Blogoir

We mere taxpayers suspect in our dark hearts that a formidable industry has grown up around the 'climate change' issue, with all sorts of organisations big and small depending on state handouts to survive, and so frothing up the climate issue regardless of the facts to make sure that those handouts keep on rollin'.

Today I was giving my views on the Diplomacy of Climate Change to one such NGO, pointing them in the direction of my website and such gems as this and especially this:

It of course all depends on the precise questions being asked.

Does human activity have an impact on the planet?  Of course.

Is it easy to measure that impact?  To a degree yes, but only over the relatively short term.

Does the climate change naturally anyway?  Of course. It would be impossible to imagine a world in which it didn't. It probably would be dead.

So how do we measure what changes are caused by Man, and which are occurring anyway?  Ah, now you're talking. Very difficult, the more so if you look at longer timescales.

If it turns out that human activity is affecting the planet, are the effects good or bad?  Some must be bad (eg if we eat every fish, no more fish). But again, it depends on what timescale you choose to use - what is Bad over (say) a century may turn out to be Good over a longer period. Thus the Industrial Revolution poured out nasty pollution (and still does) but it opened the way to far more economical use of natural resources now and into the future.

Is it better to act now to stop future bad outcomes?  This is the heart of it. We can't be sure what will be bad outcomes and what will be good ones. So it may well not be wise to overinvest now in vast inflexible and expensive schemes to 'prevent' climate change. Better (in my view) to spend money as we go, adapting to the effects of changes as they unfold over time.

So are you saying do nothing now?!  No. Energy-saving ideas and generally being less wasteful look to make sense. There will be a role for government in advancing those. But the main impetus must come from market forces and human ingenuity. Where else? Huge collectivist schemes are unlikely to be wise or sustainable in terms of popular support - we just do not know enough about Cause and Effect over the timescales concerned.

But what about all the scientific evidence?  Hmm. In the past thirty years 'scientists' have veered between warning of a new Ice Age to warning about Global Warming to (now) warning about Climate Change in any and all directions. Not very persuasive? 

Don't you care about future generations?  I do care about them, often. Some of them live in my house and demand pocket money. But one way to care about them is not to lumber them with huge debts and stupid policies brought about by our current ignorance and hubris. Look at it this way. Which scientific innovations or other trends/developments would you have stopped in 1909 to make things better now? And how would you have been sure that you hit the right ones then? Why should poorer people in 1909 have subsidised far richer people in 2009? Why should poor people in 2009 subsidise far richer people in 2109, or 2209?

Bottom Line?  Steady as she goes. Bet on the wisdom of people, not on the dogmatic certainty of governments. Because it is just not clear what to do for the best. And governments will make a far bigger mess if they get that wrong.   

We chatted to and fro about Climate diplomacy. I said that as Copenhagen had showed, the very complexity of the issue meant that a 'global' approach to it was doomed to fiasco. Better to get together a smallish group of industrialised carbon-generators (eg the Top 20) and try to sort out something within a much smaller circle. There would be fierce squeals from all the people and NGOs left out, but too bad - Saving the Planet was far more important than their self-esteem issues.

But even that, said I, assumed that (a) we could convincingly identify a causal relationship between human activity x and bad climate change y, and (b) identify policies that would help tackle y while not causing new problem z.

Oh, and then we'd have to work out who pays for it all.

All of which went to explain why countries like China piously insisted on bringing in the developing world to the process: by expanding the meeting they ensured that nothing would happen on Climate, which suited them for the next 50 years or so as their development hurtled on.

Meanwhile all bureaucrats could sense when top-level leaders were really focusing on an issue, or not. The policy caravan had moved on, from Climate to Arab Spring to Money. No senior attention was being given to Climate issues, regardless of the fact that more huge Climate junkets were continuing in Durban soon and on to Rio next year. PM David Cameron had already said that he's not going to Rio. Good choice - total waste of time.

I concluded that it all boiled down to a simple choice: spend massively now with money we don't have on uncertain and probably stupid measures, or be less ambitious and invest in adapting to Change rather than foolishly trying to modify it. And even that was not a choice - we'd end up adapting and hoping for the best, as there was no deliverable alternative to it.

My youthful NGO friend said that he tended to agree with the Bjorn Lomborg arguments on the whole issue. But he had to be careful what he said, lest his NGO stop getting funding!

I politely pointed out that he had said something profoundly bad and corrupt. The whole Western world was reeling from ill-advised investment decisions (mainly by profligate governments), and his organisation was hiding what it believed to be the truth to keep getting money. Horrendous. I sympathised with his current career plight, but that was no way to go. He ruefully said that he saw the point.

So, there we have it.

It's not Climate Truth that counts.

It's the requirement that we taxpayer suckers keep paying out to people who want to avoid the truth if it puts their grants at risk.

QED. 

As readers here know, the Spiegel Online site is a fine way to find thoughtful pieces on the goings-on in Europe from a German perspective.

Try these two for size.

The first is an interview with Polish Central Bank Governor Marek Belka (who served for a while as a technocrat Prime Minister while I was in Warsaw). Belka is a smart, steady operator who chooses his words well. Here he tries to present a cautious but optimistic picture of Poland's prospects for joining a reformed and disciplined Eurozone:

SPIEGEL: The phrase "Polish economy" once stood for inefficiency. How did Poland manage to be the only EU country to keep on growing its economy during the financial crisis?

Belka: We did a few things right. Our economic policy was cautious. We took integration into the EU very seriously. Many of our rules are more modern than the rules in Germany or France. We have had a debt limit enshrined in our constitution since 1997. We have low taxes and competitive labor costs. The Poles complain a lot, but we are basically optimists. Optimists spend money, while pessimists do not. The Germans believe that after the Hartz (welfare) reforms, they now have a flexible labor market. But ours is even more liberal. We have avoided financial turbulence. And there was no credit bubble.

...  The euro zone is heading for an increasingly closer political union, without which the euro can't be saved. One day Poland will join a new and different euro zone, which will have more of the characteristics of a federation than it does today. We have to be strong and healthy to avoid losing our economic sovereignty, which is now happening to a few countries that have problems.

And this is an important corrective to those of us in the richer parts of Europe squealing about 'austerity':

SPIEGEL: ... Why are the people in Eastern Europe so much more patient?

Belka: Because the people here still aren't used to prosperity. Let me give you an example from my days at the International Monetary Fund. It was at a time when the Latvians had to implement a drastic austerity program, which caused consumer spending to drop by 25 percent in a year.

I asked a Latvia negotiator how his country expected to survive this dramatic crisis. He said: What crisis? We had a crisis when the Soviets were sending us to Siberia. Here in Eastern Europe, many still remember why they were once poor, and they're not afraid of reasonable reforms that are painful in the short term.

But see also this tricky argument that failure to give Poland lots of EU money in the next Budget spending round would be a Breach of Promise:

SPIEGEL: Is it conceivable that the EU will cut back on other spending in the future because of the unimaginably expensive bailout funds? Spending such as subsidies and structural assistance, which has also helped Poland in recent years?

Belka: We're worried about that, of course. It would be a violation of the accession agreements. The deal, at the time, was this: We adjust our markets, and you help us in the process. If this were no longer the case, it would be a breach of promise.

Nice try. But no.

Then read this piece vividly describing how Germany's insistence that all countries make a 'real effort' is now creating a divided Europe:

... the price of her success in Brussels is the division of Europe. Those countries that are not part of the euro zone are now no longer part of a core Europe, and are now being asked to leave the room when the truly important issues are being debated. While the 17 euro-zone members walk at the front of the pack, the 10 non-euro-members are forced to walk behind, like stragglers and second-tier nations.

And now they have it in writing. In the closing document of last week's summit, euro-zone member states grant themselves the right to work together more closely without having to wait for the non-euro countries. The EFSF also deepens the divide. It is a facility set up by the 17 countries in the monetary union for the 17 countries in the monetary union...

The 17 euro-zone leaders decided to make the bailout fund and its director, Klaus Regling, even more important in the future. Regling will receive more power and influence, as well as more money. He will become the nucleus of a new Europe driven by fiscal policy.

The EU summits last week saw difficult exchanges between the UK and Eurozone countries about all this and a classic drafting fudge:

Update  it is sobering to see a long line of comments after such an article in a national newspaper, many of them buzzing away about issues far from the immediate points I made. Lots of not altogether focused Euro-scepticism out there. But this one from damage124 caught my amused eye: 

Unless I am very much mistaken, was it not the foreign office that were the big proponents not only of our entry to the EEC but also the euro?
I am sure your description is accurate but perhaps the "blue sky" was actually a very thick fog.
I appreciate that you have now retired but perhaps you should have taken this opportunity to apologise?

 * * * * *

I have been invited to join the lively sophisticated team of Daily Telegraph bloggers. Fame. At last. 

Here is the first result, a gallop over exhausted EU processes which has ideas familiar to attentive readers here but maybe not (yet) to a much wider audience:

Basically, there is the bloke in the bar anywhere in the world, railing against the iniquity of what foreigners get up to: “Can you believe what those Germans/Frenchies/Americans/Arabs/Brits/Jews are doing now?! They’re trying to cheat us! Do they think we’re thick, or wot? Innit!” 

Then above him (sorry, ladies, it’s usually a him) is a vast, unpleasant fog created by supercilious on-the-one-hand-on-the-other-hand people like me. Officials, technocrats, state-funded busybodies and experts droning on in high acronymic about Targets, Priorities, Road-maps, Objectives, Strategies, Policies and the rest of it.

