prenups

Another piece from my legal-affairs beat
Prenuptial agreements

For poorer
Mar 25th 2010
From The Economist print edition


English courts used to ignore prenuptial agreements. Not any more

LONDON is the divorce capital of the world, for two reasons. It is home to many foreigners, often themselves in cross-border marriages. And it has a divorce law that—at least until now—sharply favours the poorer partner in a marriage (usually the woman). That can mean nasty surprises, particularly for rich foreign men whose wives issue divorce proceedings in London. English courts often choose to overrule clauses in prenuptial agreements, especially foreign ones, if they look unfair.

But a case now being heard by the Supreme Court in London is likely to give such agreements more clout. It concerns a German heiress, Katrin Radmacher. She used to be married to Nicolas Granatino, a Frenchman who dumped a lucrative career as a banker to become a humble Oxford don. When they married, he signed a prenuptial agreement (common in wealthy German families) agreeing that in the event of a divorce, he would get nothing from her.

But after the couple divorced in 2007, an English court awarded him a settlement of £5.9m ($8.9m). Citing the agreement, Ms Radmacher challenged that, and the Court of Appeal reduced it to £1m. In what will be a landmark ruling on English family law, Mr Granatino is now challenging this in the country’s highest court. He argues that he did not know how rich Ms Radmacher really was (her fortune is over £54m and she stands to inherit a lot more) and that he did not have proper legal advice before signing the agreement.

Lawyers around the world are watching with interest—especially, notes James Stewart of Manches, a law firm, if they are involved in helping rich people manage their money. Such clients pay great attention to their tax and investment affairs, he points out, but they often neglect the “matrimonial” issues raised by residency in London. Rich Russians are particularly vulnerable to this: the usual “marital agreements” (in effect, prenuptials) that they conclude at home may carry little or no weight in London.

The Supreme Court’s judgment is expected in a few months, probably around the time that the Law Commission, a body that tidies up the statute book, comes out with its own proposals for change. Both Labour and the Conservative Party have said they want to reform divorce law too.

Few doubt that prenuptial agreements are going to gain in importance. The question is how much. One issue is the level of independent legal advice. Kerstin Beyer, a dual-qualified German divorce lawyer practising in London, says that in Germany it is enough

for a notary to draft the agreement on behalf of both parties. An English court (and most American ones) would expect each side to have its own lawyer. Another question is disclosure: did each side truly know the other’s financial position?

A third—and probably the biggest—question is fairness. Courts in England and Wales see marriage as an institution, not a contract. They tend to look at needs first, and then equity. So a rich man may have to cough up lots of money (including from assets acquired before the marriage, or inherited) to house and support a wife, especially if she is looking after the children. English courts may also reckon that wifely efforts in childcare or home-making have stoked a husband’s earning power, and give her a lifetime slice of it. A prenuptial agreement that disregards any of these three considerations is likely to count for less, or even nothing.

Most other European jurisdictions (and Scotland) take a flintier view: maintenance payments are scanty; only assets accumulated during the marriage are up for grabs. And prenuptial agreements are rigorously enforced. Most American states offer more generous terms for wives, but also enforce prenuptial agreements. A contract is a contract, says Marjory Fields, a former New York judge now practising as an international divorce lawyer. But American courts also have a high standard of fairness: she judged a case in which the groom made his bride sign the prenuptial on the way to the marriage ceremony; that invalidated it.

Though the European Commission launched an effort on March 24th to harmonise divorce law among ten like-minded countries (and it hopes other EU states will come on board), many international initiatives have become bogged down amid cultural and legal differences. Many lawyers doubt, for example, whether it is possible to produce a prenuptial agreement that would be globally recognised, let alone enforceable. And in many countries the whole idea of planning in advance for the failure of a marriage seems unromantic—or repellent. Yet in rich countries, the incidence is growing—not least because of grandparents, now often a family’s richest members, who wish to ring-fence property in favour of grandchildren, keeping it away from grasping in-laws.

Increased use of prenuptial agreements sounds as though it means yet more lucrative work for lawyers. Yet just as divorce law in most countries now strongly encourages mediation rather than courtroom battles, new forms of collaborative drafting aim to take the sting out of premarital negotiations. It will still cost something—but, as Ms Fields notes: “If you need one, you can afford one.”

Libel

(my other job is legal-affairs correspondent)

Libel-law reform
Fairer but still costly
Reform of England’s tough libel law is moving up the agenda

Mar 25th 2010 | From The Economist print edition

WHETHER or not lie detectors work sounds like a good subject for open and honest discussion. Unless English libel courts get in the way, that is. Francisco Lacerda, a Swedish professor of phonetics, believes that the science of analysing voices for signs of stress—and therefore deceit—is flawed. He published an article called “Charlatanry in Forensic Speech Science” in an academic journal. The publisher was then threatened with a libel action by an Israeli company that made devices that Mr Lacerda criticised.

The case (which has not come to court) is the latest to be cited by a coalition demanding changes in English libel law. Others include

that of a British cardiologist, Peter Wilmshurst, who criticised the safety of an American-made medical device at an American conference—but is being sued, personally, in England. The law, critics say, unfairly protects reputation at the cost of the public interest. That hurts journalists, and scientists and anti-corruption campaigners. They also worry about “libel tourism”: foreigners fighting cases in English courts that would be unsuccessful elsewhere.

