By now, the scenario employed against Greece, Portugal and Spain by New York-based international financial scoundrels is all too familiar to anyone who recalls the events of the 1997-98 Asian financial crisis. Then, as now, hedge funds targeted a country whose GDP was largely dependent on tourist dollars - Thailand - and had fiscal problems at the time. The crisis afterwards engulfed the “sick south” of the continent - Indonesia, Malaysia, South Korea - and severely affected China, as well. The MO was slightly different, as hedge funds targeted these countries’ currencies, whose devaluation jeopardised their ability to repay the dollar-denominated loans, requiring the IMF’s massive intervention.

Then, as now, it all started with rumours about these countries’ fiscal management or the state of their currencies. Granted, the PIIGS, as they are nicknamed in NY (Portugal, Italy, Ireland, Greece + Spain), are members of the euro club and therefore better protected. Hence, the euro’s viability is called into question. 

The size of the Southern European countries’ budget deficits and public debt are now the targets. The bet is that by raising the spectre of country default it would be much harder for them to sell the bonds necessary to finance their deficits. Thus, the concerted and vicious attacks led to a steep increase in the cost of insuring their bond emissions against risk : if for every 10.000.000 euros worth of T-bonds issued Germany pays around 45.000 euros, Greece has to pay 420.000 euros and Spain 250.000 euros !  This, however, is not all. Companies and corporations in the affected countries are seeing borrowing costs balloon. Austerity measures required to adjust budget deficits are already provoking pain and huge union protests, at a time when deficit spending should not be curtailed if the EU is to ride out of the financial crisis any time soon.

So why are these attacks happening ? Should we blame them on the blind “forces of the market”, as American spin doctors do ? Unfortunately for those concerned, we know the names of the investment and hedge funds responsible for unsettling the market and deriving benefits from the panic.

Since the ’70s, the American economy has hollowed out - a phenomenon that has not affected Asia or the European Union. The US has lost its consumer electronics industries to Japan, its car industry is in deep trouble, while the Silicon Valley entrepreneurs cannot, by themselves, compensate for the lack of investment opportunities in the country’s industrial sector. The mountains of cash available for investment have to find outlets (like the dot-com and the real estate bubble). Wall Street bankers are offering to investors high returns from either Ponzi schemes or… from raiding other countries’ economies, like buccaneers, and then scavenging their bankrupt companies, as in South Korea.

This time around, the EU is being “punished” because it adopted a single currency, has kept a strong industrial base and is vocal against the casino capitalism promoted by Wall Street bankers. During the Asian crisis, countries like South Korea were being punished because they were expanding too fast and did not allow American investors to take chunks of their industries. I remember that in 1998 some of the fund managers involved in sparking off the Asian crisis claimed that they possessed a “nuclear-financial” weapon that makes armed intervention obsolete…

By allowing its financial sector to go berserk and harm countries and societies around the world, the US loses influence and credibility in world affairs. To protect themselves,  Asian countries are busy planning an Asian economic bloc, whilst Europeans are looking at ways of renouncing the trans-Atlantic military and strategic partnership by adopting their own security architecture.

 It comes as no surprise, therefore, that President Obama has decided not to meet with the Union’s political leadership at the May summit. Indeed, what is there left to talk about ?

Last week’s Davos Economic Forum became a center stage for condemning casino capitalism in earnest. The most comprehensive critique came from French President Nicolas Sarkozy. His attacks on Wall Street bankers’ misdeeds and unreasonable bonus packages were combined with a call for the organisation of a second Bretton Woods conference. The stated objective was to abandon the dollar as the world’s only reserve currency, which presumably could benefit the euro. Sarkozy’s wish is to replace neo-liberal casino capitalism with its Weberian version, based on entrepreneurship and technological - as opposed to financial - innovation.

