The briefest post, but also the most responsible and concise one to date:

In 1775, the Shot Heard ‘Round the World was fired when General Gage was marching on the armory at Concord to confiscate all weapons from the militia in the Massachusetts Bay Colony.

What is interesting about Genearl Gage’s move, is not that it was a British General confiscating American weapons, but that it was a British General confiscating weapons of British subjects. Even after the rise and domination of the citizen in politics, the example holds true to this present day.

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The National Socialist German Workers Party and the Kingdom of Italy/Italian Social Republic in the early 20th century sought to limit gun ownership, little by little, until owning a gun became illegal. What were their programs for governance and society?

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Given the result of both examples and how they were to eventually meet on the battle field of posterity decades and decades later, only begs the question, which is the right course of action? What would you rather see? A citizenry that is armed and knowledgeable of their past, or an ignorant, and fickle mass of people to be disregarded once more?


The Euro: Not Short on Friends, Yet Homeless

An old dog may not be taught new tricks, but the European Union [EU] can be further economically and politically domesticated by enacting necessary reforms. Economists have identified the EU as the second largest economy to that of the United States, yet if the global economy needed to collaborate with Europe, whom do they call? Many European governments and banks managed to emerge unscathed after the 2008 financial crisis largely from avoiding the American credit markets[i], however the euro zone is not short of its own domestically manufactured financial concerns. The problem for the seventeen “euro zone” countries is managing their sovereign debt; and more importantly, the group’s ability to collectively respond to the realities of each euro zone member’s respective financial needs. There is serious concern as to whether the euro zone members have the necessary political as well as economically integrated and unified organizational capabilities to reconcile the Euro’s current instability.

Greece was the first euro zone member to shock the euro financial world as a result of their burdensome sovereign debt mixed with reckless levels of government spending. The economically biggest and strongest of the euro zone members, Germany, France, Italy, as well as the IMF responded quickly by creating a financial “bail-out” package to avert a Greek default on its debt payments.[ii] As of today, the “Greece problem” persists due to its failure to implement the terms agreed upon for the bailout, and is now asking for either another bailout or simply a means to “orderly default”. Disagreement on how to handle the “Greek question” has become so apparent within the euro zone that the head of the [German-based] European Central Bank [ECB] has resigned due to “personal reasons” [and yet the ECB is the most responsive actor in this crisis thus far, which is not very reassuring at this point]. After Greece came Ireland’s troubles, Spain and Portugal were also feared to be next in line and in need of some form of propping up. The major areas of concern is mostly centered on the smaller periphery states, however this changed in July 2011 when Italy began to lose market confidence [rumors circulated that Italy would be forced to default] in managing its sovereign debt [120% of its GDP], seeing bond yields rise by almost 1% in two trading days.[iii] Great Britain, who has always championed the cause of splendid isolation, warned Europe that is has six weeks to solve this crisis of confidence or risk another global recession[iv]; a sound piece of advice to a squabbling Europe, and music to our ears on this side of the pond.

The problems have continued to mount for the euro zone members largely as a result of two weaknesses: first, the euro zone leaders are unable to collectively agree as to what is the current next best step, or where to even begin [the EU suffers from “dispersed sovereign authority syndrome”, or “prideful decentralized name-calling”]. The euro currency was created without the necessary institutions such as a treasury, the ability to raise taxes, and a centralized, coherent decision-making body.[v] So even if the euro zone members were in agreement there is no formal mechanism or procedure on which to follow and therefore would have to “make up the rules as they go along,” not exactly the ideal framework to instill market confidence. Secondly, euro zone leaders continue to fail to recognize key fundamental issues confronting their task of stabilizing the Euro currency. Now is the time to “get serious”, even if it costs euro zone leaders an election at home. For example, the various euro leaders still have yet to admit that Greece’s financial situation is nothing other than insolvent. German officials are divided on how much they should use of their own money [or the ‘taxpayers money’] to put towards bailing out Greece for a second time who is singing a song, or rather kicking and screaming the cries of “orderly default”.[vi] Therefore various measures must be implemented in order to salvage a unified Europe, to stabilize the euro, and regain market confidence in the European financial institutions.

There is No Third Way

The euro zone members must do five things without delay. First, the philosophy of Jean Monnet, the “godfather of the EU” and his improvised, technocratic approach to establishing the EU framework must be abandoned. It is not a responsible approach to the more concrete issues Europe faces today. Second, euro zone members need to lose the pretense and realistically assess the financial realities of each euro zone member. Third, all relative European banks should be bolstered in dealing with sovereign defaults of various euro zone members. Fourth, there needs to be serious macroeconomic integration within the member economies or risk future collapse. Lastly, the fifth concern should be the overall vision of Europe itself. In other words, Europe must establish protocol and enact various reforms to ensure that a crisis like this will not happen ever again. I would go so far as to suggest entertaining Joschka Fischer’s call for a United States of Europe, something France would not support in its constant efforts to seek parity with Germany.

