Edward Lucas

Kati Marton

2009-11-21T20:06:00.001Z

Type your s
A child in communist Hungary

Little girls, big story

Nov 19th 2009
From The Economist print edition

Getty Images

Capitalist rulers are so much nicer

Enemies of the People: My Family’s Journey to America. By Kati Marton. Simon & Schuster; 288 pages; $26. Buy from Amazon.com

COMMUNIST bullies had a nasty trick when dealing with opponents who had children: they took them away, sometimes to be adopted by childless party stalwarts, in nastier cases to be sent to orphanages and treated as the children of criminals, or even to be consigned to an asylum. In retrospect it seems astonishing that Endre and Ilona Marton, a married couple working for American news agencies in Hungary at the height of the Stalinist era, exposed their two small daughters to such risks, their greatest fear. But they did. Decades later the younger, Kati (pictured with Bill Clinton), has pieced together her family’s missing history, a series of torments that epitomises the human cost of the communist seizure of central Europe.

Ms Marton’s main source is the now declassified secret-police files compiled by the AVO, Hungary’s version of the KGB. They chronicled minutely her parents’ professional and social lives, which moved in ever-decreasing circles as the communist grip on Hungary tightened. Sometimes the result is welcome: an AVO snooper’s stolid note brings back long-forgotten memories of a summer picnic. More often it is grim: almost everyone, it turns out, was informing on the Martons, from neighbours to the nanny. Through it all, her father baffled his persecutors, who could not believe that the suave, stylish polyglot was just what he claimed to be: a hard-living, hard-playing newsman. His undoing came when a traitor in the American embassy reported that he had lent to officials there a copy of an official document, the state budget. Not exactly a secret, but pretext enough to send him to be broken in the AVO’s dungeons.

Few grown-ups come out well in this story. Hungarian officials were callous and uncomprehending. Friends proved unreliable. Mr Marton’s American employers dithered, while American diplomats doubted the Martons’ reliability. Mr Marton’s bravado remains incomprehensible, even to his adoring daughter 50 years later. In the midst of it all are two little girls, precociously aware of the dramas swirling around them, left crying on the pavement when their mother is snatched from their home to join their father in jail. A Utah couple, reading that the girls were being brought up by strangers, offered, in vain, to adopt them.

Ms Marton avoids being too self-centred or sentimental as she tells the story. She highlights uncomfortable discoveries—her parents’ infidelities, that her grandparents perished at Auschwitz—as well as noble ones. Her descriptions of Hungary, of communist history and of secret-police tactics are all sharply drawn. So is the portrayal of the family’s life in America: they managed to escape after the 1956 uprising. The happy ending comes as a great relief after so many nerve-racking pages.

Czechoslovakia and historical vinegar

2009-11-21T20:04:00.001Z

Czechoslovakia

A chequered history

Nov 19th 2009
From The Economist print edition

Czechoslovakia was born out of trickery and died in failure. Only up to a point

Czechoslovakia: The State That Failed. By Mary Heimann. Yale University Press; 406 pages; $45 and £25. Buy from Amazon.com, Amazon.co.uk

OUTSIDERS tend to have a soft spot for Czechoslovakia. Poignant music by Leos Janacek, Antonin Dvorak and Bedrich Smetana recalls the struggle for nationhood that culminated in the creation in 1918 of a commendably decent country. Western perfidy at Munich brought its dismemberment at Nazi hands. Stories of courage and anguish leap out from the pages of novels by Milan Kundera (“The Unbearable Lightness of Being”), Josef Skvorecky (“The Engineer of Human Souls”) and Ivan Klima (“Judge on Trial”). Vaclav Havel, the dissident playwright turned philosopher-president, exemplifies the magical triumph of the Velvet Revolution, 20 years ago this week.

Hooks for outside affection abound. Czechoslovaks were strongly Atlanticist. The country owed its existence to President Woodrow Wilson, and Tomas Masaryk, its first president, had an American wife. The combination of high culture and glorious architecture reminded Westerners that it was communist captivity that made “Eastern Europe” backward and miserable. Guilt chipped in too. The West betrayed Czechoslovakia in 1938. It stood by as the Soviet-backed Communists seized power in 1948, and again when Soviet tanks crushed the Prague Spring in 1968. And Czech and Slovak dissidents were far more agreeable than their weird and prickly counterparts elsewhere.

Mary Heimann’s scalpel shreds this uplifting version of history. Inter-war Czechoslovakia was essentially a fraud, she argues, both in its composition and its reputation for liberalism. The wily duo of Masaryk and Eduard Benes (the dominant politicians of the years that followed) duped the victorious Western allies into agreeing to the creation of a new country. Named after only two of its ethnic groups, it ignored the interests of all the others: chiefly Germans, who outnumbered the Slovaks, and Hungarians. Its unjust treatment of the Sudeten Germans, stranded by the collapse of the Austro-Hungarian empire, ultimately caused the first Czechoslovak republic’s downfall.

After pointing out the intolerance, censorship and semi-authoritarianism of pre-war Czechoslovakia, Ms Heimann, an American-born historian at the University of Strathclyde in Scotland, then highlights the anti-Semitism and autocracy that followed the Munich agreement. Sympathetic observers have tended to blame that on Czechoslovak disappointment with the West; she suggests that it was a culmination of existing tendencies. The Nazi occupation that came next met minimal resistance. Her vinegary attention then turns to the diplomatic manoeuvring of exiled Czechoslovak leaders such as Benes and Jan Masaryk, son of Tomas. History normally portrays them as exiled patriots engaged in a gallant struggle. Ms Heimann, however, sees a story of Czech guile and Western gullibility. How was it, exactly, that a bunch of failed émigré politicians were able to gain the status of a legitimate government-in-exile, she asks?

The three post-war years before the communist seizure of power in 1948 come across not as a blessed breathing space between two totalitarian regimes, but as a horrible period of racial revenge: rape, robbery and deportation inflicted on guilty and blameless Germans alike. The Communists then created what she rightly calls a “Stalinist hell”—but with the support of quite a large chunk of the population.

Nor is Ms Heimann fooled by the Prague Spring: not an exuberant experiment in creating “socialism with a human face” but the by-product of a factional fight in the Communist Party. Even the 1989 revolution, she argues, only accelerated the changes already being planned. Soon after, the invented country of Czechoslovakia fell to pieces; the reader can almost hear her applauding.

Myth-busting is fun but it can easily become tiresome.

Ms Heimann ably highlights the holes and contradictions in Czechoslovak history. Her archival research and attention to detail is exemplary. But she spoils her case by sounding spiteful. The story of the revival of the Czech language in the 19th century deserves more than mockery. Although she pays fleeting tribute to Mr Havel she cannot resist qualifying it by saying that he “appears to have had” moral courage in addition to “an idiosyncratic brand of ambition”; that, she argues, fooled the West into seeing post-communist Czechoslovakia more favourably. This approach shamefully underplays the gritty determination of the Communist-era dissidents and of their friends in the West, who often felt they were fighting a hopeless battle.

Ms Heimann is right to highlight the messy opportunism that surrounded the break-up of the Habsburg empire. Czechoslovakia was an artificial creation. But so, in the end, are all countries. Inter-war Czechoslovakia treated Germans badly. But it was still a far more attractive country in terms of civil rights (for example in the treatment of Jews) than any of its neighbours, especially Hitler’s Germany. The post-war punishment of the Germans was indeed deplorable—but the aftermath of wars is often horribly messy. Czechoslovak communists may have been exceptionally revolting; but the democrats were often magnificent. Clear-eyed historical reminders are always welcome. Like everyone, Czechs and Slovaks have plenty to be ashamed of. But they have plenty to be proud of too.

China is coming

2009-11-19T11:16:00.001Z

Europe.view

Looking eastwards, even further

Nov 19th 2009
From Economist.com

Could China fill a power vacuum in eastern Europe?

AS THE countries of eastern Europe bump nervously between a near-neutralist Germany, a revisionist Russia and an absent-minded America, the search is on for a powerful outsider, with strong interests in the region, willing to put all kinds of clout behind the smaller countries’ sovereignty and independence.

Once, Britain filled that role. The Royal Navy helped the Baltic states win their independence after the first world war. Britain also ruled the southern part of Georgia as a protectorate from 1918 to 1920 and sent a daring expedition to Baku to push back the Bolshevik presence there. But Britain’s imperial star, with the shame and glory that it brought, has waned. Who can fill the gap?

Maybe China. It has plenty of reasons to develop a presence in eastern Europe, ranging from trade to geopolitics. It has expressed interest in buying Estonian Air (currently up for sale by SAS, its owner). That would give China a “domestic” European Union airline and access to a low-cost airport. Or imagine that China lends Ukraine some money to pay next year’s gas bill; perhaps in exchange for a favourable privatisation of some asset long-coveted by the Kremlin.

The result of such moves would be to place a conspicuous foot in Russia’s front yard. From a Chinese point of view, that is potentially provocative, but also perhaps quite satisfying. It would also have other benefits. Beijing would be glad to have some more allies inside the EU or in its waiting room, in addition to the ones it already has, such as Cyprus. A NATO country would be a bonus. Eastern Europe could also be an attractive low-cost manufacturing base to increase market share inside the EU, dodging protectionist pressures, higher transport costs and other impediments to feeding the European desire for cheap goods directly from China itself.

A rising Chinese presence would put eastern Europe back on the map. But flirting always brings the risk of seduction. Russia may be a nuisance now, but it is declining. Fending it off by giving a rising China a big bridgehead in Europe could look a dangerous mistake in 20 years time.

Another problem is values. Some ex-captive nations (Czechs and Lithuanians particularly) feel sincere outrage about the plight of occupied Tibet. The Dalai Lama (pictured above) is an honoured visitor, not a pariah as he seems to be in Washington, DC under Barack Obama’s administration. Reluctance to cosy up to communists of any stripe is still a reflex in most of the region. When slave labour camps are part of your family history, you may feel a bit queasy about seeking friendship with a country whose system of prison labour looks unpleasantly similar to the Soviet gulag. Two countries—Latvia and Macedonia—came close to establishing full diplomatic relations with Taiwan (“Free China” in cold-war terms) in the 1990s. “Red China” wants to dominate the world. Why help?

On the other hand, worries about principles prove no barrier to economic and security ties where countries like Saudi Arabia or Uzbekistan are concerned. If warmer relations with China enable the ex-communist countries of Europe to brace themselves better against a Russo-German squeeze, many may argue that this is a price worth paying.

