With the Bush administration and Treasury Secretary Henry Paulson pushing to pass the $700 billion bailout through congress this week, the rest of the world sat seemingly unwilling to help in any way.

Roger Cohen, a respected US commentator on foreign affairs with the International Herald Tribune writes, “The world has changed in the past decade. There has been a steady transfer of wealth away from the United States in a shift most Americans have not yet grasped. But there has been no accompanying transfer of responsibility. New powers are free-riding as if it were still the American century.”

Why isn’t the US getting the help they think they deserve from the European Central Bank and other nations? Well, for one, Mr. Paulson and Mr. Bernanke are too macho to ask. Representative Barney Frank, Democrat from Massachusetts and chairman of the House Financial Services Committee was asked about the situation by Mr. Cohen and had this to say: “I think it’s a perverse pride thing. We don’t ask for help. We’re the big strong father figure. But let’s be realistic: We’re no longer the dominant superpower.”

Whatever the reason there is no real excuse for the European Central Bank to not even hint at some responsibility, or other countries for that matter. But this is truly an “American mess” as Cohen writes, “The responsibility for undoing the mess is chiefly American too.” However no one believes that any nation is going to voluntarily offer aid to the US, definitely not with this administration.

But Mr. Cohen continues to inquire in his article why the European Central Bank is not coming forward, when they did have plenty of their own subprime mortgage mess. “With this shift of wealth there needs to be a shift of responsibility”, writes Cohen. The G-7 held a conference call earlier today to discuss global financial markets and to reaffirm their commitment to protect the integrity of international finance system, according to the European Central Bank website. Their continued monitoring of the situation will undoubtedly lead to further discussion between EU finance ministers and US leaders.

ESA (European Space Agency) faces the threat of having no way to get its cargo and astronauts to the international space station (ISS) because NASA has decided to cut off the U.S. space shuttle early - in 2010 - five years before a new generation of space craft take over the transport duties.

A planned temporary arrangement for Europeans and Americans to use Russia’s Soyuz shuttles in the interim now seems in jeopardy because of tensions in the wake of Russian actions in Georgia.

NASA and ESA had collaborated on designing a station crew-return vehicle based on an earlier experimental craft, the X-38, but the project has been dropped on the U.S. side even though the European parts were being delivered.

As reported by the BBC, ESA was caught short by NASA’s action. “The decision to cancel the order was delivered by the U.S. government after the components were ready, according to Mario Caporicci, head of ESA’s future space transport infrastructure division, the BBC said on September 12, 2008.

Already, there were question marks about the continuing U.S. role in the ISS after the current shuttle program is discontinued in 2010. The U.S. “constellation” space program has slowed its development pace because of technical and funding problems, and the NASA announcement left a 5-year gap (at least) of no U.S. transportation to and from the station.

An embarrassing aspect of this decision is that the U.S. had promised transportation services to its European, Japanese, and Canadian partners, who all provided their own laboratory materials and equipment to the station.

So what can the grounded Europeans do? A proposal is currently underway to evolve their existing cargo vessel (ATV) into having the capability to transport astronauts, which is considered a necessary second step by Mr. Caporicci and ESA. “To achieve this second step, it will be necessary to analyze in detail the implications of adapting the Arianne 5 launcher and its ground segment to human spaceflight,” Caporicci said.

The longstanding alternative had involved leasing Russian space-craft to ferry freight and people, but that appears unacceptable in Washington under the current circumstances. “The Russians are not going to back out of Georgia anytime soon, certainly not prior to the U.S. presidential election,” NASA chief Michael Griffin told the BBC.

In practice, he predicted, the next U.S. administration will have no choice but to extend the life of the U.S. shuttle. So Europeans will have to wait until the November election and January inauguration before having a clue about the fate of the international program centered on the space station.

