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Rear Vision
Since national elections fifteen months ago, Belgium has been in the grip of a profound political crisis, prompting speculation that the country might split. What has caused this political stalemate and what lies ahead for this deeply divided country? TRANSCRIPT: Keri Phillips: This is ABC Radio National. Keri Phillips here with Rear Vision. Philip Dewinter: We are not in favour of a multicultural society; we think that our society is having its own culture, our Flemish-European culture, and I think that should stay like that. Reporter: Philip Dewinter never stops. His message is defiantly extremist and he peddles it on the streets, in local halls and in bars all over Flanders, the smaller half of Belgium that borders Holland and is dominated by the Flemish-speaking population. His party, the Vlaams Blok, calls for the abolition of the Belgian State and the creation of the State of Flanders. Keri Phillips: The Kingdom of Belgium is a country of 10-1/2-million people, occupying an area about one third the size of Tasmania. Belgium´s two largest regions are the Flemish Dutch-speaking region of Flanders in the north and the French-speaking southern region of Wallonia. There´s also a tiny group of German speakers in eastern Wallonia. Belgium is divided into three geographically defined regions and also into three linguistically defined communities, each with its own parliament and government. In addition to these six parliaments, there´s a national parliament, which has been at an impasse since the most recent elections in June last year, prompting speculation about the very future of Belgium. Today, Rear Vision looks at the background to this political stalemate. The modern state of Belgium unites two groups of people who can trace their presence back to the time of the Roman Empire. Martine Van Berlo is a Belgian academic who until recently has been teaching languages at Trinity College, Dublin. Martine Van Berlo:It´s a long history. It started with the Roman Empire. Our regions were always a mix of Germanic and Romanesque cultures, and we were the northern border of the Roman Empire altogether four centuries. But in the 2nd century the Germanic tribes came and there was an invasion, and you can see that in that way we have a common culture that the whole area of Belgium was invaded by Romans and by Germanic tribes. The language border we have now is made more or less in the 8th century. Keri Phillips: More on the language border later, but in 1830 when revolution created the modern Kingdom of Belgium, French became effectively the official language. And the French-speaking political and economic elite treated those who spoke Dutch as second class citizens. Dr Martin Conway, a historian at Oxford University, says that this gave rise to a Flemish Nationalist movement. Martin Conway: It has a long heritage; it goes back to the late 19th century and put briefly, it was a Catholic movement. It was a movement of the Catholic Church wanting to rally working-class and rural Catholic people behind the Catholic Church, and in doing so, supporting a campaign for the emancipation of the Dutch-speaking Belgian people especially from the dominance of French-speaking political elites who were predominantly liberal and socialist and indeed from French-speaking employers, businessmen and factory owners. Keri Phillips: Dr Patrick Pasture is a historian from the Catholic University of Leuven in Belgium. Patrick Pasture:You have to go back to the foundation of the Belgian State in 1830. That time French was the language of the elite everywhere, so French was adopted as the official language in all Belgium, though in the north, ordinary people spoke Dutch or a Flemish dialect. So in the 19th century there was a movement, a Flemish movement that arose that gradually argued for the recognition of Dutch besides French in Flanders. After the First World War, part of this Flemish movement strove for independence. Also the moderate wing radicalised to some extent, striving for autonomy. Keri Phillips: A series of language laws, the first of which was passed in 1873 gradually began to acknowledge the right of Dutch-speaking Belgians to use their own language. In 1921, the critical decision was made that Belgium would not become a bilingual state. The French didn´t want to learn Dutch. Instead, language would be bound to territory. World War II was a watershed in the relationship between the two cultures. Martin Conway: Yes, I mean historians always want to go back a long way, don´t they, but for me it is the Second World War that is the crucial moment. Up until then, or at least until the 1930s, Belgium had been a very successful state, created in 1830, celebrated its anniversary in 1930 and it seemed like almost the epitome of a modern European state. But the Second World War was incredibly disturbing of its patterns of government, because you had a large scale Flemish independence movement that allied itself with the Nazi regime in occupied Belgium, and also you had a kind of change of power between the two communities. After the Second World War, when there was quite rapid economic growth, there was a whole transfer of wealth from the traditional industrial south of the country, which had been very much the dominant force in the country and a sort of Francophone middle-class; the transfer away from them to new areas of the north of Flanders, where you for the first time, you had not Flemish independence, but you had the demand for Flemish assertiveness within Belgium. And in many ways what you get by the 1960s is a sort of in a rather exaggerated term, a Flemish take-over of the leadership of Belgium. At a political level it was Flemish Prime Ministers; it was the Flemish Christian Democrat party, the CDP, that was the dominant political party, and in economics too, it was a whole generation of Flemish businessmen who came to the fore. And that Flemish dominance then provoked a Francophone backlash, especially large industrial strikes in Wallonia, especially in the coal-mines, protesting against the mines being closed, but also protesting against the whole force of economic progress towards the north. And also for the first time, a Francophone middle class in Brussels, this besieged city in the middle of the Dutch-speaking Flanders, that suddenly felt itself under threat from Flanders, and that in turn provoked more Flemish demands. And since then, in many ways, you´ve had a continual circuit of Flemish and French demands for some sort of new deal within Belgium. Keri Phillips: At the beginning of the 1960s, Belgian elites still spoke a common language, French, and there were national political parties representing voters across Belgium. But in 1962, legislation was passed dividing all Belgian municipalities into one of the four language areas: Dutch, French, German and the bilingual area, Brussels-Capital, that includes the Belgian capital city and 18 surrounding municipalities. On this foundation of language difference grew a steady movement towards ever greater regional autonomy. Martin Conway: It´s very interesting in contemporary Europe how some languages become politicised and other languages don´t, and in Belgium many people spoke a mixture of Flemish and French for generations, without really thinking about those as important elements of their identity. But just as in other areas of Europe like the Basque country, or Catalonia, or Wales in the 1960s and `70s, so speaking your own language and the freedom to use your own language in every circumstance and not to use the other people´s language suddenly became a very important emotional element of Flemish identity. And many Flemish people, many Dutch-speaking Belgians, who do not necessarily think of themselves as in any way Flemish nationalists, which they still think of as a particular sort of heritage, almost of the Second World War. Many of them would nevertheless think that speaking Dutch in all circumstances, is the most important element of their identity, and they always resent what they perceive to be the inability of most Francophone French-speaking Belgians to speak Dutch. Now Dutch is not a massively difficult language, but you speak to most French-speaking Belgians and they portray the idea of learning Dutch to be almost impossible. At the moment, when Flemish and French-speaking Belgians get together in formal environments, in big political meetings, it´s increasingly a tendency of everybody to use English. And in some way, English becomes as it is in other parts of the world, the great compromise language. But it is true that language, this issue of language rights, is still at the centre of what a lot of people get agitated about, those in Flanders, but also say, in Brussels. Let´s remember that Brussels is a 85% or 90% Francophone city, French speaking city, the capital of Belgium, and yet it sits in the middle, or at least on the edge of Dutch-speaking Belgium. It´s surrounded by Dutch-speaking areas, and so you have this potentially rather dangerous element of Belgian politics which is a Francophone city that feels itself besieged in the language of French speakers by Flemish people, and a great deal of emotional excitement about how many Flemish speakers are coming into Brussels every day to work, or seeking to establish houses in Brussels and so on. Patrick Pasture:Since the regions become so autonomous, politicians are also elected only in their own constituency. They don´t need to be elected in the other region so they just follow the logic of their own community, of their own region. You have to know also as background that the economic conditions and the political cultures in the regions are totally different. In Wallonia it´s just an old industrial region. In the 19th century this was one of the most prosperous regions in the world, Flanders was a very poor agricultural area. That has changed in the course of the 20th