China and ASEAN Become Free Trade Block

The Bund of Shanghai, China, May 1, 2009
The Bund of Shanghai, China, May 1, 2009 (Flickr/IceNineJon)

A free-trade agreement between China and the ten member states of the Association of Southeast Asian Nations (ASEAN) has come into effect last January 1, liberalizing trade and investment in an economic zone that is home to almost two billion people.

After the European Union and NAFTA, this new free-trade area is the third largest in the world and perhaps the most significant today for many of the countries involved, China foremost among them, are carrying the rest of the industrialized world out of the economic recession that has plagued it throughout the past year or so. Read more “China and ASEAN Become Free Trade Block”

Japan Goes All In

Last time we reported on Japan’s lingering in economic trouble, we identified decades of government interference as the cause of much of the country’s modern-day hardship. With the Democratic Party in power after years of Liberal Democratic leadership, there was reason to hope that the former would undo part of the Keynesian measures the latter had imposed upon Japan throughout decades of almost uninterrupted rule.

Alas, not only did the Democrats distance themselves from the free-market policies of former Prime Minister Junichiro Koizumi; over Christmas they approved a record trillion dollar budget which, according to The New York Times, “encompasses ambitious welfare outlays to help households cope with the country’s deep economic woes.” The paper warns though that “the scale of new spending could renew investor jitters about the government’s burgeoning debt.”

Prime Minister Yukio Hatoyama is hoping that his generous welfare spending will encourage households to increase consumption, providing the economy with a much needed stimulus. “Together with all of you, I want to build a better Japan, a new Japan,” he said at a news conference. “I have adhered to the principle that people matter more than concrete.” Unfortunately for Mr Hatoyama, Japan’s domestic market simply isn’t strong enough to ensure continued growth should exports fail. And it is exactly the country’s mounting debt that worries foreign investors.

Next year Japan is set to borrow more than half of its entire budget, bringing its public debt up to about $9.4 trillion, or 181 percent of GDP, by the end of March 2011 — by far the highest in the industrialized world.

Because the government is utterly unable to balance its budget, promised cuts on a gasoline tax and highway tolls have been abandoned while cash payments to child rearing households and free high school education are still on the agenda. Put another way: measures that might actually help the economy a bit are put on hold while more money is to be spent on programs that could at the very least be suspended while the country is still struggling to climb out of the recession.

No wonder then that within the span of just a few months, the prime minister lost about one in five of his supporters, bringing his approval rating down from a post-election high of 71 percent to below 50 percent.

Europe’s Egg Shortage

It’s difficult to get about some eggs in the eastern parts of the Netherlands these days. Supermarkets are experiencing serious shortages there because large supplies of eggs have been bought up by German wholesalers. The Netherlands has always been one of the world’s greatest exportors of eggs but usually not at a disadvantage to the country’s own market. So many more eggs are finding their way to Germany now because that country is set to ban battery hen cages next January 1 which has severaly damaged its own production already.

The European Parliament voted to ban battery cages in 1999 when so much as 93 percent of eggs in what was then the European Community came from battery hens. By 2012 all member states must have the battery system abolished but Germany has chosen to take the lead by outlawing the practice in 2010 already.

Of course, when parliament forced farmers to turn back the clock half a century it provided adequate protection against the import of cheap eggs from abroad by imposing extensive border and subsidy measures. To control imports and boost exports, the European Union uses sluice-gate prices, basic and variable import levies and export refunds on all shell eggs and products.

The sluice-gate price is a theoretical, calculated price at which poultry imports to Europe should be priced given world grain costs. The import levy is fixed at a level to protect European egg producers against imports from countries that benefit from market cereal prices considerably below the European average. The simple purpose of the measure is to prevent the import of eggs that are priced lower than their European counterparts.

A safeguard clause allows Brussels to suspend imports if the European market is threatened with serious disturbances such as a flood of low priced imports. Refunds are paid to European exporters from the Common Agricultural Policy budget to help them compete outside Europe where producer costs can be lower due to lower feed grain prices, for example.

