Gulf Stream Blues

What’s wrong with a transfer union?

2012-01-30T10:14:00.002+01:00

The eurocrisis has introduced a plethora of strange words into our everyday vocabulary: ‘Contagion’, ‘technocrats’, ‘moral hazard’, ‘austerity’ and of course the derisive description, ‘transfer union’. This last term is used by those in Northern Europe who warn that bailing out the economies of Southern Europe will lead to a European Union where money steadily flows from rich states to poor states and the North loses out. Many argue that, in fact, this is what the EU has always been.

Such feelings are at the core of the German public’s resistance to the Greek bail-outs – emotions that have turned what is normally one of Europe’s most pro-EU countries into a relatively more eurosceptic place these days. “Why should we work hard just to see our money flow to lazy people in the south?” some Germans are asking.

Their resentment is fueled by charts like the interactive diagram below, found in the Guardian newspaper’s new ‘Europa’ section (a truly fantastic project with five other papers that I’m very excited about). It shows which countries are net ‘payers’ into the EU, and which are net ‘receivers’. The statistics are familiar and often brought up when people talk about the European Union – the biggest recipients of EU funds are in Southern and Eastern Europe while the biggest contributors are in Northern Europe.

So yes, it is an observable fact that Germany pays in more than it gets out. And it is an observable fact that Germany has a higher GDP than its Southern neighbours, that it produces more and has a much healthier economy.

But how did the German economy get to this triumphal position? A lot of Germans seem to forget that in the 1990’s their economy was a mess – mass unemployment, record low industrial output and difficulties integrating East Germany into the economic system. All of that changed starting in 1999, when Germany’s output started to skyrocket and its economy boomed. And what happened in 1999? The euro was born.

Suddenly Germany had access to the largest developed market in the world, millions of new consumers to buy German products which the thrifty domestic market had hesitated to buy, with no exchange rate fees or complications. Germany was given unfettered access to the legions of Southern Europeans who were eager to buy well-made German products.

So when some Germans say they want to abandon the Euro because they don’t want to share their success with people who haven’t worked for it, they forget that it was the euro itself that spawned that success.

After all, that is the nature of a large federal union. There are going to be richer, more prosperous and more industrious states that support less prosperous states. The trade-off is that those prosperous states get access to a large market, from which they draw the wealth that they then have to share in order to sustain that market.

What about America?

I was thinking about this last week when this chart of US state net payers and net payees was circulating around the internet.

Normally the issue of the wealth of the coastal states flowing to the interior and Southern states is not something that is ever discussed in the US. It’s just taken as a given – people in the prosperous Northeast and West Coast accept the fact that much of their federal tax money is not going to go back to them but is instead going to go to supporting the poorer states of the union. That itself is not an issue.

The grievance that resulted in this chart being circulated last week is that the political dynamic is so bizarrely skewed from the reality shown in this chart. In today’s political climate it is the prosperous states with higher levels of education that consistently vote Democratic, and it is the poorer states with lower levels of education that consistently vote Republican (the so-called “blue states” and “red states”, named after the colours they are given in election results). What has a lot of Democrats annoyed is that paradoxically it is Republicans and Republican voters who are complaining about ‘socialism’ and ‘redistribution of wealth’, insisting that everyone should be made to stand on his own two feet – even though it is the red states and their residents who are the biggest recipients of social aid.

But this resentment from Democrats, while a valid point, isn’t the subject of this blog post. My point in bringing up this chart is simply to point out that this is how a federal union works – there is an inherent trade-off. The prosperous states support the less prosperous states - who produce less for geographic, cultural or historic reasons – in exchange for having unfettered access to their markets so they can sell them things. And of course there are also cultural benefits to being in a union with these states as well - think about all the contributions these states have made to US culture.

Those of us from the prosperous states don’t gripe about being in a 'transfer union' – in fact I don’t think I’ve ever heard anyone bring this up. The reason this chart was being circulated wasn’t because the prosperous state residents want to secede from the less prosperous ones – they just want their less prosperous neighbours to get a grip on reality.

Now many people say the reason this federal model won’t work in Europe is because Europeans don’t have solidarity with other Europeans if they are from another member state. In the US, people feel ‘American’ before they feel significant identification with their state. In fact, most states don’t even have adjectival forms for their residents (can you be a Connecticutian? A Michiganer? These words aren’t used). This wasn’t always the case – 150 years ago Americans identified more strongly with their state than with the federal union. But because we’re all Americans now, someone from Connecticut doesn’t feel like someone from Alabama is a ‘foreign’ person or some kind of ‘other’.

In Europe this quite obviously isn’t the case. Few people outside of the Brussels bubble would identify themselves as a “European”. They identify with their member state. This aspect of the European project, fostering a ‘European identity’ among citizens, has failed – despite 50 years of effort. So it’s hard to get a Swede to feel a sense of obligation and solidarity to help their European brethren in Greece.

What about India?

But just because a European identity hasn't been created so far, does this mean it's impossible? The Eurosceptic argument assumes that such solidarity would never be possible in Europe because these countries speak different languages and have relatively different cultures, unlike the American states. But to me this argument doesn’t hold up if you look at the other major federal union – India.

When it was created in 1947, the new union of India brought together disparate states which speak different languages, have different histories, different religions, and had existed as independent states for hundreds of years before the British loosely united the subcontinent in the 19th century. Many Indians consider the Dravidians in the South to be an entirely different race. Yet India is a model federal democracy. Few people would say India can’t work and shouldn’t exist because its peoples are so different and speak different languages. So why do they say that about Europe?

India also has its prosperous states which pay for the poor states – and this imbalance between states is far greater in India than it is in Europe. But try telling an Indian living in New Delhi that being able to sell to a market of 1 billion people isn’t worth the sacrifice of seeing wealth transfer from rich Delhi to poor Calcutta. They would laugh at you.

Undoing nationalism

So what’s the difference between the Indian situation and the European one? Some of it is, frankly, arrogance. Europeans have a tendency to think their history and culture is far more important than the history and culture of people in Africa and Asia because their history was less recorded.

But more importantly, Europe in the 19th century was the birthplace of nationalism – the creation of nation-states linked to ‘peoples’. The height of nationalism - which gave birth in the 19th century to brand new states which had never existed before like Germany, Italy and Greece - drilled these new national identities into people’s heads. In order to solidify these new states, rigid cultural and linguistic conformity within the sometimes arbitrarily drawn borders was enforced through language bans, expulsions, population transfers and - above all – national education programs.

Europeans have spent the last century being taught that their individual nation is a distinct ‘people’, an entity which has existed for hundreds or even thousands of years and should strive for independence above all else. Indians never experienced this period of nationalism. Under the British raj, inclinations toward regionalism were discouraged for obvious reasons. And once the Indian state was created a national identity had to be created – largely through Hindu nationalism that played up religion and played down racial divisions between Aryans and Dravidians.

So 150 years of nationalistic education is hard to undo, especially when European countries have still not begun teaching students the basic principles of how the EU works. But it’s not impossible. Europe was not always this way – divided into tiny nation states where people saw themselves as fundamentally different from their neighbours. This is a creation of the modern world. If nationalism can be untaught, if Europeans can be made to see the economic benefit of a united Europe, then maybe some day the EU can get to a place where it seems natural for wealth to be transferred from Germany to Greece, just as it is transferred from New York to Alabama.

Europe’s SOPA?

2012-01-26T15:56:00.007+01:00

The European Parliament’s website has been shut down by hackers today, allegedly in a denial-of-service attack from Anonymous in protest of imminent anti-piracy legislation restricting internet freedom. But as the IT folks in parliament scramble to fix the problem, the functionaries are sitting around scratching their heads in confusion. Did we pass internet piracy legislation?

Their confusion is warranted. By all accounts the EU has been on the internet-freedom-lovers side during this debate. During the fallout from the Wikipedia ‘blackout’ last week, US politicians weren’t the only ones beating a path to the door to distance themselves from the now toxic SOPA legislation on internet piracy. On Friday the EU’s Digital Agenda Commissioner Neelie Kroes tweeted that she was “glad the tide is turning on #SOPA,” adding “speeding is illegal too: but you don't put speed bumps on the motorway”.

Home Affairs Commissioner Cecilia Malmström also tweeted against the US legislation, noting that ‘sopa’ in Swedish means garbage. Notably, no public statements about the US anti-piracy bills had been made before the Wikipedia blackout. It’s quite unusual for the EU to make comments about US legislation. But such was the effect of the blackout – which was, after all, global (Eurocrats felt quite helpless without Wikipedia last week!), that even politicians not involved in US lawmaking felt the need to make a statement about it.

Kroes was eager to point out last week that there is no EU version of SOPA being considered. And she is right. But there is an international treaty which some internet freedom advocates say is just as bad as SOPA, and it is heading toward a speedy passage in the EU. It is called ACTA, or the Anti-Counterfeiting Trade Agreement.

ACTA was originally forged between the United States and Japan, and other countries can join voluntarily. It seeks to create an international body outside the WTO or the World Intellectual Property Associaiton (WIPO) establishing a legal framework for copyright violations, including those that occur on the internet. So far it has been signed by the US, Japan, Australia, Canada, Morocco, New Zealand, Singapore and South Korea.

Today the European Commission and all 27 member states signed the treaty. But the treaty must still be approved by the European Parliament. Hence the denial-of-service attack on the Parliament today. Some are saying it’s a bit strange for Anonymous to be going after the Parliament when it was the Commission and the Council who signed the treaty today, and perhaps it reflects a lack of knowledge from the hackers on how the EU works. It is unclear at this stage whether the hackers were confused and thought the EU parliament had just signed the treaty, or if they intend this as a warning to MEPs to vote against this treaty in June.

The European Parliament doesn’t get to play a pivotal role in European lawmaking all that often, so the fact that it is now up to them whether the world’s largest common market will sign up to this treaty will likely be sending MEPs’ heads spinning with sudden feelings of consequentiality.

But MEPs cannot be swayed only by, as some have termed them, “internet thugs”. They need to find out, is ACTA really as bad as the internet freedom advocates are saying? I’m no expert, so here’s a summary of the criticism of the treaty. From what I can gather the MEPs don’t seem to have paid a lot of attention to this until now. But they did pass a resolution in 2010 during the early stages of ACTA negotiations saying that it must respect freedom of expression and right to privacy. So they’ve already signalled they will be a sceptical audience. The original rapporteur appointed to guide this legislation through the parliament quit in protest after saying he was being pressured by the centre-right EPP MEPs to rush the legislation through "before public opinion could be alerted."

Privately parliament staffers working on the issue have told me it's just a question of monstrously horrible timing. The 26 January signing date has been planned for months, and it just bad luck that it happens to come a week after the SOPA protest, giving media hacks like myself an easy peg to try to tie the two together.

The Commission realised last week that the timing of this signing was going to look bad, I'm told, but there was no way to change the date. They've apparently been desperate to avoid ACTA getting the SOPA treatment. Today’s denial-of-service attack will certainly alarm them – but I doubt it’s going to get enough media attention to get them really scared. It would take another Wikipedia blackout to really frighten them.

The Commission has been keen to portray itself as a protector of online privacy and internet freedom, as opposed to the US government. Just yesterday they proposed an overhaul of data protection rules that will force internet companies to allow users to opt out of data collection. It comes the same week that Google announced it will now force users to accept having their details stored across its sites.

Last week the Commission even released a Q&A about why ACTA is not SOPA. But if the heat gets too intense, they may back off of their support (for instance by not fighting a European Parliament rejection of the treaty). This Commission is keen to be seen as a champion of internet freedom, after all.

Croatians vote to join EU

2012-01-23T21:21:00.000+01:00

Amidst all the bad news, the EU can feel at least a bit reassured following the strong endorsement given by Croatians this weekend to their country joining the European Union. Though you'd be forgiven for getting the impression from the English-speaking media that the EU is now a toxic project that few want to be associated with, 67% of Croatians voted on Sunday to join the union.

An accession agreement was already signed by the country's government in December, and they are set to become the 28th member state at the end of this year. But the accession required a public referendum to go through. There were some rumblings of concern last year that the eurozone crisis could deliver a surprise no from the Croatian people. Brussels received a pleasant surprise last night when news came that the referendum had not only passed, it had passed by a large majority.

The vote comes a year after Estonia's decision to join the euro currency. Both decisions show that even in the midst of the eurozone crisis, the European project continues to move forward - not backward. Of course, both of these things were planned and in motion before the eurozone crisis hit. The real test may come next year when the people of Iceland vote on whether to move from their status as a pseudo-member-state in the EEA to a full member state of the EU. Opinion polls are already showing that referendum could have a hard time passing, particularly as the Icelandic economy recovers from their crisis as the eurozone slips further into its much larger crisis.

The biggest American political story Europeans haven't heard of

2012-01-20T12:06:00.004+01:00

The US presidential primary race has attracted its usual amount of fascination here in Europe, and yesterday’s developments - with the Iowa race being re-called for Santorum and Rick Perry dropping out - were front page material. But behind the spectacle of the drawn-out US primaries, there is a far more interesting story going on in the state capitals.

Of course it’s not surprising that the European media is ignoring these huge developments at state level, because the Washington beltway media has also ignored them. They also ignored the unprecedented political revolution in 2010 that the recent events are a reaction to. While in Europe the media tends to ignore ‘federal’ (EU) politics and focus only on member state politics, in the US it is the opposite. The US media (even local state media) tends to focus on federal politics in Washington and there is little interest in what goes on in state capitals.

Thus, when the Republicans enjoyed an unprecedented victory in the 2010 midterm elections, the focus was almost entirely on the fact that they had taken control of the US House of Representatives. What was largely ignored was the fact that they had at the same time taken over state legislatures with unprecedented majorities – giving Republicans the most power in state governments they have had in decades. Republicans wrested six governorships from Democrats, giving them control of 30 of the 50 state executives. Five states saw both legislative chambers (state senate and state house) switch from Democrat to Republican majorities. In seven other states they gave themselves control of the entire legislature by picking up huge majorities in an additional chamber. The elections left Republicans controlling the entire government of half of US states, leaving them with Hungary-like majorities capable of passing whatever state legislation they like.

So what have they done with this unprecedented power in a time of economic crisis? Though the they were swept into office on a wave of pro-austerity fervour with pledges to fix the economy, the Republican state legislators have instead largely focused on old social causes that have nothing to do with the economy. They’ve pushed through anti-abortion bills (a record number in 2011), union-busting bills, ‘emergency manager’ laws taking away local government in mostly black cities and voter-ID laws (considered by opponents to be voter suppression methods because many African Americans, who vote overwhelmingly Democratic, do not have drivers licenses to show at the polling booth). MSNBC’s Rachel Maddow has been virtually the only mainstream media journalist covering these developments, and she did a great summary last March:

As Maddow has been reporting, what has followed has been a huge public backlash to these efforts. The efforts to strip unions of collective bargaining rights in states like Wisconsin, Indiana, Michigan and Ohio was met with the largest public demonstrations seen in the US since the run-up to the Iraq war. Before ‘Occupy Wall Street’ was even a spark in anyone’s imagination, union demonstrators literally took over state capital buildings in protest of the coordinated Republican effort to dismantle American labour.

But the most incredible developments in the backlash to Republican state efforts have come this week in Wisconsin. Opponents of the new Republican Governor Scott Walker (elected in the 2010 Republican sweep) have managed to collect the required 500,000 signatures in order to force a public recall vote for the governor. In fact they didn’t just collect the required number. They doubled it, turning in more than one million signatures on Tuesday- a quarter of the state’s voting-age population. More people have now signed the petition to recall Governor Walker than voted for him in 2010. This follows a public referendum in Maine which annulled the Republican legislature’s bill ending same-day registration for voters (another perceived effort at suppression of Democratic voters, since young first-time voters tend to vote Democratic).

Though the number of signatures was a shocking development, the news barely registered in the US national media – and therefore was ignored in the rest of the world’s media as well. But its implications are huge. As Maddow noted on Tuesday’s show,

“Voters in the states governed by Republicans cannot wait until the next election to undo what they have done. They want these politicians and their main priorities out, and they want them out now.”

Republicans have shown how they govern. They inherited unprecedented political power in 2010, both nationally and at state level. Voters have watched what they’ve done with that power, and evidence suggests a majority don’t like what they see. The Republican-controlled congress has been the most inactive in American history, blocking any and all legislation during an economic crisis in an effort to unseat President Obama in 2012. The state legislators have done the opposite, pursuing an active agenda to accomplish long-held ideological goals like union suppression and anti-abortion laws.

The common wisdom in Europe may be that the dire economic situation in the United States is bad news for any incumbent, and Barrack Obama will have a tough time getting re-elected. But don’t forget that the Republicans are the incumbents over there as well. They control the House of Representatives and hold a blocking filibuster-majority in the Senate. They control the majority of state governments. And their policies over the past two years have done nothing to help the US out of the economic crisis, leaving the US congress with its lowest public approval rating in history.

Americans may be feeling disillusioned with Barrack Obama, but that’s not the complete picture. The Republicans will have a tough time defending not only what took place during the Bush era but also what they have done since then, and the Obama campaign will be keen to drive that message home.

All eyes will be on the recall election in Wisconsin this summer as a harbinger of things to come. Only three governors have ever been successfully recalled in US history. If public anger against the actions of Republican state lawmakers is strong enough to win a recall, it will not be a good sign for the GOP going into the November presidential election.

Would the EU allow a Scottish secession-accession?

2012-01-11T23:19:00.004+01:00

Following the whirlwind events of this week, Scotland now appears to be closer to secession than it has ever been in the 300-year history of Great Britain. This week the first minister of the devolved Scottish Parliament set a date for the first referendum on Scottish independence in history. And according to polling, if the referendum were held today, Scots could very well vote to separate from the United Kingdom.

The discussion of secession has been hanging in the air for some time, ever since the secessionist Scottish National Party won a majority in the Scottish Parliament in 2007. But now with an independence referendum date set, discussion has turned for the first time toward the real practicalities of what a split would entail and the difficult questions it would present. Who does the oil in the UK's territorial North Sea waters belong to - Britain or Scotland? Who would be on the hook for the massive bailouts of Scotland's two banking giants in 2008? Would Scotland use the British pound, the euro, or a new Scottish pound?

Scottish First Minister Alex Salmond took the decision in response to a call from UK Prime Minster David Cameron to call a referendum, which the SNP had promised in their election, now. London knows that with the current economic crisis, Scots would be unlikely to be very brave at the polls. But Salmond balked, saying he would not take orders from London and setting a referendum date in 2014.

EU complications

Though there have been a lot questions asked in the British media today about what secession would mean, as far as I can tell not a lot of thought has gone into the EU implications of all this. Everyone has been asking whether or not Scotland would choose to use the euro. But there's a leap being made there. In order to use the euro, Scotland would have to be part of the EU. That is not up to them, it is up to the 27 member states. And there are plenty of member states with good reason to block Scotland's entry.

No member state has broken up since the creation of the European Union in 1992. But, precedent has been set through the separation of Algeria from France while it was a member of the European Community (the precursor to the EU. Algeria did not automatically become an EC member and never applied to join, so based on the legal precedent, the same would be true of Scotland today. It would not automatically be in the union but would have to apply to join as a new state (and as a new state, it would not have the opt-out from joining the euro that the UK has, so eventually they would have to join the euro).

Five current EU states (Slovakia, Slovenia, Lithuania, Latvia and Estonia) seceded from larger states (Czechoslovakia, Yugoslavia and the USSR respectively) within the past twenty years. But they did so before joining the EU. In hindsight, Slovakia's split seems quite prescient. It's debatable how long they could have made it as a completely independent country. But by becoming an independent country just 10 years before joining the EU, they never had to find out. They got to join the EU as a member state with all the rights and privileges that affords - their own commissioner, their own seat in the council and a veto right. Nice work if you can get it.

Bearing that in mind, it would be very much in the interest of any independent-minded region in Europe today to secede from their member state and rejoin the EU as an independent country. The benefits of being part of a large country are much less convincing in Europe now that there is a common market. Because of the representation afforded each member state regardless of its size, its better to be a small member of this union than a region within a larger one.

As a regional government, Edinburgh has no legislative voice in the EU institutions (though the Scottish people do have their own voice in the European Parliament through the MEPs). As a member state, they would suddenly have an equal voice to Germany, France or the UK on many issues (those which require unanimous voting).

But countries with regions with active secessionist movements (Spain, Belgium and Italy) would not want to set a precedent by allowing Scotland to secede from their country and accede to the EU. Even Germany might vote no for fear it would give Bavaria ideas. EU accession needs the unanimous approval of all member states.

Using the United States as a point of comparison, it would be hugely advantageous for a US region to separate and form their own state. If Long Island decided to do this, they would suddenly find themselves with two dedicated senators all to themselves, their own electoral votes to choose the president, their own governor and their own taxes. But even though the way the states are organized is much more accident of history than rational policy (the smallest state, Rhode Island, is the geographic size of Los Angeles, and 38 states have a smaller population than New York City), changing the way they are organized is not up for discussion. Because there's an understanding that the way the way the states were when they entered the union is the way they're going to stay. Everything freezes whether the borders make sense or not, because to open up that can of worms would be a logistical and political nightmare. The EU, it can be assumed, also doesn't want to open that can of worms.

Could Scotland go it alone?

Scots are generally much more pro-European than their English counterparts, and their inclination toward Social Democracy is often said to make them a better fit with the continent than England has ever been. Indeed, in London there seems to be an assumption from some that the Social Democrats of the continent would leap at the chance to welcome Scotland into their midst. But even assuming there were some Social Democrats in power by the time of Scotland's secession, are we really to believe that European nations would be willing to risk stoking secessionist enthusiasm in their own midst just to gain a new ally on the North Sea?

And this leads to the larger question - what if the EU blocked the accession? If Scotland couldn't be part of the EU, could it really survive as an independent country? There might be Scots tempted to think they could survive in Norway-like isolation with their oil wealth. But that wealth is finite - even if the UK does allow them to claim 90% of Britain's offshore oil as Edinburgh is demanding. Some calculations have said it won't last more than another 10 years.

So if EU countries made clear to Scotland before a referendum that they would not allow them to join the EU, would the referendum still succeed? Would it even be held? And if an EU 'non' would mean an effective veto to Scottish independence, could the UK effectively block it by saying they themselves would block Scotland's entry into the EU? I admit that last scenario is pretty implausible, but who knows what cards London would be forced to pull out if the battle over the North Sea oil got really ugly.

United Kingdom of England and Northern Ireland?

On more of a historical curiosity note, I also wonder what would happen to the UK without Scotland - at least in terms of its name. Great Britain would cease to exist, leaving the UK to have to change its name to the 'United Kingdom of England and Northern Ireland'. Perhaps they could add in Wales, which curiously is still not one of the constituent kingdoms of the UK even though it now has its own parliament (it's part of England). The United Kingdom of England, Wales and Northern Ireland? The last time the UK had to change its name was in 1927, when it had to add the 'Northern' before Ireland after the Republic declared their part of the island independent.

What's important to keep in mind in all this is that the peculiarities of the British situation would make this an extraordinarily complicated divorce, and the EU question would only be one part of that. The vast majority of secessions over the past decades have been cases of federal entities breaking apart into already existing constituent republics. the SSRs of the USSR already existed as semi-independent entities. So did the republics of Yugoslavia, as well as the separate Czech and Slovak republics within the federation of Czechoslovakia. Even the unsuccessful secession referendum in Quebec would have been easier since Canada is a federal country. By contrast, Scotland existed pretty much in name only from 1707 to 1998 - administratively at least. It was a seperate 'kingdom' within the UK, but it did not have its own government in the way that a US state or a Canadian province does. The UK was - and still is - a centralised government, not a federation.

With this in mind, trying to figure what belongs to whom would be a lot more difficult in this case than in a federal country like the US or Germany. In the end, the Scots may decide that it's not worth the trouble. But they have two years to make up their minds.

Azerbaijan could make this an awkward year for Eurovision

2012-01-06T13:03:00.006+01:00

It’s a new year, and of course this week everyone’s minds are on one thing – Eurovision 2012! Ok maybe not, but an interesting article in Der Speigel this week details the way in which Azerbaijan is already engaged in a public relations push ahead of their turn to host the world’s largest non-sporting television event in May of this year.

Azerbaijan will host the contest because they won last year. But there are concerns that this could be one the most problematic year in the show’s 56-year history because of the human rights record and military conflicts of the host country. Seemingly aware of this less-than-stellar reputation, the Azerbaijanis have reportedly stepped up a charm offensive in the core members of the European Broadcasting Union – Germany, France, Spain, Italy and the UK. Of course this is all part of a larger charm offensive by the oil-rich country, particularly as the Nabuco Pipeline project moves forward.

