An Inventor of Russian Democracy
By MASHA GESSEN –  March 26, 2012, 8:38 am
Masha Gessen is a journalist in Moscow. She is the author of “The Man Without a Face,” a biography of Vladimir Putin.

MOSCOW — I wanted to write her story for a long time. To be precise, I wanted to write this story: She was Vladimir Putin’s oldest enemy, and she lived to see his demise.

She did not.

I first met Marina Salye more than 20 years ago, in what was then Leningrad. The Soviet system was crumbling, and this gruff, short, heavy-set woman was one of the key people taking it apart. She was Leningrad’s most popular politician and a member of its new city council, one of the first popularly elected government bodies in this part of the world. She was one of the inventors of Russian democracy.

A geologist who had spent much of her life in far-flung expeditions, away from the ideological center, she was elected to office in 1990, at a most promising and most frightening moment. Food shortages had been endemic for decades, and the country was now on the verge of full-fledged catastrophe. In the hopes of staving off famine, the federal government decided to allow regional authorities to use strategic supplies of oil, gas, timber, rare metals and other natural resources to barter for food imports.

Famine was ultimately averted, but in Leningrad — or St. Petersburg, as the city was called starting in late 1991 — food imports never materialized. In 1992, the city council formed a committee to investigate what had happened. The committee, which was co-chaired by Salye and the city councilor Yuri Gladkov, concluded that the city had lost as much as $100 million and named a deputy mayor called Vladimir Putin as the probable culprit. It recommended that Putin be dismissed and prosecuted. The mayor dismissed the city council instead.

Salye became a professional organizer and eventually moved to Moscow. In the winter of 1999-2000, when Vladimir Putin emerged as the frontrunner in the race for president, she tried to campaign against him. She also tried, unsuccessfully, to draw attention to her long-ago investigation. A week before the election, she published online a prescient article warning that Putin would be “the president of a corrupt oligarchy.” Still, 12 years ago today, Putin was elected president.

A few months later, Salye disappeared from view. She later said that she had gone to see a political ally and encountered someone in his office whom she “never wanted to see under any circumstances.” She found the encounter frightening, she told me some years later, and as soon as she came home, she told her partner they would be leaving Moscow. They moved to a semi-abandoned village in the woods not far from the Russian-Latvian border, where Salye’s family had owned a house for some time. The man Salye had gone to visit, the opposition politician Sergei Yushenkov, was gunned down in Moscow in 2003.

I started looking for Salye about four years ago. Rumor had it she had long left the country, but it didn’t take me long to find out she was in Russia. At first she didn’t want to talk. Over the following two years I continued bothering people I thought might be in contact with her. Finally I was given a direct phone number and Salye invited me to visit her.

One day in 2010, a colleague and I were in Salye’s pink wooden house. Salye’s companion, whom she called her sister, fetched box after box of documents. Salye kept talking about rampant corruption in the St. Petersburg administration in the early 1990s, when Putin was the mayor’s right hand. I had seen some of the documents before; others were new to me. In any case, Salye was the only person who could guide me through them now: Gladkov, the co-chair of her investigation, had died in 2007 of a rapidly progressing degenerative neurological disorder. Salye and others claimed it resembled a chemical poisoning.

Salye started writing a blog. Even while living in the woods, she maintained a remarkably keen sense of Russian politics. Throughout 2011, she spoke out ever more forcefully in anticipation of last December’s parliamentary election. After the protest movement that shook Russia in the winter, she came out of hiding. On Feb. 4, she appeared in front of tens of thousands of protesters in St. Petersburg, just as she had done more than 20 years earlier.

Her partner objected, fearing for Salye’s life, but Salye seemed unstoppable again. She started campaigning vigorously on behalf of the billionaire Mikhail Prokhorov and, as was her custom, against Putin. She claimed to have evidence of previously undisclosed violations on Putin’s part and vowed to pursue an investigation.

I thought it would make a beautiful story someday soon: Woman comes out of hiding to bring down repressive Russian regime again. I think I forgot she was 77 years old.

Marina Salye died of a massive heart attack on March 21.



Vast Tracts in Paraguay Forest Being Replaced by Ranches

Noah Friedman-Rudovsky for The New York Times. By SIMON ROMERO – Published: March 24, 2012

FILADELFIA, Paraguay — The Chaco thorn forest, a domain with 118-degree temperatures so forbidding that Paraguayans call it their “green hell,” covers an expanse about the size of Poland. Hunter-gatherers still live in its vast mazes of quebracho trees.

But while the Chaco forest has remained hostile to most human endeavors for centuries, and jaguars, maned wolves and swarms of biting insects still inhabit its thickets, the region’s defiance may finally be coming to an end.

