Demonstrations, participation in elections and the exercise of power are political activities with a common characteristic: the working classes are moving away from them or feel excluded from them. When millions of people in France showed their solidarity on 11 January with the victims of the Charlie Hebdo attacks, there was a marked contrast between middle-class mobilisation and the smaller numbers of working-class and young people from deprived areas who turned out. Popular protest has been an increasingly middle-class activity for years, as has voting: in almost every election, the participation rate declines further down the income scale. And those who represent the nation are certainly no better, as they are almost identical to societys upper echelons. This is politics as an elite sport.

This is clear in the European left. The unions set up the UK Labour Party to represent working-class voters. In 1966, 69% of manual workers voted Labour; this fell to 45% by 1987, and 37% in last months election. Blairites thought the focus needed to be on the middle classes. This mission was accomplished: the party suffered a resounding defeat with the most middle-class electorate in its history (see Will the Labour Party survive?, page 2).

Growing working-class disillusionment with leftwing parties, visible in all western democracies, is probably not unconnected to the declining numbers of politicians from the least well-off parts of society who have experienced similar lives, says political scientist Patrick Lehingue. Consider that in 1945, 25% of French members of parliament had been labourers or employees before election; that has now fallen to 2.1%. In 1983, 78 mayors of municipalities with more than

BY STELIOS KOULOGLOU

Politics as an elite sport

BY SERGE HALIMI

Financial coup in Greece

Continued on page 2

Inside this issueUK election: what next for Labour? OWEN JONES Pages 2-3

NAFTA: from trade deal to raw deal LORI M WALLACH Pages 4-5

Gazprom fuels EU-Russia discord CATHERINE LOCATELLI Page 6

Kosovo: and now its corruption ANA OTASEVIC Page 7

Africa: borrowings back in fashion SANOU MBAYE Page 13

Counting the cost of Med clean-up BARBARA LANDREVIE Page 14

Germany: gender equality hits brick wall SABINE KERGEL Page 15

Tiny houses are not for the US MONA CHOLLET Page 16

JUNE 2015 No 1506 Price: 3/US$4.99

SPECIAL REPORT: THE STRANGE PULL OF CONSPIRACY THEORIES PAGES 8-12

Serge Halimi is president of Le Monde diplomatique

PETER MARTENSEN One Finger Fugue (1993) Like the traditional Greek song, in Athens everything changes and everything stays the same. Four months after Syrizas victory, the parties that had governed since the overthrow of the military dictatorship the Panhellenic Socialist Movement (Pasok) and New Democracy (rightwing) have been completely discredited. The first radical leftist government since the mountain government at the time of the German occupation is very popular (1).

Although the troika, hated because of its responsibility for the current economic disaster, is no longer mentioned, its three institutions the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) continue their policies. With threats, blackmail and ultimatums, a new troika is imposing the same austerity on the government of Alexis Tsipras.

With wealth generation down by 25% since 2010 and an unemployment rate of 27% (more than 50% for those under 25), Greece has an unprecedented social and humanitarian crisis. But despite the results of the January elections, which gave Tsipras a clear mandate to end austerity, the European Union continues to treat Greece as a naughty pupil who must be punished by the stern teachers in Brussels, to discourage daydreaming voters in Spain and elsewhere who still believe in the possibility of governments opposed to the German dogma.

This situation is like Chile in the 1970s, when US president Richard Nixon was determined to topple Salvador Allende to prevent leftwing contagion in Americas backyard. Make the economy scream, said Nixon, and when it did, General Augusto Pinochet took over.

The silent coup under way in Greece is using more modern tools, including credit rating agencies, the media and the ECB. Two options will remain for Tsiprass government: to be strangled financially if it keeps trying to implement its programme, or to renege on its promises and fall, abandoned by its voters.

ECB president Mario Draghi announced three days before the Greek election that the banks intervention programme (the ECB buys 60bn in sovereign bonds issued by eurozone countries each month) would be open to Greece under certain conditions: this was to avoid spreading the Syriza virus, the hope disease, to the rest of Europe. The eurozones weak link, which needs help the most, would not get support until it submitted to Brussels.

Greeks are hard-headed. They voted for Syriza, compelling the Eurogroups president Jeroen Dijsselbloem to call them to order: The Greek people have to realise that the major problems in the Greek economy have not disappeared and havent even changed overnight because of the simple fact that an election took place. Christine Lagarde, managing director of the IMF, said: We cannot make special exceptions for specific countries, while Benot Cur, member of the ECB executive board, went further: Greece has to pay, those are the rules of the European game.

Draghi soon demonstrated that the eurozone knew how to make the economy scream too: without any explanation, he shut off the Greek banks primary source of funding, which was replaced by Emergency Liquidity Assistance (ELA), a more costly measure that has to be renewed weekly. The rating agency Moodys announced that Syrizas victory has an adverse effect on [Greeces] economic growth prospects.

Grexit Greeces exit from the eurozone and a payment default were back on the agenda. Only two days after the elections, Marcel Fratzscher, president of the German Institute for Economic Research (DIW) and former economist at the ECB, said Tsipras was playing a dangerous game: If people start to believe that he is really serious, you could have massive capital flight and a bank

Banks are dictating terms to the elected government of Greece, overruling the lives and wishes of its citizens for

the benefit of a few at home and abroad

Stelios Kouloglou is a journalist and documentary maker, and an independent European MP, elected on Syrizas list

30,000 inhabitants had once been labourers or ordinary office workers (these still account for the majority of the population). Now there are only six (1). So much for representative democracy. More than 50% of Americans think the state should redistribute wealth through more taxation of the rich. Only 17% of the rich, unsurprisingly, share that view (2). But the way western democracies work means that the minority opinion prevails without any real debate. And a class well aware of its own interests can afford to be relaxed, since public debate is so dominated by distractions whipped up by the media that it owns, which help divide the working-class against itself.

With this system so well entrenched, all we can do is call in the experts whose job it is to remind us that apathy and anger are to be expected when societies move to the right.

TRANSLATED BY GEORGE MILLER

(1) Out of 260. Patrick Lehingue, Nous ne sommes pas reprsents! (We arent represented), Savoir/Agir, Bellecombe-en-Bauges, 2/2015.(2) See Noam Scheiber, 2016 [presidential] hopefuls and wealthy are aligned on inequality, The New York Times, 30 March 2015.

2 JUNE 2015 LMDLe Monde diplomatique

Labour never offered a coherent alternative. The Conservatives always had a clear message, constantly repeated: on the economy, on social security, and on tax

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UNEXPECTED CONSERVATIVE WIN CHANGES POLITICAL SCENE

BY OWEN JONES

Will the Labour Party survive?The Conservative Party didnt win the UK election. The Labour Party lost it, especially in Scotland, which is going its

own political way towards nationalist social democracy

run. You are quickly at a point where a euro exit becomes more possible a perfect example of a self-fulfilling prophecy that worsened Greeces economic plight.

Syriza had little room to manoeuvre. Tsipras was elected to renegotiate the terms and conditions attached to the aid. But the idea of an exit from the eurozone is not supported by most Greeks, who have been persuaded by the Greek and international media that Grexit would be a disaster. And participation in the single currency strikes other very sensitive chords.

Since independence in 1822, Greece has swung between a past as part of the Ottoman empire, and Europeanisation. Both its elites and ordinary people have always seen being part of Europe as signifying modernity and an end to underdevelopment. Participation in Europes hard core was supposed to make this national dream happen. So, during the election campaign, Syriza candidates felt obliged to treat Grexit as taboo.

At the heart of the negotiations between Tsiprass government and the institutions

are the conditions set by the lenders, the memorandums that have forced Athens since 2010 to implement devastating austerity and overtaxation. More than 90% of the lenders payments are returned to them directly sometimes the next day because they are

used to repay the debt. As finance minister Yanis Varoufakis, who wants a new agreement with the lenders, said: Greece has spent the last five years living for the next loan tranche like drug addicts craving the next dose. Since non-repayment of the debt is equivalent to a

credit event (a kind of bankruptcy), releasing the dose becomes a very powerful blackmail weapon for the lenders. In theory, since the lenders need repaying, the Greek government has considerable bargaining power, but using this leverage would have prompted the ECB to stop lending to Greek banks, meaning a return to the drachma.

It was not surprising then that within three weeks of the Syriza win, the finance ministers of the other 18 eurozone countries sent an ultimatum to Greece its government must implement the austerity programme it had inherited, or meet its obligations by finding the money elsewhere. The New York Times concluded this was a prospect that many in the financial markets think would leave Greece little option but to leave the euro.

To escape, the Greek government requested a four-month truce. It did not ask for disbursement of the 7.2bn but hoped that both sides would reach an agreement incorporating measures to develop the economy and resolve the debt problem. It would have been tactless to bring the government down immediately, so the lenders accepted the request.