century and particularly since the 1960s, which means that Flanders now is very prosperous and Wallonia especially the old industrial basins have declined. That´s the economic situation. Their political cultures are also very different. It´s different parties who dominate in Flanders, it´s traditionally the Christian Democrats, also to a certain extent liberals, and now also Flemish nationalists. In Wallonia it´s clearly traditionally social democracy that dominates strongly, now also liberals. If you combine those two elements, different political cultures, different economic conditions on the one hand, and on the other hand the fact that politicians have hardly any contact and empathy with the other and for the other, that is the main reason why you have now such a political stalemate. Keri Phillips: So what´s it like when people from Belgium´s two main cultural groups meet? Although poet Benno Barnard was born in Amsterdam, he´s lived in Belgium for 30 years. Benno Barnard: It is a small country, so you never like myself, I live on the language border, so I mean, I can see the hills of Wallonia from my window you know, and of course people cross borders and are mobile. And that is one of the reasons why there are problems, because traditionally the Flemish when they go to the French-speaking area or are among French speakers, tend to adapt, most Flemish speak French relatively well, sometimes fluently. The other way around is quite different; many French speakers will for example buy a house in the outskirts of Brussels or in the Flemish area, but some of them the what we call the `ancient regimes´, the old-fashioned French speakers, are then often too arrogant to bother to learn this little peasant language you know, because French after all is the traditional language of culture in Europe. Or has been so for 400 years, and that is where the core of the conflict is. Keri Phillips: Benno Barnard says that despite the differences there is an identifiable Belgian culture. Benno Barnard: What foreigners know about Belgium is usually limited, but many people all know Tin Tin for example, the name Magritte, the surrealist, what they all have in common is a certain askew look at reality, the way things are perceived here, the way people interpret reality is typical of a people, and now I mean both the Walloons and Flemish, who have learned over centuries, to live under occupying forces, and that creates a certain city type of humor, and mild distortion of reality, which I recognise as quintessentially Belgian. I´m Dutch myself, I was born in Amsterdam, and I´ve lived in Belgium for 30 years, but I can still see that as an outsider. So that is very typically Belgian culture, combined by the way, with probably the best cuisine in Western Europe. Nowadays I would say the Belgian cuisine is better than the French. And so this whole joie de vivre which is also very Belgian, you go out and you sit in a Brussels on a terrace and you eat moules frites and you enjoy life and you make jokes about politics. Some people claim that in fact the Walloons and the Flemish have everything in common with the exception of the language, whereas the Flemish and the Dutch only have the language in common, but they´re culturally very different. Like the Walloons and the French only have the language in common, but are very different because there is a Belgian way of life, a Belgian culture. Now that may be a somewhat romantic interpretation of facts. To an extent there are differences between the Walloons, regional differences, but then there are also regional differences inside Wallonia. This is Europe after all, and so there´s this patchwork. But ever since the Middle Ages these people have had the same powers governing them. They were part of Spain, they were part of Austria, they were a part of France, they were a part of Holland and power was always far away, it was in Madrid, it was in Vienna, it was in Amsterdam, but they were always governed by the same powers whether they were Walloons or Flemish so that created a bond. So I think all those arguments that Belgium is young, well, you know, it´s older than Germany as a state, or Belgium is artificial, I mean all states are artificial, they´re always a result of wars and bloodshed and people inheriting pieces of land and coincidence. There are no natural states. Maybe Iceland because it´s an island, but there are no natural states as such. Martine Van Berlo:I have the feeling that we have something in common; we have the same mentality, we have a common history, we have a common culture, we have even a common Belgian accent. The French-speaking people in Belgium have a Germanic accent in their French, that´s what the people from France say all the time, we have a French accent in our Dutch language, that´s so the Netherlands think about us. Even the German-speaking Belgian people have a kind of French accent in their German. We have, you can call it a Belgian accent. But are all these common things enough for a common future, that´s the question. But I feel for myself, I´m Belgian abroad but in Belgium I´m Flemish. I say my identity is Flemish. And when I´m in the Netherlands then I say I´m Belgian. In Flanders there is a kind of identity, but the Walloon people will say `I´m a French-speaking Belgian´, they will never say `I´m a Walloon, that´s my identity.´ But I think there is some, but it´s not so visible as in Flanders. Keri Phillips: Tensions over language divisions are at the heart of the current political impasse. Benno Barnard: There have been federalising the political system over the past 20 years, but the federalisation is not complete yet, and that creates certain difficulties because for example, there is one area in the immediate vicinity of Brussels where there is a significant number of French speakers, although it is Flemish territory. So you get these ethnic minorities and as always, you know, it causes some friction, particularly among those who refuse to accept reality and arrogantly behave in shops and just speak French everywhere. That is a decreasing number of people, but it still exists, and it is irritating of course. You know, you want to be respected in your cultural identity and linguistic identity. Anyway, that area is a constituency which is still bilingual; in other words, French speakers can still vote there. Now I personally don´t care, it has been the case forever, but the Flemish want it to be split up and they want to impede the option for the French speakers to vote in that constituency because it is inside the Flemish territory. That is the main cause for the current political problems, and then also the Flemish, more than the French speakers, want a large reform of the state, because they claim, and that is not untrue, the federalisation is not complete, which makes it hard. There will be elements that you know for example in traffic, certain roads for example, are taken care of by a Federal ministry so a Belgian ministry, but other elements like traffic lights, I know that the example is not concrete, but resort under a Flemish ministry or a Walloon ministry, see? And that complicates things. It is easier if you say OK, well traffic in general is two different ministries, a Flemish ministry and a Walloon ministry or it´s one Belgian ministry. Now what complicated things is that of course there are the hardliners, the separatists on the Flemish side, and the, well you would have to call them Belgiacists on the French-speaking side who are opposed to any, because they see it as, they interpret it as a loss of power so they are opposed to any reformation of the state. That´s also a minority. Also may 10%. Keri Phillips: The failure of negotiations over this electoral anomaly and how to proceed with further constitutional reform caused the Prime Minister, Yves Leterme to offer his resignation in July. This was rejected by the King, Albert II, who instead called on a small group of representatives from the three language groups to try to resolve the stalemate. Martin Conway: I think in many respects the monarchy is one of the key institutions for understanding the current crisis. Back in the period of the Second World War the King at the time, Leopold III, in many respects went along with the German occupation of the country, and after the war he did not return as King of Belgium, he was in exile. But there was a very great political crisis for roughly ten years about whether he should return as the King of Belgians. And that was resolved in 1950-1951 with a compromise, whereby his son, his eldest son Baudouin became King. Now Baudouin was then King for more than 40 years and although his beginnings were really rather unpromising, he became almost despite himself really, one of the symbols of Belgian national identity. And one of the rather astute political architects of solutions to crises. And then when he died suddenly in the early 1990s, there was a great outpouring of emotion about his death in the sense of Belgian identity being asserted through his death, but then he didn´t have any children and his brother Albert, who took over in the mid-1990s has been in many respects a very avuncular and kind of popular figure, but he clearly doesn´t carry the same sort of political weight as his brother. And there´s also the issue then of who will succeed because Albert has two sons, one daughter, and in many contemporary Belgians´ views, these figures don´t look as though they are destined the play the same role of being symbols of Belgian national identity. So just as there is a question mark over the state, there has to be a question mark over the future of the monarchy. Keri Phillips: How likely is it then that Belgium might have the kind of peaceful political divorce that Czechoslovakia had in 1992 becoming the Czech Republic and Slovakia? Martin Conway: It´s possible, it´s not likely. Whether it would ultimately lead to separation is I think the main issue that now preoccupies