ECB Code Words for Dummies

The Wall Street Journal's finance blog "The Source" analyzes European Central Bank chief Jean-Claude Trichet's use yesterday of the phrase "strong vigilance" in reference to the prospect of forthcoming interest rate raises, and what this means in numerical terms for market watchers. The Financial Times alternatively terms the code a "traffic light system" that indicates rate rises with a certain reliability.

Particularly interesting is the article's chart of ECB verbal expressions and their corresponding interest rate change metrics, which should demystify for all of us non-economists (myself included) some of the opaque language used by economists and finance folks on each side of the Pond. 

By the FT's count, the ECB has invoked the words "strong vigilance" and then raised rates seven out of nine times since 2005. 

The WSJ article surmised that Trichet's most recent use of the expression "strong vigilance" can be translated in layman's terms to, "we are worried about inflation and are leaning toward raising interest rates." 

Trichet's hawkish if nuanced rhetoric is widely perceived as a way of projecting a confident public front for the ECB in the face of grave concerns over the EU's economic recovery strategy on the eurozone's sovereign debt and the global financial crises.

If the past six years are anything to go by, turns of phrase such as "vigilance," "monitor closely" and in particular "strong vigilance" all preceded actual interest rate shifts orchestrated by the ECB. As the piece puts it,

“During the last tightening cycle, ‘strong vigilance’ was used one month prior to all policy moves (except for the one in March 2006, when only ‘vigilance’ was used). In addition, some form of ‘monitor closely’ or ‘monitor very closely’ was used in other months to signal that the rate normalization was not yet complete. Such code words could be used again this time."

Sources have varied widely on whether Trichet's words should be considered worrisome. Reuters says that the Frankfurt-based bank "stunned markets by indicating it could raise interest rates as soon as next month." In contrast, Seeking Alpha puts the odds of a rate hike at "above zero, [but] not much higher." 

A "New Breed" of Transatlantic Stock Markets

The New York Times reports a "new breed" of transatlantic stock markets.

EEAS Org Chart

Thanks to the Migrants at Sea blog for this organizational chart of the European External Action Service (EEAS). 

 

EurAmerican has published regularly about the EU's fledgling diplomatic corps, notably its relations with China, last year's disappointing Christmas summit with the US and this op-ed from Washington's The Hill newspaper, focused on the EEAS' presence in the American capital. 

Sarkozy Names Juppé Foreign Minister After Alliot-Marie Disappoints

French president Nicolas Sarkozy replaced foreign minister Michele Alliot--Marie last night after a storm of criticism at home in the wake of the Middle East and North African turmoil. Her replacement is defense minister and former prime minister Alain Juppé. 

Here's more, just in from Bloomberg:

"Sarkozy’s address last night and Cabinet shuffle follow a troubled month. His approval ratings fell to a record low and he was criticized by opposition parties, French diplomats and members of his own party for not firing Foreign Minister Michele Alliot-Marie after it was revealed her Christmas holiday in Tunisia overlapped with the beginning of anti-regime protests.

Alliot-Marie quit yesterday following criticism over her Jan. 11 statement during the Tunisian revolt that her government was ready to provide advice to local police on crowd control. Alliot-Marie, who served as a minister for the past nine years, was also criticized for accepting two flights in a private plane from an associate of then-Tunisian dictator Zine El Abidine Ben Ali.

"France’s voice had to be heard in the world … and Michele Alliot-Marie’s voice wasn’t audible anymore,” Fillon said. Polemics about Alliot-Marie ”became dangerous for France,” he said."

 

To Young French, London Means a "Gateway to Globalization"

This week's Economist describes the cross-section of French who pull up stakes and move to London, seeking work, adventure and the chance to master English. 

The archetype of this exodus, explains the piece, is the French "banker with children at the Lycée Francais in [the upscale neighborhood] South Kensington... who misses the food and weather of home." Indeed, The City's status as a global financial and business hub, not to mention its lower tax rates on income and personal wealth, make it an enticing destination for ambitious French who have money or want to make it. Many London-based French complain of the strictures of their often upper-class social codes and expectations, which they are free to customize or discard completely through a new life in the British capital. 

