The gamble that paid off in Libya

The West generally, with the exception of Germany, can take pride along with a genuine international community – including UN Security Council members Russia and China as well as the Arab League – in the overthrow of Libyan dictator Muammar Gaddafi.

While not everyone involved has covered themselves in glory – the US could have acted sooner to start bombing Gaddafi’s compound at the outset – most honours have gone to British Prime Minister David Cameron.

The best post-Gaddafi analysis has been in The Spectator, starting with Arab expert and historian Justin Marozzi’s reasons for being optimistic about Libya’s future. Here he describes what Mr Cameron had to overcome:

When David Cameron took the lead in pushing for a no-fly zone back in February, the doom-mongers were already queuing up to denounce what they considered yet another Iraq or Afghanistan. As the campaign progressed, they were quick to detect a "stalemate." The rebels were inevitably "divided." Nato’s campaign, they argued, was "running into the sand." The Italians wobbled, the French faltered (peace talks, anybody?), but London remained resolute. The prime minister maintains it was "necessary, legal and right" to intervene in Libya. He’s been proved right.

Marozzi concludes Libya, with a population of just seven million and some of the world’s largest oil reserves, could become the next Dubai:

There is no law which states that Libya must now descend into anarchy and civil war, nor is there any guarantee of freedom and democracy. Yet the chances of success here are higher than those in any other Arab country yet to take on its dictator.

Missing the point
President Obama’s failure to grasp the opportunity in Libya to cement an American success in the wake of Iraq and Afghanistan contrasts with his actions in the Bin Laden raid.

Military historian Andrew Roberts (The Storm of War), also writing in The Spectator’s wrap-up, says the American strategists failed to identify

the ‘point d’appui’ or the ‘Schwerpunkt’, the most vulnerable moment, at which a strong push can seize the psychological initiative and overthrow the enemy.

This was, in Roberts’ account, during the first week in March when Gaddafi was still trying to mount a counter-offensive after the mid-February seizure of Benghazi by rebel forces and their rapid advance around the coast to Tripoli.

As we now know, Gaddafi plunged the country into a civil war that lasted five months and cost an estimated 35,000 lives. Roberts convincingly argues that could have been prevented with a pre-emptive rocket attack on the Bab al-Aziziya compound.

To finish the series, Sir Christopher Meyer, a former UK ambassador to the US, puts the case  for an aggressive British business response to pick up the spoils from Libya’s reconstruction. Rather than become bogged down in nation-building and peace-keeping, he says Mr Cameron and his cabinet

should do what it is proper for them to do, which is to advance our nation’s prosperity. Let them press the case hard in Benghazi for British companies to receive a generous share of the new Libya’s business.

Sir Christopher notes the Germans, who failed to back the Nato actions at all, are already positioning themselves to win multi-billion pound deals from the National Transition Council.

Whistling in the dark
On top of the heavy dump of more bad news from Christchurch, and an All Blacks defeat, NZIER’s bearish senior economist Shamubeel Eaqub has become top party pooper.

His latest projections incorporate two new major negatives: the rapidly slowing global economy and net outward migration flows.

The former means our overseas markets will start to contract, notably in Australia, and the latter takes away the country’s major driver of increased demand.

A third negative, though not new, is that the effects of the Christchurch rebuild will not be felt until at least 2013. Meanwhile, people leaving Christchurch have turned the modest migration inflow into an exodus.

Mr Equab says the high loss of private sector jobs in Christchurch has been “more insidious than was previously thought.” He adds: “Without people and jobs, it is difficult to see Christchurch recovering.”

If politicians are heeding this outlook, they are keeping it well hidden. Labour, in particular, is sticking to its line that a combination of higher government spending, taxes and minimum wages will do the trick, though any business person will tell them this hardly a recipe for investment, hence growth and jobs.

These, according to NZIER, are already drying up with credit growth and housing starts stalled, plenty of spare capacity and retail spending still focused mainly on necessities.

The only cushioning effects remain strong export demand from China and an absence of inflationary pressures. Mr Eaqub thinks the situation is so serious he is urging the Reserve Bank to hold off on an interest rate rise until at least June next year. The shock to mortgage payers, 80% of whom have borrowed short-term, would be too great, he explains.

Lessons from Canada
With Australia heading for the recession it never had, only Canada is left as the star economy in the Anglo-Saxon stable.

A Canadian complained to me the other night that his country rarely makes the news here a brief mention this week was only because it was hit by Hurricane Irene.

So to balance this media shortcoming I offer two pieces of analysis reflecting the debate in North America about how Canada had the right response to the global financial crisis while the US got it wrong.

Yet, as Toronto banker David Lee points out in his article, "How Canada escaped the global recession," the policy was ridiculed at the time:

Canada's "stimulus package" was about as ambitious as a homeless man. In effect it was little more than a clever display of political gamesmanship whereby the appearance of action was maximised, while the action itself was minimised in order to control the damage the stimulus would cause while absolving itself of any culpability in the event of any externally induced shocks.

Yet it worked. Researcher Jason Clemens, in a Wall Street Journal op-ed called “Why Canada is beating America,” explains how Canada has inexorably reduced the size of its government and has consistently cut taxes in recent years.