I saw a brief interview with England’s coach Sven-Goran Eriksson after the draw. In his usual way he didn’t say much of any substance but did say that ’there are no easy games in the European Championships.’ While it may be a cliche, it’s become one because it’s broadly true - while some countries may have draws that are relatively easier compared to others, no coach or player can be looking at this draw thinking they’ve got an easy path through to the quarter-finals. The closeness of the tournament means that any team who’ve qualified for the finals has a chance of winning - and as Denmark showed in 1992, sometimes you can win it even if you failed to qualify!

Another cliched phrase used in major championships is the ’Group of Death’. Before the draw, I’d expected that it would be applied to whichever group France were drawn in, but while Group B is difficult, and neither the French nor the English will be entirely pleased with facing each other in their opening match, it’s likely to be Group D that has the Grim Reaper attending most of its matches, though he’ll want to keep an eye on the others as well.

Group A offers up two interesting matches. Firstly, the chance for Greece and Spain to renew their rivalry from the qualifying round when Greece surprisingly won the group and forced Spain into the playoffs. Greece will be wanting to prove that their qualifying form wasn’t a fluke while Spain will be trying to yet again shake off their tag as a team who flatter to deceive at major tournaments. Secondly, there’s the Iberian derby between Spain and Portugal. As hosts, Portugal will be hoping to use their home advantage to good effect, though it’s worth noting that the last time the hosts of the tournament reached the final was France’s victory in 1984. Russia could be dark horses in this group, though they weren’t that impressive in qualification - they struggled to beat Wales in the play-offs and their path there was eased by Ireland’s implosion in the qualifying tournament.

It’s tempting to say that the winners of Group B will be determined by the opening game between France and England. On paper, both sides seem much stronger than Croatia and Switzerland but they’re two of the most consistently inconsistent teams in international football (though neither can yet rival the Dutch). France qualified easily, but are still haunted by their failure at the 2002 World Cup, and English fans despair over the fact that the team who outclassed Turkey in their two qualifying matches were the same players who laboured against the likes of Slovenia and Macedonia. While neither the Croats nor the Swiss have players of the quality of Zidane, Beckham, Henry or Owen, both qualified well and will know that they’re in with a chance of pulling off surprises.

Group C should be dominated by Italy, who would appear to be a much better side than the other three. However, they’re notorious as slow starters in major championships and an opening match against Denmark could be a major test for their ambitions. Again, like Group B, it will become a test of a team that looks strong on paper with the potential to win the tournament, against teams who may seem weaker and aren’t full of household names, but who have a level of organisation and determination that can surprise a team who play them expecting to win. This is the only group where all four teams won their qualifying group, reflecting its strength in depth. Its a group that’s unlikely to produce and great matches (but then, who would have predicted the drama of Yugoslavia vs Slovenia in Euro 2000?) but it is likely to be one of the closest of the four.

Finally we have Group D (for Death? How the headline writers must love that!) which offers the continuation of many rivalries. It’s starts with a chance for the Dutch and Germans to re-enact their infamous meeting in the 1990 World Cup then the Dutch and the Czechs have the chance to renew their battles from qualifying, before concluding with a replay of the Euro 96 final between Germany and the Czech Republic. It would be easy to ignore the Latvians amongst these clashes, and while they are probably the weakest side in this group, their defeat of Turkey in the play-offs means the other three will be wary of meeting them. Indeed, the lack of expectations for Latvia, coupled with the fact that this is their first major tournament, could well work to their advantage as they’ll be there with nothing to lose and the pressure on the other three to beat them could provide them with the chances on the counter-attack that beat Turkey. As has happened in many previous tournaments, this group could be decided by which Dutch team turns up - the squabbling assembly of individuals who lost 1-0 to Scotland in the first leg of the playoffs or the collective of practitioners of Total Football who destroyed the Scots 6-0 four days later.

At this stage, with over six months till the first ball is kicked, predictions are a hostage to fortune, but I’ll offer one anyway. France appear to have learned the lessons of their World Cup embarassment and they’re my tip to lift the trophy on July 4th, but it’s going to be a tough competition with Italy, Spain, England, Germany and the Netherlands offering serious threats to their chances of retaining the title.

EU body shelves report on anti-semitism
By Bertrand Benoit in Berlin
Published: November 21 2003 21:10 | Last Updated: November 21 2003 21:10

The European Union’s racism watchdog has shelved a report on anti-semitism because the study concluded Muslims and pro-Palestinian groups were behind many of the incidents it examined.

The Vienna-based European Monitoring Centre on Racism and Xenophobia (EUMC) decided in February not to publish the 112-page study, a copy of which was obtained by the Financial Times, after clashing with its authors over their conclusions.

The news comes amid growing fears that there is an upsurge of anti-semitism in European Union countries. Among many recent incidents, a Jewish school near Paris was firebombed last Saturday, the same day two Istanbul synagogues were devastated by suicide truck bombs that killed 25 and wounded 300.

Turkey, which hopes to join the EU, suffered again at the hands of what are believed to be al-Qaeda inspired terrorists on Thursday with truck bomb attacks on British targets.

Following a spate of incidents in early 2002, the EUMC commissioned a report from the Centre for Research on Anti-semitism at Berlin’s Technical University.

When the researchers submitted their work in October last year, however, the centre’s senior staff and management board objected to their definition of anti-semitism, which included some anti-Israel acts. The focus on Muslim and pro-Palestinian perpetrators, meanwhile, was judged inflammatory.

“There is a trend towards Muslim anti-semitism, while on the left there is mobilisation against Israel that is not always free of prejudice,” said one person familiar with the report. “Merely saying the perpetrators are French, Belgian or Dutch does no justice to the full picture.”

Some EUMC board members had also attacked part of the analysis ascribing anti-semitic motives to leftwing and anti-globalisation groups, this person said. “The decision not to publish was a political decision.”

The board includes 18 members - one for each member state, the European Commission, Parliament, and the council of Europe - as well as 18 deputies. One deputy, who declined to be named, confirmed the directors had seen the study as biased.

In July, Robert Wexler, a US congressman, wrote to Javier Solana, the EU’s foreign policy chief, demanding the release of the study.

Ole Espersen, law professor at Copenhagen University and board member for Denmark, said the study was “unsatisfactory” and that some members had felt anti-Islamic sentiment should be addressed too.

The EUMC, which was set in 1998, has published three reports on anti-Islamic attitudes in Europe since the September 11 attacks in the US.

Beate Winkler, a director, said the report had been rejected because the initial time scale included in the brief - covering the period between May and June 2002 - was later judged to be unrepresentative. “There was a problem with the definition [of anti-semitism] too. It was too complicated,” she said.

This week, Silvan Sha lom, Israel’s foreign minister, proposed a joint ministerial council to fight what Israel sees as a rise in European anti-semitism.

From where I’m sitting they may in fact not be too long in coming. Now this, as I’ve said many times over is not an economics blog, but sometimes it’s impossible not to get entangled a bit. Looking at the Economist article David points to, I cannot help noticing this:

Member governments have found it impossible to live with the pact. But can they live without it? So far, the financial markets seem to think so: for them, ignoring the pact was a less troubling outcome than enforcing it. Now they can look forward to a cyclical recovery in Europe unthreatened by inopportune fiscal rigour. The return of growth should restore most euro-area governments—in France, Germany and elsewhere—to a better fiscal balance. As it does, the hoo-ha over excessive deficits will recede.

I really cannot agree with this interpretation of the market reaction. I don’t think there was a huge welcome for the decision, I just think there is no alternative to a relatively high euro at the moment, since the consensus view is that the dollar is overvalued. So the euro is staying up by default. This is not a very happy situation, and I would consider it a highly unstable one. If you want we are in an unstable, not a stable equilibrium: we are resting stationary on the hilltop, not sitting comfortable in the valley bottom.

I also think that the ’return to growth’ scenario, particularly in the German case, is like spitting in the wind. The pact and the ’structural reforms’ went hand in hand. Now the idea is that despite suspending the pact the reforms will go ahead. But, as I have argued long and often, these reforms - necessary as they may be in many cases - are growth and consumption negative, not vice versa. Germany has little way out of a protracted period of more or less painful adjustment. I wouldn’t be expecting any ’growth miracles’. Now the big danger is that the pact is gone and that one and two years from now the deficit remains the same or worse, without any serious growth impact. This is when the real effect of what just happened would be noticed, and this is where comparisons with Bush’s now famed fiscal trainwreck would spring immediately to mind.

Why is this? Well again, I think I’ve been arguing it long and often, and like I said, like Zalm, I’m tired. Even I am begining to get bored with me. I prefer to wait until the writing on the wall gets just a little bit clearer, and there is really something new to say. So for a change, why don’t I hand you over to Bloomberg’s Caroline Baum. It may be a bit of a rant, but the points she is making are valid. And if we’re knocking Bush, and not saying the same over here, then we really aren’t being either very coherent or very consistent.

Party On, Euro. The Fiscal Time Bomb Is Ticking:

Caroline Baum

Nov. 28 (Bloomberg) -- Germany and France, the euro zone’s two largest economies, dodged another bullet.

The two countries, the linchpin of the European monetary union, were given more time to reduce their budget deficits to comply with the Growth and Stability Pact, one of the cornerstones of monetary union.