As President Dmitri Medvedev formally recognized the independence of South Ossetia and Abkhazia in a televised announcement, Aleksandr Solzhenitsyn must have been rolling over in his grave and thinking, “I told you so.” Solzhenitsyn, who passed away earlier this year, had always argued that Russia had a strong soul that needed to be tamed or it would cause trouble.

The Kremlin seems to have decided to go with trouble, at least for the moment. The recognition decision comes a day after U.S. President George Bush and German Chancellor Angela Merkel explicitly warned Russia not to extend formal recognition to the republics, according to Stratfor, a U.S. company offering on-line intelligence. Furthermore, the Kremlin is hammering home the point - to Western governments - that it disdains their condemnations as insignificant. Meanwhile Russia is consolidating its footholds in Georgia and conceivably its spheres of influence in its “near-abroad” of countries formerly in Moscow’s orbit.

The west promptly denounced the Russian decision. German Chancellor Angela Merkel called the decision “totally unacceptable” and UK foreign minister David Milliband stated that “Georgia’s independence and territorial integrity cannot be changed by decree from Moscow.” In this situation, such strong rhetoric will need to be backed up by effective support for Georgia as well as with a new stance toward Moscow. Otherwise western bravado can backfire in the face of determined Russian action.

Russia will continue to use parallels to the Kosovo ‘precedent’ to contradict immediate or delayed reactions from Western leaders. The West will continue to say Kosovo was a ‘unique’ case and all other avenues had been exhausted. The rest of the states in the Caucasus will be watching closely-in the next few weeks for further developments in this conflict. Russia has made an audacious move, and the west is on the defensive. But Moscow must be wary of unleashing a backlash with secessionist regions, such as Chechnya, already on edge.

Georgia will desperately need the help of its Western allies if it is to assert its independence, but it may find the pressure from a muscle-flexing Russia and an indecisive West so unbearable that the nation loses its viability. In the longer run, Russia may have gone too far by using its military force when the lack of real dialogue frustrated Moscow. The danger is less that the attack will goad the west into countervailing action and more that the Russians may have edged themselves closer toward one of their chronic weaknesses: isolation.

The Russian Duma’s resolution calling for recognition of the Georgian breakaway regions of South Ossetia and Abkhazia is non-binding, so President Dmitri Medvedev and Prime Minister Vladimir Putin have the option of ignoring it. Indeed, they may not wish to stop short of a step liable to stir up secessionist fever in Chechnya and other restive regions within Russia’s own borders.

But Russia will certainly play the “recognition card” in negotiations about the outcome and future shape of Georgia. For one thing, Russia wants to pay back the West in its own coin for recognizing Kosovo’s independence in defiance of Moscow.

Each of the two regions has also expressed the wish to join Russia officially if they gain independence. This would expand Russian territory deep into Georgia. In practice, South Ossetia and Abkhazia are already independent, but Georgia depends on each region for key transportation infrastructure — such as the port of Sukhumi in Abkhazia for imports.

Europe is highly concerned that Russia could recognize secessionist regions in Georgia and in other nearby countries, according to Stratfor, a U.S. company offering on-line intelligence analysis. When Europe recognized Kosovo, it had control of the security situation there. In contrast, “there are countless other secessionist regions - Transdniestria in Moldova, for example - that were already stirring because of Kosovo’s independence and could really light up if they see Russia as a new guarantor of independence,” Stratfor reported.

In Russia itself, formal recognition of the breakaway republics on the ground of self-determination could create a dangerous domino effect within Russian borders. Russia has more than a dozen secessionist regions, many of which are powerful and organized. Moreover, some of these regions could attract strong foreign support - a situation the West could use to destabilize Russia or get Moscow involved in another set of wars within its own territory.

The Kremlin has worked very hard in the past few years to clamp down on the most volatile places, like Chechnya, Ingushetia and Dagestan, but there is always the possibility that these regions could flare up again very quickly.

In Georgia, reports indicate that organized cyber-warfare attacks continue against key government websites - attacks that appear to be coming from organized groups in Russia.