On March 24th the justice secretary, Jack Straw, said Labour would introduce a bill reforming libel law after the election. It would create a statutory “public interest” defence and restrict libel tourism. Campaigners welcomed the promise, which is a defeat for some senior judges who have argued that nothing much is amiss. The Conservatives and Liberal Democrats also support reform.

A report issued on March 23rd, by a working group at the justice ministry, calls for changes too. But it also explains how hard it will be make them work. It is not true that the law in England currently allows no defence based on responsible journalism in the public interest. Thanks to some landmark judgments in recent years, that already (to some extent) exists. And courts have shown themselves willing to rule against claims by foreigners when no significant publication took place in England.

But winning such victories may be prohibitively costly. England’s adversarial system of justice expects both sides to be represented; it does not encourage judges to be inquisitorial, as in continental Europe. Cutting costs would reduce the problem for small, poor news organisations that are being sued by tycoons (a notable example involves a Ukrainian website). But for scientists who are just trying to do their job a robust public-interest defence matters even more.

Lebedev

The sale of the Independent

Bought for a song
Mar 25th 2010
From The Economist print edition


A Russian tycoon buys an ailing British newspaper




ALEXANDER LEBEDEV was a rising star in the KGB in the dying days of the cold war. All he will say now about his time in the Soviet spy service’s London station is that he used to “read the newspapers”. Now, as a successful Russian tycoon, he owns several. Last year he bought the London Evening Standard, for a pound (twice its then cover price). On March 25th he bought the Independent, a national daily, and its Sunday stablemate from a company owned by Tony O’Reilly, an Irish businessman. Mr Lebedev paid a mere £1 ($1.49) for the titles.

The papers’ fortunes have fallen since he first read them. Launched in 1986, the Independent gained hugely from the collapse in newspaper costs that followed Rupert Murdoch’s defeat of the print unions. It pioneered the used of big photographs, and prided itself on extensive foreign coverage and on its independent political stance: its advertising slogan was “It is. Are you?”

But the recession, plus what looks like a structural shift in newspaper economics, has hit all British newpapers badly, the upmarket ones worst, and the Independent titles the hardest of all. People are buying and reading fewer copies. Advertisers are looking elsewhere. Internet revenues are not filling the gap. As losses mount, editorial budgets are shrivelling. That matters most for papers dependent on costly real news rather than cheap gossip. Without Mr Lebedev, the future of the



daily and Sunday Independent seemed bleak indeed.

Now it looks a bit brighter. Mr Lebedev appears willing to meet the Evening Standard’s losses from his own deep pockets (his fortune is estimated at around $3 billion). His decision to distribute it free of charge has raised circulation—though probably not enough to make up for the lost sales. He has not interfered in its journalism. The paper made an unusual public apology for what it termed an excessively negative editorial stance. The new approach is breezier.

Mr Lebedev’s motivation is hotly discussed. The authorities seem sanguine about his move into national media, though in the shadowier corners of Whitehall, some old hawks see at least a risk of mischief from any ex-KGB man with influence. But Mr Lebedev’s relationship with Russia is unclear: he has big investments there, but also part-owns Novaya Gazeta, a paper that is highly critical of the authorities. The British papers may be partly a status symbol, partly an insurance policy and partly simply an enjoyable toy. Compared to the costs of a football club, even their losses don’t look very expensive.

The most boring issue in the world

Europe.view

What's in a name?
Mar 25th 2010
From Economist.com


It is time for the most tedious dispute in the Balkans to be settled
IN THE headlines about Europe’s economic woes, one country stands out. Its public finances are a disaster. It has systematically fiddled its statistics. Its overpaid, underworked public-sector employees are a laughing stock across Europe. Rigid labour and product markets, and membership of the euro, have imprisoned it in an economic-policy straitjacket. It urgently needs a big bail-out. Call it the “Country That Needs Help” (CTNH).


Its next-door neighbour in south-eastern Europe is the “Country That Can’t Be Named” (CTCBN). The name it would like to have annoys CTNH, which regards it as an implicit territorial claim on its northern province with the same name. So the country is often called by a cumbersome five-letter acronym.


What a FYROre


The dispute has consumed an enormous amount of diplomatic time and energy over the past 15 years. It has prevented CTCBN, a small, poor country, from joining NATO, and has blocked the start of talks over its membership of the European Union. The details of the dispute are so mind-bogglingly silly that they make the Polish-Lithuanian row over spelling seem serious. it is difficult to know what sort of adjective or other qualifier, in what language or languages, with or without a hyphen, in what documents and in what contexts, would be enough to satisfy CTCBN's feeling of identity without prompting paranoia in CTNH.


Neither side is blameless. Politicians in CTCBN have provoked their southern neighbour. The controversial renaming of an airport and the erection of a prominent statue of a historical figure claimed by both sides are the main charges (no kidding: this is Europe in 2010 and people are getting seriously cross about statues). For its part, CTNH has been ridiculously obdurate: having said it would not let the name issue stop CTCBN’s integration into Euroatlantic organisations, it has

done exactly that.


Delay means playing with fire: CTCBN is divided ethnically and has weak national institutions. One of the things that keeps the country together is the prospect of integration into international organisations, chiefly the EU and NATO. CTCBN’s minority Albanian population has no dog in the fight. But if the name dispute goes on long enough, they may lose faith in CTCBN’s future as a country. Violence is not likely, but is certainly possible. If it does break out, CTNH’s foot-dragging will be largely to blame.


