Category Archives: Transition and accession

Science Fiction?

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“What do I think about the legacy of Atatürk, General? Let it go. I don’t care. The age of Atatürk is over.”
Guests stiffen around the table, breath subtly indrawn; social gasps. This is heresy. People have been shot down in the streets of Istanbul for less. Adnan commands every eye.
“Atatürk was father of the nation, unquestionably. No Atatürk, no Turkey. But, at some point every child has to leave his father. You have to stand on your own two feet and find out if you’re a man. We’re like the kids that go on about how great their dads are; my dad’s the strongest, the best wrestler, the fastest driver, the biggest moustache. And when someone squares up to us, or calls us a name or even looks at us squinty, we run back shouting ‘I’ll get my dad, I’ll get my dad!’ At some point; we have to grow up. If you’ll pardon the expression, the balls have to drop. We talk the talk mighty fine; great nation, proud people, global union of the noble Turkic races, all that stuff. There’s no one like us for talking ourselves up. And then the EU says, All right, prove it. The door’s open, in you come; sit down, be one of us. Move out of the family home; move in with the other guys. Step out from the shadow of the Father of the Nation.
“And do you know what the European Union shows us about ourselves? We’re all those things we say we are. They weren’t lies, they weren’t boasts. We’re good. We’re big. We’re a powerhouse. We’ve got an economy that goes all the way to the South China Sea. We’ve got energy and ideas and talent – look at the stuff that’s coming out of those tin-shed business parks in the nano sector and the synthetic biology start-ups. Turkish. All Turkish. That’s the legacy of Atatürk. It doesn’t matter if the Kurds have their own Parliament or the French make everyone stand in Taksim Square and apologize to the Armenians. We’re the legacy of Atatürk. Turkey is the people. Atatürk’s done his job. He can crumble into dust now. The kid’s come right. The kid’s come very right. That’s why I believe the EU’s the best thing that’s ever happened to us because it’s finally taught us how to be Turks.”

The Dervish House by Ian McDonald, pp. 175-76

Enter transition, Exit conditions

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Compare and contrast: IMF statement on Egypt –

“A number of fundamental structural reforms, including the transition to a VAT-like consumption tax and reform of the highly inequitable and costly system of subsidies, are needed to improve the efficiency of public spending and help reduce the fiscal deficit in the medium term. We share the government’s view that immediate implementation of such reforms is not feasible in the context of this arrangement as additional preparatory work is needed to ensure that an effective safety net is in place to protect the low income households. The government intends to prepare a road map to facilitate implementation of these reforms in the future.”

IMF statement on Belarus –

“We have also initiated discussions on a possible IMF program. This has only been the beginning of our discussions and we still have a long way to go. We need to have further negotiations on macroeconomic policies. We will also need to agree on structural reforms to improve the efficiency of enterprises and the financial system so that in future growth will be strong and durable. Above all, the authorities have to be committed to macroeconomic stabilization and structural reforms. We will have to agree on strong stabilization and structural measures which would be implemented prior to the program and would demonstrate their commitment.”

To spell it out, Egypt and Belarus are both looking for around US$3 billion.  Egypt gets it with an explicit deferment of structural reforms as long as there is an “action plan.”  Belarus will have to do reforms before there’s a loan.  Does anyone else see a political version of moral hazard here?

How I was wrong about the euro

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This Transitions Online piece is fascinating – as south-eastern Europe has changed, the location of “Europe” or “the West” has swung around all over the place. Once upon a time, Bulgarians and Romanians looked at Yugoslavia as the future, a better version of their own society, and both a reasonable substitute for Germany or Italy and a transit route on the way there. People watched Yugoslav TV illegally. Then, the earthquake, the nightmare. Nobody wanted to be anything like it. People in what had been Yugoslavia looked east, both because there was peace, because that was where the smuggled fuel came from, and also for political support.

Meanwhile, people in the rest of the Balkans looked north at Hungary or south at Greece. Of course, that was because the European Union came to them. Now, well, not so much. If there was ever a time to be eurosceptic, this is the moment. Greeks are quite possibly looking north and wishing they weren’t in the eurozone.

I remember that in the mid-1990s, I was quite sceptical about the single currency for the usual reasons from the left – basically, Keynesian concerns. Having grown up in a succession of recessions, the prospect of joining the Stability & Growth Pact and signing up to the monetarist second pillar of what wasn’t then the ECB didn’t seem great. However, I was (still am) very pro-European on all other issues and eventually I came round to it for not much of a better reason than that it offended the right people. Also, this was the early 2000s and economic policy based on rules seemed to be a pretty good idea. As it happened, of course, when a dose of stimulus was wanted this didn’t keep anyone’s hands out of the medicine chest. Neither did the austerity hold back anyone who was determined to have a monster property boom.

