Thursday, February 06, 2003
posted by Mooraq at 8:09 PM
Cutting It Closer
The Bank of England cuts the rate, the ECB doesn't
The Bank of England announced a surprise interest rates cut to 3.75%. Meanwhile in Frankfurt...the ECB to nobody's surprise kept the rate unchanged at 2.75%.
The ECB doesn't waste any opportunity to disappoint those who hope for a more "hands on" policy on the rates. Given the state of Europe's biggest economies, a little positive surprise could have lifted the present gloom but that's OK, we have learned what to expect from Duisemberg: nothing smart (I will be happy to wave him bye bye when he goes in a few months, what an incompetent the man has proven to be!).
Leaving aside the economic comments, one interesting side effect ot this two actions (or, more precisely, one action and one inaction) is that the spread between British and Euro rates has gone down to 1%. Might this be the beginning of the famous convergence that is one of the 5 tests the British Chancellor has to use to evaluate the sense of joining the Euro? Optimism may prove premature, the agreement is that the ECB is going to cut rates later this year and I doubt that the BoE will follow suit. On the other hand, it could be a signal that many economic indices are converging - unfortunately they are converging down -.
As a strong pro-Euroist - does such word exist? I doubt it - I would rejoice at Britain joining the Euro but every poll indicate that the British public is still strongly against, and Blair is too smart to pick a battle he will probably lose. Britain will sooner or later join the Euro, that is certain, but it will not happen in the next couple of years. In the meantime, let's hope Duisemberg successor (Trichet? Maybe, if he does not end up playing Papillon) will prove a little more flexible, a little less gaffe-prone and lot smarter.
Wednesday, February 05, 2003
posted by Mooraq at 8:59 PM
Powell's Real Proof
Powell’s speech has not convinced the sceptics but was a step in the right direction
If you happen to live on another planet: Secretary of State Powell has delivered to the UN Security Council circumstantial evidence of Saddam’s mischief. (Do I really need to add a link? here is one)
While the information offered is not enough to convince the sceptics - France has already said more time should be given to the inspectors to do their job - I personally believe this is an important step for the building up of the case for war.
Symbolism and historical reminiscences of Adlai Stevenson aside, the image of a Secretary of State addressing the UN on live TV is a strong endorsement of the UN. Whoever, like me, believes in the fundamental role of supra-national institutions like the UN cannot but feel heartened by its increasing role in issues like the war on Iraq.
Other countries should take heed and avoid anything that could undermine this role, like abusing the veto power. I am personally still in favour of a second UN resolution before starting a conflict, I subscribe to Chirac’s words about war being the last of all possible resorts. However I also believe that a second resolution could be swiftly achieved if needed. At the end of February the US army will be fully deployed and the inspectors will have had two months to investigate Iraq. Unless a decisive turn of events gives us a proof of Saddam’s compliance, that should be the time of a new UN decision sanctioning the war.
posted by Carla Passino at 8:58 PM
Good News for Argentina
Growth in some industrial sectors may drive the country’s recovery
After years of economic misery, there may be light at the end of the tunnel for Argentina, reports local newspaper La Nacion (link in Spanish).
Some of the country’s industrial sectors are bouncing back, according to risk rating agency Standard & Poor’s. Although several Argentinean companies are expected to default in 2003, this will not prevent growth and may indeed help some renegotiate their debts. This is especially true of the energy sector, which stands to benefit from the increase in oil prices driven by the imminent war against Iraq.
When the corralito (restriction on cash withdrawals) was lifted in December 2002, analysts highlighted the risk that Argentineans would rush to convert their savings into foreign currency, thus weakening the peso on the international markets and exasperating an already rampant inflation at home.
With rosier economic prospects in sight, the beleaguered country may well be able to regain the trust of its people and step into a virtuous circle, which will speed up recovery.
posted by Carla Passino at 1:43 PM
Lose-Lose Situation
Blair lost the parliamentary vote on the Lords reform yesterday, but the House of Commons lost their face
Tony Blair suffered his biggest parliamentary defeat yesterday when the House of Commons voted against his plans to turn the House of Lords into a fully appointed chamber.
When the old hereditary system was dismantled three years ago, it was replaced with a transitional House, where all the appointed peers and 92 hereditary ones kept their seats. Although he pledged that it would make the Lords 'more representative and democratic' in his 1997 electoral manifesto, Tony Blair then reneged his promises and announced his preference for a fully appointed Upper House.
This caused a serious rift with his own Members of Parliament (MPs) - including the House of Commons' Leader, Robin Cook - and even with some cabinet ministers, who spoke out in favour of an elected Lords. As a result, the House of Commons last night turned down Blair's proposal by 323 votes to 245.
