Surprising Flat Tax Support

Wahlkampf: SPD konzentriert sich auf Kirchhof - Politik - SPIEGEL ONLINE - Nachrichten

It's astonishing how the flat tax concept has become a central issue in the German election campaign.

The SPD are now training all the guns they have on Professor Kirchhof and his 25 % flat tax idea.

But so far it does not seem to be working. Representatives of the so called social wing of the CDU have now said that they find a 25 % tax paid equally by all better than the present system where all sorts of deductions means that the better off at the end of the day probably pay less.

And an opinion poll by the Der Spiegel magazine revealed that while 39 % opposed the idea, it was supported by no less than 48 %.

Big Iraqi Battle Coming

UK EU Presidency 2005 Foreign Policy Statements

Like everyone else, the European Union has officially welcomed the publication of the draft for the new constitution of the new Iraq today.

But beneath the official statements there is a deep uneasiness over what will happen next. The constitution undoubtedly represents great progress for both Iraq and the region, but it's essence seems to be a deal between the Shiites and the Kurds at the expense of the Sunnis.

This is not really what the United States sought. One gets the impression that even the high-level interventions by President Bush fail to achieve a more balanced outcome.

Now, this draft constitution should be the subject of a referendum in all of Iraq in October.

That will be a critical and in all probability fiercely contested battle.

Accordig to the Transitional Administrative Law, the constitution can be defeated by a two-thirds majority in three of the provinces of the country.

This was a provision written originally to defend the Kurds by giving them the de facto power to defeat any Iraqi constitution they did not like.

But now it's the Sunnis that will be in focus. Sunnis make up a sizeable majority in two provinces, Anbar and Salahuddin, and a slim one in Nineveh, which also has a large Kurdish population.

So we should expect the critical battle to be played out in the province of Nineveh, centered around the city of Mosul.

Flat Tax Debate Continues...

CDU Deutschlands

In the German election campaign, the flat tax issue has suddenly become one of the most discussed questions. I'm sure it wasn't planned that way, but that's the way it has turned out.

When the CDU meet in Dortmund yesterday for their election campaign congress, it was obvious that the selection of tax expert Paul Kirchhof for the Merkel team had very strong support from the CDU grassroots.

Different grandees - notably Bavaria's Edmund Stoiber - have made clear that they have no love lost for the Kirchhof idea of a 25 % flat income tax for Germany. But this hasn't stopped the debate.

In Dortmund, Angela Merkel praised Kirchhof as a man of courage without going into any details on the tax issue. But the message was clear enough.

And Kirchhof notes that the announced CDU/CSU plan for tax cuts in the years ahead will be his priority, and what he is discussing is what would be desirable thereafter. CDU financial expert Friedrich Merz has joined in and said that it should certainly be both possible and desirable to move in that direction, although the timing will be a difficult issue.

For Paul Kirchhof it is the tax competition coming from the Baltic countries, Slovakia and others and the success these countries have had that makes it imperative for Germany to move forward more radically.

The CDU/CSU plans already foresees lowering the top tax from 42 to 39 %, but that's clearly not enough in the present sitiuation. Europe is changing fast.

It will take time for Germany to change, but the Kirchhof debate has certainly injected a new urgency in the debate.

In the meantime we might well see Poland taking a big jump in the same direction after its September election...

A Changing Baltic World

The other day I was in Helsinki discussing business developments in our rapidly changing part of the world.

Little more than a decade and a half ago I remember how there was an empty and drab Soviet vessel going from Helsinki harbour to neighbouring Tallinn in the then Soviet Estonian Republic three times a week or something of that order.

Contacts were nearly non-existent. Business did not exist. Controls were extremely strict.

Now things are - mildly speaking - somewhat different.

Any given day there are now in the order of forty (40) departures by different forms of ships from Helsinki to Tallinn.

Add to that the helicopter service several times every hour between the city centres. The journey itself takes 17 minutes. And then there is of course the regular air services for those interested in connecting primarily with Helsinki Airport and the route network there.

Business of all sorts is booming. Just one example of interest.

The Finnish air carrier Finnair has put all its turboprop domestic traffic in a separate company which it has registred in Estonia and based in Tallinn. Not only are the costs significantly lower, but I was told that the work ethic has also improved markedly.

It must be unique for a flag carrier of this sort to offshore its domestic operations to a nearby country.

But this is the new Europe emerging in the Baltic world. At the end of the day, we are all the winners.

Dubious Letter on Turkey

05_08_26_Brief_Tuerkei.pdf (application/pdf Object)

With the German election now officially set for September 18, the battle is starting to heat up.

Opinion polls continue to show that it will be extremely tight between a majority for a centre-right coalition between CDU/CSU and liberal FDP and a situation in which a great coalition with the SPD would be the only viable option.

Suddenly, CDU/CSU has decided to insert the issue of Turkey in the campaign.

In a letter today to the centre-rights heads of government in the European Union, Angela Merkel and Edmund Stoiber argue that the mandate for negotiations with Turkey should include also the option of what they call a priviliged partnership. In their opinion, the inclusion of Turkey in the Union would overburden it in political, economic and social terms.

You can look at this letter in different ways.

One is obvious. It could be seen as a blatant attempt to play on the anti-Turkish and anti-Muslim sentiments that are undoubtedly there in significant parts of the German electorate. The nuances in the letter are certain to be lost in the more simplistic debates around the "stammtisch" in the local hang-outs around the country.

Another is to look at these nuances. The letter does not oppose the opening of accession negotiations with Turkey on October 3rd. Its key demand is that in addition to the aim of membership of these talks there should be another option included.

