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Italy: “I Say No”

“Today saying No is the most beautiful and glorious form of politics….Whoever doesn’t understand that can go screw themselves.” It could have been Donald Trump before the US election two weeks ago, or Boris Johnson during the Brext campaign in Britain last June, but it was actually Beppe Grillo, founder and leader of Italy’s populist Five Star Movement.

Grillo unhesitatingly compares his movement to “Trumpismo” in the United States, and the Five Star Movement (M5S) is currently running neck-and-neck with Prime Minister Matteo Renzi’s Democratic Party in the opinion polls. Moreover, if Renzi loses the referendum on changing the Italian constitution that takes place this Sunday, there may be an election in Italy quite soon.

Matteo Renzi wanted to replace the elected Senate with a smaller appointed body and make other changes to streamline the process of passing laws in Italy. He got his proposal through both houses of parliament last April – but with such a slim majority that the results had to be confirmed by a referendum. At the time Renzi was confident that he would win it easily.

But that was before the Brexit vote in the United Kingdom and the irresistible rise of Donald Trump in the United States put wind in the sails of the Five Star Movement. Now the M5S’s “Io Dico No” (I Say No) campaign is drawing huge crowds as it tours Italian cities, and the final opinion polls before the vote on 4 December gave the “No” a five-point lead in the referendum.

As the polls began to turn against his constitutional reforms, Renzi warned that he would resign if the vote went against them. But all that did was to turn it into a referendum on his own popularity, which is turning out to be considerably less than he imagined. And if M5S comes to power, it is pledged to hold another referendum – this time on pulling Italy out of the euro “single currency”.

At the moment a large majority of Italians still want to keep the euro, but that could change. Italian cities don’t look as devastated as the US Rust Belt, but the same processes that brought Donald Trump to the presidency have been at work in Italy. Average family income is still less that it was before the 2008 crash, and unemployment among the young is close to 40 percent.

An estimated quarter of Italian industry has closed down in the past decade, and the country is staggering under the burden of a public debt that amounts to 132 percent of GDP. If uncertainty about the euro crashes Italy’s economy (the third-largest economy in the Eurozone), then all 19 countries that use the euro, some 340 million people, are in deep trouble.

And the Italian economy could go belly up, because Italian banks are now as vulnerable as American banks were before 2008. They are stuffed with “non-performing loans” that have not been written off, but stay on the banks’ books at around 45-50 percent of their original value. But they are really only worth about 20 percent of the original price.

If Italian banks marked these loans down to their true market value, it would wipe out their capital and they would all go bankrupt overnight. It is an accident waiting to happen – and a “No” victory in the referendum could be that accident, because it might open the Five Star Movement’s road to power.

In theory, it’s a long road from a “No” in Sunday’s constitutional referendum to an M5S government and a referendum on the euro. If Renzi resigns, and if no other combination of parties in parliament can form a government (probably not), there would be an election. But then M5S would have to win a majority, which is a long way from its current 30 percent support.

In practice, it might be quite a short road. A lot of Italians are so angry that they just want to punish “the elites”. If both M5S and the right-wing Lega Nord (which also wants to quit the euro) did well in the election, they might be able to form a coalition government, and then the fat would be in the fire.

Technically, only the single currency would be at risk, but in the current febrile atmosphere in Western politics, with support for populist parties surging everywhere, things can change very rapidly.

It is no longer inconceivable that the National Front, which wants to leave not just the euro but the European Union, could win the French presidential election in April. With Britain on its way out, a French government that wants to follow suit, and an Italian government that
at least wants to leave the euro, the entire 60-year-old project of European unity could crumble by the end of next year.

That’s a lot of ifs, and the likelihood of such a calamity is still very small. But we do live in interesting times.
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To shorten to 725 words, omit paragraphs 8 and 9. (“And the…power”)

After Aleppo: A Kind of Peace?

Eastern Aleppo, the rebel-held half of what was once Syria’s biggest city, is falling. Once the resistance there collapses, things may move very fast in Syria, and the biggest question will be: do the outside powers that have intervened in the war accept Bashar al-Assad’s victory, or do they keep the war going?

