Volume 55, Number 16 · October 23, 2008
He Foresaw the End of an Era
By John Cassidy
The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means
by George Soros
PublicAffairs, 162 pp.,$22.95
George Soros has been an active investor for more than half a century. In the mid-1980s, when I started writing about Wall Street, he was already a leading hedge fund manager. Not many people understood hedge funds back then, but for those in the know Soros's Quantum Fund, which he founded in 1973, was the model: year after year, it had achieved returns in excess of the broader market. After weathering the 1987 stock market crash, Quantum, since 1989 under the day-to-day management of Stanley Druckenmiller, racked up more big gains, culminating in a huge bet against the pound sterling in 1992, which reportedly netted more than a billion dollars. (Soros has never publicly confirmed the exact figure. The British newspapers put it at $1.1 billion.)
Thereafter, Soros spent an increasing amount of his time on philanthropic activities throughout the world, including many laudable efforts to promote the spread of democracy in his native Eastern Europe. (He was born in Budapest in 1930.) After 2001, he also involved himself in domestic politics. A vocal critic of the Bush administration, in the run-up to the 2004 election he donated considerable sums to MoveOn.org, the liberal Internet organization. More recently, he and his family have contributed to Barack Obama's presidential campaign.
But Soros remains first and foremost a speculator. In 2007, after the subprime crisis erupted, he returned, at the age of seventy-seven, to directing Quantum's investments, with results suggesting he hadn't lost his touch. Alpha magazine, a glossy publication that covers hedge funds, estimates that he made $2.9 billion in 2007, placing him second on its list of mega-speculators, behind only John Paulson, of Paulson & Co., who raked in an even more astonishing $3.7 billion.
Harvard / Financial Crisis Books
At the start of this year, Soros, convinced (correctly) that the financial crisis was far from over, adopted a bearish investment strategy, which he describes thus: "short US and European stocks, US ten-year government bonds, and the US dollar; long Chinese, Indian, and Gulf States stocks and non-US currencies." Initially, some of these positions didn't pay off. Between January and March, US bonds rallied and Indian stocks tumbled, wiping out gains in other parts of Quantum's portfolio. Just how Soros has fared in the past few months of market turmoil may be known only to investors in Quantum, but it would be foolhardy to bet against him.
Forbes magazine recently estimated Soros's net worth at $9 billion. For all his worldly success, though, he still has an unfulfilled ambition: to be taken seriously not just as a financial practitioner but also as a theoretician. In 1987, Simon and Schuster published his first book, The Alchemy of Finance, in which he revisited some of his investments and expounded his theory of "reflexivity," which claims that major market movements, such as the recent rise in commodity prices, sometimes take on lives of their own, entrapping investors in illusions and imparting a fundamental instability to the economic system.
The book proved popular with other investors. Paul Tudor Jones II writes: "When I enter the inevitable losing streak that befalls every investor, I pick up The Alchemy and revisit Mr. Soros's campaigns." But many professional economists, who tend to take a more sanguine view of financial markets, dismissed it out of hand. Writing in The New Republic, MIT's Robert Solow, one of the most respected macroeconomists of the twentieth century, doubted that Soros understood "simultaneous" equations, i.e., systems of equations that involve more than one dependent variable. (For those unfamiliar with economics, this was a bit like accusing a carpenter of not knowing how to use a chisel.)
Solow had a point—he usually does. Soros's presentation of his ideas was a bit garbled. The suspicion lingers, however, that his principal offense was challenging professional economists on their own ground. Now he is at it again—in a much shorter and more digestible book entitled The New Paradigm for Financial Markets—and this time around he and his pet theory cannot be so easily dismissed. Since the publication of The Alchemy of Finance, the global economy has witnessed a long and geographically dispersed series of boom-and-bust cycles, the latest of which is currently ravaging the US economy. While episodes such as these would be perfectly recognizable to Victorian economists such as John Stuart Mill or Alfred Marshall, who referred to them as "trade cycles," they defy modern orthodoxy, which depicts the economy in general, and financial markets in particular, as effective, stable, and self-correcting mechanisms.
As of mid-September, the credit crunch was showing no sign of letting up, indeed it was getting more severe. One big Wall Street investment bank, Lehman Brothers, went bankrupt; another, Merrill Lynch, averted a similar fate by merging with a big commercial bank, Bank of America; AIG, the biggest insurance company in the country, got into such a perilous state that the Federal Reserve, fearful its collapse would bring down a number of other financial institutions, agreed to lend the firm $85 billion, while acquiring 80 percent ownership of the company. Finally, amid signs that despite the AIG bailout the markets were on the verge of a complete breakdown, Treasury Secretary Hank Paulson unveiled a plan for the federal government to buy from the banks up to $700 billion in distressed mortgage securities.
It hardly needs saying that these events were without precedent in postwar history, although students of the Great Depression, such as Fed chairman Ben Bernanke, saw much that was frighteningly familiar. And yet, despite all this, the economists who promulgated the reassuring orthodoxy about financial markets and force-fed it to generations of graduate students have been notably quiet about what went wrong with their theories.
Soros doesn't have all the answers, not by any means. But unlike some of the professors who dismissed him as an overremunerated gadfly, he has something to say. (In recent years, it should be noted, a number of theorists, some rallying under the banner of "behavioral finance," have created more realistic models in which financial markets can depart from economic fundamentals, speculation can be destabilizing, and boom-and-bust cycles can persist. Until very recently, however, these new theories had little or no impact on economic policymaking.[*])
Financial markets perform two essential roles in the economy: (1) they take money from those with no immediate use for it, such as people saving for retirement and the hereditary rich, and put it into the hands of firms and entrepreneurial individuals with productive investment ideas but a shortage of cash to finance them; (2) they allow individuals and institutions to reapportion risk to those more willing to bear it. If Wall Street didn't exist, another method of allocating savings and risks would have to be found. One alternative is diktat, but the history of the Soviet Union and other Communist countries amply demonstrated the difficulties involved in centralizing economic decisions.
The great advantage of a market system is that it draws on information from throughout the economy and translates it into public signals—prices—that investors and firms can react to. Earlier this year, investors woke up to the fact that Detroit had ignored the threat of dwindling oil stocks and had bet its future on gas-guzzling SUVs: the stock prices of American car companies plummeted, making it much more expensive for them to sell equity in their corporations. Toyota and Honda, which had invested heavily in smaller, more fuel-efficient vehicles, have seen their stocks hold up much better, enabling them to raise funds cheaply. Nobody planned it, but in this instance the market rewarded foresight and innovation.
For financial markets to allocate resources to their most productive uses on an ongoing basis, the price signals they send must be the right ones day after day after day. Is this a realistic goal? A typical investor following the Dow's gyrations on CNBC or Yahoo Finance might be tempted to say no, but then the typical investor doesn't have the benefit of an economics Ph.D. from the University of Chicago.
The benign view of markets owes much to three Chicago economists: Milton Friedman, Eugene Fama, and Robert Lucas. Although best known for his work on monetary theory and his enthusiastic espousal of capitalism, early in his career Friedman had played a key part in developing the "efficient markets hypothesis," which, together with its younger sibling the "rational expectation hypothesis"—see below—provided the intellectual underpinning for more than two decades of financial deregulation. Briefly put, the efficient markets hypothesis states that prices of stocks, bonds, and other speculative assets necessarily reflect everything that is known about economic fundamentals, such as inflation, exports, and corporate profitability. The proof proceeds by contradiction. Suppose stock prices have risen above levels justified by the fundamentals. Then clever speculators, such as Soros, will step in and sell them, thereby restoring prices to their proper levels. If stocks fall below their fundamental value, speculators will step in and buy them.
Friedman actually formulated the efficient markets hypothesis in an analysis of currencies. It was Fama, one of his students, who applied it to the stock market and pointed out an interesting corollary: if stock prices already reflect everything that is known and knowable, then investors can't hope to outperform the market using trading strategies based on publicly available information. Rather than wasting time and effort trying to pick individual stocks, they would be well advised to place their savings in a broadly diversified mutual fund that tracks the daily movement of the market. Largely thanks to Fama and his followers, so-called index funds today have a central part in many Americans' retirement planning.
Lucas, the third member of the Chicago triumvirate, was arguably more influential even than Friedman. In a series of ingenious papers published in the 1960s and 1970s, he and several colleagues extended the hyperrational methodology underpinning the efficient markets hypothesis to other parts of the economy, such as the job market, the output decisions of firms, and the formulation of economic policy. By the time they were done, Lucas et al. had invented a new way of doing macroeconomics, known as the rational expectations approach, which enshrined in higher mathematics the stabilizing properties of unfettered markets. You don't have to spend much time on Wall Street to recognize that expectations are what drive the markets. If investors anticipate good news, they buy; if they expect bad news, they sell.
Where, though, do these economic expectations come from? According to Lucas, they reflect a predefined, externally grounded, and commonly agreed upon reality. In his models, the economy's equations of motion are well defined and known to all—from Ph.D. economists at the University of Chicago to nurses and cab drivers. Utilizing this common knowledge, people form "rational expectations" of things like inflation and interest rates. They don't always get things right—a certain amount of randomness is allowed for—but they are precluded from making systematic errors. If in one period the economy gets out of sync, in the next period it jumps back to the "equilibrium" defined by the model.
Not content to create new models, Lucas also disparaged older theories that viewed financial capitalism more skeptically. Keynesianism wasn't merely wrong, he declared at one point: it was no longer intellectually respectable.
Soros had neither the inclination nor the technical ability to challenge the Chicago school's formal arguments. (In a charming passage, he reveals that he wasn't very good at math, and that he achieved poor grades at the London School of Economics, where he studied in the late 1940s.) What he does possess, however, is voluminous amounts of firsthand knowledge gained in the financial markets, together with a keen interest in formulating a theory on the basis of his observations. Academic criticism of The Alchemy of Finance didn't put him off that effort. "My conceptual framework remained something very important for me personally," he writes. "It guided me both in making money as a hedge fund manager and in spending it as a philanthropist: and it became an integral part of my identity."
Outside the idealized world of Lucas's theory, knowledge is imperfect, people stick to wrongheaded ideas, and there is no agreed version of how the economy works. In these circumstances, Soros rightly points out, economic expectations, even biased ones, can help to determine economic fundamentals. One way to grasp what Soros is getting at is to look at the diagram on this page, in which the arrows indicate the directions of causation. Soros doesn't refer to this diagram, which I drew up myself, but he spells out the relations it illustrates:
Reflexivity can be interpreted as a circularity, or two-way feedback loop, between the participants' views and the actual state of affairs. People base their decisions not on the actual situation that confronts them but on their perception or interpretation of that situation. Their decisions make an impact on the situation (the manipulative function), and changes in the situation are liable to change their perceptions (the cognitive function).
A simple hypothetical example—for which I also take responsibility—may help to illustrate what can happen in such a reflexive system.
Imagine that ABC Corp. makes profits of $W per share, pays dividends of $X a share, and is growing at Y percent per annum. If you assume that this rate of earnings growth will persist indefinitely, it is a matter of high school arithmetic to figure out what ABC Corp.'s stock is worth on a fundamental basis, an amount I will call $Z. In the world of the Chicago economists, well-informed investors bid the price up to $Z and stop there. If prices rise above that level, they step in and sell; if prices fall below $Z, they buy. All is rational: all is efficient.
Now imagine that a group of irrationally exuberant investors come to believe that ABC Corp.'s growth rate is about to accelerate to 2Y percent, and, as a result, they bid up its stock up $2Z and keep it there for a while. What happens next? One possibility is that ABC Corp. could issue more of its highly rated shares and use them to purchase a rival, DEF Corp., whose stock price has been lagging—hence presenting a relative bargain. Thanks to the magic of acquisition accounting, the mere act of ABC Corp. buying DEF Corp. would make it appear that its earnings per share were growing rapidly. Voilà, the inflated earnings expectations that drove up ABC Corp.'s stock would have turned out to be justified. Most likely, the stock would rise even further—for a while, anyway.
If the previous discussion seemed a bit abstract, don't lose heart. In the second half of his book, Soros applies his theoretical frame to events he has lived through, beginning with the conglomerates boom of the late 1960s and ending with today's credit crunch. Reflecting on the harsh reception afforded to his earlier book, he writes:
Many critics of reflexivity claimed that I was belaboring the obvious, namely that the participants' biased perceptions influence market prices. But the crux of reflexivity is not so obvious; it asserts that market prices can influence the fundamentals. The illusion that markets manage to be always right is caused by their ability to affect the fundamentals they are supposed to reflect. The change in the fundamentals may then reinforce the biased expectations in an initially self-reinforcing but eventually self-defeating process.
Of course, such boom-bust sequences do not happen all the time. More often the prevailing bias corrects itself before it can affect the fundamentals. But the fact that [such sequences] can occur invalidates the theory of rational expectations. When they occur, boom-bust processes can take on historic significance. That is what happened in the Great Depression, and that is what is unfolding now, although it is taking a very different shape.
One of Soros's earliest professional coups was investing in fast-growing industrial conglomerates, such as Textron, LTV, and Teledyne, which during the early days of the Nixon administration used their inflated stocks to buy out a succession of other companies. Just as in the example of ABC Corp., simply combining a lower-rated company with a higher-rated one boosted reported earnings per share for the lower-rated company. Even though investors such as Soros knew full well that much of this growth was an accounting illusion, they continued to bid up the conglomerates' stocks, thereby keeping the game going.
In order for it to continue indefinitely, however, the acquirers had to target bigger and bigger companies. Eventually, the Reliance Group, Saul Steinberg's outfit, launched a takeover bid for the venerable Chemical Bank that generated an establishment backlash. Steinberg's bid failed, and investors began to question the reported earnings growth of Reliance and other conglomerates. Knowing that the jig was almost up, Soros sold out and moved on to the next boom-bust cycle, which, in his case, turned out to be in real estate investment trusts.