Suspicions that these attacks - like an even larger cyber-assault last year on Estonia - are offensive tactics orchestrated and used by the Russian government and have triggered fresh thinking in the U.S. and European capitals about what strategy might help deter such cyber-aggression in the future.

“Cyber-attack by a nation is very different from cyber-attack by a hacker,” says Admiral Bill Owens, a specialist about the threat. He told the Financial Times that the risks for major nations are rising to the point where it may be time to consider a defensive doctrine similar to “mutually assured destruction.” That was the name for a balance of nuclear weapons between the superpowers during the cold war that convinced both sides that it would be self-destructive to launch a nuclear attack.

Similarly, Owens said, diplomats might take another page from cold war arms-control and urge countries to pledge “no first use” of cyber-war - along the lines of the “no first use” pledges about nuclear weapons.

Although Georgia does not have enough web infrastructures to be very vulnerable in this area, the organized hacking it sustained comes against a background of reported attacks on government facilities in the U.S., France, Britain and Germany that were apparently probes of Western defenses or espionage to glean secret information. Both Russia and China have specialized military units that specialize in cyber-warfare, according to Western specialists. NATO is developing similar expertise.

Evoking the possibility of Western retaliation against attacks masterminded by another government, Owens said “I think that the U.S. and China have an ability to shut down each other’s societies on the internet today.”

This latest cyber-attack has spurred Europe and the U.S. to seek policy clarifications, new technical ripostes and closer cooperation, including via NATO. Michael Chertoff, U.S. Homeland Security Secretary, outlining plans for a “Manhattan project” for IT-security, warned recently that “a big and successful attack would have cascading effects across the country and across the world”.

Though there are similarities in both attacks there are also key differences between Estonia and Georgia specialists say. This time the hackers are targeting specific government websites such as the president’s, the parliament’s and the foreign ministry’s. In fact, web traffic is being redirected to sites in Russia and Turkey that could be the first step towards controlling Georgia’s incoming and outgoing high-level communications. That is the kind of control Russia would need to help oust President Mikheil Saakasvili.

In textbooks, globalization may have its good sides and less-good sides, but there are no redeeming features to the dark side of globalization - organized crime with global reach.

To get a ripe taste of this dark underbelly of globalization and its spread in Europe, dip into the latest book by Misha Glenny, a journalist who gained international attention with his reporting on the horrors of wars and bloodshed in the collapse of the former Yugoslavia. In McMafia: A Journey Through the Global Criminal Underworld, Glenny makes the case, all too convincingly, that Eastern Europe, with its new and fragile democratic systems, has become the gateway for criminal syndicates that match the best multinationals in their professional skills in exploiting the new potential for illicit goods and services to pass borders with the freedom enjoyed by normal trade.

According to Glenny, the “global shadow economy” now accounts for 15-20% of the world’s economic transactions and its epicenter resides in new EU states where governments are still trying to organize their defenses against the criminal spillover from the collapse of the Soviet empire.

Glenny’s book of reportage and analysis is reviewed by Michael Mosettig, a foreign affairs producer at the NewsHour with Jim Lehrer, in the forthcoming issue of European Affairs. He starts by admiring Glenny’s title - “McMafia” - as a way of evoking “[their] global reach as criminal ‘corporations’ aspire to penetrate markets the world over - mirroring the global goals of legal entities such as McDonald’s.”

In this global overview, Glenny implicates Europe in McMafia’s success because it provides the market for illegal labor, drugs and illicit goods. This traffic uses the Balkan states as a highway, but other Eastern and Central European states play their roles, too, as gateways for criminal activity to enter the EU. Glenny makes it clear that, so far, EU crime-fighting strategies have failed to curb McMafia’s activities. Just last week, Enlargement Commissioner Olli Rehn confirmed that the EU may freeze millions of euros in aid to Bulgaria because of its government’s inadequate efforts to fight the organized crime and corruption which has flooded the country.