A final argument is the idea that eastern Europe could help China change. Russia’s chaos and missed opportunities over the past 20 years are seen as a warning by Chinese policymakers and opinion-formers. They have paid less attention to the success stories. Demonstrating that a multi-party system and the rule of law can take root after decades of one-party dictatorship is a potentially powerful message.

Libel latest

2009-11-13T14:46:00.000Z

Reforming libel law

A city named sue

Nov 12th 2009
From The Economist print edition

It is time to reform England’s archaic libel laws

ONE kind of foreigner loves English libel law. Anyone anywhere in the world who can prove that someone in England has bought, read or downloaded potentially defamatory material about them can start a court case. Merely initiating a defence generally costs the author or publisher at least £50,000 ($84,000). If the case ever comes to court, the costs are much higher. In 2007 Rinat Akhmetov, a Ukrainian tycoon, went to a London court to sue a Ukraine-based website about an article published only in Ukrainian—though read in Britain—and won. In a similar case a wealthy Saudi sued an American author for claims made in a book published in America which sold a handful of copies in Britain. He won too. Neither defendant was represented in court.

But foreigners who mind about free speech do not like English libel laws. Several American states have now passed laws entitling victims of “libel tourism” to counter-sue their persecutors for harassment. Big American news organisations have spent millions defending themselves against libel suits brought in London. As their budgets shrivel, so does their willingness to fork out. Some are threatening to stop selling in Britain, and to block access to their websites from British internet users. Their concern has pricked the House of Commons media committee to look at whether the law needs changing: it is due to report shortly.

Feebler than the sword

Libel law in England is not just expensive and wide-ranging (Scotland, with its own legal system, is a bit different); it also one of the most claimant-friendly systems in the world (Ireland comes a close second). That is because the law requires the defendant to prove that what he said is true, fair or legally privileged; it does not offer the strong free-speech defence that America’s first amendment provides. This hefty burden of proof, coupled with high costs, chills debate and hampers investigation into everything from consumer affairs to genocide.

Pressure groups dealing with issues such as war crimes are campaigning for reform. Scientists have got involved too. A prominent British science writer, Simon Singh, is facing a potentially ruinous libel action brought by a body representing chiropractors (who offer a form of alternative medicine with quasi-religious roots and maintain, among other things, that spine massage can improve the body’s “innate intelligence”). Mr Singh called chiropractice “bogus”. England’s senior libel judge, Mr Justice Eady, ruled that to defend this description, Mr Singh must prove that the chiropractors were not just deluded, but knowingly peddling false remedies. Mr Singh is appealing.

Like other media organisations, this newspaper has a vested interest in changing English libel law (it regularly spends large amounts of money defending itself, usually successfully, in libel actions). It is therefore important to note that there are arguments on both sides. Defamation can ruin lives; it is right that the law should offer redress to the wronged. Being a foreigner should not disqualify someone from defending a reputation in England; in some cases, English courts may be the only hope for the righteous.

But England’s libel law has become a playground for lawyers, sparring on behalf of the powerful. That needs to change. A good initial reform would be to rule that libel cases may be heard in English courts only when the material concerned has been deliberately published in England. That would stop the most absurd instances of libel tourism. Other sensible ideas under discussion include capping damages and strengthening the existing public-interest and fair-comment defences—in effect shifting the burden of proof.

Another sensible reform would be to allow cases to come to court only after an attempt to settle them amicably outside it—the current emphasis in family-law disputes too. That would offer a cheap and quick way of resolving those arguments that arose out of mistakes, where a prompt apology or a correction matters much more than damages. It would also make life easier for humble claimants with genuine grievances but without access to expensive lawyers. And it might make English law less appealing to those who use it to intimidate anyone investigating their guilty secrets.

Those were the days, my friends

2009-11-13T14:43:00.001Z

Europe.view

The beginning of the end

Nov 12th 2009
From Economist.com

Looking back at the era of a cold warrior

“MR GORBACHEV, tear down this wall”. Ronald Reagan’s stirring speech at the Berlin Wall on June 12th 1987 was not the death blow to communism, but it did highlight the West’s renewed confidence in demanding what had previously been impossible. Though the president’s advisers egged him on, American diplomats were horrified at what they felt was provocative behaviour: they saw their job as managing relations with communism, not trying to overturn it.

Those glory days were the subject of a day-long conference at the Ronald Reagan Presidential Library in Simi Valley California on November 6th. A motley collection of heroes from east and west (with your columnist tagging along as a moderator) gathered to discuss the great communicator’s role in the collapse of communism and what his approach could still offer today. Nancy Reagan, frail but immaculate, presided. Margaret Thatcher and Mikhail Gorbachev sent messages of congratulation. Freedom fighters such as Mart Laar from Estonia, Leszek Balcerowicz from Poland and Vaclav Klaus of the Czech Republic recalled how Reagan’s approach had inspired them and demoralised their captors.

Many of the surviving members of the Reagan foreign-policy team turned up too, including John Lehman (navy secretary), Dick Allen (chief foreign policy adviser) Richard Pipes (Russia expert) and the towering figure of George Shultz (secretary of state).

It is easy to forget what a daunting task these men had faced when they came to office in 1980. America was traumatised by Vietnam, intimidated by the Soviet invasion of Afghanistan, humiliated by the Iranian hostage crisis, and near-bankrupted by the economic downturn (will an incoming administration in three years’ time face something similar, wondered some people gloomily). The best option in foreign policy seemed to be presiding over inexorable Western decline as peacefully as possible.

Admittedly, whatever was happening in the West, communism would have been in trouble. Discontent among the public, divisions in the elite and economic failure would have all been gnawing away at the regimes’ stability and legitimacy. The confidence that Reagan exuded and inspired made the western star burn brightly, lifting captives’ spirits and dazzling their jailers. The America of Jimmy Carter or the Britain of the mid-1970s hardly provided a compelling alternative to communism.

In retrospect, the efficiency and decisiveness of the Reagan administration is striking. It arrived in office promptly and en masse, filling all important posts within weeks (nowadays getting the team straight within the first year is regarded as smart work). It knew exactly what it wanted to do and did it (not something that could be said so easily of the current administration). John Lehman recounted with gusto how he sent a big naval force to the north coast of Norway, against the howls of protest from officials who thought it would be provocative. Far from it: it put a direct stop to the de facto Soviet naval takeover of the region.

Communist propaganda depicted Ronald Reagan as a brainless gunslinger. In fact he was well read and wrote reams. And as George Shultz pointed out in his lunchtime speech, he used American armed force sparingly, on only three occasions—in forestalling a Marxist coup in Grenada, in bombing a terrorist headquarters in Tripoli, and in an operation against an Iranian ship that was planting mines. “Reality, strength, diplomacy” were his watchwords. “And no empty threats”. He also underlined Mr Reagan’s desire to rid the world of nuclear weapons—something on which Mr Shultz continues to work. The thousand-plus assorted Reaganites in the audience clapped that too.

It was hard not to feel a bit nostalgic for the days when grown-ups were in charge.

discussing 1989 with my then boss

2009-11-13T14:41:00.001Z

Here (from the Economist website)

europe view no 157--VVF for president!

2009-11-08T21:30:00.001Z

Europe.view

An easterner to the front

Nov 5th 2009
From Economist.com

Could a former president of Latvia make it as the European Union president?

OPTIMISTIC Latvians are thin on the ground these days. The combination of fractious politics and a dismal economic outlook blunts the enthusiasm of even the most cheerfully patriotic soul. All the more reason, therefore, to applaud the announcement that the country’s former president, Vaira Vike-Freiberga, is running for the job of president of the European Union.

At first sight, Ms Vike-Freiberga’s chances seem vanishingly slim. And at a second glance they don’t look much fatter. On the plus side, she speaks perfect French. She is a woman. And she has no big enemies. Observers of Latvian politics in the years 1999-2007 (admittedly, not exactly a mainstream hobby in Brussels) remember her as an uncommonly effective president of that country. She proved a powerful bulwark against over-mighty tycoons bent on suborning Latvia’s independent institutions and a strong defender of probity in public office.

If big European countries cannot agree on a big personality from a big country, perhaps they might like a big personality from a small one (Ms Vike-Freiberga’s protocol-heavy grandeur is the stuff of legends among outsiders used to the laid-back style of other Baltic politicians). Her backers recall that she emerged from nowhere in 1999 after a deadlock between Latvia’s powerbrokers. Perhaps she could pull off the same trick in Brussels. Her life story—a refugee who fled the Soviet occupation in 1944, became a professor in Canada and then returned to usher her homeland into the EU and NATO—is captivating. She would bridge the gap between the eastern and western halves of the continent and talk to Barack Obama as one North American to another.Unlike some Baltic politicians, she is not detested in Russia (which matters, apparently). During celebrations in 2005 to mark the 60th anniversary of the end of the second world war she went to Moscow, while her Estonian and Lithuanian counterparts stayed away in protest at what they saw as Soviet triumphalism.

But anyone who overlooks the seemingly insuperable obstacles to her candidacy has probably been over-indulging in Black Balsam, Latvia’s hallucinogenic national drink (it tastes of burnt orange peelings). She has no serious backers, is all but unknown, and comes from a country that is widely regarded as an ill-governed basket case. Indeed, some fear that her candidacy may detract from the chances of Latvia’s real EU star, the energy commissioner Andris Piebalgs, gaining a serious portfolio in the new commission.

But Ms Vike-Freiberga’s Quixotic bid for high office does have two virtues. One is to show that Latvia has impressive public figures as well as the eccentric, inadequate and questionable ones that have tended to be on public display since she left office. That may be something of a morale-booster. Not many east European countries could boast a candidate of her calibre. The other is to highlight the continuing under-representation of people from the ex-communist countries in top jobs in international organisations. Whether in the higher ranks of NATO, the Organisation for Security and Cooperation in Europe, the European Central Bank, or the European Union, the easterners are conspicuous by their rarity or invisibility.

That is partly a matter of time (the post-communist generation will be better candidates than their parents), and partly the result of disunity, bad tactics and outright sabotage from the home side when an east European candidate does have a chance. But at least in part it also reflects an informal cartel among the countries of “old Europe” in dividing the spoils of office. If Ms Vike-Freiberga’s candidacy does nothing more than to shake that up, then it will have been well worth it.

