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December 2010 Country Archive



There is....the good news

There is no horrible military threat hanging over the world, even though there is no universal peace. IRAN which has been heavily demonised doesn’t actually have any nuclear weapons - it is still not even established that this is what they are trying to achieve. Given the recent NATO meeting with Russia in attendance, it seems that any paper kite that flies above a certain height in Iran might now be in danger (according to the explanatory diagrams) of being shot down from several directions, including RUSSIA.

It is quite true that Israel sees the potential threat IF at some future time, IRAN actually goes down the nuclear weapons path. But next-door TURKEY who have been ‘next-door’ for 2000 years clearly do not feel threatened, even though Turkish Moslems are mostly Sunni not Shia like the Iranians – a sectarian difference of sufficient motive for murder in IRAQ. The wannabe Caliph, Osama bin Laden, told the Sunni of the world and his al Qaida followers, that the Shia are worse - a greater threat, than the Americans who invaded IRAQ, hence the Shia in Iraq (the majority) remain the victims of choice of ‘al Qaida in Mesopotamia’ hoping to ignite a holy war.

There is no love lost between Israel and Iran but it is far from obvious that Iran would launch its first rudimentary nuclear device, if it ever has one, to provoke Israel, who are believed in the wake of this Nato meeting, to have 80 such developed devices with missiles that work, and the best air force in the middle east. It severely strains credibility to believe the “Iranian threat”, but it does ensure that Israel is by far and will remain, the best armed force in the middle-east, which is their understandable objective.

NORTH KOREA a real rogue nuclear power (real not just because they behave like a rogue but also because unlike IRAN, they actually do have a nuclear weapon), is still capable of creating sizeable ripples, as our December Update on NORTH KOREA explains. But with this international bad boy despite the provocations, the US behaves responsibly and with great tact in the East Asian theatre, not least because North Korea has a powerful patron in China, which Iran does not.

Incidentally in the area of integrity, which is the more reprehensible –North Korea who signed the nuclear non-proliferation treaty and then publicly resigned to build a nuclear weapon, OR, Israel who signed nothing, said nothing and built an nuclear arsenal? Which of these nuclear states represents the greatest threat to peace, or is it the non-nuclear state, Iran? And where integrity is concerned, why does the US that calls all the shots, not require Israel to sign the non-proliferation pact, particularly after the sinister story of their involvement with Afrikaner South Africa, a close run thing which we have previously discussed?

Simply because both Israel and North Korea are known to have ‘the bomb,’ no-one is going to try to invade them. Same applies to Russia, only more so, and to any nuclear armed nation. If you were an Iranian pol, wouldn’t you have noticed the double standard - that the only way to be absolutely inoculated against invasion in this world, is to be a nuclear power?

The nuclear non-proliferation pact has not worked – Israel is evidence of that - it isn’t even to be mentioned in their context. India-Pakistan are other examples. Some new and original thinking is urgently required on behalf of sanity. Banning ALL nuclear weapons is just not going to happen.

It is extraordinary that the US in the brief history of the 21st century would be impartially judged, with the invasion of IRAQ, to have been so far this century the world’s major aggressor and danger, but happily under this president it is manifestly not a threat. Although it is reported that yet another carrier group (a fleet of warships, at the core of which is an aircraft carrier, currently there are twelve such fleets), is to be supplied to the US Navy, this appears to have far more to do with the effectiveness of the military-industrial lobby and a Congress rendered supine when faced with competitive ‘political patriotism’, than any actual perceived or imagined enemy. It seems a rather expensive way of delivering marines, basically assault troops, if their presence is required abroad.

So, as we see out the remains of 2010, potential or illusory military threats of substance, are not currently in prospect. How long can it have been since the world was not confronted with the threat of major war? So long, that is, as Israel doesn’t try to get away with a pre-emptive assault on IRAN, or North Korea invade South Korea when the western world is eating and drinking to festive excess.

......the bad news
That means that the worlds real problems are economic and here we see the great powers in disarray. The US wants to pump up its liquidity and does whatever it takes, notwithstanding the protests from such a staunch ally as Germany and a key player like China, both of whom as major exporters of course have a vested competitive interest. Those who support the Fed’s printing of money clearly fall into a different school of economics to the Germans, Chinese, etc, but in the absence of clear international treaties, nation states will always proceed in what they regard as the right direction for themselves. This particular spat is marginal to the world’s real economic problems which are quite unevenly about employment, about markets, about shoring up weak economies against the depredations of speculative Hedge funds and their ilk, making big bets on the financial collapse of smaller nations.

