Tuesday, September 29, 2009

THIS REWRITING OF HISTORY IS SPREADING EUROPE'S POISON by Seamus Milne


Blaming the USSR for the second world war is not only absurd – it boosts the heirs of the Nazis' wartime collaborators

Through decades of British commemorations and coverage of the second world war – from Dunkirk to D-day – there has never been any doubt about who started it. However dishonestly the story of 1939 has been abused to justify new wars against quite different kinds of enemies, the responsibility for the greatest conflagration in human history has always been laid at the door of Hitler and his genocidal Nazi regime.

That is until now. Fed by the revival of the nationalist right in eastern Europe and a creeping historical revisionism that tries to equate nazism and communism, some western historians and commentators have seized on the 70th anniversary of Hitler's invasion of Poland this month to claim the Soviet Union was equally to blame for the outbreak of war. Stalin was "Hitler's accomplice", the Economist insisted, after Russian and Polish politicians traded accusations over the events of the late 1930s.

In his introduction to this week's Guardian history of the war, the neoconservative historian Niall Ferguson declared that Stalin was "as much an aggressor as Hitler". Last month, the ostensibly more liberal Orlando Figes went further, insisting the Molotov-Ribbentrop non-aggression pact was "the licence for the Holocaust".

Given that the Soviet Union played the decisive military role in Hitler's defeat at the cost of 25 million dead, it's scarcely surprising that Russians are outraged by such accusations. When the Russian president Dmitry Medvedev last week denounced attempts to draw parallels between the role of the Nazis and the Soviet Union as a "cynical lie", he wasn't just speaking for his government, but the whole country – and a good deal of the rest of the world besides.

There's no doubt that the pact of August 1939 was a shocking act of realpolitik by the state that had led the campaign against fascism since before the Spanish civil war. You can argue about how Stalin used it to buy time, his delusions about delaying the Nazi onslaught, or whether the Soviet occupation of the mainly Ukrainian and Byelorussian parts of Poland was, as Churchill maintained at the time, "necessary for the safety of Russia against the Nazi menace".

But to claim that without the pact there would have been no war is simply absurd – and, in the words of the historian Mark Mazower, "too tainted by present day political concerns to be taken seriously". Hitler had given the order to attack and occupy Poland much earlier. As fellow historian Geoff Roberts puts it, the pact was an "instrument of defence, not aggression".

That was a good deal less true of the previous year's Munich agreement, in which British and French politicians dismembered Czechoslovakia at the Nazi dictator's pleasure. The one pact that could conceivably have prevented war, a collective security alliance with the Soviet Union, was in effect blocked by the appeaser Chamberlain and an authoritarian Polish government that refused to allow Soviet troops on Polish soil.

Poland had signed its own non-aggression pact with Nazi Germany and seized Czech territory, which puts last week's description by the Polish president Lech Kaczynski of a Soviet "stab in the back" in perspective. The case against the Anglo-French appeasers and the Polish colonels' regime over the failure to prevent war is a good deal stronger than against the Soviet Union, which perhaps helps to explain the enthusiasm for the new revisionism in both parts of the continent.

But across eastern Europe, the Baltic republics and the Ukraine, the drive to rewrite history is being used to relativise Nazi crimes and rehabilitate collaborators. At the official level, it has focused on a campaign to turn August 23 – the anniversary of the non-aggression pact – into a day of commemoration for the victims of communism and nazism.

In July that was backed by the Organisation of Security and Cooperation in Europe, following a similar vote in the European parliament and a declaration signed by Vaclav Havel and others branding "communism and nazism as a common legacy" of Europe that should be jointly commemorated because of "substantial similarities".

That east Europeans should want to remember the deportations and killings of "class enemies" by the Soviet Union during and after the war is entirely understandable. So is their pressure on Russia to account, say, for the killing of Polish officers at Katyn – even if Soviet and Russian acknowledgment of Stalin's crimes already goes far beyond, for example, any such apologies by Britain or France for the crimes of colonialism.

But the pretence that Soviet repression reached anything like the scale or depths of Nazi savagery – or that the postwar "enslavement" of eastern Europe can be equated with wartime Nazi genocide – is a mendacity that tips towards Holocaust denial. It is certainly not a mistake that could have been made by the Auschwitz survivors liberated by the Red Army in 1945.

The real meaning of the attempt to equate Nazi genocide with Soviet repression is clearest in the Baltic republics, where collaboration with SS death squads and direct participation in the mass murder of Jews was at its most extreme, and politicians are at pains to turn perpetrators into victims. Veterans of the Latvian Legion of the Waffen-SS now parade through Riga, Vilnius's Museum of Genocide Victims barely mentions the 200,000 Lithuanian Jews murdered in the Holocaust and Estonian parliamentarians honour those who served the Third Reich as "fighters for independence".

