Monday, October 31, 2011

Lost decades in Eastern Europe

The NY Times has an article about the Hungarian economy. They note that one pharmaceutical company - Richter - does almost half the R&D of the country. For the rest there came some car industry but much foreign investment was about "service centers". Problem is that the car industry and service centers don't produce self-sustaining growth. That is only done by companies like Richter. And the economic climate hasn't been favorable to them:

But through the previous decade the forint was buoyed by a speculative carry trade in which investors borrowed euros at low interest rates to buy the higher-yielding Hungarian currency, creating a headache for exporters. Mr. Bogsch referred to this period as a “lost decade.”

While things are easier now, the pressures remain intense. Profitable companies are a tempting source of revenue for a cash-strapped government, which recently slapped a €13.5 million crisis tax on Richter.

More fundamentally, Mr. Bogsch said he worried that the difficulty in attracting capital to Hungary would make hiring and retaining talented staff ever harder.

So much for the benefits of being an EU member and having a neo-liberal currency policy.

This is one of a series of a NYT special report on Central European business. Others are:
In Euro Zone or Not, Countries of Central Europe Are Buffeted
In Romania, Start-Ups Gain Strength

Wednesday, October 26, 2011

KFOR lies

KFOR claims that it insists on "unconditioned freedom of movement for all citizens and international missions".

This sounds nice. But beneath it are a few lies:

- there is no real freedom of movement in the South of Kosovo. The cities are still nearly mono-ethnic Albanian, most minorities live in enclaves, refugee returns are virtually nonexistent and just a year ago Amnesty International wrote a report about the maltreatment of Roma returnees. The Serbs in the North have good reason to want to stay free of this kind of "freedom".

- the Albanian police men and border guards are neither just citizens nor part of an international mission. They are officials who want to impose their rule. Nobody contests their right to visit Northern Kosovo as a tourist but they have different intentions. So when KFOR spokesman Nowitzki provides this argument for the KFOR position he misses the contradiction in his own words.

Friday, October 21, 2011

NATO promotes violence in Kosovo

In the past month Kosovo has seen two violent deaths of Serbs in Kosovo's South. This comes after a long quiet period so the question is justified if this may be related to the tensions in the North. I think it is and I think this makes NATO responsible for those deaths.

The standard role of peace keepers - as NATO still wants to call itself - is to guard the peace while either the parties involved negotiate for a solution or some international authority like the ICJ or the Security Council takes a decision. This means that peace keepers should guard the status quo, only make changes when absolutely necessary and then do that preferable in agreement with the parties involved.

NATO is clearly overstepping its role as peace keeper and following a pro-Albanian policy. The message from this to the population - both sides - is that NATO is partial. That message is not restricted to Northern Kosovo but is visible to everyone. You can see it in Kosovo Albanian politicians who speak with more confidence. You can see it on internet forums where Albanians write with more confidence and you see it also in the increase in incidents that seem to reflect a growing Albanian assertiveness in Southern Kosovo.

The latest incident, involving usurped Serb-owned land, is in this respect illustrative. Usurped land has been a problem in Kosovo for decades and it has become specially acute after the 1999 war. A lot of effort has gone in handling them but the procedures stay vague and progress is slow. There are still many thousands similar property disputes that could get out of hand.

Peacekeeping is supposed to create stability, but NATO has created a climate where everything is fluid and Albanian efforts to grab more are rewarded rather than discouraged. One may not like the stability because it contains some injustices, but it is not the task of peacekeepers to judge what is unjust or to solve injustices. As the murders in Kosovo show there is a balance between injustices. Repairing those for one side while ignoring those for the other creates problems rather than solving them.

One could argue that NATO just wants to create a better equilibrium. But changing an equilibrium is always risky. Not only the loser has to consent. The winner has to consent too that there are still limits to his power. And until the new equilibrium has been accepted both parties may do anything to improve their position.

