Category Archives: Europe and the world

also: buy gold

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"I believe that I can make a case in the end that there are three powers that you will see really emerge. One, a Muslim caliphate that controls the Mideast and parts of Europe. Two, China, that will control Asia, the southern half of Africa, part of the Middle East, Australia, maybe New Zealand, and God only knows what else. And Russia, which will control all of the old former Soviet Union bloc, plus maybe the Netherlands.

A lot of this isn’t too far away from what a lot of rightwingers seem to believe, but what’s the business about Russia and Holland?

How to be the subject of a formal disavowal from your own ministry: a bad week in French foreign policy

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A certain idea of French foreign policy is in crisis. On one hand, a serious (non-dickhead) terrorist threat to French interests – like Areva’s uranium mines – in Niger and Mali just isn’t going away, and the French military is semi-permanently involved. Jean-Dominique Merchet has an excellent post on the failed operation to rescue the two hostages and especially on the fact that several of the apparent kidnappers were in Nigerien police uniform…and they fired at the French helicopters. Whether this was a case of insurgents masquerading as police, rogue police cooperating with insurgents, real police acting as fake ones for some twisted reason, or a disastrous friendly-fire incident is far from clear.

Further south, in Cote d’Ivoire, the political crisis grinds on with a steadily increasing background level of violence. The many, many French citizens present have been officially advised to leave. Well, perhaps that’s what Foreign Minister Michéle Alliot-Marie meant to say – instead she advised them to return “en metropole”, thus giving the unhelpful impression she regards the place as a French colony. Oddly enough, former foreign minister and multiple-scandal case Roland Dumas, who is now one of Laurent Gbagbo’s lawyers, described it as “the jewel of French colonialism” in an interview with Le Monde. He went on to say that the water supply belonged to Bouygues, the oil to Total, and the port to Bolloré. Which is true. Typically, he left open whether he thinks this is a good thing or whether behaving as if the country was still a French colony might be a little irresponsible.

And not only did the Tunisian president, dictator, and friend of France end up fleeing, he was apparently refused entry to France. Actually, I monitored air movements over Corsica at the time thanks to this lot and I couldn’t find the plane (registration TS-IOO) – I rather suspect that even if he did apparently stop for fuel in Italy, he went straight east from there. The timings tend to support this. This was after Alliot-Marie, whose reputation as a safe pair of hands is looking dicey, had gone so far as to offer Ben Ali the assistance of the French police in dealing with the crowds. Seriously. In fact, looking at the exact wording, she may have meant some sort of low-key training team giving lessons on policing by consent, but the timing couldn’t have been less appropriate. Anyway, the minister ended up being formally disavowed by her own ministry.

What seems to be clear is that not only are there problems, but there is also an entirely unhelpful smell of imperial arrogance wafting about.

On trying not to prove your critics right

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Julian Assange says that the authoritarian regimes of the world define themselves through their attempts at concealment and conspiracy.

Some governments – we don’t know exactly which, but the group seems to include the governments of Australia, the UK, Sweden and Switzerland – are apparently set on confirming his theory. There’s some recent evidence from Switzerland here.

I have to say that if a government thinks that what the Wikileaks people have done is criminal (and by extension, that what Der Spiegel, The Guardian and the New York Times have done is criminal) then they should issue an arrest warrant and, if relevant, start extradition proceedings. They shouldn’t act like anonymous, shabby harassers. It doesn’t help the cause of state secrecy to muddle the Wikileaks releases up with what Julian Assange may or may not have done on his nights off, or with his filling out a bank account application incorrectly. It does nothing for anyone’s confidence in government if PayPal gets leant on so that donations to Wikileaks don’t make it to Wikileaks, or if Wikileaks’s various web servers are serially taken out as and when they come into use. All of that stuff erodes the legitimacy of government.

Perhaps governments are shit scared by Wikileaks. If so, then I’d direct them to this piece by Martin Kettle. I’d also suggest that they be as nice as possible to their employees; I’m thinking of the ones doing jobs like Specialist Bradley Manning did. This would be just a prudential measure: I don’t suggest that what Manning did was the right thing for anyone to do.

