Friday, 26 December 2008

An Awkward 6 Months in Prague

The end of the year is fast approaching, and with it the EU reign of SuperSarko is coming to an end as well. On December 31 at Midnight France will pass the rotating EU presidency to the Czech Republic, which will hold the position for the next six months. With the ratification of the EU reform treaty still up in the air, it will be an incredibly volatile time to hold the leadership position. And with the Czech president a notorious EU-hater, it's going to be an awkward few months

It is perhaps ironic that the EU reform treaty is set to abolish the cumbersome rotating EU presidency, which is handed off to a new country every six months. During this critical time, it could be the holder of the rotating presidency that kills the treaty.

The tension that the next six months will bring was in evidence at a recent lunch for European ambassadors to the Czech Republic. As recounted by the Economist, the guest of honour at the meeting, Czech president Vaclav Klaus, made the meeting extreemly uncomfortable. After being politely asked about how the Czech EU presidency might handle various EU policies, Klaus responded with an angry diatribe about how since he is against the EU's existence, he has no reason to answer such questions. He then followed this with an angry speech about how the Czech presidency is irrelevant anyway because the EU is always dominated by the big founding nations no matter who holds the presidency. He even turned to the envoy from Slovenia and accused that country's presidency for the first half of this year of being a farce.

Now it's important to point out that the Czech presidency is a largely ceremonial position with no direct power over domestic or foreign policy, as many in the Czech government have been quick to point out. But his symbolic importance is huge. At a time when Irish millionaires are seeking to build a pan-European movement against the EU reform treaty, the fact that the current ceremonial figurehead of the EU himself is against it is not insignificant. Comments like the ones made at this recent lunch will become a rallying cry for Eurosceptics across the continent over the next six months, and Vaclav Klaus will be the hero of the anti-treaty movement. Klaus had a well-publicized dinner with millionaire Irish anti-Lisbon campaigner Declan Ganley in November, and he still refuses to fly the EU flag over Prague Castle.

My former professor while I was studying in Prague, Jiri Pehe, told the BBC this week that the EU "has the right to be worried a bit about the Czech presidency." Pehe, an advisor to the first post-communist Czech president Vaclav Havel, should know. The Czech Republic itself is only 19 years old, and it's only been a member of the EU since 2002. "This 19-year-old teenager is now taking over a bus with 26 other people on board," Pehe told the BBC. "Maybe the rest of the European Union would be OK if this particular teenager was driving the bus on an empty road with no intersections ahead, but I think we are facing very difficult traffic, with several complicated intersections."

So it's perhaps not surprising that French president Nicolas Sarkozy has been reluctant to hand over the reigns to his Czech counterpart. Over the past few weeks there have been rumours of a secret French plan for Sarkozy to continue hosting European summits after the new year, inviting only those countries that use the euro. This plan, according to insiders would allow Sarko to maintain control if Klaus attempts to "sabotage" the EU during the Czech presidency. Recently an official from the Elysee Palace used that exact word to describe the process.

It will probably become clear within the first month of 2009 how Klaus, and the Czech government, intend to proceed with the presidency. But a confrontational tact would throw the EU into pandemonium just as it is desperately seeking to get the reform treaty ratified. Fasten your seatbelts, it's going to be a bumpy year.

Seasons Greetings from New York

I just wanted to post a quick note to wish everyone happy holidays. I'm in New York at the moment, home with the family for Christmas and New Years. It's nice to be home, I haven't really been back to New York properly for a year. It's amazing the amount of sales here at the moment, particularly considering its the days just before Christmas.

Other than that everything seems mostly the same here, the post-Obama-election streets aren't yet paved with gold. A lot of my friends here have been laid off, which is disconcerting. Of course it's like that all over, not just here. I'll spend New Years here and then it's back to Zurich for me. And after that, well that has yet to be determined! January will be a time to make some plans.

Saturday, 20 December 2008

For Once, Europe is United Over Gay Rights

A major milestone took place at the UN yesterday. Sixty years after the organisation adopted the Universal Declaration of Human Rights, 68 countries signed a non-binding delcaration sponsored by France and the Netherlands demanding the worldwide decriminalisation of homosexuality.

This was the first time that any gay rights issue had been pressed in a large motion at the United Nations, and it was interesting to see that the body was just about evenly split, with 68 countries supporting and 60 countries rejecting the declaration. The nations which rejected the the resolution were largely Arab and African states, with one notable exception: the only Western country to refuse to sign the declaration was the United States.

This is perhaps not surprising considering that homosexuality was only nationally decriminalised in the US five years ago. The Supreme Court decision of Lawrence v. Texas in 2003 ruled that a Texas law making homosexual sex a crime was unconstitutional, and in the process invalidated a number of such state laws across the country (this was the decision which Senator Rick Santorum infamously said would lead to decriminalisation of beastiality). But in light of that recent decision, it seems unusual that the Bush Administration are saying that they can't sign the treaty because it would interfere with states' rights. The 2003 decision ruled that states don't have the right to criminalize homosexuality, so that argument is non-sensical.

Of course any country can sign the declaration at a later point, and perhaps the Obama administration will revisit the issue when it comes into office. It is rather embarassing, and incredible, for the United States to be the only Western country that has refused to sign the document.

But what I found even more interesting that the US's embarassing stance on this issue was the fact that the EU was competely united behind it - all 26 member nations signed the resolution. This is impressive considering that gay rights have been one of the most divisive issues within the European Union - particularly with new entrant Poland, an extreemly religious and conservative country. So to see that Brussels was able to crack the whip and make sure that countries like Poland, Romania, Bulgaria, Latvia, Lithuana and Estonia supported the resolution is quite impressive. Even Ireland and Italy might have balked at signing such a declaration a decade ago. It's a promising sign for gay advocates in Europe who would like to see EU-wide gay rights policies implemented one day in the future.

Homosexuality remains a criminal offence in more than 80 countries, and is punishable by death in seven nations.

Sunday, 14 December 2008

Merkel the Obstructionist?

If there's one thing the global economic turmoil has taught us, it's how suddenly everything can change. Angela Merkel definitly doesn't need to be told this twice. Just a few months ago she was Europe's champion; a practical, no-nonsense leader whose pragmatism and spirit of compromise had earned her great respect throughout Europe. But since the onset of the financial crisis she has largely been in the background, failing to come up with new ideas or solutions.

In the past week, this transformation has continued even more dramatically. Suddenly she's become Europe's 'Mrs. No,' the adversary to Gordon Brown's new self-styled 'hero of the world' role. Tensions have been simmering between Germany's chancellor and the British prime minister since last week when Brown didn't invite Merkel to a summit he held in London with French President Nicolas Sarkozy and European Commission (EU) president Jose Manuel Barroso. After that the German foreign minister publicly criticised Gordon Brown's plan to rescue the global economic crisis through government bailouts and shore-ups.

Also last week, Merkel appeared to do a flip-flop on Germany's climate change target commitments, as Germany argued in Posnan that it should have its target lowered, causing many environmental campaigners complaining that Europe seemed to be abandoning its commitment to tackling climate change.

In the end, Merkel ended up relenting for the most part and signed the agreements both for a Europe-wide bailout plan and an EU consensus on climate change. In the end she probably had to relent because although she has suddenly found herself in the role of 'Mrs. No,' she has no alternative plan to propose either for the economy or climate change. Merkal has always been short on ideas but long on action (the exact opposite of her French counterpart Sarkozy), so it's not surprising that she doesn't seem to be excelling in times that require quick and bold acttion. But even still, it's clear she has strong and profound objections to the idea of taking on more debt to solve the economic crisis. It will be interesting to see if the pattern of the last week will be repeated in the coming months. For the time being, it is clear that the relationship between Brown and Merkel has soured. And with her relationship with Sarkozy already notoriously rocky, Merkel could find herself isolated politically.

