The Rape of Europa; or Greece and Germany, You Disappoint Me

Last night in my Balkans class I brought up Greece, which has by now rejoined Europe’s messiest region (not including the Caucasus). Asked by the professor what I thought about the debt crisis, I said that given what we had seen in the last three days (the sharp rise in debt yields for Greece, Portugal and Spain and debt downgrades for those countries), the euro was finished. That’s a bit hyperbolic, as I tend to be, especially when I talk rather than write. But the problem is huge and I do believe the European Union as we know it is on the brink and we are likelier than not to see some major changes.

There is plenty of blame to go around. True fiscal federalism and a United States of Europe are not what the citizens of the European Union want, so there are political limits to the centralization of fiscal decision-making, which would the best way to ensure a stable common European currency. I do not support the argument of those who wrote ten years ago that the euro was doomed and who are now eagerly writing columns to prove that they were right. The euro was a much greater success than anyone anticipated for a full decade. There were two large policy problems beyond the inevitable and insurmountable economic asymmetries which have led to the problems of Spain, for example, which experienced a construction boom and built up external private sector debts and cannot devalue its currency in the crisis because it is on the euro. The first was that the rules of the Stability and Growth Pact limiting debt to 60% of GDP and deficits to 3% of GDP, which Germany insisted was necessary, were not followed, by the Germans and the French among others, well before the crisis of 2008 and onwards, which has required flexibility. Across the eurozone, the rules to limit vulnerabilities were flouted in normal economic times. Secondly, Greece lied about its numbers to get into the eurozone and continued to lie about its numbers until autumn 2009.

I believe the Greek crisis might still have been solved by a skillful response to the crisis by the European Union and the International Monetary Fund. But this did not happen. Nicolos Sarkozy wanted to keep the IMF out, partly because he is worried that Dominique Strauss-Kahn could be his opponent in the next presidential election. Germany wisely insisted on IMF participation. But Angela Merkel’s government has wavered so much on allowing the EU to do its part in rescuing Greece that the uncertainty in the markets has made the necessary rescue package larger than it had to be and less likely to succeed in helping Greece avoid default. As of a few days ago, I am 99% sure Greece will default. Why has Merkel allowed this to happen? Because rescuing the Greeks is enormously unpopular with the German public, and there is an election May 9 in Germany’s biggest region, Nordrhein-Westfalen (which includes Cologne, Dortmund, Essen, Düsseldorf, and a quarter of Germany’s citizens, actually a larger population than that of Greece). If Merkel’s Christian Democrats lose the region to the Social Democrats, they lose control of the upper house of the German parliament, they will have trouble getting their agenda enacted, and early federal elections could result. So Merkel can make an argument that she is acting in the wishes of her countrymen and bowing to political realities. But she is also sacrificing the interests of the entire European Union over the region of Nordrhein-Westfalen. Small-minded priorities are not new in Europe – Greece’s objection to Macedonia’s name is a perfect example – but Merkel is the most powerful woman or man in Europe, she knows it, and she should act accordingly.

The stakes are quite high. Contagion could result in multiple sovereign defaults. If only Greece defaults, the eurozone should be able to survive. If Spain goes down, it’s hard to predict what happens. Reintroducing the old currencies would be tremendously damaging to the peripheral economies. But if Spain defaults, we really would be in a “moment of extraordinary politics,” to use Leszek Balcerowicz’s phrase. What I anticipate is that a two-speed Europe would then become inevitable. A German-led core of the strongest economies, looking much like the original European Community of six nations (Bundesrepublik Deutschland, France, the Netherlands, Belgium, Luxembourg and Italy) plus a few like Austria and/or minus Italy, would have the euro, more fiscal federalism, and perhaps a more unified foreign policy. A ring of European states would be affiliated more loosely, naturally led by Great Britain, but including Greece, much of Eastern Europe and sooner or later possibly Spain, Portugal, and Ireland if they did not manage to or did not want to stay in the core, possibly Turkey (the lower-speed of a two-speed European Union is the only way Turkey would ever gain entry) and perhaps Norway, Iceland and Switzerland. It is hard to work out exactly what the looser group would share with the core Europe or how many of the EU-27 would choose or be forced into it. Perhaps there would be three “concentric circles” rather than two. But a Spanish default would change the European Union significantly.

