Cyprus Bank Robbery

By Gwynne Dyer

Could a failed bank robbery in Cyprus cause the collapse of the euro? It’s hard to imagine how anything that happens in Cyprus, with less than one million people, could bring down the common currency shared by three hundred million Europeans, but there are few human behaviours as infectious as a run on the banks.

Strictly speaking, the Greek-Cypriots are not having a bank run, because their banks have all been closed since last Saturday and the cash machines will only give out 500 euros (about $650) per customer. But there would certainly be a nationwide bank run if they reopened the banks without strict limits on cash withdrawals and transfers overseas.

A financial disaster in remote Cyprus will not directly affect the fate of the rest of the European Union, but any suspicion that the bail-out of a EU country might involve the actual confiscation of money in people’s bank accounts is financial and political dynamite. The terms of the Cyprus bail-out have just confirmed that suspicion.

The banks in Cyprus had certainly got too big for their boots. They had grown fat on the deposits of Russians, many of whom were using the island republic as “a gigantic washing machine” to launder illegal funds. And they had lent out far too much money, especially to Greek banks and companies: their loans amounted to eight times the entire country’s national income.

Everything seemed all right until Greece’s economy crashed and needed not one but two bail-outs. During the second one, last year, foreign investors holding Greek bonds were forced to take a “haircut”: they had to agree to a 70 percent cut in the value of their holdings. That gave Greece a little relief, but it plunged the Greek-Cypriot banks into a nearly terminal crisis.

So now it was Cyprus’s turn for a 17 billion euro bail-out – but this time it was not the bond-holders who got a “haircut”; it was the depositors.

Cyprus was ordered to raise 5.8 billion euros of the bail-out money itself. It was to do it by confiscating 6.75 percent of the money in the savings accounts of everyone with less than 100,000 euros in their account, and 9.9 percent of the money in all larger accounts. In most people’s eyes, that is just straight theft. Worse yet, people in other EU countries realised the awful truth: EU bail-outs CAN cause bank runs.

If there’s going to be a run on the banks, you want to be first at the counter. If you think there might be an EU bail-out for your country, you should get all your money out right away, just in case. And while Cyprus is too small to be significant, much bigger EU countries like Italy and Spain, with one-third of the eurozone’s population, are also potential candidates for a bail-out. Bank runs in those countries could spell the end of the euro.

How did the geniuses who designed this bail-out get it so wrong? They included the European Central Bank, the European Commission, and the International Monetary Fund, but the real culprit appears to be Germany. Wolfgang Schaeuble, the German Finance Minister, insisted on targeting bank accounts in Cyprus (although they have never been directly raided in any other bail-out), and the rest of the geniuses went along with it.

Schaeuble’s problem was that there will be an election in Germany in a few months, and German voters are deeply reluctant to see their money bailing out (as they see it) feckless Southern Europeans. They are particularly unhappy to see it being spent to save Cypriot banks, where some 40 percent of the money on deposit belongs to Russians and much of it is “dirty”.

So rather than make the Cypriot banks’ investors (mostly other banks) pay the price of their folly, Schaeuble made the depositors pay it instead. Some of them were very rich Russians – though the really big deposits were probably moved to Singapore or Dubai a year ago, at the first hint of trouble – but most of them were ordinary Greek-Cypriots who were seeing their savings taken to pay for rich people’s greed and stupidity.

So Greek-Cypriots took to the streets in protest, and they didn’t go home when the government promised to exempt accounts with less than 20,000 euros in them. Newly elected President Nicos Anastasiades urged parliament to back the bail-out, but in the vote on Tuesday not a single MP supported it.

The whole deal is dead, and Schaeuble is now warning that the banks in Cyprus may never reopen if it is not resurrected in some form. Cyprus’s finance minister is off in Moscow to see if the Russians will bail the country out. But the real crisis may be happening in other EU countries that are vulnerable to a bail-out, including Italy and Spain.

The geniuses swore that the Cyprus bank heist was a one-off, and that no such measure would ever be imposed on another EU country. Nobody in Spain or Italy believes them, of course, and the wealthy and well-informed will already be moving their euros to accounts in other countries. The less rich and knowledgeable will just be taking their money out of the bank and hiding it in socks under the mattress.

Could all this end up with bank runs that bring down the euro itself? It’s still unlikely, but it’s certainly not impossible.

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To shorten to 700 words, omit paragraphs 8, 10 and 11. (“If…euro”; and “Schaeuble’s…stupidity”)

Iraq Ten Years Later

By Gwynne Dyer

Why did George W. Bush choose 19 March, 2003 to invade Iraq, rather than some day in May, or July, or never? Because he was afraid that further delay would give United Nations arms inspectors time to refute the accusation (his sole pretext for making an unprovoked attack on an independent country) that Saddam Hussein’s regime was working on nuclear weapons.

The US president couldn’t say that, of course, and so instead his administration’s spokesmen mumbled about the need to get the war over and done with before the summer heat made fighting impossible. Yet American soldiers proved perfectly capable of operating in that summer heat during the ensuing seven years of fighting, in which over 4,000 of them were killed.

That was nothing compared to the number of Iraqi deaths. At least five times as many Iraqis have died violently in the decade since the US invasion as were killed by Saddam’s regime in the ten years before the invasion. The exact number is unknown, but Saddam’s secret police were probably killing less than 2,000 people a year in 1993-2003. An estimated 121,000 Iraqi civilians have died in the military and political struggles of the past ten years.

