Author Archives: P O Neill

About P O Neill

is Irish and lives in America.

Vote of confidence?

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The IMF has just released its latest assessment of Hungary (news release, detailed report).  It’s interesting and sobering reading — this is a country where the budget deficit nearly hit 10% of GDP last year and which is still spending 4% of GDP a year on public debt service.  In Ireland we know how this can end badly: if interest rates go up, debt service suffocates everything in the budget and you’re screwed.  Anyway, one bit of uneasy reading comes from the assessment’s assurances that the banking system is “profitable and well-capitalized”.  Isn’t this the assurance that is given to every banking system right before it tanks?  The profits come from huge leverage and “well capitalized” is just relative to the usual standard for thinly capitalized banks.   So good luck to Hungary.  There is a tricky balancing act of getting the public debt under control while not destabilizing the system that has a big share of mortgages denominated in foreign currency.  At least all the USA’s problems are in dollars.

A new job description for EU Commissioners?

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That’s what Paul Adamson argues for in today’s Financial Times.  The basis of the argument is that we should acknowledge that the commissioners are not a dispassionate executive branch of the European Union, but people who bring their country interests to their respective portfolios — so why not make this explicit and let the commissioners be the interlocutors of their countries with the EU policy apparatus?  Example: Charlie McCreevy

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Jumping the gun

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In an action that may remind the White House why their ally can sometimes be exasperating even to them, Georgian President Mikheil Saakashvili apparently pre-empted an announcement that George Bush will attend  a special “Summit of Friends of Georgia” in late October – which would be within a fortnight of the US elections in November.  White House press secretary Dana Perino was evasive when asked about the report (see e.g. the Georgian Times) at the just concluded daily briefing.  Yet Saakashvili’s claim  sounds plausible, not least because it’s the kind of thing that Dick Cheney would have promised during his visit there last week.  It also indicates that John McCain is not planning to rely much on Bush in that crucial period — which is perhaps why they would have rather made the announcement at a time of their choosing (e.g. late on a Friday evening).

Happy talk

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Russia-Georgia is likely to be one of the main foreign policy issues “debated” at the Republican National Convention in Minnesota.  Dick Cheney is in Baku this evening and here is a statement from George Bush announcing a package of aid measures.  It includes the assertion –

The people of Georgia withstood the assault from the Russian military

“Withstood”?  Of course people were resilient.  But does anyone doubt for a moment that if the Russians really wanted to take Tblisi, they could have?  Anyway, in addition to a $1 billion package from the US which Congress will have to approve (and Barack Obama’s running mate Joe Biden will no doubt champion), Georgia is also expected to get a $750 million loan facility from the IMF, which if exercised would fairly quickly make it one of the Fund’s biggest borrowers.   One more thing about Cheney’s visit to Baku: President Aliyev never mentioned Georgia in the statements to the press.  No doubt these things get more complicated the closer you are to them.

Lisbon treaty ratification still in the doldrums

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With all attention on Georgia it’s easy to forget that the European Union remains mired in the institutional crisis created by the Irish No on the ratification of the Treaty of Lisbon. With Irish ministers drifting back from their holidays, the issue will be getting more attention. Today’s Irish Times reports on what the Irish officials trying to deal with the crisis will view as an unwelcome leak: that a delegation visited Denmark to understand the technical details of Denmark’s opt-outs from the Treaty of Maastricht — opt-outs which, ironically, the Danes had hoped to unwind by referendum to be a full player in Lisbon implementation until they got uneasy following the Irish vote.

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The road to peace in the Caucasus runs through … Rome?

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It’s no surprise that George Bush is sending Dick Cheney to the Black Sea region next week.  If media accounts are to be believed, and they are plausible, the Cheney faction in the administration had long pushed for a much harder anti-Russian line and may still be advocating more aggressive moves in the coming weeks.  But here is Cheney’s official itinerary –

The Vice President will meet with President Aliyev of Azerbaijan, President Saakashvili of Georgia, President Yushchenko of Ukraine, and President Napolitano and Prime Minister Berlusconi of Italy, as well as senior officials of their respective governments. In addition to meetings with foreign leaders, the Vice President will attend and address the Ambrosetti forum entitled, “Intelligence on the World, Europe and Italy” in Lake Como, Italy.