Huge tracts of the Chaco are being razed in a scramble into one of South America’s most remote corners by cattle ranchers from Brazil, Paraguay’s giant neighbor, and German-speaking Mennonites, descendants of colonists who arrived here nearly a century ago and work as farmers and ranchers.

So much land is being bulldozed and so many trees are being burned that the sky sometimes turns “twilight gray” at daytime, said Lucas Bessire, an American anthropologist who works here. “One wakes with the taste of ashes and a thin film of white on the tongue,” he said.

At least 1.2 million acres of the Chaco have been deforested in the last two years, according to satellite analyses by Guyra, an environmental group in Asunción, the capital. Ranchers making way for their vast herds of cattle have cleared roughly 10 percent of the Chaco forest in the last five years, Guyra said. That is reflected in surging beef exports.

“Paraguay already has the sad distinction of being a deforestation champion,” said José Luis Casaccia, a prosecutor and former environment minister, referring to the large clearing in recent decades of Atlantic forests in eastern Paraguay for soybean farms; little more than 10 percent of the original forests remain.

“If we continue with this insanity,” Mr. Casaccia said, “nearly all of the Chaco’s forests could be destroyed within 30 years.”

The rush is already transforming small Mennonite settlements on the Chaco frontier into boomtowns. The Mennonites, whose Protestant Anabaptist faith coalesced in Europe in the 16th century, founded settlements here in the 1920s. Towns with names like Neuland, Friedensfeld and Neu-Halbstadt dot the map.

Buoyed by their newfound prosperity, the Mennonite communities here differ from those in other parts of Latin America, like the settlements in eastern Bolivia where many Mennonites still drive horse-drawn buggies and wear traditional clothing.

In Filadelfia, Mennonite teenagers barrel down roads outside town in new Nissan pickup trucks. Banks advertise loans for cattle traders. Gas stations sell chewing tobacco and beers like Coors Light. An annual rodeo lures visitors from across Paraguay.

Patrick Friesen, communications manager for a Mennonite cooperative in Filadelfia, said property prices had surged fivefold in recent years. “A plot of land in town costs more than in downtown Asunción,” said Mr. Friesen, attributing the boom partly to surging global demand for beef.

“Eighty-five percent of our beef is exported, to places including South Africa, Russia and Gabon,” he said. Citing concerns in some countries over foot-and-mouth disease, which Paraguay detected in its cattle herd in 2011, he continued, “We are currently focused on some of the less-demanding markets.”

Paraguay’s Chaco forest lies in the Gran Chaco plain, spread across several nations. Scientists fear that the expansion of cattle ranching could wipe out what is a beguiling frontier for the discovery of new species. The Chaco is still relatively unexplored. The largest living species of peccary, piglike mammals, was revealed to science here in the 1970s. In some areas, biologists have recently glimpsed guanacos, a camelid similar to the llama.

More alarming, the land rush is also intensifying the upheaval among the Chaco’s indigenous peoples, who number in the thousands and have been grappling for decades with forays by foreign missionaries, the rising clout of the Mennonites and infighting among different tribes.

One group of hunter-gatherers, the Ayoreo, is under particular stress from the changes. In 2004, 17 Ayoreo speakers, from a subgroup who call themselves the Totobiegosode, or “people from the place where the collared peccaries ate our gardens,” made contact with outsiders for the first time.

In Chaidi, a village near Filadelfia, they described being hounded for years by bulldozers encroaching on their lands. The Ayoreo word for bulldozer, “eapajocacade,” means “attackers of the world.”

“They were destroying our forests, generating problems for us,” one Totobiegosode man, Esoi Chiquenoi, who believed he was in his 40s, said through an interpreter. As a result, he and others in his group, who in photographs taken in 2004 were wearing loincloths, abruptly abandoned their way of life.

Mr. Chiquenoi and others in Chaidi have spoken of Totobiegosode relatives who remain in the forest and continue to live in the traditional ways, making them possibly the last uncontacted tribe in South America outside the Amazon. Their numbers are estimated to be around 20 or more. Some researchers speculate whether they are actually uncontacted or merely hidden, as they live amid the vast cattle ranches created around them.

A March report by the Paraguayan Indigenous Institute confirmed their existence on land controlled by River Plate, a Brazilian ranching company, citing evidence of footprints and holes dug to capture turtles for food.

As the Mennonite communities come under scrutiny for the deforestation, they acknowledge that big sections of the forest around them are being removed. But they deny that they are to blame, contending that they abide by Paraguayan law, which requires landowners to keep a quarter of Chaco properties forested.

