Category Archives: World

Sometimes things just don’t make sense

It is one of the most enduring human characteristics to try and see patterns in the world around us.  We don’t like the idea of random events.  People even pore over lottery numbers.

After the awful events in Norway last week, it is only natural that people try to make sense of them.  The most common is that it is part of the rise in right-wing hate politics – for example Timothy Egan in the New York Times or Matthew Feldman in the Independent.  A more original alternative, from Joan Smith, also in the Independent, is that it is part of frustrated male pride, with parallels in the British 7/7 bombers.

But I don’t think any of this helps.  Of course people who think we should do more about the extreme right will use this event to bolster their case.  And the extremists themselves may also do so, on the grounds that this act shows just how desperate things are getting.  Frustrated macho pride was clearly part of the toxic mix, but this afflicts most of the male population.  The more I find out about Anders Behring Brehvik, the more I think his lawyer is closer to the mark by describing him as “mad”.

I am no psychologist, but I don’t think Brehvik fits the normal description of insanity.  But he does seem to have something that the professionals call a “personality disorder”.  He seems to have real difficulty in socialising.  He acted alone, almost certainly, when most terrorist acts are collaborations, like the 7/7 bombings, with people encouraging each other on.  He read widely, and took inspiration from a lot of different sources, but he doesn’t seem to have tried harden his ideas through proper discussion and argument with anybody else.  They are a very flaky agglomeration of fantasies.  The idea of a cultural war between the West and Islam has many followers, but allying with mumbo-jumbo of the Knights Templar?  Describing himself as Christian without any reference to what that actually means?

It is nonsense.  If he hadn’t picked up on these ideas, something else might have done.  Anarchism, perhaps.  The closest parallel is the US Unabomber, another unconnected loner.  We can try too hard to find patterns.  Sometimes the only way to understand something is to say that it is senseless.  The random act of a madman.


Europe’s financial crisis gets dangerous

While the British news media and politicos alike obsess with the unfolding of the News of the World hacking scandal, Europe’s financial crisis enters a dangerous stage.  In fact this crisis seems to unfolding just as quickly, and with much more important potential consequences.  Was I being too sanguine last Friday, when I blogged that it was a learning curve rather than a fundamental problem?  Well, probably.

I had hardly posted it than a flood of dire articles about the crisis came out.  One of the best is by  eminent US economist Larry Summers in this morning’s FT(£); alongside it an equally gloomy article from FT regular Wolfgang Munchau (£).  Mr Summers points to the critical issue of confidence that could be destroyed in a default, drawing a parallel with Lehman in 2008.  He then offers quite a plausible way out.  But the problem, as Mr Munchau points out, is:

I often hear that Ms Merkel in particular has moved a long way from her original position 18 months ago, when she ruled out any money for Greece. This is true. But the crisis now moves at a rate that exceeds her political speed limit.

There’s clearly a problem.  One issue is the expectation that European leaders will muddle through, as they always have.  This, unfortunately, is a self-destroying prophesy.  Because Europe’s leaders expect everything to come right in the end, they don’t have the incentive to make it actually happen.  Actually Europe’s greatest achievements have required some strong leadership, with Helmut Kohl, Germany’s Chancellor in the 1990s standing out.  Mr Kohl achieved German unification on his own terms, pushed through monetary union and the massive eastward expansion of NATO and the EU right into the former Soviet Empire.  Mrs Merkel does not fill his shoes.

Still, there are plenty of bright ideas for ways out, without the Eurozone collapsing, Mr Summers’s among them.  They will all require Mrs Merkel to shift her current stance.  Things could get worse before they get better.  At any rate it looks more soluble than the US budgetary stand-off.


The Euro crisis: structural failure or learning curve?

Coverage of the crisis in the Eurozone is astonishingly poor.  Commentators scarcely try to analyse the situation properly; instead they revert to one of two unsatisfactory critiques.  First, the Eurosceptic one, is that the Eurozone was always an unworkable idea and the best thing to do is abandon the whole thing.  The alternative, the Europhile critique, is that a currency union without political integration was a major mistake, and the best thing to do is move further towards the political integration of the union.

