The New Global Financial Order Begins in Europe

Banksters agree to force reviews on countries financial operations if  ‘suspect flaws’ arise.

Financial Times

Order out of chaos.  The EU takes more power away from nation-states.

Order out of chaos. The EU takes more power away from nation-states.

European Union finance ministers agreed on Tuesday to new intervention powers for EU officials if member states’ economic statistics are suspected to be flawed.

The measure will allow officials from the EU’s statistical agency Eurostat and the European Commission to conduct “methodological visits”, sending in number crunchers to vet countries’ data if this is deemed necessary.

The intervention powers, however, will only come into play in strictly defined circumstances in which concerns have been flagged. Diplomats cite, for example, the situation in which a country revises its figures at short notice and without a clear explanation for this as a possible case for intervention.

Similar powers have been proposed in the past, but failed to secure the backing of EU member states. However, the data flaws that emerged during the Greek crisis and the new emphasis on tougher economic surveillance in the region, coupled with pressure from European parliamentarians, has persuaded countries to accept the potentially intrusive powers.

The new surveillance measure is one of the most concrete actions expected to come out of Tuesday’s meeting of finance ministers from the 27-country bloc in Luxembourg. They will also discuss economic governance – including a new stability programme for Cyprus and additional budgetary consolidation in Spain and Portugal – as well as proposals, driven by the European Commission, to strengthen financial regulation.

Some of these discussions will pave the way for further debate at the EU leaders’ summit in Brussels next week.

“There’s lots of policy debate ahead of the council meeting and those debates are pretty significant, but no meaty items,” said one diplomat.

On Monday night, Herman Van Rompuy, the EU president, who is heading a special “task force” charged with improving economic governance in the bloc, said he believed “rapid progress” could be made on budgetary and macroeconomic surveillance. Proposals in this area would now be the focus of his interim report to EU leaders next week, he said.

Mr Van Rompuy is also thought to be leaning towards the French idea of some form of “economic government” for the eurozone. French president Nicolas Sarkozy has been pushing this idea, which would involve regular summits of eurozone leaders and give the bloc its own secretariat.

On Monday, finance ministers from the 16 eurozone countries also approved details of the “special purpose vehicle” facility, which could raise up to €440bn and make up the key part of their landmark €750bn stabilisation fund for the eurozone’s most vulnerable members.

The facility, based around a “special purpose vehicle”, which will raise money to be lent to countries in financial distress, will be called the European Financial Stability Facility and is expected to become active this month.

It will be backed by pro rata guarantees from individual member states. These will be for 120 per cent of each bond issue, providing a “cushion” should any individual contributor struggle to meet its share.

Countries will only be able to tap the fund when they have agreed programmes to overhaul their economies.

Finance ministers said they would seek “the best possible” credit rating for bonds or debt securities issued by the EFSF. “The message from finance ministers is that they will do whatever it takes to get an AAA rating on the debt issued by the SPV”, said analysts at JPMorgan on Tuesday .

● Estonia will join the euro from the beginning of 2011 after winning the backing of European finance ministers for the move.

Jean-Claude Juncker, the Luxembourg prime minister who heads the so-called Eurogroup, said that Estonia had agreed to “ensure the sustainability of convergence by implementing further structural reforms”. Estonia will be the 17th member of the eurozone.

Out of Fashion NATO continues to Expand its Wars

Russia Today

NATO’s blueprint for change mentions cooperation with Russia as a new priority, but Moscow is pushing for more than just words.

Former US Secretary of State Madeleine Albright, who leads the “wise men” responsible for drafting NATO’s New Strategic Concept, stressed that “to safeguard security at home the alliance must continue to treat collective defense as its core purpose.”

Albright, however, added the loose disclaimer that “providing for security is a more complicated proposition than in the past.” This means that NATO – like some sort of transnational corporation that must forever increase in size in order to survive – will be forced to travel further afield in the future, as the challenges continue to mount and disperse.

“NATO must be versatile and efficient enough to operate far from home,” she argued.

“Alliance leaders should learn from its experiences in Afghanistan… the need to deploy forces at a strategic distance for an extended period of time. There should be no question that NATO’s fundamental purpose is to protect the security of its members, but providing for security is a more complicated proposition than in the past.”

Albright, in an effort to assuage Russian apprehensions over the Western organization’s policy shift, reiterated for the umpteenth time that the new concept was not “a threat to Russia.”

“We do not see the gradual enlargement of NATO… as something that should be viewed as a threat to Russia,” she said, “and we all believe that and will continue to state it and the Russians in their own turn have to decide how they react.”

