THE FUTURE OF THE EUROZONE: LORD KING'S PREDICTION
Mervyn King, the former governor of the Bank of England, predicts the collapse of the eurozone in a book published this week, going further than his well-known private scepticism for the European single currency.
In extracts from The end of alchemy: banking, the global economy and the future of money, he says the burden of debts between nations in the eurozone “may become too great to remain consistent with political stability”.
Highlighting the need for the eurozone to integrate more fully, including significant debt write-offs, he says the process will probably exceed the willingness of the European people to bailout other countries.
“Monetary union has created a conflict between a centralised elite on the one hand, and the forces of democracy at the national level on the other. This is extraordinarily dangerous,” the former governor says.
Lord King has expressed similar views before and railed against the requirement, only for debtor nations to adjust policies while in office. In 2013 he told the FT that the requirements on Greece and other eurozone periphery countries were best described as hell. “Instead of mere hell, it’s real hell,” he said.
Coming to the end of his 10 years in office, the then governor said it was “astonishing” that eurozone authorities had not realised the bloc needed higher inflation in Germany, permanent transfers from countries such as Germany to nations such as Greece, or to break up.
At the time he said: “I don’t know what the right answer is”, a view he has toughened in his book to say that attempts to find a middle way, in which Greece is offered concessional loans on lax terms by the rest of the eurozone, will not work.
“The attempt to find a middle course is not working. One day, German voters may rebel against the losses imposed on them by the need to support their weaker brethren, and undoubtedly the easiest way to divide the euro area would be for Germany itself to exit,” Lord King says.
Chris Giles, "Former BoE chief King predicts collapse of the Eurozone". The Financial Times
. 29 February 2016, in www.ft.com
One does not have to be either very pessimistic nor very anti-EU in order to readily agree with the prediction set-out in the former
Head of the Bank of England, Lord King's just released book. One simply has to recognize the fact that: the single currency has singularly failed to do what it was originally set-up to do: improve Europe's competitiveness and strengthen its economic performance. Au contraire
! The very opposite has in fact occurred. At least based upon the overall performance of the Eurozone countries from the base year of 2000 to the present. With both the United Kingdom and the United States easily outpacing the Eurozone in terms of economic growth as well as jobs growth. And as Lord King notes(among many others and for a good number of years now going back to 2008-2009), the single currency has for most of its members, especially its southern core, turned into the economic equivalent of a straitjacket: making the possibility of countries such as Greece, Spain, Portugal and Italy being able to depreciate their way out of stagnation (if not worse or much worse in the case of Greece) impossible. With Brunning-like austerity seemingly being the only mooted means of over-coming the current depressed conditions in these wretched countries. Au fond
, Lord King is of course correct in stating that:
"If the alternative is crushing austerity, continuing mass unemployment, and no end in sight to the burden of debt, then leaving the euro area may be the only way to plot a route back to economic growth and full employment. The long-term benefits outweigh the short-term costs."
HOW TO RESOLVE THE LIBYAN MORASS: A COMMENT
"Already people are claiming that the euphoria and calm after the fall of Tripoli could have been predicted and can be easily explained. But such civility was not inevitable; it could not have been assumed from Libyan history or culture. Libya shares many features of countries where anarchy has prevailed. Like Afghanistan or Iraq, it has a distinguished history and has experienced periods of stability but lacks the essential trinity of the international state-building apostles: ‘a vibrant civil society’, ‘rule of law’ and ‘good governance’. It has a rapidly growing young population, which is only partially educated, and few jobs. The traditional forces of tribe and Islam co-exist with more cosmopolitan aspirations, as they do in the rest of the Islamic world....
But it would have been easy to take the same factors – a weak Gaddafi state, a light foreign footprint and a weak rebel government – and assume these were ingredients for disaster. This is why the major lesson of the post-1989 interventions should not be a renewed confidence in ‘the responsibility to protect’, or a belief that we have found a new secret recipe in targeted air-power. We shouldn’t think we know how to construct ‘a transitional administration’; even to attempt to pin down the common elements in the successful cases – population size, GDP per capita, ethnic composition – would be misguided....
