Sweden Sliding

Sweden — 2005 IMF Article IV Consultation, Concluding Statement

Last week, the Swedish media noted that the country’s economic policy had been praised by the IMF.

Well, I wonder if the person who wrote that had read the Concluding Statement coming out of the so-called Article IV Consultations. This is an annual thing. Well Prepared. Carefully Drafted.

It’s true that the IMF starts by speaking of ”large gains in productivity, continued low inflation and a comfortable competitive position.” 2004 was also a year of ”strong economic expansion.”

But that’s really the end of the praise. And probably as far as the journalists read.

The rest is a rather damming indictment of the government for presiding over ”gradual drift” towards higher and higher public deficits. The central government finances are already in deficit, and the overall public sector is heading there fast.

It might not be as bad as in some other countries – but certainly worse than most people are aware of.

But it’s not only that. IMF speaks of an ”institutional setup that discourages work effort”, and notes that figures on how many people work in Sweden should be treated with a large grain of salt.

”Taking account of the large number of employees on sick leave, social assistance, labor market programs, and measures such as mid-life sabbaticals, effective employment is significantly lower. The marked rise in disability pensioners, especially among yonger workers, is particularly worrisome.”

And it goes on by calling for redudce income taxes and says that ”the pace of structural reforms needs to be accelerated.”

Sweden is certainly a country well placed to benefit from the acceleration of European integration and globalization that we are now seeing.

But it requires more forward-looking policies. IMF is worth listening to – in everything it has to say in this report.

Force for Freedom

EUbusiness – EU court rules Swedish state monopoly on medicines is illegal

In these days of eurogloom it’s nice to see that the institutions of the European Union continue their work in promoting and protecting the free and open economy that is the foundation for the prosperity of the member countries.

Today, the European Court of Justice ruled that Sweden’s state monopoly on medical preparations is illegal. This has been a controversial issue for years in Sweden, with the present monopoly-happy government doing whatever it can to preserve the old-fashioned state of affairs.

It has clearly been an arrangement to the detriment of the consumer – with the state instead taking the side of the public monopoly producer.

Now, it’s the end. Great! It didn’t prevent the responsible minister in the government to state that they will do whatever, in spite of the European Court, to preserve the monopoly.

Good luck! Those that always insist on fighting losing battles normally end up on the wrong side of history.

Downing Street Decides

News

With another resounding No in the referendum in the Netherlands tomorrow highly likely, the focus of attention is rapidly shifting to London.

It’s unlikly in the extreme that the Blair government will proceed with plans to hold a referendum on the Constitutional Treaty.

It is more likely to postpone everything indefinitely, perhaps saying that they eventually are ready to have a referendum after the French have had another one or ratified it in some otherway.

This, of course, is little more than pushing the buck around. Nothing of this will happen in the foreseeable future. And if this is the line from London, it is safe to expect that it will be the line coming out of additional capitals, although frenetic efforts are underway to stop the leaks from the ship.

It’s far more constructive to note that this Constitutional Treaty will not come into effect in the foreseeable future, and start the real discussion on what really needs to be done.

Two things need to be in focus in that debate. Issues of peace, and issues of prosperity. What really needs to be done.

A debate with substance first and institutions second. Not the other way around. That might make it possible to getthe required support throughout Europe.

Monday – when the British government will show its cards – will be the really crucial day. I’ll watch it from the perspective of Moscow.

Why No?

TNS Sofres – Sondages, opinion, etudes : Le r�f�rendum du 29 mai 2005

Why did those that voted No in the French refererendum did so? Did they really object to the one or other part of the Constitutional Treaty?

Not really. A quick poll by the TNS-Sofres opinion polling agency tries to answer why the No’s noted No.

The number one reason (46 %) is the issue of unemployment and a fear that it will rise further. This is, in its essence, the question on whether globalization is a threat or a promise.

The number two reason (40 %) is the situation in the country in more general terms. It’s difficult to see that this has anything to do with the Constitutional Treaty.

The number three reason (35 %) is the alleged possibility of re-negotiating the treaty. Unclear, however, what this re-negotiation should be about.

And the two reasons sharing the number four position (34 %) is that the treaty is difficult to understand and that it is too liberal.

That most constitutional text are rather far from being immediate crowd-pleasers seems to be a point lost, or that the ultimate in being liberal in terms of an open market is really the Treaty of Rome that France signed in 1957 and has been – well, more or less – implementing since then.

