Abenomics and the Pension Bubble

Last week it was reported that the Japanese Government Pension Investment Fund (GPIF) had made a record annual return of over 12 percent last year. Considering the rapidly aging population in Japan and the related problem of how to finance pensions for large numbers of retirees with a shrinking active workforce, this may have seemed very welcome news. However, if you look a bit closer, it isn’t all what it seems.

The GPIF owes the record return mainly to increasing share prices of Japanese companies, of which it is holding stocks. The Nikkei 225 recently reached its highest level in about 15 years and it wasn’t all because Japanese exporters profited from the weakening yen. Another big factor was the decision of the Abe government to have the GPIF shift its asset allocation from government bonds to stocks. It reduced the bond target from 60% to 35% while increasing the stock target from 9% to 25%. Most of the above-target bonds have since been sold to the Bank of Japan (BoJ), which under “Abenomics” will buy up any volume of government bonds.

With the money from the bond sales the GPIF could go on a buying spree, while individual investors have actually been selling more shares than they bought. The GPIF has been sucking up shares like a vacuum cleaner with money basically printed by the Bank of Japan and this extra demand has inflated market values for shares, whether held by the GPIF or by banks, insurance companies or private investors. Beating deflation was a major declared goal of Abenomics, but so far the stock market is the only part of the economy where the government has succeeded in that goal (albeit only by some impressive stage magic by the Bank of Japan and the GPIF).

Will this recent on-paper gain shore up public finances for pension payments and health care for the elderly? Not really. The stock market can be a tricky beast. Just ask the Chinese, who had experienced an even more impressive stock market bull run until their bubble burst!

If the GPIF holds 25% of its assets in shares and it needs to pay pensions, it can only do so by selling shares at whatever the market rate happens to be at the time, which will directly influence those market rates. And if it needs a lot of cash because there aren’t many workers relative to pensioners it will need to sell a lot of shares. Share prices went up because the GPIF was a huge buyer; if it were to become a huge seller, the opposite would happen. This is even true if the GPIF were to reduce its share allocation before the pension problem will reach its peak.

If the real economy tanks, it will hit tax revenues and the stock market at the same time: With the GPIF heavily invested there, the government finances and the pensioners will be doubly exposed.

For the GPIF to do well out of stock sales it will need a huge number of individual buyers, as it keeps liquidating its portfolio. But who is going to invest in stocks when they know the market will keep on getting flooded with sell orders for years to come?

Instead of addressing the real problems, the government of Shinzo Abe has been using smoke and mirrors to con the public. While pensions are no more secure than before, a lot of stock market investors have made a mint out of the BoJ-financed buying binge, enriching wealthy Abe supporters.

There are no easy answers to the pension problem. As the age pyramid changes and inverts itself, lots of things will have to change. For one, the retirement age needs to increase to re-balance the number of workers vs. pensioners. Japan will need to open its doors more for immigration. We’ll all have to work more years and the sooner the changes are made, the less painful it will be later. More emphasis will have to be put on covering the minimum needs of retirees vs. tying payments to previous income levels and contributions. Wealthier pensioners will have to make bigger sacrifices. The necessary steps will be painful and controversial, but they are unavoidable. Smoke and mirror “Abenomics” are no way around that.

The End of Prohibition

At the beginning of 2014, sales of cannabis (marijuana) to adults became legal again in Colorado. It was legal there until 1927. Personal possession and cultivation have already been legal again for one year in both Colorado and Washington, following referendums in which a majority of voters supported ending prohibition in both states. In late December, Uruguay become the first sovereign country to officially permit regulated sales of Cannabis to adults again.

What I find remarkable about these legislative changes is how relatively little fuss they caused. Unlike the 1980s, where political crusades led to increasingly harsh drug laws in many countries, with little regard for human rights, the cost of enforcement and lack of effectiveness, the responses this time have been largely dispassionate and rational. In the US the federal government has adopted a wait and see attitude, deciding to give the states space to enforce their laws as they see fit, as long as cannabis does not cross state lines. Other states are likely to follow in the next couple of years.

America has experimented with Prohibition before, as production and sales of alcohol were illegal from 1919-1933. As we know, alcohol prohibition was an abysmal failure, handing organized crime a huge business opportunity. The US then repeated that mistake with the 1937 “Marihuana Tax Act”. When the US Supreme Court finally declared it unconstitutional in 1969, President Nixon soon replaced it with the Controlled Substances Act. He ignored the recommendations of the Shafer Commission that he had tasked with investigating its harmfulness and the best way to regulate it. The Shafer commission had recommended to decriminalize it.

Over the last decades several countries and states (including the Netherlands, Spain and Portugal) have decriminalized cannabis without legalising sales. Retail sales in Dutch coffee shops are only tolerated, but technically still illegal. Suppliers of coffee shops still operate in a Black Market and can be prosecuted. Spain chose a different model, permitting personal cultivation at home as well as within cannabis social clubs. The model in Uruguay and Colorado goes one step further and is similar to how production and sale of alcohol is handled in many countries.

