Wednesday Night #1301 – The Tom & Misha Show

see also #1301 on Wednesday-Night.com

Introduction

In the annals of Wednesday Night, 02/07/2007 will stand out as an exceptional evening.

… one of the most interesting, enlightening and educational Wednesday Nights ever. The riveting dialogue between Tom and Misha as they discussed the Balkans, Russia, the ‘Stans’, Europe and the politics and economics of them on a macro scale to the extent time permitted held the attention of everyone in the room. The questions asked and observations made by other guests, particularly some of the younger ones, were well placed and definitely in order. Stephen Kinsman

With the happy surprise of the coincidental appearance of two Europe-based Friends of Wednesday Night, the somewhat meandering proposed agenda was promptly jettisoned. Tom Windmuller, heads Member & Government Relations at IATA and Misha Crnobrnja (Former Ambassador of the Former Yugoslavia to the Former European Community, and author of “The Yugoslav Drama”), is now the Vice Dean of the Centre for Advanced European Studies and Research (CAESAR) of the University of Novi Sad in Belgrade where he teaches European Integrations and Economy of Transition. The two, who had never met before, slipped easily into the role of intellectual tag team to the delight of everyone present.
There was a preponderance of younger faces in the room – including first-timers, Carlos Fraenkel, Jotham Kinder, Philippe-Antoine Lévesque, Thibaut Revenaz and Andrew Echenberg -, who added to the discussion with refreshing views based on wide-ranging expertise, from philosophy to history, aeronautical engineering, law, political science, business and development work in Africa and Asia.

Europe
In defiance of the dictum that “Nature evolves away from constraints, not towards objectives”, the evolution of the states of Europe into the European Union is recognized as both an extraordinary and unlikely achievement. When the Treaty of Rome was signed in March of 1957, there were few believers and certainly almost none who could have envisioned the huge changes that have resulted since the earliest days of the European Economic Community.
A half-century of its evolution affords us the opportunity to take a second look at the integration and future of the European Union. The diversity of member countries and those knocking on the door for entry is so great that Euro-skeptics had well-founded arguments. However, when one considers the almost unthinkable act on the part of Germany and France of having abandoned the Deutschmark and Franc, symbols of their identity, in favour of a common European currency, total integration seemed truly possible. Since then, one of those countries, France, along with Holland, has rejected the proposed constitution (although it has been ratified by 16 other nations).
Europe has gone through periods of broadening growth and deepening growth. Today it can do neither. It cannot broaden because the population is tired of absorbing new (poor) states, not even a relatively resource-rich country like Turkey because it is not viewed as being ‘European’. There appears to be a grand economic project on the one hand but no equivalent social or political project, – no European identity. As identity generally comes with education, until European modules that are not based on trans-Atlantic differentials are included in all educational systems of all member states, it is virtually impossible to develop the European identity.
Unlike South America whose nations share a common religion, culture and almost  a common language, the cultural diversity of Europe dating back centuries makes it an unlikely successful candidate for integration. Even within Belgium, Switzerland, Spain and Alsace Lorraine, the various cultural entities are at odds with each other. Eire and Northern Ireland have attempted integration for some time without success, so the difficulties encountered in attempting to establish a stable unified Europe should not be surprising. As dissimilar as member states are culturally, their differences appear to be greater as the number of borders between them increases. These differences become even more obvious in moving from west to east. Objectively and certainly economically, Turkey would represent a very acceptable addition to the European Union, were it not for religious and cultural differences.
Immigration is both a problem and an economic necessity. The developed nations of Europe need people who will do the work that their own citizens refuse to do. Unlike North America, which was by and large a melting pot, France, Germany, Switzerland have a healthy rivalry between regions but do not allow immigrants to integrate. France, for example, puts its immigrants in affordable housing where they are separated from French people, giving them little if any opportunity to integrate in a local community. And, despite the fact that the State views all French nationals as equal without, institutional discrimination exists against Arab French youth seeking jobs. Others point out that in the UK it is the religious and cultural biases between immigrants that are the major causes of problems and disruptions of social peace.
North America, Australia and other new countries enjoyed the luxury of starting off from scratch (if one ignores the First Nations), building a new system and thus making people conform to the system irrespective of their race, creed or colour. In Europe every country has a history that goes back at least 1000 years (albeit not as the states that exist today).