I guess that there will be more refined polling and analysis eventually, but these first results are not without their interest.

In the meantime, we are all waiting for the Nethetlands.

Europe will survive a French Non

Europe will survive a French Non

It was not a total surprise that France was going to vote No, and accordingly there have been some debates about the possible consequences.

As I have already indicated, I find the official line that everything should just go on in terms of ratification less than credible, in particular if there is a No in the referendum in the Netherlands on Wednesday as well.

It’s worth noting that the government in London is not lining up with the official line from Brussels at the moment. From his vacation in Italy, Tony Blair is talking about a period of reflection, evidently wants to wait for the Dutch before he goes any further and announces that the Foreign Secretary will make a more official declaration on the possible road ahead next Monday.

The likelihood of them then saying that they wil go ahead with a referendum in the UK in spite of a double No in France and the Netherlands is virtually zero. And then we will have a situation where the UK de facto will withdraw ratification from this constitutional treaty.

And then it is less likely that the European Council on June 16-17 will just repeat the present official line. But we’ll see.

The European Union will now be governed by the Treaty of Nice. That’s perfectly OK for the time being. But at the same time one should start looking into ways in which some of the policy changes in the Constitutional Treaty could be implemented without any treaty changes.

In the linked OpEd piece in the Financial Times from last week, Charles Grant discusses certain of these options.

Particularly in the field of the Common Foreign and Security Policy, it is both desirable and possible to start to move in this direction.

The world needs a stronger European role.

Revolt of the Rural

Le Monde.fr : Les r�sultats d�partement par d�partement

As always, the pattern in election results is revealing, and the pattern in the French referendum result did not deviate from the pattern we have seen in other similar cases.

It’s to a very large extent – in the middle of everything else – the revolt of the rural against the urban.

José Bové, who is the leader of the militant anti-globalisation movement in France and somewhat of a celebrity, was obviously right in calling it ”a protest vote”.

The large and outward-oriented urban areas of France voted yes. In the region of Paris with impressive 66,5 % and in the second biggest city Lyon with 61,4 %. Toulouse with its Airbus and space industries voted 51,3 % yes and Bordeaux did the same with 57,9 %. In Strasbourg, with its particular European history and experience, the Yes vote was 62,9 %.

But the cities were swamped by the rural areas that – with only part of western France as the exception – voted massively no. And they were joined not the least by problem-filled areas in the declining industrial north-east and in the politically polarized areas down by the Mediterranean. The city of Marseille voted no with 61,2 %.

In essence, this is not too dissimilar from the results that we had in the different referendums on European issues in the Nordic region.

The urban versus the rural, and the modernizers versus the protesters.

Europe – What Now?

Lefigaro.fr, l’actualit�francophone au quotidien

With exit polls giving the No side 54,5 % of the vote in France the fate of the Constitutional Treaty is de facto sealed.

We have missed a possibility to create a better functioning European Union with the possibility of a stronger voice in the world and better possibilities of fighting crime in Europe itself.

That is, needless to say, bad. But it’s not the end of neither the European Union nor of Europe. When some prominent voices claim that a No would mean ”the end of the future of Europe” – in this case it was Romano Prodi – it is of course unmitigated rubbish.

Europe goes on. The question is how. There will be the need for a new leadership in a new situation.

The majority in France gave their no because they were dissatisfied with the present and fearful of the future. A substantial part of that clearly had to do with the domestic affairs of France, but a substantial part was also related to Europe as a whole.

They feel lost in a Europe where globalisation and integration is making change the necessity of the day. They evidently feared that their – in my view hopelessly outdated – view of France would be a loser in that Europe. In that sense, they might not have been that wrong.

The immediate result of the vote is obviously a crisis for France. It’s a failure for both President Chirac and for the Socialist Party. There will have to be a serious soul-searching in the political forces of France before they can start to approach these issues again.

In itself, this might not be a bad thing.

In the capitals of Europe, and not the least in Brussels, the question is of course how to proceed with the issue that the French have now voted on – and the Dutch will vote on this Wednesday.

Prime Minister Jean-Claude Juncker of Luxembourg – holding the European Union presidence at the moment – have said that everything should go on and every country should take its decision on the treaty. A referendum should be held in Luxembourg on July 10.

But this doesn’t make any sense whatsoever.

