Palace Coup In Zimbabwe Will Not Bring Along Genuine Democracy

WASHINGTON – Despite some last minute confusion regarding the timing of his exit, Robert “Mad Bob” Mugabe is finally gone. He is a despot, a cruel dictator, and the undisputed author of Zimbabwe’s economic ruin. After 37 years of autocracy, is this finally good riddance? Well, I would not bet on a good outcome. A happy ending is highly unlikely. Indeed, this sudden change at the top of the government in Zimbabwe is certainly not about an injured nation that finally rebels against its tormentor, forcing him out of power while creating genuine foundations for democratic rule and true accountability.

Just a palace coup

Sadly, this is just a garden variety palace coup. One faction against another, with the military finally deciding that it was time for the old man (now 93) to go. In particular, the army chiefs did not like the prospect of Grace Mugabe, the President’s much younger and equally rapacious wife, replacing him this way creating a dynastic rule.

For this reason the generals took over and rearranged the palace furniture, so that their favorite “leader”, Emmerson Mnangagwa, Mugabe’s Vice President, (who had just been sacked by Mugabe), will become the next president. Now 75, Mnangagwa, is not exactly part of the next generation. At home, he is affectionately known as the “Crocodile”. This nickname alone may give you an idea of what kind of man will become the future president of a post-Mugabe Zimbabwe.

New handpicked leader not a champion of democracy

The poor citizens of this unlucky country are rejoicing –for the moment. They chant in the streets of Harare, proclaiming that now they are finally “free”. Well, I would not be so sure.

Their new leader is also a cruel despot, while perhaps endowed with a bit more pragmatic attitude, at least if compared to Mugabe. It is a well known fact that as a senior cabinet official, for years Mnangagwa (cheerfully?) implemented the most awful violations of human rights directed by his boss, “Mad Bob” Mugabe.

Economic disaster

So, here is the grim picture. After 37 long years of Mugabe’s systematic looting and monstrous mismanagement, the economy of Zimbabwe is virtually destroyed. It will take a miracle to create a genuine pro-growth, business friendly environment that will entice desperately needed foreign investors.

The “regime change” that just took place, while welcome, won’t mean much when it comes to hopes of economic development; unless it is accompanied by genuine democratic reforms. And this is highly unlikely. Indeed, we can rest assured that the authors of this palace coup acted in their own self-interest; most certainly not in the interest of the people.

Silence across Africa

But this is not the entire story about poor Zimbabwe. The real story is that for decades all the African leaders stood silent, as Mugabe imposed his cruel dictatorship on the citizens of Zimbabwe who back in 1980 applauded him as their liberator.

Indeed, it is absolutely true that Robert Mugabe led the fight against white minority rule. And he deserves credit for that. Because of his role in the struggle against oppression, after this troubled former British colony finally obtained independence from the UK, (this way formally ending the white minority regime), Mugabe became the legitimate leader of Zimbabwe back in 1980.

This happened after Ian Smith, the self-appointed leader of a new Rhodesia led by a white minority government, was forced to give up power, and abandon his crazy dream of a sustainable white minority government. Because of his critical role in the long struggle against the white minority government, Mugabe the Freedom Fighter entered the Olympus of Africa’s Great Men.

That said, it became obvious almost from day one that the poor people of Zimbabwe had traded one white dictator (Ian Smith) for another (Robert Mugabe). The difference being that Mugabe was a resistance hero and therefore politically untouchable, within Zimbabwe and across Africa.

South Africa did nothing 

And yet much could have been done to stop him. Especially after the end of white minority rule in South Africa in 1994, it would have been quite possible for the new African National Congress (ANC) leadership now in power in Pretoria to force Mugabe to stop or at least tone down his crazy autocratic rule. By African standards, South Africa’s economy is a giant compared to that of neighboring Zimbabwe. Had it wanted to, South Africa could have easily imposed its will on Harare.

But no, absolutely nothing was done. South Africa did nothing. Zimbabwe’s other neighbors also did nothing. The African Union did nothing. Ostensibly this silence about Mugabe’s gross violations of human rights was out of deferential respect for a “Freedom Fighter” who got rid of white oppression, this way gaining a special place in the hearts of all Africans.

Yes, Mugabe did good things in his years as a Freedom Fighter. But he will be remembered as one of the worst (and most incompetent when it comes to economic management) dictators of this century. And every African head of state knew all this. And they did absolutely nothing to stop him.

Disingenuous western media 

Let me add a sad foot note to this tragic story. A recent BBC retrospective analysis of Mugabe’s 37 rule is titled: “Robert Mugabe -revolutionary hero or the man who wrecked Zimbabwe?”. This headline is at best disingenuous, at worst horrible journalism.

