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War I. War and the Business Cycle Peace activists throughout the world accuse the American administration of profit-motivated warmongering. More sophisticated types remind us that it was the second world war - rather than President Franklin Delano Roosevelt's New Deal - that ended the Great Depression. "Wag the Dog" is a battle cry in Europe implying that the United States is provoking yet another conflict in Iraq to restart its stalled economy and take the collective mind off an endless stream of corporate sleaze. In the wake of the previous Gulf war, in the Spring 1991 issue of the Brookings Review, a venerable American economist, George Perry, wrote: "Wars have usually been good for the U.S. economy. Traditionally they bring with them rising output, low unemployment and full use of industrial capacity as military demands add to normal economic activity." According to Perry, writing long before the dotcom euphoria and slump, war is counter-cyclical. The National Bureau of Economic Research (NBER) Business Cycle Dating Committee tends to support this view. The strongest expansions were registered during and after major crises - the Civil War, the first and second world wars, the Korea War, throughout most of the conflict in Vietnam and immediately following Operation Desert Storm, the previous skirmish in Iraq. In the wake of September 11, US military spending is already up one tenth and poised to continue its uptrend. Defense contractors and service industries, concentrated across the southern USA stand to undoubtedly benefit after a lean decade following the unwinding of the Cold War. GDP may grow by 0.6 percent this year based on $50 billion in war-related expenditures, project DRI-WEFA for MSN's Money Central. This is an unrealistic price tag. According to the Cato Institute, Operation Desert Storm cost $80 billion (in 2002 dollars), the bulk of which was covered by grateful allies. This war may be more protracted, less decisive and its costs are likely to be borne exclusively by the United States. Postwar reconstruction in Iraq will dwarf these outlays, even allowing for extra revenues from enhanced oil production. DRI-WEFA present a worst case scenario in which GDP falls by 2.2% over two quarters, the Fed Funds rate ratchets up to 6% to staunch inflation, and unemployment peaks at 7.8%. Recovery is unlikely in the first 18 months of this nightmarish script. On the minus side, the budget deficit has already ballooned, crowding out lending to the private sector, stoking inflation and threatening to reverse the downtrend in interest rates. Edward Yardeni of Prudential has demonstrated how inflation has followed every single military conflict since 1800. Ultimately, taxes are likely to rise as well. Yet, that war impacts the timing and intensity of the business cycle is by no means universally accepted. In an International Finance Discussion Paper titled "Money, Politics and the Post-war Business Cycle" and published by the Board of Governors of the Federal Reserve system in November 1996, the authors, Jon Faust and John Irons, sweepingly dismiss "political effects on the economy". "If they exist" - they add - "they are small and difficult to measure with confidence." David Andolfatto, from the Department of Economics of Simon Fraser University in British Columbia, Canada, in his "U.S. Military Spending and the Business Cycle" dated October 2001, quotes an email sent to him by one of his students: "I heard someone say that the US government tends to 'find themselves in war' every time they are in a recession. This person also claimed that the increased government expenditures on war pulled the US out of each of the last few recession they've been in. Furthermore, this person said that the 'military industry' is one of the biggest industries in the US, which is why greater government expenditures on war always pull the US out of recessions ... the boom the US had in the last decade was in large part attributed to all their considerable military effort..." Andolfatto then proceeds to demolish this conspiratorial edifice. Military spending per adult in the USA has remained constant at $2000 between 1947-2000. It actually declined precipitously from 15 percent of gross domestic product during the Korea War to 4-5 percent today. Military buildups - with the exception of the Gulf War - mostly happen during peacetime. During the Unites States' recent spate of unprecedented prosperity in the 1990s, military layouts actually shrank. When they did expand in 1978-1987, the economy endured at least one serious recession (1979-1983). In reality, changes in military expenditures lag changes in GDP. Surprisingly, mathematical analysis reveals that GDP growth does not respond measurably to unexpected surges in military spending. Rather, military budgets swell when GDP suddenly increases. But this is a minority view. Even economists who dispute the economic schools of shock-driven cycles admit that war does affect the economy. Theoretically, at least, government spending, investment decisions and consumer confidence should be affected. Jonas Fischer at the Chicago Federal Reserve Bank claims that real business cycle models cannot account for the response to fiscal shocks of real wages and hours worked, unless they unrealistically assume that marginal income tax rates are constant and that increased government purchases are financed in a specific manner. In any case, war, or a commensurate military buildup, do cause expansionary deficit-financed government purchases, employment, output and nonresidential investment to rise while real wages, residential investment and consumption fall. This is compatible with the predictions of neo-classical business cycle models. There are longer-term effects. According to Martin Eichenbaum from Northwestern University, productivity in the manufacturing sector declines - though it rises in the private sector as a whole. Ultimately, the production of durable goods contracts and interest rates, having initially dropped, end up rising. Marginal income tax rates tend to mount post conflict. Consumers and investors are inclined to postpone big-ticket decisions in times of uncertainty. Hence the adverse reaction of the capital markets to the recent crisis over Iraqi disarmament. With the exception of the Gulf War and the Cuban Missile Crisis, the Dow Jones Industrial Average has always crumbled in the face of hostilities, only to skyrocket when the situation stabilized and certainty was restored. The DJIA went down 12 percent when the Korean War broke in 1953 - only to reverse the entire loss and climb yet another 18 percent in the following 3 months. After September 11, 2001 it plunged 14 percent and then clawed back the shortfall and soared an extra 21 percent by the yearend. After the first victorious day in Operation Desert Storm, stocks surged by 4.6 percent on Jan. 17, 1991, by another 7 percent in the following 30 days and by a total of 25 percent in the next 2 years. According to Ned Davis Research, quoted by USA Today, the Dow has risen on average by c. 15 percent in the year after every triumphant excursion by America's military. Messier conflict, though - like the Vietnam War - induce no exuberance, it seems. The Gulf War was preceded by a brief recession in the United States. The Dow lost one fifth of its value. Unemployment soared. House prices fell and so did retail sales. When the war erupted, business in shopping malls, car dealerships and airlines ground to a halt. The spike in oil prices added to their woes. But the recession lasted merely nine months and ended officially a month before the actual invasion of Kuwait by Iraq. It was followed by the longest expansion on record. It affected both sides of the Atlantic. This, despite the fact that the economy was in bad shape long before Saddam's antics. Interest rates stood at about 8 percent, inflation was running at double the current rate and President George Bush Sr. raised taxes rather than lower them, as his son has done. Was the quiver in 1991-2 induced by the war in Iraq - or by the contraction of defense and aviation industries following the end of the Cold War? Probably the latter. But talking about a uniform trend in a country as vast as the United States is misleading. As Knight Kiplinger, editor-in-chief of the Kiplinger Letter notes, regions and industries in the USA have endured recessions even as the entire economy boomed. So, is war good for business? Depends on which economist you happen to ask. Some would say that war reflates the economy, re-ignites the economic engine, generates employment, increases consumption, innovation and modernization. Others, that it is merely a blip. The truth is out there but don't count on the dismal science to reveal it. II. New Paradigms, Old Cycles Until recently, the very existence of business (trade) cycles was called into question by the devotees of the New Economy. It took a looming global recession to convince wild-eyed optimists that old cycles are more reliable guides than any new paradigm. Even now, three years later and still in the throes of a meltdown of capital and real markets on both sides of the Atlantic, the voguish belief in the demise of pre-1990s economics is alive and well. Consider inflation. Even conservative voices, such as The Economist reassure us that consumer price inflation is dead and that policymakers should concentrate on the risk of deflation brought on by asset disinflation. Central bankers - particularly Alan Greenspan the mythical Chairman of the Federal Reserve - are castigated for adhering to outmoded schools of thought and for fighting the last war (against inflation), or the wrong one (artificially perking up the stock markets). The Economist was among the most consistent and persistent critics of the New Economy. Yet, by preaching that certain economic phenomena - notably inflation - are "over" it has joined, unwittingly, a growing camp of "revisionist" economists who spot the demise of the business cycle. As recapped by Victor Zarnowitz, the research director of the Foundation for International Business and Economic Research in New-York, the optimists believed that downsizing, new technologies, inventory control, the predominance of the services sector, deregulation, better government and globalization have rendered boom and bust a thing of the past. They tended to tone down the roles of earnings, inventories, investment and credit, the drivers of the "now defunct" classical business cycle. They also largely ignored the interplay between different sectors of the economy and between entwined national economies - continuous interactions which determines inventory planning, the level of wages and pricing. The purported connection between the money supply and output was largely discounted as unproven. The consensus now, though, is that the cycle is alive and well, though it is less volatile and more subdued. Economies spend less time in recession than they used to until 1980. The cycle is still susceptible, though, to exogenous shocks, such as war, or an abrupt increase in the price of oil. Bursting asset bubbles, if they become more frequent in the future due to financial liberalization, globalization and unbridled credit growth, may restore past volatility, though. Another ominous phenomenon is the synchronization of recessions and expansions across continents. According to the International Monetary Fund, gross capital flows has exceeded $7.5 trillion globally in 2000 - four times the amount of money sloshing around in 1990. Foreign portfolio assets doubled as a percentage of household assets. The ratio of merchandise exports to world output has long exceeded its 1913 level, the previous record year. Such unhindered exchange exerts similar influences on countries as far apart as Germany, the United states, Argentina and Singapore - all in the throes of a concurrent recession. Still, expansions continue to be restricted by the increase in population, net investment and, importantly, technological innovation. The downside is also limited by population increase, government policy on income support and investment. The economy fluctuates to adjust itself to these constraints. The business cycle is a symptom of this process of adaptation. The waxing and waning of credit made available by alternately over-optimistic and over-cautious financial intermediaries plays a crucial part. Fiscal policy - which affects investment and employment - also matters as do foreign trade, monetary policies and the reaction of the financial markets. The business cycle typically passes through seven phases correlated with the fluctuations in the output gap - the difference between an economy's actual and potential gross domestic product. Cycles are self-perpetuating, though they can be hastened by exogenous shocks, such as a precipitous rise in oil prices or a protracted military campaign. They can also be smoothed or ameliorated by the operation of automatic fiscal stabilizers and appropriate counter-cyclical government policies. Centuries of cumulative experience allow us to identify these stages better than ever before, though timing them with any accuracy is still impossible. They are based on the shifting balance between the emotions of greed and fear - as immutable as human nature itself. Every economic cycle invariably starts with inflation. The previous sequence having ended - and the new one just begun - the environment is mired in uncertainty. In the wake of a recession, often coupled with deflation, goods and services are (absolutely) scarce and money is (relatively) abundant. When too much money chases few products, the general price level rises. But this constant and ubiquitous increase (known as "inflation") is also the outcome of mass psychology. Households and firms compensate for the aforementioned high degree of uncertainty (that is, of risk) by raising the prices they charge. Market signals are thus garbled by psychological noise and uncertainty increases. It is a vicious cycle: inflation brought on by uncertainty only serves to enhance it. Ignorant of the appropriate or optimal equilibrium price level, everyone is trying to stay ahead of perceived economic threats and instabilities by increasing the risk premiums that they demand from their customers. On their part, consumers are willing to pay more today to avoid even higher prices tomorrow. Inflation appears to be a kind of market pathology, or a market failure. But the psychological underpinnings of inflation have been thoroughly dissected in the last few decades. It is the source and dynamics of economic uncertainty that remain obscure. Inflation disguises the suboptimal and inefficient economic performance of firms and of the economy as a whole. "Paper" profits make up for operational losses. The incentives to innovate, modernize, and enhance productivity suffer. Economic yardsticks and benchmarks are distorted and prevent meaningful analyses and well-founded decision making. Inflation leads to technological and economic stagnation. Pecuniary aspects are emphasized while industrial and operational ones are neglected. Financial assets are preferred to investments in machinery, infrastructure, research and development, or marketing. This often yields stagflation - zero or negative growth, coupled with inflation. In an effort to overcome the pernicious effects of inflation, governments liberalize, deregulate and open their economies to competition. This forces firms to innovate and streamline. Efficiency, innovation, entrepreneurship, productivity and competitiveness are the buzzwords of this phase. As trade barriers fall, cross border capital flows and investments increase, productivity gains and new products are introduced. The upward price spiral is halted and contained. The same amount of money buys better, more reliable products, with added functionality. The rise in real incomes results in increased demand. The same dose of working capital generates more production. This is technological deflation. It is beneficial to the economy in that it frees economic resources and encourages their efficient allocation. Increased consumption (both public and private) coupled with a moderate asset price inflation prevent an outright downward spiral in the general price level (monetary deflation). Moreover, as Jeffrey Miron demonstrated in his book, "The Economics of Seasonal Cycles", output growth causes a surge in money supply. These conflicting influences allow inflation to remain within a sustainable "band". This transitory phase - from hyperinflation or high inflation to a more supportable plateau - is known as "disinflation". It usually lasts one or two decades. Various studies have shown that the revolutions in knowledge, communications and transportation technologies have shortened both the cycle and every stage in it. This is attributed to the more rapid dissemination and all-pervasive character of contemporary information. The values of important parameters such as the equilibrium general price level and other gauges of expectations (such as equity prices) are all determined by data. The more information is available more readily - the more efficient the markets and the shorter and the speedier the business cycles. This enhances the false perception that modern markets are inherently unstable. Yet, rapid cycling does not necessarily imply instability. On the contrary, the faster the adjustments in the marketplace - the more efficient the mechanism is. The psychological wellbeing and reassurance brought on by disinflation generate demand for assets, especially yielding ones (such as real estate or equities). The more certain the future value of streams of income, the more frequently people transact and the more valuable assets become. Assets store expectations regarding future values. An assets bubble is created when the current value (i.e. price) of money is low compared to its certain future value. This is the case when prices are stable or decreasing. Stock exchanges and real estate then balloon in irrational exuberance out of proportion to their intrinsic (or book) value. All asset bubbles burst in the end. This is the fifth phase. It signifies the termination of the bull part of the cycle. Asset prices collapse precipitously. There are no buyers - only sellers. Firms find it impossible to raise money because their obligations (commercial paper and bonds) are not in demand. A credit crunch ensues. Investment halts. The bursting of an assets bubble generates asset price deflation. The "wealth effect" is replaced with a "thrift effect". This adversely affects consumption, inventories, sales, employment and other important angles of the real economy. The deflationary phase, on the other hand, is usually much shorter. People do not expect it to last. They fully anticipate inflation. But though not assured of low prices, they are so preoccupied with economic survival that they become strongly risk averse. While in times of inflation people are looking for ways to protect the value of their money - in times of deflation people are in pursuit of mere livelihood. A dangerous "stability" sets in. People invest in land, cash and, the more daring, in bonds. Banks do the same. Growth grinds to a halt and then reverses. If not countered by monetary and fiscal means - a lowering of interest rates, a fiscal Keynesian stimulus, an increase in money supply targets - a monetary deflation might set in. Full-fledged deflations are rare. Outright or growth recessions, business slumps, credit crunches, slowdowns - are more common. But a differentiated or discriminatory deflation is more common. It strikes only certain sectors of the economy or certain territories. A monetary deflation - whether systemic or specific to