Ripon Forum July-August 2005

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TIlE RIPON SOCIE1Y CONGRESSIONAL ADVISORY BOARD SenatOr Chuck Hagel (N E)

VOLUME 39 • N UMBER IV • JULY/AUGUST 200 S

& natc Chairman Rcp~n ta l ive

Nancy L Johnson (ct)

House C hairwoman &n atO T Richard

Burr (Ne)

Se nat o r Lin coln D . C hafe<: (RI) Senator Norm Coleman (M N) Senator Swan M . Collins (M E) Scnacor Orrin G. H:nch (lIT) Senator P;;al Rolxns (KS) Senator Gordon Smith (OR) Sen:uor Olympia J. Snowc (ME) Scmllor Arlm Specter (PA) Scn:l.lorTed Su~yc ns (A K) Rcp rcsc:nlaliYc Judy Biggw (IL) Rcpresc:nt ad vc Shcrv.·ood B~h lcn (NY) Represe ntati ve Ken C alven (CA) Represcnl.:n ivc Dave Ca mp (MI ) Rcprcsc:nlativc Eric L Cantor (VA) Rcprcsc:nlalivc Michael Castle (DE)

Rcprcsc:ntativc HOW3rd Coble (NQ Rcpresc:nl:llivc Ander Crenshaw (FL) Representa tive Thomas M . Davis, III (VA)

Rcprcsc:'I1;uivc Vernon Ehlers (M !)

Represent:!.live Jo Ann H. Emerson (MO) Representa tive Phili p S. English CPA) Represent;.niv!: M ike Ferguson eN]) RCllrc$cntative Mark Fo ley (FL) Represem:.ltive Vito Fossell a (NY) Repn:sclllative Rodney Frelingh uysen (N]) Rcpr~m:l.li~ Paul E. Gi llmof (OH) RcprC5Cntative.' K:.ly Gr.lnge.'f (TX) Rrprestm:uivc Melissa A. H :.lH (PA) Rcpresc:nt:.ltivc Ro bi n H artS (Ne) Represc:mativc David H omon <O H ) Rcprcscnlalh'c Sue W. Kelly (NY) Reprcscn talive Jim Kolbe (AZ) Reprl:$(ll t;uive luy H. laHood (l L) Rcprc.'sc rn:ltive Slcvcn LalOUrCII C (01J) lk prese nta ti vc Jim Lc-ach (IA) Representa tive Jerry Lc-wis (CA) Represen tative.' Jim MeG'ery (LA) Rcpresenl';l tive Michael G. Oxley (O H ) Rrprescnmi\'e Thomas E. Prlri (WI) Rrprescmative Drbor:1h Pryee (OH) Rrprcsc ntOlti\'e AdOim l'utnam (FL) Rrprescntativc Ji m Ramst ad (MN) Rrp rescnta tive Ralph Regula (OH) Representative E. C lay Sha w, J r. (FL) Represe nt ative C hristoph er Shays (en Represen tative Joh n E. Sv.-ccney (NY) Reprcsc nr:u ive Wi lliam M . Thomas (CAl Represc'II;ui~ Fm:! Upton (M I) Representative James T. Walsh (NY)

4 Correspondence

POLITICS 5 Virtues of Math and Science - by Rep. Verno n J. Ehlers 6 Dealing with the Deficit - by Maya MacC uineas 9 GOP Needs to Court the Female Vote - by Par Carpenter

FEATURES 10 Europe: Crisis, What Crisis? - by John O'Sullivan 16 The Rise of the Euro - by Adam S. Posen

INTERVIEW 18 Future of U.S .-EU Relations - by Jeffrey T Kuhner

CAPITOL FORUM 20 Overdraft of Power - by Rep. Ken Calvert 21 The First Freedom - by Rep Henry J. Hyde 22 R~xamining NEPA - by Rep. C athy McMorris

PUBLIC POLICY 23 Straight Talk on Children and Abortion - by Rep, Ileana Ros-Lehtinen

24 Reforming the World Bank - by Ana Isabel Eiras

FOREIGN AFFAIRS 26 Challenges Confronting Lebanon - by Michael Young 28 Wrong on Putin - by Hereward Senior

THE JUST CAUSE 30 Bolton and the Balkan Tribunal - by Jeffrey T. Kuhner

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The Ripon Forum · July/August 2005

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Letters to the editor: Readers speak out on the March/April issue Ending Our Oil Dependency J really enjoyed reading Amory Lovins' "Ending Our O il D epend e n ce~ piece.

While it is inevitable that humans will have 10

move beyond oil as an energy source,

suggestions on how

to

do so are often

un realistic. The framework of the United Sta tes is built upon the use of oil, and this realiry cannol be changed overnight withO Ui serio us conseq uences ro America's economy and securi ty. Mr. Lovins pointS o ut many ideas that seem practical and feasi ble.

More importa ntly. Mr. Lovi ns approaches the transitio n away from oil through a

language that busi n(SSeS speak- markctbased incemi ves and a c hance fo r profit.

Trying to induce change 10 cl ca n (' T e nergies

for the sake of the environment hasn't and never will be t he way to invo ke change.

U ltimately, oil co mpa n i~s a nd th ~ industries thaI :ue rel iant upon oil know tha t the wells are running dry. Many of these companies understand tha t if they are to survi ve, th~y must be pio neers thaI will unv~il the new sources of ene rgy that will k~e p society chugging along. As admirable as Mr. Lovins' ambitious plans are, it will be the natural marke t compeli lion of businesses affected by a dwindling oil supply tim will hel p 10 deal the cards that we play much mo re than any sens ible argumelll laid o ur on pa per.

J~ Pack Atfollta, Grorgia

Angry White Male?

Sen. Rick Samorum is no stranger to inciting contro\'ersy o\"e r social issues. In 2002, h~ likened ho mosexuali ty to bestiality. Earli~r this summer, he cited Boston's supposedly ov~ rly sexualized society as the reaso n for th ~ moleslalio n SClndal in th~ Calholic Church. In his a rticl~, " Pro tecting the Unborn" in Ihe M arch/April issue of T he Ripon Forum, Mr. Sanrorum manages to som~what turn down his rh ~l o ric . But reading iI , I was left wilh the same feelin g I get whenever I hear Mr. Salllo rum speak:

4

this is an angry man .

Mr. Santorum's comments ar~ indicative of a growing tre nd amongst conse rvatives in tile Republican Parry: people who seem to think that George W. Bush being reelected is a sign from th~ Am ~ ri ca n people thai they ar~ willing to e mbra c~ some SOrt of bold new conservati ve agenda. This is not th ~ case.

Keep in mind, President Bush only recei\"ed 51 percent of the vote-hardly a mandare. While the majori ty of Ame ricans do consider themselves to be "prol i f~," this vagu~ t~ rm does not necessarily mean that Ih~y art: opposed to Roe \". \'Qade. In fact, most Americans believe that Roe v. Wade is now settled law.

As th~ Democra ts move more and mOTe to (he extr~m~ Left , R~pu blica ns should rake ,he oppoTmni ty to bring in the \"ery people the De mocrats :ne moving o ur: social liberals who value a vibram economy and stro ng military. T his may include peo路 pic who are pro路 cllOice. Republicans like Senator Santoru m are not going to help with wooing these voters.

as Social Security, Iraq, the war o n terrorism 3.nd defe nse o r traditio nal values. Wh y wo uld a stro ng Republican majori ty turn its back on the people that elected t hem by nOI fOCUSing on these issues?

Republicans in Congress need to work o n issues that the electorate voted Ihe m in on , and no t give into the left -wing, hemp wearing, tre~ hugging hippics.

Richard Army Dubbyovillt, Ntbrnsktl

Frank/in T. Tn llk North Caro/illa

Ra/~igh,

No to Green Republicans I am responding to your "G reen Opportunities fo r rhe GO P" by Samuel Thernsrrom in the MarchI April 2005 issue.

It pained me to m)' conscrvati\'(: bones when I r~ad this :IT(icie. The suggcstio n ror the GOP to rake a large r role in enviro nmenral politics is irrational.

The anicie points out how the environment was hardly mentioned in the 2004 presidential race. T his was, a nd still is, because the American people realize thert: arc currently more important issues than the environment. An American majori ty reelected President Bush because tlley believed in his plan of actio n o n issues such www.riponsoc.org

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The Ripon Forum 路 July/A ugust 2005

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Opinions from Members of The Ripon Society's Congressional Advisory Board.

Virtues of Math and Science Education can save your kid's job-and yours

By U.S. Representative Vernon J. Ehlers

J

obs of the (umre will require an unders[3.llding of me basic principles of math

and science. A U.S. workforce equipped with these skills is essential for our economic

competitiveness and national securi ty. These skills also generate consumers and voters who aTC well-educated, critical thinkers.

An unde rstanding of sciemific and m:lthcmarieaJ principles, a working knowledge of computer hardware and sofrware, and the problem-solving skills de\·dopcd by courses in science, technology, engi neering and math (collectively referred to as "ST EM") are now basic requirements for many entry-level positions or admission [Q college. Furthermore, rhcseskills help ensure success on the job.

The US. Bureau of Labor :md Slatistics eslimales that four of the 10 fastest-growing industries and occupations from 2002-2012 are expttled to be high-Iech. Even many lower-Iech jobs, including clerical work, depend on a Strong found:nion in math and SCience as our society increasingly rel ics on computers and comptller-coru ro lled equIpment.

In addition to economic concerns, a workforce equipped with math and science skills is cssentialto our national security. In 2001, the Hart-Rudman Comm ission found that the United States needs to revitalize itS strengths in science and math education in order 10 pre.~erve our national security. Their report stares: .. ... tllt: inadequacies of our sys[Cms of research and education pose a greater threat 10 U.S. national security over the next quarter century than any potential conventio nal war that we might imagine ... Jf we do nOt invest heavily and wisely in reb uilding these rwo core Strengdls, America will be incapable of maintaining itS global position long inlO the 21st century.»

Finally, a workforce equipped widl math and science skills fosters critically thinking consumers and vOlers. Everyday productS are constantly improving and conrain highly advanced technological features.

Today's technology will soon be surpassed by tomorrow's innovations and consumers need to be capahle of understanding and utilizing these ad\'ances. Also, voters need 10 com preThe Ripon Forum · July/August 2005

hend scientific issues. Almost every day, members of Congress take up science-related issues, whether they are considering health rcsearch, funding environmental iniliativcs or improving our manufacturingcapabilities.

As state referenda on environmental and technical issues increase, vote rs need to understand the issues.

Given how impoTlam rhis trained workforce is, one would expect That the Unitt.'<i States would continue to be the world leader. Unfo rtunately, we are St'<:ing disturbing trends in studem performance on basic math and science tests. The rttent Program for International Student Assessment ( PISA), and Trends III International Math and Science SlUdy (TIMSS), highlight the shortcomings of current K-12 science and math education in the United States when compared to other developed countries. \'(!hile our fourth- and eighth-grade students recently have shown improvement, they are srill below the international average, and our high-school Students arc consistently near the bonom. In the PISA study, IS-year-old studentS from 20 developed counrries, including many European and Asian nations, outperformed US. studems, even when socio-economic r."lctors are take n into consideration.

Furthermore, the number of graduates with bachelor's degrees in the physical sciences, mathematics and engineeri ng has been declining for tWO decades. n le United Srates gradual'es about 50,000 undergraduate cngim:ers per year while Chi na produces about four times this number. Even Japan, wilh half the U.S. population, graduates rwice as ma ny engint.-ers as we do.

To maintain our economic competitiveness and national security, we mUSt expecT more. New methods of reachi ng math and science are required, as well as bener curricula with improved standards and improvt.'<i traini ng of teachers, coupled widl strong parental involvement and suppon.

We ha\'e made progress by implementing math and science testing as part of the No Ch ild Left Behind Act (NeLB).

Congress also created the Department of Education's and Nat ional Science Foundation's Math and Science Pannerships programs, which provide necessary profeswww.nponsoc.org

u .s . Representative Vernon J. Ehlers

sional development 10 strengthen teachers' abiliry 10 efftt[ively teach math and science.

Along with Rep. Mark Udall, I sraned the Science, Technology, Engineering and Math (STEM) Education Caucus (www.stemedcauctLs.org) 10 educate congressional members and staff, and membership is booming.

As Congress considers the Higher Education Act re."luthorization this year and the TCamhorization of the NCLB Act in 2008. we must find ways to bolster our math and science ed ucation system. Perhaps it is time for Congress 10 implement more comprehensive changes. Sputnik and The National Defense Education Act of 1958 spurred U.S. leadership in science and ma th as a respo nse to the Space Race and the Cold War. We need a simi lar boost as well. For future generations-perha ps your own children-a strong math and science education will well equip our workforce. The resulti ng economic improvements will also help the presem generation thrive in their jobs.

I am committed ro ensuring that the United States continues its leadership. I challenge you 10 join me in this quest to improve U.S. mat h and science education for the 2 1" century. <:::7

Rep. Vernon j. Ehlen is a Michigan Republican and member ofthe House Education and the Workforce Committu.

He is also the cofounder oftht Sdenct, TtcJ",o/Qgy, Enginuring and Math Education Caucus.

-

5

Last year's budget defici t was S412 billion. The Congressional Budget Office proj('(:ts we will borrow another SI.6 trillion over the rest of me: decade. That's before any money is set aside for funher operations in Iraq and Afghanistan, reforming Social ~cu ril)', fixing the A1ternative Minimum Tax, or extending any of the expiring tax curs. Evcn this fur from rosy scenario depends on our borrowing ;all the surpluses from the Social Securil)' system, and using that additional $ 1.3 u illion of imra-governmental borrowi ng to mask the true size of the deficits.

