Living On

Armen is heavily missed. His absence left a hole in independent observation of the political and economic risk situation in Latin America. Beyond the merely analytical though his work was wide-ranging from Armenian philanthropy and social observation of Latin and European lifestyles through to being a "fly on the wall" at the Cannes Film Festival every year and reporting back on the more exotic foibles of the international jet-set.

We miss his wit, his sense of history and his bon mots (in French, Armenian and, even, Turkish). Armen was very much a product of the Levant but then, like so many other Levantines, converted to an international stage where they offer insight into all around them. This record tries to humbly accumulate his collected writings for public consumption so they can be preserved and appreciated for the urgency of the moment in which they were written to the timelessness of the observations.

How best to categorise the uncategorisable? Maybe Armen could be described as an Armenian/Anglo/Franco Samuel Pepys for our times.....

It is ironic that ultimately it was the very mediocrity and self-satisfaction of the Chilean "system", which he documented so thoroughly, that brought about his tragic end.

Wednesday, November 10, 2010

Why I Am No Longer Allowed to be Armenian

Half way through my 63rd year, I have realised I cannot be an Armenian any more.

Of course, I cannot change the genetics or the character; though I could do something about the tell-tale name. I cannot erase my knowledge of the language as if it were a file on a hard disk. In a way, I may have started my mutation earlier by marrying a non-Armenian, and then realising my children had no interest whatsoever in that side of their roots.

I find it impossible to be an Armenian because Armenians are their own worst enemy. This is why I think they will never achieve neither a dynamic modern homeland, nor an unconditional recognition of the Genocide, nor the survival of the Diaspora beyond an academic and folkloric community of limited following.

Those who know me may find these affirmations surprising, as I have dedicated some 45 years, since my late teens, to Armenian causes. I fought, with mixed success, with media misrepresentation, joined non-political organisations, stayed away from divisive groups, and did such diverse things as promoting the Armenian presence at the Cannes film festival by sinking (the word is used advisedly) more than a quarter of all my savings into helping people in Armenia with a cultural sponsorship and individual assistance.

Though I found it ridiculous, I learned to live with the divisions and subdivisions of the various communities who spent more time fighting each other than pursue common aims. I accepted, with some exceptions, the idiosyncrasies of Armenia itself, thinking that they have had a hard time and deserved some positive discrimination and patience.

In less than one year, all my dreams and ideals came apart.

In late 2009, I realised that financial circumstances would not allow me to pursue my sponsorship in Armenia, and advised the 40 or so people involved of the fact. Most said that they understood and it did not matter, as I had done enough for 13 years. They insisted that their love and gratitude would endure whatever. “Parole, parole, parole”, as the Italian song went.

After sending my last contribution, I never heard from them again; even when I pursued them. Not even an Armenian Christmas greeting. Much later, I asked a member of our community in Chile visiting Armenia who had been instrumental in my initial involvement, to find out why I was so ignored. He did not even bother to report back.

I resigned myself to try to help our small and struggling community in Chile, where we have no embassy, school or church; just a rundown old clubhouse where we meet up three or four times a year . The Armenian ambassador, serving Chile from his post in Argentina, had asked me to be his informal liaison man. I can say without false modesty that I leaned over backwards to comply. We managed to have a Genocide resolution passed unanimously by the Chilean Senate, and have been omnipresent in the local media whenever the need or occasion arose.

I liaised with friendly embassies and reported on the activities of the Turks. I sent a weekly situation report on what was going on in all aspects of the country and also maintained contact with Armenian communities in Latin America and beyond.

I visited Armenia 13 times, met up with the Foreign and Diaspora ministries, and wrote papers ranging from geopolitics to diplomacy. On several occasions I was asked to lecture on aspects
of Armenian affairs both in Chile and abroad.

Suddenly, in March 2010, all communications to me from official Armenia stopped. Messages were not answered or even acknowledged, and no explanation given. Last week, I learned that a Chilean lawyer with no link to or knowledge of Armenia had been formally accredited two months ago as Honorary Consul in Santiago. I was never advised in advance. This happened despite my supposedly being the “Embassy Liaison” and “Community International Adviser”

Not just I, but the community in general was never advised. Nor did the appointed person make contact with his newly acquired flock. When I complained, I got a purposely distorted “explanation” that made no sense.

Forgotten in Armenia and thrown away by the Diaspora, there is nowhere left to go in my being an Armenian. Continue to behave like that ‘Oh Armenians’, and see how far it will get you.

An apology to the memory of my maternal grandfather Levón Hazarabedian, whom I never met, but who, on his deathbed, advised his family – “never become involved in Armenian affairs”.

I am sorry not to have listened to you, medz-baba.

Monday, March 15, 2010

WHERE DOES CHILE’S ECONOMY GO FROM HERE? - The Potemkin Village Revealed in Two Minutes

The Ides of March is a good day to talk about catastrophes and their
consequences. From times immemorial, ancient civilisations knew that they
had to appease whatever Gods they worshipped. They had them classified by
specialisation, until monotheist religions declared that a single being
could handle everything, making him busier than a Banco del Estado cashier
at 13.45 PM on a Friday. Pretty clever fellows, those ancients. The Roman
Neptune, alter ego of the Greek Poseidon, was both the God of Earthquakes
and of the Sea. The Aztecs had Tepeyollotl, just for quakes. Modern Man
thought he could do away with sacrifices such as throwing virgins into the
water (admittedly they would have a hard time finding enough virgins these
days), or opening hearts with obsidian knives at the top of a temple’s
stairs. They decided they had “dominated nature”.

