So this is it for now. I am going to take a well-deserved break for the next few weeks and return in January. It’s been ten months since I launched Peaktalk and it has been a great run, I have had great feedback from readers and links from all over the blogosphere and I want to thank you all for making this a rewarding and fun experience. There’s nothing like waking up, having a coffee in front of your PC and seeing that while you were asleep someone linked to something you wrote the night before and people all over the world have been reading it and commenting on it. Thanks again and keep coming in the New Year.

I will leave you with my view on what was the most significant development of the past year below, and I did not write it because I am European, no, I really think that we have seen a monumental global shift this year that is going to have repercussions for decades to come.

So I wish you all the best for Christmas and health, peace and prosperity in what no doubt is going to be an interesting New Year.

Update: There is a Christmas Edition of the Carnival up over at Winds of Change, with host Joe Katzman sharing a good Christmas story with us.

So we’re coming close to the end of the year and many media are starting to reflect on the past year. Was it the year of Iraq? Or was it the defining year for Bush? Or both? A quick look at my site statistics reveals that this article was the one that was the most visited and read of all the stuff that I have produced this year. It got a link from Steven Den Beste, it triggered an Instalanche and resulted in quite a number of e-mails. And all of that happened with good reason. Long before this year started it had become apparent that Europe was facing some serious and fundamental challenges: political and monetary integration, immigration from former Soviet bloc and Muslim countries, a graying and shrinking indigenous population and serious conflicts at the doorsteps of the old country fortress. Some up and coming politicians in various countries had warned about the impending dangers, yet they became the subject of vile ridicule by a complacent political elite and politically correct media that had lost the ability to think and act outside the box of pre-conceived ideas. As with so many things that are left unattended, something will happen that brings them back into focus in a very dramatic and unpleasant way.

The intent to enforce UN resolutions and disarm Saddam Hussein put the predicament of the old continent right into the spotlight. The EU was again, remember the former Yugoslavia, unable to bring itself to the point to play a meaningful role in enforcing freedom and democracy in the face of evil. Tony Blair (my vote for this year’s edition of Time’s Man of the Year), the one leader trying to build a bridge and salvage the for Europeans crucial transatlantic relationship with the US, was rebuffed by the two key European continental powers, France and Germany. They did that with both confidence and arrogance, knowing they were in the midst of shaping their new nation state and took the impending conflict in the Middle East as the key issue to differentiate the old country from the confident and assertive new country across the sea that had come under direct attack from Islamist radicals. They gambled that this move could lay the foundation on which to build a joint European foreign and defense policy separate from what Washington believed in. It would define Europe as a power in its own right. And now the opportunity was there to accentuate the difference between the statist European elites and the Anglo-Saxon free-marketeers: we are not the same, we have a different view of life and the last thing you are going to do is involve us in a war where your interests are materially different from ours, or so we think.

I say that because there were other reasons that forced the Europeans to play this card: a sizeable Muslim minority in Europe required them to be careful when engaging in a conflict in the Muslim heartland and close economic ties with Saddam were maybe worth preserving after all. And, other smaller European nations would no doubt follow the Franco-German charge it was assumed, and it was not just the littler ones that joined the pack, retired superpower Russia happily threw its weight behind the Berlin-Paris axis. Some argued that Vladimir Putin expected to reap a long-term economic windfall from building a trans-European partnership, others pointed that his economic interests were based on the short term given Russia’ close ties and involvement with Saddam. Whatever the case, Europe was drifting in an odd direction and only a few countries followed their healthy geopolitical instincts by siding with the US-UK coalition which resulted in the defining “Old Europe, New Europe” analysis from Secretary of Defense, Donald Rumsfeld. The net result was the most serious rift in transatlantic relations since the Second World War, relations that up that point had defined the security structure of the world. With a Republican leadership that was markedly different from the previous generation of moderate atlanticist Republicans, the chances of America accepting the disconnect as a matter of geopolitical fact had grown phenomenally. Not only had the rift revealed different strategic approaches, it had re-emphasized in Washington the knowledge that it would have to go it alone in Iraq. Possible and likely future ventures could equally be of a go-it-alone nature.

The French and the Germans had embarked on a questionable strategy but to some extent they must have taken comfort from their strong and dominant position on the continent. Yet, the divisions over Iraq had set the tone for a hefty debate among some European nations, as not everyone within the old fort was comfortable with what had happened over Iraq. And there was more to come, again with France and Germany in a lead role. During the second half of this year both countries breached and effectively destroyed the Stability Pact governing the EU’s common currency, turning even a good old Euro-complier like The Netherlands into a fierce and angry Euro-skeptic. And that was not all. Towards the end of the year it had become impossible to reach an agreement on the draft European Constitution, the key summit having failed and the hope for a resolution postponed to next year. It seems that what was designed as a steady and seamless integration of European countries into one-nation state with one currency and one constitution had hit some serious and unforeseen obstacles.

So the leaders within the European house have not only severed the transatlantic umbilical chord, they have started a conflict within the family. Only time will tell if these fissures can be mended, but if they can’t or if they have initiated a fundamentally changed world map, then the year 2003 will go down in history as the year of a seismic geopolitical shift. That’s why 2003 was the year of Europe.

This is how the Bush-hating left would spin it: given the choice between watching two rich spoilt kids who are both in a place where they don’t really belong, you would of course watch the prettier of the two. I don’t know why more Americans chose to watch Paris Hilton instead of President Bush (who was being interviewed by Diane Sawyer), in fact they were pretty close in terms of viewers. I have wanted to write something intelligent about the whole Simple Life phenomenon as Irene and I have found ourselves watching it regularly (although not last Tuesday, honestly) but up to now I can’t explain it, I am lost for words in the face of a reality TV-show that pushes stupidity and bliss to the extreme. Maybe it's impossible to write something meaningful about it. It’s just damn entertaining.

