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A Deputy PM who isn’t (if you are in Sweden and the deputy is a “green”)

July 19, 2015

The Swedish Social Democrats were forced to bring the Environmental Party into government to cobble together a majority in parliament with external support from the Left Party (rebranded communists). The leader of the Greens, Åsa Romson, was given the title of “Deputy Prime Minister” but it has now been revealed that in the agreement between the Social Democrats and the Greens, the position was entirely titular. Fortunately the Social Democrats were sane enough and responsible enough not to allow the possibility of a Green Deputy PM actually stepping in to replace the PM when he was abroad or ill. That would be more frightening than nuclear weapons with a rogue state.

This agreement came to light this week when the PM, Stefan Löfven, was taken ill – just for a few hours – on his return from a trip abroad. Though he has not named any particular person to fill his empty shoes, it is usually the Foreign Minister, Margot Wallström, also a Social Democrat, who steps in.

Opposition parties have been quick to take pot-shots. “Unconstitutional”, said some of them, “to have a deputy who wasn’t”.

All good fun, but there is a serious point. The Greens are not seen, even by their partners in government, as being responsible enough to be allowed to take the reins. And that is the reality. The 6 Green Party Ministers in this government have, in my perception, amply demonstrated their inexperience which borders on the incompetent. They are a destructive force, primarily concerned with stopping actions from others,  but have few constructive ideas of their own. They raise barriers when others want to “do” but “do” very little themselves.

Dagens Nyheter: The Green Party spokesperson Åsa Romson’s is Deputy Prime Minister – but will still not act as replacement for Stefan Löfven (S). Instead, it is Margot Wallström, who has that role in government.

According to information provided to DN the Social Democrat leaders did  not want to give Romson the responsibility to lead the country in a crisis.

“Stefan Löfven has not appointed a deputy. Since no specific proxy has been appointed the role is taken by the longest serving Minister” says Hans Dahlgren (S), State Secretary in the Prime Minister’s Office.

In the red-green government, Foreign Minister, Margot Wallström is the longest serving minister. Therefore she has, whenever available, led most of the cabinet meetings that have taken place since last autumn whenever Stefan Löfven has been abroad or absent for other reasons.

…….. when the Social Democrats and the Green Party negotiated for government posts last autumn, the parties agreed that Åsa Romsons title as Deputy Prime Minister was merely titular.

“We made no demands about getting an operational deputy post when we negotiated to enter government. It was more important for us to have clear responsibilities and cooperation in government”, says Åsa Romson.

The issue came to a head on Thursday when Stefan Löfven after a trip to Ethiopia suffered acute nausea and was taken by ambulance from the airport to the Karolinska University Hospital. But it took more than a day for the Prime Minister to answer DN’s questions on the matter.

The Green Party is based on agitation when in opposition. In government they flop about like fish on dry land.

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Bibi Netanyahu loses his security blanket

July 14, 2015

I particularly like this from B Michael in a Haaretz opinion column, even if his sarcasm is a little over the top. But with Bibi nothing registers if it does not go over the top.

My heart goes out to Benjamin Netanyahu. With one cold, cruel stroke of the pen, the rulers of the world have taken away his most beloved toy – the apple of his eye and the joy of his heart, the rock of his existence and the source of his strength, and above all, the rock of his refuge and safe haven. Or in short, the Iranian bomb. ……… From now on, Netanyahu is like a baby that has lost its security blanket, or like one whose favorite teddy bear was thrown into the garbage – the one that warmed his heart during the long nights and infused him with calm and serenity during times of trouble and election campaigns.

But Bibi has an easy solution says Michael. He could just take one of Israel’s greater than 200 nuclear warheads and smuggle it into Iran and he can then rest easy that he can get back to crying “Wolf” whenever he has nothing else to say.

But our hope has not yet been lost. If salvation doesn’t come from without, we will bring it from within, from ourselves. ….. As everyone already knows, the State of Israel – of course only according to strange foreign sources – has a respectable arsenal of atomic bombs that long since crossed the 200 mark. More than enough to destroy half the world. 