The one way or the other there is likely to be some reference of some sort to some such other option. The informal meeting of EU foreign ministers in Britain at the end of next week is likely to discuss some phrases along those lines.

But what it will mean remains unclear in the extreme.

While membership is well defined by the different articles of the different treaties as well as the commitment in all the so called aquis communitaire, no one really knows what the so called privilgied partnership means.

It can be argued that this is what Turkey already has. It is part of the customs union of the Union, and is thus more closely integrated than Switzerland, although less than Norway. Through the so called Berlin Plus arrangement between the EU and NATO, it is closely affiliated with much of the operations of the common security and defence policy.

The more priviligied a partnership becomes, the more complex will it be to sort out all the issues of co-decisionmaking. As the example of Norway shows, these issues are nearly impossible to sort out, and one tends to end up in a situation where the country in question is far more of a satellite than a partner.

A negotiation has to be between two parties. It remains to be seen if Turkey is interested in negotiating something that no one really seems able to define and which seems designed more to keep them out than to help them in.

I consider that less than likely.

In addition, the letter suddenly raises the Cyprus issue in a way that is just uninformed and wrong. Again, one gets the impression that its authors are just searching for ways to keep Turkey out.

I belong to those that hope that there will be a clear majority for a new government in Berlin. As Chancellor Schröder explained himself as he asked the Bundestag to vote his government out, the red-green majority has lost the ability to reform and to govern.

But I say this with the great reservation that there is a clear risk that such a new government in Berlin will mess up a most important part of the European efforts to create peace, stability and prosperity in our part of the world.

After the Boer War...

Guardian Unlimited | Guardian daily comment | Stagger on, weary Titan

Timothy Garton Ash sees the Washington of today in the perspective of London in the aftermath of the Boer war a century ago - and the powers of the United States in the world today in the perspective of the powers of Britain in the world then.

Iraq is America's Boer war, in his perspective. A war that turned out to be more complicated than anticipated, and drain the resources also of the global superpower of the day.

And if Britain then saw the gradual emergence of a Germany that was preparing to challenge its global supremacy, there is the feeling in Washington that the rising Asian power of China will change the equation in an equally fundamental way.

But Timothy Garton Ash has words of warning and caution:

"If you are, by any chance, of that persuasion that would instinctly find this a cause for rejoicing, pause for a moment to consider two things: first, that major shifts of power between rising and falling great powers have usually been accompanied by major wars; and second, that the next top dog could be a lot worse."

This, then, is the time for critical solidarity.

Dangereous Constitution?

Constitution Sparks Debate on Viability

Opinions are distinctly mixed on the draft for a new constitution for Iraq that seems to be emerging.

Apart from the issue of the role of Islam in Iraq - where the constitution seems to be along the lines that we previously saw emerging in Afghanistan - it is the division of powers between the centre and the different parts of the country in the emerging federal structure that leads to debate.

Anthony Cordesmann, who has been following Middle East issues closely for decades, says that "rather than an inclusive document, it is more a recipe for separation based on Shiite and Kurdish privilege."

If that is the case, there are clearly dangers ahead. A Sunni-based insurgency might accelerate rather than gradually die down. And any such insurgency risks triggering moves by the Shiites and Kurds that further endanger the unity of the country and brings it closer to a bloody civil war of disintegration and chaos.

The only long-term winners in such a situation would be Iran as well as the Islamic terrorists.

Nationalism and Militaristic Anti-Westernism?

Hitting Political Turbulence

There is no doubt that the Putin regime in Russia is rapidly losing in both respect and popularity. The later is reported by those polling agencies able to do so, and the former is obvious in any conversation with any Russian citizen about anthing these days.

According to the constitution, Russia will have elections for a new Duma in 2007 and new presidential elections in 2008. Having then already served two terms, Vladimir Putin will have to step down and leave room for someone else, much like what is the case in the United States.

There are few that believe that this is what will actually happen. For some time, it's been standard on the Moscow rumour circuit to speculate about different ways in which Putin and his entourage could remain in some sort of control.

But all those speculations have centered on 2008.

Now, things are changing. There are Western observers who don't really see that the regime, on present trends, can last that long. The signs of decline, division and decay are simply too many, they argue. And there are certainly Russian observers that tend to agree.

So it's hardly surprusing that one encounters speculations about possible Kremlin plans to engineer some sort of transition to a Putin 3 regime much earlier.

The linked article from Moscow Times notes some of the signs that can possibly be detected of such plans being prepared. And it notes that the political platform that then seems to be emerging is one of intense nationalism and discreetly anti-Western militarism.

These, one should note, are not speculations or comments originating in circles far away that could be expected to say something along these lines.

These are speculations from well inside the inner ringroad in Moscow.

And accordingly worth reading and contemplating.

The Polish August of 1980

Welcome to NSZZ Solidarnosc Web Site!

History passes by very fast in our fast-changing world.

This month it is a quarter of a century since the wave of strikes on the Baltic coast of Poland that rocked that Communist country and played a key role in initiating the sequence of events that lead to the collapse of communism in Europe and the reunification of our continent.

These very days - a quarter of a century ago - representatives of 50 000 to 90 000 striking workers in some 260 enterprises along the entire Baltic coast come together to set up a committe that issued a 21-point manifesto with demands that challenged the very foundation of the regime.

Based also on the experience of the suppresed weave of strikes a decade earlier, the strikers this time decided to put forward demands that were also of an obvious political nature.

Apart from de facto demanding that free trades unions should be established, they asked for censorship to be abolished and political prisoners to be released.