So a lot rests on the meeting of the two countries’ prime ministers at an EU summit on March 25th. Matthew Nimetz, the American diplomat charged by the United Nations with mediating the issue, sees some signs of hope. (He deserves a Nobel prize for patience, if nothing else).


What is missing is more muscular outside intervention. America thought of getting serious before the 2008 Bucharest NATO summit, but failed to push CTNH hard enough. Being realistic, even with health-care reform successfully passed, it is unlikely that the White House is now buzzing with excited talk about this arcane dispute as its next big priority.


The EU is a more hopeful source of help. It is good at solving problems by being boring. Faced with the prospect of a near-death experience in a meeting room in Brussels, people often discover new possibilities for compromise. But the EU doesn’t want to get involved.

That’s a pity. Without getting into crude arm-twisting, it should be possible to suggest to CTNH that talks about the bailout might go faster if the government showed a bit more flexibility. Sighs of relief would echo round the world. And the indefatigable internet propagandists insisting on either unadorned Macedonia or Greece-sanctioned FYROM would have to find something else to do.

Marvellous if true

According to Vedomosti, last year Russians bought 500,000 baseball bats and TWO balls.
http://www.vedomosti.ru/newspaper/article/2010/03/24/228992

(Hat-tip Mikhail Korchemkin for pointing this out)

Hilarious anti-Estonian propaganda

Estonia is (Pravda reports so it must be true) launching a new campaign for the assimilation of the Russian-speaking population. The Russians residing in Estonia will be pushed towards changing their Russian surnames to Estonian surnames. The administration of the Baltic nation decided to use such a measure to conceal its absolute inability to struggle against the financial crisis, which had put the three Baltic states on the edge of the economic collapse.

Utterly Alone

Just watched this interesting film "Vienui Vieni" in Lithuanian. Shot in black-and-white in 2003, it has (perhaps unconscious) echoes of Soviet propaganda films but with the plot the other way round. Very moving. Amazing that the widow of Lithuania's most famous partisan, Juozas Lukša-Daumantas, is still alive.

20 years ago..

The Economist carried a marvellous cover story called "The Bullies of Vilnius"

(not by me)

You can read it here

Catholic Church and sex abuse (leader article)

The Catholic church and paedophilia

Crimes and sins
Mar 18th 2010
From The Economist print edition


The pope should say plainly and loudly that sexual abuse of children is not just sinful. It is criminal

IT COULD hardly get worse. Sex scandals are breaking over the Catholic church with such fury (see article) that the Vatican has felt bound to defend Pope Benedict XVI himself. Children at some Catholic schools in Germany have been systematically abused; paedophiles were transferred to other jobs, rather than dismissed or prosecuted. Abuse has surfaced in Austria and the Netherlands. In Ireland Cardinal Sean Brady, the primate, has admitted that he was present in 1975 when two teenage boys were persuaded to sign oaths of silence about their abuse by Father Brendan Smyth. The church defrocked Smyth, but nobody, including Cardinal Brady, told the police about his crimes and he remained free to abuse boys for two decades.

Yet denial still reigns. Bishop Christopher Jones, head of the Irish episcopate’s committee on family affairs, has complained that the church is being singled out, when most abuse happens inside families and other organisations. “Why this huge isolation of the church and this huge focus on cover-up in the church when it has been going on for centuries?” he asked.

He is right that other secretive outfits (orphanages in authoritarian countries, say) are home to shameful abuse, but that misses the point. No church can expect to be judged merely against the most depraved parts of the secular world. If you preach absolute moral values, you will be held to absolute moral standards. Hence, for Catholics and outsiders alike, the church hierarchy’s inability to deal with the issue is baffling. The church now has exemplary child-protection rules—so strict, in fact, that they sometimes stifle healthily affectionate behaviour. It is the scandals from the past that are so toxic.


Applying modern standards to conduct long ago is tricky. The hierarchy in the past often saw paedophilia not as a crime with victims but as a sin that endangered the perpetrator’s soul: along the lines of alcoholism, or pilfering church funds. A priest who “erred” deserved a rebuke, pastoral attention (perhaps) and a fresh start. The dreadful damage done to the victims of the abuse was not appreciated, or was ignored.

A second delusion—still lingering in some church circles—was the conflation of paedophilia and homosexuality. A sexual relationship between a priest and a teenage boy was regarded as wrong, just as a liaison between two priests would be. But it did not count as a revolting abuse of trust.

Some add celibacy to the charge list. Those cut off from family life may not appreciate the horror parents feel about abuse. In a sex-obsessed age abstinence sounds unnatural and thus a cause of sexual deviancy. Yet a moment’s reflection shows how unfair that is. The childless care about children too. Parents are some of the worst child-abusers. And nobody has shown a statistical link between celibacy and paedophilia.

As in so many scandals, the cover-up compounds the original sin. The guilty secrets of the past must be flushed out. And bishops must admit their part in them. It is odd that an institution founded on honesty and penitence should struggle so. Today’s Catholic leaders might also recall that clerical abuses of power, defended by legalistic quibbling, greatly angered an itinerant preacher in Palestine two millennia ago.

