Monthly Archives: November 2009

Cheerful Weekend Reading

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In a fit of timeliness, I have read the first volume of the report by the Independent International Fact-Finding Mission on the Conflict in Georgia (IIFFMCG), colloquially known as the Tagliavini report. The report drew attention when it was published at the end of September for its headline findings about the escalation of the conflict on 7-8 August 2008 and who bore the responsibility for them. But there’s a lot more in the first part. (The account of the conflict and the conclusions of the Mission are the first, 44-page volume of the report. Expert contributions comprise the second and much larger volume, while materials submitted by parties to the conflict comprise the still-larger third.)

Here are what I see as the key paragraphs:
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the least significant bill the House of Commons will ever see

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I probably shouldn’t be, but I’m quite shocked by the fact David Cameron is proposing a piece of legislation that will, on its own terms, have no effect whatsoever. I mean, of course, his “UK Sovereignty Bill”; this horror would “reiterate” that the British parliament remains ultimate master of its relations with the EU.

But anyone with a passing knowledge of the British constitution should see the flaw here. No parliament can bind its successor; it can at any time repeal or amend anything that was legislated in the past. So the proposed Bill is completely vacuous. Tory Eurosceptics should know this, as they are very keen indeed on the European Communities Act 1972, the instrument that puts the Treaty of Rome in effect. They are mostly keen on the idea of repealing it – before the Lisbon treaty introduced an explicit procedure for exit from the EU, this was the closest anyone could think of to a procedure for departure.

Cameron, in my cynical view, is pushing this precisely because the final design of the bill might involve amending the 1972 Act, and so many of his party have been fantasising about this for years. Similarly, Dan Hannan has accidentally confirmed something I long suspected by quitting his job as legal spokesman for the Tories in the European Parliament in order to campaign for more referendums in general; it’s not any specific European treaty provision that excites him, it’s the idea of having a referendum he thinks he could perhaps win. It’s the mirror image of Der Tag, the day of the revolution.

It may be that the whole point of this was to flush out the crazies. Supposedly, old-fashioned drill sergeants would use various tricks to encourage the potential fainters to faint before the parade; in the same way, it’s better if people like Hannan and Roger Helmer to explode now and then have nothing left for when it matters.

But I’m still repelled by the idea of passing entirely pointless laws for intra-party political purposes.

How Tony Blair lost the presidency 20 years ago

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It’s the 9th of November…so, in total observance of my usual standard operating procedures, let’s think about the European presidency, or as my wonderful, wonderful Soizick puts it, who’s going to get the job of being Tony Blair.

It looks a lot like the lucky girl won’t be Blair; the reason why is more interesting and more telling. Over the last few weeks, we’ve seen a string of small states around Germany take quite a daring stand in foreign policy; Austria, the Netherlands, Belgium, Luxembourg, all progressively came out against Tony Blair. It seems more obvious that this is an interesting or daring stand if you take a Brussels view, in which Blair is still a respected member of the world elite, than if you take a street level view, in which he’s widely despised. Also, if you consider the UK or Norway to be a 10 on the NATO scale, the Netherlands must be about an 8 – the presence of the Joint Forces Command in Brunssum, and the long-standing and very close relationship with the British armed forces over the commitment to the NATO Northern Flank, are the most obvious manifestations of this. Indeed, the Dutch army served in the British zone of Iraq and its Apache helicopters, the first European-owned ones, are still flying in Afghanistan. (That the first AH-64Ds in European ownership are Dutch is a marker of NATO spirit in itself.)

So the fact they came out against Blair is interesting.

Further, it’s incredibly rare that the Austrians would launch a significant foreign policy initiative without first clearing it with Berlin. This has been true since at least 1878, and the most famous example is one that neither party would like to recall – the Blankoscheck of 1914. Dutch policy is not much different. The upshot is that in opposing Blair, this odd block of states was in a sense acting for Angela Merkel. Not long ago, and we’re talking two months here, Nicolas Sarkozy was being tempted to support Blair; relations between Britain and France have rarely been better than during the last three or so years, it being a major priority for both sides to mend fences after the ghastly Alistair Campbell-inspired frogbashing campaign in the run-up to the Iraq war.

The Franco-German alliance is considered untouchable by both allies, and everyone else – we all know only too well the alternatives. Practicality requires both of them to maintain a relationship nearly as close with Britain, as does the value of having other options. So, assuming Merkel doesn’t want Blair, it was necessary to have the opposition to him floated by others.

In terms of foreign policy, this is the Germany that resulted from the 9th of November, when Merkel herself decided to go to the sauna rather than rush to the border. She apparently reasoned that, once open, there would be no closing it again, and therefore there was no hurry; of course, she was right, but when you think of some of the stories from the Wall years about people whose lives were utterly changed by which side of the border chance put them, it demonstrated a lot of confidence in her reasoning.

This is the Berlin republic, then; discreet, hypercompetent, and steeped in that distinctly northern European combination of self-effacing modesty and intense pride. Like 17th century houses in Amsterdam or 18th century ones in Edinburgh or York; ostentatiously modest, excessive in their austerity of design. Or the supposed Yorkshire traits – being both taciturn and opinionated is quite a trick. It’s been said before that in German, there’s no distinction between the words for citizen/civil/civic and for bourgeois, and that the revolution worked in this ambiguity. Merkel is exhibit A.

Immediately. Without Delay.

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From the assembled press, someone shouts a question, “Effective immediately?”
“I have been informed that such an announcement was prepared today, you should already have a copy. According to my understanding, that is immediately. Without delay.”

Twenty years ago this evening, Günter Schabowski gave an unrehearsed answer at a press conference, and thousands of East Berliners — and soon, many more thousands of East Germans — did not delay. The Berlin Wall was open.