Trouble is that MPs went on to reject each and every one of the seven options on the table, which almost made the case for the Government's plan to populate the Lords by appointment. Due to the Commons' embarrassing incompetence, what was meant as a rebuff of the Prime Minister's stance may well turn to Blair's advantage.
Compared to most Western democracies, the British Parliament is extremely weak and would benefit from a strong Upper House that could rein in the executive. The only possibly way to achieve this would be for the new house to be wholly elected on a different basis - geography perhaps? - from the Commons. That this is unpalatable to the Prime Minister is hardly surprising. That MPs would fail to see it is inconceivable.
Petty concerns that another elected chamber would somehow threaten their primacy have led the Commons to shoot themselves in the foot. Pity that they have shot Britain's best interests with it.
posted by Carla Passino at 9:11 AM
America Second?
Although they are a minority, there remain some Americans who think that unilateral nation-building isn't such a good idea
A quick tour round American weblogs and newswires makes for a depressing read for a European these days.
The common feeling appears to be that if an allied nation puts its own interest ahead of American interest; if indeed an ally dares so much as to be an ally - and therefore advise - rather than a subservient vassal which obeys unquestioningly; then it really is a traitor and must be subjected to moral lynching.
Other friendly governments are asked to restrain the "erstwhile ally" in a strategy which smacks of schoolyard rows: if you are his friend you can't be mine. And senior Pentagon executives wonder "whether the United States should now or on any other occasion subordinate vital national interests to a show of hands by nations who do not share our interests" (and why should they do otherwise, when America always puts America first?).
In this scenario, it is all the more heartening to see that there are still some Americans out there who condemn Bush's unilateralism and call the bluff on pseudo-libertarians, who think that it is fine to go regime-building abroad so long as you have a small government at home.
Tuesday, February 04, 2003
posted by Mooraq at 5:36 PM
Bush’s Problems
The American President should remember a phrase his father learned the hard way.
The latest budget proposal (here and here) from the Bush Administration looks scary. Even with optimistic economic growth predictions, it looks set to plunge the US into big budget deficits for the foreseeable future.
Under a few grabbing headlines about increased military spending lies the usual tax cut agenda that the Administration has been pushing since election. What has changed though is the macroeconomic environment, tax cuts that made sense in a budget surplus situation now looks downright dangerous. Even without subscribing the “Rubinomics” ideas about the need for a balanced budget to keep interest rates low and the economy going, the economic risk generated an increasing long term budget deficit coupled with the usual big US negative trade balance are very high. I wonder what happened to Newt’s idea of a balanced budget that was such a big part of the Republican’s Contract with America less than 10 years ago?
In the present state of the US economy, a short term spending increase would make a lot of sense, especially if balanced with a long-term stabilization. Bush’s current plan seems to be doing exactly the opposite. The US President is playing a very dangerous game, pushing his political agenda ahead of the real needs of the economy. If the US economy does not improve in the next year or so, he will feel a lot of heat. He may learn what his father discovered 10 years ago: it’s a simple phrase which contains the word “stupid” at the end.
posted by Carla Passino at 10:52 AM
What Europeans Want
How much does a European government's relationship with America matter when it comes to the elections?
There has been some speculation on a number of American weblogs over the electoral cost European governments will pay for not supporting America. Did, for example, Schroeder's anti-American stance lose him the election? Glenn Reynolds thinks so. These views suffer from a degree of America-centrism. The truth is that the average European, if there is any such thing, doesn't care that much about America.
Schroeder may well have lost the Lander elections over his stance on Iraq, but that's because he made it the centre of his campaign, while the Germans - albeit overwhelmingly opposed to the war - wanted to understand what he would do to revive their flagging economy.
Similarly, although Tony Blair's staunch support for Bush isn't earning him any points with the British electorate, he will win or lose the next general election on taxation, transport, the health service and education, detracting some force to his brave words that he is prepared to 'stake his political future' over Iraq (link requires registration).
In Italy, Berlusconi will have to explain to his voters why he gave priority to fixing his and his friends' judicial troubles over stimulating a rather flat economic growth. That he stood by Bush at time of need will count for very little.
So what do Europeans want? A strong economy, a safe country, good public transport and education, a health service that works, liveable cities, a flourishing countryside, the lowest possible level of taxation given a certain degree of public expenditure, a healthy environment, sustainable immigration, a hassle-free integration within the European Union (the desirable level for which varies from country to country).
Sure, international alliances matter and Prime Ministers have been unseated - by Parliament - over bad foreign policy choices in the past, such as the Suez crisis in 1956. But, short of a disastrous war, friendliness towards America (or lack thereof) has yet to lose an election to a government that is successful on the home front.