Some of the demands made in August 1980 in Gdansk were very pragmatic and of an economic and social nature. Communism was characterized by constant shortages of consumer goods and bad management and as a result, workers’ protests in different countries of the communist bloc erupted. Previously, they had often been suppressed by a combination of force and promises of pay rises.

In Gdañsk in August 1980, the regime initially followed this pattern and agreed to significant pay increases for workers. But that wasn't enough. The strike went on and grew in size and impact - and at the end the regime had little alternative than to agree to the 21 demands.

The immediate result of the acceptance of the demands was the foundation of the independent free trades union NSZZ Solidarnosc, which had more than 10 million members and became a massive social and political movement.

The political confrontation that followed between a retreating and desperate regime and the new aspirations of freedom brought Poland to the brink of Soviet military invasion and eventually the imposition of martial law, a brutal crackdown and the outlawing of Solidarnosz in December 1981.

But Solidarnosz survived as an underground organization and formed a team of negotiators, who held talks with the government at the so-called round table in 1989. The communist party was forced to make new concessions, which led to the first democratic elections in the communist bloc. Subsequently, the elections became an impetus for other countries of the Soviet bloc to fight for freedom and fostered the collapse of the Soviet empire from 1989 and onwards.

When the striking workers at the Lenin Shipyards in Gdansk challenged the authorities, they paved the way for the development that would not only lead to the collapse of the Soviet Empire in Europe, but also to their country Poland today being a proud and important member of both the European Union and NATO.

It is certainly an event both remembering and celebrating.

Sharon The Right Man

Israel Policy Forum

The Israeli disengagement from Gaza has been completed. All in all, the complex process worked out better than expected.

In the linked letter, the chief analysts at the Israel Policy Forum in the US applauds the statesmanship of Ariel Sharon in carrying out this fundamental shift in his and in Israels policy.

The continuation of disengagement will of course be far more difficult, but that there has to be a continuation is beyond doubt. Israel must change course in order to be able to make peace and survive as a democracy.

Maneuvering Against Turkey

EU Enlargement: Cyprus Is a Poor Excuse for Turning Away Turkey

As the politics of Europe is starting to come back from vacation, Turkey is one of the issues looming large on its agenda.

On the one hand there is the decision to start accession negotiations with Turkey on October 3rd. On the other, there are the different maneuvers by those not really wishing this to happen.

At the moment it seems as it is France that is intent on throwing sand in the machinery. President Chirac has certainly been in favour of opening up for Turkish membership of the European Union, but suddenly they seem to be having cold feet in Paris.

Prime Minister de Villepin has been making different noices, putting up new conditions relating to Cyprus that are both unfair and impossible for Turkey to meet. There are rumours of Paris trying to encourage Athens to take as hard a line as possible. And Athens has been lining up with Nicosia to produce a list of different new demands they want to insert into the process.

Phil Gordon of the Brookings Institution in Washington is a knowledgable observer of the European scene, and commented on these different maneuvers in the linked piece in the International Herald Tribune.

We'll see what happens. A critical meeting of COREPER - the powerful Committee of Permanent Representatives - that was supposed to have been held in Brussels August 24 has now been postponed for a week to make room for more bilateral diplomacy.

The UK Presidency is firm to secure an opening of the accession talks on October 3rd. And the European Commission seems to be of the opinion that all the relevant criteria for that has now been met.

So we'll see what happens.

In the meantime it is important to notice how the European urge continues to change Turkey, now clearly manifested in Prime Minister Erdogans ground-breaking visit to the Kurdish-dominated Southeastern provinces of the country.

Flat Tax in Germany?

Steuerreform Deutschland Politik FOCUS Online in Kooperation mit MSN

It will certainly not happen in the immediate future, but the fact that the man that's been assigned the portofolio of economy and finance in opposition challenger Angela Merkel's team has spoken out in favour of a flat tax is significant in itself.

Professor Paul Kirchhof is a recognized expert in his field. His appointment to the team has been widely applauded.

And then suddenly he has said that his vision is a flat income tax of 25 %. That's a fairly radical departure, also fron the more modest ambitions of the common CDU/CSU platform. Accodingly, Angela Merkel has said that it is the platform that applies and nothing else.

But the genie of a more radical reform is out of the bottle, and it can't be brought back into it again.

It's as sure a sign as you can ask for that times are really changing.

Base Camp Transfer

Don't count on me posting comments here during the next two or three days, since I will be busy transferring "base camp" from the Dalmatian coast of the Adriatic in Croatia back to Stockholm up by the Baltic Sea.

But after that I'll certainly be back. Europe is slowly returning to business after the summer of 2005.

The Asian Age Coming

Chart: Reshaping The Global Economy

Although I belong to those that believe that we will see a revival of the larger European economy in the years and decades ahead due to the restructuring now going on, there is no doubt that it is the Asian age that we are entering.

The linked graph from the latest issue of Business Week illustrates the conventional wisdom on how the global economy will change during the first half of this century. It's dramatic.

Things might develop differently, of course. China faces major challenges, and the weaknesses in its system are often overlooked. India, with its enormous potential, could face ethnic strife and political paralysis if things get really bad.

But overall the trends that we see in the graph are likely to endure over the coming decades.

After the first phase of globalisation with a European face, and the second phase with an American facee, we will surely enter a third phase of globalisation with an Asian face.

160 000 Dead in Chechnya

Death Toll Put at 160,000 in Chechnya

A recent report estimates that app 160 000 people have died in the two conflicts in Chechnya since late 1994. It's a number higher than previous estimates.

There are no entirely reliable estimates available yet on how many died in the decade of war in the Balkans during the 1990's. Frequently stated figures are in all probability too high.