Every modern country consist of equilibriums. We have constitutions and laws that define them. For example the power distribution between the states and the federal government in the US is clearly defined. If the federal government would transgress its boundaries anything could happen. But where the US accepts internally such boundaries it behaves to the outside as if it is the absolute superpower who should determine everything. This is a very dangerous thing that does not only harm the relations of the US but also all the situations it wants to influence.

Sunday, October 16, 2011

Should EULEX be abolished?

Last Thursday I attended a lecture by Johan van Vreeswijk who until last July was an EULEX prosecutor. As he made some fame as a crime fighter in Kosovo I had expected to hear a lot about how the rule of law is strengthened in Kosovo.

Instead he spent nearly the whole lecture defending the present escapades of EULEX and KFOR in the North of Kosovo. Unfortunately he is no expert in international law and he couldn't convince me. On criminal law - his expertise - he was very short: he expressed great confidence in his Albanian colleagues. It took a question from the public to have him say something about the Limaj case and then he only said that he regretted it that it took two years just to hear Limaj on his corruption charges due to dysfunction in the EULEX organization.

Obviously if the Albanians are doing so well it raises the question whether EULEX is still needed. My gut feeling was that EULEX is a complete failure and that they are now behaving like a third rate Balkan politician who has failed to improve the life of his voters and now uses nationalism as a cheap way to appear useful anyway.

Friday, October 07, 2011

Belgrade's Gay Parade

Belgrade has forbidden its Gay Parade for this year.

I think they have a point in this. Demonstrating and rioting against Belgrade's Gay Parade has become a kind of meeting point for Serbia's extreme rightists. Given the upheaval about Kosovo they would probably be stronger than ever and their protests might even attract people who don't have anything against gays but who do believe in the extremist cause.

In that light I think the EU position that the Parade should be held is disingenuous. I suspect that they see the Parade as a win-win-win situation. If Serbia's government manages to keep order it would be a loss for Serbia's extreme right. If there are riots it would be used against Serbia in the Kosovo negotiations and if they forbid the Parade that is used against them.

There is no doubt that Serbia should do more to get its right extremists under control. But using the gays as decoy birds for that purpose seems to me a bad move.

On the death of Agim Zogaj

The death of protected witness Agim Zogaj in the process against Kosovo minister Limaj has once again highlighted that some people in Kosovo are above the law. The question is what EULEX can do to fight this culture of silence and intimidation.

One error EULEX makes is making its cases too big. They should learn the lessons the US had learned when it sent mafia boss Al Capone to jail for tax evasion. There was little doubt Al Capone was responsible for numerous murders and other crimes. But by concentrating on the one issue that could be proved without endangering numerous witnesses they avoided exactly the kind of trouble that we see in the Haradinaj and Limaj trials.

The ICTY and EULEX like to make their cases in a kind of documentary of all that went wrong in former Yugoslavia. But that isn't a suitable tactic in the case of Kosovo where witnesses are both endangered and sometimes unreliable. Instead they should just concentrate on one or two relatively easily provable incidents and condemn people for those.

11 years for tax evasion - as Al Capone got - may be a bit too tough and not achievable in Kosovo. But even a much shorter sentence would stress the principle that nobody is above the law.

Another legal tactic is that of the "criminal organization". Here the fact that a person was member of an organization is considered enough to hold him responsible for the crimes of that organization. This can be applied in human rights cases too as was recently done in the Demjanjuk case. The fact that Demjanjuk worked as a guard of a concentration camp was considered enough to hold him partially responsible for the mass murder that was committed in that camp.

Another error the EULEX makes is that it thinks it can have it both ways. That on the one hand it can prosecute Kosovo's leaders for mafiose behavior and on the other hand it can use the mafia tactics of establishing facts on the ground, violence and intimidation when it comes to Northern Kosovo. What Kosovo needs is a change of political culture, but EULEX just has adopted the mafia culture.

Wednesday, October 05, 2011

Where are Serbia's allies?