people in Belgium. People do not think that in the next two or three years Belgium is about to disappear off the map of Europe. The idea of what some people in Belgium called a divorce a la Czech, a Czech divorce, whereby Czechoslovakia fell apart very quickly. That never seems to be a possibility in Belgium, there are too many complex issues to resolve. There is the issue of Brussels and all the complexity of what you do with these French-speakers in the middle of Flanders; there´s the issue of the monarchy; there´s the issue of the national debt which is huge; there´s all sorts of problems which would take an enormous amount of problem-solving to resolve. So Belgium is not going to disappear. But I think what is more interesting and more interesting in a way as a model of contemporary Europe is the way in which not just Belgium but other nation state units in the 21st century Europe, are not working very well, are not satisfying their citizens in the same way, and we seem to be moving in 21st century Europe towards a sense that we´re going to have a lot of residual nation-states; nation-states that have not formally disappeared but have been rather emptied of a lot of their emotional power and a lot of their decision-making power, and that instead I would imagine in Belgium what we will see over in the next ten years is some more radical con-federal solution whereby we end up with a Belgium that still exists on the map, but where you might begin to colour the different bits of the country on the map in different colours, because they indicate the way in which the real power is in Flanders or in Wallonia. And they´re not that small either. Flanders would have under such a situation something like 6-million people, and Wallonia would have something like 3-million, and we have the problem then of Brussels somewhere in the middle. But look at the map of Europe currently, and of course there are places like Slovenia and so on that are members of the European Union, the Baltic States, which are not much larger than these political units and so in many respects Belgium is not breaking up into some sort of tiny little stone pebbles across the map of Europe. It´s probably engaged in some process of evolution towards becoming two or three smaller units, but as I say, that would probably be without formally abolishing Belgium, getting rid of the highly popular football team, getting rid of the in many respects highly popular monarchy. Those are things that I suspect will remain when the political power has moved much more emphatically towards regional government. Keri Phillips: Dr Martin Conway. We also heard from Belgian academics Martine Van Berlo and Patrick Pasture as well as the poet, Benno Barnard. Timothy Nicastri is the sound engineer for today´s Rear Vision. I´m Keri Phillips. read less
Sat October 04 2008
Since national elections fifteen months ago, Belgium has been in the grip of a profound political crisis, prompting speculation that the country might split. What has caused this political stalemate and what lies ahead for this deeply divided country? TRANSCRIPT: Keri Phillips: This is ABC Radio National. Keri Phillips here with Rear Vision. Philip Dewinter: We are not in favour of a multicultural society; we think that our society is having its own culture, our Flemish-European culture, and I think that should stay like that. Reporter: Philip Dewinter never stops. His message is defiantly extremist and he peddles it on the streets, in local halls and in bars all over Flanders, the smaller half of Belgium that borders Holland and is dominated by the Flemish-speaking population. His party, the Vlaams Blok, calls for the abolition of the Belgian State and the creation of the State of Flanders. Keri Phillips: The Kingdom of Belgium is a country of 10-1/2-million people, occupying an area about one third the size of Tasmania. Belgium´s two largest regions are the Flemish Dutch-speaking region of Flanders in the north and the French-speaking southern region of Wallonia. There´s also a tiny group of German speakers in eastern Wallonia. Belgium is divided into three geographically defined regions and also into three linguistically defined communities, each with its own parliament and government. In addition to these six parliaments, there´s a national parliament, which has been at an impasse since the most recent elections in June last year, prompting speculation about the very future of Belgium. Today, Rear Vision looks at the background to this political stalemate. The modern state of Belgium unites two groups of people who can trace their presence back to the time of the Roman Empire. Martine Van Berlo is a Belgian academic who until recently has been teaching languages at Trinity College, Dublin. Martine Van Berlo:It´s a long history. It started with the Roman Empire. Our regions were always a mix of Germanic and Romanesque cultures, and we were the northern border of the Roman Empire altogether four centuries. But in the 2nd century the Germanic tribes came and there was an invasion, and you can see that in that way we have a common culture that the whole area of Belgium was invaded by Romans and by Germanic tribes. The language border we have now is made more or less in the 8th century. Keri Phillips: More on the language border later, but in 1830 when revolution created the modern Kingdom of Belgium, French became effectively the official language. And the French-speaking political and economic elite treated those who spoke Dutch as second class citizens. Dr Martin Conway, a historian at Oxford University, says that this gave rise to a Flemish Nationalist movement. Martin Conway: It has a long heritage; it goes back to the late 19th century and put briefly, it was a Catholic movement. It was a movement of the Catholic Church wanting to rally working-class and rural Catholic people behind the Catholic Church, and in doing so, supporting a campaign for the emancipation of the Dutch-speaking Belgian people especially from the dominance of French-speaking political elites who were predominantly liberal and socialist and indeed from French-speaking employers, businessmen and factory owners. Keri Phillips: Dr Patrick Pasture is a historian from the Catholic University of Leuven in Belgium. Patrick Pasture:You have to go back to the foundation of the Belgian State in 1830. That time French was the language of the elite everywhere, so French was adopted as the official language in all Belgium, though in the north, ordinary people spoke Dutch or a Flemish dialect. So in the 19th century there was a movement, a Flemish movement that arose that gradually argued for the recognition of Dutch besides French in Flanders. After the First World War, part of this Flemish movement strove for independence. Also the moderate wing radicalised to some extent, striving for autonomy. Keri Phillips: A series of language laws, the first of which was passed in 1873 gradually began to acknowledge the right of Dutch-speaking Belgians to use their own language. In 1921, the critical decision was made that Belgium would not become a bilingual state. The French didn´t want to learn Dutch. Instead, language would be bound to territory. World War II was a watershed in the relationship between the two cultures. Martin Conway: Yes, I mean historians always want to go back a long way, don´t they, but for me it is the Second World War that is the crucial moment. Up until then, or at least until the 1930s, Belgium had been a very successful state, created in 1830, celebrated its anniversary in 1930 and it seemed like almost the epitome of a modern European state. But the Second World War was incredibly disturbing of its patterns of government, because you had a large scale Flemish independence movement that allied itself with the Nazi regime in occupied Belgium, and also you had a kind of change of power between the two communities. After the Second World War, when there was quite rapid economic growth, there was a whole transfer of wealth from the traditional industrial south of the country, which had been very much the dominant force in the country and a sort of Francophone middle-class; the transfer away from them to new areas of the north of Flanders, where you for the first time, you had not Flemish independence, but you had the demand for Flemish assertiveness within Belgium. And in many ways what you get by the 1960s is a sort of in a rather exaggerated term, a Flemish take-over of the leadership of Belgium. At a political level it was Flemish Prime Ministers; it was the Flemish Christian Democrat party, the CDP, that was the dominant political party, and in economics too, it was a whole generation of Flemish businessmen who came to the fore. And that Flemish dominance then provoked a Francophone backlash, especially large industrial strikes in Wallonia, especially in the coal-mines, protesting against the mines being closed, but also protesting against the whole force of economic progress towards the north. And also for the first time, a Francophone middle class in Brussels, this besieged city in the middle of the Dutch-speaking Flanders, that suddenly felt itself under threat from Flanders, and that in turn provoked more Flemish demands. And since then, in many ways, you´ve had a continual circuit of Flemish and French demands for some sort of new deal within Belgium. Keri Phillips: At the beginning of the 1960s, Belgian elites still spoke a common language, French, and there were national political parties representing voters across Belgium. But in 1962, legislation was passed dividing all Belgian municipalities into one of the four language areas: Dutch, French, German and the bilingual area, Brussels-Capital, that includes the Belgian capital city and 18 surrounding municipalities. On this foundation of language difference grew a steady movement towards ever greater regional autonomy. Martin Conway: It´s very interesting in contemporary Europe how some languages become