The Great Debate UK

Did Lithuania host a secret CIA prison?

-Clara Gutteridge, Renditions Investigator at legal charity Reprieve. The opinions expressed are her own.-

I welcome the Lithuanian parliament’s announcement that it will investigate allegations that a secret CIA prison operated on its territory from early 2004 to late 2005.

Unlike Poland and Romania – also alleged to have hosted secret CIA torture sites in the years following the U.S. invasion of Afghanistan – the Lithuanians have responded in a way that befits a modern European democracy.

“If this is true,” Lithuanian President Dalia Grybauskaite said, “Lithuania has to clean up, accept responsibility, apologize, and promise that it will never happen again.”

By contrast, such openness has failed to emerge elsewhere in Eastern Europe. The Council of Europe Parliamentary Assembly sessions in 2006-2007, which considered Swiss Senator Dick Marty’s report detailing the allegations against Poland and Romania, were perhaps the most depressing political debates I have ever witnessed.

Representatives from all sides of the political spectrum in Poland and Romania united to “refute” the allegations. When the so-called moderates were asked in private why they were so furiously refusing to even countenance these extremely serious allegations, the response was, “you don’t understand – this is an attack against our country, and to consider it would be un-patriotic”.

Evidently, news of the importance of encouraging healthy dissent in a parliamentary democracy has yet to reach some parts of the New Europe, and Lithuania should be applauded for bucking this trend. As a newer recruit to NATO and the EU, Lithuania has far more to be insecure about when it comes to maintaining U.S. relations than relative old-hands Poland and Romania, yet its president has bravely chosen to stand for political accountability rather than trying to suppress the truth.

from The Great Debate:

Brace yourself: Political-market risks in 2009

-- Preston Keat is director of research at Eurasia Group, a global political risk consultancy, and author of the forthcoming book “The Fat Tail: The Power of Political Knowledge for Strategic Investors” (with Ian Bremmer). Any views expressed are his own. For the related story, click here.

There are a number of macro risks that will continue to grab headlines in 2009, including the conflicts in Afghanistan and Iraq, cross-border tensions and state instability in Pakistan, and Iran's 
ongoing quest to develop advanced nuclear technologies.

These risks are real, and will not be resolved easily or quickly. But there are two other general groups of political risks that could be defining both for investors and policy makers: first, the prospect of a number of interrelated market risks in developed and emerging Europe, and second, the challenges faced by the United States regarding multilateral leadership (particularly in the area of financial regulatory reform).

Political risks have historically mattered much more in emerging markets, but political risk in the developed, industrial democracies is rising more quickly than anyone would have predicted a year ago.

Europe

Political-market risk in emerging Europe is significantly higher now than any time in the past decade. Russia and Ukraine, and even recent star "emerging Europe" performers such as Turkey, Hungary, and Romania face serious vulnerabilities in the coming 
year. In addition, western financial institutions based in countries
 like Germany, Italy and Austria are particularly vulnerable to a credit 
crisis in Eastern Europe, where they have large loan exposures. Russia's growing anti-westernism, its state intervention in strategic
 economic sectors, and its assertive posture regarding Georgia have been widely discussed, and will remain concerns in
 2009.

This also plays into one of the most problematic country risk 
stories right now: Ukraine. Its steel-centric economy is in free
 fall due to dramatically reduced global demand, many of its companies
 have large foreign debt financing needs that they will struggle to meet, 
 and its domestic politics are gridlocked and bordering on 
dysfunctional.