By Alexander Apostolides on October 20, 2010

The British Defence Spending Review and the Cypriot Bases

David Cameron announced a substantial defence review. Although the review was dressed up as a review of tactical priorities the fact was that the aim of the review was to substantially cut the defence budget by as much as 8%-10%.

The review has made some truly silly choices. The hugely expensive redevelopment of a more updated nuclear deterrent to replace trident and its submarines stayed, but the UK has effectively has killed all the units that gave it the capability of intervention in the Faklands, Sierra Leone and Iraq. If anything the UK military will be ever more dependent to US military power, and completely immobile in terms of offensive airpower: the surviving aircraft carrier and its harrier jets will be axed long before the two replacement aircraft carriers are ready. Even if the new carriers are pushed through the aircraft for them are not ready, unless the UK buys off-the-self carrier aircraft from another country. At an age where agility and surveillance is key, the UK airforce is being grounded - the Chinese news agency could not hide its joy.

This spells the end of the UK policy of increased intervention initiated by the Blair government, at for at least a decade until the new aircraft carriers are in place. Interestingly this may increase the importance of Cyprus (Akrotiri) as a base from with to handle the logistical network of operations in Afganistan. Although British troop presence in Germany will be winded down the report said nothing about Cyprus, whose role as a land based foreign airbase becomes more important as the air fleet looses all its carrier capability.

It is a loosely held secret that the UK offered Decelia to the G/C during some of the rounds of the Annan negotiation as it is considered it superfluous to requirements. However the UK presence in Akrotiri is here to stay, with the Acrotiri airbase becoming the only option for planes and men heading to Afganistan other than the hugely expensive in-flight re-fuelling process - this can be seen by the map below - which shows 1,100mile radii from Gibraltar, RAF Akrotiri, Al Udeid Airbase in Qatar, the French airbase in Djibouti and Masirah Island in Oman.

Lastly the role of the Cypriot Bases as a centre of surveillance is now as important as it was in the height of the cold war as the middle east surveillance is quite high in US and UK agendas.

A cold war U2 surveillance plane lifting off from Acrotiri

By Alexander Apostolides on October 15, 2010

Boys who cry wolf…

Boys who cry wolf…

I have been impressed with the complete silliness of discussion on the TV lately over the Cyprus issue. There has been a huge (and from what I gather popular) fuss over the issue of rotating presidency and the fact that the federal republic will have a qualified majority voting.

A little explanation of the two issues will show that this is a non issue since we have already surrendered our rights in both principles in the European Union, without a fuss. The decision making rules in the European council and the council of ministers the policy making bodies of the EU, are based on majority voting, more specifically qualified majority voting (QMV). This means that more populous members have more votes, but less votes that their total population. The republic of Cyprus has readily accepted this as the new Lisbon treaty changes on the QMV actually increase our voting power way beyond our population share. The democratic principles of “one man one vote” does not apply in the EU - a Dutch voter “matters” more than a Spanish voter since his nation’s representative in the EU has greater voting power than the population suggests through the QMV system. Below shows the change in power that the Treaty of Lisbon will enforce in 2014; notice the increase of voting power for microstates like Cyprus, which is over and above what their population entails.

This also is in place in the USA. Despite being a strong federal state with large central powers (something that Greek-Cypriot negotiators aspire to), the votes of each individual has different power depending on which state he resides. Florida voters have more power since they almost always elect so many electorates that it is irrelevant who wins in Rhode Island.

At the same time we have very enthusiastically agreed to rotation presidency of the EU. If we agreed to follow democratic principles of population we would have the presidency approximately once every 150 years. Yet the presidency of EU and of the European Council rotates among members every 6 months, meaning that Cyprus will be the president in 2012, just 8 years after our entry in the EU.

Thus in many ways the rotating presidency and the fact that the Turkish Cypriots will have voting power above their population are issues that we have already surrendered without a fight during our entry in the EU to other EU states. They are frankly non-issues as all federal states work on some sort of principle that has either of both of these policies in order to function properly.

The politicians who cry “WOLF” over these issues are trying to whip up the people against federation in general without suggesting anything else but a continuation of this situation, which eventually leads to a totally undesirable two state solution (without a single refugee of either community going back!). I hope that people will understand that these people cry “wolf” to get attention and that it is our duty to ignore them.

Ανάλυση: Κύπριος Οικονομολόγος κερδίσει το νόμπελ οικονομικής

Η απονομή του νόμπελ οικονομικών στους τρίο Peter A. Diamond, Dale T. Mortensen και του κύπριου Christofer A. Pissarides είναι ένα σπουδαίο παν-Ελληνιό και παν-Ευροπαικο επίτευγμα. Είναι αξιοσημείωτο ότι είναι από τις λίγες φορές που δίνετε νόμπελ σε άτομο (Δρ. Πισσαρίδη) που γεννήθηκε και εδρεύει εκτός Αμερικής, και συνεχίζει την σπουδαία παράδοση του London School of Economics αφού το σχόλιο έχει κερδίσει 15 νόμπελ οικονομικών και ένα νόμπελ λογοτεχνίας.