It took just two minutes of the earth shaking, and a slightly longer rise
of the sea level, to do away with nearly 20 % of Chile’s GDP. Gone was in
that short time the legend, for it was a legend, of the modern, well
managed country, which had solved all its problems, tackled poverty,
eliminated shanty towns and provided a modern infrastructure. Gone was the
country which cheated its way into the OECD like an immature underage girl
putting on make-up to bypass security at a fashionable disco (I have never
been invited to the OECD, and I do not think it looks like a disco, but
you get the point). Gone was the regional leader pontificating and
lecturing to its neighbours and beyond. I feel sorry for the diplomats who
now have to explain to their chanceries why they recommended them to vote
for Chile’s admission to the OECD, or wrote all these glowing speeches for
their visiting VIPS whom they always kept well away from any dissenting
view. Sure, you cannot predict earthquakes, but if you know you live on a
fault line, you plan and act accordingly, and make sure those under your
jurisdiction also do so.

Interestingly or unavoidably, not a single reader, and certainly not those
same diplomats, analysts and journalists on my list who would always refer
to my warnings as “exaggerated” has had the courtesy to ring or write and
recognise my prescience. I know that many look upon these papers as
amusing entertainment to share with your spouse at home during the
week-end. Well I hope you enjoy running the vice-consulate in Ulan Bator.
I think in fact apologies would be more appropriate. I shall take this
situation into account in the future.

As for the new administration, if anyone is interested, there is not a
single member of it on my mailing list, so all this is between us.

THE QUAKE DAMAGE The figures estimating the cost of rebuilding and
repairing the destruction of the quake and tsunami, looked as if they came
out of a random number generator, with even simple logic thrown to the
dogs. Within a few days we heard that the damage to infrastructure was U$
1.2 bn, but that rebuilding or repairing hospitals alone would cost U$ 3.6
bn, and schools another U$ 1.6bn. Some time later, the total was put at a
more credible U$ 20 bn, and on assuming office, president Piñera mentioned
U$ 30bn. The truth is nobody knows, and it would be much better to name a
public-private commission to look at each sector and come up with serious

Though copper mining seems to have come out of the event largely
unscathed, other crucial sectors have been hard hit. In some cases, they
may be back to normal within the year. In others, it may take double or
treble that. Among the casualties is the wine industry, already mentioned
in previous reports, the loss of 50 % of the country’s steel manufacturing
and beer brewing capacities, the closure of one of Chile’s two refineries,
extensive damage to the forestry and cellulose sectors, which will mean a
15 % drop in exports, varying damage to 300 irrigation installations (with
the related effect on agricultural production, from wheat to fresh
produce), as well as dairy farming, damage to the already moribund salmon
industry and the virtual disappearance of the infrastructure (boats,
jetties, processing facilities) for many coastal fishermen.

Understandably, hotel reservations for March were 50 %down, not made any
better by the cancellation of such diverse activities as the Congress of
Spanish Language Academies in Valparaiso (which appeared so badly
organised that it should have been named Spanish Language “and bad habits”
Congress- two working days before inauguration, there were still no
details of the programme), the curtailing of the Viña international song
festival and the scaled down version of FIDAE. Chile had been actively
marketing itself as a conference venue (quite a feat when there is not a
single purpose-built facility to host a large conference anywhere in the
country!), and it will take some time before people forget and accept to
attend the XXIst Congress of Lapsed Bangladeshi Jungian Psychiatrists in
Viña del Mar. The closure of the airport did not help the image either,
and its CEO saying that “it would cost too much” to have a quake-proof
terminal is hardly reassuring for passengers.

There was not much of architectural or historical value to see in
Santiago, but much of what there is in terms of historical public
buildings and churches has been damaged to varying degrees (including the
Moneda palace itself). Also a casualty has been the Colchagua valley,
where foreigners enjoyed the wine trail. Both the wineries themselves and
the traditional mansion houses of the proprietors have been affected.

International tourism is not the only casualty. Well apart from the
short-term reluctance of Chileans to go out with the risk of power or
water shortages finding them away from home, a whole area of low-cost
popular tourism consisting of down-market resorts for masochists who could
afford hotels, but think that a tent on a rainy dirty beach is cool, has
died as the small towns and fishing villages accommodating them have
literally disappeared from the map, like Atlantis.

SHORT TERM PROBLEMS The first and foremost challenge of the authorities
is to provide shelter and basic services to the between 1 and 2 million
people (probably the higher figure) who have been left totally or
partially homeless. Winter, which is both wet and cold in that part of
Chile most affected, is a few months away. Housing them is only part of
the problem. Their municipal buildings, schools and hospitals are often
unusable. Taking schools alone, 560,000 children have been left with their
schools in ruins (several universities have suffered too). No less than
4,000 hospital beds have been lost.

The amount of small businesses, beyond fishing, and including shops, small
workshops, staff attending tourists, etc. is huge, and many have dismissed
their staff, without a penny in indemnity. Basing themselves on
Pinochet-inherited labour legislation, which allows to fire employees with
no compensation within 6 days of a force majeure event, a huge number of
workers in what was already one of the poorest regions of Chile, has been
left destitute.

