Thursday, July 31, 2008

EU Divorce law

Divorce without borders
Jul 31st 2008
From The Economist print edition


A simpler way to part ways


SHE was French; he was English; they had just moved to London from Paris. When he found out about her affair, she begged for a reconciliation. He was more ruthless: the same afternoon, he filed for divorce in France, one of the stingiest jurisdictions in Europe for the non-earning spouse and where adultery affects the court’s ruling. Had she filed first in England her conduct would have been irrelevant, and she would have had a good chance of a large share of the marital assets, and even maintenance for life.

International divorce is full of such dramas and anomalies, so the natural response of policymakers is to try to make things simpler and more predictable. But the biggest attempt in recent years to do just that, in a European agreement called Rome III, has just been shelved. Instead, several EU countries are now pressing ahead with their own harmonisation deal. Many wonder if it will work any better.

At issue is the vexed question of which country’s law applies to the break-up of a mixed marriage. The spouses may live long-term in a third country and be temporarily working in a fourth. The worst way to sort that out is with expensive legal battles in multiple jurisdictions.

The main principle at present is that the first court to be approached hears the case. Introduced in 2001, this practice has worked well in preventing international legal battles, but has made couples much more trigger-happy, because the spouse who hesitates in order to save a troubled marriage may lose a huge amount of money. Rome III aimed to remove the incentive to go to court quickly. Instead, courts in any EU country would automatically apply the local law that had chiefly governed the marriage. This approach is already in force in countries such as the Netherlands. A couple that moved there and sought divorce having spent most of the marriage in France, say, would find a Dutch court dividing assets and handling child custody according to French law.

That works fine among continental European countries where legal systems, based on Roman law, leave little role for precedent or the judge’s discretion. You can look up the rules on a website and apply them. But it is anathema in places such as England, where the system favours a thorough (and often expensive) investigation of the details of each case, and then lets judges decide according to previous cases and English law.

Another snag is that what may suit middle-class expatriates in Brussels (who just happened to be the people drafting Rome III) may not suit, for example, a mixed marriage that has mainly been based in a country, perhaps not even an EU member, with a sharply different divorce law. Swedish politicians don’t like the idea that their courts would be asked to enforce marriage laws based on, say, Islamic sharia.

The threat of vetoes from Sweden and like-minded countries has blocked Rome III. But a group of nine countries, led by Spain and France, is going ahead. They are resorting to a provision in EU rules—never before invoked—called “enhanced co-operation”. This sets a precedent for a “multi-speed” Europe in which like-minded countries are allowed to move towards greater integration, rather than seeking a “big-bang” binding treaty that scoops up the willing and unwilling alike. Some countries worry that using enhanced co-operation will create unmanageable layers of complexity, with EU law replaced by multiple ad hoc agreements.

The real lesson may be that Rome III was just too ambitious. A more modest but useful goal would be simply to clarify the factors that determine which court hears a divorce, and then let that court apply its own law. David Hodson, a British expert, proposes an international deal that would start by giving greatest weight to any prenuptial agreement, followed by long-term residency, and then take into account other factors such as nationality. That would then make it easier to end marriages amicably, with mediation and out-of-court agreement, rather than a race to start the beastly business of litigation.

Daniel Morar

Romania

Mr Too Clean?
Jul 31st 2008 | BUCHAREST
From The Economist print edition


An anti-corruption crusader faces the sack

FIGHTING corruption in a country that tolerates it is a lonely job, and Daniel Morar may not have his for much longer. Intensely disliked by most of Romania’s politicians and vilified in the media, he reaches the end of his term as head of the Romania’s anti-corruption agency on August 12th. A government announcement on his future—and likely replacement—is expected imminently.

If so, Romania’s hottest political issue will become an international one. A European Commission report on July 23rd criticised Romania’s lacklustre effort against wrongdoing, but did not impose sanctions as it did against Bulgaria. It praised Mr Morar’s agency, and a spokesman says his status is a “test case” of Romania’s readiness to curb high-level corruption after joining the EU in 2007.

The Romanian parliament, however, does not share this admiration. It uses its veto to prevent Mr Morar’s hottest cases from going to court. And of the 109 cases that were prosecuted in 2007, only 25 resulted in prison sentences, mostly for the minimum three years, or (with mitigating circumstances) even less.

Critics say that Mr Morar is pursuing political vendettas on behalf of his backers, chiefly Romania’s president, Traian Basescu, whose supporters are the main opposition Democratic Party in parliament. Mr Morar’s agency has indeed chiefly gone after politicians from other parties; but it has prosecuted some important figures in Mr Basescu’s camp too.

Mr Morar’s difficulties are a symptom of something else: a culture in which corruption does not equate with disgrace. Transparency International ranks Romania as the most corrupt EU country. Bribery is endemic, typically to secure medical treatment or teachers’ favours.

At an off-the-record seminar organised by a German think-tank recently, judges said punishing corruption severely would be hypocritical and harsh. The Romanian language has no precise word for “accountability”.

europe view no 92

Europe.view

Vague but sinister
Jul 31st 2008
From Economist.com


Russia’s new foreign policy concept


AS LAUNCHES go, it was more an ominous fizzle than a big bang. At a briefing in Brussels on July 28th, Russia’s ambassador to NATO, Dmitry Rogozin, answered most questions about the Kremlin’s plans for European security with a mixture of “don’t know” and “wait and see”. But the outlines are clear—and not particularly comforting.

The idea, first put forward by President Dmitri Medvedev, is to have a big international conference in Moscow, perhaps with India and China involved, to agree a legally binding treaty that will set up a European security organisation focussed on hot issues such as migration and terrorism. Its reach will stretch from “Vladivostok to Vancouver”.

But Europe already has an outfit with that mandate: the Organisation for Security and Cooperation in Europe (OSCE). Set up in the happy heyday of east-west cooperation, the OSCE is a talking shop with some do-gooding bits attached. Its members include America and Canada as well as every country in “Europe” (including five ex-Soviet republics normally counted as Central Asian). Its activities range from promoting media freedom to arms control. And Russia, lately, has been increasingly critical of the OSCE, particularly its election-monitoring arm.

That is because, put bluntly, Russia now thinks it got a bad deal when the old cold war ended. The OSCE promotes an interfering “western” agenda of human rights and open elections. The associated treaty on Conventional Armed Forces in Europe, signed in 1990, allows America to do too much and Russia too little in Europe. NATO and the EU run riot—for example in bombing Serbia and recognising Kosovo—unconstrained by international law.

The first, unstated, aim of the new Russian plan, based on what Mr Medvedev calls “21st-century realities”, seems to be to weaken, supplant, or outright replace the OSCE. Russia has already put the OSCE’s election-monitoring outfit under intense political and budget pressure (and blocked its observers’ visas in both recent Russian elections). Conveniently, Kazakhstan, a Russian ally, will be running the OSCE (into the ground, some think) in 2010.

