How small nations were cut adrift

October 20th, 2009 1:38am

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Almost two years ago, I wrote a column hailing “the age of the small state”. I pointed out that the number of independent nations had grown sharply over the past 40 years and that small countries topped many of the international league tables, on everything from gross domestic product-per-capita to peacefulness and “human development”.

But that was then. In the aftermath of the Great Recession, the economic and political tide has turned against small nations. Look around Europe and it is the smalls that have fared worst – Iceland, Ireland, the three Baltic states. Iceland has not only suffered a catastrophic economic and banking collapse. It is also being bullied by Britain and the Netherlands into paying back billions lost by their citizens when Icelandic banks collapsed. Membership of the European Union has provided the Irish and the Balts with some protection from pressure by larger nations, but it cannot solve all problems. Latvia has had to go to the International Monetary Fund for a loan. Lithuania and Ireland may be forced to tread the same route.

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China makes gains in its bid to be top dog

September 15th, 2009 1:19am

Last week a Tibetan mastiff was flown into Xian airport in central China, where it received a welcome fit for an emperor. The dog was swept into town by a convoy of 30 Mercedes-Benz cars. Tibetan mastiffs are a rare and noble breed – and the pampered pooch had cost his new owners Rmb4m ($586,000, €402,000, £351,000). Reporting the story, the China Daily newspaper commented nervously that such an extravagant display of wealth might “heighten tension between rich and poor”.

This shaggy dog story is just a particularly weird example of the new wealth of modern China. When I last visited the Pudong district of Shanghai, in the mid-1990s, it was a ramshackle area of factories and warehouses. Last week, I found it transformed into a forest of neon-lit, modernist skyscrapers. China has shrugged off the global recession and should grow by 8 per cent in 2009.

This year the country has passed a number of economic milestones. It is now the world’s largest exporter, surpassing Germany. It is the world’s largest market for vehicles, surpassing America. Its foreign reserves, the world’s largest, are now over $2,000bn. The biggest landmark of them all – the moment when China becomes the world’s largest economy – is getting closer. Goldman Sachs famously predicted a couple of years ago that China would hit that target in 2027. But that was before the financial crisis. If America is now set for a long period of slower growth, the big moment could come rather sooner.

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The crude realities of diplomacy

September 8th, 2009 1:19am

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“Follow the money” is the advice routinely offered to detectives in low-budget thrillers. For anyone attempting to understand the ebbs and flows of international politics, I offer a variant of that old line: “Follow the oil”.

Any suggestion that the search for energy is fundamental to the foreign policy of Britain and the US is often treated as faintly indecent. In Britain, the government is currently angrily brushing off suggestions that the decision to release Adbelbaset Ali Mohmed al-Megrahi, the Libyan convicted of the Lockerbie bombing, had anything to do with Libya’s oil and gas. Jack Straw, the UK justice secretary, has released letters in which he spoke of considering prisoner transfers to Libya, in the context of “wider negotiations” and the “overwhelming interests” of the UK. He did not use the word “oil”; but, under mounting pressure, he has since admitted that trade and oil interests were “a very big part” of Britain’s desire to bring Libya “back into the fold”.

It is true that oil is not the only interest Britain has at stake in Libya. But the search for more secure and diverse energy supplies is increasingly important to UK foreign policy. Britain’s North Sea reserves are running down and the country is worrying about a looming energy crisis. Libya looks like a promising possible supplier of both oil and natural gas that is unusually open to foreign oil companies. BP and Royal Dutch Shell are the second and third biggest companies on the London stock exchange, and they have both signed exploration deals in Libya.

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While I’ve been away

August 31st, 2009 4:06pm

I am back at my desk. Nothing much has changed. The weather is still mediocre. The buskers outside my office window are still infuriating me by playing the same snatch of Mozart, a hundred times a day. I now hate Eine Kleine Nachtmusik. Still, at least, the world’s leaders have followed my wishes and not unleashed any major wars during my summer holiday.

Of course, I kept reading the newspapers and the internet while I was away - addictions are not kicked that easily. So, in the absence of small wars. what have been the major world events over the last three weeks? The Japanese have finally got rid of the LDP. Afghanistan has had its election and Karzai seems to have won. But US and UK casualties are now running at levels that are threatening support for the war.

The gloss has come off the Obama presidency and health-care reform is in trouble. Meanwhile the president himself went to Martha’s Vineyard on holiday. (I’ve never understood posh America’s obsession with “the Vineyard”; I’ve been there once and it struck me as a bit of dump.) Russia has not renewed its war with Georgia. The most offensive thing Vladimir Putin did this summer was to pose topless - an offence for which he has been roundly criticised by Phillip Stephens. And finally the German regional elections look quite interesting - no, really they do. They are the first indication I’ve seen for a while that the general election in September may not be the walk-over for Angela Merkel that everybody is anticipating.

Democracy could still win in Iran

June 16th, 2009 1:04am

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Thirty years after the Iranian revolution, could we be witnessing an Iranian counter-revolution? In the short term, events in Iran are depressing and alarming – a stolen election, violence in the streets, repression. In the long term, the weekend has provided heartening evidence that Iran, and the Middle East in general, need not be immune to the great wave of democratisation that has swept the world since the late 1970s.

Of course, there are those who think that – despite the turmoil in Tehran – President Mahmoud Ahamdi-Nejad may actually have won the election. Their line of argument is that western journalists and middle-class Iranians have been deceived by focusing too much on opinion in the capital city and amongst the educated elite. Iran might be like Thailand – a country that has recently been through political turmoil because the urban middle-classes are regularly out-voted by the rural poor.