The USA and UK (but not Germany) both made the terrible mistake over years gone by in allowing a large part of their manufacturing capabilities to decline, being seduced by what was being called “Financial Engineering.” Mrs Thatcher in the UK once answered a question on TV about British engineering ‘withering on the vine’ by telling the questioner, that “We are in financial engineering, that’s what we do, the City of London, the envy of the world, blah, blah, blah!” Her successors were of the same stamp. The US just did it all on a bigger scale and London followed behind. Both have had cause to regret that the fundamentally dishonest banking industry, as it is now perceived, in its guise as a financial services industry, with its hands in everybody’s pockets, was given license (or if not given, purchased via it’s lobbyists), to overturn laws based on the carefully learned lessons of the 1930’s in seeing that financial speculators should be prevented from causing exactly the kind of crisis as appeared from 2007 until the present time.

How is it that at the end of 2010 after several such economic crises in the modern world, that the solutions are still not agreed upon? Back in the 1930’s it was the great liberal economist John Maynard Keynes who hit the spot with his formula of intervening with financial and economic measures to recapitalise the economy, which is what the US seems to now be doing, albeit by buying up their own debt. The US had early in the Obama presidency, pumped billions of USD of federal money in the classic Keynesian formulation, to enable labour intensive building projects, agreed with the individual States. Alone it was not enough, so now the new financial measures.

One of the outcomes of the Depression was in the US a very important piece of legislation named after its congressional authors, the Glass Steagal Act. (check it out at WIKIPEDIA) That did a pretty good job over a generation simply in preventing banks licensed to take deposits (High St banks), from the kind of casino investments that culminated in the corrupted mortgage market, and inventions such as ‘collateralized debt obligations’. After years of seeking its repeal, during the 66 years of its doing its job, the big Banks finally got it done in the dog days of the 2nd Clinton administration, with a benevolent Alan Greenspan presiding (who still “trusted” the bankers to do the right thing). A Republican majority in the Senate on Nov 12 1999 did the deed. A triumph for the lobbyists - a disaster as it turned out for the world.– the sluices were opened and down came the flood.

The classical opposition to Keynes and to Glass Steagal had been to leave it to the markets, which given ‘the right circumstances’ will solve the problems. But the very crisis was caused by the markets with the financial institutions unregulated, by the authorities failure to use the means available to them.

We still witness Short-selling of quoted stocks, which is nothing less than speculators declaring war on the owners of a targeted stock or bond, depending as it does on the paid-for renting of shares by fellow conspirators (as they would be described in criminal law), with the sole object or siphoning out value from the owners of the business, or in the case of Bonds, citizens of a country, and then trousering the proceeds.

It is far from satisfactory that after all this time the ‘experts’ do not agree on solutions, or the international institutions don’t exist, leaving the rest of us feeling like test-tube babies, lab specimens - or ‘cannon fodder’, in the old military context.

There was once a phenomenon called ‘trust’ which was held to be a key element in banking. It probably was applicable at the level of a bank branch manager with his account holders, but beyond that it was almost certainly a carefully nurtured fiction and entirely dependent on public belief in a system of government regulation.

At the level of retail banking and of service industry banking ie. business loans for specific concrete business expansions, etc; there is an obvious need, and is a good reason why this level of banking should be through a state-owned entity – the same reason that so many customers use the Post Office and National Savings schemes, trusted because completely divorced from speculative bets. Why not nationally owned retail banks (since the taxpayers have to guarantee their deposit holders)? Then there is the banking industry as it has evolved and which had to be rescued internationally by governments, because of ’bad bets’. That is the way of the financial industry who, given a longer leash as memories fade, will do it all again and looking at the measures put in place as a result of the rescue, it seems so obvious that the public interest requires the ‘high street banks’ as a service industry, to be hermetically sealed off from speculative adventures.

Of course governments had no alternative but to rescue deposit-taking banks, so before it all happens again, why is the lesson not learned to bar licensed banks and their executives under criminal law, from putting depositor’s funds at risk?

