The Washington Independent » europe

IMF: U.S. Unemployment Will Stay Above 9 Percent through 2011

Annie Lowrey — Thu, 08 Jul 2010 16:41:59 +0000

Yesterday, the International Monetary Fund released a report on the world economy, revising upward its predictions for U.S. economic growth while lowering its projections for many Western European countries. It also cautioned that the global recovery is imperiled due to the sovereign debt crises in Europe:

Downside risks have risen sharply. In the near term, the main risk is an escalation of financial stress and contagion, prompted by rising concern over sovereign risk. This could lead to additional increases in funding costs and weaker bank balance sheets and hence to tighter lending conditions, declining business and consumer confidence, and abrupt changes in relative exchange rates. Given trade and financial linkages, the ultimate effect could be substantially lower global demand.

In a separate report from late June, released today, the IMF said it does not expect the U.S. economy to fall into a double-dip recession, but that unemployment will stay above 9 percent throughout 2011. That translates into a long, slow recovery characterized by persistent joblessness and sluggish growth in GDP and consumer spending: “The outlook has improved in tandem with the recovery, but remaining household and financial balance sheet weaknesses — along with elevated unemployment — are likely to continue to restrain private spending.”

But the biggest risk to the U.S. recovery? Housing:

[The] backlog of foreclosures and high levels of negative equity, combined with elevated unemployment, pose risks of a double dip in housing; the continued deterioration in commercial real estate poses risks for smaller banks; and financing conditions remain tight, especially for smaller firms reliant on bank finance.

European Rejection of Obama’s Call for Stimulus Threatens U.S. Economy

David Dagan — Tue, 06 Jul 2010 10:00:47 +0000

President Obama at the G-20 Summit in Toronto on June 27 (Xinhua/ZUMApress.com)

BERLIN — President Obama’s push for additional economic stimulus is not just hitting a wall in Congress. The president has also been rebuffed by the largest European countries — with potentially profound consequences for the U.S. economy and Obama’s national agenda.

[Economy1] In the run-up to the G-20 summit in late June, the Obama administration went on a PR offensive, urging other wealthy nations to keep pumping stimulus into their economies. But with the Greek budget crisis heightening anxieties over public debt, conservative governments in Berlin, Paris, London and Rome are all on an austerity track. Instead of a pledge to inject more capital into their economies, all Obama got at the Toronto conference was a communique that emphasizes savings over stimulus.

Some economists fret that Europe’s fiscal retreat threatens to tip the U.S. deeper into recession. Meanwhile, leading analysts in Germany, the continent’s largest economy, say the trans-Atlantic spending spat underscores Obama’s limited maneuvering room in his effort to steer the fragile recovery back home.

“America is having enormous difficulties,” said economist Gustav Horn of the Macroeconomic Policy Institute, part of a labor-affiliated foundation in Düsseldorf, Germany. “At the moment, [the U.S.] is dependent on the rest of the world offering it a friendly economic environment.”

For Obama, the environment is less friendly than he would like. In an open letter to other G-20 heads of state before the summit, the president wrote that leaders should “learn from the consequential mistakes of the past when stimulus was too quickly withdrawn.” Treasury Secretary Tim Geithner, meanwhile, told the BBC, “Growth in the future around the world can’t depend on the United States as much as it did in the past.”

Some economists warn that austerity in the largest European economies, combined with severe budget cuts in countries such as Greece and Spain, could push the continent into a double-dip recession. If so, the consequences for the U.S. could be severe. A European downturn, Horn said, would hurt American exports, both by lowering demand and by strengthening the dollar. Perhaps more importantly, he added, a stumbling Europe could weaken crucial U.S. trading partners in Asia. Likewise, Nobel Prize-winning economist Paul Krugman recently warned that the resistance to more stimulus in Europe and the U.S. raises the specter of a depression.