CEE economics--"leader" article

Eastern Europe's economies

What went right
Mar 18th 2010
From The Economist print edition


If Spain, Portugal, Italy and Greece want a lesson in how to take hard decisions, they should look eastward








IN THE depths of the financial crisis a year ago, it was easy to see how the woes of the ex-communist economies could cause huge problems for the rest of Europe. Western banks had lent recklessly in foreign currency to firms and households stricken by the downturn. If they all fled for the exit at once, dumping assets and stopping lending, the result would be carnage both at home and abroad. Also scary was the prospect of a currency crisis. If Latvia were forced off its peg with the euro, its Baltic neighbours might topple too. A combination of weak governments and angry voters looked ominous enough for some commentators, including this newspaper, to fret that the bill for bailing out new members from the east could be big enough to threaten the European Union.

In the event, the ex-communist economies have so far ridden out the storm (see article). Ex-communist Europe still has to grapple with its share of problems: an ageing workforce, bossy officials and poor infrastructure. But nobody has defaulted and nobody has rioted. Something went right—and it holds lessons for troubled countries in western Europe.

As easy as jeden, dwa, trzy

One reason for the ex-communist countries’ relative fortune is that they are not a homogenous block all of which is suffering in the same way. Few other countries had the huge debts that made Hungary so wobbly, or the gaping current-account deficit that made Latvia so vulnerable. Slovenia and Slovakia were shielded from currency speculators by being in the euro area. Poland, by far the biggest of the new EU countries, is in a category of its own: thanks to good government and good luck, it was the only European economy to boast economic growth in 2009. In short, Poland, Estonia and Bulgaria are as different in their way as are France, Finland and Greece.

International organisations also deserve some praise. The European Bank for Reconstruction and Development helped stabilise the region’s banks, bringing foreign lenders together to ensure an orderly deleveraging instead of a rout. Both the European Commission and the European Central Bank realised that problems beyond the euro area could create headaches inside it. Their cheap loans helped foreign creditors and countries alike. And the IMF showed itself to be a collegial and flexible organisation, not the aloof, rigid outfit that EU leaders have foolishly rejected as a source of help for Greece and other troubled members of the euro.

Yet the greatest credit should go to the resilience and level-headedness of the region’s own politicians and citizens. Seemingly weak minority governments in places like Hungary and Latvia proved capable of making enormous fiscal adjustments. The east European economies, for all their faults, have shown more flexibility in both labour markets and in what they produce than have many older EU members. Moreover, the cuts in spending and increases in taxes and the retirement age that some ex-communist countries have imposed over the past year were much more savage than anything that Greece or Spain have so far contemplated.

That is salutary for the many countries that have yet to change public expectations enough to make big, painful structural changes more acceptable. Greece and the other Mediterranean countries in the euro area—Spain, Portugal and even Italy—nowadays seem to be sicker than ex-communist Europe. They should look east for a cure.

CEE economics

East European economies

Fingered by fate
Mar 18th 2010 | BUDAPEST AND RIGA
From The Economist print edition

A region that a year ago looked as bad as Greece does now has averted catastrophe—but is not yet completely safe


see chart here





BELIEVE the headlines and Europe’s worst economic headache by far is Greece, financially feckless and socially volatile. Uncontained, its problems could infect other Mediterranean countries like Spain, Portugal and even Italy. The euro’s future and the European Union’s credibility are at risk. And so on.

This week EU finance ministers talked of the possibility of bilateral loans to rescue Greece, as a reward for the government’s new fiscal austerity—though details were conspicuously lacking. But history shows how fast the tide of worries can ebb. Twelve months ago, it was ex-communist countries—Hungary, Latvia, Ukraine and others—that were seen as the biggest problems. Banking and currency collapses loomed, stoking dreadful risks for the region and beyond. A year on, their problems seem humdrum, not horrific.

The fears were partly overblown. The idea of a single “ex-communist region” called eastern Europe does not bear scrutiny. What does prosperous Slovenia, which is richer than Portugal, have in common with Moldova, Europe’s poorest country? Countries like Hungary had big, over-leveraged financial systems, plagued by reckless lending and spendthrift consumers. But in the Czech Republic, the banks were solid and habits thrifty. Poland’s economy, the largest in the region, was so untroubled by the catastrophe that its GDP grew in 2009, helping all its trade partners.

A good example of outsiders’ wrong views was the market in credit-default swaps on Estonian debt. This was a chance to trade bets on, in effect, the death of a non-existent horse, as Estonia has no publicly traded government debt. Wrong numbers deepened the gloom. In particular, a misreading of some data from the Bank for International Settlements overstated the level of foreign banks’ exposure.

But ignorance only partly explains the jumpiness. Another element may have been self-interest. Officials mutter darkly that some bankers first shorted currencies and bank shares, and then published research notes forecasting default or devaluation. Others believe that west Europeans were eager to shift the blame for the recession, first to Wall Street and then to their wild and woolly east. Jacek Rostowski, Poland’s finance minister, says he was “surprised” by the “hysteria”. He blames “a deep psychological need to identify the source of crisis as ‘them’ not ‘us’.”

There is a striking contrast between riots in Greece and the grim patience of ex-communist voters, whose living standards have plunged amid soaring unemployment. The “institutional fragility” that some west European politicians worried about may be a genuine problem—but in the euro area, not in eastern Europe.

Over the past year politicians in the east facing the worst outlook mostly took commendably tough decisions (Ukraine, paralysed by political in-fighting, was the exception: it has stayed afloat thanks only to the generosity of outsiders). The spectre of populism proved a mirage. Seemingly weak coalition governments were actually rather good at pushing through reforms. In the worst-hit countries, Latvia and Hungary, the governments’ popularity even rose when the pain bit (though on March 17th Latvia’s coalition government lost its majority when a big party pulled out).