My semi-informed guess is that when we know those numbers we will find that the number of deaths as now reported from Chechnya will be higher than in all of these Balkan wars taken together.

Horrible. In both cases.

Important Battle over Internet

Internet Stability, Security Must Be Maintained, U.S. Says- U.S. Department Of State

The managment and governance of the Internet is again becoming a not insignificant international issue.

There is considerable pressure from some countries for that entire issue to be taken over by some multilateral international body. After all, mail issues are coordinated by the International Postal Union (IPU), and telephone and telegraphd dito by the International Telephone and Telegraphy Union (ITU), the one in Berne and the other in Geneva.

Many of the corresponding issues for the Internet are however dealt with by the non-governmental ICANN organisation, headquartered in California and operating under US laws. In the background howevers a certain role of the US government, reflecting a part of the history of the origin of the system.

Now, a UN panel has issued a report with a series of alternatives for the future, and the US government has issued its position in a rather extensive paper.

In essence, the US position comes down more in favour of the ICANN than of the ITU.

I have a fair amount of experience of both UN organisations and of ICANN, and I have to say that I see much greater flexibility and transparence of these issues remain with ICANN than if they disappear in a gigantic office building and multilateral organisation in Geneva.

The issue is important. Those that take an interest in the future of the Internet and what it represent should take an interest and try to influence the outcome.

Europe for Peace

85995.pdf (application/pdf Object)

It is highly significant that former President of Finland Martti Ahtisaari has succeeded in forging a peace deal between the Government of Indonesia and the Free Aceh Movement.

It brings the prospect of peace to that troubled province after 30 years of more or less intense fighting, and should also have an effect on other potential troublespots in the vast archipelagoe of Indonesia.

The implementation of the agreement will now be monitored by an EU-led Aceh Monitoring Mission.

Both the way in which this agreement has been negotiated - by a non-governmental organisation under Martti Ahtisaari - and the way its implementation will now be assisted shows the way in which Europe can play a constructive role in trying to solve different conflicts also in more far-away regions of the world.

The world is likely to take note.

Wise Words on Iran

Talk to Tehran

Fareed Zakaria has some wise reflections on how to deal with the Iranian nuclear issue that goes along the same lines as I have been advocating here.

With the military option de facto a non-option, there has to be an intense efforts to develop the political option. As this is unlikely to lead to a rapid solution of all issues, it's a question of managing the issue over time in such a way that the incentives for the Iranian leadership to go nuclear are gradually diminishing.

There are examples of this succeeding in other cases in the past, although there are of course also examples of it failing. Both Pakistan and India went nuclear in spite of intense pressures to prevent it.

It's time for faresighted statesmanship on a very critical issue.

Goodbye to 'Greater Israel'

Why 'Greater Israel' Never Came to Be - New York Times

With the beginning of the evacuation of the settlements in Gaza and the north of the West Bank, Israel passes a milestone in its history. It's a deeply controversial one, and we are likely to see a substantial drama played out in the coming days.

In essence, it means that the dream of a Greater Israel is being abandoned. And it is being abandoned by one of those that championed it strongest, namely Ariel Sharon.

There are very solid reasons for this. As the linked article from Sunday's New York Times point out, the contradiction between the facts of demography and the principles of democracy made it necessary for Israel to re-define itself:

"On Thursday, the newspaper Haaretz reported that the proportion of Jews in the combined population of Israel, the West Bank and Gaza had dropped below 50 percent for the first time. This means, many Israelis argue, that unless they yield territory, they will have to choose a Jewish state or a democratic one; they will not be able to have both."

Israel has deceided that it would like to remain a democracy. That should be applauded and supported by the world.

The evacuation from Gaza is a first step. It's fiercely opposed by those extremists that see Israel not as a state based on democracy but as based on religious and national myths that today leads to occupation and tomorrow will lead to massive ethnic cleansing and conflict in the region for generations to come.

Today, the leaders of Israel need our support as they face down the fundamentalists and extremists in their own nation.

War Card Again in Germany?

Kanzler-Wahlkampf: Schr�der startet Kampagne mit Bush-Kritik - Politik - SPIEGEL ONLINE - Nachrichten

Although the election hasn’t been officially set yet, the campaign for the German election already seems to be in full swing.

It was to be expected that there would be a certain decline in the very high support for the CDU/CSU and a certain revival in the figures for SPD.

But even if this has happened, the distance between them is so substantial that it is virtually inconceivable that the SPD will be able to catch up with its chief opponent. The latest opinion poll figures gives app 42 % for CDU/CSU and app 28 % for SPD. They are in different leagues.

Nevertheless, the CDU/CSU seems to have had a less than stellar start to its campaign. The proposal to increase VAT was unlikely to be an instant crowd-pleaser, but neither does it seem to have developed into a major burden. Instead, it’s different verbal gaffes by different leading persons – now the CSU leader Edmund Stoiber – that has caught the attention and put the party somewhat on the defensive.

In itself, this might be more good than bad at this early stage of the campaign. A victory was taken too much for granted. Now it’s obvious that it will be a fight, and that concentration is necessary in order to truly win it.

For the SPD, the strategic dilemmas are very great indeed.

On the top level, it is flatly refusing to consider any “red-red-green” coalition that includes the leftist alternative that is essentially based on the old structures of East German communists, although now dressed in the clothes of general leftist populism. But there are dissenting voices, and so far the SPD has yet to find a consistent way of dealing with this new and strong threat to part of its electoral base.

Neither is it willing to consider the possibility of a big coalition with the CDU/CSU. Although such coalitions do exist on the state level, any discussion on it at the federal level is likely to play into the hands of the leftist. Influential figures in the present government are however indicating that they do see a grand coalition as a viable – perhaps even desirable – alternative.

