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Europe: Le terrible échec de la politique d’austérité économique

February 21, 2012 4 comments

For months, I have been arguing that economic austerity in time of severe economic downturn is highly counter-productive. The last thing the economy of a country needs when a country is going through a recessionary cycle (or experiencing a contraction of its economic activities like in many European countries) is a drastic reduction of public spending. The reason for that is very simple: when the economy is in a recessionary cycle, an influx of spending (even deficit spending) is a must to boost and trigger economic growth, consumption, create jobs, and restart the economic engines against. Once those economic engines are restarted, then an increase in taxes (on the highest brackets) and progressive cuts in spending (spending in non-economic growth sectors) can be established again. Cutting spending when spending is needed the most is like depriving a patient of a blood transfusion when that patient is heavily hemorrhaging from every orifice, which would ultimately lead to the death of the patient.

Well, European countries of the eurozone such as France, Ireland, Spain, Italy, Portugal, and i add to them the U.K (I am not even going to talk about Greece in this post. My position on Greece has been clearly stated in previous posts here and specially here) have been engaged in drastic  reductions of their public spending since the beginning of this crisis. These are the infamous austerity policy packages that most eurozone countries (and the U.K) have put in place to calm down financial markets. The result is an economic growth close to zero in almost all the eurozone (and the U.K). The economic forecast for 2013 and 2014 if the same policies are followed is even worse–i.e., an economic growth around 0% leading to a long lasting recession, high unemployment, and even higher public deficits. These countries fundamentally misunderstood the demands of the financial markets. What markets (across the globe) have demanded since the beginning of the euroze crisis is not an immediate and a drastic reduction of public deficits, but credible plans and policies for generating positive economic growth again. Most markets have already factored in and digested the fact that the eurozone countries have high deficits and those deficits won’t be reduced anytime soon, and the debt won’t be repaid in the foreseeable future. There is nothing that can be done about that in the short-term, and worrying about balancing budgets and cutting spending during a recession is an economic suicide.

This fundamental misunderstanding of the crisis led most European political leaders (best example of this misguided strategy is David Cameron and Nicolas Sarkozy) to engage in crafting crazy austerity packages to reduce the yield on government bonds and securities (which means in everyday language, borrowing money at a lower interest rate). And in doing so, these political leaders sacrificed long-term economic growth for short-term financial gain and an ephemeral stability. At the end, they pretty much got nothing (most eurozone countries lost their triple-A rating–except Germany–and most eurozone banks are in a bad financial situation). This strategy would only lead to the deepening of the economic downturn on the short-term, and turning it into a long-term economic stagnation.

This is what has been happening in the eurozone countries (and England), and the data recently released by the IMF, OECD, and the Government Growth & Development Center illustrate  that clearly. Countries engaged in cutting spending (what i call slash-and-burn-economics) and austerity policies are performing worse than countries that did not. In fact, the data show that countries that adopted austerity packages have worsened their economic situation.

For a better understanding of this, i yield the floor to Dr. Paul Krugman, Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and winner of the  Nobel Prize in Economics (aka Sveriges Riksbank Prize in Economic Sciences) for his work on New Trade Theory and New Economic Geography. Since the beginning of the crisis, Dr. Krugman has been writing a series of articles in the New Times explaining the origin(s) of the crisis and advocating for the soundest way of getting out of it. Needless to say that Dr. Krugman has been right on almost everything he has said.

January 22, 2012

Is Our Economy Healing?

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How goes the state of the union? Well, the state of the economy remains terrible. Three years after President Obama’s inauguration and two and a half years since the official end of the recession, unemployment remains painfully high.

But there are reasons to think that we’re finally on the (slow) road to better times. And we wouldn’t be on that road if Mr. Obama had given in to Republican demands that he slash spending, or the Federal Reserve had given in to Republican demands that it tighten money.

Why am I letting a bit of optimism break through the clouds? Recent economic data have been a bit better, but we’ve already had several false dawns on that front. More important, there’s evidence that the two great problems at the root of our slump — the housing bust and excessive private debt — are finally easing.

On housing: as everyone now knows (but oh, the abuse heaped on anyone pointing it out while it was happening!), we had a monstrous housing bubble between 2000 and 2006. Home prices soared, and there was clearly a lot of overbuilding. When the bubble burst, construction — which had been the economy’s main driver during the alleged “Bush boom” — plunged.