politicised and other languages don´t, and in Belgium many people spoke a mixture of Flemish and French for generations, without really thinking about those as important elements of their identity. But just as in other areas of Europe like the Basque country, or Catalonia, or Wales in the 1960s and `70s, so speaking your own language and the freedom to use your own language in every circumstance and not to use the other people´s language suddenly became a very important emotional element of Flemish identity. And many Flemish people, many Dutch-speaking Belgians, who do not necessarily think of themselves as in any way Flemish nationalists, which they still think of as a particular sort of heritage, almost of the Second World War. Many of them would nevertheless think that speaking Dutch in all circumstances, is the most important element of their identity, and they always resent what they perceive to be the inability of most Francophone French-speaking Belgians to speak Dutch. Now Dutch is not a massively difficult language, but you speak to most French-speaking Belgians and they portray the idea of learning Dutch to be almost impossible. At the moment, when Flemish and French-speaking Belgians get together in formal environments, in big political meetings, it´s increasingly a tendency of everybody to use English. And in some way, English becomes as it is in other parts of the world, the great compromise language. But it is true that language, this issue of language rights, is still at the centre of what a lot of people get agitated about, those in Flanders, but also say, in Brussels. Let´s remember that Brussels is a 85% or 90% Francophone city, French speaking city, the capital of Belgium, and yet it sits in the middle, or at least on the edge of Dutch-speaking Belgium. It´s surrounded by Dutch-speaking areas, and so you have this potentially rather dangerous element of Belgian politics which is a Francophone city that feels itself besieged in the language of French speakers by Flemish people, and a great deal of emotional excitement about how many Flemish speakers are coming into Brussels every day to work, or seeking to establish houses in Brussels and so on. Patrick Pasture:Since the regions become so autonomous, politicians are also elected only in their own constituency. They don´t need to be elected in the other region so they just follow the logic of their own community, of their own region. You have to know also as background that the economic conditions and the political cultures in the regions are totally different. In Wallonia it´s just an old industrial region. In the 19th century this was one of the most prosperous regions in the world, Flanders was a very poor agricultural area. That has changed in the course of the 20th century and particularly since the 1960s, which means that Flanders now is very prosperous and Wallonia especially the old industrial basins have declined. That´s the economic situation. Their political cultures are also very different. It´s different parties who dominate in Flanders, it´s traditionally the Christian Democrats, also to a certain extent liberals, and now also Flemish nationalists. In Wallonia it´s clearly traditionally social democracy that dominates strongly, now also liberals. If you combine those two elements, different political cultures, different economic conditions on the one hand, and on the other hand the fact that politicians have hardly any contact and empathy with the other and for the other, that is the main reason why you have now such a political stalemate. Keri Phillips: So what´s it like when people from Belgium´s two main cultural groups meet? Although poet Benno Barnard was born in Amsterdam, he´s lived in Belgium for 30 years. Benno Barnard: It is a small country, so you never like myself, I live on the language border, so I mean, I can see the hills of Wallonia from my window you know, and of course people cross borders and are mobile. And that is one of the reasons why there are problems, because traditionally the Flemish when they go to the French-speaking area or are among French speakers, tend to adapt, most Flemish speak French relatively well, sometimes fluently. The other way around is quite different; many French speakers will for example buy a house in the outskirts of Brussels or in the Flemish area, but some of them the what we call the `ancient regimes´, the old-fashioned French speakers, are then often too arrogant to bother to learn this little peasant language you know, because French after all is the traditional language of culture in Europe. Or has been so for 400 years, and that is where the core of the conflict is. Keri Phillips: Benno Barnard says that despite the differences there is an identifiable Belgian culture. Benno Barnard: What foreigners know about Belgium is usually limited, but many people all know Tin Tin for example, the name Magritte, the surrealist, what they all have in common is a certain askew look at reality, the way things are perceived here, the way people interpret reality is typical of a people, and now I mean both the Walloons and Flemish, who have learned over centuries, to live under occupying forces, and that creates a certain city type of humor, and mild distortion of reality, which I recognise as quintessentially Belgian. I´m Dutch myself, I was born in Amsterdam, and I´ve lived in Belgium for 30 years, but I can still see that as an outsider. So that is very typically Belgian culture, combined by the way, with probably the best cuisine in Western Europe. Nowadays I would say the Belgian cuisine is better than the French. And so this whole joie de vivre which is also very Belgian, you go out and you sit in a Brussels on a terrace and you eat moules frites and you enjoy life and you make jokes about politics. Some people claim that in fact the Walloons and the Flemish have everything in common with the exception of the language, whereas the Flemish and the Dutch only have the language in common, but they´re culturally very different. Like the Walloons and the French only have the language in common, but are very different because there is a Belgian way of life, a Belgian culture. Now that may be a somewhat romantic interpretation of facts. To an extent there are differences between the Walloons, regional differences, but then there are also regional differences inside Wallonia. This is Europe after all, and so there´s this patchwork. But ever since the Middle Ages these people have had the same powers governing them. They were part of Spain, they were part of Austria, they were a part of France, they were a part of Holland and power was always far away, it was in Madrid, it was in Vienna, it was in Amsterdam, but they were always governed by the same powers whether they were Walloons or Flemish so that created a bond. So I think all those arguments that Belgium is young, well, you know, it´s older than Germany as a state, or Belgium is artificial, I mean all states are artificial, they´re always a result of wars and bloodshed and people inheriting pieces of land and coincidence. There are no natural states. Maybe Iceland because it´s an island, but there are no natural states as such. Martine Van Berlo:I have the feeling that we have something in common; we have the same mentality, we have a common history, we have a common culture, we have even a common Belgian accent. The French-speaking people in Belgium have a Germanic accent in their French, that´s what the people from France say all the time, we have a French accent in our Dutch language, that´s so the Netherlands think about us. Even the German-speaking Belgian people have a kind of French accent in their German. We have, you can call it a Belgian accent. But are all these common things enough for a common future, that´s the question. But I feel for myself, I´m Belgian abroad but in Belgium I´m Flemish. I say my identity is Flemish. And when I´m in the Netherlands then I say I´m Belgian. In Flanders there is a kind of identity, but the Walloon people will say `I´m a French-speaking Belgian´, they will never say `I´m a Walloon, that´s my identity.´ But I think there is some, but it´s not so visible as in Flanders. Keri Phillips: Tensions over language divisions are at the heart of the current political impasse. Benno Barnard: There have been federalising the political system over the past 20 years, but the federalisation is not complete yet, and that creates certain difficulties because for example, there is one area in the immediate vicinity of Brussels where there is a significant number of French speakers, although it is Flemish territory. So you get these ethnic minorities and as always, you know, it causes some friction, particularly among those who refuse to accept reality and arrogantly behave in shops and just speak French everywhere. That is a decreasing number of people, but it still exists, and it is irritating of course. You know, you want to be respected in your cultural identity and linguistic identity. Anyway, that area is a constituency which is still bilingual; in other words, French speakers can still vote there. Now I personally don´t care, it has been the case forever, but the Flemish want it to be split up and they want to impede the option for the French speakers to vote in that constituency because it is inside the Flemish territory. That is the main cause for the current political problems, and then also the Flemish, more than the French speakers, want a large reform of the state, because they claim, and that is not untrue, the federalisation is not complete, which makes it hard. There will be elements that you know for example in traffic, certain roads for example, are taken care of by a Federal ministry so a Belgian ministry, but other elements like traffic lights, I know that the example is not concrete, but resort under a Flemish ministry or a Walloon ministry, see? And that complicates things. It is easier if you say OK, well traffic in