Thus it isn’t easy for the SPD to get a clear line on one of the key issues of the campaign. And the problem is most unlikely to go away.

But suddenly Gerhard Schröder is back on a beaten track. In Hanover yesterday, he brought up the Iran issue, repeated the importance of denying Iran access to nuclear weapons, but stressed that there is no military option, saying with a very clear reference to Iraq and his opposition to the Iraq war that we have seen that it doesn’t work.

He is of course right in that there is no credible and effective military option in this case. But when President Bush indicated in an interview to Israeli television that all options are open, I think it should rather be seen as an attempt to reinforce the diplomatic track. There is no eagerness for new wars in the region in Washington.

But for Gerhard Schröder belligerent rhetoric over Iran in Washington is of course a gift from heaven in his campaign. Opposition to war is a strong feeling in German society, not the least in the important elderly part of the electorate.

Policy towards Iran will have manifold repercussions during the months to come. It’s unlikely that Schröder can use even very misplaced words in Washington to such effects as he did in the 2002 election campaign, but the issue is certainly worth watching carefully.

War is not a popular thing in present-day Europe. Some might think that is a sign of weakness. Others might see it as a source of strength after the centuries of war that Europe itself has seen.

Diplomacy backed by force is sometimes necessary.

But it must be handled with the utmost care. Otherwise it just carries failed diplomacy by transmission belt into failed wars.

That's really something we can't afford.

Lowering Expectations in Iraq?

U.S. Lowers Sights On What Can Be Achieved in Iraq

The linked article reflects the lowering of expectations of what can be achieved in Iraq that now seems to be permeating official Washington. Not much of a choice given the realities on the ground, one might argue.

It was never realistic to expect that everything would sort itself out easily or quickly. It remains an illusion that state-building is something quick, easy or cheap. All the experience that we have speak to the contrary.

But that doesn't mean that it can't be done - it only means that it requires far more of strategic patience, political coalition building and economic resources than almost everyone that was part of the more vocal debates prior to the Iraq war realized.

They were often mesmerized by simplistic comparisons with what they believed they had achieved in Germany and Japan after 1945. But those situations were entirely different.

In Japan the US occupation authorities de facto ruled through an intact state structure under the ultimate authority of the Emperor. And in Germany everything was facilitated by the fact that the Americans were seen as the only thing that could save them from the threat of Soviet communism.

Iraq was always going to be different. There was no state authority left. And the US was rather seen as allied with at the least one state considered by many to be an enemy, namely Israel. A confrontational stance towards Iran didn't help too much either.

Add to that a distinct shortage of troops, a naive underestimation of the political and economic challenges and a tendency to go for short-term solutions time after time and it's hardly surprising that one now sees difficulties everywhere.

It will take a decade or so until we can judge how things will work out.

Things could go distinctly bad prior to that - and that we will certainly notice - but things are unlikely to go distinctly good in any time frame lesser than that.

The Critical Battle in Iraq

Federalism Emerges As Deal-Breaker in Iraq - Yahoo! News

Media reports create the impression that the security situation is the most serious of the challenges in Iraq today.

Serious as it is, I would argue that it is the constitutional process that will really decide what happens in and with Iraq in the years to come.

By Monday, the different concepts should be brought together in a common proposal for a new constitution.

At the center of the debate is the degree to which Iraq will be a federal state with substantial powers for its different regions. And among the powers that are under dispute are the powers of responsibility for the oil revenues of the country.

In fact, the oil revenue question is central to the entire battle. One can have regions with very substantial autonomy, but if they don't have access to financial resources they tend to be adjunct to the centre anyhow.

Sicily in Italy can serve as an example. For historical reasons it has a very far-reaching autonomy within Italy, but since most of the financial resources of the Sicilian authorities are coming from Rome it does not necessarily makes that much of a difference.

In Iraq it is hardly surprising that both the Kurds in the North and lately also the Shiites in the South want to have control of oil revenues. That's where the oil is. And it is as natural that the Sunnis in the center are dead against is, and want Baghdad in control.

So we have seen the Americans coming in strongly to favour the Sunni position on this issue, knowing that if oil revenues are not flowing through Baghdad there are very scant possibilities of the country remaining some sort of united entity in the years to come.

These are other issues - notably those concerning the role of Islam in society - are now on the table as one rushes to complete the constitutional talks in order to meet the August 15 deadline.

We'll see. Positions are very entrenched - and perfectly logical. As things stand now, it looks somewhat unlikely that the deadline will be met, unless there is a serious fudging of the more difficult issues.

Henry Kissinger on Exit Strategies

Lessons for an Exit Strategy

In a thought-provoking article in the Washington Post, Henry Kissinger compares the emerging discussion on a so called exit strategy from Iraq with what happened in Vietnam three decades ago.

His conclusion is clear:

"Because of the axiom that guerrillas win if they do not lose, stalemate is unacceptable. American strategy, including a withdrawal process, will stand or fall not on whether it maintains the existing security situation but on whether the capacity to improve it is enhanced. Victory over the insurgency is the only meaningful exit strategy."

And for this to be possible there is also the need for a political framework more stable than the one that is there now. He writes this as Iraq is only days from the deadline set for reaching agreement on its new constitution, and in a situation where there is no firm regional framework for the attempts to create stability in Iraq.

His indirect message is that it is certainly too early for a discussion on the withdrawal of substantial US military units from Iraq. Neither the security nor the political conditions are as yet in place.

It is difficult to disagree with that assessment.

Confused Norway Coming?