After 37 years of dictatorship which led to economic ruin, fantastic inflation, political persecutions against ethnic opponents and millions of Zimbabweans in exile, is the BBC still in doubt about who Mugabe really is? Does this matter really require further scrutiny and analysis before reaching a conclusion?

Come on, BBC!

 

 

 




How Much Unemployment in China?

WASHINGTON – The WSJ just had a front page story on China, focusing on factory closings, jobs losses, strikes and workers protests. However, it is very difficult to place all this context. Unfortunately, there is no reliable official Chinese data on unemployment, bankruptcies and industrial actions.  

Official statistics 

Indeed, Chinese official statistics indicate that the unemployment rate in China is always the same: between 4.1% and 4.3%. Of course, this is impossible.

But why would it be important to know more? Well, because growing unemployment, if this is indeed the case, combined with workers’ protests after factories closings, is the social –and potentially political– consequence of China’s economic slow down.

New jobs in services? 

If the slow down is moderate and gradual –this is the official line coming from the Beijing political leadership– and if it is indeed true that China is successfully shifting from manufacturing to services, then its vast labor market will have time to adjust. Laid off factory workers may be able to find good or even better employment opportunities elsewhere.

But if the contraction in manufacturing is fast and severe, then the labor market cannot adjust, and this may create new problems. Citing various studies, the WSJ indicates that between 2014 and 2015 the number of labor related protests and strikes has doubled in China. If true, this is a remarkable development.

For the moment, the issue of labor protests seems to be contained. There are no politically explosive situations. But if this trend continues, if there are more and more public protests related to plant closings and jobs losses, then it becomes more complicated. In other words, what may begin as an  economic issue will become a political problem.

Unlucky migrant workers 

The WSJ goes into some detail on Chinese joblessness by telling the stories of unlucky Chinese migrant workers who left a life of poverty in rural areas and got factory jobs in cities. This change was definitely and improvement for them and literally tens of millions of others just like them.

But now many factories have shut down. These migrant workers are jobless. They cannot go back to villages where there is no opportunity. They are poor and frustrated. On occasion they stage public demonstrations.

Again, how many factories have closed nationwide? We do not know, because there are no official statistics on this. (We know however that at least 1/3 of all the factories owned by Hong Kong companies in the adjacent Guangdong region in main land China have shut down).

How many jobless workers? 

So, here is the politically relevant question. How many migrant workers are jobless and potentially desperate? Are the protests staged here and there just local events of no real consequence? Or do they represent a trend?

In other words, what if China’s economic slow down is worse than we are told by Beijing? Will unemployment levels grow to a point in which this will become a political issue?

Unemployment trending up? 

We really do not know. While unofficial statistics indicate that the real unemployment rate in China is probably closer to 10%, (as opposed to the official 4% to 4.3%), this does not tell us much. What would be really important to know is how it is trending. Is it going higher, at a fast clip, or is it stable or going down?

We have no idea. But it is hard to believe that China will be able to maintain its present level of employment while the overall economy slows down, construction is down, manufacturing is down, and exports are down.

More protests ahead?

 




After The French Vote, Is This The End Of Europe?

WASHINGTON – The triumph at the polls for French regional elections of the right-wing National Front led by Marine Le Pen is to be taken very, very seriously. This is not just a knee-jerk reaction to the Paris shootings perpetrated by a small group of Islamic terrorists. This victory of the far right is an indication of a profound spiritual and moral crisis within France, a country that until yesterday was considered a true democracy, and a pillar of the EU.

The National Front 

The National Front is now poised to get control over many French regions. Right now, based on the recent vote, it is the largest party in France, even though by a small margin. The Socialist Party is badly beaten, and almost dead. The “respectable” conservative party, the Republicans, is running second.

This electoral contest is not over yet. It is possible that in the second round an improbable coalition of Socialists and Republicans may be able to stop the National Front wave.

Xenophobia and nationalism 

Still, what we have now is that a very large segment of the French society voted for an openly xenophobic, anti-immigrant, anti-Muslim, anti Europe, and anti-Euro party.

Look, there is no depth to any of this. But there is a lot of emotional intensity. This is right-wing populism, with tinges of a regression to uncivilized barbarism. But this is unfortunately the way in which a despondent and frustrated French society is giving political expression to its despair.

The solution to all this 

The citizens look at French economic decline, and at what they perceive as societal deterioration created by millions of mostly Muslim immigrants who cannot be assimilated. In fact, some of them turn out to be terrorists.

It is a bad mix. Economic decline, diminishing opportunities, mediocre leadership, and the perception that “the enemy within” will destroy us. Hence the popularity of an openly xenophobic, nationalist force that promises to fix all this –quickly and with harsh methods, if needed.

