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How the Scot ‘no’ changed Europe and the UK

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Scotland_20140918_IndependentWith results from the 32 councils declared, the ‘no’ voters of Scotland carried referendum day and opted to stay in the union, that is, the United Kingdom. The margin – 55% ‘no’ to 45% ‘yes’ – still means that every other Scot wants independence of some sort from the UK and its London-centric Westminster government.

There are some immediate reliefs for London’s politicos who were besides themselves with worry until early today morning. The Union survives (but not in the same shape). Still, this means that the UK remains a G7 economic power and a member of the UN Security Council. It also means Scotland will get more devolution and David Cameron will not be forced out (which may be a disappointment to many more English people than the number of those who voted ‘yes’).

Those reliefs will not provide cheers until after this weekend. Monday morning, the United Kingdom will have to look back at the last few weeks of referendum mania, and the last few adrenalin and hope-filled days, and realise that the 307-year-old union must change course radically to stay in any shape at all (and even that will be on borrowed time). Here is why:

Scotland_20140918_TelegraphFirst, there has indeed been a victory for Scotland, for those who considered themselves patriots for voting ‘yes’ and for voting ‘no’. The victory is more devolution for Scotland. Scottish Nationalist Party leader Alex Salmond (who is also the governor of Scotland) is the one who initiated the referendum campaign and who had wanted three options on the ballot papers: independence; the status quo; or more devolution for Scotland.

Until mid-year, the British government led by prime minister David Cameron accepted only the independence question, for more powers to the regional government in Edinburgh was rejected outright, and at the time they thought so, polls were showing a comfortable majority against ‘yes’ – as high as 65% in 2013. That advantage dropped steadily, with a shock poll in early September 2014 putting the ‘yes’ camp for the first time in the lead. This is when Cameron and the leaders of the two other main parties in Westminster – Labour and the Liberal-Democrats – signed a pledge to give more powers to Scotland if its voters chose ‘no’. Cameron and the other leaders – Liberal Democrat leader Nick Clegg and the Labour party’s leader Ed Miliband – will now have to deliver on those promises and also face claims from the other regions – Wales, England and Northern Ireland – for more money and powers.

Scotland_20140918_HeraldSecond, the ‘yes’ camp had painstakingly put together the arguments its campaign needed to show that Scotland could be successful as an independent country. These arguments appealed to many and convinced a good number – just over 44% as it has turned out – to take the leap of faith and thereby stare down the ‘no’ placards which read, “It’s not worth the risk”. Where the SNP fell short was in convincing more Scots about the risks and how to hedge them. But even in falling short, the ‘yes’ camp has proved to UK (and to all those regions in Europe seeking self-determination) that to seek independence is a powerful and uplifting tonic, which is a substance in very short supply all over the continent.

In the end – for so the commentators and observers mutter – it is the respectable middle class in sober dress who have tended to vote ‘no’, and so have the Labour stalwarts of all ages for whom some idea of ‘solidarity’ is apparently more comforting and familiar than the gritty new business of making independence work and dealing with the more obvious contradictions of the Salmond plan. Scottish monetary union with the UK also meant an independent Scotland using the pound as its single currency, but having no control over it.

Scotland_20140918_GuardianThe Euro crisis taught Europeans that a monetary union without a political one is a debilitating project, and so the risks shrewdly exploited by the ‘no’ camp (and the banks and the petroleum industry, let’s not forget them) came to weigh more than placards. Even so, Scottish independence as an idea based upon an implicit assumption of Scottish national and ethnic uniqueness – incompatible with the British identity, as any gent in a kilt would swear – has been considerably strengthened, at the cost of the Westminster style of government, whose days are from today numbered.

Third, the nature of this long demise. Early on Saturday morning political scientists were already saying that for British politics, much thought now needs to be given to constitutional arrangements, that constitutional change will have to be delivered. Such work will have to begin on Monday morning to make a start towards reconciling all the interests – Scots, English, Welsh, Northern Irish and local (however local chooses to define itself in the UK). It is not the kind of “epochal opportunity” that the SNP was waving overhead as a flag until yesterday, but it is for similar movements all over Europe, and the project in UK will be watched very carefully indeed in those countries and territories.

Scotland_20140918_TimesSalmond and the SNP will still govern Scotland until 2016 and the party will need to decide whether to run in 2016 on a stronger pledge for full independence (a two-stage referendum was amongst the eminently sensible suggestion made earlier this year). The question of equality will be raised more pertinently than before – in the Linlithgow Palace, Scotland’s James V built an elaborate fountain to express his equal status with his English uncle, Henry VIII, and amongst the ruins the fountain survives as a vivid reminder of Scottish pride. As for the economics of independence, it was Salmond who told the BBC: “The central mistake that the ‘no’ campaign has made is to tell the people of Scotland that the land of Adam Smith is not capable of running its own matters financially.”

