Sunday, 27 July 2014

Extreme takeover

This article was published in The Malta Independent on Sunday - 27 07 2014

The world is living dangerous times. Suddenly we have various international flashpoints that could flare up into something bigger at any time with dire consequences. Our sensitivity to such risks increases as we mark the centenary of the First World War which, in the summer of 1914, flared up from one such localised flashpoint into a global conflagration in a matter of weeks.

The Jewish/Palestine dispute has escalated to an all-out war in spite of the major difference between the military strengths of the two outfits. If one takes a narrow view of the current events, one can hardly blame Israel for proceeding with a ground invasion of Gaza. No sovereign country can sit idle as its neighbour pours rockets on its towns and villages. But the narrow view is the wrong view.

As always, current events need to be evaluated in a historical context to reach a proper assessment, and for a proper assessment I suggest reading a recently-published book by famous Israeli journalist Ari Shavit, entitled My Promised Land. It is enlightening, as it gives an intellectual appreciation of how the building of the nation of Israel was, to a significant extent, at the expense of the Palestinians who had occupied the land and were unceremoniously forced out with scant recognition for their rights and interests.

The Jewish Palestine dispute is extremely complicated as there are too many blood accounts open on both sides. Apart from international prodding, a lasting solution requires moderate leaders on both sides – a Mandela for each side – to look beyond past acrimony and understand that only a proper internationally recognised two-nation state solution can result in peaceful co-existence.  

Unfortunately, both sides are being led by extremists who are the antithesis of Mandela. Prime Minister Netanyahu, apart from his own personal extreme and narrow views, is a slave to government coalition partners of extreme right-wing/religious parties who pretend a God-given right to the land they occupy without international title. The Hamas faction of the Palestinians, which is in charge in Gaza, demands the extinction of Israel and does not even recognise Jewish rights to nationhood within the confines of the UN mandate. These positions are so extreme that they allow no room for diplomatic negotiation and as pressure builds up, flash points such as the current one become unavoidable.

Unfortunately, both sides take a very narrow view. Hamas should realise that pouring rockets on Israeli towns and villages will at best cause a superficial scratch on the Jewish state but will invite a land invasion that puts at risk the lives of hundreds or thousands of innocent civilians, even if in the process it kills a few score Israeli soldiers. It seems that Hamas have become so immune to the suffering of their own people that the satisfaction of killing a few Israeli soldiers is greater than the grief of losing so many of their own innocent civilians apart from compounding the already grave misery of those who survive.

Israel, on the other hand, needs to get serious in working for peaceful co-existence. They must realise that blocking nearly two million people on a tiny strip of land, whatever the security reasons behind such a blockade, is the perfect training ground for grooming terrorists who – for want of anything more productive – spend their life digging tunnels to exit points that beat the blockade to pursue their purposes, which are often more revengeful than benevolent. Israel needs also to look at the maths and realise that – without peaceful co-existence through an internationally recognised two-state solution – internal democracy is doomed as eventually the Israeli Muslims will start outnumbering the Israeli Jews.

Eastern Ukraine has again become an extreme flashpoint after the downing by a surface-to-air missile fired from pro-Russian controlled Ukrainian territory of a civil Air Malaysia airliner, killing all the nearly 300 people on board.

One gets the feeling that this is just the early chapter in a much longer history book that is yet to be written. The situation is grave, as it brings into direct confrontation the protagonists of the Cold War – which we wrongly assumed had finished with the fall of the Berlin Wall in 1989 and with the accession of many Eastern European sovereign states that were formerly in the USSR orbit of influence into the EU and NATO in 2004.

The current flashpoint in Eastern Ukraine is nothing other than a proxy war between NATO and Russia, as both sides realise that a full-scale confrontation would be too dangerous for either. Through this proxy war, each side is sizing the resolve of the other to defend an escalation. The not so veiled occupation by Russia of the territory of Eastern Ukraine proximate to its border is pitched against international sanctions against Russian companies and personalities which are often a double-edged sword as they hurt the trade and investment relations of both West and East.

Before things become more serious, there needs to be a UN-sponsored international conference where a diplomatic solution is reached that represents a compromise between the two current extreme positions. The compromise has to take account of these factors, even if they could seem prima facie contradictory:
1.     The safeguarding of Ukraine entire sovereign territory.

2.     The recognition of Russia’s interest in Crimea through some sort of land lease agreement similar to Hong Kong’s status before its reversion to China in 1997.

3.     The recognition of Russian interest in maintaining a NATO-free buffer zone between its borders and NATO countries.

4.     The recognition of the rights of ethnic Russian majorities in Eastern Ukraine to a large degree of autonomous self-administration.

