While the entire world is admiring Londoners for their ability to not let the terror destroy their way of life, while London mayor Ken Livingston is taking the Tube each morning, because not doing so would prove the terrorists strategy right, the British government is reinforcing its ongoing quest to get hold of as much information about citizens as possible. I’d call it “opportunistic”, they’d call it “concerned”.
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France Suspends Schengen
French interior minister Nicolas Sarkozy has announced that in the light of what has happened in London France is reintroducing European Union border controls. There is a clause within the Schengen Agreement which allows for controls to be reinstated and Sarkozy said that this had been activated by France. The decision is described as temporary. Such suspensions have occured in the past for sporting events (or in the case of Spain for EU summits), but this idea of ‘temporary’ might be a little longer.
There is suggestion in the Italian press that the Netherlands may also have done so, but I still can’t find confirmation. Italy has explicitly said it isn’t going to suspend. The UK of course isn’t party to the Schengen agreement.
WaPo gets it wrong
Sunday’s Washington Post had an article by one Anne Dumas that’s been blogged here and there, provocatively titled What’s American and Envied by France?. It starts with a rather shocking assertion that has, unsurprisingly, been quoted in a lot of the bloggage:
[N]ot a single enterprise founded here in the past 40 years has managed to break into the ranks of the 25 biggest French companies. By comparison, 19 of today’s 25 largest U.S. companies didn’t exist four decades ago. That’s why France is looking to the United States for lessons.
Alas, this quotable assertion is completely false.
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Suicide Bombers
Well a consensus seems to have been reached that some at least of the bombers were ‘suicides’ (the probability seems to be that they all were). So what do we know about suicide bombing? Well reading around I came across this document from the Rand Corporation which contains a chapter from terrorism specialist Bruce Hoffman entitled “Defending America Against Suicide Terrorism” which seems quite to the point. This paragraph seems especially prescient about ‘Why is suicide bombing so attractive to terrorists?’.
“To answer these questions, we conducted extensive research and interviews with foreign police/security forces with prior experience with suicide terrorism. The following conclusions emerged.
First, from a tactical standpoint, suicide attacks are attractive to terrorists because they are inexpensive and effective?with an extremely favorable per-casualty cost benefit for the terrorists. Moreover, they are less complicated and compromising than other lethal operations. No escape plan is needed because, if successful, there will be no assailant to capture and interrogate. Suicide attacks are perhaps the ultimate ?smart bombs.? They can cleverly
employ disguise and deception and effect last-minute changes in timing, access, and choice of target. Finally, suicide attacks guarantee media coverage. They offer the irresistible combination of savagery and bloodshed.”
And for those who are interested in points from the ‘oh why do we keep making the same mistakes department’ this (pdf) file from Hoffman on Insurgency and Counter Insurgency in Iraq (written in June 2004, but still largely valid) makes an interesting read.
Italy Remains On Red Alert
The danger that Italy could be the next country to be attacked is certainly being taken very seriously there. Corriera della Sera leads with “Blitz antiterrorismo in tutta Italia” (which I imagine I don’t need to translate). For english language readers AFP are carrying this story:
Italian police were carrying out a country-wide anti-terrorism operation early Wednesday, a day after the government announced a series of measures aimed at preventing a London-style attack, the ANSA news agency reported.
Hundreds of police and paramilitary Carabinieri officers were searching homes and buildings in several cities in northern Italy as well as in the southern port of Naples and on the island of Sicily, the agency said.
Just returning briefly to the economic implications of terrorism, I want to re-iterate that stock market reactions form only part of the picture, there is also a ‘real economy’ to think about, and here consumer confidence will be important. What will be the impact in the UK of the fact they were suicide bombers (for example). The jury is still out, and will be till late autumn at the earliest. Italy is another case in point. An attack now might well have serious economic consequences, indeed even the threat of one (which is where we are now) complicates the economic picture significantly.
Update 20:15 CET
The Italian Interior Minister has announced that 174 people have been arrested.