While there are still international conventions, such as the 1961 Single Convention that restrict national drugs laws of signatory states, they will ultimately have no permanent effect, as they permit member states to withdraw and rejoin with reservations. Bolivia did that a few years ago, to be able to legalise its traditional use of the coca plant. Any other country can do the same for cannabis.

The legal changes in Uruguay, Washington and Colorado reflect a generational change. As people who gathered personal experience with cannabis and had found it less harmful than alcohol gradually aged into their 40s, 50s and 60s, cannabis is less associated with a particular generation. It became increasingly difficult to demonize this herb. Medical use of cannabis further contributed to changes in attitudes.

It makes no sense to use heavy handed criminal law to try to deny adults the use of a less harmful alternative to alcohol. Even if we acknowledge that cannabis use is not entirely benign, laws that would be harsh enough to have a deterrent effect will almost certainly cause more harm to individuals when enforced than use of the substance itself might have. This realization will take longer in some countries than in others, but it will come. Legal discrimination against users of cannabis for recreational, spiritual and medicinal purposes will one day go the way of racial discrimination and homophobia. It took a century from the US civil war to the end of formal segregation in southern states. It has taken decades to dismantle discrimination against homosexual couples. One day we will look back on the war on cannabis users the same way and wonder how come it lasted for so long.

Time has come for marriage equality

As the United States Supreme Courts starts considering the issue of same sex marriage, I can’t help thinking of the fact that as recently as 1967 my wife and I could not have got married in some US states because of racist laws. That was when the Supreme Court ruled in Loving v. Virginia that the state’s anti-miscegenation laws violated the constitutional rights of interracial couples. I think I can empathize with same-sex couples who are still denied the right to marry by unjust state laws today.

Today the historic reality of those racist laws is shocking to us. To our children and grandchildren, discrimination against gays and lesbians will be equally offensive. Same sex marriage takes nothing away from marriage between man and woman, it adds to it. If formally recognized long term commitments are beneficial between men and women, why deny them to other loving couples? I am confident that equality for same sex couples will come.

Google privacy and account cancellations

After Google announced its new privacy policy to take in effect on March 1, 2012, some people announced their intention to cancel their Google accounts. In a Washington Post online poll almost 2/3 of readers said they would cancel their accounts due to privacy changes. My answer to that is: Oh, really?

Despite what the self-selecting samples of voters on that straw poll suggests, I doubt we’ll hardly see any significant response to the new policy. It won’t even be a blip on Google’s radar screen. I think it is safe to bet that most users of the Google+ service also have Facebook accounts, whether they use them much or not. Facebook and its history of data privacy (or lack thereof) is not exactly a benign alternative to anything Google offers. I can not see people stop using Youtube, cut themselves off from their Gmail accounts and switching to what, Yahoo or Bing for web searches? The fact remains, Google may not live up to its “do no evil” credo at all times or forever, but most of us have even less confidence in companies like Facebook or Microsoft.

Google’s move is all about more clicks, i.e. more advertising revenue, which is their life blood. If they can show better targeted ads on web searches based on what you write about in Gmail or watch on Youtube, that’s more clicks that their advertisers pay for.

What worries me is if their data gets opened to the NSA, police, etc especially under the loose rules of something like the Patriot’s Act. Inside the US the constitution has been eroded further and further over the years, while its protections have never applied to most fellow humans who do not happen to be US citizens, as far as the US government is concerned. That is not a problem specific to Google latest move though. It’s something that ultimately only US voters can solve.

Al Qaeda, the public domain franchise

Millions of people will have cheered today when they heard the news of Osama bin Laden’s death. The leader of Al Qaeda had been on the FBI’s most wanted list since the 1998 US embassy bombings in Kenya and Tanzania and became even even more infamous after the 9/11 attacks.

Bin Ladin’s death is by no means “Mission accomplished” in the struggle against terrorism in countries around the world. More likely his death will make little difference.

For the last ten years he’s been little more than a figurehead for the movement he founded. “Al Qaeda in Iraq” picked up the brand name for its guaranteed headline value, but had different roots. Likewise the terrorist attacks in London and Madrid were organised independently. Bin Laden needed the Taliban and their paymasters at the ISI in Pakistan more than they needed him.

Other than its name recognition value, there was little in Bin Laden’s “brand” that couldn’t be found elsewhere by those who shared his world view and goals. Al Qaeda’s franchise manual is not proprietary information, it has been in the public domain for years.

To me the most hopeful news this year came not through the death of this evil man but through the courage of young men and women in Tunisia, Egypt and elsewhere, who boldly stood up against corrupt despots in their own countries. When young people in the Middle East have a stake in running their own countries, when they no longer feel powerless and abused then the likes of Al Qaeda will find it much harder to find new recruits amongst them.

