At this point the sovereign debt crisis in Europe is almost getting boring. We’ve seen the same script played out over and over with country after country. The basic story is the markets begin a run on the debt of a country: Greece, Ireland, Italy, Spain etc.

The troika, the European Central Bank (ECB), the European Union (EU), and the International Monetary Fund (IMF) then demand a series of austerity measures. In addition, they sometimes demand measures unrelated to fiscal policy, such as a lower minimum wage in Ireland or weaker employment protection legislation in Italy, that are intended to weaken workers’ bargaining power. As a quid pro quo, the troika then arranges enough bond purchases or other supports to get through the immediate crisis.

Of course these measures don’t actually solve the underlying problem. If the troika took the steps needed to ensure that the indebted countries got past this crisis, it would lose the ability to demand further austerity and other steps that weaken welfare state supports for workers. The troika is not willing to give up its leverage at this point.

That is why the ECB repeatedly declares its refusal to guarantee support for sovereign debt any time it seems as though the financial markets believe that it is committed to supporting the debt of the troubled borrowers. This insistence by the ECB, coupled with the other policies it pushes to stifle growth, ensures that the crises will continue. The same countries will have to keep coming back for another dose of punishment and new countries will be added to the list as the contagion of slumping demand, deteriorating bank balance sheets, and dwindling confidence spreads.

The negotiating teams at the troika surely must know that the path they are following can only lead to further crises. Their medicine of austerity is irrelevant to the disease that is afflicting the debt-burdened countries.

Most immediately they are suffering ...

At the just-concluded European Union summit, British Prime Minister David Cameron vented decades of accumulated resentment stemming from his country’s relationship with Europe. Europeans were appalled at how the last-minute injection of finicky points about bank regulation could stymie what was supposed to be a breakthrough agreement on the regulation of EU countries’ budgets. Cameron’s supporters in Britain cheered and portrayed him as a new Winston Churchill, standing up to the threat of a vicious continental tyrant.

The United Kingdom’s view of Europe has always been both emotional and ambiguous. A Conservative government wanted to join the European Economic Community in the early 1960’s, but was rejected by French President Charles de Gaulle. The General mocked the British ambition with a rendition of Edith Piaf’s song about an English aristocrat left out on the street, “Ne pleurez pas, Milord.” In the end, Britain came in from the cold, but British leaders always felt that they were not quite welcome in the European fold.

At two critical moments in the past, a British “no” had a decisive impact on European monetary developments. In 1978, German Chancellor Helmut Schmidt and French President Valéry Giscard d’Estaing proposed an exchange-rate arrangement – the European Monetary System (EMS) – to restore stable exchange rates in Europe. Initially, the Germans and the French negotiated trilaterally, with the UK, in meetings that were slow, cumbersome, and unproductive.

In fact, the talks were sabotaged by British Prime Minister James Callaghan, who started conferring with US President Jimmy Carter about the challenge that the European plan posed to the United States, and how the Anglo-Saxons could respond to the continental threat. As he put it, according to the transcript of one of the phone calls, “with the strength of the German economy, it could be ...

The world is increasingly committed to dangerous levels of global warming with yet another failure by nations of the world to agree to needed reductions in carbon emissions here in Durban. However, as the 17th Conference of Parties ended early Sunday morning, members did agree to talk about a new global treaty to reduce emissions.

After two weeks and an additional 29 hours of intense and even bitter negotiations, the 193 nations participating in the United Nations climate talks agreed to a complex and technical set of documents called the "Durban Platform." These include the continuation of the Kyoto Protocol, a formal structure for a Green Climate Fund, new market mechanisms, and more. 

The biggest development reached at dawn Sunday is an agreement to negotiate a new global treaty to reduce emissions by 2015. While this may look like simply agreeing to more meetings, it is the first time all nations have agreed to be governed by a new global emission reduction treaty under the U.N. Framework Convention on Climate Change (UNFCCC).

