The Bull v4 issue 3

14 JANUARY 2015 ISSUE 3. VOL 4

D u b l i n U n i v e r s i t y ’ s F i n a n c i a l N e w s pa p e r

Oil Price Slump A Special Report Pages 10-11

- PAGE NINE-

US SENATE TORTURE REPORT Andrew O’Donovan asseses the political fallout

- PAGE FIFTEEN-

- PAGE SEVENTEEN-

THE FACEBOOK REVOLUTION

ECHOES OF THE 1920s

How the Zuckerberg model has transformed business usage of social media

Recent policy proposals remind Audrey Smith of another age

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NEWS

THE BULL 14 JANUARY 2015

VITAL INDICATORS

14.5%

RISE IN IRISH STOCK MARKET IN 2014

1.3%

UNITED STATES CPI (ANNUAL)

Mass rally in Paris in show of unity following deadly terror attack Following a deadly attack on the offices of the Paris-based satirical newspaper Charlie Hebdo, at least 3.7 million people took part in marches across France on Sunday. Upwards of 1.5 million marched in Paris where more than forty world leaders were present, including Taoiseach Enda Kenny. Four days earlier, two gunmen stormed the offices of Charlie Hebdo, killing eleven people including the editor Stéphane Charbonnier.

The magazine has a long history of publishing controversial cartoons including satirical

period, there were seventeen victims at four locations, and others are in a critical condition.

On Monday CCTV footage was released which showed the parnter of the supermarket attacker, who is also sought

by French police, checking in at Istanbul Airport. She is now believed to be in Syria.

Shortly after the shootings, Charlie Hebdo’s website went offline and later returned as a single page, displaying the words “Je Suis Charlie” - I am Charlie. The phrase, variously used to mourn the victims and show support

portayals of the Pope’s stance on contraception and President Hollande’s private life. In 2006 it reprinted the cartoons depicting the Prophet Muhammad wearing a “turbomb” which were originally published in the Danish newspaper Jyllands-Posten, and which led to violent protests across the world.

A branch of Al-Qaeda has claimed credit for the attack describing it as “revenge for the honour” of the Prophet Muhammad. Two days later, after a manhunt and car chase, the gunmen - orphaned brothers of Algerian descent - were killed in a region 30 km northeast of the centre of Paris by police-fire following an eighthour siege. Another gunman, whose connection to the other attackers remains unclear, shot dead five people and took several customers of a kosher supermarket hostage, before being killed when police stormed the building. Over the three-day

for freedom of expression, has become one of the most popular hashtags in Twitter history, having been tweeted over five million times.

Subscriptions to the magazine have more than doubled since the attacks. The next edition will have a print one of one million copies and it will include more cartoons of the Prophet Muhammad.

Despite complaints from Marine Le Pen that her National Front party wasn’t formally invited to the march, across the nation unity was a characterising feature of the marches. On Boulevard Voltaire, presidents and prime ministers joined arm-in-arm with Israel’s Benjamin Netanyahu merely metres away from Palestine’s Mahmoud Abbas. They followed behind a procession led by the families of the victims.

Pens and flags aloft, the crowds chanted, “Charlie, Charlie, Charlie...

On est tous Charlie” - we are all Charlie.

7.2%

CHINESE INDUSTRIAL PRODUCTION GROWTH

4.7%

RISE IN IRISH RETAIL SALES (ANNUAL)

43.9%

ITALIAN YOUTH UNEMPLOYMENT

Bumper US unemployment report masks deeper malaise • • •

Unemployment falls to new post-recession low in best year for jobs since 1999.

Wages fall my most on record Labour participation rate falls, matching lowest since February 1978

Employment in the United States rose by a more-than-expected 252,000 last month capping the best year for job growth in 15 years, while the unemployment rate fell to 5.6 per cent, the lowest since June 2008, the Bureau of Labor Statistics (BLS) reported on Friday. However, stocks in Europe and the United States closed lower, as weak wage growth and a falling labour participation rate overshadowed the headline figure.

Wages fell by 0.2 per cent last month, the sharpest monthly fall since records began in 2006. From a year earlier wages rose by 1.7 per cent, just about keeping pace with inflation. The labour participation rate, the fraction of the population either in employment or active seeking it fell to 62.7 per cent, matching the lowest level since February 1978, as more people gave up searching for work (see graph below from the BLS).

The weak wage growth will help keep a lid on inflation, reducing pressure on the Federal Reserve to begin raising interest rates later this year. Minutes for its December

meeting reveal that the Fed saw “no clear evidence of a broad-based acceleration in wages”. The Fed’s official inflation target is 2 per cent.

In December, core CPI, a measure of inflation that excludes volatile food and energy prices, rose by a mere 1.7 per cent.

Employers added a total of 2.95 million jobs last year, the most since 1999 at the height of the dot-com boom. The unemployment rate averaged 6.2 per cent in 2014, down from 7.4 per cent in 2013, the biggest annual fall since 1984 when the US economy was recovering from the slump of the early 1980s.

Structural changes in the US economy are blamed for the subdued wage growth. 40 per cent of jobs created in the private-sector since the end of the recession have been in retail, leisure and hospitality, temporary employment and home health care, while growth in traditionally high-wage sectors such as manufacturing and construction has been lacklustre. In the past five years wages have risen by only 0.7 per cent.

The falling participation has overstated the improvement in the labour market. U6, the US government’s broadest measure of unemployment which includes all workers who have attempted to find a job in the past year and those who are working part time but are looking for full time work, stood at 11.2 per cent last month. However, since 1994 the unemployed who gave up the search for work more than a year ago have been omitted from government data. When these are included the unemployment rate is 23 per cent, according to economist John Williams.

Minimum wages are set to rise in more than half of US states this month after laws were approved by voters and state legislatures. This will provide a much needed boost to low-income families, who have suffered from growing inequality.

In 2013, 45 million Americans were deemed below the poverty line, while the median household income remained 9 per cent lower than its peak in 1999.

THE BULL EDITOR Callum Trimble-Jenkins DEPUTY EDITOR James Prendergast LAYOUT & DESIGN EDITOR Jordan Boyd

SUB-EDITORS Andrew O’Donovan Anna Brennan Rory O’Donoghue Andrew Nevin Eoin O Nuallain Mark Hughes Tom Kelly Michael Scholz Jr Brian Fleming Eleanor O’Mahony Andrew Corby Ryan Morgan

This publication is partly funded by a grant from DU Publications Committee.

This publication claims no special rights or privileges.

For advertising, please contact thebull.tcd@gmail.com.

Serious complaints should be addressed to: The Editor, The Bull, Box 31, Regent House, Trinity College, Dublin 2.

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THE BULL 14 JANUARY 2015

Eurozone slides into deflation As energy prices crumble the Eurozne has slipped into deflation for the first time since the depths of the FInancial Crisis in 2009. Pressure mounts on ECB to introduce QE

THE FALL in energy prices coupled with sluggish growth figures have seen the Eurozone slide into deflation. Estimates released for December show that prices have fallen by 0.2% in the previous 12 months. The figures released by Eurostat will increase pressure on the Eurozone and in particular the ECB to take more forceful measures to jump-start the area’s economy.

It appears that the recent crash in oil prices is the driving factor with other prices showing positive yet sluggish growth. The price of a barrel of oil has fallen from $115 in

June to below $50. This change has a number of benefits as demand increase along with disposable income as good become cheaper.

While it might be tempting for policy makers to take solace in the fall in energy prices it only glosses over the problems faced by the Eurozone. Unemployment in the area stands at 11.5% and with the coming election in Greece causing renewed crisis policy makers have much to solve. Debt also makes a sustained period of low inflation a serious concern. With most Member-States suffering from

Colombian truce begins to break down The recent truce between Revolutionary Armed Forces of Colombia (Farc) and the Colombian state looks to be under threat from continued army operations against the left-wing guerrilla group.

On 20th December Farc shocked the rest of the world by calling an end to its military operations as part of ongoing peace talks in Cuba that began in 2012. Farc tried to use the move as leverage to force the government to follow suit. Instead the Colombian Army stepped up pressure on the rebels arguing that any cessation in hostilities would be used by a war-weary Farc to regroup and rearm.

Farc was formed in 1964 as a Marxist-Leninist peasant insurgency but has gained international notoriety through their methods of funding. These include kidnapping and drug trafficking. It is estimated by Fundación País Libre, a Colombian NGO that investigates kidnapping that 6,778 were held for ransom

by the organisation between 1997 and 2007.

Talks in Cuba are focussing on six crucial issues of land reform, political participation, drug trafficking, rights of victims, disarmament of the rebels and the implementation of the peace deal. While agreement has been reached on the first three talks are stalling of the rights of victims, in particularly the definition of who is a victim. If the process is successful it will bring to an end a conflict that has left an estimated 220,000 dead, many of whom were civilians.

Farc and the second largest rebel group the ELN have stated that their end goal from talks is to give up violence and enter the political process. Despite this neither group seems close to decommissioning weapons which has in turn led to suspicions in the Colombian military as to their real intentions.

excessive public and private debt, borrowers will suffer from a real term increase in the value of what they owe.

December’s estimates have increased pressure on the ECB to follow the example of their American and British counterparts and begin a programme of Quantitative Easing (QE). With low interest rates not having the desired effect they are left with little option but to increase money supply by buying financial assets. Such moves have been credited with the positive growth experienced in both the U.S

and the UK. What then is the ECB’s hesitation? QE is impossible without the purchase of sovereign bonds.

In a currency union of 19 members with bond yields as diverse as above 10% in Greece and close to 0% in Germany the question of whose bond is both politically and economically charged. For example any investment in the junk bonds of the Greek Government would expose the central bank to massive loss if a ‘Grexit’ was to occur.

While many countries, especially

on the periphery are clambering for QE to bolster their ailing economies the Eurozone’s financial strongman, Germany has remained resolutely opposed to inflationary measures.

This is partially based on their own experiences with hyperinflation in the 1920s but it has hamstrung growth across Europe. With the Germany economy also beginning to feel the wider problems as demand for their exports fall throughout Europe it is likely that the time has now come for QE to begin.

Charges recommended in Petraeus scandal US prosecutors have recommended that former CIA head and army general David Petraeus be charged with leaking information to his ex-mistress Paula Broadwell.

Formerly commander of US forces in both Iraq and Afghanistan he was appointed Director of the Central Intelligence Agency in 2011, a position he was forced to resign from in 2012 as details emerged of his extramarital affair.

It is alleged that he provided confidential materials to Mrs Broadwell who he began a relationship with when she wrote a biography of the general. The relationship emerged during an FBI investigation into threatening emails sent anonymously by Mrs Broadwell to Florida socialite Jill Kelley. General Petraeus was eventually asked to step

down when the White House was briefed on the findings of the FBI’s enquiries.

A report in the New York Times suggests that the federal investigation is centred on whether the general gave his former lover access to his CIA email account after they discovered classified material on her computer. It now lies with the Attorney General Eric Holder whether to press the charges which could carry a hefty prison sentence for the decorated soldier.

David Petraeus first came to national prominence in 2007 when as Commander of US forces in Iraq his testimony to Congress led to a surge of an extra 30,000 troops. The move which became known as the ‘Petraeus Doctrine’ was credited with improving the security situation in

the country. A similar strategy was later used under his command in Afghanistan to stabilise the situation before the planned American withdrawal. In 2011 he replaced Leon Panetta at the CIA. As head of America’s foreign intelligence service he pursued an aggressive strategy of increased drone attacks in particular against targets in Pakistan.

Although he denies any illegal activity General Petraeus has accept that he displayed poor judgement in conducting the affair.

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THE BULL 14 JANUARY 2015

The Interview: Has the keyboard become mightier than the sword?

O

ne may be forgiven for glossing over the finer details of the debacle of ‘The Interview’, Sony’s ill-fated satirical film about the assassination of Kim Jong Un. Absurdity lies at the very heart of the film and the media storm surrounding it – many may have permitted themselves a wry smile at the inherent silliness of the egomaniacal dictator of a despotic state threatening ‘serious’ consequences in the event of the film undermining his infallibility reaching the public, and the ‘army of hackers’ deployed in his wake. In the weeks since, however, it has become apparent that the cultural and political stakes could not be higher.

First reported on November 24, 2014, the hack was framed as a case of business-related cyber harassment.

Over the following two weeks, the story escalated from the systematic release of embarrassing emails and confidential corporate data to direct threats of violence from anonymous hackers referring to themselves as ‘Guardians of Peace’. The first threats

made to Sony employees and their families were followed by further warnings to cease screenings of a ‘...movie of terrorism which can break the regional peace and cause the War’. Threats of violent attacks at theatres showing the film subsequently followed, culminating in the widespread cancellations of screenings of ‘The Interview’.

Little is known regarding Guardians of Peace. It is likely that they are a diverse collective of skilled hackers similar to Anonymous, who undertake different actions under the name’s umbrella, loyal to no overarching motives other than a vague and dangerously grandiose pursuit of ideals of truth and peace.

Wednesday morning’s attack on Charlie Hebdo and its writers is a chilling reminder that threats against artists and journalists are not abstractions and should be treated with the greatest of respect.

However, the handling of “The Interview” is an illustration of how ill-prepared we are in responding to those threats as we face into the era of cyber-terrorism.

The power of the cyber attack

lies in the confusion it creates – the victim knows neither who their attacker is, nor what has provoked the attack. In instances when it is possible to identify the origins of the attack, it comes as a result of detailed analysis and thorough investigation. However, this is of little comfort at the moment of attack, when those under attack must decide how networks will react and within days how it will affect the country as a whole. This may explain the lack of composure the Obama administration displayed in handling the Sony debacle. Officials in the U.S. government and international institutions simply lack any legal or conceptual framework to deal with scenarios of this nature.

This is the future of terrorism.

The lines between randomly associated hackers and government organisations are blurred, and a clandestine group of anonymous vigilantes can silence the free media and credibly threaten the security of the most powerful nations on earth.

Thus, the Sony attack is amongst the most important security concerns of our time, and should be regarded

with the greatest of respect. An even greater blurring of traditional lines between police, military, and private corporations or persons is likely as increasing sophistication in technology distributes attack capabilities across a variety of actors, platforms and geographic locations.

This difficulty in attribution is a problem that is likely to persist for the foreseeable future.