Iraq’s infrastructure has still not recovered to its prewar level. More than a million Iraqis still live in internal exile, unable to return to the homes from which they were “cleansed” during the Sunni-Shia sectarian war of 2006-2007. Another million have fled the country for good, including a large proportion of the country’s intellectual and professional elite.

Iraq ranks eighth from the bottom on Transparency International’s corruption index, ahead of Somalia and North Korea but below Haiti and Equatorial Guinea. The government in Baghdad, though dominated by sectarian Shia politicians, does little for the impoverished Shia majority. The Sunni minority fears and hates it. And the Kurdish ethnic minority in the north just ignores Baghdad and runs a state that is independent in all but name.

Iraq’s courts do the regime’s will, torture is endemic, and the swollen army and “security” forces (used almost exclusively for internal repression) eat up a huge share of the budget. And from the perspective of American grand strategy, the main result of the war has been to weaken the position of the US in the Gulf region and strengthen that of its perceived opponent, Iran.

The United States spent about $800 billion on the Iraq war, and will eventually spend at least another trillion dollars on military pensions, disability payments and debt service. Yet it achieved less than nothing. Why on earth did it invade in the first place?

Even the defenders of the invasion have stopped claiming that Saddam Hussein was cooperating with al-Qaeda terrorists who were plotting to attack the United States. They were also plotting to overthrow and kill Saddam, as everyone with any knowledge of the Middle East already knew.

The UN weapons inspectors never found the slightest evidence that Saddam had revived the nuclear weapons programme that had been dismantled under UN supervision in the early 1990s. The people in the White House who took the decision to invade must have known that there was no such programme: the way they carefully worded their propaganda in order to avoid explicit lying is ample evidence of that.

The strategist Edward Luttwak once suggested that the real reason was that the invasion of Afghanistan in 2001 had been too easy. After 9/11 the American people really wanted to punish somebody, and Afghanistan had not provided enough catharsis. So another invasion was an emotional necessity, and (given the American public’s ignorance about the Middle East) almost any Arab country would do.

There was certainly a parallel desire among the neo-conservatives in the Bush White House to restore American power to unchallenged dominance after what they saw as the fecklessness of Bill Clinton’s administrations in the 1990s. That required a short and successful war that would put everyone else in awe and fear of American military might – but, once again, any weak and unpopular country would have done. Why Iraq?

The closest we can come to a rational answer is the argument, common in Washington a decade ago, that permanent military bases in Iraq would give America strategic control of the entire Gulf region.

The role of those bases would not be to ensure prompt delivery of the region’s oil to the United States at a low price: only 11 percent of US oil imports come from there. The bases would instead enable the United States to block Gulf exports of oil to China if the United States found itself in a confrontation with that country. (Geo-strategic arguments are often frivolous.)

None of these explanations can justify what was done, and we haven’t even gone into the damage done to international law by this blatantly criminal act. But can we at least conclude that the world, or even just the United Nations, has learned a lesson from all this?

Probably yes for the United States, at least until memories fade. (Give it ten more years.) Not so much for the rest of the world, but then most other countries are less prone to invade faraway places anyway.

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To shorten to 725 words, omit paragraphs 5, 8 and 9. (“Iraq…name”; and “Even…that”)

The Koreas: The Risk of Miscalculation

By Gwynne Dyer

The joint US-South Korean military exercises known as “Key Resolve” and “Foal Eagle” have got underway, and so far the heavens have not fallen.

The American forces have not launched an unprovoked assault on North Korea, despite the strident claims of Pyongyang’s media that the exercises are a cover for exactly such a plan. In fact, joint exercises on this scale – they only involve 13,000 American and South Korean troops – have been held every year of the past forty, and pose no threat whatever to North Korea.

Neither has North Korea chosen to “defend its sovereignty”, as it recently threatened to do, by launching pre-emptive nuclear strikes against both the United States and South Korea. It could certainly do huge damage to South Korea, bur despite its successful nuclear and missile tests in the past three months it still lacks all but the most rudimentary capability to hit the United States.

Pyongyang’s nuclear test in February had twice the explosive power of the last one in 2009, but nobody believes North Korea’s claim that it has also made its bomb small enough to fit on the tip of an intercontinental ballistic missile.

Nor does the Unha-3 missile, which Pyongyang used to launch a satellite in December, have the guidance systems and re-entry technology necessary to deliver such a nuclear weapon onto an American target – which would have to be in western Alaska, since that is the limit of the rocket’s range.

There is no doubt that Kim Jong-un’s regime is feeling extremely peeved about the international response to its weapon and missile tests, which has included tighter United Nations trade sanctions that got unanimous support in the Security Council. Even North Korea’s only ally, China, voted for them.

In a particularly peevish gesture, he has even cut the military hotline between the two sides at Panmunjom. (If you think there’s going to be a crisis, the last thing you want is a secure and rapid means of talking to the other side.) But it’s really just an empty gesture: an alternative military communications line, used to monitor cross-border workers at the Kaesong Industrial Complex, remains open.

