AngelA Merkel appears set to lead her Christian Democrat party (CDU) to a comprehensive victory in the german national elections on Sep-tember 22. recent polls have put her party in the lead at 40 per cent, well ahead of the rival Social Democratic Party (SDP), whose support stands around the 28 per cent mark.

The german chancellor should be pleased with the election campaign so far. There have been few upsets or surprises and despite the oppo-sition’s best efforts, the CDU have maintained their consistent polling figures over some five months.

Most commentators have put this strong showing down to the significant personal popularity that Merkel herself enjoys. At the helm of europe’s largest economy since 2005, she has weathered the fi-nancial storm that brought greece and Spain to their knees, and has emerged relatively unscathed. Al-

though in Ireland’s eyes she may appear unremittingly staid and aus-terity-focused, to germans she rep-resents a safe pair of hands. This has been capitalised on by the recent CDU campaign poster in Berlin, said to be the largest in german elec-tion history, which shows an image of Merkel’s famous ‘diamond’ hand gesture.

Her handling of the european crises in particular has gained the chancellor cross-party support. Some 60 per cent of the population want her to remain in charge of gov-ernment, while according to polls by r+V Versicherung, the on-going un-certainty over the state of the euro remains top of the german elector-ate’s list of fears.

But ‘Angie’, despite a large con-sensus and perceived political integ-rity, may find her biggest challenges somewhat closer to home. Domestic issues such as the lack of a standard

minimum wage and the millions of germans in ‘mini-jobs’ remain unre-solved; while handling of the recent massive web surveillance by the US has dented the confidence placed in her by the privacy-conscious ger-mans.

Merkel’s recent visit to the memo-rial site at the Dachau concentration camp has also caused some con-troversy. The first such visit by any german chancellor, it nevertheless drew criticism as merely a pause on a whistle-stop tour of the region that included an appearance at a famous beer hall immediately afterwards. The influential Bavarian newspaper Suddeutsche Zeitung labelled the move a ‘misstep’ that left a ‘bitter af-tertaste’.

The left-leaning parties have for the most part failed to capitalise on these issues though. The green Party, whose support surged to 28 per cent two years ago, now stands

at just 10 per cent in polling popular-ity. Their most memorable moment of this campaign was the proposal to introduce one meat-free day a week, which elicited an indignant reaction across many areas of german soci-ety. germany’s left Party (Die linke) meanwhile, has preached a popular anti-austerity message, but is unlike-ly to register above 10 or 11 per cent on election day.

It is the SDP and their leader Peer Steinbruck however, who will feel the most pressure in the coming days and weeks. As their support stag-nates just short of 30 per cent, they pose little real threat to the incum-bent office-holders. Steinbruck has proved powerless to unsettle Merkel on any major policy concerns, as the recent televised debate between the two leaders highlighted. It was the first election debate to be broadcast in germany but was widely seen as a tedious affair devoid of personality

or incisive interrogation.The debate may be viewed in the

light of larger issues plaguing this election. none of the main parties exude the charisma that could draw in younger voters. With the median age of voting standing at 45, many young people feel disillusioned and excluded from a political process that revolves around weighty euro-pean problems and has all but ig-nored social media. Merkel herself has failed to set alight her party’s campaign in anything like the style of US presidential elections. This may be due to both her personal dislike of the limelight and an academic rather than political background – she holds a doctorate in quantum chemistry from her time as a re-searcher.

But to predict her inevitable vic-tory would be a mistake.

Continued on Page 217TH SePTeMBer 2013 ISSUe 1 Vol 3

D u b l i n u n i v e r s i t y ’ s F i n a n c i a l n e w s p a p e r

THE SYRIAN

SITUATIONSPECIAL REPORT P10

Business as usual inMexico P6

That Man fromRio P12

AMERICAN CITIZENSHIP LAWS

REFORM? P5

With the

GeRMAN FeDeRAL eLeCtiONS LOOMiNG, NORA MORONey exAMiNeS the SituAtiON

neWS & CUrrenT AffAIrSTHe BUll 17.09.20132

eDIToredward Teggin

DePUTy eDITorSean Tong

lAyoUT & DeSIgnMena eskander Sch.

MAnAgeMenTreuben Whelan

SUB-eDITorS

Patrick Vaughanludo DawnayCallum Trimble-Jenkinseoin o’DrisceoilPeter Martinniall Casey Timothy Munier Duncan Moss

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ConTrIBUTorS

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0.2%ConSUMer PrICe InDex

13.5%UneMPloyMenT rATe

1.3%gDP PerCenTAge CHAnge(projected)

117%nATIonAl DeBT AS A PerCenTAge of gDP

€3.21bnTrADe SUrPlUS

The joint north & South korean industrial plant at kaesong will be re-opened on a trial basis starting on Monday 16th September. The plant has been closed since Pyongyang pulled out its 53,000 workers in April amid rising tensions between the two states. The industrial zone, which provides cheap labour for the South and much needed hard currency for the north, generated a $80 million wage bill last year, according to the Seoul’s unification ministry and is also home to 123 South korean firms. The unification ministry also revealed

that South korean firms impacted by the closure will be exempt from taxes for the rest of the year to offset in-curred losses. The re-opening of the plant is a sign of improved relations between the two countries in recent months, as both states seek to attract foreign investment to the plant at a road-show in october. An agreement has also been made to hold a meet-ing of families separated by the divi-sion of the korean peninsula along the 38th parallel in the korean War of 1950-53. The meeting will be the first of its kind since 2010.

Harvard Business School’s gender mission

AfTer her appointment in 2010, Harvard Business School’s first fe-male president, Drew gilpin faust, appointed a new dean and set about trying to balance the pervasive at-titudes towards women prevalent in the school. While the changes were not universally welcomed when they were introduced, the number of women in the prestigious top 5% of students named the “Baker Schol-ars” has successfully risen almost overnight, from 14% in 2009 to 38% in 2013. This has opened Pandora’s Box into a number of other equal-ity issues prevalent throughout the

school and the American working environment. A recent article in the new york Times has questioned the wisdom of the school’s gender mis-sion, arguing that it sets women up with an unreal portrayal of the working world, where misogynistic attitudes are rife, the salary gap wid-ens, and women frequently feel they must choose between social and aca-demic success. one female professor asked “are we trying to change the world 900 students at a time, or are we preparing students for the world in which they are about to go?” The debate continues.

THere is still much left to play for in this election, not least the ques-tion of whether the CDU and their allies, the federal Democrats (fDP), will win enough seats to form a coa-lition as in the current government. If not, there is a chance albeit slim, that Steinbruck could forge an alli-ance of the leftist parties in the Bun-destag parliament.

The simmering Syrian crisis also represents a potential stumbling block for Merkel, as germany waits to see how negotiations with the US

and g20 states pan out. The number of undecided voters is a significant factor in all german elections, with many people holding out until the final days to make a decision. It is a situation that none of the parties can afford to ignore. But while the momentum appears to be behind the CDU at the moment, fickle public opinion could easily prevent its tak-ing a majority. September 22 is, as Merkel is most likely aware, entirely hers to lose.

Increase in violence hints at Taliban resurgencefIVe SUICIDe BoMBerS were

shot dead in a series of co-ordinated attacks an hour away from the capital kabul. More than 100 people were injured – mostly civilians – police said. The Police have also stated that the suicide bombers were targeting the pro-vincial intelligence department in Maidan Shar, the capital city of Wardak, west of kabul. local resi-dents report that the explosion was powerful enough to shatter windows at least 1km away from the blast. nATo troops are sched-uled to withdraw from Afghani-

stan by the end of 2014, and over 90% of security operations are now handled by Afghan forces. However, in this crucial transi-tory period, the Taliban sense an opening to regain some of the power they lost after the US led an intervention in 2001 into the Afghan Civil War. According to the Un, about 1,000 Afghan citi-zens have been killed and 2,000 wounded in the first half of this year, with most of them being in insurgent attacks. This represents a 23% increase compared with the same period of last year.

WIllIAM rUTo has made history in becoming the first ever serving government official to stand trial in the International Criminal Court in The Hague. looking composed and relaxed in a bustling courtroom, the 46 year old kenyan denies the counts of murder and orchestrating violence in the aftermath of the 2007 election in which 1,100 people were killed. fatou Bensouda, the ICC’s chief prosecutor, told the court that Mr ruto had orchestrated a “carefully executed plan of violence.” Prosecu-tors have complained of widespread abuse and intimidation of witnesses, with many now refusing to testify.

Mr ruto will be followed by the appearance of kenyan President Uh-uru kenyatta in november, as the ICC attempts to distance itself from alle-gations of neo-colonialism. In kenya, the parliament has voted to quit the ICC, while public opinion remains di-vided between those seeking justice for victims and those who view the court as neo-colonialist.

kenyan deputy president charged with murder at the International Criminal Court

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PolITICSTHe BUll 17.09.20134

As 2013 marks the fortieth year since Ireland’s ac-cession to the european economic Community, there has been much

celebration by those who are in-volved in the government and vari-ous organisations which have links with the european Union. In the af-termath of the spectacular death of the Celtic Tiger and the ensuing bail-outs it may seem like there is little to celebrate, particularly for those who worry about the sovereignty of the Irish state. However, it is important to remember that it has only been through our relationship with the eU that Ireland has been able to mod-ernise economically and socially.

The relationship between Ire-land the eU is usually discussed as having gone through three phases. from 1973- 86 Ireland underwent its european apprenticeship, during which the relationship was strictly economic. Support for the Accession Treaty was dependent on the receipt of economic benefits. Ireland was a net beneficiary of eU funds and even those who were pro-europe under-estimated the effects membership

would have on the lagging economy through the opening up of wealthy markets and fDI.

During this time, Ireland’s rela-tionship with the eU was one of co-operation, largely unfettered by criti-cism, or even discussion at home. There was broad political consensus on Irish involvement in european in-tegration without much contention about european issues in the media or in the oireachtas.

After the passing of the SeA in 1986, we entered a new phase in our relationship with the eU. Ireland saw the unprecedented economic success of the now infamous ‘Celtic Tiger’ and the transformation of the Irish economy and society. In 1992 the Maastricht Treaty committed Ire-land to monetary union. The state’s policy of conditional support for in-tegration is apparent here; Ireland would only agree if a Cohesion fund was set up to help relatively poorer states prepare for the introduction of the new euro currency. Towards the end of this period, economic success proved to be almost ‘too good,’ as garret fitzgerald put it, and

an inkling of doubt regarding the intentions and the future of the eU began to emerge. These grew and came to characterise the third stage of Irish-european relations through the rejection of two treaties during the 2000s.

The rejection of the nice Treaty in 2001 was a shock for political elites at home, in the eU and in those member states waiting to gain mem-bership. The Irish government had become complacent and took the electorate’s support in eU matters for granted, as was evidenced from the short unenthusiastic campaign in the run up to the vote. Turnout reached rock bottom for any europe-an referendum at 34.8%. The subse-quent establishment of the national forum on europe, before the refer-endum was brought to the Irish peo-ple a second time, saw a debate on the evolving relationship between Ireland and the eU for the first time. However, when it came to the lisbon Treaty there appeared to be a lack of knowledge even among the Irish government regarding what it would mean for Ireland’s relationship with the eU. Although it passed the sec-ond time around, Ireland’s previous status as a committed member state was openly questioned at home and abroad.

Ireland entered a fourth phase in its relationship with the eU after

2008. As the global recession was ex-asperated by the Irish banking sector crisis and falling property prices, the state sought and secured a bailout from the eU and IMf at the end of 2010. This brought Ireland back to economic and fiscal dependence on europe, a dependence that was accepted by the Irish electorate by voting ‘yes’ to a referendum imple-menting the Stability Treaty in 2012. In this case there was no fear of a lack of debate. By a large majority, 60.3% from a turnout of 50.60%, the Irish electorate decided not to weather the storm alone.

While we have accepted depend-ence on europe, we should not ac-cept the lack of knowledge and debate regarding the eU that char-acterised our early years of member-ship. Up until 2012 the only serious discussions about the eU occurred after failed treaty referendums. When pro and anti-treaty campaigns die down, a large number of the pop-ulation know very little about the eU, its institutions and rules. If the Irish electorate does not understand how the eU works now, how can they be expected to decide if future consti-tutional changes should be made or not? The future development of Ire-land’s relationship with the eU relies on a greater understanding by the public as further integration occurs.

forty yearsIreland and the eUHeather lang examines Ireland’s relationship with the eU

1973 Accession to the eU

1986 single eUropeAn Act

first major revision of the Treaty of rome

1992 MAAstricht treAty

Treaty leading to creation of the euro

2001 nice treAty

Amendment of Maastricht treaty

2009 lisbon treAty

eU Constitutional review

2012 stAbility treAty

September has been a dif-ficult month thus far for al-ready struggling mortgage holders. As the opening week hosted a succession of

meetings between bank representa-tives and the oireachtas finance committee on mortgage arrears, day after day we heard threatening rhetoric from senior Irish bankers directed at those guilty of missing mortgage repayments.

Politicians had hoped the discus-sions would provide possible solu-tions to the mortgage arrears issue which were both borrower and lend-er friendly; perhaps involving partial write-downs, minimizing reposses-sions. As the proceedings went on however, the extent of their delusion hit home and some could barely hide their disappointment.

“It became abundantly clear dur-ing the committee hearings that the banks are heavily relying on volun-tary surrender, threatening letters and legal proceedings for forced re-possession to achieve the mortgage arrears resolution targets set last March,” said fianna fáil’s spokesman on finance Michael Mcgrath.

Banker by banker we were warned about the consequences for those missing repayments. “Un-less you engage with us, you will be subjected to the full legal route” AIB’s Chief executive David Duffy told his customers, while Bank of Ireland’s richie Boucher proclaimed that debt forgiveness was “not a policy of the bank”. Permanent TSB’s Shane o’Sullivan took a slightly dif-ferent approach in offering “volun-tary assisted sales” to its struggling

borrowers. However fine gael’s ki-eran o’Donnell could be forgiven for pointing out that these were “effec-tively repossessions”.