When you break through that impenetrable, noxious layer of process, you suddenly get to clear blue sky where meetings of world leaders take place. And the impressive thing is that these leaders resemble the bloke in the pub. The language is (usually) not quite as blunt. But the thoughts and messages are...

EU Solidarity of course requires certain minimal levels of discipline and commitment by all sides, lest it become an unacceptable redistributive one-way street, money flowing from those who accept the rules to those who might (or might not) do so.

If richer Europeans ‘should’ help poorer Europeans – as they have massively done through EU Cohesion Funds and other redistributive mechanisms – what ‘should’ the poorer Europeans do in return? Work harder? Agree to refuse assistance when they have improved their lot? Stick to the rules meticulously? Be grateful?

No one has ever wanted to talk about this. Even to broach the subject is a howwid breach of Euro-etiquette, suggesting a narrow, penny-pinching, Thatcherite mistrust of European processes themselves. We're all Europeans, right? So by definition we are all equally worthy. We can – and must – be trusted!

Should Europeans trust each other? Mais oui. Do they? Not so much...

... For how much longer will Angela Merkel sit there glaring at her fellow leaders and glumly accept that, in effect, Germany is to be blackmailed by smaller, less scrupulous EU partners (“If you don’t give us your nation’s hard-won credibility – and its money – we’ll drag you down too!”)?

Is this acceptable as the basis for running a creditable and credit-worthy society in Germany, and for Germany as part of a wider European community? Is this what all those decades of Germany’s heroic post-WW2 rebuilding effort led to – a Europe of looters and moochers? How to sell that to the honest toiler in the Berlin bierkeller?

Maybe one day soon Germany will look the other shifty countries in the eye round the conference table. And, like Atlas, shrug.

Has last night's Summit solved the core Eurozone problem?

Of course not. It simply represents a new dizzy height for High Euro-Micawberism:

'Accidents will occur in the best regulated families...

I have no doubt I shall, please Heaven, begin to be more beforehand with the world, and to live in a perfectly new manner, if -if, in short, anything turns up.’  

Walter Russell Mead pours out one fine article after another.

Look at his blunt observations on the desperate situation in Rhode Island where years of not decades of public sector greed and a refusal by politicians and unions there to accept underlying financial realities (especially for pensions) is creating a ghastly mess now:

Rhode Island is looking more and more like Greece, and not in a good way.  That is one message of this important piece by Mary Williams Walsh in the New York Times.  Years of blue social policy have wrecked local and state government finance in the country’s smallest state, and now the bills are coming due.  Services are being cut to the bone and elderly retirees are losing money they thought was secure.

In Rhode Island, it is Democrats, not nasty union-hating Republicans, who are doing the dirty work.  Democratic mayors are telling their unions that there isn’t any money — not because they are vicious corporate stooges who hate working people and want to see them suffer, but because There. Isn’t. Any. Money.

... But “objectively”, as our Marxist friends would say, the union leaders and their political chums were the worst enemies of the workers: they told state workers that their benefits were secure even as it became increasingly obvious that, as a matter of arithmetic, they were not.

Let’s be crystal clear about this.  To tell a 50 year old pretty lies about the soundness of a pension plan is one of the most wicked and irresponsible things you can do without actually shedding blood; people who believe these phony promises will not make the extra savings, work the extra years or otherwise take steps to protect themselves until it is too late. 

Telling those pretty lies is exactly what Rhode Island’s establishment has been doing for some time; it is what Ostrich Party legislators, trade unionists, journalists and governors are still doing across much of the country...

Reform cannot and should not be understood simply as an assault on state and local government workers — although these workers cannot be insulated from the general consequences of a major failure of our political system. 

The problem is not that teachers and firefighters earn “too much” money; the problem is that we have developed a dysfunctional social system which cannot pay its bills.  The public economy needs to be rationalized and restructured, but the most important job is to revitalize and energize the private sector...

Devastating.

Neither the US political classes nor the EU political classes seem to understand that the game based on funding unaffordable spending via the hope of unending growth is up.

The. Money. Is. No. Longer. There.

Update  carried also at the Commentator

* * * * *

Here is Ed Miliband's Labour Conference speech today - in full.

A bad idea to hand out to the print media the same version in micro-sentenced blank verse as used to help the delivery. It looks oddly like something from a Noddy story:

Stock markets round the world falling.

The United States in difficulty.

The Eurozone struggling.

And people in Britain losing their jobs.

Now is not the time for the same old answers.

From us, on the issues that lost us your trust.

From this Government, on the growth crisis we face.

You need to know that there is an alternative.

You need to know that it is credible.

See what I mean? I can't stand it any more, so I'll run his words together to make them readable:

Government is cutting back. And the recovery has stalled. Of course, the world economy is suffering.

But our Government is making it worse. Because the current plan to raise taxes and cut spending more dramatically than any other country is not working.

Depends what you mean by 'working'. If it's strategically important to get on top of the insane debt levels Labour bequeathed, maybe that pain for a few years has to be part of any cure?

... with such great people, how have we ended up with the problems we face? It’s because of the way we have chosen to run our country. Not just for a year or so but for decades.

Now there are hard lessons here for my party which some won’t like. Some of what happened in the 1980s was right. It was right to let people buy their council houses. It was right to cut tax rates of 60, 70, 80 percent. And it was right to change the rules on the closed shop, on strikes before ballots. These changes were right, and we were wrong to oppose it at the time.

Now you're talking, Ed! Why were these things 'right', and what 'wrong' ideas did your party espouse?

We changed the fabric of our country but we did not do enough to change the values of our economy.

Oh. That's helpful.

And we have seen immigration policy which didn’t work for the people whose jobs, living standards and communities were affected.

Which Party deliberately opened the immigration gates as part of a vast social engineering scheme to make the UK more 'diverse'? Oops. It didn't work. Hard-working Poles came 900 miles to take took the jobs which illiterate rioting Yoof from our skools up da road woz too fick to do init. Do better next time. Promise!

We must never excuse people who cheat the welfare system. The reason I talk about this is not because I don’t believe in a welfare state but because I do.

We can never protect and renew it if people believe it’s just not fair. If it’s too easy not to work. And there are people taking something for nothing. And if at the same time people who have paid into the system all their lives find the safety net full of holes. No wonder people are angry.

Er, yes. But who created such a towering system of benefits and disincentivised work? Who howls with rage every time any government tries to curb abuses?

Let me tell you what the 21st century choice is: Are you on the side of the wealth creators or the asset strippers? The producers or the predators?

Ed, calm down. What is taxation to pay for all your ridiculous schemes including the folly of overseas development aid and the CAP and myriad Diversity Coordinators, if it is not predatory asset-stripping, imposed by force?

We need the most competitive tax and regulatory environment we can for British business.

But when I am Prime Minister, how we tax, what government buys, how we regulate, what we celebrate will be in the service of Britain’s producers

Er, no. Because EU laws stop you doing any of that. What's your plan for wriggling out of that one?

But our energy companies have defied the laws of gravity for too long. Prices go up but they never seem to come down.

You can't be serious. It is a huge collectivist Climate policy plank to force energy prices higher. Have you filled up a car's petrol tank recently, Ed? What % of the mad price is tax of some sort or other?

We’ve got to put an end to the idea that those at the top can take whatever they can, regardless of what they give back. It’s why we must end the cosy cartels of the way top pay is set in our economy. So every pay committee should have an employee on the board.

Ed. How a private organisation remunerates its employees is none of your damn business.

So we need a new bargain at the top of society, and in our benefits system too.

A bargain? Hmm. That sounds like an arrangement whereunder the parties, you know, agree on what happens? Not one where the state decides everything, including how private organisations set up their pay scheme committees.

When we have a housing shortage, choices have to be made. Do we treat the person who contributes to their community the same as the person who doesn’t? My answer is no. Our first duty should be to help the person who shows responsibility. And I say every council should recognise the contribution that people are making 

Utter incoherence. But so what? Lots of new jobs for thick social science graduates in the RMP (Responsibility Measurement Police).

And it’s not just in our benefits system that I want to change the way government works. It’s in our public services as well. Millions of public servants deliver a fantastic service every day of every week. But we all know that sometimes powerful organisations can become unaccountable. Work not in the interests of those who need them but in their own interests. That's what vested interests are.

Thanks for clarifying that. But what are you talking about?

You know what it’s like. You stand in the queue. You hang on the phone. You fill in the form. And then all you get? Computer says no. We need to change that.

To give power to the public. Like the power to the elderly couple to choose whether they are cared for in a care home or in their own home. Or the parents I know struggling with their council on their child’s special needs who want to know who else is facing the same challenges. So I will take on the vested interests wherever they are because that is how we defend the public interest.

So. We'll have the New VIP (Vested Interest Police) squads to keep an eye on the RMP and the rest of the sprawling bureaucracy, all of which is there to uphold, or is it oppress, the public interest. It's all so confusing.

But I’m up for the fight. The fight for a new bargain. A new bargain in our economy so reward is linked to effort.

Hurrah! A Flat Tax system does just that! Bring it on!

A new bargain based on your values so we can pay our way in the world. A new bargain to ensure responsibility from top to bottom. And a new bargain to break open the closed circles, and break up vested interests, that hold our country back.

Hurrah! Abolishing all Trades Union privileges and dismantling state education and health monopolies. I vote for that. 