certain industries - is pernicious. Due to reversed expectations (that prices will continue to go down), people postpone their consumption and spending. Real interest rates skyrocket because in an environment of negative inflation, even a zero interest rate is high in real terms. This is known as a "liquidity trap". Investment and production slump and inventories shoot up, further depressing prices. The decline in output is accompanied by widespread bankruptcies and by a steep increase in unemployment. The real value of debt increases ("debt deflation"). Coupled with declining asset prices, deflation leads to bank failures as a result of multiple debts gone sour. It is a self- perpetuating state of affairs and it calls for the implementation of the seventh and last phase of the cycle: reflation. The market's failure, at this stage, is so rampant that all the mechanisms of self-balancing and allocation are rendered dysfunctional. State intervention is needed in order to restart the economy. The authorities need to inject money through a fiscal stimulus, to embark on a monetary expansion, to lower interest rates, to firmly support the financial system and to provide tax and other incentives to consume and to import. Unfortunately, these goals are best achieved militarily. War reflates the economy, re-ignites the economic engine, generates employment, increases consumption, innovation and modernization. Still, with or without war, people sense the demise of an old cycle and the imminent commencement of a new one, fraught with uncertainty. They rush to buy things. Because the recessionary economy is just recovering from deflation - there aren't usually many things to buy. A lot of money chasing few goods - this is the recipe for inflation. Back to phase one. But the various phases of the cycle are not only affected by psychology - they affect it. During periods of inflation people are willing to hazard. They demand to be compensated for the risk of inflation through higher yields (returns, profits) on financial instruments. Yet, higher returns inevitably and invariably imply higher risks. Thus, people are forced to offset or mitigate one type of risk (inflation) with another (credit or investment risk). Paradoxically, the inflationary segment of the business cycle is an interval of certainty. That inflation will persist is a safe bet. People tend to adhere to doctrinaire schools of economics. Based on the underlying and undeniable certainty of ever-worsening conditions, the intellectual elite and decision-makers resort to peremptory, radical, rigid and sometimes coercive solutions backed by ideologies disguised as "scientific knowledge". Communism is a prime example, of course - but so is the "Free Market" variant of capitalism, known as the "Washington Consensus", practiced by the IMF and by central bankers in the West. Economic Management in a State of War Countries with a non-convertible currency and a developing economy more and more often face low intensity and prolonged guerilla warfare which leads to a gradually worsening economic situation. Measures number 2C, 4, 6A, 6B, 7, 9, 11A, 11B below are applicable to such a situation. Another scenario is a crisis in balance of payments. The country then often seeks trade relief under GATT or WTO rules and multilateral financial aid packages (such as the IMF's CCF). These measures are then applicable: 1B-1H, 2A, 2B, 2C, 2D, 2E, 3, 4, 5, 6A, 6B, 6C, 6D, 7, 8, 9, 11C, 11D, 11E, 11F. The last and worst scenario is an unmitigated, all out, state of war. These measures would then apply: 1A-1H, 2A, 2B, 2C, 2D, 2E, 3, 4, 5, 6A, 6B, 6C, 6D, 6E, 7, 8, 9, 10, 11C, 11D, 11E, 11F, 12, 13. 1. Foreign Exchange Regime and Capital Controls
1A. The central bank can fix the exchange rate
or establish a currency board 2. Banking Regime
2A. Certain types of reserves of the banks with
the central bank – for lending to import businesses, for instance - are
increased 3. Interest Rate Regime Increases in Lombard and discount rates to offset speculation against the currency. 4. Export Revenues Regime Reduce the period for repatriation of export proceeds. 5. Import Controls
Prohibition on import of luxury goods and
non-commercial vehicles. 6. Public Procurement Regime
6A. Ceiling budgeting (the imposition of
ceilings on item expenditures and micromanagement of the accounts of the budget
users) 7. Emergency Borrowing Facilities
IMF facilities under an arrangement Donor Conferences 8. War Bonds (linked to foreign exchange or nominal)
War effort bonds – voluntary (firms with
turnover above a certain amount are "encouraged" to purchase the bonds through
tax incentives) 9. Budgeting
War budget items can be part of the current
budget. 10. Emergency Regime
Freeze on wages 11. Strategic Reserves
11A. Decision on which goods are to be included
in the strategic reserves (oil, food) 12. Suspension of Laws
Suspension of tax reductions in existing laws 13. Rationing and Subsidies
Rationing of essential goods (oil, food) War Reparations As its disintegration in 1992 has proven, Czechoslovakia may have been merely an artificial multi-ethnic chimera. But it was also an industrial and military powerhouse. In the fateful 1930's, its - mainly heavy - industry was the 7th largest in the world. Even the Germans were awed by its well equipped and well trained army. The Sudeten was a region of Czechoslovakia bordering on Germany and Austria and inhabited mainly by Germans. The new-fangled country incorporated more than 3 million Germans in what used to be Austrian Silesia. These Germans, once members of the ruling majority in the Austrian Empire - became overnight a minority subjected to subtle forms of discrimination in their new country. The Germans - a hostile and restless lot - demanded to have an autonomy, which Czechoslovakia refused to grant them. It feared that the Germans will secede and join Hitler's emerging "Great Reich". Such calamity would have deprived Czechoslovakia of important industrial and mineral assets and of its rail links to northern Europe. The Sudeten was also a formidable natural barrier against an imminent German invasion. Unemployment and inflation further radicalized the Sudeten Germans. Support for Hitler and his pan-Germanic policies increased with every bloodless and bold German victory: the militarization of the Rhineland and the Anschluss (the unification with Austria). The extremist Sudeten German party, led by the Nazi puppet Konrad Henlein, blossomed after 1938. Henlein sought the dissolution of Czechoslovakia, "this French air carrier in Europe's midst", in Hitler's words. The Germans demanded to exercise the right to self-determination enshrined in numerous international treaties. The status of the German language was a major issue as was the local participation of Germans in the police forces and army. Hitler instructed Henlein: "You must always demand so much that you cannot be satisfied." "Spontaneous" demonstrations, protests, and riots erupted all over the Sudetenland. The Czechoslovaks were cast by Hitler and the West as intransigent racists, bigots, and bullies. The economies and armies of France and Britain were pitifully unprepared for war. Western leaders were traumatized by the great conflagration of 1914-8. They were reflexive appeasers and pressured Czechoslovakia into making one unpalatable concession after another. Britain and France bullied Czechoslovakia by annulling their mutual defense pacts. Bonnet, France's Minister of Foreign Affairs advised the Czechoslovaks not to be "unreasonable". Otherwise, he warned, France will "consider herself released from her bonds". Halifax, the British Foreign Minister, enlightened his Ambassador in Paris about the "importance of putting the greatest possible pressure on Dr. Benes (Czechoslovakia's president) without delay". The Sudeten Germans have, in the meantime, established militias and clashed with Czechs in mixed towns. An "independent" British mediator - Lord Runciman - was dispatched to arm twist the Czechoslovaks. His instructions were to prevent war at all costs. "We will use the big stick on Benes" - thus Cadogan, permanent under-secretary in the British Foreign Office. Henlein kept raising new demands or reviving old ones. On September 4, 1938, an exhausted President Benes accepted all German demands. This was rejected by both Henlein and Hitler as "too late". Even a pro-German idea of referendum in the Sudetenland was rebuffed by Hitler. Finally, the French and the British presented this ultimatum to democratic, multiethnic Czechoslovakia, on September 22, 1938 - Quoted in "On the Origins of War and the Preservation of Peace" by Donald Kagan:
"One - That which has been proposed by England