Preview Mosettig’s review of McMafia on the European Institute’s website.

Amidst growing criticism over biofuels, over the weekend EU energy ministers discovered that they had misread a policy document from last March that outlined Europe’s targets for the controversial energy source. As it turns out, the target - previously understood to have 10 percent of the fuel for cars and trucks coming from biofuels by 2020 - actually only demands that the 10 percent come from renewable energy sources in general (including anything from hydrogen fuel cells to electric cars powered by clean electrical sources).

The new interpretation comes in the wake of growing protest and second thoughts regarding biofuels (see earlier post from May 13). Once seen as the green panacea for transportation emissions, biofuels have come under attack for releasing as many greenhouse gases as fossil fuels and for encouraging farmers to grow crops for fuel, not food, thereby contributing to the current food crisis. Robert Zoellick, President of the World Bank, directed a statement to the leaders currently at the G8 summit, “The US and Europe also need to take action to reduce mandates, subsidies and tariffs benefiting grain and oil seed biofuels that take food off the table for millions.”

Following this reinterpretation of the policy, on Monday the Environment Committee of the European Parliament recommended that the EU lower its biofuels target and instead work to emphasize other renewable energy sources for transport fuels. Coincidentally, Portugal will announce, later today, its plans to create a national network of charging stations for zero-emission electric cars, due to arrive from France in 2011.

See Also:

“Biofuel for thought,” Financial Times, 8 July 2008

“EU biofuels target ‘probably a mistake,’ France says,” EU Observer, 30 June 2008

“Slowing the biofuel bonanza,” BBC News, 7 July 2008

The twenty-first century has proved to be a rude awakening for European higher education. Despite the EU’s pledge to make Europe “the most competitive and dynamic knowledge-driven economy by 2010,” only two European universities (Cambridge and Oxford) managed to crack the top 20 in a list of the world’s top universities that the University of Shanghai published in 2007 (the U.S. landed seventeen).

In light of the rankings, European officials, at both the national and EU levels, are being forced to reevaluate the structure, financing and objectives of post-secondary education. As recently reported in Le Monde, President Sarkozy has charged his Minister of Education, Valérie Pecresse, with the goal of placing two French universities into the top 20 of the Shanghai list and twenty into the top 1,000. France also hopes to use its EU presidency to establish a “European Shanghai” system of rankings that would be more relevant to European universities.

In the latest edition of European Affairs, news editor Pascal Riché sat down with Richard Descoings, head of Sciences Po in Paris and an active proponent of educational reform, to discuss the rankings and the problems facing higher education in Europe (and France in particular). In the piece, Descoings states that the poor European showing in the world rankings stems from three failures:

“First, the lack of decent funding in continental Europe makes it very difficult to attract very good researchers and to produce sound scientific or technological research; second, the lack of autonomy [for individual universities], which means freedom to set your own strategy; third, late awareness of the intensity of the international competition.”

Evidence for Descoings’ statement about underfunding lies in a recent spotlight by the EU Observer on education. Philippa Runner points out that Europe invests far less money per capita in higher education than America does - in the EU, an average of €8,700 is spent per student, compared to €36,500 per student in the U.S. The difference between America and Europe is even more prominent in France where every high school graduate is guaranteed a spot at a university and the state pays the vast majority (if not all) of the tuition. As Descoings explains, it is due to this public stake in education that the French government has had the power to set the salaries of professors, (mis)allocate research funds and dictate the schools’ directions.

Another critique of European higher education has been that its structure and qualifications vary too greatly between countries, making it difficult for students and teachers to move between them; Critics complain that this should not happen within a supposedly “integrated” EU. And beyond their bureaucratic flaws, some European universities have been faulted for preaching an anti-market bias in their classrooms (in France and Germany in particular) and for not making the employability of their students a sufficiently high priority. EU Education Commissioner Jan Figel recently complained that Europe’s problem is that it has a “200-year-long tradition of Humboldt system where the academic world is quite isolated from the outside world.”

