2008 Year-Ender

22 December 2008

2008 Year-Ender

By Gwynne Dyer

If Barack Obama can walk on water, then change really is coming to the United States and the world. If there are no more big unexploded bombs buried in the world’s financial systems, then this may be just an ordinary recession. But the most telling image of 2008 was Iraqi journalist Muntadhar al-Zaidi throwing his shoes at George W. Bush.

His brother says that he changed his shoes after he heard that he was being sent to cover the Bush press conference: he wanted to be sure that the ones he threw were Iraqi-made. He also gave some thought to his words: “This is the farewell kiss, you dog!” as he threw the first shoe, and “This is from the widows, the orphans and those who were killed in Iraq” with the second.

He doubtless knew that he would be beaten half to death afterwards by the security guards because he had embarrassed them. Over the next 24 hours, he was tortured into a “confession” that he had been induced to attack Bush by a “terrorist”. But what he did had enormous resonance elsewhere.

This is the end of an era, and everybody knows it. It coincides with the end of a year because of the rules on presidential succession in the US constitution, but we are not just saying farewell to 2008.

In the minds of most people — a majority of Americans, and the overwhelming majority of people elsewhere — we are saying good riddance to a long period when brutal and ignorant policies reigned supreme. We are saying goodbye to George W. Bush, and Muntadhar al-Zaidi said it most eloquently.

Bush was a relentlessly partisan president who saw no harm in using his office to help his friends, but his main fault was ignorance, not malevolence. It was wilful ignorance, for he is not a stupid man, and the damage it did was immense. I have been doing this job for a long time, but I cannot remember when the departure of a major political figure from the world scene was awaited with such eager anticipation in almost every country, including his own.

We are bound to be disappointed by the change, of course. Bush did not create all of the world’s problems, and they will not vanish when he does. In particular, the global financial crisis that exploded when the Bush administration decided not to save the foundering Lehman Brothers investment bank in September still has some distance to run, and the full extent of the damage is not yet known.

A recession was due around now regardless of who was running the US government, or indeed all the governments put together. Until some genius discovers a way to abolish the business cycle, which is driven by basic human psychology, recessions are bound to occur from time to time. What frightens people is the possibility, eagerly touted in the media, that this might be not just a recession, but an actual depression.

It’s a big difference: in the case of the United States, the difference between unemployment rising to a peak of nine or ten percent before dropping back to normal after a couple of years in the recessions of recent decades, and unemployment rising to a peak of twenty-five percent and not returning to normal for ten years in the Dirty Thirties.

It’s clear that the Masters of the Universe no longer have any idea what to do, and that they are very frightened. The levers of power are no longer attached to anything, and none of their normal tricks, like dropping interest rates, seems to stop the headlong decline. But the truth is that it always feels like this on the way down into a major recession, and yet it’s usually over after about fifteen or eighteen months.

Where is the evidence that it will be different this time? The banks are in much more trouble than they usually are in a mere recession, but governments have reacted much faster than they did on the way into the Great Depression, and relatively few banks have actually gone under.

Indeed, there are those who think that this time governments are over-reacting and making things worse. One of those doubters is the German finance minister, Peer Steinbrueck. “The same people who would never touch deficit spending are now tossing around billions,” he said last week. “The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking” — and it is raising national debt to levels that “will take a whole generation to work off.”

You can’t accuse the Bush administration of a foxhole conversion to deficit spending, because it ran huge deficits as a matter of course. But in the rest of the world conservative governments, and even “socialist” governments, really tried to balance their budgets, and often succeeded.

Now they are all Keynesians, desperately hoping that big government spending will pull their economies out of a nose-dive because they can’t think of anything else to do. Keynes is probably the right point of reference, but nothing is going to pull these economies out of their nose-dive for a while. You can’t short-circuit a recession; you have to go though the misery one month at a time.

The good news is that the G7 economies are not shrinking faster now than they were going into the last three recessions (early 80s, early 90s, early 2000s), which suggests that what is coming will not much worse than those were despite the severity of the banking crisis. If that is t he case, then most countries should be seeing an upturn by mid-2010, and even the United States (where recessions tend to be worse) by the end of that year.

This suggests that the current frenzy of deficit spending may indeed be more than is strictly necessary to keep the world from sinking into a depression, but nobody wants to take that chance. Least of all Barack Obama, who seems well aware that a big crisis, real or perceived, creates opportunities for major change.

