Author Archives: P O Neill

About P O Neill

is Irish and lives in America.

Putin would pay the airfare

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The honour of the last question ever to be asked at a Bush Administration press briefing goes to Georgia —

Q … And also, in the conversation that you had I think with Mr. [Mike] McCurry that you referred to, you made an offer to the Georgian President to be a guest at the President’s institute, and some people in Georgia took this as an opening for him to leave his current position. Was that meant?

MS. PERINO (press secretary): No, no, no, no, no. (Laughter.) I was asked a question about the President’s plans for his freedom institute, and one of the examples he has used is that leaders like Mikheil Saakashvili would be somebody who would maybe come and provide a lecture to the students at Southern Methodist University at some point. But it certainly wasn’t an invitation to leave the country or his leadership position.

Gordon Brown: Step-Skipper

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For some months now there’s a being a bit of amnesia about how we got to this point in the global banking crisis.  Does anyone remember 4 months ago when the Swedish model of banking crisis resolution was hotter than the Ikea catalog? Everyone said that they were reading up on the “bad bank” approach in which the government took over the banking system, the dodgy loans therein were dumped into a separate management entity and a slimmed down recapitalized system was returned to the private sector.  But a funny thing happened on the way to the 2008 version of that bailout: no one did the bad bank part (to be fair, Belgium and Switzerland have done bits of it on a selective basis).

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The curse of Cheney

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Dick Cheney in Azerbaijan 3 months ago —

And we support the people of Azerbaijan in their efforts, often in the face of great challenges, to strengthen democracy, the rule of law, and respect for human rights, and to build a prosperous, modern, independent country that can serve as a pillar of moderation and stability in this critical part of the world.

Meek US State Department statement issued on a slow news day, 30 December —

We deeply regret Azerbaijan’s decision not to renew the broadcasting licenses of Radio Liberty, Voice of America and the BBC. These media organizations play a crucial role in supporting democratic debate and the free exchange of ideas and information. This decision, if carried out, will represent a serious setback to freedom of speech, and retard democratic reform in Azerbaijan.

We remain committed to working with the government of Azerbaijan to find the proper legal framework within which these radio and TV broadcasts can continue.

This came just over a week after the USA had made Azerbaijan eligible for tariff concessions on its exports to the USA — the kind of thing that can be revoked from African countries if they are judged to have regressed on political pluralism.  It’s as if there’s something special about Azerbaijan that trumps such concerns.

Ukraine kicks to touch on gas crisis

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The Wall Street Journal (subs. req’d) is reporting that Ukraine is to settle the $2 billion debt to Gazprom via loans to the public gas company Naftogaz from two state-owned banks.  As Edward explained a few days ago, the gas debt is one of the open wounds of the economic crisis in Ukraine, with many questioning whether stabilization is possible with the huge gas debt unresolved.  And this solution really does nothing to resolve it.  The debt is now just shifted from Naftogaz to the state banks, and none of the ideas to put the gas transactions on a more sustainable path (e.g. by raising transit fees for gas destined for the EU) have been pursued.  Perhaps it’s another sign of the political paralysis.  But it’s not clear that the IMF will be amused by this nine zeroes debt juggle.

UPDATE: It seems that reports that the payment would resolve the latest Russia-Ukraine dispute are premature.  Naftogaz appears to have made a transfer to Gazprom that did not include “late fees” and deducted $100 million.

Left unsaid

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Among the International Monetary Fund recommendations following the mission to Belgium —

Tackle the imbalances inherent in the current fiscal federalism arrangements. Resolving vertical imbalances will require shifting more of the burden of fiscal consolidation and preparation for population aging from federal/social security to community/regional entities. Horizontal imbalances between communities/regions should be reconsidered with a view to providing a better match between spending authority and revenue-raising responsibility and improving the transparency and incentive effects of intergovernmental solidarity mechanisms.

God knows how long it took to draft such a masterful dodging around Belgium’s regional sensitivities, albeit at the expense of a paragraph that will bewilder anyone who doesn’t know much about Belgium.