Even one year ago, it seemed completely unrealistic to talk about an Assad victory. The Syrian government’s army was decimated, demoralised and on the verge of collapse: every time the rebels attacked, it retreated.

There was even a serious possibility that Islamic State and the Nusra Front, the extreme Islamist groups that dominated the rebel forces, would sweep to victory in all of Syria. But then, just fourteen months ago, the Russian air force was sent in to save Assad’s army from defeat.

It did more than that. It enabled the Syrian army, with help on the ground from Shia militias recruited from Lebanon, Afghanistan and Iraq and mostly trained and commanded by Iranian officers, to go onto the offensive. Assad’s forces took back the historic city of Palmyra. They eliminated the last rebel-held foothold in the city of Homs. And last summer they began to cut eastern Aleppo’s remaining links with the outside world.

In July government forces took control of the Castello Road, ending the flow of food and supplies for eastern Aleppo’s ten thousand rebel fighters and its claimed civilian population of 250,000 people. (The real total of civilians left in the east of the city, once home to around a million people, is almost certainly a small fraction of that number.)

A rebel counter-offensive in August briefly opened a new corridor into eastern Aleppo, but government troops retook the lost territory and resumed the siege in September.

For almost two months now almost nothing has moved into or out of the besieged half of the city, and both food and ammunition are running short inside. So the resistance is starting to collapse.

The Hanano district fell on Saturday, and Jabal Badro fell on Sunday. The capture of Sakhour on Monday has cut the rebel-held part of Aleppo in two, and the remaining bits north of the cut will quickly be pinched out by the Syrian government’s troops.

The southeastern part of the city may stay in rebel hands a while longer, but military collapses of this sort are infectious. It is now likely that Bashar al-Assad will control all of Aleppo before the end of the year, and possibly much sooner.

At that point he would control all of Syria’s major cities, at least three-quarters of the population that has not fled abroad, and all of the country’s surviving industry. He would be in a position to offer an amnesty to all the rebels except the extreme Islamists of Islamic State and the Nusra Front, and a lot of the less fanatical Syrian rebels would be tempted to accept it.

For the many foreign powers that are involved in the Syrian civil war, it would then come down to a straight choice: Assad’s cruel but conventional regime or the Islamist crazies.

Even Turkey and Saudi Arabia, however much their leaders may loathe Assad, could not openly put their armies at the service of the Islamists. (They used to send them arms and money, but even that has stopped now.) And for a newly installed President Donald Trump, it would become a lot simpler to “make a deal” with Russia’s President Vladimir Putin to finish the job of crushing Islamic State and the Nusra Front together.

Would the Russians and the Americans then hand over all the recaptured territory to Assad’s regime? Many people in Washington would rather hang onto it temporarily in order to blackmail Syria’s ruling Baath Party into replacing Assad with somebody a bit less tainted, but a deal between Putin and Trump would certainly preclude that sort of games-playing.

How could Trump reconcile such a deal with Russia with his declared intention to cancel the agreement the United States signed last March to curb Iran’s nuclear weapons ambitions? Iran is Russia’s closest ally in the Middle East, and if Trump broke that agreement he would be reopening a US military confrontation with Iran.

Since this question may not even have crossed Mr Trump’s mind yet, it would be pointless for us to speculate on which way he might jump three months from now.

It’s equally pointless to wonder what kind of deal the Syrian Kurds will end up with. Turkey will want to ensure that they have no autonomous government of their own and are thoroughly subjugated by Assad’s regime. The United States, on the other hand, owes them a debt of honour for carrying the main burden of fighting Islamic State on the ground – but the Kurds are used to being betrayed.

All we can say with some confidence at the moment is that it looks like Assad has won his six-year war to stay in power.
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To shorten to 725 words, omit paragraphs 5, 6 and 16. (“In July…September”; and “It’s…betrayed”)

Egypt: Sisi, Morsi and Democracy

Mohammed Morsi, Egypt’s first democratically elected president, has now been in prison more than three times as long as he was in the presidential palace, but his death sentence was quashed last week. On Tuesday the country’s highest appeal court also overturned his life sentence on a separate charge – but that doesn’t mean he’s going to be free any time soon.

