30 May 2013
Syria: Diplomatic Code
By Gwynne Dyer
Sometimes, in diplomacy, a translator is not enough. You need a code-breaker. This is very much the case with the latest round of diplomatic statements about the civil war in Syria, currently the biggest armed conflict anywhere in the world. So here they are, deciphered.
It all started on Tuesday, when Russian Deputy Foreign Minister Sergei Ryabkov announced that Russia would deliver S-300 air defence systems to Syria. He then added the following cryptic comment:
“”We think this delivery is a stabilizing factor and that such steps in many ways restrain some hotheads from exploring scenarios that would turn the conflict international with the involvement of outside forces.” What on Earth does that mean?
What Ryabkov was saying, decoded, was that giving Syria some state-of-the-art air defence missiles would enable it to shoot down American, British or French aircraft if they try to enforce a “no-fly” zone over Syria. And the “hotheads” he wants to deter are the American, British and French political leaders who talk about doing exactly that.
The NATO countries did not lose a single aircraft when they acted as the rebels’ air force in Libya two years ago, and Moscow wants to ensure that they won’t get a free ride if they try to do the same thing in Syria. The S-300s will stop them from “considering scenarios that would turn the conflict international with the involvement of outside forces,” and thus “stabilise” the situation in Syria by making Bashar al-Assad’s regime safer.
Ryabkov refused to say whether the missiles were actually on their way yet, and the Israelis promptly declared that they were not. But Israeli Defence
Minister Moshe Yaalon helpfully added: “I hope they will not leave, and if, God forbid, they reach Syria, we will know what to do.”
He is clearly saying that if the missiles do reach Syria, the Israeli Air Force will attack and destroy them. But he calls it a vital issue for Israeli security, even though the missiles are purely defensive weapons, incapable of attacking Israel. “Security” in what sense?
In the sense that Israel sees freedom to launch air attacks on Syria any time it feels the need as a vital element of its security policy. The S-300s would make it more dangerous to bomb Syria, so Yalon sees them as threatening Israel’s “security”. It’s an innovative use of language, to say the least.
And then there’s the European Union, which met on Monday to consider ending the blanket arms embargo against all parties to the fighting in Syria. The embargo was duly ended, and British Prime Minister David Cameron declared that it was a major step “to reinforce international efforts to reach a diplomatic solution to the conflict in Syria”.
This really does require translation. What Cameron means is that with no EU arms embargo any more, individual EU members (like Britain and France) will be free to send arms to any Syrian rebel group of their choice (but not the nasty Islamists, of course). Since giving them better weapons would put more pressure on Assad to negotiate or quit, it therefore “reinforces international efforts to reach a diplomatic solution.” Obviously.
Except that there won’t actually be any European weapons going to the rebels. The British and the French don’t want to get too far ahead of their EU colleagues, so they are postponing that decision to another summit meeting – in August. In the meantime, the EU countries will not “proceed at this stage with the delivery” of weapons.
And that’s about it. George Jabboure Netto of the opposition Syrian National Council said the end of the EU arms embargo was a “step in the right direction,” while the spokesman of the rival Syrian National Coalition said the move might be “too little too late.” (An inadvertent admission, perhaps, that things have not been going well for the rebels on the battlefield of late.)
And President Barack Obama most eloquently said nothing at all.
He said nothing about the EU’s initiative, because it’s so confused and contradictory that it’s embarrassing to talk about it.
He said nothing about the Israeli threat to attack the Russian anti-aircraft missiles because Israel is a “friend and ally,” and it’s best not to notice when its threats to attack other countries get too brazen.
And he said nothing about the Russian S-300s themselves, because he is probably secretly glad that they are being sent to Syria.
Obama is not one of the “hotheads” who want to intervene in Syria, but he is coming under increasing political pressure from those who do. Senator John McCain, the elder statesman of the Republican Party, slipped across the Turkish border into Syria for an hour on Tuesday and came back swearing that it would be easy to ensure that arms aid went only to the right rebels (i.e. not the Islamist ones).
So it actually helps Obama if the Syrian air defences get better, because it makes the case for “no-fly zones” and other forms of military intervention even less persuasive.
To shorten to 725 words, omit paragraphs 11 and 12. (“Except…of late”)
20 March 2013
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.