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Irish people to be made an offer they can’t refuse

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It’s not surprising, but no less brazen for that: the Irish government will apparently propose later today at the EU Summit in Brussels that the rejected Lisbon Treaty be put again to referendum no later than October of next year.  So says the Irish Times which has seen the draft summit agreement.  The package will essentially be unchanged from what was voted on before, but the 26 others will have to agree to keep the Commission at a size allowing at least one commissioner from each country.  Declarations regarding Ireland’s neutrality and tax autonomy will apparently also be added, but the Irish government will be in the slightly strange position of arguing that these declarations are significant when it previously argued that the associated concerns were meaningless.  It’s a packed agenda at Brussels, also including the need to patch up obvious disagreement between France and the UK on the one hand and Germany on the other on the size of fiscal stimulus.  One suspects that some of the countries are annoyed that the Irish question is still hanging around.

UPDATE [1925 GMT]: Gordon Brown apparently believes that if the new guarantees given to Ireland have any legal content, the UK would have to reratify the treaty.

Is Greece having a 1968?

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Young people in the streets.  The government forced into an early election and saying that it can’t control the country.  Years of simmering discontent apparently coalescing into serious civil unrest.   Perhaps things look worse than they are because of the police tactic of avoiding direct confrontations with rioters where possible: sacrifice property to safe life.  But is there any other European country this close to boiling point?

The Lisbon wildcard

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As pressure mounts on Irish PM Brian Cowen to announce the seemingly inevitable 2nd referendum to ratify the EU Treaty of Lisbon, the Czech ratification is still not resolved and looks set to shake up Czech politics no matter what happens.   ODS (Civic Democratic Party) is having their congress this weekend, which includes a leadership election pitting PM Mirek Topolanek as heavy favourite to be reelected despite poor regional election results. His opponent is Prague Mayor Pavel Bem — a Eurosceptic.  And Czech President Vaclav Klaus, the Eurosceptic-in-chief, has resigned his honourary chairmanship of ODS.  Thus the seeds of a split are being sown.  This follows what apparently was a circus of a meeting between Klaus and a group of MEPs yesterday, in which Klaus’s de facto alliance with Irish anti-Lisbon group Libertas was a major issue.

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Too flexible

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The global financial crisis has had a continual capacity to surprise policymakers and the latest unpleasantness would appear to be the failure of the IMF-backed stabilization program in Ukraine barely a month after it was announced.  As we noted at the time, the program emphasized a flexible exchange rate, to avoid blowing reserves on a futile defence of a peg (something on which the Fund’s reputation took a hammering during past crises in Russia and Argentina).  But the effect seems to have been a worst of both worlds situation where the failure to establish a credible range for the hryvnia led to a severe loss of confidence in it, with the result that the IMF loan is essentially covering a dollarization of the economy.  Ukraine had the bad luck to have a dollar benchmark for the exchange rate just as the dollar was sharply appreciating.  If they had been coming into the stabilization plan with a history of pegging against the euro (or sterling!) things wouldn’t look so bad.  One lesson would appear to be that planting an economic stabilization plan into unresolved political instability doesn’t work so well.  The Fund may look at Romania with a more jaundiced eye as a result.

IMF to Italy: Carry on Restructuring

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The IMF has released yesterday’s concluding statement of its mission to Italy.   It’s mixed reading.  On the one hand, Italy is looking at a full year recession for 2008, let alone 2009 (the latter being the benchmark prediction for most OECD countries).  And long-term problems, such as low employment rates, remain.  However Italy has dodged the most severe aspects of the global financial crisis, partly because it never rode the wave upwards in the first place.  Nonetheless, the Fund wants to be clear that while the G20 summit might have sounded like a call for many countries to engage in fiscal stimulus, Italy shouldn’t think of itself as one of those countries.  It doesn’t have the room and should concentrate instead on getting the budget under control.  Indeed, the Fund’s emphasis on expenditure cuts for Italy makes it sound like the kind of medicine that David Cameron will be prescribing for the UK when the Pre-Budget Report comes out next week — but he is not going to get the gift of an IMF report saying that the UK should join Italy as a country needing to get its fiscal house in order.  Incidentally, the final paragraph of the IMF statement for Italy seems to be an oblique warning to Silvio to avoid any more industrial policy initiatives as part of his “solution” to the crisis.