Meanwhile, the nation's largest entitlement programs are clearly on an unsustai nable track. The firs t Baby Boomer will retire in three shOTt years, and quickly, we will transition from 3. nation where the largcst generation is in the midst of ilS most productive years, to one where the Boomers are on the receiving end of ollr national entitlement programs-gTt::uly increasing their COSts. Though Social Seeuril)' refo rm is 011 the national agenda. Congress has beell more focused on deb;u ing whether the system fuces a crisis than discussi ng how to act ually fix it. The program is over-promised to the rune of S II trillion. Congress has known 3.bout the problem for years, and every year we wait to make changes, the harder the problem becomes. Given that Social Securil)' is by far the easiest of the under- fund ed em illement programs to fix , this docs not bode well fo r a fruitful discussion on Medicare.

If changes arc no! made to the nation's largest entitlemems, we are left with two choices: squeeze out virtually all ot her areas of the budget or allow the government to grow to an unprecedented peaceti me size of 25 to 30 perc~ m of GO P Neit hcr scenario is on~ we should be proud to pass along to the next generation.

Furthermore, as Gene Steuerle of the Urban Institute has pointed OUt, we are losing cOlUrol of the budget as we pre-allocate more and more of the nation's resou rces. jusl as we could not have pred icted the majo r needs of today 50 years ago, it is difficult to anticipate what those needs will be 50 years from now. Yet because of our intergeneration3.l , consumption-oriented, payas-you-go entitlement programs. it will be fur harder to meet new nL-cds si nce $0 much of the budget has already been promised away.

Finally. while seniors are by fur the Strongest voting block, it is hard to make The Ripon Forum ¡ Ju ly/AugusI2005

the case that our current resource allocation of S8 per senior for every $ 1 on children makes sense. And that ratio will be chang. ing to furthe.r fuvor seniors JUSt at the rime when due to the new hypcr-competitive global environment we should be investing fa r more in the next generation of workers.

Turning a Blind Eye The political class has not yet woken up to the seriousness of these tremendous challenges. Perhaps we are a victim of o ur past successes. Politicians may hope fo r a replay of thc 1990s, when strong economic growt h and a booming stock market hcJ l}('d pull the U.S. budget out of what looked 10 be a permanent defici t spiral. But many levers were used ro generate rhose budget surpluses: multiple rounds of tax increases, considerable spending constraint , the emergence of the peace d ividend, and budget rules that would have prohibited enactment of the tax cut and prescription d rug legislation that we have seen in recent years. Moreover, sitting on the precipice of such a large demographic shift, the bar for success is now much higher than it was a decade ago.

It is hopeful that the admininration has acknowledged that deficits do matter and, accordi ngly, has prom ised to Cut the defi cit in half before the end of the decade.

However, the commitment is unconvincing given (he number of ex('(:u tive branch priorities omined from the President's budge!.

Furthermore, (he goal is insufficient even if it were realistic. At the bare mini mum, sound fiscal policy would involve balancing the budget over the busi ness cycle, running deficits du ring a downturn and surpluses during I>criods of economic strength, which is a fu r more aggressive target man (he course the President has laid OUt. Secondly, the go;al should not include the Social Seeuril)' surpluses, which not long ago, members of both political part ies were comm itted to saving. Finally, in preparation for the upcoming demographic shift, we should have been running large budget surpl uses over Ihe en tirel)' of the polSt decade. Fiscal policy would then have in\'Olved a shirt between smaller and larger surpluses depending on economic cond itions, with the additional savi ngs helping to prepare us for the Baby Boom's retirement.

Instead , the budget that Congress JUSt passed, while bold in its willi ngness to scale back some entitlement spending, actually enlarged the deficit beyond what it wou ld www.ripnnsoc.org

ha\~

been if no budget had been passed!

A Financial Market Crisis?

The broader and more troubl ing question has become not when will Congress come up with a realistic budget deal, but instead, will it be a financial market meltdown that finally forces our hand? While the scenario may seem far-fetched-fiscally driven market crises occur in developing marketS and regio ns, not the home of rhe global benchm ark security-a spiraling chain of evenu is not Out or the question.

T he United States is now highly dependent on lenders from abroad to finance our massive levcls of borrowing. About half of outstanding Treasu ry bonds are owned by foreign lenders. Particularly troubling is that the composition or lenders has shifted away from private investOrs seeking o ut the highen rerurns, to foreign cenl'Tal banks attempting 10 prop up their currencies vis~-v is the dollar. This leaves the United States in the odd situatiOn ofbcing the single strongest superpower and at the same time, the si ngle brgesl debtor and thus. surprisingly dependem on other nations.

A mini wake-up call occurred when the South Korean central bank let it be known thai they were considering shifting part of their reserves 10 currencies other than the U.S. dollar, leading 10 a temporary stomach-l urching decline in rhe dollar. It is easy to envision a more permanent scenario where concern over America's fi scal posit ion would lead 10 a selling off or dollars, stocks and oonds, rising inrerest rates, the bursting of the housing market bubble, and a slowdown in not just our economy, but the world's economy.

While it is true that the Asian cenrral banks have a Strong interest in not lening the dollar drop [0 avoid taking a big loss on thei r existing holdings, it is lin.le comfort that this co-dependent relationship could ultimately produce twO sers oflosers. Japan, India and Russia have all recently made rumblings about diversifying their reserve currencies. and when they speak. U,S. Treasury officials must now listen.

Another unsettling scenario is that private rating agencies, such as Moody's and St3.lId3.rd & Poor's, downgrade the United States' debt based on our high levels ofborrowing and unfunded liabilities, much as they did Canada's in tht' mid- 1990s when their fiscal policies were deemed overl y reckless. A downgrade would surely cause bondholders to dump their debt, leading to

7

Politics: Dealin with the Deficit an ab rupt jump in intercst rotes and pOlentially setting off an unwelcome c:conomic spiral.

No one knows if an y of these scenarios will materialize. Certainly, no one knows when. Clearly, however, this is one of those rimes when w(' would rat her nO! find OUt if the crisis predictions are accurate. Even if Ihere is no financial crisis, or it is closer to a blip than a meltdown, ongoing budget deficitS droin the c:conomy of investment capital. lead 10 lower standards of living in the futurc and S<Jueeze out other are:a5 of the budget as interest payments mo un!. In short , deficits arc a reflection of o ur spc nd ~ ing morc Ihan we can affo rd and forcing our children 10 pay rhe bill.

The ben scenario to stave off any potential crises and the right one in lC:rms of generotional responsibility is to take: pre:(,mptive action rath('r than waiting until action is forcc:d upon us. The gap be(',... ~n revenues and spending is large (,nough that a few tw('aks here and there will not come dose w doing rhe Irick: a real budget deal is c alled for.

A Grand Fisca l Bargain Any effective deal will have 10 be' bipartisan to giv(' both parties political cover 011 the lOugh choices Ih:1I will inevitably be' involved. Moreover, a bipartisan and balanced compromise has a far better chance of st icking, even if powe:r in the House, Senate or White House ch:lIlges hands. [n order to reassure forwa rd-looking financial markets, the deal will have to address both the short and long-term challenges.

While it is hard ro picture what SOrt of deal could com(' OUt of this highly polarizc:d and partisan environment, the numbe'rs paint a pretty compell ing picture of where: to lx'Sin. Fc:deral revenues have ranged

from about 17.5 percent to 21 percent of GOP over the: past few dl'CIdes. Today they stand at a 46-year low of 16.3 perccm.

Meanwh ile, fedcrnl spending has been in the ra nge of 18.4 percent to 22.9 percent over the past 20 yaTS. O n its current path, spending is expected 10 grow to betwc:en 25 and 30 percent. Even for those who don't worry about the in('fficiencies cal.l.SC'd by taxation at current levels, such Cl(orbiunt growth is cause for conccrn.

One possibility would be a grand fiscal bargain : Raise taxes in the short-run and rein in entitlement spending in the longrun so thar both arc more in line with historical norms. Such a balanced ap proach has a fa r better chance of succe:ss than any of the alternatives. Neither pany will particularly rdish the plan because both will have to giv(' something up. BUI r('al budget deals are nC\'('r easy.

First, let's fake taxes. Initially, ther(' was concern that surpluses would grow so large they would consume all the: outstanding debt, prompt ing calls for tal( cuts. T hen. as the economy stalled. the case for fisca l stimulus made sense. (Though using bOlh argume nu to justify (h(' same tal( package was a bit of a stretch.)

The subsequent rounds of tax cuts, however, from a fiscal perspectiv(, were inexcusable. With the loom ing COStS of the Baby Boom around the corner. wc should have been using the government's ('xcess funds to pre-fund the major retirement and h('alth car(' programs. Moreover. once the budget surpluses vanishc:d. the tax cuts merely exploded the deficit fu nher.

Rep ublicans had their chance to r('ducc: the size of government, but chose not to.

Accordingly, neilher the argument that the tal( cuts were part of a plan to scale back governmem or increase c:conomicefficiency holds. Either the President's tax curs could

Chart; .. : Federal Spending and Revenues

30 Projection'

'0 20 !

~ '" 15

I~

Spending A

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on the nodon .hat entitlement programs cannOt be changed. updated. or cut. We have grady over-promised this area of .he budgel and have no plan for how to pay for all these promises. Whar did we do with Med icare, the most challenging of the problems? We expanded if by add ing the prescription drug plan with vi rrually no rcg:lrd for the tremendous long-term cosr.s.

Entitlement programs will have 10 be reduced. The most sensible way 10 do so is 10 progressively sc.11c hack benefits for dIOse who do not need them. The President's plan ro reduce promised Social Security benefits for wealthier retirees, for insranc(, while protecting tllose who depend on the program , makes an awful lot of sense. Same: goes for means-testing health care benefits, through rl'(\ucc:d benefi ts or higher premiums fo r the well-off elderly. The other option of course is to employ across- the:board benefit reductions, which would do great damage to the recipients who truly depend on these programs. But surprisingly it is Democrots who tend to objc:ct to rc:designing these programs in a way dial would make Ihem more progressive. faring that it would underm ine their political SIlPport. The argument Ihal we should dole out generous middle-class benefits in order to buy political support. particularly when the: cost fitlls squarely on the backs of workers, many of whOnl are Ie:ss well-ofT. is not only excessively inefficie:m and cosily: it is not in keeping with what progressives should Stand for.

Bolh parties have put politics in frOnt of principles, and this will have to change.

In order to directly confront the coumry's major flSClI challenges, both the eras of big govern mcllt conservatism and anti-p rogressive progressivism will have 10 come to an end . If we arc not willing to enter inlO somc kind of a grand fisca l bargain wherc everything is on the rabie, and both panies art: will ing 10 give up something, more than likely, finan cial markets will end lip forcing our hand. ~

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10 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 8

be repealt.-d, or a ne\\' revenue strom-such as a progressive consumpuon lax o r envIronmental and energy raxes-could be added. BlLI given rhe currell[ budget picture, taxes will have to go up.

M"''':lllwhile, Democrats must give up

www.riponsoc.org

MllJa MacGuin(as iJ 1111' Oirtctor of rJl/! Fisca! Po!i,] Progmm III til/! Nl!w Aml!nca Foulllwtion. a nonPllrliUIfI think tllllk in Washingtoll D.C Tht Ripon Forum ¡ July/Augus! 2005

GOP Needs to Court the Female Vote America's women deserve political parity

By Pat Carpenter he latc House Speaker Tip O'Neill

T

onc(' said , "All politics is loc:al,M Thai's why The W15H List (Women In the Scmuc: and House) has made the: recruitmem o t rai ning and dection of outstanding

women leaders-at all levels of government-a top priority.

Morl' tha n half of the populat ion in

America is fe male. That's why if is imporlant that women have equal rep rcsenmrion where public policy is being discussed. and laws aTC: being enacted. Women bring a different perspective and SCI of life experiences to the rable. They see issues in a different light. It is critical that bOlh the

perspect ives of women-and those of mcn-arc aired and debated in the pr~s of writing public policy.

Un fortunat ely, American women arc still a long way fro m election parity.

According to the latest statistics from the Center for American Women and Politics at Rutgers University:

• Women hold only 14% (5 Republicans. 9 Democrats) of the 100 $Cats in the U.S. Senate.

• JUSt \ 5% of the 435 U.S. House sea ts (23 Republicans, 43 Democr:m) are held by women.

• O nly eight of the 50 states have women governors (2 Republicans, 6 Democrats).

• Of all315 5talewide d ective offices nationwide, women hold JUSt 25.7% (43 Republicans, 35 Democral$, 3 nonpartisan).

• Women occupy juS[ 22.5% of the 7,382 state legislative SC3lS nationwide.

• O nly 15% of the 243 U.S. cities with pop ul ations greater than 100,000 have women mayors.

These numbers are appalling. If the interests of American women are to be equally rep resented in government today, we must dect many more women to public office.

Th e Republican Parry, which has always been at the forefront of the America n woma n's fight for eq uality.

The Ripon Forum •

July/Augu~ t

2005

"The Republican Party must take proactive steps to identify, recruit, train and elect more women to local, state and federal office." should take the lead once again in this important battle. T he GOP must ensure that the rights and interests of America's largest demogra ph ic group arc preserved and pursued.

We all recall that the Republican Party was the first political parry to call for equal voting righ ts fo r women-a battle that persisted for 70 years before ratification of the Equal Suffrage Amendment 10 the U.S. Constitution in 1920. And the fi rst woman elected (in 1916) to the U.S. House of Representatives was jean nelle Rankin-a Republican frOm Monrana. These facts underscore the Republican Parry's proud heritage of incl usion- a heri t:lge that the GOP must revive in order 10 attract the VOles of more American women.

The Republican Party must take proactive steps to identify, recruit, train and elect more women 10 local. state and federal office. There :lo re a number of W2YS to achieve this without resorting w the restrictive mandawry quota systems that have been implemented in some countries w ensure equal representation fo r women.

