Q & A: Recent Political Developments
- Published in Analysis
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1. The G7
The Group of Seven or G7 was formed in 1976. It is a forum where the finance ministers from seven industrialized nations meet to discuss economic issues and policies. The G7 membership consists of France, Germany, Italy, Japan, United Kingdom, Canada and United States of America. The European Union is represented by the President of the European Commission and the leader of the country that holds the Presidency of the Council of the European Union. Russia formally joined the group in 1997, resulting in the 'Group of Eight' - the G8. G7 should not be confused with the G8, which is the annual meeting of the heads of government of the above nations, including Russia.
The latest G7 meeting was convened on February 14 2009 in Rome. The policy makers met after economic reports this week showed Germany's economy contracted the most in 22 years, in the fourth quarter, and U.S. consumer confidence neared its lowest since 1981. Moreover, both the World Bank and the IMF have officially announced that the world economy is in depression. But despite the gravity of the situation and like previous G7 meetings, the agenda was dominated by the global economic crisis and internal schisms between Europe and the US. Furthermore, the participants of the G7 failed to discuss specifics and were once again happy to pledge support for vague general ideas, such as:
"We reaffirm our commitment to act together using the full range of policy tools to support growth and employment and strengthen the financial sector. The stabilization of the global economy and financial markets remains our highest priority."
"The G7 remains committed to avoiding protectionist measures, which would only exacerbate the downturn, to refrain from raising new barriers and to working towards a quick and ambitious conclusion of the Doha Round."
It was obvious that G7's commitment to such ideas was not taken seriously by many experts, particularly the Europeans. Simon Johnson, former chief economist at the International Monetary Fund, now a professor at MIT, said the G7 was "asleep at the wheel", adding, "[The meeting] was a great opportunity for this group of leading industrial countries to reassert its leadership in the global economy. Instead, all we received officially is a communiqué that blandly restates what these documents always say."
Marco Annunziata, chief economist at Unicredit MIB in London said, "The statement ticks all the right boxes, but as expected does not go beyond generic statements of principle and commitments that we have heard before. The commitment to act in a coordinated way flies in the face of the rather uncoordinated approach that followed similar commitments last October."
French Finance Minister Christine Lagarde said, "On paper it looks great and the principles are certainly very good. The essential thing is now to implement it." Bank of Canada Governor Mark Carney told reporters in Rome: "It is a comprehensive plan, the intent is there, the will is there...The question is implementation and execution."
At the heart of the issue is that the Europeans do not trust America's notion of the free market. America proclaims that it wants free trade, but the recent stimulus bill passed by US lawmakers promotes protectionism, and contradicts the G7 statement on protectionism, as well as the US treasury secretary's own statement at the meeting. Geithner said, "All countries need to sustain a commitment to open trade and investment policies which are essential to economic growth and prosperity."
Europeans are extremely worried that America will close its markets to European goods and lobbied hard for the Obama administration to dilute the "Buy American" reference in its $787 billion dollar stimulus package. Speaking at the G7, Britain's Chancellor of the Exchequer,
Alistair Darling said, "We must be vigilant on creeping protectionism whether it is intentional or unintentional."
However, the Europeans are also guilty of protectionism. For instance, Britain's recent moves to protect its work force from European migrant workers or government rescue packages for French and Italian carmakers. In all practical terms, the idea of an unfettered, free market is dead!
The way the West is behaving is as if they have run out of solutions to treat the complete breakdown of the global financial system. All they can do is throw more money at the problem or ask other countries most notably the G20 to share their burden. For instance, the G7 applauded China's decision to look into its exchange-rates. The statement said, "We welcome China's fiscal measures and continued commitment to move to a more flexible exchange rate, which should lead to continued appreciation of the Renminbi (Yuan) in effective terms."
The statement was meant to placate China after the new US treasury secretary attacked the high value of the Yuan. (America for quite some time has pressed China to devalue its currency thereby creating a situation which will aid the US economy in boosting exports and helping the payment of its external debt). "The G-7 has realised that China needs to be brought into the fold of the global financial system rather than be treated as a pariah just because of yuan inflexibility," said Geoffrey Yu, a London-based foreign-exchange strategist at UBS AG in London. "This statement will be welcomed in Beijing and help defuse the recent tension between China and the U.S." Additionally, the G7 countries are not co-coordinating their efforts. Rather each country is addressing its own problems with its own remedies-again in violation of the pledge.
