Wednesday, 30 November 2016

Ghosts From The Past Have Much To Teach Us

The growing number of leaders around the world wanting to turn their countries into stagnant ponds filled with frightened xenophobes should take a careful look at two of the two of the longest-lived empires the world has ever seen. They would learn that one of the main reasons for the 1,600-year collective longevity of the Byzantine and Ottoman empires in what was then, as now, a very troubled part of the world was their willingness to incorporate outsiders into the very fabric of the empire.

Unlike today’s leaders they saw the value, the necessity, of bringing fresh ideas, different experiences into the empire. Not for them the narrow-minded fear of ‘Johnny foreigner.’

The Byzantine Empire lasted about 1,000 years from the mid-4th century AD to the mid-15th century. During that time, it was surrounded by threats on all sides such as Persians, Avars, Russians, Bulgars, Latins, Visogoths, Arabs, Mongols, Turkic tribes, and finally the Ottoman Turks. The Byzantines are too easily dismissed in much of today’s history books as effete, unreliable, and more obsessed with bloody palace intrigue than true statesmanship. That simplistic characterization obscures their ability to adjust to rapidly changing circumstances. The 1,000-year run didn’t happen by chance alone.

Byzantine Emperors Justinian and Constantine presenting Haghia Sophia and city to the Virgin Mary

When strong enough, resort to military measures. When weaker, resort to diplomacy and what we call today ‘soft power.’ Compared to much of the rest of the region the Byzantine Empire, more particularly the glories of Constantinople, was so splendid that many foreigner rulers were gladly co-opted into that splendour and, in some cases, the Orthodox faith. The period was highlighted by strategic inter-marriages, alliances, financial tribute, trading privileges and much more. Jonathan Harris put it very nicely in his recent book The Lost World of Byzantium.

Thus if Byzantium has one outstanding legacy it is not perhaps Orthodox Christianity or its preservation of classical Greek literature. Rather it is the lesson that the strength of a society lies in its ability to adapt and incorporate outsiders in even the most adverse circumstances.”

            The Byzantine Empire finally and totally collapsed one spring day in 1453 when the Ottoman Turks succeeded where so many others had failed and breached the formidable walls that had protected Constantinople since the 5th century. The Byzantine Empire may have disappeared as a political and military entity, but the early Ottoman leaders were smart enough to maintain the essential characteristics of religious tolerance and using talent wherever they found it. Far from being frightened by religious or ethnic diversity these Moslem leaders valued the strength that diversity gave the Empire.

            In a new book, Aleppo, The Rise and Fall of Syria’s Great Merchant City, Philip Mansel recounts some advice that Suleyman the Magnificent gave to his council that was considering expelling Jews from the province in the mid-16th century.

“The more sorts of nations I have in my dominion under me as Turks, Moors, Grecians, etc. the greater the authority they bring to my kingdoms and make them more famous. And that nothing may fall off from my greatness, I think it convenient that all that have been together long hitherto, may be kept and tolerated so still for the future.”
Suleyman, perhaps the greatest of the Ottoman sultans
            The Jews stayed put in Aleppo and continued to contribute to Suleyman’s greatness. It is no coincidence that the ultimate decline of the Ottoman Empire was hastened when its rulers ignored Suleyman’s advice on the value of diversity. The greatest of Ottoman sultans must be looking on modern Turkey with great despair as the current rulers do their best to eradicate all traces of that tolerance and diversity.

            But Turkey is far from being alone in its headlong retreat from those two values. One need only to look at some of the countries in the European Union where walls and barbed wire have replaced Welcome signs. And then there’s Donald Trump in the United States. He not only has pledged to build a gigantic wall along the Mexican border but to expel more than 10 million immigrants now living in the U.S. The famous Statue of Liberty must be blushing at the thought of that happening.

            The shameful immigration ‘debate’ in Britain is so far a debate without any facts or even a real discussion. The anti-immigrant rantings of UKIP and many Tory members of parliament are taken at face value without a shred of proof that foreigners – specifically those from the European Union -- are taking over the country. The actual, official, numbers on immigration into Britain tell quite a different story – one that demonstrates clearly that crust-less watercress sandwiches and tea are not about to be replaced by kielbasa and vodka. But bringing this reality into the debate would require an act of statesmanship and political courage – two qualities completely lacking in the entire Brexit discussion up to now. Those two long-gone empires have a great deal to teach modern politicians.

Tuesday, 29 November 2016

Are The Walls Starting To Shake?