An incredible amount has been written in the North American blogosphere about Europe’s decline this year and I plan to write a longer piece on the subject before I sign off for the Christmas break. I have access to the Dutch press and my own experiences as a European; nothing however trumps a site visit by a prolific blogger to Paris. Roger Simon has done some fieldwork last week and his report is a must-read.

So the soup is indeed not eaten as hot as it is served, the British Columbia government has put its controversial legislation to bar BC residents from accessing private healthcare clinics on hold. It is not entirely clear what drove them to back away from their aggressive stand on people leaving public sector healthcare waiting lists to get private care at their own expense, but there’s likely more than just one factor at work. Not only was there an outcry from citizens and private clinic owners, a new Prime-Minister took the reigns in Canada last week and it may well be that the Paul Martin administration will be more flexible in opening up the government controlled healthcare system. They need to: it is becoming too much of a burden on public sector finances and if anyone understands these numbers, it’s Martin.

Joe Katzman yesterday touched on the issue of free market economies dominated by a wealthy ethnic minority where deregulation and democracy could set the stage for ethnic prosecution. The argument was originally put forward by Amy Chua, a Yale professor, whose article draws on personal experience, descending from an ethnic Chinese family in The Philippines. As Joe argues, it is a very interesting matter and can be used as a starting point for a very comprehensive discussion, for now I would like to zoom in on just two aspects.

First, it is indeed an interesting problem and Chua touches for instance on the Chinese minority in Indonesia who while only making up 3% of the local population, control about 70% of economic activity, largely through private conglomerates. As I have discussed before on these pages, the Suharto regime had established a very cozy relationship with a number of Chinese tycoons, but when Suharto fell and economic hardship struck in Indonesia the consequences for the Chinese minority were disastrous:

The fall of Suharto's Indonesian dictatorship in May 1998, for example, was accompanied by an eruption of anti-Chinese violence. For three days, Chinese shopkeepers huddled behind locked doors while Muslim mobs looted. In the end 2,000 people died and tens of billions of dollars - belonging to Chinese cronies of Suharto - left the country, plunging the economy into a crisis from which it has still not recovered.

I highlight this because in the Christopher Hitchens article in Vanity Fair which I discussed the day before yesterday, he points to the fact that when we consider the Islamist threat in Indonesia, the Achilles heel of Indonesian society may well be the ethnic-Chinese community. Islamic fundamentalists may face an uphill struggle in destabilizing Indonesia and uniting the country’s Muslims behind them, but when they would turn their attention to the Chinese minority they might find broad-based sympathy among the impoverished Indonesian population. And not only that, it would send a very wealthy business elite packing, guaranteeing an economic collapse which in turn would provide an even better climate for al-Qaeda and its political allies to build support. Taking the Indonesian example I fail to see how democracy plays a part in channeling resentment into anger, hate and finally persecution, it is equally a playball in autocratic regimes, just look at Germany in the 1930s. Manipulating ethnic emotions in Indonesia’s case goes back as far as the Dutch colonial days and it played a part equally during both the Sukarno and Suharto years which spanned the 1949-1998 period. Whatever the case, the Chinese minority does appear to be holding a very important key to the island republic’s future.

The second point I would like to discuss is that Chua points to the argument that some have made that keeping a lid on democracy and free speech may help foster a climate of stability which in turn would enable economic progress and a much easier transition to full democracy:

Commentators such as Fareed Zakaria and Robert D Kaplan have suggested holding back on democracy until free markets produce enough economic and social development to make democracy sustainable.

When we compare the cases of Russia and China there is indeed a case to be made for gradual reform with an iron fist, rather than an instant abandonment of autocracy in favor of democracy. It’s a tough choice really, and in my Asian days I often marveled how some could confidently state that the Tiananmen massacre was a necessary and justifiable prelude to economic growth. No wonder that Singapore’s Lee Kuan Yew is revered in China, he has demonstrated that you can create a prosperous western economy without giving up political control. This is the 1990s case for Asian Values: keep political and social forces in check by suppressing dissent and rule with a strong fist, in such an environment free markets will prosper. The spectacular growth rates recorded by autocracies or quasi—democracies like Thailand, Korea, Singapore, Hong Kong, Indonesia, Malaysia bolstered the case of the Asian Values school. Chua does not accept this train of thought and neither do I (although admittedly I was briefly influenced by it in the early 1990s) and there’s a good reason for that. The spectacular collapse of a number of Asian currencies in 1997-98 followed by some drastic political realignments revealed that the Asian Values model was not sustainable, attractive though it was for some. Former Hong Kong Governor Chris Patten has written a very good book about the tension between autocracy and free markets with a focus on South-East Asia and China, “East and West” (if I ever go broke I will throw my signed copies on eBay), making it very clear that free markets can not thrive, can not exist in a society that is not fundamentally free, democratic and open. This assertion does not solve Chua’s concern over the often controversial role of dominant economic minorities, nor does it give us a precise compass to help rebuild fledgling democracies like Indonesia, Iraq or The Philippines. It does however set a goal of what should ultimately be achieved.

Update: Yes, I made a case for the acceptability of corruption a little while ago, but I believe that a certain level of greasing the wheels is often required in certain situations and that does not alter my fundamental belief in the essence of free societies operating free markets.

Yesterday was Carnival of the Capitalists day over at Samablog, tomorrow is the usual Carnival of the Vanities day and this week it is hosted at Drumwaster’s Rants. So the Tuesday was an open day, but the Canadians grabbed it and launched a new Carnival: the Carnival of the Canucks and today the first edition is hosted at Switching to Glide.