Another element in the Kremlin plan is to get the outside world to take seriously Russian-led outfits such as the Collective Security Treaty Organisation, the Eurasian Economic Union, the Russian-Belarusian Union and the Commonwealth of Independent States. These bodies are so obscure and bureaucratic that they make the even the lame-duck OSCE seem important. The West has shunned official contact with them, seeing them as mere vehicles for Russia’s post-Soviet grandstanding. The Russian plan would give them similar ranking to the EU and NATO.

A third element may be to promote the “Finlandisation” of Europe, by diminishing American influence (but probably not removing it: Russia likes having some Americans around in Europe in case the Germans start getting uppity).

Now Western countries, divided and distracted as never before, just as Russia is newly rich and confident, must decide what to do. Ignoring the plan would look rude and hypocritical: after years of stroppy whinging, Russia has at least come up with a positive idea.

The main response should be that security is not just about powerful countries and blocks striking legalistic deals; it is also about values. That was the breakthrough that launched the OSCE’s predecessor in 1973 in Helsinki, when the Soviet bloc traded acceptance of its borders for recognition that human rights crossed them. If Russia now chokes on the notion of a Europe-wide commitment to political freedom, the rule of law and the rights of small countries to determine their future, that is troubling. But it is says more about what’s wrong with Russia than about anything else.

Friday, July 25, 2008

Bulgaria/Romania corruption

Bulgaria, Romania and the EU

Balkan blushes
Jul 24th 2008 | SOFIA
From The Economist print edition


The European Union softens its criticisms of Bulgaria and Romania

BY THE polite standards of Brussels, it was quite tough. On July 23rd the European Commission issued critical reports on Bulgaria’s and Romania’s progress (or lack of it) in fighting corruption and spending European Union money. Yet after intense lobbying, the language was weaker than in the scalding drafts leaked earlier. And the commission dropped an explicit warning that Bulgaria was endangering its chances of joining the euro and the Schengen passport-free travel area.

Even so, the reports hit home, complaining of a “striking” absence of convincing results in Bulgaria’s anti-corruption fight, and of a “grave problem” over the “lack of accountability and transparency in public procurement” when spending EU funds. The commission announced severe sanctions, suspending aid worth as much as €486m ($770m). Without reform, the suspended sum will rise sharply by November.

Bulgaria’s prime minister, Sergei Stanishev, welcomed the softened language of his country’s report and promised an “action plan”. Outsiders treat all promises of improvement, along with such flourishes as the appointment of a well-regarded ex-ambassador, Meglena Plugchieva, to oversee the use of EU funds, with justified scepticism. Despite much shuffling of departments and expensively publicised initiatives, and what on paper look like the right laws and procedures, the glaring fact remains that Bulgaria’s efforts have shown almost no results in terms of convicting fraudsters or corrupt officials.

Indeed, public figures sometimes seem not just weak but malevolent. For example, the EU’s anti-fraud agency, OLAF, has accused high-ranking officials of being a “political umbrella” for gangs who have stolen millions of euros meant for Bulgaria’s backward and dirt-poor countryside. “Influential forces” in politics and the bureaucracy, suggested OLAF’s leaked letter, are “not interested” in punishing those linked to two notorious crime bosses.

Worries about Bulgaria and Romania, especially over their ability to administer nearly €38 billion promised by the EU up to 2013, are hardly new. In January it emerged that the man in charge of Bulgaria’s roads, Veselin Georgiev, had granted contracts worth hundreds of millions of euros to a company owned by his brother. The commission froze €144m for farming and road improvements, and Mr Georgiev resigned. So did the interior minister, Rumen Petkov, after reports that a drug gang had obtained secret internal documents from his ministry, and that illegal booze producers had traded money for favours from a senior crime-fighter. Mr Petkov is in charge of fund-raising for the Socialist (ex-communist) party, which heads the governing coalition and also won the presidential election in 2006.

Crime, corruption and a weak judicial system are overlapping problems. Not one of dozens of gangland killings since 2001 has been solved. The kidnapping of the president of a leading football club and, later, his wife within the past two months has highlighted the authorities’ seeming helplessness over organised crime.

What scandalises ordinary Bulgarians is that their country, the poorest in the EU, is missing a vital chance to modernise. Public services are dire—shown by a crisis this month in Sofia’s rubbish collection, which has left the streets piled with rotting piles of garbage. So foreign criticism, which in some countries might arouse defensiveness, is in fact welcomed. The EU’s popularity has rocketed, whereas the government’s negative rating is now as high as 73%. The country has lost, by some estimates, a quarter of its population since the early 1990s, shrinking from 10.5m then to as low as 7.5m now. That is a huge vote of no confidence by the public.

Parliament is another story. The government looks set to survive a no-confidence vote next week. A general election is due next summer, when a new centre-right party, headed by the mayor of Sofia, Boyko Borisov, is expected to do well. He attracts praise for his dynamism, though fastidious Bulgarians flinch at his background as an ex-wrestler, bodyguard and police chief: emblematic in their eyes of the political milieu that the country needs to dump.

In Romania, by contrast, politicians are relieved after escaping sanctions in a softly worded commission report on their anti-corruption and legal reform efforts. This too was watered down from the draft, itself weaker than some seasoned Romania-watchers had hoped. The commission bemoaned the lack of practical results but welcomed a “move in the right direction”. In Bulgaria, sadly, outsiders find it hard to see any movement at all.

If you wanted to discredit the EU, squandering taxpayers’ money in its most corrupt new members, Romania and Bulgaria, would be one way to go about it. Yet though Brussels is disappointed and even angry about the two countries’ performance since joining the club in January 2007, Eurocrats are not sure what to do. Sharp criticism and tough sanctions might merely demoralise those who are trying to make things better, as well as undermining the membership hopes of other Balkan countries. Despite everything, few believe that any of the new members would be better off out than in.

Geremek obituary

Bronislaw Geremek
Jul 24th 2008
From The Economist print edition

Bronislaw Geremek, a Polish historian and politician, died on July 13th, aged 76

HAD he been in the West, Bronislaw Geremek said, he would have stayed out of politics. Safe in his enclosing study, with the lovingly filled and refilled pipe and the esoteric books, his fame would have centred round investigations of vagabonds in medieval Europe. Instead, because he was in Poland, he chose struggle. “The intellectual must be engaged,” he insisted. “We are fighting for the very right to think.”

His life mirrored his country’s story, of disaster, reconstruction, freedom and frustration. And he shaped it. Without cultured supporters like Mr Geremek, the communist regime in Poland in the 1950s and 1960s would have been even less credible than it was. Without its wily mastermind, Poland’s opposition in the 1980s would have found it far harder to outwit its oppressors. Without “Bronek”, as his friends knew him, polyglot, tweed-clad and cosmopolitan, Poland’s return to the European family of nations would have been slower and less certain.