But the bubble began deflating almost six years ago; house prices are back to 2003 levels. And after a protracted slump in housing starts, America now looks seriously underprovided with houses, at least by historical standards.

So why aren’t people going out and buying? Because the depressed state of the economy leaves many people who would normally be buying homes either unable to afford them or too worried about job prospects to take the risk.

But the economy is depressed, in large part, because of the housing bust, which immediately suggests the possibility of a virtuous circle: an improving economy leads to a surge in home purchases, which leads to more construction, which strengthens the economy further, and so on. And if you squint hard at recent data, it looks as if something like that may be starting: home sales are up, unemployment claims are down, and builders’ confidence is rising.

Furthermore, the chances for a virtuous circle have been rising, because we’ve made significant progress on the debt front.

That’s not what you hear in public debate, of course, where all the focus is on rising government debt. But anyone who has looked seriously at how we got into this slump knows that private debt, especially household debt, was the real culprit: it was the explosion of household debt during the Bush years that set the stage for the crisis. And the good news is that this private debt has declined in dollar terms, and declined substantially as a percentage of G.D.P., since the end of 2008.

There are, of course, still big risks — above all, the risk that trouble in Europe could derail our own incipient recovery. And thereby hangs a tale — a tale told by a recent report from the McKinsey Global Institute.

The report tracks progress on “deleveraging,” the process of bringing down excessive debt levels. It documents substantial progress in the United States, which it contrasts with failure to make progress in Europe. And while the report doesn’t say this explicitly, it’s pretty clear why Europe is doing worse than we are: it’s because European policy makers have been afraid of the wrong things.

In particular, the European Central Bank has been worrying about inflation — even raising interest rates during 2011, only to reverse course later in the year — rather than worrying about how to sustain economic recovery. And fiscal austerity, which is supposed to limit the increase in government debt, has depressed the economy, making it impossible to achieve urgently needed reductions in private debt. The end result is that for all their moralizing about the evils of borrowing, the Europeans aren’t making any progress against excessive debt — whereas we are.

Back to the U.S. situation: my guarded optimism should not be taken as a statement that all is well. We have already suffered enormous, unnecessary damage because of an inadequate response to the slump. We have failed to provide significant mortgage relief, which could have moved us much more quickly to lower debt. And even if my hoped-for virtuous circle is getting under way, it will be years before we get to anything resembling full employment.

But things could have been worse; they would have been worse if we had followed the policies demanded by Mr. Obama’s opponents. For as I said at the beginning, Republicans have been demanding that the Fed stop trying to bring down interest rates and that federal spending be slashed immediately — which amounts to demanding that we emulate Europe’s failure.

And if this year’s election brings the wrong ideology to power, America’s nascent recovery might well be snuffed out.

January 26, 2012, 11:04 am

The Greater Depression

One thing everyone always says is that while this Lesser Depression may be bad, it’s nothing like the Great Depression.

But this is in part an America-centered view: we had a very bad Great Depression, and have done better than many other countries this time around. As Jonathan Portes at Not the Treasury View points out, the ongoing slump in Britain is now longer and deeper than the slump in the 1930s (the figure shows how far real GDP was below its previous peak in various British recessions; the red line is 1930-34, the black line the current slump):

I believe that when I began criticizing the Cameron government’s push for austerity, some right-leaning British papers demanded that I shut up. But the original critique of austerity is holding up pretty well, if you ask me.

January 28, 2012, 1:47 pm

The Worse-than Club

Further thoughts on the observation that the current British slump has now gone on longer than the slump of the 1930s. Is Britain unique?

No, it isn’t.

The NIESR has developed a monthly GDP series for Britain, which lets it use real-time data for the comparison. I can’t replicate that, but I can use the Maddison historical data and IMF data — including projections for 2012 and 2013 — to do some comparisons. When you do this for the UK, the worse-than pops right out (I use annual data; year zero is 1929 or 2007, and real GDP is expressed as a percentage of the pre-crisis peak in each case):

France and Germany are doing much better than in the early 1930s — but then France and Germany had terrible, deflationist policies in the early 1930s. (It was the Brüning deflation, not the Weimar inflation, that brought you-know-who to power).