James Baker, nicknamed the Velvet Hammer for some and Bush Consigliere for others, has started his trip to enlist sovereign help in rescheduling and forgiving part of Iraq’s crushing foreign debt load. As I suggested last week, the exclusion of some countries from the list of preferred bidders for reconstruction contracts might have been used as a bargaining chip to entice some to start forgiving debt. The controversy generated by that list led me to believe that Baker would have to use all his diplomatic skills in order to make some progress. Well, what a difference a Saturday evening arrest makes. The French have indicated their willingness to forgive some of the debt owed to them by Iraq and:

In addition to being willing to forgive part of Iraq's debt, France also announced it will launch a number of programs dealing with education, health and the training of police forces in Iraq.

So, the French are moving, the Germans indicated their willingness on this issue a few weeks ago, and now even the Russians - whose response to the Saddam bust was muted at best - have indicated some flexibility in this department:

"Iraq is not a poor country," Fedotov said. "But I want to stress again that the Paris Club mechanisms are very flexible and provide for measures to restructure and ease the obligations of debtor countries."

Iraq has indeed some wealth in the ground, but now is the time to help them get in a position where they can successfully develop that wealth on their own. And while the Baker effort is very important, we should be reminded that two-thirds of the Iraqi foreign debt, or $80 billion, is held in Arab hands. When are they going to pitch in and help their fellow Arabs? Now there’s a task for the Velvet Hammer.

Ian Murray has disabled his comments and I buy into his rationale for doing that, although he had to shut it down because of abuse, which is not good. His trackbacks still work though. Some new readers ask me where they can leave comments and my answer is and has always been: send an e-mail. Regular mailers know that their input will find its way onto the main pages of Peaktalk or get a direct respose from me.

For the first time in years I bought the Vanity Fair again, my interest piqued I have to admit by Joe Wilson and his wife, but what made the purchase a worthwhile investment was to read Christopher Hitchens on Indonesia, a country that has attracted quite a bit of attention on these pages. Ever since 9-11 the country - being the world’s most populous Muslim nation - has been in the spotlight as the potential new base for al-Qaeda and the horrific attacks in Bali last year and on the Jakarta Marriott this year only reinforced the notion that the island republic could be the next battleground in the clash between western values and Islamic fundamentalism. A country housing so many poor and disgruntled Muslims would have to be the next domino to fall, many argued.

Not necessarily so, and Hitchens walks us through the various issues that make Indonesia a very different and complicated case. Most notably he points out that the history of Indonesia and its late and rather voluntary adoption of Islam make it difficult to compare the country to other Muslim nations, with Indonesians having a serious dislike of pan-Arabism which in turn is hampering efforts by Wahhabi agencies to fund a regional base. It should also be noted that there is hardly one dominant and pervasive Muslim doctrine in Indonesia; the religion is as varied as the island republic itself, especially when you compare it to Arab countries. You will have to read the entire piece, but the gem is this one, when someone discusses the likelihood of Sharia being enforced in Indonesia:

“If we had a religious police to enforce morality, people would start bribing it to look the other way, and then we would have a corrupted religious police – which is secularism by the back door”

Yes, corruption and Indonesia are often mentioned in the same breath as most of my readers will know, and it is entirely feasible that corrupt practices would work their way into religiously pure institutions. In a way the country has always been as secular as for instance Turkey: ensuring a safe distance between mosque and state, carefully managing the fanatical streams of Islam and allowing other religions (here: Hinduism, Buddhism, Catholicism and Protestantism) to co-exist as official religions. While certainly not discounting the potency of Islamism in Indonesia, things may not look as bleak as some would have us believe.

One issue we can put behind us is the idea that Saddam and his cronies fled to neighboring Syria, a theory propagated by many, including myself, after the war ended in April. Still, the Ba’athist brothers must feel the heat:

In Syria, national TV did not broadcast Saddam's capture - there is too much similarity for comfort between the Ba'ath regime in Iraq and in Syria. Both brought a minority to power in a military coup and kept power by force. "I do not believe Syria is the next objective of the U.S.," President Bashaar Assad said before leaving on a visit to Greece.

Syria is not a direct target no, but the events in Iraq this year should have given Assad Jr. a lot to think about. Can’t immediately think of a historic parallel, but it is not hard to figure out that if change does not come from the outside, outside events may well prompt some movement domestically.

Jim Peacock of Snooze Button Dreams has launched a new initiative, a Carnival-like entry fest that focuses on the best posts from the history of weblogs. Since the blogosphere has a tendency to focus on the ‘latest’ I think it is a great idea to recycle some quality stuff from the past (entries have to be at least two months old), compile them and give them the attention they deserve. If you want to check it out, here’s this week’s edition.

With the capture of Saddam another pillar of Arab terrorism has come under media attention: the Palestinian Authority. Saddam not only backed Arafat and various Palestinian terror groups, the Palestinians had equally backed Saddam and standing by him during the first Gulf War in 1990-91 had cost them dearly, so much that this debacle was partly responsible for Arafat engaging in peace talks with the Israelis after so many other Arab nations had abandoned him, notably the cash rich gulf states. With his continued support for Palestinians, notably the payments he made available to suicide bombers and their surviving families, Saddam continued to be an icon of Arab defiance on the West Bank and Gaza Strip. It should not come as a surprise that the Palestinian street is dumbfounded and devastated when one of its heroes and remaining friends is being paraded on TV as a beaten man:

"It's a black day in history," said Sadiq Husam, 33, a taxi driver in Ramallah, West Bank seat of the Palestinian Authority. "I am saying so not because Saddam is an Arab, but because he is the only man who said 'no' to American injustice in the Middle East," he said.

Well, if that’s the case it would appear they have already given up on Bin Laden. And if Saddam had a reputation of standing up and take on the enemy then the nature of his capture must have struck his followers as more than a little disappointing:

"I had expected him to have fought back, or at least end his life," he said. "But then again, all dictators are cowards."

Indeed. And hopefully Palestinians will come to see the tenure of their own dictator in the same light, soon.

