30 December 2013

If I had a Person of the Year Award

My choice would not be the Pope.

He seems like a nice guy (though he should go easy about his PR goons who leak his every move to the media). But his organization has a bit too much to apologize for. And I didn't even linked to massive sexual abuse scandal in the previous century.

My person of the year would be Edward Snowden.

First, I am not sure that at his age I would leave a $200,000 job in Hawaii and get myself in the crosshairs of the largest intelligence organization in the world.

He did it.

People don't seem to understand how much courage and determination that takes.

Moreover, his goals were really outstanding. As he recently explained, he was not trying to change the world, he was just trying to let people decide whether they want the world changed.

I am pretty sure that at his age, I would have missed this nuance.

The only person I admired more was a former neighbor of mine.

His name was Wilhelm Pfeffer (or as I knew him Bill Pfeffer) and he was the right age to have been part of the WWII. Yet, no one knew his history. One day I asked him how it was and he told me rather matter-of-factly (just-because-you-asked-young-man) that as a young German at the tender age of 19, he decided that Hitler was an abomination. And he made the decision to move to France not to be part of his army of murderers, he said.

That is not all.

Once France was occupied, he moved with the French Resistance to Algeria but told them them he was a pacifist and would not fight and kill. He was a geologist and he offered to train French soldiers instead.

Think about that.

At 19 (a) he knew Hitler was an abomination (something that most West Europeans and North Americans did not get for a long time) (b) he accepted the consequences of leaving his country (c) he refused to become a killer for the other side just to be accepted.

That is the definition of courage to me.

I don't know anyone who could do these things at that age and especially at that time.

Perhaps more importantly, he never shared these details with friends and neighbors. He did the right thing and he did not even let others know he was on the side of the angels.

That is a mensch in my book.

He was my hero.

So, if I had a Person of the Year Award, it would be called Wilhelm Pfeffer Person of the Year Award.

And I would give it to Edward Snowden this year.

But I don't have such an award because I doubt that I will ever find another worthy recipient.

Turkey: Is This The Beginning Of The End For Erdogan?

If you are reading this blog, chances are you already know about the huge graft scandal in Turkey.

In case you missed the highly entertaining soap opera, two weeks ago, Turkish police conducted several raids and took 52 prominent people into custody and seized over 4 million dollars in bribe money neatly stored in shoe boxes. They subsequently arrested and charged 24 of these people. Among them were the sons of two members of PM Erdogan's cabinet and the CEO of a state controlled bank. The CEO was accused of money laundering on behalf of the Islamic Republic of Iran.

I found the story rather amusing and initially, I thought about writing about the underlying ironies.

And there are many, starting with the acronym of the ruling party. You see, its supporters do not use the abbreviation of the party (the AKP) but go with the acronym AK Party, as "ak" means white and has a strong connotation of "clean" in Turkish.

To be sure, this cleanliness was never really accurate. Many AK Party politicians became extremely wealthy in their 11 years in power (including Erdogan himself who is rumored to have become a multi-billionaire on his meager PM salary). But with media consolidation after 2007, no corruption allegation ever made it to the mainstream, leaving the party free to claim a clean image. This is now over and the acronym must be an embarrassment.

The second fun fact is about the identity of the prosecutor behind the graft investigation. His name is Zekeriya Oz and he was one of the leading prosecutors for the deeply flawed Ergenekon trial. At the time, the ruling party hailed him as the brightest star in the judicial firmament and when he was reassigned in 2011 by the board of judges and prosecutors, senior AKP politicians bitterly criticized that decision as a blatant effort to change the course of independent judicial inquiry.

Now that it transpired that Oz was behind this year long investigation, the same senior AKP leaders, who had vouched for his objective and brilliant judicial mind for the Ergenekon case, are publicly claiming that Oz is an agent of the Hizmet movement and the whole thing is a politically motivated witch-hunt.

In other words, exactly the charge they dismissed as rubbish throughout the Ergenekon trial.

The third irony is about the Sledgehammer and Ergenekon cases: when the previous Chief of General Staff (who was promoted by Erdogan and who worked closely with him throughout his tenure) was arrested and later given a life sentence for trying to overthrow the government, the PM lamented that his hands were tied as he could not intervene in any investigation or judicial process.