The lesson of all this shouldn’t be inaction. Intervention isn’t doomed to fail – countries can turn out unpredictably well, as well as unpredictably badly. If we cannot come to any satisfactory conclusions on the London riots – a limited event, exhaustively documented, in our own capital – what sense can we make of why they did not riot in Tripoli?""
Rory Stewart, "Because we weren't there?" The London Review of Books
. 9 September 2011, in www.lrb.co.uk
"U.S. warplanes carried out airstrikes against ISIS-linked militants in western Libya on Friday, killing as many as 40 people in an operation targeting a suspect linked to two deadly attacks last year in neighboring Tunisia.
It was the second U.S. airstrike in three months against ISIS in Libya, where the hardline Islamist militants have exploited years of chaos following Moammer Gadhafi's 2011 overthrow to build up a presence on the southern shores of the Mediterranean Sea.
The Pentagon said it had targeted an ISIS training camp and killed a Tunisian militant linked to major attacks on tourists in Tunisia"
The Daily Star
. "US warplanes strike ISIS camp in Libya, 40 killed". 19 February 2016 in www.dailystar.com.lb
In retrospect it would be very easy indeed to make fun of the hopelessly optimistic prognosis of Rory Stewart, who is now an important Tory backbench member of Parliament, about Libya circa
the autumn of 2011. At the time of course, his optimism appeared very justified indeed. We now know of course that many of the variable which he thought had been overcome: a weak Gaddafi state, a light foreign footprint and a weak rebel government – and assume these were ingredients for disaster
, were and are indeed the very forces which have resulted in the chaotic morass that is contemporary Libya. A situation which appears to be no closer to being resolved or made any better. As the two (yes, two) weak governments contend with each other and at the same time prove completely unable to resolve either separately or in conjunction, the crisis of power and authority that exists in Libya at the moment. Truly a veritable Hobbesian 'omnium bellum contra omnes'
, which the terrorist hooligans of ISIS are only too happy to operate in. As they have in fact been successfully doing. American air strikes, while to some degree a 'good thing', is of course, much too intermittent and episodic to be of much underlying good. The only thing that can change the situation in Libya, is some form outside military intervention by Western forces. And by 'Western forces', I mean of course ground forces. Involving anywhere from ten to twenty thousand troops both to mop up and destroy ISIS and at the same time, provide the stability necessary for any semblance of order and authority to be restored. This idea of outside intervention is per contra
to the utopian concepts of how to restore order in Libya that some commentators such as Mr. Teller of Eurasia Review have been offering up for the past few years:
"So, yes, something must be done – but it cannot be imposed from the outside. Libyans themselves must put aside local rivalries and come together to establish a government of national unity. A democratically elected parliament is the arena in which political battles are best fought 1."
Which in other circumstances would perhaps indeed be great words of wisdom. But in the current situation, it is a counsel of not only inaction but even despair. In the debacle and chaos that is contemporary Libya, something indeed must be done and quickly. Before a horrendous situation gets even worse on Europe's very doorstep.
1. Neville Teller, "Libya: Something Should Be Done". Eurasia Review
. 19 February 2016, in www.eurasiareview.com
THE SINO-AMERICAN CONFRONTATION IN THE SOUTH CHINA SEAS: A COMMENT
"The US accused Chinese President Xi Jinping on Wednesday of breaking a pledge not to militarise the South China Sea after satellite images showed the deployment of anti-aircraft missiles to one of the islands China controls.
John Kerry, US secretary of state, said the Obama administration would have a “very serious conversation” with China about its growing military presence in the South China Sea.
Civilian satellite images showed the apparent presence of two missile batteries on Woody Island in the Paracel island chain, the latest sign of escalating tensions between the US and China in the South China Sea, which have included two patrols in recent months by the US navy near disputed land features.
Responding to reports about the missile deployments, Mr Kerry referred on Wednesday to the September statement by the Chinese leader about the South China Sea during a visit to the White House.
“When President Xi was here in Washington, he stood in the Rose Garden with President Obama and said China will not militarise in the South China Sea,” he said. “But there is evidence every day that there has been an increase of militarisation of one kind or another. It’s of serious concern.”
Mr Kerry added that, “we will have more to say on this in the next days for sure".”.