One thing is certain even if Greece dodges default – Germany and the other members of the eurozone are going to be very wary of letting additional members into the common currency area from now on, although according to the accession treaties Bulgaria, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovenia and Sweden are all obligated to join the euro eventually (only Denmark and the United Kingdom are excepted). For Latvia in particular, a country which has suffered an internal devaluation as its leaders have clung to a tight currency peg to the euro and an as-soon-as-possible euro accession strategy like a raft in the storm of a crash which has cut the value of the economy by 20%, changing rules would be extremely cruel. The crisis in the eurozone and the European Union could also delay the EU membership of Croatia, which is already ready already, and countries like Montenegro and Macedonia which for various reasons it would be better to bring in sooner rather than later (while it is tempting to use the crisis to force Greece to abandon its childlike position on Macedonia’s name, this is probably not possible because the country’s leaders are expending so much political capital on austerity measures).

Germany’s inward focus on this crisis only exemplifies what has become a problem for the European project in recent years. Leadership by the big three countries is necessary in enacting changes in the structure and size of the European Union. Britain is perpetually wary of Europe. A referendum on EU membership (actually promised by the pro-European Nick Clegg, who unfortunately doesn’t have a chance of becoming First Lord of the Treasury even if the Liberal Democrats win the most votes May 6, rather than by David Cameron, leader of the Euroskeptic Tories) would likely lead to withdrawal from the Union. Britain has however been a force for widening the union, while fighting against deepening. (This eurozone crisis, by the way, has for the first time convinced me that Britain’s hesitancy to join the euro might not be stupid). The elite of France are quite committed to the European project and deepening the Union and playing an important role in the world, even if the French people themselves are more skeptical. However, France worries that enlargement of the EU dilutes its voice and thus only went along with the 2004 big bang enlargement to the east and strongly opposes Turkish membership. Germany is the most important country in Europe because of its size and economy, and it is the key swing vote between Britain’s widening strategy and France’s deepening; having ambitiously pushed for both widening and deepening in the past, under Gerhard Schröder and Joschka Fischer’s Social Democratic-Green government, it has turned against both under Chancellor Merkel, particularly in her second term with the FDP as her partners instead of the Social Democrats. Only Croatia has a good shot at getting into the EU in the next five years because of its Habsburg history and the fact that Germans like Adriatic beaches. Merkel’s hesitancy to help Greece has only exposed the fact that her pro-European image has been declining since her reelection.

Which brings us back to Greece. Italy is often seen as a joke because of its unfunny clown of a prime minister and its inability to consistently match its economic and demographic weight in Europe with equivalent political weight. But Italy is actually less likely to default than other countries in Europe’s periphery due to high private saving and it actually made some heroic economic adjustments to prepare itself for eurozone membership in the 1990s, even if it has not sufficiently dealt with its large debt (117% of GDP). Greece does a much worse job fitting in with its European partners. Greece has not sufficiently reformed its economy while lying about its numbers. Greece is a beautiful place with a nice culture, but it is not a Western European country and it was and is not prepared for membership in the eurozone. The modern country holds far more the legacy of the Byzantine and Ottoman Empires. Along with the Greek Cypriots, the Greeks are Russia and Serbia’s best friends within the EU. Greece belongs in a wider conception of Europe that has room for less dynamic economies and Orthodox and Muslim cultures. The behavior and statements of continental Western European statesmen and stateswomen in recent years, from Sarkozy to Merkel to EU President Herman Van Rompuy, has called into question whether that is the Europe that Paris, Berlin and Brussels want. The question of European identity is one that will never be resolved, but the debate is one Europe needs to have. We have a fairly good idea of the dominant British and French viewpoints. The German one is less clear.

Greece gave birth to Europe with Periclean Athens in the 5th Century B.C., seen as a wonderful model by Brits, French and Germans in the 18th and 19th Centuries. It now looks like Greece might well destroy Europe. By the way, does anyone know what image Greece chose to put on their two-euro coin when they dishonestly qualified for the euro back in 2001? The Rape of Europa.

Eyjafjallajökull!

