Monthly Archives: December 2008

I am on holiday this week. This has the advantage, from my point of view, of meaning that I didn’t have to write a newspaper column on Gaza for yesterday’s FT. It is a depressing subject - to put it mildly. And it is hard to find anything to say about the Israel-Palestine conflict that is either original or constructive.

But my respite will not last. I am back at work next week. And given the likelihood that the fighting will still be going on, I may be writing about Gaza.

So while the world appeals for a ceasefire, let me appeal for some insights from blog-readers. I realise that this too might be a foolhardy endeavour since – in the past – discussions on this subject have tended to bring out the worst in everyone. If this particular thread degenerates into abuse, we will just shut it down. Anyway, here are my questions:

Usually, when I sit down to make a list it is a form of procrastination. Once a year, however, I can put my list-making habit to a practical use – when I write an end-of-year column, picking the five “defining moments” of the past 12 months.

This year has been a vintage one for news, most of it grim. It took just a few moments to scribble down my top four: the collapse of Lehman Brothers, Barack Obama, the Beijing Olympics and the Russia-Georgia war. The fifth choice was more difficult, so I canvassed suggestions from readers of my blog.

They came up with a wide range of suggestions. The most frequent was the terrorist attack on Mumbai. Other events that came up several times were Kosovo’s declaration of independence, Ireland’s rejection of the Lisbon treaty, Nicolas Sarkozy’s six months as “president” of Europe, the first ever Group of 20 nations summit, the US-India nuclear deal, the revival of fighting in the Democratic Republic of Congo and the continued disintegration of Somalia and Zimbabwe. Some wanted me to include more financial events – a reasonable enough suggestion in the year of the credit crunch. Ideas included: “The fall of the house of Madoff” and “Iceland goes kerplunk”. The most unusual suggestion was “Australia’s decline in Test and one-day cricket” (from an Indian).

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

Funny, how quickly things can go sour. The Russian government is the latest to face social unrest, linked to the global economic crisis. As blog-readers might have gathered, I was in Ukraine last week – and a Russian economist mentioned to me that there were demonstrations in Vladivostock against the new tariff on car imports. The FT is now reporting that the trouble is spreading.

More broadly, the Russian government is facing a serious economic crisis on several fronts. Just six months ago, its huge pile of almost $600 billion in foreign reserves seemed a symbol of the country’s new-found strength. But they have got through roughly a quarter of that in just three months – mainly through supporting the rouble. At this rate, it will all be gone well before the end of 2009. That is not an entirely implausible scenario, because the fiscal pressures on the Russian government are only likely to grow over the next year. Official projections are still that the economy will grow by about 3%; but private-sector economists in Moscow are talking about a deep recession. With oil down at just over $40 a barrel, the cash-spigot has been turned off.

There is a danger that, as the government comes under increasing fiscal pressure, it will be tempted to raid the foreign reserves for ordinary budget spending – espescially if the alternative involves cutting social spending and risking further popular unrest. Local governments are also likely to be screaming for financial support from Moscow.

The whole Putin phenomenon has been based on oil wealth and economic growth. So what happens now?

It is quite rare for a senior politician to start a speech by announcing to the audience that he hasn’t taken a shower that morning. But that was the opening line deployed by Hryhoriy Nemyria, Ukraine’s deputy prime minister, when I saw him speak in Kiev yesterday. He was not making a point about his personal hygiene. Rather, he was highlighting the fact that half of Kiev has been without hot water for the last week or so. The vice prime-minister blamed mismanagement by the mayor of Kiev – a political opponent, as it happens. Whoever is at fault, it’s a pretty grisly situation. The temperature outside is minus seven.

The whole episode brings together three of Ukraine’s most controversial subjects – heating, energy supplies and political infighting. The country’s political leadership are – as ever – at each other’s throats. But Ukraine could do with some decent leadership at the moment. The economy has been hit really hard by the credit crunch. The IMF have already extended a loan to Ukraine, but there are worries that the country may have to come back for more. And yet another confrontation is looming with Gazprom, the Russian gas giant, over energy bills. If things get nasty, it could make Kiev’s hot water problem seem pretty mild.

Notoriously, the Russians cut gas off to Ukraine in January 2006. Now, as the third anniversary of this unpleasant incident looms, there are fears of a repeat performance. The Russians and Ukrainians are locked in tetchy and inconclusive negotiations about the price of gas and the size of Ukraine’s debts to its Russian energy suppliers, which are meant to conclude by the end of the year. The Ukrainians are scarcely flush with cash at the moment. And some of the locals I spoke to seem almost resigned to another demonstration of Russia’s “gas diplomacy” – and a cut-off. They are just banking on the idea that it probably won’t last very long.

 

There was a distinct whiff of triumphalism in Beijing in the weeks after the collapse of Lehman Brothers. Chinese officials speculated aloud about whether it would be wise to lend the Americans the money they needed to bail out their sinking banks. There was tut-tutting about American profligacy. The famous prediction by Goldman Sachs that the Chinese economy would be larger than that of the US by 2027 was revisited – perhaps it would happen even sooner than that?

