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Syria: Russia to the Rescue?

US Secretary of State John Kerry has just phoned Russian Foreign Minister Sergei Lavrov warning him not to “escalate the conflict” by increasing Moscow’s military support for the beleaguered Syrian regime. He stamped his foot quite hard, telling Lavrov that his government’s actions could “lead to greater loss of innocent life, increase refugee flows and risk confrontation with the anti-Isil coalition operating in Syria.”

What the Russians have actually done, so far, is to send an advance military team to Damascus of the sort that is normally deployed to prepare for the arrival of a much larger military force. They have also sent an air traffic control centre and housing units for its personnel to a Syrian airbase.

It suggests that Moscow is getting ready to go in to save President Bashar al-Assad’s regime. It has given Assad diplomatic support, financial aid and some weapons over the course of the four-year-old Syrian civil war, but it will take more than that to save him now. That would include at least an airlift of heavy weapons, but maybe also direct Russian air support for Assad’s exhausted troops.

They need it. Since the fanatical fighters of “Islamic State” (or Isil, as the US State Department calls it) captured Palmyra in central Syria in May, they have advanced steadily westward from their new base.

One month ago they captured the mostly Christian town of al-Qaratayn, north-east of Damascus. (The inhabitants fled, of course). And now IS forces are within 30 km. of the M5, the key highway that links Damascus with the other parts of Syria that remain under government control.

The jihadis captured Palmyra, by the way, because the “anti-Isil coalition” – the US Air Force, in practice – did not drop a single bomb in its defence. It made at least a thousand air strikes to save Kobani, the Kurdish city on the border with Turkey that was besieged by IS fighters, because the Kurds were US allies. Whereas Palmyra was defended by Assad’s soldiers, so the US let Islamic State have it.

One can imagine Kerry’s (and Obama’s) horror at the idea that by defending Palmyra they would be seen as protecting Assad’s brutal regime, but if Islamic State troops manage to cut the M5 it will be seen as a sign of the regime’s impending defeat. At that point, up to half the people who still live in government-controlled areas – around 17 million – may panic and start trying to get out of Syria.

They would obviously include the religious minorities (Christians, Alawites, Druze), some 5 million people who have good reason to fear slavery, rape and murder at the hands of Islamic State. The millions of Sunni Muslims who have served the Syrian government and its army would also be at risk. So let’s say 4 or 5 million more refugees pouring out across Syria’s borders, to join the 4 million who have already fled.

What they left behind would be a Syria entirely controlled by the extremists. The only remaining question would be whether the jihadis roll on through behind the refugees, overrunning Lebanon and Jordan as well, or whether they fall to fighting among themselves.

All three major Islamist groups – Islamic State (which Turkey and Saudi Arabia no longer support), and the al-Nusra Front and Ahrar al-Sham (which they still do) – are virtually identical in their ideology and their ultimate goals. However, they have some tactical differences, and Islamic State and al-Nusra fought a quite serious turf war last year, so maybe they will get distracted again. But even if they do, Syria will be gone.

This is what the Russians see coming, and they may be willing to try to stop it. When asked on Friday if Moscow intended to get involved directly in the Syrian fighting, Russian President Vladimir Putin would only say that the question was “premature”. Nobody, including the Russians, likes Assad’s regime, but it is the least bad remaining option.

Indeed, it is the only alternative left to a jihadi victory. Most of the “moderate” anti-regime rebels went home or fled abroad years ago, unable to match the jihadis in firepower, in money or in frightfulness. The notion that the US can now create a moderate “third force” able to defeat both the jihadis and the Assad regime is a shameful face-saving fantasy

Moscow used diplomacy to save the Obama administration from itself two years ago, when Washington was getting ready to bomb Assad’s forces in response to a (possibly spurious) allegation that they had used poison gas on civilians. The only way Russia can avert disaster this time, however, is to put its own air force into the fight – and maybe its own ground troops too.

If it does, the key question will then be whether the United States lets Russia do the job that it is too fastidious to do itself, or whether it gives in to the clamour of its Turkish and Saudi allies – and they would be clamouring – to “stand up” to the Russian intervention.