This time around, the day after the scandal became public Erdogan dismissed or moved more than 100 police chiefs and officers and appointed two new lead prosecutors to the case, with the explicit instruction that decisions will be taken by a majority vote (two out of three). Moreover, one of the prosecutors in the original investigation claimed that a large part of the case was removed and various arrest warrants he signed were not executed. If this is not interfering with an investigation or judicial process, I don't know what is.

Fourth irony: Sledgehammer trial was about a plan that was never executed. Yet the government and the prosecutors argued that a plan was the same as an actual execution.

A month ago, a 2004 document signed by Erdogan, the then Chief of General Staff and the then Minister of Foreign Affairs (and current President) Gul was leaked to the media. It enacted a plan to destroy the Gulen movement.

When it became public, Erdogan argued that it was just a plan that was never implemented and as such it should not be taken seriously.

Right.

But, as the scandal unfolded, I realized that there was something more interesting than the ironies.

Is This Mutually Assured Destruction or a Foreign Plot?

There are two competing explanatory narratives about the scandal.

One side maintains that this is a vicious power struggle between the Erdogan wing of the Turkish Islamist movement and the Fethullah Gulen camp. And they claim that the struggle is about to turn into a Mutually Assured Destruction (MAD) type of war.

As you probably know, Fethullah Gulen is a moderate Islamist preacher who lives in self-imposed exile in Pennsylvania on a special talent visa sponsored by former CIA agents. While his movement (known as Hizmet or Service) is ostensibly a philanthropic organization running charter schools all over the world, many people believe he has serious political ambitions beyond his charitable work. And they assert that, as part of these plans, he directed his followers to infiltrate the judiciary and the security apparatus in Turkey.

Those who see Gulen's tentacles within the state argue that the National Intelligence Organization (MIT) is the only state structure that eludes him. And as proof, they refer to the February 2012 events, when a special prosecutor executed an arrest warrant against the Director of MIT, Hakan Fidan, freaking Erdogan out, in the process..

Accordingly, Erdogan's recent decision to close special prep schools (largely run by the Gulen organization) is seen as a strike against Gulen. Those schools are a major source of income for the Hizmet movement and perhaps more importantly, they operate as recruitment centers for the Imam.

In that scenario, last week's corruption scandal seems to be Gulen's counter strike. Recently, a Turkish journalist specializing on the Hizmet movement reported that a senior Hizmet figure was arrested at a US airport (link in Turkish) with many corruption dossiers implicating senior AKP leaders. The journalist claimed that the FBI submitted that treasure trove to the MIT, which, in this scenario, is the only security unit loyal to Erdogan.

The other narrative is put forward by Erdogan and his defenders and they depict these events as an American plot to get rid of him. According to these media outlets, Gulen is an American agent and one of the key players in that plan.

The more I read about the facts surrounding the case, the more I realized that maybe this is not an either-or proposition and these two narratives might actually be complementary.

There is a civil war between the Erdogan wing of AKP and the Gulen movement. Gulen movement is indeed well placed in the judiciary and security forces to be able to pull a secret year-long investigation with absolutely no leaks.

And it surprises no one (at least not me) that the US now sees Erdogan as a liability and its regional plans would be better served if he could be replaced with a less temperamental and more malleable leader.

Since Gezi events, I more or less assumed that there was an outline of a plan to remove him. But it was hardly the ingenious and nefarious coup plot Erdogan supporters claim. It was a simple re-branding effort which relied heavily on Erdogan's predictably over-the-top reactions.

But there is a twist.

Let me explain.

The Plan (If There Was One)

While many people are convinced that Gulen is an insidious opportunist driven by his ambition to become the leader of Turkey, I see him as someone who had made a Faustian pact to become the religious leader of mainstream Islam.

As I mentioned before, his ideology is the only coherent and modernist counterpart to Wahhabi or Salafist teachings. In that sense, he fits perfectly into what I see to be the American plan for the Middle East. Which also explains how and why he continues to live peacefully in Pennsylvania and his visa applications are sponsored by former intelligence officers and ambassadors.

