domingo, julio 06, 2014



The Middle East

The tragedy of the Arabs

A civilisation that used to lead the world is in ruins—and only the locals can rebuild it

Jul 5th 2014

A THOUSAND years ago, the great cities of Baghdad, Damascus and Cairo took turns to race ahead of the Western world. Islam and innovation were twins. The various Arab caliphates were dynamic superpowersbeacons of learning, tolerance and trade. Yet today the Arabs are in a wretched state. Even as Asia, Latin America and Africa advance, the Middle East is held back by despotism and convulsed by war.

Hopes soared three years ago, when a wave of unrest across the region led to the overthrow of four dictators—in Tunisia, Egypt, Libya and Yemen—and to a clamour for change elsewhere, notably in Syria. But the Arab spring’s fruit has rotted into renewed autocracy and war. Both engender misery and fanaticism that today threaten the wider world.

Why Arab countries have so miserably failed to create democracy, happiness or (aside from the windfall of oil) wealth for their 350m people is one of the great questions of our time. What makes Arab society susceptible to vile regimes and fanatics bent on destroying them (and their perceived allies in the West)? No one suggests that the Arabs as a people lack talent or suffer from some pathological antipathy to democracy. But for the Arabs to wake from their nightmare, and for the world to feel safe, a great deal needs to change.

The blame game

One problem is that the Arab countries’ troubles run so wide. Indeed, Syria and Iraq can nowadays barely be called countries at all. This week a brutal band of jihadists declared their boundaries void, heralding instead a new Islamic caliphate to embrace Iraq and Greater Syria (including Israel-Palestine, Lebanon, Jordan and bits of Turkey) and—in due course—the whole world. Its leaders seek to kill non-Muslims not just in the Middle East but also in the streets of New York, London and Paris. Egypt is back under military rule. Libya, following the violent demise of Muammar Qaddafi, is at the mercy of unruly militias. Yemen is beset by insurrection, infighting and al-Qaeda

Palestine is still far from true statehood and peace: the murders of three young Israelis and ensuing reprisals threaten to set off yet another cycle of violence. Even countries such as Saudi Arabia and Algeria, whose regimes are cushioned by wealth from oil and gas and propped up by an iron-fisted apparatus of state security, are more fragile than they look. Only Tunisia, which opened the Arabs’ bid for freedom three years ago, has the makings of a real democracy.

Islam, or at least modern reinterpretations of it, is at the core of some of the Arabs’ deep troubles. The faith’s claim, promoted by many of its leading lights, to combine spiritual and earthly authority, with no separation of mosque and state, has stunted the development of independent political institutions. A militant minority of Muslims are caught up in a search for legitimacy through ever more fanatical interpretations of the Koran. Other Muslims, threatened by militia violence and civil war, have sought refuge in their sect. In Iraq and Syria plenty of Shias and Sunnis used to marry each other; too often today they resort to maiming each other. And this violent perversion of Islam has spread to places as distant as northern Nigeria and northern England.

But religious extremism is a conduit for misery, not its fundamental cause. While Islamic democracies elsewhere (such as Indonesia) are doing fine, in the Arab world the very fabric of the state is weak. Few Arab countries have been nations for long. The dead hand of the Turks’ declining Ottoman empire was followed after the first world war by the humiliation of British and French rule. In much of the Arab world the colonial powers continued to control or influence events until the 1960s. Arab countries have not yet succeeded in fostering the institutional prerequisites of democracy—the give-and-take of parliamentary discourse, protection for minorities, the emancipation of women, a free press, independent courts and universities and trade unions.

The absence of a liberal state has been matched by the absence of a liberal economy. After independence, the prevailing orthodoxy was central planning, often Soviet-inspired. Anti-market, anti-trade, pro-subsidy and pro-regulation, Arab governments strangled their economies. The state pulled the levers of economic powerespecially where oil was involved

Where the constraints of post-colonial socialism were lifted, capitalism of the crony, rent-seeking kind took hold, as it did in the later years of Egypt’s Hosni Mubarak. Privatisation was for pals of the government. Virtually no markets were free, barely any world-class companies developed, and clever Arabs who wanted to excel in business or scholarship had to go to America or Europe to do so.

Economic stagnation bred dissatisfaction. Monarchs and presidents-for-life defended themselves with secret police and goons. The mosque became a source of public services and one of the few places where people could gather and hear speeches. Islam was radicalised and the angry men who loathed their rulers came to hate the Western states that backed them. Meanwhile a vast number of the young grew restless because of unemployment. Thanks to the electronic media, they were increasingly aware that the prospects of their cohort outside the Middle East were far more hopeful. The wonder is not that they took to the streets in the Arab spring, but that they did not do so sooner.