And here, in these surplus bombs, lies the solution to Netanyahu’s distress. All he has to do is take one of those 200 bombs of ours (according to foreign sources), wrap it up nicely in gift wrapping and give it secretly, as an anonymous donation, to the Islamic Republic of Iran. …… To anyone who fears the move might be discovered and embarrass us, don’t worry; nobody will notice the loss of one bomb out of 200. And even if a curious journalist does discover that one is missing, it’s not so terrible. As is the norm in such cases, Israel will grab the lowly guard on duty and cast him into purgatory the way one usually does with scapegoats, and that will settle the matter.

And thus, everyone will once again be happy.

But to be serious for a moment, bringing Iran back into the fold and creating a more balanced situation could be the best thing to happen in the Middle East for a long time. It is actually the 3-pronged balance between Israel, Saudi Arabia and Iran which gives hope. A military, political, financial and even a religious balance. Ultimately the Middle East has to find its own solutions for what constitutes “democracy” and of living together, without solutions being imported and imposed from Washington.

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Iran deal is done, Bibi unhappy, Greek deal done, Greeks unhappy.

July 14, 2015

Reuters and other anonymous sources are reporting that an Iran deal has been done.

Greece yesterday, Iran today, what’s for tomorrow?

Bibi is neither pleased nor amused. A “pre-emptive” strike by Israel on Iran now becomes that much more difficult. Saudi Arabia will not be too pleased either. If sanctions are  lifted and also on weapons sales by Iran then we can see the pro-Iranian factions across the Middle East getting a boost. Which will probably constrain the advance of ISIS somewhat (and whatever the Saudis might say it is private Saudi money funding the barbarians). The pro-Iranian factions in Syria and Iraq will not only get a boost, they may also be more successful on the ground than the US-led coalition.

However Saudi Arabia will not be too unhappy about the additional downward pressure on oil prices. It will be sometime before Iran can ramp up production and during this time, low-cost Saudi oil will win further market share. Though Saudi Arabia failed to wipe out shale oil from the US, it is still increasing production and contributing further to the current oil glut. Saudi seems to be pursuing a revised strategy of keeping oil prices relatively low for 2 years or more in a war of attrition against the higher-cost oil producers. Market share is perceived as their prime weapon to try and get rid of the higher-cost producers. But I think they have miscalculated even here. A discontinued shale oil well can be restarted with very little investment and at very short notice. Production costs of shale oil have decreased sharply. Shale oil developers will just ramp their production up and down depending upon the prevailing oil price. And the larger shale oil wells can make money even with oil prices down at $40/ barrel.

It isn’t quite time for vacation yet in Europe (apart from Sweden which is closed for July). Some kind of framework resolution for the whole package of the 3rd bailout needs to be passed by the Greek parliament by tomorrow. Some resistance is showing today but the resolution will surely pass. Of course that says nothing about the Greek government’s implementation of all they have signed up for. Their track record of implementing what has been solemnly promised is not good. And if the reports today that the ECB will not be pumping liquidity willy-nilly into the Greek banks are correct, then the banking system will have to start issuing IOU’s to keep functioning while the negotiations are concluded. That will effectively be an alternative currency and it won’t be long before the IOU’s start trading at a different value to par. A currency by another name than “Euro” is still a Grexit for as long as that currency is used.

But an Iran back in the international fold is undoubtedly a good thing.

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Cameron is the unlikely winner of the Greek referendum

July 6, 2015

There will be millions of words written about the Greek “No” to the conditions set by its international creditors and what it means. But what strikes me is that the only real winner is David Cameron.

For Greece and the EU it is a lose-lose situation. If the creditors soften their conditions, the Euro and the EU loses. If the creditors stand firm and Greece leaves the Euro, the sanctity of the Euro and membership of the Eurozone is gone forever. My view remains that the best for Greece and the EU is for a return to the drachma, an EU which shrinks its ambitions and a dissolution of the Euro.

If the creditors now soften their conditions and a Grexit from the Eurozone is avoided, it will demonstrate that the IMF, ECB and EU conditions will never be the final word again for any member country. Each will always have the option in any negotiation of calling a “referendum” to reject the terms. Any negotiation by a member country with the EU can use a referendum to finally reject an EU position. Any country can then reserve the right to put any EU Directive to a referendum and EU Directives will become merely guidelines to be accepted or rejected by member countries at will.