Meanwhile, Bank of Scotland (Ire-land) has this month sold an €11.5 million loan on a limerick hotel back to the borrower (hotel group Dalata) for €2.5 million, a loss of 78%. Mort-

gage holders are likely to be angered and confused at how it makes sense for banks to take losses on business loans but not their homes. Surely what’s sauce for the commercial goose is sauce for the residential gander, no?

We all understand that the Irish state is a major shareholder in many of these banks and hence that the Irish people have a vested interest in these banks returning to profit-ability; but our mortgage arrears problems are far too vast for simply no financial sympathy to be afforded to homeowners, whether we or the banks like it or not. It’s not that the proposals from the banks this month were incoherent: it’s that they were completely unrealistic. So much so that the meetings between banks and the oireachtas committee were

a waste of time and breath.Surely we deserve better. Would

it be too much to ask for the banks to bring compromising suggestions and ideas to the table?

It’s not just the message, but also the antagonistic tone of the bankers’ rhetoric that must anger the politi-cians that listen. The life-saving ges-tures politicians made to the banks in 2008/2009 are being rewarded with a stubborn refusal from said

Politicians’ anger at mortgage arrears proceedings is understandable

bankers. aSuddenly it became in the interest

of citizens to repay their mortgage but also not to repay their mortgage. We’re cheering for both teams, something which is utterly impractical.

by Brian Devitt

5PolITICS THe BUll 17.09.2013

This past year has seen throngs of people re-turning to Ireland as ‘The gathering’ has acted like a homing beacon for all

those who claim Irish ancestry and roots. The majority of those who have answered the call to return and discover their heritage reside in the US, where an estimated 12% of the population identify themselves as having Irish ancestry.

However, for many of the Irish in America there is no option for them to visit the land of their ancestors, as returning to the US could mean de-portation and an end to any life that they have created there. This is the plight of the ‘undocumented’ Irish who have lived and worked in the US for years but still have not achieved any recognition of their presence in the country. They are stuck in a citi-zenship ‘limbo’ with no legal status and no present path to achieving formal citizenship. Vice-President Joe Biden has stated that ‘They are Americans but they are not citizens – they are undocumented.We need to find a fair and effective and decent

way to take the out of the shadows.’This state of uncertainty could be

coming to an end with the recent passage of an immigration reform bill in the US Senate that is set to overhaul the defective immigration system, something which has not been achieved since the 1980s. The bill allows undocument-ed immigrants to gain legal status and eventually get on the pathway to citizenship, provided they meet certain requirements. Tánaiste ea-mon gilmore has ‘strongly welcomed’ the bill, and it received substantial cross-party support, with 30 republicans voting for the meas-ure.

However, the real test for immigra-tion reform will come

i n the

republican controlled House, where conservatives are likely to oppose any sort of reform.

Provisions such as increasing the size of the border patrol, erecting a fence along the USA-Mexico border

and not granting any immigrant resident status until the border is secure have all been placed in the bill with the intention of gaining re-

publican support . Also, Democrats have been portraying the meas-

ure as a piece of legislation that will reduce the deficit to garner

republican votes. This appears to be rather

fruitless, with the Speaker of the House, John Boeh-ner, stating that the Sen-ate bill will not becoming before the House and that the House itself will

be creating its own bill. Should the House

put forward their own bill and if

no compro-mise is

reached between the House and the Senate, then automatic gridlock will occur, resulting in the faulty immi-gration system remaining.

regardless of whether the Senate Bill or a revised bill can be passed in the House, the issue is likely to fall down on the list of priorities of the House. The issue was most salient before the summer recess, however with the recent crisis in Syria set to dominate all political proceedings in the coming future and a budget yet to be agreed between Congress and obama, the issue may not come to the floor of the house till the end of the year, if not the coming year.

If any form of immigration reform is hoped to be achieved it will be-come even more difficult the longer the issue remains unaddressed. for the undocumented Irish, the final step to fully realising the American Dream of citizenship and a legal sta-tus in American society could yet be a distant reality.

American Citizenship laws - reform? US CorreSPonDenT STePHen kIely InVeSTIgATeS A PoSSIBle CHAnge In AMerICAn IMMIgrATIon PolICy

The State of SpainIn 1957 franco’s Minister for Hous-

ing said ‘we want a country of pro-prietors, not proletarians’. Today, with unemployment standing at over 27 per cent and the rate of

home ownership one of the high-est in the world, Spain has almost reached that goal; although perhaps not in the way the Minister would have liked.

However, there has been a flurry of excitement in sections of the finan-cial press of late as signs abound that Spain’s economy may be finally ‘bot-toming out’. The harbingers of a pos-sible upturn include a stabilisation in gDP, a slight dip in unemployment, and a swing in the current-account to surplus, something that has hap-pened very rarely in Spain’s economic history.

The export recovery has aroused particular comment. Spain’s econo-my Minister has claimed that greater ‘flexibility’ is spurring a rebound in the auto industry. The most recent data show export growth running at 8 per cent, outpacing germany. The decline in gDP has been steadily slowing and Prime Minister Mariano rajoy has said that Spain’s economy will stop contracting in the second half of this year for the first time in two years. However, the IMf’s outlook remains gloomy. Its economists are predicting that growth will only turn

positive in 2015, when the economy will eke out an expansion of 0.3 per cent. They also forecast an extremely marginal fall in unemployment to just over a quarter of the labour force by 2018.

Spain is seen by some as a labora-tory study of whether countries can successfully effect ‘an internal de-valuation’ and return to rapid growth. The justification for the austerity being imposed on the ‘periphery’ is largely based on the belief that wag-es rose excessively during the boom and must be brought down to ‘com-petitive’ levels.

But this claim isn’t backed up by statistics. over the period from 1975 to 2010 the proportion of Spanish gDP going to employees fell. real wages went in the same direction for much of the boom. The secret to Spain’s domestic consumption boom wasn’t excessive wages, but massive levels of borrowing supported by surging private wealth, with house prices soaring at an annual rate of 30 per cent during the frothiest years.

Proponents of austerity often point to the divergence of unit la-bour costs between the ‘core’ and ‘pe-riphery’ as evidence of ‘profligacy’. In Spain’s case this loss in competitive-ness was more or less forced on the country. Shut out of export markets

by an overvalued euro and unable to compete with a germany under-going an extended period of wage repression, Spain had no choice but to embark on a domestically driven boom. A flood of cheap credit from the core financial sector fuelled the boom and at the peak in 2008, ger-man banks’ exposure to Spain was €200 billion. The result in Spain was a decisive shift in the economy to-wards low productivity ‘non-tradable’ sectors like housing, accompanied inevitably by roaring inflation.

Thus we have the paradox of a shortage of 48,000 engineers in ger-many, while Spanish graduates are emigrating in search of work. The number of foreign workers has fallen by 400,000 since 2008. This largely explains the perceived fall in unem-ployment. Indeed, the labour force is dropping even faster, indicating that the unemployed are either emigrat-ing or have stopped looking for work.

economic ties with latin America strengthened in recent years and many emigrants are going there, particularly to Argentina. The expan-sion of Spanish banks and multina-tional companies in this region has provided Spain’s largest banks with a greater level of financial stability, and so far the regional caja savings banks have been worst affected. nevertheless bad loans continue to

climb while bank lending is plunging by more than 7 per cent. This reflects both the reluctance of banks to lend and that of businesses to borrow, which belies the claim of an invest-ment and export driven recovery.

The signs of recovery in europe’s economy may be merely cyclical and are not an indication that the funda-mental contradictions of the euro-zone have been overcome. The great-est of all, that of the trade imbalance between the core and periphery is as

glaring as ever, with germany con-tinuing to run an enormous current account surplus. The crushing effect this is having on southern europe was demonstrated in figures which show that Italian industry, formerly second only to germany, fell in March to levels last seen in 1979; which also happens to be the year the whole monetary union ‘project’ began.

feATUreSTHe BUll 17.09.20136

Business as usual in Mexico

With corruption rampant and drug cartels in power, political editor Duncan Moss recounts the challenges of doing business in Mexico.

It was 10pm, Christmas eve, and José luis de la Cruz stood chew-ing a piece of Juicy fruit outside Puente grande, a maximum se-curity prison in Mexico. A deathly

silence which echoed across the freeway between guadalajara and Zapotlanejo was suddenly broken by a convoy of SUVs hurtling to-wards the gate. De la Cruz nerv-ously chambered a round, fearing for his life. His fears were allayed when he recognised the jovial face of Juan raúl Sarmiento, the prison commander, hopping out of one of the SUVs. “It’s us,” Sarmiento chirped amiably.

for Joaquín “el Chapo” guzmán, imprisoned drug lord of the Sinaloa Cartel, Christmas had only just be-gun. The convoys contained over 500 litres of alcohol, illustrious mari-achi bands, a sumptuous feast of lobster and prawns, as well as both el Chapo’s and other inmates’ relatives. The prison guards themselves had worked overtime to paint the walls in a bright yellow, and Christmas lights and decorations were hung throughout two of the units in the prison. The feast lasted for 5 days. This unprecedented display of pow-er went unpunished; in fact, the ban-quet was attended by prison warden leonardo Beltrán himself, who never once let go of a briefcase jam packed full of money he had been given for Christmas.

This is not a one-time case, a single solitary stand-alone isolated incident amid a host of law-abiding moments congenial to the Mexican way of life. This is the norm. Corrup-tion in Mexico is rife. el Chapo, who

is “the most powerful drug trafficker in the world” according to the United States Department of the Treasury, effectively ran the prison in which he was supposedly incarcerated and, in 2001, escaped the prison by walking out freely dressed in police uniform and accompanied by a police con-voy.

Since then not much has changed. Mexican society remains dominated by private cartels whose drug trafficking business is worth an estimated $50billion a year; no one knows the full extent. Successive Mexican Presidents have tried and failed to seize power from the car-tels; President felipe Calderon, who started the so-called “war on drugs” in 2006, deployed more than 50,000 troops to combat the cartels, yet violence soared amid allegations of corruption and little changed on the ground. The incumbent President enrique Peña nieto has promised that his “war on drugs” will consti-tute a lower-profile approach to that of his predecessor, as he aims to tackle violence on a local level.

So far, his record has been mixed. The Mexican navy successfully cap-tured Miguel Angel Treviño Morales, the leader of los Zetas, Mexico’s sec-ond biggest drug cartel; yet mean-while high profile detainee rafael Caro Quintero, who had been im-prisoned for 28 years for the murder of enrique Camarena in 1985 was set free without advance notice due to a technicality. Many are accusing Peña nieto of forming a “pax mafiosa” with the biggest cartel, guzmán’s, where the drugs are allowed to flow in ex-change for a cessation of violence,

while the “war on drugs” is fought against guzmán’s opponents. “Sadly, I think this is what is happening,” says Anabel Hernández, author of narcol-and, a new publication which aims to reveal the unspoken truths about the Mexican war on drugs. “Mexico is exhausted. People will pay anything to live in peace. And this is the strat-egy; a sponsorship of the Sinaloa cartel, which makes the so-called ‘war on drugs’ one big lie.”

If a mafia state is what is required to bring peace to the nation, then many would be willing to have it, and who could blame them? Howev-er, this is a dangerous road and one which offers no guaranteed safety. for many young people the drug cartels offer the only viable option for employment in a country where minimum wage is just over $5 a day.

The cartels themselves have become institutionalised, and are now al-most a hereditary part of the Mexi-can societal system.

A report published by Human rights Watch in february 2013 esti-mated that over than 60,000 people were killed in drug-related violence in Mexico from 2006 to 2012. “Dis-appearances” have become com-

monplace in Mexican society. In the northern state of Coahuila alone, officials reported nearly 2,000 disap-pearances in the same time period, and of nearly 250 specific cases of forced disappearance; security forc-es were implicated in 149 of them.

And so, it may come as a surprise to find that in a country whose insti-tutions are fraught with corruption, the US and other countries have chosen to invest. The lure of black money is great, yet fraught with danger. last year alone Mexico con-ducted $400 billion of business with the United States, third only to Can-ada and China, as the US desperately seeks to find stable sources of oil outside of the Middle east. However, while Mexico’s economy appears relatively stable, the capture of Z-40, the leader of los Zetas, shows that Peña nieto has either begun a real crackdown on the illicit drugs trade for the first time in Mexican his-

tory, or that he has taken sides. Both paths lead down dangerous roads.

Perhaps in time Peña nieto will establish lasting peace for the Mexi-can populace and stricter US border control; US arms licensing agree-ments and Mexican anti-corruption laws will lead cartels to seek profits from more legal means. This would change the current hierarchy and create fairer and safer opportunities which the vast majority of Mexicans crave. However, there are many who do not believe this would happen. one such man, who expressed his wish to remain anonymous, finally realized his dream of opening a fur-niture store in Mexico City, only to be kidnapped and extorted. The man closed his business stating quite simply that “you cannot do business in Mexico.” While el Chapo might ob-ject, perhaps the rest of us should hear his plea.“MexICo IS

exHAUSTeD. PeoPle WIll PAy

AnyTHIng To lIVe In PeACe”

7feATUreS THe BUll 17.09.2013

STArTIng SAlArIeS for investment bankers rose 5% last year, with top banks offering up to €58,400 a year. This massive sum is enough to lure a rising number of applicants to sign up for horrendous working hours in an industry badly stigmatized by the financial crisis.

A recent survey of the top thirty British universities found investment banking to be the leading destina-tion for male graduates, ahead of fa-vorites such as engineering and law. yet the key to success in the financial industry starts long before gradua-tion as thousands of business and economics undergraduates compete to give up their summers slaving away in banks in london’s City or on Wall Street.

If one were lucky enough to gain a summer internship, it would ap-pear that a full-time position later on is nearly guaranteed; but there are mounting concerns over the working culture for these young employees.

The death of 21-year-old Bank of America Merrill lynch intern Moritz erhardt in mid-August sparked fren-zied media attention on intern’s working hours in the banking in-dustry. erhardt was rumored to have worked 72 hours straight before be-ing found dead in his east london accommodation. Several reports from fellow investment banking in-terns claim it is not unusual for them to work over 100 hours a week and pulling all nighters is a common oc-currence.