Friday, 12 December 2008

Happy 'Switzerland Joins Schengen' Day!

After so much anticipation, I rose early this morning at dawn to creep down to the fireplace and see if I had received a visit from Schengen Clause. I gasped with joy to find it was true, he'd come! The border check with Germany had disappeared!

Ok I can't really see the German border from my dad's house in Zurich (although I can see the border with the next Canton), but I did eagerly check the news this morning to see if it had indeed come to pass. I have no idea why, but the moment which countries open their borders with other countries really excites me.

At midnight CET this morning Switzerland joined the Schengen Zone, the 25-member European block that allows passport-free travel between the member states. Switzerland is not technically in the EU, but it has a series of bilateral treaties with the EU which make it in many ways a "virtual member," bound to follow EU regulation although it has no representation in the EU parliament.

Thursday, 11 December 2008

Blagogate: Obama's first scandal?

Interestingly, the unfolding scandal around the arrest of Illinois governor Rod Blagojevich has received zero coverage over here in Europe. But the implications of this huge political development could profoundly affect the Obama presidency even before he's taken office, and that would likely be of great interest to Europeans. To me the scandal is fascinating, bringing back memories of my days as a reporter in Chicago covering the truly staggering level of corruption in that area of the US.

The fact that a governor of Illinois is corrupt isn't what's surprising about this development, after all Blago's (that's his nickname in Illinois) two predecessors were also arrested for corruption. It's the sheer audacity of his crimes that's so staggering. Among a long list of corruption charges, one of them is that he was trying to sell Barack Obama's senate seat. Obama was previously a senator for Illinois before he won the presidency, and when a senator departs it is the governor of that state who appoints the new senator. Blagojevich is a Democrat, so the Democratic Party didn't have to worry about losing that seat. But the governor can appoint anyone he wants, and apparently he was planning to sell the seat to interesting parties.

The language he's using in the wiretaps is straight out of the 1950's, it's astonishing any politician could be so stupid in this day and age. Not only does he explicitly say he's planning to sell Obama's senate seat, he uses language so mafioso-like it sounds like it's coming out of Tamany Hall. He even litterally says that someone interested in the seat was willing to "pay to play" at one point in the tapes.

Tuesday, 9 December 2008

Europe Nervous as Greek Riots Continue

The deep fault lines within Greek society have exploded this week, with huge riots erupting across the country. The causes for the violence are myriad, but considering that part of the cause is the global economic stress, anyone in Europe watching the images on TV right now must be feeling at least a pang of dread. With so much uncertainly looming, there are plenty of people who fear scenes like this could be coming with more frequency across the continent.

The riots were immediately sparked by the fatal shooting of a 15-year-old protestor by police over the weekend, but the severity and length of the violence indicates that this is about much more than the shooting. Even though the country is prone to rioting from a strong left-wing student movement, this is the worst civil disorder to hit the country for decades according to reports. Schools across the country have been shut down, and transport has also come to a standstill. Most of the damage has been against property: luxury hotels, banks, any strong symbol of capitalism. The targets indicate that it is the economic reforms of prime minister Kostas Karamanlis that are driving people to the streets.

Students have a long and respected history of protest in Greece: it was they who brought the right-wing military junta down in the 1970's, and after that students were given special privileges to protest by the new government (similar to what happened in Spain in the 1970's). Police are not allowed to enter university campuses to arrest students, and during these riots students have used the campuses to regroup in between flare-ups of violence.

The government is saying that the police officer who shot the boy is going to be charged with manslaughter. Police say the boy was shot as he and some other young protesters were pelting a police car with stones. They say he was shot as he tried to throw a fuel-filled bomb at the police.

Greece is reeling right now from the effects of the global economic downturn; it has been hit harder than other European countries. The economic hardship has resulted in new flare-ups between the right and left in this country, both very powerful and both seething with hatred for the other side. As Europe watches the violence unfold, there must be fears in other countries with strong leftist movements that if the economic troubles get worse, these tensions between the right and left could flare up in their own countries as well.

Friday, 5 December 2008

My adventures in the French education system

Well I've made it through my semester at the Sorbonne. I finished my final exam (a 4 hour process spread out over 2 days) earlier this week and hopped on a train to Zurich immediately after. Now I'm settling in at my parents' house in Zurich and I'll have the opportunity to reflect a bit on my three months in Paris and on what I want to do next. I just called to get my result and am pleased to report that I passed with the highest distinction, so I am now a certified French speaker according to the Sorbonne. Nifty!

This was an incredibly interesting three months. Not only was I able to dramatically improve my French, but I also learned a great deal about French culture and way of life. One thing I experienced with a bit of frustration was the obsession within the French education system for test-taking. I think it's safe to say that never before in my life have I been in a course so preoccupied with exams.

Thursday, 4 December 2008

Ireland's Road Trip

As Britney Spears makes her whirlwind tour of Europe (she hit the British, French and German versions of American Idol in quick underwhelming sucession last week), she isn't the only one criss-crossing the continent in the hope of redemption. This week Irish prime minister Brian Cowen is coming hat in hand to the European capitals delivering his proposed solution to the Lisbon standoff. By most indications, it looks like Ireland is going to have another referendum before June.

So far Cowen has been in Luxembourg and Germany. Today he's in London with Brown and tomorrow he'll be in Paris with Sarkozy.. At the same time, his Europe minister is visiting the small countries to tell them of Ireland's plans. The two of them are coordinating with the leaders for next week's proposal to the European Councilon what to do about the situation. According to reports, that solution is going to be another vote. But what they have to come up with is a way to say that this is not the exact same vote done over, but rather a different vote that will be palatable to the Irish people.

Surveys have been done over the past few months that have indicated that if the Irish government were to get specific guarantees for key areas - namey abortion, neutrality - the referendum would pass. Of course there was nothing affecting these two areas in the treaty anyway, but it is thought that if the Irish were to have the issues spelled out in disclaimaers. This will surely not be enough for the dedicated no campaigners - since their beef is with the EU itself, but it may be enbough to convince some of the fence sitters.

The revote would be a big gamble, particularly for Cowen whose government hangs by virtually a thread at home. But it is thought now that the economic turmoil has set in, it is thought voters will be more receptive to argument sthat Ireland shouldn't cut off its ties to the safety net of the European Union. The Irish may have been feeling a bit overconfident about their economy during the last vote, no doubt their optimism about whether Ireland needs the EU has changed over the past few months.

So as much as the first referendum was watched, the second one will be even more so. If Ireland votes no again, there are only two options: Scrap the treaty and allow the EU to operate in disfunction, or or go ahead with the treaty and kick Ireland out of the union. Considering that the current economic crisis means that the EU's institutions must function properly as soon as possible, the second option is perhaps the more likely. And I think that this time around, in these uncertaint times, EU leaders won't be above using this as a threat before the vote.

Wednesday, 3 December 2008

Guest Blogger: The Queen and Canada's Crisis

As I watched pomp and pageantry of the Queen's speech this morning, I couldn't help but reflect a bit on the role of the British monarchy in the modern world. Though the role is now mostly ceremonial, the British government still depends on it to function properly. For instance, parliament cannot open its new session without the Queen's blessing and speech. But the monarchy can have sudden importance outside Britain as well. And this is being born out in Canada at the moment.