First there is the very obvious risk that it will be just an accumulation of further negative decisions. Even Luxembourg might well vote No if France and the Netherlands have already done it.

Then it is now clear that this particular text will never enter into any force. The decision of France must be respected. To continue with ratification in different countries is just to prolong the agony.

When the European Council meets in Brussels on June 16 they should close down the process officially. But they should also stick to their previous agreement to meet in November of next year to consider the situation and discuss what to do.

Then the period until then will be a period of further reflection and debate. In the meantime, everything will work in accordance with all the treaties in force.

In the meantime we might see changes in the political landscape of Europe. There will in all probability be a new government in Berlin by this autumn. There might well be a new Prime Minister in London within this period. And shortly thereafter – in March 2007 – there will be a new President in France.

Clearly, the Europe of today can provide the leadership that inspires. But after a debate across the borders in the coming years, there is at the least the possibility that we will get it.

We are entering a new and not uninteresting phase in the evolution of the European Union.

Sweden’s Economy – Successful or Sick?

Not the least its government likes to portray Sweden as a big success story in terms of growth and employment, and not seldom this is what comes out of EU compatison based on the official statistics available.

But the thruth is somewhat different, and a row inside the trade union federation LO during the past weeks have exposed this in a somewhat brutal way.

By tradition, the economist of LO have intellectual freedom, alhough they are supposed to stay politically loyal to LO and the social democratic party.

Now, however, the limits of this intellectual freedom has been demonstrated as a report on the level of real unemployment in the Swedish economy was de facto supressed and the author left his position at LO in protest at this. As a result, the report has gotten far more attention than would otherwise have been the case.

The official unemployment rate in Sweden is 5,5 %. This is the figure the government likes to give out. It’s considerably above the 4,0 % they have as their target – indeed ”the promise” they have given the voters in the last few elections. That’s bad enough.

But in addition there are 4,4 % of the labour force in different sorts of labour market programs. If you add these two together, the unemployment rate suddenly jumps to 9,9 %, which is very much higher, and doesn’t make Sweden that much different from some of the more problematic economies in Europe.

But what Jan Edling – formerly at the LO – claims is that this figure is way too low. A number of other measures, notably putting people on early pension schemes of different sorts as well as on long-term sickness benefits, should add in the order of a further 10 % to this figure.

That’s dramatic. That means that in the order of 20 % of the labour force is unemployed in the one way or the other.

Not much to boast about – mildly speaking. In terms of employment, the Swedish economy suddenly looks like being far more sick than it is succesful.

The Splits of France on Europe

Le Monde.fr : Intentions de vote pour le r�f�rendum sur la Constitution

Tomorrow, France will say its Yes or No to the Constutional Treaty for the European Union.

But already today it’s interesting to see how the campaign has evolved and how the split of France on the issue really looks. The opinion poll in Le Monde today gives some answers.

In political terms, the No side is most strongly supported by the extreme right of Le Pen and the extreme left of the Communist Party. That’s hardly news. The extremes have always came together in their nationalist and nostalgic opposition to European integration.

But the opinion polls makes clear that the decisive support for No comes from the serious split in the Socialist Party, with this poll showing a clear majority of its supporters in the No camp. It’s leadership has failed to secure the support of a majority of its followers, although the party itself in an internal vote in December come out solidly – well, 58 % – in support of the treaty.

Among the supporters of the parties of the centre-right, support for the Constitutional Treaty looks surprisingly solid.

The key conclusion is that in more concrete political terms it is the split in the Socialist Party that’s threatening the position of France.

Crisis Postponed

The talks between Iran and the so-called EU3 – France, Britain and Germany – in Geneva earlier this week was a success in the sense that a collapse and a crisis was postponed. Now, the talks will resume after the presidential elections in Iran.

What was decided is that Iran for the time being will remain within the framework agreed in Paris in November 2004 by complying with all its provisions, including those dealing with the suspension of enrichment- and reprocessing-related activities.

It was also decided that the talks should continue, and the EU3 would make more detailed proposals to the Iranians, if possible at the end of July or early in August. It being understood that these proposals will normally cover all aspects under discussion, i.e. everything regarding security guarantees, economic, technological and nuclear cooperation and also political dialogue.

There was another event in Geneva in the week that wasn’t entirely unrelated – the opening of negotiations on Iran’s membership in the WTO, which was one of the points discussed earlier with the Europeans.

