Interview with Besa Shahini

Independent researcher and policy analyst

Published in El Punt Avui newspaper in December 28th, 2015

http://www.elpuntavui.cat/politica/article/17-politica/928331-lel-cami-de-kosova-a-la-ue-esta-bloquejatr.html

PROFILE

Besa Shahini (Prishtina, 1982) is an independent researcher and policy analyst based in Kosovo. Until summer 2015, she was a Senior Analyst with the Berlin-based think tank European Stability Initiative (ESI).

Shahini participated this month in the seminar "Understanding the limits of international post-conflict governance: the case of Kosovo", organised by Barcelona-based think tank CIDOB.

Full version (in English)

"The biggest issue for Kosovo now is that five EU member states do not recognise Kosovo as a state. This means that Kosovo cannot apply for membership to the EU"


"Kosovo needs to be engaged in two dialogues simultaneously: an internal one with the Kosovo Serbs, and an external one with Belgrade"


"Kosovo Government – while it gave the Serb community in Kosovo a lot of rights and possibility for self governance through decentralization – it did not do a good job at engaging them in an internal dialogue about Kosovo’s future. This created a gap between Prishtina and the Kosovo Serbs, which Serbia is now using to achieve its goals in Kosovo"


"Kosovo should have built up the courage to establish local courts that would deliver justice to the victims of all ethnicities. Serbia should have done the same"


"I stopped believing that the international community wants to fight corruption in Kosovo"


"There should also be more opportunities for Kosovo’s youth to work, study and travel to the EU. Currently this is not possible as Kosovo is the only country in the Western Balkans without visa free travel to the EU"


"The fact that only Kosovar youth have to go through this arduous procedure is really singling them out and making them feel like second class citizens in Europe. This must absolutely change"


A.B. - Expectations that Kosovo's independence would bring a rise in standards of living with the help of the United States and the European Union were not met. What's the current economic and social situation in your country?

B.S. - Kosovo is one of the poorest countries in Europe. GDP per capita is 3,000 Euro, or less than 10% of average GDP per capita in the EU 28. It has the lowest employment numbers in the region – 30% of everyone ages 20-65 has a job.

The current economic model does not support employment growth - Kosovo produces very little and imports most basic goods. Kosovo’s exports come up to 300 million Euro, of which only 100 million Euro are processed goods (the rest are in mines and minerals). While it’s imports reach 2.3 billion Euro, and are mainly financed by the large Kosovo diaspora that regularity send remittances back to their families.

How did Kosovo get here? Kosovo was the most underdeveloped region in Yugoslavia. Economic planning was done centrally from Belgrade and due to strained political relations between Serbia and Kosovo, it saw very little investment until 1970s. This changed in the 1970s and 1980s, as political tensions eased somewhat. In the 1990s, due to the wars and overall economic decline, most industries declined rapidly.

After the war, Kosovo became an international protectorate, fully governed by the UN and its partners. The EU was put in charge of economic governance through EUMIK (EU Mission in Kosovo). The one policy they implemented in Kosovo was privatization. Instead of reviving the declining industries, they set up mechanisms to sell them off. This rapid deindustrialization resulted in the loss of Kosovo’s skill base.

Today, without the necessary skills in its labour force Kosovo is finding it difficult to attract foreign direct investment to boost its economy. At the same time, the education system is only now being tuned to build the professions Kosovo needs. So the way I see it, we are still looking at a long way ahead in this battle for economic turnaround, and it won’t be easy.

A.B. - Seven years after declaring independence from Serbia (February 2008), Kosovo has been recognised by the United States and major European Union countries. But Serbia, backed by Russia, refuses to do so. How is affecting this lack of recognition the integration of your country in the international community?

B.S. - I think the biggest issue for Kosovo now is that five EU member states do not recognise Kosovo as a state. This means that Kosovo cannot apply for membership to the EU, thus cannot really take part in normal pre-accession programs that the rest of the Western Balkans are benefiting from. This will keep Kosovo further behind the region.

If Serbia would recognise Kosovo, five EU member states would have no reason not to any longer, thus this would unlock Kosovo’s way toward the EU. But also, if the five decide to take a principled position and recognise Kosovo even before Serbia does, it would ease tensions with Serbia tremendously as it would open Kosovo’s path toward the EU, independently of Serbia, and Kosovo would focus its efforts on the EU reform program.

