The two countries with most serious chances of becoming the 28th and 29th member of the EU are Croatia and Iceland. The progress towards membership of both seemed straightforward due to their compliance with many EU’s policies, especially in the case of Iceland. However reality proved to be different.

Slovenia’s determination to use its veto powers in order to solve a border dispute with Croatia delayed the negotiations with the latter. After most of 2009 was lost in disputs, the two former Yugoslav republics found common ground and negotiations resumed. However the last intergovernmental conference saw a failure to open new negotiation chapters, again due to Slovenia’a objections.

The resolution of the border dispute as seen by Slovenia.

Iceland is a member of the Schengen zone, complies with most EU policies, has a higher than the average European living standard (ranked no.1 on quality of life in the world in 2008) and is rather small country (320,000 people) which in theory meant negotiations would go fast and smootly. The two issues that have and will prove to hinder country’s path to membership are the terms of the common fisheries policy and the settling of claims by continental clients of collapsed Icelandic banks. The latter might appear quite problematic given the latest developments.

Yesterday (Jan. 5) the  president of Iceland refused to sign a bill that would set the framework for repaying €3,8 bn. to British and Dutch clients of the collapsed Icesave bank. The repayment is crucial in securing Britain’s and Netherland’s consent for opening negotiations with Iceland. The sum would have represented around 40% of Icelandic GDP and although the payment would be stretched in time until around 2024, it is seen as too heavy burden by most Icelanders. Consecutively, more than 56 000 citizens petitioned the president asking him not to sign the bill.

President Ólafur Ragnar Grímsson of Iceland.

It seems that in both cases national interests come in conflict with the integration process - the Croatia-Slovenia border dispute as well as the three-way Icesave issue. These are no precedents as Slovenia itself was forced to withdraw all claims against Italy to be allowed to join the EU in 2004. Once Croatia becomes an EU members it may well be expected that the country puts conditions on Serbia’s accession given the recent history of both.

It is obvious now that the 2011 Croatian accession target will not be met. Same will hold for Iceland’a 2012 aspirations should the Icesave case remains unsolved in the near future. No one doubts that both counties could make better EU members than the likes of Bulgaria and Romania yet they suffer from other factors. Time will tell whether they are just applying for membership in the wrong time or are too stubborn in defending their own stance. In any case, under the current circumstances the EU looks set to see off the economic crisis in its present format.

No more meter readers...

Loads of initiatives are being taken by European Union member states to
fight climate change.

Personally, I strongly believe that Brussels should focus on energy
efficiency and alternative energies.

Following the 27 EU leaders endorsement to the European Commission’s
proposed 20-20-20 energy and climate change targets in March 2007,
bureaucrats in Berlaymont Building worked on the so-called
”energy-efficient, low-carbon economy”.

This action plan included several technology related initiatives to
facilitate this transition in mentality, including Smart Meters.

It is believed that such application could reduce global CO2 emissions by
15% by 2020.

Malta is supporting the European Commission call to boost energy efficient
devices and introduce smart metering devices.

Malta’s state-owned energy corporation, Enemalta earlier this year started
installing the first 5,000 smart meters and water probes as part of a
pilot project.

Smart meters will enable remote, real time and accurate meter reading,
removing the need for physical meter reading and billing based on
consumption estimates.

Click here to view the embedded video.

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Preparing my favorite cooked breakfast of bacon & eggs with fried tomatoes and baked beans on toast I stumbled upon another sign of food inflation. While this depicted can of baked beans costs an unchanged 89 Euro cents in my local supermarket I get less product for the same price.
Opening the 10 cm high can one discovers that it is only filled with 75% beans. Heinz has become generous with its tomato sauce which fills the top 2.8cm of the can and I can remember very clearly there used to be more beans in the can 2 years ago. Under the assumption that Heinz used to fill the cans with 90% beans I arrive at an earlier kilo price of €2.68.
At the lower fill rate of 75% one has now to pay €3.21 to get a kilo of this Heinz classic.
This is a 20% price hike within 2 years or some 9.8% p.a. Being highly skeptical about official consumer price indices I prefer such on-the-ground research, this time in the comfort of my own kitchen. Like stamps there cannot be any hedonic changes applied to baked beans. It’s the same product for several decades. Although EU laws require food distributors to display a kilo price consumers are being tricked this way in a multitude of food items. My favorite cookie bar still costs the same, but on opening the wrapping I find a vacuum of 2 centimeters in a 6 cm long wrapper. This is one more sign that companies cut corners in order to keep the price tags per unit unchanged.
It is ironic that consumer surveys on prices always result in a much higher rate of price inflation than the respective national statistics office’s calculations. Prices have roughly doubled in Austria since the introduction of the Euro. Former central bank governor Klaus Liebscher’s statements that consumers “feel higher inflation” made him always appear a bit helpless when defending the non-existent strength of the Euro.

The Euro Is Doomed to Fail as All Monetary Unions Did in the Past
If you are in the mood to read more about the doomed Euro currency, download this PDF from Black Swan Capital, titled “Preparing for a Breakup in the European Monetary Union.” Short reminder: All currency unions in history ended with a complete economic mess due to wide differences in the terms of trade that varied regionally. From a historic perspective the Euro will share the same fate.

While I certainly oppose Milton Friedman’s supply side theories Black Swan noted this smart statement made before the introduction of the Euro:

It seems to me that Europe, especially with the addition of more countries, is becoming ever more susceptible to any asymmetric shock. Sooner or later, when the global economy hits a real bump, Europe’s internal contradictions will tear it apart.

Parsing Black Swans research note I am reminded about the sunny summer Maastricht convergence criteria. They mandate the following.

1. Inflation rate: No more than 1.5 percentage points higher than the average of the three best performing (lowest inflation) member states of the EU.
2. The annual government deficit to gross domestic product (GDP) must not exceed 3%.
3. The ratio of gross government debt to GDP must not exceed 60%.
4. Nominal long-term interest rate must not be more than two percentage points higher than in the three lowest inflation member states.

These criteria were invented 10 years ago when it was unimaginable for the big majority of “experts” that Europe would ever face again strong economic headwinds as we witness them now. Thanks to these optimists there are no official strategies as how to unwind from the Euro currency union without major collateral damage.
I faintly remember that the idiotic Maastricht criteria also include punishment rules if a country diverges too far. Seeing only negative convergences these days like rapidly rising unemployment, ballooning government debts and tricks on official inflation figures I arrive at the sad conclusion that applying fines on weak Euro members can be compared to a man who stumbled and falls and the arriving paramedics jump on his back.
Brussels, we have a problem and you are cooking up the wrong medicine. Celebrating black masses at the grave of John Maynard Keynes are certainly not the solution. You cannot fight monetary inflation by printing ever more Euros for a sagging economy.

The “European perspective” is key concept for integrating western Balkans into EU. The main carrot for ordinary people during this millennium has been visa-free travel after some 17 years of isolation. On 15^th July 2009, the European Commission submitted its proposal on visa-free travel for citizens of Western Balkans countries. After a non-binding opinion of the European parliament on the EC proposal the Council comprising EU interior ministers will take the official vote and at best case free travel to Schengen area could be possible January 2010.

But not for all! European perspective will be true only for some when visa ban still will be existing for some countries or even to some ethnic groups inside a country. Instead of connecting people of western Balkans with western Europe the EC proposal will divide again people according their nationality or location. From EU’s side the reason for division is seen technical related to common standards; from western Balkan’s perspective the reasons for division can be seen political or even related to religion.

The Schengen wall was erected against most of the Balkans during the early 1990s, when the breakup of former Yugoslavia created an image was ongoing and bloody wars were spreading from Croatia to Bosnia and Kosovo. Before breakup the citizens of Yugoslavia enjoyed relatively free travel possibilities if compared to rest of countries in central and eastern Europe. After visa ban and trade embarco only the most criminal elements found it easiest to evade the regulations.

EC proposal

Briefly of the five regional states involved in the visa-liberalisation process, Serbia, Macedonia, and Montenegro have been approved for visa-free travel within the EU, as of January 2010. Bosnia and Herzegovina and Albania have been told that they might receive EU visa-free status later. Kosovo, on the other hand, has not been included in the process, as five of the 27 members of the EU have not recognised Kosovo’s independence. (Source BalkanInsight )

An EU law (Council Regulation 539/2001) lists the countries whose nationals need a visa to enter the Schengen area (Schengen Black List) and those whose nationals do not (Schengen White List). The Commission proposes following:

• visa-free travel for the citizens of Macedonia since this country has fulfilled all the conditions listed in the visa roadmap; technically, this should be done by moving Macedonia from the “black list” onto the “white list” annexed to the relevant Council Regulation;
• visa-free travel for the citizens of Serbia and Montenegro on condition that these two countries meet a few remaining conditions by the date of adoption of the proposal by EU member states;
• exclusion from visa-free regime for Serbia of holders of the new Serbian biometric passport who reside in Kosovo and persons whose citizenship certificate has been issued for Kosovo, due to “security concerns regarding in particular the potential for illegal migration from persons residing in Kosovo”; the new passport can be issued to Kosovo residents solely by the Coordination Directorate at the Interior Ministry of Serbia, which will make these passports recognisable;
• formalisation of the existing visa requirement for Kosovo residents by adding Kosovo (under UNSC Resolution 1244/99) to the black list, under the special category of “entities and territorial authorities that are not recognised as states by at least one member state” where the Palestinian Authority and Taiwan are already listed;
• no change of the status for Albania and Bosnia and Herzegovina, which remain on the black list since they have not fulfilled all conditions, but the Commission “intends to propose transferring them to the positive list as soon as they have fulfilled the necessary benchmarks”.

(Source and more information about “White list project” one may find from web-pages of European Stability Initiative – ESI – institute)

Divided rights in Bosnia-Herzegovina

Bosnia-Herzegovina is an international creature established by Dayton Agreement on 1995 which split Bosnia into two semi-independent entities – the Serb Republic and the Muslim-Croat Federation. Three ethnic groups – Croats, Serbs and Bosniaks – are trying to lead state together and separately. Entities are united by weak central institutions, while at same time administration is quite heavy loaded with some 170 ministers and whole system is supervised by international presence.

Most Bosnian Croats already have Croatian passports and since Republika Srpska residents can apply for and obtain Serbian passports, the EC proposal for Bosnia would affect the majority of Bosniaks and those Bosnian Serbs, Jews and others that live in the Muslim-Croat Federation. The EU’s message now weakens already non-existent national identity and opposes EU’s earlier multi-ethnic ideals.

While earlier dispute was between Serbs and Bosniaks, last year showed serious dissension between Bosniaks and Croats and EC proposal will make ethnic divisions deeper at time when Bosnia-Herzegovina is on the stage of transition from an international protectorate to one responsible for its own reform dynamics. So instead of an inevitable EU member, Bosnia is more likely to remain an unwelcome, dysfunctional and divided country, with an aggrieved Bosniak (Muslim) plurality, a frustrated, increasingly defensive Serb entity, and an anxious, existentially threatened Croat population. (More about Dayton and situation in BiH e.g. In My article “Bosnia Collapsing” )

Mess-up in Kosovo continues

The Kosovo case is dividing international community as well EU. EU started its huge rule & law mission late 2008 under UN umbrella. Besides UN/UNMIK and EU/EULEX there is also other players twisting arms who is leading the international protectorate. There is European Union High Representative who simultaneously leads International Community Office wondering his role, same time Nato-troops (KFOR) tries to keep ethnic tensions moderate, OSCE do not know its role nor length of its mission’s mandate in Kosovo, EU delegation office, few influential foreign liaison representatives and of course sc. Kosovo government based to local tribes. It shows amazing creativity to establish this kind organizational nightmare in one tiny province and more amazing is that after nearly nine years of international administration and capacity building and squandered billions of Euros both the administration and the situation on the ground are beneath all criticism.

According the new report made by Minority Rights Group International (MRG) gives a bare picture about worsening situation of minority rights in today’s Kosovo. Instead to return to their homes after ethnic cleansing implemented by Kosovo Albanians after Nato intervention 1999 minorities are beginning to leave Kosovo, because they face exclusion and discrimination. This negative process is happening in international protectorate where EU is implementing one of its biggest civil crisis management operations and once again demonstrates the huge gap between high flown ideas, aims, programmes and statements made in Brussels and their implementation on the ground.

In the letter to the EU, the NGOs state that Kosovo`s exclusion from the visa-liberalisation process threatens to transform Kosovo “into a ghetto without any way out”. The head of the Club for Foreign Policy and co-signatory of the letter, Veton Surroi said that Kosovo’s citizens would be further isolated by the EU’s decision, hindering the integration of the country.

“Today, one of the [factors] which impinge on the dignity of Kosovo’s citizens [...] is the issue of visas. Go to any embassy in Kosovo or in Skopje today and you will see how degrading the approach towards Kosovo’s citizens has become. And today we are worse off than we were 15-20 years ago”, Surroi said in a press conference on Tuesday. (Source BalkanInsight)

In line with the Commission’s (visa-free) proposal, the 3.5 million Serbs living outside Serbia, including the Serbs of Bosnia, will be eligible to receive Serbian passports allowing visa-free travel within the EU. The residents of Kosovo, meanwhile, will not. The argument for discrimination is a follow-up of of administrative mess-up mentioned earlier. According EC proposal

“Since 1999 Serbia has not had the possibility to make on the spot verifications regarding persons residing in Kosovo under UNSCR 1244/99 … the Commission and the Member States experts were not in a position to verify the issuing of breeder documents and the integrity and security of the procedures followed by the Serbian authorities for the verification of the correctness of data submitted by persons residing in Kosovo when applying for new Serbian biometric passports”.

So when EU and international have not implemented during last 10 years UN resolution the residents in international protectorate must suffer. From the bright side now the majority of former Kosovo Serbs can have visa-free travel abroad as they are residing in Serbia because they could not return to their homes in Kosovo after ethnic cleansing made by Kosovo Albanians on 1999 and 2004. (More about this topic e.g. in my article “Kosovo March/February 17^th: Pogrom with Prize”)

Politics or standards

For one hand one can see some European hypocrisy towards the region as in both cases – Bosnia-Herzegovina and Kosovo – EU and international community have guided and supervised these regions towards “European standards”. So has EU failed with this task as those countries without outside supervision are getting visa-freedom earlier?