Republican leaders must make the election of women a priority, and they should let Americans know (in speeches, writi ngs, and the GOP platform) that Republicans are leading the way in the fight for women's equali ty in the political arena. In addition , Republiun Parry org:lonizations-at the federal, State and local levels-need to recruil promising women to run fo r office-a nd then provide these women wilh fi nancial help, strategic support and candidate training. www.riponsoc.org

Em phasis must be placed o n the election of fe male candidates at tlie loc:lol and stare legislative levels. where women leaders ga in the experience necessary to run for governor, Congress, the U.S. Senateor even president. The more women officeholders in the pipeline at the local levels of government, the more the chances are Ihat they will survive Ihe harsh climb to the uppermost rungs of power on the politial ladder.

The battle has nOt bttn an easy one.

And it won't be easy in the days ahead. But right now America is using only a fracli on of the resources we could be putting 10 work for us.

The political party that helps America's women acq uire equal clout is the party most likely 10 thrl\'e. After all, women vOl'e.

This is why The WISH List has made the recrui tment, training and election of outst:londing women leaders a tOp priority.

It wi ll rake time, determination and perseverance to bring gender equality 10 all levels of American government. We ca nnot give up. Nothi ng worth achievi ng comes easily. ~ - I'at Cnrpmttr is Pmidmt of The WISH List (www.llJ~ishliJt.org), 4 n4tionwide ntl/wrlt ofmninstrtnm womm nnd mtn dtdicattd to inrrrasing tI)( numbrr of Republican womm offiuholdflJ arross Amrrica. WISH rerruirs, trains and supporn pro-choiet Rrpublican womm ca"didatts 1Ull11ingfor Congress. go~morshipJ, statt ItgiJIOIi~ stan and local officn.

9

Europe: Crisis, What Crisis?

EU must reform in wake of rejection of constitution

By John O 'Sullivan

M",,"""

~;oy",,, stands In centef". as They are, from u .s. PreSident George W. Bush. Canadian Prime Minlstef" Paul Martin. French President Jacques ChIl"8C. Japanese Pnme Mlnistef" Junichiro Koi~umi. Mr. Blair, ltahan Prime Minister Silvio Berlusconl. Russian President Vladimir Putm, EU President Jose Emanual Barroso, and GenTIan Chancellor Gerhard Schroed8f".

STOR/L. Porwgal-My sympathies go out quite sincerely to anyone, American or European, who seeks to undersland whal is going 011 in ~Europe~ (as (he European Union is quai lilly known in (he media) following Ihe recent ~No~ \·Otes ill the French and Dutch referenda on the proposed European constitution. He is likely to be more than averngeJy barned if he is taking some trouble to inform himself. and he will be completely at sea ifhe is an official in the St:u e Department or the National Securi ry Council responsible for European affairs. For Ihe more closely and scrupulously he has followed the post-referendum debates, the more wildly wrong he is likely to be aho U! what has happened and what is now likely to happen .

Let me try to summarize the confidem misinformation that fill s this official's head in a brief pamgmph. He will probably believe

E

10

thai there is a "crisis" in the £U following Ihe "NoH vOtes, which have led 10 the abandonmen! or even "de:llh~ of the conslitUlion; Ihal Ihis initial crisis has been aggravated by a further crisis as a result of the fai lure to agree on a common £U budget for FY 2007 and following years; and that this budgetary crisis was itself the result of a clash between the British preserving Iheir budgelary "rebale and [he French defending the Common Agricultural Policy that financially feather-beds Iheir farmers. If he has been reJ.ding the credulous British and American press, he may feel some optimism about the favorable resolution of these crises because British Prime Minister Tony Blair has proposed free-market solutions to Europe's high unemployment, low growth and galloping regulatOry sclerosis. As the 11(.'>: [ rotating president of the EU, Mr. Blair will therefore seek 10 "modernize" Europe :Ilong the same M

www.riponsoc.org

flexibl e labor market lines that his New Labor government has successfully pursued in Britain. And because a flexible, de-regulated, free-market Europe would make a more compatible partner for the United StatCS, the United States need no longer worry that the EU is likely to develop as a rival or ~cou nterweight ~ to the United Statcs in glob<!.l polilics.

Alltha( is missing from this accou nt is a smiley-face after the lasl semence. Yet not a single item in the above lisl is correct. Not one. Nil. Nada. Zero. Or in the language of diplomacy: Rien.

European Reality Check For a realiry check, let us go through them item-by-item.

'10 lx-gin with, the Dutch and French \'otcs have not created an EU uc risis." The proposed EU constitution was an innovaThe Ripon Forum ' Jul y/August 2005

rion. It consolidared some things, changed OIhers, and introduced still more. Since it has not yet passed, the otisting EU treaties remain in force and govern the EU as before.

If the ~tatus quo was not in crisis before the VOtes, as it was not, then it is not in crisis now. You don't need to panic; you don't (:ven need to "not panic. ~ Nor is the constirution dead, buried, or even terminally ill. At the recent EU Council (or Usummit'" as the UK press calls it), the assembled heads of government decided to ext'e nd the deadline for its r:nification indefinitely. Without that extension it would have perished by November 2006; it will now remain in political limbo until the EU Council decides that it can safely risk asking member-states, including France and Holland, t'O ralify it again. Postponing r:ttification is:t device for saving the constitution.

The same logic explains why the pro-constitution governments of Ireland, Poland and Denmark have postponed their referenda on it. "lney know they would lose the VOtes now.

And they calculate it would be easier (though not necessarily easy) to win a first referendum in two years' time, say, than to ask their voters to reverse themseh-es in a second referendum after having rejected the constilUtion today.

"111is dete rmination to press ahead, even if slowly, was emirely predict::lble. l.e::lding EU politicians think th::lt the only legitimate outcome of this process is ratificl.tion. So the question will go on being asked until the voters of 25 counuies give the right answer.

Charlemagne, the European columnist in TIN aonomiJ/, thinks this determination is unrealistic. But is it-given a long enough time scale~ After all. it has paid offlxfore on St.'veml issues. Moncr;try union was first introduced in the 1970s when i1 coliapsl.J disaslfously; 25 }'l':trs later the Euro was launched. The first European defense community was rejected in 1954; almost 50 ~rs later it came into existen~.

While we arc waiting patiently for the voters to ratify their go\'ernments' decisions, some of the innov.uions in (he draft consti· tution are likely to Ix imroduced anyway under the existing trcaties---and nOi small items, either. They include an enti re EU diplomatic foreign service and a European defense procuremem agency.

So if the constitution really is "dead," the theologians should be del ighted: it would be {he first example in nature of life afler dC3th.

In comparison wim such a time-scale.

The Ripon Forum · July/August 2005

postponing a decision on the EU budget almost 18 momhs Ixfore it is due to come into effect is not even a difficulty. let alone a crisis. No EU budget in history has ever been agreed this fu r in advance. Talk of crisis is mainly to impress the punrers back home and in W:a.shington. It enables EU leaders ro "stand firm" on thei r national positions, hurl insults, predict dis.1ster, ~save Eu rope~ at the laS[ millme and generally act like political leaders in a Hollywood history movie.

Fight Over CAP The facts are less dramatic. Far from there being a complete impasse over the terms of a budgeury compromise, (here is only a modcst gap between the two sidcs.

Like all British Ic:tders since Lady T harcher, Mr. Blair arrived at the summit prom ising to defend to the death the British budgetary rebate (in effect, compen5.1tion fo r the disproportio nate sums Brir;tin pays: into the EU's Common AgricullUral Policy. otherwise known as CAP). He left the summit saying that it was "an anomaly that has to gO.8 He would surrender it ill return for majo r refo rm of the CAP that spends 40 percent of the EU budget on less than 4 percent of the EU workforce. At the European Council itself, Mr. Blair offered to reduce the rebate by E5 billion: the other summiteers asked for EI8 billion. As Tilt' Erollomist's reporter concluded, the compromise figure is likely to be somewhere betwccn thoSt.' two points---Iarger if Mr. Blair can get ~ubstantial O\P reform, smaller if not.

You may confidently bet that the rebate reduction will be very modest indeed h«ause there will be no major refo rm of the CA P before 2013 at the earliest, and perhaps not even then. T lm ..'C ye-Jrs ago Mr. Blair joined everyone else in adopti ng a miniscule CAl' reform package to last until 2013. The French have a veto on any change in the CAP until then. Every major French politician regards the unreformed CAP as a vital French national interest. And any new Christian Democrat government in Berlin (on which extravagant hopes in Washington and elsewhere ::Ire currently pinnl-d) would not want to begin its term in office byalienating Bavarian fimllers and thus its longstanding C hristian Social coalition partner with massive cuts in agricultural spending.

All these considerations point 10 a very modest CAP reform indeed in retu rn for a reduction of, say, EII billion in the British rebare. In other words, a typical EU budgetary non-<:risis will be settled by the cuS[Qmwww.riponsoc.org

ary EU ~fudge.ft And Mr. Blair. like every British leader since 1972 except Lady Thatcher, will return claiming a wtriumph" for the British approach of an open, reformed and flexible EU. Mr. Blair has already laid the groundwork for this kind of illusionist politics in his sp(.~.'ch to the European uparliam en t ~ se({ing OUt British illlemions for his ror;tting EU presidency. That speech has been b'e'lleraliy repo rted as a ringing call for market reforms.

In faCt , the prime minister advocatl.J both sidc::s of every important issue. He criticized the EU's high levels of unemployment but denied that there was any contradiction betwcc:n this ~social · Europe and market freedoms. He conceded that the referendum defeats reflected serious popubr discontent with the direction of "Europe" but he wanted the existing EU structures to remain intact and even to be "deepened" by further integration. He declared that he believed in a "political Europe" not JUSt a common market or free trade area, but he denounced :lS either inadequate or misguided virt ually every major economic initiative l2ken by that "political Europe." When the speech is reduced to its essential core, his ringi ng call to "modern;'ze" the EU comes down to the same (or more) Euro-institutions enjoying lhe same (or more) powers pursui ng the 5.1me (or more inrervemionist) policies as now-but doing so more efficien r.ly.

Mr. Blair could hardly argue otherwise in the light of his recelll stance 011 things European. He enrered office in 1997 pledging, like John Major, 10 put Britain "at the heart of Europe." In the intervening eight years he campaigned to join the Euro (now concedt-d to Ix killing German and Ital ian growth), abandoned Britain's opt-out from the "Social Chap ter,~ reduci ng labor market fl exibility in Britain, embtaced an independ~ enl European defense structure sepamte from NATO that previous British governments had firmly opposed, and was a mbid supporter of the constitutiOn until yesterday.

His current stance is to defend the same policies wir..ll differelll rhetoric. It is Tharcherite rhetoric ro advance anti~Tha (cherite purposes, Euro-skeptic rhetoric about competition and flexibility that cloaks a fun damentally corporatisl and interventioniST institutional structure.

How Blairite is Blair?

That has not stopped mcdia everywhere from proclaiming that Mr. Blair is leading a vigorous movement to make the EU more

II

More efficiency? Ditto. He praises market reforms which makes them nervous. But when he lists those reforms, they turn out to ~ the average EU burea ucrat's list of pro-business interventions.

From Mr. Blair's speech again: "The Kok report in 2004 shows the way: Investment in knowledge. in skills. in active labor market policies, in science parks and innovation, in higher education, in urban regeneration, in help for small businesscs. ~

Tony Blair gIVeS a press conference at the end

like the British market model and less like the French social model. Maybe we should be grateful Ihal this is nonsense since the British ~ market model ~ has been grossly oversold. As Mr. Blair himself said at those points in his speech when he was wooing the Left panies in the Emo-parliament , social regulations and benefits have both increased rapidly under his gO\'ernment. One estimate is thar 70 percent of Ihese new regulations are generated domestically. Many of the European n:gulations are the result of Mr. Blair's signing OntO the European Social Chapter. Recent job growth in Britainabout which he boasted- has occurred almost emirely in the public sector and is therefore a drain on enterprise rather than an CX2mple of iL And as several British commentators have noticed, public spending is accordingly rising sharply as a percentage of GOP. The OECD forecasts that Britain's public spending will rise to 45.2 percent of GO]> in 2006

12

of the c;.a summit in Gieoeagles, United Kmgdom from 40.2 percent in Labor's first year of office. At the same time-as skeptical British commentators such as Helen S1.:.muely.

Richard Nort h, Neil Collins, and Ambrose Evans-Pritchard have pointed o utEuropean economies have aClUally red ucc.od their sme spending: Spain and Italy by 9 percent, Sweden by 16 percent. Denmark, Belgium, Holland and Aumia by 6 pcrctnl.

Even despised Germany has reduced the state sector to 46.1 percent ofGD I~ less than one percent higher Ihan Ihe British share. and slill going down while the UK share is going up. Mr. Blair was lcauring people who, by that cemral measure at least, were showing more concern for enterprise, competition and the private sector than he was. h is, in fact, quite difficuh to see exactly where Mr. Blair and most of his European critics seriously differ outside the limited issue of the EU budget. He wants moderni7.ation of the present European institutions; they would nOt object ro that in principle. www.riponsoc.org

No European head of government would be worried by such policies; he would merely call them "civilized" corrections ro market "anarchy." And though such terms would be self-praising economic stupidi ty, they would be a more accurate dc.scription of the policies than Mr. Blair's enthusiastic hymn 10 flex ibility, openness, competition and whatnol.

But this raises a question. If Mr. Blair and most EU leaders are essentially agreed on a more streamlined version of the corporate economy with more rational priorities (i.e., less spending on agricultural supportS and more on scientific research), why have such policies nOI been adopted? And when they have been adopted, as with the " Lisbon agenda." why have they had such limited and disappointing results? And how corne the EU has stubbornly resisred reform of the CAP and continues to spend 40 percent of its budget on 4 percent of economic activity wllell anyone can see this is foolish?

