Obama To Samaras: Greece Needs To Focus On Growth & Development

US President Barack Obama told Greek Prime Minister Antonis  Samaras on Thursday that Greece's efforts to exit the crisis  cannot be focused soley on austerity but also need growth and  the creation of new jobs, of course he did not tell us how to do  this. After an hour long meeting at the White House, Obama  spoke of the deep friendship existing between the two countries,  making special reference to the Greek-American community.

     "We are all watching the challenge facing Greece in  proceeding with structural reforms to reduce its debt. The Prime  Minister told me that he is committed to go ahead, but this  cannot be done solely through austerity measures. Apart from  budget consolidation, there has to be growth and job creation,"  Obama stressed.

He also noted that the US will stand by Greece by providing  assistance, saying that there is a strong relationship between  the two countries, as Greece is a partner of the US in NATO  and cooperate in the military sector and security issues.

According to the state news agency the US President added  that Greece is located an area facing challenges and difficulties  and can play an important stabilising role and provide solutions  to problems including that of Cyprus.

On his part, Samaras said that Greece and the US are not only  allies but also share the same values. "The enormous sacrifices  by the Greek people should not be in vain," he said, further  referring to the problem of unemployment in Greece and  particularly youth unemployment.

The Greek premier added "the Greek success story will also be  a European success story? and that Greece is trying to achieve  stability in a very destabilised environment.

Turning to the issue of Cyprus, Samaras said there was a  window of opportunity and that Greece is going to work on it.

Samaras also made note of Greece's massive energy reserves,  in the Greece-Cyprus-Israel triangle.

     "We are trying to align synergies by contributing to Europe's  energy security," he said.

Ahead of his meeting with Obama, Samaras also met and held  talks with US Secretary of State John Kerry, who on his part  apparently expressed solidarity with the efforts made by the  Greek people. Reports in the Greek press claim that the  hour-long discussion focused mainly on issues of mutual  interest, and notably on developments in the wider region  (meaning the Balkans, the Middle East and especially the  Eastern Mediterranean).

It is also suspected that the US official also spoke about ways  to promote defense cooperation with Greece, recognising the  importance (for the US) of having a strong NATO ally in the  region.

A day earlier and while in the US, Samaras also met with twenty  high-level officials from the largest global investment funds, in  New York City. The companies represented manage investment  portfolios totalling among them 850 billion Euros, and from what  was reported discussion focused on new investment  opportunities in basic economy sectors and on the economic  prospects of Greece.

Interestingly, a few days before Samaras' trip to the US and in  an all out interview to the Kathimerini newspaper and more  specifically to reporter Alexis Papachelas, US Vice-President  Joe Biden said that the United States wants Greece to remain a  strong and vital part of the Eurozone.

     "The administration has always taken the view that it's  overwhelmingly in our interest to have Greece remain a strong  and vital part of the eurozone as it undertakes difficult reforms  to modernize its economy. We've made that view clear to  Europe, to the world, and to Greece," he said.

Commenting on Samaras' visit to the Oval Office, Biden said  that foreign policy issues would probably figure prominently in  the agenda, including the Greek government's plans for the EU  rotating presidency that it takes over in January, while he  underlined that the US-Greece relationship "matters a great  deal to both of our countries," highlighting Greece's help and  support in addressing "global security challenges", such as  operations in Libya or stabilising efforts in Kosovo, and the  country's role as an "essential voice" in the Eastern  Mediterranean.

(Combined Reports)

OPINION - Winners and losers in Snowden fiasco

Everyone knows the competition between China and the US is  key to 21st century international relations. But China’s strength  still lags far behind that of the US. As China’s comprehensive  strategic partner, Russia took the initiative in the Snowden case  and came to the forefront of the rivalry with the US, which  shows multipolar flexibility in global geopolitics. Russia’s action  deserves respect from China.