Tuesday’s contentious meeting of European finance ministers ended with a hardly unanimous decision to give Germany and France until 2005 to bring their deficits down to 3 percent of gross domestic product, a target they’re expected to exceed for the third consecutive year in 2004. The Organization for Economic Cooperation and Development already cast doubt on the viability of the 2005 deadline.

The smaller countries weren’t happy: Ministers from Spain, Finland, Austria and the Netherlands voted against giving Germany and France a stay of execution. The European Central Bank was miffed. The European Commission was outraged. Economists wrote the epitaph of Europe’s fiscal-policy framework.

And as for the euro, it suffered a mild case of dyspepsia lasting 24 hours before it went back to basking in the glow of the dollar’s despised status. After all, the U.S. is the one with the really bad fiscal problem.

Tick, Tick, Tick

Not so fast. “A pension time bomb is threatening European integration,” says Jose Pinera, the founder and president of the International Center for Pension Reform and the architect of Chile’s pension privatization.

Europe’s aging population, high structural unemployment, huge unfunded pension liabilities and generous welfare state -- not to mention constituencies that go on strike at the mere suggestion of any diminution of benefits -- make its pending fiscal crisis worse than that of the U.S., according to economists who use governments’ future liabilities to calculate the fiscal gap.

And because Europe’s union is monetary, not political, its future is threatened.

“History suggests that asymmetric fiscal problems quickly cause monetary unions between fiscally independent states to dissolve,” Pinera says.

Pinera, a pied piper of pension reform, divides Europe into two categories, which I’ll call “good” and “bad.” In the good group are countries with large private pension systems (the U.K. and the Netherlands), countries that have recently introduced personal retirement accounts (Sweden and Poland), and countries with sound public finances (Ireland and Luxembourg).

Bad Lands

In the bad (and ugly) category are the big monetary union countries: Germany, France, Italy and Spain. These countries “have no private pension systems and are hugely in debt,” Pinera says. “Their fiscal problems pose an enormous problem to the unity of the euro zone.”

Tweaking the current pay-as-you-go system -- modest tax increases here, small benefit reductions there -- won’t work. Only structural reform will solve Europe’s looming pension crisis.

“If Europeans don’t want to have babies, they have to have money in private pension accounts,” Pinera says.

The good countries, which joined the European monetary union so they could be more like the bad countries when they were good, are learning that those who made the rules don’t have to play by them. With their own finances in relatively good order, these countries won’t want to bear the costs of compliance forever. Nor will they want to see the value of the euro eroded by inflation, the old-fashioned way for governments to meet outstanding obligations.

Generations Apart

The U.S. faces a crisis as well, with the baby boomers getting ready to retire and the two largest social insurance programs, Social Security and Medicare, threatening to gobble up the entire federal budget.

Traditional budget accounting, which concerns itself with the annual or multiyear deficit/surplus and total national debt outstanding, may have been fine when the government was spending money on planes and roads. With huge demands from these unfunded programs, some economists are advocating generational accounting as a better measure of a country’s fiscal gap.

Generational accounting calculates the present value of all current and future government obligations -- spending on goods and services, transfer payments and net debt -- and offsets them with current and expected tax receipts in an attempt to measure the “fiscal burdens confronting current and future generations under existing policy,” says Laurence Kotlikoff, professor of economics at Boston University.

‘Menu of Pain’

The news isn’t pretty. According to an analysis economists Jagadeesh Gokhale and Kent Smetters did for the Treasury that was buried and subsequently published by the American Enterprise Institute, the U.S. fiscal gap is about $45 trillion -- and that’s before the new Medicare prescription drug benefit is factored in.

What would it take to eliminate the fiscal imbalance? Gokhale and Smetters’s “menu of pain” outlines various options:

-- double the current payroll tax of 15.3 percent, with no cap;

-- increase federal income taxes by two-thirds;

-- cut Social Security and Medicare benefits by 45 percent;

-- eliminate all federal discretionary spending.

The viability of all of these options suggests some degree of pension privatization is the only way out of demographic distress, as fewer workers support a growing number of retirees.

Deaf Ears

If the dollar’s current weakness is about the lack of budget discipline, what should we say about Europe’s predicament?

“By 2025, nearly one third of Europe’s population will qualify for retirement benefits,” Pinera says.

Drastic payroll tax increases or benefit cuts would be required just to keep the pension system going. Ultimately the constraints would lead to a “generational war, with young people resenting higher payroll taxes and the confiscation of their savings,” Pinera says.

Both Kotlikoff and Gokhale agree that Europe faces a bigger pension hurdle than the U.S., with Japan holding the No. 1 ranking.

Kotlikoff, who’s been preaching fiscal Armageddon for 10 years, is “short bonds,” has a “big mortgage” (counting on inflation) and is “thinking about gold.” He’s still waiting for capital markets to catch on.

“Our country is bankrupt,” he says.

I ask him when everyone else will get the joke.

“As soon as bond traders who read Bloomberg News read this and understand, they will mark bonds way down in price,” Kotlikoff says.

I gently remind him I spoke to him and wrote a column on generational accounting three years ago. Everyone must have missed it.

Second question first. Oddly enough, you haven’t seen anybody predicting the beginning of the end for the euro. That’s a natural conclusion an economist might arrive at. Yet even the most hard-headed eggheads appreciate that the euro is a vast experiment into which European elites have already invested too much political capital to even think about letting it fail.

As for the rulebook, it’s worth harkening back to some of the arguments made for and against European Monetary Union back in the early 1990s. Through a friend who’s much smarter than me, I have a brief understanding of one of the more coherent -- and understandable -- arguments in that debate. The argument, made by an MIT professor named Rudi Dornbusch (who passed away last year), goes something like this:

Take a guy from Amarillo and a guy from Sausalito. They use the same currency, the almighty greenback. They can do this in large part for two reasons: the generousity of Uncle Sam and the affordability (and willingness to use) one-way U-Haul trucks.

If the economy tanks in Texas but stays relatively strong in California, having a common currency might be a problem, because a Texas dollar can’t be devalued to pump some life into the local economy. A dollar’s a dollar. Ditto for interest rates. But in the Unites States, this works because:
a) Washington is likely to even things out by taking some of California’s extra money and sending it to Texas. (A lot of this happens through so-called automatic stabilizers, like federal unemployment compensation, which kick in without politicians having to get their hands dirty.)
b) If things get really bad in Texas, people will pack up and move to California where the work is.

Now the question for the Europeans was (and remains) whether they can hold their currency union together without these two characteristics -- federalized spending and inter-regional mobility. If there’s a huge recession in Portugal, are the Portuguese really going to move to where the jobs are in Germany? (Or vice versa?) How are the Germans going to feel about a flood of swarthy Iberians who don’t speaka the Deutsche invading their labor market? Or how are the Germans going to feel about a huge chunk of their tax dollars going to bail out the Portuguese economy?

This argument isn’t my own, but it’s through this prism through which I’ve always seen the euro project and stability pact. Basically, the pact says, you have your budget and we have our budget; you don’t overspend, we don’t overspend, the boat stays steady and nobody gets hurt.

It’s worth reading what Dornbusch himself said (it’s a PDF document) a few years later, after the euro, ready or not, actually arrived:

[T]he fact is, it did happen. The Maastricht criteria were a forceful mechanism to give governments a fresh argument against procrastination on fiscal laxness and casualness in anti-inflation policy. It worked and there was not even much cheating at the end. Those who said “impossible” (including this writer) were embarassed by those who did it.

If he were around today, I wonder how Dornbusch might reassess that evalation of “not even much cheating.”

We’ll see. The question is what, if anything, replaces this stability pact. It seems to me all the core European issues -- eastward expansion, the federal question, the constitution, and how the eurozone and the ECB fits into the picture -- will have to come to a head one of these days. But let’s be honest: the European political class specializes in muddling through and never letting anything come to a head. Taking the long view, not only is this sometimes a good thing, but I get the feeling it’s sort of the point of the whole European integration project.

His boss responded creatively: he contracted a hall with 200 workers in India. These workers spend their day typing the image responses manually into a data base. Currently they have entered something like 500,000 images. (It also occurs me that systematic spam must do something like this: the bacteria-antibiotic effect). The recounting of this story lead my Argentina blogging friend Marcelo to make the following highly perceptive observation:

The image of the wharehouse of people defeating the turing-test safeguards is extremely interesting. At the risk of sounding callous, I think that an interesting way of conceptualizing what’s happening in India and China is that Moore’s law is applying to humans: the capacity of a person you can rent for $1 is increasing fast, thanks to a bigger pool of people and better technology to teach and connect them. Of course the pool of people is finite, and eventually you start getting higher wages, but the principle is the same - and if stuff like MIT’s Open Courseware works well, the trend might well continue.

Now I think he really has a point here. The internet skeptics are so busy being skeptical that they don’t notice when the roof is falling in around their heads.

On my website deflation page I identify three factors which might be contributing to a global deflationary environment: OECD ageing, surplus labour in China (and now, increasingly, of course, India), and the falling price of information. Now I have never really been to clear where to go with this third one, it was more a case of reading Kurzweil and extrapolating what to me was the obvious. Now Marcelo has come along and put it very succinctly: Moore’s law as it applies to humans. And like the other version of the law, the only remaining question is how long can this run till we hit specific physical limits. I think Kurzweil’s answer would be: farther than you imagine.

