Living in Default: The Greek Debt Crisis and the Future of the Euro

The crisis over how to resolve the excessive debt of peripheral countries within the Euro zone, especially the case of Greece, seems to drag on incessantly. Presumably a new decision will be taken by the next EU summit on the 23^rd of this month.  In the meantime opinions proliferate.  As is often the case the majority of opinions in circulation are little more than ill-informed political slogans.  What is needed, of course, is a comprehensive analysis of the background to the crisis and commentary on alternative ways forward.  Having lived and worked in Greece for much of the past four decades, perhaps I am in position to provide such an analysis.

Background:

Greece has had a history of debt problems.  It was a country that was born into debt at the time of its emergence as an independent nation after the revolution against the Ottoman Empire in 1821.  After World War II there was a period of economic stability and growth. However, in !967 a coup resulted in a 7 year dictatorship. And following the reestablishment of democracy in ‘74 an unfortunate trend took hold in favour of populist policies and state intervention in the economy.  Most observers blame Andreas Papandreou for this legacy, but in fact both major parties have contributed to the process. 

The first Prime Minister following the dictatorship was Konstantin Karamanlis, the leader of the conservative New Democracy Party. His government prosecuted a case against a banking and industrial group (Andreadis) and nationalized two large banks and a large shipbuilding facility.  When Andreas Papandreou[1] came to power in 1980 he began a wholesale ‘socialization’ of vast sectors of the economy. Since then Greece has remained one of the most Statist economies in Europe. In fact many economists consider Greece to be the last bastion of an Eastern European styled, state run economy.  At numerous times since then there have been proposals to privatize state owned companies, but very few privatizations actually took place.  And despite the fact that over the ensuing three decades power shifted several times between conservatives and socialists, this extended public sector realm remains in tact.  A local newspaper recently commented that we have in effect had a shared political leadership between the party in power and the unions of the state run companies.

Over the course of nearly four decades (i.e. since the collapse of the military dictatorship and the return of democratic rule) the Greek economy ran twin deficits, both a public sector deficit and a negative trade balance.  During the ‘80s and ‘90s some discipline was provided by the markets and by the programs established in accordance with membership in the European Union.  So the deficits were held within limits during those years, but the structural trend was never reversed.

Maastricht and beyond

The Maastricht Treaty, which established the rules for the Euro currency, is considered either as a visionary plan for Europe or as a poorly designed project for currency union, depending on one’s perspective. The latter view is more prominent today because of the crisis at hand.  At the time there were ample critics to point out the flaws in the project.  The EU included members with greatly divergent economies.  So it was obvious that any country joining the Euro should be subject to scrutiny.  The Maastricht Treaty dealt with the problem by proposing to permit entry only to those countries with a public sector deficit of less than 3% and total public sector debt of less than 60% of GDP.  In practice these criteria were relaxed to allow countries such as Belgium and Greece with debt to GDP ratios of more than 100% to enter as long as their trend was positive.  Popular support for the Euro project was weak in more developed countries[2] but strong among the weaker, peripheral economies.  

The Simitis’ government devalued the Drachma in ’97 and began an earnest attempt to impose discipline on the Greek economy in preparation for the country’s entry into the Euro in January 2002.  This austerity program was largely successful with the result that the public sector deficit was brought under the 3% barrier, inflation was tamed and the Drachma actually appreciated to recover about half of the value lost in the devaluation.  Still there were few structural reforms of the economy aside from the banking sector. The debt ratio remained above 100% and interest rates on the Drachma remained high, declining from double digits at the beginning of 2001 to several points above the European average at the end of the year.  And yet Greece entered the Euro on schedule January 1^st 2002.