The an.Wo'er is that polilical priorities are not necessarily economically tational. They reflect the interests of powerful groupsrcm-$(..'t."kers such as French humers and Spanish fishermen- rather than textbook economic theory. Such groups will not surrender valuable privileges simply because Mr. Blair argues they do not maximi7.c returns on spending or represent oplimal economic OUlComes for the EU. Stares represeming Ihe interests of those groups will insist on being "paid" for conceding some of the privik'ges by obtaining some other benefit- the placing of an EU agency in their country, for instance. In a non-market polilical system of distribution-and the EU is a cartel of governments-log-rolling becomes the standard method of directing investmen t. This systematically misal10cates resources increasingly over rime. II requires heroic measures ro keep the losses ro moderThe Ripon Forum ¡ July/August 2005

European Union

goes from the anti-American

"counterweig}u" model of the EU on the Left to the (AIm, 8eIg/I.m. o,,:.-us. ClettI~, Deometk. E$IonIa, FinIaocI. France, Atlanticist model on the ltight.

Gemlany, Gteece, HlrlOary.Iremd.IIatt.laMa.lJtOOIriiI,~, Malta.

Spectru m C on governNetherIards. ~ Portugal, SJoiIakIa, SIoveriI, SpaiI, Sweden, LWIIO KirI}lcm) mental structure goes from Population: 457,030,418 (2005 est.) sup ra- nationalism on (he Left to intergovernmentalism on Population growth rate: 0.16% (2005 est) (he Right.

GDP: $11 .65 trillion (2004 est.)

It is fair (0 say, I bdi~, that there are family resemGDP - net growth rate: 2.4% (2004 est.) blances linking the positions GDP - per capRa: $26,900 (2004 est.) people take on these different models. Those who favor the Inftatlon rate: 2.1% (2004 est.) social model in political econoUnemployment rale: 8.9% (March 2005) my will tend (0 support both the "counterweight" model of Europe in foreign policy and sup ra-national afe proponions, let alone abolish them in the model of European integration. Those favorcourse of setting more rational priorities.

Hence, this is the reason for the persistence ing the market model will lean towards the same end of the other two spectrums. We of CAP spending.

If Mr. Blair wantS Europe to be an effican reasonably assign these various ideas to cient corporate economy, let alone a vibrant their traditions. Those ideas that duster at open market one, then he will need to the I..dt-hand side of the spectrums fall into the general category of "Constructivist reform Ihe emire institutional and legal structure of the EU and re-write the existing Rationalism" which is a general philosophiEuropean treaties. He will have to re place cal approach to politics found more comregulatory harmonization with the principle monly in continental Europe than in the English-speaking world. Contrariwise, the of "mUlual r«ognition of national stanpositions on the Right-hand side of the specdards. And he will have to transform the trums I would label "Adaptive Evolutionism" present CUte! of governmentS into a market of go\'ernmems in which European nations which is my term for the main "Anglocompete with each other by offering differ- Saxon" tradition in political thought, though there are d istinguished conrinenral ent mixes of tax and regulation to attract Europeans, Alexis de Tocqueville for investment and talent.

Given Mr. Blair's record to date, any instance, who are ornaments ofi !.

Such inter-relationships are tendencies, :ltte:mpt to make such changes is highly however, rather than absolutely firm relaunlikely; given his chameleon political character, however, it cannot be entirely ruled tionships. Some especially logical souls will out. He may even be trapped into it by his find themselves at the same extreme end of flights ofl iberrarian fantasy. all three spectrums. Until recently at any rate, France's President Jacques C hirac would have embraced the social modd, the counPoHtical Connections terweight model and the supra-national To explore what such policy might look model-but the apparent decline of French like, let me I'CSOrt to political science and draw a theoretical diagram. As Nod Coward influence in the EU may be giving him secsaid when musical comedy star Gertrude ond thoughtS about supra-nationalism. The British Tories ....'Quld tend to be at the oppoLawrence appeared in a serio us play: ~ Legit i mate at last- Mother will be site end of all three spectrums to Mr. Chirac-I certainly would fi nd myself there. pleased."

But others would pick and choose. I think it Let me suggest that when we disrill the various disputes over EU policy into pUI'C reasonable to describe the current head of theory, we will be left with three large the EU Commission, Manuel Barroso, as 2 debates. Each of those debates is, so to speak, sup ra- nationalist who is nonetheless nearer a spectrum of opinion going from Left to to the market modellhan the social one and who as an Atlanticist dislikes the counterR;gh" Spectrum A on political economy goes ....'Cight concept of EU foreign policy. The from the Social Model on the Left to the EaSt Europeans are currently market modelers who favor intergovernmentalism and Market model on the Right.

Spectrum B on international relations Atlanticism, but all three preferences may be M

The Ripon Forum · July/A ugust 2005

www.riponsoc.org

subtly modified if they obtain larger subsi· dies from Brussels. Mr. Blair thinks of himself as a market modeler, intergovernmentalist and Atlamicist, but only his claim to the third will survive examination, and even that may evaporate as Britain sinks deeper into the morass of a common European defense :md foreign policy. And so on.

Ar first glance it seems more pragmatic and reasonable to mix-and-match different positions from the th ree spectrums. But there is a reason fo r these different attitudes being linked aside from political dogma.

Consider, first, the relationship between the spectrums on political economy and governmental structure in the light of current controversies. Suppose tOO that Mr. Blair genuinely wantS the EU to develop a more flexible labor market that would reduce labor costs in o rder to cut unemployment. He would then have to face me faa that many French voters rejected the EuroConstitution precisely because they believed-wrongly, in my view and in that of the French government- that me constitution would weaken their treasured social model on "Anglo-Saxon" lines. No French politician-not even Nicholas Sarkosy-is likely to win an election by advocating what the French quaintly call ultra-libcr.al ~mod . . " ermullon.

Here is where governmental structUre comes in. In an intergovernmental Europe (or what is sometimes called a "free trade area"), that difference of opinion need not maner overm uch. Both French and British governments would pursue their diS[inctive economic policies in an environment of "ju risdictional competition. " And there would be endless battles of statistics to seek to prove which rax.-and-regulation modd had delivered the goods. In a supra-national Europe, however, such a live-and·let-live arrangement would be impossible. The requirement fo r common policies and the "harmonization" of different na[ional regulations would compel both countries to adopt the same set of rules. No doubt those rules would be a compromise of sorts berwecll marketS and social intervention. Neither country would be satisfied; the compromise would probably lack the vinues of both approaches; and we would never settle the superiority of either system through competition. If there really is to be market competition in Europe, the EU needs to lean heavily towards the intergovernmental end of the spectrum .

The social model in the economic spectrum also clashes with the Atlanticist end of

13

Feature: Euro e: Crisis What Crisis? the diplomatic o ne. Nor are the reasons obscure. A social model a la francaise increases domestic indusrrial com and reduces competitiven~. If th~ COSts can ~ exported to o ther EU mem ~rs through harmonization, co m rise throughout the cartel.

W ith higher COStS, continent-wide, the EU now has either 10 export its regulations internatio nally or erect various rariff and non-rariff barriers 10 trade. In fact, il does bolh. The United Slates is currently protesting the EU's altem plS to impose new and mo re onerous chemical regulations through the "cultural excepti on~ in ru les, and the Chinese are angry at the EU for CUlli ng textile import quo tas. The more am bitious the social model , the mo re protectionism it requires, and the mo re likely it is to provoke trade disputes, and over time the mo re it will alienate itS alliance parmer.

Now, the same is true-though less obvious ly-of the relationsh ip bet\veen Spectrum 13 and Spectrum C. Supra-nationalism may nOt acmally mandate a diplomatic stance of rivalry rO\vards the United Sr:lte5, but it makes one more likely. For their own

wro

nation-building purposes, EU supra-nationa1islS tend to promote anti-Americanism as the glue of an otherwise disaggregated European identity. Still more fundamental, supra-natio nalism makes rivalry possible. An intergovernmental Europe simply could not ~ a rival of the United Srates even if it wished to be one. h would be unable to mainrain a consistent common stand-sec Iraq passim. It would have no armed fo rces.

It could never unite around o pposition to U.S. policies since there would always be some nations o n the side of the United States. Atlanticism would then be the o nly sensible and effective common foreign policy open 10 it. Advocates of supT:l-nationalism argue that the EU could shape such a common policy without wanting to lx.'COme a rival to the Un ited States. But this neglects a viral point: supra-nationalism tends to manufucture ri valry by its \'ery workings even when no one necessarily intends them.

Mr. Blair inadvertently revealed this in a passage of his speech that was intended to prove that the common foreign and defense policy would make the EU a good panner to Ihe

United States internationally.

"We arc leading the: debate on dim:!.l!! change and developing pan-European poli-

cies (0 lackle it. Thanks 10 Xavier Solana, Europe has slancd to make its presence fell in the Middle East peace process. But my point is very simple. A strong Europe would

be an active player in foreign policy, a good pannC'f of course ro the United $ra(t'S but also capable of demonstr.ning its own ClpaCit)' to shape and move the wo rld forward. "

Mr. Blair's own aarn ples make the opposite case. The EU's policies on climate change: were to use the Kyoto accords to mise U.S. energy cOStS disproportionately, to demonize the United States when it resisted this mctic and in ge neral to make a rational

dcbalC.' on global warm ing impossible by, cr, raisi ng the remperalUrc. h:s main contribu-

tion

10

the Middle East peace process has

been 10 distinguish itself from U.S. policy by consistently striking a more pro- Palestinian and anti-Israeli posrure without being able to get its clients to make concessions of their own or to respond sensibly to Israeli concessions. Here EU policy is driven by the sad

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14

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The Ripon Forum ' July/August 2005

faa that it would never have been noticed if it had nOI run counter to American policy.

And, finally. if Mr. Blair had wanted (0 add a third to these (wo boomerangs, he could have cited the EU's support for the International Criminal Coun. Not only has it tried [0 force the: United Stales to abide: by a treaty it has nOl ratified bUi the: EU has also sought to frustrate American cfrons to pro-teet its soldiers from ICC prosccmion by making agreements with third states. This potentially bitter dispute arises entirely from

ideological motives: the EU sees the ICC as a model of supra-national governance like irself. and a rebuke [0 the outmoded sovereigmy of narion-srarcs such as the United States.

What the model suggests, therefore. is thaI su p ra-nationalism in the EU context

obstrucu not only ttOnomic rationality but also continuing good transatlantic relations.

Europe's current difficulties, though Ihey fall short of being a "crisis," nonetheless present the United Stares and the Bush administration with a wonderful opportunity to assist the re-shaping of Europe along "Adaptive

Evolutionary" lines mat would benefit its traditional allies, New Europe and proAmerican political forces throughoul the continent and thereby advance its own ec0nomic and strategic interests. It is a moment that may nevt::r come again.

Yet it is at this very momem that senior U.S. administration figures are qUOted as saying that Pres idem George W. Bush and his foreign policy ream have determined to give full support to rhe traditional policy of endorsing EU integration. President Bush's speeches in Europe and Secretary of Stale Condoleeaa Rice's endorsement of the EU constitution were imended to signal that advocatcs of "disaggregation" (i.e., supporting some, generally economic imegrarion, but resisting other, generally political integration) had losl the administration debate.

Washington would in future place more Stress on dealing with the EU than on bilateral relations with individual European Statcs. In shon, WashingtOn would rerum 10 its traditional policy of obraining good alliance relations by backing "imegration"in practice a synonym for supra-national.

ism-in Europe.

Let'S go back to Mr. Blair, the man of the momem, however. Aoout a year before he became prime minisrcr, he shared a rail· waycompanmem with a former Tory minisler, Norman Lamont, with whom he was on friendly terms. The Tory asked him to explain how he would approach the EU once he was in power. Mr. Blair argued that he would make clear that Britain was fully commi tted to European unity, gain the trUSt of other EU leaders, dispel the aroma of obstructionism clinging to British policy, and from a position of greater acceptance seek to persuade his fellow leaders to adopt a more outward-looking, liberal and Atlanticisr strategy. Mr. LamOnt smiled. ~ J 've seen this movie before," he said, "and J know how it comes our."

Well, I've seen me American version before 100, and it doesn't come OUI any better. <::'I -John O'SuUivan is a muionaUy syndicaud columnist I1rui

form" rditor-in-chi~f of The National IntntSt

@) BELLSOUTH®

The Ripon Forum · JulyiAugu5t 2005

www.riponsoc.org

15

I

Currency is emerging as rival to the dollar

By Adam S. Poscn he European Union's curre ncy. the

T

curo, is now in uSC' by 12 nadons wit h a IOtal population of 300 million peopic in an econo mic zone two-thi rds the size

of the U.S. economy. Si nce its introduction on Jan uary I, 1999, it has been readily accepted at ho me and in global capital markets. Also, several natio ns in Eastern Europe and around the Mediterranea n arc eager to join the eU T07.0nc or peg their national currencies to {he curo. In contrast 10 {he predictions of some American pesSimiSts about its prospects, the curo hlS

16

delivered low innalion and low interest rates to fh e Continent.

However, Ihal being said, the curo has been a panial success :011 best so fu r. The curo's share of global reserves and of invoicing in internatio nal [fade remains f.u smaller than its share of global GOP (22%) or the dollar's overwhelming share on bot h counts (more than 60%). European fin ancial markets are still fragmented along national lines once one gets past tbe money markets. And eurozone member coulllries' C(:onomlC performance has nOt improved www.riponsoc.org

since the euro's launch, despite the decline in average interest rates. This has contributed to the European public's rccenl resistance to the proposed EU constilUlion.

