April 28, 2004

A "BIG" day for the European experiment

MABB is a registered TM.


A big day, perhaps "the biggest" yet since Maastricht 1992, is rapidly approaching for the European Union (EU). On May 1, 2004, ten central European countries (Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Slovenia, Hungary, Malta and at least the Greek part of Cyprus) will join the European Union as new members. European enlargement has come a long way since 1951.

As it can be expected, it is no easy feat. Enlargement comes with its dose of troubles. But, that is just what it's exciting about observing this once in a life-time process. We can actually observe, live, how the EU takes shape. How do the Europeans deal with the immense challenges they get confronted as they move forward towards this "experiment" called European Union.

So, what does the addition of 10 new members mean for the EU? Well, we know one thing. The 15 old members are not waiting eagerly and with open arms for their new partners in life. Nor the new countries are joining with the same enthusiasm as when they first applied. Nevertheless, there is an air of optimism for the latter.

Of the many challenges they must face, immigration is the one that is ever present in the minds of all Europeans alike. This is the number one topic, especially for the biggest members (France, Germany, Italy and Britain). The average EU citizen thinks that as soon as these 10 nations join the club, there will be millions of immigrants moving west, where it is thought life is better. Proponents of enlargement, of course, beg to differ. They argue that some people undoubtedly will migrate, but the majority will, at least think about it very hard. Currently the new member's economies are growing at a fast pace (about 3 per cent). Proponents suggest that the new member countries will substantially raise their living standards in a relatively short time, which will make it harder for people to want to migrate and thus leave home.

Having said that, practically, it will be much harder for people to migrate from one country to another. Even though, the EU has as a core principle the free mobility of labor and people, most of the member countries will, in fact, maintain restrictions for migration, at least for the first two years.

A couple of issues closely attached to migration, is the economy and jobs. European integrationists argue that an enlarged EU will, in fact, grow economically faster and thus create more opportunities for Europeans. One just has to look at the size of the new total market (450 million people representing about 18 per cent of the world trade). The opportunities for investment and commerce with the new economies is also a strong incentive. The EU has budgeted to spend 40 billion euros on the new member states for the next three years. This money is bound to return to the EU in the form of investment and commerce among member countries. Another form of influx of money for the new members, specially for countries like Poland, will be the agricultural subsidies. The EU pays about 47 Bn in agricultural subsidies to its members. Although, the new members, in the beginning, will only get 25 per cent of what the old members get, the sums are set to be equaled by 2013. This is expected to play a big role in the new members, because they have a bigger agricultural base, compared to the other countries.

Job creation will indeed be the major question. Will enlargement be conducive to job creation or not? Europeans are betting that increase trade and commerce among the old and new members will translate into jobs all over Europe. Sceptics are willing to bet that jobs will not materialize in the near future, at least not in the old member countries. In fact some even argue that the trend will be downward, with unemployment rates increasing in the EU-15 due to investment in the new member countries. Cheaper labor might provide strong incentives for companies to move east.

One other lingering issue is the Euro. Since January 2002, the core countries of the EU received the Euro (the new European currency) with scepticism. However, the new countries will have to wait at least two years after the official admission to the EU. In order for any country to be able to adopt the Euro as their own currency, they have to fully participate in the EMU (European Monetary Union) exchange mechanism and fulfill the Maasthicht criteria. Researchers say that this could take up to 5 years, with the earliest time being 2009.

Lastly, the planned European Constitution has proven to be harder to realize than many had thought. After last December's collapse of talks, where a dispute over the distribution of power in the EU Council of Ministers between Germany and France on one hand, and Poland and Spain on the other, one more attempt will be endeavoured on June 2004. And, even if this time agreement is achieved, the respective legislatures will have to ratify it in each member countriy. This has become a sticky point dividing the union.

Once all is said and done on May 1, the process will not be complete. The new countries will have continue to work hard to comply with the requirements to become a member. What will they do, is enjoy some of the perks, of belonging to such a club. It will be interesting to see how all this turns out in the next few years.

