Global News Journal

Angela Merkel’s “read my lips” moment

    Angela Merkel has already abandoned plans to pursue billions of euros in tax cuts next year — the central policy pledge of her 2009 election campaign and main plank of her 7-month-old coalition agreement with the Free Democrats.

    But now her uneasy government looks ready to go one step further and raise value-added tax on certain products which benefit from a reduced rate to help it consolidate the budget.

    This is what Merkel had to say about such a move in an interview with N24 television in June 2009, in the midst of the election campaign: “There is absolutely no need to worry about that, it won’t happen. In the midst of an economic crisis it is absurd to even discuss these questions.”

    She told top-selling daily Bild that same week: “With me, there will be no increase in the next legislative period, neither of the full, nor of the reduced rate of value-added tax.”

    If her government does decide to raise VAT rates — it will meet this weekend to try to forge a consensus on fiscal plans — Merkel can and will claim that underlying economic conditions have changed since she uttered those seemingly definitive words nearly a year ago.

    The Greek crisis has spooked leaders across the euro zone, and many are scrambling to consolidate their budgets to avoid suffering the same fate as Athens, which was forced to go cap in hand to the EU and IMF.

    But Merkel’s about-face is different and more serious, especially for a leader who came into office in 2005 vowing to put an end to the “false promises” of previous German governments.

Colombia’s Santos vs Mockus – Who will be the next president?

Colombia’s presidential election had been painted like an establishment versus anti-establishment contest between Juan Manuel Santos – a former government minister and son of a wealthy family – and Antanas Mockus, who once dressed up as a superhero while mayor of Bogota and sent mimes into the streets to shame residents into obeying the laws. With a strong party machinery and the rural popularity of President Alvaro Uribe, Santos cruised to victory on Sunday when nearly 15 million Colombians caste their ballots, 47 percent for Santos – not enough to bypass a June 20 run-off but enough to send a strong signal of support for the former defense and finance minister. Opinion polls in the lead up to the vote showed Mockus and Santos deadlocked with no clear winner; the surveys said the same thing about the second round in June. But looking at a map of who won each province, Colombia is orange – the color of Santos. Only a single province was colored green for Mockus, trapped in the ginger sea. Alliances will be key for the run-off, but after securing only a fifth of votes, Mockus might find himself all but friendless. How would the country be different if Santos won versus if Mockus were elected?

Holiday in the “axis of evil”

This article by Stephen Kinzer originally appeared in GlobalPost.

YAZD, Iran —“You are American?” a surprised Iranian asked me as I sat down near him in a restaurant famous for eggplant and pomegranate stews. “How did you get a visa?”

Ever since 2002, when U.S. President George W. Bush named Iran a member of the world’s anti-American “Axis of Evil” — or perhaps since the Islamic Revolution of 1979 and the searing hostage crisis that followed — the idea that American tourists would visit Iran has seemed to border on the bizarre. Yet an adventurous few do come, and most find a welcome far beyond what they had imagined.

In no other country is there such an imbalance between the wealth of tourist attractions and the dearth of tourists. If Iran were a fully open country, sites like the awe-inspiring ruins at Persepolis or the dazzling mosques of Isfahan would be jammed with visitors from around the world. Instead they are all but empty, offering visitors one of the world’s richest travel experiences.

During a two-week trip through Iran in May, I ran across groups of intrepid travelers at almost every stop. All marveled at what they saw.

“It’s great to be here before the crowds come,” Jamie Whittington, who came with a tour group from California, said as she surveyed an ancient Zoroastrian “tower of silence,” where corpses were once placed on ceremonial slabs for vultures to consume. “This place is waiting to be discovered.”

from MacroScope:

Spend Save Man Woman

Far from being lauded as a virtue, China's high savings rate has been blamed for the economic imbalances underlying the global financial crisis. The criticism being that the Chinese spend too little and rely too much on exporting to Western consumers.

The IMF and World Bank have long called for Beijing to ramp up social spending so its citizens will feel less need to save for a rainy day and instead consume more.

