Politics and jail

The news this week is certainly attention grabbing. For my money, I suspect the most interest will fall on the indictment of Paul Manafort. I have read the indictments, and it is clear that while some of them are probably there for lawyer talk, there are two really serious ones. The first is he laundered money, at least $18 million worth, and maybe a lot more, and the second is that money mostly went for his personal benefit and he did not declare it as income. Tax evasion has been a classic way of sending bad guys to prison, an example being one Alphonse Capone.

The most obvious question to answer is, did he do it? If he did, it was not very bright of him to manage the US presidential campaign because politics, being what it is, sends too many people looking for a way to discredit you. Having committed obvious crimes, even if so far nobody has noticed, is an obvious weakness. The most obvious weakness is that Manafort is supposed to have avoided tax, but that also assumes he owned the money, as opposed to acting as an agent for the owner of the money. The indictment names a few properties, and I assume Manafort’s name will be on the property ownership papers as the owner. If so, he will be in trouble. However, he will be less so if he can prove he is merely an agent for the true owner. If he tries that, then he could be effectively admitting guilt to being an agent for a foreigner without registering, which is one of the other indictments. Interestingly, this appears to be being tried in a State court, rather than a Federal court. Does a State court really have jurisdiction over Federal matters? We await further developments.

One of the more interesting indictments is that he acted against the interests of the United States by carrying out contract work for Yanukovich, then President of Ukraine. Since when is it against the interests of the United States Government to carry out work for a democratically elected President of a foreign government that is not a declared enemy of the United States?

The other interesting issue is Catalonia. The Catalan regional parliament has voted to declare independence from Spain, on the basis that 90% of the 43% that voted in a nominally illegal referendum voted for independence. The Spanish Prime Minister, Mariano Rajoy, declared the vote and the declaration to be illegal, although what that means remains to be seen. The Catalan President, Carles Puigdemont, had paused and I thought he might even step away from going ahead with the declaration, but he has elected to declare seccession. Meanwhile, the UK, Germany and France have supported Spanish unity. So, what now? Puigdemont nominally faces up to 30 years in jail, but I doubt that that will be enforced unless something goes really wrong between now and then.

On the other hand, Madrid has apparently arrested a number of senior Ministers of the Catalna government who declared independence, and presumably they will try them in court. Puigdemont is apparently in Brussels, and claims he will not return to Spain until the threat of arrest is removed. Whether that will work is a matter of interest, but from Madrid’s point of view, they may not care. Puigdemont out of the way is probably just as useful to them and they do not want a political martyr.

Suppose the Catalans did secede, what would happen? The main “reason” for independence cited is to preserve the language, and to give a feeling of independence. They also feel that Catalonia pays €10 billion more to Madrid than it gets back in spending. Of course, not counted in that “paid back” are the services Madrid pays for, such as border patrol, customs, international relations, defence, a central bank, the tax service and air traffic control are some of them. As an independent country, it would have to set up these. There is also a sense of selfishness here; why should we send money to the poorer parts of Spain?

However, even in finance, there is a problem. The Catalan regional government owes €77 billion, of which about 2/3 is owed to Madrid. Then, of course, Madrid would expect Catalonia to share its proportion of the Spanish national debt. Further, two thirds of Catalonia’s exports go to the EU, and if Catalonia seceded it would be out of the EU, and would have to go to the back of the queue to get back in. Spain would then have the power of veto. Further, if it gained independence, it would have to leave the euro zone, and again Spain, and friends, could block re-entry. Either way, it would have to set up its own currency in the meantime. Of course countries like San Marino uses the euro without being an EU member with the eorozone’s approval, since they are so small. Nobody knows whether Catilonia would qualify, but Spain could block that. Apparently Kosovo and Montenegro use the euro without the EU’s approval. After all, a bank note is a bank note. However, a problem will arise if they ever need credit. If you use someone else’s currency, you have to earn it. Who knows what will happen?

Fragmenting Nations

One of the more interesting questions that have arisen lately is should a region of a country have the right to break away from the country and be independent, and if so, what are the obligations of the participants? The classic way of breaking away is to have a war. The US got its independence from Britain that way, as did Eire. Does nationhood depend on “might makes right?” It can, but surely there are other ways.