There is also well based arguments that the EU is isolating three mainly Muslim European states/regions – Albania, BiH and Kosovo - and Turkey as some in the EU fear the presence of such a large, Muslim community inside traditionally Christian Europe. Of course EU denies political aspects and highlights only the technical ones but from Balkan perspective the impression can differ.

Be the proposal based on political or technical reasons the outcome now however is that while visa-freedom sure is good step forward for (FYR) Macedonia, Serbia and Montenegro the Commission’s proposal same the gulf between ethnic groups in Bosnia-Herzegovina and Kosovo will deepen further.

]]> http://elections.thinkaboutit.eu/2009/07/eus-visa-freedom-dividing-balkans/feed/ http://elections.thinkaboutit.eu/2009/07/markets-show-an-easing-of-banks-stress-in-the-eurozone/ http://elections.thinkaboutit.eu/2009/07/markets-show-an-easing-of-banks-stress-in-the-eurozone/#comments Wed, 22 Jul 2009 08:17:35 +0000 Toni STRAKA http://elections.thinkaboutit.eu/?p=5858 ECB president Jean-Claude Trichet was quite complacent at the last council meeting. And for the first time since the beginning of what was first called subprime, then credit crunch, only to morph into a recession by now, markets seem to agree with Trichet.
There is a glimmer at the far off end of the tunnel of hope. Euro interbank markets spreads are currently the lowest in a comparison with Federal Reserve Notes and Pound Sterling, Trichet was happy to tell an audience at the University of Munich on Monday.

GRAPH: Mr. Market says there is less stress in the system than there was last year. The long term picture leaves a lot to desire, though. Chart courtesy of ECB.

Read Trichet’s speech here.
UPDATE: FT Alphaville writer Izabella Kaminska has done the work for all on such a humid summer day. Click here for her excerpts from Trichet’s speech, covering the ECB’s rubbish in its portfolio,, i.e. “Other assets.”

The Srebrenica case is in headlines again – like during every anniversary – and also the story seems repeat itself from year to year. More light is however coming and the real (political) context is gaining space also in mainstream media.  Former Hague Tribunal spokeswoman Florence Hartmann referring the arrest of Radovan Karadzic told earlier, that as “Karadžić has finally been arrested, he can tell a lot about secret deals that led to the fall of Srebrenica. His testimony represents a great risk for the great western powers.” (SourceB92)

The recent past of Bosnia-Herzegovina is violent and there was not only one brutal side – there were three of them. This past has its impact today and real truth behind successful propaganda about events of war 1992-95 is still unclear. This year I expect that the trial of war crime suspect Radovan Karadzic will clarify a bit of this bloody past when both prosecutor and defense are making their case. Statements of ICTY insider arouse few questions to my mind, such as following:

Political aims behind events?

The three points of the triangle represent the nation’s three ethnic groups: Bosniaks, Croats, and Serbs. The triangle itself represents the geographic shape of the nation itself. The colors represent neutrality and peace, whereas the stars represent Europe.

Srebrenica case should finally put into its political context, for media it would be useful to see the case as part of lobbying/marketing to achieve political aims. It seems that the town was deliberately sacrificed by the Presidency of the Bosnia and the Military High Command in order to encourage NATO intervention. From the the U.N. Secretary General’s 1999 Report on Srebrenica, it emerges that the idea of a “Srebrenica massacre” was planned at a September 1993 meeting in Sarajevo between Bosnian Muslim president Alija Izetbegovic and members of his Muslim party from Srebrenica. On the agenda was a Serb proposal to exchange Srebrenica and Zepa for some territories around Sarajevo as part of a peace settlement.

“The delegation opposed the idea, and the subject was not discussed further. Some surviving members of the Srebrenica delegation have stated that President Izetbegovic also told them he had learned that a NATO intervention in Bosnia and Herzegovina was possible, but could only occur if the Serbs were to break into Srebrenica, killing at least 5,000 of its people.”  So from here are the numbers originating, sadly the western mainstream media went to this propaganda trap. * Was the secret deal made about Srebrenica (Bosnian Government and the Bosnian Serb party, possibly with the knowledge of one or more Contact Group States, had an understanding that Srebrenica would not be vigorously defended by the Bosniacs in return for an undertaking by the Serbs not to vigorously defend territory around Sarajevo. The capture of Srebrenica made it easier for the Bosniacs and Serbs to agree on the territorial basis of a peace settlement. The result of the tragedy in Srebrenica contributed in some ways to the conclusion of a peace agreement — by galvanizing the will of the international community, by distracting the Serbs from the coming Croatian attack, by reducing the vulnerability of UNPROFOR personnel to hostage-taking, and by making certain territorial questions easier for the parties to resolve).

Source: UN report “Memorandum on war crimes and crimes and genocide in eastern Bosnia (communes of Bratunac, Skelani and Srebrenica) committed against the Serbian population from April 1992 to April 1993”    and some other material can be found from my blog’s Document library

Secret deals?

During ICTY trial of Mr. Karadzic there has been discussion if the Holbrooke-Karadzic deal is existing, like the accused has said ( Karadzic claims that his going into hiding formed part of a deal with Holbrooke, which included his withdrawal from public life in exchange for not being arrested).  However more interesting secret deal is related to international peace settlement and the role which Srebrenica plays in that context.

One theory is following: Bosnian Government and the Bosnian Serb party, possibly with the knowledge of one or more Contact Group States, had an understanding that Srebrenica would not be vigorously defended by the Bosniacs in return for an undertaking by the Serbs not to vigorously defend territory around Sarajevo. The capture of Srebrenica made it easier for the Bosniacs and Serbs to agree on the territorial basis of a peace settlement. The result of the tragedy in Srebrenica contributed in some ways to the conclusion of a peace agreement — by galvanizing the will of the international community, by distracting the Serbs from the coming Croatian attack, by reducing the vulnerability of UNPROFOR personnel to hostage-taking, and by making certain territorial questions easier for the parties to resolve?

The actions of ruling Bosnian (Muslim) party (SDA) and its leader – Alija Izetbegovic – during Srebrenica events on July 1995 seems to confirm that a deal about the fate of town had been made earlier.  Author John Schindler, a professor at the U.S. Naval War College and a former National Security Agency analyst, concludes in his book “Unholy Terror: Bosnia, Al-Qa’ida and the Rise of Global Jihad” describes how local Muslim leaders begged Sarajevo for assistance. None came, and the town fell to the Serbs within five days. Schindler proves that Bosnian Army signals intelligence had advance warning of a Serb offensive, and did nothing, and that even when armed Bosnian soldiers taking with them civilians (and not the simple unarmed masses that the Western media tacitly alleges) tried to contact their kin, no help came. Shockingly, on the morning the town fell to the Serbs, “there was a meeting of the (SDA) party leadership and the top officers of the General Staff in Sarajevo; the enclave wasn’t on the agenda.

Pre-Srebrenica events?

The pre-Srebrenica events are often forgotten. There was also a long history of atrocious Bosnian Muslim violence and treachery perpetrated against Bosnian Serbs leading up to the regretable events of 1995. The most cruel crimes were committed by the 3rd Corps 7th Muslim Mountain Brigade, to which were subordinated foreign Muslim fighters, also known as mujahedeen, who came from Islamic countries through Osama bin Laden’s terrorist network. This sc. “demilitarized safe area of Srebrenica” served as the safe haven to this brigade lead by Bosnian Muslim leader of Srebrenica forces Naser Oric and his people went from that almost unconquerable place in the series of atrocious attacks on the near-by Serbian areas.

Top Muslim generals Halilovic and Hadzihasanovic easily admit that they had no intention to honor the disarmament of Srebrenica agreement.  They even did their best to arm Srebrenica war criminals. The two generals inform us that Srebrenica Muslims, already in April 1993, are organized in well formed military unit (the 28th Division), numbering 5.803 people. The “disarmament” scam left them quite well armed. The generals were able to admit that the unit had 1.947 automatic rifles, 27 submachine-guns, 15 machine-guns, 68 hand-held rocket launchers, all kinds of mortars, anti-armour, anti-missile, anti-aircraft launchers, rockets, guns…After the UN declared Srebrenica a safe haven in April 1993, the attacs continued. More about disarmament scam in ICTY files/Hague proceedings in documents “Disarming”Actually Meant - Arming of Srebrenica”

Author John Schindler, concludes in his book “Unholy Terror: Bosnia, Al-Qa’ida and the Rise of Global Jihad” that the facts were incompatible with the standard version of events in Srebrenica.  Schindler points out that Izetbegovic government had been using “safe zone” to stage attacks on Serbs in neighboring villages for three years and over 3,000 Serbs including 1,300 civilians were massacred by Muslims in Srebrenica municipality, “in many cases butchered, tortured, mutilated, burned alive, or decapitated. The main figure often ultimately responsible was the Bosnian Army’s local commander, the exceptionally brutal Naser Oric, who used Muslims as human shields against the Serbs, and who eliminated enemies real or perceived, even within his own units. Oric delighted in showing Western journalists his home-made videos depicting the beheadings of Serb prisoners (p. 229). However, even as talk of a Serb offensive was growing in early 1995, Sarajevo’s local strongman was inexplicably recalled, leaving Srebrenica-area Muslims without effective leadership: “in April, Oric and his senior staff left the town under cover of darkness, headed for Tuzla, ostensibly to take a command training course. He never returned (p. 230).

PR-game?

Even today’s headlines are describing Srebrenica with slogan  “worst civilian massacre in Europe since WWII”, there is also many arguments about political PR game behind exaggerated death numbers, misrepresentation of early reports and manipulated pictures.  Probably a massacre happened but maybe not like that picture which main stream media has offered. Are we finally getting more wider picture about connections between numbers (Srebrenica figure game), reports (as mean of one-sided propaganda) and political PR marketing considering events in Balkans during 1990s?

The Aim of PR game played by Bosnian Muslims was to get US to fight aside of them.  One part to achieve US involvement was to gain sympathy in West by implementing attacks towards its own citizens.  Republican Policy Comittee of US Senate give good description about these self-inflicted atrocities as follows:

Almost since the beginning of the Bosnian war in the spring of 1992, there have been persistent reports — readily found in the European media but little reported in the United States — that civilian deaths in Muslim-held Sarajevo attributed to the Bosnian Serb Army were in some cases actually inflicted by operatives of the Izetbegovic regime in an (ultimately successful) effort to secure American intervention on Sarajevo’s behalf. These allegations include instances of sniping at civilians as well as three major explosions, attributed to Serbian mortar fire, that claimed the lives of dozens of people and, in each case, resulted in the international community’s taking measures against the Muslims’ Serb enemies. (The three explosions were: (1) the May 27, 1992, “breadline massacre,” which was reported to have killed 16 people and which resulted in economic sanctions on the Bosnian Serbs and rump Yugoslavia; (2) the February 5, 1994, Markale “market massacre,” killing 68 and resulting in selective NATO air strikes and an ultimatum to the Serbs to withdraw their heavy weapons from the area near Sarajevo; and (3) the August 28, 1995 “second market massacre,” killing 37 and resulting in large-scale NATO air strikes, eventually leading to the Dayton agreement and the deployment of IFOR.)

Edward S. Herman - a Professor Emeritus of Finance at the Wharton School, University of Pennsylvania -  gives one example of successful propaganda in his article on July 7^th 2005 “The Politics of the Srebrenica Massacre”  I quote:

One of the most important propaganda lies of the 1990s  featured the Serb-run Trnopolje camp, visited by Britain’s ITN reporters in  August 1992. These reporters photographed  the resident Fikret Alic, showing him emaciated and seemingly inside a concentration camp fence. In fact,  Fikret Alic was in a transit camp, was a sick man (and was sick with tuberculosis long before reaching the camp), was not in any way representative of others in the camp, and was soon able to move to Sweden. Furthermore, the fence was around the photographers, not the man photographed. [18] But this hugely dishonest photo was featured everywhere in the West as proving a  Serb-organized Auschwitz, was denounced by NATO high officials, and helped provide the moral basis for the creation of  the ICTY and its clear focus on Serb evil.

The message went through western mainstream media – it was easy to believe that the Bosnian Serb Army organized and executed a premeditated slaughter of 8,000 unarmed Bosnian Muslim civilian males; the case has become a crucial element in portraying Serbs, collectively, as genocidal aggressors.  This picture has stayed stabile in spite of evidences that Izetbegovic’s own party, the SDA, specialized in staged mortar attacks on civilians which were then blamed on Bosnian Serb forces. As described above by RPC of US Senate release this operational tactic of the Sarajevo regime’s Special Forces (AID) was designed to gain sympathy and invite NATO intervention on behalf of the Izetbegovic regime … and it was successful.

In Balkans Srebrenica was not only case being part of bigger political came and fabricated manipulation; few years later the same tactic was implemented in Kosovo e.g with the Racak case was similar (More about this one may find from my article “High pressure to fabricate Racak reports“).  After over decade it is still difficult in western media to admit that also Serbs were victims of war crimes - instead from year to year media repeats one sided picture about Serbs created mid 90s when US selected its side. Also the same manipulated approach was later applied in Kosovo (Other side of story can be found e.g. from my article “Kosovo March/February: Pogrom with Prize” and “10th anniversary of Nato’s attack on Serbia“. What is amasing for me is how easy the mainstream media can be used for political manipulation.

Number game?

Srebrenica, the figure of 8,000 originated with September 1995 announcements by the International Committee of the Red Cross that it was seeking information about some 3,000 men reportedly detained as well as about some 5,000 who had fled to central Bosnia. Neither the Bosnian Serbs nor the Muslims were ever forthcoming with whatever information they had, and the “8,000″ figure has tended ever since to be repeated as an established total of “Muslim men and boys executed by Serb forces”.Despite unprecedented efforts over the past ten years to recover bodies from the area around Srebrenica, less than 3,000 have been exhumed, and these include soldiers and others-Serb as well as Muslim-who died in the vicious combats that took place during three years of war. Only a fraction have been identified.

The above map clearly explains why round 2,000 Srebrenica Muslims lost their lives. The decision that the 28th Muslim Division should refuse to lay down its arms and embark on a break-through along a 100km-long route in the hardest of military operations, for which it was not prepared in view of the prior retreat of command personnel, amounted to a conscious sacrifice of round two thousand Muslim men of military age. The Western allies would do their best to present it as no less than genocide.