Following Greece’s entry into the Euro club it was clear that there was a need for an extended period of careful economic management toward convergence with more developed European economies.  Unfortunately that never happened.  A strong trend began within the Euro zone where interest differentials between national economies began to decline sharply.  This trend was known in the markets as the ‘convergence play.’  So the rates charged on government bonds of the various Euro zone nations began to decrease.  For Greece the premium over Deutsche Bunds declined from nearly 200 basis points (2%) to just over 10 (one tenth of a percent).  The assumption was that the Euro economies would naturally converge and that there was an implicit guarantee that a country within the Euro would not be allowed to default.  But during this period of easy credit under the influence of this convergence play no global institutions emerged other than the European Central Bank (ECB).  And national governments were only loosely monitored to ensure true economic convergence.

So Greece failed to implement the necessary reforms; easy and cheap money was readily available to fund the ongoing twin deficits.  The economy grew at rates well above the Euro zone average, but all of the growth was based upon borrowed capital.  And then the banking crisis of 2008 struck.  Suddenly markets realized that risks too need to be managed.  And traders came to understand that money could be made through short positions as well as long, as described in Michael Lewis’s book, The Big Short.  Since then the Greek economy has been under pressure.  Capital was no longer available, so Greece had to turn to its Euro zone partners to service its existing debt.

Populists and Pundits

From the moment the current PM, George Papandreou, was elected in the fall of 2009 and discovered that the public sector deficit had risen to 15% Greece has been under EU support and supervision.  But the EU and more specifically the Euro zone countries have pursued a muddling though policy trying to deal with the crisis piecemeal.  Greece has endured a severe recession for two years now with no end in sight. 

In part the problem stems from populist politics.  In Germany the idea of bailing out profligate countries is anathema.  Yet as the crisis subsequently spread to Ireland and Portugal and now threatens Spain and Italy, pragmatism suggests that something needs to be done to stem a major systemic tremor across the EU and the world.  In Greece the government has managed to pass legislation to finally commence economic reforms and a privatization plan.  But they have been slow to actually implement these policies.  What they have done is to decrease public sector salaries and pensions and increase taxes.  But these measures have merely exacerbated the recession.  The fact that economic convergence can never take place without growth seems to have escaped the collective consensus among European leaders.

Discussion now centers on the sudden realization that the level of Greek debt is not sustainable.  In fact without growth no national debt in any economy is sustainable.  So in July the EU approved a new plan for Greece that included a voluntary program for banks to forgive 21% of their holdings in Greek Government Bonds (GGB).  That agreement is now seen as inadequate, so discussions are underway to increase the write down of Greek debt.  Of course there is a nasty detail that raises its ugly head under such a scenario.  The banks that hold this debt, banks not only in Greece but across Europe, will sustain heavy losses and require new capital to remain solvent.  So the debt crisis will morph into a banking crisis.

There are two issues to consider here.  The first is why the banks accumulated such large concentrations of Greek debt.  In fact it was the result of faulty regulation.  Under the rules for capital adequacy for banks exposure to OECD governments in the same currency were deemed to be risk free.  So banks were able to stock up on the debt of peripheral economies within the Euro zone without consideration of risk.  And up until 2008, while the convergence play was the vogue, banks earned nice profits on those positions.

Many may feel that it would be appropriate to simply allow the banks holding GGBs to fail.  I belong to a minority of the progressive community who believe that to be a mistake.  The problem is that the banking sector is the best conduit to economic growth and depression as well.  The reason is that banks stand at the center of the so-called multiplier effect.  When deposits increase at banks, loans to companies and individuals increase many times over.  Likewise when banks collapse depositors lose their capital together with the capital of the banks themselves and this creates a tsunami effect through the real economy.  So, in spite of public opinion and demonstrations against bank bail outs, at the end of the day banks will most assuredly be recapitalized whatever the costs.  The curious thing is why European leaders would prefer to recapitalize banks rather than provide the capital necessary to support the convergence of the peripheral economies such as Greece.  The answer to this lies in populist politics.  The same was true during the mortgage crisis in the US.  No one wanted to support the ‘poor schmucks’ who couldn’t pay their mortgages.  But when the banks came under pressure from their foolish and fraudulent practices ample capital was available to save the day.