US President Barack Obama has announced he will attend the  G20 summit in St. Petersburg this September. A meeting  between Russian and US defense and foreign ministers will  also be scheduled for later this week in Washington. Although  Obama canceled his Moscow summit last week with Russian  President Vladimir Putin ahead of the G20 summit, it is a  relatively insignificant change. The US has apparently accepted  the fact that Russia granted one-year asylum to National  Security Agency leaker Edward Snowden. Russia has  impressed the world, which views the Kremlin as the “winner”  and the White House as the “loser.”

This judgment is correct. In the Snowden case, all the other  countries involved have become winners while the US is the  sole loser. Washington put on a show of bravado, but failed to  extradite Snowden in the end. By contrast, Moscow displayed  its national characteristics of decisiveness and boldness and  kept Washington at bay.

Many Chinese netizens believe China should have done so, but  China only showed hesitation and weakness.

If China had Snowden in its care, a big change in its attitude  toward Sino-US relations would have been brought and China  would have had to undertake risks associated with such a  change.

Yet China ostensibly chose to not interfere. Now, the decision  seems to have generated better results. Some of the US’  hypocritical national policies were exposed, and Snowden was  not extradited to the US. International opinion is scathing of the  US in information security issues. At the same time, Sino-US  relations have not been greatly affected.

Moscow has consolidated its tough diplomatic attitude toward  Washington and drawn closer in diplomatic status when a gap  still exists in terms of the actual strength of the two. Moscow is  willing to take the lead in the Snowden case and has experience  in doing so. This perfectly fits Beijing’s interests.

Everyone knows the competition between China and the US is  key to 21st century international relations. But China’s strength  still lags far behind that of the US. As China’s comprehensive  strategic partner, Russia took the initiative in the Snowden case  and came to the forefront of the rivalry with the US, which  shows multipolar flexibility in global geopolitics. Russia’s action  deserves respect from China.

China is not willing to engage in a head-on confrontation with  the US, but it has already had the ability to unite with those who  can restrict the US’ abuses of power. We did not confront the  US directly, and this serves the long-term interests of China’s  diplomacy.

Washington ate the dirt this time, but it does not necessarily  mean it is really awed by Moscow. In the same manner,  Washington is unlikely to fear Beijing, and Beijing needn’t fear  Washington. What Beijing should care about most is how to  maximize its interests in its relations with Washington.

Snowden can do more in a country like Russia. The  performance that has disgraced the US is far from over.

rickrozoff

OPINION - The global economy is now distinctly Victorian

The Old Normal is looming large on our horizons, bringing with it  unfettered markets, writes Adam Posen for gonzaloraffoinfonews

The global economy is getting back to normal. That does not  mean a rapid return to full employment nor to a low-risk world  for investors. It means that the underlying realities of  globalisation are becoming clearer: ours is a multipolar world,  where the technological convergence between rich nations and  capable poor ones is rapid.

Middle classes are expanding quickly in emerging markets – a  group that politicians focus on everywhere, while ignoring  recurrent protests from others, particularly low-skilled labour.  The world has and will have high real economic volatility despite  relative price stability. This state of affairs is, in fact, a return to  the Old Normal of the late 19th century. It is a world that we can  understand, even if we do not like it.

In international politics, as has long been foretold, the  “American century” of 1945-2000 has given way to a world  where the US remains the leader but is losing dominance. So  the global system is somewhere between outright conflict and  smooth international governance. Reflecting this diffusion of  economic and military dominance, a few major currencies – not  just one – are increasingly being used for invoicing and reserve  management, and that trend will only continue.

The link between currency usage and geopolitical ties is strong,  and so the dollar will not be suddenly displaced, but regional  alternatives will continue to rise. This has a feel of the 19th  century: as Barry Eichengreen, a professor at the University of  California, Berkeley has argued, there have been long periods  of history where multiple reserve currencies coexisted, like at  the end of the 1800s, and we are now in one of those periods –  which contributes to economic volatility and uncertainty for  national economies and investors.