It is unclear to what extent er-hardt’s working environment was to blame for his death, but scientific research clearly shows the negative impact of stress and sleep depriva-tion upon one’s health and job per-formance. Despite these findings, the banking world keeps turning, whip-ping up hopeful young students only to spit them out at the end of sum-mer as burnt out wrecks.

long working hours for bankers are legendary, with the length of time sat behind a desk often being proudly announced. Magic rounda-bout shifts, where a taxi takes an em-ployee home and waits outside while they shower and change before bringing them back to the office, are mentioned with an element of self-admiration, provoking contention among employees over who works the hardest.

When it comes to inexperienced students who are not being reward-ed with large bonuses and have yet to establish their own working limits, these infamous shifts and incentive schemes for longer hours need to be abandoned. Management should in-stead set clear limits on the number of working hours for their younger members to avoid an increased risk of adverse health effects.

Banks fuel the competitive atmos-phere, with one intern admitting to “practice” work when he had noth-ing to do, just to show his dedication. Managers take advantage of the lack of job security faced by interns by overloading them with endless du-ties and encouraging them to start early, stay late and to come in on weekends. limiting working hours should not hamper the internship system. extra measures to evaluate the quality of work rather than the quantity of hours in work could be implemented as a means of stratify-ing job candidates. This shift of focus onto quality, along with the extra sleep, would no doubt improve an intern’s job performance.

This brutal initiation system into the world of banking needs urgent review. Investment banking will al-ways have the catch line of ‘hard work high reward’ but that is not an excuse for managers to take advan-tage of vulnerable younger staff and push them until they are literally worked to death.

by Aislinn killian

overworked and underlovedInvestment banking Internships

Are banks being hung out to dry?BAnkS or THe MAfIA: WHo’S goT CleAner SUITS?gráinne Hawks

Al CAPone reportedly used a laun-derette business to lodge his crimi-nal proceeds; the new york mafia used a troop of old ladies to routine-ly lodge wads of cash into accounts on their behalf and Mexican drug lords concealed a thriving cocaine business with coal. Creativity and craftiness has never been an issue for criminals. However, the more mundane use of banks remains the standard method through which most illicit money enters the legiti-mate financial system.

Despite being a vital part of any criminal organisation’s set up, quite surprisingly, anti-money laundering laws are a relatively new concept. Due to the multinational nature of multiple transfers, currency ex-changes and off shore accounts used to conceal money and launder it effectively, the drive for anti-mon-ey laundering regulation is, neces-sarily, an international one.

The financial Action Task force, an international organisation founded in Paris in 1989, routinely issues sets of legal recommenda-tions and standards to its mem-ber states to help fight corruption and money laundering. These are designed to protect the financial system and vulnerable professions such as lawyers or insurance bro-kers from being misused for money laundering or for the financing of terrorism. Its annual issuance of a blacklist of countries has been an important impetus in the interna-tional community to legislate for anti- money laundering measures.

The day after liechtenstein was put on this blacklist, rating agency Standard and Poor’s downgraded

the country’s debt rating, highlight-ing the blacklist’s effectiveness as a tool for international cooperation against financial crime.

This february, the european Union published proposals for its fourth Anti-Money laundering Di-rective which will be binding on member states when it is due to be formally issued in early 2014. ob-ligations include banks and other ‘at risk’ professions to adopt know-your-client procedures involving probing into their clients’ activi-ties and due diligence reporting requirements for ‘suspected risk’ transactions.

The third (and current) directive branched out by targeting new risk areas for money laundering such as online gambling, terrorism and tax evasion; these have been added to the list of predicate or implicit of-fences.

The fourth directive delves even deeper into the world of financial crime. It boasts a requirement that all companies, legal entities and trustees hold adequate, accurate and up-to-date information on their beneficiaries. They are also re-quired to make this available to law enforcement agencies and anyone involved in anti-money laundering due diligence procedures.

Two banks, HSBC and Standard Chartered, faced huge settlements last December over money launder-ing allegations. Standard Chartered paid a $667m penalty and HSBC parted with $1.9 bn. Both signed statements acknowledging they had facilitated illicit financial trans-fers on behalf of Iran, Sudan, Myan-mar and libya. HSBC also had facili-tated illicit transactions in Cuba and for both Mexican and Colombian drug cartels.

Whilst these are both examples of enforcement and regulation, the number of transactions falling through the gaps is substantial and it is clear the subjective ‘risk assess-ment’ conducted by banks is inef-fective. given that money launder-ing is a crucial component of any terroristic or drugs related criminal organisation, and in the midst of a ‘”War on Terror’ and ‘War on Drugs’, tackling money laundering, im-plementing proper enforcement mechanisms and thereby removing a crucial source of income for such organisations may prove a worth-while chore.

“TWo BAnkS, HSBC AnD STAnDArD

CHArTereD, fACeD HUge

SeTTleMenTS lAST DeCeMBer

oVer Money lAUnDerIng

AllegATIonS”

feATUreSTHe BUll 17.09.20138

WHen yoU think cancer, what comes to mind first? In the case of most people I have spoken to, the answer usually fails to deviate from surgery, radiation, chemotherapy or hormonal therapy. occasionally you hear whispers of alternative meth-ods, but they are never so loudly dis-cussed as orthodox treatments.

Vitamin B-17, otherwise known as amygdalin or laetrile, is one ex-ample. The greatest concentration of amygdalin is found in rosaceous fruits, such as apricot pits or bitter nuts. And rumor has it, that it can be used in nutritional therapy and cancer prevention. It can be - but it is not - at least, not everywhere, due to governments banning Vitamin B-17 on the basis of it being a drug, highly toxic and not helpful whatsoever.

If it so highly toxic though, why is it that nobody has warned against the dangers of eating apricot pits? In fact, an isolated community living in the Himalayas known as the ‘Hunza’ are said to snack on them on a daily basis. Their rates of cancer are non-existent.

of course, the logical thing would be to conduct tests and trials to reach a conclusion and end the debates concerning Vitamin B-17 once and for all. There has indeed been a trial with 200 participants, but though they were given laetrile; their diet was not being controlled and the tests ended after three

weeks instead of three months with negative results. Considering most of those who believe in the effective-ness of amygdalin always emphasize it must be ingested in certain doses and works with certain enzymes and with a certain diet over a longer pe-riod of time, those tests are nothing to base an opinion on.

of course, there are both success stories and accounts of failure. noth-ing works 100% of the time. And as this is a mainly preventative method, if someone is in advanced stages of the disease, chances are nutritional therapy will not be as successful as one might hope.

What makes me wonder though is why this is not available to patients? It isn’t harmful, so why not suggest it to people alongside orthodox meth-ods? Why not do more trials?

Money is being made treat-ing diseases, not curing them. The cancer industry is worth billions of dollars every year. financial gains belong to transnationals producing and testing their own chemicals, to which they then retain the rights and can sell at whatever price they wish. Amygdalin is not a chemical to be discovered, there is no big money in commercializing it. So it is presented as useless, and governments try to sweep it under the rug.

There was an incident in Ireland six years ago, when a man was sell-

ing vitamin B-17 and advising peo-ple not to listen to their doctors who would lead patients towards chemo-therapy or radiation. of course, hav-ing no medical background and telling anyone to disregard medical advice is perhaps not the thing to do. But members of the Irish Cancer Society immediately spoke out not only against this, but against amyg-dalin as a whole, announcing that any claims of health benefits from Vitamin B-17 are “absolute rubbish”.

forty years ago, amygdalin was freely available in Australia. now, each case must be considered indi-vidually before it is decided whether or not sufficient material may be im-ported for this treatment. one might argue that this is because with time, we have found out that amygdalin is in fact useless - but if so, then why is it used anywhere at all? evidently, this has not been proven clearly enough. Vitamin B-17 is readily avail-able in Mexico, and miracle stories are easy to find.

Members on both sides of the battlefield claim more tests should be done, if only to do away with these debates which have been go-ing on for decades. So why is noth-ing done? Is it because governments truly believe that this method of treatment has no merit, or is it be-cause they fear that it does, and hope that through inaction on this front the more expensive treatments will remain as our only option?

A lot is said about what kind of freedoms we, as people, have and should have. We have the freedom to speak out, which is why I am writing this article at all. We have freedom to information, which is why you are reading this article at the moment. But what about choice? Why are we not given all the possible answers people have given to cancer, an-swers which are not clearly classified as wrong, but are simply disregard-ed? Are financial benefits really more important than knowledge?

IT HAS recently become apparent thanks to former CIA contractor ed-ward Snowden that the US national Security Agency (nSA) has been spy-ing on citizens; not just in the United States, but across the globe. The legislation that supposedly justifies the nSA’s actions is known as the Pa-triot Act. This act was rushed through Congress in the days following the terrorist attacks of 9/11 with virtually no debate.

The Patriot Act included “Sunset” clauses, parts of the Act which would have to be reviewed and debated in the future. These sunset clauses kicked into action in 2011, at which point an open debate should have taken place. Vague language was used throughout the Patriot Act al-lowing a discrepancy to emerge be-tween how the public, along with most members of the US Houses of Congress, interpreted the Act and how the US government interpreted the Act. The government’s interpre-tation was deemed classified at the time. As a result, when Congress de-bated the Patriot Act most members had no real knowledge of what the

actual implications of the legislation would be. Those who did know were precluded from revealing what they knew.

last May, Snowden leaked clas-sified nSA documents, and in doing so finally revealed the extent of the discrepancy between the public’s interpretation of the US Patriot Act and that of the government. Debate about the scope of the Patriot Act began to take place well over a dec-ade after it was first enacted. Many consider Snowden’s actions heroic, putting his life at risk to expose the unjust actions of a secretive organi-sation.

After much delay, US President obama gave a press conference on the nSA almost three months later, on the ninth of August. When asked did he consider Snowden to be a Patriot, he replied: “I don’t think Mr Snowden was a patriot. I called for a thorough review of our operations before Mr Snowden made these leaks. My preference and I think the American peoples’ preferences would have been for a lawful, orderly

examination of these laws.” His claim that he had called for a thorough re-view is dubious. He has been in office for over four years and was in office when the Act was debated in 2011. That was the opportunity to call for a thorough review. At this juncture, it is frankly too late.

What is most provocative how-ever, is that obama went on to say: “what makes us different from other countries is not simply our ability to secure our nation; it’s the way we do it, with open debate and democratic process.” This statement stands in stark contrast with the reality of the American situation: a state, in which national security and the autonomy of institutions involved in national security, is valued significantly more than the rights of the citizens of the US.

In justifying the actions of the nSA, many have claimed that in do-ing what is necessary in the interests of American national security, their actions have been justified. How-ever, many of the Intelligence Com-munity’s decisions seem to be based

more on a desire to avoid criticism and scrutiny than on clear national security interests.

obama would be do well to con-sider the plight of reverend Martin luther king Junior, a man whose legacy he has been so keen to tie himself to, on the fiftieth anniversary of his utterance of those famous four words: “I have a dream”. king was no

stranger to government surveillance and the documents concerning him which have since been released be-tray government hostility towards king and the ideals he represented. obama must now address the ac-tions of the nSA and reduce their powers significantly or he will have to face the backlash of the American public.

By Theo Donnelly

Big Brother is watching you

Vitamin B17

› Headquarters of the American national Security Agency (nSA)

Maya Zakrzewska-Pim investigates the history of the naturally occurring chemical amygdalin that some groups believe has potential in cancer therapy

Amygdalin

Amygdalin, popularly known as Vitamin B17, is a cyanogenic glycoside that occurs naturally in bitter almonds and fruits such as apples, peaches and raspberries.

The fact that it is cyanogenic (i.e. cyanide-releasing) is crucial to its potential role in cancer therapy and indeed toxicity.

In plants, amygdalin is a phy-toanticipin (a type of plant anti-biotic) used to deter herbivores from feeding on the plant both by being bitter to the taste and due to their toxicity as amygdalin is converted to the highly potent poison cyanide.

In humans, a potential mecha-nism of action for amygdalin as a cancer therapy is that (like many drugs) it is taken up by cells in its non-toxic form (amygdalin) where it is then metabolised to its active form of cyanide. This is (again like many cancer drugs) also a possible mechanism of tox-icity. others suggest amygdalin can be used as a nutritional sup-plement (hence the name “vita-min B17”) to prevent cancer but there is little evidence to support either mechanism as of yet.

by Mena eskander › Amygdalin (Vitamin B17) Potential cancer treatment?

9feATUreSTHe BUll 17.09.2013

on THe backdrop of the State of Is-rael’s renewed and ongoing national project of what the right collectively, and leaders of the Ashkenazi majori-ty “establishment” party likud, large-ly refer to as “natural expansion” into Historical Judea and Samaria, the sixth round of peace negotiations with the Palestinian national Author-ity have begun in earnest. Despite the reigning media omertà, we can estimate that until the longstanding issues that have repeatedly prevent-ed an instauration of a peace plan, reasonable hope of success is dim.

They are: the future politico-legal status of Jerusalem; the “right of re-turn” of the Arab population uproot-ed during the creation of the State of Israel in 1948. The practical feasibility of the latter is contested, not least because of a now multiple genera-tion Palestinian diaspora. The border issue would also form the corner-stone to any potential agreement. That Israel recedes to borders demar-cated in light of the Six Day War is highly unlikely, not least in light of a repeated territorial expansion. next, the steadfast refusal by the Hamas movement in gaza to recognise Is-rael’s basic right to exist.

The renewed peace negotiations seem doomed to failure from the outset without meaningful engage-ment in these longstanding obsta-cles to a lasting peace. Israel’s gov-ernment may be satisfied if it can escape a politically explosive and certainly unpopular set of peace pro-posals amongst a civil population, the majority of which holds a sur-

prising but contradictory ambition: to achieve a fair peace with the Pal-estinian neighbour without ceding on national security (a code word for giving up territory). Internally, Israeli social divisions are rife, coupled by an increasingly volatile political rep-resentation, with the recent electoral quasi-disappearance from the knes-set of the once popular centrist force kadima, only one glaring example of the hardening rightward shift of Is-raeli public opinion.