As for his nemesis, Erdogan, my regular readers know that I singled him out as the lead actor in the US produced drama in the region. The problem is that, Erdogan, who was almost a method actor in the original Kabuki theater, has turned, over time, into a Chaplinesque caricature of an autocrat.

You must have heard of Baron Acton's dictum that "power tends to corrupt and absolute power corrupts absolutely." After his last election victory, it has been reported that Erdogan stopped listening to other people and he began running the government with a small group of trusted aids. Apparently, he treats even his own ministers with disdain and mistrust. Throughout, there have been numerous reports that he is unable to control his temper (which some people attributed to his diabetes) and he routinely lashes out at journalists, civil society leaders or colleagues.

More importantly, in the process, he dropped the ball economically. His focus remained on large construction projects, which were designed to be glamorous for him and profitable for his supporters (the construction magnate Agaoglu was among those arrested). But he did very little to fix the chronic current account deficit or to stop foreign capital outflow.In fact, his polarizing rhetoric seemed to have accelerated the exodus of foreign capital making the current account deficit even worse.

On top of all that, he committed a series of blunders in the Middle East and alienated an impressive list of regional and global players, including Israel, Egypt, Iran and Saudi Arabia. And of course the US.

Given all this, I assume that there must be a consensus that he needs to go. You hardly need a conspiracy theory to see this. But how do you get rid of him?

His supporters find him charismatic and believe that he is a man of God, working tirelessly for the country and his constituency. They see him as their dragon slayer who will stand up to internal and external enemies.

How do you turn such a man into a pariah?

If I were asked to do it, I would take a page out of Joao Santana's book. I would first make him appear as an out-of-touch and out-of-control leader. This would galvanize and unify his opposition and solidify a darker image. Then I would expose his corruption dossiers. And this would make him appear the opposite of a man of God: a greedy politician filling his pockets.

It is not a very original idea but judging from the turn of events, it looks like someone else might have had the same inspiration.

Gezi events appears to be the turning point and (if such a re-branding plan existed) the first step.

And therein lies an interesting tale.

When Gezi protests erupted, Erdogan remained silent initially. He was scheduled to go to Morocco and he was expected to make a statement upon his return. At the time, President Abdullah Gul and Deputy PM Bulent Arinc were making conciliatory noises (both men are said to be "inspired by" Gulen). The expectation was that Erdogan was going to do the same upon his return.

However, I learned from reliable sources that just before his trip, Erdogan was submitted a report by his trusted aid Hakan Fidan, the Director of MIT. And the report concluded that the protests were actually a plot by foreign powers wanting to destabilize the government. It also claimed that radical left wing organizations were the main groups behind the unrest.

We now know that both claims were complete and utter rubbish.

Apparently, this made Erdogan livid and he immediately adopted a very belligerent rhetoric and a decisive action plan. He ordered the police to forcibly remove the protesters, he famously lashed out at them as "capulcu". And he introduced his extremely dubious "interest rate lobby" discourse.

The police executed his orders, wounding hundreds of people and killing at least four. It was a hugely disproportionate use of violence against peaceful demonstrators. Overnight, the opposition became unified and Erdogan appeared as an out-of-touch and out-of-control autocrat. Even some Islamist groups joined the protests.

Now, let's think about this for a minute.

First, there is the role played by MIT in this. If there is a "deep state," as people in Turkey would like to believe, a US controlled Gladio structure, wouldn't MIT be part of that shadowy apparatus? Historically, it certainly was. In fact, it was smack in the middle of it. So when I hear the MIT director submitting a completely bogus report to the PM and changing the course of history, I wonder whether the highly inaccurate conclusions of that report could be seen as an honest mistake.

If you wish to mislead the PM and encourage him to overreact to change his public image, is there a better way than give him such a report and let him hang himself? If you argue that Fidan is a trusted aid and he would never do that, I would suggest that stranger things have happened when it came to intelligence organizations.

Secondly, if the opposition narrative is correct and the police are controlled by the Gulen movement, shouldn't we question why they used such excessive force in implementing Erdogan's order to empty Taksim Square? If Gulen himself and Gulen-inspired politicians recommended a softer approach, why would a police force supposedly taking its orders from the movement opt for a massive use of force?

