UN head Christine Lagarde and Libyan Prime Minister Al-Thinni should be subject to sanctions

The UN has the power to sanction any group that interferes with or obstructs the peace process in Libya. The EU has already listed five individuals it intends to sanction.

 

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The UN had previously tried to impose sanctions on two Libyans, one from each main party in the conflict but the sanctions failed to pass through the Security Council. The EU has recently named five people to be subject of sanctions, three from the Tripoli government side, and two from the internationally-recognized House of Representatives(HoR) government in Tobruk. The Tripoli government has not even signed the UN plan, yet it is still called a peace agreement. In the bizarre world of international relations one can have a political settlement of a conflict with just one side signing on. As of now, the agreement is just initialled since most of the significant parts still need to be completed. Negotiators for the HoR Tobruk government of prime minister Abdullah Al-Thinni have approved the agreement yet the head of his air force and CIA-linked General Khalifa Haftar commander-in-chief of his armed forces have rejected the document: Two military leaders in the east of Libya, who say their forces will not respect any peace accord, also face sanctions. They are General Khalifa Haftar, commander in chief of the eastern forces and air force head Fakir Jarroushi.Given that the two commanders are acting in a way that directly challenges government policy, one would think that the two military commanders would be immediately fired. That is not likely. Al-Thinni does not want to have another parliament burned down while he is prime minister. He was prime minister in the GNC government when Haftar burned down the Tripoli parliament buildings as part of Operation Dignity. A warrant was issued for Haftar's arrest but of course it was never carried out. A video of the event is appended. Now far from being a fugitive fleeing after a failed coup attempt, Haftar heads the armed forces of a government led by the same Abdullah alThinni.

The UN has warned the two rival governments in Tripoli and Tobruk against doing anything that would interfere with the operation of the Libyan National Bank and the National Oil Company(NOC). Both institutions provide what little unity that is left in Libya. The Central Bank distributes government salaries and subsidies to both governments and the Oil Company also remains neutral depositing revenues in the National Bank. As the UN Support Mission in Libya(UNSMIL) said:In this regard, UNSMIL calls on the parties to safeguard the national institutions by refraining from taking any steps that could compromise the neutrality of these institutions that are crucial for Libya’s economic survival.The al-Thinni government did exactly the opposite of what the UN demanded.They set about attempting to take over the Central Bank by firing the existing head and then created their own bank in the east as a rival to the neutral bank in Tripoli. They also set up a rival oil company to the NOC in the east of the country:What the internationally-recognized al-Thinni government did was to try to bypass both institutions:The Al-Thinni government recently fired the head of the Central Bank of Libya that has remained neutral between the two governments. The headquarters of the bank is in Tripoli and it carried on as before. Even more serious is the setting up of a new oil company in the east. The existing National Oil Company has been neutral as well collecting receipts from oil exports from areas controlled by both governments and depositing the money in the Central Bank. Now the Tobruk government has set up a National Oil Company in the east. It is intending to open bank accounts and offices in other countries bypassing the National Oil Company.

There is no sign of any action by the UN to sanction Al-Thinni. Indeed, the UN has provided the al-Thinni government a draft peace plan that gives sole legislative powers to the HoR, the Tobruk parliament. The GNC government has no veto over legislation through a Council in which it had a majority in a previous draft. That power was removed. A previous fourth draft was approved by the GNC but not by the Tobruk government. Amendments were made in favour of the Tobruk government without consultation or the approval of the Tobruk government. The UN created a draft it must have known the Tripoli government could not sign without caving in completely to Tobruk demands. There is no peace agreement there is agreement to isolate the Tripoli government and punish it, if it does not sign on. Instead of the Al-Thinni government being sanctioned for its actions it is being supported and encouraged. Just recently the IMF has added to the complete contradiction of everything the peace process is supposed to achieve.

Today the IMF said that it recognizes the central bank governor named by Libya's internationally-recognized government as its sole contact and has ended any connection with the bank head in Tripoli. This will make it even more difficult to foster cooperation between the two rival administrations a report claims. Economic cooperation with the Tripoli regime and the Tobruk regime will now be virtually impossible. It will be interesting to see if there is now a swing to selling oil through the Tobruk created oil company. The aim of the move is not to foster cooperation between rival administrations it is meant to isolate the Tripoli regime and exert even more pressure to sign a peace agreement that gives it almost no power while empowering the HoR. It all makes sense if you assume the powers that count want the Tobruk government to win out in the power struggle while Tripoli will be forced to give up on its demands.

An IMF spokesperson said that the decision to recognize the Tobruk-appointed bank governor was based upon a request by the al-Thinni government and said:"The international community ... recognizes the HoR as the only legitimate authority in Libya," she said by email. In line with established Fund procedures, Mr al-Hibri was recognized as Libya's governor for the Fund."Not a word about the warning of the UN about doing anything that would detract from the neutrality of the Central Bank. Surely Christine Lagarde , the IMF head, should know that she is violating the UN demand through helping the Tobruk government undermine the existing neutral Central Bank. Will the EU or the UN now recommend that Al-Thinni and Christine Lagarde be subject to sanctions?

Greece's proposed reforms for bailout deal accepted by Eurogroup but with reservations

The Greek Finance Minister Yanis Varoufakis sent a letter to Eurogroup President Jeroen Dijsselbloem just before the deadline of midnight Monday that outlines proposed reforms that Greece was willing to undertake to receive bailout funds.

