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Wednesday March 9th 2011
News analysis
Jacques Chirac's corruption trial
Mar 8th 2011, 15:13 by S.P. | PARIS
FOR nearly two decades, French investigating judges have been compiling dossiers, gathering evidence and hearing witnesses in an attempt to hold Jacques Chirac to account for his time as mayor of Paris. This week the former president of France was finally due to appear in court to stand trial, an event without precedent under France's fifth republic.
Yet earlier today the presiding judge in the Paris criminal court accepted a technical objection from one of Mr Chirac’s co-defendants, thereby delaying proceedings for a further three months.

The 78-year-old Mr Chirac is charged with “misappropriation of public funds” in connection with the creation of fake jobs while he was mayor of Paris, in 1977-95. During that time he was building up a new Gaullist party, from which he bid for, and won, the presidency, in 1995. Many town-hall employees, paid for by the taxpayer, were in reality working for his party.
The trial that (temporarily) opened yesterday involved two separate judicial investigations, 28 bogus jobs and nine co-defendants. Among them is Michel Roussin, Mr Chirac’s former town-hall chief of staff, already convicted in a previous town-hall corruption case. If convicted, Mr Chirac could in theory face up to ten years imprisonment and a €150,000 ($208,000) fine.

Over the years judges have put together various cases in an attempt to finger Mr Chirac. This is the only one to have reached court. All the others have been shelved, either because the statute of limitations expired or because the judges failed to get around the presidential immunity that Mr Chirac enjoyed until he left office in 2007.
Some of the cases appeared far more serious than the current one, notably those involving an entrenched system of kickbacks on public contracts from the Paris town hall, for which dozens, including Mr Roussin, were convicted. Other inquiries were never resolved, such as that into travel-agency bills paid in cash by the Chirac family.

So if the investigating judges are ever to hold Mr Chirac to account for what went on during his watch, this is their last chance. That a system of fake jobs existed has already been established. In 2004, Alain Juppé, Mr Chirac’s former right-hand man at the Paris town hall (now reincarnated as France’s new foreign minister) was convicted in connection with the affair.
But last year, to general surprise, Bertrand Delanoë, the Socialist mayor of Paris, withdrew the town hall as a plaintiff in the Chirac case, after Mr Chirac agreed to pay the city €500,000 in compensation and the UMP, the successor to his Gaullist party, stumped up another €1.7m. Mr Chirac has said that he was willing to appear in the dock, and that he has nothing to hide.

This week’s ruling, however, adds to the sense that, when it comes to Mr Chirac, the French justice system keeps stalling. Following the withdrawal of the Paris town hall, the case is being brought by civil plaintiffs, against the advice of the public prosecutor. This week’s technical appeal, querying the constitutionality of the law under which the defendants are being tried, now goes to a higher court. That body has three months to decide whether the appeal is founded, in which case it goes before the Constitutional Council, France’s highest judicial authority (on which, in normal times, Mr Chirac himself sits). If not, the case resumes.

The oddity is that the French themselves seem ambivalent about sending their ageing ex-president to stand trial. In retirement, he has become something of a national treasure, enjoying public affection and high popularity ratings despite the many wasted years of his presidency. Many remember with pride his stand against the 2003 American-led invasion of Iraq. Most of his Gaullist friends, and some of the opposition, are dismayed at the thought of him in the dock.
Even Arnaud Montebourg, a Socialist politician and lawyer, who vowed to pursue Mr Chirac the moment his immunity expired, says that “there is no point now in judging him”. Nobody now expects Mr Chirac to get anywhere near the inside of a prison cell. With each delay, he looks ever more likely to emerge relatively unscathed.
This week's caption competition
Mar 7th 2011, 18:13 by The Economist online
CAN you write an Economist picture caption? The excellent standard of entries in our previous competitions suggests that many of you can: last time your suggestions again provided us with both a caption and a headline. Here's a new chance for you to see your idea in print.
The photograph above will accompany an article in the United States section in this week's issue. Disability benefits are crucial for many. Yet in America, the number of people claiming disability benefit for quite subjective ailments has skyrocketed. "Bad backs" are now a particularly common complaint.
As before, it's up to you to provide the caption: please leave your suggestions in the comments thread below. The captions should be as short and snappy as possible, and definitely no more than about 30 characters long. The most appropriate contribution will appear beneath the picture in this week's print edition, which is published on Friday morning. Entries close at midnight London time on Wednesday evening, so you've got a little more than 48 hours. The only reward is that the winner can then truthfully claim to have written (at least a few words) for The Economist. Over to you.
Israeli politics
Mar 6th 2011, 9:47 by D.L. | JERUSALEM
A FORMER Israeli ambassador to South Africa has pointedly resigned from the foreign service, citing the collapse of apartheid South Africa as an important lesson for modern-day Israel.
"For 46 years the apartheid government strove by force of arms to achieve regional hegemony," wrote Ilan Baruch wrote to his colleagues in the Israeli foreign ministry in a parting letter. "Apartheid was supported by almost everyone in the white community, not necessarily as a racist theory but as a policy of self-defence. There was denial of the moral price."
Mr Baruch stressed that "those who accuse Israel of South Africa-style apartheid are plain wrong. That is a vengeful and vicious calumny against Zionism… However, I do believe that the South African experience needs to be studied." He explained in his letter that he found himself no longer able to represent Israel because the government of Binyamin Netanyahu had no interest in a peace process based on land for peace and designed to end the conflict with the Palestinians.
Government spokesmen, he wrote, had repeatedly rejected the international demand that Israel withdraw from the occupied Palestinian territories. "They spurn the Annapolis process, they ignore the Road Map [two American peace initiatives from the Bush years which Israel accepted at the time]. The upshot is a malignant diplomatic dynamic which threatens Israel’s international standing and undermines the legitimacy not only of its occupation but of its very membership in the family of nations."
He was, therefore, taking early retirement, Mr Baruch announced. He is the first and thus far the only member of the foreign service to quit since Mr Netanyahu became prime minister two years ago and installed Avigdor Lieberman, leader of the hard-right Yisrael Beitenu party, as foreign minister. He says he received dozens of e-mails and text messages from colleagues thanking him for expressing what many in the ministry think. No-one wrote condemning his action. Most of his colleagues wrote nothing at all. Perhaps, he surmises, people were not anxious to put their thoughts in traceable writing.
The foreign ministry itself issued a statement saying that Mr Baruch had applied last year to be ambassador to Egypt, had failed to get the appointment—and that was why he was leaving.
Mr Baruch dismisses that as petty and spiteful. He admits, though, that if he were younger or poorer he probably would not have left, "but rather have sought a low-profile posting where one can keep one’s head down and wait. A sort of unarticulated, internal resignation; that’s what many people do."
In his letter, Mr Baruch cautioned that "the paternalistic depiction of Israel as a front-line fortress in a global inter-cultural and inter-religious conflict is dangerous. The depiction of the opposition within the international community to Israel’s occupation policy as anti-Semitism is simplistic, provincial and superficial."
Mr Baruch took a stinging swipe at the foreign ministry’s efforts to change Israel’s branding as a way of improving its international standing. "The concept that the answer to the various threats to our national security lies in expanding our public advocacy and in promoting Israel’s image as a leader in world technology—that concept is an illusion."
Tzipi Livni, the foreign minister in the previous government and now leader of the opposition, supported Mr Baruch’s critique. "Public relations without policy is no solution," she said. "Perhaps [Mr Netanyahu] really believes that speaking in fluent English on foreign television stations creates change. But it doesn’t."
Iran's opposition leaders
Mar 4th 2011, 16:36 by The Economist online
FOR Iran’s best-known dissidents, Mir Hossein Mousavi and Mehdi Karroubi, the net has tightened with tortuous precision. First came calls that they be arrested for their prominent role in the country’s two-year-old pro-democracy movement, followed by physical attacks, media vilification, and, last month, the spectacle of hardline parliamentarians baying for their execution. By then, the pair had been prevented from leaving their homes, which had been daubed with abusive graffiti and, in Mr Mousavi’s case, sealed with a metal door. Now, according to their families, both have been quietly taken to jail.
The government refuses to confirm the incarcerations that demonstrators on March 2nd sought to denounce. Thousands took to the streets of Tehran and other towns under the cover of a festive shopping spree–the Persian new year falls on March 21st–only to demand freedom for Messrs Mousavi and Karroubi, and, in some cases, grisly retribution for the author of their misfortunes, the supreme leader, Ayatollah Ali Khamenei. Motorists honked their support and the security forces responded as usual with tear-gas, baton-charges and arrests.
These echoed scenes of the protests that followed the disputed re-election of President Mahmoud Ahmadinejad in 2009 and which restarted last month in emulation of the Egyptian and Tunisian revolutions. There was never any doubting Mr Khamenei’s hankering for revenge over the two men, both former loyalists who have turned against the regime, and his countervailing fear that to do so might spark a popular explosion. But the struggle for Iran’s future is turning out to be a drawn-out affair. It may be some time before the true impact of this latest escalation is felt.
The truth is that neither of the detained pair was ever iconic enough for his arrest either to signal the end of the movement or to prompt mass anger. Assuming, as seems likely, that the authorities are deliberately blurring the facts, and the pair are to be kept behind bars, a fresh struggle will now begin, out of view.
Both men will need all their obstinacy, of which they have proven reserves, to resist interrogators’ attempts to force them to make a recantation showing their treasonous intent and allegiance to Western powers. If they resist, news of their courage will seep out and their hold over the public will grow. If they crack, the movement may crack too.
The week ahead
Mar 4th 2011, 16:19 by The Economist online
A selection of things to look out for over the next five days
Monday March 7th
The trial of former President Jacques Chirac over charges he misused public funds, when he was mayor of Paris, begins.
Tues 8th
America's vice-president, Joe Biden, visits Russia.
Wednesday 9th
Ash Wednesday marks the beginning of Lent, a Christian festival that is observed sporadically.
Thursday 10th
Crufts, the world's largest dog show, gets underway in Birmingham (Britain rather than Alabama).
Friday 11th
The European Council (made up of the heads of EU members' governments) holds a meeting to talk about Libya, in Brussels.
Dutch local elections
Mar 4th 2011, 15:09 by A.U. | THE HAGUE
DESPITE their cliff-hanger outcome, the provincial elections held in the Netherlands on Wednesday brought few surprises. The political landscape remains fractured, with the forces on the right narrowly ahead. But the results may point to a long-term polarisation of politics in the Netherlands, a country once renowned for its consensual model of decision-making.