Today I am an Egyptian

Since the exciting events in Tunisia stirred activists and the masses in Egypt into action, I have been following the news with anticipation. Finally 82 year old dictator Hosni Mubarak has ceded power, opening the door to a more democratic future for over 80 million Egyptians.

At times Mubarak reminded me of a stubborn elderly relative refusing to give up driving even after multiple accidents. The amounts of money stolen by him and his family during his rule, even if it were just a fraction of the figures reported, are shocking. Hundreds lost their lives in recent weeks and thousands were arrested and tortured over many years.

Echoes of 1989

I felt reminded of the events of 1989 in central and eastern Europe, when in a matter of months and weeks regime after regime collapsed that once seemed cast in concrete for decades to come.

When the regimes in Eastern Europe fell it took months for free elections for a representative parliament and government and for comprehensive reforms of the apparatus of government. A lot of hard work still lies ahead and it will take patience and a lot of skill to solve the problems left behind by decades of violent oppression and mismanagement.

The Islamist bogeyman

Despite some understandable anxiety by some, Egypt 2011 is not Iran 1979. The Egyptian revolution was the work of a broad coalition of unionists, leftists, students, young people and other secular forces as well as Islamists. The Muslim Brotherhood was never at the forefront. This was a revolution about democracy and social justice, not Islamism.

Those stoking the fear of an Islamist takeover in Cairo do so for political purposes, but it is up to the Egyptians to decide how to run their country now. I hope they will do it as responsibly and maturely as they have shown themselves in the past weeks.

Democrats need not fear democracy

Israel, until now recognized by Freedom House as the only fully free country in the Middle East, should feel uplifted, not panicked at the prospect of living next door to another democracy. History has proven that in the long term democracies do make for much safer neighbours than dictatorships. Egyptians deserve freedom and justice as much as Israelis do, or Palestinians for that matter.

Supporting a brutal kleptocrat was never going to a stable basis for peace, because peace needs justice. My hope is that one day a future government of Israel will offer an outstretched hand towards a democratic Egypt and recognize it as a much better partner to do business with than Mubarak could ever be, and (I know this will take time) even as a friend.

Speech by US president Barack Obama on 11 February 2011

Good afternoon, everybody. There are very few moments in our lives where we have the privilege to witness history taking place. This is one of those moments. This is one of those times. The people of Egypt have spoken, their voices have been heard, and Egypt will never be the same.

By stepping down, President Mubarak responded to the Egyptian people’s hunger for change. But this is not the end of Egypt’s transition. It’s a beginning. I’m sure there will be difficult days ahead, and many questions remain unanswered. But I am confident that the people of Egypt can find the answers, and do so peacefully, constructively, and in the spirit of unity that has defined these last few weeks. For Egyptians have made it clear that nothing less than genuine democracy will carry the day.

The military has served patriotically and responsibly as a caretaker to the state, and will now have to ensure a transition that is credible in the eyes of the Egyptian people. That means protecting the rights of Egypt’s citizens, lifting the emergency law, revising the constitution and other laws to make this change irreversible, and laying out a clear path to elections that are fair and free. Above all, this transition must bring all of Egypt’s voices to the table. For the spirit of peaceful protest and perseverance that the Egyptian people have shown can serve as a powerful wind at the back of this change.

The United States will continue to be a friend and partner to Egypt. We stand ready to provide whatever assistance is necessary — and asked for — to pursue a credible transition to a democracy. I’m also confident that the same ingenuity and entrepreneurial spirit that the young people of Egypt have shown in recent days can be harnessed to create new opportunity — jobs and businesses that allow the extraordinary potential of this generation to take flight. And I know that a democratic Egypt can advance its role of responsible leadership not only in the region but around the world.

Egypt has played a pivotal role in human history for over 6,000 years. But over the last few weeks, the wheel of history turned at a blinding pace as the Egyptian people demanded their universal rights.

We saw mothers and fathers carrying their children on their shoulders to show them what true freedom might look like.

We saw a young Egyptian say, “For the first time in my life, I really count. My voice is heard. Even though I’m only one person, this is the way real democracy works.”

We saw protesters chant “Selmiyya, selmiyya” — “We are peaceful” — again and again.

We saw a military that would not fire bullets at the people they were sworn to protect.

And we saw doctors and nurses rushing into the streets to care for those who were wounded, volunteers checking protesters to ensure that they were unarmed.

We saw people of faith praying together and chanting – “Muslims, Christians, We are one.” And though we know that the strains between faiths still divide too many in this world and no single event will close that chasm immediately, these scenes remind us that we need not be defined by our differences. We can be defined by the common humanity that we share.

And above all, we saw a new generation emerge — a generation that uses their own creativity and talent and technology to call for a government that represented their hopes and not their fears; a government that is responsive to their boundless aspirations. One Egyptian put it simply: Most people have discovered in the last few days … that they are worth something, and this cannot be taken away from them anymore, ever.

