In a thoughtful opinion piece in The New York Times, 29 March 2010, columnist Roger Cohen reflects upon the changing political scene in the Middle East.
He starts with the observation that the passage of the US health care bill is an important foreign policy victory for President Barack Obama, because it demonstrates that he is a tough politician with a capacity to deliver.
On Netanyahu’s inept performance in relation to the Obama Administration, Cohen observes:
Netanyahu was the first foreign leader to think he could steamroll Obama. He earned a frosty comeuppance.
The Israeli leader toyed with Obama’s unequivocal call in Cairo last June for a “stop” to Israeli settlements. He allowed the ill-timed announcement that 1,600 apartments for Jews will be built in East Jerusalem. Then, rather than scrap that, Netanyahu chose cheap cheers from the American Israel Public Affairs Committee with “Jerusalem is not a settlement.”
(I say cheap because everyone knows Jerusalem is not a settlement. That’s not the issue. The issue is that the Israeli annexation of East Jerusalem is rejected by the rest of the world and any peace agreement will involve an inventive deal on its status. To build is therefore to provoke.)
Obama was not amused. He airbrushed Netanyahu’s White House visit. The message was clear: The Middle East status quo does not serve the interests of the United States (or Israel). When Obama says “stop,” he does not mean “build a bit.”
On Netanyahu’s efforts to make Iran the key issue (efforts which were demolished quite effectively by Newsweek editor Fareed Zakaria (see Fareed Zakaria on Netanyahu), Cohen says:
Obama’s stance has also demonstrated that his focus on Israel-Palestine will not be diverted by Netanyahu’s push to place the Iranian nuclear program front and center. This is critical: Iran cannot be a Palestine-postponing pawn.
Cohen sees a changing scene as a result of Obama’s stance:
Already, there are shifts in Israeli attitudes as a result of the new American clarity. Last year, Netanyahu described Iran’s leaders as “a messianic apocalyptic cult,” which was silly. Of late we’ve had Ehud Barak, the Israeli defense minister, setting things right: “I don’t think the Iranians, even if they got the bomb, are going to drop it in the neighborhood. They fully understand what might follow. They are radical but not total ‘meshuganas.’ They have a quite sophisticated decision-making process.”
...
Barak also got it right when he said that, absent a two-state solution, Israel would be “either non-Jewish or non-democratic.”
Obama is now insisting Israel act to avert that unhappy outcome. Americans, prodded by a report from Gen. David Petraeus, are beginning to see the link between terror recruitment and a festering Israeli-Palestinian conflict. Planning in Washington on Iran has shown a “marked shift in thinking away from the war strategy,” as Nicholas Burns, a former top State Department official, put it to me.
Cohen’s overarching message is that realism is needed all around. America cannot afford a third Muslim war. Israel cannot afford to open an unprecedented Persian front. The Arab world will always regard Israel as a bigger problem than Iran.
On 22 January 2010 the House of Commons all-party Science and Technology Committee established an inquiry into the disclosure of climate data from the Climatic Research Unit at the University of East Anglia. Today it published its findings, which follow:
The Science and Technology Committee today publishes its report on the disclosure of climate data from the Climatic Research Unit (CRU) at the University of East Anglia. The Committee calls for the climate science community to become more transparent by publishing raw data and detailed methodologies.
Phil Willis MP, Committee Chair, said:
"Climate science is a matter of global importance. On the basis of the science, governments across the world will be spending trillions of pounds on climate change mitigation. The quality of the science therefore has to be irreproachable. What this inquiry revealed was that climate scientists need to take steps to make available all the data that support their work and full methodological workings, including their computer codes. Had both been available, many of the problems at CRU could have been avoided."
The focus on Professor Jones and CRU has been largely misplaced. On the accusations relating to Professor Jones's refusal to share raw data and computer codes, the Committee considers that his actions were in line with common practice in the climate science community but that those practices need to change.
On the much cited phrases in the leaked e-mails—"trick" and "hiding the decline"—the Committee considers that they were colloquial terms used in private e-mails and the balance of evidence is that they were not part of a systematic attempt to mislead.
Insofar as the Committee was able to consider accusations of dishonesty against CRU, the Committee considers that there is no case to answer.
The Committee found no reason in this inquiry to challenge the scientific consensus as expressed by Professor Beddington, the Government Chief Scientific Adviser, that "global warming is happening [and] that it is induced by human activity". But this was not an inquiry into the science produced by CRU and it will be for the Scientific Appraisal Panel, announced by the University on 22 March, to determine whether the work of CRU has been soundly built.
