Pluto in Cap, the USA, the future of the world

[Rad]

SPIEGEL ONLINE
04/27/2012 03:50 PM

The Debt Drug: How Long Will Hollande's Party Go On?

An Analysis By Wolfgang Kaden

François Hollande is predicted to win France's presidential election, but his victory could endanger the euro zone's carefully negotiated fiscal pact. He also wants to water down the European Central Bank's statutes, forcing it to lend more to promote economic growth. But his plans would do little more than borrow time -- and they could be very dangerous for Germany.

The whole ghastly process is now set in motion. Not just for Chancellor Angela Merkel, but also for anyone who still had a modicum of hope that the worst of Europe's debt crisis had already been overcome.

The opinion pollsters were right -- François Hollande won the first round of the French presidential election last Sunday. According to all the polls, he will also win the runoff vote on May 6. If he wins, he would become the second Socialist president of the Fifth Republic, following in the footsteps of François Mitterrand.

For France's neighbors and the fight against the sovereign debt crisis in Europe, that will set everything back to square one. Hollande has said that if he's elected, he will seek to renegotiate parts of the already painstakingly negotiated European fiscal pact. He has disparagingly called it the "Merkel-Sarkozy" pact and says he wants to renegotiate it or block it if necessary. He is demanding that "austerity policies be complemented by growth." And while he's at it, he also wants to change the statutes of the European Central Bank so that it would also be given the official duty of facilitating growth.

One might argue that the calendar is about to be set back 40 years and that we are landing right back in the 1970s, in an era when economic policymakers had been infected by the ideas of John Maynard Keynes, and believed they could bridge economic downturns with ever more multi-million programs financed with debt. It was precisely this phase of recent economic history in which governments began to declare it as their right to accrue ever more debt, and it also laid the foundation stone for the policy of racking up debts that is now standard in all industrialized nations.

"The people of Europe expect that we, the people of France, will provide Europe with another perspective, another direction, another orientation," Hollande recently told his supporters. But what orientation will that be? It certain won't be one that leads to less debt and to living within one's means.

Borrowed Time

Of course it would be desirable to have greater growth, which would also help overcome national deficits that have gotten out of hand. But it would be even better if this happened through natural means -- through innovation and increased investment in the real economy. But that's not what politicians like Hollande -- and his friends here in Germany and in other European countries -- is talking about when he calls for more growth.

What he's talking about is artificially created demand: growth paid for with ever more borrowing. It's about building motorways through sparsely populated stretches of land, the construction of more trade fair halls where they aren't needed and building provincial airports that are totally unnecessary.

To see how such growth is to be conjured up, one need only look at the potential future French leader's political platforms. His miracle weapon is called "euro bonds," securities that would be jointly issued by the Europeans and that Germany would also be liable for. But there is no logic whatsoever behind this call, because Hollande is also aware that France now only enjoys limited creditworthiness on the financial markets.

To perfectly round out the whole plan, the European Central Bank (ECB) is also now expected to do its part in a cheerful new round of borrowing. According to the current statutes governing the ECB, the central bank's sole duty is to ensure price stability. But for some time now, this mandate has been "extended to the extreme," argues Jürgen Stark, the ECB's former chief economist and a member of its executive board. The ECB has spent way over €200 billion buying up government bonds and it recently flooded the market with €1 trillion in cheap central bank money. And now, if Hollande has his way, the ECB will also be held responsible for growth through a change in its statutes. In other words: It will be obliged to carry out even greater credit financing.

Has Hollande Learned Nothing from Past Crises?

This melange of messages suggests that the expected new president of France, which is Germany's most important partner in the euro zone, hasn't learned a thing from the frequent crises that have emerged over the past 15 years. They were all fuelled by distortions that had been created through excessive borrowing -- by both private households and governments. But if politicians like Hollande have their way, the party will just keep going. Under their vision, growth is supposed to supplant urgently needed reforms -- a French pension system that allows 60-year-olds who are still capable of working to retire, a vastly oversized French state apparatus and a French labor market that is saddled with high wages and short working hours that is causing the country to become less and less competitive internationally.

But perhaps these fears are exaggerated. Perhaps Hollande will quickly learn the harsh, raw reality that campaign rhetoric and European reality aren't the same thing.

The new man in the Élysée Palace may fare the same as Mitterrand once did. When France's first Socialist president came into office in 1981, he brought with him a classic leftist agenda: higher minimum wages, more generous pensions, a shorter working week and also a wave of nationalizing businesses. Two years after Mitterrand took office, France slid into a state of economic disaster. The president was forced to abandon his socialist utopia and subject the country to a bitter course of austerity.

Will Merkel Risk Serious Discord with France ?

It probably wouldn't even take two years before Hollande arrives at a similar juncture. As long as German Chancellor Angela Merkel sticks with her "no" to euro bonds and to changes to the ECB's statutes, the Socialist president would fail based on a lack of funds alone. He simply wouldn't be able to obtain the money needed for his political adventure -- at least not at relatively acceptable conditions.

So what about the Germans -- in other words, Merkel and her government? Would she risk serious discord with the French by confronting her new French partner with an unequivocal "non"? When it comes to the European Union, governments have a tradition of solving their conflicts through compromise. But it is precisely that kind of compromise that could come with a huge price tag for Germany.

That also applies to the desire to weaken the European Central Bank's statutes. It would permanently lay to waste the German line that the central bank cannot be abused to finance government spending. That is even truer of the call for the fiscal pact to be renegotiated and to give the go-ahead for euro bonds. With the collectivization of new loans, the cost of Germany's debt servicing would rise by billions of euros. It would also eliminate the necessary pressure on Europe's most heavily indebted states to implement austerity measures. Ultimately, the fiscal pact creates the necessary preconditions for solving the debt crisis in the longer term and builds a solid foundation for the common currency.

For some time now, Germany has shouldered more burdens for the countries of the euro zone than it can actually carry. Even today, the liability risks entailed by the bailout programs that have already been provided threaten Germany's future viability, in the event that those countries are unable to service their debts and Berlin's guarantees turn into actual payments.

Merkel will have no choice but to show François Hollande the limits of what she is willing to accept. It's going to be a hot summer.

[Rad]

meanwhile in the USA ............ this is what happens in a country in which the corporations own almost the entire media .. whose agenda is to make as much capitalistic profits as they can .. and thus hire people who will fulfill that agenda .. you end up with an utterly corrupt media .. this is exactly what happened with Gore ran against Bush ... 75% of all media reports about Gore were negative while 75% were positive for Bush ... and now in the USA the same thing in happening again ...

April 30, 2012 10:00 AM

Media Coverage Favored Romney Over Obama

By Nicole Belle

Oh, that librul media strikes again...

    During the bruising Republican primaries, there was one candidate whose coverage was more relentlessly negative than the rest. In fact, he did not enjoy a single week where positive treatment by the media outweighed the negative.

    His name is Barack Obama.

    That is among the findings of a study by the Project for Excellence in Journalism, a Washington nonprofit that examined 52 key newspaper, television, radio, and Web outlets.

    “Day in and day out, he was criticized by the entire Republican field on a variety of policies,” Mark Jurkowitz, the group’s associate director, says of Obama. “And he was inextricably linked to events that generated negative coverage”—including rising gas prices, the ailing economy, and the renewed debate over his health care law.

    In short, while the president was being hammered on both fronts, his message was somewhat drowned out by the volume of news coverage surrounding the GOP candidates.

Surprise! The media doesn't seem to want to offer up "balanced" coverage, do they? They don't want to inform their audience that the president has little to do with rising gas prices, or that the economy is in fact recovering, albeit slowly, or that there are massive lies constantly flung by Republicans over the health care law. No, it's much more interesting to cover the Republican primary as a horse race and to uncritically regurgitate Every. Single. Republican. Talking. Point. without bothering to fact check or place it into context.

And that's why Democratic voters cannot take this election for granted. The media -- by abdicating their jobs -- have muddied the waters. They have made this race far closer than it should be, for their own purposes. And while Obama is nowhere near the progressive hope that some may have thought him to be in 2008, there is no question that the alternative is far, far worse.

Not that the media will ever admit that.

[Rad]

The Washington Post
May 1, 2012

Let’s just say it: The Republicans are the problem.

By Thomas E. Mann and Norman J. Ornstein,

Rep. Allen West, a Florida Republican, was recently captured on video asserting that there are “78 to 81” Democrats in Congress who are members of the Communist Party. Of course, it’s not unusual for some renegade lawmaker from either side of the aisle to say something outrageous. What made West’s comment — right out of the McCarthyite playbook of the 1950s — so striking was the almost complete lack of condemnation from Republican congressional leaders or other major party figures, including the remaining presidential candidates.

It’s not that the GOP leadership agrees with West; it is that such extreme remarks and views are now taken for granted.

We have been studying Washington politics and Congress for more than 40 years, and never have we seen them this dysfunctional. In our past writings, we have criticized both parties when we believed it was warranted. Today, however, we have no choice but to acknowledge that the core of the problem lies with the Republican Party.

The GOP has become an insurgent outlier in American politics. It is ideologically extreme; scornful of compromise; unmoved by conventional understanding of facts, evidence and science; and dismissive of the legitimacy of its political opposition.

When one party moves this far from the mainstream, it makes it nearly impossible for the political system to deal constructively with the country’s challenges.

“Both sides do it” or “There is plenty of blame to go around” are the traditional refuges for an American news media intent on proving its lack of bias, while political scientists prefer generality and neutrality when discussing partisan polarization. Many self-styled bipartisan groups, in their search for common ground, propose solutions that move both sides to the center, a strategy that is simply untenable when one side is so far out of reach.

It is clear that the center of gravity in the Republican Party has shifted sharply to the right. Its once-legendary moderate and center-right legislators in the House and the Senate — think Bob Michel, Mickey Edwards, John Danforth, Chuck Hagel — are virtually extinct.