But the dominant view in Germany is that such fears are misguided. Supporters of budget consolidation note the country is on an upswing, with GDP growth expected to reach as high as 2 percent this year as exports accelerate. Moreover, they argue that fiscal retrenchment will spur private-sector spending. A recent report by the Ifo Institute for Economic Research, a Munich-based think tank with government funding, says cuts would lead to an “expansive confidence effect on German consumers and investors.”

The fear that a European slowdown could hurt American trade underscores a more fundamental challenge that German economists say the U.S. must tackle: expanding exports as a source of economic growth.

“Before the crisis, we had a consumption boom in the U.S. that was not sustainable,” said Ifo economist Klaus Abberger. “And so we think there is a need for some redirection.”

That redirection, economists say, will be outward.

“The growth driver you’ve got left is ultimately net exports,” said economist Christian Dreger of the Berlin-based German Institute for Economic Research, another government-funded think tank.

The Obama administration has come to a similar conclusion. In his State of the Union speech in January, the president announced a new initiative to double American exports within five years, though many analysts called the goal unrealistic.

“For too long, America served as the consumer engine for the entire world,” the president said in follow-up remarks in March. “But we’re rebalancing. … Countries with external deficits need to save and export more.”

But the future of U.S. exports is not entirely under American control. The country can only reduce its trade deficit if the rest of the world has sufficient buying power, Horn said. The G-20 has been touting a new initiative to ease trade imbalances, which would require net exporters like Germany to buy more from net importers like the U.S. But it remains to be seen whether there will be any action to follow the talk.

Obama’s inability to induce Europe to boost its stimulus spending is rendered even more discouraging by the limited traction his spending proposals are getting in Congress. And it does not help that Obama is looking increasingly isolated among world leaders in pushing a more expansive fiscal policy.

“You don’t win something in Congress by saying, oh, Europe’s doing this,” said economist Dean Baker, co-director of the left-leaning Center for Economic and Policy Research in Washington. “[But] you don’t want the U.S. to look like an outlier.”

The president should not get his hopes up for a hand from Berlin, though. As the Berliner Zeitung newspaper declared of Germany’s chancellor in a recent headline: “Merkel won’t listen to Obama.” The country has a culture of thriftiness to rival even the fiscal-conservative wing of the Republican Party. The traumatic hyperinflation that racked the Weimar Republic during the 1920s has made Germany hyper-sensitive to price stability. The country last year amended its constitution to include limits on government debt. Deep concern that the aging of the population will soon make Germany’s welfare state unaffordable have made people here anxious to get back to budget cutting. Meanwhile, unemployment is lower than in the U.S., so the economic pain is less acute.

Deficit hawks here also argue the turmoil in Greece is a warning to profligate governments across the continent.

“We saw with the Greek crisis how vulnerable highly indebted countries are to [speculative] attack,” said Norbert Barthle, a member of the German parliament from the ruling center-right Christian Democratic Union party (CDU) who specializes in budgeting.

The American economy has managed impressive growth so far this year, but it has largely been driven by the effects of government stimulus, Horn said. And the looming dry-up of stimulus funds around the world amounts to a serious problem for the American president.

“He has to do more if other countries do less,” Horn said. “And in that sense, his worries are absolutely understandable.”

David Dagan is a freelance journalist living in Berlin.

How to Discredit Afghan Women, Courtesy of the CIA

Spencer Ackerman — Fri, 26 Mar 2010 20:32:50 +0000

Wikileaks obtained and published (PDF) a CIA “Red Cell” analysis — that’s what the agency presents either to counter received wisdom or to be deliberately provocative — on bolstering support for the Afghanistan war among skeptical European publics. (Hat tip to Jeremy Scahill.) Among the strategies employed: a cynical manipulation of the horror faced by Afghan women under the Taliban:

Afghan women could serve as ideal messengers in humanizing the ISAF role in combating the Taliban because of women’s ability to speak personally and credibly about their experiences under the Taliban, their aspirations for the future, and their fears of a Taliban victory. Outreach initiatives that create media opportunities for Afghan women to share their stories with French, German, and other European women could help to overcome pervasive skepticism among women in Western Europe toward the ISAF mission.