Put aside whether contemporary Europeans live up to what is claimed for them (and migration to London alone gives cause for doubt), there’s something to these ideas. It’s true and not true, and here’s something that Wallace Stegner had to say on the subject:

If you don’t know where you are, says Wendell Berry, you don’t know who you are. Berry is a writer, one of our best, who after some circling has settled on the bank of the Kentucky River, where he grew up and where his family has lived for many generations. He conducts his literary explorations inward, toward the core of what supports him physically and spiritually. He belongs to an honorable tradition, one that even in America includes some great names: Thoreau, Burroughs, Frost, Faulkner, Steinbeck - lovers of known earth, known weathers, and known neighbors both human and nonhuman. He calls himself a “placed” person.

But if every American is several people, and one of them is or would like to be a placed person, another is the opposite, the displaced person, cousin not to Thoreau but to Daniel Boone, dreamer not of Walden Ponds but of far horizons, traveler not in Concord but in wild unsettled places, explorer not inward but outward. Adventurous, restless, seeking, asocial or antisocial, the displaced American persists by the million long after the frontier has vanished. He exists to some extent in all of us, the inevitable by-product of our history: the New World transient. He is commoner in the newer parts of America - the West, Alaska - than in the older parts, but he occurs everywhere, always in motion.

(From “The Sense of Place” by Wallace Stegner, reprinted in Where the Bluebird Sings to the Lemonade Springs)

I’ll add one modest idea to Stegner. If you know where you are from, know where the shore grasses grow to just the right height, where the live oaks bend to the ground as they should, know when the sun rises in June and sets in January, what blooms when, what sports fit the season, what accent says this side of the river, when to bless the fleets going out and when to hope for the harvest coming in, if you hold a place so clearly in you, then you can be there anytime no matter where you are. If you know where you are from, you are free to roam without the danger of losing who you are.

Two weekends, and two very different European experiences, made me remember an email conversation I had with an American friend in early 2002. Much like many of his countrymen and especially his colleagues within the Washington Beltway, he never really understood what happened in Western Europe after 1945, despite all the effort he put into it by writing foreign policy analyses and eventually even going to the LSE instead of an American university for a post graduate programme. He once summarized his main problem in a question –

”My question is that normally when identities form there is at least some level of an other that the identity uses to distinguish who is outside that identity or maybe who that identity is opposed to, in this case who is that identity?”

While he is ideologically firmly positioned as far away from Robert Kagan as Michael Moore is from Karl Rove, it’s not too difficult to figure what his point is. His troubles alluded to me how difficult it must be for governments of nations states who are still intellectually locked up in the rationality myth of zero sum strategic competition to think “European”.

Maybe the idea of a nascent European identity based on cherishing diversity - not a common outsider - is impossible to explain – “Unless you feel, naught will you ever gain”.

Those who do feel will recognize it, even when it disguises as a 3-hour-long poetry reading in fifteen different languages that even the publicly subsidized elite tv-station 3sat decided to hide entirely from the public by broadcasting it from 1-4 on a Friday night. It was the fifteenth anniversary of the translation workshop „Poetry of the Neighbours – Poets translated by Poets“, which started out regionally but has silently become an internationally appreciated event.

Sure, listening to Bulgarian, Gaelic, and Norwegian poems last Friday night, I was at times closer than I would ever publicly admit to Bjoern Staerk’s submission that

”…nothing beautiful or sensible should ever be written in Norwegian, if it could be written in English.”

But these are occasional lapses. I want (the appropriate amount of) Gaelic poems on German tv - that’s the diversity I treasure, the diversity that enriches our lives. Yes, sometimes this means hard work. Sometimes it means listening to poetry in languages no one in the audience will understand. But sometimes, it just comes naturally.

Last weekend, I went to a local cinema to watch a home video on the silver screen. Well, it wasn’t exactly a home video, it was a French movie, but it could as well have been. And not just for me - or for John, Chris, Sofie, Roberta and others who are good friends now but who were strangers when we all met one Thursday evening in Paris for our first Erasmus exchange programme party. I could have been a home video for about 110,000 European students more each year.

“L’Auberge Espagnole”, emphatically tells the coming of age story, the life and love issues of a couple of young Europeans on their Erasmus exchange year in Barcelona. It is a film full of clichés – featuring French administrational hell as well as the young Brit who one day greets his sister’s German flatmate with a cheerful “Heil Hitler” and the eternal misunderstandings about the English pronunciation of the word most commonly used in French with reference to a university – “la fac”. But let me assure you – these are not just clichés – a penny for each time I had to explain that a “fac-otel” is actually a hall of residence, not some swinger-club, and I would be a rich man already.

“L’Auberge Espagnole“ is a coming of age film not just for the flatmates – and not simply because more and more young Europeans have had the opportunity to spend an important part of their life together abroad. It is a coming of age film because it recognizes that there is something like a European identity growing out of these experiences as much as out of the efforts of poets who meet to read between the lines of other cultures, challenge Wittgenstein and thus expand our own limits of comprehension and empathy.

I know, these may be the necessary elements for an explanation of the developing European identity so difficult to understand for some. They are hardly sufficient. So, knowing that there is something out there, in the end, it is probably Goethe all over again – ”Here now I stand, poor fool, and see I’m just as wise as formerly.”

Partly, of course, it’s the nature of a two-legged ties to reduce the possibility of shock results. While a ’small’ team can often pull off a good result against a ’big’ team in one game, the return leg offers the big team the chance to settle the score, as both Spain and the Netherlands did tonight, putting multiple goals past the Norwegian and Scottish sides who’d pulled off good results on Saturday.

Croatia’s tie against Slovenia looked from the draw like it would be the closest of the playoffs, and it proved to be that way, with just asingle goal securing the Croatians’ passage to yet another major final, continuing their presence at a major tournament, but denying the Slovenians what would have been a frankly amazing third qualification in a row after Euro 2000 and the 2002 World Cup.

Wales pulled off one of their best ever performances in Moscow on Saurday, holding Russia to 0-0, but tonight fell victim to that other curse of the two-leg tie: the away goals rule. Once Russia had scored, it left Wales searching for two goals to win, rather than one to draw, and though they had a gallant performance, luck just wasn’t with them. However, despite the downbeat ending, this has been a positive qualifying tournament for the Welsh and they will be looking to build on this and perhaps hold on to the positive feelings surrounding Welsh sport after the national rugby side’s great performances in their World Cup.

However, leaving the biggest to the end, there was one shock this evening and I suspect the partying may go on in Latvia for a long time after their superb 2-2 draw in Turkey for a 3-2 aggregate win made them the first former Soviet country to qualify for a European Championships (approximately one hour before Russia became the second) since the CIS’ appearance in 1992. It was proof that even with a two-leg system, seeming sporting miracles can occur, even a side ranked 56th in the world beating the third-place team from the last World Cup.

This means the sixteen teams competing in Euro 2004 next year will be Bulgaria, Croatia, the Czech Republic, Denmark, England, France, Germany, Greece, Italy, Latvia, the Netherlands, Portugal, Russia, Spain, Sweden and Switzerland. The draw for the finals, in which these teams will be arranged into four groups of four through the use of various plastic balls, glass bowls and Lennart Johansson, takes place on the 30 November with the tournament itself beginning on the 12 June next year.

Europe, it notes, ’though the smallest of the four quarters of the earth, is the most distinguished for its power, its wealth and its knowledge’.

First up is Scandinavia and Sweden, with a population of ’three millions’. Its capital, Stockholm, is ’a fine city, containing 80,000 inhabitants…the surrounding scenery is beautifully romantic’. Norway, with its ’million inhabitants’ who live ’cheaply by fishing and are robust, well made, patient under hardships and distinguished for their hospitality to strangers’. It’s not so keen on the Laplanders, who are ’low in stature, thick set, habitually filfthy. Not enjoying the blessings of education they are extremely ignorant and superstitious’

Moving eastwards to Russia, where the ’nobility are in general very wealthy and live in great splendour; but the peasantry are in the most abject state of slavery; they can neither read nor write; they live in houses of the most wretched description; and are bought and sold with estates; yet with all these disadvantages they , they are robust, and patient under hardships’.

France, the most populous country with 33 millions, enjoys a ’fine situation near the centre of Europe’, and Paris is distinguished ’by the magnifence of its public buildings but many of its streets are narrow and dirty’. The British love/hate relationship with the French is clear; they are: ’A gay, active and lively people, graceful in their deportment and very polite; posessing however not an inconsiderable share of vanity’

The Prussians are ’a brave people; the higher classes are well-informed and courteous, but the peasantry are uncultivated and superstitious’. Sadly the Austrian nobility are ’haughty and oppressive, but the middle classses are moral and industrious and greatly attached to reading and music’. The Swiss are ’a robust people, noted for the simplicity of their manners and their love of liberty’, while the Poles are ’gallant, and those subject to Russia made a brave attempt to assert their independence, but unfortunately without success’.

Moving inwards, Holland is ’a very flat country’, with Amsterdam, the capital, ’chiefly built on wooden piles and contains many magnificent buildings. It has broad canals nd good coach roads, with 200,000 inhabitants’. The Dutch are ’slow and heavy but remarkable for their cleanliness, frugality and industry’. Belgium makes ’good corn and wine’ and Brussels is ’one of the most elegant cities in Europe’. Of course they can’t resist mentioning it is just a few miles north of Waterloo, famous for ’the great battle in whch Bonaparte met with his overthrow’.