Kosovo is small and it cannot develop in isolation, thus this situation is really hindering Kosovo’s development.

A.B. - A landmark deal aimed at paving the way for the normalisation of relations between Kosovo and Serbia was brokered by the EU in 2013. But there are hurdles on both sides to implement the agreement. Is there any chance to come to a dialogue for a real rapprochement between Pristina and Belgrade?

B.S. - Kosovo needs to be engaged in two dialogues simultaneously: an internal one with the Kosovo Serbs, and an external one with Belgrade. All issues pertaining to Kosovo Serbs should be dealt with through an open dialogue with them. While the dialogue with Belgrade should focus on issues of recognition, war damages, missing persons, property claims of Serbia in Kosovo, etc.

But this is not really happening this way. Kosovo Government – while it gave the Serb community in Kosovo a lot of rights and possibility for self governance through decentralization – it did not do a good job at engaging them in an internal dialogue about Kosovo’s future. This created a gap between Prishtina and the Kosovo Serbs, which Serbia is now using to achieve its goals in Kosovo. It insists on the establishment of the Association of Serb Municipalities in Kosovo, through which it will exercise control over Kosovo, the same way it exercises control over Bosnia through Republika Srpska there. The August 2015 agreements show this clearly. They do little to address the needs of Serbs in Kosovo but do a lot to legitimise Serbia’s control over Kosovo.

If Kosovo could get international support to split these two dialogue tracks, I believe this would produce lasting results leading to stability in Kosovo and the region.


A.B. - The war in Kosovo in the late 1990s opposing ethnic Serbian and Albanian population has left deep wounds, and reconciliation between the majority Albanians and the Serb minority remains elusive. Kosovo's Parlament approved a law to set up a special war crimes court paving the way for indictments to be filed against top wartime leaders and current politicians. Is that a crucial and an ineluctable step towards reconciliation? Has this special court started its works? What has been done so far regarding this field?

B.S. - This is an international court that Kosovo is integrating into its own institutions. I think Kosovo should have built up the courage to establish local courts that would deliver justice to the victims of all ethnicities. Serbia should have done the same: there are hundreds of thousand murdered in the Balkan wars in the hands of the Serbian army, yet only a handful of generals were successfully put on trial and convicted. This is not right.

But coming back to the Special Court in Kosovo, I have very little faith that international courts can deliver justice. The crimes for which this court is being set up, have been addressed by three other international courts unsuccessfully: UNMIK, International Crimes Tribunal for former Yugoslavia (ICTY) and now EULEX. What confidence does anyone have that a fourth court, with some of the same judges and prosecutors and investigators, and many more years removed from the events at stake, can deliver the justice for the victims?


A.B. - According to the 2014 Transparency International Corruption Perception Index, Kosovo and Albania continue to be the most corrupt countries in South-East Europe. Is this kind of criminal activity blocking Kosovo's economic growth?

B.S. - To some degree yes. Surveys with big investors show that they do consider corruption to be one of the issues why they hesitate to invest in Kosovo. According to different studies, corruption in Kosovo is public sector corruption: government officials skimming from public tenders to private companies. Which makes it difficult to expect that the current government can fight public sector corruption, if it is involved in it.

It is also difficult to vote out of power the current political class as they have the support of all the international stakeholders in Kosovo. The EU (including member states) and US officials in Kosovo, continuously talk about the importance of fighting corruption. But when the opposition in 2014 formed a coalition against the biggest party in power, and on a platform to fight corruption, the international stakeholders intervened to prevent them from forming the government*. The opposition – they said – was not as cooperative as the party in power in reaching agreements with Serbia.

(*For more see this: http://www.democratizationpolicy.org/uimages/DPC%20Policy%20Paper%20Trading%20Democracy%20in%20Kosovo.pdf)

After this had happened, I stopped believing that the international community wants to fight corruption in Kosovo.

In addition the EU Rule of Law Mission (EULEX) – whose mandate was precisely to fight organised crime, corruption and deal with war crimes - also failed to indict corrupt politicians or come up with important final rulings. This mission cost EU taxpayers over a billion Euro and is now being investigated for corruption itself!


