Saturday, November 28, 2009

One State Solution: A pipe-dream, maybe, but not a nightmare

Originally published by Dubi Kanengisser at 'IsraLeft' - see:

Republished under Creative Commons License Non Commerical Share Alike (CC NC SA)

for further details see:

My friend Rod wrote at length against a binational solution to the Jewish-Palestinian conundrum. He does not so much oppose the idea of binationalism, but rather has serious doubts about the availability of a route to binational salvation that does not travel through some horrendous gutters. I disagree with him. A route to binationalism does exist that is more attractive than taking a detour through Apartheid and ethnic cleansing. This route, of course, is not very forthcoming, nor is it achievable through governments such as the current one – but then, neither is a viable two-state solution. The left must ask itself two questions: which is a more desirable solution, and which is a more likely solution to persuade the Israeli public to bring the left back to power to implement. Neither of these questions will be answered here. My intention here is merely to plot the road that might be taken to binationalism, under the ideal premise of a liberal-minded left-wing government.

It should be said, before I begin, that contrary to what Rod wrote, binationalism is rarely touted as the optimal solution to the problem – although I have noticed an uptick in texts carrying this message of late. The majority of mentions of binationalism use it as a threat, a whip, with which to hasten Israel’s acquiescence in a two-state solution. Binationalism is presented as the only realistic alternative to two-statism, and, building on the prevalent sentiment supporting a Jewish nation-state, the two-state solution is then made to look good in comparison. I personally deplore this line of argument. It exemplifies exactly what’s wrong with the two state solution: it is a solution built on virulent, hateful nationalism, rather than on mutual acceptance, and it ignores the fact that even after we “go our separate ways in peace”, as one popular bumper sticker once advocated, we still have one fifth of the population of Israel proper living in the “wrong” territory.
Binationalism is not merely unavoidable, but, I believe, desirable. Is it attainable?

The road to a viable binational solution must begin with a greater incorporation of the Arab citizens of Israel into the polity. The first step a prime minister with a wish to implement binationalism must do is call upon the more moderate Arab parties in the Knesset to join her government proper – not merely support it from the outside as in the second Rabin government.

The thing most lacking in current internal Jewish-Arab relations is trust. An Arab minister (from a “non-Zionist” party) would be able to begin building this trust, in both directions. Of course, having a token Arab minister would not suffice – it is merely pointing out the way for other government agencies. A higher rate of government employment of Arab-Israelis must follow. It is also assumed that an Arab minister will be able, by bringing the voice of this population directly into the cabinet meetings, to increase government investment in this population even beyond his own ministry’s jurisdiction (of course, we are assuming a government that is already more likely to do that anyway).

The Arab citizens of Israel are a bridgehead to the Palestinians in the territories. Establishing real bidirectional trust with that population will enable Israel to come into rapport with the Palestinians that was not possible so far. Throughout this process, and using it, Israel must support the democratic development of the Palestinian Authority and promote moderate deliberation within it (rather than prevent it, as in the case of the harassment of Mustafa Barghouti before the presidential elections).

If these processes are successful, and Israeli shows a continued willingness to follow this path (e.g., by reelecting the government), it seems to me that the road to a binational solution will be open. Of course, that solution must still be fashioned in a careful manner. The PhD thesis I am working on currently deals precisely with the question of the application of binational solutions, why they failed where they did and how they can succeed. I am still in early stages of this study, but my hunch so far is that the biggest mistake is to create an identity between the national interests of each group, and territorial interests of the administrative units of a federal state, e.g. the Belgian solution. A good binational state will make sure to break each national community into two (or more) territorial units. This will foster more opportunities for cross-cutting cleavages and cross-national interests. An “East” and “West Palestine” are simple enough to envision. Similarly, a “North” and “South Israel” can also be conceived. Each of the units will get equal representation in an upper-house (much like the US Senate), to create parity between the national communities regardless of demographics. (Jerusalem can be a fifth district, with no upper house representation, a-la Washington D.C., or Brussels).