Russia
There is some fear that the cold war still exists with Russia. Having paid off practically all of its debt including that of the U.S.S.R. and currently doing very well financially by supplying much of Europe with gas and oil, Russia has in fact become more an economic than political Big Power. Furthermore, political influence is more one of economics than ideology. Unlike some other communist states, Russia’s long-term historical heritage has been that of extreme authoritarianism that exists to this day, widening the gap between the wealthy and the very poor (but that is also a problem in other parts of the world such as China and India). The people support Putin, despite what some might term his ‘ham-fisted’ attempt to use oil and gas resources to establish the new sphere of influence, because the population of Russia has this long authoritarian heritage of respect for authority. However, the reaction in the states of the former USSR has been quite different, despite their need for those resources (or in some cases, adequate infrastructure to enable their export), driving them towards not only the European Union but (unthinkable!) to NATO. Thus, the possibility of a new Eastern Europe political bloc appears unlikely.
In contrast to its economic stability, Russia faces serious demographic problems including the declining birthrate, low life-expectancy and an increasingly unhealthy population.

The Balkans
The Balkans which formerly represented an example of diversity held together only under an unacceptable dictatorship are now considered transitioning economies as they move from socialism to capitalism/democracy, and are thriving financially, continuing to co-exist partly thanks to the NATO and U.S. presence. Despite the underlying instability, a source of concern for the future, they enjoy the competitive advantage of a pool of well-qualified, technically competent cheap labour, – an example is the Serbian branch of the Montreal School of Animation. European investments have been pouring in. Serbia enjoys the fruits of a customs union with Russia [a market of 155 million], which has resulted in a healthier economy. Another powerful indicator of economic growth is the explosion of the area’s popularity for ‘second-homes’ – property prices up by several 100 percent.

The U.S. Economy & Budget
Despite the cost of the Iraq war, the U.S. economy is actually a bright spot. As long as investments in T-Bills keep pouring in it is not that bad for the American and global economies. Meanwhile, as long as the US consumer continues to consume and not save a penny, the economy will continue to flourish.
At least one Wednesday Nighter believes that it would be good and healthy for the market to have a correction following the recent upward leg. Failing to do so within a two-week window, could very well lead to a rerun of the 1987 experience.
The budget of $2.9 trillion will not prevent the Americans from continuing to lower their fiscal deficit and heading into surplus, however it must be remembered that the budget is simply the first phase of negotiation between the White House and Congress. This budget is different in that for the first time it incorporates the short-term costs of the wars in Afghanistan and Iraq; previously these have been sent to Congress separately and months later. In any event, there is no doubt that the Democratic Congress will vote this budget down because of the $100 billion cuts to social programs.
[Editor’s Note: for a different American analysis of the budget]

Iraq
Whatever the original motives for invading Iraq, the Administration failed to understand that winning the war is easy; it is winning the peace that is difficult. Worse, there was no accepted plan for winning the peace, as there has usually been in the history of conquests over the past 4,000 years. These failures should not be attributed to the lack of many policy options that would have been put forward, but to the failure of the White House and its inner circle to give credence to any view that did not confirm the decision to invade.
Now, unable to democratize disparate segments of the population each of which appears to believe that it is in sole possession of the ultimate truth, the U.S. finds itself in the position of alien invader rather than liberator and unifier. America, in the logic of the Middle East, has become for each of the factions a part of the traditional enemy. President Bush made a major mistake when he refused to accept the lifeline that was offered by the Iraq Study Group (ISG) Report, better known as the Baker Hamilton Report. Instead, he decided to do it his way at a cost not only to the U.S. taxpayer, but to millions around the world who will suffer the consequences arising from the on-going problems in Iraq and the Middle East.
Today the challenge for the U.S. is find a solution that will leave Iraq and the region better than “we found it” and at the same time save face. But the truth is there are no options. Not even difficult decisions.
$12 billion gone missing
The Guardian reports that the United States sent $12 billion in shrink-wrapped $100 bills from New York to Baghdad in 2004 and distributed the cash with no control over who received the money or how it was distributed. Henry Waxman, the chairman of the House Oversight and Government Reform Committee, is following the money trail and summoned Paul Bremer to testify on Feb. 6.
Although ‘losing” $12 billion in cash seems almost inconceivable, one explanation is that U.S. efforts to rebuild the country are thwarted by the inability of the diplomats, aid workers and others to leave the safe area of the Green Zone in order to adequately directly supervise U.S.-funded reconstruction.

