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Economics

2009 Year-Ender

29 December 2009

2009 Year-Ender

By Gwynne Dyer

The year 2009 was most notable for the three bad things that didn’t happen. Firstly, the financial melt-down of late 2008 did not plunge us all into a 1930s-style depression, although there were plenty of pundits predicting that less than a year ago.

As Stephen Schwarzman, head of the private equity company Blackstone Group, said last March: “Between 40 and 45 percent of the world’s wealth has been destroyed in little more than a year and a half.” But all he was really saying was that a very specific kind of financial bubble has burst. All the land and houses are still there, and so are most of the factories and jobs.

There has certainly been a deep recession in the developed countries, and the current slow recovery may be a false dawn: a “double-dip” recession is still entirely possible. Moreover, the vast amounts of money spent by Western governments to save the banks has left them with a staggering burden of debt. But the worst has been avoided, and in the developing countries there was scarcely even a recession.

The second predicted disaster that did not come to pass was a killer global pandemic like the 1918 strain of influenza. Something of that order is probably still lying in wait for us down the road, but the swine flu turned out to be much less lethal than was initially feared. Considerable credit should go to those who made a vaccine available much faster than was thought possible, but basically we just got lucky.

And the third bad thing that didn’t happen? The same bad thing that hasn’t happened every year since 2001. There was no mass loss of life (by which I mean more than a thousand people murdered in a single incident) due to terrorist action in any Western country.

Even a relatively large death toll like that should not be a reason for any government to go berserk and start invading foreign countries. A thousand people is a lot to lose, but it really isn’t the end of the world. A thousand people die of natural and accidental causes in the United States (to pick a country not entirely at random) about every three hours. Terrorism is different, of course, but a rational and measured response is still required.

You know very well that it would be neither rational nor measured. Although an over-reaction is precisely what the terrorists are seeking to provoke, domestic political realities in the target country still make it likely that the response would be hugely stupid and violent. So we go from year to year waiting for the terrorists to succeed again on the scale of 9/11, knowing that Western countries will go crazy again if they do. But it didn’t happen in 2009.

What did finally happen at the beginning of 2009 was the long-overdue departure of the Bush administration. Almost everybody outside the United States, and many people within it, were profoundly relieved by that, but it imposed a huge burden of expectation on the shoulders of his successor as president, Barack Obama.

It has been a difficult first year for Obama, who presumably expected to have both his healthcare reforms and a climate change bill through Congress by now. His problems with Afghanistan, however, are largely of his own making.

Calling Afghanistan the “good war” (in contrast to Iraq) during the election campaign was a useful tactic to deflect accusations that he was too peace-loving, but now he’s stuck with it. He has already ordered a doubling of US troop numbers in Afghanistan, and he is now on a very slippery slope. This war is unwinnable, and it could destroy him politically.

In the meantime, Obama does small but useful things that do not require Congressional assent, like cancelling the Bush plan to put a missile defence system into eastern Europe. Or at least that do not need Congressional assent in advance, like a new and better Strategic Arms Reduction Treaty with Russia (although that is still being negotiated). He even tried to launch a new Middle East peace initiative, although that was doomed from the start.

The Middle East, with only a tenth of the world’s people, continued to generate more than its fair share of the news. The Israeli punishment attacks on the Gaza Strip that began on 27 December, 2008 continued through most of January, leaving over 1,300 Palestinians dead. More than half of them, according to all estimates except the Israeli military’s own, were civilians. Israeli fatalities from all causes, including friendly fire, were thirteen.

The Israeli election in February delivered Binyamin Netanyahu, the leader who had buried the Oslo accords in the late 1990s, back into the prime minister’s office, and any remaining hope for an Israeli-Palestinian peace deal evaporated. Netanyahu is politically dependent on right-wing Jewish settlers in the occupied territories, and would be most unlikely to compromise on their demands even if he were personally so inclined (which he is not).

So the twenty-five-year dream of a “two-state” solution gradually fades, and the prospect of a third intifada grows. It didn’t happen this year, and it probably won’t happen next year either. But the Israeli military occupation has entered its fifth decade, and another generation of Palestinians is growing up so full of rage that they will confront Israeli power despite the obvious fact that they cannot win.

At the other end of the Middle East, Iran was hardly ever out of the news in 2009. The old question of whether or not it is seeking nuclear weapons stayed high on the international agenda, but it was overtaken by the new question of whether the present leadership could stay in power. President Mahmoud Ahmedinejad’s implausibly high level of voter support in the June election ignited protests that have shaken the regime’s hold on power.

If it is a revolution, it’s a very slow-motion one: the protesters are not out on the streets every day, or even every month. Most of them do not even want to overthrow the Islamic system; just to reform it. But they keep coming out, most recently just this week, and they are not deterred by mass arrests and systematic rape of detainees, nor by Revolutionary Guards shooting to kill in the streets.

This is the way that the Shah was overthrown: by slow degrees, over a period of many months. It may not end the same way this time, but it looks like the same pattern – and the best thing everybody else can do is not to meddle. Iranian protesters do not need foreign support, and they certainly do not need foreign trade sanctions to be applied right now, because that makes them look like foreigners’ puppets.