The Role of Financial Fraud
But whilst it is well understood that greed has always trumped trust, what has once again emerged, is the role of big-time fraud. Here we reproduce an ‘underexposed’ assessment by James Galbraith, son of JK and himself a considerable figure, made to the Subcommittee on Crime of the Senate Judiciary Committee, May 4, 2010.

“I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including “ rational expectations,” “market discipline,” and the “efficient markets hypothesis” led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.

Thus the study of financial fraud receives little attention. Practically no research institutes exist; collaboration between economists and criminologists is rare; in the leading departments there are few specialists and very few students.

Economists have soft-pedalled the role of fraud in every crisis they examined, including the Savings & Loan debacle, the Russian transition, the Asian meltdown and the bubble. They continue to do so now. At a conference sponsored by the Levy Economics Institute in New York on April 17, the closest a former Under Secretary of the Treasury, Peter Fisher, got to this question was to use the word “naughtiness.” This was on the day that the SEC charged Goldman Sachs with fraud.
This whole important evidence is at Galbraith May 4 sub Comm Crime RV.pdf

The GROUP of 20 has recently met – this is the group whom we think should replace the UN Security Council, as self-evidently they are much more appropriate than a governing Council made up of the ‘victors’ of a war that finished a lifetime - 65 years ago. Much of their deliberations this time necessarily related to the enfeebled world economy- to us it seemed that G20 meetings should be longer - and that reinforces the proposal that the G20 should be a permanent body, replacing the UN Security Council, particularly now that it is the world economy, not defence that has become the world’s primary area of concern

Russia: The Fulcrum of the World
This month’s Update sees a flurry of activity quite positive in world terms, particularly with Obama having thrown out the GW Bush plan to station anti-missile missiles in Poland and the Czech Republic, which obviously was offensive to Russia. Without yet knowing the compatibility of Russian with US technical equipment, it seems that there is a political unity about a combined anti- missile system. This puts RUSSIA and the Nato countries on the same side, if the world is faced with a rogue state using hostile rocketry.

However all this good work is at risk because in the United States, the political shifts in Washington are showing out as a Republican priority to make Obama a one- term president, by frustrating each and every action which could bring him credit which require a vote in the Congress. Thus US Republican party politics, seeking to make the US unmanageable by its elected president - who’d have thought it, look no further - now appear to have become the enemy of world peace, in terms of burying the Cold War and dealing with Iran!

North Korea
Even China must be tiring of its neighbour and client. There are after all more productive areas for China’s foreign policy than its spiky north eastern neighbour.

In this month’s report, even as the smoke settles we examine the momentous events of November on the Korean Peninsula, and hopefully render them accessible to comprehension, if not to ‘reason’. NORTH KOREA is in headlong pursuit of fissile material to expand its nuclear arsenal. It’s an important story.

Iran: Once we were friends
So things are changing where Russia is concerned. This Update shows how Russia’s thoughtful shift towards the USA looks from Tehran. Russia needs, as the potential mediator between the two, to be able to speak for Iran, but not with the status of a mere mouthpiece. Whilst the inevitable belt tightening goes on – the whole point of sanctions, Tehran is claiming a ‘fuel miracle’ in an area in which IRAN was highly vulnerable, that although being a great owner –supplier of oil, its national economy is dependent on it – it didn’t have anything like sufficient refined petroleum for its own commercial and private vehicles. We report their claims to have solved that problem. Also Iranian claims for high technology achievements are recounted here.

IRAQ: Emerging from Paralysis?
IRAQ’s epic journey towards democratic government may just possibly have moved on a further stage. Their American mentors seem to have achieved a different sort of democracy, where virtually everybody elected to parliament gets to be in government, even if it takes nearly a year to get there. Maybe the next time they have an election the Americans will not be there (with 50,000 US troops still in country), mentoring and holding their hands. On today’s form there would probably be a putsch.

We describe the outcome of the latest power sharing deal which this time was brokered by the Kurds. It cannot be described as a happy situation and in terms of introducing democracy to the middle- east (one of W’s afterthoughts on the invasion), it is unlikely to have many admirers. There are just too many players who need to be at least accommodated, if not satisfied. Expat Shia (exiles who came in with the US forces); Shia who stayed and survived through the Saddam years, and look to Iran as their mentor. Sunni, many of whom never left, some of whom were in the Baath establishment; Iraqis who have superseded their religions to be elected as secular members of parliament. Assorted Christians, Turkmen, Assyrians and other minorities. Finally Kurds, who are at least now reconciled to each other as a bloc, and an important one.