“What the Brazilians do, acquiring land with their strong currency and deep pockets, is something else,” said Franklin Klassen, a member of the city council in Loma Plata, a Mennonite town.

Across Paraguay, Brazil’s economic sway is impossible to ignore, symbolized by an estimated 300,000 Brasiguayos, as the relatively prosperous Brazilian immigrants and their descendants are called, who have played a role in expanding industrial agriculture and ranching in Paraguay.

Tension already simmers over the growth of Brazilian landholdings. Tranquilo Favero, a Brazilian soybean farmer and rancher who is one of Paraguay’s richest men, enraged many Paraguayans when he said in remarks published in February that landless peasants had to be treated “like a swindler’s woman, who only obeys when beaten with a stick.”

Mr. Casaccia, the prosecutor, said that Mr. Favero alone controls an estimated 615,000 acres of land in the Chaco, in addition to huge tracts in eastern Paraguay. Neither Mr. Favero nor directors at his company in Asunción responded to requests for comment.

Still, other Brazilian ranchers confirmed that they have aggressively expanded their holdings in the Chaco, effectively contributing to the deforestation.

Nelson Cintra, a rancher from the Brazilian state of Mato Grosso do Sul, said he and his brother were among the first Brazilians to put down stakes in the Chaco, acquiring about 86,000 acres in Alto Paraguay, near the Brazilian border, in 1997.

“Environmentalists complain about deforestation, but the world has billions of mouths to feed,” said Mr. Cintra, mayor of Porto Murtinho, a Brazilian border town. “There are now 1 million heads of cattle in Alto Paraguay, whereas 15 years ago there were just 50,000,” he said.

On Filadelfia’s outskirts, the transformation of the Chaco from a vast, untamed wilderness into a ranching bastion already seems irreversible. About 80 Ayoreo live in squalor in one spot on the side of the highway, sleeping under plastic bags draped from trees.

Sometimes ranchers in pickups stop to hire the Ayoreo men as laborers, paying them about $10 a day. But such work is sporadic. On most days, the Ayoreo lean on a fence, sipping a tea made from yerba maté leaves, watching trucks barrel past carrying cattle that grazed where peccaries once roamed.

“We’ll never live in the forest again,” said Arturo Chiquenoi, 28, an Ayoreo man who works occasionally as a ranch hand. “That life is finished.”

Noah Friedman-Rudovsky contributed reporting.


In Europe, Where Art Is Life, Ax Falls on Public Financing

By LARRY ROHTER – Published: March 24, 2012 in NY Times

European governments are cutting their support for culture, and American arts lovers are starting to feel the results.

La Scala opera house in Milan faces a $9 million shortfall after cuts in subsidies from the Italian government.

In Italy, the world-famous opera house La Scala faces a $9 million shortfall because of reductions in subsidies. In the Netherlands, government financing for arts programs has been cut by 25 percent. Portugal has abolished its Ministry of Culture.

Europe’s economic problems, and the austerity programs meant to address them, are forcing arts institutions there to curtail programs, tours and grants. As a result, some ensembles are scaling down their productions and trying to raise money from private donors, some in the United States, potentially putting them in competition with American arts organizations.

For Americans used to seeing the best and most adventuresome European culture on tour in this country, the belt-tightening is beginning to affect both the quantity and quality of arts exchanges. At least three European troupes that were expected to perform in January at the Under the Radar theater festival in New York, for example, had to withdraw as they could not afford the travel costs, and the organizers could not either.

“It is putting a pretty serious crimp in international exchanges, especially with smaller companies,” said Mark Russell, artistic director of Under the Radar. “It’s a very frustrating environment we’re in right now, tight in part because of our own crash, but more generally because it seems to me now that every time we get around to the international question, we have a meltdown and go back to zero.”

For artists and administrators in Europe, such changes are deeply disquieting, even revolutionary. In contrast to the United States, Europe has embraced a model that views culture not as a commodity, in which market forces determine which products survive, but as a common legacy to be nurtured and protected, including art forms that may lack mass appeal.

“Culture is a basic need,” said Andreas Stadler, director of the Austrian Cultural Forum in New York and president of the New York branch of the European Union National Institutes for Culture. “People should have the right to go to the opera.”

Over all, he added, “Culture is much higher on our political agenda than it is here, because it is so linked to our identities.”

Germany and France, the largest and most stable economies in Europe, are suffering the least and can even point to increases in financing for some officially favored programs, genres and ensembles that are seen as promoting the countries’ images abroad, like film.

But other countries with governments that are led by conservatives or technocrats — like Italy, Hungary, the Netherlands and Britain — have had their culture budgets slashed. So have others that are being forced to cut public spending to remain in the euro zone, including Greece, Portugal, Spain and Ireland.