and France is the only hope of averting war and the invasion of Czechoslovakia. Benes accepted this ultimatum. Hitler demurred. Now he demanded that German troops occupy parts of Czechoslovakia to protect rioting Sudeten Germans from Czechoslovak retribution. In the Munich Conference of the leaders of the West these demands were essentially accepted and Czechoslovakia was no more. Hitler conquered it, in stages, and assimilated it in the German Reich. The infamous British Prime Minister, Neville Chamberlain made this radio address to the British people in the heat of the crisis on September 27, 1938: "How horrible, fantastic, incredible it is that we should be digging trenches and trying on gas masks here because of a quarrel in a far-away country between people of whom we know nothing ... However much we sympathize with a small nation confronted by a big and powerful neighbors, we cannot in all circumstances undertake to involve the whole British Empire in war simply on her account. If we have to fight it must be on larger issues that that." Between 1940, while still in exile in London, and 1946, when Czechoslovakia was reconstituted, president Benes issued a series of decrees, later made law by the Czechoslovak provisional national assembly. The decrees mandated the expulsion of 2.5 million Germans and tens of thousands of Hungarians from Czechoslovakia, expropriating their land and stripping their citizenship in the process. A few German males were subjected to forced labour. The laws were never repealed and, technically, are still in force. Statutes of restitution enacted after the 1989 Velvet Revolution apply only to property confiscated by communists after the 1948 coup. The Czechs and Slovaks are still afraid of a flood of claims by relatives of the refugees. Hungary's prime minister, Orban, repeatedly called on Prague and Bratislava to rescind the decrees. They are incompatible with EU membership, he thundered. The EU seems to unofficially agree with him. Officially, Gunther Verheugen, the EU Commissioner for Enlargement says the decrees were issued long before there was a European Union and, therefore, should have no effect on EU-Czech relations. The European Parliament disagrees. It has called upon the Czech Republic in 1999 to revoke the laws and it has now ordered its foreign policy commission to scrutinize the legality of the decrees. The German Chancellor, Schroeder, cancelled a trip to the Czech Republic last month. Joschka Fischer, the German foreign minister, said the decrees were the biggest obstacle to bilateral relations - despite a 1997 joint declaration that seemed at the time to have resolved the differences. The decrees became an election campaign issue in these four central European countries. An association of Sudeten Germans based in Austria is preparing to sue the Czech government in a Czech court, aiming to, as they put it "rectify damages resulting from the decrees' infringement on human rights". Another, US-based group, is contemplating a similar move, according to "Forward Magazine". A lawsuit was filed by Sudeten Germans located in Germany against the German authorities for failing to act to countermand the Benes Decrees. Czechs are not unanimous about the decrees either. A former presidential advisor, Jiri Pehe, told Radio Free Europe/Radio Liberty: "I think that from the whole package of decrees, [parliament] should repeal those decrees which massively violated human rights and were essentially undemocratic, because not all the decrees issued by President Benes were like that. Decision making through decrees in the first months after the war was a legitimate component of the Czech legal order. To that end, the decrees were ratified by the provisional parliament." A group of prominent Czechs, including Bishop Vaclav Maly, is circulating a "Stop Nationalism" petition, urging politicians not to exploit the controversy in the run-up to the June elections. But the Czech Republic's former - and possibly future - outspoken prime minister, Vaclav Klaus, suggests to embed the decrees in the country's accession agreement with EU in order to render them tamper-proof. Zeman, the current Czech premier labeled the Sudeten Germans "Hitler's fifth column" and "traitors" in an interview in an Austrian magazine. The reparations demanded by the Sudeten Germans ever since they filed a petition with the UN in 1975, potentially amount to tens of billions of US dollars. They cover confiscated bank accounts, annulled insurance policies, land, property, artifacts, and compensation for slave labour and wrongful deaths. It is an irony of history that the struggle of the Sudeten Germans is greatly aided by the recent successful settlement of claims of - mostly Jewish - holocaust victims. US House of Representatives Resolution 562 dated October 13, 1998 - in support of these claims - calls upon "countries which have not already done so to return wrongfully expropriated properties to their rightful owners or, when actual return is not possible, to pay prompt, just and effective compensation, in accordance with principles of justice...to remove restrictions which limit restitution or compensation ...to persons who reside in or are citizens of the country..." As early as 1952, West Germany has enacted the Federal Indemnification Law (BEG). Other laws aimed at compensating the victims of the holocaust followed in 1953, 1956, and 1965. Austria has similar legislation on its books. But, contrary to popular mythology, these laws were shamefully stingy and heartless. They have mostly lapsed now. Survivors were given small monthly sums to amortize health care and medical costs. Eligibility criteria were so strict and application procedures so convoluted that a cottage industry of restitution lawyers and advisors has sprung up. Some victims still receive monthly allowances from the German social security fund. The slave labour of a few workers is even recognized for the purpose of accumulating pension benefits. A tiny group of mothers receive symbolic child rearing benefits. The State of Israel support the vast majority of these crippled and traumatized people from funds it allocates under its Invalids and Nazi Prosecution Law. Despite the fact that the holocaust occurred mainly in central and eastern Europe, holocaust survivors behind the iron curtain were ineligible for German compensation. A "Hardship Fund" was set up in 1980 and paid 5,000 DM to 180,000 claimants from these countries. But Jews residing in the region are still not eligible to any other kind of aid - 13 years after the downfall of communism. In response to repeated complaints, the German government has set up a Central and East European Fund (CEEF). It pledged to contribute to CEEF $180 million in 4 annual installments starting in 1999. By end 2001, the Fund has paid c. $150 million to more than 17,000 survivors, with maximum monthly benefits of $120. All told, the Germans allocated $220 million to victims from Poland and less than $470 million to survivors from Russia and Ukraine combined. More than 4.5 million people perished in these three countries - exterminated in camps such as Auschwitz. At least 10,000,000 people served as slave laborers between 1933-1945, enriching a clutch of German firms and senior Nazis in the process. About 2,000,000 of them are still alive. It took decades of negotiations - and a re-unified Germany - to secure funds for formerly ineligible survivors. The Article 2 Fund was established in 1993. The very few who fulfill the myriad, cumulative, conditions, receive less than $250 a month. Germany claims that since it has provided 12 west European governments with "global compensation" funds between 1959 and 1964, their subjects are not eligible either. Austria set up its compensation fund in 1995, conveniently well after most of the victims died. The maximum indemnity Austria pays is $6000 per person. In a typically cynical fashion, Austria auctioned off art looted from the Jews in 1996 and used the proceeds to compensate the victimized former owners through its Mauerbach Fund. The governments of formerly Nazi-occupied territories proved sometimes to be more generous than the perpetrators. Denmark and the Netherlands financially support disabled victims to this very day. Norway established in 1999 a $58 million fund for its few remaining Jews. Even Switzerland founded, in 1997, Shoa - a $183 million fund for 310,000 Needy Victims of the Holocaust. The corporate and banking sectors were next. Following intensive public pressure by Jewish organizations - and a thinly-disguised anti-Semitic backlash - funds to compensate slave laborers were set up by various firms (Siemens, Volkswagen). Allianz, BASF, Bayer, BMW, DaimlerChrysler, Deutsche Bank, Degussa-Hüls, Dresdner Bank, FrieDrive Krupp, Hoesch-Krupp, Hoechst, Siemens and Volkswagen and 50 other wartime exploiters - boosted by matching funds from the German federal authorities - grudgingly and reluctantly formed a "Foundation Initiative of German Firms: Memory, Responsibility and Future." The Foundation has $5 billion to distribute to slave laborers and their descendants. In August 1998, Switzerland's two major banks, UBS and Credit Suisse, agreed to set up a $1.25 billion fund to settle claims by holocaust survivors and their relatives. The red-faced Swiss government threw in $210 million. It seems that banks - from the USA to Switzerland - were in no hurry to find the heirs to the murdered Jewish owners of dormant account with billions of dollars in them. A settlement was reached only when legal action was threatened against the Swiss National Bank and both public opinion and lawmakers in the USA turned against Switzerland. It covers owners of dormant accounts, slave laborers, and 24,000 refugees turned back to certain death at the Swiss border - or their heirs. A high level international commission, headed by Paul Volcker, a former chairman of the Federal Reserve Board, identified 54,000 accounts opened by holocaust victims - not before it inspected 350,000 accounts at an outlandish cost, borne by the infuriated banks, of $400 million. A similar - though much smaller ($45 million) settlement was reached with Bank Austria and Creditanstalt of Vienna. Another $2 billion are claimed from 9 French banks. Five major insurance firms - Allianz AG, AXA, Generali, Zurich and Winterthur Leben - formed an International Commission on Holocaust Era Insurance to deal with unresolved insurance claims of holocaust victims. Assicurazioni Generali went ahead and set aside $12 million in a compensation fund. But the claims may total $1 to 4 billion. Surprisingly, calls for the restitution of Jewish real-estate, property, bank accounts, insurance policies, and art works confiscated by the Nazis and their collaborators are fairly recent. The International Committee on Restitution took until 1999 to appeal to the Austrian government to restore assets to their rightful Jewish owners. Governments from Austria to France and from Belgium to the Netherlands appointed commissions to investigate Jewish claims. The United Kingdom has posted to the Internet a list of