EUROPE: RETURN OF THE 'OLD ECONOMY'
America's misfortune is proving to be Europe's advantage. The new technology Nasdaq market's worst ever year -falling 39 percent - was matched by the New York Stock Exchange's worst result in 20 years as the Dow Jones Industrial Average fell six per cent since 1 January 2000. In 1999 the European Union's Annual Economic Report anticipated a 'flight to quality' as investors shifted from the depressed Asian market into Europe, but the continuing growth of the US economy made America a better option throughout the first half of 2000. As funds shifted to the US, the dollar soared while the newly created Euro tumbled unimpressively, leaving the European Central Bank unsure whether to intervene to stop its slide or abstain from short-term measures to build confidence.
In the second half of the year, though, the dot.com bubble burst leaving investors wondering whether the new technology companies they were holding were just so many tulips. Though there is no good reason why new technologies ought to be rubbish, the speculative investment boom in New York promoted watered stock and barely-existent dot.coms. It might still be the case that the feeding frenzy will lead to new productive industries, as the railroad boom of the late nineteenth century did. But for now, the shallow optimism of the dot.com revolution is giving way to shallow pessimism, as investors return to 'old economy' stocks, in industry, pharmaceuticals and chemicals - a move that favors the eleven Euro-Zone countries, which are more heavily weighted to the old economy than the new. Europe's old economy is winning out because of the conservatism of investors about the new technology.
Behind the market fluctuations is the rate of investment in the real economy. While share prices in the US boomed, the rate of investment halved from five to 2.5 percent. Meanwhile the sluggish Euro-Zone rose from 2.5 to 2.8 percent. Europe's Commissioners hope that they are reaping the rewards of the concerted effort towards exchange rate stability and economic convergence on the one hand, and liberalization of trade and investment on the other.
The more likely explanation is that Europe's modest growth has been achieved by the Commission's sustained campaign to shut down excess industrial capacity by removing national subsidies - on the grounds that these constitute 'non-tariff barriers' to free trade. The commitment to the free market is strictly rhetorical, though, as the commission has set about organizing 'collaboration' between European firms as a way of competing with their larger US and Japanese rivals. Under the 'Esprit' and European Biotechnology Coordination Groups, the Commission aims to consolidate the leading Information Technology and Biotechnology industries into trans-European world competitors. One such is SGS Thompson whose collaboration in research with ST, France Telecom, Cnet and Phillips has helped it secure a place in the world market. For the most part, though, Esprit programs turn out to be Research and Development subsidies for German firms like Siemens and AEG, to catch up on IT.
The bad news for the UK in all this is that while its own policy of leaving the 'old economy' of car production to fall on its sword, the promise of the new economy of IT and design companies in the City Fringe is looking doubtful.
THE ROAD TO HELL IS PAVED WITH GOOD INTENTIONS
The tragic death of Charlotte Wilson, a teacher with the Volunteer Service Overseas in Rwanda with a Doctorate of Philosophy in the slaughter of more than twenty by Burundian insurgents drew condemnation from the British press. Ms Wilson joins the growing list of aid workers killed abroad in local conflicts, and her selfless generosity only adds to the sense of outrage.
Few will ask, though, whether aid workers in Rwanda and Burundi, where Ms Wilson worked, are making a positive contribution to the region. Since the establishment of military regimes in both countries drawn primarily from the minority Tutsi, governing over Hutu majorities, savage repression has followed. The Rwandan regime led by Paul Kagame has pursued its war against Hutu refugees into neighboring Congo, rejecting UN calls for Rwanda to withdraw its forces from the region as 'surprising'. Over the Christmas period, Rwandan military forces rounded up hundreds of 'criminal drug dealers' in Kigali. Burundi's military regime, too, has continued to crack down on Hutu insurgents.
Despite the regions fertile agriculture, both countries are stricken by famine, not caused by natural factors, but by the social dislocation of forced population movements. In Rwanda 30 000 refugees and returnees who fled the 1994 invasion of Kagame's RPF guerillas are dependent upon World Food Programme handouts. Since the invasion, Rwanda, once considered so fertile it was called the Switzerland of Africa, has been dependent upon foreign aid. Neighboring Burundi has thousands more displaced persons in famine, with harvests failing as roads and waterways fall into disrepair. The disaster in Rwanda-Burundi is a consequence of the Western powers shameful endorsement of the minority- supported military regimes. Aid workers run the risk of supporting those repressive governments, and have become targets for their opponents.
-- James Heartfield