Currently the promised emission reductions by industrialized countries and those of China, Brazil, South Africa, India and others under the 2009 Copenhagen Accord guarantee a world that is at least 3.5 degrees Celsius warmer on average according to climate science. It will be double that over large parts of ...

European leaders closed a pivotal week Friday with an agreement in principle to join a new treaty that would force all but one European Union nation into common budget discipline and would empower EU courts to enforce the new rules.

The 17 nations that use the euro as their currency agreed to support the new treaty, and nine of the 10 EU members that have their own currencies agreed. The treaty's rules would allow only small budget deficits, and they'd require EU nations to submit their budgets for review by the European Commission, a considerable erosion of their sovereignty. The commission could request that they revise their budgets; details on enforcement remain to be drawn. The EU leaders hope to have a draft treaty by March.

Great Britain was the lone holdout, concerned that Europe-wide rules could harm its vital financial-services sector. London is the financial center of Europe.

U.S. stocks flat-lined for much of the week awaiting the EU summit, and the trading week ended with modest gains on the news that Europe had moved forward, notwithstanding huge unanswered questions on implementation whose answers matter to Americans. The Dow finished up 186.56 points at 12,184.26, the S&P 500 rose 20.84 points to 1,255.19 and the NASDAQ gained 50.47 points to 2,646.85.

Here are some answers to questions about ...

Sweden, the United Kingdom and Germany are the top countries to fight climate change, according to the 2012 Climate Change Performance Index, whose results were published at the United Nations climate change summit today.
 

Sweden, the country with the lowest emission levels of 50,600 tons of CO2 emissions, according to the latest data from the United States Energy Information Administration (EIA), and good emission trends worldwide, was ranked 4th. 
 

Experts said they could not award any country with the top three rankings, as no nation was doing enough to prevent climate change. 
 

The three lowest-ranking countries are Saudi Arabia, Kazakhstan and Iran. The index is compiled each year by environmental lobby organization Germanwatch and the Climate Action Network (CAN), which evaluate and compare the climate protection performance of the 58 countries worldwide which are together responsible for more than 90 percent of global energy-related CO2-emissions. 
 

"This year’s results signify that although globally emissions are still growing, none of the big emitters make the real shifts that are needed," said CAN Europe director Wendel Trio. "None of them is considered as doing enough." 
 

Sweden’s climate policy was not ambitious enough, while the UK, ranked 5th, had recently shown worrying signs. It had failed to tighten up its carbon budgets, while Germany’s emission levels remained too high for a placement higher than rank 6. 
 

"The average grades for the national and international policies are weak," said Germanwatch researcher Jan Burck, one of the authors of the ...

The decision by the Federal Reserve to reduce the interest rate and extend the duration for its dollar swap facility with the European Central Bank is at best a temporarily ameliorative measure that does not come close to addressing the fundamentals of the eurozone crisis.

The problem is that the markets lack confidence in the ability of heavily indebted countries, most important Italy at the moment, to be able to pay their debts. This creates a downward spiral where interest rates rise, making their budget situation more precarious, which in turn leads to higher interest rates.

The austerity conditions imposed by the troika (the European Central Bank, the European Union and the International Monetary Fund) as a condition of past support have made the situation worse. Cutbacks in spending and higher taxes have slowed growth. Slower growth reduces tax collections and raises payments for programs like unemployment insurance. It also leads to a higher ratio of debt to gross domestic product, since slower growth means a lower GDP.

The way out of this situation is for the ECB to temporarily guarantee a manageable interest rate for the heavily indebted countries. It also should aggressively pursue expansionary policies to support growth and ideally aim for a somewhat higher rate of inflation within the eurozone, which would gradually reduce the burden of the debt.

READ FULL POST 25 COMMENTS

It looks as though the eurozone may be in a decisive meltdown, which is just fine in my book. The sooner we get back to francs, lire, punts, drachmas and the rest of the old sovereign currencies, the better.