This is the power of human dignity, and it can never be denied. Egyptians have inspired us, and they’ve done so by putting the lie to the idea that justice is best gained through violence. For in Egypt, it was the moral force of nonviolence — not terrorism, not mindless killing — but nonviolence, moral force that bent the arc of history toward justice once more.

And while the sights and sounds that we heard were entirely Egyptian, we can’t help but hear the echoes of history — echoes from Germans tearing down a wall, Indonesian students taking to the streets, Gandhi leading his people down the path of justice.

As Martin Luther King said in celebrating the birth of a new nation in Ghana while trying to perfect his own, “There is something in the soul that cries out for freedom.” Those were the cries that came from Tahrir Square, and the entire world has taken note.

Today belongs to the people of Egypt, and the American people are moved by these scenes in Cairo and across Egypt because of who we are as a people and the kind of world that we want our children to grow up in.

The word Tahrir means liberation. It is a word that speaks to that something in our souls that cries out for freedom. And forevermore it will remind us of the Egyptian people — of what they did, of the things that they stood for, and how they changed their country, and in doing so changed the world.

Thank you.

Afghanistan 30 years after the Soviet invasion

I spent Christmas of 1979 with friends of mine in Czechoslovakia, then behind the “iron curtain”. It was there that I heard about a massive Soviet invasion of Afghanistan that started on Christmas eve, 24 December 1979. It was the beginning of a war that cost 15,000 Russian lives and countless Afghan ones, driving millions abroad as refugees.

When my friends heard the official report on Czech TV news, that the USSR had been asked for “brotherly assistance” by the Afghan government under a Peace and Friendship Treaty between Afghanistan and Russia, they immediately felt reminded of a similar announcement during the 1968 invasion of Czechoslovakia. The fact that Afghan president Hafizullah Amin was killed three days later did not exactly help to make it look like the Soviet army did come with an invitation.

The invasion was a watershed event for the Soviet Union, which it demoralized and effectively bankrupted. It has often been called “Russia’s Vietnam” and there were indeed many similarities. Each war was costly to the respective superpower which lost out against insurgents supported by the opposing superpower. Like the US client regime in South Vietnam that survived for another two years after the withdrawal of US troops following the 1973 Paris Peace Accords, the pro-Soviet regime in Kabul under Najibullah managed to hang on to power for another three years, until post-Soviet Russia dropped support for it. Civilian casualties in both wars were huge and vastly outnumbered military casualties by the superpower. About 3,500,000 North and South Vietnamese (about two thirds of them civilians) and between 700,000 and 2,000,000 Afghan civilians were killed.

The pro-Soviet government in Kabul that was overthrown by US-sponsored mujahideen did have a poor human rights record, but at least, unlike the later Taliban regime, it worked to support the rights of women, who could go to work and weren’t forced to go veiled then. Under the Taliban girls could not go to school nor could women see a doctor.

While in 1979 the Soviet invasion was portrayed as an unprovoked aggressive move, as the first invasion outside the direct Soviet sphere of influence since 1945, the picture that has since emerged looks quite different. In an interview with “Le Nouvel Observateur” (Paris), 15-21 January 1998, President Jimmy Carter’s national security adviser Zbigniew Brzezinski revealed that Carter authorized support for Afghan insurgents almost six months before the Soviet invasion, which came as a response to the US-sponsored insurgency:

According to the official version of history, CIA aid to the Mujahadeen began during 1980, that is to say, after the Soviet army invaded Afghanistan, 24 Dec 1979. But the reality, secretly guarded until now, is completely otherwise Indeed, it was July 3, 1979 that President Carter signed the first directive for secret aid to the opponents of the pro-Soviet regime in Kabul. And that very day, I wrote a note to the president in which I explained to him that in my opinion this aid was going to induce a Soviet military intervention.

In an Interview with Mother Jones (23 July 2009), US journalists Elizabeth Gould and Paul Fitzgerald explain that stepped up US aid to militant Islamic insurgents had the opposite effect of the declared intention: Instead of driving out the Russians from Afghanistan, it kept them trapped there:

Gould: [Texas congressman] Charlie Wilson came online around 1984 with the idea that the Soviets were never going to leave Afghanistan, so Congress had to increase the supply of arms to insurgents to drive them out. In 1983, a little more than two years after the Soviets had invaded, we took Roger Fisher of the Harvard Negotiation Project to Afghanistan for Nightline to assess the possibility of negotiating the Soviets out of the country. We came back with the story that the Soviets were actually desperate to get out and really wanted to save face, effectively.

MJ: Why was that?

Gould: The big issue really was the insurgency. The Soviets were in Afghanistan primarily because of the insurgency that was flowing from Pakistan and was basically burning schools and burning down power lines and disrupting the ability of the Afghan government to function. When Charlie Wilson actually did in fact get his budget going, and increase the insurgency, it actually held the Soviets there as opposed to driving them out. Charlie Wilson kept the Soviets in Afghanistan for another six years. He didn’t drive them out.