Pundits are as always readily available to offer opinions during crises.  To be fair some of the opinions circulating in the blogosphere are well reasoned.  But others go off the deep end.  One of the more radical opinions is that Greece should unilaterally leave the Euro and resurrect the Drachma.  That would allow the country to devalue its way to competitiveness and to maintain its national sovereignty.  This view is terribly short sighted.  The devaluation that would be required before reaching some stable level has been guestimated to exceed 50%.[3]  And even after devaluation, Greece would still require an extended period to reform its economy.  Capital for growth would not be available from the market without such reform.  Moreover there is no appreciable support in Greece for the idea of exiting the Euro.  And the issue of economic sovereignty is bogus.  A currency union must entail some measure of common policies and institutions.  The failure so far within the Euro zone has been that such policies have not been implemented.

The Road not Taken

The fact is that the Euro currency has been in place for a decade now and despite the current crisis it has in many ways been successful.  If European leaders allow a Greek default, the crisis will almost surely spread to other peripheral economies.  Markets will rightly surmise that there is a lack of political will to defend the Euro area in its entirety. Consequently they will intensify an attack already underway against Portugal and Ireland and quite probably then Italy and Spain.  A break up of the Euro zone would be a very messy affair.  Public opinion in Germany is toying with the idea that Germany should bring back the D Mark.  But, if they were to do so, the new D Mark would appreciate so rapidly that it would bring about a sharp recession in Germany and in any countries which chose to follow suit and peg their own new currencies to the Mark.  The former German PM, Helmut Schmidt, made exactly this point in a recent interview.

The most promising way forward on the contrary is to strengthen the Euro zone.  So the real question is how to achieve the strengthening of the Euro zone economy.  The starting point would be to recognize that all outstanding Euro zone debt is a reality.  Trying to play games by writing down that debt as an exception for Greece only to necessitate recapitalization of banks is frankly a back-assed forward means to resolving the crisis.  The appropriate thing to do is to replace all outstanding government bonds within the Euro zone with Euro bonds backed by the ECB and the combined governments of the currency union.  (A watered down version of this solution was floated in fact, whereby such bonds would be issued up to 60% of the GDP of Euro zone economies, but the proposal fell upon deaf German ears.) 

This Eurobond mechanism would, of course, need to be linked with a parallel process to create and enhance Euro zone institutions.  Let me summarize briefly the institutions needed to move the collective Euro zone economy forward.  First the ECB should have its mandate revised to include a bias in favour of growth as well that of being a guardian against inflation.  Second, a Ministry of the Euro Area Economy should be created.  All national budgets would be approved and monitored by this super sovereign ministry.  Unemployment insurance must be administered across the zone to ensure that regions which temporarily have high unemployment, such as Spain and Greece today, are provided with insurance without burdening national budgets.  Similarly public pension programs across the zone should be merged and monitored to ensure stable income to pensioners in times of crisis, but also to ensure that the pension funds remain actuarially sustainable into the future.

Of course, there will be resistance to such new policies.  But allow me to suggest that it is the only viable way forward. Of course, there must be plans to reform profligate national economies such as Greece.  But if such reform is not supported by the necessary transfer of knowhow and capital, but instead by naked austerity, then the peripheral economies of the Euro zone will enter a downward spiral of recession.  The recession in the periphery will eventually infect the stronger European economies.  And, the common currency project for Europe will end in disaster.

While the policies and institutions needed to shore up the future of the Euro are unpopular, they are precisely those that eminent economists recommended when the Euro was launched.  But given the imminent economic downturn and the state of public opinion, only visionary leadership will be capable of dragging the people in tow in the direction of resolution and renewed growth.  Unfortunately it is hard to be optimistic when one surveys the quality of leaders in Europe today.  We are probably in for a rough ride.  And October 23^rd will most likely come and pass without a comprehensive resolution of the crisis.

---

[1] Andreas Papandreou was the leader of the socialist party, the Pan-Hellenic Socialist Movement, PASOK. He was the father of the current PM, George Papandreou.

[2] The French narrowly approved the Treaty in a referendum known as the ‘petit oui.’