I aspire to be your Prime Minister not for more of the same. But to write a new chapter in our country’s history. The promise of Britain lies in its people. The tragedy of Britain is that it is not being met. My mission. Our mission. To fulfil the promise of each so we fulfil the promise of Britain.

Zzzzzzzzzzzzzzzzzzzzzz

Oh ... he's stopped? After a mere 5830 words or so.

What's wrong with this speech? No, sniping aside, what's really wrong with it?

It's all so thin and phoney, aimed at a sound-bite culture. The words values or value appear 43 times. But repeating the word values like a parrot is, in fact, valueless. 

There are huge interesting things to talk about. The Eurozone and future European architecture. How to manage complexity. Where state action might best work when networked spontaneous order might not do enough. How to use the tax system to deliver incentives. How in fact to give people more choice. Why it made sense to sell council houses and reduce the state's role - scope for more of that now? How to make 'national' policies work in a globalised world. European demographics and pension schemes. Defence policy - heavy manned weapons or myriad unmanned drones? State v individual. Structure v freedom. What in fact these days works well, and why?

Not a single one of these issues appears in any meaningful form. If the one thing the Labour Party ought to have aplenty, it's intellectuals. Those clever people who swarm in higher education and Islington and Camden, some of whom are very smart and able to think. They should be able to help Ed articulate these tough subjects and more in a light-touch but mentally nourishing way. Is this what Ralph Miliband expected?

Instead we get this blast of lukewarm air, this cumulus of clichés, this infantilised gruel which in its faux soul-searching toughness pretends to be part of an adult diet but evaporates any time you stick in your spoon hunting for some substantial morsel.

Look at the Guardianistas trying to find something intelligent to say about it. If you listen closely you can hear them cringing with embarrassment as they tap away on their smart laptops while sipping their globalised Fair Trade coffee, all provided to them by the greedy uncaring private sector.

Conclusion?

The words values or value appear 43 times. But repeating the word values like a dying parrot is, in fact, valueless.

I write little here about Israel/Palestine as I have little to say which countless others are not saying. Plus I don't have first-hand professional experience.

What is going on? Of course the Palestinians want to advance their claims and demands on all international fronts. Upping their status at the UN to that of an 'observer state' might help them launch new legal claims against Israel. But that would be far from straightforward - maybe even impossible in practice:

European countries worried about Palestinian access to the ICC blocked a Spanish-French proposal for nonmember observer status for Palestine, and there has even been discussion among Europeans about creating a new legal status for the Palestinians that would provide an upgrade in status but block potential access to the ICC and other international legal enforcement agencies.

Even if the Palestinians got nonmember state status at the U.N., which is the maximum they could achieve under the present circumstances, and were able to become party to the ICC, there are serious doubts about their practical ability to bring charges against Israel or Israeli officials. Any request for such charges would be more a diplomatic and political question than a legal one, and both the ICC and prosecutors would be subject to significant domestic and international political pressures that make it hard to imagine such a scenario actually unfolding...

Here is a neat account by former UK diplomat Carne Ross of the procedural goings-on in the fetid New York UN corridors aimed at shunting the issue into the long grass so that President Obama is not embarrassed into using a veto to block Palestine's UN membership. Note Carne's shrewd view on the Russia/China angle here - to get some PR 'progressive'/Arab credit but not do anything on the substance:

So far, only the US has declared its outright opposition to the membership application, but we can be confident that there will be others who will abstain on the vote, giving the US some political company and, perhaps, avoiding them having to veto (this will happen if the Palestinians cannot muster the 9 votes necessary to pass a resolution, thus forcing a veto if the US wants to stop it).  Germany and Colombia will abstain, and perhaps the UK too.  

Russia and China will support the Palestinian initiative but without sufficient vigour to take on the Americans in the Council.  They will be not be desperately unhappy if this gets blocked.  Their objective is to look good to the Arab world, and this objective is met by merely promising their support, and not by spending any serious political energy on it.

Meanwhile, the US is putting ferocious pressure on weaker non-permanent members like Bosnia.  This is a vicious nasty business: I have seen it done.  A number of diplomats have told me about the extremely aggressive pressure being put on them by US diplomats, including here at the UN.  But the pressure will also involve high-level phone calls from Hillary Clinton and the President, and others.  

This type of pressure is very, very difficult for weaker countries, who may be dependent on the US in some way or other (like Bosnia), to resist.  This is how power works.

Yup. If you want the privilege of being on the UN Security Council, you have to play hardball with the mean players who always hang around there.

I wonder how Bosnia will end up voting if it gets to a UNSC vote where Bosnia and Herzegovina is currently a member. The Muslim/Bosniac position will be to support Palestine, and the Bosnian Serbs will vote for the best available anti-Muslim option (in this case whatever suits Israel). Bosnian Croats anyone?

Likely BH position: abstain. All too difficult.

Or is it Coup des États?

Definitely one or the other. Let's stick with the headline one.

My latest Commentator piece is out, belabouring a theme familiar to regular readers here, namely the Limits of Trust:

Once upon a time world leaders met only rarely if at all. They maintained their dignity if not power precisely by not meeting.

Now EU leaders are meeting and talking almost every month in one way or the other. This (for now) has the effect of making wars in Europe a lot less likely. How can Hans send his country to war against Juan and Maria’s countries when they had such a jolly expensive dinner together last week in Brussels?

There is nonetheless a downside. Which is that Trust reasserts itself in a peculiarly personal way. Private tiffs can spill over into public disagreements, and vice versa.

Imagine that you are the Dumpling Finance Minister who is getting it in the neck from the Dumpling media and public opinion for being far too lenient with the EU’s Olive tendency. You sit there at the EU Council meeting listening to an Olive drone on about urgent reforms which both of you know won’t be carried out quickly or honestly or even at all. Worse, the predecessor of this Olive (probably a cousin of the current one) actually lied at Council meetings time and again about the state of his country’s finances – that’s how the whole mess started.

Basically, your willingness to listen to any more Olive nonsense is trending towards absolute zero. Your exasperation is likely to burst out when it is your turn to speak. Meanwhile your unctuous officials sense your mood and are freezing out their Olive counterparts in the coffee breaks.

And lo! ‘Dialogue’ diminishes. Trust declines. Emails start to get no replies, phone-calls aren’t taken. Differences start to count for more than what people have in common. Those who have money start to bark out instructions to those who are hoping for yet more cheap loans. The whole mood shifts for the worse, defaulting to petulant defensiveness...

The problem for the European Union is that it has very little legal or political room for manoeuvre for tackling the Eurozone crisis. It's as if they designed a beautiful tall building without factoring in the right sort of fire safety plumbing. There is no direct way to put out all the small fires which have erupted on different floors of the building, and as these fires develop they in turn reduce still further the room for bringing in more water.

Thus:

... the mighty elite brains who got us into this mess will come up with an even better plan, but then implement it with even less public scrutiny and direct accountability than now exists. To do that they may have to start taking serious legal short-cuts, to the point of side-stepping or ignoring key national laws and EU treaty constraints.

A voter's right to choose.

This is not good enough. Insofar as it means anything it sounds like a coup d’etat, or more precisely coup d’etats.

I might be prepared to sign away some of my own autonomy and my own little slice of my country’s autonomy in return for a wider economic package which makes sense, but only if I get to take part in a proper debate about the options. Which, given what is at stake in current circumstances, means a referendum

Imposed behind my back on the hoof by the people who led us into this fiasco? No way. That breaks the most profound Trust test which allows our society to work freely

Maybe we are heading towards an existential democratic crisis. Stressed-out European leaders round on their bewildered and increasingly angry voters, and tell them in blunt terms: “Your money. Or your democratic life”.

Last week in the Krynica Economic Forum in deep Poland, a highlight was the exchange between former German President (and former IMF Director) Horst Köhler and Polish Finance Minister Jan Vincent-Rostowski.

In essence, Kohler argued that the time had come to stop throwing good money after bad in the Eurozone - countries should accept responsibility for their own performance in racking up unsustainable sovereign debt. Rostowski insisted that that was all very well - in the meantime the Eurozone could face drastic problems if the ECB did not respond to a 'classic Keynesian moment' by printing Euros on a vigorous scale.

As I understood their respective points, Germany was offering the ailing Eurozone patient some stern medicine - Poland retorting that medicine of that strength would be good in other circumstances, but now would kill the patient.

After this presentation a senior European expert told me that the Eurozone was on the 'verge of disaster'. If it struck and confidence crashed, great swathes of EU economic life would simply grind to a halt, including many German exporters. Germany knew this but did not want to accept it. I asked him how close to the Verge of Doom the system now was. "About two inches".

During his presentation the erudite and impassioned Rostowski quoted Tarquinius and the Sybil, helpfully reminding the large audience what that story was about. Basically:

The story of the acquisition of the Sibylline Books by Tarquinius is one of the famous mythic elements of Roman history. The Cumaean Sibyl offered to Tarquinius nine books of these prophecies; and as the king declined to purchase them, owing to the exorbitant price she demanded, she burned three and offered the remaining six to Tarquinius at the same stiff price, which he again refused, whereupon she burned three more and repeated her offer.

Tarquinius then relented and purchased the last three at the full original price and had them preserved in a vault beneath the Capitoline temple of Jupiter.

Rostowski's argument was that at each stage the EU had ducked the tough but correct option for tackling the Eurozone crisis, so that the cost of fixing it now was massive. 

Where do things stand now?

The real crisis, as we know, is not Greece but the EU banking system which has lent EU governments unsustainable sums to fund inefficient state spending. So, in the inevitable mess, where should the losses fall and be distributed?