The implications of these attacks are myriad. If North Korea is in fact responsible for the attack, one fails to see any significant difference between that and a North Korean spy breaking into Sony offices and making stolen documents available to the public – an overt act that would undoubtedly warrant a response in line with the united States’ typical reactions to such insolence. Is corporate espionage an issue for government agencies such as the NSA or CIA to solve, or should corporations defend themselves?

How much should we allow such organisations to insist that we trust them without proof when they claim to have classified evidence that they choose not to disclose? How

should we react to one government imposing sanctions on another based on this secret, potentially even non-existent, evidence? More importantly, it is near to impossible to decide who is in charge of responses to attacks and under what legal system punishments should be applied.

The answers to these questions are not easily found, and are likely to occupy the minds of international security organisations, not least those in the United States, for decades to come. The future of journalism, free media and the fundamental rights of all citizens to express their views depends on the effective counter measures taken against cyber terror. We must continue to challenge those who attempt to silence free media, and applaud those who are courageous enough to create works of dissent and satire in the face of responses of the terrifying magnitude of the Sony hack, and the unspeakable horror of Charlie Hebdo.

TOM KELLY

Jangmadang Style

T

oday, the Korean peninsula is recognised for two polar opposite cultures, which have intersected and fed off one another somewhat positively over the past decade.

In the South, Hallyu, or the Korean Wave altered the national image, which was once that of a Third World country, burdened by the Japanese occupation, Korean War, the 1953 US mutual defence treaty and later the 1997 Asian financial crash. The latter proved a decisive moment when President Kim Young-sam begged his people for forgiveness as he agreed to accept an IMF loan of $57 billion.

Vowing to correct this major mistake, the nation rebuilt itself, fixated on developing soft power. In 1998 under Kim Dae-jung - whose first move was to hire a PR teamthe South began reforming itself as an unparalleled force producing information technology and popular culture. The move, though audacious, paid off and they were

freed of debt by 2001.

Hallyu had turned the Korean lifestyle into a brand. This was “peddling cool” as journalist Euny Hong wrote in her book, The Birth of Korean Cool and, in turn, the move proved influential to a new generation of North Koreans, as the wave became a means of quiet resistance.

Founded upon juche, the dogmatic ideology of Kim Il-sung, North Korea sought to exist in neartotal isolation from its conception.

Juche was their uncompromising call for self-determination and absolute equality internationally, outlawing any non-social realist cultures tainted by the outside world. Hardly waning until 1994, it was with the passing of Il-sung that a major mark was left on successive generations and their tolerance regarding juche.

Born into a life without any significant attachment to said ideology, or Il-sung’s cult of personality, these millennials found a purpose during the devastating famine of 1994 and 1998. Without

hope for surviving on state rations, various black markets were formed as these younger citizens deeming it vital to adopt a capitalist ethos.

This gave rise to the Jangmadang, or the Black Market Generation, whose attitude grew from their detachment to the Kim dynasty, embracing the free market and within this, gaining exposure to international cultures through bootleg DVDs and samizdat books.

Now, this generation has been thrown into the spotlight thanks to Park Yeon-mi, a twenty one year old defector, who fled the state in 2007 and currently works in conjunction with various anti-Kim humanitarian organisations.

Appearing at such events as Dublin’s One Summit, Yeon-mi has stressed the importance of gaining a taste of freedom through bootleg Hollywood movies, which she amongst many others cite as their first moment of disillusionment.

However, today on the black market, Hallyu products have proven to be more popular in terms of their social

significance and allure. Whereas American DVDs could cost 35c, a copy of a Korean soap opera can go for $3.50, such is the demand and risk that accompanies its procurement. Euny Hong has gone as far as to suggest that a thaw in the two nations relations could be aided by such minor items, considering the reputed popularity of these ‘K-Dramas’ amongst DPRK officials’.

As a result, Kim Jong-un has often been the recipient of gifts related to the wave, with one noted example being a DVD of Park Chanwook’s Joint Security Area, a film about guards on both sides of the demilitarized zone becoming close friends. Bonding over seemingly subversive concepts, the men are simply besotted by trivial, nonpolitical events and share a dream centred around the confectionary known as Choco Pie, a South Korean version of the Kimberly Clark. The significance of this biscuit is that it became a black market currency over the next few years.

The Choco Pie, as a symbol of

unlikely resistance, gained popularity in 2004, as the two nations cooperated in setting up the Kaesong industrial region. Employing 52,000 Northerners, the 125 Southern companies involved were forbidden from paying bonuses and therefore, began to supply workers with said biscuits. So beloved were they that the black markets would sometimes be inundated with 150,000 per day.

However, due to this influx, the North clamped down on their sale, meaning that prices often fluctuate between 80c and $10.

Although minor forms of subversion, Park Yeon-mi has highlighted the value of these apolitical items in undermining governmental authority. The state has been forced to permit the existence of ‘gray markets’ and through each of these miniscule setbacks, Park has proudly exclaimed that the juche system is closer to joining Kim Il Sung in the grave.

MICHAEL LANIGAN

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The Black Death of West Africa? The consequences of the Ebola outbreak Alison Burns on the surprising potential economic effects of epidemic

I

n recent weeks, Irish and British media coverage of the Ebola crisis has shifted from the conditions in the worst effective regions of West Africa to focus on the case of Pauline Cafferkey, the first person in Britain to be infected with the virus. While the BBC rolls their pre-recorded Ebola outbreak instruction videos, the dismal situation in Sierra Leone, Guinea and Liberia is pushed to the back of the public consciousness.

According to statistics released by the Centers for Disease Control and Prevention, at the end of December 2014, the collective death toll from this disease for Sierra Leone, Guinea and Liberia has risen to 7989. In addition to this high human cost, there is an equally severe economic cost. On November 19 2014, the Center for Strategic and International Studies (CSIS) Global Health Policy Center hosted an important discussion on the economic impact of the Ebola epidemic in West Africa. According to the CSIS, Sierra Leone, Guinea and Liberia will suffer a combined loss of $359 million in GDP for 2014 and it is likely that the situation is going to get worse before it gets better.

This is particularly true from a fiscal perspective. Governments in West Africa have had to

increase public expenditure in efforts to contain and combat the disease. This increase in public expenditure is accompanied by a decline in the size of the pool of working people from which the government can collect tax revenue to finance this high expenditure.

However, there may be a glimmer of light at the end of a very long and dark tunnel for the economies of West Africa.

Economic expansion following severe epidemics is well documented throughout the history of the world economy.

Arguably the most well documented instance of this phenomenon is the economic growth that occurred in Europe following the Black Death. There is evidence that the shock of the Black Death led to an increase in income in Europe. The supply of capital and land remained largely unaffected by the plague while the Black Death led to a sharp contraction in labour supply, resulting in higher wages for those who survived.

This historical tale of economic recovery following epidemic may offer some hope although tainted by the high human cost of the disease. When weighing up the viability of this long-run Eurocentric economic theory in a West African context,

it is essential to remember that the world has evolved since the time of the Black Death. Whereas at the time of the Black Death medicine resembled superstition rather than science, now there are medical experts around the world with the knowledge required

to prevent further spread of the disease. The international response to this crisis is also key feature that distinguishes the Ebola epidemic from the deadly plagues of the past. The policy of “fend for oneself” has long expired as countries around

the world acknowledge that they have become too interdependent to turn a blind-eye in the event of such a crisis.

Could the Ebola epidemic be the turning point in West Africa’s economic history? - Only time will tell.

Still the “Lucky Country”?

The collapse in commodity prices has scuppered Australia’s plans to balance the budget, writes Fionn McGorry

A

ustralia’s weathering of the Global Financial Crisis saw then-Treasurer Wayne Swan of the Labor Party named Euromoney Finance Minister of the Year in 2011. In spite of this, his conservative opponents railed against an apparent budgetary emergency and the Labor government’s failure to deliver a budget surplus in the immediate period following. In 2012, Joe Hockey, now the Treasurer of Australia, promised that if Australians elected a Liberal/ National Coalition government, they would deliver a surplus in their first year in power and in each of the three years of their first term in government. Having failed to

deliver a first-year surplus in May 2014, the budget forecast a deficit of AUD$29 billion. By December this had increased to more than AUD$40 billion with the release of the Mid-year Economic and Fiscal Outlook (MYEFO) by Hockey in December, and according to the MYEFO a surplus will not be achieved for five years.

Hockey has faced significant political difficulties with his budget, facing a Senate populated with a large cross bench of independents and minor party members, stifling many of the more controversial policies. Prior to the budget, Prime Minister Tony Abbott enumerated these at the G20 Summit in Brisbane, mentioning proposals to deregulate University fees and introduce real interest rates on

student loans, and to introduce a AUD$7 co-payment on visits to General Practitioners. Discontent with such measures as these has seen the Government lagging behind Labor in every major opinion poll since April 2014.

One fact that both sides of politics seemingly must face, is that the benefits resulting from the investment stage of the “mining boom” now are limited, and the most significant political and economic question of the period is how to transition out of this phase, to combat the supposed “Dutch disease” which occurs when de-industrialisation accompanies a boom. The boom which saw Australia’s economic position become the envy of the world, is estimated by the Reserve

Bank of Australia to have raised real per capita household income by 13% up to 2013. However, with the price of iron ore 50% lower than it was a year ago, and with a fall of 10.9% in private capital expenditure from 2013-14, there are clear signs the boom is ending.

Though the Coalition government has been readily laying their budgetary woes firmly in the hands of the Senate and their Labor predecessors in government, it is questionable whether the full potential of the mining boom was captured by the last Conservative Government.

The Howard government, in power from 1996-2007, introduced a series of populist measures such as a “baby bonus”, and tax cuts, and was able to deliver

a series of surpluses based on mining revenue. Whether fiscal reforms would have allowed a better harnessing of revenue, and allowed the benefits of the boom to be secured in the long term, is one which will haunt Tony Abbott over the next two years, as he faces up to another Federal Election. While these Howard government surpluses allowed the Rudd government a buffer against the Global Financial Crisis, the question remains whether an Abbott government will ever have the opportunity to deliver a surplus, or whether the unpopularity of its harsh budget measures will see them turfed out of office in 2016.

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The Dragon at a crossroads

T

owards the end of last year, two reports were published, which provided striking evidence of China’s rising role in the global economy. Last month, the IMF announced that in purchasing power parity terms, China has now overtaken the United States as the world’s largest economy.

In November the World Bank and IMF broached the possibility that globalisation may have ‘peaked’. By this they did not mean that the volume of world trade as peaked.

Rather that after decades of growing faster than global output, world trade may now grow more slowly. The reason? Chinese manufacturers are sourcing more of their intermediate inputs internally, rather than importing them.

Globalisation since the information technology revolution began in the 1980s, has been driven by the growth of international supply chains, with many intermediate production stages taking place in separate countries. China, which was at the heart of this process, may now be responsible for its (at least partial) undoing.

China’s industrialisation is sometimes seen as similar to that of Europe and the United States in the late nineteenth century.

But not only has China’s growth been many times faster, it has been far more stable, seeming to defy the laws of boom and bust.

Between 1870 and 1913 output per capita in Western Europe grew by an average of 1.33 per cent. In the ‘Western offshoots’, including the United States and the British colonies, it grew by 1.88 per cent.

Growth was punctuated by severe economic crises, at the time known as ‘panics’. The worst occurred in 1873 and 1893, both during what used to be called the ‘Great Depression’, before the slump that began in 1929 usurped the title.

China’s growth rate between 1978 and 2007 was 8.12 per cent, or more than six times faster than Western Europe at a comparable stage of industrialisation. China hasn’t experienced a single year of negative growth since 1978. Even in 1998, when many of its nearest neighbours’ economies suffered depression-like conditions, which in Indonesia led to the overthrow of Suharto’s more than three-decade-long dictatorship, China’s economy expanded by 6.8 per cent.

The speed of China’s rise can be largely explained by its late development. Western Europe and North America were more or less at the frontier of technological development in the nineteenth century, and productivity growth was limited by the incremental advance of scientific knowledge. China has been able to import the most advanced technology wholesale, skipping the intermediate stages that early developers laboured through.

China’s growth has also been achieved at the expense of its own people, and some would say at the expense of other developing countries too. While China is an increasingly market-based economy, the state has retained control over what Communists used to call the “commanding heights” of the economy, most importantly banking.

The true nature of China’s economy is revealed by the total disconnect between the performance of its stock market and its economy. In 2014, when China’s economy grew at its slowest pace since 1990, its stock market soared by 54 per cent. In a typical capitalist economy, the stock market is one of the principal mechanisms of allocating capital, and its performance is generally reflective of that of the economy.

The government’s control of the banking system has enabled it to engage in “financial repression”. Financial repression involves state-enforced artificially low interests, penalising households and subsidising firms.

Effectively it is a tax on consumption and a subsidy to production. While it promotes rapid economic growth, financial repression leads to a severely imbalanced economy in which production grows much more quickly than consumption.

The demand deficiency arising from this gap between production and consumption can only be solved in two ways: through sufficiently high domestic investment or through exports. To promote exports China has artificially held down the value of its currency, and the Yuan has been one of the most undervalued currencies in the world, for years. According to the most recent edition of The Economist’s Big Mac Index, a useful if rough tool for assessing the fair value of a currency, the Yuan is undervalued by 43 per cent.

By repressing the value of the Yuan, China has effectively made its competitors bear some of the cost of its imbalanced economy. The excessive growth in Chinese industry was one of the chief causes of the great commodity price boom that preceded the crisis of 2008. The victims of China’s mercantilism mostly been developing countries at the cusp of industrialisation, but also Southern Europe, where industries such as textiles are in direct competition with Chinese producers. This may be one of the neglected causes of the Euro crisis.

When the financial crisis hit in 2008, China could no longer rely on the rest of the world to resolve its lopsided economy.

To avoid a crash, the Chinese government used its control of the banking system to unleash one of the greatest credit booms in economic history, with credit soaring by 100 per cent of GDP in the past five years.

This funded a terrific rise in investment and exacerbated existing excess capacity. In the past four years China has added more steel capacity than the combined output of Europe and North America.

