Forty years on, a cold-war security pact rooted in the colonial past survives
IT HAS not drawn much attention. But as 40th-birthday bashes go, it has been rather a spectacular affair. About 4,000 servicemen from five countries, 19 warships, 68 military aircraft and two submarines have been taking part in exercises in South-East Asia to mark the anniversary of the conclusion on November 1St 1971 of the "Five Power Defence Arrangements" (FPDA). And the five defence ministers-from Australia, Britain, Malaysia, New Zealand and Singapore-convened in Malaysia and Singapore to give the occasion a high-level gloss.
You might imagine that they would be discussing an overdue retirement for arrangements made for an entirely different world. The security threats perceived in 1971 have evaporated. British colonial rule, which had come to an end just a few years before, is now ancient history to most Singaporeans and Malaysians, born since independence. For them the idea of looking to the British, Australian and New Zealand armies for security must seem bizarre. Meanwhile, regional co-operation has spawned a plethora of new security forums and organisations.
Yet the FPDA survive, and show no signs of packing up. Indeed, sheer longevity has in some ways strengthened them. They remain, in a phrase coined in Australia's defence ministry, SouthEast Asia's only "multilateral security arrangement with an operational dimension". Their durability is testimony both to the flexibility of the armed forces that have looked after them, and to a continued nervousness about the region's security.
The FPDA were a response to Britain's precipitate withdrawal of its forces from "East of Suez", which caused deep anger and resentment in the other four countries. They are far from a fullfledged military alliance. They provide merely for the five countries to "consult" in the event of an attack on Singapore and Peninsular Malaysia (Sabah and Sarawak, the Malaysian states on Borneo, are excluded). This gave Singapore and Malaysia breathing space to build up their own armed forces, while under some protection from British air defences.
Earlier in 1971, when asked in Parliament in London about the threat the arrangements were intended to counter, Edward Heath, prime minister at the time, referred to "forces outside [Malaysia] in southern Thailand and north of the Malaysian border". Presumably, he meant the communist insurgency still simmering in the border area. Presumably, too, he was fibbing tactfully: the real danger was seen as Indonesia, which until recently had been eyeing Malaysia and Singapore as bits of its territory lopped off by an accident of colonial history. Among other worries, the Philippines had not dropped a claim to Sabah. And, of course, the Vietnam war was raging, raising fears of South-East Asian dominoes toppling to Soviet-aligned communism.
Malaysia's and Thailand's armed communists have long given up the ghost. Indonesia and the Philippines have for over 40 years been joined with Malaysia and Singapore in the Association of South-East Asian Nations (ASEAN), and have stopped pursuing irredentist claims. Even Vietnam, the first domino in the queue, has been part of the family since 1995. And Britain's weight in the world has dwindled, as have its defence budgets. Even before its latest defence review outlined painful cuts, and despite the war in Afghanistan, Britain's defence expenditure, as a proportion of GDP, was less than half what it was in 1971.
So the FPDA's survival seems puzzling. Partly, put it down to inertia-no compelling reason to terminate them. But also all five powers gain different benefits from them. Britain keeps a toehold in South-East Asia. New Zealand and Australia, which has made the biggest commitment of the "travelling" powers, see their own security as bound up with that of the region. Singapore and Malaysia acquire expertise and training from the other armies. Importantly, their armies also learn to work together, even when relations between their governments occasionally turn fractious.
The FPDA have also deftly diversified. The ministers now discuss piracy, cybersecurity and humanitarian and disaster-relief operations. And the pact provides a mild sort of reassurance against other forms of instability. In the late 1990s that again meant Indonesia, in turmoil after the end of the Suharto dictatorship, sparking fears of disintegration and mass flight.
Now, though it is a fear that dares not speak its name, it means China, and the assertive posture it has adopted in recent years towards disputed territorial claims, such as in the South China Sea. As Philip Hammond, Britain's defence minister, put it this week, a possible threat to regional security is a "miscalculation over a territorial claim, probably over an island somewhere". Another area of possible miscalculation might be the Malacca Strait, through which most of China's oil passes.
Tim Huxley, in Singapore for the International Institute of Strategic Studies, a British think-tank, points out that there is no way the FPDA can be part of "a balancing mechanism" to China, or that it will come into play in the South China Sea. Of the five, only Malaysia has a direct stake there. Rather, the FPDA's persistence reflects "a concern that the distribution of power is in flux, creating a pervasive sense of insecurity that is hard to pin down."