This multipolar world is also one where no one has sufficient  authority to fully protect global public goods, such as intellectual  property rights. A weakening of those protections will increase  the pace at which emerging markets capable of converging will  catch up with advanced economies. Some see this trend as a  result of China’s rise or digital piracy, but remember that  Germany and the US reverse engineered British innovations in  the Victorian age, and even pirated the IP of Charles Dickens  and Arthur Conan Doyle.

At the same time, a lack of IP protection reduces incentives to  invest in innovation, as Elhanan Helpman of Harvard has  demonstrated. So the technological leaders will advance more  slowly, which will also boost catch-up.

This, in turn, will erode the relative power of the US and other  advanced economies, further reducing their ability to enforce IP  rules. The whole cycle will increase competitive pressure on  incumbent multinational businesses.

Active national rivalries, multiple reserve currencies, eroding  intellectual property rights and increased corporate competition  in many industries will increase volatility of the real economy  and diminish investment. Large state-backed national  infrastructure projects, as dominated late 19th century  development, will be a growing asset class as a result. The  división between investments yielding safer low returns and  speculative higher-return assets will be quite sharp.

But as was the case from the 1840s until the first world war,  today’s convergence and competition – and the volatility that  results – can and I believe will persist for a long time without  globalisation breaking down. It held up for a long time then  because, even as there were arms races and conflicts, France  and Germany, let alone the UK and the US, had an interest in  maintaining the status quo. And, as then, today’s dominant  powers wish to maintain their legitimacy against non-state  actors, including terrorists and revolutionaries, and preserve  cross-border flows of trade and finance.

Furthermore, politicians are responsive to their own upper  middle classes, whose wellbeing depends upon maintaining  globalisation and keeping international disputes within limits.  These groups are also creditors whose desires for price  stability, combined with the pressures from currency  competition, creates strong incentives for keeping inflation low.  On average, such motivations will dominate over temptations to  inflate their problems away. So, just as most countries usually  adhered to the gold standard over a century ago, they will stick  with independence for their central banks and fiscal  consolidation now.

There was little or no response to recurring spasms of protest or  calls for radical change by low-skilled workers in the 19th  century, except when mass movements were assimilated into  mainstream political parties with support from the elites.  Something similar is at work today, with the protests of southern  Europe and the demands of the Occupy movement largely  ignored by policy makers catering to the voters of the (older)  bourgeoisie.

The Old Normal is thus a tale of the global economy returning to  unfettered markets in many ways, and – at the national level –  to more volatile economic conditions with slower average  growth as a result. This is a situation which I am predicting, not  endorsing.

While domestic politics and international relations have  changed greatly since 1914, the creation of safety nets and  welfare states (even if now curtailed), and the development of  nuclear deterrence among the major powers only strengthen the  status quo bias of the current governments.

The Old Normal is not nice, but it is likely to last.

ANALYSIS - East Mediterranean Geopolitics - Prospects of a Settlement of the Cyprus issue

(hellenicantidote) - I was reading this long piece by Panayiotis  Ifestos on recent developments in the geopolitics of the Eastern  Mediterranean, in which the professor of international relations  makes a plea for Greece to pull its finger out, reverse  Constantinos Karamanlis’ ‘Cyprus is too far away’ doctrine and  more actively engage in the region, not only for Cyprus’ sake  but for Greece’s too – the security of the two Greek states are,  of course, interdependent.

I was also reading a report from the American Enterprise  Institute – the prominent US conservative think tank, whose  associates and reflections strongly influence the Republican  Party’s foreign policy. Will the Eastern Mediterranean become  the next Persian Gulf? argues that Turkey – mainly because of  its increasing hostility to Israel – is becoming an unreliable  partner to American interests in the region, and suggests that  Cyprus and Greece could form part of a US-led ‘Eastern  Mediterranean Defense Partnership’.