It took him some years to become one of the “grains of sand” that clogged the machinery of totalitarian rule. First he abandoned the Communist party, in 1968 after the Soviet invasion of Czechoslovakia; later he taught in Poland’s flourishing intellectual underground. But his moment of glory came in August 1980 when, in his Volvo, he drove to Gdansk to deliver the Warsaw intellectuals’ message of support to the striking workers at the Lenin shipyard. He had been chosen mostly for his car; it was the most reliable motor the eggheads had.

He forged an unlikely but effective alliance with Lech Walesa, the earthy, mercurial leader of the nascent Solidarity trade union. “The most honest, truthful and intelligent person I ever knew,” Mr Walesa said of him, forgetting the anti-intellectual gibes he had chucked at him. Geremekian guile helped win a temporary victory: a few precious months of semi-freedom when Poles could speak, meet and publish, before the military crackdown in December 1981. Mr Geremek was interned, released and arrested again; in prison, he shovelled coal. The authorities confiscated his passport, booted him out of his university job, and prevented him publishing even purely academic work. “There’s one word in the book that they object to,” he told an interviewer. “It’s ‘Geremek’.”

The winds of history

That name was not the one he had been born with. He was the son of Borys Lewertow, a Jewish businessman and teacher, in a world that was soon destroyed by the Nazis. He referred to those years as a “closed chapter”, an experience that meant he could never be a writer as he intended, for he would never understand the horrors he had seen. “I saw my world go up in flames before my eyes…the little world of family continuity…of values, principles and rules.” He escaped from the Warsaw ghetto through a hole in the wall; his father died in the camps.

Sheltered by a Catholic Pole who later married his mother, the renamed Bronislaw Geremek survived the war. In 1950, at the height of the Stalinist terror in Poland, he joined the Communist party. He was 18. As a trusted party member (and talented historian), he was allowed to travel to the Sorbonne to study, a rare privilege. When critics later attacked him for this, he said he had been “seduced” by the socialist ideal.

And he more than made up for it. Released from jail in 1983 as communist rule in Europe neared its end, Mr Geremek devoted himself to hastening the regime’s downfall. Other Polish opposition figures could be waffly or provincial; it was hard to see them running the country. Not he. Urbane, brainy and funny, he seemed the embodiment of Poland’s hoped-for future. All that was necessary for the downfall of communism, he used to say, was for the barriers of fear and passivity to fall.

At the “round-table” talks in the spring of 1989, it was Mr Geremek who devised the terms for the communist surrender. The key was elections, free enough for the Solidarity-backed candidates to have a chance of winning. In fact, the result was a rout; and once Poland, the biggest country in eastern Europe, was free, the fall of the Berlin Wall was only a matter of time. The winds of history, Mr Geremek knew, would do the rest.

The country’s position in 1990 still seemed perilous. Would the economy survive the shock of transition? Would Poland ever be ready join the EU, let alone NATO? Mr Geremek was sanguine. And as a senior member of parliament and, from 1997 to 2000, foreign minister, he made things sure, signing the agreement in 1999 that brought Poland into NATO—“anchored for centuries” in Europe, as he hoped. His last job was as a member of the European Parliament, a distinguished and passionate member of an often undistinguished institution. “We have created Europe,” he said. “Now we have to create Europeans.”

His critics saw it all differently. The round-table deal was a canny fix, in which weak-willed opposition figures allowed the cronies of the old regime to maintain their power. That approach prompted the demand in 2006 for all public figures to admit any past collaboration with the communist authorities. Mr Geremek responded, echoing Dreyfus, “Je refuse”. The answer of an historian, a European, and a man of moral courage.

Europe View no 91

Europe.view

For your freedom and ours
Jul 24th 2008
From Economist.com


Captive nations inside Russia

Is Cornwall a “captive nation”? As last week’s Europe.view noted, influential Russians are pushing for America to rewrite the resolution that marks its Captive Nations Week (the third week in July), to make it clear that communism, not Russia, is the target. An even trickier question is not what other former Soviet-ruled countries make of this, but of Russia’s own internal composition—which includes places that some might also count as “captive”.

Countries’ borders grow and shrink, partly by consent, but also by conquest. Nations—defined, loosely, as people sharing a common language or culture—may find themselves no longer masters in their own house. Some may despair. Others start plotting.

Practicality is not the main determinant. In Cornwall, which lost its independence around 875AD, a doughty band of campaigners has revived the language and hopes to win back more rights. But compared to Scotland, where the separatist tide is running strongly, theirs looks like a lost cause. So does secession in Vermont, say, or Hawaii. In Russia, at least for now, those reviving, say, the Siberian language, or commemorating the short-lived and abortive independence of the Siberian republic in 1918, look a lot closer to Cornish nationalism than Scottish. But for how long?

Since 1991 the state calling itself the Russian Federation has been a miniature, de-communised version of the Soviet Union, paying lip-service to multi-ethnicity, but withholding actual cultural or political freedom from non-Russians: when Tatarstan wanted to write the national language in the orthographically better-suited Latin alphabet, the Kremlin insisted that Cyrillic was the only script to be used officially in the Russian Federation, regardless of practicality.

Since 1989, Russia's Muslim population has increased by 40% to about 25m. By 2015, Muslims will by some estimates make up a majority of the army, and by 2020 a fifth of the population—by far the majority in some regions.

How many of those Muslims will look to the tolerant “Euroislam” pioneered in the Tatar capital, Kazan, in the early years of the last century, or to indigenous Sufi forms, and how many may look abroad for more radical forms of Islam?

Added to ethnic and religious discontent is a growing regional consciousness. The colossal bribe-collecting opportunities created by Putinism have heightened the divide between big cities (particularly Moscow) and the rest of the country.

Heightened resentment does not mean that Russia is going to fall apart as the Soviet Union did. For now, no part of the Russian Federation looks remotely like being a viable independent state. Even the most ardent supporter of Captive Nations Week would not argue that the “Idel-Ural” that it cites (present-day Tatarstan, Bashkiria and their Finno-Ugric neighbours, briefly independent after 1917) has any chance of a Baltic-style breakaway.

But if anything can upset the post-1991 apple cart it will be ethnic-Russian chauvinism and heavy-handedness. As Paul Goble chronicles in his “Window on Eurasia” bulletins (a must-read for anyone interested in the politics of post-Soviet ethnicity), the Sochi Olympics have fuelled the revival of national consciousness among the Circassians. For this far-flung ethnic group, scattered throughout Asia Minor and the Levant by near-genocidal Czarist brutality, seeing the Olympics being planned at the site of their greatest historical tragedy is hugely offensive: some compare it to how Jews would react to a big international sporting festival being held at Ravensbrück or Dachau.