Undoubtedly, a significant fraction of the accumulated debt will turn ‘bad’, and how the government chooses to manage the costs matters for the global economy. One option would be print money to absorb the losses, thus devaluing the Yuan, and possibly igniting a currency war with China’s trading partners. This was what the Chinese did after their last credit bust in the early 2000s, and by 2004 China was running a gargantuan current account surplus of 10 per cent of GDP. But whether China’s credit boom results in the dreaded ‘Lehman moment’ or not, there are longer-term institutional reasons for caution about China’s growth ‘story’.

Daron Acemoglu, Simon Johnson, and James Robinson in their book Why Nations Fail find that no nation with an ‘authoritarian’ regime has ever achieved more than half of the per capita income of the United States.

Of course, economists have possibly the worst track record of all ‘professions’, when it comes to forecasting. But the mistake they make most often is extrapolating from current trends. Few would have expected that Argentina, the tenth richest country in the world in 1913 and whose capital Buenos Aires was home to the only foreign branch of Harrods outside of London, would be the byword for financial ineptitude it is today.

While China’s rise has been breath-taking, its continuation is by no means assured.

JAMES PRENDERGAST

An inconvenient Kosovon truth

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pon landing in the scorching W e s t e r n Balkan heat at Adem Jashari International Airport in mid-July, a coordinator of the intercultural study programme of which I was to be a participant, after taking my baggage at Arrivals, quickly moved on to more important affairs with a blunt question closely along the lines of: so, where were you on 17 February 2008 when Kosovo won its independence?

What was to follow was 10 days of intercultural discovery and exchange with fellow participants from all over the world. The discovery was to begin immediately. I was shocked by the ubiquitous presence of Austrian, Hungarian and Italian NATO peacekeeping troops. Among other highlights, we received Adrian Prenkaj, a Presidential Advisor, who spoke glowingly of Kosovo’s path of European integration, visited the nowquasi shrine of the revered (or despised) Adem Jashari, leader of the officially defunct Kosovo Liberation Army, visited the League for the Defence of the Rights of the Albanian Nation in Prizren, and also Mitrovicia, a deeply divided city where Serbs, residing North of the Ibar River, are separated from Albanians, living South of the river. Italian Carabinieri were keeping the peace on the bridge the day we visited, while amused children stared at their armoury.

Kosovo’s declaration of independence was a unilateral one and came after long-running bitter ethnic tensions in addition to an international intervention led

by NATO forces. Today, the national identity of Kosovo seems to be synonymous with uniquely secular Muslim and thoroughly Albanian values. I saw that where the blue and gold Kosovo flag (introduced after independence) flies high, the grand Albanian black eagle on a red background flies beside it, and on occasion even the flags of the EU, the USA and NATO are privileged with their own flagpoles beside the Kosovo flag.

This surely runs counter to what the same Kosovo flag is meant to stand for: the six stars to represent the principal ethnicities present, and given official recognition in the new state of Kosovo?

We were accommodated in the so-called Grand Hotel, central Prishtina. It is an immense, even gigantic structure built on order by Tito. Grand Hotel holds many

dark secrets of a tragic period in the history of the Western Balkans. What seemed like a vast network tunnel in the basement is penetrable from the ground floor. The 4th floor was reserved for the Yugoslav nomenclatura.

Zeliko Raznatovic, a Serbian paramilitary figure and racketeer took over the same floor in 1992. In an interview with KosovAlive. org, a former manager of the Grand Hotel told of how, after the Kosovo War had ended, he had accompanied KFOR (a NATO-led international peacekeeping force) soldiers through the vast basements when they discovered “young girls’ underwear, socks and slippers, medieval binding devices and two fire pits...”. Late at night a few evenings, I, along with other participants roamed around the vast building, wandering through abandoned sections still under construction, the haunting basement network, and a separate luxurious floor of bedrooms.

In 2011, under the auspices of the EU Rule of Law Mission in Kosovo (EULEX), the Special Investigative Task Force (SITF) was set up to conduct an “independent criminal investigation” into allegations published in the same year by a Council of Europe (CoE) report in relation to “inhuman treatment of people and illicit trafficking in human organs in Kosovo”.

The report pointed the finger squarely at senior figures within the Kosovo Liberation Army (KLA).

Late this Summer, the SITF published a thorough statement. It found “compelling evidence” against these guerrilla leaders leading to an “indictment against these individuals for serious violations of international humanitarian law, including crimes against humanity and war crimes”.

In addition, it concluded that certain senior leaders usurped power for personal enrichment. Crucially, the SITF concluded that the victims of KLA’s mob tactics were mainly “Serbs, Roma, and other minorities, but also Kosovo Albanians who were labelled either to be collaborators with the Serbs, or, more commonly, to have been political opponents of the KLA leadership”. The prosecutorial findings make notable reference to a very thorough 1999 Human Rights Watch report. It was compiled overwhelmingly on the basis of on-site research, field-visits, and first-hand testimonials.

The report, even at what transpires to be an “early” stage, was very hard-hitting on summary and unlawful

killings of minorities in “New Kosovo”. Examples it cited include the fate of elderly ethnic Serb residents in Prizren, the fate of one Serb Professor at the Economics faculty at the University of Prishtina, the dramatic decline in the Roma population, amongst others, the desecration and burning of places of worship including a monastery in Musutiste blown up by explosives, and the abduction and execution of ethnic Albanians opposed to the KLA, particularly south of the River Ibar.

This report was superseded by a more legalistic one by the same NGO in 1998. All in all, the STIF’s findings make for harrowing reading and it may remind us of the danger of selective indignation when it comes to identifying victims in (any) conflict. Carla Del Ponte, the well-respected Swiss prosecutor wrote in her memoirs, The Hunt: Me and War Criminals, dedicated to her time at the head of the International Tribunal for the Former Yugoslavia, of how credible evidence and testimonials came to her attention of 300 cases of Serb victims of organ trafficking taken to a house-clinic in Albania. “Prisoners were aware of the fate that awaited them, and according to the source pleaded, terrified, to be killed immediately”, Del Ponte told The Guardian. She was silenced by the Swiss government, and has told of how the UN agencies in Kosovo blocked her attempts to investigate the case of these missing Serbs.

In Prizren, the group visited an old Serbian church, that today benefits from permanent and round-theclock armed police protection after a 2004 looting and subsequent torching that completely destroyed the interior and damaged the structure. March 2004 saw multiple Orthodox places of worship looted or arsoned.

We walked in the ruins of one of these churches: those of the Church of the Holy Saviour, Prizren.

Kosovo is more troubled than maybe the European Union integrationist cheerleaders wish to admit.

In fact, it is difficult not to get an impression of how the European Union, in its various composites or via its satellite agencies and civil society partners in the region are not engaged in a sort of propaganda campaign to sell to the international community a rather ill-fitting, idealised portrayal of a deeply troubled country.

DONAL KENNEDY

Each year Trintership, run by Ernst & Young in association with DUBES, attracts a wide range of applicants all vying for a much sought after place on their summer internship programme. The winning team describe their experiences to Brian Fleming.

Rebecca Ryan: JS Law, 19, Luke McGuiness: JS Genetics, 20, Aspirations; Continuing Study/Journalism/Consultancy Jenny Anderson: JS Business and Economics, 20, Aspirations; Business consultancy Daniel Curran: JS Business and Economics, 20, Aspirations; Accountancy Kevin Hogan

Could you start off by describing the competition and the structure of it?

Daniel: Forty candidates applied to take part in the competition and were split into groups of five. Due to the overwhelming (while completely understandable) number of applications from business students, teams were divided so that three came from the business school (predominately BESS students), and the remaining would consist of students from other disciplines. We were all briefed on a Wednesday afternoon in early December, and given the case study information. All groups were given a time-slot on Friday where we would present to a panel that would critique our pitches and ask questions. Thus we all had a short time-scale in which to create a high-quality presentation.

How was the experience overall? Is there anything that excited you, or anything that you would change if you had the opportunity?

Jenny: It was great working with such an enthusiastic team, and I really enjoyed meeting up each morning to work together. Its not often you look forward to seeing those Lecky doors at 9a.m.!! The main aspect of the competition I was most excited (and scared) about was being able to present in front of the Partners and Senior Managers of EY, since I don’t get many opportunities at college to do presentations of that nature. It was a great insight into the company and confirmed to me that I want to explore this area of work further. I found it pretty difficult going back to my assignments after the excitement of working on the case study.

Luke: Our team hit it off from the start. From being one of the last teams to leave the briefing session on the Wednesday, to being up for meeting early on the Thursday/Friday and spending the whole day together, I thoroughly enjoyed working with the rest of the team. I think this kind of mixed background team dynamic often produces better results than one person working alone, or even a team who all have the same background, as you find that the different exposure that people have had means that they think about things differently and have different strengths and weaknesses.

Daniel: If possible I’d probably encourage the organisers to check with the course administrators to see if there were exams or important assignments coming up for students in third year. We were fortunate enough and our team-mates were organised enough to be able to work around it, but with such a short time period within which to create the presentation, it could have been a disaster!

Do you view internships as being important to having a successful career?

Rebecca: Yes I think internships are so important, especially internships in big firms as they have experience in training students and I think they are an educational experience. Although in college you learn the theory of your subject, I feel internships teach you to apply this theory and prepare you for working in business environments. They are also extremely important for networking and your CV. Jenny: I do believe an internship is not only a huge benefit in securing a future job, it also helps you decide if this is an area you are interested in or not. No experience is a wasted experience!

What do you hope to learn from your internship in EY? Daniel: Definitely hope to learn a lot. Fortunately we’re going to be given a buddy so we can get some of the ‘stupid questions’ out of the way quickly enough!

In general though, I am not unlike most 20 year olds I would imagine in that I don’t know what I want to do for the rest of my life. Working in EY will give me a taste of a few different departments, and hopefully I’ll find something I like that I have an aptitude for!

How did you approach the competition and what advice have you for future participants?

Luke: Use your mentor as much as possible. That said we did get a particularly lovely mentor who was incredibly nice and extremely helpful, but try and make the most of their knowledge and experience. Also, be prepared for long hours with your team - assignments/lab write ups/study are unlikely to happen while the competition is on, and trying your best to make it pleasant to work as a team is by far the best strategy for success. Finally, practice your presentation a lot. Work out where people are going to be standing side of the screen, who is going to change the slides, when that person has to talk, who takes over changing the slides, stuff like this. The more professional and polished it looks, the better. Finally, if you are going to bring notes/prompts into the presentation, have them on flashcards.

This way, even if you are inclined to try and hide behind your notes, it is much harder to do so, and looks better than having pages of A4.

Rebecca: This competition is all about how you work as part of a team and your presentation skills. Its very important to bond as a team from the start and get to know each others strengths in order to highlight them in the presentation.

Jenny: Go for it!! It has been one of the best experiences I’ve had in college. For a few days of hard work the reward not only sorts out your plans for the summer, it is also a huge boost to your career prospects and your confidence.

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UNITED STATES

THE BULL 14 JANUARY 2015

Scott Walker: A unifying force for Republicans in 2016?

uch has been made over the last few years of the internal struggle for the ideological soul of the Republican Party. News channel MSNBC even has a permanent shortcut link on their website labelled “GOP Civil War”. Nowhere is this split clearer than in the names being touted as potential Presidential candidates for 2016. Governor Chris Christie, Mitt Romney, and Jeb Bush, the establishment Wall Street backed favourites are detested by the Tea Party grassroots who want the social libertarian Rand Paul or the conservative firebrand Ted Cruz, neither of whom seem to have the broad appeal to win a national election. The GOP cannot win in 2016 with only half of its base supporting their candidate, which is a real possibility given the deep divide in the party. This was proven in 2012 as Romney couldn’t rally the rural conservative base and thus couldn’t win against President Obama in crucial states like Virginia, Florida, and Iowa that are usually reliably Republican. This leaves the door open to a strong uniting candidate who can pull both factions together and harness the “big tent” that worked so well for George W. Bush and Ronald Reagan.

Wisconsin Governor Scott Walker is seen as in neither camp but has huge appeal to both. He is liked by Wall Street for his tough stance against Unions, so much so that Chris Christie sees him as a major threat.

Controversy brewed before the election as many media outlets claimed that Christie, who is head of the Republican Governors Association was withholding campaign funds from Walker knowing that a defeat would end any presidential ambitions. Walker however won emphatically, carrying Wisconsin which has historically been a Democratic bastion for the third time after winning a recall election in 2012, he is the only governor in history to do so. He’s taken on powerful labour unions, has cut 2 billion dollars in taxes, and has overseen a revival in Wisconsin’s economy with 110,000 extra private sector jobs added during his tenure. Wisconsin’s unemployment rate is 5.5% below the National average of 6.1% which is particularly good for the blue collar state that has suffered greatly at the slow-down in the industrial manufacturing sector. His ability to win a usually Democratic state is another positive credential for any potential national candidate.

Democrat Senate leader Harry Reid made Scott Walker enemy number 1 during the 2014 midterm elections. The Democratic National Convention pumped a whopping $15 million Dollars into the Campaign of challenger Mary Burke in an attempt to unseat Walker, running a torrent of negative ads. 3 elections won in 4 years is a remarkable record for any governor and is testament to his campaigning ability. This will be valuable in taking on the political goliath that is the Clinton Campaign machine. Walker is well liked by the public and would be a tangible conservative alternative to the neo-liberalism of Hillary Clinton who is the presumptive Democratic candidate. It is hard to differentiate between the policies of Clinton and many of the Establishment Republicans which could benefit Clinton as she has greater name recognition than most.

There is already much support for Walker to run and his cross board appeal could be pivotal to success.

Another failure to galvanize the base would be disastrous for the GOP in 2016. The Republican grassroots has showed its teeth several times in the recent midterms, unseating former House Speaker Eric Cantor in the primaries and Mitch McConnell, now Senate Majority leader, had to stave off an attack from the fringes of his party. Republicans need a uniting candidate to coalesce around who has a proven track record and electability, Scott Walker could emerge as that candidate.

AONGHUS O’FATHAIGH

The US and Cuba: Ninety miles away and coming closer

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t was the perfect story - the timing: less than a week before Christmas, when the media had just warmed up for the 2016 presidential elections with Jeb Bush’s quasi-announcement. The setting: DC in winter, a small island ninety miles away, and Florida, a state so crucial to any electoral map. The characters: a tired President with greying hair, the band of brothers Castro, a Republican congress, and even an intercession from the Pope.

Cuba was always the enigma of US foreign policy. Decades after trade restrictions against America’s long-time nemesis the Soviet Union were discarded, a small island 90 miles from Florida remained subject to a blanket embargo.