Heading south finds more praise and scorn. The ’fourteen millions’ in Spain are: ’grave and haughty people, posessing elevated notions of honour; but they are indolent and revengeful’, while pity the Portuguese,. with their: ’Swarthy complexion with dark hair and eyes’, and where, ’the peasantry are very poor, living in wretched huts, almost without furniture and their diet consists of mainly bread and garlic’. In Italy there are 17 millions Italians, who are ’discreet and polite people but extremely effeminate’.

As ever Turkey’s position in Europe is unclear. The Turks ’appear completely different from other inhabitants of Europe; the men instead of the close dress of Europeans wear loose robes and turbans instead of hats’ and while ’Turkey abounts with natural advantages, owing to the depotism of its government and the baneful infleuce of its religion, it cannot be considered a great nation’. Greece, which was ’long in state of bondage to the Turks’ recently due to it’s ’own bravery and the support of the great Christian powers has established its independence’.

Safely back over the channel to England and its 13 millions, of whom: ’The intelligence, industry and enterprise of her people have raised her to a pitch of greatness enjoyed by no other power’. London may be ’considered the first city of the world’. The book is also keen on the Scots: ’temperate in their diet, of robust and healthy constitutions and by superior management made very productive’, noting that there is ’less crime’ there too. The rest of the British Isles fares less well, with the Welsh: ’Brave and hospitable but inclined to be hasty in their temper and priding themselves extravagantly on their pedigrees and families’; the
Irish: ’Hardy, active and brave; the lower classes however are in general ignorant and superstitious and in a wretched state of poverty’

The hot topic among opposition politicians and activists the last few weeks has been the arrest of Mikhail Khodorkovsky. Who is this guy? A victim of property redistribution? A champion of democratic freedoms? Or a front for “comprador capital,” squeezed out by a nationalist administration? At a forum for left-wing political organizations held in Moscow last weekend, the discussion focused on Khodorkovsky, although the topic listed in the program was “Internationalism or Nationalism?”

The argument that Khodorkovsky is the victim of a government attempt to rid Russian business of foreign influences simply doesn’t hold water. The Putin team has done all it can to drag Russia into the World Trade Organization and to increase the role of foreign capital in the economy.

Khodorkovsky’s arrest could be put down to a run-of-the-mill battle to redistribute property if not for two things.

The first is Putin’s announcement that the legal and economic results of privatization will not be reviewed. This means that the oligarchic structure of the economy, dominated by raw materials quasi-monopolies, will remain in place no matter who owns them. In a twist of fate, the very fact that the quasi-monopolies are protected against nationalization leaves the heads of these corporations defenseless in any conflict with the regime. The Kremlin has vowed to defend the private property, not the owners themselves.

In a country where the vast majority of the population wants these companies to be renationalized, the regime can only be authoritarian. In order to defend private property, the regime has no choice but to ignore public opinion. A wide-open political contest is out of the question. The most the regime can afford is a semblance of participatory government, or “managed democracy.”

But sooner or later the arbitrary rule to which most Russians are exposed every day will affect the upper echelons of society. When the bureaucrats are all-powerful, no one is safe. At some point the defenders of private property start demanding their fair share. Some businesses choose to cut a deal. Others, in particular Khodorkovsky, have tried to establish a dialogue with the people directly in an attempt to free themselves from dependence on the state. This explains why Khodorkovsky has pushed so insistently for greater openness and has founded so many charitable organizations to support education, civil society and even the political opposition.

It was always doubtful how successful this strategy could be. However, the Kremlin sensed a threat and went after Yukos with a vengeance. Khodorkovsky wound up behind bars, though if the charges he faces are taken at face value, the entire Russian elite -- starting with the Kremlin -- ought to be locked up along with him.

At this point a second factor comes into play, changing the situation dramatically. Khodorkovsky stepped down as the head of Yukos and indicated that he would be happy just to run the foundations he had established to develop civil society. In Marxist terms, the oligarch became a “leader of the bourgeois-democratic opposition.” He remains a member of the oligarchic elite. But the owner of a major corporation who is trying to hang on to his slice of the pie taken from the people back in the early 1990s is one thing; a politician who has issued a challenge to the regime is another thing entirely.

The press frequently compares Khodorkovsky to the famous industrialist Savva Morozov, who bankrolled the Bolsheviks at the beginning of the 20th century. It would be more apt, however, to compare Khodorkovsky with two men who found themselves in a similarly complex situation: Benigno Aquino in the Philippines during the Marcos dictatorship, and Pedro Joaquin Chamorro in Nicaragua during the Somoza dictatorship. Both were liberal representatives of a traditional oligarchy who opposed authoritarian rule and “managed democracy” in their countries. They were neither radical nor left-wing, but the logic of political confrontation drove them into such a heated conflict with the regime that no compromise was possible.

Today, Khodorkovsky is just about the only person in Russia for whom democratic reform is not just a worthwhile goal, but a matter of life and death. He is surely familiar with the fate of his predecessors: The Aquino and Chamorro clans eventually came to power in the Philippines and Nicaragua, but both men paid for this triumph with their lives.

The arrival of winter in this troubled land of medieval forts and Soviet-era apartment buildings invariably means one thing: another energy crisis. And so late last year the desperate government turned to U.S. officials for help.

With U.S. funds, a consulting firm was hired to take over the country’s electrical distribution system outside Tbilisi, the capital, but it did not take long for the American consultants to discover why Georgia is a nation that does not work. The power company the firm inherited in May was a tangle of creaky equipment, unpaid debt and widespread corruption. Only 10 percent of customers paid their bills.

The consultants decided to play tough. Delinquent customers would have their power turned off until they began paying. The Georgians’ response proved equally tough. In one region, the governor and his guards stormed a substation and flipped the power back on. A mayor in another area did the same, whipping out a gun and shooting a transmission insulator to prove he meant business. Subcontractors have been kidnapped by their own employees, and the consultants even had to break up a knife fight in the energy minister’s office.

The U.S. firm’s tribulations mirror a broader social breakdown in this country of 5 million. A dozen years after independence, the former Soviet republic in the Caucasus Mountains has become the archetype of a failed state, overwhelmed by poverty, stagnation, graft and separatist divisions.

“It’s just a big dysfunctional web,” said Dean White, a senior partner at PA Consulting Group, the U.S. firm struggling to fix the electrical system.

Years of frustration boiled over in parliamentary elections this month as nearly 80 percent of voters cast ballots for parties other than the bloc led by President Eduard Shevardnadze. And that was only the official tally. The vote was marred by massive fraud, according to U.S. and European observers, and thousands of protesters certain that the government stole what votes it did get have been in the streets of the capital for nearly two weeks demanding Shevardnadze’s resignation.

In the latest escalation, as many as 20,000 protesters marched to Shevardnadze’s headquarters at the State Chancellery on Friday and formed a human chain around the building.

The election may also have signaled a turning point in U.S. relations with Georgia. For the last decade, Washington has given Tbilisi special treatment out of gratitude to Shevardnadze for his role in ending the Cold War when he was Soviet foreign minister.

Successive U.S. administrations have funneled more than $1 billion to Georgia, one of the highest per capita rates in the world. The CIA trained Shevardnadze’s personal guards. President Bush dispatched Green Berets to train Georgians to deal with terrorists camped out in the lush but lawless Pankisi Gorge. “We used to be the darlings of Washington,” recalled Tedo Japaridze, the Georgian national security adviser, who has six aides whose salaries are paid by the U.S. State Department.

But now there are increasing signs that the long-indulgent United States has decided to stop cutting Shevardnadze so much slack.

In the run-up to the election, Bush publicly encouraged Shevardnadze to hold an honest vote and chose the most influential envoy he could find to deliver the message, former secretary of state James A. Baker III, Shevardnadze’s longtime friend from the final days of the Soviet Union. Baker came in July and pressured the Georgians into adopting a new election code.

To impress upon Shevardnadze the importance of the situation, more American luminaries followed, including Sen. John McCain (R-Ariz.), John M. Shalikashvili, a former chairman of the Joint Chiefs of Staff, and Strobe Talbott, a former deputy secretary of state.

In a last-minute intervention, Bush sent Shevardnadze a letter two days before the Nov. 2 vote imploring him “to conduct this upcoming election in a free, fair, peaceful, and transparent manner” and avoid “violence and intimidation as a political tool.”

The apparently rigged election left U.S. officials steaming. In an interview, U.S. Ambassador Richard M. Miles called the election “a mess” and “marred by massive irregularities and voter fraud.” More broadly, he said: “We’re disappointed at the slow pace of reform in Georgia. There are seemingly enormous difficulties in tackling very basic problems with corruption in this society. We would like to see stronger leadership and faster, more measurable progress.”

AES Corp., an Arlington-based firm that owned Tbilisi’s electric utility, pulled out of Georgia in July in frustration and sold its assets to Russia’s electric monopoly. Two months later, a U.S. aid official declared that, when it came to reform in the 27 former Soviet-bloc countries, “Georgia’s progress has slipped near the bottom.”