On the mishandling of Freedom of Information (FoI) requests, the Committee considers that much of the responsibility should lie with the University, not CRU. The leaked e-mails appear to show a culture of non-disclosure at CRU and instances where information may have been deleted to avoid disclosure, particularly to climate change sceptics. The failure of the University to grasp fully the potential damage this could do and did was regrettable. The University needs to re-assess how it can support academics whose expertise in FoI requests is limited.
These findings completely exonerate the man at the centre of the controversy, Professor Phil Jones. To the extent that there is criticism of a culture of non-disclosure, responsibility for this is sheeted home to the University of East Anglia, not the Climatic Research Unit. This means that the mountain that climate change deniers have built upon this episode in order to discredit climate change science turns out to be very small molehill.
To read the Committee’s report on the House of Commons website see here.
For today’s news item on the Committee’s report see here, and for an editorial on the matter see here.
For earlier commentary on this controversy, specifically on a piece by conservative US columnist George Will which was published in The Weekend Financial Review, 20-21 February 2010, see More climate change denial.
Newsweek editor Fareed Zakaria had a piece in the 29 March edition (see here) on the subject of the current crisis in US-Israeli relations. Headlined Bibi’s bluster, it carries the strapline The Israeli Prime Minister says his nation’s security is his top priority. Too bad he’s undermining it.
Zakaria makes the point that this crisis hasn't been caused by just one event—the announcement, while Vice President Joe Biden was visiting Israel, to approve new Jewish housing units in East Jerusalem. It caps a year of increasingly strained relations between Washington and Tel Aviv.
He notes that Netanyahu apologised about the timing of the housing announcement, but remains unyielding on the substantive question, and claims to be guided by the vital interests of the State of Israel. In identifying those vital interests, Zakaria says that it would be clear to anyone who has listened to Netanyahu over the last few years that Iran tops his list. He goes on:
But after watching Netanyahu's government over the past year, I have concluded that he is actually not serious about the Iranian threat. If tackling the rise of Iran were his paramount concern, would he have allowed a collapse in relations with the United States, the country whose military, political, and economic help is indispensable in confronting this challenge? If taking on Iran were his central preoccupation, wouldn't he have subordinated petty domestic considerations and done everything to bolster ties with the United States? Bibi likes to think of himself as Winston Churchill, warning the world of a gathering storm. But he should bear in mind that Churchill's single obsession during the late 1930s was to strengthen his alliance with the United States, whatever the costs, concessions, and compromises he had to make.
In a smart piece of analysis in Israel's Haaretz newspaper, Anshel Pfeffer, no fan of the Obama administration, writes, "When senior ministers or generals list Israel's defense priorities, there is always one point on which there exists total consensus: The alliance with the United States as the nation's greatest strategic asset, way above anything else. It is more crucial than the professionalism of the Israel Defense Forces, than the peace treaty with Egypt and even than the secret doomsday weapons that we may or may not have squirreled away somewhere…But [Netanyahu] has succeeded in one short year in power to plunge Israel's essential relationship with the United States to unheard of depths."
This is the same Netanyahu that The Australian’s Greg Sheridan seems to see as a wise leader around whom we should all rally, attributing President Obama’s coolness towards him as an “anti-Israel jihad”, and describing the widespread criticism of Israeli actions as “hysterical” (see Greg Sheridan’s jihad).
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Obama’s Anti-Israel Hysteria Dangerous and Destructive screamed the headline of Greg Sheridan’s major piece in The Weekend Australian, 27-28 March 2010.
His article begins:
Barack Obama’s anti-Israel jihad is one of the most irresponsible policy lurches by any modern American President.
And just in case you missed that phrase “anti-Israel jihad”, he uses it again towards the end of the article, when we are told that the hearts of the radical political theorists favoured by Obama are made to sing by “this anti-Israel jihad”, and elsewhere he poses the question why Obama has “gone into full jihad mode against Israel”. To Sheridan this “dangerous new lurch into anti-Israeli populism” is all because Obama’s personal popularity is more important to him than America’s standing in the world.
Popularity with whom, we wonder. Certainly not the voting public of the United States, where unshakeable support for Israel is a sine qua non of obtaining the highest office in the land – a criterion on which Obama was closely scrutinised during the election campaign. No, it is personal popularity in the Muslim world that Obama courts, which seems a trifle odd in a first-term President who shows every sign of wanting to be re-elected.
That word hysteria gets a bit of a workout as well. An addition to the headline, we are told that
The anti-Israel hysteria is totally disproportionate and wildly over the top. The British decision to expel an Israeli diplomat because Israel is alleged to have used forged British passports in Mossad operation is a case in point.
... Israel’s friends now should rally around it, or the spectre of wild and hysterical anti-Israeli sentiment will be unleashed with all sorts of destructive consequences.
