Nov 25 2015

Why Cameron shouldn’t gamble with Germany: Helmut Schmidt’s story

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 By Mathias Häussler

Born in the North German port city of Hamburg in 1918, Helmut Schmidt was an enthusiastic Anglophile in his early life, to the point that he abstained from voting on the Treaties of Rome in the German Bundestag in 1957. Much as he was convinced about the necessity of European integration, he simply did not believe that the proposed European Community (EC) would succeed without Britain.

In the early 1970s, he even tried to convince a highly sceptical Labour Party conference of the virtues of EC membership, comparing himself to “a man who, in front of ladies and gentlemen belonging to the Salvation Army, tries to convince them of the advantages of drinking”. During his eight years as German chancellor from 1974 to 1982, however, his views would change profoundly, largely as a result of British European policy.

Harold Wilson‘s renegotiation of EC membership in 1974-5 and Margaret Thatcher’s crusade over Britain’s budget contributions left Schmidt bitter about British attitudes towards Europe. In his eyes, Wilson and Thatcher had deliberately tried to hijack the European Community, fighting domestic political battles on the backs of other member states. In 2012, Schmidt even claimed that de Gaulle had been right to veto British membership during the 1960s.

Almost nobody in Britain, he would muse frequently in his later years, seemed to think “that the Atlantic Ocean between England and America is broader than the channel between England and continental Europe”. While such judgements of Britain’s post-war European role are somewhat harsh, they nonetheless reveal a lot about why Britain and Germany continue to be at loggerheads over the basic principle of European integration to this day. Continue reading

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Nov 19 2015

Terrorism, Counter-Terrorism, and Paris

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By Richard English FBA 

The appalling events in Paris on 13 November force us, once again, to think carefully about the paradoxically intimate relationship between terrorism and counter-terrorism. The immediate response we should all feel is one of horror at the callous violence, and empathy regarding the victims.  Beyond this, however, serious analysis is required if we genuinely want to minimize the recurrence of such atrocities in the future.

One aspect of our thinking should concern the West’s post-9/11 response to that even larger atrocity.  Tony Blair’s recent admission that the Iraq War played an important part in generating ISIS might, perhaps, be thought to change very little.  For, unless one has been living on another planet for the past twelve years, then one will know that what Mr Blair admits here is not merely true, but also rather obvious.

Yet Blair’s comments do point to something less frequently acknowledged and of far wider significance in international politics: namely, that there is indeed an intimate, mutually shaping, profoundly antiphonal relationship between what we normally refer to as terrorism and what states (often violently) themselves do.

This is an uncomfortable truth for those holding state power, which is why the word terrorism much more often gets deployed to refer to non-state actors (despite the unarguable fact that, historically, states have carried out far more terrorizing violence in pursuit of political goals than non-state actors have managed to do).

Recognition of the paradoxical intimacy of terrorists and their counter-terrorist state opponents can help us to understand – even, perhaps, to respond more effectively to –  those conflicts which generate so much brutal and maiming violence.  This should not, I think, merely involve a pendulum swing towards the far opposite direction. To replace an unjustified pro-state bias (‘al-Qaida, Hamas, ETA, and ISIS – these are the bad guys in the story’) with an equally simplistic focus only on state iniquity (‘Israel is evil, the CIA has done terrible things’, and so forth) would merely be to replace one myopia with another.

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Nov 17 2015

The Paris Attacks

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By Patrice De Beer

The morning after was horrible, like a moral, emotional hangover. Even for a former war correspondent who has covered too many wars and massacres, but who has, for the first time, witnessed shooting at a stone’s throw from his family members.

Ten months after last January’s attacks against the satirical magazine Charlie Hebdoand a kosher shop in Paris, people thought, hoped, things would never be the same after a spectacular solidarity march. And now, it has started again, in a more massive, brutal way, and it looks like it could repeat itself again. After what had been, for ISIS, an attack against the “enemies” of Islam – or rather their senseless version of it – France is facing for the first time senseless random killings. A first here, even if the London attacks in 2005 and those in Madrid in 2004 had already targeted ordinary people only united by the fact that they were using public transport at the wrong time.

So now, as politicians and media say, it is “war”, not the war of words we too often indulge in, but the real thing. Not in Beirut or in Syria, Iraq or Turkey, but here, in Europe, at our doorsteps. A war situation with new border controls and, for the first time in decades, a state of emergency.

But while this war is not, or not yet, an all-out war like WW I or II, the sense of national unity we shared after Charlie has already started to crack, only hours after the blood of 219 persons was shed on the streets of Paris, thanks to politicians mainly concerned with next month’s regional elections, personal or ideological hatreds and their political ambitions. Sad.

