Europe view -- Belarus

Europe.view

Closer still
Feb 26th 2009
From Economist.com


Europe should not embrace Belarus—yet


SO LONG as Belarus does not give diplomatic recognition to two Russian-backed puppet states in Georgia, its president, Alyaksandr Lukashenka (to give his name using the Belarusian transcription rules), can attend the European Union’s summit in Prague in May. That is the message coming from Brussels to the regime in Minsk. It is not wholly wrong, but it is not nearly enough.

By April, the EU has to decide whether the partial political liberalisation in Belarus in recent months warrants a real change in the way the country is treated. The issue is divisive. A powerful argument is that Mr Lukashenka is trying to escape the Kremlin’s embrace. His son, Viktar, is said to be pushing him in this direction.
AFP
AFP


Belarus under Mr Lukashenka is an odd mix of beastly and sometimes lethal repression (half a dozen people have disappeared and are believed murdered) coupled with a steady growth of national identity. It is not, however, the “red-white” identity of the beleaguered opposition. Named after the colours of the former Belarusian national flag, the opposition is strongly pro-Western, and traces the country’s historical roots back to the Grand Duchy of Lithuania (which had its capital in present-day Belarus, and an official language that is an ancestor of modern Belarusian).

Mr Lukashenka has treated the “red-white” cause roughly, not only politically but also in his discouragement of Belarusian language and culture. Instead, he has promoted a “red-green” identity, named for the colours of the Soviet-era “Byelorussian” flag—briefly dropped in favour of the red-white version, and now restored. It stresses Soviet-era themes, such the role of Belarus in the second world war, and ideas such as Slavic brotherhood. In some ways, he has moved closer to Russia, pressing the “union state” (much discussed but never implemented) and closer military ties.

Some think that history will judge him kindly for that. Perhaps in a future Belarus, his moustachioed visage will even be on the bank notes, as a father of the nation alongside such giants as Francisk Skaryna, the first person to translate the bible into Belarusian.

But from another point of view, this is all an atrocious betrayal of European and Atlantic principles. Mr Lukashenka is just flirting with the West, in order to drive a harder bargain with Russia. He has done it before; now he is doing it again. Inviting Mr Lukashenka to rub shoulders with Europe’s leaders at the May summit would be a colossal mistake. It would demoralise the people in Belarus who believe in a European future. And it will show the Belarusian leadership that a few phoney gestures towards freedom are all that is needed to fool the West.

It is certainly right to bring business, culture and other bits of public life in Belarus into close relations with the West. Training officials to deal with EU rules, and a more relaxed visa regime, will help dilute the paranoia and sense of isolation that the regime has stoked. It will be particularly effective at a time when the gloss is fading from Russia’s experiment with oil-fuelled superpowerdom. So the EU should certainly press ahead with the “Eastern Partnership”, conceived and promoted by the Czechs, Poles and Swedes as a way of extending Europe’s soft power to the eastern borderlands.

It may be necessary to swallow hard and relax the travel ban on some senior people in the regime. It may even be necessary to meet at some point with Mr Lukashenka—preferably as part of a deal that sees him leaving power. But it is a step too far to treat him as if he had done everything already.

Hermann Simm

[I am totally tied up with libel litigation right now so apologies for the paucity of material on the site]

Espionage at NATO

Spy scandal in Estonia
Feb 26th 2009 | TALLINN
From The Economist print edition


A senior spy for Russia in NATO is convicted


WHY he did it is still unclear. But the “how” is leaking out. Hermann Simm, a former Estonian official who was one of Russia’s highest-placed spies in NATO, pleaded guilty to treason on Wednesday February 25th and was jailed for 12½ years. The Estonian authorities have released some details of a case that has had the spook world buzzing for the past year.

Russia’s foreign-intelligence service, the SVR, recruited Mr Simm on his holiday in Tunisia in 1995. He was a prime catch. He had finished a stint as a top policeman, and was starting a new security job at the defence ministry. The approach was made by Valery Zentsov, once a KGB officer in Soviet-occupied Estonia. Mr Simm was neither blackmailed nor, at first, bribed; he just wanted his Soviet-era rank of colonel back. At a third meeting he was put on the payroll, receiving just over $100,000 in all.

Mr Simm betrayed every secret that crossed his desk. There were plenty: as the man in charge of Estonia’s national security system, he organised the flow of all classified military documents in the country and abroad. Once Estonia joined NATO in 2004, he acted as the Kremlin’s eyes and ears on the alliance too (although his poor English, say some, may have limited his usefulness). He also tried but failed to get hold of secrets from Estonia’s security and intelligence services, which are separate from the defence ministry.

In 2002, say Estonian officials, Mr Zentsov was replaced by another Russian handler. Sergei Yakovlev worked for the SVR’s elite S-directorate, which runs “illegals”: spies who acquire a genuine identity in a foreign country. Mr Yakovlev, a near-native speaker of Portuguese, appears to have acquired Portuguese citizenship illegally, gaining a passport in the name of Antonio de Jesus Amurett Graf. Travelling as a business consultant, he met Mr Simm every three months or so, in at least 15 countries in the EU and elsewhere.

The plan came unstuck because of poor spycraft. According to spycatchers elsewhere, Mr “Graf” tried to recruit a senior official in another country, who reported the incident to his own counter-intelligence service. Under scrutiny, the Portuguese was seen meeting Mr Simm. That set alarm bells clanging across NATO. The difficulty was to observe Mr Simm closely enough to build a criminal case without sparking his suspicion. Estonia’s security service is getting many plaudits for this, which culminated in his arrest last September. In a separate prosecution, Mr Simm was ordered to pay 20m Estonian kroons ($1.7m) for the cost of new security systems. The SVR did not immediately reply to a request for comment.

Mr Simm is not the only Russian spy at high level in NATO. Several other countries are apparently following up five leads arising out of Mr “Graf’s” activities. The results are unlikely to become public. The way in which Estonia put Mr Simm openly on trial is striking. In other countries, those caught spying for Russia tend to be eased out discreetly rather than being brought to justice in the painful light of day.

Europe View

Europe.view

Open sore

Feb 5th 2009
From Economist.com

Unintended consequences of modernisation

Get article background

FIRST the financial crisis, then the economic one, then—soon—a social one, and after that a political one. The world economic crisis is hitting the countries of eastern Europe particularly hard. Events such as devaluations, ratings downgrades and shocking economic statistics that would be front-page news in normal times barely make it into a preoccupied world media.

It would be nice to say that the countries that followed the right (ie Western-mandated) policies in past years are surviving reasonably well, while naughty ones that failed to finish their homework are suffering. That’s true up to a point. Reckless policies (especially in the big ex-Soviet countries) are punished particularly hard. Prudent Estonia squirreled away a cushion of savings in good times that will make it a bit less vulnerable than its Baltic neighbours to the south.

The much bigger lesson is that what once looked like the right thing now seems to have been either useless or outright dangerous. As Katinka Barysch, of the Centre for European Reform, a think-tank, points out in a new paper*, the ex-communist countries now in the European Union have made themselves particularly vulnerable thanks to their energetic adoption of open economic policies.

First, they are hugely dependent on exports—close to 100% of GDP in some cases. Foreign trade is a fine thing. It brings in investment from outside and creates a wonderfully competitive environment at home. But when the export markets crash, the effect is immediate.

Secondly, the kind of foreign trade was particularly risky: these countries integrated into the global-supply chain in industries such as electronics and cars, which are proving far more cyclical than anyone suspected. That may prove a near catastrophe for a country such as Slovakia, which is one of the world’s top producers (on a per capita basis) of cars and car parts.

Even worse, it is the auto industry where politics is playing a role in the new era of bailouts. In theory, cash-strapped vehicle producers should be favouring low-cost locations as they try to cut costs. That would mean more investment in Slovakia and Hungary, but cut-backs in high-cost France and Germany. But the rich-Europe bailout packages include clear conditions: save the jobs at home.

Selling the banking system to outsiders is proving to be another vulnerable area. In the 1990s, that looked like pure common sense. Local banks were wobbly and sometimes outright dodgy. Foreign banks promised modernisation and a big capital base: just what an emerging economy needed. For a time that proved a huge success. Foreign banks drove down borrowing costs for firms and households who wanted to borrow, provided attractive investment vehicles for those who wanted to save, and made juicy profits in the process.

Now that looks very different. It is the western banks that look wobbly. Their loans are going sour (especially those made in foreign currency on wildly optimistic assumptions). A harsh political suspicion is in the air: are (say) Polish companies losing vital lines of credit because (say) Austrian managers are pulling the liquidity home?

It’s too late to put the clock back, but demography makes new thinking urgently needed. The great worry for the ex-captive nations was always that they would get old before they got rich. A long slump risks catastrophe.

The best hope now is to stoke competitiveness by improving infrastructure and education, and continuing with structural reforms of pensions, the labour market and so on. But these are painful. And from the public’s point of view, the reformers have some explaining to do.

"New Europe and the economic crisis” by Katinka Barysch is published by the Centre for European Reform.