The post-McGovern Democratic Party, by contrast, while losing the bulk of its conservative Dixiecrat contingent in the decades after the civil rights revolution, has retained a more diverse base. Since the Clinton presidency, it has hewed to the center-left on issues from welfare reform to fiscal policy. While the Democrats may have moved from their 40-yard line to their 25, the Republicans have gone from their 40 to somewhere behind their goal post.

What happened? Of course, there were larger forces at work beyond the realignment of the South. They included the mobilization of social conservatives after the 1973Roe v. Wade decision, the anti-tax movement launched in 1978 by California’s Proposition 13, the rise of conservative talk radio after a congressional pay raise in 1989, and the emergence of Fox News and right-wing blogs. But the real move to the bedrock right starts with two names: Newt Gingrich and Grover Norquist.

From the day he entered Congress in 1979, Gingrich had a strategy to create a Republican majority in the House: convincing voters that the institution was so corrupt that anyone would be better than the incumbents, especially those in the Democratic majority. It took him 16 years, but by bringing ethics charges against Democratic leaders; provoking them into overreactions that enraged Republicans and united them to vote against Democratic initiatives; exploiting scandals to create even more public disgust with politicians; and then recruiting GOP candidates around the country to run against Washington, Democrats and Congress, Gingrich accomplished his goal.

Ironically, after becoming speaker, Gingrich wanted to enhance Congress’s reputation and was content to compromise with President Bill Clinton when it served his interests. But the forces Gingrich unleashed destroyed whatever comity existed across party lines, activated an extreme and virulently anti-Washington base — most recently represented by tea party activists — and helped drive moderate Republicans out of Congress. (Some of his progeny, elected in the early 1990s, moved to the Senate and polarized its culture in the same way.)

Norquist, meanwhile, founded Americans for Tax Reform in 1985 and rolled out his Taxpayer Protection Pledge the following year. The pledge, which binds its signers to never support a tax increase (that includes closing tax loopholes), had been signed as of last year by 238 of the 242 House Republicans and 41 of the 47 GOP senators, according to ATR. The Norquist tax pledge has led to other pledges, on issues such as climate change, that create additional litmus tests that box in moderates and make cross-party coalitions nearly impossible. For Republicans concerned about a primary challenge from the right, the failure to sign such pledges is simply too risky.

Today, thanks to the GOP, compromise has gone out the window in Washington. In the first two years of the Obama administration, nearly every presidential initiative met with vehement, rancorous and unanimous Republican opposition in the House and the Senate, followed by efforts to delegitimize the results and repeal the policies. The filibuster, once relegated to a handful of major national issues in a given Congress, became a routine weapon of obstruction, applied even to widely supported bills or presidential nominations. And Republicans in the Senate have abused the confirmation process to block any and every nominee to posts such as the head of the Consumer Financial Protection Bureau, solely to keep laws that were legitimately enacted from being implemented.

In the third and now fourth years of the Obama presidency, divided government has produced something closer to complete gridlock than we have ever seen in our time in Washington, with partisan divides even leading last year to America’s first credit downgrade.

On financial stabilization and economic recovery, on deficits and debt, on climate change and health-care reform, Republicans have been the force behind the widening ideological gaps and the strategic use of partisanship. In the presidential campaign and in Congress, GOP leaders have embraced fanciful policies on taxes and spending, kowtowing to their party’s most strident voices.

Republicans often dismiss nonpartisan analyses of the nature of problems and the impact of policies when those assessments don’t fit their ideology. In the face of the deepest economic downturn since the Great Depression, the party’s leaders and their outside acolytes insisted on obeisance to a supply-side view of economic growth — thus fulfilling Norquist’s pledge — while ignoring contrary considerations.

The results can border on the absurd: In early 2009, several of the eight Republican co-sponsors of a bipartisan health-care reform plan dropped their support; by early 2010, the others had turned on their own proposal so that there would be zero GOP backing for any bill that came within a mile of Obama’s reform initiative. As one co-sponsor, Sen. Lamar Alexander (R-Tenn.), told The Washington Post’s Ezra Klein: “I liked it because it was bipartisan. I wouldn’t have voted for it.”

And seven Republican co-sponsors of a Senate resolution to create a debt-reduction panel voted in January 2010 against their own resolution, solely to keep it from getting to the 60-vote threshold Republicans demanded and thus denying the president a seeming victory.

This attitude filters down far deeper than the party leadership. Rank-and-file GOP voters endorse the strategy that the party’s elites have adopted, eschewing compromise to solve problems and insisting on principle, even if it leads to gridlock. Democratic voters, by contrast, along with self-identified independents, are more likely to favor deal-making over deadlock.

Democrats are hardly blameless, and they have their own extreme wing and their own predilection for hardball politics. But these tendencies do not routinely veer outside the normal bounds of robust politics. If anything, under the presidencies of Clinton and Obama, the Democrats have become more of a status-quo party. They are centrist protectors of government, reluctantly willing to revamp programs and trim retirement and health benefits to maintain its central commitments in the face of fiscal pressures.

No doubt, Democrats were not exactly warm and fuzzy toward George W. Bush during his presidency. But recall that they worked hand in glove with the Republican president on the No Child Left Behind Act, provided crucial votes in the Senate for his tax cuts, joined with Republicans for all the steps taken after the Sept. 11, 2001, attacks and supplied the key votes for the Bush administration’s financial bailout at the height of the economic crisis in 2008. The difference is striking.

The GOP’s evolution has become too much for some longtime Republicans. Former senator Chuck Hagel of Nebraskacalled his party “irresponsible” in an interview with the Financial Times in August, at the height of the debt-ceiling battle. “I think the Republican Party is captive to political movements that are very ideological, that are very narrow,” he said. “I’ve never seen so much intolerance as I see today in American politics.”

And Mike Lofgren, a veteran Republican congressional staffer, wrote an anguished diatribe last year about why he was ending his career on the Hill after nearly three decades. “The Republican Party is becoming less and less like a traditional political party in a representative democracy and becoming more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe,” he wrote on the Truthout Web site.

Shortly before Rep. West went off the rails with his accusations of communism in the Democratic Party, political scientists Keith Poole and Howard Rosenthal, who have long tracked historical trends in political polarization, said their studies of congressional votes found that Republicans are now more conservative than they have been in more than a century. Their data show a dramatic uptick in polarization, mostly caused by the sharp rightward move of the GOP.

If our democracy is to regain its health and vitality, the culture and ideological center of the Republican Party must change. In the short run, without a massive (and unlikely) across-the-board rejection of the GOP at the polls, that will not happen. If anything, Washington’s ideological divide will probably grow after the 2012 elections.

In the House, some of the remaining centrist and conservative “Blue Dog” Democrats have been targeted for extinction by redistricting, while even ardent tea party Republicans, such as freshman Rep. Alan Nunnelee (Miss.), have faced primary challenges from the right for being too accommodationist. And Mitt Romney’s rhetoric and positions offer no indication that he would govern differently if his party captures the White House and both chambers of Congress.

We understand the values of mainstream journalists, including the effort to report both sides of a story. But a balanced treatment of an unbalanced phenomenon distorts reality. If the political dynamics of Washington are unlikely to change anytime soon, at least we should change the way that reality is portrayed to the public.

Our advice to the press: Don’t seek professional safety through the even-handed, unfiltered presentation of opposing views. Which politician is telling the truth? Who is taking hostages, at what risks and to what ends?

Also, stop lending legitimacy to Senate filibusters by treating a 60-vote hurdle as routine. The framers certainly didn’t intend it to be. Report individual senators’ abusive use of holds and identify every time the minority party uses a filibuster to kill a bill or nomination with majority support.

Look ahead to the likely consequences of voters’ choices in the November elections. How would the candidates govern? What could they accomplish? What differences can people expect from a unified Republican or Democratic government, or one divided between the parties?

In the end, while the press can make certain political choices understandable, it is up to voters to decide. If they can punish ideological extremism at the polls and look skeptically upon candidates who profess to reject all dialogue and bargaining with opponents, then an insurgent outlier party will have some impetus to return to the center. Otherwise, our politics will get worse before it gets better.

[Rad]

SPIEGEL ONLINE
05/01/2012 11:10 AM

Austerity Backlash; What Merkel's Isolation Means For the Euro Crisis

Angela Merkel's euro crisis strategy is unpopular and she has lost a number of allies. Worse yet, French presidential candidate François Hollande has pledged a change of course from the strict austerity measures she supports. But in the end, the Paris-Berlin alliance will likely survive and austerity will continue, albeit with a few growth initiatives thrown in.

German Chancellor Angela Merkel stood behind a podium at the DZ Bank at Berlin's Brandenburg Gate, gazing sullenly into the cameras. She had just received the wrong prop for a photo op, and she needed to get it out of sight as quickly as possible.

To thank her for her speech marking the International Year of Cooperatives, a gray-faced official had thrust a porcelain piggy bank into her hands -- an ugly thing with a milky sheen that appeared to reflect the very coldness said to characterize her policies.

Merkel reflected momentarily, then had the gift quickly tucked away in a box. Photos of the piggy-bank chancellor are not exactly what she most urgently needs right now. In fact, for the past few days, she has endeavored to put a more friendly face on her image as the strict belt-tightening politician who is forcing Europe to adhere to Germany's budgetary discipline dictates.

She is determined to stick by her strategy. But now when she talks about the euro crisis, instead of focusing solely on "structural reforms" and "stability," she has also started to refer to "growth" and "jobs."

Merkel's euro strategy is under fire, and she has lost one ally after the next in recent weeks. In the Netherlands, her most loyal follower, Prime Minister Mark Rutte, has submitted his resignation. In Frankfurt, European Central Bank President Mario Draghi has demanded that Merkel's cost-cutting strategy be supplemented by a "growth pact." And in Paris, Socialist Party presidential candidate François Hollande has announced that, if he wins the run-off election this coming Sunday, he intends to lead the European opposition against Merkel. "So many people in Europe are waiting for our victory," he said. "I don't want a Europe of austerity, where nations are forced on their knees."