With two of Europe’s big four economies doing worse than they did in the Great Depression, at least in terms of GDP — and that’s three of five if you count Spain — do you think the austerity advocates might consider that maybe, possibly, they’re on the wrong track?

January 29, 2012

The Austerity Debacle

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Last week the National Institute of Economic and Social Research, a British think tank, released a startling chart comparing the current slump with past recessions and recoveries. It turns out that by one important measure — changes in real G.D.P. since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British G.D.P. had regained its previous peak; four years after the Great Recession began, Britain is nowhere close to regaining its lost ground.

Nor is Britain unique. Italy is also doing worse than it did in the 1930s — and with Spain clearly headed for a double-dip recession, that makes three of Europe’s big five economies members of the worse-than club. Yes, there are some caveats and complications. But this nonetheless represents a stunning failure of policy.

And it’s a failure, in particular, of the austerity doctrine that has dominated elite policy discussion both in Europe and, to a large extent, in the United States for the past two years.

O.K., about those caveats: On one side, British unemployment was much higher in the 1930s than it is now, because the British economy was depressed — mainly thanks to an ill-advised return to the gold standard — even before the Depression struck. On the other side, Britain had a notably mild Depression compared with the United States.

Even so, surpassing the track record of the 1930s shouldn’t be a tough challenge. Haven’t we learned a lot about economic management over the last 80 years? Yes, we have — but in Britain and elsewhere, the policy elite decided to throw that hard-won knowledge out the window, and rely on ideologically convenient wishful thinking instead.

Britain, in particular, was supposed to be a showcase for “expansionary austerity,” the notion that instead of increasing government spending to fight recessions, you should slash spending instead — and that this would lead to faster economic growth. “Those who argue that dealing with our deficit and promoting growth are somehow alternatives are wrong,” declared David Cameron, Britain’s prime minister. “You cannot put off the first in order to promote the second.”

How could the economy thrive when unemployment was already high, and government policies were directly reducing employment even further? Confidence! “I firmly believe,” declared Jean-Claude Trichet — at the time the president of the European Central Bank, and a strong advocate of the doctrine of expansionary austerity — “that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”

Such invocations of the confidence fairy were never plausible; researchers at the International Monetary Fund and elsewhere quickly debunked the supposed evidence that spending cuts create jobs. Yet influential people on both sides of the Atlantic heaped praise on the prophets of austerity, Mr. Cameron in particular, because the doctrine of expansionary austerity dovetailed with their ideological agendas.

Thus in October 2010 David Broder, who virtually embodied conventional wisdom, praised Mr. Cameron for his boldness, and in particular for “brushing aside the warnings of economists that the sudden, severe medicine could cut short Britain’s economic recovery and throw the nation back into recession.” He then called on President Obama to “do a Cameron” and pursue “a radical rollback of the welfare state now.”

Strange to say, however, those warnings from economists proved all too accurate. And we’re quite fortunate that Mr. Obama did not, in fact, do a Cameron.

Which is not to say that all is well with U.S. policy. True, the federal government has avoided all-out austerity. But state and local governments, which must run more or less balanced budgets, have slashed spending and employment as federal aid runs out — and this has been a major drag on the overall economy. Without those spending cuts, we might already have been on the road to self-sustaining growth; as it is, recovery still hangs in the balance.

And we may get tipped in the wrong direction by Continental Europe, where austerity policies are having the same effect as in Britain, with many signs pointing to recession this year.

The infuriating thing about this tragedy is that it was completely unnecessary. Half a century ago, any economist — or for that matter any undergraduate who had read Paul Samuelson’s textbook “Economics” — could have told you that austerity in the face of depression was a very bad idea. But policy makers, pundits and, I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know. And millions of workers are paying the price for their willful amnesia.

February 19, 2012

Pain Without Gain

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Last week the European Commission confirmed what everyone suspected: the economies it surveys are shrinking, not growing. It’s not an official recession yet, but the only real question is how deep the downturn will be.

And this downturn is hitting nations that have never recovered from the last recession. For all America’s troubles, its gross domestic product has finally surpassed its pre-crisis peak; Europe’s has not. And some nations are suffering Great Depression-level pain: Greece and Ireland have had double-digit declines in output, Spain has 23 percent unemployment, Britain’s slump has now gone on longer than its slump in the 1930s.