The Greek government thought it could count, at least temporarily, on certain sums. It hoped for 1.2bn from the European

I t was a calamitous defeat for Labour, and few saw it coming. Throughout the election campaign, the opinion polls stubbornly refused to move, suggesting the Conservatives and Labour were in a dead heat. On the day of the vote, 7 May, the polls even suggested a shift towards Labour. The consensus among political commentators and pundits was that Labour leader Ed Miliband was headed for 10 Downing Street: as the prime minister not of a majority government, but of a minority Labour administration propped up by the pro-independence Scottish National Party (SNP).

Opinion polls had been spectacularly wrong before infamously predicting a Labour victory in 1992 (the Tories won) and their methodology had since been radically overhauled. And then, at 10pm, as voting ceased, the exit polls declared a result that few had predicted a decisive lead for the Tories. For Labour supporters, disbelief collided with horror, an unpleasant mix that has barely subsided since. Yet, as election night wore on, they found themselves wishing the exit polls had been accurate: because, contrary to the projection, the Conservatives ended with their first parliamentary majority for 23 years, albeit by the slender margin of 12 seats.

How could it have gone so wrong for Labour? Britain has endured the longest fall in workers living standards since the Victorian era, one of the worst among EU countries; the most far-reaching cuts to public services and social security in generations; and the weakest economic recovery in a century. There was no dramatic surge towards the Conservatives, the senior partner in the previous government coalition set up with the supposedly centrist Liberal Democrats (Lib Dems) after the 2010 election. The Conservatives did increase their share of the vote a feat not achieved by any governing party since 1955 winning just over 600,000 more votes, which still gave them a total of less than 37% of the overall vote (compared with 36.1% in 2010).

In 2010 the German chancellor Angela Merkel gleefully told Conservative leader David Cameron that, in a coalition, the little party always gets smashed! So it proved.

Before 2010 the Lib Dems often put themselves forward as a more progressive alternative to the Conservatives, winning over leftwing voters disaffected with New Labour, who were horrified when the Lib Dems then entered the coalition. In 2010 the Lib Dems won 57 seats on 22% of the vote; 2015 was their near-extinction event, with a vote share of just 7.9% and a pathetic eight MPs, who could be crammed into one London taxi. Their losses, perversely, often benefited their erstwhile Conservative allies in seats where Labour had only ever had a small presence.

The Tories did not win the election so much as Labour lost it. Social democracy is in crisis throughout Europe, crumbling before an increasingly confident populist left and a xenophobic right. It is no different in Britain. The potential Labour vote fell to the social democratic nationalists of the Scottish National Party, the right-wing populists of the UK Independence Party (UKIP) (1) and the anti-austerity Greens.

Scotland produced the first Labour leaders and has been a party heartland for decades. In 2010, 41 of Scotlands 59 MPs were Labour; the SNP had just six. The 2015 election was almost a political revolution. Labour lost every Scottish seat bar one; the SNP won 56 and 50% of the Scottish vote. How was such a historic victory possible, by a party positioning itself defiantly to the left of Labour? The SNPs political triumph is partly the product of Thatcherism: Scots voted consistently against the Tories in the 1980s, while suffering some of the worst consequences of Tory governments. The New

Labour era fostered disillusionment, allowing the SNP at least rhetorically to capture some of the progressive political space vacated by the Labour Party. Labour MPs often neglected their constituencies, believing that the immense parliamentary majorities over which they presided left them invincible.

But last years Scottish independence referendum produced what currently seems like a decisive historic shift in favour of the SNP (2). Although a majority of Scots voted against independence, the margin with 45% voting in support of secession was significantly narrower than predicted, and victory was only won because of blackmail and bluster from major newspapers and big businesses. Labour pursued what has proved to be a catastrophic strategy: joining forces with the despised Scottish Tories in a united front against independence, rather than setting up its own separate anti-Tory campaign. Many Scottish Labour voters were repulsed, referring to their old party as the Red Tories: they display the zealotry of converts and the bitterness of ex-lovers.

By losing its Scottish heartland, Labour paved the way for a fatal problem: the encouragement of English nationalism and resentment. Labours only hope of power was a minority government supported by the SNP: and so this became the key attack line of the Conservatives and their allies in the mainstream media. On one Conservative poster, a miniature Ed Miliband (the Labour leader) sat in the pocket of Alex Salmond, the SNPs leader at the time of the referendum. Vote Miliband, get Salmond was the slogan, suggesting that if Labour emerged as the biggest single party, the UK would be at the mercy of Scottish separatists. The Sun the Murdoch-owned tabloid, a less-than-subtle mouthpiece for the Conservatives propaganda offensive portrayed Nicola Sturgeon, the new SNP leader, as the singer Miley Cyrus, in a skimpy tartan skirt, dangling on a wrecking ball labelled Tartan Barmy. It was overtly sexist, and underlined that the British right was content to promote anti-Scottish resentment and fuel the break-up of the UK in order to maintain

power. This tartan panic was undoubtedly decisive in the collapse of Labour support.

But Labour had another, entirely unavoidable, terminal problem. The global financial crisis happened on New Labours watch, and its failure to regulate the banks (since it was shackled by neoliberal dogma) contributed to the severity of the economic collapse. The Conservatives had demanded even less regulation although that was almost written out of history. Even worse, in the aftermath of Labours 2010 defeat, with the demoralised party turned in on itself, the Conservatives rewrote history: according to the new narrative, the crisis had actually been caused by Labour overspending. The Conservatives had backed Labours spending pound for pound until 2008, but this too was deleted from history. Were clearing up Labours mess, the Conservatives and their allies repeated until it became a clich. Why hand the keys back to the driver who crashed the car in the first place? was another key line. Perversely, it was left to scattered critics of New Labour (me included) to defend its record on spending from its own apologists. Because of this, Labours economic credibility with the public was in tatters, even when the economy was in the doldrums because of the coalition austerity programme.

Labour never offered a coherent alternative. The Conservatives always had a clear message, constantly repeated: on the economy, on social security, and on tax. Miliband often resorted to academic language with little popular resonance, such as a 2011 speech that divided businesses into predators and producers. Concepts were adopted and then abandoned: a squeezed middle of hard-pressed middle-income Britons; the British promise the guarantee of the next generation doing better than the last; One Nation Labour, borrowed from pre-Thatcherite One Nation Toryism; and the cost-of-living crisis the long-term fall in living standards.

Policies with little coherence or radicalism were thrown up: a promise to increase the minimum wage by 2020 to a level it would reach in line with inflation anyway; a temporary freeze in energy bills and a commitment to promote competition in energy markets; restoring the top rate of tax to 50%, the same level as Japan; and a mansion tax on properties worth more than

Owen Jones is a UK journalist and the author of The Establishment: and How They Get Away With It, Allen Lane, London, 2014

Financial coup in Greece

Continued from page 1

LMDLe Monde diplomatique JUNE 2015 3

In April Varoufakis said: The government today faces a new kind of coup, one that is not carried out with tanks, as in 1967, but through banks

Labourism is in crisis. Could a populist left emerge?SHUTTERSTOCK

Leader Total votes Total MPs MPs,net changeVotes,

of total (%)Conservative David Cameron 11,300,303 330 +28 36.8

Labour Ed Miliband 9,344,328 232 24 30.4

UKIP Nigel Farage 3,881,129 1 -1 12.6

Liberal Democrat

Nick Clegg 2,415,888 8 48 7.9

SNPNicola Sturgeon

1,454,436 56 +50 4.7

GreenNatalie Bennett

1,157,613 1 0 3.8

Plaid Cymru Leanne Wood 181,694 3 0 0.6

Sinn Fin Gerry Adams 176,232 4 -1 0.6

How they voted (and what they got)

2m, taken from the manifesto of the Lib Dems. Labour promised Britain would have the lowest rate of corporation tax of any G7 economy; and for the first time, a Labour prime minister would make cuts every year of the five-year term. On immigration, the party shifted to the right, scolding Tony Blairs government for allowing in too many Eastern Europeans, and pledging a crackdown.

The loss of Scotland and the fuelling of anti-SNP English resentment, the failure to rebut accusations that New Labours overspending had caused the crash, and the lack of any coherent alternative were all fatal. In Scotland, the social-democratic civic nationalism of the SNP benefited from disillusionment with Labour, while in many northern working-class Labour seats, the anti-migrant UKIP thrived. Four million disproportionately working-class voters opted for UKIP, and although because of Britains electoral system it was left with just one MP, the surge ensured the Conservatives won seats thought safe for Labour.

What hope for Labour? In the leadership election after the defeat, there is no candidate from the left. Rightwing elements within the party, as well as the Conservatives and many of the mainstream media, have spun a story that Labour lost because it was too leftwing and anti-business. Each leadership candidate promises to ditch anti-business or anti-aspiration policies. No strategy is offered to win back those who fled to the SNP, the Greens or UKIP. Within Unite, Labours biggest trade union backer, there are growing demands to disaffiliate from the party, and questions over whether the historic link between the labour movement and the Labour Party can survive.

Could a populist left emerge, backed by the trade unions, looking to Syriza and Podemos and hoping to challenge the populist right? Labourism is in crisis, with Jon Cruddas the architect of the partys manifesto describing it as the greatest crisis since 1918. The right triumphed not because of the Conservatives success, but because of Labours failure. An unavoidable tragedy.