On the way to the forum
The bewildering array of regional security talking-shops has so far failed to still such worries. Most hopes now are vested in a grouping known, with Asia's flair for alphabetical nomenclature, as the ADMM+ (for ASEAN Defence Ministers' Meeting). It groups ASEAN with America, China, India, Japan, Russia and South Korea, as well as Australia and New Zealand. One day, it might become a forum for settling disputes. Today it is barely even one for airing them. And in that context, the FPDA provide members with a vague sense of comfort that is also hard to pin down, and certainly less easy to explain than the premise of their 40th-anniversary exercises: the seizure of an island by a hostile power.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
2011年11月29日
2011年11月24日
Transport in South Africa - By the seat of your cheap pants
ASK any middle-class South African.what are his country's worst scourges and taxis will almost certainly come in the top four, along with violent crime, HIV I AIDS and corruption. By taxi people do not mean the Western-style saloon cab but the privately owned 16-seat minibus "kombi", used throughout Africa as the main form of public transport. It is cheap, friendly, convenient and performs a vital service in countries with meagre public transport systems. But it is often lethal-for both passengers and other road users.
South Africa has 15o,ooo taxis, almost all owned and operated by blacks, carrying some 15m passengers a day, with a turnover of R16.5 billion ($2.2 billion) a year. Often dented and overloaded, they have no timetables or formal stops but swerve at high speed in and out of traffic, carving up other drivers, running through red lights and mowing down pedestrians in their rush to pick up passengers on the kerb. Competition is fierce and drivers' pay is usually a cut of the day's takings. They are a law unto themselves and the police generally seem to turn a blind eye.
South Africa has one of the world's highest road accident rates, with around 14,000 deaths a year. Many victims are minibus passengers; a disproportionate number are children. The Automobile Association found that minibus taxis were involved in almost 200 crashes a day, twice the rate of other passenger vehicles. Owners tend to cut costs by skimping on repairs. Many drivers are unlicensed.
In the past, the police have seemed to ignore taxi-drivers' lawlessness. But in a bid to stop the carnage, the transport minister, Sbu Ndebele, recently ordered a crackdown on all road offenders. In the past 11 months, more than 14m vehicles have been stopped and checked, 6m fines issued, 20,000 drunk drivers arrested, and more than so,ooo defective vehicles taken off the roads, most of them buses and taxis. In September alone, some 1,500 lawbreaking public-transport drivers were arrested. Mr Ndebele has called for reckless drivers who cause death to be charged with murder.
The South African National Taxi Council, representing some 95% of taxi operators, has aired the idea of launching a low-cost taxi airline to cater for the urban poor, few of whom have been anywhere near a plane. It says it might one day fly between Johannesburg, Cape Town and Bisho, capital of the Eastern Cape province, almost as cheaply as going by kombi. It has yet to explain how costs can be kept so low. Few South Africans dare ask.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
South Africa has 15o,ooo taxis, almost all owned and operated by blacks, carrying some 15m passengers a day, with a turnover of R16.5 billion ($2.2 billion) a year. Often dented and overloaded, they have no timetables or formal stops but swerve at high speed in and out of traffic, carving up other drivers, running through red lights and mowing down pedestrians in their rush to pick up passengers on the kerb. Competition is fierce and drivers' pay is usually a cut of the day's takings. They are a law unto themselves and the police generally seem to turn a blind eye.
South Africa has one of the world's highest road accident rates, with around 14,000 deaths a year. Many victims are minibus passengers; a disproportionate number are children. The Automobile Association found that minibus taxis were involved in almost 200 crashes a day, twice the rate of other passenger vehicles. Owners tend to cut costs by skimping on repairs. Many drivers are unlicensed.
In the past, the police have seemed to ignore taxi-drivers' lawlessness. But in a bid to stop the carnage, the transport minister, Sbu Ndebele, recently ordered a crackdown on all road offenders. In the past 11 months, more than 14m vehicles have been stopped and checked, 6m fines issued, 20,000 drunk drivers arrested, and more than so,ooo defective vehicles taken off the roads, most of them buses and taxis. In September alone, some 1,500 lawbreaking public-transport drivers were arrested. Mr Ndebele has called for reckless drivers who cause death to be charged with murder.