Cha llenging the Dollar Nonet heless, tbe euro docs prescnI a challenge to the dollar's dominance in three areas. Over ti me, this challenge will only grow more formidabl e, particularly if Euro pe undertakes economic reforms in ternally. Even in [he absence of Europe The RifKIn Forum ' July/August 2005

"The euro does present a challenge to the dollar's dominance in key areas. Over time, this challenge will only grow more formidable, particularly if Europe undertakes economic reforms internally." liberalizing and becoming more auractivc as a place in wh ich (0 invest, il is incumbelli upon Ame rican pol icymakcrs to make themselves aware of these trends and rheir potent ial impact on the U.S. economy and foreign policy.

First and foremost, the existence of the curD provides inveslOrs with an ahernatiye currency having wide enough acce ptance

and deep enough markets 10 shift in10 should there he a decl ine of confidence in the dollar. In recem decades, since the end

of fixed exchange rates, there have been periods of marked dollar decline, such as the early 1970s and the mid-1980s; another one appears imminent due to OUf balance uf paymclHs deficits. In each case before now, rhe available ahcrnarivc currencies- the ye n, pound, and deutsche mark- all had limimtions in thei r auractiveness, not least in their size of underlying economics and in their liquid ity. No such limitations apply to the euro.

As a result, the eu ro stands to gain market share in usage (as a reserve currency, in invoicing of trade, and as a vehicle for fi nancial na nsactions) in a lasting fashion when investors opt out of the do llar.

T his will increase the cost of capital to the United States on a sustained basis since we will have to compete harder to retain investment in our currencies. This also will erode some of t he competitive advantages of o ur financial indusny by encOuraging de nomination of tr:ansactions in euros, and will add to uncenai nry for our industrial companies as more products arc sold with euro price tags. This will not happe n wholesale or overnight. Such erosion, tho ugh, is exactly t he process of slow decline that undercut the Hrilish pound's advantages as a reserve currency over the fifS( half of the 20th cem UfY once t he dolbr existed as an :alternative to it.

underground economy. Both illegal activities and transactio ns avoid ing taxes tend to utilize cash for obvious reasons-and th is cash when used ab road creates seigniorage revenues for the issui ng government. By being closer to muc h of the underground economy in Eu rasia and issuing large denominatio n (euro 500) notes to fac il itate their tra nsport (versus bundles of $100 bi lls), the euro is rapidly increasing its market share. This m:ay not be a business the Uni ted States wants to be in, but tbe euro's e)[pand ing role in it will both COSt the U.S. Treas ury mo ney and complicate the abiliry of the Un ited States to nack and respond to the underground economy.

The third euro challenge to the dollar is institutional. Right now, the combined share of eurowne votes in the IMF and World Bank exceeds that of the Uniled States (23% to 17%), but is fragmented across "constituencies~ whic h include co mbinations of euro, non -cu ro, and even non European members. Should the eurowne member countries consolidate their representation in t hese institutions (and in the G-7 mee tings), the United States would finally have a more decisive and coherem partner for international colbboration negot iation. This consolidation could also decrease U.S. influence over these institutions' agenda and priorities.

The long-term upwards trajecto ry of tbe euro's role in global finance thus will largely come at the expense of the dollar.

In some areas, such as usage in the underground economy, the costs to the Un ited States of the euro rivaling Ihe dollar are small . In other areas. such as representation of the euro in international fo rums, there are some advamages as wel l as COStS for the United States. Most pressingly and im portantly, the existence of the euro means t hat Ame rican fiscal indiscipline or ill-advised financial regubtory measu res in U.S. marke ts will have brger and mo re lasting negative impact than when no re:alist!c rival currency existed. C';I

- Adam Posm is Smior rei/ow at the Institute for Inltrnatiomd Economics, which jmt publishtd his "tUl book. "The Euro at Fille: Rtndy for a Global Rolt ?" Dr. POst" htlS bun a lIisiting scholar at (md consultant for cmtml banks worldwide, includillg the Fedual Reserlle Board and the European Central Bllllk.

International Underground Economy The second challenge presented to the do llar by the euro comes from the two currencies' relative usage in the international The Ripon Forum ' July/August 2005

17

Future of U.S.-EU Relations An interview with Ambassador Rockwell Schnabel

By Jeffrey T. Kuhne r ockwell Schnabel , the U.S. Represemative ro the European Union, was confi rmed by the Senate on September 26, 2001. Ambassador Schnabel came to Brussels from Los Angeles, Cal ifornia, where he was chairman and co-founder of Trident Capital, a venture capital firm ai med at supporti ng new economy companies. A longtime business¡ man , he Sr:J.rted in the securities business as a financial analyst before joining the LAbased firm of Batem:lI1, Eichler Hill Richards Inc. (now Wachovia Bank) and rising through the ranks to become its president.

He accepted his first govern ment post in 1986, when former President Ronald Reagan named him U.S. ambassador (0 Finland. OnC' of his achievements there was thC' negotiation of an expOrt conrrol agreement between tile U.S. and Finland.

After leaving Helsinki III 1989, Ambassador Sch nabel wC'nt to Washington, D.C., where he served at the Department of Commerce as Depury Secretary and then as Acting Secretary of Commerce in the administration of George Bush Sr. As Depury Secretary, he worked on the early talks on the North American Free Trade Agreement (NAFfA) . He also spearheaded a Commerce Oepanment effort to commercialize diverse technologies produced by U.S . government laboralOries.

The Ambassador attended Trinity College and holds an Honorary Doctorate of Law from Pepperdine University.

We wish to thank his staff for their cooperation and generosity in making the interview possible.

R

RF : Why do you think the referendums on the European Constitution were voted down in France and Holland?

Schnabel: I think it was fear of globaliz.ation and a number of other things. Hut I think the essence was fear of globalization.

Then of course, you get imo the issue of enlargement, the concern about people from the new member S(:ltes taking jobs

18

AmbassadOf" Rockwell Schnabel

away and a variery of things-the misun¡ derstanding of tile Constitution to begin with. A vote which was a referendum in France on President Jacques Chirac; in Holland it was the murder of Mr. Theo Van Gogh. But essemiaJly, it was globalization, which in my way of thinking was directly related 10 {''Conomic issues.

HF : When yo u say globalization and economic issues, do you mean the sphere of greater liberal ization and free markets?

Schnabel: It is fear of people coming in and taking jobs away due to the enlargement process. It is the fea r of liberali1..:ttion, the fear of people coming in and Out, competing with the Europeans, and raking away their social nerwork and their social system.

But if you cut through it all, it has to do with economics. The good pari about the failure of rhe referendum votes was the fact that people basically didn't really understand what the Constitution was all about and that it was a vote against bureaucracy. It was a vote against excessive regulation and against anythi ng to do with interference with people's well-being-especially, economic things such as jobs. The flipside of that in my judgment is that the focus from the recent European summit is going to be on the economy.

For starters, there will be a new focus on the whole area of regulation, with basically doing away with barriers. There will www.riponsoc.org

be a new attempt to get a fully integrated capi tal market system within Europe, which would substantially help the economy. So I think the bottom line, regarding the focus on economic issues: No. I is the regulatory process which is vitally important; No.2 is on integrating financial markets; and then No.3, the resuucturing of the economy-particularly, freeing up labor markets. I think between those various things those reforms could dramatically increase Europe's GOP The bottom line issue for Europe is economic growth. If you have no growth, how do you take care of the welfare system and the social system?

You simply have a very difficult time ro do that and ultimately, you can't.

HF : What is Anlerica's policy toward the EU?

Schnabel: It is probably the most positive it has been in a long time. There were a number of things that helped to affect transatlantic relations, starting with the KyolO accords, the steel tariffs, and ultimately, the debate over Iraq where there was a lot of division within the EU on the subject. But all along, we have said that the United States is in favo r of a strong, democratic, prosperous Europe and in fitvor of enlargement.

President Bush delivered the same message when he came 10 Brussels in February. He made it very clear that the United Stat'es is very supportive of the EU. The reason is very si mple: the EU today is roughl y the same size as our economy.

Together with Europe we constitute something close to 60 percent of the world's GOP Together with Europe we can accomplish a lor of things, including such issues as fighting terrorism and figh ting global poveny. On the economic side working together is vitally importam because we are each others' largest trading and investing partners. So it is very important 1'0 the United States to have a strong, prosperous Europe.

The Ripon Forum ' July/August 2005

RIQ.bo

R F : When you say a strong Europe, a lot of commentacors say Europe is at a cross roads. II can either go down the path of closer and tighter integration- a United Srates of Europc--or a more decentralized, free (fade wne, like we have in North America regarding NAFI"A. What is the administr;nion's policy? Does it support a doser, more integrated Europe or would it prefer a politically looser Europe based on a common currency and trade?

Schnabel : We recognize dearly that Europe is not [he United States of Europe.

Power exists in the network of SUtcs. T he power ultimately is in the hands of individual states in a number of different areas.

Trade happens TO be the one thing that is totally handled in Brussels, and a lot more of the competencies in the future are going to go 10 Brussels in a lot of different areas.

Exceptions to that, for the immediate future, will be the aTeas of taxation and education. We work very closely in the areas of trade, the environment, science, financ ial issues and homeland security in fighting terrorism.

A number of the smaller European countries will have a much greater say in world afF.airs through the EU than otherwise they would have had before joining.

There are a lot of smaller member states that have a vote at the table, which they did n't have in world affairs before. So you are going to see, in my judgmem, a greater integration of Europe over time, including in the political area and also in the area of security. That integration will become deeper over time.

Europe has ro learn from what recently happened in France and Holland.

Europeans can try to stick to the old ways, the social welfare network ways. T he ('1Ct of

Exclusive interviews with leading politicians in every issue.

the matter is in reality the EU has to look to more liberaliut ion of markets in order to compere worldwide. Europe will be competing with India and C hi na, where they don't have those social networks. Basically, Europe can't compete wirh them unless it reforms. Ultimately, Eu rope must liberali1.e or perish in my judgment; this liberali7.ation, however, does not have 10 be at the e);pellse of the social systems. The Europeans JUSt mUSt reform them. Th is has been done in countries such as Denmark, Holland and Sweden.

What's happening now in Eastern Europe is having a com pctitive influence on the rest of Europe, and is actually very positive. A good example of that is Slovakia, which is next door to Austria. Slovakia has a flat tax rate, which I believe is around 19 percent. Austria's TateS were almost twice as high . But Austria was forced to lower its corporate taxcs in order to be competilive.

That's going to happen in other cou ntries as well in order to be competitive with the rest of the world. So those 10 new Eastern European members are really a positive influence on the rest of Europe.

R F : A lot of people arc now saying regarding the f.'111out from rhe referendums in France and Holland that the EU has suffered a body blow. Do you believe the EU can be saved and what form will a more acceptable EU have to take?

Schnabel: Whether you call it a body blow or not, I'm not sure. 1 prefer to call it a bump in the road. The fact is that the EU has gone through a number of si rnibr types of things in the past. Over the lasr 50 years there have been a number of cases where Europe went through a very d ifficult time.

It was moving along at a rapid pace and hit

a speed bump, which slowed things down: there is no question abom thaI. Bm it also gives [he Europeans time for reflection in finding out what is really needed in order to move forward, if this thi ng is going to continue. The 25 members are in place. T hey are working together. No one is going to unravel the EU and/or the currency, and il is moving forward. I think what you are going to sec is a slowing down of the enlargement process, and then you arc going 10 have a Europe that reflects upon what has happened and what needs to be done in the future. [ believe that Europe will have a comprehensive econom ic review, which will be at the top of its agenda. [n particubr, this revicw will he pushed along by the European Commission under rhe leadership of Mr. Barraso. The com mission is more right of ccmer; it's more for the transatlantic relationship; and it is essentially morc for liberalization. I also believe Mr. Blair, who has the presidency of the EU fo r the next 6 months, will pby a major role in the process. France dearly at the mOment is not part of thaI thinking.

M r. Chirac continues to try to come up with ideas rhat haven't worked before. The faCt of the matter is, in my judgment, Europe will have to liberalize over time in order to competc. Maybe Europe wi ll use rhis crisis that you refer to as the very thing that is needed in order to get to the economic restructuring that is necessary to put Europe on a more compelitive basis with the reSt of the world. This would then be the positive result of the referenda because oflen times you can't get these kinds of changes withoul a crisis. C'I

- je.Jfrty T. Kuhner is commulliCfUiollJ director at The Ripon Socitty

"Together with Europe we constitute something close to 60 percent of the world's GOP. Together with Europe we can accomplish a lot of things, including such issues as fighting terrorism and fighting global poverty. So it

IS

very

important to the United States to have a strong, prosperous Europe."

The Ripon Forum ¡ July/August 200S

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19

Overdraft of Power Banking powers should not include real estate brokerage

By U.S. Represenrative Ken Calvt-ri uring the floor debate of the Gr.tmmuach-Bliley Act (G LBA) in 1999, Rep. Jim uach. Iowa Republican, warned that ~thc movemelll t'O go beyond me integration offinanciaJ services and eliminate the traditional harriers bernreen commerce and banking is simply a bridge we should not cross. n Shonly after the passage of GLBA, the banking and real estate indumies engaged in a serious debate about thc congressional

D

intent of the law, specifically. as it related

to

allowing banks 10 enter iruo the real estate brokerage and manage mCIII indusrry.

I believe Congress has a ~ponsibiliry ro c!.arify any misinterpretations that seem to exist from the passage of G lBA. In an attempt to do so, I have imroduccd the Community Choice in Rol Estate Act, H.R. Ill , which prohibits nadonal banks from engaging in ~I estate brokerage or real estate managemem activities. This legislation, which I first introduced in 200 1, continues to receive broad, bipartisan support in Congress.