ORIGINAL TEXT IN ENGLISH

(1) See Owen Jones, Ukips surprise party line, Le Monde diplomatique, English edition, October 2014.(2) See Keith Dixon, Scotland decides?, Le Monde diplomatique, English edition, September 2014.

Financial Stability Facilitys reserves a sum not used in the process of recapitalising Greeces banks as well as 1.9bn that the ECB had earned on Greek bonds and promised to give back to Athens. In March, the ECB announced that it would not return these earnings; and the Eurogroup ministers decided to transfer this money to Luxembourg, as if they feared the Greeks would steal it. The Tsipras team, inexperienced and not expecting such manoeuvres, assented without demanding any guarantees. In an interview with the TV channel Star, Tsipras admitted that not asking for a written agreement had been an error.

The Greek government remained popular despite the concessions it had agreed to no reversals of the privatisations of the previous government, a postponement of the increase in the minimum wage, and increased value-added tax (VAT). So Germany launched a campaign to discredit the government. Der Spiegel published an article on the tortured relationship between Varoufakis and German finance minister Wolfgang Schuble, written by, among others, Nikolaus Blome, recently transferred from Bild, where he was the hero of its campaign in 2010 against the lazy Greeks (2). Schuble publicly mocked Varoufakis as being stupidly nave,

a rare occurrence in the history of the EU and in international diplomacy. Der Spiegel presented Schuble as a benevolent Sisyphus, sorry that Greece would be condemned to fail and leave the eurozone unless Varoufakis was removed from his post.

With capital flight, grim predictions and threats worsening, Dijsselbloem declared in the New York Times that the Eurogroup was considering whether to apply the Cyprus model to Greece, limiting capital flows and reducing deposits. This could only be seen as an unsuccessful attempt to provoke a banking panic. While the ECB and Draghi were further restricting Greek banks options for finance, Bild published a pseudo-story about a panic in Athens, misrepresenting a

banal scene of pensioners queuing outside a bank on pension day.

At the end of April, Varoufakis was replaced by his assistant Euclid Tsakalotos for negotiations with the lenders, and said: The government today faces a new kind of coup, one that is not carried out with tanks, as in 1967, but through banks. For now, the silent coup has affected only him. But time is on the side of the lenders, who are demanding neoliberal remedies. Each has its own obsession. The IMF ideologues insist on the deregulation of the labour market as well as legalisation of mass redundancies, which it promised to the Greek oligarchs who own the banks. The EC (or rather, the German government) demands further low-cost privatisations that may interest German companies. One scandalous example that stands out from the long list is that of 28 buildings sold by the Greek state in 2013 it still uses them and must pay the new owners 600m in rent over the next 20 years, almost triple their sale price.

The Greek government, in a weak position and abandoned by those whom it had hoped would support it, such as France, cant resolve the countrys main problem: an unsustainable debt. The proposal for an

international conference similar to the 1953 event where Germany was forgiven most of its war reparations, opening the way to its economic miracle (3), has been lost amid threats and ultimatums (including a warning of Greek default this month). Tsipras wants a better agreement, but any deal reached would be a long way from the programme voted for by Greeks. Jyrki Katainen, the EC vice-president, was clear on this the day after the election: We dont change our policy according to elections.

So do elections have any meaning when a country which respects its major commitments is allowed no rights to modify its policies? The Greek party Golden Dawn, and its neo-Nazis, have an answer to that, and it may be that they will benefit more from the failure of Tsiprass government than will Schubles supporters in Athens.

STELIOS KOULOGLOU TRANSLATED BY HAMZA HAMOUCHENE

(1) According to a poll on 9 May 2015 in Efimerida ton Syntakton, 53.2% of Greeks think the governments policies are positive or fairly positive.(2) Olivier Cyran, Bild: big circulation, loud voice, Le Monde diplomatique, English edition, May 2015.(3) See Renaud Lambert, Greece: pay now, live later, Le Monde diplomatique, English edition, March 2015.

In their wordsLabour leader Ed Miliband resigned after his partys devastating defeat in the general election, and prominent Labour figures were quick to criticise his policies and campaign. This is what some of the remaining hopefuls in the leadership contest say:

Andy Burnham, shadow health secretary, an early favourite to take over, used a video message to launch his campaign.

The plain truth is this. The party that I love has lost its emotional connection with millions of people. The way to get it back cant possibly be to choose one group of voters over another to speak only to people on zero hour contracts or only to shoppers at John Lewis [the leading middle-class department store] Our challenge is not to go left or right, to focus on one part of the country above another, but to rediscover the beating heart of Labour. And that must always be about the aspirations of people. The Guardian, 13 May 2015; www.theguardian.com/politics/video/2015/may/13/andy-burnham-announces-his-candidacy-for-labour-leadership-video

Liz Kendall, MP only since 2010 and shadow social care minister, may appeal to the young vote.

We have got to face up to the catastrophic scale of the defeat and the scale of the response we need to win again, and that is what this leadership contest has to be about. We need a leader who is going to lead a team, because the challenges are so fundamental. It is a catastrophe. This is not a minor issue of cobbling together a new coalition of voters. It is about profound change in our party, if we are to change our country. The Guardian, 15 May 2015.

Yvette Cooper, shadow home secretary, was a minister in the Gordon Brown government.

In the end, Labour didnt convince enough people that we had the answers ... for many people it wasnt enough to give them hope and confidence we could match all their ambitions for the future. And when theres too little hope, optimism or confidence, the politics of anger, fear and division takes over thats what the Tories, the SNP and Ukip all exploited and campaigned on in this election. Going back to the remedies of the past, of Gordon Brown or Tony Blair, wont keep up with the way the world has changed. We need a Labour party that moves beyond the old labels of left and right, and focuses four-square on the future. Daily Mirror, 13 May 2015.

Rightwing elements within the party, the Conservatives and many of the mainstream media have spun a story that Labour lost because it was too leftwing and anti-business

4 JUNE 2015 LMDLe Monde diplomatique

The North American Free Trade Agreement (NAFTA) went into effect on 1 January 1993, on a cloud of promises of economic, social and environmental benefits. Few matters unite the US, deeply divided along partisan lines, yet Republicans, Democrats and independents of diverse geographic and socio-economic groups consider NAFTA to have damaged their families and the nation. But as details of the secretive Transatlantic Trade and Investment Partnership (TTIP) (1) negotiations emerge, we learn that the NAFTA mistakes are likely to be repeated.

NAFTA was an experiment, establishing a radically new trade agreement model. It was fundamentally different in that it was only partially about trade. Previous US trade pacts had focused narrowly on cutting tariffs and easing quotas, while NAFTA created new privileges and protections for foreign investors that incentivised the offshoring of investment and jobs by eliminating many risks of moving production to low-wage countries. NAFTA allowed foreign investors to directly challenge domestic policies and actions before investor-state dispute settlement (ISDS) tribunals, and demand government compensation for policies that undermined their expected future profits.

NAFTA also required the signatory countries Canada, Mexico, the US to limit regulation

of services, such as banking, energy and transportation; extend medicine patent monopolies; limit food and product safety standards and border inspections; and waive domestic buy local preferences, such as Buy American policies.

It was sold to the US public with grand promises. In 1993 Gary C Hufbauer and Jeffrey J Schott of the Peterson Institute for International Economics now making grandiose projections of TTIP gains projected that NAFTA would lead to a rising trade surplus with Mexico, which would create 170,000 net jobs in the US within the pacts first two years. US farmers would export their way to wealth. NAFTA would bring Mexico to a first-world level of economic prosperity and stability, providing opportunities that would reduce immigration to the US. Environmental and consumer standards would be harmonised upwards improving public health, the safety of food and products and the quality of the air and water. Consumer prices would be reduced. The economies would enjoy new growth.

Two decades later, the grand projections and promises remain unfulfilled. Indeed, many outcomes are exactly the opposite of what was promised.

Rather than creating US jobs, NAFTA has contributed to an enormous US trade deficit with Mexico and Canada, and an estimated net loss of 1m US jobs by 2004. This figure, calculated by the Economic Policy Institute (EPI), includes the net balance between jobs created and jobs lost (2). Much of the erosion stems from the decisions of US firms to embrace NAFTAs foreign investor privileges and relocate production to Mexico, with its lower wages and weaker environmental standards. The EPI calculates that the trade deficit with Mexico destroyed about 700,000 net US jobs between NAFTAs implementation and 2010. More than 845,000 US workers have been certified for Trade Adjustment Assistance (TAA), having lost their jobs due to imports from Canada and Mexico or the relocation of factories there.