In the case of the Netherlands, the culture budget is being cut by about $265 million, or 25 percent, by the start of 2013, and taxes on tickets to cultural events are to rise to 19 percent from 6 percent, although movie theaters, sporting events, zoos and circuses are exempted. The state secretary of education, culture and science, Halbe Zijlstra, has described his focus as being “more than quality, a new vision of cultural policy,” in which institutions must justify what they do economically and compete for limited funds.

In practical terms, that has meant that smaller companies, especially those engaged in experimental and avant-garde efforts, bear the brunt of the projected cuts. Large, established institutions, like the Rijksmuseum, the van Gogh Museum, the Royal Concertgebouw Orchestra and the Dutch National Ballet, are in a better position to fend for themselves.

“The economy is not that good any more, so to get support, you have to be a large company with an international reputation,” said Michael Nieuwenhuizen, the senior project manager for international affairs of the Netherlands Music Center. “Plus, the government wants to see value for the money and links that to the markets, so that if you have an audience, you get rewarded.”

As a result, he added, “we’re going to lose some orchestras and choirs.”

And in the dance field, said Sophie Lambo, managing director of the Internationaal Danstheater, of Amsterdam, “it’s going to be a tsunami.”

In the boom years before the economic crisis hit late in 2008, it was not uncommon for touring European orchestras, ballet and opera companies and theater troupes to travel beyond New York, to cities like Minneapolis and San Diego. That has now become more difficult, and when it occurs, the European performers expect their American hosts to cover more of the costs.

“We have less money and have changed our concept of cooperation,” said Mr. Stadler of the group of European cultural institutes, which has 44 members. “We expect more from our partners and we will negotiate tougher.”

The cutbacks are hitting so hard that some of the cultural institutes in New York that have been intermediaries for arts companies in their home countries have experienced reductions of staff or salary, or both.

The crisis is also affecting what kind of art is performed and how it is made. After returning from Europe last month, Nigel Redden, director of the Lincoln Center and Spoleto arts festivals, said that a trend toward new work with fewer characters or players, especially with commissioned pieces, seemed to be growing.

“Many playwrights are writing things for three performers instead of eight, and if you are a composer, you may be writing for a chamber group rather than a symphony,” he said. “That also is a factor of the current climate: artists want to have their work performed, and smaller productions are inevitably less expensive to put on.”

Some of those scaled-down works are now beginning to find their way to the United States. The lineup for this summer’s Lincoln Center Festival, announced last week, includes “Émilie,” a 2010 “monodrama” opera for a single singer, written by the Finnish composer Kaija Saariaho, which had its American premiere last year at Spoleto.

In New York, European arts institutions are also looking for smaller, less expensive places to present their offerings. “Why spend so much money on Carnegie Hall when there are cheaper places available?” one organizer of cultural exchanges said, insisting on anonymity so as not to jeopardize business ties.

Others are trying to forge closer ties to American institutions. The Romanian Film Festival, which has done much to promote awareness of the Romanian new wave of prizewinning directors and actors, was presented last year at Lincoln Center with the Film Society of Lincoln Center as a co-sponsor.

“Compared to five years ago, we no longer think of doing things alone, on our own” said Corina Suteu, of the Romanian Cultural Institute. “All of a sudden, you have to become creative, you need to look for partners, whether American, European or even from other continents. I’m doing this, and all of my colleagues are doing the same.”

As they scramble to stay afloat, affected institutions in Europe are also cultivating private donors anywhere they can be found. But with little experience with, or understanding of, that kind of fund-raising, they often turn for advice to the American institutions with which they have built longstanding affiliations.

“I can tell you that across the board, they are talking about their governments saying that they are going to have to move toward an American model,” said Joseph V. Melillo, executive producer of the Brooklyn Academy of Music. “But there’s no tradition of individual philanthropy in many of these cultures, and so they lack both the motivation and tax incentives to give.”

As a result, some European arts institutions have begun looking for financial support in the United States, courting American companies or wealthy Americans with emotional ties to an ancestral homeland. But that means, as Mr. Stadler acknowledged, that “we are also competing with American institutions, which are also hit hard.”

Artists worry that money will flow to established entities that tend to be more conservative, rather than to more experimental companies that have served as incubators of new talents. That, they say, has profound implications for the artistic process.

The established companies “need to refresh their work by working with younger artists, and it’s the small and middle-sized companies that bring diversity and innovation,” said Ivana Müller, a choreographer based in Amsterdam. “You’ve created a different dynamic of production now,” she added, “and A lot of good work will disappear because it can’t sustain itself.”