However, a significant move forward was made on the 17th December when President Obama announced a thaw in hostility between the two states. This was the culmination of months of secret negotiations, brokered in part by Canada, with His Holiness Pope Francis helping to bridge the gap between the two leaders, Obama announced that open talks would begin immediately in an effort to eventually restore normal relations. Obama also laid out a plan to partially lift the travel ban on Americans seeking to visit Cuba, as well as other measures which will serve to open up trade and movement of capital between the two countries.

It seems reductive to reduce any historical reasons for the embargo to merely toppling Fidel Castro - on that score, the measure has undoubtedly failed, with Raul Castro officially running the country, while the seemingly indefatigable Fidel Castro remains ‘a soldier in the fight of ideas.’ But nonetheless, the wider reasons supporting an embargo don’t hold much water either - fewer and fewer Americans feel the ban is justified. China and Vietnam, both communist states maintain full diplomatic relations with the United States. Even Cuban-Americans, long a a hugely powerful lobby on the Cuba question have relaxed their opinions - a younger generation of American-born Cuban-Americans have welcomed the announcement made by President Obama to begin a process of normalising relations. The move further puts the US on a par with other Latin American countries, a desirable result in a region that has long distrusted the US. Naturally, the reaction among the US political class was not necessarily so enthusiastic. As is nearly always the case, opinions were divided among party lines - you are with Obama, or you are against him. Little to no time was spent considering the merits of the question; whether there might actually be good reasons to either maintain or change the existing policy on Cuba. Rather, the debate skewed towards what this might mean for 2016 - would this affect Republican candidates seeking the Hispanic vote? Remembering that only Congress has the power to lift the embargo, Obama’s critics blasted him for again forgetting his place, barely weeks after the controversial executive action on immigration.

All in all, a lot is still up in the air. It is not clear what developments the announcement will bring in the New Year whether Congress will put up a huge fight against any further measures to loosen the rules of the embargo, whether Havana will reap more political benefits from the deal than DC. However, Obama has taken the first step towards a new era in American-Cuba relations - if that risk pays off, he will have brought resolution to an issue that has alluded Congress and Foggy Bottom since 19th October 1960.

Cuban Americans at Cuban Day Parade in Union City, New Jersey. Union City is known as Havana-on-the-Hudson owing to its large population of ANNA BRENNAN Cuban Ameericans.

UNITED STATES

THE BULL 14 JANUARY 2015

US Senate report: CIA used torture

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What you’re doing?

News Editor Andrew O’Donovan analyses the fallout from the release of a mammoth US Senate report into the CIA’s so-called “enhanced interrogation” techniques.

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decade after it first became apparent that the Central Intelligence Agency (CIA) was using interrogation techniques of dubious moral and legal standing, a US Senate committee has released a report that leaves no doubt that those techniques did indeed constitute torture. The 499 page report (itself extensively redacted) is a summary of an almost seventhousand page report that is the product of a four-year investigation by the Senate Intelligence Committee, beginning in March 2009, into the CIA’s Detention and Interrogation Programme. The full report remains classified.

In at times harrowing detail, the various interrogation techniques performed at CIA “black sites” are described, which included cramped confinement, sleep deprivation, white noise, face slapping, stress positions and water boarding. The CIA’s first detainee, Abu Zubaydah, at one time a suspected mastermind of the September 11 attacks, was subjected to enhanced interrogation techniques in “varying combinations, 24 hours a day” for 17 consecutive days in 2002. During that period, “he spent a total of 266 hours (11 days, 2 hours) in a large (coffin size) confinement box and 29 hours in a small confinement box, which had a width of 21 inches, a depth of 2.5 feet, and a height of 2.5 feet.” Water boarded “2-4 times a day”, some sessions “resulted in immediate fluid intake and involuntary leg, chest and arm spasms” and “hysterical pleas”. In at least one session, he “became completely unresponsive, with bubbles rising through his open, full mouth.” Another detainee, who had been stripped of almost all his clothes, died of hypothermia after being shackled to a wall in a way that required that he rest on the bare concrete floor. Interrogators threatened at least three detainees with harm to their families, including “threats to harm the children of a detainee, threats to sexually abuse the mother of a detainee, and a threat to ‘cut (a detainee’s) mother’s throat.’” At least 26 of 119 detainees were wrongfully held including an “intellectually challenged” man held “solely as leverage to get a family member to provide information.”

Ardent opponents of torture maintain that the efficacy or otherwise of torture is irrelevant; it remains morally unjustifiable even if it yields intelligence. It’s worth noting, however, that the report is highly sceptical that any information of worth was gathered as a result of the interrogations. Detainees either disclosed nothing, supplied fabricated information or gave information that had been gleaned through non-violent interrogation. Detainees provided fabricated information on critical intelligence issues, including the terrorist threats which the CIA identified as its highest priorities. In one case, fabricated information resulted in the capture and CIA detention of two innocent people.

Highly critical of the CIA, the report characterises it as a rogue organisation that “repeatedly provided inaccurate information to the Department of Justice”, “actively avoided or impeded congressional oversight”, ignored internal opposition to torture and failed to objectively assess the value of its interrogations.

The report describes the programme has having “caused immeasurable damage to the United States’ public standing, as well as to the United States’ longstanding global leadership on human rights.”

It would seem then that much damage was done, and all for little if any gain. Interestingly, despite concerns over fallout from the publishing of the report’s contents – Secretary of State John Kerry sought to delay its release; chairman of the House Intelligence Committee, Mike Rogers, warned that “foreign leaders have approached the government and said, ‘You do this, this will cause violence and deaths’ – there were no significant protests and little points-scoring from countries hostile to the US. Perhaps that was largely because much was already either known or suspected, and the report merely confirmed and expounded.

The Senate Intelligence Committee, chaired by Dianne Feinstein, a Democrat, was split along party lines and all but one Republican voted against publishing the executive report. The political reaction, therefore, was predictable. The now majority leader of the Senate, Mitch McConell, said in a statement that the report would cause “serious consequences for U.S. national security” and branded it “an ideologically motivated and distorted recounting of historical events.” Contrary to what was outlined above regarding the questionable worth of the torturous techniques, he believes it “incontrovertible” that the interrogation programme “developed significant intelligence that helped us identify and capture important (al-Qaeda) terrorists … and take down (Osama bin Laden).” Marco Rubio, one of the dissenting members of the committee, branded it “partisan” and “politically-motivated.” None of the other likely presidential candidates, of which Rubio is one, commented. Former Vice President Dick Cheney said he would “do it again in a minute.”

One notable exception was former presidential nominee Senator John McCain who described the CIA’s activities as having “stained our national honour”. He commended the report which he said “strengthens America’s stature in the world” and has “empowered the American people to come to their own decisions” about the CIA’s activities.

Polls conducted following the release of the report present a similar divide amongst the public: a majority ranging from 51% to 59% of respondents to three national polls believes that the torture is justified. Strikingly, as William A. Galston of Brookings Institution, a Washington-based think tank, notes, Americans could have “let themselves off the moral hook by denying that what the CIA did was torture. They did not.” According to one of those polls – ABC/Washington Post – 49 percent thought that what the report detailed “amounted to” torture, compared with 38 percent who thought it did not.

Questions remain about the role of Ireland in the CIA’s extraordinary rendition programme. In diplomatic communications released by Wikileaks, former minister for foreign affairs Dermot Ahern is quoted as having said that he is “quite convinced that at least three flights involving renditions had refuelled at Shannon Airport before or after conducting renditions elsewhere.” Human Rights organisations suggest the number being several times more. Despite calls for aircraft stopping-over to be searched, the Irish government has expressed confidence in assurances it has received that no detainees have been or will be transported through Irish territory. The UN Committee against Torture stated in 2011 that it was “concerned at the inadequate response by the State party with regard to investigating these allegations.”

It seems implausible, especially considering the CIA’s sustained obfuscation, that reforms could have occurred internally. Publishing this report was therefore an essential step in the unfinished journey that must conclude with an acceptance that torture, in whatever guise, can never be justified. If nothing else, the United States can comfort itself with the knowledge that few other countries would so publically air their dirty laundry in a bid to cleanse themselves of so recent an ignominy.

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FEATURES - SPECIAL REPORT

THE BULL14 JANUARY 2015

Oil price plunge: A demand and supply side story

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here is a world famous expression, first used in the 1960’s musical play ‘Cabaret’ that states, “Money makes the world go round”, and in many aspects this is true. However if money is the driver of business, then oil is most certainly its fuel. Constituting 36.7% of the World’s primary energy production in 2013, oil is humankind’s most relied upon source of energy. In fact, according to WTRG data, even this year there has been a net increase in the number of active oil rigs worldwide.

This may come as a surprise to many due to the fact that since mid-June of this year oil prices have nosedived and, as of January 6th Brent Crude (the international benchmark) hit lows not seen since April 2009.

The two main questions therefore that arise as a result of this price drop are ‘why has this happened?’ and ‘why does it matter?’

In answer to the first of these, although there are other secondary factors, the primary cause of the price fall comes down to simple economics: Supply and Demand. When the supply of a commodity/good outstrips the demand for it, the price of the good/commodity will fall. This is because the product in question is no longer scarce and so is readily available to all who seek to buy it. Again, with respect to oil, a large chunk of the additional supply has come in the form of the huge increase of US shale oil production. Increased levels of horizontal drilling and hydraulic fracturing, or ‘fracking’, as it is commonly known, have helped push US crude production levels to their highest in three decades.

Add to this phenomenon OPEC’s stubborn stance on their own production levels. OPEC, an organization made up of some of the world’s key oil exporters and, in effect, led by Saudi-Arabia, recently (November) chose not to decrease its own production beyond its current 30m-barrela-day level. This decision came even after pleas by member states such as Venezuela to lower production. Saudi-Arabia however, with $900 billion in savings, (The Economist) and the lowest production costs in the world is far less sensitive to these lower prices and so made the decision to not decrease production.

On the demand side too we have seen changes. In fact, according to Bloomberg, at $1.19, the US is consuming the least oil per dollar of GDP in more than 40 years. Further to this, with cars worldwide becoming more fuel efficient, as baby boomers retire and drive less, as western

society moves towards more renewable sources of energy, and as the US becomes more energy self-sufficient, oil demand is expected to continue to fall, and possibly even flatten out in 2015.

Now that we know the primary causes of the oil crisis, what then are the results of it? Should we be happy, sad or indifferent?

Unfortunately there is no clear answer to this question. As a consumer, the drop in oil prices have led to cheaper home heating and car fuel. As an ordinary retailer, the fall in oil prices will reduce costs too which will help to bolster revenues. In this respect it can even be argued then that for the majority of us, lower prices are a good thing.

On the other hand, the apparent free-falling prices are damaging for those regions already facing inflation crises. Japanese inflation, for example, fell for a 4th successive month in November while the Eurozone, already seemingly on the brink of embarking on its own Quantitative Easing package, slipped into deflation territory in December. Both of these cases are largely down to oil price plummets.

Furthermore, falling oil prices have contributed to weakening currencies in net oil exporters such as Russia, Nigeria and the aforementioned Venezuela. In Russia particularly this has led to a spike in its inflation level.

Even some US shale producers are now feeling the effects as their profit margins continue to be eroded by the falling price.

So, what of the future? As it stands, and if the world’s leading economists are to be believed, oil prices look set to continue their fall, at least throughout 2015. Crude oil put option positions have massively increased in the last few months, with some traders betting that prices will fall to levels as low as $20-a-barrel. This could spell disaster for smaller exporting countries and, given enough backlash, the end even of OPEC as we know it.

EOIN O’NUALLAIN

Why the Saudis are maintaining oil production

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n the 27th of November, OPEC led by Saudi Arabia, in the face of a global glut in oil production and falling prices decided not to cut back on its current production levels. Rather it opted to maintain its current production levels while simultaneously lowering its official selling price. This has served to drive down worldwide crude oil prices to a five-year low with Brent Crude reaching $65.29 per barrel and U.S. crude falling to $62.25, the lowest price since September 2009.

So why has Saudi Arabia not just cut back on production and kept prices high?

THE KEY TO THE KINGDOM Saudi Arabia’s international political and economic power is sourced from its vast oil reserves.

The Kingdom’s stability rests on its ability to satisfy the demands of its populace, and the funds required to satisfy these demands come from the revenues gained from exporting oil. Any threat to Riyadh’s oil exports is a threat to Saudi influence, to the Al-Sauds and to the political structure of the state itself. And they are under threat.

OPEC’s maintaining of its current production levels is part of an effort led by Saudi Arabia to limit the growth of non-OPEC oil sources produced at higher marginal costs in order to maintain its global market shares. Oil is Saudi Arabia’s primary means of exerting its influence and has in the past proven its strength during a similar oil glut in the 1980’s. Although Riyadh has learnt from its past mistakes, where once it cut production to buoy up its prices and lost valuable market-share in the process, today it does the reverse. Saudi is maintaining its production levels and concurrently its market-share whilst slashing prices. Threats to Saudi oil include one of its best customers, US oil production levels have risen 70% since 2008, threatening the position of the Kingdom and potentially curbing its influence over the White House. Saudi exports to the USA during the first half of 2014 were 1.2 million barrels per day (mbpd), but by the second half had dropped to 1mbpd. OPEC oil which once flowed into US terminals, is now seeking markets in Asia which are demanding far lower prices.

By reducing their profitability, Saudi Arabia hopes to preserve its considerable market share, especially in the USA where it is threatened by Canadian imports and indigenous shale oil. Main-

taining Saudi share in the US market is crucial in ensuring the Kingdom’s diplomatic and international clout, both in terms of influence over the US and in securing vital rents to satisfy the Saudi population. By slashing prices, Riyadh hopes to price as much shale as possible out of the market and ensure its continued oil dominance. Saudi Arabia will be able to ride out $60 per barrel for a while on the back of its extensive financial reserves and low levels of debt.

A GOOD SWEATING However, the use of the oil weapon has a distinct geopolitical aspect to it. Saudi Arabia has increasingly attempted to expand its regional influence, using its economic power and religious authority as the home of Islam. Riyadh is actively involved in supporting anti-Assad rebels in Syria, rolling tanks across into Bahrain to extinguish a Shiite uprising against their fellow Sunni kingdom, combating the Muslim Brotherhood in Egypt and is now taking part in the US led efforts against ISIS. Its main rival in the Arab world for control and influence is Iran, which is already struggling under the punitive international sanctions due to its nuclear ambitions. Lower and lower oil prices, or as John D. Rockefeller put it, “a good sweating” will further hurt Iran and stretch its economy, reducing its ability to combat the Kingdom for regional dominance.