It used to be as much a part of going to France to change money and be handed a bundle of notes featuring the devious Cardinal Richelieu as choking on Gauloise smoke. Instead, those francs are now replaced by the characterless but somehow always expensive euros.

The argument against the eurozone is that hard-faced Euro-bankers — their killer instincts honed at Goldman Sachs, Wall Street's School of the Americas — have the power to act as the bully-boys of international capital and impose austerity regimes from Dublin to Athens, scalping the poor to bail out the rich.

Now the end of the eurozone does not mean the end of the European Union. They're different. There are 17 nations in the former, 27 in the latter. Britain, for example, has never been in the eurozone, which is why the currency exchange in London will, in return for your worthless dollars, hand you bank notes with the Queen's portrait on them.

At the moment, the European Union has virtually no tax collecting powers. Its annual haul is about 1 percent of the EUs gross domestic product. By comparison, the U.S. government collects about 20 to 24 percent of GDP.

Throughout the entire Eurocrisis, there has been a basso profundo chorus from the Eurocrats that what's needed is a lot more centralizing. In the words of Wolfgang Munchau at the Financial Times on Nov. 28, the EU needs "a fiscal union": "This would involve a partial loss of national sovereignty, and the creation of a credible institutional framework to deal with fiscal policy, and hopefully wider economic policy issues as well."

I've read many editorial paragraphs with this same bullying timbre — that what the whole European enterprise needs is an ...

In 1729, when Ireland had fallen into a state of utter destitution at the hands of its British landlords, Jonathan Swift published a famous essay, “A Modest Proposal for Preventing the Children of Poor People in Ireland from Being a Burden to Their Parents or Country, and for Making Them Beneficial to the Public.” 

His idea was simple: the starving Irish should sell their own children to the rich as food. 

His inspiration, as it happened, came from across the Atlantic.  As he explained, “I have been assured by a very knowing American of my acquaintance in London, that a young, healthy child well nourished is at a year old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee, or a ragout.”

Inspired in turn by Swift, I want to suggest that we put in motion a similar undertaking: on January 16th, Martin Luther King Day, citizens from around the country should gather at the New York Stock Exchange on Wall Street.  Let’s call this macabre gathering -- with luck and even worse times, it should be mammoth -- “We Surrender” or “Restore Debtor’s Prisons” or “De-Fault Is Ours” or “Collateralize Us.”  And plan on a mirthful day of mourning.

The basic idea is that we offer ourselves up, 99% of us anyway, on the altar of high finance as a sacrifice to the bond markets.  It was Karl Marx who first observed that high finance is “the Vatican of capitalism.”  How right he turned out to be -- right with a vengeance! 

The Death of Democracy

Whole governments, democratically elected, are collapsing, or ...

A deadline the Arab League had set for Syria to sign a deal allowing observers into the country to monitor whether the government was adhering to a peace plan expired Friday without any Syrian response, setting the stage for the league to impose sanctions on the regime of President Bashar Assad.

Turkey's foreign minister said his country would coordinate with the Arab League on imposing sanctions, an indication of the extent to which the international community has lined up to force Assad to end his bloody crackdown on anti-government demonstrators, which has taken the lives of an estimated 3,500 people. Turkey once was considered a close Assad ally.

"There is excellent coordination between Turkey and the Arab League," Foreign Minister Ahmet Davutoglu said at a news conference he held with Jordan's foreign minister. "We share every step we make and every position we develop."

Davutoglu said Turkish Deputy Prime Minister Ali Babacan would attend a meeting of Arab League finance ministers Saturday to decide what to do next and that he himself would participate in a meeting of Arab League foreign ministers tentatively set for Sunday. He said he was continuing to consult with the European Union, NATO and U.N. Security Council members on what next steps should be taken to increase pressure on Assad's regime. He met Friday with Italy's foreign minister as well.

Davutoglu warned that Syria would be isolated by Turkey, Arab countries and the entire international community if it ...