These positions are both unhelpful.  The Eurosceptics fail to see the benefits of the currency union, the awful logistics involved in unpicking it, or the unsatisfactory nature of floating currencies for most countries.  The Europhiles want to drag European peoples down a road they do not want to go.  There is a third way: that Eurozone governments change their countries’ economic arrangements so that they can live within the currency zone, more or less as it is currently configured.  This crisis is a learning experience.

The more far-sighted of the Eurozone’s designers did not want full political integration.  It was never to be a currency zone like the USA, with a federal government able to make massive fiscal transfers across the union to help balance out asymmetric crises.  Instead the single currency, alongside the single market, was meant to act as a discipline on national governments.  This would address the widespread failure of floating currencies, which allowed governments to buy time through currency depreciation rather than addressing economic inefficiency.  This was a process leading inexorably to hyperinflation and economic collapse – which was very clearly beckoning for Portugal in particular before the Euro project was taken on board.

Discipline was required in two particular areas: government finances and labour markets.  In the former case discipline is to be provided by the threat of default; in the zone it was impossible to evade default by debauching the currency.  The consquences of a sovereign default are very severe, and European leaders sought to prevent it through the muddled Growth & Stability Pact, which sought to restrict deficits and levels of government debt.  For labour markets the discipline was that without flexible labour markets, economies would become uncompetitive, creating unemployment.

But things went badly wrong almost immediately.  Bond markets did not seem to believe the default story, as spreads between the more creditworthy governments (like Germany) and the less so (Italy and Greece) were impossibly narrow.  Governments in the shakier countries (especially Italy, Portugal and Greece) found it much too easy to borrow cheaply and used this as an excuse for not proceeding with reform.

Labour markets were largely untouched by reform, as were other economic inflexibilities.  This caused major problems in Spain, Portugal, Italy and Greece whose economies became increasingly uncompetitive.  Only one country (apart from Ireland perhaps) really grasped the implications of living inside the Euro, and that was Germany.  After unification the German economy lost competitiveness and unemployment became a real problem.  But through its system of corporate deal-making between employers and unions, pay was restrained and other reforms instituted.  Competitiveness was duly restored, as was employment.  Unfortunately that made things worse for the laggards.

While the Eurozone had proved a failure in these two areas it proved a bit too successful in another: capital flows.  There was a lot of reckless lending, with quasi-public banks in Germany in prominence.  Capital flowed freely to countries, like Spain and Ireland, that didn’t really deserve it, allowing problems to be hidden in a property bubble.  And then Pop!  The Eurozone has lurched from one crisis to the next.

But the basic idea remains intact.  Markets now fully appreciate the risks of default and are pricing debt accordingly.  This is applying pressure on governments like Italy’s that the Growth & Stability Pact simply could not.  And the pressure to make market reforms is likewise proving unbearable.  It’s been a horrible experience for many, but this is not a structural failure: it’s a learning curve.

So what next?  The Greek government must default, and default properly (i.e. the principal must be cut rather than repayment simply deferred).  Maybe it will be forced out of the Euro.  If so, it will be a terrible example.  Some eurosceptics make it all sound rather easy (“decouple, default, devalue”), but it involves the utter collapse of the Greek economy with private savings being wiped out.  The hope would be that it would be easier to rebuild from the ashes than interminable limping along inside the zone.  Portugal and Ireland (whose crime was not to manage its banking system properly) may also go through some form of de-facto default.  But they will stay in the zone.  Portugal must go through a painful period of reforms, but at least for them this path is clearly better than being outside the Euro.

Meanwhile the Euro governments need to keep “kicking the can down the road”.  This is not as short-sighted as it sounds, since with each kick the various parties invovled understand the situation better and what needs to be done.  The default word is now openly talked of.  German bluster over not bailing out the profligate is gradually having to come to terms with the role German banks played in the disaster.  There is learning for the Germans too.  Bold decisive action can be disastrous – it didn’t help the Irish.  This way things are properly thought through.

Reforms?  Fiscal reforms are unnecessary.  But the banking system does need serious attention.  The regulatory system is badly coordinated.  There are too many cosy quasi-public banks who have been allowed to make silly investments.  Banks remain largely national affairs, with only a limited number of transnationals.  There is strong case for a centralised banking regulator.  And cross-border banking mergers need to be encouraged.

But the Eurozone is not dead; and neither are we on the verge of a more centralised European government.


