Daily Archives: December 29, 2011

A key theme of 2012 will be freedom and control on the internet. As demonstrated in Egypt, social media can be the most disruptive of revolutionary tools. But as we have seen in Iran, it is also a potent mechanism of state repression. The battle between digital liberation and autocratic limitation is playing out today around the globe – in Syria, in Cuba and, most crucially, in China and Russia.

Never have individuals and small groups had such potential for political leverage – something apparent to followers of the Chinese artist Ai Weiwei’s Twitter account, Alexei Navalny’s blog about Russian corruption, or the “We are all Khaled Said” Facebook page that became the staging tent of Tahrir Square. This is not to say, though, that the wired activists are destined to triumph.

The technologies of tracking and control, often supplied by western companies, are aiding dictatorships in their own innovative efforts at cyberwar, surveillance and censorship. The coming year is sure to see new showdowns, with outcomes shaped in part by the policies and practices of international technology companies.

In the west, the conflict revolves around a different set of issues – piracy, privacy and monopoly. It pits the giants of technology against the creators of media, who are demanding stronger protections for their intellectual property. Facebook, whose business model lies in the collection and use of personal information, will continue to push the boundary of acceptable snooping against the notion of a “right to be forgotten”. In Brussels, Google faces an antitrust investigation into whether its domination of internet search has led to favoritism toward its own properties. Wrapping it all up is the broader societal question of whether we are approaching media nirvana or filtering ourselves into solipsistic oblivion.

The chief factions in this struggle are not a conventional left and right, but three groups that can be drawn from either side: the digital utopians, the cyber-sceptics, and the techno-peasants. The digital utopians expect the internet to cure all of society’s ills. The cyber-sceptics see it making all of our familiar problems even worse. The techno-peasants watch bemusedly as technology remakes our world in ways they cannot understand.

The writer is chairman and editor-in-chief of The Slate Group and author of ‘The Bush Tragedy’

Sovereign risk was a principal theme in 2011 – most visibly in Europe and, to a lesser extent, in America’s loss of its triple A rating. Along with poor growth and rising inequality, it will continue to raise serious questions next year about the functioning of the global economy. As this occurs, one institution – the International Monetary Fund – will attract special attention. The key question is whether it can finally step up to the role of global conductor, rather than suffering yet more erosion of its credibility.

The sovereign risk crisis has not been kind to the IMF, especially when it comes to Europe. There is no denying that too many of the adjustment programmes it has overseen have fallen short of their objectives. Whether it jumped or was pushed, the institution sacrificed some of its own rules, including those previously deemed sacrosanct.

For two years, the IMF agreed to a series of programmes that were partially designed, inadequately funded and, in some cases, even threatened its preferred creditor status. In each case, the IMF ended up supporting a weak attempt to muddle through, rather than a plan sustainable in the medium term.

This shortfall has accentuated prior concerns about the IMF’s governance, representation and legitimacy. The damage has been material, though fortunately not irreversible.

Don’t get me wrong. This is not about the IMF’s ability to be an agent of good for the global economy. After all, it is endowed with considerable influence, global standing and talented staff. Rather, it is due to political pressures from Europe.

Many countries interpret the IMF’s actions in Europe as confirmation that they are members of an institution that speaks about uniformity of treatment but makes large exceptions for its historic masters. As the institution’s credibility and balance sheet suffer, its programmes are less effective in attracting co-financing from the private sector.

The world needs a strong and legitimate multilateral institution if it is to avoid costly fragmentation; and Europe needs a credible IMF to help it overcome a deepening crisis. This will only be achieved if there is a change next year in the overly cosy relationship between Europe and the IMF.

What is required goes beyond enlightened restraint on the part of European leaders. The IMF must find the courage to resist European bullying; and the rest of the world must help by making a collective effort to accelerate reform of the institution’s governance and representation. Only then would an enhanced IMF be able to help the global economy back to growth and jobs.

The writer is the chief executive and co-chief investment officer of Pimco.

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