In last June's parliamentary elections, a similarly scattered vote produced the first minority government in modern Dutch history, comprising the liberal VVD and the centre-right Christian Democrats (CDA), and propped up by Geert Wilders's far-right Freedom Party. This unwieldy set-up yields a majority of just one seat in the 150-member parliament.

In Wednesday's elections the Dutch were voting for members of the country’s 12 provincial councils. In late May, these bodies will elect the 75 members of the Senate, the upper house of the Dutch parliament, which is charged with approving government legislation.

Here the political mathematics get knotty. This week’s results suggest that the VVD, the CDA and the Freedom Party will fall one seat short of the 38 they need for a majority in the Senate. So the government is likely to seek extra support, either from the SGP, a hardline Calvinist party, or various right-leaning local parties in the provincial assemblies. Yet the opposition may also be able to build a Senate majority, enabling it to block legislation. So the fight for the votes in each council will continue until May.

Even if the government does prevail, many believe that Mark Rutte, the VVD prime minister, will struggle to implement anything much beyond his economic agenda, which includes some significant spending cuts. In particular, various controversial anti-immigration and anti-Muslim measures, such as a ban on face-covering Muslim garments, now look less likely to pass. This is because their main proponents, Mr Wilders's Freedom Party, performed worse than expected on Wednesday, slipping into fourth place. Mr Wilders's sharp edge has been somewhat blunted.
More important in the long term may be the continuing crumbling of the the CDA. Once seen as the natural party of government in the Netherlands, on Wednesday it attracted support from just 14% of voters. Still reeling from the internal quarrels that followed its decision to participate in a government backed by Mr Wilders last year, it may not want to risk alienating its remaining voters by supporting laws that may be seen as anti-constitutional. Its ideological appeal was always vague. Now it is shedding voters both to Mr Wilders and to Mr Rutte's VVD.
The decline of the CDA could have far-reaching consequences. Its stabilising influence has been an important component of the consensual politics on which the Netherlands has long prided itself, and for which it was often admired by outsiders. As Mr Rutte suggested after the election, the country may be moving towards a system where big decisions are made by a small majority. This would be unknown territory not just for politicians, but for other participants of the once-famous “polder model,” such as trade unions and employer organisations.

This week's elections could also accelerate a transition towards Euroscepticism. Beset by polarised debate at home, the cabinet will not be inclined to compromise abroad. Accession to the European Union of the Balkan states (other than Croatia) or Turkey will be opposed. Further bail-outs of troubled euro-zone economies, such as Portugal, will be frowned upon. In the months to come the Netherlands' European partners may find themselves dealing with a country that looks increasingly unfamiliar.
The Economist
Mar 3rd 2011, 18:14 by The Economist online
Too hot to trot
A new survey says only 64% of Americans can be described as physically active. In general, it seems that people who live in cold states are more likely to get their weekly workout than those in sunny Florida. Hawaii, where 70% are energetic, is an honourable exception
Kings of the sky
The monarch butterfly is famed for its migration, with some insects travelling 2,000 miles from breeding grounds in Canada and the United States to a forest west of Mexico City. But, as this video shows, the insect’s survival is under threat from changing weather and deforestation
Appointment in Tripoli
As the world considers how to stem the violence in Libya, we revisit our leader about the American bombing raids in April 1986 that followed a Libyan-sponsored terrorist attack. “The time had arrived to use some kind of force against Colonel Qaddafi,” we reckoned
United States: Defining “overpaid”
In the discussions about the role of unions in Wisconsin, overpaid has become a complicated term
Americas: Haiti’s hallowed hotel
Now run by a Voodoo priest, the resort that Graham Greene made famous in “The Comedians” is amazingly unchanged
Middle East: Tea with The Economist
Richard Dalton, a former British ambassador to Libya, discusses the current crisis
Asia: The 15-minute parliament
Whatever Myanmar’s new MPs are doing, they are not doing very much of it
Asia: Microcreditor in the dock
Bangladesh’s government uses a mandatory-retirement law to banish Muhammad Yunus from Grameen Bank
Business: Such stuff as dreams are made on
Currently the preserve of high-performance cars, carbon fibre could be the future of mass-production carmaking
Finance: Ageing and shopping
A pair of big property deals bet on Americans consuming more as they grow older
Technology: Beating cheating
Computer analysis of candidates’ answers to standardised tests can reveal cheats
Europe: Mr Erdogan goes to Germany...
...and manages to annoy everyone with a speech accusing Germany of seeking to forcibly assimilate its estimated 3m-strong Turkish community
Culture: Jan Gossaert’s renaissance
An exhibition at the National Gallery in London examines an influential Flemish painter who discovered nudes in Italy
Culture: Books of the month
Our books and arts editor discusses the impact of innovation on the world economy, business and government
The Frankfurt shootings
Mar 3rd 2011, 16:25 by B.U. | BERLIN & T.J.
GERMANY had been nervously bracing itself for its first post-September 11th attack by Islamist jihadis. Now it seems to have happened. Yesterday afternoon a man wielding a pistol opened fire on a busload of American troops at Frankfurt airport, killing two and severely wounding another pair. The suspect, Arif Arid Uka, a 21-year-old of Kosovo Albanian origin, was arrested after he ran into the terminal building. His gun reportedly jammed, which may have averted worse carnage.