Valg 2005 - Aftenposten.no

On September 12th, Norway will elect a new Storting. The election campaign is likely to get going more seriously around the coming weekend.

If the present opinion polls are to be relied upon there is a certain probability that Jens Stoltenberg from the Workers Party Ap will take over as Prime Minister from Kjell Magne Bondevik from the Christian People’s Party.

Then, Norway would move from a coalition of the centre-right to a coalition of the centre-left.

It’s difficult to see that there are many grounds for dissatisfaction in Norway. The economy is one of the star performers in the OECD, and the high oil prices aren’t making things worse.

The centre-right government, with conservative Höyre having most of the cabinet positions, has been doing rather well over the past few years, although one could perhaps detect a certain sign of governing fatigue primarily in the Prime Ministers party.

The governing coalition has also had some difficulties keeping the challenge from the rightist populist Progress Party at bay. It looks like it will be doing rather well in the election.

If there will be a centre-left majority in the Storting, it will be a rather diverse one, and a Stoltenberg government will be a coalition between his Ap, the Socialist Left Party SV and the profoundly misnamed Centre Party Sp.

On economic policy, these parties can probably agree on higher expenditures, higher taxes and more of public monopolies. It’s not what Norway needs, but that’s another issue. But on foreign and European affairs, they are profoundly divided.

Both the SV and the Sp are against not only membership of the European Union – that issue will remain off the agenda – but also the present European Economic Area agreement as well as the agreement under which Norway will contribute to one of the so called battle groups being set up by the European Union. It is not difficult to foresee that this will risk creating problems for the government, as well as making Norway a somewhat less predictable international partner.

The Centre Party in particular has a profoundly xenophobic approach to everything outside the borders of Norway. For them, even the World Trade Organisation is something that must be rejected outright.

In addition, SV remains opposed to Norway’s longstanding membership of NATO, although they are most unlikely to press that issue.

This should contrast with an Ap that has always been a champion of Norway in NATO, and has a leadership that genuinely believes that the country should become a member of the European Union. They will have to govern with very strange bedfellows on these issues.

And foreign affairs are not unimportant for Norway. From having been an important member of NATO during the cold decades of the 70’s and 80’s, they have ended up in semi-isolated backwater after having again rejected EU membership in 1994. Norway needs to assert itself constantly in order not to be too marginalized on the international stage, and this requires a foreign policy that has the capability of being active on numerous different stages.

Given its handicap, Norway has not been doing badly in these respects in the last few years.

But a government deeply confused and divided over fundamental questions of foreign affairs will certainly not be an asset for the future.

Room for Talk

Bush Cautiously Optimistic as Iran Offers to Negotiate

Well, there seems to be room for more of diplomacy on the Iranian nuclear issue. Even the White House is sending out small signs of white smoke when it comes to the possibility of extending the political process.

We'll see what comes out of the IAEA meeting. In all probability Teheran will be given some time to get its act together after the installation of the new president.

In the meantime, everyone is accusing everyone over the breakdown of the latest six-party talks over the North Korean nuclear issue.

Critical Battle Ahead in Japan

The Japan Times Online

With 125 votes against 108, Prime Minister Koizumi lost the critical vote in the Upper House of the Diet of Japan for bill to reform Japan Post. In July, he very narrowly secured the bill's passage through the Lower House.

Now, Prime Minister Junichiro Koizumi has deceided to dissolve the Lower House and seek a new election, probably in mid-September. He will go into that election with his LDP party divided over the wisdom of this particular reform.

It's a daring and important move. For all its success during past decades, the structure of the Japanese economy needs reform, and the virtual monopoly the gigantic Post Office has on cash transfers in the economy is very much part of what needs to be changed.

But as always there are deeply entreched interests keen on preserving the status quo. These have now rebelled with the help of the leftist opposition and parts of the Liberal Democratic Party. There were significant defections also in the vote in the Lower House.

The election battle will be a battle for the soul of the LDP and for the future of reform in Japan. It's been somewhat jokingly said that the LDP is neither liberal, nor democratic or a party. It's certainly a very broad coalition including those favouring a heavy government and state guidance on most issues and those that want a leaner government and a more pronounced market economic course.

Now Koizumi will take this battle to the voters. He's unlikely to allow the LDP dissidents to stand for the party, which means that they in many cases might well stand against the party. He can take losses and still survive - but there are limits to it.

Japan is the second largest economy in the world that is gradually coming out of a decade of economic stagnation. What happens there affects us all.

The elecion - September 11? - will result in either an acceleration of reforms under a continued Koizumi government and a reformed LDP, or complete political gridlock with obvious negative economic consequences.

September will then be the month with key elections over key economic issues in two key global economies - Japan and Germany.

New Rift in Israel

Haaretz - Israel News - Leader of the extreme right

It was of course highly opportunistic of Finance Minister Benjamin Netanyahu to resign from the Israeli government when the evacuation from Gaza was bound to happen. He wants to disrupt as much as possible.

Bibi is a media-savy and opportunistic politician who has now placed himself as leader of the extreme right in Israel, intent on blocking any move towards any sort of rapprochment with the Palestinians or implementation of the road map of the international community.

He will undoubtedly split the Likud party and create waves in Israeli public opinion. But he is most unlikely to derail the disengagement, and might as a matter of fact make it marginally more possible that there will be a continuation thereafter.

Ariel Sharon is fighting his battle with the lawbreakers and extremists of Israel. He deserves support.

Iranian Nuclear Crisis?

Statement by the IAEA Director General Mohamed ElBaradei on Iran

It was hardly to be expected that there would be a speedy and easy resolution to the issues connected with Iran’s development of advanced nuclear technologies. And now we are obviously approaching a crisis point.