The South African National Taxi Council, representing some 95% of taxi operators, has aired the idea of launching a low-cost taxi airline to cater for the urban poor, few of whom have been anywhere near a plane. It says it might one day fly between Johannesburg, Cape Town and Bisho, capital of the Eastern Cape province, almost as cheaply as going by kombi. It has yet to explain how costs can be kept so low. Few South Africans dare ask.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
2011年11月17日
New Help for Smokers
An antinicotine vaccine is moving closer to regulatory approval
As any smoker can tell you, quitting is relatively easy. The hard part is avoiding relapse—the urge to light up weeks or even months after you have supposedly kicked the habit. The patch, the gum and all the other tricks smokers use to get through the first few months are often powerless against those later urges.
That is one reason why an antinicotine vaccine now wending its way through clinical trials has public health officials so excited. Like all vaccines, NicVAX, made by NABI Biopharmaceuticals works by stimulating the body’s immune system to produce antibodies against a certain target—in this case, nicotine. Because immune responses are generally lifelong, the vaccine makers say it could serve as a longterm antismoking aid.
Normally nicotine molecules are small enough to evade detection by the immune system.
They are even small enough to slip past the blood-brain barrier and bind to receptors on brain cells, where they trigger a chemical cascade that leads to addiction. NicVAX floods the body with nicotine molecules that have been chemically attached to large, carrier proteins, forcing the immune system to recognize and deploy antibodies against the cigarette ingredient. Then, when ordinary nicotine molecules enter the system, those antibodies bind to them, making them too large to cross the blood-brain barrier.
The vaccine doesn’t work for everyone. An earlier trial showed that 16 percent of heavy smokers who were vaccinated and had high antibody levels remained abstinent from cigarettes one year after quitting, compared with 6 percent of the placebo group. Those who produced high antibodies but did not quit cut their smoking in half, from around 20 cigarettes a day to 10.
Results from wider, or “phase III,” trials are expected as early as September. For these studies, researchers recruited 1,000 smokers who consume at least 10 cigarettes a day. The volunteers received five to six injections spaced roughly one month apart and were asked to quit after 14 weeks, when around 80 percent of subjects have high antibody levels. (Why 20 percent of subjects fail to produce a high antibody response to the vaccine is unclear.). “The idea is to ensure that when we tell them to quit, they have the tools—the antibodies— to help them,” says NABI CEO Raafat E. F. Fahim. He and his team have yet to determine how long patients will need to get shots.
If results from the phase III trials are as good as everyone expects, the vaccine could hit pharmacy shelves soon after. Meanwhile researchers are already at work on other antiaddiction vaccines, including one against cocaine that employs the same strategy as NicVAX.
Source of Information : Scientific American Magazine
As any smoker can tell you, quitting is relatively easy. The hard part is avoiding relapse—the urge to light up weeks or even months after you have supposedly kicked the habit. The patch, the gum and all the other tricks smokers use to get through the first few months are often powerless against those later urges.
That is one reason why an antinicotine vaccine now wending its way through clinical trials has public health officials so excited. Like all vaccines, NicVAX, made by NABI Biopharmaceuticals works by stimulating the body’s immune system to produce antibodies against a certain target—in this case, nicotine. Because immune responses are generally lifelong, the vaccine makers say it could serve as a longterm antismoking aid.
Normally nicotine molecules are small enough to evade detection by the immune system.
They are even small enough to slip past the blood-brain barrier and bind to receptors on brain cells, where they trigger a chemical cascade that leads to addiction. NicVAX floods the body with nicotine molecules that have been chemically attached to large, carrier proteins, forcing the immune system to recognize and deploy antibodies against the cigarette ingredient. Then, when ordinary nicotine molecules enter the system, those antibodies bind to them, making them too large to cross the blood-brain barrier.
The vaccine doesn’t work for everyone. An earlier trial showed that 16 percent of heavy smokers who were vaccinated and had high antibody levels remained abstinent from cigarettes one year after quitting, compared with 6 percent of the placebo group. Those who produced high antibodies but did not quit cut their smoking in half, from around 20 cigarettes a day to 10.
Results from wider, or “phase III,” trials are expected as early as September. For these studies, researchers recruited 1,000 smokers who consume at least 10 cigarettes a day. The volunteers received five to six injections spaced roughly one month apart and were asked to quit after 14 weeks, when around 80 percent of subjects have high antibody levels. (Why 20 percent of subjects fail to produce a high antibody response to the vaccine is unclear.). “The idea is to ensure that when we tell them to quit, they have the tools—the antibodies— to help them,” says NABI CEO Raafat E. F. Fahim. He and his team have yet to determine how long patients will need to get shots.
