View from abroad: Germany under more fire as Europe takes a summer break (Originally published 25/07/2015 at Dawn.com)

Fortunately, after a gruelling six months, Europe will soon be on vacation. The half-year of anguished and angry debate over the Greek financial crisis has left the 28-nation European Union bruised and battered. A deal of sorts has now been done to avert a Greek exit from the Eurozone. But, Europe’s morale is low, emotions are running high and nobody likes anyone any more.It’s time for a break. In time-honoured fashion, EU leaders are indeed heading off for a holiday to refresh, revive and re-energise. As of July 1, tiny Luxembourg is in the EU chair. But because August is Europe’s “dead” season, the EU will only come to life in September, giving Luxembourg a relatively short time at the helm.But, it doesn’t matter. In fact, nothing and no EU country really matters — except Germany.If there’s one thing that has become clear over the last half-year, it’s that Germany rules Europe — even, according to some, Germany is Europe or at least wants to shape Europe in its image.And not everyone likes it. Germany’s tough line on austerity and refusal to countenance debt relief for Greece may have won the admiration of some countries like the Netherlands, Finland and Slovakia but others are critical of Berlin’s unashamed bullying of Athens.Importantly, a majority of European and American economists — including experts at the International Monetary Fund (IMF) — have made clear that Germany is on the wrong track, that a country which is already on its knees cannot be expected to immediately stand up tall and become even taller. In other words, Greece cannot be expected to pay its creditors and also notch up high economic growth rates.What a mess. Much-respected author Philippe Legrain has voiced his anger at the “brutal, vindictive and short-sighted exercise of German power against Greece”.“Let’s be clear,” warns Legrain: “What Berlin and Frankfurt [the seat of the European Central Bank] have done to Greece, they can — and they will — do to others.”Others are equally tough. Renowned economist and Noble prize-winner Paul Krugman has been equally vocal in his criticism of the austerity that has been imposed on Greece by Germany and others.There’s no doubt: Germany is the monetary union’s dominant economy, and its chancellor is the region’s dominant leader, with virtual veto power over Eurozone-wide decisions. That puts the spotlight squarely on Angela Merkel.Much of the critics’ ire is in fact directed at Merkel, who is viewed by many as a symbol of all that is harsh about Germany. But in truth, the German who everyone loves to hate is the hard-nosed finance minister, Wolfgang Schauble, who once said that Greece “cannot be a bottomless pit”.German public opinion appears to be staunchly behind Merkel and Schauble with many Germans arguing that Greece is unworthy of their aid. “NEIN”, blasted a headline in the tabloid Bild earlier this year. “No more billions for greedy Greeks!” it insisted.What rankles for many is that Merkel and Schauble have played the unrelenting taskmasters, treating Greeks not as partners, but as spoiled children who could be set right only by the rod.There has even been talk of a Europe divided along religious lines, with a German Protestant belief in austerity and thrift contrasted with a Catholic/Orthodox tolerance for sinners — provided they repent.The Syriza party of Greek Prime Minister Alexis Tsipras is not alone in bridling under German diktat. Gaining popularity in Spain, where unemployment is 22.5 per cent, is the leftist political movement Podemos, which also seeks a fairer deal from the rest of Europe. In Italy, Beppe Grillo, leader of the anti-establishment Five Star Movement, has called for a referendum to decide if Italy should remain in the monetary union.There is no doubt that months of EU acrimony since Tsipras’s election in January as Greek premier at the head of an anti-austerity coalition has tarnished the bloc in the eyes of both its own citizens and globally.The bail-out agreed for Greece has come at a great cost to the EU’s reputation both at home and abroad. At the end Merkel tried to play the middle ground but Schauble will be seen by some critics as the true villain of this piece.Significantly, criticism — and envy — of Greece is not limited to Berlin’s conduct during the Greek crisis. Berlin is also under fire from its European partners for being too eager to cash in on last week’s nuclear deal with Iran.As this column underlined last week, Europeans are eager to get a piece of the economic action in Iran. Not surprisingly given Berlin’s commercial ambitions and outreach, the first EU policymaker to make his way to Tehran was Germany’s Vice Chancellor Sigmar Gabriel, ahead of the EU’s Foreign Policy Chief Federica Mogherini, French Foreign Minister Laurent Fabius and other assorted European foreign ministers.Germany’s EU partners may slam Berlin for its economic bullying and high-handedness. But they also admire the country for its strong and effective economic diplomacy.It appears that when it comes to Germany, Europeans face an age-old dilemma: they find it difficult to live under Germany’s thumb, but they can’t really live without Berlin either.