The risk of a Third Intifada appears to simmer under the surface; with a continued radicalisation of the Arab Israeli population and the bubbling Hamas ruled gaza cauldron, both bolstered by a frustrated Arab youth across the Middle east north Africa (MenA) region. Meanwhile, Israel’s voice has grown increasingly isolated amongst international players.

regionally, an over-zealous main-stream western press was quick in 2011 to coin a catch-all term in ref-erence to revolts in Arab states that would see a renewed lust for liberal democracy which must finally be in the offing. The presumption was naively and hastily made that these heterogeneous Arab countries with contrasting political systems: the petro-monarchies of the Arab-Per-sian gulf, yemen’s tribal system, the Hashemite kingdom of Jordan, lib-ya’s clan order, passing by Baathist Syria, were uniformly adaptable to a typically euro-centric vision of a lib-eral pluralist democracy. It is all the more remarkable to notice the dra-matic transformation that has taken place on a journalistic level within the past two years; from an initial outpouring of excessive euphoria to a now cataclysmic outlook for the Arab peoples. The genuine prognos-tic is to be found somewhere in the middle with important institutional reforms having been implemented in the Maghreb region the gradual

emergence of a civil society, as well as an on-going, chaotic revolution-ary process in the Mashrek.

To Israel’s north-east, the Syr-ian “mosaic” has been rendered in-creasingly fragile since early 2011. Since what initially took on the ap-parel of primordially a social revolt (a high rate of 30% unemployment among the youth, and inflation rate that climbed from 1.5 – 5.9%), has since exposed the underlying eth-no-confessional divisions that have forever characterised greater Syria. The founding father of the Baathist movement, Michel Aflaq, precisely theorised with limited practical suc-cess, political solutions to these in the rallying pursuit of the Pan-Arab nation. Aflaq, himself a Christian, underlined that despite these ethno-religious divides, the Arab peoples have “an eternal vision for an eternal mission”. The sporadic but none-theless existent Sunnite slogan of “Alwaites to the coffin, Christians to Beirut” is anecdotal but revelatory, as is the instinctive survival method of late of the Alawite communities in the eastern latakia province, “Take arms or be killed”.

The Israeli government and the Tsahal intelligence forces in particu-lar, are likely to have increased sur-veillance at a time when the assets of Syrian Hezbollah emissaries are likely moving over transnational bor-ders. Islamic-conservative forces will continue to have the regional wind in their sails and have largely recuper-ated or even confiscated the initial electoral outings largely due to them having a long established implan-tation, despite a historical de jure prohibition. The Sunni-Shiite divide (notably between Shiite Iran and Wahhabist Saudia Arabia) arguably presents, for the foreseeable future, a more dangerous threat to regional peace than the Israeli-Palestinian question.

By Donal kennedy

lAST Week saw the first real sign of acknowledgment by the gov-ernment of the 293 long suffering ex-tenants of the deserted Don-aghmede development, Priory Hall. An Taoiseach enda kenny vowed to find a resolution to the “complete in-justice’’ of the residents after receiv-ing a letter from Stephanie Meehan, whose partner fiachra Daly, com-mitted suicide on July 13.

Mr.Daly’s suicide came days af-ter receiving a letter from kBC Bank demanding €17,000 in mortgage arrears and interest be repaid im-mediately, regardless of the fact the family had been living in tempo-rary accommodation since october 2011. Indeed, the bank continued to pursue Ms Meehan for this debt after the death of her partner; even after Mr.Daly’s life assurance policy paid off the body of the mortgage itself. Under media pressure and public sympathy, kBC subsequently dropped the pursuit acknowledging that the remainder was “irrecover-able’’.

The Priory Hall scandal first emerged in 2011 when it was evacu-ated by order of the High Court in order to facilitate fire-safety works after it was deemed unsafe by Dub-lin City Council.

The boom-time development was by ex-IrA hunger striker turned developer, Tom Mcfeely; now bank-rupt, with some €200m debts to nAMA and the revenue Commis-sioners. Mcfeely’s construction company Coalport has a long his-tory of reported sub-standard build-ing practices.

In 1990 the fianna fáil Minister for environment, Padraig flynn, introduced the new “light touch” regulatory scheme which allowed for ‘self-certification’ by builders, ar-chitects and engineers as regards statutory requirements on build-ing safety. This has left Mcfeely and many other developers of question-able character or qualifications, per-fectly qualified to certify their own new developments. The responsi-bility for inspection was left to local authorities, vulnerable to corruption and vastly under-funded to cope with the surge in construction activ-ity soon to follow.

Since then, local authorities have struggled to reach inspection tar-

gets of even 15% of new buildings. Scandals have emerged such as widespread Pyrite contamination, which slowly cracks walls and foun-dations. Up to 20,000 houses are es-timated to be affected, with the av-erage cost for repair almost €50,000 and taking months. With bankrupt developers unable to pay for repairs, homeowners are left to take what-ever action they can, while the gov-ernment struggles to find a solution.

Since the problem takes years to manifest itself, the true figure will likely be much higher. The gov-ernment response to the overall problem of sub-standard building practice has been to introduce leg-islation making inspections of new buildings by certified inspectors at several key stages of construction mandatory. The builder and inspec-tor then sign a statutory certificate if they are satisfied the building is compliant with regulations; they can then be held legally liable if the building is subsequently found to be defective.

Priory Hall property owners are still liable for their mortgages, but individual circumstances do vary. The main banks involved have been slow to offer resolutions, with many mortgage holders liable for accumu-lating interest and charges for prop-erties they cannot use. Most have eventually been offered a morato-rium on their repayments, but only in the last week has there been any sign of a possible debt write-off. AIB Chief executive David Duffy con-firmed that write-downs will be of-fered in certain circumstances.

last year, furious former Priory Hall residents blamed Dublin City Council for ‘’numerous repeated bungling errors’’ and mishandling the case against Tom Mcfeely, after he walked free from a 3 month jail term and €1 million fine after the Supreme Court found in his favour. now living in the up-market Mount Albany estate in Dublin 4 with a rent bill unveiled to be over €2,000 a month, Mcfeely’s plight is a far cry from the 294 residents now fight-ing for the right even to be housed in temporary council accommoda-tion. The Supreme Court will return its verdict in conjunction with the mediation process on october 15th.

Arab-Israeli peace following latest talks?

Priory HallDestined forDestitution?tiArnAn MccAUghAn investigAtes the sUbstAndArd bUild-ing prActices Used to constrUct priory hAll which hAs left its forMer residents’ lives in disArrAy

“THe SUnnI-SHIITe DIVIDe

ArgUABly PreSenTS,

for THe foreSeeABle

fUTUre, A More DAngeroUS

THreAT To regIonAl

PeACe THAn THe ISrAelI-PAleSTInIAn QUeSTIon.”

“To ISrAel’S norTH-eAST, THe SyrIAn

“MoSAIC” HAS Been renDereD

InCreASIngly frAgIle SInCe

eArly 2011.”

feATUreS - SPeCIAl rePorTTHe BUll 17.09.201310

The Syrian

Situation

A new and bloodier war SPECIALREPORTThe United States of

America boasts an economy larger than any other nation. It boasts a military

incomparably superior to its nearest rivals. The USA is the sole remaining superpower and yet throughout the on-going crisis in Syria, the obama administration has proved to be utterly ineffectual at influ-encing the course of events.

over 100,000 Syrian civilians have died in the conflict while 1,000,000 Syrian refugees have fled their homeland, with a fur-ther 2,500,000 facing internal displacement. This is one of the great humanitarian crises of our age.

Peaceful protests which are but a small fraction of the democratic freedoms we take for granted were met with vio-lence and torture, followed by mass murder. When the Syr-ian people called for assistance from the Un, from the US and from europe, their pleas fell on deaf ears. no one provided humanitarian corridors, no one provided equipment and no one provided no-fly zones

to protect the people of Syria from aerial attack. no one cared to act and Assad contin-ued to escalate the violence and murder his people.

obama announced ‘red line’ issue after ‘red line’ issue only to see the lines crossed; yet he remained idle.

The landmark Un Doc-trine: responsibility to Protect, agreed in 2005 document ex-plicitly calls for international involvement to protect a state’s civilians from war crimes and crimes against humanity be-ing perpetrated upon them by their own government. The very argument for the passage of this international framework for humanitarian intervention was that failure to act implicitly endorses the commission of these crimes by governments and encourages further atroci-ties.

The inaction of the interna-tional community in May 2011 and afterwards has allowed the violence against civilians in Syria to spiral into the hellish nightmare we now see. It was all too predictable that failure to act against Syrian President

Bashar al Assad would result in great tragedy.

last month the Assad re-gime attacked civilians in the ghouta region of Syria with the lethal nerve agent Sarin. 1,400 Syrian civilians were killed; in-cluding over 400 children, in what was the gravest deploy-ment of chemical weapons to date. That Assad would deploy the lethal nerve agent while Un observers were in his coun-try shows the impunity with which Assad believes (seem-ingly rightly) than he can act. He committed this atrocity in the firm belief that the inter-national community would not react. So far, his gamble has paid off.

Despite US agencies con-firming the widespread use of chemical weapons by the As-sad regime and holding him responsible for the ghouta at-tack, obama seems undecided as to what course of action to take. He has been outma-noeuvred by russian President Vladimir Putin in the Un and has left french President fran-cois Hollande isolated both internationally and domesti-

cally, President Hollande being the sole western leader brave enough to push convincingly for intervention. obama con-tinues to prevaricate and wal-low in indecision; meanwhile, the slaughter of the Syrian peo-ple continues.

Besides the grave humani-tarian implications of global inaction in Syrian, obama’s poor handling of this crisis has severely damaged America’s geopolitical clout. obama has failed to lead the global com-munity. rather, throughout the Syrian crisis, the US administra-tion has seemed disengaged and taken a back seat.

Vladimir Putin has been al-lowed to largely dictate the response of the international community, stalling any action that might damage the Assad regime which has long been an ally of Moscow. Despite all the recent international con-demnation of the Putin regime, obama’s weakness in deal-ing with the Syrian crisis has allowed Putin to take centre stage on the issue and signifi-cantly boost russian global in-fluence.

More worrying for American interests, as argued by obama’s former presidential rival Sen. John McCain, Islamic extrem-ism has stepped in where the international community re-mained absent. While the pro-democratic Syrian national Council have been forced into near oblivion through lack of proper military equipment and funding; jihadist militias have, thanks to external backing, amassed advanced weaponry and offer generous wages to their foot soldiers. In Syria it is global jihad rather than the west or the Un that is backing the fight against the atrocities of the Assad regime. The lack of intervention by the west sim-ply stirs further anti-western sentiment in a region where pro-western sentiment is rare.

The events we are seeing unfold bear testament to the truth of former US general Douglas MacArthur’s words when he said “appeasement but begets new and bloodier war.”

As the death toll rises in Syria, features editor eoin o’Driscoll discusses the international community’s response

Syrianism - The great western distrust

Throughout all of west-ern media over the last two weeks, Syria has been high up on the agenda. With civil

war encroaching upon the en-tire country and ‘fear’ of it spill-ing over into ‘stable’ countries allied with the west, a political battle was started. Action must be taken by the west; the self-designated and governing world police fighting for de-mocracy.

And so, the supply of arms was given the go ahead in June 2013 by the west to directly fuel conflict and instigate political change. At least this card was laid down on the table so that the world could see; unlike pre-vious skirmishes. But still, major world players of the ‘game’ were adamant to veto taking military action at Security Council meet-ings. one western country side-stepped; pledging allegiance to their allies but failing to deliver the hoped for support. Instead, an extra £52 million would be spent on aid; a gener-ous amount given the current economic climate. This deci-sion was quick to be released

into the media following the unsuccessful plea to give mili-tary support; almost sounding like an economic backup strat-egy. Is this a country taking the moral high ground; or is there a hidden agenda, be it gaining public support or war profiteer-ing? The former can only be a fantasy.

The Syrian government por-trayed by the western media appears no better, and has now been given the red card by the west. The use of chemical weap-ons against humanity is seen as monstrous and was a step over the line. But let us take a step back and think about the larger picture. The Syrian government has shown that a rebel force supplied by small arms can-not topple the government. Western countries in turn be-come frustrated with the lack of development and choose to invest a heavier amount of re-sources into the uprising. The western countries must see this as an economic gain of resourc-es; but so far progress has been hindered by the objections from prominent World leaders. To persuade the Security Coun-

cil for further intervention a jus-tified reason would be needed; the use of chemical weapons. We have seen from previous conflicts that declarations pre-sented by world leaders on weapons of mass destruction have exposed false claims. This time around, solid evidence would be needed to convince the council that intervention is required.

At a time when the Syr-ian government is faring well against the insurgents, why would the government deploy chemical weapons against its own people, knowing that there would be repercussions taken against the country? The Syrian regime currently has the resources to fight off a low level insurgency; if the government was struggling for power, there could be cause for desperate measures. But this is certainly not the case. Western countries are pushing for greater inter-vention, indicating that the lev-el of resistance by the regime is high. Why is it that only western countries (and their allies in the region) are pushing for greater intervention?

once the band wagon sees a potential for resource exploi-tation, the capitalist drill gets going and there is very little to stop it until reaching the black gold. Syria, rated 34th in world oil pro-duction, has a prov-en reserve of 2.183 billion barrels. There is also the potential for development in exploration, produc-tion and refinement; a lucrative industry prized by the west. With unexploited re-sources, low exports and a dictatorship, this would provide the means for western governments to war-rant action. Western allies have just discovered a new reserve of oil (128 million barrels) in the region, some 200km from the border with Syria, which lead to a 16.9% share increase in the drilling company, Shemen oil.

War can provide vast eco-nomic gains in terms of re-source access and availability, but only once turmoil is gen-erated within a country. Many barriers must be crossed; firstly

convincing the rest of the world that action needs to be taken. once the ruling party has been conquered, power and influ-ence over the region is redis-tributed. Contracts for access to resources can be sold to recoup initial costs; even when the risks are high. To have it all, you must risk everything; even if that means throwing your ethics out the window.