A.B. - An April report by the Kosovo Center for Security Studies (KCSS) claims that Kosovo is the Western country that has sent the most recruits on a per capita basis to join Islamic State and other militant groups in Syria and Iraq. Which factors explain this Kosovo's fecundity for jihadists? How is the Kosovar government dealing with the matter?

B.S. - I think that like in any other country, those who have joined ISIS seem to be disenfranchised youth, with little perspective in their lives, trying to find some meaning in life. The word that I commonly see used by those who give interviews to the media is “dignity” – they are fighting to get their dignity back. These youth feel that the world is an unjust placed and they have been wronged greatly by a system that rewards consumerism and wealth, so they decide to join this compelling call to a more egalitarian community, as ISIS presents itself to these youth through their recruiters.

The problem is of course that ISIS is not egalitarian, nor a means to retrieve dignity. It is a violent terrorist group that treats people as expendable good. But people find this out only after they have gone to Syria, which is too late because then they can hardly leave any more.

The Kosovo Government is addressing this as a security issue, arresting suspicious people and closing down dubious NGOs that are suspected of having contributed to recruitment. But I think this is not only a security issue: it has a socio-economic aspect to it. And to fight it, Kosovo needs to become a better, more prosperous and inclusive country, which will involve all of its citizens in building this better country. The system in place right now – with a few very rich people, a lot of very poor people and a very thin middle class – must change, to allow for a building of a stronger middle class that will support the development of the country.

There should also be more opportunities for Kosovo’s youth to work, study and travel to the EU. Currently this is not possible as Kosovo is the only country in the Western Balkans without visa free travel to the EU. If young people want to travel to the EU, they must apply for a costly visa with long waiting times. The fact that only Kosovar youth have to go through this arduous procedure is really singling them out and making them feel like second class citizens in Europe. This must absolutely change so there is a clear signal to the Kosovo youth that they belong in Europe too.

A.B. - Despite all the difficulties, do you think that Kosovo's democratic process is moving forward? Do you feel optimistic about the near future?

B.S. - I think we are looking at a difficult few years ahead, but I am optimistic about Kosovo’s future. It is important that more people get engaged in a national debate about the future of the country. Until recently this was not possible, as decisions were being made by international organizations governing the place. They were not accountable to the people of Kosovo thus no debate was needed to inform their decisions.

But now things are different: there is currently a fierce national debate happening between the government and the opposition, that is authentic and I hope will produce change. It was sparked by the recent agreements made with Serbia, which the opposition disagrees with, but it is spilling over in other areas: energy and environment, privatization and even education.

At its core though, it is a debate about how are we going to build the state. On one side are those who believe that Kosovo is an international project and it is the international community who will finalise this project. So all we need to do is compromise and wait and the state will just happen. On the other side are those who think that the state can only be built by the people of Kosovo, who have to get engaged, work hard, achieve equality among – and justice for – its citizens and not compromise on issues that threaten the future of the state. I think this debate is absolutely necessary for the democratic development of Kosovo and the fact that it is happening is giving me hope for the future.

Interview with Zoe Konstantopoulou

Former president of the Greek Parliament (February-October 2015)

Published in El Punt Avui newspaper in November 29th, 2015

http://elpuntavui.cat/politica/article/17-politica/919026-tsipras-ha-trait-la-gent-que-confiava-en-ell.html

Full version (in English)

" Tsipras has betrayed a lot of people, a lot of things, a lot of ideas in many ways"

"When we talk about viable alternatives [to the debt crisis], we should underline that what is now being implemented is not viable"

"The memoranda regime is a death penalty not only for the Greek society but also for democracy and European societies"

"I would say there is a huge, an ample future for the left in Europe provided that the people from the left do not accept selling their souls and their common values and principles"

A.B. - Since the victory of Syriza last January we've seen a lot of things happening in Greece. Ten months later, we have a leader who took power promising to put an end to austerity, currently implementing the measures he vowed to reject.

Z.K. - For a lot of us, the fact that the Greek people gave us the mandate to do away with austerity and the memoranda regime, is a binding contract with society. It is inconceivable to do the opposite of what you promised the people and it's unacceptable to undertake to implement the harshest, the most anti-social, the most neoliberal programme ever introduced in the European Union.