Has Germany decided that if colossal sums must be spent to salvage something from the Eurozone rubble, it is better to invest that money in sorting out the big EU banks most in danger and let those national governments who are unable to keep up go their own sorrowful way? Agonising, but character-forming. See this hard-core analysis by Hussman Funds:

As for any public funds approved for use by various European governments to stabilize the financial system, IMF chief Christine LaGarde is right - those funds would be better used to recapitalise banks (ideally, restructured banks) rather than using those funds as a transfer to Greece in hopes of making bad debt good.

What is particularly unfortunate is that all of this is unfolding in a very predictable way, but the constant attempts to ignore reality and defer the inevitable restructuring is imposing enormous costs on the public. 

The misery and disruption to lives round the planet caused by hubristic European political elites are going to be incalculable.

Basically, the European Union has run out of policy manoeuvre-room. Its taxes are already too high, its populations too old, its bureaucratic dead weight too heavy. The existing Treaty structure does not work, and the latest German Constitutional Court ruling effectively (and wisely) reduces even more the scope for German leaders to dump debts on the German public.

Undaunted, the Euro-elites realise that they need a new Kardelj-like attempt to cure the sick cow, this time by changing the rules to give themselves even wider powers. In other words, EU treaty change.

This forces to the fore the UK dilemma. How to avoid a Euro-federalist concentration of power among Eurozone members directly affecting in substance everything the EU does? Euro-federalists have a problem too - how to get accepted such far-reaching national sovereignty-surrendering Treaty changes without referenda in the UK and (probably) elsewhere? 

This is impossible. The sheer intensity of the integrative forces required to make Eurozone 2 work will affect the EU as a whole, not least in the reach of Eurozone authority as upheld by European Law. 

The issues are already clear:

German Chancellor Angela Merkel said on Friday that the European Union must enact treaty changes in order to strengthen cooperation during the debt crisis...

Osborne said it was an "absolute requirement" that any EU-wide treaty would safeguard Britain's interests in key areas.

"It is crucial that Britain's interests on financial services, on the single market, on competition are protected, that we're not outvoted by the euro zone, that there is not an in-built euro zone caucus into the system ... that we are able to continue to have a decisive say on things that affect us."

Asked about opting out of other parts of the EU, Hague said: "It's true of the euro, it could be true of more areas in future. In fact we may get ahead as a result of being outside."

Luckily the key speech the Prime Minister needs when the crunch finally arrives has already been drafted...

I returned to the Embassy in Belgrade to be told to watch on TV what was happening in New York.

I did. The Twin Towers crashed.

My thought then is still valid:

This level of Islamist madness is quite different. It can't be defeated by normal means. Only moderate Muslims can do it, if they have the courage. And what will they demand from us as the price for sorting out their own lunatics..?

Israel?

What was 9/11? One thing it was not was a 'tragedy'. A speedboat death or a fatal fire in a tenement caused by drunkenness is a tragedy.

Some things are so much bigger than mere tragedies that it is insulting if not evil to use that sort of language. Yet a sizeable 'liberal' tendency wants to shrink 9/11 down to something manageable, if not banal.

Luckily we have Mark Steyn batting for civilisation. Sorry, Mark, but this column is so powerful I have to quote it at length:

Waiting to be interviewed on the radio the other day, I found myself on hold listening to a public-service message exhorting listeners to go to 911day.org and tell their fellow citizens how they would be observing the tenth anniversary of the, ah, “tragic events.” There followed a sound bite of a lady explaining that she would be paying tribute by going and cleaning up an area of the beach

Great! Who could object to that? Anything else? Well, another lady pledged that she “will continue to discuss anti-bullying tactics with my grandson.”

Marvelous. Because studies show that many middle-school bullies graduate to hijacking passenger jets and flying them into tall buildings?

Whoa, ease up on the old judgmentalism there, pal. In New Jersey, many of whose residents were among the dead, middle-schoolers will mark the anniversary with a special 9/11 curriculum that will “analyze diversity and prejudice in U.S. history.” And, if the “9/11 Peace Story Quilt” at the Metropolitan Museum of Art teaches us anything, it’s that the “tragic events” only underline the “importance of respect.” And “understanding.” As one of the quilt panels puts it:

You should never feel left out

You are a piece of a puzzle

And without you

The whole picture can’t be seen.

And if that message of “healing and unity” doesn’t sum up what happened on Sept. 11, 2001, what does? A painting of a plane flying into a building? A sculpture of bodies falling from a skyscraper? Oh, don’t be so drearily literal. “It is still too soon,” says Midori Yashimoto, director of the New Jersey City University Visual Arts Gallery, whose exhibition “Afterwards & Forward” is intended to “promote dialogue, deeper reflection, meditation, and contextualization.”

So, instead of planes and skyscrapers, it has Yoko Ono’s “Wish Tree,” on which you can hang little tags with your ideas for world peace.

What’s missing from these commemorations?

Firemen?

Oh, please. There are some pieces of the puzzle we have to leave out. As Mayor Bloomberg’s office has patiently explained, there’s “not enough room” at the official Ground Zero commemoration to accommodate any firemen. “Which is kind of weird,” wrote the Canadian blogger Kathy Shaidle, “since 343 of them managed to fit into the exact same space ten years ago.”

On a day when all the fancypants money-no-object federal acronyms comprehensively failed — CIA, FBI, FAA, INS — the only bit of government that worked was the low-level unglamorous municipal government represented by the Fire Department of New York.

When they arrived at the World Trade Center the air was thick with falling bodies — ordinary men and women trapped on high floors above where the planes had hit, who chose to spend their last seconds in one last gulp of open air rather than die in an inferno of jet fuel. Far “too soon” for any of that at New Jersey City University, but perhaps you could reenact the moment by filling out a peace tag for Yoko Ono’s “Wish Tree” and then letting it flutter to the ground.

Upon arrival at the foot of the towers, two firemen were hit by falling bodies. “There is no other way to put it,” one of their colleagues explained. “They exploded.”

Any room for that on the Metropolitan Museum’s “Peace Quilt”? Sadly not. We’re all out of squares

Read the rest. And get very angry.

While you're doing that, reflect on the assertions now flying thick and fast that BlairBusHitler are responsible for "a million deaths and five million orphans" in Iraq and much more in Afghanistan, Pakistan and elsewhere. The point here is that the vast majority of these deaths are Muslims murdering other Muslims. Part in fact of the battle I predicted, between more or less moderate Muslims and the lunatic not-so-fringe.

That battle has to be fought. See events across North Africa now. It reflects a huge 'civilisational' fault-line in Islam, where the various tendencies have played upon our dependency on oil to get fabulously rich and then lever up the struggle to the point of putting global security at risk.

The casualties in this war are bound to be huge, as the propensity to madness, extremism and savagery among extreme Islamists is so high.

Where do we as mere honest citizens fit into this war?

Watch George Bush and Bill Clinton tell us, in a superb example of the speechmakers' art drawing on the stunning events themselves and looking at the wider lessons.

They were speaking at a commemoration of the heroism of the passengers on Flight 93, who rose up against the deranged hijackers and thwarted their plan to blow up Washington - at the cost of their own lives. 

George Bush:

Aboard United Airlines Flight 93 were college students from California, an iron worker from New Jersey, veterans of the Korean War and World War II, citizens of Germany and Japan, a pilot who had rearranged his schedule so that he could take his wife on a vacation to celebrate their anniversary.

When the passengers and crew realized the plane had been hijacked, they reported the news calmly. When they learned that the terrorists had crashed other planes into targets on the ground, they accepted greater responsibilities. In the back of the cabin, the passengers gathered to devise a strategy.

At the moment America’s democracy was under attack, our citizens defied their captors by holding a vote. The choice they made would cost them their lives, and they knew it. Many passengers called their loved ones to say good-bye, then

Many passengers called their loved ones to say goodbye then hung up to perform their final act. One said, “They’re getting ready to break into the cockpit. I have to go. I love you.” Another said, “It’s up to us. I think we can do it.”

In one of the most stirring accounts, Todd Beamer, a father of two with a pregnant wife with a home in New Jersey, asked the air operator to join him in reciting the Lord’s Prayer. Then he helped lead the charge with the words “Let’s roll.”

With their selfless act, the men and women who stormed the cockpit lived out the words, “Greater love hath no man than this, that a man lay down his life for his friends.” And with their brave decision, they launched the first counter offensive of the war on terror.

The most likely target of the hijacked plane was the United States Capitol. We’ll never know how many innocent people might have been lost, but we do know this, Americans are alive today because the passengers and crew of Flight 93 chose to act, and our nation will be forever grateful.

The 40 souls who perished on the plane left a great deal behind. They left spouses and children and grandchildren who miss them dearly. They left successful businesses and promising careers and a lifetime of dreams they will never have the chance to fulfill. They left something else — a legacy of bravery and selflessness that will always inspire America.

If anything Bill Clinton is even better. Watch the video to see how he uses rhetorical pauses and historical allusions to put the Flight 93 passengers up there with some of the world's finest historical heroes.

Conclusion?

There are no sure, safe, rational, reasonable ways for dealing with the sort of cynical, depraved wickedness which Bin Laden represented. In fact these extremists bank on our very reasonableness to create operating space for themselves in our own societies.