While everyone was celebrating the capture of one of our key enemies in the fight against terrorism, we almost lost one of our most important partners: Pervez Musharraf, Pakistan’s President survived an attack on his motorcade yesterday. The circumstances of this not entirely unexpected event however point to the fact that Musharraf’s enemies may be a lot closer than we all like to think. Stability in Pakistan is not only a pre-requisite to successfully conduct the war against terrorism, it is crucial given the uncertainty over the succession of Musharraf should he perish as his successor will have the keys to a readily deployable nuclear arsenal.

This is the type of news that makes you wonder whether what you have just read on your screen is for real. Saddam captured! I just had a chance to sit down and watch CNN with my two kids, one asking if Wolf Blitzer was Grandpa and the other pointing to Saddam asking: “Is that a monkey?” She is too young to understand but monkey is probably too generous and nice a term for this man, but today he sure looked like one!

A complete round-up of blogosphere reactions to the capture of Saddam can be found over at The Truth Laid Bear. My other recommendation for the day is Wizbang, where Kevin challenges you to beat Indymedia by coming up with conspiracy theories that describe why Saddam was capured today.

A few more thoughts: I had some time to digest this news. With celebrating Iraqis in the streets and a phenomenal jump in the value of the Iraqi Dinar I think today’s events are a huge confidence builder for Iraq and its future. Let’s see how the rest of the Arab world reacts. Especially the way in which Saddam was captured is telling, no firefight, no suicide, no heroism. Any chance of martyr status evaporated on the spot and a likely death penalty will not change that. Saddam falls in the Ceaucescu class and keeping him imprisoned leaves the door open for Baathist remnants to bring him back at some point in time in whatever format. Therefore, the Iraqi courts need to deal with him now in a fair and swift manner, after coalition forces have fully debriefed him.

My piece on Chretien resulted in some feedback from other bloggers, notably Debbye. Interestingly I used the term Trudeaupia in my piece which is another, increasingly common, way to describe Canada (was it coined by Mark Steyn?). The term refers to its former left-liberal Prime-Minster and parodies the place as a socialist paradise, governed by statist and political correct principles. Well, unbeknownst to me there’s actually a blogger in Quebec who has a blog entitled Trudeaupia and I encourage you to visit him, stuff like this warrants blogosphere attention.

Well, it has happened: the summit on the new European constitution has failed, primarily because Spain and Poland, wanted to have a better ability to influence events than contemplated in the draft constitution that was on the table. Apparently there was a complete unwillingness to compromise according to summit Chairman Berlusconi, in a Dutch newswire I read (sorry no link in English) that Spain and Poland were willing to compromise but that it was Chirac that remained intransigent as the draft constitution favored larger countries when it came to voting procedures.

The atmosphere was not good to begin with as I reported earlier. Late last week the Dutch kept hammering on having the budgetary rules underpinning the Stability Pact included in the constitution which prompted German Finance Minister Eichel to accuse the Dutch of “poisoning the atmosphere”. That is as far away from diplomatic language as you can get and it underlines the fact that there hardly is a team spirit to speak of these days. Andrew thinks that with 25 members the project has become impossible to manage. The Iraqi crisis, the failed Stability Pact and now the discord over the draft constitution are issues complicated by the number of members sure, but we should remind ourselves that two large European countries played a crucial and dividing role during all three debates. That attitude is becoming increasingly unpalatable to the other European countries, large and small.

One of the first reader e-mails I received came in response to this entry, posted shortly after I launched Peaktalk earlier this year. The reader, an American, said “Chrétien is Clinton is Chrétien”. While I agreed at the time, the past nine months have even more solidified the correctness of that particular analogy. Today, after ten years in office Prime-Minister Jean Chrétien will say farewell and hand over the reigns to his one time rival, Paul Martin, a good moment to look once again at the man and his politics.

Like Bill Clinton, Jean Chrétien rode into office by skillfully capturing the electoral middle ground. Disliked by the left for being too right and disliked by the right for being too left he not only placed himself in the center, he benefited at the same time from a hopelessly divided opposition, a situation that persisted for his entire period in office. As a pure centrist, Chrétien did not formulate any vision, ideology and that is why he, like his 1990s US counterpart, never really captured the imagination of his people. Indeed, in my four years in Canada I have yet to meet a single person with some positive words about the man, most are disgusted but that may be a function of geography, the West in Canada is not particularly fond of leaders from the East. Yet, he achieved quite a bit. By moving to the political center he broke ideologically with his mentor, Pierre Trudeau, the hero and symbol of Canadian left-liberalism whose legacy was a phenomenal debt burden, high tax rates and an omnipresent public sector. The task of reining in spending, cutting the deficit and yes, lowering taxes fell onto Chretien’s plate. The left thought he went too far, the right lamented the lack of real cuts in spending and taxation. The amazing thing is however that credit for the fiscal boon went to his Minister of Finance, Paul Martin who became the darling of the Canadian political center and especially the business elites, yet at the end of the day it was a policy that was initiated and approved by none other than the man from Shawinigan himself. Paul Martin’s perceived accomplishments boosted his position and he became Chrétien’s nemesis in the late 1990s. It was especially during this battle that the Prime-Minister showed that he was the street fighting bully that so many described him as, ruthlessly forcing an election in 2000 to make a point about who was the leader and humiliating Martin who was forced out of cabinet a little while later. Chrétien could count on praise even from his enemies by the way he determined the course of the political process and stayed in charge. I often compared him to the old bastard, the fictional British Prime-Minister Francis Urquhart played in the BBC TV-series by the British actor Ian Richardson.