Even before the election, U.S. officials made their displeasure plain this fall by canceling a $14 million aid project to rehabilitate a hydroelectric plant and scaling back a program to help the Finance Ministry. They have threatened more aid reductions in February unless Georgia demonstrates progress according to certain benchmarks of reform.

“I think their patience is finished,” said Alexander Rondeli, president of the Georgian Foundation for Strategic and International Studies.

Talbott said in an interview that the time had come for Washington to apply a tough-love policy to the Georgians. “If they can’t get the problem of corruption, and essentially corrupt politics, under control, then there’s not much hope for Georgia,” he said by telephone from New York. “Shevardnadze has this huge international prestige that he could have used … and all the preliminary evidence is that he decided not to do that.”

Japaridze, a former ambassador to Washington, said he sees the shift in the e-mails from the White House that he finds each morning when he arrives at the office. He added that Shevardnadze grasps the situation.

“He knows and understands better than anyone that Washington has a short memory,” Japaridze said in the State Chancellery building, over the shouts of protesters outside. “Yes, he helped bring down the Berlin Wall, and there will be nice words. But politics is about other issues.” Japaridze acknowledged that the election was deeply flawed and added, “We need to do our best to clean up this damage.”

Georgia was supposed to be a model of reform under Shevardnadze, but in recent years has seen mostly misery. Major industries have been taken over by powerful oligarchs, including some close to Shevardnadze. Georgians must pay bribes to get driver’s licenses, passports or university admission, to start a business and to avoid paying taxes or electric bills.

“There’s no segment in Georgian society without corruption,” said Ketevan Rostiashvili, director of the Georgian office of American University’s Transnational Crime & Corruption Center.

Pensioners receive $7 a month, and even that is often months late. Police officers are so poorly paid that protesters have been slipping them food across the barriers each night. Electricity has become such a precious commodity that the elevators in some tall buildings here will not work unless people feed coin boxes installed in them.

The shadow economy represents at least 60 percent of Georgia’s total. And even under the most optimistic growth scenario, according to Roman Tsiridze, an economist, it would take Georgia 12 years to catch up to where Bosnia is today.

One reason for that can be found at the Tbilisi factory run by David Bidzinashvili.

In the communist era, the sprawling factory compound employed 5,000 people and supplied shoes for sale throughout the Soviet bloc. Today, most of the buildings are used for storage and only the part bought by Bidzinashvili for $130,000 in 1990 is still operating, making uniforms for oil companies.

During his busiest season, he employs 380 people.

“We can’t compete with small illegal factories that don’t pay taxes,” said Bidzinashvili. “There are a lot of them, and they can produce as much as we do and they can sell cheaper.”

What’s more, Georgia is still in pieces. The territories of Abkhazia and South Ossetia remain under the control of pro-Russian separatists.

The Pankisi Gorge was until last year the refuge of Chechen guerrillas and Arab terrorists. The autonomous region of Adzharia has its own military and does not defer to Shevardnadze, who is trying to make a deal with its leader to forge a parliamentary coalition.

The ripple effects of those divisions are visible in the heart of Tbilisi. Overlooking Republic Square, just behind a statue of Georgia’s 12th-century hero, King David the Builder, sits the run-down Iveria Hotel, its once proud sign rusted, its cold lobby dilapidated, its balconies covered by cheap plywood or blue plastic sheeting to create more rooms.

About 3,500 refugees from Abkhazia have been camped out at the Iveria for more than a decade waiting for a chance to go home. “We’ve heard promises for 10 years, but nothing has ever been done,” said Lamara Availiani, 69, who lives on the fourth floor in a small room with a cross and an icon on the wall. “We have no hope left.”

At the end of the 1990s (following the painful collapse of the Albanian pyramid schemes which took with them the hard earned savings of a generation of Albanian immigrants - the topic of immigrants and saving will be the subject of a subsequent post), more Albanians arrived and more settled permanently as, finally, Greece decided to legalize all the undocumented workers and give them Green cards. Now - suddenly - the schools were full of Albanian children and with them the first successful cases of Albanian students passing the university entrance exams. For the first time Albanian newspapers were published in Athens, Albanian politicians held election rallies in Greek cities, the National Greek Opera had Albanian dancers in its cast, the World Champion in female javelin from Greece was Albanian, together with a large part of the Greek weightlifting dream-team that has dominated two successive Olympics. Theatre companies and rap groups composed of Albanian immigrants and Albanian journalists writing in Greek papers have now become a regular part of national life. Greeks slowly and with difficultly began to get used to the reality (and some to the necessity) of living with the Albanian immigrants. But then three years ago there was an incident which, while lamentable in itself, serves very well as an example of the kind of issues of migration, inclusion, assimilation, national and European identity etc, which might usefully be borne in mind by our leaders when they get down to framing the document they have in hand. What follows was sent to me by Talos, who many of you will already know from the comments section, and who others may be interested enough to read in his own blog Histologion (I am also grateful to him for providing me with the background information which forms the basis of this post).

Odysseas Tsenai (Oddisej Qena)was a high-school student in Nea Mechaniona, a town near Thessaloniki. He was the son of Albanian immigrants and a great student despite his recent arrival and initial inability to speak the Greek language. He was actually too good for his own good.

By custom in Greek schools, the best student of a particular school is awarded
the honour of holding the Greek flag on the national holiday parades
(the parades themselves are a militaristic anachronism, the product of a
fascist dictatorship in the 1930’s and should be stopped anyway).
Odysseas was the best student according to his grades and his teachers
board decided that he was the one who should carry the flag. Odysseas
accepted, saying it would be an honor and a very proud moment for him. At
that time there were a number of other Albanian students in other high
schools and lykeia (the three last years of high school) around Greece
that were similarly awarded (Not much was made of these other cases as
there seemed to be less disagreement on having immigrants as flag
bearers.)

The local parents council in Nea Mechaniona though, freaked out. Instead of seeing this (at least) as a move towards assimilation, they considered it a national disgrace: an Albanian was carrying our symbol and there was no way that this should be allowed and it was against the law anyway. They were right about the last part, but in a lightning move (and to its credit) the ministry of education modified the law, thus allowing Odysseas to bear the flag after all. The parents threatened a boycott of all festivities. Faced with such mind boggling arrogance, xenophobia, plain stupidity and despite the teachers council decision to back him regardless of any reactions, Odysseas gracefully said that he would not accept the flag because he didn’t want to cause a disturbance in the ceremony or the parade.

This became a national issue quickly, the media running with it with all sorts of interviews and live coverage. To their credit all the main parties and the President of the Greek republic stood by Odysseas. So did the teachers unions. But there were 50% of people in opinion polls that were against Odysseas raising the flag, a sign that socially immigrants were far from universally accepted even when they excelled. So Odysseas, soon after this, and obviously needing to feel part of the society he grew up in, decided to be baptized as an Orthodox Christian (something astoundingly frequent among Albanians living in Greece). One of his godfathers was a big time TV journalist who championed his cause. All seemed to be going fine for Odysseas, but, annoyingly he still remained a great student.

Thus this year as he was finishing the lykeion, he still remained the best student in the school. Again the teachers had no qualms about awarding him the flag and surprisingly it was deja-vu. I’ll let the news stories describe the events:

Flag row revives as Odhise still tops class. No citizenship for the Qena family. Support to Tsenai. Best pupil denied right to carry Greek flag for being Albanian. Controversy over Greek flag bearer continues.

Finally here is the good news: The top politicians of all parties and most of the MPs for both the Socialists and the Conservatives (and all the leftist MPs) were 100% behind Qena. The teachers both in Nea Mechaniona and through their unions as well, most serious commentators, artists, media personalities most (if not all) were supportive of Odysseas selection. Tens of other immigrant students around Greece marched with the flag with little or no problem (one or two exceptions when far right groups tried to create a scene at the parade).

Now for the bad news: this time most of his fellow students were against him. The town seemed to isolate those of the students and parents. Again public opinion is split on it (most common opinion: if he is a good student they should give him another kind of award and not the flag). It seems that the far right is using this to recruit new members. For the first time I think that a far right party might be able to elect MPs. See this on why I’m worried.

There are a number of points of interest in this 69 page document, but I want to call attention to page 38, titled Si l’école n’était plus obligatoire jusqu’à 16 ans…:

Translation:

Question: School is currently mandatory until the age of 16. Imagine that it was only required until the age of 11. [The survey only studied children age 11 and up.] Which of the following situations do you think is most likely:

	Students aged 11 to 18	Parents of children aged 11 to 18	Teachers	(of which)
				elementary school	junior high and high school
Students would:
go to school of their own accord	57	34	15	15	15
go to school because their parents would make them	23	58	49	51	48
go to school, but not every day	18	5	25	25	25
not go to school	2	3	9	7	10
No opinion	0	0	2	2	2

Now, there are a number of things this table implies. First, almost 60% of parent think they would force their kids to go to school, while less than a quarter of the kids think so. This, I suspect, reflects traditional parental illusions about how much control they actually have over their offspring. Teachers are, as usual, more pessimistic about the motivations of their students than the students or their parents are. You should compare this table to the one on page 31. Half of French parents think their kids go to school because they like to and a third because they have to. Only 13% say they have to actually make their kids go to school. Almost half of the teachers think students go to school because their parents make them.

The sample sizes for this study weren’t terribly large, and people always tend to say the things they think they ought to say rather than the ones they really think. But, for a moment, let’s take these numbers at face value.