Ireland: Lead us not into temptation

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Wall Street Journal Europe editorial –

Ireland’s plight is not the result of collecting too little tax. The country is a victim of the global credit bubble, which tended to hit hardest the countries that had the largest and most innovative financial industries: Ireland, the U.K., Spain, the U.S. and, in its especially perverse way, Iceland.

From the report of Klaus Regling (yes, that Mr Regling) and Max Watson into the macroeconomic and global sources of the Irish crisis (page 29) –

Concerning credit growth …. what occurred in Ireland over the past decade was simply and squarely a massive financial sector and property boom. Moreover, this boom was not marked by the esoteric complexity of financial instrument design that proved the downfall of nstitutions elsewhere. The problems lay in plain vanilla property lending (especially to commercial real estate), facilitated by heavy non-deposit funding, and in governance weaknesses of an easily recognisable kind. Together, these factors led to acute vulnerabilities and then to deep economic and social costs.

To spell it out, although you can use various words about Irish banks, “innovative” is not going to be one of them.  Yes there was cheap money but bad lending practices (including investment loans payable on demand and non-recourse loans to developers) are at the root of the crisis.  However, it remains a Eurozone article of faith that bondholders who lent money to banks to engage in such dodgy lending practices shouldn’t lose a cent.

One from the files

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With so much new reading material being generated on the evolving Ireland situation, we’d like to recommend that you go back just over 6 months to this really excellent and prescient opinion piece in the FT  from David Bowers, global strategist at Absolute Strategy Research.  We want to be nice to the FT and not cut and paste from the articles as they request, but focus in particular on the idea that we are headed for a world of increased official capital flows, with political conditions attached.  With Klaus Regling, CEO of the European Financial Stability Facility, telling us just now that he’s been shopping the EFSF fund-raising to sovereign wealth funds and central banks, we could be getting into a world of Asian/petrodollar flows, via Brussels, Washington, and Frankfurt, to the European periphery.

Merkel’s Little Ray of Sunshine

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Remember the sunshine option? You might think it was getting some traction. Berthold Huber, the leader of IG Metall, has set some goals ahead of this year’s payround, which opens on the 27th and covers the steel industry. IG Metall is the German metalworkers’ union, which in practice represents most of the industrial economy – the wider importance of the steelworkers’ pay round is that it acts as a price-leader for the rest of the German collective bargaining year. Huber clearly reckons that Germany is recovering well enough that he can insist that the workers get a share of the benefit. Further, he wants to reintegrate some of the short-time or temporary workers, a sector that grew during the Lohnzurückhaltung years and then during the crisis.

Interestingly, someone has gone further and nailed a target to the wall. Peter Bofinger, a member of the German council of economic advisers, has named a figure of 3% earnings growth as necessary to achieve a broad-based recovery. Bofinger has appeared on this blog before; looking back, these remarks are highly telling

If the SGP is regarded as a framework that contributes to price stability, it suffers from the weak link between government deficits and inflation. This is due to the fact that a negative budgetary position can be caused by excessive government spending but also by a dismal growth performance….However, already in the 1990s it should have been obvious that the link between public debt or deficits and inflation is very weak, at least in OECD countries with relatively moderate inflation rates….Together with the depreciation of the dollar this insufficient macroeconomic stabilisation can be regarded as the main reason for the underperformance of the euro area in the last few years.

Bofinger’s words are here, in an interview with the Rheinische Post. Bofinger argues that German employees have seen no growth in their buying power in the last 10 years (the unions’ research group reckons no growth in real wages in 6 years), while exports grew by 70% at constant prices – to put it another way, there’s been a “massive redistribution at the expense of workers”. Of course, the flip side of holding down wages in a major export economy is that somebody has to buy the stuff. He further argues that the Lohnzurückhaltung has contributed to European economies drifting apart: in Der Spiegel, for example.

Anyone who sees this as a virtue must ask themselves whether Germany’s export successes would have been possible if other countries had behaved as “virtuously” as we have. It says a lot about the level of the debate that such simple and fundamental insights are apparently difficult to get across in Berlin.