Is the west really fighting ‘for’ democracy, or is this just a visage for a well established agenda?

11feATUreS - SPeCIAl rePorTTHe BUll 17.09.2013

The Syrian

Situation

SPECIALREPORT As the diplomatic situation

in Syria unfolds, one must feel the victory is pyrrhic, at most, in relation to the seizure and destruction

of Bashar Assad’s chemical arsenal. Seizing the weapons isn’t a guaran-tee that there isn’t another chemical attack on the horizon and that such a catastrophe wouldn’t occur again. given the nature of chemical weap-ons and their quick mobility; track-ing and monitoring the destruction of the weapons is a challenge that is both daunting and borderline im-possible. furthermore, the seizure of such weapons holds no account-ability, punishes no offenders and most importantly offers no stability. The last couple of weeks have shown the rebels in Syria the cold reality, that America is not an ally and has no intention to intervene. The insist-ence of no boots on the ground, the failure to conjure support for the re-leasing of Tomahawks and the fact that the executive administration has cancelled congressional invita-tions to general Salim Idriss, com-mander of the rebels’ Supreme Mili-

tary Council, on more than three occasions all highlights this

lack of interest.

It is both unfair and naive to con-sider America’s lack consensus as the catalyst in this civil war, if a finger is indeed to be pointed the true factor is russia. Syria is russia’s most impor-tant strategic partner in the Middle eastern region. given its military and economic significance, providing russia with access to the Mediterra-nean Sea and its biggest purchaser of military supplies, the ex-Soviet State is in no hurry to disband the Assad regime. on September 9th at the new America foundation - a public policy think-tank, Susan rice the current national Security Advi-sor and former ambassador to the United nations spoke frankly about the US-russo relationship and its ob-vious standstill. She spoke at great length about the personal frustra-tion felt whilst dealing with russia on the United nations Security Council, where on more than three occasions russia and China used their veto abilities to halt joint statements be-ing released from the United nations condemning the conflict in Syria. It is becoming more and more appar-ent that the once hopeful “reset rela-tions” initiative proposed by obama has largely failed and that Putin’s third term seems circulated on dis-banding any connection between russia and the West spawning from the infamous 2007 Munich Speech.

Turning back to the con-flict in Syria and apply-

ing the d o c -

trine of Summers, one must feel the objective and interest of the West in Syria is to achieve regional stabil-ity. Calling on russia to mediate the conflict is largely pointless given the nature of the relationship between them and Syria. It is for this reason that America should turn to the most unlikely of partners, Iran. officially there are no diplomatic relationship between Iran and America and their mistrust for one another has existed since the Iran’s establishment in 1979. furthermore, with America’s crippling sanctions and continued high tensions between the two na-tions, it seems somewhat unusual to call on Iran; then again it might make the difference that could provide the stability in this complicated theatre of war. Currently Iran provides train-ing, military aid and equipment to the Assad regime and Hezbollah, and there are on-going quotes from revolutionary guard general’s saying they shall provide assistance to the regime “until the very end”. But the West has a glimmer of hope based on the country’s new president Has-san rouhani and his fortunate past as chief nuclear negotiator. Consid-ered by many as a moderate, rouha-ni draws a new light on a regime that is often so difficult to assess. Particu-lar praise must be given to rouhani’s blessing of rosh Hashanah, a stun-ning remark given the Holocaust de-nials by his predecessor.

It is for this reason that now is the time for America to drop the “dove diplomacy” and reignite the old nixon “Cold War Warrior”. With

Iran’s continuing aspiration to begin talks on its’ nuclear

weapon’s ambi-tion there

should be one prerequisite that should be brought to the table, that Iran distance itself from Syria and mediate a cease fire whilst pursu-ing negotiations. This can be done privately between wire transmits or publicly, allowing Iran to show the Western world its ability to act a mediator. Ultimately America’s first interest in Iran should be stopping the conflict in Syria first, nuclear proliferation second. With the grow-ing burdens felt by the Iranian peo-ple from unprecedented economic sanctions and the disgust from the August 21st events, this could be an affordable way for America to ease sanctions on Iran without upsetting the Israeli lobby, and a way for Iran to disassociate itself from the ever growing sectarian conflict without looking as if it were pressured by the American “Imperialist”.

The pursuit of nuclear negotia-tions and their potential conflicts are for another article, one that shall not be digressed into here. We should be wary that the ultimate decision shall come from Iran’s su-preme leader, Ali Hosseini khame-nei, and that this deal could be seen as far-fetched. one should still remain optimistic given rouhani’s strong background in diplomacy; it might just be enough to convince the Supreme leader to bring him to the table. With no end in sight for how the conflict will end in Syria and with sectarian violence spring-ing up more and more, this is the time for obama to pursue a more aggressive diplomatic approach and to disband from the doves that have largely constrained this administration. now is the time for obama to act. President rouhani please pick up the phone.

By graham reynolds

America & Iran?• America to seek Iranian mediation on Syria?• Should America return to ‘Cold War’ foreign policy?

AT AglAnCe

DeATH TollApproximately

100,000

Duration of Conflict

30 months

Time in PowerPresident Bashar Al-Assad

13 years

feATUreSTHe BUll 17.09.201312

Sun, Sand, Samba and latin beauties spring to mind when Brazil is mentioned. The 7th largest economy in the world by nominal gDP

and purchasing power parity, Brazil is one of the world’s largest econo-mies and it is expanding. In the last decade, a large increase (~32%) in agricultural product, tax and social security reforms, and the national program for economic acceleration (Programa de Aceleração do Cresci-mento) have contributed to the country’s continuing growth in the face of global turbulence. yet annu-ally, 25,000 young Brazilian come to Ireland and they comprise one of the largest non-eU ethnic groups living in this country. Dicey’s weekly Bra-zilian nights on Tuesdays boasts a queue that easily reaches Stephens green from Harcourt Street. With visas provided care of a school of english, they live and work silently in our society – child-minders, door-to-door sales, folding clothes in Hol-lister, hairdressers etc. Indeed, most truthfully want to learn english but also they seek a better life, many re-newing their student visas year after year until they have nothing left to study. So the question then is sim-ple: why?

In the heart of rio City the tall clock tower of Central Do Brazil sta-tion is draped in a rainbow banner and the Metros come with “Carro[s] exclusive para mulheres” (women only subway cars). However the equality of gender, race and religion which lines the streets as colourfully as Carnival does not affect the true inequality of life in Brazil. Despite remarkable growth over the last half decade, the distribution of wealth is greatly uneven and the political sys-tem is corrupt. These problems have persisted since its days as part of the Portuguese colonial empire and the Brazilian empire. There exists a great divide between those living in high rises above the beaches of Ipanema and Copacana, and the inhabitants of the slums of zona norte.

The expansive slum regions are known as favelas. The majority of modern favelas are due to rural exo-dus in the 1970s. A large influx of the poor came to cities such as rio in search of work. However the large relative cost of living and property made housing in the city too ex-pensive and the prospect of com-muting to work impossible. Shanty towns built illegally sprang up on the mountainside. each house is built of a single layer of red brick in the shape

of a box. Without infrastructure or order house after house is built side-by-side and even stacked one atop another. favelas are famous for their connotation with crime and drugs, often controlled by armed drug gangs. As of late these areas are being pacified by the government, with images of such progress being spread across the globe. However many see little difference between life under the control of the police or of the gangs.

During time spent living in one such favela many expressed their belief that the government have no interest in improving the favela areas as they provide an easy vote to lead. The government make little effort to promote education. The aver-age number of years spent in edu-cation is less than 7. on top of this, the school day lasts from morning to midday or midday to afternoon – less than half of that in europe. entering third level education is conceived to be an ‘impossibility because of the requirement for such high marks’ and people therefore never see the benefits that education can bring to the lives they actually lead. Hour-for-hour working is still perceived, and possibly engineered, to be more use-ful than study. 5% of public expendi-

ture is stated to be on education yet in reality this is not the case.

Inhabitants of a favela near Inhau-ma in rio explained that ‘The govern-ment gives grants to the people for education, 100 or so reais a month. They give cash and never check. like saying here is some money, no give it back.’ The minimum wage is 622 reais (~340€) per month and many still fail to earn this figure. ‘The peo-ple must spend the education grants on food just to survive. And they [the government] know this’. In this way the government keep large num-bers of voters in their pockets and under their thumb, ‘all the while em-bezzling vast sums’ of money.

The last few months have been a turbulent time in Brazil and riots and protesting have reached our TV screens more than once. even on o’Connell Street there have been sympathy protests, where young Brazilians have come to express their dissatisfaction. The evidence of such civil unrest is easy to see on the streets of rio: all major commercial buildings in the Centro are boarded up with 12ft tall plywood and the glass in every ATM between largo de Marchado and gloria has been replaced in the last month. However,

this unrest arose due to an increase in bus prices. Apart from a few thou-sand loyal activists the people are content now that the price has been dropped again. With the backing of the national Station globo, which holds a monopoly on media in Brazil, the protests can be discouraged as violent outbursts for hooligans and the government applauded for their kind resolution of transport cost problems.

Time and time again the corrupt behaviour of the government has been repeated to me by Brazilian na-tionals both here in Dublin and dur-ing my stay in rio. one man from the rio’s Complexo do Alemão explained his view of the politics in Brazil; the same discontent I had heard from those in Dublin. yet he told me there was no solution coming down the tracks and no great revolution on the horizon. The reason became simple to understand at the end of the con-versation, when he asked me how easy it was to get a visa to study and work in Ireland.

By Michael o’Toole

That man from rio

› rIio de Janeiro, Brazil

13BUSIneSS THe BUll 17.09.2013

oVer THe course of 2013 competi-tion between aircraft manufactur-ers Boeing and Airbus has shown no sign of letting up, with each side seeking to gain the competitive edge over its rival.

It has been a busy summer for both Boeing and Airbus. In June, budget airliner ryanair announced that it had concluded a deal with Boeing worth $15.6 billion for the purchase of 175 new aircraft. The deal is not only Boeing’s largest ever order from a european airline but is also the largest ever industrial order in the history of the Irish State. In August, International Airlines group, the holding company of British Air-ways and Iberia Airlines, announced that it had concluded the purchase of up to 220 Airbus A320 aircraft in a deal worth $5.4 billion. To add to this, test flights for the new Airbus A350 began in June with Airbus announc-ing that it already had received over 600 orders for the new aircraft.

These developments paint a rosy picture for both Boeing and Airbus. Their major economic indicators, such as aircraft orders and revenue, would appear to be holding up in spite of the ongoing international economic slowdown; however, new challenges are emerging which could pose significant problems for Boeing and Airbus.

In recent months Boeing has had to contend with a number of safety issues. In July, london Heathrow was brought to a standstill after a fire broke out on an ethiopian Airlines

Boeing 787 Dreamliner. This fire was later traced to the emergency loca-tor Transmitter. Shortly afterwards Boeing requested that all airlines that use the Dreamliner and certain other models inspect the transmit-ter in question. This has proved to be an embarrassing debacle for Boeing and there could yet be further ques-tions raised about the airworthiness of certain Boeing aircraft.

Airbus too is facing tough chal-lenges. The development of the Air-bus A350 has proved to be a long and costly process. It is estimated that Airbus has invested €11 billion in the development of the A350. In 2006 Airbus were forced to go back to the drawing board after its initial design for the A350 was heavily criti-cised by potential customers such as the International lease finance Corporation (IlfC), the world’s larg-est aircraft leasing company. These delays meant that Airbus missed the opportunity to unveil the A350 at the prestigious Paris Air Show last June.

However, it is the emergence of new aircraft manufacturers in China and russia, as well as the growing influence of Canada’s Bombardier, which may yet pose the greatest challenge for Boeing and Airbus. Both Chinese manufacturer Comac and russian manufacturer United Aircraft Corporation are state-owned companies: it is hoped by their re-spective owners that these compa-nies will become the main suppliers of aircraft for their respective domes-tic markets. given the considerable

resources which both of these state companies dispose of, it is unlikely that the current Boeing Airbus duop-oly will be able to continue in these markets.

The Canadian manufacturer Bombardier has high hopes for its new C-Series which it hopes will be a rival to the Boeing 737 and Airbus A320. Indeed, at the time of writing, it has been reported that Air Canada is considering the purchase of up to 100 C-Series with a decision to be made before the end of 2013.

Although the emergence of new competitors for Boeing and Airbus is likely to alter the market dynam-ic, it is probable that both of these manufacturers will enjoy significant advantages over any competitors for the short to medium term future. This is largely due to the fact that both Comac and the United Aircraft Corporation have only been estab-lished in the last decade and are still in the process of developing their industrial presence. This will allow both Boeing and Airbus to further cement their places in the Chinese and russian markets. Meanwhile, with only 177 orders as of July for its C-Series, Bombardier still remains very far behind its American and eu-ropean counterparts in terms of air-craft orders.

Indeed, looking at the aircraft manufacturing sector at present, it is clear that interesting times lie ahead for all its main stakeholders.

By niall fitzgerald

Aviationindustryinsight

› The interior of a new Boeing 787 Dreamliner

ACCorDIng To a recent HSBC glob-al trade report, “China is expected to become Ireland’s fourth biggest trading partner by 2030, overtaking france, and knocking Japan out of the top five”. As emerging markets continue to develop at higher rates than the developed world, world trade patterns are reshaping. locat-ing the markets that will result in the most opportunity and capitalizing on these developments at an early stage will give Ireland an advantage heading into the future.

However, for developed nations, a trading relationship with China has not always been as beneficial as poli-ticians have touted. A prime exam-ple of this fact can be found within China’s biggest trading partner: The United States. With a trade deficit of $178 billion so far this year and un-employment rates above the natural rate of 5% for over 6 years now, trade relations between the US and China have increasingly come under public scrutiny.