Falling oil prices are also likely to hit Russia hard, again contracting under the strain of sanctions surrounding the Ukraine, potentially losing billions of dollars’ worth of vital oil exports. As one of the staunchest supporters of the Assad regime, Saudi Arabia’s effective control over global oil prices may prove a more effective tool than Western sanctions in attempting to bring Moscow to heel. These impacts while perhaps unintentional, are sure to garner some support in Washington.

Low oil prices may be an economically painful strategy, but in terms of preserving Saudi Arabia’s domestic and regional position it is a price worth paying. The Kingdom merely has to outlast its rivals.

ALEX CONWAY

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FEATURES - SPECIAL REPORT

THE BULL 14 JANUARY 2015

Pipeline politics: Russia abandons South Stream project in growing energy war with Europe

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n early December, Russian President Vladimir Putin announced that Russian energy giant Gazprom would no longer be pursuing the long-sought after South Stream pipeline. The pipeline, which would have supplied gas to Southern Europe, was originally intended to bypass Ukraine, a country which Russia claim is an unreliable partner as a transit state for its gas. However construction stalled amid new geopolitical tensions between the West and Russia over Ukraine.

The three primary countries the pipeline would have passed through were Bulgaria, Hungary (both of which are members of the EU) and Serbia which is currently seeking EU membership.

While Serbia and Hungary maintained their support for the pipeline project, Bulgaria became the roadblock to completion, ordering all construction of the pipeline to cease. This decision came in June after a US delegation, that included Senators John McCain, Ron Johnson and Chris Murphy, visited Sofia In light of the fierce conflict in Ukraine, the pipeline deal became a bargaining chip in the search for a peaceful solution to the crisis - an ending that seemed all the more unlikely after the failure of the Minsk Agreement between Kiev and separatist leaders.

President Putin’s announcement that Russia would no longer pursue the South Stream project came as a shock to the European Commission, and to Bulgaria, Hungary and Serbia. Even though the failure of the South Stream represented another of many examples of failing EU-Russia ties in 2014, its cancellation was treated as a victory in the West. Meanwhile, only days after the surprise announcement, President Putin declared that Russia was seeking a new pipeline with Turkey and a memorandum of understanding was signed with Turkish President Erdogan.

Although any pipeline between Turkey and Russia is still a long way off, if it will happen at all, the mere announcement of the proposal is a hard blow to the EU. On a political level, the anger of Bulgaria, Hungary and Serbia at the failed pipeline is partly directed at the European Union, doing little to assuage the fears of Eurosceptics in these countries and indeed other countries within the EU. On the whole, this turn of events shows some of the limitations of the Western policy of sanctions against Russia. If Russia can pursue other options, forging closer relationships with countries such as China, India and Turkey, surely Europe is risking more than it gains? And if the Turk Stream pipeline reaches completion and Turkey becomes a gas hub, this would shift the balance of power between the EU and Turkey, leaving the EU open to pressure.

Economically, the South Stream would certainly have created more jobs and more revenue in the transit states. Instead, they are left with a partially built, but useless, pipeline, and a missed opportunity. Hungary and Bulgaria were left reeling, their economies already in a vulnerable position as they struggle to overcome Russian counter-sanctions against the EU. On a common sense level, the cancellation of the South Stream Pipeline shows the indecisiveness of the EU on energy policies. For Russia, another pipeline would have been a huge political victory. However, the pipeline was economically questionable as gas consumption in southern and eastern Europe is declining rather than increasing. By ceasing work on the pipeline, Russia appears to be cutting its losses and seeking a more economically viable project with Turkey while the EU had no contingencies to the pipeline being cancelled. The result? President Putin can reap the political rewards of snubbing the EU, while Europe is left in the lurch when it comes to a secure and profitable gas supply.

With the conflict in Ukraine, it is clear that it can no longer be ‘business as usual’ with Russia. However, the EU must tread carefully to avoid “shooting oneself in the foot” as the Hungarian Prime Minister put it. The European Union must seek to protect the interests of all its member states, economically and politically, while pursuing transparent and diversified energy policies to stymie the growing influence of Russia and Turkey.

BRENDAN ROONEY

The Oil Collapse in Figures Oil price needed to balance budget

WTI Crude Oil price since 2007

Source: Nasdaq Stock Exchange

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FINANCE

THE BULL 14 JANUARY 2015

Flying high: Aircraft leasing in Ireland

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ecember 12th marked an historic day for Irish aviation leasing. Avolon, established in 2010 by Clare entrepreneur Domhnal Slattery, was floated on the NYSE to make it the largest ever IPO in the United States by a company founded in Ireland. Avolon has achieved a market capitalisation of $1.6bn on the back of $6.4 billion in aircraft orders and sale-leaseback agreements. With 49 customers in 27 countries including Ryanair, American Airlines, Air France, Virgin Atlantic, Avolon is just one of many Irish based aviation firms operating in a country that is a global leader in the aircraft leasing industry.

Nine of the top 10 largest aircraft leasing companies are located here, supporting 2000 direct and indirect jobs, and manage 50% of the world’s commercial aircraft fleet with a combined asset value of €83bn. An extensive network of support industries has thrived in the areas of painting, aircraft maintenance for instance. Success simply breeds success and aviation as a whole contributed a massive €4.1bn to the Irish economy in 2013, according to The Irish Aviation Authority. Our favourable tax system and a high availability of relevant skills has cemented Ireland as a centre of excellence for aviation leasing and finance.

This begs the question: How did Ireland become a world leader in aviation leasing? No doubt the industries origins date back to Guinness Peat Aviation founded by the late Tony Ryan in 1975.

The company became the largest such enterprise in the leasing world, gaining a £4bn valuation at its peak. Although it’s infamous failed IPO in 1992 lead to its demise, GPA left behind it a burning legacy that inspired many former executives to launch their own leasing firm such as AirCap and Avolon itself. The current levels of professional expertise in aircraft leasing and finance can largely be attributed to the success of GPA which no doubt initiated the development of the industry here. And of course, many will know the largest airline in Europe bears the name of Mr. Ryan in its title.

Furthermore, other factors have been favourable to Irish Aircraft leasing. A generous tax system, in particular our headline corporation tax rate of 12.5% on lease rental income and gains on aircraft sales, and the so called ‘double Irish’ policy which has attracted many global leaders to set up significant operations here. Combined with an effective 0% VAT rate on costs linked to aircraft leasing activities, and the size of Ireland’s flagship airlines, leasing firms here have profoundly benefited. This has been reinforced in recent years with three Chinese aviation leasers establishing their European headquarters in Ireland (the latest being JY Aviation which manages 21 aircraft from Dublin). Additionally, The IDA forecasts that Chinese airlines will require 6000 new planes valued at $780bn over the next 20 years, representing a huge opportunity for Irish leasers to expand their operations. Reflecting the industry’s ambitious long term growth strategy, Irish leasing firms agreed orders for $44bn worth of jets at the Farnborough airshow in London last summer. Since 40% of aircraft deliveries are leased, due to the fact that the latest fuel efficient jets costs a whopping $80m at list price, the outlook for the 30 plus leasers located here is exciting.

PHILLIP BANE

Aer Lingus reject new takeover bid

Who owns Aer Lingus?

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er Lingus have rejected an approach for the International Airlines Group (IAG), parent company to British Airways and Iberia to purchase the airline. This attempt represented an improved offer on IAG’s part to acquire Ireland’s flag carrier.

IAG had valued Aer Lingus at roughly €1.3bn and are likely seeking the airline for their flight slots at Heathrow airport. These are particularly valuable for IAG who are based out of the airport but are limited in the number of routes they can operate from Europe’s busiest passenger airport. This makes a renewed effort at a takeover likely.

Other than price there are a number of other stumbling blocks IAG must overcome if they are to succeed in purchasing Aer Lingus. The Irish Government controls a 25% stake in Aer Lingus, meaning any deal requires their approval. It is likely that they will seek assurances that the Heathrow airport slots remain committed to Irish routes for at least a set period of time. There is also the nationalistic implications of Ireland’s national airline being controlled by their British rivals.

Another key party is Irish rival Ryanair who own nearly 30% after their own three failed attempts to purchase Aer Lingus. These previous moves were blocked by European competition authorities due to potential monopoly concerns over in particular Irish routes.

Nevertheless Ryanair’s Chief Executive Micheal O’Leary seems unwilling to give up on his ambitions to own his national carrier, potentially scuppering any deal with IAG. On the other hand Ryanair’s stake in Aer Lingus has come in for scrutiny with competition authorities in the UK which could force Mr O’Leary’s hand.

Another key question is given the European Commission’s involvement in previous potential Aer Lingus mergers is what they will make of the further consolidation of flag carriers. Given the nature of the market the airline industry has long been a target for European Competition for unfair practices used to monopolise profitable routes.

The industry is also dominated by national pride in flag carriers which for a long period manifested itself in what is now illegal state aid. This can be illustrated by recent Commission rulings that have forced Cyprus Airways to suspend operations in the face of massive fines. IAG will try to use the precedent of their own formation, a merger of Iberia and BA. However in this case Aer Lingus is not in the same dire straits Iberia was, therefore they will need to show the merger will not negatively effect consumers. Ryanair will prove crucial to this as the main competitor on the Irish routes.

With a third bid likely this story will continue to rumble on, whether IAG manages to propose something that will satisfy individual shareholders, Ryanair, the Irish Government and the European Commission remains to be seen.

Aer Lingus Share Price since Flotation in September 2006

EMMA O’SULLIVAN

Source: Irish Stock Exchange

ECONOMICS

THE BULL 24 JANUARY 2015

13

Devolution plus: Corporation tax in Northern Ireland

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ith the signing of the Stormont House Agreement the devolution of corporation tax to the Northern Ireland Assembly came a significant step closer. As a key part of wider negotiations corporation tax powers acted as a carrot when it came to welfare reform and tougher budgetary control.

Corporation tax in NI is currently 21% as in the rest of the UK however this is of course significantly more than the 12.5% rate here in the Republic of Ireland. Thus politicians of all persuasions see a cut as a way of increasing the competitiveness of the ailing Northern Irish economy.

The Northern Irish economy has a number of long run problems including an undersized private sector and a lack of competiveness. In an environment of cuts to the public sector a corporation tax cut is seen as a silver bullet for the resulting unemployments.

The move may seem like a sensible solution that should have been taken previously. The reason it has not been is that devolution of corporation tax powers to a specific region is a complicated matter.

According to European rules on fiscal sustainability any fall in government revenue must be met by a fall in government spending. In this case the NI executive must hand back a significant part of their annual grant from the Treasury in London.

While proponents argue that the stimulating effects of the cut will more than make up for this loss of revenue this is in the long run. In the short run there must be public sector reductions in order to prove the economic sustainability of such devolution. Sinn Fein have already shown themselves opposed to any form of austerity. It was this opposition that led to crisis negotiations over a balanced budget and finally the Stormont House Agreement itself. Therefore political question marks remain over the viability of the move.

There are also question marks over the economic benefits as well. The ability to compete with the Republic of Ireland is central to the proposal. However large multinationals use accounting tricks and further tax breaks to pay a rate well below the headline 12.5%. Thus the benefits may not be as great as first thought. There are also the negative effects of the initial cuts to the public sector which come on top of cuts First Minister Peter Robinson and Deputy First Minister Martin McGuinness will be hopnecessary to create a balanced budget.

Without doubt both economic and political questions remain as to the viability of the devolution of ing Northen Ireland can emulate the Republic’s success in attracting US multinationals corporation tax to Stormont. Hence what has been agreed is just a step amongst the many that are required before we see Northern Irish politicians gaining such tax raising powers.

LISA KENNY

Ethiopia: An African lion?

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n industrial revolution has been occurring in Ethiopian cities, with many major cities undergoing immense construction booms where the skyline swiftly has more high-rise buildings than ever before seen in this African country. Ethiopia is considered an ‘African Tiger’ and has now one of Africa’s fastest growing economies. Ask anyone what they know about Ethiopia and the infamous 1984 famine is likely to feature prominently, in which it is estimated that over one million people were killed. The country has seen some positive change economically since this devastating famine, and the country’s construction boom is being powered by its recent rapid economic growth.

Ethiopian cities have been turned into huge building sites in an attempt to industrialize the country. The construction boom is being funded privately and publicly with the government promoting public works projects, worth billions of dollars, in an attempt to improve the infrastructure of Ethiopia and ultimately this is contributing to an ambitious goal of becoming a middle-income country in the next decade. Also, this sector is strengthened by state incentives such as easy access to land, which is being introduced in a seemingly genuine attempt to eradicate poverty and create jobs for Ethiopian citizens.

However, it is the opening up of this previously socialist country to privatisation which arguably is the most important factor in transforming the Ethiopian economy and this particular sector.

Previously state owned companies are now privatized and this has resulted in the majority of new buildings being owned by private investors. Foreign direct investment has been on the up and Chinese investment has been intensifying year by year. The city of Addis Ababa has seen the boldest levels of Chinese investment in Ethiopia and in Africa as a whole. The city’s real estate is booming and Chinese investors are constructing railway systems around the city. A combination of cheap labour and a government reaching out for foreign direct investment is the reason for Chinese attraction to Ethiopia. Construction and manufacturing are two key components of Chinese investment and Ethiopian Prime Minister Hailemariam Desalegn has recently stated that China is, “supporting Ethiopia’s great vision to become Africa’s manufacturing powerhouse.”

Nonetheless, there is a gloomy side to Ethiopia in economic terms. Firstly, Ethiopia has an extremely weak financial system and with a lack of a stock exchange and financial markets, the construction sector is the only main investment opportunity for the economic society. Also, the large number of state-funded infrastructure and construction projects could severely strain public finance in the country. A vast increase in public spending will place the economy in enormous difficulties. Further, there is a growing economic inequality in Ethiopia with many rural areas still suffering from poverty and deprivation. Economic growth has fuelled concerns about labouring in the country. Indeed, the country’s Central Statistical Agency says there are over 5.5 million child labourers in Ethiopia between the ages of five and fourteen.