Domestic news in Canada usually gets short shrift both in the US and Europe, but at the moment some huge events are unfolding over there that could topple the current government and change the face of Canadian politics permanently. It's a bit complicated, but essentially all of the opposition parties are wishing to band together and form a coalition against the currently ruling Conservative party. A coalition government has never before been formed in Canada, and doing so would completely shape the political landscape there. The big question is whether the parties will be allowed to band together to oust the goverment and rule in tandem. And the person who will decide the answer to that question? None other than the Governor-General of Canada, who answers directly to Queen Elizabeth II. Canada is still, after all, technically under the rule of the British monarch. And it could be the British monarch that will decide this hugely important question for her dominion on the other side of the Atlantic.

I'm not very knowledgable about Canadian politics, so my friend Dan Berrier, a pollster in Washington DC was nice enough to explain the situation. Enjoy!

Canada in Crisis
By Guest Blogger Dan Berrier

In many ways the current crisis in Canada is a long time in the making. It is first and foremost a political crisis, involving the politicians of the day and their respective stances on issues and their choices about policy outcomes. But it is also a constitutional crisis, one that puts serious strains on the very foundation of the Canadian federation.

Standing in the center of it all is a woman named Michaëlle Jean, the 27th Governor-General of Canada, who will have to mediate with Conservative Prime Minister Stephen Harper and the Opposition leaders and come to a series of decisions that preserve the Canadian's people's faith in their government and in their constitutional processes. It is truly representative of 21st century multi-cultural Canada that this responsibility rests on the shoulders of a woman of African descent, born in Haiti, who moved to Montreal as a child and became a distinguished television journalist before being appointed to this largely ceremonial and symbolic post. For Americans, it would be as if Barbara Walters, with a lot of advice from lawyers and constitutional scholars, was entrusted with some unique and abstract role as the final arbiter on important constitutional matters. Technically speaking, Jean is the sovereign's representative, in this case, the Queen of England. But in reality, she serves the Canadian people and is supposed to make decisions that will stand the test of time, set precedent, and maintain the trust of the public.

The politics of Canada over the last 20 years have been defined in large part by two movements, Quebec separatism and Western regionalism, as well as the mainstream political reaction to these strains on national unity. For most of the post-war period, Canada's two leading political parties, the Liberals and the Conservatives (formerly the Progressive Conservatives), have held sway and ruled the country. Most of the time, one party or the other would win a majority of seats in the House of Commons, and thus form a majority government.

Along with these two parties, the NDP (New Democratic Party) also gained support from trade unions and the left, but never garnered more than 20 or 30 seats in the House of Commons, though they did win some provincial elections. In 1988, they hit somewhat of a breakpoint and earned 20% nationally under the leadership of Ed Broadbent. This coincided with two strong showings by the Conservatives and a much weakened Liberal Party.

The 1993 election saw the emergence of Quebec separatism and Western regionalism as major forces in national politics. The Bloc Quebecois won 54 seats and became the second largest party after the Liberals, who won a landslide victory and decimated the Progressive Conservatives, who were down to just 2 seats. The Reform Party, a new conservative party that promised to advocate for a greater voice for Western Canada won 52 seats in Manitoba, Saskatchewan, Alberta and British Columbia.


Throughout the 1990s, Liberal Prime Minister Jean Chretien served the country, still winning some seats in Quebec, his home province. This limited the appeal of the Bloc and helped the Liberals stay in power. The Liberals went on to win two more impressive victories, in 1997 and 2000, assisted by the fragmentation on the political right, as Progressive Conservatives still won seats in Eastern Canada and Reform won seats in the West. In Ontario, both of these parties ran candidates, splitting the conservative vote and ensuring continued Liberal dominance in Canada’s most populous province.

With the end of the Chretien era, Liberal popularity waned, and the Conservatives finally put aside their differences, merging the eastern Progressive Conservatives with the western Canadian Alliance (formerly the Reform Party). This new Conservative Party would present a single slate of candidates and was anticipated to dramatically improve its performance in Ontario, where they had been dividing their vote.

The Liberals managed to hang on in 2004, Prime Minister Paul Martin, Chretien's successor, won a minority government by taking 135 out of 308 seats, falling short of the 155 needed to form a stable majority government. The NDP did well, winning 15% of the vote and 19 seats. Their strengthened position, along with the Bloc's continued dominance in Quebec seemed like it would make it very difficult for any national party to again win a majority government.

Without the support of a majority of parliament, a government in Canada must tread very carefully. They need to earn either the support of opposition parties to pass their budgets, or at least get them to agree to abstain. Because continual elections do not allow any of the parties to rebuild, they typically manage to cooperate and allow minority governments to last at least one or two years. This tenuous position gave even more power to the NDP and to the Bloc Quebecois, in effect allowing them to play kingmaker. In 2005, the then-Conservative leader Stephen Harper tried to make a deal with both the NDP and the Bloc to bring down the Liberals, but this failed.

Martin lasted until 2006, when he was forced to call another election. This time the Conservatives came out in front, but with a government even weaker (124 seats) than the Liberal one preceding him. They won by dramatically increasing the number of seats they won in Ontario, while strengthening their near monopoly of seats in the West, especially in Alberta.

After two and a half years in power, Prime Minister Harper thought that October 2008 would be the time that he could win his long sought majority. But again, his hopes were dashed in Quebec and Atlantic Canada, where the party lost seats in Newfoundland and made no gains in Quebec. Further gains in Ontario helped the party move from 124 to 143 seats, but he was still 12 votes short of his majority. Without a majority, the Conservatives knew they could get very little done.

What is happening now is the aftermath of that election, in which just 37% voted Conservative and still elected a government. The remaining 63% voted for another party. More voted Green than ever before, earning 7% of the vote but no seats in the House of Commons. The NDP won 18% and strengthened to 37 seats. The Liberal Party was badly bruised, winning only 26% of the vote and just 77 seats, a historic low. The Bloc Quebecois won the remaining 10%, entirely in Quebec, winning 49 seats.

Mr. Harper’s actions following the election, not agreeing to a major economic stimulus package, and threatening to cut off public funding for political parties infuriated members of the opposition. They realized that the time to fight the Conservatives was probably now or never. With their funding removed, they would be seriously hampered in competing in the next election or any kind of public relations battle with the much better funded Conservatives. That was the final trigger to make them decide they had to try to bring down Mr. Harper at the very start of this parliament.

The political fragmentation of the left is now seriously plaguing Canada and is what the leaders of "the Coalition" are trying to remedy. Their fundamental argument is that they represent the wishes of more of Canada's public than do the Conservatives, and that they should rule the country. This is perhaps true, but their many factions will make governing difficult. They may be able to cobble together a government, but it will not last through an election unless there is some kind of long-term agreement. What is needed is either a merging of the two main left-wing parties, the Liberals and the NDP, or at least some kind of agreement to not run candidates against in each other in parliamentary ridings where one candidate has a chance to win and the other does not.

The prominent role of the separatist and left-wing Bloc Quebecois in the coalition (though just in parliament, not in the Prime Minister's cabinet) will unnerve the rest of Canada. The provinces of the west, particularly Alberta that is almost entirely represented by Conservatives in parliament, will become more and more alienated. This will be even more of a problem for a new coalition government if the Conservatives are successful in painting it as illegitimate.