North and South

Until now, the German-French axis, led by Merkel and incumbent French President Nicolas Sarkozy, has been the best reason to hope for a positive outcome to the euro crisis. But a dangerous rift appears to be looming, along with a relapse into outdated mindsets. Paris is relying on the presumed stimulating effect on the economy from additional government spending, while Berlin trusts in the dogma of tough reforms.

The differences are great, and the two main actors aren't even trying to play them down. On the contrary. Last Thursday, Merkel underscored that the current rescue strategy is "not renegotiable." Hollande responded: "Germany will not decide for all of Europe."

This reflects differing political traditions and economic ideologies, but it is mainly an attempt to appeal to the differing moods on the Continent. Hollande has stylized himself as the hero of the south -- the defender of the Spanish, Portuguese and Italians who have had enough of pension reductions and hiring freezes, and believe that additional cutbacks will only exacerbate the crisis.

Merkel, on the other hand, speaks in the name of northern European taxpayers, who are repeating another mantra. Before additional billions of euros evaporate in the south, the Mediterranean countries should first do their homework, they say.

Viewed from this perspective, the conflict between Merkel and Hollande is also an attempt to both nurture the illusions of their respective supporters and to pretend that everything in Europe could be restored to the way it once was. It's an attempt to escape the bitter truths of the euro crisis, which is dominated by one truth in particular: If the European currency is to be secured over the long term, additional sacrifices are inevitable, both in the north and the south.

In Europe's Mediterranean regions, though, another axiom is currently popular. Political leaders in Lisbon, Paris and Madrid are saying that the situation can't be turned around by introducing an endless series of new cost-cutting initiatives. That may appear to be true at first glance, but the most recent history of combating crises in Europe paints a different picture. A number of countries on the Continent have managed to recover from severe economic crises precisely because they have unswervingly adhered to their reform policies.

Austerity Success

This has been the case with Ireland, where the budget deficit soared by 31 percent in 2010 after a number of banks ran into trouble. The country had to be rescued with bailouts, and it embraced a radical austerity program that produced unexpectedly rapid results. Unit labor costs declined, exports rose, and the budget deficit shrank to nearly 9 percent within two years.

This success is also reflected in the country's current account balance. After a huge deficit of €10 billion ($13.25 billion), it is once again positive.

There was a similar series of events in Estonia, where the economy rapidly contracted in 2008 and 2009 and the budget drifted into the red. To balance the budget and boost the economy, the government should have devalued its national currency, the kroon, as textbooks would recommend.

But that was simply out of the question for the Estonians, who were determined to enter the euro zone. Consequently, the government cut wages by up to 40 percent, froze pensions and slashed social services. There were no protests like the ones in Greece and Spain, and unemployment sank from over 18 percent to under 12 percent.

What's more, Germany itself is living proof that their approach to crisis therapy produces results. At the beginning of the last decade, the country was considered the "sick man of Europe." Economists warned that the radical "Agenda 2010" reforms introduced under then-Chancellor Gerhard Schröder would accelerate the country's decline even further.

But the opposite occurred. The reforms of the labor market generated jobs and competitive wage agreements with German industry helped spur exports. Germany has once again become the engine of Europe's economy.

The only question is whether Germany's recovery can also serve as a model for the countries of the Mediterranean region. Merkel's critics argue that the structures of northern and southern Europe differ too greatly, making it all the more difficult to lead countries like Portugal out of the crisis.

No Alternative

In reality, though, the austerity policies have yielded the first fruits of success, as shown by the most recent data from Spain. Granted, the economy has faltered again, and the number of young people out of work has reached a record level, but the recent flood of bad news has overshadowed statistics that give cause for hope. For instance, unit labor costs, which are an important indicator of a country's international competitiveness, have continuously declined over the past two years. In return, Spain's exports are growing, with sales of Spanish red wine in Germany alone rising by 20 percent.

More importantly: There is no alternative. If Spain were to water down its austerity policy, and boost growth with new loans, the result would be particularly disastrous. Economists are convinced that this would lead to growing concerns in the markets that the government in Madrid can't bring its finances under control, and interest rates would rise.

The experts even warn that it's very possible such a growth strategy could ultimately precipitate a recession. "We don't see any possibility of boosting growth through additional expenditure," says a high-ranking representative of the German government.

The government in Berlin would thus prefer to do nothing more. The crisis-ridden countries are making cutbacks, and the euro rescue fund has been expanded. According to Chancellor Merkel and her finance minister, Wolfgang Schäuble, this means that sufficient measures have been taken to put the monetary union on firm footing. Now, they say it's up to each individual country to do the rest.

That's how the Germans see it -- but leading economists take a different view. Henrik Enderlein, an economist at the Hertie School of Governance in Berlin, says that the austerity measures introduced by the German government were the right move, "but they won't fix the euro zone's flaws."

Enderlein is sitting in a café at Berlin's Tegel Airport. He's on his way to attend a session of the Notre Europe think tank, founded by the legendary eighth president of the European Commission, Jacques Delors. The meeting in Brussels deals with an issue that is central to Europe's survival: How can the monetary union be made permanently crisis resistant?

New Initiatives in Brussels

One answer is provided by a comparison with the US, where the monetary union has worked for over 200 years, even during times of economic crisis. If a state such as California falls into a recession, the same rules apply as in Europe. The government has to cut costs, and the economy has to become more competitive.

But the Americans have an additional mechanism to help crisis-ridden regions. National systems such as federal income tax and nationwide unemployment insurance ensure that money automatically flows from rich to poor states, and this reduces the impact of economic downturns. Enderlein is convinced that such transfer systems are missing in Europe. "If we really want to save the euro, the question is not whether we need such financial transfers, but rather how we organize them," he says.

Enderlein says that he could envision a Europe-wide unemployment insurance scheme and a common financial transaction tax and/or standardized corporate tax for all EU member states. The only problem is that it will take many years before such systems can be introduced in Europe.

Countries like Portugal and Spain, which are grappling with a worsening recession, can't wait that long. Indeed, Brussels is currently preparing a range of initiatives designed to rapidly divert money from the prosperous north to the poorer south.

For instance, the European Commission is soon planning to launch "project bonds" to finance major infrastructure projects. On May 7, the day after the French presidential election, the Commission intends to present its plans. EU President Herman Van Rompuy wants to have the plan approved at an EU summit in late June.

The German government also supports the scheme as a way of financing new highways, along with energy and telecommunications networks. Olli Rehn, the European commissioner for economic and monetary affairs in Brussels, enthusiastically announced to EU parliamentarians in mid-April that "there was a breakthrough before Easter." He said the European heads of state had given the green light to pilot projects worth billions, such as building highways in Greece.

From the point of view of all cash-strapped politicians, the project bonds have the appeal that they cost relatively little to start out with. The money primarily comes from private sources. The European Investment Bank (EIB) will provide guarantees that safeguard private investors. In the pilot phase until 2013, EU funds amounting to €230 million are expected to mobilize investments of up to €4.6 billion.

Conflict Will Blow Over

The second major project designed to put an end to the EU's "ruthless austerity," as Hollande calls it, involves bolstering the EIB's financing. The EU countries plan to pump €10 billion into the bank. This would allow the EIB, which is headed by Germany's Werner Hoyer, to loan an additional €60 billion for major projects in the EU. Together with private co-investors, €180 billion would be made available, according to Rehn's calculations.

The increase in capital for the bank is already on the agenda, at least informally, for the next meeting of EU finance ministers scheduled for this week. It's already clear that Germany will contribute the lion's share.

The German government has shown a willingness to do its part. It's reportedly also examining ways that EU organizations and subsidies can be used in a more growth-oriented manner. According to sources inside the German government, instead of funding new highways, Berlin is interested in supporting innovation and programs to promote small and medium-sized businesses. To ensure that this is done as professionally as possible, the Germans would like to see the southern European countries receive their own state-owned development banks, modeled after Germany's KfW banking group. It's hoped that this will get the economy moving in Greece and Portugal.

And so it seems that the loud conflict between Paris and Berlin has momentarily eclipsed what will actually be on the negotiating table between the two countries when the French presidential election is over. That is, no change in Merkel's austerity drive, but additional growth projects for southern Europe and more power for Brussels -- yet all of it done as cheaply as possible.

Will Paris and Berlin find a compromise? This question will be easier to answer after May 6, when the current French election campaign is over. German Finance Minister Schäuble would clearly prefer to see his fellow conservative Sarkozy remain in office. But aside from that, the excellent relations between Germany and France will continue to work as well as they have in the past, regardless of who wins the election.

BY SVEN BÖLL, CHRISTOPH PAULY, CHRISTIAN REIERMANN, MICHAEL SAUGA AND CHRISTOPH SCHULT

Translated from the German by Paul Cohen

[Rad]

SPIEGEL ONLINE
05/01/2012 01:55 PM

France's Enigmatic François Hollande: The Man Who Always Smiles

By Mathieu von Rohr

All eyes in Europe are on François Hollande, the Socialist candidate who could become France's next president on Sunday. The reserved technocrat has become more confident and presidential during the campaign, and makes up for his shortcomings as an orator by showing genuine empathy with people. But even his friends say he is hard to fathom.

At around noon on the day after his victory, François Hollande steps off a private plane at the airport in Quimper, a small city in Brittany. As he walks past the baggage conveyor belt and into the terminal, he seems almost aglow with certainty, but he also looks tired and disheveled.

Late the night before, he had flown to Paris from Tulle, his election district in southwest France, and had celebrated his triumph in the first round of the presidential elections until the early morning hours at the headquarters of the Socialist Party. He was in such high spirits that he was still giving interviews in front of his house. Now the interviews continue in the terminal at Quimper, where he says: "I received more votes than Mitterand did in 1981."