The transition to privatisation, the development of its financial system and further investment in a wider range of sectors may be crucial to the future success of Ethiopia. Poverty in Ethiopia remains a major concern and although there are many economic, social and political problems in Ethiopia, it has already been a prosperous journey from a land of famine to one of the most promising economies in Africa.

ANDREW NEVIN

Ethiopian GDP Per Capita 1982-2012

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TECHNOLOGY

THE BULL 14 JANUARY 2015

3D printing: What to make of this disruptive technology?

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any people are fascinated by the ever improving capabilities of 3D printing and the affect it will have on industry and our lives in general. Some fanatics proclaim that improvements in 3D printing will ultimately lead to a device similar to the “replicator” seen in star trek, which can reproduce anything we want instantly. While skeptics such as Terry Gou denounce 3D printing as a “gimmick” which has been overhyped and has promised that he will spell his name backwards if he is proved wrong (Which is a bizarre forfeit to say the least!). In this article I will outline the story thus far of the 3D printing industry and the challenges, which are presenting themselves on the frontier of this industry.

Many people are surprised to find out that the origins of 3D printing date back to 1982 when Hideo Kodoma created the first 3D printed model. It was 1984 before Charles W. Hull created the first 3D

printer for 3D systems Corp who are still the leaders in the 3D printer market. Key patents, which have slowly been expiring over the last 5 years, have limited the development of the industry (Which really raises the question about how restrictive company’s patents should be if it ultimately slows down the progress of the industry). Thereby leading many people believe that 3D printing is an overnight industry which it certainly is not.

So who’s using 3D printers?

For what and why? 3D printers undermine the concept of economies of scale, which has long been a lynchpin of production managers planning process. It makes it as cheap to produce a single item as it does to produce thousands. This has led the Economist to believe “3D printers may have as profound an impact on the world as the coming of the factory did.” Therefore we have seen early adoption in the medical, aerospace and automotive industries for the production of

one-off /specific parts which may be needed to serve a particular individual or indeed to provide replacement parts for planes and cars which have gone out of production. An interesting fact is that today a typical F-18 is likely to contain as many as 90 3D printed parts despite the fact that it has been in service for more than 2 decades before 3D printing took off. Adoption rates across all major industries have increased dramatically in recent times however leading Wohlers to reevaluate the 3D printing market estimations they made in 2011 from $5.2 billion in 2020 to $10.8 billion by 2021. While JP Morgan’s research suggests that the market will be valued at $10.8 billion by the end of 2020, While Credit Suisse is even more optimistic anticipating $12 billion by 2020.

There is a lot of time and money being poured into improving the capabilities of 3D printers. The key investment area is improving the materials that we use to print

with. In the next few years we should begin to see developments in materials that will drastically reduce the cost of printing and bring 3D printing to the masses.

Developments such as those seen by the Seattle Company Functionalize who’s new filament F-electric which it claims to be 1000 times more conductive than any other filament available today “will make it possible to print your next cell phone complete with circuits and electric components” according to Mike Toutonghi, Functionalize’s Founder, CEO and chief scientist.

There is also fascinating research being done in the area of Bioprinting. A Biotech company called Miroculus has created a 3D printed microRNA that could detect and monitor disease at the molecular level. The University of Toronto is leading research on Bio-printing live cells and tissue and some futurists speak of hospitals that will have your stem cells and physique on file and will simply “reprint” organs and limps as required. While we are still

very far away from “The Replicator” every day there are steps being taken across the world to advance 3D printing capabilities.

However there are some challenges, which still remain especially in regard to IP protection.

If digital production is to be successful then we must provide a means to protect the IP of the creators of the digital files that are created. If people are to be able to purchase files for print then what is to stop them from sharing these files with their friends or indeed beginning to produce the product themselves for resale. It may not be long before we begin to see files for 3D printing available on file sharing networks such as The pirate bay. Similar to how the music industry had to react to Napster, the manufacturing world will hav to respond to the IP threat of 3D printing. This is an obstacle which 3D printing must overcome before it ever becomes truly mainstream.

JONATHAN DEANE

Cyber Attacks are no longer a question of if, but when

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ybersecurity incidents have been growing rapidly in recent years.

According to the Global State of Information Security Survey 2015, the total number of security incidents detected amounted to 42.8 million in 2014, or an average of 117,339 attacks per day. The data showed an increase of 48 per cent over 2013.

41 per cent of US executives had experienced one or more security incidents in the past year.

Sony is not the only victim of cyber attacks. Customer’ credit and debit card data has been breached in hundreds of US stores after cardstealing malware was remotely installed on their point-of-sale (POS) systems. £400,000 was stolen from the European Central Bank by cyber

attack in June 2014. In October 2014, JPMorgan suffered a data breach affecting 76 million customers. An attack on HSBC Turkey breached the personal data of 2.7 million cardholders. In the third quarter of 2014, SuperValu was compromised twice in cyber attacks. Online retail company eBay suffered from two cyber attacks in six months with a “small number of employee login credentials” and customers’ personal details, including customers’ physical addresses, stolen. Similarly, Kickstarter was hacked when its users’ passwords and phone numbers were stolen.

Analysts from Deloitte claim that cyber risk today is no longer limited to financial crimes in their report entitled Transforming cybersecurity: New approaches for an evolving threat landscape. Previously, attacks were often committed by small groups of highly-skilled individuals.

Larger and well-organised threat actors, including hacktivist groups driven by political or social agendas and others organised by nation-states have emerged, aiming to create systemic havoc in markets. In January 2014, Syrian Electronic Army successfully hacked Microsoft’s blog and CNN’s website, Twitter, and Facebook. In the same month, YouTube was made to spread banking malware in ads. In September, the ObamaCare website was hacked.

Cyber attacks have put companies’ financial stability at an

elevated risk. Companies will have to continuously increase cyber security investment but will still be at risk of severe losses from a single successful attack. Security attacks usually entail financial losses, intellectual property theft, reputational damage, fraud, legal exposure, and the loss of shareholder value. Last year, a report conducted by Javelin Strategy, showed that almost onethird of affected consumers were not willing to continue doing business with companies where data breach occurred. It is a trend that security attacks are becoming more costly, especially to larger organisations.

The survey revealed a jump in insider incidents. In an analysis of those responsible for insider crimes, current and former employees top the list, followed by current and former service providers, consultants and contractors. Corporations today are very likely exposed to higher cyber risks, because in practice it is hard to make business partners employ the same, or equivalent level of safeguards. But compromises by insiders have even put those who have set up a secure network, at risk.

However, there is a “silver lining” for investors to the increased awareness of cybercrime. Managing cyber risk is on executives’ agenda.

There has been a sharp rise in cyber insurance demand. This type of insurance covers the revenue losses owing to actions taken by consumers’ and banks’ for protection against attack, and also the costs associated

with crisis management, notification obligations and the costs of credit monitoring.

In a cat-and-mouse game, each side learns and adapts. Being attacked seems only to be a matter of time. The existing security companies that specialise in recovering data after attacks can no longer provide adequate protections to companies suffering huge losses from cyber crime. In the drive for new business cybersecurity solutions, investments are moving away from traditional security technologies to more advanced cyber protections, says Daniel Ives, an analyst at FBR Capital Markets.

Cyber security firms are thriving.

For example, Palo Alto Networks, a US cyber security firm that provides big data analytics, saw an increase in stock price by more than 140 percent in the 12 months to the end of 2014. By contrast, traditional firms that provide cyber security services, such as Cisco and Juniper reported 1.3 percent growth, and a 5 percent decline respectively, during the same period. Moreover, funding for cybersecurity startups in 2014 was 29 percent higher than that in 2013, and 129 percent more than in 2012, according to CB Insights. Intel and Google Ventures are the top two corporate ventures in this field.

PHEOBE SUN

TECHNOLOGY

THE BULL 14 JANUARY 2015

15

How the Web Was Won: The Zuckerberg Model

Leo Boyle argues that Mark Zuckerberg has revolutionised our online identity.

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n January 1st Facebook rolled out another covert update to it’s terms and policies with little fanfare and even less controversy. Of the billions (yes that plural is correct!) who currently use Facebook, few noticed and fewer cared. This is a marked contrast from the autumn of 2006 when Facebook debuted its newest feature - The Newsfeed. Before this facebook consisted entirely of separate profile pages linked together into social networks. To find out something about another person a user had to make a conscious effort to search their page and look for the relevant info. In “The Facebook Effect” David Kirkpatrick recounts how the news feed we all know and love was shocking when it was introduced, prompting a huge backlash. The constant barrage of updates on acquaintances lives was seen as too intrusive, and users reported feeling “creepy” and “stalker-esque”. A group titled “Students against Newsfeed” gathered one million likes in days, a sizable portion of the old user base. This was the biggest crisis yet at Facebook and soured a potential takeover deal from Yahoo, an offer for one billion dollars. Yahoo revised their offer downwards, figuring the people’s reactions as a barrier to making Facebook a profitable business. Zuckerberg on the other hand remained a firm believer in the potential of social networking and saw the public’s objections as nothing more than a barrier to overcome. Less than ten years later Facebook Inc. is worth dramatically more than Yahoo’s early bid, due in part to the unprecedented influence Zuckerberg has come to exert on the internet as a whole. Zuckerberg’s vision did not match the attitudes of the users, so he changed their attitudes to suit.

The early internet was a vastly different place, governed by different norms and paradigms. The first pioneers of the wild web were a motley bunch of geeks and hackers who cobbled together a basic infrastructure which influenced the nature and shape of the emerging networks. The internet seemed to them a radically new thing, different from anything that had come before, which required radically new ways of thinking. The prevailing narrative of the early internet was that it was inherently anarchic and ungovernable, transcending archaic notions of borders and national laws. People gathered in anonymous chat rooms to socialise, discuss various interests and to share pirated media. Anonymity was the norm and the online and offline worlds were sharply delineated. In these revolutionary days the Electronic Frontier Foundation was founded, which wrote an ambitious “Declaration of Independence for Cyberspace” announcing that national governments would have “no sovereignty” on the web. However the future they envisioned has not come to pass, for a variety of reasons.

Part of the story lies with the government’s revamped efforts to understand and control the web. Gone are the days when a savvy thirteen year old with mainframe access could run circles around police departments still using typewriters. The TOR network was the last bastion of the lawless web and the recent bust of the infamous Silk Road drug marketplace has shown emphatically that the internet is under the domain of national law. The internet became more legally stable, but the social change had not yet come that allowed businesses to capitalise on potential. The Dot Com bubble collapsed due to the failure of ambitious start-ups to actually make money through the internet. The fantastic growth of our own Web Summit is evidence that we are now well into a second boom. Since the first nothing has changed regarding the physical structure of the web, but the social norms have evolved that suit the business of making money.

This includes Zuckerberg’s favourite buzzword, transparency. Anonymity does not facilitate trade. The early internet was fragmented, where one person could have a thousand different accounts and, if they wished, a thousand different identities. The modern internet is defined by ever more intertwined sites and services that tie you to a single identity. This is a deliberate goal by the titans of today’s tech world, like Jeff Bezos, Eric Schmidt and Mark Zuckerberg who have an unparalleled sway over the nature of emerging internet culture. Lawrence Lessig, an influential scholar of the web, coined the phrase “code is law”. When we log into Facebook, we’re also signing up to an ideology, the belief that one profile can define us in entirety and that constant visibility and transparency is a good thing. Zuckerberg once claimed that “having two identities for yourself is an example of a lack of integrity”. This is the underlying justification of the new web zeitgeist.

Facebook is aiming to be a universal log in, and is already implemented in most of the top apps. Your profile follows you around the web, tracking your progress and logging your data. You enter your credit card details once and shop to satisfaction with single clicks.This is great for commerce and great for advertisers. This has become the natural order of the web, the code has become law.

While this sounds very negative, it’s not necessarily worse than what we had before. The new structures are designed to be convenient for contemporary denizens of the web. The huge success of the new platforms has funded investment in all sorts of innovative and exciting projects. However it’s important for us as internet users to be aware of the forces that shape our experience. Good for business does not always equate to being good for consumer. There is a serious argument to be made for social networks becoming a personal necessity for engagement with modern life, which does not sit easily with Facebook’s status as a profit maximising entity. We have learned to live with the newsfeed keeping us updated on all the essential trivia but we must not stop questioning each new development, for it affects us in ways we can’t always foresee.The primary thing to remember is that websites are constructed things, that carry intent. Anything that does not suit our needs is there for the benefit of someone else, such as Facebook’s old convoluted privacy settings. In that case public opinion made a real impact and the site was changed to favor the users. Responsible citizens of the internet must educate themselves about the significance of code, just as it is important to keep track of politics, for in cyberspace they are one and the same.

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BUSINESS OF SPORT

THE BULL 14 JANUARY 2015

Dana White: The man at the heart of UFC’s financial surge

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hen we think of businessmen behind sports we think of the likes of Bernie Ecclestone, Roman Abramovich and looking further back, the likes of Don King.

Despite. However there’s a new business mogul making waves in the world of sports that everyone needs to pay attention to. That man is none other than UFC’s charismatic president Dana White. Since being involved in the takeover of the promotion White has masterminded the expediential growth of his fighting promotion and the sport of MMA. In fact mixed martial arts is the fastest-growing sport word with international icons like Anderson Silva, Ronda Rousey, Conor McGregor. Have no doubt without Dana White the superstars would never had the opportunity showcase their talents to the audience at UFC is now exposed to.

UFC when it was founded in 1993 was not an instant success. The little momentum the company had gained up until 1997 was

severely damaged when John McCain petitioned states to outlaw what he called “no holds barred” fighting. His work forced the sport underground as 36 states imposed this ban. When White and his business partners took over UFC in a deal worth about $2 million the promotion was practically bankrupt. However in under a year White’s management and fantastic promotion skills managed to have the sport legalised in the state of Nevada and sell-out the MGM Grand Arena. From then the promotion has gone from strength to strength.

The promotion of the sport has seen unrivalled paper view buy rates and pushed the sport into mainstream culture with even networks such as ESPN covering stories about the sport. As the combat sport continues to grow many believe it has eclipsed boxing as the pinnacle of combat sport. If you would go on the basis of household names these results would be quite interesting.