Unfortunately, Mr.Tsipras, who was leading, and is leading the government, decided to do the unacceptable. He decided to undertake what is inconceivable: to implement the harsher measures, to bring more austerity upon a destroyed society and to pretend that he has been forced to do what he doesn't agree with.

There was, and there always is an alternative for Europe. For the European people and for the Greek people, to believe that there isn't one just because a leader proved short of our expectations is not what we should do. We should still fight to protect the Greek society and the European societies from this extreme and so suicidal programme.

A.B. - Do you consider him a traitor?

Z.K. - It is sure that he betrayed the people who trusted him. He betrayed his comrades, us, who trusted and supported him and made extreme efforts in order to implement our programme and proved, a lot of us proved, that there was, that there absolutely is, a possibility to implement a programme which is friendly to the society, a left-wing programme. And he betrayed also the traditions and the legacy of the people who have fought to protect rights and freedoms and to restore democracy in our country. Oh yes, he has betrayed a lot of people, a lot of things, a lot of ideas in many ways.

A.B. - Was there a viable alternative to the bailout?

Z.K. - First of all, when we talk about viable alternatives, we should underline that what is now being implemented is not viable. It is not acceptable to have one out of two children living below the poverty line, one out of two pensioners living below the poverty line or having unemployment among the young which reaches 72% among young women and 60% among young men. This is not viable. It is not viable to ask for the Greek society to pay with the blood of the people and to give away whatever has been cherised as public property just in order to repay a debt which has been proven to be unsustainable and illegal.

A viable solution is a determined solution about the debt and abolition of the debt which is already proven to be unsustainable, illegal and odious. A viable solution would be to let the society breathe through different economic modalities. A viable solution would be and still is to reinforce institutional democracy and the democratic procedures at all scales. A viable solution is to demand that democracy is protected and implemented within the European Union.

It is true that we have creditors who are playing an extortionate role, they are blackmailing the society, they are blackmailing the people. It is never a solution to condone to blackmail, it is never a solution to subject your people to this blackmail; it is a solution to demand a restoration of legality, it is a solution also to demand that the principles of the UN voted just last September at the General Assembly concerning debt undertaking and debt restructuring, be implemented.

There is, I would say, a whole range of alternatives, of solutions. What is sure is that the memoranda solution, the memoranda regime is a death penalty not only for the Greek society but also for democracy and European societies.

A.B. - After the approval of the first batch of reforms and tax cuts stemming from its third EU bailout, the current Greek government is facing pressure from the street. In the 12th of November, there was the first general strike against Syriza's government. Given the difficulties, can you foresee a lasting government?

Z.K. - I can't make a prediction. It has been proven that governments who undertake to implement memoranda don't last long. And it has also been proven that at the end they can not even see themselves in the mirror. Talking about whether it would last long, I would like to underline that unfortunately this government instead of clashing with what is a real oligarchy in Greece, instead of implementing a tax regime which would target those who have been benefiting big time during the last 40 years from corrupted relationships with governments, instead chooses to make alliances with these kinds of interests which can never be the pillar of a stable government. They can be the pillar of power for a short time but they can't ever be the pillar of a stable government. Only society and the people can be pillars for a stable government, and this government is losing both society and the people because it betrayed them and defrauded them.

A.B. - Over 744,000 refugees have arrived in Europe so far this year. Most of them (more than 600,000, according to U.N. figures) through the Greek islands. How is the flow of refugees entering Greece affecting your country?

Z.K. - The flow of refugees and before that the waves of migrants have been used and misused by political parties in order to cultivate racism. Indeed there is a very dangerous rhetoric during the last 25 years in Greece which is also the reason for the rise of Golden Dawn, a party which is clearly fascist but also nazi but also and most gravely extremely racist.

On the other hand this is one repercussion- of political parties not realising and not facing up to the seriousness of the phenomenon. On the other hand what is extremely heartening, extremely optimistic is the fact that among simple people, everyday people, there is a touching show of solidarity towards refugees. There is a sense of the need to support them and what is even more touching is the fact that this is demonstrated by people in need, by people who are themselves experiencing a humanitarian crisis and a humanitarian disaster and yet they find within themselves the strength and the determination to support other human beings who are fleeing to Greece and to Europe to flee war and tyrannies.

