The Statesman’s Yearbook Online

SPOTLIGHT

10 YEARS AGO – ON THE ANNIVERSARY OF THE LAUNCH OF THE EURO, COMMENTATORS ARE ASKING WHETHER IT CAN SURVIVE

Just a few weeks after the euro became the lead currency of Europe, a higher editorial authority on one of Britain’s national newspapers declared confidently that it couldn’t last. ‘I give it less than a year,’ he said. That was a decade ago. His view, as I discovered recently, has not changed; only the timing. And he is not alone. The sceptics who forecast the imminent collapse of the euro in 2002 are back to the old refrain. The end is nigh.

Maybe this time they have a point. The financial crisis that has preoccupied the western democracies for the best part of three years has undoubtedly damaged the credibility of the euro. As one member country after another – Ireland, Greece, Portugal, Spain, Italy – has struggled to stay afloat, their expectations that the euro, along with the European Bank, would act as a fail safe, a guarantee of sustainability in hard times, have been disappointed. The risk of a break-up of the currency, led by populist agitators who are only too eager to blame others for self-inflicted wounds, is real.

What, if anything, can be done? The short answer is for the euro nations to move closer towards fiscal and political union. What is needed is a United States of Europe modelled on the United States of America where the weakest states are supported by the stronger. So far, this has been unacceptable in Europe where strong national identities mitigate against a pooling of sovereignty.

There is also the question of economic imbalance. As by far the strongest of European economies, Germany is naturally averse to coming to the rescue of neighbours who are less industrious and have failed to exercise the necessary budgetary controls. Greece is a case in point. The reputation of that country for solving any problem by throwing more money at it is well founded. The revelations of profligacy are almost surreal, the latest being that until recently, hairdressers, ticket collectors on public transport and supermarket cashiers were in the list of ‘heavy and arduous’ professions qualifying for early retirement and fat pensions.

Even so, the prophets of euro doom could yet again prove to be over hasty. The latest deal between Germany and France, with support from the other euro countries, aims to tighten budgetary discipline while freeing the European Central Bank to act more aggressively in the markets to keep down the borrowing costs of trouble economies. This is not a solution to the euro crisis but it does put off the day of reckoning so widely prophesized over the past year. It remains to be seen if the EU can keep up the momentum towards creating a set of rules that will ensure the long term future of the common currency.

The alternative, a break-up of the euro with the inevitable disruption of trade and a return to inward looking politics, is too awful to contemplate. We could be in for a long process of muddling through but in the end, a stronger more united Europe may emerge. Critics will continue to point out that this is not the logical way forward, that political union should precede fiscal union. That is how America did it. But it is worth remembering that it took a bloody civil war to forge the United States. Europe, with its heritage of internecine violence, has every reason to avoid that route to the single state.

See also
International Organizations, EU, Major Policy Areas
For more information on the world 10 years ago see The Statesman's Yearbook Archive

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10 YEARS AGO – 9/11 AND THE DECADE-LONG SEARCH FOR SECURITY

The first duty of government is to maintain the rule of law. For society to go about its business in an orderly way it needs to be convinced that lives and property are secure from unwarranted attack. The objective is easier to state than to achieve. There is a narrow line between keeping the peace and overreacting to suspicious behaviour or legitimate dissent. After every outrage, the latest being the massacre of young people in Norway, popular opinion is quick to criticise the police for failing to anticipate the event. An extreme right-wing activist with a grudge against immigrants, Anders Breivik was known to the authorities. Why, therefore, it is asked, was he not in a padded cell instead of being out on the rampage with sophisticated weaponry?

But the world is not short on fantasists and psychopaths. If having weird ideas was in itself a crime, the courts would be working round the clock. It is to the credit of the people of Norway and their government that they have responded to the tragedy more with sadness than with anger. Still, it remains to be seen what, if any, additional restrictions and powers of surveillance are imposed to try to prevent a recurrence.

Ten years ago, the emotional trauma of needless carnage was suffered by America in the wake of the terrorist attacks on the World Trade Centre. It is no way to understate the horror of 9/11 to question the value for money of the billions of dollars spent subsequently to build up a mammoth security industry which seems hell bent on battening down on individual freedom and the right to privacy.

The sad fact is that however many barriers we erect there can be no guarantee against fanatics and lunatics taking the law into their own hands. On the other hand, allowing Big Brother into our lives will mitigate against mutual respect and toleration, two of the basic tenets of genuine democracy. If we are serious about minimizing the risks of social disruption we would do better by tackling the root causes of disaffection, particularly among young people. But in the present political climate, this is a challenge few of our leaders are prepared to take up.

