Thursday, December 29, 2011

Preparing for the post-Western world

As the Libyans have experienced and the Syrians still experience Western sanctions come sooner and sooner and are every time better refined to hurt a country. But I wonder about the larger picture.

On the one side there is the issue of globalization. Free trade only works when you can trust that the other side will always deliver. Syria, that had in the last decade done a lot to open its economy is a good example. Now it is paying a price for that openness. I am sure that China and all the other countries that might one day find themselves to be America's newest favorite hate object have taken notice and will try to take precautions. This will hamper further globalization and may well reduce it.

While the Far East has taken over much of our industries finance is still very much a Western monopoly. But the increasing use of financial sanctions - now both against Iran and Syria - must make the Chinese wonder. I expect them to take steps to lessen Western control of international banking.

Tuesday, December 27, 2011

The EU as modernizer

The EU likes to see itself as the big modernizer. Their favorite success story is how they absorbed the former dictatorships Spain and Portugal and made them into stable democracies. And how later they repeated the trick with Greece.

I have never believed much of that story. On the one hand Spain had become a rather prosperous country and - as I have mentioned before - prosperity - and with it a growing middle class - makes a democracy much more viable. Portugal and Greece also saw a rise in prosperity after becoming EU members, but that was caused to a large extent by money from Brussels and not by real development. We basically bribed those countries to stay democratic. But the price was that those countries have a dubious kind of democracy where you can vote how much you want but nothing really changes. The political dynasties of Greece are a good example of what is wrong. The EU isn't bothered too much about this fake democracy. Most rules come from Brussels nowadays in a very undemocratic way and the EU wants obedience more than anything else.

But nowadays the EU seems to be losing it. They no longer seem able to maintain even a semblance of democracy in all those countries they aim to modernize: they simply have too much to bother about. Nearly half the EU countries are former dictatorships, then they have the Balkans, the former Soviet Union and the Arab World and finally there is also the economic (euro) crisis. They really dropped the ball with Hungary that adopted a couple of very authoritarian laws without being bothered by Brussels. The recent complaints about how Serbia is implementing its judicial reform fall in this category too.

The basic problem is that the EU operates like a mafia. If you don't behave like they like they will send in some tough guys (or girls like Merkel) who make some veiled threats. The EU has strayed so far from its ideals that it no more remembers how it once did the trick with some gentle moral persuasion.

Monday, December 26, 2011

The EU's crazy aviation tax

The craziness with which Western countries try to ignore international law keeps increasing. One good example is the aviation tax that will start with the beginning of next year. On itself there is nothing wrong with a tax on fuel for planes. On the contrary, not being taxed gives air transport an unfair advantage over other types of transport.

The problem is in the extra-territoriality. If there is a flight from Brussels to Tokyo the EU wants to tax the whole route and not just the part between Brussels and the Ukrainian border. If a country like Russia or China had done such a thing the EU would have fumed with anger but nowadays the EU leaders feel just as invulnerable as their American colleagues. Both the EU and the US leaders are incompetent to get their own affairs back on track. It looks like their extremist foreign policy is meant to give their voters the impression that they are still in control.

In the mean time we will likely see that people will get creative evading the tax. One example are ideas to give fights from Hong Kong to Germany a stop in Mumbay. It is 1800 km extra but that will be more than compensated because you have only to pay tax for the distance between Mumbay and Germany.

Sunday, December 25, 2011

Comparing communists and the Muslim Brotherhood

There is a considerable similarity between the communist parties at the time of the Soviet Union and the Muslim Brotherhood now:
- In both cases these are parties that are supported by dictatorships that want to export their ideology. in the case of the Muslim Brotherhood the money comes from the Gulf States.
- In both cases party members are known for their loyalty and fanaticism. I suspect that that is caused to a large extent by the fact that there are no real ideological discussions in the party as the ideology is settled by the money supplier. This allows one to be a true believer. Sometimes elements of the ideology may changed by the money supplier but that is still less stressful than seeing an endless ideological battle as often happens in democratic parties.
- Both types of parties are very capable to survive in adverse circumstances like dictatorships.
- Both types of parties can show a wide range of behaviors: from loyal democrats to ruthless Machiavellians and even terrorists. As this is directed by the money suppliers it is hard to predict how they will behave.
- Both tend to have many faces. Some are plain front organizations while in others the party is only contributing in the background.

This all makes it very doubtful how the Arab Spring countries will end even if they have free elections. At the first elections almost inevitably the Brotherhood will win and so they will be happy to participate. But what will happen if at some point the voters get tired of the Brotherhood? Even the leader of the Tunisian Islamists is known to have given some threatening statements on what would happen if they didn't get enough votes.

We know how communism worked. Each "converted" country became a communist dictatorship that tried to export its ideology to its neighbors while making it impossible for its own citizens to get rid of communism. Just as communism Islamism has already been a powerful exporter of terrorism - with Osama bin Laden as its greatest success story - and of ideological fanaticism - as can be seen in many extremist mosques in Europe and the US. If this ideology is allowed to expand things will only get worse.