CEE economics

2009-11-08T21:25:00.000Z

Eastern Europe's economic woes

Down in the dumps

Nov 5th 2009
From The Economist print edition

The ex-communist economies have not collapsed. But finding new ways to catch up with the West will be hard

Illustration by Peter Schrank

EVEN at the height of the ex-communist countries’ boom in 2006, almost half their citizens felt they lived worse than in 1989. Yet that glum verdict on 17 years of liberalisation, privatisation and stabilisation was tempered by another finding. Most of those polled by the World Bank and European Bank for Reconstruction and Development (EBRD) said they were optimistic about their children’s prospects.

The worry is that the global economic crisis has dented confidence in the future and intensified gloom about the present. Fast growth eased dissatisfaction with corrupt politicians and bossy bureaucrats. It offered at least the chance of better health care and education, which lag far behind western standards. But the average decline in GDP this year is a whopping 6.2%; recovery is expected to be slow. So east Europeans face higher taxes, bigger debts, less public spending, lower pay and fewer jobs. They do not have the same shock-absorbers as in the west—which is where, in the eyes of many, the crisis originated.

That could prove a toxic mix, yet so far the fallout has been limited. Support from the European Union, the IMF and other lenders, after initial hesitation, was unprecedented in size, scope and speed. Tens of billions of dollars of outsiders’ money staved off a catastrophe. So far, no currencies have collapsed; no country has defaulted; no banks have faced runs, or been cut adrift by foreign owners. Politicians preaching protection, state control or other charlatanism have remained on the fringes. In its latest annual transition report, the EBRD says reform has largely stalled, but not reversed. In countries such as Latvia and Hungary, governments have shown a masochistic delight in following IMF prescriptions for fiscal tightening, even at the cost of likely electoral oblivion.

It makes little sense to talk of the ex-communist countries as a single region. Resource-dependent economies such as Russia and Kazakhstan have one set of problems (such as diversifying and spending export revenues wisely). Open manufacturing economies such as Hungary and Estonia have another (chiefly, maintaining competitiveness). Poland, bolstered by strong domestic demand, will be the only economy in the EU to grow this year (though its rising public debt is a worry). Two ex-communist countries, Slovenia and Slovakia, have already adopted the euro. Estonia may be next. Countries to the east and south tend to be poorer, glummer and worse-run.

For those in or close to the EU, growth came from strong exports of goods and services and big inflows of capital. The net effect was beneficial but the disadvantages are now apparent: heavy dependence on single industries (eg, cars in Slovakia) and on west European demand. Foreign capital inflows may have been too big or too quick, leading to a consumption and construction splurge, fuelled by reckless lending to firms and households, often in foreign currencies. Inflows of money from abroad have fallen dramatically, or in some cases even reversed. The volume of syndicated loans going to the region, for example, has fallen to roughly a sixth of the pre-crisis level. Restarting these capital flows is a high priority—preferably with more prudent rules for the credit market.

Alongside this problem is another: finding a way to share the pain of restructuring private-sector debts among governments, borrowers and bankers. Dealing with this product of past excesses causes much headscratching for policymakers. Debt overhangs—of over 100% of GDP in some countries—will curb growth in future years, hurting everyone.

Outside support has headed off a vicious circle of falling exchange rates, lower investor confidence and failing banks (though that may still loom in Ukraine, where vote-hungry politicians have just shredded a deal with the IMF). But many states face another grim outcome: years of low growth caused by uncompetitive exchange rates and sluggish productivity. That is what happened to Portugal after it joined the euro in 1999. For ex-communist countries in the euro, pegged to it or hoping to adopt it soon, the Portuguese example merits careful study.

The ex-communist economies’ competitive advantage may have shrunk, but it is still a big asset. Cost-cutting in western Europe may produce more outsourcing to the east. Some also hope to find new niches, based on brainpower and creativity. But they must also make their countries work better. According to the EBRD, four areas stand out. One is improving the legal system. Slow and unpredictable justice is a turn-off for foreign investors worried about contracts and property rights (see article). Second is better regulation. Despite improvements from EU membership, businesses still battle with profit-choking red tape. Third is a better social safety-net. A feeling that life is unfair and precarious sharpens the divide between winners and losers and risks political upsets. Fourth is competition. Informal barriers to entry and old networks of communist-era pals keep bits of the economy off limits to outsiders, at huge cost to efficiency.

Getting state institutions to function better is easier to discuss than to accomplish. It has long been clear that intangible factors to do with national culture and levels of social trust play a bigger role than explicit rules in ex-communist countries’ fortunes. The EBRD highlights “values, attitudes and practices” in determining what constitutes “acceptable behaviour within a firm…or by government officials”. Economics offers little guide to that.

1989 books

2009-11-08T21:23:00.003Z

The fall of Communism

Wall stories

Nov 5th 2009
From The Economist print edition

How communism in eastern Europe collapsed, and what came next. Scholars and journalists give their account

Uncivil Society: 1989 and the Implosion of the Communist Establishment. By Stephen Kotkin. Modern Library; 197 pages; $24. Buy from Amazon.com

1989: The Berlin Wall: My Part in its Downfall. By Peter Millar. Arcadia; 220 pages; £11.99. To be published in America by Arcadia in April 2010; $16.95. Buy from Amazon.com,Amazon.co.uk

The Year that Changed the World. By Michael Meyer. Scribner; 254 pages; $26. Simon and Schuster; £16.99. Buy from Amazon.com, Amazon.co.uk

Revolution 1989: The Fall of the Soviet Empire. By Victor Sebestyen. Pantheon; 451 pages; $30. Weidenfeld and Nicolson; £25. Buy from Amazon.com, Amazon.co.uk

'89: The Unfinished Revolution: Power and Powerlessness in Eastern Europe. By Nick Thorpe. Reportage Press; 320 pages; £12.99. Buy from Amazon.co.uk

1989: The Struggle to Create Post-Cold War Europe. By Mary Elise Sarotte. Princeton University Press; 307 pages; $29.95 and £24.95. Buy from Amazon.com, Amazon.co.uk

WHY all the fuss about 1989? Twenty years on, the idea of millions of people yearning for the humdrum joys of daily life in welfare capitalism no longer seems so startling or moving. Familiarity has dimmed the excitement of the freedoms won: to travel, to shop, to exchange currency, to change jobs, to move house, to think, to speak. Experience has scarred the belief that “Western” life is a self-correcting nirvana, where officials are efficient, politicians public-spirited and justice incorruptible. For about a third of the world’s population, the fall of the wall is probably history, not real life.

The best way to appreciate the significance of 1989 is to remember what it was a revolution against. The new edition of Alexander Solzhenitsyn’s epic novel, “In the First Circle” (Harper Perennial, $18), captures better than any other work of fiction the quintessence of communist rule at its Stalinist peak: all-pervasive, paranoid, oppressive, incompetent, lethal.

By 1989 that system had become more rotten and less frightening, especially in the east European satellites of the evil empire. But the climate of fear and lies was still there, with political prisoners, murders, beatings and blackmail, especially in the grimmer places such as East Germany, Czechoslovakia and Romania. Eight hectic months in 1989 turned the winter so starkly described by Solzhenitsyn into spring.

The new edition of the novel differs subtly but importantly from the version published in English in 1968. That was based on a self-censored text that the author had prepared in the hope of getting it published in the Soviet Union. It left out the hero’s espionage for America, the Christian faith of his friend and other details that the Soviet authorities would have found utterly intolerable. The longer text is deeper and darker.

For all its malevolence, the Soviet empire was like a Ponzi scheme, dependent on ever-increasing amounts of money. When that ran out, its regimes imploded. That is the story told in Stephen Kotkin’s slender but snappy book, which concentrates on demoralisation and divisions in what he calls “uncivil society”, the circles of power. This side of life, he argues, was more important than the dissidents, who were lionised in the West as “civil society”, but ignored and unknown at home.

Mr Kotkin is right that bankruptcy forced some regimes to make concessions, but he greatly overstates his case. Czechoslovakia was under little immediate economic pressure to change. As the grim examples of Romania then and North Korea now both show, a sufficiently determined communist leadership can survive economic failure through repression. Moreover, 1989 is the story of people as well as processes. Although the reformers and ship-jumpers inside the regimes were important, in most countries it was the dissidents who forced the pace of change.

The real point, though, is that fitting a dozen complex stories into a single analytical straitjacket is a nonsense. Communism collapsed differently in every country, as the journalists who reported the story could see. Their accounts published for this anniversary are necessarily episodic: too much was happening for one person to witness it all. But each book carries the vital touch of personal experience.

The best read is the irreverent and engaging account by Peter Millar, who writes for the Sunday Times among other papers. Fastidious readers who expect reporters to be a mere lens on events will be shocked at the amount of personal detail, including the sexual antics and drinking habits of his colleagues in what now seems a Juvenalian age of dissolute British journalism. He mentions his long-suffering wife and children rather too often, but the result is full of insights and on occasion delightfully funny. The author has a knack for befriending interesting people and tracking down important ones. He weaves their words with his clear-eyed reporting of events into a compelling narrative about the end of the cruel but bungling East German regime.

View from the top

At the other end of the spectrum is the Olympian perspective of a former Newsweek bureau chief for Germany and eastern Europe. Michael Meyer ranges widely and not always deeply. His best reporting is on Hungary, particularly on the decision by the reform-minded leadership there to open the border with Austria. That destabilised the East German regime, first creating an embarrassing outflow of refugees, and then forcing the Berlin authorities to restrict travel freedoms still further. This is a competent and professional account—though it does not quite merit its claim to be the untold story.

A more solid and less pretentious book comes from Victor Sebestyen, who has covered the region since the 1970s. His book deals more thoroughly with both history and geography. He starts the story, rightly, with the election in 1978 of John Paul II, the Polish pope. He highlights Ronald Reagan and Mikhail Gorbachev, the other two giant figures who ended the communist epoch. Unlike his rivals, the author devotes at least some space to developments in other continents.

Few journalists covering the region lived there in the communist era, inevitably giving their accounts a second-hand feel. An exception is Nick Thorpe, who moved to Budapest in 1986 and has mastered Hungary’s beautiful, impenetrable language. His account of the interplay between dissidents and reformists inside the regime shows a level of sympathy and nuance that is missing from more ambitious accounts—and makes his own chapters on events in other countries look skimpy.