One begins to form the impression that the only possible reason for disapproving of the actions of Israeli Prime Minister Netanyahu (the proximate cause of Obama’s irritation with Israel) is the onset of an hysterical condition. This impression is reinforced by the fact that Sheridan cannot find a single Israeli contribution to the difficulties of finding a Middle East peace settlement. In his view, “all of the things that make peace impossible” are down to the Arabs:
- Arab and Palestinian refusal to accept the legitimacy of any Jewish state
- Palestinian insistence on certain deal breakers such as the right of return of all Palestinian refugees and their descendants to Israel proper
- the insistent and violent anti-Semitism of Palestinian and Arab propaganda, and
- the regional ambitions of players such as Iran and Syria.
All of these, he avers, will be completely unaffected by any decision to build apartments in a Jewish neighbourhood in East Jerusalem in three years time.
So the Palestinians are “refusing to participate in peace talks, which Netanyahu would be happy to participate in”. There is an important distinction to be made here between peace talks and any kind of peace settlement. To the extent that Mr Netanyahu would be “happy” to participate in anything with the Palestinians, it would be perpetual talks with the Palestinians of his choice (certainly not with Hamas, without whom no settlement is possible), leading nowhere except perhaps eventually to the stunted Palestinian Bantustans that he has in mind if in extremis Israel is forced one day to accept some kind of two state solution.
Towards the end of his article Sheridan fulminates:
Accompanying Obama’s own actions has been some of the most dangerous rhetoric ever to come out of a US administration, to the effect that Israeli intransigence endangers US troops by inflaming extremists in the Islamic world.
What Sheridan neglects to tell us is that this is actually a reference to Senate testimony given earlier this month by General David Petraeus, the Commanding Officer of Central Command, who has overall command responsibility for the wars in Afghanistan and Iraq. In that testimony, General Petraeus presented a 56 page document in which he listed five major challenges faced by Central Commmand, and a list of a dozen second-tier challenges, one of which was insufficient progress towards a comprehensive settlement in the Middle East, in relation to which the document said:
The conflict foments anti-American sentiment, due to a perception of U.S. favoritism for Israel. Arab anger over the Palestinian question limits the strength and depth of U.S. partnerships with governments and peoples in the AOR and weakens the legitimacy of moderate regimes in the Arab world. Meanwhile, al-Qaeda and other militant groups exploit that anger to mobilize support. The conflict also gives Iran influence in the Arab world through its clients, Lebanese Hezbollah and Hamas.
That all seems perfectly reasonable to me, but the significance of this element of the testimony should not be overstated; General Petraeus has been at pains to hose down the controversy which has resulted, pointing out that this is just one paragraph in a 56-page document, and that it is simply an account of part of the context in which US troops are fighting.
Sheridan goes on to make the remarkable claim that
No serious analyst anywhere believes that Israel is an important source of the conflicts in Afghanistan or Iraq.
Source is the key word here. I don’t think anyone seeks to argue that Israel is the source of the conflicts, but I think that no serious analyst would seek to argue that the Israeli-Arab dispute is irrelevant to either conflict, and that Israeli behaviour does not matter in the wider context of the Middle East.
So Greg Sheridan has managed to convince himself that the responses of the Americans and the British to the passport forgeries and the announcement of the extra settler housing in East Jerusalem are hysterical and wildly over the top. After all, what is a bit of passport forgery between friends? And the Israelis apologised to Vice President Biden for the unfortunate timing of the housing announcement, so why all the drama?
Interestingly, commentators in Israel are capable of taking a stance that is much more critical of Mr Netanyahu. Writing in the mainstream Israeli newspaper Ha’aretz on 28 March (see here) columnist Zvi Bar’el writes about “how Israel’s security situation has deteriorated during Netanyahu’s short term in office”:
We're not talking about yet another clumsy Israeli foreign minister whom no one wants to meet, or irksome building permits. Netanyahu poses a threat to Israeli security because he tips the balance of U.S.-Israeli relations, which are essential for our survival.
Of Netanyahu’s performance in Washington, and more generally, Bar’el concludes:
In a properly-run country, concerned about its own survival, thousands would have met the prime minister on his return, calling for his resignation. In such a country, gangs of squatters who steal land and buildings in Jerusalem would be considered organizations opposed to the nation's security interests. They would be taken to court, at least. In Israel, they are a symbol of national pride.
This arrogant government is sure that ever since it annexed the occupied territory in Jerusalem, it granted Israel control for all eternity. Jordan's King Abdullah can tell the lovers of eternity what happened to the so-called legal annexation of the West Bank and East Jerusalem to Jordan. This is the same Jordanian East Jerusalem that Washington will recognize as the capital of Palestine.