That loudest sound n Ankara these days is the shattering intrusion of hard reality into Turkish President Tayyip Erdoğan’s pretentious dream palace. After a long run of success, the wheel is beginning to turn. The economy, once the strong pillar of support for President Tayyip Erdoğan, is showing major cracks. Domestic tranquility has evaporated with the failed coup, the heavy-handed response of an extended state of emergency, and the near civil war with the Kurdish guerrilla group PKK. Once proud boasts of foreign policy success have turned into mindless military adventures and wild claims to overturn the treaty that created modern Turkey from the ruins of the Ottoman Empire almost 100 years ago.
'If only we could go back to those glory days.'
Erdoğan used to boast proudly about the strong Turkish economy with its high growth, solid currency, and rising foreign investment. No more. Those days are long gone. Growth is sputtering and the government steadily reduces growth expectations. Hotel vacancies, shuttered holiday resort areas, and empty shopping centers are glaring testimony to the collapse of the once-vibrant tourism industry. Unemployment has leapt up to 11%, and once-gushing foreign direct investment is now just a trickle.

The most obvious indicator of economic malaise in Turkey has always been the hyper-sensitive currency. It is easy for the average citizen to express his unhappiness with the general state of affairs by rapidly selling Turkish Lira and buying foreign currency – usually US dollars. Turkish corporations also move rapidly to dump TL and buy foreign currency to meet their high foreign currency debt obligations. So far this year the value of the Turkish Lira has eroded more than 18% to a record low vs. the USD of 3.44 as citizens and companies scramble to protect themselves against the country’s increasing political and economic instability.

Perhaps the most unnerving thing for ordinary Turks is that the government has absolutely no answers to the growing economic problems. All people hear are platitudes about the ‘underlying’ strength of the economy or the even more frightening “There’s no need to worry. We’ve got things in hand.”  Rather than create real, long-lasting solutions to these mounting problems Erdoğan’s usual response is to look for someone to blame – the perfidious West, the so-called ‘interest rate lobby’, or would-be coup plotters. When that doesn’t work, he could well throw one of his own ministers under the bus for ‘failing to do his duty’ The most likely candidate is the hapless Mehmet Şimşek, the Deputy Prime Minister responsible for macroeconomic affairs, whose voice of relative economic reason is becoming increasingly isolated.
Mehmet Şimşek: 'What, me worry?'
Citizens are also unnerved by widening social/political divisions within the country as Erdoğan crushes any and all opposition with a draconian state of emergency following the failed coup attempt last summer. Jails are filling up with journalists, editors, opposition politicians, or anyone else deemed insufficiently loyal to Erdoğan. On top of this, people are frightened of bomb attacks carried out by a diverse foreign and domestic collection of the government’s enemies.

Foreign policy dreams of playing a key role in the region and acting as a trusted mediator between Europe and the Middle East have turned into a nightmare of clumsy military adventures, crumbling alliances, and weakening ties with its crucial economic partners in Europe.

The Turkish army blundered into Syria in a thinly disguised effort to keep Kurds from establishing an autonomous zone along Turkey’s southern border. The government acted surprised when the Syrian regime reacted violently and attacked the Turkish forces. The Turkish government was ‘shocked and horrified’ that anyone would dare to attack its forces. One wonders what they expected when marching into another country. Erdoğan is beside himself with impotent fury that the anti-ISIS coalition won’t let his forces join the fight for Mosul. His response is to mutter dark threats about tearing up old treaties and re-capturing what is ‘rightly’ Turkish – i.e. oil-rich northern Iraq. Good luck with that one.
OK, we're in Syria. Now what do we do?
Relations with the European Union have hit a new low as the European Parliament voted to suspend the on-again-off-again membership negotiations with Turkey. Erdoğan was predictably furious at this reaction to his repressive moves at home. “We don’t need you anyway!! We can turn to our good friends in the Shanghai Five.” For those of you not familiar with the Shanghai Five, it is a loose coalition of autocracies including Russia, China and Central Asian states not known for its concerns about human rights.
At least no lectures about democracy in this meeting
This might work if it were not for a few glaring problems with his new best friends. Russia backs the Syrian regime that just killed some Turkish soldiers. How do you spin that to the Turkish public? China, for its part, suppresses the Moslem minority Uighurs – a Turkish tribe no less – in the western province of Xinjiang. Also, a tough one for the staunch supporter of Moslem identity to spin to his overwhelmingly Moslem supporters. Furthermore, it’s difficult to see any Shanghai Five members willing or, more importantly, able to support Turkey’s teetering economic structure.

None of this is to say that Erdoğan’s iron grip over Turkish domestic politics is weakening any time soon. His total control of the media severely limits what the public sees and hears. And his never-ending, ear-shattering rhetoric about the ‘glory days’ of the Ottoman Empire continues to resonate with a large part of his voter base. But sooner or later hard reality will break down the walls protecting Erdoğan-world.