See also
New York, City Profile
United States of America Past Leaders - George W. Bush
For more information on the world 10 years ago see The Statesman's Yearbook Archive

50 YEARS AGO – THE BUILDING OF THE BERLIN WALL

The Berlin Wall was built on fear. A divided city in a divided country was on the front line of the Cold War, a flash point of confrontation between the communist world directed from Moscow and western democracy led by Washington. The fear was two sided. As Stalin’s heir, the Soviet Leader, Nikita Krushchev wanted above all else to contain what he imagined to be a revival of German militarism. In this he was misguided. But he could see, along with everyone else, that the rapid recovery of West Germany after the war stood in contrast to the basket case that was East Germany, a combination of straightjacket bureaucracy, corruption and fatalism in hock to the Soviet Union. Faced with the loss of nearly three million citizens seeking a better life across the border, the East German economy in 1961 was in danger of collapse. What that might mean for the future of the rest of communist Eastern Europe was too terrifying for Moscow to contemplate.

Across the Atlantic, Germany was also a worry for the recently elected John F. Kennedy. More than twenty years younger than Krushchev, the inexperienced president was clumsily groping his way towards some sort of accommodation with the Soviet Union that would deter aggression while slowing the nuclear arms race. His big fear, as irrational as it turned out as Krushchev’s fear of another German-led war, was that Russia would be tempted towards a pre-emptive strike. Germany was the likeliest trigger.

So it was the Berlin Wall gave comfort to both sides. Shoring up the teetering East German regime calmed nerves in Moscow and Washington. As Kennedy famously declared, he preferred a wall to a war. So too did Krushchev, though the two leaders were at odds over their interpretation of events. Critically Krushchev convinced himself that the absence of an American response to the building of the wall, in defiance of international agreements, was a sign of weakness. A year later he put this theory to the test by trying to sneak nuclear missiles into Cuba. But Kennedy had learned his lesson. He was not to be browbeaten again. This time it was Krushchev who backed away from the final reckoning.

Outlasting Kennedy and Krushchev the Berlin Wall remained in place for twenty-eight years, a monument to political mistrust and misjudgement.

See also
Germany Key Historical Facts
Berlin, City Profile
For more information on the world 50 years ago see The Statesman's Yearbook Archive

Further reading:
Frederick Kempe, Berlin 1961. Putnam Adult, 2011.

60 YEARS AGO – AMERICA EMBARKED UPON A PLAN TO SAVE THE EUROPEAN ECONOMY

A new museum opened recently in Paris. It is dedicated to the Marshall Plan, the American inspired economic programme of the late 1940s that did more than anything to put a war torn Western Europe back on its feet. Sited, appropriately enough, in the former Rothschild palace on the Place de la Concorde which served as the headquarters of the Marshall Plan, the museum houses a permanent exhibition recalling the collective effort to rebuild the continent after World War II. It was an awesome achievement and one that deserves more recognition on both sides of the Atlantic.

Europe was in a parlous state in 1947. The euphoria of victory had soon given way to despair. Mass bombing had devastated Germany while of the victors, Britain was virtually bankrupt while France was close to civil war. Short-term American loans to aid reconstruction had been quickly exhausted. In Moscow, Stalin saw no limit to the reach of Soviet communism. On June 5th, George C. Marshall, former army chief of staff and latterly secretary of state in the Truman administration, spoke at a Harvard degree ceremony. The European economy was on the edge of collapse, he told his audience. The time had come for action. The United States would provide a financial bridge to European sustainability. How the money was spent was up to the Europeans. The US would serve as a constructive partner but did not seek to dictate terms.

The Plan had an element of self interest. It would support US security and economic growth. But idealism was the stronger motive. Having for many years favoured a policy of unilateral non-involvement, many Americans had come round to the belief that their country should use its power to promote international peace. In Europe, the only countries to dissent were those under Soviet control.

On March 14th, 1948 after a hard fight in Congress, the Senate approved $5.3 billion for the first year of a four-year programme for European recovery. Life magazine called it the ‘most important decision of the 20th century’. President Truman said it was ‘America’s answer to the free world … perhaps the greatest venture in constructive statesmanship that any nation has undertaken’. He was not far wrong.

The final commitment was $13 billion, say the equivalent of $117 billion in today’s currency.

By mid-1949, Western Europe was well on the way to recovery. A year on, industrial production was 28 per cent up from the first quarter of 1948 and 24 per cent higher than the pre-war average. In the wake of economic reconstruction came NATO and the birth of the European Union.

The inauguration of the Hôtel de Talleyrand in Paris as the Marshall Plan museum marks the 60th anniversary of the official end to Marshall aid. The displays are a timely reminder if, in 1942, America had not joined the fight against Nazism, the European democracies might well have lost the war, five years later, in the absence of any American economic rescue, they would most certainly have lost the peace.

See also
United States of America Key Historical Facts
United States of America Past Leaders – Harry S. Truman
For more information on the world 60 years ago see The Statesman's Yearbook Archive

Further reading:
Greg Berhman, The Most Noble Adventure. The Marshall Plan and the Reconstruction of Europe. Simon and Schuster, 2007.