(Die Zeit has an article about Bofinger and his predecessor on the council, Jürgen Kromphardt, which describes them as the last Keynesians. To read, as a period piece from the distant age of 2004.)

So what’s happening in the other superexporter? Even The Economist has not only noticed Chinese labour activism, but thinks it’s a good thing. Doug Saunders reckons that this is the only lasting gain from the boom.

That’s the theory; the practice is here.

The week-long strike at Honda supplier Atsumitec ended Thursday after workers and management agreed to a 45 percent increase in the basic wage from 980 yuan a month to 1,420 yuan.

The roughly 200 employees at the Foshan plant were, in addition, offered a 250 yuan monthly living allowance and a performance related bonus; a significant victory after management had earlier in the week threatened to fire striking workers and hire replacements if they did not return to work…. The fact that workers are asking for increases of around 50 percent, even higher in some cases, is a clear indication that wages in the Pearl River Delta have been kept far too low for far too long.

As the strikes continue, a high-level delegation from the Guangzhou Federation of Trade Unions arrived in San Francisco, the first leg of a four-city tour of the United States designed to improve relations with American trade unions and labour groups.

Delegation head Chen Weiguang was quoted by the Chinese media as saying American labour groups had already secured a commitment from Apple to improve payments to Foxconn so that wages at that company’s factories in China could be increased.

Even the People’s Daily thinks so, although I’m not sure what to make of this:

Nonetheless, even as these doubts remain over the ACFTU [the official unions, under pressure to demonstrate real representative power - not-ed], it’s not stopping in its “union-building” efforts. The Financial Times reports that it’s unionizing many large foreign investment banks, including Goldman Sachs, JPMorgan, Morgan Stanley and UBS. According to a foreign banker in Suzhou, “(t)hey are actually telling us [to establish union chapters], not asking us…the feeling from everyone was – we just got a 2 per cent tax.”

You can’t expect much from a journalist at that level

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Alex Perry, an Africa correspondent Africa bureau chief for Time magazine, writes on China’s involvement in Africa. In the process, he describes the DRC as a “sucking vortex”, citing the corrupt rule of Mobutu Sese Seko. Julie Hollar at FAIR (Fairness and Accuracy in Reporting) takes Perry to task for failing to mention US / Belgian involvement in the overthrow of Patrice Lumumba (and their subsequent support of Mobutu). Perry then makes the terrible mistake of responding to Hollar in comments while not in full control of his own sense of self-importance. Self-harming behaviour (not to mention Time-harming behaviour) then follows.

Jonathan Schwarz (Tiny Revolution) summarises the Perry / Hollar spat and takes the opportunity to quote an apposite passage from Devlin’s book about his time as CIA station chief in the Congo. It’s good, so I’ll quote it myself here:

We moved onto Ambassador Houghton’s office where we were joined by Ambassador Burden for more detailed talks concerning the Congo and its problems…During our discussions, Tim brought up a delicate matter: “Time magazine plans to do a cover story on Lumumba with his picture on the front of the magazine.” He continued, “Celebrity coverage at home will make him even more difficult to deal with. He’s a first-class headache as it is.”

“Then why don’t you get the story killed?” Burden asked. “Or at least modified?”

“I tried to persuade the Time man in Leopoldville until I was blue in the face,” Tim replied. “But he said there was nothing he could do about it because the story had already been sent to New York.”

“You can’t expect much from a journalist at that level,” Burden said pulling out his address book and flipping through the pages. He picked up the phone and put a call through to the personal assistant of Henry Luce, Time’s owner.

So: Time. Apparently at the beginning it was going to be called Facts. May I just say at this point that if news reporting on the internet as we currently know it should happen to get wound up in favour of dedicated news magazine ‘apps’ running on tightly controlled platforms, then – since you can’t link from the web to the content of a proprietary app – no one will be linking to the bullshit with an explanation of why the bullshit is bullshit. It’s pretty obvious that Steve Jobs is nostalgic for the corporate futurism of the 1960s – only now he gets to implement it, woo-hoo – and it just doesn’t look as though end user selectivity features large in any part of the Jobs vision. You’ll get what you’re given and call it knowledge.

