The Euro Crisis Explained
June 19, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
Check
June 19, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
Marco Rubio, a Republican who is the junior senator from Florida, has a full head of thick black hair and a movie star’s baby face. He speaks passionately and argues persuasively. Just forty years old, he has the youthful glamour of a Kennedy, with an attractive wife and four children. Tea Party activists love Rubio, and he is surely the most prominent Hispanic Republican in America. His longtime political mentor, Al Cardenas, who is the former Florida Republican state chairman, thinks Rubio’s most winning quality is his humility: “He’s the kind of young man you want as your own son.” Rubio’s parents immigrated from Cuba during the Eisenhower years, and, in his first speech on the floor of the U.S. Senate, in June, Rubio sounded a little like a certain former junior senator from Illinois, who soon went on to bigger things. “We should never forget who we Americans are,” he said. “Every single one of us is the descendant of a go-getter. Of dreamers and of believers. Of men and women who took risks and made sacrifices because they wanted their children to live better off than themselves. And so, whether they came here on the Mayflower, on a slave ship, or on an airplane from Havana, we are all descendants of the men and women who built here the nation that saved the world.”
National Republicans say openly that Rubio is a top contender to be the Party’s 2012 Vice-Presidential nominee. He could, they suggest, secure victory for the Party in Florida and win over Hispanic voters in other states, many of whom have been angered by the G.O.P. Presidential candidates’ harsh positions on immigration. Political betting markets list Rubio as many times more likely than anyone else to be the nominee. “Rubio is our superstar,” Ed Rollins, a former Presidential campaign manager for Ronald Reagan, Mike Huckabee, and Michele Bachmann, says. “He would be my first choice. My premise is that if you can add someone to your ticket that gives you a state you don’t have you’re way ahead of the game. No Republican can win without Florida.”
But other Republicans worry that straight identity politics (Republicans need to win over Hispanics; Rubio is Hispanic; Rubio is our savior) might not work in their favor in this case. Rubio’s positions on immigration are to the right of those held by most Hispanic Americans. And these views have helped lead him into a war with Univision, which is the dominant Spanish-language media outlet in the country, and which champions immigration reform. Many national Republicans have stood by Rubio in that conflict, but it is politically risky to fight with a network that has as much influence as Univision and, more important, it is perilous to maintain positions on immigration that anger the majority of Hispanics. Because Rubio comes from the small Cuban community, whose members have long been granted automatic citizenship—as political exiles, not as immigrants—he risks being perceived by Hispanics as an out-of-touch élitist. Earlier this year, the conservative columnist Ruben Navarrette wrote on CNN.com about the political dilemma faced by Rubio and his party: “Marco Rubio is the Republican Party’s Superman. And the immigration issue, if not handled correctly, is his kryptonite.”
Rubio’s fight with Univision began in early July, when Gerardo Reyes, the chief of the network’s investigative unit, called Rubio’s older sister, Barbara Cicilia. Reyes said he had learned that, more than two decades earlier, her husband, Orlando Cicilia, had been convicted as part of a drug-trafficking ring that paid off cops and sold cocaine by the kilo. Other members of the ring had murdered and dismembered a government informer. Barbara said that her husband had never been arrested, and hung up the phone.
But, as Reyes knew, in 1989 a jury had found Cicilia guilty of possessing large quantities of cocaine and marijuana and of travelling to several states to sell and deliver drugs. He was sentenced to twenty-five years in prison. After he was paroled, in 2000, Rubio’s parents went to live with the Cicilias, in their new home; Rubio’s father died in 2010, but his mother still lives there. Cicilia has not been actively engaged in Rubio’s political campaigns, but the night Rubio was elected speaker of the Florida House of Representatives, in November, 2006, he joined the family on the stage. When Rubio ran for the Senate, in 2010, Cicilia’s teen-age son was his travel aide. Orlando Cicilia was on the stage again when Rubio declared victory.