History of the Mafia by Salvatore Lupo

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Seeing that the Italian Mafia has been generating headlines again, this may be a good opportunity to let our readers know about a new book by Columbia University Press: History of the Mafia by Salvatore Lupo. The book was first published in Italian in 1996 and has now been translated into English by Donzelli Editore. Even though I find the book a tad too ‘academic’ at times, it is really useful in understanding just how the Mafia operates, where it comes from and how it continually adapts itself to new circumstances. It soon becomes clear that you cannot understand the whole Mafia phenomenon without a proper understanding of Italian history. And, as Lupo adequately explains, you can forget about the myths that both Hollywood and the Mafia itself are tyring to uphold; there is no ‘good Mafia’:

“Valachi, Gentile, Bonanno, Buscetta, and Calderone all portrayed themselves and their friends as wise men who applied the rules, who sought to mediate conflict, and who avoided illegal violence, turning to bloodshed only as a last resort, in order to apply the rational and carefully weighed deliberations of the organization. At the same time, they depicted their enemies as treacherous individuals, unwilling to respect the laws of (their own) society, always ready to engage in betrayal, killing at the drop of a hat, and verging on the brink of sadism and insanity. We can believe that the self-portrayal of the pentiti is a sincere one, yet if their adversaries were to speak, they might well tell the story from a diametrically opposed point of view. (…) In reality, such internal conflict – such as the contrast between the old Mafia and the new Mafia – is an integral part of the Mafia’s ideology. It is an expression of a mediocre and obscurantic vision of the world.”

I haven’t read the entire book yet, so I’ll just refer you to the book’s pages at Columbia University Press for more quotes and information.

The Dollar As A Funding Currency

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Nouriel Robini is not a man who is known for mincing his words. “We have the mother of all carry trades,” he tells us, “Everybody’s playing the same game and this game is becoming dangerous.” There is a “wall of liquidity” sweeping the planet, pushing asset prices ever higher in one country after another. I wholeheartedly agree. Continue reading →

Death on the Tisza

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A sad story from the edge of Europe last week: fifteen Kosovar Albanians died trying to cross the border between Serbia and Hungary. The border there is a a river, the Tisza, which is a large and swift-flowing tributary of the Danube. The Albanians were illegal immigrants trying to move from Kosovo into the EU. Their boat capsized and most of them drowned. The immigrants seem to have been family groups, and the dead include at least two children.

Kosovo declared a national day of mourning last week. Serbia, which still claims Kosovo as part of its territory, made no official statement.

It’s a very sad incident that points to some realities in the region.

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Welcome to the Lisbon Era

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Czech President Vaclav Klaus, after much hemming and hawing, signed the Treaty of Lisbon this afternoon. It is expected to enter into force on 1 December 2009. This success is undoubtedly the highlight of the Swedish Presidency, which made concluding ratification a top priority.

Prominent changes include more qualified majority voting in the Council of Ministers, increased involvement of the European Parliament in the legislative process through extended codecision with the Council of Ministers, eliminating the pillar system and the creation of a President of the European Council with a term of two and half years and a High Representative for Foreign Affairs to present a united position on EU policies. The Treaty of Lisbon will also make the Union’s human rights charter, the Charter of Fundamental Rights, legally binding.

Now that that’s done, is everyone ready for the next round of enlargement?

Norwegian Wood

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Well, if John Lennon had still been around today he would undoubtedly have entitled his song Norwegian oil, but whatever way you want to put it Norway is back in the news, and this time not because of adolescents who find themselves with no alternative to sleeping overnight in the bath-tub, but rather because its central bank has been put in a position where it has little alternative but to raise interest rates, even if in fact it would be more comfortable for it not to do so. So, not being in the habit of looking for a quiet life, decision makers over at the Norges Bank decided last week to put themselves in the hot seat by lifting the banks main rate by 25 basis points to 1.5 per cent and in this inauspicious and modest way entered the history books as the first European central bank to raise interest rates since the financial crisis started to ease. Continue reading →

Global Manufacturing, France Outperforms, As Spain Continues To Flounder

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Well, it is not as if I relish rubbing salt into old wounds, but this quote from the latest piece by Ben Hall in Paris and Ralph Atkins in today’s Financial Times is just too good to resist.

French manufacturing output rose at its fastest rate for nine years, according to a survey on Monday, confirming that France has become the economic powerhouse of continental Europe. Purchasing managers’ indices for manufacturing showed France performing significantly better than the continent’s other main economies – thanks to robust domestic demand.

Plenty of food for thought in this paragraph it seems to me. As foreshadowed in this earlier post, it is the French economy – and not the German one – which is rebounding sharply, and this seems to be for essentially three reasons:

i) there is still life in domestic demand, due to the fact that demographics are good, and lending to households (at an average rate of increase of 11%) was a lot less during the last boom than it was in the bubble societies (20% per annum in Spain and Ireland

ii) France’s more favourable demography means that the French government has more space for fiscal stimulus (when compared with Germany) which means the “cash for clunkers” can roll on a bit longer.

iii) the combination of these above two factors means that stimulus actually can work, since it can fire up domestic consumption which is not already dead on its feet. That is, the situation is a win-win one in the classic sense (although, as I was arguing at the end of last week, the ECB will now need to do some pretty adroit monetary footwork if it wants to avoid firing up an asset bubble in France, to follow hot on the heels of the one which has just deflated in Spain.

As Jack Kennedy, economist at PMI survey organisers Markit put it:

“The strong recovery in French manufacturing continued in October, with output rising at the fastest pace for nine years. While some of the current strength reflects a rebound from the extreme financial crisis, it nevertheless offers further evidence that the France is towards the front of the pack among developed economies in emerging from the downturn. Domestic demand remains the key driver of growth as confidence continues to recover.”

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