Mr Uka appears to have succeeded where others failed. Although Germany has until now been spared Islamist violence, it has been a hub of terrorist activity and, in part because of its participation in the Afghanistan war, a frequent target of threats. The September 11th attacks in the United States were largely planned and executed by the members of the so-called “Hamburg cell.”
In 2007 police arrested the four-member “Sauerland Group” before they could launch their car bombs. They are said to have planned attacks on airports and on the American air base at Ramstein, a big logistics base for the military operations in Afghanistan and Iraq and the destination of the soldiers killed yesterday. In 2006 two men planted suitcase bombs on trains leaving Cologne; they failed to explode.
Investigators have found evidence that Mr Uka had Islamist leanings, including a Facebook page that lists him as a fan of sites such as "Reign of Islam." News reports quote his uncle as saying that he had worked at the airport. The fear is that Mr Uka may be part of a cell that is planning further attacks. He has apparently confessed to the murders—one report said he was driven by anger about German involvement in Afghanistan—but says he acted alone.
Mr Uka's family hails from Mitrovica, a Kosovar town divided into an Albanian south and a Serb-controlled north, although many reports say he himself was born and raised in Germany.
Most Albanians, inside and outside Kosovo, are fanatically pro-American following the US-led NATO attack on Serbia in 1999 that led, eventually, to Kosovo's declaration of independence. There is a large statue of Bill Clinton in Pristina, Kosovo’s capital. The influence of the American ambassador on local politics there remains enormous.
The Kosovar government immediately issued a statement describing yesterday's attack as a “macabre act” carried out by an individual "acting against the tradition of the people of Kosovo, who will always and forever be grateful to the United States of America”. Zeri, a newspaper, headlined its story on the murder "Shame" while this morning’s edition of Koha Ditore says that the murders are a "stain" on Kosovo’s already-damaged reputation, a reference to recent allegations of election fraud and a grisly organ-harvesting scandal implicating the country's prime minister.
If Mr Uka was radicalised in Germany rather than in Kosovo, some may draw parallels with other cases, in particular the so-called Fort Dix plot. In 2009 three ethnic-Albanian brothers from Debar in western Macedonia were convicted in the US of being part of an Islamist plot to attack Fort Dix, an army base in New Jersey. The brothers, all in their twenties, had left Macedonia as children, and reports suggested that they had never been back.
The attack may also bolster concerns in Germany that the country is failing to integrate its immigrants. Last October Angela Merkel, the chancellor, said that multiculturalism had "utterly failed" in Germany.
But there are no immediate signs of alarm. Many German newspapers did not make the attack their lead story this morning. The new interior minister, Hans-Peter Friedrich, seems inclined to follow the cautious policy of his predecessor, Thomas de Maizière (who left the job today to become defence minister after the fall of Karl-Theodor zu Guttenberg). In his first day on the job Mr Friedrich has declined to raise the terrorist threat level.
McKinsey's reputation
Mar 2nd 2011, 12:41 by R.L.G. | NEW YORK
RAJAT GUPTA was the boss of McKinsey, the world’s most famous consulting house, from 1994 to 2003. He parlayed the connections he made in that powerful shop, which advises firms on big decisions like restructuring and buying other firms, into a number of plum perches afterwards. He advises the United Nations’ secretary-general on management, is the chairman of the International Chamber of Commerce, co-chair of the American India Foundation, and sits on several boards.
Now the SEC has charged Mr Gupta with using those board positions illegally. What might the allegations mean for McKinsey? The alleged incidents took place after Mr Gupta’s time running the consultancy. But the firm (or “the Firm”, as its employees like to call it) has a proud tradition of advising bosses both expertly and discreetly. Its consultants almost never even divulge their clients’ identities. Marvin Bower, who ran McKinsey in the 1950s and 1960s, fought to have consulting considered a profession like law and accounting, with the training, prestige and adherence to ethics that professionals pride themselves on.
For the former boss of such a firm to be found double-dealing would deal a more profound reputational blow than the usual insider-trading scandal. Traders and hedge-fund types are expected to scrap for every bit of momentary advantage to make their money. It’s rarely a shock, then, when the boiler-room pressure occasionally blows through legal safeguards. But elite consultants, and McKinsey foremost among them, consider themselves in a different class.
McKinsey is unlikely to suffer any immediate disaster. But its rivals, the hungry two other top-tier consultancies Bain & Co. and the Boston Consulting Group, are surely gleeful today, and will get to work seizing whatever advantage they can tomorrow.
Insider trading
Mar 2nd 2011, 10:46 by The Economist online
HEDGE funds are often fatefully named. Long-Term Capital Management, a hedge fund that had to be bailed out in 1998, had a notoriously short lifespan. More recently the Galleon Group, a large hedge fund named after an old-fashioned sort of sailing ship, has dramatically sunk. The boss of the fund, Raj Rajaratnam, and 21 other people have been charged in a sweeping insider-trading case that has allegedly led to at least $85m in illicit profits. 
On March 1st, the Securities and Exchange Commission (SEC) brought charges against Rajat Gupta (pictured), the former boss of McKinsey, a consultancy. He is the highest profile corporate executive to be ensnared in the case so far, having served as a former board-member of Goldman Sachs, a bank, and, until yesterday, Procter & Gamble, a giant consumer-goods firm. 
Mr Gupta was an investor in Galleon and a friend of Mr Rajaratnam, which is why he tipped him off, on multiple occasions, according to the SEC. For example, after Mr Gupta found out about Warren Buffett’s $5 billion investment in Goldman Sachs in 2008, he supposedly called Mr Rajaratnam, who bought 175,000 shares in Goldman. All told, Galleon raked in around $15m and avoided losses of around $3m thanks to Mr Gupta’s tips, the SEC alleges.
Mr Gupta fiercely denies the charges and vows to fight them. But the allegations will permanently tarnish his reputation, and may cause fallout at the companies he worked. McKinsey, for example, prides itself on advising bosses discreetly, and rarely even divulges its clients’ identities. This case against a former boss won’t be good for business. Goldman Sachs, already having settled a lawsuit with the SEC last year for allegedly duping clients into buying mortgage-backed securities without enough information, doesn’t need to give investors another excuse to question how information flows on Wall Street.
Mr Rajaratnam, who claims innocence despite the guilty pleas some of his colleagues have already put forward, is set to face trial on March 8th. With his day in court so soon, the timing of the SEC’s charges against Mr Gupta probably aren’t coincidental. The SEC may be trying to scare Mr Rajaratnam into a settlement while also bringing down the ultimate corporate insider. It’s one thing to topple a hedge fund manager, but it’s quite another to bring down a major figure in corporate America.
Turkey and Europe
Mar 1st 2011, 22:01 by A.Z. | ISTANBUL
IT IS no secret that Turkey's efforts to join the European Union have not been going well. But a bout of Europe-bashing this week by Turkey’s mildly Islamist prime minister, Recep Tayyip Erdoğan, has exposed just how rotten relations have become since the EU formally began membership talks with Turkey in 2004. All the more so because Mr Erdoğan made his comments in Germany, where he was meant to be shoring up Turkey’s case. If anything his visit has had the opposite effect.

Mr Erdoğan's German hosts were outraged by a speech he delivered in Dusseldorf on Sunday before a huge crowd of Turkish immigrants. He accused Germany of seeking to forcibly assimilate its estimated 3m-strong Turkish community. "Nobody will be able to tear us away from our culture…our children must learn German, but they must learn Turkish first," he thundered. Not so, riposted Guido Westerwelle, who said German had to come first.

Mr Erdoğan was taking aim at Germany’s chancellor, Angela Merkel, who drew Turkey’s ire last year when she declared that multiculturalism in Germany had “utterly failed.” She appeared to be echoing the views of Thilo Sarrazin, a German central banker, who last year argued, in a bestselling book, that German culture was at risk from “parallel” Muslim societies.
What about Turkey’s estimated 14m Kurds, Mr Erdoğan's hosts may well have asked. Although Turkey's ruling Justice and Development (AK) party has eased restrictions on the Kurdish language, thousands of Kurdish activists are on trial for advocating greater rights for their people and are barred from speaking Kurdish in court.

Mr Erdoğan’s invective was not reserved for Germany. A day later he told a group of Turkish and German businessmen in Hanover that the idea of NATO intervention in Libya was “absurd”; the alliance had no business meddling in non-member states, he said. Mr Erdoğan suggested that Western interest in Libya and in the Middle East in general was driven by "calculations centred on oil wells" rather than democracy and human rights.

Mr Erdoğan’s fury will have been fed by a visit to Ankara on February 25th by Nicolas Sarkozy. Much like Ms Merkel, France's president advocates a so-called “privileged partnership” for Turkey with the EU instead of full membership, a view he repeated during last week's visit—which was restricted to five hours, against Turkish wishes.

Mr Erdoğan declared that the Franco-German stance proves that the EU is a “Christian club.” In an interview with a German television channel he called on the EU to reveal its “true intentions... If you do not want to take Turkey into the European Union then say it clearly and openly,” he huffed.

Turkey has good reasons for being aggrieved. The EU has failed to deliver on promises to ease a trade embargo on Turks in Cyprus mainly because of protests from the Greek Cypriots, who joined the EU in 2004. Turkey believes, probably rightly, that its other detractors, notably France, Austria and Germany, are using Cyprus as an excuse to torpedo Turkish accession.

Membership talks have all but ground to a halt. Of the 35 “chapters” into which the negotiations are divided, as many as 18 have been blocked by the EU as a whole, by Cyprus or by France.  Only one chapter, on science, has been concluded. And none has been opened under the current Hungarian presidency. Egemen Bağış, Turkey’s chief EU negotiator, is said to have asked Mr Erdoğan to scrap his job.

In private, many AK leaders sniff that Turkey can do perfectly well without the EU. Their confidence has been compounded by Turkey’s growing regional clout, especially in the Arab world, where Mr Erdoğan is hailed as a hero thanks to his repeated salvoes against Israel.  There is more and more talk of a "Turkish model" for the rebellion-wracked Middle East.
Moreover, Turkey’s economy has weathered the global financial crisis relatively unscathed. Growth this year is predicted to average 5%, not far behind India and China. Opinion polls suggest AK will win a third single-rule term in elections due on June 12th.