Most repulsively of all, while rehabilitating convicted Nazi war criminals, the state prosecutor in Lithuania – a member of the EU and Nato – last year opened a war crimes investigation into four Lithuanian Jewish resistance veterans who fought with Soviet partisans: a case only abandoned for lack of evidence. As Efraim Zuroff, veteran Nazi hunter and director of the Simon Wiesenthal Centre, puts it: "People need to wake up to what is going on. This attempt to create a false symmetry between communism and the Nazi genocide is aimed at covering up these countries' participation in mass murder."

As the political heirs of the Nazis' collaborators in eastern Europe gain strength on the back of growing unemployment and poverty, and antisemitism and racist violence against Roma grow across the region, the current indulgence of historical falsehoods about the second world war can only spread this poison.

Thursday, September 10, 2009

Double Dip Recession Very Likely


Much media blather about positive economic data from the USA and the prospects of 'green shoots' in the the EU, notably a recording of the fact that Germany and France had stopped shrinking in growth terms, ignores the fact that so much of the steam now apparently being picked up by the world economy is driven by entirely artificial 'monetary and fiscal easing'. This is in fact a posh way of describing the process of 'printing money'. The problem is, what will happen to this 'recovery' once it is no longer sustained by this artificial stimulus.. The stimuli will have to be curtailed, its just a matter of timing. Leave the money presses rolling for too long and you will certainly generate inflation, stop too early and the sickly weak recovery shoots will wither.
Two notable economists, Nobel prize winner Joseph Stiglitz and Professor Nouriel Roubini of the New York University, have alerted us to this prospect...







"Employment is still falling sharply in the US and elsewhere – in advanced economies, unemployment will be above 10 per cent by 2010. This is bad news for demand and bank losses, but also for workers’ skills, a key factor behind long-term labour productivity growth.

Second, this is a crisis of solvency, not just liquidity, but true deleveraging has not begun yet because the losses of financial institutions have been socialised and put on government balance sheets. This limits the ability of banks to lend, households to spend and companies to invest.

Third, in countries running current account deficits, consumers need to cut spending and save much more, yet debt-burdened consumers face a wealth shock from falling home prices and stock markets and shrinking incomes and employment.

Fourth, the financial system – despite the policy support – is still severely damaged. Most of the shadow banking system has disappeared, and traditional banks are saddled with trillions of dollars in expected losses on loans and securities while still being seriously undercapitalised.

Fifth, weak profitability – owing to high debts and default risks, low growth and persistent deflationary pressures on corporate margins – will constrain companies’ willingness to produce, hire workers and invest.

Sixth, the releveraging of the public sector through its build-up of large fiscal deficits risks crowding out a recovery in private sector spending. The effects of the policy stimulus, moreover, will fizzle out by early next year, requiring greater private demand to support continued growth.

Seventh, the reduction of global imbalances implies that the current account deficits of profligate economies, such as the US, will narrow the surpluses of countries that over-save (China and other emerging markets, Germany and Japan). But if domestic demand does not grow fast enough in surplus countries, this will lead to a weaker recovery in global growth.

There are also now two reasons why there is a rising risk of a double-dip W-shaped recession. For a start, there are risks associated with exit strategies from the massive monetary and fiscal easing: policymakers are damned if they do and damned if they don’t. If they take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stag-deflation (recession and deflation).

But if they maintain large budget deficits, bond market vigilantes will punish policymakers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation.

Another reason to fear a double-dip recession is that oil, energy and food prices are now rising faster than economic fundamentals warrant, and could be driven higher by excessive liquidity chasing assets and by speculative demand. Last year, oil at $145 a barrel was a tipping point for the global economy, as it created negative terms of trade and a disposable income shock for oil importing economies. The global economy could not withstand another contractionary shock if similar speculation drives oil rapidly towards $100 a barrel.
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In addition , Joseph Stiglitz, winner of the 2001 Nobel Prize in economics, has warned that the global economy could suffer a double dip, a pronounced rebound giving way to another slide.

'It is difficult to know whether or when there will be a W,' as such a course of events is often described, Stiglitz said.

Stiglitz, a former World Bank chief economist and an advisor to US former president Bill Clinton, said household balance sheets had been 'destroyed', which has meant that savings have gone up from zero to 7-9%.
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A rising savings rate cuts into consumer spending, which is responsible for roughly two thirds of US economic growth. An 'inventory adjustment' is under way, as companies build up their stocks, Stiglitz said.

But 'because of the uncertainties, people are not hiring, unemployment is very high and foreclosures are likely to remain high,' he said.

Stiglitz has been a sharp critic of policies advocated by the International Monetary Fund, contending that they aggravate crises and impose public hardship.