The appeal court not only cancelled Morsi’s death and life sentences, but also those of sixteen other senior members of his party, the Muslim Brotherhood. “The verdict was full of legal flaws,” said Morsi’s lawyer, Abdel Moneim Abdel Maksoud. The men will all stay in jail indefinitely, as the military regime can easily get convictions on other charges in the lower courts, but justice is not entirely dead in Egypt.

Democracy IS dead, however. Since General Abdel Fatah al-Sisi’s coup destroyed Morsi’s elected government in July 2013, at least 1,400 Egyptians have been murdered by the regime. (That includes the thousand people who were killed in the streets in August 2013 while non-violently protesting against the coup – a massacre at least as bloody as the Tienanmen Square slaughter in Beijing in 1989.)

The army was never going to accept the non-violent revolution that overthrew former general Hosni Mubarak’s 29-year-old regime in January of 2011: its officers benefit greatly from its control over at least a quarter of the Egyptian economy. But the military had the wit to bide their time, whereas the young revolutionaries were neither experienced nor united, and they quickly began making mistakes.

Their worst was to fail to unite behind a single candidate in defence of a secular democracy. Instead, the presidential election of July 2012 ended up in a run-off between Air Chief Marshal Ahmed Shafik, Mubarak’s last prime minister, and Mohammed Morsi, the representative of the Muslim Brotherhood. Enough secular voters held their noses and backed Morsi to give him a narrow victory in the second round.

The Muslim Brotherhood was a moderate Islamic party that had been tolerated under the Mubarak regime. Its main supporters were conservative rural voters and the pious poor, and it felt obliged to reward them by inserting more Islamic elements into the new constitution. Besides, Islamists really believe that making the country more “Islamic” will solve its problems. That’s why they are Islamists.

It was far from wholesale Islamisation, but it was enough to panic the urban and mostly secular young people who had led the revolution. In a stupid attempt to force the new constitution through, Morsi granted himself total executive power and began ruling by decree in November 2012. After ten days he realised he had made a dreadful mistake and relinquished his special powers, but it was too late.

In an equally foolish reaction, the young revolutionaries concluded that Morsi was a dictator in the making and began agitating for an early election to get rid of him. They simply didn’t understand that the democratic solution was to wait the full four years and then vote Morsi out. By then, given the state of Egypt’s economy, he would be so unpopular that he would be certain to lose.

Some even thought that the army was their friend and would help them to get rid of Morsi. So the anti-Morsi demonstrations grew through the first half of 2013, and on the first anniversary of his election on 30 June millions came out in the streets to demand that he quit. The army moved at last, and in days Sisi was in power and Morsi was in jail.

In due course, many thousands of the young revolutionary generation were also in jail: the latest estimate is 60,000 political prisoners. The Sisi regime is far more brutal and repressive than any of its military predecessors, but its plans to welcome foreign investment, privatise the infrastructure and restrict the right to strike have lots of foreign support.

Last year the regime held a national coming-out party at the Sharm al-Shaikh resort: the Egyptian Economic Development Conference. It invited 1,700 investors, consultants and foreign government officials including the US secretary of state, the British foreign minister, and the head of the International Monetary Fund. They were pleased by what they heard..

Former British prime minister Tony Blair was also there. “Look,” he burbled, “I’m absolutely in favour of democracy, but I also think you’ve got to be realistic sometimes about the path of development, and that sometimes you will have a country with not what we would call 100 percent Western-style democracy, but it is going in a direction of development that is really important.”