NAFTA has contributed to downward pressure on US wages and growth in US income inequality. Its broadest economic impact has been to transform the types of jobs and wages for the 63% of US workers without a college degree. Trade deeply affects the types of jobs available rather than the total number. The US workers who lost manufacturing jobs to NAFTA offshoring and import competition went into lower-wage jobs in service sectors, which cant be off-shored, where they added to a glut of workers, pushing down wages across the economy. According

to the US Bureau of Labour Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 had to take lower wages, most of them a pay cut of more than 20%. For the average US manufacturing worker on more than $47,000, thats at least $10,000 down. As more workers displaced from manufacturing have joined those competing for low-skill jobs in sectors such as hospitality and food services, real wages have fallen in these sectors under NAFTA. US median wages have been flat since NAFTA, even as worker productivity has soared.

The reductions in consumer goods prices that have materialised have not been enough to offset the losses to middle-class wages under NAFTA. US workers without college degrees have lost 12.2% of their wages in real terms under NAFTA-style trade, even after the benefits of cheaper goods. Despite a 239% rise in food imports from Canada and Mexico, the average price of food in the US has jumped 67% since the deal, the opposite of the outcome promised. Back then, some NAFTA proponents acknowledged that the deal would cost some US jobs, but argued that US workers would win because of cheaper imported goods.

Soon after 1993, the small pre-NAFTA US trade surplus with Mexico turned into a massive trade deficit and the pre-NAFTA US trade deficit with Canada expanded greatly. The 1992 inflation-adjusted trade surplus with Mexico of $2.5bn and the $29.6bn deficit with Canada have morphed into a combined NAFTA deficit of $177bn. The rosy job-creation promises were predicated on NAFTA

Cubas president Ral Castro will be 87 by 2018. He cannot seek a further mandate, so the last of the revolutionary generation will retire from government. Three years isnt much time to reform Cubas economy, adopt a new constitution and grow used to normalised relations with the US, as symbolised by the meeting of the US and Cuban presidents at the summit of the Americas in April. Can the Cuban regime survive the loss of its historic leadership?

The Communist Party of Cuba (PCC) has already designated First Vice-President Miguel Daz-Canel as Castros successor, but challenges remain. To meet them, Castro is relying on the support of the Revolutionary Armed Forces (FAR), for which he was minister for 49 years, the PCC and the Catholic Church, which has played a key role in the negotiations with the US. Cubas economic reforms have increased inequality (1) and everyone is uncertain over the future. The PCC has tried to respond with public consultations in the run-up to party congresses. Castro has confirmed that consultations will also be held before the 7th congress in April 2016. But the debate has already begun between members and non-members of the PCC, especially on the Internet, despite limited access.

Ral Castro has been working to modernise Cuban socialism a euphemism for the economic liberalisation that started in 2011. Though this is tearing down the society Fidel Castro tried to build, the former president has not protested: The Cuban model doesnt even work for us anymore, he said in 2010. The economic situation gave Cuba no choice. Venezuelan aid had enabled it to achieve an average 10% growth between 2005 and 2007, but the financial crisis and Venezuelas own problems ended this: In 2013 the value of trade between Cuba and Venezuela fell by a billion dollars; it could fall still further in 2014, Cuban economist Omar Everleny Prez Villanueva warned last year (2). Some estimate the fall could be as much as 20%.

In March 2014 Cuba adopted a new law on inward investment, presented by Ral Castro as crucial. With the exception of healthcare, education and defence, the economy is now open to foreign capital, promised tax exemptions for eight years, or longer, especially in special economic development zones such as the new port at Mariel (3), built with help from Brazil. Projects must be approved by Cuban government agencies. Dborah Rivas Saavedra, general director for foreign investment at the

Ministry of Foreign Trade and Investment, said: Its not capital which decides how the money will be invested (4). Hiring is monitored by state agencies. Economist Jess Arboleya Cervera said: Cuban migrs already invest in small businesses indirectly [through the money they send home]; investment on a larger scale is no longer prohibited by law, only by the embargo (5).

Some feel the pace is still too slow: You cant modernise something that has never worked, said Prez Villanueva. The growth just isnt there. With a bit of help from God, we may achieve 1% [in 2014] (6). Sociologist Ailynn Torres asked: What is this proposed economic model intended to achieve? Who are the winners and the losers? (7).

The official line is that introducing market principles into Cubas economy should make it possible to improve its performance without undermining social justice. But 20% of Cubas urban population now live in poverty (compared with 6.6% in 1986). The abolition of the libreta (ration book) was announced, then postponed, as it would have hit the poorest hard. In a society characterised by equality, the divide between the winners and losers in the reforms is growing.

According to Ral Castro himself, the losers include state employees paid in pesos, whose salaries are not enough to live on, the elderly (around 1.7 million), whose pensions are insufficient given the cost of living (8), single mothers, the black population (which gets little or no benefit from remittances by Cuban Americans), and people in Cubas eastern provinces. The winners include employees of public-private enterprises, tourist industry workers, smallholders in the private agricultural sector and some self-employed (cuentapropistas) anyone with access to hard currency, the CUC (convertible unit currency). Since 2004 this has been used alongside the Cuban peso; one CUC is equivalent to 24 pesos. It was introduced to replace the US dollar, permitted since 1993. So Cuba has parallel economies based on the peso and the CUC, used by tourists and Cubans who deal with them.

Castro is counting on the loyalty of the FAR to reconcile economic liberalisation with a single-party political system. Since the great economic crisis of the 1990s (9), the military hierarchy has been running key sectors of the economy through the holding company Grupo de Administracin Empresarial SA (Gaesa). Businesses controlled by the military were used as a testing ground for enterprise optimisation, a management model based on western techniques for stimulating productivity. Most

Lori M Wallach is director of Public Citizens Global Trade Watch, Washington DC (www.citizen.org)

Janette Habel is a lecturer at the Institut des Hautes Etudes dAmerique Latine, Paris

BY LORI M WALLACH

TWENTY-ONE YEARS OF NAFTAS FAILED PROMISES

Trade imbalanceNAFTA was going to enrich consumers, workers and farmers in the US, Mexico and Canada.

A minute percentage of the very wealthiest gained everybody else lost massively

BY JANETTE HABEL

END OF US EMBARGO WILL FLOOD CUBA WITH DOLLARS

Some will be more equal than othersRelations are beginning to normalise between Cuba and the US last month a ferry service began from Florida,

the first for more than 50 years. But the new Cuba may be a less stable society

The rosy job-creation promises were predicated on NAFTA improving the US balance of trade. The reality has been the opposite

LMDLe Monde diplomatique JUNE 2015 5improving the US balance of trade. The reality has been the opposite.

US manufacturing and services exports to Mexico and Canada have grown slower since NAFTA; annual growth in US manufacturing exports to Canada and Mexico has fallen 62% below the annual immediately-pre-NAFTA rate. Even growth in services exports, supposed to do especially well given a presumed US comparative advantage in services, dropped precipitously. Annual growth of US services exports to Mexico and Canada since NAFTA has fallen 49% below the pre-NAFTA rate. The overall growth of US exports to countries that are not FTA partners has exceeded combined US export growth to countries that are FTA partners by 30% over the last decade.

Scores of NAFTA countries environmental and health laws have been challenged in foreign tribunals through the ISDS system. More than $360m in compensation to investors has been extracted via challenges against toxics bans, land-use rules, water and forestry policies, etc. More than $12.4bn is currently pending in such claims, which cover foreign investor challenges to medicine patent policies, a fracking moratorium and a renewable energy programme. Instead of learning the lessons from these corporate excesses, the Obama administration ignored all the input from civil society representatives when it reviewed its model investment treaty language in 2011 and continues to push for inclusion of ISDS in TTIP, despite protests from the European Commission and EU member state officials and parliamentary bodies. US corporations, such as Chevron, which is using ISDS to try to avoid paying billions for environmental and health damage from pollution in the Amazon, have made clear that ISDS must be included in TTIP.

The average post-NAFTA annual US agricultural deficit with Mexico and Canada has reached $975m, almost three times the pre-NAFTA level. US food processors moved to Mexico for its low wages, and food imports soared. NAFTA rules relaxing US food safety standards allowed imports from plants previously considered unsafe. Before NAFTA, when imports were allowed, pre-NAFTA, only from facilities deemed to at least satisfy US standards, just one beef

processing plant and no poultry facilities from Mexico were approved. US beef imports from Mexico and Canada have risen by 133% since 1993. Over the last decade, US food exports to Mexico and Canada have fallen slightly while food imports from them have more than doubled.

This is nothing like the promises made to US farmers and ranchers that NAFTA would

allow them to export their way to wealth and farm income stability.

Given the extreme negative impact on US workers and farmers, its shocking that NAFTA did not benefit people in Mexico and Canada. Rather than the win-win promised, NAFTA has been lose-lose for most. Exports of subsidised US corn increased under NAFTAs first decade, destroying the livelihoods of more

than a million Mexican campesino farmers and about 1.4 million other Mexicans whose livelihoods depended on agriculture. The mass dislocation exacerbated the instability and violence of the drug war. And the desperate migration of those displaced from the rural economy pushed down wages in the border maquiladora factory zone and contributed to a doubling of Mexican immigration to the US.