Understandably, this is upsetting developing countries which are currently stalling negotiations within the World Trade Organization for one thing, precisely because the West, the European Union in particular, is increasingly protecting its own market, making it near impossible for Third World farmer to compete. Yet, with subsidies, European producers are able to penetrate their markets. (So next time you hear someone denounce “free trade” for destroying Third World agriculture, you know better than to nod in approval.)

The only ones not complaining right now are Dutch poultry farmers who are able to sell their eggs in Germany at prices unprecedented in recent history. Within the next two years however, they too will be forced to give up their battery cages. Inevitably, the supply of eggs will shrink throughout Europe, driving prices up only further.

City of Venice Flooded

The ancient Italian city of Venice has slowly been sinking for many years. Early Wednesday morning, an unusually high tide flooded most of the city once again, forcing its denizens to wade through knee-high waters or make use of the improvised, elevated boardwalks set up in St Mark’s Square and other public spaces.

The waters reached a peak of almost 1.5 meters above sea level Wednesday, flooding about 60 percent of the city’s streets according to authorities. The level came close to last year’s record 1.6 meters; Venice’s worst flooding in over two decades. Responsible are the strong southern wind and rain combined with the lagoon city’s periodic tidal phenomenon.

A system of movable barriers that is supposed to protect the city from high tides is under construction but not expected to be operational anytime before 2014.

Venice is not the only place in northern Italy that has fallen victim to bad weathers this season. Lasting snowstorms and cold have forced airports and public transportation to largely shut down throughout the region all the while wreaking havoc on traffic in the different cities.

Israel Threatens Force Against Settlers

Although the Israeli Goverment of Prime Minister Benjamin Netanyahu refused to freeze the construction of settlements in the West Bank altogether, it is imposing a moratorium on the building of new homes in the occupied territories — and it is willing to use force against Israeli settlers who refuse to abide by it.

Some Jewish colonists were so enraged by the government’s announced settlement freeze that Defense Minister Ehud Barak felt compelled to warn them that military force might be used if they continue to flout the ten-month agreement. Settlers have repeatedly blocked inspectors and security personnel from entering their communities with resistance growing increasingly hostile.

According to a memo leaked to Israeli media, the Defense Department is preparing to deploy unmanned drones to photograph illegal settlement construction. The document goes on to specify that military police, special forces and communication specialists to jam cell phone frequences could all be called upon to enforce order.

The plan was probably leaked by settler sympathizers although there are skeptics who suggest that the authorities themselves were responsible as it could help the government portray itself as willing to confront domestic opposition for the sake of attaining peace.

Peace, however, is hardly to become a reality any time soon. With about 300,000 Israelis currently living in the West Bank, the Palestinian Authorities rejected the Netanyahu Goverment’s compromise to slowdown settlements construction with the exception of East Jerusalem and 3,000 homes currently under construction in the West Bank. Seeing as how the United States also insist that Israel shut down settlement construction in its entirety, there is little reason to assume that any sort of negotiations will be resumed in the near future.

The Peace Abbas Rejected

The Israeli newspaper Haaretz has revealed the peace plan that former Prime Minister Ehud Olmert offered the Palestinian President Mahmoud Abbas in September of last year. “Abbas did not respond, and negotiations ended,” according to Haaretz.

The peace plan encompassed an exchange of land, with Israel gaining Jerusalem and a little over 6 percent of the West Bank — parts that are home to 75 percent of the settlement population living in the occupied territory. Dozens of other settlements in the Jordan Valley, in the eastern Samarian hills and in the Hebron region were to have been dismantled.

The Palestinians were to have been compensated for the loss of territory with strips of land north and south of the West Bank and additional ground east of the Gaza Strip. To provide safe passage between the two parts of Palestine, Olmert offered to secure a highway that would remain Israeli territory but lack any Israeli presence.

Haaretz notes that in a formal reply, the former prime minister’s office claimed that their map contains a “number of inaccuracies that are not consistent with the map that was ultimately presented” but based as it is on different official sources, it ought to provide a rough idea of what was offered to the Palestinians nonetheless.

Although the Olmert Plan was less generous than what Ehud Barak offered as prime minister at the 2000 Camp David Summit, it is still difficult to understand why Abbas refused to consider it. He could have provided his people with a sovereign state and end the conflict once and for all but apparently, it wasn’t enough.