Russian ethno-nationalism, coupled with bad government, may disillusion Russians of all stripes with the lingering imperial features of Russian statehood. If talk of “captive nations” jars Russian sensibilities, the best answer is the great slogan of freedom-lovers in the Czarist empire: “for your freedom and ours”.

Saturday, July 19, 2008

Captive Nations Resolution (original)

The original Captive Nations resolution of the U.S. Congress
PUBLIC LAW 86-90

Whereas the greatness of the United States is in large part attributable to its having been able, through the democratic process, to achieve a harmonious national unit of its people, even though they stem from the most diverse of racial, religious, and ethnic backgrounds; and

Whereas this harmonious unification of the diverse elements of our free society has led the people of the United States to possess a warm understanding and sympathy for the aspirations of peoples everywhere and to recognize the natural interdependency of the peoples and nations of the world; and

Whereas the enslavement of a substantial part of the world's population by Communist imperialism makes a mockery of the idea of peaceful coexistence between nations and constitutes a detriment to the natural bonds of understanding between the people of the United States and other peoples; and

Whereas since 1918 the imperialistic and aggressive policies of Russian communism have resulted in the creation of a vast empire which poses a die threat to the security of the United States and of all the free people of the world; and

Whereas the imperialistic policies of Communist Russia have led, through direct and indirect aggression, to the subjugation of the national independence of Poland, Hungary, Lithuania, Ukraine, Czechoslovakia, Latvia, Estonia, White Ruthenia, Rumania, East Germany, Bulgaria, mainland China, Armenia, Azerbaijan, Georgia, North Korea, Albania, Idel-Ural, Tibet, Cossackia, Turkestan, North Viet-Nam, and others; and

Whereas these submerged nations look to the United States, as the citadel of human freedom, for leadership in bringing about their liberation and independence and in restoring to them the enjoyment of their Christian, Jewish, Moslem, Buddhist, or other religious freedoms, and of their individual liberties; and

Whereas it is vital to the national security of the United States that the desire for liberty and independence on the part of the peoples of these conquered nations should be steadfastly kept alive; and

Whereas the desire for liberty and independence by the overwhelming majority of the people of these submerged nations constitutes a powerful deterrent to war and one of the best hopes for a just and lasting peace; and

Whereas it is fitting that we clearly manifest to such peoples through an appropriate and official means the historic fact that the people of the United States share with them their aspirations for the recovery of their freedom and independence:

Now, therefore, be it

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That:

The President of the United States is authorized and requested to issue a proclamation designating the third week in July 1959 as "Captive Nations Week" and inviting the people of the United States to observe such week with appropriate ceremonies and activities. The President is further authorized and requested to issue a similar proclamation each year until such time as freedom and independence shall have been achieved for all the captive nations of the world.

Europe view no 90

Europe.view

Who’s captive now?
Jul 17th 2008
From Economist.com


A question about Russia

Each year since 1959, in the third full week of July, America has marked Captive Nations Week. The original Congressional resolution is worth reading. It highlights both what the drafter, the late Lev Dobriansky, saw as the success of the United States in “e pluribus unum” (making one nation out of many), and the failure of Communist empires to do the same. The continued celebration of the week is something of a totem for old cold warriors who believe that the victories of 1989-91 are still sadly unconsummated.

Yet the resolution's wording rings oddly. The list of “captive nations” reads: “Poland, Hungary, Lithuania, Ukraine, Czechoslovakia, Latvia, Estonia, White Ruthenia, Rumania, East Germany, Bulgaria, mainland China, Armenia, Azerbaijan, Georgia, North Korea, Albania, Idel-Ural, Tibet, Cossackia, Turkestan, North Viet-Nam, and others [sic, throughout]”.

It is hard to find rhyme or reason in that, even in its original context. Cossacks are Russian patriots; their beastly treatment under Soviet rule does not equate to a desire for national independence. Others whose history gives them every cause for complaint, such as the Circassians, don't appear at all. Is the aim of the resolution ethnic self-determination, or the destruction of communist rule? As it stands, the two are conflated.

Moreover, the phrase “Communist Russia” is wince-making. Many Russians find it unfair or outright racist to link Soviet rule, under which more Russians perished than any other nationality, with Russia itself. From a Russian point of view, it can be argued that the motherland was the greatest captive nation of all, its destiny hijacked by murderous ideologues (many of them, incidentally, not Russians).

A seminar this week in Moscow may mark the start of another push to have the resolution revised. One of the initiators, the Russian-American academic Edward Lozansky, believes that a differently phrased resolution could be the start of a real rapprochement between modern Russia and the countries of central and eastern Europe.

But there are two snags. One is that Soviet rule, particularly in its latter decades, did indeed mix Russian chauvinism with proletarian internationalism. The forcible Russification policies in the Caucasus, the Baltic states and elsewhere have left lasting bitterness.

Secondly, the Russian Federation is a work in progress. Around a fifth of the population are not ethnic Russians. Some are deeply integrated and count themselves as patriotic citizens of a common state. But others aren't. The spectrum of discontent ranges from separatists pursuing their cause by violent means (so far, thankfully, confined to the Caucasus) to moderate demands for greater cultural autonomy.

Bad government stokes such grievances, just as the rule of law and political freedom defuse them. America conquered the Sioux and the Cherokee, and treated its aboriginal population abominably for decades. But the political and legal systems at both state and federal levels, albeit imperfect, now work well enough to make separatism both fanciful and unnecessary.

The pervasive feeling of injustice and voicelessness in the Soviet system stoked captives' desire to be free, and fatally corroded a system already vulnerable because of its economic failure. But if Soviet legitimacy was based on phoney ideology, what of the new Russian state's identity? Is it a Swiss-style federation of equally sovereign peoples? Or is it an ethnically Russian state in which non-Russians are outsiders, guests or immigrants? The first would require an unprecedented degree of tolerance from ethnic Russians. The latter would relegate the 20% of the population to permanent second-class status.

Ever since 1991, the answer, usually unspoken, has been “don't know”. Next week's Europe.view will suggest some answers—and, if anyone is puzzled, have more on the mysterious country of “Idel-Ural”.

book reviews

Russia

Doom, gloom and boom
Jul 17th 2008
From The Economist print edition


Crooks and spooks run amok in Russia


The Age of Assassins: The Rise and Rise of Vladimir Putin
By Yuri Felshtinsky and Vladimir Pribylovsky



Gibson Square Books; 320 pages; £16.99

Buy it at

Amazon.co.uk

Putin's Labyrinth: Spies, Murder, and the Dark Heart of the New Russia
By Steve LeVine



Random House; 194 pages; $26

Buy it at

Amazon.com

From Soviet to Putin and Back: The Dominance of Energy in Today’s Russia
By Michael J Economides and Donna Marie D'Aleo



Energy Tribune Publishing; 464 pages; $29.99

Buy it at

Amazon.com

Petrostate: Putin, Power, and the New Russia
By Marshall I. Goldman



Oxford University Press; 256 pages; $27.95

Buy it at

Amazon.com

THE comforting conventional wisdom is that after Russia’s chaos and humiliation in the 1990s, eight years of tough rule by Vladimir Putin has brought prosperity and stability. Russia is now on course to become free and law-abiding. These four books suggest that mild panic might be the better part of wisdom.