Monday, February 03, 2003
posted by Mooraq at 5:55 PM
Chirac’s Problems
The French President has some challenges of his own.
The electoral fortunes of Chirac are very different from his friend Schroeder’s (see previous entry), but the French President has some pretty big challenges ahead. His main problem is connected to France’s international role.
This editorial from the Italian Il Riformista (in Italian) describes very well France’s quandary. For those who do not speak Italian, it basically reads that France’s traditional strategy of using the EU as a podium to punch above its weight is under threat from many fronts. The German re-unification, and subsequent political emancipation from the burdens of the past, the shifting of the EU point of balance with the recent enlargement (and even more if Turkey were to join, no wonder Giscard D’Estaing doesn’t want it!) and the new world order, are all factors that have short-circuited the French foreign policy compass. This is why France is embarking in a number of quirky initiatives (like inviting Zimbabwe’s president Mugabe to a congress to discuss the future of Africa) and idiosyncratic stances - like the one on the war on Iraq -, trying to regain its traditional role. But all these initiatives are just smoke and mirrors as the only real card that Chirac can play is his veto at the UN, but it is a card that has power only if it is not used.
So this is Chirac’s problem: in trying to defend France’s traditional privileges he painted himself in a political corner. The US will go to war regardless of his position and France cannot be the only country in the Security Council voting against war without making a mockery of the same institution that it professes to support. At the same time, his position risks to split Europe and therefore to defeat its own purpose to use Europe as a counterbalance to the US.
So, what will Chirac do? I expect him to do a double tumble at the last minute and vote in favour of the war if it comes to that, even sending some token force to Iraq. Still, it will be a very big and clear volte-face and I doubt that France status will be enhanced by that.
posted by Mooraq at 2:47 PM
Schroeder’s Problems
The German Chancellor has to find some nerve or he is doomed to be gone and forgotten very soon.
The regional elections’ results (it's in German but it's not difficult to understand what "ein desaster" means) in Germany have, apparently, nailed Chancellor Schroeder’s coffin. Having squeezed through last year’s general election by an inch his current ratings are abysmal…and spiraling downwards.
Not even the easy rhetoric against the war on Iraq helped him this time. Yes, we want peace - the Germans are shouting - but we want also an economy that works and badly needed reforms. On the second count Schroeder promised much, for instance to implement the Hartz commission’s recommendations, but no fact has followed his words.
So is time up for the Chancellor? I would not be so sure; Schroeder has demonstrated an uncanny ability to rebound back from dire straits: last year’s elections are a case in point. If he can use his troubles as leverage against the Unions and his own party (who have been blocking most of the reforms) he could still come out the winner and deliver on his promises. In order to do this, he needs to find the strength and energy that he showed in the first two years of his Government, and not the lethargic attitude demonstrated ever since. It’s a big challenge but the Chancellor may sense that he has nothing left to lose by trying radical reforms. Without some bold moves he will fade into nothingness.
posted by Carla Passino at 9:52 AM
The America We Love
The way America is coping with the shuttle tragedy embodies what we love about it
American correspondent for Italian newspaper La Repubblica, Vittorio Zucconi reports from Texas on the aftermath of the Columbia tragedy. In a couple of perhaps over-flowery sentences, he captures the essence of many Europeans' feelings towards America, what we love - the courage, the technology, the desire to push beyond the boundaries of the known - and what we hate or fail to understand - the greed, the military arrogance, the Bush administration.
"In the car park of the First Baptist Church in Nacogdoches, Texas, at the end of the service, children write the names of the dead astronauts on the film of ashes that covers the cars. It probably is just dust from the street, not from men, but no one has yet had the courage to wash his vehicle.
This is the day of tenderness, the day of the jackal, in the world's largest opencast morgue, under a sky from which everything falls, tons of fine ashes and thousands of protective tiles, a finger with a ring, a thighbone, a skull and a plastered helmet, white and flaked like those marble monuments on the tombs of a backwater graveyard, here lies an astronaut, model father and husband. A prayer.
This is the America we prefer to love, not that of the invisible bombers, the money and the power bullies, but the America betrayed by its technology lover, by itself, an America that speaks without arrogance, through its people and its churches."
posted by Carla Passino at 9:39 AM
Requiescant In Pacem
Remembering the Columbia seven
'Considerate la vostra semenza
Fatti non foste a viver come bruti
Ma per seguir virtute e canoscenza.'
Dante, Inferno XXVI
'Call to mind from whence ye sprang:
Ye were not form’d to live the life of brutes,
But virtue to pursue and knowledge high.'
May space exploration continue in their memory.
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