Now, due to some clumsy diplomacy on the part of the Obama Administration, Abbas is refusing to so much as sit down with the Israelis in spite of Prime Minister Netanyahu’s offer to largely freeze the construction of settlements in the West Bank. One wonders what more the Palestinians are honestly expecting to get.

Merkel Government Under Pressure

Pressure is building on German chancellor Angela Merkel and her defense minister, Karl-Theodor zu Guttenberg, to account for the German-ordered NATO attack in Afghanistan last September that killed 142 people, many of them civilians.

Guttenberg, formerly minister for economics, took charge of the Defense Department last October as member of Chancellor Merkel’s second cabinet. The rising star of the German conservative party, Guttenberg outranked Merkel as the country’s most popular politician but he has come under siege from the Social Democrats, the former coalition partners, for changing his position on the Afghanistan attack.

Initially, Guttenberg called the bombings “appropriate” but three weeks ago, he claimed the opposite after assessing the incident in greater detail.

Germany’s previous defense minister already resigned over the affair and Guttenberg himself has discharged a top defense official and a state secretary for supposedly withholding information. Now, a parliamentary inquiry has been produced to study the bombings all the more thoroughly.

Although all but one of Germany’s political parties support the Afghan mission, there exists something of an obsession to wage a “clean” war there regardless of the changed circumstances. While the Taliban has gained ground, parliament’s mandate remains unchanged: German soldiers are to aid in the reconstruction of Afghanistan, not to be involved in any fighting.

The Social Democrats are leading the charge that seems specifically aimed at Karl-Theodor zu Guttenberg. He and the chancellor are to appear before committee next January. Yet the Social Democrats were the ones in power when the country decided to contribute to ISAF and they were still in power when the bombings occurred. Holding the man who has been defense minister for barely two months responsible seems utterly hypocritical and largely a political move before anything else.

Hillary Clinton Speaks on Human Rights

American secretary of state Hillary Clinton testifies to the House Committee on Foreign Relations in Washington DC, December 2
American secretary of state Hillary Clinton testifies to the House Committee on Foreign Relations in Washington DC, December 2 (DoD/Chad J. McNeeley)

Elaborating on the statement President Obama made when he accepted the Nobel Peace Prize last week — “Only a just peace based upon the inherent rights and dignity of every individual can truly be lasting” — Secretary of State Hillary Clinton spoke at Georgetown University in Washington DC about human rights today.

“We cannot separate our democracy, human rights and development agendas,” she argued. “They are mutually reinforcing and united in service of a common purpose: to create a world where all people have the opportunity to fulfill their God-given potential.” Read more “Hillary Clinton Speaks on Human Rights”

Obama Accepts Nobel Prize

In Oslo, Norway today American president Barack Obama was awarded the Nobel Peace Prize. In his acceptance speech, the president outlined his vision for peace and the role which the United States must play in achieving it.

Recognizing the horrors of total war and genocide, Obama named the League of Nations and the United Nations as instruments in the preventing of another world war. At the same time he stressed the continued necessity of force. “A nonviolent movement could not have halted Hitler’s armies,” he said and “negotiations cannot convince Al Qaeda’s leaders to lay down their arms.” American weapons of war have kept the peace in many parts of the world since the end of World War II although the advent of the Nuclear Age still poses a danger to world peace. Read more “Obama Accepts Nobel Prize”

Jerusalem Capital of Two States?

After conferring for two days in Brussels the foreign ministers of the European Union called for “the urgent resumption of negotiations that will lead […] to a two-state solution with the State of Israel and an independent, democratic, contiguous and viable State of Palestine, living side by side in peace and security.” With a soon-to-be-appointed joint foreign minister and the Americans once again committed to bring about peace in the Middle East, Europe too appears determined to finally achieve some result.

The two-state solution is something most European countries have supported for a long time, so what’s new? Well, for one thing, the Council decrees that it “will not recognise any changes to the pre-1967 borders including with regard to Jerusalem,” unless both Israel and the Palestinians agree otherwise. A way must be found for Jerusalem itself to become the capital of both Israel and a Palestinian state — “through negotiations.” Read more “Jerusalem Capital of Two States?”