Geoff Dyer, "US rebukes China for ‘militarisation’ of South China Sea". The Financial Times
. 18 February 2016, in www.ft.com
"Sovereignty, at its most basic, means physical control of territory and airspace within certain lines inscribed on the map. Physical supremacy in the South China Sea would let Beijing dictate the rules whereby ships and aircraft pass through regional waters and skies. It would also let Beijing reserve the right to close Southeast Asian sea routes to foreign shipping should it see the need — making one of the world’s great nautical thoroughfares a no-go zone.
So enough with the tit-for-tat debate over who militarized what in Southeast Asia. Navies are the guardians of freedom of the sea. When someone lodges unlawful claims, navies flout those claims to keep them from calcifying into international practice and, perhaps, into customary international law. China, therefore, can always claim America was the first to militarize the South China Sea controversy — a controversy that China itself created by challenging freedom of the seas. If Beijing won this point, it’s a trivial one. It’s doubtful anyone will buy the narrative that a hegemonic United States is bullying poor little China.
And on and on the Clausewitzian dialogue by displays of force will go. To reply to China’s HQ-9 challenge, the United States and its Asian allies must demonstrate that they can exercise maritime freedoms despite the worst the PLA can throw at them. They should also ponder how to prove that they could take down Chinese missile sites should the worst come. If they do that, they may make believers of the Chinese and other observers—and bolster their likelihood of deterring future Chinese misconduct".
James Holmes, "The Great Debate: What makes just 16 missiles such a deadly threat in the South China Sea". Reuters
. 19 February 2016, in www.reuters.com
One does not have to be especially distrustful of the regime in power in Peking to not take seriously the protestation of the Peoples Republic that it is the Americans and their allies who are at fault in the question of the arming of the South China Seas. By definition it is Peking's recently moves first to endeavor to exercise by intimidation and to a small degree force spurious claims to islands in the South Seas, then to militarize them, which are at fault. All of Peking's claims that:
"It is Washington that is fanning up the flames by flexing its muscles in the South China Sea and by emboldening nations in their territorial disputes with China" 1.
Would be laughably absurd if the situation were not so serious. Au fond
of course Peking is playing the role of a spoiler and a paper tiger. If the Americans and their allies were to seriously challenge Chinese via various military exercises akin to what the Americans did in the Formosa Straits circa 1995, we would see soon enough that Peking would stage a very quick retreat. The motivations for Peking's policy being a mixture of primat der Aussenpolitik
and primat der Innenpolitik
. With the latter variable having more influence no doubt over Peking's policy then the former. What has to be avoided at all costs is a feckless policy of appeasement, in which the United States fails to exercise the requisite amount of leadership and strength to confront the PRC. Left to itself, without the appropriate response by the Americans and their allies, Peking will of course feel emboldened to stretch its
military muscles more and more, not less and less. As the petit-histoire
of this issue of the past half-dozen years clearly shows. As the late, great scholar (if morally not so great) Edward Hallet Carr
once aptly put it almost eighty years ago in 1939:
"Military power, being an essential element in the life of the state, becomes not only an instrument but an end in itself. Few of the wars of the last hundred years seem to have been waged for the deliberate and conscious purpose of increasing either trade or territory....It is perhaps for this reason that the exercise of power always begets the appetite for more power 2."
1. Zhu Dongyang, "Commentary: FM's visit to remind Washington of China's core interests". Xinhua.
23 February 2016 in www.news.xinhuanet.com/english
2. E. H. Carr. The 20 years' Crisis, 1919-1939
. (1939). pp. 111-112.
HOW TO DEAL WITH POPULISTS: A DIFFERENT POINT OF VIEW
"Mainstream politicians across Europe face serious challenges from populist and xenophobic parties. How should they respond? One thing is certain: excluding such parties from the political process does not work; it only lends them more support. Bringing them into the fold makes more sense. The contrasting experiences of Finland and Sweden bear this out.
The anti-immigration, populist Sweden Democrats are on a roll. In an opinion poll carried out shortly before Christmas, 18.9 per cent of voters said they intended to vote for the insurgent party in the 2018 general election. A crackdown on the numbers of asylum seekers trying to enter Sweden announced by the centre-left government in November reflects the extent to which the Swedish Democrats have shaken up the country’s politics.