Poverty Over campaign: why Christian Aid is not serious about eradicating poverty

I am a regular donor to Christian Aid, with a history of support that goes right back to when I was a boy.  It has outlasted my attachment to the Church itself because the charity does not go in for proselytising, and they are dealing with some pretty gritty and important issues.  So I get their supporters’ magazine.  The latest publicises their Poverty Over campaign (which in the publicity is written as POVERTY).  The aim is to “deal with the root causes of poverty”; the publicity highlights eight issues: climate change, conflict, corruption, disasters, food and agriculture, health, inequality, and tax.  All of these issues are closely related to poverty.  But, like “Make Poverty History” before it, the title suggests that its aim is to end poverty, rather than to merely alleviate it.  And here it has almost nothing to say.  Perhaps because the answer is too uncomfortable for most of the charity’s supporters, and perhaps even its staff, to accept.

There has been rather a lot of progress in eradicating poverty in the last couple of centuries.  According to the map that accompanies the article, in 1821 pretty much the whole world was in poverty (Britain, Ireland and the Netherlands were the exceptions according to this, though the inclusion of Ireland is surely a bit shaky).  Now according to the map alongside it only a minority of countries are in poverty, across the central part of Africa, and a few Asian outliers like Afghanistan and Burma.  That picture seems a bit too bright, but we need to acknowledge the progress made by countries such as South Korea and China in the last 40 or so years.  It is worth asking how such rapid progress has been made.

We usually think of poverty in terms of low consumption – insufficient food, poor shelter, a few clothes and practically nothing else.  It is more helpful to look at the other side of the coin: low production, or low productivity.  Beating poverty is about boosting the productivity of countries that are poor.  It’s not about dumping surplus production from the rich onto poor societies, the only other way it can theoretically be broken

And yet raising production involves wrenching change.  And one change above all: moving people from the countryside to towns.  In poor societies agriculture is ludicrously inefficient, and this drags the whole economy down.  In towns it is much easier to mobilise people into more productive activities in manufacturing and services.  What is more, it is much more efficient to deliver basic services such as education, health services, power and water to people living in towns.  Pretty much every breakout from poverty, from our own in Britain in the 18th and 19th centuries, to China now, has invovled the emptying of the countryside and the growth of massive cities.  Only when society is much more wealthy, and infrastructure much better, do we see some reversal.  Now where’s that in Christian Aid’s eight issues?

The problem is that we in our comfortable developed societies don’t like the idea of imposing such drastic change on the poor.  The change is painful.  Families are torn apart; initially poverty at both ends (in the country and town) is extreme.  Our attitudes to the country are tinged with a folk memory of a lost rural idyll.  There’s another uncomfortable truth.  Such changes sit uneasily with democracy.  Some of the most successful changes have been carried out by benevolent dictatorships  (consider China, the early days of South Korea, Singapore).  The record of democracies may be better than that of kleptocratic dictatorships, but it is flawed.  India has advanced phenomenally, but, compared to China, it has left huge swathes of the population behind in dire poverty without much hope of escape.  Poverty Over implies turning a blind eye to progressive dictatorships.

So what should we be doing if we truly want to end poverty?  Well the first point is that we can’t impose progress from outside.  Ending poverty is painful, and not an automatic choice; things may have to get worse before they get better; this has to be led by the locals.  We have to back off a bit.  The second point is that most aid should focus on urban poverty.  Rural poverty may be cuddlier and more instinctively appealing (remember the Christmas campaigns about buying people goats?) but it carries the risk of perpetuating poverty rather than ending it.  Rural aid should concentrate on making it easier for people to migrate: so improving literacy and education is an obvious one.  But even then you get more bang for your buck in the towns.  Thirdly we should promote the role of competition and businesses in the developing world, if we can.  Too often local elites leach off local businesses, or create excessive regulation as a source of soft jobs and bribes.  That prevents more productive employment opportunities from being created.   Fourthly, promote constructive multinationals.  Multinationals inject a dose modern productivity and efficiency into countries, and helps raise levels of trade.  They are perhaps the best way of channelling our excess wealth into the developing world.  Of course there are badly behaved multinationals, complicit in corruption and taking more than they give – but when they work well they are a better, more sustainable channel of help than any other.