Pretty much the only part of Africa I’ve spent any time in at all is Madagascar. I’ve visited twice. They’ve just celebrated fifty years of independence from France. Andy Rajoelina has failed to gain international recognition since he took over (with the support of the army): for what it’s worth, celebrations are reported to be muted as a consequence. I think you have to give the Malagasy population credit for two things. First, they know a stitch up when they see one. Pre-Rajoelina, a South Korean chaebol had some deal under negotiation where (in broad terms) they’d produce corn and bio-fuel on some immense percentage of Madagascar’s arable land (half of it?) and then get to keep all the corn and all the fuel. In return, the Malagasy at large would get, not rent exactly, but at least the promise of being allowed to work as agricultural labourers for the South Koreans. News of this ‘deal’ prompted the ouster of Ravalomanana. You wonder if even Philip K. Dick could have foreseen it. As it happens, Alex Perry sees good things in the ‘deal-making approach’ for Africa:

For all the heat, IMF officials admit that the Chinese model for African development has some advantages. First, it’s quick. Loan talks with multilateral agencies take years. The China-Angola discussions took weeks. “With the West, there are studies, analyses and bureaucracy,” says the Western official. “The Chinese just ask what the government wants, and they don’t question or comment or judge. They just do it.”

My understanding is that the South Koreans took a similar approach: they just asked the then president what he wanted. Lickety-split …

The other thing about the Malagasy is this. When they have a coup, they generally do it with the minimum of violence and fuss. Madagascar is not a wealthy country but it’s smart enough not to waste too much time and effort on civil war when what’s wanted is a change in the administration.

Our organisation does not tolerate failure?

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Re my earlier post, in case you were wondering if there were any actual cases of politicians making ambiguous calls for market reassurance, well, here’s a nice example from the G20 Toronto Summit Declaration:

There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth. Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016.

Whose confidence? And (fiscal) consolidation is necessary where? Halving deficits by 2013 is no small aim. It’s also a highly political aim – affecting many people in many constituencies – and so it seems to me that explicit justification is needed; not hand waving and vague talk of ‘confidence’.

Incidentally, the G20 organisation seems to talk quite a bit about ‘taking steps’ and ‘delivering concrete outcomes’. What, if anything, gives them legitimacy to even attempt to ‘take steps’? Many national constitutions require governments to ratify international treaties as and when they’re negotiated. Shouldn’t the G20 ‘steps’ count as treaties? My question here is only partly facetious. Shouldn’t they?

Our boys on the x front

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Uh oh. David Cameron’s moving into the phase of his leadership career where he says stuff out loud. For instance, he now has an official view on what our attitude to the military should be:

But supporting our Armed Forces isn’t just a government responsibility – it’s a social responsibility,” he said.

In the First World War those at home didn’t just sing ‘keep the home fires burning’, they practised it. In the Second World War, the military occupied a huge place in the national consciousness, partly because everyone knew someone in uniform.

I believe as a country at war we should see the same appreciation today, with the military front and centre of our national life once again.

Of course, we now have (a) an all-volunteer military and (b) a much smaller military, in terms of numbers in uniform. It’s odd that Cameron doesn’t seem to recognise these facts: they can’t but make for a large difference in the relationship between the military and the population in general. What’s harder to explain though, is why he felt the need to say something like this in the first place. I don’t detect any antipathy to the military itself, or towards its members: on the contrary, your typical Brit turns up at Navy Day, or any time there’s an RAF air show, and we are talking of attendances of up to 100,000. That looks like enthusiasm. So is it just that ‘public should support the military more’ is a current MOD talking point and he got briefed to say it? Or does it reflect Tory nervousness about the set of foreign policies inherited from New Labour?

The tragic emigres

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I’ve just finished Smiley’s People, the third and probably the best of John Le Carre’s Karla trilogy. It’s a great read, but here’s an interesting point: the book opens with the murder of a retired British agent, an Estonian called Vladimir. Le Carre goes to great lengths to portray Vladimir as the hopeless partisan of a hopeless cause – deserted and ultimately let fall by his erstwhile British case officer, and leading a group of ageing, ineffectual campaigners for the utterly lost and tragicomic cause of Estonian independence.

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