There is a general sense of unease among human rights activists about the future of Afghanistan if there’s a negotiated settlement of the war with Taliban elements, even despite the women’s rights abuses perpetrated by the Karzai government and its allies. It’ll be the subject of what might be a fraught conference at the U.S. Institute of Peace next week. For anyone concerned about human rights, it’s a vexing, haunting question, and one that creates an increased need to listen to the voices of Afghan women as they try to consolidate what gains they have made in post-Taliban Afghanistan.

This analysis, however, outlines a surefire way to cynically discredit those voices precisely when they’re needed most. The easiest recourse to marginalization is to portray someone as a CIA stooge. “Media events that feature testimonials by Afghan women would probably be most effective if broadcast on programs that have large and disproportionately female audiences,” the Red Cell analysis advises. What a disservice that would be to some of the bravest people on the planet, who’ve had to endure so much, to be used as a sales pitch for a war.

Western Officials Are Laughing at Mahmoud Ahmadinejad

Spencer Ackerman — Thu, 11 Feb 2010 20:47:00 +0000

It hurts not to be taken seriously, and that’s why the Iranian dictator went around boasting that he was going to deliver a knockout blow to the West in his speech today. The speech just kind of swung and missed. How badly? Mark Hosenball explains:

A European official with knowledge of Iran, who also asked for anonymity, said that despite the latest nuclear pronouncements of Ahmadinejad and other Iranian officials, many Western governments remain skeptical of Iran’s ability to produce uranium enriched to the 20 percent level—nevermind enriching it to a higher, bomb-grade purity of up to 97 percent. “Nobody even knows if they can do 20 percent,” the European official told Declassified. The Washington Postreported on Thursday that the Iranians were experiencing “surprising setbacks” in their enrichment efforts, failures the paper said “could undermine” Iran’s ambitions to dramatically expand its nuclear program.

The European official added that Iran’s erratic behavior, including its on-again-off-again response to a deal brokered by international negotiators to send its nuclear-power fuel rods abroad for processing, has alienated some important powers, like Russia, that in the past might have blocked efforts by the U.S. and Europe to tighten sanctions on Iran.

Once feared, Ahmadinejad is becoming a clown.

Europe: Still Smelly

David Weigel — Tue, 07 Apr 2009 16:27:52 +0000

Rasmussen Reports gins up the “does President Obama hate America and love Europe” controversy — which doesn’t seem to be, er, denting Obama’s improving poll numbers — by asking whether Americans think they’ve been too arrogant with Europe. Surprise!

Thirty-seven percent of American voters agree that in dealing with its European allies over the years, the United States has shown arrogance, been dismissive, and even derisive. The latest Rasmussen Reports national telephone survey found that 47 percent disagree with that assertion and 16 percent are not sure.

Whether America has been dismissive with Europe doesn’t seem open to question. We did, after all, have a Secretary of Defense who called France and Germany irrelevent chunks of “Old Europe.” But Sean Hannity can now say that 47 percent of America agrees with him.

‘Evet’

Spencer Ackerman — Mon, 06 Apr 2009 13:42:43 +0000

Last year, the Obama campaign promised to deliver a major speech on U.S.-Muslim relations in a Muslim capital during the president’s first year in office. Today, President Obama fulfills that promise by addressing the Turkish parliament. It’s a clever, multi-layered statement: Obama visits a capital in a majority-Muslim country as part of his first overseas trip as president; that trip is to Europe; speaking in Ankara implies that, as the Turks want, Muslim Turkey is part of Europe; and cooperation between the West and Islam is the proper order of things. “Some people have asked me if I chose to continue my travels to Ankara and Istanbul to send a message,” reads the text of his speech. “My answer is simple: Evet.” Yes.

