Govern Different

Our friends at Foreign Policy (among others) report that the Prime Minister of Norway, stranded in the US by volcanic events in Iceland, is working with his new iPad to make sure things don’t get out of hand back home. No word on what kind of mobile he uses, though maybe he’s saving on roaming charges by using Skype?

Anybody else out there stuck? (Chancellor Merkel, for example, is in Lisbon at least through Saturday. Not sure if that qualifies as stuck.)

Is Estonia’s Euro Membership A Done Deal?

Well, if you read this report from Euractiv, citing unnamed EU Commission officials, it is:

“If nothing extraordinary happens, the Commission will give its positive opinion for the accession of Estonia to the euro zone on 12 May,” an EU official said, clearing the way for Baltic country to join the euro in 2011.

There just one little snag here: that extraordinary, “fat tail” event seems to have just happened. For the Commission to be able to move forward on Estonia’s Euro Membership, the ECB have to agree. And it is here that Estonian journalist Mikk Salu steps in (in Estonian in the newspaper Eesti Päevaleht, summarised in English here) and says “not so fast”. Salu reports on a closed-door meeting of the Economic and Monetary Affairs Committee of the European Parliament held last Tuesday (April 13). The meeting had a single-item agenda: Estonia’s membership of the Eurozone, and the meeting was attended by ECB Executive Board member Jüergen Stark. According to MEPs who attended the meeting (but did not wish to be identified), Stark was “stark”: Estonia is not going to be admitted. The reason given was that in the wake of the recent crisis affecting the Eurozone, new criteria will be introduced – including per capita GDP and competitiveness sustainability – and on these counts Estonia will not qualify.

Salu also spoke to Estonian MEP Ivari Padar, who attended the meeting and confirmed the substance of the discussion, although Padar did try to mediate the situation slightly, saying, “you know, he is a central banker, and central bankers are a conservative lot”, etc etc. On phoning the ECB itself and the Commission the only reply he got to a straight question seems to have been “no comment”.

Basically, as I said, maybe the ECB are a conservative crowd, but I think it is very hard to see Estonia being admitted to the Euro without ECB backing, and indeed looking at what is happening over in Greece at the moment, and in the German Constitutional Court, I think it is very hard to see any new members at all in the immediate future. Consensus thinking right now seems to be more towards small(er) is more beautiful.

None of this surprises me, indeed when I wrote my last post on Estonia, back in February, it seemed to be an increasingly likely outcome.

But as Fitch pointed out when they raised their Estonia outlook, while eurozone membership looks increasingly possible it is not yet certain. Fitch warned in their report that even if Estonia meat all the formal Maastricht reference criteria for euro entry there is still a risk that the European authorities’ interpretation of these same criteria could lead them to reject Estonia’s application. According to Fitch, in Estonia’s case uncertainty surrounded whether the idea of “sustainable price performance” was going to be consistent with the deflation which is to be expected from such a severe recession, after inflation had so recently been in the double digit range. The agency also added that one-off measures taken by the government to reduce the budget deficit in 2009 could also count against it in the EU authorities’ judgment of whether the medium-term budget plans are credible.

The first point is an important one I think, and is reiterated by the ECB’s own Jürgen Stark in an interview given to the German magazine Der Spiegel for this weekend: “But when taking on board new members, we will need to take an even closer look, concerning the data and the sustainability of convergence,” he is quoted as saying.

Indeed if we go back to the 172 page EU Commission document leaked to the German magazine Der Spiegel last month, the EU Stability and Growth Pact is increasingly going to focus on issues surrounding competitiveness as well as on fiscal deficit ones. That is what the whole deabate over the Greek and Spanish economies which EU leaders are engaging in this week is all about. And any country which is not considered to be in completely good health under the SGP criteria is hardly likely to get the green light from the ECB and Ecofin.

It is obvious that the Estonian economy is still suffering from earlier structural distortions which have not yet been corrected. If we come to the consumer price index, this was only down about 2% in 2009, far short of the deflationary adjustment which will be needed to restore growth and competitiveness.

