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Friday, 29 June 2012

29 June 2012


You probably haven't been counting -- but I'm told that this week's meeting of EU leaders in Brussels is the 19th they've had since the debt crisis exploded. And as you'll have noticed, they haven't come up with a solution just yet.

In fact, quite the opposite. The tensions are greater, the differences deeper, the fears more profound than at any time since this whole wretched business began. And some commentators are wondering if it's not merely the survival of the euro that's at stake, but the survival of the European Union itself.

The deal they announced late last night -- to allow eurozone rescue funds to be used to prop up banks in trouble, without adding to a government's debt burden -- is unlikely to do more than offer a few days' respite. All the evidence of the past couple of years is that these mini-deals tend to be forgotten almost as soon as they've been agreed.

I remember for much of the 1990s traipsing around from EU capital to EU capital, sitting in cavernous media centres at summit meeting after summit meeting, as presidents and prime ministers drew up their master plan for a single currency that would somehow work without either political or fiscal union.

They gave the impression that they were driven by a deep conviction that political will alone would see it through. And -- for a time -- it did. What they didn't predict was that unlimited cheap credit in countries with weak economies would lead to an epidemic of rash lending (remember all those admiring articles about Ireland, the "Celtic tiger"?), which in turn would lead to a spectacular bust.

So now we are where we are. And no one -- not political leaders, nor central bankers, nor economists -- can agree on where we should go from here.

Take the idea of a European banking union, designed to coordinate banking regulation and oversight. This is how an article in The Independent summed up the current state of play: "Britain and Romania are in favour of a banking union but will not join it. France, Austria, Belgium and Cyprus want two tiers – one for the eurozone and one for the 27 EU nations. Others, including Luxembourg, would only support the idea if all 27 join it, while the Czech Republic, Denmark, Finland, Hungary, Lithuania, Netherlands and Sweden are against the plan."

If you can find a way through that little lot, there are several well-paid officials in Brussels who would love to hear from you.

So what about eurobonds, which would in effect pool eurozone debts (ie make Germany pay them off)? In an uncharacteristically colourful phrase, the German chancellor Angela Merkel has dismissed the idea outright: "Not as long as I'm alive."

Here's what she suggests instead: "We need more Europe, we need not only a monetary union, but we also need a so-called fiscal union, in other words more joint budget policy … And we need most of all a political union, that means we need to gradually give competencies to Europe and give Europe control."

The German view can be summed up easily enough: "You don't get something for nothing." If countries in trouble want help from Berlin, they'll have to offer up a chunk of sovereignty. To put it crudely, if you can't run your affairs without our help, fine, we'll run them for you.

Oh, and just in case you were thinking "Thank God the UK never joined the euro", along comes the banks' lending rate rigging scandal, described yesterday in the London financial newspaper City AM as "a disastrous own goal" for the City of London.

In the words of the paper's editor, Allister Heath: "Barclays and the entire banking industry have been badly damaged by the Libor manipulation scandal – and this time it is entirely a crisis of their own making … The City’s reputation as a trustworthy marketplace will take years to recover."

So you have moves in the eurozone to devise a system of greater oversight for banks and other financial institutions. You have a London financial services industry that makes a substantial contribution to the nation's wealth, now embroiled in a series of scandals (you haven't forgotten the NatWest IT melt-down, have you?) -- and a British prime minister who, because the UK is outside the eurozone, may find it increasingly difficult to make his voice heard when these things are discussed in Brussels.

At one time, there was much talk of creating a "variable geometry" Europe, with different nations opting in to different bits of the Union. John Major and Douglas Hurd were great proponents of the idea -- and with the passage of time, it may well look as if they were considerably more perceptive than their more mainstream EU colleagues.

If you want me to predict how this is all going to end, well, sorry, I can't. But I'm in good company: the respected constitutional historian Vernon Bogdanor ended an article in The Guardian yesterday with these words: "No one can predict what convulsions the eurozone crisis will cause. But its political ramifications are likely to prove both massive and fundamental."