Far away from the conference hall, however, tens of thousands of innocent people rotted in jail, and real terrorists affiliated with Islamic State and al-Qaeda ruled over northern Sinai and regularly set off bombs in Cairo.
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To shorten to 725 words, omit paragraph 12. (“Former…important”)

The End of the Big Trade Deals

US president-elect Donald Trump announced on Monday that he will cancel the “Trans-Pacific Partnership” on his first day in office (20 January 2017). That will kill the TPP off for all 12 countries that agreed on it just over a year ago: as Japan’s Prime Minister Shinzo Abe said, the TPP would be meaningless without the involvement of the United States. But then, it was pretty meaningless even with American involvement.

Japan and the US were the only two really big economic players in the TPP deal. All ten other partners – Canada, Mexico, Peru and Chile on the eastern side of the Pacific, and Vietnam, Singapore, Brunei, Malaysia, Australia, and New Zealand on the western side – have a total population scarcely bigger than that of the United States alone.

It was really just an attempt to create a Pacific trading bloc that excluded China, thereby preserving what was left of the traditional US and Japanese domination of the region’s trade. For just that reason, the other big trading economies of the region, Indonesia, the Philippines and South Korea, stayed out of it. They preferred to play the giants off against one another.

Chinese influence and trade in South-East Asia may grow modestly as a result of the TPP’s cancellation, but no profound transfer of power or wealth will ensue. There were no big tariff cuts coming as a result of the TPP anyway, because actual taxes on international trade were already low. The real focus was on removing so-called “non-tariff barriers”.

The classic example of a non-tariff barrier was Japan’s attempt in the 1980s to ban imports of foreign-made skis on the grounds that Japanese snow was “unique”. A great deal of detailed haggling in the TPP talks went into breaking down thousands of similiar (and sometimes equally ridiculous) barriers to trade, but any country that wants to keep those gains can just incorporate the same deals into bilateral trade treaties with other ex-TPP members.

Not many jobs would have been gained or lost, in the US or elsewhere, if the TPP had gone into effect. The same is true for the US-European Union equivalent of the TPP, the Transatlantic Trade and Investment Partnership (TTIP), which was dead in the water even before Trump was elected. Donald Quixote is attacking windmills, not dragons, because the great free-trading spree of 1990-2008 has already come to an end.

It was not working-class American voters who killed TTIP. It was mainly European consumers who didn’t want hormone-laden American beef, US-grown GM foods, and chlorine-washed American chickens on their supermarket shelves.

To be fair, European left-wingers also played a role in mobilising opposition to the deal, by raising the (probably correct) suspicion that the “Investor-State Dispute Settlement” process (ISDS) in the proposed treaty was designed to cripple the ability of European goverments to impose high safety standards in health and environmental issues.

Most of the jobs that moved from developed to developing countries in the heyday of “globalisation” (or often, in the US case, just from Rust Belt states to Sun Belt states where wages were lower and unions were weak or non-existent) left long ago. In recent years eight American jobs have been lost to automation for every one that went abroad.

Most economic strategies, including both protectionism and free trade, conform to the law of diminishing returns. The same goes for political strategies, but they tend to lag even farther behind the realities. That’s why the old white working class in the US (and therefore Trump) still feel compelled to “fight “ free trade – and why even Hillary Clinton, once an enthusiastic advocate of the TPP, was ultimately obliged to turn against it .

When she finally made that U-turn, Reince Priebus, the chairman of the Republican National Committee, mocked her as “a case study in political expediency.” Now he has been appointed as President Trump’s chief of staff, and he will change his tune accordingly. But the cross-party consensus on this does not make it the right tune.

The truth is that these now aborted free-trade deals were merely the finishing touches on an edifice whose basic structure was completed more than a decade ago. Those who had devoted their lives to building that edifice simply kept on doing what they were good at doing, necessary or not. And all the while technological change was conspiring to make them as irrelevant as the people who so vehemently opposed them.

Cultural lag being what it is, the last battles in this long war – probably between the US and its NAFTA partners, Canada and Mexico, and between the US and China – are yet to be fought. We may be entering the next decade before the political process anywhere seriously engages with the reality of automation as the main destroyer of jobs. But reality always wins in the end.
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To shorten to 725 words, omit paragraphs 7 and 8. (“It was…issues”)