A lot of ruin

These wrongs cannot easily or rapidly be put right. Outsiders, who have often been drawn to the region as invaders and occupiers, cannot simply stamp out the jihadist cause or impose prosperity and democracy. That much, at least, should be clear after the disastrous invasion and occupation of Iraq in 2003. 

Military support—the supply of drones and of a small number of special forcesmay help keep the jihadists in Iraq at bay. That help may have to be on permanent call. Even if the new caliphate is unlikely to become a recognisable state, it could for many years produce jihadists able to export terrorism.

But only the Arabs can reverse their civilisational decline, and right now there is little hope of that happening. The extremists offer none. The mantra of the monarchs and the military men is “stability”. In a time of chaos, its appeal is understandable, but repression and stagnation are not the solution. They did not work before; indeed they were at the root of the problem. Even if the Arab awakening is over for the moment, the powerful forces that gave rise to it are still present. 

The social media which stirred up a revolution in attitudes cannot be uninvented. The men in their palaces and their Western backers need to understand that stability requires reform.

Is that a vain hope? Today the outlook is bloody. But ultimately fanatics devour themselves. 

Meanwhile, wherever possible, the moderate, secular Sunnis who comprise the majority of Arab Muslims need to make their voices heard. And when their moment comes, they need to cast their minds back to the values that once made the Arab world great

Education underpinned its primacy in medicine, mathematics, architecture and astronomy. Trade paid for its fabulous metropolises and their spices and silks. And, at its best, the Arab world was a cosmopolitan haven for Jews, Christians and Muslims of many sects, where tolerance fostered creativity and invention.

Pluralism, education, open markets: these were once Arab values and they could be so again. Today, as Sunnis and Shias tear out each others’ throats in Iraq and Syria and a former general settles onto his new throne in Egypt, they are tragically distant prospects. But for a people for whom so much has gone so wrong, such values still make up a vision of a better future.

July 3, 2014 6:14 pm

Janet Yellen’s asset price boom

Caution on rates is wise but Fed could do more on bubbles

They say the US Federal Reserve is for ever blowing bubbles. Janet Yellen did little to counter that view this week with her reiteration that tighter interest rates are almost always the wrong tool to curb asset price inflation.

She was right, however, to hold the line. Central banks have a poor record of anticipating asset bubbles, let alone preventing them. There is no reason to suppose that their foresight has improved. In contrast, it is within the Fed’s power to bolster the economy’s resilience to bursting bubbles via tougher macroprudential controls. Bubbles will always be with us, she argued. The goal should be to make them less explosive.

Ms Yellen is in good company. On Thursday, Sweden’s central bank reversed its stance of tightening interest rates to head off asset price bubbles by slashing them to just 0.25 per cent.

Far from rebuilding confidence, the Riksbank’s strategy of “leaning into the wind” had brought Sweden to the brink of outright deflation. In place of the blunt monetary instrument, the Riksbank will look at further toughening banks’ capital requirements.

At the Bank of England, Mark Carney has taken macroprudential policy a step further by promising to vary the loan-to-value ratio on mortgages with the housing boom cycle. Central banks everywhere are starting to vary their bank stress tests to take the asset price cycle into account.

The debate is far from settled. This week the Bank for International Settlements threw a contrarian straw into the wind by insisting that central banks should tighten early and clearly to stave off another cycle of bubbles. Ms Yellen is wise to ignore their advice. Without easy monetary policy, the US, the UK and other leading economies would have grown by far less in recent years. Premature tightening would have reduced growth, risked deflation and increased the value of the debt burden that the BIS so fears.

The BIS was right to warn of the dangers of “balance sheet depression”, which can persist for years. Alas, its remedy would worsen the disease. Without growth, the balance sheet can only deteriorate further.

That said, there are grounds to worry that the Fed is not doing enough to limit the impact of future asset price shocks. Unlike the BoE, which seems serious about counteracting the UK’s chronic housing boom-bust cycle, the Fed’s macroprudential tool kit is limited.

Ms Yellen has made it clear the Fed will increase capital cushions as conditions demand. But almost all the onus is on the formal banking sector. Much of the risk, however, has shifted into shadow banking. There are real concerns the Fed is behind the curve

Regulators are almost never as nimble as the markets they regulate. Ms Yellen must do more to demonstrate that the Fed, and its sister agencies, will follow the search for yield into whichever asset classes it goes, and via whichever entities.