But it’s a long way from feeling peeved to feeling suicidal. Any North Korean nuclear attack on an American target would be answered by immediate US strikes that would annihilate the military and civilian leadership in Pyongyang, obliterate its nuclear facilities, and probably destroy much else besides. So North Korea’s threat to launch a “pre-emptive” nuclear strike against the United States, or even against South Korea, is totally implausible.

However, the young and inexperienced North Korean leader may feel the need to prove his mettle to his own military commanders by taking some more limited action against the US-South Korean exercises. That sort of thing can easily go wrong.

There is a widespread perception in South Korea that Seoul was caught off-guard by North Korea’s sinking of the warship Cheonan and its artillery attacks on Yeonpyeong island in 2010. North Korea paid no military price for either action, and South Korea’s newly elected president, Park Geun-hye, who took office only two weeks ago, needs to show South Koreans that she is not going to let that happen again.

She probably also hopes that a promise of prompt and severe retaliation will deter North Korea from any future attacks of that sort. So she has engaged in some rhetorical escalation of her own.

She has warned North Korea that any further attacks will be met by instant retaliation that targets not only the units involved in the attack, but also North Korea’s high command.

No doubt this is only intended to deter any such North Korean attack, but in practice it means that there will be much more rapid and uncontrollable escalation if Pyongyang makes a token attack anyway.

Even a conventional war in the Korean peninsula would be hugely destructive. Just north of the “Demilitarised Zone” between the two countries is the largest concentration of artillery in the entire world, and the mega-city of Seoul is within long artillery range of the border.

North Korea’s population is considerably smaller than South Korea’s, but the North maintains the fourth largest army in the world. Its armed forces operate mostly last-generation weaponry, but the equipment is well maintained and the soldiers appear to be well trained. The last war between the two countries killed over a million people and left all the peninsula’s cities in ruins – and that was over sixty years ago.

If North Korea ignored Park’s warning and made some local attack to demonstrate its displeasure, and Park then felt obliged to act on her threat to go after the North Korean leadership in Pyongyang in retaliation, things could get very ugly very fast.

So far the US-South Korean exercises have gone off smoothly, but the risk of a serious miscalculation first in Pyongyang and then in Seoul is real, and the exercises still have more than a week (until 25 March) to run.

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To shorten to 725 words, omit paragraphs 7 and 14. (“In a particularly…open”; and “North…ago”)

Afghanistan: The Najibullah Syndrome

By Gwynne Dyer

“Yesterday’s bombings (in Afghanistan) in the name of the Taliban were aimed at serving the foreigners and supporting the presence of the foreigners in Afghanistan and keeping them in Afghanistan by intimidating us,” said Afghanistan’s President Hamid Karzai on Sunday. What on Earth could he have meant by that?

The “foreigners” he is talking about are the troops from the United States and various NATO countries in Europe that have been in Afghanistan for the past dozen years. They will almost all be gone by the end of next year. Can Karzai seriously think that the Taliban bombs in Kabul and Khost last Saturday, which killed 19 people, were meant to get the Americans, British, Germans et. al. to keep their soldiers in Afghanistan longer?

If he were the leader of al-Qaeda, you can imagine him saying that. It was always al-Qaeda’s goal to get Western military forces entangled in military occupations in the Muslim world, in the belief that that would nurture popular hostility both to the West and to the local leaders who collaborated with it. But Karzai IS a collaborator, parachuted into Afghanistan after the American invasion in 2001.

He may have won the first presidential election in 2005 legitimately, but by the second election in 2009 he has so unpopular that he was only re-elected thanks to massive vote-rigging, tacitly condoned by the United States. And when the Americans leave, he had better leave with them.

So what is all this nonsense about the Taliban bombs being an attempt to persuade the “foreigners” that they have to stay, and to “intimidate” Karzai and his cronies into letting them stay? It can best be explained as a manifestation of the “Najibullah syndrome”.

Najibullah was the Communist leader who ruled Afghanistan during the latter stages of the Soviet occupation and immediately after the Russians left. When the Taliban finally took Kabul in 1996, he was tortured, castrated, dragged through the streets behind a truck, and then hanged from a traffic light. It can be safely assumed that Karzai and his cronies, when they contemplate the forthcoming American departure, are acutely aware of this precedent.

This leads to various flailing attempts by members of the regime to distance themselves from the American occupation forces who originally boosted them into power. Karzai has been increasingly vocal in criticising the NATO forces in Afghanistan, as if he had nothing to do with their presence in the country, and didn’t owe his presidency to them.

Let’s deconstruct that remarkable statement of Karzai’s. The message is that he is an Afghan patriot who is trying to make the “foreigners” go home, whereas the Taliban are trying to keep the Americans and their NATO allies in the country to further their own nefarious purposes. It makes no sense whatever, but what else can he say? That the Taliban are winning, the Americans are getting out, and he is doomed?

He’s not really doomed. Since the constitution does not allow him to run for the presidency again, he can easily leave the country for “health reasons” or whatever before the foreign troops depart. He must have salted away enough money abroad to live quite well in exile, as have almost all the other members of the regime. So why does he act as though he might have a future in post-occupation Afghanistan?

The Najibullah precedent is instructive here, too. The former collaborator with the Soviet occupiers stubbornly believed that the Taliban would understand that his motives had been pure, and after all he was a Pashtun like them. He refused to leave Kabul before the Taliban took over, even though numerous friends implored him to. Karzai apparently suffers from the same delusions, and may eventually suffer the same fate.