What a third term of AK rule bodes for Turkish-EU relations remains unclear. AK leaders, notably the foreign minister, Ahmet Davutoğlu, insist that EU membership remains a strategic goal. But so long as Turkey believes that the EU needs Turkey more than it needs the EU, it is unlikely to make the kind of radical concessions—such as opening its ports to Greek Cypriot vessels—that would unblock the talks.
In the meantime, Mr Erdoğan’s tirades may win him votes at home, but they will only provide further fodder for Mr Sarkozy and Mrs Merkel.
From the archive
Mar 1st 2011, 17:11 by The Economist online
AS THE world debates how best to stem the violence in Libya, including the possibility of a military no-fly zone, we look back at our leader about Ronald Reagan's use of force in April 1986 after a Libyan-sponsored terrorist attack.
Appointment in Tripoli
The Economist, April 19th 1986
In bombing Libya, the United States killed sleeping women and children and opened a dangerous new period in which terrorism against Americans and West Europeans may, for a time, get worse rather than better. Most Europeans but very few Americans conclude that America was wrong to use its bombers against Libya. The United States did not choose the best instrument of force available to it. Aerial bombardment rarely serves a political end, and better options were available on the night of April 14th-15th. It is not foolish or weak-kneed to worry about what will come next. Nevertheless, the time had arrived to use some kind of force against Colonel Qaddafi. Unless this week's bombing causes him to stop sponsoring terrorists, the time will come when it will be right to use more force and, if necessary, to overthrow him.
The United States should have no illusions about the course on which it has set out. It will be precarious, frustrating and possibly unrewarding. Twenty-five years ago America was confident that its big army and air force, with all the shiniest technology, could defeat guerrilla insurrections. That confidence was smashed in Vietnam, and the United States spent several years afterwards believing that military force could solve nothing. Under Ronald Reagan it rediscovered on the tiny island of Grenada that armed clout sometimes achieves good things. But the United States and its European allies face in terrorism a threat that is even more intractable than the guerrillas of the 1960s.

The need for action
 Americans would be wrong to conclude that force and more force will, by itself, suppress terrorism. A combination of political and economic pressure, better police work and attempts to ease the conflicts that help to generate terrorism are also needed to contain it. But it has to be understood, especially in a week of sickening television shots of the victims of American bombs, why military force must be one of the instruments in the fight against terrorism. Two reasons, one present and one prospective, justify an extreme course of action against Colonel Qaddafi. The present one is that, in attacking Libya, the United States was defending itself. America's existence, of course, is not threatened by anything that the colonel could do, even in his wildest dreams. But a government's first duty is to protect the lives of its citizens, and the evidence has damningly piled up over the years that Mr Qaddafi has paid for, housed, trained and directed terrorists whose business is to murder Americans (and Europeans). Proof of Libya's complicity in the latest terrorist attack, the bombing on April 5th of a West Berlin discotheque frequented by American soldiers, has convinced even some habitual sceptics. The colonel shows no true remorse over any of this—indeed, Mr Reagan and Mrs Thatcher claim that more terrorist attacks backed by him were in the works—and the United States has ample grounds for trying to stop him from going any farther.
Many people wonder why sanctions short of military force would not do. The answer is that the United States has tried all of them, and they have done no good. Had it been joined in its efforts by European governments, it might have been less inclined to go for the bombing that most of them deplored this week. The bland measures belatedly adopted by the EEC’s foreign ministers a few hours before America attacked were a tiny move in the right direction, but it is hard to believe that a man of Mr Qaddafi's passion and sincerity would be deflected by diplomatic reproofs. Some critics of America's bombing claim that it will encourage him to further wildness. So it might. But to do nothing—to accept failure—certainly would. To doubt that is to misunderstand the nature of modern terrorism and the minds of its perpetrators.
The prospective reason for using force against Mr Qaddafi is that before this century is over the rush of technology will probably deliver into the hands of some minuscule powers conventional weapons of frightening power, and quite possibly nuclear weapons as well. The West and Russia can live with their armed competition with each other. Neither can tolerate a world in which Qaddafis can give a few terrorists the power to wipe out whole cities and countries that do not concede their demands. The physical safety of the West ten years from now depends on its setting clear rules today which tell state backers of terrorism that they will be stopped.
Colonel Qaddafi is not the only, and perhaps not even the biggest, present backer of terrorism. The Syrian and Iranian governments are formidable competitors for that title. But Mr Qaddafi has made an example of himself. The Americans are justified in making an example of him too. Their purpose should not be revenge, however vengeful they may feel; it is to persuade Colonel Qaddafi to change his ways.
Better behaviour by Libya is not out of the question. Colonel Qaddafi is not the "mad dog" that President Reagan has described. He is deeply committed to certain principles and to his means of achieving them. That does not make him irrational or impervious to pressure. Two of his own children were injured, and an adopted daughter is said to have been killed. The thought of being killed or overthrown must grow in his mind when he sees that people are trying to achieve those things. The thought of what his actions are bringing down upon Libya must nag at his countrymen and (more to the point) his soldiers. The bombing may at first strengthen the colonel's grip. The longer-term calculation of his army officers, the only Libyans whose say about a change of policy or of leader might matter, could move towards a different conclusion.
Prepare the next steps
 The odds are, at least for a while, against a coup. The stories on Wednesday of internal risings against him seemed to stem from wild anti-aircraft fire and surprised newsmen's wishful thinking. America and Western Europe should therefore be aware that this week's events—including the range of attacks on Thursday from Heathrow to Lebanon—could be a prelude to even nastier ones. What should the West be ready to do?
If Libya does respond with more terrorism, the next step up the military ladder would be a blockade of Libya's oil-exporting ports, probably by mining them. This is a bigger and in many ways riskier military operation than the bombing America carried out this week: apart from anything else, it would need to go on for a long time and would involve interfering with neutral (eg, Soviet) rights of passage. It would, however, be less likely than the bombing was to kill civilians, and for that reason would have this week been preferable to the bombing raids. The blockade would need to last until the colonel condemned terrorism without reservation, and handed over some known terrorists to Western governments.
Beyond a blockade, if that did not work in making Colonel Qaddafi lay down his terrorist weapon, would lie an invasion and overthrow, of Libya's government. Even that would not get rid of terrorism. Terror in the modern sense—the murder of people who have no personal connection with the political grievance behind it—is not merely a phenomenon of the Middle East, though that is its chief arena. It has its roots there in the legitimate complaints of Palestinian Arabs, though it has produced many another, twisted, flower. The question of Palestine is not, it seems, about to be settled. Even if it were, there would still be people willing for other reasons, half-rational or wholly irrational, to take advantage of the technologies that make random murder so dramatic and practicable, and there would be governments willing to back them.
Even those who shrink from punitive measures against such governments accept the humdrum need for better airport security, intelligence about terrorists, control over Libya's embassies and the like. Saving lives is always better than avenging them. But the terrorist war of the late twentieth century has passed the stage where defence on its own is enough.
zu Guttenberg resigns
Mar 1st 2011, 15:31 by B.U. | BERLIN
"I'VE reached the limits of my strength." With these words Germany’s most promising politician, Karl-Theodor zu Guttenberg, resigned as defence minister this morning. He fell less than two weeks after revelations that large chunks of his 2006 doctoral dissertation had been plagiarised. At first, it looked as if his charisma and popularity would save him. The chancellor, Angela Merkel, backed him. So did voters, according to opinion polls.
But he could not survive the tsunami of outrage from Germany’s academic community and the internal contradictions of his position. Mr zu Guttenberg and his party—the Christian Social Union (CSU), which is the Bavarian branch of Mrs Merkel’s Christian Democratic Union (CDU)—stand for nothing if not for conservative values like personal responsibility. His downfall is a heavy blow for the chancellor, for both parties and for the health of politics in Germany generally.

Mr zu Guttenberg’s rise, from precocious backbencher to prospective future chancellor in little more than two years, has been called the fastest ascent in post-war German politics. His aristocratic background, good looks and glamorous wife gave him a head start. But he capitalised on it. His favourite trick was to flout orthodoxy in ways that unsettled his political allies but found favour with voters.
As economy minister in Mrs Merkel’s last government he threatened to resign over a proposed bail-out of Opel, a car-maker, winning fame as a defender of liberal economic principles. At the defence ministry he prevailed over his fellow conservatives in ending conscription, the first step in an ambitious proposal for modernisation of the armed forces.
This vaulted Mr zu Guttenberg into a position occupied by no other politician. Germans in general are disillusioned with conventional politics. Voter participation is dropping and support for the big-tent political parties, including the Social Democratic Party on the left, is in long-term decline. Angry citizens are resorting to protests and referendums to countermand the decisions of a political class for which they have little respect. Mr zu Guttenberg was the great exception, the one politician who stirred something like enthusiasm among ordinary voters.