For their part, outsiders showed patience and ingenuity. A big but little-known effort was the “Vienna initiative”, brokered by the European Bank for Reconstruction and Development. In late 2008 its chief economist, Erik Berglof, spotted the danger of policy based solely on national interest. The Austrian government had just said it would support the troubled Erste Bank, but only if the money went to loans inside Austria. That approach risked a rampage out of eastern Europe by overexposed foreign banks that had lent unwisely (and often in foreign currency) during the bubble years.

This was a classic collective-action problem: each bank’s individual interest was to reduce exposure by calling in loans and dumping assets, but if all acted similarly, everybody would suffer. The international response has worked well. The European Central Bank’s provision of liquidity to foreign banks encouraged them to keep financing subsidiaries outside the euro area. The IMF and other lenders helped host countries to stay afloat—and to provide liquidity to banks, regardless of ownership. Regulators helped the banks by relaxing capital requirements.

No foreign-owned bank has pulled out of the region. In total 17 systemically important local banks went bust (mostly in Russia, Ukraine and the like). But inside the EU, just one, Parex in Latvia, had to be rescued by the government and the EBRD. That is a lot fewer than many were expecting—and it is a far better result than in the Asian financial crisis of 1997-98.

Other efforts by outsiders helped too. “Cash for clunkers” car-scrappage schemes boosted countries, such as Slovakia, with big car industries. The inflow of EU money for modernisation of infrastructure softened the effects of the fiscal squeeze in countries that had to sort out their public finances in a hurry. Those countries that could depreciate their currencies did so, keeping monetary policy loose. Those with currency pegs—the Baltic three and Bulgaria—have started on an “internal devaluation”, thanks to their flexible labour and product markets.

Sustainability remains a big problem. The overhang of private-sector debt in the region risks damping growth for years to come. Sharing out the burden of adjustment among lenders, borrowers and taxpayers in an orderly restructuring is a job that has barely started. As Capital Economics, a consultancy, notes, the banks remain fragile, a new fiscal squeeze looms and export growth is likely to stay sluggish. Through luck, judgment and friendly help, eastern Europe has staved off disaster. But to catch up on what the region missed when it was behind the Iron Curtain remains a mighty task.

Lithuanian diary

Here is a short (three-day) diary from last week's trip to Lithuania

Lithuania

Back on the map
Mar 16th 2010
From Economist.com


How an invisible country rocked the world


Day one

EARTHQUAKES are a horrible way of changing the physical landscape—but geopolitical ones can have marvellous results. Lithuania has just celebrated the 20th anniversary of its declaration of renewed independence, when late in the evening of March 11th 1990, deputies of the “Supreme Soviet” of the Lithuanian Soviet Socialist Republic voted unanimously to dump the symbols of Soviet rule and to restore their country’s independence.



It seemed a hopeless gesture at the time. But the seismic shocks shattered the Soviet Union, bringing freedom, or at least the chance of it, to 15 new countries. It put Lithuania—literally—back on the world map, from which it had been wiped by its forcible annexation by the Soviet Union in 1940.


A poignant exhibition in the parliament building shows the mass murder, deportations, collectivisation, forced atheism and unrelenting propaganda inflicted on Lithuania under Soviet rule. It also shows the determination to resist. Particular moving are the souvenirs created by Lithuanians in the Gulag, bearing national symbols and the red-green-yellow colours of the national flag. Possession of that flag, or let alone humming the old national anthem, was a criminal offence.


Yet that flag, along with those of Latvia and Estonia, was visible in in the lobby of the American State Department throughout the period of Soviet occupation. (America, like almost all western countries, never formally recognised the Baltic states’ incorporation in the Soviet Union). Thanks to that non-recognition policy, a dwindling handful of elderly diplomats in moribund embassies, chiefly in Washington, DC, the Vatican and Britain, retained their diplomatic status, living and working in a kind of limbo which all too easily seemed futile. One of their few real jobs was issuing passports, carried with pride by Lithuanian emigres, though seldom used in practice.


As the Soviet Union crumbled, old Lithuania stirred: neither gone, nor forgotten, just buried. Huge demonstrations began to challenge the Soviet occupiers. Political prisoners returned from Siberia. Independent media emerged, and began overturning the systematic lies and propaganda of the past. In late 1989 the Communist Party turned against its masters in Moscow and then split. In elections to the Supreme Soviet, the candidates endorsed by the pro-independence “Sajudis” movement (pictured in 1990, above) swept the board. On March 11th, barely 24 hours after they first convened, the new members restored the pre-war coat of arms, ripping down the hammer and sickle from the building’s entrance. Then—to the amazement of the outside world—they declared the pre-war republic re-established with immediate effect.


Had it all gone wrong, those men and women would have been the first to suffer. Some of them had been born in Siberia, the children of parents deported there for no other reason than that they had been officials in the prewar republic. But bravery aside, what the gesture meant in practice was unclear. Lithuania had no money, no state institutions, no experience, no means of defending itself. The KGB was still a threatening presence, housed, appropriately, in the building that had once been the Gestapo headquarters. The Lithuanian authorities’ power was dependent on the Soviet military staying in their barracks. Initially, only a few hunting rifles and sandbags defended the parliament. Lithuania’s borders were still under Soviet command. Anyone wanting to cross them needed a Soviet visa. There was one exception. On March 28th, your correspondent managed to enter the country, gaining Lithuanian visa 0001. Using visa 0002 had to wait for more than a year, until the Soviet Union collapsed in August 1991.