There is no longer any hiding in diplomatic niceties: the NATO raids in Northern Kosovo have finally forced Serbia to talk openly about splitting Kosovo so that the North tip can join Serbia. It has generated the predictable negative reactions (such as REFRL calling it a "tirade") but as I wrote previously that was predictable. It is easier for Western diplomats to discard Serbia's politicians as crazy or nationalistic than to change their opinions. To achieve a change of opinion will demand persistent campaigning and explaining.

What has been until now however are allies. Sure, some university professors and former politicians have spoken out. But I have been astonished that none of the NATO members that do not recognize Kosovo have spoken out publicly against the behavior of the NATO "peace keepers". Neither has any major active international politician spoken in favor of a partition of Kosovo. Those that did were unimportant enough or did it discrete enough for the international press and the Western diplomacy to ignore.

Yet the nonsensical ban on partition is potentially harmful to many other countries as well. Spain for example would face a similar problem with Navarra if the Basques might ever secede.

Many countries have provincial borders that are centuries old. More often than not if they had to be drawn today they would be different. Changing them raises so many emotions and interests that it usually better to spend political capital on more productive issues. For that reason the US position that a partition of Kosovo should have been done before is in my opinion disingenuous. The only right time to do it is when there is an urgent need to do so. And there was not such a need in the 1990s. It is there only now when we are discussing Kosovo's independence and the bad position of Kosovo's minorities since the 1999 war.

Sunday, October 02, 2011

Kosovo's North: the Swiss and Finnish look

Swiss and Italian taxfree areas
This article drew my attention to the fact that Kosovo's North is not the only area in Europe with a tax-free status.

Of course Europe has its tax paradises, like Liechtenstein, Luxembourg, Monaco and the Channel Islands. But there are also small taxfree areas like Samnaun, Livigno and Campione d'Italia. They are just municipalities without special autonomy that for historical and geographical reasons got a tax-free status:

- Samnaun in Switzerland is on the Austrian border and could until 1905 only be reached over Austrian soil. Nowadays Swiss tourist have to pay taxes (in Martina) when they leave Samnaun for the rest of Switzerland.

- Livigno in Italy is a small municipality in the Alps at the border with Switzerland. For centuries it was a very poor place that in the winter was often isolated from the outer world. Diverse motives have been mentioned for its tax-free status: the fear that everyone might leave and the area might become uninhabited and the poverty and local resistance against tax. Nowadays it is rich - thanks to tourism - but still tax free.

- the Italian municipality Campione d'Italia on the Lugano lake is an enclave that is on all sides surrounded by Swiss territory. It has taken over many Swiss systems: the legal coin of the area is the Swiss franc - although the euro is widely accepted too; car plates are Swiss; most phones are on the Swiss network and if you send mail to the place you can both address it to Italy and use the Italian postal codes or use the Swiss equivalent.

The Åland Islands
One could also compare North Kosovo with the Åland Islands as there are a lot of similarities in the situation.

Sweden had for centuries ruled Finland and Swedish had become the language of the ruling class while Finnish was the language of the farmers. Only the last century before independence (1809-1917) was Finland ruled by Russia. In 1917 Swedes still formed 15% of the population on the mainland and they were overrepresented in the upper classes. Nowadays this has decreased to 6%. The Åland Islands are on the sea between Sweden and Finland and when Russia conquered Finland they took the islands too. When Finland declared independence the islands - that are nearly completely Swedish speaking but adjacent to Finland - wanted to join Sweden but the Finnish government objected. In contrast to the brutal politics that we see now regarding Kosovo in 1921 the case of the status of the Åland Islands was brought to the League of Nations. These ruled that the Islands should stay with Finland but get far reaching autonomy so that they should keep their Swedish character.

The League of Nations decision in the case of the Åland Islands was a close call and might just as well have gone in favor of the Swedes. But the maturity with which the case was handled stands in great contrast with the swashbuckling diplomats and generals that we see now in Kosovo. Another contrast is that while in Kosovo "freedom of movement" is taken as an excuse for a policy that is in essence one of ethnic cleansing on the Åland Islands the opposite has been done: you need special permission to settle on the islands.