general is two different ministries, a Flemish ministry and a Walloon ministry or it´s one Belgian ministry. Now what complicated things is that of course there are the hardliners, the separatists on the Flemish side, and the, well you would have to call them Belgiacists on the French-speaking side who are opposed to any, because they see it as, they interpret it as a loss of power so they are opposed to any reformation of the state. That´s also a minority. Also may 10%. Keri Phillips: The failure of negotiations over this electoral anomaly and how to proceed with further constitutional reform caused the Prime Minister, Yves Leterme to offer his resignation in July. This was rejected by the King, Albert II, who instead called on a small group of representatives from the three language groups to try to resolve the stalemate. Martin Conway: I think in many respects the monarchy is one of the key institutions for understanding the current crisis. Back in the period of the Second World War the King at the time, Leopold III, in many respects went along with the German occupation of the country, and after the war he did not return as King of Belgium, he was in exile. But there was a very great political crisis for roughly ten years about whether he should return as the King of Belgians. And that was resolved in 1950-1951 with a compromise, whereby his son, his eldest son Baudouin became King. Now Baudouin was then King for more than 40 years and although his beginnings were really rather unpromising, he became almost despite himself really, one of the symbols of Belgian national identity. And one of the rather astute political architects of solutions to crises. And then when he died suddenly in the early 1990s, there was a great outpouring of emotion about his death in the sense of Belgian identity being asserted through his death, but then he didn´t have any children and his brother Albert, who took over in the mid-1990s has been in many respects a very avuncular and kind of popular figure, but he clearly doesn´t carry the same sort of political weight as his brother. And there´s also the issue then of who will succeed because Albert has two sons, one daughter, and in many contemporary Belgians´ views, these figures don´t look as though they are destined the play the same role of being symbols of Belgian national identity. So just as there is a question mark over the state, there has to be a question mark over the future of the monarchy. Keri Phillips: How likely is it then that Belgium might have the kind of peaceful political divorce that Czechoslovakia had in 1992 becoming the Czech Republic and Slovakia? Martin Conway: It´s possible, it´s not likely. Whether it would ultimately lead to separation is I think the main issue that now preoccupies people in Belgium. People do not think that in the next two or three years Belgium is about to disappear off the map of Europe. The idea of what some people in Belgium called a divorce a la Czech, a Czech divorce, whereby Czechoslovakia fell apart very quickly. That never seems to be a possibility in Belgium, there are too many complex issues to resolve. There is the issue of Brussels and all the complexity of what you do with these French-speakers in the middle of Flanders; there´s the issue of the monarchy; there´s the issue of the national debt which is huge; there´s all sorts of problems which would take an enormous amount of problem-solving to resolve. So Belgium is not going to disappear. But I think what is more interesting and more interesting in a way as a model of contemporary Europe is the way in which not just Belgium but other nation state units in the 21st century Europe, are not working very well, are not satisfying their citizens in the same way, and we seem to be moving in 21st century Europe towards a sense that we´re going to have a lot of residual nation-states; nation-states that have not formally disappeared but have been rather emptied of a lot of their emotional power and a lot of their decision-making power, and that instead I would imagine in Belgium what we will see over in the next ten years is some more radical con-federal solution whereby we end up with a Belgium that still exists on the map, but where you might begin to colour the different bits of the country on the map in different colours, because they indicate the way in which the real power is in Flanders or in Wallonia. And they´re not that small either. Flanders would have under such a situation something like 6-million people, and Wallonia would have something like 3-million, and we have the problem then of Brussels somewhere in the middle. But look at the map of Europe currently, and of course there are places like Slovenia and so on that are members of the European Union, the Baltic States, which are not much larger than these political units and so in many respects Belgium is not breaking up into some sort of tiny little stone pebbles across the map of Europe. It´s probably engaged in some process of evolution towards becoming two or three smaller units, but as I say, that would probably be without formally abolishing Belgium, getting rid of the highly popular football team, getting rid of the in many respects highly popular monarchy. Those are things that I suspect will remain when the political power has moved much more emphatically towards regional government. Keri Phillips: Dr Martin Conway. We also heard from Belgian academics Martine Van Berlo and Patrick Pasture as well as the poet, Benno Barnard. Timothy Nicastri is the sound engineer for today´s Rear Vision. I´m Keri Phillips. read less
Sat September 27 2008
With the Rudd Labor government promising to establish a Carbon Pollution Reduction Scheme, Rear Vision takes a look at the history of carbon trading. What is it, when did the idea first emerge, why was it adopted by the Kyoto Protocol and just how successful have trading schemes been at reducing greenhouse gases? TRANSCRIPT: Annabelle Quince: Welcome to Rear Vision on ABC Radio National and Radio Australia. I´m Annabelle Quince. Emma Alberici: A few moments ago the Federal Government unveiled its Green Paper on its polluter pays plan, otherwise known as its Emissions Trading Scheme. Reporter: The whole plan is called the Carbon Pollution Reduction Scheme, at its heart is an Emissions Trading Scheme which essentially is a polluter-pays scheme. Under the plan the government will set a limit on how much carbon pollution industry can produce. It will then sell permits to allow companies to pollute up to that level. Mark Colvin: The Federal government´s climate change advisor, Professor Ross Garnaut has put some numbers on the table with his latest report on tackling climate change. From 2010 to the end of 2012, Professor Garnaut recommends that permits allowing businesses to pollute should cost $20 a tonne. After that, he wants the target for reducing greenhouse gas emissions set at 10% of emissions at year 2000 levels by 2020. He admits it´s not the best case scenario, but says it is the one which is most achievable. Annabelle Quince: The Federal government´s carbon pollution reduction scheme will be a cap and trade scheme. The government will set a target for Australia´s carbon emissions and then allocate permits giving companies a right to emit certain amounts of carbon dioxide. Companies can then buy and sell permits, depending on how much carbon pollution they want to emit. The debate around the scheme has focused on what effect it might have on the economy and whether Australia should be introducing such a scheme before other nations have signed on to carbon targets. Less attention has been paid to how effective cap and trade schemes are at reducing carbon dioxide and why it is these schemes have become so popular. Today on Rear Vision we´re going to take a look at the history of carbon trading, an idea that first emerged in the 1960s. Donald Mackenzie is Professor of Sociology at the University of Edinburgh and specialises in the sociology of financial markets. Donald Mackenzie: Cap and trade is essentially an invention by economists, and particularly a Canadian economist called J.H. Dales, writing in 1968. He was the first person who put forward the idea of an emissions market, in something like a fully fledged form. During the 1970s and the 1980s people primarily in the United States did try to set up these markets, but they did it in a kind of ham-fisted sort of a way, and the markets really on the whole weren´t very successful. What essentially got the idea going and made it influential was when in the United States the market in sulphur dioxide was introduced. Now sulphur dioxide is produced by electric power stations, particularly those electric power stations that burn coal. So people set up a cap and trade market in sulphur dioxide in the United States, they passed the legislation in 1990 and trading began in 1995 and that was really a pretty successful market. If you tried to reduce sulphur dioxide by traditional means, you´d have done something like have a piece of legislation that says that no power station is allowed to emit more than a certain proportion of sulphur dioxide in its emissions. The idea of cap and trade is that the flexibility that the trading gives you, enables you to make the reductions a bit more cheaply and by and large the economists who´ve analysed the American sulphur dioxide market did indeed find that that was the case. So the cap was met, but the costs of doing it here trading and these economists´ analyses were something like half of what they would have been if traditional means had been used. Larry Lohmann: I think there are several points to be made about this comparison. First, yes it´s true the sulphur dioxide scheme relatively speaking, was more successful than the other pollution trading schemes, which were tried out in the US, most of which were dismal failures, whereas the sulphur dioxide scheme at least had some success, being reducing costs