The reach of Univision is often underappreciated. It is watched regularly by two-thirds of all Hispanic television viewers in the U.S. In Los Angeles, Miami, Houston, Dallas, San Antonio, and Phoenix, its stations’ newscasts rate higher than those of their English-speaking competitors. Some nights, the network’s national ratings exceed those of ABC, CBS, Fox, or NBC. And the audience is growing, in part because of demographics. Today, fifteen per cent of Americans are Hispanic; in 2050, the percentage will have doubled. According to Univision’s news president, Isaac Lee, the network is openly committed to “pro-Hispanic” immigration reform, and it has a particular slant on the news: a dog biting any man is not a story, but a dog biting a Hispanic man is. Sergio Bendixen, perhaps the leading Hispanic public-opinion researcher in the U.S. and Latin America, says that Univision is the most respected institution among Hispanics in the country, ahead of the armed forces and the Catholic Church. “It is considered to be the institution that protects Latin-Americans in the U.S. and fights the institutions that abuse them,” he says…
At the center of the violent unrest in Syria stands President Bashar Assad, the man who has ruled the country since 2000. Today Assad is almost universally seen as a bloodthirsty tyrant. He unleashed his army against his own population after the Arab Spring over a year ago, and since then has presided over thousands of civilian deaths. His name is grouped with other recent—and notorious—Arab dictators who have been overthrown, such as Khadafy, Mubarak, and even Saddam Hussein.
But he wasn’t always seen this way. Assad came to power amid hope and anticipation, with many Syrians and outside observers believing he would be a leader who could help loosen up the inert, stultifying Syrian system. Although it seems shocking now, his arrival ushered in a time of openness dubbed the “Damascus Spring.” Assad had a far different pedigree than the men he has come to resemble: He was, relatively speaking, normal, an ophthalmologist educated in London, the second son of Syria’s longtime ruler Hafez Assad. Bashar was an intellectual, not noticeably ambitious, even a bit of a computer nerd.
I should know because I met with him on a regular basis between 2004 and 2009, spending more time face-to-face with him than perhaps any other American. I witnessed his transformation first-hand, as he evolved from a potential agent of reform to a repressive dictator with his own people’s blood on his hands.
His story, and the recent hardening of Syria’s government against its own people, offers a stark illustration of how autocrats can ultimately be captured by the systems that they notionally control. And to understand how the conflict looks from within the regime—the view from Bashar’s seat, as it were—suggests a very pessimistic outlook for the peaceful kind of resolution the international community hopes to bring about.
When Assad officially took the constitutional oath of office on July 17, 2000, in Damascus, he delivered an inaugural speech that was remarkably enlightened by Syrian standards. His father had ruled Syria for 30 years by building a security state that controlled virtually all aspects of society. Bashar’s speech was clearly intended to change some elements of this, especially economic ones. Remarkably, it directly criticized some of his own father’s past policies.
Hafez had been the quintessential Middle Eastern strongman, having seized power in a coup and then built up his country’s military-security apparatus to maintain himself, his cronies, and his Ba’ath party in power. In doing so, he tacitly offered (or demanded) a Faustian bargain with the Syrian people: In return for their subservience, if not obeisance, he would provide domestic stability of a kind that Syria had not experienced in its politically turbulent past since independence in 1946.
Bashar wasn’t supposed to be the successor at all. His older brother, Basil, was the putative heir being groomed to succeed the father. Bashar, on the other hand, was the licensed ophthalmologist who had studied in London. When Basil died in a car accident in 1994, Bashar returned from London and nurtured a relationship with elements of the Syrian intelligentsia. Bashar was chairman of the Syrian Computer Society; he reveled in the technological toys of the West and liked Western music. He brought into the government a number of members of the computer society, Western-friendly technocrats who were generally thought to be reformers.
His inaugural speech conveyed clear ideas on how Syria could move forward: The economy and educational system needed an extensive overhaul to help the country find a niche in the international economy. It was ambiguous, even evasive, on the prospects for political reform along a more democratic model, but it was still greeted with enthusiasm by people hoping for more political openness.
And the openness did follow. The seven to eight months after Bashar took office—the period dubbed the Damascus Spring—were a time of a noticeably more open political environment marked by general amnesties to political prisoners of all persuasions, the licensing of private newspapers, a shake-up of the state-controlled media apparatus. Bashar discarded the personality cult that had surrounded the regime of his father, and allowed political forums and salons in which open criticism and dissent were tolerated.
The regime, however, appeared to be caught off guard by just how fast things changed. Civil society organizations and pro-democracy groups arose, and the level of criticism directed at the government grew quickly.
