2014-09-24 21:15:35 | Telegraph (UK)
Germany's Eurosceptic AfD spells end to Europe's false calm, warns S&P
By Ambrose Evans-Pritchard Economics
Telegraph Blog: Last updated: September 23rd, 2014
Standard & Poor's has issued an extraordinary credit alert on the eurozone, one that deserves close attention.


It warns that the rise of Germany's AfD anti-euro party calls into question the euro bail-out machinery and queries the pitch for any form of QE, stimulus that has already been pocketed and spent in advance by the markets.


It will force Angela Merkel to take a tougher line on Europe, and further complicates the management of the (already dysfunctional) currency bloc.


The rating agency said it will henceforth monitor any sign that Germany is digging in its heels on EMU matters as it seeks to head off this rising political threat. The report is written by Moritz Kraemer, head of sovereign ratings in Europe. He is German. This is not an Anglo-Saxon analysis.

レポートをまとめたのは、ヨーロッパのソブリン債格付け親分、Moritz Kraemer氏。

Alternative für Deutschland is blowing across Germany like a tornado. The party won 12.6pc in Brandenburg and 10.6pc in Thuringia a week ago, following its success in Saxony. It has now broken into three regional parliaments. The free market FDP is being systematically destroyed. Now AfD is ripping into the Left-wing base of Die Linke as well.


They have seven seats in the European Parliament. We saw potent effects of that yesterday as party leader Bernd Lucke personally grilled the ECB's Mario Draghi at a session of the economic and monetary affairs committee.


He specifically attacked ECB plans for asset purchases, insisting that there is already more than enough liquidity in the financial system to head off deflation. QE-lite is merely a way to shift credit risk from the high-debt states to the creditor core (a quasi fiscal policy that circumvents the sovereign prerogatives of the Bundestag), he said, and it will not work anyway. "You are saddling up the wrong horse because you don't have another one in the stable," he said.


Mr Lucke is a professor of economics at Hamburg University, a specialist on the real business cycle model. His right-hand man is Hans-Olaf Henkel, former head of the Federation of German Industry and a financial columnist for Handelsblatt. These are serious men. Attempts to dismiss them as fringe romantics, and lately far-Right rabble-rousers, are unlikely to work. AfD has for the first time given disaffected Germans a way to protest without stigma.


Here are a few extracts from the S&P report:

As the largest euro area government and the benchmark safe-haven issuer, Germany's role in the joint crisis management has been critical. The relatively strong domestic political position of the German federal government facilitated the necessary compromises.


Until recently, no openly Eurosceptic party in Germany has been able to galvanise the opponents of European "bail-outs", and of German taxpayers assuming contingent financial risks. But this comfortable position now appears to have come to an end.


AfD has presented a party program, appears to enjoy a disciplined leadership, and is a well-funded party appealing to conservatives more broadly, beyond its europhobe core and roots. Most political analysts agree that the ascent of AfD is unlikely to be a short-term phenomenon. It could also have repercussions beyond German politics.


This shift in the partisan landscape could have implications for euro area policies by diminishing the German government's room for manoeuvre. Chancellor Angela Merkel and her conservative CDU have long benefited from the absence of a viable opposition to its right. This has allowed it to move deeply into the centre of the political spectrum.


Should AfD's popularity persist in the polls, we would expect the CDU to attempt to reoccupy the political space it had previously abandoned. Accordingly, we would envisage a rising probability of the CDU's (and hence Germany's) policy stance hardening toward euro area compromises. This could include less flexibility in easing the pace of fiscal adjustment of other European sovereigns, or resistance toward a coordinated pan-European investment plan that some European governments are aiming for. It could also lead to more openly critical rhetoric against the ECB's policies, which would further complicate unconventional monetary policy.


None of this would matter much, if we were to assess that the euro crisis is safely behind us. However, this is unlikely to be the case. Eurozone output is still below 2007 levels and in 2014 the weak recovery has come to a near halt in much of the euro area. Unemployment remains precariously high and disinflationary pressures have been mounting. Public debt burdens continue to rise in all large euro area countries bar Germany.