Hollande is wearing his candidate's uniform, a black suit and tie, which he alternates with a blue suit, and rimless glasses. He keeps his thinning hair combed in a way that's meant to cover up his bald spots and, as is always the case when he speaks with people, he is smiling.

The campaign has done something to François Hollande. He began as an inconspicuous and sometimes awkward-seeming man. There is still something of the accountant about him, but he also comes across as presidential. In the last few months, he has grown to larger-than-life proportions, buoyed by the cheers of his supporters and filled with a growing belief in his ability to win the election.

A friend who has known Hollande since 1985 is waiting to greet him at the airport café. He is Bernard Poignant, the mayor of Quimper. "I remember when he was at a point that was so far removed from the position where he is today," says Poignant, who is visibly moved. "People already saw him as eliminated and buried. I knew that it wasn't true."

If Hollande feels any sense of satisfaction, he hides it well. But of course he remembers the day when he resigned as his party's leader three-and-a-half years ago. His former partner Ségolène Royal had lost the 2007 election against current President Nicolas Sarkozy, and the Socialist Party almost broke apart as a result. At the time, it seemed absurd to even consider that Hollande could ever be president. Now Royal is reluctantly campaigning for him.

The polls predict a clear victory for Hollande in the runoff election this Sunday. If they are right, Hollande will become the second Socialist after François Mitterrand to be elected president in the Fifth Republic.

'He Has This Mysterious Side'

If that happens, German Chancellor Angela Merkel will encounter a new partner in Europe, one who has already announced that he intends to put an end to her austerity policy and that he wants Europe to stimulate growth to overcome the crisis. His election is important for the entire continent, and that makes it important to understand who he is.

Oddly enough, though, as this election campaign nears its end, no one seems to know who Hollande really is and what can be expected of him. Even Poignant, his old friend in Brittany, is somewhat at a loss. "I have the same feeling with him," he says. "He has this mysterious side. He's always been like that."

During the campaign, and in the days before and after the first round of voting, Hollande has come across as a man who plays his role as a candidate with uncanny perfection. Nothing he says is imprudent, and yet despite this self-control he still seems likeable. His routine borders on the superhuman. For months now, his days have begun early in the morning and ended late at night. He sometimes visits three cities a day, and near the end of his day, when the journalists accompanying him are exhausted, he still seems alert and rested.

What distinguishes him as a politician is his ability to show empathy. Hollande seems to sense what people want to hear. Last Wednesday, he spoke to factory workers in the northern French city of Montataire who were about to lose their jobs. "I am here," he told them. "But getting here is easy. The important thing is to come back!" The men who welcomed him with skeptical glances start nodding.

Later on, as he sits in a café in the northern city of Amiens, surrounded by high-school and university students plagued by fears about the future, he says that he knows that, at their age, they want to stand on their own two feet. "You want independence. I understand that." The young voters nod.

A Technocrat Who Shows Empathy

Making people feel that you understand them is a gift. Hollande has it, unlike Sarkozy, for whom interacting with citizens is a burden. During factory tours, for example, Hollande converses cheerfully with the workers. He seems relaxed, even though he keeps his hands locked so tightly together behind his back that his knuckles protrude.

His weakness is that he is basically a technocrat, a numbers man, which frequently gets in his way, both in interviews and in his speeches. He is effective at delivering emotionally charged speeches and conjuring up France's illustrious past, and the legacies of the French Revolution, the Résistance and socialism, as he does in a speech in Carmaux in the southwest, standing in front of a statue of Socialist Party co-founder Jean Jaurès. But then he becomes bogged down in the details of his platform, using hackneyed phrases. He seems serious, and yet he lacks the ability to inspire people.

Hollande has no spin doctors. He is his own most important campaign manager, and his strategy is simple: to seem more presidential than the president. To achieve this goal, he channels François Mitterrand. When Hollande speaks, he copies Mitterrand's gestures and his way of speaking. It seems almost uncanny at times, as if he were a reincarnation of Mitterrand. He also finds himself in a strategic situation similar to that of Mitterrand when he defeated Valéry Giscard d'Estaing in 1981. "At the time," he says, "the incumbent also focused on the fear of the left, while Mitterrand emphasized hope."

No one can say with certainty what kind of a president Hollande would be. He has the reputation of being a pragmatist, which suggests that he could quite possibly get along better with Merkel than one might surmise today. But although he is seen as a moderate socialist in France, his worldview is traditionally leftist. For Hollande, growth is something that should ultimately be left up to the state -- or Europe and its central bank. He says that he is for "a serious budget, but against life-long austerity." Nevertheless, his platform contains many costly ideas that could result in €20 billion ($26 billion) in additional expenditures. Whether Hollande would have the strength to reform France from the bottom up, or whether he would become something of a Chirac of the left, that is, a passive regent, remains to be seen.

Departure From Austerity in Europe

Merkel's refusal to meet with him, along with her support for Sarkozy, will not make future cooperation any easier. "It was certainly interesting that I wasn't received," says Hollande. A growing self-confidence has been evident in his campaign speeches in recent weeks. Hollande believes that his election will signify a departure from austerity policies for Europe, and it often sounds as if he were convinced that this would solve most things.

On the afternoon after his arrival in Quimper, Hollande takes a walk through the historic district. The campaign uses the term "deambulation" to describe these moments, and the chaos that ensues when the candidate turns up in a busy pedestrian zone. When that happens, all that is visible to an outside observer is a dense crowd of people surrounding Hollande, who is not a tall man. His position in the crowd can only be ascertained by the location of the microphones suspended above his head like antennae. He reaches out across his bodyguards to connect with passersby, who call out "Keep it up!" He can conjure up a smile in an instant, a smile that looks natural and genuine, except that his eyes remain serious.

It's a stormy day as several hundred people stand under their umbrellas in the pouring rain, listening to Hollande speak in front of the cathedral. He leans forward, pushing his vocal chords to the limit, which is why he often sounds as if he were about to lose his voice. "I will protect you, Sarkozy said. And? Has he protected you?"

'Always Underestimated'

Hollande is not a great speaker, unlike Sarkozy, but he gave an important speech at the end of January in an auditorium near Paris, when he put his campaign in the context of France's history, and of socialism. It was his most significant appearance, because it was the first time he seemed presidential. He had been a loyal party soldier for years, but in all those years, he never made it to the top and was never a member of any administration. He is currently the president of the General Council of the département, or administrative district, of Corrèze. His fellow party members have variously derided him as a "Flamby," or wobbly pudding, a "Marshmallow" and a "Woodland Strawberry."

"People have always underestimated him," says Stéphane Le Foll, one of his campaign managers. Le Foll was already his office manager when Hollande was first secretary of the Socialist Party, from 1997 to 2008. Hollande is a reserved person, says Le Foll, someone who never shows his emotions and yet is very accessible and assertive. A few weeks ago, Hollande's 28-year-old son Thomas said: "I am like my father. I can't say no."

While leading the Socialist Party, Hollande was known as the "man of synthesis." He would sit in a room with the representatives of all wings of the party and have them present their views, and by the end of these meetings, he could summarize what had been discussed in a way that reflected what everyone had said, but without revealing his own position. It would be a radical shift for France to be run by someone who seeks compromise -- and it isn't clear yet whether this would work.

There is a chapter in his life that Hollande doesn't mention very often: his childhood. He was born in the northwestern city of Rouen in 1954. His biographer Serge Raffy writes that Hollande suffered under his authoritarian father, an irascible doctor who ran under a right-wing extremist platform in local elections. According to Raffy, his smile and his jokes already helped Hollande steer clear of conflicts at the time.

One of those rare intimate moments with Hollande during this campaign takes place in Tulle, the small city in southwest France where his political career began. It is the Saturday evening before the first round of voting, and the main shopping street is empty. Hollande is standing in a leather goods shop with his partner, the journalist Valérie Trierweiler, buying a gray handbag.

They step out of the shop together and walk, arm-in-arm, a few steps along the street. She lovingly wipes something away from the candidate's chin. He seems tense and even a little lost. It must be the first time in weeks that he hasn't been surrounded by a crowd.

Hollande knows most of the people in Tulle, where he served as a member of the city council and later as mayor. Tulle is what the French call his fiefdom. The former monarch, Mitterrand, had sent Hollande to Corrèze when he was 26 to capture a seat in parliament against Jacques Chirac, who later became president. "It was an unusual decision to go there," says his old friend, Quimper Mayor Poignant. Hollande lost the election. "But he didn't go back to Paris. He stayed. That's exceptional and says a lot of about him." His career began in this rural district, Corrèze, and it was there he learned to be folksy.

Now he could very well be on the verge of attaining the highest office in the French republic. If he wins, many Frenchmen will be glad to be rid of Sarkozy, and yet Hollande doesn't exactly generate enthusiasm among his own voters. This becomes evident when, on the last day of his campaign before the first round of elections, he travels to Vitry-le-François in eastern France, where there is high unemployment and the right-wing populist Front National is strong. Of the 3,000 jobs that once existed in the local industry, only 300 remain in place today.

Although the local newspaper went to great lengths to announce his visit, there is almost no one waiting to greet him -- except the usual throng of journalists crowding around him. The candidate eventually walks into a few clothing stores and bakeries, where he shakes the hands of the salespeople. He manages to pull off this disappointing appearance in a crowd that never materializes with as much dignity as possible. A drunk shouts after him: "There's nothing here. It's always like that in Vitry. And no one has ever kept his promises here."

But by then François Hollande and his entourage are long gone.

Translated from the German by Christopher Sultan

[Rad]

SPIEGEL ONLINE
05/01/2012 02:00 PM

Inside the Idlib Province: Losing Hope In Syria's Devastated Countryside

The world is still hoping that the efforts of United Nations envoy Kofi Annan will succeed in Syria, but regime forces have inflicted such brutal destruction in the country's northwest Idlib province that no one there believes peace is possible anymore. A SPIEGEL journalist reports from the embattled countryside.

