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Showing posts from June, 2011

The Killing Fields of Sri Lanka

Since the Dominion of Ceylon became independent from the British Empire in 1948, it has struggled to achieve stability between its majority Sinhala speaking people and minority Tamil speaking people. Although the first decade of so of freedom was generally a good time for the country, after the election of Soloman Bandaranaike in 1956, the country took a major wrong turning. The policies of radical Socialism and Sinhala nationalism that Mr. Bandaranaike and -after his assassination in 1959- his widow Sirimavo , adopted began to undermine national unity. The generally higher level of education of the Tamils meant that they were more represented in the civil service and and many levels of society. However the determination of the radical Sinhala to create an officially Sinhala speaking, officially Buddhist state alienated the Hindu Tamils and since most could not speak Sinhala fluently, the Tamil population was largely removed from administration and positions of power. Eventuall

Euro futures

The European sovereign debt crisis has its roots in a variety of long term mistakes. The biggest of which is not the creation of the common currency, but the failure of states to maintain solid public finances. Whether the crisis is the result of a policy mistake- the Irish decision to offer an unlimited guarantee to its banking system- or long term corruption,-the fraudulent Greek public debt numbers- the impact amounts to the same. No matter what, all European states now have no option but to bring their runaway government budgets under control. That is as true for countries outside the Euro zone- such as the UK- as it is for the Euro member states. However, the structural problem of Euro sovereign debt is now putting the entire mechanism of the Euro under intolerable strain. The European Central Bank, through its large scale purchases of the sovereign debt of the weaker Euro zone members, is placing its own balance sheet at risk, and even now, it is straining its own leverage ratios

Assad 'as 'ad it

The speech from Bashar Al-Assad was long awaited. How would he address the crisis in his country? In the end he has bottled it. By failing to recognize that the protesters have legitimate grievances and by making a speech insisting that the unrest in Syria is all the fault of shadowy foreign conspiracies, he may well have condemned himself to death. If he will not enter into a dialogue with the majority in his country, then sooner or later he will be overthrown. A small part of me suspects that the clique that surrounds the Baathist regime in Damascus has got its own agenda that has little to do with the personal survival of Bashar al-Assad, after all the speech that they must have tacitly approved is astonishingly reckless. The days when Bashar was a mild mannered optician at the Western Eye Hospital in London whose interest in politics seemed, at best, tangential are long gone. Indeed the death toll in Syria is already creeping up to the tens of thousands killed in in the time of hi

Greek Tragedy: German Crisis

In the face of the growing crisis in Athens, it would be as well to remember that this is as much a crisis of Germany as it is of Greece. If Greece is to be rescued, the German taxpayer will be forced to find the money. Yet if Greece is not rescued, it is the German banks that are first in line to take the losses, and again it will be the German taxpayer that will have to pick up the bill. Meanwhile, if Greece is left to its fate, then Germany will have to carry the opprobrium for breaking down European solidarity: it will show once and for all that Germany will indeed put its perceived national interest above that of the wider European Union, which pretty much ends the idea of Germany signing up to ever closer union. In other words it would be a major change in German policy towards the EU- and if it were to be changed, there could be some widespread and unexpected changes in other countries policies towards Germany. There are some potential significant foreign policy risks for Berlin

Remarkable Lives

The death of Yelena Bonner at 88 is a reminder of the extraordinary courage that those who opposed the Soviet system needed to show in order to survive. Dr. Bonner- she was a paediatrician- formed part of a remarkable pairing with Andrei Sakharov, the father of the Soviet Hydrogen bomb, but above all the man who became the conscience of the Russian people. Sakharov was in many ways the Mandela who never was. He become the voice of moral integrity in the Soviet society which had very little of any integrity. His harassment by the Soviet authorities became a cause celebre in the West, but it also underlined the moral crisis inside the Soviet system. Yelena Bonner became the vital lifeline between the closed city of Gorki (now, once again, Nizhni Novgorod) where Sakharov was exiled and the outside world. Inevitably she too was harassed and denied medical treatment for a heart condition and for a serious eye injury (she had been nearly blinded during the siege of Leningrad), and latterl

Improving Estonian Politics

From a Liberal perspective it is hard to be anything other than enthusiastic about Estonia. The laws of the country are generally fair, and the process of government is generally open. The adoption of generally liberal economics has helped propel the country towards becoming one of the richest countries in the world. In many aspects, from health care to the adoption of new technology, the country is dramatically ahead of the the UK. Estonians are often genuinely self critical and therefore look to find ways of improving the way the country and society works. Quite often I have been genuinely stumped when asked what I would change: the fact is that in general things work quite well. Yet, despite a well functioning democracy, there are two things that I would change. The first is now quite topical: I would make the President of the Republic directly elected. Why so topical? Well, the first term of office of President Tomas-Henrik Ilves will expire in the autumn. Already, however, it s

Tallinn Water Fight

In previous postings I have sounded warnings that Estonian privatization policy risks becoming incoherent. I have pointed out that few of the larger privatizations have gone without problems, and that far from being the poster child for economic reform, Estonia risks becoming known as an unreliable and even cantankerous privatization partner- which could have a significant financial impact in the future. The failure of the Estonian Rail privatization now seems set to be compounded by the failure of the Tallinn Water company sell off. Some politicians have suggested that my views "as the view of one person" carry little weight, and it is true that my thoughts on the blog are entirely personal. However, they are views which, nonetheless, are informed by more than two decades of activity at reasonably senior levels at major firms in the City of London. Neither are my views given in the service of any sectional interest, but rather because I want to contribute positively to the c

The Unacceptable face of Capitalism

The point about free markets and an open and transparent economy is that they should reward success and penalize failure. When competition becomes limited and access to markets or capital is denied, then individuals or corporations can behave in non-market ways. We are now seeing more and more examples of this happening: the corporate leader who presides over falling profits and faltering performance still managing to increase his compensation package, for example. This perverse result is justified on the grounds that "the competition for talent requires greater rewards for managers". The result is today's news that FTSE Chief executives have on average gained a 32% increase in their remuneration over the past year . Meanwhile the FTSE itself has only gained 7% and average workers pay has gained only 2%- or a fall of at least 2.5% in real terms. In other words the CEOs are gaining at the expense of both shareholders and of staff. This is not, in my view, the result of fa