Friday, June 24, 2011

Why Serbia's economic pressure on Kosovo doesn't work

Part of Serbia's strategy to force Kosovo to accept a compromise has been economic pressure - mainly through the refusal to accept documentation that claims Kosovo to be an independent country. Until now it hasn't brought much result.

What made me wonder whether this really works was the lack of demands from Kosovo's society for a solution. It made me wonder whether Kosovo's export sector is simply too small to have political influence.

That would lead to the conclusion that Serbia's best strategy might be to actively encourage Kosovo's export sector. Of course it would need to keep some negotiation chips. But simply hindering Kosovo's exports may be a bad strategy.

Tuesday, June 21, 2011

The benefits of paralysis

The NY Times has an article (Hip, Hip — if Not Hooray — for a Standstill Nation) in which it discusses the paralysis in the politics in Washington today. The article concludes that it is nothing new and that politics has always been this way:

Moreover, it’s useful to remember that the founders devised the system to be difficult, dividing power between states and the federal government, then further dividing the federal government into three branches, then further dividing the legislative branch into two houses. The idea, James Madison wrote, was to keep factions from gaining too much power, presuming that “a coalition of a majority of the whole society could seldom take place on any other principles than those of justice and the general good.”

This may be good to keep in mind the next time some Western diplomat claims that the mere fact that it has two entities makes Bosnia ungovernable.

Monday, June 20, 2011

Will Turkey go broke?

Amidst all the enthusiasm about Turkey's economic success it is good to read the recent article in Business week about it (Turkey's Moment).

The article is rather short on figures but it creates the impression that with its large account of payments deficit and its huge influx of money it looks a lot like South East Asia at the eve of the 1997 crisis.

It would be bad for the Balkans if after Greece also Turkey falls into a crisis. But at least for the moment Turkey is still very confident.

Sunday, June 19, 2011

Western cowardice in the Balkans (2x)

This weeks saw several illustration of Western reluctance to take important decisions, despite evidence that delay may only make matters worse.

The Greek debt
One year ago Greece received a large loan from the EU. Now it is back for more. Unexpected? No! Because Greece didn't keep its commitments? No! It was calculated from the beginning. The only thing that might have prevented a new Greek crisis was when the markets might have suddenly developed faith in Greece and decided to give it new loans against decent rates. But that was very unlikely: Greece was forced to large budget cuts and that usually translates in a shrinking economy; creditors don't like that.

The real problem are Greece's creditors. Because of the uncertainty they change higher interest rates and that put Greece in a hole from which it is difficult to get out. Normally a country's debts is restructured when in such a situation. That may mean that part of the debt is forgiven but it may also mean that the creditors just have to wait a little longer for their money.

And this is where things get dirty. With the first aid operation a year ago their was no "restructuring". It it suspected that Lagarde, who coordinated that support operation and as a consequence has now the best cards to become the next head of the IMF, did so to protect the French banks who are major creditors to Greece. Some people believe that this background and the bad result of the operation make Lagarde a bad choice for this job.

This time another Frenchman, Trichet, the head of the European Central Bank is trying to prevent a "haircut" for the banks. Yet his arguments that such a haircut might have disastrous consequences sound hollow. That countries go broke is a normal thing. If the European financial system cannot bear such a development then that means that Trichet has failed in his job as overseer of the financial sector. he doesn't have much power in this respect but he certainly has a moral authority that he hasn't used.

In the mean time Greece stays in the twilight zone. This has both good and bad consequences. The good thing is that there finally seems to be some momentum to modernize the way Greece is administered. One bad thing is that financial uncertainty leads to stagnation. The longer the situation isn't solved the worse it is for the European economy. Another bad thing is that Greece may be forced to excessive cuts and privatizations that will harm it in the long term. I would advise Greece to simply refuse such prescriptions.

Trichet is both right and wrong. Restructuring the Greek debt may have serious consequences. But delaying it has consequences as well and it is very likely that the longer we delay it the larger the total damage will be. Often the fall of Lehman Brothers that triggered the crisis in 2008 is used as an deterring example. But companies go broke all the time. The real problem with Lehman Brothers was that the central bankers hadn't taken the precautions that made it possible to handle such a bankruptcy in an orderly way.

P.S. Here is an article that discusses the way

Kosovo's borders
While Europe keeps stumbling along with the Greek debt the US showed very similar behavior when Assistant Secretary of State Philip Gordon declared himself against a partition of Kosovo. According to him it would be "a a recipe for disaster for the Balkans".