MEDIUM AND LONG TERM PROBLEMS The above situation gives rise to many
other question marks. Taking the most urgent first, one has to sympathise
with a couple of mayors from affected towns who rejected the putting up of
emergency wooden huts to replace destroyed houses. Called for some reasons
“media aguas”, though I think ”medio tonto” would describe them better,
these are the standard “solution” to emergencies in Chile and consist of
18m2 of wood panels and a roof, with no sanitary installations, insulation
or floor. The mayor’s reluctance is based on the fact that they tend to
become “permanent” (547 families from the earthquake in Tocopilla two
years ago have still to get proper housing, and this time we need half a

In a good average year, some 140 to 150 thousand dwellings are built in
Chile. How long would it take to replace four times as much, as additional
demand. Will there be enough materials, and at what price. Who will pay
for it? Worryingly, the neo-liberal Piñera ministers are talking of loans,
not grants, so in order to help the wretched, put them even more in debt.
Won’t the demand for scarce materials push prices up and thus inflation?
In Central Chile, people will be reluctant to buy high rise apartments, so
we would go back to low density housing and the price of land could go up
consequently. Will the “building boom” help unemployment? Only marginally,
because one thing is to clear the rubble which any able-bodied man can do,
but do you want an unemployed fisherman or mini-market cashier to rebuild
your damaged apartment block?

When it comes to public buildings, there is a bureaucracy that makes any
construction work very slow, in terms of administrative organisation, and
in normal years. Overwhelmed with necessities, unless the system’s inertia
is reformed, it could cause near-paralysis.

So if the unemployed cannot be fully absorbed by reconstruction, what will
they do? After losing patience, they might drift up to Santiago and create
a desperate miserable lumpen there, putting pressure on criminality and
social services alike.

What effect will all this have on growth? For 2010, it depends with what
speed the fundamental industries can build up to full capacity. The first
semester in particular could be bad, and I think it is foolish as yet to
start putting figures on expectations for the full year.

The drop in exports, notwithstanding better copper prices, and a rise in
imports needed to compensate the lack of enough national production, will
affect external accounts but it is not a matter that should cause worries.
External reserves ended at U$ 25 bn last February. Also deteriorating will
be fiscal accounts, which suffered in 2009 the dual impact of lower copper
revenue and pre-election largesse. Higher expenditure and lower tax
revenue will not improve matters this year. Once the extent of the damage
is clear and means of financing thought out, (from redirecting resources
of the normal budget to using part of the U$ 15 bn copper savings or going
out and borrowing abroad), the consequence can be better quantified.

The banking sector has yet to figure out the impact of the situation as
losses from bad debts may be compensated by new business related to
reconstruction and cash flow needs. The insurance sector, even taking
reinsurance into account, has obviously received a big blow. On the
peso/dollar exchange rate, exporters and expatriates should expect no
respite from the erratic and capricious management of the rate seen in the
past 20 years.

WILL ANYTHING CHANGE? We have seen that public services, even those
gloriously privatised under Friedmanite theories, did not live up to
expectations. Buildings supposedly quake-proof, collapsed in large cities,
water and electricity supplies are still a daily lottery even in Central
Chile, and to have a single road up and down the country is both
economically and strategically ridiculous. It is also unacceptable to
quote the above average intensity of the earthquake as an excuse or

Quake proof means just that. Proofed against ANY quake known to man or
beast. I am less critical about the failure in telecommunications. We
never had our land lines interrupted for a minute, even when we were 85
hours without power, and the collapse of mobile phone systems is not due
to the quake but the stupidity of the natives, against which nobody has
yet invented a cure. Ringing all your friends and relatives after each
aftershock or cut in power or water, with the question “sentiste el
temblor?”, or “tienen luz?”, when just looking out of window would tell
you the whole town is dark, is a reflection of mental underdevelopment and
it would be meaningless to oblige mobile phone companies to invest in
capacity which allows 17 million idiots to use their mobiles
simultaneously and unnecessarily. As my late grandfather used to say :
“when God was handing out brains, why did you hide?”.

A lot has been said and written, and much more will, about remedial
measures for the future. Have no illusions. The national culture, both in
the private and public sectors, used to short-term returns, will not
accept to spend money or personnel resources on systems and equipment that
may be needed once every 20-25 years, or maybe never. They will consider
it as idle capital, and even the few who will be persuaded or forced to
act otherwise, will soon save on proper training and maintenance of said
equipment which when the time comes to use it will turn out to be out of
order. Greed is good, in Chile. There is one unchecked report that on
hearing the tsunami warning last Thursday, one Concon restaurant owner
shut its doors, with the customers inside, to ensure that they did not
escape without paying the bill. The legal and non-legal subterfuges
housing companies are using to get out of any responsibility for
jerry-building should give some thought to those who used to be so
admiring of corporate governance and the rule of law in the country.

2009 AT A GLANCE I was planning to write a full paper on the economic
results for 2009, because they would normally have provided the base for
the expected improvement in 2010. Now all bets are off, and I am just
giving out a few pointers on last year, even before the missing figures
are published next Thursday March 18.

Based on the IMACEC index, the Chilean economy shrank by 1.7 % last year.
Unemployment ended the year at 8.6 % (1.1 points higher than end-2008) and
the total number of employed shrank by 0.44 %. Inflation was a negative
1.4 %. Real wages increased by 6.4 % thanks to the negative inflation,
ending at a gross monthly average of U$ 760.