For generations the settlers have been blamed for posing an obstacle to peace, for acting against the policy of the government, which, poor soul, can't stand up to these bullies. And so, while Washington believed that the Israeli government wanted to take action against such subversive organizations but had problems, it showed restraint, gave in a little about the construction freeze, patted Netanyahu on the shoulder and granted extensions to the government so it could manage its own affairs.
There is no longer any basis for this approach. The Israeli government, and the seven wonders in charge of it, are inseparable from the bullies. And so Washington had to conclude that the government and prime minister were simply lying.
Washington's main interest is no longer whether the peace process will advance, because there are no guarantees that even direct talks with the Palestinians will end in an agreement. Washington's interest is to preserve its standing in the world against a small state and its crafty government, which made it a laughing stock. This will be a true test of the United States' ability to apply foreign policy. What is good for Iraq and Afghanistan, Washington figures, will also suit Israel now, because if Israel rebuffs Washington, Iraq and Afghanistan will, too.
And so the American formula is the same for all three. The United States will take care of the security of Israel/Iraq/Afghanistan, but security will not be measured only in the number of weapons sold to them, but also in the creation of conditions that will avoid the need to use them. To a certain extent, it will also be measured by these countries' willingness to agree to U.S. policy. In this way, a new condition has been created that should have been applied a long time ago. According to it, any country that is willing to harm the international standing of the United States is gambling on its own security. This is not a threat, but a clarification.
Strong stuff. I leave it to you, gentle reader, to decide whether Greg Sheridan or Zvi Bar’el is closer to the mark, closer to the temper of the times.
On ABC Radio National’s morning and evening current affairs programs Radio National Breakfast and PM we have been treated today to Opposition Immigration spokesman Scott Morrison breathlessly obsessing about the transfer of a number of asylum seekers from Christmas Island, which is outside the migration zone, to Villawood Detention Centre in the suburbs of Sydney. This, he fears, could result in a change in the asylum seekers’ legal rights, and enhance their access to our legal system.
Needless to say, Morrison is highly critical of the Government for the recent level of boat arrivals. This, it would appear, is entirely a function of the Government’s limp-wristed approach to asylum seekers. To Morrison there is nothing in the world outside Australia that influences the number of arrivals, it is entirely due to the “signal” that the Government sends to the people smugglers. All we need is a sufficiently brutal approach to asylum seekers to deter people from trying to enter Australia, and the boats will stop coming.
For my part, my only criticisms of the Government’s approach in this particular matter are that it has chosen to continue the Howard Government’s excision of parts of our sovereign territory from the migration zone, and that it still mouths the rhetoric of taking a tough line on “border protection”. I would like to see a Government which recognises all of our sovereign territory as a part of Australia in every sense, and which does not feel the need to be apologetic or defensive about adopting a humane approach to asylum seekers.
Under the headline Tony Abbott calls for restraint on Israel, the 27-28 March edition of The Weekend Australian reports that Opposition leader Tony Abbott has called on the Rudd government to ignore the precedent set by the British Government, and refrain from expelling an Israeli diplomat over allegations that the Israeli secret service, Mossad, used forged Australian passports in the Dubai assassination of a Hamas operative.
To quote from the article:
While stressing that he did not condone the misuse of Australian passports, and while it is not yet known whether Israel was involved in the assassination, Mr Abbott pleaded for understanding for the Jewish state.
"We can never forget that Israel is a country under existential threat in a way Australians find difficult to understand," Mr Abbott told The Weekend Australian. "It's also the only pluralist democracy in the Middle East”.
"We have to understand that Israel sometimes has to do something which mercifully other countries are spared the necessity of doing. It strikes me that it would be an overreaction to expel an Israeli diplomat."
Some comments:
- The “existential threat” argument is paraded constantly, but it is palpable nonsense. Israel has a substantial nuclear strike force, widely reported to be deliverable by aircraft, ballistic missiles, and submarine-launched cruise missiles, and it has an absolute security guarantee from the United States.
- A much better case could be made that Israel’s neighbours in the Lebanon, the West Bank and Gaza face an existential threat; they live under constant threat of Israeli attack, and there is no sign that the Palestinians have any future other than continuing military occupation, accompanied by a steady attrition of their natural resources and their cultural assets. Israel occupies Syrian territory in the Golan Heights, and Syria was attacked by Israeli commandos and aircraft in September 2007. Iran is constantly threatened with a pre-emptive Israeli strike.
- Mr Abbott might think that it is not yet known whether Israel was involved in the assassination, but the UK Government seems certain enough to take the step of expelling an Israeli diplomat. Given the close collaboration between Australian and British police and intelligence agencies, I think we can be reasonably confident that the Australian Government knows a great deal of what the UK Government knows, and why the UK Government is so confident that the assassination and the associated forging of passports were the work of Israel. I don’t know what sort of smoking gun would satisfy Mr Abbott.