The most alarming (or alarmist) of the books is “The Age of Assassins”. It stitches together the most lurid scandals in post-Soviet history in a narrative of infamy and camouflage, arguing that Russia is run by a gang of murderous ex-KGB men. Though Yuri Felshtinsky and Vladimir Pribylovsky present “evidence” to support their case, what they really do is raise questions of varying likelihood. Did Russia’s secret services kill hundreds of people in 1999 in staged “terrorist” bombings to help Mr Putin’s tough image (not as mad as it sounds)? Does the lack of evidence about Mr Putin’s early childhood point to a hidden family in Georgia (not really)? What is the extent of his personal fortune (probably huge) and how exactly did he spend his years in the St Petersburg bureaucracy (murkily)?

As the authors point out, witnesses and those who investigate these mysteries tend to end up dead. That is sinister, but not proof. Idiosyncratic structure, layout and syntax also blunt the book’s appeal, as does its gentle treatment of Boris Berezovsky, a prominent tycoon in the 1990s who now lives in exile in London. Any discussion of Mr Putin’s rise to power is incomplete without mention of his sponsorship by, and revenge on, Russia’s arch-intriguer.

The same ground is covered more professionally by Steve LeVine in “Putin’s Labyrinth”. His material also includes mysterious murders, but he follows the fact-based conventions of American journalism, an art at which he excelled during a decade of reporting from the ex-Soviet area. His reconstruction of a savagely botched anti-terrorist operation at a Moscow theatre is particularly effective.

The search for balance does sometimes lead him to give undue weight to shadowy hangers-on: splitting the difference between liars and madmen does not necessarily produce the truth. But his thoughts about the casual lethality of power and wealth in Russia are all the more convincing for being cautious.

“From Soviet to Putin and Back” is an encyclopedic history of Russia’s oil industry, peppered with acerbic remarks about its politics. Some of the ground was covered more readably in a 2007 book by Mr LeVine: “The Oil and the Glory” (Random House). But Michael Economides and Donna Marie D’Aleo offer an invaluable first-hand account of the way in which Soviet state planners abused their country’s natural riches and Kremlin kleptocrats drove out foreign investors. Disappointingly, the book tails off before fully answering the big question: where is Russia headed now? Will the ex-KGB men now running the country’s biggest hydrocarbon firms put profit first or geopolitics or simply self-enrichment?

No such doubts cloud Marshall Goldman’s mind. One of America’s most seasoned Kremlin-watchers, his snappily written “Petrostate” argues boldly that Russia has become an energy superpower with a strong political agenda. Readers will wince in disbelief at the way in which Russia has outmanoeuvred the European Union in tussles over pipelines. And his description of the way that Russian money has influenced politics in both Germany and America is worrying.

Trying to find a single coherent account of events in a country as diverse as Russia is risky. Mr Putin’s rise to power—and his recent move out of the Kremlin to be prime minister—cannot be explained solely as part of a putsch by the old KGB (indeed Mr LeVine thinks that thesis to be “vastly exaggerated”). Economic reformers in high office may be marginalised at times but they are not there just as decoration. Russia can be a bully but also yearns for international respect. Even so, murder is murder.

Sunday, July 13, 2008

Soviet Cars book review

Soviet cars

Spluttering to a halt
Jul 10th 2008
From The Economist print edition



Cars for Comrades: The Life of the Soviet Automobile
By Lewis H. Siegelbaum



Cornell University Press; 309 pages; $39.95 and £20.50

Buy it at

Amazon.com
Amazon.co.uk

THEY were the butt of jokes in the West. (“How do you double a Lada’s value? Fill up the tank”). Inside the Soviet Union, however, the quantity and quality of the cars it produced epitomised both the system’s failure and the capitalist world’s advantage.

Cars bring freedom of movement (at least until the roads are full of them) and symbolise personal aspiration: both were frowned on in the Soviet Union. In “Cars for Comrades”, Lewis Siegelbaum, a professor at Michigan State University, provides extensive examples of the mental knots in which the Communist leaders tied themselves, wanting on the one hand to boast about their superiority over the West on all fronts, and being unable and unwilling to match it when it came to cars. A revealing bit of Soviet jargon applied to owners of cars was chastnik, meaning, roughly, a suspicious private person. Until the early 1960s, Mr Siegelbaum reports, vandalism against private cars was dismissed by the police as an understandable expression of egalitarian sentiment.

“Cars for Comrades” is a bit too generous. The truth was that even for Communist Party members, a private car was a huge and barely obtainable luxury for most of the decades of Soviet rule. Only in 1972 did the Soviet Union begin producing more private cars than trucks. And once it did, as Mr Siegelbaum aptly notes, it sowed the seeds of its own destruction. One reason, of course, was the glaring unfairness. For the Soviet elite, cars were plentiful. Some, like Leonid Brezhnev, had big collections of Western cars. The system also provided luxury limousines such as the sleek black ZIL. These were unreliable and thirsty, but a horde of mechanics took care of them.

As you became less important, life got worse. Lower down the range, there was the Volga, a mid-size saloon whose interior tended to fill with petrol fumes. The Lada was an obsolete Fiat, produced at the Togliatti factory south-east of Moscow: bought new, it required extensive repair in order to become roadworthy. Soon after that it would start rusting. Getting it serviced was a nightmarish process involving long waits, the use of personal favours, and unpleasant discoveries (light-fingered mechanics would steal scarce items such as the wing mirrors or windscreen wipers).

Soviet cars weren’t all bad: the excellence of Soviet engineering in the military field sometimes filtered through to civilian life. The Niva, an adapted army jeep, was a highly-strung but handy 4x4; oddly it is unmentioned in the book. Your reviewer bought a new one for $4,000 in 1998. It caught fire shortly after purchase, but then gave excellent service until its gearbox seized up four years later.

But those were rare exceptions. The worst Soviet cars were almost comical: when the Oka was launched in 1987, Mr Siegelbaum notes, “like the Zaporozhets [its predecessor], with which it shared a diminutive size and lack of safety features…it quickly became the subject of horrifying stories and mordant humour”. And for ordinary citizens, getting hold of even the worst rattletrap involved many years of waiting.