A.B. - In parallel with Syriza's success in Greece, we've seen Podemos rise in Spain and now the possibility of a left-wing government in Portugal with socialists alongside marxists and communists. Is the surge of the left in Southern Europe an isolated reaction to the 2008 crisis or something deeper, more settled?

Z.K. - First of all I think there are differences between the three examples, Greece, Spain and Portugal but there is also one acute common danger. And the common danger is to confuse the left with the social democrats. The danger is also, in a way, to launder the poltical responsibilities of the social democrats for Europe, for the fact that they basically accepted this transformation of Europe to this neoliberal cage. This was done with the social democrats support, so there is a danger for the left which is defending the society, the social state, democracy, social rights. There is a danger for the left when it decides to ally with powers basically responsible for a lot of the misery in Europe today. I would say that societies are becoming more and more aware of the reality surrounding them and the people are becoming more and more decided to fight for their lives, for their rights and for their dignity.

And it's through this awareness and this decisiveness that they meet with the left but also with the social movements and with those social powers which are ready to fight the battle to restore democracy and to protect society.

I would say there is a huge, an ample future for the left in Europe provided that the people from the left do not accept selling their souls and their common values and principles.

Interview with Salam Kawakibi

Deputy Director and Director of Research,
Arab Reform Initiative (ARI), Paris

Published in El Punt Avui newspaper in
November 10th, 2015

http://elpuntavui.cat/politica/article/17-politica/913265-lels-refugiats-interessen-quan-arriben-a-europar.html







Full version (in French)

"Les réfugiés n'intéressent la communauté internationale qu’à partir du moment où ils commencent à arriver en Europe"


"Il est à souligner l’absence des parties syriennes de la table de la négociation de Vienne. Cela traduit une volonté d’imposer, tôt ou tard, une solution sans prendre en considération leurs avis"

 
"Il est fort possible que la communauté internationale prévoit un scénario espagnol pour la future proche en Syrie : L’Occident avait réhabilité Franco pour combattre le communisme en effaçant tout son passé et son alliance avec les Nazies et les fascistes. Ainsi, en Syrie, rien n’empêche de réhabiliter le dictateur afin de combattre les “terroristes”


A.B. - Cinq ans après la révolution syrienne et la guerre civile, quelle est la situation du pays? Qui contrôle quoi sur le terrain?

S.K. - C'est très confus. Même pour parler d'une défaite de la révolution et pour qualifier que c'est maintenant une guerre civile, c'est plus compliqué que cela. Le régime contrôle, avec ses appuis iraniens et russes et irakiens et Hozballah moins que 20 % du territoire. Cependant, les autres parties du pays sont sous contrôle très changeants et fluides. Nous ne pouvons pas parler de réelles lignes de démarcations. Il est important de souligner, qu’après un an du début des frappes des alliés occidentaux contre Daech et un mois du début des frappes russes –soit disant- contre Daech aussi, ce dernier avance et il réalise des « victoires » sur le terrains. Les groupes modérés, qui existent bel et bien malgré le dénigrement de plus en plus répandu au sein des diplomates occidentaux, contrôlent aussi des zones avec très peu de moyens. Ils mènent leurs combats sur deux fronts : d’un côté le régime et ses alliés et de l’autre Daech.


A.B. - Les puissances internationales et régionales, y compris l'Arabie saoudite et l'Iran, se sont réunies en octobre à Vienne pour discuter d'une solution politique pour la guerre civile en Syrie, mais il n'y a pas eut de consensus sur l'avenir du président Bashar Al-Assad. Qu'est-ce qu'on peut attendre de ces conversations?