This conference is a prelude to the next one which is to be held on 22 April in London. It will highlight the impact on China. China is least affected by the crisis, it did not enter recession and the recession, and growth is still occurring though more slowly than in previous years. China is now the focus of the seven heads of capitalism. It appears that the expression in the final statement "the use of all policy instruments to support growth and employment and strengthen the financial sector" is not intended internally, but externally, so as to force other nations, particularly China, to accept their demands or their blackmail, such as: raising the exchange rate of its currency, the Yuan, to continue to buy U.S. Treasury bonds, such that since the emergence of the crisis China has bought more than a trillion dollars worth.
This is asides from China buying shares of mortgage companies "Fanny Mae and Freddie Mac" of about half a trillion dollars, tens of billions of shares of Morgan Stanley, the giant, so as to protect them from collapse, as well as Bank of America amongst others. China is still demanding the application of the terms of the World Trade Organization, which she joined in 2001, including the liberalization of markets and opening of them to China.
Despite all of this, America is still working to present itself as the leader of the world, sparing no efforts to do so. The new, US Treasury Secretary, Timothy Geithner, said that, "the world faces the worst economic and financial crisis in decades, and that governments should act decisively, but with a commitment to the principles of free trade" (Reuters 14/2/2009)
In conclusion, America has worked in this conference to prove that she is still the leader of the world. America is being forced to do so due to the weakening of confidence in her after following the recent financial crisis. It is expected to do so again in the next G20 conferences too- perhaps more forcefully- and to dictate its desires to the other countries. Moreover, the major powers in the European Union have not been able to take advantage of the rare opportunity that arose in the wake of the economic crisis, so as to replace the United States as the leading nation or even use become a close rival, particularly when America took the brunt of the recent financial crisis, with a loss of confidence in her and the ideology of Capitalism which is the cause of the crisis. All that is left to say is that the policy of arrogance and conceit in the Bush era has gone and has been proved a failure, bringing a scourge upon all of the Western nations.
2. The Western Sahara Desert
The al-Quds al- Arabi in its issue dated 6th February, 2009 announced the intention of the international envoy for the Western Sahara region to visit the countries of this region: Morocco, Algeria, Mauritania and the city of Tindouf. On 17thth February, 2009, the UN Secretary General Ban Ki Moon had announced appointment of an American named Christopher Ross as the Special Envoy to the Western Sahara region succeeding Miguel Moratinos of Spain.
Meanwhile Ross last week decided to visit the region including Algeria, Morocco and the city of Tindouf which is the headquarter of the Polisario Movement. The Special Envoy has included Spain in his schedule, though it has major stakes in the Western Sahara and previous envoys to the region used to visit Spain for consultations. But Ross cited his meeting in Washington with the Spanish minister for not going to Spain in his current tour. This implies that that the Western Sahara problem is an African issue for a long time and it does not constitute vital and strategic interest for Washington and which are imperative to be dealt with in the current scenario.
The US is currently preoccupied with the miserable economic crisis. This is despite the fact that the new US administration has stressed that it would involve the Europeans in finding solutions to the global issues! Ross had announced that after the negotiations in the region, he would call for a fifth meeting in Manhattan near Washington. Four earlier meetings had failed to resolve the crisis in the period between July, 2006 and March, 2008 because each party was adamant about its stand and the previous US administration did not work to bring about proximity between the negotiating parties.
It is only expected that the new American Special Envoy will work to manage the conflict and not to solve it as such. This will allow US to keep the conflict within its control which is Henry Kissinger's strategy in handling conflicts without resolving. Meanwhile the UNSC has announced that it will take a new decision on the Western Sahara issue after the 5th negotiations meeting expected between the warring parties, Morocco and the Polisario, at the end of which Ross will submit his report to the Council.
3. Munich Conference On Global Peace and Security
US Vice President Joe Biden addressed the Munich Security Conference this year and the US administration sent a message to the Western Countries and Russia who were expecting changes in the US foreign policy by the new US administration. His address however focused on the generalities and did not touch upon vital global strategies. Joe Biden led US delegation this year instead of the usual Defence Secretary which implied a break with the past when William Gates would head the US delegation. This is in accordance with the US President's promise and reassures that his foreign policy is in control in the current US administration.