Breaking up the narrative, Soros provides a handy eight-stage guide to the typical boom-bust cycle, together with a series of stock charts to help readers spot one in the making. Turning to the current situation, he says that, in large part, the recent housing bubble in the United States fit the historic pattern, except that in this case reflexivity was centered on the real estate rather than the stock market. As house prices shot up between 2001 and 2005, credit standards deteriorated sharply. Rather than restricting their lending, mortgage financiers deluded themselves into believing that the collateral for the loans they were making would continue to rise in value. The very act of extending more and more credit, on easier and easier terms, kept demand for real estate buoyant, which, in turn, ensured that for several years the lenders' optimistic expectations were validated. It was only when borrowers who had taken out loans they couldn't afford started to default in large numbers that the housing bubble finally burst.
What distinguishes this process from earlier downturns, and what makes it so dangerous, is the historical and international economic situation in which it is taking place, Soros says. "Superimposed on the US housing bubble," he writes, "is a much larger boom-bust sequence which has finally reached its inflection, or crossover, point." The housing slump is following the normal historical pattern, he suggests,
but, in addition, it has also set in motion a flight from the dollar and unwinding of the other excesses introduced into the financial system by recent innovations. That is how the housing bubble and super-bubble are connected.
As described by Soros, the "super-bubble" developed over the past quarter-century and is the result of three underlying trends: globalization, credit expansion, and deregulation. By globalization, he means not just expansion of trade in goods and services, and the rise of China and India, but the US's emergence as the world's biggest debtor. In the past couple of years, he reminds us, the United States has been running a current account deficit of more than 6 percent of GDP—a level usually associated with a developing country about to suffer a foreign exchange crisis.
The US has been able to avoid that fate because of the dollar's status as the main international reserve currency, and because foreign governments, particularly the one in Beijing, have proved willing to purchase enormous quantities of Treasury bonds. "There was a symbiotic relationship between the United States, which was happy to consume more than it produced, and China and other Asian exporters, which were happy to produce more than they consumed," Soros notes. "The United States accumulated external debt: China and the others accumulated currency reserves."
The lending boom extended far beyond the housing market. Over the past generation, the overall expansion of the US economy has increasingly become an asset-driven phenomenon. In 1980, the total amount of credit market debt outstanding in the United States was roughly the same as the GDP: by 2007, it had risen to about 350 percent of GDP. The bundling of residential mortgages into widely traded securities—"securitization"—played a significant role in this transformation, but so did increased federal lending resulting from large-scale budget deficits, the securitization of credit card debt and auto loans, and an expansion in corporate debt issuance. Soros isn't the first to point out these trends, but his description of the changes he has witnessed since starting out on Wall Street is instructive, nonetheless. In the years after World War II, he points out:
The total amount of credit outstanding in relation to the size of the economy was much less than it is today, and the amounts that could be borrowed against different types of collateral were also much smaller. Mortgages required at least 20 percent down payment, and borrowing against stocks was subject to statutory margin requirements that restricted loans to 50 percent or less of the value of the collateral. Auto loans, which required down payment, have been largely replaced by leases, which do not. There were no credit cards and very little unsecured credit. Financial institutions represented only a small percentage of the capitalization of US stocks. Very few financial stocks were listed on the New York Stock Exchange. Most banks were traded over the counter, and many of them traded only by appointment.
Until last summer, the US economy was awash in easy credit. In one way or another, the banking system played an important part in issuing many of these loans, which is hardly surprising since that is how banks make money. Rather than criticizing his fellow investors on Wall Street, who created many of the newfangled debt instruments—such as mortgage-backed securities and collateral debt obligations—that have now imploded, Soros puts the blame on the regulators and central bankers who aided and abetted the financiers' incendiary activities. Under the system of "self-regulation" adopted by American and European banking regulators, many big financial institutions, such as Citigroup, Barclays, and Union Bank of Switzerland, were allowed to rely on their internal risk-management systems. The only outside check on their activities came from commercial ratings agencies, such as Moody's and Standard & Poor's, which depended on the banks' fees for business.
"I find this the most shocking abdication of responsibility on the part of the regulators," Soros writes.
If they could not calculate the risk, they should not have allowed the institutions under their supervision to undertake them. The risk models of the banks were based on the assumption that the system is stable. But, contrary to market fundamentalist beliefs, the stability of financial markets is not assured; it has to be actively maintained by the authorities. By relying on the risk calculations of the market participants, the regulators pulled up the anchor and unleashed a period of uncontrolled credit expansion.
As long as credit was flowing freely, the three elements of the "super-bubble" reinforced one another. Now that the housing bubble has burst and economic growth has slowed dramatically, reflexivity is working in the opposite direction: market fundamentals are influencing investor perceptions. The global capital market that enabled the US to finance a huge trade deficit has proved equally adept at transferring the subprime shock to other parts of the world: after rushing in to capture the high yields offered by US subprime securities, big European banks have been forced to write off almost as much money as their American brethren. (Taking the United States and Europe together, banks and other financial institutions have, so far, written off roughly $450 billion in subprime-related charges. Many institutions are sitting on losses that they haven't yet declared. Estimates of the total losses that will eventually result range from $1 trillion to $2 trillion.)
As nerves fray and values of collateral plummet, many big financial institutions are desperately trying to eliminate the debt showing on their balance sheets. Individually, this may make sense. When banks do this collectively, it deprives worthwhile capital projects of funding and risks deepening the economic downturn, which, in turn, could well lead to more loans going bad. As Lawrence Summers, the Harvard economist and former Treasury secretary, recently noted in the Financial Times, this is but one of several vicious cycles operating simultaneously. Falling asset prices are forcing investors with heavy borrowings into distress sales, which is putting more downward pressure on prices. As GDP growth slows, firms are laying off workers. Higher unemployment leads households to cut back on their spending, which reduces economic growth. "Without active efforts to interfere with these mechanisms," Summers wrote in an article published on August 6, "there can be no basis for confidence that the American economy will recover even in the medium term."
Soros would surely agree with that statement. Finishing his manuscript earlier this year, he predicted that the economic slump would be prolonged, partly because problems in the financial system would make countercyclical policies—such as easing the money supply to stimulate investment—less effective than usual. During 2008, the Fed has cut short-term interest rates to 2 percent and established virtually unlimited borrowing lines to financial firms. Congress has voted through a refinancing scheme for many of the homeowners who fall behind on their mortgage payments.
In early September, in an effort to bring down mortgage rates and put an end to the housing slump, the Bush administration took the dramatic step of effectively nationalizing Fannie Mae and Freddie Mac, two giant mortgage lenders that the government originally set up but which had for many years operated as private companies. The federal takeover added more than $5 trillion to the national debt, and, especially coming from a Republican administration, it represented a historic extension of public intervention in the American economy; the Treasury Department then, without congressional approval, granted itself warrants to buy up to 80 percent of AIG's stock. (One Republican senator, Jim Bunning of Kentucky, lambasted the move as socialism and called on Treasury Secretary Hank Paulson to resign.) Yet despite all these moves, rates on jumbo mortgage loans—the type many home buyers have to take out if they live in places like New York, Boston, and Washington—remain close to 8 percent. Not surprisingly, house prices in most major markets are still falling.
Where will it end? Viewed from Soros's perspective, the dramatic events of mid-September demonstrated how reflexivity was working on the downside, to devastating effect: the slumping real estate market had wreaked havoc on banks and other financial institutions, which had reacted by tightening lending standards, and cutting back on the amount of credit, particularly mortgage finance, that they were willing to extend to households and firms. Tighter credit conditions, in turn, were hurting the economy and putting further downward pressure on property prices, shattering hopes that the credit markets would stabilize of their own accord, and that troubled firms would be able to recapitalize their balance sheets.
Some sort of recovery was what Richard S. Fuld, Lehman's former chief executive, and his colleagues had been hoping for. From the fall of 2007 onward, the firm, which was founded in 1850, was struggling to survive. Rather than selling out to a bigger, sounder institution, its managers gambled that the credit markets would rebound, arresting the fall in value of tens of billions of dubious real estate assets festering on the firm's balance sheet. The turnaround never came. By the time that Lehman was prepared to give up its independence, in mid-September, it was facing a funding crisis, and there were no purchasers interested. (The Treasury Department and the Federal Reserve didn't deem Lehman strategically important enough to save, so it went bust. AIG, on the other hand, was too big to be allowed to fail.)
History shows that ad hoc attempts to resolve banking crises seldom work. The only thing that puts an end to the downward spiral is government intervention on a grand scale, socializing the losses that have been incurred, and freeing up the surviving institutions to start lending again. With Hank Paulson's bailout plan, we have now reached that stage, where the taxpayer is called upon to rectify the bankers' mistakes. Although the plan comes with a $700 billion price tag, the eventual cost could be even larger. Some observers have compared what is happening now to the S&L crisis of the late 1980s, when the government set up the Resolution Trust Corporation to dispose of the assets of insolvent thrifts, but that was a relatively trivial exercise compared to what is ahead. A better analogy is the Japanese banking crisis of the 1990s, where the government initially refused to recognize the scale of the problem, but ended up, after almost a decade of economic stagnation, having to spend vast sums of public money on recapitalizing the country's financial sector. Even then, the Japanese economy failed to resume its previous growth rates: after a few years of modest expansion, it has once again slipped into near-recession.
It is to be hoped that the Paulson plan has a more invigorating effect on the US economy, but despite the recent celebrations on Wall Street a happy outcome is far from guaranteed. Critics have questioned the timing, ethics, politics, and efficacy of the proposal. The Treasury secretary is seeking absolute freedom to enact the plan as he sees fit. Under his proposed legislation, "decisions by the secretary pursuant to the authority of this act are nonreviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"—a position rejected by members of the Senate Banking Committee who questioned Paulson on September 23. (Writing in the Financial Times on September 25, Soros proposed an alternative rescue plan, also suggested by Senator Charles Schumer and others, of injecting public money directly into the banks, through government purchases of preferred stock.)
From an economic perspective, what matters is whether the Paulson plan, or one close to it, will work: Are the planned purchases of assets big enough to make a difference? What about all the other increasingly toxic assets that financial institutions have on their books, including roughly $950 billion of securities linked to risky "alt-A" mortgages; hundreds of billions of dollars in securitized auto loans and credit card debts; and countless dubious credits that were extended during the boom to commercial real estate developers and leveraged buyout firms? Would it have been cheaper and more effective for the government to have recapitalized the big banks by taking equity stakes in many of them?
Even if the Paulson plan, or some variation of it, restores some degree of normalcy to the credit markets, it is far from certain that a modest fall in mortgage rates and a greater willingness to lend on the part of financial institutions will be sufficient to break the self-reinforcing impetus toward recession that has taken hold in other parts of the economy. Much depends on what happens to the housing market and to the global economy, which, in providing a ready market for US exports—and in providing cash by buying US government bonds—has helped to prevent a much sharper downturn in output and employment.
One of Soros's points is that the behavior in markets he defines as reflexivity adds a fundamental indeterminacy to economic events, which makes prediction very tricky. Still, given his taste for the grand philosophical statement, he couldn't resist imparting a few thoughts about the future. Writing well before the latest dramatic developments, he said:
Eventually, the US government will have to use taxpayers' money to arrest the decline in house prices. Until it does, the decline will be self-reinforcing, with people walking away from homes in which they have negative equity and more and more financial institutions becoming insolvent, thus reinforcing both the recession and the flight from the dollar. The Bush administration and most economic forecasters do not understand that markets can be self-reinforcing on the downside as well as the upside. They are waiting for the housing market to find a bottom on its own, but it is further away than they think.
Soros wasn't all gloom and doom. He said rapid growth in the developing world, particularly China, would continue, and he brushed aside fears that the international banking system would collapse, as it did in the 1930s. After observing the pathologies the financial system had exhibited since the summer of 2007, he called for more regulation, including stricter limits on leverage, the amounts borrowed for investment. But Soros's main conclusion went beyond specific forecasts of policy recommendations. The period of history that the elections of Margaret Thatcher and Ronald Reagan ushered in had come to an end, he said:
So what does the end of an era really mean? I contend that it means the end of a long period of relative stability based on the United States as the dominant power and the dollar as the main international reserve currency. I foresee a period of political and financial instability, hopefully to be followed by the emergence of a new world order.
Since 1971, when the Nixon administration abandoned the dollar's link to gold, many commentators have predicted the demise of the American currency and an end to US economic hegemony, only to be proved wrong, or, at least, premature. Soros could well end up joining this group—he freely admits he has been too pessimistic on previous occasions. (A decade ago, he underestimated the global economy's ability to rebound from the Asian financial crisis.) If the Paulson bailout succeeds in excising from the US banking system the distressed mortgage securities that have caused so much trouble; if there is a recovery of confidence on Wall Street; if the housing market stabilizes; if the recent fall in the oil price is sustained—then the US economy and currency could yet display their Houdini-like qualities one more time. Conversely, Soros's reading of the financial omens has enriched him oftentimes before: betting against him now could be unwise.
—September 25, 2008
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Notes
[*] See Andrei Shleifer, Inefficient Markets: An Introduction to Behavioral Finance (Oxford University Press, 2000), and Advances in Behavioral Finance, Vol. 2, edited by Richard H. Thaler (Russell Sage Foundation/Princeton University Press, 2005).