The good news for Europe is that efforts to reform higher education are now underway. In 1999, nearly all of the Member States voluntarily agreed to the Bologna Process, an initiative with three goals:

• Develop a common system of academic credit,
• Design a common degree structure,
• Gradually converge toward a European Area of Higher Education.

Signatory states - which now include many outside of the EU - have already made substantial progress on the first two goals, creating the European Credit Transfer and Accumulation System (ECTS) and agreeing to adopt the 3-cycle (BA, MA, PhD) Anglo-American system of degrees by 2012.

And in order to diversify and internationalize its universities, the EU increased its efforts to encourage students to study under the ERASMUS program (European Region Action Scheme for the Mobility of University Students) and established an international counterpart - Erasmus Mundus - that creates the opportunity for joint post-graduate degrees at linked universities.

But problems and criticism remain. Some complain that efforts to internationalize schools will merely result in “scholarship tourism” - that is, students attending a foreign university, using its educational resources and then returning to his/her home, thus not “giving back” to the host country. And students at the Helsinki University of Technology claim that the Bologna Process turns universities into nothing more than “diploma factories” that encourage students to value credits over academic discussion and experience.

Commissioner Figel points out that educational reform will remain difficult because education lies firmly under national - not EU - sovereignty. He plans to work to persuade both governments and students to make university studies more “relevant” and to establish better links between campuses and science and business. With these initiatives, he hopes that European universities will be better able to prepare EU citizens for an increasingly global and competitive society.

The difficulties of maintaining a common transatlantic front against Iran were on display last week when European officials suddenly voiced concern about Barack Obama’s public pledge to open talks with Tehran. A U.S. initiative of this sort, the officials said, could undercut the work they have done to make the Iranians suspend nuclear enrichment as a precondition for a full dialogue.

In the past, the so-called “EU-3″ - Britain, France and Germany - had chafed at the Bush administration’s refusal to envision direct talks with Tehran, complaining that Washington needed to be more directly involved in supporting the EU trio in trying to negotiate with Tehran. Last year, a common front emerged behind a Western demand that Tehran suspend nuclear enrichment as a precondition for the EU to move forward with its “carrots” and for Washington to lay down its “stick” to the degree of exploring direct high-level contacts with Tehran.

Now European governments worry that the position taken by Obama in the presidential primary campaign - in which he advocated sitting down with adversaries without preconditions - goes far past the negotiating position that Europe has been taking in tandem with Washington.

The transatlantic split came to light in an article by Glenn Kessler that appeared in the Washington Post on June 22 reporting the unease felt by Europeans in regard to Obama’s promise to open diplomatic talks with Iran without any preconditions. François Heisbourg, a Paris-based strategic analyst, was quoted saying: “Dropping a unanimous Security Council condition would simply be interpreted by Iran and America’s allies as unconditional surrender, and America’s friends would view this as confirmation of America’s basic unreliability.”

The EU has adopted a dual approach - a carrot-and-stick policy, if you will - for dealing with Iran. On the “carrot” side, they recently joined Russia, China, and the US in offering Iran an incentive package that included the promise of diplomatic talks, trade agreements and aid in developing a civilian nuclear program in exchange for the suspension of its uranium enrichment. However, after Tehran failed to give an answer on the incentive offer, the European states came together and issued a set of new sanctions on Monday, June 23.

Based on measures previously agreed upon by the U.N. Security Council, the sanctions target businesses and individuals believed to be connected to Iran’s nuclear programs. Iranian senior experts and officials such as Defense Minister Mostafa Mohammad Najjar and Gholamreza Aghazadeh, head of Iran’s Atomic Energy Organization, will be denied visas to the EU and the assets of Iran’s largest bank - Bank Melli, which has branches in Paris, Hamburg and London - will be frozen. The US imposed similar sanctions on Bank Melli’s activity in America last year.