But they are not doomed to succeed. Security measures work. Some moderate Muslims are fighting back. Western intelligence agencies have benefited from defectors from Islamic communities and used the information gained to destroy Islamist extremist leaderships and their structures. Spare a thought for those Muslims who have risked all to work with us and been murdered when they were discovered. They are true citizen heroes too. 

Since 9/11 we have done quite a good job in scaling down the risk in the 'West'. Soft policies of inclusiveness/diversity have a role. They show a willingness to talk, within civilised limits.

So does killing our enemies. That shows a refusal to be defeated.  

Over at Commentator is my latest piece on UK engagement with Libya, in which I argue that what happened in recent years was principled, smart and mainly effective. Take that, you chattering classes:

there are only two basic choices available to democracies when it comes to dealing with odious regimes: Isolation, or Engagement. And that both can have perverse consequences, because it is impossible to deal with perverse regimes without some perverse outcomes

Isolation (plus or minus sanctions) invariably drags on unhappily, mainly because the regimes are never in fact that isolated: see the wild success of those policies for eg Cuba, Myanmar, Zimbabwe and Belarus. In some cases the regime may isolate itself, all the better to oppress its own citizens: see decades of North Korea.

Engagement creates different problems. Above all, if you engage with dirty people, how to avoid some of their dirt ending up on you? The promise of Engagement is that it offers the hope of slowly but surely changing things for the better; the danger is that while you are doing that, the key leaders of the regime in fact get far richer and learn how to be oppressive in new, cleverer ways.

So in the Libya case. The stupid/wicked/naive Brits trained the Libyan security forces! Of course we did: if you want to set in motion a process of reform and enlightenment in such regressive institutions, what else to do?

Think about what this means in practice. If the Libyan secret police are known torturers, you will be training them while their torturing ways continue. Even if the total amount of Libyan torture declines sharply as a direct result of Libyans cleaning up their act during the wider normalisation process, your trainers in one way or the other will be helping a torturing regime be more efficient.

Yet without outside democratic engagement (and the high-level civilisational rewards which rightly flow to the regime for behaving in a less extreme way) the chances of reducing Libyan torture at all (and thereby opening some small new space for opposition trends) are hugely reduced...

This is also where I part company with my former UK Ambassador colleague Craig Murray. Forget his idiosyncratic leftism. My problem is that Craig's books and website lambast almost any 'Western' foreign policy as corrupt, mendacious, duplicitous or whatever. Yet he is almost 100% silent on how in real life to achieve any positive changes for the better, not least in Uzbekistan which is run by a hard-core regime which he knows only too well.

A loyal reader of my latest Commentator piece says this:

My initial instincts would be to disagree mostly with the kind of line you take on this particular issue. I'm a no compromise man on dictatorships. But, as you say, what are we supposed to do with them? If I may say, you make a very convincing case that really makes me think hard.

Let's think about this a bit more, taking for granted that a 'Western' democratic system with a strong legal system is just 'better' than a cruel torturing dictatorship. What should the democracy do about the dictatorship?

One option is to do nothing. Faraway wicked foreigners oppress each other - what's new?

That option is in fact quite often used, even if there is a busy pretence of 'doing something'. Saudi Arabia is the classic example of a system which in most respects imposes odious unfair apartheid-like restrictions on its citizens, and which we studiously treat as a 'factor of stability'. Communist China used to be far worse, murdering millions. As did the USSR.

In all these cases the hard fact that these systems are powerful, ruthless and/or rich compels a certain caution. But does the fact that we 'tolerate' (say) the Saudi system demolish any claim by us to moral superiority? Double standards, they shriek.

No. Any good policy has to be realistic as well as consistent. If you can't stop all killers, it's right to stop those you can stop. To that extent there is solid intellectual and moral territory between 'double standards' and 'no standards'.    

If we nonetheless decide to do something about a dictatorship, what in fact is likely to work, where 'work' means bringing about change for the more pluralistic, preferably without massive violence?

Hold it right there. Why is massive violence bad? Sweden's Foreign Minister Carl Bildt tweeted recently thus:

What if we think that there are possibilities for more or less peaceful change? Egypt in some ways is a good current example. NB South Africa is always presented as a triumph for peaceful change but of course wasn't.

Libya might have been too, had the Gaddafi elite not reverted to stupidity instead of using its new improved relations with Western democracies to negotiate .

Cuba? Belarus? Myanmar/Burma? Zimbabwe? China itself?

Simply making a short list like that shows just how varied and problematic the challenge is. In each individual case the options range far and wide, as does the prospect of getting allies and building successful coalitions for change. 

Let's not forget too that Western political leaders' main focus is what their voters want. And voters (with rare exceptions) do not put changing the ways of revolting foreign regimes far up their priorities list. Or much taxpayers' money to be spent on the problem. In 1999 Robin Cook realised that it was a good investment to fund anti-Milosevic activities led by myself, and got superb results. 

So in the real world of foreign policy it makes no sense to take a stark 'no compromise' position of substance with dictatorships. They exist, they have UN and other votes, they can export trouble, they probably have Ambassadors in London. Your aircraft may need to fly over their territory, or they may agree with you on various international technical issues. It's complicated. 

You almost always end up with some form of 'engagement'. But the fact of matter-of-fact exchanges and opportunistically looking for areas to build some common ground is not the same thing as having a policy of Engagement aimed at deliberately using a range of options (openly or otherwise) to bring out reforms. 

When in Poland I quietly and privately explored with the then Ambassador of Belarus (smart, energetic diplomat) some ideas for engaging with the Lukashenko elite. But it all fell into the Not Important Enough category in London. Getting anything done there would take a lot of effort and senior time: Tony Blair saw no real upside in this long slog, and plenty of reasons for letting this one quietly fester under 'EU pressure'.

Was that the wrong decision by No 10? Or the right one? It's still festering, but EU governments are still wobbling unconvincingly between Engagement and Isolation.

A huge subject.

My point today is simple. British foreign policy and leadership can make positive changes in unpropitious foreign situations. But simply wanting to make a difference does not get results. Making that happen requires a powerful combination of strong policy determination, operational nimbleness and fine professional technique, an area where the FCO obviously declined under Labour. Plus some money.

What just doesn't help is facile sneering from the likes of the BBC's 'foreign editor' Jon Williams:

WilliamsJon Jon Williams

Any suggestion of MI6 relationship with #Libya into 2011 v damaging to FCO & No10. Til (sic) now claimed UK-Gaddafi ties part of Blair/Brown past

The fact that MI6 had a relationship with #Libya under Brown/Blair and continued under Cameron showed the policy was working, you silly fellow.

Is here.

It looks at The Secret History of Democracy by Benjamin Isakhan and Stephen Stockwell (Palgrave Macmillan, 2011). And finds it more tendentious than enlightening.

Basically, straining to demonstrate that the 'Western narrative'( sic) of democracy is seriously incomplete, the editors define democracy in a dumbed-down prim post-modern way which allows all sorts of other less effective consultative processes to qualify (emphasis added):

The editors’ Introduction labours to identify a unifying theme by eschewing an ‘undemocratic comprehensive and static’ definition of democracy. Instead we are offered Jacques Derrida’s obscurely open-ended celebration of the ‘multiplicitous nature of democracy’ and its ‘emancipatory promise’.

To move towards this promise three factors must (say the editors) be evident: willingness to participate; equality of access to information, free speech and voting; and civic virtue to accept the rule of law and majority decisions. “If democracy can be understood in this way, it is inconceivable that it has only (sic) occurred in the small collection of historical epochs with which it is usually associated.”

Well sure. But so what? All through human history the reach of leaders’ rule has been tempered by some sort of participatory or consultative process. The collection gives us all sorts of examples of how and where this has systematically happened, many of which might deserve a mention in our history books. But the editors’ factors surely exclude the most important one, namely a robust mechanism for changing leaders. Without that focus for leaders and voters alike, participatory and consensus-building activity is not going far?

And the various contributors miss another vital issue:

Most importantly, the contributors show no understanding of the importance of sheer scale. Human dialogue and participation in any extended family or clan or even larger ethnic community may not work in a much bigger context. Quite different issues of managing trust appear. Rules need to be drawn up, promulgated and enforced.

The power of the Western democratic model lies here, namely in the breadth and depth of the civilisational achievement to deliver codified rules for some sort of fair-minded governance scaled-up for larger populations and (in the case of the early years of the USA) designed to be applicable across vast thinly populated territories with rudimentary communications. In Search of Jefferson’s Moose: Notes on the State of Cyberspace by David Post (2009) is a brilliant study of that organisational challenge, exploring how principles developed back then might apply in cyberspace.

I warmly recommend that David Post book to anyone who wants to learn some fascinating history - and to think about why things work at different levels of scale, including now on the Internet. I previously wrote about it here. 

Buy it. Right now:

These extracts from the German Bundesbank August Outlook (via Guido) capture something as basic as basic can be in the way Germany looks at the Eurozone's problems.

The Bundesbank says almost in so many words that if EU member states want the benefit of the full weight of German financial discipline , they can have it. But at a price. Namely an extensive surrender of sovereignty.

In other words, it makes no sense for Germany to put Germany's top financial reputation reputation at risk without maintaining a systemic and enforceable level of German discipline to support that reputation:

The recent resolutions transfer sizeable additional risks to the countries providing assistance and their taxpayers, and go a long way towards communitising risks caused by unsound public finances and misguided macroeconomic policies in individual euro-area countries.

This weakens the foundations of monetary union, which is based on the principles of national fiscal responsibility and the disciplining effect of capital markets, without noticeably increasing the influence and control over individual national fiscal policies as a quid pro quo.