tens of thousands of assets confiscated - mostly from refugee Jews - under the 1939 Trading with the Enemy law. More than $60 million were set aside by 18 governments in the 1997 London conference on Nazi gold. A French commission, chaired by Jean Matteoli, a resistance fighter, identified $1 billion in expropriated Jewish property, including 40,000 apartments and hundreds of thousands of works of art. According the World Jewish Congress, Germany and Poland confiscated $3 billion of Jewish property each (in 1945 values), Romania and France - $1 billion each, the Czech Republic and Austria - c. $700 million each. Hungary saw $600 million appropriated and the Netherlands - $450 million. Russia still holds 200,000 looted works of art. Plundered pieces by Monet and van Gogh, among others, were identified and restored to their Jewish owners all over the world - from Boston to Berlin. Matters are more complicated in eastern Europe where the concept of property rights is novel and communist confiscations followed Nazi ones, hopelessly complicating the legal situation. Moreover, victims and survivors of waves of ethnic cleansing have recently lodged claims with post-communist governments. Macedonians from the Aegean part of Greece, recently repatriated Kosovars, Serbs expelled from Croatia, Croats exiled from Serbia, Hungarians everywhere - are all studying the Jewish example and its precedents thoroughly. The Bulgarian ministry of finance has just announced that it will pay reparations to some of the 350,000 Turks forcibly expelled from Bulgaria to Turkey during Zhivkov's communist regime in 1984-89. The Haskovo City Council demanded compensation for 550 bulldozed houses. The government - which includes in its coalition the ethnic-Turkish Movement for Rights and Freedoms (DPS) - agreed to cough up the funds. The accommodation of such demands for compensation by an ethnic minority is unprecedented. It could be the harbinger of massive, politically destabilizing, claims, expensive court battles, and multi-billion dollar settlements. This tidal wave is not confined to Europe. Aborigines in Australia, descendents of slaves in the States, Japanese-Americans incarcerated during WWII are all suing. "The Economist" wrote in its review of Elazar Barkan's "The Guilt of Nations": "Negotiations over these claims are not really about the past, but the future. However they are resolved, they give victims, usually the poor and dispossessed, a voice and a reason to believe that they have a stake in their society. And such negotiations force the better-off to recognise their obligations to those beneath them in the pecking order. A society which can face the ugly episodes in its own history, and agree a way to repudiate them, is also a society capable of setting moral standards for itself, of constraining its own worst instincts, and of aspiring to a better future." Water Growing up in Israel in the 1960's, we were always urged to conserve precious water. Rainfall was rare and meager, the sun scorching, our only sweet water lake under constant threat by the Syrians. Israelis were being shot at hauling water cisterns or irrigating their parched fields. Water was a matter of life and death - literally. Drought often conspires with man-made disasters. Macedonia experienced its second worst dry spell during the civil strife of last year. Benighted Afghanistan is having one now - replete with locusts. Rapid, unsustainable urbanization, desertification, exploding populations, and economic growth, especially of water-intensive industries, such as microprocessor fabs - all contribute to the worst water crisis the world has ever known. Governments reacted late, hesitantly, and haltingly. Water conservation, desalination, water rights exchanges, water pacts, private-public partnerships, and privatization of utilities (e.g., in Argentina and the UK) - may have been implemented too little, too late. Rising incomes lead to the exertion of political pressure on the authorities by civic movements and NGO's to improve water quality and availability. But can the authorities help? According to the World Bank, close to $600 billion will be needed by 2010 just to augment existing reserves and to improve water grade levels. The UNDP believes that half the population in Africa will be subject to wrenching water shortages in 25 years. The environmental research institute, Worldwatch, quoted by the BBC, recommends food imports as a way to economize on water. It takes 1000 tons of water to produce 1 ton of grain and agriculture consumes almost 70 percent of the world's water - though only less than 30 percent in OECD countries. It takes more than the entire throughput of the Nile to grow the grain imported annually by Middle Eastern and North African countries alone. Some precipitation-poor countries even grow cotton and rice, both insatiable crops. By 2020, says the World Water Council, we will be short 17 percent of the water that would be needed to feed the population. The USA withdraws one fifth of its total resources annually - proportionately, one half of Belgium's drawdown. But according to the OECD, Americans are the most profligate consumers of fresh water, more than double the OECD's average in the 1990's. Britain and Denmark have actually reduced their utilization by 20 percent between 1980 and 1996 - probably due to sharp and ominous drops in their water tables. Stratfor, a strategic forecasting firm, reported on May 14 that Mexico and the USA are in the throes of a conflict over Mexico's "failure to live up to its water supply commitments under a 1944 treaty", which allocates water from the Colorado, Rio Concho, and Rio Grande among the two signatories. Mexico seems to have accumulated a daunting debt of 1.5 million acre-feet over the last 8 years - the result of a decade long drought. Each acre-foot is c. 1.2 million liters. Mexico's reservoirs are less than 25 percent full. Some of the water, though, has been used to transform its borderland into a major producer of fresh vegetables for the American market - at the expense of Texas farmers. Faced with the worst drought in more than a century in some states, the Bush administration has announced on May 3 that it is considering sanctions, including, perhaps the suspension of water supplies from the Colorado to Mexico. Texas lawmakers demanded to re-open NAFTA and amend it punitively. Mexico is a typical case. Only 9 percent of its streams and rivers are fit for drinking. Its underground water is almost equally polluted. Its infrastructure is crumbling, leading to severe seepage of more than two fifths of the water. Half of the rest evaporates in open canals. Moreover, water is under-priced, thus encouraging wasteful consumption, mainly by farmers. Stratfor cites an estimate published in the May 5 issue Fort Worth Star-Telegram - more than $60 billion will be needed over the next decade to refurbish Mexico's urban and rural networks. William K. Reilly, former administrator of the EPA, writing in the "ITT Industries Guidebook to Global Water Issues", mentions the human cost of water scarcity: a million dead children a year, a billion people without access to treated water, almost double this number without sanitation. More than 11,000 people died in a cholera epidemic induced by polluted water in Latin America in the 1990's. Every year, according to the World Bank, the amount of water polluted equals the quantity of water consumed. In many parts of the world, notably in Africa, people walk for hours to obtain their contaminated daily water rations. Water shortage hobbles industrial production in places as diverse as Sicily and Malaysia. The lower estuaries of the Yellow River - China's most important - are now dry two thirds of the year. The water table beneath China's fertile northern plane is falling by 1.5 meters a year. The drought in Sri Lanka is so severe and so prolonged that the International Red Cross had to intervene and launch an appeal for emergency funds. The Mekong River, which flows from China to Vietnam, is being obstructed by 7 Chinese dams under construction. Once completed, its flow will be reduced by half. Close to 200 million people in seven countries will be affected. In a retaliatory move, Laos is planning to hold back c. 70 percent of its contribution to the Mekong by constructing 23 dams. Thailand follows with 20 percent of its contribution and a mere 4 dams. Vietnam is likely to pay the price of this "dam war". Thailand is sufficiently rich to simply buy the water it needs from its truculent neighbors. Australia is in no better shape. The diversion of Snowy River inland led to massive salinization of the lands it irrigates - Australia's bread basket. Many of the tributaries are now unfit for either irrigation or drinking. In India, the holy river, Ganges, is depleted and impregnated with poisonous arsenic. A long running dispute is simmering between India and Bangladesh regarding this dwindling lifeline, recent progress in negotiations notwithstanding. This is reminiscent of a low intensity conflict that has been brewing along the banks of the Nile between an assertive Egypt and the encroaching Sudan and Ethiopia since the Nile Basin Initiative has been signed in 1993. A July 2000 conference of the riparian states, backed by the likes of the World Bank and the United Nations, eased the tension somewhat by promulgating a workable plan to redistribute the African river's throughput. The emphasis in the February 2001 meeting of the International Consortium Cooperation on the Nile, though, was on hydro-power over the contentious minefield of water usage rights. Turkey is constructing more than two dozen dams on the Tigris and Euphrates within the Southeastern Anatolia Project (GAP). Once completed, Turkey will have the option to deprive both Syria and Iraq of their main sources of water, though it vowed not to do so. In a cynical twist, it offers to