Before I was 18 (when I went to Bavaria and Austria for a week upon graduating from high school), I had spent all but a few hours of my life in the United States (those few hours were in August 1998 in Victoria, Canada, on a ferry day trip from Washington state's San Juan Islands, no passport necessary, the world had just learned the name of Osama bin Laden several days earlier after the embassy bombings in Africa and the US border control and customs officials were worried about two things - Cuban cigars and counterfeit Beanie Babies). I was no travel addict or international politics buff, and certainly was not obsessed with Europe yet. The countries I most wished to visit were probably Australia and New Zealand and Ecuador (Galapagos Islands) because of their cool animals and geology, but running closely behind them and in my mind perhaps the leading candidate for my next jaunt abroad was Iceland. WHFS 99.1 FM, my favorite radio station, was constantly playing ads for weekend getaways with an Icelandic airline which flew out of Dulles or BWI. This was the land of Vikings, hot springs, and a really cool music scene, home of alternative music's queen of strangeness, Björk. Reykjavík is fun to say.

A year after that first excursion into Europe, I spent the summer in Alaska, where I learned another Icelandic word: Jökulhlaup. This was the standard term for an ice-dam lake, a unique phenomenon whereby a stream runs into a glacier, can't move and so starts a lake at the side of the glacier, which every now and then had enough water to actually float the glacier an inch or two. This happens annually in McCarthy, Alaska. When it does, the dangerous, cold, fast river at the end of the glacier gets faster and more dangerous. Back when McCarthy and Kennecott were at the center of the world copper mining industry, they would have to rebuild the rail bridge annually because the jökulhlaup would take it out. For decades they just had a zipline over the river, five years before I went they installed a bicycle bridge with good concrete pillars, but you can still only drive to McCarthy in the winter when everything is frozen.

But I digress. Iceland has always seemed a cool, unique place to me, and I assume to many others. But to many Europeans since 2008, it has been a cursed source of evil. British and Dutch citizens and communities lost their savings when Iceland's ambitious banks, whose assets ultimately amounted to more than 10 times the island's GDP, went bust in the crisis. The national governments protected their citizens, but then expected Iceland to pay them back. The Icelandic people objected to this. The government of Geir Haarde (a SAIS alum) fell, a left-wing coalition emerged led by the world's first openly gay head of government, the very cool Jóhanna Sigurðardóttir, Iceland applied for European Union membership, then the basically ceremonial president jeopardized that possibility by exercising a veto for I think the second time in Icelandic history and putting the government's debt-repayment deal with the Brits and Dutch to referendum. It lost.

Now comes the volcano, the eruption of Eyjafjallajökull which grounded Europe by darkening the skies with ash, keeping thousands of travelers from their homes (I enjoyed Gideon Rachmann's piece about this), preventing Barack Obama, Angela Merkel, Nicolos Sarkozy and others from going to Lech Kaczynski's funeral, hurting the airlines, and frightening the ponies and puffins of southeastern Iceland. You've read about it since I'm a little late getting to writing this, so just enjoy these pictures from Foreign Policy and The Boston Globe. They're awesome!

I wonder if Thor is angry about the Brits using anti-terror legislation to freeze Icelandic accounts, or about the worldwide weak banking regulations which got us all into this disaster, which caused his people to suffer especially (although not as much as Latvians and some others). I'm hoping Björk does a concept album about it all. I've designed the cover for her already.

Sunday evening on the Hill with democracy

So today has been the biggest day in this never-ending health care reform legislative effort, with the Democrats getting the bill through the House. I was back at home trying to work on school stuff when Bart Stupak and friends got the executive order they wanted on no federal funding for abortion and could support the reforms. We've won, I thought. (And no, the bill is not perfect. It's not death panels or socialism, it's a centrist bill. A public option would have been center-left, I really wanted that at least, and would have enrolled in the public option. Single-payer is what the true left wanted, and that includes me. But the Republicans have fought the battle for public opinion better because it's easier to smear legislation than to sell it... and they're unscrupulous. But Obama and the Democrats need this to pass for their political future, and it is an improvement to one of America's biggest problems.) And moved by the spirit of history and Obama's one-helluva-speech yesterday to the House Dems and the fine warm weather, I decided to abandon my work and hop the Metro from Columbia Heights and head down to the Mall.

