Friday, September 30, 2005

The Great Chinese Cyber Wall

China hits blogs where it hurts | The Register

Things were not too good before, but now it seems as if the authorities in Beijing are getting even more nerveous over the potential political impact of the Internet - including the new phenomena of blogging.

Recently, a series of new measures have been announced to control the flow of information over the Internet.

In effect, the regime only wants its own version of what's happening to be available.

That's a sign of weakness - not the other way around.

Thursday, September 29, 2005

Gustaf Mannerheim

There is no doubt that Gustaf Mannerheim is one of the most interesting personalities of the dramatic European 20th century.

With wide margins seen as the most significant Finnish personality ever, I think it is too limited to see him only in that perspective.

That what was I argued at a most well-attended seminar at the Embassy of Finland earlier today that had gathered different scholars of both the period and of the person.

Most of the attention given to Mannerheim is obviously focused on his role in securing the independence of Finland in 1917 and 1918, as well as surviving the Soviet onslaught in first the Winter War 1939 and 1940 and then the war of continuation from 1941 to 1944.

But essentially he was a Swede from Finland who become a general in the army and court of the Tsar of Russia, and whom the Bolsjevik revolution forced back to his native Finland to try to save it from the Red menance.

The speech is - unfortunately - in Swedish, but there might be those that understand that language as well.

It could be noted that the two main languages of Mannerheim were Swedish and Russian. His Finnish was never much to boast about.

It was a different time.

Congratulations Finland!

World Economic Forum - Global Competitiveness Report

For the third consecutive year, Finland emerges as the world's most competitive economy in the annual ranking by the World Economic Forum.

A number of factors contribute, but not the least the commitment to education and research that is there in Finland. It's basic education system is consistently ranked as one of the best in the world.

But the Nordic area as a whole is doing well in this ranking.

Sweden keeps its number three position, Denmark moves up from position five to position four, and Iceland from ten to seven. Only Norway slips - from six to nine.

But all the five Nordic nations are in the global top ten of competitiveness.

The others in that exclusive category are United States, Taiwan, Singapore, Switzerland and Australia.

Sweden's ranking is, as usual, one of ambivalence. We are coming were high on topics like Internet connectivity and managment skills in the enterprises, but fairly low on those connected with the politics of the country.

On quality of education in science and mathematics we rank 42 out of 117, on labour market legislation 117, on the tax system 109 and on flexibility in wages 108.

It's fairly obvious that there is a need for improvement - and that it can be done fairly easily.

But overall, the Nordic countries are not only the top of Europe, but very clearly part of the top of the world.

Wednesday, September 28, 2005

Strange Maneuvering in Strasbourg

News - Press service - Info - Turkey and opening accession negotiations

Confusion is probably the best way of describing the results of today's debate and vote on the issue of Turkey in the European Parliament.

At the end of the day, however, 356 MEP's voted in favour of and 181 MEP's against a resolution that gives a green light to the opening of membership negotiations.

The biggest group in the European Parliament - the centre-right EPP-ED group - is split on the issue, with the Germans and the French there opposing it all.

But it should be noted that a majority of the EPP-ED group does not share this point of view, but takes a more positive view.

Road for Turkey as Important as Destination

EUROPA - Rapid - Press Releases

Today, the European Parliament is discussing the issue of starting accession negotiations with Turkey.

That negotiations will start on October 3rd now looks virtually certain. It's only Austria making some strange sounds, but they might in fact be playing for something else.

In Parliament, enlargement commissioner Olliu Rehn has been presenting his point of view.

And he makes the important point that the journey is as important as the destination.

In more concrete terms, this means that the continued reform process that will have to be driven forward in Turkey during the years of negotiation might be as important as achieving the goal of membership.

This is certainly true. One needs only to look at the example of the Central European and Baltic states to see the critical importance of the journey.

It's a journey of new European reforms and European transformation that starts for Turkey on October 3rd.

Good for us all.

Denmark Debates Europe

DR Nyheder Online - Deadline 22:30 -

Yesterday was the day when Denmark was supposed to have had its referendum on the Constitutional Treaty of the European Union. Obviously, this did not happen.

Instead it was the day when an ambitious attempt was made to restart the debate on where Europe is heading.

Prime Minister Anders Fogh Rasmussen published a not particularly offensive piece on the issue in Politiken in the morning, and Danish industy - including the trade unions - organised a major conference on European issues where I was one of the featured speakers. Among others there was also Foreign Minister Per Stig Möller and the new leader of the Social Democratic opposition party.

And there seems to have been a fair amount of attention given to these issues on TV as well. I was the guest in the main TV current affairs program in the evening.

It has to be said that Denmark takes these issues seriouly. To some extent it is the result of having had a long series of referendums which over time have forced far more of debate on these issues.

There seems to be a fair amount of consensus on getting away from the focus on the institutional issues, and to concentrate on some of the issues of substance, with the economy taking centre stage. As expected, Danes of all persuasions speak proudly of their Danish model of labour market flexicurity.

Noticeable is also a broad consensus is sharply critical of the mess created with quotas for Chinese textile imports. Being the trading nation that it is, Denmark is a strong opponent of the protectionist sentiments sometimes found in the deliberations in Brussels. Good.

The controversial issue remains enlargement with an emphasis on Turkey. In his article, the PM was vague on the issue, restricting himself to asking questions, although the Foreign Minister was obviously more positive.

I spoke about the merits and importance of enlargement with an emphasis on Turkey and the Balkans. I'll make certain that a link to the text appears here as well.

A good initiative, Denmark!

Sunday, September 25, 2005

Swiss Yes

SCHWEIZ: Resultate der Volksabstimmung vom 25. September 2005 (NZZ Online)

In a referendum today, the voters of Switzerland has endorsed the agreement that extends the right of free movement of workers also to the ten new member states of the European Union.

With 56 % yes, it was a more positive result than when Switzerlands joining of the Schengen agreement was endorsed by 55 % in a previous referendum.

In its own way, also Switzerland wants to be part of Europe.

French Minds on Europe

In Lisbon on Saturday, I shared a panel with French philospher and author Bernhard-Henri Levy discussing the present state of Europe and our position in the wider world.

It was part of the European Ideas Fair of the European Ideas Network that I have written about before.