Méthode Monnet No More: Jean Monnet once said that, “Europe will not be built all at once, or as a single whole: it will be built by concrete achievements which first create de facto solidarity.”[vii] Yet this improvised philosophy of European unification has met its breaking point: either Europe must seek a more centralized structure or risk losing everything altogether. This méthode has created two problems that the euro members are currently grappling with at the moment: (1) it alienates voters of each member country in the affairs of the central European government, and; (2) it creates a “democratic deficit” within the system, derived from member countries ensuring their “sovereign rights” are not trampled on.[viii] For problem one, the concern is that there is no accountability or potential for European voters in each country to “vote out” the members who have invited this crisis in the first place. The second problem, begs the question as to whether this “maximization of sovereignty” is the proper course to pursue toward creating a strong and unified Europe. This maintenance of sovereignty works fine in times of relative calm, but in a crisis that same quality enables inaction to run rampant through the system, thus paralyzing any essential leadership.

Realistic Assessment: euro zone leaders, the most influential being Germany and France, need to buckle down and make the difficult assessment that Greece is no longer solvent. Greece is aware it is unable to actually pay off all its sovereign debt and therefore the country has started the request of finding a way to “orderly default”[ix], against the wishes of some euro zone members. Ultimately, the euro members have to realistically determine which countries are solvent and which are not. By ignoring the reality of the situation, they are setting up the certain failure of their own response to “fix” the situation. Like any effective problem-solving venture, one must outline the problem to be tackled; to paint a prettier picture is only ensuring imminent failure.

Keep Banks Strong: The European Financial Stability Facility (EFSF) is a centralized fund that offers capital to banks that need shoring up. Euro zone members must strengthen the capabilities of the fund in order to meet the financial needs of each country’s financial institutions. To further strengthen these institutions there needs to be a recapitalization effort for banks, only after a more thorough stress test is conducted which should include the possibility of a Greek default, among other related scenarios. This process is especially important in relation to French banks, which have lent substantial sums of capital to periphery states such as Greece and Spain.[x] Ensuring this process will enable a more responsive EFSF to European financial institutions, as well as sufficiently prop up European banks to deal with any potentialities that would otherwise deepen the crisis if left unattended.

Macroeconomic Integration: The ECB needs to play a stronger role that it has already been playing within this crisis. The German-based bank is unelectable and independent and many of its leaders fear that purchasing more of Spanish and Italian bonds could damage the credibility of the still young institution.[xi] What should be done to further integrate the macroeconomic functions of the euro zone members, as well as stave off deep concerns of financial instability within the region, is to have the ECB back all solvent countries. There is fear that Italy would be forced to default on its sovereign debt, not because the debt itself in insolvent, but rather due to loss of confidence, primarily as a result from political turmoil at home.[xii] Italy, for example, has more capital on hand than Germany, and easily relies on domestic lending to gain market stability and confidence; and the country has been known to raise taxes when necessary. Therefore when it comes to solvent countries such as Italy and Spain, and given their relatively “smooth” capabilities to domestically reconcile market concerns,[xiii] the ECB should publicly guarantee any financial assistance to these countries; for example, purchasing their government bonds, thus ensuring a boost in market confidence.

The United States of Europe: the fundamental issue concerning the entire euro crisis is, confidence. The vicious cycle witnessed thus far in the euro zone is the result of a non-unified approach to solving this crisis, as well as pursuing collective measures that do little to solve the problem, just prolong it to a later date [Europe has refined the art of claiming grandiose achievements only to pay the more burdensome price at a later date]. Italy’s sovereign debt would have never come into question if there was a more cohesive, well-defined central body that instilled confidence in markets and investors; and French banks would never have suffered as much as they have the last two months if the Greek and Spanish questions were initially solved. There are two visions that roughly emerge from this lack of a unified front between euro zone members: first, the concept of an “economic government” where countries retain political sovereignty but are more economically interdependent of one another. This is especially popular with the French who wish to maintain a level of influence on par with Germany.[xiv] The second is “Joint Eurobonds” that would pool together euro zone members’ resources to back up the issuing of bonds from a central European entity. This is not too popular with the budget-efficient, and economic power-house of Germany who believes such an idea would “reduce borrowing costs to profligate;”[xv] an assessment not too wide of the mark given Europe’s financial track record.