The real surprise is the number who think they would go to school, at least some of the time, for whatever reason: 98%. Furthermore, over half of them would go entirely voluntarily just as they go now. The French school system is not usually regarded as an especially child-friendly place. It has improved a lot since ’68, but it is still seen - by parents and teachers alike - as a place for enculturation and vocational training rather than self-development. (Page 23 covers exactly that point.) Nonetheless, 98% of kids are basically okay with going to school.

Page 39, which breaks down the answers by gender, class, school type, age and geography, strongly suggests that those two percent who just wouldn’t go come overwhelmingly from the classes that are generally acknowledged to not be getting much out of school as is: the urban underclass. 5% of the children of parents considered “inactive or retired” (read “long term unemployed”) and 2% of those considered “workers” (read “working poor”) wouldn’t go to school. These are the suburban ruffians who were so instrumental in electing Chirac and Raffarin by adding a shred of substance to right-wing rhetoric about crime and public security. If school was actually doing much for them, Élysée Palace would house President Jospin.

There is some other stuff here of interest. Page 34 suggests that the main areas of American school reform - subject qualifications for teachers and political control over curricula - are not very important to French students, parents or teachers. They appear to be the two least important factors in making children want to learn. Classroom size reduction is an important issue to all three groups, but teachers believe that adapting school programmes to students individual needs is even more important, and parents place the two on about equal footing.

I was rather surprised to see how much value students place on vocational and professional training. When I was in school in the States, people tended to think vocational training was for university. Page 47 suggests that half of kids only think school is important because of its value in getting a job, and another 20% gave answers that I can only interpret as having the same effect.

Anyway, this is an interesting snapshot of French attitudes towards school. It strongly suggests that French children over the age of 11 are quite well aware of why they go to school and have their own agendas for their education. I would say that this survey supports the idea of loosening the structure of the French school system and perhaps looking for solutions to problems of social exclusion outside of the Ministry of Education.

Now many may feel that in the UK, the US, France, Sweden etc, politicians don’t have the highest of reputations. This is undoubtedly true: but if you come to Spain, Italy or Greece, you will find that things get markedly worse. There is an interesting piece on the ChinaBiz website about Guanxi, or informal trust, in China, and the role it plays in the context of an institutional structure that few have confidence in. The more corrupt the society the less important is the official framework for information transit, and the more important are the informal ones. Crooked Timber blogger Henry Farrell has some interesting material which relates to the role of informal trust in the packaging machinery and textile manufacturing industries in Northern Italy, where, as is probably well known, outsourcing into small efficient units has been both speedy and effective. The curious detail is that Italy is the European society that regularly gets the lowest score when it comes to general confidence in the public administration. The interpretation that has normally been put on this is that such micro-social informal networks normally blossom in precisely these circumstances. This I can also confirm from my work with Bulgarians. So when you get down to Iraq, you can imagine: how little credence is given to secular politicians (this may indeed provide some of the explanation for the robustness of the religious networks) and how important the alternative apparatus is. Any realistic strategy would need to start from this reality. When you think about it the German post WWII example which is so often cited in connection with reconstruction may well be badly flawed. It may have been something about the very nature of German civil society that made this type of transition possible. If we do a compare and contrast exercise with Japan, the point should be obvious. I don’t know yet just exactly where this argument is leading me, but the short term conclusion isn’t exactly an optimistic one. Unfortunately the dynamic impetus provided by Guanxi in China, and the presence a thoroughly undemocratic institutional structure, only serve to reinforce the point.

US authorities in Iraq have put on hold hundreds of millions of dollars worth of mobile telephone contracts, while they investigate allegations that the bidding process was hijacked by associates of the new Iraqi governing council.

When the Iraqi Ministry of Communications last month awarded three Middle Eastern consortia two-year licences to build and operate wireless phone networks, the deals were heralded as a breakthrough for regional operators willing to invest in the new Iraq.

But the US-led Coalition Provisional Authority in Iraq has been advised to postpone signing the contracts, according to a US administration official speaking on condition of anonymity. CPA lawyers in Iraq made the recommendation to delay signing the contracts for 10 days to allow time to investigate claims of cronyism by the Iraqi authorities in awarding the licences, the official said.
Source: Financial Times
LINK

DON’T STRETCH EUROPE’S PROMISED LAND
(original is trapped in pay-per-view)
Financial Times, 7 Nov 03, by Dietrich Von Kyaw *

* The writer was Germany’s permanent representative to the
EU from 1993-1999

Since the second world war, the European Union has
decisively shaped the destiny of Europe. Its success is,
not least, due to its “community method” of integration and
its ability to bring about the cohesion and efficiency
needed to raise the continent above the counterproductive
practices of the past.

Today, after the break-up of the Soviet empire, the EU is
overrun by candidates who wish to join this exclusive club
as soon as possible.

+++

Most of the rest of the column makes a rough bit of sense, but the idea that the EU is being overrun by candidates in a great rush is pure silliness. Fourteen years ago yesterday, the Berlin Wall was opened. Twelve years ago this coming Christmas, the hammer and sickle came down from the Kremlin and haven’t been seen since.

In all that time, the main foreign policy goals of the states of Central Europe have not changed: membership in NATO and the European Union. Since an American-led intervention brought something like peace to the Balkans in 1995, eventual membership in the EU has been those states’ goal as well. No one can claim to have been surprised by the Central Europeans’ desires.

Nor can the word “overrun” be anything but rhetorical cover. It’s been fourteen years. The life of three British Parliaments. Two full French presidential terms. Two complete rotations of the Union’s presidency through all of its members. Four elections for German chancellor. Time enough for Berlusconi to come and go and come back again as Italian prime minister.

Looked at from another perspective, more time will have elapsed between the fall of the Berlin Wall and EU enlargement than between the surrender of Nazi Germany and acceptance of the Federal Republic into NATO.

There has been nothing speedy about the process of enlargement. Nothing hasty. And “as soon as possible” only in a very peculiar Brussels definition of the phrase, as anyone writing for the Financial Times certainly ought to know.

Poland on Wednesday came under a scathing attack by the European Commission which claimed the Warsaw government had all but stopped reforms just months ahead of Poland’s accession to the European Union.

The report, the last before next May when 10 countries will join the EU, dispensed with any diplomatic niceties and instead described how Poland was failing to deliver on implementing reforms required for membership.

The Commission also did not shy away from piling pressure on Turkey, insisting it should reach a settlement by next year over the divided island of Cyprus, whose northern part Turkey occupied in 1974.

Failing any settlement, Günter Verheugen, enlargement commissioner, made it clear Cyprus could become an obstacle for Turkey’s bid to start formal accession negotiations by early 2005.

This was despite last minute telephone calls by Abdullah Gul, Turkish foreign minister, who asked Mr Verheugen to soften the language on Cyprus before making the reports public on Wednesday.

“Our message of Turkey [over the recent reforms] is positive,” said Mr Verheugen. “As regards Cyprus, we are trying to create a political fact. A lack of a solution to the Cyprus conflict will be a serious obstacle to Turkey’s efforts. It is an incentive for Turkey to find a solution,” he said.

The tough language on Turkey reflects a growing concern that when Cyprus joins next year, part of an EU member state will be under foreign occupation. Mr Gul said Turkey “will make a great effort to solve the problem before May 1, 2004.”

The annual reports by the enlargement commission headed by Mr Verheugen monitor in detail how all the candidate countries are preparing for accession.

Poland, along with Estonia, Latvia, Lithuania, the Czech Republic, Slovakia, Slovenia, Hungary, Malta and Cyprus, will join on May 1, 2004. Bulgaria may be ready to join by 2007 while Romania, which still hopes to join along with Bulgaria, was on Wednesday bluntly told it could not be considered a functioning market economy.

The blistering attack on Poland reflects serious concern, as well as disappointment in the Commission that had placed great store on the largest of the ten new entrants to make a final push on reform ahead of accession. “The reform path has nearly come to a halt since last year’s report,” said the Commission. It said Poland had shown “reluctance” to reduce its public expenditure, had relaxed fiscal policy and was doing little to rein in the government deficit. The promised restructuring of heavy industry and agriculture “has been modest.” The pace of privatisation had “stalled”.

Polish diplomats put a brave face on the report. “It’s a fact of life. We knew from the beginning what were the weakest points of Poland’s internal reforms,” said Daniel Rotfeld, secretary of state at the foreign ministry.
Source:Financial Times

So I did a quick cut and paste into my blog. And it was only then, after pasting, while trying to think of some cutting comment to make, that my eye was struck by something I hadn’t expected: my own name. You see Eddie had been rumaging about in my website, and I must now publicly give him the credit (or is it the notoriety) for being the first journalist I know of to have taken my demography argument seriously. Well cutting a long story short, I subsequently contacted him, to begin what I hope will prove to be a long and fruitful relationship. Going back to the substance of my Saturday post: I now know a lot about Eddie, his wife’s name, his childrens names, that he went - like I did - to the LSE (10 years after me), that he used to work for the central bank in Spore etc etc. The one thing I have no idea of is what Eddie looks like. I can only imagine.