But perhaps IRAQ now has a government at least. The whole episode has clearly demonstrated how it is that since the Iraqis first took political power, quite soon after the invasion, they have been unable to pass an oil law, one of the early priorities, when that essentially would have to decide ‘who gets what’ of the serious money in the proceeds.

Pakistan’s Problem(s)
It’s ironic, tragic even, that Pakistan’s only ‘success story’ in recent years has stalled.

Its pro-insurgency operation in neighbouring AFGHANISTAN is threatening to move beyond their control, because the Afghan Taliban, whom PAKISTAN’s ISI has sustained for years, are not convinced that they should break their links with Al Qaida. Already, the Saudi government have withdrawn from the Afghan peace talks initiative, for this reason. Nobody (other than the Taliban) can countenance Al Qaida being a part of the peace process. Indeed until ISAF can genuinely say ‘Mission Completed’ with al Qaida out of it, dispersed – probably the best anyone can hope for - is that the US/Nato military in one form or another, be it Special Forces with drones and airforce back-up, will not be leaving.

Pakistan’s whole policy regarding its northern neighbour is to become its effective overlord, which isn’t going to happen until the westerners have gone. That is even more likely since the contamination of Islamic terrorism is spreading, already to the Russian Caucasus and with a great danger to the inheritors of Soviet power in the Central Asian ‘Stans, on Afghanistan’s borders. If only one might say of PAKISTAN that they were well equipped to confront these problems, but as our report makes clear, there is not much good news from PAKISTAN itself. That would mean more long overdue change; PAKISTAN is the biggest recipient of British Aid. The Brits have warned the Pakistani government that unless they reform themselves, specifically the tax system - in this country the richest pay no taxes at all - then British aid could be slashed. We tell more in this Update.

Afghanistan’s Big Issue
Which is the question of negotiating with the Taliban. In this report we review the state of play. Of course Karzai’s presence hobnobbing with the leaders of all the Nato nations in Lisbon, undoubtedly will have re-valued his fading political stock back in Kabul. The Nato watchword is ‘transition,’ that is the Afghans taking responsibility for their own security – and letting the western troops go home. We explain more how it might work. How extraordinary it is that in the wake of the near (a hairsbreadth off) collapse of the country’s biggest bank, the Karzai family are resisting a proper audit being held whilst IMF funding is temporarily ‘on hold’ until this is done.

Philippines looking up
It is good to be able to report about the Philippines that their newly elected president, voted in on an anti-corruption ticket, is looking good but with such a task in such a country, held to be the most corrupt in SE Asia – and that’s saying something, Benigno Aquino needs all the luck he can get. On top of a centuries old tradition of massive wealth and power concentrated in a very few hands, whilst the large and ever growing population struggle to economically survive; in a nation where the rule of law is treated with contempt by power-holders, perhaps, just perhaps it is all going to be different now.

Taiwan backs away from democracy
Not so long ago we celebrated TAIWAN’s achievement of arriving at a democracy in the fullest sense, all this by their own efforts, not a system imposed on them by others. Then came an election and a change of government with the Kuomintang in charge, the infamously corrupt KMT party of Chiang Kai Chek that moved across from mainland China, after being defeated by the armies of Mao Tse Tung. The intervening sixty or so years, have not taught them much. Unsurprisingly, the PRC prefers to deal with them because the authoritarian KMT see Taiwan as a springboard to getting back to positions of power and privilege in mainland China. But the obstacle they faced, the former president and leader of Taiwanese independence, Chen Shui Bian, has just been railroaded by the KMT. As our Update explains he has been through a disgraceful and fundamentally flawed trial (for just one example the KMT administration removed and replaced the judge who appeared to be favouring the not guilty plea, during the course of the trial). It is a disgrace and sadly the proud title of democracy is slipping away from this new arrival, after such a short association.

Turkey – doing well
It must be very satisfactory for the Turks to realise that their economy is strong and doing well, particularly given the reaction of the European Union to their application for full membership, and that many of the EU member states must envy that success.

It is a fundamentally racial problem caused by ‘immigrant indigestion’. Also countries like Bulgaria and Romania from Europe’s South East, by virtue of EU membership, have tended to export their unemployed – and unemployable to the more affluent nations of Europe, which experience has tended to create hostility to the SE European region. Notwithstanding this, TURKEY does have its supporters in the EU membership, as we report.