The fresh, shimmering leaves of olive trees stretch to the horizon. Thyme grows wild here, but the air is filled with the stench of decay. "They even shot the cows," the farmer says. Their corpses, crawling with maggots, now lie outside the village. "They shot at everything: people, animals, houses," he says. "They even flattened the potato fields with their tank treads."

For months, it had remained quiet in the village of Bashiriya, located high up in Syria's Tuscany-like northwest, with its endless groves of olive and fruit trees. The village was proud of the fact that the Al-Jazeera news channel had mentioned the demonstrations that had taken place there. A few soldiers who had defected to the Free Syrian Army (FSA) had returned to protect their native village with Kalashnikovs. For a while, they even believed that it was possible.

But when the helicopters appeared over the top of the hill shortly after 9 a.m. on April 9, they too could do nothing but flee. A volley of rockets incinerated the first houses, while the gunners pursued the fleeing villagers with their machine guns and shot those who didn't manage to take shelter under the trees. They even mowed down a herd of sheep.

The tanks arrived minutes later, already firing indiscriminately into the village from hundreds of meters away. Then came the soldiers, who went from house to house, first looting and then burning down more than 100 houses. "They came in and dragged us outside," recalls Adiba Yusif, who is about 70. "Then they poured something inside and lit it on fire." She is the only member of her family of 10 who hasn't fled. "I don't want to die someplace else," she says. All she has left is one room, which contains a mattress, blankets, dishes and a jar of olives people from a nearby village brought to her. When the army moved into the village once before, in November, it only attacked the houses of defectors' families. But now its attacks are much more indiscriminate. "What did they want from us? We never had anything to do with politics!" says Yusif.

They had threatened to set the entire country on fire, says a neighbor. He serves water in a glass that was deformed by the heat. "And they're really doing it," he adds, noting that the soldiers had shouted that this was only the beginning. "Wait until we come back," they allegedly said. "There is no god but Bashar Assad!"

No Longer Controlled By Regime

They stayed for one-and-a-half days, and after burning down the houses, they incinerated the farmers' delivery vans and motorcycles, the dovecotes and the shops. They also shot holes into the water tanks on the roofs of houses, and when they pulled out, they left behind their calling card, written in meter-high letters on the wall of a house: "Liwa al-Maut" -- the Brigade of Death. It was the name the 76th brigade of the Syrian armed forces had given itself, written in huge letters as if the sheer size of the writing could also intimidate residents.

Twenty-eight masonry stones with the names of the dead inscribed on them surround a fresh mound of earth outside the village. "We only buried the bodies we could recover," a man who lives next to the cemetery, and hid during the attack with his family in an ancient underground burial vault, says apologetically.

It's been quiet in Bashiriya since the attack. Half of the 7,000 residents have fled, and the rest are making do in the peculiar state of limbo of a country whose own regime has declared war on its people. In some ways, it's a war that the regime has already lost. A trip through the villages in northwest Idlib Province leads through a world in which the inhabitants are being kept in check but are no longer under the government's control.

The regime controls the cities, and the world's attention is focused on what is happening there. The peace plan devised by United Nations Special Envoy Kofi Annan calls for Syrian President Bashar Assad to withdraw his troops from Homs, Hama and the suburbs of Damascus, which the regime has not done yet. There are daily reports of skirmishes and murderous attacks. Apparently it will take a few more weeks until all 300 of the observers the UN plans to deploy have taken up their posts in Syria. But what can 300 people do in the embattled cities? What can they achieve in the countryside, and to which of the thousands of Syrian villages should they travel first?

The fear of the once omnipresent government informants has disappeared in the villages, where everyone now speaks his mind and the drivers for the FSA write "Free Army" on their dusty rear windows. Guards keep watch at access points to the villages, and scouts are positioned on the hilltops. The FSA is a strange bunch. In the countryside, about two-thirds of the rebel army consists of defectors who have returned to their native villages. Outsiders from Damascus or Aleppo are a rarity, and there is no evidence of the presence of foreign jihadists. When it comes to heavy weapons, each village has no more than a few machine guns and rocket-propelled grenades, and there is no command structure extending beyond the range of a radio. Nevertheless, this seemingly anarchic force has not disintegrated into competing militias. The rebels are united in their resistance to a regime that only stirs up more hatred where it aims to achieve subjugation.

Ordinary Life Goes On

Village councils everywhere are hard at work attending to electricity needs, maintaining the water supply and upholding the rule of law. Committees organize supplies of gasoline and food, as well as transporting the injured to nearby Turkey. The mobile telephone network that was cut off in most areas here months ago has been replaced by radios and satellite phones smuggled in across the border, in addition to carrier pigeons. The regular telephone network still works, but hardly anyone has a land line. Although the humanitarian corridor along the Turkish border that has been proposed repeatedly doesn't exist, there is at least a telephone corridor, with the Turkish mobile wireless networks extending up to 20 kilometers (12 miles) into Syria.

But the troops can return at any time. Many of those who were kidnapped are still gone, and unidentified corpses are constantly being found in dry creek beds and fields. On the outskirts of the village of Sarmin, only 500 meters (about 1,600 feet) from a government troop position, farmers found the bodies of eight men and one woman in an old cistern. They were bound and had been shot in the head. The farmers had hardly recovered the bodies before a helicopter turned up, and they fled. Bulldozers leveled the area the next day, and the fields are now littered with facemasks. There is no longer any trace of the bodies.

Long, freshly dug trenches constantly appear along the paths. Empty tombstone slabs are stacked next to the trenches -- in preparation for the dead the next attack will bring.

Nevertheless, life goes on in a surprisingly ordinary way. The world of the village population has shrunk to its closest surroundings, and residents even have to ask people what things are like behind the next hill. Still, farmers are cultivating their fields, even as they drive their tractors past the charred remains of cars. Old men sit in the shade of grape vines drinking sugary tea, while residents scrub burned-out stone houses and apply new coats of whitewash.

Their lives will continue in this fashion, at least until the "Brigade of Death" returns. Like members of some medieval campaign of devastation, but one equipped with modern weapons, the soldiers move through the province, attacking one town after the next, only to pull out two days later. They attacked Sarmin and Taftanas in the east at the end of March, Deir Sunbul in the south in early April, and Kastan and Ain Sauda in the west in mid-April. The attacks always unfold in much the same way, starting with helicopters, followed by tanks and, finally, soldiers setting fire to buildings. Sometimes the soldiers also take prisoners, but sometimes they simply kill people.

'An Iceberg That is Slowly Melting'

The deadly brigade attacked the village of Kurin south of the provincial capital in late February. In the morning hours, tanks fired on a school from which panic-stricken children had managed to escape only moments earlier. It took a long time before the parents felt comfortable enough to allow their children to return to the school. At the end of April, about 200 of the previous school body of "exactly 302" students returned to the half-destroyed building, presided over by Principal Mohammed Adjini.

What was intended to be a visit with a courageous principal comes at a completely inopportune moment for Adjini. He is sitting in his office with a stack of requisition forms, arguing with someone on the phone. "Who will approve it now?" he asks. He is caught in a confusing set of circumstances, because the very same government that ordered the attack on the school still pays the teachers' salaries and is now supposed to approve his requests for new schoolbooks and chalk. Adjini feels uncomfortable with the situation. Just as if it were the nail holding up the portrait of Assad on the wall behind him, the regime is still wedged inside the head of the fearfully smiling director, who doesn't want to be photographed and soon stops talking altogether.

This, in turn, is awkward for his cousin Aziz Adjini, a former English lecturer at the University of Idlib, one of the most respected figures in the village. Aziz, a chain-smoking cynic who, despite having been arrested twice, managed to escape and return to his village because many of the sons and daughters of the intelligence officers were his students, has collected the villagers' accounts of the day of the attack. "The soldiers were supposed to set an example. One group slit a man's throat, and then they tied another man to a car, then they burned down everything they couldn't loot," he says. "But then others came to the houses, apologized and acted as if they didn't see the Kalashnikovs hidden behind cushions. And two of them left this behind," he says, unfolding a page torn out of a notebook on which all the names and ranks of the officers in the Brigade of Death are carefully noted. "Assad's army is like an iceberg that is slowly melting," says Adjini.

He doesn't understand why the world is looking on without doing anything. "By taking this approach, they are merely encouraging something they fear just as much as we do," namely that a civil war will follow Assad's overthrow. The regime, he says, still seeks to justify its actions by claiming that bad elements within the population must be fought, and that the rest of the people are still its loyal subjects. This, according to Adjini, is why government forces are firing on schools and paying the teachers at the same time -- or attacking his village while still subsidizing the flour for the villagers' daily bread.

Watching and Waiting

Everyone says that no one wants civil war. But how can civil war be prevented if the officers and regime thugs are almost all Alawites, while their victims are all Sunnis and the undertow of revenge grows stronger with each new wave of murders? "If someone has lost a son he can still be stopped," says a pharmacist in the village of Martin. "If he has lost two, it becomes very difficult, and it's impossible if he's lost three. I read what Mahatma Gandhi managed to do in India. I admire that. But what would have happened to him here? He would have been lying dead in a field within a week."

On one of our trips along dusty paths, an FSA fighter sitting in the back seat bellows: "And once the regime is overthrown, the Alawites will all be killed!" The driver turns around immediately and says: "Don't listen to him! We don't want that!" He snaps at the fighter: "What about the Alawites, our neighbors, who haven't done anything to us? Do you want to kill them all?" The man falls silent.

No one knows what will happen, but few still believe in the success of Kofi Annan's peace plan. Nevertheless, the FSA has promised to abide by the cease-fire the plan calls for. There are RPGs and a machine gun stacked in Aziz Adjini's living room. "I rounded them up as a precaution, just in case some hothead has crazy ideas," he says. Meanwhile, the scouts are observing how Assad's army isn't moving its tanks back to the barracks, but instead is hiding them from the expected UN observers in olive groves and quarries, or between the buildings of the Idlib farming administration.