- When he argues that Australians might find it difficult to understand Israel’s situation, and that we need to understand that Israel sometimes has to do something that others are spared the necessity of doing, he might like to reflect that people whose land has been stolen and who live under brutal military occupation are also in a situation which many Australians find hard to imagine, and they too might sometimes feel that they have to do things that we are spared the necessity of doing. There is no sign from Mr Abbott of any such empathy for the Palestinian situation.
One of my key extra-curricular activities is my role as a foundation director of Australia 21.
Australia 21 is an independent, non-partisan, non-profit organisation which was established in 2000 to develop and promote new frameworks of understanding regarding the complex problems which Australian society faces in the 21st century.
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Australia 21 operates by drawing on outstanding researchers and experts from diverse institutions and disciplines, nationally and internationally, and from various sectors of society – the research community, government and business. We bring together in roundtables and ongoing research networks of the best minds available and provide them with opportunities to interact in ways that are not usually available.
Whereas most of our national research institutions very sensibly contour their research efforts around established research teams, our tendency is to start by identifying a crucial question and then go looking for the multidisciplinary, inter-institutional team that can answer it. We do not claim that this is a superior approach, simply that the nation needs both approaches.
We undertake inclusive, integrated analysis in four thematic programs:
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Last night I decided to have a relatively early night, but made the fatal mistake of deciding to look something up on the web on the way.
I opened a new tab on Firefox, and hit the Home icon, to find to my horror that instead of seeing my default search engine (Google) I was confronted by something called Ask.com, which had not only insinuated itself into my system as a new default search engine, but had installed a couple of unsolicited toolbars with handy links to places like amazon.com and Facebook that I do not find handy at all (or I would have installed them myself).
I next did the simple and obvious thing – opened Internet Options and replaced the Ask.com string with www.google.com.au. This made no difference whatever, and when I had another look at the default search engine in Internet Options, there was the Ask.com string again. I tried shutting and restarting Firefox, and doing a complete restart, after restoring Google as the default, all to no avail.
I then started looking on the web to see whether other people had encountered this problem. Indeed they have, and a variety of potential solutions is offered. I tried the easiest ones first, and none of them worked. Then I found someone who seemed to know what he was talking about, on a site called ITechLog. The bad news is that Ask.com inserts three sets of entries into your systems registry, and you cannot get rid of the damned thing without doing a registry edit.
This is never something to be embarked on lightly by the average mug IT user, but if you follow the steps carefully you cannot go too far wrong.
The ITechLog solution, directed to Vista users, may be found here. I could not find the third entry that needs to be replaced (extension.snipit.chrome), which may have something to do with the fact that I am in Windows 7 rather than Vista, but having made the first two changes I used the filter to find any other entries associated with Ask.com. I found one with a name to the effect that it is the preferred search engine and replaced that with Google.com.au, and another entry with a name indicating it is to be launched on startup; here I replaced the Ask.com string with the Google string copied from the ITechLog solution.
This all worked in the way it is intended to, but the strings I have inserted mean that without another registry edit with a Google string I do not have I now have Google.com as my default search engine. This means that I have lost the facility to give preference to Australian web pages unless I take the further step of going to Google.com.au. Not happy.
It was good to see Julian Huxley return to playing for the ACT Brumbies last night in their match against the Waikato Chiefs. Huxley, 30, is a very attractive player who was diagnosed with a brain tumour in March 2008 and has been through all of the surgical and other rigours that inevitably follow.
While awaiting medical clearance from the Australian Rugby Union to resume playing, Huxley has been the Brumbies’ kicking coach and has been training regularly with the senior squad in the gym and in the field. The talk was, however, that it would be some time before he returned to match appearances.
That all changed when he was selected for the reserves bench for last night’s game, which meant that he had a legitimate expectation of being called upon for the last 15-20 minutes of the game. That all changed again when winger Francis Fainifo sustained a leg injury 10 minutes into the match. Full back Adam Ashley-Cooper was moved to his slot, and Huxley came on to play a full 70 minutes as full back against the determined onslaught of the Chiefs. He gave it everything he had, to such effect that one of the TV commentators remarked that he was a candidate for man of the match.
Today’s Australian Financial Review, datelined Washington (Bloomberg, AFP) contains a remarkable claim by Israeli Prime Minister Binyamin Netanyahu:
... Israeli Prime Minister Benjamin Netanyahu met President Barack Obama in Washington late on Tuesday after insisting on Israel’s right to pursue housing projects in Jerusalem. The US opposes these as detrimental to peace efforts.