[3] Some pundits have actually said more than 100%, but it is impossible to devalue a currency by more than 100%.

Juliano Mer-Khamis was a talented actor and a humanitarian whose work supported peace in Palestine through theatre and the arts.  His tragic death represents a great loss to cultural creativity and to the voices for reason and compassion within the Israeli-Palestinian conflict.  Perhaps more tragic still is the hatred and the bile emanating from the blogosphere written by thoughtless Zionists rushing to shout, “I told you so.”

The actor participated in the film Miral, which I have not yet seen, unfortunately, but which hopefully will become an even greater success and still more influential through the martyrdom of Mer-Khamis.  The author of the book on which Miral is based and of the screenplay for the film is Rula Jebreal.  She gave a particularly poignant interview last night on CNN, despite the efforts of Fionnuala Sweeney to cut her off.  Ms Jebreal said she feels that Mer-Khamis is still alive.  I find this a touching statement that brings to memory the song about Joe Hill.  As it happens, Joe Hill has long been a symbol for my own work.  In fact I owe to him my pen name, ‘Hillstrom.’  Joe Hill and the poet Lorca, who also met a tragic death during the Spanish civil war, provided the inspiration behind my poetic drama, The Story of Our People.

Perhaps the lovers of Peace within Palestine and aspiring young actors will find solace and inspiration in Mer-Khamis’ life’s work.  And perhaps a new inspirational song, I dreamed I saw Juliano Mer-Khamis, alive as you and me, may well from the lips of legions of budding Palestinian poets.

The Libyan No Fly Zone: Responsibility to Protect and International Law

Just as Secretary Gates had said, enforcing a no fly zone in Libya requires an attack on Libyan military assets, specifically air defense systems, in the initial phase.  These attacks are now underway.  There had been a good deal of debate over the wisdom of this action over the course of the uprising in Libya.  But once the Arab League came out in favour of a no fly zone and the Security Council approved the measure, it became a question of when rather than whether to launch attacks.  There is now of course a veneer of legality for the action, given the UN approval, the stance taken by the Arab League and the participation of token Arab States in the coalition.  But the consequences of the action remain difficult to predict.

Many observers are already saying that the action has come too late and may therefore be unsuccessful.  The hidden agenda behind such statements is that the goal is regime change and, if Gaddafi doesn’t fall, further action would be justified.  My personal assessment is that there is a glaring double standard in play.  If Libya, then why not Yemen and Bahrain?  The answer is obvious of course; it is a question of alliances.  Bahrain is an ally for the West and action against the regime there would result in the strengthening of the Shiite majority and shift power in the region toward Iran.  Such is the moral bankruptcy of realpolitik.  But a more subtle concern is how this military intervention may affect the political trends within the Arab revolution that began in Tunisia and until now has been secular, democratic and culturally progressive.  With Western powers bombing an Arab country once again and inflicting civilian casualties (which ostensibly is what the UN decision intended to prevent), there is bound to be negative reaction on the Arab street.

The broader question that we need to examine is the question of ‘the responsibility to protect.’  Debates have taken place in the UN and books have been written on the issue, but we now have a tangible case through which we can consider both the process and the consequences of accepting ‘R2P’ as a guiding principle in international affairs.  The balance of this article examines just this question.

First let’s consider the process.  Should international law govern political events that are internal to a recognized nation state?  China, Russia and other countries have adamantly answered negatively in the past, although in this case they chose silence over exercising a veto.  What this detail tells us is that the process of decision making is flawed; approval or rejection of proposals to intervene is based upon the balance of interests and alliances within the Security Council and not upon an established legal procedure.  Most of us have difficulty supporting Gaddafi; he is a buffoon as well as a tyrant.  So it is not so terribly surprising that he garnered little support during the debate in the Security Council.  But surely, if the UN intends to establish R2P as a legally binding principle, there should be a broader exchange of views leading toward a consensus opinion and followed by a written legal document to govern future decisions.  The framework for such a process is not in place and without such a framework all future decisions will similarly be ad hoc.  This is not a prescription for international justice. 