In Finland, by contrast, the True Finns, one of the first populist parties in Europe to seize on voters’ anger over eurozone bailouts, are struggling. The difference? While Sweden’s mainstream parties have refused to co-operate with the Sweden Democrats, the True Finns are part of a centre-right coalition government. The result? The more serious the refugee crisis has become in Sweden, the more support the Sweden Democrats have gained. The reverse is true in Finland....
The central paradox in European politics today is the following: on the one hand, countries are attempting to integrate newcomers from outside Europe who often subscribe to quite alien political values. On the other hand, politicians exclude substantial numbers of their own citizens for the same reason. We welcome refugees, while telling some of our compatriots to shut up.
Both groups — refugees and supporters of populist parties — include extremists and fanatics. We must not let the irresponsible behaviour of the few colour our attitude to the many. I do not claim to know what the supporters of Marine Le Pen in France or Geert Wilders in the Netherlands are like. But I do know that a majority of the supporters of Timo Soini’s True Finns are decent people. If we are willing to give the benefit of the doubt to the newcomers, we should be willing to do the same for our own citizens.
Demonising your opponent is an age-old strategy. It was applied during the Thirty Years War by both sides. It was used again during the cold war. And it is being used now.
The solution to the threat of populism is not to pretend that we agree with the xenophobes. Rather, we should welcome them in the political process. As long as they abide by the rules of an open democratic society, we must engage with them. If they go beyond the pale, then we should beat them in elections. That is what European democracy is all about. Right?"
Risto Penttila, "We should engage with xenophobes, not silence them". The Financial Tim
es. 9 February 2016, in www.ft.com.
"Stupidity is for the vast majority of people, no doubt the only solution to the problem of thinking".
T. S. Eliot.
While I whole heartily agree with the sage observation of the man who taught me how to think as it relates to the conceptual capacity or lack thereof of the vast majority of my fellow human beings, the fact of the matter is that as long most of mankind is governed by a system of government which mandates that almost everyone, including convicted criminals (in some cases) and registered idiots and lunatics (in others) are able to participate in the political process, then one is forced to engage with respect with the 'vast majority of people'. Given the socioeconomic ramifications of our post-industrial / post-modern society, in conjunction with the slowing of economic growth in the West in the past ten years, it is not in the least surprising that 'populist' parties of various types have emerged in Europe. Or in the case of the United States, populist personalities and candidates. Which is not to gainsay the fact that such developments are more often than not to be deplored and bemoaned. Id. est., no one in their right mind, can view with favor the political success of such a horrible demagogue as Mr. Donald Trump. Or for that matter (albeit an infinitely more intelligent man) Senator Sanders of Vermont. That dislike or detestation which I share with our bien-pensant
elites, cannot gainsay the fact that the masses of people who are supporting the Trumps, the Sanders, the Le Pen's and the Wilders cannot be made to disappear. As the very very cogent arguments of Mr. Penttila
in the Financial Times clearly delineates, what is needed in dealing with populists is not denunciation but an intelligent and subtle
outreach. An endeavor in fact to try to assuage their concerns and political aspirations. As Mr. Penttila rightly notes: these people are our fellow citizens and not beings from outer space or for that matter from abroad. They are entitled to be respected and if they are willing to play the democratic game, some form of political compromise with them is necessary. That is to my way of looking at the matter, a far more intelligent way of dealing with the rise of populist parties, movements and personalities than the traditional bien-pensant's de haute en bas
ways of dealing with the same. Ways which have proven to be uniformly unsuccessful.
THE CEASE-FIRE IN SYRIA: WHAT DOES IT PORTEND?
"World powers have agreed to implement a nationwide “cessation of hostilities” in Syria by the end of next week in an effort to salvage the peace talks that crumbled last month.
The breakthrough — announced at a meeting in Munich of the International Syria Support Group, the countries whose influence is critical to the outcome of the five-year war — will pave the way for opposition and regime parties to meet again under the auspices of the UN in the coming days.