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The complete text of the letter can be found here or here. Many of the reforms have to do with tax collection and the tax system, an area that both Syriza and its EU partners agree is in drastic need of reform. There is also an emphasis on tackling corruption. While there are sections that deal with tackling poverty and humanitarian issues, these are always treated as being addressed in a manner that does not impact negatively on the fiscal situation.

Under the final section entitled the Humanitarian Crisis there is a section that an article in the Business Insider considers could redefine how we view the modern welfare state. The proposal is for a guaranteed minimum income(GMI). While this is often supported by leftists, it is also supported by many on the right The libertarian right sees the system as a replacement for the many separate welfare schemes that have grown in advanced capitalist societies with a single payment that could be spent by the recipient at will and without bureaucrat intervention. This contrasts with other right wing groups who want to ensure that welfare is narrow and targeted and goes only to those who are "deserving". The idea has been supported by free market ideologues such as Milton Friedman and Friedrich Hayek.

Hayek said:There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend. To enter into such an insurance against extreme misfortune may well be in the interest of all; or it may be felt to be a clear moral duty of all to assist, within the organised community, those who cannot help themselves.Hayek's formulation for the GMI is much more idealistic than that presented in the Greek reform proposals. Here is part of the context of the Greek GMI reforms as set out in the letter: • Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide.• Ensure that its fight against the humanitarian crisis has no negative fiscal effect.So any expenditure on the GMI will presumably need to be revenue neutral or paid for by saving elsewhere. Another passage makes it clear that the GMI is actually intended to discourage early retirement which would cost the state more in pensions.The reforms promise to:"..provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds."

This would allow those between 50 and 65 who may become unemployed through becoming jobless, no doubt in some cases through the measures accepted for the bailout loan, to remain in the job market until conditions improve for them without opting for early retirement which would cost the government more.

Another supporter of the GMI is Sam Bowman, deputy director of the Adam Smith Institute who writes: "The ideal welfare system is a basic income, replacing the existing anti-poverty programmes the government carries out (tax credits and most of what the Department for Work and Pensions does besides pensions and child benefit)...Like the current benefits system, this would provide a safety net. But ‘benefits traps’, where people lose as much in benefits as they earn from work, would be eliminated."

The role of the GMI as presented in the Greek reforms is to save money not solve the humanitarian crisis. This may be a means by which Greece is trying to sell the program to its partners. For those who would earn more if they could choose early retirement when laid off the GMI would represent a decline in income. The GMI is hardly the revolutionary new program the Business Insider describes:In the First Muslim Caliph, Abu Bakr introduced a guaranteed minimum standard of income, granting each man, woman, and child ten dirhams annually; this was later increased to twenty dirhams.

While the EU and Troika or "institutions" have accepted the reforms listed--not surprising since they were developed through constant consultations--they have also demanded further elaboration of them. Christine Lagarde the manager of the International Monetary Fund(IMF) and Mario Draghi, the President of the European Central Bank expressed some reservations and objections to the list. The Eurogroup finance ministers in an official statement said: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions in order to allow for a speedy and successful conclusion of the review.”Greece is being presented with more and more hoops to jump through to receive further funds. In the end the Greek government may decide enough is enough and break free through an exit from the euro zone.

International Monetary Fund lowers global economic growth forecast

- The International Monetary Fund(IMF) reduced its projected global growth number for next year from 4 percent in July to 3.8 percent now. The downgrade resulted from continued economic weakness in the Eurozone and a slowdown in several emerging markets.

The 3.8 percent growth rate is still better than the estimated 3.3 percent growth estimated for this year.The IMF claimed there is a one in three chance that the Eurozone could actually enter a recession. Growth forecasts were reduced for the three largest European economies, Germany, France and Italy. Italy will be entering its third year in recession. Lower growth rates are also predicted for Japan, Russia, and Brazil. Brazil is expected to grow only 1.4 percent next year down from the 2.0 percent predicted in July. However, there are signs of strengthening in the world's largest economy the United States and gains as well in Canada and Mexico.
 After a slow growth rate in the first part of 2014 the IMF upgraded US growth prospects to 2.2 percent for 2014. Job growth numbers have been strong and the unemployment rate has dropped to 5.9 percent. 248,000 jobs were added in September. Canada is predicted to grow by 2.3 per cent this year and 2.4 percent in 2015.
 IMF economic growth forecasts have tended to be overly optimistic. In the last four years they have repeatedly been forced to downgrade their growth forecasts.The IMF Managing Director Christine Lagarde warned that the recovery was "brittle, uneven and beset by risks". The IMF report also suggested that the global economy might never return to the high growth rates prior to the financial crisis. Details of the IMF predictions and graphs can be found at this Guardian article..
 While China's growth is predicted to be 7.4 percent this year, by sometime in 2016 it is expected to be down to 6.5 percent. While many countries would envy such growth rates, they are well down from the over ten percent average yearly growth rate before the financial crisis.
 Russia's growth rate will be hit by sanctions imposed by the US and EU. The ruble's value has plunged as investment dries up and capital flees. The IMF predictions assume that the geopolitical tensions in such places as Iraq and the Ukraine will be less. The report noted that "the projected pickup in growth may again fail to materialize or fall short of expectations" and stress that there were increasing downside risks. The downside risks included high levels of public and private debt in many countries.