It looked hardly liked a balanced statement. Being in the Balkan Gordon has very probably heard the usual threats ("if that happens our people will riot") and his statement may have been a result of that.

The result is that Kosovo stays in the twilight zone too. It will not be recognized and its relation with its Serb minority will stay tense. We see something very similar happening in Bosnia.

Here too the West is only delaying. The problem stays, keeps causing harm and may in the end very well be "solved" in a less decent way - like Operation Storm solved Croatia's ethnic trouble. Not to mention that such "solutions" may very well lay the foundation for new conflicts.

So Gordon too takes the way of the coward - avoiding solutions because their implementation is tricky and can get out of hand. This is the wrong way. The West should together with the local ethnic groups find solutions and find ways to implement them. That will take both an open ear, an instinct for fairness and diplomatic skills.

Friday, June 17, 2011

Russia and Brazil

VOA News has an article "Can Russia catch up with Brazil". In this article it mentions similarities between the countries such as that both used to be dictatorships and that both were late abolishing slavery.

But where Russia is tuck with authoritarian Putin Brazil has found the way to democracy. The article's account of how this happened:
I was in Florianopolis, Brazil, lunching on shrimp stew with Roberto Schmidt, a lawyer and veteran of Brazil’s long, slow motion move to full civilian rule.

“Expansion of civil society is the key,” he said. “One year in the early 1980s, neighborhood groups just started forming across Florianopolis.”

As a reporter in Brazil in the early 1980s, I recall thinking that this proliferation of non-governmental groups, neighborhood groups, church groups, green groups, women’s groups, and independent trade unions was a boring story. For news value, how could this grass roots phenomenon compare with the pyrotechnics of civil war in El Salvador, Augusto Pinochet beating heads in Chile, and Maggie Thatcher rolling back Argentina’s occupation of the Falkland Islands?

But for Brazil, this transition to democracy was The Story.

On a political level, these non-governmental groups led to the formation of the Workers Party, Brazil’s first truly grass roots party. This is the party that overturned class expectations and put into the presidential palace Luis Inacio Lula da Silva, a former shoeshine boy whose formal education stopped at the fourth grade.

Unfortunately the US policy of color revolution has made grass root organizations suspect and politicized.

Wednesday, June 15, 2011

Science and dealing with dictators

For my study I had to read some scientific publication (Less Power or Powerless? Egocentric Empathy Gapsand the Irony of Having Little versus No Power in Social Decision Making.) that has some interesting implications for how to deal with dictators.

It is a well known fact that when people get more power they use or abuse it. But this does not go on endlessly. When they get absolute power they become more generous. I quote one experiment from this article. I have changed it a bit to make it comprehensible without the context:
Participants were read a scenario in which they were asked to imagine themselves as being one of two competing owners of adjacent cafe´s. Both want to use the sidewalk in front of their cafe´s for an outdoor bar. Participants were told that the city council endowed them with 100 m2 that they could use together. As they were the ones that first contacted the city council about this extension of their cafe´, the participants are instructed by the city council to come up with a division of the 100 m2. Allocators could therefore propose a division of the 100 m2 to
their neighbors. In the condition in which the participants were confronted with a powerless neighbor, they were told that they could make any division and that the neighbor is going to have to accept this proposal—the 100 m2 will be divided as they propose.
It is important to note that this is equivalent full power. In the other condition, participants were confronted with a neighbor with a small amount of power. They were told that the neighbor has information that could lead to a decrease of the total space that could be used for the outdoor cafe´. The neighbor has a choice between either accepting the proposal that the participants make or informing the city council that the 100 m2 are too close to the street and that according to the law, 10 m2 would have to remain unused.
This would mean that although the relative sizes of the parts for each cafe´ owner would remain as proposed, the total area to be divided would be reduced by 10%. It is important to note that this situation is equivalent to 90% power. The scenario was accompanied by a map that gave an overview of the layout of the two cafe´s, the area to be divided, and, in the 90% power condition, the area that was too close to the street.
After reading this scenario, participants were asked to indicate what percentage of the total 100 m2 they would allocate to their neighbors.

The result was that the people with 100% power were prepared to give 41.9 square meters compared to 34.35 for the 90% power people. There are numerous experiments with similar results. It appears that when people have all the power they feel responsible: "Noblesse oblige".