The trade surplus jumped by 51 % to u$ 13.31bn, with exports 20.2 % lower
at U$ 53.02 bn and imports 31.1 % down at U$ 39.7 bn. Copper accounted for
50.7 % of total exports and dropped a bit less than the average (- 18 %).
Wine exports rose 0.4 % in value but salmon sales declined by 17 %.
External debt ended 2009 at U$ 74.08 bn of which only U$ 14.47 bn owed by
the public sector. Balance of payment figures will be published on March

On specific sectors, 133.526 dwellings were built (- 11.5 %) with a 14.5 %
drop in surface area. Adding other types of buildings, total surface built
was 18.2 % lower. Car sales dropped 28.3 % to 172,044 and truck sales 32.6
% lower at 8,152. motorbike sales were 30 % down. International air
passenger traffic was 5.8 % lower whereas domestic numbers rose by 6 %.

Fiscal revenue was 23.2 % down at U$ 36.05 bn whereas expenses rose by
17.8 % to U$ 44 bn. The resulting deficit of U$ 8 bn represented 4.5 % of
GDP vs. a 2008 surplus of 5.3 %.

Leading non-financial corporations’ earnings rose by 14 % to U$ 4.94 bn on
sales 13 % down at U$ 61.70 bn. 53 % of companies in the sample increased
earnings, 21 % reduced them and 25 % made a loss. Bank earnings declined
by 9.4 % to U$ 2.41 bn.

The Santiago stock market’s blue-chip IPSA index rose by 90.5 % measured
in U$, with a daily turnover averaging U$ 153 million. Its year-end market
value reached U$ 231 bn.


Sex and the Chileans are not normal partners in a word association exercise, but the previous government obviously got a good bargain by buying (probably from the same agency), its infamous “All Ways Different” slogan. Currently in the market is the domain, expected to reach U$ 1 million. What is particular about this site? Its slogan:” All Ways in your Mind” has a familiar air to it. What next? Promoting sex tourism in Chile to help in the reconstruction effort?


The way people behave under unexpected stress or crisis situation is an excellent indication of their character. Thus the reaction of some of the foreign guests when a major aftershock hit central Chile in the midst of the presidential handover ceremony tells us a lot about them. We now know that Alvaro Uribe is a coward who only feels safe under the skirts of the US military, that Cristina Kirchner is somewhat hysterical, and that Evo Morales can keep the serenity of native people who are closer to the Pachamama than modern man. Alan Garcia is a clever opportunist who remained unperturbed and added later that it was an honour to share the experience of Chileans in a quake. Let me add that the representative of the Russian Federation did not loose his cool either, but then, Hero of the Soviet Union, leading polar explorer and Duma member Artur Chilingarov is an Armenian from St Petersburg, and we’ve seen some more in our history! This was Chilingarov’s second trip to Chile in recent years, and I am very sorry not to have been given the opportunity to meet him on either.

Monday, March 8, 2010

THE CHILEAN MILITARY AND THE EARTHQUAKE - Sorting the Chaff from the Reality

Nine full days after the quake and tsunami which hit much of Chile on
February 27, it is still very difficult to get exact facts and figures.
Much of this is due to the time needed for a proper evaluation of the
situation, but there is also a substantial aspect of protecting backsides
from criticism and/or make political capital of what was or was not done.
This paper, based as much as possible on declarations made by those
directly in charge or involved, cannot be taken as gospel. Its main
purpose is to develop the section in my previous note dedicated to the
role and consequences of the catastrophe as far as the armed forces are
concerned. However, this also has to be put in the more general context of

I am making this further effort because I am already seeing the latter day
Roubini clones already coming up with obscure papers proving that they
predicted it all, and getting media coverage both in Chile and abroad. I
have been complaining about the lack of preparation towards natural
catastrophes for as long as I can remember, but interestingly not a single
Chilean or foreign journalist has sought my views (or recognised my

SILLY POLITICS Before all this happened and Mrs. Bachelet was preparing
for an apotheosis of an exit with a popularity rating even Saddam Hussein
only ever dreamt of, it was clear that this success was due to her ability
to do nothing and get involved in as little as possible. The phenomenon is
well known in the corporate world with executives rising to the top by
smiling and being nice, staying out of internal and external conflicts,
and thus be unfettered by heavy loads keeping them on the seabed.
Unfortunately, this attitude might work in normal times, but it becomes
totally out of place when there is a major crisis. You do not get any
bonus points for doing nothing in a crisis.

With the outgoing president and her entourage eyeing a comeback in 2014,
if it is true, as it most probably is, that her advisers and some
ministers insisted that it was “aesthetically” unacceptable to leave
office with soldiers keeping order in the streets, this is unacceptable.
Despite the shortcomings, which will be mentioned later, the armed forces
are the ones nearest to having the infrastructure and personnel to deal
with such a major event.

If they did not want them to be involved, then they should have made
efforts to develop the alternatives. This they obviously did not. When the
previous ONEMI (national emergency office) head was fired, to be replaced
by his deputy, several retired generals and admirals applied for the job,
but were rejected in favour of a political crony.

A law destined to upgrade the institution, like much of the legislation
needed to modernise the country, has been sleeping in congress for years.
Its budget is minimal (the natives regard any protection against
hypothetical risks a waste of money and resources), and even when
something is done, it is not done properly. In one affected municipality,
emergency equipment was bought in 2007 but never installed. An offer of
Russian dual purpose Beriev fire-fighting and light transport seaplanes
was rejected (”what will we do with them for the rest of the year?”). I
could go on for pages, but most of us living in Chile have had (belatedly)
an earful of what was not done and what was done wrong. Let me just
mention the absence of an emergency communications network, including
satellite phones, an older model of which a visiting Ms. Clinton
ceremonially gave to president Bachelet. At the lower end of technology,
radio hams had been asking for years for help with which to buy the
batteries and autonomous generators they would need in an emergency. No
money ever came. Let me not even start about the shameful situation of the
fire service, having to beg hand-me-down vehicles from European towns and
getting their wives to mend their hoses as if they were socks. Many years
ago, a major plan to provide cheap insurance for lower-cost housing was
announced, and quickly torpedoed by the insurance industry itself.