In Iraq Prime Minister Nouri al-Maliki emerged as a genuine strongman, centralising power in his own office, staffed by his own party and clan. In Afghanistan another American nominee, President Hamid Karzai, embarrassed his patrons by rigging his re-election last August too blatantly, but they had to accept him in the end. And in Fantasyland-on-the-Gulf, aka Dubai, they could not make interest payments on some $50 billion in loans until Abu Dhabi bailed them out.

Europe had a quieter year (as it generally does). Chancellor Angela Merkel of Germany swept back into a second term in September with a “dream coalition” that freed her from having to compromise with the left. France became the largest economy to impose a carbon tax on individuals and businesses using coal, gas or oil, with the explicit intention of changing people’s patterns of energy use. The tax is seventeen euros (US$24) per tonne of emissions now, but it will rise over the years.

Italian Prime Minister Silvio Berlusconi had a miserable year, being accused (probably correctly) of consorting with minors and with high-class prostitutes, sued for divorce by his wife, and struck in the face by a model of Milan cathedral. More seriously, an Italian court struck down the umpteenth law he had pushed through parliament to allow him to escape prosecution for corruption. But he would win another election today. Italian voters are very tolerant, or something.

At one extremity of Europe, Northern Ireland was threatened with a slide back into chronic violence, as radical Catholic groups who reject the IRA’s commitment to power-sharing tried to lure the Protestants and the British army back into the fight by committing random acts of terrorism. At the continent’s other extremity, the Georgian government was found guilty of starting last year’s war with Russia by an investigating commission of the European Union

The EU as a whole finally ratified the Treaty of Lisbon, which streamlines the operation of the organisation to cope with a membership that has now expanded to 27 countries. It took eight years, two Irish referendums (they got the answer wrong the first time), and some face-saving concessions to the Czech president to get it through. The EU, it would appear, is still not ready for prime time.

The principal political events in Asia were the Indian election in May, which gave the ruling Congress Party a resounding vote of confidence, and the August election in Japan, which brought the opposition Democratic party to power after 52 years of almost uninterrupted rule by the Liberal Democratic Party. But there was almost no connection between these two elections in anybody’s mind: Asia is still little more than a geographical expression.

Elsewhere in Asia, the most important military events were the Sri Lankan government’s decisive victory over the Tamil Tiger insurgency in May, which brought a 26-year civil war to an end, and the North Korean nuclear weapons test in the same month. The North Korean regime was mainly using the test as a way to blackmail the major powers into guaranteeing its future, and those powers are playing along as usual. They have no choice.

Thailand is caught up in a deepening struggle between the poor majority and the old royalist anti-democratic elites, incarnated in the recurrent street clashes between the Red Shirts and the Yellow Shirts. In Burma, pro-democracy leader Aung Sang Suu Kyi, though still under house arrest, has supported efforts by the United States to open up channels of communication with the military junta. A military mutiny was successfully put down in Bangladesh in February.

In Pakistan in December, an amnesty for corruption charges that had protected hundreds of politicians including Prime Minister Asif Ali Zardari was overruled by the Supreme Court, and the country was plunged into fresh political turmoil. The Maldives held a full cabinet meeting underwater in scuba gear to dramatise the threat posed to the low-lying island country by rising sea levels. The Nepalese cabinet, not to be outdone, held a meeting on the slopes of Mount Everest to dramatise the threat posed to the country by melting glaciers.

China’s emergence as a world player continued, with attention focussed in particular on its expanding investments in Africa. The ex-imperial powers saw this as neo-imperialism, but the ex-colonies themselves mostly took a different view. They understood that China was trying to secure long-term supplies of food, fuel and minerals for a future in which it believed that all those commodities would be scarcer, but at least the Chinese paid well and didn’t subject their suppliers to hypocritical lectures on human rights.

A blow-by-blow list of all the things that went wrong in Africa in 2009 is depressing: a military massacre in Guinea, a coup in Madagascar, blood-drenched anarchy in Somalia, mini-wars between the police and extreme religious sects in northern Nigeria, and much more in the same vein. But it feels less hopeless if you recall that most of Africa’s 52 countries are at peace – and that African economies have been growing at an average of five percent a year since 2000, compared to only one percent in the previous decades since independence.

Much the same observation applies, in a minor key, to Latin America. What little news makes it out of the continent tends to be bad: the brutal war between the state and the drug cartels in Mexico, the alleged threat of war between Venezuela and Colombia, the messy sort-of-coup in Honduras, and so on. But most of the region is at peace, more or less democratic, and even making progress economically. Which may explain why it exports so little news.

Finally, Copenhagen. The vast, 192-country conference on climate change in December was a total failure in terms of its declared objectives. There is no new treaty to replace the Kyoto accord. Even modest Kyoto-style national targets for cutting greenhouse gas emissions were omitted from the vague declaration that was cobbled together by the two biggest emitters, the United States and China, on the last day. Neither are there any deadlines for further action.

“The Chinese hate numbers,” as one participant put it – and the United States was quite happy to let China get the blame for killing a deal that Washington couldn’t have delivered on either. The problem is that nobody really knows where we go from here, and time is running short. If there is one thing that 2009 is remembered for, it may be for the historic failure at Copenhagen.

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This article is 2200 words. It’s written in modular form, for the most part, and you’re free to cut it wherever you want. If you need to write something to bridge the gap where you cut, just do it. Experience has taught me that people’s news priorities in different parts of the world are so different that it makes no sense for me to try to do the job.