Editorial

Ever since the Gulf Cooperation Council (GCC) was formed in 1981, its six members have been striving for closer cooperation, though the degree of success in this regard hasn’t been very satisfactory. There were intense efforts, a clear intent and a coherent plan by the Gulf Arab body to achieve its objectives, but some of the obstacles on the way, which had to do with geopolitical reasons and issues of individual sovereignty, proved to be substantial.

The issue of closer Gulf cooperation is back in the limelight with some Gulf leaders recently announcing their intent to seek a political union, which would first start with a union between Saudi Arabia and Bahrain. Meetings are being held to discuss the issue, the latest of which happened yesterday in Riyadh where leaders of the bloc discussed the details. But unlike in the past, the GCC plan has attracted global interest and triggered an intense debate in the member countries because it comes at a crucial time. In Bahrain, the opposition is waging an intense campaign for reforms. Other Gulf governments are under pressure to bring in political reforms, a demand which has been increasing in stridency. And Iran has been flexing its military muscles with nuclear ambitions. All these factors have influenced the current decision.

Any plan for closer political union between the GCC members is welcome and can be considered a continuation of the efforts in this regard. There is no doubt that economic, political and military cooperation and a centralised decision-making process will strengthen the bloc and enable it to face challenges with confidence. But what remains to be seen is how the new bloc will take shape, whether it’s to be modelled on the lines of the European Union or will have a more integrated structure that will blur the differences. On these, there is no clarity and Gulf leaders have been candid about it.

At the same time, it will be a distortion of truth to say that the GCC plan is without major obstacles. In the past, progress has been tardy even in achieving limited goals like a single Gulf currency, a customs union and closer economic cooperation. Also, despite the cultural and social affinities, the Gulf member states enjoy varying degrees of freedom and democracy and differ vastly on their foreign policies, and the people of each country have their own doubts and apprehensions about the future bloc. It is also not clear the degree of sovereignty each member will have to cede to make the union a reality. But Saudi Foreign Minister Prince Saud Al Faisal has been realistic about the objectives. The plan would take time, he told the media in Riyadh yesterday.

More than a union, the people of the region are looking for genuine reforms.

Around 2,000 Palestinians are on hunger strike in Israeli jails to protest against the Israeli policy of ‘administrative detention’. The condition of six of these prisoners is said to be serious, and another two, who have refused food for 77 days, are said to be close to death.

The mass hunger strike and the global media attention it has received have given a fillip to the ongoing Palestinian struggle for freedom. It has profound implications for not only the peace process, but even to Israel. It has driven deep holes in the Jewish state’s pride about its legal system and the rule of law, which it has claimed to be of Western standards. The prisoners’ rights are fundamental human rights, and by denying Palestinian prisoners these rights, which include an opportunity to defend themselves in a court and access to legal help, Tel Aviv has exposed itself and invited opprobrium from the international community.

The Palestinians are not seeking any special rights, but basic ones which they are entitled to under the international law. They are demanding an end to imprisonment without trial or charge, known as “administrative detention”, an end to solitary confinement; permission for families from Gaza to visit them, access to educational materials, and an end to strip searches and other physical abuse.

Israel has only one option to solve the current crisis. It must either put on trial or release those it holds within this inhuman system. Or, it must be prepared to face the consequences. The death of any prisoner will trigger violence in Palestinian territories and pile pressure on Israel to deliver justice.  Already, UN officials have spoken against Israel and one unusual intervention came yesterday from Tony Blair, the representative of the Middle East quartet, who urged the Benjamin Netanyahu government to “take all necessary measures to prevent a tragic outcome that could have serious implications for stability and security conditions on the ground”. He said he was “increasingly concerned about the deteriorating health conditions” of hunger strikers. Earlier, Mahmoud Abbas, the Palestinian president, said the situation was “very dangerous” and said that iIf anyone dies … it would be a disaster and no one could control the situation.” Abbas has appealed to Hillary Clinton, the US secretary of state, to intervene.

Palestininas need to build on the success of the hunger strike to expose the Israeli atrocities before the international community and further their objectives. This new method of nonviolence has proved to be quite effective in pushing Israelis to take action.

Israeli security forces have responded to protests and marches in towns and villages across the West Bank with teargas, rubber bullets and water cannon. But unlike in the past, the Israelis can’t have their way this time.