India Entertains Obama
This visit had a significance other than the superficial. The ‘larger than life’ President of the USA comes to India - it hasn’t happened a whole lot. We evaluate the visit, what Indians hoped for and what they got. We were very pleased that Obama made a point about supporting INDIA to a permanent seat on the UN Security Council. As our regular readers will know, we have long argued this (and more, that the G20 should replace the whole of the Security Council). INDIA is now into long distance ballistic missiles, we give details of the AGNI-I and AGNI-V which are expected to soon be deployed with the armed forces.

Syria’s Relationship with its neighbours
Quite a lot hinges on the Special Tribunal for Lebanon (STL), set up to investigate and apportion blame in the 2005 murder of former Prime Minister Rafiq al Hariri. It has taken some extraordinary twists and turns which we re-run, and it is not all over yet. What some might call ‘the bigger picture’ seems to have determined that justice will not be done – in the sense of bringing the murderers to justice. It is a complex enough story which we have been following since the assassination, and set out to explain here. The ‘bigger picture’ of course has to do with US policy to separate SYRIA from IRAN, whose interests on many issues are clearly quite separate. The current North Korean martial activities have been seized on by Israel suggesting that what the world is witnessing in the Korean peninsula could be repeated with IRAN should they become sufficiently emboldened by some nuclear success.

The Balkans
Just as CROATIA’s ‘ally’ in Europe is Germany, SERBIA’s friend is the Czech Republic, which is giving its full support to the Serbs’ EU bid. The Serbian Prime Minister Mirko Cvetkovic said on November 16 in Prague that the Czech Republic is a reliable partner to Serbia in its European integration and stressed that good political relations should be the basis for strengthening economic cooperation between the two countries. The Czech Prime Minister emphasised that his country welcomes the progress made by SERBIA towards EU integration and declared that the Czech Republic will provide assistance to Serbia in its pre-accession negotiations. He added: "We welcome the idea of SERBIA integrating with the EU, and we wish that our two countries promote economic cooperation."

More unsettling for the Serbs is that the Kosovars are holding parliamentary elections on December 12. The fear is the loss of territory in southern SERBIA, where Albanians predominate. The majority of ethnic Albanians living in Kosovo, ALBANIA, and Macedonia are in favour of forming a "Greater Albania," a poll shows. 80% of the Albanians in Kosovo, 62% of those in ALBANIA, and 51% of the Albanian minority in Macedonia back the idea, according to a poll by Gallup carried out in cooperation with the European Fund for the Balkans, cited by Macedonian TV Kanal 5.

An alliance between ALBANIA and Kosovo has smaller support – 33.7% in ALBANIA and 29.2% in Kosovo, according to the report of the Serbian media B92.

According to Albanian nationalists, a hypothetical "Greater Albania" would include all of ALBANIA and Kosovo, about half of Macedonia, and ‘parts of’ Southern SERBIA, Montenegro and Greece. This is unlikely to be politically going anywhere.

ALBANIA’S major preoccupation at present is EU membership. The EU’s progress report on Albania was presented to Prime Minister Sali Berisha on November 9th. The report gave the country credit for the work achieved on legislation, the economy, and implementation of the Stabilisation and Association Agreement and praised Albania's constructive role in "maintaining regional stability and fostering good neighbourly relations with other Western Balkan and EU countries". However, the EU did not grant Albania candidate status, citing a number of problems and issues the country must resolve.

EU membership also dominates the political agenda in CROATIA which hopes to conclude the negotiation process by the end of this year or early 2011 next. A vital report, issued on Nov 9, states that CROATIA is meeting the political criteria for EU membership and has made progress in many areas. However, it still needs to ramp up the fight against organised crime and corruption, intensify judicial and administrative reform, boost protection of minorities and facilitate refugee returns. Croatian leaders are hailing its overall positive tone. "This is the best report ever and a very promising one. It clearly recognises the changes and efforts made," declared Prime Minister Jadranka Kosor.

