Category Archives: Economics

Commentary, Economics, Politics, War

Syria 2012: Nicaragua 1979 Redux

On Friday, as thousands of civilians flood Syria’s borders with Turkey, Lebanon and Iraq, they did so because of the intensifying conflict between the regime of Bashar al-Assad and an increasingly militarized opposition is quickly rushing to all-out war. I find it somewhat reminiscent of the final days of the second week of July 1979 in Managua Nicaragua. What Bashar must now realize is that there is no turning back. He is a dead man walking.

Syrian authorities boasted of driving rebels out of a key neighborhood in the heart of Damascus as gunfire and shelling by pro-regime loyalists drove thousands from the capital towards the borders on the eve of the Islamic holy month of Ramadan. This should hardly be treated as a great victory. Even more disconcerting is the claim by US officials that Syria started moving chemical weapons out of storage on July 13th coupled with the statement on July 17th by the Israeli army intelligence chief that Syrian army forces has moved from the Golan Heights area next to Israel toward Damascus and other internal conflict zones.

Last week two journalists were murdered in Damascus which only served to remind me of June 1979 savage murder of ABC news reporter Bill Stewart by a National Guardsman who shot him while he was lying face down on the ground, kicked him, and shot him again. Another journalist captured the killing on film.

For Somoza, this marked a true turning point and the death rattle for his regime.

The mosques are now calling for “Ramadan for Victory in Damascus” in their Friday call to prayer. This led to “Massive” demonstrations against the Syrian government after Friday prayers, most notably in the center districts of Aleppo and Damascus cities, their suburbs, and the Idlib, Hama, Daara and Homs provinces.

The result? 215 civilians were killed by the Syrian army’s artillery shelling by the end of the day. 55 were killed in the Damascus suburbs, and 26 in Damascus city itself, including at least 10 protesters when security forces fired on a large crowd in the Baramkeh district of central damascus.

I think what the world now can look forward to is the death of another tyrant.

By July 5, 1979 the Sandinistas controlled eighty percent of Nicaragua. Eight days later they were in control of the major roads into Managua, cutting the National Guard’s land communications with the outside world. Surely with the Syrian Army abandoning their positions in the Golan Heights to circle the wagons in Damascus, the end must be near. The overwhelming power of the people in their desire for political and economic freedom will win the day in the end.

Looking back to Managua, by the second week of July 1979, president Somoza had agreed to resign and hand power to vice-president Francisco Urcuyo Maliaños, who was then supposed to transfer the government to the revolutionary junta. Somoza fled to Miami in a converted Curtiss C-46. In Miami he was denied entry to the U.S. by President Carter. He later took refuge in Paraguay, then under the dictatorship of Alfredo Stroessner. He bought a ranch and a gated house at Avenida de España no. 433 in Asunción.

Somoza’s regime only survived him by a day, when the Sandinistas captured Managua.

The pressure is on with British Prime Minister David Cameron calling on Bashar al-Assad to fall on his sword and increased pressure on Russian leader Vladimir Putin to back UN sanctions against Syria.

Speaking during a visit to the Afghan capital Kabul, Mr Cameron said: ‘I have a very clear message for President Assad. It is time for him to go. ’It is time for transition in the regime. If there isn’t transition it’s quite clear there’s going to be civil war.’

Bashar al-Assad is only three years older than me, and I can’t imagine he hasn’t studied the Nicaraguan revolution. So, as he prepares to flee the country, somewhere in the back of his head there must be second or third thoughts about where to wind up. These probably are very worrying thoughts.

Bashar might recall that Somoza was assassinated near his exile home a little more that a year after his resignation. Somoza was ambushed by a seven-person Sandinista commando team (four men and three women) on September 17, 1980.

For over six months the Sandinista assassins researched and planned their assault. The team meticulously studied Somoza’s movements with a team member who was staked out at a newspaper kiosk near the estate. They waited in ambush for Somoza in Avenida España. Somoza was often driven about the city in a Mercedes-Benz S-Class sedan. On that morning, they watched Somoza exit the estate at 10:10 A.M.

Already in position, the team tried to fire an anti-tank rocket at the car, but the RPG-7 misfired. The team then gunned down the chauffeur while another RPG was readied. The second rocket made a direct hit on the sedan. Accounts mentioned that the Mercedes’ engine kept on running even after the rocket explosion. Those Mercedes engineers sure can build an engine.