Though the price paid to Mexican farmers for corn plummeted, the deregulated retail price of tortillas the staple food shot up 279% in the pacts first 10 years. Real wages in Mexico have fallen below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38% fewer consumer goods than on the day NAFTA took effect. Despite promises that NAFTA would benefit Mexican consumers by granting access to cheaper imported products, the cost of basic consumer goods has risen to seven times the pre-NAFTA level, while the minimum wage is only four times the pre-NAFTA level. Facing displacement, rising prices and stagnant wages, more than half of the total population, and more than 60% of the rural population, are still below the poverty line. The promised NAFTA nirvana did not happen.

TTIP negotiations could have been the place to create a new model of economic integration premised on not repeating the mistakes of NAFTA and other damaging pacts. But by following the same secretive, biased negotiating processes and including the same provisions that undermine the public interest, TTIP is setting up workers and consumers on both sides of the Atlantic for more damaging consequences. Given the grim evidence of two decades of NAFTA, European and US citizens are right to raise the alarm. If any good is to come from the damage NAFTA has caused millions, then we must use NAFTAs record to stop the TTIP project.

ORIGINAL TEXT IN ENGLISH

(1) See Lori M Wallach, Ten threats to Americans, Le Monde diplomatique, English edition, June 2014. (2) For all sources and further reading, see NAFTAs 20-year Legacy and the Fate of the Trans-Pacific Partnership, Public Citizens Global Trade Watch, February 2014; www.citizen.org/documents/NAFTA-at-20.pdf

The restoration of diplomatic relations with the US is necessary but dangerous. Cuba knows that the US goal is still to overthrow the regime

US President George Bush caps his pen after signing the North American Free Trade Agreement in December 1992

RENAUD GIROUX/AFP/GETTY IMAGES

people still regard the FAR as prestigious, but their privileges are criticised; its not uncommon to hear they dont have any problem finding somewhere to live (an allusion to the modern housing complex reserved for military personnel and families in Havana). The PCC has lost some of its influence, but Castro has revamped its leadership, bringing in younger people and women, and increasing racial diversity. Economist Pedro Monreal Gonzlez feels the PCC has maintained its credibility: The state still enjoys popular support because it is able to provide public goods that many Cubans regard as essential.

In 2013 the PCC announced the establishment of a constitutional reform commission. This year, it announced a new electoral law that will come into force before the end of Castros mandate. But it is difficult to see how the leadership can be renewed through the designation of cadres without the same legitimacy as their seniors, and with no public debate to allow a choice between candidates with different agendas. The current approach, where candidates must have the final approval of the PCC, does not seem viable in the long term.

Espacio Laical, a magazine published by the diocese of Havana, was a main forum for political debate. For a decade, it carried articles on constitutional reform, the role of the PCC and the reform of the organs of popular power. Its directors, Roberto Veiga and Lenier Gonzlez, both lay Catholics, stressed the contrast between the pluralism of [Cuban] society and the lack of spaces in which this pluralism can be expressed (10). Last year both revealed they had been forced to resign because of very serious criticisms of them and Cardinal Jaime Lucas Ortega y Alamino. The diocese clearly wanted the magazine to take a less political approach. Subsequently the Centro Cristiano de Reflexin y Dilogo-Cuba (11) agreed to sponsor a similar

publication, Cuba Posible, coordinated by Veiga and Gonzlez. The first issue reported on a symposium on Cubas sovereignty and the future of its institutions.

There has been severe criticism of article 5 of the constitution. It defines the PCC as Martian [after Jos Marti who inspired Cubas struggle for independence], Marxist-Leninist, the organised vanguard of the Cuban nation, and as the supreme leading force of society and state. This is contested not only by the Church, but also by scholars. According to sociologist Aurelio Alonso, the image of the party as a vanguard loses all meaning as soon as the party is in government, and Cuba urgently needs to build an inclusive state that is able to admit political and ideological pluralism. Veiga believes Cuba must envisage the possibility of authorising the existence of other political forces rooted in the foundations of the nation, even if such forces are unlikely to emerge soon (12). No one knows if the planned electoral reforms will allow the election of people with close links to the Church, or of other independent figures.

The debate also concerns the way in which presidents are elected; they are to be limited to two terms of five years, and some believe they should be elected by universal suffrage, so as to ensure their electoral legitimacy. The political scientist Julio Csar Guanche has stressed the need for a reorganisation of people power, officially embodied in Cubas municipal, provincial and national assemblies (13). According to sociologist Ovidio DAngelo Hernndez, Cuba needs to build a democratic and socialist citizenship, but the mass organisations are too much subordinated to the PCC to be an expression of it. Especially, says Guanche, as the official discourse undermines the basis of its own historical legitimacy. Questioning egalitarianism opens the way to questioning socialisms most powerful ideal equality. This is barely concealed criticism of

Castros speech at the congress of the Workers Central Union of Cuba (CTC), denouncing paternalism, egalitarianism, excessive handouts and unjustified subsidies the old mentality built up over the years.

This old mentality also affects the PCC, where unanimous voting and a tendency to self-censorship still prevail, although these are now being challenged. In 2013, for the first time, a member of the national assembly Mariela Castro, Rals daughter voted against a new labour law in protest at its insufficient provisions against gender discrimination. The cancellation of the screening of French director Laurent Cantets film Return to Ithaca (2014), about popular disenchantment in Cuba, led to protests from Cuban colleagues.

In this context, the restoration of diplomatic relations with the US is necessary but dangerous. Cuba knows that the US goal is still to overthrow the regime. Cuba won the first round by making no concessions, but the mood is of tempered optimism. People said to me: [The Americans] will probably take everything, like they do everywhere else. What will be left for the Cubans? Theyve just bought one of our baseball players for $63m. Many people no longer know what the future holds for them, said sociologist Rafael Acosta. No one knows how Cuba will control the flood of dollars and tourists once the

embargo is lifted. One area of disagreement is over thousands of properties nationalised with the revolution, since the government does not intend to compensate former owners who left the country. (It would be hard to balance the US return of Guantnamo against the cost of a half-century embargo, estimated at $100bn.)

A complete end to the embargo will require the approval of the US Congress, where Republicans and Democrats are divided. On 14 April Obama announced plans to remove Cuba from the list of state sponsors of terrorism, though Congress was given 45 days to object. The restoration of diplomatic relations and the nomination of ambassadors should follow. But normalisation will take a while. Cuba will take advantage of the delay to avoid destabilisation and cultivate its relations with Latin America, China and the EU. Without a historic leader personifying the struggle against the Empire, it may be harder to unite and mobilise Cubans.

TRANSLATED BY CHARLES GOULDEN

(1) The Gini income coefficient was 0.24 in 1986, 0.38 in 2002 and 0.40 in 2013.(2) Cuba: soberana y futuro (Cuba: Sovereignty and the Future), Cuba Posible, no 1, Havana, October 2014.(3) Mariel is near a key shipping lane for freighters using the Panama Canal, and will be the largest container terminal in the Caribbean.(4) Granma, Havana, 17 April 2014.(5) Jess Arboleya Cervera, Integracon y soberana (Integration and Sovereignty), Cuba Posible, 20 January 2015; www.cubaposible.net(6) Cuba Posible, no 1, op cit.(7) Ibid.(8) Speech at the 20th congress of the CTC, 22 February 2014.(9) Between 1991 and 1994, GDP fell by 35%.(10) Cuba y Estados Unidos: Los dilemas del cambio (Cuba and the US: the dilemmas of change), Cuba Posible, no 2, February 2015.(11) The CCRD-C defines itself as a religious institution of civil society.(12) Cuba Posible, no 2.(13) Cuba Posible, no 1.

6 JUNE 2015 LMDLe Monde diplomatique

Gazprom and the Russian state have close relations for historical reasons, but they are separate entities. Gazprom is the direct descendent of the Soviet Ministry of the Oil and Gas Industry, which was turned into a state company with financial and managerial autonomy in 1989. Its president, Viktor Chernomyrdin, became Russian prime minister in 1992, and in 1993 made Gazprom a joint-stock company and opened it up to investors. The state remained dominant, though, with 38% of the shares. When Vladimir Putin became president of the Russian Federation in 2000, he reasserted government control of this powerful geopolitical tool and put one of his own, Alexei Miller, in charge of the company in which the state had reacquired a 51% share.

Gazprom is the worlds biggest gas company; it holds 72% of Russias reserves (1), 16.8% of the global total (2). In 2013 its production (487bn cubic metres) overtook ExxonMobil and Shell, as did its exports (233.7bn cubic metres), accounting for 12% of Russias total exports of goods and services.

More than half of Gazproms output is sold on the domestic market and it plays an important part in ensuring Russias economic and social stability: by agreement with the state, it supplies Russian consumers, domestic and industrial, with low-cost gas. Cut-price energy makes a difference to Russian households and functions as a subsidy for energy-intensive industries. In return, Gazprom enjoys a monopoly over transport and exports by pipeline, through its wholly owned subsidiary Gazprom Export, and a proportion of profits from exports go back to the state.