Politicians are masters at “passing the buck.” Everything good that happens reflects their exceptional talents and efforts; everything bad is caused by someone or something else.

The economy is a classic field for this strategy. Three years after the global economy’s near-collapse, the feeble recovery has already petered out in most developed countries, whose economic inertia will drag down the rest. Pundits decry a “double-dip” recession, but in some countries the first dip never ended: Greek GDP has been dipping for three years.

When we ask politicians to explain these deplorable results, they reply in unison: “It’s not our fault.” Recovery, goes the refrain, has been “derailed” by the eurozone crisis. But this is to turn the matter on its head. The eurozone crisis did not derail recovery; it is the result of a lack of recovery. It is the natural, predictable, and (by many) predicted result of the main European countries’ deliberate policy of repressing aggregate demand.

“Fol­low Pro­ject Syn­di­cate on Face­book or Twit­ter. For more from Robert Skidel­sky, click here.”

That policy was destined to produce a financial crisis, because it was bound to leave governments and banks with depleted assets and larger debts. Despite austerity, the forecast of this year’s UK structural deficit has increased from 6.5% to 8% – requiring an extra £22 billion ($34.6 billion) in cuts a year. Prime Minister David Cameron and Chancellor George Osborne blame the eurozone crisis; in fact, their own economic illiteracy is to blame.

Unfortunately for all of us, the explanation bears repeating nowadays. Depressions, ...

As a ProPublica/PBS NewsHour investigation detailed earlier this month, X-ray body scanners use ionizing radiation, a form of energy that has been shown to damage DNA and cause cancer. Although the amount of radiation is extremely low, equivalent to the radiation a person would receive in a few minutes of flying, several research studies have concluded that a small number of cancer cases would result from scanning hundreds of millions of passengers a year.

European countries will be allowed to use an alternative body scanner, one that relies on radio frequency waves, which have not been linked to cancer. The TSA has also deployed hundreds of those machines – known as millimeter-wave scanners – in U.S. airports. But unlike Europe, it has decided to deploy both types of scanners.

The TSA would not comment specifically on the EU’s decision. But in a statement, TSA spokesman Mike McCarthy said, “As one of our many layers of security, TSA deploys the most advanced technology available to provide the best opportunity to detect dangerous items, such as explosives.

“We rigorously test our technology to ensure it meets our high detection and ...

Europe has always been a rather tenuous concept. A rump continent, Europe represented the barbarous hinterlands for the Greeks and Romans. The first use of the term "European" occurred in a chronicle describing the forces of Charles the Hammer that turned back the northward advance of Islam at the battle of Tours in 732. Long celebrated in Europe as a victory of civilization over barbarism, the Battle of Tours was, as historian David Levering Lewis reminds us in God's Crucible, actually the opposite: "the victory of Charles the Hammer must be seen as greatly contributing to the creation of an economically retarded, balkanized, fratricidal Europe that, in defining itself in opposition to Islam made virtues out of religious persecution, cultural particularism, and hereditary aristocracy."

For most of its existence, Europe has been just that: a continent divided against itself. From the conquests of Charlemagne to the unprecedented bloodletting of two world wars in the 20^th century, Europe saw only brief stretches of unity, and that only by virtue of imperial force.

Europe as a unified, democratic, relatively peaceful, and economically prosperous order has so far only enjoyed a brief lifespan. This conception of Europe dates to the early days of the Cold War and the perceived need to create a bulwark against the Soviet Union to the east. Centuries of Franco-German enmity vanished after World War II, as these two key European countries united against a common enemy at the urging of a common friend (the United States). The resulting economic alliance would expand and deepen over the decades into the current European Union of 27 countries. The EU now boasts a parliament, a council of ministers, a common currency (for 17 of the 27), the largest economy in the world, and even, somewhat ominously, a military force that has intervened overseas a dozen times or so.

Thanks to a difficult-to-contain economic ...