This is not to say that the Taliban will overrun all of Afghanistan after the NATO forces leave. They will undoubtedly gain control of the Pashtun-majority south and east, and they will probably take Kabul. They didn’t gain control of the Tajik, Hazara and Uzbek minority regions in the north of the country last time, and they may not do so after this bunch of foreigners leave either.

The likeliest post-occupation outcome in Afghanistan, therefore, is a reversion to the situation that prevailed there before 2001. Karzai will either leave or be tortured and killed, as will most of his senior collaborators. Pakistan will be the dominant influence in Taliban-controlled parts of the country, and the minorities will have to fend for themselves.

If this is the final outcome, what have the “foreigners” been doing in the country for the past twelve years? Several thousand of their soldiers have been killed, hundreds of billions of dollars have been spent, and things will be about the same after they leave as they were before they arrived – apart from the al-Qaeda terrorist training camps, which were dealt with before the end of 2001.

For the NATO alliance, which has been searching for a new role ever since the collapse of the Soviet Union, the Afghan operation at least helped to justify its enormous budget. For the United States, it never made sense from any point of view. And for Afghanistan, it was merely the continuation of a disaster now more than thirty years old.

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To shorten to 725 words, omit paragraphs 9 and 10. (“He’s not…fate”)

Venezuela After Chavez

By Gwynne Dyer

“The graveyards are full of indispensable men,” said Georges Clemenceau, prime minster of France during the First World War, and promptly died to prove his point. He was duly replaced, and France was just fine without him. Same goes for Hugo Chavez and Venezuela.

“Comandante Presidente” Chavez’s death on Tuesday came as no surprise. He was clearly coming home to die when he returned from his last bout of surgery in Cuba in December, and since then everybody in politics in Venezuela has been pondering their post-Chavez strategies. But none of them really knows what will happen in the election that will be held by the end of April, let alone what happens afterwards.

Venezuela never stopped being a democracy despite 14 years of Chavez’s rule. He didn’t seize power. He didn’t even rig elections, though he used the government’s money and privileged access to the media to good effect. He was elected president four times, the first three with increasing majorities — but the last time, in 2012, he fell back sharply, only defeating his rival by 54 percent-44 percent.

That is certainly not a wide enough margin to guarantee that his appointed successor, Nicolas Maduro, will win the next election. Maduro will doubtless benefit from a certain sympathy vote, but that effect may be outweighed by the fact that Chavez is no longer there in person to work his electoral magic. If his United Socialist Party of Venezuela (PSUV) were to lose that election, it would not be a tragedy.

Chavez was an unnecessarily combative and polarising politician and a truly awful administrator, but he has actually achieved what he went into politics for. Twenty years ago Venezuelan politics was a corrupt game fought out between two factions of a narrow elite. Now the task of using the country’s oil wealth to improve the lives of the poor majority is central to all political debate in the country.

In last year’s election, the Venezuelan opposition parties managed to unite behind a single presidential candidate, Enrique Capriles, whose political platform was basically “Chavismo” without the demagoguery. In previous elections, the opposition had railed against Chavez’s “socialism” and Marxism, and lost by a wide margin. Capriles, by contrast, promised to retain most of Chavez’s social welfare policies, and lost very narrowly.

Over the past dozen years Chavez’s governments have poured almost $300 billion into improving literacy, extending high school education, creating a modern, universally accessible health-care system, build housing for the homeless, and subsidising household purchases from groceries to appliances. What made that possible was not “socialism”, but Venezuela’s huge oil revenues.

Capriles had to promise to maintain these policies because the poor – and most Venezuelans are still poor – won’t vote for a candidate who would end all that. He just said that he would spend that money more effectively, with less corruption, and a lot of people believed him. It would not be hard to be more efficient than Chavez’s slapdash administration.

Venezuela today has the fairest distribution of wealth in the Americas, with the obvious exception of Canada. Venezuela’s “Gini coefficient”, which measures the wealth gap between the rich and the poor, is 0.39, whereas the United States is 0.45 and Brazil, even after ten years of reforming left-wing governments, is still 0.52. (A lower score means less inequality of income.)

For all of Chavez’s ranting about class struggle and his admiration for Fidel Castro, this was not achieved in Venezuela by taking money from the rich and giving it to the poor. It was accomplished by spending the oil revenue differently. He changed the political psychology of the country, and it now has the potential to be a Saudi Arabia with democracy.

That is not a bad thing to be, and the Venezuelan opposition has finally grasped that fact. It remains for Chavez’s own party to understand that it has actually won the war, and to stop re-fighting the old battles. A spell in opposition might help it to come to terms with its proper role in the new Venezuelan political consensus: no longer an embattled “revolutionary” movement, but the more radical alternative in a more or less egalitarian democracy.

This will be hard for the PSUV to do, because the people around Chavez are still addicted to the rhetoric and the mindset of “struggle”against the forces of evil that they see on every side. Nicolas Maduro, for example, could not resist claiming that Chavez’s cancer had been induced by foul play by Venezuela’s enemies when he announced the leader’s death.

One day, Maduro promised, a “scientific commission” would investigate whether Chavez’s illness was brought about by what he called an enemy attack, presumably by the United States. Ridiculous, paranoid stuff, and it shows just how far the PSUV has to travel to take its proper place in a modern, democratic Venezuela. But the journey has begun, and it will probably get there in the end.