If his rocket-like rise resembled Barack Obama’s, his fall was reminiscent of Hosni Mubarak’s. Reports of plagiarism first appeared in the newspapers, but they gained momentum on the internet. Online sleuths posted their findings on GuttenPlag Wiki, a website. An interim report found that more than a fifth of the text had been copied without attribution. Furious doctoral students wrote an open letter, signed by thousands, to Mrs Merkel demanding that she sack Mr zu Guttenberg.

Mrs Merkel said she had hired a minister, not a “research assistant.” But in the face of indignation from would-be, serving and former research assistants, his political allies began feeling squeamish. How could Mr zu Guttenberg credibly remain in charge of the two armed-forces universities, they wondered. How could the CDU and CSU continue to pose as defenders of intellectual property rights? How, as the authors of the open letter asked, could Mrs Merkel continue to proclaim Germany an “education republic”? Treating plagiarism as a side issue was an uncharacteristic blunder on her part.

With Mr zu Guttenberg gone the chancellor faces two immediate problems. The first is to find a credible new defence minister who does not upset the balance among the CDU, the CSU and the third coalition partner, the Free Democratic Party. The CSU transport minister, Peter Ramsauer, was an obvious choice, but he has already rejected the job.
The second problem is that there are six state elections to come this year, three in March alone. The most important is in the southern state of Baden-Württemberg, on March 27th. At stake is the CDU’s unbroken 57-year record in charge of government. The party had seemed to be heading for a narrow victory, but the zu Guttenberg affair throws a new element into the mix. Losing Baden-Württemberg would be even more painful for Mrs Merkel than losing her defence minister.

As for Mr zu Guttenberg himself, it would be unwise to write him off. By stepping down now, he hopes to preserve much of the goodwill he has accumulated over the past few years. His resignation may be a prelude to resurrection rather than the end of a brilliant career.
Future of food
Mar 1st 2011, 14:56 by J.L.P
A VERY thoughtful analysis of our special report on food this week in Poverty and Power, a blog run by Duncan Green, head of research at Oxfam GB.  (An outstanding blog, by the way. Bookmark it now).
Mr Green gives the report “top marks on biology, botany, chemistry, ecology and the other natural sciences”; and zero marks on the “humanities – people, power and politics”. There’s nothing in the report, he says, on who does the farming (smallholders or large commercial farms); nothing on how they exercise influence over their governments and large food processing and distribution companies; and nothing on trade (as he rightly says, an “odd absence” for The Economist). “The bottom line for The Economist,” he concludes, “is that all that tricky power and politics stuff is just too difficult.”
The basic characterisation of the report is absolutely fair (though I don’t agree with the conclusion). So let me explain why the report takes the approach it does, and then respond to some of Mr Green’s specific points.
The report sets out to answer the question how will the world feed 9 billion in 2050? To do that, it concentrates on the basic constraints on food supplies – land, water and so on - and asks how they might be overcome. The report is only secondarily concerned with politics, policies and trade. This is not the only way of looking at the food business. One could look at other questions, such as why are a billion people hungry? Why are prices rising? Or one could say – as Mr Green does – that prices and other incentives influence how basic constraints are dealt with, and since these things are influenced by politics and policies, the distinction between constraints on the one hand and politics on the other is artificial.
All true. But in looking at the question of feeding 9 billion, the most useful thing The Economist can do is lay out some of the basics: land, water, climate, seed technology, etc. This seems justified in itself: farmers start with these things. It seems helpful because public debate on such matters is sometimes rather confused: the debate on GM technology, for instance, rarely makes a distinction between using genes from a different organism (GMOs) and changing – hopefully improving – the existing genetic base of plants through marker-assisted breeding. I thought such an approach would add to the sum total of human knowledge because there is already quite a lot about trade, small holders versus large farms and so on. I’m certainly not saying these things don’t matter. But even in 14 pages, you have to make choices. Above all – and I was surprised by this – there really is a problem of declining yield growth. Yields are growing more slowly than population for the first time in over 30 years. This seems a big deal and deserves more attention than it usually gets.
So the report concentrates on the “what” of food (what’s gone wrong; what needs to be done), rather than the “how” (how to do it). Obviously these aren’t contradictory approaches. But starting with the “what” seems justified because it is the prior question.
So much for the basic approach. Let me turn to a few of the holes in the argument that Mr Green points out. Because the problem of boosting yields is such a big one, it seems to me one can make too much of the trade-offs between small and large farmers. These do exist but because the problem of failing yields is so large, I suspect we will need better productivity from both large and small farmers. Neither can do it alone. Which will dominate will vary from place to place. Two of the great successes in agriculture have been Brazil and Vietnam. Brazilian farming is dominated by large commercial exporters; Vietnam’s by smallholders who also export. I’m agnostic about whether large or small farms matter most, though I suspect that in practice people will want to leave farming so consolidation of plots is inevitable.
On gender, Mr Green is right: because women do most of the farming in many developing countries, sexual discrimination in things such as credit policies is a big problem. Getting rid of  it is desirable in itself and would boost output.
Mr Green takes me to task for saying “Pushing up supplies may be easier than solving the distributional problem” and says this is a complete cop-out. Maybe. But the sentiment is supposed to be a straightforward statement of fact. It will be easier to provide extra food to the have-nots by growing more, than by switching it from the haves by transforming distribution systems. Damaging trade barriers have persisted for decades. We can’t stop the biofuels lunacy. I’m certainly not against boosting producer organisations or tackling vested interests that skew government decision-making (The Economist has been railing against trade distortions for 150 years). But I fear that, unless we boost yields of staple crops, the current spike in food prices won’t be a spike at all but will turn into an endlessly sustained period of high and rising prices.
VW buys into BMW's carbon-fibre dream
Mar 1st 2011, 14:31 by P.M.
VOLKSWAGEN sprang a surprise at the Geneva car show today. The carmaker announced that it will invest €140m ($194m) in an 8% stake in SGL Carbon, a German firm which constructs things from carbon-fibre composite materials. The deal surprised many because SGL is already instrumental in BMW’s quest to use carbon fibre to manufacture lighter vehicles. Ferdinand Piëch, VW’s chairman, says he does not think sharing SGL with one of VW’s big rivals will cause any problems. Mr Piëch has good reason to hope it will not because the use of carbon fibre is turning into a critical area of competitive advantage for carmakers.
For the car industry, the race to master carbon-fibre technology began 30 years ago when McLaren, a British-based Formula 1 team, built a racing car with a unique carbon-fibre monocoque (as a structural body which also doubles up as a chassis is called). It did not take long before the car, driven by John Watson, won the 1981 British Grand Prix at Silverstone. Within a few years all the F1 teams raced carbon-fibre cars.
The attraction of carbon fibre is that it is extremely strong (one reason why racing-car drivers now walk away from horrendous crashes) but also very light—some 30% lighter than aluminium and 50% lighter than steel. This means it can be used to greatly reduce the weight of a car. A lighter car can go a lot faster or use less fuel—or a combination of both. Hence carbon fibre is being used to build both supercars, like the new McLaren MP4-12C (pictured above) and a range of electric cars which BMW is developing. With electric and hybrid cars lightness can be used to increase both performance and range.
The difficulty is that carbon fibre can be an expensive and labour-intensive material to work with. Customers for high-performance products like aircraft wings, racing cars and tough mountain bikes are prepared to pay the extra cost for added performance. But to take these performance gains to broader markets producers need to find ways to make carbon fibre more suitable for high-volume production. And that is what companies like SGL and McLaren are now doing. Hence VW’s interest.
BMW has been extremely impressed with the potential of carbon fibre, so far. The company has been working with SGL on a type of injection-moulding process that can produce parts in minutes, and be handled mainly by robots. Parts can be bonded together or larger parts made as a single component. As the aerospace industry has already discovered, producing things with fewer parts greatly reduces the cost of assembly. The cars have also performed well in crash tests and shown that in many cases damaged parts are repairable. There are other advantages too. Unlike steel, carbon composites do not corrode.
Anthony Sheriff, managing director of McLaren’s automotive division, reckons carbon fibre will move to more mainstream production. McLaren, which has been working with Carbo Tech, an Austrian firm that specialises in carbon composites, is planning to build 5,000 cars a year with carbon fibre at a new factory near its base in Woking—which in supercar terms is mass production.  
Property deals
Mar 1st 2011, 14:17 by The Economist online
IT ISN'T always cause for worry when billions are being splashed on property deals. Two big commercial-property transactions have been announced this week. On February 28th Ventas, an American real-estate investment trust (REIT) specialising in health-care facilities and housing for the elderly, agreed to buy Nationwide Health Properties (NHP) for $7.4 billion. And today Centro Properties Group, a debt-laden Australian group, announced a major restructuring plan, the centrepiece of which is the $9.4 billion sale to Blackstone of its portfolio of American shopping malls. 
The two deals are very different. The Ventas-NHP tie-up, paid for in Ventas shares, is about old-fashioned consolidation. There are lots of listed REITs and little happening in the way of new development. The deal follows other acquisitions by Ventas and will create the country’s largest health-care REIT, helping to diversify the combined group’s assets and reducing Ventas’s leverage. Inexorable demographic forces underpin the sector’s growth prospects: the baby boomers are starting to retire and America’s 85-plus age group is growing at three times the national average. 
The Centro deal is about escapology rather than strategy, the cycle rather than structural change. As well as offloading its American assets, the Australian group has reached agreement with its senior creditors to extinguish its debt in return for almost all of its Australian assets, too. If the restructuring goes ahead as planned, about $100m will be left over for Centro’s shareholders and junior creditors. 
The sale of the group’s portfolio of 588 strip malls in America is nonetheless an important moment in the commercial-property recovery. To date, institutional investors have been channelling money into high-grade, or “prime”, assets in America’s big, international cities, where demand is always stronger. The next stage in the industry’s recovery will be for that money to start flowing into secondary assets like Centro’s malls, whose anchor tenants are supermarkets and discount stores. 
That point has not yet arrived. But Blackstone is the type of opportunistic investor, on the prowl for buildings where it sees the potential for capital gains, which acts as a bridge between the distressed owners of today and the institutional investors of tomorrow. This is not the first investment it has made in shopping centres since the crisis but it is the biggest, and it had to fight off competition to land the assets. If the Ventas purchase is a reflection of American ageing, the Centro sale is a bet on the strength of American consumers. 
Canada's mobile-phone market
Feb 28th 2011, 15:58 by The Economist online
BEING a vast and sparsely populated country, mobile phones are important in Canada. But hopes that the country’s moribund wireless market will be opened up to greater competition have been dealt a blow. Earlier this month a federal court ruled that Globalive Communications, an upstart mobile phone firm, be shut down. Because Orascom, an Egyptian company, owns 65% of its shares, the court concluded that it breaks antiquated foreign-ownership rules requiring all operators to be Canadian-controlled.
The ruling came after intense lobbying by Canada’s “big three” operators, Bell Canada, Rogers Communications and Telus. Between them, these firms serve 95% of the country’s wireless subscribers. They are a clubby bunch. Canada’s mobile phone penetration has stalled at around 60%. This compares with 84% in the US and over 100% in much of Europe. Many blame a lack of competition.
The big three have repeatedly attempted to put the brakes on Globalive, which has signed more than 250,000 subscribers to its Wind Mobile brand since it launched 14 months ago. But the government is keen to encourage new entrants. Tony Clement, Canada’s industry minister, says he will take the latest challenge to the Federal Court of Appeal, reviving a bare-knuckle fight between the government and the country’s telecom establishment that dates back to 2009. In that instance, Mr Clement overturned a decision to block Globalive from doing business by the Canadian Radio-television and Telecommunications Commission, the national regulator. 
Under Globalive’s corporate structure, the company’s Canadian chairman, Anthony Lacavera, controls the majority of voting shares. Orascom has a minority of seats on the board of directors and is a largely a silent partner. In the government’s view, this makes Globalive a Canadian-controlled company.
The big three, fearful of losing their monopoly oligopoly—and fat profit margins—don’t see it that way. They are using their formidable resources to uphold the letter of the law. That may yet backfire. Some are suggesting that Mr Clement simply amend the Telecommunications Act, rendering their objections worthless. 
Protests in Iraq
Feb 28th 2011, 15:16 by A.F. | BAGHDAD
ANOTHER Friday, another Tahrir Square, this time in Baghdad. At the end of last week, several thousand people came for a day of shouting and chanting. But things turned nasty when the demonstrators tried to push down a blast-wall barrier onto a bridge leading out of the square into the heavily-guarded Green Zone which houses Iraq's parliament and its ministers. As parts of the wall collapsed, riot police sprang into action. Later they used  water cannons, gas and live ammunition on protesters, said eye-witnesses.
The protest may have been small but the authorities were determinted to quash it. The prime minister, Nuri al-Maliki, gave a stern speech saying that Saddamist and al-Qaeda factions would try to take over—or attack—any protests. Security officials predicted bombs. Clerics, who are close to or part of many political factions, urged their followers to stay away. Journalists filming the demonstrations were arrested and a curfew banning vehicles was imposed across the city. Everything closed down. The city was silent except for children playing in the streets unusually empty of cars, and a few hundred people—mainly young men—who walked miles from the suburbs to the square, waving banners. Largely secular, they were a mix of graduates and working class, all with the same grievances: not enough electricity and clean water, no jobs, corrupt politicians who wasted eight months on full pay forming a government. Iraq’s democracy, they said, was not worth much unless their elected representatives worked harder.