Having read about the Tea Party folk chanting "kill the bill" at Congress, as well as some less savory things at John Lewis and Barney Frank, I expected to see animated Americans waving flags at Congress. And I did, although what I saw surprised me as I walked towards the Capitol from the Archives Metro stop. There were thousands, perhaps 10,000, of Latinos, mostly, wearing white shirts, waving American flags as well as Honduran ones and othes, and they were marching for immigration reform, chanting "Si, si puede." Obama supporters, trying to push him on an issue. I walked up Capitol Hill with them, tried to run across the street to get around the crowd at one point but was yelled at by a police officer, so joined in the march around the north (Senate) side of the Capitol, saw congresspeople waving from the east balcony of the House. Although I saw mounties and many police, the scene was hardly tense, just professionals and a big crowd, no sense of danger at all. I thought, "Well they picked a terrible time to march" given the current focus of the Congress and the country, but was also struck by the patriotism and activism of thousands of hard-working Americans trying to get a better deal in life with the help of their government. Which is the main thing that government is for. These are the people that healthcare reform will help. And I think a lot of the Tea Party and "Obama is a dictator bringing socialism to America" folk have a problem with that.

I'm sure I missed the height of the anti-health care protests, by 6 p.m. on Sunday, the fate of the bill in the House seemed to be concluded in favor of reform. But I was surprised by how few protesters were assembled calling for the bill to be killed, waving American, "Don't Tread On Me," and in one case a Virginian flag. There were about 200 people with signs and maybe another 200 basically watching. Most were anti-health care, but a few had come to support the bill. The signs included "Obamacare=Deathwarrant," "Obama: Communism you can believe in," "Has anyone in Congress read the Constitution," "No government can continue good, but under control of the PEOPLE - Thomas Jefferson," but also "Hope not hate," "People of Faith for Healthcare Reform," "Catholics for Healthcare Reform," "Pass healthcare reform for our life, liberty and pursuit of happiness," "Universal healthcare is a family value," and "Obama isn't Jesus, Jesus was a socialist." One guy yelled at another that he was a bigot and was told that he should go back to England rather than choosing to live in this country, but overall everyone seemed fairly civil to one another, engaged in democratic debate. A woman sitting on a railing was holding a sign telling the Democrats to show courage and pass healthcare reform. I gave her a thumbs up and she looked happy as a clam. Then I set out for the turns-out-to-unfortunately-be-closed-after-3pm Bagels and Baguettes, leaving Congress and the democratic activists to their work and their free speech.

British History book review

Hey again. I haven't posted in a while but I've been meaning to put up this book review I did for my Modern British Politics class on an interesting history book by a novelist. I'm off to Texas in an hour or so, for a week, so hopefully this will hold you over and then I'll come up with something else interesting. The book is Our Times: The Age of Elizabeth II by A.N. Wilson, and it was published in 2008.

This is the third volume of a history trilogy, covering everything about Britain since Queen Elizabeth II took the throne. A.N. Wilson’s thesis is “the Britain of 6 February 1952 is not merely different from the Britain of today – it has ceased to exist.” Why? There are a multitude of reasons, but going through the book, the chief ones appear to be Roman Catholics, homosexuals (more specifically, the leaders of the nation who fell into these categories) and immigrants. This is slightly unfair to the author, but Wilson’s bugbears are clear, and I’m being no more unfair to the author than he to the subjects of his survey.

Our Times can be viewed a history as a polemic, or a bad history book written by a novelist, which it indeed is. The book is clearly meant to be entertaining, full of amusing vignettes and risible prose, but it is most often risible because it is ridiculous. The decline of the Church of England and the Empire and the supposed imminence of Scottish independence (Scottish nationalism is dubbed “wandering drunk into a rootless future” on page336) are Wilson’s favored reasons for the “disappearance” of Britain, perhaps fairly obvious and well-documented. The reductions of the national rail network and changing British landscape are more interesting explanations which Wilson cites. And then there’s Europe. Wilson is one of those Brits who thinks the European Union and submission before Brussels is a terrible idea and overreliance on America is also bad. Does he have a realistic alternative to these two options? Not really.

While Wilson is clearly a Conservative politically, but turns a sharp pen on all and sundry, attacking them for age (Churchill), looks (pretty Eden and ugly Thatcher), being cheated on by their spouses (Macmillan), and other such personal grounds as well as a few political ones. If a few Tories stand out as decent leaders – Wilson is actually quite a fan of John Major and worships Alec Douglas-Home – Macmillan and Heath (the latter for the unforgivable sin of signing up Britain to the European Economic Community) were terrible people who destroyed Britain. Labour is to be mocked, of course, although Gordon Brown’s spell as Chancellor of the Exchequer is praised (he did preside over a healthy economy and keep Britain out of the eurozone)… his premiership not so much.