As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic eurozone breakup would cause irreparable damage to the European integration project, the central pillar of Europe’s political stability since World War II. It would destabilize not only the highly-indebted European periphery, but also core countries like France and Germany, which have been the architects of that project.

The nightmare scenario would also be a 1930’s-style victory for political extremism. Fascism, Nazism, and communism were children of a backlash against globalization that had been building since the end of the nineteenth century, feeding on the anxieties of groups that felt disenfranchised and threatened by expanding market forces and cosmopolitan elites.

Free trade and the gold standard had required downplaying domestic priorities such as social reform, nation-building, and cultural reassertion. Economic crisis and the failure of international cooperation undermined not only globalization, but also the ...

While the Greek bailout and stimulus package dominated discussion among the Group of 20 (G20) major industrialized and emerging market economies at the high-level summit in Cannes, France, this week, the proposed financial transactions tax (FTT) received meagre attention.

Dubbed by some economists and activists as the ‘Robin Hood Tax’, the FTT has enjoyed marginal but sustained support from hard-hitters in the G20.

Back in February, French President Nicolas Sarkozy nudged Microsoft co-founder Bill Gates to prepare a report on the enormous potential of such a tax to jump-start development in poor countries, particularly after the 2008-9 crash pushed many donor nations to slash their official development assistance (ODA) to the global south.

A ‘technical note’ from the report, released at the World Bank and International Monetary Fund spring meetings in Washington D.C. in September, claimed that the adoption of an FTT by the G20 or even the European Union could generate "substantial resources."

According to the note, "Some modeling suggests that even a small tax of 10 bp (basis points) on equities and two bp on bonds would yield about 48 billion (dollars) on a G20-wide ...

Leaders of the world’s most-industrialized nations ended two days of turbulence here, unable to finalize a bailout plan for struggling European Union economies but inching forward on steps designed to prevent a financial crisis from spreading.

“Here at Cannes, we moved the ball forward,” said President Barack Obama, who sought to spur European leaders to act but nonetheless was forced to the sidelines as the United States grapples with its own financial woes.

The two-day G-20 summit was overshadowed by drama in Greece, which at the start of the week looked headed for a public vote on, and rejection of, an EU plan to restructure the country's debts. A “no” vote would have meant expulsion from the EU, something that’s never happened, but by week’s end Greek opposition leaders had agreed to honor the tough austerity measures that will be required in exchange for banks voluntarily taking a 50 percent cut in the value of the Greek bonds they hold.

“That’s the right recipe,” Obama said. “It just has to be carried out.”

While concerns about Greek resistance to the plan eased, European leaders made little progress on the size and composition of what was supposed to be a muscular version of their current bailout fund, known as the European Financial Stability Facility. Europe had hoped to have big emerging economies such as Brazil and China ...

World leaders are gathering in Cannes for the opening of the Group of 20 summit today. On the top of the agenda is the Greece bailout and the European debt crisis. On Monday, Greek Prime Minister George Papandreou angered many European leaders by announcing his support for a popular referendum—allowing the Greek people to decide if they want to accept the conditions of the $179 billion European Union bailout. After days of increasing criticism from European leaders, Greek Prime Minister George Papandreou is now facing calls from within his party to resign. The Greek debt scandal has also pitted U.S. banking interests against France, Germany and other European powers. "The Americans are putting immense pressure on Europe, saying, 'We will wreck your economy, if you don't wreck Greece’s economy,’" says economic analyst Michael Hudson. President Obama is "basically telling Europe, ’Don’t go the democratic route. Support Wall Street.’"

Transcript: 

AMY GOODMAN: World leaders are gathering in Cannes for the opening of the Group of 20 summit today. That’s the G20 summit. On the top of the agenda is Greece and the European debt crisis. The Greek prime minister, George Papandreou, is coming under intense criticism from European leaders for allowing the Greek people to decide if they want to accept the conditions of a $179 billion E.U. bailout. Papandreou has announced the referendum will take place in early December, but it now looks like his government is in danger of collapsing before then. He faces a vote of no confidence tomorrow. According to polls, most Greeks are opposed to the bailout plan, and there have been protests across the country against deepening ...