Worse yet, European leaders — and quite a few influential players here — are still wedded to the economic doctrine responsible for this disaster.

For things didn’t have to be this bad. Greece would have been in deep trouble no matter what policy decisions were taken, and the same is true, to a lesser extent, of other nations around Europe’s periphery. But matters were made far worse than necessary by the way Europe’s leaders, and more broadly its policy elite, substituted moralizing for analysis, fantasies for the lessons of history.

Specifically, in early 2010 austerity economics — the insistence that governments should slash spending even in the face of high unemployment — became all the rage in European capitals. The doctrine asserted that the direct negative effects of spending cuts on employment would be offset by changes in “confidence,” that savage spending cuts would lead to a surge in consumer and business spending, while nations failing to make such cuts would see capital flight and soaring interest rates. If this sounds to you like something Herbert Hoover might have said, you’re right: It does and he did.

Now the results are in — and they’re exactly what three generations’ worth of economic analysis and all the lessons of history should have told you would happen. The confidence fairy has failed to show up: none of the countries slashing spending have seen the predicted private-sector surge. Instead, the depressing effects of fiscal austerity have been reinforced by falling private spending.

Furthermore, bond markets keep refusing to cooperate. Even austerity’s star pupils, countries that, like Portugal and Ireland, have done everything that was demanded of them, still face sky-high borrowing costs. Why? Because spending cuts have deeply depressed their economies, undermining their tax bases to such an extent that the ratio of debt to G.D.P., the standard indicator of fiscal progress, is getting worse rather than better.

Meanwhile, countries that didn’t jump on the austerity train — most notably, Japan and the United States — continue to have very low borrowing costs, defying the dire predictions of fiscal hawks.

Now, not everything has gone wrong. Late last year Spanish and Italian borrowing costs shot up, threatening a general financial meltdown. Those costs have now subsided, amid general sighs of relief. But this good news was actually a triumph of anti-austerity: Mario Draghi, the new president of the European Central Bank, brushed aside the inflation-worriers and engineered a large expansion of credit, which was just what the doctor ordered.

So what will it take to convince the Pain Caucus, the people on both sides of the Atlantic who insist that we can cut our way to prosperity, that they are wrong?

After all, the usual suspects were quick to pronounce the idea of fiscal stimulus dead for all time after President Obama’s efforts failed to produce a quick fall in unemployment — even though many economists warned in advance that the stimulus was too small. Yet as far as I can tell, austerity is still considered responsible and necessary despite its catastrophic failure in practice.

The point is that we could actually do a lot to help our economies simply by reversing the destructive austerity of the last two years. That’s true even in America, which has avoided full-fledged austerity at the federal level but has seen big spending and employment cuts at the state and local level. Remember all the fuss about whether there were enough “shovel ready” projects to make large-scale stimulus feasible? Well, never mind: all the federal government needs to do to give the economy a big boost is provide aid to lower-level governments, allowing these governments to rehire the hundreds of thousands of schoolteachers they have laid off and restart the building and maintenance projects they have canceled.

Look, I understand why influential people are reluctant to admit that policy ideas they thought reflected deep wisdom actually amounted to utter, destructive folly. But it’s time to put delusional beliefs about the virtues of austerity in a depressed economy behind us.

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Syrie: Mise à jour sur la situation en Syrie

February 19, 2012 Leave a comment

This post is courtesy of our friend Juan Cole

General Assembly Condemns Syria as Regime Bombards Homs Again

Posted on 02/17/2012 by Juan

The world condemned the Syria regime’s brutal crackdown on its own people at the UN General Assembly on Thursday. What would be the response of the ruling Baath Party? We didn’t have to wait long to find out.

On Friday morning, the Syrian armed forces subjected Baba Amr in Homs to one of the fiercest bombardments yet in the 14-day-old regime attempt to take back control of the rebellious city. Some observers allege that at the same time the regime’s hold on the north of the country has weakened. Revolutionaries appear also to have taken control of much of the city of Idlib.

At the UN, the Arab League presented a Saudi Arabian-crafted statement on Syria to the General Assembly. It condemned the state’s crackdown, which has cost thousands of civilian lives Of 193 nations, 137 voted in favor the resolution condemning the ruling Baath regime. Only 12 opposed, including Russia, China, Iran and Latin American friends of Iran, including Venezuela and Ecuador. (Venezuela is pledged to deliver oil to Syria at a time that it is facing economic sanctions and boycotts in other quarters.). The rest of the nations were absent or abstained.