S.K. - Je crains que toutes les parties soient confortables pour étaler ces conversations. Chacune pour une raison différente et peut être contradictoire. En attendant, les Syriens meurent sous les barils de TNT ou à cause des frappes aériennes russes, ou finalement et beaucoup moins, à cause des crimes des terroristes de Daech. Il est à souligner aussi l’absence des parties syriennes de la table de la négociation. Cela traduit une volonté d’imposer, tôt ou tard, une solution sans prendre en considération leurs avis. Les Iraniens sont très contents d’être impliqué sans même devoir proposer des solutions. Les Russes se sentent le danger d’un éternisèrent de leur implication avec tous les couts que cela représente pour leur économie. Les Américains, avec leur manque de vision et de stratégie, ils veulent assoir les acteurs régionaux et internationaux autour d’une table sans même chercher à ellébore un plan de route. Et les Européens, ils sont sous le choc superficiel de la crise des réfugiés et ses répercussions. Les élections dans plusieurs pays dictent le choix diplomatiques malheureusement. Cependant, les négociations de Vienne sont malgré tout nécessaires mais il faut du contenu et de la consistance.


A.B. - Al-Assad doit rester au pouvoir ou partir?

S.K. - Même un chef d’entreprise qui ne ressui pas dans sa mission doit démissionner. Un “Président” qui, par sa politique héritée de son père, mène le pays vers une catastrophe humaine, économique et même écologique doit dans les meilleurs des cas se retirer. Cependant, il est fort possible, dans l’incapacité d’avoir une vision politique claire et une volonté d’imposer une solution viable pour les Syriens, que la communauté internationale prévoit un scénario espagnol pour la future proche en Syrie : L’Occident avait réhabilité Franco pour combattre le communisme en effaçant tout son passé et son alliance avec les Nazies et les fascistes. Ainsi, en Syrie, rien n’empêche de réhabiliter le dictateur afin de combattre les “terroristes” dont il a contribué avec sa politique à leur émergence et leur développement.


A.B. - En septembre, l'aviation russe a commencé à bombarder cibles rebelles et de l'État islamique. Croyez-vous que la intervention russe est un "game-changer" qui va ouvrir un nouveau chapitre dans le conflit?


S.K. - Comme j’ai mentionné, l’alliance occidentale ne donne aucun résultat tangible. Ainsi, depuis le 30 septembre, les Russes ont concentré leurs frappes sur les rebelles modérés et très peu sur l’Etat islamique. Les Russes ont toujours étaient claire sur leur positionnement en Syrie. Ils ont parlé même d’une “Grozny solution”. La destruction massive fait partie de leur culture militaire. Le nombre des victimes civiles les importe peu. Ils sont sur le terrain en Syrie maintenant et ils voudront avoir le prix nécessaire pour concéder. Ils veulent régler plusieurs affaires sur leurs scènes intérieures et extérieures au dépend des Syriens. C’est un changement crucial dans les règles du jeu et il semble que les occidentaux cèdent devant cette opération en essayant de demander des petits “faveurs” par ci et par là.


A.B. - Craignez-vous un effondrement de la Syrie, avec la perte de la souveraineté nationale et un avenir comme celui de l'Irak ou de la Libye?

S.K. - La souveraineté nationale est déjà bafouée. C’est un open space. Il y a plusieurs forces étrangères qui œuvrent sans le consentement des Syriens, surtout du côté du régime. Cependant, parler de la partition de la Syrie reste un sujet peut être espéré par certains occidentaux ainsi que les Russes et les iraniens chacun pour ses motives. Pour l’occident, c’est le scénario la plus simple à envisager le traitement. Pour les Russes et les iraniens, ils savent que l’ensemble de la Syrie ne pourra jamais tomber dans leurs mains, donc, la partition en gardant une Syrie “utile” leur semble faisable. Mais dans la réalité c’est presque impossible sans effectuer des opérations massives de déplacement de la population pour changer la donne démographique. Il est vrai que cette opération avait commencé dans la région de Homs mais elle reste limitée. Pour éviter le chaos, il est inévitable de trouver une solution qui rassemble des forces gouvernementales qui n’ont pas contribué à la tuerie avec les groupes des rebelles modérés. Ce qui s’est passé en Irak et en Lybie est dû à une invasion étrangère et une mauvaise gestion du day after. Il faudra éviter cette suite en Syrie avec le maintien des institutions étatiques restructurées.


A.B. - La guerre en Syrie a fait plus de 250.000 morts depuis 2011 et a provoqué près d'11 millions de réfugiés et déplacés. Comment peut-on arrêter cette souffrance, cette catastrophe humanitaire?