The other big concern was the optimal currency-area problem – could the interest rate be right for the whole eurozone? This is about the most conventional critique of the euro there is. In the UK, it used to be quite a commonplace that the country itself wasn’t an optimal currency area, with the corollary that it therefore didn’t matter so much about the euro. I never quite grasped the logic here, although I admit I may have used the argument. Perhaps the underlying thinking was that there is really no such thing as an optimal currency area – a currency system that was sufficiently decentralised to offer an optimal credit environment in its whole territory would have such high transactions costs it wouldn’t be worthwhile, and therefore we would always have to tolerate some inefficiency due to this effect.

So I was very pro-euro and pro-European while it was a live issue in the UK (about 2003, IIRC – I wonder what happened then?).

What I don’t remember anyone discussing much was the Eurosystem as opposed to the Euro or the ECB – the transactional, flow-of-funds financial workings between the member central banks and the ECB. Nor do I remember anyone talking very much about the fact that the ECB doesn’t have an explicit lender-of-last-resort function. And even discussing whether member states should do anything to manage their trade balances with one another – that was so far out of fashion, of course, that even I didn’t give it any thought.

Of course, this was the bit that bit us.

To put it another way, we argued enormously about the fiscal aspects of the Euro, which turned out to be absurdly easy to fudge when it became necessary to do so. We argued quite a bit about interest rate policy. We hardly even mentioned banking or the issue of money. This is quite a cock-up when you remember we were talking about setting up a new central bank. No wonder west is north and east south.

Is this just my fault? Was there serious discussion of how the Eurosystem might work or not in a financial crisis back in the 90s? Working on my own private black swan theory – apparently unlikely events are both predictable and usually predicted, but they tend to be ones it was unrespectable to predict – somebody must have been.

Also, has anyone else in Britain changed their mind, or is it only me?

Ron Asmus, RIP

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Ron Asmus, a key person in the 1990s enlargement of NATO and a tireless advocate of better European and transatlantic relations, died on Saturday, April 30. He was 53.

The Economist’s Eastern Approaches blog writes:

He was a discreet, wise and sympathetic presence in the region, in Washington DC, and in West European capitals for two decades, explaining to jittery ex-communist politicians that volume and frequency of public utterances does not correlate with effectiveness, to American officials and politicians that the goal of “Europe whole and free” still required patient and detailed work, and to West European leaders that a security grey zone in the east would be as bad for them as it would be for those consigned to it.

Just so.

He will be much missed, even among people who barely knew him, and his efforts missed among people who knew him not at all.

Finalité Revisited

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Shortly after the big round of EU enlargement in 2004, I took a look at future prospects for enlargement. At the time, I called prospective members, “largely a collection of the poor, ill-governed and recently-at-war.” Most of them are much less recently at war, many of them are better governed, and almost all of them are less poor, yet for all but a few prospects for EU accession seem to me more distant than in 2004.

What has happened?
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Panning back to Egypt…

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A couple of weeks ago, the big question had ceased to be “Will there be a revolution in Egypt?” and had become “Will it matter?” The revolutionaries had demonstrated that they could endure, could divide the Army from the government and the security state, and had eventually succeeded in chasing the president out of power. But would this mean lasting change? Wouldn’t it just imply the creation of a new ruling elite, or a permanently-temporary military junta? The grey lineup detailed here were in charge, issuing statements about going back to work. This piece from David Wessel of the Wall Street Journal sketches it out, and reveals far more than it means to.

It’s easy to sketch the scenario in which Egypt blows it. The army could maintain control behind a façade of democracy and protect elites who benefited from the growth produced by significant economic reforms that Mr. Mubarak blessed. Four things have to go right for Egypt to seize the moment.

First, the young protesters of Tahrir Square have to keep the pressure on the military. A lot depends on which way they go. If they’ve been soured by privatization that engorged the cronies, will they demand the security and subsidies of the state over the risks, competition and dynamism that comes with a vibrant private sector? In short, do they want government jobs? Or a shot at being hired—and maybe fired—by an entrepreneurial company?

Of course, the policies those elites benefited from are precisely the ones he goes on to advocate, and the ones that the IMF recommended and Mubarak implemented. Wessel alludes to this further down the piece but never quite manages to say that the Egyptians hated them so much they overthrew the state. Also, although he compares Egypt with Poland after communism, he doesn’t seem to be aware that a major factor in Poland’s revolutions (1981 and 1989) was that the state got huge international loans it couldn’t pay back.

Anyway, so that was one scenario – the military guarantees some constitutional change but keeps the political economy and the power-structure Mubarak left.