We will monitor any signs of Germany hardening its stance. Such a shift could diminish the confidence of financial investors in the robustness of multilateral support upon which any eurozone sovereign could draw, should it be required. Such a change in sentiment could contribute toward less benign sovereign funding conditions for lower-rated euro area sovereigns compared to the historically low interest rates on sovereign bonds that we observe today.

S&P also warned that a forthcoming judgment by the European Court on the ECB's backstop plan for Italy and Spain (OMT) might queer the pitch yet further.


The German Verfassungsgericht has already ruled that the OMT "manifestly violates" the EU Treaties and is probably "Ultra Vires", meaning that the Bundesbank may not legally take part. The European Court can hardly ignore this if it values its own survival. (Just to clarify, the German court does not defer to the ECJ as a superior court. It reserves the sovereign right to strike down anything the EU institutions do, pointedly reminding overzealous officials that the member countries are the "Masters of the Treaties", and not the other way round)


David Marsh from the monetary forum OMFIF – and author of books on both the Bundesbank and the euro – says there cannot be any serious QE in these circumstances. "QE is just not on the table. It is a red herring," he said.


I agree entirely with S&P's analysis, and I also note a stark divergence in market perceptions between German experts (or those who read German and follow Germany closely) and the Anglo-Saxon/global fraternity. Americans in particular seem to view the ECB as the counterpart of the Federal Reserve, responding to normal economic signals. It is nothing of the kind. The ECB is a political animal. It cannot stray far from German political consent, or at least it cannot do so safely.


It is already clear that Germany will drag its feet on the ECB's plans for private bond purchases (ABS, RMBS, covered bonds) for months. Berlin/Frankfurt will seek to ensure that it does not add up to much – at least until Germany itself gets into trouble.


Bundesbank chief Jens Weidmann said this week that the ECB's plan to buy securities shifts the risk to taxpayers from banks. It is "doubtful" whether there are enough high-quality assets available to make much difference in any case, he said.


Yes, Mr Weidmann was overruled on the OMT in August 2012 but that was an entirely different episode. Germany was not overruled. The German finance ministry helped create the OMT, as the lesser evil at a moment when Italy and Spain were flying out of control.


This time Berlin is closer to the Bundesbank. Finance Minister Wolfgang Schäuble has been shooting down every proposal for reflation, warning at the G20 that there are already bubbles forming in the equity and property markets.


We are back to the core problem that bedevilled the eurozone through its three near-death experiences – May 2012, November 2011, and July 2012 – which is how far the German body politic is willing to go to shore up monetary union when push comes to shove.


This issue has never been resolved. At each stage Germany has agreed to do just enough to keep EMU going, always at the twelfth hour, without ever going far enough to put the currency union on a workable footing (Very difficult in my view, though that won't stop EU leaders persisting until victims take matters into their own hands).


Whatever window of opportunity may have existed when Angela Merkel faced no coherent Eurosceptic opposition has now passed irreversibly. If and when the next shock hits, Prof Lucke's AfD will standing across her path with bayonets, not pitchforks.




2014-09-24 21:15:10 | Telegraph (UK)
Germany's Ukip threatens to paralyse eurozone rescue efforts
By Ambrose Evans-Pritchard
Telegraph: 9:50PM BST 23 Sep 2014
Alternative für Deutschland has swept through Germany like a tornado, winning 12.6pc of the vote in Brandenburg and 10.6pc in Thuringia


The stunning rise of Germany's anti-euro party threatens to paralyse efforts to hold the eurozone together and may undermine any quantitative easing by the European Central Bank, Standard & Poor's has warned.


Alternative für Deutschland (AfD) has swept through Germany like a tornado, winning 12.6pc of the vote in Brandenburg and 10.6pc in Thuringia a week ago. The party has broken into three regional assemblies, after gaining its first platform in Strasbourg with seven euro-MPs.


The rating agency said AfD's sudden surge has become a credit headache for the whole eurozone, forcing Chancellor Angela Merkel to take a tougher line in European politics and risking an entirely new phase of the crisis. "Until recently, no openly Eurosceptic party in Germany has been able to galvanise opponents of European 'bail-outs'. But this comfortable position now appears to have come to an end," it said.