If, on the other hand, a Grexit does occur and the fatally flawed Euro experiment begins to come to an end, it will be emphatic evidence also that the entire concept of a new Holy European Empire is something only in the minds of a very few in Bonn and Paris and Brussels, but is not shared – at this time – by the general population (represented by the general Greek public). It is a concept either too far ahead of its time or possibly which will never be real. At any rate, for this time, it would demonstrate that it is fundamentally flawed.

And what strikes me is that this helps David Cameron both within the EU in his quest for renegotiation and even for treaty change. It even helps him domestically. He has had an issue of credibility in that he has called for an In/Out referendum where he will surely have to call for an “In” vote. His problem lies in being able to show that he has won enough during negotiations to justify an “In” recommendation. But now, with the Greek precedent, he can even demand the most drastic changes in Europe without being thrown out of any room. He is likely to get changes which were unthinkable yesterday. He can even go to a referendum ostensibly demanding an “Out” as a negotiating ploy, get an “Out” vote and then return to the negotiating table. He can call a second or even a third referendum (and if a bankrupt Greece can carry out a referendum within a week then surely the UK can manage something similar).

Referenda are now just a step in the EU negotiating process.

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A drastic haircut for Greek middle-class as savers are set to lose 30% of their deposits over €8,000

July 4, 2015

The Greek problem is very complicated I am told. It is an ideological battle between right and left, I also read. It is austerity versus profligacy. But I think it has been unnecessarily “complexified”. It is not about which ideological gods are to be worshipped but it is about good house-keeping. It is essentially, basic “home economics” applied to a household of 11 million people. It is about how a deeply indebted household with expensive habits and many non-contributing members is to continue. It is about what lenders are justified in demanding from the household to continue lending. It is about abdication of responsibility by the householder. It is about lending to a prudent householder or to one who will neither clean his house or commit to good house-keeping.

Whichever way it goes at the referendum tomorrow, there is going to be a great deal of pain for the “middle class” who have paid their taxes and have managed to save and who keep their savings in Greek banks. Those who don’t usually pay their taxes (and I have seen one estimate that these are around one third of those who should be paying taxes), keep the “black” economy thriving and they don’t usually bother with banks. The visible rich probably pay a significant amount of the taxes they should but they keep their money mainly outside of Greece (but probably in the Eurozone or in dollars). Since Tsipras came to power they have been quietly getting out of the Greek banks. They are well aware of how all depositors in Cyprus had their savings in Cypriot banks arbitrarily written down over one day while the banks were closed. The very rich of course are well versed in all methods of tax evasion and they are not so stupid as to have kept their money as deposits with the Greek banks.

The total Greek debt is about €328 billion which is about €30,000 per capita. In theory if €30,000 could be confiscated from every Greek citizen, Greece could be debt free. Of course if creditors accept that some level of debt write-down is inevitable – and this seems unavoidable – they will certainly insist that Greece and its banks also accept a “haircut”. The question becomes how much debt write-down is necessary and how much of that will be confiscated by those with substantial deposits in Greek banks. If the IMF analysis is to believed (and they have been wrong many times) then the debt must be reduced by around €60 billion for a growing(?) Greek economy to have a chance of servicing the remaining debt.

Yesterday a report in the Financial Times (since vehemently denied by Syriza) stated that a swingeing 30% of all deposits over €8,000 would be confiscated. As a comparison the Cypriot haircut finally became a dissolution of Laiki Bank and the confiscation (with part conversion to equity) of 47.5% of all deposits above 100,000 euros in the Bank of Cyprus. There are not enough deposits at Greek banks of over €100,000 to milk and hence the figure of €8,000 seems credible.

The critical point is how much debt can 30% of these deposits wipe out. Suppose the lenders agree to write-off (or write down) debts equivalent to about €30 billion. Then Greek savers would need to cough up an equivalent amount if the IMF target of €60 million is to be reached. That is about €3,000 per capita. Greece has an average monthly wage of about €1000 per month (2014). Of course unemployment is high and it is not the average wage earner who exhibited the profligacy or evaded taxes which created the Greek debt mountain. From Syriza’s perspective, confiscating the money of the rich would be best for this purpose. But since that may not be within reach, it is better to soak the middle-class than the bulk of their supporters who are average wage earners or unemployed.

So whichever way it goes in the referendum tomorrow, the middle-class in Greece are going to get badly hit. They are in for a full Brazilian wax job and not just a neat short back-and-sides.