You see what I am hinting at.

Once the first step is complete and Erdogan's image is tarnished (and the opposition unified), the second step would be to open up the treasure trove of corruption dossiers. If there was such a plan, that is. And this is exactly what happened.

In fact, it is widely rumored in Turkey that more dossiers are being readied and some of them will implicate Erdogan and his family members. One of the ministers who had to resigned openly called for the PM's resignation and said that all of the large construction projects were approved personally by the PM. To me this is a thinly veiled threat against Erdogan. It means that they know the skeletons and they have the key to the closet where they are kept.

There is a third element that support the idea of a plan to politically terminate Erdogan. As I wrote recently, there has been an unmistakably clear and very successful re-branding effort to turn Gul into a caring and moderate politician. In fact, at every juncture, as soon as Erdogan staked a position Gul carefully moved away from that stance and made it clear that he did not approve of it.

If Gul does not accept to resign as president to make way for Erdogan to replace him, Erdogan has only one option left. He will have to publicly renege his commitment to term limits and fight for a third term in office. A year ago, this would have been fine and perhaps even encouraged by most observers for the sake of stability. But now, such a move would make him look like a greedy and power-thirsty politician even in the eyes of his supporters.

Which means his negative re-branding is almost complete.

What's Next?

I only have a couple of educated guesses for the short run. In medium and long term, I can only speculate on likely outcomes but not on the unfolding of events.

In the short run, I am pretty sure that the new Minister of the Interior, Efkan Ala, who is one of the closest collaborators of Erdogan (he was Prime Ministry's Under Secretary and he is not an MP) will go after Gulen supporters.
Ala, with his vast experience in bureaucracy, is expected to play a central and practical role in purging the followers of the Gülen movement, who are particularly influential in the police and judiciary.
If his past behavior is any indication, Erdogan will also order tax audits for pro-Gulen businesses and he will try to prevent them from bidding in large state contracts. He might try to seize Zaman (the largest Turkish newspaper) and its English language counterpart, Today's Zaman and sell it to one of his supporters (it was one of his favorite tactics prior to media consolidation).

Almost as likely, the Gulen camp will retaliate with more corruption allegations and they will get closer to the PM with every leak. They might hit close collaborators first, then family members and finally the PM himself.

I also suspect that this slowly unfolding process will cost the AKP electorally, starting from the municipal elections early next year. My prediction is that their vote will hover around 35 percent but might go lower if particularly damaging information surfaces before these elections.

It is hard to speculate beyond that point because there are too many variables that might change between now and then.

But I can make two predictions.

One is that Erdogan will find it difficult to hang on to power in the next year or so and he might quit before the 2015 general elections citing health reasons.

Two, Abdullah Gul will become the new star of the party.

Many pundits see him taking over the PM post. I am inclined to think that he might prefer his current position which is above politics and work with another pro-Gulenist PM.

One name that comes to mind is Ali Babacan, a formidable technocrat who enjoys the work and does not chase the limelight.

He would be perfect as he would let Gul become the public face of the administration while he acts like a super trouble-shooter.

For once, I am actually curious to see how things will unfold..


15 December 2013

Is France the Sick Man of Europe?

When I moved to Paris almost ten years ago, I expected to be enchanted with what I assumed to be the best synthesis of capitalism and an egalitarian society with impeccable living standards.

Up to that point, I had been reading how the French system was superior: Their healthcare system was exemplary, frequently elected the best in the world. Their school system produced solid managers, innovative engineers and world class thinkers and literary figures. They had an amazing social safety net, their minimum wage was more than decent and they believed in leisure society, as everyone enjoyed at least four full weeks of vacation time.

Add to all that excellent food, very good and affordable wine, a mild climate with barely a speck of snow all year around and you could picture me giving myself virtual high-fives all the way to Paris.

Imagine my surprise when I discovered that the superior French system was a mirage, a holographic picture taken a couple of decades earlier.

The Real France

By the time I arrived, France was running continuously a budget deficit for at least 30 years, unemployment had reached double digits, the influx of expats pushed food and accommodation prices so high that ordinary French people were simply unable to maintain a reasonable middle class life style (at least not in Paris and certain other popular regions). Their minimum wage (known as SMIG, which stands at €1430.25 as of July 2012) wouldn't be enough to pay the rent for a one bedroom apartment.