It is therefore possible that Obama’s election, and not the financial meltdown, was really the key event of 2008. One of the longest, tightest presidential races in American history has produced not only the first non-white president, but a president who, thanks to his innovative fund-raising methods, is almost uniquely free of the usual debts and obligations to special interest groups.

For a time — possibly a quite extended period of time — Obama will be free to do what he thinks is right, and to justify it in terms of the crisis. His cabinet and other high-level appointments suggest that he will make few initiatives in foreign policy, limiting himself perhaps to speeding up the timetable for withdrawing American troops from Iraq that has already been forced on President Bush, but that domestic affairs will see a whirlwind of change.

Health care, education and welfare are all areas where Obama can and probably will push through reforms that have been stalled for several decades, but it has become increasingly clear in recent weeks that environment — climate change, to be specific — will be the area to see the most radical policy changes. The United States, the world’s biggest emitter of greenhouse gases, is about to switch from being the main obstacle to global action to being its chief proponent.

Obama is not only going to change the laws in this area to encourage emission cuts. He is going to spend the money, justifying it as dual-purpose expenditure that both creates jobs and serves a genuinely useful purpose.

It’s still unlikely that there is enough time to negotiate a successor to the Kyoto accord that mandates adequate cuts in emissions internationally by the current deadline of 2010, but if Obama is as serious about this as he seems, it could be done by the end of his first term.

So there’s a bit of unadulterated hope. In other domains and regions, the picture is more mixed, but it is not all dark.

In the Americas, Cuba fumbles its way towards a post-Castro future with much anxiety but no violence beyond the usual state-backed oppression. (Here is a place where the Obama administration could ease the transition greatly by ending half a century of US sanctions.) The various left-wing regimes of South America also stagger onwards, free for once to succeed or fail on their own without US intervention.

Three Andean countries almost stumbled into war in March after Colombia raided a camp of FARC guerillas on Ecuadorian soil and Venezuela leader Hugo Chavez joined the left-wing leader of Ecuador, Rafael Correa, in mobilising troops on the Colombian border. The United States did not encourage Colombia to pursue the conflict, however, and after a week everybody made up and went home. For all of Hugo Chavez’s histrionics, the United States never intended to attack his regime directly even under George W. Bush’s leadership.

Africa below the Sahara has had a deeply discouraging year. The resurgent fighting in eastern Congo was showing signs of expanding into a major war involving lots of foreign troops by year’s end, and the Darfur war in Sudan was no nearer to resolution. Ethiopia began pulling its army out of Somalia in December, but not before reigniting the Somali civil war, and Somali pirates operating in the Gulf of Aden and further south became a serious hazard to shipping.

Zimbabwe sank into wretchedness, cholera and despair as Robert Mugabe clung to power. In Kenya, President Mwai Kibaki and the real winner of the country’s rigged election of December, 2007, Raila Odinga, managed to forge a power-sharing government in April (Odinga became prime minister), and began to repair the damage caused by the bloody post-election riots, but Mugabe could not do the same.

Instead, the 84-year-old despot betrayed the power-sharing agreement that he had signed with the real winner of Zimbabwe’s election last March, Morgan Tsvangirai. Most of Zimbabwe’s neighbours has refused to bring real pressure on the old thug to quit, though Botswana gallantly offered to host  a  government-in-exile.

South Africa, having seen its president of the past nine years, Thabo Mbeki, unceremoniously removed from office by his own party, the African National Congress, awaits the election next year of his certain successor, Jacob Zuma, with some apprehension. (Kgalema Motlanthe, the current president, is only keeping the seat warm for Zuma.) Many fear that Zuma will drag South Africa into a swamp of corruption and rabble-rousing populism, but it really is too early to judge how he will behave as president.

The big development in the Middle East was the relative fall in violence in Iraq, combined with the emergence of an Iraqi government confident enough to insist on a deadline for the withdrawal of American troops. But the prospective victory of Likud’s Binyamin Netanyahu in the forthcoming Israeli elections practically guarantees another long period of Arab-Israeli confrontation and expanding Jewish settlements in the occupied Palestinian territories.

Various governments fretted aloud about Iran’s alleged drive for nuclear weapons, but the legal grounds for the complaints were as flimsy as the unity of the complainers. Whatever Iran has in mind, it can safely get on with it. Pakistan made a shaky transition from the military dictatorship of Pervez Musharraf to a civilian president, Asif Ali Zardari, in the course of the year, although nobody would accuse the governing coalition of parties of being either coherent or stable. And Afghanistan remains mired in a civil war with extensive foreign involvement The third major terrorist attack on Mumbai in fifteen years in November pushed Indian patience to the breaking point, as once again there was evidence of sponsorship by Pakistan-based extremist Islamist groups.