Even at the heights of various financial crises, the advocates of free market and bankers had successfully withstood calls from various quarters for strict regulation of banks and financial institutions to stop them from playing recklessly with public money. Those calls are back with a virulence again after America’s biggest bank JP Morgan Chase made a stunning admission that it had lost billions (approximately $2bn) thanks to positions taken by a trading desk on which one of the stars, Bruno Iksil, was nicknamed the London Whale for his bullish trading. Such was the impact of the revelation that it sent shivers through the markets. The US Securities and Exchange financial watchdog is said to be reviewing the losses, but some $13bn has been wiped off the value of the bank after its shares plunged, taking the US stocks down with it, and the rating agency Standard & Poor’s revised its outlook on the bank from stable to negative and Fitch Ratings downgraded it from A-plus to AA-minus.

What makes the Morgan tale curious is the fact Jamie Dimon, its boss, is known for his public scorn of any regulatory reforms. When the activities of the Whale were first reported in April, he dismissed them as “tempest in a teapot”. But that tempest has moved out of the teapot to swallow him and his company, and the consequences will be more than he could handle.

The banking lobby in US and the West is too powerful to let anyone take away their powers or let reforms impede their operations, but the latest incident will make voices for reforms more strident, and the day will come when these demands could no longer be ignored. A strong case for market reforms was made eight months ago after the debacle at UBS, where trader Kweku Adoboli allegedly lost around $2bn. As long as a regulatory mechanism is not installed to check the wayward ways of rogue traders, they will continue to treat currency as mere paper, and incur losses which will not only take their companies down with them, but the global markets too.

Two $2bn losses in the space of eight months show that big banks need to be restrained, that too quickly. The onus is now on the US government to act. The Morgan loss is a solid proof of the failure of post-financial crisis US reforms to reduce the risks of one bank sparking a major meltdown.

Some US lawmakers have blasted Dimon for causing the current loss and have called for tougher regulation of banks. Powerful Senate veteran Carl Levin said: “JPMorgan’s loss is a stark warning about the dangers of having major banks take risky bets.”

It’s time to translate his words into action.

Greece is hurtling towards an unprecedented political crisis too. The country remained mired in political stalemate yesterday as talks on forming a coalition government faltered after inconclusive polls boosted anti-austerity parties and rattled the eurozone. The media, experts and political parties are now engaged in an intense debate on the way forward, and though there is a shortage of clear answers, one thing is clear: Greeks are unwilling to buy the tough austerity measures prescribed for them by their European doctors, especially German Chancellor Angela Merkel, and are ready for a fight.

In the absence of a clear majority for any single party, leaders of various parties failed to break ground on coalition talks which now depend on an anti-bailout radical leftist party that won the second place in the election. But the leftist party Syriza yesterday ruled out joining a pro-austerity coalition, throwing into jeopardy last-ditch efforts by the country’s socialist leader to form a government. “It is not Syriza which is rejecting (its participation in a coalition with the socialists and the conservatives) but it is the verdict of the people of Greece,” party chief Alexis Tsipras said after talks with socialist Pasok leader Evangelos Venizelos. All eyes are on Syriza’s telegenic leader, a 37-year-old engineer named Alexis Tsipras, who has been very vocal in his views. “The people of Europe can no longer be reconciled with the bailouts of barbarism,” he told state-run NET TV. “European leaders, and especially Merkel, should realise that her policies have undergone a crushing defeat.”

If the stalemate continues, Greece will be headed for a revote in June.The choices before them are tough. If they don’t want to accept the harsh terms that foreign lenders have imposed in return for aid, what are the other options available and what will be the consequences? And which party is capable enough to lead them through all this? There is no way Greeks can avoid painful solutions.

German leaders warned that Athens could expect no more money without reforms and also suggested that the eurozone would cope if Greece left the 17-member currency union. Debt-laden Athens has already committed to finding in June another 11.5bn euros ($15bn) in savings over the next two years. It also needs to redeem 436m euros in maturing debt on May 15.

With the election of a new French president, Greeks can find some support in their fight against tough austerity measures which stifle growth. This can lead European leaders to ease their policies to include measures which stimulate growth, but it’s too early to say to what extent they will go.

In a sense, the current stalemate is a positive development. The government that emerges from this crisis will be stronger and in a position to make tough decisions.