The General Assembly vote was pursued by the Arab League out of knowledge that Russia and China would veto any strong censure at the level of the Security Council, as happened recently. Russia and China have trade interests in Baathist Syria, and also dislike the very idea of outside interference when putting down a popular revolt.

Unfortunately, the UNGA vote has no direct legal consequences. Unlike the UNSC, it cannot authorize the use of forces. It cannot refer cases to the International Criminal Court. The vote is symbolic more than anything else, and the Syrian opposition used it to advantage in video made after the resolution.

The world body’s vote came a day after Syrian President Bashar al-Assad pledged a February 26 vote in a referendum on a new constitution that would end Syria’s one-party state. Much of the opposition has decided to boycott the polls, believing that the whole thing is a stunt.

Aljazeera English reports:

Meanwhile, on Thursday Pulitzer-prize winning journalist Anthony Shadid died in Syria of an asthma attack. He had sneaked in from Lebanon to find out more about the military wing of the opposition. Lebanese-American Shadid made his mark with his belief in the dignity of the Arab citizen, his searching and humane intelligence, and his knowledge of Arabic, gained initially as a student in university Arabic classes. He set a high bar indeed for younger journalists who will come after him.

Sarkozy: Humour de campagne et les affiches de Sarko

February 18, 2012 8 comments

In every presidential election, the pundits and the media usually take a big interest in and over-analyze candidates’ posters, yard-signs and slogans. Yesterday, Nicolas Sarkozy unveiled his campaign slogan, La France Forte, and his campaign poster. Of course, it was not a surprise. Continuing on the theme of courage, strong leadership, and the savior of France, Sarkozy’s poster tries to embody these themes as accurately as possible.

However, once a campaign slogan and poster is out there, it belongs to the public. And if an incumbent president is unpopular, like Sarkozy is, the public would hijack that poster and the campaign theme and make it its own. That is exactly what happened to Sarkozy’s poster and slogan. Just hours after it was unveiled, blogs and websites were bubbling with literally hundreds of photo-shopped versions of the main campaign slogan and poster. You cannot Google Sarkozy’s slogan without getting some very funny and an extremely well-done spoofs. Basically, bloggers turned Sarkozy’s poster into a joke reflecting his popularity–or should i say, his unpopularity–and his hectic tenure in office.

Keeping with this well honored tradition of humor from the campaign trail, i decided to post what i thought were the funniest and the best variations of Sarkozy’s poster “La France Forte.”

Main Campaign Slogan and Poster

This one i thought was a great one

This one plays on Sarkozy’s obsession with Angela Merkel and Germany: This one should be titled Merkozy

La France Morte instead of La France Forte and a strong hint to the sinking of the Costa Concordia

Another variation of La France Morte

One that shows a deep-seated anger

And this is just funny

Lastly, I think this one should really be Sarkozy’s Campaign slogan and poster

Sarkozy: “Le brave capitaine du navire dans une violente tempête.” Je l’ai prédit il ya de cela quatre mois

February 16, 2012 3 comments

In October 27, 2011, about 4 months ago, i argued that Sarkozy would follow G.W. Bush’s 2004 reelection campaign strategy. In this strategy Bush II presented himself to the American people as the “experienced [candidate], battle-hardened, steady-handed leader and the captain who navigated the treacherous waters and brought Ship America to a safe harbor in these dire times.”

When i wrote those words, i did not think that Sarkozy would quote me almost verbatim four months later when he would announce his candidacy. Well, ladies and gentlemen, he just did. Here is what Sarkozy said yesterday evening on TF1

Quoting from my October 2011 post, i said that

Sarkozy’s reelection campaign strategy will look [exactly like Bush’s reelection campaign]. [Sarkozy] cannot run on domestic issues. He has one of the worst record in job creation of the fifth republic; he has introduced highly controversial reforms that have not yielded any results (social security reform, retirement reform, education and so forth); he has a poor record on immigration control; he has a poor record on the economy and economic growth; and he has a poor record on security. During his tenure, deficit spending went through the roof and the overall charge of the national debt has tremendously increased. So what else out there is left to run on? In two words: Leadership, and national unity.