View from Abroad: Europe and the new world order (Originally published 11/07/2015 at dawn.com)

Entangled in the Greek debt crisis, few European policymakers had the time or interest this week to pay attention to the summit talks in the Russian city of Ufa between the leaders of Brazil, Russia, India, China and South Africa (BRICS).True, Europe has its hands full with Greece and the looming possibility of a Greek exit from the Eurozone. But the world doesn’t stop for Europe. And pretending that the BRICS and their self-confident leaders don’t matter — or matter little — is not an option.Discussions about the rapidly-transforming world, the role and influence of the BRICS and Europe’s relations with the emerging powers appear to be off the European Union agenda. For now, the focus is rightly on the existential threat posed by Grexit, the acrimony the Greek crisis has triggered across the EU and the worsening relationship among Eurozone leaders.Solving the Greek problem should of course take priority. But Europeans know that more is at stake. Italy’s Prime Minister Matteo Renzi has so far been most vocal in signalling his fears that the fury unleashed by the difficulties in Greece is damaging the very existence of the EU. But this thought is also in many other minds. If Europe can’t get its house in order, it really does run the risk of becoming irrelevant on an increasingly crowded global stage.For the moment, most Europeans seem to fall into two categories: those who fear the rapidly-changing world order and the increasingly long list of nations clamouring for a stronger role on the world stage and those who hope that if they look the other way, firm up their bonds with the United States, the world won’t change too much and the BRICS will gradually fade away.There are some, wiser, people in the middle: they may not be enthusiastic about the changes being made to the global status quo; but they also know that times are changing fast and that Europe needs to adapt, adjust and accommodate.It was on the advice of such people that despite strong pressure from the US not to do so, several EU countries decided to join the Asian Infrastructure Investment Bank (AIIB) set up by China.While many Europeans voice fear that China is “buying up” European assets, cooler heads are urging the EU to join forces with China’s ambitious ‘One Belt, One Road’ transport networks to boost domestic growth and jobs.Similar arguments for and against cooperating with emerging nations are likely to come to the fore as Europeans discuss membership of the New Development Bank (NDB) being set up by the BRICS to fund projects in member countries.Headquartered in Shanghai, the bank is expected to be operational by end of 2015. Once fully operational, it will become an alternative financing source for the BRICS nations and other emerging markets.Like the head of the AIIB, the first chief of the BRICS bank, India’s K. V. Kamath has been quoted as saying that the NDB sees other multilateral lending institutions such as the International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB) as partners rather than rivals.And yet many continue to be suspicious. The US and Japan have not yet joined the AIIB and many EU policymakers continue to voice fears that the new banks will fall short of high Western standards of transparency and accountability.The BRICS have made clear that they don’t really care. The Old Guard is welcome to come on board, but the world is moving on and they won’t stop for the laggards.Russia, given its tense relations with the West following the crisis in Ukraine and the annexation of Crimea, has taken the toughest line in its dealing with Europe and America. As Foreign Minister Sergei Lavrov underlined in Ufa, emerging nations represent a “new polycentric system of international relations” and demonstrate new global centres of power.As he shook hands with his Chinese, Indian, South African and Brazilian counterparts, a beaming Russian President Vladimir Putin made clear that he was far from the sad and isolated man that the West wants him to be.And it’s not just about the BRICS. An array of newly-empowered nations and groupings are challenging Europe and America’s dominance of the post World War II order. Mexico, Indonesia, Korea, Turkey and Australia are part of MIKTA which claims to act as a bridge between old and new powers.New Zealand says it is the champion of “small nations” without whose support nothing can be achieved on the global stage. The Group of 20 remains relevant as a forum which brings together industrialised and emerging countries.And then there is also the Shanghai Cooperation Organisation (SCO) which EU and Nato policymakers also tend to shrug off as an impotent “paper tiger”.They shouldn’t. As India and Pakistan set out on the road to membership of the SCO, it is clear that while the security organisation does not see itself as a rival to Nato, it does intend to make its voice heard on global security challenges.Underlining just how significantly the world has changed, the five BRICS countries and the six SCO members which include China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan — joined by India, Pakistan, Afghanistan, Iran and Mongolia which have observer status — held a joint summit in Ufa.The Greek crisis was on the BRICS agenda of course. While Europe may not like the new world out there, emerging nations know that in an interconnected and interdependent world, what happens in Europe affects them. And that a failed Europe is in nobody’s interest.