The international smorgasbord of London offers an intoxicating feast to those seeking cultural and culinary adventure. "It's hard to go back once you have tasted the internationalism here," explains one Gallic expat. A senior official from the French consulate likewise dubbed the city a "gateway to globalization"  for mobile and willing French professionals. Some of these are fleeing the economic doldrums of Ireland, where they had gone to launch business and careers; reluctant to head home, they're giving themselves a second chance in the UK. And language is a key draw for French of all social strata, and many lower-middle- and middle-class strivers elect to work summers or longer stints as waiters, au pairs and odd-jobbers in exchange for increased fluency in the language of Shakespeare.

One detail of the article's Franco-centric globalization deserves underscoring: In the 2012 elections there will be for the first time a representative in France's Assemblée Nationale -- equivalent to the U.S. House of Representatives -- for all French citizens living in the UK and Northern Europe. The capital for the French diaspora in this part of the world is London by overwhelming numbers: the same French consulate approximates the Hexagon's population in London as some 400,000, perhaps the capital's largest minority nationality.

Watch this space for more on the French député for London and European points north, as well as Franco-British developments on either side of the Channel.

Left- and Right-Wing French Diplomats Spar in Press

The Hatfields

It's like the Hatfields and McCoys -- family feuds, 

strong words and provocations -- only this time, the families are French diplomatic chiefs who skirmish not with weapons but a pair of caustic collective letters published (anonymously) in top-tier news outlets. The French Politics blog reports a tit-for-tat between France's pro- and anti-Sarkozy foreign service members. 

Le Monde printed an editorial Thursday from a group of diplomats critical of the Sarkozy record, who, going by the moniker "the Marly group" after the Paris cafe where they congregate, launched a missive against what they feel is their overshadowing by the French president's do-it-himself approach to foreign affairs. Sarkozy's supporters came to his defense in another editorial published by Le Figaro the following day. The group styled themselves similarly, calling themselves "the Rostand group," after the name of their most-frequented cafe. I won't delve into a long analysis of each piece, but some choice morsels read as follows.

From the Marly group, critical of Sarkozy diplomacy:

"Europe is weak, Africa is escaping us, the Mediterranean is avoiding us, China is overtaking us and Washington is ignoring us! Even worse, the voice of France has disappeared in the world. Our herd mentality in regard to the United States puzzles many of our partners."

["... L'Europe est impuissante, l'Afrique nous échappe, la Méditerranée nous boude, la Chine nous a domptés et Washington nous ignore ! ... Plus grave, la voix de la France a disparu dans le monde. Notre suivisme à l'égard des Etats-Unis déroute beaucoup de nos partenaires."]

Note the worry over Washington's seeming move away from one of its historically important foreign partners, even as the prose projects a latent but palpable antiamericanism... Still more odd is the virtual invitation for a "WikiLeaks à la francaise" to expose the sound methods of French diplomats that the Marly group considers wrongfully dismissed by the current French head of state.

"A French WikiLeaks would allow [the public] to see that French diplomats drafted, like their American colleagues, cables just as critical and without concessions."

["Un WikiLeaks à la française permettrait de vérifier que les diplomates français ont rédigé, comme leurs collègues américains, des textes aussi critiques que sans concessions."]

These mixed attitudes of this random sample of the French left typify the post-WWII posture pioneered by Jean-Paul Sartre and others. They are only aggravated when the element of the United States gets put in the mix -- a tireless trope of the countries politically progressive wing.

Not that the Marlyites act as the sole contributors of weirdness in this ugly exchange. The Rostand Group is guilty of its own inelegant tone.  The Figaro piece vaunts heavy sarcasm, which does little to advance its case among nonpartisan readers in France or elsewhere. They write, on the Marly group's rhetoric:

"Oh, if only [the world] had listened to us! France would have predicted the fall of the Arab dictators. Even better, France wouldn't have mixed with these evil regimes...  If we'd let the French do as they intended, [the climate summit at] Copenhagen would have been a triumph and global temperatures would already be a little lower everywhere. The Middle East would be in peace... France would have anticipated everything; France would have never been wrong."