QUOTES of the EVENING

Economically they are this far away from an integrated market, the difficult part is getting the foreign policy and security aspect together

There is no European identity except in Brussels amongst the bureaucrats

The European economy is as good as it is going to get – this is not high growth – the bedrock economies have high unemployment, suffering with social welfare programs people aren’t willing to give up, but nor are they willing to pay for

Possibly as many as 90% of Europeans are sick of Brussels and sick of ‘broadening’

The riots in France were not motivated by economics but cultural, religious (prejudice).

I am here to tell you that the Belgrade stock market is booming like you wouldn’t believe – from February 1^st (2006) to February 1^st 2007 I have made over 80% return on my investments. Markets in Montenegro, Croatia, Bosnia, Serbia are going crazy

There are no global warming people in the Balkans

Marx never wrote about communism in Russia

The Russians want to be able to hold countries like France, Spain, Italy… hostage. The pipeline is going through

The Albanians in the UK are a legend for their criminal activities – “severely nasty people’ – are the proceeds from these activities financing the instability in Kosovo?

The role of the Embassy used to be go-between – the line of communication between your government and the government to which you were accredited. Today, with direct real-time communications between capitals and instant 24-hour news services, that role has changed dramatically into one of selling your country’s policies to the people of the other country. When the Embassy is a fortress that becomes impossible.

The immigrants are not at fault; it is the failure of societies receiving them to integrate them

Switzerland doesn’t even allow immigrants to stay – they are booted out when they have served their purpose