Levy and I have not seen eye to eye on aspect of thre Yugoslav wars, but this wasn't the topic of the Lisbon discussion, although we agreed to seek to meet and discuss that issue as well at some time.

He delivered a devastating critique of the state of the debate in France at this time.

According to him, anti-americanism is rampant, and words like liberal, globalisation and even Europe is used only to scare people. France, according to him, is in the danger of retreating from some of its own very best contributions to the development of the West.

I hope he's exaggerating in order to make the point, but he's certainly worth listening to.

Tomorrow I'm heading to Paris to share a panel with former European Commission President Jaques Delors to discuss how Europe can overcome its present crisis. Also on the panel is Elmar Brok, who chairs the Foreign and Security Affairs Committee of the European Parliament.

It's all part of the Annual Meeting of the European Union Institute for Security Studies with EU High Representative Javier Solana also there.

Delors is always worth listening to. I'll see if he shares the deep pessimism of Bernhard-Henri Levy.

The Iranian Challenge

Empowering Iran - New York Times

After intense diplomacy, the EU3 has succeeded in getting majority support on the board of the IAEA in Vienna for a resolution that opens up for reporting the question of Iran and its nuclear activities to the UN Security Council. It however leaves it open when this could be done.

It remains to be seen what good this will do. So far - as the linked editorial in the New York Times today argues - most of the policy moves done versus Iran in the last few years have been counterproductive. The hardliners are stronger, and the democrats weaker, in today's Teheran.

There is no question that there is reason for concern. IAEA Director-General El-Baradei said after the vote, that "the international community is . . . not satisfied with the level of confidence-building measures Iran has so far taken."

There are however different degrees to that dissatisfaction. Of the 35 states on the IAEA board, 22 voted in favour of the diluted resolution, while most of the others abstained.

There were numerous reasons for these abstentions. One is the fear that a move towards the Security Council would cause Iran to limit its cooperation with the IAEA and indeed start actual enrichment of uranium, as it indeed has threatened to do. Then, the entire thing would result in the situation getting worse.

And behind is also the fear that if the issue goes to the Security Council without a clear strategy on what to do there, one could end up in a situation of escalation like the one leading up to the Iraq war. Suspicions against Washington after those months undoubtedly plays a significant role.

But it is clear that there will have to be taken a broader approach to the entire issue of relations with Iran. Iran is critical also to stability in Iraq. 40 % of the oil that is traded internationally daily passes through the Strait of Hormuz. We are dealing with a significant nation.

Instead of policy at a distance, the US must move closer to all of these issues by establishing diplomatic relations with Iran.

It's one of the oddities of today's world that such relations don't exist. Not that they in themselv would solve much, but they would at least increase the points of contacts and make better daily assessments of what's happening possible.

We are talking about one of the most difficult, and potentially most dangereous, issues on the global political agenda of today.

Friday, September 23, 2005

Ideas from Wall Street to Lisbon

With hurricane Rita closing in on the shores of the US Gulf coast, I'm leaving New York and heading for Lisbon in Portugal.

Two days have been spent discussing the ten greatest risks to the global economy in a conference facility by Wall Street just a stone throw from where the World Trade Center once stood. An assortment of experts as well as people from the financial industry have been trying to do their best to see what could go wrong in the years ahead.

The results were not without interest. At the end of the two days, concerns over global energy supplies come in very high, followed by worries about a possible sudden correction of primarily the US current account deficit, with the spectre of the effects on the global economy of new pandemic diseases also hovering over the discussion.

Terrorism certainly figured as well, but far less than just a few years ago, and there was obviously concern over developments in the Middle East, not the least in Iraq. This being the United States, we also had our discussions on the peaceful rise of China and the possibility of that leading to confrontations further down the road.

And then there were obviously the issues connected with possible systemic chocks in the global financial system that's centered in the very buildings around were we were meeting. In a low interest-rate environment, the search for yields might be driving the system into riskier environments with increasingly advanced but perhaps not fully understood instruments.

From here I'm heading to Lisbon to speak tomorrow to the European Ideas Fair of the European Ideas Network that every year brings the best and the brightest of the centre-right of the European Union countries, and primarily the EPP parties and their associated think-thanks.

We'll be meeting in the conference center in Belem just by the great monument to those explorers that from the shores of the river Tagus went out beyond the borders of the known world to see what there was beyond the far horizons.

Perhaps we need somewhat more of that spirit to handle all of the challenges of our Europe and our world today.

Global War Against Warming - News

It's still faboulous summer weather in New York, but the country as a whole is preparing for the landfall of hurricane Rita on the Gulf coast of Texas probably early Saturday morning.

It's an amazing story of the world's greatest power being forced litterally to its knews by the forces of nature.

Outside Houston, NASA has evacuated the 15 000-person Johnson Space Center, including the famous Mission Control that has been and continous to be running all manned space missions.

Control of the International Space Station has been transferred from Houston to the space control facility just outside of Moscow in Russia. Even the small emergency crew has now been withdrawn.

One can not but wonder what long-term effects these two hurricanes will have on the United States. The fact that Rita follows directly after Karina probably takes some off the heat off President Bush, but at the same time there is bound to be a shift of priorities on a number of issues.

Rebuilding will have to be paid for. Already after Karina there was talk of 200 billion dollars, which is app the same cost as for the Iraq war so far. And it remains to be seen what Rita will cause in terms of immediate damage.

This has already re-ignited the debate about tax cuts as eroding the public finances versus tax cuts as a means of getting the growth out of which also rebuilding will have to be paid. At the end of the day, I guess the conclusion will be more towards the later position.

It will also cause a new debate on environmental issues. The link between alleged global warming and these hurricanes is far from clear, but the public perception is that there are more hurricanes, and thar this has to be caused by something.

It is not to be excluded that the global war against warming will start to compete with the global war against terrorism for the attention of decision-makers in Washington. Whether this is right or not, there is likely to be a narrowing of the gap across the Atlantic on the issue.

This is among the topics I will continue to discuss here tomorrow, as people from the financial industry is meeting to discuss "the ten greatest risks to the global economy".

Thursday, September 22, 2005

Dealing with the Devil

This deal is no bargain - Los Angeles Times

Back in New York. Summer just continues here. Clear blue sky over the East Coast, but the nation is now keenly following hurricane Rita as it gathers strength and approaches the coastline.

