Tag Archives: countries

Hungary: Well That Didn’t Take Long!

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It was only just over two weeks ago (two weeks, which following the logic of a historical time which seems far from uniform, now seem like half a lifetime) that guest poster P. O’Neill, said this:

For understandable reasons — the addition of 10, and soon to be 12, new member countries, and the constitutional crisis, the European Union has been preoccupied with foundational questions in recent years. But an older concern is working its way back onto the agenda: how to handle an economic crisis in a member country……However, the risk of the latter type of crisis in a member country is now quite high.

The warning lights are flashing again – this time in eastern Europe, and especially in the recent or imminent member countries of Hungary, Romania, and Bulgaria. Poland is also a source of concern. Some combination of profligate governments, political uncertainty, EU spending booms, and capital inflows have created precarious economic positions for these countries.

Well, well, well, scarcely three weeks later, and here it is, all on the table. Sometimes, in the field of interest of what is sometimes erroneously termed the dismal science, things do indeed move quickly.
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Of Population Pyramids and Value Chains

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It is by now well known that the main hope for developed societies subject to rapid population ageing who wish to maintain their relative standard of living lies in increasing their collective productivity more rapidly than they increase their dependency ratio via-a-vis the older age groups. Now in the comments thread on the recent ‘Reform is a Dirty Word‘ post I ventured to say that I found it obvious that at some stage we would reach a point where the rate of population ageing was going to outstrip the rate of productivity increase (in which case relative income per capita would inevitaby start to fall). David, unsurprisingly, asked me why I thought this to be the case. I was not happy with the response I offered (which was essentially some ‘rigmarole’ about the biology of ageing which is coming in a separate post), and since that time I have been scratching my head trying to find a simple way to get this point across. Perhaps I now have one.

All you need to get to grips with what follows is a basic understanding of geometry and a vague interest in football.
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More Sweden, less tidbits

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Well, I just lost a long post about the so-called Swedish model due to my own stupid carelessness the combined malevolence of Windows XP and MS Word.

Anyway, the main point was to say that the article on the subject (free for non-subscribers) in last week’s issue of The Economist was really a dishonest hack job. And my critique went roughly like this :
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The new great game

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Our next anniversary guest post is written by the the great Jonathan Edelstein.

It’s starting to look like the season of referenda in the near abroad.

On September 17, less than a week from today, voters in the unrecognized republic of Transnistria, located between Moldova and Ukraine, will be asked to vote on whether to “renounce [their] independent status and subsequently become part of the Republic of Moldova” or “support a policy of independence… and subsequent free association with the Russian Federation.” The option of “free association” with Russia, which is widely considered a prelude to outright annexation, is reportedly backed by a large number of Russian-financed business and political organizations, some with long-standing presence in Transnistrian politics and others apparently formed for the occasion. In the meantime, South Ossetia, which had earlier explored the possibility of petitioning Russia’s constitutional court for annexation, has just announced its own referendum for November 12, and although Abkhazia currently denies similar plans, there are rumors that a plebiscite may be in the works there as well.

The referenda, which are rather transparently supported by Moscow, represent something of a change in policy for the Russian Federation. It’s certainly nothing new for post-Soviet Russia to attempt to maintain its influence over the countries comprising the former Soviet Union, and it has at times used Russian citizenship to cement the “soft” annexation of neighboring territories; for instance, at least 90 percent of Abkhazians and South Ossetians now hold Russian passports. Nevertheless, up to now, it has soft-pedaled the issue of de jure territorial expansion. The forthcoming vote on whether Transnistria should become a second Kaliningrad suggests that policymakers in Moscow are at least starting to think seriously about taking formal responsibility for the territories that have broken away from other former Soviet republics.

At first glance, it’s hard to see why Russia would push such a policy at the present time. All three of the breakaway republics have substantial minorities who oppose union with Russia; Transnistria is almost evenly divided between ethnic Russians, Ukrainians and Romanians, and despite post-Soviet ethnic cleansing, South Ossetia and Abkhazia retain Georgian minority enclaves. The recent wave of terrorist bombings in the Transnistrian capital of Tiraspol may well be linked to the referendum, and Russian annexation of the Georgian breakaway republics would only intensify border conflicts such as the Kodori Gorge. Nor would successful plebiscites lend a veneer of legitimacy to a Russian annexation; indeed, given the current international attitude toward non-consensual secessions from recognized states, this would only make Russia’s legal position worse by transforming it into an occupying power.

In other words, the referenda seem like a recipe for stirring up ethnic conflict within the breakaway republics, making Moldova and Georgia even more alarmed over Russian political ambitions than they already are, and creating new diplomatic and legal problems for Moscow. Which leads naturally to three questions: why now, what does Russia stand to gain in compensation for these risks, and how much should the rest of the world (and particularly Europe) care?
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Visit Hungary Now!

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Because they devalued the forint this summer, so everything is now about 7% cheaper.

Well, they didn’t actually devalue it. No. I mean, that would imply there had been a… devaluation. Ha ha, how silly. No, what happened was that the Bank of Hungary moved the band in which the forint was allowed to float freely. Whereupon the forint freely floated down from around 250/euro to more like 275/euro. So, it was a sudden fast downward change in the value of the currency caused by central bank action. Which is not a “devaluation” at all.

(The forint lost about 10% of its value in a month; you can see the graphic here. It has since clawed back about a third of that loss. Still, a Euro will go about 7% further than it would in May, and about 10% further than in March.)