What we need to see in the coming months is the conceptualization and operationalization of a framework that draws Europe closer together economically, if not politically. Maintaining each euro zone members’ sovereignty sounds comfortable and even feasible in times of economic prosperity, but this crisis has been prolonged to an extent that threatens the very existence of the European Union and the euro currency altogether. Euro zone members need to strengthen and increase the influence of central European mechanism such as the EFSF, the ECB as well as institute new powers and organs such as a reasonable tax-raising power and a treasury for starters. There needs to be less emphasis on national sovereignty and more on a cohesive and central response; especially when the issue at hand involves a single currency. Even with a more economically interdependent Europe, [which already arguably exists], there needs to be further political integration that enables and thus guarantees that when a problem of this magnitude occurs, euro zone members can and will act in a single front to tackle the problem, and reduce the potentialities of losing market confidence. This will take the longest of all to realize, and would involve countless new treaties and agreements between the euro zone nations. If the euro zone and its single currency are to be taken seriously, and ultimately strengthened within the global economy, this old dog known as Europe must reform itself or be lost forever.

[i] “Fears over French Banks: Panic in Paris | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 20 Aug. 2011. Web. 22 Sept. 2011. <;.

[ii] “Europe’s Economies: Strong Core, Pain on the Periphery | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 25 July 2011. Web. 18 Sept. 2011. <;.

[iii] Ibid.

[iv] Giles, Christ, and Alan Beattie. “Global Economy Pushed to the Brink.” Pearson PLC, 23 Sept. 2011. Web. 23 Sept. 2011. <;.

[v] “Charlemagne: The End of Monnet | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 3 Sept. 2011. Web. 19 Sept. 2011. <;.

[vi] “Europe’s Currency Crisis: How to save the Euro | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 17 Sept. 2011. Web. 20 Sept. 2011. <;.

[vii] “Charlemagne: The End of Monnet | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 3 Sept. 2011. Web. 19 Sept. 2011. <;.

[viii] Ibid.

[ix] “Europe’s Currency Crisis: How to save the Euro | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 17 Sept. 2011. Web. 20 Sept. 2011. <;.

[x] “Fears over French Banks: Panic in Paris | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 20 Aug. 2011. Web. 22 Sept. 2011. <;.

[xi] “Europe’s Currency Crisis: How to save the Euro | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 17 Sept. 2011. Web. 20 Sept. 2011. <;.

[xii] “Italy: Trashing the Lifeboat | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 3 Sept. 2011. Web. 20 Sept. 2011. <;.

[xiii] Ibid.

[xiv] “Charlemagne: The End of Monnet | The Economist.” The Economist – World News, Politics, Economics, Business & Finance. 3 Sept. 2011. Web. 19 Sept. 2011. <;.

[xv] Ibid.

Give Angela Merkel credit. For all her rhetoric to the contrary, Germany’s Chancellor has not always been an ardent supporter of international pressure on Iran. In fact, over the past half-decade, her government has perpetuated Germany’s historic Janus-faced policy toward the Islamic Republic, supporting UN and European sanctions against Iran’s ayatollahs while simultaneously nurturing a thriving economic partnership with them. Of late, however, Merkel and her administration seem to have had a change of heart. In recent days, Germany has signaled its willingness to sign on to a European Union effort to sanction the European-Iranian Trade Bank, or EIH. (A formal designation by the EUis expected on Monday).

The move is deeply significant. The Iranian-controlled, Hamburg-based bank is widely known to be a key financial conduit for the Islamic Republic, facilitating billions of dollars in trade between Iran and Europe—and contributing substantially to Iran’s nuclear and ballistic missile programs in the process. According to U.S. and international intelligence assessments, EIH serves as a pass-through for arms deals involving Iran’s acquisition of WMD-related components; as a financial lifeline for Iran’s feared clerical army, the Iranian Revolutionary Guard Corps; and as an economic conduit which has facilitated the transfer of millions of dollars in ballistic missile technology to the Islamic Republic in recent years. This role led the U.S. Treasury Department to formally blacklist EIH in September of 2010.

Until recently, however, Germany has been reluctant to follow America’s lead. For years, the Merkel government has dragged its feet on similarly proscribing EIH, citing its potential financial liability to investors that could be disadvantaged if the bank were shuttered. It has also nixed proposals to do so put forth by other nations; as recently as February, Berlin reportedly blocked a French bid to designate EIH as a potential target for future EU sanctions.