The "day of rage", organised like others in the Middle East on social networking websites, spread across the country, with bloody consequences. Around a dozen people were killed in clashes between police and protesters in Mosul, Kirkuk, Fallujah and even near the usually peaceful Kurdish city of Sulimaniyah. A number of government buildings went up in flames, and various politicians stepped down, notably the governor of the oil-rich southern city of Basra.

Mr Maliki released a conciliatory statement promising to look into the demands of the people. Protesters said they would be back on the streets soon. When demonstations began in Tunisia, ministers said Iraq was immune to such unrest because it was already a democracy. They may have underestimated Iraqi anger about their government. As one old man in Tahrir Square said, "we did vote for them, but they’re gangsters."
French politics
Feb 28th 2011, 13:32 by S.P. | PARIS
THIS year was supposed to mark the revival of French diplomacy. France currently runs both the G20 and the G8, and President Nicolas Sarkozy hoped to use both as a perch to reassert French influence in the world. But the wave of revolution spreading through the Arab world has caught France unprepared, exposed its complicity in the region and weakened its voice. The departure of Michèle Alliot-Marie (pictured) as foreign minister, announced yesterday by Mr Sarkozy in a televised address, is a belated attempt to repair the damage.

Mr Sarkozy did not mention Ms Alliot-Marie by name in his speech, and her exit was described as a “resignation”. But it was clearly an enforced eviction, prompted by her repeated gaffes and a series of revelations about her links to the former Tunisian president, Zine el-Abidine Ben Ali.
Just days before the regime fell, and Mr Ben Ali fled, she had offered Tunisia the “savoir-faire” of French security forces in crowd control. She then confessed to taking one, and then two, trips on a private jet owned by Aziz Miled, a local tycoon with links to the Tunisian regime, while holidaying in the country over Christmas. As if this were not enough, it then emerged that, during her holiday, a property deal had been tied up between her elderly parents and Mr Miled.
At first, Mr Sarkozy tried to shrug off her blunders. But as the weeks went by it became clear that Ms Alliot-Marie had been so weakened that she could not carry out her own job. Last week, Mr Sarkozy sent Christine Lagarde, the finance minister, to head a ministerial visit to Tunisia, the first for the French government since the regime fell, while Ms Alliot-Marie was kept far away, in Brazil. Such absurdities were unsustainable.
In Ms Alliot-Marie's place, Mr Sarkozy has named Alain Juppé, whom he described pointedly as “a man of experience”. It is quite a comeback for this Gaullist former prime minister (who has held the foreign-ministry portfolio once before, in 1993-95). In 2004, he was suspended from political life for a year, and given a 14-month suspended prison sentence, for political corruption linked to a fake-jobs scandal at the Paris town hall when Jacques Chirac was mayor.
Having spent a year in self-imposed exile in Canada, this former arch-rival to Mr Sarkozy has quietly rebuilt his career. Last year Mr Sarkozy brought him back into government as defence minister. A clever, though cold, operator, his great merit for the unpopular Mr Sarkozy is that his darker dealings have already been exposed.
Although French foreign policy will remain firmly in Mr Sarkozy’s hands, Mr Juppé may have a bit more freedom than his predecessors enjoyed. As part of this latest reshuffle, Claude Guéant, Mr Sarkozy’s chief of staff, has been moved to the interior ministry, to replace Brice Hortefeux, who becomes special adviser to the president. This, in effect, removes one source of parallel diplomacy from the Elysée Palace, since Mr Guéant ran his own network of foreign contacts, mostly in Africa and the Arab world, alongside those of the French foreign ministry.