The forum is apparently an Italian-centric mini-Davos but it’s perhaps of interest that no other western European leader is deemed worthy of the Cheney pop-in despite the continuing gravity of the situation.  Or because of the continuing gravity?   One wonders if a new parallel strategic track on Georgia is being opened via Silvio while the main channel continues with Condi’s interactions with France.

Hamlet without the Prince

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In Crawford Texas today for a meeting about the Georgian crisis at George Bush’s home, here’s Condoleezza Rice yet again using an analogy of the Georgian situation with the USSR period –

Now, I think the behavior recently suggests that perhaps Russia has not taken that route [international integration], and either that they have not taken that route or that they would like to have it both ways — that is, that you behave in a 1968 way toward your small neighbors by invading them and, at the same time, you continue to integrate into the political and diplomatic and economic and security structures of the international community. And I think the fact is, you can’t have it both ways.

Perhaps odd here is the equation Russia=USSR and an associated absence of any role for Communism (as it was implemented) in explaining behaviour within the Soviet bloc. It’s an intellectual gap that might escape the notice of politicians but could draw fire from the sort of academic who had written articles with titles like “The Party, the Military, and Decision Authority in the Soviet Union”. And who might such an academic be? Well, an article with that title appeared in World Politics in 1987 under the authorship of a certain C. Rice. The lunacy of academic copyright restrictions makes it impossible to find out more about this intriguing thesis, which apparently is that the Communist party really matters for understanding military decisions from the USSR period. Hopefully a good Sovietologist is around to advise the White House of the problems with transposing that structure to the present situation.

Enough about the war. What do I think of the war?

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It was inevitable: exit stage left the images of death and destruction from Georgia on American television (especially the ones seen frequently on Russia Today), and enter the war’s implications for the Presidential election.  Specifically, this detailed statement from John McCain (with a brief preview from The Politico), showing his sense at vindication at his long-time anti-Russia stance (recall his repeated mockery of Bush’s claimed insights into Putin’s soul and his proposal to expel Russia from the G8).  His most radical proposal is for a NATO peacekeeping force for Georgia (although the phrasing is a little unclear about who would supply the forces) along with NATO membership for Georgia.  If you were trying to find a way to irritate the Russians even more (and understanding this war surely requires some ability to see things from their side), McCain has hit the jackpot.  Whether he’s showing much of his supposed foreign policy nous is another story entirely.

Globalisation meets Bulgaria

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Here’s another little USA extradition headache for an eastern European country, but unlike the Serbian case where it’s a bar fight that turned out very badly, this one is a tiny little slice of the global nature of the current financial crisis.  At issue is the whereabouts of Bulgarian-born Julian Tzolov, whom federal prosecutors would very much like to talk to about his career as a broker at Credit Suisse selling auction rate securities (asset-backed bonds with frequent yield resets) to now aggrieved clients.  The clients apparently thought they were buying bonds backed by student loans but were in fact buying dodgy mortgages, an impression due it seems to the wheeze of adding the description “student loan” to whatever the asset actually was. 

Whatever the outcome, Tzolov provides a good example of why America can seem like an appealing place: he went from arriving in the US in the early 1990s with not much more than high school graduation to his name, to getting a degree in finance (with a bankruptcy in there somewhere), to jetting to Israel to sell these securities to corporate investors.  He even managed what sounds like a trade-up to Morgan Stanley before the feds started sniffing around and his apartment emptied out.   Anyway, the point is that the US may have been the playground of the financial shenanigans, but everyone was getting involved. 

Amazingly, there is a US-Bulgaria extradition treaty all the way back to 1924, and the US Senate is supposed to ratify a new one very soon.  So there will likely be more about the case in the months ahead.