But could this year’s contest highlight the awkward relationship between the oil-hungry West and this autocratic regime? Or, as many argue, will an international event like this help to bring Azerbaijan more into line with the West and with Democratic principles? I suspect it may be the former. Even as Azerbaijan pursues its charm offensive, there are reports circulating that they are evicting Baku residents in order to build the 25,000-seat arena that will house the show this year.

In the past the contest has been held in Francoist Spain, Zionist Israel and, most recently, Putin’s Russia. But Eurovision’s first trip to the Caucasus, to a small autocratic country which still has a semi-active conflict with its neighbour Armenia, could prove more troublesome than all three.

Franco’s Spain may have been a Fascist dictatorship, but it was still a main country of Europe. Holding the Eurovision Song Contest in Israel may have been a strong statement, but it was consistent with Europe’s support for the country (and in turn reinforced perceptions in the Arab world that Israel is a European colony). Russia’s spotty track record on human rights, particularly gay rights, may have caused some discomfort with the song contest’s large gay following, but Russia is still a large mainstream European player that can’t be ignored.

Azerbaijan, on the other hand, is a small dictatorship on Iran’s border ruled with an iron fist by a dynasty of autocrats. Whatever discomforts existed two years ago over Russia’s human rights record, they are dwarfed by the situation in Azerbaijan. Media freedom is severely curtailed and few independent news outlets exist. The country is ruled by a cadre of mafia-like families who control virtually all aspects of the economy. In diplomatic cables released by Wikileaks in 2010, the US diplomats who were station there described it as a feudal society, where “a handful of well-connected families control certain geographic areas, as well as certain sectors of the economy." The leaked cables also contain remarkably blunt descriptions of the ruling family, including the heavy plastic surgery of the powerful first lady Mehriban (pictured above along with Azerbaijan president Ilham Aliyev and the Browns).

Azerbaijan is ranked 171 out of 196 countries for press freedom, 135 out of 167 countries in the Economist’s Democracy index and is the 40th worst country for corruption according to the world corruption index. Dissidents are violently suppressed. One such crackdown led to this photo which made the rounds as one of the most iconic of 2011.

Like in Russia, there will likely be discomfort for the contest’s large gay following in this year’s host country. Like in neighbouring Iran, were the vast majority (three-fourths) of the Azerbaijani people live, there are few openly gay people in Azerbaijan. While homosexuality isn’t punishable by death as it is for Azerbaijanis in Iran, homosexuality is still considered as an aberrant behaviour rather than an identity in Azerbaijan. According to the United Nations, accusations of homosexual acts are often used by state-controlled media to discredit government opponents or journalists. But, like in Russia, homosexuality was decriminalised in 2000 in order for the country to join the Council of Europe.

Then of course there is the concern over Azerbaijan’s past behaviour in the Eurovision Song Contest itself. The country has been in an active conflict with its neighbour Armenia since 1993 over the disputed territory of of Nagorno-Karabakh, which is now technically still part of Azerbaijan but is under Armenian military control. This conflict has in the past bled into the song contest. In 2009 a number of Azerbaijanis who had voted for Armenia's entry Anush and Inga (pictured left) during the contest that year were reportedly summoned for questioning by the Ministry of National Security. Once word got out, the EBU threatened to exclude Azerbaijan from the contest if it ever happened again.

There were also allegations in 2009 that the Azerbaijan broadcaster blurred out the number for people to call to vote for Armenia during the contest. The EBU fined Azerbaijan €2,700 euros for this, as well as for distorting the TV signal during Armenia's performance. There is still an open question over whether the Armenian entry will be able to go to Baku for next year's contest, as Armenians are not allowed to enter Azerbaijan.

There are also questions over the political stability of the regime. We are, after all, still in the age of the Arab Spring - and Azerbaijan is a Muslim country (though it is not very religious, as opposed to Azerbaijanis in Iran). There are already signs that the Arab Spring movement could inspire more protests against the Aliyev family, which has ruled Azerbaijan since 1993, as occured last year. The protests last year were forcefully repressed by the government, which is clearly nervous that the violent anti-government demonstrations in the Middle East could spread to their country.

It is entirely possibly that come May some large-scale rebellion could have broken out. Though the elite families are getting richer and richer from the country's oil wealth, over 40% of the country's population lives in poverty, according to Der Spiegel. The average monthly income is just €24. At the same time millions of dollars and euros are flowing into the country to develop its oil infrastructure. It's not exactly a recipe for stability.

So it will be an interesting year for Eurovision to say the least, and one could envision a host of scenarios that could result in the contest being cancelled for the first time in its histroy. This will be one to watch.

Is Iowa the problem, or is it the primary system?

2012-01-04T20:39:00.004+01:00

While I was home in the US over the past few weeks I witnessed the quadrennial spectacle of the Iowa caucuses - shivering reporters in front of the capital dome in Des Moines, candidates eating corn on the cob while clutching plump cord-fed babies, the usual fare. And I was also able to witness the quadrennial griping about why the United States allows “a few hundred farmers” to pick its president.

The complaining about the Iowa caucus, where the first nominating primary for both political parties’ presidential candidates is held, is both predictable and legitimate – even if the language used sometimes smacks of regional snobbery. The Iowa caucus makes or breaks politicians running for the presidency. Barack Obama owes his presidency to winning the Iowa Democratic caucus in 2008. This year, the result of the Republican caucus will force Michele Bachman and Rick Perry to drop out of the race. And the Iowans have elevated Rick Santorum from obscurity to be the main challenger to frontrunner Mitt Romney.

But the Iowa caucus is a big deal only because it is first. And being first means presidential candidates promise Iowa all sorts of lovely things (just look at the corn subsidies of the past four decades – and you wonder why Americans have corn syrup in most of their food for no reason?). The Iowans go through outrageous lengths to make sure they are first. When South Carolina and New Hampshire tried to move their primaries ahead of them this year, Iowa moved theirs to the earliest possible day in 2012 – 3 January.

This year the criticism went perhaps a little too far. A professor at the University of Iowa (himself a transplant from New Jersey) wrote a column for The Atlantic about a much-asked question – why should a state that is not ethnically or ideologically reflective of the country as a whole be given such a prominent role in selecting the nation’s president? But he asked it in a way that was incendiary to say the least, calling Iowa a place that's "culturally backward" and teeming with "slum towns”, where the 96% white population “clings to guns and religion.”

The article spawned a firestorm of criticism from Iowans, the best of which was this video posted on YouTube. ‘He’s an elitist East Coast liberal snob!’ the Iowans cried. But whether or not his observations were accurate (he has lived in Iowa for 20 years and has written two books about the state), the larger point seemed to be lost amidst all the name-calling. Does this system, in which a small group of people in early primary states choose presidential nominees through government-organised elections, really make sense?

An American peculiarity

What is rarely brought up in these discussions about Iowa is that choosing party nominees by public vote is neither a long-standing American tradition nor a common worldwide practice. In fact America is the only nation to choose its leaders based on an extensive system of popular vote primaries. US states only gradually began doing so starting in the early part of the 20th century as a response to the Progressive movement. Before then party nominees were selected by parties themselves – which is the way they are still selected in the vast majority of the world’s democracies.

Nominees used to be selected by party members on the floor of the Democratic and Republican national conventions. Now the open primaries have made the conventions mere political theater, with the nominee actually having been selected long before they are held.

Here in Europe, there is no country that systematically chooses party nominees by popular vote, though a few parties in Europe have experimented with it. Nominees are instead selected by party members or officials (the equivalent of the Democratic and Republican National Committees choosing their chairman). The main reason for this is that most countries in Europe are parliamentary democracies, and the head of government position is awarded to the leader of whichever party wins the greatest number of seats in parliament.

It would therefore be a bit awkward to poll the general public to select nominees, because party leadership contests don’t usually happen at the same time as the general elections that determine a country’s leader. Sometimes a party leadership contest can even replace a sitting prime minister without a public vote – as occurred in 2007 when Gordon Brown replaced Tony Blair as prime minister of the UK.

Of course that awkwardness hasn’t stopped some of Europe’s Socialist parties from trying the concept a few times, but it has never worked very well. In 2005 the centre-left Olive Tree coalition organised an open primary to elect a candidate to challenge Silvio Berlusconi in the April 2006 election. That public vote chose Romani Prodi, who then went on to defeat Berlusconi. But the open primary was largely considered a messy failure, because it didn’t reflect the political realities of the Italian parliament. Prodi was toppled from power two years later after he lost the support of the Communists.

It isn’t just the differing parliamentary system which has kept most Democracies from adopting US-style primaries. Even most presidential democracies with the same system as the US don’t hold regular open primaries to determine candidates. In fact the only presidential systems to do so are Chile, Uruguay and Taiwan.

In France, which is the only EU country to have a presidential system like the US, the practice was used for the first time in October of last year by the Socialists (the main centre-left party) to select their nominee. The party organised the polling itself, and anyone who was registered as a Socialist could vote by paying €1 to cover the costs. About three million people participated and they selected François Hollande, the former partner of their 2007 nominee Segolene Royal, as their candidate.

But the public vote was widely criticised for not being compatible with the French political system and for turning French politics into an American-style piece of theatre. Many argued that France’s two-round system of voting make primaries redundant. The country has many political parties that each field a candidate in a 1st round, which whittles the field down to two candidates for the final round. Given that the political spectrum is still dominated by the two main parties (the Socialists and the UMP) it is debatable how much this first round really represents a ‘primary’ as we think of them in America.

Do primaries produce the best candidates?

Of course, just because the rest of the world doesn’t do it doesn’t mean that open primaries are a bad system. And if you believe in American exceptionalism, then the very fact that the US is alone in this practice means it is a good thing to do!

But before ganging up on the Iowans perhaps people should ask themselves if having public primaries at all makes sense. It’s not the Iowans fault that they happen to be the state which is the most skilled and aggressive at putting themselves first in this process. After all, if it wasn’t Iowa then it would be another state going first and determining the shape of the race. And while there are certainly other states that are more reflective of America as a whole, is there really any one state that could legitimately claim to represent the whole nation?

One could argue that maybe every state should hold their primaries on the same day. Such a change would certainly turn the whole primary system on its head, given that it’s geared around a building momentum and a slow testing of how a candidate performs before you cast your vote. But what if candidates were chosen instead only by members of the Republican/Democratic National Committees?

Such a change would likely not be very popular – once you give people the power to vote over something it’s nearly impossible to take it back. But if party officials were choosing candidates, does anyone really believe we’d be seeing candidates like Michelle Bachman or Herman Cain? Would a candidate like Mitt Romney have to be running around the country disavowing virtually every position he’s ever taken in his previous political career as Massachusetts governor in order to be electable by deeply conservative Republican primary voters? Party officials could choose someone who is appealing to the entire electorate, not just to a narrow base. And they could choose the most competent person who would make the best leader rather than just a person who can win votes (ideally at least).

Let’s face it, watching this Republican primary process has been like watching sausage being made. And I’m not sure you’d want to eat the sausage that came out of the process even if you hasn’t seen it created. It’s been an absolute farce, from the 13 debates (and 10 more to go!) which managed to discuss almost nothing of substance despite the over 100 hours of talking, to the circus-like sideshow of Cain’s sexual misconduct. Who actually thinks this is working well?

The primary system’s most ardent defenders, such as New York Times columnist David Brookes, say they still produce the best candidate because they show who can stand up to the rigours of a campaign and who can connect the best with the public. But given that any candidate chosen by the party itself would surely have already held office and would therefore have gone through a campaign, wouldn’t that information already be evident?

Let’s not forget that these primaries are organised at great expense to the taxpayer, since they are (in most cases) organised by the states rather than by the party. Perhaps the most painful part about watching this Republican primary process is knowing that I’m paying for it. Well, not any more, but if I was a US taxpayer I would be. And don’t forget, primaries aren’t just held for the presidency. They’re held for almost every political office.

That’s a lot of money, and that's just the public money. People can go on about the illusion of 'old-fashioned democracy' that plays out at these Iowa caucuses held in high school gyms with paper ballots and discussions, but that masks the fact that an obscene amount of private money is now being spent on this caucus. In 2008 candidates spent $52 million trying to be elected in the Iowa caucses. This year, Rick Perry alone spent a staggering $817 per voter in Iowa. Is there anyone who would really argue that this money couldn't be better spent elsewhere? How about if Rick Perry gave each of those people $817 to spend on heating their homes?

Inane distractions

The public primaries also have the effect of drawing out the presidential campaign to two years in length, meaning a first-term president spends half of his term campaigning for reelection. These primaries eat up so much air time and so much political focus that they distract from other more important things. In Europe campaigns usually last one month, because elections aren’t called until one month in advance. In the US, the news networks started reporting ad nauseum about the 2012 election at the beginning of 2011.

As we sit at the precipice of the greatest global financial disaster the world has seen since the Great Depression, the US media has spent the past year talking about Herman Cain’s groping, Michele Bachmann’s pray-the-gay-away therapy and Rick Perry’s inability to make a list of more than two things. If the US let the parties go back to selecting their nominees themselves at their conventions, we wouldn’t start the election process until the Spring of the election year, which seems wholly appropriate.

In France, where the 2012 election will be in April, intensive media coverage began earlier than usual this year because of the Socialist’s first nominating public vote in October. It was another complaint made by the French about the country’s first open primary – it took up too much media attention too far in advance of the actual contest. But if France is going to adopt a US-style presidential open primary system, they can expect longer and longer campaigns in the future, with plenty of accompanying debates and distractions. Le Herman Cain anyone?

I don’t think the French want that. And, really, I don’t think the Americans want that either. But at the same time, it’s hard to see the US changing the system. Change doesn’t come easily to the world’s oldest government.

Protest over Ikea meatballs - welcome back to Absurdistan

2012-01-03T16:19:00.007+01:00

I’m back in Brussels after spending the Christmas break home in the US. It was yet another trip where I spent most of the time regaling people with the insane stories of the strange place I now find myself living in. I’m pretty sure most of my American friends think I’m making this stuff up. I only wish.

After describing the impromptu general strike three days before Christmas which forced me to pay $500 to rebook my flight home, I moved on to describing to my friends the other union strikes I have witnessed since moving here. From the impromptu metro driver strike that was called after a driver claimed he was punched by a passenger (it turned out the driver had punched the passenger) to the October garbage strike in which the garbagemen went around town lighting the trash bags on fire and throwing them into the street, there’s plenty to describe. And let's not forget the time the taxi drivers blockaded Brussels Airport because an unlicensed taxi driver had been grazed by a bullet while he fled from police during a high-speed chase.

Today I learned about a whole new anecdote of insanity I could have described to my perplexed American friends. According to this story by Belgian news station RTL, the restaurant owners association in Belgium (Horeca) is busing homeless people to Ikea as a protest against their low meatball prices. When I first saw this story I assumed it had to be a joke. Clearly I’ve been in the US too long! Because I forgot that when you hear about something this absurd happening in Belgium, it’s probably true.

In a protest against Ikea’s low-priced meatballs, which they say are putting traditional restaurants out of business, Horeca bused 200 homeless people to a branch of Ikea for a Christmas dinner. It was an apparent effort to disrupt the chain’s business by scaring away customers. Horeca’s president accused the Swedish chain of selling meatballs at loss-leading prices in order to get people into the store, something that is illegal in Belgium. He told RTL, “After seeing meatballs at €2.50 in Ikea, consumers will treat us traditional restaurants like thieves."

The Christmas dinner wasn’t just a one-off. Horeca’s president said they will continue busing the homeless people to Ikea and buying them meatballs until Ikea raises its food prices to what they deem an acceptable level. Apparently, Horeca is banking on the fact that consumers will find the sight and smell of homeless people so objectionable that they won’t go to Ikea any more for their meatballs. The whole thing would be quite funny, if it weren't so symptomatic of the absurdity in this country.

So to anyone who didn’t understand why I was buying so many things to take back with me while home in the US, now you get a clearer picture! Consumer goods are much more expensive here in the 'land that capitalism forgot', because prices are so rigidly controlled (either by the government, by unions or by business cartels). We’re now in the January sales period, one of just two months per year when retailers are allowed to have sales (the other is July). But really, this sale period just reduces prices to what they would be in neighboring countries like the UK and Germany. So they’re of little interest to me, since I have a policy of never buying anything in Belgium that isn’t absolutely necessary. I save up my shopping for when I’m out of the country.

I made a new years resolution to try to be more positive about Belgium. Clearly, I'm off to a great start already. Oh well, my resolution to lose 10 kilos was probably much more realistic. Happy new year!

An itinerant decade

2011-12-16T15:57:00.001+01:00

I came to a startling realization yesterday. 2011 will be the first year in a decade that I have not moved to a different city during the course of the year. Since 2001 I have packed up and moved to a new city at least once each year. And there has actually never been a year in my adult life where I haven’t moved to a new apartment! 2001 and 2011 have the exception of being years where I moved to a new apartment, but in the same city.

I say ‘startling’ because it’s a kind of bizarre way to live one’s life, constantly moving to new cities. Of course not all of those moves were to unfamiliar cities I had never lived in before – a lot of this was moving away from New York, then returning, then leaving again. But now that I’ve managed to stay in one city for an entire calendar year, does it mean I’m settled here in Belgium? If it does, I don’t feel it. I’m in a good place in my life here – I’m enjoying what I’m doing, have an interesting job, good friends and a good apartment. So I think I’ll be here at least another couple years. But could I live the rest of my life in Belgium? Absolutely not. So when will I know when it’s time to leave?

Just for fun, here’s my moving history over the past ten years – with links to the blog entries at the time where available:

1999    ===>   Boston
2000    ===>   New York
2001    ===>   No move
2002    ===>   Prague
2003    ===>   New York
2004    ===>   Chicago
2005    ===>   Washington
2006    ===>   New York
2007    ===>   London
2008    ===>   Paris
2009    ===>   London
2010    ===>   Brussels
2011    ===>   No move

It’s been an itinerant decade! It’s been great fun and incredibly interesting, but obviously there are trade-offs to all this moving about. Friendships become more abbreviated, culture and language become confused and you can end up with a sort of permanent feeling of alienation. I think I’m done moving for awhile. The thought of moving to a new city right now is very unappealing to me, even as much as I complain about Belgium. For better or worse, this is where I’ve ended up – and this is where I’ll be for awhile. Because looking at this past decade, I really need a break!

This isn’t about the UK any more

2011-12-14T21:07:00.000+01:00

The markets have returned to panic mode today as their confidence in national governments to approve the new Eurozone financial consolidation treaty wavered. Ratification has hit some bumps in the road, with Finland’s prime minister expressing dissatisfaction with the transfer of authority over national budgets to the EU on Tuesday. In Ireland, the opposition parties seem keen to force a referendum on the issue even if the country’s legal services rule that one is not required.

The euro fell below $1.30 today, its lowest point in a year. Yields on Italian bonds widened to new highs. It’s a familiar pattern we’ve seen repeated several times now: markets rally upon news of a new European Council agreement, but then crash a few days later when they look at the details and realise it’s not as strong as they’d hoped. The UK's abandonment of Europe may have been the big story on Friday, but now the more important story sets in - the markets have not been satisfied.

But there seems to be some confusion in the British media though about what this all means vis-à-vis the UK’s decision to veto the attempt at treaty change on Friday. The Spectator has run a column from the Eurosceptic think tank Open Europe scolding the British media for describing the UK as isolated as a result of the 26 vs. 1 outcome last week. There isn’t really any such divide, Open Europe insists, because many other member states support the UK’s reticence. As evidence that all is not what it seems, they run through the list of objections to the new treaty being expressed in national capitals this week.

But this analysis is flawed on many levels. For one thing, it is equating apples with oranges. Several governments have said they can’t firmly commit to the new treaty until they consult with their parliaments not because they oppose the treaty, but because they didn’t have a mandate to agree to it on Friday. The Hungarians were particularly keen to stress this to journalists on Friday. They were angry that initial reports had suggested that Hungarian Prime Minister Viktor Orban had ‘rejected’ the treaty. Orban had only received a mandate from the Hungarian parliament to accept EU-27 treaty change. But when that route was blocked by the UK veto and they instead began devising a new 26-state treaty outside the EU instead (with everyone but the UK), a new mandate had to be obtained.

Treaty change vs. new treaty

The current debates raging on in national parliaments are about the new inter-governmental treaty, not the original EU treaty change than Cameron vetoed last week. Leaders like Orban would have accepted EU treaty change on the spot if the UK hadn’t vetoed it on Friday.

Another thing that makes the Spectator’s analysis highly dubious is that most of the objections they have cited are from opposition parties (particularly Socialists), who could naturally be counted on to rail against this change since they’re not the ones who have to pull the trigger, there is no political risk to themselves in taking populist stances. The article mentions the fact that Socialist presidential candidate Francois Hollande, who is ahead in the polls by roughly 18%, has said he would renegotiate the treaty if he was elected to remove the requirement that countries stay below a specific budget deficit threshold.

But what the article fails to mention is that Hollande isn’t objecting to the treaty outright, he’s objecting to the contents of the treaty – specifically that it is a conservative austerity-enforcing pact that abandons Keynesian notions of how economies should work in times of boom and bust. That’s where much of the opposition criticism has come from.

Cameron’s veto had little to do with the content of the treaty changes. In fact what the changes are calling for is the exact austerity model the Conservatives have been imposing on Britain. They essentially want to apply the Tories medicine to all of Europe. There’s really nothing that the Tories should philosophically object to in there, particularly since none of this budget oversight or loss of sovereignty would apply to the UK since it’s not in the euro.

The debate in the UK hasn’t been at all about the actual content of these changes – if it were then Labour would be fiercely opposing it and the Tories would be cheering it. Cameron vetoed treaty change because of bizarre domestic politics in Britain that could have seen his government collapse if he didn’t.

Trying to equate Socialists objecting to the content of a new Eurozone treaty with Conservatives vetoing EU treaty change simply because it came from Europe just doesn’t make sense. Whatever resistance this deal is now experiencing in national parliaments, it does not mean the UK suddenly has allies in Europe. In fact, it has nothing at all to do with the UK. Because the UK isn’t involved with this process any more. They took themselves out of the decision-making room last Friday. The national ratification process now has nothing to do with the UK, and vice versa.

And that, my friends, is called isolation.

Last-minute surprise deal in Durban to save Kyoto

2011-12-11T15:25:00.000+01:00

Chaos may be erupting at home in the European Union, but in South Africa news came this morning that the EU has scored a surprising success in international climate talks. A binding roadmap for a globally binding agreement by 2015, which the EU had demanded in exchange for continuing the existing commitments of the 1997 Kyoto Protocol, was signed this morning by all greenhouse gas emitters – including the US and China. It is the first time all major emitters have agreed, in principle at least, to binding emissions reductions.

It was truly surprising news. As of Friday (the day the talks were supposed to end) it looked like they were going to collapse in failure. Though the EU had been able to convince Brazil and South Africa to sign the roadmap, the US, China and India were still refusing. There was fear that Durban would end with no deal, which would mean the end of any internationally binding emission reduction commitments. It would have essentially taken climate talks back to 1995 and made a mockery of the UN process.

The US and China did not participate in the 1997 Kyoto Protocol, which committed nations to binding emissions reductions by 2013. The Clinton Administration signed the Kyoto Protocol, but by the time it came up for ratification in the US the George W. Bush administration had taken over - and they refused to ratify it. They said they would not participate in a binding protocol that did not include China, now the US’s biggest competitor.

Since that time, the developed countries that are participating in Kyoto have reduced their emissions, and now make up only a minority of global emissions. But China has overtaken the US and is now the world’s number one emitter of greenhouse gas emissions. The emissions of the US have also risen compared to 1990 levels, while the EU’s have fallen.

The world was supposed to agree a new global climate deal that would include both developed and developing nations in Copenhagen in 2009. But that summit ended in failure. Talks in Cancun the following year also failed to make significant progress toward a new global deal. With the Kyoto reduction commitments expiring in 2013, that left this year's Durban summit as the last chance to continue the existing protocol. But Canada, Japan and Russia announced last year they would not participate in a second Kyoto commitment period, saying it wasn't fair when the US and China were not participating. The EU said they would continue, but only if all major emitters including the US and China agreed to a roadmap toward a new agreement to be reached by 2015.

It was a carrot and stick approach. The US and China did not want to agree to any such roadmap, but at the same time they knew that the end of Kyoto would delegitimise the UN process and basically end any hope of a global treaty on reducing carbon emissions - something they don't want to see happen either. For the EU, it was immaterial whether Kyoto was continued or not because they have already enacted domestic reduction commitments for 2020 at home. But EU Climate Commissioner Connie Hedegaard said that if the EU continued in it with no conditions attached, it would allow the other major emitters to sit back and not take any action. She used the continuation of Kyoto as a bargaining chip - knowing that the US and China feared the signal it would send if it ended. In the end, it appears her strategy worked.