The last days of April were the quietest days in months. The Brigade of Death hasn't returned, and yet it feels like the calm before the storm for the villagers. With their limited weapons, they wait in their half-destroyed villages for help from abroad, help that will not arrive -- and hope for an end to the violence that they no longer believe will materialize.

Translated from the German by Christopher Sultan

[Rad]

01 May 2012 - 14H15 

Anti-austerity anger sweeps Europe on May Day


AFP - May Day protesters poured into streets across Europe on Tuesday, swept up in a wave of anti-austerity anger that threatens to topple leaders in Paris and Athens.

From the eye of the eurozone debt storm in Madrid to the streets of Paris and Athens, where tottering governments face elections within days, marchers spoke of job losses, spending cuts and hard times.

More than two years after the eurozone sovereign debt crisis erupted, frustration with austerity is boiling over across the continent as voters wait in vain for signs of the economic pay-off.

In Spain, suffering the industrialised world's highest jobless rate of 24.4 percent in the first quarter of 2012, the major unions called protests in about 80 cities.

Tens of thousands massed in central Madrid's Neptuno square, decrying the jobless queue, new labour reforms that make it easier and cheaper to fire workers, and a budget squeeze in health care and education.

"Total Violence, You Are Robbing Us of Home and Bread!" read a banner brandished by 51-year-old Josefa Martinez Fernandez, who said her two daughters in their 20s were out of work.

"They are going to destroy more jobs with the labour reform and create rubbish jobs," complained 28-year-old graphic designer Sonia Calles.

"Already in Spain almost everyone is an intern up to the age of 30. And now employment insecurity is going to hit those in their 30s and 40s."

Thousands rallied in Athens, Thessaloniki and other cities around Greece, five days ahead of cliffhanger general elections with voters fed up with years of austerity.

"No-one Alone, Together We Will Get There!" read a banner draped on a stage in Athens' central Kotzia square.

Polls indicate that Greeks are fleeing the main parties for smaller groups in revenge over a European Union-IMF economic recovery plan that has brought repeated waves of pay and pension cuts.

The two parties that have ruled Greece for the past 37 years, socialist Pasok and conservative New Democracy, are blamed for catastrophic finances after decades of state overspending and nepotism.

The new Greek government will face an early test when 436 million euros ($575 million) of debt, held by private creditors who turned down a swap, matures on May 15.

In Paris, the French presidential election race overcast the day as three powerful political movements battled for attention with competing rallies five days before polling day.

Marine Le Pen's anti-immigrant far-right National Front kicked off the May Day events with several thousand supporters marching through central Paris in memory of Joan of Arc, who has become a far-right icon.

Le Pen, who scored a record 18 percent in the April 22 first round, led the march and urged supporters to abstain rather than back President Nicolas Sarkozy or Socialist Francois Hollande in the run-off.

Waving a sea of blue, white and red French flags, Le Pen's supporters chanted "France for the French!" and "This Is Our Home!" as they marched to the Place de l'Opera.

Sarkozy's right-wing supporters were to gather at the Place du Trocadero in Paris's posh 16th arrondissement to hear their champion give his last major speech in the capital before the vote.

And, on the left, trade unions were to carry out their traditional march to the historic Place de la Bastille.

With the latest poll predicting a Hollande win on Sunday by 53 to 47 percent, Sarkozy is anxious to gain some momentum from the rally and said he expected "tens of thousands of French" to take part.

In contrast to Western European rallies, more than 100,000 people held a Soviet-style march through Moscow to celebrate labour day and show support for president-elect Vladimir Putin ahead of his inauguration.

Accompanied by kitsch brass music and surrounded by multi-coloured balloons, Putin and outgoing President Dmitry Medvedev led the march through a central Moscow avenue.

Police said around 120,000 people took part in the "Holiday of Labour and Spring" march in Moscow.

[Rad]

01 May 2012 - 13H57 

May Day protests sweep across Asia

AFP - Trades unions and left-wing parties staged colourful May Day protests across Asia, sharing the theme of better wages and conditions, as living costs spike in fast-growing economies.

Thousands of Indonesian workers held Asia's biggest rally, demanding better pay and job security, watched warily by a heavy police and army contingent.

Carrying banners saying "raise our salaries" and "stop outsourcing contracts", more than 9,000 workers gathered at Jakarta's main roundabout before marching to the state palace.

Around 16,000 police and soldiers were deployed to guard the protest, Jakarta police spokesman Rikwanto told reporters.

"Living costs have gone up but our salaries remain unchanged. We only make enough to eat but there is no money in the bank, no money for our children's education," protest leader Muhamad Rusdi told AFP.

"There's also no job security. Jobs like telemarketing and production of goods such as electronics are outsourced (to contractors)," he complained. "We always live in fear of losing our jobs."

Indonesia's parliament in March rejected a plan to hike the country's heavily subsidised fuel price by a third, after protests in Jakarta that saw demonstrators hurl stones and police retaliate with tear gas and water cannon.

A rash of workers' strikes that began late last year across the nation of 240 million people saw several provinces hike their minimum wages.

Factory workers on the outskirts of Jakarta blocked major roads and disrupted the international airport early this year, winning an increase from 1.29 million rupiah ($141) a month to 1.49 million rupiah ($162).

Raising the minimum wage was the main demand also for about 5,000 workers, domestic helpers and activists who held a noisy procession through central Hong Kong, clashing cymbals and chanting demands on the city's incoming government.

"The problem with Hong Kong is that the wealth is concentrated on a small number of people, many people are still living in poverty," university professor Fernando Cheung, who teaches social work, said at the rally.

"That's why Hong Kong has one of the world's highest income gaps between rich and poor. We urgently need a redistribution of wealth," he said.

In Manila, about 3,000 workers and activists marched to the presidential palace, bearing a giant effigy of Philippine President Benigno Aquino which depicted him as a dog obedient to foreign capitalists.

They carried banners saying "raise our pay now" and "fight for socialism".

But in a Labour Day speech, Aquino said: "If our wages go even higher, what foreign investor will put his money here? Our economy could fall even further behind."

The government in Taiwan is also fretting about its competitiveness in the face of rising global energy prices.

Last month it announced that electricity prices would rise by up to 37 percent from mid-May, following a recent 10 percent increase in petrol prices.

Denouncing the increases, more than 1,000 workers took to the streets in downtown Taipei for a Labour Day rally that also condemned workplace exploitation.

"Oppose exploitation" and "oppose double hikes," the protesters shouted, waving matching placards.

In East Timor, Asia's poorest nation which this month celebrates a decade of formal independence from Indonesia, police fired warning shots and arrested 84 people to disperse some 500 protesters calling for higher wages.

Police said they were forced to intervene to break up the "illegal demonstration" after protesters began hurling stones and marching to a hotel in Dili where some staff had recently been laid off.

[Rad]

01 May 2012 - 08H42 

Mexico to compensate crime victims

AFP - Mexico's Congress approved a bill to set up funds to compensate thousands of victims of the country's ongoing drug war.

The Chamber of Deputies approved the measure amid chants and tears from relatives of kidnap and murder victims sitting in the visitor balconies.

Among them was poet Javier Sicilia, an outspoken activist whose son was slain along with seven friends in March 2011.

The bill, which was earlier approved in the Senate, now goes to President Felipe Calderon to be signed into law.

The fund will initially have $20.5 million, said Justice Committee head Humberto Benitez Trevino. Some 70,000 people could potentially receive compensation, Benitez Trevino said.

The measure also sets up a national registry of crime victims.

More than 50,000 people have been killed over the past years in the government crackdown on the country's violent drug cartels. Most of those killed were victims of turf wars between cartels.

Thousands of people have also vanished, been kidnapped or were wounded in the violence, according to government figures.

[Rad]

01 May 2012 - 08H36 

Australia slashes interest rates to 3.75%

AFP - Australia slashed interest rates by a shock 50 basis points Tuesday to 3.75 percent due to weaker economic conditions and lower inflation, causing a drop in the Aussie dollar but a sharemarket boost.

It was the largest cut since the Reserve Bank of Australia reduced rates by 100 basis points in February 2009 in the wake of the global financial crisis, and came as a surprise to analysts who tipped a 25 basis point fall.

Bank chairman Glenn Stevens said the decision was "based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated".

In particular, data showed underlying inflation had declined again, and was a little over 2.0 percent over the latest four quarters, and would likely be lower than earlier forecast over the next few years.

"A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates," Stevens said.

The local currency, which has been at historic highs for the past 18 months, slumped from 104.10 US cents to 103.22 US cents after the announcement. Sydney stocks were up around 0.8 percent.

Treasurer Wayne Swan welcomed the news, describing it as a move small businesses and householders had been "hanging out for", and urged the big commercial banks to pass the full cut onto their borrowers.

The RBA last slashed its rate in December, and Stevens said the board "judged it desirable that financial conditions now be easier than those which had prevailed" then.

He repeated his view that while growth in the global economy had slowed in late 2011, a deep downturn was not occurring.

"Market sentiment remains skittish, however, and the tasks of putting European banks and sovereigns onto a sound footing for the longer term, and of improving Europe's growth prospects, remain large," he said.

"Europe will remain a potential source of adverse shocks for some time yet."

Australia was dubbed the "Wonder from Down Under" after its mining-fuelled economy dodged recession during the global financial crisis.

But despite its booming resources sector, other parts of the economy are struggling against higher labour and energy costs and the stronger Australian dollar.

Families are saving rather than spending, with retail in a slump and housing construction weak.

Chief economist at the Commonwealth Bank Michael Blythe said the rate cut could lift consumer confidence.

"I think it has provided a circuit breaker for the negative feedback loop of consumer confidence that has been coming through," he said.

Shane Oliver, chief economist at AMP Capital Investors, said the decision revealed "the RBA got it wrong, now it's trying to get it right".

"At last the RBA has moved to get back on track and reverse the de-facto monetary tightening we have seen so far this year thanks to higher bank lending rates, and address the fact that the non-mining economy in Australia is really struggling," he said.