It was indeed remarkable that it was possible to agree on a statement of principles in after 23 months of the so-called six party talks on the question of North Koreas nuclear program. It is obvious that Beijing had decided to demonstrate that at the end of the day they are able to deliver.

The document agreed upon certainly does not resolve all aspects of the conflict. It will unavoidably be compared with the 1994 deal that Pyongyang later violated by initiating a separate uranium-based weapons program, leading to the crisis that produced the crisis of today.

There are differences, but there are more of similarities. North Korea is promised normalized relations as well as access to civilian nuclear technology in exchange for giving up its weapons program. That was the essence of the 1994 deal, and that remains the essence of this deal.

But the devil is always in the details - not th least when one is trying to make a deal with the devil.

Pyongyang has immediately stated that it demands access to a light-water reactor before it dismantles its nuclear program. And Washington has said that this is all wrong, and that it has to be the other way around.

That will be the conflict when the talks continue, as well as the need to establish fool-proof mechanisms for making certain that Pyonyang does not try to cheat again. This will not be easy.

The deal has already aroused an amount of controversy here in the United States, since it does not really conform to what was implied in the beginning of the Bush administration. But with US powers bogged down elsewhere, there is de facto only a diplomatic track open, and there are limits to what can be achieved in this way.

Interesting is to see what implications this deal will have on the ongoing dispute with Iran.

The situations are different. Iran has not left the NPT, and accepts intrusive IAEA inspections. It professes to have no ambitions to develop nuclear weapons.

But the similarity is still there in the nature of the deals that must be offered.

If the US offered to normalize its relations with Iran, and if ways could be found to more credible assist their civilian nuclear ambitions under strict monitoring, perhaps there would be more of a way forward in the case of Iran as well.

Wednesday, September 21, 2005

Sweden Slipping

Public Information Notice: IMF Executive Board Concludes 2005 Article IV Consultation with�Sweden

Yesterday was the day when the government in Sweden, after weeks of agony with its redgreen parliamentary base, presented its budget to the Riksdag.

As was to be expected when the government is facing an election next year and opinion polls are appalling, the budget promised vast sums of money trying to get unemployment down.

But that's not likely to be much of a success. To a cost of 24 billion crowns it claims that it is creating 55 000 new jobs. This in itself isn't much, but then practically all of it is in different labour market or educational schemes.

In an indirect sort of way this seems to be acknowledged by the government. It only believes that open unemployment will decrease by 0,2 %, at the same time as there will be a much bigger increase in persons in different labour market schemes.

The week before last the International Monetary Fund released its annual review of the economic performancy of the country.

All in all, Sweden has a decent growth performance, and the IMF believes that growth, driven by export successes, will be 2,5 % in the next two years. It could be much worse - as well as somewhat better.

But in other areas the record is far more mixed. IMF notes that employment has declined and unemployment has risen further, and that's really the hearth of the failure.

Reforms are necessary, it says. That includes "further reforms of the tax-benefit system", although I fail to see the relevance of the word "further" given the stalemate on the issue in recent years. And IMF urges that Sweden should "accelerate the pace of other structural reforms" as well.

The most worriesome words are however reserved for the decline in the fiscal standards, with expenditure boosted well above what is prudent and responsible. With a diplomatic formulation which in all certainty is the result of diplomatic wrangling with the Swedish government - that's the way these things are done - the IMF notes that this could be "costly later".

Costly later. Yes, indeed.

Government in Sudan

1A1: Sudan Page @Sudan.Net

While there is complete confusion in Berlin on how Germany will be run in the years to come, the negotiators in Khartoum have agreed on the composition of the new unity government for the war-torn country of Sudan.

Talks have been hard, but at the end of the day it was the sense of compromise that evidently made it possible to go forward.

It seems as if the Sudan peace process - of vital importance for large parts of Africa - has managed to overcome its first really difficult hurdly.

Good news. We need that these days.

Monday, September 19, 2005

The German Extremists

I had just to suffer a commentator in television who did not seem to understand why none of the other political parties in Germany were willing to enter into talks with the renewed leftist PDS party.

After all, it was noted, the party increased by 4,7% and got together 8,7% of the nationwide wide.

But Germany happens to be a country with history. And a rather complicated one, at that.

Within a generation it had to suffer first a nazi dictatorship and then in parts of the country a communist dictatorships. They both brought misery and death to Germany.

It's not an unhealthy sign that modern democratic Germany keeps a distinct distance to those forces trying to build their strength on misdirected nostalgia for the past dictatorships on German soil.

This is the reason why both the NSDP - the old Nazi party - and the KPD - the old Communist party - are illegal in Germany.

But it's very difficult to prevent these unreconstructed nostalgia types from turning up elsewhere.

On the extreme right, there are the so called national democrats in NDP. They figure now and then when they manage to capitalize on discontent of different sorts, but their basis remains weak.

In the election yesterday, they scored 1,6% of the second party votes. Not too impressive.

On the extreme left, the old SED Party of East Germany - the state party of the dictatorship and the wall - was transformed into the PDS that this year join forces with the ex-SPD leader Oskar Lafontaine and scored the result referred to above in Sunday's election.

Gerhard Schröder might well have a certain personal antagonism against Oskar Lafontaine. After all, it was the latter who was the leader of the SPD when they won the election in 1998 and Schröder become chancellor. He is the Luficer of German Social Democracy.

But that's really a separate story. The real story is that the PDS is the inheritor of the tradition that suppressed democracy, imprisoned and persecuted people for their beliefs and convictions, killed people on the border and impoverished its citizens.

We would all be chocked if the NPD was treated as a normal party among others in Germany.

We should note with satisfaction that the PDS is treated in essentially the same way as the NPD.

Democracy must be defended by democrats.

Practically Only Losers...

It looks like it will be another sunny and nice day in Berlin. Soon, the different party bodies of the different parties will start meeting to see what to do with the verdict handed down by the voters of Germany yesterday.

Over the first page of the local newspaper Tagesspiegel one can read the giant headline "Deutschland hat Gewälht" - Germany has decided.

I wish that was true. But unfortunately Germany hasn't. They have had an election OK, but they didn't really make a choic.