apparently, although that´s still controversial. Annabelle Quince: Larry Lohmann works with environmental and social justice research NGO in the UK, called The Corner House. Larry Lohmann: However, there´s a lot of differences between the sulphur dioxide scheme and any scheme which would use cap and trade to reduce global warming gases. One of the first differences is that the sulphur dioxide scheme was very carefully designed so that it did not include what are called offsets, that is special pollution saving projects which allow polluters to continue polluting as long as they invest in some special project elsewhere, which is supposed to save pollution. And the fact that there weren´t these offsets which are very, very complicated, very, very difficult to measure and very, very controversial, helped the sulphur dioxide scheme in the US achieve some coherence. However, every single greenhouse gas trading scheme which has been proposed, including the Kyoto Protocol, including the European cap and trade system, also include these very complicated offsets. Another big difference between the sulphur dioxide trading system in the US and any global scheme to use cap and trade to control climate change, is the whole problem of measuring emissions. The sulphur dioxide scheme in the US became possible only because there were relatively few sources of sulphur dioxide to worry about and the emissions form those sources could be measured by the mid-1990s, so you had quite a good monitoring and measuring system possible. However, when we turned to the issue of global warming and greenhouse gases, that´s a quite different matter, I mean we´re talking about millions and millions of sources or carbon dioxide, we´re talking about a whole range of greenhouse gases, not only industry, we´re talking about transport, we´re talking about land use, emissions from cattle and so forth. I mean it becomes very complicated. And of course that measurement problem is compounded further by the fact that if you´re got some kind of emissions trading or cap and trade system that´s global in nature, then you´re talking about different jurisdictions, different national authorities. So there´s a lot of dissimilarities between the sulphur dioxide situation and the carbon dioxide or greenhouse gas situation. Annabelle Quince: How did emissions trading become part of the Kyoto Protocol? Donald Mackenzie: Well here basically we´ve got to look at the influence of the United States on the negotiations that led to Kyoto and of course it was the Clinton Administration at the time. They were very taken by the success of the US sulphur dioxide market, particularly by the fact that the costs of making the necessary reductions, seem to have been pretty low. Certainly a lot lower than people had feared. So essentially the Clinton Administration thought `We´ve found an effective tool, domestically, for controlling emissions, and let´s try it internationally.´ A lot of the rest of the world wasn´t at all keen on that. They feared for example that what trading would do would allow people to, as it were, buy their way out of making the emission cuts that were necessary. But the US was very influential, its Kyoto delegation was very energetic, very professional, and by and large they managed to pull the rest of the world along with them. Denny Ellerman: I think there were three things, that at the time the Kyoto Protocol was negotiated, Green parties were a part of the government of both Germany and France and were basically hostile to the concept. Annabelle Quince: Denny Ellerman is a Senior Lecturer at the Sloan School of Management, MIT, and specialises in Emissions Trading and Energy Economics. Denny Ellerman: Now the politics changed within Europe. There were several things that happened. On the one hand the Europeans recognised that they were in danger of not meeting their targets. As they went into the turn of the century around the year 2000, there was a growing awareness that Europe was not going to meet its targets, which they thought they were going to do before. And they needed something else. And this became the only means that seemed feasible, because they had proposed a unified carbon tax in the 1990s and that had failed. So there was nothing else left. Then you had about the same time when President Bush, the second President Bush, rejected the Kyoto Protocol. That led to a diplomatic effort of the Europeans to salvage the Kyoto Protocol. And that meant going back to the parties such as Canada, Australia, Japan, New Zealand, and compromising and embracing emissions trading in order to salvage the Kyoto Protocol, to which they place a lot of value, and once it became evident that that was the only way to get what were then called the umbrella group countries, that is, the United States, Japan, Australia, New Zealand, Canada, Russia, to agree was going to have to embrace emissions trading. So it because much more a part of the Protocol than it had been before. It was a part of the Protocol in 1997, but let´s say the European position evolved where they then created their own trading system. Annabelle Quince: The European Union scheme, which includes about half of all Europe´s carbon pollution, began in 2005. Donald Mackenzie: The European Union scheme in its first phase which ran from January 2005 to December 2007 was over-allocated. Too many permits were handed out. The consequent flaws that by the end of 2007 you could buy the right in Europe to emit a tonne of carbon dioxide for 4 Euro cents, for like trivial amounts of money. And it´s not only the European Union scheme that´s been afflicted by this tendency to over-allocation, because it´s essentially a political process, it´s a difficult thing to set up a carbon market, and it can easily be blocked by lobbying against it from industries who think they´re going to suffer and so on. So the easiest thing to do in germs of setting the thing up politically is to buy off potential industry opposition by being generous in your allocation of allowances. Now I´m not saying that in Europe that was consciously done, but the people who were setting up the scheme knew that it was always politically a bit precarious. If they had been too tough for example with the member states in their national allocation plans, then you could imagine a European Summit being called and the countries of Europe saying, `Now let´s just postpone it for a few years´, you know, that would have kicked it into the long grass and nothing would ever have happened. So the people who were getting this scheme going knew that there were political risks in being too stringent. And their hands were also a little bit tied by the problem of data. Because we might think that in advanced countries, we kind of know how much carbon dioxide we´re emitting pretty accurately but the reality is that we don´t know that with any great precision, because the figures at national level are a bit blurry and when you get down to the level of particular installations, well who in the past has ever cracked the emissions of carbon dioxide from those installations? So the data on which the caps were set just a little bit flaky and that also contributed to the problem of allocating more allowances than actually were needed. Annabelle Quince: One of the key aspects of any carbon trading scheme is how the permits to pollute are allocated. Larry Lohmann: At the beginning the designers of the system, the economists, said `Well what you do in a cap and trade system, in order to impose a cap, is the government hands out a limited amount of right to pollute to industry. And most economists would agree that the best way of doing that is to sell those pollution rights to industry, to have an auction, and different industries bid on them and the revenue goes into the government kitty and the government can then use that for beneficial purposes, preferably to do with dealing with the global warming problem. But what´s happened in Europe is that this was not even on the table at the beginning, because it was felt to be `Oh this is too much politics, and what we´ll have to do is to give the pollution rights away for free to industry otherwise industry will kick up a fuss and they´ll complain that it´s too expensive. How do we allocate them? Well I guess we´ll have to allocate the biggest number of pollution rights to the biggest polluters because otherwise they will squawk.´ So what happens is that in the end you have a system which is a polluter gains, or a polluter wins system rather than a polluter pays system. Donald Mackenzie: In effect what auctioning does is to transfer money from industries to governments, and of course, industries don´t like that. They´ll lobby fiercely against it. Auctioning for example, now is on the political agenda in Europe, but there´s a great deal of industry lobbying against it. So again essentially it was the politically necessary feature of setting up a big novel scheme in a situation, there´s a lot of political controversy potentially. It was politically simpler to allocate allowances for free than to try to auction them. Annabelle Quince: But did that have the ramifications that some producers of carbon actually ended up almost making a windfall from them? Donald Mackenzie: It absolutely did. And this I must admit because I´m not an economist, this took me a little while to get my head around because of course one immediately thinks, supposing you´re an electricity producer and hey, they government´s just given you this big bundle of free allowances, you would think that that wouldn´t affect the price of electricity because you get the allowances for free. But an economist will quickly tell you that that´s not so. An electricity generator after all, it´s a profit-making company and once you´ve got allowances, even the free allowances, they can of course earn money by selling off those free allowances. So what happened was that the market value of those free allowances got built