Civilized people will say that this is impossible. This madness cannot last. Common sense will have to prevail. The National Front will disappear soon, as it should. Well, the fact is that as France became weaker, the National Front got stronger. The politics of despair work for those who promise “solutions”, however unrealistic they may be.

Impact on Europe 

Whatever the implications for France, from a European perspective this political development spells disaster. If you go back a few years broadly speaking there was some, although usually tepid, support for increased European integration.

But now, with a decidedly anti-EU political force in a strong position in France, one of the key EU pillars, forget about any plans of further integration. Nothing important can happen within the EU without strong French support. All far-reaching initiatives are based on a prior agreement between France and Germany. The anti-EU National Front is now strong enough to make this agreement virtually impossible.

And bear in mind that the rise of the French National Front is not an isolated phenomenon. Indeed, if we review what is happening across Europe, we get an alarming picture.

Anti-EU sentiments on the rise 

In Hungary there is Viktor Orban, a would be dictator who talks about the need for an illiberal democracy. In Italy you have the Lega Nord, a nationalist, northern secessionist party now led by Matteo Salvini, and “5 Stelle”, a large anti-system party, led by Beppe Grillo. In Finland there are nationalists and xenophobes. In Denmark there is a growing anti-EU sentiment. In Greece you have the ultra right Golden Dawn party. In Poland the nationalists of the Law and Justice Party led by Jaroslaw Kaczynski just won the elections. Add to all this perennially undecided Great Britain that at some point will have to vote on whether to continue its membership in the EU or not.

And there is more. New parties on the left, like Syriza in Greece, led by Prime Minister Alexis Tsipras, and Podemos in Spain, while promoting a totally different political agenda, are certainly not pro-EU. Finally, consider the centrifugal impulses created by the strong support for independence in Catalonia and in Scotland, and “Europe” begins to look like a real political mess.

No real support for further EU integration 

What does all this mean? It means that the ideological and moral glue that kept Europe together, weak as it was, has gotten a lot weaker in the past couple of years.

The economic crisis, the EU-imposed austerity on profligate states, high unemployment, lower standards of living, the endless stream of refugees from Africa, and now Syria, coupled with more Islamic terrorism, created a sense of existential threat.

Hence the popularity of anti-system political forces that promise strong measures to fix all this, quickly. Whatever their vacuous agendas, these now stronger parties on the right and on the left share an anti-EU bias.

Shaky EU foundations 

Sure enough, there are strong, established, shared economic interests that keep Europe together. There is a large free trade area, a common currency, and a lot more. Yes, but “Europe” as a believable political entity does not exist.

At best, it is a “Supercharged Regional Chamber of Commerce”. This entity is held together by a myriad of agreements and binding rules. But these agreements are not understood or appreciated by the average European.

And now you have the emergence of powerful centrifugal forces that do not believe in the value of free trade and a common currency. They dream of rebuilding their own nations and protecting their economies. From their perspective, Europe is in fact a menace.

Yes, these are silly ideas. Regressing into protectionism in this era of globalization makes no sense. But it does not matter. These “political platforms”, such as they are, now have millions of believers.

A weaker Europe 

So, is it over for the Brussels technocrats, and all the EU supra national institutions? No, it is not over. But forget about any new momentum leading to further European integration. Above all, forget about all dreams of any process that will lead to a strong and assertive United Federal Europe. This will probably never happen.

May be Marine Le Pen and her opposite numbers across Europe are not strong enough to destroy all that has been created since 1957.

But they seem strong enough to make whatever Europe there is even weaker, and even more ineffective.




In Italy High Unemployment Is Good News

WASHINGTON – If you really, really insist on finding the proverbial “silver lining” in rather depressing news, here is a headline for you. We find it in the Italian daily La Repubblica, as the title for a recent story about unemployment in Italy: “Work, confidence returns, inactive people numbers are down”.

Things looking better? 

Well, with such a promising headline you would expect to read that Italy has turned, or is turning, a corner. You would expect to read that hiring is more robust, and tragically high unemployment is finally going down.

No. Nothing of this sort. We read instead that “Within an increase in overall unemployment [12.4% in July 2015] Istat [National Statistics Institute] reads positive signals that indicate a recovery. What moves the scale are inactive workers (those who do not have a job and who are not seeking one). Their number is down by 1.1%, to under 14 million. The ranks of the discouraged are also down, (-114,000 in one year), especially in the South, among young people aged between 15 and 34. On the other hand there are more people who are inactive (+77,000) because they are pursuing some kind of education.”

Bad news is good news 

Got the picture? The number of the chronically unemployed is now just a bit under 14 million, because there has been a 1.1% decrease. This clearly means that things are looking really positive.