MJ: So if the U.S. hadn’t funneled arms to the insurgency, the Marxist government that was in power in Afghanistan would continue and at that point the Soviets wouldn’t need to be there?

Fitzgerald: The Soviets even prior to their invasion had been trying to convince the Marxists that they should step down from running the country. They told them point blank, you are not capable, you are not diverse enough, your party isn’t broad enough to run the country. And they were letting the United States know. In the summer of 1979, through their emissaries, the Soviet Union let the US know that they wanted the Marxist government of Hafizullah Amin and Nur Mohammed Taraki, to step down. According to the declassified cables the U.S was fully aware of the Soviet’s desire for a political solution. The Soviets expected that they would get cooperation from the United States in setting up a coalition government.

It becomes clear then that liberating Afghanistan was not the primary objective, but hurting the Soviet Union. Zbigniew Brzezinski appeared to have no regrets about having lured the Soviets into the conflict, which not only wrecked the Soviet empire but also left Afghanistan into the hands of the Taliban:

What is most important to the history of the world? The Taliban or the collapse of the Soviet empire? Some stirred-up Moslems or the liberation of Central Europe and the end of the cold war?

Now the US is sending tens of thousands of its sons and daughters, with billions of dollars for funding this war, to counter some of these “stirred-up Moslems” mentioned by Brzezinski.

The Frankenstein’s monster created by the US to bring down the Soviet Union is now going after its own creator, except of course that the men and women dispatched to fight and die in Afghanistan today are not the same individuals who conspired to launch this never ending war some 30 years ago.

Wars are rarely ever by necessity, despite what politicians may say at the time and what may first seem like an effective solution to a political problem often comes back to haunt those who chose the path of violence even though there were better alternatives.

Afghanistan — a missed chance for Obama

President Barack Obama will over time come to regret his decision to send another 30,000 men and women into war in Afghanistan, announced in a speech at West Point on 1 December 2009. More non-Afghan boots on the ground in Afghanistan will do nothing to make Americans more secure. To the contrary, the escalation will only help the Taliban recruit more men. And the more Western troops are stationed in Afghanistan, Iraq and other Islamic-majority countries, the easier it will be for Al Qaeda to portray the US and its allies as “crusaders” coming to invade.

As Canadian columnist Gwynne Dyer reasoned in an article on the Afghan presidential election in early November, the blatantly rigged election that secured Afghan president Hamid Karzai another term in office could well have provided the political cover to abandon the doomed Afghan intervention: “…now is his best-ever chance to pull out, because the political train-wreck in Kabul gives him an ideal opportunity to renege on his foolish promises to pursue the war in Afghanistan until victory.” Obama did not use this chance to cut his losses.

What kind of “victory” is Obama hoping for by staying? The signs are not encouraging. For years, President Karzai’s power has barely extended beyond the capital, which is why he’s often nicknamed the “mayor of Kabul”. The provinces are ruled by powerful warlords, whose abuses of power and lawlessness back in the 1990s paved the way to power for the Taliban. Karzai’s administration and police force are one of the most corrupt in the world — the country was ranked 179 out of 180 countries evaluated by Transparency International in 2009 (only Somalia is worse). Hamid Karzai’s own brother, Ahmed Wali Karzai, who lives in the Southern city of Kandahar, is reputed to be a major player in the opium trade as well as being on the CIA payroll, writes the New York Times. US troops are propping up an unpopular, corrupt regime, just as they did in South Vietnam in the 1960s. Even Afghans who side with the government know that sooner or later the US will withdraw its troops, while the enemies of the present government will still be there and they will have to live with them somehow.

In deciding to stay the course and trying a “surge” (just like his predecessor in office), Obama will have pleased some generals and the political establishment in Washington, D.C., but failed his test as a new kind of politician. To his credit, Obama took his time to carefully consider his options and listen to advice from different sides. He was very deliberate about it. Somehow I can’t quite image John McCain taking this much time to come to a conclusion, had he won the election a year ago… Yet, the outcome was still a bad choice and the reasons given for it are utterly unconvincing to me and many others.

In his speech Obama kept lumping together the Taliban and Al Qaeda, Afghanistan and Pakistan, knowing like his predecessor that the memory of 9/11 is still powerful and that some political mileage can be gained from it. The problem with that line of argument though is that Al Qaeda did not really need any bases in Afghanistan to stage that attack on the US: 9/11 appears to have been planned mostly in Hamburg/Germany and in Florida.

Occupying the mountains and deserts of Afghanistan will be costly in blood and treasure, but looked at it rationally, it will do almost nothing to prevent future terrorist attacks in the US or Europe. If anything, it will help recruit for future attacks, just as the US military presence on bases inside Saudi Arabia after the 1990-1991 Gulf War became the main recruiting tool for 9/11 (which is one reason why 15 of the 19 hijackers were Saudis).