These arguments are unconvincing. The Iranian election bears all the hallmarks of a stolen vote. The official count has Mr Ahmadi-Nejad winning even in the home town of Mir-Hossein Moussavi, his main challenger. Mr Ahmadi-Nejad is said to have won even in Azeri-speaking constituencies, despite the fact that Mr Moussavi comes from an Azeri background. The official tally gave Mr Ahmadi-Nejad 63 per cent of the vote, which is way out of line with most pre-election predictions. The Iranian regime has reacted to popular protests with all the instincts of a dictatorship – beating up protesters, locking up opponents, shutting down text messaging services and internet sites.

The remainder of the article can be read here. Please post comments below.

Economists v Historians: cats v kings

June 3rd, 2009 4:45pm

I have enjoyed the spat between Niall Ferguson and Paul Krugman: public intellectual v public intellectual; Harvard v Princeton - and, most significantly, historian v economist.

Essentially Krugman accused Ferguson of not knowing what he was talking about and having a shaky grasp of economics. I thought Ferguson’s response in the FT was remarkably good-tempered under the circumstances. As a former historian, I particularly enjoyed his line - “A cat may look at a king and sometimes a historian can challenge an economist.” I quoted this to one of the economists on the FT staff, who remarkred snootily that he regarded that as a reasonable summary of the intellectual hierarchy. Continue reading "Economists v Historians: cats v kings"

Obama: the right man at the wrong time

April 7th, 2009 1:21am

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And so it was that Barack Hussein Obama visited Europe. In London, he rescued the world economy. In Strasbourg, he healed the Nato alliance. In Prague, he rid the world of nuclear weapons. In Ankara, he reconciled Islam and the west. And on the seventh day, he got back on to Air Force One and disappeared into a cloudless sky.

Was it all a dream? I fear so.

On many levels, the new US president’s first tour of Europe was indeed a triumph. Mr Obama was articulate, ambitious and charming. His personal style has a touch of the emperor and a touch of the rock star – but with an appealing humility that is common to neither profession.

While his manner was relaxed, Mr Obama also consistently displayed an instinct for bold action that seems to be beyond the European leaders he mingled with. He wants to abolish nuclear weapons, shock the world economy back into recovery and redouble efforts to win the war in Afghanistan.

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Europe spurns the beloved Obama

March 31st, 2009 1:21am

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Europeans have long worshipped Barack Obama from afar. Now the beloved one is paying his first visit as US president to the old continent. Yet there is every indication that Europe’s leaders are about to stiff him.

Mr Obama is on a rapid-fire tour that will take him from the Group of 20 meeting in London to a Nato summit in Strasbourg, then on to a US-European Union meeting in Prague and, finally, a state visit in Turkey. But he will be lucky to return from Europe with much more than commemorative photos and some presents for the kids. (“I went to the G20 summit in London and all I got was this lousy T-shirt.”)

If you look at Mr Obama’s top priorities, you get a sense of just how little the Europeans are prepared to give him. More help in Afghanistan? Most Europeans will do the bare minimum. A co-ordinated fiscal stimulus? Sorry, Europe is out of cash as well as troops.

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Why it is Turkey that matters for Obama

March 30th, 2009 2:37pm

Here in London, everybody is going G-20 crazy. Understandable, of course, since this is the biggest gathering of world leaders that has Britain has hosted for many years. But the G-20 is just the first leg of a four-stop tour by President Obama. First there is the London meeting, then the Nato summit in Strasbourg, then the US-EU meeting in Prague and then a two-day state visit to Turkey. In fact, my guess is that it will probably be a five-legged tour - with Obama going on to Afghanistan for a surprise vist, after Turkey.

The assumption here in London is that it is the G-20 meeting that matters most. But I think that could well be wrong. If you look at Obama’s four stops, I think the most important could well be Turkey.

The G-20 summit brings together the most high-powered group of leaders and is all about the economic crisis. But, as the FT reports today, the communique is already pre-cooked - and looks like it will be pretty meagre fare, with a boiler-plate call to resist protectionism as its centre-piece. There will be plenty of hoopla at the Nato summit. But, once again, the big decisions - in particular about Afghanistan - have already been taken elsewhere. Mr Obama is likely to enliven the US-EU summit by making a big speech on arms control. But whilst these occasions are always taken desperately seriously by the Europeans, they are not terribly important to the Americans who find them unwieldy and baffling.

So that leaves Turkey. Continue reading "Why it is Turkey that matters for Obama"

Attacking Taliban safe havens in Pakistan

March 18th, 2009 6:52pm

There is a fascinating and slightly alarming story in the New York Times, suggesting that the Obama administration is thinking of extending US military action in Pakistan - in a bid to go after the Taliban and al Qaeda. The idea is that bombing by pilotless drones could be extended beyond the tribal areas of Pakistan and into areas that are directly controlled by the central government, such as Baluchistan. These could be supplemented by commando raids into the area around the city of Quetta - which is believed to be the residence of Mullah Omar, the head of the Taliban.

I can see the temptation. But this still strikes me as a bad idea. Of course, I don’t have the intelligence - so I cannot know how successful the current strikes have been. And if Obama thought he could get Osama, I can see it would be hard to say No. (That would be worth at least 10 points in the polls.)

But the whole thing has an uncomfortable Vietnam-era ring to it. This is the process whereby a liberal Democrat (JFK or LBJ) gets steadily sucked further into a war he doesn’t really want to fight: more troops for Vietnam/Afghanistan; raids on the enemies safe havens in neighbouring Cambodia/Pakistan - resulting in the wholesale destablisation of another country. Continue reading "Attacking Taliban safe havens in Pakistan"