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To shorten to 725 words, omit paragraphs 7 and 8. (“Over…administration”)

Carbon Tax: The Chinese Are Frightened

by Gwynne Dyer

Last week’s announcement by China’s Ministry of Finance that the country will introduce a carbon tax, probably in the next two years, did not dominate the international headlines. It was too vague about the timetable and the rate at which the tax would be levied, and fossil fuel lobbyists were quick to portray it as meaningless. But the Chinese are deadly serious about fighting global warming, because they are really scared.

A carbon tax, though deeply unpopular with the fossil fuel industries, is the easiest way to change the behaviour of the people and firms that burn those fuels: it just makes burning them more costly. And if the tax is then returned to the consumers of energy through lower taxes, then it has no overall depressive effect on the economy.

The Xinhua news agency did not say how big the tax in China would be, but it pointed to a three-year-old proposal by government experts that would have levied a 10-yuan ($1.60) per ton tax on carbon in 2012 and raised it to 50-yuan ($8) a ton by 2020. That is still far below the $80-per-ton tax that would really shrink China’s greenhouse gas emissions drastically, but at least it would establish the principle that the polluters must pay.

It’s a principle that has little appeal to US President Barack Obama, who has explicitly promised not to propose a carbon tax. He probably knows that it makes sense, but he has no intention of committing political suicide, the likely result of making such a proposal in the United States. But China is not suffering from political gridlock; if the regime wants something to happen, it can usually make it happen.

So why is China getting out in front of the parade with its planned carbon tax? No doubt it gives China some leverage in international climate change negotiations, letting it demand that other countries make the same commitment. But why does it care so much that those negotiations should succeed? Does it know something that the rest of us don’t?

Three or four years ago, while interviewing the head of a think-tank in a major country, I was told something that has shaped my interpretation of Chinese policy ever since. If it is true, it explains why the Chinese regime is so frightened of climate change.

My informant told me that his organisation had been given a contract by the World Bank to figure out how much food production his country will lose when the average global temperature has risen by 2 degrees C (3.5 degrees F). (On current trends, that will probably happen around 25 years from now.) Similar contracts had been given to think-tanks in all the other major countries, he said – but the results have never been published.

The main impact of climate change on human welfare in the short and medium term will be on the food supply. The rule of thumb the experts use is that total world food production will drop by ten percent for every degree Celsius of warming, but the percentage losses will vary widely from one country to another.

The director told me the amount of food his own country would lose, which was bad enough – and then mentioned that China, according to the report on that country, would lose a terrifying 38 percent of its food production at +2 degrees C. The reports were not circulated, but a summary had apparently been posted on the Chinese think-tank’s website for a few hours by a rogue researcher before being taken down.

The World Bank has never published these reports or even admitted their existence, but it is all too plausible that the governments in question insisted that they be kept confidential. They would not have wanted these numbers to be made public. And there are good reasons to suspect that this story is true.

Who would have commissioned these contracts? The likeliest answer is Sir Robert Watson, a British scientist who was the Director of the Environment Department at the World Bank at the same time that he was the Chair of the Intergovernmental Panel on Climate Change.

George Bush’s administration had Watson ousted as chair of the IPCC in 2002, but he stayed at the World Bank, where he is now Chief Scientist and Senior Advisor on Sustainable Development. (He has also been Chief Scientific Adviser to the British Government’s Department for Environment, Food and Rural Affairs for the past six years.)

He would have had both the motive and the opportunity to put those contracts out, but he would not have had the clout to get the reports published. When I asked him about it a few years ago, he neither confirmed nor denied their existence. But if the report on China actually said that the country will lose 38 percent of its food production when the average global temperature reaches 2 degrees C higher, it would explain why the regime is so scared.

No country that lost almost two-fifths of its food production could avoid huge social and political upheavals. No regime that was held responsible for such a catastrophe would survive. If the Chinese regime thinks that is what awaits it down the road, no wonder it is thinking of bringing in a carbon tax.

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To shorten to 700 words, omit paragraphs 2, 4 and 5. (“A carbon…economy”: and “It’s a…don’t”)

Italy: Grillosconi Wins

By Gwynne Dyer

The winner of last week’s election in Italy was a mythical beast called “Grillosconi”. That is bad news for Italy, for the single European currency, the euro, and even for the future of the European Union. Not that “Grillosconi” will ever form a coherent government in Italy. The problem is that he – or rather, they – will prevent anybody else from doing that either.

The newer part of this hybrid beast is Beppe Grillo, a former stand-up comedian who is essentially an anti-politician. His blog boils with bile against Italy’s entire political class, and his public appearances are angry, foul-mouthed, arm-waving rants against the whole system.

Raging against Italy’s privileged, corrupt and dysfunctional political class is a perfectly reasonable thing to do, but Grillo’s Five Star Movement, which in just a few years grew from nothing to take a quarter of the national vote in last Sunday’s election, has nothing useful to put in its place. Just “throw the bums out”, and the democratic power of the internet will solve all of Italy’s problems.

“We want to destroy everything,” Grillo said in a recent interview with the BBC. “But not rebuild with the same old rubble. We have new ideas.” We have heard this sort of talk in Europe before, always from people who turned out to be totalitarians of some sort, whether Communist or fascist. It should not be necessary for Italy to go through all that again.