But in their intriguingly named paper,  'A Sexually Unbalanced Model of Current Account Imbalances', New York-based researchers Du Qingyuan and Wei Shang-Jin suggest China's gender imbalance could also be a significant factor in the persistence of its high savings rate.

The pair argue that intensifying competition in the Chinese marriage market is causing men -- or indeed parents with sons -- to raise their savings rates to improve their relative allure among a shrinking pool of potential brides.

A draconian one-child policy, coupled with a traditional preference for male offspring and the availability of selective-sex abortion, has left the country of 1.3 billion facing its most serious demographic crisis.

An estimated 119 boys are born per 100 girls and the Chinese Academy of Social Sciences has warned that this could leave more than 24 million Chinese men of marrying age without spouses by 2020.

This anxiety over the worsening marriage prospects for men could explain why Chinese household savings as a share of disposable income has risen from 16 percent in 1990 to 30 percent in 2007.

Japan prime ministers haunted by ever-present media

Japan’s Prime Minister Yukio Hatoyama at a news conference on April 28, 2010. (REUTERS/Toru Hanai)

It’s not unusual for a politician whose popularity has slumped to want to avoid the media. But for Japan’s premiers it’s not just a question of keeping critical newspaper editorials out of sight.

Prime Minister Yukio Hatoyama, just like his five predecessors, faces questioning from a posse of reporters morning and evening at least five days a week. And just like his predecessors, he seemed to find these brief  “doorstep news conferences” exhilarating while voter support for his government soared around the 70 percent level after a landslide election victory last year.

Now that only about 20 percent of Japanese say they support him in the run-up to a key upper house election, Hatoyama has visibly lost enthusiasm for commenting twice a day on camera. At first known for lengthy explanations, he has become increasingly curt. He even admitted recently that he’d prefer to skip the doorsteps in favour of holding more frequent sit-down news conferences, inviting a broader range of reporters from magazines and internet outlets.  ”But this is the custom,” he said forlornly.

Life was not necessarily easier for Japanese prime ministers before the doorstep idea was introduced by the popular Junichiro Koizumi, who served as premier from 2001-2006. Before his time, young reporters from Japan’s generously staffed big media companies were sent to camp out by the door of the prime minister’s office, taking note of whoever visited him and following him every time he left the room. Some leaders made it clear they found this constant attention irritating.

A move from the quaint 1920s building to a modernist new prime ministerial office in 2002 cut off reporters’ access to the premier’s office door and Koizumi sought to quell media protests by promising to speak to reporters twice a day. No matter how far their support falls, none of his successors has dared abandon the system for fear of sparking a media backlash. 

But some have sought to look beyond the cub reporters sent to quiz them and speak directly to the electorate. Shinzo Abe, premier from 2006-2007, became known for staring straight into the camera lens while speaking to reporters, in an effort to give the impression he was speaking directly to television viewers.

from Pakistan: Now or Never?:

Between golf and war, Pakistan’s General Kayani’s future is debated

The Pakistan Army prides itself on being an institution which rises above politics and personal ambition, committed to defend the interests of the nation. That this has not always been the case is demonstrated by its history of military coups, and a tendency of past military rulers, from General Zia ul-Haq to former president Pervez Musharraf, to impose a very personal brand of leadership.  Where Zia pushed Pakistan towards hardline Islam, Musharraf aimed at "enlightened moderation" in a country he wanted modelled more on Turkey than on Saudi Arabia.

While no one expects the military to launch another coup, some of that historical memory is feeding into increasingly intense speculation about the future of Pakistan Army chief General Ashfaq Parvez Kayani, who is due to retire in November.

The general who is arguably Pakistan's most powerful man has given few clues as to whether he might seek an extension in office beyond November.  But earlier this week Pakistani paper The News reported that the army's corps commanders wanted him to stay on to see through the battle against Islamist militants in the tribal areas bordering Afghanistan. One theory doing the rounds is that Kayani could be appointed as chairman of the Joint Chiefs of Staff Committee, with oversight over the air force and navy as well as the army,  and with the role given enhanced powers to ensure he remains in command.