But Mr Juppé has his job cut out. French diplomats have grown frustrated over the past few years, sidelined by the Elysée’s grip on foreign policy. Last week a group of them, writing anonymously in Le Monde, a left-leaning newspaper, said that “France’s voice has disappeared in the world” and that “our foreign policy has been dictated by improvisation”.
Mindful of the criticisms, Mr Sarkozy spoke yesterday of “a new era” in France’s relations with countries on the southern Mediterranean shore. The only spoiler was that he also called for a fresh lease of life for the Union of the Mediterranean, a moribund grouping that has not met since Mr Sarkozy launched it in Paris in 2008, and which was co-presided by none other than Egypt’s Hosni Mubarak.
Ireland's election
Feb 28th 2011, 10:20 by J.O'M | DUBLIN
NO IRISH election has produced a result as far-reaching. In a landmark election on Friday, the centre-right Fine Gael transformed the political landscape by displacing Fianna Fail as Ireland's largest party. When parliament reconvenes on March 9th, Fine Gael seems likely to form a coalition with the centre-left Labour Party, which also performed strongly at the polls, almost doubling its seats. Although the seat count has not yet concluded, such a government would enjoy the largest parliamentary majority in Ireland's history.
Since 1932 Fianna Fail, a centrist nationalist party founded by Eamon de Valera, has been Ireland’s natural party of government. It has been in office for three out of every four years since, and continously since 1997 (with a number of coalition partners). But on Friday Ireland's voters, enraged by a government that had taken the economy on a rollercoaster ride that culminated, last November, in an €85 billion ($115 billion) rescue by the European Union and the IMF, exacted their revenge.
Overnight a political giant was turned into a pygmy; Fianna Fail lost three quarters of its seats and finished behind Fine Gael and Labour. The party won just one seat in the capital, Dublin. Many ministers, including the prime minister, Brian Cowen, did not seek re-election; others lost their seats. Fianna Fail's erstwhile coalition partner, the Green Party, which had triggered last week's early election by quitting government in January, was completely wiped out.
The scale of Fianna Fail’s defeat raises questions over its future as a political force. The party finds itself unrepresented in over half the country’s 43 constituencies, and without a single woman member of parliament. This leaves it poorly equipped to lead the opposition benches, where it will find itself in competition with Sinn Fein. That party, formerly considered fringe, has greatly increased its parliamentary representation, and bolstered its presence with the election of its president, Gerry Adams.
Fine Gael's success marks a triumph for its underestimated leader, Enda Kenny. In 2002 Mr Kenny, Ireland’s longest-serving parliamentarian, took over the leadership of a party in some disarray. Eight months ago Mr Kenny defeated a challenge to his leadership. Back then the party was lagging behind Labour in the polls. It is now a handful of seats short of an overall parliamentary majority and Mr Kenny is prime minister-elect.
If Fine Gael and Labour are to form a parliamentary alliance they must first narrow the policy differences that sharply divided them in the election campaign. Seeking to maximise their prospective electoral gains, the parties disagreed on tax, public spending and how quickly the budget deficit should be reduced.
But time is not on their side. After March 9th the new government will face a stern test at an EU summit on March 24th-25th. There, Ireland may come under pressure from Germany and France to raise its low corporate-tax rate in exchange for an easing of the terms of the EU element of the bail-out package. During the campaign one of the few issues that united all Ireland's parties was that the rate, seen as vital in securing foreign investment, should be left untouched. For the new government, there will be no political honeymoon.
The week ahead
Feb 27th 2011, 12:56 by The Economist online
A round-up of things to look out for in the next seven days