BBC ; Europa ; European political resources ; Financial Times ; Economist ; EU in the US ; Eurostat

April 25, 2004

Must, Bolivian Democracy, be defended by the military?

MABB is a registered TM.

During the 41 anniversary ceremony of the Bolivian Navy (Fuerza Naval Boliviana), the current commander, Hormando Vaca Diez verbalized the intentions of the armed forces to "defend" the weak Bolivian Democracy.

I ask myself, does the Bolivian democracy need to be defended? Of course, when there is a serious threat, such as an invasion by a hostile country, terrorists, people who's aim is to destabilize and further weaken such Democracy and other threats of that nature. In this case, however, from whom will, the Bolivian armed forces, want to defend the democracy?

The answer, I think, points to all the politicians who are practically highjacking the democratic process and to those social movements who follow them without rationally questioning the motives these so called "leaders" might have. In the last few weeks, there has been a frightening rumor saying that a coup d'etat is on the way. The well known indian activist, turned politician, Evo Morales (deputy in congress' lower chamber representing his party MAS) has denounced, what he calls, a conspiracy to take over the government by the deputy defense minister, Jorge Badani. Demagoguery such as this serves to destabilize the country and put in serious jeopardy the democratic process. (more about Morales)

How is one man capable to highjack democracy? Well, it helps to have a substantially large constituency and a well organized party. But, what helps Morales the most is its appeal to the general indigenous populace. Only then, can he get away with threatening the President of Bolivia saying that he better do what "the people" want or suffer the consequences. This is exactly what he did, in the past few days, threatening president Mesa not to travel to Argentina to sign a natural gas sales contract. If Mesa were to sign such a contract (which he already did) then the trouble would begin. (read here)

At the moment, various organization and groups are threatening to demonstrate against, what they call, the illegal sale of Bolivian patrimony. The regional worker's organization from El Alto, COR (in Spanish, Central Obrera Regional), is set to begin pressuring the government on Monday 26 April. On the same day the Bolivian worker's organization (COB), the Bolivian Confederation of Indigenous People (CIDOB), and various university students' organizations are also set to begin demonstrating.

This does not end there. It is a vicious downward spiral taking Bolivia through a road full of conflict and many times violent. Once the demonstrations start, they tend to go on for many, many, days. But, it is when the road blocks start, when the troubles begin. If the demonstrations would stay peaceful and, as according to law, not interfere with the daily life of the general population, there would not be much confrontation. The road blocks are set up, as directed by the leaders, as an effective way of coercion, essentially forcing the government to intervene. This sets up a losing game for the governmental forces because such demonstrations are almost never peaceful. All too often, there are casualties as a result of the repressive actions of the police. The more casualties, the more the general population gets angry at the police and the government. The leaders (people like Evo Morales) play a psychological game, inciting more and more violence. It is a winning game for these leaders, because they are always with the population, claiming to be fighting for their rights.

In the last crisis, there were many losers. Among them, the victims of repression; the families of the victims; the police force; and the government. However the biggest loser of all was the Bolivian democracy. The end result was many people dead, a democratically elected president forced out of office, a short period of time of uncertainty and caos, the undermining of every Bolivian citizen's votes and the further weakening of Bolivian credibility in the eyes of the world.

This is how these, so called political leaders can highjack the democratic process and manipulate it to their advantage. They are the only double winners. First, they are seen as the champions of the people, fighting for their causes. Second, they further their own personal agendas, essentially getting what they want. They take advantage of the trust placed in them by the populous.

April 23, 2004

Bolivia and its malice

MABB is a registered TM.