The effusive congratulations for the 20th anniversary belie the fact that at the time most outsiders reacted not with cheers but a mixture of caution and outright horror. The top priority for most countries was not supporting a forgotten country’s quixotic quest for freedom. It was to keep the embattled Mikhail Gorbachev in power in the Kremlin, and his hardline opponents out of it. Following the fall of the Berlin wall, Germany was gingerly negotiating the terms of reunification. That depended on Soviet consent.


Foreigners counselled the Baltic states to play it slow and soft. Better to be autonomous in a Soviet Union where glasnost and perestroika (openness and reform) were ascendant than to aim for the seemingly impossible goal of restoring full statehood. Lithuanians disagreed. As Vytautas Landsbergis, the first head of state of the reborn republic, put it during the celebrations, “they offered a reform of the prison regime. We didn’t want to be in the prison at all”.

Yet the gamble paid off. Barely 14 months later, a failed putsch in Moscow left the Soviet Union in ruins. The Russian leader Boris Yeltsin displaced Mr Gorbachev in the Kremlin. He wanted independence for his country from the Soviet Union too. Almost overnight, the Baltic states were back on the map. It was as if Atlantis had reemerged from the depths of the sea and applied to join the United Nations. A lot to celebrate indeed.


Day two

THE centre of the celebrations was the parliament. Most senior positions there and in the government are still held by people who featured prominently in the independence struggle. They look a lot less tired and worried now. They are also a lot better dressed. Sleek designer glasses have replaced clunky Soviet-era spectacles. Dreadful dentistry has given way to shiny white teeth. Grey shoes and white socks—once a common combination—have vanished. Shabby polyster suits are in the same dustbin of history as the Soviet Union.


In those days the “Supreme Council” building (pictured, right) was rank with cigarette smoke, sweat, cheap Soviet perfume (seemingly applied by the litre) and the lingering smells of boiled cabbage and stewed tea from the cafeteria. All that has gone, along with the improvised defences that used to ring the building. These were built, Lego-style, out of huge prefabricated concrete structures from a nearby building site, under the direction of a mysterious and energetic American who was rumoured to have a military engineering background. They were backed up by what purported to be a minefield. The sign “Stop-Mines!” was in Lithuanian only—a language that attacking Russian soldiers would be unlikely to understand.


The parliamentary guards of those days—twitchy, unkempt and armed with only rudimentary weapons—were the nucleus of what later became Lithuania’s armed forces and security service. Both outfits are in a mess. Swingeing defence cuts have left Lithuania’s military able to do its NATO duty in Afghanistan, but not to defend the country—something that infuriates the Estonians, who still spend the NATO-mandated 2% of GDP on defence. Lithuania, like the other Baltic states, is now gaining formal contingency plans from NATO and big American land exercises are planned for later this year. But outsiders’ willingness to risk blood and treasure in the Baltic may fade if the locals show so little desire to provide their share.


In the security service, the VSD, a huge political row is raging over the so-called “Valstybininkai”—a tightknit group of hawkish senior security officials and advisors. Their nickname is all but untranslatable into English, but could be rendered as “Men of State”. They played a key role in deposing an elected president, Rolandas Paksas, in 2004, supposedly because of ties (which he denies) with Russian intelligence and organised crime. Now they are enmeshed in a scandal over a CIA compound in a suburb of Vilnius, which may have been a secret prison. News of its existence was leaked in America, to the despair of Lithuanian officials. Not that it was very secret: the Americans had acquired the building through a shell company in Panama, engaged in highly conspicuous and unusual construction work, and asked the electricity utility to wire the building up with an American-style 110-volt power supply. Short of putting a neon light on the roof saying, “CIA—your security in safe hands”, it could hardly have been more conspicuous.


Some of the Valstybininkai may face criminal charges relating to abuse of power; others have been exiled to postings in faraway countries. Lithuania is a hugely pro-American country, and many might think that turning the odd dirty trick for the country’s most important ally was nothing to get too excited about. Though the group may have got overly self-important, they still enjoy great respect in many quarters (not least abroad) for their brains and patriotism. Some scent a vendetta by Lithuania’s president, Dalia Grybauskaite. Since her election last year she has seized on the issue. She also wants to improve her country’s ties with big European states such as France and Germany—and with Russia. Nobbling the VSD could be part of that, say her critics.


But what worries even the most solidly Atlanticist Lithuanians is the mystery around the presumed murder of a senior VSD officer, Vytautas Pociunas, in Belarus on August 23rd 2006. His family and friends believe that his death (falling from a hotel window) was covered up in order to forestall an investigation into a scandal in the VSD. Conspiracy theories abound, involving secret cabals of homosexuals, Russian penetration and high-level corruption. Others think that he was murdered by the Russians, or the Belarussians, in order to sow confusion in Lithuania. If so, that certainly succeeded. More than three years after his death, the issue continues to sow mistrust, and a certain amount of fear.