Meanwhile BOSNIA is facing the aftermath of inconclusive elections in October. Milorad Dodik was sworn in as the new president of Republika Srpska, the Serb-dominated entity of BOSNIA HERZEGOVINA (BiH), on November 15 at a session of the National Assembly in Banja Luka. Often described as a hard-line nationalist politician by the West for resisting attempts to build stronger state institutions at the expense of the autonomy of Republika Srpska (RS), Dodik indicated that his vision had not changed. "Those who dream of a unitary BOSNIA, or who hope to -- under the mantle of European integration -- dispossess RS, you should know that we never, under any circumstances, we will not give up its autonomy, even at the cost of not joining the European Union," stated Dodik. There are also tensions in Sarajevo, the capital of the other part of BOSNIA. The leader of the Croatian Democratic Union of BOSNIA and HERZEGOVINA, Dragan Covic, called the southern city of Mostar the future capital of a federal unit within BOSNIA which would have a predominantly Croatian population.

There is a sharp reminder from ROMANIA that the espousal of capitalism and membership of the EU have not brought happiness. After months of demonstrations against austerity measures, a recent opinion poll carried out by CSOP and the Institute Investigating Communism Crimes and the Memory of Romanian Exile (IICMER) has revealed that 61% of Romanians consider “communism” a good idea at present, as against 53% four years ago.

In TURKEY although it is their central preoccupation in government, there is less enthusiasm for EU membership. “The EU needs TURKEY more than TURKEY needs the European Union”, Ankara’s chief negotiator on EU accession has said, during a visit to Dublin. Egemen Bagis rejected suggestions that Turkey’s rhetoric on Europe had hardened in recent months and said there was growing frustration over the pace of the accession process.

He compared Europe’s economic crisis with Turkey’s growth of 11 per cent this year, and said TURKEY was “vital” in terms of European access to regional energy resources. “Europe does need TURKEY more than TURKEY needs Europe,” he told The Irish Times. “The cost of having TURKEY out of the EU is much greater for Europeans than the cost of having it in.”

Central Asia
The upcoming summit in Astana, the capital of KAZAKHSTAN, of the Organization for Security and Cooperation in Europe (OSCE), to be held on December 1st & 2nd, is a key event for the country and for Eurasia as a whole. Kazakhstan has vast mineral resources. Its oil, natural gas and uranium resources are extraordinary and new discoveries are adding to known reserves all the time. It is the world’s fastest growing energy economy.

The OSCE is concerned with security in Eurasia. Central Asia is vital, especially with the turmoil in Afghanistan. Important issues are on the agenda, such as how to deal with the Taleban; and the vast heroin trade. However, US President Barack Obama has declined to attend this important summit.

The United States has significant interests and a lot going for it in Central Asia. Kazakhstan has attracted $120 billion in foreign direct investment since becoming independent of the disintegrating Soviet Union at the end of 1991, and $15 billion of that is invested by major U.S. energy corporations. China and major European nations like Germany, France and Italy are nailing down hugely lucrative export orders for the enormous construction and hi-tech industrial development projects that are transforming this vast Central Asian nation. Kazakh officials are worried that, although they are eager to expand their energy cooperation and trade deals with the United States, the Obama administration and the State Department have shown no interest in pursuing that agenda.

US diplomats have in recent months marked up significant and welcome improvements in US relations with UZBEKISTAN and TURKMENISTAN, the two other energy-rich nations of former Soviet Central Asia. Rather than attend the OSCE summit himself, Obama is sending Secretary of State Hillary Clinton. The president’s refusal to attend the OSCE summit may signal that the current administration does not take the OSCE very seriously and that it lacks the fortitude and focus to bring significant influence to bear on exerting US influence in the area.

The Caucasus
In Georgia, the government of Mikheil Saakashvili continues to leave its mark on the landscape. Saakashvili has announced the construction of a modernist tower in the Black Sea resort of Batumi, which he likened it to the Eiffel Tower in Paris. There are also plans for a futuristic new parliament building that will be constructed in the provincial city of Kutaisi. Georgian television has reported that a copy of New York’s Central Park is to be created in Tbilisi. A recent opinion poll suggested substantial public support for the ruling party’s political direction. Whatever Saakashvili’s political future, his architectural legacies will remain as monuments to his eventful years in office.

Iranian President Mahmoud Ahmadinejad travelled to AZERBAIJAN this month to attend the summit of Caspian Sea littoral states in Baku. The presidents of the five Caspian states, including AZERBAIJAN, IRAN, KAZAKHSTAN, RUSSIA and TURKMENISTAN, attended the summit.