Even when the crisis subsides, many fear that the impact of the cuts could permanently affect every stage of the artistic process, from creation to consumption.

“Perhaps instead of doing Brian Friel, one does Noël Coward, because the box office is important,” said Mr. Redden, the festival director, trying to put himself in the place of his European counterparts. “Some of these trade-offs are inevitable, but I think that if it becomes all drawing room comedies and not gritty theater, it would be devastating. It has not gotten to that yet, but there is definitely a kind of calibration going on.”



As Displaced Return to Iraq, New Tensions for Neighbors


Published: March 24, 2012

BAGHDAD — Even after death squads began killing his neighbors, after corpses appeared in the streets around his home and his family fled in fear, Walid al-Bahadli still believed in his once affluent and diverse neighborhood of Al Adel.

A Shiite Muslim, he had grown up there during the 1960s, when Sunnis and Shiites lived side by side in palm-shaded mansions. He vowed after he and his family moved away to safety that the family would return.

But as the Bahadlis have discovered, along with hundreds of thousands of Iraqis now seeking to go back to areas they fled during the bad times, going home again is never as simple as it seems. Instead, they find themselves perched along the next front in Iraq’s seemingly unending turmoil: the battle of return.

Across the country, near-record numbers of displaced families are pouring back, but instead of kindling a much-needed reconciliation they are in some cases reviving the resentments and suspicions created by bloody purges that carved Iraq into archipelagos of Sunnis, Shiites and Kurds after the American-led 2003 invasion.

In places like Al Adel, some Shiite families view the Sunni families who stayed behind as complicit partners of the violent Sunni militants who overran many mixed neighborhoods. But many Sunni families say they now feel like they are being hounded by returning Shiites who, for the first time in centuries, have the force of the government and army at their backs.

In 2011, the number of returnees to Iraq soared by 120 percent from a year earlier, to 260,690, according to the United Nations High Commissioner for Refugees. They were drawn back by improving security and larger government payments to Iraqis registering as returnees. It was the most since 2004, when the fall of Saddam Hussein opened the gates for thousands who had fled his brutality, forced relocations and a decade of crushing sanctions.

As they continue to come home, they will test whether Iraq can move beyond a sectarian prism that distorts its politics and undercuts its security. It is a struggle that will play out in future years not just in politics and government, but in scarred, segregated neighborhoods like Al Adel.

And if the story of the Bahadli family and their neighborhood is any guide, it will be a return layered with friendship and forgiveness, but also distrust. And one stained with blood.

In Arabic, Al Adel means justice. After the 2003 invasion, it became a base camp for Sunni insurgents in western Baghdad. They carried out torture in seized houses and battled Shiite militias who had control of a nearby neighborhood. Nearly every Shiite family moved away, and residents estimated that 300 people were killed in a neighborhood of about 1,500 to 2,000 families.

Today, Al Adel blooms with loud markers of the Shiites’ return and ascent. Along the main streets fly black, green and red flags of Shiite mourning and martyrdom. The faces of Shiite clerics, living and dead, stare down from billboards. A new mosque for followers of the radical Shiite cleric Moktada al-Sadr has opened.

For Shiite Muslims who have returned over the past few years, these are footholds of identity. But Sunnis say they get the message: it is religious Shiites who now hold sway from Al Adel to the office of Prime Minister Nuri Kamal al-Maliki. “They see us as a threat,” said Mohammed al-Ani, 35, a Sunni government worker. “They are putting us through the same things that the Shiites suffered. Now, as a Sunni, I am afraid when I am home. I keep thinking that they will come and arrest me.”

They grumble about being harassed at the two checkpoints leading into the neighborhood, and they say that the soldiers who wave Shiite residents through demand identification of the Sunnis. Every few weeks, Sunni residents say, their houses are raided by soldiers loyal to Mr. Maliki.

“For nothing,” said one resident who asked to be identified by the nickname Abu Sama, a Sunni who has lived in Al Adel since the late 1960s and whose house has been raided several times.

Abu Sama lives next door to an old Shiite friend. They call each other brothers. But in private, Abu Sama seethes with a bitter sense of disenfranchisement that now sears the Sunni heartlands of Iraq, from the river valleys of Diyala to the deserts of western Anbar to the irrigated central plains of Salahuddin. He sees conspiracies against the neighborhood’s Sunnis in the home searches and the periodic arrests of scores of Sunnis over the latest terrorism plots. “I am a stranger in my neighborhood,” he said.

But the suspicions have two sides.

Inside Al Rabia market, shoppers from all sects and political backgrounds jostle for the same honeyed sesame candies, dried dates and plates of roasted lamb. The market’s Shiite owner, Saad Hamid Majid, has deep ties to both the Sunni and Shiite communities in Al Adel. But he admits he is still wary of his neighbors who stayed behind when he and other Shiite families fled.