In time, one could consider a “third layer” of federalism to this state (”The Abrahamic Federation”? Nah, too religious…), at the individual level – a “cultural federalism”. This layer could, for example, handle issues such as education and the arts, which will be shared across the administrative units, and also important for those of one nationality living in the units of the other (e.g., current Arab Israelis). This will also facilitate freer movement between the units.

But there is no need to go into the intricacies of the particular model of binationalism to be used. The point is that a well-meaning government can achieve this through positive means, rather than through diving into the realms of Hades to reemerge with the ghost of a binational state. The fact is, the first steps of this plan are positive even if we don’t wish to achieve a binational state, and — maybe I’m being overly optimistic here — could be potentially supported by a majority of the population in Israel even today.

The road is there. It isn’t the King’s Highway, nor a yellow-brick road. It is, if anything, a long and winding one, and an arduous one no doubt. But it is there, and I believe we should take it.

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Saturday, November 21, 2009

Of State Borders, Wars and Refugees

by Lev Lafayette  (picture above)

The fact that communities have always had policies concerning the movement of people into the lands held by that community should surprise nobody with even a modicum of understanding of anthropology and history. True, there are some rugged individuals who dream of a past or of a future, where one can simply wander with absolute freedom wherever they should like and perhaps many of these are well intention with a desire to interact with nature in solitude. But terra nullius was, and is, a fiction; the principle of freedom of movement is one that must be negotiated and balanced with present occupiers and their claims of jurisdiction. It must be acknowledged that capital will always be more likely to have greater freedom of movement than labour, for capital itself is not a moral actor. With technological and systematic development, such borders have developed from vague marchlands often defined by natural boundaries (forest, river, mountains) to very specific and precise designations, controlling both the movement of people and also the movement of animals, plants, and goods, not to mention the opportunity for rulers to acquire lucre through visa charges, excises and duties.

With the institution of landed property the negotiations between immigrant and established community ceased to be a negotiation between equals with the balanced tipped firmly in favour in the owners of estate. The opportunity now existed for one person or class of persons to acquire the best land to exclusion of the others. If the calculated risk was considered worthwhile, this acquisition was made force of arms in the pursuit of monopoly profit. Wars, both across state borders and within them, have challenged the effectiveness of administrative systems to smoothly operate in some cases, and in others the local jurisdictions have simply had to acknowledge the chaos as a quirky result; a most famous case being Baarle-Hertog (the Belgium exclaves in the Netherlands) and Baarle-Nassau (the Netherland's exclaves in Belgium), where the complexity arises from a number of medieval treaties, land-swaps and sales between the Lords of Breda and the Dukes of Brabant and ratified by the Treaty of Maastricht in 1843.

Whilst such borders seem amusingly anachronistic in a civilised and modern Europe, they underlie a much more serious concern; that fluctuating borders, between and within states, are often the result of violent conflicts which displace huge sections of the affected population, before, during and after the actual conflict leading to the presence of refugees seeking sanctuary. The contemporary definition of a refugee is derived from the 1951 Convention Relating to the Status of Refugees which defined a person who, owing to a well-founded fear of being persecuted on account of race, religion, nationality, membership of a particular social group, or political opinion, is outside the country of their nationality, and is unable to or, owing to such fear, is unwilling to avail him/herself of the protection of that country. The 1967 Protocol expanded the original definition which was specific to "events occurring before 1 January 1951... in Europe". The Convention and Protocol combined do not have such geographical or temporal limits. Until a person is legally recognised as a refugee in a country where they seek sanctuary they are designated as asylum seekers.

Behind these legal definitions is the very real people themselves. At the beginning of 2006, the United Nations High Commissioner for Refugees estimated the total number worldwide of such people at almost 8.5 million at the beginning of 2006. This figure excludes some 4.6 million Palestinian refugees classified under the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), who are the only group to be granted refugee status to the descendants of refugees. Nor do these figures include Internally-Displaced People, those who have been forced to flee their homes for the same reasons as refugees (usually civil war) but remain within their country's borders. At the end of 2006 the number of these persons was estimated at 24.5 million, with some 40% of these being in Africa. Conditions in refugee and IDP camps is typically very poor and are rife with abuse and violence. For the large number of children in such places there is little opportunity for formal schooling. Asylum seekers, apart from often suffering physical wounds, often develop post-traumatic stress disorder (approximately 9% across several studies) and major depression (5%).