Money in misery

Divorce (another opening salvo from my new secondary beat as legal-affairs correspondent)

Feb 5th 2009
From The Economist print edition

International marriages are crumbling with the global economy, revealing unseen pitfalls in cross-border divorce law. Good news for lawyers

Tim Marrs

MARRIAGES that thrive on money may wither with thrift. That is a depressing lesson from the world economic crisis, which has brought a surge in business for divorce lawyers in former boomtowns such as London and New York. When one or both spouses is from a foreign country, divorce is not just sad but complicated too—especially when most assets may be in a third country, a pension in a fourth, and offspring in a fifth.

Globalisation has made binational marriages, once exotic, much more common among high-earning, highly mobile families. When they stop being high-earning, life gets tricky. Louise Spitz of Manches, a London law firm, has observed an “exceptional” period since September. “With the redundancies in the City there has been a concomitant wave of marital upheaval,” she says. “Families used to living on huge bonus income are unable to continue with the commitments they have taken on—housing and school fees and the cost of living the high life.” Manches has taken on eight more divorce lawyers to cope with the extra work. A high proportion, Ms Spitz and other lawyers reckon, of the once-rich couples now breaking up include at least one foreign spouse.

So who sues whom for divorce and where? How much money will be awarded to whom? Will it be collected? And how? The answers are far trickier than most non-lawyers would imagine. Take, for example, this lightly disguised but real-life example: a wealthy philandering Texan banker with a French wife. Formerly resident in New York, with a recently-lost good job and rented house in London, he now plans to move back to Texas. His wife, newly suspicious and with no money of her own, wants to take the children home to France. She needs her family, she says. What she actually needs is urgent, specialist legal advice.

A London divorce settlement might give her many millions: a house, school fees and maintenance until the children are adults, or even indefinitely. An English court may well disregard a prenuptial agreement, particularly if one of the parties did not have independent legal advice. And it will tend to care more about immediate needs than about whether assets were acquired during the course of the marriage, or predate it, or are the result of an inheritance. All assets are likely to be divided. If the wife is lucky, she may even be able to collect her share.

In the wife’s native France, things will look very different. In her favour is that conduct counts—so adulterous spouses will be penalised. In most other Western countries, divorce courts have given up attributing blame. Even domestic violence is often ignored, though it still counts heavily in some jurisdictions, such as Florida.

But in the typical French divorce, any alimony (also called maintenance) will be less and for eight years at most; any prenuptial agreement will be binding. Only assets acquired during the marriage are up for grabs. If, in our example, the American husband moves to France, he will be expected to play an equal part in bringing up the children—a requirement that would delight some fathers, but by no means all.

If the errant husband has the divorce filed in Texas, the tables are turned even more dramatically. The wife risks being left penniless. In Texas state law, alimony is usually minimal and temporary—though child support, thankfully, is a federal matter. In America, the law varies hugely between states. Most exclude from the settlement assets acquired before the marriage (but Michigan and Colorado don’t). Most exclude inherited property (but Massachusetts and Oregon don’t). In most states, judges will enforce prenuptial agreements (but they often won’t in Alaska).

If the Texan husband decides to file in New York, however, he may find the outcome startlingly expensive. As in some English court rulings, New York courts may award one party a share of a spouse’s future earnings—assuming that they are based on a qualification, such as an MBA or medical degree, that was earned thanks to a joint effort in happier times. Yet New York law has one big catch: unless the parties have signed a formal separation agreement it requires proof of cruelty, adultery or abandonment, whereas other states allow “irreconcilable differences” as grounds for a divorce. So binational couples in New York who want to end their marriage may find themselves unable to do it there, and squabbling about alternatives. Rules differ, too, on what constitutes residency in a particular jurisdiction. In hedonistic Las Vegas, six weeks is enough.

According to Jeremy Morley, an international divorce lawyer based in New York, hiding assets from a spouse is also much easier in some countries than in others. California, at one extreme, requires complete disclosure of assets. At the other extreme, Austria, Japan and many other countries require very little disclosure. A California court recently ordered a husband to pay $390,000 in costs and penalties to his wife because he did not disclose some significant financial information. In another jurisdiction, the assets could have stayed hidden.

Who gets the children?

Cash and kids may pull in different directions. Countries that are “man-friendly” (shorthand for favouring the richer, usually male, partner) when it comes to money may be “mum-friendly” when it comes to custody. Japan, for example, is quick and cheap for a rich man—unless he wants to keep seeing his children. English courts are ferocious in dividing up assets, even when they have been cunningly squirrelled away offshore. But compared with other jurisdictions, they are keen to keep both divorced parents in touch with the children.

The children’s fate, even more than family finances, can be the source of the hottest legal tussles. The American State Department unit dealing with child abduction has seen its caseload swell from an average in recent years of 1,100 open cases to 1,500 now. In Britain, the figures rose from 157 in 2006 to 183 in 2007, according to Nigel Lowe of Cardiff Law School.

Of the cases reported worldwide, mothers are the main abductors when a marriage breaks down. They are cited in 68% of cases. Ann Thomas, a partner with the International Family Law Group, a London law firm, says child abduction has increased “dramatically” in the past three years or so. A big reason is freedom of movement within the European Union, which has enabled millions of people from the new member states to live and work legally in the richer part of the continent. That inevitably leads to a boom in binational relationships, and in turn more children of mixed marriages. Ms Thomas notes that when a relationship between a foreign mother and an English father breaks down, the mother often assumes that she can automatically return to her homeland without the father’s permission. That may be a costly legal mistake.

Tim Marrs

Most advanced industrialised countries, plus most of Latin America and a sprinkling of others, are signatories to the 1980 Hague Convention, a treaty which requires countries to send abducted children back to the jurisdiction where they have been living previously. That is fine in theory: it means that legal battles have to be fought first, before a child is moved. It is a great deal better than a fait accompli which leaves one parent in possession, while the other is trying to fight a lengthy and expensive legal battle in a faraway country.

But in practice things are very different. Views on the desirability of children being brought up by “foreigners” vary hugely by country; so do traditions about the relative roles of fathers and mothers in bringing up their children after divorce. In most Muslim countries, for example, the assumption is that children over seven will be brought up by the father, not the mother, though that is trumped by a preference for a local Muslim parent. So the chances of a foreign mother recovering abducted children from a Muslim father are slim. Apart from secular Turkey and Bosnia, no Muslim countries have signed the Hague Convention, though a handful have struck bilateral deals, such as Pakistan with Britain, and Egypt and Lebanon with America.

Japan has not signed it either—the only member of the rich-country G7 not to have done so. Canada and America are leading an international effort to change that. Foreign fathers, in particular, find the Japanese court system highly resistant to attempts even to establish regular contact with abducted and unlawfully retained children, let alone to dealing with requests for their return. Such requests are met with incomprehension by Japanese courts, complains an American official dealing with the issue. “They ask, ‘Why would a father care that much?’” Countries edging towards signing the Hague Convention include India, Russia and mainland China. But parents whose ex-spouses have taken children to Japan should not hold their breath: as Ms Thomas notes, even if Japan eventually adopts the Hague Convention, it will not apply it retrospectively.

Games with different rules

Moreover, even signatory countries may be bad at abiding by the convention, especially when it means enforcing the return of children to a parent alleged to have been abusive. The annual State Department report to Congress on observance of the Hague Convention lists Honduras as “non-compliant” and nine other countries (Brazil, Bulgaria, Chile, Ecuador, Germany, Greece, Mexico, Poland and Venezuela) as showing “patterns of non-compliance”. Anyone in a wobbly marriage with a citizen of these countries might bear that in mind before agreeing to let the children go on holiday there.

But America is not blameless either, particularly if parents try to recover their children through state rather than federal courts, where judges may be unaware of the Hague Convention’s requirements. “Except in Florida, New York, California and Texas, a judge may only hear one Hague case in his career,” says a State Department official. Judges who get it wrong can be overruled on appeal, but it takes time and money: the Hague Convention aims to make proceedings quick and cheap, thus making abduction less likely. Whereas Britain offers automatic legal aid to the foreign parent trying to recover the children, in America they must rely on their own resources or a pro bono lawyer.

Making wily choices about possible jurisdictions is often criticised as “forum shopping”. But the stakes are high: ending up in the wrong legal system, or with the wrong approach, may mean not just poverty but misery. Mr Morley says the differences between one divorce jurisdiction and another are far more than, say, playing a sporting fixture at home or away. As the table shows, totally different rules apply.

So it is understandable that a disillusioned spouse, and his or her lawyer, will try hard to get the most favourable jurisdiction. Yet that can all too easily lead to each party starting, or even finishing, a divorce in a different country. Sorting out these cross-border legal wrangles can be colossally expensive. A tussle between jurisdictions usually starts in six figures, in dollars, euros or pounds; when all four legal bills, of both sides’ costs in both countries, are totted up, it easily shoots into seven figures. And it is hugely time-consuming. The children involved may reach adulthood before the final verdicts are given.