Throughout the book, psychoanalysis of notables based on anecdotes and rumours is given greater weight than more serious analysis of policy. In one passage Wilson surveys the sexuality of Britain’s 20th Century leaders and concludes that John Major, whose adultery was revealed by his mistress, was the first British prime minister to have a sexual nature since David Lloyd George, although throughout the book he pushes rumors that his biggest targets of derision – Macmillan, Heath, Blair – were secretly homosexual. Wilson actually writes that greater ease for gays to live openly as who they are is one of the improvements from old Britain to the country-but-not-society which has replaced it, but the weight of the innuendos make Our Times fall on the gay-bashing side of the scale.

Wilson particularly hates Catholicism, which to me was the most striking part of the book. A typical example, on the comically presented figure of George Brown, foreign secretary under “Hawold” Wilson: “He died in 1985 of cirrhosis of the liver, having become a Roman Catholic.” Funnily enough, according to Wikipedia, Wilson once converted to Catholicism, also going through an atheist phase before returning to his present devotion to the Church of England. There is nothing particularly extraordinary in his treatment of immigration and multiculturalism, which is less extreme than a lot that is out there. However, he is sometimes creative with it – New Labour’s legislation banning foxhunting and smoking in the workplace and pubs is compared to the Koran, which “should perhaps have made the British more capable of understanding the Muslims, who follow a scripture which is almost devoid of the narrative interests of the Hebrew Bible, and is largely injunctions and prescriptions” (365).

Thatcher receives one of the more interesting treatments. Wilson compares her rebellion to that of the Sex Pistols, citing that Johnny Rotten said in 1977 “You don’t write a song like ‘God Save the Queen’ because you hate the English race. You write a song like that because you love them, and you’re sick of seeing them mistreated.’ (264)” And both of them were redheads. He cheers her premiership, but he also gratuitously insults her looks, and goes over the top on her post-premiership: “Now she returned from the dead, having lost what vestiges of political nous or personal niceness she might once have possessed. Like a witch at a christening, she wanted to curse the baby whom she had at first suckled as her natural heir [John Major]. And she who had forced through British membership of the European Union [in Heath’s government] now became the High Priestess of the Eurosceptic Cult, screeching her strange imprecations against each and every manifestation of ‘compromise’ from the government…” (312). Interesting – hardly objective history, but Wilson is no Hunter S. Thompson, either.

There are some better moments in the book. The last several pages on the disappearance of Britannia are well-written and fairly convincing. Prince Charles is portrayed as a very decent and admirable man if somewhat politically tone deaf in a strikingly fair chapter on the most famous marriage of the Second Elizabethan Era.

But when the cover has been shut, one comes away with the impression that Wilson thinks postwar Britain has been a march of mediocrity mitigated only by the exceptions of Douglas-Home, Thatcher, Major and Charles in the realm of politics and Benjamin Britten and the Rolling Stones in the realm of culture (with the rest of the United Kingdom contributing the great man that is Rev. Ian Paisley). I’m sure there are some people who agree with him, but if he meant to be taken seriously, he should have treated his subject more seriously. Then again, this is history by a novelist, which might not have been taken seriously anyways, and salaciousness is a good way to sell books.

Ukraine speech

Greetings everyone. I'm sorry I haven't updated more often. Casualty of school business. Viktor Yanukovich was inaugurated as the fourth president of independent Ukraine today, I don't have time to write a full article about this but generally, it's a disappointment and we can only hope that he surprises us by showing some commitment to reform and democracy and having the right priorities. It's happened before with checkered politicians. Ukraine bears watching the next several months because the political shake-up isn't over yet, Prime Minister Yulia Tymoshenko is not accepting Yanukovich's victory and a new parliamentary election is to be expected, the economic situation is still very bad, there is actually some risk of default although I'm not sure how serious of one, and people have been turned fairly indifferent to politics, which is usually a bad sign.