“This was never raised as a point of contention between us and the US” in 42 years of building in Jewish neighbourhoods of the Israeli capital, Mr Netanyahu told US House Speaker Nancy Pelosi.
For starters, the current controversy is not about what any single country outside Israel recognises as “the Israeli capital”, it is about the intensification of ultra-orthodox Jewish settlement in East Jerusalem, which was annexed by the Israelis after the 1967 War, contrary to international law, and in which the Palestinians expect to establish the capital of an independent Palestinian state.
If this really has never been a bone of contention between the United States and Israel in the 42 years of the illegal annexation of East Jerusalem, then that would say a lot about the supine nature of US dealings with Israel over the period. But I am inclined to doubt it. Whatever caused Bill Clinton to observe after his 1996 meeting with Netanyahu that “he thinks he is the superpower and we are here to do whatever he requires”, and as ardent an Israel supporter as Clinton’s Middle East Adviser Dennis Ross to observe that Netanyahu’s performance was “nearly insufferable”, it is hard to imagine that no terse words were exchanged, or that building in Jerusalem never came up.
I rather think that the claim tells us more about Mr Netanyahu. I am no more inclined to believe that the US has never raised building in East Jerusalem at any stage of the last 42 years than I am inclined to believe that Mr Netanyahu was taken by surprise, as he claims, by the announcement at the start of Vice President Joseph Biden’s visit to Israel that Israel would build another 1600 homes in East Jerusalem.
Israeli Prime Minister Binyamin Netanyahu has told the annual conference of the American Israel Public Affairs Committee in Washington:
The connection between the Jewish people and the Land of Israel cannot be denied. The connection between the Jewish people and Jerusalem cannot be denied.
The Jewish people were building Jerusalem 3,000 years ago and the Jewish people are building Jerusalem today.
Well, that settles it. No-one else has done a tap, apparently, no-one else has any meaningful connection with the place. Wonder how that golden domed mosque got there?
In this weekend’s edition of The Weekend Australian Financial Review, 20-21 March 2010, there is an opinion piece on the debt crisis by Simon Johnson (a professor at MIT’s Sloan School of Management and former chief economist of the International Monetary Fund) and Peter Boone (Chairman of Effective Intervention at the London School of Economics) which resonates strongly with the piece contributed by Professor Ross Buckley on Friday 12 February (see Negative resilience in the global financial system).
In his piece Professor Buckley identified feedback loops in the international finance system that reward international commercial banks and the elites within nations, at the expense of the common people in those countries. The principal mechanism for this is the pressure which is placed on the governments of highly indebted countries to assume the obligations of local banks to foreign lenders, so that the foreign lenders are repaid in full, and the locals wear most of the cost of the repayment – essentially a massive socialisation of private sector debt.
Writing in a similar vein, Johnson and Boone contrast favourably the recent actions of the Kazakhstan Government with the behaviour within the Euro zone.
In relation to Kazakhstan:
For most of the last decade, Kazakhstan gorged on profligate lending, courtesy of global banks – just like much of southern Europe. The foreign borrowing of Kazakh banks amounted to about 50 per cent of gross domestic product, with many of these funds used for construction projects. As the money rolled in, wages rose, real estate prices reached near-Parisian levels, and people fooled themselves into thinking that Kazakhstan had become Asia’s latest tiger.
The party came to a crashing halt last year, when two sharp-elbowed global investment banks accelerated loan repayments – hoping to get their money back. The Kazakh government, which had been scrambling to support its overextended private banks with capital injections and nationalisations, gave up and decided to pull the plug. The banks defaulted on their loans, and creditors took large “haircuts”(reductions in principal value).
But – and here’s the point – with its debts written off, the banking system is now recapitalised and able to support economic growth.
By contrast, in Ireland, where the banking system’s external borrowing reached roughly 100 per cent of GDP (twice the level of Kazakhstan):
Instead of making the creditors of private banks take haircuts, the Irish government chose to transfer the entire debt burden onto taxpayers. The government is running budget deficits of 10 per cent of GDP, despite having cut public sector wages, and now plans further cuts to service failed banks’ debt.
For Greece, with its government debt approaching 150 per cent of GDP, the outlook is much worse:
If Greece is to start paying just the interest on its debt – rather than rolling it into new loans – by 2011 the government would need to run a primary budget surplus (that is, excluding interest payments) of nearly 10 per cent of GDP. This would require another 14 per cent of GDP in spending cuts and revenue measures, ranking it among the largest fiscal adjustments yet attempted.
Johnson and Boone argue that, in Greece’s poisonous political climate the level of adjustment required is a sure route to dangerous levels of civil strife and violence; Greece simply cannot afford to repay its debt at interest rates that reflect the inherent risk.