Like all Russian companies in the hydrocarbon sector, Gazprom is taxed on its profits and on exports and extraction, but also pays an additional premium that independent producers are spared. Gas companies account for 5% of state revenues, a significant income stream, though much smaller than that from the oil industry, which contributes 36%.

Yet Gazproms interests are not identical to the Kremlins. The company wants to grow as a business, not as an arm of the state like Pemex, the Mexican state oil company. Gazproms directors want to see it as an international company, alongside Shell, Exxon and Total as do Russias political leaders. As it operates in competitive markets domestically and internationally, pursuing competitiveness is essential, especially in the EU, where it makes a large proportion of its profits.

Russia, with a market share of around 30%, is the EUs main external gas supplier, a source the EU would find hard to replace in the short term, especially in Central Europe, where more than 70% of the gas comes from Russia. In volumes imported, given their size, Germany, France, Italy and the UK are the favoured markets for Russias strategy. Gazprom inherited most of the Take or Pay (TOP) gas contracts signed in the Soviet period with historic operators ENI (Italy), E.ON Ruhrgas (Germany) and GDF Suez (France). These run for 20-30 years, peg gas prices to oil prices and stipulate a volume commitment: the customer undertakes to buy an agreed quantity each year at an agreed price and incurs a fine if the order is smaller. This contractual arrangement based on risk-sharing and stability has enabled the construction of the necessary infrastructure to supply the European market from western Siberias large gas reserves.

Most of Gazproms deliveries to Europe fall under such contracts, but from time to time the company also uses short-term contracts. It needs to be flexible to maintain market share: the EU market has become more competitive since the gas directives of 1996 and 1998, and

after the third climate and energy package of 2009, which aims to complete the opening up of the gas and electricity industries by separating production and transport. There has been a glut in the world gas market since 2008, because of stagnating demand due to the economic crisis and to US shale gas production. The short-term markets quickly translated this into price drops, while long-term contract prices (which account for more than 50% of the EUs gas imports) fell more slowly. This created a significant disparity not necessarily sustainable between the types of contract.

Gazprom, faced with significant losses of markets in 2011-2, had to renegotiate its arrangements with most EU customers. It reduced its base price and offered reductions of between 10% and 20% (3). With oil prices currently 50% lower than in June 2014, this downward trend is likely to continue.

Since the early 2000s, relations have been volatile between Russia and the EU, which has found it hard to define a common policy. Germany has made its gas supply from Russia more secure with the Nord Stream pipeline, but Poland and the Baltic states have attempted to diversify their supplier base. Against a background of tensions over the Ukrainian conflicts of 2006 and 2014, Gazprom has shown willingness to behave principally as a business and remain a reliable supplier to Europe, despite EU and US sanctions against the Russian energy sector. There was goodwill on both sides in the negotiations led by the EU energy commissioner, Gnther Oettinger, to find a solution to Kievs gas debts and guarantee transit through Ukraine.

Gazprom has a major advantage thanks to the lowest production costs in the market, even if investing in new regions could take the edge off that. Its main production centre is currently in the Nadym-Pur-Taz region in western Siberia, where it exploits reserves in Urengoy, Yamburg and Medveje. These super-giants, which went into production in the 1970s and 80s, are now reaching maturity. As exploitation of the Arctic Yamal Peninsula in the Kara Sea regions in the far east of the country and offshore gas fields is phased in, it is intended to replace these older fields. According to Gazprom, Yamal and eastern Siberia could account for 20% of production by 2020, and more than 50% by 2030.

Catherine Locatelli is an expert on Russias hydrocarbon industries and a CNRS research fellow at the PACTE-EDDEN laboratory, Universit Grenoble Alpes

The EU in April accused Gazprom Europes main external gas supplier of unfair pricing. This challenge to the state-owned energy giant has further heightened tensions with Russia

RUSSIAS NO 2 EXPORT CHANGES ITS STRATEGY

Gazproms eastern future

BY CATHERINE LOCATELLI

Russia has abandoned its plans to build the South Stream gas pipeline, intended to carry Russian gas under the Black Sea and via Bulgaria to the EU. President Vladimir Putin said during a visit to Turkey last December: If Europe does not want to implement [South Stream], then it will not be implemented. We will redirect our energy flows to other regions of the world mainly Asia.

The South Stream project involved European investors EDF (France), ENI (Italy) and Wintershall (Germany) and was launched in 2006 with the aim of bypassing Ukraine and scuppering the Nabucco pipeline (which was to link the gas fields of the Caspian Sea to central Europe). The decision to cancel South Stream came at a time of increased diplomatic tension with the EU (which had adopted sanctions against Russia after its annexation of Crimea in March 2014).

But there were also economic reasons. Russia realised that the lengthy negotiations with the European Commission over the implementation of the third climate and energy package had reached an impasse. To promote competition, EU rules require gas

pipeline operators to open up their networks to all suppliers, so investors no longer have priority in reserving gas transportation capacity according to their stake in the pipeline. Gazprom asked to be exempted to offset the necessary investment ($35bn).

To guarantee its gas supply to Europe, which will be its biggest market for many years to come, Russia wants to replace South Stream with another gas pipeline under the Black Sea this time to Turkey (Turkish Stream). The project has already attracted interest from Greece, Macedonia, Serbia and Hungary. If transit via Ukraine becomes too uncertain, Europe will have to collect its gas from the Greek-Turkish border, where the terminal is to be located. This will involve building costly infrastructure, in which the major European gas companies are reluctant to invest (for the same reasons as Gazprom).

The EU still believes it can secure the Ukraine route for Russian gas by means of a lasting agreement between Ukraine and Russia. It is pressing Ukraine to resolve the dispute over its gas debt and wants to make economic aid conditional on Ukraine liberalising its gas sector.

HLNE RICHARD

Why Russia cancelled South Stream

President Vladimir Putin says Russia is ready to redirect its energy flows to other regions of the world mainly Asia

ULRICH BAUMGARTEN VIA GETTY IMAGES

Gazprom also faces competition at home. Independent gas companies such as Novatek and Russian oil companies, some of which are majority state-owned (such as Rosneft), already account for 27% of production. In the important market sectors of power generation and industrial energy supply, they have taken market share from Mezhregiongaz, the Gazprom subsidiary that controls many transmission and local distribution networks. The state has deliberately exposed its main company to competition, trusting that the rigours of the market will be to the benefit of the gas giant, often referred to as the state within the state.

Doubts about Gazproms ability to open up new markets were dispelled by its contract with the China National Petroleum Corporation in May 2014; the contract has economic and strategic significance, given tensions with

the EU over Ukraine. This reorientation was confirmed in December 2014 by the abandonment of the South Stream pipeline project, intended to link Siberia and Europe, passing through the Black Sea and emerging in Bulgaria. Russia now favours a route through Turkey, which several countries are prepared to extend, from Greece to Hungary, via Macedonia and Serbia. In Asia, Gazprom also has its sights on the Japanese and South Korean markets.

Although the Sino-Russian agreement is for relatively low volumes (38bn cubic metres a year for 30 years), it indicates a clear reorientation to the east, and is in addition to liquefied natural gas (LNG) exports from Sakhalin. The value of the contract $400bn for 30 years supply gives some indication of the tariff for China, even if the terms remain largely confidential. The price may be in the region of $360-430 per thousand cubic metres, advantageous compared to its main competitors, LNG or gas from Turkmenistan.

These exports will require the construction of a new gas pipeline, the Power of Siberia, linking the Chayandinskoye (Yakutia) reserves to Vladivostok via Khabarovsk along the Amur river. Gazprom is also planning to develop LNG projects, one based in Vladivostok, which will export to Japan. In the medium term, Russia could export 110 cubic gigametres to Japan annually. A new production zone may emerge in eastern Siberia and the Far East. After Chayandinskoye, exploitation of other reserves may follow, such as Kovytka in the Irkutsk region or Talakan in the Sakha Republic (4). Exports to Asia are part of a wider programme adopted in 2007 that aims to develop a production and pipeline system in eastern Siberia and the Far East. Ultimately, Russia and Gazprom may force Europe and Asia to compete for their gas supply and sell to the highest bidder. Potentially Asia has much to gain and Europe much to lose.

TRANSLATED BY GEORGE MILLER

(1) According to Gazprom.(2) Proven reserves at the end of 2013 according to BP (British Petroleum), Statistical Review of World Energy, London, June 2014.(3) James Henderson and Simon Pirani (eds), The Russian Gas Matrix: How Markets are the Driving Change, The Oxford Institute For Energy Studies, 2014.(4) Keun-Wook Paik, Sino-Russian Oil and Gas Cooperation: the Reality and Implications, The Oxford Institute For Energy Studies, 2012.

LMDLe Monde diplomatique JUNE 2015 7

Nearly 100,000 Kosovars are thought to have tried to enter the EU since last summer, and the flow of migrants swelled this spring, with whole families crossing Serbia to reach the Hungarian border. According to the Serbian authorities, 60,000 Kosovar Albanians have asked for a Serbian passport, intending to apply for a European visa.