5.     The recognition of the right of sovereign Ukraine to seek cooperation with and, if necessary, membership of the EU.
Finally, the flashpoint closer to home is Libya which, unfortunately, is degenerating into a failed state. A failed state on our doorstep is a strategic risk that we have to worry about. Unfortunately, the parallelism between what is happening in Libya and the experience of Iraq following the removal of their dictators is too obvious to disregard or about which to be optimistic.

Iraq and Libya are cases of “be careful what you wish for”. There is no doubt that the regimes of Hussein and Gaddafi were despicable in their gross disregard of minority and human rights. But this is the narrow view. The wider view is whether the alternative is any better. In both cases, the alternative seems to be a failed state where extremists take over, where newly-created democratic institutions are too shallow rooted and too fragile to defend themselves, and where populations that had been glued together by the iron hand of a dictator become unstuck and fall into a civil war in which might is right and the rule of law is the barrel of Kalashnikov.

The position is too serious for it to become a political football between the government and the Opposition – which was the whole purpose of the parliamentary debate forced by the Opposition this week. With the government having offered full access to the Opposition to keep it informed about the extremely fluid situation in Libya and the steps being taken to safeguard the interests of Malta and the Maltese, there was little value to be gained by a parliamentary debate, especially when things are very often so delicate that public disclosure could cause more harm than good.

In such situations, Malta’s interests are served better by covert cooperation between our political forces than by overt performances for the gallery in parliament. But one must pay tribute to the courage of our diplomats who returned to Libya, after they were blocked in Malta, to be as close as possible to the Maltese who have decided to stay even though they were offered a route to leave.

But the Iraqi and Libyan experiences have a clear message: the transition from dictatorship to democracy is never a straight line, it is never easy and things could get worse rather than better. As the Egyptian experience is suggesting, the transition may have to pass through the military and it is to be hoped that, for want of something better, the military is benign and will be successful in institutional nation-building to make the transition to democracy quick and successful.

Monday, 14 July 2014

The numbers speak German

This article was published in The Malta Independent on Sunday - 13th July 2014

The second Sunday of July every four years is World Cup final day. Tonight, the biggest TV audience for any sporting event watches the game that decides who will be crowned World Champions of the beautiful game for the next four years.
Unlike elections, the results cannot be surmised through scientific polling surveys. The winner will be decided by what happens on the ground between the two teams and not by the opinion of lovers of the game who cannot influence the outcome in the same way that they influence elections through the ballot box.
Yet the numbers speak and, for tonight, the numbers speak German. According to the World Economic Forum, Germany is already the winner of the Competitiveness World Cup, as they crush Argentina in the four criteria selected to measure their international competitiveness. Here are the results:

Gender equality
Tech. Readiness
Trade Openness

But the numbers also favour Germany when sticking strictly to football statistics. Whichever team wins the semi-final against the home side must hold great prospects for winning the final against a less formidable opposition. But Germany did not just win the semi-final against Brazil. They demolished Brazil on their home ground in the first half-an-hour and then walked through the rest of the match without sweating too much as they marched on to the Maracana.
To qualify for the final stages of the World Cup, Germany played 10 games, winning nine of them and drawing the other one, at home against Sweden. They scored 36 goals and conceded 10. Argentina had to play 16 matches, of which they won nine, drew five and lost two. Argentina scored 35 goals, one less than Germany, even though they played six more games, and conceded 15. Just in the qualifying round for the Brazil World Cup, Germany boasted better figures.
In the group stage in this World Cup, Argentina won all three of their games, whereas Germany won two games and drew the one against Ghana. Argentina scored six goals and conceded three, winning each game with a one goal margin. Germany scored seven goals and conceded two. Although Germany was unable to beat a gallant Ghana side and had to settle for a two-all draw, they emerged from the group with a better goal difference than Argentina.

