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Western Press Review: Falling Financial Markets, Turkey's EU Bid, And The Middle East

Prague, 23 July 2002 (RFE/RL) -- Several Western dailies today devote attention to the state of the global economy, amid falling stock markets and the ongoing crisis in investor confidence following a series of U.S. corporate scandals. Other attention is focused on the Middle East, in the wake of overnight reports that an Israeli army missile attack killed the leader of Hamas's military wing, Salah Shehada, as well as his wife, three of their children, and at least nine others.


In the "International Herald Tribune," Philip Bowring warns against being irrationally pessimistic about the state of global markets. The current financial downturn is merely a natural and necessary part of the normal financial cycle, he says. As he puts it, "What has happened to the S&P [Standard and Poor] 500 index and the [U.S.] dollar in recent weeks should come as shocks only to those who forget that major market cycles seldom last less than five years." Bowring notes that the Dow Jones Industrial Average is only 30 percent down from its peak, which he calls a "modest fall" that still maintains "a historically high price-to-earnings ratio."

Bowring acknowledges that the U.S. dollar has fallen sharply in recent weeks and says it would not be surprising if it were to fall further, given the "bulging" U.S. trade deficit. But he adds that although market "exuberance" may be long gone, "Wall Street has not yet swung to irrational despondence. Markets have made major moves back toward the mean," he says. And the journey back to "the real world is probably not yet complete."


In "The Wall Street Journal Europe," deputy editor George Melloan says, "Stock markets are swooning all over the world," while the U.S. dollar "is being viewed with renewed suspicion." Following a spate of accounting scandals plaguing high-level U.S. corporations, the U.S. Congress is "rushing to shape new rules for corporate behavior." Melloan says there is certainly room for improvement in corporate accounting, and the creation of a new federal watchdog might somewhat renew investor confidence.

But he says accountancy is "only partly susceptible to a set of rules describing what should be reported and how." Fraud is already a felony under current laws, he notes. "Corporate executives may be able to cover up their mistakes for a time, but even under present SEC [Securities and Exchange Commission] reporting standards, they can't get by with it for very long." As for the falling stock markets, he says, "they don't seem very impressed by the near-certainty that there will soon be a new U.S. law supposedly offering stockholders greater security."


The current issue of the British-based weekly "The Economist" says at the upcoming EU summit in Copenhagen, Turkey should be invited to begin negotiations for future EU membership, providing it has already enacted some of the human rights reforms that are prerequisites to membership. Turkey must bring many of its laws into line with EU standards by, among other things, abolishing the death penalty and granting more rights to its sizeable Kurdish minority.

The magazine says Turkey has a long way to go before qualifying for membership, and it "could take another generation." "But the country has come a long way, in economics and politics, since the early 1980s, when it was an outright military dictatorship," says "The Economist." EU governments "would be foolish to slam the door" in Turkey's face. Instead of a cold shoulder, it says the country needs help -- "albeit tightly conditional" on various reforms.


An editorial in "The New York Times" discusses the U.S. administration's decision yesterday to withhold $34 million from the United Nations Population Fund, which continues working in China despite the government's population-control policies of what the newspaper calls "coerced abortion and sterilization."

The paper says: "It is precisely because of China's reprehensible policies that the UN presence is important. Cutting off funds to the agency is an inexcusable sop to right-wing antiabortion activists in an election year. It will increase the number of abortions worldwide by depriving poor women of the education and help they need and that the UN agency provides."

The editorial notes that the UN Population Fund is the only serious external force in China trying to change the local policies on population control. Now, the administration of U.S. President George W. Bush has essentially wiped out 12.5 percent of the agency's budget for "vital and worthy programs like midwife training in Algeria and a new AIDS center in Haiti."

The administration has instead decided to donate the funding to a program under the U.S. State Department's Agency for International Development. But the paper says this agency "cannot duplicate the work of the UN, which operates in dozens of countries where the United States has no aid presence."


A commentary by Anke Bryson in the "Frankfurter Allgemeine Zeitung" says Germany's politicians seem to lack vision and leadership skills as they vie for votes ahead of September elections. The two major parties are adding new, "not quite matching and never quite convincing elements" to their campaigns on a weekly basis.

On employment, pensions, health care, and European Union affairs, however, "no party so far has presented a clear concept on how to tackle the major issues in German domestic, foreign, and economic policy." Bryson says Germany's health care and pensions systems require "major surgery," but "neither party has the courage to swap guarantees for incentives" that would spur the system.

Furthermore, Bryson says none of the minor parties that could hope to benefit from the major parties' lack of vision have produced a convincing alternative. "[Disoriented] voters want political direction and leadership," she says, "not the thinly disguised message that parties' sole aim is to gain or retain power."

Bryson concludes: "It takes a visionary to give Germany new political and economic impetus. But it takes political courage to defend a vision and carry out structural reforms. Apparently, Germany's political elite lacks just that."


"The Washington Post's" Jackson Diehl says Palestinian suicide bombers have achieved some self-destructive successes. "They have succeeded in uniting Israelis and the Bush administration behind a once-unthinkable military reoccupation of the West Bank." They have spurred the creation of the first U.S.-sponsored peace initiative that calls for reforms and concessions to be made first by the Palestinians, "before any serious action is taken" by Israel. And they have enabled Israeli Prime Minister Ariel Sharon to quietly oversee "a plan of settlement construction designed to make any two-state solution impossible."

Diehl notes that since Sharon took office, 44 new settlement sites have been established in the West Bank, comprising more than 300 new units. The Bush administration, meanwhile, has been "trying not to notice what is going on." But Diehl says "there should be no mystery" about Sharon's intentions.

For 25 years he has had a vision of Jewish settlement in the occupied territories, and he has been consistent in pursuing that vision, says Diehl. He adds that Sharon "also has a consistent strategy for handling American and other international inquiries about his program: straight-faced denial."


In the "Financial Times," former British Foreign Secretary Douglas Hurd says, "Something has gone wrong with democracy in the Middle East." The "optimistic principle that the safest and most peace-loving societies are produced when people have an unfettered right to choose their rulers remains elusive" in the region, he says.

Under Palestinian leader Yasser Arafat's regime, Hurd says, "the elementary institutions of good governance, such as a credible budget system and independent judiciary, do not exist." But movements toward reform are "welling up there under the surface. Under the optimistic Bush doctrine, the Palestinian people would, given a free vote and free institutions, turn Mr. Arafat out and install a moderate alternative anxious to make peace with Israel. But the reality is the reverse," he says.

Arafat may be re-elected in January. Even if Arafat "moves aside or accepts an honorary non-executive role," Hurd says, "it seems clear that no one would stand a chance as his successor in free elections who was not pledged to passionate resistance to Israeli occupation and settlements."


In France's daily "Le Figaro," Phillipe Reclus says there are some positive lessons to be learned from the current fall in global stock markets. At least the collective panic that can often be witnessed at times like this has not managed to creep in. Aside from the obvious difficulties facing today's savers and investors, says Reclus, this period may eventually lead to an economy with renewed vigor.

For months, says Reclus, economic pessimists have been listening for bad news, and they have ultimately exported their pessimism to the real economy. The danger is now real, he says. Companies may hesitate to invest to meet demand, and thus cease recruitment. These trends would ultimately undermine consumer morale, the crux of economic recovery.

"Traditionally, a stock exchange anticipates growth" -- but today we are seeing the exact inverse. On one side, "a wave of suspicion and scandals" keeps markets down; on the other, a confirmed tendency toward recovery in the U.S. and Europe remains labored and slow, he says.