Few believed that the new Pakistani government (which had just launched a peace and charm offensive towards India) was sympathetic to these groups; many doubted that it could get them under control. At year’s end, Indo-Pak relations were again in the deep freeze.

In Sri Lanka, the government launched yet another “final offensive” against the separatist Tamil Tigers in the north, and this one has actually been making some headway on the ground. Dozens died in nationalist demonstrations against the Chinese regime in Tibet in March, and tens of thousands died in the cyclone that struck southern Burma in May. Nepal dumped its king and became a republic in May, and in August the Communist/Maoist leader Prachandra became prime minister.

Suharto, the former dictator who ordered the deaths of at least half a million Indonesian Communists in the 1960s, invaded East Timor in 1975 and caused at least 100,000 deaths there, and stole billions of dollars from the Indonesian state, died peacefully in Jakarta in January.

He was never punished for any of it, but at least Indonesia is now a democracy. Thailand, regrettably, is no longer a democracy, although the forms persist. Right-wing demonstrators backed by the army, the courts (and perhaps by the king) brought down two legally constituted governments in two months, and the new regime will have to change the electoral rules to exclude a lot of voters before it dares to call an election.

China’s Sichuan province was struck by a powerful earthquake that killed at least 69,000 people in May, but three months later the Olympics in Beijing were a spectacular success, leaving London (site of the 2012 Olympics) to wonder whether it should try to match the sheer choreographed spectacle of Beijing or aim for something on a more human scale. Reports that North Korea’s “Dear Leader,” Kim Jong-Il, was ill or dead began to surface in September, but the truth of the matter is still not known. Japan had another change of prime minister, but nothing else changed.

In Europe, the big news was the war in the Caucasus that erupted in August when Georgia tried to seize the breakaway republic of South Ossetia, one of two ethnic minority areas that have maintained their separation from Georgia ever since the latter got its independence from the former Soviet Union in 1991.

In order to conquer South Ossetia, Georgia had to kill or expel the Russian peacekeeping troops who were stationed there. Some might see the disparity in the size of the two countries (4 million Georgians, 140 million Russians) as a serious obstacle, but Georgian President Mikhail Saakashvili was not deterred. The Georgian assault on South Ossetia in early August, however, was easily repelled by the Russian army, which seized control of large parts of northern Georgia after the Georgian troops broke and fled.

A cease-fire stopped the shooting after five days, and Russian troops had all left Georgia proper within two months, but Moscow did recognise the independence of South Ossetia and of Abkhazia, another ethnic enclave that broke away from Georgia in the early 1990s.

Some circles in the West believe that this war proves that Russia under Prime Minister Putin has expansionist goals, and the Bush administration and several Western European governments promised to bring both Georgia and Ukraine, another former Soviet republic, into NATO. But the tangled facts on the ground argue for a more measured judgement, and enthusiasm among NATO nations for this course of action is visibly shrinking. There is no reason yet to believe that the West and Russia are committed to a new Cold War.

Elsewhere in Europe, the most exciting political events were the Spanish election in March (Socialists keep power), the arrest of former Bosnian Serb leader Radovan Karadzic in July (off to The Hague for trial), Greenland’s vote on increased autonomy in November (yes) — and, of course, Ireland’s rejection of the new European Union constitution in a referendum in June.

Europe has gone from the world’s most violent continent to its most placid, and most Europeans are quite happy to have it that way. (In the end, after Brussels made a few face-saving promises not to impose on Ireland measures that nobody ever intended to impose on it anyway, the Irish government agreed to hold another referendum on the constitution next year.)

And one last big thing. In January, 2008, oil reached the $100-per-barrel mark for the first time; in mid-July it touched $147 per barrel; and by late December it was back down below $50 per barrel. This extreme volatility is exactly what is predicted by most models when we are at or near “peak oil”, and it is entirely possible that we are there now.

If not, we will certainly be there within a decade.

But this does not necessarily mean regular oil shortages and permanently high prices, because a parallel down-shift may be getting underway in the demand for oil. The United States is about to get serious about greenhouse gas emissions, and that means that US oil use is going to fall. A lot of other countries are already on that track, and more will follow. If they all get it right, then oil will be neither scarce nor expensive — and nobody will care much about it anyway.