But it would be difficult to argue that today was a huge victory for the climate. The EU will now be going it alone in a second period of Kyoto, making it basically irrelevant as the EU only represents 11% of global carbon emissions. The binding agreement in 2015 will only agree emissions reductions to start in 2020, five years after what many scientists have said is the "point of no return" for humanity reducing emissions. They say unless emissions start being reduced by 2015, it will be impossible to limit climate change to the two degrees scientists say is that maximum that can change without grave effects on the earth's climate.

These days though, the world will take any small victories it can get. The outcome of Durban may not be anything spectacular, but at least it avoided disaster and kept the UN climate process on track.

9 December 2011: The day Britain left Europe

2011-12-09T11:59:00.003+01:00

David Cameron emerged as the villain of the hour in the early hours of this morning as news broke that after tense all-night discussions, the UK has vetoed treaty change to save the faltering euro. The meeting then went to plan B, forging ahead on a new treaty with just the 17 countries of the eurozone. But nine non-eurozone countries then said they would also sign the new treaty, leaving the UK as the lone one out. This may sound like a small detail, but in reality it is huge. As the world press is reporting this morning, this effectively means the UK has begun the process of leaving Europe. And even the UK’s usual allies in the American media were aghast.

“UK Threatens Eurozone” headlined ABC News this morning. “UK to Euro nations: We’re out, good luck” heralded CBS News this morning. The reason for Cameron’s veto is bound to make him even more unpopular globally. In order to give his assent to the treaty change, which would not have affected Britain but only the countries using the euro, he demanded that the UK be given an opt-out from proposed increased regulation on banks and financial traders. That financial transaction tax (or 'banker tax') proposed by the EU earlier this year had nothing to do with last night's negotiations.

France and Germany balked, and Cameron walked. As one journalist friend noted last night, "The UK has refused to help solve the crisis because it wants to help the banks who started the crisis." Because the other 26 members walked away and went ahead without Britain, it means the financial transaction tax is still on the table, and the situation on that issue is unchanged from what it was before the summit. Cameron walks away with nothing.

Putting the global economy at risk in order to protect London City traders may not be the most popular stance given the current economic crisis. And Sarkozy emerged from the meeting this morning eager to exploit this. “You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised,” Sarkozy declared to the press after emerging from the meeting at 5:30 this morning. It took Cameron a full half-hour after Sarkozy spoke to comport himself and figure out what he was going to say in his own press conference.

Cameron’s intransigence may please his eurosceptic backbenchers, but it will enrage his global allies and the markets. It will also have serious consequences for the future of the EU and Britain. The eurozone states, plus nine others who do not use the euro but will join the pact anyway, will form a new treaty for a fiscal union. That leaves only the UK outside of this bloc.

As the Economist’s Charlemagne blog noted this morning, this is effectively the beginning of the end for the UK’s place in Europe – it is a divorce. The tigher union formed by all the other EU states will move ahead if the specifics are ironed out today.

The UK will now either have to leave the EU, or watch the EU become an irrelevant skeleton of its former self while the eurozone moves forward as the new federal entity. This is what Sarkozy has wanted for a long time – an EU without the UK constantly saying no and slowing it down. It looks like he is now getting his wish, which explains why he was looking so confident at last night’s press conference. Cameron, not so much.

It's a bit like that episode of The Simpsons when Homer joins the "Stonecutters" (a send-up of the Freemasons). When the rest of the members have had enough of him, they form a new organisation called the "Ancient Society of No Homers", leaving Homer as the lone member of the Stonecutters. The rest of the EU is going to form their own club, and leave the UK behind.

Of course even the 26-country deal could unravel today – the details still need to be worked out. But the lines have been drawn, and the future of a two-speed Europe has been decided. Cameron will go back to Britain this afternoon, while the remaining EU states stay to take the decisions that may or may not prevent the collapse of the global economy. The UK has been left isolated and on the outside, looking in.

Cameron's choice tonight: will UK be inside or outside the room?

2011-12-08T17:54:00.007+01:00

The degree to which the Left has become irrelevant in Europe was in evidence today as the European People’s Party (EPP), the EU grouping of Europe’s centre-right conservative parties, met in Marseille. The annual meeting of centre-right leaders, which coincidentally is this year a day before the final European Council, has toda become a first round in the treaty change talks. US Treasury Secretary Timothy Geithner has been there meeting with Europe's Conservative leaders, helping them to devise a strategy to save the Euro. Every leader who is important in this process was there today.

But it is not only the Left that is noticeable in their absence today in Marseille. Despite being a centre-right conservative leader, David Cameron is not there either. That’s because in 2009 Cameron took the decision to take his Tory party out of the EPP group and create a new, europsceptic grouping called ‘European Conservatives and Reformists’. That group is essentially just the British Conservatives, with a few hard right parties from Eastern Europe thrown in for good measure.

That decision, which was the fulfilment of a promise he made to the Eurosceptic wing of the Tory party in 2005 in order to be appointed party leader, may well be weighing heavily on the British leader’s mind today. He has already been locked out of the discussions amongst Eurozone leaders to devise a strategy to end the euro crisis. Now he is also locked out of the pre-summit meeting today in Marseille where so much of the strategy is being formulated. The later is a self-inflicted wound, and must be particularly hard to take considering it’s hard to see how creating a new EU group has benefitted the Tories in any way.

The move to take the Tories out of the EPP was probably not something Cameron actually wanted to do. But he has been forced to talk tough on Europe in order to appease the Eurosceptic wing of his party, and this was likely an action he thought he could take with little consequence. Perhaps he didn't see at the time how significant it would be, removing himself from the group that is now governing Europe. He likely hoped that tossing the eurosceptics that bone in 2009 would make the Europe headache go away. After all, it is an issue he clearly doesn't want to deal with because he knows it has torn the party apart in the past.

But the issue hasn't gone away, in fact it’s become an increasingly jarring problem for him as the Eurosceptics have become increasingly more brazen. He has to pretend to be in agreement with the unrealistic demands of the eurosceptic backbenchers, but then come to Brussels and face reality.

Now the backbenchers are demanding that Cameron threaten to veto the treaty changes to save the euro designed by Angela Merkel and Nicolas Sarkozy (or “Merkozy” as people are now calling the lock-step pair) unless the EU agrees to give the UK further opt-outs from EU legislation. They want him to demand repatriation of powers in areas completely unrelated to the current crisis, like fisheries, agriculture and working time.

Of course this is a ridiculous demand for a variety of reasons. For one thing, playing chicken with a crisis that threatens to bring down not just the eurozone, but also the British economy (and likely the world economy), is not only self-defeating but also morally unjustifiable. For another thing, Merkel and Sarkozy have already indicated that if any of the 10 non-euro-using EU countries give them any trouble about backing the treaty, they will just adopt a separate pack with the 17 euro-using (Eurozone) countries only. Cameron has no cards to play, and even if he did it would be wildly irresponsible to use them.

It’s a political mess for the UK, but it’s one you could see coming a mile away. In 2009 I wrote about this dilemma for Cameron. It was all too easy for Cameron to play up populist EU-bashing while in opposition, but he knew even then that he was walking a delicate line, because once he got into power he would have to be realistic, and the howls of the Eurosceptic right in Britain do not live in that realm of reality.

It was easy for Cameron to publicly demand a referendum on the Lisbon Treaty while he was in opposition, but privately he was likely desperately hoping that the British Parliament would pass it before he came into office. Such a referendum, sure to yield a no vote, would have been an enormous headache for whoever the prime minister was at the time and possibly lead to the UK leaving the EU - something Cameron does not want. In today’s Wintour and Watt blog in the Guardian they recall a conversation in 2009 with Lord Garel-Jones, the Conservative Europe minister under John Major, when he said,

It is now a tradition in Britain that all the major parties behave badly on Europe in opposition and they all behave fairly sensibly when they get into government. Cameron is a sensible, clever, thoughtful young man. If he becomes prime minister he will behave in a sensible, clever and thoughtful way and in the best interests of Britain.

This prediction has played out exactly, opening Cameron to criticism from both his back-benchers and his opposition. During prime minister’s questions this week Labour leader Ed Milliband asked,

Why does the prime minister think it is in the national interest to tell his backbenchers one thing to quell a rebellion on Europe, and to tell his European partners another thing?

Of course the obvious answer is that it isn’t in the national interest, but it is in David Cameron’s political interest if he wants to stop a revolt in his party that could see him tossed out of office. He’s really in an impossible situation.

Here in Brussels we're waiting for the important leaders of Germany, France and the European Commission to arrive from Marseille. I suppose David Cameron will be arriving on a train from London any minute now as well. Someone will have to catch him up on what has been decided already today.

Tonight he must make the decision: will he agree to treaty change for the eurozone countries, allowing all 27 member states to be involved in the process? Or will he say no, forcing the 17 eurozone countries to adopt a treaty on their own. If he opts for the latter, it means he and the other nine leaders from the EU countries not using the euro will have to leave after lunch tomorrow, and in the afternoon the 17 Eurozone leaders will decide Europe’s future amongst themselves. Either way, the UK will be hugely affected by what is decided tomorrow. It is up to Cameron to decide whether the UK will be involved in making the decisions.

Ah, I hear the sirens. The leaders have arrived!

Kicking them while they’re down

2011-12-06T17:17:00.000+01:00

It wouldn’t have taken much to make the US-based ratings agencies less popular in Europe. But Standard & Poor’s decision last night to put all 17 countries that use the euro on review for a possible downgrade has left European leaders seething with anger. Just two days before the make-or-break European Summit that was supposed to save the euro, the markets seem to have decided that whatever the European heads of government decide will not be enough.

Just hours before the S&P news broke, German Chancellor Angela Merkel and French President Nicolas Sarkozy had emerged from an emergency meeting in Paris outlining a plan for rapid and fundamental treaty change in order to stem the crisis – to be agreed on Friday. That, combined with Italy’s unveiling of drastic austerity cuts over the weekend, caused European markets to rally and Italy’s long-term borrowing rate to fall below 6% on Monday afternoon – the lowest it’s been since October. But S&P soon put an end to the party by announcing that the AAA ratings of the FANG countries (Finland, Austria, Netherlands and Germany) are in jeopardy. Without that AAA rating these countries can’t hope to bail out the collapsed economies of the PIGS (Portugal, Italy, Greece and Spain).

It’s not hard to see what influenced S&P's decision. Merkozy - I mean, Merkel and Sarkozy - had emerged from their meeting at the Elysee Palace in almost lock step. Sarkozy, who has been pleading with his German counterpart for months to embrace the idea of ‘Eurobonds’ that would collectivise European debt, suddenly did an about-face.

“Germany and France are not going to pay the debts of other nations without being able to control the debt issues of other nations,” the French president said as Germany’s chancellor looked on approvingly. “And we restate our previous position of confidence in an independent European Central Bank.” One had to check to see where Merkel’s hands were and if her lips were moving. The Elysee Palace had never seen such an impressive display of ventriloquism.

Germany is afraid the collectivising of debt will invite moral hazard, taking away the impetus for the Southern European countries to reign in their spending. They are also resisting any move by the ECB to bail the countries out, since it violates the traditional German ideal of an independent central bank (and Germany’s fear, based on its history, of runaway inflation).

But the US, UK and the financial markets are all demanding that Eurozone debt be in some way collectivised in order to end the crisis. The S&P downgrade was a clear display of displeasure with the new Franco-German unity on the subject. And it was a message clearly intended for Ms. Merkel: don’t even think about leaving Brussels on Friday without throwing Southern Europe a clear lifeline. The decision is hers alone to make.

The British press has begun to call the German Chancellor “Frau Nein”, and in France she has been dubbed “Madame Non”. But Merkel did emerge from Monday’s meeting in Paris with a clear agenda for Friday’s council meeting: fundamental treaty change.

Under the new treaty Eurozone states would face checks on their budgets and automatic sanctions if they run up deficits of over 3% of GDP. National budgets of countries using the euro would effectively need the approval of the European Commission, effectively creating a Eurozone finance ministry. But countries in the EU who don’t use the euro would be powerless to shape this budgetary policy. The talks on the new treaty should be completed by March, they said.

But this is a long-term solution, designed to prevent a crisis like this from happening again. It doesn’t do anything to address the immediate problem, which could cause the collapse of the euro within weeks. Voices both from the markets and governments are warning that a tentative agreement on treaty change on Friday will not be enough to save the euro. The question has arisen – if there will be no Eurobonds and no ECB bail-out, what is left for EU leaders to announce on Friday that could calm the markets?

Though the treaty changes seem likely to gain approval by the 17 Eurozone states (it’s still an open question whether the 10 non-Euro states will get a vote), there is still widespread dissent. Even the EU’s employment commissioner Laszlo Andor called the Merkozy plan a “joke” on Twitter yesterday, saying, "Fiscal union needs collective, democratic decision-making that can respond to challenges & manage aggregate demand."

Of course the Left-leaning Hungarian economist’s opinion may not be terribly indicative of how the response will be on Friday, given that only three leaders at the 29-person summit will be Socialists. The rest will be Conservatives and the technocrat administrators they’ve imposed. And all are eager for austerity and budget discipline.

But the mood in the council chamber on Friday may not reflect that of the public, or even that of some of the technocrats they have put in office. This was in evidence over the weekend as the newly appointed Italian welfare minister broke into tears as she announced the changes to the country’s pension system that will see retirement funds lose value.

The break-down has actually been praised in the Italian media for how much of a change it represents from the detached buffoonery of the Berlusconi government. It appears to mean a lot to the Italian public that the person devising the austerity cuts has a heart and understands the pain her decision is inflicting. It’s a lesson that would be well-heeded by Europe’s leaders meeting on Friday.

Customs, security and immigration - learn it, live it, love it

2011-12-03T01:36:00.002+01:00

I have many irrational pet peeves, and many seem to involve air travel. One of the most silly may be my disproportional irritation when people use the word 'customs' when they really mean immigration or airport security. But as silly as this little hang-up is, it actually does make a big difference not only to public policy but also to your rights and plans as a traveler. And yet I hear people confuse these three things very often when they're telling their travel stories, even frequent travelers. I'm in Switzerland this weekend visiting my father, himself a very frequent traveler, and I was just explaining the difference to him. So I thought it might be helpful to write a blog post about it.

Customs, immigration and airport security checks are three distinct processes you may encounter at an airport or border crossing. Sometimes you may have to go through all three, other times you just encounter one or two and other times you won't go through any. It all depends on which countries you're traveling between. For instance, when you travel between Belgium and the UK you go through immigration, but not customs. When you travel between Belgium and Switzerland you go through customs, but not immigration. If you're flying between Belgium and Finland you would only go through security, the same as you would if you were flying between Florida and California. Confused yet? Here's a quick guide.

Airport security

Security is what you go through before boarding a plane (or a train in the case of the Eurostar). It is run by the airport or transport safety authority and has nothing to do with customs. They are screening your luggage for weapons in order to protect the plane. They are not screening for undeclared goods or for illegal drugs. It is purely related to protecting the mode of transport you have chosen, usually an airplane, and is done for flights within countries as well as between them.

Immigration

This is the step where you show your passport to an immigration officer (but not when you show your passport to an airline, that is purely for identification purposes). The countries of the European Union have the Schengen agreement, which means there is no immigration check when you travel between them (meaning you don't show your passport to an immigration officer). These countries are actually not allowed to make you show your passport in order to pass between them.

Two countries in the EU - the UK and Ireland - have opt-outs from participating in Schengen. So you must show your passport when traveling between these countries and the rest of the EU. Bulgaria and Romania are now in the EU but are not yet in Schengen - they are in the process of joining.

Incidentally this also means that if you are from a country without a visa-waiver agreement for Europe (South Africa for instance), you can visit all the countries in the Schengen zone by getting just one Schengen visa. But if you want to visit the UK or Ireland on that same trip, you must apply and pay for a separate visa.

Customs

Customs is the process that controls the goods you are bringing into a country and levies charges on them. This is the step where a customs officer can search your bag, and you might be in trouble if they find cash or goods that you haven't declared, illegal drugs, or improper agricultural products. You can either choose to declare what you have, or you walk through the 'nothing to declare' line where they selectively stop people to check their luggage. In all my years of flying I have never been stopped at customs. Ever, in any country. Chances are you haven't either.

The EU is one customs zone, meaning there aren't restrictions on what you can bring in between the countries. So when you travel between EU countries, they are not allowed to search your luggage for customs-violating goods. There wouldn't be any reason to anyway, as there aren't restrictions. This is why some airports have the 'EU' line to walk through in customs. If you are stopped there, and you show your ticket showing you have come from an EU country, they cannot search your bag. Turkey is also part of this zone (the only non-EU member).

This also means that you cannot get duty-free goods if you're traveling between EU countries. This is why they scan your ticket if you're buying duty-free goods, to make sure you're on a flight leaving the EU. So when I fly home to the US, that is the time I can get goods duty free. But I can also get them when I'm flying to my dad's house in Switzerland - because Switzerland is not in the EU and therefor not part of the customs zone.

But even though Switzerland is not in the EU customs zone it is in the Schengen Zone, along with fellow non-EU (or pseudo-EU if you want to get real) countries Norway and Iceland. That means when you fly from the EU into Switzerland you will not have your passport checked, but you can have your luggage checked - and there is a limit on what goods you can bring into the country. There is also a customs levy charged on goods coming into the country - which is why mailing something from Belgium to Switzerland is so much more expensive than mailing something from Belgium to the UK.

Traveling from Belgium to the UK you have the opposite situation. You do have to show your passport, but you do not have to go through a customs check. This is because the UK is in the customs zone but not in the Schengen zone. It's all the joys of the many overlapping European zones and treaties, somewhat demystified by this helpful Euler diagram.

Why is any of this important? Well for one thing it's helpful to know when you need to bring a passport, when you can buy duty-free items and when you have to worry about what goods you have in your luggage. But it's also a good thing to know your basic rights as an EU citizen and as a traveler. And it's also helpful to not send me into a rage if you're telling me a story about your experience at 'customs', when it is actually immigration or airport security!

After 18 months, Belgium will have a government again

2011-12-01T17:07:00.002+01:00

Belgium will make history this weekend in two ways. When a new government is finally formed on Sunday it will end the longest period that any country has gone without a government in modern history. And when Elio di Rupo is appointed prime minister, Belgium will become the first country in the world to have an openly gay male head of government.

I've specified 'male' because Iceland actually beat Belgium to the punch for the first gay leader of any sex – their openly lesbian Socialist Prime Minister Johanna Sigurdardottir was elected in 2009. In both countries the leader’s sexual orientation has been of little concern to the public or the media. In Belgium it is rarely ever mentioned, and in Iceland people were actually confused in 2009 when their PM’s sexual orientation received worldwide attention.

The sexual orientation of Di Rupo, also a Socialist, isn’t the only thing that makes him a different sort of politician. He is the son of Italian immigrants – a sizable population in Belgium’s Wallonia region who are descendants of the Italians who came to work in the mines in the early 20th century. This fact prompted one Belgian politician to say Di Rupo was evidence that the “American dream” is possible in Belgium.

He will also be the first non-Flemish prime minister in Belgium in three decades. It has been an unwritten rule that the prime minister must speak both Dutch and French, and since few Francophones speak Dutch (but most Dutch-speakers in Belgium speak French) this has meant the post has gone to a Fleming for the past 30 years. Di Rupo, the leader of Belgium’s Socialist party, speaks some Dutch but apparently not very well and with such a heavy French accent it's difficult to understand him. But he says an auditory disorder prevents him from being able to speak Dutch well, and that should not preclude him from being prime minister. His Francophone Socialist party won the largest share of votes in the 2010 Belgian election 535 days ago, making him the logical choice to become prime minister.

It isn't just the prime ministership, all politics in Belgium comes down to one thing – language. Belgium’s feuding French-speakers from Wallonia in the South and Dutch-speakers from Flanders in the North have been in perpetual conflict since the 1960's. The Conservative parties which won an electoral majority in wealthy Flanders want more autonomy for the regions and they want their tax money to only go back into Flanders. The Socialist parties which won a majority in economically depressed Wallonia oppose this and say tax should be a federal issue.

For 18 months the Flemish parties refused to budge on their demand for more autonomy, and the Walloon parties refused to allow the country to be further federalised. Neither side had enough of a majority to form a government on their own, so the only way to form a government was for them to come together in a coalition. Talks remained intractable until, in the end, the markets accomplished what the negotiations could not.

On Friday Belgium had its credit rating downgraded, with the agencies citing the uncertainties over the political situation and the country’s future as the reason. Belgium looked set to join the PIIGS. Suddenly on Saturday news came that, lo and behold, the negotiators had come to a hasty agreement! The timing was so absurd that when I heard the news I assumed it was a ruse, that they were pretending to have reached an agreement to avoid a bond run and buy more time.

But apparently the pressure of the downgrade put enough pressure on them that emergency talks were held and they agreed to a compromise. That compromise, of course, will only hold for maximum another 2.5 years until it’s time for the next election. And few here believe this hastily cobbled-together coalition won’t fall before then. But for now the emergency formation has worked. The yield on Belgian government bonds continues dropped from the alarming level of 6% down to 5% following the budget agreement.

But it really is testament to the power of the markets these days. Last month we saw that they have the power to make intractable governments fall when they achieved what democracy and common decency couldn’t and deposed Silvio Berlusconi. Now we see that they have the power to create governments as well! What will they do next?

The final reading of the 185-page deal was held today, with the new government expected to be sworn in Sunday or Monday. That will mean the Socialist Di Rupo will be able to keep the EU’s other two lonely Socialist leaders from Denmark and Austria company at next week’s European Council summit. They need all the company they can get. On Sunday, on the same day Di Rupo becomes prime minister, the Socialist government in Slovenia is certain to be voted out of office (they are already only a provisional government after the government collapsed in September).

But considering that the new Belgian government is actually a ‘grand coalition’ of almost all the parties in the country, it would be disingenuous to call it a Socialist government. It just happens to be led by a Socialist. The same is true of Austria. In fact the only real Socialist government in Europe is Denmark, where a coalition of the centre-left, far left and greens is ruling.

Brussels – enter at your own risk

2011-11-30T22:06:00.022+01:00

Fontainas, a cafe in central Brussels that could best be described as the headquarters of the city’s gay community, is shut down this week. Its doors have been closed since an incident Sunday night that sent a man to the hospital with severe stab wounds.

News of the attack, which has been spreading like wildfire through social media all week, seems to have left the city’s gay community shocked yet unsurprised at the same time. The storyline has become a familiar one in Brussels. Three drunk men entered the café, began hurling homophobic abuse at the people inside, and before long a violent altercation ensued. The details of what took place are still unclear, but the incident was serious enough to shut the doors of this Brussels landmark since Sunday. And although homophobic attacks are unfortunately common in Brussels city centre - an area of the city that is known for its crime and grime - this incident has still caused huge shock because the establishment is so well-known. Even the soon-to-be Belgian prime minister, who is openly gay, can often be seen there.

A movement has been growing to try to pressure the city authorities to do more to keep the city centre safe since a gay-bashing attack in June that many saw as the straw that broke the camel's back. A man was beaten by a group of young men near the Bourse (stock exchange), just next to Grand Place, because he was gay and behaving in an effeminate manner.

In response, a campaign was created protesting against the increasing violence in the city centre and the lack of action by police. A gay guerilla "kiss-in" was planned to take place at the Bourse, but in the end it had to be moved to Grand Place so as not to conflict with a planned demonstration at that location by the city's Moroccan community calling for Democratic reform in Morocco. The police told the kiss-in organisers they could not guarantee their safety if they held their kiss-in next to the Moroccan demonstration. So the kiss-in took place at Grand Place, to be witnessed by bemused tourists. It was emblematic of the sometimes uncomfortable juxtaposition of gays and Muslim immigrants in Brussels city centre.

Abandoned city

Though the historical city center is home to the famous symbols of the city – the Grand Place and Mannekin Pis – when tourists walk just a few blocks away it doesn't take long for them to feel they are in an unsafe area of town. Brussels’ gay quarter - centred on Rue Marche au Charbon - lies right next to Grand Place. But walk to the end of the street and you quickly have the impression you're in a place you're not supposed to be. When you live down here you get used to it and learn how to navigate it. But it can be very intimidating when you first arrive.

Brussels has suffered under decades of neglect and the lack of a centralised planning authority, which is reflected in the haphazard way the city has developed. Visitors have said to me that the city looks OK considering the damage it sustained during WWII. I tell them Brussels actually escaped WWII unscathed - the demolition and eyesores they see were a self-inflicted wound from the Belgians themselves over the last sixty years. There was no Brussels planning authority to stop the destruction of the city's historic buildings for a whole decade.

In the 1970's many Belgians moved out of the city and into the suburbs, mirroring a trend happening in America at the same time. The abandoned buildings in Brussels city centre were largely taken up by new immigrants from North Africa and Turkey. Today most of the city centre, as well as large areas of neighboring Anderlecht and Molenbeek, is made up of Muslim immigrants and their children, who make up 25% of Brussels Capital Region residents and 57% of Brussels commune (city centre) residents.