A common characteristic of both refugees and internally displaced persons is that the people involved are seeking sanctuary. An ancient times among both the Greeks and Egyptians it was held that a person who fled to a temple could not be harmed without inviting divine intervention. This religious right to asylum was included in medieval European legal codes, originally with King Ethelbert of Kent, c600AD. In modern times, significant numbers of people seeking asylum after the first world war to the establishment of the League of Nations' High Commission for Refugees in 1921, dealing with some 1.5 million people who were fleeing the Russian Revolution and the subsequent Civil War and soon after some 1 million Armenians fleeing the genocide in Turkey. International response however, was not always beneficial. The United States introduced the Emergency Quota Act (1921) and the Immigration Act (1924), aimed at reducing the migration of southern and eastern Europeans. As a result most of the European refugees - principally Jews and Slavs - fleeing Stalinism, the Nazis and World War II were barred from coming to the United States.

Often overlooked is the massive refugee crisis in the last months of WWII and immediately afterwards. During the war itself the Allied forced had created repatriation of over seven million displaced persons in Europe and China. However as Soviet forces advanced towards Germany, some five million German citizens fled northern and western Poland and Prussia. Further, Poland engaged in an ethnic expulsion program an issue further complicated as most of eastern Germany was under Polish administration. Large numbers of Germans were also expelled or left eastern Europe; an estimated twelve million in total and between five hundred thousand and a million perishing in the process.

Other refugee crisis in the second half the twentieth century and in contemporary times begins with the partition of India, leading to the largest movement of persons in history, with some eighteen million Hindus and Sikhs moving from West Pakistan to India with a smaller number of Muslims moving in the other direction. The Algerian War of Independence resulted in some two million Algerians either fleeing into the Algerian hinterland or relocating to France, Morocco or Tunisia, along with some nine hundred thousand European-descended Algerians. Decolonisation also led to approximately one million people of Portuguese descent leaving Angola and Mozambique and the Angolan Civil War caused four million IDPs and five hundred thousand refugees. During the Bangladesh War of Independence in 1971, more than ten million Bengalis fled to neighboring India. Following war and the establishment of communist governments in Vietnam, Cambodia, and Laos in 1975, about three million people became asylum seekers, resulting in the term 'boat people' entering the vernacular. The civil war in Sri Lanka, from the early 1980s onwards, generated over one hundred thousand refugees and almost three hundred thousand IDPs. In the aftermath of the 1994 Rwandan Genocide, over two million people fled into neighboring countries. A civil war in Tajikistan has led to 1.2 million refugees and displaced persons. Africa's instability is so great that countries are often simultaneously countries of origin for refugees and countries of asylum for other refugees; the Democratic Republic of the Congo is the place of origin for over four hundred thousand refugees, but it is also the place of refuge for almost two hundred thousand. In contemporary Darfur, some 2.5 million people - a third of the population - have been forced to flee the homes after attacks by government-backed paramilitaries. The current war in Iraq led to displacement of some 4.7 million persons; 2 million seeking refugee status and the others as IDPs.

The reality is that whilst there are wars, with their heavy foundation in the existence of standing armies and the prospect of monopoly control of natural resources, there will be asylum seekers. Indeed, if scientific expectations have a degree of accuracy, in all probability the twenty-first century will witness huge displacements of people as 'climate change asylum seekers'; those whose homes and livelihood become no longer viable due to rising sea levels, deforestation and desertification, extreme weather, extinctions etc. With these affects monopolistic competition for resources will become greater, leading to more wars and increased numbers of asylum seekers in coming decades. In these circumstances it is probable that there will be a rise among reactionary nationalists who will oppose such asylum seekers, who will support their expulsion and detention and generally seek to overturn the Refugee Convention.

