By Their Friends Shall Ye Know Them

And by their enemies. It is now clear that the Iraq and treatment of detainees policy of the current US administration has found little favour down at the Financial Times. The FT is hardly a ‘radical rag’ and views expressed there can hardly be dismissed in the same way some might feel able to lightly-brush-aside opinion expressed in more predictably anti-Bush quarters. Nevertheless, it seems clear to me that the battle for the heart and mind of the Financial Times has now been definitively lost. Some may not care. I beg to suggest they would be making an important mistake.

Today the FT carries prominently on its website this article from the New York Times:


Al-Qaeda link to Iraq tied to coercion claim

The Bush administration based a crucial prewar assertion about ties between Iraq and Al Qaeda on detailed statements made by a prisoner while in Egyptian custody who later said he had fabricated them to escape harsh treatment, according to current and former government officials.

The officials said the captive, Ibn al-Shaykh al-Libi, provided his most specific and elaborate accounts about ties between Iraq and Al Qaeda only after he was secretly handed over to Egypt by the United States in January 2002, in a process known as rendition.

The new disclosure provides the first public evidence that bad intelligence on Iraq may have resulted partly from the administration’s heavy reliance on third countries to carry out interrogations of Qaeda members and others detained as part of American counterterrorism efforts. The Bush administration used Mr. Libi’s accounts as the basis for its prewar claims, now discredited, that ties between Iraq and Al Qaeda included training in explosives and chemical weapons.

The Most Bizarre Monetary Policy DecisionOf Recent Times?

This was Wolfgang Munchau writing in the Financial Times a week ago:

The pre-announced interest rate rise that the European Central Bank is due to agree this Thursday must rank as one of the most bizarre monetary policy decisions of recent times. The economic recovery in the eurozone remains fragile, as last week’s German confidence indicators have shown. Even the ECB’s own forecast for headline inflation is relatively optimistic, while core inflation remained unchanged at 1.5 per cent in October.”

and he issued a warning:

“It is still not too late to propose ECB reform as part of the next treaty revision. For as long as EU leaders maintain the status quo, they have the central bank they deserve.

Central bank independence seems to be once more ‘a l’ordre du jour’, and the ECB may well live to find to its cost that there is one thing worse than actually playing the game, it’s playing the game and losing. Now why?
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Little Bits of Asia

A while back I asked about EU policies toward China. There’s now a section on the Europa server devoted to just that question.

“There will soon be more people living in the city of Bombay than on the continent of Australia. … Bombay is the future of urban civilisation on the planet. God help us.” (p. 3)

“[W]orldwide, a billion more people a year buy tickets to Indian movies than to Hollywood ones. … When every other country’s cinema had fallen before Hollywood, India met Hollywood the Hindu way. It welcomed it, swallowed it whole and regurgitated it. What went in blended with everything that had existed before and came back out with ten new heads.” (p. 321)

“What is a South Asian? Someone who watches Hindi movies. Someone whose being fills up with pleasure when he or she hears, Mere Sapnon ki rani or Kuch Kuch Hota Hai. Here is our national language; here is our common song.” (p. 323)

“A wide assortment of cousins and uncles peoples the marriage. One works on an oil rig in Abu Dhabi; another is a property dealer in Bombay who spent six years in Nigeria getting rich off the currency scam in the 190s.” (pp. 430-31)
— From Maximum City: Bombay Lost and Found by Suketu Mehta

“[Ms. Zhang] has come to realize what all people who want to change China eventually learn: the current system is at a dead end, but its death is not in sight.” (p. 273)
— From Wild Grass by Ian Johnson

“Anita Jain reported in the Financial Times last week that India has ’10 discount airlines planning to enter the market over the next 18 months.'”
— From Slate

“On July 18th, Shanghai’s first budget airline made its maiden flight from Shanghai?s Hongqiao Airport.”
— From the Economist’s August 2005 Shanghai update

And finally, back on July 9, the perceptive Mark Leonard had a terrific article in the dead-tree edition of the Financial Times on China’s role in global economics and politics. It’s online here.

Merkel’s Reform Agenda

Angela Merkel has an interview in the Financial Times today. Unfortunately the transcript is subscription only. This is a pity, since to some extent she defines the kind of Europe she would like to see:

In an interview with the Financial Times, Angela Merkel, leader of the Christian Democrat Union, on Wednesday issued a clarion call for economic reform in Europe based on countries borrowing successful policies from one another. ?If I look at Scandinavia, for instance, I see we still have a long way to go in decoupling our social security system from labour; if I look at central and eastern European countries, I see I still have a long way to go in reforming my tax system; and when I look at the UK, I see I still have much to do to make my labour market more flexible.?

Ms Merkel’s references to central European countries and to the UK are striking, since the former are identified with low corporate taxes and in some cases, such as Slovakia with a ?flat tax? system. The deregulated UK labour market is often demonised by continental European politicians as alien to the European social model.

Her remarks provide clear backing for Tony Blair, prime minister and current holder of the EU’s rotating presidency, in his campaign to put economic reform at the centre of the EU’s effort to reconnect with European voters after their rejection of its planned constitution in France and the Netherlands in the past two months.

The big difficulty I see with her proposals is that they will put more of the burden of financing government on consumer taxes (VAT), and this will not help Germany lift domestic consumer demand which is one of the ‘big issues’.

Morgan Stanley economist Elga Bartsch, who I have in the past maligned somewhat here on this blog, has a pretty fair and balanced summary of the CDU reform programme here.

Parmalat Update

Well, well, what do you know: Paramalat’s real debt is much bigger than was first thought. What a surprise. According to the Financial Times Parmalat’s gross debt now stands between ?14.5bn and ?14.8bn ($18.08bn-$18.46bn). At the same time its main Italian operations barely made a gross operating profit last year. Meantime Italy’s unions are threatening a strike iif the government reduces the regulatory role of the central bank. The dispute has arisen as a result of the Parmalat scandal, which the government blames partly on a failure of oversight at the central bank. As a solution the finance ministry wants to reform financial market regulation in Italy so that the central bank would no longer supervise corporate bond issuance and competition in Italy’s banking sector. The unions object to this.

Actually this was meant to be a quick post, but while writing it I cannot help reaching the conclusion that Italy may be begining to fall apart. Just wait till you read this.
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