Greek crisis endangers Europe’s heart and soul (Originally published 04/07/2015 at dawn.com)

This column is not about the Greek Eurozone crisis. How could it be — what more would I or indeed anyone — be able to add to the reams and reams of stuff that has already been written, rewritten, said and resaid about the topic?The facts are well known: Greeks will vote on July 5 in a snap referendum that Prime Minister Alexis Tsipras says will give the country’s long-suffering people the final say on whether he should accept the tough terms of a cash-for-austerity deal from creditors at the European Union, the European Central Bank and the International Monetary Fund.Tsipras wants Greeks to say no, apparently arguing that creditors are bluffing and will not take the catastrophic step of ejecting Greece from the club of 19 nations that use the euro currency.The creditors say they’re ready to push the nuclear button. Enough is enough. Throwing Greece out of the Eurozone won’t matter that much. It’s a small economy, the impact will be limited. Eighteen countries will still be in the Eurozone. Life will go on.Of course it will. Life always goes on. After wars, earthquakes, tsunamis and suicide bombings, life goes on. People come out of the crisis, pull up their socks, get back to work.But think about it: life is never really the same ever again.So, Grexit won’t bring Europe to its knees. The Eurozone will not unravel, neither will the European Union. The other eighteen countries of the Eurozone will soldier on even if Greece exits the currency bloc.Also worth noting: even if it does leave the Eurozone, Greece will still be a member of the 28-nation EU.But let’s make no mistake: If Greece is ejected from the Eurozone, it will — even further — destroy the heart and soul of this continent.In fact, the soul of Europe is already half-destroyed. This protracted crisis is taking its toll on Europe’s self-image, self-confidence, its links with ordinary Europeans and its role and influence on the global stage.Born in Asia, grown up in Europe, I have always admired my adopted continent for its ability to put past animosities behind, to work together for the common good, to make sure war never erupts again in our lifetime and beyond.I love the variety and the diversity of Europe, the freedom to travel, work and live in any of the 28 countries, the freedom to say and do what I like, without raised eyebrows or reproachful, critical glances.But Europe is changing. The last 70 years since the end of World War II have been peaceful — but the EU showed its feet of clay during the devastating and blood-soaked Balkan conflict.Tolerance and human rights are universal values but Europe has been their most determined defender. And yet as thousands of hapless refugees arrive on its shores, Europe is showing an indifference which beggars belief.As the Far Right narrative of hatred and racism becomes ever shriller, the voices calling for peace and calm are drowned out. No politician has the courage to say that Europe needs immigration and desperately needs foreign skills and talent.The debate over Greece has polarised Europe, splitting it in half. Those in favour of austerity argue that Greece spends too much, doesn’t save enough money and doesn’t tax its rich people as much as it should.They want Athens to cut spending, slash pensions and increase taxes.Others argue equally powerfully that a country in recession cannot be punished even further and that what Greece needs above all is a fiscal stimulus to get back growth and create some desperately-needed jobs.Greek Prime Minister Tsipras and his Finance Minister Yanis Varoufakis have been engaged in a seemingly un-ending battle of wills with their Eurozone colleagues for months.I have lost count of the number of marathon discussion sessions held so far, the constant tweeting by the key players and the false dawns that a deal was just around the corner.But something strange appears to have transpired over the last few days. Initial sympathy for the Athens duo appears to be fading, with more and more insiders warning that Tsipras and Varoufakis have lost the plot.German Chancellor Angela Merkel, whose nation has lent more to Greece than any other in the European Union, is often seen as the architect of Greek austerity. But some of the countries that are now coming down hardest on Greece are the smaller, poorer Eurozone nations that have accepted the bitter pills of austerity and say the Greeks should do so as well.As the debate grinds on in Brussels, Athens and other capitals, it would be heartening to know that the interest of the Greek people was top of the EU and the Eurozone agenda.It isn’t. Europe, which was once about the people, the citizens, the demos, is now transformed into an argument about money. It’s about austerity versus growth.My question is: how will Greece ever get back on track — ever start growing again — without the support, involvement and contribution of its people?