Yet, by winning the fight with Martin he did something that would come back to hurt him: he overstayed his welcome. While he balanced the books and ended the Quebecois quest for independence, the events of September 11 took him completely off-guard. It was here that he could have stepped up to the plate and maneuver himself in a great role like that other great centrist, Tony Blair, yet he failed miserably. The old anti-American Trudeaupian instincts came to the surface and when the majority of Canadians sat shocked in front of the TV during those fateful September days, Chrétien was painfully absent, unsure of where to position himself, like Clinton completely oblivious to the lethal seriousness of Islamic fundamentalism. It did not help in the relationship with the new team in the White House and from then on the relationship between 1600 Pennsylvania Avenue and 24 Sussex Drive deteriorated, impacting not just foreign policy but also bi-lateral trade and cross-border security issues.

The low point in US-Canadian relations however was reached in the run up to Iraqi Freedom where again the Canadian Prime-Minister failed to take the appropriate course of action. He was unsure, as always seeing how the public would react before he would make a stand. The public apparently was divided, the National Post arguing that a Canadian majority supported an invasion of Iraq, the Globe and Mail arguing the reverse. When decision time was there the ghost of Pierre Trudeau grabbed Chrétien from behind and dragged him back into that vile undercurrent of anti-Americanism and left-liberal faith in the UN as an international enforcer. His risk averseness revealed that he was not a political leader but a political player. Opting out of the coalition and leaving the Americans to it led in many parts of Canada to unprecedented fury. Many saw the danger of completely abandoning the important efforts in the Middle East: the Canadian government could at least have supported the war politically and offered humanitarian help, yet even that proved too much for Chrétien and his team.

In the first few years of the new century Chrétien thus revealed who he really was. He could have used his phenomenal political capital to help steer events in the new post-September 11 world and ensure that a Canadian voice would be heard at the table. But instead he shied away from the global arena, preferring and praising the failed multilateral institutional approach. He ended his reign relishing his ten years in office and blowing the remains of his surpluses on social and environmental pet projects, an act reminiscent of Bill Clinton signing a variety of controversial executive orders in his final day in office. Like Bill Clinton, Chrétien was a phenomenal political operator, but also a shallow man by failing to lay out a courageous vision and fearful of taking any bold steps. Like Bill Clinton he will be associated with the economic boom times of the 1990s and its fiscal surpluses but he will never be given credit for it. That credit will inexplicably go to his successor who comes out of the same Quebecois, Liberal, Trudeaupian mold so don’t expect any daring initiatives from Otttawa yet, it will unfortunately be more of the same.

I have updated my top referrer list on the left sidebar, Donald Sensing and Dean Esmay are new thanks to their generous links. This comes in addition to a number of blogs adding me to their respective blogrolls, so slowly but steadily Peaktalk is gaining some momentum. That doesn’t mean I have arrived in the blogosphere, although there are days that I like to think so. The mechanics are pretty much like any other career, you can rise to the top gradually or meteorically, but in both cases you will have to work hard to stay there. So there is an analogy with showbusiness here, keep performing and stay in shape otherwise some new up and coming talents will relegate you to the sidelines. And there are a lot of newcomers in the blogosphere these days.

While everyone was debating if the Pentagon was wise in excluding France, Germany, Russia and Canada from bidding on Iraqi reconstruction work, estimated at $18 billion, Bush was on the phone with Putin, Schroeder and Chirac to discuss comparatively far bigger amounts: Iraq’s foreign debt. Estimated at about $120 billion dollars (the equivalent of the current foreign debt of Russia), with $80 billion to owing to the Arab world. France, Germany and Russia are probably instrumental in trying to restructure and write-off about $40 billion of that amount, it is estimated that France and Russia each are owed about $8 billion by Iraq. Former Secretary of State James Baker has been given the task to talk some of these sovereign creditors into co-operation, but yesterday’s events haven’t made things very easy for the Velvet Hammer:

White House officials declined to say how Mr. Bush explained the Pentagon policy to President Vladimir V. Putin of Russia, President Jacques Chirac of France and Chancellor Gerhard Schröder of Germany. France and Russia were two of the largest creditors of Saddam Hussein's government. But officials hinted, by the end of the day, that Mr. Baker might be able to show flexibility to countries that write down Iraqi debt.

So there’s a way out of this mess: if you write-off some debt we can put you back on the list of the Pentagon’s preferred bidders. Sounds easy but my guess is that Baker will have to use all his diplomatic skills to pull off this one.

Update: A reader points to the Marshall Plan and suggests that France and Germany be presented with a bill for that which, adding interest, would well exceed what Iraq owes today.

The whole Pentagon list issue is bizarre, let’s take an example here. The Dutch did not support the war in Iraq militarily, only politically. No one really knows what that was supposed to mean but the essence was, Dutch forces as part of the coalition were politically not palatable for the Dutch public at large but the government felt it had to support the US on moral grounds. Good, so there were no Dutch troops during the war in March-April and when Tommy Franks dragged a Dutch officer on stage that happened to be walking around at CENTCOM’s operations center there was a public outcry in The Netherlands: “ What was that guy doing there with Franks, weren’t we only supporting the US politically?” After the war the Dutch sent out a contingent of soldiers to help out in Southern Iraq and while I do not know what the price tag is for that deployment, it may very well be comparable to the $225 million that Canada is forking out to help and rebuild Iraq, although I guess it’s much less. The Canadians were not part of the war coalition, but neither were the Dutch. Yet the Dutch can bid for contracts, but the Canadians can not.

I have come out consistently in favor of the Rumsfeld-Wolfowitz approach and I will continue to do that as I believe in their vision for the Middle East. The positioning of Russia, France, Canada and Germany in the months leading up to Iraqi Freedom was disgraceful and counter-productive, but excluding them from a contractor list is petty, short-sighted and vindictive. The portion of the contracts they would eventually end up with is irrelevant; it is the principle and the approach. That approach reflects a lot but hardly the long-term view and that is what we need in Iraq. Let’s see what preferred bidders Angola, Uganda and Samoa will throw into the effort.