International attempts to tidy up the law have made some things better, but not all. The European Union (where 875,000 divorces take place each year, a fifth of them binational) introduced a reform in 2001 called Brussels II. This has largely stopped “forum shopping”, with a rule that the first court to be approached decides the divorce.

The problem with this rule is that it encourages those in troubled marriages to end them, not mend them. Even if a marriage is doomed, the trend in family law is to resolve the dispute out of court, typically through mediation. A race to issue proceedings makes it much more likely that matters will get nasty, as well as lengthy and costly. David Hodson, an international family law specialist, notes sadly that “This law works against reconciliations and resolutions out of court. Cases can be won and lost by one spouse issuing a divorce a matter of minutes before the other spouse. That must be wrong.”

Tim Marrs

The law of dirty tricks

Brussels II also encourages some less scrupulous lawyers to behave badly, urging their clients to act fast and dirtily. A London divorce lawyer recalls a case where a husband from an overseas country had acquired his wife’s European nationality by marriage, living briefly in her continental home country before moving to London. Five years and two children later, the marriage was on the rocks, with the husband away working in East Asia. Without his wife’s knowledge, he filed for divorce in her country, one of the stingiest jurisdictions in Europe (from her point of view). His only connection with it was his marriage to the wife he was trying to dump cheaply. Had the case been heard in London, where both parties had much stronger links and had owned a home for years, she would have done far better.

To avoid such cases, a further EU measure, Rome III, tried to stipulate that a marriage should be ended only by the law that has governed it originally. That works fine in similar countries where divorce rules are highly codified, precedents do not matter and judges’ discretion is limited. It already applies in some northern European countries, so that Dutch courts, for example, will apply French law when dealing with a French couple whose marriage has ended during a posting in The Hague.

But such a rule works much less well when other systems are involved. English law is much more complex, and is based on intricate precedents and judges’ discretion that cannot simply be looked up and applied. Even greater difficulties arise when couples come from more distant countries. Would a Swedish court want to apply sharia law to a divorcing couple recently arrived from Saudi Arabia? Many Swedes flinched at that. Mr Hodson complains that it would mean that “the essence of a country’s community life found in its family laws is removed and replaced by the laws of another country.” In the United Kingdom, he says, it would be “entirely against [national] law and policy.”

For richer, for poorer

Now that Rome III has been stymied, a group of nine countries, led by Spain and France, is going ahead under a provision in EU law known as “enhanced co-operation”. This allows like-minded countries to work together, leaving the unwilling behind. And still more international tidying-up operations are in the works. Another Hague Convention tries to harmonise arrangements on cross-border child-support payments—an area that tends to be a bit less contentious than divorce, where views of what is fair differ wildly.

Perhaps the biggest weakness of the system is the advantage that it gives to the richer partner when an international marriage breaks up. Experienced lawyers can operate, if necessary, with high speed to help the poorer spouse—for example, by putting the first hefty legal bill on the husband’s credit card before he is aware of what his wife is up to. In England, that may be followed by a swift move to initiate divorce proceedings, and then an emergency maintenance application that includes provision for legal costs. When the richer party has assets in that jurisdiction, a fair fight is possible. But Kerstin Beyer, a German-British divorce lawyer at the International Family Law Chambers in London, says the tables are often stacked against the poorer (and usually less knowledgable) spouse. Some husbands file for divorce abroad and simply fail to turn up at the English court, hoping that the cost and delay of enforcing the judgment abroad will lead their ex-wife to give up. A client of hers trying to gain the assets she had been awarded in Colorado was faced with a demand for a $15,000 upfront payment from a lawyer there: an impossible expense for someone of her means. Another has been pursuing, expensively and so far fruitlessly, assets in Luxembourg and Germany awarded by a London court. Pensions are particularly tricky. Some countries split them between divorcing couples as a matter of course; others regard such requests from foreign courts coldly.

More fundamentally, divorce arrangements in countries with English-style common law are still liable to be influenced by highly atypical fights between the super-rich, who can afford to take cases to the highest courts. In most marriages there is barely enough money to support one family in one country, notes Ms Spitz. Spreading that between two sides is a stretch, even without an expensive legal fight. As house prices plunge and savings shrivel, divorcing couples are fighting over a shrinking cake.

Lebedev: the spy who came in for the gold

Europe.view

Mission accomplished?
Jan 29th 2009
From Economist.com


An oligarch buys influence for a pound

HOW about this for a thriller plot: an ex-KGB officer in London in the Soviet era returns 20 years later to buy the capital's main newspaper. Trained at the Red Banner Institute to find out secrets and exert influence at the highest levels of the British establishment, he is now part of it.

Such a plot could be said to exemplify the success of the ex-KGB regime now running Russia. In the old days, the best they might have been able to do was to bribe or blackmail an individual journalist, and perhaps plant the odd bit of dezinformatsiya as a result. Now, however, dressed in capitalist clothes, they don’t need to infiltrate the western media: they can buy it outright.

Such worries come to mind amid the takeover of London’s Evening Standard by Aleksandr Lebedev (pictured), an “economics attaché” at the Soviet embassy in London in the late 1980s. He is a retired lieutenant-colonel from the Sluzhba Vneshnei Rozvedki, the successor to the First Chief Directorate of the old KGB. A billionaire thanks to his holdings in Aeroflot and other leading Russian businesses, he has bought the paper for £1: the price of just two copies.

But Mr Lebedev is not one of the steely tycoon-spooks around Vladimir Putin, such as Igor Sechin, the mastermind of Russia’s overseas energy diplomacy. They lurk in the shadows. He courts publicity, and comes across as urbane, amusing and liberal-minded.

Nor is Mr Lebedev a mere tycoon-playboy, cruising the streets of London or the ski-slopes of Switzerland with a musclebound entourage and highly decorative women. He shuns ostentation and is a conspicuous supporter of good causes.



Asked about his KGB past, Mr Lebedev speaks fondly of the English way of life and insists that his job was mainly to monitor the British press, particularly for economic news. The foreign-intelligence service of the KGB, he maintains, had nothing to do with the Gulag and domestic repression.

Indeed, he has a fair claim to be countering that era’s dark legacy in Russia now. He is a co-owner of Novaya Gazeta, which is the most widely read opposition newspaper in Russia. He is an outspoken defender of its brave journalists (one of whom was murdered earlier this month).

In short, if any former KGB officer should be allowed to buy an influential London newspaper, surely it should be him. But whatever Mr Lebedev’s motives now, his business interests in Russia could—at least in theory—make him vulnerable to Kremlin pressure in future. His blithe dismissal of his KGB past does not square with the evidence we have of that organisation from other sources. In the early 1980s, as Mr Lebedev was signing up for the KGB, Oleg Gordievsky, its station chief in London, was already risking his life to warn the West about the true nature of the Soviet system.

The only legal restriction on taking over a newspaper in Britain comes from the last-resort powers vested in the Secretary of State for Business, Peter Mandelson. Just this summer he was enjoying, controversially, the hospitality of Oleg Deripaska, another Russian tycoon (who is unable to visit the United States).

There is no reason to question Lord Mandelson’s integrity (he insists his much-discussed visit to Mr Deripaska’s yacht was entirely personal). But the whole saga shows the way in which Russian business influence has seeped into Western public life. Probably it is all fine. But, just theoretically, suppose it isn’t. Some may be less confident that a Russian-owned Evening Standard will investigate that subject with the fullest possible vigour.

missile defence

Missile defence

Cool heads
Jan 29th 2009
From The Economist print edition


America is holding back its planned missile shield in eastern Europe

BELIEVE the hype, and America’s planned missile-defence bases in Poland and the Czech Republic risked starting a new cold war. The Russians, claiming that they were intolerably provocative, even threatened to station new short-range missiles in Kaliningrad and to target their existing nuclear warheads at Europe. Many west European countries thought the whole affair epitomised both the Bush administration’s clumsy foreign policy and the destructive paranoia of the ex-communist countries in Europe’s east.

Now things are looking different. Barack Obama criticised the waste of money on “unproven” missile-defence technology during his presidential campaign. At the forthcoming Munich security conference, the Americans are expected to announce a review of the whole scheme. That could take a long time. For their part, the Russians said semi-officially this week that they would halt the planned deployment of the short-range missiles to Kaliningrad (although they are also pressing Belarus to accept new rocket bases).



On the surface, all of this sounds like good news. America hopes that Russia will come to see the missile shield as a joint project against Iran. Poland has removed a sticking-point by saying privately that it is willing to accept “intrusive” Russian monitoring of the base when it is built. Previously it had been twitchy about Russian snooping.

The new administration’s willingness to talk about arms control helps as well. The main treaty dealing with long-range nuclear weapons, Start-1, expires in December. The Bush administration seemed not to care, which stoked the Russians’ feeling that they were being ignored. With a decaying arsenal of nuclear warheads, and a shrinking number of ways of launching them, the Kremlin has a bigger interest in talking about cuts.

So if Russia wants a deal on missile defence, one may be possible. But what if it doesn’t? American officials think the Kremlin’s complaints about the scheme reflected a wish to pick a fight over Western influence in eastern Europe. Contrary to popular myth, the previous administration tried hard (albeit unsuccessfully) to present missile defences as a matter of common interest. Nobody on the Russian side could explain how a handful of interceptor rockets in Poland would hamper a nuclear superpower that can launch weapons from anywhere on the planet.