Diplomats in Syria and analysts at the time believe that an old guard still in the regime—stalwarts loyal to his father, Hafez, especially in the military-security apparatus—warned Bashar that too much of this openness would endanger his power base. By the time I met Assad for the first time in 2004, the Damascus Spring had given way to a winter of retrenchment, at least politically. The newspapers had been shuttered, the political salons closed, and a number of prominent pro-democracy activists had been re-imprisoned. Bashar was still promoting economic modernization, but pointed out that it was difficult to reform a political system quickly in an environment as threatening and unstable as the Middle East…
If people are hungry, provide food at prices they can afford. If they need fuel to cook it, or perhaps to bring their crops to market, give them a break at the pump. What could be fairer or more straightforward?
What, indeed. Governments all over the developing world have been seduced by the populist logic of subsidizing consumer necessities. The approach was especially alluring in centrally planned economies (including hybrids such as China and India), where prices didn’t reflect costs to begin with. And, of course, subsidies for petroleum proved to be as Arab as hummus for the oil exporters of the Middle East, where citizens have come to think of fuel at circa 1979 prices as a birthright.
If subsidies are good for the poor, why not let everybody else in on the deal? That’s a formula for multiplying the waste — subsidies reduce prices below cost, after all, artificially increasing demand and, where the subsidies are borne by the producers, undermining supply incentives. Nonetheless, extending eligibility to include both middle-class and business users has, more often than not, proved irresistible.
The catch, of course, is that few developing countries can really afford the drag on efficiency or budgetary cost. Case in point: Egypt, which devotes an astounding 10 percent of GDP to subsidies for food and fuel – both of which it must import. Whoever wins the presidential election runoff this weekend will thus face the unenviable task of prying both the middle-class and powerful business interests from their accustomed perquisites.
It needn’t (and probably shouldn’t) be done overnight; among other problems, that would spike inflation, which Egypt can’t afford, either. The big question is whether the new government will have the will and the way to manage it at all. Much, alas, is at stake here: Egypt’s failure to confront the subsidy issue would put at risk the gains of two decades of growth in which GDP per capita, measured in terms of purchasing power, almost tripled.
As you might have already guessed, subsidy withdrawal can be harmful to health. Back in 1977, when Egypt was effectively bankrupt, Anwar Sadat decided to let food prices rise and Egyptians took to the streets. Days of rioting and some 160 deaths later, Sadat changed his mind.
Apparently, the passage of time hasn’t made the process any safer. Yemen’s initiative to reduce fuel subsidies in 2005 led to riots that left dozens dead; the decision was quickly reversed. Today, Yemen’s transition government must finance fuel subsidies equal to nine percent of GDP — the highest fuel subsidy burden in the world.
It was much the same story in Nigeria, where the cash-starved government lifted fuel subsidies this past January and then quickly compromised after the announcement was countered with a general strike. The issue is far from settled, though: There are press reports that the government is so hard up for cash that it hasn’t paid gasoline marketers for subsidized deliveries since the beginning of 2012.
None of this bodes well for Egypt’s next president, who will be caught between conflicting economic priorities from the get-go. One the one hand, he must make headway in meeting the expectations of middle- and lower-income Egyptians who resent the fact that a disproportionate share of the (very substantial) fruits of growth under Mubarak ended up in the hands of cronies. Raising the price of bread and gasoline is hardly a way to win them over. On the other hand, the failure to cut the budget deficit over the next few years might well leave the economy broke and stagnant.
Egypt made it through the global recession in good shape, but stumbled badly in the wake of the revolution as tourism collapsed and investors (domestic and foreign) put their plans on hold. To bring back growth, the new government will need to woo the people who can vote with their checkbooks. And a critical step in that direction would be to spell out a credible plan for containing spending — a virtually impossible task without reducing subsidies, which have ballooned over the years to absorb more than a quarter of the government budget.
Actually, the most realistic path to investor confidence runs through Washington: There’s no way Cairo will be able to lure back private investors unless it can win a vote of confidence (and a multibillion dollar line of credit) from the IMF and other multilateral lenders. While the IMF won’t hold all the cards in the coming negotiations — the rich countries it represents have a strong interest in stabilizing Egypt — the Fund will surely insist on a believable plan to slow the hemorrhage of foreign currency from the Egyptian Central Bank before it throws good money after bad. And I can’t imagine any plan passing the laugh test that doesn’t include cuts in subsidies…
View From The Left
June 19, 2012
Via AJC
View From The Right
June 19, 2012
This image has been posted with express written permission. This cartoon was originally published at Town Hall.