Bandung and a changing world order

For proof that the world is a much-changed place, look no further than last week’s impressive Asia-Africa conference in Bandung, Indonesia, marking the 60^th anniversary of the original Cold War era summit in the same city led by Indonesia’s then leader-Sukarno.The talk in Bandung six decades ago among representatives from twenty-nine Asian and African governments of Asian and African nations was of the role of the “Third World” in the Cold War, economic development, and decolonisation.The meeting’s final resolution laid the foundation for the nonaligned movement during the Cold War. The heady talk among leaders was on the potential for collaboration among Asian and African nations and their determination to reduce their reliance on Europe and North America.Fast forward to Bandung last week and replace references to the “Third World” with the more modern “emerging nations” and it’s clear that Asia and Africa have changed dramatically since 1955.The two regions – as well as Latin America – are simultaneously driving the transformation of the global landscape and thriving because of it.The mood may be morose in Washington and EU capitals – but Asia, Africa and Latin America are on a roll. Trade is booming – including between the three regions, investments are pouring in and an emerging middle class is changing social, political and economic lifestyles.Interestingly – and worth reflecting on – is the fact that much of the transformation is the result of China’s rise and its gradual but sustained emergence as an important regional and global actor.The West, especially the United States, is finding it difficult to adjust and accommodate the deep-seated paradigm shift in power taking place around it. That’s not difficult to understand given that the US as the current dominant global power has the most to lose from the shift of power to the East.But Europe also needs to come to terms with a changed world. Here in Brussels as the European Union prepares to hammer out a new European Security Strategy to replace the one written 12 years ago it needs to pay special attention to the myriad ways in which the world is becoming different, almost daily. And it needs to forge a new outlook on China and Asia.The world viewed from Europe is indeed violent, messy and dangerous. The EU faces a host of domestic problems – Greece, unemployment, and of course the deteriorating refugee crisis. Europe is surrounded as some say by a “ring of fire”: in the east by Russia and in the south, by a turbulent Arab world.But the EU should be wary of projecting its own morosity on other regions – and indeed of basing its assumptions of Asia’s future on Europe’s tragic, war-racked past.While Europe and its neighbours are in turmoil, the rest of the world is doing better than expected – and certainly better than 60 years ago.The economies of most of the African and Asian countries gathered in Bandung are booming. Steps are being taken to combat poverty, there were successful elections in Afghanistan and Indonesia – and changes are underway in Myanmar and Vietnam next year.Emerging countries are setting their own agenda, defining their interests, building partnerships and rallying together to forge a joint vision for the future.This time the talk is also of breaking the chains of colonialism – but of a different kind; today’s African and Asian governments want an end to the economic domination of the West and of Western insitutions.As the Bandung meeting pointed out last week, the focus is on establishing a new global order that is open to emerging economic powers and leaves the "obsolete ideas" of Bretton Woods institutions in the past.President Xi Jinping of China told the conference that “a new type of international relations” was needed to encourage cooperation between Asian and African nations.Indonesian President Joko “Jokowi” Widodo, the conference host, said those who still insisted that global economic problems could only be solved through the World Bank, International Monetary Fund and Asian Development Bank were clinging to a long-gone past.“There needs to be change,” he said. "It's imperative that we build a new international economic order that is open to new emerging economic powers.”In 1955, the 29 countries which met in Bandung accounted for less than a quarter of global economic output at that time; today they contribute to more than half of the world economy.Many of those countries, such as China, India and Indonesia, are now themselves at top tables like the Group of 20 and wield significant economic power.Indonesia’s Jokowi said the group was meeting again in a changed world but still needed to stand together against the domination of an unspecified “certain group of countries” to avoid unfairness and global imbalances.The creation of the China-backed Asian Infrastructure Investment Bank (AIIB) is one way in which emerging nations are challenging the Western-dominated economic stage. While the US has decided to stay out of the AIIB, many European countries have offered to be founding members of the new bank.Asia’s future will depend to a large extent on the economic future of China. And on relations between China and Japan.Tensions between Asia’s two biggest economies have flared in recent years due to feuds over wartime history as well as territorial rows and regional rivalry.Memories of Japan’s past military aggression run deep in China, and Beijing has repeatedly urged Japan to face up to history.In an encouraging move, Japanese Prime Minister Shinzo Abe and President Xi did meet in Bandung, prompting hopes of a cautious rapprochement between the two economic giants.Peace and prosperity in Asia hinge on cordial relations, even partnerships between the region’s leading powers. And who knows if China and Japan can sidestep their historical enmities, perhaps India and Pakistan could – one day – do the same?