America is now committed to boosting Poland’s defences. The paradox is that Russia complained loudly about something that did not matter, but by doing so it has got America to do something that does: beef up its security relationship with Poland. This will include more training and equipment (including such sought-after kit as armoured Humvees) as well as high-tech air-defence systems for Warsaw. Even if missile defences are delayed, officials say, these promises will be kept. A big theme for the Obama administration is treating its allies better.

Interview on Lithuanian television

You can see me speaking bad Lithuanian here (about 20 mins into the programme)

NYRB

The ultimate accolade: a review for the New Cold War in the NYRB

Lancet rebuttal

Ex-communist reform

Mass murder and the market

Jan 22nd 2009
From The Economist print edition

Economic reform in Russia was accompanied by millions of early deaths. But it was not the cause

MATCHES and even salt were in short supply as the Soviet empire’s planned economies collapsed two decades ago. But blame was plentiful then and now. Millions of people—chiefly men in late middle age—died earlier than their counterparts in other countries. That drop, of fully five years in male life expectancy between 1991 and 1994, demands explanation. A newly published article in the Lancet, a British medical journal that in recent years has used epidemiological analysis to examine political and social questions, argues that the clear culprit was mass privatisation (distributing vouchers that could be swapped for shares in state-owned enterprises). A statistical analysis, it says, shows that this element of the economic-reform package, nicknamed “shock therapy”, clearly correlates with higher mortality rates.

That, says the Lancet, was a shocking failure. It argues that advocates of free-market economics (it cites an article in this newspaper by the economist Jeffrey Sachs) ignored the human costs of the policies they were promoting. These included unemployment and human misery, leading to early death. In effect, mass privatisation was mass murder. Had Russia adopted more gradual reforms, those lives would have been saved.

In fact the blame game must start at the beginning. Why was the Soviet economy in ruins by 1991? Partly because planned economies don’t work (blame Lenin and Stalin for that). Partly because the gerontocratic leadership of Leonid Brezhnev failed to start reforms in the early 1970s, when gradualism might have had a chance of succeeding. By the time Mikhail Gorbachev initiated perestroika and glasnost in the late 1980s, the Soviet Union was all but bust. Worse, by running the printing presses red-hot, his government created a colossal monetary overhang. Russians may have thought that their savings evaporated when prices were liberalised at the start of 1992; in truth, their cash was already worthless.

Surgical alcohol

The second question is the effect of all this on mortality. Soviet public-health statistics show a clear decline from 1965 to the early 1980s, with rising deaths from circulatory diseases (because of poor diet, smoking and, especially, drinking). Mr Gorbachev’s anti-booze campaign—although hugely unpopular—raised life expectancy by fully three years between 1985 and 1987. After 1992 the state monopoly on alcohol (and health checks on its quality) collapsed. As anybody who lived in Russia at the time will recall, the effect was spectacular—and catastrophic. Death rates returned to their long-term trend.

The thorniest question is about economic policy mistakes after 1991. In retrospect, the West failed to prepare for the Soviet collapse. It took too long to recognise that Boris Yeltsin’s first government deserved trust, pressing it too hard on debt repayments and being too stingy with aid. Then it made the opposite mistake, being too trusting and generous when Russia was becoming more hawkish and looting was endemic. Mass privatisation broke the planners’ grip but failed to create the hoped-for shareholder democracy.

Yet the Lancet paper seriously misunderstands both the timing and the effects of economic reform. It states quite wrongly that “Russia fully implemented shock therapy by 1994”. As it happens, in that year life expectancy started rising. But in any case reforms were by then bogged down and advisers such as Mr Sachs had quit in despair. Moreover, mass privatisation had little immediate effect on jobs—or much else. Most Russians exchanged their vouchers for trivial amounts of cash, or even vodka. That may have been marginally bad for their health—but it does not explain the huge jump in the death rate.

Correlation is not causation. Mass privatisation was not the most important or effective part of “shock therapy” and the rise in death rates is out of synch with efforts at economic reform. Furthermore, countries that successfully applied shock therapy, such as Poland, saw improved life expectancy. So did the then Czechoslovakia, which plumped for mass privatisation, albeit not very successfully. Mistakes were made, but Russia’s tragedy was that reform came too slowly, not too fast.

East European economies

To the barricades
Jan 22nd 2009 | VILNIUS
From The Economist print edition


Economic pain brings political ructions

IN INTENSIVE care but angry: that describes Latvia’s economy after its dramatic rescue by the IMF and other foreign lenders. Now the question is whether the tough conditions imposed by the bail-out are politically tolerable. A riot in Riga, in which more than 40 people (including 14 police officers) were hurt and 106 arrested, suggests there is a bumpy ride ahead.

Latvia, a country of 2.4m that may soon be the sixth-biggest debtor to the IMF, is not alone. Lithuania has pushed through similarly tough wage and spending cuts and tax rises. A protest on January 16th turned violent, with protesters pelting the police with snowballs and stones. After a decade in which breakneck growth made up for political weaknesses, pessimists fear that the post-cold war settlement across eastern Europe may now be at risk.

That settlement rested on three notions. One was that Western-style politics was both trustworthy and efficient, in contrast to the failures of communism. The second was that welfare capitalism and integration into Western markets would produce prosperity. And the third was that joining the European Union would provide a guarantee of economic and political security. All three now look wobbly.

In 2006 Latvia’s economy was still growing by an astonishing 12% a year. One reason was that locally owned banks—comprising some 40% of the financial system—took deposits from foreigners (chiefly Russians) and invested in an increasingly frothy property market. The government not only failed to supervise them properly. It also inflated the bubble by running a loose fiscal policy.

The biggest local bank, Parex, collapsed and has been largely nationalised. Outsiders going through the books are finding much to be glum about. At worst, the Latvian taxpayer faces a bill of up to $3 billion. Even at best the country faces several painful years as it tries to regain competitiveness. Such pain may have been tolerable after 1991 when problems could be blamed on communist times. Nobody knows where public anger will focus now.

The IMF and others believe that the best solution would have been immediate devaluation of the national currency, the lat, accompanied by its replacement by the euro. That would have hurt the many households and businesses that have borrowed in foreign currency. But calculations published by the IMF suggest that the recovery thereafter would have been quicker and steeper.



Yet euroisation has proved impossible. The European Central Bank and the European Commission were unwilling to change their rules. And the overwhelming consensus in Latvia favours keeping the lat’s currency peg. Neither the protesters in Riga nor opposition politicians want a devaluation. Their most controversial demand is for a progressive income tax (Latvia, like its neighbours, has a flat tax).

Ainars Slesers, the transport minister, is suggesting legal action to protect creditors of the Nordic-owned banks that make up most of the rest of the financial system. He blames their irresponsible lending for stoking the boom. Yet it is only foreign banks’ willingness to stump up for their losses that is keeping Latvia afloat. Shares in Nordic banks such as Swedbank and SEB have plunged because of worries about their exposure to bad Baltic loans.

Latvia’s prime minister, Ivars Godmanis, is widely seen as a competent heavyweight. But he depends on powerful political barons such as Mr Slesers to support his governing coalition. The president, Valdis Zatlers, wants a cabinet shuffle to dump discredited figures. Failing that, an early election in the summer looks likely. Yet Latvia’s opposition parties are a motley lot; and no policy mix can now avoid economic pain.

Most other east European EU members are in a better way, at least for now. Estonia was more prudent during the boom, building up net public assets equivalent to 7% of GDP. It can now run an expansionary fiscal policy that offsets the recession, rather than a tight one that aggravates it, as in Latvia and Lithuania. Estonia’s banks are almost all foreign-owned. Even Lithuania’s dodgiest local bank is nothing like as troubled as Parex in Latvia.

Not that the foreign-owned banks are in great shape. Across the region cash-strapped banks are cutting business loans, worsening the downturn. No international or national institution has the authority to deal with banks that take deposits in one country and lend in another, often with managers in a third country and shareholders in a fourth. Neither the IMF nor the ECB is set up to deal with these beasts.

The biggest concern is how far the economic weakness will spread. Poland, the biggest regional economy, has looked fairly safe. The central bank has even cut interest rates sharply, after raising them in 2008. But industrial production is plummeting, with inevitable effects on tax revenues. By the summer the government will have to choose between maintaining a tough fiscal stance (a condition for joining the euro) and easing the pain of recession. At least Poland has a choice. Hungary, the most indebted country in the region, has little option but to tighten its belt further.

Governments normally respond to recession by loosening fiscal policies to preserve jobs and output. But most in eastern Europe cannot do this. Their debts make it hard to borrow more. Currency pegs in the Baltics and Bulgaria that once seemed to offer stability and a smooth path to the euro now put the burden of adjustment wholly on wages and output. The voters, many of whom suffered gas cut-offs in Russia’s gas spat with Ukraine, won’t like it. What will they do? Nobody knows.