I gave a speech about the Ukrainian economy at a panel at SAIS last Tuesday, the 16th, with famous economist and Ukraine expert Anders Aslund, my classmate Greg Fuller and our professor Mitchell Orenstein, I talked about what we learned in our visit to Kyiv from January 10 to January 13. Here's the text of my speech:

"We spent two and a half days in Kyiv doing interviews last month, from January 11 to January 13, just before the first round of the presidential election. We spoke to former finance minister Viktor Pynzenyk, the EU, US and Polish missions in Kyiv, the World Bank, journalists, businesspeople in banking and other sectors, and academics in think tanks and universities. Some were deeply pessimistic about the short-term future for Ukraine and its economy, as the country deals with continued political and economic instability and structural challenges, while others were optimistic about Ukraine’s potential as an emerging growth market.

A quick overview of the economy. Ukraine is a late-reforming post-communist economy which joined the World Trade Organization in May 2008 after years of strong growth of about 7 to 8%. This is, along with continued free and fair elections, the landmark success of the Orange Revolution and the presidency of Viktor Yushchenko. Since then, the economic news has been largely bad. Ukraine is still one of the poorest countries in Europe and the global financial crisis hit the export-dependent economy hard. Ukraine was one of the first countries to ask for and receive help from the International Monetary Fund as the global economic downturn came into full force in October and November 2008.

The IMF granted a $16.4 billion loan which helped mitigate the downturn. With help from the IMF, the Ukrainian government had three key goals: help the economy adjust to the new realities by floating the exchange rate and other measures, restore confidence and financial stability by recapitalizing viable banks, and protect vulnerable groups in society through targeted social spending. The Ukrainian currency, the hryvnia, had been pegged to the dollar which resulted in one of the highest inflation rates in the world, up to about 30% in early 2008, now it was floated and lost 40 percent of its value quickly. But only $11 billion of the IMF package has been paid out, with the fourth tranche suspended due to disagreements over the 2010 budget and a generous social spending law passed in the run-up to the election.

One key conclusion from the interviews on our trip is that Ukraine’s political polarization and electoral competition have impeded the economic recovery. Ukraine’s divisions had prevented good governance and reforms before the crisis, and they have also been a challenge in the response to the recession. President Yushchenko, the government of Prime Minister Yulia Tymoshenko, and the opposition led by Viktor Yanukovich have not worked together well in the crisis, while populism and electioneering have led to an international record for spending on pensions as a percentage of GDP (almost 20%). In Ukraine, many people said that having a clear-cut winner in the presidential runoff was more important than who won, because the continued instability caused by a protracted fight could only hurt the country and its economy.

The prevailing opinion among our contacts was that although the IMF rescue had helped, the IMF had actually been too lenient with Ukraine. Businesspeople said it was correct for the IMF to not deliver further tranches of aid because conditions were not fulfilled. Viktor Pynzenyk, who resigned as finance minister in February 2009, said the IMF did not play a beneficial role for Ukraine because it covered up problems and did not force Ukraine to cut spending further when the 2009 budget was based on an unrealistically optimistic growth forecast.

Some people we talked to expected the economy would get worse in 2010, with private loans coming due and a risk of government default. Pynzenyk argued that the government and IMF have prevented people from feeling the crisis so the necessary support for tough reforms isn’t there. He said that Ukraine could still avoid default if they make the right decisions but said it was difficult to predict what President-elect Yanukovich would do. Yanukovich’s Party of Regions drove the passage of the budget-busting social standards law which if fully implemented will cause default. However, others dismissed the possibility of default.

The shadow economy has grown in the economic crisis to the point where it may be over a third of Ukraine’s true economy, and it has acted as a cushion. Ukraine’s economy hasn’t really shrunk as much as the statistics indicate. The Orange Revolution has been called “the revolt of the millionaires against the billionaires,” billionaires referring to the powerful oligarchs who run much of the economy. What has happened is that a good proportion of the millionaires have gone underground because the problems with bureaucracy and kickbacks haven’t been fixed. We were told there are a lot of good policy ideas floating around and also lots of good legislation already passed that goes unimplemented. One of our contacts said his college friends complained about “so many regulations, forms, taxes, extortion, officials coming to their office to demand money.” In Ukraine you have to bribe people but your bribes won’t get you results as reliably as in some other corrupt countries like Russia. Serhiy Tihipko, a successful banker who finished a strong third behind Yanukovich and Tymoshenko in the January elections after staying out of politics since the Orange Revolution, owed much of his success to rhetoric about streamlining the bureaucracy to make Ukraine more business-friendly. Tihipko has a good shot at becoming prime minister so perhaps we will see action on this front.