Nobody seems to have paid much attention, but I think there are some points of interest here.
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Who gets under the EU umbrella when it rains?

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This anniversary guest post is written by the clever and wittty P O’Neill.

For understandable reasons — the addition of 10, and soon to be 12, new member countries, and the constitutional crisis, the European Union has been preoccupied with foundational questions in recent years. But an older concern is working its way back onto the agenda: how to handle an economic crisis in a member country. The last major convulsion was Black Wednesday in 1992. Yet the only real long term impact of Black Wednesday was on the electoral fortunes of the Conservatives, as the legacy of mismanagement proved very difficult to shake. But there was little other damage: the UK economy managed to shed an exchange rate straitjacket that it had never particularly liked and growth recovered quite quickly, and the Eurozone project, then its in infancy, shed its most reluctant large member, setting the stage for monetary union 7 years later. Furthermore, the crisis itself was limited in scope, as it never concerned the ability of the UK government or the country as a whole to pay its bills.
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Romania edges towards the door

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Romania’s PM Tariceanu announced yesterday that he wants to withdraw Romania’s troops from Iraq.

Right now here are about 900 Romanian soldiers there — one full battalion, with the catchy name of “The Red Scorpions”. They’re deployed in the Al-Nasyria area. They don’t do combat operations. There’s an intelligence team and some de-miners. 900 non-combat soldiers may not sound like a lot, but they made Romania the fifth largest member of the coalition (after the US, Britain, South Korea and Italy).

Why were they there? Well, Romania places a high value on the security relationship with the US. (A cynic might suggest that they’re keeping up the payments on their national security insurance policy.) The numbers involved are not large, Romanian casualties have been very light (one death in three years, to a roadside bomb), so up until now it hasn’t seemed like a very expensive investment on Romania’s part.

The withdrawal isn’t a done deal, BTW. PM Tariceanu must ask the Defense Council for permission; unlike a US President, he isn’t Commander in Chief of the armed forces. And President Basescu (who until recently was saying that the troops should stay “until democracy is established”) may yet weigh in.

From a little distance, I have the impression of a government edging cautiously towards the door, floating a trial balloon and waiting to see how everyone else reacts.

Note that the new government of Italy is sharply cutting Italy’s military commitment to Iraq; the troop count there has dropped from 2,700 to 1,600, and Italian Foreign Minister Massimo D’Alema says all troops will be out by early 2007. That would leave the Poles (900 troops) and the Danes (550) as the only European countries other than Britain with significant numbers of troops in Iraq. (Hereby somewhat arbitrarily defined as more than 200 men. There are a dozen or so countries with 20 or 50 or 100 there.)

European countries that had significant troop levels in Iraq, but then left:

Spain — 1,300, left April 2004 (Zapatero government)
Hungary — 300, December 2004
Netherlands — 1,300, left March 2005
Ukraine — 1,600, left December 2005 (Yushchenko government)
Bulgaria — 460, left May 2006

So, there were nine (counting Britain); five have left, one looks getting ready to go, that would leave three.

No further comment, just taking note.

Qualified yes to Romania and Bulgaria

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As expected

Not that “qualified” I don’t think. Once you’ve gone this far, turning them down isn’t politically viable. They might get a bunch of embarassing transitional arrangements instead.

My semi-informed uniformed view is that waiting until 2008 would have ultimately been better for them, though a longer wait would have been counterproductive.

The European Commission gave a qualified yes Tuesday to Romania and Bulgaria joining the European Union on Jan. 1, but it delayed a final decision until October to try to pressure the Balkan countries to make greater inroads in fighting corruption and in judicial reforms.

The EU’s executive body said it did not want to dissuade reform-minded governments in both countries by delaying an entry date. But Olli Rehn, the EU expansion commissioner, warned that the two nations still needed to address shortcomings in their judicial systems and that their entry into the world’s largest trading bloc was not yet assured.

“Unless the countries take immediate corrective action, they will not be ready” in January, Rehn told a packed chamber of European deputies in Strasbourg. “If serious concerns remain, we will not hesitate to use the safeguards we have at our disposal,” he added, alluding to the EU’s power to delay the countries’ entry until 2008 or to withhold EU aid, even after they join.

The HRC is dead, long live the HRC?

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The UN has elected a brand new Human Rights Council to replace the discredited Human Rights Commission. Why was the old HRC discredited? Well, basically and officially, because several of its members were known to violate human rights and/or to protect their own interests. It is only logical. However, who will be taking a seat in the new and improved HRC? Right, some of those very same countries that were known to violate human rights: China, Cuba, Pakistan, Russia and Saudi Arabia.
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Flexicurity – a working model for Europe?

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Before moving in to the nitty-gritty of flexicurity; what it is and whether it can work as a universal European labour market model I should take the time to thank the AFOE team for allowing me a spell as a guest-writer here at the blog in the coming two weeks. In terms of presentation my name is Claus Vistesen and I am a Danish student at the BLC program at Copenhagen Business School. For further info I invite you to visit my personal blog Alpha.Sources, which deals with a wide range of topics of my interest.

There is a lot of talk and flurry at the moment about labour market reforms in Europe, notably in France, but also Germany has been struggling with how to reform the labour market and here as well as here.

Looking to the north we find the Nordic countries who seemingly have the best of two worlds; low uemployment coupled with a high degree of security but what is it exactly that the Nordic countries are doing, and could others potentially follow their example?
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