A second relevant question is whether the decision process belongs within the Security Council or elsewhere.  The problem with the Security Council is that it is dominated by major powers who wield veto rights.  This state of affairs is a legacy of the founding of the UN after WWII.  Given the developments in world affairs and the trend toward a multi-polar context it is high time that the UN charter be amended.  As a first step membership in the Security Council should be revised to include all G20 nations and to cancel all veto rights.  Decisions could then be taken through majority vote (or perhaps enhanced majority).  And again these votes should be exercised following a legal argument presenting the case based upon an approved framework of international law.  All those in favour of R2P please speak up and insist that the UN immediately initiate discussion toward establishing legal precedent along the lines I am suggesting here.  All those who claim to support R2P, but who refuse to allow such amendments to UN process, will be unveiled.  In actual fact what they favour is conditionality in the enforcement of R2P.  The condition is that the target country should be a candidate for regime change and for the extension of the West’s influence.  Otherwise, as in the case of Bahrain, the internal conflict is to be overlooked.

There are two subsidiary issues that demand examination within my proposed framework.  First, what role should nations within the region play in the decision process?  In the present case the Arab League recommended the no fly zone for Libya, but failed to mention either Yemen or Bahrain.  The Arab League recommendation clearly influenced the UN decision.  It seems unlikely to me that Russia and China would have remained silent without the endorsement of the Arab League.  But the Arab League itself is a group of semi-democratic and dictatorial regimes which evidently have their own interests in mind.  One might also ask why the Arab States did not intervene themselves or ask the UN to approve such an intervention.  This question leads into the second subsidiary issue: Once the UN approves intervention in the internal affairs of a country, who should enforce the decision and how?

The R2P principle suggests a UN mandate to police the world.  But the UN has insufficient means to enforce decisions itself.  Hence the US, as always, exercises the role of the world’s police force.  But it is inappropriate in principle for any one country to play such a role.  In any case policing the world is an entirely different concept to what we see unfolding today.  The coalition (largely dependent upon US military assets) is engaging in an air attack on Libya and the US has announced that it will not send ground forces.  Gaddafi’s forces have already gained the upper hand on the ground, so how is the air attack going to successfully protect civilians in Libya?  Simple, it is not!  There can be no protection without a police force on the ground.  This last observation brings us back to Secretary Gates’ earlier objection and reveals a fundamental problem in establishing a role for the UN in policing the world.  There are simply too many military assets available across the world to permit a policing role without first launching a high tech military assault.  The vast proliferation of arms in the world is a legacy of the cold war and the influence of the military industrial establishment.  There cannot, I would therefore argue, be a successful and just R2P policy without first successfully implementing a global disarmament program.  Yes R2P has its merits, but first we need to reform the UN charter and dramatically reduce arms across the global community.

David Hillstrom

Author of The Bridge  

20.3.2011   

Also posted at http://www.foreignpolicyjournal.com/   

Book Review of "Breeding Ground" by Deepak Tripathi

Review of Breeding Ground

By

Deepak Tripathi

The conflict in Afghanistan is now into its fourth decade with no end in sight.  In spite of the fact that Afghanistan is a poor and landlocked country in Central Asia the violence there has echoed across the world.  Camps in Afghanistan that trained Islamic fighters during the initial phase of the conflict later produced Islamist radicals who organized terrorist attacks on the US, Madrid and London.  These same groups have radicalized public opinion and brought increasing violence to Muslim countries in the Middle East, North Africa and Indonesia.  And the wave of violence has most assuredly impacted Pakistan, one of the front line players in the initial conflict, and India its neighbour and adversary.