The report states:

    ‘The US Department of State and Pentagon might also  negotiate a naval security site in Limassol, Cyprus. The British  maintain a Permanent Joint Headquarter in 98-square-mile  Sovereign Base Areas in Akrotiri – close to Limassol – and in  Dhekelia, which they use for electronic intelligence gathering  and communications.
    ‘Greece and Britain could join a US-led “Eastern  Mediterranean Defense Partnership” designed to ensure Israel’s  and Cyprus’ exploration rights and seaborne defense against  threats from nearby littoral states and terrorism from the Middle  East. It is essential that the US government convince Greece  and Cyprus that the United States, United Kingdom, and Israel  can guarantee their diplomatic and economic interests more  than Russia and the Arab Middle East.’

I make no assessment on whether it’s in Greece and Cyprus’  interests to become so entwined with the US, UK and Israel, just  note that incorporating Cyprus and Greece into right-wing US  strategic thinking is quite a change.

A couple more points on Ifestos’ piece:

He expresses concern that the economic crisis affecting Cyprus  will so weaken it that a new Annan plan will be imposed. This is  an exaggeration. It should be remembered that the 2004 Annan  plan only emerged because Greece and, following Athens’  recommendation, Cyprus accepted a particular procedure  involving binding UN arbitration, expecting the UN to put  forward an even-handed settlement rather than the disgraceful  concoction it came up with.

The Annan plan expressed an ethos and contained provisions  that no Cypriot government would have freely negotiated, in  which case unless Cyprus accepts a similar arbitration process  – and, given the experience of 2004, this is extremely unlikely –  then a settlement like the Annan plan cannot be imposed on  Greek Cypriots.

Similarly, the particular strategic alignment in 2004, in which the  USA, UK and Israel were content to dismantle the Republic of  Cyprus and allow Turkey to exert itself in the Eastern  Mediterranean, no longer applies, with skepticism over Turkey’s  long-term ambitions in the region prevailing.

More generally, I remain doubtful that the new round of Cyprus  talks scheduled for October will produce a settlement.

It seems to me that Turkey believes that because of the  economic crisis in Cyprus and because President Anastasiades  campaigned in favour of the Annan plan in 2004, then there  exists another opportunity to arrive at a deal, like the Annan  plan, in which all of Turkey’s strategic objectives on Cyprus are  fulfilled. However, Turkey exaggerates Cyprus’ weakness and  puts too much store in Anastasiades’ support for the Annan  plan.

Anastasiades favoured the plan not because he regarded it as  fair and just, but because he (mistakenly, as it transpired)  believed that the consequences of the Greek side rejecting it  would be international recognition of the ‘TRNC’ and the  formalisation of partition. Indeed, there currently exists no  pressing need for the Greek side to accept a settlement on  Turkey’s terms. In fact, it could be argued that Cyprus should  resist any deal for the time being, since there are signs, as  indicated by the AEI report mentioned above, that Turkey’s  strategic hand is weakening and Greece and Cyprus’ improving.

In this scenario, with its value as an energy hub and reliable ally  to US and Israeli interests upgraded, Cyprus will be in a much  better position regarding the terms of a Cyprus settlement it is  able to insist on than it is now and has been for a while.

It’s also worth reminding ourselves, as mentioned in Ifestos’  piece, of how Turkey views Cyprus.

In his tome outlining the principles of neo-Ottomanism,  Strategic Depth: the international position of Turkey, that  country’s foreign minister Ahmet Davoutoglu makes clear  neo-Ottomanism’s belief that Cyprus has to exist within Turkey’s  orbit.

    "Even if there was not one single Muslim Turk there [Cyprus],  Turkey would have to maintain a Cyprus question. No country  could be indifferent to an island like this, positioned at the heart  of its Lebensraum [living space]. The same applies to the  Dodecanese islands, where there no longer exists a significant  Turkish population, but which continue to retain their importance  for Turkey. As the USA has no population projection regarding  Cuba or the other islands in Caribbean and yet retains an  interest in the region, so Turkey is obliged from a strategic point  of view to take an interest in Cyprus, regardless of any human  factor."

Given Turkey’s unrelenting view that Cyprus belongs in its  sphere of influence, then it is hard to imagine Turkey, in the  near future, making the kind of concessions that would make a  settlement acceptable to the Greek side.