The report warned that AfD has upset the chemistry of German politics, implying even greater resistance to any loosening of EMU fiscal rules. It raises the political bar yet further for serious QE, and therefore makes the tool less usable.


There has long been anger in Germany over the direction of EMU politics, with a near universal feeling that German taxpayers are being milked to prop up southern Europe, but dissidents were until now scattered. "AfD appears to enjoy a disciplined leadership, and is a well-funded party appealing to conservatives more broadly, beyond its europhobe core," it said. "This shift in the partisan landscape could have implications for euro area policies by diminishing the German government's room for manoeuvre. We will monitor any signs of Germany hardening its stance."


Mrs Merkel has a threat akin to Ukip on her right flank, and can no longer pivot in the centre ground of German politics. AfD has almost destroyed the centre-Right Free Democrats (FDP), and is also eating into the far-Left of the Linke party.


The new movement calls for an "orderly break-up" of monetary union, either by dividing the euro into smaller blocs or by returning to national currencies. "Germany doesn't need the euro, and the euro is hurting other countries. A return to the D-mark should not be a taboo," it says. Club Med states should recover viability through debt restructuring, rather than rely on taxpayer bail-outs that draw out the agony. Unlike Ukip, the movement wants Germany to stay in a "strong EU".


Party leader Bernd Lucke is a professor of economics at Hamburg University. His right-hand man is Hans-Olaf Henkel, former head of Germany's industry federation. Attempts to discredit the party as a Right-wing fringe group have failed.


Prof Lucke had a taste of his new power in the European Parliament this week, questioning the ECB's Mario Draghi directly on monetary policy. He attacked ECB asset purchases, insisting that there is already enough liquidity in the financial system to head off deflation. Such stimulus merely stokes asset bubbles and does little for the real economy, he argued, adding that the ECB is "saddling up the wrong horse" because it doesn't have another one in the stable.


S&P said the rise of AfD would not matter for EMU affairs if the eurozone crisis were safely behind us. "This is unlikely to be the case. Eurozone output is still below 2007 levels and in 2014 the weak recovery has come to a near halt in much of the euro area. Public debt burdens continue to rise in all large euro area countries bar Germany," it said.


The report warned that any sign of hardening attitudes in German politics could "diminish the confidence of financial investors in the robustness of multilateral support" for EMU crisis states, leading to a rise in bond spreads. This in turn would shift the focus back on to Club Med debt dynamics, arguably worse than ever.


S&P said a forthcoming judgment by the European Court on the ECB's backstop plan for Italy and Spain (OMT) might further constrain the EU rescue machinery. Germany's top court has already ruled that the OMT "manifestly violates" EU treaties and is probably ultra vires, meaning that Bundesbank may not legally take part.


The political climate in the eurozone's two core states is now extraordinary. A D-Mark party is running at 10pc in the latest polls in Germany, while the Front National's Marine Le Pen is in the lead in France on 26pc with calls for a return to the franc. One more shock would test EMU cohesion to its limits.




2014-09-23 11:02:35 | Telegraph (UK)
France 'not afraid' of Isil threats against its citizens
By David Chazan, Paris
Telegraph: 1:40PM BST 22 Sep 2014
French interior minister says France is ready to ward off attacks against its citizens by Isil terrorists


France responded to a threat by Isil on Monday to kill "spiteful and filthy French" in retaliation for air strikes by saying it was "not afraid" and would protect its citizens.


In a brief televised address hours after the terrorist group posted the threat online, the interior minister, Bernard Cazeneuve, said everything possible was being done to protect French citizens from terrorist attacks.


France became the first US ally to join air strikes against Isil last week.


"France is not afraid because it is prepared to respond to their threats," Mr Cazeneuve declared, adding that the French security services had been fully mobilised to prevent attacks by groups active in Syria and Iraq for several months.


The authorities, he said, were "taking 100 per cent precautions" and were "ready to stop actions even if there is no such thing as zero risk."


"We must eliminate the risk posed by Isil to our security ... The barbarity of these terrorists justifies that we combat them without respite," he said.


He spoke after an audio statement by an Isil spokesman, Abu Mohammed al-Adnani, appeared online in Arabic, with brief translations in English, French and Hebrew.