The redgreen government lost, but the opposition did not win.

And Germany accordingly got an election result where there are distinctly more losers than winners.

The first obvious loser is the German economy, and as a consequence Europe.

There will not be the needed reform break-through that would have come with a coalition between the CDU/CSU and FDP.

The second rather obvious loser is unfortunately Angela Merkel. She did an honest and fair campaign, but could only secure a result that was marginally better than the rather disastrous 1998 result and distinctly worse than the 2002 result.

The third loser - but less than expected - is Gerhard Schröder. As usual, he proved to be an excellent campaigner, but at the end of the day his SPD lost more than any other party, is no longer the largest in the Bundetag and he himself is somewhat unlikely to remaimn chancellor of the country.

The only winner in sight is the liberal FDP party. There is no doubt that they surged in the end due to their very firm opposition to any sort of coalition with the SPD. CDU/CSU voters that definitely did not want any Grand Coalition or anything of this sort went to the FDP.

That's were we are. Now, what to do?

Well, there might still be change. The by-election in Dresden on October 2 could in theory not only decide that seat but matematically also swing a further two.

And that's critical. With 225 seats in the Bundestag for CDU/CSU versus 222 for the SPD is it the CDU/CSU that has the initiative. If there would be the maximum swing coming out of the Dresden vote in two weeks time, there could in theory be a situation where they have equal number of seats.

That would be a further mess in the middle of the mess there already is.

Expect everyone in German politics to descend on Dresden during the next two weeks.

The different parties now have until October 18th to get their act together and agree on a new government. That's when the newly elected Reichstag meets in Berlin. Strictly speaking the entire thing need not be ready by then, but if they are not it would really be profound crisis.

Two governments are possible as things stand this Monday morning in Berlin.

Still a big coalition between CDU/CSU and SPD, although no one is keen. Judging by the words exchanged yesterday, it might be that such a coalition, if it happened, would be without both Schröder and Merkel.

And then the rather unorthodox possibility of CDU/CSU, FDP and the Greens. It might seem far-fatched, but is not impossible. This is what is referred to as the Jamaica coalition - black, green and yellor according to the party colours.

The Greens are anti-collectivist in a way that could fit into a changed approach by the CDU/CSU and the FDP. There are significant hurdles to overcome for such a coalition, and it might severly strain the internal cohesion of several parties, but intellectually it might well be the most interesting of the alternatives now on the table.

But it will all take time, be messy and leave masses of casualties along the road. It will not be good for Germany - and not be good for Europe.

It might be a sunny and clear morning here in Berlin as concerns the weather, but everything else is distinctly unclear.

There will be reason to return to the subject.

Sunday, September 18, 2005

Greek Cypriot Blockage

Turkish Daily News - Greek Cyprus hijacks EU declaration on Turkey

According to this rather credible report, it is the Greek Cypriot government in Nocosia that is now trying to do whatever it can to throw sands into the machinery of the membership negotiations between Turkey and the member countries of the EU scheduled to start October 3.

This is hardly surprising. The nationalist credentials of President Papadopoulos are impeaccable.

He was the man that used the most irrendist and xenophobic language possible to defeat the UN peace plan for Cyprus in the referendum last year.

The UN peace plan, endorsed also by the European Union, was the result of years of diligent work, and at the end of the day it was endorsed by the Turkish Cypriots in their referendum.

These things should not be easily forgotten. Now, it has been the Greek Cypriots that have been sabotaging the efforts to bring the island back together again.

I fail to see that one should tolerate them sabotaging also the effort to achieve wider reconciliation and integration in the Eastern Mediterranean.

Saturday, September 17, 2005

Strategic Dialogue Between America and the European Union

At the ongoing 3rd Global Strategic Review of the International Institute for Strategic Studies in Geneva I was asked to be the European speaker on the subject of the strategic dialogue across the Atlantic.

On my webpage the interested can find my remarks as prepared for delivery earlier today.

Friday, September 16, 2005

Nerveous Nerveous in Germany

Umfrage: Allensbach sieht Schwarz-Gelb im Vorteil - Politik - SPIEGEL ONLINE - Nachrichten

If the opinion polls are to be believed, the German election on Sunday is heading for a true photo finish.

In itself this is hardly new. In the 2002 elections, the red-green Schröder coalition survived with only 6000 votes. If anything demonstrates that every vote counts, German elections certainly do.

As nerveousness is increasing, the debate about government alternatives gets increasingly confused.

It should be remembered that this election was called because Chancellor Schröder declared that he could no longer govern on his red-green basis. His own party was deserting his reform policies, and the opposition has secured a solid majority in the Bundesrat.

What Schröder said then applies today as well.

If anything, the SPD is even less likely to be able to carry reform policies after the advent of the leftist alternative on the scene, exposing its flank in a way that was not the case before. If there was to be a red-red-green majority in the parliament, one could magnify everything Schröder said when he asked for the dissolution of parliament several times.

A big coalition is now ruled out by everyone. Although sometimes working not too badly on the Länder level, there are no doubt great risks that it will just get bogged down. And SPD will still have its open front towards the left.

Such a government is unlikely to survive the full four years. And now the possibilities of actually calling new elections have increased. A great coalition should, perhaps, be given a length of two years. Since that it what everyone will be speculating about, election campaign will be round the corner, and not much in terms of serious business will be done.

So there is every reason to hope that there will be a majority for CDU/CSU and FDP. Everything else looks like being very messy indeed.

And I say this in spite of having serious reservations against the CDU/CSU policy on the importance issue of the necessary southeastern enlargement of the European Union.

Whatever happens will be of profound importance.

On Sunday, I'm heading from Geneva to Berlin in order to be at the CDU headquarters as the results start coming in.

New Beginning in Israel?

Haaretz - Israel News

Where the politics of Israel is heading after the withdrawal from Gaza is of course a most important question.

Yesterday Ariel Sharon spoke to the UN General Assembly in New York, and did so with words that have not been uttered by him before. There is open rebellion in parts of his Likud party, but judgning by this speech, Ariel Sharon will chart a way of his own more in accordance with what seems to be the desire of a majority if the people of Israel.

Details apart, this must be seen as good news for peace in the region and for Israel itself.