S.K. - Cela ne commence à intéresser la communauté internationale qu’à partir du moment où les refugiés commencent à arriver en Europe. Malheureusement, nous constatons un accru de xénophobie qui s’associe avec la progression des partis de droite nationaliste dans plusieurs pays. Il était temps où l’occident traitait les questions humanitaires avec plus d’humanisme et loin des calculs électoraux. La situation est aussi très difficile dans les camps des réfugiés en Jordanie et au Liban. Seule la Turquie assure un accueil décent. Nous sommes maintenant dans une nouvelle phase : après l’accomplissement de la destruction matérielle du pays par une volonté diabolique de s’accrocher au pouvoir, il y a la destruction humaine. Une bonne partie des réfugiés vient de la classe moyenne éduquée. La reconstruction se fera avec une telle catégorie de la population. Si elle disparait, si elle s’en va, la construction va être très difficile le moment où les “autres” décideront d’instaurer la “paix” dans ce pays.

Interview with Mohamed El-Erian

Chief Economic Adviser at Allianz, chair of President Obama's Global Development Council and former CEO at PIMCO

Published in El Punt Avui newspaper in
September 16th, 2015

http://elpuntavui.cat/economia/article/18-economia/895503-els-eua-tots-sols-no-poden-tirar-l-economia-global.html 

A.B. - Headlines this summer have been all about the slowdown in China, the devaluation of the RMB and the crash in global stock markets. Why is China a problem all of a sudden? What are the implications of the Chinese slowdown on the U.S. and global economy?

M.E. - For quite a while now, markets have been comfortable with the notion of a global economic equilibrium – not a great one but a stable on. While growth would be low in Europe and Japan, this would be offset by a gradual recovery in the United States along with continued robust expansion in the emerging world.

This notion has been unhinged by persistent data out of China and other emerging economies pointing to a notable slowdown. Indeed, with the exception of India, every systemically-important emerging country is slowing: Brazil, China, Russia, Turkey, etc…

Market anxiety has been compounded by something else: lower confidence in the ability of central banks to manage well their policy challenges. With the latest tricky issues coming out of the emerging world – rather than Europe or the US – there is more concerns about the effectiveness of policymaking there. And there is realization that the policy reach of the ECB and Federal Reserve, two highly respected central banks, is a lot more limited in these circumstances.

As regards the spillover, the strictly economic ones can be contained. The big risk is that the financial turmoil, including heightened volatility, spills over onto the real economy by altering both household and corporate behaviors – by making individuals less willing to spend and by making companies less eager to invest.

A.B. - Judging by the strength of its labor market, the US economic recovery has been well ahead of everybody else's. Why has the U.S. succeeded in creating employment while others have failed? Can the U.S. become an engine of global growth?

M.E. - While it is a contributor to global growth, the US economy – by itself – is not in a position to decisively pull the global economy out of its doldrums.

Don’t get me wrong. The US economy is still the most important in the world. And what happens here matters a great deal. The problem is that, while it continues to heal, the US economy is unlikely to attain economic “escape velocity” and “lift off.” And that is what is needed for it to perform the role of a robust global growth engine.

A.B - Can the ongoing turbulences in global markets derail the recovery in the U.S.? Is there a risk of a return to a 2008-type of financial crisis or to a major financial accident? What kind of triggers would take us there? Has the financial system/banks been sufficiently regulated after 2008?

M.E. - It is a risk scenario, and not a baseline. And the major threats no longer come from the banks. 

What made the 2008 financial crisis particularly painful is that it struck the payments and settlement system, the nerve system of a market economy. The trust needed to complete simple transactions literally disappeared, triggering cascading failures and “sudden stops” that brought the global system very close to a multi-year depression.

The payments and settlement system is in much better shape today. Concurrently, the systemic risks associated with banks have lessened now that they have been forced to raise capital, better value their balance sheets, and dispose of dubious assets.

But this is not to say that there are no risks. In fact, some of them have morphed and migrated out of the traditional areas that are closely regulated and supervised. They now reside in the non-banks.

A.B. - What does Europe need to do to generate more sustainable growth and employment? Is the ECB doing enough? Has fiscal austerity been the right policy response to the challenges afflicting the periphery of Europe?

M.E. - Europe needs to move on four policy issues, simultaneously; and as hard as the ECB is trying – and it is trying very hard – it is not in a position to deliver when it comes to these four critical policy areas.