25 YEARS AGO – THE END OF SWEDISH INNOCENCE

As a citadel of political freedom and the international arbiter of good causes, Sweden went into traumatic shock when its prime minister, Olof Palme, was shot down and killed in a street in central Stockholm.

It happened twenty-five years ago and though there has been an exhaustive investigation (‘the largest in global police history’), numerous public inquiries and a trial of a roving dysfunctional who was convicted then acquitted on appeal, the case remains unsolved.

It was to the enduring credit of Ingvar Carlsson, Palme’s deputy and successor, that his social democrat government held the line against the panic mongers who were only too eager to sacrifice liberty to an illusory security. Carlsson himself, a savvy but relaxed politician, refused the sort of imperial guard favoured by other national leaders. It was typical of the man that, in private life, he drove the then deeply unfashionable Skoda because it was cheap on petrol. As a football fan he would make unannounced appearances at big matches in London and elsewhere, much to the surprise and consternation of those responsible for his safety.

But while the Swedish open society survived, there could be no doubt that with Palme’s death it lost much of its proselytizing ardour. Palme was a world stage player, one who spoke out against American involvement in Vietnam as loudly as he condemned the apartheid regime in South Africa. Picking up on questionable leads, the conspiracy theorists let rip with accusations of complicity to murder against every country Palme had ever offended.

Whatever credence was given to the supposed plots and counter plots, the fact that Palme, the fearless pursuer of truth and justice, had come to a violent end was taken by many as a warning against a small state, however morally secure, punching above its diplomatic weight. The security against terrorism sought elsewhere by restraints on freedom of information and opinion was less heavy handed in Sweden where a behind the scenes benevolent neutrality seemed to promise that nothing like the Palme outrage would happen ever again. But then it did.

In September 2003, foreign minister Anna Lindh died from stab wounds after she was attacked in NK, Stockholm’s premier department store. This time there was a successful prosecution. A young Swede born to Serbian parents was sentenced to life imprisonment. Once again, the political response was measured. Coming as it did shortly before a referendum on Sweden joining the Euro, the attack brought all campaigning to a halt. But only for the time it took to decide that the democratic process could not be disrupted by mindless violence. The referendum went ahead and the Euro was rejected. This vindication of the open society went hand-in-hand with the belated realization that no democracy can be risk free.

If any reminder of this fundamental truth was needed, it came last December when a suicide bomber targeted Stockholm’s Christmas shoppers. In the event, the only casualty was the terrorist himself who died when his bombs exploded prematurely. But contemplating what could have happened was made all the more terrifying by the discovery that the terrorist was home grown, one of an Iraqi family that had escaped the clutches of Saddam Hussein. In denouncing the attack, Prime Minister Fredrik Reinfeldt rejected panic measures and called for Sweden to ‘stand up for toleration’. But this time, the decent, civilized values may not pass unchallenged. After years of quiescence, the anti-immigrant, anti-Muslim far right is making advances in the polls. The inviolability of the open society can no longer be taken for granted.

See also
Sweden Key Historical Events
Sweden Past Leaders - Olof Palme
For more information of the world 25 years ago see The Statesman's Yearbook Archive

20 YEARS AGO – GERMAN REUNIFICATION

Few believed it would ever happen. Many did not want it to happen. Though, with hindsight, the coming together of East and West Germany twenty years ago followed naturally on the collapse of communism across Eastern Europe, at the time there seemed to be too many irreconcilables for reunification to be achieved.

Germany had been divided close on half a century. In the west, a booming capitalist but essentially social democratic economy had brought prosperity and renewed confidence. The contrast to the east, where deference to the Soviet Union and the weight of ill-conceived economic planning and social engineering had stifled growth and initiative, could not have been more apparent. Commentators who like to think of themselves as realists asserted that the sheer cost of a merger put it beyond the reach of practical politics. Understandable fears of an older generation who had been scarred by the Hitler regime added to the weight of argument against reunification.

President Mitterrand and prime minister Thatcher were initially opposed to reunification. Both underestimated the strength of will of Chancellor Kohl and his administration in Bonn to find an accommodation. French fears were stilled by a deal on European monetary union, a move that Germany with its revered deutschmark had hitherto resisted.

The momentum gathered pace with Germans on both sides of the divide convinced that they were walking with destiny. The economic disaster so widely predicted did not happen though citizens of the former German Democratic Republic still have a long way to go before they reach equality with their western neighbours. The upside for us all is a vibrant democracy at the heart of Europe. A few unreconstructed Marxists may look back with sadness to what might have been. But who now listens to them?

See also
Germany Key Historical Events
Germany Past Leaders - Helmut Kohl
For more information on the world 20 years ago see The Statesman's Yearbook Archive