THE week's big story will once again be the spread of the Jasmine Revolution through the Middle East, with particular attention on Libya. However, there are some other things going on too.
Monday 28th
In Germany, Turkey's Prime Minister Tayyip Erdogan meets Chancellor Angela Merkel. In New York the delayed trial of Raj Rajaratnam, who founded a hedge fund called Galleon, begins.
Wednesday 2nd
The Netherlands holds regional elections. Apple holds a press conference at which it is expected to unveil the iPad 2.
Thursday 3rd
The Geneva Motor Show begins. Climate-change negotiators from some 200 countries meet in Bangkok.
Dictators and violence
Feb 27th 2011, 10:09 by The Economist online
In a  guest post, a Middle East editor at the Economist Intelligence Unit, our sister organisation, examines the way in which dictators choose whether or not to use violence to stay in power.
Violence only works if it is overwhelming. Up to a critical point, civilian losses embolden protesters who will rally against the injustices they see in the loss of their comrades. If the losses are massive, and pass that point, protesters are likely to realise that the state means business and is here to stay. This was the case in 1991; as soon as Saddam Hussein was allowed to use helicopter gunships, he did. The magnitude of destruction was stratospheric and anybody seen as being remotely sympathetic to the uprising was punished. Even palm trees were destroyed (10m in Basra alone), and the Marshes were drained, ostensibly to stop rebel fighters from seeking refuge there, but undoubtedly also to punish the people seen by the state as being complicit in the uprising by destroying their livelihoods.
The need for a patronised inner coterie: Iraq taught us that magnitude of destruction has to be immense. Muammar Qaddafi's rhetoric suggests he understands this and is willing to follow through. This will depend on the willingness of the army to follow his directives. Saddam did not have the army, but he did have a series of concentric circles of supporters loyal to him because of the patronage he extended them (special-forces units and tribes). He had tied their interests to his survival so successfully that they could not risk defecting. In the same way that Mr Qaddafi has turned to foreigh mercenaries, Saddam Hussein could also rely on his own foreign legion, the Mojahid-e-Khalq organisation whose divisions were used to fight both against the Kurds and the Shia down south (Mariam Rajavi, one of the group's leaders, famously said "take the Kurds under your tanks and save your bullets for the Islamic Guard").
The need for a scapegoat. Iraqis in 1991, even the Shia, did not trust Iran. According to Kanan Makiya, an Iraqi academic in his book, "Cruelty and Silence", agents from the Iraqi state began to post pictures of Iran's leader, Ayatollah Ruhollah Khomeini, across the south. This allowed Saddam to frame the uprising as one orchestrated by Iran, not disgruntled Iraqis with real grievance against the regime. This idea gained traction and was key to maintaining support among the "White Provinces", the mainly Sunni areas to the north and west of the country that feared that an Iranian-style regime would replace Saddam, and that the new system would be inherently hostile to their community. These provinces remained loyal and formed the mainstay of Saddam's support base throughout the uprising.
Supporters of the monarchy in Bahrain are painting the unrest as a Shia uprising to try to retain support of the country's Sunni community (despite leading Sunni opposition MPs, including Munira Fakhro of Wa'ad, coming out in support of the protest movements). Similar tactics, but with an ethnic dimension, have been used in Jordan; King Abdullah sacked the Palestinian-born prime minister and replaced him with a Jordanian replacement. Part of the reason for the move is likely to play on the Palestinian/Jordanian rift within society and to shore up his Jordanian support base who are uneasy about Palestinian representation in the government.
The will to maintain power vs. the desire to pander to international public opinion: Libya went through years of sanctions and was an international pariah for decades. Mr Qaddafi would probably like to nurture friendly ties with Europe and the wider international community, but he will not do this at the expense of his own survival. Hosni Mubarak, Egypt's former president, crumbled under international pressure. This was part of the reason he could not use overwhelming force to maintain his grip (the apparent defection of the army played a part too). Mr Qaddafi, like Saddam Hussein, probably cares less about external pressure because the damage has been done. He may feel he can go it alone, as he has in the past.
The uprising in Libya
Feb 27th 2011, 9:49 by J.D | LONDON
IN LIBYA the bloodshed continues, as does Muammar Qaddafi’s defiance in the face of his people’s protests and international outrage. Arab commentators have been scrutinising those who have supported Mr Qaddafi over the years, wondering what can be done to prevent further violence and asking and how the various Arab revolutions will cope with challenges of making the transition to democracy.  
In response to criticism of Arab diplomatic collusion with Mr Qaddafi, the Arab League has suspended his membership. Khalid al-Zubayday in a Jordanian newspaper, al-Dostourpoints to Arab protest movements as proof of the failure of traditional Arab leadership:
The accumulation of centralised power by these governments and their refusal to grant even the most basic rights to their citizens has now led to their own downfall. Most importantly, the youth movement has not harnassed any religious ideology, nor has it looked to traditional leader. They talked lots and did little, while the young people talked little but achieved a great deal, laying the ground for the Arab nation to reclaim its rightful status. The future of the people of the region is at stake.
In al-Hayat, a Saudi-owned pan-Arab daily, Randa Takieddine criticises Western leaders who she says have overlooked Mr Qaddafi’s human-rights abuses in recent years:  
This "leader" has, for many years, wasted the wealth of his country, kept his people under lock and key, and nurtured terrorist movements from east to west. And now he is wildly trying to kill off those of his compatriots who would rather die than let him cling to power any longer. Europe and America carry a large part of the responsibility for this because they opened their doors to Qaddafi, rushing to rehabilitate him among the international community. 
The Libyan state-owned media have covered pro-Qaddafi demonstrations and published outright threats against anti-government demonstrators. But a staff editorial in Quryna, a Libyan newspaper owned by Mr Qaddafi’s son, Saif al-Islam, seems to be trying to find the middle ground, implying that the anti-Qaddafi movement is no longer peaceful but calling on all parties to refrain from violence: 
While the first three days of demonstration were peaceful, in the last few days they have devolved into a gruesome slaughter, horrifying to all, without exception… Many have been killed in the two-day-long clashes with demonstrators at the headquarters of the al-Fadeel Abou ‘Umar brigade in the al-Kaysh district. Although our role as journalists is normally to investigate events objectively and analyse them, we felt compelled to urgently call on the city’s religious leaders, social elite, and all citizens of conscience to move, peacefully, to prevent further casualties.
The London-based Libyan newspaper Libya Al-Youm has published many pro-revolution editorials, including this appeal to Libyans by Mr al-Ameen Balhajj, a former spokesman for the Muslim Brotherhood in Libya:
My compatriots of august Libya, my fathers, mothers, brothers, sisters, sons, and daughters, I greet each one of you with great pride for we Libyans have ignited the spark of freedom. We have broken the wall of fear and have dispersed the clouds of hesitance. We all now have but one path, one goal: that Libya, for whose freedom our forefathers fought, should become a state governed by the rule of law.
Some commentators, however, remain concerned about the future of post-revolutionary Arab states. Hazim Saghiya, in al-Hayat again, tries to address the dual concerns of human rights and stability, recognising the challenges that a post-Qaddafi Libya may face with the meeting the protesters’ demands: 
The fact is that history cannot be wiped away to leave a clean slate. Championing the most progressive ideas, believing in them fervently doesn’t necessarily mean they are feasible. There are broader realities to be contended with, the most important of which is the objective ability to make revolution or democracy implementable...None of this should be taken to mean that the masses should just submit to their regimes’ blackmailing logic that says you are either for us and for stability, or for change and anarchy...What can be said about the Libyan regime except that it defies all analysis and theorising? Perhaps just that it alone–and not those rising up against it–bears responsibility for the chaos and violence which have been unleashed.
For more translated commentary from the Arab press, visit Meedan.net
Ireland's election
Feb 26th 2011, 14:09 by T.N.
IT LOOKS like there will be no surprises from Ireland's general election, which took place yesterday. Counting began this morning, and, because of the complex proportional-voting system the country uses, the full results may not be announced until tomorrow. But an exit poll confirms what all observers expected: the opposition Fine Gael will top the vote, and its leader Enda Kenny (pictured) will become Ireland's next taoiseach (prime minister). Turnout appears to have been strong.
Voters who have been through one of the most devastating economic crashes in Ireland's history have taken their revenge on Fianna Fail, which has been in office since 1997 (with various coalition partners). According to the exit poll, the party's vote share fell to 15%—quite a drop for a party that took 42% of votes in the last election, in 2007. It may be all but wiped out in Dublin.
Fianna Fail has won more seats than the other parties at every general election since 1932. It has been in power for three out of every four years. How the party responds to this reverse will be one of the interesting sub-plots in Irish politics over the coming months and years.
As for Mr Kenny, few will envy his position. One of his first tasks will be to find a coalition partner, as the party's predicted 36% vote share will not be enough to allow it to govern alone. The most likely candidate is Eamon Gilmore's Labour Party, generally seen as Fine Gael's traditional partner. But the two parties did not exactly campaign in harmony, and differences over taxation and spending may make their alliance a fractious one.
Yet the biggest challenge for the new government will be how to satisfy Irish voters' craving for a renegotiation of what they see as an unfair bail-out foisted on it by the European Union and the IMF in November. Mr Kenny and Mr Gilmore both campaigned on pledges to improve the terms of the European element of the deal. Voters will be watching keenly to see if those pledges can be made good. The word from Brussels appears to be that they should not get their hopes up.
A full report will follow on Monday.
(Photo credit: EPP)
British banks
Feb 25th 2011, 19:35 by The Economist online
THE sight of fist-thumping Arab dictators broadcasting their defiance to the masses may strike some bank watchers as a blatant and outrageous rip-off of the performances of several prominent Wall Street chiefs during the financial crisis. Well over two years ago, on public conference-calls to investors whose transcripts are all too easy to obtain on the internet, they were railing against a tiny minority of conspiracists, rambling incoherently, making vague promises of reform, and insisting on their organisation’s rock-like fortitude until the bitter end.
Since the financial revolution most banks have got their propaganda departments under control. Contrition, pessimism and voluminous disclosure are the order of the day. Yet every now and then one gets a glimpse of the old, more optimistic, days. Such a moment came with the annual results on February 25th of Lloyds Banking Group, a giant British firm that is partially state-owned after being bailed out during its state-sponsored takeover of HBOS, another bank. Page 1 of the results release herald’s the firm's “return to profitability” during 2010. Page 2 says the firm made a statutory loss to attributable to equity shareholders of £320m in that year.
Of course, there are different definitions of profit. A further one is "comprehensive income attributable to equity holders", which also includes movements on the balance-sheet that are not booked directly in the profit-and-loss account. On that basis the firm lost £37m. The firm itself prefers, like many companies, an underlying measure that excludes one-off or non-cash items and attempts to capture the recurring earnings of the business. That showed a pre-tax profit of £2.2 billion, but the definition looks rosy. It excludes cash restructuring costs of some £1.7 billion that are arguably part of the firm’s core cost of doing business, and includes a £3.2 billion, non-cash, “fair value” boost related to the HBOS acquisition that is fairly clearly not part of core earnings.
Reasonable people can disagree about one number. But Lloyds also said that it had made “excellent progress” in sorting out its funding, arguably its biggest strategic problem. It did manage to improve the maturity profile of its borrowings, making them more long-term. But it still has £298 billion of overall wholesale debt, down by only 8% over the year, a position which means it is probably still the bank with the single largest shortfall between loans and deposits in the world. At the end of the year it owed some £100 billion (down from £157 billion) to central banks and governments, again probably still making it more dependent on public funds in absolute terms than any other bank in the world. It also said that this year its lending margin would not expand as the firm’s medium-term targets suggest, partly due to the additional cost of refinancing all that wholesale funding and the difficulty of passing this on to customers.
Lloyds also has form. In the 2008 annual report, issued in early 2009, the bank told its shareholders that the decision to buy HBOS, widely thought to be disastrous, was the “right transaction” because the firm paid in shares worth £7.7 billion for a bank with a book value of £17.9 billion. As a gauge of the board’s wisdom this was daft. It computed the bill based on Lloyds’ share price on 15th January 2009, when the deal closed, by which point the shares had collapsed as investors discounted the gory consequences of the takeover and the government bail-out it helped precipitate. And for eccentric accounting reasons, largely outside of Lloyds’ control, HBOS’s book value was adjusted to reflect the “fair value”, or market price, of both its assets and liabilities. The acquisition’s debts were trading at below par, largely reflecting investors’ worries that it might go bust. This, perversely, boosted the reported net asset value by about £12 billion.
The bulk of the acquisition’s supposed book value at that point, then, consisted of an accounting anomaly that reflected the risk of bankruptcy. The alternative approach (which Lloyds did not use, or indicate was more appropriate), of taking HBOS’s balance-sheet before any fair-value adjustments and then including the giant losses it was clear it would (and did) make in the six months after its acquisition, would appear to suggest a true book value of £10 billion or less in early 2009, although the complexity of the sums involved makes it very hard to say from the outside.
Does one calculation really matter? As far as your correspondent is aware, it is the only numerical attempt the company has published to justify a deal that it still insists made sense. Although the outlook has undoubtedly improved a lot, and the combination is producing large cost savings, a proper evaluation of the deal still seems unlikely to justify the tortuous phrasing of Eric Daniels, Lloyd’s departing chief executive, that he is “grateful to have been given the opportunity to create the new group”. He has made a decent fist of cleaning up the mess and is a long way from being one of the villains of the crisis. All the same, hopefully the bank’s new leader, António Horta-Osório, will turn its propaganda machine off.
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In this blog, our correspondents respond to breaking news stories and provide comment and analysis. The blog takes its name from newsbooks, the 16th-century precursors to newspapers, which covered a single big story, such as a battle, a disaster or a sensational trial
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