I like the piece I am posting today because it questions received wisdom: the point is that received wisdom, when it becomes unthinking dogma is dangerous. Argentina is a living proof of this. Of course, in many cases deregulation and privatisation can be enormously beneficial. But if the process is applied unthinkingly, or if it is simply the transfer of a state monopoly to a private one, then it is much more problematic. It goes without saying that a regulation ridden and corrupt public sector alternative is no alternative at all. However, as Eddie says, markets do fail, and not only occasionally. This seems to be the most misunderstood part of the story.

Privatisation can harm the public good By Eddie Lee

LAST week, the re-nationalised owner of the British railway system, Network Rail, announced that it would cancel private sector contracts for the maintenance of its 32,000km network. The decision followed a series of fatal train crashes, which spurred concern that safety standards were being overlooked in the company’s rush for profits. From breakdowns of railways to power blackouts such as those that happened in the United States, there’s a rethink worldwide on how best to deliver public services. In the United Kingdom, the performance of rail companies has deteriorated, with 20 per cent of trains running late and passenger complaints up by 8 per cent over the past year. Ironically, the big companies were the worst performers: South West Trains notched up a 275 per cent increase in delays, measured in total passenger time, last year. And despite the dismal service record, some train fares were raised by more than twice the rate of inflation earlier this year.

The British rail privatisation experience is significant because it was symbolic of the many privatisations first championed by then prime minister Margaret Thatcher. A number of public services which were earlier thought to be ’natural monopolies’ were privatised and subjected to market forces, in the belief that this would result in lower prices and improved service.But so far, not many people think that has happened.

Here’s Britain’s story.

British Rail was sold in 1996 with the following plan: passenger trains were to be run by 25 Train Operating Companies on franchises, while the railway signalling, tracks, bridges and stations were to be handled by a private company - Railtrack. But Railtrack went bust because attempts to raise profitability backfired. Reductions in expenditure on maintenance and repair led to an increase in accidents and delays that proved costly as the company was fined by the Rail Regulator and also had to compensate train operators for each delayed train.

Investigations into the fatal Hatfield train crash on Oct 17, 2000, and into two other rail accidents revealed that the number of Railtrack workers had fallen by over 60,000 from 159,000 in 1992, even though the number of trains had increased. Railtrack went bankrupt last year, and was replaced with the government-controlled Network Rail. And it looks as though the London Underground could take a step back from privatisation as well. There are inklings that maintenance work may be moved slowly away from the private sector.

As for the subway operators, British transport expert Professor John Whitelegg notes that they now get more public subsidy, about 1.5 billion pounds (S$4.4 billion) a year, than British Rail got in its last few years of existence. Mr Richard Bowker, chairman of the Strategic Rail Authority, is worried about the growing financial frailty of some of the operators and aims to dramatically reduce the number of companies to a handful. What has happened in Britain is that private interest (trying to maximise company profits) ended up with a huge social cost (not just higher fares and delays, but also fatal accidents due to negligence).

In Singapore, Acting Health Minister Khaw Boon Wan expressed his concern over such a divergence of private and social interests when he rebuked hospitals recently for engaging in ’silly competition’, and urged hospitals to save money for patients, rather than make more profits for themselves. The belief that public interest is best served by liberating enterprise from state intervention has shaped thinking for almost two decades. The California Energy Crisis of 2001 was one of the first rude awakenings. But even though economists have pointed out that the crisis was actually caused by the manipulation of market power, people still cling to the belief that deregulation reduces market power.

Last month, a report by the United Nations’ Conference on Trade and Development asked whether market-led reforms adopted in many developing countries after the debt crisis of the early 1980s have strengthened the ability of these countries to withstand external shocks. The disappointment is deepest in Latin America, which ironically is where deregulation has gone furthest. But after initial success, privatisation has roused anger. Take the case of Argentina’s privatisation of water and sanitation in 1993: Sewerage infrastructure development has not kept pace with water delivery expansion, due in part to the fact that water delivery is twice as profitable as sewage treatment. As a result, over 95 per cent of Buenos Aires’ sewage continues to be dumped into the Rio del Plata.

So how to avert unnecessary crises from misguided privatisation projects? Professor Paul Krugman of the University of Princeton suggests critical analysis in place of blind faith in the market. This is especially so in the case of companies that also need to respond to shareholders’ short-term interests. Markets do fail, and sometimes they fail spectacularly to provide for the public good. Unless private and social interests can be adequately matched, it’s silly to sweep all problems under the carpet of competition. Transport Minister Yeo Cheow Tong says the Government’s suggestion last week that SBS Transit could transfer the loss-making North-East Line to SMRT was a rethink, not a U-turn. Whatever it is, there’s no shame in admitting a good decision. The next question is, should the problem be left solely to the market to resolve?
Source: Straits Times
LINK

The Republican chairman of the House Intelligence Committee [Rep. Porter Goss] said Tuesday that prewar American intelligence about Iraq had been hampered by significant shortcomings, including what he called the C.I.A.’s unsatisfactory response to Congressional directives to improve its foreign language capacity. […]

“Our capabilities were not what they should have been,” Mr. Goss said in an hourlong interview. He said there had been “way too many gaps” in American intelligence gathering, including information about Iraq’s conventional military power and any illicit weapons programs.

Congressional officials have long expressed concern that intelligence agencies do not have nearly enough officers who speak Arabic, Persian or Pashto, languages needed to gain access to information in Arab nations, Iran and Afghanistan. […]

On the issue of language training for intelligence officers, a senior Republican Congressional official said a significant amount of money allocated by Congress for the foreign language training of C.I.A. officers, particularly in Arabic, Persian and Pashto, had been redirected by the agency for other purposes during the last fiscal year.

An agency official who spoke on condition of anonymity said he understood that some of the money had been spent on computer-driven document translation rather than on training for individual officers.

“Our view is that we need both,” the official said, but he defended the computerized capacity as one that would prove useful, for example, in translating the reams of Arabic-language documents being accumulated by the American investigators in Iraq who are working under David Kay, a special adviser to Mr. Tenet.

“We’ve been working on language capability for a number of years,” said the C.I.A. official, who added that the agency had increased hiring bonuses and other inducements.

But Mr. Goss was sharply critical, saying the agency sometimes seemed hamstrung by uncertainty over which languages it might need most in the future, when “the answer is we need them all.”

First, I’d like to take this opportunity to remind our pro-war readers that this is why you needed to get France and Russia on board, and why you still do, even if the price is completely disenfranchising Iraq’s American admistrators. Having had a colonial empire can mean having to deal with headaches like Gibraltar, but it has distinct advantages. I note that the DGSE doesn’t seem to have Arabic language recruiting issues.

The troubles the US is having are a part of the cost of undermining immigrant languages. When schools focus on English fluency to the exclusion of native language skills, you get a second generation with poor literacy in their parent’s languages, and a third generation with no skills at all. Furthermore, by demanding that everyone speak the same language, students learning foreign languages are denied the real communication opportunities they need to become genuinely fluent.

And, as this Mr Goss points out, you don’t know in advance which languages you’re going to wish you’d planned on having. The long lead time it takes to gain adequate literacy - a couple years at best, a decade at worst - means you can’t decide to just support some small set of languages and hope for the best. Hiring bonuses and other inducements will not bring you employees who don’t exist.

Americans tend to place a great deal of faith in their collective ability to solve problems with engineering. I know the American intelligence community has been throwing a lot of money at Arabic machine translation lately. Since I probably stand to make money off of this situation, albeit indirectly, I suppose I shouldn’t complain. However, the best automated solution likely to actually be developped will still not improve matters very much. This problem can’t be made to go away by tossing money at it.

A former ambulance driver has put his first aid skills to good use at a weekend birthday party by reviving one of his pond fish with mouth-to-mouth resuscitation, a local newspaper says.

And Leo Van Aert is so happy about having saved the life of his cherished koi that he wants to name it after one of his grandchildren, the Gazet Van Antwerpen said on Tuesday.

Van Aert, 57, was hosting a party at his home near the Belgian port of Antwerp when his wife noticed the koi -- a spotted Japanese carp -- floating on the surface of the garden pond.

The 60-centimetre-long fish had been “acting funny”, swimming and jumping frantically before stopping dead in the water.

Van Aert figured the koi had had a heart attack and took it out of the water to try to resuscitate it, giving it heart massages before joining lips with the fish.

“First, I applied heart massages to the fish,” he said. “That’s when I picked him up and applied mouth-mouth.

“After 15 minutes, the fish started to move again so I put him in the pond…but when he fell over again I again applied mouth-to-mouth and heart massages.

“That’s when the fish recovered,” he added.

What can I say? Belgians love their fish.
 

Not being particularly clued-in on Dutch political rhetoric it is hard to judge. But it is clear that this wound is open, and is not disappearing. I don’t doubt that even though many are talking of a ’constitutional crisis’, some compromise or other will be put together. My bigger question is just how much farther down this road can you go before things do finally get serious. The Netherlands is, as I have previously suggested, the ’odd man out’ in the euro group. You cannot keep raising the temperature a notch on each occasion before something finally gives. So what we perhaps ought to be asking ourselves, is how long have we got left before push really does come to shove? This week battle is to be joined, and according to the Financial Times:

Germany and France will on Monday night join forces in a last-ditch legal attempt to save themselves from the full impact of the EU’s budget rules…………….