Tomorrow Monday Iran is expected to reject the offer that the European Union after lengthy preparations presented to them on Friday. That in itself is hardly surprising. It looks as if the offer was rather vague on key points, and any bargaining around a deal is likely to be rather prolonged.

At the same time Teheran has announced that it will resume some limited enrichment of uranium at its Isfahan facility. Under existing treaties it has the right to do so, and it has made clear that it will not do it until IAEA has installed monitoring equipment so as to assure that no material is diverted for non-civilian purposes.

But still this means that Teheran crosses the red line that has been laid down by both the United States and the European Union. The EU has asked for a special meeting of the Board of IAEA on Tuesday to look at the details and how to react.

There might well be those in Washington that will be gloating over a perceived failure by the Europeans to sort out the issue. But they might well reflect on the fact that at the same time the latest round of six-party talks on the issue of the actual nuclear weapons in North Korea has been suspended without achieving much at all.

And the North Korean situation is by all standards worse. The country has left the Non-Proliferation Treaty and is already assumed to have a limited number of nuclear devices already, and could well start exporting technologies and capabilities as well.

Iran, by contrast, is rather far from that. Leaks from the latest US National Intelligence Estimate on Iran say that while the US intelligence community believes with "high confidence" that Iran is determined to develop a nuclear weapon, it is "moderately confident" that Iran is unlikely to make a weapon before the beginning to the middle of the next decade.

This is a more relaxed assessment of the situation than previous ones, and certainly less alarmist than those marketed by some other nations.

Iran certainly builds up capabilities and competencies, but it seems to be at the least a decade behind the North Koreans.

If the confrontation now heats up, there will be pressure to take the entire issue to the UN Security Council in order to try to get a decision on some sort of sanctions. The problem is only that such a decision might well be very difficult to get and that, if that happens, sanctions might as well lead the Iranians to accelerate their program and leave the NPT.

Then, of course, there are those advocating military action. But here the risks are very real indeed. Iran has the power to destabilize in both Iraq and Afghanistan, among other places. At the very best, air strikes could set back an Iranian program by some years, perhaps even less. And an invasion of Iran is not something that the US is even in the vicinity of having the capacity for given how its army is bogged down in Iraq.

In international affairs there are often situations where there are no ideal or immediate solution, and the only alternative is really to struggle along with the issue and hope that time improves prospects for solutions.

In Iran it seems as if we have more time than in the case of North Korea. Continued talks might well be not only the only realistic but also the best solution.

Robin Cook

BBC NEWS | Politics | Cook's resignation speech

It is truly sad news that Robin Cook has died during a hiking vacation in the hills of Scotland. He was undoubtedly one of the profiles of the politics of Britain, and served as Foreign Secretary between 1997 and 2001.

That was the time - among other things - of the Kosovo war. He was somewhat less than pleased with me when I on the evening of the beginning of the NATO bombning said that I thought we would see a million refugess from Kosovo in the weeks and months to come. Up until then, there had hardly been any refugess from the fighting in Kosovo.

We had a somewhat tense discussion over the issue in the always impressive room that is the office of the Foreign Secretary. I said that we will see who's right. But the key thing was that we saw eye to eye on how to get out of the situation and get a good deal for Kosovo and the region.

In the end, there were app 800 000 refugees streaming out of Kosovo during the next three months.

He was an intense and highly intelligent man. He made both friends and enemies with intensity. He was probably more Old Labour than New Labour, but very much Labour.

His perhaps most brilliant movement was the speech that he delivered in the House of Commons as he resigned from the Cabinet in opposition to its policies over Iraq. He won a standing ovation from both sides of the house for his moral clarity.

I remember seeing it live on television, and was determined during the following days to write him a letter of congratulation and admiration although I did not share many of his views. But his was a stand of principle, and he demonstrated political courage and moral principle in a way one does not see too often.

I never did write that letter, and unfortunately never saw him thereafter.

Today, there are few better ways of remembering him than re-reading that speech.

Putin Rebuffed in Finland

YLE uutiset

It's unfortunately not that common for Western leaders to directly take issue with President Putin when he starts to accuse the Baltic nations of numerous things.

But when visiting Finland for an otherwise friendly and apparently good visit, he had to face the firm views of Finnish President Tarja Halonen on the subject.

Putin urged Finland - scheduled to become the EU's presiding country in the second half of 2006 - to work with Russia in order to "resolve the problems" of Russians in Estonia and Latvia.

Zeroing in on the issue of citizenship, Putin alleged that the legal category of "non-citizen" is unique to Estonia and Latvia. Terming this situation "absolutely impermissible," Putin accused Estonia and Latvia of withholding citizenship and otherwise restricting the rights of those people "on ethnic grounds." "Ethnic discrimination is unacceptable," he warned.

On this occasion again, Putin tried to portray the Baltic states as breaching European criteria for democracy and rule of law, and he asked the EU to help Russia correct this situation.

In her response, Tarja Halonen firmly made three basic points.

First, Estonia's and Latvia's legislation and practice "correspond with the criteria for EU membership," as well as "meeting the requirements of the Council of Europe and the OSCE," on citizenship and related issues. Moreover, "It is normal for any state to set certain requirements and conditions for granting citizenship."

Second, minority-related issues "exist everywhere in the EU, and are resolved within the EU, as well as in cooperation with the UN and OSCE. " This point clearly intends to prevent singularization of the Baltic states by Russia and to preclude intrusion into EU political processes by non-member Russia.

Thirdly, the policies of Estonia and Latvia are "doing their best … actively encouraging the non-citizens to take up citizenship," Halonen noted, citing the ongoing increase in the number of citizens.