Wednesday, December 21, 2011

The EU goes for broke

It is really amazing to see how the eurocrats have managed to once again solve an EU problem with more power for Brussels. It is obvious that to the question "double or quit" they know only one answer "double". Unfortunately - as many gamblers know - this strategy often leads to it that you loose everything. Most likely we will see something similar here too.

Germany keeps advertising that the problem is irresponsible spending of Southern European countries while in fact it is that the countries are no longer competitive compared to Germany. For years Germany has lowered its wages and cuts its government spending in order to become more competitive. But that competitiveness came at the expense of the South Europeans. Now they need to lower their wages and cut their government spending too in order to catch up again. But as Germany keeps doing the same they are facing a moving target and it is doubtful whether they will be able to catch up before the things start to fall apart.

Germany seems very allergic to any proposal that might hurt its exports. It has refused to cancel defense orders from Greece, it blocks an expansive policy by the European Central Bank that might take some pressure from Southern Europe and it forces the Southern countries to very restrictive economic policies that hurt their prospects - in the hope that that way they will be able to pay to Germany. So in the end all those massive European funding programs serve mainly to keep Germany's economy going.

Of course this is window dressing. On the short term Germany gets the other countries to foot its bills. But in the longer term it may find that Southern Europe is not capable to pay every loan it granted back. The damage that it does to the Southern economies will harm Germany's economy in the long term. And one can only hope that the EU will find a nice way out once things are no longer tenable.

The present strengthening of the power of Brussels carries another risk: it may cause Southern Europe to become permanently in debt and dependent on aid from the North. The "great" example is Southern Italy that since Italy's unification in the 1860s has become poorer and poorer and keeps exporting people instead of products.

There is a remarkable similarity between Merkel's behavior in Kosovo and regarding the EU. In both cases she seems totally out of control and no longer capable of common sense. It looks like her power has risen to her head.

Wednesday, December 07, 2011

Blowing up Europe

Every general knows the term "tactical retreat". It means withdrawing your army because your supply lines are too long, you risk to be cut of from the rest of your troops or another sector of the front needs reinforcement. Such a tactical retreat is exactly what the EU needs at the moment. Unfortunately our eurocrats have gotten used to always wanting more and they simply seem incapable of making a step backwards.

If they had withdrawn a few years ago the euro crisis would have stayed rather small. If they had spent a few billions to grease the transition Greece - whose core problem is a lack of competitiveness - could have left the eurozone without much problems and would by now be refinding its competitiveness. And if they had not forced to accept bad bank loans from speculators in order to avoid trouble with the banks Ireland wouldn't have much problems now. By highlighting that a lack of competitiveness can lead to the exit from the euro they would also have encouraged Spain and Italy to take their problems more seriously.

Now we see instead the eurocrats making another power grab. This time they want automatic fines for countries that have a too large budget deficit. But such a fine would only make the deficit larger. And sometimes budget deficits arrive suddenly like we saw in Spain and Ireland when their real estate bubble burst. The real problem of the eurozone is seldom budget deficits - it is countries that are not competitive and live above their means. Spain and Ireland got into problems thanks to a busting real estate boom, not because they spent too much. But now they have to adjust.

The eurozone has two structural problems and we will need to find an answer to them:
- one is that its economies develop not in sync. The bursting of the real estate bubbles in Spain and Ireland are good examples of that. One could argue that allowing those bubbles to happen was bad economic policy to begin with but as virtually no economists or politicians raised the issue we will have to consider such developments as de facto "natural" developments. It takes painful adjustments for such economies to get back in sync with the rest of the eurozone.
- the other is more structural. I call it the "Southern Italy effect". Since Southern Italy became part of Italy around 1860 it has become poor (much poorer than before) and mafia infested. It have no good theory why that happened, but given the fact that Spain and former Yugoslavia had similar problems between the north and the south there must be some structural cause. I see a great risk that with further integration of the EU the whole of Southern Europe may become caught in such a poverty trap.

It looks like - except for giving in yet again to the power hunger of the eurocrats - the European leaders will today once again attempt to buy time and to evade the structural problems. If they continue that way they might well end up blowing the euro. But maybe that would be the better outcome in the long term. Finding a solution that lets the rot go on just slow enough to be "manageable" might in the long term be yet worse.

Border changes: it is so simple

As I keep hearing people claim that border changes will lead to long term instability I will once again repeat my thoughts on that subject.

My rule is simple: "Don't do it. But if you have to do it anyway then do it good."

The first part is what everyone knows: border changes can generate a lot of trouble. If today you have Congress of Berlin (1878) you will find that some parties will keep grumbling and when after a few decades the power balance has changed you will get a new set of border changes. In addition border changes are often accompanied by soft or hard ethnic cleansing and "population exchanges".

But sometimes you cannot avoid border changes. A secession movement is too strong or the international players are too strongly in favor. In that case the second part of my rule applies and that part is often ignored.

Doing it good means two things: first of all you take into account all things, including the desires of the local populations. Secession according to existing internal borders - without considering the consequences - is in my opinion a fundamental error. In addition the border changes - and how they are implemented - should be mutually agreed. That way it is possible to have peaceful border changes as multi-ethnic countries like Belgium and Switzerland demonstrate.