STRATEGIC PLANNING “National Security” and “Territorial Integrity”,
together with “New Threats” are part and parcel of the seminar and
academic paper circuit these days, but if you look at Chapter IX of the
latest National Defence Book, there is a single reference to “natural
catastrophes”. You need a magnifying glass to find it, and it is in an
extract from another publication.

National Security is to protect against anything which affects the normal
functioning and infrastructure of a country, much beyond “integrity of
borders”. Thus, in a country prone to natural disasters and particularly
earthquakes, they have to be part and parcel of strategic planning. Some,
including the military themselves, might not like that role, in which case
a sufficiently strong civilian alternative has to be found. However, for a
medium-sized economy with limited means, it would be silly to duplicate
resources. The exception is in terms of specialist manpower for prediction
and evaluation, which should consist of highly trained civilian experts.
Whether they work (preferably) in a separate civilian entity, or in
military offices, is an administrative detail.

Based on such premises, the equipment of the armed forces has to take into
account the fact that natural catastrophes, and in particular earthquakes
occur in Chile with more frequency than wars with Peru (I do not mention
Argentina because there never was a war between the two countries) . It is
therefore obvious that even if you buy all the surplus F-16s that shady
characters lurking in Santiago back alleys can offer, they jointly can
less transport water supplies than a single medium-sized helicopter.
Transport aircraft with short landing capabilities, and larger lift
helicopters have been wanted for years, but it turns out they have to
borrow two from Brazil for the quake, on top of field hospitals from
Argentina, Cuba and Peru, and two USAF Hercules.

Nobody even mentioned the shortage of heavy trucks for the army, whose
purchase has also been part of the traditional Latin American novel (Cien
Años de Pláticas) . I will be polite enough not to mention the
Israeli-equipped Condor AWACS, which was supposed to provide
communications in times of national emergency.

The above blame does not solely rely on the armed forces, because the
Finance ministry, despite assigned funds being available, has often
delayed, cancelled or reduced purchases in order to keep up the cosmetics
of public finances, over and above urgent needs. Unless you all developed
amnesia as a result of the quake, you can do me the courtesy to remember
that I have mentioned all these points in papers and the few interviews I
have been tolerated to give.

ORGANISATIONAL SHORTCOMINGS A number of anecdotes are coming out, not
just in the press but from the mouth of those directly in charge such as
the Defence Minister and military chiefs. The list given below is a
mixture of all the above, and the only aspect I can vouch for personally
from various experiences is the “office hours” profile that much military
activity has taken. When one of the commanders in chief, (the army one)
said a few years ago that his institution was “Chile’s largest
corporation”, the concept should not have been taken so for granted.
Defence, like diplomacy, even without war or catastrophes, is not a 9-6
Monday to Friday job. The whole of the officer corps cannot disappear on
holiday during February, leaving much lower rank subordinates in charge
(sometimes even their secretaries are away simultaneously).

It is now officially told that no helicopter could be found for the
president to go South on the morning after the quake because transport
difficulties stopped pilots getting to the base. Apparently they do not
live on the base, which can be excused, but why not have a couple of them
on duty at the base round the clock 365 days a year? Also a helicopter
fully serviced and fuelled (another story says that the lack of power
obliged hand-pumping of fuel which takes longer. Why aren’t there any
emergency generators for such things?). The fact that one of the
(insufficient) numbers of sea sensors, unluckily the one closest to the
epicentre, was not working is also inexcusable. They should be checked
daily. Yes, daily, including week ends and the month of February.

One paper reported that the duty officer at the unfortunately named (SHOA)
navy oceanographic service could not communicate properly with Hawaii
because of language difficulties. It seems that communications problem
also existed in Spanish. The Defence minister himself reported that the
newly appointed Joint Chief of Staff, speaking to SHOA on the telephone,
could not make heads or tails of what the guy at the other end was saying,
so he passed the phone (actually, he passed the buck) to president
Bachelet standing next to him. Whether true or not, the protocol and
bureaucracy are bad enough in normal times, but this is not a ball at XVII
th century Versailles. Many people have said and rightly, that a seaside
quake of 8.8 should automatically mean a tsunami alert.

A CLIMATIC PEARL HARBOUR The Navy’s main base at Talcahuano, near
Concepcion, suffered heavy damage and is 80 % destroyed. It is, or was,
the HQ of the submarine fleet and other smaller craft, but in particular
it was the home of the prime naval shipyard in the region, servicing not
only the Chilean fleet, but also refitting and building vessels for
overseas customers. That business is lost, even though official
communiqués say that an Ecuadorean submarine in refit and an Icelandic
patrol ship being built only suffered minor damage, as did a Chilean
oceanographic research ship.