Well, tonight Sarkozy proved me right. He is the captain of Ship France and he cannot abandon the ship in this terrible storm. In reality, the options before Sarkozy were/are very limited. Since he cannot run on his record, he must run away from it. But the question, what can he run since he cannot run on his record? The answer is leadership. Sarkozy is betting big on his leadership quality, on his manhood, on his Savor-of-France status. Is it going to be enough? Yes, but at one condition: he has to attack Hollande violently, mercilessly, and negatively. I predict that this is going to be the nastiest electoral campaign in the history of France because any other campaign style would lead directly Hollande to elected easily.

Say whatever you want about Sarkozy, the man is a fighter. And he will fight until the bitter end. The problem with conducting a no holds barred, scorched earth negative campaign is that the attacker tends to increase his unfavorable ratings (unfovorables in electoral campaign jargon are the negatives of the candidates). Of course, the attacked candidate gets hurt in the process and loses several points, but the attacker almost always sees his negatives increases as well. Sarkozy has already huge favorable ratings (the spread is about 20 points against Sarkozy right now and has been stable for several months now) and going on the attack can literally sink his campaign. So, i am guessing that it is not going to be Sarkozy who would do the daily attacking, the most dirtiest and nastiest attacking; he will delegate that to one of his faithful campaign lieutenants–preferably someone who is trusted by the public, even liked by the public; someone with a beautiful smile and an ease with words; someone who has the reputation of a nice guy or girl–to do the dirty work.  For negative campaigning to be efficient it must look like normal innocent electoral politics. Briefly stated, the attacker must take the pettiness, the rapacity, and the meanness away from the attack and couch the whole thing in normalcy.

So, brace yourself Holland, a shit storm is about to hit you. Sarkozy could get away with such strategy if Hollande is not ready strategically and methodically to respond, and if he gets distracted by the 1001 forthcoming little daily attacks. Bush proved that this strategy can be successful. So, there is a successful model out there to successfully execute such a strategy. There is also the unsuccessful counter-strategy model of what-not-to-do.  Yes, absolutely this strategy can be successful if the Socialist Party and François Hollande roll-over and play dead. This is the time for the PS and for Hollande to go on the offensive. Hollande cannot afford to play defense on the theme of leadership. Hollande cannot let Sarkozy own the theme of leadership. As the old saying goes, the best defense is offense; this is more true in politics than in sport. If Hollande allowed Sarkozy to capture the debate and dictate the tempo and the themes upon which the campaign would be fought, the socialist candidate would lose. Period. There is no doubt about this.  Moreover, if Hollande let’s Sarkozy frame him as a weak, divisive, and an untrustworthy leader, Hollande would lose. Hollande has 3 deadly weapons in his arsenal: 1) hammer Sarkozy’s record daily; 2) don’t run against Sarkozy the man, run against Sarkozy the incumbent president with a bad record; and 3) attack Sarkozy’s strongest suit, which is leadership. If Hollande neutralizes Sarkozy’s leadership theme, he wins. Ladies and gentlemen, electoral politics is mostly a game of perception and expectation, and if you let the voters see you as weak, you might as well pack up and go home. That’s why Hollande has to fight Sarkozy on the theme of leadership.

Sarkozy: Escadron, A Droite, Salu-ez.

February 11, 2012 3 comments

Today’s post is an attempt to catch up on the lasted news and the evolution of the French presidential election. We have had quite a week. First, Claude Guéant and his “civilizations are not equal” declaration, then Sarkozy’s long interview in Le Figaro Magazine titled “Mes Valeurs Pour La France”, and the possibility that Marine Le Pen will not be able to gather the 500 necessary signatures to be able to be on the ballot.  Well first, let me clear one thing: Sarkozy is running, and there was never a doubt in my mind (or on his for that matter) that he wasn’t going to run again. Those who thought otherwise either don’t know much about politics or  have not been paying close attention to the Sarkozy circus.

So, this week, we have Guéant, Sarkozy, and Le Pen. The question is: what is the link between the 3? And how does Guéant’s declaration about civilizations play a role in helping Sarkozy win his reelection bid while at the same time taking a sharp ideological turn to his right? Well, everything is linked. It is like jigsaw puzzle and each little piece fits in its little place, and when all the pieces are assembled, the resulting image is Sarkozy in the Élysée Palace for 5 more years. Allow me to explain all of this, folks.