Kayani has been credited with restoring the army's image in Pakistan - it had suffered from the popular resentment against Musharraf, who stepped down in 2008 . He has also made it clear the military had no intention of taking over the country, although it continues to call the shots on foreign and security policy.  He has overseen some successful operations in the tribal areas and built a reasonable working relationship with the Americans.

A former head of the Inter-Services Intelligence (ISI) agency, Kayani never gives public interviews and therefore remains somewhat inscrutable for those trying to gauge his attitude to the United States or Pakistan's traditional enemy India.  That said, he has always made his views clear when it seemed that either the United States or the civilian government were about to over-step the boundary into what the Pakistan Army considers its own domain.  A suggestion floated by President Asif Ali Zardari in 2008 that Pakistan adopt a policy of no first use of nuclear weapons was quickly dropped after raising hackles in the army which determinedly guards its control of the nuclear arsenal. 

Kayani spoke out fiercely against a reported incursion by U.S. ground troops in 2008 and in 2009 condemned provisions in the Kerry-Lugar U.S. aid package which called for greater civilian oversight of military appointments and promotions.

The civilian government has given mixed messages about whether it wants Kayani to stay on, but is seen as unlikely to challenge the military or the United States if either or both of them decide they need to keep him in command. In any case, after a rocky start, the civilian government and the military appear to have found - for now at least - an accommodation with each other in which the government relies on the army to fight the Pakistani Taliban in the tribal areas and knows better than to cross its red lines when it comes to foreign and security policy.

EU squabbles feed market frenzy

  The European Union can rarely have been more in need of a show of unity than now, as it tries to convince financial markets it can handle the euro zone’s debt crisis.

    Hardly a day goes by without a European leader underlining the need to act together, but hardly a day passes without signs of differences among them that undermine the impression of unity.

    This week is no exception. European Commission President Jose Manuel Barroso said in a speech in Brussels on Tuesday: “We can turn today’s challenges into opportunities only if we stand together, give a collective response.”

    But comments he made in an interview published hours earlier showed the EU’s leaders are anything but united in their vision of how to tackle the crisis.

    In the interview with Frankfurter Allgemeine Zeitung, Barroso dismissed as “naive” Germany’s call for the EU treaty to be modified to prevent a repeat of Greece’s debt crisis — and Germany hit back quickly.

    Economy Minister Rainer Bruederle said he was surprised at the remarks and went on to criticise a joint euro bond proposed by European Union President Herman Van Rompuy, saying it would create the wrong incentives and reward member states that do not pursue sensible budget policies.

    “What we need are clear signals for solid state finances in order to secure trust in the euro over the long term, and to prevent future crises,” Bruederle said.

Deal or no deal for Iran?

In broad terms Iran seems to have done what world powers urged it to do months ago and accepted a plan to part with some of its nuclear material.

Under the proposal, agreed with Turkey and Brazil last week, Iran would transfer over one tonne of low-enriched uranium – enough for an atomic bomb if enriched to higher levels — to Turkey to be put under the watch of U.N. inspectors.

In return Iran would get fuel rods for a reactor which makes medical isotopes for cancer treatment.

So what’s the problem?

Western officials say that the landscape has changed in the seven months since they brokered a similar plan with Iran and the International Atomic Energy Agency as a way to ease international tensions over Tehran’s atomic work.

Iran has continued enriching uranium and the 1,200 kg no longer represents the bulk of its low-enriched stockpile as it did in October, they say. Taking away this amount now would still leave Iran with enough for a bomb if it wanted to build one. Tehran says it has no intention of doing this and says its nuclear programme is for peaceful purposes only.

But perhaps more importantly, Iran has started enriching uranium to higher levels, taking it closer to the grade needed for nuclear weapons material. It appears to show no intention of stopping or scaling back.