Putting it another way :

While fiscal policy will continue to be determined by democratically elected parliaments at national level, the resultant risks and burdens will increasingly be borne by the Community in general and the financially sound countries in particular, without this being offset by any concrete powers to intervene in the sovereignty of national fiscal policies.

No comprehensive change in the European treaties is currently envisaged that would democratically empower a central entity to exert some (sic) control over national budgetary policies. This means there is a danger that the euro-area countries’ propensity to incur debt may increase even further, and the euro area’s single monetary policy will be increasingly susceptible to the temptation to adopt an accommodating stance.

Unless and until a fundamental change of regime occurs involving an extensive surrender of national fiscal sovereignty, it is imperative that the no bail-out rule that is still enshrined in the treaties and the associated disciplining function of the capital markets be strengthened, and not fatally weakened.

So, question. What does Germany want? Does it mean what this says? Or is this merely a way to lay down a strong bargaining position in advance of any decisive negotiation, to help ensure transfer of sufficient additional 'sovereignty' to a new central authority on German terms?

The problem for the Eurozone now is that it is not easy to see how any new centralised system can work unless EU member states more or less abolish themselves and agree to be run by unsentimental ruthless Germans for the next few decades until they all learn how to behave properly. Relying on stern rules alone does not work, since the whole mess arises from the fact that the existing supposedly stern rules have been fatally broken, allowing some states to overborrow and then send other states the bill.

The other point is that the Bundesbank appears to be warning that there is nothing much more to be done to help the Eurozone within the existing EU treaty framework.

This is a huge point: any attempt to draft new treaties would open up a can full of wriggly referendum worms, including (but not only) in the UK, and could not be guaranteed to get past all EU member states in any meaningful timetable.

Which leaves the struggling EU member states in a tricky and deteriorating position. While they mull over these existential problems, they urgently (says the Bundesbank) need to 'strengthen the no bail-out rule'. And change the habits of a thousand years or so by starting to behave like good Germans, more or less overnight.

The UK position amounts to projecting a pseudo-helpful willingness to accept anything the Eurozone does, as long as no substantive Treaty changes are required: such changes would lead to a UK referendum (as now required thanks to the Coalition government's 'referendum lock' legislation and a deafening NO to anything looking like more integration. So, given that Whitehall can see the bind the Eurozone is in (ie fast running out of options to help struggling member states within existing treaty structures) it's not especially helpful at all.

Conclusion? Germany: "It's our way - or the highway", the latter translated thusly:

Lots of things are incredibly complicated and yet oddly simple when you strip down the issues to the basics.

Such as the Eurozone drama.

Amidst all the swirling technical/clever analysis of bonds, treaty provisions, sovereign debts and so on, Marshall Auerback gives us this lively thought:

Germany is in effect also a passenger on the Titanic, as Italian Finance Minister Guilio Tremonti recently noted. It might be in the first-class cabin, rather than steerage (or Irish stowaways, as the Germans no doubt view the former “Celtic Tiger”), but when the boat hits the iceberg, all passengers are affected.

OK, but what's the nub of the problem?

... it is ironic (and more than a touch hypocritical) that Germany chastises its neighbors, like Greece, or its trading partners like the U.S., for their “profligacy”, but relies on these countries “living beyond their means” to produce a trade surplus that allows its own government to run smaller budget deficits.

But ... but ... but the Eurozone has rules to manage these tricky situations. Not only rules. Principles!

... there has been a complete lack of consistency of principle. When larger countries such as Germany and France routinely violated spending limits a few years ago, this was conveniently ignored (or papered over), in contrast to the vituperative criticism now being hurled at the Mediterranean profligates. The EU’s repeated tendency to make ad hoc improvisations of EMU’s treaty provisions, rather than engaging in the hard job of reforming its flawed arrangements, are a function of a silly ideology which is neither grounded in political reality, nor economic logic. As a result, a political firestorm, which completely undermines the euro’s credibility, is potentially in the offing

Huh? What are you talking about? President Sarkozy and Chancellor Merkel took decisive new action this week. They sent Herman van Rompuy a letter:

The Euro is the basis of our economic success and symbol for the political unification of our

continent. It stands for the will of Europe to consolidate its internal development and to

jointly meet the challenges of our time. Germany and France, consider it their historic mission

and stand united to protect and strengthen the economic and monetary union and thus the

stability of the single currency.

That's pretty clear. Strong stuff, surely?

And to judge from the flaccid statement that accompanied the conclusion of the Merkel-Sarkozy summit yesterday, it appears that even at this late stage, policy makers don’t get it, or just cannot summon up the political will for the huge conceptual leap forward required to save the euro. The Germans are paralysed politically and things are moving too fast for their policy makers to respond quickly. And their political leadership has neither leveled with the electorate in regard to the magnitude of the problem, nor the costs associated with ongoing punishments of the profligates.

Still, at least Marshall Auerback foresees a happy ending if Germany itself can't stand any more of this and abruptly leaps from the Eurozone taking a few honest and efficient states with it:

The Club Med, such as Greece, Italy, and Spain countries are saved because the euro plunges and they get to export their way out of this. The euro becomes a soft currency country again and these countries go back to living with higher inflation, higher exports and probably a generally more comfortable way of life. 

Interestingly enough, the country which really gets screwed in this type of environment is France which is neither a true “Club Med” economy, but has yet to undertake many of the structural reforms of its German counterpart which it is seeking to emulate. Its economy is more akin to that of Italy, but should it seek to become part of the “greater DM bloc”, then its industrial base will likely face a huge competitive threat from Italy.

Read the whole thing. Very carefully. A fine example of clever complex expert work expressed in words and graphs for the rest of us to follow.

Well, sure he's clever. But is he correct to present the choices so starkly and pessimistically? Who knows? I don't.

In this whole accelerating drama over the past couple of years, those who have predicted that things will get worse (and then worse again) have been vindicated by events. Because (in part) the whole Eurozone rests on elemental existential Euro-assumptions about Paternalism, Trust and Solidarity which turn out to be flawed or flimsy - or just not true.

++Update++ 

A warm welcome to readers from Instapundit and The Corner. (There's nothing like an unexpected Instalanche for improving one's meagre August web-stats)

* * * * *

Mark Steyn has some savage things to say about contemporary British life.

No doubt he exaggerates. Or does he? How would we know?

Thus:

The great-grandparents of these brutes stood alone against a Fascist Europe in that dark year after the fall of France in 1940. Their grandparents were raised in one of the most peaceful and crime-free nations on the planet.

Were those Englishmen of the mid-20th century to be magically transplanted to London today, they'd assume they were in some fantastical remote galaxy. If Charlton Heston was horrified to discover the Planet of the Apes was his own, Britons are beginning to realize that the remote desert island of "Lord Of The Flies" is, in fact, located just off the coast of Europe in the northeast Atlantic.

Within two generations of the Blitz and the Battle of Britain, a significant proportion of the once-free British people entrusted themselves to social rewiring by liberal compassionate Big Government and thereby rendered themselves paralytic and unemployable save for nonspeaking parts in "Rise of The Planet Of The Apes." And even that would likely be too much like hard work...

This is the logical dead end of the Nanny State. When William Beveridge laid out his blueprint for the British welfare regime in 1942, his goal was the "abolition of want" to be accomplished by "co-operation between the State and the individual."

In attempting to insulate the citizenry from life's vicissitudes, Sir William succeeded beyond his wildest dreams. As I write in my book: "Want has been all but abolished. Today, fewer and fewer Britons want to work, want to marry, want to raise children, want to lead a life of any purpose or dignity."

The United Kingdom has the highest drug use in Europe, the highest incidence of sexually transmitted disease, the highest number of single mothers, the highest abortion rate. Marriage is all but defunct, except for William and Kate, fellow toffs, upscale gays and Muslims.

From page 204: "For Americans, the quickest way to understand modern Britain is to look at what LBJ's Great Society did to the black family and imagine it applied to the general population..."

Mark ends with a line which sums the whole drama up in a devastating epigram: Big Government means small citizens.

Here is what the Express says is the text of a strange letter from PM David Cameron's political private secretary Laurence Mann to a 'Conservative activist' (that one seems like a contradiction in terms, but never mind) on the subject of the UK's membership of the European Union and why an In/Out referendum might be, ahem, unhelpfu.

This looks like an authentic text - it carries the obligatory clumsy typo without which no letter from a senior politician's office these days is meaningful.

Thus:

There is also one argument, in particular, against holding such a referendum that we find irrefutably powerful, namely that most people in our country want to say neither ‘yes’ to everything from the EU, nor ‘no’ to everything.
 
The EU is not a matter of everything or nothing. We have, in the past, done well in ensuring that Britain can participate in the collective good carried out by the EU, such as free markets, while keeping out of things that we believe would be bad for our country. For example, we are not part of the Schengen Zone but have kept control of our own border controls, just as, crucially, we have kept the pound.
 
And we should not lose sight of the EU’s very useful work, such as ensuring that all the nations of Europe are equipped to face the biggest challenges of the 21st Century: global competitiveness, global warming and global poverty. These are compelling arguments for why we believe Britain should be an active member.

That last paragraph is more or less nonsensical. What does the EU do to 'equip' all (sic) the nations of Europe to 'face the challenge of global poverty'? The EU's Common Agricultural Policy is a major poverty driver, in that it prevents Africa exploiting to the full its comparative advantage.