The older part of the beast is Silvio Berlusconi, the former cruise-ship crooner and billionaire media magnate (he’s the richest man in Italy) whose cynical populism has dominated Italian politics for the past twenty years. For more than half of that time he has been the prime minister, and even when he’s out of power he dominates the political stage.

Berlusconi is 76 now, but he still manages to generate constant sex scandals. (His “bunga bunga” parties are notorious, and he currently faces charges in connection with an under-age prostitute.) He has been fighting charges or appealing against convictions for corruption for the whole time he has been in politics, and keeps changing the criminal law to avoid doing jail time. Yet a large number of Italians go on voting for him.

Their devotion is even more inexplicable when you recall that Italy has been in steady economic decline for most of Berlusconi’s two decades as the country’s dominant political figure. The Italian economy is smaller than it was twelve years ago, over a third of the under-25s are unemployed, and the state auditor estimates that 60 billion euros is stolen from the national budget by corrupt politicians every year.

So 29 percent of Italians voted for Silvio Berlusconi’s party in the election last weekend, and 25 percent voted for Beppe Grillo’s. More than half of Italy’s voters preferred some part of the “Grillosconi” monster to more serious politicians who talked about fixing the economy, tackling the budget deficit, fighting organised crime, and reforming the country’s badly broken justice system.

The result is political paralysis: no party or group of parties is able to form a stable government, and there will probably be another election within a year. (Only one Italian government in the past seven decades has served out its full five-year term.) But why should we believe that that will produce a better outcome? Grillo confidently predicts that his Five Star Movement will win a majority next time round, and he may well be right.

Berlusconi promises to bring back the good old days with a wave of his magic wand: 4 million new jobs, tax cuts, and even refunds for taxes paid in the recent past. But you have to shut your eyes to the financial disaster that is engulfing Italy to believe that, and it will be even harder to do that a year from now.

Grillo promises salvation in a fantasy future where everything happens on the web, but he’s really just getting the protest vote. Even he admits that “the (Five Star) Movement is a dream of what could happen in 20 or 30 years. Not now. Now, nothing will happen.” So why would anyone look to him for a solution to today’s pressing problems? Good question.

Meanwhile, the Italian economy continues to decay, and the government goes on spending money it does not have. One number says it all: about 70,000 Italian public officials are given cars with chauffeurs. (In Britain, the number is 300.) The risk grows that Italy will need a financial bail-out so massive that it causes a collapse of the euro.

Why so many Italians put up with this kind of thing passes understanding. But so does the fact that so many of those who are infuriated by it turn to a clown like Grillo, who offers salvation in the form of a web-based direct democracy. The crisis will therefore continue indefinitely.

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To shorten to 725 words, omit paragraphs 10 and 11. (“Berlusconi…question”)

Bahrain Again

By Gwynne Dyer

“Floggings will continue until morale improves.” As a way of dealing with a discontented crew it was much favoured by 18th-century sea-captains, but the Bahrain government has been an apt pupil. Alas, Interior Minister Sheikh Rashid bin Abdullah al-Khalifa doesn’t quite grasp that this sort of policy statement must be clear and concise.

Announcing that the Bahraini authorities would intensify the repression that has prevailed since the crushing of pro-democracy demonstrations two years ago, the sheikh declared last October: “It has been decided to stop all gatherings and marches and not to allow any activity before being reassured about security and achieving the required stability in order to preserve national unity.”

He’s got the spirit of the thing right, but he falls short in the clarity and brevity departments. (He’s obviously been listening to spin doctors, and they always hate clarity.) At any rate, the demonstrations, gatherings and marches have not stopped, although they have got even more dangerous for the participants.

Bahrain’s brief role in the “Arab Spring” began on 14 February, 2011, when demonstrators demanding a constitutional monarchy, a freely elected government and equality for all citizens took over Pearl Square in Manama, the capital of the tiny Gulf state. But one month later the protesters were driven from the square by force, and after that the repression became general.

By no coincidence, that was also when Saudi Arabian troops arrived “to help the government of Bahrain restore order.” (Bahrain is an island connected to Saudi Arabia’s Eastern Province by a long causeway.) Officially the Saudi soldiers were invited in by Bahrain’s ruler, King Hamad bin Isa al-Khalifa. Unofficially, he probably had no choice in the matter.

Bahrain’s ruling family is Sunni Muslim, like Saudi Arabia’s and those of all the other members of the Gulf Cooperation Council (Kuwait, Qatar, United Arab Emirates and Oman). However, 70 percent of Bahrain’s population is Shia, whereas the rest of the GCC countries are overwhelmingly Sunni. And the relationship between Sunnis and Shias throughout the region is coming to resemble that between Catholics and Protestants in 16th-century Europe.

The ensuing century of religious wars in Europe was not really about doctrinal differences. The wars were driven by the rulers’ conviction that people who did not share their particular brand of Christianity could not be loyal to them politically.

It was nonsense, but millions of Europeans were killed in the 1500s and 1600s in wars triggered by this belief. The same disease now seems to be taking root in the Arab Gulf states. Shias, it is argued, cannot be loyal to a Sunni ruling family. And if they object to being oppressed, it can only be because Shia-majority Iran has deliberately stirred them up.