Undoubtedly, such projects are irking Americans. Thus, according to Greek prime minister George Papandreou, interviewed at Davos, the recent attacks and rumor-mongering directed against Greece are, in fact, part of a broader strategy employed by some international financial circles, aimed at affecting the euro and eurozone economies. Zeroing in on Greece as one of the eurozone’s “weak links” might, therefore, provoke the unravelling of the ten year-old monetary union itself. The charge might not even be far-fetched : New York economists are now in the process of fabricating scenarios according to which Spain becomes the next “target” in two-three years from now. (source: Kathimerini)

Fortunately, the EU’s economic ministers and Mr. Trichet, the ECB president, are adamant that Greece will not lose its membership in the euro club and will be helped by the other members to put its financial house in order.

As fewer legal professionals nowadays still take an interest in defending human rights, the city of Toulouse stands out as a shining example to the contrary. The well-known organisations such as Avocats sans frontieres, Cimade, the Institut d’Etudes Politiques and others organise regular events bringing human rights to the top of the political and civic agendas. Last month, for example, the city hosted the by-now-traditional Human Rights Week. Next week, the Toulouse-based human rights NGO’s have organised the 3rd Festival du film des droits de l’homme, aimed at raising awareness of human rights violations around the world.

In 2008, I have had the opportunity to participate at the annual Human Rights Week in Toulouse. The highlight was the ten-year anniversary of the creation in Toulouse of Avocats sans frontieres (France), presided by Maitre Francois Cantier. The guest of honour was Dr. Ashraf al-Hadjud, the Palestinian who had been on death row in Libya together with the Bulgarian nurses before being freed thanks to the ASF’s efforts and those of President Sarkozy. ASF is active in Africa, Latin America and Asia, helping local lawyers cope with corrupt justice systems and saving the lives of many victims in the process.

The Institut d’Etudes Politiques from Toulouse is very well-known, among other things,  for its excellence in discrimination studies. This is a hot topic in France and in the European Union since the deregulation of labour markets and the massive privatisations that took place in the 1990’s.

From an European perspective, Barack Obama’s first year in office has been less than spectacular as far as results go. His left-of-centre administration includes many of Bill Clinton’s former appointees in vital areas such as economic strategy or foreign affairs. Many of his supporters feel let down with the lack of progress in Iraq, in Afghanistan, on the environment or by the less-than-satisfactory health reform. To be sure, the Republicans are still in charge of the Defense Department, same as during the Clinton mandate in the ’90s. Thirty thousand additional troops were recently dispatched to Afghanistan, which is unfortunately becoming an Islamic Vietnam, with a Taliban victory no longer considered a remote possibility.

Today’s United States is a country with a decaying industrial base and infrastructure, being regarded around the world as a promoter of financial instability and military diplomacy. True, its relationship with Russia is less tense than during the Bush years, and these days American diplomats are required to “achieve more with less”. The US’s recent foreign affairs strategy was developed last April during a meeting of the Institute for National Strategic Studies (INSS) and the National Defense University. On that occasion, the representatives of the State Department freely admitted that the US are not able to stop China from developing further, much as they would have liked to: “we cannot change the course of events and we do not have any plausible recipe that would allow us to slow down their growth” (source Le Monde diplomatique) . The participants admitted that America has lost its claim to world supremacy and the fact that its diplomats can “no longer dictate to other states how to conduct their affairs, having to use persuasion instead”. In order to enlist the Russians’ support to pressure Iran in giving up its nuclear ambitions, the Obama administration has scrapped the missile shield deployment in Central Europe.

Obama also hopes that China’s support will help his administration in dealing with the North Korean nuclear threat. Consequently, during his November 2009 visit to Beijing he did not discuss Tibet with the Chinese leaders - an approach that could serve as a useful model for President Sarkozy.

One of Obama’s disappointments is that the Wall Street culprits for provoking the 2008 financial meltdown are back to business as usual, after paying back the Treasury bailout funds they had received a year ago. The administration’s efforts to limit their bonuses have failed so far, and moves to re-regulate the financial sector have been all but abandoned.