A brand new situation?

This all-out, indiscriminate attack, hitting Parisian bourgeois alongside youngsters from the ‘banlieues’, Muslims, Christians, Jews and non-believers alike, rich and poor just because they are French – i.e., for IS, evil “Crusaders” – this has created a brand new situation.

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Nov 12 2015

The Ultimate Sovereign Debt Showdown: Russia & Ukraine likely to battle it out in court!

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By Kanad Bagchi

Against the backdrop of acute political instability, civil war, the loss of Crimea, and a debilitating state of public finances, Ukraine remarkably secured a debt restructuring deal with its international bondholders on 27th August 2015, potentially augmenting its case for a $40bn bailout from the International Monetary Fund. The restructuring package envisaged a principal reduction of around 20% of the total $18bn debt outstanding along with a debt rescheduling arrangement until 2019. The deal has been vociferously hailed as a ‘significant milestone’ and one, which is likely to restore the ‘debt sustainability’ of the Ukrainian government. Amidst a cohort of international financial institutions, including Franklin Templeton, BTG Pactual, Rowe Price et al, agreeing to the haircut, Russia, which holds $3bn worth of those US dollar dominated bonds (just ‘bonds’ hereafter), refused to participate in the negotiations and insisted on being repaid in full. Both countries, having dilly-dallied for weeks since the initial restructuring deal, are now considering to resolve their dispute over the debt in a London court. In this regard, the bond agreements are governed by English law and are subjected to the jurisdiction of British Courts. Political skirmishes aside, this post considers some of the intricate questions connected with sovereign debt enforcement in general and speculates on the likely set of legal issues arising out of the present dispute in particular.

One of the main sticking points of the present controversy relates to the nature and scope of the bonds that were issued by the Ukrainian government, and in particular whether these count as official or private debt. The distinction is important for two specific reasons. First, Russia can validly insist on restructuring of official debt under the umbrella of the Paris Club, as opposed to the recently agreed private creditor-debtor arrangement. Second, legal defenses available to Ukraine in a debt enforcement action by Russia would vary substantially depending on the form and substance of the bonds and whether these are categorized as official or private debt.

Bilateral State Loan or Private Debt?

If the matter reaches the English courts, a ruling on the status of the debt becomes imperative. For starters, the Russian government acquired the entire 3 billion worth of Ukrainian government issued bonds, as a partial fulfillment of a previously agreed loan disbursement to the erstwhile government of Ukraine under President Viktor Yanukovych. Reports suggest that an artificially low interest rate of 5% was agreed on the bonds, when the market, admittedly was demanding far higher rates. In addition to that, a debt acceleration clause giving Russia the option of immediately reclaiming the entirety of the funds, in the event of Ukraine’s debt to GDP ratio exceeding 60%, posits an unusually compromising financing arrangement, further confounding the distinction between private and official debt. In the author’s opinion, the peculiarities of the transaction highlight the fact that the bond issue and its purchase was both creditor specific and materially distinct, in as much as the Russian initiative lacked a purely commercial motive and a profit rationale. Such unconventional issues of securities add a strategic, if not a completely official flavor to the transaction, thereby admitting a characterization of the bonds as official sector debt, regardless of its form. That said, the present indeterminacy has nonetheless stimulated an intensely polarized debate amongst academics and practitioners alike and one hopes that a court decision will infuse more clarity and coherence on an issue, which is both novel and unprecedented. (For a fuller exposition of the debate, see here and here).

Can Ukraine Validly Resist Debt Enforcement by Russia Assuming that Debt is ‘Official’?

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Nov 8 2015

How visible are Britain’s EU renegotiation demands across Europe’s twitterspheres?

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By Max Hänska and Stefan Bauchowitz

David Cameron warned EU leaders to meet Britain’s demands, as he faced mounting pressure to outline his terms for keeping the UK in the EU. He is expected to set out these demands in greater detail on Tuesday. George Osborne began to set out what Britain sought from its renegotiations in a speech delivered to German business leaders at the BDI (Federation of German Industries) in Berlin on Tuesday 3 November. As the prelude to Britain’s EU referendum the renegotiations have gained in significance, particularly as the lead for ‘staying in’ has narrowed in the polls.

With Britain’s referendum, the EU faces the possibility of a Brexit just month after it narrowly avoided a Grexit. It seems reasonable to expect that Europe would pay substantial attention to these renegotiations and the concessions Britain is demanding of other EU members for its continued membership. A useful way of studying the amount of attention paid to Britain’s demands, is by examining their EU-wide public visibility. The extent to which actors or issues relevant to one EU member are visible across the rest of the EU is sometimes described as horizontal Europeanization of national public spheres. Following this line of inquiry, we investigate the visibility of Osborne’s speech and the UK’s demands across Europe’s twitterspheres.