We’ll see what happens. The Iranians continue to insist on their right to the entire nuclear fuel cycle, and the EU3 continues to insist that Iran should abstain from any activities linked to the enrichment of uranium as well as to the reprocessing of spent fuel.

In itself this does not guantee that Iran will not seek to produce nuclear weapons – but it would make the time between a decision and a deployment of such a weapon substantially longer. That’s in reality all that can be achieved.

Further on, another regime in Iran might make it possible for Europe as well as the United States to go into far more collaboratibe relationships, which would be good in itself from every conceivable point of view.

A More Ambitious Europe

mysan.de – be updated – Former Prime Ministers Call for More Ambitious Europe Ahead of French EU Vote

A brief account of a discussion I had yesterday in the European Parliament in Brussels on the competitiveness of Europe has found its way into cyberspace.

It was a discussion with former Prime Minister of Denmark Poul Nyrup Rasmussen and former Prime Minister of Estonia Mart Laar and myself on what Europe needs to do to grow better and create more new jobs for the future.

I called for structural reforms – the labour market flexibility of Denmark and the flat tax of Estonia are good examples – as well as new investments in research and development.

And we carefully avoided the subject that otherwise dominates everything in Brussels these days – the effects of a No in the French referendum on Sundaty.

Bush and Abbas

Bush Praises Palestinian; Tells Israel of Its Duties – New York Times

It seems to have been a good meeting yesterday in the White House as Palestinian president Mahmoud Abbas came to visit.

There is unlikely to have been uniformity of views on everything, but it was clear that President Bush was keen to express as strong a support as possible to the democratic transformation under way in Palestina and to the efforts to prepare for a proper peace process with Palestine.

Divergencies were there in public on the question of Hamas, but more informally it’s obvious that Washington doesn’t really see much of an alternative to the policies pursued on the issue by Mahmoud Abbas.

It’s a question of drawing Hamas into a political process – and then defeating them there.

A good meeting. Hopefully it created a bit of a new momentum. But much will depend on the Palestinian parliamentary elections and the way the Gaza withdrawal is carried out.

Future in Danger?

A dangerous game in France########### ‘

Daniel Cohn-Bendit is always worth listening to. Once one of the street leaders of the 1968 student rebellion in France, and since then Member of the European Parliament from first France and then Germany, he is now a leader of the Greens in that Parliament and a vocal debater on most European issues.

He’s distinctly in favour of the new Constitutional Treaty and distinctly worried about the consequences of the No that he anticipates in the referendum on the issue in France on Sunday. And his arguments are worth listening to.

Nothing is certain in an election or a referendum. Opinion polls still indicate that a quarter of the electorate in France haven’t yet made up their minds. There is still hope.

But if there is a No in France there is likely to be a No in the Netherlands three days later and that means, for all practical purposes, that the present proposed Constitutional Treaty is dead. To keep the process alive will only prolong the agony.

This will have consequences of different sorts, although – as Daniel points out – both the world and Europe will go on.The European Union works today and it will work tomorrow, but it has missed a good possibility of working even better in the years ahead.

And that’s really needed. There is a large risk that Europe will be squeezed between the innovation potential of America and the production potential of Asia in the decades ahead.

Only a Europe that moves forward will have the ability to inspire not only its own citizens but also the wider global community.

Saving Sudan – and Africa

Annan heads to Ethiopia for conference to boost African Union efforts in Darfur

Everyone is heading for Addis Ababa in order to try to save Sudan.

Everyone? Well, the Secretary General of the United Nations, the High Representative of the European Union, the Secretary General of NATO and a couple of others. It’s a conference to pledge support to the African Union peacekeeping efforts in the Darfur region of Sudan.

Good and worthy and nice in itself. The African Union certainly needs the support it is given. And there is most certainly a need for the AU peacekeeping forces that are now in Darfur and that will, at least according to plans, increase to 12 000 towards the end of the year.

But in itself this will not solve the situation. Stabilize, perhaps. Solve, distinctly not. You can stabilize with a military mission of this sort, but in order to solve you need a political process.

At the moment, there is hardly anything worthy of the name in Darfur.

The different rebel movements seems, according to the UN representative there, to be more interested in travelling around the world than in attenting peace talks. And there are obvious strains between these people and those actually doing the fighting on the ground in Sudan.

As long as this remains the case, there will be no peace worthy of the name, and that irrespectively of what the government in Khartoum is doing or not doing. It take two to tango – or to test the seriousness of each of them to the dance.