The healthcare system was falling apart. The education system was crumbling and the students were disillusioned with their job prospects.

Having lived through the Thatcher-Reagan revolution, it was obvious to me that the system had a number of structural problems. And unless they were fixed (and fixed rapidly), sooner or later capitalism would fix it for them, as it did in the UK and the US under those two hapless luminaries.

But I also knew that if the correction was left to capitalism, the French system would become something else entirely. It would look like today's America or Britain, that is, a polarized society with massive income disparity and a sharp winners and losers perspective permeating everything, including the distribution of vital services. (If you doubt that vision, think of the American system today with Obama and the British system with Cameron and tell me the difference).

I could also tell that France had never gone through the North American IT-based productivity revolution. Most computer systems were archaic, inventories were still taken by hand, banks operated on a batch processing system and most custom software packages were written with simplistic languages like Visual Basic.

But when I voiced my concerns about productivity, my French friends always defended their system by citing the OECD statistics that place France very high on the productivity scale. I know that their numbers can look high.  But I think these high figures are mostly based on the industrial sector. It is a capital-intensive and highly automated sector and I am sure French industrial workers work their tails off. But the service sector is a different ball game.

If you look at the period where the IT-led productivity took off in the US and the UK, France is at the bottom of the scale.



And since then, the productivity gap has remained a major issue.

Mittelstand or Does Size Matter?

You might have heard that a category of German companies known as Mittelstand are credited for the economic health of the country. These companies of up to 500 employees (or €50 million annual turnover are the stuff of legends.

And the French business press routinely bemoan the fact that France does not have a similar structure. That is because the French economy is structured to discourage Medium Enterprises, the ME in the SME. It is a peculiar system.

On the one side there are tiny companies, one or two person family firms. They don't hire much and they have a high failure rate (twice as many bankruptcies as Germany).

On the other side, there are large enterprises, most commonly in fashion and food & beverage sectors. And there are state-championed giants in high tech fields like aerospace and nuclear energy.

In the middle, you find French style SMEs but they are much smaller than the German Mittelstand: They are characterized by their constant effort to never have more than 49 employees. (Beyond 50 they have to spend on training and provide additional benefits.)

In OECD countries, SMEs are usually the main source of employment and you can see from the above picture why unemployment has remained stuck around 10 percent for the last four decades. However, in my humble opinion size is not the decisive criterion.

There are other factors at play.

Management, Innovation and Tools of Productivity

The primary characteristics of Mittelstand companies is to promote innovation and target export markets. Better products do not compete on the basis of price and they command higher margins. And opening up to foreign markets gives companies more independence and flexibility: if you have more outlets, you can weather cyclical crises with relative ease.

To achieve this, Mittelstand companies maintain a lean management structure, emphasize continuous on-the-job training, encourage in-house innovation, invest in Research and Development (R&D) and they promote Information and Communication Technologies (ICTs).

Let's start with lean management structures:
Jean-Daniel Weisz (...) compares the way German firms and their French counterparts operate. French middling companies, he says, have twice as many layers of management between the boss and the shop floor: usually 18, compared with a German maximum of nine.
Think about that: Average of 18 layers of mid-management versus a maximum of 9 levels.

Moreover, these managers are the product of elitist Grandes Ecoles, which means that they are convinced that they already received all the training they will ever need. According the an early Harvard Business Review study, they view management not as a set of techniques but as a state of mind. It sounds like a line from a Godard movie but that's what passes for business perspective in France.

The same study also found that French businesses are overly hierarchical and sharply compartmentalized.

Perhaps more importantly, change and innovation are almost actively discouraged by the system. Let me give you a concrete example.

You are an engineer or a researcher in a French company and you have just invented something new. Maybe a new method to produce more with less or a brand new product. And your invention directly benefited the company's bottom line, with increased revenues, lower expenditures and higher stock value. Can you guess what your reward will be?

You will get a bonus of €500 to €2500. Before taxes. That's it.