Australia still has higher rates compared to other nations.

The US Federal Reserve is expected to keep rates near zero until late 2014, while Bank of England policymakers last month voted to keep them at a record low 0.50 percent, where they have stood since March 2009.

With the European economy tipping towards recession, the European Central Bank's policy-setting governing council voted last month to leave its benchmark interest rate unchanged at the historic low of 1.0 percent.

[Rad]

Brazil cracks down on lucrative wild animal trade

01 May 2012 - 07H19 


AFP - Blue-and-yellow macaws from Amazonia, green parrots, monkeys, turtles, anacondas and pumas: wild animal trafficking is a very lucrative business that spares no species in Brazil, including those facing extinction.

"According to our estimates, 38 million wild animals, 80 percent of them birds, are poached from the forest every year in Brazil and nearly 90 percent died during transport," said Rauff Lima, a spokesman for the non-governmental organization Renctas (National Network to Fight Trafficking of Wild Animals).

But Renctas says the traffickers don't worry about the losses as the sale of a single specimen can earn them a profit in an industry now worth nearly $2 billion a year, the most profitable illegal trade after arms and drugs.

In 2001, the organization released the first national report on wildlife trafficking.

In that year, the last wild Little Blue Macaw -- considered one of the world's most endangered species -- disappeared from the northeastern state of Bahia and today only 70 others remain in captivity around the world.

"They are held by private collectors who acquired them illegally," Lima told AFP.

On average, federal police seize 250,000 wild animals per year and the Brazilian environmental agency Ibama captures another 45,000 during controls that have been significantly stepped up in recent years.

At Cetas, the Rio Wildlife Screening Center, which is linked to Ibama, veterinarian Daniel Neves cares for 1,600 animals, many of which were rescued in starving or sick conditions from Brazilian poachers.

Located in a wooded area some 75 kilometers (45 miles) from downtown Rio, Cetas resembles a zoo. Macaws are homed in a vast cage, or "flight corridor," where they can move relatively freely ahead of their future release.

Nearby, some 700 bird cages are stacked up precariously on top of each other.

The animals "remain in quarantine until their health improves," explained Neves. "The aim is to release them into the wild but we succeed for only 20 to 30 percent of them."

The macaws could be sent to zoos but these are already overcrowded, according to the veterinarian, who says Brazil should pass legislation to make animal adoption easier.

"It's a real problem because they (the macaws) are no longer able to fend for themselves in the wild," Neves told AFP.

Brazil, Latin America's largest country with a land area of 8.5 million square kilometers (3.2 million square miles), is considered to have the greatest biodiversity on the planet.

It has 530 species of mammal, 1,800 bird species, 680 different kinds of reptiles, 800 amphibian species and 3,000 varieties of fish.

According to the environment ministry, 627 species now face extinction, a threefold increase in 15 years.

Hunting animals is banned in Brazil, as is holding any wild animal in captivity except in the rare cases of authorized breeding.

With increasing help from Brazil's intelligence services, police have succeeded in tightening the noose on the traffickers, choking off some of the profits from their illegal trade.

To buy a green parrot on the black market or a tucan poached from the wild costs less than 100 dollars while it is worth ten times more in a legal store.

[Rad]

meanwhile in the USA......

May 01, 2012 09:00 AM

Why MayDay Matters: GE Versus Hard-Working Employees


Mary McBroom told us her story at a closed Starbucks restaurant in Detroit. It's one we've heard too many times before: For 18 years she worked hard for her employer, GE before discovering GE cared less about her than she did about the company. Mary was not an unskilled worker: she wired circuit boards, most recently for Chevy Volt charging stations. Hired in 1991, she was a college graduate who had worked her way up in the company from entry level wages to $23 per hour in 2009.

Along the way, she raised two daughters and sent them to college, bought a house, saved for retirement, and did all the things "responsible people" do. Mary is a college graduate with a passion for giving her job her all. Even as she told her story, it was evident that more than feeling angry, she was hurt.

In 2009 GE laid Mary off due to the economic downturn with the promise that there was always a possibility she could be called back. On May 13, 2011 she was called back to the same job she had before the layoff. GE trumpeted the recall as a Big Move, publishing a "Welcome Back" to the eleven employees.

Yet, on her first day back she was told that she was classified as a "competitive wage" employee, and would be paid $13 per hour to do the same work she had been paid $23 per hour to do. She was expected to work alongside co-workers making the higher wage who had managed to get their 20 years of service so they could be considered "legacy employees." Worse, some of the coworkers receiving the higher rate had been hired one week before Mary. Whether they escaped the layoff or there was another reason, the inescapable fact was that employees were working side-by-side doing the same work, but one employee was paid $13 per hour and the other was being paid $23.67 per hour, and everybody knew it.

Mary's shock quickly turned to action, and she wrote to Human Resources in June, 2011 asking them to reconsider her classification and asking about the status of her pension, which was based on years of service and compensation levels. She also wrote a letter to Jeffrey Immelt expressing her concern that she was being recalled to a job she had done well for 18 years, only to suffer a 40 percent pay cut.

GE's response was to send out an investigator to assess the situation without interviewing any of the "competitive wage" employees causing supervisors and coworkers to be hostile to those who complained. In a second letter to Jeffrey Immelt on September 30, 2011, Mary and her fellow "competitive wage" coworkers asked Immelt to intervene and restore her pay to its former level.

On November 20, 2011 she and her fellow competitive-wage coworkers were laid off again without notice and after putting in an extraordinary number of overtime hours to make up for the difference in pay. This time, the layoffs were permanent. McBroom's position, along with 13 others, was being eliminated entirely. Those jobs would not be coming back. In a statement to the local newspaper, Human Resources manager Billy Futch said the layoffs came after they had "tried to avoid the move." He cited slow orders for Volt charging stations, but also said he anticipated "this will turn around soon."

Yet he let 14 workers go, permanently, right after they had asked for parity in compensation to other workers in the plant with comparable years of service and skill sets.

This graph highlighted Monday by Brad DeLong is a shocking visual representation of Mary's story:

enlarge
this-is-graph-that-scares-me.pngPrivate Industry Workers Wages & Salaries

The gray bars are recessionary periods. The line represents the average percentage change in workers' salaries.

Mary says she felt as though she was loyal for 20 years to a company that disrespects her. It's difficult to argue with her on that point. The group of us listening to her story that night felt a collective outrage for her situation.

Jeffrey Immelt has been with GE for 30 years. Over the past six years, his average compensation has been $10.26 million per year. That's $5,130 per hour, give or take. About 395 times Mary's hourly wage. Immelt could have given up $30 per hour and kept three employees. The whole 14 employees could have stayed on if he gave up $140 per hour. After all, they were expecting orders to pick up at that plant, right? To Immelt's credit, he did give up his paycheck in 2009, but honestly, I doubt it stopped him from making his mortgage payments or sending his kids to college.

If Jeffrey Immelt leaves GE, he walks away with over $100 million in GE stock and deferred compensation benefits along with exercisable, vested stock options. If he stays until retirement, he can expect to receive a large pension and many other benefits. I'm assuming health insurance for life will be one of them. Meanwhile, GE terminated its pension plan for new employees, despite the fact that it was fully funded and has been for years.

As for GE, the company? It hasn't paid taxes that help fund schools or roads or the highways their products roll down on the back of 18-wheelers for several years, despite Immelt's protestations at this year's shareholders' meeting, which I attended as the holder of a legally executed proxy. Unfortunately, GE "lost" my name from their proxy list along with about 50 others holding similar proxies, so I was exiled to a room downstairs with a video feed, where I heard Immelt justify GE's low, low US income tax rate to applauding one-percenters in the room. Rather than paraphrase, I will just quote the annual report:

    Our consolidated income tax rate is lower than the U.S. statutory rate primarily because of benefits from lower-taxed global operations, including the use of global funding structures and our 2009 decision to indefinitely reinvest prior-year earnings outside the U.S. There is a benefit from global operations as non-U.S. income is subject to local country tax rates that are significantly below the 35% U.S. statutory rate. These non-U.S. earnings have been indefinitely reinvested outside the U.S. and are not subject to U.S. income tax.

    [...]

    We expect our ability to benefit from non-U.S. income taxed at less than the U.S. rate to continue, subject to changes of U.S. or foreign law, including, as discussed in Note 14, the expiration of the U.S. tax law provision deferring tax on active financial services income.

In between those two paragraphs there is this statement: Income taxes (benefit) on consolidated earnings from continuing operations were 29.5% in 2011 compared with 7.3% in 2010 and (11.6)% in 2009. Later in the report, GE reports a $1.5 billion benefit due to lower foreign tax rates in 2011. That's $1.5 billion that isn't reducing the United States federal deficit, creating jobs, or building roads and bridges. The majority of the increase in taxes for 2011 came as a result of GE's partial sale of NBCU to Comcast, which was also offset by ongoing losses and writeoffs over at GE capital. Despite the protestation that GE pays its fair share of taxes, it goes without saying that paying their fair share to other countries doesn't really do a lot for this one.

In 2011, GE increased its workforce in the United States by 10,000 employees. In that same year, GE increased its foreign work force by 18,000 employees. After adjusting for the NBCU employees taken off the rolls due to the 2011 Comcast merger, less than 50 percent of the employees employed by GE's consolidated companies were United States employees. The actual percentage of US employees was 43 percent. The other 57 percent represent 170,000 jobs that are not going to American workers.

As for Mary McBroom, she's not sure what to do next. Her girls are still in college and she still has a mortgage to pay. Jobs are scarce in North Carolina, and she's fairly certain there isn't going to be one where she can earn the salary she was earning at GE. And make no mistake, she was earning it. She gave them a day's work for a day's pay until they decided a day's pay was worth 60% of what it was the day before, and then ultimately decided they didn't want her day's work at all.