"If you can kill a disbelieving American or European – especially the spiteful and filthy French – or an Australian, or a Canadian or any other disbeliever ... including the citizens of the countries that entered into a coalition against the Islamic State, then rely upon Allah, and kill him," it said.


Isil has released a number of French hostages; the French government has strenuously denied paying ransoms. French ex-hostages who were held with others who were beheaded said American and British captives had been singled out for harsh treatment.


France, which opposed the US-led invasion of Iraq a decade ago, has joined the US in launching air strikes partly because of fears that hundreds of French jihadists in Syria and Iraq may return to Europe to launch attacks.


Mehdi Nemmouche, a French national who went to Syria and was one of the captors of foreign hostages, now faces trial for murdering four people in an attack on the Jewish Museum in Brussels in May after his return.

シリアに行き外国人を捕虜にした犯人の一人だったフランス国籍のMehdi Nemmouche容疑者は、帰国した後、5月にブリュッセルのユダヤ博物館を攻撃して4名の死者を出した容疑で裁判にかけられています。

Mr Nemmouche was arrested in Marseille during a routine check after police found him in possession of weapons and a video in which he admitted carrying out the Brussels shootings. However, Mr Cazeneuve said his arrest indicated that the authorities were vigilant.


Mohammed Merah, another Frenchman who killed seven people in a series of attacks in France in 2012, had made several trips to the Middle East and Afghanistan.

また、2012年にフランスで数々の攻撃を行った7名を殺害したMohammed Merahは、中東とアフガニスタンを数回訪れていました。

Mr Cazeneuve said the French authorities had made more than 110 terrorism-related arrests this year.


After the first air strikes, Mr Cazeneuve placed the security services on heightened alert last week. He ordered special measures to protect public buildings, places of worship, embassies, concert halls, theatres and sports stadiums.




2014-09-23 09:35:40 | Telegraph (UK)

China exporting tools of torture to developing world
By Malcolm Moore, Beijing
Telegraph: 12:01AM BST 23 Sep 2014
China has become a leading manufacturer of riot control and torture equipment and is exporting it to other authoritarian regimes, according to Amnesty International


China is exporting its expertise in riot control and torture to other authoritarian regimes, selling everything from electric shock batons and leg shackles to armoured cars, according to a report.


The market for equipment to control crowds and interrogate detainees has boomed in the wake of revolutions across Europe and the Arab Spring, and Chinese companies have been quick to respond to demand.


The number of Chinese companies manufacturing "policing and security equipment" has quadrupled in the past decade to 134, with 48 offering products for export, according to Amnesty International and the Omega Research Foundation, which tracks the global market.


"This is a multi-billion dollar business," said Patrick Wilcken, who helped to author the report, which took four years to research.


Jiangsu Wuwei Police Equipment Manufacturing CorpがHPに掲載中のスパイク付警棒

"China has led in the nastier end of the trade," he added. "Chinese companies are taking a leading role in restraint chairs, spiked batons, weighted leg manacles, the sort of equipment which is a bit clandestine."


China's domestic market is also booming, with an ever-expanding government budget for "maintaining stability".


"There is a lot of demand from Chinese police for shackles and chairs and that has created an internal market which is now becoming more international," said Mr Wilcken.


Police torture remains commonplace; on Monday a court in northern China heard how police officers had killed a suspect during interrogation after stuffing a towel in his mouth and beating him in the face with a shoe.


Another suspect being interrogated in the same case had mustard oil poured into his nose before being tied to a metal stool and having electric wires attached to his toes.



Amnesty tracked several Chinese products to global trade fairs in France, the Middle East and South Africa and added that illegal equipment is regularly promoted at arms fairs in the UK.


"The UK has never prosecuted any company for illegally peddling torture equipment at UK arms fairs, despite repeat offences for over a decade," said Oliver Sprague, Amnesty's arms programme director.


Contacted by the Telegraph, several companies offered to export equipment banned by Europe and the United States. "We have spiked batons and can air freight them," said the Jiangsu Wuwei Police Equipment Manufacturing Corporation.