Even good cars fare poorly in Russia’s climate. The harsh winters, sloppy construction and scanty maintenance mean bad roads; salt and grit take their toll on bodywork. It is not surprising that Russia’s elite nowadays favour huge jeeps, invariably foreign-made. It is a pity that Mr Siegelbaum’s book has such poor photographs: for those who never experienced the true horrors of Soviet-era motoring, words are not enough.

Cars for Comrades: The Life of the Soviet Automobile.
By Lewis H. Siegelbaum.
Cornell University Press; 309 pages; $39.95 and £20.50

Missile defence

Getting to first base
Jul 10th 2008
From The Economist print edition


An American missile-defence radar in the Czech Republic infuriates Russia




IS IT wise to bargain hard with your best friend? This is the question for loyal Atlanticists of the Czech Republic and Poland, as they consider America’s planned missile-defence bases.

The Czech approach is that anything that bolsters the fraying transatlantic security relationship is welcome. Neither the European Union nor NATO seems like a fully reliable bulwark against a resurgent Russia, so hosting an important American radar base adds a valuable extra dimension to Czech security. Condoleezza Rice, America’s secretary of state, signed a deal on the radar this week in Prague. Although around two-thirds of Czechs oppose the radar, the government seems confident of surmounting the final hurdle, a vote in parliament.

The Polish approach is more muscular. In exchange for hosting a base with ten interceptor rockets (designed to deter any Iranian missile attack on America or Europe) the government has asked for billions of dollars to modernise its armed forces, plus Patriot air-defence missiles. Having first dismissed this out of hand, the Americans have shifted a bit, offering a temporary deployment of Patriots.

But no deal has yet been reached. Poland’s president (who wants a deal at any price) is embarrassingly at odds with the government (which doesn’t). Neighbouring Lithuania says it will happily host the missiles. The Americans sound huffy but are anxious to clinch the deal in time to give a rare foreign-policy success for the outgoing Bush presidency.

Yet success is not the word that leaps to every European lip. Some see the entire plan as divisive and unnecessary. America now portrays the missile-defence bases as a NATO project, but few see any difference. Vladimir Putin, Russia’s former president, threatened to target nuclear missiles on European countries that co-operated with the missile-defence plan. This week the Russian foreign ministry said that the response to an American deployment would be not merely diplomatic, but “military-technical”. That could mean bolstering Russian conventional forces in Kaliningrad, or in Belarus.

America swiftly rebuked Russia for its “bellicose rhetoric”. It says Russia has nothing to fear from the installations and has been offered the right to join the project. The Poles and Czechs already feel uneasy about this offer (made over their heads). They are also fretful about American politics. What if an Obama administration watered down or cancelled the plan, leaving those who supported it twisting in the wind from the east?

Another low-key and tentative reflection on Anglo-Russian relations, this time from the Sunday Telegraph

Russia sees us as pawns on its chessboard


By Edward Lucas

So now we know: the "new Russia" of Dmitri Medvedev looks very like the old one of Vladimir Putin.

Consider the events of the past week. MI5 accused its Russian counterpart of murder; in return, Russian media "unmasked" a senior UK diplomat as a spy. Britain's largest company, BP, came closer to losing its flagship investment in Russia. The deal to base a US radar station in the Czech Republic was met by a Russian threat of a "military-technical" response. Gordon Brown's meeting with Mr Medvedev was as icy as any Anglo-Russian summit in the past 20 years. On Friday night, Russia sided with China to block UN sanctions against Zimbabwe.

Over the past eight years, starting with the rise of Mr Putin, Russia has recovered both its confidence and its capability. But to do what?

Some argue that like any big country, Russia is just pursuing its national interest, and that this is nothing sinister. Such a view ignores both a very definite strategic plan, born of the peculiar Russian mindset, and the role of chauvinism, xenophobia and the desire for revenge.

Russian thinking is still rooted in a Soviet approach that leaves little room for the concept of mutual benefit. The "zero-sum" game is deeply entrenched: if something is good for the West, it is bad for Russia, and vice versa.

That chimes neatly with the story pushed on Russian state television that treacherous Russian politicians connived with the West in the 1990s to weaken the country. We promoted chaotic economic reform and phony democracy that enriched a handful and impoverished the rest, leaving Russia near disintegration until it was rescued by Putin's firm.

That is preposterous. In fact, the West provided billions of dollars to prop up Russia in the 1990s; it failed not because of our bad advice, but because of its appallingly difficult starting position and weak Russian leadership. Yet for that mythical wrong, Russia now wants revenge.

The first big push is for influence in what Russia sees as its own back yard: the old Soviet European empire, viewed not as countries that freely prefer the West, but former allies hijacked by nationalists and Western spin doctors.

The second part of the plan is to neutralise the big countries of western Europe and weaken the Atlantic alliance. Russia (population 140 million and GDP of $1trillion) is smaller and weaker than Europe (450 million and $11trillion). Yet like an able chess player, it uses a smaller number of well-positioned pieces to overwhelm a seemingly superior opponent.

Its tactics are simple: to use the promise of long-term, dependable gas supplies to build ties with energy-hungry countries such as Germany; to build gas pipelines that circumvent countries such as Ukraine; to exploit anti-US sentiment in the West on issues such as Iraq and missile defence; to buy politicians, parties and whole countries where the opportunity presents itself.

The key to Russia's success is linking political and economic issues, and playing one country off against another. If the EU wants to help Georgia, Russia uses Greece to block it. If Nato wants to help Ukraine, Russia invokes German help. When France raised human rights concerns, the Kremlin offered huge investments in a car plant and a gas field in exchange for silence.

It is working. Germany's ties with Russia now trump those with Poland, nominally its chief east European ally. Germany leads the opposition in Nato to a clear membership timetable for Ukraine and Georgia.

Both countries are threatened with dismemberment by Russia, which is stoking separatism in the Ukrainian province of Crimea, and has all but annexed two provinces of Georgia. In protest against Russian military overflights, Georgia has recalled its ambassador from Moscow. Nobody in the West seems to notice. The US, the final guarantor of our security, is discredited and distracted.

Russia's skilful pipeline politics has wrecked European attempts to diversify the continent's energy supplies. An EU-backed project called Nabucco, which would bring gas from Central Asia to Europe via Turkey and the Balkans, has been kyboshed. The Russian pipelines of Nord Stream (in the Baltic) and South Stream (across the Black Sea) form an effective pincer movement, eagerly backed by key Russian allies such as Germany and Austria, leaving Ukraine and Poland open to Russian energy blackmail.

Russia is a big investor in our economies; our bankers salivate at prospect of Russian bonds and stocks. The presence of Gerhard Schröder, the former German chancellor, on the board of the Nord Stream gas pipeline epitomises the way in which Russian influence has penetrated deep into our political system. Checkmate is looming.