In the knock-out stage, Germany won every game without recourse to penalty shoot-outs and had to play extra time only against Algeria to qualify for the quarter finals. In the quarter finals and semi-finals Germany won the game in the normal ninety minutes. In the three knock-out stage games, Germany scored 10 goals and conceded just two. Compare that to Argentina’s record in the knock-out stage where they had to play extra time twice and won one game, the semi-final against The Netherlands, on penalties. They scored just two goals without conceding any.
So in this World Cup competition, including the group qualifying matches, Germany has not lost a single game and has never gone through penalty shoot-outs. Argentina lost two games and qualified for the final with a penalty shoot-out.
The history of their performance in previous World Cups is also neutral to positive in favour of Germany. The teams have met in a World Cup final twice already. In Mexico, in 1986, Argentina won 3-2 and four years later, in Rome, Germany won the rematch 1-0. In all, Germany has played in seven World Cup finals – in 1954, 1966, 1974, 1982, 1986, 1990 and 2002. They won three and lost four, generally in alternate sequences. They lost their last final, in 2002, against Brazil – so it is time to level the score. Argentina has played in four World Cup finals – in 1930, 1978, 1986 and 1990. They won two of the games and lost two. Germany has a rough pattern of reaching the final every 12 years and winning alternately. They won in 1954 and lost 1966. They won in 1990 and lost in 2002 and now, 12 years later in 2014, they can win again. Argentina’s World Cup history numbers have no such patterns.
These two teams met in direct elimination clashes in the last two World Cup finals: 2006 and 2010. Both were quarter-finals, won by Germany with penalties in 2006 and with a 4-0 thrashing in 2010. Seventeen of the players on the field in that last match in Cape Town, South Africa, could still be in the final line-up this evening so that match gives a better understanding of the relative strength of the two teams. Germany still has 10 of those players, whereas Argentina has seven.
There are other numbers that speak German. German had one extra day to rest following their semi-final match against Brazil and had quite an easy passage, given they were 5-0 after half-an-hour. With one day less to rest, Argentina had to play extra time against Holland in the semi-final and then had to go through the psychological stress of a penalty shoot-out to qualify for the final.
Although the Final is being played in South America, support for the two teams could be pretty even. Obviously, given their proximity, there will probably be more Argentineans than Germans on the stands but there is no doubt that the Brazilians, who secured their place hoping to see their team in the finals, will be behind Germany. The pain of a humiliating elimination will be rendered more acute if Argentina were to win the World Cup in Brazil.
As it happens, the Argentineans cannot even have the advantage of papal prayers from Pope Francis, a former Bishop of Buenos Aires. The Germans still have a Pope in Benedict XVI and although he is no longer sitting on St Peter’s throne, papal prayers are papal prayers.  On that front both teams are even.
Of course, each game has its own history and these numbers could count for nothing, once the game begins. To win at this level it takes skill but it also takes a dose of luck. A ball finding the net after hitting the post could change the dynamics of a game in a way that a ball that just rebounds off the post does not.
The games played so far show that, whilst Argentina has more skilled individuals in Messi, Higuain and De Maria, Germany has a more solid collective with precision passing, impressive accuracy in first control of the ball and individuals ready to sacrifice personal glory for collective success. They boast impressive discipline in passing to a colleague in a better position to score rather than making an attempt from a difficult position. This collective behaviour has rendered Germany a formidable goal machine in this World Cup so far, scoring 17 goals and conceding just four. Argentina, superstars and all, has scored only eight goals and conceded three – even though they played half-an-hour more.
Since the 1982 World Cup in Spain, the final game is determined by playing two semi-finals. Prior to that, in 1974 and 1978, the winners of two sub-sets groups would play the final without going through a semi-final. Only Germany, in 1990, won the World Cup Final after reaching it through a penalty shoot-out in the semi-final. But then their opponents – Argentina – had also reached the final through a penalty shoot-out in the semi-final against Italy. Germany lost the final in 1982 against Italy after going through extra time and a penalty shoot-out in the semi-final. Brazil lost the final in 1998 against France after reaching the final through a penalty shoot-out after extra time. Going further back in time, when semi-finals were played, Italy lost the 1970 final to Brazil after going through to the final having played extra time against Germany in the semi-final, but without a penalty shoot-out. Playing extra time in the semi-finals does not seem to bode well for winning the final.
The only numbers that materially speak for Argentina is that no European Country has ever won the World Cup on the American continent and that, in the last direct encounter in a friendly match on 15 August 2012, in Germany, Argentina won 3-1 with much the same team it has at present but against a depleted German side playing with 10 men for most of the match after their goalkeeper was sent off for a penalty foul.
Ultimately this will be a clash of the brilliance of individual talent against the solidity of teamwork. My money is on the latter as the numbers speak German.  

Tuesday, 1 July 2014

Bites, bytes and bits

This article was published in The Malta Independent on Sunday - 29 06 2014

As the month of June cruises towards its end to mark the mid-point of this unfolding year, we have had a month of bites, bytes and bits.


The World Cup has delivered the surprising results of the group stages, with the elimination of favourites such as defending holders Spain and previous winners Italy, as well as the quick failure of other nations who were expected to perform much better such as Portugal, England, Russia and Croatia. The Europeans are finding it tough going in Brazil – not helped by some controversial refereeing that has clearly weighed against Bosnia Herzegovina and Italy.

It is incomprehensible that a footballer of the quality of Uruguay’s Luis Suarez has to revert to the physical biting of opponents at crucial times in a match to re-shape doomed fortunes. It is even more incomprehensible that he can do so with instant impunity, to the detriment of opponents. Biting an opponent during a match is not only a grave offence punishable by instant dismissal in football, but is also offensive to all sports in general. Not even in physical contact sports such as boxing and wrestling is biting tolerated.