Urbanisation; helping businesses; supporting the right sort of multinationals.  Apart from a tangential reference in dealing with corruption, none of this gets a look in in Poverty Over.  Not even education does.  Instead of ideas that would really help eradicate poverty, we get a ragbag of politically correct issues that suit the tastes of western do-gooders.  Christian Aid is not beginning to tackle the root causes of poverty.  Perhaps it shouldn’t try.  Good knows that just alleviating its symptoms needs doing.  That’s why I will continue to support them.


Libya: the UN motion is not just a cynical gesture

I’m getting a bit fed up with commentators who launch into diatribes based on generalities, without bothering to examine the facts of the case in point.  Libya is the latest example.  I have read two articles critical of the UN motion authorising military action; Max Hastings in the FT, and Sean Collins in Spiked.  The situation in Libya is interesting because it is unique; these articles are almost worthless because they never get beyond generalities.  In fact exceptional circumstances make the UN-approved action a viable way forward; and no doubt that is why it was proposed.

Mr Collins’s article is the weaker – but it is a pretty typical offering for a Spiked writer.  (See my post on Spiked).  Its title is Libya: how the West just made things worse.  He says:

Far from rescuing the Libyan uprising, the resolution is a setback for the cause of democracy and self-determination.

He does not do a good job of explaining why though.  We get the usual complaints that it will undermine the rebels’ legitimacy; we also get a rather old-fashioned (and unsupported) reference to the sacred principle of national sovereignty.  He does not even attempt to explain how this is worse for the rebels than being overrun by Gaddafi’s forces, or at least how this would be better for self-determination and democracy.  This comes over as just another rant from a writer who would condemn any action taken by a Western leader, whatever it was.

Mr Hastings’s article is much more disappointing, because he is a military historian who should be able to deploy some insight and expertise, if he could be bothered.  His article is entitled US and its allies are too late to help Libya.  His contention is that only intervention by ground forces will save the Libyan rebels:

…the situation today is where it always was: once Muammer Gaddafi showed himself determined to fight, only direct ground intervention by the US and its allies would have enabled the ill-armed rebels to prevail.

This would ordinarily be a correct assessment; but Libya is different.  Libya consists of a series of settlements separated by expanses of desert.  Crossing this desert is the key to success, and that gives air power a much greater effectiveness than normal.  Ground forces must be motorised – but motor vehicles are vulnerable with so little cover.  Or you use airpower – which, of course can be neutralised by opposing airpower.  Added to which are the issues of logistics; advancing forces find it increasingly difficult to keep in fuel and ammunition the further they advance – and rely on motor or air transport for these too.  This is not Kosovo or Bosnia.  Gaddafi does not have huge forces at his disposal, so it is quite realistic for this intervention to halt them – although not to roll them back.

So it looks quite feasible for the West to sustain the rebel territory from Benghazi eastwards, especially given the moral boost that intervention gives them.  This still leaves Gaddafi in control of most of the country.  How is he to be defeated?  He will be defeated once his forces start to lose hope.  This is possible because he depends on two groups in particular: foreign mercenaries and tribal allies.  Both of these need to be on the winning side; a third group, Gaddafi loyalists who face the prospect of being lynched if Gaddafi loses, are more reliable but not enough.  Gaddafi’s problem is that the economy has collapsed: he needs those migrant workers and the oil trade.  More rigorous enforcement of sanctions is part of the UN resolution.

Which leads me to another exceptional circumstance: Gaddafi is diplomatically isolated.  The Arab League has come out against him, and he has no allies (apart from Syria perhaps and, who knows?, Iran).  This is just reward for his antics and excessive ego; he was never a reliable ally.  This puts him in the same situation as Saddam Hussein after his attack on Kuwait.  This isolation gives the West a much greater degree of legitimacy, as well as making it much more difficult for him to rebuild a sustainable state from the territory he does hold.

So the scenario for victory is this.  Gaddafi’s advances are halted and the resolve of the rebels sustained by the no-fly zone, and air strikes from Western powers and Arab states (with the US not necessarily playing a huge role).  Gaddafi’s support then gradually melts away as his tribal allies are tempted to change sides in order to bring the conflict to an end, and mercenaries become unwilling to expose themselves to air attack and the possibility of the regime collapsing.  This is not the only possible outcome – but it is viable.  Unlike trying to shift the Serbs from Kosovo with air power alone.