***************************

The Prologue
This message of dribs and drabs makes no claim to any sort of thematic coherence (much like many Wednesday Nights). We would welcome other offerings, should you wish to suggest them, provided you stay away from the U.S. presidential candidates – it’s too early to take anyone seriously; and the arrest of astronaut Lisa M. Nowak for attempted kidnapping and who knows what else – it’s just too bizarre, although we were captivated by the comment tonight that although astronauts go through such severe physical testing, there is very little attention paid to psychological testing.
Rumors and analysis of rumors of provincial (March 26 seems pretty solid conjecture even if – or maybe because – it would rule out student volunteers) and federal election dates are always welcome, though there’s nothing we can do about them.
Power to the People & the Press – if not the 42,000+ petitioners and Julius Grey – at least François Bourassa’s interview with the Gazette convinced the Mayor of the un-wisdom of renaming Park Avenue du Parc.
That’s twice in a week that he has had to reverse himself, a bitter pill for a politician.
Speaking of reversing themselves, isn’t it fun to watch the (New) Harper Government turning every shade of green in the wake of the IPCC Report. Our favorite convert is the newly-minted (would that be mint green?) Environment Minister, who, in an interview with RCI, said he did not expect the report’s conclusion that human activity is the cause of climate change.’ That’s a surprise for me,’ he told Radio-Canada. [We are NOT making this up.] He must have been expecting the report of the scientists the American Enterprise Institute tried to recruit for $10K each
Meanwhile in China, some 300,000 people in Shaanxi province are short of drinking water because of unseasonably warm weather (Hello! Climate change).
Since we last met, President Bush has sent his record budget to the new Congress. How many zeroes in $2.9 trillion? Now the games begin. Democrats don’t ever like cuts in social spending and are hardly going to accept the proposals to trim growth in Medicare and Medicaid by $78 billion over five years and cut a program that provides health insurance for children in low-income families. And that’s just the beginning….
News from Iraq continues to be dismal. “Almost four years after the US and British invasion of Iraq, reliable statistics on the human cost of the war remain scarce. A report, published last October … estimated that 655,000 civilians and security personnel had lost their lives. The UN High Commissioner for Refugees estimates that about two million Iraqis, ­ about 8 per cent of the pre-war population ­ have fled the country. An additional 1.7 million people are displaced inside Iraq. Violence continued to rock Baghdad yesterday, where an Iraqi general took formal control of the security operation. Reports said at least 38 people were killed in bomb and mortar attacks.”
But it’s all very well to say the U.S. shouldn’t have invaded Iraq, that the occupation has been mishandled, that the troops were poorly trained for the kind of fighting they face, and poorly equipped, and that the only people profiting from the misadventure are the contractors, but who can come up with a plan for a withdrawal that would not tear the Middle East apart? Is Syria’s President Bashar al-Assad the Saviour, as he proposed on Good Morning America?
Tensions between the U.S. and Iran increase and the situation will not be helped by the kidnapping of the Iranian diplomat and possibly intelligence officer which Iran suspects the U.S. to have had a hand in. Stratfor (Strategic Forecasting Inc) has an excellent analysis “U.S.-Iranian Tensions and an Abduction in Baghdad” and concludes that “There are some factors that allow us to speculate — and this remains speculation — that U.S. forces working with partners within the Iraqi Defense Ministry engineered the kidnapping.”
The above item permits a perfect segue to a topic that had escaped our attention: the International Convention for the Protection of All Persons from Enforced Disappearance
which bars governments from holding people in secret detention Fifty-seven countries signed on Tuesday, but the US, Britain, Germany, Spain and Italy were notably absent.
In the what’s-good-for-the-goose … category, we note that Federal Reserve Chairman Ben Bernanke has just discovered what development economists and many unsung aid workers have been preaching for years: Bolstering education and training – rather than erecting trade barriers – would help narrow the economic gap between low- and high-income workers
We are fascinated by the AP news item that FEMA Wants More Than $300 Million in Hurricane Aid Returned. According to the report, the ” [U.S.] government made more home grants than the number of homes in one of every five neighborhoods in the wake of Katrina. After Rita roared ashore, there were more home grants than homes in one of every 10 neighborhoods.” There is no explanation of who received the money or how FEMA plans to get it back.
Attention John Curtin: Nortel’s bookkeeper packs it in Nortel announced Tuesday that CFO Peter Currie will leave the communications equipment maker on April 30 – a move that may mark the start of a more aggressive expansion phase for Nortel Networks Corp.

The Report

Introduction
In the annals of Wednesday Night, 02/07/2007 will stand out as an exceptional evening.

… one of the most interesting, enlightening and educational Wednesday Nights ever. The riveting dialogue between Tom and Misha as they discussed the Balkans, Russia, the ‘Stans, Europe and the politics and economics of them on a macro scale to the extent time permitted held the attention of everyone in the room. The questions asked and observations made by other guests, particularly some of the younger ones, were well placed and definitely in order. Stephen Kinsman