Edward S.Herman gives a short history lesson about number game in his article “The Politics of the Srebrenica Massacre” as follows

Both before and after Srebrenica lying about numbers killed was also standard practice, helpful in sustaining the dominant narrative. For Bosnia, in December 1992 the Bosnian Muslim government claimed 128,444 deaths of  their forces and people, a number which grew to 200,000 by June 1993, rising to 250,000 in 1994.  These figures were swallowed without a qualm by Western politicians, media, and intellectual war-campaigners, with Clinton himself using the 250,000 figure in a speech in November 1995. Former State Department official George Kenney has long questioned these figures and marveled at media gullibility in accepting these claims without the least interest in verification. His own estimate ran between 25,000 and 60,000.  More recently, a study sponsored by the Norwegian government  estimated the Bosnian war dead as 80,000, and one sponsored by the Hague Tribunal itself came up with a figure of 102,000 dead.  Neither of these studies has been reported on in the U.S. media, which had regularly offered its readers/listeners the inflated numbers.A similar inflation process took place during the 78-day NATO bombing war in 1999, with high U.S. officials at various moments claiming 100,000, 250,000 and 500,000 Serb killings of  Kosovo Albanians, along with the lavish use of the word “genocide” to describe Serb actions in Kosovo.  This figure gradually shrank to 11,000, and has remained there despite the fact that only some 4,000 bodies were found in one of the most intense forensic searches in history, and with unknown numbers of those bodies combatants,  Serbs, and  civilian victims of  U.S. bombing. But  the 11,000 must be valid because the NATO governments and ICTY say it is, and Michael Ignatieff assured readers of the New York Times that “whether those 11,334 bodies will be found  depends on whether the Serb military and the police removed them.

The serial lying had been largely unchallenged in the mainstream, the demonization process and good-versus-evil dichotomy had been well established, the ICTY and UN leadership were closely following the agenda of  the United States and its NATO allies, and the media were on board as co-belligerents. The Srebrenica events had a number of features that made it possible to claim 8,000 “men and boys” executed. One was the confusion and uncertainty about the fate of the  fleeing Bosnian Muslim forces, some reaching Tuzla safely, some killed in the fighting, and some captured. The 8,000 figure was first provided by the Red Cross, based on their crude estimate that the BSA had captured 3,000 men and that 5,000 were reported “missing.” There are also lists of missing, but these lists are badly flawed, with duplications, individuals listed who had died before July 1995, who fled to avoid BSA service, or who registered to vote in 1997,  and they include individuals who died in battle or reached safety or were captured and assumed a new existence elsewhere. But because of its key political role for the United States,  Bosnian Muslims and Croats, and an almost religious ardour of belief in this claim, Sebrenica has been immune to evidence.  From the beginning until today the number has been taken as a given, a higher truth, the questioning of which would show a lack of faith and very likely “apologetics” for the demon.

This nice round number lives on today in the face of a failure to find  the executed bodies and  despite the absence of  a  single satellite photo showing executions, bodies, digging, or trucks transporting bodies for reburial.   The media have played an important role in making the Srebrenica massacre a propaganda triumph. As noted earlier, the media had become a co-belligerent by 1991, and all standards of  objectivity disappeared in their subservience to the pro-Bosnian Muslim and anti-Serb agenda.

The transformation of Srebrenica into myth

Jared Israel concludes in his article published in Emperor’s Clothes  that

Why should people read articles challenging this massacre story? After all, it’s consistent with what one has been told: that Srebrenica was a safe haven where the UN was supposed to protect Muslims from supposedly murderous Serbs; that the Muslims, portrayed in the media as an oppressed group, were moderate and tolerant while the Serbs were supposedly fanatical Muslim-haters with a Hitlerian vision of a mono-ethnic state; that therefore it was no surprise that when the Serbs took Srebrenica, they supposedly killed thousands of Muslims as fast as they could.

John Schindler concludes in his book mentioned earlier that all sides committed atrocities, but those of Muslims generally went unreported. For example,

The number of Christians murdered in Sarajevo during the war by Muslim military and police, right under the noses of Western journalists, is at least in the many hundreds and probably in the low thousands. Between 1992 and 1995, some 1,300 Serb civilians were liquidated by Muslim troops based at Srebrenica; this was the precursor to the infamous July 1995 Serb offensive against that town.

While Muslims were certainly expelled from their homes in large numbers, so were Croats (Catholics) and Serbs (Orthodox), but only Muslim victims and refugees were really considered newsworthy.

Srebrenica – a hoax or massacre?  I would say both; a hoax due the well planned and implemented PR maneuver , a massacre when the Serbs went to trap and used brutal force also against civilians.  When the Serbs got a tactical win in warfare the Muslims got US as their strategic ally with Serb demonization.  In addition to human sacrifice – victims from all ethnic groups, civilians and soldiers/mercenaries – one loser was the investigative journalism and media on the whole by accepting one-sided truth in Bosnia and since then also in future conflicts.

It is notable that the ICTY has never called the Croat ethnic cleansing of  250,000 Krajina Serbs “genocide” although in that case many women and children were killed and  the ethnic cleansing applied to a larger area and larger victim population than in Srebrenica. Perhaps the ICTY had accepted Richard Holbrooke’s  comic designation of  Krajina as a case of  “involuntary expulsions.” (More about “Operation Storm” in my article “Operation Storm – forgotten pogrom”

One can have different opinions about bias of ICTY but from my point of view it offers so far best forum to get some answer to questions mentioned before when both prosecutor and defence have made their case. Anyway the statements of Mrs.Hartmann – as well the book of her former boss del Ponte describing e.g. organ trafficking (More e.g. in “War crime selected – organ harvesting from Serbs by KLA”) of Serb civil people by Albanian mafia – are giving quite disgusting picture about realpolitik behind noble statements of international community.

But I think there is another thing that should be emphasized here. Our colleague and top 3 guy Hristo was, to my knowledge, the first to announce anywhere on the internet that Buzek is set to be the new president of the EP. He posted the news on the 9th of April, which is over 3 months ago. I think this goes to show that Th!nk About It is not only a room for debate and analysis, but also a source of first hand news, and that blogging in general is a source of meaningful and credible information.

Apart from this, I hope the vacation that everone took after the elections will be over after today’s innauguration of the new Parliament. Maybe some of you will also be part of Th!nk 2, but wouldn’t be nice to build some kind of competition with the second lot of th!nkers and show that we can be at least as active even outside the competition?

GRAPH: European map by credit rankings. The eventual bottoming out of the global margin call is probably as distant as the year 2011. Important translation: “sehr hohes Risiko” means “very high risk.” Chart courtesy APA/Coface. Click for larger image.

Revolution in Iran seems to happen only in western dreams and media. Protests took place only in Tehran and a few large cities and are now nearly disappeared. Smaller towns and rural areas have been very quiet whole the time after elections. The opposition may not yet have been defeated, but the problems are much deeper than calming the streets. The struggle inside ruling elite is continuing and one could estimate that Iran’s political system is now undergoing a major crisis of legitimacy over allegations of a fraudulent presidential elections.  So revolution is postponed in this still theocratic state.

Iran is one of the oldest existing civilizations on globe, its population is well educated young and big and it owns huge energy resources so the country can have sustainable success also in future as regional superpower.  From my point of view people in Iran know best how to develop their country without outside guidance – indeed foreign interference can only make situation worse as seen in history.  However for foreign countries it is extremely important to try understand developments in Iran and consider their future cooperation according that background. From western perspective the key question is if foreign policy of Iran is changing and if to which direction.

While U.S. and EU are still looking their positions related postelection situation in Iran the country itself appears to be caught between strategies: one that does not want to downgrade diplomatic relations with other nations for fear of international isolation, and another that is pushing the concept of foreign interference for domestic reasons.

U.S. interference

Tehran’s foreign policy, particularly its policies toward the U.S., has its own strategic logic, and is based on Iran’s ambitions and Tehran’s perception of what threatens them.

Iranians are deeply skeptical about American motives in the Middle East. In 1953, the CIA, with cooperation with Intelligence Service, triggered a coup that deposed the popular Prime Minister Mohammad Mosaddeq, who had nationalised Iran’s oil industry, monopolised by the British. Mossadeq had wanted to nationalise the Anglo-Iranian Oil Company in which the British had a majority share. The British and Americans organised a coup, put Mossadeq under house arrest and placed Pahlavi firmly in control as Shah.

Added to this are the insults and damages that the United States has inflicted on Iran over the past two-and-a-half decades. Iranians will never forget that the United States tilted toward Iraq in the Iran-Iraq war. By all accounts, Iran would have won the war if the United States had not interfered. Moreover, it is widely known that the United States provided poison gas and other chemical weapons to Iraq during that conflict.

Behind the soothing rhetoric of  “the promotion of democracy “, Washington’s actions aim to impose regimes that are opening their markets to the US without conditions and which are aligning themselves to their foreign policy claims Thierry Meyssan, a journalist and chairperson of Voltaire Network.  Meyssan describes in his article “Color revolution fails in Iran” -  two of U.S. tools for democracy promotion related also to Iran namely the National Endowment for Democracy (NED), created in 1982 and the United States Institute for Peace (USIP) in 1984; both of these institutions are organically intertwined. I quote:

Legally the NED is a not-for-profit organization under US law, financed by an annual grant voted by Congress as part of the State Department budget. In order to operate, this organization is co-financed by the US Agency for International Development (USAID), which is part of the State Department. This legal structure is used jointly as a cover by the American CIA, the British MI6 and the Australian ASIS (and occasionally by Canadian and New Zealand secret services).

The NED presents itself as an agency promoting democracy. It intervenes either directly or using one of its four tentacles: one designed to subvert unions, the second responsible for corrupting management organizations, the third for left-wing parties and the fourth for right-wing parties.

The operation conducted in 2009 in Iran belongs to the long list of pseudo revolutions. First, a 400 million dollar budget was voted in 2007 by Congress to orchestrate a « regime change » in Iran. This was in addition to the ad hoc budgets of the NED, the USAID, the CIA & Co. How this money is being used is unclear, but the three main recipients are the following: the Rafsanjani family, the Pahlavi family and the People’s Mujahedin of Iran. “Another is the presence in the UK of the Iranian opposition group MKO.” The MKO is the People’s Mujahedin Organisation, which was taken off the list of terrorist groups by the EU in January.

Western manuscript – Restore Monarchy project

What was the practical plan to change regime in Iran?  One quite well based option is described by William O.Beeman in an article “Washington might have picked Iran’s future king and premier” -published in Iran Press Service.  Of course IPS can be seen as biased media but the script shows how western interference can be seen from Iran’s perspective.  Anyway  Mr. Beeman is a writer and professor of anthropology at The University of Minnesota and he describes western script for regime change in Iran as follows:

The form of government would be a Constitutional Monarchy, with the Head of State being Reza Pahlavi, son of the former Shah, Mohammad Reza Pahlavi, who was deposed in the 1978-79 Islamic revolution, and Sohrab Sobhani as his Prime Minister. The Bush Administration apparently has a handpicked American “plumber” ready to go in Iran, much like Ahmed Chalabi (the leader of the Defence Department-backed Iraqi National Congress) in Iraq. This is Sohrab “Rob” Sobhani, an Iranian-American associated with the neoconservatives in Washington. With Reza Pahlavi as Shah, the 40-ish Sobhani would presumably be prime minister or president.

The promoter of the Administration policy is American Enterprise Institute Freedom Chair Holder Michael Ledeen -  one of four advisers in regular consultation with White House strategist, Karl Rove.  ledeen and Sobhani recently established the Coalition for Democracy in Iran (CDI) to promote this regime change.

Reza Pahlavi had been living quietly in Maryland until 11 September, when he began to address the Iranian community via the internet and satellite television. This prompted the Iranian community to dub him the “Internet Prince.” Rob Sobhani, who has known Reza Pahlavi since childhood, was actually born in Kansas. He became a specialist in energy policy. He has had his finger in many pies in Washington, including consultation on the construction of an oil and gas pipeline across Afghanistan. Sobhani’s interests in regime change are very clear and very consonant with American desires. They are largely commercial. Following his graduation from Georgetown, he became head of a Caspian Energy Consulting, a firm dealing with the transport and sale of Caspian oil. He also notes that supporting a secularisation of Iran would lead to easier transport of Caspian oil through Iranian territory.

Sobhani also sees secularisation of Iran as beneficial for Israel. This is not surprising, since Israel and Iran had excellent ties before the 1978-79 Islamic Revolution. The Iranian Jewish community is the oldest continuous Jewish community in the world. The community is as prominent in Diaspora as in Iran, with members in powerful positions in the Israeli government and in American life, particularly in California. Elimination of the clerical regime in Iran would eliminate support for (the Iran-backed Lebanese) Hezbollah. It might even lead to renewed trade between Tehran and Tel Aviv.

Ledeen and Sobhani expect to have the coup first, and then present Reza Pahlavi as the emergent ruler. Ledeen said as much in a rally in Los Angeles for Iranian monarchists, saying in effect: Let’s have the revolution first, then worry about who will rule Iran. What Ledeen, who has never traveled to Iran, and Sobhani don’t understand is that for such an operation to work, it cannot be tied to an overt embracing of a restoration of the Monarchy (remembering the CIA engineered counter-coup in 1953 that created an American puppet regime in Iran until 1979). Moreover, it cannot specifically espouse use of the Mojahedeen Khalq Organisation (MKO), the guerrilla movement opposing the Iranian government from Iraq. Both the Pahlavi regime and the Mojahedeen are widely opposed in Iran, even from people who would like to see clerical rule eliminated. To have Reza Pahlavi return to power with American blessing would, for many Iranians, be a continuation of American interference in Iranian affairs.

Change in foreign policy – western view?