At the end of the day, everything is linked to the process with the implementation of the peace agreement between the South and the North of Sudan. That’s the really big story for the coming years.

The UN has just started to deploy the beginning of a peace force that will build up to app 10 000 men and women in primarily the South of the country. It will in all probability be the biggest, most challenging and most important UN mission in the years ahead.

Also here, the political process is paramount.

In six years time there will be a referendum in Sudan on whether they want to stay together or split up with the South and the North going different ways. It’s a very short time to demonstrate that a common future might actually work.

A breakup of the biggest state in Africa will have far-reaching consequences in the region. There might well a serious aggrevation of the tendencies towards disintegration in the entire region immediately to the South of the Sahara – from Somalia to Sierra Leona. Large parts of the region will be hovering on the brink of genocide.

The future of Sudan is of immense importance for the future of Africa. It’s the biggest country of the continent – bordering on no less than ten other states. Its diversity in terms of cultures, traditions and languages is vast.

I hope that the discussions in Addis Ababa will not only the the usual beauty contest between international organisations on who can to the best to provide planning and logistical support to the efforts of the African Union. That’s certainly important – but no more than the beginning.

There needs to be a proper political process. In Darfur – that’s the most immediate challenge. In Sudan as a whole – really making certain that the peace agreement works over the years to come.

And a clear strategy from international actors on how to prevent the catastrophies that are likely to flow out of a gradual disintegration of important parts of Africa.

It might be there – in which case it remains a deep secret. An even deeper secret would be to absence of such a strategy.

Mood, Madness and Leadership

During the past few days I have spent some time talking to people first at UN Headquarters in New York and then in the European Union institutions in Brussels.

Neither is a place in a particularly good mood these days. Morale has suffered from real and perceived political and other setbacks. And there is the fear that more will come.

As always, mood swings too fast and too far in whichever direction it swings. Neither the UN nor the European Union is in as bad a shape as some people tend to believe. Beyond the turmoils and troubles of today are signs of change that can signal strength for the future.

But – as always – it requires the right policies. And they are not always in place.

In Brussels, the politics of the European Union is driven by the politics of the different member states. And sometimes this leads things off in directions that are obviously very wrong.

In some member states there is great agitation over the rapid rise in the import of T-shirts and underwear and similar things from China in the beginning of this year. Previously there were limits, but now trade is free. It didn’t come as a surprise – the decision was taken no less than ten years ago.

This has lead to the European Commission looking into whether action needs to be taken against the Chinese in this sector, and in order to avoid such action the Chinese authorities have introduced some sort of export fee.

All this would have some logic if we saw a critical part of the economic future of the European Union as being the manufacturing of T-shirts and underwear. And this would of course signal the demise of any dream of being in the top of the global league in terms of economic and social development.

The future of the European economy is to produce innovative services and innovative production solutions to an increasingle globalized world. We need to move from low-cost producing to high-clasas and high-cost services.

But the very same forces that are skreaming over T-shirts from China are often the ones screaming over the liberalisation of trade in services proposed in the so-called service directive.

There is some logic in the madness: they see Europe as continuing with T-shirts, while not developing the competitive service sector that obviously would benefit all and make Europe more competitive. As said – it’s madness.

If the somewhat pessimistic mood in Brussels should be broken, it will require a political leadership that clearly takes issue with madness of this sort. It’s not a European Union drifting under populist pressures we need, but a Union with the will and the ability to give leadership for the future.

Let the Chinese and whoever wants supply us with cheap and good underwear. But let us develop as global first-class service providers.

Alternatives in Germany

Two days after the drama in Germany, the alternatives for the future are beginning to be somewhat more clear.

On the non-socialist side, it is obvious that CDU and CSU will nominate Angela Merkel as their candidate for chancellor the coming Monday. Bavarian PM and CSU Chairman Edmund Stoiber evidently want’s to be part of the team, and is busy negotiating the conditions.

It’s also clear that the aim is to form a coalition government between the CDU/CSU and the liberal party FDP. In a way, the FDP has cleared the way for this by making clear that its parliamentary leader Wolfgang Gerhardt will emerge as the contender for the position of foreign minister. He is widely seen as a safe pair of hands on these issues.

On the other side there is more of drama. Tensions inside the SPD was illustrated when left-wing former SPD Chairman and finance minister Oscar Lafontaine left the party.