Couldn't have put it better myself.

Friday, 22 June 2012

22 June 2012


There's a well-established principle in politics, going all the way back to ancient Greece: for a just, stable and equitable society, you need to ensure that state power is divided into separate entities: executive, legislature, and judiciary.

The idea is that each entity keeps an eye on the other two, and any abuse of power is kept in check. Judges hold parliaments and presidents to account; parliaments hold governments to account.

In the UK, for example, the Home Office is regularly in trouble with the courts, both domestic and European, over immigration and anti-terrorism laws. Ministers and MPs don't much like it, but the principle is a sound one: even law-makers have to be told when they're breaking the law.

Which brings me to Pakistan, Paraguay, Egypt and Kuwait. They're not countries which could normally be said to have much in common, but over the past week alone, in each one of them we have seen this theory of separation of powers in action.

Pakistan: the supreme court told the prime minister he is not legally allowed to remain in office, since he has been held to be in contempt of court for refusing to reopen investigations into corruption allegations against the president. (Sub-plot: as soon as the ruling party named a prime ministerial replacement, an arrest warrant was issued against the new chap, so now they've had to come up with yet another name.)

Paraguay: later today, the Senate is due to start impeachment proceedings against the president, Fernando Lugo, who is held responsible for the deaths of 17 people when police tried to evict about 150 farmers from an estate owned by a prominent politician. His allies call the impeachment proceedings "an institutional coup".

Egypt: where do we start? The supreme constitutional court has dissolved the recently-elected parliament, on the grounds that a third of the seats were improperly contested; the ruling military council has issued a "constitutional declaration" awarding itself sweeping legislative powers; and the election commission has delayed announcing the results of the presidential election because it's still "examining complaints".

And finally, Kuwait, where the constitutional court has dissolved parliament on the grounds that it was elected unconstitutionally because the decree authorising the election had been drawn up after the resignation of the cabinet.

Oh, all right, perhaps you've got the appetite for just one more: in Washington, the House of Representatives Oversight and Government Reform Committee has voted to charge the attorney-general, Eric Holder, with contempt of Congress after the Obama administration withheld documents related to a failed gun-running investigation.

Isn't it wonderful, seeing consitutional theory in action in so many different countries -- in each case, one branch of government holding another to account?

Well, perhaps it is, and there again, perhaps it isn't. I'll leave you to judge the merits of each case, but it won't surprise you to learn that everywhere there are allegations of political machinations and hidden plots.

In Paraguay, there are the allegations of an "institutional coup"; in Egypt, they talk of a "soft coup".  In Washington, the White House has accused the Republicans on the Congressional committee of "political theatre".

If you're a conspiracy theorist, you may argue that it's hardly a coincidence that in both the Egyptian and Kuwaiti parliaments, Islamists were a growing or dominant force, much to the alarm of the traditional ruling classes.

In Paraguay, you might argue that President Lugo is facing impeachment because his rivals still can't accept his election victory four years ago when he ended more than 60 years of rule by the right-wing Colorado party.

And in Pakistan, you might argue -- as many do -- that the enforced resignation of prime minister Yousuf Raza Gilani owes as much to long-standing personal animosity between the chief justice Iftikhar Muhammad Chaudhry and President Asif Ali Zardari as it does to consitutional principles.

So what are we left with at the end of this unusually turbulent week, even by recent standards? A world in which presidents and prime ministers are pushed hither and thither, in which "deep states" (hidden power structures, in other words) are accused of seeking to subvert the popular will.

It's a world in which more and more people are given the opportunity to vote for presidents, prime ministers and parliaments, and yet where suspicions remain that somehow the same people remain in power, regardless of who wins the elections.

It doesn't seem ideal by any means, but I don't have any answers. Do you?

Friday, 15 June 2012

15 June 2012

I have a suggestion for you: take a look at a calendar and make a note of Sunday's date. June 17, 2012 -- it may just be a date that goes down in history.