The challenge of choosing a new WTO director general (Originally published 05/02/13)

The Doha round of trade talks has long dominated the agenda of the World Trade Organization (WTO). An urgent priority for the organisation’s 157 members, however, is to appoint a new director general to replace Pascal Lamy, the much-respected former EU trade commissioner who has led the Geneva-based trade body since 2005, and who is stepping down in August this year.Over the coming months, WTO members must also make sure that a ministerial conference in Bali at the end of the year can reach agreement on a small package of “early harvest” deliverables from the long-running Doha round. The focus is on clinching a deal on trade facilitation – a move that Lamy says could stimulate the US$ 22 trillion world economy by more than US$1 trillion – as well as on special measures for least developed countries.First, however, the WTO must select a new director general to lead the organisation for the coming four years, a task made more difficult by the continuing deadlock on Doha. The new man/woman who takes the helm of the WTO faces the challenge of revitalising the long-term trade liberalisation agenda while also ensuring short-term results in time for the Bali meeting.A changed global landscapeMuch has changed on the global economic stage since the Doha talks were launched in the capital of Qatar in November 2001. The world economic recovery remains fragile, protectionism continues to be a threat even as global economic inter-dependence grows, the Group of 20 nations is a more powerful force in global affairs (China joined the WTO in 2001) and so-called “new” topics such as investments and competition policy are now firmly on the trade agenda.The proliferation of regional and bilateral trade deals, meanwhile, continues to distract from the multilateral trade agenda – despite hopes that these agreements will be transparent and inclusive and become “building blocks” to boost global free trade.Nine hats in the ringGiven the challenges facing the WTO, it is heartening to see that candidates from nine countries have thrown their hats in the ring to succeed Lamy. Under WTO rules, members have until the end of May to decide on the right person for the job.It’s a great line-up. A majority of the candidates are from developing countries and, for the first time, three women are in the race. So far only men have held the WTO’s top post, and only one previous director general, Thailand’s Supachai Panitchpakdi has been from a developing country.The final set of nominees includes three candidates from Latin America: Roberto Carvalho de Azevêdo, Brazil’s current ambassador to the WTO; Anabel González of Costa Rica, who is her country’s current trade minister, and Herminio Blanco, Mexico’s former minister of trade and industry.From Asia, Mari Elka Pangestu, who is Indonesia’s Minister of Tourism and Creative Industry and was trade minister from 2004-2011, and current South Korean Trade Minister Taeho Bark have been put forward by their countries.Kenya has nominated Amina Mohamed, the country’s former WTO ambassador, while Ghana has presented Alan John Kwadwo Kyerematen, former minister of trade and industry.New Zealand’s Minister of Trade, Tim Groser and Ahmad Thougan Hindawi, former trade and industry minister of Jordan, are also vying for the position.The nine candidates have already addressed a closed-door meeting of the General Council - the organisation’s highest decision-making body outside of its ministerial conferences.The selection and appointment of the new trade chief will follow consultations to be held in April and May and the final selection will be made by consensus, no later than May 31. The nominee will take over at the WTO on September 1. Qualities neededChoosing the right man or woman for the job will not be easy. Of course, qualifications, experience and competence should be the deciding factors in choosing the new head of the WTO. But in the real world of horse-trading and strategic alliances, other factors – such as geography, gender and whether the candidate has held a ministerial post - will play an equally pivotal role.WTO selection procedures state that “where members are faced in the final selection with equally meritorious candidates, they shall take into consideration as one of the factors the desirability of reflecting the diversity of the WTO’s membership in successive appointments to the post of Director-General.”The top slots at the International Monetary Fund (IMF) and World Bank have traditionally been held by a European and an American, respectively, as the result of a “gentlemen’s agreement” between decision-making members of the two Bretton Woods organisations. This is the case at the moment, with France’s Christine Lagarde at the IMF and Jim Yong Kim from the US at the World Bank.Further complicating the WTO selection process is the fact that the search is also on for a new head for the United Nations Conference on Trade and Development (UNCTAD). Speculation is that an African will be selected for the post.The next WTO head must be able to drive forward an organisation which has lost much of its lustre in the last few years. He or she must be a champion of free trade, able to keep protectionism at bay and also play bridge-builder between the concerns of emerging economies and the priorities and interests of developed countries.On a personal level, the new WTO chief must be an honest broker but also a pragmatist who can adapt the organisation to new challenges.