And to cap it all, for the first time since the start of the financial crisis, Moody’s has chosen this, of all, moments to up its ratings outlooks for Lithuania, Latvia and Estonia. The decision was apparently based on the idea that the contraction has been stabilized (which it has), but as we are unfortunately about to see, stabilization and getting back to growth are not one and the same thing. In Estonia’s case the more favourable rating was a reflection of the expectation that the country “will soon be able to join the eurozone”:

Estonia’s “economy and banking sector are exhibiting signs of a gradual recovery,” Kenneth Orchard, a Moody’s analyst in London, said. “Equally important, the government’s impressive fiscal performance in 2009 means that Estonia is likely to be permitted to adopt the euro next year.”

And if I’m reading this report aright, Latvia just declared a 9% general government fiscal deficit for 2009, well above the 6.7% which was originally estimated. Cry victory if you will, but perhaps it would be prudent to wait till the war is actually over before you cry it too loudly.

demonstrating uncertainty

Hey ho, big media seems to have picked up what I suppose we’ll have to call Cameron’s China gaffe:

British Conservative Party leader David Cameron cited uncertainty over China as one of the reasons for Britain to maintain its nuclear deterrent, drawing an instant reprimand from Foreign Minister David Miliband. 

“Are we really happy to say that we’d give up our independent nuclear deterrent when we don’t know what is going to happen with Iran, we can’t be certain of the future in China?” Cameron said in a debate last night against his rivals in May 6 elections, Prime Minister Gordon Brown and Liberal Democrat leader Nick Clegg. “I say we should always have the ultimate protection of our independent nuclear deterrent.” 

… The Conservatives issued a statement saying, “David Cameron was demonstrating the extent of uncertainties in the world, not saying China is a threat to the U.K.” 

So he did actually mean China – I mean, inasmuch as he meant anything. What does he think is going to happen in China that requires Britain to have nuclear weapons?

Cameron’s said some not bad things in the past about distancing Britain somewhat from US policy, but he’s done some deeply flaky things in foreign policy more generally. There’s his European parliamentary alliance with Latvian SS nostalgics, that bizarre trip to Georgia in 2008 and now this. 

Maybe it’s basically because he’s a classic Tory little Englander who doesn’t really think about abroad, except that it’s where you go skiing and where the au pairs come from. But it can’t help that he’s got people like Michael Gove around him when his thoughts do turn in that direction. 

It would be kind of ironic if Cameron did take power and the US, which actually controls the use of our “independent deterrent”, decides to take it away on the grounds that he can’t really be trusted with it. I mean, he’s not demonstrating uncertainty here so much as adding to it.

the long awaited Jamie Kenny endorsement

Outsourced to Porter: 

The party will introduce a freedom bill, regulate CCTV, reduce local council surveillance, restore the right to protest, protect free speech, offer guarantees to investigative journalism, scrap ID cards, end plans to spy on email and internet connections, scrap ContactPoint, reduce pre-charge detention to 14 days and scrap secret evidence. The Lib Dems go much further than the Tories on the DNA database and offer wholehearted support for the HRA. 

On civil liberties, the Lib Dems win hands down.

I’m not a Lib Dem. I’m really just parking my vote there. I’ll probably vote Green once the crusties are ready for prime time. Good luck to the folk further left, but I don’t do movements. I’m a retail politics guy. 

Meanwhile, if you think that this stuff matters you should vote for it when it’s offered by a major party, especially since we’re now at the stage when it clearly doesn’t matter to either the government or the opposition. It’s way past time that social authoritarianism stopped being a cost free political option. And voting Lib Dem is the only realistic way I can see that you can at least try to make that happen.

specialness news

The Tory manifesto calls for a “special relationship” with India, apparently combined with a “strong and effective” relationship with China. This is an exact copy of US policy, even if our special relationship with them isn’t so special anymore. We’re going to be special on our own. 

This obviously raises the question of what side Britain would take if Sino-Indian rivalries got really serious. The obvious answer involving potential conflict between nuclear powers that account for one third of the world’s population would be to encourage neither side to do anything drastic. And that would be difficult to do credibly if one of the countries involved is “special” to you. 