It certainly helped Kosovo, and Kosovo is of interest because it was effectively US air power and NATO forces that won the war. Clinton described the activity as “upholding our values, protecting our interests, and advancing the cause of peace”. Strictly speaking, this action had no UN Security Council approval, therefore it could be regarded as illegal, and it was described as illegal but justified. Whether the Serbs would agree is another matter, and it then becomes interesting that violating the law is fine as long as you think it is justified. Who says so? The guys with the most guns?

The background to Kosovo is of interest. Some in Kosovo wanted independence, particularly those of Albanian origin, and apparently things got out of hand when the Kosovo Liberation Army made four attacks on Serbian security people. The Serbians soon began calling the KLA terrorists (and since they carried out sneak murders, that is probably fair) while the Albanians saw them as “freedom fighters”. Up until 1998, the US government described the KLA as a terrorist group, but suddenly it changed its mind and used NATO to intervene. End of Kosovo Serbians’ hopes. US intervention had another effect: it took the Monica Lewinsky affair off the news table for President Clinton. The US used cluster bombs, and did serious damage and caused considerable civilian casualties, including to Albanians in Kosovo, but the net result was that Kosovo apparently has declared independence. However, not everyone recognizes this, and it remains to some extent under UN administration.

It would seem fair for a split if those leaving did so by winning a referendum that was fairly executed. Scotland had such a vote and decided to stay, so the issue does not arise, however I believe had the vote been yes, London would have agreed. Of course this raises the question that if they keep having votes, sooner or later they will get one result to leave, and that would be irreversible. So maybe there has to be a limit to the number or spacing of referenda.

However, votes can also be rigged in favour of some end. The vote to have a separate Kurdistan would probably win for the Kurds, but would they take Kirkuk? To make sure they would, when the Iraqi army fled from ISIS, a large number of Kurds poured into Kirkuk, and so I guess they would win a vote. But if you pour in the appropriate number of extras to win the vote, is that the right way to go? My guess is no. Then the question is, is the vote fair? When Crimea seceded from Ukraine and joined Russia, this was done with a clear majority vote favouring it, but the Russians had poured in a number of soldiers and they ran the voting system, and as a consequence a number of people do not believe it was fair. My guess is, it probably was because there were a lot of people of Russian descent there, but we cannot be sure. In Crimea, it probably was a case of “might makes right”, but if the Russian military did not come in, the Ukrainians had the might, and as can be seen in eastern Ukraine, they are prepared to use it.

Suppose we look at Catalonia. There have been widespread claims that Catalonia should be independent from Spain, and they held a referendum, which gained 90% in favour. So that is clear evidence, right? Maybe not. Spain declared the referendum illegal and sent in riot police. Those not in favour of independence may well have considered the vote illegal, and they wanted no part in it. It now turns out that only about 40% of those eligible to vote participated, so maybe this was not as conclusive as the enthusiasts claim.

The next question is, why do people want independence? Presumably because they feel they would be better off independent. The Catalans apparently are net donors (tax paid less benefits) to Madrid of about 10 billion euros. However, this might be a little misleading because there are a number of Head Offices of Spanish companies in Barcelona, so company tax from all activities in Spain would be paid from Barcelona. If Barcelona were in a separate country, presumably the activities from Spain would remain taxed by Spain. In Scotland’s case, one can’t help wondering whether the politicians had their eyes on the North Sea oil revenues. In my opinion, in such a breakup, existing royalties and such should be divided between the original members based on population, in which case the returns would be a lot less.

That leaves the Lukansk, Donbass and Donetz oblasts in Eastern Ukraine. Should they have independence? A lot of opinions in the West say yes; territorial integrity should outweigh grumpy citizens. In this case, Western Ukraine has quite different objectives; they want to join the EU while the East wants closer ties with Russia. Irrespective of the rights and wrongs of this, in my opinion there has been enough shelling and bombing of these oblasts that the citizens there will not accept the Western domination. The West complains about Russian intervention that has helped the Eastern Ukrainians. In doing so, they conveniently forget Kosovo. Also, it is now very doubtful Ukraine could join the EU, and if they did, they would find EU financial impositions on Ukraine would make Greece look somewhat attractive. My guess is, Germany would not be willing to carry an even bigger load.

So, what are the conditions for breaking up? I rather fancy there is no recipe. The various places have to find their own salvation. Nothing could be worse, however, than encouraging a breakup, and leaving one part without adequate resources, or encouraging them, and then walking away after the event.