First, we start with Marine Le Pen. As i write this post, Marine Le Pen does not have the 500 necessary signatures (500 parrainages) from local officials to be on the ballot. The likelihood that she does not get those signatures is real. So, who benefits the most from such a situation? Well, let us look at a poll conducted by Le Journal du Dimanche last weekend.

Clearly, the candidate who benefits the most from Marine Le Pen’s absence in the first round of the presidential election is Sarkozy. He goes from an average of 26.6% (i averaged all the polls from December 01, 2011 to February 01, 2012 of the following polling institutes: BVA, CSA, HARRIS, IFOP, IPSOS, LH2, Opinionway, and TNS-SOFRES) to a 33% in the first round. This is a jump of more than 6%, while all other candidates maintain their normal statistical scores. Clearly, the one who benefits the most from the absence of Le Pen is Sarkozy (statistically, he is 1% outside of the margin of error upper bound). The problem for Sarkozy is that he still loses the second round badly to Holland even if Le Pen is not on the first round ballot (a difference of about 8 percentage points). Where can Sarkozy get 8 more percentage points to close the gap with Hollande in the second round and win the election? Most importantly, what can he do to close that gap in the second round and get 6 or 8 points to win? Here enters the faithful soldier, Claude Guéant, and Sarkozy’s “Mes Valeurs Pour La France.”

The minister of the interior Guéant, in an informal meeting with the young UMPists,  said last week the following:

 Contrairement à ce que dit l’idéologie relativiste de gauche, pour nous, toutes les civilisations ne se valent pas

Roughly translated, Guéant said that “Contrary to the relativist ideology and doctrine of the left, for us, not all civilizations are created equal.” This is quite a statement. It is so radical that Heinrich Luitpold Himmler would be proud of his disciple. It is important to understand that Guéant is not talking about political regimes, social and economic structures, or even political values and democracy. Guéant is talking about the importance of civilizational hierarchy. It is also very important to understand that Guéant did not make a mistake or misspoke or his remarks were taken out of context or misconstrued. Guéant meant what he said and said what he meant. Why? Why would a politician so disciplined like Guéant say something so controversial in the middle of a very contested presidential campaign? Well, this is what American politicians and observers call a strong and loud dog-whistle, and its objective is to attract or get the attention of the voters of the National Front. If Sarkozy is seen as a believer (by the way, Sarkozy did not rebuke Guéant’s remarks or distance himself from his minister of the interior. He actually defended and supported his remarks) in the hierarchy of the civilizations–i.e., that the white Catholics are racially, ethnically, culturally, economically, and politically form a more advanced civilization than the rest of immigrants in France–he would be seeing as the ideological gap and distance between him and the FN voters. And if he closes that distance, he would get a big chunk of Marine Le Pen’s vote. Add to that the possibility that she might not be able to be on the ballot, you would have a very close first round, and possibly a close second one too.

In addition, Sarkozy’s long interview in Le Figaro Magazine (a puff piece of the worse kind of journalism i have ever seen. It’s not really journalism, it’s a Soviet-like propaganda piece) leaves no doubt about his sharp ideological turn to the right. The essence of the interview is: same-sex marriage? No; Voting right for foreigners? No;  Adoption rights for homosexuals? No; Euthanasia? No; Situation of the unemployed? Take the job we give you, get some training or go somewhere else, etc… So Sarkozy has clearly opted to campaign very hard on his right. In this interview he does not talk about the economic crisis or the dire situation of most of the French people, but he talks about values, “his values for France.” In a way, Sarkozy decided to run on the cleavage left-right and create a clear and sharp distinction between him and Hollande by positioning himself to right of the traditional right-left ideological divide. He is so far to the right that the distinction between him and Marine Le Pen is only a matter of rhetoric, not policies and values.