This week the Carnival is hosted at Signal + Noise by Chris Genovese, lots of good stuff, as usual.

There’s no way I am going to dislodge Merde in France from collecting the Best Foreign Blog award, but there still is time to vote for Peaktalk and help it to at least an honorable defeat in the 2003 Weblog Awards. Thanks!

Andrew Sullivan is having his annual pledge week and I am contemplating what to contribute. I sent two checks his way over the past two years, but I have yet to see any Sullivan traffic coming my way. Still, he will get a piece of our annual Christmas charitable budget although a lot of it has been consumed by the cancer foundation and local playschool and scholarship funds. Why should I as a fellow blogger throw some money Sullivan’s way? Because I like him, because he’s good, because his British and 1980s inspired view of the world is so recognizable to me and because I think that his request for cash is genuine. And while he doesn’t do it every day, sometimes his assessment of a development is pretty compelling, like today’s take on Gore and Dean.

While we are at it, if Sullivan is right then the Republicans have an exceptional opportunity to capture the Clinton middle ground in 2004 and retain their hold on the executive and legislative branches for at least another four, maybe even eight years. By doing that they take advantage of the deep rift that is splitting their Democratic opponent, much like the Liberal Party in Canada has done by capturing the center and taking advantage of a divided right. As we are seeing in Canada it takes a long time for such a division to heal, but if a group is shut out of power long enough they will eventually set aside their most fundamental differences in order to recapture control of the political process. Yet, in the case of the Democrats that would require uniting behind a personality that may be a unifier in her own party, but outside of that remains both divisive and controversial.

Although the Dutch are now dangerously close to breaching the EU Stability Pact rules they have been advocating so vehemently, they now want to see certain enforcement principles enshrined in the new EU constitution. They are proposing expanded powers for the European Court of Justice over the Stability Pact and according to a Dutch government official:

“ … an increase of power of the European Court of Justice would avoid further 'political fiddling' with the stability pact by big member states. This would be a 'very important' point for the Netherlands in the negotiations on the EU Constitution”

I wonder if the Dutch government has thought about the implications of this proposal or to put it plainly: if you have banged your fist on the table you may want to assess the likely damage before you continue banging that fist. Incorporating enforcement procedures in a constitution opens the door for many other EU partners to seek to include similar rights. And while they arrogantly and royally breached the Stability Pact rules, France and Germany may actually see some merit in obtaining tools that can help them achieve certain other political objectives that would otherwise have remained out of their reach. It is this point that defines whether the EU is an international organization where members can ignore the rules at their discretion or a supranational entity that can ensure that its members toe the line by imposing certain measures with a legally binding basis in the EU constitution. And that's why asking for strict enforcement rules you definitely have opened the final chapter in the erosion and ultimate disappearance of sovereign rights.

This coming weekend the EU will meet for what is described as a make-or-break summit in Brussels and the prospects are already quite promising:

The European Union's Italian presidency warned Monday that no deal on a constitution for the expanding bloc would be better than a bad one as the pressure mounted ahead of a crunch EU summit this week.

Will keep you informed.

The Ventilator responds to my post on dealmaking in Indonesia during the Suharto years and points to the fact that corruption places a sizeable burden on business and he leans towards supporting the “sand theory of corruption” as opposed to my apparent support for “the grease theory of corruption. True, corruption can in the long run stifle economic growth and indeed the Asian currency crisis of the late 90s can to some extent be contributed to the general intransparency of Asian economies.

I guess the core of my argument about Indonesia was that at that point in time and in that particular place it helped a certain development that would otherwise have remained absent. And while in some cultures corruption is more of an accepted practice than in others, the Indonesian case in the end demonstrated that too much of it will ultimately lead to its own destruction and I can’t see any Suharto returning to a position of power anytime soon. Having said that, the many infrastructural projects that came to fruition during the 1990s in Indonesia can be pivotal drivers in an economic upturn down the road. As an example, one day the island republic is going to need and use the phenomenal power capacity installed during the previous decade.

I can’t link it – subscriber item – but Christopher Caldwell made some good points in the FT this weekend on the Geneva Accord, criticizing the sponsors of the accord’s claim that Geneva reflects democracy at its best. On the contrary argues Caldwell:

In fact, the Geneva summit reveals democracy as alarmingly weak, insufficient to solve pressing problems to the international community’s satisfaction and losing legitimacy in the eyes of the world’s advanced countries, which are increasingly willing to look at alternatives. So that even those public figures who have been repudiated by their nation can now, it seems, rear up and claim a moral right to lead it.

Exactly, and Yossi Beilin, who lost his parliamentary seat in the most recent Israeli election is now hopping around the world as a statesman trying to give everyone the impression that he has discovered the key to peace between the Israelis and Palestinians. That makes him oblivious to the fact that a majority of his countrymen consider his actions an outright danger to their security. If the international community bestows legitimacy on this man and his plans it will only further isolate Ariel Sharon, the one that got elected with a mandate from the voters, a mandate given at a time of extreme distress and danger. The world at large may not like the current stalemate in Israeli-Palestinian relations, and yes, we may at one point in time see a deal along the lines of the Geneva Accord, but for now the Sharon team and the Israeli people do not have a lot of appetite to sign away their security in return for a questionable peace arrangement. They did that before, remember Oslo and Camp David, and the net result was the unleashing of a torrent of violence from the West Bank and Gaza. Those were asymmetrical deals. Beilin’s plan may look a lot more symmetrical, but in reality it is quasi-symmetrical, which means that in essence it's unbalanced.

This week’s edition of the Carnival of the Capitalists is up over at A Penny For …, and it marks the first time that I have submitted an entry. This Carnival usually is a great round-up of the best the blogosphere has to offer in terms of business, finance, markets and everything that is somehow related to these topics, but even if you’re not interested I recommend you check in, there are usually some very good blogs participating.