This is where the role of the Governor General becomes so important. It is likely that Prime Minister Harper will ask her to “prorogue” Parliament, essentially hitting the restart button, and dismissing them until late January when he will present a budget. This would prevent his government from falling after losing a no confidence motion on the floor. It is an open question whether the Governor General could turn down the request. Undoubtedly, she has the authority to do so, but it has never been done before in the history the country. But it is also true that a Prime Minister has never made such a request so soon after an election, and for the express purpose of avoiding a vote of no confidence. While undoubtedly provoking outrage, it is not inconceivable that Jean could simply tell Mr. Harper no and let his government fall on Monday, December 8th as is currently scheduled.

If she grants his request and institutes a prorogation, he would likely lose in January anyway, if the coalition managed to stick to their guns and vote him down. Giving the Conservatives six weeks to de-legitimize the incoming coalition government does not seem as though it would serve the interests of Canada very well. But it may serve to maintain the standing of her office, whose enormous powers are only respected because of the reverence people have for the office. These powers are only really exercised in the most rare circumstances. If she denies the Conservative request for a delay, she will likely be painted as a Liberal stooge, since she was chosen when a Liberal prime minister was in office. Her Quebec roots, and her husband’s alleged separatist sympathies would also be highlighted by a Conservative Party, mostly of Western Canadians, outraged at their sudden loss of political power. The damage to her office could be significant.

Once the vote of no confidence takes place, either next week or in January, it seems likely the Conservative government will fall and the Governor General will face another choice, this one much easier. Prime Minister Harper will go to her and request the dissolution of the House of Commons, triggering another election, just six weeks after the last general election. With the country inclined against such a course of action, she will have much greater standing to deny this request and take up Liberal leader Stephane Dion’s offer to form a coalition government supported in the House by the three major opposition parties.

The reaction in Western Canada to this course of events will be interesting to watch. There are reports that the Separation Party of Alberta is already getting a flood of angry emails, phone calls and volunteers. This may just be bluster, but it is representative of very real and lasting divisions in the country between east and west, and over Quebec. The reaction of Conservative leaders to this loss of power will be critical. Will they turn further to the right and further west, with some prominent politicians joining the call for separation or more regional sovereignty? Or will it just be a temporary blip in Canada’s political history?

The future of the Liberal Party will be even more dramatic to watch. Having just lost an election, Stephane Dion has already announced his intention to step down as leader of the party. They will choose between Michael Ignatieff, Dominic LeBlanc and Bob Rae. Whoever wins this election would then immediately become Prime Minister, with Mr. Dion stepping aside.

Even more important than the future of the Liberal Party is the future of the entire Canadian left. Going into another election as they did the last three, with votes being divided between the Liberals, the NDP and the Greens, they will undoubtedly be much weaker than they would be if they were more united. Will the governing experience motivate these parties to come to some type of agreement to be able to unify? Will they at least be able to coordinate in some fashion so as to not defeat each other’s candidates in marginal seats? If they can manage to do this in some fashion, they may be able to govern in the next parliament without the support of the Bloc Quebecois. Without stronger numbers, Quebec will undoubtedly seek more concessions and money from the federal government, and a weak coalition will have no choice but to acquiesce to these demands.

Canada is facing more than just a political battle about economic stimulus and Stephen Harper. The very foundations of their parliamentary democracy and sense of national unity are being tested. What is needed is a fundamental re-consolidation of the political party structure on the left to again restore stability. This will present Canada with a true choice, between a Conservative Party that gains support from all across the country and a left wing party that is diverse and welcoming of different ideas, but is mature enough to cooperate and to govern. The worldwide economic crisis has now forced that coalition together and they will likely be given a chance to try. I hope that this is just a first step in a process that will again see political stability come to Canada. What will be needed in May is a Liberal leader that can step up to the plate and seize that mantle. Who will it be Mr. Ignatieff, Mr. LeBlanc and Mr. Rae?

Saturday, 29 November 2008

Britain's Fritzl: is Austria off the hook?

Back in April, as the details of the notorious case of Josef Fritzl in Austria became public, the world became instantly fascinated. The details of the case were absolutely horrific: A man had imprisoned his daughter in his family's basement and repeatedly impregnanted her over 20 years, hiding the children she bore in the basement with her and never letting any of them see the light of day.

At the time many in the media (including myself) sought answers to the incredibly bizarre circumstance within the culture in which they took place. A lot of ink was spilled about how the case reflected the "look the other way" culture in Austria, a traditionally conservative society that highly values privacy.
 

But now details are emerging about a case in Britain that may throw that argument on its head. This week a man in Sheffield received 25 life sentences for getting his two daughters pregnant 19 times during almost 30 years of rape and physical abuse. The case has eery similarities to the Fritzl case, but the numbers involved in the story are even worse in the UK case. Instead of 20 years, the raping went on for 30 years. Instead of impregnanting one daughter, this man impregnanted two. And rather than hiding his daughters and their children, this family was living out in the open, and even received visits from British social workers.

Thursday, 27 November 2008

India's 9/11

The news coming out of Mumbai today has really been horrific, and the tragedy is still unfolding. I don't have much to write about it, but I think it will be interesting to see exactly what actually happened once this is resolved. This attac was shockingly brazen. There's a massive army training facility right next to India gate in the bay, so if its true that they landed next to Gateway of India by boat, that means they sailed right past it. If the details of how this unfolded last night are accurate, truely this is an attack unlike any other the world has seen. This is India's 9/11, and perhaps the most significant attack the world has seen since 9/11 in its introduction of a new, unthought of type of terrorism.

I was at the Taj hotel almost exactly a year ago during a business trip to India, and its really shocking to think that terrorists could take over such a massive landmark like this. The Taj is one of the most famous hotels in India, comperable to the Ritz or the Park Plaza. And there are still people barricaded in their rooms more than 24 hours after this all started. It's really stunning.fff

Monday, 24 November 2008

Socialist Drama Continues

The French Socialist Party probably couldn't have imagined a worse result than Thursday's vote for a new leader, which seems to have split the party right down the center. After a vote counting that literally took days and was at various points predicting different winners, it emerged Saturday that Martine Aubrey had won by just 42 votes. But Segolene Royal is alleging voter fraud and demanding a revote. Now the party, divided and derided, seems to be at an impassable juncture and moments away from collapse.

With such a small margin of victory (42 out of 134,784 cast), it's hard to see how the vote will be seen as conclusive to anyone. But even more embarassing that the narrow victory margin was the low turnout; more than 40 percent of the party’s 233,000 members didn't even vote at all, likely as an expression of their exasperation with the party.

This morning her lawyer reportedly asked her former partner and current party leader Francois Hollande (the father of Royal’s four children - awkward!), to annul the vote. Hollande must make a decision by Wednesday. But will another vote really solve the problem? Whichever the result, there is going to be a large faction conspiring against whoever is chosen as leader.

One could see across the French media today mockery of the Socialists' dilema, but perhaps where this was most interesting was in the leftist papers. Today's Le Monde wrote that the result of the vote couldn't have possibly been worse. The front page of Le parisien featured a rose, the symbol of the party, cleft in two. And the Journal du Dimanche cracked called the party "suicidal."

If the party were to split it would be a political earthquake for France. It is the second largest party in the country, the equivalent of the Democratic Party in the US. It is still very powerful in the provinces and controls most French major cities. As recently as 2002 it had a majority in the parliament.