Tuesday, 7 October 2008
Tariq Ramadan
02/09/2006 03:20 PM
INTERVIEW WITH MUSLIM LEADER TARIQ RAMADAN ON THE CARICATURE CONFLICT
"We Have to Turn Up the Volume of Reason"
With unrelenting Muslim anger over the Muhammad caricatures, sentiments between Islam and the West once again have all the delicacy of a powder keg. SPIEGEL ONLINE spoke with Tariq Ramadan, Europe's leading Muslim scholar, about the overreaction of the Muslim world, rampant anti-Semitism and the frustrations of Muslim immigrants in Europe.
Egyptian-Swiss philosopher and Islamic theoretician Tariq Ramadan.
AP
Egyptian-Swiss philosopher and Islamic theoretician Tariq Ramadan.
SPIEGEL ONLINE:
The Muslim world's reactions to the publishing of the Muhammad caricatures first in the Danish newspaper Jyllands-Posten and then in other European publications have not done much to improve the image of Islam in the West. Are Muslims overreacting?
Tariq Ramadan: Of course. The reaction has been way too severe. I traveled to Denmark back in October and I told Muslim leaders there not to react emotionally, because it would be the reactions and the emotions of the Muslims that would become the center of attention. The best thing would have been for us to take an emotional distance. But now, all you see is angry faces, crying and rage on the television. This is not the way forward for the Muslims.
SPIEGEL ONLINE: But clearly there are deeper reasons for this enormous outburst of emotions than just a handful of offensive cartoons. It's as though huge amounts of pent up frustration are finally being released. Is there something larger going on here?
Ramadan: Of course it started with a few people being hurt by the cartoons. But then a few people took the cartoons to the Middle East. Some governments there were very happy to present themselves as the great champions of Islam. One reason, of course, was to gain legitimacy in the eyes of their own people. But secondly, it was to direct the attention of the people, living under these dictatorial governments, toward the West and to provide their people with a vent for their own frustrations. And it worked -- it became Muslims against the West. All the first reactions from the Islamic majority countries came from those countries (and places) where there is a difficult relationship with the West: Syria, Lebanon, Saudi Arabia, Gaza, and then Iran. It's more than just the cartoons. It's part of a broader picture that we have to keep in mind.
SPIEGEL ONLINE: Where does this intense resentment against the West come from?
Ramadan: There are a number of countries, like Syria or Iran, in the Islamic world which are under tremendous pressure from the West. The governments present themselves as victims and turn their people against the West. In Gaza, to take another example, there is a perception that the West is speaking about democracy, but when the votes are tallied, it considers the result unacceptable. There is also a perception that Israel is supported to the disadvantage of the Palestinians. So there are many things that add up and the result is a perception that the war on terror isn't only against terror but it is also against Muslims. The cartoon showing the Prophet's turban as a bomb didn't help.
SPIEGEL ONLINE: None of this is terribly new. After all, burning American flags in the Middle East has become something of a tradition. But Muslims living in Europe also talk about an anti-Islam prejudice.
Ramadan: If you're living in Europe as a Muslim, it's in the atmosphere. There is the presence of far-right parties and their discourse -- even though such parties don't have much support. But even mainstream political parties have accepted and propagated a discourse which is perceived by Muslims to be a continuous and permanent attack.
SPIEGEL ONLINE: There are also plenty of people and political parties preaching tolerance and doing their best to help Muslims in Europe. Why focus on the negatives?
Ramadan: I have long been saying that we Muslims have to get rid of this victim mentality. But it's there. And it's hard to ignore the Islamophobia or racism that is present. Many allow themselves to be hurt and their emotional reaction spins out of control. Muslim leaders in Europe have a responsibility to help shape the response of the Muslims to the West and of the West to Islam. We have to somehow take the emotion out of the response.
SPIEGEL ONLINE: How is that possible when the Muslim world and some radical Muslim leaders here in Europe are constantly saying that the West is the source of all evil?
Ramadan: The great majority of Muslims in Europe feel they are Europeans. They may face troubles sometimes and may face negative perceptions, but the great majority of Muslims in Europe are demonstrating that they are citizens of Europe and want to change the image of Islam. We have to pay more attention to these people than to the vocal radicals on the margins who think that Europeans will never accept Muslims.
SPIEGEL ONLINE: But there are many who listen to these radical voices on the fringes.
Ramadan: But there are many who don't. The media should speak about these Muslims who are trying to become active and committed European citizens and who are accepting European culture. They need to be helped. Media pressure is undermining our work and we are regressing. Every six months you have some new event which ratchets up the pressure and focuses the attention on emotions, reactions and on Muslims committing violence. The latest event just happens to be the Muhammad caricatures. But these events really undermine the process of reform, the process of settling down and the process of dialogue. Today, there is no dialogue, there is no debate. It's a power struggle and it's very, very vicious.
Part II: "In a Clash of Civilizations, We Both Lose"
Disgruntled Muslim protesters gathered in central Copenhagen last Saturday.
AP
Disgruntled Muslim protesters gathered in central Copenhagen last Saturday.
SPIEGEL ONLINE: Which of course proves the point the radicals are trying to make -- namely that Islam and the West are incompatible.
Ramadan: Exactly. On the positive side, what we Muslims experience in Europe will have a tremendous impact on Islamic majority countries. We now have experience with living in democracy and living in free societies. But there is a danger. If Muslims and Europeans, as equal citizens living together in a democracy, are not able to trust each other, if we are not able to talk to each other, if we are not able to come to a reasonable agreement about how to live together, we are sending a signal to Islamic majority countries that there is no way for Muslims and Westerners to trust each other. We in Europe have a great, great, great responsibility. It's important that European citizens understand that if mutual knowledge and mutual respect are improved, then we are sending the signal that it is possible. Right now, though, we are sending exactly the opposite message.
SPIEGEL ONLINE: Not to be overly pessimistic, but that sounds like a pretty tall order.
Ramadan: It has to happen at the local level. It's up to each and every citizen to choose if they are ready to know more about their fellow citizens and the Muslims living around them. There is a lot of mistrust between the two groups. People need to break out of their intellectual ghettos, break out of their religious and cultural ghettos and come to some common, universal values. And these values do exist. We can't just wait for the next crisis and then react. This needs to be a pre-emptive strategy based on a true understanding of what pluralism requires.
SPIEGEL ONLINE: Outside of Europe, the Muslim world doesn't seem to have understood that Europe and the West really is committed to freedom of the press, freedom of opinion and other democratic values.
Ramadan: That's true. Many in the Muslim world think that European governments are responsible for the caricatures. They don't realize that it doesn't work like that. These people are living under regimes where the president controls both the government and the media. But that's not the only misconception of the West. There is a perception in the Muslim world that the West is a lost civilization with no moral standards and no ethics. But this is, of course, wrong. It's important that the Muslims living in Europe tell them that even in the West, there wasn't just one single response to the caricatures. Many Europeans and Westerners are arguing that the West has to be wise in the way it exercises its freedom of expression.
SPIEGEL ONLINE: So you're saying that a lot of people in the Muslim world don't understand that there is a debate going on?
Ramadan: The same thing works in reverse. In the West, when you look at the violent reactions in the Muslim world, you have the perception that these are the Muslims. But that's not right either. There are different trends in the Islamic world as there are here. Because the radical voices are loudest and are covered more by the media, they have the upper hand. We have to turn up the volume of reason and ensure that our discourse gets the upper hand.
SPIEGEL ONLINE: What different trends do you see emerging in the Islamic world?
Ramadan: There is a power struggle going on. The Muslim world is afraid of being self-critical because they feel that plays into the hands of the other side -- the West. If you ask too many critical questions, you are perceived as having switched sides and become a Westerner in Muslim dress. There is a perception that whereas yesterday it was political colonization from the West, today it is economic colonization and cultural imperialism. But you can't forget that the great majority of the Arab-Islamic countries are not democracies. Many people in Europe ask about the rights of Christians in Saudi Arabia, for example. What about the rights of Saudis in Saudi Arabia? What about the people. The reality is that it is a dictatorship. That's what makes it difficult to get some movement within the Islamic majority countries. We Muslims in Europe have to speak out, but the Islamic world as a whole also has to stop blaming the West and to ask ourselves, from within, what is wrong with us. The average discourse in the Islamic majority countries is that all our problems are imposed on us. No. They are a consequence. There is no freedom, there is no political will to solve the problems.
SPIEGEL ONLINE: What about the Iranian paper's idea to hold a contest to create Holocaust caricatures? Why is every perceived provocation from the West answered by anti-Semitism?
Ramadan: Muslims have to realize that double standards cannot be allowed. We are confusing the Israeli-Palestinian conflict -- a political conflict -- with all the Jews. We have to condemn something which is harmful and anti-Semitic. The Holocaust is a deep and hurtful part of the European conscience. Exploiting that, and exploiting a people who were hurt and suffered and treated in a horrific way -- which is what the Holocaust caricature campaign does -- is not acceptable. It is to be condemned.
SPIEGEL ONLINE: Is there a connection between the current cartoon conflict and Iran's potential quest for nuclear weapons?
Ramadan: Yes, there is. The cartoon conflict provides the Iranian government -- which postures as the defender of the Muslim world against the West -- with legitimacy. We as free citizens and democrats need to stand between the two extremist sides -- between the Iranians and those calling for war against Iran. We need to stand between the people who are prophets of a very dark tomorrow. If we end up with a clash of civilizations, we are both going to lose. If there is a dialogue of civilizations, then we are both going to win. We have to realize that whether we win or lose, we are going to do it together.
Interview conducted by Charles Hawley
© SPIEGEL ONLINE 2006
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH
INTERVIEW WITH MUSLIM LEADER TARIQ RAMADAN ON THE CARICATURE CONFLICT
"We Have to Turn Up the Volume of Reason"
With unrelenting Muslim anger over the Muhammad caricatures, sentiments between Islam and the West once again have all the delicacy of a powder keg. SPIEGEL ONLINE spoke with Tariq Ramadan, Europe's leading Muslim scholar, about the overreaction of the Muslim world, rampant anti-Semitism and the frustrations of Muslim immigrants in Europe.
Egyptian-Swiss philosopher and Islamic theoretician Tariq Ramadan.
AP
Egyptian-Swiss philosopher and Islamic theoretician Tariq Ramadan.
SPIEGEL ONLINE:
The Muslim world's reactions to the publishing of the Muhammad caricatures first in the Danish newspaper Jyllands-Posten and then in other European publications have not done much to improve the image of Islam in the West. Are Muslims overreacting?
Tariq Ramadan: Of course. The reaction has been way too severe. I traveled to Denmark back in October and I told Muslim leaders there not to react emotionally, because it would be the reactions and the emotions of the Muslims that would become the center of attention. The best thing would have been for us to take an emotional distance. But now, all you see is angry faces, crying and rage on the television. This is not the way forward for the Muslims.
SPIEGEL ONLINE: But clearly there are deeper reasons for this enormous outburst of emotions than just a handful of offensive cartoons. It's as though huge amounts of pent up frustration are finally being released. Is there something larger going on here?
Ramadan: Of course it started with a few people being hurt by the cartoons. But then a few people took the cartoons to the Middle East. Some governments there were very happy to present themselves as the great champions of Islam. One reason, of course, was to gain legitimacy in the eyes of their own people. But secondly, it was to direct the attention of the people, living under these dictatorial governments, toward the West and to provide their people with a vent for their own frustrations. And it worked -- it became Muslims against the West. All the first reactions from the Islamic majority countries came from those countries (and places) where there is a difficult relationship with the West: Syria, Lebanon, Saudi Arabia, Gaza, and then Iran. It's more than just the cartoons. It's part of a broader picture that we have to keep in mind.
SPIEGEL ONLINE: Where does this intense resentment against the West come from?
Ramadan: There are a number of countries, like Syria or Iran, in the Islamic world which are under tremendous pressure from the West. The governments present themselves as victims and turn their people against the West. In Gaza, to take another example, there is a perception that the West is speaking about democracy, but when the votes are tallied, it considers the result unacceptable. There is also a perception that Israel is supported to the disadvantage of the Palestinians. So there are many things that add up and the result is a perception that the war on terror isn't only against terror but it is also against Muslims. The cartoon showing the Prophet's turban as a bomb didn't help.
SPIEGEL ONLINE: None of this is terribly new. After all, burning American flags in the Middle East has become something of a tradition. But Muslims living in Europe also talk about an anti-Islam prejudice.
Ramadan: If you're living in Europe as a Muslim, it's in the atmosphere. There is the presence of far-right parties and their discourse -- even though such parties don't have much support. But even mainstream political parties have accepted and propagated a discourse which is perceived by Muslims to be a continuous and permanent attack.
SPIEGEL ONLINE: There are also plenty of people and political parties preaching tolerance and doing their best to help Muslims in Europe. Why focus on the negatives?
Ramadan: I have long been saying that we Muslims have to get rid of this victim mentality. But it's there. And it's hard to ignore the Islamophobia or racism that is present. Many allow themselves to be hurt and their emotional reaction spins out of control. Muslim leaders in Europe have a responsibility to help shape the response of the Muslims to the West and of the West to Islam. We have to somehow take the emotion out of the response.
SPIEGEL ONLINE: How is that possible when the Muslim world and some radical Muslim leaders here in Europe are constantly saying that the West is the source of all evil?
Ramadan: The great majority of Muslims in Europe feel they are Europeans. They may face troubles sometimes and may face negative perceptions, but the great majority of Muslims in Europe are demonstrating that they are citizens of Europe and want to change the image of Islam. We have to pay more attention to these people than to the vocal radicals on the margins who think that Europeans will never accept Muslims.
SPIEGEL ONLINE: But there are many who listen to these radical voices on the fringes.