The Scottish ‘no’ therefore is but a punctuation mark in a strong statement of cultural identity that began to be written well over half a millennium ago. A more thoughtful UK may result, one whose political performers learn to understand the union they claim to love. If so, the Scots have indeed won.

[The Khaleej Times published my article here.]

Europe’s workers say ‘no’ to top-down ‘austerity’

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Strikes in EU, September 2010. Photo: Socialist WorldAfter ordering drastic ‘austerity’ programmes in Hungary, Romania, Greece, Spain and Portugal, pressure is now being increased on other countries to significantly reduce the living standards of broad social layers. This is what ‘austerity’ in the EU, and particularly western Europe, actually means. It does not mean the ruling parties and their agencies do with smaller salaries. It means that the massive deficits in public finances resulting from the economic crisis and bank bailouts be countered by slashing wages and social spending.

The German government, acting on behalf of the German export industry, is calling the tune for western EU. This spells continuing trouble for Europe’s working classes for it has been clear for several years that the ruling coalition in Berlin is acting in concert with the most powerful European financial and business circles, in particular the German export industry which claims to have led Germany into a new phase of ‘growth’.

There is no lack of voices saying these policies are short-sighted. On Monday, four leading European economists warned in the Financial Times that such harsh measures were “necessary but risky”. They threaten to trigger a depression affecting the whole eurozone. The resulting economic, financial and social stresses could destroy the eurozone. They suggested, therefore, a European solution: the European Financial Stability Facility established in the spring should become a permanent instrument that can be used to support highly indebted countries.

But this week Europeans marched on the streets in protest against the impacts of ‘austerity’. Up to 100,000 took part in a march on Wednesday on the European Union buildings in Brussels, Belgium, organised by the European Trade Union Confederation (ETUC), reported the World Socialist Web Site (WSWS). The march in the Belgian capital was the official centre-piece of Europe-wide demonstrations against austerity and cuts, though a general strike in Spain was by far the most significant expression of workers rising anger at the attack on their livelihoods.

Nearly 70% of Spanish workers — 10 million — took part in Wednesday’s general strike. In some sectors, such as mining, metal, auto manufacture, electronic, fishing and other industries, participation was nearly total. The movement also encompassed many self-employed workers and small businesses. Although the government tried to downplay the effects of the strike, the national grid operator Red Electrica Corp. said that electricity consumption was down by 20%.

The strike dealt a blow to business leaders, politicians and the media who claimed it would not be well supported. But without the minimum service levels agreed by the unions, which allowed the government and local authorities to determine how many airplanes, trains and buses had to be provided, the country would have ground to a complete halt.

[There’s more in Deutsch on the strikes from Die Tageszeitung of Berlin, which reported on the strikes in France, the protest against the pension ‘reform’ and the social impacts of ‘austerity’. The Liberation of France reported on the massive Spanish strikes, and Socialist World has reportage of the Brussels strike.]

Greece’s main union federations, representing about 2.5 million workers, did not strike on Wednesday and only organised a march to parliament in the evening. Only a few of the smaller unions called strike action, with hospital doctors stopping work for 24 hours. There was strike action by bus and trolley drivers for several hours and the Athens’ metro system and trams were shut down for a period at noon.

A demonstrator reacts after being hit by anti-riot police in central Barcelona during the general strike held in Spain. (Guardian) Photograph: Josep Lago/AFP/Getty Images

In Ireland, there were rallies hundreds strong in Belfast and Derry. A man drove a cement mixer covered with anti-bank slogans into the gates of the Irish parliament in Dublin to protest the bailout of the banks. In Portugal, there were protests in Lisbon and Porto. According to trade unions sources some 20,000 people took part in the evening demonstration in Lisbon.

Most of the other protests were in eastern Europe. In Poland, thousands marched in Warsaw against government plans to freeze wages and raise some taxes. They demanded the government guarantee job security and scrap plans to raise taxes. In Lithuania, some 400 protesters held an illegal demonstration in Vilnius. In Slovenia, around half of all public service workers continued a third day of an indefinite strike to protest at the government’s plan to freeze salaries for two years.

The Guardian reported that in Portugal, unions said 50,000 protesters joined a march in Lisbon and 20,000 in Porto. “It’s a crucial day for Europe,” said John Monks, general secretary of the European Trades Union Confederation, which orchestrated the events. “This is the start of the fight, not the end. That our voice be heard is our major demand today – against austerity and for jobs and growth. There is a great danger that the workers are going to be paying the price for the reckless speculation that took place in financial markets. You’ve really got to reschedule these debts so that they are not a huge burden on the next few years and cause Europe to plunge down into recession.”

In Brussels marchers from across Europe waved union flags and carried banners saying “No to austerity” and “Priority to jobs and growth”, bringing parts of the city to a halt. The protest was led by a group dressed in black suits and masks and carrying umbrellas and briefcases to represent financial speculators, acting as the head of a funeral cortege mourning the death of Europe.