European diplomats had meeting on 1^st July 2009 but  they made no formal decision to order their envoys home, however  this measure was an option as the European Union — Iran’s biggest trading partner — tried to work out how to defuse the dispute in a way that would shield other embassies in Tehran from similar action (detention of the British Embassy’s Iranian personnel).  A high-ranking Iranian military official demanded that the Europeans apologize for interference in Iran’s affairs, which, he said, disqualified European countries from negotiating on Iran’s nuclear program. The official, Maj. Gen. Hassan Firouzabadi, the armed forces chief of staff, was quoted by the semiofficial Fars news agency as saying that because of the European Union’s “interference” in the postelection unrest, the bloc had “totally lost the competence and qualifications needed for holding any kind of talks with Iran.” (Source NYT)

In an interview with The New York Times, a day before his scheduled departure for Moscow on Sunday, Mr. Obama said he had “grave concern” about the arrests and intimidation of Iran’s opposition leaders, but insisted, as he has throughout the Iranian crisis, that the repression would not close the door on negotiations with the Iranian government. “We’ve got some fixed national security interests in Iran not developing nuclear weapons, in not exporting terrorism, and we have offered a pathway for Iran to rejoining the international community,” Mr. Obama said. (US) The administration, meanwhile, has been preparing for two opposite possibilities: One in which the Iranian leadership seeks to regain a measure of legitimacy by taking up Mr. Obama’s offer to talk — a situation that could put Washington in the uncomfortable position of giving credibility to a government whose actions Mr. Obama has deplored — or one in which Iran rejects negotiations. In comments on the CBS News program “Face the Nation,” Admiral Mullen (the chairman of the Joint Chiefs of Staff) seemed to underscore the Pentagon’s concern that an Israeli strike could start a broader conflict, and might simply drive the Iranian nuclear efforts deeper underground. He said any strike on Iran could be “very destabilizing — not just in and of itself but the unintended consequences of a strike like that.” (Source NYT)

Israeli leaders have not asked the United States for approval to attack Iran for fear Washington will turn them down, according to a news report on July 7, 2009 in The Washington Times. Two unnamed Israeli officials close to Benjamin Netanyahu said the prime minister is concerned the White House would not approve an Israeli request to launch military strikes on Iran’s nuclear program. “There was a decision not to press this because it was probably inadequate for the engagement policy and what we know about Obama’s approach to Iran,” one of the officials told the Washington Times.

There are some who believe Bush’s mistake was not to have shifted his aim eastward: that if he was looking for an oil-rich state in the Persian Gulf with links to terrorism and dreams of weapons of mass destruction then Iran, not Iraq, should have been his target. That kind of talk makes others nervous. They fear that the US might one day repeat the Iraq calamity, with the ayatollahs cast in the role of Saddam Hussein.

Russian President Dmitry Medvedev said Sunday that Moscow supports US Administration’s plan to hold direct talks with Iran.Medvedev told reporters that the talks would prepare ground for US to discuss its concerns.
Referring to the countries rights to gain nuclear technology for civilian utility, Medvedev said that producing nuclear energy within the framework of the international regulations and the IAEA must not be considered problematic. The Russian president drew a line between the Iranian nuclear program and that of North Korea and said that Iranian nuclear program is underway while interacting with international bodies, the Islamic republic news agency reported. “North Korea has cut its contacts with the outside world,” the Russian president said expressing his concern about the North Korean test-firing missiles. (Source Farsnes)

Energy aspect

Putting democracy  and civil rights aside for a while the economical aspect has been and is maybe the most important while foreign powers are looking their positions with Iran. As the world’s fourth-highest oil and gas producer Iran can have good economical growth, petrochemical revenues account some 80 % of Iran’s export earnings, much of this income is used to public spending and subsidies (energy subsidies amount to about 17.5 % of GPD according IMF) while a lack of domestic refining capacity means that Iran imports around 40% of its petrol. Iran boasts the biggest reserves of natural gas in the Middle East but its consumption is also high, behind only the US and Russia.  EU and Russia have big interests where this gas will be exported.  More about this e.g. in my article “Is it time to bury Nabucco?”

As mentioned earlier privatization of energy sector and transportation routes were a priority in US blueprint “restore Monarchy”.  Also during the last electoral campaign, Rafsanjani required Mir-Hossain Mousavani, his former adversary, to promise he would privatize the oil sector.

Iran’s plans to develop nuclear energy facilities has been crucial factor with Iran’s international relations. Russia has been helping Iran with the construction of the nuclear facility in the southern port city of Bushehr under a contract signed in 1995. Bushehr power plant started its pre-commissioning stage in the presence of Iranian and Russian nuclear experts in February 2009. Tehran and Moscow planning to expand nuclear cooperation in future. (Source Irannewsdaily)

Color revolution postponed

Thierry Meayssan hits the nail on the head in his article “Color revolution fails in Iran”  giving following description:

“ Color revolutions” are to revolutions what Canada Dry is to beer. They look like the real thing, but they lack the flavor. They are regime changes which appear to be revolutions because they mobilize huge segments of the population but are more akin to takeovers, because they do not aim at changing social structures. Instead they aspire to replace an elite with another, in order to carry out pro-American economic and foreign policies. The  “green revolution”  in Tehran is the latest example of this trend.  Behind the soothing rhetoric of “the promotion of democracy”, Washington’s actions aim to impose regimes that are opening their markets to the US without conditions and which are aligning themselves to their foreign policy. However, while these goals are known by the leaders of the “color revolutions”, they are never discussed and accepted by the mobilized demonstrators. In the event when these takeovers succeed, citizens soon rebel against the new policies imposed on them, even if it is too late to turn back. Besides, how can opposition groups who sold their country to foreign interests behind their populations’ backs be considered “democratic”?

When post-election riots started the Western media relied on its reporters covering the mass demonstrations of opposition supporters, ignoring and downplaying the huge turnout for Ahmadinejad. Worse still, the Western media ignored the class composition of the competing demonstrations – the fact that the Ahmadinejad was drawing his support from the far more numerous poor working class, peasant, artisan and public employee sectors while the bulk of the opposition demonstrators was drawn from the upper and middle class students, business and professional class.  The most news coverage came from Tehran via English speaking students ignoring the provinces, small and medium size cities and villages where Ahmadinejad has his mass base of support (more in pre-election survey).

While the opposition’s supporters were students easily mobilized for street activities Ahmadinejad’s support drew on the majority of working youth and household women workers who would express their views at the ballot box and had little time or inclination to engage in street politics. Ahmadinejad did very well in the oil and chemical producing provinces. This may reflect energy sector workers’ opposition to the reformist plans privatize public enterprises.  The great majority of voters for the incumbent probably felt that national security interests, the integrity of the country and the social welfare system, with all of its faults and excesses, could be better defended and improved with Ahmadinejad than with upper-class technocrats supported by Western-oriented privileged youth who prize individual life styles over community values and solidarity.

Mohsen M.Milani, University of South Florida/political science department, estimates that

Unless there is a fundamental change in the existing structural configuration of the Islamic Republic, or in a change in the institution of the Supreme Leader, it is unlikely that Iran will radically change its foreign policy. If anything, the next president of Iran is likely to rely increasingly on nationalistic sentiments in order to bring harmony to a divided, dynamic and assertive Iranian electorate. The Islamic Constitution was deliberately structured to insure that the unelected component of the government, or its Islamic part, dominates its elected or the republican part.

A summary below made by BBC describes good today’s ruling system in Iran:

Tehran’s top priority is the survival of the Islamic Republic as it exists now. The strategic direction of the Islamic Republic of Iran has always been determined by the Supreme Leader, in consultation with the main centers of power in Iran’s highly factionalized polity. As the second most powerful man in the country, the Iranian president has profound impact on strategy and policy, but the Supreme Leader — Ayatollah Ali Khamenei — is the final “decider.” As the country’s most powerful figure, he is the commander of the armed forces and in charge of the intelligence and security forces and serves for life. He — not the president — makes the key decisions regarding war and peace, Iran’s nuclear policies, and relations with Washington. The Islamic Constitution was deliberately structured to insure that the unelected component of the government, or its Islamic part, dominates its elected or the republican part.

One aspect that something is changing inside Iran’s power structure is that the opponents of new elite is making mass-scale money transfers from Iran. European security experts, speaking on the condition of anonymity because they were not authorized to discuss the matter publicly, confirmed reports in Italian and Turkish newspapers that large sums of money had been sent to havens outside the country from banks controlled by the Revolutionary Guards.

Ahmadinejad’s success in last  election is strenghtening a process begun in June 2005, with his first election as president. Slowly he is making power swift from clerics of Qom to the Iranian Revolutionary Guards Corps (IRGC), particularly the veterans of the Iran-Iraq war. Revolutionary Guards have seized ownership of Iranian revolution from the clerics, whom they accused of being weak-willed opportunists and corrupted hypocrites.

From discussion forums a couple of opinions maybe are expressing also wider mood in today’s Iran:

However under Ahmadinejad I see that we have a president who will not take insults from anyone or any country, this makes me and millions of other Iranians very happy.

I have no doubt, he also did an excellent job standing up to the world war criminals, thieves, liars and hypocrites. My only dilemma is accepting the way ordinary citizens & protestors on the streets were treated.

Bottom line

Abbas Barzegar concludes the post election outcome quite good in his article  “Media fantacies in Iran” as follows:

Soon, Iran will fade from the news cycle and its horrors will blend with those of the rest of the world. Ahmadinejad will serve four years as a lame-duck president, tempered by Khamenei domestically and internationally. Mousavi, along with Khatami, will probably retire from politics while Rafsanjani secures his assets as quickly as possible. (Ali) Larijani (Parliament Speaker)  will be the supreme leader’s new man and after leading the charge on election reform will probably be the next president.

The West cannot afford to ignore any regime in Iran -  there are a number of issues that one just has to negotiate with the current Iranian regime such as the nuclear programme, regional security and economy-related problems

Professor Ali Ansari, a noted authority on the country, predicts that a regime that now “suffers from a serious domestic legitimacy problem – and which knows it – will seek a foreign foe, something to rally the country around.” He predicts “acts of provocation”, and only hopes Israel is wise enough not to take the bait.

The worst thing for foreign powers – excluding Israel’s airstrike and all its consequences -  is to come out in open support of opposition demonstrations – as the Bush administration did so recklessly in 2003, forcing reformist leaders and opposition politicians to shun protesters for fear of being denounced as traitors.  Same action today would be fatal for Mousavi and the current Iranian opposition.

The best thing the United States and EU could do is to re-establish diplomatic relations with Iran, get involved with commercial dealings, and give the Iranians some reason to undertake reforms ­ a better life in partnership with the West. From other side Russia has long-term interests in Central Eurasia and with Iran it will continue to implement large-scale economic projects so Iran’s partnership with Russia can also create economical base for Iran’s reforms. In time, the younger generation, which makes up more than 75 percent of the population, will take over the system which now is on developing stage.

Related articles:

“No revolution but potential for change anyway” by Ari Rusila

“Iran-Twitter-Revolution” by Ari Rusila

“Where will the power lie in Iran?” By New York Times

“Iran: the new elite” by Vladimir Yurtayev

Today the Irish Government publishes the Twenty Ninth Amendment to the Constitution Bill 2009 to set up the conditions for the second Lisbon Treaty Referendum.

This means that today the Referendum Commission will be set up. The Referendum Commission is responsible for:

• Explaining what the referendum is about.
• Raising public awareness.
• Encouraging people to vote.

This is an important step in the referendum process in Ireland. The bill will be debated in the two houses of the Oirecahtas (Irish Parliament) this week and then will go to the President for signature. The Referendum will take place in early October as it must take place with 90 days of the bill being passed by the Oireachtas.

For more on the Referendum Commission and the bit of the timline of events check out stephenspillane.com. I will try and keep everyone interested updated as things progress.

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• Ireland’s EU balancing act (guardian.co.uk)

I think this blog could be an important fixture in the Euro-blogosphere if we keep it going.

In the Euro-bloggersphere there is a distinct lack of group blogs and blogs that look at issues from all side and not just one partisan view. In Ireland we have such a site which is IrishElection.com. It is one of the most read Irish Political Blogs.

So do we want to develop Th!nk into such a blog or will we leave it wallow and die?

Libertas on brink of extinction after poll disaster costs €40m - National News, Frontpage - Independent.ie

LIBERTAS has sunk into oblivion after forking out up to €40m on its disastrous European campaign, an Irish Independent investigation has found.

In Ireland alone, the party spent between €600,000 and €700,000 during the 30-day campaign. That figure is much higher when the major billboard campaign — run at an estimated cost of €200,000 before election spending limits came into effect — is factored in.

Libertas claims all these bills are accounted for from donations and fundraising, with the exception of between €20,000 and €30,000 which will be paid off through “dinners and golf tournaments”, one source said.

But after running 532 candidates across Europe, just three countries are considering continuing with the Libertas banner – Britain, Estonia and Slovakia.

The only candidate out of 532 candidates who won election for Libertas, French MEP Philippe de Villiers, confirmed he was no longer a member of the organisation.

The party’s offices in Dublin, Brussels and London were all closed when the Irish Independent attempted to contact them this week.

Remaining Libertas members in Ireland are expected to meet in the coming weeks to decide if the party should be wound up, whether a new leader should be elected or if it should return to the status of a “think tank”.

The Irish Independent doesn’t really detail how they arrived at their figure of €40M, but if the figure is anything near true, it begger’s belief that it could have been raised by popular subscriptions alone.  There simply is no tradition of the public donating to a political party on anything like that scale - in Ireland, in any case.  

The Annual reports of the Standards in Public Office [SIPO] typically disclose donations amounting to a few tens of thousands, if any, although it should be noted that donations below €5,000 by an individual to a political party need not be reported to SIPO.  However it shouldn’t be too difficult for a rich organisation or individual to find surrogates who will allow €5,000 to be donated under their names.

Had Ganley et al succeeded in being elected, there is no doubt that we would have never heard the end of them decrying the “unelected elites” of the EU and their undemocratic policies and practices.  But will we ever find out where all this money really came from?  I very much doubt it.

Fortunately, true to the pattern of “Führer led” parties, the party seems set to disappear now that its leader’s credibility has been undermined by a lack of electoral success.  But it could so easily have been otherwise, and the whole episode shows just how vulnerable our democratic institutions are to subversion.  Unfortunately party finance reform is going to go to the bottom of political priorities now that Ganley is gone.  It shouldn’t be thus, of course.  But the other parties are hardly going to focus on this important issue now that the elections are over and funding is so hard to come by.

Just how private funding of political parties is supposed to be compatible with public accountability and democracy has always been beyond me.  If you want a democratic political system, you have to pay for it.  Otherwise the “democrats” will dance to someone else’s tune.  It’s time the taxpayers started paying the piper to ensure he plays a public tune.