Almost more interesting than his description of the collapse of Hungarian communism are Mr Thorpe’s insights into what came next, told through the unlikely prism of obstetrics. Abominable practices stayed in place after 1989, treating birth as a medical emergency in which painful and humiliating procedures such as episiotomy, shaving and enemas were mandatory. Parents’ wishes were habitually ignored. Mr Thorpe and his wife decided they wanted their children born at home: a normal procedure in western Europe but illegal in Hungary. The medical bureaucracy’s cartel-like resistance gives a pungent flavour of the lingering communist-era mindset that the region still has to shake off.

No whiff of the personal contaminates Mary Elise Sarotte’s scrupulous account of the high politics and diplomacy of 1989. With remarkable diligence, she has interviewed almost all the surviving participants, and quarried government archives and other libraries for documents that illustrate the decision-making (and lack of it) that year. The result is a tale of hypocrisy and indecision in high places.

Some of it, however, is commendable. After the Tiananmen massacre in June, communist leaders could not quite summon the willpower to use mass murder to stay in power. On the Western side, it is sometimes deplorable. For all her fiery freedom-loving speeches, Margaret Thatcher, then Britain’s prime minister, privately loathed the idea of German unification and tried to sabotage it, covering her tracks as she did so. The then American president, George Bush senior, comes across badly too, giving tepid and unemotional responses in public and missing the chances that 1989 presented.

Ms Sarotte debunks myths: the opening of the wall on November 9th was not planned, let alone forced. It was the result of a bungle: a bureaucratic rule-change misleadingly announced and over-excitedly reported. German unification was not inevitable: outsiders, the new East German leadership and many West Germans wanted something else. It came thanks to a combination of electoral pressure in the East and highly effective arm-twisting by the West German chancellor, Helmut Kohl.

Missing in all this is a powerful voice from the countries concerned. Writers such as Solzhenitsyn, Czeslaw Milosz, a Polish poet, and Czech novelists such as Milan Kundera, Ivan Klima and Josef Skvorecky helped the world understand life under communism. But no writer from the region, in fact or fiction, has produced a matching account of the collapse of the Iron Curtain and its aftermath. The way in which the countries of central Europe, the Baltics and the Balkans emerged from communist captivity, made peace (mostly) with their history, and rebuilt the economic, legal, moral and psychological order destroyed five decades previously is a gripping story. It has yet to be fully told.The author comes across as more at home with her sources than with the region’s wider history. The pope, she writes, “continued to dominate the Vatican” in 1989. That is what popes normally do. In analysing the question of whether NATO’s eastward expansion broke a promise to Mr Gorbachev (it didn’t), she overlooks the worries of countries in central Europe about Russia’s ominous drift back to old habits in the 1990s.

1989 revisited

2009-11-08T21:12:00.001Z

The world after 1989

Walls in the mind

Nov 5th 2009
From The Economist print edition

The ex-communist countries of central Europe have fared well, mostly, since 1989. But they still have to shed their image as poor and troubled relations

PICTURE yourself in a smoky café somewhere in the middle of Europe—Prague, say—in late 1989. Sipping muddy coffee sweetened with gritty sugar, served by a sullen waiter at a greasy table, you are discussing the future with friends. Their ill-cut clothes are in dull blue, brown and green, the hallmarks of planned-economy tailoring. Your foreign gear stands out a mile.

In the café window, posters tell of a revolution won (see article). One is a poignant death notice for “Comrade Fear”—the once omnipresent and omnipotent embodiment of the totalitarian regimes, newly toppled by candles, flags and courage. Another poster shows a simple starburst, with the words “Gloria in Excelsis Deo”. Religion, like so much else, is now a matter of free choice. But a third poster shows the task ahead. It depicts Europe divided by a cliff that runs along the old Iron Curtain. A precarious ladder leads from the gloomy east to the sunny western uplands. “Back to Europe”, it reads. Before the communist era, countries such as Czechoslovakia, Poland and Hungary were at the centre of the continent, not its impoverished and isolated backwater.

The cliff looks dauntingly steep. Climbing it means long queues at Western consulates before facing the suspicious officials inside them. Western Europe may have cheered the revolution, but it fears a flood of riff-raff from the east. Abroad, easterners feel like humiliatingly poor relations. Their savings and salaries are all but worthless. You buy the coffees without a glance at the bill. When easterners head west, they pack sandwiches.

Ghosts of the past are everywhere. Some are welcome. Old songs, long-banned, are on the radio again. Heroes once vilified by official propaganda are celebrated. Other ghosts are more sinister. Central Europe before communism was no paradise. What will emerge as the region defrosts? Will Hungarians be content with their constricted borders? Will the Germans, so brutally deported from Silesia and the Sudetenland after the war, now demand justice? Will it be safer to be a Jew—or more dangerous?

Nor are the more recent spectres of the evil empire laid to rest. Will the secret police, still hunkered in their bunkers, give up their power peacefully? What will happen to the millions of guilty secrets in their files? Scariest of all, what happens if the wind from the east changes? Hundreds of thousands of Soviet troops still occupy the region. Will they leave peacefully? Facing all those questions is a fragile new political elite: dissidents, oddballs, turncoat communists and university professors, blinking at the task of building justice and prosperity on the ruins of communism.

Central Europe 20 years later, if glimpsed from 1989, would have seemed a glorious pipe-dream. A generation has grown up in free and law-governed societies. Fears of economic ruin and political chaos have proved unfounded. Ten countries have climbed that cliff and joined the European Union. Two more, Croatia and Albania, have joined NATO.

For all the unsolved and new problems facing the region now, it is voters, not outsiders, who determine who rules and how. Judges, lawyers and police have shed the shackles of Communist Party control. Courts may be slow, politicians meddlesome and bribery a problem. But nobody can count on impunity.

The huge exception has been Yugoslavia, seen in 1989 as a template of multi- ethnicity and pluralism, a halfway house between centrally planned socialism and the harsh and distant world of Western capitalism. It is still an example, but a dreadful one. For a decade, the outside world was unable to stop rampaging ethno-nationalist militias turning ancient grudges into bloody revenge. Some 140,000 people died in wars in Bosnia, Croatia and Kosovo, as authoritarian politicians purged their countries of those they saw as subversive or subhuman.

That was far worse than anything witnessed in central Europe before the war, though it still pales by comparison with the horrors of the Nazi era. Even outside ex-Yugoslavia, authoritarian and bigoted ideas still haunt the political fringe. Explicitly racist parties come and go in some parliaments; in Slovakia, one is in the government. But in no country over the past 20 years have they gained full political power. That is cause for relief and pride.

The economic achievements are barely less astonishing. At the end of 1989 it was easy to imagine the region staying mired in poverty for decades. Only the over-60s remembered how a market economy worked. For decades official propaganda had lambasted capitalism as akin to cannibalism. Industry was state-owned and run by party placemen. Management meant hunting for resources and then hoarding them, not dealing with costs, customers and competition. Foreign trade involved haggling with state planners in Russian, not closing deals in English.

So even granted the will-power to stabilise the economy, privatise state property and liberalise markets, would it work? As Lech Walesa, Poland’s first freely elected post-war president, noted, it is easy to turn an aquarium into fish soup. Reversing the process is much harder.

Yet free prices, free exchange rates, free trade, free labour markets and privatisation have proved a colossal success. The profit motive—however ugly, sleazy or vulgar—unleashed the caged talents of millions of entrepreneurs. Foreign investors, at first deterred by scarce telephones, bumpy roads and obnoxious officials, have come in droves, bringing a huge transfer of management and technical know-how. The first wave came because of low labour costs. Membership of the EU attracted the next influx. The EU has improved life in other ways too, forcing the pace of reform as a condition of membership and providing billions of euros for modernisation. Borders once sealed by minefields are now just lines on the map. You can drive from the Baltic Sea to the Mediterranean without even showing your passport. Water and air are cleaner than in 1989, transport faster and safer.

For the young, flexible and ambitious, the past 20 years have proved a bonanza. For the losers—the old, the timid, the dim—life has been punishingly difficult (see article). Yet outside the former East Germany, nostalgia for the past plays no part in politics. Only in the Czech Republic does a Communist party still have a political role. Elsewhere, the former proletarian internationalists have rebranded themselves as slightly sleazy centre-leftists.

The third big achievement, alongside democracy and prosperity, is the partial restoration of public-spiritedness, trust, decency and kindness. Communism habitually imposed horrible moral choices: denounce your colleague, or your child will never go to university. It preached altruism but ingrained selfishness. Statistics can barely capture the legacy of 50 years of lies and fear. Freeing central Europe’s captive nations has proved far easier than freeing its captive minds. Most adults in the region spent their formative years under communism. Only when those in charge have no memory of totalitarian rule will communism’s shadow finally be lifted.

The biggest disappointment is the continuing power and wealth of the old system’s elite, who have proved much better at running the capitalism they decried than the socialism they preached. Party bosses and their secret-police henchmen successfully squirrelled money abroad, using it to buy assets cheaply in the chaotic years of the 1990s.

The western half of the continent can still seem far off when viewed from the middle. And vice versa. Toomas Hendrik Ilves, Estonia’s sharp-tongued, American-educated president, says Westerners privately regard people from ex-communist countries as “troublesome cripples whose views can be ignored”. Seen through the fug of a café in late 1989, 2009 looks pretty good. But central Europeans can be forgiven if they see the present a bit cynically.

Upcoming talk

2009-11-04T15:31:00.002Z

Thursday 3^rd December

Rewriting History

A Critique of the Putin-Medvedev Approach

with Edward Lucas

6.30-8.00pm

Seen from the Kremlin, history is simple: the Soviet Union, with extraordinary sacrifice, liberated Europe from fascism and Europe should be grateful. Anyone who disagrees is a fascist. Stalin may have been bad in some ways, but he was an effective leader in difficult times. The Soviet Union had its flaws, but so do other countries. Criticism reflects double standards and jealousy of Russia's recovery.

This simplistic and triumphalist version of 20th-century history is the central plank in Russia's new ideology. Edward Lucas, a journalist and author who has been covering the region for more than 20 years, will show why it is not just mistaken but pernicious. The revival of Stalinist history is a threat to the countries of Eastern Europe--and a dreadful dead end for Russia.

Edward Lucas is the Central and Eastern Europe correspondent for The Economist. He has been covering the region for more than 20 years, witnessing the final years of the last Cold War, the fall of the Iron Curtain and the collapse of the Soviet empire, Boris Yeltsin's downfall and Vladimir Putin's rise to power. From 1992 to 1994, he was the managing editor of The Baltic Independent, a weekly English-language newspaper published in Tallinn. He holds a BSc from the London School of Economics, and studied Polish at the Jagiellonian University, Cracow. The New Cold War is his first book.