Steven Den Beste has rolled his roll which he does every quarter or so, attempting to help new bloggers get exposure which he believes they rightly deserve. As an alumnus of his roll I always watch closely what ends up on his new blogroll and I encourage you to do the same by going here, on the same page you will also find a list of all the alumni. Interestingly another foreigner in Canada has landed on his roll, go check her out.

… are, as a reader in the Vancouver Sun commented, the only countries in the world where it is illegal to pay for healthcare not provided by the government. There’s one other country part of that unique socialist elite: Canada. Here’s the story of someone that evaded life in a wheelchair by seeking treatment across the border which is something that many Canadians trapped on waiting lists are now forced to do following the crackdown on private clinics. Yet, there’s hope and the seal of approval for the merger of the two right-of-center parties in Canada to form one national conservative party this weekend is a glimmer of hope that things may yet work out in the people’s republic.

Dean Esmay links to a speech by Michael Crichton on the environment, which for anyone concerned about the environment yet skeptical about environmentalism is a must-read. The essence of his argument is that it is time for environmentalists to abandon their religious beliefs and start acting based on facts, on science. While I strongly agree with him it should be noted that this is a near impossibility for it means that the environmental movement would have to question the core of the agenda it has been advocating for over 30 years. That's not going to happen and we will likely see an environmental nucleus that is ever more becoming radicalized and fundamentalist in its beliefs, passing the cost of its delirious ideas on to society at large. After seven years in Hong Kong I had come to believe environmentalists, a few years on Canada’s West Coast made me realize that we need to use common sense, feed the Kyoto Protocol through the shredder and listen to people like Crichton.

Kevin at Wizbang is hosting the 2003 Annual Weblog Awards where readers can vote directly for their favourite blogs. I scored a nomination in the category “Best Foreign Blog” so if you want, check into Kevin’s well designed ballot box and throw in a vote for the Peaktalker, judging from the interim results I could use a few votes.

Tonight is the evening the Dutch celebrate Sinterklaas or St. Nicholas. Yes, the origins of Santa Claus are probably Dutch who took the tradition to North America when they started settling Manhattan and moved up along the Hudson River in the 17th century. In Holland, St. Nicholas arrives every year by steamboat from Spain where he is employed as a Roman Catholic bishop, accompanied by his assistant(s) the so-called Black Pete(s). So no Father Christmas and reindeer from the North Pole, but the principles are the same.

If ever there is fodder for historians and the politically interested here it is for it is a mystery why a country built on a Reformist revolution would continue to worship a Roman Catholic bishop residing in the country it defeated during that revolution. In most other Protestant European countries (and North America) the Catholic-Protestant dilemma was fixed by merging the St. Nicholas festivities with Christmas and giving the man a new look and name, but I guess it was hard for the tolerant Dutch to ban this persistent tradition. In any case they have become less tolerant these days when it comes to Black Pete. Black Pete is not only black, he is an assistant and that of course does not sit well with those that call themselves politically correct, and in recent years they have been attempting to take away a time-honored tradition from children in order to satisfy their political dogmas. Black Pete is interesting since he is often described as a Moor, which makes him a Muslim and this fits into the historical map of Europe where large chunks of Spain at one point were conquered and settled by Muslim armies, in fact they got as far as the middle of France. Yet, there’s one complication, St. Nicholas although hailing from Spain, is based on an actual bishop who lived in Turkey in the early Middle Ages, in the city of Myra to be precise, which puts him most likely in a time slot well before the advent of the Ottoman Empire.

As I said, the role that St. Nicholas performs is not that different from Santa Claus, he arrives on his steamboat from Spain on his White Horse with Black Petes to bring gifts to the kids. For those that are naughty, the implicit threat is that the Black Petes will take you back to Spain where utter hell and torture would await. Until age six I was both obsessed with, and terrified of St. Nicholas and to this day I know all the songs celebrating the “Good Holyman” as he was called, by heart. It brings back memories of cold winter evenings, special St. Nicholas candies, gifts and long exciting family evenings unwrapping the gifts brought all the way from Spain. These were usually delivered by the Saint himself, or otherwise by some Black Petes who happened to be in the neighborhood. These days Black Pete runs the risk of being beaten up by disgruntled Muslim youth in Dutch inner cities.

These, my North American friends, are the origins of Santa Claus and the Dutch celebrate it on the eve of St. Nicholas’ birthday, the latter being December 6. Irene and I have merged the event as well, the kids being well aware of St. Nicholas, but equally aware that in our case it will not be until Christmas when he will show up with a bag full of gifts.

Gay marriage and legalizing drugs, while controversial for some, have become mainstream in Canada and it seems the country is steadily moving towards acceptance of both issues. They are actually non-issues when compared to the greatest taboo in Canada: private sector involvement in healthcare. In a day and age where many European countries have, in order to sustain them, opened their healthcare systems for private initiatives, Canada refuses to amend or tweak the principle of universal healthcare.

The irony is that the federal government in the 1990s was able to balance its books (and cut taxes) by shifting the cost of healthcare to the provinces and some of these provinces, scratching their heads over how to pick up the tab, have started to experiment with private sector involvement. In a limited way I must add, but there are clinics that provide MRIs and certain types of surgery for a market based price. This makes perfect sense, offering direct treatment to those that are willing to pay for it while alleviating the pressure on public sector waiting lists. Well, that phenomenon seems to have outlived its short welcome when the government of British Columbia announced this week that it will be illegal for residents covered under provincial healthcare to access these private clinics, even if they pay for it out of their own pockets. It means that anyone requiring a quick MRI not readily available in the public system can not access the private system, while any visitors to the province can – think ski-accidents – walk into a clinic, toss a credit card over the counter and get immediate treatment. And why you ask did a local government committed to privatization make this absurd decision? Very simple, the federal government threatened to withhold some extra cash allocated to the province if it did not comply with the principles of universal healthcare.