Most French incumbent  presidents (Giscard, Mitterrand or Chirac) when they decide to run for a second term, they choose to run on the theme of unity, of bringing the country together, of creating a synergy to lift the country to a higher level and so on. They also run on their records and showcase their accomplishments. Sarkozy cannot do that. I said it before in a previous post on this blog that Sarkozy will run away from his record as vampire runs away from the sunlight. His record is abysmal and he cannot use it and hope to even win the first round. So, he needs to find another theme. Thus, Sarkozy decided to run a value-driven campaign–right-wing value-driven campaign more accurately. Can he win with this strategy? Yes, the electoral math says so. If he runs hard to his right (with the possible absence of Marine Le Pen, this strategy works better), he secures for himself a high enough score in the first round to be able to face Hollande in the second round. The whole strategy of Sarkozy can be summarized in four words: winning the first round. Then, anything is possible. It is, as the French would say, strictement une campagne du premier tour

It is up to Hollande to counter this strategy by never running against Sarkozy the man, but running against Sarkozy’s record. Hollande must talk and hammer Sarkozy’s record ad nauseam. This is Hollande’s most lethal electoral weapon. No one really cares about Hollande’s policy proposals as most voters are ignorant and don’t understand the particularities of fiscal policies or budget reduction versus generation of new revenues. Hollande already passed the most important test–i.e., he looks and sounds as a capable politician and most French people can easily imagine him in the Élysée Palace handling the business of the state–now, he has to cleverly attack the record of Sarkozy and keep it the main focus of the campaign. One more point, it is important for Hollande not to lose control over the agenda. He has to set the agenda and dictate the rhythm of the themes debated during the upcoming weeks. It is easier to say this than do it, especially when one is running against and incumbent. However, by controlling as much as possible the agenda setting, Hollande controls as much as he can his destiny. In other word: this election should be a referendum on Sarkozy’s performance in office for the last 5 years. If Hollande does that, he wins.

Egypte: Des Hooligans ou les soupirs d’une possible contre-révolution?

February 5, 2012 2 comments

Egypt Soccer Protests Challenge Military Regime

Posted on 02/04/2012 by Juan

Friday saw another day of big protests and police repression in Egypt’s major cities. The protesters, who want the military to withdraw from politics and go back to the barracks, were galvanized by the soccer tragedy at Port Said on Wednesday, where some 74 persons were crushed in a stampede after local ultras (soccer hoodlums) supporting the al-Masri team attacked those cheering for Cairo’s al-Ahli team.

Ahli soccer rowdies had played a leading role in the overthrow of Hosni Mubarak in 2011, and I saw them lining up around Tahrir Square last summer to provide security to a second round of protests. Ultras had often fought police after games, and used that experience during the revolution. Those in Egypt’s dissident movement already predisposed to see the military and police as holdovers of the Mubarak regime darkly suspected that police in Port Said had their own thugs target Ahli ultras in an act of revenge.

Even level-headed Egyptian authorities, such as judges in the judiciary, took this theory seriously enough to forbid the head of the Egyptian soccer federation to travel abroad, along with the governor of Port Said.

You can’t really understand the Arab world unless you appreciate the importance of what Americans call soccer (in most parts of the world it is just “football”). The first thing people ask me in Egypt once they discover that I speak Arabic is not where I am from or what I do, but if I am a supporter of the Ahli team or the Zamalik one. (I’ve lived on the island of Zamalik and, despite the opprobrium it will bring me in some circles, admit to being a Zamalikawi). People are passionate about their soccer. Enthusiasm for the game has helped them get through a very difficult year with a bad economy. And, young soccer enthusiasts are shock troops of popular street movements.

Among Friday’s big protests was one at the Ministery of Interior building in Cairo, the HQ of the state security police and a center under the old regime of torture and arbitrary imprisonment and punishment. At one point it was reported that police and military had been forced to abandon the Cairo television station, but the station denied that report.

Large numbers of protesters, in Cairo, Alexandria and elsewhere, were injured or sickened by military-grade tear gas deployed by police and security forces. In one incident, the wind shifted and blew the tear gas back at the police, which crowds saw as divine intervention. They shouted triumphantly, “God is Great!” A protester and an officer were said to have been killed.

The Arabic press is reporting that angry crowds threw stones at the HQ of the security policy in Suez, and wire services say two were killed there.

Ironically, Egypt’s generals may ultimately be brought down not by civil libertarians or Muslim fundamentalists but by young soccer fanatics. That wouldn’t be an entirely new phenomenon in Egyptian history. An earlier generation of Ahli ultras played a role in anti-British agitations that led to Egypt’s independence.

Courtesy of Juan Cole