Jiangsu Wuwei Police Equipment Manufacturing Corporationは次のように答えました。

"We export around ten per cent of our goods and we have partners with certificates for military equipment export. We sell to the United States, Cyprus and some other countries." The East Qiangsheng Technology company in Beijing said it could offer steel spiked batons weighing 1.5kg for £6 each, with a discount for bulk orders.

北京にあるThe East Qiangsheng Technology社は、重さ1.5㎏のスチール製スパイク付警棒は1本6ポンドで、大口発注なら値引き出来ると言いました。

"We do not export them," a salesman said. "Most of the time, they are used by security guards transporting money because they look intimidating," he added.


Anhua Police Equipment Manufacturing社のHPで販売されている「尋問椅子」

The Anhua Police Equipment Manufacturing company offered a rang of handcuffs and restraint chairs. "Is it legal? Well, we can do it through special channels," a salesman said.

Anhua Police Equipment Manufacturing社は、様々な手錠や拘束椅子を作っています。

Amnesty said it had photographic evidence of Chinese equipment being used in Egypt, Ghana, and Senegal.


In Libya, a 2008 shipment of Chinese small arms, ammunition, tear gas sprayers, handcuffs and shock batons was delivered from Bometec, the Bureau of Military Equipment & Technology Cooperation.


In Uganda, a large consignment of anti riot gear arrived ahead of the February 2011 elections from Poly Technologies, a firm spun out of the People's Liberation Army, reportedly including armoured vehicles with water cannons and tear gas launchers.

ウガンダでは2011年2月の総選挙に先駆けて、人民解放軍のスピンオフ企業であるPoly Technologiesから、高水ホースや催涙弾ランチャーを備えた装甲車を含む、大量の暴動鎮圧用装備が届きました。

Dr Kizza Besigye, a former presidential candidate, was subsequently forced out of his car after being sprayed with pepper spray and tear gas through the window. Chinese armoured cars were used in an operation which killed nine, injured 100 and detained 600.

元大統領候補のKizza Besigye博士は窓から唐辛子スプレーと催涙ガスをかけられた後、自分の車から力尽くで引きずり出されました。

Amnesty added that Chinese armoured cars were also used in the Democratic Republic of Congo in November 2011 elections and that China had exported rubber projectiles and tear gas to Madagascar in 2009.


Additional reporting by Adam Wu



2014-09-22 22:38:46 | Telegraph (UK)
Europe will never be the same after Scot vote, nor will British euroscepticism
By Ambrose Evans-Pritchard
Telegraph: 5:35PM BST 20 Sep 2014
Scottish nationalism has lit the blue touch paper beneath Europe's separtist fault lines


Each of Europe's aggrieved clans sent witnesses to Scotland for the vote. Some were nationalities seeking statehood, some more explosively seeking Anschluss with a mother country broken by victors' cartography after the First World War.


The flaming red and yellow Senyera of the Catalans flew over Edinburgh. The German-speakers of the Sud-Tirol sent a delegation, careful not to violate Italian law by speaking too loudly of reunion with Austria. The Corsicans turned up. Flemings who could not make it lit candles on the Scottish Saltire in Brussels.


The Bosnian Serbs invoked the precedent, and so did Okinawan separatists in Japan as the chain reaction reached Asia. If the Okinawans get anywhere, their island will become a strategic hot potato, pitting China and Japan against each other on the world's most dangerous fault line. Chinese nationalists are already combing through archives to bolster claims to the land dating back to the early Ming Dynasty in the 14th century.


Those descending on Scotland were not so much aiming to celebrate a Yes – though all wanted a Salmond triumph to make their point crushingly emphatic – but rather hoping to bottle the intoxicating air of democratic secession and take it home to countries were no such vote is allowed.


What matters to them is the precedent set by this extraordinary episode. Scotland's right to self-determination was recognised. The British state allowed events to run their course, vowing to accept the outcome. "It is a great lesson for democracy for the whole world. What we have seen in Scotland is the only way to settle conflicts," said Artur Mas, the Catalan leader.


"We could have blocked it, said David Cameron, "but I am a democrat. It was right that we respected the SNP's majority in Holyrood and gave the Scottish people their say." These words are gold for elected separatists everywhere. Yet you can hear teeth clenching in the chancelleries of Europe. Pandora's Jar is open, for good and ill.