Of course the EU has some serious failings too, and there are certainly areas where its powers should be reduced. But a simplistic in/out referendum – posing an artificial choice that does not do justice to the range of views in the country – would be highly unlikely to settle the question of Britain’s membership of the EU at all.

Doesn't that depend on what the referendum result actually is? If we voted to leave, we would then, presumably, leave. OK, in decades to come we might decide to apply to rejoin, so in that sense the issue would not be settled. But in that sense no issue is ever 'settled'.

Another odd paragraph:

The Government has also introduced a European Union Bill, currently before Parliament, which will give Parliament and voters more say over important EU decisions. This new legislation will ensure that if, in the future, there is a change to EU Treaties that move a power or an area from the UK to the EU, the Government of the day will have to ask for the British people’s consent in a national referendum before it can be agreed. This ‘referendum lock’ ensures that politicians in Whitehall will never again be able to hand over more power to Brussels without asking the British people first.

Huh? How can a change to an EU Treaty move a 'power or an area (sic) from the UK to the EU'? Is he referring to some possible scheme to transfer Greater Witney to Brussels?

Forget this eccentric letter. What is really happening here?

As Simon Nixon from the WSJ has just posted on Twitter,

UK now in curious position of actively begging EZ to embrace full political union. Cameron will be desperate not to put obstacles in way 

The startling fact now is that the Eurozone is in such turmoil that it probably does needs radical step towards a completely different sort of European Union, eg one featuring Joschka Fischer's valiant Vanguard (states capable of sticking to the disciplines and hard-core sovereignty pooling of a single currency) and a forlorn Rearguard (ie everyone else). 

The problem with that arrangement is that it won't be possible to ring-fence the Rearguard (including presumably the UK) from the political/economic and above all legal implications of running the Vanguard in a disciplined way. 

So highly pro-integration legal judgements and other edicts issuing from the Vanguard will end up being binding in form or substance or both on the Rearguard, whether they like it or not. Das Vanguard can not fail! That's it!

Does the UK's 'referendum lock' (European Union Act 2011) apply to ECJ rulings, which could be the main threat to effective national control of key decisions as the vanguard tries to survive? Not as far as I can see.

In practice the issue may not be: does the UK put to a referendum sovereignty-threatening parts of a new EU Treaty?

Instead we may face a quite different decision: does the UK decide to attend meetings which are all about scrapping the current bloc of EU Treaties and setting up a totally different structure, where the whole new scheme necessarily involves implicitly or explicitly radical and diminished implications for national sovereignty?

The issue, in other words, is not whether the UK leaves the EU.

It is whether the EU leaves the UK.

Andrzej Lepper, turbulent leader of Poland's left-populist Self-Defence party, yesterday was found dead. Apparently by hanging himself in his party office in Warsaw

Where to start? The English Wikipedia page gives the basics of his lively career, describing how he came from a modest rural family background and with little formal education worked himself up and up to become one of Poland's leading politicians.

At the peak of his political fortunes his party won 11% of the vote in Poland's 2005 general elections to become the third-largest party in parliament. Lepper himself likewise came a more than respectable third (15% of the first round vote) in the 2005 Presidential elections shortly thereafter.

There ensued a messy period featuring an unhappy coalition government between the Kaczynski twins' Law and Justice party plus the two leading populist parties in parliament, Self-Defence and League of Polish Families. Lepper became a Deputy Prime Minister and Minister of Agriculture. This eccentric arrangement duly crashed under the weight of excessive bickering.

In the ensuing 2007 elections both Self-Defence and League of Polish Families blew up and crashed from any seats in Parliament; the Citizens Platform government led by Donald Tusk swept to a heavy win. Thereafter Lepper has been a forlorn, diminished figure, beset by footling private and political scandals and family difficulties.

* * * * *

What to make of Lepper's rise and fall? He was a classic 'transition' spoiler phenomenon, echoing Zhirinovsky in Russia although nothing like as, ahem, vivid:

Lepper by contrast was much more 'stolid' if not oddly conventional. He rose to prominence during the turbulent post-communist 1990s by the usual populist tactics (noisy championing of the 'little man' especially in rural areas and periodic road-blocks) but necessarily (and unlike Zhirinovsky) calmed down as his party won more and more votes.

By the time I went to Poland as Ambassador in late 2003, Lepper's party was doing well, with polling oscillating up to 15% or more (a result good enough to secure a strong Parliamentary presence).

As Ambassador I had a supposedly tricky decision. Poland was a new EU member. Lepper was likely to do well in the 2005 elections and perhaps get into government. Should I meet him to see for myself what sort of leader Poland might get, as British Ministers might need to engage with Lepper at EU meetings? Or would doing so give him an undeserved and wrong-headed boost of credibility/respectability/legitimacy?

This raises a profound point of diplomatic technique, which in turn links to one's view of politics and political change.

My view was that I should go and see him, even if that might dismay some Polish liberal-minded friends.

First, my own main duty was to help London understand what was happening in Poland, which meant dealing with Poland as it was, not as polite Warsaw opinion wanted it to be.

But second, part of the drama of the whole post-communist transition was all about slowly but surely calming down politics after the brutalising effects of decades of one-party stagnation. Foreign diplomats engaging with people - especially the 'problematic' ones - in a friendly but direct way was all part of the process of restoring normal life and respectable standards. It opened horizons and raised expectations: once a populist gets a taste of diplomatic life and the odd canapé, s/he tends to want to stay in that magic elite circle, which means moderating behaviour and language.

Putting it another way, by engaging with people you do give them a respectability they may not deserve. But you also get leverage you otherwise would not have. Precisely because they get a new sort of vicarious respectability from meeting you, they now have something new to lose. And, usually, they are very loath to lose it. 

Slightly undignified for the diplomats, and vexing for mainstream middle-class liberal locals. But it works.

London thought hard about this for all of two seconds, and agreed. So off I went to call on Mr Lepper in his party offices.

Needless to say, Lepper was quite good company: canny, interesting, folksy-funny and genially opportunistic. We had a pleasant and sensible exchange which achieved a few seconds of notoriety in the Polish media. My main problem was not staring too obviously at Lepper's caked-on fake almost orange sun-tan.  

And lo! it transpired that when Law and Justice pipped Citizens Platform to the post in Poland's 2005 general elections, the Kaczynski twins decided to form a coalition with the two populist parties who also got into the Sejm. Lepper became Deputy PM! And Minister of Agriculture! Horror!

Apart from the fact this strange coalition government as a whole was a priori dysfunctional and sub-optimal, political life in Poland spluttered on adequately for a while.

Lepper himself did well enough as Agriculture Minister. He was clever and diligent. He mastered the brief, popped over to Brussels for Agriculture Council meetings and made no blatant policy mistakes. A visiting House of Commons Committee met him in his office and had a more than sensible exchange with him about how Poland's fragmented farming sector was coping with the CAP and so on.

In due course the Kaczynski twins collapsed the arrangement and called the 2007 elections which brought Donald Tusk's Citizens Platform a sweeping victory. Both Lepper's party and League of Polish Families were more or less wiped out as political forces, just as Jaroslaw Kaczynski had planned.

This, of course, is why I respected the Kaczynski twins as a powerful force for normalising Polish politics, even if that view much vexed the Warsaw chattering classes. The Kaczynskis really were concerned to tackle 'social exclusion' in Poland, by bringing lots of frustrated rural and small town voters (many of them the human flotsam and jetsam of WW2 displacements from today's Ukraine who ended up dumped on collective farms) into the political mainstream. 

Lepper's Self-Defence and to a lesser extent Polish Families delivered handy lumps of these rural, marginalised voters who otherwise might drift away to more extreme ideas. Hence the cynical brilliance of the Kaczynkis' scheme: they would create this unworkable populist coalition government, steadily suck out the electoral juice from their partner parties, then throw away the discredited leadership husks.

All of which went precisely to plan. Polish politics today is more 'inclusive' - and far more stable - as a result. A huge gain for Europe.

Let me tell you about one meeting of EU Ambassadors hosted by the Austrian Ambassador soon after the new improbable coalition government was formed in 2005. 

One senior colleague who should have known better proposed that the EU Ambassadors send back monthly reports to capitals about the problematic state of human rights in Poland following the creation of this disastrous new extremist/populist government.

I argued that this was wrong in principle. It was very good news for Europe that these supposedly populist parties now had a taste of government. What was better for the EU? Having these people getting occasional smart lunches in Brussels and learning about modern negotiation of good EU standards, or manning road-blocks to protest EU policies?

The whole point of 'transitions' in post-communist countries was, I said, slowly but surely to bring marginalised people into the normal mainstream political process. That was what the Kaczynski twins were doing, much to their credit. Yes, some of the people concerned did not meet usual high standards of Euro-fastidiousness and table-manners. But the best way for them to get there was through patient engagement, not patronising sneers. The fact that Eurosceptics Lepper and Polish Families had entered government and now would start to engage with Brussels processes was a real success for European integration, not a failure!

And, I concluded, if we were really concerned about 'rising extremism in Europe', the desecration of Jewish graves by Islamist fanatics in some major EU capitals might be a much better place to start. 

This terse view won the day, and the proposal was promptly dropped.

Conclusion?

Transitions from communism or other embedded dictatorships necessarily take a long time - decades. Be patient. Deal with these societies as they are, for all the social and moral contradictions.

When in doubt, err on the side of engagement and inclusivity. Be democratic. For all their flaws and failings, people like Andrzej Lepper can play a necessary and ultimately unexpectedly positive walk-on role in normalising things.    