The fall of France's Socialiast party is symptomatic of the larger problems being expienced by European leftist parties. It is perhaps ironic that just as the global economic collapse should be giving their ideology the most credence, the European left seems to be more unpopular than any time in the last half century.

Monday, 17 November 2008

Socialist soap opera

Say what you will about it, but you can't say that French politics is boring. Just as the country is in the midst of speculating which government official is responsible for the unmarried Minister of Justice Rachida Dati's pregnancy, the Socialist Party conference this weekend exploded with a cacophony of backstabbing, intrigue and humiliation involving jilted lovers and feuding siblings. It was, as one French friend amusingly put it, "quite the shit show."

The party conference, similar to a party convention in the US, was supposed to signal the return of a strong and confident Socialist Party that would be capable of challenging French president Nicolas Sarkozy in 2012. The reality was anything but. Though it took place in Reims, the capital of France's tranquil Champagne region, there was little celebrating going on for the main party of the French left. The intention was select a new leader for the party now that François Hollande (above left) is stepping down after 11 years. Of course "leader" is a subjective term here, it would probably be more accurate to say he held the party together as it teetered on the brink of collapse for the past decade.

British Adults are Terrified of Teens

So far this morning the currency markets seem to be ignoring UK Tory shadow chancellor George Osborne's comments on Saturday. Despite predictions that the pound would take a dramatic plunge once currency trading opened this morning, it is actually slightly up against the dollar as of noon. Phew! Safe for now. But according to a new report receiving a lot of press coverage this morning, Brits may be fearing something even more insidious than a collapsed currency: their own children.

A poll conducted by a British charity shows that more than half of British adults are afraid of British children, believing they behave like animals and pose an increasing danger to themselves and others.

The behavior of British young people has been increasingly in the news, with public perceptions of children growing worse and worse. Recently a product was launched in the UK called the 'mosquito,' which emits a painful noise that only people under 18 can hear. The device is being sold to British shop-owners and other people, with the idea that they would install them on their premises to keep away young loitering hooligans. The popularity of the product has caused many British pundits to question people's attitudes toward British children.

According to the study, words like 'animal', 'feral' and 'vermin' are used daily in reference to children by British adults. The charity launched a TV advert this morning to accompany the report, showing a group of men seemingly talking about hunting a group of meddlesome animals. But then at the end of the advert it is revealed that all of the comments they used were actually comments British adults wrote about children in the comments sections of British newspapers.



But though the group is condemning these attitudes, many on the other side say that the fear expressed by these adults isn't the problem, but is rather a symptom of the real trouble - the increasingly shocking behavior of British youths. Incidents of young people being involved in violent crime or anti-social behavior have become frequent fare on the front pages of British newspapers, particularly several high-profile cases. In one of the most shocking cases, three teenagers were found guilty in January of murdering father of three Garry Newlove, who was beat to death after he confronted a group of youths making trouble outside his home.

So which is the real problem? Is the media needlessly fear-mongering by focusing so heavily on these youth crimes, or is it highlighting a legitimate social issue as British children drift into widespread anti-social behavior? The answer is probably a bit of both. As a foreigner living in the UK I have to say I noticed right away a dramatic difference in the behavior of British teenagers versus those in the US - and I reached this conclusion without the aid of the British media. When I first moved to London I was truly shocked by how British children behaved, and how accustomed adults seemed to have become to the behavior. My office in London was near a school, and every day in the mid-afternoon we would hear a chorus of shrieking, screaming and obscenities like I had never heard. I can say without exaggeration that it literally sounded like like people were being murdered outside. The first time it happened I ran to the window to see what was happening, and my coworkers looked on with mild bemusement. They had grown accustomed to this kind of display, whereas I thought some kind of horrible crime was being committed on the street below.

I should point out that when I moved to London I was coming directly from New York City, so it's not a question of being in an urban area rather than a suburban one. Maybe I'm just getting old and cranky. But I've had this conversation with many other Americans living in London and they've all said they've independently observed the same thing, that British children seem to be bizarrely out of control compared to youths in the US. But then again, who knows how much the British media influenced our perceptions in this area.

Clearly the fact that so many adults seem to be terrified of children is not good, but it seems to me that blaming the media entirely for this fear misses the bigger point. The current generation of British teenagers has somehow ended up feeling alienated from and unaccountable to society. I don't know how this came about, but people's fear in this area isn't entirely irrational. Then again, one should also keep in mind that complaining about the "youth of today" is a trend that will probably never go away, so matter which generation is being discussed.

Saturday, 15 November 2008

The Imminent Collapse of the Pound?

Gordon Brown is in Washington this weekend, along with the other leaders of the G20 countries, attempting to come up with a solution to the global economic crisis. The ambitions for the group are huge, with suggestions of a global stimulus package and perhaps the creation of a global financial regulatory body. And it is the first time that the leaders of the G8 countries have met to discuss the current crisis with the growing economies like India, China and Brazil, which analysts say will be crucial in jolting the world out of the financial mess its in. But despite the big plans, everyone knows that at this weekend's meeting little is likely to be committed because of one very important absence from the conference: Barack Obama. With the Bush Administration leaving office in two months, countries see little point in making firm commitments now when everything could change come January.

Just now the summit has released a declaration of intent, with key points saying that each country has committed to financial stimulus, with each using government money to prop up the economy. It's also come out with pretty damning language about what got us into this mess, laying the blame on the door of the US and the lack of macroeconomic regulation.

But with little concrete policy news coming out of the meeting, the media in the UK has focused today largely on some side comments made by prime minister Brown on the sidelines. The comments were a response to something said by the Tory shadow chancellor George Osbourne in the Times newspaper today. Osbourne told the Times that Brown's stimulus plans could cause a "proper sterling collapse, a run on the pound." From Washington Brown lashed out at the comments as "irresponsible," suggesting that talk like that could become a self-fulfilling prophecy.

Osbourne's rant was the first time a senior UK politician has suggested that the country may be just weeks away from a currency collapse similar to what happened in the early 1990's. The pound has lost more than a quarter of its value in four months, dropping from over $2.00 in July to less than $1.50 today. It has also plunged against the Euro, declining by 20 percent just in the last month, particularly in the last week. A Euro is now worth a shocking £1.16. If the currency continues falling at this rate it could be worth less than a euro by the end of the year. With an economy that has become almost completely reliant on financial services, currency speculators seem to have concluded that the UK is going to be disproportionately affected by the economic crisis.

As someone who lives in continental Europe but whose savings and salary are in pounds, this is obviously not good for me. In fact the timing of my little jaunt over to the continent apparently couldn't have been worse. Considering I'll be moving to Zurich at the end of this month (the pound-franc exchange is also not good), it's really hitting home how volatile working across borders can be, especially in times of economic turmoil such as these.

It is clear that Osbourne and many other Tories are hoping that a currency collapse could damage Labour in the same way that the Tories were hurt by the sterling crisis in 1992. But as someone who's livelihood depends on that not happening, I share Brown's annoyance at Osbourne's seeming attempt to use the economic crisis to score political points.

Wednesday, 12 November 2008

The Kaliningrad Question

Having written an in-depth article on Russia's Kaliningrad oblast for an article I was working on back in 2002, I'm always interested when the territory makes its way into the news. Most people don't even know of the existence of this strange corner of the earth, but judging from Russian President Medvedev's state of the union speech last week, it could feature very prominently in relations between Russia, the US and Europe over the next decade.