Since the United States doesn’t actually have a coherent strategy of its own, it’s impossible to predict how it will respond. For all Kerry’s bluster, they don’t know yet in Washington either.
To shorten to 725 words, omit paragraphs 6 and 10 . (“The jihadis…it”; and “All…gone”)

Europe’s Refugee Crisis: The Good, the Bad and the Ugly

Refugees from the wars of the Middle East are pouring into the European Union at an unprecedented rate. So are economic migrants from Africa and non-EU countries in the Balkans (Serbia, Bosnia, Albania, etc.), and some of them claim to be refugees too. They are coming at the rate of about 3,000 a day, mostly through Turkey into Greece or across the Mediterranean to Italy, and the EU doesn’t know what to do about it.

It’s not really that big a refugee crisis: one million people at most this year, or one-fifth of one percent of the European Union’s 500 million people. Little Lebanon (population 4.5 million) has already taken in a million refugees, as has Jordan (pop. 6.5 million). But while a few of the EU’s 28 countries are behaving well, many more have descended into a gibbering panic about being “overrun”.

It really is a case of the Good, the Bad and the Ugly, and the best of the Good is Germany. Chancellor Angela Merkel put it bluntly: “If Europe fails on the question of refugees…it will not be the Europe we imagined.” She has put her money where her mouth is: two weeks ago she predicted that Germany would accept asylum claims from 800,000 refugees this year.

She also said that Germany is suspending the “Dublin regulation”, an internal EU rule that says refugees must seek asylum in the first EU country they reach. This is manifestly unfair to Greece and Italy, so Berlin will now allow all Syrian refugees to apply for asylum in Germany regardless of where they entered the EU. Moreover, it will regard Syrian citizenship as adequate evidence that people are genuine refugees.

France, Italy and the Netherlands have also been fairly generous about granting refugees asylum, and quiet, gallant Sweden is accepting more refugees per capita than anybody else in the EU. But the good news stops here. Most other EU countries are refusing to take a fair share of the refugees, or even any at all.

Let us define the Bad as those governments that really know they should be doing more, but are shirking their responsibility for domestic political reasons. The most prominent are the United Kingdom and Spain, which played a key role in sabotaging an EU meeting last June that was trying to agree on a formula for sharing the refugee burden fairly among EU members.

Prime Minister David Cameron’s problem is that overall immigration into Britain is high (330,000 last year), which has infuriated the right-wing media. In fact, more than half the newcomers were citizens of other EU countries (who have the right to cross borders in search of jobs), and only 25,000 were refugees – but such fine distinctions have little place in the public debate. And in Spain, there’s an election coming up.

Then there are the Ugly: the countries that simply don’t want to take in refugees because they are different from the local people. Like Slovakia, which said that it might take a few hundred refugees, but only Christians, or Hungary and the Czech Republic, which are both talking about deploying armed forces on their borders to keep refugees out.

All these countries lived under Soviet rule for two generations, which was almost like living in a cave. They have almost no experience of immigration, and it’s commonplace to hear people make racist or anti-Semitic remarks without the slightest sense of shame. In a way, they are still living in the 1950s. It’s not an excuse, but it is an explanation.

So how, in these circumstances, is the European Union to agree on a common policy for sharing the burden of caring for the refugees? “We must push through uniform European asylum policies,” Angela Merkel says, but the EU operates on a consensus basis, and there is little chance that that will be accepted. In practice, therefore, the burden will continue to be borne by the willing.

In an attempt to lessen the burden, the German chancellor has proposed a list of “safe” countries (like the Balkan ones, which account for 40 percent of asylum claims in Germany), where it may be presumed that most claimants are really economic migrants. Arrivals from “unsafe” countries like Syria, Libya and Afganistan, where real wars are underway, would be treated as genuine refugees. But even then, each case must be investigated individually.

“Germany is a strong country and the motto must be: ‘we’ve managed so much, we can manage this’,” Merkel said, and no doubt she can get through this year without changing course. But there is every reason to believe that there will be another million people risking everything to make it across the EU’s borders next year, and probably for many years thereafter. It may even get worse.