In my previous article “Iran-Twitter-Revolution”    I had some doubts that revolution is coming soon concluding however that something historic is afoot in Iran today. I order to understand events in today’s Iran I think they should be put in wider context of Iran’s history and ruling system.  In this article I try to do so before jumping to analyze of recent elections which from my point of view are the key element while estimating the basic conditions for revolution, coup d’état, power swift or some – even historic – change in Iran’s political climate.

History of democracy in Iran

Iran is a country with one of the oldest democratic systems in the Middle East. In order to understand the background to the demands of the demonstrators it is necessary to look briefly at the major developments in Iran prior to and since the Islamic revolution.  My source which I quote here is Dr. Farhang Jahanpour, Oxford and his article “Iran’s Suppreme Leader silences the opposition”.

Over one hundred years ago, the Iranian people staged the “Constitutional Revolution” (1905-11) against the power of despotic kings, and wrote a constitution that transferred power to the people’s representatives in the Majlis (Parliament). Throughout the past century, even at the worst of times, different governments have found it expedient to hold elections, even if they were not completely free and fair. The Iranian revolution of 1978-79 was essentially a democratic revolution aimed at extending people’s freedoms and establishing a truly democratic state. Although Iran had made great material progress under the Shah, the brutality of the Shah’s secret police, the SAVAK and the lack of political freedom, forced people to rise up to achieve greater freedom and democracy. Sadly, as the result of infighting among various democratic forces and as the result of the stature that Ayatollah Ruhollah Khomeini had gained as the leader of the revolution, the mullahs ended up controlling all levers of power. Instead of laying the foundations of a more democratic state, Ayatollah Khomeini established an Assembly of Experts (dominated by clerics who were allegedly experts in Islamic law) and the novel concept of the Velayat-e Faqih, or the rule of the chief jurisconsult, emerged as the basis of the new constitution. This concept which had no precedent in the history of Islam enshrined the power of the clergy over the state and resulted in the creation of a theocracy.

The unexpected election of Mohammad Khatami in the 1997 election, with the votes of over seventy percent of the eligible voters with 80% turnout, opened a new chapter in the post-revolutionary history of Iran and provided the possibility of reform from within. However, his efforts were at every step blocked by the rightwing clergy and their agents in the judiciary and especially in the Guardian Council whose clerical members are appointed by Ayatollah Ali Khamene’i. This body supervises the elections and approves the credentials of the candidates that can run for high office. So, even in the best of times, only the candidates that are approved by the regime can run in the elections. The nation-wide student uprising in June 1999 was brutally crushed, with a number of students killed or injured. The reformers, and especially the young people, lost faith in the system and adopted a negative and detached stance towards the regime.

Some characteristics about Iran ruling system

Iran’s political system is a combination of elected and un-elected institutions.  Some unelected institutions like Guardian council has vetting powers e.g. to bills decided in Parliament and they also can bar candidates from standing in elections  to Parliament, the Presidency and the Assembly of Experts. A graphic version of Iran’s power system below:

• The president is elected for four years and can serve no more than two consecutive terms. The constitution describes him as the second-highest ranking official in the country. He is head of the executive branch of power and is responsible for ensuring the constitution is implemented. Members of the cabinet, or Council of Ministers, are chosen by the president. They must be approved by parliament, which in 2005 rejected four of President Mahmoud Ahmadinejad’s initial nominees for his hardline cabinet. Parliament can also impeach ministers.
• The 290 members of the Majlis, or Parliament, are elected by popular vote every four years. The parliament has the power to introduce and pass laws, as well as to summon and impeach ministers or the president. However, all Majlis bills have to be approved by the conservative Guardian Council.
• The responsibilities of the Assembly of Experts are to appoint the Supreme Leader, monitor his performance and remove him if he is deemed incapable of fulfilling his duties. The assembly usually holds two sessions a year and is officially based in the holy city of Qom. Direct elections for the 86 members of the current assembly are held every eight years and are next due in 2014. Only clerics can join the assembly and candidates for election are vetted by the Guardian Council. The assembly is dominated by conservatives. Its current chairman is former President Akbar Hashemi-Rafsanjani.
• Guardian council is the most influential body in Iran and is currently controlled by conservatives. It consists of six theologians appointed by the Supreme Leader and six jurists nominated by the judiciary and approved by parliament. The council has to approve all bills passed by parliament and has the power to veto them if it considers them inconsistent with the constitution and Islamic law. The council can also bar candidates from standing in elections to parliament, the presidency and the Assembly of Experts.
• The role of Supreme Leader in the constitution is based on the ideas of Ayatollah Khomeini, who positioned the leader at the top of Iran’s political power structure. The Supreme Leader, currently Ayatollah Ali Khamenei, appoints the head of the judiciary, six of the members of the powerful Guardian Council, the commanders of all the armed forces, Friday prayer leaders and the head of radio and TV. He also confirms the president’s election. The Leader is chosen by the clerics who make up the Assembly of Experts.
• The Armed forces comprise the Revolutionary Guard and the regular forces. The two bodies are under a joint general command. All leading army and Revolutionary Guard commanders are appointed by the Supreme Leader and are answerable only to him.
• The Expediency Council is an advisory body for the Leader with an ultimate adjudicating power in disputes over legislation between the parliament and the Guardian Council. The Supreme Leader appoints its members, who are prominent religious, social and political figures.

Results

One of the key questios is what was the real result of Iran elections.  Official results gave 63% of the vote to President Mahmoud Ahmadinejad and 34% to Mir Hossein Mousavi. The Mousavi camp say the true result — allegedly leaked by the interior ministry — had its candidate winning more than 60% of the vote.  I have not any reliable first hand source, but sc. leaked real results are claimed to be following:

Ken Ballen and Patrick Doherty claim in their Washington Post –article Monday, June 15, 2009 that the election results in Iran may reflect the will of the Iranian people. I quote:

Many experts are claiming that the margin of victory of incumbent President Mahmoud Ahmadinejad was the result of fraud or manipulation, but our nationwide public opinion survey of Iranians three weeks before the vote showed Ahmadinejad leading by a more than 2 to 1 margin — greater than his actual apparent margin of victory in Friday’s election. Independent and uncensored nationwide surveys of Iran are rare. Typically, preelection polls there are either conducted or monitored by the government and are notoriously untrustworthy. By contrast, the poll undertaken by our nonprofit organizations from May 11 to May 20 was the third in a series over the past two years. Conducted by telephone from a neighboring country, field work was carried out in Farsi by a polling company whose work in the region for ABC News and the BBC has received an Emmy award. Our polling was funded by the Rockefeller Brothers Fund.

The breadth of Ahmadinejad’s support was apparent in our pre-election survey. During the campaign, for instance, Mousavi emphasized his identity as an Azeri, the second-largest ethnic group in Iran after Persians, to woo Azeri voters. Our survey indicated, though, that Azeris favored Ahmadinejad by 2 to 1 over Mousavi.

Much commentary has portrayed Iranian youth and the Internet as harbingers of change in this election. But our poll found that only a third of Iranians even have access to the Internet, while 18-to-24-year-olds comprised the strongest voting bloc for Ahmadinejad of all age groups.

The only demographic groups in which our survey found Mousavi leading or competitive with Ahmadinejad were university students and graduates, and the highest-income Iranians. When our poll was taken, almost a third of Iranians were also still undecided. Yet the baseline distributions we found then mirror the results reported by the Iranian authorities, indicating the possibility that the vote is not the product of widespread fraud.

The full report of Iran poll can be found as pdf here!

Iranian economist Djavad Salehi-Isfahani - professor at Virginia Tech and guest scholar at Brookings - noted in the New York Times online evidence that Ahmadinejad’s programs to distribute income and wealth more evenly have begun to bear fruit, explaining his support in rural areas and small towns: “Once these factors are taken into account, it is not so implausible that Mr. Ahmadinejad may have actually won a majority of the votes cast, though not those cast in Tehran.

But if the Iranian election was not stolen, it does make the protest and crackdown fundamentally different political events: it fundamentally undermines the claim of the protesters to be speaking for the majority of the Iranian population, who just voted for a different candidate than the one supported by the protesters. Only a new vote with new rules and independent monitoring is likely to end the argument, and so far Iran’s ultimate rulers have refused to contemplate such an outcome.

Isolated protest?

Successful revolutions have three phases. First, a strategically located single or limited segment of society begins vocally to express resentment, asserting itself in the streets of a major city, usually the capital. This segment is joined by other segments in the city and by segments elsewhere as the demonstration spreads to other cities and becomes more assertive, disruptive and potentially violent. As resistance to the regime spreads, the regime deploys its military and security forces. These forces, drawn from resisting social segments and isolated from the rest of society, turn on the regime, and stop following the regime’s orders. Revolutions fail when no one joins the initial segment, meaning the initial demonstrators are the ones who find themselves socially isolated.

“Westerners love to overstate the importance of street demonstrations abroad. In our eyes anyone flashing the local equivalent of a v-sign salute represents all that is decent and democratic in the world. But we do them a disservice by raising false hopes and proclaiming their every protest as the next velvet revolution” writes Lionel Beehner in his The Guardian colum “Iran’s manufactured revolution”. Beehner continues “despite the hopes of overexcited western commentators, demonstrations in Iran are likely to change very little Regimes do not collapse as easily as we think. There were similar pronouncements that the junta in Burma was finished after hundreds of saffron-clad monks took to the streets a few years back. Well, guess what happened: not much. The junta continues to clamp down on the opposition.”

While background data informs that according to the United Nations, 68 percent of Iranians are urbanized and urban population seems to be on the streets one can get impression that the demonstrators are good representative of the country. The problem is the Iranian definition of urban includes very small communities (some with only a few thousand people) as “urban”. Tehran proper has about 8 million inhabitants; its suburbs bring it to about 13 million people out of Iran’s total population of 70.5 million. Tehran accounts for about 20 percent of Iran, but as elsewhere too the students at elite universities are only fraction of the whole Tehran population. There are six cities with populations between 1 million and 2.4 million people and 11 with populations of about 500,000. Including Tehran proper, 15.5 million people live in cities with more than 1 million and 19.7 million in cities greater than 500,000. However it seems that just the Tehran professional and student classes possess civic courage to go on the streets. While appearing large, the demonstrations actually comprised a small fraction of society.

George Friedman from Stratfor notes quite well that

The global media, obsessively focused on the initial demonstrators — who were supporters of Iranian President Mahmoud Ahmadinejad’s opponents — failed to notice that while large, the demonstrations primarily consisted of the same type of people demonstrating. Amid the breathless reporting on the demonstrations, reporters failed to notice that the uprising was not spreading to other classes and to other areas. In constantly interviewing English-speaking demonstrators, they failed to note just how many of the demonstrators spoke English and had smartphones. The media thus did not recognize these as the signs of a failing revolution.

As in Iran, none of the poorer folks from the provinces bothered to show up.  Could the reason be that they like and voted their pandering president, even if the west couldn’t stand him. There just seems to be no popular support for regime change.  Ahmadinejad has helped the poor and lower middle class by increasing pensions, sometimes by more than doubling them, loans, and government workers wages, also increasing and maintaining financial support for the families of those killed or wounded during the Iran-Iraq War. The New York Times has reported that Ahmadinejad “has also handed out so-called justice shares of state firms that are selling stock to the public, and provided low-interest loans to young married couples and entrepreneurs.”

The Iran’s purchasing power parity is estimated to be about US$800 Billion, or about $12,000 per capita, in 2007.  Life expectancy is about 71 years, and literacy about 85-90%. School enrollment is 100%. Iran has the 17^th largest economy in the world ahead of Australia and Israel. Iran’s oil and gas reserves are known and when the logistic location of country is not so bad, better say opposite, the country has relatively good change for sustainable development even more regional superpower than it is today.

From the media coverage we can see a lot of Iranians in towns and cities protesting, but what about the rural areas? A grassroots movement cannot succeed unless they have massive support from all segments of the populace. And while the majority of all Iranians are not actually from the middle class, not live in major cities and not have Internet access, a justified conclusion can be that the mullahs will have no problem ignoring or crushing the isolated (student) movement.

Foreign interference

Among typical conspiracy theories Iran’s political leadership can have some base to their claims about foreign involvement to destabilize Iran. Already years some western NGOs like the Open Society Institute, Freedom House and the National Endowment for Democracy have been financing, training, supporting and mobilizing opposition movements in countries that have been targeted for destabilization, often during elections and usually organized around an identifiable color. These “color revolutions” sprang up in the past decade and have so far successfully destabilized the governments of the Ukraine, Lebanon, Georgia and Kyrgyzstan, among others. The only thing different is that now social media and networks are being employed to amplify the effect of (and the impression of) internal protests. One mechanism by which the U.S. interferes in the internal political affairs of other nations is the National Endowment for Democracy (NED), a quasi-governmental agency with funding from both Congress and private individuals whose purpose is to support foreign organizations sympathetic to U.S. foreign policy goals. In February, 2006, Secretary of State Condoleezza Rice requested emergency funding from Congress to the amount of $75 million, on top of a previously allocated $10 million, “to mount the biggest ever propaganda campaign against the Tehran government”, in the words of The Guardian. The money “would be used to broadcast US radio and television programmes into Iran, help pay for Iranians to study in America and support pro-democracy groups inside the country.” The propaganda effort would include “extending the government-run Voice of America’s Farsi service from a few hours a day to round-the-clock coverage.”

However, there are credible reports that the CIA has been working for two years to destabilize the Iranian government. On May 23, 2007, Brian Ross and Richard Esposito reported on ABC News: “The CIA has received secret presidential approval to mount a covert “black” operation to destabilize the Iranian government, current and former officials in the intelligence community tell ABC News.”On May 27, 2007, the London Telegraph independently reported: “Mr. Bush has signed an official document endorsing CIA plans for a propaganda and disinformation campaign intended to destabilize, and eventually topple, the theocratic rule of the mullahs.”A few days previously, the Telegraph reported on May 16, 2007, that Bush administration John Bolton told the Telegraph that a US military attack on Iran would “be a ‘last option’ after economic sanctions and attempts to foment a popular revolution had failed.”On June 29, 2008, Seymour Hersh reported in the New Yorker: “Late last year, Congress agreed to a request from President Bush to fund a major escalation of covert operations against Iran, according to current and former military, intelligence, and congressional sources. These operations, for which the President sought up to four hundred million dollars, were described in a Presidential Finding signed by Bush, and are designed to destabilize the country’s religious leadership.