In contrast a policy that is dedicated to maximising human freedom promotes policies that allow anyone to settle in any area subsequent to basic health and security checks, limited by the carrying capacity of the region in question. Indeed, there is a utilitarian argument that refugees should be given priority over general immigration as their needs are greater as will be the change in their circumstances. As for specific settlement locations, these should be determined by smaller jurisdictions, not larger. As the Howard administration in Australia sought to reduce the refugee intake into Australia - and engaged in a particularly racist and heartless program of incarceration, temporary protection visas and even sending naval vessels to prevent the landing of those arriving by boat - many areas of regional Australia expressed great desire for further migrant populations to settle in increasingly deserted townships.

The detention of asylum seekers is another issue that is not going to go away, and it will be increasingly a favoured tool of popularist governments who seek to incarcerate asylum seekers pending determination of their status as a refugee, especially those who arrive by boat. In Australia, such "unauthorised" arrivals have been treated with outcry by a conservative media even though in 2008 the total number people who sought asylym in such a manner was a paltry 3.4%. Australia was the only country that mandated the detention of all such arrivals, and public claims were often made that this would deter people smugglers, although it was never substantiated how punishing the victims would challenge the perpetrators. Because application for refugee status is a universal right, one that transcends local jurisdictions, and the temporal vagaries of politics, the management of such applications should be determined internationally, not by the states in question. In other words, rather than processing of refugee claims and management of detention centres being carried out by states, they should be carried out by the UNHCR.

As a further emphasis on the universal applicability of the claims, concerted international effort needs to be directed towards those countries that are not signatories to the 1967 Protocol. Specifically this refers to a swath of countries across the middle-east and southern asia, including Indonesia, Vietnam, Laos, Thailand, Burma, Bangladesh, India, Pakistan, Iraq and Saudi Arabia among others. Of course, in some of those cases people may indeed be fleeing from the governments of such countries. Nevertheless, the existence of these non-signatories causes problems for neighbouring states, as these asylum seekers are supposed to seek refuge at the first country of opportunity. With the existence of 'non-countries' in between the source and destination, the real or imagined concern of selective choice weakens claims of asylum among the existing inhabitants.

Whilst these three policies - universality of the Protocol, UNHCR processing of asylum seekers, localised settlement of refugees - will certainly serve to provide greater justice for refugee claimants and local communities, reminder is drawn to the original points of this article; that whilst there is the possibility of monopoly ownership over natural wealth, there will be the the impetus for wars both internal and external to states. Whilst this problem remains unresolved, along with the lack of responsibility of damage to the environment, a genuine tragedy of the commons, there problem of asylum seekers, refugees and internally displaced persons, shall remain.

by Lev Lafayette, founder of Labor for Refugees (Australia)

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Saturday, November 14, 2009

Privatisation debunked - by John Quiggin

above: the author, Australian economist John Quiggin

 (first published Thursday 5 November 2009 – reproduced with the permission of the author)

Bad arguments can be used to defend good ideas. But when the arguments used to defend a policy proposal are invariably spurious, it’s hard to avoid the conclusion that the policy itself cannot be defended on its merits.

The policy of privatisation, popular with governments around the world since the 1980s, is a perfect example. Time after time, governments have sold privatisation to the public as a way of freeing capital that can be invested in social infrastructure such as schools and hospitals. And time after time, economists have pointed out that such claims are fallacious.

Just this week I (like every other Queensland householder) received a taxpayer funded pamphlet advocating the sale of public assets, stating that ‘Keeping these businesses would cost the Government $12 billion over the next five years. That’s $12 billion spent on new coal trains and new wharves that can«t be spent on roads, schools or hospitals.”

The pamphlet is entitled “The Myths vs the Facts”, but appears to have its labelling wrong. There can be few myths that have been refuted more often than the idea that privatisation creates a ‘war chest’ from which new social infrastructure can be financed.