Ramadan: But there are many who don't. The media should speak about these Muslims who are trying to become active and committed European citizens and who are accepting European culture. They need to be helped. Media pressure is undermining our work and we are regressing. Every six months you have some new event which ratchets up the pressure and focuses the attention on emotions, reactions and on Muslims committing violence. The latest event just happens to be the Muhammad caricatures. But these events really undermine the process of reform, the process of settling down and the process of dialogue. Today, there is no dialogue, there is no debate. It's a power struggle and it's very, very vicious.
Part II: "In a Clash of Civilizations, We Both Lose"
Disgruntled Muslim protesters gathered in central Copenhagen last Saturday.
AP
Disgruntled Muslim protesters gathered in central Copenhagen last Saturday.
SPIEGEL ONLINE: Which of course proves the point the radicals are trying to make -- namely that Islam and the West are incompatible.
Ramadan: Exactly. On the positive side, what we Muslims experience in Europe will have a tremendous impact on Islamic majority countries. We now have experience with living in democracy and living in free societies. But there is a danger. If Muslims and Europeans, as equal citizens living together in a democracy, are not able to trust each other, if we are not able to talk to each other, if we are not able to come to a reasonable agreement about how to live together, we are sending a signal to Islamic majority countries that there is no way for Muslims and Westerners to trust each other. We in Europe have a great, great, great responsibility. It's important that European citizens understand that if mutual knowledge and mutual respect are improved, then we are sending the signal that it is possible. Right now, though, we are sending exactly the opposite message.
SPIEGEL ONLINE: Not to be overly pessimistic, but that sounds like a pretty tall order.
Ramadan: It has to happen at the local level. It's up to each and every citizen to choose if they are ready to know more about their fellow citizens and the Muslims living around them. There is a lot of mistrust between the two groups. People need to break out of their intellectual ghettos, break out of their religious and cultural ghettos and come to some common, universal values. And these values do exist. We can't just wait for the next crisis and then react. This needs to be a pre-emptive strategy based on a true understanding of what pluralism requires.
SPIEGEL ONLINE: Outside of Europe, the Muslim world doesn't seem to have understood that Europe and the West really is committed to freedom of the press, freedom of opinion and other democratic values.
Ramadan: That's true. Many in the Muslim world think that European governments are responsible for the caricatures. They don't realize that it doesn't work like that. These people are living under regimes where the president controls both the government and the media. But that's not the only misconception of the West. There is a perception in the Muslim world that the West is a lost civilization with no moral standards and no ethics. But this is, of course, wrong. It's important that the Muslims living in Europe tell them that even in the West, there wasn't just one single response to the caricatures. Many Europeans and Westerners are arguing that the West has to be wise in the way it exercises its freedom of expression.
SPIEGEL ONLINE: So you're saying that a lot of people in the Muslim world don't understand that there is a debate going on?
Ramadan: The same thing works in reverse. In the West, when you look at the violent reactions in the Muslim world, you have the perception that these are the Muslims. But that's not right either. There are different trends in the Islamic world as there are here. Because the radical voices are loudest and are covered more by the media, they have the upper hand. We have to turn up the volume of reason and ensure that our discourse gets the upper hand.
SPIEGEL ONLINE: What different trends do you see emerging in the Islamic world?
Ramadan: There is a power struggle going on. The Muslim world is afraid of being self-critical because they feel that plays into the hands of the other side -- the West. If you ask too many critical questions, you are perceived as having switched sides and become a Westerner in Muslim dress. There is a perception that whereas yesterday it was political colonization from the West, today it is economic colonization and cultural imperialism. But you can't forget that the great majority of the Arab-Islamic countries are not democracies. Many people in Europe ask about the rights of Christians in Saudi Arabia, for example. What about the rights of Saudis in Saudi Arabia? What about the people. The reality is that it is a dictatorship. That's what makes it difficult to get some movement within the Islamic majority countries. We Muslims in Europe have to speak out, but the Islamic world as a whole also has to stop blaming the West and to ask ourselves, from within, what is wrong with us. The average discourse in the Islamic majority countries is that all our problems are imposed on us. No. They are a consequence. There is no freedom, there is no political will to solve the problems.
SPIEGEL ONLINE: What about the Iranian paper's idea to hold a contest to create Holocaust caricatures? Why is every perceived provocation from the West answered by anti-Semitism?
Ramadan: Muslims have to realize that double standards cannot be allowed. We are confusing the Israeli-Palestinian conflict -- a political conflict -- with all the Jews. We have to condemn something which is harmful and anti-Semitic. The Holocaust is a deep and hurtful part of the European conscience. Exploiting that, and exploiting a people who were hurt and suffered and treated in a horrific way -- which is what the Holocaust caricature campaign does -- is not acceptable. It is to be condemned.
SPIEGEL ONLINE: Is there a connection between the current cartoon conflict and Iran's potential quest for nuclear weapons?
Ramadan: Yes, there is. The cartoon conflict provides the Iranian government -- which postures as the defender of the Muslim world against the West -- with legitimacy. We as free citizens and democrats need to stand between the two extremist sides -- between the Iranians and those calling for war against Iran. We need to stand between the people who are prophets of a very dark tomorrow. If we end up with a clash of civilizations, we are both going to lose. If there is a dialogue of civilizations, then we are both going to win. We have to realize that whether we win or lose, we are going to do it together.
Interview conducted by Charles Hawley
© SPIEGEL ONLINE 2006
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH
Der Speigel Interview with His Highness
10/12/2006 02:34 PM
SPIEGEL INTERVIEW WITH AGA KHAN
"Islam Is a Faith of Reason"
Karim Aga Khan IV, descendant of the prophet Muhammad and spiritual leader of 20 million Ismaili Muslims, discusses the foundations of his faith, the controversy over the pope's recent statements about Islam and ways of preventing a global clash between religions.
Karim Aga Khan IV: "Nobody will ever convince me that the faith of Islam, that Christianity, that Judaism will fight each other in our times -- they have too much in common."
Getty Images
Karim Aga Khan IV: "Nobody will ever convince me that the faith of Islam, that Christianity, that Judaism will fight each other in our times -- they have too much in common."
SPIEGEL: Your Highness, in a lecture Pope Benedict XVI quoted Emperor Manuel as saying: "Show me just what Muhammed brought that was new, and there you will find things only evil and inhuman, such as a command to spread by the sword the faith he preached." This quotation from the 14th century has caused great uproar in the Muslim world. Why? And what was your reaction?
Aga Khan: From my point of view, I would start by saying that I was concerned about this statement because this has caused great unhappiness in the Islamic world. There appears to be momentum towards more and more misunderstandings between religions, a degradation of relations. I think we all should try not to add anything to worsen the situation.
SPIEGEL: Benedict XVI did explicitly dissociate himself from the emperor’s quoted statement. The pope's own position with regard to his lecture is that he wanted it to promote a dialogue; and since then, several times, he has expressed his respect for the world religion that is Islam. Was it just an unfortunate choice of words? Or was he deliberately misunderstood?
Aga Khan: I do not wish to pass judgement on that, nor can I. And it might also be unreasonable for me to presume that I know what he meant. But that (medieval) period in history, to my knowledge, was one of the periods of extraordinary theological exchanges and debates between the Byzantine Empire and the Muslim world. A fascinating time. The emperor’s statement does not reflect that, so I think it is somewhat out of context.
SPIEGEL: The theme of Pope Benedict’s lecture was different, it was one of his favorites: the link between faith and reason which, he said, implies a rejection of any link between religion and violence. Is that something you could agree on?
Aga Khan: If you interpret his speech as one about faith and reason then I think that the debate is very exciting and could be enormously constructive between the Muslim world and the non-Muslim world. So I have two reactions to the pope’s lecture: There is my concern about the degradation of relations and, at the same time, I see an opportunity. A chance to talk about a serious, important issue: the relationship between faith and logic.
SPIEGEL: If the pope were to invite you to take part with other religious leaders in a debate about faith, reason and violence, would you accept?
Aga Khan: Yes, definitely. I would, however, make the point that an ecumenical discussion at a certain stage will meet certain limits. Therefore I would prefer to talk more about a cosmopolitan ethic stemming from all of Earth's great faiths.
SPIEGEL: Does Islam have a problem with reason?
Aga Khan: Not at all. Indeed, I would say the contrary. Of the Abrahamic faiths, Islam is probably the one that places the greatest emphasis on knowledge. The purpose is to understand God’s creation, and therefore it is a faith which is eminently logical. Islam is a faith of reason.
SPIEGEL: So, what are the root causes of terrorism?
Aga Khan: Unsolved political conflicts, frustration and, above all, ignorance. Nothing that was born out of a theological conflict.
SPIEGEL: Which political conflicts do you mean?
Aga Khan: The ones in the Middle East and in Kashmir, for example. These conflicts have remained unresolved for decades. There is a lack of urgency in understanding that the situation there deteriorates, it’s like a cancer. If you are not going to act on a cancer early enough, ultimately it’s going to create terrible damage. It can become a breeding ground for terrorism.
Now to the issue of spreading faith by the sword: All faiths at some time in their history have used war to protect themselves or expand their influence, and there were situations when faiths have been used as justifications for military actions. But Islam does not call for that, it is a faith of peace.
SPIEGEL: It’s true that horrible crimes were committed in the name of Christianity, for example by the crusaders. That was long ago, that’s the past. But jihadists commit their crimes now, in our times.
Aga Khan: It is not so far in the past that we have seen bloody fights in the Christian world. Look at Northern Ireland. If we Muslims interpreted what happened there as a correct expression of Protestantism and Catholicism or even as the essence of the Christian faith you would simply say we don’t know what we are talking about.
SPIEGEL: „The West (will stand) against the Rest“ wrote Professor Samuel Huntington in his famous book „Clash of Civilizations." Is such a conflict, such a clash inevitable?
Aga Khan: I prefer to talk about a clash of ignorance. There is so much horrible, damaging, dangerous ignorance.
SPIEGEL: Which side is responsible?
Aga Khan: Both. But essentially the Western world. You would think that an educated person in the 21st century should know something about Islam; but you look at education in the Western world and you see that Islamic civilizations have been absent. What is taught about Islam? As far as I know -- nothing. What was known about Shiism before the Iranian revolution? What was known about the radical Sunni Wahhabism before the rise of the Taliban? We need a big educational effort to overcome this. Rather than shouting at each other, we should be learning to listen to each other. In the way we used to do it, by working together, with mutual give-and-take. Together we brought about some of the highest achievements of human civilization. There is a lot to build on. But I think you cannot build on ignorance.
SPIEGEL: Nonethless, it is striking that a particularly large number of Muslim-dominated states figure among the most backward and undemocratic states in the world. Is Islam in need of an era of enlightment? Is the faith even incompatible with democracy as others claim?
Aga Khan: As I said before, one has to be fair. Some of the political leaders have inherited problems that are in no way attributable to the faith. New governance solutions have to be tested and validated over time. Nor do I believe Muslim states are systematically economic underperformers. Some of the fastest growing economies and some of the most successful newly industrialized countries are in the Islamic world. Now concerning democracy: My democratic beliefs do not go back to the Greek or French (thinkers) but to an era 1,400 years ago. These are the principles underlying my religion. During the prophet’s life (peace be upon him), there was a systematic consultative political process. And the first imam of the Shiites, Prophet Muhammad’s cousin and son-in-law, Hazrat Ali, emphasized: "No honor is like knowledge, no power is like forbearance, and no support is more reliable than consultation."
What makes democracies fail?
SPIEGEL: If pluralism, civil society and Islam can coexist harmoniously, as was proven in the past, then why is this so seldom achieved nowadays?
Aga Khan: I think we have a very diverse situation in the Islamic world. Wealthy countries with enormous ressources, newly industrialized countries, extremely poor ones.
SPIEGEL: Not many are functioning democracies.
Aga Khan: People speak about failed states. I do not think that states can fail, but democracies certainly can. The failure of democracy is not specific to the Islamic world. Indeed, about two years ago, the United Nations carried out an in-depth analysis of democracy in South America. About 55 percent of the population in South American states said that they would prefer to live under a paternalistic dictatorship instead of an incompetent or corrupt democracy that is not improving their living condition.
SPIEGEL: Most of your Ismaili constituency lives in states that cannot be called perfect democracies: Pakistan, Afghanistan, Syria and Iran. What makes democracies fail?
Aga Khan: I ask myself every day what we can do to sustain the multiple forms of democracy, to make these forms of government work, whether it is in Latin America, Africa or the Middle East.
SPIEGEL: And what do you believe to be the answer?
Pakistani protesters chant slogans and burn an effigy of Pope Benedict XVI, during a protest in Karachi: "A chance to talk about a serious, important issue which is the relationship between faith and logic."
DPA
Pakistani protesters chant slogans and burn an effigy of Pope Benedict XVI, during a protest in Karachi: "A chance to talk about a serious, important issue which is the relationship between faith and logic."
Aga Khan: I admit that I live in a mood of frustration. What is the point in these areas of the world of carrying out a referendum in a population that essentially cannot read and write? What is the point in testing a constitution with a population that knows no difference between a presidential regime or a constitutional monarchy? Elections, constitutions -- all this is necessary, but not sufficient. I think we have to accept that countries have different histories, different social structures, different needs, so we have to be a great deal more flexible than we have been.
SPIEGEL: Nor is democracy monolithic. The American model of democracy is no panacea for the rest of the world. Has George W. Bush aggrevated the situation with his particular way of bringing democracy to the Middle East? Can the United States still win the war in Iraq?
Aga Khan: I am very, very worried about Iraq. The invasion of Iraq had an impact across the world like nothing before in modern times. The invasion has unleashed every force in the Islamic world, including the relations between the Arabs and non-Arabs and the relationship between the Shia und the Sunni.
SPIEGEL: You mean the war created a new terrorist base and radicalized people?
