US STRATEGIC CONCERNS, FROM IRAN TO THE PACIFIC – Pages 4-5

MARCH 2012  N o 1203

,BERLIN

TS

AR

FINE

PORARY

TEM

-CON

LITTKEMAN

JOCHEN

Price: £3

Economical with the truth

The first steps have been taken in the US to make public the financial affiliations of economists submitting papers to academic journals. It’s a start. In France, such experts do not disclose their interests when they write or speak for the media. And the media asks no questions

NORBERT SCHWONTKOWSKI – ‘Pause’ (2004)

Saudi Arabia’s free pass by Serge Halimi

Saudi Arabia’s record is no better than Iran’s when it comes to respect for human rights. Yet the international community always manages to overlook the Wahhabi monarchy. Could this be connected with Saudi Arabia’s status as top oil-producing country and trusted ally of the US? Saudi Arabia can intervene in Bahrain, crush democratic protests there, execute 76 people in 2011 (including a woman accused of “sorcery”), threaten to execute a blogger who posted an imaginary conversation with the Prophet on Twitter, sentence thieves to amputation, announce that rape, sodomy, adultery, homosexuality, drug trafficking and apostasy are to carry the death penalty, and nobody except the Office of the UN High Commissioner for Human Rights seems to care. The UN Security Council, the G20 (of which Saudi Arabia is a member), the International Monetary Fund, whose director recently visited Riyadh and expressed her appreciation of the kingdom’s “important role” in supporting the global economy: none of them care.

This monarchy still refuses to allow women to travel by car unless accompanied by husband or chauffeur, or to participate in the Olympic Games. Although the latest breach of at least two principles of the Olympic charter (1) hasn’t caused much of a fuss. If Iran had been guilty of such sexual apartheid, international protests would have been organised and widely reported.

The Tunisian prime minister Hamadi Jebali has provided another example of the preferential treatment automatically accorded to the Saudi monarchy. Jebali, who belongs to a movement savagely repressed by former president Zine el-Abidine Ben Ali, praised his Saudi hosts on one of his first official visits abroad. Yet Riyadh, which supported the Ben Ali clan to the bitter end, refuses to extradite them and provides a safe haven for their finances. Gulf money also helps encourage the Salafists’ provocative behaviour in Tunisia, funding TV channels that spread their medieval interpretation of Islam.

In January 2008 French president Nicolas Sarkozy claimed that Saudi Arabia, “encouraged by His Majesty King Abdullah”, was promoting a “policy of civilisation”. Four years on, this country riddled with corruption is the Arab world’s foremost proponent of ultraconservative Sunni Islam. Riyadh’s elders, who see the protests of young Saudis as a “new form of terrorism”, only care about peoples’ rights when they can be used as a weapon against the “radical” or Shia regimes of their regional rivals. The kingdom thinks it will be shielded from popular protests by spending a drop of its oil revenues on social services, by its Sunni majority’s contempt for the 10% to 20% of Shia nursing their grievances in the eastern part of the kingdom, and by the fear of Iran. The international indulgence of the Saudi monarchy is an added comfort.

Translated by Barbara Wilson (1) Principle 4 of the Fundamental Principles of Olympism states: “Every individual must have the possibility of practising sport, without discrimination of any kind.” Principle 6 says: “Any form of discrimination with regard to a country or a person on grounds of race, religion, politics, gender or otherwise is incompatible with belonging to the Olympic Movement.”

inside this issue Fifty years ago Port Huron questioned America’s pursuit of happiness Page 6 Bluegrass roots: Obama harnesses the power of Country music Page 7 What is Europe and where does it end? We redefine its borders Page 8 Balkans: does anyone still want to join the European Union club? Page 10

y Renaud Lambert

The collusion between economists and financial institutions is creating concern: many academics invited to explain public issues in the media, and researchers appointed as government advisors, receive money from banks or big business. Can an expert be truly independent in advocating financial deregulation when he is also a director of an investment fund?

These potential conflicts of interest are not exactly secret, but those who benefit do not talk about them. Before the 2008 crisis everyone put up with the ambiguity: the media presented experts who were supposed to be neutral but gained both fame and cash from their frequent appearances. Since 2008, economists and their contacts have come under scrutiny. The American Economic Association (AEA) hopes that public attention will end intellectual prevarication: since January it requires all articles published in its scholarly journals to mention potential conflicts of interest. Authors must identify each interested party (1) from whom they have received significant financial support amounting to $10,000 or more in the past three years. This also applies to sums received by “any close relative or partner of the author”. The AEA, which will shortly celebrate its 130th anniversary, publishes some of the world’s most prestigious journals and does not act on a whim; people are taking notice.

After Charles Ferguson’s documentary on the financial crisis, Inside Job, people were angry. The compensation paid to some of President Barack Obama’s close advisers, who were involved in the liberalisation of the banking sector, raised questions: in the year to March 2009 Lawrence Summers, director of the National Economic Council, received $5.2m in remuneration from hedge fund firm DE Shaw and up to $135,000 a time for talks, most often to financial firms, plus generous payment for newspaper articles.

Economists were also discontented. During 2011, said George DeMartino of the University

Renaud Lambert is deputy editor of Le Monde diplomatique

Mexico: school lessons by television are cheap but far from good Page 12 France’s schools: religion is creeping into the lauded secular model Page 12 US health care: is medication really the cure for all ills? Page 14 Big Brother: there’s now profit in reading our emails Page 14

of Denver, a number of “scientific studies showed that conflicts of interest were the rule rather than the exception.” On 3 January 2011 academics Gerald Epstein and Jessica Carrick-Hagenbarth sent an open letter to the AEA, calling for action; it was signed by more than 300 economists, including George Akerlof, winner of the Bank of Sweden prize in economic sciences, and Christina Romer, a former advisor to Barack Obama. A year later, the AEA has taken action.

This change has yet to cross the Atlantic (2). In Le Monde on 1 February, the economist Olivier Pastré was angry at talk of France leaving the euro and set himself a mission: “To explain to the most vulnerable people in France, those most subject to disinformation, the risks of abandoning the euro” (3). He was described in the paper as a “professor of economics at the University of Paris VIII”. He is also chairman of IMBank (Tunisia), a member of the board of CMP-Banque, of the French Banking Directors Association and of the Europlace Institute of Finance. But when he speaks every Saturday morning on the France Culture radio show L’Economie en Questions, of which he is a co-producer, he is only described as a university professor.

“That’s a classic example of what led us to think there is an issue,” said Professor Michael Woodford, a member of the AEA’s executive committee. The AEA is not only concerned about its own publications: it also “urges its members and other economists to apply the above principles in other publications: scholarly journals, op-ed pieces, newspaper and magazine columns, radio and television commentaries”. Woodford feels readers have a right to know if experts are stating their own views, or are defending the interests of the institution they work for. Pastré’s article assured readers that if France left the euro its banks would see their short-term and long-term borrowing costs explode and would eventually lose profitability.

According to Patrick Artus, chief economist at the French bank Natixis, a director of Total and a member of the French Council of Economic Analysis, Woodford’s theory “makes sense in the US and the UK, but I do not really believe that it applies to the eurozone,” where “the number of economists with links to the financial industry is very low compared with the Anglo-Saxon countries” (4). They may

Continued on page 2