Obama’s performance during his first year in office has disappointed many of his supporters because they had burdened his presidency with too many expectations, from ending the war to solving environmental problems. This personalisation of power which afflicts presidential systems of government is mainly to blame. The hope that a ”miracle leader” could turn things around decisively has thus been exposed as just another political myth. Or, in the words of Serge Halimi, editorialist for Le Monde diplomatique, “the 2008 US presidential election has reminded us that miracles do not exist. And that, same as in other countries, a president’s political willpower or personality cannot be responsible for the destiny of the US”.

From very large Asian countries to relatively small East African nations, the European economic integration model has followers on every continent. Late last year Kenya, Tanzania, Uganda, Burundi and Rwanda have signed the birth certificate for the newest - and smallest - trade bloc, the East African Community.

Back in 1999, the leaders of Tanzania, Kenya and Uganda decided to revive the short-lived union established  in 1967. As the European Union model has proved, economic liberals and socialists could successfully work together towards removing tariff barriers and other less obvious obstacles to the free movement of people, goods and services across vast areas. Indeed, it was a committed French socialist and former boss of the European Commission Mr. Jacques Delors who pushed hardest for the removal of the last remaining barriers to trade and employment within the Union during the 1980’s.

The nucleus of the East African Community (Tanzania, Kenya and Uganda) “covers an area of 1.8 million square kilometres with a combined population of about 80 million and has a vast potential in mineral, water, energy, forestry and wildlife resources. It also has agricultural, livestock, industry and tourism development. Its people have a common history, language (Kiswahili), culture and infrastructure”. (source: Africa-business.com) The combined GDP of its five member countries is a modest 75 billion USD, according to The Economist. The bloc plans to abolish internal tariffs by this summer and to later adopt a common currency as well, in a hope to improving trade, investment and the economic performance of its members. 

According to observers, the country that stands to gain the most from closer economic integration with its neighbours is Kenya, which has sizeable manufacturing and retail sectors. Uganda is expected to be able to increase its agricultural exports; Burundi and Rwanda hope to benefit from the abolition of custom duties and cheaper access to Tanzanian ports; whilst Tanzanians fear that better-qualified Kenyans will be hard to compete against in an unrestricted labour market. All member countries hope to stave off the assault of Chinese imports and to export more goods to countries like Congo and Sudan.

While Europeans partied this Christmas, on the Islamic side of the Bosphorus Turkish army personnel were busy undermining their country’s shaky democracy. According to The Economist, two Turkish Special Forces agents were arrested over a plot to assassinate deputy prime minister Bulet Arinc. For the first time in the country’s history, civilian authorities were able to raid the central command of the special forces, thanks to a new law adopted by parliament in 2009, making it possible to try army personnel in civilian courts.

In my previous postings and articles, I have labelled Turkey as “the country of the permanent coups d’etat“, one in which the army plays a bigger-than-normal role in public affairs and interferes with democratic processes, regularly attempting to topple elected leaders. Also according to The Economist, the military have been directly responsible for the demise of four elected governments since the 1960’s.

The new 2009 law, however, and the relative stability of Turkish politics under the Erdogan leadership have the potential to uproot such an unenviable tradition. If that happens, Turkish democracy might finally find the balance it has been lacking over the past half-century.

Next month, Ukrainians will be called to the polls to select their next president. As the 2004 Orange revolution has backfired against its initiators, the presidential election is a two-horse race between pro-Russian candidate Viktor Yanukovich and the current prime minister, Ms Yulia Tymoshenko.

Beset by serious economic woes, Ukraine is also striving to find its identity within a geostrategic context that has transformed the country into a battleground between Russia and the United States. In the opinion of Mark Medish, former director for Russian, Ukrainian and Eurasian Affairs on the National Security Council during the Clinton presidency, “Russia and the United States tend to view Ukraine as a key battleground in a cosmic proxy war between East and West. Both have a bad habit of trying to pick winners in Ukrainian politics. These interventions, naive in their own ways, tend to backfire, often at Ukraine’s expense.” (source: IHT)

The Orange revolutions, which led to the electoral wins of Viktor Yushchenko in Ukraine and that of Traian Basescu in Romania have led nowhere. Both countries are politically dysfunctional and, economically, severely affected by the financial crisis, as well as dependent on IMF’s bailout packages. True, Basescu succeeded in getting himself re-elected this month, but his Pyrrhic victory will not significantly improve the country’s situation or diminish US experts’ meddling into Romanian politics. As for Viktor Yushchenko, his single-digit approval ratings and continuous squabbles with Yulia Tymoshenko have brought Ukraine to a standstill.