Aga Khan: Indeed. It mobilized a large number of people across the Islamic world, who before then were not involved, and indeed I think they did not want to be.
SPIEGEL: Do you share the view of the American professor and Islam expert Vali Nasr that the balance of power in the Muslim world is undergoing a decisive shift, that Shiites could become the most influential force from Baghdad to Beirut, that the future of the Middle East will be shaped by wars between different Muslim factions?
Aga Khan: When the invasion of Iraq took place, we were told two things: (that there would be) regime change and democracy. Well, anyone who knew the situation in Iraq, as you did, I did, but what did that mean? That meant a Shia majority; it could not have been otherwise. Anyone who then concludes that the next issue is a Shia majority in Iraq is going to start thinking, What does that mean in the region, what does it mean in the Islamic world, what does it mean in relation to the West? All that was as clear as daylight, you didn’t even have to be a Muslim or a scholar to know that.
SPIEGEL: In your opinion, was it pure ignorance and naivete that made the Bush government start the war? Was it really about introducing democracy or a strategic decision about conquering oil fields and military bases?
Aga Khan: I wish I could answer that question.
SPIEGEL: Are you in contact with the religious leaders in Iraq, like Grand Ayatollah Sistani? And with the religious leaders of Iran as well?
Aga Khan: We have frequent contacts with important personalities in both countries.
SPIEGEL: What would it take to get you to go to the region as a mediator?
Aga Khan: This is, at the moment, not one of my priorities. One day maybe, we might consider (participating in the) reconstruction (effort).
SPIEGEL: When you compare the invasion in Iraq with the one in Afghanistan, where the Taliban and al-Qaida worked hand in hand ...
Aga Khan: ... there I see a completely different picture. First of all, the Afghan regime at the time was quasi totally detested by the people; it was equally unpleasant for Sunnis as it was the for Shias and it was totally unacceptable I think just in terms of overall civilized life.
SPIEGEL: Afghanistan is currently being confronted with major problems and the situation seems to be deteriorating by the hour. What went wrong? And what can the West do to make the situation more stable?
Aga Khan: The security situation is indeed very worrying -- it is getting worse, especially in the south. Most of our projects are in the capital and in the north where (the situation) is better but not satisfying. We can supply energy from Tajikistan, we can provide civil services. We try to avoid the danger that certain areas in Afghanistan will be rehabilitated more quickly than others. If this development overlaps with ethnic divides you have another problem. But the main problem is that most people in Afghanistan have not seen an improvement in their daily lives. The process of reconstruction does not seem to be penetrating. We have not succeded in bringing a culture of hope to this country. One of the central lessons I have learned after a half century of working in the developing world is that the replacement of fear by hope is probably the most powerful trampoline of progress.
SPIEGEL: President Karzai is a personal friend of yours. Many people see him as a weak leader, and some call him "Mayor of Kabul" because he is unable to control large parts of the country.
Aga Khan: We should do everything to help him. He has an enomously complex agenda to deal with. He is our best hope. And besides, he is the elected leader and we have to work with the parliament.
SPIEGEL: Even if warlords and a former members of the Taliban are represented in Afghanistan's parliament?
Aga Khan: You either accept the results of democracy or you don’t. Otherwise you talk about qualifying democracy.
SPIEGEL: That means the West should deal with the radical Islamist Hamas as well?
Aga Khan: You have to work with whoever the population has elected as long as they are willing to respect what I call cosmopolitan ethics. Now, it’s true that Hamas has a record of conflict ...
SPIEGEL: ... of outright terror ...
Aga Khan: ... but it would not be the only time that movements that have such a record make it into parliament, and even end up in charge of government later on. Can I remind you of Jomo Kenyatta and his Mau Mau movement in Kenya, for example, or the ANC in South Africa? Take away the causes of extremism and extremists can come back to a more reasonable political agenda. That change to me is one of the wonderful things about the human race.
SPIEGEL: You know Syria’s president, Bashar Assad, very well. You recently visited him again in Damascus. In contrast to the American administration, the German government is trying to get him involved in the Middle East peace process.
Aga Khan: I would like to compliment the German government and others in Europe who have taken the decision to invite President Assad to be a party to the peace process. The process of change from decades of political directionalism is something that needs time, as you saw in East Germany. I think there are many reasons to go out of our way to assist Syria in making the transition from the past to the future.
SPIEGEL: If you look back at the years that have passed since World War II -- the Cold War between the East and the West, the ideological conflict with communism -- would you ever have thought that this conflict could be replaced by one between the West and radical Islamists?
Aga Khan: I beg you, please get away from the concept of a conflict of religion. It is not such a conflict. Nobody will ever convince me that the faith of Islam, that Christianity, that Judaism will fight each other in our times -- they have too much in common. That’s why I am talking about this global ethic which unites us all. That’s why we are trying to work with the Catholic Church in Portugal on a program aimed at immigant minorities. I am aware of a sense of disaffection with the society that many young Muslims feel because they think that the Western society has the intention of marginalizing or damaging them.
SPIEGEL: The German government just organized a conference with many different Muslim groups and personalities who live in Germany. Do you consider such a forum useful or is it just window dressing?
Aga Khan: We can avoid misunderstandings by having such a forum where people from different faiths consult each other so they understand what really affects them. Once you have committed an offense all you can do is to try and reverse it. Anyone who knows the faith of Islam, for example, would have known that the caricatures of the prohet were profoundly offensive to all Muslims.
SPIEGEL: Again, this whole affair was misused by radical Islamists. They added caricatures much more offensive than the original ones to incite the masses.
Aga Khan: But I am told that there was an internal debate between the editors of that publication and they actually knew what they were doing. They took a risk and somebody should have said to them, Why get into that situation? Now we are talking about civility, which is a completely different concept. If we are talking about civility in a pluralist society, then how do you develop that notion of civility, particularly where there is ignorance. And that’s the thing that’s worrying. And that’s why I get frustrated when I see these situations that go on and on and on. Because I’m not willing to believe that they are all inspired by evil intent.
SPIEGEL: Provocative, sad and distasteful. But the freedom of the press is one of the highest values in our democracy. We have to balance one thing against the other and we will allow non-believers to express even outrageous opinions.
Aga Khan: I think that you are now referring to one of the most difficult problems that we have and I don’t know the answer. The industrialized West is highly secularized; the Muslim world is much less secularized and that stems largely from the nature of the faith of Islam, which you know and I know has an intrinsic meshing with everyday life. And that is a scenario where people of goodwill need to think very, very carefully.
SPIEGEL: In some of your speeches you mentioned Kemal Atatürk in a positive context. Turkey followed his path and is one of the very few countries with a predominant Muslim population where there is separation of church and state. Would you like to see others go the same way?
Aga Khan: I am not opposed to secularism as such. But I am opposed to unilateral secularism where the notions of faith and ethics just disappear from society.
SPIEGEL: Your Highness, we thank you for this interview.
Interview conducted by Stefan Aust and Erich Follath.
The Other Bail Out
Web| Oct 07, 2008
View From Britain
The Other Bail-Out
While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Few people noticed; fewer fought it... The great corporate bail-out is spreading like the plague
GEORGE MONBIOT
While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Last week, George Bush agreed to lend $25bn to US car manufacturers. It’s a soft loan, which will cost the government $7.5bn(1). Few people noticed; fewer fought it. The House of Representatives approved the measure by 370 votes to 58. The great corporate bail-out is spreading like the plague.
It has already crossed the Atlantic. Yesterday European car makers demanded that the EU hand them E40bn ($54bn) in cheap loans to match the US subsidy(2). Where will the public spending spree end?
The motor companies in both Europe and the US claim they need these loans to help them go green. They will invest the money in a new generation of environmental technologies, which will allow them to meet the efficiency standards their governments are setting. There is more joy in heaven over one sinner who repents … but how strange this green enthusiasm seems, now that there’s the smell of public money in the air. For the past ten years the car manufacturers have driven every useful green initiative into the wall.
In 1998 European car makers promised to show that they could cut their greenhouse gases voluntarily. By the end of 2008, they pledged, they would reduce the average emissions produced by their cars from 190 grams of carbon dioxide per kilometre to 140. How well have they done? By the end of last year they had cut average pollution to 158g/km across Europe(3) and 165g/km in the UK(4): they will miss their target by some 40%.
Discerning, only ten years too late, that lobby groups’ promises are worth as much as a share in Lehman Brothers, in 2006 the European Commission announced that it would set compulsory standards: by 2012 all manufacturers would have to reduce their average CO2 emissions to 120g/km. It looked like progress, until you remembered that 120g was the target proposed by the EU in 1994, to be met by 2005(5). It was repeatedly delayed by industry lobbying.
Last year the 2012 target fell to the same forces. Angela Merkel, lobbying on behalf of companies like DaimlerChrysler and BMW, demanded that the European Commission put the brakes on(6,7). (Ironically it was Merkel, as the idealistic young German environment minister, who first proposed the target of 120g by 2005(8).) The commission agreed to revise the figure to 130g, and to cover the gap by raising the contribution from biofuels. Since then we’ve seen hard evidence that most biofuels, as well as spreading starvation, produce more greenhouse gases than petrol(9,10,11), but the policy remains unchanged.
Now the pollutocrats are whinging that they can’t meet the 130g target either. A month ago they persuaded the European Parliament’s industry committee to take up their case: it proposed postponing the target until 2015, reducing the fines if they don’t comply and allowing manufacturers to offset eco-innovations against the target even if these don’t actually reduce emissions(12). These invertebrates, in other words, proposed to grant official approval to industry greenwash. Fortunately this scam was rejected two weeks ago by the parliament’s environment committee(13).
In the US, manufacturers have still not reached the standard (an average of 27.5 miles per gallon) that they were supposed to have met, under the Energy Policy Conservation Act, by 1985(14). The average car sold in the States today is less efficient than the 1908 Model T Ford(15,16).
What makes this dithering so frustrating is that to be talking, in 2008, about targets of 130 or 120g/km is a bit like discussing whether modern computers should have ten rows of sliding beads or 100.In 1974 a stripped-down 1959 Opel T-1 managed 377 miles to the US gallon (160km/l)(17), which equates to 15 grams of CO2 per kilometre(18). There is no technical reason why the maximum limit for mass-produced cars shouldn’t be 50g/km.
Nor is there a good commercial reason. A poll by the Newspaper Marketing Agency shows that 80% of car buyers say economy is now more important to them than performance(19). The car industry’s technological failure results entirely from lobbying by the companies now demanding public money to go green. They want to squeeze every last drop from existing technologies before switching to better models.
Their sabotage of green technology has been both subtle and comprehensive. The film Who Killed The Electric Car? shows how the manufacturers, working with oil companies and corrupt officials, sank California’s attempt to change vehicle technologies(20). Having bumped off battery power, they persuaded the federal government to pour money instead into hydrogen vehicles, aware that the technological hurdles are so high that a cheap, mass-produced model might never be possible. Electric cars, by contrast, have been ready for the mass market for almost a century. The $1.2bn that the US government is spending on research and development for hydrogen cars(21) - like the E2bn pledged to the same quest by the European Union(22,23) - is a subsidy for avoiding technological change.
Now, after so much procrastination, the car makers have the flaming cheek to demand public money to pursue the policies they have spent fifty years and millions of dollars crushing. Of course, the "green loans" they are soliciting are nothing of the kind. Funding better environmental performance is simply an excuse for bailing out another failing industry. As a result of the credit crunch and high oil prices, new car registrations in the UK fell by 21% last month(24). In the US, sales by the major manufacturers have declined this year by between 20 and 35%(25).
There is no need to spend a penny of public money on greening the motor industry. As a recent report by the House of Commons environmental audit committee shows, you could achieve the same outcome by creating a bigger differential between vehicle tax bands: it proposes that people buying the least efficient cars should pay around £2000 more per year than those buying the most efficient(26). This would kill the market for gas guzzlers and force the industry to make the changes it has long resisted.
But the government has taken all the flak a good tax policy would have generated for very little gain. Its controversial new vehicle tax banding will save a mere 0.16 million tonnes of CO2 per year(27): a drop in the acidifying ocean. At scarcely greater political cost it could have hammered emissions and generated much of the money it needs to revolutionise public transport. Again there has been a historical slide: between 1920 and 1948 cars were taxed at £1 per horsepower(28): in real terms (and in some cases in nominal terms(29)) a far higher rate for gas guzzlers than today’s.
But subsidies are what governments pay when regulation doesn’t happen. If you don’t have the guts to force companies to do something, you must bribe them instead. It’s a fair guess that European car makers will still fail to meet their environmental targets, even if they get the money they’re demanding. The greenest thing governments could do is to allow these foot-dragging, planet-eating spongers to go under.
www.monbiot.com
References:
1. Bernard Simon, 25th September 2008. House clears $25bn for carmakers. Financial Times.
2.ACEA (the European Automobile Manufacturers Association), 6th October 2008. European auto industry calls on EU to help sustain changeover to low-emission car fleet.
3. European Federation for Transport and Environment, August 2008. Reducing CO2 Emissions from New Cars: A Study of Major Car Manufacturers’ Progress in 2007.
4. Low Carbon Vehicle Partnership, 18th March 2008. Average UK new car CO2 emissions fell 1.4% in 2007.
5. European Federation for Transport and Environment, 26th August 2008. BMW leaps ahead on new car CO2 emissions, others still stalling.
6. George Parker and Andrew Bounds, 31st January 2007. Brussels climbdown on car emissions. Financial Times.
7. European Commission, 7th February 2007. Commission plans legislative framework to ensure the EU meets its target for cutting CO2 emissions from cars. Press release.
8. European Federation for Transport and Environment, 26th August 2008, ibid.
9. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne, 7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi 10.1126/science.1152747.
10. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7th February 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.
11. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels. Atmospheric Chemistry and Physics Discussions 7, pp11191–11205.
12. European Federation for Transport and Environment, 16th September 2008. MEPs’ call for ‘phased’ CO2 limits amounts to a postponement, IEEP study shows.
13. European Federation for Transport and Environment, 25th September 2008. MEPs stand up for fuel-efficient cars.
14. Kathy Gill, 28th April 2006. CAFE (Fuel Efficiency) Standards for Passenger Cars and Light Trucks.
15. The estimated average fuel efficiency for cars, including SUVs and pickups, in the US in 2008 is 20.8 mpg.
16. In 1908 the Ford Model T ran at 25mpg. Detroit News, 4th June 2003, cited by Want to Know, 11th July 2005.
17. See http://www.treehugger.com
18. According to Audi, 100km/l equates to 23.8gCO2/km.
19.Low Carbon Vehicle Partnership, 27th September 2008. Survey shows more buyers want low emission cars.
20. http://www.whokilledtheelectriccar.com/
21. Office of Science and Technology Policy, Executive Office of the President, no date given. Hydrogen Fuel Initiative. Research and Development Funding in the President’s 2007 Budget.
22. No author, 16th August 2003. The clean green energy dream. New Scientist: Energy Special – Hydrogen.
23. The allocation for the current Framework Programme is E470m. European Union, 10th October 2007. The Fuel Cells and Hydrogen Joint Technology
Initiative. Press release.
24. BBC Online, 6th October 2008. New car registrations fall by 21%.
25. Suzy Jagger, 2nd October 2008. US carmakers forced to wait for $25bn ‘green’ loan. The Times.
26. House of Commons Environmental Audit Committee, 4th August 2008. Vehicle Excise Duty as an environmental tax.
27. ibid.
28. ibid.
29. The top standard rate of vehicle excise duty from 2010 will be £455. The Mercedes-Benz SL is 604hp; the Lamborghini Murcielago is 640.
View From Britain
The Other Bail-Out
While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Few people noticed; fewer fought it... The great corporate bail-out is spreading like the plague
GEORGE MONBIOT
While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Last week, George Bush agreed to lend $25bn to US car manufacturers. It’s a soft loan, which will cost the government $7.5bn(1). Few people noticed; fewer fought it. The House of Representatives approved the measure by 370 votes to 58. The great corporate bail-out is spreading like the plague.
It has already crossed the Atlantic. Yesterday European car makers demanded that the EU hand them E40bn ($54bn) in cheap loans to match the US subsidy(2). Where will the public spending spree end?
The motor companies in both Europe and the US claim they need these loans to help them go green. They will invest the money in a new generation of environmental technologies, which will allow them to meet the efficiency standards their governments are setting. There is more joy in heaven over one sinner who repents … but how strange this green enthusiasm seems, now that there’s the smell of public money in the air. For the past ten years the car manufacturers have driven every useful green initiative into the wall.
In 1998 European car makers promised to show that they could cut their greenhouse gases voluntarily. By the end of 2008, they pledged, they would reduce the average emissions produced by their cars from 190 grams of carbon dioxide per kilometre to 140. How well have they done? By the end of last year they had cut average pollution to 158g/km across Europe(3) and 165g/km in the UK(4): they will miss their target by some 40%.
Discerning, only ten years too late, that lobby groups’ promises are worth as much as a share in Lehman Brothers, in 2006 the European Commission announced that it would set compulsory standards: by 2012 all manufacturers would have to reduce their average CO2 emissions to 120g/km. It looked like progress, until you remembered that 120g was the target proposed by the EU in 1994, to be met by 2005(5). It was repeatedly delayed by industry lobbying.
Last year the 2012 target fell to the same forces. Angela Merkel, lobbying on behalf of companies like DaimlerChrysler and BMW, demanded that the European Commission put the brakes on(6,7). (Ironically it was Merkel, as the idealistic young German environment minister, who first proposed the target of 120g by 2005(8).) The commission agreed to revise the figure to 130g, and to cover the gap by raising the contribution from biofuels. Since then we’ve seen hard evidence that most biofuels, as well as spreading starvation, produce more greenhouse gases than petrol(9,10,11), but the policy remains unchanged.
Now the pollutocrats are whinging that they can’t meet the 130g target either. A month ago they persuaded the European Parliament’s industry committee to take up their case: it proposed postponing the target until 2015, reducing the fines if they don’t comply and allowing manufacturers to offset eco-innovations against the target even if these don’t actually reduce emissions(12). These invertebrates, in other words, proposed to grant official approval to industry greenwash. Fortunately this scam was rejected two weeks ago by the parliament’s environment committee(13).
In the US, manufacturers have still not reached the standard (an average of 27.5 miles per gallon) that they were supposed to have met, under the Energy Policy Conservation Act, by 1985(14). The average car sold in the States today is less efficient than the 1908 Model T Ford(15,16).
What makes this dithering so frustrating is that to be talking, in 2008, about targets of 130 or 120g/km is a bit like discussing whether modern computers should have ten rows of sliding beads or 100.In 1974 a stripped-down 1959 Opel T-1 managed 377 miles to the US gallon (160km/l)(17), which equates to 15 grams of CO2 per kilometre(18). There is no technical reason why the maximum limit for mass-produced cars shouldn’t be 50g/km.
Nor is there a good commercial reason. A poll by the Newspaper Marketing Agency shows that 80% of car buyers say economy is now more important to them than performance(19). The car industry’s technological failure results entirely from lobbying by the companies now demanding public money to go green. They want to squeeze every last drop from existing technologies before switching to better models.
Their sabotage of green technology has been both subtle and comprehensive. The film Who Killed The Electric Car? shows how the manufacturers, working with oil companies and corrupt officials, sank California’s attempt to change vehicle technologies(20). Having bumped off battery power, they persuaded the federal government to pour money instead into hydrogen vehicles, aware that the technological hurdles are so high that a cheap, mass-produced model might never be possible. Electric cars, by contrast, have been ready for the mass market for almost a century. The $1.2bn that the US government is spending on research and development for hydrogen cars(21) - like the E2bn pledged to the same quest by the European Union(22,23) - is a subsidy for avoiding technological change.
Now, after so much procrastination, the car makers have the flaming cheek to demand public money to pursue the policies they have spent fifty years and millions of dollars crushing. Of course, the "green loans" they are soliciting are nothing of the kind. Funding better environmental performance is simply an excuse for bailing out another failing industry. As a result of the credit crunch and high oil prices, new car registrations in the UK fell by 21% last month(24). In the US, sales by the major manufacturers have declined this year by between 20 and 35%(25).
There is no need to spend a penny of public money on greening the motor industry. As a recent report by the House of Commons environmental audit committee shows, you could achieve the same outcome by creating a bigger differential between vehicle tax bands: it proposes that people buying the least efficient cars should pay around £2000 more per year than those buying the most efficient(26). This would kill the market for gas guzzlers and force the industry to make the changes it has long resisted.
But the government has taken all the flak a good tax policy would have generated for very little gain. Its controversial new vehicle tax banding will save a mere 0.16 million tonnes of CO2 per year(27): a drop in the acidifying ocean. At scarcely greater political cost it could have hammered emissions and generated much of the money it needs to revolutionise public transport. Again there has been a historical slide: between 1920 and 1948 cars were taxed at £1 per horsepower(28): in real terms (and in some cases in nominal terms(29)) a far higher rate for gas guzzlers than today’s.
But subsidies are what governments pay when regulation doesn’t happen. If you don’t have the guts to force companies to do something, you must bribe them instead. It’s a fair guess that European car makers will still fail to meet their environmental targets, even if they get the money they’re demanding. The greenest thing governments could do is to allow these foot-dragging, planet-eating spongers to go under.
www.monbiot.com
References:
1. Bernard Simon, 25th September 2008. House clears $25bn for carmakers. Financial Times.
2.ACEA (the European Automobile Manufacturers Association), 6th October 2008. European auto industry calls on EU to help sustain changeover to low-emission car fleet.
3. European Federation for Transport and Environment, August 2008. Reducing CO2 Emissions from New Cars: A Study of Major Car Manufacturers’ Progress in 2007.
4. Low Carbon Vehicle Partnership, 18th March 2008. Average UK new car CO2 emissions fell 1.4% in 2007.
5. European Federation for Transport and Environment, 26th August 2008. BMW leaps ahead on new car CO2 emissions, others still stalling.
6. George Parker and Andrew Bounds, 31st January 2007. Brussels climbdown on car emissions. Financial Times.
7. European Commission, 7th February 2007. Commission plans legislative framework to ensure the EU meets its target for cutting CO2 emissions from cars. Press release.
8. European Federation for Transport and Environment, 26th August 2008, ibid.
9. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne, 7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi 10.1126/science.1152747.
10. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7th February 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.
11. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels. Atmospheric Chemistry and Physics Discussions 7, pp11191–11205.
12. European Federation for Transport and Environment, 16th September 2008. MEPs’ call for ‘phased’ CO2 limits amounts to a postponement, IEEP study shows.
13. European Federation for Transport and Environment, 25th September 2008. MEPs stand up for fuel-efficient cars.
14. Kathy Gill, 28th April 2006. CAFE (Fuel Efficiency) Standards for Passenger Cars and Light Trucks.
15. The estimated average fuel efficiency for cars, including SUVs and pickups, in the US in 2008 is 20.8 mpg.
16. In 1908 the Ford Model T ran at 25mpg. Detroit News, 4th June 2003, cited by Want to Know, 11th July 2005.
17. See http://www.treehugger.com
18. According to Audi, 100km/l equates to 23.8gCO2/km.
19.Low Carbon Vehicle Partnership, 27th September 2008. Survey shows more buyers want low emission cars.
20. http://www.whokilledtheelectriccar.com/
21. Office of Science and Technology Policy, Executive Office of the President, no date given. Hydrogen Fuel Initiative. Research and Development Funding in the President’s 2007 Budget.
22. No author, 16th August 2003. The clean green energy dream. New Scientist: Energy Special – Hydrogen.
23. The allocation for the current Framework Programme is E470m. European Union, 10th October 2007. The Fuel Cells and Hydrogen Joint Technology
Initiative. Press release.
24. BBC Online, 6th October 2008. New car registrations fall by 21%.
25. Suzy Jagger, 2nd October 2008. US carmakers forced to wait for $25bn ‘green’ loan. The Times.
26. House of Commons Environmental Audit Committee, 4th August 2008. Vehicle Excise Duty as an environmental tax.
27. ibid.
28. ibid.
29. The top standard rate of vehicle excise duty from 2010 will be £455. The Mercedes-Benz SL is 604hp; the Lamborghini Murcielago is 640.
Interview with Ashley Tellis
agazine| Oct 13, 2008
Interview
'US Domestic Laws Define The Boundaries Of The N-Deal'
As senior advisor to the US State Department, this Indian American strategist shepherded the deal in Washington and kept the faith
SEEMA SIROHI ON ASHLEY J. TELLIS
When the new history of Indo-US relations is written, Ashley J. Tellis, an Indian American strategist, will find a very special place in the riveting narrative of how the nuclear deal was conceived, birthed, nurtured, protected and finally delivered against heavy bureaucratic and political odds. As senior advisor to the US State Department, Tellis shepherded the deal in Washington, liaised with the Indian government at the highest levels and, most importantly, kept the faith. He spoke to Seema Sirohi.
To what do you attribute the constant tension in getting the deal through?
This was built into the very nature of the initiative. The administration sought the deal primarily as an effort at building a new relationship with India, whereas many in the United States, including Congress, would acquiesce to it only to the degree that it contributed to non-proliferation objectives. Since the deal was to change over 30 years of US policy, it wasn't easy.
The bill to approve the deal says that the Hyde Act would be supreme.
That is not surprising. It's Congress's way of affirming that its own legislation is supreme. I don't see why that should matter to India in any material sense. What should matter to India is the 123 document, which represents its agreement with the US.
But the Hyde Act is a big problem for India.
It's mainly a rhetorical problem because the Indian government has asserted that the Hyde Act and other US legislation do not bind India. That's both right and wrong. It's right in that India is not party to the Hyde Act or the Atomic Energy Act but it is wrong in that these domestic laws define the boundaries within which the 123 Agreement has been negotiated.
The bill says that if the US terminates supplies, it should also block others from supplying India....
India can still go to other countries in such a contingency. Congress has expressed its intention but how that is implemented will depend on the executive and the circumstances. Moreover, the international community is under no obligation to comport with Congressional preferences.
Will President Bush take care of India's concerns when he signs the bill into law?
I don't know what his statement will say. What matters is the principle. Every president since Richard Nixon has very zealously guarded and protected his prerogatives under the constitution. So I expect that President Bush, if he issues a statement, will say that he will implement the legislation without undermining his prerogative to conduct foreign policy.
Will Bush's commitment in his statement bind future presidents?
No signing statement issued by one president binds another. Ultimately, it all depends on what the policies of the day are but the policies towards India will only grow more liberal over time.
The bill requires Congress approval for future reprocessing agreement?
Not really. The reprocessing agreement will be treated as a subsequent agreement, which does not require affirmative Congressional approval. If Congress wants to disapprove of the agreement, however, it will have to find a veto-proof two-thirds majority.
The tough language has created disquiet in Delhi.
Yes, the disquiet has arisen because everyone in India wanted literally a one-line resolution of approval. While that was desirable even from the administration's point of view, it was unrealistic. Our Indian critics shouldn't forget that despite Congressional discomfort with the deal, it has essentially voted a resolution that does not materially change anything fundamental in the 123 Agreement. It has articulated various expressions of policy, but little else.There are presidential reporting requirements and determinations, which are operative, but these don't burden India. The bottom line is that the legislation doesn't change anything that the US or India has committed to. We shouldn't miss the forest for the trees.