And it’s clear that the SDP will not campaign together with the Greens in any sort of way. Suddenly, there is no love lost between them.

A subtle reason for this is that Gerhard Schröder can’t really combine his motives for going to early elections with a continued commitment to a red-green coalition. He claimed – rightly! – that it would be impossible for a red-green government with a CDU/CSU majority in the Bundesrat second chamber in which the state government are represented.

This argument, taken seriously, rules out a red-green coalition even in the event of the SPD and the Greens achieving a majority in the Bundestag after the election.

The only credible alternative in such a case would then probably be a grand coaliton between the SPD and the CDU/CSU. No one really wants to talk about it, but that seems to be the true alternative to a government between the CDU/CSU and the FDP.

So oder so – we are heading for a rather dramatic political change in Germany. It will have repercussions throughout Europe.

Historic Red Green Collapse

Home | Deutsche Welle

The elections in Nordrhein-Westfalen – the biggest state of Germany, with 18 million inhabitants – turned into catastrophy for the social democrats SPD and the red-green coalitions in Dusseldorf and Berlin.

SPD registred their worst election result in the state for 50 years, and now have to leave the state government they have been in for no less than 39 years. It’s quite something.

There is little doubt that what proved the undoing of the red-greens was their failure to deliver on their promises on employment. In the industrial hearth area of Germany, unemployment remained very high. In its true bastions, the SPD failed on its number one issue.

They could not give convincing answers to the worries that people had for the future in our increasingly open and increasingly changing world. Their old stories had no relevance in a new situation.

In a surprise move, Chancellor Schröder said that he will now seek new federal elections instead of the slow march to an almost certain political death in the regular September 2006 elections. He obviously made the assessment that the aftershocks of the NRW election would not only tear his SPD apart but would also make it de facto impossible to conduct government policy in the coming year.

It’s not entirely straightforward under the German constitution how this can be done. A similar move was done in 1982, but wasn’t entirely uncontroversial. We’ll see.

A quick opinion poll just hours after the announcement on new federal election indicated that 67 % thought it was a good idea, and that 70 % believed it was going to work out to the benefit of the opposition.

What we have seen in Nordrhein-Westfalen tonight is thus in all probability the beginning of the end of red-green rule in Germany with important ramifications for all of Europe.

But nothing can be taken for granted. The opposition in CDU and CSU was taken by surprise along with everyone else, and will now have to agree very fast on a number of issues.

The first and most important is who will be their candidate for chancellor.

In all probability, it will be the CDU leader Angela Merkel. A girl from former East Germany, her constituency is as close to Sweden as one gets.

It’s only a question of how long it will take for Bavarian Prime Minister Edmund Stoiber and CSU Chairman to announce that he support Angela Merkel. The sooner, the better.

But then CDU and CSU has to come together on a credible and clear programs for reforms in Germany and Europe. Tensions between the two parties on this have been much too obvious during the past year, with the CSU being more reluctant to face thre though issues that have to be tackled.

Now, these tensions have to be overcome if the momentum from tonight shall be carried forward to and during a federal election campaign sometimes during the autumn.

And it will also be of importance to see how the SPD decides to shape its political profile during the coming campaign. The strident anti-capitalist message launched in the NRW campaign obviously did not help, but that’s no guarantee that this neoleftist approach will be abandoned.

It will be an unusually interesting summer in Germany.

The Middle East in the United States

Aljazeera.Net – Sharon to meet US Jews on Gaza plan

As one opens The New York Times this morning one encounters no less than two full-page ads in which different Jewish organisations is welcoming Israeli Prime Minister Ariel Sharon as he arrives here.

Sharon himself will not visit the White House – he’s here to get support from the Jewish organisations for his plans to disengage from Gaza – but his advisors will be busy having talks.

The reason is that on Thursday it is Palestine President Mahmoud Abbas that will be the guest of President Bush. It will be a most important meeting.

There is a clear need to give a stronger impetus to the work towards peace in the region.

Both Ariel Sharon and Mahmoud Abbas have been forced to devote a large part of their energies the last months towards controlling the respective fundamentalist forces in their societies. It’s not been easy, but it’s moving in the right direction.

In Palestine, everything is now focused on the July 17 parliamentary election.

Judging by some of the local elections held, Hamas is likely to do rather well in these. This is also resulting from a perception that, once again, Mahmoud Abbas might be let down by Washington and Tel Aviv in his search for peace.