The broad outline of the conflict is familiar to anyone who keeps abreast of politics and world affairs.  The Soviet Union engineered a coup in Afghanistan to install a friendly government there and later invaded and occupied the country in order to prop up a failing regime.  The Mujahidin then began a guerrilla war against the occupation with support from the US, Pakistan and numerous Arab countries.  Subsequently, when the Cold War ended, the world lost interest in Afghanistan and it was abandoned in a state of civil war until the Taliban took control.  The Taliban offered safe haven to Osama Bin Laden and Al Qaeda, who planned terrorist attacks on the West.  While this is the broad outline of recent history, we appreciate that a more comprehensive understanding requires a much deeper analysis of events.  Deepak Tripathi, the author of The Bush Legacy has produced a new book, Breeding Ground: Afghanistan and the Origins of Islamist Terrorism, which provides exactly such an analysis.  In his concise yet powerful book he details the interlocking decisions and strategies that inflamed the conflict and produced a new and dangerous historical context. 

Tripathi has relied on a broad array of sources, many of them unavailable until recently, including archives of both the US and Soviet governments.  Hence there is ample material in the book to supply a source for further historical study.  As he promises in the acknowledgments, Tripathi’s “analysis goes where the archives take it” and he pulls no punches.     As the story unfolds Tripathi examines the thinking behind the fateful decisions of the players involved which resulted in the spiral of violence.  But this story unveils a still deeper tragedy.  The US government, in its effort to contain the expansion of communism, was drawn into the ‘Great Game’ that Tsarist Russia and the British empires participated in during the 19^th century.  More tragic still the evidence demonstrates that all the players developed their simplistic strategic goals with only a shallow understanding of Afghanistan’s history and with little regard for the human cost to the Afghan population.

In addition to relating the history of the conflict Tripathi present s a thesis on the causes underlying the growth of Islamic terrorism.  In brief he says that the phenomenon arose as a consequence of a prolonged period during which a culture of violence prevailed in Afghanistan.  The US through Pakistan provided a vast amount of weaponry to the Mujahidin.  Foreign fighters were attracted from the Middle East to participate in the jihad against the communist occupation.  And the violence antagonized long silent religious, ethnic and tribal differences within Afghanistan itself.  These antagonisms created a virtual vortex of descending violence that has nurtured the growth of global Islamic radicalism.  One could argue of course, as Mr Brzezinski did in 1998 (p. 64) that the collapse of the Soviet empire was far more important to world history than the rise of the Taliban.  But such a view is not only cynical, but now quite obviously short sighted.  And Pakistan, in its attempt to ensure a pacified northern neighbour, has inflamed Pashtun nationalism and Islamic radicalism within its own borders in the so called Federally Administered Tribal Area. 

One wonders after reading Tripathi’s rich and insightful book whether the damage can ever be undone, whether Afghanistan might become a peaceful country and Islamic radicalism be tamed.  For his part Tripathi proposes a shift in US policy toward the use of soft as opposed to hard power.  That is a sensible approach, if one analyses events from a realpolitik perspective.  As the sole remaining super power the US will inevitably exercise its influence in world affairs.  But the line between the use of soft and hard power is fuzzy.  The Soviets initially supported a nearly bloodless coup in Afghanistan only later to become drawn into a full scale invasion and bloody occupation in order to preserve their gains.  Given the multi-ethnic and tribal structure of Afghan society and the culture of violence that Tripathi has so vividly described, what are the chances that the US will be able to succeed in nation building there?  Whether through the use of soft power or counterinsurgency the effort would appear doomed.  It seems to me that the real tragedy of history lies precisely in the meddling of world powers in foreign lands be it through clandestine activities or direct military intervention.  Tripathi sums this up beautifully in his closing quote from Tolstoy, “In all history there is no war which was not hatched by the governments, the governments alone, independent of the interests of the people, to whom war is always pernicious, even when successful.”

David Hillstrom

Author of The Bridge

This review has also been published by The Foreign Policy Journal, http://www.foreignpolicyjournal.com/2011/03/04/review-of-breeding-ground-by-deepak-tripathi/

Security Council Vetoes and Legacy Politics

Security Council Vetoes and Legacy Politics

Yesterday the US vetoed a Security Council resolution condemning continued Israeli settlement activity.  There are only two possible interpretations of this act which goes against international law, international consensus and the US government’s own professed opposition to new settlements.  Ambassador Rice’s justification that it is inappropriate for the Council to attempt to resolve the core issues between the parties is simply not convincing.  What other purpose does the UN have, if not to attempt to resolve problems that endanger world peace and establish principles of international law?  Either the US is unable to escape its legacy of supporting Israel come what may (a political position that began with its support for the establishment of Israel in 1948 and continued during the era of client states in the Cold War) or it is intent upon undermining the legitimacy of the UN once again.  So, President Obama has taken one more step towards compromising with the policies he inherited from previous administrations.