In the long run it is almost certain to get worse, even if the current wars in the Middle East all miraculously end. Coming up behind the current crisis is the inexorable advance of climate change, which will hit the Middle East and Africa very hard indeed. Nobody has the slightest idea how many refugees that will generate, but it is likely to be many times the current flow.
To shorten to 725 words, omit paragraphs 4 and 11. (“She…refugees”; and “In an…individually”)

Malaysia: Najib in Trouble

“There’s no more rule of law,” said Mahathir Mohamad, the 90-year-old grandee who was prime minister of Malaysia for 22 years. “The only way for the people to get back to the old system is for them to remove this prime minister.”

Mahathir has been openly criticising the current prime minister, Najib Razak, for the past year although they both belong to the same political party, the United Malays National Organisation (UMNO). What made it special this time was that he said it at a two-day mass demonstration in the centre of Kuala Lumpur.

Mass demonstrations are normally attacked and dispersed by the police in Malaysia despite its formally democratic system, but this time the police remained peaceful. There were the usual disputes about how many people were there, with the organisers claiming 300,000 and the police saying 20,000, but the important thing was that Mahathir showed up and gave it his support.

There’s certainly good reason to demand Najib Razak’s resignation as prime minister. In July the Wall Street Journal published a report that $700 million had been transferred into his personal bank accounts in 2013 by the deeply indebted 1MDB state investment fund, which he created in 2009 shortly after becoming prime minister. He remains chairman of the fund’s board of advisers even today.

At first Najib just denied it all. He fired his deputy prime minister, Muhyiddin Yassin, for criticising his handing of the affair, and also the attorney general, Abdul Gani Patail, who was leading the the investigation into the scandal. Then, when it became impossible to deny that the money had appeared in his accounts, his advisers began claiming that it had come not from 1MDB but as a “political donation” from unnamed Middle Eastern sources.

Whether it was really looted from the 1MDB investment fund or just given to Najib by a “wealthy Arab family”, its purpose was clear. It was not to enrich Najib personally. It was to swing the outcome of the 2013 election, which Najib’s party was in danger of losing.

In a normal democracy, accepting the better part of a billion dollars from foreigners to win an election would be just as serious a crime as stealing it from a national investment fund, but Malaysia is not a normal democracy. It has been effectively a single-party state since independence in 1957, because the great majority of ethnic Malays vote for UMNO and its allies in order to retain their special privileges in the country.

Malays, who are almost all Muslims, were the original population in most of the country and still account for 60 percent of its people. However, large-scale immigration by Chinese and Indians in the 19th century shifted the balance: Chinese Malaysians now account for about a quarter of the population, and people of Indian descent for around one-tenth.

Moreover, it is the Chinese who dominate the country economically, a fact that led to the bloody race riots of 1969. Since then, Malays have enjoyed cheaper housing, priority in government jobs and business licenses, and in practice (though no longer in theory) better access to university courses, in order to help them catch up economically with the Chinese and Indian populations.

The policy has had some success: average household incomes have converged, with Malay families going from about 40 percent of Chinese family earnings in 1970 to around 70 percent in 2009. Most Malays nevertheless feel this institutionalised favouritism is still necessary, and vote UMNO to protect it – while a majority of Chinese and Indian Malaysians undoubtedly feel that half a century of extra privileges for Malays is enough.

That’s why the great majority of protesters at last weekend’s demonstration in Kuala Lumpur were ethnically Chinese or Indian. Najib’s financial misdeeds provided a justification for the protest, and even many Malays want to see the back of Najib, but the Malays stayed away because they detect a deeper agenda in the protest movement.

Matters are further complicated by the fact that all Malays are Muslims whereas practically nobody else is. Mahathir was exploiting the demo in order to further his campaign to unseat Najib in an internal conflict within UMNO, but he certainly does not want to end the Malay-Muslim domination of the country’s politics or dismantle Malay privileges.

“What is 20,000 (demonstrators)? We can gather hundreds of thousands,” said Najib after the demonstration. “The rest of the Malaysian population is with the government.” Or at least most Malays are, especially in rural areas, and that’s probably enough for him to ride out this crisis unless Malaysia’s economic situation worsens.