Day three

CENTRING celebrations around Lithuania’s parliament leaves Ms Grybauskaite in an unusual position: off stage. A former European commissioner, she trades on her image as a political outsider, running against the old-boys club that dominates public life. Without a political machine behind her, she needs to keep her popularity high. Many Lithuanians appreciate her boldness and bluntness, as well as her squeaky-clean image. Unmarried and childless, she has no relatives to embarrass her with dodgy business dealings. Her success in a big job overseas gives her credibility. In a country where politicians are prone to self-enrichment, she does not even draw her full salary. Her tactical skills are formidable—she fought and won a sharp battle to get rid of the country’s high-profile foreign minister, Vygaudas Usackas (who is now the European Union’s envoy to Afghanistan).

That leaves her (at least in her own eyes) as the unquestioned leader of Lithuania’s foreign policy. But to what end? By Lithuanian standards, she is not a great Atlanticist. Her priority is to develop the country’s ties with the EU, especially France and Germany. She shows little interest in causes that have been at the centre of Lithuanian concerns in previous years, such as promoting Georgia. To the displeasure of Georgia’s friends in the region, she did not invite President Mikheil Saakashvili to the celebrations (though the parliament invited heavyweight Georgian lawmakers). Instead she invited Alyaksandr Lukashenka, the autocratic president of neighbouring Belarus—and Dmitri Medvedev of Russia. 


The reasoning behind this is interesting. Ms Grybauskaite said she would go to Moscow on May 9th for the 65th anniversary celebrations of the end of the war if Mr Medvedev would come to Lithuania to celebrate the events of March 11th. He said no, quite politely, and in turn invited her to come to Russia at a time of her choosing. That could be quite a victory: May 9th is not a great day of celebration for the Baltic states, where many see it as irredeemably tainted with the Soviet (and Stalinist) view of the war, in which the three little countries bounced like shuttlecocks between two totalitarian empires. So Ms Grybauskaite avoids the embarrassment of being pictured against the pictures of Stalin which are likely to adorn the Moscow streets. And she gets a chance to talk properly to Mr Medvedev in more congenial surroundings.


But if the price of good relations with Russia is snubbing Georgia, many Lithuanians will balk. Georgia’s plight—divided and part-occupied—could easily have been the Baltic states’. Even those who bemoan Mr Saakashvili’s flaws still care about the country he leads. The speaker of the Georgian parliament, David Bakradze, gained a rapturous reception from a big crowd at an outdoor concert in Vilnius on March 11th. Mr Saakashvili would have had an even bigger one.


Ms Grybauskaite’s invitation to Mr Lukashenka, oddly, was less controversial. Lithuania has rather good relations with Belarus, despite being a base for efforts to aid the opposition there. (Another scandal around the VSD concerns the alleged misappropriation of American money paid to that cause). Lithuania was the only NATO country to be invited to observe the big and threatening military manoeuvres mounted last autumn by Russia and Belarus. Showing the Belarussian authorities that close ties with Russia are not the only option is a good idea: it is strongly supported by neighbouring Poland.


That is another priority for Ms Grybauskaite. Poland and Lithuania should be great friends. They share a long history. From a cultural point of view, they are in some ways indistinguishable (Poland’s best known poem starts, “Lithuania, O my fatherland”). But ties are oddly tense. Lithuanians, with unhappy memories of past Polonisation, have never delivered on repeated promises to sort out an arcane dispute about spelling. That infuriates Polish officials. The Conservative Party, which leads the governing coalition, is deeply divided on the issue. But it may have to swallow its pride: the votes of two Polish deputies are essential if it is to have a working majority.

Lost in cyberspace

As I gradually get back into the swing of things after the distractions of the past year, I notice how the cyberscape has changed. Where is the Tiraspol Times? That website is no longer active. I hope somebody has saved some screenshots of their groundbreaking journalism. Luckily Transdniestria news is still available at transnistria.info though the site appears to be running on an automated basis (the last "views" entry was posted in May 2007).   Another "separatist" site, visitpnr, is still running but similarly free of new content. The semi-official pridnestrovie.net is still running, and claims support from the mythical ICDSS (subject of an Economist investigation a couple of years back). But of the ICDISS itself--no sign. 

Back in the real world, the British Helsinki Human Rights Group (which at least has some real people associated with it) has relaunched its website. But the material is so old it is growing whiskers (unless I am missing something).  The menu of recent offerings highlights material from the US mid-term elections  in 2002.  Maybe some fresher fare is lurking behind the subscribers' wall.

Ukraine--Andrew Wilson latest

Andrew Wilson is the best Ukraine-watcher I know. Here is his new paper, which argues that Yanukovych could be Ukraine's Nixon.

This is the most amusing thing I've seen for a long time

Have you ever wondered how the history of the 20th century would look if represented on Facebook? Well, look at this

A Moscow-based friend has just received this letter from his hr department

Dear XXXX


I need to ask you to bring me medical certificates about absence of the following diseases  for Work permit:

lepromatous leprosy chancroid
tuberculosis
syphilis
Chlamydia
limphogrannulema
HIV test (HIV certificate is needed)
test on the absence of narcomania

All the tests could be taken at the International Medical center SOS (Orlovskiy pereulok, 7).

Warm regards

XXXXXX

secret plan to expel Baltic states from Europe

The Kremlin is trying secretly to discredit the Baltic states by organising their public humiliation on television. This I suspect one of the opening efforts.