This is why Mayday matters. Today's demonstrations are one way to stand up and tell the GEs and Jeffrey Immelts of the world that this system isn't working for Americans. Loyal workers are being laid off or having their pay cut by nearly half while GE holds earnings "indefinitely" outside the United States in order to avoid taxation while shareholders of GE saw a return on equity of 11.9 percent in 2011.

Disrespected? Yes, I'd agree with that. During and after last week's shareholders' meeting, about two thousand workers came to Detroit's Renaissance Center, stood up and told Mr. Immelt, the board of GE, and the one percent what they thought about GE's corporate citizenship. Here's just a little taste of what that was like:

[Rad]

Occupy protesters march on New York and other cities for May Day

By Ryan Devereaux, The Guardian
Tuesday, May 1, 2012 20:24 EDT

The Occupy Wall Street movement has kicked off its most anticipated action of the year, with a series of May Day protests in major US cities.

Protesters spent the day alternately celebrating in a New York park and branching off on “wildcat” marches around the city. There were about 15 arrests by the end of the afternoon, and isolated clashes with police.

Occupy activists had said they planned to bring business to a standstill, but while traffic was severely disrupted in some parts of Manhattan, commerce seemed to carry on much as usual.

In Oakland, California, stinging gas sent protesters fleeing a downtown intersection where they were demonstrating. Police arrested four people.

Black-clad protesters in Seattle used sticks to smash small downtown windows and ran through the streets disrupting traffic.

Threatening letters containing a white powder that appeared to be corn starch were sent to some institutions in New York. Three letters were received Tuesday, two at News Corp. headquarters and addressed to the Wall Street Journal and Fox News, and one to Citigroup. The message in the letters said: “Happy May Day.”

Seven letters were received Monday at various banks. One was sent to New York City Mayor Michael Bloomberg.

Protesters in the city gathered in Bryant Park in the morning, and set off on marches around the area. Dubbed the “99 Pickets” campaign, protesters set their sites on 53 confirmed locations. By 9am more than 20 of the sites had been visited by demonstrators.

Outside a branch of Bank of America, protesters chanted: “Bank of America, bad for America.” One protester, Jason Ahamdi, said he was ready for a long day of demonstrating. “I’m prepared for the whole day,” Ahmadi told the Guardian, saying that he had been involved in preparations for weeks.

As demonstrators marched past the headquarters of News Corp, the Fox News ticker read: “May Day, May Day, May Day, police set to deal with Occupy crowd that vows to shut down the city”, and “NYPD and big corporations braced for trouble”. But the extent to which Occupy will be able to disrupt business as usual in New York City seemed limited.

In San Francisco, the Occupy movement was blamed for a night ofviolence in which cars and small businesses were vandalized.

A crowd of protesters, dressed in black and wearing masks, gatheredat Dolores Park at 9pm on Monday and marched into the Mission district, smashing property and throwing paint bombs along the way.

Diners at the Laconda restaurant were enjoying their meals when thegang tried to break the reinforced windows. The manager, Adam Koskoff,was hit with eggs when he went outside to remonstrate.

He told the San Francisco Chronicle: “They’re coming through the Mission, where there aren’t any corporations, just a lot of small businesses, which is what they’re all about. It doesn’t make sense.”

The Mission police station on Valencia Street was hit with pink and yellow paint although a small group of riot police soon gathered to protect the building. One arrest was made.

The protest had been planned in advance by people claiming to be partof Occupy SF. Describing the event online as a “ruckus street party” organisers said they were rallying against gentrification, racist police murders, outrageous rent prices and “the displacement of all that is queer”.

However, posting on the area’s popular Missionmission blog on Tuesday morning, there was an attempt to distance the Occupy movement from the night of violence. Writers for the blog said a group of black bloc anarchists were responsible, and called for peaceful protests on Tuesday.

In Bryant Park in New York, a focal point of the protest in the city, there were many of the staple elements of Occupy’s original encampment, including a library with works from Thoreau, Alice Walker and F Scott Fitzgerald.

A screenprinting table was set up where participants could “up-cycle” their clothing, taking old their clothes and adding Occupy logos and imagery to them.

“Why buy something new when you can improve something you already have?” said David Yap, who was volunteering at the stand.

Eileen Maxwell arrived in New York on Saturday, motivated by the influence of corporate money on the political process. “We’ve got to get corporate money out of Congress,” Maxwell said. “I’m gonna be here all day, all night.”

Maxwell dismissed the idea that the protest movement had declined in relevance. “People think we’re invisible. We’re not,” she said.

At least for the day, it seemed Occupy had managed to once again grab national headlines.

Occupy organizer Chris Longenecker said he was satisfied with the day’s actions. “I’m happy so far,” Longenecker said. “Considering the rain, it went really well.”

Reactions from New Yorkers who witnessed the early marches were mixed. “Is this Russia?” asked Harold Barksy, as he watched a contingent of chanting protesters pass.

“It looks like a communist country – all this bullshit,” Barksy commented. “I think they should get jobs instead of fucking around.”

Lifelong Manhattan resident Ron Thomas disagreed. Thomas nodded as head to the beat of the protesters’ drums as they crossed his path on a midtown sidewalk.

“They call it the city of dreams,” Thomas said, referring to his hometown. But, he added: “There’s a lot of things that need to be addressed.”

“People need jobs,” he pointed out. “I think it’s necessary that we do things like this.”

guardian.co.uk © Guardian News and Media 2012

[Rad]

Over 20,000 Tunisians in May Day march for national unity

By Agence France-Presse
Tuesday, May 1, 2012 17:30 EDT

TUNIS — Tens of thousands of Tunisians marched for national unity on Tuesday, chanting slogans borrowed from the popular uprising that toppled Zine El Abidine Ben Ali over a year ago.

On Habib Bouguiba avenue, a symbol of the revolution, more than 20,000 Tunisians marched, waving the country’s red and white flags while singing the national anthem, an AFP correspondent at the scene reported.

“Bread, freedom and national dignity,” “Work, freedom and national dignity,” the protesters chanted, repeating key slogans used during the uprising that ousted Ben Ali on January 14, 2011.

“People want national unity,” “Work brings back national dignity,” “No fear nor terror, power in the hands of the people,” cried the marchers who had gathered.

Red and white balloons symbolising national unity were also released into the clear blue skies to applause.

[Rad]

U.S. envoy: Worst ‘not over’ in Yemen

By Agence France-Presse
Wednesday, May 2, 2012 7:19 EDT

Two months after a new president took power in Yemen, replacing veteran Ali Abdullah Saleh, the UN envoy to the unrest-hit country cautioned that the worst may not be over, though a transition plan remains on track.

In an interview with AFP in Sanaa, Jamal Benomar also said Yemen is still facing serious security challenges and that progress on this front is still “very relative.”

The implementation of UN-backed Gulf-brokered plan that ousted Saleh is “on track,” Benomar said, but warned there is “no indication that the worst is over or no indication that Yemen is turning the page.”

Armed militias and divided forces still roam the streets of the capital with AK-47s slung on their shoulders.

And though much of the roadblocks and barricades on Sanaa’s main roads have been dismantled, the armed men have moved “to side streets and have stored munitions in buildings,” said Benomar.

He added that “lawlessness and criminality prevail in some parts of the country,” not only in the more distant provinces in the south and the east, where Al-Qaeda linked militants are gaining ground, but even to some degree in Sanaa, the seat of the new government.

In the capital, police officers are few and far between. Traffic lights don’t work and the streets are littered with garbage. The country’s courts have been on strike for the past three months, putting any and all forms of justice on hold.

The national electricity grid as well as oil and gas pipelines are regularly attacked, disrupting the flow of power and fuel to Sanaa and other cities.

Unless the government makes progress and begins to deliver some basic services soon, Benomar cautioned, the people will start to “question its credibility and legitimacy,” especially considering the escalating humanitarian crisis.

The latest UN statistics are alarming and point to 10 million Yemenis that are food insecure. Seven million of them are “severely food insecure” said Benomar, adding that some 700,000 children “could die this year from malnutrition if nothing is done immediately.”

The streets of Sanaa are packed with children, barefoot and begging. Men line the sidewalks, many unemployed, chewing on the local narcotic known as Qat.

Buildings destroyed and damaged in the fierce clashes that rocked this city last year stand deserted, the businesses in them remain shut and the residents who moved out during the fighting have not returned.

With a difficult security environment and no real signs of economic recovery, “the people are experiencing extreme hardship,” said Benomar.

Yemen was already the poorest country in the Arab world at the end of 2010. And then the Arab Spring happened and Yemenis, like their Egyptian, Tunisian, Libyan and Syrian counterparts revolted against decades of autocracy, corruption and economic stagnation.

The uprising however turned violent, hijacked by the country’s opposing political, tribal and military leaders, leaving hundreds dead and many thousands more wounded before Saleh signed the UN-backed and Gulf-sponsored power transition agreement that paved the way for February’s presidential poll.

President Abdrabuh Mansur Hadi and his cabinet are struggling to cope with the challenges, a situation complicated by Saleh’s presence and apparent meddling in the government’s affairs.

In recent weeks, some of President Hadi’s decisions, specifically those relating to the restructuring of the country’s divided military, have been challenged by the top brass of the former regime.

Saleh’s son Ahmad still controls the country’s elite Republican Guard troops. His nephews still control other key military and security units, including the anti-terrorism unit and the presidential guard.

So far, at least two senior military figures, both of them close relatives of Saleh, have refused to step down from their posts, a sign Yemen’s old guard remains a power to be reckoned with.

One of them, Mohammed Saleh, a brother of the former president who led the country’s air force, later agreed to step down following international pressure.

“The situation remains very fragile and complex,” said Benomar.

Yemen’s unity government is split equally between Saleh loyalists and opposition figures, a factor that has emerged as a key obstacle to implementing the transition.

“It means that various elements from the past and future will have to coexist during the transition period,” said Benomar, cautioning that such a formula would be challenging “even for the most advanced democracies” let alone a country like Yemen.