Coal industry assets generate income. Selling income generating investments and using the proceeds to fund investments that return no additional revenue leaves the government with no flow of income to service the associated debt. The necessary income must be raised by increasing taxes or cutting expenditure.

Economists have been making this point for decades. In 2002, NSW and Victorian Treasury Secretaries, John Pearce and Ian Little observed that Public-Private Partnerships ‘do not provide governments with an additional bucket of money for use on infrastructure projects‘. The validity of the point is unchanged if PPPs are replaced by asset sales.

Selling public assets will improve the net fiscal position of the public sector only if the price realised for the assets exceeds the value of the income stream that is foregone through publication. Is this the case with the Queensland asset sales. “The Myths vs the Facts” says it is, claiming that ‘The total return from all five businesses in 2008-09 was approximately $320 million … When the sale process is completed, it is anticipated the Government will save $1.8 billion every year in interest payments’.

That looks convincing, but it is an apples-and-oranges comparison that would never be allowed in a corporate prospectus. The $320 million figure appears to consist solely of dividend payouts, excluding retained earnings, tax-equivalent payments and the interest paid by the government business enterprises to service their debts.

The $1.8 billion, though unexplained, appears to represent the interest that would be saved, at a rate of about 6 per cent, if the state realised $15 billion from the asset sale and avoided $12 billion in new investment.

This calculation entirely is invalid. New investments in coal infrastructure can be justified only if the regulators are willing to approve additional revenue sufficient to cover the cost of capital. This revenue will cover the interest needed to service the additional debt, so forgoing the investment will not save the government money.

It is true that selling assets is likely to improve Queensland’s credit rating, which was reduced from AAA to AA+ earlier in the year, and thereby knock around 30 basis points of the interest rate on state debt. That will save the state about $65 million a year. It’s not a trivial sum, but it would not justify a sale except at a price high enough to compensate for foregone earnings.

AAA ratings are not necessarily indicators of good economic management. Leaving aside the failures, and anti-government biases of the ratings agencies, their job is to advise bondholders. Asset sales will always reduce debt equity ratios and reduce the risk faced by bondholders, whether or not they are economically sound.

With the spectacular failure of the efficient financial markets hypothesis over the last two years, it is no longer possible to put any faith in general claims about the superiority of the private sector. In a mixed economy, it is necessary to assess the merits of private and public ownership on a case-by-case basis.
Perhaps there are better arguments for these privatisations than those that have been presented so far. If so, the Bligh government should put them forward, instead of relying on long-refuted myths.

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Saturday, November 7, 2009

Queensland privatisation needs a rethink - fight the betrayal of the Bligh Labor government

by an Anonymous author - passed on by the Queensland Electrical Trades Union (ETU)

Anna Bligh and Andrew Fraser have a Plan for Queensland.  Unfortunately, it is the wrong plan.  And it has not been subject to the critical examination that it deserves.

The Renewing Queensland: Future Investment Plan was announced by the State Government on the 2nd of June in what can be described as a ‘take it or leave it’ announcement.  The plan seeks to sell off Qld Motorways, the Port of Brisbane, Forestry Plantations Qld, QR’s coal business and the Abbot Point coal terminal. 

As recent public meetings and rallies throughout Queensland have shown, many members of the community (indeed polls indicate a clear majority) have serious concerns about the impact of privatization.

A throw back to the 1980s and 1990s, the community knows privatisation always ends up in poorer quality services, higher prices and job cuts.  The only real winners are the select few from the finance and consultancy community.

When Premier Anna Bligh announced her plan, she highlighted the so-called ‘success’ of QANTAS being privatised.  Funny how she didn’t mention the post-privatisation performances of Telstra, the Commonwealth Bank and interstate public transport and electricity systems.

It is easy to get trapped, when debating privatisation, and focus on ideological grounds.  The public sector is good, the private sector is better etc.

It’s time to move on from that.  The Government’s plan needs to be viewed through rigorous economic and public policy grounds.  And on this it comes up a lemon.