Earlier this yea r, my good friend and colleague Rep. Michael Oxley, Ohio Republican and chairman of the House Financial Services Committee, imroduct-d competing legislation that would allow national banks to engage in real estate brokerage and management activities. Mr. Oxley and I agree on mon issues; however, we have a different perspective on this issue. My bill has more than 240 co-sponsors, while the chairman's bill has one. However, as chairman, he: sets the :tgenda and the only comminee hearing he has held on this subject in the last three years focused on his legislation.

The question before: Congress could not be clearer: Should we define real estate brokerage and management activities as financial in nature and, therefore, allow national banks to engage in thest: activities?

GLBA was landmark legislation thaI allowed banking, securities, and insurance companies to operate in affiliation with each other under the umbrella organizalional form of finan cial holding companies. GLBA also permitted these companies to engage in a variety of activit ies not previously allowed to banks.

20

U.S. RepresentatMl Ken Calvert

Under GLBA, the Federal Reserve and the T n:asury Department possc:s.s the authority to issue regulations expanding these new activi ties. When considering whether or not to define an activity as financial, and permit national banks to partake in that activity, they must fi nd a change in the marketplace: and/or tet:hnology that undermines the ability of national banks to effectivel y compete with Olher financial companies.

Within months of passage of GLBA , Ille national banks were :Ipplying to redefine real estate as a financial activity, even though nothing had changed in the marketplace or tet:hnology. Shortly thereafter, the Ft:deral Reserve and Treasury Department proposed a rule defining real estate brokerage a5 an activity thar is financial in nature and there:fore permissible for national banks.

Immediately following the rel~ of the proposed rule, the debate Wa5 reignited between the banking and real estate brokerage industries about what constitUle5 a financial activity and under what scenario would consumers truly benefit. Congress quickly became ground zero for this debate.

With significant bipartisan opposition to the rule, Congress included language in the FY2003 Tn:asury Appropriations bill tha t prohibirt-d dte expenditure of funds ro final ize lhe rule.

That action did not end tlle debate.

Congress sti11 fuces this unresol ved issue and mus t again address the problem this year, with either a lasting solution or continue to www. riponsoc.org

put it off for anomer year. The lanet choice: has been the preferred. roule for the past three years as Congress has continued to prohibit the implementation of rhe rule through the appropriations process.

As a member of Congress that vo ted in fuvor of GLBA, I believe it is important to put rhis question into COntext. The goal of GLBA was to modernize and modifY the activities of national banks to ensure their competitiveness in a changing global marketplace. The silence ofGLBA on the topic of banks and real estale brokerage should not lead one to believe that it was not discussed.

Legal and economic realities prevented the indusion of real estate brokerage activides to the list of new activi ties indudt..J in G LBA, since such an indusion would have seriousl y jeopardized the passage of the bill.

Conversely, an outright prohibition of tht' activity would ha\'e been received with considerable consternation by members looking 10 expand banking aaiviries.

Appealing for expanded powers under G LBA so quickly after its passage made il dear that the banking industry wished to gain from the Federal Resen'c and Treasury Department what they were unable to pass through Congress.

I believe the issued rule: incorrectly proposes that real estate brokerage and management services arc financial in natu re. By fuiling to dearly articulate any compelling reason to change the traditional characteri7-1tion of real estate brokerage as a commercial activity, the proposed rule would seriously blur the line between fi nancial and commercial activities and would set a dangerous precedenr.

If yo u are sri11 unable ro decide for yourself if ral estate brokerage is a commercial or financial activity, I recommend you apply what I call the "Saturday nighl tcst. ~ If you can conduct a business transaction on a Saturday night, chen it is a commercial activity. If you can't, it is probably a financial transaction.

I thin k mOSt people would agree that you arc fur more likely to do business with a raltor on a Saturday night, than you are with a bank. ~

- Rrp. Krn Co/vrrt is a California Rrpub/ican The Ripon Forum ' July/August 2005

The First Freedom Bush's judicial nominees deserve a vote

By U.S. Representative Henry J. H yde

01itiCilI discourse: in America, both civil and comb:uive, reflexively lakes the form of disputes over rightS, as contending interpretations and orders of precedence do batrlc for [he public's favor. This mt:dium is being pressed into service once: again as the $enate approaches a H igh Noon showdown occasioned by the: Democrats' filibustering of Prcsidem George W. Bush's judicial nominees. Advocates on both sides have scourW the armory of rights 10 select their weapons, and the rhetorically bloody [OurnamcllI has already begun.

The issues al stake in (he increasingly sharp debates and grim struggle over politiC3J power are many. But overlooked is the faCt that this dispute represents a clash of rwo funclamemaJ riglm: the right to speak and du' right to vote.

'1"0 most Americans, these rightS are complementary, even inseparable. But JUSt as the closest of friends may sometimes clash, this is tnle of fundamenul rights as well.

The right to free: speech is universally acknowledged as being among [he 1I10St basic of political and personal rights.

Liberty, democracy. and even modern society would be inconceivable without it. For tlla! reason, the degree: of its freedom of exercise is correctly regarded as the best measure of liberty's health in any political system. We are wise to greet efforts (Q impose limits on it, however noble the avowed purpose, with cold skepticism.

Although free speech is of surpassing imporunce in the deliberations of potitical philosophers, its (rue value is grounded in its practical application to the mundane world.

The exchange of information that modern societies require to operate, the ability of public debate and scrutiny to weigh competing claims and filets and weed out those which are unsubstantiated or marred by logical or factual error, can only be guaranteed by the freedom to speak freely. Intelligent choices, especially in voting, could not occur in its absence. A society and government deaf 10 the world and to dissenting \'Oices could not hope to prosper.

The right to vote, then, would appear

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The Ripon Forum ' JulylAugun 2005

U.S. Representative Henry J . Hyde to require, and perhaps be dependent on, the right to free: spcc:<:h and the accompanying right to examine and debate issues publicly and at length. Yet regardless of the validiry of this assumption, the parallel faCt is dIal me righl [0 vore is [he more profound of the tWO, perhaps more fundamental than any but the right to life itself T his is because voting represents decidi ng, choosing, taking action . the prerequisite by which all other rights are distilled from theory into realiry. h must be stressed that 10 decide means (Q engage with the real world, the world where life is lived.

In the Senate, the minoriry Democrats' assertion that a vote on judicial nominees should not be allowed 10 rake place without their consent, regardless of that body's constitutional responsibilities or the needs of the country, is in effect a subordination of the right to vote to the right to speak. What is at stake is not me right of a minority to free speech- in this case, the right to filibusterbut the responsibiliry to take action after the right to speak has been fully, exhaustively e)[ercised. The obvious effect of the Democrats' course would be paral~is, for which no amount of empty rhetoric can substitute.

The legitimacy of our political order is based on its guarantee of our rights, a pro po-

www.riponsoc.org

sition first and most elegantly enunciated by Thomas Jefferson. But the relationship is not one-way. Although our political system ensures our exercise of those rights, the integriry and resiliency of our political order in turn depends upon our ability to actually do so--a vinuous circle that has on ly srrengthened over two centuries.

Unlimited, non-germane speech for the purpose of eviscerating the right to vote is at best a perversion of the right to free speech, if not a more serious menace to the re.sponsibiliry to ultimately act. The consequences of this irresponsibiliry are more dangerous than a passing political conflict may suggest, however heatl-d that contest may become.

For employing one right to prevent the exercise of :l.I1othcr undermines them both and thus the edifice on which all rest.

The outcome of the drama in the Senate wil1 have an enduring impact in many areas, from the purely political to the ideal worlds of philosophical abstraction.

But this COntest also represents a tCSt of our understanding of those righ ts as guides to action. Ik it whispered or delivered full throated, political speech is a prerequisite to liberty. But, however eloquent or impassioned, political speech cannot be allowed to substitute for the inescapable responsibility that we have to judge, to decide, to acr, and ultimately, to vote. <7

- &p. Hmry j. Hytk is an IUinois Rtpub/i(an and mnnbv 0/ tIN Houu juditiary ummittu

On the forefront of Hellublican politics and ideas Visi l our Web sUe for informalion and the la lest news aboul Ihe Ripon SOCiely. \\\\\\

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21

He-examining NEPA After 35 years it is time to give measure a fresh look

By U.S. Reprcscntative Cathy McMorris all share the gooi of dean Wolter, dean ai r and making sure ~'e do our parr to protect our environment.

We wam our cnvironmentallaws to best pm-(eet and cnh:U1CZ' wildlife, watenoheds, wetlands and communities-not just perpetuate a federal bureaucracy. We need to ensure OUT protections are working effectively and alJoCIting rl:S(j UTCCS properly. For these reasons, we sometimes must rake a hard look ar both a law's successes and i[S shortcomings.

Everyone can agrtt (h:1I when Ihe National Envi ronmemal Policy ACI (N EPA) was passed. it served an import31l1 and laudable goal: (0 emure that federal agencies would consider envirollmcnul concerns when making decisions. Vel aner 35 years, Congress IlCl..-ds to take a closer look at the NEPA and determine whether the law is fu lfilling itS original imem in the best way pos· sible. This law has a major impact on our country on an everyday basis. We must review its effects 10 ensure Ihe besl OUlcomes, for bOth the environmem and our economy.

Wh:1[ starred as an overly vague single paragrnph statule have become 25 pages of regulalions, 1,500 court cases and hundreds of pending lawsuits Ihal are blocking iml>ortalll projl'CU and economic growlh in our coum ry. We can and musl do bener. Si nce NEPA was cnacled in 1970, Congress has never [horoughly reviewed Ihe lcgislalion (0 s(:e if it is working or if il [0 be improved.

I have the honor of being appointed by the chairman of the House Resources Commincc, Rep. Richard Pombo of California, to lead the Task Force on Improvi ng the National Enviro nmental Policy ACI. -nu: task force is a bipanisan group of Rerources Commirtee members lhat have Ix.'en charged with reviewing and making recommendations on improving NEPA. One of the trademarks of NEPA is to take into accoum public comment. With that in mind, Ihe taSk force bclil"\"t$ Ihe best way to get inpUl about how Ihe NEPA process is working is to get outside Washington, D.C., and listen to dlOse direclly affccr.ed by rhe process.

NEllA conrribmes to delays. addilional

W

neros

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u .s . Representatrve cathy McMoms

cosu and lawsuilS th:n have stalled dredging on the Columbia and Snake Rivers. Our river systems playa vil:11 role in the rt:gion's economy, transporting our goods and supporting our tourism. We ClnnOf afford [0 ignore these problems.

A gross abuse of Ihe NEPA process halted efrons to ease trnffic congestion in Las Vegas, Nevada. Environmental groups, which dlOse to remain uninvol\-ed in the public commelll procas during the decade of NEPA analysis, filed a last- minute lawsuit ro block the projcct, four yC.1TS after Ihe completion of all environmental studies. -rbe lawsuit was finally settled lasl month, But delay of this project hurl local businesses, traffic congestion, air pollution and highway

"""Y-

In Arizona, power omages have become a way of life for ,he 38,000 people living in the soulhern IOwn of Nogales.

Environmental review for a desperately needed I>ower line has «Iken nearly five yelTS. Po\'.'Cr went out duri ng the local high school's grad ualjon ceremony last month, as graduates and proud parents were left in the dark with no ceremony and no commencement parties.

Wildfires raged in the eastern pan of the salte in 2002, growing in size: comparnble to the S«Ite of Rhode Island and nearly engulfing the three neighboring towns. Homes were burned 10 the ground. Sadly. this massive tragedy could have been prevented. But the forest managcmeJl1 plan thai would have www.riponsoc.org

prevented such a massive blaze was tied up in NEPA litigation.

The taSk force has received many public comments on fi res like this. In California, frivolous environmental lawsuits arc preventing timely action on desperntely needed th inning projects around communities.

For every acre thinned, three acres have been destroyed by fi res.

The SlOries or projCCt delays and in:IC· tion are numerous. Too often we hear hor· ror stories about epdless reallls of paper needed to complete envi ronmental impact state· merus because agencies now opernte in fear ofliligadon. NEPA provides linle assurnncc for the federal agencies, so avoiding litigalion becomes the standard to meet.

T he task force musr look al tilis lirigalion and dl'Cide wht·ther it advances or hinders NEPA's imem. II should not be a choice of either prOfccting the environment or allowing [imdy projCCtS ro be completed.

We C-dn do ]>Olh while maintaining the public's right to participate and be informed of federnl gO\'ernmeJl1 actions.

We ha\'C held two successful field hear· ings in Spokane, Washingron and Lakeside, Arizona thai have provided opportunities for us ro engage in dialogue with communities on how ro improve NEPA. We ha\'e heard tcstimony saying NEPA should not be ch:mged and that federal agencies ncOO 10 better mili7.e the tools NEPA provides.

Others believe that changes in the law are necessary to produce certainty and finali ty.

Still others told [he task force that so-called stale mini-N EPAs provide jusl as much environmcmal analysis as NEPA, bUI in less rime and monl')' and with fewer lawsuits.

From any perspective, most agree the NEPA process must be examined. I look forward to attending the four other field hearings this summer to enable the rask force to take a hard look at this law from all si<les and perspc..'Ctives.

T he final produa of this ~ k force will be a repon that lays OUI faCts and makes appropria te recommendations. Whether or not our findings lead to further legislation, the taSk force will ha\'C succeeded in ensuring NEPA's original intentions. <:::7

- Rep. Cathy McMorris is it Washington &pltbliClln and m~mlxr of tlJ~ 1·lol4~ !ksOltrcn Committu The Ripon Forum ' July/August 2005

Straight Talk on Children and Abortion Procedure for minors must have parental consent

By U.S. Representative Ileana Ros-Lehtinen na country that espouSd the importance of protecting the inherent rights of every person, abortion denies the rights of our most innocent and vulnerable members: OUf ch ildren.

As legislators, we ha ve the great responsi bili ty 10 str ive to uphold the [Tuths upon which our great nation was founded, especially that every individ ual is entitled to life, liberty, and the pursuit of happiness.