in to the price of electricity. In other words, the price of electricity was higher than it would otherwise have been, so electricity prices rose even though the companies were getting not all the allowances for free, but a good proportion of the allowances for free, and of course that boosted the profits of the European electricity generators, they made windfall profits out of the scheme. They´re still making windfall profits, even though we´re now in the second phase of the scheme. The UK regulator reckons that during the second phase, the current phase of the European Union Emissions Trading Scheme which runs from January 2008 through to December 2012, the regulator reckons that the UK electricity companies are going to make a profit of 9-billion pounds. Annabelle Quince: So the electricity companies have made a bigger profit and consumers have paid more for their electricity? Donald Mackenzie: Exactly, exactly. Annabelle Quince: So has the Emissions Trading Scheme in Europe reduced carbon emissions? Denny Ellerman: We would argue the figure we use is that we estimate that emissions were reduced anywhere from 2% to 5%. It´s definitely had an affect, and I think what everyone has to understand is that at least during the trial period, that´s the period up through 2007, the ambition of the European program is very modest. It was not requiring big reductions and it did not get big reductions, but it did, that price of carbon did have an effect, and I think that´s irrefutable. Annabelle Quince: So basically you think the emissions decrease was somewhere between about 2% and 5% over the three year period? Denny Ellerman: Yes. 2% to 5%. I´d be surprised any more than 5%, and I think at least 2%, somewhere in there. But it had an effect. Annabelle Quince: I mean I guess a lot of people would say actually that´s a pretty small amount and if that´s really all carbon trading can do, is it the best method to actually use? Denny Ellerman: Well it is a small amount but I go back to the point I made, the ambition is very modest in the European system and I would observe it everywhere we observe any sort of real carbon constraint, the ambition is modest. Now the ambitions are very great for 2050, but that´s 40 years from now and the task currently is and the view would be in Europe, is simply to have a mechanism in place that puts a price on carbon and starts changing investment decisions, changing operational decisions, encourages innovation and will lead to a transformation over a much longer period of time. It´s not going to transform it immediately. Europe looks very much today just as it did three years, four years ago before they had a carbon price. It´s had effects, but you wouldn´t see it if you travel to Europe and went around, it wouldn´t look any different than it did in 2004. Larry Lohmann: One thing that just about everybody agrees on now is that in order to deal with global warming, we´re going to have to tackle the major polluters. I´m talking about sectors like the electricity generating sector, the chemicals industry, cement, transport, aviation and so forth. However, cap and trade is actually designed to do just the wrong thing. It´s designed to give the major polluters an incentive to delay. How does that work? Well if you´re a major polluter and you´re locked into fossil fuels, you have your whole capital plant committed to fossil fuel dependence, obviously it´s going to be a very major task for you to think about switching over to some other kind of business or switching over to some other kind of generation than fossil fuel dependent generation, and obviously you don´t want to do that right away, and cap and trade actually gives you a means for not doing that right away, for delaying. How does it do that? Instead of starting to invest in a different path, a different development path, a different kind of generation, you can simply buy cheap carbon permits or pollution rights from people who have them to sell. So it actually gives the big polluters, the ones who are most strongly committed to fossil fuels and who have most at stake, another incentive simply to delay, to put off action. And is that we really need with the global warming problem? Yes, of course, cap and trade in the short term would save those big polluters money. But are we really dealing with the root of the problem in fossil fuels if we´re allowing the people who are most dependent on fossil fuels simply to delay that crucial first step in reinvesting and a different way of doing things. And this actually also addresses directly the question of cost savings. I mean the big calling card of cap and trade systems is that they save money especially save money for industry. But the question is save money over what time span? And the answer is, cap and trade saves money for the big polluters in the short term. But everything that history teaches us about industrial transformation tells us that actually what matters in a problem like global warming is the costs over the long term. And it could well be that by giving the big polluters today a breathing space, allowing them to delay; we´re actually building up costs for the long term. Donald Mackenzie: If one had a free political choice then I think there are good arguments that emissions trading isn´t the way to go, because a carbon tax in many ways is actually a simpler kind of instrument, and indeed in some economic analyses it´s seen as having preferable properties to emissions trading. So a combination of a carbon tax, direct government support for research and development, maybe public investment in the big stuff that needs to happen like refashioning electricity grids so that you can make the best use of renewables. A package like that would be very attractive. But of course we do live in the real political world and one of the great advantages of emissions trading schemes is that they´re often politically feasible in contexts where simply a carbon tax isn´t actually politically feasible, because what an emissions trading scheme can do is to create a kind of alliance between environmentalists who are on the left by and large, and free marketeers on the right, who like the trading aspect of it. And that kind of alliance can actually be quite important politically. But what I would say is this: that if you´re going down the route of carbon trading, you´ve got to make sure that your carbon trading market is effectively designed, and above all you´ve got to make sure that you´re not actually handing out more permits than are really needed, because if you do that, then the whole thing becomes kind of pointless. What´s happened in Europe, and I think this is an important thing to say, that despite all those problems in the first phase of the scheme that ended in December, 2007, the very existence of the scheme has changed the political landscape in Europe. When the scheme was first started you could easily imagine it being blocked. Now it´s there, very hard for people who are unhappy with it to stop it existing. So what´s happening in Europe is that the scheme wasn´t very effective when it first started, but it´s getting more effective and I can imagine it becoming more effective still in the next phase of the scheme that begins in 2013, because then we might start getting significant auctioning for example, rather than free allocation. It´s taken time, but I think the European Union scheme shows that with good planning, a dedicated skilled team of people at the centre, and I´m very impressed by the European Commission people who set the scheme up, and at least reasonable levels of political support, and you can get a carbon market to work. Annabelle Quince: Donald Mackenzie, ending today´s program. Our other guests were Larry Lohmann and Denny Ellerman. The sound engineer was Jenny Parsonage and this is Rear Vision on ABC Radio National. I´m Annabelle Quince, thanks for your company. read less
Sat September 20 2008
After a week of almost unprecedented drama on global financial markets, Rear Vision revisits the 1920s and the events that led to the stock market crash of 1929. This program was first broadcast 27 April 2008 TRANSCRIPT: Annabelle Quince:Welcome to Rear Vision here on ABC Radio National. I´m Annabelle Quince and today the story of the 1929 stock market crash. Reporter:It was a Monday morning like none other in the 158 year history of financial giants Lehman Brothers the company went bankrupt. Man:The most shocking part is that I don´t think anyone expected a bank as big as Lehman´s to be in a position in a position as it is now. Reporter:There was no skill in predicting the opening on Wall Street today with one of its premier investment banks bust and another taken over for its own safety confidence here has been dealt a massive blow. Mark Colvin: Analysts are now freely making comparisons with the Great Crash of 1929 and the Second World War. The crisis is transforming financial markets and freezing credit markets in the process. Annabelle Quince:Over the past 9 months the global financial system has been racked by instability due to subprime mortgage crisis in the US. A crisis resulting from loans make to people with a less-than-ideal credit record who now can´t to repay those loans because of the slump in the US housing market. This week US investment bank Lehman Brothers announced that it´s filing for bankruptcy, brokage firm Merrill Lynch agreeing to sell itself at a knocked down price to Bank of America and the US Government bailed out insurance giant AIG. These announcements followed hard on the heals of the bailout of two of the US´s largest mortgage lenders Fannie Mae and Freddie Mac. And it´s not just in the US - banks and financial institutions across the globe are feeling the effects. So what does this mean for the global finance system and for stock markets everywhere? While we can´t predict the future - we can look back to another time when the financial system failed and a period of economic