There is a real political and military rivalry between Iran, the major power on the north side of the Gulf, and the smaller Arab states to the south-west. It has got even worse since the US invasion of Iraq ended centuries of Sunni rule and put a Shia regime in power there. The competition is actually geopolitical and strategic, not sectarian, but people get confused.

So Saudi Arabia worries a lot about the loyalty of the large Shia population (maybe even a majority) in its Eastern Province, where all the oil is. It was certainly not going to tolerate a democracy – which it thinks would be a “Shia” democracy, and therefore a hostile regime – in Bahrain, right next door.

And, of course, it believed that the downtrodden Shia majority in Bahrain (who cannot even serve in their own country’s army and police) had been stirred up by Shia-majority Iran across the Gulf. So when Bahrain’s king had still not got the pro-democracy protesters under control after an entire month, it sent its troops in.

This may not be what the king had in mind. It certainly wasn’t what Crown Prince Sheikh Salman bin Hamad al-Khalifa intended: he was trying to negotiate with opposition parties about giving Shias a bigger role in the kingdom’s affairs. But Saudi Arabia didn’t want that kind of example right next-door, and it found hardline allies in the Bahraini royal family.

It may have played out somewhat like the Soviet invasion of Czechoslovakia in 1968, when Moscow, determined to crush the reform movement there, got some second-rank Czech Communists to request military intervention. At any rate, hard-liners in the royal family have called the tune since then, while the king and the crown prince have effectively been sidelined.

The triumvirate who are now running Bahrain are Khalifa bin Salman al-Khalifa, prime minister for the past forty years, and the brothers Khalid bin Ahmed bin Salman al-Khalifa, the royal Court Minister, and Khalifa bin Ahmad al-Khalifa, who commands the Bahrain Defence Forces. (Do pay attention at the back; there will be a test on these names later.)

The brothers belong to the Khawalid branch of the royal family, descended from another royal who led a brutal crackdown against a Shia uprising in the 1920s. With them in charge, there will be no compromise, even though more than 80 Shia protesters have already been killed.

And even if it gets a great deal worse in Bahrain, no Western government is going to condemn the country’s rulers. That would seriously annoy Saudi Arabia, and they will never do that.

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To shorten to 725 words, omit paragraphs 9, 14 and 15. (“There is…confused”; and “The triumvirate…killed”)

Prisoner X and the Gang Who Couldn’t Shoot Straight

By Gwynne Dyer

Ben Alon, Ben Allen and Benjamin Burroughs are dead. So is Benjamin Zygier, an Australian Zionist who moved to Israel in the 1990s and became an Israeli citizen. He then adopted the curious custom of flying back to Australia at fairly frequent intervals to change his name (Australia lets its citizens change their names once every twelve months). And every time, Zygier would take out an Australian passport in his new name.

The reason, it turns out, was that he had been recruited by Mossad, the Israeli external intelligence agency, to supply it with Australian passports for use in its foreign operations. So far, nothing new. Israel has been compelled at various times to apologise to the British, Canadian and Australian governments, among others, for using the passports of Israelis with dual citizenship in its various clandestine operations abroad.

But then the Israeli government arrested Zygier, and held him in solitary confinement until he committed suicide in his cell in late 2010. It has taken until now for the story to get out because Zygier’s imprisonment without trial was treated as a state secret.

Even his jailers were not allowed to know the name of “Prisoner X” or the reason he was being held – and after his death the Israeli government went to extreme lengths to keep the whole affair secret, even threatening Israeli editors with fines or jail if they reported on it. What could he have known or done to merit such treatment?

Maybe he had stumbled across some apocalyptic secret that would change everything if it got out. Maybe Israel doesn’t really have hundreds of nuclear weapons, or even any. Maybe all the Jewish settlements in occupied Palestinian territory are just Potemkin villages. But it seems improbable, doesn’t it?

The likely answer is that the Mossad hit team that murdered Palestinian leader Mahmoud al-Mabhouh in Dubai in January, 2010 used one or more of Zygier’s passports, and he started to get cold feet. Especially since around the same time the Australian Security Intelligence Organisation woke up and had a little chat with him about his multiple name changes.

So did Zygier just lose his nerve and confess the passport scam to the ASIO? That would annoy his Israeli employers, but not so much that they would turn him into “Prisoner X”. The Australian government would complain through diplomatic channels, the Israeli government would solemnly promise not to do it again, and Mossad would just carry on as if nothing had happened.

Israel regularly spies on the United States, its greatest ally, and then shamelessly lobbies Congress to get its convicted spies released, so it’s obviously not going to worry about offending the Australians. But what if the ASIO turned Zygier into a double agent, and pumped him for information on Israeli “black” operations?

If he had real information about those operations and started passing it to the Australians, that would explain the great anger of the Israeli authorities and the extreme secrecy that surrounded his case.

Whatever. The point is not Zygier’s personal tragedy, or even Israel’s misuse of the passports of its friends and allies in its black ops. It is rather that all this Boy’s Own cloak-and-dagger stuff is profoundly foolish. Or at least the dagger part is.

When Mossad occupies itself in gathering intelligence and doing strategic analysis, it does good work. For example, it has been successful so far in its attempts to talk Binyamin Netanyahu’s government out of launching an extremely ill-advised attack on Iran over its alleged nuclear weapons ambitions. But Mossad’s assassination programme is a long-running disaster.