On the bright side, the US economy’s strong labour market numbers in June – with 288,000 new jobs added – is another signpost on the way to ending the historically easy monetary policy of the past few years. The Fed’s taper will almost certainly be completed by the autumn. And there is a rising chance that it will begin to raise interest rates in late 2015 if not before.

For six years, the Fed has done its best to boost asset prices to rekindle the real economy. The path was ugly but undoubtedly the lesser of two evils. At some point, US interest rates will begin to normalise and the search for yield may go into reverse. 

Volatility will return to the markets and risks will rise. It is imperative the Fed makes use of every macroprudential tool it has to protect the US recovery from the bubbles it has helped create.

Copyright The Financial Times Limited 2014.

The Count

The World Cup Flopping Rankings

Brazil, Neymar Are Most Commonly Seen in Anguish; Bosnia Is Most Likely to 'Grin and Bare It'

By Geoff Foster

Updated June 27, 2014 1:55 p.m. ET


Brazil's forward Neymar reacts in pain following a tackle by Cameroon's midfielder Joel Matip. Agence France-Presse/Getty Images

One of the most common complaints during this otherwise splendid World Cup is the amount of time players spend embellishing injuries.

All too often during matches, seemingly fit men fall to the ground in agony. They scream, wince, pound the grass with their fists and gesture to the sidelines for a stretcher. Some of them clutch a limb as if it was just freed from the jaws of a wood chipper.

But after a few moments, just as the priests arrive to administer last rites, they sit up on the gurney, shake it off, rise to their feet and run back on the field to play some more.

Fans of the world's most popular game know that this is just one of soccer's oldest and most universally despised tactics. Turning a small foul into a death performance worthy of La Scala can draw cards for opposing players, kill time from the clock or just give one's winded teammates a breather. What's interesting about the World Cup is that not all national teams are the same. Some embellish all the time, some hardly at all. (Explore team profiles and key players to watch.)

With this in mind, the Count loaded 32 World Cup matches on the DVR and set out to perform a comprehensive empirical study aimed at determining one thing: Which World Cup participant nation is the world's floppiest?

During the first 32 games, there were 302 players who could be seen at some point rolling around in pain, crumpling into a fetal position or lying lifeless on the pitch as the referee stopped the match. These theatrical episodes ate up a total of 132 minutes of clock, a metric we have decided to call "writhing time."

To be fair, it is actually possible to get hurt playing soccer. You can clang heads. You can snap a hamstring. You can get spiked in the soft tissue. There were nine injuries in total that forced players to be substituted from the game and to miss, or potentially miss, a match. These were discarded. That left 293 cases of potential embellishment that collectively took up 118 minutes, 21 seconds.

Another trick: how to calculate writhing time. The criteria used here is the moment the whistle is blown (because of a potential injury) to the moment that player stands up. If the TV camera cut to a replay, the stand-up moment was estimated. If he was helped off the field, the "writhing" clock stopped when he crossed the sidelines.

The study showed one thing emphatically: The amount of histrionics your players display during a match correlates strongly to what the scoreboard says. Players on teams that were losing their games accounted for 40 "injuries" and nearly 12.5 minutes of writhing time. But players on teams that were winning—the ones who have the most incentive to run out the clockaccounted for 103 "injuries" and almost four times as much writhing.

So with that cleared away, here are the "winners" of our first-ever international soccer injury-embellishment awards. Envelopes, please!

The Team Most Commonly Seen in Anguish: Brazil. There were 17 incidents in two games when a member of the Seleção was seen on the ground in pain—the most of any country. World Cup poster boy Neymar had five such "injuries," the most on his team. In every case (except friday´s july 4th grave injury) he was back on his feet within 15 seconds.

The Overall Writhing-Time Champions: Honduras. Los Catrachos spent the most time on the ground or being tended to by trainers: seven minutes and 40 seconds to be exact. Naturally, five minutes and 10 seconds of that came in the first half against France when the match was tied (which would have been good enough for them).

The Team Most Likely to Grin and Bear it: Bosnia and Herzegovina. These World Cup newbies obviously don't get how this works. They only had two "injuries" in two games for a total of 24 seconds of writhing time.

The Team With the Most Carnage in One Game: Chile. While they protected an early lead against Spain, the Chileans tallied 11 "injuries," more than 24 other teams had in two games.

The Fastest "Injury" Yet: Enner Valencia, Ecuador. Against Honduras, Valencia was on the ground, clutching his leg after four seconds.

Worst Use of a Stretcher: 5 players (tie). Of the nine players carried off in these matches, five returnedall in less than 90 seconds, including American DaMarcus Beasley.