Following the same methodology outlined in our previous post, we collected tweets matching a set of relevant keywords on Tuesday 3 November, covering the time of Osborne’s speech, through twitter’s streaming API. We used the Google Maps Geocoding API to map user-specified locations to countries. The data presented includes total volume of tweets by country. To get an idea of how many tweets from the UK and other EU countries we should expect in general, irrespective of the issue, we collected a random sample during a comparable timeframe from the streaming API’s sample endpoint.

Figure 1: Share of tweets, renegotiation vs. random sample

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Nov 2 2015

As Europe looks fearfully outside, its liberal democracy is under attack from within

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By Cas Mudde

Liberal democracy in Europe is under threat once more. This time, however, the threat comes from within the European elite. What can be done to remedy this situation? 

If one believes the international media, then the “refugee crisis” is pushing Europe further and further into the hands of the far right. As refugee centres burn and tens of thousands of people demonstrate against an alleged “Muslim invasion”, far right parties across Europe are at record highs in opinion polls and are winning in local and national elections.

Earlier this month the Swiss People’s Party (SVP) won 29.4% of the vote in the Swiss national elections, the largest victory of any far right party in Western Europe since 1945. In the Netherlands and Sweden, long seen as immune to far right parties, the Party for Freedom (PVV) and Sweden Democrats (SD) are soaring in the polls. From Denmark to Germany (planned) refugee centres are being targeted by arsonists and protesters.

Against this angry mob, given voice by charismatic leaders like Marine Le Pen and Heinz-Christian Strache, stands an apathetic and flustered political elite. While German Chancellor Angela Merkel tried to defend a welcoming approach to the refugees, she was met with silence or opposition from her centre-left and centre-right colleagues across the continent.

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Oct 26 2015

Brexit will give neither Hitchens nor Mason the Europe they desire

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By Denis MacShane

Recently I had the pleasure of debating Europe with Peter Hitchens of the Mail on Sunday at the Dulwich Literary Festival. Hitchens advanced the well-worn Brexit arguments about Europe being run by faceless unelected bureaucrats, imposing its vicious will on poor countries like Greece, and that there was absolutely no democratic control over what it does.

In fact, variation of these arguments have been advanced by national sovereignty critics of European integration ever since Churchill called for the creation of ‘the United States of Europe’ seventy years ago. The late Denis Healey wrote the classic critique of European unity in 1950 in a Labour party pamphlet. He argued the left should reject “a system by which important fields of national policy could be surrendered to a supranational European representative authority.”

Peter Hitchens who began on the left reprised with style and eloquence these European_flag_outside_the_Commissionarguments. Now he is joined by one of our most prominent left commentators, Paul Mason, who writes in the Guardian’s G2 that Brussels embodies “the determination to dissolve political traditions into a monolith.”

Mason complains about the treatment of Greece and now the handling of the refugee crisis. I share his Hellenophile critique of the decision of the centre-right ruling group in Europe to insist on foolish and counter-productive budget balancing measures in Greece. Their rejection of the IMF’s correct insistence that Greek debt to northern EU banks – those that lent money to corrupt Greek political elites – should be written off. Unlike Paul I also think the Greek political class including the new Syriza elite have to accept some responsibility. I do not admire Greece’s refusal to show any EU solidarity in its approach to stabilising the western Balkans, where Greek’s ultra-nationalist stance is destructive.

The arrival this summer and autumn of waves of refugees/migrants undermines and does not confirm Paul’s thesis about the EU being a monolith. On the contrary we have seen the vigorous resistance of national governments and national public opinions against accepting anything proposed by the European Commission.

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Oct 19 2015

Lies, damned lies and statistics on the UK’s EU membership

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By Iain Begg

The launch in the last few days of groups to campaign for and against UK membership of the European Union has, predictably, seen the publication of claims and counter-claims about the costs and benefits. Anyone hoping for clarity from these data is, however, bound to be disappointed, as the numbers being bandied about are, with few exceptions, more likely to be misleading or downright wrong than helpful.

  • According to Britain Stronger in Europe ‘our economic partnership with Europe is worth £3000 per year to every household’ and part of the reason is that ‘the average person in Britain saves around £450 a year because trading with Europe drives down the price of goods and services’.
  • Meanwhile Vote Leave tells us that ‘Britain sends over £350 million to the European Union each week’ and goes on to highlight ‘£19.4 billion – the amount the UK would save by no longer having to contribute to the EU budget and invest in our priorities’.
  • Its competitor on the ‘no’ side, Leave.EU says that ‘leaving the EU could make the average UK household £933 better off. Freedom from excessive regulations and contributions to the EU budget will significantly lower costs for business and save the treasury billions of pounds per year’.