["Ah, si on les avait écoutés! ... La France aurait prédit la chute des dictateurs arabes. Mieux, elle n'aurait pas frayé avec ces régimes honnis... Si on les avait laissé faire, Copenhague aurait été un triomphe et la température baisserait déjà un peu partout. Le Moyen-Orient serait en paix... On aurait tout prévu, on ne se serait jamais trompé."]

Clearly, "hyperbole" was Rostand's operative word. They go on to question Marly's timing (French presidential election campaigns for 2012 are gearing up) and throw in a whiff of postcolonial reflection: 

" 'Africa is escaping us,' they also say. Must it still belong to us? And must we have today nostalgia for a "Papa's Africa" held in dependence on aid for which we know the cost, where clientelism takes the place of politics?"

 [" 'L'Afrique nous échappe,' disent- ils aussi. Devrait-elle nous appartenir encore? Et faudrait-il aujourd'hui avoir la nostalgie d'une Afrique de papa tenue dans la dépendance d'une aide dont on connaît le bilan, où le clientélisme tenait lieu de politique?"]

This kind of editorial sparring among federal bigwigs just doesn't happen in the US. Or as the WSJ put it in today's weekend journal, "we don't grow them here," but that's in reference to France's sometimes-intellectual rockstar, Bernard-Henri Lévy, and his thoughts on writing, style and why people hate him.

 

"Style, writing, hating... Hating, style, writing..."   Bernard-Henri Levy

As a barely-related final thought: in 2006, Levy retraced the American journey of French aristocrat and political thinker Alexis de Tocqueville, then wrote a book about it. For that, Garrison Keillor nailed him.  

 

NY Times Suggests EU's North African Policy Is Unclear

See this New York Times piece on the European Union's mixed-bag policy suggestions on the current turmoil in North Africa. EU leaders have in recent days spent much fretting over the prospective masses of immigrants from the Mediterranean's southern crescent. The article underscores the particular concern that the possible collapse of the government in Libya could unleash "chaos and anarchy," which may in turn prompt huge flows of migrants into southern Italy and other European nations from that point on. 

The British foreign secretary William Hague has signaled that the North African situation has far broader implications for EU foreign policy, terming it a “major test, a historic test for the EU.”

“Clearly if we can succeed in bringing more democracy and more stability to North Africa and the Middle East that will be the greatest achievement for the E.U. since enlargement,” he added, referring to the bloc’s expansion to bring in former Communist states. “If we don’t succeed, the dangers to the E.U. of instability or extremism on our frontiers are immense.”

Other EU chiefs moved beyond hypotheticals and toward crippling financial restrictions for Libyan leaders who may be considering flight from the country. There is an implication the same would hold true for other government officials in the region, though whether other EU seniors will rally behind the pronounced position seems politically unlikely.  

A few EU politicians voiced benevolent, if politically unrealistic, aspirations to have functional democracy materialize in nations so long accustomed to authoritarian rule.

"Belgium’s foreign minister, Steven Vanackere, suggested that European parliamentarians should help countries like Egypt to develop a parliamentary system."

Also see how protests in Tripoli, the Libyan capital, were fought off with troops and warplanes on Monday, Feb. 21. In a symbolic shift in political capital, Libya's diplomats at the U.N. openly renounced Col. Muammar El-Qaddafi, the country's leader since the 1980s, called for his resignation and calling him a genocidal war criminal for his violent crackdown on protesters.

Egypt and the European Angle

Here's some of what we in the U.S. may not be seeing in regards to the European response on Egypt:

From Presseurop
 

The European Voice reports that the EU is reconsidering their aid structures to the country, which for the last three weeks has been paralyzed by protesters demanding the ouster of President Hosni Mubarak. Earlier this month EU leaders gathered in Brussels called for a democratic transition 'now,' offering various EU instruments that include "proposals and projects" to assist a post-Mubarak Egypt. The columnist Bruce Stokes underscores the leverage that trade could provide in stabilizing the nation should the current president, who has occupied his seat since 1981, respond to broad calls from his citizens that he step down.

