Sep-2011-International

INTERNATIONAL AFFAIRS

Libya’s new rulers lay a road map for polls
Libya’s National Transitional Council (NTC) has set out steps leading to democratic elections monitored by the UN within 18 months. The plan goes into effect with a “declaration of liberation” which the NTC has not defined precisely, though NTC chairman Abdel Mustafa Jalil said the conditions for such a declaration included the capture or death of Muammar Gaddafi.

The NTC’s Constitution Declaration for governing during the transitional period sets out the main guidelines for the way the country is to be overseen as it emerges from six months of war.

Libya is a democratic, independent State with Tripoli its capital, Islam its religion, sharia, Islamic law as the main source of legislation and Arabic as its official language. The rights of minority groups are guaranteed.

The State will establish a democratic political system based on political and party pluralism aiming for a peaceful, democratic transition of power. All Libyans are equal before the law and are not discriminated against because of religion, faith, language, wealth, gender, ancestry, political views, social status or tribal, group or family affiliation.

The NTC is the highest authority. It is made up of representatives of local councils who are chosen to reflect population density.

The NTC will be based in Tripoli and will appoint an Executive Office, or interim government, consisting of a head and members to run specific portfolios. The Executive Office is responsible to the NTC for implementing NTC policy.

After “declaring liberation”, the NTC will move to its headquarters in Tripoli and form a transitional government within 30 days. Within 90 days of declaring liberation, the NTC will issue legislation about the election of a Public National Conference (PNC), appoint an elections commission and call for the election of the PNC.

The PNC will be elected within 240 days of the declaration of liberation. It will consist of 200 elected members. The NTC will be dissolved at the first meeting of the PNC. Within 30 days of its first meeting, the PNC will appoint a PM who will nominate his government which will become an interim government.

The PNC will appoint a Constituent Authority for drafting a constitution which should submit a draft constitution to the PNC within 60 days of its first meeting.

The PNC will approve the draft constitution and will put it to a referendum within 30 days. If it is approved by a two-thirds majority, the Constituent Authority will endorse it as the constitution, and it will be ratified by the PNC. If it is rejected, the Constituent Authority will have to re-draft it and put it to a referendum again within 30 days.

The PNC will issue a general elections law in line with the constitution within 30 days and a general election will be held within 180 days of the declaration of the laws.

Euro zone debt crisis
The 17 nations sharing the euro are in deep crisis, saddled with massive debts and weakened by political division over how to find a way out, just as the world economy flirts with another downturn.

With the euro introduction in 1999, unified interest rates allowed members to borrow heavily. Bonds issued by southern European nations were taken to be as safe as German ones. Money flowed into Greece. Spain and Ireland had realty booms.

The bursting of the housing bubble in the US and Europe in late 2007 dealt the first blow to the Euro zones aura of invincibility. Then, in late 2009, when a new Greek government found that its predecessor lied about its borrowings and had run up huge debts, the revelation provoked a drastic loss in investor confidence that spread across the currency bloc.

Euro zone politicians were slow to react and nervous investors who began pulling their money out of the country and demanding punitive interest rates on its debt. Larger Euro zone economies and the IMF extended Athens an emergency credit line in May 2010, but by then Greece’s finances had destroyed the illusion that all Euro zone members were equal. Investors quickly turned on the weaker economies of Portugal and Spain, driving up borrowing costs.

Massive losses at banks in Ireland’s stemming from the housing bubble forced Ireland to take a bailout six months after Greece; uncompetitive Portugal then followed in May 2011.

Still, Euro zone leaders missed another chance to reassure markets. Reluctance in Germany to fully commit to helping member States meant the rescues did not constitute an effective firewalls.

To get out of the crisis some European politicians and economists say euro zone States should consider issuing bonds jointly underwritten by all countries in the bloc. The bonds would create a common interest rate for the bloc and allow weaker States to access markets at reasonable rates. But implementation of such an idea could take years and there is fierce opposition to the idea in Germany.

More immediate solutions include sorting out weak banks and helping economies where growth has been hit by budget-cutting measures, weakening government finances.

The central bank could also increase its program of buying Italian debt to contain the widening spreads over German benchmark bonds, but the bank is divided and the scheme has already prompted ECB chief economist Juergen Stark to resign in protest.