How will the navy service its fleet in the meantime, as it could take at
least 3 years and maybe longer to put ASMAR back on track? The only local
alternative is the privately owned ASENAVE yard in Valdivia, further South
from the earthquake zone. Unfortunately, that yard is up river and out of
reach in its present shape for frigates, though submarines can access it.
There are yards near Buenos Aires and in Brazil, but the navy may not want
to have one of its “historical enemies” nosing too close to its vessels in
Argentina, whereas the Brazilians are expensive and with not exactly a
high reputation. Vessels may have to be sent to Britain or Holland with
all the cost that it involves, on top of the U$ 1.3 bn damage to ASMAR
(some of it covered by insurance).

The sea wave also broke the moorings of two out of service vessels (a
destroyer and a frigate), which drifted in the bay for a while, but the
two Scorpene submarines appear to have had a lucky escape. The Simpson
sailed out and the Carrera, which was initially pushed back to shore by
the second wave, was heroically pulled back by a tug, quite a performance
in the midst of what was going on.

The base still has 40 personnel unaccounted for, though it is not clear if
they were swept away or have gone AWOL.

THE AIR FORCE, FIDAE ETC. Though other services are participating, the
air force is now at the centre of the air relief effort. This raises the
question of the outlook for the FIDAE show, scheduled to start the week of
March 22. Initially, communiqués were sent out to exhibitors declaring
“business as usual”, but as the installations are being used for
organising and despatching relief supplies, and many foreign visitors are
understandably somewhat nervous regarding travel to Chile, the decision is
being kicked over to the next administration. I can only insist that a
cancellation would give a negative image, and put at risk the fair’s
future, unless it is totally unavoidable. It is also wrong to leave the
decision for the last minute, because there are many people and goods that
need to be moved. The Brazilian competitor LAAD is already bad-mouthing
FIDAE in order to attract business for itself.

THE ARMY We have not heard of any substantial damage to army
installations, and to the extent that they have more personnel (60 % of
all armed forces) than anyone else, are bearing the main brunt of land
operations, curfew supervision, etc.. The boast of the former CiC general
Cheyre, that he could have had 7,000 troops on the ground, within 3 hours
of the quake, has to be taken with a pinch of salt. By the way, one of the
construction companies whose building collapsed in Santiago is part of the
consortium building the new army HQ.

Nevertheless, with two army generals overseeing the state of exception on
the ground, an army general at the helm of the new joint chief of staff
post, and the probably choice of general Izurieta as Undersecretary for
Defence, the army has reached its aim to re-establish the rank seniority
it was disputing with the navy. The latter, between the tsunami alert
controversy and the destruction of its prime operating facility, is now on
the defensive.

WHAT LESSONS AND WHAT ACTION? In really modern countries, rather than
short-term cross accusations and rumour, the urgency would be to organise
relief and reconstruction, and after heads had cooled down and more
information is at hand, organise and independent commission of inquiry to
apportion blame and recommend action. In Chile, that is not possible,
because of the simple fact that there are no “independent” people of any
kind. Everyone has a personal, political, professional or ideological axe
to grind. Such a commission would order Ms. Bachelet to appear before it
and name the “group of generals and admirals” she claimed had advised her
not to declare a curfew, because this is contradicted by the statement of
the new joint chief of staff, nominally in charge of coordinating such
matters, who says he at least was never consulted.

It has been once again proved that the approach to security (about which I
have also written many times) is a cultural matter inherited through El
Andalus from the fatalism of the Levant, and will be very difficult to
change. This goes hand in hand with the reluctance to spend money on
protection which shows no immediate return or media advantage (how many
votes do you get by inaugurating an insurance policy?).

The country’s military defence has shown its vulnerability, to the extent
that we now know that you can paralyse communications and transport by
hitting some power stations (or just transmission lines), the
installations of the three mobile phone companies, and a few bridges. The
country is all yours.

HUEVADA DE LA SEMANA Would it have been different if the quake had
happened under Piñera’s watch?. Well, nobody has dared to mention that the
mayor of Concepción for the past 10 years, Jacqueline Van Rysselberghe,
belongs to the rightwing of the UDI party. Before her, both her father and
grandfather had also been mayors of Concepcion at one time or the other.
From March 11. the lady (an Opus Dei psychiatrist) will become intendente
(Prefect) of the whole BioBio region of which Concepcion is the capital.
Mayors are the first line of inspection, defence and relief in case of
emergencies. The father had a court case against him brought by the
municipality for some financial fraud, but proceedings were dropped as
soon as the daughter became mayoress.

As for the intendente-designate of Santiago, he is a partner in another
construction firm with a collapsed building. Mind you, the system is of
equal opportunity. The family of a senior executive at the Central Bank
control the building company which is responsible for not one, but several
collapsed apartment blocks.

Saturday, February 13, 2010

EGYPT AND AFTER - Et Maintenant, que vais-je faire, Vers quel néant glissera ma vie?


Gilbert Bécaud´s famous song applies well to the situation in Egypt. We know what has happened, more or less, but nobody has any idea of the future, and there is nothing as risky as demolishing an imperfect house without knowing where you plan to live afterwards.

One of the reasons I stopped my weekly Chile “civilian” papers at the end of last year, was the fact that they were ignored by most people who matter, or worse, plagiarised my opinions and analysis to present them later as their own. The latest case was the paper by academics who “discovered” that unemployment statistics were being “massaged”, a matter I wrote about regularly for months, totally ignored by both the Chilean and international media. However, when two researchers from the Catholic University said the same thing six months later, their paper was hailed and publicised urbi & orbi.