Seven years after Kosovo declared independence and was placed under EU supervision, we have a disaster, says Andrea Capussela, an Italian who was, between 2008 and 2012, head of the economic affairs unit at the International Civilian Office, a major international mission to Kosovo. Capussela has just published an attack on European policy in the Balkans (1), and says things are worse since the European mission arrived. He believes the situation raises questions not only about the EUs investments in Kosovo (more than 4bn between 1999 and 2013) but also about the soundness of its foreign policy.

Since last autumn, Federica Mogherini, the EUs foreign policy chief, has been trying to rescue the EU Rule of Law Mission in Kosovo (Eulex), which was established in 2008 to reinforce judicial institutions and police. It had annual funding of 111m, 1,600 personnel, and a specific mission to fight corruption and organised crime. But a number of senior officials are suspected of embezzlement, and there are accusations of a cover-up.

For a whole year, they not only buried, but actually compromised the inquiry, says Maria Bamieh, a British lawyer who was a prosecutor on an independent taskforce within Eulex, investigating organised crime. In a 2012 report, she told her superiors she suspected two senior officials of corruption: Italian judge Francesco Florit, then chairman of Eulexs Assembly of Judges, and its chief prosecutor, Jaroslava Novotna. The allegations were based on tapped phone conversations between the former secretary general of Kosovos health ministry, Ilir Tolaj (tried for corruption and tax fraud in 2010), and go-betweens who assured him the two judges were likely to be sympathetic (2).

Bamieh also mentioned the case of Fatmir Limaj, former transport minister, accused of involvement in organised crime and embezzlement, and that of Enver Sekiraqa, a crime boss suspected of involvement in a bombing the file on him disappeared and there was no follow-up.

Last October Kosovos biggest newspaper, Koha Ditore, obtained parts of this file and got an interview with Catherine Fearon, political adviser to the new Italian head of Eulex, Gabriele Meucci. Journalist Vehbi Kajtazi said Fearon demanded that he name his sources and threatened him with legal action, but the paper still began publishing his inquiry at the end of the month. The revelations led Eulex to suspend Bamieh, whom Meucci said was suffering from burnout; he also criticised her for passing information to the media. Back in London, Bamieh accused her superiors of being too close to Kosovar power: How can we be expected to fulfil our mission when our superiors dine with Kosovar gangsters and politicians suspected of corruption?

Mogherini ordered an inquiry, to be led by Jean-Paul Jacqu, an expert on international law who had been head, between 1992 and 2008, of the legal service of the EUs Council of Ministers, which mandated Eulex. Jacqus report, published in April, concludes that there was no cover-up, but refers to administrative errors: the EU was not given sufficient information on the document setting out the suspicions of corruption within Eulex; senior officials were slow to launch an inquiry because they did not find the content of the tapped phone conversations particularly credible. Yet Jacqu does think there should have been an inquiry as soon as Bamieh alerted her superiors. Referring to the threats against Kajtazi, he writes that the head of the missions

political adviser warned the journalist against disclosing information on criminal cases, as this would infringe Kosovan law.

Kajtazi feels the report cant be considered as independent: It concludes that I was not threatened, and that it was just a breakdown in communications. But Eulex did threaten me with legal action if I published. Jacqu has tried to minimise the chances of the mission being implicated in corruption.

Jacqus report does however differ from the official line of European institutions, which present the Kosovo mission as a model. Jacqu notes serious dysfunction within Eulex and describes corruption in Kosovo as omnipresent the judicial system is no exception. Seven years of work to restore rule of law have not been enough to eradicate corrupt practices, but it should be possible to lay the foundations of a system capable of fighting corruption. According to Jacqu, Eulex will lose its meaning if it is not reformed, but he feels its withdrawal from Kosovo would be premature its mandate ends in 2016 as the local judicial system is not capable of dealing with some cases.

In an open letter to Jacqu, Bamieh calls the report disappointing and inaccurate, more an

internal memo than an independent inquiry: she claims that the transcriptions of the recorded phone conversations show that money had changed hands. She deplores the fact that the inquiry did not include Novotna, and that the investigation of Florit only began in 2013, after information from German intelligence services, and not when she submitted her own internal report in 2012. She also quotes the names of former colleagues who supported her and were forced to resign from Eulex.

After the stumblings of the International Criminal Tribunal for the former Yugoslavia (ICTY), and with no judicial follow-up as yet to the report by US special prosecutor Clint Williamson on human organ trafficking and the crimes of the Kosovo Liberation Army (KLA) (3), the Bamieh affair reveals the extent of the compromises made by European institutions. Capussela says: People talk of corruption, and organised crime, but no one ever says that what we have created is an authoritarian regime in the making, and that a criminal elite which has emerged from the KLA is stealing public funds and has latched on to political power.

The KLA was the main force supported by the West in 1999, and took power when Serbia surrendered after the NATO airstrikes. Inquiries

led by ICTY prosecutor Carla Del Ponte, then by Dick Marty for the Council of Europe, found that the KLA had committed violence against Serb and Roma civilians, and Albanian political opponents. Some of the murders, abductions, false imprisonments and torture happened in the years just after the conflict, when NATO troops and the UN Interim Administration in Kosovo (Unmik) were in the country.

The mission was incapable of defending civilians, says Chris Decker, who spent 12 years in Kosovo, from 1999, with the International Crisis Group, then the Organisation for Security and Cooperation in Europe (OSCE). The UN police were poorly equipped and completely unprepared. It was easy for the KLA to engage in violence. The international community keeps making the same mistakes: they intervene militarily, then let criminal elements take power, which prevents the establishment of rule of law.

The local elite were not ousted, since that could have upset the established order and led to instability. Eulex does not seem to have done anything different. Del Ponte believes the leaders of the KLA were an obstacle to Eulexs mission, and could even have endangered the entire Balkan peace process. She says prime ministers Agim Ceku (2006-8) and Hashim Thai (2008-14) were in a position to create violence in Macedonia, southern Serbia and elsewhere, by calling on Albanian minorities to take up arms (4).

Capussela says: At first, I was surprised by the negligence, incompetence and laziness I saw at Eulex. Later, I realised they were partly explained by the political choices that had been made. The people who set out to Europeanise Kosovo ended up being Balkanised, says Kosovar political scientist Belul Beqaj. Their employees cant be prosecuted. The countries involved dont want their people to be put on trial, says Sian Jones, a Kosovo expert with Amnesty International.

Capusselas book lists Eulexs failures economic, financial and human rights. It has failed to investigate corruption linked to the privatisation of state enterprises (telecommunications, cement), roadbuilding, land expropriation, electoral fraud, intimidation of journalists and political assassinations, and some war crimes.

Worse, Eulex has occasionally targeted innocent parties. The governor of Kosovos central bank was held in custody for four months without being told the charges against him, which were later dropped. Capussela, who alerted Eulex about accusations he felt lacked credibility, believes the banker was arrested because he obstructed the interests of powerful figures.

In this climate, tensions are rising. The political class, led by Hashim Thai, is trying divert attention from itself. Capussela says: Their networks would enable them to provoke riots in Macedonia, where the situation is highly unstable, against the Serbs in Kosovo, or against EU representatives. This would amount to telling Brussels and Washington You are crossing the line. Decker too believes the Kosovar ruling class knows how to use violence to its advantage: Without the riots in 2004 [against the Serbs and other minorities], there wouldnt have been so much pressure for independence.

Eulexs inability to establish a functional judicial system raises questions not just over the money the EU has invested in the mission (more than 1bn), but over respect for the rights of Kosovar citizens and how peace can be maintained.

TRANSLATED BY CHARLES GOULDEN

(1) State-Building in Kosovo: Democracy, Corruption and the EU in the Balkans, I B Tauris, London, 2015.(2) See Julian Borger, EUs biggest foreign mission in turmoil over corruption row, The Guardian, London, 7 November 2014.(3) Statement by the Chief Prosecutor of the Special Investigative Task Force (SITF) on investigative findings; www.sitf.eu/. After this report, the Kosovo parliament had until the end of this May to establish a special tribunal to try these crimes, which fall outside the ICTY mandate.(4) Carla Del Ponte with Chuck Sudetic, Madame Prosecutor: Confrontations with Humanitys Worst Criminals and the Culture of Impunity, Other Press, London, 2009.

Despite EU patronage, Kosovo is not working as a country, and corruption is rife even within the international mission to establish rule of law

CRIMINALS TAKE OVER AFTER MILITARY INTERVENTION

EU fails in Kosovo

BY ANA OTASEVIC

Ana Otasevic is a journalist

8 JUNE 2015 LMDLe Monde diplomatique

Julien Brygo is a journalist

Marina Maestrutti is senior lecturer in sociology at the University of Paris 1 Panthon-Sorbonne, and the author of Imaginaires des nanotechnologies: Mythes et fictions de linfiniment petit (The Imaginary World of Nanotechnology), Vuibert, Paris, 2011

At a meeting of the ReOpen911 organisation in a Paris youth hostel in early May, Richard Gage began by asking his audience: How many of you think that the World Trade Centre towers collapsed because of a fire caused by the impact of the planes and believe the official version? Just one hand went up. There were around 70 people mainly men at this meeting of the campaign group, which wants the 9/11 inquiry reopened. Gage, recently arrived from the US, heads the US organisation Architects & Engineers for 9/11 Truth. Ive come to tell the truth and separate fact from fiction, he said. How many of you have doubts about whether the towers collapsed because of the fire caused by the planes impact? Ten hands went up.