Do you know how much a German engineer will get if she or he comes up with a better method or product? Since 1957, companies are legally required to give such innovators a proportion of the revenues generated by their innovation. The more the company earns, the more the inventor/innovator collects.

Even in China, since 2010, the person who comes up with a better product is given 2 percent of the additional revenues and if the invention is licensed to another company, they collect 10 percent of the royalties.

To be sure, French researchers have an outstanding record and they came up with many great inventions that changed the world. But it is quite damning of the system that very few of these new ideas and products were commercialized by French companies.

French companies have another management-induced obstacle.

According to the Economist, a World Economic Forum of Davos report found that while "the French have a "stronger work ethic than American, British or Dutch employees." They're just not motivated by their managers." In fact you could call it apathy and in some cases intense dislike.
France ranks last out of ten countries for workers’ opinion of company management, according to a report from 2007. Whereas two-thirds of American, British and German employees say they have friendly relations with their line manager, fewer than a third of French workers say the same. ...
A study of seven leading economies by TNS Sofres in 2007 showed that France is unique in that middle management as well as the lower-level workforce is largely disengaged from their companies.
The disconnect is not just within corporations, it is also reflected in management attitudes towards global markets.

While German Mittelstand company managers remain very active in global markets and bring up their supply chain with them, French managers are almost entirely absent from the global scene. This is partly due to the Grandes Ecoles mentality: they know best and don't need stinking foreigners to tell them otherwise. Partly, it is the unintended consequence of the insular nature of the French elite. They rarely speak any foreign language, they almost never had any experience living abroad and they are too happy to stay within a familiar market delineated by language and history, such as France and North Africa. A French report in 2008 concluded that, unlike Germany, France had no longer any international expertise.

The insular and parochial management culture affected the productivity efforts. When the US, the UK and Scandinavian companies were heavily investing into ICTs, French companies were staying away from them.



A recent report reached this conclusion:
En définitive, les mauvaises performances françaises en termes de croissance du PIB et de la productivité peuvent être interprétées comme la conséquence d’un investissement insuffisant en éducation supérieure et en TIC, d’un marché du travail trop rigide, d’un marché des biens insuffisamment concurrentiel et d’un renouvellement insuffisant du tissu entrepreneurial. [my emphasis].
In that sense, my critical assessment of Air France, a global company run by French business elite with no regard towards productivity can be generalized to the rest of the French economy.

Just like my French friends who loved to point to high industrial productivity figures to tell me I am wrong, you could also counter with recent ICT investment figures. In Europe, Germany, the UK and France are now the top spenders on high tech tools. Point taken.

However, like high productivity figures, these numbers hide a different reality. The ICT revolution of the 90s was geared towards increasing labor productivity. These new spending programs are designed for a different purpose. The bulk of it is for new technologies like virtualization solutions and moving things up to the Cloud. They hardly make employees more productive. They are shiny new toys that will reduce corporate carbon footprint and get subsidies from the state.

There is one other point you find in the new ICT figures: In France, unlike other European countries, a large portion of that spending goes towards software development. Normally, this would be encouraging, but in this case it is largely because they need to catch up with the rest f the world and update all the primitive Visual Basic enterprise software packages that seem to be running the operations of most French companies.

You think I exaggerate. Two anecdotes to illustrate the point.

Around 2005, French IKEA was using an inventory system that was updated once a day (I asked). Therefore, during the day, each time a customer asked if an item was available at the warehouse, a clerk had to call another clerk for a visual inspection. The computer showed two but the clerk had no idea if someone bought them. Maybe it is still the case, I can't tell you. I have not bought anything from IKEA in a long time. But no US store had such a system past 1995. Including, I am sure, IKEA itself outside France.

Second anecdote. Two years ago, I went to a branch of Groupama, a large insurance company operating in 14 countries. It was to get a quote and I asked them to print me a couple of tables. The custom software package was so user-unfriendly that they couldn't do that. So, the only thing the person I was dealing with could do that was to copy various tables in to an empty Word document and print that. It took her 10 minutes. All the while she complained about how terrible the software was. The workaround was suggested by her manager. I agreed with her. The package should have done that with two clicks.