Today these immigrant communities have developed cohesive but isolated communities in the central parts of the city. At the same time, Eurocrats and working professionals tend to live in their own segregated areas of the city, such as the elevated parts of the city's southeast around Avenue Louise and beyond. Many of these people rarely go into the city centre or use public transport, and many would never dare to walk in the city centre at night because they think it's too dangerous. Whether that perception is accurate or not, it means much of the city's professional, monied class completely ignores the city centre, which contributes to its decay.

In this way Brussels can often feel like a collection of isolated communities that don't associate with one another. You have the Muslim immigrants in the city centre. You have the Eurocrats who stay in the EU bubble uphill. You have the immigrants from the Congo who live in Matonge. You have native Francophone Belgians in leafy suburban sections of the outer Brussels Capital Region. And you have Dutch-speaking Flemish who live in Flanders and only come into the city to go to work.

This separation of Brussels' residents is mirrored by the city's administrative structure. Though the Brussels Capital Region is its own 'federal state' of Belgium - on an equal plane with Flanders and Wallonia - there is no Brussels city administration. The city is divided into 19 'communes' which are the equivalent of 19 separate towns, with their own town halls and administrations. They are not like the 'councils' of London, because there is no central authority coordinating them. And as anyone who lives here knows, the communes do not communicate with one another.

No Brussels identity

So what does this all have to do with the violence in the city centre? In my view, the urban decay is largely the result of a lack of civic pride. In many ways this feels like a city with no real 'Bruxellois', no city identity which people own and are proud of. It is a seemingly accidental hodgepodge of different communities that have little to do with one another and who don't feel very much ownership in the city as a whole.

The fact is, the frequent gay-bashing in Brussels city centre is probably more a symptom of generalised crime and violence in this area than it is about specific targeting of gays. But the issue of the decay and danger in the city centre is of high interest to gays in Brussels because they live and socialise there, whereas many of their co-workers don't. The danger in the city's centre isn't much of a preoccupation for many of the bubble-encased Eurocrats, suburban-dwelling francophones or commuting Flemish. There's such little sense of ownership from the residents and workers of this city that it doesn't seem to bother people that the historical centre of the country's capital, the capital of Europe, has a reputation as a crime-ridden danger zone where a gay person can't walk openly down the street without fearing abuse.

There's been suggestions that the police should conduct outreach campaigns on tolerance with the Muslim community in central Brussels. But the Muslim immigrant communities in central Brussels feel so disconnected from Belgian society and Belgian administration that the idea of asking the police to work with those communities to increase tolerance is almost laughable. The City of Brussels police seem to make little effort in making connections with the city's Muslim community. I have never seen a minority police officer in this city.

It is a head scratching situation that in the capital of a country that is about to have the world's first openly gay male prime minister - and one of the first countries in the world to have gay marriage and adoption - a gay couple can't hold hands on the street without fearing violence. Even on Rue Marche au Charbon, one of Brussels' characteristic murals appears to depict a gay couple holding hands, walking confidently down the street. And yet people have been beaten up below that very mural for doing just that.

The Brussels model is a familiar one to American cities - the disconnection between poor, minority residents of an inner city and the suburban workers who come in to their offices in the city by day but would never dream of staying there for the night. But this is not a typical model in Europe, where the aversion to city living didn't take hold like it did in America.

As an American who likes to live in cities and came to Europe to get away from the American habitation model, it's a bit disappointing. And it's a shame really because Brussels has so much potential. But because it has been so abandoned and neglected by the country it lies in, it can often be a very unpleasant place to live. It's hard to envisage myself living here long-term, because it feels as if there's no civic spirit I could ever latch on to. Living in London I felt a real community spirit, an exciting, strong identity that I could envision feeling a part of and settling in long term.

Brussels could never feel like more than a temporary residency for me. It's a house, not a home. And that seems to be a feeling shared by many of the residents here, even those that have been here their whole lives.

Europe's left has vanished from the map

2011-11-21T21:36:00.002+01:00

It's a process that's been long in the making, but this weekend's election in Spain seemed to be the final nail in the coffin for European Democratic Socialism - at least for the moment. With the fall of the Socialist government of Jose Luis Rodriguez Zapatero in Spain, following on the heels of the fall of Socialist prime minister George Papandreou in Greece two weeks ago, the EU is now left with only two centre-left governments - Denmark and Austria.

The already dwindling left was already not in a good position, with just five centre-left governments out of the 27 EU states at the beginning of the year. Four of those governments have since fallen, including the collapse of the Slovenian government in September (new elections, which the Left is certain to lose, will be held next month). Only the Austrian government has survived, and they were joined by the Danish social democrats who won a trend-defying election in September. Cyprus, which has a communist (but in truth more nationalist) government, does not sit with the centre-right grouping in Europe.

At the same time, five governments now have provisional or technocratic governments - effectively under the control of the markets and the dominant centre-right governments of Europe. The presidencies of the three institutions of EU governance - the commission, the parliament and the council - are all held by the centre-right. The situation is unprecedented. The irony is, at this time of crisis when Europe seems to be tearing itself apart, the governments of Europe have never been so ideologically united - at least in terms of the left-right divide.

The one country that has bucked the rightward trend, Denmark, will take over the rotating EU ministerial presidency at the end of the year. There will be many on the left who will be looking to Denmark's new prime minister, Helle Thorning-Schmidt (pictured left), to represent their interests as the only voice of the Left at EU level during the presidency term in the first half of 2012. It's much like the way the Left was looking to Zapatero when Spain held the rotating presidency in 2009.

But Zapatero never sought out a leadership role at European level, and so far Thorning-Schmidt also seems hesitant to take up the mantle. Even if Denmark holds the presidency, it would be hard for them to forcefully put forward the positions of the European left when that only represents the governments of two small countries.

But that could all change depending on the results of the French election in May of next year. Sarkozy's poll numbers are plunging lower by the day, and his loss of the French senate to the left in September seemed a harbinger of things to come. If Socialist candidate Francois Hollande wins in May it would fundamentally change the European political landscape and could reverse the left's decline. With the support of the government of the EU's second largest country, Denmark may feel more confident in promoting a Leftist solution to the European crisis.

But if Hollande loses and Sarkozy is elected for a second term, it is hard to see the European left regaining relevance again any time soon.

The new Italy: this is what technocracy looks like

2011-11-18T18:25:00.004+01:00

Former EU commissioner Mario Monti, appointed as Italian prime minister on Sunday after Silvio Berlusconi was forced by the markets and EU leaders to resign, had his ‘technocrat government’ approved by the Italian parliament today.

Neither Monti nor the members of his cabinet have been elected by the Italian people. They are not politicians but instead experts in their respective fields. The 'government of experts' has been brought in because, it was thought, both within and outside Italy, the Italian political system is so broken that only unelected non-politicians could be trusted to implement the reforms EU leaders say are necessary to prevent the country’s economic collapse.

American readers may be wondering how on earth a national leader in a democracy could come into power without having been elected. It has to do with a quirk in parliamentary democracy. Members of the upper houses of many of Europe’s parliaments (their equivalents of the US Senate) are appointed rather than elected. A prime minister can come from either house, so if the parliament wishes to appoint a leader who has not been elected they simply have the president appoint that person to the senate.

This is what both Italy and Greece’s presidents have done (with Greece’s unelected prime minister, former European Central Bank vice president Lucas Papademos, approved by that country’s parliament yesterday). Interestingly, the presidencies of Italy and Greece are both meant to be only ceremonial positions like the Queen of England. But they have suddenly been imbued with enormous power. An unelected prime minister could also come to power in the UK, if that person was appointed to the House of Lords.

Meet the technocrats

So what does Italy’s new ‘government of experts’ look like? Monti, infamous for his successful prosecution of Microsoft during his time as Competition Commissioner, will actually hold three ministerial positions – prime minister, economics minister and finance minister.

Italian banker Corrado Passera will also hold multiple ministerships, heading a ‘super ministry’ of Development, Infrastructure and Transport. Monti’s former head of cabinet in the European Commission Enzo Moavero has been made EU minister. A famous Italian criminal lawyer will become justice commissioner, and Nato military committee head Giampaolo di Paola will become defence minister.

The founder of the Catholic peace advocacy movement Community of Sant'Egidio has been made minister of international co-operation, a move sure to please the Vatican. The Chairman of the Enel power company has been made minister for tourism and sport, and the former Italian ambassador to the US will become foreign minister.

None of these people are politicians and none has ever been elected to office.

Model for the future?

So if these governments of unelected experts in Greece and Italy work out and Europe is saved, is this a model for other democracies that seem to be stuck in intractable political paralysis? Unelected provisional governments can now also be found in Belgium (where we’ve had one in place for over 500 days now) and Slovakia.

A British diplomat told me earlier this week that he thinks the public of other European and North American democracies would probably find the idea of these “philosopher kings” coming in and sorting everything out quite appealing. But what would happen after a few weeks or months, he asked, when the first thing went wrong? People would suddenly be asking ‘who are these people in office? Who put them there?’ The lack of a democratic mandate would make it difficult for them to insulate themselves from criticism.

It didn’t seem like a huge vote of confidence in the new technocracies’ staying power. But then again, the Greek and Italian governments are only supposed to be temporary placeholders until elections are held next year. But the logic of imposing the technocracy is that it must be in place until the euro crisis has been sorted out. If the crisis has been sorted, then the technocrats will have been successful. In which case, wouldn’t the public want them to stick around?

But in a parliamentary democracy this is tricky, because you vote for a party rather than individual people. Monti and his cabinet have no party. Therefore unless they created a party (the Techno Party?), there would be no way for Italians to vote to keep Monti in power when/if elections are held next year. But if Monti creates a political party, then he’s no longer a technocrat is he? He would have become a politician, and would then be subject to the very political constraints which hindered his predecessors.

At what point does someone become a ‘politician’ anyway? Is it once they run for office? Is it once they’re elected to office? Or is it once they hold office? If it’s the latter, then Monti is already a politician whether he likes it or not. It’s just that instead of having to keep the public happy, he has to keep the elected representatives in the parliament happy. After all, they can throw him out at any moment.

Silvio Berlusoni also came into power claiming to be a man above politics as an independently wealthy businessman, having formed a small party and strong-armed the corrupt large parties out of power. He promised to weed out the corruption in Italian politics and convert the government to efficiency and dignity. I’ll leave you to judge how that worked out over the past 17 years.

Angela and Dave fight it out over EU's future

2011-11-15T20:26:00.003+01:00

It’s the fundamental question facing the EU today: should the union integrate, or disintegrate? In two duelling speeches yesterday the British prime minister and the German chancellor took polar opposite positions on the answer.

David Cameron’s speech, delivered just hours after Angela Merkel delivered a speech to her conservative CDU party conference calling for further European integration, appeared to be a direct response to the German chancellor. Describing himself as a Eurosceptic, Cameron said the EU had overreached in its ambitions and that the euro crisis is "an opportunity, in Britain's case, for powers to ebb back instead of flow away and for the European Union to focus on what really matters".

Merkel’s speech hours earlier had delivered the opposite message. Telling the audience that Europe faced its greatest challenge since the second world war, she said, “The task of our generation is to complete economic and monetary union and build political union in Europe step by step…that does not mean less Europe, it means more Europe.”

Considering the influence of the UK in Europe compared with the influence of Germany, it was a bit like a pygmy picking a fight with a giant. Cameron’s argument may find a sympathetic audience with the British press, but among national governments – even those in his ‘Northern bloc’ – the idea that the crisis is an opportunity to pull Europe apart is not very alluring. But whether or not the UK actually has the influence to sell Europe on the idea of downgrading the EU to merely a free trade zone, the fact is this may happen anyway. But few outside Britain would describe this as a desirable outcome.

Today, the CDU fought back. Volker Kauder, the CDU leader in Germany's parliament, blasted the British approach to the euro crisis. "Just looking for their own advantage and not being prepared to contribute -- that cannot be the message we accept from the British," he told the audience. He was referring both to the British Conservatives' desires to use the euro crisis as an opportunity to repatriate powers to London and to their opposition to the financial transaction tax proposed by the commission.

His remarks have already sparked a furious reaction in the British press, with the Daily Mail accusing Merkel of expecting Britain to "fall into line" with Berlin like all other EU countries do. Many Eurosceptic commentators are writing that with the EU moving toward closer integration, this is the perfect time for the UK to exit stage right. Merkel and Cameron are set to meet on Friday, an occasion which will surely be frought with tension as the two leaders drift further and further apart on their ideas of how to resolve the euro crisis.

'Neither side has their priorities right'

It isn’t just other European leaders who don’t share the view that the EU should see the euro crisis as an opportunity to dismantle itself. Cameron’s deputy prime minister Nick Clegg hit back today against Cameron’s speech in no uncertain terms. Speaking at a press conference with Dutch Prime Minister Mark Rutte (a not insignificant detail), he dismissed Cameron’s call for unilateral repatriation of powers as unrealistic. “It's not possible, and Europe doesn't work like that,” he said.

At the same time Clegg suggested that Merkel’s calls for treaty change in order to bring about closer economic union were also a step in the wrong direction. He said European leaders need to be focused on jobs and economic growth, not fundamental questions of the EU’s future. “The danger always is that the debate becomes very quickly polarised between one side which says this is the moment to rush headlong towards further integration, new treaties, new intergovernmental conferences, new arcane debates about EU powers, and another side that says this is the moment to unravel the whole thing,” he said. “I don't think either side have got their priorities right."

“Is the whole political establishment now going to disappear into a windowless room in Brussels, discussing things that no one can understand?” he asked. “It means absolutely nothing to millions of people across the EU who are worried about economic security. They are worried about prospects for their children. The only people who will benefit will be populists, chauvinists and demagogues, who will exploit that lack of political leadership."

Clegg may be worryingly right about his latter point. But Merkel is also right that the institutional causes of the euro crisis – the fact that the European project was unfinished and the attempt to have a monetary union without an economic union didn't work – have to be addressed. Mistakes were made, and now the euro is hanging by a thread as a half-finished project. The choice now is to finish it, or abandon it. Either choice will require treaty change. Both Cameron’s road and Merkel’s would require this unpleasant process. And as recent events have proved, to do nothing is no longer an option.

Clegg’s instinct that a protracted battle on treaty change will cause public disquiet is probably correct. And yet leaders may have no choice but to forge ahead with that battle whether they want to save the European project or abandon it. The ensuing deadlock and complications may open the door to the populists, chauvinists and demagogues Clegg fears.

Are we done with democracy?

2011-11-11T15:53:00.004+01:00

It has been a dramatic week for Southern Europe, with the elected leaders of both Greece and Italy falling as a result of pressure from the markets. Both are to be replaced by unelected technocrat governments, with former EU economists being appointed to replace them. It would appear that the democratic political systems in both countries were incapable of delivering a solution to the debt crisis. The unprecedented situation has prompted uncomfortable questions. Given the North Atlantic crisis the West has found itself in and seems to be incapable of extracting itself from, is democracy failing?

This was the question being asked on the BBC's Newsnight programme Wednesday night. Italian economist Vito Tanzi said during the interview that a government of unelected technocrats can do what elected politicians cannot - tell people the truth and push through unpopular but necessary reforms. "It can do a better job of informing people what needs to be done. I think that is the problem that the Italians were told for many years that there were no problems, that nothing needed to be done when the situation was progressively getting worse. If you have this kind of government, then sooner or later you get in trouble. The technical people would know better and would tell people what the consequences are of continuing with current policies"

He was of course speaking of his friend Mario Monti, the former EU Competition Commissioner who is set to be appointed new Italian prime minister.

In Greece, it was announced yesterday that another EU official, former European Central Bank vice president Lucas Papademos, will be appointed prime minister of Greece. Neither of these men has ever been elected to any office in their home countries. But both were appointed by their countries to their EU positions, and both earned praise for their performance in those positions. Greece and Italy are joining the two EU countries which already have provisional unelected governments - Slovakia (whose government collapsed after the parliament refused to back the Greece bail-out) and Belgium.

I was speaking with a Greek friend about this situation last night. He said both he and his family in Greece see the unelected technocrat government as the best alternative to the country holding elections. The political system is broken, he told me, and there is no way an election would yield a government that could tell the people what they don't want to hear and implement the immensely unpopular austerity reforms demanded by Northern Europe in exchange for the bail-out. It is the same in Italy, where the political system has become so dysfunctional it allowed a prime minister to stay in power while he openly flouted the law, had sex with underage prostitutes and called his own nation a "shitty country."

"It's not like democracy has been working so great for us," an Italian friend told me. "I felt powerless before with Berlusconi in power. At least this way I'll be powerless with a competent government."

So has it come to this? Have our political systems in the West failed us so utterly that people are willing to try less democratic approaches? The prospect of unelected technocrat governments has caused alarm in many quarters of Europe. And the fact that Greece is the birthplace of democracy is an irony lost on no one. Because these technocrat governments are being dictated by the markets, it seems to many like we are witnessing the imposition of a 'marketocracy', where political decisions are no longer made by elected leaders but instead by bankers and financial experts.

But others are questioning whether we are being too hasty in immediately condemning the scaling back of democracy as a step too far. Perhaps we entering a period where people start to think of new ways of organising governments and society that stray from the democratic principles we've held as sacrosanct for the past half century.

Looking at this from an American context, one can see how this line of thought might be attractive. The American political system is now universally acknowledged to be broken, and the cause is politics itself. The right feels a primal rage against the system that has manifested itself in the form of the Tea Party. And the left feels disillusioned after they elected a president who promised them change but was then stymied by the constraints of politics and a confused, emotional electorate. I wonder, how would Americans - particularly liberals - feel about the prospect of a technocrat government temporarily coming in to fix the nation's deep problems without being under the constraints of politicking and elections? I honestly don't know.

These are certainly interesting times in which to be living. Are we, as many democracy advocates are now suggesting, entering a slippery slope toward dictatorship? Or are we, as others have suggested, on the cusp of new revolutionary movements that will change the world in a way similar to what took place in 1848? Is this a return to authoritarianism, or the dawn of a new period of creativity in which people develop new, heretofore undeveloped political systems? Are we moving backwards or forwards?

Lots of questions, few of which I'm qualified to give the definitive answers to. But one thing seems increasingly apparent - things are not going to stay the same. We are on the cusp of great change, but what that change is is anybody's guess.

Berlusconi is finished - for real this time

2011-11-08T23:02:00.009+01:00

This blog has predicted the imminent resignation of Italian prime minister Silvio Berlusconi many times. In fact I counted, and in the past six years the blog claimed on five separate occasions that his sex and corruption scandals were about to topple him. After all it was hard to believe that a leader facing the kind of allegations he has faced could have held on to power. But this is Italy, and the normal rules don't apply.

But now it seems that the markets have accomplished what common decency couldn't - they have forced Silvio Berlusconi out of power. Tonight the Italian leader announced he will step down.

Rumours to this effect were swirling yesterday, causing European markets to rally and the euro's value to shoot up. But then Berlusoni issued a denial of the rumours on his Facebook page (where else?) and the markets tumbled. This was a clear sign: the markets had lost any shred of faith in Berlusconi to implement the reforms he promised European leaders last month. Berlusconi has survived many things, but when it came to the all-powerful markets that seem to be calling the shots these days, he was no match.

It is the end of an era for Italy, which has been ruled by the Italian media baron for 17 years save a brief sting out of power in 2006. His method of departure was fitting for a man who controls almost all of Italy's private media as well as its public media. He told his own Canale 5 television station in a dramatic announcement last night that he would step down after the parliament votes through his budgetary reforms later this month, calling an early election. His term was due to end in 2013.

So what happens next? Berlusconi made his announcement just after European stock markets had closed. But the announcement caused the US markets to rally and caused the Euro to rise against the dollar. Tomorrow as the European markets open they may rally on the news that he has resigned, as they did when there were rumours to that effect yesterday. But what will they do after that? Berlusconi has no clear successor - there is a political vacuum in Italy which has allowed him to stay in power despite his egregious behavior. A drawn-out and uncertain election could spook the markets and cause them to pounce on Italian yields.

But Italian president Giorgio Napolitano is thought to favour forming a 'national unity' provisional government similar to what has just been formed in Greece with the resignation of the Greek prime minister. It is thought markets would be pleased with this solution and would back off.

But this would mean four countries in the EU would then have provisional caretaker governments rather than elected governments - Greece, Italy, Slovakia and - let's not forget - Belgium. The fall of all of these governments except Belgium's was a result of the debt crisis. This would be a shocking state of affairs and would further add to the impression that it is the financial markets, not elected leaders, who are now running the show in Europe. And with elections coming in Spain shortly, there could soon be a fifth member state added to the list of countries that have abandoned democracy for technocrat administrations. It is an alarming situation.

Yet what other choice does Europe have? The political situation in these countries is so fractious that calling an election would cause huge uncertainty and cause the markets to panic. So the markets dictate unelected technocrat administrations must be formed to maintain certainty, or else they will instigate a global economic collapse by seizing upon Italian bonds.

Welcome to the age of marketocracy.

Who is the villain in the eurocrisis movie?

2011-11-04T22:12:00.004+01:00

Cannes has seen its fair share of cinematic flops over the years. But this red carpet-laden city on France's south coast has never seen a political flop like the one it witnessed over the past two days. It had all the elements of an edge-of-your-seat political thriller: high stakes, sudden plot twists, personal rivalries and looming global disaster. But who is the villain in this particular script? Today there was plenty of finger-pointing to go around.

The leaders of the world's 20 richest countries intended to come to Cannes to come up with a solution to global economic crisis which is quickly spiraling out of control. But a shock announcement Tuesday from the Greek prime minister that he would hold a referendum on Greece's acceptance of the bailout package worked out last week changed all that. The resulting outcry threw the Greek government into disarray, putting it near collapse - which could have precipitated a global emergency. The leaders of the 20 richest countries in the world ended up working out nothing, spending the entire summit glued to their blackberries waiting for news from a tiny country in the Mediterranean.

The leaders left Cannes tonight with nothing to show for their meeting. No plan to save the eurozone, no funding, and no consensus. Indeed the G20 summit has ended with the world in a worse state than it was in when it started. Europe, and the world, could be just days away from economic collapse if the Greek government collapses tonight in a no-confidence vote scheduled for midnight.

So who is to blame for all this? The obvious culprit, both from the beginning and this week in particular, is Greece. But though Greek Prime Minister George Papandreou's snap decision to hold a referendum may be mystifying, he and his Socialist party have done nothing to create this crisis. Since they came into power they have only been trying to fix what the previous Conservative government did. One would be hard-pressed to not feel a bit sorry for Papandreou, who came into office in 2009 to get the shock of his life when he learned the previous government had been cooking the books.

But Greece is fast becoming only a bit player in this drama. All eyes are now turning to Italy and its beleaguered and reviled leader Silvio Berlusconi. Yields on Italy's bonds rose to euro-area highs this week, prompting fears that the country may be just days away from collapse. Italy is the third largest economy in the Eurozone and it is too big to bail out, so a collapse of Italy's borrowing ability would likely spell the end of the euro and a global financial crash. But Berlusconi, who does not seem to be in full grasp of reality at this point, is almost literally fiddling while Rome burns.

With his black coat wrapped around his shoulders, Berlusconi seemed the ultimate archetypal villain in Cannes. The degree to which the rest of the world's leaders don't trust him was on display today when they forced him to accept IMF monitoring to make sure he actually implements the austerity reforms he promised last week. His deep humiliation over this fact will likely only make his behavior more erratic in the coming weeks.

There are a host of Southern European leaders who are easy to point fingers at in this disaster. But can the real villain be found further north, in the land of lederhosen and beer steins? Reports coming out of Cannes this week indicated that the US is getting increasingly frustrated with Germany because they see them as the real problem that is blocking a solution to the euro crisis.

After all, the EU has the resources and the ability to solve the euro crisis tomorrow if they wanted. They actually have enough money to build a firewall around Italy and Spain to prevent contagion to those countries - if they had backing from the European Central Bank. The UK, US and France have all been pleading with Angela Merkel to agree to let the ECB put its economic might behind the bailout. And China has also told them this, most notably when they last week declined to participate in the €1 trillion EFSF bailout fund, pointing out that Europe has the capacity to shore it up itself with the ECB. But Germany regards such a move as antithetical to the precepts of the ECB, the successor to the very conservative Bundesbank. They say the ECB must be kept independent, acting only as a regulator of currency and interest rates.

Of course the ECB isn't technically controlled by Germany, although it is based in Frankfurt. In fact the ECB as of a few weeks ago has a new leader, the Italian central banker Mario Draghi. But few are expecting him to assert himself with Merkel. There are thoughts that his Italian background might even make him 'more German than the Germans', given that he doesn't want to expose himself to allegations of perverting the traditional role of the ECB in order to save his home country.