Many Sunni families watched over houses vacated by their Shiite neighbors, but Mr. Majid believes others invited squatters and became the eyes of Sunni militants, passing along information about their Shiite neighbors.

“We told the Sunnis that we are brothers and can live together,” he said. “But they are not happy we’re coming back. You can see that in their eyes.”

In 2008, after three years of displacement, Mr. Bahadli and his family moved home. Their house was a wreck, but an ebb in the violence gave them space to rebuild. The family bought new couches and furniture for the parlor, and new birds to sing in backyard cages.

Mr. Bahadli took on a role as the neighborhood’s mayor, his family said. He wrangled garbage collectors. He paid grocery bills for widows. He mediated countless arguments while sipping glasses of syrupy black tea. The family reopened their ice cream shop.

“We were cautious at first,” said Mr. Bahadli’s brother Riyadh. “We took measures to protect ourselves. We all went out together. But day after day, we started to feel safe.”

More than anyone else, Mr. Bahadli felt as if he had reclaimed Al Adel, his family said. “He felt like the neighborhood was guarding him,” his brother Alaa said. “Like it all loved him.”

But on Jan. 17, Mr. Bahadli was coming home from the ice cream shop with his daughter and 2-year-old grandson when two men confronted them at their front gates. They drew their guns and fired. Mr. Bahadli and his grandson were both killed. His daughter survived, wounded by a bullet that passed through her hand and struck her son’s skull. Two Sunni men from the neighborhood were arrested in the shooting, but the Iraqi police would not identify them or make them available for an interview. Mr. Bahadli’s family members said they believed he was killed because he was one of Al Adel’s most prominent Shiites. “Killing him was a big achievement,” said his brother Riyadh.

A few days after his funeral, a crowd of Sunni and Shiite residents, tribal sheiks and neighborhood leaders gathered at the family’s door and urged them not to leave. They promised to look out for the family.

The family stayed, but they now live in terror. Mr. Bahadli’s mother weeps and implores her other sons to move away again. Recently, a car circled the block two times and the family suspected it was the prelude to another attack.

And a pall has fallen over much of Al Adel. Friendly Sunni residents mourn Mr. Bahadli’s death while worrying it will bring reprisals on their heads. And some Shiites, like Mithaq Sadia, a young mother, have steeled themselves for another sectarian conflict.

“This time,” she said, “we will make them feel fear.”


The crisis, golden opportunity for employers
23 March 2012 – Frankfurter Rundschau Frankfurt

Pressed hard by the recession and national debts, European governments are rewriting the labour law, whether watering down job protection or cutting wages cuts. And employers are smiling.
Stephan Kaufmann

In Greece, Spain, Italy and Portugal, the crisis is raging. All of southern Europe has been laid low. All of southern Europe? Not exactly. Some people in these countries are seeing long-cherished wishes come true. One is Juan Rosell, head of the Spanish employers’ organization CEOE, who has been calling for a relaxation of job protection for years. Now the government has heeded his call. “It won’t be the last labour market reform,” prophesies Rosell, scenting victory. The crisis is his opportunity.

Businesses in Europe have the upper hand. Under pressure from recession and national debt, governments are rolling back workers’ rights across the board and pushing down labour costs. The aim is to make locations for investors cheaper and therefore more attractive. “Europe is on its way to becoming an entrepreneur’s paradise – on the backs of the workers,” complains Apostolos Kapsalis of the Research Institute of the Greek Trade Union Federation, GSEE.

Given skyrocketing unemployment rates and the cutbacks demanded by the European Union, trade unions are on the defensive. In Greece, the government has made drastic cuts to the minimum wage and to unemployment benefits. “Massive wage cuts will be the consequence,” says Michala Marcussen from French bank Société Générale.

Retirement age has also been pegged higher, which not only lets the state save on pension payments but also increases the numbers of job-seekers. This in turn fuels competition for those jobs. “In the European labour reforms, Greece is the laboratory rat,” says Kapsalis. “Here is where they’re testing how to carry out the rollbacks.” Similar moves can soon be expected in other countries, the trade unionist warns.
Employee rights on the chopping board

In Spain for example, where in February, and without negotiating with the unions, the government reformed the labour market – “extremely aggressively”, as even economics minister Luis de Guindos conceded. The big winners are the companies: “It’s simply a matter of increasing their profit margins – and this, in the short term, can only be done by driving down unit labour costs,” says Patrick Artus, an economist at the French bank Natixis.