Then I asked why she simply did not click Ctrl-P on each table. She was shocked to see that you could print almost anything under Windows with that key combination. She went around the office to tell everyone that. I became a hero.

Two years later, they are still using the same software and since that person moved to another branch, the new people still copy and paste tables for customers.

You can see the unifying thread in all this.

An insular and elitist management class creating structures to penalize innovation, devalorize their own R&D, discourage employees, turn their backs to global markets and ignore lean corporate structures and new management techniques implemented elsewhere.

A Huge Missed Opportunity

What is sad in all this it was a historic opportunity to set an example.

You see, in the UK and the US, the huge productivity gains made companies very profitable. But senior management and CEOs moved quickly and appropriated everything. Executive pay shot through the roof and real wages continued to decline.

France had a historic opportunity.

If they had implemented ICTs at the same time as everybody else, valorized their own R&D, motivated their employees, copied the lean management structures and new techniques being implemented elsewhere and expanded their global horizon, they could have pushed France to the forefront of global capitalism.

Given the social democratic nature of the system and the relative power of the unions, such a system would be inclined to distribute these profits derived from productivity gains more equitably. Which would have made France a prosperous, affluent and peaceful capitalist system.

People would have used them as a stellar example of what could have been when they criticized the winner-take-all culture that emerged in the UK and the US.

They could have become the envy of the world.

Instead, with parochial and elitist managers blaming "lazy" workers for their every mistake, an ineffectual government mismanaging the economy and discouraged and alienated employees, France is on its way to becoming a second tier economy.

As a Francophile, I find this to be a shame.

-----------

UPDATE

This is a headline on the BBC Web site from this evening, or a full day after I posted the above assessment.

PMI surveys raises fear that France may be back in recession.

It mentions the possibility of a "triple dip" recession.

What can I tell you?

12 December 2013

Bangladesh Might Be the Canary in the Mines

Bangladesh has just executed Abdel Kader Mullah.

To most people, this will not mean much.

To me, this is really worrisome.

It is not the man himself.

He was one of the leading figures of the Jamaat-e Islami, a conservative Islamist party in Bangladesh.

More importantly, he was one of the Islamists who (allegedly and apparently) advocated that independence from Pakistan was not a good idea in 1971.

And he was among those Islamist leaders who actively "discouraged" pro-Independence people.

I explained some of those dynamics here.

Now that they terminated him with extreme prejudice, I suspect things will go a bit crazy.

Bangladesh may not be on your radar screen. But it is about to become the main chessboard in the power struggle between the cynical ISI of Pakistan and not-so-in control of Indian government.

I hope this ends well for the sake of Bangladeshi people.

But I am worried.

07 December 2013

Additional Notes on the New American Plan

I received several contrarian reactions to my 200th post on the New American Plan in the Middle East.

Some people felt that I was giving too much credit to the American foreign service and national security apparatus. This group included a few senior insiders and they were adamant that the US foreign policy is usually a mess, full of contextual misconceptions, logistical errors and terrible overreach.

Other people felt that my model was too mechanical and I was overlooking a lot of nuances to reach my Occam's Razor conclusions.

I plead guilty on both counts. But as the saying goes, these are features not bugs.

American diplomats may appear like bumbling idiots occasionally and we all read about some of their ignorant remarks, showing a profound lack of understanding on their part. But that is not convincing to me. I will not even argue that for a caricature of oversized obnoxious Yankees they did a hell of a job maintaining US supremacy for a century.

The point is that I look at the US like an astronomer observing a black hole. It is not the mechanics of it that interests me. My understanding is based on the behavior of the objects near the black hole. When they change shape and color, move erratically and defy laws of physics, I know that the hole had something to do with it.

From that observation, I try to come up with an explanatory model that I can test with further observations. So, indeed I overlook a lot of nuances. But that is because I try to edit a lot of noise, misdirection and biased reporting to see if actions could actually corroborate my admittedly mechanical model.

To illustrate my contrarian method, I want to give you several examples showing how the US-Iran rapprochement changes the regional dynamic dramatically.