But the fact is that injecting cash in order to shore up an economy is within the remit of a normal central bank - but not a German one. And no solution to this eurozone crisis can go ahead without Merkel's approval. Who has the authority to tell the Germans that they just have to suck it up and let the ECB get involved in the bail-outs?

There is only one such power - the United States. If Barack Obama sat Merkel down and told her she must accept a bail-out role for the ECB, it might be enough pressure to make her accept. After all, he can point out, America came to the aid of Germany in 1948 with the massive injection of cash with the Marshall Plan (which Germany is still paying back). Germany owes the United States, and the world, this sacrifice.

But there is a problem with this idea. European leaders, as well as the European public at large, views the United States as the one who sparked off this economic crisis in the first place. Germans believe the US has lost the moral authority to tell them what to do in this situation because they were the ones who caused the 2008 economic crisis, which in turn sparked the 2010-2011 European debt crisis. The euro project was still being built, they say, it needed more time to develop. But the crisis sparked in 2008 by Wall Street and loose American financial regulation exposed the eurozone to a crucial test too early in its development. Why, many German politicians are asking, should they take orders from the very people who sparked this crisis in the first place?

And that's the scary situation we find ourselves in today. There is no leader in this crisis, and seemingly no country has the moral authority or the will to step in and tell the others what to do. The developing world - who are the only ones with the cash to bail out their struggling formal colonial masters - are conversely not yet in a position to exert leadership in this crisis. And with the US and Japan struggling under their own debt problems and political stagnation, there is nobody left to be the adult in the room.

This movie has a lot of villains, but apparently, it has no hero.

Was it all for nought?

2011-11-03T16:44:00.000+01:00

Greek Prime Minister George Papandreou is getting an earful today at the G20 summit in Cannes from world leaders furious at his shocking and sudden call for a referendum on the Greek bailout on Tuesday. The surprise announcement sent markets into a tailspin and seemed to, in an instant, eviscerate the deal painstakingly crafted last week by European leaders to save the euro. Now for the first time EU leaders are today openly talking about Greece leaving the Euro. Was last week's all-night negotiating session all for nothing?

Papandreou is facing the same level of fury at home, much of it coming from within his own party. His own finance minister broke ranks shortly after the announcement and reacted with incredulity to the idea of calling a referendum. Papandreou's Socialist government is now hanging by a thread as it looks like he will have to step down or face an imminent vote of no confidence.

Reports coming out of the G20 meeting this afternoon indicate that Papandreou may have been convinced to cancel his call for a referendum. But whether he cancels the referendum or his soon-to-come replacement does, it will only serve to enrage the Greek public further. Promising them a referendum and then snatching it away is undoubtedly worse than having never promised a referendum at all.

Angela Merkel and Nicolas Sarkozy have told Papandreou today that if such a referendum were to result in a 'no' vote it would mean Greece's immediate expulsion from the Eurozone. It's the doomsday scenario that no one has wanted to even mention for two years. But things have reached a boiling point today. Greece will get no more aid until the referendum is held on 4 December. In the mean time, the markets may panic and descend into chaos, particularly if opinion polls continue to indicate a majority of the Greek people will vote against the bailout and the austerity conditions attached to it.

Greece leaving the Eurozone may sound simple, but it is frought with potential peril. For starters, it would wreak almost unimaginable havoc on the country's economy because a return to national currencies was never envisioned by the Eurozone and there is no blueprint for how to do it. But the danger doesn't end there, it extends to the entire EU. Greece's exit could trigger a domino effect whereby Ireland and Portugal are forced to exit as well. This could in turn cause a financial collapse in Italy and Spain – who could themselves have to leave the Euro. Considering they are the EU's fourth and fifth largest economies, this would plunge Europe and indeed the world into a very serious economic crisis.

So what could have been Papandreou's motivation for leaving last week's eurozone summit at 6am on Thursday morning acting as if everything was certain, only to return to Greece and throw the question back into uncertainty a few days later? The prime minister says he felt it was his duty to consult the Greek people on this question that will affect the country for many years to come. More likely, he felt he needed the referendum as political cover for what is going to be a very unpopular decision. He likely hopes that if the Greek people themselves are forced to make the same choice he is now faced with, they too will conclude there is really no other option for the country.

In other words, he needs to bring the Greek people into the culpability zone for the austerity measures that are to come.

The G20 meetings continue tonight and tomorrow. US President Barack Obama has been in the possibly unprecedented position of being in the back seat at a G20 meeting. He is urging the Europeans to sort their mess out but in the end there is little he can do. As he acknowledged today, this is Europe's problem and only Europe can solve it. But Europe's problem has already become the world's problem. And right now it's looking like the problem is about to get to a whole new level of seriousness.

'Occupy London' pits bishop against bishop in Church of England

2011-11-02T21:03:00.002+01:00

Today I paid a visit to the 'Occupy the London Stock Exchange' protestors who have camped out outside St. Paul's Cathedral in central London. It was a fascinating visit, I sat in on a 'general assembly' and also observed a conversation between an occupier and a banker that was being filmed for a British TV station. But what is perhaps the most interesting to me about the Occupy movement in London is the strange standoff it's not found itself in with the Church of England.

The 'occupy movement' has spread from its initial manifestation in August at Wall Street in New York to cities around the globe. On 15 October activists in London decided to stage their own version in the city's financial quarter ("the city"), the second most important financial centre in the world after Wall Street. They initially tried to occupy Paternoster Square, which is where the London Stock Exchange sits. But because the UK courts had already granted an injunction against public access to that particular square, police blocked their access to it.

So the 3,000 protestors moved to the nearby small open space next to St. Paul's Cathedral, the massive domed city landmark in the city built by Christopher Wren in 1697. The police surrounded the protestors in order to protect the cathedral. But the canon of St. Paul's told the police to leave. He said the church had decided to allow the protestors to protest peacefully on their land.

The encampment quickly grew in size, growing to 150 tents within two days. This apparently caused some panic in the church administration, and on 21 October the Dean of St. Paul's announced that because of "health and safety" concerns the church would have to close its doors to the public until the protestors voluntarily left. It was the first time St. Paul's had closed its doors since the blitz during World War II, and the decision got huge media attention. It was clearly an attempt to shame the protestors into leaving.

But it didn't work. The protestors remained, and in what was deemed an "embarrassing U-turn" by the British media the church reopened their doors two days later. What has followed has been a huge row within not only St. Paul's itself but also within the Church of England leadership. The Dean and the Canon of the church clearly could not see eye to eye about what to do about the protest. The canon eventually resigned, saying the Dean was planning to allow the protestors to be forcibly removed by police, which he regarded as contrary to the church's message of social justice.

The dispute then spread to the highest levels of the Church of England. The head of the church (after the Queen of course) Archbishop of Canterbury Rowan Williams came out on the side of the protestors. He said he sympathises with the "urgent larger issues" the protestors are raising and says their presence on the church property is an important voice that needs to be heard. Williams has consistently been a controversial archbishop, coming from the liberal wing of the Anglican church. Williams was the co-founder of a Left-Wing student group as a student at Oxford and was an outspoken critic of capitalism, according to the Evening Standard.

But there is a more orthodox wing of the Anglican Church that is keen to see Williams go. Shortly after the Archbishop of Canterbury expressed his support for the protestors, the Bishop of London Richard Chartres said that the protestors should be evicted. Chartres, who represents the conservative wing of the church, is seen to be a top contender to take the position as head of the church.

The St. Paul's chapter is still meeting to decide what to do about the protestors, but at this point it seems most likely that they will not endorse any move to forcibly evict them. People are now estimating that the camp could remain there for years, remaining both for the 2012 Olympics and for the Queen's Diamond Jubilee.

So now, depending on how you look at it, either the protestors have become pawns within a power struggle in the Anglican Church, or the church has become a pawn in an anti-capitalist movement. Editorials, even from those on the left, have accused the protestors of shamefully taking advantage of the church's hospitality, and insisting on staying even though it seems to be serving no purpose except tearing apart the Church of England.

Speaking to some of the occupiers yesterday, I was curious if they felt any embarrassment or shame about the fact that their decision to stay is causing such drama within the church, and even resignations. But everyone I talked to saw no reason to be ashamed. They said that it's natural for them to receive the support of the Anglican Church, one of the world's most progressive religious bodies (it also includes Episcopalians in the US). They said they didn't agree that they are putting the church in an awkward situation. They said they see the church as a natural ally and felt supported by them. Interestingly though, I asked each person who I spoke to whether they considered themselves a member of the Anglican Church. Not one said yes.

It will be interesting to watch what happens with all of these Occupy protests across the world. I'm on the train back to Brussels now and I'm hearing that there is violence happening in Oakland connected with the Occupy protests there. Will the violence spread?

As for Brussels it seems like the indignados/occupiers have left, I haven't seen them here for about a week. As far as I know, there is no permanent occupy presence here in Brussels. Given all the important decisions being taken here, that seems frankly ludicrous when there are occupy movements in Dublin, Rome, and even Auckland, New Zealand. But I suppose it's typical of the lack of attention paid to policy-making in Brussels! Nobody even wants to come here to protest!

Just Lips service?

2011-10-27T17:58:00.005+02:00

So the Euro is saved, for now. At 4am European leaders finally emerged from their talks to tell the fatigued journalists that after hours of very difficult negotiations, they had come to an agreement that will give the markets what they are demanding.

Perhaps it was the late hour, or the fact that the Polish presidency had closed the press bar at 11pm, but the journalists covering the summit initially greeted the announcement with scepticism. Many questioned whether the "bazooka" just unveiled really had the firepower to shield Spain and Italy from collapse. After all, this was not the first time the press had been held captive until late into the night in the Justus Lipsius building - or 'Just Lips' as I like to call it - to be told at the break of dawn that the euro would be saved. So in the end, was this just lip service? Or was this the decisive action the markets needed to see?

The agreement has three prongs:

Private banks holding Greek debt will accept a loss of 50% on their Greek bonds
The eurozone's main bailout fund (the European financial stability facility or EFSF) will be leveraged to €1 trillion.
Italy will implement reforms to bring down the country's staggering debt, including a lowering of the retirement age.

The agreement will not solve the euro crisis once and for all, and more meetings will be necessary over the coming months - particularly as concerns setting the closer financial union that will be necessary to prevent this from happening again. But as council president Herman van Rompuy noted as he was leaving the summit, “the deal was better than most people expected”. It certainly was a lot better than people in the press room were predicting early in the night.

The markets seem to share Van Rompuy's optimism. Stock markets rallied today and the euro shot up in value. But the devil is in the detail. For instance, that €1 trillion figure is not actually mentioned in the Eurogroup summit statement. It only says that the current amount can be leveraged four or five times. But where is that leveraging coming from? This is what got sceptical observers calling this a bazooka with no ammo last night.

The money cannot come from the European Central Bank – Angela Merkel was insistent on that. So instead it will come from special purpose vehicles. This will include the EFSF, but also the IMF and sovereign wealth funds. It is expected that much of that sovereign wealth will come from China. The first thing French President Nicolas Sarkozy did this morning after getting a few hours sleep was call Chinese president Hu Jintao. And the head of the EFSF will fly to China later today. The real convincing will have to be done at next week's G20 summit. In the end, China will probably agree to bail Europe out. Anyone want to start taking Mandarin lessons with me?

The banks themselves will also be going hat in hand to China to fund their 50% 'haircut'. If they cannot get the funding from China then they will have to be nationalised by their respective governments.

So much still needs to be ironed out over the coming weeks. Finance ministers will meet next week and set the details of this new arrangement. But for now, the markets have been calmed. But it remains to be seen whether last night's Eurogroup summit statement was just lip service, or the beginnings of a concrete plan that will save Europe.

Will Europe be saved tonight?

2011-10-26T18:27:00.003+02:00

I'm here at the big EU summit in Brussels, the D-day event that is being billed as the last chance to save the Euro and prevent a collapse of the European economy. Even if the leaders emerge from those fortified doors having done everything the markets are asking, there will still be a long road ahead in this crisis. But this could be the moment they were finally able to turn the tide and appear in control.

Or it could be remembered as the moment where the entire European project collapsed. The tension in the press room is palpable. It's hard to say if it's coming from the stressed-out journalists or seeping in from the inner chambers where the European leaders are meeting. Either way, I would venture to say the Justus Lipsius building (or 'Just Lips' as I like to call it) is one of the most tense places on earth at the moment.

The markets need the leaders to come out of those doors and tell the press room two things: First, that they have amassed a trillion euro war chest to protect all of the Southern European economies, including Italy and Spain, from collapse. Second, that Italy has agreed to put in place a drastic austerity plan in line with what is being imposed on Greece.

Italian prime minister Silvio Berlusconi has come to Brussels tonight with an letter for the other EU leaders that has been agonisingly crafted over the past two days. According to reports, the letter agrees to implement the drastic measures including – and this was the key sticking point – hiking the Italian retirement age. Berlusconi's coalition partners the Northern League had refused to acquiesce to this demand, threatening to topple the Italian government. But in the end it appears they've relented, as long as those near retirement will still be able to retire early.

The leaders will also need to emerge with some kind of bank recapitalisation plan in order to sooth the markets. European banks will likely be asked to increase their core capital, and those that are unable to do so will have to seek support from their governments. If the governments can't provide it (which is likely the case for the indebted Southern European states) then the European Financial Stability Facility (the €1 trillion fund) could provide it.

The leaders are also expected to ask for larger private sector involvement in the recovery effort, with banks being asked to take a 'haircut' on their Greek bonds. They've already agreed to take a 21% haircut, but it is expected that they will now be asked to take a 50% reduction.

Finally, the leaders are going to have to indicate that they have some kind of plan for bringing in closer Eurozone economic and fiscal integration. This of course will be a process that will take a few years and may require treaty change, but tonight they need to at least indicate that they are taking the first steps. To put it crudely (and this is admittedly over-simplified), the current crisis is the result of the fact that the euro created a monetary union without a fiscal union. Individual member states could set their own budgets and these were not independently verified, while at the same time they were sharing a common currency. Experts say this is no longer tenable, and either fiscal policy for the Eurozone needs to be dictated/coordinated or the euro needs to be abandoned.

US-EU trade war looming over airline emissions

2011-10-26T12:35:00.003+02:00

This week the US House of Representatives passed a bill that would ban US airlines from participating in the EU's emissions cap-and-trade scheme. It is just the opening shot in what is likely to be a nasty trade war between the two blocs over the coming months. The winner will determine whether 72 million tonnes of CO2 are emitted into the Earth's atmosphere over the next eight years.

While international climate talks have stalled the EU has pushed ahead with its own unilateral action on climate change, the keystone of which is the Emissions Trading Scheme (ETS). Under the scheme industries with heavy emissions are capped on the amount of greenhouse gases they can produce, and if they want to emit more they must buy credits from others who are using less than their cap. The scheme is already up and running, but starting in January airlines will be included. The decision to include airlines in the scheme was taken back in 2008.

This will mean all airlines that fly in or out of the EU must purchase carbon permits. The plan has not met with significant resistance from the European airline industry, but it has met ferocious resistance from American, Indian and Chinese airlines. US Airlines have challenged the law at the European Court of Justice, but the court has already indicated it will rule against them. So the airlines have now turned to the US Congress, and they have found a receptive ear.

American airlines are particularly concerned because their fleet tends to have higher emissions than fleets in Europe, and they therefor might need more permits. European airplane maker Airbus has been faster to implement fuel efficiency technology than Boeing.

The bill, which must also clear the Democratically-controlled Senate and be signed by President Obama, would forbid the US airlines from participating in the scheme. This would effectively mean US airlines can no longer fly to Europe, an unimaginable scenario. So the question is now who will blink first. The EU commission has indicated it will not, with Climate Commissioner Connie Hedegaard saying yesterday on Twitter they are "confident that the US will respect EU law, as the EU always respects US law" and that they do not intend to modify the legislation.

It is as yet unclear whether Senate Democrats will support the bill, but its bipartisan support in the House indicates that they might. The Obama Administration has said they oppose the inclusion of non-EU carriers in the scheme and he would likely sign the bill into law.They say it is a violation of international aviation rules, and the unilateral approach is contrary to the spirit of the UN climate negotiations.

But the ETS does have its defenders in the congress. Democrat Henry Waxman of California said on the House floor "If we expect European companies to comply with US law then we have to respect their laws." Until the Republican takeover in 2010 Waxman was the chair of the House Energy and Commerce Committee.

Interestingly, the House Republicans urged the Obama Administration to take their case to the United Nations, which could rule that the EU measure violates international agreements. It's rare for Republicans to urge the US to go to the UN for anything! But they could find a sympathetic ear at the UN. The US is by no means alone in its opposition to non-EU airlines inclusion. China has been threatening retaliation in their own Chinese way, by delaying purchases of plane parts by Airbus.

Clegg defends Europe

Meanwhile, yesterday saw a new development in the Tory backbench EU revolt. Following Monday night's rebellion by Eurosceptic MPs voting to put an 'in or out' EU referendum to the British public, Deputy Prime Minister Nick Clegg launched an impassioned defence of the European project in a speech the following day. He said that as long as the Liberal Democrats are in the government coalition, there will be no referendum and no 'clawback' of powers form Brussels.

"Eurosceptics need to be quite careful for what they wish for, because if they succeed – and they won't succeed, as long as I'm in government – to push this country towards the exit sign, let's be clear: what will be damaged is British families, British businesses, British jobs."

On the Europe issue, even if Cameron thought now was the right time to throw the Eurosceptic back-benchers a bone, it is clear his coalition partner will not allow it.

UK sidelined as Cameron faces attack from Sarko and his own MPs

2011-10-24T17:24:00.002+02:00

David Cameron's quest for influence at this week's Eurozone crisis meetings is meeting headwinds, to say the least. First French president Nicolas Sarkozy tells him to 'shut up' at yesterday's summit, and now he is facing a rebellion his back-bench Eurosceptic MPs.

Tonight the rebels will try to force a vote in the parliament to set a public referendum in the UK on its EU membership. Cameron opposes such a referendum and has instructed his party to vote against it, as have the leaders of his coalition partners the Liberal Democrats and the opposition Labour. But 70 Conservative MPs are expected to defy him and vote for a referendum.

Of course, the measure has no hope of passing. But commentators and the markets,will be focused on the message that the rebellion will send at this precarious and sensitive time. British foreign secretary William Hague, who is himself quite eurosceptic, told the BBC that the vote being forced by the back-benchers is "the wrong question at the wrong time" and has likened it to "a piece of graffiti". The vote will "create additional economic uncertainty in this country at a difficult economic time," he said.

Cameron has imposed a 'three-line whip' on his party to vote against the measure, which is the most serious whip a party can issue. Any MPs who disobey will be expected to resign from government jobs. Cameron has said the preceding Labour Party should have held a public referendum on the ratification of the Lisbon Treaty, and he has pledged to hold a referendum on any future treaty changes. But he says an 'in-out' referendum would be counter-productive. This is likely because he knows such a referendum could easily yield an 'out' result, plunging the UK into a diplomatic and economic crisis.

The timing of the vote couldn't be worse for Cameron, who is desperately trying to fund a way for Britain to have a voice in this week's crucially important Eurozone talks. At yesterday's first round of talks between EU leaders (the final round comes Wednesday) Cameron tried in vain to have an influence. After the summit he told reporters that "there is a risk that those countries outside the euro...might see the eurozone members starting to take decisions that affect the single market." He said he had fought for the leaders in the Eurozone (those countries which use the euro) to guarantee the rights of non-euro countries in the summit's final statement.

Even some countries within the Eurozone are expressing concern that the non-Euro EU members - which include Sweden, Denmark and the UK plus all the Eastern European states member states except Slovenia and Estonia - are being excluded from decision making. Finland and the Netherlands signed a joint letter ahead of the summit demanding that "all member states need to be included in decisions." But with closer economic integration of the Eurozone now looking like the only option to solve the crisis, a "two-speed Europe" is looking more and more likely. In such a scenario, the non-euro countries will be sidelined from decision-making.

"You say you hate the euro and now you want to interfere in our meetings"

At this crucial moment it is important that the UK be seen to be engaged and influential, but tonight's vote will send a completely opposite message to the world. And at the same time that Cameron is being pulled away from Europe by his own MPs, he is facing an increasingly hostile and defensive Franco-German alliance that wants the UK to mind its own business. French President Nicolas Sarkozy reportedly said as much to Cameron in a shocking outburst during yesterday's summit.

According to reports, toward the end of the summit when Cameron insisted that non-euro countries be included in the decision making, Sarkozy exploded. "You have lost a good opportunity to shut up," he reportedly told him, adding, "We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings."

Wednesday's 'D-Day' meeting of Eurozone leaders, being billed as the last chance to save Europe, will technically not include Cameron. He is going to come to Brussels for the meeting anyway, but it's unlikely the Eurozone leaders will let him in to the most crucial talks. In any event, he won't get a say over the final decision they take, as that is only being taken by Eurozone leaders.

It's an incredibly sensitive time for Europe as leaders grapple with an almost impossible question: How do you create fiscal union for only part of a common market? In the end, the answer may be: You can't. If this is the case, member states would either have to join the euro or leave the EU. Given that Cameron has ruled out the UK ever joining the Euro, it could mean that one day soon the UK may have to leave the union. This is not something Cameron wants to see happen. But if the message sent by tonight's vote is that this 'two-speed Europe' is untenable and will soon split the union apart, it will have a damaging impact on confidence in whatever solution is announced on Wednesday.

Indignant occupiers and the EU’s ‘sink or swim’ moment

2011-10-21T10:45:00.095+02:00

The past few weeks have witnessed a remarkable coalescence between the months-old ‘Indignados’ movement that started in Spain and spread to other European capitals with the ‘Occupy Wall Street’ movement that started in New York and spread to other American cities. Coordinated demonstrations and unrest took place this weekend in from London and Paris to Brussels and Frankfurt.

I was in Italy on Saturday when Rome saw the worst of the violence outside Greece, and the news coverage was clearly unnerved in tone. Everyone is now wondering – where is this all going?

The protests on both sides of the Atlantic are expressing the same frustration: people feel powerless and confused by a North Atlantic economic crisis where solutions seem to be dictated by the all-powerful 'markets'. It's reminiscient of how the Pope in Rome excersised ultimate authority over kings and queens in midieval Europe. Now European and American leaders follow the dictates of 'the markets'. In 2008 following the Lehman Brothers collapse, the US congress was told that it must immediately pass a rescue package for the banks or 'the markets' would panic, causing economic catastrophe. Now European leaders are being told that they must immediately inject an enormous amount of cash into the struggling Southern European economies to prevent 'the markets' from panicing.

But who are these 'markets', and why do they seem to be the only thing calling the shots these days? In truth they are all of us: it is made up of the savings in our bank accounts, the money in our retirement funds, the value of our stocks. And we've become completely dependent on this system we've created. Experts aren't lying when they tell lawmakers on either side of the Atlantic that they must throw money at the problem in order to prevent economic collapse. The 'occupy' protestors seem to understand this. But what they are protesting is the system itself. For whatever reason, this public backlash didn't materialise back in 2008 (or it did so in the confused form of the Tea Party which seemed to be defending the system rather than challening it).

The demonstrations across Europe last weekend seem to have taken more inspiration from the Occupy movement than the Indignados, so much so that the Spanish may feel a little resentful that the New Yorkers have stolen their thunder. But in the end it’s natural for the two movements to coalesce. Both are essentially leftist, and both seem to be more about expressing outrage at the current situation than about demanding specific policy goals.

Of course the big difference between the indignados/occupiers in Europe and those in America is that in Europe there is no counterpart mob on the right. In America the situation is a bit more worrying, with the organized and politically powerful ‘Tea Party’ movement on the other side. Roving bands of angry mobs on both the far left and far right bring to mind uncomfortable historical parallels. At least in Europe, the far-right mobs have yet to materialize in significant number (though far right parties have been enjoying increasing political success).

The divergent ways in which different national medias have covered the occupy protests has been interesting. It's almost like the protests have become a Rorschach Test, with media seeing in them what they want. The French and German media started covering them very early on, even before they had spread beyond New York City. They very quickly identified them as being anti-capitalist in nature and made comparisons to the Arab Spring.

The US media on the other hand almost completely ignored the protests at first, and when they did begin covering them once they spread to other cities they focused on the 'carnival-like atmosphere' and the lack of a coherent message. It's possible that Europe, and France in particular, was more accustomed to these 'occupy'-type protests - there is a long tradition in France of workers 'occupying' factories as a form of protest (and they sometimes take management hostage, most recently in 2009). In the US, the media initially seemed confused by the 'occupy' tactics being used.

