Categorie archief: Reports 2013

April 2013, III

April 2013, III

April 2013, III

The Euro, Euro-zone and the EU

The Euro

The single currency in the European Union, EU, started to promote trade, business and it would make life easier for the people. The unification with the Euro in the Euro-zone was a political project to bring the EU even more together. A political, or even an economical union, was still a bridge to far. The single currency was essentially an attempt to unify through the back door.

With the current knowledge we know, it worked out not as planned.

The basic idea of more integration, more cooperation, in Europe is not a bad idea, it could promote trade and contacts between the people of the EU. To be successful you need however at least some kind of fiscal union or at best a political union. Regulations, fiscal policy, need to be synchronized to create a real common economy in the EU.

In the end it remains a political concept, what do the politicians and the people want in and with the EU. The governments in the Euro-zone decided that they wanted a common currency, which in the end means more integration, cooperation.

The economy and the Euro

The financial crisis in the world and especially in the south of Europe led to several thoughts about the common currency. Many in the north and south have great doubts about the Euro. It allegedly brought more worse than good. The answer to that question depends on the individual situation and the political outlook.

The common currency, Euro, is however a fact of life and any discussions about if it should be or shouldn’t have been implemented is a rather superfluous discussion. It is here and will be here for now.

The existence of the Euro is up to the members, especially to the big three or four, Germany, France, Italy and Spain. If one of them decides to get out it is over and out.

To leave and abandon the Euro will not deliver the advantages which are described by the followers of independent currencies and sovereign nations.

The main advantage of having an independent currency, if something like that exists, is that the value of the currency depreciates if the economy is performing bad or is in a recession. The lower value of the currency would stimulate export. This would increase growth, more employment, more demand and after that a stronger economy. Regrettably, other countries, your trading partners, are mostly also experiencing economic worser times, limiting demand from those countries and their currency will also depreciate. This will destroy your relative advantage.

Not included in this simple equation is that your imports will become equally more expensive and the payment of loans and interests will also become more expensive. To this, we should ad that the patterns of export and import are in the EU mostly limited to the closest by neighbors and the products are not that exclusive that they’re unique, irreplaceable.

The only EU economy producing products that are more or less unique is Germany, the demand for their products will remain, at lower level but will not evaporate. The products of other economies in the Euro-zone are not that exclusive and can be replaced or even avoided.

The debts of the countries, national or business, are also nominated in Euros, so any change tot hat will be complicated and very expensive to all parties. With a renomination of the currency in a national currency will be more or less 1 to 1, but within a second this will change, the southern currencies will fall and will be need to pay the double to the Euro days. The same is valid for the interest rates which have to be paid. In percentage to the BBP/GNP, whatever, more need to be paid to interest rates.

The advantage of a weaker currency is not valid as it seems, if you are alone on the world and eveybody else is doing all right, it could work. In reality, it works out a little different. All national economies are already that connected, interdependent, that there is no such thing as sovereign national, economic/fiscal, policy.

The future of the Euro

The existence of the Euro depends on its members, especially Germany, France, Italy and Spain. It is still and remains a political project. If they want to end it, it can be done, the price for it will be more expensive for the southern countries as their debts will mulitply and a default will be their only option. This would result in massive write offs for the northern countries. For all countries in the EU, even the ones which are not members of the single currency, the price will be very high. In the end it will be expensive for all parties, countries, involved. Everybody which has some how has a connection through trade or debts with the Euro-zone will be hurt by the end of the Euro.

The countries which kept their own currency will not be off the hook, the ones which are performing better have done their howework before, implemented changes in their economy and are now able to harvest the profits from that changes. But other countries which have not done so are experiencing the same difficulties, it doesn’t matter if they are in or out the Euro. Germany in the Euro and Sweden, Switzerland and Norway outside the Euro are doing better. Norway is of course a different category with its massive oil/gas resources. The UK and to a lesser extent Denmark, even if they’ve their own currency, are doing not that good. Just as many of the other Euro countries with high debts and unbalanced budget deficits.

There will be no winners nor advantages in leaving or ending the Euro. Continuation of the Euro will demand further unification, fiscal and political unification, to structurally solve the problems in the Euro-zone. This will demand changes and adaptions in and from the Euro members. All choices will be expensive but a world with a Euro will be more beneficial, cheaper, especially on the long term.

 

Standaard
April 2013, II

April 2013, II

April 2013, II

North-Korea vs South-Korea; a potential war

War in the Koreas

The war in Korea, 1950-1953 has formally never ended, there was only an armistice, restoring a status quo. The tensions between the two have remained and at times intensified.