But two months into the global financial crisis, things look much grimmer for China. In fact the only recent examples of social unrest in one of the world’s main economies have come there, not in the west. Laid-off workers in factories in southern China have staged protests that had to be contained by riot police. There have also been strikes and violent protests by taxi drivers in some cities across the country. The notion that the Chinese economy has so much momentum that it has “decoupled” from the US looks like a myth.

The economic statistics tell their own story. Last week the Chinese government announced that the country’s exports fell in November, compared with a year earlier, in the first such monthly drop for seven years. There are said to be 1m new graduates looking for work. It is generally held that the Chinese economy needs to grow at 8 per cent a year to absorb all the new workers coming on to the market. But new projections suggest that Chinese growth next year will be lower than that – possibly much lower.

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

I have got into the habit of finishing every December, with a column that tries to list the five most politically significant events of the year. I plan to publish this year’s list on December 23rd. It seems to me there are four events that have to make the list: the election of Obama, the collapse of Lehman Brothers, the Beijing Olympics and the Russian invasion of Georgia.

But what should be my fifth event? Please send nominations by the end of the week.

What a delight to discover that the governor of Illinois seems to have wandered in off the set of the “The Sopranos”. When Rod Blagojevich says of his right to appoint Barack Obama’s successor in the Senate – “I’ve got this thing and it’s f***ing golden, and I’m not going to give it up for f***ing nothing,” – it could be Tony Soprano himself speaking.

There is also a lovely contrast between the unbelievably sleazy reality of Illinois politics and the absurdly prim and exacting ethics-standards demanded from potential appointees to the Obama administration. For those of you who haven’t seen it, here is a link to the lengthy questionnaire all job-seekers must fill out. It would seem to me to rule out anybody who is not either a liar or a Mormon missionary.

My favourite is question 14 in section 2, where applicants are asked if they have ever “kept a diary that contains anything that could be a possible source of embarrassment.” Now what diary, worth its salt, does not contain anything that could be embarrassing?

In the light of the Blago scandal, however, perhaps they could add a new question to the  form – “Have you ever been taped by federal prosecutors, discussing the sale of the president-elect’s senate seat in profane language?”

I think I’m going to take the precaution of closing the comments section on this posting, before I open it – so to speak.

But, a couple of final thoughts. First, I am amazed by how many people read that article as a passionate call for the formation of a world government, rather than a dispassionate discussion of the possibility. I began to wonder if I had misunderstood my own article. But I was re-assured (if that’s the word), by a discussion with my sister, who described the piece as – “A slightly dull discussion of a school-boy debating topic that went – on the one hand, on the other hand, probably not.” That seems fair enough to me.

But – amidst all my whinging about my flame mail – I would like to thank my critics for introducing me to a good, new word. Despite being ardent defenders of “democracy” in the abstract, many of these people seem deeply contemptuous of American voters who are stupid enough to do things like vote for Barack Obama, or fail to realise that they are being hoaxed over global warming. These people are dismissed as blind followers of the elite and so are referred to as “the sheeple”, rather than the people. I like that.

I knew that there was something odd going on, when I woke up at 7am on Tuesday and found that over 200 e-mails had arrived in the seven hours that I had been in bed. It turned out that my article on world government had been “Drudged” – ie put on the much-read Drudge Report and this had set off a torrent of e-mail traffic.

The pace of comments – and their vituperative tone – persuaded the blog-masters here to shut down the comments section on that article pretty quickly. But this had the unfortunate effect of encouraging people to e-mail me directly. The following from one reader is fairly typical:

“Just wanted to let you know that you’re never gonna get your New World Order.
People are waking up everyday to what’s really going on ….Good luck gettin’ the guns you traitor piece of trash!!”

If you get two e-mails like that it can be faintly unsettling. If you get 200, however, you begin to get used to it. That said, the whole experience has given me an insight into the mindset of the gun-toting, bible-bashing, nationalistic bit of the United States. Here are my conclusions.

I have never believed that there is a secret United Nations plot to take over the US. I have never seen black helicopters hovering in the sky above Montana. But, for the first time in my life, I think the formation of some sort of world government is plausible.

A “world government” would involve much more than co-operation between nations. It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.

So could the European model go global? There are three reasons for thinking that it might.

First, it is increasingly clear that the most difficult issues facing national governments are international in nature: there is global warming, a global financial crisis and a “global war on terror”.

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

The World

with Gideon Rachman

About this blog About Gideon Blog guide
Gideon Rachman and his FT colleagues debate international affairs. Read more on the authors.

Gideon became chief foreign affairs columnist for the Financial Times in July 2006. He joined the FT after a 15-year career at The Economist, which included spells as a foreign correspondent in Brussels, Washington and Bangkok. He also edited The Economist’s business and Asia sections.

His particular interests include American foreign policy, the European Union and globalisation
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