The alternative they propose is for Greece to manage an orderly default:
Reckless lending to the Greek state was based on European creditors’ terrible decision making. Default teaches creditors – and their governments – a lesson, just as it does the debtors: mistakes cost money, and the mistakes are your own.
...
A default would be painful, but so would any other solution.
...
A default would ... appropriately place part of the costs of Greece’s borrowing spree on creditors...
Ultimately, by teaching creditors a necessary lesson, a default within the euro zone might actually be a key step towards creating a healthier European – and global – financial system.
Many will disagree no doubt, and there is an argument that there is nothing wrong (in the Greek case) with the taxpayer being asked to foot the bill for the recklessness of the governments they elected – by contrast with the Irish case, and the Indonesian case cited by Ross Buckley, where the punters are picking up the bill for the recklessness of the private banks. The fact is, however, that Greek society simply cannot deal with this matter on its own. If Greece does default, it will be the Germans and the French who take the biggest haircuts. This will be an interesting space to watch.
There is an article, Thales contracts in Combet’s sights, by John Kerin in the 15 March 2010 edition of The Australian Financial Review, which can only be described as an ill-informed beatup.
After informing us that:
Defence Materiel Minister Greg Combet has ordered a review of all “poor value for money” long-term Defence contracts with industry as part of a $20 billion drive to cut wasteful spending.
Kerin goes on to tell us that:
Government sources have told The Australian Financial Review that the Defence Materiel Organisation has had the Thales arrangements in its sights since at least 2006, suggesting the contracts were drawn up in the “bad old days” when the plants were transferred from government to private ownership (ADI) and before regular performance-base contracting.
Having been directly involved as Secretary to the Department of Defence in the closing stages of the privatisation of Australian Defence Industries (ADI) I can attest that the form of the contract had nothing to do with the bad old days before Dr Gumley took up the reins at the Defence Materiel Organisation, and everything to do with the Howard Government’s objectives in privatising ADI, namely, to maximise the proceeds of the sale.
By way of background, Australian Defence Industries was the corporate vehicle into which the Hawke Government had gathered up all of the assorted manufacturing and service-providing activities that had been directly owned by the Department of Defence. Until its privatisation it was a government corporation with its own CEO and Board, but a wholly owned entity of the Department of Defence. Its assets included the Captain Cook Graving Dock at Garden Island, the contract to build six modern minehunters, the ammunition factory at Benalla and the propellant plant at Mulwala, the so-called Long-Term Ammunition Agreement with Defence, and an assortment of smaller plants and businesses.
In one of the first conversations I had with then Defence Minister Ian McLachlan on taking up duty in February 1998, he told me that the Department of Finance (Office of Asset Sales) was complaining that Defence was dragging the chain on completing the provision of the due diligence data required for the privatisation. He told me that I was to have the process completed in four weeks. I told him that I would look into it and get back to him.
On looking into the matter I quickly ascertained that the jewel in ADI’s crown was the Long Term Ammunition Agreement, under which ADI had a contract to provide Defence with certain ammunition natures for a twenty-year period from the date that the munitions factory at Benalla commenced operations in 1995. It was that agreement that put the value into the factories at Mulwala and Benalla. I read the 250-odd pages of the agreement from cover to cover, and came upon the clause that said in effect that Defence could give its wholly owned entity one-month’s notice to terminate the Long Term Ammunition Agreement, would meet all the costs of winding up the relevant operations of ADI, but would not be liable for any other costs.
I went back to Mr McLachlan and said that without a renegotiation of the LTAA, to give the buyer contractual certainty, the Commonwealth would have virtually nothing to sell. Who would pay for a contract that had 17 years to run, but could be wound up without compensation at one month’s notice? He agreed, I said we would complete the matter without delay, and would have all outstanding matters dealt with in weeks, not months, and we did.
The point of this tale is to make the point that the Howard Government’s privatisation strategy for ADI was shaped by its desire to get as much money as it could for the business, as quickly as possible. It was sold by public tender, and the Transfield-Thomson CSF Joint Venture (the original purchaser) paid a price that reflected what they perceived the LTAA was worth to them. For its part, the Commonwealth capitalised that expected profit stream. If the Commonwealth had placed more stringent performance conditions or less certainty on the contract, that would have been reflected in a reduced price. The Joint Venture got what it paid for, and the Commonwealth was paid the best price it could obtain for what it chose to sell.
Over ten years on, it is entirely appropriate that Defence consider what arrangements it wants to make for the acquisition of the hundreds of ammunition types that it purchases. Everyone has always known that the LTAA was a fixed term arrangement, and that there were no understandings, explicit or implicit, about what would happen after it expired. This is the ordinary course of business and is not a reflection on either Defence or Thales, the current owner of the ammunition facilities and the LTAA.