Russia didn't waste any time testing Obama's mettle, with President Dmitry Medvedev delivering a speech the day after the historic election lambasting the United States for provoking the Georgian conflict, leading the world into economic disaster, and threatening Russia with its missile defense system it is installing in Poland and the Czech Republic. These complaints aren't new, but on the last point President Medvedev matched actions to words, saying Russia would install short-range missiles just off the Polish border in its territory of Kaliningrad, in response to the US "provocation." If Russia were to carry out this threat, it could provoke a new Cuban missile crisis for the EU and the new US president Obama. A spokesperson for Obama said today that the president-elect hasn't yet made a decision on whether to continue the Bush Administration's plans for the missile defense system.

So I think this is big news, but coming as it did after Obama's historic election, its been largely overshadowed. Additionally, I've been struck by some of the basic points the media seems to be missing with this news. For one, they keep referring to Kaliningrad as an "enclave" of Russia, when in fact it is an exclave (a territory is an enclave of a country it is completely surrounded by, it is an exclave of the country it belongs to). This may seem like a trivial semantic difference, but by failing to highlight the fact that Kaliningrad is an exclave of Russia it seems to me the media is missing the point. When they refer to the territory as being "on the border of Lithuania and Poland" they fail to mention that it is surrounded by those countries, which are both now in the EU. That means the Russian territory of Kaliningrad is located within the EU. It would be as if Russia owned the US state of Connecticut and was going to install missiles there. Keep in mind this is no insignificant territory, being larger than Connecticut and located on the strategically important Baltic Sea.

So why does Russia have this territory anyway? It's actually a peculiar accident of history and I think an incredibly sad one. The city of Kaliningrad was until the 1950s a German city named Konigsberg. The entire area was settled by crusading Germans in the 13th century and became
the kingdom of Prussia. It was actually the nucleus of what eventually became Germany, with the capital of the growing German Empire only moving from Konigsberg to Berlin in the 18th century. However after World War I, with the re-creation of a Polish state, the allied powers decided that the new country needed access to the Baltic Sea, so they created a "Polish Corridor" cutting through Germany, separating East Prussia from the rest of the German state. One of Hitler's main initial aims was to retake Poland to unite east Prussia with the remainder of Germany. But in the end of course Germany lost the war, and Russia demanded huge territorial concessions. It was decided at the Potsdam Conference that East Konigsberg should be given to Russia, resulting on one of the largest forced population moves following World War II. Before Potsdam East Prussia was almost completely inhabited by ethnic Germans, Russians had never lived in the territory. But at the end of the war about 2 million ethnic Germans were evacuated or forcibly expelled, and ethnic Russians moved in to the territory, which had been almost completely destroyed by World War II.

Kaliningrad was made into an SSR within the Soviet state, and at the time it was contiguous with the rest of the country because the Baltic states were part of the USSR. And with Poland and East Germany in the Warsaw Pact, Kaliningrad was located comfortably well within the Soviet sphere. But with the collapse of the USSR in 1991, things suddenly changed dramatically. Lithuania and Belarus broke away from the USSR and became independent countries. However it didn't make sense for Kaliningrad to become an independent country since it was still inhabited mainly by the ethnic Russians who had moved in during the 1950's. So the territory became a Russian island hundreds of miles away from Russia. Now that Lithuania and Poland have joined the EU and the Schengen Zone, the situation has become tricky.

What makes this situation especially complicated is that Kaliningrad is a sparsely populated, barren wasteland. Russia seemed to almost purposefully punish the territory after they acquired it. Rather than developing this incredibly strategic piece of land - now Russia's only year-round Baltic port - they ignored it. It is very difficult for foreigners to be granted a visa to enter the territory, and even Russians need permission to go there. It is an incredibly sad, desolate place.

For the past 15 years, while the West considered the new Russia to be a friend, the awkward situation of Kaliningrad didn't seem so important. But now with tensions rising between the West and Russia, and with Russia threatening to build up its military presence there, the territory's status could quickly become an issue. Can the EU handle a hostile enclave within its territory?

**Fun semantic trivia for your next cocktail party: Kaliningrad is an exclave of Russia and an enclave of the EU, but it is not an exclave or enclave of Lithuania or Poland because it is not completely surrounded by either.

Wednesday, 5 November 2008

The Obama Urban Coalition

Wow, what a night. I have to say I was pretty bummed to not be in the US for election night. Watching Grant Park and the city streets across the nation erupt in celebration, it just wasn't the same sitting alone in my apartment at five in the morning. Still it was an amazing moment, seeing the celebrations across the world as the Bush era was declared definitively finished.

I started the evening by going with some American friends to a US election party at the town hall of the 3rd arrondisement here in Paris. We were expecting your classic election party, with television, food platters, drinks, etc. Instead we found an art exhibit! Apparently the French conception of an 'election party' involves an exhibition of photography from the US election and the screening of a conceptual art film about American politics. And no booze! There was a large screen showing French coverage of the election, but it was outdoors so the prospect of hanging out to watch the results there for six hours wasn't too enticing! Still it was interesting, when people heard our accents they were very eager to talk about the election. They were really fascinated by it, as the art exhibits reflected. And as the only Americans there we were the self-appointed experts of the moment.

We sort of moved around from cafe to cafe but after it started to get late I went back to my apartment to watch the results. I live on a street with a lot of expat bars and the place across from me was having an election viewing party, but I don't think they realized how late the result was coming because when they finally called it at 5am I went to look out the window to see if they were pouring into the street, and the bar had already closed! So I was a bit jealous as I talked to my friends in the US and they told me how people were pouring into the streets to celebrate. It was really wild. I spoke with one friend who lives in DC, he was outside the white house among the huge crowds that had gathered outside the lawn. He said it almost looked like they were going to storm the gates and drag Bush out themselves. Another friend called me from Grant Park in Chicago and said it was absolutely amazing, unlike anything he had ever seen. It wouldn't be hyperbole to say it looked like a third world country that had just overthrown a dictator. Here's a video someone took from a window in New York's east village.



So what prompted this huge outpouring of jubilation? Certainly it was an extremely unusual reaction to an election result in the US, especially in the last ten years, when election nights were more likely to see people crying in the streets of American cities. To understand why US cities erupted in celebration like this, you have to look beyond the current campaign and look back at the last ten years. Since the election of 2000, which most Democrats considered to have been stolen from Al Gore, residents of American cities in the Northeast and the West Coast have felt as if the Bush Administration was literally at war with them. The Republican Party's strategy during this time has been to appeal almost exclusively to rural white voters, vilifying urban dwellers and using social issues like abortion and gay marriage to drive cultural conservatives to the polls. The strategy worked, and the GOP was voted into office again and again by turning out rural votes. This left American city dwellers feeling almost completely powerless. as if they had no power and no voice while their country's leaders continually vilified and insulted them.

The same playbook was used by the McCain campaign in this election, dividing the country into "real America" and "fake America." So when that strategy didn't work this time, it signalled to city-dwellers that their long period of exile from power was finally over.

Of course there was another reason for the celebrations as well. Part of the GOP's process of vilifying urbanites also involved fostering distrust of African Americans, albeit not with direct language. African Americans felt completely ignored by the Bush Administration, particularly during Hurricane Katrina. Tuesday night the African American community celebrated a minor victory, the defeat of a party which most of them despise, and a major victory, the election of the first black president. No wonder there were tears in the streets. And it was hard not to be moved by them.

What's Next?