Somoza was killed instantly and charred with the other two passengers in the car, his financial advisor Jou Baittiner and his new driver César Gallardo. Later media reports in Paraguay stated that Somoza’s body was so unrecognizable that forensics had to identify him through his feet. Bashar al-Assad must be hoping to avoid this fate. I’m not sure he can.

Damned like Quadafi if he stays, damned like Somoza if he leaves. I’m pretty sure he’s rethinking his approach to the Damascus Spring. He probably wishes he’d been a little more open to letting political and economic freedom play out. He might even be wondering if he’d still be an eye doctor somewhere if his idiot brother Bassel hadn’t managed to get himself killed driving recklessly through the Damascus airport in the fog back in 1994. Aside on the death of Bassel: it turns our that as good as Mercedes Benz engineers are, at high enough speeds you still need to wear a seatbelt.

As they say: “oh well”

Bottom Up, Economics, Politics, Top Down

Uh oh. Rethinking the Eurozone

So the Europeans seem to think things under control again. “I can say the medicine is beginning to work,” said José Manuel Barroso, president of The European Commission. I guess the reduction in budget deficits and other fiscal imbalances has cause some level of amnesia with respect to the fact that Greece will soon be leaving and the Spanish can’t seem to decide the appropriate spread on their bonds. What is this powerful medicine? Well, for now it appears to be austerity, reduction of tax evasion, and other structural reforms to the EU.

Germany ( the über-fit ) made adjustments earlier than planned earning release from the “excessive deficit procedure”. Likewise, Bulgaria has achieved the same in an attempt to prove that fiscal discipline is not just for the economically mighty. Estonia, Finland, Luxembourg and Sweden all seemed to have managed to gain access to the club of European nations complying with deficit targets. Even renegade Hungry has the commission now recommending lifting their previous threat to withhold chunks of aid.

Celebration abounds in Brussels as the Eurocrats cheer on their early success in what may well still be a pyrrhic victory .

Will, or should, big countries like France take orders from Brussels? Word on the street is that France will miss its target of cutting the deficit below 3% of GDP next year. Brussels wants it to accelerate it’s deficit-reduction measures. This is likely to cause some problems for François Hollande, who was elected on a pledge to turn Europe away from austerity. What will he do now that he is being told by Europe that not only does he need more austerity he needs it quickly.

France was one of the 12 countries subjected to in-depth studies this year. The findings: France faces serious imbalances, a worrying decline in competitiveness as well as a falling share of exports. Failure to redress excessive imbalances is subject to punishment, just like failure to address deficits. Can sanctions be far off?

It is quite clear that much of the European economic model is in serious trouble. That said, when you are close to heart failure, worrying about your chemo-therapy dosages for a small tumor seems unwise. The Greeks are in a depression and their election next month may push them out of the euro zone, with wildly unpredictable consequences. Bad loans by Spain’s banking system are close to crushing the (formerly?) fourth-largest economy in the euro zone. Short-term measures to boost investment are likely to be approved at a EC summit next month. Surely something else can ( must? ) be done…

While deficit reduction is the hallmark of the EC curative potion, and it is likely a wise thing for a country to engage in over the long run, what impact is it having today? Most EC adjustments seem to fall on deficit countries, and surplus countries can contribute. I wonder why the EC doesn’t urge the Germans to stimulate their economy and let inflation go on the one hand, but they hint that the Germans could remove “unnecessary regulatory and other constraints on domestic demand”.

Can the patient survive long enough for a real cure?
Real growth in Europe will only come when there is no more doubt about the euro’s survival AND when countries move away from the popular but unsustainable social programs that drive so much of the debt.

The political reality is that Europe’s trend toward greater and greater Socialism does seem irreversible. But even if it were, two big problems lie ahead of reversing the trend. From where I sit, there is the distinct possibility that Greece (or Spain) could blow up in the immediate future. Spain is looking more and more like it will need European cash for its banks to avoid massive increases in it’s own public debt. The other big risk is that “more Europe” runs into severe political problems. Owing largely to their own upcoming Federal elections, Germans are already reluctant to stake more money to help weaker members of the euro. Add to that, the fact that citizens across the EU are increasingly disenchanted with the whole European experiment.

Really, with massive debt, declining standards of living, and a host of other difficulties, who could blame them?