Both countries have since developed in opposite directions, communist vs capitalist. The north stayed poor and relatively underdeveloped and the south progressed to wealth and one of the leading economies in the world.

This making North-Korea one of the few remaining true communist countries in the world. This autocratic regime, a police state, survived by closing the country to virtually all foreign influences and living of contributions and all kind of shady businesses, including the trade in nuclear technology.

This all cumulated in a policy of developing a nuclear device, or something close to it. This aspiring nuclear weapons power used its knowledge to somehow blackmail the world in supporting the country (financially/economically), get some respect and of course have it to defend the country against the evil world.

The assumption of power by the new North-Korean leader, Kim Jong Il, changed the rule of the game as they felt more threatened, lost respect, the economy was in ever worser shape and above all Kim needed to establish his power.

Conflict in 2013

North Korea used all options to increase the tensions between the two countries, everything was used to keep the fire burning. The final escalation to war seems to be around the next corner. The nuclear program restarted, the question remains if it was ever stopped, borders closed, missile launch commands given and even foreign diplomats were told that their safety couldn’t be guaranteed anymore.

The military training operations between South Korea and the USA have been used as an excuse to make new threats but they’re probably sincerely felt by the north as a danger to their existence. More than ones, military training, maneuvers, were used as a pre-cursor to an attack.

It remains however very unlikely that North-Korea will start a conflict, the odds are simply against them. Military they’ve greater numbers but the level of technology, the quality of the forces and the logistical capabilities of South-Korea vastly outnumber everything the north has to offer. Only a possible functioning and deliverable nuclear device could change the odds somewhat in the favor of the north.

Weapons of mass destruction, nuclear devices, are however unuseable in military conflict as there always would be an equal devastating counter-attack after the first use of nuclear weapons. MAD still works even if one of the parties in conflict seems to be irrational. Irrationality will end if there is a chance to survive, remain in power. If they can survive, MAD will work. Nuclear weapons are only good for defence, keep the enemy at bay.

North-Korea only kind of war play could be a very short conventional attack on the south by the massive use of artillery and missile barrages, commando style attacks on strategic objectives and a possible use of a man created natural disaster. In North-Korea close to the border with South-Korea there is a big dam used to genrate electricity, if that would be destoyed, the flood would cause massive damage. The economical cost would however equally worse for the north.

A short attack on the south were after the UN and the world community would quickly intervene to end the fighting could be beneficial to the north. If the north would be given financial/economical support to stop the fighting.

The uncertain factor would be South-Korea who are fed up with the northern policy of black mail. The south could use the opportunity to eliminate the military threat out of the north and create a kind of security zone by destroying most military equipment in a 30 to 50 kilometer zone. That kind of military loss could mean the end of the regime in North-Korea, or at least the rule of Kim Jong Il.

It can be concluded that the chance of survival of the Kim Jong Il regime is more likely if they don’t start a conflict. A conflict, war, could be the end of the regime and than they could become irrational but they would have to make the first move and strike at the south but again considering the situation of the military in North-Korea it is unlikely if not impossible to start an attack against the south.

Militarily they’re essentialy incapable to strike at the south. The equipment is out of date, badly maintained, the ammunition is in equally worse shape and the level of training is bad. The armed forces have been used for internal security roles, had to take care of growing their own food and help in civil affairs and natural disasters. And finally the supply and payment of the troops, with the exception of the special forces, have become worser so beside the capability even the loyality of the mass of the forces can be questioned.

A war never can be excluded but in the current situation very unlikely.

 

 

Standaard
April 2013, I

April 2013, I

April 2013, I

Syria; an endgame without an end

Syria, an assessment

The conflict in Syria has been going on for a couple of years without any victory in sight, if you can speak about victory in a conflict which has already cost over 70.000 casualties.

The Assad government wants to remain in power because the alternative is absolutely not acceptable for them. As the track record of atrocious behaviour of the security forces and the militias created and supported by the Assad regime is that bad that any peaceful solution or any negotiations for that matter are out of the question. It will ultimately mean death for Assad and co.

The opposition, in some way allied within the SNC, Syrian National Coalition, with its military arm, FSA, Free Syrian Army, which consists out of numerous independent fighting groups strongly connected to one area are nearly just as focussed on the defeat of the other side.

With a third party somewhat of an outsider, the Kurdish PYD in the north-east of the country wanting independence or at least autonomy.