In the end it will not being the indignant or the occupying that will decide the fate of the European economy in the short term – that unenviable task will fall to European leaders over the next two weeks in what is being described as the EU's 'sink or swim' moment. But it is unclear what impact the growing unrest spreading across Europe will have on the European leaders’decision making in the coming days.

Euro crisis comes to a climax

European Union leaders are heading into a series of crucial meetings over the next week that could save or destroy the union. During the European debt crisis over the past two years many EU summits have been billed as “make or break,” but this is the real deal. Even the leaders themselves have acknowledged that they must come up with a final solution for the crisis before the G20 summit in Cannes on 3 November, or risk collapse of the European economy.

The crucial meetings begin today with an emergency meeting of Eurozone finance ministers, followed tomorrow morning by a meeting of all 27 EU finance ministers. Later tomorrow foreign ministers will meet to hammer out the last details before the big meeting, the summit of the 27 EU heads of government on Sunday.

Or at least that was the plan. But yesterday the offices of French President Nicolas Sarkozy and German Chancellor Angela Merkel said they would need more time after it became clear that the Eurozone's two biggest members will not be able to bridge their differences before then. So a second summit will be held on Wednesday - and that one will really be the last chance. It's a worrying sign, especially considering that the summit had already been delayed from its original date earlier in the week. EU leaders are looking very Hamlet-esque, and this is rattling the markets.

The disagreement centers around how to structure the massive bail-out fund. Germany and the other rich Northern European countries want banks and other private investors to take steeper losses on their Greek bonds, but France and the European Central Bank have opposed this because they think it would destabilize the banking sector. Additionally, France wants its own banks to be able to use the bail-out fund, but Germany says only the countries in economic meltdown should be able to do that.

What will happen during these meetings over the next days is anybody’s guess. EU leaders are all claiming they have a plan and that they are in agreement, but the incessant delays betray the truth. There are still severe disagreements. The EU Executive signalled it to had a plan earlier this month, when Commission President Jose Manuel Barroso unveiled a 5-point “roadmap for stability and growth”. But though the EU executive may desperately want to be relevant during this crucial moment, the fact is it is the member states who have both the power and the responsibility here.

How much the growing unrest on Europe's streets will effect member state decision-making is anybody's guess. Right now the goveernments of Germany and France seem more preoccupied with the disagreements between themselves than with the disagreement of the public at large. And as angry as people on the street may be, they are not proposing any tangible solution short of complete revolution, which the broad swathe of the population isn't ready for yet. But what would it take for that to change?

With even the editorial pages of The Independent now openly talking about an imminent period of revolution in the West, these are very uncertain times indeed.

Two different animals

2011-10-07T15:55:00.004+02:00

If you needed evidence of just how different the British Conservative Party is from the American Republican Party, this week's party conference provided two particularly illuminating illustrations.

Conservative Prime Minister David Cameron stood before the yearly gathering of Conservative Party members – similar to the 'national conventions' in the US – and said he wholeheartedly supports gay marriage and will work to enact it in the UK next year (to replace the current civil unions). This was met with thundering applause in the hall. Try to imagine the reaction if a presidential candidate said this to the Republican National Convention!

In the second example, a huge row has developed after the Conservative Home Secretary Theresa May used an incorrect fact in her speech to the conference. Explaining why she wants to dismantle the Human Rights Act, which is the British transposition of the European Convention on Human Rights, she listed as an example a case where the act's requirements meant that there was an "illegal immigrant who cannot be deported because – and I am not making this up – he had a pet cat."

As it turns out, she was making this up. As the decision shows, the actual verdict against deportation had nothing to do with a pet cat, the decision was instead due to a mistake made by the Home Office's prosecution. A pet cat, which had been mentioned in the appellant's brief along with his partner as reasons why he has a home life in the UK, was merely mentioned by the judge in his verdict as an attempt at humour. It was later revealed that May had taken the cat story from a speech made by UK Independence Party leader Nigel Farage.

In the United States, such half-truths are common in debates and speeches. In fact, analysies have shown that in the Republican primary debates so far the candidates have uttered more half-truths and outright fabrications than truths. But they are seldom called out on these misstatements because untruths have become such a normal part of political dialogue in the United States.

But in the UK, after the Home Secretary made the erroneous statement, she was called out on it by a member of her own party. In fact it was a member of her own cabinet, Justice Secretary Kenneth Clarke, who levelled a blistering attack on her for using the false example, calling it "laughable and child-like". These two are not competing with each other for any office, so there was no reason for Clarke to level this attack other than the fact that he was legitimately offended by her outright lie.

I was thinking about these two developments this week, and I was trying to imagine either of them occurring in an American context. And I just couldn't place them. It's hard to imagine even a Democratic presidential candidate endorsing gay marriage in front of the Democratic National Convention. And the idea that a half-truth uttered during a political speech would turn into a national controversy nicknamed "catgate" is, these days, inconceivable. The political dialogue is now centred around half-truths, so what would be the point of calling a candidate out for one false statement when it is merely one out of many?

As for the gay marriage comment, in fact the leaders of all three main UK political parties have promised to upgrade the UK's civil partnerships to full marriage. In essence the current civil partnerships grant all of the rights of full marriage (with a few exceptions), but gay rights advocates have said separate is not equal and there is no need for a parallel institution for gays. Here's what the prime minister said to the party conference:

“I stood before a Conservative conference once and I said it shouldn’t matter whether commitment was between a man and a woman, a man and another man or a woman and a woman.
“You applauded me for that. Five years on, we’re consulting on legalising gay marriage.
“And to anyone who has reservations, I say this: Yes, it’s about equality, but it’s also about something else: commitment. Conservatives believe in the ties that bind us; that society is stronger when we make vows to each other and support each other.
“So I don’t support gay marriage in spite of being a Conservative. I support gay marriage because I am a Conservative.”

Radical stuff right? Not in the UK. In fact this statement got no mainstream media coverage as far as I can tell, because it was so enormously non-controversial. So the assertion that gay marriage is a conservative value gets no coverage, but a half-truth uttered in passing by the home secretary turns into a scandal.

The UK really is a very different country!

The Knox verdict: another humiliation for Italy

2011-10-04T15:09:00.007+02:00

These are embarrassing times to be Italian. The country is in a financial mess, on the precipice of becoming the latest victim of the debt crisis. The prime minister is now regarded even by most Italians to be a national embarrassment, yet he still clings to power. The waste crisis in Naples has spiralled out of control, and Italy's handling of migrants from North Africa during the Arab Spring has drawn condemnation from human rights groups and European leaders alike. Even their prime minister has heaped scorn upon Italy, calling it a "shitty country". The last thing Italians needed was another embarrassment.

As I write this, Amanda Knox is boarding a plane in Rome, heading back to her home in the US after four years in an Italian jail for a crime the judiciary now says she did not commit. Yesterday's verdict of innocence, the conclusion of the most closely-watched Italian court case in decades, brought jeers and condemnation not just from the crowd of Italians outside but also from the Italian media. Many in Italy see the verdict as the judiciary bending to American pressure. But other Italians agree with the sentiment felt abroad - particularly in the US – that the Italian judiciary and police system are so flawed there was no way Ms Knox could be convicted without significant doubt about her guilt.

The prosecutors had alleged that Ms Knox, staying in Italy to study the language, had with her Italian boyfriend killed her British flatmate Meredith Kircher – also learning Italian – after a sex game had gone horribly wrong in 2007. They centered the case around painting her as an evil creature, even calling her a "witch" in court. Both were convicted of the murder in 2009, but in the Italian legal system defendants are allowed two appeals. Apparently convictions at a first trial are commonly later overturned on appeal. After 2009 significant flaws were found with the police investigation of the case. An independent review found that the DNA evidence found on a kitchen knife in the boyfriend's flat was unreliable because the police had not followed proper procedures when collecting it. Yesterday the judge found that the police had made a catalogue of errors.

This was a case involving three nations, and each nation seemed to be most interested in protecting their own. In America, Amanda Knox was portrayed as an innocent college student who had been in the wrong place at the wrong time. In Britain the tabloid press dubbed her "Foxy Knoxy" and painted her as a brutal, psychotic killer who had preyed upon her innocent English roommate. In Italy, the concern centred around defending the police and prosecutors, and upholding the dignity of the Italian justice system.

In the end, one could read into yesterday's verdict that the Americans won. That's certainly what much of the Italian press seems to be doing. The newspaper Corriere della Serra wrote today that the American media had subjugated Italian justice. Other papers echoed the crowd's chants of "shame" after the verdict was read. Notably, the US state department said that they were "satisfied" that the court had come to this decision. The British foreign office had no comment.

Whether you think Knox is guilty or innocent, either way the Italian justice system comes out looking very bad here. Either they wrongfully accused a young woman of murder - brandishing her a witch and holding her in prison for four years - or the blundering of their investigation has let a brutal killer go free. But in Italy some are choosing to see this as a question of American media pressure letting a killer go free, choosing to ignore that mistakes made by the Italian police and prosecution.

It seems likely that the defensive Italian media reaction is part of a larger picture – a feeling within Italy that the country is being set upon by chastising neighbours. And that feeling is only going to get more pronounced. Recent leaked cables have shown that the European Central Bank is growing increasingly frustrated with the country and its inability to get control of its debt and implement an austerity package. Italy-bashing has become common place in Northern Europe, part of a growing trend of blaming Southern Europe and their perceived lack of a work ethic for the eurozone crisis.

I will be going to Italy next week for a long roadtrip from Pisa to Milan. I'll be stopped in San Gimignano, Florence and Bologna on the way. It will be good to get to know the country better and maybe even pick up some Italian, considering I actually haven't been there since I acquired Italian citizenship through ancestry three years ago. I also want to talk to people about how they're feeling about the eurozone crisis, particularly in the context of defending the European project from disintegration.

Paradoxically, Italians tend to be one of the most pro-EU countries at the same time as being very isolationist from the rest of Europe. This is simply for the reason that despite a tendency toward provincialism, Italians have such little faith in their own government that they welcome the EU coming in and enforcing European law. I've never met an Italian who wasn't a 'federalist' in the sense that they want more power to go from Rome to Brussels. Now that the entire European project is under threat, will Italians be enthusiastic about defending it? Or will they have a defensive reaction to being partly blamed for the crisis and join the anti-EU sentiments of the protestors in Greece? I'm curious to find out.

What would the world look like without the EU?

2011-09-29T23:38:00.004+02:00

They used to say that when America sneezes, Europe catches a cold. That’s certainly what they (and I) were saying during the 2008 economic crisis, when misadventures on Wall Street and the subsequent collapse of Lehman Brothers created a disaster that quickly spread to Europe. How the tables have turned. Now the US is waiting helplessly to see if Europe can avoid a disaster that would eclipse Lehman Brothers in scale and could throw the US back into recession.

It’s a testament to just how important Europe has become to the global economy that it is now Europe’s sneeze that can give the world a cold. The EU is now a larger market than the United States, and over the past twenty years it has literally become the world’s regulator. Is it conceivable that this entire project could now collapse?

This is the question that is now being asked in the United States. When I was home last weekend I was asked by friends, “Is the EU going to fall apart?” Trying to show a bit of false confidence, I assured them that it is not. Germany is in the end going to suck it up and do what needs to be done to save the euro, I insisted, because the alternative is complete economic meltdown. The vote for the increased bailout fund today in the German parliament seems to go some way in justifying that optimism. The truth is that Europe’s problems are not insurmountable.

The EU actually has a combined debt much smaller than that of the United States, and the vital signs of the EU economy, in the North at least, are much more promising than in the US. Europe has a structural problem, not an economic one. It has states with individual sovereign debts that can be set upon by international markets. Can you imagine if the same were true of the individual American states?

At this time three years ago I was in Paris watching Europe panic as it looked like the US congress would not pass the bail-out to shore up the failing US banks. Eventually they did pass the enormous fund which stopped the contagion of the crisis. That was hard enough. But if they thought that was tough, imagine having to pass such a bail-out in 27 parliaments. The Obama administration should keep this in mind as they express increasing impatience with Europe's slow reaction.

The problem is that Europeans went only halfway with the European project. They thought they could create monetary union without financial union, and that is how they’ve ended up with the problem they now find themselves in. But that problem is still solvable, perhaps even (depending on who you ask) without treaty change. It will take a measure of sacrifice from the Germans, but if there’s any people willing to make a sacrifice for Europe it is them. They have been, after all, the ‘best Europeans’ over the past fifty years.

The EU’s importance to the world

But what if it did all collapse? What would that mean for the world? Personally, I believe that the EU is the last best hope for the world. It’s why I came here, after all. So I believe that a collapse of the European project would not just cause a short-term economic collapse and recession. It would fundamentally alter the 21st century, and for the worse.

In the 21st century we are guaranteed to have two superpowers – one on the rise and one in decline. One is an authoritarian colossus that tramples over human rights and doesn’t seem to have any defining ideology outside of profit and growth. The other is a creaking, aging democracy struggling under the weight of an antiquated governing structure and a political discussion increasingly divorced from reality. As different as they are, China and the United States have one thing in common – neither seems to be in a position to take on a role of strong global leadership today.

There is the possibility of a third superpower -a union of former world powers who dominated previous centuries but whose influence today is, individually, weak and growing weaker by the day. Though of low significance individually, acting collectively they take on an importance that can equal or even dwarf that of the US or China. The EU is already a larger common market than the United States, and it has a higher GDP. Before the current crisis came along there was talk of the euro becoming the world’s new reserve currency (China was requesting it no less).

The EU’s importance today doesn’t just lie in its size. Over the past three decades, as the US has adopted a laissez-faire, light touch attitude toward regulation, the EU has stepped in and become the world’s regulator. The huge recent growth in the lobbying presence in Brussels is a testament to this. US companies operating globally no longer worry so much about constraints coming from Washington, they worry about Brussels. Because if they want to operate in Europe, then they have to make their products conform to European environment, health and safety requirements. And the European market is just too big to ignore.

The examples are myriad. For example, the REACH chemicals regulation, adopted in 2006, requires companies to identify and test all chemicals they use in their products. Believe it or not this has never been required before, and no government knew exactly which chemicals were being used in items people use every day. US companies now have to identify all the chemicals they use, because Europe requires it.

Environmental policy is another area in which the EU is the only one showing leadership. It’s not just that Europe has better public transport, recycling, and emissions levels within its borders than elsewhere in the developed world. Europe is now the center of development and deployment for green technologies. It is also the center of the world for setting environmental standards, for instance for unleaded fuel. Automakers tend to make their worldwide fleets according to European standards, because they're not going to make separate cars for Europe. The same goes for the EU's ecodesign legislation, which specifies green standards for products. Those standards then get applied to the products worldwide, because manufacturers aren't going to make separate products for Europe.

In previous decades it was California that was the leader for green technology and environmental standards, and these would then spread to the rest of the US and then to Europe. It is now the opposite, with Germany taking the mantle as the world’s generator of environmental technology and standards. The EU is also the one driving forward international talks on combating climate change, in the face of huge resistance from the US and China.

Regulations covering anti-trust, consumer rights, privacy and finance now also generate from the European Union, and the world’s corporations must follow them. GE CEO Jack Welch learned this lesson the hard way in 2001 when his takeover of Honeywell was easily cleared by US anti-trust authorities but was then smacked down by EU authorities, forcing him to abandon the deal. It would have been the biggest industrial merger in history, and without the EU it would have gone ahead. Microsoft was also caught off guard by the EU's regulatory muscle, and may soon happen to Google.

Europe has also provided the world with moral leadership in modern times, something that used to be the purview of America. Unlike in the US and China - the two most prolific state killers in the world – the death penalty is forbidden in the EU. Europe has been on the forefront of the gay rights movement, with same-sex unions now the law of the land in 18 out of the 27 EU member states. The United States was only recently able to join the rest of the Western world in ending a ban on gays in its military, something that hasn’t existed in Europe in many years. Europe’s social model is also an example to the rest of the world, with healthcare systems that care for all and welfare systems which, though they may have problems, prevent large numbers of citizens from falling into abject poverty. The United States and China cannot claim these successes.

Even in the realm of foreign policy, undoubtedly the EU’s biggest weakness, EU member states have often acted as modifiers in conflicts, as opposed to their more bellicose American cousins. If that propensity for peace by individual member states could be unified into a single voice at EU level, and if Europe could become capable of defending itself militarily and not rely on US military protection, it could make a huge difference in the world. The EU is a long way from this point, but it could get there.

Doomsday scenario

So what if this all went away tomorrow? The practicalities of a ‘European divorce’ are enormously complicated, so complicated that it seems very unlikely to me that it would even be possible to break up the EU. The entire structure of how European states interact with each other are now contained in the EU treaties. If these were suddenly torn up it would mean a nightmare of redrafting bilateral treaties between all the various states.

In term of law, EU directives have been transposed into national law so all those areas would remain the same. But regulations, the type of EU law that does not need to be transposed but is automatically effective in member states, are not encoded in national law. So these would disappear. These include, for instance, the REACH chemicals regime and food safety standards.

For Europeans the consequences would be extreme. But what about the rest of the world? If companies no longer had to fear the regulatory power of the EU and only had to deal with the light-touch US authorities, its safe to assume that the level of consumer protection in products and services would quickly deteriorate.

Economists say that just the euro’s collapse alone would plunge the world into a global recession, a crisis that could even develop into a long-term depression. The collapse of the world’s number two currency, combined with the collapse of the world’s number one economy, would be catastrophic.

And what would happen to the states of Eastern Europe if they no longer had the EU or the goal of EU accession to bring them toward the West? It’s easy to see these states falling easily back into the Russian yolk. And however you feel about the question of Turkish EU accession, it seems that the death of the EU would seal the deal of Turkey’s transformation into an Islamic state oriented toward the Middle East.

Then of course there is the most extreme scenario – that the break-up of the EU could result in another European war down the road. As unimaginable as that seems in today’s Europe, the Polish finance minister actually suggested this last week when he said that the collapse of the EU could eventually lead to another large scale war on the continent. It is often said that the EU’s greatest achievement was making war on the continent of Europe inconceivable, because the countries are bound together by an intergovernmental structure. If that structure disappears, logic would hold that war is once again a possibility. That is a future nobody wants to envisage.

“The EU faces its greatest challenge”

Clearly, the stakes are high. European Commission President Jose Manuel Barroso indicated this in his emotional ‘state of the union’ speech to the European Parliament Wednesday. "We are today faced with the greatest challenge our union has known in all its history," he told MEPs. But he said it was both possible and necessary to overcome it. Only more Europe can solve the current crisis, he insisted, not less. Despite the current mood of nationalism in Europe, there is no other way out of this crisis but to complete the European project. "I think this is going to be a baptism of fire for a whole generation," he said.

But despite the impassioned speech, it still seems like European leaders aren’t grasping the enormity of the crisis. German Chancellor Angela Merkel has been paralyzed with inertia since the euro crisis began, afraid to vigorously make the case to a skeptical German public that they must make sacrifices to save the common currency. Barroso himself has seemed sidelined and irrelevant as the bail-out mechanisms used so far to combat the debt contagion have been intergovernmental rather than institutional in nature. Newly-appointed council president “Haiku Herman” Van Rompuy has been missing in action (he told an audience in the US last week that he was a “poet lost in politics”). UK leader David Cameron has seemed confused about what role the UK should have since it is not in the Eurozone, and French President Nicolas Sarkozy’s solutions have seemed disjointed.

The problem is that everyone knows what must be done to end the crisis - establishment of financial union with one EU finance minister dictating finance policy to the member states. But at this time of heightened nationalism and euroscepticism amongst the European public, they are too afraid to take this case to the public. So they have stumbled ahead with half-measures, putting off the pain and hoping that the problem will just go away. Eventually though, they’re going to have to do what needs to be done. And the first steps in this direction may be taken at next month’s enormously important European Council – perhaps the most anticipated council in the EU’s history.

If Europe’s potential is the best hope for the world, it is now the European people themselves who are the biggest obstacle to this hope. As I’ve said before, this continent is long on comfort and short on ambition, and Europeans don’t like to see themselves as leaders in the world. But as the European project seems to teeter toward collapse, Europeans need to start thinking about what the alternative to that leadership will look like. It’s something the rest of the world needs to start thinking about as well.

EU banker tax? UK says no

2011-09-28T18:43:00.010+02:00

"In the last three years member states - I should say taxpayers - have granted aid and provided guarantees of €4.6 trillion to the financial sector. It is time for the financial sector to make a contribution back to society. That is why I am very proud to say that today, the Commission adopted a proposal for the Financial Transaction Tax."

With these words European Commission President Jose Manuel Barroso put forward what is bound to be an enormously controversial piece of EU legislation, a transaction tax on bankers and investors who invest in stocks, bonds and derivatives. Speaking to the European Parliament in Strasbourg today for his annual 'state of the union' address, Barroso said the tax would bring in €55 billion per year, starting from 2014.

The language used by the president was clearly populist in nature, emphasising a sense of fairness and responding to a public feeling that the bankers who caused the economic crisis of 2008 have never been called to account and have not been asked to contribute to the recovery from the pain they caused. Stock markets and investment firms have made remarkable recoveries over the past few years, and executive pay has steadily risen. But at the same time the economy as a whole has suffered enormously and continues to suffer.

The UK immediately said it will resist the EU financial transaction tax, and Barroso anticipated this resistance in his speech. Such a financial transaction tax would require the approval of all EU member states, and the UK has vowed to veto it. David Cameron's government says they have no objection to a financial transaction tax in principle, but such a tax would have to be global. They have also said that the UK would be disproportionately affected by such a tax. Some have estimated that 80% of the revenues from a Europe-wide financial transaction tax would come from London.

Noting that his proposal will likely encounter the "constraints of unanimity" in trying to get passage, Barroso suggested that perhaps only the Eurozone – the countries that use the euro – would adopt it. It was yet another sign that Europe may split into two entities – a core Eurozone and a wider, increasingly irrelevant EU.

If such a transaction tax is passed it will have big implications for the United States, and indeed for the whole world. A tax of 0.1% would be levied on all transactions where at least one party is based in the EU. With the global nature of today's market, that is likely to encompass a large share of the typical Wall Street trader's transactions. It would be yet another instance of the EU being the world's regulator.

But given the inevitability of a UK veto and the fact that the EU has bigger things to worry about at the moment, this proposal is probably going nowhere, at least for the moment. There will be plenty who see this as a populist move by the commission ahead of a difficult year during which the EU and member state governments will have to convince the people to go along with plans for stronger fiscal union.

UKIP rebuke

Perhaps because he had the veto in mind, Barroso appeared to be particularly fed up with the Brits today. During the section for statements by the party leaders, UK Independence Party leader Nigel Farage gave his usual EU-bashing rant, asserting that the UK is a powerful, prosperous nation that doesn't need the EU. Normally European leaders ignore this sort of thing. But this time Barroso bit back. And his response seemed to be directed not only to Farage but to Britain as a whole. In fact he devoted most of his allotted time for closing remarks to a response to Farage's accusations.

"If you do not respect the institution to which you belong yourself this is not my problem. And regarding Britain I would like to make this point to you: as far as I know there have been several times tries for you to be elected for your own British Parliament. How wise are the British people that have never elected you and sent you exactly here. Precisely because if you want your country to leave the European Union, say it in London. Because so far as we know your institutions, your country wants to remain in the European Union.

And if your country does not want to be in the European Union do not speak on behalf of the others, do not speak on behalf of Poland that just today said their commitment to the community approach and to stronger and ever close European Union.

If Britain believes that it can, because of the past empire or because of its dimension, defend its interest in the world alone - try to get that point across in your country. But I think that the majority here believes as was said - that to protect our interest, to defend our values in the world of globalisation, to speak with one voice with our American friends or with China and Russia, we need a stronger European Union. And this stronger European Union is the way to reinforce also our countries, the countries we represent around this house."

As we seem to be heading toward a two-speed Europe and an integrated Eurozone bloc of which the UK will not be a part, this is indeed an important question the British need to be asking themselves right now. If financial union does go ahead, binding the Eurozone states together in an unprecedented way, is the UK really content to be outside that process? It is a debate which has not yet started in the UK, but will likely need to be dealt with in the coming months as negotiations toward financial union get underway.

Sakozy loses French Senate to the Left

2011-09-26T13:26:00.001+02:00

Small signs of hopes for the European left continue to mount. In a vote over the weekend the French Senate changed hands from Nicolas Sarkozy's centre-right UMP party to the Socialists. It is the first time that the Senate has ever been out of the centre-right's control since the creation of the current French state in 1958, and it is a stunning setback for the French president just seven months ahead of France's general election.

So is this outcome a harbinger of a wider reascendance to power for the left, not only in France but also in Europe as a whole? Like the recent centre-left victories in Latvia and Denmark, this news comes with some important caveats. For starters, French Senators are not directly elected by the French people. They are instead chosen by 150,000 local officials throughout the country. These include mayors, city councelors and regional councelors as well as members of the lower house, the National Assembly.