Consider this: the Government’s main argument is that we are in a ‘global recession’ which has wiped $14 billion off budget forward revenues and made Queensland lose its Triple A credit rating.  $12 billion is needed in future capital investment in the entities they have earmarked for sale.  By selling them, we save this $12 billion, and realize $15 billion in sales revenue.

Let’s put these claims under the microscope.

Blaming the global financial crisis (GFC) for our current predicament is a myth.  Australia is NOT in a recession (ask Kevin Rudd).  The prime cause of Queensland’s  financial problems is poor budgetary management going back to the start of the Beattie Government and even before.  Queensland rigidly stuck to the ‘low tax state’ dogma and did not plan for spending on much needed services and infrastructure for a growing population.

The past decade saw ‘rivers of gold’ flow into State coffers from the resources boom, the property boom and the GST boom.  And yet we have nothing to show for it.  The Government has done the financial equivalent of ‘pissing it up against the wall’.

As respected economics commentator with News Ltd, George Megalogenis, summed up recently:

“Don’t blame Wall Street for this.   This mistake is home grown….. (Qld) didn’t bank the windfalls, so they could spend in bad times such as those we are going through now.  They used the proceeds instead to cut taxes elsewhere.  In effect, they took a temporary revenue surge and returned it as a permanent tax cut.   By not imagining the day when the property market might go bust, Fraser has condemned his taxpayers to more pain than necessary in a downturn.”

If you look at the 12 Beattie-Bligh budgets, 5 have been in deficit.  And 2 of the 7 surpluses have been extremely ‘skinny’ to say the least (i.e. below $40m).  Long before the GFC came along, the signs were there the Queensland budget was skating on thin ice.

And what about the so called ‘facts’ the Government is giving us, based on Treasury advice?  That they will realize $15 billion from asset sales, helping cater for a $14 billion hole in State Government revenue over the next 4 years, and saving the Government from $12 billion in future capital expenditure.  Where’s the supporting evidence and information for such claims?  What modeling was used to come to these conclusions? What methodology and assumptions underpinned such modeling? Will such information be made public and transparent?

I challenge Treasurer Andrew Fraser to make all supporting information and calculations - justifying privatization - available for independent verification, ideally with Auditor-General Glen Poole who has done an excellent job recently highlighting flaws in the Bligh Government’s health and transport policies.

Queensland Treasury has got every one of their surplus/deficit forecasts for the past 12 budgets completely wrong.  For 2008-09 they predicted a surplus of $809 million.  We got a deficit of $574 million.  Their track record doesn’t inspire much confidence in me at all.

And in terms of saving $12 billion in future capital expenditure needed for the entities concerned, let me get this straight:  The Government is saying that the private sector, in the middle of the gravest economic crisis since the Great Depression, will readily cough up this money?  You’ve got to be kidding!

And let’s not forget the information Andrew Fraser let slip recently.  That of the $15 billion in expected revenue from asset sales, $13.5 billion will go towards debt repayments.  That means it is really only $1.5 billion Queensland taxpayers look at getting for selling off some key assets.

I acknowledge Queensland is experiencing financial difficulties but let’s address the structural state budget problem which is the real cause here.  It’s not the fault of our public assets which, in total, return some $500 million to State coffers each year and which carry out important services the private sector would not otherwise do.

To borrow a phrase Bligh, Fraser and co might understand, their economic plan is wacky, kooky and full of holes.  It needs urgent reconsideration.

New South Wales, widely viewed as a ‘basket case’ economy, still has its triple A credit rating – and it hasn’t privatized!

When Joh Bjelke Petersen was Premier, a popular bumper sticker at the time was “See Queensland First before Joh sells it”.

Anna Bligh faces being featured in a similar bumper sticker in future.

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Tuesday, November 3, 2009

The Berlin wall had to fall, but today's world is no fairer - by Mikhail Gorbachev

Twenty years have passed since the fall of the Berlin wall, one of the shameful symbols of the cold war and the dangerous division of the world into opposing blocks and spheres of influence. Today we can revisit the events of those times and take stock of them in a less emotional and more rational way.