Gwynne Dyer in his article “Last Exit from Afghanistan”:

It was always nonsense: terrorists don’t need “bases” to plan their attacks. Regular armies need bases, but all terrorists need is a couple of safe houses somewhere. Controlling Afghanistan is almost entirely irrelevant to Western security, and that reality is also beginning to seep out into the public discussion in the United States.

Al Qaeda does not depend on Afghanistan. Most experts assume both Osama Bin Ladin and Mullah Omar, the leader of the Taliban to be living in relative safety in next-door Pakistan, perhaps protected by the ISI, the powerful secret service of Pakistan that was allied to the Taliban when they first came to power in the 1990s. Remember that Pakistan was one of only three countries worldwide that diplomatically recognized the Taliban regime (the other two were fellow US allies Saudi Arabia and the UAE).

Even if the Pakistani government and its organs were to fully cooperate with the US, the tribal regions along the frontier between Afghanistan and Pakistan have always only nominally been under control of the central government. This goes all the way back to the days of the British Empire in India, when the British could only pacify these regions by paying them not to attack.

Middle East expert Fawaz A. Gerges estimates in a CNN opinion piece (“Afghanistan is mission impossible”, 2 December 2009) that there are three times more Al Qaeda operatives in US-allied Pakistan than inside Afghanistan.

It was foolish for President George W. Bush to invade Iraq after 9/11 when the Al Qaeda camps were based elsewhere. It is foolish of Obama too to send more troops into harm’s way in Afghanistan, a graveyard of foreign invaders (from Alexander the Great and the Mongols to the Soviet Army). Yet it wouldn’t make any more sense to try to send those troops to Pakistan, the real hornet’s nest, whose large population would be deeply hostile to any such adventure.

The problem is not really that the US keeps sending troops to the wrong country, or maybe sending too few troops to get the job done, it is that military invasions are not the right tool for this job: You can not defeat Al Qaeda with conventional armies any more than you can do surgery with a hammer. Al Qaeda is not fighting a conventional war and it can not be defeated with conventional military means.

There are political reasons for terrorism. As long as the US remains allied with corrupt, unpopular regimes across the Middle East and Central/South Asia, domestic hostility against these regimes will always spill over into Anti-Americanism and the local presence of US troops will fan the Anti-Americanism. Defeating terrorism will have to start with better governments in countries that currently act as a breeding ground for terrorism and insurgency, with weeding out corruption, injustice and lack of development.

Isn’t it ironic that, compared to its image in other countries in the region, America as a country is surprisingly popular amongst ordinary people in Iran, maybe because for the last 30 years they have lived under a government that is not allied with and not bribed by the US, unlike say Egypt, Jordan or Pakistan, where corrupt and incompetent elites are seen as in the pocket of Washington.

Instead of primarily seeking military cooperation from political elites in client countries through funding and military pressure, the US would be better off nurturing projects to build civil society and to encourage those governments to invest in education, health care and a working judiciary. Based on the experience of the last eight years, Karzai is the wrong man to deliver such goods to his fellow citizens in Afghanistan.

When Obama will finally start to withdraw US troops from Afghanistan maybe 18 months from now or later, the US will have squandered hundreds of billions of dollars while hundreds and thousands will have got killed, without having fixed any of the problems that plague the country today.

At that point, the Afghan people will still have to solve their problems amongst themselves.

Revolution in Prague – 20 years of freedom

This week it will be twenty years since I had the privilege to become an eyewitness to the Velvet Revolution (Czech: sametová revoluce) in then Czechoslovakia. With close friends of mine I attended a mass demonstration at Letna Park in Prague to mobilize for a general strike the following day, which ended 4 decades of Communist Party rule.

The following is an account of these events that I wrote about 10 years later, with photographs taken on that cold winter day.

[Start of original article]

Revolution in Prague

I have long had friends in Czechoslovakia, some 100 km (60 miles) east of where I was born. In 1968 a massive invasion of Soviet, East German and other Warsaw pact armies ended “socialism with a human face”, a daring but short-lived experiment by liberal communist prime minister Alexander Dubcek. My friend later showed me underground leaflets distributed then, that he had secretly stashed away. I was only seven years old when that happened, but I still remember being frightened after hearing my father and uncles talking about whether the invasion could mean WW3.

Nine years later, a group of intellectuals formed a human rights organization called “Charta 77”. Its leaders were playwright Vaclav Havel and Jiri Dienstbier. Another prominent member was Petr Uhl. The opposition group was persecuted and its members spent many years in Czech prisons.