Wheat sends food prices up, US agriculture exports to be $107.5 bn

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Surging wheat prices drove international food prices up 5% last month in the biggest month-on-month increase since November 2009, the Food and Agriculture Organization (FAO) has announced. The FAO Food Price Index (FFPI) averaged 176 points in August, up nearly nine points from July, FAO said in its latest update on the global cereals supply and demand situation. The 5% increase brought the Index up to its highest level since September 2008, but still 38% down from its peak in June 2008.

FAO Food Price Index

FAO Food Price Index, 2010 September

The FFPI surge mainly reflected the sudden sharp rise in international wheat prices following drought in the Russian Federation and the country’s subsequent restrictions on wheat sales. But other drivers included higher sugar and oilseed prices. FAO’s update said that the forecast for world cereal production in 2010 has been lowered by 41 million tonnes to 2,238 million tonnes from 2,279 million tonnes reported in June.

However, even at this lower level, world cereal output in 2010 would be the third highest on record and above the five-year average. Among the major cereals, wheat accounted for most of the cut, reflecting mainly smaller crops in the leading producers in the CIS due to adverse weather. Under the present forecast world cereal utilization would slightly exceed production in 2010-11. This would trigger a 2% contraction in world ending stocks from their 8-year-high opening levels and to a small decline in world cereal stocks-to-use ratio. At 23%, however, the ratio would still remain well above the 19.5% low witnessed in the 2007-08 food crisis period.

A further cut in the forecast for 2010 world wheat production since FAO’s last update on 4 August puts this year’s wheat crop at 646 million tonnes, down 5% from 2009 but still the third highest ever. The latest revision reflects a further cut in the estimate of this year’s harvest in the Russian Federation to 43 million tonnes (from 48 million tonnes in August) more than offsetting higher forecasts for crops in a number of other countries including the United States and China.

FAO Food Commodity Price Index, 2010 September

FAO Food Commodity Price Index, 2010 September

The forecast for world wheat ending stocks in 2011 was also lowered, to 181 million tonnes, down 9% from their 8-year high opening level. The stock-to-use ratio for wheat in 20010-11 was projected at 27%, down 3% from the previous season but still 5% higher than the 30-year low in 2007-08.

World production of coarse grains was forecast to reach 1 125 million tonnes, down 6 million tonnes from the previous forecast in June but up marginally from 2009 and the second highest on record. Maize production was heading towards an all-time high of 845 million tonnes, with expectation of record crops in China and in the United States. But world barley production was forecast to fall by 22% to a 30-year low of only 129 million tonnes in 2010, driven mostly by a sharp cut in production in the CIS and in the EU as a result of poor weather.

The forecast for global rice production in 2010 was also revised downward and now stands at 467 million tonnes, 5 million tonnes lower than the June 2010 forecast but still 3% more than in 2009 and a  historical record. Much of the revision was the consequence of Pakistan’s floods but it also stemmed from lower expectations in China, Egypt, India, Laos and the Philippines. The recent disturbances in  world cereal markets will be examined by delegates meeting at a special one-day session of FAO’s Intergovernmental Group on Grains and Intergovernmental Group on Rice convened for 24 September at FAO headquarters in Rome.

World Food Day 2010

16 October is World Food Day 2010

Industrial agriculture news sources such as Agweb are reporting the United States Department of Agriculture’s (USDA) agriculture products exports for financial year 2010, which have just been released. Increased exports of grain and feed at higher values along with increased livestock, poultry, and dairy product exports all helped to push up the forecast for US ag exports in fiscal year (FY) 2010. USDA has said the value of US ag exports for FY 2010 will be US$107.5 billion, up US$3 billion from their May forecast. And their first look at FY 2011 has the value of those shipments projected at US$113 billion, up US$5.5 billion from FY 2010 forecast.

On the import side, USDA now puts FY 2010 imports at a value of US$77 billion, up US$500 million from their May forecast. For FY 2011, USDA sees the value of US ag imports rising to US$81.5 billion. USDA now expects a slightly larger trade surplus for US agriculture for FY 2010 – US$30.5 billion, up US$2.5 billion from May, and for FY 2011 they expect the trade surplus will be US$31.5 billion. Analysts for USDA’s Economic Research Service (ERS) also included this caution:

“The three major threats to world growth in 2011 are the EU economy tanking due to their debt situation, the U.S. economy going into a recession, and a continuing widening of the Chinese trade surplus. A major near-term risk to the world recovery is a potential spillover of the crisis brought on by high government debt in Greece, Portugal, Spain, Italy, and Ireland.

“The consensus forecast for 2010 and 2011 is of continuing recovery in both the developed and developing economies, with a few regional rough patches. The case for moderate world growth for the rest of 2010 and solid growth for 2011 is based on low interest rates, increasing trade flows, and the willingness of central banks to keep financial assets on current balance sheets, encouraging easier private credit and strong growth in corporate profits. At this time, that scenario is much more likely than any or all of the downside scenarios.”