Latvia and history: Europe View 175

Europe.view

Harmony in Riga

For once, the anniversary of a wartime battle in Latvia should pass off peacefully

Mar 11th 2010 | From ​The Economist​ online

THAT March follows February is not a state secret, but it sometimes seems to come as a surprise to Latvian officials. Sometime in February, they notice that March 16th is approaching and start worrying, belatedly, about what outsiders will think.

That date is the anniversary of a battle in 1944, when two Latvian units raised by the Nazis fought against the Soviets side by side, under Latvian command, for the only time during the war. The commemoration highlights a sharp historical controversy in the ex-communist region. On one side are those who regard those Estonians, Latvians and others who fought on the Nazi side and wilful collaborators with the genocidal regime of Adolf Hitler. That they bore the uniforms of the SS—the epitome of Nazi brutality—is a key incriminating fact. Given the slaughter of Jews in the Baltic states during the war, the only defensible position is to accept that the Soviet forces were liberators. Any form of commemoration of their opponents, such as the Latvian SS, is tantamount to nostalgia for the Nazis.

In the middle are those that see mitigating circumstances. By this late stage in the war the “SS” label was used for all conscripted non-Germans, who were not allowed to join the Wehrmacht. The label “volunteer” was a Nazi propaganda trick: the vast majority of soldiers in these units were conscripts. Though many war criminals did join the new units, fighting in the Third Reich’s military forces was not in itself a war crime. The Soviet claim that the Estonian and Latvian SS were “traitors” is based on the idea that the 1940 annexation of the Baltic states into the Soviet Union was legal. That is not an approach that any civilised country accepted then, or believes today.

On the other side are those who think that Latvians and others who fought against the Red Army were fighting in a just cause: to defend their countries against a return to the horrors of Soviet rule they had experienced in 1940-41. Their military prowess and bravery in a doomed fight deserves recognition, particularly given the huge casualties and persecution they experienced after the end of the war. It is this last group that most wants to mark March 16th.

The anniversary is marked not by a march or parade. Instead, veterans of the Latvian units, in civilian attire, lay flowers at the Freedom Monument in Riga, in memory of their fallen comrades. The event attracts unpleasant attention from neo-Nazi and skinhead groups on one side, and self-proclaimed anti-fascists on the other.

Russia usually makes a big deal of this. Tarring Latvia (and Estonia) as “fascist” is a big theme of Kremlin propaganda. Claiming that the authorities honour “SS veterans” (or at least permit them to meet in public) adds an extra twist. By skilful manoeuvring and news management, Estonia has managed to defuse the issue. But in Latvia, the authorities have found it a perennial and perplexing headache.

This year, the pot is, for once, off the boil. Regnum, a normally polemical Russian news website, published a remarkably balanced commentary ​here​ (in Russian) http://bit.ly/b2FdM4. Riga city council has banned the veterans’ wreath-laying.

This reflects Latvia’s changing politics. Riga is run by a coalition led by the Harmony Centre party, which has good chances in the October parliamentary elections. The party is mainly Russian-led, but its pro-welfare policies attract Latvian voters too. A big row over March 16th would polarise opinion, driving Latvian voters to support the mainstream parties that thrive on fears of Kremlin mischief-making. The leaders of Harmony Centre don’t want that. Neither do their friends in Russia.

what's happened to axisglobe?

For several years I have been reading with enjoyment and some puzzlement a site called www.axisglobe.com/ It is a rum mixture of assiduously collected press cuttings and spin, mainly to do with the activities of security and intelligence services in the ex-communist world. The authors are all pseudonymous (at least as far as I have been able to determine).

Michel Elbaz – general coordinator. Specialization – regional security in Eurasia, in particular in what concerns regional activity of local and international terrorist organizations.
Allister Maunk – administrator and editor of the Eurasian secret services daily reviews. Specialization – Eurasian states' relations with the states of South Asian region.
Can Karpat – Turkish and Balkan section coordinator. Specialization – interior and foreign policy in the states of Balkan region.
Simon Araloff – European section coordinator. Specialization – East European states' regional policy, and the East European policy of the West European states (particularly, Germany) and Russia.
Anders Asmus – European section writer. Specialization – regional and international politics of Baltic States.
Pavel Simonov – Russian section coordinator. Specialization – Russia's foreign policy and secret services.
Ulugbek Djuraev – Central-Asian section coordinator. Specialization – geopolitics of Central-Asian region.
Asim Oku – Turkish section writer. Specialization – Turkey's policy towards Eurasian states; the Southern Caucasus' regional policy.
Sami Rosen – Israeli section coordinator. Specialization – Eurasia – Middle East relations (with emphasis on Israel).
Alexander Petrov – webmaster.

I had the strong feeling that the site was part of some "information warfare" effort but I could not quite see from which quarter. 

But since late December, nothing new has been added (as far as I can see) to the axisglobe site. The Russian version of the site has completely expired. I have tried a whois search and found only that the axisglobe registration runs out shortly. 

Does anyone have any idea who is (or was) behind it, and why it has suddenly stopped? Those wanting to be discreet can email me at edwardlucas(at)economist.com or skype me at edwardlucas

Latvian SS commemoration

Has anyone else noticed how quiet the Kremlin propaganda machine has become as the March 16th anniversary approaches. I am writing on this for my online column this week but I have just come across this remarkable (to me) commentary on the normally vitriolic regnum.ru site, by Vlad Bogov, which gives a more-or-less balanced account of the issue. Has anyone else noticed this shift in Russian approach?