Before the 24 November agreement, you remember how the Gulf countries were adamantly opposed to any deal with Iran. Once the deal was signed they all understood what that meant. And that, within days.
UAE Foreign Minister Abdullah bin Zayed was the first of his Gulf counterparts to visit Tehran to show his country's support, calling for stronger ties between Iran and the UAE — "ties beyond the normal relations between neighbors and partners."
Then Bahrain (yes the same Bahrain that has been ruthlessly persecuting its Shia majority and blaming Iran for its troubles) extended an invitation to Zarif.
The little Gulf kingdom that for the past couple of years has continuously accused Tehran of interfering in Bahrain and backing the uprising against the ruling family invited Iranian Foreign Minister Mohammad Javad Zarif to take part in the forthcoming Manama dialogue next month.
After months of hard lobbying against a deal with Iran, Saudi Arabia chimed in the day after the agreement.
Saudi Arabia views the agreement as a primary step toward a comprehensive solution to the Iranian nuclear issue provided it leads to a Middle East and Gulf region free of all weapons of mass destruction, including nuclear weapons.  The Kingdom hopes that such a step will be followed by more important steps that lead to a guarantee of the right of all countries in the region to peacefully use nuclear energy.
What about Israel and Netanyahu's campaign against the deal?
There’s no panic at all among Israel’s professional military echelons. Nobody talks about a catastrophe or an imminent second holocaust. People discuss the merits of the agreement with levelheadedness and discretion.
Despite Netanyahu's doomsday predictions, the past and current military and intelligence chiefs are perfectly fine with the agreement.
 Former Mossad Director Meir Dagan and former Shin Bet Director Yuval Diskin believe that the agreement with Iran — while not perfect and with a few holes — has benefits that outweigh the damage. Stopping Iran’s stampede, it sparks hope for a positive final agreement. These two are fully at peace with their historic stance that blocked an Israeli offensive. This position is also shared by the IDF’s former chief of staff Gabi Ashkenazi and former Military Intelligence Director Amos Yadlin, who hinted at his position on several public occasions. Yadlin’s predecessor, Maj. Gen. Aharon Ze’evi-Farkash, is also of the same opinion.
What about the current leaders, like chief of staff Lt. Gen. Benny Gantz, Military Intelligence Director Maj. Gen. Aviv Kochavi, Mossad Director Tamir Pardo and Shin Bet Director Yoram Cohen?
They cannot speak up and express their feelings, yet in internal forums they continued all along to oppose an independent Israeli military move. As for the agreement, the voices that come out of the IDF’s Military Intelligence Directorate are slightly different from what Netanyahu and his senior ministers are saying. An analysis of the Geneva agreement by military intelligence points to its pros and cons. The agreement has advantages and achievements but also drawbacks, mistakes and problems. The main thing that Israel’s military intelligence does not demonstrate — in contrast to the government’s position — is panic.
Okay, I hear you say, I'll bite, how any of this shows that the US was doing this to get the Palestinian peace process back on track?

The Iran deal was to show everyone that the US can back a different horse and make life difficult for everyone (without seriously jeopardizing anyone's security as, like Mursi in Egypt, Rouhani and Zarif have their own reason not to rock the boat).

What other issue exist that Netanyahu can grab on, in order to claim that the peace negotiations are not acceptable? Why, it is Israel's security of course.

A recently retired four star Marine Corps General John R Allen and his team are currently in Israel drawing up plans to increase Israel's security in the event of a Palestinian peace deal. What that means is that the US is no longer willing to accept any blanket claims about Israel's security and will not allow that to be used to stall peace talks. They have their own expert to draw up plans and they will follow his advice over Netanyahu's.

If you know a little bit about the region, you know what a big deal this is.

There is also this:
US Secretary of State John Kerry was meeting Israeli Prime Minister Benjamin Netanyahu for the third time in 24 hours on Friday for talks understood to be focused on security. 
Kerry, who is seeking ways to drive forward stagnant peace talks, met twice with Netanyahu on Thursday for more than six hours of talks about potential security issues in any peace agreement. 
He also held a three-hour meeting in Ramallah with Palestinian president Mahmud Abbas.
Three meetings in 24 hours.

Maybe I study objects near the black hole too much. And I see the world a tad too mechanically.

But sometimes I wish people paid more attention to actions.