Abortion is perhaps one of the most life-altering and li fe-threatening of procedures. It leaves lasting medical, emot ional, and psychological consequences and, as noted by the Supreme Coun, "particularly so when the patien t is immature. ~ Although Roc v. Wade legalized abortion in 1973, it did not leg3.lize the right for persons Olher than a parelH or a guardian to decide what is best for a ch ild.

Nor did it legalize the right for strangers to place our children in a d angerous or porcmially fatal situat ion.

There are many rules and regulatio ns in our society that ensure the salery of our nation's yo uth through parental SU ppOT! and guidance. In most schools, an unde r¡ age child is prohibited from attending a school field trip without fim obtaining a signed perm ission slip fro m a parent or legal guardian .

An underage child is also unable to receive mild medication at school , such as aspirin for a headache, unless the parent signs a rele3.se form permiuing lhe school nurse to administer such medication.

Everyone of these principles emphasize that parents should be involved in decisions that C3.ll seriously affect their children. The decision of whether or not to obtain an abo rtion , a life altering, potentially fatal and serious medici procedure, should be no exception to these rules. As a mo th er of TWO teenage daughters, I want to know what is going on with my children, espccially something as significant as an abortion.

I

The Ripon Forum ¡ July/August 2005

U,S. Representative Ileana Ros-lehtinen

My Icgislation, the C hild Interstate Abo rti on Notification Act (C IANA), in co rporates all of the provisions previously contain ed in the C hild C ustOdy Protection Act, a bill that the House has passed on three previous occasions. My bill makes it a federal offense to transport an underage child across slatc lines in circumvention of sta te and local parental notification laws, for the purpose of having:1I1 abortion.

It prOtects minors from exploi ta tion from [he abortion 1I1duslfY, promotes strong famil y ties, and helps foster respect for state laws. In addition, the bill req uires that, in a Stale withoUi a paremal notification requirement, abortion providers must notify a parent.

About 80 percent of the public favors parental notification laws, and over 30 states ha\'e enacted such laws.

Yet these laws are often evaded by intersta te transportation of minors, often openly encouraged in advertising by abortion providers.

Parental consent or parental notification laws m3.Y vary from stale to statc, but they are all made with the same purpose in mind: to protect frightened and confused adolescent girls from harm. It is amaling www,riponsoc.org

that such a bill is necessary---<:onsidering tha t it is a crime to transport a minor across state Jines without parental permission for any other purpose but abortion.

A minor who is forbidden to drink alcohol, to stay out past a certain hour, or to get her cars pierced, is certainly not prepared to make a life-altering, hazardous and potentially fatal decision , such as abortion, without the consultation or consent of at least o ne parelll.

M y legislation closes a loophole that allows adults not only to help minors break state laws by obtaining an abo rtion wiThout paremal consent, but also contributes to ending the life of an innocelll child.

As an ardcnt advocate of human rights for all, especially those suffering political and religious persecution, it is my hope that we will one day live in a world where all may live and work together in a spirit of peace, mutual respect, and soli dari ty and where The sanctity of human life is preserved on all levels.

I am trul y pleased and honored that my colleagues in the House havc given this im portant bill this great vote of confidence. It passed the House on April 27, 2005 by 270 to 157. T he bill will now go to the Senate. I am extremely hopefullhal we shall sec positive results there as well.

We have a greal responsibility as a nation to maintain a true reverence for protecting vulnerable human life, and to cOl1linue to build up a cultu re of life. I will continue to wotk together with my colleagues to ensure that the precious gift of life and the dignity of womanhood are promoted and protected on every level.

May we continue 10 work tOgether to ensure that our precious children are protected and lhat the rights of every parent are upheld. ~

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Rep. Ileana Ros-Lehtinm is a Florida Republican

23

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..

Reforming the World Bank Paul Wolfowitz must push concrete policies

By Ana Isabel Eiras

WolfowilZ, having assumed the presidency of the World Bank, now faces the challenging task of turning the Bank imo a more effective organization.

Despi te fi ve decades of good imcmions, the Bre n on Woods instit ution has failed to reach its goal of a world free of poverty.

T he World Bank was conceived at the end of World War II out of fear that private markets might nO[ provide the resources necessary 10 reconstruct Europe. The United Stales and the United Kingdom pushed 10 establish an inu:rn:nional fra me-

P

lU]

work to pf"C'\'cm a recurrence of economic recessio n and to promote rcconSlruction in

war-torn Europe. A central component of this fra mework was the World Bank. T he Bank followed its mandate closely and contributed to the effort , but in the end, it was private marke ts that plaYI..-d the major role in the reconstruction of Europe and Japa n.

Despi te this first. hand evidence of (he private sector's effecti ve ness, the Wo rld

24

Bank (hen fo und a new purpose: to facilitate the development of poor nations and newly independem former colonies wilh aid . But aft e r five decades, most aid recipie rus remain JUSt as poor as-if nOI poorer than- they we re when lending began.

First Challenge: Why to Lend

A majo r pan of the problem is thai the Bank's mission- to elim inate poverty-is based on rhe false assumpt ion Ihar economic growth and deo.'elopmelH can be achieo.·oo by giving aid. This premise Aics in the face of five decades of deo.·elopment experience and the bulk of economic studies, which indicate that econom ic freedom and the rule of law are far more imponant than assis· (ance as determinal1ls of growth.

Furthermore, giving aid to count ries with poor policies helps to support corrupt govern mellls and perpetuates b:ld pol icies that retard development.

Between 1980 and 2003. for example. www.nponroc.org

the Bank d isbursed $261.36 bi llion of I.."{;O· nomic assisrance. This aid failed to consis· [eruly catalyz.e SHong growth in per capita income in low-income countries. Acco(ding to the Bank, of rhe 105 recipients of International Developme nt Association (IDA) credits between 1980 and 2002 for which per capita gross domestic product (G OP) data are available, more than a third had negari\·e average compound annual groW(h in real per capila GOP and 16 percent grew between zero percent and I perCCnt. The lessons are d ear. It is nOI lack of aid Ihal is preventing these countries from addressi ng their problems; it is anti·ma rket economic policies, corruption , and the absence of (he rule of law-all of which undermine economic groW(h. The World Bank, therefore, needs ro focus assistance on cou nt ries with relatively sounder policies and demo nstrable commiunems to economic freedom and the rule of law.

Th~

Ripon Forum · July/AligUSI 2005

Second Challenge: Whom to Lend A good SU':ltq;y for th~ World Bank should be to hdp ~ery nation ;anain a credil raling good eno ugh to borrow on imernalional capital markets at reaso nable interest rales. The reason is that first, the reso urces available through internatjonal capilal markets, foreign direct investmenl, and increased trad~ art far larger Ihan any transfer from multi1.ueral and bilateral assistance; and, second, if goV('rnments have to depend on private capital. they have a huge incenlive to implement sound policies and create a stable environ ment with a strong rule of law.

But the Bank doesn't seem 10 have an "ait Slratcgy~ for its debtors and cominuC$ subsidizing lending even if aid recipienrs have access to private marketS. In this way, the Bank removes these market incenti\'C'S to pursue good policies. For example, in 2004, the World Bank disbursed 56 percent of its funds through IBRD loans. which are targeted to rtl:lIively wn.lthy countries. At least a third of IBRD recipientS have an investment grade credit rating (BBB or beller) according to Siandard & Poor's.

Only 44 percent of Ihe World Bank's funds in 2004 wert disbursed thro ugh IDA credits, which are available only to countries with a per capita income less than $865.

Only 40 percent of all World Bank (IBRD plus IDA) funds disbursed in 2004 went to low-i ncome countries without access to capital markets. Ck"3rly, die World Bank is not foc\lsing its resources on the pooresl of Ihe poor.

By providing subsidized loans to counuies that have access to capital markers and that are not the poorest, Ihe World Bank nOt only undermines incentives to make freemarkel reforms and sound fiscal decisions necessary 10 reduce credit risk, but also diverrs resources away from poor nations to countries that could borrow ciscv.'here. The Bank should end this practice and focus irs efforts on low-income countries that have 100 Iow an in\"CStmem gnde to borrow in capital markers.

Third Challenge: When to Lend The Bank should give aid only to countries wilh relatively good policies already in place. This idea of establishing preconditions that reward good pol icies already in place ral her than providing money in hope of encouraging reform is supported by man}' economic stud ies.

The Ripon Forum •

JulylAugu~ 1

2005

Of course, this approach works only if the World Bank actually StOpS lending to countries with policies that impede ec0nomic growth and development. Th~ challenge for the Bank is to draw a hard line, no maIler how poor the COUlllry. II must Sl'Op lending when there is no progress in terms of reform. Not only will this provide greater assura nce thai the assistance will be more effective, but it will provide incenti\'cs for other nations to adopt policies that will increase their opportunities for econom ic growth and developmenr.

yield $2.7 billion annually. Se.miment for suppo rt of an IDA invesrmem fund should exceed that for the current system beCI.UK the original investment would not be dis· bursro as grants; only the earnings from the investment would be distributed, thereby eliminating the need for future donor contributions.

As long as the World Bank performs well, it should retain donor support. (f me IDA fai ls to perform as envisioned, the donors could reclaim their portions of the investment. Market discipline is good fo r the World Bank as well as for recipients.

Fourth Challenge: What to Lend T he failure of development assistance f.'lcilirate economic growth has left many poor nations with a large debt burden.

However, the world's poorest countries rhat lack access to capital markets do face problems that could be assuaged through assistance. (n such situations, it makes little sense for me World Bank to provide loans that arc nOI likely to be repaid and thai are intended to alleviate the immediate consequences of poverty-such as immunizi ng children-ramer than to spur growth. Such activities should be funded by performancebased grants rather than loons.

World Bank officials resist the change from loans to performance-based gran ts, believing that grants wo uld undermine projecl effectiveness becaUK they would not have 10 be repaid. This is unlikely since, as proposed by the Internatio nal Financial Institutions Advisory Com m ittee. the recip. ient of {he gram would have to match a portion of the grant and the money would only be disb ursed after an outside auditOr verifies that the proposc.-d project has been completed. Future grants would depend o n the recipient's adherence to the agreed terms of the grant, creating Sltong incentives to implemem the project as planned and per· mit independem evaluation of the project.

Officials at the World Bank also fear thai granrs, because they are nO[ repaid. will undermine the Bank's resource base and create a greater reliance on frequent contributions from member states. But IDA contributors could provide resources for an IDA endowment to b~ invesled in low-risk imtrumems similar to a pension fund.

Originally, this amoul1l could be similar 1'0 that of a typical IDA replenishment, which donors fund every th ree years. The mOSI recent IDA replenishment was fo r $34 bil· lion. For example, at an 8 percent rate of rClurn, an investment of this size would 10

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Fifth Challenge: How to Give Providing assistance to govern ments of countries that have a weak rule of law and that lack tranSparency and accountability invites corrupt us<: of assistance by govern· mcm officials. Once a loan is disbursed, it is exu cmely hard to monitor. In addition , the World Bank frequently f.tils to enforce loan conditions and often continues to fin ance projecrs regardless of whemer COUntry offi· cials comply with loan terms.

A bener stratq;y would be for the World Bank to COlllract out directly to privale-sector businesses, charities, uni versities, and other appropriate entitics to fu lfill measurable objectives. A hospital could be paid per vacci ne when a vaccination projcel is completed. A charitable organization could be paid after feeding children at a local village for the expense incurred. By cir· cumventing the governments and paying directly 10 private sector providers, the bank could exert greater control over the project's execution. mo nitor results more easily, and reduce the opportunities for corruption.

With all of irs good intentions, the World Bank has fai led to achieve its goal of ~ nding poverty. M r. Wolfowitz ha~ an opportunity to change this disappointing t!!Cord and turn the World Bank into a more effective organization.

This effort should sran with seu ing a morr appropriate mission for the World Bank: encouraging poor nations 10 bolSter the rule of law and increase economic freedom. It is these policies that will remove obsracJes for economic growth and pave the way to Ihe Bank's ultimate dream: a world wilhoUt poverty. ~ -Ana lUlbri £irtlJ iJ Smior Policy AnaryJl for lnurnat;onal £conomia ;'1 tbr emur for Imrrnlllional Tradr ({nd Economics III Tbr Hrrifllgr Foundatioll.

25

Challenges Confronting Lebanon The country's emerging democracy takes shape

By Michael Young n June 2, a month after the withdrawal of Syrian soldiers from Lebanon , a prominent Lebanese journalist hostile 10 the Syrian regime was killed by a bomb placed under his car in an cast Bei rut neighborhood . Samir Kassir had developed dose lies to the Syrian opposition and was active in calling for democratic change in Syria. Colleagues had littlc doubt that the regime of Syrian President Bas har Assad was behind the killing, carried Out by the Lebanese

O

intell igence network that Syria helped up during its decades-long presence in Lebanon.

SC I

Two weeks later, Lebanon held the third round of its parliamentary cltt tiOlls in the central (and predominantly Christian) Moum Lebanon disnict, and in the Beba Valley. In Mourn Lebanon, Gen. Michel Aou n , the former head of a milirary govern¡ mell! that fought Syria in 1988-90, won a S\'.¡eeping victory. thanks largely to Christian frustration with the political maneuveri ng of the general's rivals, which had resulted in the marginalization of C hristians. T he same day, in the northern Bekaa distriCt, He-,o;bollah won an easy victory, echoing its triumph a week earlier (in alliana with another Shiite party) in south Lebanon.

A Lebanese woman casts her ballot at a polling statiOfl. Voters in lebanon took. part fourth end lest stage of Lebanon's parliamentary elections on June 19. 2005.