The wave of reform is washing across not just the smaller states. Even in Italy, Prime Minister Mario Monti is drawing up plans for swingeing cuts in traditional workers’ rights. Iron-clad employee job protection is one of those rights on the chopping board. The government tried to get rid of it in 2002, but mass protests forced it to back down.

Today a new opportunity is dawning – and the Prime Minister intends to seize it. “When it comes to economic policy issues, Monti’s line is very close to ours,” says Emma Marcegaglia, head of the Italian industrial association Confindustria.

The model for EU politicians is Germany, where Agenda 2010 and wage restraint have been highly profitable for companies and where the crisis has long been over. “In international competition with rising powers like China and Brazil, Europe can stay in the race only if it’s as competitive as Germany,” Chancellor Angela Merkel said in January.
“The measures will turn out to be a burden on growth”

German wage levels and productivity have thus set the benchmarks for European competition – and in France too, which has seen its international market share drift to other countries, while Germany has been able to expand its market position. By Commerzbank’s calculations, French and Italian car production fell between 2004-2011 by almost 30 percent, while in that same period the German car manufacturers saw their own output jump by 22 percent.

What’s already clear is that the labour market reforms are not short-term measures to tackle the crisis, but are here for the long run. The cost-cutting strategies are pitting the states against each other. Low-wage countries like Croatia and the Czech Republic are being forced to make their labour markets more flexible and push their labour costs downwards to become more competitive, says the IMF.

This competition between states is also desired by the EU, whose goal is to make Europe the most competitive region in the world by 2020. “We must come up with an agenda for growth,” said European Commission President Jose Manuel Barroso.

This increase in competitiveness through lower labour costs comes at the expense of income – and thus consumer spending. “The measures will turn out to be a burden on growth and on the labor markets for years to come,” predicts Natixis economist Artus. The question is whether those affected will go along with it. The Portuguese trade unions have just called a general strike, and the Spanish unions are coming out next. In Greece, the trade unionist Kapsalis is also launching a call for solidarity from the Germans: “Today it’s us feeling the squeeze – tomorrow it’ll be your turn again.”

Translated from the German by Anton Baer


Mar 24th 2012

AS SLOGANS go, “restructure the promissory-notes repayment schedule” doesn’t have quite the same tub-thumping ring as “burn the bondholders”. But as Ireland has moved from the anger to the bargaining stage of economic grief, it has realised that coming to a deal over €31 billion ($41 billion) in promissory notes which the government issued to two failing banks is more important than defaulting on their remaining unsecured bondholders.

In 2008 Ireland’s previous government said it would stand behind the debts of the country’s tottering banks. In 2010, as that rash pledge worked itself out, it issued a series of promissory notes (essentially IOUs with set payment dates) to what is now the Irish Bank Resolution Corporation (IBRC), a merger of Irish Nationwide Building Society and the far larger Anglo Irish. Cut off from markets and short of decent collateral that could be pledged directly with the European Central Bank (ECB), the IBRC used the promissory notes to secure access to emergency funding from Ireland’s central bank. The government’s schedule of promised payments will be used to pay back the central bank’s loans.

That schedule is punishing. The government is on the hook for €3.1 billion every year until 2023, with smaller annual outlays due until 2031. This year’s sum, due on March 31st, represents around 2% of GDP. From next year interest payments on the debt are due to be counted against the budget balance. To meet its deficit targets the government will have to make further cuts. Hence rising pressure in Dublin for a deal to restructure the payments.

That requires the nod from Frankfurt. Ireland’s central bank needed permission from the ECB to issue its loans to the IBRC, and any change to the terms of the repayment must also have ECB approval. As The Economist went to press Michael Noonan, the Irish finance minister, was hopeful of securing agreement from the ECB to swap the cash payment due this month for a government bond with a 13-year maturity.

That agreement may not be forthcoming: any restructuring risks exacerbating tensions on the ECB’s governing council between Mario Draghi, the bank’s president, and Jens Weidmann, head of the Bundesbank. But a deal would in any case offer only temporary respite. A more lasting solution might be to replace the promissory notes with longer-term bonds from the European Financial Stability Facility, the euro zone’s temporary bail-out fund. But that would also mean adding to Ireland’s rescue programme, an unappealing prospect for euro-zone member states fresh from patching up Greece.

Lurking behind all this is an Irish referendum, expected in May or June, on the “fiscal compact”, an agreement to enshrine budgetary discipline in the euro zone. Although they publicly forswear a link between the referendum and the promissory notes, ministers know that a deal with the ECB would help them win—and they know that their fellow Europeans know this too. Moreover, say officials, an easier ride on the debt repayment would be the best way to help ensure Ireland returns to the markets next year, as scheduled.