First, countries need to move more forcefully in implementing pro-growth structural reform. Second, they need to attain a better aggregate demand balance. Third, there are still crippling pockets of debt over-indebtedness that need to be resolved. And finally, progress needs to be made on the regional architecture, going from a 1 ½ legs for the Eurozone stool (monetary union and baking union) to a set of 4 legs (those two, along with fisval integration and closer political coordination).

As much as it is committed to do whatever it can to assist the region’s economic and financial recovery, the ECB does not have the right instruments to deliver decisive gains in these four areas. As such, the best it can do is to buy time for politicians to get their act together,

As regards the specific issue of austerity, what is needed now is to evolve to a more responsive approach – I call it “intelligent austerity.” And it is one that better tailors the degree and composition of austerity to the longer-term needs of generating robust growth and generating sufficient jobs,

A.B. - We all have been witnessing the dramatic flow of refugees crossing Europe to reach Germany, and the shameful handling of the situation by the European governments. What should do European countries to give an efficient and humanitarian response to this crisis?

M.E. - As you rightly say, it is a dramatic flow; and it is one that has involved significant tragedies and human suffering.

In simple economic terms, there is a massive imbalance between the supply and demand for refugees.

Escaping awful and lamentable conditions at home, tens of thousands of people are risking their lives in the hope of establishing a more tolerable life for them and for their families – it’s a supply that will not moderate any time soon.

On the other side, the demand for refugees is limited – thus causing huge bottlenecks. While some countries, led by Germany have taken an enlightened approach – mixing humanitarianism with a belief that supporting the refugees can also result in productive workers down the road – most are yet to respond sufficiently to this historic challenge. And, to make things worse, regional coordination has not been up to the task.

A comprehensive solution requires movement on both the demand and supply sides. Brussels’ proposals of country quota is a way of forcing a higher demand for refugees throughout the EU. But even if accepted by member countries, this won’t be a long-term answer unless steps are also taken to improve conditions in the home countries of the refugees.

A.B. - Is the Greek crisis over for good? Would Greece have been better off by defaulting on its debt and leaving the eurozone?

Unfortunately, the Greek crisis is not over; and it won’t be unless Greece is able to generate high growth and sizeable job creation.

A deeper debt restructuring is one of the measures Greece needs. Without that, crippling debt overhangs will continue to hold back investment and undermine the country’s growth dynamics. How best to achieve this is up to Greece and its European partners.

A.B. - The economic crisis in Europe (and the periphery in particular) has shaken its existing political and economic structures. The emergence of the far right and populist movements is radically altering the political landscape in Europe. Is Europe heading back to the 1930s?

M.E. - The “non-traditional/anti-establishment/outsider” wave is one that is apparent in much of the west.

In the United States, it started out with the emergence of the Tea Party, and it is now playing out in the surprising popularity of presidential candidates such as Donald Trump and Bernie Saunders. And, as you note, it is visible in much of western Europe.

This is an important contextual observation as it speaks to the general dis-satisfaction among citizens with the performance of the political establishments; and it is a particularly concerning phenomenon when it translates into support for extremist parties, some of which are also only one-issue parties.

The immediate impact of this is to complicate governance by the traditional parties. And this comes at a time when citizens are looking to their governments to step up to a series of economic, financial, social and geopolitical challenges.

As worrisome as all this is, I do not think that we are heading to the 1930s. But we do need a “sputnik moment” that brings together the political class in a manner that better serves those who elected them.

A.B. - There's also an emergence of secessionist movements across Europe as we saw in Scotland last year and Catalonia today. On Catalonia, are markets worried over the process of independence? Would markets care as to how the process is handled, and whether an independent Catalonia stays within or outside the EU?

Rather than worried, I would say that markets are paying attention -- and understandably so. Catalonia is a notable part of Spain’s economy, the fourth largest in the Eurozone. So of course they care about how this situation is handled. And it matters beyond the Eurozone too.

Assessing what markets care about reinforces the notion that it is in everyone’s interest – Catalonia, Spain and Europe’s – to handle this process in orderly manner. This is particularly so after all the tensions and strains caused by the Greek crisis. As such, it would include maintaining an independent Catalonia within the EU.