If results from the phase III trials are as good as everyone expects, the vaccine could hit pharmacy shelves soon after. Meanwhile researchers are already at work on other antiaddiction vaccines, including one against cocaine that employs the same strategy as NicVAX.
Source of Information : Scientific American Magazine
2011年11月14日
Currency controls in Argentina - Unfree exchange
An ill-advised attemptto prop up the peso
INFLATION and capital flight have steadily weakened Argentina's peso since Cristina Fernandez became president in 2007. Back then one peso bought $0.32; today it buys just $0.24, despite recent support from the central bank. Long accustomed to currency crises, Argentines price homes and cars in dollars, and race into green backs at the first sign of economic trouble. Fresh from re-election, Ms Fernandez is now preemptively stopping them from trying. On October 31St the government began requiring bureaux de change and banks, who could previously conduct transactions with little oversight, to submit clients' tax-identification numbers online to the tax agency for approval. It sent 4,400 inspectors to moneychangers nationwide to enforce the rule. Officially, the restriction targets money-laundering. "People above board should remain calm," said Amado Boudou, the economy minister. "Those in the black economy should be very nervous." But in practice it is ensnaring everyone. Some operators closed their doors, saying they had to process the new rules. Those that did open drew queues up to two hours long. Yet most people who lined up waited in vain: around 70% were rejected on the first day, including many who were wrongly accused of lacking legitimate funds to change the sums they had put forward.
If the government hoped to strengthen the peso or improve financial transparency, it has accomplished the opposite. Fearful they would lose access to hard currency, investors bought Argentina's dollar-denominated bonds and dumped their peso equivalents. If legitimate exchanges remain blocked, a black currency market will surely emerge. These could just be teething troubles while the new system beds down. Even if Ms Fernandez is serious about imposing currency controls, she may have to retreat if an uproar ensues. However, nervous Argentines must feel even more jittery now that a presidential whim can stop them from changing money.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
INFLATION and capital flight have steadily weakened Argentina's peso since Cristina Fernandez became president in 2007. Back then one peso bought $0.32; today it buys just $0.24, despite recent support from the central bank. Long accustomed to currency crises, Argentines price homes and cars in dollars, and race into green backs at the first sign of economic trouble. Fresh from re-election, Ms Fernandez is now preemptively stopping them from trying. On October 31St the government began requiring bureaux de change and banks, who could previously conduct transactions with little oversight, to submit clients' tax-identification numbers online to the tax agency for approval. It sent 4,400 inspectors to moneychangers nationwide to enforce the rule. Officially, the restriction targets money-laundering. "People above board should remain calm," said Amado Boudou, the economy minister. "Those in the black economy should be very nervous." But in practice it is ensnaring everyone. Some operators closed their doors, saying they had to process the new rules. Those that did open drew queues up to two hours long. Yet most people who lined up waited in vain: around 70% were rejected on the first day, including many who were wrongly accused of lacking legitimate funds to change the sums they had put forward.
If the government hoped to strengthen the peso or improve financial transparency, it has accomplished the opposite. Fearful they would lose access to hard currency, investors bought Argentina's dollar-denominated bonds and dumped their peso equivalents. If legitimate exchanges remain blocked, a black currency market will surely emerge. These could just be teething troubles while the new system beds down. Even if Ms Fernandez is serious about imposing currency controls, she may have to retreat if an uproar ensues. However, nervous Argentines must feel even more jittery now that a presidential whim can stop them from changing money.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
2011年11月10日
Greece's w-oes
The markets are not the euro's only threat. Voters may be too
EVEN by the euro zone's undemanding standards, a summit deal that survived less than a week is lamentable. Early on October 27th Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, hailed a "comprehensive package" to save the euro. Yet by the time The Economist went to press, their plans were in tatters. Greece's prime minister, George Papandreou, looked doomed, rejected by some of his ministers, many in his party-and, possibly, most of his country.
The shallowness of the summit's achievements has been brutally exposed. Instead of settling into a period of calm, markets were thrown into new turmoil. One way or another, the euro is destined for an unavoidable test of popular support. Unless the euro zone's leaders shape up, this is an encounter their currency may well lose.