The fact is that despite their personal ideology, politicians often take their cues from the people who put them in office. For instance, no matter how much she is vilified as a "liberal" by the American right, Nancy Pelosi has pursued a rather moderate agenda as speaker of the house over the last two years, because she knows Democrats were given their majority by moderate voters in a center-right country. So who put Obama in office?

I thought former speechwriter David Frum made an interesting comment on the BBC Tuesday night, saying Obama was elected into office by a coalition of "the very top and the very bottom." Frum questioned whether over the long term these two groups will have aligning interests. College-educated whites voted almost exclusively for Barack Obama, as did 96 percent of African Americans. But non college-educated whites, especially those in rural areas, voted largely for McCain. Frum insisted on calling this group of McCain voters the "middle class," which I think is debatable. But there is no denying that the majority of blue collar white voters, those in the middle of the income spectrum, did not vote for Barack Obama.

So will this coalition of college-educated whites and African Americans hold? Do they have more in common philosophically than their hatred for George W. Bush? Only time will tell, but early philosophical differences may have already been exposed by the passing of Proposition 8 in California. The proposition sought to amend the constitution to overrule a recent California Supreme Court decision to allow gay marriages in the state, which prompted 18,000 marriages including those of a few celebrities including Ellen DeGeneres. In the end the proposition to ban gay marriage passed by a very narrow margin, and ironically it looks like it was Barack Obama's presence on the ballot that enabled it to pass. Because although the college-educated whites who turned out for Obama would have mostly voted against it, the huge African American turnout that was driven to the polls for Obama would have mostly voted for it. This is perhaps the biggest divide between African Americans, who are largely socially conservative and religious, and college-educated whites, who are often socially progressive and secular.

With control of both houses of congress and the presidency, the Democrats have a huge mandate for action. But what action will they take? it's going to be fascinating to watch.

Wednesday, 29 October 2008

Cross-Border Suicide is Tricky Terrain

A UK court reached an interesting decision today about the legality of transporting someone to another country for the purpose of assisted suicide. Assisted suicide is illegal in the UK, but the law is unclear about whether it is a violation of the law for someone to take an ill person to another country where assisted suicide is legal and do it abroad.

One such country is Switzerland, and a British woman suffering from MS has been seeking a ruling from the High Court that would clarify the law. She says that if she can be sure her husband won't be prosecuted for taking her to an assisted suicide facility in Switzerland, she wants to wait until the last stages of her illness, when she has lost all function, to be killed. She says if the law isn't clarified, she cannot take the risk that her husband could be prosecuted for transporting her to the facility in Switzerland, and she will have to take herself there, earlier in the stages of the illness when she can still get herself around without assistance.

Her legal argument is that the lack of clarity in the law is essentially forcing her to end her life earlier than she would like, while she could still lead a functioning and happy existance.

Though the practice is illegal, since 1992 almost 100 British citizens have had themselves killed at this facility in Switzerland, and the relatives who transported them there haven't been prosecuted. But the plaintiff, Debbie Purdy, says that she cannot in good conscience let her husband transport her to the facility if she knows there is a possibility that he could be prosecuted.

The high court as ruled that the law's lack of clarity doesn't infringe on Purdy's human rights, and it has concluded that only an act of parliament could clarify the law. Purdy's attorneys say she plans to appeal.

It seems a shame that this woman should have to spend what little time she has left on this earth dealing with a high-profile court case.

Friday, 24 October 2008

Austria's Far-Right Gay Secret: History Repeating?

The death of far-right Austrian politician Jörg Haider took an interesting twist today. The huge outpouring of mourning and sympathy which Haider's death inspired has received much press coverage in Europe over the past two weeks, but the biggest open secret about Haider has not - the fact that he was gay. That is until yesterday, when his lover of five years Stefan Petzner publicly acknowledged their relationship in a tearful confession.

What has followed has been some hesitation from European media about whether it is appropriate to cover the sexuality of Haider, who is married with two children, as a news story. The issue has been further complicated by the fact that his sexuality was hardly inconsequential in the details of his death. He died in a car crash driving home drunk from a gay bar he had been at with his lover. But before Petzner's televised admission, that detail was left out of all press reports in Austria. It's not hard to see why, when the reality of Haider's personal life are so inconsistent with the public image of the party he led - the far-right Alliance for Austria's Future (BZÖ). After his admission, Petzner was fired from his position as leader of the BZÖ. He had already attracted attention at Haider's funeral after television cameras caught him loudly weeping more than Haider's wife and two daughters combined. Petzner said in his interview that Haider's family was aware of their relationship.

The revelation has put the party into full damage-control mode, fearing that the news will scare off the core conservative voters in Southern Austria that make up the group's voters. The hugely popular Haider had recently led the party to great success, ushering in a victory scoring 8 percent in last month's general election. Now that this news might throw the party into disarray, there has been speculation it may merge with the populist Freedom Party (FPÖ). That merger would create the second-strongest political party in Austria.

So, the revelation about Haider's sexuality is hardly inconsequential. But still, Austrian media outlets have remained extremely hesitant to cover it. In fact, it was Germany's Bild newspaper that forced the details surrounding the circumstances of Haider's death into some of the Austrian press. Austria is one of the most conservative countries in Western Europe (many would say the most conservative) and has a particularly bad reputation for gay rights (though it does not have a form of civil partnership). The rest of the European media is full of criticism today for Austria's press, questioning why the country's media seemed to show such deference to the far-right leader in not reporting his homosexuality, which seemed to blatantly contradict the policy goals of his party. However the Austrian media has defended itself by pointing out that though the party's official platform demonized gays, Haider himself was never heard to utter any criticism of homosexuality amidst his attacks on foreigners and his praise for Nazis.

I can't help but wonder what effect all of this will have on the public perception of Austria in the rest of Europe, already badly damaged by the recent string of bizarre imprisonment cases, most notably the horrific tale of Josef Fritzel. That last case was also notable for the shocking way in which people 'looked the other way.'

Fascist leaders who lived secret gay lives while publicly condemning gay people to death is a familiar theme in Europe's history. As Austria slides further and further to the right, revelations such as these are bound to make people pretty uncomfortable, especially due to its almost creepy historical parallels.

Tuesday, 21 October 2008

Europe's Moment

The blog's been noticeably quiet the past week, apologies for that. I had two language exams for my French certification last week, and then this weekend I had a friend from London visiting. My life's been a lot busier than I thought it would be during this sojourn, non-stop French tests all week and then visitors from London on the weekends. It's fun though!

To answer the question I posed in my post last Monday, in the end the US did go ahead and follow Europe's lead on the bank buyout plan. It really has been an astounding thing to watch. Though it initially looked like the EU was stumbling in trying to devise a unified response to the crisis, over the past week that trend has been reversed and the EU has actually taken on a leadership role in the world's response to the crisis, with the United States following!

Perhaps one of the most surprising elements of the past week was to see UK prime minister Gordon Brown rise to the occasion and become the man of the hour. As BBC Europe correspondent Mark Mardell noted last week, Brown has suddenly become the leader of Europe, having devised the bank bailout plan which continental Europe shortly copied and then the United States followed. Though he initially failed to lead Europe with his first summit, French president Sarkozy's gung-ho 'throw everything at the wall and see what sticks' approach has actually served him well during this crisis. He was full of ideas when addressing the European parliament last week, saying the EU must lead in "overhauling capitalism." In fact it is Angela Markel - Germany's chancellor who is respected throughout Europe for her calm, steady and thoughtful leadership - who has really stumbled during this crisis, seeming almost erratic and lost. I couldn't help but smile when I saw Paul Krugman's piece in the New York Times last week praising Brown's leadership (on the same day that he won the Nobel prize, so it got lots of press). The UK had basically given up on Brown until last week. Now he's quickly rising in the polls, closing David Cameron's lead over him to single digits. As the saying goes, "cometh the hour, cometh the man." But how long will the praise last?