Part of the problem that results from engaging in a trading rela-tionship with China can be pinned on the lack of copyright laws in the Asian nation. When American com-panies come to China with goods that the Chinese demand, the sale of which would narrow the US’s trade

deficit, Chinese companies quickly replicate these goods and sell them in China’s “fake markets” for a frac-tion of the price. This results in less market penetration and profitability for American companies and creates a trade relationship where mutual fairness is questionable at least and unfair at most. The US also invests a large amount into r&D, developing products that derive global demand. not only is China taking demand for US goods away from the Chinese and American markets, they are also in-creasing competition for US exports internationally, replicating US goods and utilizing their low cost advan-tage across the world.

Trade between Ireland and China is currently worth over €8 billion a year, with a trade surplus in Ireland’s favour. In 2013 €35million worth of contracts were signed as a result of enterprise Ireland’s trade mission. HSBC predicts that “exports to China will grow by 11% a year during 2016 to 2030”. However, these predictions may not have factored in China’s notorious reputation for replicating goods. As trade increases and Irish goods become more popular, what’s to stop Chinese companies from duplicating our goods in their “fake markets”? In order to establish stable relations we must initiate trade con-tracts with strict consequences for

counterfeit products.

The issue of copyright law is not the only thing threatening Irish goods. In 2014 the €1.4 billion ‘eu-rope China Trading Hub’, China’s ini-tial starting point for expansion into the eU, is set to open in County West-meath. A variety of goods will be traded such as electric cars, fabrics and machinery. With the potential creation of 9,000 jobs, the develop-ment was welcomed with open arms. However, allowing China to trade wdirectly on our doorstep will lead to a rapid decline in our current trade surplus. not only will these Chinese goods increase competition for our Irish domestic goods, they will also threaten our traditional exports that make up a large proportion of gDP. employment may increase in the service industry in Westmeath but this will be at the cost of increased unemployment in the higher return sectors across the Country.

Does Ireland have the intelligence to advance into the Chinese markets appropriately, or will the Irish be taken advantage of like our counter-parts in the United States?

Chinese Trade: To fear or to embraceMegAn PAyBoDy DISCUSSeS THe PAST, PreSenT AnD fUTUre of SIno-IrISH TrADe.

The same way the web changed publishing and facebook changed the way we contact people, Bitcoin may change the way we make mon-etary transactions. Many tech-savvy investors globally are increasingly interested in the growth of Bitcoin; is it the next inevitable step towards the technological improvememt of our lives?

Bitcoin is entirely decentralized, not controlled by any one organi-zation or government and has no country of origin. Therefore, no central authority that issues Bitcoin can manipulate its supply for any al-leged reason in the way the federal reserve or the Bank of england can issue dollars or pounds to alter in-terest rates. It is the most pure form of free trade. Since it can be used to trade anywhere in the world bypass-ing banking systems and exchange rates, the transaction costs are near non-existent. If Bitcoin does even-tually become widely accepted it would be the ideal platform for parties to carry out direct financial transactions. All that is needed to make an exchange is the Internet or a smartphone both of which are in-dispensible for daily use.

Up until 1971 all global curren-cies were set against the value of gold. This meant that all economies interacted on a level playing field and there was a limit to how much currency could be printed by cen-tral banks. In 1971, President nixon brought an end to the gold standard to enable America to fund its huge

expenses on things such as war and space travel; something which lead to the ongoing ‘paper money crisis’. This meant that the currencies of the world were no longer backed by anything other than themselves and adjusted their value according to rival currencies. As Bitcoin con-tinues to prove itself as a ‘common’ medium of exchange, it could be the 21st century’s answer to gold and finally re-establish necessary greater global economic stability.

Will Bitcoin ever become widely accepted? The general consensus is that it will have a binary outcome. either it will grow to reach unprec-edented heights or it will be worth nothing. However, the current at-tention it is receiving from the tech community and investors make the former outcome the most likely. The main risk Bitcoin faces is governmen-tal regulation. As it can essentially replace the many uses of banks as it grows it will undoubtedly receive increasing opposition from finan-cial institutions. on the other hand, many investors agree that regula-tion could be beneficial as long as it is fair and give Bitcoin the legitimacy it needs to expand. The future value of Bitcoin will hinge on its ability to become increasingly functional in a number of different ways that will be useful to society.

By Timmy Munier

BitcoinlITTle IS still known of the crypto-currency Bitcoin but it could po-tentially be a revolutionary event for global economies. economists, bankers and consumers alike are still apprehensive about a digital cur-rency potentially replacing paper currency..

legAl InSIgHTTHe BUll 17.09.201314

In JUly 2013, the government an-nounced the names of the two new judges who were to be appointed to the Supreme Court. Those of us who weren’t keen on the gender inequal-ity evident in Ireland’s highest court were pleased. Ms Justice Mary laffoy and Ms Justice elizabeth Dunne were the deserved appointees, bring-ing the number of female Supreme Court judges to three out of eleven; Marvellous.

However, the positive press surrounding the announcement masked a more worrying story: that of the outrageous waiting times for the only avenue of appeal open to those involved in civil litigation in Ireland.

When Alan Shatter proposed ap-pointing these additional judges it was with the intention of ameliorat-ing a bloated and backlogged jus-tice system. At present, the waiting time for a case to appear before the Supreme Court is around four and a half years. This waiting time is just as absurd as it seems. So absurd in fact, that Ireland got a rap on the knuck-les by the european Court of Human rights in 2011

This absurdity stems from the fact that, excluding the Court of Crimi-nal Appeal, the Supreme Court is the only higher appellate court in the country. This means that every civil case appealed from the High Court has to eventually end up be-fore it. Setting aside the logistical

nightmare inherent in this concept, a more fundamental issue arises: the Supreme Court is supposed to deal with issues of great public interest or important questions of law. It is not designed to cope with the pressures currently being exerted upon it and it is understandably coping quite poorly.

In March of this year Chief Justice Susan Denham delivered a speech to the law Society. It was aptly en-titled “Unsustainable” and outlined the myriad reasons for establishing a Court of Appeal. In this speech, the transcript of which is available to download from the courts.ie web-site, Ms Justice Denham notes that in the past few decades the High Court has expanded significantly in order to deal with an increase in both litigation and in that litigation’s complexity.

A separate commercial list has been established, dealing with ma-jor commercial disputes. yet the Supreme Court has seen no such improvement and the commercial cases which all but sail through the High Court reach an impasse on ap-peal. If Ireland wants to continue to attract large multinational corpora-tions they need to know that their time and money will not be wasted waiting for an appeal date four years in the future.

The Court of Criminal Appeal is a limited example of the importance of an intermediate court of appeal.

Appeals related to convictions and sentencing are dealt with here with only those concerning exceptional questions of public import making it on to the hallowed ground of the Supreme Court.

The Court of Criminal Appeal has over one hundred appeals and ap-plications currently waiting to be heard, which proves just how neces-sary it is in keeping the path to the highest court that little bit clearer. Unfortunately, this court remains but a part time solution, with no judges

sitting solely on this list. The working group on the Court of Appeal recom-mended that it be amalgamated into a new Court of Appeal, thus ensuring permanent judges, but it remains to be seen whether the government will heed their advice.

on october 4th, Ireland’s voting population will make the trip to their local primary schools, eyes bright/bleary with the spark of democracy. There they will be faced with two important questions: both concern-ing constitutional institutions. They

will undoubtedly have heard at least something about one of these is-sues. The one with all party support, however, may never make it on to their radar. While the abolition of the Seanad is a significant issue, the es-tablishment of a Court of Appeal is crucial to the smooth running of our justice system. We, as citizens, have a right to access the courts. This prob-ably should not come with a four year long wait as a caveat.

on that other referendumWith the abolition of the Seanad being a bone of contention, Alison Connolly discusses the one constitutional issue all parties agree on.

THe CoMPAnIeS Bill 2012 follows over a decade of research and 14 re-ports by the Company law review group. It is the single biggest legis-lative initiative ever undertaken by the State. running to 1,429 clauses and over 1,000 pages, it is truly mam-moth piece of legislation and will consolidate, reform and simplify the 15 previous Companies Acts. The Bill is expected to be enacted early next year.

The purpose of the Bill is to sim-plify company legislation and reduce costs, particularly for the SMe sector. It is estimated that start-ups will save €1,200 in professional fees when es-tablishing companies. By refocusing the law on the private limited com-pany, or company limited by shares (ClS) in the Bill’s parlance, it will re-move an anomaly in the law where-by the bulk of company legislation considered public limited compa-nies at its heart while in reality pri-vate limited companies account for over 90% of incorporations in the state. This refocusing of the law will remove many restrictions which are only necessary for larger companies.

The aim of the Bill is to equip Ire-

land with a first-class company law infrastructure and thereby increase enterprise. Ireland is currently the 15th easiest country to do business in amongst the oeCD countries; the hope is that this bill will improve our competitive position, thereby at-tracting investment as well as spur-ring local enterprise.

While it is outside the scope of this article to consider the Bill in its totality, there are several advance-ments which will be of particular interest to the majority of business owners which we will now turn to. The primary corporate vehicle which is the company limited by shares or the new lTD company is of most in-terest in this regard.

The business community will be particularly pleased to note that the doctrine of ultra vires, which limited a company’s capacity to enter con-tracts, is to be abolished by establish-ing a single constitution as opposed to the articles and memorandum of association. Companies will now have the same contractual capac-ity as natural persons. The doctrine was seen to operate harshly against unsuspecting outsiders in the case

of disputes, who could find their contracts unenforceable against a company who didn’t have capacity to enter the contract. further to this, they were fixed with constructive no-

tice of a company’s memorandum of association and objects clause. Thus, its abolishment will improve the ease of corporate trading. The ultra vires rule initially emerged as a corollary of limited liability as it was deemed necessary to restrict the field of ac-tivity any company could engage in in order to protect shareholders and creditors. for the most part, the rule was circumvented by clever drafts-manship and statutory intervention, and ultimately has been dying a slow death for the last 20 years or so. The rule was also undercut by the fact that a company could change its ob-jects clause with ease subsequent to the 1963 Act, which is currently the major repository of company law. freeing up companies to do business as they think expedient will allow for increased innovation.

The Bill will also allow for Single Member Companies outright. While they were available before due to the european directive on the issue, there was still a requirement that there would be two directors due to the 1963 Act. even where a person wanted to avail of the privilege of incorporation, they needed to find a second person to act as director

which could prove difficult as oth-ers would be unwilling to take on a perceived risk. By eliminating this re-quirement we can expect to see an upshot in the number of small com-panies incorporated in 2014.

The Bill is the emanation of re-search which looked at company law legislation on a practical level and thus identified that the requirement of a formal AgM, which can impose huge cost on a company, should be dispensed with. By allowing for writ-ten AgMs where all business can be ratified without meeting in person, the costs associated with a tradition-al AgM can be done away with.

on the whole the new Bill will be warmly welcomed by business. The major benefits of this semi-codifica-tion will be the increased visibility of the law; it will be much easier to navigate, as well as a reduction in un-necessary paperwork. Commercial law at its best involves the balancing and allocation of risk in order to pro-vide certainty in business and this Bill, currently at committee stage, achieves those goals insofar as can be expected.

By Peter Martin

new bill to simplify business in Ireland“AgMS

WHere All BUSIneSS CAn

Be rATIfIeD WITHoUT MeeTIng

In PerSon, THe CoSTS

ASSoCIATeD WITH A

TrADITIonAl AgM CAn Be Done AWAy

WITH”

15eConoMyTHe BUll 17.09.2013

MArk CArney, the first foreign head of the Bank of england, is a man on a mission. He came to the post with a radical agenda. He talks of stimulat-ing a sluggish British economy until it reaches an “escape velocity” of self-sustaining growth, easier said than done.

Carney was appointed governor of the Bank of Canada in early 2008, just as the international economy began to unravel. Carney earned international plaudits for his deci-sive response. He set about lower-ing interest rates to spur lending and worked with international cen-tral banks to coordinate a response to contain contagion risks. Canada emerged from the downturn in the best position of any developed economy and its earned reputation as a safe port in the storm helped at-tract billions of dollars in investment.

The Boe has injected vast amounts of credit into the economy through excessive quantitative eas-ing in an attempt to stoke activity. yet very little of this expansion is seeping into the investment market. SMe lending remains at record lows, with banks preferring to expand reserves rather than offer credit. Businesses complain of exception-ally risk adverse banks that refuse to offer loans to the dynamic start up market.

Carney has sought to ease con-cerns by issuing forward guidance that the Bank will not raise interest rates until unemployment falls to 7% from the current 7.7%. Since the Bank’s own forecasts do not project this to happen until at least 2016, Carney is essentially promising to keep rates at record lows for the foreseeable future.

This commitment may not be as ironclad as it appears however; Carney and the monetary policy committee give themselves get out

clauses. Should inflation spike or if the financial stability of British banks is questioned, then forward guid-ance would no longer be applied. When attempted in Canada, the policy had such simulative effect as to eventually force a rate rise.

Many claim that the bank’s tar-gets remain too narrow. Unemploy-ment targeting, like inflation targets, focuses only a small section of the economic picture. employment figures can be manipulated by an increase in part-time or zero hours contracts artificially improving the employment picture. nominal gDP targeting would be a more holistic approach, allowing inflation and output growth to be targeted at the same time. ngDP targeting would have the advantage of stabilizing output growth without endangering long run price stability.

Increasingly it seems that the Uk economy is strengthening. Buoyed by recoveries in manufacturing and construction, the Uk economy appears to be on an upswing. The oeCD is now projecting fourth quar-ter, annualised gDP growth of 3.2%, the fastest of the g7 industrialised nations. That ostensive recovery creates a new set of challenges. A further rise in inflation, already run-ning above target, would endanger financial stability and force a policy change.

It’s impossible to forecast what challenges awaits the British econ-omy in the coming years. Contin-ued eurozone instability or an Asian slowdown could throw the nascent recovery off course. The Boe are clear that they have an array of yet unused “macroprudential” options available to maintain financial stabil-ity come what may. The challenge for Carney is to convince a sceptical market.