Would there be trouble if India were not to follow the US line on Iran?
I think there will be no consequences at all for the deal. India doesn't follow the US line in the WTO, it doesn't follow the US line on climate change. Why should Iran be any different? The two are not linked. Our US opponents forced a linkage because they were trying to get leverage during negotiations. India will be free to pursue its own foreign policy and we will do the same with ours.
Why did the US decide to do this deal?
There are sound strategic reasons for it. It was to engineer a new beginning between our two countries. This administration felt very strongly that the old policy of trying to target India was not yielding fruit, and that it had become counterproductive. So Bush made the bold decision that he was going to change existing policy in very dramatic ways. Over the last four years, he put in place various building blocks to implement this change.
Was it partly driven by the rise of China?
It has nothing to do with the rise of China directly. The purpose of the initiative was to strengthen India, help it to grow as a power of consequence. That objective, if successful, would be good for India and the United States: it would help to preserve an Asia not dominated by any single power.
Did you ever feel the deal may not survive?
I never believed its demise was ever a possibility. I was in very close touch with leaders at the highest levels in the Indian and US governments. Whatever the uncertainties in the body politic, the president and secretary of state never wavered in their determination to push hard once they got the go ahead from India. PM Manmohan Singh was absolutely determined to make this happen. I kept telling my colleagues that one way or other we were going to do this.
What was foreign minister Pranab Mukherjee's role?
He played an extraordinary role. Next to the PM, he was the singularly most important individual at two or three different levels. First, only he could negotiate with the Left—he was always very sober and never victim to extravagant expectations. Second, his bureaucratic weight in the government and his years of experience were critical. He kept the bureaucracy going, reached out to the coalition, dealt with the press, and argued the case vigorously in Parliament.
Aren't you forgetting a very important lady?
No, I am not. I think Sonia Gandhi was obviously critical as was Rahul. But whatever they did, they did behind the scenes, at a level I was not privy to. It is quite obvious that this initiative couldn't have gone forward if Sonia had not made the extraordinary political decision to confront the Left. That was ultimately her call.
If the Democrats come to power, what are the implications for the deal?
I hope they stay the course. With the deal completed, the action now moves to the private sector. The goods and services of interest to India are not provided by the US government but by private companies. The government is an important bystander because it controls licensing. If you get an administration that is uncomfortable with the deal, you could postulate that there might be some reluctance to issue licences freely. But on the other hand, any future administration will have to appreciate the consequences for US industry if it were to implement licensing policy in a curmudgeonly fashion.
The great thing about the deal ultimately—and this is George W.Bush's most magnificent bequest to India—is not simply the restoration of the US-Indian tie in regard to reopening civilian nuclear commerce but rather the integration of India into the global nuclear commerce regime. What Bush has effectively done is to provide India with multiple lifelines if for whatever reason the US is unable to deliver in the future.
You are an advisor to Senator John McCain's campaign. Describe him.
He is quite a remarkable man. He has a strong sense of duty, honour and commitment to country. He is very focused on thinking about the world and the US in strategic terms. He is not driven by ideology or whim. There is a strategic consciousness that he brings to bear, a consciousness that takes him pretty much in the same direction that it took President Bush as far as India is concerned. If you have a McCain administration, you will have nothing but very good news from the perspective of US-India relations.
Interview
'US Domestic Laws Define The Boundaries Of The N-Deal'
As senior advisor to the US State Department, this Indian American strategist shepherded the deal in Washington and kept the faith
SEEMA SIROHI ON ASHLEY J. TELLIS
When the new history of Indo-US relations is written, Ashley J. Tellis, an Indian American strategist, will find a very special place in the riveting narrative of how the nuclear deal was conceived, birthed, nurtured, protected and finally delivered against heavy bureaucratic and political odds. As senior advisor to the US State Department, Tellis shepherded the deal in Washington, liaised with the Indian government at the highest levels and, most importantly, kept the faith. He spoke to Seema Sirohi.
To what do you attribute the constant tension in getting the deal through?
This was built into the very nature of the initiative. The administration sought the deal primarily as an effort at building a new relationship with India, whereas many in the United States, including Congress, would acquiesce to it only to the degree that it contributed to non-proliferation objectives. Since the deal was to change over 30 years of US policy, it wasn't easy.
The bill to approve the deal says that the Hyde Act would be supreme.
That is not surprising. It's Congress's way of affirming that its own legislation is supreme. I don't see why that should matter to India in any material sense. What should matter to India is the 123 document, which represents its agreement with the US.
But the Hyde Act is a big problem for India.
It's mainly a rhetorical problem because the Indian government has asserted that the Hyde Act and other US legislation do not bind India. That's both right and wrong. It's right in that India is not party to the Hyde Act or the Atomic Energy Act but it is wrong in that these domestic laws define the boundaries within which the 123 Agreement has been negotiated.
The bill says that if the US terminates supplies, it should also block others from supplying India....
India can still go to other countries in such a contingency. Congress has expressed its intention but how that is implemented will depend on the executive and the circumstances. Moreover, the international community is under no obligation to comport with Congressional preferences.
Will President Bush take care of India's concerns when he signs the bill into law?
I don't know what his statement will say. What matters is the principle. Every president since Richard Nixon has very zealously guarded and protected his prerogatives under the constitution. So I expect that President Bush, if he issues a statement, will say that he will implement the legislation without undermining his prerogative to conduct foreign policy.
Will Bush's commitment in his statement bind future presidents?
No signing statement issued by one president binds another. Ultimately, it all depends on what the policies of the day are but the policies towards India will only grow more liberal over time.
The bill requires Congress approval for future reprocessing agreement?
Not really. The reprocessing agreement will be treated as a subsequent agreement, which does not require affirmative Congressional approval. If Congress wants to disapprove of the agreement, however, it will have to find a veto-proof two-thirds majority.
The tough language has created disquiet in Delhi.
Yes, the disquiet has arisen because everyone in India wanted literally a one-line resolution of approval. While that was desirable even from the administration's point of view, it was unrealistic. Our Indian critics shouldn't forget that despite Congressional discomfort with the deal, it has essentially voted a resolution that does not materially change anything fundamental in the 123 Agreement. It has articulated various expressions of policy, but little else.There are presidential reporting requirements and determinations, which are operative, but these don't burden India. The bottom line is that the legislation doesn't change anything that the US or India has committed to. We shouldn't miss the forest for the trees.
Would there be trouble if India were not to follow the US line on Iran?
I think there will be no consequences at all for the deal. India doesn't follow the US line in the WTO, it doesn't follow the US line on climate change. Why should Iran be any different? The two are not linked. Our US opponents forced a linkage because they were trying to get leverage during negotiations. India will be free to pursue its own foreign policy and we will do the same with ours.
Why did the US decide to do this deal?
There are sound strategic reasons for it. It was to engineer a new beginning between our two countries. This administration felt very strongly that the old policy of trying to target India was not yielding fruit, and that it had become counterproductive. So Bush made the bold decision that he was going to change existing policy in very dramatic ways. Over the last four years, he put in place various building blocks to implement this change.
Was it partly driven by the rise of China?
It has nothing to do with the rise of China directly. The purpose of the initiative was to strengthen India, help it to grow as a power of consequence. That objective, if successful, would be good for India and the United States: it would help to preserve an Asia not dominated by any single power.
Did you ever feel the deal may not survive?
I never believed its demise was ever a possibility. I was in very close touch with leaders at the highest levels in the Indian and US governments. Whatever the uncertainties in the body politic, the president and secretary of state never wavered in their determination to push hard once they got the go ahead from India. PM Manmohan Singh was absolutely determined to make this happen. I kept telling my colleagues that one way or other we were going to do this.
What was foreign minister Pranab Mukherjee's role?
He played an extraordinary role. Next to the PM, he was the singularly most important individual at two or three different levels. First, only he could negotiate with the Left—he was always very sober and never victim to extravagant expectations. Second, his bureaucratic weight in the government and his years of experience were critical. He kept the bureaucracy going, reached out to the coalition, dealt with the press, and argued the case vigorously in Parliament.
Aren't you forgetting a very important lady?
No, I am not. I think Sonia Gandhi was obviously critical as was Rahul. But whatever they did, they did behind the scenes, at a level I was not privy to. It is quite obvious that this initiative couldn't have gone forward if Sonia had not made the extraordinary political decision to confront the Left. That was ultimately her call.
If the Democrats come to power, what are the implications for the deal?
I hope they stay the course. With the deal completed, the action now moves to the private sector. The goods and services of interest to India are not provided by the US government but by private companies. The government is an important bystander because it controls licensing. If you get an administration that is uncomfortable with the deal, you could postulate that there might be some reluctance to issue licences freely. But on the other hand, any future administration will have to appreciate the consequences for US industry if it were to implement licensing policy in a curmudgeonly fashion.
The great thing about the deal ultimately—and this is George W.Bush's most magnificent bequest to India—is not simply the restoration of the US-Indian tie in regard to reopening civilian nuclear commerce but rather the integration of India into the global nuclear commerce regime. What Bush has effectively done is to provide India with multiple lifelines if for whatever reason the US is unable to deliver in the future.
You are an advisor to Senator John McCain's campaign. Describe him.
He is quite a remarkable man. He has a strong sense of duty, honour and commitment to country. He is very focused on thinking about the world and the US in strategic terms. He is not driven by ideology or whim. There is a strategic consciousness that he brings to bear, a consciousness that takes him pretty much in the same direction that it took President Bush as far as India is concerned. If you have a McCain administration, you will have nothing but very good news from the perspective of US-India relations.
Urvi Avnery
Summing Up
A kind of State of the Nation report to the public, a summary of the reality of Israel after 60 years of the state and 120 years of the Zionist enterprise from someone who stood at the center of national and international decision making, who had personal contact with the leaders of the world and of the Palestinians.
URI AVNERY
IN COLLOQUIAL Israeli Hebrew, when someone discovers something that everybody else already knows, we say: "Good morning, Elijahu!"
Why Elijahu? I don't know. Now one could say: "Good morning, Ehud!"
That's what I said to myself when I read the sensational interview that Ehud Olmert gave this week, on the eve of the Jewish New Year, to the newspaper Yediot Aharonot.
AT THE end of his political career, after resigning from the prime ministership, while waiting for Tzipi Livni to set up a new government, he said some astounding things - not astounding in themselves, but certainly when they come from his mouth.
For those who missed it, here is what he said:
* "We must reach an agreement with the Palestinians, the essence of which is that we shall actually withdraw from almost all the territories, if not from all the territories. We shall keep in our hands a percentage of these territories, but we shall be compelled to give the Palestinians a similar percentage, because without that there will be no peace."
* "… including Jerusalem. With special solutions, that I can visualize, for the Temple Mount and the historical holy places … Anyone who wants to keep all the territory of the city will have to put 270 thousand Arabs behind fences within sovereign Israel. That won't work."
* "I was the first who wanted to impose Israeli sovereignty on all the city. I admit … I was not ready to look into all the depths of reality."
* "Concerning Syria, what we need first of all is a decision. I wonder if there is one single serious person in Israel who believes it is possible to make peace with Syria without giving up the Golan Heights in the end."
* "The aim is to try and fix for the first time a precise border between us and the Palestinians, a border that all the world [will recognize]."
* "Let's assume that in the next year or two a regional war will break out and we shall have a military confrontation with Syria. I have no doubt that we shall smite them hip and thigh [an allusion to Judges 15:8] … [But] what will happen when we win? … Why go to war with the Syrians in order to achieve what we can get anyway without paying such a high price?"
* "What was the greatness of Menachem Begin? [He] sent Dayan to meet with Tohami [Sadat's emissary] in Morocco, before he even met Sadat … and Dayan told Tohami, on behalf of Begin, that we were prepared to withdraw from all of Sinai."
* "Arik Sharon, Bibi Netanyahu, Ehud Barak and Rabin, his memory be blessed …each one of them took a step that led us in the right direction, but at some point in time, at some crossroads, when a decision was needed, the decision did not come."
* "A few days ago I sat in a discussion with the key people in the decision-making process. At the end [I told them]: listening to you, I understand why we have not made peace with the Palestinians and the Syrians during the last 40 years."
* "We can perhaps take a historic step in our relations with the Palestinians, and a historic step in our relations with the Syrians.In both cases the decision we must make is the decision we have refused to face with open eyes for 40 years."
* "When you sit on this chair you must ask yourself: where do you direct the effort? To make peace or just to be stronger and stronger and stronger in order to win the war … Our power is great enough to face any danger. Now we must try and see how to use this infrastructure of power in order to make peace and not to win wars."
* "Iran is a very great power … The assumption that America and Russia and China and Britain and Germany do not know how to handle the Iranians, and we Israelis know and we shall do so, is an example of the loss of all sense of proportion."
* "I read the statements of our ex-generals and I say: how can it be that they have learned nothing and forgotten nothing?"
MY FIRST reaction, as I said, was: Good morning, Ehud.
I am reminded of my late friend, the poet who went by the name of Yebi. Some 32 years ago, after dozens of Arab Israeli citizens were killed demonstrating against the expropriation of their lands, he came to me in utter turmoil and exclaimed: we must do something. So we decided to lay wreaths on the graves of the killed. There were three of us: Yebi, I and the painter Dan Kedar, who died last week. The gesture aroused a storm of hatred against us, the like of which I have not experienced before or since.
Since then, whenever someone in Israel said something in favor of peace, Yebi would burst out: "Where was he when we laid the wreaths?"
That is a natural question, but really quite irrelevant. Olmert, who fought all his life against our views, is apparently adopting them now. That is the main thing. Not "Good morning, Ehud" but "Welcome, Ehud".