What are the morals for dictators wishing to avoid overthrow?  First keep the armed forces under your control (unlike Tunisia and Egypt).  Second make sure you stay friends with enough of your neighbours (unlike Gaddafi and Saddam).  All the worse for the incipient rebellions in Bahrain and Yemen.  Also it helps if your country isn’t mostly desert.  Robert Mugabe looks pretty safe.


What is going on in Libya?

The chaotic goings on in Libya expose the weaknesses in modern journalism.  I am particularly disappointed in the BBC, whose radio news is one of my main sources.  The modern journalists job, it seems, is to relay the latest dramatic report, and pass on the odd rumour.  Analysis isn’t their job.  And the biggest crime of all is to report news that is out of date, no matter that it may be more accurate than earlier reports.  24 hour news coverage simply tries to substitute quantity for quality.  I can only stand it for short periods.  The BBC was particularly weak in reporting what happened at the western oil town of Brega yesterday.  This morning I found the best coverage in the Independent, though I have to say I didn’t do a thorough search.  There was a reasonable overview in the FT as well (behind the paywall…).  This matters because what is actually happening informs public policy decisions back here.

The situation appears to be quite chaotic.  The Gaddafi forces clearly have strong grip on Tripoli.  They have some reasonably well organised forces, with access to some heavier weapons, including some air power.  They have control on some other towns too, including Sirte, Muammar Gaddafi’s home town, which is on the coast roughly halfway between Tripoli and the second city, and main rebel stronghold, of Benghazi.  But we shouldn’t exaggerate their strength.  Air attacks seem to be occasional sorties by single aircraft.  In their attack on Brega they needed to use civilian cars.  Mostly they seem unable to dislodge determined resistance from even lightly-armed irregulars.  That is just as well, because the rebel forces lack organization and weapons.  The regular army seems to have dissolved, and probably wasn’t up to much in the first place.

The Gaddafi forces seem to be consolidating.  The main priority for them, apart from continuing to hold Tripoli, is to retake the towns to the west of Tripoli up to the Tunisian border.  This seems to be slow going.  The attack on Brega was interesting because it is in the west of the country, not all that far from Benghazi.  The rebels managed to get in reinforcements, and this seems to have held them.  They may make another attempt today.  Apparently they want to control the airfield, no doubt so that they can get reinforcements and supplies from Tripoli.

What this seems to boil down to is stalemate.  Gaddafi is militarily too strong to dislodge what he holds, but too weak to extend his control very far.  Never mind taking new ground, he probably hasn’t go enough loyal forces to hold much more than he already does.  Meanwhile the economy has collapsed and Gaddafi is politically isolated.  No doubt he has lots of weapons, fuel and ammunition in Tripoli – and cash to pay the mercenaries – but it is difficult to see how he can get reinforcements or replenishments. This means that things could get very ugly in Tripoli, as Gaddafi forces throw their weight around, commandeer food for themselves, and so on.  They will only be defeated when their morale collapses.

So what are we to do?  Military intervention would be very messy.  NATO forces have the competence, but would be very messy politically – getting them out would be difficult as they would be left with the baby in hand.   Arab or African forces would be less politically difficult, but I question their ability to avoid many civilian casualties.  A no-fly zone looks a non-starter; it would take a lot of resources to implement, while not making all that much practical difference.  Isolating Gaddafi will help, but what is needed is some way to break the spirit of his forces.  I don’t know if there is a way to offer his mercenaries or other loyal forces an easy exit – but this could reduce their will to fight.

But in the end, we in the west need to accept that we do not rule the world, and nor should we.  Events will have to take their own course; we can only limit the human suffering at the margins.

Update: 4 March 2011

As usual, some very good coverage in the Economist this week, as consensus settles on the situation being a military stalemate.  The Economist points out that the real significance of the Gaddafi airpower is the ability it gives them to transfer their forces from place to place, and to attack groups of fighters crossing the desert between the main towns.  I think they are exaggerating Gaddafi’s airpower somewhat.  Air forces (and especially combat aircraft) are notoriously difficult to keep in airworthy condition.  The regime may not have the capability to fly more than a few of their aircraft at a time, without external help.  His diplomatic isolation is critical here.