From Le Figaro

Le Figaro describes a furious public after this afternoon's speech by Mubarak, in which the president announced the transfer of his powers without going as far as resigning his office. This article features a fascinating minute-by-minute timeline on the events of the day, from before the speech to the march toward the TV station where Mubarak had delivered his address.  

EUobserver sports a black-and-white dichotomy between in reporting and editorial blogs, with almost zero attention paid to the Egypt conflict in the former, and near-exclusive focus poured onto the Middle Eastern nation. Roberto Foa alludes to the region then segues nicely into a demographic analysis.  George Irvin surmises that, "will Mubarak go? The answer must surely be ‘yes’," before launching into a security debate with an Israeli-Arab orientation.  Nicu Popescu writes on revolutions, European "fence-sitting" as policy and the Egypt uprising's similarities with those in Albania and Belarus.

Presseurop submits that the revolutions across North Africa are only difficultly comparable to the fall of the Berlin Wall in 1989. On EU-Middle East relations, they say it's "time to ditch the Arab stereotype."

Euronews bring an under-reported angle to the religious climate in Egypt, where Muslims and Coptic Christians are united in solidarity during anti-government protests.

Global Europe illustrates discord between the EU's foreign policy chief, Catherine Ashton, and the Egyptian government, after the latter warned her not to follow through on a planned diplomatic visit later this month. Those close to Ashton say she still plans to arrive in the region, at least to Tunisia.

Watch this space for more on European and US dealings in the ongoing Egyptian turmoil.

Media Battle Over Tuscon Shooting Remarks

The best thing for safeguarding integrity in the media, it turns out, is the media.

Krugman: "Was it something I said?"

Following a column by New York Times columnist Paul Krugman about the possibility that the recent shooting in Arizona could be attributed to the incendiary rhetoric associated with the Tea Party and far-right groups, the Wall Street Journal editorialist James Taranto lashes back with this excoriating rebuke, lambasting the Princeton professor over what he sees as Krugman's hypocritical rejection of "eliminationist rhetoric." 

James Taranto, flagbearer of civility

EurAmerican is no stranger to Krugman's writings (see here), but agrees that Krugman went too far. I should hasten to observe, however, that a level-headed reading of both Krugman's and Taranto's pieces could judge them both as impassioned, which isn't actually bad, and exaggerated, which is.

Krugman's controversial comment is as follows, pulled from a piece called "Climate of Hate," a not-unironic title given the acrimony it has spawned:

"Where’s that toxic rhetoric coming from? Let’s not make a false pretense of balance: it’s coming, overwhelmingly, from the right. It’s hard to imagine a Democratic member of Congress urging constituents to be “armed and dangerous” without being ostracized; but Representative Michele Bachmann, who did just that, is a rising star in the G.O.P.

"And there’s a huge contrast in the media. Listen to Rachel Maddow or Keith Olbermann, and you’ll hear a lot of caustic remarks and mockery aimed at Republicans. But you won’t hear jokes about shooting government officials or beheading a journalist at The Washington Post. Listen to Glenn Beck or Bill O’Reilly, and you will.

Here's part of Taranto's response several days later in the WSJ:

"If the broader claim--that the "rhetoric" of Republican politicians and the nonliberal media was to blame for last Saturday's act of mass murder--is true, why can't it be presented without false factual assertions? Krugman's little lie undermines the big lie he and his newspaper are attempting to purvey.

"Krugman and his colleagues on the Times editorial board are not skilled enough to be effective liars. That is far from the worst thing you can say about newspapermen. But when did the people who run the New York Times forget that their job--their duty--is to tell the truth?"

We'll see what happens in the coming days as to whether Krugman will apologize and retract his remark, or whether he and his publisher will dig in their heels and lead the charge against the Wall Street Journal and followers toward a bitterly vitriolic rhetorical bloodbath. Given they're two of the finest papers in New York, if not the world, it's sure to be a spectacular fight. And maybe afterwards they can both bandage themselves up and get back to the objective, civil discourse that was once the pride of the American news industry -- and, here's hoping, back to media integrity at the same time.