National and international diplomacy cannot be revised incessantly of course.  That would make for a very unstable world.  But there must be moments in time when a zero based reassessment of policies and alliances is warranted.  Surely a fresh analysis of US policy in the Middle East is in order following Israel’s resumption of construction on occupied lands despite the Obama administration’s plea to extend the moratorium on new settlements.  It would also seem wise to present a more balanced policy in the region given the popular uprisings across Arab countries.  Providing such blatant cover for illegal, Israeli settlements is certain to strengthen the hand of radical opinion on the Arab street against the rising tide of democratic, secular activism.  So much for President Obama’s pledge to bring a new global perspective to US foreign policy. 

While discussing such matters, could someone explain to me why the permanent members of the Security Council continue to retain their veto powers?  Those veto rights are themselves a legacy stemming from agreements at the conclusion to World War II.  As we move increasingly toward a multi polar global community (and with the G20 meeting ongoing in Paris) can it possibly be appropriate to exercise a legacy authority that is no longer justifiable?  Let us raise a banner in favour of the enforcement of international law.  Let us promote international institutions that recognize the emerging realities of the distribution of power in the world.  And let us accept the loss of legacy symbols of authority, such as veto rights within the Security Council.  Policies that diverge from such a reasoned approach are bound to augment risks to world peace.

David Hillstrom

Author of The Bridge

Perspectives on Egypt

Having lived in Cairo for a couple of years during the late 90s, I have taken a special interest as events unfolded in recent weeks.  The political oppression was always in evidence, while I lived there, but as well I recall the terrible social discrepancies between poverty and blatantly conspicuous wealth.  Hundreds of poor families lived in the confines of the cemetary outside Cairo.  So witnessing Mubarak's downfall produced no regrets from my part.  But, as usual I do take issue with the manner in which US policy leaders have responded to the events.

Broadly speaking there were two perspectives on events.  The Obama administration was cautious but open to pressure from liberals to meddle in Egyptian affairs, whether through public commentary or direct phone calls to Mubarak.  Conservatives on the other hand were playing the game of realpolitik and appeared eager to support an old ally who ensured regional stability and a peaceful border for Israel.  The conservative appraoch is the most distasteful, since it amounts to direct, imperial meddling.  Presumably conservatives were eager to retain their facilities for rendition in Egypt.  But the liberal perspective is equally misplaced.  When will liberals learn that the US simply does not have the right to meddle in the affairs of independent, sovereign states?  I accept that there was justifiable concern for the safety of the demonstrators.  But that concern should be voiced through enahnced and empowered international institutions such as the UN and not unilaterally.  The US has over the years lost any moral authority it may have had to intervene in support of human rights.  By promoting such intervention liberals are themselves guilty of playing the empire card. 

Now that the uprising has been successful think tank intellectuals and oped authors are trumpeting the victory of democracy in the Middle East.  Some of them even suggest that this event justifies the US occupation of Iraq.  Such thoughts are a travesty of reason.  Personally I am afraid Mubarak's resignation may prove to be a brief interlude on the road to a new dictatorship.  I certainly wish the young activists well, but I would caution them that the struggle has only just begun.  Please don't be naive; you have not yet 'gotten your country back.'  That will only happen when a new constitution is in place, elections have been held and the army has retired to its barracks.  Even then the fledgling democracy will require decades before it becomes established within the social fabric.  Good luck, but keep your eyes wide open and don't place undue confidence in US meddling.  Your goal must be to build Egypt into a prosperous nation that is a fully independent member of the community of nations.