Following “perestroika” in Russia under Mikhail Gorbachev, political change built up momentum across Eastern Europe. Poland voted for a non-communist government. Hungary took down the barbed wire along its border to Austria, triggering a mass exodus of East Germans to the west. Mass demonstrations in Leipzig, Dresden and other east German cities followed. Then thousands of East Germans invaded the West German embassy in Prague, forcing the East German government to let them emigrate. Soon after, the Berlin wall and border checkpoints to West Germany were opened and millions of East Germans could travel west for the first time in four decades.

Infected by the bold spirit of their neighbours, Czech students publicly demonstrated near Vaclav square in the center of Prague, commemorating Czech students who had dared to demonstrate against Nazi occupation 50 years earlier. Despite the non-confrontational theme, police violently broke up the demonstration, brutally beating the students. Photos of the events emerged and public outrage followed. The national television eventually had to show pictures of the clubbing. This triggered growing mass demonstrations on Vaclav Square in central Prague, which got so big that they had to be moved to Letna Park, the usual site of the annual Mayday parade of the Communist Party (KSC). Two big rallies were to be held on Letna Park over the weekend, to spread the call for a general strike, to demonstrate to the Communist Party that it was isolated and that the people wanted it to resign.

When I saw the reports on the TV news, I decided to leave for the Czech border the very next morning. East of the Bohemian Forest the snow was about 30 cm (1 ft) deep. Bohemia was covered in white and the infamous “Bohemian Wind” was blowing. I experienced no particular problems at the border and found relatively little traffic on the wintery roads. My 4wd Audi took me to Teplice, in northern Bohemia, some 60 km (40 mls) south of Dresden, without any problems due to ice or snowdrifts.

My friends were surprised to see me, of course. Throughout the afternoon we watched television. All regular programming had been canceled and there were only interviews, live reports and speeches. All censorship had been dropped. Journalists reported about anything, said anything, gave a forum to anybody. I was probably watching the most free television in all of Europa at that moment. Finally it was announced that Vaclav Havel would speak. I was utterly amazed. The man who had all his plays banned, had been jailed, made to earn his living shoveling coal, probably the most stubborn oppositional in this country could speak freely to his compatriots. And speak he did, I don’t remember if it was for 30 minutes or an hour. The camera was his, and the audience too. That same afternoon there were a million people on Letna park, at a demonstration of the Obcanske Forum (civic forum, the largest organization within which was Charta 77).

I talked to my friend about going to Prague on Sunday together. His wife was worried what might happen. What if they had their pictures taken, got arrested and lost their jobs? But a million people had demonstrated already and Havel had been on TV. The Berlin Wall had been broken too. This was not Prague 1968 any more. This time it would work. Well, if he was going then so was she.

The roads were icy as we headed down to Prague the next day, but it was a pleasure to drive in the Audi. Letna Square is on one of the hills high above the centre of Prague, which makes it cold and windswept in the winter. We parked in the suburbs within walking distance and followed the crowds.

The first thing that surprised us was that there was no police. Usually, they were all over the place. Now, not one. I was going to witness an event with anywhere upwards of 500,000 people and would not see a single policeman all afternoon, in what until days ago could only have been described as a police state. Instead we saw students with white armbands, or civic forum badges, who took care of everything. The government must have decided that violence was too risky.

This ice-hockey stadium at the edge of the square was used by the speakers, amongst them Havel, Dienstbier and Petr Uhl, who had just been released from jail were he had been taken for spreading the (luckily mistaken) rumour that a student had been killed during the demonstration the previous weekend.

The crowd was so huge, it was difficult to see how big its was from anywhere in the middle. So I passed up my camera to one of these guys and they were kind enough to take some pictures in various directions. No one was paranoid about having their pictures taken any more. People had shaken off fear.

This is the view towards the stage. Many people were wearing ski hats or jackets in the colours of the Czechoslovakian flag. This was not just an anti-communist or anti-Stalinist event, since it had been a foreign invasion that suppressed freedom 21 years earlier. This was very much a nationalist event too. The revolution of 1989 was as much about reclaiming national sovereignty lost in 1968 as it was about restoring democracy lost in 1948.

That’s the view towards the right hand side of the square. I was told Letna park can hold one million people. It had been full on Saturday. Looks pretty full to me on that Sunday too!

The slogans on three of the banners read: “Step down!”, “Civic Forum” and “Free Elections!”

The Victory sign became popular over night, as a sign of confidence in the effectiveness of the general strike the following Monday.

“Free newspapers, radio and television” (my Czech is pretty rudimentary…) — a message against censorship

On the left (in red): “End one party elections!” Below: Valtr Komarek was a renowned economist who came out against the government.

Two of the young people who organized security, directing traffic and handing out information. Yes, it was cold and windy too.

A Skoda car (Prague license plate) with “I love civic forum” in the rear window.

A revolutionary family effort. The child in the middle holds a banner with “Svoboda” (Freedom) written on it

Stalinism hit its dead end. All shop windows were plastered with political messages, as were the underground (subway) stations that are the arteries of public transport in Prague.

Photographs of the violently crushed students demonstration that caused the outrage triggering the mass demonstrations.