The US delegation also included the National Security Advisor James Jones which is meant to signal that in the new US foreign policy, there is no rivalry between the Defence and State departments, though the delegation also included former US forces commander and currently the commander of the US Central command General David Petreus, Richard Holbrooke from the State department. However the presence of these men in the US delegation signifies the importance that the current administration attaches to Pakistan & Afghanistan; one is a man under whose command US forces are headed for Afghanistan, while the other is the president's envoy to Pakistan and Afghanistan.
In this context, the New York Times wrote on 7th February, 2009: "America has convinced Germany to strengthen its forces in eastern Afghanistan to 4500 men and France will submit a bill to its parliament asking it to keep its 3300 soldiers in Afghanistan." This is like a clarification of what the NATO commander had earlier said which suggested that Germany and France have refused to increase the number of their troops in Afghanistan, while also reassuring that they will not abandon the United States' forces fighting global conflicts all alone. This was mentioned in New York Times on 9th February, 2009.
Joe Biden, on the other hand said: "I come to Europe on behalf of a new administration determined to set a new tone in Washington, and in America's relations around the world. America will do more, but America will ask for more from our partners."
On Afghanistan, he added: "The United States is trying to lay clear targets that are achievable, both Washington and its allies must bear the responsibility."
On the Middle East issue, he did not elaborate on his support for building two nations. On Russia, he said: "We can and should cooperate to secure loose nuclear weapons and materials and prevent their spread, to renew the verification procedures in the START treaty and then go beyond existing treaties to negotiate deeper cuts in our arsenals. The United States and Russia have a special obligation to lead the international effort to reduce the number of nuclear weapons in the world." He also stressed that US policies in the Eastern Europe, which frustrate the Russians, are firm.
However, the US desires to cooperate with the Europeans and the Russians, he said that he saw no change in US's strategic foreign policy. Although he stated this, his tone was different from that used by Donald Rumsfeld who would be abrasive even with the allies, Rumsfeld once told Fischer: "Do you understand, Mr. Minister?!"
4. Israeli Elections and Expected Impact
It was observed that the current US administration did not interfere in the Israeli elections which against the precedents set by earlier US administrations. The same US that once dethroned Netanyahu did nothing this time to prevent his return to head the government.
It was America that brought Ariel Sharon and his Kadima party which followed the US line in the negotiations based on the two-nation theory in a way that served both, the US interests as well as those of the Jewish entity as envisioned by America.
The US backed the Kadima party against the Likud and the Labour parties, but in the recent elections, it did not try to weaken Netanyahu despite the fact that he declared his intention to proceed along the self rule rather than pursue the two-nation policy favoured by the US. This is in spite of the fact that the US was in a position to weaken him and prop up the Kadima party by increasing their vote-share as it used to do in the past.
However, the two approaches, i.e., the self-rule and the two nation policy, do not differ much except in their appearance. The maximum that can be harnessed from the two-nation policy is self-rule any way! It is only that entering the negotiations for the two-nations policy, will give the impression that the American agenda is at works, while the declaration of the self-rule amounts to just that, and make a mockery of the US.
It is well-known and America knows it well too, that the Jewish entity's life & death lies in America's hands. Then what compelled the US to keep away from the elections without interfering in it to weaken the Likud and strengthen the Kadima party?
It appears that the US refrained from interference to achieve the following objectives:
1. It intends to focus on the twin subjects: Economy and Afghanistan in the initial stages of Obama's term in office because they occupy a position of priority for America and its ruling party. Therefore it was inevitable that America refrains from direct interference in the Middle East mess to allow the administration to remain focused on subjects that require immediate attention.
2. The US wants the region to calm down, for which it is merely issuing statements from the backstage so that the regions returns to a relative stability in the next one or one and half years which will give enough time to the involved parties to crystallise their positions and plans and the US would meanwhile be free from its more pressing issues.
3. Reorganizing what it calls, the Palestinian house in order through compromises and rebuilding the Palestinian Authority based on new principles by integrating the Hamas and the Islamic Jihad.
4. Allowing time for the Jews' public opinion that supported Netanyahu to settle down and witness any failure of his Self-rule policy and also then rally around the -Two-nation project and see it in their interest.
5. After this initial period which may stretch between one-and-half to two years, America will be free from its current priorities of Economy and Afghanistan, or so it thinks, and then take up the issue of Palestine. Then it will not be opposed either by Netanyahu or any other Jew. This is because such is the tendency of the Jewish entity, it can not sustain on its own without support of the US.