One between-the-lines interpretation of Albright’s comment could be that “NATO will act as it will, and Russia is free to respond however it feels necessary.” In other words: take our new global strategy or leave it; Moscow will just have to take Brussels on its word that the military bloc will never exist as a threat to Russia’s security.

In May 2009, Russia released its own updated national security strategy, which specifically mentioned NATO as one of the country’s greatest threats.

“The instability of the existing global and regional architecture, especially in the Euro-Atlantic region… is an increasing threat to the international security,” the document said.

Interestingly, especially in light of the ongoing battles being waged courtesy of US forces in oil-rich Middle East/Central Asian countries, the Russian paper mentioned “competition for resources” as a potential geopolitical flashpoint in the years to come.

“In a competition for resources, problems that involve the use of military force cannot be ruled out, which would destroy the balance of forces close to the borders of the Russian Federation and her allies,” it said.

But it is not simply a matter of NATO introducing weighty game pieces in Russia’s “near abroad” that is playing havoc with the Kremlin’s nerves; it is America’s unflinching determination to drop an antimissile system into Eastern Europe that is the primary source of US-Russian tensions today.

One man’s shield is another man’s sword

In February, Romania and Bulgaria announced they were in talks with US President Barack Obama’s administration on deploying elements of the US missile shield on their territories from 2015.

The move came after Obama shelved plans to deploy missile-defense elements in the Czech Republic and Poland due to “a reassessment of the threat from Iran.”

Russia fiercely opposed the plan – both the original one hatched by the previous Bush administration, and the latest one by Obama – calling it a direct threat to its national security.

According to the new NATO blueprint for change, Russia will figure into the new system. The question remains: How? As a mere occasional observer of the cool new technology, or a hands-on participant in the entire process? And if the latter, will they be involved from construction to activation?

“Missile defense is most effective when it is a joint enterprise and cooperation … between the alliance and its partners – especially Russia – is highly desirable,” the NATO blueprint advised.

“We are faced with a real threat and we need real protection against a real threat, and to that end we need an effective missile defence system which covers all populations in all allied nations,” Anders Fogh Rasmussen, Secretary General of North Atlantic Treaty Organization told reporters at a news conference.

Meanwhile, Russian Deputy Prime Minister Sergei Ivanov told his own news conference on Tuesday that it will be clear by the end of the year exactly to what degree Russia will cooperate with NATO in the missile defense system, while stressing that the level of cooperation includes everything from “from A to Z.”

“But cooperation needs to be from A to Z: to the end,” Ivanov said, adding, “We will assess the threats together, evaluate the risks together, and begin creating a defense system together.”

Russian President Dmitry Medvedev said in an interview with the Danish Broadcasting Corporation (DR) in April that Moscow advises that “the system of global missile defense must protect not only a definite country or a group of countries, but also function in the interests of all responsible participants of the international society.”

Medvedev said Russia is opposed to the formation of air defense systems because they eventually “damage the current balanced system between the main nuclear powers.”

“Either we are together or [Russia has] have to react somehow,” he said.

NATO foreign ministers agreed at an informal meeting in Estonia in April that it was essential to begin dialogue with Russia on cooperation in the sphere of anti-missile defense.

A new strategic concept should be drafted by the NATO Secretary General this summer on the basis of the report. The new strategic concept will then be approved by the NATO summit in Lisbon in November. On the basis of that summit we will finally have a peek at NATO’s hand. Will it be a bluff, or a sincere desire to reset relations with Moscow?

Give NATO-Russian cooperation a chance?

The document mentioned Russia’s decision to open an air corridor route over its territory to accommodate NATO military flights into Afghanistan, where 100,000 coalition troops are fighting a protracted war against Taliban forces. Incidentally, two-thirds of the soldiers fighting in Afghanistan are from the United States, and for Washington, the outcome of this war may very well spell make or break for NATO.

Already this year, 200 NATO soldiers have been killed in Afghanistan, compared with 119 in the same period last year. Europe’s patience for such bloodshed will not last forever.

In a recent article in the Financial Times, Richard Haas, the president of the Council of Foreign Relations, argued that NATO’s future role only makes sense “as an expeditionary force in an unstable world,” while predicting that the ties that bind Europe, NATO and the US together will eventually come undone.

“European political culture has evolved in ways that make it harder to field militaries willing to bear the cost in blood,” Haas writes, before quoting Robert Gates, US Secretary of Defense, who complained about “the demilitarization of Europe – where large swaths of the general public and political class are averse to military force and the risks that go with it.”

More…