A date like November 9, 1989, the day the Berlin wall was cracked open. Or June 28, 1914, when Archduke Franz Ferdinand was assassinated in Sarajevo and Europe slid into war. Or perhaps September 11, 2001, when two hijacked airliners smashed into the Twin Towers in New York (and a third crashed into the Pentagon in Washington).

On each of those dates, a single event changed the world. On Sunday, we'll have two events to choose from. And that's not something that happens very often.

Elections in Greece -- and elections in Egypt. Rarely have so many voters had so much power to influence so much. (And my apologies to voters in France, who will also be doing their civic duty on Sunday -- but frankly, the make-up of the Assemblée Nationale in Paris pales into insignificance when compared with what'll be happening in Greece and Egypt.)

So let's take Greece first. You'll remember that their last election in April did not turn out well -- no party or combination of parties could form a government, so they decided to have another go.

This time round, it's quite possible that the left-wing Syriza bloc will emerge as the largest single group in parliament  -- and if they do, given their pledge effectively to rip up the euro bail-out deal which has plunged the country into austerity, you can expect a pretty dramatic reaction from the financial markets come Monday morning.

Where that will leave the euro is anyone's guess. Spain is already in deep trouble -- and there's now talk of another bail-out being needed to prop up Spanish government debt, on top of last weekend's deal that was designed to save the Spanish banking system.

Cyprus is in big trouble too, but given how little it is, no one seems much bothered about that. What they are bothered about is Italy, which has a deeply problematic debt-to-GDP ratio and where the government's borrowing costs are up again at record levels. There's a G20 summit in Mexico this weekend, and an EU summit in Brussels due at the end of the month. No prizes for guessing what they'll be talking about.

If you read the musings of economic commentators as I do (believe me, I don't do it for fun), you'll know that even the most cautious of them are now sounding terrifyingly doom-laden.

Like this one: "For the last three years Europe's politicians have promised to 'do whatever it takes' to save the euro. It is now clear that this promise is beyond their capacity to keep -- because it requires steps that are unacceptable to their electorates. No one knows for sure how long they can delay the complete collapse of the euro, perhaps months or even several more years, but we are moving steadily to an ugly end."

So will the Greek election on Sunday sound the death knell for the euro? It might.

But that's not all that Sunday could have in store for us. In Egypt, voters will be choosing their next president, their first since the ignominious fall of Hosni Mubarak 16 months ago. On offer: Ahmed Shafiq, a former Mubarak prime minister, described by his critics as a throwback to the old regime, or Mohamed Mursi, the candidate of the Muslim Brotherhood, which won a sweeping victory in parliamentary elections earlier this year.

On the subject of which, yesterday Egypt's supreme constitutional court annulled the parliamentary election and ruled against an application to have Ahmed Shafiq's candidacy declared illegitimate.

And the effect of that was to lead some of Egypt's already deeply worried revolutionaries -- and some leading Muslim Brotherhood officials -- to talk of a military coup. Their reasoning is that if Shafiq wins on Sunday, and if parliament is dissolved, the old guard will be back in effective control of the country.

One British official was quoted late last night as saying it looks as if "things are coming apart at the seams." And if they do come apart, if Egypt's messy, faltering, imperfect transition from autocracy degenerates into chaos, the implications for the region could be profound.

Egypt, after all, is by far the most populous of the Arab states and has long been regarded as the leader of the Arab world. That's why June 17, 2012 is as big a deal for the Arab region as the outcome of the Greek election is for Europe.

The New York Times columnist Thomas Friedman summed it all up a couple of days ago like this: "In Europe, the supranational project did not work, and now, to a degree, Europe is falling back into individual states.

"In the Arab world, the national project did not work, so some of the Arab states are falling back onto sects, tribes, regions and clans."

Me? I'm reminded of those lines from W.B. Yeats's poem The Second Coming: "Things fall apart; the centre cannot hold/Mere anarchy is loosed upon the world".