It doesn’t seem to be working. Mohammed Fadel has a good rundown of the Army’s (and the Muslim Brothers’, and the 2005-era middle class dissidents’) efforts to put pressure on strikers, their eventual failure, and some of the economic ideas circulating among the revolutionaries. Apparently, the military has eventually been induced to open talks with the real trade union movement as opposed to the yellow unions that were part of Mubarak’s system. You can read their negotiating position at guess who’s.

But perhaps the best news of all isn’t economic. Here’s some incredible reportage of an incredible and very significant event – the crowds take over the headquarters of Central Security in Alexandria, and start salvaging the secret files the spooks were trying to destroy.

I wouldn’t bet on the holy-of-holies in Cairo lasting much longer – Hossam el-Hamalawy has already been down to his local station with his Canon EOS 5D and his angry mob. Guess what, that’s full of files as well.

In 1989, something similar happened – when it looked like the post-Wall East German government might be stabilising, and that it felt confident enough to tell the public that it was going to retain the Stasi although under a new name, people invaded the organisation’s offices to secure the key assets of any secret police force, the files. It was the end, really; there could be no more hoping for some sort of patched-up afterlife for the basic structure of the DDR. This time there was much more violence, and the spook toys included a sinisterly large stash of Viagra – the Stasi did a fair amount of drug dealing as part of its efforts to raise hard currency, but nothing with those implications.

There probably weren’t many documents like this one in the files at the Normannenstraße either.

The upshot includes the resignation of Mubarak’s last prime minister. In an almost uncanny echo of East Germany, he went on TV not long before the crowds moved into the secret police stations, to defend the institution of Central Security. Just like Hans Modrow did, and with exactly the same effect. His exit was announced via the Egyptian Army’s facebook profile.

His replacement is profiled here – Essam Sharaf, significantly, is both a candidate endorsed by the revolutionaries and a participant in the revolution himself, as well as apparently enjoying a good reputation with the workers’ movement as far back as 2006.

épuration, crowdsourced

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I’m not sure what either Ethan Zuckerman or Evgeny Morozov would make of this, but this is quite the revolutionary web crowdsourcing project. Piggipedia is an effort by Egyptian Flickr users to pool their photos from the revolution and identify the plain-clothes cops and private thugs responsible for the worst of the violence, with a view to prosecuting them or failing that, just ostracising the hell out of them. I presume this is also going to be a rare deployment outside China of the human flesh search engine. If sex infects new media like a virus, yadda yadda William Gibson feh, just wait ’til you see how revenge does.

The most useful article you’ll read on Egypt this week

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Is here. How did we get to the position where the red flag and the desert eagle were suddenly back ahead of the star and crescent? How do the Muslim Brothers and other Islamists interact with the Left? Where did those people come from?

As a Revolutionary Socialist member who was active in the 1990s recalls: “We were a kind of leftist the Muslim Brothers hadn’t met before. They couldn’t quite figure us out at the beginning. Anyway, we were still too marginal for them to bother with. We were only a few individuals.” This began to change in 1999. On a few occasions in that year, as one socialist remembers, the Muslim Brotherhood students at Cairo University allowed the Revolutionary Socialist students to speak at rallies held on campus against the US airstrikes on Iraq. The socialist students took this unprecedented opportunity as a sign of the Muslim Brothers’ recognition that they were a force that had to be given a place on the political stage. It was a step in a long, slow process of building trust.

“…Only one heli left on the ground and it’s running”

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It’s officially wheels up for Hosni Mubarak. Rather, that particular landmark was reached an hour ago:

I can also see mubarak residence airport. 5 helicopters used to be there, only 1 left on the ground & it’s running

Anyway, the promised statement, as fashionably late as usual, arrived and it confirmed his resignation. This after an incredible afternoon during which Nile TV’s newsreader argued on air at length with the crowds outside the TV headquarters, before apparently apologising for their past coverage after an Army spokesman read out the resignation letter. From Sultan al-Qassemi of The National‘s twitter feed:

Fascinating: Egypt State TV is speaking live with anti-Mubarak protesters surrounding the State TV building http://yfrog.com/gyahfhpj

The news anchor is pleading with the angry protesters “You know there was a period of chaos, we all want there to be more freedom of speech”

Protesters surrounding State TV building: We demand an apology for your coverage of Bloody Wednesday! On air Anchor : Calm them down please

[Sultan Al Qassemi]:The State TV anchors are terrified. There are tens of thousands of protesters surrounding the building who are unhappy with the coverage.

Egypt State TV anchor is speaking to a go between “Please assure the protesters. Please”

And then, from Port_Saeedy:

Egyptian TV News reader : We apologize , we read lies against our own..

The next message recorded the arrival of the Army spokesman. The on-air apology happened in Tunisia, but I’m at a loss for a historical example of a TV station actually arguing with the general public in real time and losing without any actual violence being used.