The first thing those of us asked to judge the veracity of the claims should become accustomed to saying is ‘it deLondon_Thames_Sunset_panorama_-_Feb_2008pends’. Nearly every figure relies on some sort of assumption and, unsurprisingly, if you want a negative figure, you assume the worst, and vice versa. As the persistent misrepresentation of the 3 million jobs associated with the EU as being ‘at risk’ outside the EU shows, politicians often blithely ignore the small print on estimates.

There are also little tricks of the trade that are used to stretch a point or to obfuscate what is being measured. Notice, for example, that one of the BSE (did anyone ponder the likely acronym?) figures quoted above is per person and the other is per household, but how they relate to each other is not explained. Notice, too, that the VL arithmetic is a tad dubious: £350 per week times 52 weeks is £18.2 billion, not 19.4.

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Oct 16 2015

Why the EU gets in the way of refugee solidarity

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By Gregor Noll

Can the migration across the Mediterranean really be considered a security threat? The European Council, the Council of Ministers and implicitly also the Parliament are dealing with the flight over the Mediterranean from a narrowly protectionist perspective.

The actions that were decided by the European Council on 23 April 2015 essentially reproduce the policies that have proved to create, rather than reduce, risky migration strategies for those in need of protection and others. At the top of the agenda is fighting human “trafficking” (it is noteworthy that the Council uses an erroneous legal term for a phenomenon that constitutes human smuggling).

The second issue on the agenda is the decision to increase presence on the Mediterranean Women_and_children_among_Syrian_refugees_striking_at_the_platform_of_Budapest_Keleti_railway_station._Refugee_crisis._Budapest,_Hungarywith additional vessels, planes and personnel. To cooperate with countries of origin and transit is the third issue on the agenda, while a commitment to increase internal solidarity and responsibility is last on the action program.

All four issues – the criminalization of migration, tougher border control, pressure on non-EU states and finally an increase in solidarity – have always been seen as the solution to real and imagined migration crises in Europe since the fall of the Wall. At the same time the UN High Commissioner for Refugees has found that the number of refugees in the world has not been this high since the Second World War.

This reiteration has something forced about it; there is reason to seek the structural causes behind it in EU history and politics. At the same time we notice an escalation; the EU is planning to use force against smugglers and their property outside EU territory, in analogy with the operation Atalanta that targets pirates outside the Somali coast.

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Oct 8 2015

Finnish competitiveness-raising policies and their discontents

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By Paul Jonker-Hoffren

Although Finnish politics have been concerned about the country’s competitiveness for quite a while now, the public discussion reached a temporary climax with PM Juha Sipilä’s televised speech late September. In this widely discussed speech, he argues, through various clever rhetorical devices, that Finland’s competitiveness is at stake and that something has to be done about rising state indebtedness.

To some observers, the policies advocated seemed to come straight from the employers’ federations’ pen. For the Finnish labour movement, the key sticking point was not so much the content as the way this content was presented. The labour movement felt (quite 55fc89751c5ef.imagecorrectly) that the government intended to interfere with issues that are dealt with in Finland through collective agreements and negotiations between labour market actors – instead of through coercive legislation. As an immediate result of the Prime Minister’s speech, the labour movement organized a political protest in Helsinki, which was attended by some 10 000 people. This protest is significant, because it was the first large scale political protest against a government in years.

How did we get to this situation where the government feels compelled to enact radical legislation, which erases long-standing trust between negotiation partners as well as changing the rules of the game in Finnish labour market relations? Moreover, what happens next?

To understand the atmosphere of crisis in Finland, it is useful to recap some major developments in the Finnish economy since 2008. First, the pillar of Finnish exports, the pulp and paper industry has gone through a harsh restructuring. It seems that for the moment, pulp and paper exports to the rest of the world are doing relatively well. But earlier, many people lost their jobs with factory closings. Another big hit to the Finnish economy was the downfall of Nokia. And a final critical development was the sanctions regime against Russia (one of Finland’s main trading partners). I wrote about these issues here.

Furthermore, labour market relations have seen a specific development as well. In 2008, the employers’ side announced that it did not want centralized income policies anymore. This was followed by a period (2007-2011) of sectoral agreements, which, as empirical literature shows, leads to higher wage increases than central or local bargaining. In 2011 a leaner kind of centralized agreement was concluded, followed by the Growth and Employment Agreement of 2013, which featured extremely moderate wage increases. The core focus of that agreement was restoration of Finnish (export) competitiveness.

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