With the happy surprise of the coincidental appearance of two Europe-based Friends of Wednesday Night, the somewhat meandering proposed agenda was promptly jettisoned. Tom Windmuller, heads member & government relations at IATA and Misha Crnobrnja (Former Ambassador of the Former Yugoslavia to the Former European Community, and author of “The Yugoslav Drama”), is now the Vice Dean of the Centre for Advanced European Studies and Research (CAESAR) of the University of Novi Sad in Belgrade where he teaches European Integrations and Economy of Transition. The two, who had never met before, slipped easily into the role of intellectual tag team to the delight of everyone present.
There was a preponderance of younger faces in the room – including first-timers, Carlos Fraenkel, Jotham Kinder, Philippe-Antoine Lévesque, Thibaut Revenaz and Andrew Echenberg -, who added to the discussion with refreshing views based on wide-ranging expertise, from philosophy to history, aeronautical engineering, law, political science, business and development work in Africa and Asia.
Europe
In defiance of the dictum that “Nature evolves away from constraints, not towards objectives”, the evolution of the states of Europe into the European Union is recognized as both an extraordinary and unlikely achievement. When the Treaty of Rome was signed in March of 1957, there were few believers and certainly almost none who could have envisioned the huge changes that have resulted since the earliest days of the European Economic Community.
A half-century of its evolution affords us the opportunity to take a second look at the integration and future of the European Union. The diversity of member countries and those knocking on the door for entry is so great that Euro-sceptics had well-founded arguments. However, when one considers the almost unthinkable act on the part of Germany and France of having abandoned the Deutschmark and Franc, symbols of their identity, in favour of a common European currency, total integration seemed truly possible. Since then, one of those countries, France, along with Holland, has rejected the proposed constitution (although it has been ratified by 16 other nations).
Europe has gone through periods of broadening growth and deepening growth. Today it can do neither. It cannot broaden because the population is tired of absorbing new (poor) states, not even a relatively resource-rich country like Turkey because it is not viewed as being ‘European’. There appears to be a grand economic project on the one hand but no equivalent social or political project, – no European identity. As identity generally comes with education, until European modules that are not based on trans-Atlantic differentials are included in all educational systems of all member states, it is virtually impossible to develop the European identity.
Unlike South America whose nations share a common religion, culture and nearly share a common language, the cultural diversity of Europe dating back centuries makes it an unlikely successful candidate for integration. Even within Belgium, Switzerland, Spain and Alsace Lorraine, the various cultural entities are at odds with each other. Eire and Northern Ireland have attempted integration for some time without success, so the difficulties encountered in attempting to establish a stable unified Europe should not be surprising. As dissimilar as member states are culturally, their differences appear to be greater as the number of borders between them increases. These differences become even more obvious in moving from west to east. Objectively and certainly economically, Turkey would represent a very acceptable addition to the European Union, were it not for religious and cultural differences.
Immigration is both a problem and an economic necessity. The developed nations of Europe need people who will do the work that their own citizens refuse to do. Unlike North America, which was by and large a melting pot, France, Germany, Switzerland have a healthy rivalry between regions but do not allow immigrants to integrate. France, for example, puts its immigrants in affordable housing where they are separated from French people, giving them little if any opportunity to integrate in a local community. And, despite the fact that the State views all French nationals as equal without, institutional discrimination exists against Arab French youth seeking jobs. Others point out that in the UK it is the religious and cultural biases between immigrants that are the major causes of problems and disruptions of social peace.
North America, Australia and other new countries enjoyed the luxury of starting off from scratch (if one ignores the First Nations), building a new system and thus making people conform to the system irrespective of their race, creed or colour. In Europe every country has a history that goes back at least 1000 years (albeit not as the states that exist today).

Russia
There is some fear that the cold war still exists with Russia. Having paid off practically all of its debt including that of the U.S.S.R. and currently doing very well financially by supplying much of Europe with gas and oil, Russia has in fact become more an economic than political Big Power. Furthermore, political influence is more one of economics than ideology. Unlike some other communist states, Russia’s long-term historical heritage has been that of extreme authoritarianism that exists to this day, widening the gap between the wealthy and the very poor (but that is also a problem in other parts of the world such as China and India). The people support Putin, despite what some might term his ‘ham-fisted’ attempt to use oil and gas resources to establish the new sphere of influence, because the population of Russia has this long authoritarian heritage of respect for authority. However, the reaction in the states of the former USSR has been quite different, despite their need for those resources (or in some cases, adequate infrastructure to enable their export), driving them towards not only the European Union but (unthinkable!) to NATO. Thus, the possibility of a new Eastern Europe political bloc appears unlikely.
In contrast to its economic stability, Russia faces serious demographic problems including the declining birthrate, low life-expectancy and an increasingly unhealthy population.

The Balkans
The Balkans which formerly represented an example of diversity held together only under an unacceptable dictatorship are now considered transitioning economies as they move from socialism to capitalism/democracy, and are thriving financially, continuing to co-exist partly thanks to the NATO and U.S. presence. Despite the underlying instability, a source of concern for the future, they enjoy the competitive advantage of a pool of well-qualified, technically competent cheap labour, – an example is the Serbian branch of the Montreal School of Animation. European investments have been pouring in. Serbia enjoys the fruits of a customs union with Russia [a market of 155 million], which has resulted in a healthier economy. Another powerful indicator of economic growth is the explosion of the area’s popularity for ‘second-homes’ – property prices up by several 100 percent.