  • Edward Lucas is author of The New Cold War (Bloomsbury, £18.99)
  • Friday, July 11, 2008

    europe view no 89

    EUROPE

    Europe.view

    A plague on small businesses
    Jul 10th 2008
    From Economist.com


    A moving story of Polish bureaucracy

    IN THE bureaucrats’ ideal world, people stay still. Movement creates unpredictability, uncertainty, confusion and the possibility that people will dodge taxes or defraud the taxpayer.

    So in any country, the state creates a few obstacles to discourage too much flightiness. In Germany and many continental countries it is a minor misdemeanour not to register your home address with the authorities. You need official approval to change your name.

    The Anglo-Saxon tradition is different, allowing people to stretch or shrink their names at will. Posh Anthony Lynton-Blair can become plebeian Tony Blair. You can even change your name to something completely different on a whim, so long as you don’t obtain money dishonestly as a result. Similarly, you don’t have to tell the British authorities where you live. But if you have a business, it must have a real address, available to anyone who asks, with a nameplate on the door showing the physical location.

    But in the ex-communist countries that have failed to reform public administration (ie, most of them) the lingering control-freakery of the Bolshevik mindset and the legacy of the Ottoman, Hapsburg and Czarist bureaucracies make these requirements far more onerous.

    Take for example, the rigmarole involved in moving a one-person business (owned by a friend of your columnist) from one district of Warsaw to another. The first stage is for the owner to change her personal ID card. That takes a month. Then the business owner goes to the municipal office in the place she is leaving and informs them of the move and the new address. That information makes its way at snail’s pace through the Polish bureaucracy to the other municipal office. It typically takes three to four weeks.

    During this period the business is in limbo. It is not clear which is the legal address: the old one or the new one? Where should taxes be paid? Failure to comply involves time-consuming and even costly penalties.

    When the municipal office is satisfied that the move is OK, the next stage is to go to the state statistical office and have officials there register the company change of address, and update the “REGON”—the state statistical number. Armed with that, and the new company stamp, the owner then has to go to her bank and write an annex to her company’s contract with it. Then the same procedure happens with her accountant. It is hard to see why this is a legal requirement.

    If the company is still in business, the owner must take the title deed or rental agreement to the new premises, notarised, and then embark on changing the records at the tax office. Here, as with all the government offices mentioned, the opening hours are inconveniently short and often unpredictable, and the queues long. Knowing the right person can speed things up considerably. But not everyone wants that kind of friendship: obligations cut both ways. The applicant then fills out several forms, each lengthy and different, which are submitted to the offices dealing with value-added tax, income tax and so forth.

    Once these are processed, the company can start worrying about its customers, costs, and what its competitors have been up to in the meantime. But one obstacle still remains: dealing with the ZUS social insurance bureaucracy. That is time-consuming too, but need not be done immediately.

    It is worth noting that none of this—at least in the Warsaw offices dealing with your columnist’s friend—could be done online. Poland’s government talks happily about its plans for streamlining the state machinery. For the country’s long-suffering small businesses, they can’t start soon enough.

    This nuanced and cautious take on Anglo-Russian relations from the Daily Mail.....

    Tuesday, July 08, 2008

    Romania corruption scoop

    This was largely the work of the excellent Economist stringer in Romania, Valentina Pop


    Corruption in Romania

    In denial
    Jul 3rd 2008 | BRUSSELS AND BUCHAREST
    From The Economist print edition


    The European Union conceals Romania’s backsliding on corruption

    HOW bad is corruption in Romania? Somebody well-placed to answer is Willem de Pauw, a Belgian prosecutor who is a veteran European Union adviser on the matter. Last November he wrote a report that concludes: “instead of progress in the fight against high-level corruption, Romania is regressing on all fronts…if the Romanian anti-corruption effort keeps evaporating at the present pace, in an estimated six months’ time Romania will be back where it was in 2003.”

    This report has not been published (it is now available here). The European Commission’s report in February was a lot softer. “In its first year…Romania has continued to make efforts to remedy weaknesses that would otherwise prevent an effective application of EU laws, policies and programmes. However, in key areas such as the fight against high-level corruption, convincing results have not yet been demonstrated.”



    That falls far short of admitting that Romania’s authorities are wilfully failing to co-operate. Some of Mr de Pauw’s most striking examples did not appear in the official report either, or were buried in footnotes. Mr de Pauw confirms his authorship but refers inquiries about it to the commission. Officials say he was consulted on the issue. Their February report, they add, was a “factual update”, not an assessment of Romania’s progress. That will come in a fuller report later this month.

    It would be encouraging if this included some of Mr de Pauw’s points. One hot example is the cases that courts have sent back to prosecutors since Romania’s constitutional court struck down an anti-sleaze law. Mr de Pauw’s report said that “basically all” high-level corruption trials had been rebuffed by courts, which it was “statistically impossible to attribute [to] the coincidental occurrence of procedural mistakes in individual cases. Other factors than legal-procedural considerations have clearly played a major role.” He added that “the Romanian judiciary and/or legal system appears…unable to function properly when it comes to applying the rule of law against high-level corruption. Indeed, more than five years after the start of Romania’s anti-corruption drive, the public is still waiting for one single case of high-level corruption to reach a verdict.”

    Events also support Mr de Pauw’s warning that Romania could soon regress to the level of 2003. Take the case of Adrian Nastase, a former prime minister charged with several counts of corruption and bribery. He has now been exonerated by the parliamentary committee on legal affairs. A lobby group, the Initiative for a Clean Justice, complains that “we are witnessing the transformation of parliamentarians into judges and of the judicial committee into an extraordinary court.” A full parliamentary vote on the committee’s recommendation has been postponed until after the EU’s July report. But Mr Nastase and his supporters are already considering a presidential bid in 2009.

    In retrospect, the EU relied too much on individual politicians to back Romania’s anti-corruption drive, notably Monica Macovei, a much-admired justice minister. She was fired soon after Romania joined the EU in January 2007. Membership made the political elites feel they were off the hook. Mr de Pauw offers a bleak verdict. “Many of the measures that were presented, before accession, to be instrumental in the fight against corruption, have been deliberately blunted by parliament or the government immediately after accession…all major pending trials concerning high-level corruption, started just before accession and only after many years of hesitation, have now been aborted and are, most probably, definitely abandoned for all practical purposes.” He also cites the weakening of the role of the National Integrity Agency, meant to limit politicians’ conflicts of interests and verify their assets, and also amendments to the penal code before parliament that will “fatally affect” the investigation of corruption.

    All this, he says, shows “the intense resistance of practically the whole political class of Romania against the anti-corruption effort”. Mid-level Eurocrats, as well as some foreign diplomats in Bucharest, agree. The problem is that countries such as France pushed to get Romania into the EU early for their own reasons, whether financial or geopolitical. And the political pressure may now be to cover up, not expose, the problem. If the EU’s July report on Romania is as anodyne as the previous one, suspicions will only grow.