Friday, 1 June 2012

1 June 2012


A week ago today, a group of armed men went methodically about their business, in and around the town of Houla, north of the Syrian city of Homs.

Their business was killing -- slaughtering, if you prefer, or massacring.

By the time they'd finished, more than 100 people were dead, several dozen of them women and children, most of them stabbed to death or shot at close range.

This is not the unsubstantiated claim of opposition activists whose credibility may be suspect. This is the account of United Nations observers, who were on the scene shortly after the attack, collecting eye-witness accounts and collating evidence.

So who were these armed men, the "shabiha" (ghosts) who are blamed so often for the most appalling crimes committed in Syria?

The government calls them "armed groups", and says they are armed and financed by foreign powers. (It means principally Saudi Arabia and Qatar.)

The opposition say they are pro-government militias, recruited by the regime of President Bashar al-Assad to do the dirty work that the regular military either can't, or won't, do themselves.
Alex Thomson of Channel 4 News has been in Houla since last weekend and has filed a remarkable series of reports throughout the week. Yesterday, based on extensive interviews with local people, he wrote this account of what he believes happened last Friday:

"There was an extensive Syrian Army shelling barrage, then around one hundred men were able to enter the shelling zone without a single mortar, bullet or shell landing anywhere near them from the Syrian Army side. Perhaps that is simply coincidence. Perhaps it indicates clear communication and co-ordination between the two groups.

"With no firm proof either way forthcoming as yet and possibly not ever, you have to believe in either staggering luck and coincidence, or prima facie evidence of co-ordination and planning."

So, in the words of Foreign Policy magazine this week: "What the hell should we do about Syria?"

On the Today programme this morning, the foreign secretary William Hague insisted that the priority remains to find some way to make the six-point peace plan drawn up by the international envoy Kofi Annan work. That seems to be closer to forlorn hope than realistic policy.

So here are five alternative policy options, as collected by Foreign Policy from various US-based Syria analysts, which I summarise here for your benefit:

Robin Yassin-Kassab, author of The Road from Damascus: "The damage is already done. It's already too late for a happy ending. The civil war is here, and the longer the stalemate lasts the deeper the trauma will be. This is why I support supplying weapons to the Free Syrian Army. Let's get it over with as soon as possible."

Rand Slim, of the New America Foundation and Middle East Institute: "Time and again, Iranian senior officials have stressed the need for a political resolution to the Syrian crisis. They have been reaching out to different groups in the Syrian opposition. As the Western community keeps searching for a political solution in Syria, Iran might have some ideas about how to bring it about."

Bilal Saab, of the Monterey Institute of International Studies: "Kofi Annan's U.N.-backed plan has served its goal of exposing the Syrian regime before the world. But that was all anyone could realistically hope … It's time for real and serious negotiations with Russia over not just Syria but a range of Middle Eastern issues of concern to both countries. But the Yemenskii Variant [ie a plan similar to the one which levered President Saleh of Yemen from office] is not it."

Andrew J. Tabler, of The Washington Institute for Near East Policy: "As Syria's conflict tragically unfolds, Washington may need to carry out surgical airstrikes or similar measures to stop regime forces from attacking civilians. If those strikes are to succeed in toppling the regime, however, Washington and its allies will need to have cultivated an alternative leadership from the fragmented Syrian opposition. Conflict will be the constant in Syria for the foreseeable future. But conflict does not necessarily have to set off a generalized civil war -- the opposition on the ground has come together over one issue: Assad must go at all costs. The question is how to get there."

Andrew Exum, of the Center for a New American Security: "As the United States works to facilitate a transition, it must also recognize the limitations of its leverage over Syrian actors, prepare for the likelihood of a long conflict in Syria, and work to mitigate the effects of that war on U.S. interests. This means containing the conflict and discouraging human rights abuses while seeking a political solution."

I shall be taking a few days off next week, so the next newsletter will be in two weeks' time, on 15 June.