The West and the Sudan Referendum

THOUGH it deserved better than being relegated to the Sunday "Outlook" section, The Washington Post today ran a compelling early-warning article and video on the role of the international community as Sudan gears up for a referendum on January 9th. In less than a week, southern Sudanese will take to the ballot box and determine whether their half of the country will secede from its northern counterpart. The north-south divide has produced decades of violence fueled by economic, racial and religious differences, notably in the region of Darfur, and many international figures have expressed great regret over not doing more to stabilize the region.

This time, leaders hope, will be different: President Obama has initiated a blitz of diplomatic activity in an effort to preemptively avoid violence. The push has involved US officials as well as foreign partners. Obama has sent over twenty envoys to the region in recent months, and has bundled a mixed carrot-and-stick package designed to motivate Sudanese power figures into a proactive mindset toward keeping the peace. The US president has also enlisted the help of Egyptian President Hosni Mubarak, whose country abuts Sudan's northern border. Mubarak can leverage diplomatic and political heft with Sudan's would-be warmakers, the US administration hopes. Said Samantha Power, an advisor to Obama on the region, "this is the first time I have seen the US government devote so many high-level resources to preventing violence before it happens rather than responding to it after the fact."

In light of the violence in recent years, the event will take

place under the strong glare of international media, which boosts at least somewhat the chances of a peaceful referendum. And a host of international groups are involved, with the African Union acting as peace brokers, the European Union with offers of economic aid, and a full 10,000 UN staff on the ground to ensure a voting process both fair and on-time.

However, the piece argues, "diplomacy can only be effective if it is complemented by a willingness to take action if prevention fails." This rings loudly of a hard-power solution of last resort, should the violence that is so dreaded nonetheless erupt. The article, written by the genocide prevention expert Michael Abramowitz, goes on to suggest dim hopes for the overly optimistic. It reminds the reader of the recent catastrophes in Rwanda and Bosnia, as well as the withering criticism roused by the international community's role -- by turns inappropriate, insufficient or lacking entirely -- in both of these.

Abramowitz therefore urges that the international community be prepared to make war to break war, so to speak, even as he strongly questions the role the UN would be able to play should armed intervention become necessary. 

"It is far from clear that the U.N. Security Council would react quickly to an unfolding crisis, and most experts agree that the U.N. troops in Sudan would be of little use should atrocities commence. (Years of conferences, NATO and E.U. deliberations, and think-tank studies on civilian protection have yet to yield momentum for an effective international rapid-deployment force to deal with such emergencies.) The United States has the capacity to intervene militarily in Sudan, but after 10 years of war in Afghanistan and Iraq, would it have the will, and would it be effective?

If the unthinkable were to happen in Sudan this year, we might hear echoes of Romeo Dallaire, the Canadian general in charge of peacekeeping forces in Rwanda in 1994, who futilely begged the United Nations for more troops to end the slaughter there - and who has lived in anguished regret over his failure ever since."

Abramowitz clearly sees the need for a two-pronged security approach for Sudan: 1) do everything possible to prevent violence from happening, and b) should violence return, be prepared to quell fighting with a persuasive (meaning mighty) show of force from the international community. 

PRACTICALLY speaking, the burden of the second task of course falls to the West. The military prowess of the African Union and its members is more reputed for internecine warring than for effective peacekeeping. More worrying still, the other blocs involved -- the EU, the UN, the United States -- face deep structural differences on what necessitates armed response to bloody conflict. The recent ghosts of Bosnia, Rwanda, Afghanistan and Iraq have only emphasized this disparity, in which the US is most often ready to fight (Afghanistan) -- but fights when it shouldn't (Iraq), or doesn't when it should (Rwanda), or fights too late (Bosnia). 

By drastic contrast, Europe suffers from a nearly Pavlovian reflex against military action of any kind, for any reason. This is the product of deeply entrenched civilizational lessons learned from two world wars fought at home, as well as a "never again war" dogma that has occasionally blinded the continent to its responsibility to act militarily in the world during times of true humanitarian need (Bosnia, again).

We all hope that no referendum-related violence transpires in Sudan, but another major question may develop among the international community of the West: if intervention becomes necessary, will we be of one accord to execute it?