£5 Full / £3 Concession

Advance booking is recommended, tickets at the door subject to availability.

To book please call the Louise Blouin Foundation on 020 7985 9600, payment is required upon booking.

My memories of 1989: sex, cricket and revolution

2009-10-29T22:21:00.003Z

I am too embarrassed to repost this piece in full but it contains a vivid if highly-coloured account of what I was up to in 1989, written in the Daily Mail's trade-mark style.

Estonia ahead

2009-10-29T21:18:00.002Z

Baltic economies

The Estonian exception
Oct 29th 2009 | RIGA AND TALLINN
From The Economist print edition

Estonia gets a boost, but worries persist about its Baltic neighbours
SMUGNESS is Estonians’ least attractive feature, at least in the eyes of their Baltic neighbours, Latvia and Lithuania. A surprise endorsement by the International Monetary Fund of Estonia’s plans to join the euro in 2011, coupled with gloom about the other two countries, will only make that worse.

All three Baltic states are facing double-digit economic declines in GDP this year, following the collapse of credit bubbles created by reckless lending and spending. Many outsiders have wondered if the three countries can maintain their fixed exchange rates, which peg the national currencies to the euro. A currency or banking collapse in the Baltic would spook markets elsewhere in the region, threatening wobbly economies such as Hungary’s.

So for the past year the focus has been on averting disaster. Plunging tax revenues made the chances of any Baltic states meeting the criteria for joining the euro look slim. In Latvia, for example, the government is struggling to keep next year’s budget deficit down to 8.5% (see chart)—a condition for the continuation of a €7.5 billion ($11 billion) IMF-led bail-out package. To join the euro, the deficit must be sustainably below 3%.

But it now looks as if, barring upsets, Estonia by the middle of next year will have met all the criteria for joining the euro. Inflation is low; government debt is negligible (indeed the country still has net public assets) and next year’s budget sets a deficit of 2.95%. That is thanks, the IMF says, to Estonia’s thrifty habits in public finances. The government has cut spending hard and early. It sped through modernisation projects financed by the European Union. This acted as an economic stimulus. Latvia and Lithuania have found it much harder to follow the same path. Lithuania has dodgy banks and spiralling debts; Latvia has lost credibility among outsiders because of its failure earlier this year to cut spending as promised.

For safety’s sake, the IMF still wants Estonia to raise and broaden taxes a little. Car-owners, for example, pay no car or road tax. But Andrus Ansip, the prime minister, already feels vindicated. He says the prospect of euro adoption will boost investors’ confidence and speed the country’s recovery.

Attention now shifts back to Latvia, where the IMF and EU are holding up a new budget, due to be passed on October 28th. They worry that the precarious governing coalition lacks political will, and that the crisis is unfairly hitting the poor. They want Latvia to dump its flat tax for a more progressive system. But Latvia says higher taxes would discourage entrepreneurs and that chaos in the state revenue office means that the higher rates would bring in little extra cash. No reason to feel smug there.

NATO and Russia

2009-10-29T21:16:00.001Z

War games
Oct 29th 2009 | RIGA AND TALLINN
From The Economist print edition

Jitters in eastern Europe over Russia’s military manoeuvres

SCAREMONGERING is where defence-planning and politics overlap. Big military exercises in western Russia and Belarus, which finished earlier this month, were based on the following improbable scenario: ethnic Poles in western Belarus rise up and “terrorists” from Lithuania attack the Russian exclave of Kaliningrad. More than 10,000 troops from Russia and Belarus countered them, reinforcing Kaliningrad from the sea and sending special forces behind the enemy lines. Three NATO–like brigades, one visiting, one Estonian and one Latvian, then invaded western Russia, where they were successfully rebuffed by the elite Pskov-based 76th air assault division, reinforced by a motorised rifle brigade.

Military exercises need a notional enemy and, from Russia’s point of view, NATO is the obvious choice. Because the alliance has expanded to Russia’s borders, taking in a dozen ex-communist members over strenuous protests from the Kremlin, it is all the more desirable to send a strong signal. What is more, Western countries have been urging (and helping) Russia’s military forces to become more professional. That requires practice drills.

The main aim of the Russian exercises may indeed have been to measure progress on military reform, particularly the creation of more Western-style autonomous brigades. And, plainly, Russia is neither willing nor able to fight a real war with NATO. Yet the war-games look alarming to neighbours. They recall that the war in Georgia in August 2008 followed many years of exercises, and they point out that NATO has no formal contingency plans to defend its vulnerable Baltic members. Nor has the alliance held land drills on the territory of any of its new members. Indeed, until two years ago NATO’s threat assessments explicitly discounted the idea of conflict with Russia.

Russia faces many security problems within its borders, and its armed forces are still rusty. It is hard to see why preparing for an implausible armed attack from the West should be a priority; these days America and its allies have little time to rehearse big-war manoeuvres because their soldiers are too busy fighting, or training to fight, insurgencies in Iraq and Afghanistan. Similarly, the idea of Lithuanian-based “terrorists” invading Russia is risible.

Western military analysts have noted Russia’s use of destroyers and landing craft from the Black Sea and Northern Fleets to back up its feeble Baltic-based naval forces. They also noted the deployment of Russia’s most advanced S-400 air defence system in Belarus and a parallel drill conducted by the Strategic Rocket Forces, the guardians of the Kremlin’s nuclear arsenal. “The scope of the exercises, the weaponry used, the troops involved and the scenarios rehearsed all indicate unequivocally that Russia is actually rehearsing a full-scale conventional strategic military operation against a conventional opponent,” says a report by Kaarel Kaas, an analyst at an Estonian security think-tank, the International Centre for Defence Studies.

Dividing the exercise into a northern war-game (called Ladoga) and a southern one (Zapad-09) brought each below the 13,000-troop threshold at which Russia is obliged to invite outside observers. Some neighbouring countries were not able to monitor the manoeuvres (Lithuania, with a handful of observers in Belarus, was an exception). That does not build confidence.

From what outsiders can gather, the performance of Russian forces was patchy. A joint Belarusian-Russian headquarters worked poorly. Drones—a big feature of Western armies—seem to have been used mainly for show. Moving large numbers of troops and equipment around, a weakness during Russia’s war in Georgia, took too long.

Polish, Baltic and other officials will meet in Warsaw shortly to discuss the significance of the exercises. NATO will assess them next month. America certainly took careful notes: the USS Cole, a guided-missile destroyer, visited Estonia. NATO warplanes mounted a modest air exercise. A planned exercise in the Baltic states next year is likely to be beefed up, perhaps with the involvement of part of NATO’s new mobile Response Force.

Russia’s armed forces may be ramshackle, but many European members of NATO are in poor shape too. The alliance’s ability to defend the Baltic states depends almost wholly on American involvement. NATO hawks complain that members such as Germany and Italy are blocking attempts to draw up formal contingency plans for all its members—something that President Barack Obama has demanded. The doves retort that NATO’s Article 5, which says that an attack on one member is an attack on the whole alliance, is deterrent enough; new members who question its worth are hurting their own cause.

Yet easterners are raising their voices in talks about NATO’s new “strategic concept”, a document to define its purpose that will be adopted next year. With NATO focused mostly on the fighting in Afghanistan, they want a clear statement that old-fashioned collective defence of NATO territory is still a priority. Only that, they say, will convince their voters that, with Russia flexing its muscles nearby, sending troops to Afghanistan is worth it.

Slovakia/Hungary

2009-10-29T16:57:00.003Z

Europe.view

Linguistic discontents
Oct 29th 2009
From Economist.com

Slovaks, Hungarians and missing data

THE row is over but the problems remain. Amid an outcry from neighbouring Hungary, and discreet pressure from other outsiders, Slovakia’s government has backed away, for the moment, from implementing its badly drafted and intrusive-sounding new language law.

Despite the backdown, hopes that membership of the European Union and NATO would bring a permanent end to central Europe’s tribal conflicts and historical grudges now look over-optimistic. It would be good if all concerned—the Slovak government, Hungarians in Slovakia and Hungary’s political parties—paused for reflection about the troubling issues that divide them. But the economic crisis, and the likely victory of the tough-talking Viktor Orban and his right-of-centre Fidesz party in Hungary’s parliamentary elections next year, are among the reasons for expecting another flare-up sooner rather than later.

A short list of Hungarian grievances would go like this. Since 1992 the new Slovak state has made its largest linguistic minority feel like outsiders. Native Slovak-speakers increasingly dominate the upper reaches of government; the handful of Magyarphones in the diplomatic service has been purged (from ten ambassadors to one, for example). The parts of southern Slovakia where Hungarians tend to live have missed out on foreign investment and have the worst public services. Bilingualism is declining: few mother-tongue Slovaks learn Hungarian; Hungarian-language schools teach Slovak remarkably badly. The rise of the Slovak National Party has made anti-Hungarian racism alarmingly acceptable in public life.

Slovak grievances read rather differently. Hungary has a conceptual problem in accepting that Slovakia is a real country. Public figures there stir up Slovakia’s Hungarians with reheated historical wrongs. The number of ethnic Hungarians in Slovakia is exaggerated: many of them are in fact Gypsies (Roma). All citizens of Slovakia are equal before the law and talk of discrimination is absurd. All efforts to pamper the Hungarians just make them complain all the more, in an annoying and disloyal way. If Hungarian-speakers really do not feel at home in Slovakia then they can leave.

To an outsider, the striking thing is the prevalence of assertion and the absence of facts. How many people in Slovakia are really “ethnic Hungarians” as opposed to, say, Hungarian-speaking Roma, or native Slovak-speakers with Hungarian surnames, or the products of mixed marriages who do not regard themselves as being fully in one camp or the other? Are those who self-identify as ethnic Hungarians better or worse paid, housed or educated than other population groups? Is this changing over time? Is bilingualism declining? How many go to Hungary for higher education? How do their fortunes compare to Slovak universities’ alumni? What are the statistics on mixed marriages, migration, and life expectancy? And how do all these compare to the comparable population groups in Hungary proper, and to Hungarians living in other places such as Transylvania in Romania or the Vojvodina province of Serbia?

Nobody seems to be collecting this data, either in official statistics or in academic surveys. Lessons could be learned from Britain’s diplomatic service, which makes a big effort to attract applicants from a wide range of class, ethnic and linguistic backgrounds and monitors how successful this has been. But Slovak officials react with shock at the idea that monitoring the composition of the civil service could help settle arguments about prejudice. “It would not be politically correct” says a senior government spokesman.