To shorten to 700 words, omit paragraphs 8, 10 and 11. (“If…euro”; and “Schaeuble’s…stupidity”)
4 February 2013
By Gwynne Dyer
It’s hard enough to manage a fishery stock sustainably when the fish stay put. Once they start moving around, it’s almost impossible. That’s why the European Union and Iceland are heading into a mackerel war. It’s a foretaste of things to come, as warming oceans cause ocean fish to migrate in order to stay in their temperature comfort zones.
The conflict this time is quite different from the “cod wars” between Iceland and Britain in 1958 and in the early 1970s, as Iceland progressively extended its maritime boundaries in order to save its cod stocks from over-fishing by British trawlers. Back then, Icelanders were indisputably in the right. If they hadn’t acted decisively, their codfish would have gone the way of the world’s richest cod fishery, on the Grand Banks of Newfoundland.
Newfoundland lost its cod because it was no longer an independent country, and the cod-fishery ranked pretty low on the Canadian government’s list of priorities. Ottawa wasn’t willing to pick a fight with other countries over codfish when it had so many other trade issues on the table, from wheat exports to airline landing rights.
Whereas the cod-fishery was the biggest industry in Iceland, and so it fought hard to defend it: British trawlers’ nets were cut by Icelandic Coast Guard vessels, there were ramming incidents, and there was much angry rhetoric. In the end Iceland won, as it deserved to – and it still has its cod stocks. (A president of Iceland once told me privately that she believed Newfoundland would still have its codfish too if it had been free to fight for them).
But Icelanders are not saints, and this time they are in the wrong. The issue is the Atlantic mackerel, whose total catch went from about 150,000 tonnes in the early 1950s to over a million tonnes in 1975, and then fell back to around 700,000 tonnes by 2010. A smaller relative of the tuna, its flesh is much in demand in Europe, and it has become a mainstay of the British, Dutch and Scandinavian fishing fleets.
They know that the mackerel stock is being over-fished, and in recent years they have set quotas for the Total Allowable Catch. This required complex negotiations between the European Union (representing the United Kingdom, Denmark, Sweden and the Netherlands) and Norway (which is not an EU member). The talks were successful, but last month the Marine Conservation Society removed mackerel from its “(safe) fish to eat” list anyway.
Bernadette Clarke, fisheries officer at the MCS, explained that “the stock has moved into Icelandic and Faeroese waters, probably following their prey of small fish, crustaceans and squid. As a result, both countries have begun to fish more mackerel than was previously agreed. The total catch is now far in excess of what has been scientifically recommended and previously agreed upon by all participating countries.”
What has happened is that global warming caused most of the mackerel to move north-west to the cooler waters around Iceland in the summer – and since they were now in Icelandic waters, Iceland began fishing them heavily. It set a quota, of course, but it is not a EU member, and this unilaterally decided quota was in addition to the one agreed between the EU and the Norwegians.
Last year scientists advised a total catch of no more than 639,000 tonnes of mackerel by the EU countries, Norway, Iceland and Russia. However, about 932,000 tonnes was caught – 307,000 tonnes more than was safe. And almost half of that excess was down to the Icelanders, who caught almost no mackerel ten years ago.
Icelandic Industry Minister Steingrimur Sigfusson told the Scottish Sunday Express: “In the summer you can see mackerel jumping on the water at the harbour, which is something new for us. The numbers coming to our waters are quite incredible and they double their weight when they are here….Our catch will be above the scientific advice but all I am willing to say is we will be as responsible as our situation allows us to be.”
Loosely translated, that means that Iceland wants a much bigger share of the Total Allowable Catch because it now has most of the mackerel in the summer, while the countries that traditionally fished the mackerel are digging their heels in and trying to hold on to their old quotas. “We will be as responsible as our situation allows us to be” could also be the slogan of the EU countries – and it isn’t responsible at all.
Maybe they’ll all see the light before they fish the mackerel out, but the EU is now muttering about sanctions, and Icelanders don’t respond well to outside pressure. Everybody involved understands what’s at stake here, but they are all answerable to their own fishing industries at home, not to international law (there is none on this issue) or to some wise and impartial arbitrator. So there may not be a deal. Good-bye, mackerel.