The Fire Next Time in Thailand

(Thai firefighters douse the Central World shopping mall building that was set on fire by anti-government “red shirt” protesters in Bangkok May 19, 2010.  REUTERS/Yannis Behrakis)

We were walking down Sukhumvit road in downtown Bangkok just after the 9 p.m. curfew  –  down the MIDDLE of a road that on any other Friday night would have been filled with honking vehicles,  hawkers, tourists and touts. We were escorting a colleague home from the temporary newsroom in that Reuters had set up at the Westin Hotel after we were chased out of our office near the red shirt encampment in central Bangkok. Not a creature was stirring. But what was that sound we kept hearing? Squeak, squeak, squeak.Then we saw them. Rats. Thousands of them.  Scurrying along in packs on the sidewalks, the streets, the closed-down Skytrain overhead, at the entrances to shuttered shops, around piles of garbage that had mounted in the Thai capital since the May 19th riots. It was like a movie about an urban apocalyptic event where humans are wiped out and the vermin are triumphant.

We walked past darkened Soi Cowboy, whose raucous go-go bars should have been crammed with visitors. “You know, it’s serious when Soi Cowboy is closed,” my colleague said. “Soi Cowboy never closes.”

What happened in Bangkok last week was, indeed, unprecedented. The worst eruption of political violence, rioting, arson and general mayhem in modern Thai history.  An initially peaceful, if not festive, protest movement ended up in an orgy of violence that killed 85 people and wounded  more than 1,400, according to official figures.  Almost 40 buildings were set ablaze, including the stock exchange and Central World, Southeast Asia’s largest  shopping mall. The targets of the arson attack – symbols of wealth and privilege – were probably no accident.

Thailand is undergoing, what in some respects, appears to be a 19th century style revolution: peasant and proletariat (the red shirts) versus the aristocrats — family business dynasties, military brass, members of the educated middle class and a royalist establishment (the yellow shirts).

It’s been brewing for decades, and has come to a head at a time when revered King Bhumibol Adulyadej, the sole unifying father figure in Thailand, has been hospitalized. He has stepped in to defuse previous crises in his 63 years on the throne. But not this time.

 Bangkok reopened for business on Monday. The Skytrain thundering overhead. The Tuk-tuk taxis weaving manically through traffic-clogged streets, hawkers shouting above the din, and the rats retreating to their underground nests. The government announced that economic growth for the rest of the year would be around 4.5-5.5 percent – it would have been a point or so higher but for the prolonged protest and riots, but still pretty good in the current climate.

Tax evasion becomes extreme sport in Greece

By Dina Kyriakidou

In Greece, hiding a little from the taxman is considered good sport, so the government, struggling with a debt crisis is shaking international markets, is firing every weapon in its arsenal to crack down on rampant tax evasion.

A snapshot of the Greek capital’s northern suburbs, where the Athenian nouveau riche have built big swimming pools as status symbols, revealed about half of them had not been declared to tax authorities.

View Larger MapSuch luxuries, along with big cars and yachts, are considered “objective criteria” of high income and authorities tax accordingly regardless of declared income. But tax dodgers quickly fought back. On the Trelo Kouneli blog, visitors exchanged advice on how to dodge the tax man. They included “Put an army net over it”, “Paint the tiles green so it looks like grass” and “Hack Google maps”.

The Socialist government faces an admittedly tough task. To climb out of the debt crisis, it must impose tough belt-tightening measures on a public that has seen politicians and businessmen get rich off the state for decades. It was no wonder that Prime Minister George Papandreou sacked his tourism minister this week after press revelations her singer husband owed 5.5 million euros in taxes and penalties. Blogs went wild with calls to stop paying taxes unless authorities stepped in.

Opinion polls and street violence indicate people will resist austerity unless social justice is done, until blatant tax evaders and those involved in a long string of scandals are thrown in jail.

Given the widespread impression that the big fish never get caught, many Greeks don’t think it’s unethical to hide a little income from a state which gives very little back. At most state hospitals and other public services, citizens regularly get unsmiling, slow service and bureaucracy for their money. Most Greeks pay a “tip”, also known as “fast-stamp” and “little envelope” to get things done.