Europe View on "December Heat"

Feeling the pinch
Jan 22nd 2009
From Economist.com


Uncomfortable echoes of uncomfortable times

“ECONOMIC collapse undermines national security”. Two years ago, when the script for “December Heat”, Estonia’s lavishly produced new historical thriller, was being written, that seemed a theme from the past, not the future. Now it looks uncomfortably prescient—if not yet for Estonia, certainly for its southern Baltic neighbours Latvia and Lithuania.

“December Heat” portrays the failed Bolshevik putsch in Estonia in 1924. Some elements are unlikely to be repeated. Communism then could attract idealists hoping to build a workers’ paradise. It is hard to imagine starry-eyed young Estonians now believing that modern Russia is a new civilisation. The Baltic states are in NATO and the EU.

But other elements are all too topical.

The film shows that economic hardship has discredited the idea of independence in the eyes of many. Children beg on the streets. Public servants are poorly paid. Private business is struggling. People are cold. A few tycoons have done well and are widely disliked for it. All of that sounds pretty familiar.

So does the political backdrop of the early 1920s. The politicians don’t seem to have a grip on the situation. Officials are indecisive and possibly treacherous. And although Estonia, Latvia and Lithuania are far better guarded than they were then, territorial defence has taken second place to NATO’s overseas commitments. It would require several hundred well-equipped coup plotters, not a few dozen with small arms as in 1924, to seize key buildings in the capital city. But with the right support from outside, it is not impossible.

Similarly, you can no longer take over a country’s international communications simply by sending few toughs with guns into the telegraph exchange and railway station. But as the events of April 2007 showed, a cyber-attack can have roughly the same effect without firing a shot.

This is good material for a lively if rather melodramatic film. Only quick thinking and bravery by the protagonist, the stalwart Tanel Rõuku (played by Sergo Vares), with his nubile and equally valiant wife Anna (played by Liisi Koikson) save the six-year-old Estonian republic from disaster. They are assisted by the true hero of the events, General Ernst Põdder, (a real historical figure, played by Tõnu Kark). He happens across the coup plotters while returning from a late-night drink and leads an impromptu posse to raise the alarm. The final scene, in which the plotters’ telegram “inviting” fraternal assistance from the Soviet troops massed across the border is foiled in mid-sentence, is both exciting and amusing.

The troubling question for today’s audiences is about the differences between then and now. Politics in the 1920s was pretty shambolic in the Baltic states (which is one reason that all three countries, like the rest of central Europe, descended into semi-authoritarian rule in the 1930s). Opinion polls of today’s type didn’t exist, but it is a fair bet that voters then thought as little of their squabbling, incompetent politicians as their current counterparts do. Until recently, a big difference would be the magnet that Euroatlantic integration has provided to all post-communist countries. But divisions in the EU and NATO, and the huge dents that the crisis has left in the “western model” of political freedom and welfare capitalism, mean that this magnet’s pull is now weakening. In Latvia and Lithuania, political protest has spilled over into sporadic violence.

So the big question is about Russia. For all its faults, the ex-KGB regime in the Kremlin now is hardly comparable to the ruthless Bolshevik ideologues of the 1920s. Yet the lingering worry remains. Prosperity made independence seem successful and permanent after 1991. What will economic hardship bring?

Europe View on "War Games"

Europe.view

The spy who remained in the cold
Jan 15th 2009
From Economist.com


A new film honours a hero of the cold war

WATCHING Daniel Craig, an actor best known as James Bond, playing a Jewish resistance fighter successfully battling the Nazis is an unbeatable combination for film audiences in the western world. “Defiance”, a newly released film about the Bielski partisans, is likely to do well. Some Poles may argue that it does not give a complete picture of their resistance to the country’s double occupation by the Nazis and Soviets. But historical films necessarily tell only one strand of a story.

“Defiance” is a story of a group finding collective courage against impossible odds. Another new film, Polish-made for an international audience, tells a similarly inspiring story, of how one man, in the heart of the Soviet empire’s military machine, was able to make a difference and—perhaps—save the world from a nuclear holocaust. “War Games”, by Dariusz Jablonski, tells the story of Ryszard Kuklinski (pictured), once the West’s top spy behind the iron curtain.

As one of communist Poland’s top military planners, Kuklinski had access to the Warsaw Pact’s most sensitive secrets—including plans for a devastating military onslaught on the West. What his colleagues never suspected was that he had become a fervent anti-communist, who photographed thousands of documents and passed them to the CIA.

His disillusion started in the mid-1960s, and was crystallised by his outrage at the Soviet-led invasion of Czechoslovakia, which he helped plan. The film shows his CIA handlers and other American officials giving, for the first time on camera, vivid details of their meetings with Kuklinski. One hardened ex-spook weeps as he recalls his prize agent’s courage.



Kuklinski and his family were smuggled out of Poland shortly before martial law was imposed in 1981. Like many defectors, they lived a twilight life in the West, physically comfortable but emotionally isolated: making friends was risky. If he hoped for speedy vindication once communism collapsed, he was mistaken.

After the evil empire imploded, attitudes to those who had spied for the other side varied. The then-Czechoslovakia said that they were heroes; it invited those western agents who had escaped to return and help set up the new non-communist intelligence service (nobody, it seems, took up the offer). In Estonia, the late Mart Männik, a survivor of the disastrous MI6 post-war operation in the Baltic states, chose not to make himself known to the authorities, fearing retribution from the KGB, which he felt still had plenty of power in the post-occupation republic. His story is well told in a book “Tangled Web”, recently published in English by Grenader, an Estonian publisher.

But the post-communist Polish authorities were shockingly slow to rehabilitate Kuklinski. Many Poles thought he was not a hero, but a traitor who had broken his military oath. Only in September 1997 were charges of espionage dropped; he finally returned to Poland for a visit in 1998.

The film casts a thought-provoking light on that controversy, which the new film is likely to reignite. Lech Walesa’s evasive answers to the question why he as president failed to pardon Kuklinski are striking (he says he was surrounded by ex-communists but does not explain why he couldn’t overrule them).

Also troubling are the mysterious deaths of both his sons in 1994: just a boating mishap and a hit-and-run road accident? Or the belated revenge of his former colleagues? The film cannot answer that. Nor does it answer the question of who tipped off the Soviet authorities that the West had a mole in the Polish military: was it one of the traitors who has since been exposed? Or one who has to this day covered his tracks successfully?

Freedom falters

Tracking freedom

It never stays long
Jan 15th 2009
From The Economist print edition


One survey shows liberty shrivelling; another names the “spoilers”

WHETHER your purpose is to promote freedom, to curb it, or to quibble about its definition, the reports of Freedom House, an American lobby group, make good reading. The new 2009 edition paints a sombre picture of how the world fared during George Bush’s time in office. An initial five years of improvement were followed by a three-year decline—less in 2008 than previously, but still disappointing. Russia’s rigged elections and cowed media attract particular criticism in the gloomy ex-Soviet section. Though Iraq posts a slightly better score, Afghanistan shifts from “partly free” to “not free” in Freedom House’s broad three-category system. The Middle East and north Africa region—the centrepiece of Mr Bush’s efforts to promote freedom—showed little measurable improvement over the previous year.



More widely, the number of “electoral democracies” (those with tolerably free and fair elections) dropped by two, to 119 (thanks to four demotions and two promotions). The general trend was down too, with declines in freedom of expression and association, and a weaker rule of law.

As with most international rankings, headline comparisons and trends are often less interesting than the details and the underlying thinking. Freedom House sticks to measuring the rise and fall of political freedom: it eschews the idea, promoted by outfits like Amnesty International, that economic and social rights matter equally.

Raw country-by-country figures can be misleading: the population-weighted results published by Freedom House are more informative. From that point of view, the failure of the Beijing Olympics to bring any of the promised (or more accurately, hoped-for) changes in China’s policy towards dissent was probably the biggest disappointment of 2008.

A similarly heavyweight annual report from another American outfit, the New York-based Human Rights Watch (HRW), takes direct aim at what its director, Kenneth Roth, terms “spoilers”. He writes: “Those conducting the most energetic diplomacy on human rights are likely to reside in such places as Algiers, Cairo or Islamabad, with backing from Beijing and Moscow. The problem is that they are pushing in the wrong direction.” Such countries, he says, “hide behind the principles of sovereignty, non-interference and Southern solidarity, but their real aim is to curb criticism.” He pointedly criticises the stance taken by India and South Africa, which uphold human rights at home but undermine international efforts against regimes such as Burma, Sudan or Zimbabwe.



At least in the eyes of the world, Freedom House and HRW come from slightly different places. The latter is adamant that it accepts no government funding, while the former does get money from the American taxpayer (and is committed to the view that American leadership is a good thing for liberty), though it has a decent track record of criticising the United States and its friends where appropriate.