Interestingly people don't expect this. When in an experiment people are put in the powerless position and given a little piece of information that they can use against the powerful side nearly everyone discloses this to the other side - seriously harming their receipts.

In this context it is nice to looks at the studies that show that nonviolent protest has the best results. Many people see nonviolence only as a trick: if you can't beat the government with arms it is better not to use them so that when the government uses them people will see it as excessive violence and the government will loose support.

The result is the kind of doomed insurrections as we have seen in Iran, Libya and Syria. Everyone - including the government - knew that the ultimate goal was the fall of the government and the government took accordingly measures to quash the protests. Compare that to Tunisia and Egypt where there were concrete demands like less corruption and the abolishment of the state of emergency. These were moral demands that not directly attacked the government and even when in the end the dictator left much of the established order - including the army - stayed behind.

An important factor behind this illfated strategy is that the CIA is pushing the opposition in those countries in that direction.

If we look to dictatorships that have become democracies it seldom happened at once in a revolution. Usually it happened in small steps that seemed logical at the time. This is how the moral appeals at the "noblesse oblige" of dictators works. With demands for regime change the protesters move themselves to more power. But just as in the experiments that makes the dictator less likely to grant more freedom.

It looks to me that in their present mode the uprising in most Arab countries are doomed to fail. The country were there is best chance for regime change is Syria but that is for the wrong reasons. The Syrian regime has chosen the strategy of massive reaction. As any guerrilla handbook may tell you this is bound to antagonize the population against the regime. It is standard guerrilla tactic to shoot a few cops in order to achieve such a reaction. But even if this strategy of provocation succeeds the humanitarian price may be very high.

Tuesday, June 07, 2011

When the rules have changed

In today's Washington Post, Jackson Diehl argues that the International Criminal Court's role in Libya has not been helpful as it gives Gaddafi an incentive to keep fighting. It is an argument that I have made too.

I want to add one point: we should acknowledge that times have changed. Gaddafi is just one of many dictators in his part of the world. And many of his colleagues would be just as ready to kill protesters when they found it ready. As I have argued before - Ben Ali and Mubarak were geriatric old men who were overwhelmed by the protests. Had they been younger and more energetic they would most likely have put up more of a fight before giving up power. Dictators are ruler and judge in one and if they see a threat to stability they have good reason to lock up or even kill someone - all for the sake of stability and progress. That is the ideology that underlies their rule.

From this point of view is simply doesn't make sense to tell Gaddafi that suddenly he is a criminal just for doing what he has done the last 40 years. It makes better sense to tell him that times have changed and that now the time has a arrived for a more democratic and open style of government. He should leave but we don't blame him for what he has done with the best intentions. Those intentions are of course an assumption that we can adopt until proven otherwise.

This is not just about Gaddafi and his family. Hundreds of thousands of Libyans have supported him. By telling that Gaddafi is a criminal we are also telling those people that they are criminals. Doing that we make them to enemies of the new order while we did have a good chance to get them on our side. It is no coincidence that violent transitions lead to long term problems. We are now more than two centuries past the French revolution and there is still some antagonism between church and state left. Those Western bombers may very well be laying the foundation for similar problems between Libya's tribes.

Thursday, June 02, 2011

Mladic, be a man and take responsibility

Finally Mladic has been caught. And now we will see his process. If the processes of Milosevic and Karadzic are any guide it may be once again a disappointment for people who expect anything new.

Yet I think there should be. Milosevic and Karadzic were responsible for policies that took many unnecessary lives. But it is hard to find an optimal policy - Bush's policies in Iraq took many unnecessary lives too - and they might see reasons why it is in the interest of Serbia and the Serbs to be economical with the truth.

However, I can't see such a reason for Mladic when it comes to the Srebrenica massacre. Even if he didn't order it and wasn't aware of it until after it happened - what is very unlikely - he still would be responsible as the highest commander. It would fit him as a man to take that responsibility - however painful.

Mladic owes not only an apology to the Muslims. The mass murder also harmed the Serbs. It was a major strategic blunder that gave the Serb cause a bad name, made any further Serb conquest (Bihac?) internationally unacceptable and may well have led to the fall of the Krajna.

When he was commander in Bosnia Mladic had the image of being a brave man who didn't evade his responsibilities. Now he faces the ultimate test of his bravery. For his fate it won't make much difference: given his health it looks unlikely that he will ever again be a free man no matter what he does.