Thursday, September 15, 2005

Balkan Business Reforms

News - Doing Business in 2006 – Reforms Mean More Jobs

It's a wonderful late summer in Zagreb in Croatia where I am at the moment. After a discussion in Brussels yesterday on the politics of Southeastern Europe in the context of the enlargement strategy of the European Union, I'm now here for discussions on the business and investment possibilities of the region.

And they are certainly there. All the countries have made rather remarkable progress in the last few years. That Croatia is on the verge of starting accession negotiations with the EU is a clear sign of this.

Earlier this week the World Bank published its annual survey of reforms in business conditions around the world.

During the last few years it has consistently been Central European countries that have been on the top of that list. Reforms driven bby European integration has been rated by the World Bank as the most significant in the global economy.

This year it is Serbia and Montenegro that suddenly emerges at the top of the list of global reformers when it comes to business conditions.

"Five of the top reformers were from Eastern Europe led by Serbia and Montenegro. So from setting up a business, through dealing better with construction licenses, improving property registration, hiring new workers, to paying taxes, contract enforcement and bankruptcy and access to credit – Serbia and Montenegro covered the waterfront.”

So things are distinctly moving in this part of Europe as well, although this does not mean that everything is perfect - there is still much to do.

But it shows how the agenda here has shifted from the conflicts over the past to reforms for the future.

Tuesday, September 13, 2005

Fewer or More Subsidized Jobs?

Regeringsf�rklaringen 13 september 2005

I have just attended the ceremonies in connection with the official opening of the parliament in Sweden, and listened to the policy statement for the coming year by the Prime Minister.

It was a somewhat odd event, since obviously the governing Social Democrats had failed to reach full agreement with their parliamentary base in the Left Party and the Green Party, which is highly unusual.

Election is approaching in a years time, and the Prime Minister put great stress on increasing employment in the economy. The unemployment situation is generally seen as the biggest of the failures of the present government. It is, of course, much higher than what is reflected in the official figures.

The PM read a long list of thousands of new jobs that will be created with an avalanche of different schemes of old and new subsidies.

I have to confess that I would have felt better if the Prime Minister had been able to say that we are now drastically cutting back on all the different schemes for subsidized jobs, since real jobs are now created by real growth in the real economy.

The large expansion of all these subsidized jobs is really a sign of failure.

A good economy requires fewer - not more - subsidized jobs.

Took Some Time... / World / Europe - Albania PM wins confidence vote

It took some time for Albania to get its new government after the July 3 elections, but it now is finally in place.

All in all, it was a peaceful and orderly transfer of power. As such, it was the first in recent Albanian history.


Oil-for-Food Facts

Oil-for-food: Far from a failure - Editorials & Commentary - International Herald Tribune

Having spent some time flying across the Atlantic reading the Volcker Report on the Oil-for-Food program and the alleged scandals around it, as well as discussing it with some of the key UN people in New York, I can not but recommend reading the linked article from today's IHT.

The Volcker Report notes - although this has been largely ignored by the media - that the money that the Saddam regime got to an overwhelming degree was the result of smuggling beyond the UN programme, and that this smuggling was known to and in major cases even sanctioned by the US and UK, which were the key members of the 661 Committee of the Security Council.

You can not avoid the conclusion that what the massive Volcker Report investigation has found does not amount to much. In one case, Mr Savan clearly violated UN ethics rule, bu whether anything illegal was done remains to be clarified.

It is worth nothing, that the Volcker Report fails to mention the very large amount of Oil-for-Food money that was transferred to the Coalition Provisional Authority in Iraq and for which there has been no accounting whatsover.

New Scene in Norway

Aftenposten Norway, Norwegian news in English

As expected, the election in Norway yesterday resulted in a shift of majorities in the Storting, and within the next few weeks the centre-right government under Kjell Magne Bondevik will be replaced by a redgreen coalition under Jens Stoltenberg.

Stoltenberg was the undisputed winner of the election, taking his party from its disastrous 2001 result of 24,3 % to no less than 32,7 %. He has now committed himself to a coalition government with the leftist-populist party SV and the agrarian nationalist Senterpartiet.

It will - as I have written about her earlier - be a most uneasy coalition. There are fundamental differences of opinion, not the least on foreign affairs, between the parties.

On the non-socialist side the result was heavily influenced by the fact that a large part of the electorate thought that PM Bondevik should leave. This was expressed very openly by the populist Framstegspartiet, and was undoubtedly one of the reasons for its success, replacing centre-right Höyre as the second biggest party.

Höyre for its part was squeezed between its support for Bondevik and the fact that on this issue many of its voters had sympathy for what Framstegspartiet had to say. It's party leader Erna Solberg accordingly had difficulty getting her profile through during the campaign.

Now we will have to await the forming of the new government and its policy declaration. There will certainly be reason to return to the subject when that is presented.

Monday, September 12, 2005

United Nations News Service

United Nations News Service

It's a sunny and nice morning in New York, and leaders are starting to gather for the 60th General Assembly of the United Nations. The local TV stations are warning that security precautions will close off large parts of the Eastern section of middle Manhattan.

Over the weekend, talks have been continued in a smaller group to sere if it is possible to reach agreement on a document for the summit starting on Wednesday. Lead by the incumbent President of the General Assembly Mr Ping, the process produces different drafts all in the Ping name.

Later today a new draft might be presented to the member countries, possible with the Secretary-General himself making an appeal for it to be adopted as the basis.

But the reform process is now down to rather few issues. With the question of an enlargement of the Security Council effectively off the table, the minimum requirement seems to be an agreement on the new Human Rights Council proposed as well as the beginning of progress on the different managment issues.

Not much, but at the least something.

On the last point, it's primarily a question of starting to get rid of the myriad bizarre and sometimes even stupid regulations that the General Assembly has decided during the decades, and which tends to make effective managment by the Secretariat nearly impossible.

But, as one could expect, this is encountering fierce opposition from not the least the developing countries. Often these regulations have been driven by them. They fear that a stronger Secretariat will de facto mean a stronger role for the Americans and others.

It will be an important meeting, but I fear we should not expect too much in terms of important results. At the moment, avoiding a break-down is the number one priority.

But when the summit itself starts Wednesday, I would be surprised if there is not some sort of basic text already agreed. Everyone will have to give a little.