Well, it takes a really heroic level of optimism to say that “confidence is back” in a country with 12.4% unemployment, and 14 million of long term unemployed. (By the way, the unemployment rate is 44% for young people. It used to be 28% in 2011). Italy looks bad even compared to the still uninspiring unemployment rate within the rest of the Eurozone: 10.9%.

No sense of reality? 

So, why do main stream media like La Repubblica try to disguise an ongoing national tragedy into a “confidence returns” story?

Have they lost any connection with reality? Or, in truth, in this new world of drastically diminished expectations, a 1.1% decrease among the long term unemployed, within a context of massive unemployment, is in fact good news?

This story exemplifies “decline” 

This being the case, I would take this news story about unemployment as a clear example that describes what “decline” is:

You are in it, and you do not even know it.

You are so used to a “New Normal” of a worsening economy, and lower standards of living, that you forgot how things should be.

From this perspective of diminished expectations, a story that at the very best could be construed as a faint ray of hope is indeed good news.

 




What We Learnt From The Tianjin Tragedy

WASHINGTON – More bad economic news from China. Notwithstanding highly publicized official support for the stock market, after a few days of relative calm, the Shanghai Stock Exchange took another serious hit.

Shanghai Index takes another hit 

On August 18, the Shanghai Index lost more than 6%. this would be the equivalent of the US Down Jones index losing about 1000 points in just one day. (Analysts call losses of 200 points or more pretty bad. Losses above 300 really scary. Imagine 1,000). In early trading the following day the market extended its losses by another 3%.

Government actions ineffective 

This -6% (possibly -9%) hit is especially bad because the government is now officially committed to supporting share prices through a variety of interventions. Indeed, because of these well advertised actions, one would think that the smart investors should stay put, or may be buy some more stocks. “After all, these shares are guaranteed by the government. They must be a safe investment”.

Well, it seems that heavy government interventions are not enough. And this is bad. Apparently, average Chinese investors do not believe that the all-powerful government can deliver. Just think about for a moment of the possible political ramifications of this new belief, should it become entrenched. “The Chinese government cannot deliver on its promises”.  

The Tianjin tragedy

On a separate but related note, we have seen the catastrophic chemical explosion in the city of Tianjin. Hundreds of people dead. Many more wounded. Extensive damage to properties. Thousands of imported vehicles ready for final delivery destroyed. And now the danger of additional contamination brought about by the chemical reactions of the released compounds with rain.

Let’s be clear. The issue in Tianjin is not the accident itself. Sadly, there are plenty of major industrial accidents all over the world, including in the United States.

But here is the difference. Usually accidents are caused by human error, or negligence. In some cases they are caused by someone deliberately cutting corners in one particular instance.

Broken laws

Tianjin’s case is different. In Tianjin there are permanent warehouses containing extremely large quantities of hazardous, potentially flammable or explosive material located within populated areas. Both the location of the warehouses and the amount of hazardous material stored in them are in open contravention of existing Chinese laws that prescribe that such facilities must be at a safe distance from homes, businesses, or high traffic areas. The laws also prescribe how much material can be safely stored. Well, the laws are there, but they have been ignored, most likely because some public officials have been paid to ignore them.

So, here we are not talking about someone making a fatal error in a particular instance. This is about a practice of routinely  breaking or circumventing laws and regulations, thereby creating a systemic risk. Therefore this horrible accident is not about what someone did one day. This is about what many people conspired to do over many years, with full knowledge of the hazard they created. 

Not just in Tianjin

Where am I going with this? Very simple. It would be naive to believe that this deliberate circumvention of established safety procedures somehow is confined to some unscrupulous public officials and influential business people in the city of Tianjin. Bribing officials is common practice in China. Everybody who can will do it, if they think this is necessary in order to safeguard their economic interests.

And this means that warehouses that contain hazardous material are in the wrong places. Materials that do not meet safety specifications are used in buildings. Dangerous additives are illegally used in processed food. Toxic waste is dumped everywhere. Information about pollution levels in soil, water or air is unavailable or unreliable.

False data 

And, yes, talking about shady practices, economic data is routinely manipulated to make it look better. But, somehow, it is not polite to point out this practice of deception. When really bad economic news from China comes out, some Western analysts (at best) cautiously say that “May be the underlying situation is worse than what the more optimistic official data would indicate”. Well, let’s be real. What they really mean to say is that we have been fed false data. And now the facts prove it.

In the case of the illegal warehouses in Tianjin it took a massive tragedy to expose the ugly truth of routine violations of elementary safety rules.

What will it take to expose the deception of official economic statistics containing manipulated data?