That seems a rather lazy and complacent approach. Consequently, without even the elementary information to know what is right and what to do, the two sides remain entrenched in their silos of ignorance, making myths, and sooner or later, mischief.

British Waffen-SS Legion? Not likely...

2009-10-15T16:41:00.002Z

Europe.view

Unoccupied Britain

Oct 15th 2009
From Economist.com

It looks simpler from across the Channel

TWEAK history a bit. Imagine that in 1940 Hitler and Stalin divide Britain between them. Both occupying powers behave abominably but in different ways. After a rigged election, Scotland is declared part of the Soviet Union. Stalin imposes a one-party state and planned economy with a terrifying secret-police apparatus, liquidating normal life and decapitating the country. Tens of thousands of people—lawyers, teachers, businessmen, priests, journalists, and even philatelists—are woken in the small hours, given ten minutes to pack and then deported to slave labour camps in northern Norway. Few ever return.

South of the border, the Nazi military dictatorship rounds up England’s Jews, supported by local anti-Semitic collaborators. Industry is commandeered by the Nazi war machine. Anti-Nazi activity is lethal; thousands are shipped off to work as forced labourers. Others, disgracefully, even volunteer as concentration-camp guards and for auxiliary police battalions in the hope of gaining privileges or settling scores. Life is dire, but for most of the non-Jewish population it is much less awful than in the Scottish Soviet Socialist Republic.

In 1941 Hitler attacks Stalin. As the Red Army flees Scotland, Jews suffer terrible pogroms. Many Scots blame them, quite unfairly, for being allied with the communists. (In fact, though many Scottish communists are indeed Jewish, Jews feature prominently among the “bourgeois elements” deported to Norway). Many Jews die of starvation or typhus in the Glasgow ghetto. Most are gassed in death camps, some on British soil, some further afield.

As the Nazis start losing the war they conscript thousands of teenagers into a “British legion” of the Waffen-SS. About one-third of this unit are volunteers, desperate to stave off another Soviet occupation at least for long enough for their families to escape to neutral Ireland. Some have ardently helped the Nazis. Despite last-ditch resistance, Soviet power is restored in Britain by 1944, with implacable vengeance. A doomed underground army fights on (its last partisan is killed only in 1975). Britain regains its freedom only when the evil empire collapses.

Digesting that historical trauma would take time. Britons’ views of their country’s SS troops would probably be rather ambiguous: few would call them heroes, but few would condemn them outright either. Many British people might focus more on their own suffering than that of the all-but vanished Jewish population. Outsiders would do well not to jump to conclusions. Stereotypes linking the Holocaust in Britain to “endemic anti-Semitism” before the war would clearly be ludicrously simplistic.

Amid the current row about the Conservative Party’s new alliance with Poland’s socially conservative Law and Justice party and Latvia’s nationalist Fatherland and Freedom/LNNK party, British commentators would do well to bear some history in mind. Fatherland and Freedom (which has roots in the anti-Soviet dissident movement) says Latvian SS veterans have the right to pensions and public gatherings. Yet Jon Snow, a British television presenter, misleadingly dubbed the party “neo-Fascist”. Also on the same programme, he failed to challenge a British comedian, Stephen Fry, who deplored Poland’s history of “right-wing Catholicism”, terming it “deeply disturbing for those of us who know a little history, and remember which side of the border Auschwitz was on”.

Mr Fry is entitled to criticise Poland’s record on gay rights and the Tories’ choice of friends. But it is horribly unfair to mention Auschwitz (a death camp run by German Nazis in an occupied country) in the same breath. The million-plus Poles, both Gentile and Jewish, who perished there deserve better. And commentators from Britain, which escaped the war unoccupied, should try approaching other countries’ wartime history with more humility and less self-satisfaction.

Lebedev interview

2009-10-14T09:26:00.000Z

here

2009-10-08T15:47:00.001Z

Europe.view

Old rows, new book
Oct 8th 2009
From Economist.com

Albania and Macedonia quibble over an encyclopaedia
IT IS normally hard to get excited about encyclopaedias. Indeed, in the internet age, it is quite hard to sell them at all. But in Macedonia, a new national encyclopaedia has sparked a row worthy of the 19th century, with furious denunciations, forced resignations, hurried political intervention and appeals to outsiders to join in the condemnation of insulting entries.

The row underlines Macedonia’s still-fragile national identity. Here is a non-exclusive list of possible views. One is that Macedonia does not exist at all. It is simply a bit of Bulgaria, amputated by the rise of post-war Yugoslavia and then hijacked by self-interested local politicians (some Romanian nationalists see Moldova the same way). Those who think they are Macedonians are “ethno-politically disorientated” Bulgarians.

From another point of view, the country’s existence is not in doubt, but the name is an insult to Greece. Hardline Hellenes think that the “Skopjans” are cheeky Slavs trying to hijack the name of Macedonia, which was, is and will always be an inalienable part of Greece.

Another view comes from Albania, Macedonia’s western neighbour. From an Albanian nationalist point of view, Macedonia is not a state, but a compromise, and perhaps only a temporary one. A much-abused ethnic Albanian minority has finally managed, partly by force of arms and partly thanks to international pressure, to gain some constitutional rights, which must be defended vigilantly.

But what about the majority ethnic grouping in this country of 2m people? That is where the encyclopaedia comes in. Published by the Macedonian Academy of Sciences and Arts, it trod hard on some sensitive toes. For a start, it asserted that the Albanians were relative newcomers to the territory, settling it only in the 16th century. From an Albanian point of view, that is exactly the wrong way round: it was the Slavs who are the newcomers, and who should behave themselves in the company of their hosts. Worse, the encyclopaedia also referred to the Albanians as “highlanders”. That, apparently, is an insult.

Another entry describes Ali Ahmeti, the leader of the ethnic Albanian insurgency in 2001, as a war-crimes suspect. Many may query the methods he and his fighters used, but he has never been indicted, and he now heads the junior party in the country’s coalition government. Amid student demonstrations and other protests, Albania’s prime minister, Sali Berisha, called the book “absurd and unacceptable” and complained about “identity based on the forgery of history.”

The encyclopaedia is now being hastily rewritten. But it would be nice to think that some of the energy on display could be directed toward bigger issues. One is sorting out the name dispute with Greece. The new centre-left government in Athens may soften the Greek insistence that its northern neighbour drop “Macedonia” before joining international organisations. Macedonia could clear up a couple of troubling human-rights cases, such as that of Spaska Mitrova, a young mother who has lost custody of her two-year-old daughter, in a dispute with strong political overtones (she identifies herself as Bulgarian, and says Macedonians have ill-treated her in retaliation). From the Albanian side, Mr Berisha could be more careful in describing all of his compatriots as members of “one nation”.

Silly rows about encyclopaedia entries are not just distracting. They also damage outside perceptions of the region and thus its chances of integration into the rest of Europe. The sensible response to a bad book is to yawn, or to produce a competitor. And by complaining so loudly, critics have given the encyclopaedia publicity that most booksellers could only dream of.

Latvia (from Economist website

2009-10-08T15:46:00.000Z

Ailing fast

Oct 7th 2009
From Economist.com

Bad news from Latvia raises fears of contagion across eastern Europe

THE patient emerges from intensive care, hurls the medicine at the doctors and bites his blood donor. That may be an unfair characterisation of the recent news from crisis-stricken Latvia, but it is pretty much how outsiders see it. The prime minister, Valdis Dombrovskis, is refusing to make the spending cuts mandated by international lenders and has floated a new law that would partially expropriate foreign banks’ loan books.

It would be worrying enough if the European Union’s weakest economy defaults, devalues or implodes. But what scares outsiders more is the effect of Latvia’s latest wobble on other ex-communist economies, which until this week seemed to be surviving the financial crisis with less trouble than some had feared.

In recent weeks, the news from Latvia had seemed mildly encouraging, after a year during which the country has been kept afloat thanks to an $11.1 billion international bail-out. The breakneck decline has slowed: the economy is expected to contract by 17.5% this year, but by only 3% in 2010 and to return to growth in 2011, according to a forecast by SEB, a Swedish bank (and big lender to Latvia). The current account, which showed a yawning deficit of 1.42 billion lats ($3 billion) in the first seven months of last year has been transformed to show a 581m lats surplus in the same period of 2009.

The main outstanding issue is next year’s budget deficit. International lenders had softened the target to a mere 8.5% of GDP; the government still had to push through spending cuts of 500m lats to meet this.

But this week Mr Dombrovskis startled outsiders by saying that cuts of only 225m lats would be necessary. He has pencilled in a further 100m lats in better tax revenues—counting, apparently, on a faster economic recovery than anyone expects. The hesitation has brought stern warnings. Sweden’s finance minister, Anders Borg, said outsiders’ patience was “limited”—his country is due to provide SKr10 billion ($1.45 billion) in a loan tranche in early 2010. The EU’s monetary affairs commissioner, Joaquín Almunia, has publicly rebuked the government too. Mr Dombrovskis has now backtracked, saying that if the cuts are necessary, they will be made.

But doubts remain. Mr Dombrovskis lacks the authority to push tough measures through parliament and his public wobble could be seen as an attempt to summon up another burst of international pressure on the government to do the right thing. If so, it is risky.

The same could be said about another of Mr Dombrovskis’s moves—calling for a draft law that would restructure domestic assets of foreign banks. Borrowers would be liable only for the collateral value of their loan (eg, a house bought with a mortgage) rather than the whole amount. Banks would also be unable to evict defaulters from their homes without rehousing them. A fall in property prices of over 50% has sent Latvia’s private-sector debts to foreigners ballooning. They will need restructuring eventually. But this proposal looks unworkable, clumsy and damaging. Shares in Nordic banks, which have been the biggest private-sector lenders to Latvia, dipped on the news.

If Latvia fails, with a strike by international lenders prompting a debt crisis or a bank run, the spotlight then turns to the neighbouring Baltic states of Estonia and Lithuania. They are not in the same political mess, but both have also pegged their currencies to the euro and are facing huge and painful adjustments. Some wonder if the EU might accelerate its recognition of Estonia’s impressive progress in sorting out public finances by giving it early approval of its plans to join the euro in 2011. But where would that leave Lithuania, which is nowhere near balancing its books and borrowing expensively from private lenders instead of turning to the IMF?