Heed the messenger
Mr Papandreou was in part the author of his own misfortune. Seeking the backing of the Greek people in a referendum, he was immediately condemned in the capitals of Europe as a fool or a traitor. Why had he wrecked all their good worl
There is no disputing that Mr Papandreou, in spectacularly chaotic style, has left the euro zone racked by uncertainty. His referendum now seems unlikely to take place. Perhaps Pasok, his party, will enter a government of national unity with New Democracy, the opposition, headed by a technocrat. Perhaps there will be an election. Perhaps even these plans will fall apart, just as the last did. All the while, the clock is ticking: within a month or so, Greece must receive fresh funds from the IMF and its European rescuers-or messily default.
Mr Papandreou has created an almighty mess, but he is better cast as the messenger than the villain. He was not to blame for the summit's shortcomings. The spreads between Italian and German government debt had begun to widen well before Mr Papandreou dropped his bombshell. If the euro zone had put a credible firewall around the government bonds of Italy and other troubled euro countries, a Greek default would not now be threatening contagion. Stable sovereign borrowers would have helped to safeguard Europe's banks, and a decent plan to strengthen the weakest banks would have secured the door. But last week's summit deal-concocting ajerry-built firewall and asking the banks to boost their capital ratios by June next year-was not up to scratch. No wonder the markets took fright only days later.
At one level, Mr Papandreou does not deserve blame even for seeking a mandate on the summit's main achievement (though he must now be ruing his decision). Although the proposal to write down the face value of privately held Greek government debt by so% would be substantial and welcome, Greece's stock of debt would, even on best assumptions, still add up to 120% of G DP by 2020. All the while, the Greek people would be living with austerity.
Hence Mr Papandreou's most important message. Until now the euro crisis has chiefly been about pressure from the markets. But a country's finances are not defined by markets alone. Rather the limits of solvency are tested by people's willingness to accept tax rises and spending cuts. A government runs out of political capital long before it runs out of things to tax. In the end, won't pay matters more than can't pay. Greece is farther down this road than any other member of the euro zone-even though other countries such as Portugal and Ireland have already seen their governments toppled and Spain is about to follow suit. Beset by rebels in his own party, by a hostile media and by strikes and protests, Mr Papandreou concluded that he would find it hard to impose the austerity being asked of Greece. Every quarter the EU, the IMF and the European Central Bank (ECB) scrutinise Greece before releasing the next chunk of money. With nowhere to hide, he decided to appeal over the heads of his opponents to the people. Greece's next government, whatever its composition, cannot escape the growing resentment of the country's political class. A growing but still small contingent of Greeks wants to defy the Eu's treaties and quit the euro altogether. Fully 60% reject the summit deal. But Greek withdrawal still looks like a terrible mistake. Depositors would rush to pull their money out of Greek banks to protect their savings from being converted into new drachma. Greek firms would be bankrupted by their euro debts. The gain in competitiveness from devaluation would be transient if, as is likely, wages inflated along with prices. Even Greece's EU membership would be in doubt.
Whattodo?
Greece's government must wisely spend what scant political capital it may have. Above all, the economy needs to grow. Despite their anger, 70% of Greeks say they want to remain in the euro, but their tolerance for austerity has limits. The government must devote less effort to growth-destroying tax rises and instead undertake growth-promoting structural reforms. It will have to begin facing down public-sector unions and enforcing barely implemented reforms. Mr Papandreou's government consistently took the easy way out. The euro zone's emphasis on austerity rather than structural reforms has aggravated Greece's political woes. Instead it should favour medium-term fiscal consolidation. The creditor nations could boost domestic demand, to provide a bigger market for debtors' exports. Most of all, they should dispel the threat of contagion by putting the ECB's balance-sheet behind the debt of solvent governments, like Italy and Spain. Throughout this crisis, creditors-particularly Germany-have worried about being too soft on the euro zone's weaklings, for fear that they would go slow on reform. Mr Papandreou has shown that they also need to worry about being too austere.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
EVEN by the euro zone's undemanding standards, a summit deal that survived less than a week is lamentable. Early on October 27th Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, hailed a "comprehensive package" to save the euro. Yet by the time The Economist went to press, their plans were in tatters. Greece's prime minister, George Papandreou, looked doomed, rejected by some of his ministers, many in his party-and, possibly, most of his country.