The protests in Tehran no doubt have many sincere participants. The protests also have the hallmarks of the CIA orchestrated protests in Georgia and Ukraine. Several commentators have already dredged from the memory hole press reporting at the time on a presidential “finding” on Iran, which is the formal method for the president to initiate covert actions against another country. Back in 2007 — plenty of lead time for this election — the president met with the Congressional Star Chamber, the “gang of 8″ House and Senate leaders, and was granted the authorization to use some $400 million for among other things, as the Washington Post  - reported, “activities ranging from spying on Iran’s nuclear program to supporting rebel groups opposed to the country’s ruling clerics…

More about US involvement one may find from an article of Daniel McAdams on June 19, 2009 which I have used also as my source related foreign interference.

Battle inside Power structure

More important for Iran’s political future than street protests is the battle inside the power structure, tensions within the Iranian political elite. The Supreme Leader Khamenei also faced a stark warning from another senior cleric and onetime rival, Grand Ayatollah Hossein Ali Montazeri. “If Iranians cannot talk about their legitimate rights at peaceful gatherings and are instead suppressed, complexities will build up which could possibly uproot the foundations of the government, no matter how powerful,” Montazeri said. He called for an impartial committee to be set up to resolve the Islamic Republic’s worst crisis since the 1979 revolution. (The Guardian 25^th June 2009)

In his article “The Iranian Election and the Revolution Test”on June 22, 2009 George Friedman from Stratfor claims that many of Iran’s religious leaders see Ahmadinejad as hostile to their interests, as threatening their financial prerogatives, and as taking international risks they don’t want to take. Ahmadinejad’s political popularity in fact rests on his populist hostility to what he sees as the corruption of the clerics and their families and his strong stand on Iranian national security issues. In my opinion Mr. friedman hits the nail on head and I quote his analysis:

The clerics are divided among themselves, but many wanted to see Ahmadinejad lose to protect their own interests. Khamenei, the supreme leader, faced a difficult choice last Friday. He could demand a major recount or even new elections, or he could validate what happened. Khamenei speaks for a sizable chunk of the ruling elite, but also has had to rule by consensus among both clerical and non-clerical forces. Many powerful clerics like Ali Akbar Hashemi Rafsanjani wanted Khamenei to reverse the election, and we suspect Khamenei wished he could have found a way to do it. But as the defender of the regime, he was afraid to. Mousavi supporters’ demonstrations would have been nothing compared to the firestorm among Ahmadinejad supporters — both voters and the security forces — had their candidate been denied. Khamenei wasn’t going to flirt with disaster, so he endorsed the outcome. The Western media misunderstood this because they didn’t understand that Ahmadinejad does not speak for the clerics but against them, that many of the clerics were working for his defeat, and that Ahmadinejad has enormous pull in the country’s security apparatus. The reason Western media missed this is because they bought into the concept of the stolen election, therefore failing to see Ahmadinejad’s support and the widespread dissatisfaction with the old clerical elite. The Western media simply didn’t understand that the most traditional and pious segments of Iranian society support Ahmadinejad because he opposes the old ruling elite. Instead, they assumed this was like Prague or Budapest in 1989, with a broad-based uprising in favor of liberalism against an unpopular regime. Tehran in 2009, however, was a struggle between two main factions, both of which supported the Islamic republic as it was. There were the clerics, who have dominated the regime since 1979 and had grown wealthy in the process. And there was Ahmadinejad, who felt the ruling clerical elite had betrayed the revolution with their personal excesses. And there also was the small faction the BBC and CNN kept focusing on — the demonstrators in the streets who want to dramatically liberalize the Islamic republic. This faction never stood a chance of taking power, whether by election or revolution. The two main factions used the third smaller faction in various ways, however. Ahmadinejad used it to make his case that the clerics who supported them, like Rafsanjani, would risk the revolution and play into the hands of the Americans and British to protect their own wealth. Meanwhile, Rafsanjani argued behind the scenes that the unrest was the tip of the iceberg, and that Ahmadinejad had to be replaced. Khamenei, an astute politician, examined the data and supported Ahmadinejad.

My conclusions

Putting my own sympathies – I admire people who have courage to risk their lives for their ideals – aside I would conclude following related today’s events in Iran:

• Iran’s ruling system can be criticized especially due the powerful role of non elected institutions in the whole.  Even the system is far away from western democratic ideals I however see existing system more democratic than in most other Middle East or Arabic countries
• During last elections there probably was some irregular acts and wrongdoings but not so massive fraud demonstrators are claiming.  Indeed the election results in Iran may reflect the will of the Iranian people.
• The demonstrations are actually representing a small fraction of society – mainly students and middle-class in Tehran – and as such they will be isolated from other segments of society and unable to deliver any revolution in Iran.
• There has been foreign interference for years to destabilize Iran’s regime, however foreign influence for recent demonstrations could be estimated to be minimal and not that scale what Iran’s leadership has been claiming after election protests.
• The battle inside Iran’s power structure can lead to radical changes inside ruling clerical elite and maybe also a power shift from non elected to elected institutions.
• The short-term effects might well result in either a harsher regime or a more liberal regime.  The first choice would probably be counterproductive the later would stabilize Iran by channeling peoples demands for democracy instead of theocracy.

More my views one may find from my BalkanBlog!

GRAPH: According to data from the EU commission - the non-elected quick intervention troup towering above the European Parliament - I arrive at a total real GDP growth of 19,64% for the period from 2000 to 2008. Chart courtesy of tradingeconomics.com

Harmonization at even the most important levels like data integrity is a goal still to be attained, comparing the EU Commissions data with those of Eurostat, the EU’s official statistical office.

GRAPH: GDP growth figures for the Eurozone’s 15 members (Slovakia only joined this year) come in a tad smaller according to Eurostat. According to Eurostat’s figures total GDP growth from 2000 to 2008 was 18,98% in real terms. Chart courtesy of Eurostat

I would have loved to provide readers with the absolute difference between these two official figures in nominal Euro figures (certainly many many billions,) but such are not available. Browsing Eurostat’s and the EU commission’s websites does not yield this information.
I would prefer nominal GDP figures as I have been having a problem with the dichotomy between the EU’s/ECB’s “official” inflation figures that diverge widely from the real devaluation of the Euro since its inception in 2001 for consumers (corporate and public accounts were converted a year earlier.)
Based on continuously changing consumer baskets in all Euro member countries I am reminded of Winston Churchill’s quote that he only believed statistics he had falsified himself. Read more on the issue of juggling inflation figures in this earlier post. Although it deals mostly with US inflation figures you should get an idea of the manifold tricks invented to hide true inflation.
My anecdotal evidence stemming from criss-crossing the old world concludes that prices have effectively doubled in the last 10 years. This is a crass disparity to Eurostat’s official figures.

GRAPH: Annual Eurozone Inflation according to Eurostat from 2000 to 2008. Chart courtesy of Eurostat.

Be it Germany where I paid €3,40 for a coffee in Berlin, about double of what it was in the hailed times of the ultra-hard Deutschmark, the Netherlands, where a single fare ticket for the Metro in Rotterdam is a whopping €3,50, or Venice/Italy where a single fare with the public vaporetti - boats - has exploded from 80 Euro cents to €6,50 since the introduction of the common currency let me conclude that the real ascent of prices is closer to 7% annually since the formation of the Eurozone.
In my home country Austria gastronomy prices have been going through the roof. A simple lunch menu on Vienna’s Naschmarkt where office clerks share tables with guys with ties has shot from an average of €4,35 in 2000 to €8,80 nowadays further elevates my skepticism about the true reflection of consumer prices in Eurostats HICP (Harmonised Index of Consumer Prices) figures.
Not that inflation would be a phenomenon limited to Euro members. An average lunch in the city centre of Bratislava/Slovakia, the youngest Euro member, has doubled from €5 to €10 in the last 10 years.

Recent Decline of Inflation Will Be Temporary
Seeing the upper echelons of the ECB jumping with joy about recent declines in HICP figures will be a short-lived spectacle. Italian ECB governing council member Lorenzo Bini-Smaghi told a conference on June 24 that there is a lively European debate whether we have to fear deflation or inflation more.

The debate between those who consider that inflation represents the main risk for advanced economies over the next few years and those who instead believe that deflation is the most immediate threat, has polarised, especially in the United States. It has also had an interesting echo here in Europe.
Both concerns are legitimate. To some extent, the fact that informed observers can maintain both views simultaneously can be seen as a sign that monetary policy is managing to walk the fine line between the two risks. The debate neatly encapsulates the trade-off currently facing policy-makers. They have to choose between short-term adjustments to strong recessionary forces and long-term macroeconomic stability. A key challenge is how to calibrate the policy response in the face of these forces: too timid a reaction may be costly in the near term, but an overreaction may sow the seeds of the next crisis. I will argue that a policy action that aims to ensure macroeconomic stability in the medium term requires a thorough examination of the risks, in much the same way as a disease calls for a sound diagnosis if it is to be properly treated.

They better hurry up with their diagnosis, as this crisis is far from over although my gut feeling tells me we will see a short-lived bounce this fall in economic activity before the whole mess caves in due to unsustainable debt levels on both public and private accounts.

GRAPH: A chart accompanying Bini-Smaghi’s speech shows that future inflation expectations have significantly moved north since last November.(Click for larger image)

Enjoying blogger’s freedom of speech I firstly expect significantly more true inflation based on the daily price shocks I experience when shopping or paying for public services which should be covered by taxes already. Double-charging has become the new norm in the leading debtor nations of the world, 9 of the first 10 of them being Eurozone countries.
Secondly I allow myself to remind the money printers in the ECB that no saver would ever fear deflation. Or would you mind if your weekly grocery bill would be lower?
The ECB’s self-pride is based on clay feet though. A slowdown of M3 growth while the economy contracts still means there is more fiat money produced compared to the declining purchases of goods and services with these funny colorful papers that are only backed by the belief they will buy the same amount of goods and services in the future as they did in the past.

GRAPH: Absolute growth of money supply M3 clearly shows that even in a contracting economy (Q1: minus 4,8%) the ECB showers the Eurozone - or more exactly its banks with ever more money. The weekly financial statement to be released next Tuesday will show another upshot due to the record €442 billion 371-day “liquidity providing” tender

Not only nominal but also the relative change of M3 - hovering above the ECB’s reference rate (whatever that means) shows that we are still experiencing monetary inflation at its best.

GRAPH: Don’t get confused: Month-on-Month change of M3 is still way to high in order to return to the ECB’s meaningless reference rate of 4.5% annual M3 growth, a growth rate it has never reached since the inception of the Euro. Chart courtesy ECB. Click for larger image.

Another way to see that the ECB will have to face runaway inflation is the comparison of weak GDP growth since 2000 and the balance sheet of the ECB. Repeating above mentioned meekly economic growth of 18,98% or 19,64% (depending on the data source) lags far behind the 162% growth of the ECB’s balance sheet between January 2000 and end of 2008. In absolute figures the balance sheet grew from €792 billion to €2,072 billion. This is a lot more money sloshing around in comparison to GDP growth.
While these additional €1.3 trillion (on Tuesday it will be €1.75 trillion) are now kept within the ailing banking sector who ran agog creating derivatives, thereby exploding leverage to dimensions never seen before in history, this money has to trickle through into the contracting economy, pushing up nominal and real prices at one point. After all, for every loser there is a winner who will try to maximize his gains again.

Gold Again Proves Its Role As Inflation Shield
Although the next chart from Gary Dorsch is a bit outdated, stemming from February 2008, it again proves the point that gold is a most reliable canary in the coal mine of monetary inflation.

GRAPH: Observing since a while that gold only gyrates against Federal Reserve Notes but remains more or less steady priced in Euros this year is another indication that the dollar’s days will come to an end soon. Chart courtesy Gary Dorsch via MarketOracle.

I sign off with John Pierpoint Morgan’s historical quote when asked by congress in 1907 what money actually is.

“Gold is money. Everything else is credit.”

And finally I like to promote this phrase, brought to my attention by learntotradefutures.com publisher Duncan Robertson.

Gold is the money of kings.
Silver is the Money of merchants.
Barter is the money of peasants.
Debt is the money of slaves.

Thursday June 25 2009

About the only remaining argument against the Lisbon Treaty the ‘No’ campaigners have left is that they dislike being asked to vote on the same treaty twice.

But we have also voted in referendums on proportional representation, divorce and the Nice Treaty twice, and voted no less than four times in abortion-related referendums.

In fact, we seem to be making a habit of revisiting the same issues to be sure, to be sure.

Politics is an ongoing process of change, not a once off, once and for all exercise. So the ‘No’ campaigners had better get used to it.

Many of them have campaigned against every European treaty referendum since our accession into the EU in 1973. They have become creatures of habit and will no doubt oppose the next treaty (likely to be the accession of Croatia) as well.

We cannot have too much democracy, consultation and participation in the ongoing evolution of the European Union.

Let us rejoice that we have the opportunity to vote when so many have not, both inside and outside the European Union. But let us also not be afraid to change our minds and amend the Constitution if circumstances warrant it, as we have done on no fewer than 23 occasions before.

Our Constitution is a living document, and is the better for those amendments.

Frank Schnittger

Of course there are many valid arguments against the Lisbon Treaty. Many would say it doesn’t go far enough in reforming the EU and preparing it for an expanding membership. But the NO campaigns in Ireland (for they have little in common with each other) have been more or less boxed into a corner by the Government and EU Council systematically addressing many of the arguments they made the last time around.

As An Taoiseach, Brian Cowen wrote in yesterday’s Irish Times:
Why we must deliver a resounding Yes to Lisbon - The Irish Times - Wed, Jun 24, 2009

Our EU partners have addressed our concerns and we must reassert our solidarity with them

AT THE European Council in Brussels last week, the EU member states agreed to give Ireland legally binding guarantees in response to the concerns of the Irish people in relation to the Lisbon Treaty.

Going to Brussels, I had two clear aims. Firstly, I wanted clear legal guarantees on the issues of tax, neutrality and our constitutional protections on the right to life, education and the family. Secondly, I wanted an explicit commitment that these legal guarantees would, at a future point, be given full treaty status, by way of a future protocol.

Both of these aims have been met in full. I am confident that we now have a solid basis to return to the Irish people and to ask them again for their approval for Ireland to ratify the Lisbon Treaty.