Thanks to Eduardo for his April 23rd comment. He is absolutely right. Corruption touches every aspect of Bolivian life. One of the clearest examples is its cancerous effects on the Bolivian economy, or for that matter in any economy, in the form of "contrabando" (smuggling). It is a simple process. People, for various reasons, buy goods in another country and smuggles them into their own country, without paying any duties (taxes) required by the local government. This way, they can turn around and sell them at much lower prices, almost always to the detriment of goods produced locally.

In Bolivia, there are many incentives to engage in such a questionable trade. None of them, of course, justifies smuggling as a legitimate trade. However, many of them have strong arguments. One example is the dispute about the "autos chutos" or smuggled cars. In the last six years alone car smuggling has cost the government Bs 480 million ($59 million) in revenue and the downtrend keeps going. However, the administration is reluctant to clamp down on the activity, because it is not prepared to offer an alternative source of income. The government very well knows that if it were to strictly enforce current law, there would be another sector from where political heat would emanate to further destabilize the country. The citizens engaged in this activity, see such work as the only alternative to earn income. One only needs to look at the creation of jobs and unemployment statistics to, perhaps, understand where are these citizens coming from. This is a politically loaded topic for the administration. Perhaps that is why the government keeps extending the deadline to register the cars and legalize them.

Nevertheless, the government has, since July 1999, implemented an agency-wide reform to help the Aduanas Nacionales (national customs agency) to become more efficient and rid itself of corruption. The reform has two goals:

1. To eliminate internal corruption and thus become more efficient in the collection of contributions.

2. To fight against external (outside agency) corruption; fight against smuggling and stream-line the process of transfer of collected funds to the national treasury.

The reform process is not yet finished, but some results are already evident, according to the agency. But the issue is not how much they collect, but whether they can successfully transform themselves from a slow, inefficient and corrupt laden
institution into a modern, efficient and relatively un-corrupt agency.

C'mon Bolivia, you can do it!

Anatomy of an article

MABB is a registered TM.

If you go back in time on my blog, you will find a small project I started back in October 2003. The name of the project was: "The anatomy of an article". In it, I wanted to record the whole process of writing an article about Bolivian democracy. From the conception of the idea; the preliminary research; more complete research; the draft of the article and the end result. However, various circumstances have come in the way and I have not been able to record the entire process. The good news is, that I continued with the idea and I am currently arriving at a time when I will be able to post the first draft of the article.

This note is just an to update those who browse in the archives and find this seemingly unfinished project.


April 20, 2004

A mind boggling question

MABB is a registered TM.

There is a question which is currently circulating the internet that boggles my mind.

Does president Bush have a deal with Saudi Arabia's prince Bandar to help him get re-elected?

The argument goes: President Bush has a deal with Saudi Arabia's prince Bandar, so the latter will help Bush lower gas prices in the US just in time for the elections.

In a news report I read on MSNBC, I learned that the recent OPEC cut in oil production was at the urging of the largest oil producer within the cartel, Saudi Arabia. As a result, OPEC cut production by about 10 per cent. The arguments for the cut are based on the cartel's assumption that demand for oil will subside in the northern hemisphere due to warmer weather. In the meantime, the price for a gallon of gas is currently at an all time high ($1.76 per gallon), with tendencies to keep increasing.

In recent days, Saudi Arabia, has come out to reassure the US that it will not allow oil shortages to harm world economic growth. This statement sets the stage for a future increase in oil production by none other than the Saudis.

If one looks at this events with an skeptic eye, one easily comes to certain conclusions.

However, unfortunately, things are not that easy. There are more factors to take into account. For example, the facts that the US is currently buying oil to replenish the nation's emergency crude stockpile (of course, this fact can also be seen with skepticism). Another example is the fact that China is also eating up enormous amounts of oil in response to its growing needs. Another argument cited is the weak value of the dollar, which hurts the US. And of course the disruption in Iraq's oil production due to the war and Venezuela's production due to political instability, add to the mix. (source)

I don't think we will ever know if Bush has such a deal with Saudi Arabia. Nonetheless, there are many questions left lingering.