In any case, the prospect of Barack Obama’s presidency clearly delights HRW, which lambasts the “disastrous Bush years” for torture, secret prisons and “hyper-sovereignty” and hopes that America will now sign up for all kinds of international good causes, from landmine bans to the International Criminal Court. Freedom House is more cautious, praising Mr Bush for his championing of dissidents. It worries that the new administration will prefer improving relations with authoritarian countries to challenging them. Sadly, measuring government beastliness looks like a future-proofed business.

CEE and America

Europe.view

Thorns in the east
Jan 8th 2009
From Economist.com


Pipelines, missiles and maybe something worse

GAZA, rather than gas, is likely to be top of the new American administration’s to-do list. If the ex-communist world gets any early attention, it will be in search of Russian help over Iran and in the Middle East, rather than the pressing business of Europe’s energy and military security. If Barack Obama’s top foreign-policy officials pay even a nanosecond of attention to eastern Europe in the first few months of their time in office, it will be to bemoan locals’ inability to deal with their own problems.



Imagine the difference a single-minded and effective push on Nabucco a few years back would have made. If that pipeline, bringing Caspian and Central Asian gas to Europe via Turkey, was seriously underway—perhaps fed by a trans-Caspian gas pipeline, perhaps just with Azeri gas—then the effects of the current Russian-Ukrainian energy spat would have been to accelerate an existing project to early completion, rather than to highlight the shambles.

Now the Kremlin is well-placed to tell the European Union that if it wants to avoid headaches with transit through Ukraine in future, then it had better hurry up and help Russia build its pet pipelines, North Stream and South Stream. These projects, in the Baltic and Black seas respectively, do get round the corrupt and fractious gas transit industry in Ukraine. But they create another problem: strengthening Russia’s ability to play divide-and-rule with European customers. It is hard to see the American administration sparing much time to worry about that.

A renewed push on arms control, conversely, still looks possible. Whereas the Bush administration seemed to regard dominance in strategic nuclear weapons as an end in itself, the signs are that Mr Obama’s advisers see it differently. Russia is already twitchy enough about its decaying nuclear arsenal, and about its failure to make its new submarine-launched missiles work properly. The urgent need now is for talks on a new third START treaty on big nukes, coupled with measures to get Russia back into the Conventional Forces in Europe treaty (in which it has suspended its membership) and to preserve the INF (Intermediate Nuclear Forces) treaty. In addition, the new administration is unlikely to share its predecessor’s allergic reaction to any talks about an international legal order in space.

All that may go some way to defusing feelings of paranoia and neglect in the Kremlin. The most dangerous situation for the west is one where Russia feels vulnerable to an American first strike (because of nuclear or space-weapon superiority). Russia’s creaky command and control means that a move to “launch on warning” hugely raises the risk of a false alarm turning into a nuclear war.

That does not mean that America should make big symbolic gestures such as cancelling its planned missile-defence bases in the Czech Republic and Poland. Doing that would be a huge snub to its most loyal allies, and stoke fears of American disengagement from Europe. In truth, the new rockets and radar don’t work yet, and the Democratic congress is unlikely to vote money for them in a hurry. That gives plenty of wiggle room over timing, during which America can see if there is any way of getting Russia to share its concerns about rogue-states’ missiles.

The trickiest task will be dealing with an internal political crisis in Russia that leads the Kremlin to seek a distraction abroad, such as undermining the sovereignty of a neighbouring country—Ukraine, Georgia or perhaps even a Baltic state. That is not likely to catch attention in Washington until it happens.

Libel

Libel tourism

Writ large
Jan 8th 2009
From The Economist print edition


Are English courts stifling free speech around the world?

SEEN one way, it is nothing short of a scandal. Small non-British news outlets and humble non-British authors (in many cases catering almost wholly to a non-British public) are being sued in English courts by rich, mighty foes. The cost of litigation is so high ($200,000 for starters, and $1m-plus once you get going) that they cannot afford to defend themselves. The plaintiffs often win by default, leaving their victims humiliated and massively in debt.

There is another side to the story, of course. Attempts to collect damages for libel and costs from people outside Britain are rare and often fruitless. Just because someone is rich, or holds a foreign passport, or lives abroad, that does not mean that they should not seek justice in an English court. Sometimes the defendants are global news organisations with a substantial presence in Britain. Sometimes the plaintiffs are dissidents, complaining about libellous attacks on them by state-friendly foreign media; a lawsuit in London may be their only chance of redress.

Yet some cases are still startling.

Two Ukrainian-based news organisations, for example, have been sued in London by Rinat Akhmetov, one of that country’s richest men. One, the Kyiv Post, had barely 100 subscribers in Britain. It hurriedly apologised as part of an undisclosed settlement. Mr Akhmetov then won another judgment, undefended, against Obozrevatel (Observer), a Ukraine-based internet news site that publishes only in Ukrainian, with a negligible number of readers in England. Judgment was given in default and Mr Akhmetov was awarded £50,000 (now $75,000) in damages in June last year. The best-known case is that of Rachel Ehrenfeld, a New York-based author. She lost by default in a libel action brought by a litigious Saudi national, Khalid bin Mahfouz, over allegations made in her book “Funding Evil”. It was published in America and available in Britain only via internet booksellers. Since then she has been campaigning hard for a change in the law.

Yet no attempt has been made to collect the £50,000 in costs and damages awarded against Ms Ehrenfeld, says Mr Mahfouz’s lawyer, Laurence Harris. He adds: “It doesn’t appear that we’ve had any chilling effect at all on her free speech.” (Even now, British booksellers are offering second-hand copies of Ms Ehrenfeld’s book over the internet.) Although Ms Ehrenfeld is sometimes portrayed as being unable to come to Britain because of the lawsuit, he says there is no reason why she can’t visit England “unless she is bringing a lot of money with her”. He notes: “We abolished debtors’ prisons some time ago.”

Nonetheless, cases such as these have outraged campaigners for press freedom in both Britain and America, who are trying to change the law in both countries. The states of New York and Illinois have passed laws giving residents the right to go to local courts to have foreign libel judgments declared unenforceable if issued by courts where free-speech standards are lower than in America. Ms Ehrenfeld sought such a ruling in late 2007 in New York state courts but failed; with the new law in place she may try again.

Now the campaign has moved to the American Congress. A bill introduced into the House of Representatives last year by Steve Cohen, a Democrat, sailed through an early vote but stood no chance of becoming law. A much tougher version submitted to the Senate, the Free Speech Protection Act, also gives American-based litigants an additional right to countersue for harassment. The bills have been strongly supported by lobby groups such as the American Civil Liberties Union, which fear that the protections offered by the First Amendment are being infringed by the unfettered use of libel law in non-American jurisdictions.

Similar concerns are being expressed in Britain. In a debate in the House of Commons last month Denis MacShane, a senior Labour MP, said that “libel tourism” was “an international scandal” and “a major assault on freedom of information”. Lawyers and courts, he said, were “conspiring to shut down the cold light of independent thinking and writing about what some of the richest and most powerful people in the world are up to.” He cited, among others, cases heard in London where a Tunisian had sued a Dubai-based television channel and an Icelandic bank had sued a Danish newspaper.

Mr MacShane also said the Law Society should investigate the actions of two leading British firms that act for foreign litigants, Schillings and Carter-Ruck, implying that they were “actively touting for business”. Neither wished to comment on the record, though both, like other big law firms, have websites promoting their services and highlighting their successes.

British members of a parliamentary committee dealing with the media are now broadening a planned inquiry into privacy law and press regulation. The chairman, John Whittingdale, says the committee has received a large number of submissions from people worried about libel tourism.

These go well beyond the usual media-freedom campaigners. Groups that investigate government misbehaviour say their efforts are now being hampered by English libel law. “London has become a magnet for spurious cases. This is a terrifying prospect to most NGOs because of legal costs alone,” says Dinah PoKemper, general counsel at the New York-based Human Rights Watch. It recently received a complaint from lawyers acting for a foreign national named in a report on an incident of mass murder. “We were required to spend thousands of pounds in defending ourselves against the prospect of a libel suit, when we had full confidence in the accuracy of our report,” she says.

The problem is not just money. Under English libel law, a plaintiff must prove only that material is defamatory; the defendant then has to justify it, usually on grounds of truth or fairness. That places a big burden on human-rights groups that compile reports from confidential informants—usually a necessity when dealing with violent and repressive regimes. People involved in this kind of litigation in Britain say that they have evidence of instances where witnesses have been intimidated by sleuthing and snooping on behalf of the plaintiffs, who may have powerful state backers keen to uncover their opponents’ sources and methods.

Private matters

A further concern is what Mark Stephens, a London libel lawyer, calls “privacy tourism”, arising out of recent court judgments that have increased protection for celebrities wanting to keep out of the public eye. In December alone he has seen seven threatening letters sent by London law firms to American media and internet sites about photos taken of American citizens in America. “Law firms are trawling their celebrity client base,” he says.

The more controversial and complicated international defamation law becomes, the better for lawyers. The main outcome of the proposed new American law would be still more court cases, with lucratively knotty points of international jurisdiction involved. Prominent Americans with good lawyers may gain some relief, but for news outlets in poor countries it is likely to make little difference. And as Floyd Abrams, an American lawyer and free-speech defender, notes, a book publisher, for example, will still be nervous about an author who has written a “libellous book”.