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III

the

Challenges Ahead These successive eve nts provi ded convenient headings in an impressionistic illustration of the challenges Lebanon faces in the coming months, lO which we must add a fourth: the need for urgent economic reform.

Kassir's death showed that , despite the Syrian military withdrawal , Syrian intelligence agents still operate freely in Leb;mon-a view endo rsed by the Bush administration. At the same time, the killing appeared to send parallel messages: that Damascus would not tolerate Lebano n's becoming a source of instability for the Syrian regime; and thaI the international community, panicularly France (Kassi r was a d ual French- Lebanese national) and the Uniled Slates must not push Syria toO far, si nce retaliatory violence remains an optio n.

Lebanon's fi rst challenge, then, will be 10 ensure that it can rid itself of the rem¡ nants of the Syrian order, part icu larly what the opposition has called the "Syrian.

Lebanese securit y apparatus." The process will req ui re purgi ng the upper echelons of the various intelligence and securiry age ncies and the arm y. This is easier said tha n done. The su preme overseer of the network, Lebanese President Emi le Lahoud, is nOt likely to soon Ix removed fro m office; his ri V2ls are di vided, while he has no intention of surrendering the las( card he holds.

At a broader level, Lebanon will also have to avoid being transformed into a playing fi eld for regional or international rivalries-particularly between the United States and France on the one hand and Syria on the other. The trick wi ll be for it to do this while preserving an open society and free expression, and not shy Th~

Ripon Forum ' July/August 2005

_LEBANON Populat[on: 3.826.018 (July 2005 est,) Population GrvwIII: 1.26% (2005 est.)

Ethnic Groups: Arab 95%. Armenian 4%. Olher 1%

Religion: Muslim 59.7%, Christian 39%, Olher 1.3% (rotalof 18 Officially recognized religious groups) GDP: $18 .83 billion (2004 est.)

GDP - per capita: $5.000 (2004 est.)

GIlt' - ...1 growth rate: 4% (2004 est,)

--

1n.9'IIo II GllP ($33.5/JIIIIDnJ (2(XJ41JSt)

away from this to avoid confromation with more powerful autocratic Arab Slates.

Improving Christian·Muslim Relations Michel Aoun's victory focused anention on another rea lity of post-Syria Lebanon: the need for a new relationship between the religious communities. The general's victory, while it lOok place at the expense of the opposition, was seen by many Christians as payback fo r the community's marginalization in the run-up 10 the elecrions, when leading opposition politicians, including the Druze leader Walid Jumblatt and the Sunni leader Saadeddine Hariri, son of the late Rafik Hariri, dismissed Ch ristian displeasure with a discriminalOry election law.

The Christian "revolt" only underlined how complicated will be a future re-balancing of com munal relations 10 satisfY all sides. Christians, though they arc believed 10 be between 35-40 percem of the population, have half the se:us in Parliament, according 10 a political system designed, among other things, to reassure minorities. In the fUlUre, this may prove problematic, as some of the larger Muslim communities could begin demanding parliamentary representation commensu rate 10 their size in the populadon.

The Ripon Forum· July/August 2005

The Taif agreement , which put an end to Lebanon's civil war, olTers a broad mechanism, namely the creation of a Senate where Christians and Muslims would be represemed equally, sitti ng alOp a non-sectarian parliament ; administrative decemralization, so all comm unities would have more of a say in their own affairs; and an equitable election law to dismantle the Syrian-i mposed gerrymandering that so thwarted true representa· tion in postwar elections. The question is, however, whether the com munities arc prepared 10 engage in a debate on these issues in the nuid political environment Syria left behind.

Disarming Hezbollah The third issue the Lebanese will have to address is the disarming of Hczbollah. which the Un ited Nations has demanded in its Resolution 1559. This is an extraordinarily complex issue, compli cated funher by Hczbollah's success in the recent parliamentary elections. Solidly anchored in the Shiite community and increasingly in state institutions, including parliament and local councils, Hczbollah publicly rejecTS disarmament , and has vowed to fight it. However, while most Lebanese don't want to sec the party brought 10 heel by force- nor believe thi s possible-they also aren't prepared 10 defY www.rlponsoc.org

the inrernational commun ity merely so the group can keep its weapons.

Hezbollah's disarmament will most probably require some sort of an international agreement, which includes Iran, in tandem with negotiations inside Lebanon to olTer the party more of a stake in the political system. This is easier said than done. But Hezbollah is not irrational: it will drive a hard bargain and try to retain what it can of its weapons; but it is unlikely to take steps fundame ntally threaten ing Sh iite influence in the system (nor docs it have a mandate to do so). In that conteJl:t, the Lebanese consensus to avoid violence will be vital.

These predictions will come to naught if the new Lebanese government that emerges from the elections doesn't move quickly to reform the economy, which is struggling with a $36 billion public debt and with a GOP of around $20 billion. This is the stuff of economic collapses, and unless the debt is rescheduled through international aid, Lebanon could face a financial meltdown making all else look uivial. ~

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Michatl Young is opinion pagr ~ditor of thr Daily Star n~wspaprr in Lrbflnon, and a contributing ~diror at R~flJon magazin~ in t"~ Uniud Statn

27

Wrong on Putin West is misguided in its criticisms of Russian leader ussian

R I

President

Vladimir

l'urin

cannOt hope to remain in power unless

.

he can deal effectively with terrorism.

For such a task he requires morc powers than arc normally provided by a democratic systern. This is pan of a larger problem which the West has had trouble understanding: the ~ Russian difficulty of catching up with Western Europe.

Tsarism was meeting the challenge after its fashion until the revolution sct Russian

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society hack about three generations.

President Vladimir Putin looks on during his meeting witt1 top German busmess executiveS at the 18"' century Konstantm Palace outside St, Petersburg. Russia. During the meeting Putin hailed the economic beS between the two countries and voiced hope they would grow.

Berween February and OCtober 19 17, various Russian liberals and social d emocrats demonstra ted their inabi lity 10 gove rn.

Vladimir Lenin's coup d'etat removed a bankrupt would-be democracy and started a civil war. It is necessary to understand that the Communists achieved an internal conqucst which demanded defeat nOI o nly of the While armics, but the pcasams and

Answers That Matter.

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The Ripon Forum ¡ July/August 2005

minorities as well. After 1920, at the time of the Kronstadt mutiny, the Bolsheviks also turned on the working class of Petrograd, which originally had helped them to sei7.c power.

Russian intellecTUals convinced the West that they could govern better than the Tsar. The truth was that they could not govern al all. "nle obvious alternative to Tsarism was a mil itary dictatorship less libernl, less stable and less likely to (."Vo[ve into a democrncy. Lenin secured his claim to power by promising pe;lce, [and and brt'ad.

Even so, he gained only a local and temporary majority III Peu ograd and Moscow. \Xfhal he actually delivered was unconditional surrender to Germany, the seizure of peasant land, and famine.

After seizing power, the Bolsheviks discovered that they could nor hold il withom creating a privileged class. By creating such a class they survived for three genernlions, bur only by grnce of a totalitarian system which demanded a personality cult after Lenin's death. This was difficult, as Lenin tolerated no equals. \Xfhat he failed to detect was Josef Stalin's talent for office intrigues until it was tOO late. As Stalin had talent for little else, most of his decisions were disasters which he

The Ripon Forum ¡ July/August 2005

covered up by putting the blame on potential rivals, hence the continuous series of purges. He in parr demonstrated the ability to create a personality cult without a popular persomlity. In any case, the victims of Stalin were mostly old revolutionaries whose talents for conspiracy were lillIe use to the new Soviet ruling class.

Nevertheless, there was sti ll Leon Trotsky, in exile. He commanded no substantial followi ng but his place in histOry made him a potential rival. Any minority staging a coup d'etat mighl ha.ve gained credibility by bringing back Trotsky.

Therefore, he was murdered in Mexico in 1940 by an agent of Stali n.

Stalin's rule has been, with some justice, compared to rhat of Ivan the Terrible and Peter the Greal. How<."Ver, there was rhis difference: the tWO absolutisms were used in the service of a possible objeclivc-----the creation of a powetful Russian state, and most of their efforts were successnll. Stalin was committed to the impossible objective of creating a Utopia, and most of his efforts were failures.

The need to maintain the belief thac the Soviets were engaged in creating an idt!al society was the Achilles' heel of the Soviet

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Union. It demanded continuous tension with the West and prel/ellled the emergence of a wo rki ng market economy. Concessions could be m'lde to reality- for example, dle retention of Tsarist-style military uniforms and ra n ks, and gestures towa rd other Russian traditions such a.s fil ms about Peter the Great and [van the Terrible. The difference was that the bureaucratic ruli ng class which the Com mun ists created did not understand the market economy. They thought in terms of production statistics instea.d of meeting actua.l n\.-ros. That is also Mr. Putin's big problem: the limitations of the surviving elite which Communism created.

Stalin's successors tried ro keep the system going, but it needed another Stalin; they could nOt produce one because of fear of one another. Democracy will <."Ventually emerge in Russia because the count ry has the resources to create wealth and security. Meanwhile, Mr. Putin must do his best to re-educate the Russian ruling class. It is in the interest of world stability that he succeeds. CI

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Hl'reWllrd Smior is Il pro/tHOr o/history at McGiU UniVN'Sity.

29

Bolton and V.N. court is a failure,\w:lStilng V.S. taxpayer dollars

By Jeffrey T. Kuhner

T

he International Criminal Tribunal fo r the form er Yugoslavia was initially created 10 pun ish those who perpetrated wa r crimes in the Balkan wars of the 19905.

It was never intended to become a politicized, ami-democratic tribunal aimed at intimidating opposition journaliSTS in the region. Yet this is exactly whal has hap-

pcn<.-<i.

Carla Del Ponte, the ICfY's chief prosecutor, recently indicted four journalistS in Croatia-Ivica Marijacic. Markica Rebic. Domagoj Margetie and Slie pan

Sesdj-for "contempt of the tribunal," These journalists' all~ed "crime" was that th ~ published the identity and statements of a protected wiwess in the 1998 case of a Bosnian Croat general. The IC rY stipul:ue5 the maximum punishment for such an offense is a fine of 100,000 euros and seven yeats In prison.

The tribunal prosecutor's office is seek~ ing to justify these OUirageous indictments by claiming the witness' Slatemems were given in a ~ nonpublic," secret proceed ing.

Hence, by publishing those statemems these journalists supposedly violated the witness' protection guarantees of the tribunaL However, it is the tribunal's responsibility, not that of the Croalian o r inlernational media, 10 ensu re secret witness testimony is not leaked. More imponanriy, freedom of the press and the public's right to information trumps any claims the tribu nal may have about witness protection. h is the role of journalists in a free society to hold public officials accountable for their actions and to reveal sensitive. even privileged, information in order to inform the public.

These indictments are a direct assault on Croatia's democracy and its independent media. This is why Mrs. Del Ponte's actions have aroused the anention of Republicans on Capitol Hill. as well as leading U.S. press watchdog groups. ~ We are concerned about the tribunal's activities in rega rds 10 the indictments of these journalistS and we are watching it closely," said Alex Lupis, Europe program coordinalO r fo r the Com mittee 10 Protect

30

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Journalists. Based in New York. the C PJ is America's largesl organization devoted to monilO ring and pro tecting global press freedom. ~We thi n k the tribu nal should focus on indicting and prosecuting waf criminals ml her than going aCrer journalists." he said. "There is a legiti mate need on behalf of the tribunal to protect secret witness testimony but this is nOt the best way to go about ie."

Mr. Lupis stressed the CPJ opposes the ICfV having "broad jurisdiction O\'er journalisIS." He urgc."<i the tribunal nOI to "overstep its authority....

Journalists should be allowed 10 do their work without criminal penalties." Mr. Lupis said.

Leading Republicans mainrain these indictments may trigger a movement in Congress 10 cut off funding for the [CrY. "This is something we will be looki ng into," said an official on the House International Rela tions Committee. who spoke on the condition of anony mi ry. T he official went on to describe the indictments as ~outra­ geous," especially since the ICrY, as an ofTshoot of the United Nations. is partly fina nced by U.S. laxpayers. Su rel y, Americans are not pleased their hard-earned money is being used to help put journalists in jaiL This is not the first time Mrs. Del Pome has abused her prosecutorial powers.

Numerous Croatian journalists have complained her office has oflen sought co intimidate them in order 10 prevent any negative press coverage of the tribunal.

They claim officials close to her have Ihreatened to use their influence with gov· ernmenral authorities and prominent edi· cors ro have ~porters fired , demoted or muzzled .

Lord Accon , the great 19th-century British classical liberal, famously said: "Power corrupts, and absolute power tends 10 corrupt absolu tely. ~ This is clearly the

....

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7

case with Mrs. Del Ponte. She has become corrupted by power: She is now engaging in anti-democr:nic, thuggish behavior. She is seeking ro silence all opposition co the ICfV within the Croatian media. Someone needs ro remind her she is not a former Hapsburg governor of a backward Balkan province. whose m:mdate is ro crush internal rebellio ns. Her mandate is ro pursue genuine war criminals; it is nOi ro intimidate and silence journalists.

Republicans would be wise to finally ~in in Mrs. Del Ponte. Her conduct warr:ants nOI only closer congressional scrutiny, but an official investigation. Moreover, John Bohon. President Bush's choice ro be U.S. ambassador ro the United Nations, has made no secret of his dislike for the ICfY. He advocates winding down the tribunal and transferring most cases co local courts.

Once confirmed, Mr. Bolton faces numerous challenges in trying to refo rm the U.N. Removi ng Mrs. Del POllle and havi ng these indictments dropped should be ncar the rop of his list. (;'3

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Kulmrr is communications dir«tor at TM Ripon Socirty.

Thr virws apmud rrprrsmt solrly thosr oiMr. Kuhnrr.

Tht' Ripon Forum · July/Augus t 2005

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