"The Catalans see this as a victory regardless of the result, and I think we are heading for a very nasty crisis," said Charles Grant, head of the Centre for European Reform. "Madrid is going to block their vote and it may lead to Ghandi-style civic resistance that could bring Catalan cities to a standstill."


The Catalan drive for independence has its own deep roots, harking back to statehood before the Bourbon conquest in 1714. It turned radical four years ago when the ruling Partido Popular – a party with roots in the Franco regime – exploited economic crisis to settle an old score and roll back Catalonia's autonomy.


Madrid has banned Catalonia's pre-secession vote in November, or the "Consulta" as it is known, threatening "all available means" to stop it. The government has the constitution on its side, but critics say that is to hide behind the law in a political dispute that has already gone too far. At least a million Catalans came onto the streets last week for their "Diada" festival in what sounded like a collective roar of protest. Premier Artur Mas aims to press ahead with the vote regardless, invoking the Scottish precedent. "If it had been a Yes in Scotland, the road ahead would have been clearer, but what matters is not the way they voted, but the fact that they did vote. And we are in a stronger position because we have more social support."


This conflict could perhaps be settled by giving Catalonia the federal status of the Basques, with full powers over income tax and debt issuance. Madrid is instead threatening to suspend Catalan self-government altogether. "I see no way out. Nothing is going to stop the Catalan movement. We're heading for a train wreck," said Quim Aranda from the Catalan daily Punt Avui.

「出口は見えない。カタルーニャの動きを止めるものは何もない。前面衝突に向けて突き進んでいる」とカタルーニャの日刊紙、Punt Avui紙のQuim Aranda記者は言います。

Eve Hepburn, an expert on secessionist movements at Edinburgh University, said the chain reaction is sweeping through Italy, already under volcanic stress. "Something peculiar is happening in Italy. A country reluctantly soldered together in the late 19th century looks like it's beginning to come apart at the seams," she said.


The rich Venetians – with their own ancient republic until Napoleon – have already had an online referendum. In June the regional council approved plans for a real vote.


The ruling Volkspartei in the Sud-Tirol just to the north threw down its own post-Scotland gauntlet on Friday, demanding fresh powers and a "real Europe of the Regions" on radically different foundations.

直ぐ北側に位置する南チロルの与党、南チロル人民党は金曜日、スコットランド独立投票後に決起すると、新たな権限と抜本的に異なる基盤における「real Europe of the Regions」を要求しました。

Further east, where borders are fragile and the carnage of the Yugoslav wars is being replicated today in Ukraine, nothing can be entirely ruled out as populist leaders test what they can get away with.


Hungary is distributing passports to ethnic Hungarians in Slovakia, Romania, and Serbia, descendants of those left stranded by the Treaty of Trianon in 1920, and doing so in a way that is not deemed friendly by neighbouring states. Ultra-Right Magyar nationalists lay claim to all 64 counties of Greater Hungary.


The European order is subtly different after the Scottish vote. The borders of Western and Central Europe have been stable since 1945 – excluding the anomaly of German reunification, and Czechoslovakia's velvet divorce ― and for almost three quarters of a century this was viewed as a precious fact that should not be disturbed lightly.


One strange twist is that Britain's flirtation with Brexit may start to fade. The creation of what amounts to an English parliament and a federal Union is a constitutional rupture of such magnitude that it will be very hard to carry out amid a parallel – and complicating – dispute over withdrawal from Europe. We will never know for sure whether English Euroscepticism played into the hands of the Scottish Yes camp, but suspicion that these are linked may cause some to reorder their priorities.


The near death of the Union has been a profound shock to many. The arguments contrived to save it dwelt on collective security and Burkean pleas to settled practice, stressing how disruptive it would be to break up a complicated marriage; a regressive step risking a decade of trouble, with capital flight, loss of markets, and a business retreat to safer political venues.


The No side deployed the very same arguments of statecraft used by pro-Europeans to warn against a break-up of the EU itself, an irony that is all too obvious.


Alex Salmond may not have won the day but he has reshuffled the European pack in ways nobody could have imagined.