 

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Is embarrassing Gujarat data holding back the Indian Health and Nutrition Survey?

July 3, 2015

According to the BBC, the massive undertaking that is the Indian Health and Nutrition Survey has been completed, should have been released in October 2014, was last issued in 2007 and even has an encouraging story to tell. But the data on Gujarat is not an edifying tale in comparison to other states. Economic growth in the state has not translated into any major advance compared to other states. In fact the Gujarat performance is worse than most. 42% of all children are stunted and half of all children are malnourished.

Is the report too damaging to Modi’s Gujarat story? And is it therefore being held back by Modi’s public relations managers? The official position is that the methodology is being reviewed. But it is more likely being held back to somehow massage the Gujarat figures. It will be difficult because copies of the completed – but not officially released – report are now available widely.

BBC:

Good health data is rare in India. The last time the country published a comprehensive, state-wide survey was back in 2007. So why hasn’t a vast survey of women and children carried out by the Indian government with the UN agency for children, Unicef, been released?

India’s so-called Rapid Survey of Children was a huge undertaking. Almost 100,000 children were measured and weighed and more than 200,000 people interviewed across the country’s 29 states. The final report was due for publication in October last year, the BBC understands. Yet, more than half a year later, the important body of data remains secret.

Leading development economist Jean Dreze describes the delay in publication as “an absolute scandal”. “All the neighbouring countries including Bangladesh, Nepal, Sri Lanka, Bhutan, Pakistan and even Afghanistan have up to date nutritional surveys,” he says. “It is hard to account for a 10-year gap without attributing some sort of political reluctance.” …..

Looking just at the overall figures, India’s reluctance to publish the survey is rather surprising. It shows the country has an encouraging story to tell. Indicators of malnutrition are still very high, far higher than most African nations, but they are improving. Ten years ago, two-fifths of children under five were underweight, now it is more like a third.

However, the survey confirms large and enduring discrepancies between states, including the continuing strikingly poor performance of the Indian prime minister’s home state, Gujarat. As chief minister, Narendra Modi ran the state for more than a decade. His general election campaign was based on the promise that he would do for India what he had done for Gujarat.

Is anybody surprised?

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A Grexit is the best option as the government hides behind a new referendum

June 28, 2015

It seems to me that modern democracies – and especially those with coalitions produced by proportional representation – produce “followers” rather than leaders. And when “followers” pretend to lead they end up taking the easy, CYA, path through referenda. The Scottish referendum and the upcoming UK referendum on EU membership are illustrations of where supposed “leaders” pass the buck onto a diffuse and unaccountable electorate. The “wrong” choice can always be justified as being “the will of the majority”. All across Europe, countries have “followers” in leadership positions, who inevitably fail to lead. I take vision and the ability to carry people towards that vision as being the hallmarks of leadership. Rather than vision, it is the next election which governs. “Leaders” merely follow the current whims of the crowd and don’t even make the attempt to “carry” the crowd an any difficult path.

But I think the current Greek government’s call for a referendum to vote on the lenders’ conditions for further loans to Greece, while carrying out negotiations with those lenders is an abject abdication of leadership. Suppose, as is most likely, the conditions are rejected. The government may well return to the negotiating table in the hope that this may have strengthened its hand. Though exactly how is difficult to see. It is really only an attempt to mobilise a “sympathy” factor. It is equivalent to sitting in front of the bank manager, without any collateral and without any plans to stop spending on unnecessary things while pointing at a crying child and begging for a sympathy loan.

If the government recommends a rejection and this is confirmed by the referendum,  it would be the start of a Grexit. The government may carry forward a “begging” from the lenders but it will only be postponing the inevitable. If the people accept the lenders’ terms, the government ought to resign but will not since they can always point to the referendum for their abandonment of their “principles”. But it will also make it impossible for anyone to negotiate with the Greek government, since no “decision” by them will carry any credibility without being backed up by a referendum.

I expect we will see a run on the banks on Monday – if the banks are open. I also expect that the government will scrape up the relatively modest €1.6 billion needed for the repayment due on Tuesday. Then the result of the referendum  on Sunday the 5th will be the card in the hole to continue negotiations.