It is also an offence easy to prove. It requires no goal-line technology. It needs just common sense by match officials when faced with irrefutable evidence – especially if corroborated by the historical record of the imputed offender. Italy probably did not deserve to go through from the group but they probably did not deserve to go through even in 1982 either – when they eventually won the World Cup in Spain – and in 1994 when they lost the final in the USA. Being eliminated by a bite on the ground bites into the moral of a nation for whom football is a way of life.

* * * *

Details were announced this week about the mechanics of the Investment Registration Scheme 2014 (IRS 14) which essentially is a revised version of several similar schemes operated by past PN administrations but at a higher fee (7.5 per cent compared to the former three to five per cent. Tax offenders who are quickly losing the non-disclosure protection of foreign jurisdictions are being offered a fairly easy way to regularise their past undisclosed (and consequently untaxed) earnings if these are still represented by assets that are eligible for registration under IRS 14. These assets do not include cash but do now include property held in Malta and loans to private companies.
Human nature being what it is could make tax-dodgers consider compliance with such schemes as a taxman’s bite into their wealth. In reality, it is the tax dodgers’ bite into the public coffers in that they are being given an opportunity to regularise income that should have been taxed at rates between 15 per cent and 35 per cent by paying simply 7.5 per cent, without any penalties or interest, and in the process also being forgiven for offences related to social benefit fraud resulting from such formerly undeclared assets.

Whilst one appreciates that this is a last chance to bring tax dodgers on board before international tax disclosure arrangements result in much more serious consequences, and also the economic benefits of such hidden capital being given an easy chance to become active within the regular economy, one also questions why tax dodgers should be given such favourable treatment compared to other forms of offenders against public funds.

Offenders under VAT legislation and those who defrauded Enemalta by permitting tampering to their meters have received much harsher treatment. Whilst in their case penalties have been reduced conditional on full admission and disclosure, they had to pay the full amount originally due plus reduced penalties. On the other hand, IRS 14 and similar such schemes under previous administrations offer tax dodgers a substantial discount to regularise their position and retain their non-disclosure cloak. Any tax offender who considers regularisation under IRS 14 as a taxman’s bite into their wealth is surely unfamiliar with the mechanics of tax amnesty schemes being given in other countries, especially the UK and Germany.


June 2014 was also the month when major technology companies such as Apple, Samsung, Google and Amazon revealed their product innovation plans to show how they are intending to keep consumers hooked by making their lifestyle dependant on such technology. Just as the smartphone has changed the mobile phone into a portable computer, giving instant access to information on the move, the next big thing will be how to make the smartphone the core source of not only external information but also of internal information and its management and control, ranging from our own health to appliances within our homes.

Putting so much information under one central technology control could be as convenient as it is scary, knowing that so much confidential information is controlled by third parties who, even if well-intentioned, could either exploit us commercially – as we become dependent on such technology – or themselves be exposed to criminal external hacking attacks that could gain illegal access to so much confidential details about us.

As technology extends its reach and dominates our lifestyle, regulatory control must also keep up to ensure that consumer protection remains effective. The EU is at the forefront of such regulatory up-dating, as was evident by the recent European Court of Justice ruling granting individuals ‘the right to be forgotten’.

When we leave home these days we have to ensure we carry three things: the smart phone, the watch and a wallet full of cash and all sorts of cards (credit, debit, parking, loyalty, etc.). Soon the smart phone will be all you need as it is linked to other wearable technology, whether it be Google glasses or i-watches. Self-driving cars will come later.


From the bytes to the bits. As the world marked the centenary of the event which triggered World War I, i.e. the assassination on 28 June 1914 of Archduke Franz Ferdinand of Austria and his wife Sophie, the EU basically marked the event by a divisive vote at the EU Council for the nomination of Jean Claude Juncker as President of the Commission. This nomination was strongly opposed by British Prime Minister David Cameron, who has spent so much political capital on it that it is difficult to see how he can defend British membership in the EU if he is re-elected and keeps his pledge to hold an in or out referendum.

The defeat of Cameron cannot be considered a victory for the 26 countries (only Hungary supported Britain’s objections) that supported Juncker’s nomination. The EU must inevitably re-visit its internal structures and Juncker is expertly positioned to lead such a project, which might pleasantly surprise Cameron.

Ultimately those who have agreed to share their currency have also to agree that this is only sustainable if they agree to share many other things, leading to the deepening of their political ties on federalist lines. Those who, like Britain, do not agree to share their currency can then be given a much looser arrangement outside the basic conditions of a single market.

Marking the centenary of the first World War – which was the main cause of the second World War (many consider both wars as a continuous one with a 20-year non-belligerence interlude) should help realise how much we need to protect the peace that has been delivered across Western and Central Europe over the last seven decades through the formation of the EU and its preceding versions. The model must continue to evolve as the EU offers prospects to aspirants on the Eastern front.