Pictures of Alexander Dubcek, father of the “Prague Spring” of 1968 and of Mikhail Gorbachov whose hands-off policy discouraged the Czech communists from resorting to violence in the way the Chinese leadership had done at Tien-An-Men square earlier that year.

View towards the top end of Vaclav Square, with the National Army Museum in the back. In front of the museum is the Vaclav Monument, which most of us remember from pictures showing it surrounded by Russian tanks in August 1968.

A field of candles lit for the victims of the government.

Cheerful pedestrians were waving the V-sign at passing motorists who honked their horns in solidarity.

V-signs and flags every where — as along the street between Vaclav Monument and the museum.

People had been waiting for this day for at least 21 years. Until a few years aerlier the National Army Museum in the background still bore the bullet holes were it had been hit by Soviet tank artillery.

Ladas, Skodas, Trabants and Wartburgs in a freedom parade.

The following day was scheduled to be a general strike. The opposition groups were headed by well known intellectuals. The big demonstrations had all been in Prague. People still were not sure what the outcome would be in the smaller towns, away from the capital and how effective the strike call would be amongst industrial workers, such as the Skoda factories.

The right to go on strike

The right to go on strike
(See here for an English Translation of this flyer)

But Czechs have long held intellectuals in high respect, like to read and to watch plays. Famous actors, whole theaters and even national football (soccer) players publicly came out in support of the strike call. By Monday afternoon, when I was back in Germany, the figures were in: The strike was a great success, the government had lost every pretense of being in control and there was nothing else left but to withdraw in an as orderly way as possible. Within days, a transitional cabinet was established and former oppositionals took control of public institutions. An election later confirmed that communist majority had always been a carefully constructed fiction.

Vaclav Havel (president of the Czech Republic until February 2003) is one of the politicians who I respect most, for his courage, his non-violent struggle, his sense of humour and his humane values.

[End of original article]

Twenty years later

I went back to the Czech Republic about ten years later, with my wife and kids. We visited Prague as tourists. I was amazed how much everything had changed. I heard English spoken everywhere, where before most tourists were from East Germany or other parts of the Eastern Block. Prague had become a magnet for young people from all over the world.

Things have not been easy for people, as not all have materially benefited equally from the changes. The old planned economy suffered from low productivity and horrendous ecological problems (especially acid rain in the lignite mining areas in Northern Bohemia), but everybody had been guaranteed a job of some sort. Hopes had been so high after 40 years of repression and mismanagement that people were bound to be disappointed by reality (just as Americans were bound to be somewhat disappointed after voting for change in the 2008 US Presidential Election, I might add).

Rule by a repressive one party bureaucracy was a dead end for Czechoslovakia. Now the Czech Republic is a free country again. Its citizens need not fear being arrested or losing their jobs or be denied education for speaking their minds. They are free to travel and to trade and to seek opportunities.

The events of twenty years ago gave me hope in the human spirit. They showed me what people can achieve when they dare to dream, to follow their moral convictions and to reach out to their fellow human beings instead of being bowed by fear.

“Trau keiner Statistik…”

Today, in online chat with an American friend that touched on website statistics I posted the line:

“Never trust any statistics that you didn’t forge yourself.”

He replied that he liked the quote, which suggested to me that he hadn’t heard it before. This particular one liner frequently pops up in discussions of published numbers in Germany, especially if one disagrees with what they appear to show. You might call it the German equivalent of “There are three kinds of lies: lies, damned lies, and statistics.” Its two common variants are “Ich traue keiner Statistik die ich nicht selbst gefaelscht habe” (I don’t trust any statistics that I didn’t forge myself) or as advice: “Traue keiner Statistik die du nicht selbst gefaelscht hast” (Don’t trust any statistics that you didn’t forge yourself).

I vaguely remembered that this line was usually attributed to Winston Churchill and found my friend’s reaction odd, because if this was a Churchill quote, it would be more likely to be known amongst English speakers than in Germany. A quick Google search confirmed my suspicions because hits centered on Germany, making it unlikely the quote was indeed from Churchill. The German-centric hits were no coincidence, because as it turns out the “quote” was a product of Nazi propaganda that has managed to survive the fall of the Reich by more than six decades.

According to research conducted by a member of the Baden-Wuerttemberg State Office of Statistics a couple of years ago, there is no verifiable source for the supposed “quote”. The Times of London had never heard of it. What’s more, it dovetails nicely with WWII Nazi propaganda that accused Churchill of exaggerating Allied successes and minimizing British losses (i.e. forging numbers). It does not really fit Churchill, because he was not known as a general skeptic on statistics, though he was suspicious of German claims (and for good reasons). The fake “quote” combines these two themes, skepticism of his opponents’ statistics and accusations of being a liar that the Nazis liked to smear him with.

Maybe better advice would be: “Don’t trust any quote that you didn’t forge yourself.” 😉

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