But I hope a default takes place and that the Greeks reject the lenders’ conditions and a Grexit does occur. Then a debt restructuring can take place. Writing off debt without first going bankrupt is not healthy. In the long run it will be better for Greece to return to the drachma. It will also be better for both the EU and the Eurozone. Both need to shrink. In corporate terms I would say that EU Inc. has expanded too far, much too fast. Some divestment is desperately needed. It would be better for the EU to focus on the common market and free labour movement provisions and to allow political union to happen whenever, and only when, it is ripe – or maybe not to happen at all. Trying to force the political union is counter-productive. The European parliament can be dismantled completely without losing anything. The Brussels bureaucracy could, and should, be drastically trimmed to be an accounting agency and nothing else. The common currency is of little value with the disparity in economic disciplines across the Eurozone. Dealing with multiple currencies but where each currency is representative of its underlying economy is not as difficult as having the fundamental mis-match we now have between the “average” value of the Euro and the strength of each of the underlying economies.

Greece needs to get out of the Euro strait-jacket it is in while remaining within the European trade zone.

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Post-intellectual West Bengal

June 23, 2015

The new post-intellectual intelligentsia ruling West Bengal are demonstrating the heights to which they aspire:

NDTV: West Bengal Chief Minister Mamata Banerjee’s nephew Abhishek has publicly threatened to “gouge out the eyes and chop off the hands” of anyone who dares to hurt Bengal’s interests. … “Those who dare to glare at us, we can gouge their eyes out and throw them on the road. Show us your hands and we can cut them off,” Abhishek said, adding, “But remember, it is the common man who will have the last word.” …

… Last year, Mamata Banerjee and the Trinamool Congress had to face many embarrassing questions after a prominent parliamentarian, actor Tapas Pal, said at a public meeting: “If the CPM people touch a hair on the head of my workers, I will set my boys upon their women to rape them.”

The West Bengal of today is not the intellectual or cultural powerhouse it once was. I finished my schooling in Calcutta long before it had been ravaged to be called Kolkata. I have been a regular visitor since then and was last there in 2014 for the 50th anniversary of graduating from school.

I grew up knowing – and living – with the intellectual legacy of Swami Vivekananda (Narendra Nath Datta), Rabindranath Tagore and Jagadish Chandra Bose. Satyajit Ray and Ravi Shankar were living legends. But they were all of the old school of Bengali intellectualism. Since then West Bengal was first plagued by 5 decades of a very peculiar Marxist communism. Just two layers of society were recognised. First came the agricultural masses who were all organised into almost-martial cadres and then there were the politburo and its hangers-on who amassed their corrupt wealth. The middle class and those who actually contributed to growth and culture and thought were reviled and oppressed. Marxist communism collapsed in on itself after years of decay. The communists were then replaced by an even more peculiar bunch, the Trinamool Congress. They are led by the narcissistic Mamata Banerjee with the slogan “Ma Mati Manush”  which is supposed to mean “Mother, Motherland and People” but where the sub-text says “Me, Me and Me”.

As an aside, I note that in spite of the efforts of post- nationalists, Theatre Road is still Theatre Road to all taxi drivers. It was renamed as  Shakespeare Sarani during my time there in the 1960s but that is only for maps and road signs. More than 50 years after the name was changed, the Post Office will still deliver your mail addressed to Theatre Road. Lansdowne Road is still Lansdowne Road and many don’t even know it is now called Sarat Bose Road. Lower Circular Road  is still referred to as such, though it is officially Acharya Jagadish Chandra Bose Road. Who does not know Park Street (officially Mother Teresa Sarani and earlier Burial Ground Road) and Park Circus? Camac Street and Free School Street were part of my schooldays beat and are still there – though the building we lived in no longer exists. Officialdom can be schizophrenic and is often irrational. High Courts are set up by Acts of Parliament and their names cannot be changed so easily. So it is the High Court of Calcutta in Kolkata. The Netaji Subhas Chandra Bose International Airport is the mouthful rarely uttered for what was Dum Dum airport and is still designated CCU.

In the 1970s post-intellectual Bengal produced a vicious and violent movement – the Naxals – who considered themselves intellectuals but who in reality were anything but. They considered themselves Maoist communists, engaged in a permanent revolution (a la the cultural revolution) and naturally opposed to everybody else, including the Marxist communists in power in the state. Mayhem was the name of the game. Culturally they were the Bengali Taliban. Many of the starry-eyed, self-styled and self-proclaimed “intellectual” leaders were killed by vicious police and army actions in the early 1970s. Some of my class mates were among them. This revolutionary communist movement still exists in pockets and has spread to other states. But the movement lacks any intellectual content or realism.

