Putin Ups the Anti On Latvia

Tensions between Russia and Latvia have been escalating since escalated during the Moscow to mark the 60th anniversary of the end of the war. In particular the two countries have an outstanding territorial dispute. The war of words is now on the rise with Putin today resorting to what Mosnews calls a Soviet-era jibe: warning the Latvians that if they press any territorial demands they will get not land but ?a dead donkey?s ears.? Alex at All About Latvia has some background.

Just in time.

Well timed ahead of the French referendum, Deutsche Bahm AG and la SNCF are demonstrating what “ever closer union” can be about… increased quality of life (AP via IHT):

A new high-speed train line will link France and Germany beginning in 2007, cutting travel time between Paris and Frankfurt to under four hours, officials said Monday. … Currently, the fastest train connection between Paris and Frankfurt via Saarbr?cken and Mannheim takes 6 hours, while passengers to Stuttgart have to go via Strasbourg.

And Italy Heading For A 4% Deficit

That’s the current estimate of Morgan Stanley economist Vincenzo Guzzo. And even this he suggests can only be achieved at the price of a series of one-off measures which make the longer term outlook even worse. Just one of the problems:” Labor productivity growth averaged an appalling -0.4% over the past four years”.
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Portugal’s Deficit To Reach 6.8%: It’s Official

A special commission on the deficit set up by the government of Prime Minister Jose Socrates has just reported that the deficit this year will reach 6.83 % of GDP, that’s more than twice the European Union’s 3 percent limit. Over to you Almunia.

Portugal will have the highest budget deficit of any country using the euro since the common currency was introduced in 1999, the government said today. The announcement will prompt a package of spending control measures that may include freezes on wages of civil servants.

SPD Defeat in North Rhine-Westphalia

Gerhard Schr?der and the SPD have suffered a major election setback in these regional elections. Schr?der’s response it seems has been to suggest he will call an early general election late this year.

Schroeder made his proposal after exit polls showed the Social Democratic Party (SPD) suffered a heavy defeat in a state election in North Rhine-Westphalia where it had ruled for 39 years.

The conservative Christian Democratic Union (CDU) won 45 percent, comfortably ahead of the 37.2 percent for the SPD, public TV said.

Schroeder said the “bitter defeat” in North Rhine-Westphalia “throws into question the political basis for the continuation of our work” at a time when Germany was in need of wide-ranging reforms.

Kapitalismus III

More from behind the great PPV firewall. Unfortunately only the reproduced extract is available to non-subscribers (like me):

The German economy, once the economic powerhouse of Europe, is stalling. Annual average growth in gross domestic product since 1995 has been just 1.2 per cent, unemployment has increased since 1970 to 11 per cent, the social security system could no longer be financed even if the population were not ageing, and the government’s finances are in disarray. This is a knot of problems, and it is difficult to disentangle the many threads, isolate one issue and solve it.

Unfortunately, Germany also finds itself in a political trap. Germans have become accustomed to the current high level of GDP used for social protection. In the west, this is due to earlier expansion of the welfare state; in the east, to the expectation of equal treatment created by the one-to-one exchange rate chosen for unification of the two halves of the country in 1990. Unfortunately, expectations determine voters’ behaviour, and political parties anticipate how the electorate will vote. Politicians are reluctant to tell the true story and to propose the reforms that are necessary. Witness the campaign leading up to Sunday’s regional election in North Rhine-Westphalia, where Gerhard Schr?der’s Social Democratic party, facing defeat, has stepped up its anti-capitalist rhetoric.

I think this is a clear statement of the problem from Horst Siebert. Of course we may all agree on the diagnosis, and yet beg to differ over the medication needed. Even if you can’t get through the firewall, you can browse his complete book at Amazon.

Kapitalismus II

The FT asks today (behind the dreaded ppv firewall I’m afraid) whether the current “Kapitalismus” debate in Germany may not represent something more than short-term electioneeering. Could a real shift in the SPD be actually taking place?

The most ignominious defeat of Gerhard Schr?der’s political career may be at hand. On Sunday, in the 12th regional election since Mr Schr?der, the chancellor, scraped back into national office in 2002, polls suggest that his Social Democratic party will be routed in North Rhine-Westphalia – Germany’s most populous state, the industrial heartland of the country’s postwar economic miracle and an SPD bastion for decades.

Defeat would not only turf the SPD out of regional government in the state for the first time since 1966 but would end the last ruling coalition of Social Democrats and Greens in any of Germany’s 16 regions, leaving the federal government in Berlin as the last “red-green” partnership in the country.

The central point is: where is all this leading? It is far from clear. There is a clear danger of electoral setbacks in Germany and a ‘no’ in the French referendum producing an ‘anti-reform’ backlash, with growing protectionism as a backdrop.

Americans look at Europe

Mc Masterchef posts his “final draft of a paper on European Muslims at Liberals against terrorism I wrote for my recently concluded class on Islamic Political Movements with Professor Husain Haqqani.” at Liberals against terrorism: Clash of Identities: Integration, Islamism, and the Question of Europe?s Muslims.

The great Brad Plumer summarizes and discusses a survey of a bunch of books on judicial systems around the world (the parts dealing wit hEurope.) A couple of days ago, he did the same for a Brookings report on The Rise of Europe’s Defense Industry.