In more ways than one, the uneasy relationship between Russia and Ukraine is similar to that between Germany and Austria within the German-speaking world. The languages and culture are similar, only small differences between them justify the nationalistic aspirations of the Ukrainians. Most, if not all, of the latter would like to see their country become a member of the European Union, although the bid to join NATO, which fortunately failed at the Bucharest summit, was by-and-large a counterproductive exercise.

Over the last few winters, European Union countries have repeatedly had to suffer the practical consequences of this tug-of-war between Russia and the US over Ukraine. Before long, EU enlargement officials will have to choose between admitting Ukraine or Turkey into the Union. As matters now currently stand, the accession of Turkey is more important to the security of Israel than that of the Union - hence the strong US diplomatic lobby on its behalf. A non-NATO Ukraine, on the other hand, could prove a more useful EU member than Turkey, as geopolitically, religiously and culturally the country is an integral part of our continent.

For the past few weeks, rating agencies like Fitch and Moody’s have hoped to stir up a financial storm within the European Union by downgrading Greece’s sovereign debt and treasury bond issues. On the Greek stock exchange, the downgrade has prompted a slide in bank shares, amid fears that government T-bills cannot be used as collateral by local banks when borrowing money from the ECB (source: Kathimerini).

Although this has created quite a stir for a while in the media, the EU officials are confident that the deficit reduction measures adopted by the new Pasok government are sufficient to contain the crisis. To its credit, Moody’s recognizes that Greece does not experience a short term credit crunch, so the spectre of country default is not in the cards. As Cypriot central bank governor Athanasios Orphanides puts it, “there is arguably a greater risk of default on the debt of a US state than there is on the debt of a euro area member”.

To be sure, the Greek government does have to find solutions to the country’s thriving tax-avoidance industry and to reduce the size of its budget deficit. Plans to that effect are already underway. The hope of some US rating agencies that somehow the problems experienced by Greece or Ireland will harm the euro or the ECB is wishful thinking.

China’s loss of US export markets has determined Chinese officials to invest huge amounts of money into the construction of a 16,000-km fast train network, to be fully completed by 2020. During the first three quarters of 2009, investment in fixed assets like factories and railroads has amounted to more than 90 percent of China’s 8 percent growth for the year, using up 45 percent of the country’s GDP (source: IHT).

By 2012, China hopes to complete  1320 km of fast-train tracks linking Beijing and Shanghai, halving travel time between the two cities. Some US analysts like Steven Roach, chairman of Morgan Stanley Asia, criticize the high proportion of the GDP allocated to developing the new rail infrastructure, considering the numbers involved as “ridiculous and unsustainable for any economy”. Mr Roach wrongly believes that the Chinese should favour raising living standards and help stimulate consumer demand instead of building bullet trains and the necessary infrastructure.

Built with the help of Canada’s Bombardier and Germany’s Siemens, China’s bullet trains are a high-tech alternative to freeway construction and have the potential to increase passenger traffic. According to the Chinese railway ministry, a two-track bullet train is able to transport 160 million people per year, compared to 80 million by a four-lane freeway: “the trains are the safest, fastest, most economic, most environmentally-friendly and most reliable mode of transport“.

When completed, the new fast train network will rival those in existence in the European Union or the shinkatsu of Japan. The US, which during the 1960’s have accommodated demands by General Motors to phase out many intercity rail links in favour of notoriously unsafe bus travel, is the odd country out when it comes to providing the best and most technologically advanced mass transportation solutions. Sic transit gloria mundi…