An even bigger question involves the future co-operation between the IMF and EU. They worked together closely during the emergency rescue of Latvia in December. Now ties are strained: the IMF thinks Latvia should devalue its currency. EU officials are determined that it should not, for fear of the wider effect on ex-communist countries that are trying to join the euro zone. That has led the EU to squeeze the IMF into accepting softer conditions on Latvia than it would have wished for. For all those involved, in Brussels, Washington, DC, and Riga, patience is running out.

extradition

2009-10-01T18:52:00.003Z

Extradition

Succumb and deliver
Oct 1st 2009
From The Economist print edition

Extradition laws are getting tougher and tighter. But they remain messy, even if your name is not Polanski

IT IS a fair bet that if a humble Polish immigrant called, say, Pawel Romanski had skipped bail after pleading guilty to raping a 13-year-old in Los Angeles 30 years ago, fleeing to France would have done him little good, and his fate, however unfair, would never have become a cause célèbre. Most of the time, international extradition is a boring business involving a lot of dull form-filling, after which wrongdoers are taken back to face justice.

But add a dose of celebrity, a dash of politics, and sharply clashing cultural attitudes, and things change. Swiss police arrested the film director Roman Polanski (pictured above) on September 26th, fulfilling an American arrest warrant issued in 1978. In that year Mr Polanski fled the country to avoid sentencing by a Los Angeles judge. Arrested for rape, he had agreed to a plea bargain in which he admitted unlawful sexual intercourse with a 13-year-old. A French-born Pole, Mr Polanski has dual citizenship, thus benefiting from France’s restrictive extradition laws. He has since travelled in Europe, but never returned to the United States.

His arrest has sparked a diplomatic rumpus. The French and Polish foreign ministers jointly asked America for clemency—though their governments later distanced themselves from these calls. Film-industry luminaries such as Woody Allen, Pedro Almodóvar and Martin Scorsese are supporting a petition calling for his immediate release. For Mr Polanski’s fans, the extradition decision is vindictive and sinister. His whereabouts were no secret: he was invited to Switzerland to receive an award at the Zurich film festival. Some suspect that the wily Swiss set a trap, hoping to placate America, which has been cracking down hard on Swiss tax shelters. Certainly Mr Polanski had travelled to the country many times in the past, without incident. Why had the American court only now sought to enforce the warrant?

Others, especially in America, see the issue differently. By jumping bail, Mr Polanski cocked a snook at American justice. The passage of time if anything aggravates that. So did his attempts (without showing up in person) to have a Los Angeles court dismiss the case late last year, and his successful lawsuit in London against an American magazine. (He gave evidence by videolink). The witness statement given by Mr Polanski’s victim still makes harrowing reading (though she has long since settled with him in a civil-law suit, and has supported his efforts to close the case). Justice would be ill-served if fame mitigated any crime, especially one like rape.

Mr Polanski’s case is one of several high-profile and highly politicised extraditions now in court. America is also trying to extradite Viktor Bout, a Russian arms dealer, from Thailand. Russia is trying to extradite Yevgeny Chichvarkin, a mobile-phone tycoon, from Britain on charges of extortion and kidnapping. He says his life is in danger if he is returned. Britain has previously refused to extradite other Russians, including a former Kremlin insider, Boris Berezovsky, on the ground that they cannot expect a fair trial in Russia.

Politics plays a big role in extradition. Some countries—France, Russia and Israel are examples—rarely or never extradite their own citizens (though they will send back foreigners). Diplomatic clout decides which countries conclude treaties with others, and on what terms. Exact reciprocity is rare. The fourth amendment to America’s constitution requires proof of “probable cause” for an arrest. But for America to extradite someone from Britain the level of proof is rather lower: information (not evidence) that provides a “reasonable basis to believe that the person committed…the offence for which extradition is sought”. Many find that imbalance galling.

Bond bound
The biggest flaw in extradition is not politics, however, but the treatment of those who lack Mr Polanski’s wealth and connections. As extradition becomes speedier and procedures tighter, the risk of miscarriages of justice rises, and in a way that the humble and innocent may find difficult to resist. A report to the British House of Commons this year highlighted the case of an elderly British citizen called Derek Bond, who was arrested, at gunpoint, in February 2003 while on holiday in South Africa. After being held for three weeks, it turned out that the American extradition request was based on a fraudster who had stolen Mr Bond’s identity.

A second concern is deeds that count as crimes in one country but not another. In October 2008 an Australian Holocaust-denier, Gerald Fredrick Töben, was arrested at Heathrow Airport while flying from America to Dubai. Germany wanted his extradition for publishing anti-Semitic material on his website. (An English court freed him after a month.) Free-speech defenders worry that in other cases vaguely worded laws against “xenophobia” could be used to extradite the controversial and eccentric, as well as the obnoxious.

The third worry is that rules on legal aid, interpreting, bail and the like vary widely between countries. That makes gaining justice in a foreign court dauntingly difficult. Such worries are particularly acute in the EU, where the “European arrest warrant”, a fast-track procedure agreed in 2002, has removed many of the bureaucratic barriers to speedy extradition—but also some of the safeguards. Charlotte Powell, a London-based barrister and chair of the Extradition Lawyers’ Association, notes that the desire to harmonise procedural rules has outstripped the harmonisation of substantive elements.

Moreover, the grounds on which a court may refuse extradition still vary sharply country by country. If a crime took place several years ago, notes Ms Powell, a Greek court may regard it as time-barred and decline to extradite, even though other EU countries would count it as still prosecutable. Another difference concerns what lawyers call “specialty”: making sure the person is prosecuted only for the crime the extradition order cites. Some countries’ courts are finicky about this. Others see warrants as small hooks to catch big fish.

Criminal-justice authorities understandably want their reach to be global. But they make mistakes. Standing trial in your own country is likely to give you a better chance of dealing with such errors than if you are hauled into court abroad—assuming, of course, that you come from a law-governed and civilised country.

Europeview/Germany and CEE

2009-10-01T18:50:00.001Z

Europe.view

Lostpolitik
Oct 1st 2009
From Economist.com

Will the Free Democrats quell east Europe's fears?

EASTERN EUROPE owes a huge debt to the Germans. By showing that capitalism worked better than planned economies, West Germany helped win the cold war. East Germans kept trying to escape, forcing the Soviet-backed regime to build the Berlin Wall, destroying communism’s claim to be popular. East German people-power brought that wall down and tore up Stalin’s map of post-war Europe by demanding unification. In the 1990s Germany forced expansion onto the European Union’s agenda and then made it happen (and paid for it, German taxpayers would add sourly). And to this day, Germany’s Vergangenheitsbewältigung is a template for other countries wanting to come to terms with their past.

All the odder, therefore, that Germany is not more popular in the east. The burgeoning trade and political ties between Berlin and Moscow have spooked the countries in between. Germany and Russia are planning a condominium, just like 70 years ago, the worriers say. An opinion poll last year showing that a substantial majority of Germans would oppose the military defence of the Baltic states if they were attacked further stoked those fears. The countries between Russia and Germany feel squeezed—all the more so now that America is distracted, NATO divided, and Britain out of the game.

Germans find that sort of talk rather hurtful, especially when it is laced with crude references to the Nazi past. Some Polish politicians have made a speciality of that. The result is a vicious circle. German policymakers see the easterners as ungrateful and mad, so concentrate more on the profitable business of selling things to Russia. The easterners see a game being played over their heads, and get even crosser.

Until this weekend, the easterners had a point. Even the best German diplomats could not conceal the fact that Germany’s economic relationship with Russia to some extent trumped the security fears of the nominal allies in the east. German scepticism about NATO expansion was well-known. Even the departure of the Russia-loving Gerhard Schröder, who after leaving the chancellery went to work for a German-Russian gas pipeline, made little difference. Angela Merkel might have the right instincts, the Poles and others reckoned, but she was constrained by the grand coalition with Mr Schröder’s old party, the Social Democrats.

This weekend’s election offers a glimmer of light. The Social Democrats are out and the liberal Free Democrats (FDP) are in. Their leader, Guido Westerwelle (pictured at right, above), is likely to be Germany’s new foreign minister. Although a foreign-policy novice, one of his few notable campaigns was against Mr Schröder’s business dealings. The ex-chancellor fought a lengthy legal battle to gain an injunction preventing Mr Westerwelle from repeating allegations of improper conduct.

It would be premature for the east Europeans to pin much hope on Mr Westerwelle. Even in the days of his FDP predecessor, the legendary Hans-Dietrich Genscher, it was the federal chancellery, not the foreign ministry, that largely decided Germany’s foreign policy. Freed from the baleful influence of the Social Democrats, Mrs Merkel may be tougher with Russia on some issues. But Germany’s business lobby is the biggest supporter of the “Russia First” policy. And conservatives in Mrs Merkel’s CDU/CSU have the closest ties to German industry.

What could make a difference is having a solidly pro-nuclear German government. If Germany makes serious plans to extend the lives of its nuclear power stations, it reduces the country’s dependence on imported Russian gas—the cornerstone of the “special relationship” between Berlin and Moscow. Perhaps countries such as Poland, which love whinging about energy security but have been slow in doing anything practical, may then get round to following Germany’s example. Just don’t expect gratitude.

Happy anniversary!

2009-09-24T16:30:00.001Z

Europe.view

Happy holidays
Sep 24th 2009
From Economist.com

When to give good and bad news to east Europeans
HISTORY was a long time ago, unless it happened to you. Anyone with bad news for eastern Europe forgets that at his peril. The American administration stumbled this month when it cancelled a planned missile-defence base in Poland on September 17th. That is the anniversary of the Soviet attack on Poland in 1939, which sealed the country’s fate for the next 50 years.

Poland produces more history than it consumes, so almost any day will be an anniversary of something—usually something miserable. But this was a blooper: it would be a bit like giving America bad news about its security in the Pacific region on December 7th. That (as many Poles probably don’t know) is the anniversary of the Japanese surprise attack on Pearl Harbour in 1941.

Some big dates are also national holidays, but many others are not. So here is a handy guide to days that carry heavy emotional baggage.

If modern Russia wants to reach out to Estonia, or if western countries want to offer support, February 2nd would be a good day. That is the anniversary of the 1920 Tartu peace treaty, when Soviet Russia recognised the newborn republic. It is still legally valid but presently ignored by the Kremlin. For Latvia, the counterpart is the Riga peace treaty signed on August 11th of that year.