In recent times intellectuals from West Bengal have been few and those few have been relatively lightweight. Amartya Sen may have received a Nobel prize but it was only for economics which does not really count. His theories suffer from the confusion of his wanting to be a capitalistic socialist and he ends up being nothing of anything. Pranab Mukherjee was a disaster as a Finance Minister and is nondescript as President. Intellectually, just a bantam-weight.

It is a post-intellectual, post-nationalist West Bengal struggling to find a new role for itself.

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Wanted! A leader in the White House

June 8, 2015

After 7 years as President, Barack Obama’s Iraq strategy is still ” not complete”. His Syria and Ukraine “strategies” are only conspicuous by their absence.

Once upon a time and a fairy tale or three ago, I had very high expectations of President Obama. He had set the expectations himself with his rhetoric. There was nothing he couldn’t. But all that he will have accomplished by the end of his two terms is to have been the first “black” President of the United States – and he can’t even take credit for that.

I have a theory that world development proceeds in steps and that these discrete steps are dependent upon the number of “leaders” available at any time in the world to work together. With “leaders” I mean those who take people along with them towards some vision of the world and are not mere “followers”. For the last 150 years the “leader” of the US has been, is, and must be a necessary – but insufficient – ingredient. The world stagnates or even moves backwards in the time when the political leaders are “followers”. A critical mass of “leadership” is not possible when the President of the US is a follower. It would seem that for the last 7 years we have had a “follower” in the White House whose actions are subordinated to his fears. It is paralysis by analysis which reigns. The closest to a leader in Europe has been Angela Merkel but even she has  not communicated any vision of Europe – let alone the world – to chase.

The clarity of a vision is important for leadership. A “consensus” vision is diffuse and muddled – almost by definition. My hypothesis is that real “leadership”, if existing simultaneously in 5 key countries/regions of the world, can provide the necessary and sufficient conditions to create new wonders. If the “leaders” of the US, Russia, Europe (whichever of France, Germany or the UK qualifies) together with China and India actually shared a vision of what could be done and “led” their people along that path, there would be a paradigm shift and a step-change to a level not ever seen before.

BBC: The US does not yet have a “complete strategy” for helping Iraq regain territory from Islamic State (IS), President Barack Obama has said.

Business Insider: “When a finalized plan is presented to me by the Pentagon, then I will share it with the American people,” Obama said. “We don’t yet have a complete strategy because it requires commitments on the part of the Iraqis as well.” ………. Obama said in September that the goal was to “degrade, and ultimately destroy, ISIL,” but that goal still seems far off.

ISIS Islamic State Iraq Syria control

Graphic Business Insider / Reuters

The development of proportional representation in democracies is a natural inhibitor of “leaders” and “leadership”. The focus on consensus politics means that, very often, it is the “lowest common”  standards and goals that apply. This turns even very good leaders into mediocre followers. The coming together of a critical mass of “political leadership” in the world cannot be predicted. But it will surely happen some time.

It might even happen in my lifetime, but looking at the field of Presidential candidates in the US, the next President of the US is likely to be another follower, and it will not happen anytime soon.

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Sweden is 1.5 times more important to India than Belarus

June 4, 2015

The only item to make headlines in the Swedish newspapers regarding the Indian President’s State Visit to Sweden was the accident his motorcade had on a roundabout on the last day of his visit. Nothing else was worth reporting in the Swedish media. The Indian media were not much more interested. Which is a commentary on the lack of real content.

In any event after his 3 day visit to Sweden Pranab Mukherjee went off for a 2 day jaunt to Belarus.

Maybe that is the real message. Sweden is 1.5 times more important to India than Belarus. And going by column-inches, India is 1% as important to Sweden as FIFA.

President Pranab Mukherjee with his counterpart from Belarus, Alexander Lukashenko inspecting the guard of honour during his ceremonial reception at Palace of Independence in Minsk, Belarus.

President Pranab Mukherjee with his counterpart from Belarus, Alexander Lukashenko inspecting the guard of honour during his ceremonial reception at Palace of Independence in Minsk, Belarus. photo PTI via The Hindu

 

 

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