The fighting between the two opponents have been long and messy with little progress. None of the parties could enforce a decision and both used their advantages, the government has/had superior firepower and logistics and the opposition has/had the initiative, popular support, better tactics and lately ever more foreign support including more advanced weapons and ammunition.

The Assad government concentrated their forces at the most important areas/points and the Alewite/Druze/Christian homelands to protect their regime. Leaving most of the rest of the country with little to none resistance to the opposition. Fighting between the two sides occured mostly at those contested important areas/points, like Damascus and especially Aleppo.

The recently received additional Western support, especially the weapons and ammunition, immediately made a difference. The FSA could go on the offensive and take on the Syrian army in Damascus and Aleppo and press on and continue the battle. Until now the FSA was often limited in its operations because of the lack of supplies, especially ammunition.

In the mean time the logistical situation for the government is worsening, stocks get lesser, soldiers and officers desert and even long trusted Russian and Iranian support diminishes. The first by intention the second by situation.

The Kurdish north-east of the country is another ball game. The PYD was divided whom to support, Assad or the SNC/FSA. They considered them both as possbile friends or foes. They fight for their own cause, autonomy at least or independence preferred for their Kurdistan. The PYD managed to keep both contestors out of the region. The government left voluntarily, the FSA has been more or less forced out. For both sides the Kurdish territories are not of urgent interest as both have other more important battle fields, areas, to contest.

The future of the Assad regime

Due to the deteriorating combat, logistical, financial and political situation and the improving situation of the FSA, the chance of survival for Assad and his regime will be very unlikely. Within 12 to 18 months, 6 if given western air support, the Assad government will be defeated, they’ll have lost Damascus, Aleppo and other strategic important areas. Assad and his most loyal forces can however survive a long time in the Alawite home areas but not forever.

The rate of desertion will most likely increase in the coming months forcing Assad to rely only on his most loyal security forces and his less capable but even more brutal militia forces. Because of lesser forces available Assad and co will be forced to concentrate their forces. Logically they will withdraw to the coastal areas taking as much arms and ammunition with them, including the much feared biological and chemical weapons.

The survival in the coastal home areas will depend on the unity in the FSA and of course, to a lesser extent, the level of support, air support, from the West.

International, Arab and Western, support, weapons, ammunition, intelligence, training and other logistical support will be absolute necessary to defeat Assad. Without it, it will become very difficult as the firepower, the level of organization and the supplies are still better and larger at the Assad side.

The FSA as an organization

The FSA is a collection of independent groups with the common aim to defeat the Assad regime. All groups have their own leader and the followers are loyal to their leader and not to the FSA or SNC per se. The strength of each group is also very different. The number of men under arms, the quality of the weapons and the availability of ammunition used to vary a lot. If they’re out of stock, the men would go home and would continue if the ammunition would be resupplied.

The FSA can be divided in about two kind of groups, the moderate groups wanting a new government with some kind of democratic system and the other group of Islamic fundamentalistic groups who also want a new government but then a Islamic republic, with Allah and the Sharia as the leading principle. The moderates constitute the majority but the Islamists are the most agressive and daring. In fighting the government the Islamic groups are more effective and successful. They will demand a price, a role if Assad will be defeated, and are certainly willing and able to fight for their demands.

This is going to be the major weakness in the fight against Assad and especially in the time there after. The several more or less independent groups with different levels of capability and support will be a major problem as there is no central and strong system and hierarchy of control and command.

All groups are more or less represented in the FSA leadership, with the exeption of the Islamic fundamentalists. And even this leadership is divided, as the previous moderate leader Mouaz al-Khatib resigned his position as the hardliners rejected any form of negotiations.

The lack of unity can and will be the biggest problem for the FSA and SNC, as long as Assad is still in command in Damascus, the groups will cooperate and continue to fight against Assad. But there after?

An end without and end

The future of Syria looks bleak as Assad is still not defeated and also still has some potential to fight and be dangerous. But this is more or less just a matter of time but the time there after will be much more troublesome and demanding.

Syria could end up with four different groups fighting each other. A complicated civil war with each group fighting each other and with little common ground to negotiate and to cooperate.

The moderates, the Islamic fundamentalists, the Kurds and of course the minorities of Alawites, Druze and Christians with or without Assad. All will fight and continue to fight as giving up or loosing is not an option.

The committed atrocities by all sides, the culture of revenge and honor and the strong religious differences between Sunni, Shia and Christians are all reasons for a long fight were only a total exhaustion could end the conflict or create a balance of power between three or four different areas, new countries, as two groups are strongly bound to an area.

 

 

 

 

 

Standaard