Good. Russians in Estonia and Latvia certainly have more of democray and freedom and protection for their human rights than have Russians in Russia.

UN Reform Failing?

For reasons not immediately obvious to me, a change in the composition of the Security Council has been put at the very centre of the efforts to reform the United Nations at the upcoming session of the General Assembly in September.

There are of course reasons for doing so. The present set-up with the five permanent members was decided in 1945 and reflects the realities of the world of those days.

The so called G4 group has been launching itself with great diplomatic energy in order to become new permanent members, although without the veto powers of the original five. It’s Japan, Germany, India and Brazil.

But these things don’t come easily. Each has neighbours campaigning against them. Italy is doing whatever it can to block Germany, China is doing even more to block Japan, Argentina is up in arms over the prospect of Brazil entering the exclusive club etc, etc, etc…

In order to get sufficient support the G4 group has rather desperately been seeking the support of the sizeable block of African votes. But at the end of the day the African nations failed to reach agreement within themselves on any sort of solution that could fit into what the G4 was trying to win broad support for.

And in the meantime the United States and China has formed an alliance of convenience in order to prevent any new permanent members of the Security Council. They are, in short, not unhappy with the present state of affairs, and fears that any enlargement, even one with friends, will bring a more messy Council from their point of view.

That seems to be were we are at the moment. The G4 are running into difficulties due to the divisions of Africa. Washington and Beijing are seeking to mobilize against them as well. It all looks rather messy, and on present trends will result in masses of diplomatic smoke but not very much more.

It might be just as well. In Europe, there are more solid reasons for waiting for the day when it becomes realistic to ask that the European Union gets a permanent seat on the Security Council than to now seat Germany alongside Britain and France.

In the meantime, the rest of the UN reform efforts risks being neglected. A curious proposal to set up a so called Peace Building Commission is likely to get through, not the least because no one seems to have been thinking through the issue enough. It’s not really more of open commissions that the UN need for its future complicated state building missions.

We certainly need the United Nations for many of the future challenges.

But then we need a UN reform effort of a different quality than what it looks as if we are going to get now.

A Pro-Growth and Pro-Business Europe

Macleans.ca | Top Stories | World | Out with the old...

The reputed Canadian magazine Macleans has written about the the search for a pro-growth and pro-business Europe. It looks into the policies of Sweden, Slovakia and Estonia as well as on some of the recent debates on the subject.

It makes good reading. There are good things happening.

Increasingle, what is happening in the Tallinn-Bratislava process of competitive economic reforms is reshaping the economic and political landscape of Europe.

Among others things, Macleans notes that Angela Merkel has pointed at the tax reforms in Central Europe when discussing the reform challenges in Germany beyond what the CDU has so far been proposing.

Deep Worries for Future of Sudan

1A1: Sudan Page @Sudan.Net

The death of SPLM leader John Garang is a tragedy and potentially a deadly setback to the crucially important peace process in the country.

After his triumphant return to Khartoum on July 8th, Garang was also Vice President of Sudan, and it was the axis between him and President Bashir that was the key axis in a peace process more complicated than most.

Sudan is Africa's largest country with an ethnic and geographic diversity that borders on the mind-boggling. Ever since achieving its independence in 1956, it has been seriously affected by the tension between its Northern and Southern parts. Wars have alternated with periods of relative peace.

In its latest version, this war went on for more than twenty years and caused more than two million deaths. It's been one of the world's most devastating conflict for decades.

It was not the least the Bush administration that put the issue of peace in Sudan high up on the agenda, and it played a key role in forging the agreement that resulted in Garang becoming Vice President of the country.

It's a highly complex deal. And the task of truly implementing it will not be an easy one. Sudan has seen peace agreements before, but they have all failed some way down the difficult implementation stage.

In essence, the agreement foresees a six year transition period in which an effort is made to build a united country with a very high level of autonomy for the South. After these six years, a referendum will be held in which the South has the option of becoming an independent state.

Within the South, there were mixed emotions concerning the deal. Some undoubtedly see the six year period as little more than a waiting period for independence. John Garang was the man that could have made the difference. He genuinly believed in a united Sudan, and in all probability would have worked hard for the agreement to succeed and the country to stay together.

Now everything is up in the air. That the US is rushing high-level envoys to Khartoum is hardly surprising. A break-down of the peace process in Sudan could have devastating consequences for the entire region. One only wonders if the European Union will also wake up.

John Garang was important in keeping the South reasonable united. The ethnic diversity here is great, and numerous groups are in more or less open conflict with each other. But some sort of cohesion of the South is a precondition for making the North-South agreement work. If the South fractures, so does th possibilities for peace in the country.

This also affects Darfur. Here, efforts to achieve a political settlement has made very little progress. With Garang's death and the new uncertainity in Sudan as a whole, the possibilities of progress here virtually disappears. The already reluctant rebel groups are unlikely to sit down and make a deal if the future of the entire country is suddenly uncertain. And militant groups on the Khartoum side might well think in similar terms.

Then, there is a severe risk of the human suffering just continuing.

My own contact with Garang were limited. I know some of the other Southern leaders better. But his political role and importance was always the decisive on the big and important issues. He was a strong - sometimes outright brutal - leader of the South that could also maneauver the chancelleries of the world.

Now Me Salva Kiir has been appointed as his succesor as leader of the SPLM and Vice President of Sudan. He's the former military commander of SPLA, but his political skills is a somewhat more unknown quantity.

His main task now will be to keep the South together. If the South fractures, so does Sudan, and then the risk of a large part of Africa fracturing is very real indeed. The human suffering to follow risks being truly immense.