The new clout that the EU has during this crisis was in evidence at the Camp David meeting over the weekend. During this crisis the EU has some new clout and it is being wielded loudly by Sarkozy. The EU is, after all, now the world's largest trading block. And for the first time, the EU is being listened to seriously by an American president (albeit a lame duck one). Just to see the sight of a French president standing at Camp David and calling for regulatary overhaul of the world's financial system while the US president stands next to him was an amazing sight. And on his other side was European Commission president Jose Manuel Barroso, whose advice at the end of the summit that the world needs new rules and regulations and that these should be based on the European model, "not gung-ho liberalism." The fact that this is being taken seriously by the US shows how much things have changed in the past few weeks. Is this Europe's moment to take the reigns and devise a new global financial system based on European values? It seems suddenly, and unexpectedly, within reach.

Monday, 13 October 2008

Europe to Semi-Nationalize Banks - Will US Follow?

Perhaps it's appropriate that it is on Columbus Day that the Old World appears to be getting into gear. All I can say is wow. What a day in Europe.

In what can only be described as a veritable financial earthquake, the UK nationized its main banks, the Eurozone unveiled a massive bank bailout plan, and even Poland said it will have a plan in place to inject funds into banks. Across Europe, banks are going to be partly nationalized. And the US could shortly follow suit. Who would have thought they'd see the day?

After much angst over the past week over the EU's inability to come up with a coordinated plan, this morning an emergency summit of the 15 countries in the eurozone (the countries that use the euro), the governments afreed to offer guarantees for the troubled banks, commiting the national goverments to use public money to make sure no European bank is allowed to fail. The market responded well to the news. European trading closed up by the end of the day, and the euro jumped 1.1 percent against the dollar.

British Prime Minister Gordon Brown even stopped by to join the leaders in a show of good fath, even though the UK isn't on the euro. But even before he went, Brown had outlined specifics this morning on the plan for the UK to use public funds to bail out the ailing banks, as announced last week. This morning it was revealed that the UK would undertake a partial nationalization of the British banking system, with the government taking a majority share in Royal Bank of Scotland and Halifax Bank. Continental Europe will soon follow suit. This afternoon each government, from France to Germany to Portugal to the Netherlands, all announced the massive amounts of money they will each make available to buy stakes in their banks. It's a truly stunning development.

And just now Polish government officials said that that country is also coming up with a plan to partially nationalize its banks through funding. This may be an indication that tomorrow, when all 27 EU countries meet in Brussels, the non-Eurozone EU countries will sign on to the plan.

So is this the unified European plan that the markets wanted? Sarkozy was presenting it that way this morning, saying, "This is indeed a common action that we are taking." But the agreement is only a framework, with each government taking steps at a national level according to its own interpretation of what should be done. So far, for today at least, this seems to have been enough coordination to calm the markets, both in the US and Europe. But will it last?

Apparently the US Fed will meet tomorow and iron out the final arrangements for bank funding, and it is thought they may come up with a plan similiar to that announced today in Europe, where the US government would take controlling stakes in American banks. It is expected that if the 27 EU countries do reach a consensus tomorrow on the bank partial nationalization plan, they will also tomorrow recomend that the US follow suit. If the US follows the recomendation, it will be truly amazing. To think that this week the US could follow Europe's lead toward economic nationalization shows just how rapidly things are changing before out eyes. But right now it's anybody's guess what the US will announce tomorrow.

The long and short of all this? I am now a banking customer of the UK government. Amazing.

Wednesday, 8 October 2008

Britain follows with UK Bailout Plan

Those in the US who thought the $700 billion bailout package passed by the congress last Friday was extremely unusual might be reassured by seeing another bailout unveiled across the pond - a £500 billion ($870 billion) plan for the UK. But importantly, the British bailout plan is entirely different from its counterpart in the US. Here's why.

For starters, the £500 billion figure being used by the British media this morning is a bit misleading. Though all $700 billion of the US package will be coming directly from taxpayers, only £50 billion ($87 billion) of the UK plan is coming from taxpayers money. That part of the plan will be used by the government to partially buy out failing UK banks. This is where the plan differs significantly from the one in the US. The $500bn US taxpayer-funded bailout package will be used to buy the bad debt from the ailing financial institutions to clear up their balance sheets. The
£50bn UK taxpayer-funded bailout package will be used by the government to buy partial ownership in failing UK high street banks, the banks most people use to store their savings.

Additionally, because of the differences between the US presidential system and the UK parliamentary system, there is no doubt as to whether this bailout plan will become reality. It's definitely happening.

So where is the £500 billion figure coming from? Some news outlets have decided to include the other part of the plan, half of which is theoretical money being made available and the other half of which is just a larger injection than normal by the Bank of England into the money markets, in the headline. £200 billion will be coming from the Bank of England under its existing Special Liquidity Scheme. The Bank of England always injects money into banks under this scheme, although now it will be putting in much more money much faster. Additionally, the Government is making £250 billion "available" for banks to guarantee medium-term debt in a bid to encourage banks to start lending to each other again, although so far the banks have said they won't use it.

Brown said that the £50 billion investment by the taxpayers will yield a return on the investment, as is being claimed in the US. Like in the US, Brown seemed to be throwing the financial philosophy of the ruling government (in this case New Labour) out the window in order to urge the new plan. "This is not a time for conventional thinking or outdated dogma but for the fresh and innovative intervention that gets to the heart of the problem," he said this morning. This language perhaps struck more than a few people as unusual this morning, as that "outdated dogma" was developed and followed by Brown himself when he was chancellor under Tony Blair. Such quick philosophical rethinking echoes the language that has been being used in the US about the Anglo-Saxon model of free-market capitalism.

The two men said the government had been working on this plan for weeks, but has chosen to unveil it now because of the market meltdown which took place yesterday, in which the high street banks plummeted on the UK stock markets. My bank, for instance, lost 40 percent of its value in the course of yesterday, making me feel quite nervous about my savings. This morning's announcement seems to have had a small rallying effect on the UK markets - for now.

European Plan?

So now that the UK has become the first EU country to come up with its own bailout package unilaterally, does this mean any talk of a pan-European bailout fund is dead in the water? Not necessarily, said Brown. The prime minister also announced that the UK has put forward ideas this morning for a pan-European funding plan. Yet he still ruled out extending the UK's savings account guarantee to cover all deposits, even as other European nations are scrambling to do so.

The fact that Brown didn't have much else to say about a pan-European response probably means that coordinated action is unlikely, which may mean that his announcement does little to calm the European markets in the long run. The market turmoil over the past two days was largely in response to the fact that the EU seems to have disintegrated in response to the economic crisis, with each member nation taking drastic unilateral steps which seem to conflict with one another. As Swedish finance minister Anders Borg told reporters in Luxembourg yesterday, "One country's solution is another country's problem.'' Though Brown's announcement this morning may temporarily calm the British markets, it may send the continental European markets into even more turmoil, and by tomorrow the beneficial effect of the announcement for UK trading could be overtaken by continues fears about the lack of a coordinated Europe-wide response.