Global stocks skidded Tuesday after a stunning about-face by Greece on a deal agreed to last week to quell the European Union's debt crisis, as investors and analysts scrambled to understand the impact on the U.S. and global economies.

U.S. stocks plunged as investors fretted that Europe's problems, thought largely resolved, now appear far from settled and threaten a weak U.S. economic recovery. Blue chips on the Dow Jones industrial average traded down more than 300 points for most of the day before closing off 297.05 points to 11, 675.96. The S&P 500 closed down 35.02 points to 1218.28 and the NASDAQ lost 77.45 points to finish at 2606.96.

The spectacular collapse of U.S. investment bank MF Global, and allegations of missing funds and irregularities within it, added to the volatility. The financial giant, which held large amounts of Italian debt, is considered the first significant U.S. victim of Europe's widening debt crisis.

Greek Prime Minister George Papandreou shocked fellow European Union heads of state late Monday by announcing that he'd put to a referendum the debt deal negotiated last week at a marathon EU summit. French Prime Minister Nicolas Sarkozy and German Chancellor Angela Merkel on Tuesday summoned Papandreou to a hastily called meeting Wednesday.

Turmoil looks certain to continue this week.

Papandreou held a Cabinet meeting late into the night and said he'd stick to his plans for a referendum. He also called for a parliamentary confidence vote Friday. Several leaders of Papandreou's Socialist Party, called Pasok, threatened to leave the government in protest over the surprise referendum. If there are enough deserters from his own party, the Greek government could collapse while President Barack Obama and leaders of 19 other industrialized nations meet in France on Thursday and Friday.

This is exactly the sort of turmoil that U.S. government officials had warned ...

Tar sands imports to the EU could be banned altogether after the EU Commission on Climate Change backed new greenhouse gas (GHG) emissions standards as part of the Fuel Quality Directive first adopted in 2009. Pursuant to the directive’s original goal of a 6 percent reduction of CO2 emissions from transport fuel production by 2020, the new standards set values for each fuel based on estimated grams of CO2 released per megajoule of energy produced. 

They set a much higher emissions value for tar sands oil than conventional oil production, making oil produced in Canada's controversial sands an unviable option if the directive’s goals are to be achieved. [1]

Although tar sands oil is not a major import to the EU, the move reveals a sharp contrast between international business interests and environmental realities, and would set a precedent for future bans on other controversial fuels—including shale gas, whose extraction process is known as fracking.

EU member states will vote in just a few weeks on the directive, which could be blocked by two nations that have expressed opposition: the UK and the Netherlands. Britain’s Under Secretary for the Department of Transport, Norman Baker, said in a September 26 ...

The term “spring” may suggest a gentle awakening, but what is happening in North Africa and the Middle East is a true revolution, fomented by a new, digitally-savvy generation. The Arab upheavals are a by-product of the inexorable process of globalization in the twenty-first century, with almost instantaneous communications and increasing contact with the West transforming social and economic expectations.

Only by fully understanding the demands and grievances of these Arab revolutionaries will the West be able to give the region appropriate support – and this support is critical. The Arab revolts have not been directed against the West – on the contrary, they have been fed by Western democratic principles and values – but they could yet produce a reactionary backlash.

There are three preconditions that Europe and the United States must meet to ensure the prevention of such a scenario. First, Western countries’ support must be unambiguous. The Arab peoples must see clearly that the EU and the US genuinely intend to sustain Arabs’ demands for democracy, freedom of speech, and economic opportunity. In short, the region’s people must have evidence of the West’s interest in establishing their right to human dignity and higher standards of living.

"Follow Project Syndicate on Facebook or Twitter. For more from Massimo D’Alema, click here."