That message is this:

I know there have been difficulties these last few years. I know that the trust that binds us has been strained, and I know that strain is shared in many places where the Muslim faith is practiced. Let me say this as clearly as I can: the United States is not at war with Islam. In fact, our partnership with the Muslim world is critical in rolling back a fringe ideology that people of all faiths reject.

But I also want to be clear that America’s relationship with the Muslim work cannot and will not be based on opposition to al Qaeda. Far from it. We seek broad engagement based upon mutual interests and mutual respect. We will listen carefully, bridge misunderstanding, and seek common ground. We will be respectful, even when we do not agree. And we will convey our deep appreciation for the Islamic faith, which has done so much over so many centuries to shape the world for the better – including my own country. The United States has been enriched by Muslim Americans. Many other Americans have Muslims in their family, or have lived in a Muslim-majority country – I know, because I am one of them.

Some corners of the right may see this as creeping dhimmitude, and yet it’s important to recognize that Obama is interpreting U.S.-Islamic relations the way Muslim leaders worldwide have wanted them interpreted — not restrained to a narrow counterterrorism issue, but a broadly-construed and enduring partnership of mutual respect. Yet that in itself has a counterterrorism component. al-Qaeda and other extremist groups prosper through the demonization of America fueled by American disrespect for the Muslim world — the invasion of Iraq, Guantanamo Bay, Abu Ghraib; and, less comfortably for the U.S., lopsided support for Israel over the Palestinians — and therefore, forthright displays of respect for Islam are themselves counterterrorism tools. No wonder Ayman Zawahiri had no way to confront the election of Barack Obama except by a self-parodic attempt at arguing he’s inauthentically American. An America that concedes legitimate Muslim objections to U.S. foreign policy — even when it doesn’t reshape its policies along the lines of Muslim grievances — makes no sense to him, and is a danger to his efforts at indoctrinating the next generation of extremists.

There’s been a conservative objection for a few years now that suggests that speeches like this obsequiously shy away from frank confrontations of the real differences between U.S. and Muslim interests. Stipulate that framework for the sake of argument. Obama’s Ankara speech still contained lines like “We must reject the use of terror, and recognize that Israel’s security concerns are legitimate” and “Iran’s leaders must choose whether they will try to build a weapon or build a better future for their people” and “We share the common goal of denying al-Qaeda a safe-haven in Pakistan or Afghanistan. The world has come too far to let this region backslide, and to let al Qaeda terrorists plot further attacks.” Those who portrayed Obama as recently pledging his fealty to Saudi King Abdullah won’t be persuaded by this, but they wouldn’t be persuaded by anything Obama says. But the Ankara speech shows that there is, in fact, a choice between domination and subservience, between perpetual war and dhimmitude: patient, respectful cooperation, and acting like great civilizations ought to act.

Let’s Take This Af-Pak Show on the Road

Spencer Ackerman — Mon, 30 Mar 2009 13:45:08 +0000

What’s in store for Secretary of State Hillary Rodham Clinton and Special Envoy Richard Holbrooke at tomorrow’s United Nations conference on Afghanistan at The Hague? And for Thursday’s NATO summit in Strasbourg, which President Obama will address? Empty promises, dashed hopes and lowered expectations, according to this preview from The Wall Street Journal:

Michele Flournoy, a senior Pentagon official who helped craft the new U.S. strategy, said Friday that “we have made some very clear requests of [European allies],” for more troops, trainers and money. The EU plans to expand its police training force — a key focus of the U.S. review — from about 200 today to 350 by the end of the spring, according to the spokeswoman for [EU foreign policy chief Javier] Solana. That’s still short of the 400 promised, and well short of the 4,000 extra U.S. trainers the U.S. review allocates to train Afghanistan’s army.

Lieberman Adviser Joins ‘Loyal Opposition’ Blog

Spencer Ackerman — Wed, 21 Jan 2009 16:59:38 +0000

Foreign Policy magazine’s Website hosts an interesting blog written by GOP foreign policy luminaries and Bush administration veterans called Shadow Government, which bills itself as featuring “notes from the loyal opposition.” It’s a good blog, filled with often-insightful critiques of President Obama’s emerging foreign policy from the right, as well as intellectually honest reconsiderations of the Bush administration. It’s also notable that an adviser to Sen. Joseph Lieberman (I-Conn.) is now contributing.