Mr Stephens, the London lawyer, is taking a case to the European Court of Human Rights, where he hopes to persuade judges that the size of English libel damages is disproportionate. If you get only around £42,000 for losing an eye, why should you get that much or more from someone writing something nasty about you, he asks. But even limiting damages is not enough. For reform to have any effect, it will have to deal with the prohibitive cost of any litigation in London.

Sikorski for NATO

Europe.view

What Santa can bring Eastern Europe
Dec 27th 2008
From Economist.com


Radek Sikorski for NATO chief


THE reindeer are harnessed, the sledge laden. So what will Santa Claus bring the ex-communist countries for Christmas? Desirable presents are easy to think of. A respite from the economic downturn. A less chauvinist attitude from Russia. A more considerate approach from Germany. Attention from the new American administration. But these belong in the same charming but unrealistic category as a child’s wish-list on which “no school”, “a fairy carriage” and “machine gun” are scrawled in crayon.

Rather more likely—and genuinely desirable—would be the appointment of someone from the once-captive nations to a top international job. Since the collapse of communism, the record on this has been dismal. Russia chaired the G-8 (though most of the countries attending the St Petersburg summit did so while wincing at their host’s behaviour). Slovenia held the European Union’s presidency competently (though close inspection revealed a tight French embrace of the EU’s nominal leadership).

But in terms of the big appointments, such as running the EU Commission and NATO or even the lesser posts such as leading the Organisation for Security and Co-operation in Europe, the Council of Europe, the European Bank for Reconstruction and Development or anything at the United Nations, it is hard to find anyone from eastern Europe who has held anything remotely resembling a top job. The message is: be grateful for your EU commissioners; now shut up.



The new member-states of NATO and the EU feel they have been rather poorly treated in the past year or so. Germany snubbed them at the Bucharest NATO summit. The EU told them they were silly to care about Georgia, imposed a single flimsy sanction on Russia and then was unable to maintain even that.

Much of the responsibility for this lies with the French president, Nicolas Sarkozy. He has also flirted with the Kremlin’s new scheme for European security. This involves kicking the Americans out, sidelining NATO, and allowing Russia and the big EU countries to stitch things up between them.

In private briefings, French and other west European officials are already undermining the upcoming Czech EU presidency, sneering and jeering at the idea that the dumpling-munching peasants of Bohemia can match the grandeur of France. They also grossly overstate the importance (more accurately: nuisance value) of the abrasive Czech president, Vaclav Klaus. All EU states are equal, Mr Sarkozy concedes. But the bigger ones have “more responsibilities” (and are less equal, George Orwell might have concluded, than others).

Next year, if the Lisbon treaty is ratified, the following jobs will come open: presidents of the EU Commission (an existing post) and the EU Council (a new one), plus EU foreign minister, NATO secretary-general and president of the European parliament. As things stand, the east Europeans will get only the last of these—which is by far the least important.

That is not just unfair. It’s risky. It will alienate the east Europeans and make their political elites feel mutinous. East European countries have plenty of ways to slow down EU decision-making. So far, they have for the most part been at pains to show that they are good Europeans. That cannot be taken for granted.

Here is a possible way out: the NATO top job should go to a heavyweight Atlanticist politician, with expertise in defence policy, from a new member state. That produces a shortlist of roughly two: Radek Sikorski, Poland’s foreign minister (and former defence minister) or Sasha Vondra, the Czech deputy prime minister. Poland’s status as a defence heavyweight makes Mr Sikorski’s case the stronger. Let’s hope Santa sees it that way too.

Cromwell book review

Oliver Cromwell

Headless story
Dec 30th 2008
From The Economist print edition



Cromwell's Head
By Jonathan Fitzgibbons

BEHEADED posthumously, as punishment for his part in the execution of Charles I in 1649, Oliver Cromwell’s fate after death matches his grippingly controversial life. Was it really his body that was buried in Westminster Abbey in 1658, with jarring pomp and ceremony? Was the same corpse exhumed and mutilated after Charles II came to the throne, ending Britain’s brief experiment with republicanism and military rule? Was it really the Lord Protector’s head that was rammed on a pike in Whitehall, to discourage regicides, only to be blown down in a gale and swiped by a soldier? And was it really that same head, battered and worm-eaten, with an iron spike still rammed through the skull, that became a souvenir, a vulgar curiosity, a treasured relic and was finally in 1960 secretly laid to rest in the chapel of Sidney Sussex College, Cambridge, where the young Cromwell briefly studied?

Jonathan Fitzgibbons answers these questions ably. The head is indubitably Cromwell’s: though the provenance is a little cloudy in the early 18th century, it beggars belief that a fraudster of that era would be able to fool forensic science many years later. The body was embalmed before it was beheaded; and the skull measurements correspond almost exactly with extant portraits of the Lord Protector.



The interesting historical detective work, and some neat demolition of myths and conspiracy theories, bring Mr Fitzgibbons half-way through a short book. After that comes a potted history of the aftermath of the English civil war, starting with the botched scheming that led the maddeningly duplicitous Charles I to lose not only the military conflict but also his head.

The regime that succeeded him was an uneasy tussle between idealists and a would-be military junta. Cromwell himself, that walking paradox, was neither as austere nor as principled as portrayed in most textbooks. His behaviour was marked by an oddly prankish streak and outbursts of genuine jollity. His refusal of the crown was both his greatest achievement and his biggest mistake. The author sums up his subject’s gravest weakness as “nihilistic overconfidence”. Like so many other revolutionaries, his regime became tyrannical and collapsed when he died.

This work is part of a venture into the book trade by Britain’s National Archives. Unlike stingy private-sector publishers these days, they have indulged in such rarities as a proper index, footnotes, bibliography and colour plates. It is a pity that they seem to have skipped the copy-editing. Cromwell appears chattily as “Oliver”. “May” and “might” are used interchangeably. An Oxford anatomy professor is said to have been “pouring” over documents in 1875 to expose a fake. Britain’s republican hero deserves better.

Global warming--why our diet is getting hotter

Chilies

Dec 18th 2008
From The Economist print edition


Why the world has taken to chilies

TASTELESS, colourless, odourless and painful, pure capsaicin is a curious substance. It does no lasting damage, but the body’s natural response to even a modest dose (such as that found in a chili pepper) is self-defence: sweat pours, the pulse quickens, the tongue flinches, tears may roll. But then something else kicks in: pain relief. The bloodstream floods with endorphins—the closest thing to morphine that the body produces. The result is a high. And the more capsaicin you ingest, the bigger and better it gets.

Which is why the diet in the rich world is heating up. Hot chilies, once the preserve of aficionados with exotic tastes for cuisine from places such as India, Thailand or Mexico, are now a staple ingredient in everything from ready meals to cocktails.

One reason is that globalisation has raised the rich world’s tolerance to capsaicin. What may seem unbearably hot to those reared on the bland diets of Europe or the Anglosphere half a century ago is just a pleasantly spicy dish to their children and grandchildren, whose student years were spent scoffing cheap curries or nacho chips with salsa. Recipes in the past used to call for a cautious pinch of cayenne pepper. For today’s guzzlers, even standard-strength Tabasco sauce, the world’s best-selling chili-based condiment, may be too mild. The Louisiana-based firm now produces an extra-hot version, based on habanero peppers, the fieriest of the commonly-consumed chilies.

But for the real “heat geeks”, even that is too tame.

Tesco, Britain’s biggest supermarket chain, recently added a new pepper to its vegetable shelves: the Dorset naga. Inhaling its vapour makes your nose tingle. Touching it is painful; cooks are advised to wear gloves. It is the only food product that Tesco will not sell to children. By the standards of other chilies, it is astronomically hot. On the commonly used Scoville scale (based on dilution in sugar syrup to the point that the capsaicin becomes no longer noticeable to the taster) it rates 1.6m units, close to the 2m score of pepper spray used in riot control. The pepper that previously counted as the world’s hottest, the Bhut Jolokia grown by the Chile Pepper Institute at the New Mexico State University, scored just over 1m. That in turn displaced a chili grown by the Indian Defence Research Laboratory in Tezpur, which scored a mere 855,000. The hottest habanero chilies score a wimpy 577,000.

The naga, originally from Bangladesh, was developed commercially by Michael Michaud, who runs a specialist online chili supply firm in south-western Britain. Having spotted it in an ethnic-food shop in the coastal town of Bournemouth, he bred a dependable and much hotter strain and had it tested. “I sent the powder to a couple of labs. They didn’t believe the reading. They thought they had made a mistake,” he recalls. Jonathan Corbett, the buyer who handles (cautiously) specialist chilies for Tesco says that the naga makes a standard hot curry “taste like a bowl of breakfast cereal”.