That's the only way in which the United Nations can work.

Reform Victory in Japan

The Japan Times Online

Prime Minister Junichiro Koizumi was the big winner in the elections to the Lower House of the Diet of Japan on Sunday.

At the time of writing, his LDP had won 280 of the 480 seats. That's a big increase from the 212 seats it had previously.

But even more important is that the back has probably been broken on all those that have opposed and delayed the necessary reforms that Prime Minister Koizumi has been pressing for. The LDP might have turned into more of a reform party than was the case before.

'Prospects for the Japanese economy were already improving. With this election result, they are certainly not going to get worse.

Rather the other way around.

Sunday, September 11, 2005

A different America?

No Fixed Address - New York Times

Four years after September 11, the United States is struggled with another major blow against its self-confidence. But in much the same way as we saw then, great forces are being mobilized in order to create a new beginning.

New York is back in a big way since that dreadful day four years ago. The gaping hole down near the southern edge of Manhattan is still there, but in every other sense the city is truly booming, carried forward not the least by the strength of the US economy and its pivotal position in the global economy.

On a sunny and warm day like today, all the world seems to be strolling through the streets of mid-Manhattan.

The New Orleans catastrophy will take a long time to repair. But in the media here, discussions have already descended into a very partisan dispute over who is to blame for most things. It is Democrats versus Republicans in a show of politics at its worst.

Large sums are already talked about when it comes to the rebuilding efforts. It will be sums probably larger than the annual costs for the Iraq war, with the total talked about perhaps in the order of 150 to 200 billion dollars. Huge amounts.

There will be a new but probably different New Orleans. And there will in all probability be an attempt to address the race and poverty issues that obviously predate even the Bush administration, but where so brutally exposed in the aftermath of the hurricane.

We are told that America will never be the same. Sure. America is never the same. September 11 changed a lot. So, in its own days, did certainly the San Fransisco earthquake. Not to speak about World War II or the Vietnam war. This is a society where change is the only thing that's permanent.

Back in Europe there are those gloating and hinting that higher taxes would have held off the hurricane or at least substantially alleviated its effects.

It sounds improbable, sorry to say. A hurricane of that order tended to devastate cities irrespectively of the level of income taxes - if they are not used to permanently hiding the population in bunkers.

But the New Orleans tragedy has clearly changed the agenda of the Bush administration. By how much remains to be seen. These are still early days.

But with his leadership abilities on the issue called in question, and with Iraq looking constantly messy, there is bound to be rather intense strategy sessions in the White House.

America will change. Sure. But in changing I guess it will still have a tendency to look the same.

Over Greenland

Just coming in over the East coast of Greenland on a spectacular sunny day.

The majestic glaciers seem to softly be discharging their icebergs into the crystal clear fjords. There are no signs of human life or activity whatsoever down there. In spite of the beauty, conditions for life are harsh.

The contrast between the comfort of the aircraft cabin with its Internet connectivity many thousands of meters up in the athmosphere is striking.

I think I have written it before, but the Greenland coasts on a clear day from high above is one of the most breathtaking sights on Earth.

Tight Race in Norway

R�dgr�nn opphenting -

The very last opinion polls before the parliamentary election in Norway tomorrow shows that it will be a very tight race.

The redgreen opposition coalition has been leading during most of the campaign, but during the last week a number of opinion polls suddenly showed the race tightening and the combined centre-right even taking a small lead.

But now the last opinion polls shows the redgreens winning, although with a very narrow margin. AP leader Jens Stoltenberg obviously performed well in the final TV debate between all the party leaders Friday evening.

But tomorrow will decide.

Saturday, September 10, 2005

Confrontation in Kiev

Kiev Ukraine News Blog

In an emotional TV interview, Ukraine's former Prime Minister Yulia Timkoshenko has gone into confrontation with the team and policies of President Yushenko.

That's the end of the Orange Revolution coalition for the time being. Although those that want to write off the entire Orange Revolution are hardly in touch with reality.

Yulia Timoshenko has proven herself as an able infighter and an accomplished populist. In addition, she's a personality with charm and charisma, and the ability to transform that into power.

But she was a revanchist upset with the past much more than a reformer looking to the future. It's a pity - but a regrettable fact.

Now there will be drama on the political stage from Donets to Lvov.

Danish Model in France

Statsministeriet - Statsminister Anders Fogh Rasmussens tale ved UMP-konferencen om �konomiske udfordringer den 7. september 2005 i Paris (Talen er p�engelsk)

Swedes have a tendency to believe that most of the world believe in some sort of "Swedish model" for the development of society.

But those days are mostly gone. Although the Swedish economy is performing well, there are other models that are attracting the attention of Europe.

Apart from the Finnish model, highlighted in numerous studies on growth and competitiveness, there is also the Danish model.

On September 7th, the UMP party of France under the chairmanship of strong presidential candidate Nicolas Sarkozy organized a major conference in Paris on how to reform the French and the European economy.

The keynote speaker at the conference was Denmark's Prime Minister Anders Fogh Rasmussen.

He outlined the foundation for Denmark's strong performance in the policies initiated by the centre-right government in 1982, and pointed in particular at the flexibility of the labour market in Denmark.

Indeed, the word "flexiturity" - combining flexibility in the markets with social security - has become an increasingly popular concept recently in the European debates on structural reforms.

But Fogh Rasmussen also described the forward-looking way in which his government is trying to get Denmark to buse all the possibilities created by globalisation.

"Reaping the full benefits of a creative, positive strategy towards globalisation requires two things: Firstly, we must carry out the necessary reforms to prepare our societies for the challenges of the future and, secondly, we must work to liberalise trade through free and open markets."

One can only hope that these words from Copenhagen was sufficiently heard in Paris.

But the bare fact that it was Anders Fogh Rasmussen who was invited to give the keynote speech at the conference is a distinctly positive sign.

Friday, September 09, 2005

Disarray by the Dnjepr

TAK! :: People's Union Our Ukraine :: Official party site

To some extent, the political crisis that we now see playing out in the Ukraine was expected.

In Moscow, were I was when the news broke, surprise was distinctly limited, although my talking partners in the Kremlin noted how fast things had developed just during the last few days.