sell them water from its Manavgat river. Iraq's own rivers have shriveled by half. Still, this is the less virulent and violent of the water conflicts in the Middle East. Israel controls the Kinneret Sea of Galilee. It is the source of one third of its water consumption. The rest it pumps from rivers in the region, to the vocal dismay of Syria, Lebanon, and Jordan. Despite decades of indoctrination, Israelis are water-guzzlers. They quaff 4-6 times the water consumption of their Palestinian and Arab neighbors. "The Economist" claims that: "The argument over Syria's water rights to the Sea of Galilee is now the only real stumbling-block to a peace treaty between Syria and Israel. Negotiations broke down last January, after the two sides appeared to agree on everything save the future of a sliver of territory on the north-east coast of the sea. Israel had insisted on keeping control of that, since the Sea of Galilee supplies more than 40% of its drinking water." Only two decades ago, the Aral Sea featured in encyclopedias as the world's fourth largest inland brine. In a typical hare-brained subterfuge, the communists diverted its two sources - the Amu Darya and Syr Darya - to grow cotton in the desert. The "sea" is now a series of disconnected, toxic, patches overlaid on a vast wasteland of salt. But excess water can be as damaging to multilateral relationships - and to the economy - as scarcity. Floods brought on by the Zambezi River have devastated the countries on its path, despite their efforts to harness it. Often, these calamities are man-made. Zimbabwe wrought a deluge upon its region by opening the gates of the Kariba dam on March 2000. The countries of West Africa, from Ghana to Mali are "one river states". Their fortunes rise and fall with the flow and ebb of waterways. Sometimes watercourses are conduits of destruction and death. A single - though massive - chemical spill in Romania on January 31, 2000 devastated the entire Tisa River which runs through Yugoslavia and Hungary. Only when the waste reached the Danube did the West wake up to the danger. Nor are these phenomena confined to the poor precincts of our planet. The people of Catalonia in Spain are thirsty. They contemplate diverting water from the river Rhone in France to Barcelona. A two years old government plan to redistribute water from rain-drenched regions to the arid 60 percent of Spain met with stiff domestic resistance. The Ogallala aquifer in the USA, its largest, has been depleted to near oblivion. The BBC estimates that it lost the equivalent of 18 Colorado rivers by 2000. All the lakes around Mexico City have dried and it is now sinking into the cavernous remains of its withered reservoirs. Soil subsidence is a major problem in cities around the world, from Bangkok to Venice. According to "The Economist", the town of Cochabamba in Bolivia, once a florid valley is now a dust bowl. Some of its residents receive water only a few hours every two or three days. A World Bank financed project attempts to pipe the precious liquid from mountain rivers near the city. Singapore, concerned by its dependence on water from capricious Malaysia, decided last November to purchase water from private sector suppliers who will be required to build one or more desalination plants, capable of providing it with 10% of its annual consumption. Singapore is so desperate, it even considers importing water from the strife-torn Aceh province in Indonesia. The cost of Malaysian fresh water skyrocketed following a bilateral accord with Singapore signed September 2000. Control of water sources has always served as geopolitical leverage. In Central Asia, both Kyrgyzstan and Tajikistan often get their way by threatening to throttle their richer neighbors, Kazakhstan and Uzbekistan - and by actually cutting them off from the nourishing rivers that traverse their territories. This extortion resulted in inordinately cheap supplies of gas, coal, and agricultural products. To avoid such dependence, Turkmenistan has decided to divert water from the catchment basin of one of the rivers - the Amu Darya - to a $6 billion artificial lake. This inane project is comparable only to China's much-disputed Three Gorges Dam - the $30 billion, 180 meters tall hydroelectric plant that will block the fierce Yangtze River. On January 2000, a Kinshasa-based firm, Western Trade Corporation, and an American partner, Sapphire Aqua, proposed to raise financing for a $9 billion set of 1000-2000 km. pipes from the Congo River to the Middle East and South Africa. Stratfor justly noted that the water were to be given free, casting in doubt the viability - or the even the very existence - of such a project. Con-artists and gullible investors notwithstanding, water is big business. Water Forum 2002, sponsored and organized by the World Bank, attracted many NGO's, donors, and private companies. The Agadir conference next month is expected to attract scholars and governments as well. According to the government of Morocco, it will deal with "views and experiences on water pricing, cost recovery and the interactions between micro and macro policies related to water". T. Boone Pickens, a corporate raider, has bought water rights from Texans during last year's drought. He succeeded to amass c. 200,000 acre-feet worth c. $200 million. Economic competition coupled with acute and growing scarcity often presage conflict. "Water stress" is already on the world's agenda at least as firmly as global warming. The Hague Ministerial Declaration released on March 2000 identified seven 'water-related challenges'. This led to the establishment of the 'World Water Assessment Program' and UNESCO's 'From Potential Conflict to Cooperation Potential' (PC to CP) which 'addresses more specifically the challenge of sharing water resources primarily from the point of view of governments, and develops decision-making and conflict prevention tools for the future'." Simultaneously, Green Cross International and UNESCO floated "Water for Piece" project whose aims are "to enhance the awareness and participation of local authorities and the public in water conflict resolution an integrated management by facilitating more effective dialogue between all stakeholders." In its efforts to minimize tensions in potential and actual conflict regions, the project concentrates on a few case studies in the basins of the Rhine, the Aral Sea, the Limpopo/Incomati, the Mekong, the Jordan River, the Danube, and the Columbia. Peter Gleik of the Pacific Institute suggested this taxonomy of water-related conflicts (quoted in thewaterpage.com):
Mark de Villiers, author of "Water Wars" contrasts, in ITT's aforementioned Guidebook, two opposing views about the likelihood of water-related conflicts. Thomas Homer-Dixon, the Canadian security analyst says: "Water supplies are needed for all aspects of national activity, including the production and use of military power, and rich countries are as dependent on water as poor countries are ... Moreover, about 40 percent of the world's population lives in the 250 river basins shared by more than one country ... But ... wars over river water between upstream and downstream neighbors are likely only in a narrow set of circumstances. The downstream country must be highly dependent on the water for its national well-being; the upstream country must be able to restrict the river's flow; there must be a history of antagonism between the two countries; and, most important, the downstream country must be militarily much stronger than the upstream country." Frederick Frey, of the University of Pennsylvania, disagrees: "Water has four primary characteristics of political importance: extreme importance, scarcity, maldistribution, and being shared. These make internecine conflict over water more likely than similar conflicts over other resources. Moreover, tendencies towards water conflicts are exacerbated by rampant population growth and water-wasteful economic development. A national and international 'power shortage,' in the sense of an inability to control these two trends, makes the problem even more alarming." Who is right? The citizens of Karnataka and Tamil Nadu states in India are enmeshed in bloody skirmishes over the waters of the Carvery River. Colonel Quaddafi has been depleting the Iittoral aquifer in the Sahara for decades now - to the detriment of all his neighbors - yet, not a single violent incident has been recorded. Last year, the Rio Grande has failed to reach the Gulf of Mexico - for the first time in many decades. Yet, no war erupted between the USA and Mexico. As water become more scarce, market solutions are bound to emerge. Water is heavily subsidized and, as a direct result, atrociously wasted. More realistic pricing would do wonders on the demand side. Water rights are already traded electronically in the USA. Private utilities and water markets are the next logical step. Water recycling is another feasible alternative. Despite unmanageable financial problems and laughable prices, the municipality of Moscow maintains enormous treatment plants and re-uses most of its water. Wars are the outcomes of cultures and mores. Not every casus belli leads to belligerence. Not every conflict, however severe, ends in battle. Mankind has invented numerous other conflict-resolution mechanisms. There is no reason to assume that water would cause more warfare than oil or national pride. But water scarcity sure causes dislocation, ethnic tension, impoverishment, social anomy, and a host of other ills. It is in fending off these pernicious, all-pervasive, and slow-acting social processes that we should concentrate our efforts. Women (in Central and Eastern Europe) The European Monitoring Center on Racism and Xenophobia (EUMC) warned yesterday against a rising tide of anti-Semitism and anti-Muslim views in the European Union in the wake of the September 11 atrocities in the United