The naga has been a runaway success. In 2007, a Tesco outlet in Newcastle in northern England was supplied with 400 packs for a pilot period that was intended to last a month. The entire stock sold out on the first morning. According to AC Nielsen, a market-research firm, demand for hot chilies across all British retailers rose by 18% in the last year. At Tesco, the growth has been 29%. Demand for the naga has been so high that it has been forced to sell unripe green ones, intended for sale early next year. Tesco’s supplier is Britain’s biggest chili farmer, Filippo Salvatore. Based near Biggleswade, he is also a leading light in the Bedford Sicilian Association. He is hurrying to grow more.

Tesco is one of the world’s largest retailers, with outlets in both continental Europe and North America. But Mr Corbett says that his colleagues have no plans to stock the naga elsewhere, for example in the firm’s Fresh & Easy chain in America. “Tastes in the UK are hotter,” he says. That may be true, though the chili-eating milieu is certainly bigger in America, where the calendar is dotted with events such as the rumbustious Fiery Foods and Barbeque Show (in Albuquerque) and the more academic 19th International Pepper Conference (which took place in September in Atlantic City, concluding with a barbecue).
AP
AP

From pain comes pleasure

For connoisseurs though, the macho hullabaloo about ever-hotter chilies is distasteful, even vulgar: rather like rating wine only according to its alcohol content. Steve Waters, who runs the South Devon Chili Farm, says even the idea that the spectrum runs on a simple one-dimensional axis between “hot” and “mild” is misleading. He prefers the more complex Mexican matrix, which categorises chilies both by heat, and whether they are fresh, dried, pickled, or smoked. Any of these can produce big changes in flavour: he highlights the Aji (pronounced ah-hee), a Peruvian chili, which “ripens to bright yellow, with a strong lemony taste when fresh, very zesty. When dried it picks up a banana flavour.”

From this point of view, the most interesting trend is not in ever-higher doses of capsaicin for the maniac market, but in the presence of chili in a range of foodstuffs that previous generations would have regarded as preposterous candidates for hotting up. Chili-flavoured chocolate, for example, has gone from being a novelty item to a popular mainstream product. Mr Waters sells “hot apple chili jelly” as a condiment for meat, and chili-infused olive oil.


Adrenalin plus natural opiates form an unbeatable combination

The reason may be that capsaicin excites the trigeminal nerve, increasing the body’s receptiveness to the flavour of other foods. That is not just good news for gourmets. It is a useful feature in poor countries where the diet might otherwise be unbearably bland and stodgy. In a study in 1992 by the CSIRO’s Sensory Research Centre, scientists looked at the effect of capsaicin on the response to solutions containing either sugar or salt. The sample was 35 people who all ate spicy food regularly but not exclusively. Even a small quantity of capsaicin increased the perceived intensity of the solutions ingested. Among other things, that may give a scientific explanation for the habit, not formally researched, of snorting the “pink fix” (a mixture of cocaine and chili powder).

A chili-eating habit may develop to a startling degree (your author guzzled a packet of nagas while writing this article, and puts Tabasco in his coffee). But indulging in capsaicin does not quite meet the formal medical definitions of addiction. It is at most a craving, not a physical necessity. It does not cause loss of control when taken to excess, or illness in those deprived of it: heavy users may develop remarkable degrees of tolerance, but they do not require regular doses simply in order to feel normal. The preference does not wear off: ex-smokers, by contrast, may gag at the taste of a cigarette. And the effect on the brain is different: with nicotine, the more you smoke, the more you want.

Indeed, capsaicin has useful medical effects. By disabling a part of the nervous system called “transient receptor potential vanilloid 1” it can stop the body registering the pain caused by rheumatoid arthritis, for example. It can also be used to help patients with multiple sclerosis, amputees, and people undergoing chemotherapy. With rather less scientific evidence, a capsaicin product is marketed as an alternative to Botox, a wrinkle-smoothing cosmetic treatment.

But does it do any harm? The use of pepper spray as a weapon, and chili powder as a means of torture, suggests that it must. Certainly capsaicin can be painful, causing stress: in itself a potential health risk. A big dose incapacitates. But as far as permanent physical damage is concerned, the evidence is negligible to non-existent.

That seems to contradict common sense, which suggests that hot food causes an upset stomach—or what medical specialists call “gastric mucosal injury”. A study in 1987 on the effects of ordinary pepper produced some signs of gastric exfoliation (stripping away the stomach lining) and some bleeding—though the effects were less than those produced by aspirin. An alarming-sounding experiment a year later involved volunteers being fed minced jalapeño peppers through a tube, directly into the stomach. The results, observed by an endoscope (a camera on a tube) revealed no damage to the mucous membrane. Against that is a study of heavy chili-eaters in Mexico City, who appeared to have higher stomach cancer rates than a control group. But the rate of illness had no correlation with the frequency of chilies eaten, leading to speculation that other factors may be at work.

Humans are the only mammals to eat chilies. Other species apparently reckon that nasty tastes are a powerful evolutionary signal that something may be poisonous. Paul Rosin, a psychology professor at the University of Pennsylvania, who is one of the world’s best-known authorities on the effects of capsaicin, has had no success in persuading rats to eat chilies, and very limited success with dogs and chimpanzees: the handful of cases where these animals did eat chilies seemed to be because of their strong relationships with human handlers.

That offers a clue to the way in which mankind comes to develop a chili habit. In the same way as young people may come to like alcohol, tobacco and coffee (all of which initially taste nasty, but deliver a pleasurable chemical kick), chili-eating normally starts off as a social habit, bolstered by what Mr Rozin calls “benign masochism”: doing something painful and seemingly dangerous, in the knowledge that it won’t do any permanent harm. The adrenalin kick plus the natural opiates form an unbeatable combination for thrill-seekers. Just don’t get it in your eyes.

Latvia on the brink

Latvia's troubled economy

Baltic brink

Dec 18th 2008
From The Economist print edition

Latvia has chosen economic torture over complete collapse

ONE of the more dramatic and controversial financial rescues in modern European history has been taking shape in Latvia over the past three weeks, led by officials from the International Monetary Fund and backed by neighbouring countries, the European Union and other institutions. Latvia’s central bank has burned through €1 billion ($1.4 billion), around a fifth of its reserves, since mid-October to defend the national currency, the lat. This is pegged to the euro in an arrangement similar to a currency board, but with an even bigger lump of foreign currency to back local money in circulation. As a stopgap measure, the Swedish and Danish central banks this week offered a combined €500m in short-term swap facilities, allowing the central bank to keep exchanging lats for euros. The IMF-led bail-out—so far agreed only in outline—is likely to amount to over €7 billion, with contributions from the Fund, Nordic countries and Latvia’s Baltic neighbour, Estonia.

The deal does not require Latvia to devalue its currency. This is highly controversial inside the IMF, where memories of the debacle over Argentina’s abandonment of its currency board in 2002 are still painful. But ending the currency peg would be tricky, not least because the central bank’s independence is constitutionally entrenched. It would bring little lasting benefit. And it would be deeply unpopular. Some 85% of loans to Latvian households and firms are denominated in euros and other foreign currencies.

The clinching argument was the damage that a devaluation could wreak elsewhere. Swedish and Finnish banks, which own the bulk of Latvia’s banking system, could find their own creditworthiness suffering. Although total exposure to Latvia is still small, the perception of risk is damaging. In late October, the Swedish government launched a loan guarantee plan of SKr1.5 trillion ($190 billion) to allay fears about its banks’ future.

A Latvian devaluation would also be likely to topple the currency boards of Estonia and Lithuania, and to endanger the precarious stability secured in recent weeks in other wobbly east European countries such as Hungary. The IMF said this week that it did not believe that either Estonia or Lithuania needed to abandon their currency boards. However, big current-account deficits there and in other east European countries remain a worry.

The bail-out plan makes unprecedented demands for fiscal adjustment to trim both the current-account deficit and inflation. After some years of double-digit growth (during which a complacent government signally failed to cool the economy), Latvia faces a 5% or greater contraction in GDP next year. The tax rises and spending cuts that have been agreed upon are worth a full 7% of GDP. Public-sector salaries will fall by 15%. Private employers are making deep wage cuts too.

Latvia’s flexible economy may fare better than the political system, which is notable for fragmented parties, squabbling mediocrities, dodgy business lobbies and abuse of power (the security police briefly arrested an economics lecturer who urged people to keep their savings in foreign currency in cash). The prime minister, Ivars Godmanis, is a heavyweight, but lacks a competent team. This matters as the plan calls for big structural changes, including thorough reform of the financial system. The crisis was precipitated by the near-failure of a locally owned bank, Parex, which enjoyed a lively offshore business taking deposits from Russians, some of which appear to have been lent, unwisely, to locals. Having pushed the central bank into printing 200m lats ($390m) to support Parex, the government is now nationalising it.

Assuming that the bilateral elements in the plan are finalised, it may yet be agreed upon at an IMF board meeting shortly before Christmas. Any delay risks creating new room for speculators to try to attack the currency, and for locals to panic and turn more lats into euros (after some unwise remarks by the finance minister about a possible devaluation, the central bank lost more than €100m in reserves in a single day). Negotiating the plan has involved hectic late-night sessions in which outside officials have given locals copious instructions on the details of reform measures and the lobbying needed to gain support for them. It seems to have worked. But only for now.