German government lawyers claim it would be possible to strike a deal where Berlin and Paris agreed to take further measures if the Commission promised not to make binding policy recommendations. “The Commission must ask itself whether it wants to knowingly wreck the stability pact through an excessively rigid interpretation of the rules,” said a German government official. The legality of the move was being explored over the weekend before a two-day meeting of EU finance ministers that begins on Monday night in Brussels. Commission officials say that if the German move were successful, although illegal, it would inflict incalculable damage to the stability pact. “We have probably never been in such a serious situation,” one said.

While EU Business reminds us that it is not only Zalm who is raising the temperature:

Swedish Finance Minister Bosse Ringholm slammed France Thursday for its excessive public deficit, saying the situation Paris was in was not exceptional. “France is not in an exceptional situation, France is in a situation for which it is itself responsible,” the TT news agency quoted Ringholm as saying after a meeting of the parliament’s European affairs commission.

France faces a vote Tuesday by European Union economic and finance ministers on a European Commission recommendation that Paris cut its structural deficit by six billion euros (seven billion dollars) in 2004 in a bid to get its deficit under 3.0 percent of gross domestic product (GDP) “France is in a situation that it should be able to resolve rather easily. They could postpone (planned) tax cuts,” the Swedish finance minister said. Along with Germany, France is on course to breach the EU Stability and Growth Pact’s ceiling on public deficits -- 3.0 percent of GDP -- for three years running next year. Ringholm and Swedish Prime Minister Goeran Person have repeatedly criticized Paris for lax fiscal policies that have also been cited as one reason Swedes rejected the single European currency in a September 15 referendum.

Stockholm forecasts a public surplus equivalent to 0.5 percent of GDP in 2004, following a 0.2-percent surplus this year. Earlier Thursday, Dutch Finance Minister Gerrit Zalm defended the stability pact, warning of a crisis if countries flout rules for budgetary rigor contained in the 1997 agreement. “If it were the case that (France and Germany) ignored the pact and the Maastricht treaty… we will have a serious constitutional crisis,” Zalm told As finance minister Zalm pushed through highly unpopular measures such as spending cuts on healthcare, pensions and social security to meet the EU rules. “When it becomes evident that you are not complying with international agreements, it begs the question what the EU is worth,” Zalm warned.

The thing is, working this way raises certain problems. The first is that the bigger you are, the more you can offer your translators plenty of work and the less money they’ll demand as a result. Size matters. Second, you have to offer certain additional services, because when different translators handle your work, the results can be inconsistent. The best translators are generally not very specialised in a single field, so two different translators may not all use the same terminology for the same translation job. It’s usually better to make sure that the same translator does all of your work if possible, but the essence of this business model is that we can’t promise you that will happen. There are ways of addressing this latter problem, but unless you’re really interested in translation theory and computer-human interaction, they’re not very interesting. Dealing with these issues is basically what I’m paid to do.

The ability to charge less for translation, and to invest in technologies that enhance translation productivity and quality, depends quite closely on the size of your firm. As recently as the early 90’s, it was still rare to find pan-European translation firms. The translation market in the EU wasn’t very integrated, and as a result, firms tended to be fairly small. The large, integrated markets - the US and Japan - are monolingual; they don’t do very much translation.

Now, things are different. Translation in Europe gets contracted more and more on a continent-wide basis. The possibility of large, integrated translation firms is much more real. If we relied exclusively on the Belgian market, we could not justify the capital spent on us or the money we’ve poured into technology development. We’re beginning to make real progress in raising productivity in this industry. This has only become possible because of European integration.

So, let me offer you a bit of investment advice: We’re going to need that increase in productivity very badly, because the demand for translation services is growing. Precise figures on this industry are hard to come by, but estimates of its size range from EUR10 billion to EUR30 billion in annual revenue. The common consensus is that this industry is seeing rapid growth despite the current global economic downturn. And, in the next decade, it’s going to grow at an incredible pace.

Let me explain why:

1. The expansion of the European Union is acting as a stimulus to growth in this industry. The ten new members have eight new official languages, not counting Maltese, on top of the existing eleven, not counting Irish, Letzeburgish and Catalan. This does not just mean that EU official documents have to be translated, it means that manufacturers who are going to start exporting to those countries also have to translate mountains of information, from instruction manuals to maintenance guides to regulatory declarations.
2. The decline in the value of the US dollar means that American firms that have not exported very much in the past will begin to do so. American companies don’t do translation. Many of them - the kinds of small and medium sized firms for whom the falling dollar is a big opportunity - many of them have never exported. They don’t know about language and don’t want to know, and they are going to want some single firm to come along and take care of all their language problems for one price.
3. Rapid growth in key developing markets - India, China, southeast Asia and Russia in particular - is also a factor in the rising fortunes of the translation industry. Each one has its own language laws and regulatory requirements, and even less ability to use documents in English than most European states.
4. The regulatory environment in the EU is the biggest reason to be bullish on the translation industry. With tighter integration, the European Commission and the EU member states themselves are increasingly explicit about language requirements in labelling, documentation and government submissions. These requirements tend to increase rather than reduce translation requirements, and this trend shows no evidence of abating.

One particularly good example of this last point is the EU directive 98/79/EC, covering a variety of medical devices. When it goes into full effect on December 7, 2003, it will require virtually all medical technology vendors to receive the “CE” label before being able to distribute their products anywhere in the EU. Obtaining this label means, among other things, complying with the language and labelling regulations of every single EU member state. Of the current 15 members, nine require all mandatory documentation in their national language and all of them require it for at least some of the documentation. The new members will doubtless make similar impositions.

The new European Patent Office is also an excellent example of how regulatory requirements are driving companies to spend more on translation. The new system streamlines the process of obtaining a Europe-wide patent and lowers the price dramatically. However, it has not eliminated the need to translate patents into whatever languages the member states individually mandate. The initial patent application can be in English, French or German, but once the patent is issued, a translation has to be prepared and deposited with each of the national patent offices, in whatever form and language they require. Twenty-two of the twenty-seven contracting states mandate that the whole of the patent be translated, one state requires only that one section be translated, and the remaining four states have not yet published regulations regarding European patents.

These translations aren’t examined - the EPO examines the original application and unless someone challenges them, the rest are taken as accepted. You need only pay a filing fee of €50 to €100 in each member country. This is negligible compared to the price of filing a patent for examination (~€50,000), so the total cost of a European patent is now far, far smaller than it used to be. Many more firms will take out European patents than before. But, the translation load is even larger under the EPO scheme than back when you would only file patents in a few countries.

There is also more and more reason to see product liability as a motive for document and translation quality control. A rather infamous train accident at Paris’ Gare de Lyon in 1988 focused attention on layout and structure as a factor in text comprehensibility. French investigators ruled that the accident had been caused primarily by the failure to use clear layout in maintenance documentation, leading to incorrect servicing and ultimately to the deaths of 56 people. I don’t know of any comparable case involving a poor written translation, but it is only a matter of time before this issue is gruesomely highlighted.

EU regulations already make poor translations subject to product liability law. Although in principle the translator can be held liable for poor quality work, in practice this virtually never occurs. However, clients who commission and distribute bad translations are at present strictly liable. Manufacturing and service regulations focus more and more on issues of quality rather than specifications, and semi-voluntary standards like ISO-9000 focus heavily on quality issues. This means that not only will having translations matter, it will matter more and more that they be good translations. Good translations cost more than cheap ones.

This is why economic integration is going to make the translation industry much more productive and much larger in a decade than it is today. It is why integration - and not just free trade in the form of eliminating duties on imports - is worth pursuing.

I can manage to work up one or two pointers which might get us back on track. You see, the interesting question to ask would be about how I got to meet Henry. And the answer would be that I found him because he linked to me (I normally follow new links back upstream to have a quick gander at just who might be crazy enough…..), and he linked to me because, for some reason I still haven’t fathomed, he got interested in my Indian Tech friend Rajesh, and this somehow sent him over to me.

Now I’m starting to get used to things like this, but when it first started happening, it was, I think, little short of mind blowing. Someone from Brazil, living in NY, zooms through Mumbai only to end up on top of my desk in Barcelona. Not only that, but it turns out we have a number of things in common. What I think I’m trying to say is that if this has never happened to you, it’s very hard to describe how you feel. My wife continually tells me that she can see from my face that something interesting has been happening, but beyond that there is no other external sign. She complains she has no way of telling what is important and what isn’t anymore. And the net is like this. Those of us who are in just can’t find any reasonable way of conveying the sensations to those who aren’t. The only strategy would seem to be preparing an experiential explanation - like one of those Borges maps which gives a more detailed specification than the space it is describing - which could offer a large as life version of the net itself. An astronaut must have similar problems after the flight.

And this brings me back to the core of this post. What I find is that my very conception of human contact - whether European or any other - is changing, and part of that change has to do with the loss of place, of physical location, as a determinant. I would say I had now a lot more friends, or people who I consider to be friends, than I had when I started blogging. But the strange thing about my new ’friends’ is that in the majority of cases I neither know what they look like, nor have I ever heard their voice. I think it’s worse: I think I’m getting to like it like this. In some ways you could say the contact is ’purer’: you have less to go on, you form your opinion without visual or auditory information, you get to use your imagination more. It is in a way a bit like reading a novel, and imagining the characters, simply by going on the author’s description and what he has them say. And yet, the strangest thing of all, I have the feeling I know the person I am communicating with, that I can like, or dislike them, just as I can like or dislike people in the physical world. Weird.