It is interesting that the only other one of the “older poor value long term contracts” that rates a specific mention relates to the Collins-class submarines:
Another long-term contract under renegotiation is Adelaide-based submarine builder ASC’s $3 billion, 15-year maintenance contract on the troubled Collins-class submarines.
There seems to be a bit of a pattern emerging from this and other reports by Kerin. It seems that nothing that happened in the defence acquisition world prior to the advent of Dr Gumley was quite up to scratch, and similarly, ASC’s performance since he ceased to be the CEO there has been distinctly below par. I wonder where Kerin gets those impressions from?
The 15 March edition of The Age carries a letter to the editor by Andrew Farran, former senior lecturer in public law and, like me, a former Commonwealth public servant, on the issue of whether or not it is appropriate for Ministerial staff to be called before Parliamentary Committees.
Farran’s letter as published reads:
Parliamentary committees are proceeding down a dangerous path when seeking to investigate ministerial staffers. They are endangering the viability of the Westminster system of Ministerial responsibility.
When senate committees sought to involve themselves in departmental matters in the early 1970s, Canberra’s mandarins became very concerned. They were placated when assured that departmental witnesses would be required to answer factual questions only and not comment on policy.
The area that should remain sacrosanct is the ministerial office. The Westminster principle of ministerial responsibility to Parliament should prevail.
Decades ago I had responsibility for a federal ministerial office. Every day written and oral exchanges took place between myself and the minister, and with others, much of which was confidential and personal. The thought that I, and not the minister, could be brought before a parliamentary committee to account for these would have been incomprehensible.
If we lose sight of the long-standing conventions we risk undermining the system that has sustained our parliaments over centuries.
I am in complete agreement with Farran on this, subject to one important caveat: the Minister must accept in full the consequences of a convention which says, in effect, that the Minister and the Minister’s personal staff are a single political entity – the members of a Minister’s staff are an extension of the Minister’s political persona, and not players in their own right. If this principle is respected the Minister accepts full responsibility for his or her own actions and all actions of the staff.
A serious problem arises, however, when Ministers seek to depart from that principle, either claiming, as happened in the Children Overboard affair, that information had not been passed on, or excusing themselves on the basis that a staff member had acted without instruction from the Minister, or had misunderstood the Minister’s instructions.
I addressed this issue amongst others in a 2003 submission to a Senate Inquiry into Members of Parliament Staff (MOPS). The terms of reference of that inquiry, and the Committee’s Report, can be accessed from here, and the nineteen submissions received, plus supplementary information from the Department of Finance, can be accessed here.
On the question of whether members of Ministerial staff should be required to appear before Parliamentary Committees of Inquiry or other Parliamentary Committees, my position remains as I put it in my submission:
I would suggest that a regime along the following lines is practicable and strikes a fair balance between the confidentiality of transactions within the Minister’s Office and the accountability of Ministers and public servants to the Parliament:
- Where the activities of Ministerial staff are confined to the provision of advice to the Minister, the confidentiality of that advice should be sacrosanct to the extent that it is today. Any action taken pursuant to this advice would taken by the Minister or on the Minister’s instructions. The Minister can be held fully accountable for this. Under these circumstances there would be no requirement for the accountability processes to penetrate the internal workings of the Minister’s office, nor would this be desirable.
- Communications between Ministers’ staff and Ministers’ offices should enjoy similar levels of confidentiality under the same conditions.
- Ministerial staff should be fully accountable for all actions undertaken by them outside the confines of the internal Ministerial advisory processes, for example, all transactions they conduct with the Department, with other agencies, with private companies and with the general public.
In respect of the latter point, it seems to me an intolerable situation that, as seems to be the case at the present time, members of Ministerial staff can give oral instructions to Departmental officials that purport to be instructions from the Minister, but being oral are susceptible to claims that the Minister was not aware of them, and yet the staff member concerned cannot be reached by due Public Service or Parliamentary processes.
Similar concerns apply to the receipt of information or advice by Ministerial staff. If information or advice is provided to Ministers’ offices by Departmental staff, only one of the following two approaches is tenable:
- The information or advice having been received by the Minister’s Office, it is deemed to have been received by the Minister him/herself, there being no conceptual distinction to be drawn for this purpose between the Minister and the Minister’s staff, or
- There being a conceptual difference between the Minister and the Minister’s staff, members of the Minister’s staff are liable to being tested as to what they did with the information or advice and when.
Addressing these issues is a matter of high importance. They are the first line of defence for the Parliament and public in safeguarding our political system against the establishment of a political culture in which Ministers can operate in an environment of plausible deniability.