The ISSG communique outlines three key areas of agreement. First, a commitment to implement a cessation of hostilities, nationwide, by the end of next week. A UN task force, co-chaired by Russia and the US, will begin meeting on Monday to outline the “modalities” for the cessation of hostilities and the pathway to cement them into a permanent ceasefire. The task force will also agree on which areas are judged to be under terrorist control and, therefore, legitimate to target with air strikes.
Second, a commitment to meet all existing UN humanitarian access requests. A second UN task force will be established to ensure full compliance by all fighting groups in Syria. Aid drops by parachute and by convoy will begin immediately, the ISSG communique states.
Third, the ISSG reiterated the urgency of reopening the formal UN-led peace process.
Speaking at a press conference late on Thursday night in Munich, John Kerry, US secretary of state said: “We have taken a different step than we, the ISSG, have done previously. Today we decided on a process, on a timeframe, and we all agreed to do everything we can to meet that.
“This is ambitious but everyone is determined to move as rapidly as possible to try to achieve it.”
Sergei Lavrov, Russia’s foreign minister, said it would be a 'complicated task'".”
Sam Jones, "World powers agree path to Syria ceasefire". The Financial Times
. 12 February 2016, in www.ft.com
"A diplomatic push for a temporary pause in Syria's civil war and the delivery of humanitarian aid faced huge hurdles Friday, with Russia saying it would continue its airstrikes and government planes dropping leaflets urging rebels to surrender because "the belt is narrowing around you."
A plan for the "cessation in violence" announced by the U.S. and Russia does not go into effect for a week, and while the Syrian opposition expressed "cautious optimism," it also said more innocent civilians would be killed in that span.
Government forces, aided by a withering Russian bombing campaign, are trying to encircle rebels in Syria's largest city of Aleppo and cut off their supply route to Turkey. Another week of fighting could bring the Syrian troops closer to that goal.
Syrian forces recaptured several strategic hills north of Aleppo and are in position to target the final supply line to the rebel-held eastern suburbs, according to Al-Manar TV, a Lebanese channel run by the militant group and Syrian ally Hezbollah.
Heavy fighting between government and opposition forces occurred south of Aleppo, around the town of Tamoura, according to the Britain-based Syrian Observatory for Human Rights. It said 12 fighters of the al-Qaida-linked Nusra Front were killed.
U.S. Secretary of State John Kerry praised the agreement in Munich as a significant accomplishment in the five-year war, but he noted that a cessation of hostilities, if achieved, would only be a "pause" in the fighting and that more work would be needed to turn it into a full-fledged cease-fire.
He also said the agreements made were "commitments on paper" only. "The real test is whether or not all the parties honor those commitments and implement them," he told reporters after the nearly six-hour meeting concluded early Friday....
Lavrov made clear that Moscow will continue airstrikes on Aleppo and other parts of Syria because they are targeting groups that are not eligible for the "temporary cessation of hostilities"'.
Bassem Mroue & Matthew Lee, "Diplomats aim for temporary Syria truce in a week". Associated Press
. 12 February 2016, in www.ap.org
One does not have to be as pessimistic as Kathy Gilsinan is in the current edition of the American periodical the Atlantic
to be skeptical about the peace plan / cease-fire agreed to by the Americans and their allies and Moskva and its allies. It is self-evident merely from the statements coming out of Russia as well as Damascus that for Putin & Assad, any cease-fire plan is at best a pis-aller
preparatory to the fall of Aleppo to Assad's forces 1. There is nothing to indicate or to show that Putin & Assad are truly interested in a halt to fighting. Far from it as per what is being said. Accordingly, what the Americans and their allies need to decide and quickly as possible is: what are its goals in this conflict
? The defeat of the terrorists of ISIS or the ouster of Assad? Or both? If the latter, then one can only conclude that the Americans do not have the will and the Europeans and the Sunni powers of the region lack the means to accomplish both. A tactical situation which is the polar opposite of that of Grazhdanin
Putin. Moskva's goals being both narrow in scope (prop up the Assad regime and prevent it from falling at a minimum) and it would currently appear achievable. What needs to happen in Syria is that the Americans & their allies must rethink what their achievable goals are. In the absence of such, all the cease-fires in the world will accomplish nothing.