So what does that mean for Northern Kosovo? As long as opinions vary from Albanians who want it ethnically cleansed from its Serb population and included in Kosovo until Serbs who want it included in Serbia you won't find a solution. Allocating it to Kosovo now will lead to (soft) ethnic cleansing of the Serbs. Allocating it to Serbia will very probably lead to long term territorial claims by Kosovo Albanian politicians.

For that reason I think the solution for the moment should be to decide to give Northern Kosovo very strong autonomy - virtually independence - for the coming 5 years. That is in fact a continuation of the present situation. The big difference is that once you decide to this constellation formally you can also make agreements on how the area should be governed.

Will that lead to another situation like the RS in Bosnia? Actually I think the entity solution hasn't done that badly: compared to Croatia - where we implemented a unitary state - Bosnia has done better in terms of minority returns. The Bosnian solution could have worked even better is we had not consistently sabotaged it by insisting on a unitary state. That polarized the ethnic relations while the entities were meant to take them out of the equation.

The disadvantage of Dayton was that it was to a large extent an imposed solution. An imposed solution leaves room for nationalists to demand more. A real solution has to be negotiated and that takes time. At the moment it is impossible to find any solution that would not lead to one - and maybe even both - negotiators to be seen as traitors as soon as they came back home. Real negotiations make the parties gradually aware of the position of the others and how far that position is real and how it is nationalistic greed. They gradually establish criteria about how you treat people and how you want to be treated.

That takes time. We have recently seen how it took Belgium one and a half year to find a solution for a relatively minor problem. Kosovo very likely will take longer. Problem is that until now real negotiations still haven't started. One can blame for that to a large extent the Western countries that have treated Kosovo mainly as a play-field for their international power games.

What I would like to see is that the West explicitly admits that the treatment of minorities in the rest of Kosovo is still so bad that it is ethically irresponsible to deliver the Northern Serbs to a similar treatment. From there they could decide that Northern Kosovo should keep for at least the next 5 years its present semi-independent status. As that is a temporary solution it could be acceptable for both parties. In contrast to what the EU is doing now it would not leave space for yet more adventurous policies that aim to change the "facts on the ground". It would also clearly establish that the Northern Serbs have good reasons at the moment not to want to be part of Kosovo.

Every border change should be thoroughly negotiated. The trouble in Croatia and Bosnia was a direct consequence of not following that rule. The present trouble similarly is a direct consequence of separating Kosovo from Serbia without proper negotiations.

Negotiating takes time. But it also is a dialogue that forces both sides to take each other seriously. I think Kosovo would be in a much better shape if it had spent the last 12 years negotiating with Serbia. The mafia style posturing that is propagated by the EU and the US takes in the long run much more time and is much more harmful.

Monday, December 05, 2011

The profits of doom

100Reporters has an article The profits of doom about arms smuggling towards ex-Yugoslav republics during the early 1990s.

However, I couldn't find an underlying report.

I don't think that it is that important who profited from the conflict. In our present world there will always be some people who are prepared to supply arms. The real sources of the conflict are to be found in Western diplomatic circles - and they are until now beyond scrutiny.

Friday, December 02, 2011

German views on the recent Kosovo clashes

Looking at the German press about the recent clashes between NATO and protesters in Northern Kosovo the fate of the own soldiers dominates - above all in Austria.

Some headlines:

Mitteldeutsche Zeitung: Kirsch fordert höhere Auslandszulage für Soldaten im Kosovo. Translated: Kirsch (president of a union of soldiers) asks for a higher expat allowance for soldiers who go to Kosovo. Im Kosovo verletzter Soldat: „Beim Bosnien-Einsatz 2012 bin ich dabei“.
Translated: Soldier who was wounded in Kosovo: "I will be there when we are stationed in Bosnia". Kosovo-Fliegerarzt im Talk: "Soldaten bekommen psychologische Hilfe". Doctor on airplane that evacuated soldiers to Austria: soldiers get psychological help.

Thüringer Allgemeine: Verletzter Sondershäuser Offizier will im Kosovo bleiben.
Translated: wounded Officer from Sondershausen wants to stay in Kosovo.

I could go on and mention another dozen similar titles.

A translated quote from one German parliamentarian who visited Kosovo: Johannes Selle was not only as parliamentarian happy to have learned a bit more about the background of the UN mandate in Kosovo. It is important for his decisions in Berlin. Even though the soldiers cannot go into details for security reasons became it clear that the confrontations in the area of employment have changed recently. "The red line of mutual agreements has been crossed by the few Serb militants", cited Selle. And he means that people no longer keep the agreement not to shoot each other.

In addition the Serb hooligans recently place women, old people and children in the street blockades, so that the soldiers can no longer use tear gas when they want to remove street barricades. But the main problems in the regions have been solved and they will deal with the remaining militant hooligans too - so Selle und Hengstermann (an officer) briefly summarize their conversations with soldiers. They have developed a good relationship with most of the people - but the situation is still too dangerous for touristic trips.

I read several reports that in general relations between German soldiers and the Serb population are good. It looks like the Serbs in Kosovo - and specially the protesters - should spend more of their time explaining their cause to those German soldiers.