So far, the Caspian Sea states have reached a consensus over 70 percent of the sea’s legal regime. The framework convention to protect the Caspian Sea environment was signed between the littoral states in Tehran in November 2003. This was re-affirmed at the summit.

The Tehran Convention is in principle one of the most enlightened international agreements ever. It aims at protecting the Caspian Sea environment from all sources of pollution and protecting, preserving and restoring the marine environment. The convention includes provisions on sustainable and rational use of the bio-diversity of the Caspian Sea, as well as environmental monitoring, research and development. The question is how to implement it? The summit came up with no new proposals in that regard. But it at least kept this grave set of issues on the agenda.

At a European Union-UKRAINE summit on November 22nd, EU leaders called on UKRAINE to give renewed impetus to reform efforts concerning the consolidation of human rights, democratic principles and the rule of law. They urged UKRAINE to make further progress in improving the business and investment climate particularly by tackling corruption and removing red-tape.

They welcomed reforms in the macro-economic sphere, particularly Ukraine’s Standby Arrangement with the International Monetary Fund (IMF). They looked forward to Ukraine’s eventual accession to the Energy Community. The leaders also discussed the opportunities provided by the Eastern Partnership to promote political association and economic integration between the EU and countries of the Eastern Partnership, a European Commission (EC) statement said.

Ukraine also has always ‘to think eastwards’ towards its most important relationship, that with RUSSIA. Russian Prime Minister Vladimir Putin says trade ties have improved dramatically since Kremlin-friendly President Viktor Yanukovych came to power. Putin made his remarks in Kiev, where he met Ukrainian leaders for talks on natural-gas supplies to Ukraine. Putin said trade turnover between RUSSIA and UKRAINE rose nearly 80 percent this year because of improving global conditions, but also because ties were "normalized."

About 80 percent of Russian gas exports to the European Union transit UKRAINE, and RUSSIA has said it wants a stake in Ukraine's pipeline system. UKRAINE, which depends on Russian gas imports, wants RUSSIA to cut prices.

Saudi Succession Speculation in Riyadh
Following the hernia operation on King Abdallah there inevitably is speculation about his successor, despite the fact that the operation was a success. Given his advanced age (mid-eighties) such speculation is in order - the problem is not only that there are so many potential candidates, but that many of them are themselves septuagenarians - a sixty year old is regarded as relatively young in this situation. Several brothers/half brothers have occupied or currently hold, high offices of state. The probability therefore is that when the time comes for a successor, he will be an experienced statesman, fully appraised of the manifold problems of the region, and of the Kingdom itself. Of course IRAN looms large and the recent wikileaks episode involving embarrassing messages from Riyadh urging a US strike on IRAN, will not make relations easier, between the two most internationally significant players in the Gulf.

King Abdallah against all the odds, has been surprisingly progressive in the changes he has brought to the Kingdom. His approach to a more liberal society, inclusive of women other than in a domestic situation, inevitably directly challenges the ultra- conservatives. Similarly, he has been prepared to rein back the dreaded religious police, who operate independently of state institutions. He has played an active role in the Arab League which he has led, and formulated a very significant Peace Plan to resolve the half-century long antagonisms between Israel and the Arab neighbours. That still lies on the table and could be the basis for a settlement, given a progressive leader in Israel. King Abdallah may live long and given his modernising instincts that could only be good for the Kingdom Our report this month looks at this situation in more detail.

Emperor of Africa
Nov 29th to Dec 1st are the dates of the EU African summit held in LIBYA and of course a significant stage for Colonel Ghadaffi. European leaders Merkel, Sarkozy and Cameron won't be attending, which won't please Ghadaffi in his role as the bringer together of two continents. But others will, although there are likely to be top-ranking exceptions from the Black Continent as well. Our issue this month looks at the Colonel in his multifarious role as President of the African Union, giver of gifts, indeed Emperor, except without either that title or the power. It is expected that when the issue of illegal immigration comes up of economic African refugees into Europe, he will ask for more money. There are it is estimated, two million additional Africans in Libya since visa restrictions were eased, many of whom have their eyes set on Europe as their chosen destination. He has not dropped his dream of a United States of Africa, and if that ever comes about, as it probably will in centuries to come, his successors will be able to look back at this man of vision, but also note that although the idea is understandable, he as an African leader can also see the impossible hurdles to be surmounted in a continent where even the concept of the nation state has an uphill battle with traditional tribalism.

Clive Lindley

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