The Malaysian economy has slowed down dramatically since Chinese demand for imports and the price of oil both began to collapse. Malaysia’s currency, the ringgit, is in free-fall. If it gets bad enough, Najib will have to go.

Whatever the injustices involved, it’s probably better for everybody that the ethnic can of worms stays firmly closed for a while yet, so UMNO should be thinking hard about a successor who will be acceptable to everybody.
To shorten to 725 words, omit paragraphs 3 and 12. (“Mass…support”; and “Matters…privileges”)

The Global Economy: A Perfect Storm?

You know how it is with buses? You wait ages for one, far longer than seems reasonable – and then three arrive all at once. Financial crises are a bit like that too.

The financial crisis everybody in the business has really been waiting for is a “hard landing” of the Chinese economy, now one of the two motors of the global economy. (The other is still the United States.) Everybody thought it was bound to come eventually – well, everybody who was not too heavily invested in the Chinese market – and it now appears to be here, although the Chinese government is still denying it.

The second crisis, less widely anticipated, is a credit crunch that is sabotaging economic growth in almost all the developing countries except India. In many cases their currencies have fallen to historic lows against the dollar, making it harder for them to repay the dollars they borrowed. Moreover, it’s getting harder for them to earn dollars from their exports because commodity prices have collapsed.

And a third crisis is looming in the developed economies of Europe, North America and Japan, which can see another recession looming on the horizon before they have even fully recovered from the effects of the banking crash of 2007-08. And it’s hard to pull out of a new recession when your interest rates are still down near zero because of the last one.

These crises are all arriving at once because they are all connected. When the huge misdeeds and mistakes of American and European banks caused the Great Recession of 2008, China avoided the low growth and high unemployment that hurt Western countries by flooding its economy with cheap credit. But that only postponed the pain, and between 2007 and 2014 total debt in China increased fourfold.

The Chinese government is more terrified of mass unemployment than anything else. It believes, probably correctly, that the Communist regime’s survival depends on delivering continuously rising living standards. So the Chinese economy went on booming for another six years, but the “solution” was fraudulent and now it’s over.

The huge amount of cheap credit sloshing around the Chinese economy mostly went into building unnecessary infrastructure, and above all into housing. That did preserve employment, but property values soared and and a huge “housing bubble” was created. There was nobody to buy all those houses and apartments, and there are now brand-new “ghost towns” all over China, so property values are falling fast.

Since the crash on the Chinese stock markets began last month, the government has done everything it could to stop it. It has dropped interest rates repeatedly, it has devalued the currency, it has ordered state institutions to invest more – and nothing has worked.

Chinese exports have fallen 8 percent in the past year, and even the regime admits that the economy is growing at the lowest rate in three decades. Nobody outside the regime knows for certain, but it may scarcely be growing at all. The “hard landing” is now close to inevitable.

Now for the second crisis. While China’s artificial boom was rolling along, its appetite for commodities of every sort, from iron to soya beans, was insatiable, so commodity prices went up. The other “emerging market economies” grew fast by selling China the commodities it needed, they attracted large amounts of Western investment because of their rapid growth, and they borrowed freely because Western interest rates were at rock-bottom.

The collapse of Chinese demand ends this party too. From Brazil to Turkey to South Africa to Indonesia, exports are falling, the value of the local currencies is tumbling, and foreign investors are fleeing. Capital flight from the 19 largest emerging market economies has reached almost one trillion dollars in the past 13 months, and the outflow is still accelerating.

And the third crisis, in the West? The problems that caused the crash of 2007-08 have not really been addressed, just papered over. What limited growth there has been in Western economies is due almost entirely to absurdly low interest rates and“quantitative easing” (governments printing money).

The average time between recessions in the West is seven to ten years, so one is due around now anyway. The likeliest trigger for that is a collapse of demand in China and in the other emerging economies, which is now practically certain. And when it hits the West, neither of the traditional tools for pulling out of a recession will be available. Interest rates are already near zero, and the money supply has already been expanded massively.

It would be rash to talk about a long-lasting global depression in the style of the 1930s, because a lot has changed since then. But it is certainly safe to say that the global economy is heading into a perfect storm.
To shorten to 725 words, omit paragraph 7. (“The huge…fast”)