By niall Casey

› A gold vault inside Bank of england

A rocky start for the governor of the Bank of england

france’s economy has been hit drastically this year; scandals such as tax-evasion (l’affaire Cahuzac with his secret Swiss Bank account), record levels of unemployment, the failed imposition of the 75% margin-al income tax rate and the abysmal relationship between Hollande and Merkel have all hindered the growth of this once dominant european nation. Pierre Moscovici, economy minister, accepted that within a dec-ade france would be overtaken in economic size by emerging markets such as India. That would see eu-rope’s second-largest economy fall-ing to eighth or ninth in the world rankings, from fifth today. President Hollande seems content to allow Angela Merkel direct him on how he should control the economy. Is it any wonder then that the french like to coin this relationship “merde”. Mr Hollande recently told voters to judge him and his fellow ministers on their ability to lower unemploy-ment. With that figure now at a re-cord 3.3m, most observers would agree that the government faces an uphill task. .

france in its current state is a far cry from the Utopian image painted of the country in 10 years by Presi-dent Hollande at a recent seminar at the presidential palace to mark an end to the summer holidays. Accord-ing to Mr. Hollande the france of the future “would be a safer place where justice was quicker and cheaper,” and where today’s stressful experience of finding affordable housing would be transformed into “a pleasant mo-ment in one’s life,” cabinet ministers

said on Monday. He may be taking courage in the inspiring words of obama’s “yes we can” motto by stat-ing “unemployment does not take a holiday” but it remains obvious to all that there have been no precise measures implemented to date. less than 1 in 4 people believe Mr Hol-lande has the ability to reverse the unemployment trend.

In 2012 the seemingly bullet-proof economy was dealt a massive blow. Standard and Poors decided to downgrade the rating of french banks to AA, losing the famed AAA status. This may seem a minor blow, but worse was to follow. reports emerged of the extravagant lifestyle enjoyed by former President nicolas Sarkozy. President Hollande - a So-cialist, was seen by many to be a new beacon of hope in a never-ending list of disappointing politicians. This reputation was, however, soon to crumble. Happiness with the poli-tician has reached an all-time low, with some french papers touting Sarkozy as a potential replacement. l’affaire Cahuzac severely damaged the reputation of Hollande. A former finance Minister – Jerome Cahuzac, lied to President Hollande, failing to disclose details of his accounts held abroad. further details emerged that this sum of money (€600,000) was partly used to finance President Hol-lande’s presidential campaign.

Perhaps it may be the french themselves that are the reason for this huge lack of competitiveness. The french are productive, but not enough are working. only 40 per

cent of the population is employed, compared to almost 60 per cent in Switzerland. france has high social expenditure for a developed coun-try, and relatively high taxes on those in work.

The average french employee labours for just 1,580 hours a year, compared to more than 1,900 in the US, and the french do have a love of industrial action. Between 2008 and 2010, france lost an average of 27 working days a year for every 1,000 people, compared to just 3.4 days in germany.

According to the 2012 World Competitiveness yearbook, france came last among 59 countries in its attitude towards globalisation. Its goal, it seems, is to preserve france’s way of life rather than to be globally competitive and generate wealth. This insular attitude must change if the country is to return to a posi-tion of strength. With the current government the future looks bleak. Christine lagarde, current head of the IMf summed up the difficulties recently: “even with the best of ef-forts, the dam might leak.” There may be measures implemented in this month’s budget which will aid the country; we can only hope.

frenchfinances

Paul Curran reviews the French economy and discusses its knock on effects on President Hollande’s popularity.

eConoMyTHe BUll 17.09.201316

When Benjamin frank-lin proclaimed, “In this world nothing can be said to be certain except death

and taxes” in 1789, one may not have questioned the validity of his state-ment; but in today’s world where retrospective legislation is no alien concept to fiscal jurisprudence, one would know that even tax liability is uncertain. It is the corporate impe-ria’s hullabaloo in the Vodafone taxa-tion case in India that has afforded this issue the limelight in recent times.

Pursuant to the 2007 transaction wherein Hutchison Telecom sold its 67% interest in the Indian mo-bile phone network Hutch essar to Vodafone for US $13. 1 billion, the Income-Tax Department of India is-sued a notice to Vodafone imposing a $2.5 billion withholding tax liabil-ity. While Vodafone argued that India doesn’t have jurisdiction to tax the Hutchison deal since it was struc-tured as a transaction between two overseas entities, the Indian taxing authorities opined that because the transfer of stock involved an indirect interest in the Indian company, India had jurisdiction to tax the gain from the transaction.

Passing the judgment in favour of Vodafone, the Supreme Court of In-dia held that the Income Tax Depart-

ment had “no jurisdiction” to levy tax on overseas transactions between companies incorporated outside of India, while highlighting that the deal was not a plot to deprive the Indian tax authority of revenue but a bona fide transaction. Discording with the verdict, the government of India amended its Income Tax laws; the finance Act 2012 amended Sec-tion 9 of the Income Tax Act, 1961 which makes income deemed to be accruing or arising to non-residents directly or indirectly through the transfer of a capital asset situated in India taxable retrospectively post 1962.

While the Supreme Court of India provided some assurance of security for non-Indian investors who avoid-ed the Indian market in fear of being taxed retrospectively, the country’s legislature has reaffirmed the Indian taxing authority’s propensity to im-pose tax even when its authority is questionable to say the least, and consequently, has affronted inves-tors worldwide.

In his letter to the Prime Minister of India last year the Ceo of Voda-fone, Vittorio Colao, had ascertained that ‘arbitrary and punitive retro-spective treatment’ of Uk-based tel-ecom major Vodafone will tarnish India’s image as an investment des-tination. The sizable devaluation of the Indian rupee this year, too, has a

lot to reflect on India’s fiscal policies of late.

In recent times many countries, including Ireland and the Uk, have been criticized for being too lax or “bowing down” to large corporations who have developed complex and comprehensive corporate structures to avoid tax. As witnessed in the re-cent past, corporate giants such as Starbucks, google, Apple and Ama-

zon have been guilty of using tax avoidance schemes to their benefit. In this light, it is refreshing to see In-dia take a proactive step to tax large corporations who have been availing and vigorously defending tax avoid-ance schemes.

The Indian legislature’s stance mirrors lord Viscount Simonds thought that “neither comity no rule of international law can be invoked

to prevent a sovereign state from taking steps to protect its own reve-nue laws from gross abuse or save its own citizens from unjust discrimina-tion in favour of foreigners.” As such, retrospective legislation is within the vires of Indian Constitutional law, and the deployment of the same may be thoroughly beneficial and advisable to prevent financial crisis.

By Aishwarya Jha

› Vodafone facing 2.5bn tax liability over Hutchinson deal › The Ceo of Vodafone is concerned about the damage retrospective taxation may cause to India’s investment attraction

retrospective taxation in the Indian Context

As I sit here writing this, the Indian rupee is cur-rently trading at 63.31 rupees to the dollar. Two weeks ago, on Wednes-

day the 28th of August, the rupee almost hit the dreaded 70 rupees to the dollar, slipping to its lowest rate since 1995. Since that Wednesday, the currency has gradually appreci-ated, thanks to the rBI (reserve Bank of India) pledging to sell dollars to the public sector oil companies, and the simmering down of the Syria cri-sis. The India Crisis, however, is now in full swing.

These recent events sparked global coverage about India’s posi-tion as one of the emerging econo-mies, and the potential economic crisis it was entering into. The recent emergence of the story led to some to refer to it as the combustion of India’s “debt bubble”, posing sug-gestions that it was both unforeseen and sudden. However, this could not be any further from the truth. The steep devaluation observed two weeks ago was merely a slight exag-geration of a steady trend that has seen the currency drop 16% of its comparative value against the USD

in the past year. furthermore, the surfacing of concerns recently relat-ing to restrictive regulations, corrup-tion and general uncertainty within the markets have acted as deterrents to foreign investors, sparking fears of an impending exodus of India’s fDI market.

Devaluation of currencies should spark an increase in exports from the

country as their relative global value decreases, making their prices more competitive. This can be observed in India to a small extent; over the past year India has seen an increase in ex-ports of over 10% to correlate with the depreciation of the currency. The various industries have howev-er, expressed their concerns, stating that other issues have negated the potential of any profit. Issues such as increased costs of importation; poor supporting infrastructure, and infea-sible regulatory requirements are some of the key issues that appear to be hampering the potential for an export-led recovery.

The question now remains; how does India recover? India’s Prime Minister, Manmohan Singh, released a very optimistic statement about the future of the Indian economy, looking to the current instability as a tool for strengthening India. Singh has also attempted to further shift responsibility from his administra-tion onto external global factors, most prominently the U.S. federal reserve and in particular Ben Ber-nanke, who recently announced that they would be reducing their quanti-tative easing policies that were used

to help boost the economy after the financial crisis. These measures had the effect of flooding the mar-kets with cash that found its way to the emerging markets such as India through fDI’s. finally, the Prime Minister stated that he envisioned “substantial growth” in the second half of the year, owing to the major reforms in fuel subsidy and foreign direct investment (yet to be fully im-plemented and realized).

Unfortunately, during a time when certain austerity measures seem appropriate to ensure contain

the fiscal deficit, the recent expan-sion of the inefficient food program from $16 to $20 billion seems puz-zling. The explanation appears to be purely populist-driven, as the current administration attempted to recover some support during the impending elections. finance Minis-ter P. Chidambaram recently stated that the government would contain the fiscal deficit to 4.8% of gDP. The question beckons; during a time when the expected growth is at its slowest rate in over a decade, where is the State going to source the addi-tional revenue? Many fear that cuts in fuel subsidies and capital expendi-tures are inevitable. Thus the unfor-tunate reality is that whilst measures such as this may appease the public in the short-term, it will cost India in the long run.

There remains a glimmer of hope, as raghuram rajan was unveiled at the helm of the rBI last week. The former chief economist of the IMf has promised an overhaul of the system with “considerable change”. He has yet to make any substantial statements as to his monetary poli-cies, and thus only time will tell.

Devaluation of the rupeeraaj Zutshi analyses the effect which the recent devaluation of the rupee has had on the Indian economy, and comments on the future stability of the economy

“fInAnCe MInISTer P.

CHIDAMBArAM reCenTly

STATeD THAT THe

goVernMenT WoUlD

ConTAIn THe fISCAl DefICIT

To 4.8% of gDP” “THe PrIMe MInISTer

STATeD THAT He enVISIoneD “SUBSTAnTIAl

groWTH” In THe SeConD HAlf of THe yeAr”

17eConoMyTHe BUll 17.09.2013

financial trading is no longer what it used to be. The tradi-tional open outcry method of hectic shouting, erratic hand signals and flying pa-

per orders is almost extinct, with london’s Metal exchange standing as europe’s only remaining “pit”.

The open outcry system has been replaced by electronic trading which is quicker, less expensive and more efficient than its predecessor. now traders at investment banks sit at desks with multiple monitors and a dealer board, placing orders either over the phone or via messages on Bloomberg Terminal. It’s a whole new ball game.

Staring at spreadsheets all day certainly isn’t as sociable as interact-ing with people on the trading floor, but what are the real effects of this

electronic shift? one obvious disadvantage is that

traders no longer make physical con-tact with competitors and so lose the ability to speculate on buyers’ and sellers’ non-verbal giveaways.

A more prominent consequence of electronic trading is that traders now have constant access to (al-most) complete, real-time informa-tion, both in terms of their risk posi-tion and in terms of profit and loss. High-frequency trading is an imme-diate corollary of this abundance of information.

over the past few decades, a new breed of “high-frequency traders” have been utilizing state-of-the-art supercomputers along with algo-rithm trading programs to recognize market trends and pull in massive profits for investors. These comput-

ers are located close to or inside stock exchanges to give their owners millisecond advantages over com-petitors, something which is every-thing in this mercurial world!

As exciting and efficient as it sounds, high frequency trading has the potential to be extremely disruptive. one cunning activity is to send out thousands of orders in mil-liseconds and instantly retract them, all with the intention to dive into the middle of other institutional orders and scalp their profits. It seems that high-speed trading facilitates the fear and greed that are synonymous with investing.

Defenders of high-frequen-cy trading say they add liquidity to markets, yet the opposite is often true. In times of distress, computer-driven algorithm programs flood the market with (unrealistic) sell orders, which fuels investor fear and causes everyone to over-react. The end result is too often an unnecessary collapse, the “flash crash” of May 6th 2010 being a daunting example.

High-frequency trading is be-

lieved to account for some seventy per cent of the volume of shares traded on US exchanges daily, and so must be properly managed. With many uncertainties, like the fed’s inevitable cutting back on quantita-tive easing over the coming months, the last thing markets need is an-other high-frequency trader driven flash crash.

Another development worth mentioning in the world of trading is the introduction of taxes on financial transactions. In an attempt to reduce its budget deficit and ease stock market volatility, the Italian govern-ment last week introduced a tax on financial transactions, and thus on high-frequency share trading. This will distort markets, effecting vola-tility, liquidity and ultimately caus-ing analysts to change their views and possibly even make losses. It may, however, incentivize investors to focus on the fundamentals of an investment rather than using only computer programs and algorithms.

The story goes beyond Italy

alone, with a proposed, more dan-gerous, eU tax on every stage of a fi-nancial transaction being pushed as a means of earning income while at the same time limiting the amount of risk financial intermediaries take.

Such over-regulation of financial markets may have cata-strophic results. Because overall rates created by global quantitative easing are already at rock bottom, this tax could prove very damaging to fixed income instrument yields and thus reduce liquidity in corpo-rate and sovereign bond markets.

The growing complexity of finan-cial markets is making it increasingly difficult for traders and investors to see the bigger picture and fully un-derstand the repercussions of their actions. The last thing the world of high-frequency trading needs is a heavy tax burden. Traders can be sure of one thing; long gone are the simpler days of placing an order by shouting in the pit of the new york Stock exchange.