This makes the Thurday meeting in the White House extremely important. It is important that President Bush, in the same way as he went far in demonstrating his support for Prime Minister Sharons disengagement plan, is ready to announce concrete policy steps to support the Mahmoud Abbas policy of reconciliation, reform and peace.

So, this week the politics of peace in the Middle East will be played out here in New York and Washington. Sharon and Abbas will be dancing around in different circles.

Europe is slightly at the sidelines. But there is a much higher degree of consensus between Washington and Brussels on policy than was the case a year or so ago.

Let’s hope that things can be moved forward.

The New World: Gotland versus China

Navy Times – News – More News

Soon, we will see a submarine of the Swedish navy transiting the Panama Canal for the first time ever.

It’s part a deployment that vividly illustrates the new global strategic realities and the discreet role that even Sweden plays in these.

The submarine Gotland is on its way from the Swedish naval base area of Hårsfjärden outside Stockholm to the vast US navy base in San Diego in southern California. It left on May 12th, and is expected in San Diego in mid-June.

Its journey is part of a much bigger story.

Back in the days of the Cold War and the Soviet Union, the role of the security policy of Sweden was fairly obvious, although not often explained to public opinion.

We built impressive military forces to defend ourselves, not the least against a Soviet attack across the Baltic. And the submarine force was a very crucial part of that effort.

Over the decades, we developed, built and operated what was probably the very best submarines in the world for the sort of shallow waters that the Baltic is. They were – and are – truly formidable systems.

We also played a more discreet role in intelligence gathering and intelligence exchange. The island of Gotland was a solid intelligence gathering platform.

Now, the world has changed beyond recognition. And the role of Sweden is changing fast.

The journey of Gotland is intimately related to the military rise of China and the nervousness this causes in the US.

China is busy buying advanced submarines from Russia and building up advanced capabilities in this respect.

It has already bought four Kilo-class submarines, designed by the Rubin design bureau in St Petersburg and mostly built at the Admirality yards in the same city.

Now, a further eight submarines of the 636 class – a more advanced version of the Kilo – will be delivered. They are also equipped with advanced anti-ship missiles in addition to its torpedoes.

Again, it’s the Admirality yard in St Petersburg that are building, and they are tested out in the waters of the Baltic.

The US Navy got really scared about the capabilities of modern conventional submarines also when they exercised against the Swedish submarine Halland in the Mediterranean some years ago. Their defences simply didn’t work against advanced systems like this.

And now they see the Chinese starting to build up capabilities that over time might become as capable and as threathening.

This will have profound strategic implications. If US aircraft carriers can’t get sufficiently close sufficiently fast to Taiwan, they can’t defend the island. The threat from Chinese submarines might force them to stay at a distance, or to go much slower.

It changes the entire political and military equation in the area.

That’s why the US asked Sweden to borrow a submarine to start to train against the Chinese threat they see emerging out of the shipyards in the Baltic.

Gotland will soon operate under Swedish flag as part of the command of Submarine Squadron 11 in San Diego. It will work with units of the US Third and Seventh Fleets in the Pacific in order to train their skills in meeting the emerging threat.

It’s a truly unique assignment that should be seen against the background of the huge strategic shifts underway – and the sometimes discreet way in which also Sweden is part of these.

The island of Gotland was of great strategic importance in the old world. Now the submarine of Gotland is of obvious strategic significance in the emerging new world.

China, the Internet and Democracy

Xiao Qiang: The Development and the State Control of the Chinese Internet :: China Digital Times (CDT) 中国数字时代

Building a new Chinese Wall in cyberspace is proving to be a rather mammoth undertaking.

Nevertheless, this is what the authorities in China are trying to do. Very large resources evidently goes into this effort, but ultimately it seems bound for failure.

Xiao Qiang is Director of the China Internet Project at the University of California in Berkeley, and recently detailed his views on the ongoing Chinese efforts.

It’s interesting in its details – but even more in its conclusions.

Eventually, says Xiao Qiang, the attempt will fail, and the spreading of information through the Internet will help to facilitate the transition of China to a more open and democratic society.

That’s when the real peaceful rise of China will start!

We have seen what 20 million people of Taiwan can achieve in a free and democratic Chinese society.

In the rest of China, there are app 65 times as many people.

Think of 65 Taiwans in the global economy, and today’s trade disputes over T-shirts will look like peanuts.