Germany’s Structural Budget Problems
Bloomberg (didn’t I once promise not to have anything more to do with them, oh well, needs must) have obtained a copy of German Finance Minister Hans Eichel’s budget plans for 2006. The problem is a serious one since the big problems are structural not cyclical:
“Given the availability of financial resources, an adequate public infrastructure and a sound education system with everything that accounts for Germany’s future viability can no longer be guaranteed”
The room for manouevre – whoever is elected in the autumn – is extremely limited since “nearly two thirds of next year’s 256 billion-euro budget are slated for debt-servicing, state pensions and unemployment benefits as well as jobless-placement costs”…(while)..”Germany’s three-year economic slump and near-record joblessness have eroded tax revenue”.
The ECB And Rate Reductions
Bloombergs Mathew Lynn on why we need a rate cut regardless of fluctuations in the value of the euro. (Also see the Liquidity Trap post on Afoe yesterday, I, like Lynn, don’t agree we have reached the point where monetary policy is useless, at least not yet we haven’t).
“The ECB appears to have little comprehension of the task it faces right now. With the rejection of the European Union constitution by the French and Dutch electorates, and with Italian politicians openly calling for the return of the lira, the future of the single currency is no longer assured.”
“This isn’t the moment for small-minded technical arguments about how far exchange-rate changes boost or depress an economy. It is the moment for bold action. At some point, people will tire of permanently low growth. If the euro area can’t perform better in the next five years, there may not be a euro for the ECB to defend”.
Settling Accounts?
I don’t know how many of you have seen the film The Insider, but Caesar Alierta, boss of Spain’s telecommunications near-monopoly Telefonica, has always seemed to me to fit the bill perfectly. Now the Financial Times announce that he is finally to be charged with an old insider-trading scandal:
“C?sar Alierta, executive chairman of Telef?nica, the Spanish telecommunications group, has been charged with insider trading in connection with alleged improper share trades when he was chairman of a tobacco company. The public prosecutor’s office is seeking a four-and-a-half-year jail sentence for Mr Alierta, the most senior executive ever charged with insider trading in Spain. The prosecutor’s office is also requesting the seizure of ?1.86m ($2.27m) of profits Mr Alierta is alleged to have made from trading in Tabacalera shares when he was chairman of the Spanish tobacco group in 1997.”
As the FT notes, the case also has a political dimension, since it forms part of the ongoing ‘feud’ between PSOE and PP. The reality is that ‘justice’ is still a very political issue in Spain. Still, you have no idea how happy it would make me to see Alierta finally convicted of something. Adding-on a few racketeering charges might not go badly amiss either.
There’s been an arrest
The investigation quite early led us to have concerns about the movement and activities of four men, three of whom came from the West Yorkshire area,” said the head of the Metropolitan Police anti-terrorist squad, Peter Clarke.
“We are trying to establish their movements in the run-up to last week’s attack and specifically to establish whether they all died in the explosions,” Clarke told reporters.
He added that it was “very likely” that one of the suspects was among those who died in one of the bombed Underground trains, near Aldgate station in east London.
Clarke said the “complex and intensive” investigation was “moving at great speed”, following raids on six premises in the industrial city of Leeds, in northern England, home to a large Muslim population of south Asian origin.
He said a man — identity and age not revealed — was arrested in West Yorkshire, the county that includes Leeds, and that he was being transferred to London for questioning.
Closer to the capital Tuesday, police sealed off a train station and parking lot in Luton, a town north of London, and carried out controlled explosions on a car with suspected links to the attacks.
More Details Emerge
Sky continue to maintain their original claim that there were four bombers, and that they are all dead. This has not had direct police confirmation. But sky do provide a lot more details. One of the most important of these is that images of the four were captured by CCTV cameras at Kings Cross. There may be some doubt about the fourth of the bombers because the police inform that three come from the Yorkshire area, but say nothing about the fourth.
Deputy Assistant Commissioner Peter Clarke explains:
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