True, we said this 40 years ago. But we were not an incumbent Prime Minister.
True, too, that these things were said and spelled out in detail by many good people, like those who wrote the Gush Shalom Draft Peace Treaty, the Nusseibeh-Ayalon document or the Geneva initiative. But none of them was an incumbent Prime Minister.
And that is the main thing.
IT SHOULD not be forgotten: In the period in which these ideas were crystallizing in Olmert's mind, he was allowing the settlements to expand, especially in East Jerusalem.
That gives rise to an unavoidable question: Does he really mean what he says? Isn't he cheating, as is his wont? Isn't this some sort of manipulation, as usual?
This time I tend to believe him. One can say: the words sound truthful. Not only the words themselves are important, but also the music. The whole thing sounds like the political testament of a person who is resigned to the end of his political career. It has a philosophical ring - the confession of a person who has spent two and a half years in the highest decision-making office in the land, has absorbed the lessons and drawn conclusions.
One can ask: Why do such people reach their conclusions only on finishing their term of office, when they can no longer do much about the wise things they are proposing? Why did Bill Clinton come to formulate his proposals for Israeli-Palestinian peace during his last days in office, after wasting eight years on irresponsible games in this arena? And why, for that matter, did Lyndon Johnson admit that the Vietnam War has been a terrible mistake right from the beginning only after he himself had brought about the deaths of tens of thousands of Americans and millions of Vietnamese?
The superficial answer lies in the character of political life.A Prime Minister rushes from problem to problem, from crisis to crisis. He is exposed to temptations and pressures from the outside and stress from the inside, coalition squabbling and inner-party intrigues. He has neither the time nor the detachment to draw conclusions.
The two and a half years of Olmert's term were full of crises, from the Second Lebanon War, for which he was responsible, to the corruption investigations which dogged him throughout. Only now has he got the time, and perhaps the philosophical composure, to draw conclusions.
That is the importance of this interview: the speaker is a person who stood for two and a half years at the center of national and international decision making, a person who was exposed to the pressures and the calculations, who had personal contact with the leaders of the world and of the Palestinians. A normal person, not brilliant, not a profound thinker by any means, a man of political practice, who "saw things from there that cannot be seen from here".
He has delivered a kind of State of the Nation report to the public, a summary of the reality of Israel after 60 years of the state and 120 years of the Zionist enterprise.
ONE CAN point out the huge gaps in this summary. There is no criticism of Zionist policy over five generations - but that is something that one cannot really expect from him. There is no empathy with the feelings, the aspirations and the traumas of the Palestinian people. There is no mention of the refugee problem (it is known that he is ready to take back just a few thousand in the framework of "family reunion"). There is no admission of guilt for the disastrous enlargement of the settlements. And the list is long.
The primitive basis of his world view has not changed. That is made clear by the following amazing statement: "Every grain of the area from the Jordan to the sea that we will give up will burn our hearts … When we dig in these areas, what do we find? Speeches by Arafat's grandfather, or Arafat's great great great grandfather? We find there the historical memories of the people of Israel!"
That is utter nonsense. It is totally unsupported by historical and archeological research. The man is just repeating things he picked up in his early youth, he is simply expressing his gut feelings. Anyone sticking to this ideology will find it hard to dismantle settlements and make peace.
All the same, what is in this testament?
It is an unequivocal and final divorce from "All of Eretz Israel" from a person who grew up in a home over which hovered the Irgun emblem: the map of Eretz Israel on both sides of the Jordan. For him, the Irgun slogan "Only Thus" has turned into "Anything But Thus".
It gives unequivocal support to the partition of the country. This time, his adherence to the principle of "Two States for Two Peoples" appears much more genuine, not lip service or sleight of hand. His demand for "fixing the final borders of the State of Israel" represents a revolution in Zionist thought.
Olmert has already said in the past that the State of Israel is "finished" if it does not agree to partition, because of the "demographic danger". This time he does not invoke that demon. Now he speaks as an Israeli who is thinking about the future of Israel as a progressive, constructive, peaceful state.
All this is put forward not as a vision for the remote future, but as a plan for the present. He demands that a decision be taken now. It almost sounds like: Let me continue for another few months, and I shall do it.The unstated assumption is that the Palestinians are ready for this historic turning point.
And he has fixed an Israeli position from which there can be no going back in any future negotiations.
THIS IS the testament of the Prime Minister, and it is obviously intended for the next Prime Minister.
We don't know whether Tzipi Livni is ready to implement such a plan, or what she thinks about this testament. True, she has lately voiced rather similar ideas, but she is now entering the cauldron of the Prime Minister's office. One cannot know what she will do.
I wish her one thing above all: that at the end of her days as Prime Minister she will not have to sit down and give an interview, in which she, too, will apologize for missing the historic opportunity for making peace.
A kind of State of the Nation report to the public, a summary of the reality of Israel after 60 years of the state and 120 years of the Zionist enterprise from someone who stood at the center of national and international decision making, who had personal contact with the leaders of the world and of the Palestinians.
URI AVNERY
IN COLLOQUIAL Israeli Hebrew, when someone discovers something that everybody else already knows, we say: "Good morning, Elijahu!"
Why Elijahu? I don't know. Now one could say: "Good morning, Ehud!"
That's what I said to myself when I read the sensational interview that Ehud Olmert gave this week, on the eve of the Jewish New Year, to the newspaper Yediot Aharonot.
AT THE end of his political career, after resigning from the prime ministership, while waiting for Tzipi Livni to set up a new government, he said some astounding things - not astounding in themselves, but certainly when they come from his mouth.
For those who missed it, here is what he said:
* "We must reach an agreement with the Palestinians, the essence of which is that we shall actually withdraw from almost all the territories, if not from all the territories. We shall keep in our hands a percentage of these territories, but we shall be compelled to give the Palestinians a similar percentage, because without that there will be no peace."
* "… including Jerusalem. With special solutions, that I can visualize, for the Temple Mount and the historical holy places … Anyone who wants to keep all the territory of the city will have to put 270 thousand Arabs behind fences within sovereign Israel. That won't work."
* "I was the first who wanted to impose Israeli sovereignty on all the city. I admit … I was not ready to look into all the depths of reality."
* "Concerning Syria, what we need first of all is a decision. I wonder if there is one single serious person in Israel who believes it is possible to make peace with Syria without giving up the Golan Heights in the end."
* "The aim is to try and fix for the first time a precise border between us and the Palestinians, a border that all the world [will recognize]."
* "Let's assume that in the next year or two a regional war will break out and we shall have a military confrontation with Syria. I have no doubt that we shall smite them hip and thigh [an allusion to Judges 15:8] … [But] what will happen when we win? … Why go to war with the Syrians in order to achieve what we can get anyway without paying such a high price?"
* "What was the greatness of Menachem Begin? [He] sent Dayan to meet with Tohami [Sadat's emissary] in Morocco, before he even met Sadat … and Dayan told Tohami, on behalf of Begin, that we were prepared to withdraw from all of Sinai."
* "Arik Sharon, Bibi Netanyahu, Ehud Barak and Rabin, his memory be blessed …each one of them took a step that led us in the right direction, but at some point in time, at some crossroads, when a decision was needed, the decision did not come."
* "A few days ago I sat in a discussion with the key people in the decision-making process. At the end [I told them]: listening to you, I understand why we have not made peace with the Palestinians and the Syrians during the last 40 years."
* "We can perhaps take a historic step in our relations with the Palestinians, and a historic step in our relations with the Syrians.In both cases the decision we must make is the decision we have refused to face with open eyes for 40 years."
* "When you sit on this chair you must ask yourself: where do you direct the effort? To make peace or just to be stronger and stronger and stronger in order to win the war … Our power is great enough to face any danger. Now we must try and see how to use this infrastructure of power in order to make peace and not to win wars."
* "Iran is a very great power … The assumption that America and Russia and China and Britain and Germany do not know how to handle the Iranians, and we Israelis know and we shall do so, is an example of the loss of all sense of proportion."
* "I read the statements of our ex-generals and I say: how can it be that they have learned nothing and forgotten nothing?"
MY FIRST reaction, as I said, was: Good morning, Ehud.
I am reminded of my late friend, the poet who went by the name of Yebi. Some 32 years ago, after dozens of Arab Israeli citizens were killed demonstrating against the expropriation of their lands, he came to me in utter turmoil and exclaimed: we must do something. So we decided to lay wreaths on the graves of the killed. There were three of us: Yebi, I and the painter Dan Kedar, who died last week. The gesture aroused a storm of hatred against us, the like of which I have not experienced before or since.
Since then, whenever someone in Israel said something in favor of peace, Yebi would burst out: "Where was he when we laid the wreaths?"
That is a natural question, but really quite irrelevant. Olmert, who fought all his life against our views, is apparently adopting them now. That is the main thing. Not "Good morning, Ehud" but "Welcome, Ehud".
True, we said this 40 years ago. But we were not an incumbent Prime Minister.
True, too, that these things were said and spelled out in detail by many good people, like those who wrote the Gush Shalom Draft Peace Treaty, the Nusseibeh-Ayalon document or the Geneva initiative. But none of them was an incumbent Prime Minister.
And that is the main thing.
IT SHOULD not be forgotten: In the period in which these ideas were crystallizing in Olmert's mind, he was allowing the settlements to expand, especially in East Jerusalem.
That gives rise to an unavoidable question: Does he really mean what he says? Isn't he cheating, as is his wont? Isn't this some sort of manipulation, as usual?
This time I tend to believe him. One can say: the words sound truthful. Not only the words themselves are important, but also the music. The whole thing sounds like the political testament of a person who is resigned to the end of his political career. It has a philosophical ring - the confession of a person who has spent two and a half years in the highest decision-making office in the land, has absorbed the lessons and drawn conclusions.
One can ask: Why do such people reach their conclusions only on finishing their term of office, when they can no longer do much about the wise things they are proposing? Why did Bill Clinton come to formulate his proposals for Israeli-Palestinian peace during his last days in office, after wasting eight years on irresponsible games in this arena? And why, for that matter, did Lyndon Johnson admit that the Vietnam War has been a terrible mistake right from the beginning only after he himself had brought about the deaths of tens of thousands of Americans and millions of Vietnamese?
The superficial answer lies in the character of political life.A Prime Minister rushes from problem to problem, from crisis to crisis. He is exposed to temptations and pressures from the outside and stress from the inside, coalition squabbling and inner-party intrigues. He has neither the time nor the detachment to draw conclusions.
The two and a half years of Olmert's term were full of crises, from the Second Lebanon War, for which he was responsible, to the corruption investigations which dogged him throughout. Only now has he got the time, and perhaps the philosophical composure, to draw conclusions.
That is the importance of this interview: the speaker is a person who stood for two and a half years at the center of national and international decision making, a person who was exposed to the pressures and the calculations, who had personal contact with the leaders of the world and of the Palestinians. A normal person, not brilliant, not a profound thinker by any means, a man of political practice, who "saw things from there that cannot be seen from here".
He has delivered a kind of State of the Nation report to the public, a summary of the reality of Israel after 60 years of the state and 120 years of the Zionist enterprise.
ONE CAN point out the huge gaps in this summary. There is no criticism of Zionist policy over five generations - but that is something that one cannot really expect from him. There is no empathy with the feelings, the aspirations and the traumas of the Palestinian people. There is no mention of the refugee problem (it is known that he is ready to take back just a few thousand in the framework of "family reunion"). There is no admission of guilt for the disastrous enlargement of the settlements. And the list is long.
The primitive basis of his world view has not changed. That is made clear by the following amazing statement: "Every grain of the area from the Jordan to the sea that we will give up will burn our hearts … When we dig in these areas, what do we find? Speeches by Arafat's grandfather, or Arafat's great great great grandfather? We find there the historical memories of the people of Israel!"
That is utter nonsense. It is totally unsupported by historical and archeological research. The man is just repeating things he picked up in his early youth, he is simply expressing his gut feelings. Anyone sticking to this ideology will find it hard to dismantle settlements and make peace.
All the same, what is in this testament?
It is an unequivocal and final divorce from "All of Eretz Israel" from a person who grew up in a home over which hovered the Irgun emblem: the map of Eretz Israel on both sides of the Jordan. For him, the Irgun slogan "Only Thus" has turned into "Anything But Thus".
It gives unequivocal support to the partition of the country. This time, his adherence to the principle of "Two States for Two Peoples" appears much more genuine, not lip service or sleight of hand. His demand for "fixing the final borders of the State of Israel" represents a revolution in Zionist thought.
Olmert has already said in the past that the State of Israel is "finished" if it does not agree to partition, because of the "demographic danger". This time he does not invoke that demon. Now he speaks as an Israeli who is thinking about the future of Israel as a progressive, constructive, peaceful state.
All this is put forward not as a vision for the remote future, but as a plan for the present. He demands that a decision be taken now. It almost sounds like: Let me continue for another few months, and I shall do it.The unstated assumption is that the Palestinians are ready for this historic turning point.
And he has fixed an Israeli position from which there can be no going back in any future negotiations.
THIS IS the testament of the Prime Minister, and it is obviously intended for the next Prime Minister.
We don't know whether Tzipi Livni is ready to implement such a plan, or what she thinks about this testament. True, she has lately voiced rather similar ideas, but she is now entering the cauldron of the Prime Minister's office. One cannot know what she will do.
I wish her one thing above all: that at the end of her days as Prime Minister she will not have to sit down and give an interview, in which she, too, will apologize for missing the historic opportunity for making peace.
Friday, 3 October 2008
''The Second Coming''
By: William Butler Yeats
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of "Spiritus Mundi"
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of "Spiritus Mundi"
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
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