There are some reasons to be optimistic about the Ukrainian economy going forward. The reliance on steel exports was one of the major problems Ukraine had in the crisis, as production dropped precipitously. But the devalued currency will help exports grow this year, while some of our contacts were optimistic that the crisis would push the country to diversify its exports. The President of the American Chamber of Commerce was very optimistic about the economy’s long-term prospects, comparing Ukraine with the BRICs as a growth market with strong margins for multinational corporations while still painting a picture of a tough environment in which to do business. EU membership seems pretty far away but an Association Agreement with a deep free trade area should come into effect during the Yanukovich presidency. And the Euro 2012 soccer championship, which Ukraine is co-hosting with Poland, is welcomed because it will leave behind a legacy of improved infrastructure.

I think we did get the sense that life was going on a bit more normally in Kyiv than in Riga, that the crisis had struck Latvia harder than Ukraine. This is the result of several factors. The boom and bust in Riga was bigger, with faster growth in Latvia before the crisis, and the economy has simply shrunk more in Latvia, while Ukraine’s shadow economy means that the shrinking of the economy there is actually smaller than it looks on paper. Also, Latvia’s government has embraced tough austerity measures in hopes of gaining entry to the Eurozone, while Ukraine’s has been less cooperative with the IMF as irresponsible politicians jockey for votes. And I think that to some extent Ukrainians, having lived through a rougher last two decades than Latvians, are more used to dealing with the turbulence.

The election was of course won by Viktor Yanukovich, the villain of the Orange Revolution, with a margin of about 3.5% of voters. Yulia Tymoshenko has refused to concede defeat, which is in line with what many of our contacts predicted she would do if she lost narrowly, but she is limiting her challenge to the results to the courts and telling her supporters not to take to the streets. The OSCE said the elections were free and fair, Yanukovich has been recognized as the new president by world leaders, and the results are not going to be overturned, but the new political order could take some time to emerge with the possibility of Yanukovich calling snap parliamentary elections to help form a new government. In short, there is a great likelihood of continued political fighting, while the 2010 budget necessary for further IMF help is yet to be adopted by the Verkhovna Rada. Ukraine’s economy is not out of the water yet."

Commentary on Europe, 2008-2009

Here's my blog posts about European politics from my first year at SAIS. PostGlobal is a blog run by the Washington Post which unfortunately went on "extended vacation" last summer, but for the year before that they subcontracted their European coverage to SAIS students and I helped coordinate the project as the student leader in Bologna and wrote six commentary pieces. This was a great experience which I was thankful for but the headlines are sometimes vague so I sum them up:

July 27, 2009 - Resetting Russian Relations - actually this one is about German policy on Russia, and the difference between the political parties, it's related to a paper I did in the spring semester.

April 6, 2009 - Russia's Olympic Election - Boris Nemtsov, a Kremlin critic, ran for mayor of Sochi, the Black Sea resort town where the 2014 Winter Olympics will be held. So the race developed into a bit of a zoo with a lot of interesting characters. Nemtsov didn't win.

January 16, 2009 - Artwork, Toilets, and EU Identity - On the infamous Entropa art installment in Brussels by Czech artist David Černý.

January 7, 2009 - For New EU President, A Baffling Array of Challenges - The Czech Republic takes over the rotating presidency of the EU and copes with war in Gaza, the cutoff of gas to Ukraine and Eastern Europe, and Nicolas Sarkozy.

October 24, 2008 - Reason Rules in Tussle with Kremlin - McCain and Obama's stances on Russia compared, and what Russia and Georgia think of them.

October 14, 2008 - McCain Falls Plainly on Spain - John McCain gratuitously insults Spain, and what Nicolas Sarkozy, Gordon Brown, Angela Merkel, and Silvio Berlusconi think of the candidates McCain and Obama.

Writings Archive: Hunter S. Thompson obituary

The good doctor Hunter S. Thompson killed himself almost five years ago now, February 20, 2005. Rest in peace, friend. Anyway, my tribute to him in the pages of my college newspaper is still one of my favorite of my published writings and it's come up in conversation a few times recently, so here's the link - get hits for The Bowdoin Orient. I'll republish some of my old pieces here, good to have an online archive. This magnet is on my fridge. I recommend Fear and Loathing in Las Vegas for a taste of Hunter's fantastic writing for any of you who might not have read it, but for any junkies of American politics, Fear and Loathing on the Campaign Trail '72 is even better.