This means developing consistent policies and putting in place concrete measures aimed at favoring a peaceful transition to democracy. It also means isolating dictatorships across the region – even those governments traditionally considered to be Western allies and reliable economic and political ...

To resolve a crisis in which the impossible has become possible, it is necessary to think the unthinkable. So, to resolve Europe’s sovereign-debt crisis, it is now imperative to prepare for the possibility of default and defection from the eurozone by Greece, Portugal, and perhaps Ireland.

In such a scenario, measures will have to be taken to prevent a financial meltdown in the eurozone as a whole. First, bank deposits must be protected. If a euro deposited in a Greek bank would be lost through default and defection, a euro deposited in an Italian bank would immediately be worth less than one in a German or Dutch bank, resulting in a run on the deficit countries’ banks.

Moreover, some banks in the defaulting countries would have to be kept functioning in order to prevent economic collapse. At the same time, the European banking system would have to be recapitalized and put under European, as distinct from national, supervision. Finally, government bonds issued by the eurozone’s other deficit countries would have to be protected from contagion. (The last two requirements would apply even if no country defaulted.)

"Follow Project Syndicate on Facebook or Twitter. For more from George Soros, click here."

All of this would cost money, but, under the existing arrangements agreed by the eurozone’s national leaders, no more money is to be found. So there is no alternative but to create the missing component: a European treasury with the power to tax and, therefore, to borrow. This would require a new treaty, transforming the European Financial Stability Facility (EFSF) into a full-fledged treasury.

But this presupposes a radical change of heart, particularly in Germany. The ...

Palestinian leaders will ask the U.N. Security Council for full United Nations membership, Palestinian officials said Tuesday, despite a U.S. vow to veto the move and fears that it could deal a fatal blow to the moribund peace process.

Palestinian Authority President Mahmoud Abbas scheduled a formal announcement for Friday night even as two senior U.S. envoys prepared to return to the region to mount a last-ditch effort to revive Palestinian-Israeli peace talks, which have been stalled for nearly a year.

European Union officials, meanwhile, pursued their own effort to prevent a new crisis in the restive region, struggling to draft a compromise U.N. resolution that could meet Palestinian and Israeli positions.

But a U.S.-based European diplomat, who requested anonymity in order to speak freely, admitted that EU members were deeply divided. He said that reaching a deal before the new U.N. General Assembly opens next week was "a long shot."

"There will be a U.S. veto and then we enter unchartered waters," he said.

Ending months of speculation, Maen Rashid Areikat, the Palestinian Liberation Organization representative to the United States, said that Abbas would ask the Security Council next week to pass a resolution upgrading the PLO to "non-member observer state" status.

"We want to seek full membership ... and seek a resolution in the Security Council," he told reporters in Washington, adding that Lebanon, the current council president, has agreed to sponsor the resolution "on our behalf."

Non-member observer status is the lowest level of full U.N. membership. It would confer on the PLO, which runs the Palestinian Authority, the same standing as the Vatican, giving it a seat in the 193-member U.N. General Assembly and access to international institutions like the International Criminal Court. The PLO is currently a U.N. observer without voting rights.

Mohammad ...

“April is the cruelest month,” wrote T.S. Eliot at the beginning of his great poem, “The Waste Land.” But, if Eliot had been a professional investor who had observed European financial markets over the last few years, I am quite certain that his choice would have been August.

In August 2007, the decision by BNP Paribas to close two of its hedge funds exposed to the subprime sector precipitated a liquidity crisis for all European banks during that summer. This year, BNP’s great rival, Société Générale, has been in the spotlight. Its stock fell by more than 14% in one day in mid-August, plumbing depths not seen for two and a half years. Rumors have swirled about a possible downgrade of France’s sovereign debt, accompanied by speculation about the consequences for French banks.

"Follow Project Syndicate on Facebook or Twitter. For more from Howard Davies, click here."

READ FULL POST 1 COMMENTS