The problem is not really greedy Icelanders or stubborn British. It is climate change. And we will see many more disputes like this, some of them with a much higher risk of violent confrontation, as the warming proceeds and fish stocks dwindle.
To shorten to 725 words, omit paragraphs 3 and 4. (“Newfoundland…them”)
23 January 2013
The Little Englanders Win Big
By Gwynne Dyer
The real problem is continental drift: Brussels, the capital of the European Union, is getting further and further away from England. Or at least that is British Prime Minister David Cameron’s line.
Cameron made his long awaited speech promising a referendum on continued British membership in the European Union on 23 January, and he placed the blame squarely on plate tectonics: “People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity or their taxes are used to bail out governments on the other side of the continent.”
The “frustrated” people in question are English, of course. Hostility to the European Union is mainly an English thing, but that matters a lot in the United Kingdom, where 55 million of the kingdom’s 65 million people live in England.
The Scottish nationalists seeking separation from England in their own referendum take the opposite tack. They promise the Scottish electorate that leaving the UK would NOT mean leaving the European Union (although in fact Scotland would probably have to re-apply for membership). Scottish politicians have to promise to stay in the EU, because otherwise very few Scottish voters would say “yes” to independence. But England is different.
The “Little Englander” glories in the notion of England being unencumbered by foreign ties and commitments. It’s the kind of nationalism that Americans call “isolationism”, and the phrase is now used to describe strongly nationalist, even xenophobic people on the right of English politics. Those people, always present in significant numbers within Cameron’s Conservative Party, have now won the internal party debate.
Every Conservative leader has had to deal with these people. They always managed to contain them in the past, because the European Union is Britain’s biggest trading partner, and it is obviously in Britain’s interest to belong to the organisation that makes the rules for Europe’s “single market”. What has changed is that the long recession and relatively high immigration of recent years have increased the popularity of the extreme right in England.
That doesn’t mean that populist demagogues and neo-fascists are about to win power in the United Kingdom. Far from it: they’d be lucky to get 10 percent of the vote. But it does mean that the Conservatives are losing their more right-wing supporters to the anti-EU, anti-immigration United Kingdom Independence Party.
UKIP could never win an election in Britain, but it could easily steal enough votes from the Conservatives to make them lose the next election. So there has been mounting panic in the Conservative Party, and not just among its instinctively anti-EU members.
Cameron’s promise of a referendum on EU membership is first and foremost an attempt to steal UKIP’s thunder and win back the defecting Conservative voters. He doesn’t really want to leave the EU, but he really does want to win the election that is due in 2015.
His reluctance to be the man who took Britain out of the EU was evident in the way he hedged around his referendum promise. The referendum would not take place until after the next election, and only if the Conservative Party won enough seats in 2015 to form a government on its own. (Its current coalition partner, the Liberal Democratic Party, opposes the whole idea).
Cameron says he will spend the next two years renegotiating the terms of Britain’s EU membership to “repatriate” many powers from Brussels to London, and to make various changes in the way the EU is run. Then, if he is satisfied with the outcome, he will support EU membership in the election and in the subsequent referendum, which will be held by 2017. But he had no satisfactory answer to the hard questions that followed his speech.
What if the 26 other EU members choose not to waste months in talks on changing Britain’s relationship with the EU? What if they do negotiate but refuse to tie themselves up in knots just to ease Cameron’s local political problems? Would he support continued EU membership in the promised referendum if he didn’t have a “new deal” to offer the voters. He simply wouldn’t answer those questions.
There is much that could be done to improve the accountability and efficiency of the European Union, but it is not helpful to open a negotiation with 26 other governments by standing at the exit door and threatening to leave if you do not get your way. The time may well come when Cameron has to answer those questions, and he probably does not know himself which way he would jump.
So for the next four years, all those foreign companies that have been using the United Kingdom as a convenient, English-speaking centre to produce goods and services for the European market will be re-thinking their investment strategies. If the United Kingdom may leave the EU by 2017, is this really the right place to put their money? It will probably be a long dry season for the British economy.
How did an allegedly grown-up country talk itself into this position? It’s an attitude that was summed up in an apocryphal English newspaper headline of the 1930s: “Fog in (the English) Channel; Continent Cut Off.”
To shorten to 725 words, omit paragraphs 4 and 13. (“The Scottish…different”; and “There is…jump”)