States. The report states that the main victims of this resurgent racial prejudice are women wearing traditional headscarves. This is merely the latest in an uninterrupted tradition of victimization. Last month, Donna Hughes from the University of Long Island, published a damning overview of Russian prostitution. She described the work of the Angel Coalition of non-governmental organizations trying to save women and girls in Russia and other former Soviet republics from human trafficking and subsequent sexual slavery. Tens of thousands of young females from Moldova, Belarus, Ukraine, Albania, Macedonia, Bulgaria and a host of other erstwhile communist countries, suffer this fate every year. Lured by promises of work or marriage, they are smuggled to the Persian Gulf, to Russia and to western Europe by organized crime gangs in cahoots with local politicians. Tellingly, many former communist countries, Russia foremost, have no laws against these practices. AIDS and other sexually transmitted diseases among women sex workers are rampant. They are the main conduit of infection of heterosexuals and neonates in these societies. A policy forum hosted by the State Department in August 2000 recommended to "decriminalize prostitution and redefine it as 'sex work' — i.e., a form of labor ... Since 'migrating sex workers are simply responding to a demand for their labor', migration laws should be reformed to accommodate their transnational travel. Prostitution in foreign countries was described as potentially 'empowering' for women because it would enable them to migrate to other countries and to achieve 'greater economic independency and autonomy from men." The Angel Coalition rejects this counsel: "Legalization of prostitution would ruin this country. Russian women have suffered enough exploitation. They do not deserve to become the (prostitutes) of the world." According to the Vienna-based International Organization for Migration, more than half a million women from east Europe serve as sex workers in the West. The Economist remarked wryly in August 2000: "(In)... the brothels off Wenceslas Square, in central Prague, (where) sexual intercourse can be bought for USD 25 - about half the price charged at a German brothel... Slav women have supplanted Filipinos and Thais as the most common foreign offering in (Europe)." Yet, grave as they are, these transgressions against the 200 million women and girls in the 27 countries in transition are the least of their concerns. Elena Kotchkina from the Moscow Centre for Gender Studies, wrote this in the "Report on the Legal Status of Women in Russia": "The high level of unemployment among women, segregation in the labour market, the increasing salary gap between women and men, the lack of women present at the decision making level, increasing violence against women, the high levels of maternal and infant mortality, the total absence of a contraceptive industry in Russia, the insufficiency of child welfare benefits, the lack of adequate resources to fund current state programs - this is only part of the long list of women's rights violations." The mythology of the left in Europe, well into the 1980s, postulated that communism may have been tough on men but a Shangri-la for women. Actually it was a gender-neutral hell. Feminine participation in the labor force was, indeed, encouraged. Amenities such as day care centers, kindergarten, daylong schools and abortion clinics were common, except in Poland. Women were allotted quotas in all governance levels, from parliament down, though the upper echelons remained unwaveringly and invariably male-dominated. March 8 - a cross between Valentine's Day and a matriarchal May 1 - is still celebrated throughout the region with great official fanfare. But this magnanimous gender equality was a mere simulacrum. Women were not allowed to work night time or shifts or in certain jobs, nor were they paid as much as men in equal functions. By the demise of communism in 1989, more than 90 professions in Poland were found to be women-free, probably by design. Women were quashed by the "triple burden" of obligatory employment, marital and childrearing chores and inescapable party activism. According to surveys quoted by UNESCO, women worked, on average, 15 weekly hours more than their male counterparts. Communism had use only for "super-women", Ninotchka-like, communist bluestockings. Yet, "it is difficult to carry three watermelons under one arm" - goes a Bulgarian proverb. Thus, the Marxist revolution did not extend to "kitchen, children, church". The woman's traditional domestic roles within a largely patriarchal family remained intact. "Scientific Marxism" made limited headway only in urban centers like Moscow. Folk wisdom reflected these tensions between dogma and reality. "The woman is the neck that moves the head, her husband", went the old adage. Czech men often referred to themselves self-deprecatingly as "underslippers". But male prominence and statal patriarchy prevailed. Unemployment - officially non-existent in the communist utopia - was ignored. So were drugs, AIDS and battered women. The legal infrastructure left by communism was incompatible with a modern market economy. While maternal leave was an impossibly generous 18 to 36 months - there were no laws against domestic or spousal violence, women trafficking, organized crime prostitution rings, discrimination, inequality, marital rape, date rape and a host of other issues. No medium (print or electronic) catered to the idiosyncratic needs of women. Academic gender studies programs, or women's studies departments were unheard of. According to Slavenka Drakulic, author of "Cafe Europa" and "How We Survived Communism and Even Laughed", no factories in the region manufactured tampons or sanitary bandages. Women, who formed an integral and important part of national and social movements throughout the region, were later shunned and marginalized. They felt betrayed and exploited. Disenchanted and disillusioned, they voted overwhelmingly for right wing parties ever since. They conservatively reverted to the safe values, mores and petite bourgeois aspirations of the 19th century. Writing in the July 2001 World & I, Christine Weiss described the situation in Slovakia: "Slovakia is similar to many other countries in central and eastern Europe in its attitudes toward women and their role in society. Officially equal to men under communism and given equal government representation by law, women nevertheless carried the greater burden of domestic duties and were not given decision-making positions. Women's involvement in politics and political parties has decreased drastically in the last decade. Most Slovak women agree with the official myth that they are 'equal' to men, making it difficult for them to seek help with issues such as protection against domestic violence, employment discrimination, and inadequate health care. The worsening economic situation has placed a greater burden on women since 1990. Increasingly, there is an out-migration of men to larger towns, more prosperous regions, or other countries for work. This heightens the domestic burden on women; the help they got from husbands, sons, or other relatives is now largely removed. The economic slump has also forced women to increase food production from the family plots." Feminism failed to take root in pragmatic central and east Europe. It was too ideological, often Marxist, too extreme, family-disparaging and man-hating. Petr Prihoda offered the male point of view in the Czech-English monthly New Presence: "I'm also wary of the revolutionary ambition of some feminist texts, with their ideas about changing present conditions, having seen enough attempted utopias for one lifetime." Czech women tend to agree. "We myself...and many others are not in search of global sisterhood at all, and it is only when we give up expecting it that we can get anywhere." - says Jirina Siklova from the Gender Studies Center in Prague - "It is each other's very 'otherness' that motivates us, and the things we find in common take on greater meaning within the context of otherness. There is so much to learn by comparing the ways in which we are different, and which the same elements of women's experience are global, and which aren't, and wondering why, and what it means." Capitalism has improved the lot of women in some countries - and considerably worsened it in others. According to Elizabeth Brainerd of Harvard University, writing in the October 2000 issue of the Industrial & Labor Relations Review: "Under state socialism, women fared relatively well in the labor market: female-male wage differentials were similar to those in the West, and female labor force participation rates were among the highest in the world. Since the introduction of market reforms (there is) a consistent increase in female relative wages across Eastern Europe, and a substantial decline in female relative wages in Russia and Ukraine. Women in the latter countries have been penalized by the tremendous widening of the wage distribution in those countries. Increased wage inequality in Eastern Europe has also depressed female relative wages, but these losses have been more than offset by gains in rewards to observed skills and by an apparent decline in discrimination against women." All in all, transition was not good to women. The privatization of state-owned enterprises was dominated by a male nomenclature of managers and insiders. Technological modernization was both male-driven and male-biased. Men in central and eastern Europe are still three times as likely as women to find a job. Between three and four fifths of all women's - mostly menial - jobs were lost, notably in the industrial sectors, especially in textile and clothing. According to the February 2000 issue of the UNESCO Courier, 14 million of the 26 million jobs that vanished in eastern Europe since 1989 