I do not underestimate the scale of the challenge. I understand that, for many, absorbing a complex legal document is difficult, and I accept that we must do better this time around in explaining it in clear terms. I recognise, too, that from time to time people can find certain aspects of EU policies and regulations frustrating. Above all, I know that the forces that have always opposed our membership of the European Union since 1973 will once again seek to confuse and mislead the electorate.

Already they are trying to dismiss the significance of last week’s achievements. Their accusations that the outcome of the summit was a pre-cooked charade are wrong and highly insulting to our EU partners.

Many member states struggled with Irish reluctance to sign up to what they see as a necessary updating of the union’s rulebook. Some were alarmed at being asked to agree guarantees on issues not even mentioned in the Lisbon Treaty. Others, perfectly legitimately, did not wish to reopen their own democratic ratification processes.

Despite these misgivings, our EU partners listened carefully to us, and to our proposals about how our concerns might be addressed. Now they have responded substantively to those concerns, with legal guarantees which ensure that:

– Ireland retains control over our own tax rates;

– Ireland’s traditional policy of military neutrality will not be affected by the Lisbon Treaty; and

– The treaty will not affect the protections in the Irish Constitution on the right to life, education and the family.

They have also reaffirmed the importance of workers’ rights and public services where, far from being a negative force, the EU has brought about many positive changes over the years. Interestingly, when the No side quote last year’s research showing that workers’ rights was a big concern for the public, they omit the fact that many people cited progress in this area, including commitments in the Charter on Fundamental Rights, as a major reason why they voted Yes to Lisbon.

Last week’s agreement is not the action of a union that cares little for the interests of the citizens of its member states. Rather, it demonstrates the capacity of the union and its member states to work, patiently and constructively, towards consensus and solutions to problems. And above all it represents a very positive response from our partners and a significant achievement for Ireland.

Focusing on last week’s outcome risks losing sight of a major element of the overall response to Irish concerns: agreement last December to return to one commissioner per member state if the Lisbon Treaty enters force.

The fact that retaining a commissioner was considered important by so many Irish people reveals, I believe, an underlying appetite for connection with, and influence in, the affairs of the European Union.

None of this will, of course, prevent the No campaigns from introducing new arguments against the Lisbon Treaty. But so far most of their bile has been directed at the alleged arrogance of the Government and the EU Elite for not taking the Irish No last time around for a final answer. Hence my LTE above - to highlight the fact that Referendums in Ireland are often not the final answer on anything.

My letter also seeks to highlight a second point - that the popular engagement encouraged by repeated referenda on the same or similar topics is an important part of popular democracy and government legitimacy in Ireland - something which has so far prevented an economic catastrophe turning into a political catastrophe - with riots in the street, racial pogroms (such as the one directed against Romanians in Belfast recently), and government repression the likely outcomes.

So rather than seeing the requirement for repeated Irish referenda on EU issues as a problem, we should see it as a positive way of encouraging wider education, participation and engagement. Of course a similar process in other Member States (e.g. the UK, France, the Netherlands) might lead to a more negative outcome) and we then have the much more difficult scenario of one member state having a veto on the development of the Union as a whole.

Perhaps the next EU Treaty should address this thorny issue full on and provide for a scenario whereby all future EU Treaties will have to be approved by popular referendums throughout the EU, but that a 60% majority of all voters and at least a 50% majority in 75% of all member states will be sufficient to secure the ratification of a Treaty. That way greater popular participation and engagement is secured without (say) Malta having a veto on what 90% of the population of the EU as a whole actually need and want.

What is clear is that the current system of ratifying new EU Treaties is all but broken. Popular engagement is declining, and the EU has been all but paralysed in recent years. It is this meta problem which needs to be addressed if the EU is to regain the ability to respond dynamically to the challenges in the world ahead.

No doubt such a change (the 60/75% rule) would be resisted tooth and nail by nationalists, eurosceptics, and those who want to destroy the European project because it will diffuse power much more generally throughout the Union, and increase its legitimacy by encouraging wider popular engagement. But who can doubt that the global challenges of war, climate change, financial regulation and corporate governance to not need a more concerted and dynamic European response?

The EU either needs to improve its popular legitimacy, or it will die. And it doesn’t have a lot of time left to make the choice.

Euro-zone banks borrowed the one-year funds, the largest amount the central bank has ever dispersed at a single shot, at the ECB’s current key rate of 1%. Much of the total likely substituted for amounts banks had been borrowing from the ECB for shorter time periods, so the net stimulus to the economy is less than it appears at first sight.
The novelty lies more in the length of time over which the ECB is prepared to offer unlimited funding, reflecting a desire to bring longer-term money-market interest rates down to where it thinks they should be…
Analysts said the high demand for the funds reflected the problems some banks are still having in funding their businesses.
At the same time, it also reflected expectations that the euro zone’s economy will start to recover later in the year and that ECB interest rates are unlikely to fall further. ECB policy makers have signaled they are not inclined to cut their key rate — now at the lowest level in the central bank’s 11-year history — again unless the euro-zone economic outlook darkens substantially. Analysts expect the key rate to hold steady at 1% through year end.
“We are nowhere near the beginning of a tightening cycle, but we are getting closer to the end of the easing one,” said Lauren Mutton, a strategist with Margin Stanley in London….
The Paris-based Organization for Economic Cooperation and Development said Wednesday in its latest forecasts that the ECB still had scope to cut its key rate further.
At the peak of the crisis, banks were using over €1 trillion in short-term funding from the ECB. As fears of a complete meltdown of the financial system have eased, that has fallen to around €618 billion.
During the worst of the crisis, banks were forced to live from week to week, always anxious about access to liquidity. In response, the ECB offered money first for three, then six and now 12 months to give banks greater clarity in their operations, hoping the certainty of longer-term funding from the ECB would encourage them to lend again to the real economy.
“This should reassure the banks that they have adequate liquidity for the next 12 months,” ECB governing council member Lorenzo Bini Smaghi said in a speech to a university in Rome Wednesday.
By promising a full allocation of all bids on Wednesday, the ECB has effectively passed responsibility for any easing of policy to the banks themselves, giving complete license to any institution that thinks it can lend the money out profitably into the real economy.
“They must pass it along,” Mr. Bini Smaghi said.

This is exactly the problem that has not been solved in the last 22 months and will also not be solved by creating pan-European watchdogs for the financial industry: Banks are not willing to lend unless you present them with 200% collateral. As always, credit is only around for those who don’t really need it. Anybody wagering a bet that Europe will recover within the next 12 months? I’d love to take the other side.

I see the Common Agricultural Policy CAP (however imperfect) as an essential mainstay of a sustainable European food industry and a bulwark against the disaster capitalism tactics of the global agri-business giants that would almost inevitably follow its demise.  Jon appears to see it as more part of the problem rather than the solution, which for him seems to lie with greater liberalisation of global food markets.

I don’t think either of us are particularly qualified to conduct this debate on our own, so I have taken the liberty of copying our debate beneath the fold in the hope that it might attract some more expert comment on ET.  Is a Sustainable European food industry as essential as a sustainable European Energy or defence  industry?  Or is it just a bunch of cosseted farmers who should be let go to the wall?

You decide.

Jon Worth » One rule for farmers, another rule for everyone else

One rule for farmers, another rule for everyone else

I managed to avoid the milk-farmer chaos in Brussels on Thursday and Friday - hundreds of tractors driving slowly to bring protests about low milk prices to the European Council. But what exactly are the farmers whingeing about, and what should be done about it?

This piece from EUObserver has more - it costs €33 to produce 100 litres of milk on a Belgian farm, and wholesalers are buying milk for just €19 per 100 litres. The farmers would ideally like a price of €44 per 100 litres. In any normal sector of the economy the high-price producers would go out of business, and those that can produce at a lower price would get the business, profiting from economies of scale or better technology. Look at how OPEC works - reduce production to drive up prices. Sorry to put it bluntly, but if the prices are too low, then some cows are going to have to be slaughtered.

Another alternative would be to appeal to customers that might be more inclined to buy local rather than imported milk, and pay a premium for the privilege - some equivalents of the British Farm Standard scheme might do to the job.

But what do the farmers do instead? They come complaining to the European Commission, and governments in each of the Member States, whining that something should be done to help their plight. It’s the EU’s plan to phase out the quota system for milk that is to blame they bleat - the very quotas that were introduced in the 1980s to prevent over-production of milk and were detested by milk farmers at that time. Keep the quotas, keep our prices up!

The EUObserver piece quotes a farmer: “It’s not a problem of the stores, it’s a problem of a regulation by the states and overall by Europe” - no. The problem is with the farmers who cannot except the logic of simple market forces. If the price of milk is too low, then produce less. Don’t produce at a loss and then go begging for assistance from the EU.

(Apologies if this article is really wide of the mark - I’ve scoured the web and cannot find anything except hot air and hollow rhetoric from farmers on this - if I’m missing some fundamental point to the economics behind this then please do tell me in the comments)

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My response

Frank Schnittger<abbr> 21.06.2009 at 23:30 | Permalink

I live on my brother-in-law’s dairy farm and the economics are a good deal more complex than you suggest. Production has been going down, many farmers are retiring and not being replaced, but the costs of production keep going up because of very stringent regulations governing animal testing, milk testing, anti-biotic use, vet care, animal husbandry, design of silage pits, slurry pits, milking parlours etc. Most of this is very good - but it results in EU farmers incurring costs not incurred by farmers outside EU. Some of the regulations are idiotic or keep changing. My brother-in-law has had to replace very expensive equipment long before its lifespan because of regulations changing without much logic or aforethought.

The consequence is that the EU will increasingly be importing dairy products from relatively unregulated external sources - with risks to food quality, consumer safety, and security of supply - not to mention carbon footprint/energy costs associated with transporting goods long distances. Once farmers retire a lot of knowledge and culture is lost - it is a largely irreversible process - there are virtually no new entrants into the business. Thus unless t is managed carefully, the EU will create an irreversible dairy produce dependency on external suppliers with little by way of animal care or product quality control in source countries.

I’m not suggesting that farmers be subsidised hugely and indefinitely - subsidies have been declining gradually on a long term basis in any case. But we don’t want to turn our countryside and rural population structure into an arid depopulated agribusiness wasteland either. What works for large Tory held estates doesn’t necessarily work for small family held farms. The call to eliminate subsidies is also a call to eliminate competition from small farmers so that the larger estates have control of the countryside to themselves.

Food production is an issue worldwide, and we shouldn’t necessarilly be forcing third world economies to provide for first world food requirements when their own people are starving. The Irish famine 1845-8 led to 2 Million deaths and the same number of forced emigrations at a time when Ireland was a grain exporter for the British market. Small producers can’t always survive the exigencies of climate and market price fluctuations. So providing some stability is a laudable CAP objective - as is control of GM crops and habitat destruction.

Unregulated markets haven’t worked in the financial sector, and neither did they work in the agricultural or fishing sectors. The difficulty is that farmers have very little bargaining power compared to “too-big-to-fail” banks and are thus always going to be at the end of the gravy chain - even though they are at the very beginning of the food chain. Long term, the farmers are fighting a losing battle, and the family farm is dying. However I think we won’t appreciate what they contributed until they are gone.

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Jon Worth

Jon<abbr> 21.06.2009 at 23:58 | Permalink

Nice try Frank, but there are 2 serious problems with this:

(1) Seriously, how much milk could possibly be imported from anywhere outside the EU to - say - Ireland? OK, if it’s cheese or yogurt perhaps, but I would like to see some stats on that. And if there are major (sub-standard) exports, then the farming lobby needs to push for more stringent rules on those imports, rather than whining about the situation.

(2) The farming lobby in Brussels has been immensely strong for years and years, massively out-weighing the total impact for farming on the European economy. There’s no way farmers are rolling over in a pliant manner.

I agree that the family farm is dying, but as far as I am concerned, so be it. I do not seen any further justification for protection of farming than for any other sector.

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My Response

1. Farmers have been pushing for greater (level playing pitch) regulation on imports for years. See recent Irish farmers delegation to Brazil.. The problem is GATT often doesn’t permit such regulation (= trade restrictions) and may even force GM products into the EU.

2. If farmers have been so powerful and successful, why have CAP price supports been declining for years, and why is the family farm dying? You confuse highly visible street protests with really effective insider lobbying such as that carried out by the City or large corporations.

3. Why is it that urban “Socialists” are all for regulated markets and state intervention and provision when their direct interests are concerned - healthcare, education, housing, social welfare - and suddenly all for free markets when farmers are concerned? In reality, differential taxation/government supports means that very few sectors are not subject to varying degrees state intervention/subvention.

4. The reality is that primary food production is largely uneconomic in western Europe - we don’t have the huge land mass and scale of US farmers, and even they are heavily subsidised. The EU has long had a strategic policy of supporting a degree of food self-sufficiency in Europe, and preserving a degree of small scale craft production of produce as part of the social structure. I find these to be laudable objectives - no less so that providing good state education/healthcare for all, social welfare for some, and policies to support industry and enterprise in other sectors. It also makes sense that these policies are enacted at an EU rather than a state level.

5. Instead of whining about farmers, why don’t you work for better and more consistent health, education, and social welfare services throughout the EU?

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Trooper Thompson responds

Trooper Thompson<abbr> 22.06.2009 at 01:35 | Permalink

“I agree that the family farm is dying, but as far as I am concerned, so be it. I do not seen any further justification for protection of farming than for any other sector.”

The family farm may be dying, but not from natural causes. The cost of regulation that your beloved EU has introduced has fallen disproportionately on small farmers. I’d rather subsidise food production than the criminal bankers.

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Jon Worth

Jon<abbr> 22.06.2009 at 08:20 | Permalink

1. At the instigation of Irish farmers the EU banned Brazilian beef imports - see this. The idea the farmers have no power on these sorts of matters is folly.

2. It’s completely right that CAP price support has been declining. Price support is what gave us milk mountains, excess supplies of sugar, Italian farmers dumping excess tomatoes on the world market. Pay farmers to stay in business, fine, but don’t mess up world trade while doing so. There are 2 things wrong with the CAP: that it takes a huge slice of the EU budget, and that is messes up world trade in agricultural products, especially for producers in the developing world. The latter is the one that most importantly needs to be sorted out.

3. There is a difference between setting up the rules for a market and making sure it operates fairly, and handing out subsidies - they are not the same thing. Yes, farmers should be paid a fair price for milk, just as a steel worker should get a fair wage too. But if either of those industries takes a hit, so be it, government has to step in and help support and re-train the people made redundant.