Despite the EU’s hard line, officials maintain that the incentive package is still on the table if Iran agrees to halt its enrichment.

Iran has repeatedly refused to suspend its uranium enrichment, arguing that it is intended for civilian uses such as electricity generation. Western capitals suspect that Iran’s nuclear-energy program is merely a cover for making nuclear weapons.

Foreign Ministry spokesman Mohammad Ali Hosseini condemned the new EU sanctions as “illegal” and warned that they could hurt future diplomatic efforts. It remains to be seen whether these latest sanctions will affect Iran enough to push them to halt the enrichment. Past sanctions by the U.N. Security Council and the United States have failed to do so thus far, and skyrocketing oil prices may cushion the economic impact of the latest sanctions in Iran, the world’s fourth-largest oil exporter. Some also predict that the sanctions will merely continue to push Iran’s focus away from the West and closer to China and other areas of Asia. After the EU announced the new economic sanctions, Iran’s new parliamentary speaker - Ali Larijani, the former Iranian nuclear negotiator, who seems to be a political moderate — warned that the sanctions could push Iran away from diplomacy.

Updates:

“US considers sending envoys to Iran,” Financial Times, 25 June 2008

“The Europeans Step Up,” New York Times, 28 June 2008

“New US Nuclear Sanctions on Iran,” BBC News, 8 July 2008

The European Chemicals Agency, which started operations in June in its Helsinki headquarters, marks the latest chapter in the European Union’s efforts to address consumer needs and concerns though market and business regulations. (Similar programs already in place have included antitrust regulation in the computer industry and rules imposing greater consumer privacy.) With its corresponding regulatory legislation, known as REACH (Registration, Evaluation, Authorization and Restriction of Chemicals), the new EU program requires companies to prove that a chemical is safe before they put it on the market.

This approach is the exact opposite of current US policy in which regulators have to prove that a chemical is harmful in order for it to be pulled from the market.

The EU initiative has aroused transatlantic controversy. But now that it has been pushed through in Europe, it is causing American companies with markets in Europe to take into account the new requirements, often across their whole production, in everything from processed food to household furnishings and beauty products.

Supporters defend the step as helping the environment and protecting the health of individuals, Daryl Ditz, senior policy adviser at the Center for International Environmental Law, believes that the new regulations will “compel companies to be more responsible for their products…they’ll have to know more about the chemicals they make, what their products are and where they go.”

For example, any chemical suspected of causing cancer or other health problems will be placed on a new list of “substances of very high concern” and all of this data will be made accessible to the public for the first time via the internet. Supporters hope that by making information - such as the “high concern list” - available to the public, consumers will shirk from certain products and the subsequent decline in demand will pressure manufacturers to halt production of dangerous chemicals.

American chemical manufacturers and the Bush administration have strongly opposed the new EU measures because they believe that they will hurt manufacturers and offer minimal benefits to the consumer. In order to continue selling to the EU market of nearly 500 million people, US manufacturers like DuPont Chemicals will have to spend “tens of millions” of dollars to register chemicals and also pull major products that contain chemicals placed on the list of “substances of very high concern.”

In the absence of similar strong federal regulations for chemicals in the US, individual states have taken it upon themselves to address consumer concerns. Last month, Senator Frank Lautenberg (D-NJ) reintroduced the Kid Safe Chemical Bill to Congress. The bill proposes that all chemicals used in baby bottles, children’s toys and other products are proven to be safe before they are put on the market - a philosophy that echoes the EU approach invoking the “precautionary principle” favored in Europe and gaining ground in some quarters in the US.

See Also:
“Chemical Law Has Global Impact,” Washington Post, 12 June 2008
“European Chemicals Agency: Turning REACH into Reality,” Speech by José Manuel Durão Barroso, President of the European Commission, 3 June 2008
“Lautenberg, Solis, Waxman Introduce Legislation To Protect Americans From Hazardous Chemicals In Consumer Products,” 20 May 2008