Following the Orange Revolution, President Yushenko set together an administration where he tried to be nice to virtually all the different parts of the original coalition of the revolution. Given the circumstances, he probably did not have much of a choice.

But the contradictions were obvious from the very start. When I was there in the spring and met, among others, Prime Minister Tymoshenko and Security Council head Poroshenko it was fairly obvios that they were singing to different tunes. Already then, the air was rife with rumors about a coming rift.

Since then, things went first worse, as Yulia Tumoshenko messed up economic policy, and then somewhat better as President Yushenko tried to restore some order. But it was evidently not enough.

Much boils down to the issue of reprivatisation. There is no doubt that some of the privatisations carried out by the Kuchma regime were designed to enrich their its loyal cronies. But to tear up everything in 3 000 or so cases, as Tymoshenko wanted, and redo the entire thing was bound to create chaos for years to come. Everyone would suffer.

When the process of reprivatisation - much more limited in scope - finally started, it looks as if there was a tendency to take things away from one set of people and give these things to another one. Allegations of corruption and cronyism were all over the place.

And at the end the President probably had few options left but to ask the two protagonist in the internal civil war in the regime to leave. It was a decisive and probably unavoidable move.

Now, much depends on what Yulia Timoshenko will. She is undoubtedly charismatic, and has a willpower that should not be underestimated.

The fear is that she will link up with the strong industrial groups in Eastern Ukraine to form a new opposition bloc for the March 2009 parliamentary election. Then she could sweep back to power at a time when constitutional changes have made the position of the Prime Minister much stronger.

But for the time being the changes brings the hope of a more coherent and clear reform course in the policies of the country. The designated new Prime Minister is said to be less interventionist and more committed to the reform course. Revenge does not seem to be his main driving force in politics.

Let's hope that will be the case. A new government is yet to be formed, and Yulia Tumoshenko hasn't really declared what she intends to do.

One should note that time is running very fast, and that action now is necessary in order to avert worse problems further ahead.

By the beginning of December, the European Union is scheduled to assess developments in Ukraine and the prospect for accelerating the integration of Ukraine in its different structures. A positive signal from that assessment is important for the Yushenko team as it approaches the March elections, but such a positive assessment will depent on policies announced and implemented in Ukraine during the the coming weeks.

Relations with Russia are also challenging. Most important here is to sort out the issue of the price for the natural gas that Ukraine is importing from Russia, and which it still gets at prices well below what the EU countries are paying. But now Gazprom wants to rise the price in that direction, and if this happens during the coming winter there is bound to be an adverse impact of the economy and perhaps the living standards of ordinary people.

So there are challenges both concerning the European Union and Russia in the weeks and months aheas. To maneauver both of these relationships prior to the March elections will require both skill and determination from the political leadership in Kiev.

Much need to be put in place now. Time is short. Next week President Yushenko is off to New York to the UN Summit there.

Wednesday, September 07, 2005

Future of United Nations and Kofi Annan

No single nation can match UN; credibility must be restored, says Volcker

The publication earlier today of the final report of the Volcker independent inquiry in the running of the so-called Oil-for-Food program set up by the UN Security Council has undoubtedly thrown the organisation into a crisis just before its scheduled summit meeting.

I have not yet had the time to read the report in full, but will certainly do so in the next few days.

Paul Volcker rightly notes, that the program was "a compact with the devil, and the devil had means for manipulating the programme to his ends."

In a sense, the entire program played into the hands of Saddam Hussein and his regime, and that in more ways than I believe is covered by the Volcker report.

No one who has worked in the UN system will deny that a major overhaul of its managment system would be more than welcome. In many ways it is a tragedy that this could not be done during the otherwise succesful years of Kofi Annan, given not the least the fact that he personally knew every corner of the organisation better than most.

But it's much too simple to just point at the Secretary-General or some other individuals. The powers of the Secretariat are often severly restricted by the political authority of the Security Council and the budgetary authority of the General Assembly. This was to a degree beyond the normal the case in the Oil-for-Food program.

Now, we'll have to see what effect the Volcker report has. Clearly, it will focus the attention of the upcoming General Assembly and the summit meeting on the needed managment reforms. But there will be severe opposition against these important issues crowding out other important issues, not the least those concerning the Millennium Development Goals.

And over the discussions will of course be hanging the question of the future of Kofi Annan. Can he stay his term out, with a successor elected a year from now, or will there be calls for a speedier transition to a new leadership of the organisation?

The question will be hanging there. It is certainly unfair to the legacy of one of the most succesful Secretary-Generals in the history of the organisation.

But it's nevertheless a reality after the report today.

Tuesday, September 06, 2005

Norwegian Echo

Sammenligner Stoltenberg med Putin -

Those able to read Norwegian might look at what the leading Oslo daily had to report on what I have written on this blog on the economic policies advocated by the prospective redgreen governing bloc in Norway.

Meanewhile, opinion polls continue to indicate that such a government is the most likely - although not entirely certain - outcome of the September 12 election.

Sunday, September 04, 2005

Evening of Debate - Germany - Schr�der gewinnt TV-Duell - Merkel besser als erwartet

Obviously, the German debate was of somewhat greater importance than the Swedish one with the election as imminent as it is.

It was also expected that perhaps 70 % of the German electorate would watch this the only direct encounter between Gerhard Schröder and Angela Merkel during the campaign.

It is doubtful whether the debate will change much. There were - as far as I could see - no major policy surprises, mistakes or blunders.

In contrast to the very domestic-oriented Swedish debate, Europe and the world did figure in the German one. Schröder did a statesman-like explanation of the geostrategic importance of integrating Turkey with the rest of the European Union, which made Merkels resistance on this issue look rather pedestrian.

As expected, Schröder turned out to be the more skilled and confident debater, but at the same time the opinion polls indicated that Merkel performed somewhat better than people had been expected.

An important waypoint towards a new government in Germany has been passed.

Evening of Debate - Sweden - Nyheterna

This was truly the evening of the great and important political TV debates.

I had some difficulties following both the big debate between all the party leaders in Sweden a year before our election and the important debate between Gerhard Schröder and Angela Merkel two weeks before the German election.

But modern technologies makes most things possible these days.

There was no doubt as to the outcome of the debate in Swedish TV.