Also, does that mean a Tory run Britain would take the Indian view on Kashmir? Because that ain’t the view of British Kashmiris, presumably including the ones in the Tory Party. 

Interestingly, the Tories also want the other two BRIC countries as permanent members of the UN Security Council, which among other things would give them all an excellent opportunity to caucus together.

pirate republic

Iceland is proposing radical new laws that will create a safe haven for investigative journalism and therefore the release of this kind of shocking footage, which exposes a cover-up, as well as the true nature of a war where a superpower deploys its weapons on a third world country, in this instance cutting down, among others, two people working for Reuters. The Icelandic Modern Media Initiative (Immi) will allow organisations likeWikileaks to provide the strongest possible protections for sources and whistleblowers releasing sensitive material that big business and secretive states want to suppress.

 Having flown from Britain last Tuesday where our disreputable Parliament was about to pass the Digital Economy Bill with virtually no scrutiny and certainly no concern for freedom of expression, it was remarkably refreshing to read the following from the official website of the Immi, which, incidentally, is supported by all parties here. "The goal of the Immi proposal is to task the government with finding ways to strengthen freedom of expression around the world and in Iceland… we also feel it is high time to establish the first Icelandic international prize: the Icelandic Freedom of Expression Award." 

To get the cynicism out of the way upfront, one suspects a plan to market the country as a haven for well-heeled geeks. The “Icelandic Freedom of Expression Award” is brochure stuff, like those economic freedom ratings which consist of counting the yachts in the harbour. 

 And why not? There’s a both a corporate and state-level landgrab on data and virtual space going on and so the logical outcome of Iceland’s policy would be to provide a physical safe haven for people who resist or fall foul of it. 

 Henry Porter suggests that the yanks aren’t pleased by all this. I suggest the following response: 

damn ye, you are a sneaking Puppy, and so are all those who will submit to be governed by Laws which rich Men have made for their own Security, for the cowardly Whelps have not the Courage otherwise to defend what they get by their Knavery; but damn ye altogether: Damn them for a Pack of crafty Rascals, and you, who serve them, for a Parcel of hen-hearted Numskuls. They villify us, the Scoundrels do, when there is only this Difference, they rob the Poor under the Cover of Law, forsooth, and we plunder the Rich under the Protection of our own Courage; had you not better make One of us, than sneak after the Arses of those Villains for Employment?"

reaching out

Per the last post on election speak and the discourse of mental illness, only 13% of the electorate think that Nick Clegg is reaching out to them, but 42% think the Tories want to take them in the right direction. However, voters seem concerned that Gordon Brown is leaving them sobbing and confused on the ledge of the multi-story car park overlooking the town centre.

put the knife down

I was trying for a bit of cheap election snark by comparing what we’ve heard so far from Brown, Cameron and to a lesser extent Clegg to the speech patterns of schizophrenics. It doesn’t really hold up. Schizophrenic speech is free in the most fundamental way, full of random association, stuffed with neologism, repetition and the bizarre juxtapositions generated from crossed synapses and odd biochemical combinations.

I got the wrong end of the stick. Current political speech is more like that adopted by people talking to schizophrenics, and, in particular, trying to get them to co-operate in some way. There’s nothing internal about it. It’s concocted rather than originated. The aim is basically negative: to close down neural pathways and opportunities for mental association and to shepherd the listener down the desired pathway – to a future fair for all, for instance, where we are all in it together. Just get down from the ledge and get into the ambulance…that’s right…one step at a time…this way. Don’t worry. We have plans for you. We are in the future business.

PR

I’m a great supporter of proportional representation, in particularly STV, and not a foul-weather friend like Gordon Brown (my election 2005 first thoughts were “55% of the seats on 36% of the vote though. Can we have PR?”). Thus I was quite surprised last night in Nick Clegg’s interview to see that he didn’t seem to be aware that a party could win most votes but not most seats. It was quite strange – he genuinely didn’t seem to understand Paxman’s point. I guess he might have been pretending not to understand, in order to ignore it, and I suppose it would hardly lose him votes.