The hesitance is understandable. The partnership that has developed between Berlin and Tehran over the past three decades isn’t just politically expedient, it’s highly lucrative. Germany represents Iran’s top trade partner in the European Union. And, according to official data from the German Federal Statistics Office, bilateral trade between Berlin and Tehran last year actually rose by some five percent (to just over $4.17 billion), despite multilateral efforts to economically isolate the Islamic Republic. German firms have gotten the message; although some (like Siemens) have at least pledged to curtail their trade with Iran, a great many—including ThyussenKrupp and Daimler—still do a booming business with, and within, the Islamic Republic.

Germany is helping Iran in other ways as well. By some estimates, the country provides as much as 60 percent of the critical technology used by Iran to exploit its massive natural gas reserves. With U.S. sanctions now beginning to squeeze Iran’s oil industry, such assistance is nothing short of a lifeline for Iran’s beleaguered energy economy. It also puts Berlin very much on the wrong side of the widening international effort to derail Iran’s march toward the bomb.

Perhaps this realization has contributed to the Merkel government’s more critical stance. But timing likely plays a large role as well. Germany’s hardening of policy against EIH comes amid new movement within the European Union for sanctions aimed both at Iran’s atomic endeavor and its repressive domestic conduct. And it precedes Merkel’s early-June visit to Washington, where the global drive to frustrate Iran’s nuclear ambitions is sure to take center stage in her discussions with White House officials.

Still, the German-Iranian alliance is liable to prove resilient. The economic bonds between Berlin and Tehran run deep, and there is bound to be no shortage of German companies agitating for a return to “business as usual” in bilateral trade with the Islamic Republic in the months ahead. Indeed, Germany’s recent (and distinctly unhelpful) role in temporarily helping India circumvent international restrictions on oil trade with Iran suggests that its status as an enabler of the Iranian regime is far from a thing from the past.

Nevertheless, Germany’s support of sanctions against EIH should be seen for what it is: a significant evolution in Berlin’s Iran policy, and a major step forward for international efforts to cut off a critical conduit for Iran’s burgeoning strategic arsenal. When she comes to Washington, American policymakers should commend Chancellor Merkel for facilitating both. But they also should make clear that they expect these changes to be more than simply temporary.

This article by Forbes brings up many a good point. It identifies a Germany that falls in line with the most recent UNSC resolution provisions (1929) put toward the Iranian regime and their belligerent nuclear development activities, yet also a Germany that is still itching to do business with the country. The author strikes a chord when he comments,

It also puts Berlin very much on the wrong side of the widening international effort to derail Iran’s march toward the bomb.

Perhaps this realization has contributed to the Merkel government’s more critical stance. But timing likely plays a large role as well. Germany’s hardening of policy against EIH comes amid new movement within the European Union for sanctions aimed both at Iran’s atomic endeavor and its repressive domestic conduct.

The recent trend of increasing international isolation on the intolerable and damaging acts of the Iranian regime are not just from European nations but also South Korea, Australia, Canada and Japan, just to name to a few. The overall effect of these sanctions is to demonstrate that Iran can be a viable and respected player within the global market if it chooses to play by the rules all other civilized and developed nations adhere to. The international community wishes Iran to be the valuable and necessary international partner that it has the potential to be, yet it chooses a path of deception, and armament build ups.

Merkel I believe is finally capturing the true essence of the situation and falling in line with many of her European as well as international counterparts in pursuing what is the most non-lethal, yet aggressive and assertive policy toward the belligerent Iranian regime. Germany has helped the Iranian natural gas trade in years past however this is relatively minor in the grand scheme of things, especially if Germany does not allow the Iranian natural gas extraction capabilities to exceed a dangerous amount that would put them at a more economic competitive edge.

As the article’s author suggests, this is a good move toward a more stable and secure international community of the future, and Merkel should be praised for her recent efforts in helping to rid the Iranian regime of all its belligerent and destructive habits.

Brief Overview of Iranian Energy Sector:

The UNSC resolution sanctions target their energy sector, which in turns effects their economy at large with the overall goal of not allow Iran the necessary revenue to advance their secretive nuclear development program further and faster than current levels. Their natural gas infrastructure is severely limited and all of the natural gas being extracted goes to powering the Iranian petroleum production. Due to the effectiveness of the sanctions, Iran uses a substantial portion of its extracted petroleum on powering its own country’s energy needs. Iran overall produces a mere 5 billion barrels of oil per day and the cost to produce each barrel is staggering compared to other nations like Saudi Arabia. For example, what costs the Wahhabis $2 to $3 per barrel costs the Iranians roughly $15 to $17 dollars. The Iranians then are left with no option but to sell whatever is left over for export at market prices, creating a severe loss and usually the reason why Iran always demands OPEC increase the price of oil.

This policy in the recent months has shown to work and has caused immense pressure on the Iranian regime to follow policies that are more conducive toward global economic and security cooperation and nothing to the contrary.