Οι Diamond, Mortensen και Pissarides επικεντρώθηκαν στο θέμα της ανεργίας και το γεγονός ότι η αγορά εύρεσης εργασίας έχει επιπτώσεις στο βαθμό και την περίοδο ανεργίας. Το σημαντικό αυτής της βράβευσης είναι το μήνυμα που στέλνει η επιτροπή οικονομικών Νόμπελ στον ευρύτερο κόσμο. Μέσα σε συνθήκες χρηματοοικονομικής κρίσης η επιτροπή έχει απονέμει το νόμπελ σε άτομα που έχουν σαν πρωταρχικό στόχο την ανεργία για να φέρει το πρόβλημα της ανεργίας στο προσκήνιο. Μέχρι τώρα τα μέσα μαζικής ενημερώσεις έχουν επικεντρωθεί στις επιπτώσεις της κρίσης στον τραπεζικό τομέα και τους λόγους της κρίσης, και έχουμε εν μέρη αγνοήσει την σοβαρή επίπτωση της κρίσης – ο ψηλός βαθμός ανεργίας. Η επιτροπή έχει κάνει κίνηση ματ και φέρνει πίσω στο προσκήνιο το πρωταρχικό κοινωνικό θέμα της κρίσης που δεν είναι άλλο από την αύξηση της ανεργίας.

Η βράβευση του Δρ. Πισσαρίδη δεν προκαλεί έκπληξη έκκληση κανένα οικονομολόγο. Σύμφωνα με την ιστοσελίδα ακαδημαϊκών δεδομένων “ideas” ο Δρ. Πισσαρίδης είναι στο τοπ 5% οικονομολόγων σε θέματα επιρροής σε όλη την υφήλιο. Το έργο του έχει αναφερθεί σε πάνω από 7,000 αλλά ακαδημαϊκά άρθρα και βιβλία. Οι αναφορές είναι αξιοθαύμαστες, καθώς η ανεργία δεν είναι ένα από τα καυτά θέματα στα οικονομικά.

Ο κ. Βασιλιού ανάφερε ότι είχε προτείνει το Δρ. Πισσαρίδη για διοικητή της κεντρικής τράπεζας της Κύπρου προ δεκαετίας, μια κίνηση που πιθανών θα απότρεπε το σκάνδαλο του χρηματιστηρίου (έχουμε ακόμα το ρεκόρ για την μεγαλύτερη αύξηση και πτώση χρηματιστηρίου μέσα σε ένα χρόνο). Δυστυχώς η θεωρία του Δρ. Πισσαρίδη θεωρείται άκρος επικίνδυνη από πάσα φιλολαϊκή και φιλοσυντεχνιακή κυβέρνηση, αφού η ερευνά του καλεί κυβερνήσεις να μείωση της ακαμσίας της αγοράς εργασίας. Καμία Κυπριακή κυβέρνηση δεν έχει εναντιωθεί στα πεπαλαιωμένα συμφέροντα οργανωμένων εργαζόμενων στο κυβερνητικό τομέα. Αυτό είχε σαν αποτέλεσμα την αύξηση της ανισότητας του κυβερνητικού και ιδιωτικού τομέα, τόσο σε θέματα δικαιωμάτων και μισθοδοσίας αλλά και με τον ιδιωτικό εργαζόμενο να έχει επιβαρυνθεί το συνολικό βάρος της παρούσας οικονομικής κρίσης. Αυτός είναι ο κύριος λόγος που η αξιοποίηση του Δρ. Πισσαρίδη από την Κυπριακή δημοκρατία ήταν περιορισμένη παρά που ο ίδιος ήθελε πάρα πολύ να έχει περισσότερη επαφή με την χώρα του.

Το λινκ είναι η συνέντευξη του Δρ. Πισσαρίδη μετά από την ανακοίνωση. Είναι αξιοσημείωτο η συγκίνηση του προς την Κύπρο και τους Κύπριους.

By Alexander Apostolides on October 11, 2010

Cypriot wins nobel in economics!

Professor Pissarides, a Cypriot and an LSE man, has just win a shared nobel in economics. Rumour has it that he tried to have an involvement with the University of Cyprus but politics left him out. What a shame that we can not seen to capitalise on brilliant Cypriots making wonders abroad.
the blurb from boolberg.

By Alexander Apostolides on October 01, 2010

The stupidity of the IMF in Greece

So the Greek debt is 125% of GDP. What is the solution the IMF is forcing the Greek government to implement? Make everyone dislike it by liberalizing the trucking business, as the resulting strikes have led to goods running out in the country's periphery.

It is very interesting that the ideal solution is quite obvious, while is very hard to implement. With the informal economy being estimated as large as 40% of the economy, the interception of such "under the table" activity should be the prime focus of any recovery plan. However doing this is hard: it upsets established corridors of power, it reduces nepotism, and affects the upper middle classes more than the poorer classes. Other economists argue that to reduce corruption and informal trading is impossible. The truth is that economic history teaches us that change is possible - the 12th to 16th century government positions in England where some of the most corrupt in the world, yet England champions its self a a bastion of clean governance today. The efforts to bring this informal economy to bear have been weak at best, partly as the IMF has not focused so much on this aspect of reform.

So what is the second-best solution actually dictated by the IMF? - A huge painful and bitter array of reforms, some of them necessary and some dogmatic. Up to now all efforts have been to reduce the government deficit, ignoring that this also reduces the GDP thus increasing the Debt to GDP ratio. In addition some reforms are being pushed along with the necessary reforms that are just causing more harm that good right now.

Exactly how much GDP growth would liberalizing the trucking business give to Greece? 3-4 % of GDP over 5 to 10 years? The current strike wave caused by such measures that could wait is at least causing negative fall of GDP (at maximum ) of 0.5% - 1% GDP today aggravating the main issue today - debt to GDP ratio.

So why do it now? Because now the IMF still believes that the hard shock therapy of the "Washington consensus" that was given to former communist countries is right - don't solve the issue - just introduce capitalism in all forms and the rest would be taken care off automatically.

In the mean time Greece is being plunged to further crisis, and the reforms seem increasingly unfair to the average Greek person, who hears stories and stories of corruption and government incompetence.