were women's. Unemployment among women is 5 percentage points higher than among men. Two years ago, the inter-gender gap in pay in Russia was 24 percent. It was over 15 percent in both Poland and Hungary. In all the countries in transition, the highest rates of unemployment are among middle aged and older women. Three quarters of the unemployed are women. The Ukrainians call it "unemployment with a female face". Women go unrecorded both when employed and when unemployed - thus deprived of social benefits, health and unemployment insurance and labor-related legal rights. When trained, women are relegated to clerical, low-skilled and low-paying jobs. Men are assigned to assimilate new and lucrative technologies. In some countries, women are asked by prospective employers to waive their rights, to produce a medical certificate confirming non-pregnancy, or, more rarely, to provide proof of sterilization prior to gaining employment. Even in higher education, where women's participation has gradually increased - they are confined to "feminine" - i.e., low pay and low status - occupations. Vocational and technical schools are either defunct or do not welcome women. The rising cost of tertiary schooling threatens to dampen women's educational opportunities. Even in feminized professions (such as university teaching), women make less than 20% of the upper rungs (e.g., full professorships). The very ethos of society has adversely changed. Resurgent nostalgic nationalism, neo traditionalism and religious revival seek to confine them to home and hearth. Negative demographic trends - declining life expectancy and birth rate, numerous abortions, late marriage, a high divorce rate and an increasing suicide rate - provoke a nagging sensation of "we are a dying nation" and the inevitable re-emphasis of the woman's reproductive functions. Hence the fierce debates about the morality of abortion in Catholic Poland, in Lithuania, Slovenia and even in the agnostic Czech Republic. Many women believe that capitalism is for men, emphasizing, as it does, masculine traits, such as aggressiveness, assertiveness, and competition. Women political representation shriveled since 1989 when rubber stamp parliaments were transformed into loci of real power. The few women that did make it are typically relegated to "soft" committees which deal with budget-poor social issues. There is a dearth of women among business executives of medium and large enterprises, or the owners of privatized enterprises. Job advertising is sex-specific and sexist to this very day. Pay regulations and tax system are skewed in favor of male employees. Child benefits were all but eliminated, maternal leave shortened, affordable day care facilities rendered extinct by massive cuts in social outlays. The quality of social benefits not yet axed has deteriorated, access to them has been restricted and supplies are often short. The costs of public goods, mainly health and education, have been transferred from state to households either officially, once services have been commercialized, or surreptitiously and insidiously (e.g., patients required to purchase their own food, bed sheets and medication when hospitalized). The swift deterioration in the quality of the region's health systems and the proscription, in certain countries, of the only effective form of contraception - abortions - led to an upsurge in maternal mortality and teenage pregnancy. The curtailing or absence of sex education yielded an epidemic of sexually transmitted diseases. Rape, spousal abuse, date rape, street prostitution, begging, especially by destitute widows - are common phenomena. Divorce maintenance payments are often both pitiful and delinquent. A generational abyss opened between young women and their older sisters. The post-communist generations are conspicuous consumers, car owners, and career opportunists. They aspire to be managers, shareholders, politicians and professionals. The older ones, exhausted by decades of social turmoil and futile activism, prefer to stay at home, in relative tranquility, tinged with benign dependence. Yet, neither fare well. East European pseudo-yuppies lack business skills, knowledge, contacts, supportive infrastructure, or access to credit. Older women cannot work long hours, lack skills and, when officially employed, are expensive, due to the burden of their social benefits. Consequently, women mostly migrate to services, light industry and agriculture - the less lucrative sectors of the dilapidated economies of their homelands. As far as women as concerned, the brave, new world of liberal democracy is old, patriarchal, discriminatory and iniquitous. This may yet prove to be transition's worst failure. Work, Future of A US Department of Labor report published, aptly, on Labor Day 1999, summed up the conventional wisdom regarding the future of this all-pervasive pastime we call "work". Agriculture will stabilize, service sector jobs will mushroom, employment in the manufacturing sector will be squeezed by "just in time" inventory and production systems and by labor-intensive imports. An ageing population and life-prolonging medicines will prop up the healthcare sector. Yet, the much touted growth in services may partly be a statistical illusion. As manufacturing firms and households contracted out - or outsourced - hitherto internal functions, their employment shrank while boosting the job figures of their suppliers. From claims and wage processing to take-away restaurants and daycare centers, this shift from self-reliance to core competencies spawned off a thriving service sector. This trend was further enhanced by the integration of women in the workforce. The landscape of future work will be shaped by technological change and globalization. The latter is erroneously considered to be the outcome of the former. But as "The Economist" has pointed out in a series of "School Briefs", the world has been much more globalized one hundred years ago, long before the Internet. These two independent trends reinforce each other in a virtuous cycle which will profoundly impact the future of work. Enhanced flows of information increase market efficiency, partly through global competition and price transparency and partly through shorter product life cycles. But innovation by itself would not have had such an impact on work patterns. Manufacturing techniques - chiefly miniaturization - had a profound effect on the relocation of work from factory and office to home and car. Machine tools and office equipment well into the 1980's were too cumbersome to install at home. Today everyone has a telephone and many have a fax, a mobile phone, an Internet connection, and a PC. As a result, work-from-home and flextime are burgeoning. Increasingly - with the advent of Internet-enabled PDA's, laptops, beepers, and wireless access to e-mail and the Web - so does work-on-the-move: in cars, in trains, everywhere. Work has become ubiquitous. This harks back to the past. Even at the end of the 19th century - at the height of the Industrial Revolution - more than half the population still worked from home. Farmers, medical doctors, blacksmiths, small time retailers - lived and slogged in combined business and domestic units. A steady career in an organisation is a recent invention, as William Bridges pointed out in his book "Job Shift". Harlan Cleveland and Garry Jacobs explained the emergence of Organisation Man in the newsletter of the World Academy of Art and Science: "The job - the kind that you had, or hoped to get - became a central fixture of life in industrial countries. Its importance was great because it served many needs. For managers and efficiency experts, job assignments were the key to assembly-line manufacturing. For union organizers, jobs protected the rights of workers. For political reformers, standardized civil service positions were the essence of good government. Jobs provided an identity to immigrants and recently urbanized farm workers. They provided a sense of security for individuals and an organizing principle for society." Currently, three types of work are surfacing. Old, industrial-age, permanent, and workplace-bound jobs are increasingly the preserve of low and medium skilled workers - about 80 percent of the workforce in Britain. New, itinerant, ad-hoc, home-based, technology-intensive, brand-orientated, assignment-centered careers characterize another tenth of the workforce. Temporary and contract work work - mainly in services - account for the rest. It is a trichotomous landscape which supplanted the homogeneous labor universe of only two decades ago. Nowadays, technologically-literate workers - highly skilled, adaptable, well-educated, and amenable to nontraditional work environments - are sought by employers and rewarded. The low skilled, computer-illiterate, uneducated, and conservative - lag behind. In 1999, more than 13 million people in the USA alone held multiple jobs, or part time, or contract jobs (i.e., freelancing). Work from home and flextime accounted for one fifth of all other employees. Contrary to their image as rigid labor marketplaces, self-employment and temporary work were more prevalent in the European Union (except Britain) than in the USA. The Bureau of Labor statistics in the US Department of Labor noted these demographic changes to the workforce. Though pertaining to the USA, they are applicable, in varying degrees, to the rest of the world, with the exception of certain parts of Africa. America is a harbinger of trends in employment and of changes in the nature of work. (1) Labor force growth will slow down to an annual 0.2 percent after 2015 - compared to 2.6 percent between 1970-1980 and 1 percent during the last decade. This is when Baby Boomers start retiring and women's participation will level off. Women already make almost half the labor force. More than three quarters of all mothers are working. T |