Now, the soup is never eaten as hot as it is served – as an old Dutch saying goes – so I suspect that over time some carve-outs and exceptions to the policy will be made allowing private clinics to continue to operate. The long term trend is towards privatizing government functions and sooner or later parts of the healthcare system will follow, but many Canadian politicians prefer to ignore and postpone that what is inevitable. The important point is however that it is downright scary that some outdated socialist ideology, backed up and implemented by gutless politicians and administrators threatens something as precious as health, as life, itself. Sorry guys, it is illegal to get treatment, go back in the queue!

Conrad introduces some of the candidates for next year’s presidential elections in Indonesia. Anyone concerned over the deteriorating climate for foreign investment in Indonesia should rest assured, the people that helped create the phenomenal boom of the 1990s in the island republic are down but not out. I was pleased to see that Siti Hardiyanti Rukmana or “Tutut” is mulling a bid, as I can personally attest that due to her involvement in a number of projects phenomenal amounts of capital flowed into Indonesia that helped build some spectacular infrastructure projects. In turn these deals generated work for exporters all over the world, helped the local island economy by creating jobs and of course they ensured huge bonuses for the lawyers and bankers who put it all together. Reading Conrad’s post I dug out one of my old deal memoranda that I prepared for our head office, describing one of the local companies that owned a stake in the power project my bank was underwriting:

“ … President and Commissioner of the company is Siti Hardiyanti Indra Rukmana, the youngest daughter of the President of Indonesia, Suharto. Her company’s ownership is conform the Indonesian law on foreign investment for local shareholding requirements which is currently 5%. Her company is involved in thermal power station maintenance and private power development”

I wrote that, in 1996. Thermal power station maintenance? I bet you that Tutut was not able to tell a power station from a fish market but, under the laws carefully crafted by her father anyone doing business was required to carry at least a 5% interest for the family. To be clear, they got it for free, no need to make a cash contribution for the equity as was required of the other partners. Multiply this arrangement over telecoms, car plants, gas fields, banks, property developments, beer bottlers and you will begin to get a grasp of the wealth the Suharto family generated. And few foreign investors ever raised material objections; it was the way business was done in Indonesia. And Tutut was obviously not the only one, the brother of Prabowo Subianto (also on the Conrad shortlist and married to another Suharto daughter), was instrumental in putting together one of the largest private power financings in Indonesia in the 1990s, US$2.6 billion, largely funded by US and Japanese investors and banks. For this deal, which took a little longer to arrange, the family upped its rate to a healthy 15%.

I recently dusted off these memories for a gathering of MBA students and to my surprise they could not contain their amazement over these somewhat unusual arrangements, asking me over and over again how western banks and businesses could be comfortable with such excessive corruption. Not only businesses I told them, as many western governments helped to finance these deals indirectly through export credit support, or even direct intervention with Bill Clinton, Warren Christopher and Bob Rubin calling on the Suharto clan to get deals closed. And with good reason. Not only was it a small price to pay for economic growth and making good profits, in retrospect we may have funded - at the expense of a currency crisis - a veritable attempt to help bring prosperity to countries that we now know may drift towards radical Islamism absent any economic prospects. Tutut and Prabowo are probably not our dream candidates to take up the highest office in Jakarta, but we should remind ourselves to remain involved in Indonesia to help steer it away from economic and political chaos. If that means picking up someone’s interest in a gas plant or fast-food outlet, so be it.

Again thanks. November was an absolute record in terms of visits, thanks largely to the Carnival of the Vanities and a few Instalanches. Visitor deluges only have value when new visitors return and it seems that many of you do. Thanks.

A new month also means a revision of the blogroll and adding some new monthly readings, but this month I have decided to just update the regular roll by adding last month’s daily read Signifying Nothing and Donald Sensing’s One Hand Clapping as permanent features. Neither requires any further introduction.

I have added a new feature on the roll, Markets, which I had been planning for a long time but I never got around to doing it, partly because I could not find that many market inspired blogs. Yet, there’s a lot of interesting business and economical stuff written out there and with the Carnival of the Capitalists getting solidly established as another blogosphere institution, it seems that markets-blogging is gaining momentum and I want to keep track of it. Especially on the venture and entrepreneurial side of things, which is my real profession, I have discovered some interesting weblogs, notably the aptly named VenturPreneur. Together with Professor Bainbridge and the BusinessPundit he will form the core of some good business and markets reading on the Markets blogroll. That roll will hopefully also serve as a daily reminder for me to not get lost too much in politics, I have to keep my venture deals going!

The property market is booming here in Vancouver, spurred of course by low interest rates. Yet, there are other factors at work, an improved business climate with a tax-cutting and deregulating provincial government, a government that was also instrumental in helping to land the 2010 Olympic Winter Games which has given another impulse to the local property market. What I did not know however was that according to one of my realtor friends there is a huge influx of Americans buying up residential property in and especially around Vancouver. And according to her many of them buy here, you’re not going to believe this, in fear of a terrorist attack on US soil. To me this is baffling, abandoning your home country out of fear in itself is debatable, but what in my mind points to sheer stupidity is the idea that buying a property 50 miles north of the US is going to insulate you from potential disaster. But there’s more. One American bought a property up here after he had satisfied himself that the water supply was insulated from any potential contamination threats. In a place where local councils freak out if hikers piss in designated water reservoir areas, I leave it to you to judge if this American has bought himself any safety.

Two liberals and two conservatives form the team of Begging to Differ and they are hosting this week's carnival. Go check 'em out!

I have started this month in a very slow fashion, I am not sure what it is but I am tired beyond belief. It is probably a case of the flu so don't expect too much in terms of posting. I will try and check in later this week.