The U.S. Economy & Budget
Despite the cost of the Iraq war, the U.S. economy is actually a bright spot. As long as investments in T-Bills keep pouring in it is not that bad for the American and global economies. Meanwhile, as long as the US consumer continues to consume and not save a penny, the economy will continue to flourish.
At least one Wednesday Nighter believes that it would be good and healthy for the market to have a correction following the recent upward leg. Failing to do so within a two-week window, could very well lead to a rerun of the 1987 experience.
The budget of $2.9 trillion will not prevent the Americans from continuing to lower their fiscal deficit and heading into surplus, however it must be remembered that the budget is simply the first phase of negotiation between the White House and Congress. This budget is different in that for the first time it incorporates the short-term costs of the wars in Afghanistan and Iraq; previously these have been sent to Congress separately and months later. In any event, there is no doubt that the Democratic Congress will vote this budget down because of the $100 billion cuts to social programs.
[Editor’s Note: for a different American analysis of the budget]

Iraq
Whatever the original motives for invading Iraq, the Administration failed to understand that winning the war is easy; it is winning the peace that is difficult. Worse, there was no accepted plan for winning the peace, as there has usually been in the history of conquests over the past 4,000 years. These failures should not be attributed to the lack of many policy options that would have been put forward, but to the failure of the White House and its inner circle to give credence to any view that did not confirm the decision to invade.
Now, unable to democratize disparate segments of the population each of which appears to believe that it is in sole possession of the ultimate truth, the U.S. finds itself in the position of alien invader rather than liberator and unifier. America, in the logic of the Middle East, has become for each of the factions a part of the traditional enemy. President Bush made a major mistake when he refused to accept the lifeline that was offered by the Iraq Study Group (ISG) Report, better known as the Baker Hamilton Report. Instead, he decided to do it his way at a cost not only to the U.S. taxpayer, but to millions around the world who will suffer the consequences arising from the on-going problems in Iraq and the Middle East.
Today the challenge for the U.S. is find a solution that will leave Iraq and the region better than “we found it” and at the same time save face. But the truth is there are no options. Not even difficult decisions.
$12 billion gone missing
The Guardian reports that the United States sent $12 billion in shrink-wrapped $100 bills from New York to Baghdad in 2004 and distributed the cash with no control over who received the money or how it was distributed. Henry Waxman, the chairman of the House Oversight and Government Reform Committee, is following the money trail and summoned Paul Bremer to testify on Feb. 6.
Although ‘losing” $12 billion in cash seems almost inconceivable, one explanation is that U.S. efforts to rebuild the country are thwarted by the inability of the diplomats, aid workers and others to leave the safe area of the Green Zone in order to adequately directly supervise U.S.-funded reconstruction.

QUOTES of the EVENING

Economically they are this far away from an integrated market, the difficult part is getting the foreign policy and security aspect together

There is no European identity except in Brussels amongst the bureaucrats

The European economy is as good as it is going to get – this is not high growth – the bedrock economies have high unemployment, suffering with social welfare programs people aren’t willing to give up, but nor are they willing to pay for

Possibly as many as 90% of Europeans are sick of Brussels and sick of ‘broadening’

The riots in France were not motivated by economics but cultural, religious (prejudice).

I am here to tell you that the Belgrade stock market is booming like you wouldn’t believe – from February 1^st (2006) to February 1^st 2007 I have made over 80% return on my investments. Markets in Montenegro, Croatia, Bosnia, Serbia are going crazy

There are no global warming people in the Balkans

Marx never wrote about communism in Russia

The Russians want to be able to hold countries like France, Spain, Italy… hostage. The pipeline is going through

The Albanians in the UK are a legend for their criminal activities- “severely nasty people’ -are the proceeds from these activities financing the instability in Kosovo?

The role of the Embassy used to be go-between – the line of communication between your government and the government to which you were accredited. Today, with direct real-time communications between capitals and instant 24-hour news services, that role has changed dramatically into one of selling your country’s policies to the people of the other country. When the Embassy is a fortress that becomes impossible.

The immigrants are not at fault; it is the failure of societies receiving them to integrate them

Switzerland doesn’t even allow immigrants to stay – they are booted out when they have served their purpose