1. Why is it that Bandar has access to top secret information?
2. Why has the administration (Bush) not put more pressure on OPEC and Saudi Arabia to keep the price of gas from rising the way it has been rising?
3. If gas prices do come down by November, will it be just bad (or good) timing (for Bush) or a mere coincidence?

The race to the White House

MABB is a registered TM.

It is interesting to note that with all the seeming attacks against president Bush in the last few months, he still managed to pull ahead in the polls. Criticism about his war in Iraq by former counterterrorism expert Richard Clarke and Bob Woodward's new book, "Plan of Attack", coupled with criticism on his management style by Bush's former Treasury Secretary, Paul O'Neal, has not affected his campaign. If anything, it appears to have strengthened his position in the race for re-election.

In the meantime, John Kerry has noticeably disappeared from the stage. He has struggled to get his "message across" and thus he is suffering in the polls. A recent report by the Washington Post, says that Bush is leading in the polls by about 5 percentage points. Moreover, Bush has successfully overcome a 12 point deficit from a couple of months ago.

So what is going on? Certainly, "the" issue being talked about currently is the War on Terrorism and the War in Iraq. While many ostensible attacks have been launched against president Bush, seriously questioning his judgment, ability, readiness, and awareness to govern, by former members of his administration and now a well known journalist famous for having been one of the people who helped brake out the Watergate affair, apparently, he did not feel many effects from such attacks. To the contrary, all these attempts seem to have helped him, if not gain, at least, maintain his high approval ratings and his appeal to voters. The questions raised by these attacks have failed to highlight Bush's mistakes, if any, and to take away precious support. Instead, him and his team, have vigorously and successfully, refuted every accusation thrown to them. In the process, affirming, in the public's eye, Bush's perceived strength over Kerry (for republicans a.k.a. "Hanoi John") to lead the nation in times of war.

The commission investigating the 9/11 attacks has provided for a much welcomed public forum, with a touch of drama, for the administration to make its case and defend itself from attacks. The members of the administration who appeared before the commission, especially, Condi Rice and Colin Powell, efficiently defended Bush's actions, taking care not to leave any potentially embarrassing issue lingering about.

The economy and jobs were potentially dangerous issues for the Bush campaign. However, recent reports on growth, low inflation, historically low interest rates and a surprising growth in the number of jobs created in 1Q 2004, have helped the administration's argument that the economy is starting to take off and Bush's tax cuts are working. As the economy gets better, prospects get better and people do not have the jobs issue in the back of their minds.

One other issue that has certainly helped the Bush campaign is the appearance of Ralph Nader. According to the Post's report, when the Nader factor is taken into account, he takes about 6 percentage points over all. The argument is the same. Nader, with his candidacy, takes away precious votes from the democrats. People who, would otherwise vote democrat, choose to vote for Nader, only to make a statement about the political system. In a race so closely divided, every vote counts and if Nader was not in the race, chances are, those votes would otherwise find their way to John Kerry.

Lastly, the absence of democrats ready to criticize the Bush administration is specially helpful for the Bush campaign. The strategy followed by all the primary democratic candidates during the primaries, was working. All of them concentrated their attacks on Bush. As a result, president Bush's initial lead had evaporated and had become a real problem for his campaign. This concerted effort did have a significant effect on the polls. However, all of the sudden all the attacks have stopped; John Kerry hardly gets any coverage in the news; and much worse, any prominent democrat (the likes of Al Gore, Bill Clinton and Howard Dean) has disappeared from the map without uttering a word against the Bush campaign. The only prominent democrat to be seen engaged in a one-to-one with his republican counterpart (Ed Gillespie) is DNC Chairman Terry McAuliffe. It seems that either the democrats have thrown the towel or they are following a strategy designed to deliver a knock-out punch to Bush as the elections approach.

Whatever happens in the next months will certainly be interesting to watch. The campaigns are close to their highest points and the last cards are probably being prepared to be drawn at the appropriate time.