Poland and Lithuania could settle their still-festering differences (mainly arcane wrangles about spelling) on February 2nd. On that date in 1386, the Polish parliament elected Jogaila, Lithuania’s Grand Duke, to be king, immediately after he renounced paganism and married his Polish counterpart, Jadwiga, starting a mighty dynastic union. May 3rd would also work: in 1791, the Polish-Lithuanian commonwealth adopted Europe’s first modern national constitution.

Conversely, if the west has more bad news for Poland, it should at all costs avoid giving it between February 4th and 11th. Those are the dates of the infamous Yalta conference in 1945, when Stalin bamboozled Franklin Roosevelt into accepting the Sovietisation of Poland. The Molotov-Ribbentrop Pact (signed between Soviet and Nazi foreign ministers on August 23rd 1939) has similar echoes.

For the Czechs and Slovaks, August 20th and 21st are the miserable anniversary dates of the Soviet invasion of Czechoslovakia in 1968. Other bad days for Czechs include November 8th, when Bohemian nobility and Protestantism were defeated at the Battle of the White Mountain in 1620; and February 25th, when a communist putsch in 1948 extinguished a brief period of post-war freedom. Be particularly nice to any Czech foreign ministers you meet on March 10th. In 1948 the most famous of them, the much-loved Jan Masaryk, died in a mysterious suicide.

Tread carefully with Hungarians on June 4th. That is the anniversary of the treaty of Trianon which in 1920 dismembered old imperial Hungary. Hungarians are also particularly sombre on November 4th, when a Soviet invasion crushed their anti-communist uprising in 1956.

Every other country in eastern Europe and plenty elsewhere, have similar dates: they are left out this article merely because of reasons of space. Readers are welcome to complete the calendar by adding their comments.

But the big question is why the anniversaries still matter so much. One reason is the feeling of suffocation during communist rule, when marking the real version of history was risky. Another is the sense that historical wrongs are not yet put right. No outsider intervening in a wrangle between Denmark or Germany would worry about avoiding August 1st, which in 1860 marked a turning point in the bitter row about the Schleswig-Holstein Question. As you go east, the wounds are rawer.

Baltic turnaround?

2009-09-24T16:29:00.000Z

Baltic economies

Feeling a bit fragile

Sep 24th 2009
From The Economist print edition

A Baltic meltdown has been averted, but the gloom may yet last a bit longer

WORRIES about a financial meltdown across eastern Europe have receded, thanks to generous outside support, some canny policies and the start of a recovery in western Europe. Poland, the region’s biggest economy, has managed to avoid recession altogether. But even the worst-hit countries are breathing more easily.

This week Moody’s, a rating agency, noted a “fragile stabilisation” in the three most vulnerable: Hungary, Latvia and Iceland. Some mildly encouraging signs are visible. Thanks to plunging imports, and foreign investors refinancing local subsidiaries, Latvia’s second-quarter current account showed a surplus of 14.2% of GDP. A year ago it was a 15.1% in deficit. The economy shrank by a grim 18.7% year-on-year, but the worst seems to be over and some industries are picking up.

The slowdown has hurt the banks, which have lost nearly $1 billion this year. That is a big hit for the shareholders, mainly Nordic, whose managers lent so recklessly. But contrary to expectations, only one big local bank had to be rescued and nobody has pulled out. Doomsters who forecast bank runs and devaluation in Latvia (followed by Estonia and Lithuania, which also have currencies pegged to the euro) have little to show for their gloomy prophecies.

Yet Latvia, in particular, is still in an economic and political mess. It survives because outside lenders, chiefly the European Union and the IMF, think it worth propping the country up with smallish loans (by bail-out standards). The European Commission lent €1.2 billion ($1.8 billion) in July, following an IMF-led €7.5 billion agreement in December. In theory, the money is conditional on spending cuts and tax rises. The IMF agreed, reluctantly, to a budget deficit of 8.5% of GDP in 2010, down from 10% this year. The measures have been striking: some civil servants’ pay is down by a third. But that followed big rises during the boom years.

The real shortcoming is that Latvia’s squabbling politicians have ducked deeper changes in the public sector and the civil service. The People’s Party, supposedly part of the ruling coalition, says it may block a planned property tax. The government promised its lenders it would implement this, but it has to secure support in parliament. Some senior politicians in the People’s Party want to swap the currency peg for a band. The EU’s monetary affairs commissioner, Joaquín Almunia, lectured the Latvian prime minister, Valdis Dombrovskis, recently about the need for “national consensus” behind the austerity plan. But the prime minister cannot crack the whip over his coalition’s powerful party chiefs, who prefer carping about government policies to voting for them.

Outsiders find Latvia’s politicians unimpressive and exasperating. But they are unwilling to cut the country adrift or to push it into a devaluation. Turmoil in Latvia could easily spread to the neighbours, or even to Hungary (see article). Latvia’s biggest asset is its neighbours’ popularity, says one weary international banker. Foreign money may plug the public finances for a bit and so avert disaster. But it is not a recipe for prosperity. Latvia did not solve its growth-choking problems, such as corruption and poor public services, when times were good. Nor is it solving them when they are bad.

Fakt article

2009-09-24T10:42:00.004Z

This is the English version. The Polish version (behind a pay barrier) is available here

Once is chance. Twice is bad luck. Three times is enemy action. That is the easy conclusion to draw about America’s treatment of what was until recently its strongest and most important European ally.

The first snub came over Radek Sikorski’s candidacy for the secretary-general’s post at NATO. His chances were slim, but he still deserved respectful treatment from America. Not a bit of it: Mr Sikorski struggled even to get a meeting at the National Security Council
Then came the commemorations on September 1st-a black day in Polish history and worthy of high-level attendance by Poland’s friends (Britain’s foreign secretary David Miliband turned up, and politely sat in a back row listening to other people make speeches). The initial American choice to lead the delegation bordered on the insulting: William Perry, who as defence secretary under Clinton opposed Poland’s NATO application. Only belatedly did the administration send Jim Jones, the national security adviser. By then the damage was done.

The third snub was the worst. Militarily and technologically, the decision to scrap George Bush’s ambitious, costly and unpopular missile defence plans makes sense. It would have been easy to reassure Poland and the Czech Republic that America was still taking their security seriously. Beefing up NATO’s planning, holding some military manoeuvres (to match Russia’s sinister Zapad-09), making it clear that the Patriots would be real ones-all would have showed America’s commitment to Poland. Instead, there was a hurried, almost amateurish announcement, with late night phone calls and a low-level delegation scurrying between Warsaw and Prague. And all of it on one of the blackest days in Polish history.

Actually, it is not enemy action-just carelessness and ignorance. I have tried explaining to American officials that September 17th is the Polish equivalent of Pearl Harbour. They sometimes seem only dimly aware of what I am talking about. For the youngsters at the White House and State Department, this is ancient history. At the top, there is the same feeling of detachment. Mr Obama is the first president of the United States with no sentimental or family ties to Europe. It would be quite unfair to say that for Mr Obama, Europe stands for slavery. It just doesn’t stand for much.

In particular, on the foreign-policy to-do list, eastern Europe’s security jostles for attention with other far more pressing problems (Afghanistan, Middle East, climate change, North Korea, Iran-and of course Russia). Until something goes badly wrong, it won’t be a priority.

The worst thing is that Russia knows this. America doesn’t need to sell out eastern Europe. Neglect will do fine. In theory, NATO’s security guarantee still holds. But without real contingency planning and regular manoeuvres, this is pleasant fiction, not hard fact. Once it becomes clear that Washington’s attention is elsewhere, Russia and its west European friends (Germany chiefly, but also Italy, Austria and others) can do their dirty deals, especially in energy, unchecked.. Without a powerful outsider to act as a counterweight, Europe’s power-politics are always vulnerable to a Russian-German deal. It has happened before and now, with America weak and distracted, it can happen again.

Sunday Telegraph on Obama

2009-09-24T10:37:00.003Z

Published: 8:30AM BST 20 Sep 2009

President Barack Obama is beginning to look out of his depth

It is lovely to feature in other people's dreams. The problem comes when they wake up. Barack Obama is an eloquent, brainy and likeable man with a fascinating biography. He is not George Bush. Those are great qualities. But they are not enough to lead America, let alone the world.

Admittedly, the presidential to-do list is terrifying. The economy requires his full-time attention. So does health-care reform. And climate change. Indeed, he deserves praise for spending so much time on thankless foreign policy issues. He is tackling all the big problems: restarting Middle East peace talks, defanging Iran and North Korea and a "reset" of relations with Russia. But none of them are working.

Regimes in Moscow, Pyongyang and Tehran simply pocket his concessions and carry on as before. The picture emerging from the White House is a disturbing one, of timidity, clumsiness and short-term calculation. Some say he is the weakest president since Jimmy Carter.
The grizzled veterans of the Democratic leadership in Congress have found Mr Obama and his team of bright young advisers a pushover. That has gravely weakened his flagship domestic campaign, for health-care reform, which fails to address the greatest weakness of the American system: its inflated costs. His free trade credentials are increasingly tarnished too. His latest blunder is imposing tariffs on tyre imports from China, in the hope of gaining a little more union support for health care. But at a time when America's leadership in global economic matters has never been more vital, that is a dreadful move, hugely undermining its ability to stop other countries engaging in a ruinous spiral of protectionism.
Even good moves are ruined by bad presentation. Changing Mr Bush's costly and untried missile-defence scheme for something workable was sensible. But offensively casual treatment of east European allies such as Poland made it easy for his critics to portray it as naïve appeasement of the regime in Moscow.
Mr Obama's public image rests increasingly heavily on his extraordinary speechifying abilities. His call in Cairo for a new start in relations with the Muslim world was pitch-perfect. So was his speech in Ghana, decrying Africa's culture of bad government. His appeal to both houses of Congress to support health care was masterly – though the oratory was far more impressive than the mish-mash plan behind it. This morning he is blitzing the airwaves, giving interviews to all America's main television stations.

But for what? Mr Obama has tactics a plenty - calm and patient engagement with unpleasant regimes, finding common interests, appealing to shared values - but where is the strategy? What, exactly, did "Change you can believe in" – the hallmark slogan of his campaign – actually mean?

The President's domestic critics who accuse him of being the sinister wielder of a socialist master-plan are wide of the mark. The man who has run nothing more demanding than the Harvard Law Review is beginning to look out of his depth in the world's top job. His credibility is seeping away, and it will require concrete achievements rather than more soaring oratory to recover it.

Edward Lucas writes for The Economist and is the author of The New Cold War (Bloomsbury, £8.99)