In an opinion poll immediately afterwards, the Moderate Party leader Fredrik Reinfeldt come out well ahead of Prime Minister Göran Persson. When asked which of the two government alternatives - the present redgreen constellation or the new alliance between the four centre-right parties - they preferred 54 % said that the alliance inspired more confidence versus only 31 % for the redgreen constellation.

A very clear result.

And a fair one. The Prime Minister's high-profile attempt at assualting the alliance for cutbacks in the unemployment insurance system didn't really work, and when thius his piece de resistance didn't, nothing else did either.

Instead, he suddenly found himself having to defend his proposal to increase subsidies to higher income earners - while the alliance want to lower taxes for those with lower incomes.

Lower taxes for people with lower income suddenly stood against higher benefits for people with higher incomes.

In his initial attempt at assualt - before it all failed - it was also noticeable that the Prime Minister tried to ride a wave of anti-Americanism. Time after time, he accused the alliance of wanting an "American model" that was grossly unfair, in contrast to some sort of "Swedish model".

But it didn't really work either.

It's a year to the election, but so far the government seems to getting most things wrong, and the normally savy tactician Göran Persson seems to create the one problem after the other for himself.

There is no question what would be the result of an election in Sweden in the next few weeks.

A year is a long time in politics. Much will undoubtedly happen. But there is no doubt that the entire scenery has changed in a fairly fundamental way.

Caucasus-wide conflict?

Turkish Daily News - Unrest threatens to engulf Russia

There is no denying that the security situation in Russian-run Northern Caucasus is deterioating.

Dagestan has been in particular focus lately. Even President Putin felt compelled to pay a brief visit to the security forces there just before the summer. The ethnic diversity of Dagestan, and the strong Islamist undercurrents obviously to be found in some groups, make it a particuilarly demanding place.

The roots of the insecurity goes deep, as the linked article tries to explain. And the present policies of repression rather seems to make things worse.

According to a security source interviewed for the article, "there is a 90-percent chance of a Caucasus-wide conflict."

Such a conflict will affect all of Russia - and indirectly us as well.

Saturday, September 03, 2005

Fatal Flaw in Constitution?

The Iraqi Constitution: Potentially Fatal Flaw

There is, as I have written earlier here, reasons to be concerned over the draft for a new Constitution for Iraq.

It might contain the seeds not only for immediate conflict in terms of Sunni anger, but also future conflicts in terms of the power over oil.

For the foreseeable future, oil is everything that Iraq has. Oil exports are 98 % of the country's export, and with foreign assistance of different sorts declining in the future the country's oil dependence is massive.

Iraq has vast reserves. Within OPEC, they are second only to Saudi Arabia. Since large areas of the country haven't been properly explored for decades, it is by no means excluded that further large finds will be made.

Power over oil is the power over the economy that will bring power over Iraq.

That's why it is so disturbing that the draft constitutions provisions concerning oil revenues are so unclear. In all probability, they will be used by the Kurds in the North and the Shiia in the South to argue that any income from new oil wells should go to them rather than through the central government.

There is no doubt that such a reading of the constitution will further a disintegration of the country. There will be very strong incentives for the Kurds and the Shiites to attract oil companies to their part of Iraq to drill new wells, in all probability also so adjacent to old fields that only the distinction between new and old is bound to create conflicts.

On present plans, there will be a referendum on the constitution on October 15th.

Let's hope that the unclear and dangereous parts of the draft constitution can be sorted out before then.

Superpower? T-P Orleans Parish Breaking News Weblog

The devastation that hurricane Katrina brought to the US Gulf coast - with the city of New Orleans "the epicenter of chaos and misery" - seems to defy belief. There is talk of thousands of people having lost their lifes.

It is nearly unavoidable that relief efforts are seen as inadequate in a situation like this. Perfect relief operation have yet to be invented by mankind.

But even while taking this into account it is difficult to avoid the impression that the Number One Superpower has been caught in a situation that exposes some of its vulnerabilities and shortcomings in a very brutal way.

There is likely to be an acrimonious debate as things start to settle down and focus shifts from the immediate needs to the larger questions of what could have been done to prevent this massive damage.

In the meantime, the local media gives the world a window towards how that debate is shaping up.

Thursday, September 01, 2005

Last Rich Soviet State?

Today's edition of Stavanger Aftenblad - the local newspaper in Norway's oil capital - had a first page headline saying that "Norway risks drowning in money".

With oil prices in average this year 40 Norwegian crowns over the assumption the Finance Ministry made as late as May, money is certainly flowing into the public coffers of the country.

If oil were to stay at 50 dollars a barrel - it's well over 65 today - for a lengthy period of time the effects on the country will be dramatic. There is a boom athmosphere on the markets of Norway.

It is in this athmosphere that the country is now approaching its parliamentary election. With few signs of campaign activities in the streets - where are the posters? - it all seems a rather timid affair.

But there are real issues. I have written earlier about those connected with the foreign policy of the country.

On the economic side, the prospective red-green coalition is promising more of public spending more or less across the board. And with oil prices being what thwey are, it's not entirely easy to argue against.

But increased public spending is almost certain to lead to increasing inflationary pressures which is almost certain to lead to higher interest rates which might well take the currency higher, thus risking the strangulation of what there is in the form of a non-energy and non-public sector of the economy.

When reading the election material of the Labour Party - Arbeiderpartiet - I find it difficult to avoid the impression that they have moved towards the left since I last had reason to look at their policies.

With Jens Stoltenberg - likely next Prime Minister - smiling at you from a leaflet, they start out by saying that they will "build but not sell" the country. Well, what that means is explained by saying that the government should own power-, energy- and other natural reserve resources and that mail, telecommunications and railway should remain firmly in state hands.

"We want to use our strong capital base to build long-term national ownership of the strategic industries for the country."

Once upon a time, there was a somewhat careless Swedish minister who happened to say that Norwaty was "the last Soviet state."

It was and remains an exaggeration. But when reading the election promises of the Labour Party, it is difficult not to notice the similarities in philosophy to some of the things we are now hearing coming out of Putin's Russia in these respects.

State capital. State control. State ownership.

This is certainly not the wave of the future. It's rather the words from those that can afford to ignore the future.

At least for some time.