This paper is an occasional one (certainly not monthly) I shall produce for my Defence list, to which are added, very conditionally, some survivors from my civilian lists, but who will be subject to close scrutiny and treated ruthlessly if they misbehave.

On Egypt, nobody was interested in the views of the only Arabic-speaking analyst in Chile, furthermore born in the Middle East, so a number of “expertos” have been filing in front of the TV cameras and filling the pages of the newspapers with increasing amounts of imbecile comments about a country and region they know nothing about. This paper aims at putting some facts straight.

WHAT HAPPENED LAST FRIDAY Some time ago, in other notes, I mentioned the day when I criticised at a Santiago conference the sale of the Peruvian state steel company to the Chinese government, pointing out that calling it “a privatisation” was stressing the definition. In Egypt, the outgoing president handed power to the Supreme Council for the Armed Forces, headed by a Defence minister appointed by him. They call it a Revolution, even a “historical” day. The military have promised free and fair elections (hey, just like most military governments resulting from a coup. The problem is that they get a taste for power and as time passes, find it difficult to leave it).

Since the fall of King Faruk in 1952 in a pretty bloodless revolution, Egypt has been ruled by military people. They may not have been partisans of Swiss-style democracy, but to describe Mubarak (who has the same surname as Shakira, did you know that?) as a cross between Stalin and Dracula is an exaggeration. It was one of his predecessors, Gamal Abd el Nasser, who gave not just Egyptians but the whole Arab world, a sense of pride and identity, even though his attempts at unifying failed. Mubarak took over from Anwar Sadat (who inherited the job from Nasser), as a result of an assassination, so transfer of power has been generally unexpected in the country. So much for the current “historical” events.

The fact that this time there was a big popular uprising (mind you, even if 3 million demonstrated against Mubarak, that only makes less than 4 % of the population), was not a novelty either. Following the 1967 defeat against Israel, Nasser offered to step down, but a popular protest in his favour (admittedly it contained some rent-a-crowd elements), made him change his mind.

The importance of Egypt is because of its size and shining light, as well as its prestige (due in no small terms to Nasser’s tenure and his clever diplomacy in taking over the Suez Canal in 1956 and arranging for a concerted Israeli-French-British invasion attempt to end shamefully). Egypt is the most populated Arab country, a traditional centre for culture and ideas, prestigious universities, a quality Foreign Service. Though rural illiteracy is still high, it has a sophisticated and well educated urban elite. The problem is that if you turn out all these millions of trained graduates and have no jobs for them, you build up resentment and frustration, educated resentment and frustration, on top of the tiredness of seeing the same faces for 30 years (mind you, Queen Victoria was on the throne for 64 years, and many Brits were tired of her too, particularly as her own depression following her husband’s death permeated through many aspects of life in a dreary way).

WHAT DID THE PROTESTERS WANT? OK, so the Mubarak regime muzzled the opposition, restricted freedom of speech, did nasty things to opponents who became serious, stole money, flirted with the wrong people, and was made to sign a “peace” agreement with Israel which resulted in removing the main military threat to them whilst they went on driving tanks over Palestinian babies.

All the above is not an end but a means towards a different life. What people want is better living conditions (otherwise try eating your Facebook account and make a twit through your backside for dessert..). “La politique, c’est le bifteck” said De Gaulle, and as often as not, he was dead on right.

Will the removal of Mubarak make Egyptians materially better, beyond the odd additional school or hospital? The answer is NO. Egypt is a poor country with limited resources, which cannot provide higher wages, more employment and less corruption. The latter is pervasive in such a society and after over 40 years as an international analyst, I cannot remember a single country where a political upheaval reduced or eliminated corruption. Most former Communist countries are far more corrupt now than in the USSR days. As for wages and jobs, with 60 % of the Arab population aged under 20, and today’s activities being less labour intensive, there just is no possibility to absorb this workforce.You can create McDonalds, IT companies, tour operators, and make only a small dent in the figures. The post-natal depression of the “historic” revolution is likely to be hard, without even mentioning the time it will take to make up the losses from the changeover and economic instability, the fall in foreign investment, etc..So even getting back to December 2010 levels (which
caused the uprising) might take one, two or even three years. Will the population be that patient?

India is supposedly democratic. Doesn’t it have poverty and corruption? Let us not go that far. Spain is democratic and not only does it have 20% unemployment, but its corruption scandals make even Latin American politicians blush. You cannot do such things by decree. The laws of gravity are against you.

WHO WILL RUN EGYPT? Well, for the moment the country is being run by military men appointed by the outgoing Mubarak. Elections were initially due next September. It remains to be seen whether such a deadline can be met when you need not just a new constitution, but the emergence of structured politcal parties, which just do not exist.

Apart from the military, the only structured set-up in the country is the Muslim Brotherhood, with over 80 years of existence and still very much around, despite constant hounding. Both they and the military have been making soft noises in order not to frighten anyone, but do not take it for granted. The sceptics say the Brotherhood has no charismatic leader (no Khomeini) but others say that it is not an essential ingredient for grabbing power, particularly in a vacuum.