Yesterday, Vance Serchuk, a foreign policy adviser to Lieberman, wrote his first post for the blog, a thoughtful meditation about the future of the United States’ European policy. Serchuk, a former researcher for the conservative American Enterprise Institute and someone whom I’ve expressed my respect for, describes himself on Shadow Government as “in almost any imaginable respect the odd man out on this blog,” and an employee of “a Democratic member of Congress,” though you have to click through to his bio to learn that Lieberman is his boss.

He’ll be blogging in a nonofficial capacity, but it’s still a little odd that someone who works for Lieberman — who was last heard expressing support for Obama’s foreign policy team — would align himself publicly with a blog designed to provide opposition to the new administration, even if it’s loyal and constructive opposition.

State of Play: Europe Reacts (Curiously) to Obama Victory

Aaron Wiener — Fri, 07 Nov 2008 22:23:07 +0000

The overwhelming reaction in Europe to the election of Sen. Barack Obama has been one of enthusiasm and support. Yet a scan of the European press also reveals some peculiar — and some deplorable — responses.

Der Spiegel reports on the shock that has rippled through the German-speaking world after Klaus Emmerich, the “Wolf Blitzer of Austria,” said on a TV talk show, “I wouldn’t want the Western world to be directed by a black man.” Emmerich has refused to apologize, arguing that “blacks aren’t as politically civilized” — but he did call Michelle Obama a “very good-looking woman.”

In Rome, Italian Prime Minister Silvio Berlusconi asserted that Obama would have no problem establishing good relations with Russia because Obama is “handsome, young and sun-tanned.” In response to accusations of racism, Berlusconi called his critics “imbeciles without any sense of humor.”

El Pais, Spain’s leading paper, which has obsessively covered the U.S. presidential election for months, leads its “Estados Unidos” page with a long analysis of Michelle Obama’s election-night outfit.

And Le Monde of France calls Obama the first spammer president under the headline, “With Obama, ‘Yes they spam!’”

Take a look at these and other stories from the Old Continent. Bonus points if you’re bi- or trilingual:

Austrian Journalist Slammed for Racist Obama Rant (Der Spiegel International)

Gaffe su Obama, Berlusconi rilancia “Le critiche? Ci sono tanti imbecilli” (On Obama Gaffe, Berlusconi Retorts, “The Criticisms? They Are All Imbecilic”) (La Stampa)

El vestido de cambio (The Dress of Change) (El Pais)

Avec Obama, “Yes they spam!” (With Obama, “Yes they spam!”) (Le Monde)

Obama’s victory: a change the world should believe in (Financial Times)

Where’s Europe’s Obama? (Der Spiegel International)

Abdel Bari Atwan on Al Qaeda in North Africa and Europe

Spencer Ackerman — Fri, 10 Oct 2008 18:40:53 +0000

The editor of the London Arabic-language newspaper Al Quds Al Arabi, Abdel Bari Atwan, all but begs us not to overlook Al Qaeda’s increasing hold over North Africa.

In Algeria, Al Qaeda in 2006 formally merged with the Algerian Salafist group known as the GPSC to form Al Qaeda in the Islamic Maghreb. The “next generation” of Al Qaeda leaders will emerge from this group, he predicts.

European radicalization is a big deal too, Atwan adds.

He lists statistics on Europe’s approximately 32 million members of the Muslim diaspora.

“When Al Qaeda starts to feel more confident in Afghanistan, new people start to join, and many of them are from Turkey,” he says.

Same goes for recruits from Yemen and North Africa. “You have to feel like [Europe] is facing a future danger,” Atwan says. The situation is rife for “recruiting new cells in Europe,” owing to the inability of European xenophobia to accomodate Muslims as equal citizens.