The focus must be on personal skills and qualifications, passion and commitment. The new man or woman at the WTO must make the case for free trade, not for its own sake but because global trade is the motor of world growth and development and of jobs.

Let the best man/woman win the IMF job (Originally published 23/05/11)

Prepare for an epic battle over the appointment of a new head of the International Monetary Fund (IMF) following Dominique Strauss-Kahn's resignation as the organisations's managing director. Europeans are insisting the job should once again go to a European candidate. Countries like China, India, Mexico and South Africa, however, say it's time to end Europe's traditional grip on IMF leadership and appoint a representative from an emerging nation.The struggle for influence in global institutions between old and new powers has been brewing for many years. Newly-empowered emerging countries are impatient for a stronger say in economic global governance. They are especially adamant that the Bretton Woods institutions should reflect the emerging world's rising economic clout.There’s no doubt: Europe is currently over-represented in international bodies like the IMF and the World Bank. The cozy deal under which Europe gets to appoint the head of the IMF while an American leads the World Bank has also run its course. The point has been repeatedly made in the G20. There is no agreement, however, on the timing of the change-over to a new system.Strauss-Kahn’s resignation offers an early opportunity to move to a more modern 21st Century system for selecting top international civil servants. Appointments should be based on merit and qualification rather than nationality, a point made by many emerging countries and by Australia.As many EU governments have underlined, French Finance Minister Christine Lagarde is well-placed to become the next IMF managing director. But they are wrong to insist that Lagarde should get the job because she is European. The EU argument, presented among others by German Chancellor Angela Merkel and EU Commission President Jose Manuel Barroso, that the new IMF chief must be sensitive to Eurozone economic woes is unconvincing – and inappropriate.The next IMF head should not be seen as doing special favours to Europe. EU policymakers’ insistence that Europe has a historical right to the job sends the wrong message to those who complain that Europeans are unwilling to cede existing power and privilege to newcomers.At stake in this debate is Europe’s ability to adapt to life in a globalised world and its willingness to accept the shift of power from older, industrialised countries to the world’s new and dynamic emerging economies. It is advisable therefore to open up the IMF competition, focus on merit and qualification and let the best man/woman win.The issue of IMF leadership was also discussed at our roundtable debate "Taming the turmoil: New rules for global finance" on 19 May 2011 and will be tackled at our Asia-Europe conference on 21 June 2011.