But Ireland’s leverage is nonetheless limited. The fiscal compact does not require unanimous euro-zone adoption to become law, and a “no” vote would make Ireland ineligible for money from the European Stability Mechanism, the single currency’s planned permanent rescue fund.

If Mr Noonan’s plan comes off it will be quite a coup. But it will still be no more than a can-kicking exercise. At some point Ireland will have to move from the bargaining stage to acceptance. The problem is that in between the two lies depression.


Portugal – Still waiting for better days
22 March 2012 – Expresso Lisbon
Hugo Franco

On March 12, 2011, João, Alexandre and Paula helped organise a massive demonstration against job insecurity and unemployment. A year later, with the country once more in the grip of a general strike, their situation hasn’t got better.

Little if anything has changed in Lisbon’s historic Alfama district in the year since. That’s where Alexander, Paula and João organised the marches that shook up the early spring of 2011 and drew nearly half a million people into the streets – protests that would go down in history as the “March of the Desperate Generation”. Certainly, their personal lives have seen some changes, and the country is no longer exactly the same either.

The tallest of these three friends has a bohemian look and a sense of irony on the tip of his tongue. Alexandre de Sousa Carvalho, 27, seems unimpressed with his life following March 12, 2011. “What has changed in my life? I have more friends on Facebook and, for a week, I was a celebrity,” he sums up with a sip at his beer, cigarette in hand.

Two months ago he stopped receiving the 900 euros of his fellowship and had to give up the studio where he lived alone in Lisbon. “I sleep in a room with no furniture in an apartment that I share with eight people I don’t know in the slightest.” He is waiting patiently for the money for his Doctoral Fellowship to arrive. Alexandre’s thesis is in African Studies, on power-sharing in Zimbabwe and Kenya.
Liberating breath of the Arab Spring

Paula Gil, 26, who seems the most timid of the trio, but certainly no less combative than either of them, has just had a bumpy, roller-coaster ride of a year. After completing an internship in an NGO she found herself unemployed (without benefits), and then landed administrative and secretarial work. She was paid very modestly and in fake “green receipts”. These receipts, designed in theory to compensate the self-employed, have become a symbol of job insecurity in Portugal. Her situation could have been better – but it could have been worse. “I’ve been paying my way for ten years,” says the young woman.

Worse would be unemployment. That’s the story of João Labrincha, 28, who lives without any state subsidies. He does, though, have the unwavering support of his family. Despite the obstacles, he’s making his way in life. “I’ll find work soon. I’m preparing a project linked to citizenship.”

While the event that brought them together a year ago started out as non-partisan and secular and spoke to the hearts of all the unemployed, the “500-euros-a-month” workers, sub-contractors, interns, students with scholarships and temporary workers, it turned out to be something much more comprehensive, and is even becoming a case study for sociologists and political analysts.

The organisers are proud to have opened up a Pandora’s box of social protest in Portugal, and even in Europe. “Except during the PREC (the ‘Ongoing Revolutionary Process’, the name given to the period of intense protests that began with the Carnation Revolution in 1974 and ended with the adoption of the constitution in 1976), “Portugal has never known such an eventful year.” After the ‘12M’ (May 12) came March 15, October 15, November 24 and January 21.

In 2011, João remembers, the dynamic was a little different, propelled by songs from the Portuguese band Deolinda (songs about the Geração parva, the “Foolish Generation”), the end of the Sócrates era, rising unemployment and even the liberating breath of the Arab Spring.
“I’ve already emigrated to England and Luxembourg”

“The next protests won’t necessarily have to come from the same mold,” insists João, and Paula agrees with him. Alexandre is less receptive to the idea. “It’s not fair,” he says, “that it’s always the same ones who have to do all the work to start up a big event like the one on March 12. So stop waiting for the Messiah.”

Troika, cutbacks, unemployment: when Alexander, Paula and João hear these three words their blood boils. “Our politicians are just servants who do nothing but listen to their master’s voice – namely, Merkel and German bankers.” The Portuguese, the trio worry, are becoming “infantilised by technocrats”.

The movement’s detractors accuse it of being only “half a dozen ‘Deolindo’ radicals” who are protesting without having any concrete solutions to propose for the future. “Maybe we don’t know what we want,” they retort, “but we do know what we don’t want.”

Paula would like to continue working in Portugal and “to make a difference”. It’s not impossible, though, that she may eventually leave her country behind. “This won’t be anything new. I’ve already emigrated to England and Luxembourg.”

A year from now, Alexander would like to be in Kenya monitoring the elections in the country he is writing his doctoral thesis on. He doesn’t know if he’ll come home. “I want what everyone wants. I want my country to love me as much as I love her.”