The risk of a collapse of the euro or even of the European Union itself could eventually force Germany, the EU’s pay master, to do whatever it takes to back weaker Euro zone nations, whether it be with the ECB intervening in markets to buy riskier debt or providing more funding to recapitalize European banks. But for now, European politicians seem more divided than ever, particularly on issues such as budget sovereignty. Even countries central to the European project, such as the Netherlands, are increasingly wary.

Swiss set exchange rate cap on soaring franc
The Swiss National Bank (SNB) shocked markets on September 6, 2011, by setting an exchange rate cap on the soaring franc to stave off a recession, and discouraging investors anxious about flagging global growth from using the currency as a safe haven. Using some of the strongest language from a central bank in the modern era, the SNB said it would no longer tolerate an exchange rate below 1.20 francs to the euro and would defend the target by buying other currencies in unlimited quantities.

The move immediately knocked about eight per cent off the value of the franc, which had soared by a third since the collapse of Lehman Brothers in 2008, as investors used it as a safe haven from the euro zone’s debt crisis and stock market turmoil.

Analysts said that the SNB should be able to defend 1.20 as it can print unlimited francs but that long-term success depended on efforts to deal with the euro zone’s debt problems.

The move was seen as a new shot in the currency wars, with Japan expected to try to weaken the yen if the Swiss action diverts more safe-haven inflows into the currency.

Earlier also, in 1978, the SNB had set a formal exchange rate target—above 0.80 francs per German Mark—when the franc was soaring in the aftermath of an oil crisis, and successfully defended that rate, but at the price of soaring inflation.

The strong franc had started to dampen exports, hurting companies like specialty chemicals maker Clariant AG which cut its 2011 sales target, while the tourism sector was also suffering as foreign visitors started staying away.

The SNB step will also help economies in eastern, with two-thirds of mortgages in Hungary and about half of Poland’s denominated in Swiss francs.

EU plan on emission trading opposed
India and 25 other countries including the US, China, Russia and Brazil, have opposed the European Union’s plan to include aviation under its emission trading scheme (ETS) and impose emission charges on airlines flying into the region starting 2012.

The non-EU ICAO members have termed as “unilateral” the imposition of EU Emissions Trading Scheme (EU-ETS), saying it was “inconsistent with applicable international law”.

The EU move would lead to a hike in air fares on these flights as the airlines, which would be paying the ETS charges, would pass them to their customers.

The EU-ETS, also known as the European Union Emissions Trading System, is the largest multi-national emissions trading scheme in the world.

Under the EU-ETS, large emitters of carbon dioxide, including airlines, within the EU must monitor and annually report their carbon dioxide emissions. They are obliged every year to return an amount of emission allowances to the government that is equivalent to their carbon dioxide emissions in that year.

US links Pakistan to Haqqani network
The US has evidence linking the Pakistan government to the Haqqani network, which was behind this attack on the American embassy in Kabul, in September 2011, according to US Ambassador to Pakistan Cameron Munter.

A “lot of work” is needed to put Pakistan-US ties back on track and Islamabad must sever its links with militant groups like the Haqqani network, Munter said in a wide-ranging interview with ‘Radio Pakistan’.

Munter’s remarks came close on the heels of a warning from Defence Secretary Leon Panetta that the US would retaliate against attacks on its forces in Afghanistan by Pakistan-based militants.

US Vice-President Joe Biden too has criticised Pakistan as an unreliable ally in the war against terrorism.

Pakistan has angrily rejected the US administration’s charges, saying such accusations were “out of line” with ongoing counter-terrorism cooperation between the two sides.

US declares Indian Mujahideen a terror entity
The United States has designated Indian Mujahideen, which has claimed responsibility for many terrorist attacks inside India, including the most recent bombings in Mumbai and New Delhi, as a global terrorist organization with links to Pakistan.

In a surprising move, the US State department also clearly and bluntly identified and cited the terrorist group’s significant links to Pakistan, despite the efforts of some analysts in Washington and leaders in India to attribute an entirely indigenous hue to the group and its attacks.

IM maintains close ties to other US-designated terrorist entities, including the Pakistan-based Lashkar-e-Taiba, Jaish-e-Mohammad and Harakat ul-Jihad-i-Islami. IMs stated goal is to carry out terrorist actions against non-Muslims in furtherance of its ultimate objective of an Islamic Caliphate across South Asia.