The first optimistic observation to be made is that the announced "end of history" has not come about, though many claimed it had. But neither has the world that many politicians of my generation trusted and sincerely believed in: one in which, with the end of the cold war, humankind could finally forget the absurdity of the arms race, dangerous regional conflicts, and sterile ideological disputes, and enter a golden century of collective security, the rational use of material resources, the end of poverty and inequality, and restored harmony with nature.

Another important consequence of the end of the cold war is the realisation of one of the central postulates of New Thinking: the interdependence of extremely important elements that go to the very heart of the existence and development of humankind. This involves not only processes and events occurring on different continents but also the organic linkage between changes in the economic, technological, social, demographic and cultural conditions that determine the daily existence of billions of people on our planet. In effect, humankind has started to transform itself into a single civilisation.

At the same time, the disappearance of the iron curtain and barriers and borders, unexpected by many, made possible connections between countries that until recently had different political systems, as well as different civilisations, cultures and traditions.

Naturally, we politicians from the last century can be proud of the fact that we avoided the danger of a thermonuclear war. However, for many millions of people around the globe, the world has not become a safer place. Quite to the contrary, innumerable local conflicts and ethnic and religious wars have appeared like a curse on the new map of world politics, creating large numbers of victims.
Clear proof of the irrational behaviour and irresponsibility of the new generation of politicians is the fact that defence spending by numerous countries, large and small alike, is now greater than during the cold war, and strong-arm tactics are once again the standard way of dealing with conflicts and are a common feature of international relations.

Alas, over the last few decades, the world has not become a fairer place: disparities between the rich and the poor either remained or increased, not only between the north and the developing south but also within developed countries themselves. The social problems in Russia, as in other post-communist countries, are proof that simply abandoning the flawed model of a centralised economy and bureaucratic planning is not enough, and guarantees neither a country's global competitiveness nor respect for the principles of social justice or a dignified standard of living for the population.

New challenges can be added to those of the past. One of these is terrorism. In a context in which world war is no longer an instrument of deterrence between the most powerful nations, terrorism has become the "poor man's atomic bomb", not only figuratively but perhaps literally as well. The uncontrolled proliferation of weapons of mass destruction, the competition between the erstwhile adversaries of the cold war to reach new technological levels in arms production, and the presence of the new pretenders to an influential role in a multipolar world all increase the sensation of chaos in global politics.

The crisis of ideologies that is threatening to turn into a crisis of ideals, values and morals marks yet another loss of social reference points, and strengthens the atmosphere of political pessimism and nihilism. The real achievement we can celebrate is the fact that the 20th century marked the end of totalitarian ideologies, in particular those that were based on utopian beliefs.

Yet new ideologies are quickly replacing the old ones, both in the east and the west. Many now forget that the fall of the Berlin wall was not the cause of global changes but to a great extent the consequence of deep, popular reform movements that started in the east, and the Soviet Union in particular. After decades of the Bolshevik experiment and the realisation that this had led Soviet society down a historical blind alley, a strong impulse for democratic reform evolved in the form of Soviet perestroika, which was also available to the countries of eastern Europe.

But it was soon very clear that western capitalism, too, deprived of its old adversary and imagining itself the undisputed victor and incarnation of global progress, is at risk of leading western society and the rest of the world down another historical blind alley.

Today's global economic crisis was needed to reveal the organic defects of the present model of western development that was imposed on the rest of the world as the only one possible; it also revealed that not only bureaucratic socialism but also ultra-liberal capitalism are in need of profound democratic reform – their own kind of perestroika.

Today, as we sit among the ruins of the old order, we can think of ourselves as active participants in the process of creating a new world. Many truths and postulates once considered indisputable, in both the east and the west, have ceased to be so, including the blind faith in the all-powerful market and, above all, its democratic nature. There was an ingrained belief that the western model of democracy could be spread mechanically to other societies with different historical experience and cultural traditions. In the present situation, even a concept like social progress, which seems to be shared by everyone, needs to be defined, and examined, more precisely.


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