    Commie jokes

    Communist jokes

    Funny bones
    Jul 3rd 2008
    From The Economist print edition



    Hammer & Tickle: A History of Communism Told Through Communist Jokes
    By Ben Lewis



    Weidenfeld & Nicolson; 354 pages; £14.99

    Buy it at

    Amazon.com
    Amazon.co.uk

    JOKES under communism were not just a welcome contrast to the dreariness of everyday life; they also helped undermine it. For example. “How do you deal with mice in the Kremlin?” “Put up a sign saying ‘collective farm’. Then half the mice will starve and the others will run away.”

    Ben Lewis has collated some of the best, and best-known, jokes that were told under more than seven decades of communist rule. His work is based on more than 40 previously published collections ranging from underground selections, to those published by anti-communist émigrés, and a large sprinkling that appeared after 1989, once it was safe to air them.

    Most make you giggle and groan in equal measure. It is worth remembering that in some countries and some eras, being overheard telling or laughing at just one of these jokes could mean you died in a labour camp; there are plenty of jokes about that too. “Who built the White Sea canal [Stalin’s single most murderous slave-labour project]?” “The left bank was built by those who told the jokes, and the right bank by those who listened.”

    But the aim of “Hammer & Tickle” is not just to be amusing and poignant, but also to instruct. The author makes the (to him) rather depressing discovery that most communist-era jokes were just recycled versions of older ones. Take this example, which is told twice in the book: a flock of sheep approaches the Finnish border in a panic, pleading to be allowed entry. “Beria [Stalin’s secret police chief] has ordered the arrest of all elephants,” they explain. “But you’re not elephants,” reply the Finnish border guards in puzzlement. “Yes, but try explaining that to Beria.” That sounds spot-on for the Soviet Union in the 1930s. But it can be traced to a Persian poet in 12th-century Arabia, where it involves a fox running away from a royal ordinance that in theory applies only to donkeys.

    Unfortunately, Mr Lewis is not content to laugh and remember. He wants a “serious comparative study” of the subject. It is tempting to think that he is joking, and that his theoretical elaborations about the true significance of communist-era jokes are a subtle parody of the way that modern literary critics so often miss the point of the texts they write about. It is almost comical to read his po-faced but pointless consideration of whether jokes about Stalin predated Stalin’s own jokes—almost comical, but not quite.

    If Mr Lewis is indeed joking, he pushes it too far. The potted histories of communism he provides as context are leaden and sometimes sloppy. The travelogue of his meetings with jokesters across the Eastern block is fun at first but then becomes dull. In particular, the conceit of linking his research to the ups and downs of his relationship with a tiresomely pro-communist (and humourless) girlfriend from East Germany is jarringly intrusive and self-referential.

    No matter: rather than worrying about whether humour was ultimately a safety-valve for communism or subversive of it, the reader can skip ruthlessly and concentrate on the jokes, and the remarks people have made about them. “Jokes against the Party constitute agitation against the Party,” raged Matvei Shkiriatov, a zealous Stalinist, at a Central Committee Meeting in January 1933. That was echoed by Hitler’s propaganda chief, Josef Goebbels, in 1939, when he wrote: “We will eradicate the political joke.” But they didn’t.

    Many of the jokes told about past Soviet leaders are now told about Vladimir Putin (Stalin appears to him in a dream and says: “I have two bits of advice for you: kill your opponents and paint the Kremlin blue.” Putin asks, “Why blue?”). The world would be a poorer place without the jokes sparked by ridiculous yet ruthless rulers. But Russia would be a lot happier.

    europe view no 88

    EUROPE

    Europe.view

    Red turns grey and gloomy
    Jul 3rd 2008
    From Economist.com


    Keep an eye on the mood of the unlucky millions

    Get article background

    WHETHER you call it transition or convergence, the message is the same. Cut off from the outside world by decades of totalitarian rule, the ex-communist countries have mostly caught up fast. That contrasts pleasantly with the years after the change when poverty soared, trade slumped, and public services frayed. In the six years since the Russian financial crash of 1998, 50m people (out of 400m in the whole region) moved out of poverty. High oil prices aside, competition, banks, brains, roads and good government have emerged indubitably as the fuel for growth, and the more you have of them, the better the results.

    The idea of inevitable and accelerating progress is comforting. But as a comprehensive new study from the World Bank shows, the policies that worked in recent years are not enough to keep the future rosy, particularly for the ex-Soviet countries likely to stay outside the European Union in the next decade or so. They are still dependent on low-skilled business and natural resources. Competition, both internal and from foreign firms, is lower; as a result productivity lags. Even the more successful countries shouldn’t be complacent: labour shortages, not unemployment, are already a problem; that will get worse because of bad education systems and a fast-ageing workforce.

    The danger is that a lucky globalised few enjoy the benefits of integration in the world economy, while ill-educated chunks of the population and backward regions get left behind. That’s both a waste, and politically dangerous.

    The World Bank’s main message is “more of the same”. Competition, for example, drives up standards. So reducing barriers to foreigners (such as clogged ports and peculiar local standards) is one key; avoiding political favouritism at home is another.

    The bank also suggests a cocktail of new policy measures, under the headline “Innovate, Include and Integrate”. Labour-market reform and better training for adults would for example, improve the participation rate (strikingly bad among over-50s). Pension ages need to be higher and health policy needs to focus more on keeping older people fit for work.

    Diagnosis and prescription are the easy bits. The real difficulty is getting the patient to take the medicine. As the report notes, EU accession gave a big boost to reform efforts. But now that has run out of steam, both in its effects on new members, and in the likelihood of any big further expansion.

    So what to do? Marcin Piatkowski, chief economist at Poland’s biggest bank, PKO Bank Polski, has put forward a commendable idea that he calls “For your (economic) freedom and ours” (it has pleasing echoes: the slogan was first used at a Polish rally in support of the Decembrists on January 25th, 1831).

    He wants to put economic flesh on the political bones of the “Eastern partnership” recently launched by his country and Sweden, with backing from the Czech Republic and others. It offers closer ties to the EU for ex-Soviet countries and Russian regions that want it. So far, the plan has been about improved border crossings and the like. But Mr Piatkowski wants to include opening the labour markets in countries that sign up for it, plus free trade in goods and services. That would serve three purposes. Legalised migration from Ukraine and other countries would cool overheated labour markets in Poland and in other new member-states. It would export know-how and expertise eastwards. It would change the debate in the EU, away from navel-gazing towards understanding how to promote growth and good government. And, most importantly, it would change expectations: if you think competition is going to intensify, you smarten up your act.