Egypt has had a checkered history of being mainly run by foreigners in modern times and until 1952. The Ottoman Empire dominated until WWI following which the British took over. In 1919, there was a revolt against British rule encompassing a wide range of elements within the population, in fact very similar to the “unique historical event” of last week. Some 800 people died. The leading nationalist party was the Wafd, initially very powerful, but once it had more or less achieved its aim it lost touch with ist base and disappeared into oblivion. It is probably the only previous example of a popular-based party in modern Egyptian politics. Obama and the world press, please read history before you make asinine declarations about world events. Britain granted formal independence in 1922 but the country was de facto a British protectorate. I shall leave a copy of this paper under the door at the Hyatt hotel for your arrival on March 21. The period of the kings (Fuad and Faruk) was not exactly nationalist, as not only was the British consul-general constantly breathing down their necks, but they themselves were of Albanian origin. Man, even the first Ottoman prime Minister of Egypt, the man who was
behind the Suez Canal project, was Armenian Nubar Nubarian, better known as Nubar Pasha, born in Smyrna.

There are other groups lurking in the background. Among them are two Islamic groups. The fundamentalist Salafists, and the Jihadists, a more generic term but certainly on the more militant end of Islam. From Palestine, Hamas also has its eye on Egyptian politics. I would not put too much faith on Al Baradei, who at best can be a sort of short-term Egyptian Kerensky.

There are people, and not just foreign investors, who have much to loose. Not just the coterie of the Mubarak antourage, but even the military under him control large chunks of the economy. They may resent having to give it up. The US has made such a big song and dance about the U$ 1 bn + they give each year as military aid. At the height if the protests, there were hints of suspending it. What’s U$ 1 bn today? 40 % goes on “administration” and much of the rest on buying US goods. Little of it stays in Egypt. The amount is equal to just a third of the defence budget of tiny Azerbaijan..Last time the Americans thus tried to “punish” Egypt by withholding finance for the Aswan dam, the only result was to throw them into the open arms of the USSR.

IS THE DOMINO THEORY JUSTIFIED? The Arab world is much more diverse than Latin America, in every aspect of life, culture and politics. Each country has to be looked at separately, but one thing most have in common is that they have a political culture based on tribal, religious or personal allegiances, rather than Western-style political parties. Forget that as an analyst and you have lost your way.

A mixture of some political overture and better economics may help, but not everyone can afford both or either. Egypt, as was said earlier, is a poor country. Many people are government employees, and earn a pittance. On the other hand, Kuwait, in a move which is fundamental but received hardly any coverage, announced last month that it was giving each of its citizens a U$ 3,500 cash bonus and food rations for 14 months. It has plenty of money, like many of the low-population high-oil income countries of the Gulf. Algeria’s finances are prosperous, less so Morocco’s. Syria may be able to soften its politics, but it will be harder for Saudi Arabia. What they have all understood is that you cannot trust the USA as an ally. They should have consulted the Georgians, those Caucasian peasant Atamans who thought they could attack the Russian Federation and be backed by the USA and the EU. All they got was a shipful of relief supplies after they had lost the war.

What about Iran? Previous protests have been successfully stifled, and if you followed such things more closely and objectively, you would know that it is the Middle Eastern country with the hardest fought elections (much more passionate than the Chilean ones, to name but one). Will Egypt turn Islamic, and will it be as “light” “a la turca” or “hard” “a la persa”. Many commentators have claimed that in the case of Iran, a secular popular uprising had been hijacked by the Mullahs. Mazkharaf, as they say in Farsi. The Iranian revolution was a religious-inspired one from the beginning, and it was never on the cards, once the Shah’s regime and his own version of Kerensky, Shapur Bakhtiar, was out of the way.

So to tell the truth, we do not know who will fall as a result of popular protests elsewhere, if anywhere. The respected British magazine the New Statesman has suggested that one should not limit the speculation to developing countries with no Western-style democracy. The populations of Western Europe, as they will be increasingly affected by the overthrow of 150 years of social progress because their governments bought U$ 220 million Rafale combat aircraft instead of the U$ 20,000 second hand (and perfectly serviceable) MIG-19s that the Czech Republic was selling in the early 90’s, have now run out of money.

OTHER CONSEQUENCES The biggest looser in all this, and under any scenario, is Israel, and it was worth all the sacrifice just for that. Unfortunately, instead of filing in an application to rejoin the human race, they will become even more aggressive, inflexible and arrogant. 

Should there be unrest or a radical government, there is also the risk of a closure of the Suez Canal. This would be cutting a nose to spite a face, as the yearly revenues from its operations are U$ 5 bn, far more than the U$ 1 bn the USA give the Egyptian military. Increasingly bigger vessels and an extensive pipeline network to the Caspian, Black Sea and the Mediterranean, have made the canal less important but any lengthy interruption in its operations will hurt the trade of many people, as well as add to existing inflationary pressures.

COULD IT HAPPEN IN CHILE? The answer must be know, because with some local exceptions (such as the recent case in Punta Arenas), the natives here have no passion. They are lobotomized by cosy materialism, mind-numbing TV programmes and a studious censorship in the press or educational systems of any advice on how to get wrongs put right. It is the only country where if you complain loudly about bad service anywhere, the other users equally affected will not back you up, and in fact try to shut you up.

On January 19, I got angry at the fact that the Super Caja banking centre of Banco Santander near Escuela Militar was unable to giveme 20 1,000 peso bills. This is not just the largest bank in Chile, but the Super Cajas are service centres open longer hours with a limited range of services mainly consisting of cashing cheques, paying bills and depositing money. How could they not have U$ 40 in 1,000 peso bills at 12.30 PM? One guy behind me said that “why don’t you go back to your country and get your bills there!”. I will not tell you what I answered him just in case your innocent daughters read these papers. He is still in therapy. Those jerks are going to overthrow the Opus Dei Mullahs and the money-grabbing oligarchies? Give me a break.