Another sharp piece by Tim Worstall, this time over at Forbes:

For labour and product market protectionism, decent public sector wages and benefits, are the “European Model”. And what’s being said here is that you can either have the European Model or you can have the European Currency.

His article links to this fine piece of work by Peter Boone and Simon Johnson which explains in expert but readable detail just where the Eurozone has gone wrong and why it is fast running out of recovery road.

You have to be smarter than I am to understand some of it, but the core point shines through: the Eurozone has never agreed what ultimately underpins the whole system, but everyone has just 'assumed' that it will be ok on the day if anyone asks.

The Germans had a good answer to what props up the Eurozone: the Rules! But they themselves cut corners when it suited them, plus the Rules required a degree of Teutonic discipline and honesty which some governments found too, ahem, strict

Thus EU banks and governments alike have been busy assuming that regardless of how they pile up debts between themselves, nothing can go wrong. Hey, how can anything go wrong? We're the sunny EU uplands, full of nice moderate social democrats and the very best climate change and gender-neutral principles! We uphold Solidarity!

In short, they believed their own propaganda. .

And that was fine until the markets started to ask more and more awkward questions. Not getting sensible or credible answers from the Eurozone's grandees, the markets have responded (as they of course should) by pushing up interest rates to lend more money into the Eurozone's maw.

This 'subjective' move of pricing uncertainty/risk higher than certainty/less risk in turn in fact makes things 'objectively' harder for Eurozone countries, so the whole problem starts to feed on itself at ever-greater speed.

Boone and Johnson suggest some radical moves that the Eurozone grown-ups might take to hack their way out of the moral hazard disaster area they now inhabit. Cutting public sector wages - and benefits. Removing 'job protectionism'. 

But as Tim explains, these very things are what the EU primarily is all about. Benign and comforting Social Europe, not some nasty capitalist place like the USA or China where there's just no Solidarity:

Who was it who said each man kills the thing he loves? For that’s exactly what the European Union enthusiasts seem to have done, they’ve set up the monetary union so incompetently that in order to maintain it they’ve got to kill that European social democrat model they were hoping to preserve.

Listen - and soon as the gravy train shoots of the rails you'll start to hear the screams of anguish from 'civil society' and the firms who supply those communist-style building-high banners for EU programmes in Brussels.

Let's abolish the European Parliament while we're at it.

Julian Borger at the Guardian has written a long and well-sourced piece about the hunt for Bosnian war crimes suspects. It even quotes me a couple of times (no great surprises for diligent readers of this site).

The key policy dilemma point is here, tucked away in the middle of the article:

While deciding to go after the criminals, the Nato powers had chosen the more cautious course of going after the smaller fry first, on the grounds that they would be less well-protected, a decision many later regretted because it allowed the bigger fish to go into hiding

In most if not all situations there is a spectrum of policy outcome options, ranging from Utterly Awful to Deliriously Wonderful. Politicians and officials know that they really don't want the former and are unlikely to get the latter, so they settle for a range of options somewhere in the middle.

The thing to understand is that within that range of options (which usually is all about balancing risks and short-term v longer-term likely upsides/downsides of different choices) reasonable people might disagree on where the 'right' choice is, but also agree that another point in that range is in itself a reasonable choice, all things considered.

So in Bosnia in 1996 our leaders had a very tricky operational decision to take.

Do they try to arrest the biggest ICTY indictees first? Upside: they deal with the worst suspects immediately, encouraging lesser suspects to surrender. Downside: the biggest fish are well protected and likely to resist - the operation might go wrong and prompt wider protests which could destabilise the peace process itself.

Or do they go for 'lesser' indictees, get some easy runs on the scoreboard and then work their way briskly up towards the biggest fish? Upside: less risky, therefore more chance to plan harder operations in the light of experience - unlikely to rock the peace process. Downside: suggests lack of resolve - the biggest fish may go underground and make life very difficult as we try to catch them.

In other words, once it was decided in principle to arrest ICTY indictees, all sorts of non-trivial policy and operational issues then presented themselves.

As Julian Borger describes, the steady-as-she-goes cautious option prevailed (as it usually does): 'lesser' indictees first. 

But the predictable (if not quite predicted) result of that was the bizarre spectacle of Karadzic and Mladic evading arrest for a startling 14 or so years, even though they were lurking in the Serbia/Bosnia/Montenegro area.

I don't recall being consulted about the pros and cons of arresting Big v Lesser ICTY indictees first. My instinct, I think (hope), would have been to go for some pretty Big ones, as that would send a signal of determination precisely because it was more 'risky'. But I was pleased when the decison was taken to start arresting lesser indictees, and then delighted when the first operation finally unfolded, even though the ICTY indictee concerned, a Serb called Simo Drljaca, died when resisting arrest by the SAS.

This first operation was notable also because the mad Bosniac/Muslim media in Sarajevo quickly denounced it as a typical British pro-Serb plot, designed to rally Republika Srpska opposition to Dayton by making Drljaca a martyr. These ravings played into the background to Robin Cook's first dramatic visit to Sarajevo in 1997.

Anyway, all ICTY indictees have been taken to The Hague to face justice. The whole process has been staggeringly expensive and in many ways deeply unsatisfactory. 

Yet through ICTY the facts of the former Yugoslavia conflict have been aired and argued about in stunning detail. If anything the unfairness of the process lies in the fact that it was too narrow: many senior Bosniacs and Croats with a case to answer - including Izetbegovic and Tudjman themselves - were never called upon to explain themselves and answer serious accusations against them.

Still. Rough justice better than no justice?

As I peck at the keyboard there is plenty of scrambling in Washington to try to get together the votes needed to pass the 'compromise' package agreed by President Obama and Republican/Democrat leaders.

Hardcore Democrats bewail the 'cuts'. Hardcore Republicans/Teapartyers bewail the fact that the cuts don't go far enough and may bear down too heavily on defence spending. These positions echo public annoyance and confusion as to what it all means.

Leftists like Paul Krugman are furious with President Obama for ceding too much, to the point of near-hysterical babbling about the startling fact that Congress members elected with a clear mandate to cut federal spending have had the temerity to want to do so. Banana republic tactics! Extortion!

What does it all mean? Luckily we puny earthlings have the brilliant Keith Hennessey to explain it all.

And, as he warns, it all gets very complicated:

The key technical detail is that the Committee’s recommendations on taxes will be measured against a current law baseline for taxes. Under current law, certain taxes are scheduled to go up in 2013, most notably the individual income tax rates and rates on capital gains and dividends. Normally Republicans dislike a current law baseline on taxes, but in this case it helps them.

Here’s what that means for the Joint Committee:

• If the Committee allows tax rates to increase in 2013 (aka “raise tax rates in 2013,” or “let the Bush-Obama tax cuts expire,” depending on your point of view), the additional revenues raised will not count toward the Joint Committee’s target since this is already current law
• So raising these tax rates doesn’t help the Committee meet their $1.5 T deficit target.  That doesn’t mean they can’t include them in their legislation (they can), just that they can’t get any numeric benefit for doing so. That is incredibly important.

Hmm.

OK, Keith. You win. It's complicated. But what does it basically mean?

While the Joint Committee process does not preclude tax cuts, it is tilted pretty heavily against them and toward spending cuts. That is huge.

That sounds OK. Anything else?

Senate Democrats get to punt this year and next on passing a budget resolution and making any politically difficult choices in the open. This is for me the only unequivocally bad part of this bill. It is process abuse, in which Senate Democrats are avoiding taking responsibility for proposing solutions to America’s biggest economic policy problems.

Everyone wants to blame the other side. No change. Next?

I think Team Obama thinks, because a failed Joint Committee would cause the trigger to cut defense spending an additional 10% and nondefense discretionary spending “only” an additional 8%, that Republicans will pay anything to get a new law, including agreeing to tax increases.

I think Congressional Republicans think this judgment is wrong, and this difference of opinion allows both sides to agree to this trigger and this new law

OK. High stakes political poker. No change:

I am reminded of the familiar scene in an action movie. The bad guy holds a hostage and a hand grenade while our hero, five feet away, points a gun at the bad guy. The bad guy threatens to pull the grenade pin and kill himself, the hostage, and our hero. He points out that the hero may not care about himself, but surely he doesn’t want to risk the life of this innocent young girl.

The hero, who we know is a kind and compassionate man, looks the bad guy straight in the eye and says, “Go ahead. Blow us all up. I don’t care about her, and I don’t care about myself, as long as you’re killed in the process as well. We both know you won’t pull that pin because you won’t kill yourself. So let her go and let’s end this peacefully.”

The bad guy backs down because the hero has demonstrated the threat provides no relative advantage. As long as the exploding grenade would do sufficient damage to the bad guy (death), it doesn’t matter that the hero suffers a greater loss (death X 2). The bad guy doesn’t want to carry through with his threat any more than the hero does.

NB: Superb passage on negotiating technique and 'relative advantage'.

But is the underlying problem of dangerously high public spending in the USA solved by this compromise? Or not?

$2 trillion of spending cuts is big for Congress but small relative to our underlying fiscal problems. If this bill becomes law and if the fall Joint Committee process is successful, the remaining spending problem will be more than an order of magnitude larger than this accomplishment.

If you think this summer has been painful or dread the battle of this fall, you ain’t seen nothin’ yet. Wait until Congress wrestles with the big stuff.

As I expected. Important step in the right direction, but a long hard road ahead.

Read Keith's three magnificent posts in full. You'll learn something.