1. Kathy Gilsinan, "What Happens If Aleppo Falls? Why the Syrian war—and the future of Europe—may hinge on one city". The Atlantic
. 11 February 2016 in www.theatlantic.com
THE WAR IN SYRIA: CHANCES OF SAUDI MILITARY INTERVENTION?
"Saudi Arabia is discussing plans to deploy ground troops with regional allies, including Turkey, for a safe zone in Syria, in a last-ditch effort to keep alive a rebellion at risk of collapse as a Russian-backed offensive by Syrian regime forces encroaches on the northern province of Aleppo.
Although western officials have dismissed the plans as lacking credibility, they are a sign of the desperation that many of Syria’s opposition backers feel towards what looks like an increasingly bleak outcome in the war. Two people familiar with Saudi plans told the Financial Times that high-ranking Gulf officials are in Riyadh meeting Turkish officials to discuss options for deploying ground troops to head a coalition of fighters inside Syria....
President Bashar al-Assad’s forces, bolstered by Iranian-funded Shia militias, advanced last week into opposition-held territory in Aleppo’s northern countryside under the cover of Russian air strikes. The violence prompted thousands of civilians to flee, exacerbating the already vast humanitarian crisis....
The plans appear to be led by Riyadh’s defence minister and deputy crown prince, Mohammed bin Salman, whose involvement makes some diplomats reluctant to rule out an attempted intervention. “I see all kinds of red flags. But there is a new level of unpredictability and erratic behaviour in the new Saudi government,” said one western diplomat. “With Mohammed bin Salman, you just don’t know.' "
Mehul Srivastava, Erika Solomon, Simeon Kerr and Geoff Dyer, "Saudis make plans to deploy ground troops in Syria". The Financial Times
. 9 February 2016 in www.ft.com
"Saudi Arabia has offered for the first time to send ground troops to Syria to fight Islamic State, its defence ministry said on Thursday.
“The kingdom is ready to participate in any ground operations that the coalition (against Isis) may agree to carry out in Syria,” said military spokesman Brigadier General Ahmed al-Asiri during an interview with al-Arabiya TV news.
Saudi sources told the Guardian that thousands of special forces could be deployed, probably in coordination with Turkey....
Asiri suggested that recent progress against Houthi rebels in the war in Yemen was allowing Saudi Arabia to free up forces for deployment in Syria. A decision could be taken at a Nato summit in Brussels next week.
“There is frustration with the current efforts put in place to fight Daesh,” said the Saudi analyst Mohammed Alyahya.
“Increasingly, it seems that none of the forces on the ground in Syria (besides rebel groups) is willing to fight Isis. The Assad regime, Iran, Russia, and Hezbollah are preoccupied with fighting Bashar al-Assad’s opposition with one ostensible goal: to keep Bashar al-Assad in power, irrespective of the cost in innocent Syrian lives'".
Ian Black, "Saudi Arabia offers to send ground troops to Syria to fight Isis ". The Guardian
. 4 February 2016 in www.theguardian.com
One does not have to be especially anti-Saudi (by the bye: is there anyone who can be characterized as 'pro-Saudi'?) to view the news stories which are coming out of the region with some degree of skepticism. Why so
? Simply put, the Saudi army with or without its Gulf allies has never prove to be erste-klasse
soldiers. Nor has Saudi Arabia ever provided the world with any examples of its military being able to fight abroad successfully against a fully equipped and trained opponent as they would find in Syria (Assad's forces, Hezbollah and Persian forces). Certainly the performance of the Saudi-lead force in Yemen in the recent past, with its overwhelming reliance on air-power, can hardily said to provide an example of an outstanding military performance. Something to keep in mind, especially in light of the dominance that the Russian air force currently exercises in most parts of Syria. With the recent gains by Assad forces in Aleppo, heavily backed by Russian air support and Persia / Hezbollah ground forces, the diplomatic noise that it coming out of Riyadh is I would submit more for domestic and internal Saudi Arabian consumption than anything else.
Which is not to gainsay the fact that the current regime in Saudi Arabia is more inclined, once again for primat der Innenpolitik
to be seen as more of an active player
in the diplomatic and military chessboard in the Near & Middle East. Time will of course tell.