Sometimes it kills the wrong person, as when it murdered an innocent Moroccan waiter in Norway whom it mistook for one of those responsible for the massacre of Israeli athletes at the 1972 Munich Olympics. But what enemy of Israel was deterred, what further attack on Israel was prevented, by Mossad’s success in hunting down and killing more than a dozen other people whom it suspected of being involved in that atrocity?

When five Mossad agents, travelling on Canadian passports, poisoned Khaled Meshaal, then head of Hamas’s political bureau, in Amman in 1997, it nearly wrecked Jordan’s peace treaty with Israel, and in the end Israel had to come up with an antidote for the poison. Canada even withdrew its ambassador from Israel for a time.

And when it murdered Mahmoud al-Mabhouh in Dubai three years ago, just three days after the first-ever visit by an Israeli cabinet minister to the United Arab Emirates, it put a promising detente between the two countries into the deep freeze indefinitely.

The whole wig-and-fake-passport nonsense is worse than a distraction from Mossad’s real job. It is self-indulgent and counter-productive. And often, when innocent bystanders are killed in these operations, it is criminal. You know, like those US drone strikes that kill innocent bystanders every month.

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To shorten to 725 words, omit paragraphs 5 and 9. (“Maybe…doesn’t it?); and (“If he…case”)

The Decline of the West?

By Gwynne Dyer

You know the story-line by now. There are one million US-dollar millionaires in China. (“To get rich is glorious,” said former leader Deng Xiao-ping.) Seventy percent of the homes in China are bought for cash. China’s total trade – the sum of imports and exports – is now bigger than that of the United States. “They’re going to eat our lunch,” whimper the faint-hearted in the West.

It’s not just the Chinese who are coming. The Indians and the Brazilians are coming too, with economic growth rates far higher than in the old industrialised countries, but it doesn’t even stop there. There’s also Mexico, Turkey, Indonesia and half a dozen other big countries in what used to be called the Third World that have discovered the secret of high-speed growth. The power shift is happening even faster than the pundits predicted.

As recently as 2009, the “Brics” (Brazil, Russia, India and China) accounted for less than one-tenth of total global consumption. The European Union consumed twice as much, and so did the United States. But by 2020, the Brics will be producing and consuming just as much as either of the older economic zones, and by 2025 considerably more than either of them.

In fact, if you include not just the four Brics but all the other fast-growing economies of the ex-Third World, in just a dozen years’ time they will account for around 40 percent of world consumption. As a rule, with wealth comes power, so they will increasingly be calling the tune that the West must dance to. Or at least that is the Doomsday scenario that haunts the strategists and economists of the West. It’s nonsense, for at least three reasons.

First of all, a shift in the world’s centre of economic gravity does not necessarily spell doom for those whose relative influence has dwindled. The last time the centre shifted, when the United States overtook the nations of Europe in the late 19th and early 20th centuries, it did not dent Europe’s prosperity at all.

It’s true that by the latter half of the 20th century there were American troops all over Western Europe, but that would not have happened if Europe had not come close to destroying itself in the two world wars (which can be seen as a European civil war in two parts). In any case, the US troops have mostly gone home now, and Europeans live at least as well as Americans.

Secondly, the new centre of gravity this time, while mostly located in Asia, is not a single country with a coherent foreign policy like the United States. The four Brics will never become a strategic or economic bloc. They are more likely to split into rival blocs, although one hopes not. And the Mexicos and Turkeys and Indonesias of this new world will have their own fish to fry.

So it will be a more complicated world with many major players, and the centre of economic gravity will be in Asia, but there’s nothing particularly strange about this. More than half of the human race lives in Asia, so where else should the centre of gravity be? Asia is very far from monolithic, and there is no logical reason to suppose that its economic rise spells economic decline for the West.

Thirdly, descriptions of the future that are simply extrapolations of the present, like the ones at the start of this article, are almost always wrong. If the widely believed forecasts of the 1980s had been right, Japan would now bestride the world like an economic Colossus. The one certain thing about the future is surprises – but some surprises are a little less surprising than others.

Take climate change, for example. The scientific evidence strongly suggests that the tropical and sub-tropical parts of the world, home to almost all of the emerging economic powers, will be much harder hit by global warming than the temperate parts of the globe, farther away from the equator, where the older industrialised countries all live.

There is already much anger about this in the new economic powers. Eighty percent of the greenhouse gases of human origin in the atmosphere were put there by the old-rich countries, who got rich by burning fossil fuels for the past two centuries, and yet they get off lightly while the (relatively) innocent suffer. But even if the newly rich wanted revenge, they are too disunited – and will be too busy coping with the warming – to do much about it.

The centre of gravity of the world economy is undoubtedly leaving the old “Atlantic” world of Europe and North America and moving towards Asia, but how far and how fast this process goes remains to be seen. And there is no reason to believe that it will leave the countries of the West poor or helpless.

True, economists in the West often ask the question: “what will we sell the emerging countries in the future that they cannot produce for themselves?” In the runaway global warming scenario, the answer would be “food”, but the real answer is sure to be more complex than that. Never mind. They’ll think of something, because they’ll have to.

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To shorten to 725 words, omit paragraphs 6 and 11. (“It’s true…Americans”; and “There is…about it”)