By Patrick Vaughan

There are good reasons why central bankers are notori-ously careful about what they say. Central banks can control short term interest

rates and thus influence long-term rates, which means that financial analysts spend vast amounts of time dissecting central bank statements. Any false hints or misspoken words can send interest rates in the wrong direction. Analysts pay close atten-tion for hints regarding expected short term rates, trying to mitigate rate changes and even profit from them. Credible central banks steer such expectations by what they say (or don’t say). The slightest slip can pre-emptively move interest rates which may result in undesirable con-sequences.

There is of course a negative side to silence. The very rumours and ex-

aggerations caused by too little talk can be solved easily by becoming more transparent. Central banks are trying to be clearer and more trans-parent with what they say. A key ele-ment of this increased transparency has been more extensive efforts by central banks to communicate their views about the economy. We are not at a point of maximum transpar-ency but we are far closer to it than we were 30 years ago when central bankers still cultivated a ‘monetary mystique’.

Transparency can enhance the effectiveness of policy by fostering behaviour in wages, prices and finan-cial markets that help central banks achieve their objectives. If busi-nesses, employees and individuals know exactly what the central bank is doing, and why it is doing it, they can plan for the future better. Maxi-

mum transparency with full commu-nication between central banks and the public can prepare the markets for increases or decreases for short term rates. reinforcing the view that a rates move is not temporary is of major importance for central banks. A tweak in the federal funds rate counts for little by itself. It is only if the markets expect a succession of rate changes that mortgage rates, bond yields and equity prices will move in symphony. This is why the feD has said that it will hold the fed-eral funds rate at its current level un-til at least 2015.

With all the benefits of central bank ‘talk’ why then do several mem-bers of the eCB’s board feel that cen-tral bankers ‘talk’ too much? They feel that if something goes without saying, there should be no reason to

say it. Too much ‘talk’ may complicate the message that a central bank is trying to get across.

Analysts sometimes hold the opinions of central banker’s too highly. This results in them not be-ing rigorous enough with their own analysis about economic funda-mentals. They follow what central bankers say, rarely questioning it as they assume that the central bank has more information and expertise. obviously this is dangerous and can lead to central banks over-steering the economy. errors, which creep into even the best central-bank anal-ysis, are thus amplified, because they are not gainsaid. And if the analysis is not the best, it can steer expecta-tions about the economy widely off the mark.

The fear is that markets will be-

come lazy and take central banks pronouncements as gospel, with less transparency analysts must formu-late their own opinions and assess central banks actions with more rig-our. This should lead to a better ag-gregation of market opinions and a better functioning market.

obviously, there are disadvan-tages to having too much talk, be it analysts becoming lazy or central banks over-steering the economy. However, these must not cloud the fact that central bank transparency is extremely important. Transparency is needed to protect central banks from political meddling. To this end, central bankers need to become more open to explain the logic be-hind their actions and the trade-offs between their goals, while not over steering expectations.

To TAlk or noT To TAlk? › With the world’s economies at stake, central bankers must carefully weigh every word › Colm Manning explains just how words, or lack thereof can appear to the world’s financial markets

Trading - It’s not what it used to be

STUDenT MAnAgeD fUnDTHe BUll 17.09.201318

WorlD fInAnCIAl markets have been in panic mode ever since I took over as CIo of the fund last May. Speculation that the fed will begin to pull back the reins on their $85bn a month easing program has sent everyone rushing for the exits. fixed Income markets have sold off dra-matically, with the 10y US yield ris-ing from 160bps to 300bps over the course of the summer, an unprece-dented move. All eyes will be on the Sept 18th foMC meeting of fed offi-cials. The market expects a $10-15bn taper despite an appalling payroll last fri. The fed as made it clear that tapering isn’t tightening, and that ZIrP will remain in place for years to come. I personally will be focusing on the median expectation of foMC members timing of a first rate hike as an indicator for how long we can expect accommodative policy. Judg-ing by price action in recent weeks, it seems the fed can only surprise to the upside (by not tapering). In my opinion it is unlikely the fed will lay out a clear timeline for tapering and will reinforce it’s “data depend-ent” stance. As such I would expect the majority of moves to come from their forecasts and Ben’s rhetoric on tightening expectations.

The big question is what this all means for equities and the SMf. eq-uity price action has been very pe-culiar over the summer. While the rest of the markets have been in a taper on/taper off frame of mind after big data releases, correlation between fixed income and equities has been all over the place. equities are caught in a dilemma in their re-lationship with central banks. Is less easy money bad for companies or does it mean the economy is improv-ing? only time will tell. History tells us that equity markets have tended

to perform very well as the fed im-plements hawkish monetary policy, I sincerely hope this is the case. I look forward to sitting down with all sec-tor managers when term resumes to discuss how this inflection point in policy will affect our holdings and in how we evaluate future acquisitions.

on a micro level, the biggest news in our holdings of late is Vodafone. The fund has owned Vodafone since nov 2011 and was delighted to hear of it’s decision to sell it’s 45% stake in Verizon for $130bn. As a result of the deal, the share price has risen to over £2.10, a 10 year high! overall the fund has performed extremely well relative to our benchmark, the MSCI World Index, beating the index by 280bps on an annualized basis since last May.

The only other news to report is that upon taking over from last years team, the new investment commit-tee decided to invest the majority of our excess cash into sector specific eTfs. This has allowed us to balance our portfolio and better compare ourselves to our benchmark.

I look forward to what promises to be an exciting year ahead and encourage all interested to apply to become part of europe’s premier student managed fund. The fund has prospered in both size and quality year after year, I hope with the help and dedication of this year’s team that we can continue this trend.

More reD fACeS, less red numbers: It’s been a while since both Ireland and the stock market enjoyed a relatively hot summer. The question whether this favourable economic climate will continue to persist with-in the markets is still very open and leaves investors in an interesting po-sition for the 4th quarter of 2013.

The current 3rd quarter has brought some happy smiles to the faces of disap-pointed investors. In developed coun-tries, economic growth has picked up, pushing troubled economies one step closer to exiting technical recession. Spain, for example, saw its services sec-tor grow for the first time since June 2011 with a PMI of 50.4. Together with its thriv-ing manufacturing sector, Spanish eco-nomic growth should bring sighs of relief to eCB representatives.

The US is also one of the main benefi-ciaries from the recent summer. With the markets up by almost 70% within 2 years, US economic expansion is already 4 years old. further, growth in the US manufac-turing sector reached its fastest pace over the past 2 years this August. Subse-quently, this economic growth triggered the interest rate on 10-year Treasuries to double since July 2012 lows.

nonetheless, downside risks to global

growth prospects are still strong in force. The summer saw new risks emerge, such as a possible long-term growth slow-down in the developing world. In fact, the iShares MSCI emerging Markets eTf, which tracks emerging market mid and large-cap corporations, was down 20% this summer. The slowing credit, declin-ing domestic demand and lower poten-tial growth in the emerging markets com-bined with rising interest rates and asset price volatility in advanced economies has proved detrimental to the developing world, leading to capital outflows, depre-ciation, rising sovereign yields and declin-ing equity prices. This caused the Inter-national Monetary fund to revise their economic outlook for each of the BrIC countries downward by .25% to .75%.

further, after significant declines in commodity prices, many commodity ex-porters are facing a darker outlook. on top of this, political problems in the Mid-dle east and north Africa are having ad-verse effects on global growth.

In summary, the IMf projects global growth to increase to 3.75% in 2014 from an estimated 3% in 2013.

In terms of individual sector perfor-mance, technologies outpaced share price growth of any other sector, having expanded by 22% on a 3-month basis. This sector appears to be in a solid con-

dition, characterized by strong cash bal-ances and low debt. This low level of gear-ing could lead to more M&A action this year; a recent example being Microsoft‘s $7.2bn acquisition of nokia, as economic activity picks up. other outperformers in-cluded the healthcare (+2.9%) and com-munication services (+3.5%) sectors.

given the current state of the econo-my, the industrials sector also seems like a good bet, after the national ISM Manufac-turing Index showed a strong reading this July. It must be noted that global fiscal austerity measures could have a damp-ening effect on industrials, however, given the eCBs increased aggressiveness and Japan‘s improving state, along with the aforementioned situation in the US, the investment picture is continuing to brighten for industrial corporations.

All in all, this fall will see a divergence in investment philosophies. Some may try and grab equities with emerging market exposure, as they are arguably trading at a discount. others will aim for cash-loaded firms, given the combina-tion of a higher interest rate environment and M&A opportunities that could reduce competition and lead to price mark-ups. This year, the SMf macroeconomic team will follow the economic trends analyzed in this article in order to help develop and contribute to our long-term value invest-

MACRO REPORTHead of Macro research Jasper Plan gives his outlook for Q4 2013

Fund Performance

Adam Power outlines the core interests the fund will focus on in 2013

19oPInIonTHe BUll 17.09.2013

By edward Teggineditor

With Argentina gearing up for mid-term elec-tions in october, President Cris-tina kirchner-

fernandez faces not only a potential grilling at the poles for her fPV party, but also a clear indication from the Argentine public about her political future beyond 2015.

The Argentine President has hint-ed strongly that she wishes to remain in power for as long as is legally pos-sible; to follow this train of thought at the moment would mean that she would stand down at the end of her second term as President in 2015, as an individual may not serve more than two terms consecutively under Argentine law. Such an impasse has not served to dull President fernan-dez’s political aspirations however, and her supporters have made it very clear that they wish to change the Argentine constitution to allow for an historic third term. Although such a move could be seen as evi-dence of Peronist ideology filtering through to Ms fernandez and the fPV from its’ Justicialist Party origins, it would after all be well within Presi-dent fernandez’s rights under the constitution. The only immediate stumbling block for Ms fernandez and the fPV in this venture it seems is the constitution itself.

for such an amendment to take place President fernandez and her fPV party will need to win two-thirds majorities in both the Senate and in Congress, something which given the results of the recent primary elections in mid-August, she is un-likely to do. Since Ms fernandez was re-elected in the 2011 Presidential election with 54% of the poll, the

fPV has enjoyed a majority in both the upper and lower houses, mean-ing that she and her fPV party have held great power in terms of deci-sion making and policy. 2011 how-ever would seem to be a long time ago for many Argentine voters, and the successes of the mid-noughties which her late husband presided over further still. The recent primary elections have shaken the confi-dence of the fPV and its leadership, even though they came out on top with 26% of votes cast.

If one merely glances at this result one might conclude that it wasn’t too bad for a party whose popularity is on the decline and who has a leader plotting to be Argen-tina’s longest serving ruler, bar the odd dictator. Under the surface of this result however, the facts are less pleasing for the fPV. The fPV may have won the most votes overall, but it was also the only party to field can-didates throughout Argentina and subsequently suffered some embar-rassing reverses, the most notable casualty being Martin Insaurralde in Buenos Aires. The political landscape of Argentina is dotted with count-less political parties which seem to emerge and recede in unison with the various political fallings-out that occur amongst Argentine politicians; meaning that though the fPV may have won the most votes, they could face a challenge in turning those votes into a significant number of returned candidates come october.

But where does this leave the fPV ahead of the october elections? Though the fPV will be deemed to have underperformed in the prima-ries, they can still expect to be the largest party in both houses due to the lack of a realistic opposition. It is predicted that the senate is the bat-tlefield which will be the most costly for the fPV, with political consultants expecting the fPV dominance to

come to an end. There is however the outside chance that Ms fernandez and the fPV may manage to retain two-thirds control of Congress if the many seats deemed to be ‘safe’ such as those in the capital or in Santa Cruz province vote along traditional lines. Ms fernandez did however risk incurring the wrath of many of the more rural voters in 2009 by raising export taxes on farm produce, some-thing which those in agricultural employment may not be willing to forgive or forget, despite the num-ber of years which have passed. It should be noted however, that even if Ms fernandez and the fPV man-aged to pull off a two-third major-ity in the lower house; without the control of the upper house, they are hamstrung. Such a situation would leave the fPV needing the support of other parties if they wished to push on and amend the constitution to fa-cilitate President fernandez.

In terms of President fernandez’s own aspirations, though she cer-tainly does not command the same approval ratings that she has done in the past, she is still a potent po-litical force to be reckoned with. As is standard procedure with a govern-ment or leader seeking re-election, the ramping up of public spending and focusing on social projects is a tried and tested way of garnering public support, a procedure which Ms fernandez has been careful to follow in the past few months. A well advised strategy which was preced-ed by the careful growth of a person-ality cult surrounding the President. Due to Ms fernandez being seen as a charismatic and elegant female leader of Argentina following in the Peronist tradition, the inevitable comparisons between herself and the beloved eva Peron-Duarte have emerged. This holds immense politi-cal value for Ms fernandez as she can

portray herself as the true voice of the Argentine people, and has done so; standing either on the balcony of the Casa rosada, or speaking publi-cally with images of evita looming large.

In terms of nationalist iden-tity, the case of the falklands is one which is deemed to be politically worthwhile exploiting, one which has indeed been readily used by Ms fernandez. every year there are offi-cial services of remembrance in both Argentina and Britain to remember those who died in the falklands War of 1982, as it is only right to do. What has been seen time and time again however, is the manipulation of Argentine feeling and memory to better suit a political end. A return to the sabre-rattling ways of past military juntas is always popular among nationalist circles in Argen-tina and serves as a rallying cry for the fPV; Though Ms fernandez is of course not foolish enough to think that making such noises is anything more than a necessity of the political game.

At the present time things do seem to be stacked against Presi-

dent fernandez and the fPV, but if Ms fernandez is anything; it’s a con-summate politician, and she can be expected to pull out all of the stops

to achieve her aim. It looks un-likely that a change in the Argen-tine constitution will occur before the end of Ms fernandez’s second term in office unless a deal can be struck with the incoming opposi-tion. Should such overtures fail, it is not inconceivable that Ms fernandez may ‘do a Putin’ on it, and seek Presi-dential election again in 2019. Such a move would be within the bounds of the constitution and it may suit the Argentine people and Ms fernandez to have a cooling off period before they resume the status quo. In this way, regardless of the result of the upcoming legislative and Senato-rial elections, the Peronist tradition seems to be alive and well in Argen-tina and can be expected to linger on for many years to come.

eDITorIAlCristina fernandez de kirchner - A historic third term in Argentina?

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