In terms of power the French senate is much more similiar to its British cousin the House of Lords than to its American counterpart. The real power in France, after the presidency, lies with the National Assembly. The Senate can propose law and it must sign off on law, but like in the UK with the House of Lords, they can be easily overridden by the lower house and the president. Like with the House of Lords the French senate is often considered a refuge for people who used to be important, such as former assembly members or cabinet officials.

But even though this legislature housed in Paris's beautiful Luxembourg Gardens is a largely symbolic body that is not directly elected, the chang in power in the French Senate is hugely significant because it has been historically dominated by conservatives. This is because the voting system gives far more weight to rural councilors than it does to urban officials. And the countryside has always been the stronghold of the UMP. Half of the senate's seats were up for election this weekend, and though the official result has yet to be announced it looks certain that the Socialists, backed by the Communists and Greens, will have an absolute majority.

Given the fact that the senate can be easily overruled, and the fact that the Socialists will likely not want to be seen as obstructionists in a time of economic crisis, they are unlikely to use their new power to try to block Sarkozy's major initiatives in the Autumn. The most important of these are the budget and a reform of the healthcare system. So not much will change in terms of political reality between now and the election next April.

But the fact that local elected officials seem to have lost confidence in the French president will without doubt be a worrying sign to Sarkozy and could even cause panic within the UMP. It will also give a boost of confidence and hope to the Socialists, who have been demoralized and disunited for some time. Ségolène Royal, who hopes to challenge Sarkozy again if she wins the Socialist's nomination, called the vote a "very deep rejection by local elected officials of the unfair and inefficient policies of the Sarkozy system, which are plunging the country into one of the worst economic and moral crises it has known".

How will Sarkozy and the UMP respond to the loss? Will they moderate their policies and try to woo back the centre of the electorate by being less confrontational with unions and less aggressive on immigration issues? Or will they lurch to the right in order to make sure they do not lose votes to the far right National Front party in April? Either way, this weekend's result seems bound to illicit some kind of political response from the Elysee Palace.

Palestinian UN bid divides Europe

2011-09-25T18:45:00.041+02:00

I'm at JFK about to fly back to Brussels, and all around the airport you can see signs of this week's general assembly at the United Nations. I saw several pro-Israel and pro-Palestine demonstrations scattered around the city over the past few days, mostly outside hotels where I assume diplomats and leaders were staying.

Despite the best efforts of the United States and her allies to convince him not to, Palestinian National Authority President Mahmoud Abbas went ahead on Friday with his request to have the UN recognise Palestine as a 'non-voting observer' member. The machinations around this have been described as a slow-motion "diplomatic car crash" by diplomats. Coming as it does in the middle of the 'Arab spring', the United States knows it will look bad if they use their veto in the security council to deny the request. On the other hand, their close alliance with Israel means that the US government believes it has no choice but to veto the move.

But will the US be the only one to issue the veto? And which US allies will support the bid in a full assembly vote? Europe is showing characteristic disunity on the issue. France, which also holds veto power on the security council, is supporting the Palestinian bid. Spain, Portugal, Greece, Belgium and Luxembourg have joined France with their support.

On the other side of the debate stands the UK, America's closest ally in Europe and another veto-holder. The UK has been working hard to convince the Palestinians not to go ahead with their bid but instead return to direct negotiations with Israel. It is still not clear whether they would also veto the bid, but they will most likely abstain from the vote and let the US take the heat for the veto.

Italy, Bulgaria and the Czech Republic have fallen in line with the UK (although it is not clear whether Czech President Vaclav Klaus was speaking for the Czech government when he backed a US veto in his speech to the general assembly this weekend). Several key states such as Germany have yet to indicate their position on the issue. Given its general foreign policy, it seems likely Germany will support Israel

The differing positions are another painful reminder that the EU that it has yet to develop any effective apparatus to enable it to speak with one coordinated voice on foreign policy. This problem was supposed to be solved by the creation of the EU External Action Service (EEAS) and its high representative Catherine Ashton. The idea is that big foreign policy issues like this are supposed to be coordinated.

But Ashton is nowhere to be seen in this debate. Given that a US veto is guaranteed, the specific opinions of each member state could be seen as being rather irrelevant in this particular debate. To that extent, perhaps coordinated foreign policy isn't needed in this instance. But if EU member states can be so far apart on an issue like this, it seems fair to assume that if a very consequential foreign policy issue came up in the future where Europe being united would make a real difference to the outcome, there would be a similar result. If Europe can't unite on the small questions, how will it unite on the large ones?

There will be quite a diplomatic tango playing out over the coming weeks here in New York. As this continues, it will be interesting to see if the EEAS is able to get Europe speaking with a more united voice on the issue.

Bike sharing coming to New York?

2011-09-22T21:47:00.006+02:00

I’m in New York City today, I’ve come home again for a baptism that was rescheduled due to last month’s hurricane. It’s just a short trip for the weekend, so I’ve only brought a carry-on bag. Because I’m traveling light, I was able to take a bike to the train station this morning, which is always nicer than taking the tram.

I use the Brussels bike-share scheme every day actually, it’s quite nice to have in a city with not very comprehensive public transportation. It’s quite simple really. For €30 a year I can check out a bike from any the stations scattered around Brussels and return it to a different station at my destination. It’s free as long as I return it to another station within a half hour. If I want to take it out for longer, it’s €1 for every 30 minutes. It’s particularly nice because my apartment is downhill from my office, so I take the metro to work and check out a bike to coast home.

Today I’ve learned that New York is considering implementing a similar scheme. But will it work in New York as well as it’s worked in European cities?

The city with the most successful bike share scheme is undoubtedly Paris – a system that was modeled after an earlier successful program in Lyon. I used the Velib system when I was studying at the Sorbonne and it was a really nice way to get to class every day. The system is very widely used and popular with residents.

This year London launched a bike-sharing scheme that seems like it could be on its way to similar levels of popularity. Dubbed “Boris bikes” after the London mayor who implemented the scheme, most of my friends in London who didn’t cycle before are now using them. Personally I find the 3 gears a bit limiting, and the front basket is too small to store a bag. But they work ok.

New York mayor Mike Bloomberg is considering starting a similar scheme. The New York City Bike Share would have an initial roll-out of 600 stations and 10,000 bikes and would go from the Upper East and West sides down to Battery Park in Manhattan. Some stations would also be located in Brooklyn, according to the New York Observer.

According to a recent survey 60% of New Yorkers such a scheme. Apparently there is some resistance from residents associations who are concerned about the amount of space the bike stations will take up. Space in New York is, of course, rather limited. There are also concerns over the fact that those spaces would be managed by a private for-profit company (as all the bike sharing schemes across the world are privately managed). The city would be essentially handing over public land to a private company.

Right now the New York transport department is surveying citizens to find out if they want such a program and how they would want it to work. Residents can indicate where they want to see a station on this map (apparently the answer is everywhere).

As the city consults, there are lessons to be learned from European cities. Bike sharing schemes have been very successful in some cities, but have been complete failures in others. The initial roll-out of the bike share scheme in Brussels was a disaster. Brussels is already not a very bike-friendly city, with a hilly topography, nightmarish traffic, dangerous tram tracks and unnecessary cobblestones on many streets.

When they first rolled out the scheme they had only a few stations, so even if you checked out a bike you couldn’t go very far with it. The original bikes were also very heavy. Eventually the system was expanded and the bikes were changed. Brussels learned its lesson: you can’t roll out bike sharing on the cheap. And you also need to provide safe and efficient paths for the bikes to ride on.

London learned this lesson well and had a massive roll-out of stations right from the start. They also added many new cycle lanes throughout the city. New York says it would do this as well. Already 250 bike lanes have been added in the city since 2006.

Another risk to bike sharing schemes is security. I’ve already noticed a lot of bike stations in London with missing bikes that have been detached from the ports. Some cycle charing schemes have had to be abandoned because theft was so widespread. In 2001 Bratislava, Slovakia launched a bike sharing scheme but it had to be abandoned just three months later after most of the bikes were stolen or destroyed.

It will be interesting to see how New York emulates the European/Canadian bike sharing programs. As far as I know, no bike sharing scheme yet exists in the US. I’ve been a bit disappointed in the outcome of Bloomberg’s efforts to ‘Europeanize” the city and make it more pleasant. The “pedestrianization” of Times Square is a joke, all they’ve done is closed off a section fo Broadway to traffic and set up some cheap tables on the road. The High Line makes for a nice stroll, but if it were in any other city it would be pretty unremarkable. I can think of two dozen efforts to green ex-industrial waterfront projects in Europe that are much more interesting and ambitious.

Given that New York City drivers are very aggressive, I also don’t know if I would feel safe cycling through the city. I guess I’ll find out once I try out the first bikes. In the mean time, it’s still the subway for me!

DADT repeal: US joins the Western world

2011-09-21T22:13:00.003+02:00

Yesterday America's infamous Don't Ask, Don't Tell ban on gays in the military was officially repealed. It was a hard-fought battle for the Democratic Party, and the Obama administration was keen to publicize the fulfillment of one of the president's key campaign promises. It wasn't easy, and the past three years have been met with opposition and setbacks.

The level of jubilation from Democrats was incredible, but understandable considering how long they have fought to end this ban. But looking at the situation in a global context, the excitement over a rather small policy change might seem strange. After all, until Tuesday the United States was the only country in the developed world that still had a ban on gays serving in the military.

Barring gays from military service is illegal under European law, and no such ban exists in any EU state - even in ultra-Catholic Poland or Italy. In fact the only country in all of Europe to have a ban on gays in the military is Serbia. In Latin America, the only countries to have bans on gays in the military are Cuba and Venezuela. As can be seen in the map above, the divide between gay bans (in red) and no gay bans (in blue and gray) mirrors the divide between the developed and developing world. Gay service bans are common in Africa and the Middle East.

It's a testament to just how much of an anomaly the United States is in the Western world that it has been, for so long now, the only one to maintain its ban. But these sort of cultural issues have an importance in American politics which is almost unparallelled in the rest of the West. Until yesterday, the map for global gay service bans closely resembled the map for global capital punishment.

It was Bill Clinton who first promised to end the ban on gays in the military, but in 1993 he had to settle for a merely semantic change to the policy after not getting enough political support. 'Don't Ask Don't Tell' was always a misnomer for the compromise policy because the military did ask, even if people didn't tell. In fact the number of investigations and dismissals of gay people actually rose after DADT was put into place in 1993.

Following president Obama's election, the Republicans fought tooth and nail to resist the change. Former presidential contender John McCain led a filibuster in the senate that was only resisted when three Republicans broke ranks. The reasons expressed today were the same expressed back in 1993 - allowing gays to serve will affect military readiness and reduce the capabilities of the army.

Considering that the rest of the Western world scrapped their gay bans years ago, those cases would have been helpful to look at during this debate. Of course given ideas about American exceptionalism, foreign experiences are rarely brought up in US political discourse. After all, this is a real army we're talking about here, not some rag-tag European military. But despite the fact that the foreign experiences were rarely brought up during the discussion (even as openly gay British troops served alongside American forces in Iraq and Afghanistan), they're still helpful to look at in thinking about what comes next.

The British experience

Obviously there are a wealth of examples to choose from, but the experience of Britain might be the most relevant. Not many people in the UK talk about this, but it was actually the European Court of Human Rights that forced them to end their ban. In 1999 four people who had been discharged from the British military for being gay took their case to the European court. The court ruled that investigations by the military into a person's sexuality breaches their right to privacy. The British government then lifted the ban, followed by all the countries in the EU which had a ban. Some European countries had never had a ban to begin with, while several others had ended theirs in the 1980s and early 1990s. The Netherlands was the first European country to end their ban in 1972.

At the time of the repeal in 2000, polls indicated that 70% of the British public supported the decision to end the ban. But one senior military officer quit his post, saying it would lead to disorder among the troops. None of this came to pass. According to the British Ministry of Defence, no cases of discord, blackmail or an erosion of unit cohesion or military effectiveness as a result of the end of the ban has ever been recorded. In fact the biggest news about the now 10-year-old policy is that there is no news.

The British military now actively recruits gays and lesbians, sending recruiters to gay pride events and advertising in gay magazines. The Royal Navy has even allowed gay soldiers to hold civil partnership ceremonies on board ships. Since civil partnerships are the law of the land in Britain, the military grants the same rights to civil partners as they do to husbands and wives.

That being said, the military has also reported that the rate of openly gay service members is assumed to be far lower than that of the general population. Despite the end of the ban, there are likely still many gay military personnel who choose to still keep their sexuality a private matter.

Draft-dodging

The end of the bans did leave many European countries with an odd reality. Several countries in Europe still have compulsory military service. In fact Germany only ended their draft this year. In two of these countries, Greece and Switzerland, one can get out of military service by saying they are gay (the idea being that they would face harassment in the military). So in these countries, one cannot be excluded from military service because they are gay, but they can get out of compulsory service if they say they are gay and because of this they do not want to be in the army.

One wonders what the American policy would be on this if the draft were ever re-instated in the United States.

Lib Dems declare 'rhetoric war' on Conservative allies

2011-09-20T18:18:00.002+02:00

This week's Liberal Democrat party conference in the UK has been generating big headlines in the British press as each successive speaker tries to outdo the previous one in denouncing the party's coalition allies. But do the harsh words signal an impending divorce with the Conservative Party, or are they merely a move to stop the freefall in Lib Dem support.

According to opinions polls the party has lost more than half of its supporters since its decision to join with the Conservatives to form a coalition government last year. A subsequent u-turn on tuition fees and the loss of the alternative votereferendum – the prize they had been awarded for allying with the Conservatives – has sent the party to what some think could be their lowest popularity ever. This despite the fact that they are now in government for the first time.

The language being used at this week's conference shows the party is going to try a drastic change of tact in order to stop the haemorrhaging of support. Though they have been restrained in showing major disagreement with their coalition partners over the past year, after this week the honeymoon is clearly over - rhetorically at least.

Today Energy Secretary Chris Huhne delivered a scathing attack on the Conservative Party's right flank, comparing them with the "madcap" Tea Party movement in America. He warned that those hard-line elements of the Conservative Party not to go the same way as their American counterparts, warning them "if you keep beating the anti-European drum, if you slaver over tax cuts for the rich, then you will put in peril the most crucial achievement of this Government." And he vowed that the Lib Dems will stand in the way of that hard right element of the Conservative Party getting what they want.

Huhne had particularly sober words for Eurosceptic Tories who have sought to use the crisis in the eurozone to argue that the UK should cut ties with the EU and repatriate powers. "Being part of Europe is not a political choice," he said. "It is a geographical reality. It always was and until the tectonic plates break up, it always will be."

Deputy prime minister and party leader Nick Clegg sounded a similar note yesterday, telling the conference that the Tories remain their "political enemies" despite the alliance. Business Secretary Vince Cable decried the Conservatives' resistance to increasing taxes on the wealthy and curbing executive pay. Deputy party leader Simon Hughes said the Conservatives were "ruthless and extreme"

Ironically, the motivation behind all this Tory-bashing is likely a move by the party leadership to defend their political alliance. Party president Tim Farron opened the conference by trying to make this case, saying that a Conservative government would have been an "absolute nightmare" had the Lib Dems not diluted their policies by entering the coalition. While admitting that the decision to enter the coalition had "tainted" the party brand, he said such a sacrifice was necessary to stop the Conservatives from having absolute power.

But it was one line in Mr. Farron's speech that likely has Nick Clegg and his cabinet ministers worried. Farron told the crowd that "divorce is inevitable" in the Lib Dem-Tory marriage and it would likely come in "three or four years". This would be before the intended term of the partnership until the next general election in 2015. The line received thunderous applause in the Birmingham auditorium, which in turn has prompted speculation that Farron, who is on the left flank of the party, might challenge Clegg for the leadership. Clegg is also keenly aware that from inside the conference hall, people can here the demonstrators outside protesting the coalition's budget cuts.

Clegg is likely keen to stress his disagreement with the Conservatives in order to keep the contrast between himself and Farron from looking too stark. The message is this: you need us to stay in government, because we are the only thing that keeps the Conservative Party's hard right, eurpsceptic flankaway from exercising power. The Conservatives are forced to moderate their positions because the Lib Dems are with them in government.

For their part the British media doesn't seem to know what to make of the aggressive tone toward people who are supposedly political allies. It is after all the UK's first experience with a coalition government in many decades. I've asked some German friends if such intra-coalition sniping is typical in German politics. It seems the best comparison, since the German government is also a Conservative-Liberal coalition.

My German friends tell me that while it would be normal for the Liberals (FDP) to clearly outline their differences with Angela Merkel's Christian Democrats, it would be unusual for them to use such aggressive language. It would be surprising for them to describe their allies as "political enemies" who are "ruthless and extreme". But considering that the German Liberals are now also suffering plummeting popularity due to a coalition alliance that now feels like a noose around their neck, perhaps they may soon take a page from the playbook of their British counterparts.

With Angela Merkel's re-election prospects looking increasingly uncertain, the Liberals will be keen to distance themselves well before the 2013 election. They may also decide to adopt a populist approach to the eurozone issue in order to reverse their falling support. There is increasing speculation that they may suddenly do a U-turn and oppose the bail-outs, a move which could cause the collapse of the German government.

Only time will tell of these two marriages will last, or if they will be abruptly cut short. But with so much uncertainty still plaguing the European markets, the collapse of either the German or British coalition governments would be extremely bad economic news.

Another small victory for Europe's Left - or is it?

2011-09-19T18:24:00.003+02:00

Saturday's general election in Latvia yielded a victory for the country's centre-left coalition Harmony Centre. The coalition won the largest amount of seats in the parliament. But though this may seem like yet another promising victory for Europe's left following Thursday's election in Denmark, the facts on the ground are a bit more complicated than that.

Harmony Centre is a coalition between the Social Democratic Party and the Socialist Party (the communists). The SP is essentially an ethnic Russian party, formed in 1991 to replace the Communist party after the country achieved independence from the USSR. Though the new state was formed around the Latvian ethnic and linguistic identify, in fact less than 60% of people in Latvia are ethnically Latvian. Almost 30% of the country is made up of ethnic Russians, some of whom moved there during the Soviet period but others of whom have lived there hundreds of years. The majority of the ethnic Russians cannot speak Latvian. In some of latvia's largest cities they constitute the majority of residents by far.

The status of ethnic Russians in Latvia is perhaps the country's greatest controversy, one it shares with neighbouring Estonia. Most of the ethnic Russians were not given citizenship after the country attained independence in 1991, because knowledge of the Latvian language was required to obtain citizenship. About 45% of ethnic Russians in Latvia still do not have citizenship, and are essentially stateless persons. Those who are citizens and can vote have remained loyal to the communists, whereas ethnic Latvians tend to vote for the centre-right parties.

So in fact, this was a victory not for the left, but for Ethnic Russians in Latvia. In fact the centre-left coalition is not even a member of the Party of European Socialists at European level. The 'centre-left' Harmony Centre coalition is in fact dominated by the former communists, and the centre-left party that is affiliated with the PES hasn't been represented in the Latvian partliament since 2002. It would therefore be hard to glean any kind of pan-European trend from this election result. In Latvia, most people who vote for Harmoney Centre are doing so for ethnic rather than left-right ideological reasons.

In terms of its actual impact on the left-right balance of Europe's governments, it looks likely that the ethnic Latvian parties are going to unite to ensure that Harmony Centre does not form even part of the government. With 28.43% of the vote, Harmony Centre does not have the outright majority it would need to form a government on its own.

Denmark's election: is the Left clawing its way back?

2011-09-16T14:17:00.003+02:00

The centre-left Social Democratic Party scored a victory in yesterday's closely-watched general election in Denmark, ending the 10-year reign of a conservative coalition that had been moving steadily further and further to the right.

The campaign of the centre-left coalition, called the 'Red Bloc', was centred around a promise to raise taxes on the country's investment banks and wealthiest citizens, reversing a trend of decreasing corporate taxes led by the previous government. The victory for this message is a stinging rebuke to the current austerity crusade dominating the governments of Europe. The Social Democrats, led by Helle Thorning-Schmidt (pictured above), promised to actually expand Denmark's welfare system, which is already one of Europe's largest. They have also promised to use the proceeds from increasing taxes on investment banks and the wealthy to improve roads, schools and hospitals.

So is this a sign that Europe's hobbled left may be on it's way back? Are voters across Europe growing tired with the messages of the right and ready to turn to a new direction? Or are the circumstances of this change in direction limited to Denmark?

Centre-right governments across Europe have been making increasingly populist moves in order to keep themselves from losing voters to the far right. From Nicolas Sarkozy's gypsy deportation last year to David Cameron's 'multiculturalism is a failure' speech, the centre-right has been keen to co-opt some of the ideas of the far right, which has been growing in popularity in Europe.

Nowhere has this been more evident than in Denmark. The centre-right even invited the far-right Danish People's Party into an alliance to support their governing coalition. That coalition government introduced drastic new limitations on immigration which particularly targeted Muslims and asylum seekers. Following an aggressive push from the DPP, the government picked a fight with the European Commission by unilaterally imposing controls at its borders with Sweden and Germany – something forbidden under the Schengen passport-free agreement.

It may be that the increasingly aggressive moves in this direction backfired on the party. It is also highly likely that the far-right terrorism in neighbouring Norway in July influenced the election, with voters not looking to kindly on a coalition that has embraced the far right. The Danish People's Party lost seats in this election for the first time in three election cycles.

But are these conditions that exist throughout Europe? With the exception of Italy, no governing centre-right government has co-opted the ideas of the far right as much as Denmark's government has over the past few years. The revulsion felt toward the far right and those who collaborate with them following the Norway attack would likely not have the same resonance in France or Germany than it did in Denmark.

It's hard to say whether the Denmark election victory heralds new momentum for Europe's Socialists, who have been locked out of power in member states for several years now. One thing is for sure – the map of European governments looks a lot more promising to the left than it did last week. With the addition of Denmark, the left will once again have a voice in Northern Europe. On the other hand Denmark is a small, low-populated country that is not in the Eurozone, and therefore will not be centrally involved in the upcoming discussions over tighter financial union in that bloc.

But every journey begins with the first step.

Will Europe federate, or separate?

2011-09-15T20:53:00.000+02:00

People here in Brussels have cautiously started to use the F word again. Though it has long been banned from people's vocabulary after the traumatic experience of trying to ratify the EU constitution and Lisbon Treaty, ‘federalism’ is again being heard in the corridors of power. The federalist idea – to create a "United States of Europe" – back.

European Commission President Jose Manuel Barroso signalled as much in an impassioned speech to the European Parliament this week in Strasbourg. "What we need now is a new, unifying impulse – a new federalist moment," he told MEPs. "Let’s not be afraid of the word – a federalist moment is indispensable.” Federalist parliamentarians rejoiced. The people may have rejected the idea of a European superstate, but now the markets are stepping in and demanding one. Could it be that the fulfilment of the 'European dream' could be triggered not by Europeans themselves, but by the markets they've created?

The federalist rejoicing may be premature. All that is clear right now is that the EU cannot continue operating the way it has. Europe is at a crossroads, and it is being pulled in two different directions. On one hand, the public has grown weary of the European project and the mood of the day is calling for more local control. There is an increasingly vocal minority in Europe who want to see the EU project walked back for the institutions Brussels has built up to be dismantled. On the other hand, the economic circumstances and the euro crisis are pushing Europe toward greater federalisation in order to avert a catastrophe. The markets are calling for more integration, and European leaders agree with them.

How we got here

Two years ago, it would have seemed inconceivable that in 2011 we'd be talking about moving more powers from national to EU level and amending the EU treaties to do so. Europe had just resolved a painful and embarrassing six year saga of trying to pass the European Constitution and Lisbon Treaty. In the end they were able to pass the changes that were needed, but not before three public referendum rejections created a damaging impression of illegitimacy. The eventual passage of a watered-down, less federalist was eventually pushed through, because the changes were necessary to accommodate the 12 new member states taken on since the last treaty. But it was an exhausting and ugly process.

Once that debacle was behind them, European leaders didn't even want to hear the word 'treaty'. But then the European debt crisis began. A fatal flaw with the design of Europe's single currency was exposed – a monetary union without a financial union proved unable to cope with bad fiscal management by individual countries. All 27 member states each had their own finance minister, and each had taken widely divergent financial decisions, all under the security of a high-valued currency backed by the union's economic powerhouse, Germany. Leaders are now realising that some kind of unified financial policy should have been developed along with the unified monetary policy – not just a European Central Bank but also a European central finance ministry. But hindsight is 2020.

Such a single finance ministry for the eurozone could have been created back when the euro was devised in 1992, at a time when there was great enthusiasm for the European project. But the hasty creation of such an unelected, unaccountable body would not go down very well with the continent's euro-weary population today. At the same time, the creation of such an institution may be the only way to save Europe from economic collapse. If the public will not accept such a change, what is plan B?