The shallowness of the summit's achievements has been brutally exposed. Instead of settling into a period of calm, markets were thrown into new turmoil. One way or another, the euro is destined for an unavoidable test of popular support. Unless the euro zone's leaders shape up, this is an encounter their currency may well lose.
Heed the messenger
Mr Papandreou was in part the author of his own misfortune. Seeking the backing of the Greek people in a referendum, he was immediately condemned in the capitals of Europe as a fool or a traitor. Why had he wrecked all their good worl
There is no disputing that Mr Papandreou, in spectacularly chaotic style, has left the euro zone racked by uncertainty. His referendum now seems unlikely to take place. Perhaps Pasok, his party, will enter a government of national unity with New Democracy, the opposition, headed by a technocrat. Perhaps there will be an election. Perhaps even these plans will fall apart, just as the last did. All the while, the clock is ticking: within a month or so, Greece must receive fresh funds from the IMF and its European rescuers-or messily default.
Mr Papandreou has created an almighty mess, but he is better cast as the messenger than the villain. He was not to blame for the summit's shortcomings. The spreads between Italian and German government debt had begun to widen well before Mr Papandreou dropped his bombshell. If the euro zone had put a credible firewall around the government bonds of Italy and other troubled euro countries, a Greek default would not now be threatening contagion. Stable sovereign borrowers would have helped to safeguard Europe's banks, and a decent plan to strengthen the weakest banks would have secured the door. But last week's summit deal-concocting ajerry-built firewall and asking the banks to boost their capital ratios by June next year-was not up to scratch. No wonder the markets took fright only days later.
At one level, Mr Papandreou does not deserve blame even for seeking a mandate on the summit's main achievement (though he must now be ruing his decision). Although the proposal to write down the face value of privately held Greek government debt by so% would be substantial and welcome, Greece's stock of debt would, even on best assumptions, still add up to 120% of G DP by 2020. All the while, the Greek people would be living with austerity.
Hence Mr Papandreou's most important message. Until now the euro crisis has chiefly been about pressure from the markets. But a country's finances are not defined by markets alone. Rather the limits of solvency are tested by people's willingness to accept tax rises and spending cuts. A government runs out of political capital long before it runs out of things to tax. In the end, won't pay matters more than can't pay. Greece is farther down this road than any other member of the euro zone-even though other countries such as Portugal and Ireland have already seen their governments toppled and Spain is about to follow suit. Beset by rebels in his own party, by a hostile media and by strikes and protests, Mr Papandreou concluded that he would find it hard to impose the austerity being asked of Greece. Every quarter the EU, the IMF and the European Central Bank (ECB) scrutinise Greece before releasing the next chunk of money. With nowhere to hide, he decided to appeal over the heads of his opponents to the people. Greece's next government, whatever its composition, cannot escape the growing resentment of the country's political class. A growing but still small contingent of Greeks wants to defy the Eu's treaties and quit the euro altogether. Fully 60% reject the summit deal. But Greek withdrawal still looks like a terrible mistake. Depositors would rush to pull their money out of Greek banks to protect their savings from being converted into new drachma. Greek firms would be bankrupted by their euro debts. The gain in competitiveness from devaluation would be transient if, as is likely, wages inflated along with prices. Even Greece's EU membership would be in doubt.
Whattodo?
Greece's government must wisely spend what scant political capital it may have. Above all, the economy needs to grow. Despite their anger, 70% of Greeks say they want to remain in the euro, but their tolerance for austerity has limits. The government must devote less effort to growth-destroying tax rises and instead undertake growth-promoting structural reforms. It will have to begin facing down public-sector unions and enforcing barely implemented reforms. Mr Papandreou's government consistently took the easy way out. The euro zone's emphasis on austerity rather than structural reforms has aggravated Greece's political woes. Instead it should favour medium-term fiscal consolidation. The creditor nations could boost domestic demand, to provide a bigger market for debtors' exports. Most of all, they should dispel the threat of contagion by putting the ECB's balance-sheet behind the debt of solvent governments, like Italy and Spain. Throughout this crisis, creditors-particularly Germany-have worried about being too soft on the euro zone's weaklings, for fear that they would go slow on reform. Mr Papandreou has shown that they also need to worry about being too austere.
Source of Information : The Economist Volume 401 Number 8758 Nov 05th - Nov 11th 2011
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