However despite fantastic management the UFC has not had that “super fight” worth in the region of $30-$40 million the way

the events associated with boxers such as Floyd Mayweather have had in the past. White accepts this and in an interview he pointed out that UFC only began making money in 2007 and to see the profits today is a credit to the promotion and all those involved. He did however clearly state that he aspires to a day when the promotion will be organising fights on this scale.

Asshrewd businessman White has led UFC from an underground support to part of everyday society.

This growth can be partially down to the fantastic paper view strategy whereby some of the undercard are available on television networks and UFC’s website and finally the “main event” fights are available on pay-per-view. This growth has fuelled major television deals with Fox Sports as well as UFC’s own online network. It has also resulted in multi-million sponsorship deals with household names like Bud Light, Harley-Davidson, Dodge, Burger King and most recently and quite controversially Reebok will now make UFC uniforms. This has caused a rift amongst the locker

room saying that it going to prevent fighters earning revenue through sponsorship which is not actually forms of income. However White has said that the Reebok deal which financially is the second-biggest after did television deal with Fox network in terms of its revenue for UFC will reimbursed all athletes for their last sponsorship. He went as far as to say the UFC will not make money of this deal is simply to make the sport look even more professional.

We look at White and see someone who took on a struggling business with a lot of potential. In just over a decade he ran a multi-million industry, a work renowned brand and White himself amassed net worth estimated to be in the region of $300 million. White has been criticised for his outspokenness, he once claimed Rhonda Rosie easily win in a fight with Floyd Mayweather and has had a couple of quite public feuds with former fighters. However in my opinion judging a man as personality is an overly subjective issue whereas judging him on his financial success

and success of his company is much more objective especially consider going I am writing from a business perspective. I would go as far as to say that Dana White has done more for UFC than Dan King did for boxing or even Bernie Ecclestone for Formula One. In shorter time span he has made phenomenal profits and has marketed MMA in such a way that has changed the landscape of sport worldwide with traditional sports coming under threat in terms of the popularity. This is why I feel Dana White is the kind of business manager we should be reading about in textbooks not necessarily traditional corporate executives.

PJ MCGRANE

The salary cap: The European capital cup

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inance is something which has come to play a significant role, if not the most significant role in professional sport in the modern era. Without sufficient financial backing it is impossible to compete on a level where trophies are a possibility or longevity is guaranteed. The proof of this can be seen clearly in the Aviva Premiership and Top 14, as the financially weaker teams battle against relegation and the richest contest for play-off places.

To curb the impact of gaps in financial power the Salary Cap was created, coming into the English Premiership in 1999.

As professionalism became a reality in Rugby Union, it was seen as a necessary

restriction in order to increase competition and ensure financial stability of all clubs.

Ever since the salary cap has been on the rise and now, in England, the salary cap is £5.5 Million per year, with two ‘marquee’ players wages being exempt from inclusion.

Domestically, this has been a system which has worked reasonably well for the last decade or so.

The Aviva Premiership using the example of three different teams becoming champions in as many years as proof of this.

This does say a lot for the evenness of competition the cap has created but, the winners always come out of those that push the cap to its limit and those fighting relegation are consistently the teams which cannot afford

the full wages they are allowed to pay. As the salary cap continues to rise, this gap will only increase and the point of it, to maintain even competition, will serve to be irrelevant and it will act only as a minor financial restriction to the biggest teams. This is being shown by teams such as Bath and Saracens, who have both been recently accused of going over the imposed Salary cap.

The Salary cap will inevitably rise, calls for it to do so come on a weekly basis, the most vocal club being Saracens, Aviva Premiership and Heineken Cup finalists in 2013-14. Their argument is fair on a European scale, there is a £3 Million pound gap in the salary gaps of England and France and as a result, the best teams in France

can attract better players than the best teams in England. This is due to the salary gap as many teams cannot compete with their French counterparts financial, demonstrated by Toulon’s recent European domination.

The big issue is whether to prioritise domestic or European competition?

Maintain the cap as it is and allow all teams to compete equally within their domestic league or expand it and allow teams with the financial power to compete more internationally?

Neither is a perfect solution and both have sizable impacts on the competitiveness of teams in one way or another. The ideal way for Rugby Union to move forward is by introducing a worldwide Salary

cap, an idea that is far too impractical as international teams pay significant contributions towards players wages also.

A salary cap for each competition is more workable and will allow English and French clubs to compete on the same financial level in Europe.

There is much Rugby Union can learn from the example of professional football, specifically in finance, it is something that needs to be controlled and if this is not acted on soon, money will dictate, even more so, where the best players play and where the most prestigious trophies go.

NEIL WILLOUGHBY

Above: New Zealand’s Dan Carter who will become the highest earning rugby player when he signs for Racing Metro for €1.5million per year.

17

FEATURES

THE BULL 14 JANUARY 2015

2015 or 1920s?

Recently, officials at the Department of Public Expenditure and Reform suggested cutting the old-age pension, proposals which were quickly dismissed by Minister for Social Protection Joan Burton. In the 1920s such a policy was not only suggested, but implemented, as Audrey Smith explains.

J

ames Fitzsimons recently argued in the Irish Independent that “pension thievery has become the Government’s new norm”, and that a “cushioned elite in the public service have outrageous pensions that few workers in the private sector can even dream of earning”. In the latter respect he was right. However, to suggest that “pension thievery” has become the government’s “new norm” is debatable to a historian.

It actually evokes the shadow of Ernest Blythe, and his own socially devastating pension cut, during the formation of the Irish Free State.

A confidential memo sent from Kevin O’ Higgins to W. T Cosgrave on 11 April 1924, offers some insight into the situation facing Blythe as Minister for Finance. O’Higgins criticised the economic condition of the country and argued it was “one of extreme gravity…growing steadily worse”. For O’Higgins, the unemployment situation in the country “was acute” and “it was not in a man’s nature to starve or to see his immediate kin starve without

a fight”. Unemployment had the potential to cause civil unrest; antiTreaty forces had the potential by way of propaganda, to create yet another crisis and pervert the new Free State’s political aims.

Cosgrave’s and O’Higgins’ reaction to the situation has been suggested historically, as being political.

Ernest Blythe’s reaction to the fiscal problems facing the new exchequer was to balance the books.

But at what cost? He endorsed the recommendations of his department to cut government spending by measures that would prove highly unpopular, socially and politically.

This included salary cuts for national school teachers and the army, as well as a cut of one shilling in the tenshilling weekly pension. His defence of the cut to the public pension was that the cost of living had fallen, but even that standard was lower than that of many other European countries of this period. For his efforts, government expenditure fell from £28.7 million in 1923/24 to £18.9 million in 1927/8.

In 1924, the Dáil erupted into a heated debate while covering

the issue of public spending on unemployment assistance. It had been suggested by deputies that some citizens were suffering from malnutrition, and at the potential risk of dying of starvation. The government response to this was: “there was not an abundance of public funds to expend upon public relief… what had been made available, had been expended as well as it could be…the remedial measures for rousing the activity of industry and commerce took time to develop… while facing the immediate problem, the future should not be lost sight of.” When Deputy Johnson replied to this answer by asking “but what if people die this year?” he was answered with a cold reply from the opposite side of the house: “There are certain limited funds at our disposal. People may have to die in this country and may have to die through starvation”.

The stark reality of this remark returned to haunt the Dáil just three years later. In March, 1927, T. J. Donovan complained that some families although suffering great distress, had been denied the home

assistance grant. In his constituency of West Cork a “terrible tragedy had occurred”. The family of Daniel Sullivan of Ardigole had been almost annihilated, due to starvation. A neighbour, seeing nobody around the home, had visited it, and found the mother of the family dead, and the father and five children in a hopelessly weak condition. There were no beds in the house except hay, and no bedclothes. The only food found in the house was a few pounds of yellow meal and half a loaf of stale bread. Within three days of the Civic Guard and the Medical Officer being informed, three more members of the same family were dead. Donovan decried the situation, arguing that in some areas of the country “we have not had such a calamitous state of affairs since 1847”, during the Great Famine. In the same month, Blythe was abused verbally and attacked with eggs, on a platform in Monaghan by an angry mob. He had been asked to defend the extravagance of judge’s wages and why ministers were being paid so much.

Ninety years on in twenty-first

century Ireland, it would seem extraordinary for anyone to suggest that our government could possibly be engaging in a discourse on the effects of malnutrition. Yet the issue remains on the government’s agenda. It is estimated that in combatting the effects of malnutrition in Ireland, it costs the Health Service Executive €1.42bn annually, almost 11 per cent of its total budget. More startling is that 66,500 of the cases treated are elderly people who live at home alone. This historian is no economist, but would suggest there are many lessons we can learn from the past. What we do know is that targeting those who are the most vulnerable in our society can have massive repercussions, which end up costing the exchequer more in the long run. Was it not John Maynard Keynes who once said to an open gallery in Dublin in 1933 that “no one has a right to gamble with the resources of the people, by going blindly into technical changes imperfectly understood”?

The rise of Islamophobia in Europe: The German case

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hen the marches of PEGIDA, the “Patriotic Europeans Against the Islamisation of the Occident”, began in late October, not too many observers took notice. A mere 350 participants made their way through Dresden, Saxony’s capital city. This, however, has changed. By December, 10,000 protesters took their worries and fears to the streets, sparking a national debate. Following this, Chancellor Angela Merkel’s New Year’s speech addressed the issue, urging the population to “not follow those who … all too often … have prejudice, coldness, even hatred in their hearts.” This plea was answered by a protest in January that attracted 18,000 people in Dresden alone.

On the same day, though, 20,000 people gathered for counterdemonstrations across German

cities.

While the number of “likes” on the PEGIDA Facebook page has risen to over 125,000, the German media and politicians rush to assert that racism is not at the heart of the issue. The German Minister for Development Gerd Müller distanced himself from Angelika Merkel’s comments in her New Year’s address, warning that the wrong signals were sent: “The majority of PEGIDA demonstrators are not racists,” the Christian-Social Democrat states. But what are the reasons for this seemingly sudden outburst of islamophobia?

Given the good performance of the economy in the past years, and a general sense that all is well in Germany, it is little wonder that PEGIDA’s marches took many by surprise. Compared to other countries struggling with recession and stagnant growth rates since 2007, the well-established

relationship between economic crises and a rise of racism and xenophobia does not seem to fit the German case, especially in light of the eighth year of record-high employment rates, as the Federal Office of Statistics revealed lately.

However, many of the studies examining this relationship observe that these tendencies are more a result of uncertainty, a lack of trust that things will improve soon, and social disintegration.

This is not new to Germany.

Xenophobia spiked in the years following the re-unification in the early 1990s. Moreover, the European Commission against Racism and Intolerance (ECRI) criticised Germany for its fixation on right-wing extremism, while not acknowledging troubling developments with regard to dayto-day racism, xenophobia and anti-Islamic views. A recent poll has found that 57 per cent of the

population regard Islam in Germany as a threat, compared to 35.6 per cent in 2010. Moreover, East German parts of the population lead the polls with an average of 66 per cent.

This also shows that it should not come as a surprise that PEGIDA originated in Saxony, a region of the still relatively deprived former GDR, with an alarming 78 per cent perceiving islamification as tangible threat. The failure to fully integrate the Eastern parts of Germany economically has left a disenchanted subpopulation leading polls on xenophobia, racism and islamophobia year after year.

Equally, the praised labour reforms of the early 2000s, and Hartz IV in particular, have produced a large mass of marginalised and stigmatised long-term unemployed, coupled with a rising share of the Precariat, workers with little economic security working in shortterm contracts and “Mini-Jobs”. The

fact that many Germans have taken on part-time jobs in addition to fulltime employment to compensate for declining real wages since the 1990s equally sheds a different light on the employment statistics. While the labour reforms have spurred the German economy through internal devaluation in the years before the Great Recession, a large share of the population who had slipped into a precarious economic state remained deeply suspicious and fearful even during Germany’s recovery.

Commentators have argued that islamophobia is the new form of racism. Taking all of the above factors into account, it seems much less surprising that Germany joined Western Europe’s movement against Islam with such force.

SABRINA SCHÖNFELD

18

‘Je suis Charlie’

Loïc Delorme discusses why the recent terrorist attacks in France have caught the public’s imagination

J

e Suis Charlie”. Everyone now knows what it means and it is a rallying cry that has been taken up across the world in defiance to terrorism. Cartoonists across the world have taken up the pen against the sword. The French Channels have it in the top corner of the screen. Politicians and world leaders across the globe have expressed their deepest regrets, from the US to Iran. Religious leaders, imams and priests alike, have prayed for the victims of the attack and expounded that this was not done in God’s name and that the dialogue between religions must continue. “Je Suis Charlie”. Across the globe, people are marching under that banner to express their support. It has reached such a magnitude that it has already spawned counter cries.

“Je Suis Ahmed” reminds us that members of the police died too. “Je ne suis pas Charlie” was suggested by Al Jazheera as they attacked Charlie Hebdo for poor taste and calling this upon themselves. People marched in Afghanistan in support of the attackers. This attack is obviously something important, even for people on the other side of the globe.

Forgive me for being callous but: why? Why is there so much fuss around this attack? The war in Syria rages on. Ukraine continues to lose territory to the invisible army of Russians. North Korea is still practicing torture. The US still hasn’t taken action against its own use of torture. Israel and Palestine still undermine each other.

The Islamic State continues to sell people as slaves.

Maybe it’s because that’s old news? Does it lack the flash in the pan aspect that grabs our attention? No, that’s not it either. A ten year old girl blew herself and nineteen other people in a suicide attack today. Boko Haram killed over 2000 people a few days before the Charlie Hebdo attack. An attack in Yemen killed 49 people and injured 70 others; the victims were celebrating the “Islamic Christmas”, the birthday of the Prophet. And yet the world quietly continued to live its life, deaf to the muffled explosions and to the silent screams.

Maybe it’s because the victims were Westerners at home. This is a tempting theory. People learned that ISIS was beheading hostages only when an Englishman decapitated an Englishman; this event nonetheless generated less media attention because he went to the danger and not the other way round. People feared war over Ukraine only after a plane full of civilians who had fastened their seatbelts and packed teddy bears was shot down. It is easier to get a reaction when people can empathise; it is easier to empathise when the victims live in a place like ours and could have been us. But this doesn’t hold water either. This isn’t the first murder

by Kalashnikov in France, Marseille and Corsican banditry have been around for decades. This isn’t the first terrorist attack either in France even if it is the deadliest (three years ago there were similar shootings). The US has school shootings with embarrassing regularity (Wikipedia has attempted to list them all on a single page).