Abandon the European project?

Europe has two paths it can follow – and staying on its current path is not an option.

The first option is to give up on the EU. European leaders can allow the eurozone to break apart and brace themselves for the economic shock to follow, which would likely cause the collapse of European economies and even result in a global depression. Such an event would likely be the death knell of the EU itself. Having given up on the euro, there would be less reason to try to maintain the pan-European institutions in their current form, especially when much of the public is clamouring for more powers to be brought back to national capitals. Powers could be repatriated until the EU was nothing more than a free trade zone like NAFTA in North America. Borders would be re-established, separate currencies recreated, and the concept of 'EU citizenship' would disappear.

The bet would be that the short-term pain of abandoning the European project would have to be dealt with in order for Europe to go back to being a collection of completely independent nation states. This outcome is the long-held goal of Eurosceptics in the UK's Conservative Party, and that party heads the current coalition government. Yet David Cameron and his cabinet have made a U-turn on their Europe policy as this crisis has unfolded, urging their continental partners to push ahead with economic union and bring powers of finances and budgets to the EU.

But if the Euro crisis presents an opportunity to dissolve the common currency the Tories always said was doomed to failure, unwind the European project which the Tories deride and return powers to member states as the Tories have demanded, why aren't the Tories advocating a break-up of the Eurozone? They know that the economic pain caused by such a break-up would be catastrophic for the UK economy. It is easy for them to suggest that Eurozone states surrender their financial sovereignty to the EU, because Britain is not part of the Eurozone and would therefore be unaffected. Ordinarily they would oppose new powers going to the EU in all cases, even those that don't affect the UK. But the enormity of the current circumstances have made them take positions today that are antithetical to their overall Europe policy.

Or, is the answer more Europe?

The key buzzword over the past two months when speaking of the solution to the euro crisis has become "more Europe". Angela Merkel and Nicolas Sarkozy have both used these words, and David Cameron has expressed essentially the same sentiment by backing closer economic union. But even if the leaders agree that more Europe is needed, there are two big open questions. Will the citizenry accept more Europe? And if the 'more Europe' created is more intergovernmental, could it actually sideline the EU to irrelevance?

Much of what has been worked out so far has been between governments rather than at EU level. The European Financial Stability Mechanism, the permanent bailout mechanism for the struggling Eurozone countries, has been worked out between member states and has nothing to do with the EU. The ‘stability pact’ agreed in February was worked out between Germany and France, with the other eurozone states simply signing off on it. Now the stability pact is morphing into some kind of new institution of economic governance, and it is clear that it will be Germany and France calling the shots there as well.

This trend is clearly starting to alarm Brussels, hence Barroso’s impassioned speech for federalism this week. He is likely feeling sidelined, as is the parliament he was addressing. It’s still very unclear what this new institution will look like. But if its creation doesn’t involve the European Commission or the European Parliament, it could make the EU an almost irrelevant body.

New intergovernmental agreements between the 17 states of the eurozone could create a new ‘core’ EU group that does not involve the other 10 EU states. This is the ‘two-speed Europe’ scenario many have warned about, where a core group of countries federalise faster than a peripheral group. But the creation of a separate Eurozone intergovernmental institution that is separate from the EU itself could evolve to the the point where it ends up being more important than the EU itself.

So even the economic integration that the markets are now demanding does come to pass, it doesn’t necessarily mean that EU is now on a federalist course. This new economic governance could take any number of different forms, and it could go in any different number of directions.

Amidst all the confusion and angst, one thing is clear: the future of Europe is very uncertain. But with talk now returning to the idea of "more Europe", federalists are just happy to be back in the game.

US tells Europe to act quickly on euro crisis

2011-09-14T14:20:00.007+02:00

Barack Obama delivered some sobering words to Europe this week, saying the world economy will remain weak and destabilised unless EU leaders take action to stem the Euro crisis. It's not the first time the US has expressed frustration with what they say is a slow and inadequate European response to the situation, but the president's words were the most stark to date.

Obama said he will put the issue at the top of the agenda for the G20 meeting in France in November. "[European leaders] are taking some steps to slow the crisis but not solve the crisis," the president told a group of journalists at the White House. "The bigger problem is what happens in Spain and Italy if the markets keep making a run at those very big countries?" Few would disagree with the president on these sentiments, but it might be hard to take from a country which almost deliberately drove itself to default because of its broken political system.

The president's obvious concern, coupled with fresh fears this week that Greece will drop out of the eurozone, sent European stock markets into a steep fall early this week. German Chancellor Angela Merkel struggled to get ahead of the freefall and reassure the markets that the eurozone will stay intact no matter what, but to no avail. She told German media that a euro exit for Greece is not an option because if Greece left others would quickly follow causing a destabilising domino effect in Europe that could spark economic disaster.

But the kind of decisive action Obama is hoping for seems unlikely to materialise any time soon. What is clearly needed is greater economic union and the establishment of something resembling unified European economic policy. But such changes could take years and would most likely require changing the EU treaties – sparking a painful process of ratification and referendum in an era of Euroscepticism.

Into the abyss has stepped China. Following Obama's comments, Chinese premier Wen Jiabao told the World Economic Forum meeting in Dalian that China would consider 'bailing out' its biggest trading partner, but only if EU countries first "put their own houses in order."

The German chancellor and Greek prime minister George Papandreou are set to hold emergency talks tonight to coordinate a response to the new speculation of a Greek default and eurozone exit. Such meetings are starting to become a weekly exercise. If bold action isn't taken soon, this pattern of worry-calm-worry-calm will surely continue repeating itself.

War of words between PIGS and FANGs

2011-09-09T16:48:00.006+02:00

The European Commissioner from Spain delivered a surprising attack yesterday on the Northern European countries pushing Southern Europe to adopt painful austerity measures. The comments follow a controversial proposal from the Dutch prime minister earlier this week which called for EU member states struggling with debt to be put under the 'guardianship' of the European Commission, surrendering their ability to make their own financial decisions.

"There are member states, in particular some of the most powerful -- Germany, Netherlands, Finland, Austria -- who feel that they don't have this kind of problem," Almunia told a group of business executives in New York. "[They believe] they don't need to make an additional effort to compensate the lack of resources of the countries who have the most difficulties to reduce imbalances."

The rhetoric was then ratcheted up to an even more dramatic level today when the European Commissioner from Germany told the tabloid Bild that if indebted (read: Southern) EU countries refuse to comply with new rules on debts and deficits, their flags should be flown at half mast outside institutional buildings. Mourning the loss of fiscal prudence, perhaps?

Things seem to be getting a bit personal, or a bit national at least. The attack from the Spanish commissioner, Joaquin Almunia, is extremely unusual because commissioners are not supposed to be representing their member states. Once a member state appoints someone to serve in the European Commission, that person is supposed to be independent of both their country and their political party. But it appears that the proposal for fiscal 'guardianship' from Dutch Prime Minister Mark Rutte, outlined in a leaked letter to the Dutch parliament, was so offensive to the commissioner from Spain that he couldn't hold his tongue any longer.

So far, the politicians from the struggling countries of Portugal, Italy, Ireland, Greece and Spain (the so-called PIIGS) have not made strong objections to the demands being made by the austerity-pushing countries of Finland, Austria, Netherlands and Germany (the so-called FANGs). But the commissioner's comments seem to be a departure from this.

Almunia also dismissed the Dutch suggestion that the ailing countries should be expelled from the eurozone if they refuse to put themselves under the economic authority of the European Commission as fantasy, saying it could "never happen." "Those who think that this hypothesis is possible just do not understand our process of integration," he said.

Of course Almunia would make the argument that his comments were independent of the fact that he is of Spanish nationality. After all, he is the competition commissioner so this subject naturally falls into his prevue. But the fact that he is Spanish was immediately seized upon in media reports of the speech, reflecting just how much national sensitivities are being exacerbated by the current crisis. The divide between Northern and Southern Europe is continuing to widen as lectures, accusations and stereotypes are being batted around by both sides.

Rutte's proposal for a 'European Commissioner for Budgetary Discipline' who would oversee the budgets of the PIIGS countries has been greeted with incredulity and jeers from the affected countries. 'Are we entering an era where one half of Europe will rule over the other by fiefdom?' some Southern European papers are asking. On the other hand, the FANGs countries seem to be indicating cautious support for the idea today.

Meanwhile Ireland looks like it may be on the road to taking a vowel out of the indebted acronym. In a report issued this morning, a team of international inspectors concluded that Ireland's budget deficit next year is likely to be lower than expected. The EU said the country is "well on track" to meeting its deficit-cutting targets. On the other hand, investors and EU officials have both voiced concern that Italy and Spain are not implementing austerity plans that will save them from default. The tepid austerity package pushed through by Italy over the past month has been particularly singled out for criticism.

With Ireland back on the road to fiscal health, the PIGS would become a Mediterranean club. This could likely exacerbate the cultural and geographic sensitivities that are being tested by the current crisis.

Could Strasbourg battle pit country against country?

2011-09-08T17:40:00.003+02:00

The long-running battle between the European Parliament and France over where the institution's permanent seat should be located has reached boiling point in recent months, following the parliament's vote in March to combine two of its mandated Strasbourg sessions into one. The fight has now been taken to the European Court of Justice, and following a call from Dutch parliamentarians today, the war could for the first time pit member state against member state.

The official headquarters of the European Parliament, as mandated by the EU treaties, is Strasbourg, France. The EU treaties require the parliament to meet there twelve times a year. But for well over a decade the working offices of the parliament have been in Brussels, where the other EU institutions are based (they surreptitiously built a giant parliament building there by telling France it was going to be a "conference center"). So once a month the entire European Parliament is made to make a five hour trek from Brussels to Strasbourg to hold three-day sessions. It would be like the US Congress uprooting itself once a month to hold sessions in Pittsburgh, Pennsylvania.

The majority of members of the European Parliament (MEPs) hate the monthly "traveling circus". A 2007 survey by Liberal MEP Alexander Nuno Alvaro showed that 89% of MEPs want to end the Strasbourg sessions. MEPs have tried to force the issue several times, but changing the treaties to end the Strasbourg requirement would need the unanimous approval of all member states – and France has always promised to veto such a move. They are insistent that one of the EU capitals should remain in France – even if no actual work is done there and it is merely a place where things already agreed are rubber-stamped.

In March MEPs thought they had finally found a sneaky way to go above France's head and end at least one of their twelve annual trips. They voted in a technical amendment to combine two of the Strasbourg sessions into one one-week session starting in 2012. These two sessions are normally both held in September, since the parliament has the whole month of August off. That means there are two 'travelling circus' trips in September. This month's are happening next week and the week of the 26^th.

Not so fast, said France. They launched a legal challenge against the parliament in the European Court of Justice, arguing that anything less than twelve separate Strasbourg plenary sessions per year violates the treaties. Luxembourg, which holds the other EU capital (there are officially three – Brussels, Luxembourg and Strasbourg), has joined the French in the court case.

Privately, the Northern European countries are known to fiercely oppose the monthly travelling circus. But they have never taken official positions against the practice for fear of angering France, and knowing that picking a fight would be fruitless. But now the Dutch Labour party are trying to force the government of the Netherlands into taking a position in this court case, which would mark the first time a member state has officially opposed the Strasbourg plenary.

Dutch MEP Judith Merkies and national MP Nebahat Albayrak today called on the governing coalition of Liberals and Conservatives to enter the fray on the side of the European Parliament. During the European election campaign of 2009 both the Dutch Liberals and Dutch Conservatives campaigned on a pledge to oppose the travelling circus. The Labour politicians say they are calling on the coalition to honor this pledge and join the court case on the side of the parliament.

But this is a big ask for the Dutch government. For a small state, angering one of Europe's most powerful countries for what is essentially a sideshow issue may not seem worth the political cost. After all, there are bigger fish to fry right now in the battle to save the euro and impose austerity. But then again, Dutch Prime Minister Mark Rutte has certainly not shied away from angering other member states recently. This week he proposed that the indebted 'PIIGS' countries of peripheral Europe be put into "guardianship" and be made wards of the European commission, prompting an enraged response from the European commissioner from Spain.

For the Netherlands to enter the fray they would probably need cover from a large member state, most likely the UK. Rutte and UK prime minister David Cameron are close political allies, and it is feasible that both countries could file briefs and possibly be joined by Sweden and Denmark. This would certainly be a logical policy goal for the new 'Anglo-Nordic bloc' created by David Cameron to force more streamlined and logical decision-making in Brussels. But then France would probably bring in other member states to back its side, perhaps Italy and Spain.

The Labour MPs say that if the Dutch government does not respond to their call, they will put the issue to a vote in the Dutch parliament. This may force the government to file a supporting brief in the court case. Knowing this, Rutte may already be coordinating with the UK to prepare a coordinated response.

If the parliament wins the ECJ case it would be a victory in just one battle of a long war. But the game plan is this: if the parliament can combine two of their plenary sessions into one, who's to say they can't combine 12 of their sessions into 6? Taking that to its logical conclusion, could the parliament just meet in Strasbourg for 12 days a year and call each day a session? France is keenly aware of this slippery slope and that's why they have launched this aggressive challenge to the move. But if the ECJ rules against France, it could be the first nail in the coffin for the travelling circus.

Germany backs bailouts – for now

2011-09-07T18:09:00.001+02:00

The markets are breathing a sigh of relief today after Germany's constitutional court ruled that it is legal and in line with the EU treaties for the country to be bailing out its struggling Eurozone neighbors. But the jubilation may be short-lived, because in its ruling the court sewed a minefield of potential future obstacles that will have to be dealt with in the coming months.

The ruling was in response to a lawsuit from Eurosceptic German citizens who said the bail-outs of Portugal, Ireland and Greece to stem the European debt crisis are unconstitutional because the German parliament should have control over taxpayer money, rather than the European Central Bank. The court rejected that argument, saying Germany's participation did not amount to an excessive burden on the country's budget, nor did it constitute a significant transfer of power away from Berlin.

Germany is by far the largest contributor to the bailout funds. If the judges had sided with the challengers in this ruling today it would cast Germany's ability to participate in those bailouts into question, which in turn would have thrown the markets into turmoil. Instead, the announcement this morning sent European stocks shooting up. Amongst the German public, who are growing weary of what many perceive as Germans being on the hook for the profligate spending of their Southern neighbors.

But the celebration from the markets may be premature. In its ruling, the court also gave the German parliament's budget committee the ability to block participation in future bail-outs. This effectively gives this small committee a veto over future activation of the eurozone's bailout fund, the safety mechanism agreed by EU leaders earlier this year. It also seemed to imply that the introduction of Eurobonds, one of the measures being considered to save the euro, would be unconstitutional without treaty change.

For those who are afraid of future challenges to the bail-outs, they can take comfort in the fact that Germany's budget committee has so far towed the government line on this issue. But the question of the need for treaty change is a different matter. In her address to parliament today, German Chancellor Angela Merkel seemed to imply that in her view, treaty change is needed if the EU wants to establish closer economic union (such as the move to establish Eurobonds). She said "more Europe" is needed in order to save the euro, and in order to prevent Europe from collapsing, "treaty amendments can no longer be taboo in order to bind the EU closer together." She also pleaded with the German public to remember that the country's current wealth is due to the benefits that the EU and the euro have bestowed. "In the long term, Germany cannot be successful if Europe isn't doing well too."

But the question of establishing more long-term institutions providing economic cohesion in the eurozone now seems to moving toward a back burner as leaders focus on getting the second Greek bail-out approved by member states.. For now, it's full steam ahead with the bail-outs. And if/when those don't work, it won't be until the next crisis that economic union will be discussed again. According to most analysts, that next crisis is mostly likely just weeks, if not days, away.

EU still terrified of treaty change

2011-09-06T18:03:00.002+02:00

During today's midday briefing a European Commission spokesperson emphatically insisted that any tightening of economic integration in the Eurozone will not require treaty change. Reporters in the room didn't seem to be buying it. It's not hard to see why, after the president of the European Central Bank said yesterday that such a change would require such a treaty change.

It's an uncomfortable situation for the EU, which only recently was able to pass the long-stalled Lisbon Treaty after a painful and embarrassing six year saga. There is now a consensus that the only way to save the euro from the contagion of the debt crisis is to establish a tighter economic union between the countries that use the currency, essentially establishing a single finance ministry instead of having separate economic policies for the different states.

But there is fear that doing so will require yet another treaty change, and Brussels is worried that another round of treaty change approval by member states would be a disaster. There is still uncertainty over whether such changes would meet the threshold for UK Prime Minister David Cameron's 'cast-iron guarantee' to hold a public referendum on every treaty change. Because of the widespread antipathy toward the EU in Britain, it is guaranteed that any referendum on an EU question would fail – even if it is on a question that doesn't directly concern Britain, such as the eurozone (the UK does not use the euro and would therefore keep its own finance ministry).

All governments agree that some degree of tighter economic union is needed to save the currency, and it's certain that no parliament, not even in the UK, would reject the proposal to change the treaty to allow this. But most voters don't fully understand what is happening, and there is little appetite amongst the public for further EU integration. If the question of economic integration is put to the public in a referendum in any member states, there is a real possibility it could be rejected. Such news would cause European markets to collapse, and Europe's currency would likely collapse with it.

This is why the commission and member states are desperate to find a way to enact the tighter economic union without having to change the treaties on which the EU is based. But can it be done? It still seems very uncertain. ECB president Jean-Claude Trichet's comments yesterday saying treaty change will be needed sent European stocks plummeting.

Even beyond the concerns over whether such changes would be rejected in a referendum or even by parliaments fearing a public backlash, there is the larger concern over the amount of time treaty change would take.

There was however some good news for the euro today, as Switzerland announced it is setting a cap on the exchange rate between the Swiss Franc and the Euro. The Swiss economy is in crisis mode at the moment as speculators have piled onto the country's currency, which they see as a safe haven as the euro, dollar, pound and yen experience trouble. This has caused an explosive overvaluing of the currency, and last month it was at near parity with the euro. The cap will fix the exchange rate at no less than 1.20 Swiss francs to a Euro, and the Swiss National bank will keep it below that level by buying euros.

This will provide some badly needed support for the euro, and the news sent the value of Europe's currency up today. But market observers are pointing out that the SNB may not have the funds to buy euros at the scale needed. This is the last bow available in Switzerland's quil before it will have to resort to pegging its currency to the euro, something that would be humiliating for the Swiss national psyche.

Conservative Party may disband in Scotland

2011-09-05T18:43:00.002+02:00

In an attempt to shed its image as an 'English party', members of the Conservative Party in Scotland are considering splintering off from the Tories and forming a new Scottish centre-right party. The move, which would not be the result of any policy disagreement with the Tory leadership but rather for identification issues, reflects just how strong regionalism has become in Europe in recent years.

The change is being proposed by Murdo Frasier, a candidate in the current race for a new leader of the Conservatives in Scotland. The Tories have been pretty much banished from power by Scottish voters for over a decade now, ever since a massive defeat in 1997. They currently hold only 15 of the 129 seats in the Scottish Parliament and only one of Scotland's 59 seats in the British Parliament. Since 2007 the largest party in the Scottish Parliament has been the Scottish National Party, which wants to seceed from the UK.

Frasier has centred his leadership campaign around a promise to break this trend by dissolving the party, which he says has become a "toxic brand" in Scotland because people see it as representing the interests of Westminster over Edinburgh. The new party would likely not even have the words "conservative" or "tory" in its name.

Separate versions of parties for specific regions are not unheard of in Europe. But there are places where it works well, and other places where it doesn't. In Germany, Bavaria has its own separate version of Angela Merkel's conservative Christian Democratic Union called the Christian Social Union. The CSU is in practice just the Bavarian chapter of the CDU which almost always votes with its sister party. But technically, the CDU is a separate party which can rebel against the CDU on specific issues.

Here in Belgium, there are two separate versions of each political party for each of the linguistic communities. There are separate Flemish and Francophone versions of the Socialists, Conservatives, Liberals and Greens. But in contrast to the German example, the only pair of parties that actually coordinate with one another are the two Green groups. What's more, you are only allowed to vote for the party that matches your linguistic community. So for instance, someone in French-speaking Wallonia cannot vote for the Flemish Socialist party, and someone in Flanders cannot vote for the Francophone Socialist party.

The situation in Belgium has devolved into a bit of a farce. Nobody votes for the Francophone Conservatives and nobody votes for the Flemish Socialists. At this point those two parties are effectively non-entities. Almost all of Wallonia votes for the Socialists and almost all of Flanders votes for the two Conservative/Liberal parties. So there is no point in the separation because the political allegiances are now divided along linguistic lines anyway.

One could see the same thing developing in Scotland, where politics have long been dominated by centre-left Labour and now the centre-left/nationalist Scottish National Party. If all of the parties split into separate Scottish and English versions one struggles to see how it would make much of a difference electorally. You would likely just end up with a situation where the separate Scottish conservative party becomes invisible, much like the Francophone conservative party in Wallonia.

On the other hand, if things worked out like they have in Germany, having completely separate versions of political parties in Scotland could work out hugely in Scotland's advantage - and be hugely disadvantageous to England. It could give Scotland even more political advantage than it has already received under devolution.

Devolution, the process by which Scotland, Wales and Northern Ireland were given their own regional parliaments in 1998, has created a bizarre situation in which people in those three regions have twice the government representation as someone living in England. Because England has no separate parliament, a person living in England has only one representative in the British partliament. By contrast, someone living in Scotland has two representatives, one in the Scottish Parliament and one in the British Parliament. A Scot's representative in the British parliament can vote on issues only affecting England. But an Englishman's representative cannot vote on issues only affecting Scotland, because those decisions are taken in Edinburgh.

If a separate centre-right party in Scotland were able to overcome their toxic image and achieve success (and that's a big if), they could enjoy an advantageous situation like that currently enjoyed by the Bavarian conservatives. Germans have long complained that whenever there is a conservative government in power nationally, Bavaria gets special treatment because their separate Bavarian conservative party can threaten to drop their support for the main party if they don't get concessions. The Bavarian conservatives are the strongest party in Bavaria.

That's the tricky business about devolution. When it's done only for some regions, it leaves the rest of the country out in the cold. And when it's done for all the regions, as was done in Belgium, it can create a complicated morass of a system which can end up ungovernable.

Perhaps the biggest irony in all of this is that the original raison d'etre of the Conservatives in Scotland was to support the union of the United Kingdom. In fact the full name of the Scottish chapter of the party is the Scottish Conservatives and Unionists. If the Scottish conservatives were to break away to form their own Scottish-only party, it sends a rather incongruous message about their commitment to the union of England and Scotland. The fact that they are now considering such a move shows just how powerful Scottish nationalist sentiment is these days.

Berlusconi: Italy is a "shitty country"

2011-09-02T17:18:00.002+02:00

He's survived sex scandals, corruption investigations and insurrections – but can Italian prime minister Silvio Berlusconi survive in his post even after insulting the country he rules? Considering the shocking vulgarities he has been caught using while referring to Italy in a secret recording, this may be too much for even the Teflon Prime Minister to fend off.

The recording, made in July but released this week, catches Berlusconi saying he wished he could leave Italy – saying it is a "shitty country" that "sickened" him. The recording was made by Italian police, who were investigating allegations that Berlusconi was paying a man to corroborate his story that he was unaware the women supplied to him for his infamous "bunga bunga parties" were prostitutes.

The transcript of the recorded conversation came to light after police arrested a wealthy Rome businessman and his wife in a raid at dawn on Thursday, charging them with blackmailing Berlusconi. They allegedly demanded payment from Berlusconi in order to keep quiet about arranging the prostitutes for him. Berlusconi has admitted paying them but says he wasn't blackmailed and did it voluntarily.

In order for the prosecution to go forward the transcripts of the recorded calls had to be made public. In one of them, Berlusconi goes on a tirade while talking to the Rome businessman.

"They can say about me that I screw. It's the only thing they can say about me. Is that clear? They can put listening devices where they like. They can tap my telephone calls. I don't give a fuck. I … In a few months, I'm getting out to mind my own fucking business, from somewhere else, and so I'm leaving this shitty country which sickens me."

Berlusconi's poll numbers are already dismally low, and in any normal country it's hard to see how a leader could survive after insulting his country in this way. But this isn't a normal country, this is Italy. Italians are not a very patriotic bunch, and the sad truth is I suspect a great deal of Italians would agree with Berlusconi's sentiments (most of the Italians I know certainly do). Add to this the fact that Italy has no viable alternative to Berlusconi at the moment and I would predict he's still not going anywhere (despite his apparent desire to leave).

As I've written before, Berlusconi is like asbestos in the walls of Italy – toxic to the country, but if you remove him the whole structure will need to be renovated – and the building could collapse. It's an extremely strange situation.