Thursday, 10 November 2016

The Center Cracked

I am resigning effective immediately my post as election forecaster. My only consolation is that I am far from alone in predicting a Hillary Clinton victory. The media will be filled with instant analyses of the meaning of Donald Trump’s victory, but I caution that it will take some time to determine the real causes of this unexpected victory. Was it a one-off, or does it signal something much deeper in American society? Don't forget that Hillary Clinton won the popular vote. So we should be careful about making sweeping conclusions about major upheavals in American society as a whole.

What will change more, Trump or Washington?
            The one thing, perhaps the only thing, we can say for sure at this point is that Trump’s victory demonstrates just how deeply unpopular on a personal level Hillary Clinton is with a large number of voters. She doesn’t deserve this opprobrium, but no one said politics is fair. She just didn’t resonate with voters the same way Obama can. His particular electoral genius is being able to combine the calm, reasoning – almost philosophical – approach to governing with a genuine human touch. Can you imagine Hillary Clinton leading a gospel choir in the deeply moving Amazing Grace during a memorial service for people slain inside a black church in yet another senseless shooting? I can't.

             Is Trump’s victory a crushing statement against the so-called privileged, cocooned elite that has -- allegedly -- constantly denigrated working class America and followed economic policies stripping the Rust Belt of its old-line manufacturing jobs? Too simple. For one thing, unemployment in America is at its lowest level in more than a decade, and wages are going up. Another point is that the Rust Belt began losing those old manufacturing jobs decades ago. For example, my hometown in Vermont lost its machine tool business in the 1950s and 1960s.  Also, if this election was a mass cry against the much-maligned establishment why is Obama’s personal popularity at an all-time high? Unlike recent presidents he will leave office with his flag flying high and proudly. And the one good note of this horrible campaign was the performance of Michelle Obama.

            I accept the fact that thousands of voters are furious that no one was thrown in jail or even severely punished after the sub-prime crisis destroyed homes and livelihoods. It is even more infuriating when those deemed responsible for the crisis were rewarded with ever higher bonuses. But this can’t be the main reason for Clinton’s defeat. That same anger existed in 2012 when Obama was easily re-elected and carried several states that then – as now – suffered from the erosion of traditional jobs.

            Neither candidate seriously addressed the issue of the Rust Belt job losses or the real impact of globalization on American workers. I think a little honesty would have gone a long way. I remember very well when Bill Clinton was addressing workers in Portsmouth, N.H. during the 1992 primary. The workforce of Portsmouth was devastated by the loss of Navy-related jobs. Bill stood in front of a hostile crowd and simply, honestly, admitted that those jobs weren’t coming back. The challenge, he continued, was to find a way to support their income while re-training them for new types of employment. You could almost see the relief and grudging acceptance on the faces of the audience that someone was at last treating them honestly – like grown-ups. Bill Clinton, like Obama, had the crucial ability to empathize with people and soften the harsh reality of what they faced. Incidentally, we returned to Portsmouth last summer and found that it has come a long way from those dark days of the early 1990s. Once down-trodden communities can, and do, rejuvenate.

            No matter what Trump says, no one is going to turn the clock back on globalization. Let’s assume he succeeds in erecting high tariff barriers blocking imports from Mexico or China. Instead of establishing manufacturing plants overseas those companies in places like Michigan, Ohio or Indiana could simply shut down because they are no longer profitable. How does that help anyone? There is nothing, absolutely nothing, he or anyone can do to change the reality of higher costs in the United States putting great pressure on manufacturing business already operating on low margins. Are Wal-Mart customers going to be happy paying much higher prices just to buy goods manufactured in the United States? I doubt it.
Wal-Mart customers won't easily give up these low prices
            Thousands of American companies have found that the solution is to move up the food chain, creating and using high technology that cannot be easily replicated overseas. Basic low-margin manufacturing is nice, but high tech design and engineering is much, much better. Just ask the American oil service companies that dominate the industry world-wide. Also, traditional trade figures ignore another critical area of American dominance – the service industries of finance and insurance. Throw those into the mix and the total trade balance picture changes dramatically.

            I have a friend who is rubbing his hands in glee with the image of Trump riding into Washington and ‘cleaning the swamp.’ I hate to disappoint him, but Washington is a very seductive place with a well-earned reputation of swallowing would-be swamp cleaners. Rather than challenge the so-called establishment he so vociferously denounced Trump could well wind up as a charter member. If this happens, thousands of those who cheered for him on election day could be sadly disappointed.

Trump, a person with no known convictions one way or another, could also have serious problems with a Congress filled with many people in his own party who don’t trust him. Much too early to tell just how this will unfold, but I suspect the Republic will survive even a Donald Trump.