So what made this one different? Maybe it’s the fact that this attack was caught on film. If so, we are despicable creatures, unable to empathise with anyone out of reach of the press’s cameras, unable to truly believe without seeing. This might have helped, but this can’t be the main factor. The gruesome execution of a police man asking for mercy was caught on film and published and many people have watched it despite being cautioned not to by the media. And yet the focus was on the journalists, not on the police and even less on the dead hostages in the supermarket attack.

This is what has made the difference. The attacks targeted journalists because they were journalists. Why would their fate move us more than another’s? It is possible that the media has strongly influenced us and when it responded to fellows being killed, so did we. But I don’t think that was the main factor either; “Je Suis Charlie” quickly became #JeSuisCharlie, beyond the media’s power.

The reason we reacted so strongly was because the victims were chosen in order to attack something greater and that they were part of: journalism. The ability to speak without fear was the target, warning other news agencies around the world that this could happen to them too. This is why their fate mattered to us. The first attack was particularly atrocious because all those who died did because they were doing their job, their difficult job and what they felt was their duty, killing journalists and police. On the next attack, a policewoman was specifically targeted because of her uniform. This is what we stood up to defend. This is why the names of the victims are not known, nor even many of the drawings they made. It doesn’t matter, freedom of expression does. “I do not agree with what you have to say, but I’ll defend to the death your right to say it.”

This attack on core values explains why this attack has been perceived as “France’s 9/11”despite it being comparatively small. It also explains why the attack on the Canadian Parliament was so important despite the terrorist only succeeding in killing one man. Symobols and values are important.

But as important as they are, do they really outweigh lives to such an extent? Can we really justify ignoring all else for this one attack? The West needs to learn to feel for the loss of life in lands far away just as much as at home and stop ignoring the slow evils that plague the world at home and abroad. As humans, can we?

Je Suis Charlie LOÏC DELORME

OPINION

THE BULL 14 JANUARY 2015

The Race question - can President Obama find the answer?

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ichael Brown. Trayvon Martin. Tamir Rice. Eric Garner. These names have become emblematic of deteriorating race-relations in the US. Protests have exploded in Ferguson, Missouri, while tensions between law enforcement and minority communities could not be more strained.

From a European view, the question that hangs in the shadows - how, in the era of the first black president of the United States, have things come to this point? Recent shootings of several unarmed young black men have scraped away the thin veil covering the deep wounds left by America’s troubled past.

The conflict has forced Americans to re-examine the issue of racism and ask how there could be so much racial conflict in a country that has for the first time an African American President?

In 2008, America welcomed Barack Obama as president. His election was hailed as a huge victory for the United States, a sign of how far things had come. In reality, it appears his election papered over the cracks so to speak, a covering over the deep racial issues which still affect the US today. Barack Obama has been wary of addressing racial issues in the past. This is an understandable stance - coming into the White House with innumerable challenges ahead, President Obama’s entire campaign was run on the theme of a truly united country. Coming into office, it seemed clear that Mr. Obama was anxious not to appear solely ‘the President of Black America’. However, in the wake of the recent unrest, Mr. Obama has resorted to speaking more bluntly about race, describing times when he was dining out with his wife, and was mistaken for a valet - an experience confirmed as regular by many other black American males. It is clear that Mr. Obama takes seriously his burden, stating that ‘no-one will push harder’ to improve race-relations in the US. Parallels have been drawn between the riots in Ferguson, and the Civil Rights marches of the 1960s. Drawing comparisons between JFK’s presidency and Barack Obama’s we can see similarities: each presidency has been faced with racial challenges. With regards to JFK’s presidency, there were huge steps taken to solve racial issues and attempt to achieve equality, and his legacy is that of a man who tried his best to create an equal America. 50 years later the advent of the first black president seems to suggest an end to racial inequality, but Obama’s presidency is instead fraught with criticism of his handling of racial issues.

Could it be possible that JFK did more to help America’s race relations than the first black president? Or is it simply that improvements in race-relations have stymied to a point where a new approach is needed?

President Obama’s every move is fraught with complexity - whatever action he takes, critics see him as either betraying his heritage, or creating division in communities. As with all questions of race, there are no easy answers. A great deal more empathy and sensitivity is required from people on both sides of the aisle.

All that said, there is a fear left unspoken - will the legacy of Barack Obama’s presidency be that of deep disappointment for many African-Americans? As with all of those who break barriers, the weight of expectation weighs heavily. It seems that for some, unless Obama takes a stronger stance on racism, the result may be an unsatisfactory end to his presidency in 2016.

EILIS BHRAONAIN

19

EUROPE THE BULL 14 JANUARY 2015

Editorial: New Greek poll: First act of a European tragedy?

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reece has once again pushed the Eurozone back to the brink of crisis. A snap election was triggered by the failure Prime Minister Antonis Samaras to get his nominee for President through the Hellenic Parliament. The ballot, to be held on 25th January has caused the rest of Europe to sit up with fear.

If the polls are correct then the radical left anti-austerity Syriza will take a narrow victory over Mr Samaras New Democracy. With 50 out of 300 parliamentary seats on show for the victor, a narrow percentage win could translate into an electoral landslide.

Their determination to renege on the EU-IMF bailout conditions while remaining in the Eurozone is perfectly in tune with the electorate in general. I believe this is a contradiction and that it is not possible to combine the two.

The prospect of Greece not repaying the EU-IMF loans is not a pleasant one for Brussels. Nor indeed for the money markets, the very prospect sent the Euro to a nine year low against the dollar. This has led to threats from across Europe that a vote for Syriza is a vote against the Euro. These have been particularly loud in Germany where Chancellor Angela Merkel hinted to Der Spiegal that a Greek exit (or Grexit) was manageable. In Greece some are decrying this as undue inference in the democratic process of a sovereign state. Nevertheless it is in fact the opposite, as well as benefits

membership of the EU also comes with certain obligations and costs.

Thus the Greek people can choose whether the pluses outweigh the minuses of keeping the Euro. They can only do this if they know what is at stake.

It is clear however that a Grexit would be disastrous for both Greece and the rest of the Eurozone. While Angela Merkal is certainly right that it an exit has become more workable and that the core economies are increasingly insulated, it would still set a dangerous precedent. A domino effect is a real possibility with the likes of Spain, Portugal and Italy still close to the fiscal brink.

The crisis could develop similarity to what happened to the banks in 2008. After Bear Stearns collapsed the markets then moved on to the next weakest bank Lehman Brothers and would have continued to pick off banks without government intervention. The actions of the market were controlled by the most base of human instincts, fear. This equates to an unwillingness to lend.

The bond market would be similar with the other periphery countries finding it harder to borrow as the credibility of the EU-IMF safety net dissolves. It is thereby imperative for the confidence that the market relies on for Greece not to exit and subsequently default.

Politically it would be damaging to the key Eurozone players who agreed to the bailout in the first place. The first action after the Grexit would no doubt be a default costing

taxpayers across Europe billions. The question will be asked as to why this did not happen years ago without the expense of trying to solve Greece public debt problems.

Hence it is no surprise that we are hearing similar rhetoric from European leaders as in 2012 when Greek voters were also warned the consequences of an anti-austerity vote. It is important to note that Syriza does not advocate a full exit from the Euro, a few that seems to be shared by a majority of Greeks.

Unfortunately as I have mentioned for the single currency to work individual countries must meet certain obligations.

Under the ‘Stability and Growth Pact’ members of the EU (particularly those of the Eurozone) are required to keep deficits under 3% of GDP and public debt under 60%. While Greece did run a surplus last year it still maintains a public debt to GDP ratio of 175%. During the years of economic prosperity enforcement of these guidelines was lack and Greece were able to use their position in the Euro to borrow at cheaper rates.

This flipped on its head when the recession hit. The Government had also under reported the level of public debt and once this stopped panic ensued.

To obtain more sustainable levels of public debt the EU-IMF mandated massive reform of the public sector.

This was necessitated by years of tax evasion and wasteful government spending. However it has been an extremely painful process with the

economy shrinking 25% in the last six years. Greece’s inability to devalue their currency has led to a real depreciation amplifying the effects of austerity. It has made exports more expensive on the global market further depressing demand and increasing unemployment. This is especially prevalent in the tourism industry, which is key to Greek prosperity. With unemployment sitting at 25% it is little wonder why the electorate are fed up with austerity and are searching for radical solutions.

Any shift away from the policies of Mr Samaras, a relatively recent convert to austerity will mean a failure to meet these obligations.

Consequently, despite Syriza’s pledge to keep the Euro it does not match their other policies. In particular the demand that the rest of Europe write off half of Greece’s debt and a moratorium on repayment of the rest.

There is of course the argument that a return to drachma would be just the shock that the Greek economy needs to get back on its feet. The drachma could be depreciated to make Greek exports more attractive and thus bolster demand. To get to this stage however there will be huge initial costs that the economy will not be able to sustain.

Servicing the massive public debt would prove a near impossibility.

The yield on 10 year government bonds reached 9.5% compared to the near zero yield on the German

equivalent. Without the safety net of an EU-IMF bailout the yield will only increase the cost of borrowing to unsustainable levels. This will make at least a partial default inevitable with the long run consequences that will entail for both Greece and the rest of Europe.

Greece also gains significant benefits from ceding monetary control. As mentioned borrowing becomes cheaper and easier since the market knows there is a safety net diminishing the possibility of default. Obviously there are the positive effects on trade but these are often underestimated. Transaction costs are removed within the zone thus boosting demand as prices fall. A currency union also leads to a high degree of price stability further increasing demand.

All of this being the case, the stakes when the Greek people head to polling stations are high. It is a referendum on the Eurozone, Syriza’s manifesto pledges make continued membership untenable.

Due to the disastrous consequences for all involved it is likely that a Syriza victory will see some sort of compromise. While it may be presented as something other than austerity it is likely that the party’s leader Alexis Tsipiras will undergo a similar conversion to the current Prime Minister.

CALLUM TRIMBLE-JENKINS EDITOR

Action needed to prevent clash between EU Member States over migration

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ince its inception with the Treaty of Rome in 1958 the European Union has overcome many challenges and crises while at the same time it has greatly contributed to the improvement of the quality of life of all of its citizens. By helping to maintain peace between formerly bellicose nations, uphold democracy and promote free trade across Europe, the EU has provided a model for other continents to follow.

However, with the onset of the global financial crisis the EU has struggled to adequately respond to the needs of its citizens and of its Member States. The ongoing divisions between members of the eurozone as to how to resolve the ongoing economic crisis that has affected much of continental Europe is but one example of the challenges that today face the EU. Apart from this, it would appear that a crisis is brewing in relation to Europe’s immigration problems.

With no end in sight to the civil war in Syria and with the Islamic State now firmly rooted into large swathes of Iraq and Syria, it is likely that the number of people making the perilous journey across the Mediterranean is likely to increase.

This will only put further pressure on Europe’s already straitened financial resources, and of Italy and Spain in particular. Moreover, many of those who successfully traverse the Mediterranean immediately make for northern Europe where there is a greater possibility of finding employment. This is problematic for northern Member States who are struggling to deal with the already heightened immigration numbers.

In the UK, with a general election now looming, it is clear that immigration from Europe and beyond will be a key electoral issue. Given that there is a distinct possibility of a referendum on UK membership of the EU should the Conservatives be returned to power later this year, it is likely that the theme of immigration and the EU’s role in it, will move from being, heretofore, a sideline issue to a central issue in the UK and many other European countries. If a referendum on EU membership is tabled in the UK, then the EU will need to come up with an adequate response to any demands that the Conservatives might make in return for supporting continued membership. One of these demands is likely to be a cap on the number of European citizens being allowed to enter and live in the UK.

The free movement of European citizens is an integral part of EU law.

Thanks to these rules, citizens have benefited greatly from the possibility of being able to live and work in different European countries. Free movement of citizens is perhaps one of the greatest achievements of the whole European project.

Any restrictions on these rules would require radical change to the Treaties. Moreover, if the UK sought to cap the number of migrants coming from Europe, this could put the UK government on a direct collision course with the German government. In 2014, Angela Merkel firmly expressed the view that there should be no restrictions on the free movement rules. With a birth rate that is below replacement level Germany will need more and more immigrants to help fuel economic growth.

Any opt out for the UK on free movement rules could also have a dangerous domino effect as other Member States might seek to follow suit. This could be a significant hindrance to further integration and to intra-European trade. For example, during the 2012 French presidential campaign the then incumbent, Nicolas Sarkozy, threatened to pull France out of the Schengen zone

unless the EU took action on illegal immigration. Consequently, any future debate on immigration and free movement rules is likely to be extremely divisive. Therefore, the EU must ensure that its response to any British demands does not create a contagion effect.

Furthermore, even if some sort of agreement is reached on capping migrant numbers coming to the UK from other Member States, such exceptions are likely to be narrowly construed by the European Court of Justice. The ECJ has been a key driver of European integration. The ECJ has always taken a rigorous approach when it comes to the free movement of workers and European citizenship.

In several high profile cases, the ECJ has condemned measures put in place by Member States that seek to restrict EU workers and citizens from settling in another Member State. With this in mind, there is a strong likelihood that the ECJ would give only the narrowest reading to any exceptions to the rules on free movement of persons, with the result that any opt-out would be extremely limited in its effect.

Therefore, it is clear that if the EU wants to overcome any challenges to the free movement of persons rules, difficult decisions will have to

be made. This is especially the case if the EU wants to avoid seeing a twotier Europe emerge whereby certain countries such as Germany and the Low Countries engage in much more integration while other Member States play a more peripheral role.

No easy solution lies in sight for the EU. Perhaps the best that can be hoped for is that continental Europe might experience an economic recovery similar to the ongoing recovery in Ireland and the UK. This might reduce intra-EU migration; with better employment prospects at home, the need to emigrate would probably fall. In a similar vein, more must be done to increase the standard of living of those in the Middle East and Africa if we are to see a reduction in the number of migrants seeking refuge in the EU. In the absence of any economic recovery or fresh agreement on free movement of persons rules, it is likely that 2015 will show yet more division between the Member States.

NIALL FITZGERALD