4. There are 2 aspects to what I stand for with regard to the EU - one is to make the EU use the powers that it has better, and the second is to work out ways to do new things. CAP is a relic of the 1950s, there’s never been a proper discussion of its role, and it does not benefit farmers, consumers or developing countries in its present form. That’s the reason I’m critical of it.

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James Burnside responds

James Burnside 22.06.2009 at 09:59 | Permalink

If the CAP was maintaining “family farms” in Europe, it would be worth the money. But - as recent moves to publish the beneficiaries prove - too much of the budget is going to rich landowners, large farming companies and agrifood businesses (sugar refiners, for example). In 50 years, CAP has - at best - slowed down the process of consolidation in farming, as commercial interests seek to maximise economies of scale. The introduction of the sorts of regulations/costs Frank mentions above have been a major driver of that consolidation.

The other problem has been, and is, the buying power of the (consolidating) small numbers of supermarket chains which supply ever-larger proportions of the total food consumption of the increasingly urban population across Europe. They drive the prices down for foreign suppliers, just as much as EU-based suppliers, so while farmers giving up in the EU will increase the proportion of food we get from the developing world, it certainly doesn’t mean they will be guaranteed a better price.

Yes, the CAP takes the biggest share of the EU budget, but the proportion’s fallen a lot; and would have fallen further if the Union had increased its budgets to the GNI share agreed in previous financial perspectives. CAP needs to be reformed significantly, but the answer is a lot more complex than simply slashing agricultural spending in the EU budget and letting the markets decide the fallout.

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My response

Jon Worth wrote

CAP is a relic of the 1950s, there’s never been a proper discussion of its role, and it does not benefit farmers, consumers or developing countries in its present form. That’s the reason I’m critical of it.

But you do not need to repeat Tory talking points to be critical of the CAP. Farming is as susceptible to a class analysis as any other sphere of economic activity, and as James Burnside has pointed out, the problem is not the existence of the CAP per se, but that its has been too largely tilted towards large landowners and agri-buisness rather than small workers earning a precarious wage. (My brother-in-law works 12 hour days, 6.5 days of the week, 51 weeks of the year, with no public or bank holidays. He has never married partly in consequence, and his income, never large, is subject to huge fluctuations in price and costs - e.g. the EU has just mandated a new slurry pit at a cost of 40K and his silage harvester (14K)has just broken down). It is unlikely that his farm will survive him as a working farm and the countryside is being taken over by scattered suburban development, “gentlemen farmers”, land bank investors, roads and developers.

I would share your concerns about product dumping to the detriment of third world producers, but the butter mountains et al of which you complain have been much reduced in recent years and it is generally multi-national agri-businesses operating in the third world which are effected by world commodity prices, not small indigenous producers producing for their local market - which are much more effected by local supply and demand in response to poor harvests/climatic conditions, and the general healh of the local economy. Overall, not enough food is being produced, so policies which encourage quality, stability and security of demand and supply are to be commended from both a producer and consumer perspective.

I have no doubt that agriculture in advanced high cost European economies would have long died out were it not for the CAP. Rather than repeat Tory talking points on the one area of policy where the EU has been somewhat effective - operating out of a declining cut out of a budget of c. 1% of GDP - why not campaign for more effective EU action and a larger budget where greater EU expenditure and coordination is needed - harmonisation of health care, education, social welfare, working conditions, consumer/patient/worker/child/and human rights etc.? The working hours and conditions of farmers would not pass any “Working Time Directive” test and yet socialists are peculiarly blind to the rights of farm workers invoking market mechanisms they do not accept in the public employment sphere or many private industries.

Part of the reason socialism is in long term decline in Europe is that they have often gratuitously alienated the self employed in many spheres of economic activity when those self-employed - increasingly dominated by near monopoly capitalistic concerns - have far more objective interests in common with industrial workers than they have with their multinational suppliers/customers who are gradually squeezing them out of business through a combination of higher costs and lower prices. You are confusing urban hubris and alienation from primary production with socialism. Get your hands dirty and work on a farm for a few days to appreciate its importance in social, economic and environmental terms - and don’t mortgage our future to the Chiquitas of this world.

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Jon Worth

Jon<abbr> 22.06.2009 at 12:34 | Permalink

Moving slightly beyond the farming points… I agree with you that policies for small enterprises and self-employed people are vital if the left is ever to rejuvenate itself. I am after all self-employed (although in web design and not in farming) so I know what it’s like, especially in Belgium where ludicrous rules and systems predominate.

As for how small business can prosper in farming - it is surely through value added, rather than simply being a smaller version of the big guys - i.e. by producing better products for niche markets.

Then for the other things you raise… I think you wrongly interpret the extent to which I in any way agree with socialist or social democratic parties anywhere, and I for sure have very, very little influence or impact on any of them. I have been a member of the UK Labour Party for a long time, but that’s more due to what the party might be rather that what it actually is. I’m very much a believer in Nordic ideas of flexicurity, wealth redistribution through the taxation system, but also simple systems to allow individuals to create companies and become entrepreneurs.

The issues of social policy, healthcare etc. are in my mind too much lost causes at EU level at the moment that I don’t deal with them on this blog. At least with CAP, esp. when it comes to matters of international trade, there could at least be some movement in the coming years.

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My Response quoting Jon

Frank Schnittger<abbr> 22.06.2009 at 12:55 | Permalink

Jon Worth

As for how small business can prosper in farming - it is surely through value added, rather than simply being a smaller version of the big guys - i.e. by producing better products for niche markets.

My daughter works on a neighbouring dairy farm producing high quality ice cream for shops, restaurants and festivals using only natural fresh ingredients - she is the sole employee in a family enterprise.

I’m very much a believer in Nordic ideas of flexicurity, wealth redistribution through the taxation system, but also simple systems to allow individuals to create companies and become entrepreneurs.

How is this inconsistent with helping family farms to survive? - ref:
Jon Worth

I agree that the family farm is dying, but as far as I am concerned, so be it.

Jon Worth

The issues of social policy, healthcare etc. are in my mind too much lost causes at EU level at the moment that I don’t deal with them on this blog. At least with CAP, esp. when it comes to matters of international trade, there could at least be some movement in the coming years.

Must we always let our agendas be set by the neo-cons and neo-libs? The only movement there has been in recent years has been in line with the “market liberalisation” agenda you also seem to espouse. Isn’t that what is wrong with “New Labour”? It has become more free market orientated than the big businesses it claims to regulate and control. (Having worked for 24 years in the world’s largest alcoholic drinks business, I can assure you that free markets are for the little guys. We aimed to dominate and control markets).

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Jon Worth

Jon<abbr> 22.06.2009 at 12:59 | Permalink

The Nordic flexicurity model operates - broadly - on the basis of the state stepping in with re-training and re-skilling, rather than propping up enterprises that are no longer competitive. So the statements I’ve made are consistent. The state should not step in to save family farms, but it should assist with helping communities to adjust.

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My response

Frank Schnittger<abbr> 22.06.2009 at 13:36 | Permalink

According to this article on the Nordic Model, Ireland and the UK rank more highly than Iceland, Norway, Finland and Sweden on the ease of doing business index. It didn’t stop us being hit disproportionately hard when “light touch regulation” capitalism crashed in the past two years. Neither did it stop us bailing out banks and car industries etc. to the tune of (potentially 90% of GDP) and the only re-training/re-skilling of bankers we have done is to ask them to go easy on the bonuses for the next year or so.

The CAP is a pittance by comparison, and is aimed at sustaining a level of agriculture in an environment where costs have inflated sky high because of the dominance of financial “services” and other industrial monopolies. I would feel more comfortable in a society where at least part of our productive effort is devoted to making real things for real people and we have some security of supply if the whole system of world trade goes belly up.

There is no guarantee that world food prices will come down if Europe stops producing but we can be sure that our food supplies will be increasingly dominated and controled by a smaller and smaller oligarchy of global food businesses. An Oil crisis has nothing on the social crises that would follow on a food crisis, and as Naomi Klein has shown, disaster capitalism feeds on such artificially induced crises to produce an entirely new playing pitch and price levels for essential foods.

We need a domestic food industry for strategic survival reasons - as much if not more than as we need a defence industry, and a sustainable energy industry. Leaving energy to the free markets merely hastens the day when the the oil will run out and energy prices become unaffordable for all but the wealthy. If we don’t ensure a strategic and sustainable supply of food for the world’s population more people will end up starving. It’s as stark a choice as that.

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I’m sure there’s right on both sides, and I may be getting a bit over-rhetorical and over generalised in some of my points.  I make no claims to CAP expertise.  But can someone here help us out?  Is there such a thing as a progressive critique of the CAP or is the neo-lib critique the only game in town?

A conference to mark the end of the Th!nkaboutit blogging competition was held in Rotterdam on the 15th. June, and even merited a story in the Financial Times.

Joe Litobarski, Nanne Zwagermann, Andreas Mullerleile, Daniel Antal, Jon Worth, and Julien Frisch led a panel discussion on the outcome of the European Elections and David Brewer, of Media Ideas International, gave a presentation on the growing importance of blogging in conflict areas of the world - where creating an international blogging profile is sometimes the best insurance policy against arbitrary arrest and even death. Jon Worth had this to say about the more prosaic matters of Euroblogging (against the backdrop of a boat trip around Rotterdam harbour)…

Click here to view the embedded video.

The conference was a great opportunity to meet bloggers from all the EU member states.  Joeri Oudshoorn “travelled to all the EU member states in 2005 and stayed at young people’s homes to live their lives and interview people taking initiative. Now he is Editor in Chief of Dutch version of indigo magazine, a European serious lifestyle magazine printed in seven languages: English, French, German, Italian, Polish, Spanish and Dutch. www.indigomag.eu”

Click here to view the embedded video.

The panel decided it would be a good idea to blog about the appointment of the next European Commission, and especially the likely identity of the Commissioners to be nominated by each country.  I don’t have a lot to contribute on the likely appointees from other countries, but here is my take on the potential Irish nominees:

The post of Euro Commissioner is in the gift of the Taoiseach of the day and so is likely to go to one of his (Fianna Fail) party members - although he will have to consult with his Green Party junior coalition partner.  A major consideration is which candidate is most likely to secure a senior Commission portfolio - the Agriculture portfolio being the most prized from an Irish perspective. The possible candidates include:

1. Charlie McCreevy (Outgoing Commissioner).  I have no information on whether he wants to be re-appointed or not but he doesn’t seem to have covered himself in glory in his Internal Market portfolio.  On the other hand, he may appeal to Barroso’s free market instincts and could be assured of a reasonably senior post if he wanted it.  He has always been more at home on an Irish horse racing track with his entrepreneur chums and my guess is he would prefer to retire at this stage.
2. Bertie Ahern, former Taoiseach.  Was offered the Presidency of the Commission but didn’t want it and brokered the deal which saw Barroso appointed. Led an extremely successful Irish Presidency of the EU but has had a rapid fall from grace since primarily because of his dodgy personal finances as revealed by a Tribunal of Enquiry, and the implosion of the Irish economy just as he was retiring.  It is difficult to know how these factors will have effected his stock in Europe, but he certainly has little prospect of a further career in Ireland (a run for the largely ceremonial post of President had been mooted).  More of a negotiator and a fixer than an administrator, his talents would be more suited to the Presidency of the Council should Lisbon be ratified.
3. Micheál Martin, Minister for Foreign Affairs.  Generally seen as competent and a major contender for the leadership if there is a heave against Cowen -  and so what better way of getting rid of a potential rival than to send him to Brussels?  But would he want it?  He is the originator of the ban on smoking in public places which has proved to be very popular despite the opposition of the influential pub trade.  A smooth operator, he could do quite well in Brussels.
4. Mary Coughlan Tánaiste (Deputy Prime Minister) and Minister for Enterprise, Trade and Employment. Has been a major embarrassment and is generally perceived as not being up to the job. During the Lisbon referendum campaign she committed the gaffe of saying that larger EU members states still had two Commissioners each - which doesn’t augur well for her general knowledge of the Commission.  However she is a big drinking buddy of Cowen and he will not want to be seen to demote her.  The Commissionership could be presented as at least a move sideways, but would she get a significant portfolio?
5. Brian Lenihan Minister for Finance.  Brian Lenihan was promoted to the Ministry of Finance on Brian Cowen’s election as Taoiseach.  Despite relatively little prior ministerial experience and a training in Law rather than Economics or Business, he is seen as doing a passable job despite being thrown into the deep end of the worst financial crisis in the State’s history.  If he suffers from burnout Cowen may reward him with the Commissionership, although it is difficult to see who - other than Martin - could replace him.
6. Dick Roche Minister for European Affairs.  If he delivers a successful Lisbon referendum campaign this time around, Dick may be in line for a promotion to the Commission.  He has always been very partisan in favour of the EU but his combative style can alienate those who see things differently.  The key issue is whether he could secure a senior portfolio.
7. Pat Cox . The former President of the European Parliament has the advantages of a former high profile in Europe and the fact that his selection wouldn’t cause a bye-election in Ireland - as would all the other potential nominees bar McCreevy above. It has also been rumoured that his selection might have been part of the deal for Fianna Fail joining ALDE. Personally, I can’t see it happening. Pat Cox was a member of the now defunct Progressive Democrat party and Cowen doesn’t owe him anything. Cowen is above all a party man, and would want to be pretty desperate to go outside the ranks of Fianna Fail.
8. Anybody whose appointment wouldn’t cause a bye-election, one which the Government would almost certainly lose. Into this category fall Eoin Ryan, defeated Fianna Fail MEP in Dublin; Pat the Cope Gallagher, successful Fianna Fail candidate in Ireland North-West, (but who may have swung a deal to be the next Commissioner in return for standing); and Brian Crowley, popular Fianna Fail MEP for Ireland South who will lose his leadership position in UEN with Fianna Fail’s move to ALDE. None of these have senior Ministerial experience and would be rightly shunted to the most junior ranks of the Commission. But is Cowen beyond caring?

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The other question raised by the panel is who we would like to see be the next Commissioner from our country.  I have though long and hard about people who might be qualified for the job - people with outstanding political or administrative experience. outstanding visionary or intellectual gifts, and who could make a major contribution to the development of the European Union.  So far I haven’t come up with any names.  Perhaps readers here might have some suggestions.