The third question was the clincher: How many of you are convinced that the towers collapsed as a result of controlled demolition? Forty or so people raised their hands. Why didnt you bring your friends? Gage asked them. Probably because you havent had any since you told them you questioned the official version! There was laughter. Gage then embarked on a two-hour PowerPoint presentation, which he has already given 400 times in 88 US cities and 35 countries. His audience was shown the same image over and over: a skyscraper falling perfectly symmetrically and straight. A clear sign, according to Gage, of what he calls controlled demolition.

The last time a journalist interviewed me [1], he asked what I thought about Elvis living

on a desert island with Marilyn Monroe, said Arnaud, an unemployed IT technician in his 30s who runs the organisations website. He said the point of todays meeting was to get across the idea that doubts exist and that those who hold the official line have not dispelled those doubts.

Sbastien, a temp receptionist who does the translating and subtitling of ReOpen911s online videos, said: Im not saying it was the Americans or Mossad who did it; Im saying I dont believe the official version. There are definitely a lot of conspiracy theorists in this organisation. But there are also a lot of people who simply have doubts about the obvious inconsistencies of the official version. Most of our members are struck by the fact that its impossible to have a public debate. Look at Mathieu Kassovitz and Marion Cotillard [2]: 9/11 is dogma.

Before long, Sbastien brought up Alain Soral, the convenient idiot were often compared to, who took all our data and stuck the word Jewish on the end (3). Other members of the group were angry about comments by Caroline Fourest, Pierre-Andr Taguieff and Grald Bronner, whom they consider their main detractors, and the recent book by Philippe Val, former head of Charlie Hebdo and France Inter, whom ReOpen911 believes to be one of the public figures most resistant to challenging the official version.

Members of ReOpen911 may all nurture their own version of what happened, but they

share an obsession with watching pictures of the towers collapsing. To back up his thesis that they should not have fallen like that (if the official version is true), Gage cited off-the-cuff reactions from firemen and bystanders; he made comparisons with other dynamited buildings, and quoted experts from all over the world who explain that traces of thermite, a powerful explosive, were found among the ruins.

Gages 10-point argument includes the sudden destruction at the point of the planes impact, the presence of molten iron and iron microspheres, and the lateral ejection of steel girders over 180 metres at 95kmph. He maintains no plane is capable of bringing down 100,000 tonnes of structural steel. And even if some of this goes over his audiences heads, the shock of the repeated images is enough to convince them that the truth has been hidden from us.

History does sometimes come down on the conspiracy theorists side. Arnaud, who described himself as being on the left, mentioned the progressive US historian Howard Zinn and his now universally recognised work deconstructing the Vietnam war, including the attack on a US ship under a false flag off Tonkin. This attack on the American destroyer, the USS Maddox, in 1964, started the Vietnam war. It was not carried out by North Korean torpedo boats but staged by the US itself. The head of ReOpen911 in France, a young man who calls himself Lixi, also mentioned the police

being sent to start fights at demonstrations so that demonstrators can be banged up. If that doesnt count as a conspiracy

At the meeting, Gage was keen to get back to the facts: close-ups of debris, cross-sections of steel girders, endless replays of the symmetrical collapse. Its not just about the towers, a disappointed Sbastien told me after. Its a pity it focused only on them when theres so much else: insider trading by shareholders, links between the Bush and Bin Laden families, the attack on the Pentagon

For the audience, though they were riveted by the technical data, it was what Gage said next that clinched their belief that the US planned the attack itself: The wars which followed have cost $2-3 trillion and the media, who refuse to reopen the case, are all owned by the arms industry, the banks, and insurance and oil companies which have made major profits from 9/11. Ninety per cent of the media are owned by six corporations. The media have a plan, an agenda which is not ours. We must become the media. There was applause, then Gage asked his audience to put money in a box being passed round the room. The organisations aim is to collect several hundred thousand dollars to fund an independent inquiry into the collapse of 7 World Trade Centre.

TRANSLATED BY GEORGE MILLER

(1) Interviewees declined to give their surnames.(2) These two French actors have said in TV interviews that they do not believe the official version.(3) See Evelyne Pieiller, The online politics of Alain Soral, Le Monde diplomatique, English edition, November 2013.

How far do you agree with the following statements (on a scale of 1 to 7; 1 being not at all and 7 completely)? 1) AIDS was a deliberate human invention, specifically devised by the US government; 2) The Apollo mission never landed on the moon and the pictures broadcast to the public were a CIA trick; 3) The assassination of John F Kennedy was not the act of a lone gunman but the result of an elaborate plot; 4) Princess Diana did not die in a car accident; she was assassinated. And so on.

Social psychologists including Pascal Wagner-Egger and Adrian Bangerter, who devised the test have spent years trying to analyse the mechanisms that make people believe in conspiracy theories. They treat these theories as collective constructs: a manifestation of social thinking (1). The discipline is particularly interested in biases that, in our everyday thinking, might favour the spread and persistence of conspiracy theories.

The first of these is the conjunction fallacy, the widespread tendency to overestimate the probability that two separate events are linked. A 1983 experiment by Daniel Kahneman and Amos Tversky tested this by giving participants a description of 31-year-old Linda, a philosophy graduate with leftwing political beliefs who had been an anti-racism activist (2). When asked Do you think it is more likely that Linda is a bank employee (Response A)? Or a bank employee and a feminist (Response B)? nearly 90% of participants answered B. They based their judgment on information in the description they were given, rather than the actual likelihood of such an eventuality (it is

statistically more likely that someone will be a bank employee (fulfilling one criterion) than a bank employee and a feminist (fulfilling two). Stereotypes the implicit social aspects in the portrait of Linda led participants to fall for the conjunction fallacy.

This sort of flawed thinking operates directly in conspiracy theories. Olivier Klein and Nicolas Van der Linden showed this in relation to 9/11: presented with two separate pieces of data the discovery of melted steel in the debris of the Twin Towers and the absence of reaction by the Bush administration to the information that individuals with Al-Qaida links were taking flying lessons most participants tended to judge the probability of these two phenomena occurring together as higher than their probability as separate occurrences.

Intentionality bias, which affects the way we attribute causality, also works in favour of conspiracy theories. John McClure, Denis J Hilton and Robbie M Sutton studied this in an experiment in which they presented participants with several accounts of a fire, with a variety of alleged causes, some intentional (arson), some accidental (the sun, etc). When asked which account seemed the most plausible, most participants chose arson (3). This bias partly explains why some people prefer conspiracies-based explanations, especially when the official version lacks agency (the death of Diana, the emergence of AIDS) or when the official version is felt to be suspect (9/11, the Charlie Hebdo attacks).

Then there is the mere-exposure effect. As a number of studies have shown, the simple fact of being exposed to conjectures that support a theory unconsciously encourages belief in it. Researchers Karen Douglas and Robbie M Sutton wanted to measure what

determined belief in rival accounts of Princess Dianas death. The group of students who were given information in support of the claim that she was assassinated demonstrated a higher rate of belief in this than those who were not given the information.

Daniel T Gilbert and his team analysed the way in which our judgment is influenced by the conditions in which we receive information and the type of information received. In their experiment, two groups of participants were given a list of information about a defendant whose guilt they had to assess. They were told the list included several pieces of false information, which were easily identifiable as they were marked in red in the margin and were to be ignored. The false information given to the first group constituted mitigating circumstances, whereas that supplied to the second group amounted to aggravating factors. Some participants had the further challenge of reading the list while fulfilling additional cognitive tasks (for example, putting numbers against items on the list) while others were allowed to concentrate on what they were reading. All then had to come to a conclusion about the defendants guilt and, if appropriate, recommend a sentence. The experiment showed that few participants discounted the false information. When their attention was divided, all the information was treated as true. Those who had the list with the aggravating factors (despite knowing them to be false) tended to recommend harsher sentences.

Finally, confirmation bias leads individuals to seek out information that backs up their pre-existing beliefs rather than information that would challenge them. This contributes to the persistence of conspiracy theories. In 1960 Peter C Wason conducted a now-classic experiment in this field. He

presented participants with a group of three numbers (for example, 2, 4 and 8) and told them this sequence of numbers conformed to a particular rule. Participants were then asked to try to work out the rule and create their own set of three numbers to test their hypothesis. The experimenter would tell them if their sequence conformed to the rule, and if it did, participants had to explain what rule they had deduced. Wasons rule was, in fact, very simple any sequence of three rising numbers satisfied it but most participants came up with something more complicated: even numbers, doubled numbers, geometric series In addition, the numbers sequences they submitted to the experimenter were almost always designed to test positive hypotheses that confirmed their suppositions, although the