optimism was followed by a period of economic turmoil. Today we revisit the story of the 1920´s and the events that led to the stock market crash of 1929 and a decade long Depression. Man: American can 181 and 7/8ths ... Narrator - Ed Murrow: It was 1929, the year of the golden glow of the boom, of the bull market, when a nation with a rainbow round its cocky shoulder, stumbled on what appeared to be the permanent plateau of prosperity. The capital was still in Washington, but the nation´s pulse was to be felt where two swollen arteries named Broad and Wall Streets met. Robert Sylla: In 1919, 1920, New York became the financial capital of the world. You know, London was that before 1914, New York became the world financial capital. So Americans were quite optimistic going into the 1920s. Annabelle Quince: Robert Sylla, Professor of Economics and Financial History at the Stern School of Business, New York University. Robert Sylla: There was a bit of a post-war recession in 1920–21, but then there was a very nice recovery and as the decade went on, Americans got more and more optimistic. There were a lot of new technologies, the Radio Corporation of America, which made radios was the hot technology stock of the 1920s, and it soared like dot com stocks did in the 1990s. The automobile makers, General Motors, was doing very well. Airplanes were coming in, too, so that the modern commercial aircraft industry got its start in the 1920s. A lot of electrical utilities and people who made electrical appliances, these were all kind of new technologies in the 1920s, and they captivated the investors of the 1920s just like dot coms and computers and the Internet, the information technologies did in more recent times. The Roaring `20s sometimes called, a period of great optimism in the United States. Annabelle Quince: And it was interesting; you said that the centre of the financial world really shifted from London to New York, or to America, and was that very much the same for the stock market? Did the New York stock market through in the post World War I period become really the most important stock market in the world? Robert Sylla: I think it probably did. Americans invested a lot in war bonds during World War I, then after the war, this got many Americans used to investing in financial securities, and after the war, the government paid off some of the debt, which put money in people´s pockets, and then Wall Street rallied to the occasion by inviting Americans to invest more in stocks and private bonds and so a great many people began to play the stock market in the 1920s, people who hadn´t done it before World War I. The stock market was kind of the playground of the rich. In the 1920s, Wall Street became the playground of ordinary, middle-class Americans. Narrator - Ed Murrow: There the stock market reflected a nation´s fever. Everyone played the market. The financial page was read by more people than the sports page. The barber and the cab driver talked about the kill their cousin had made in copper, and everybody talked about margins. Annabelle Quince: Peter Spencer is Professor Finance at the University of York, in England. Peter Spencer: What was interesting about the 1920s was that share ownership migrated out from the very rich to ordinary people, and in just the same way as ordinary citizens in China are now punting on the stock market, so we saw a lot of that kind of spread of wealth and spread of stock market interest to ordinary people in the US during the 1920s. Robert Sylla: Roughly speaking, the stock market doubled in value between 1925–26 and 1929, which meant that it was rising at something like 20% a year. 1928 was a very good year and then 1929 was a very good year, up until stocks peaked at the beginning of September in 1929, and the Dow Jones average, which started out at I forget, but at below 100 back in the late 19th century, it was almost 400 at the peak in early September of 1929. The best thing to say is that in the three or four years before the peak in 1929, the stock market more than doubled. Annabelle Quince: Harold Bierman is the Nicholas H. Noyce Professor of Business Administration at Cornell University. Harold Bierman: Well you have to understand as you look at the market going up the US economy was going full blast in real terms. The automobile industry had developed into a major industry, the steel industry, electricity was spreading throughout the country. Railroads were expanding. Obviously things like coal, steel. So, well, the stock market literally doubled from let´s say ´27 to 1929. The fact is, that if you looked at any of the appropriate measures of economic vitality, as late as October of 1929, all the signals were good. There was no inherent reason why the market crashed in 1929. You look at automobile production productivity, all the signs were positive, so that when the newspapers in the summer of 1929, magazines, spoke about the economic environment. They were very bullish measures. Robert Sylla: People still disagree on that. I think what happened in the late 1920s is that corporate earnings were at a kind of all-time high in relation to GDP we´ve seen at other times, but the late `20s were one of those times when earnings were unusually high. But some people say, based on fundamentals, that those stocks at 20 times earnings, weren´t so over-priced, and it is true that American business was doing very well. On the other hand I think, as an economist, that the over-optimism led to over-investment, so anyone might see that corporate America would have to be lucky to continue selling its goods at the same levels of the late `20s going forward, and so maybe they over-invested. And then there are some definite signs of speculative orgy in the 1920–29 period. Some closed their mutual funds, you know, just packages of stocks that were based on stocks already richly priced, and then Goldman Sachs let´s say would package them into a Goldman Sachs fund and then the fund would go to a premium over the richly priced stocks that were in it. That´s what some people say as evidence of a bit of a speculative orgy. Harold Bierman: Congress, the Federal Reserve, the President of the United States, were very bearish on the stock market. They blamed the New York speculators for inflating stock market prices and it´s proof they looked at the growth rate in prices rather than looking at the relationship of the stock market prices and real profits of the corporation. Surveys of corporate profits, dividends and so forth in 1929 all beat 1928 by a significant measure right up until the third quarter, and if I were a stock buyer or seller in 1929, in September I would have bought stocks. Everything looked good and then the market crashed. And there´s an important lesson there. You can have a stock market crash without a general over-riding reason for the crash. Annabelle Quince: One of the features of the stock market during the 1920s was the growth of margin lending. Narrator - Ed Murrow: Few of the millions of people who were playing the market owned their stock outright. Most of it was on margin, and to do this, more than $6 billion had been borrowed from banks and brokers who would be forced to call if panic seized the market. Man: Margins, must have more margins. Robert Sylla: In the 1920s the big new thing that happened is all kinds of middle-class people came into the stock market and they found that they didn´t just have to rely on their own savings to invest in stocks, that the brokers and the banks were willing to lend them money and so a lot of the stock market boom was financed on margin buying, where people borrowed money, and of course that´s the way of getting leverage. You know, if you put down $100 and borrow $100 or more, if the stock goes up, you know, you kind of magnify your percentage profits because you only have to pay back your loan and you get to keep the rise and the equity value of the money you borrowed. Harold Bierman: Back in 1929 it was thought that brokers were lending money too freely and the interesting thing there is it was the brokers´ money, and guess what? The brokers were very careful about who they made the loans to, with the result that no brokers went bankrupt after the ´29 crash. The margin buying was not excessive. It was there, but it wasn´t excessive, and yet in 1929, ´30–´31, the crash was attributed to the margin buyers. And there were a lot of half-truths. It was thought that there were people manipulating the market. Even back then when there weren´t the SEC rules, it was very hard to manipulate the market. Annabelle Quince: The Reserve Bank responded to the great flurry in speculation by putting up interest rates in August of 1929, and I´m just wondering, did that have an impact at all on what led up to the crash? Robert Sylla: I think it had a negative impact. You have to remember that even earlier in the year, some people at the Federal Reserve Bank were thinking stocks were over-valued by the end of 1928 and early 1929, and they wanted to push interest rates up, but then other people came in and said, Well you know, that wasn´t really the right thing to do. I think Citibank, a private bank said, Don´t worry about it, we´re going to lend you money to buy stocks. But by August of 1929, those stocks were moving up to this previous all-time peak, then the Federal Reserve did raise interest rates and the peak was 380-something on the Dow Jones Average, and by October 24th, it was down to 300, so the Federal Reserve´s raising of interest rates at the end of August, beginning of September 1929, actually led to a fairly substantial decline from 380 down to 300 by October 24th. And that´s just before the crash itself began. Narrator - Ed Murrow: At 10 o´clock on the morning of October 24th, the traditional bells sounded across the Exchange and another day of trading got under away. Man: General Electric, 315, General Electric 310... Narrator - Ed Murrow: But by 11 o´clock, it was apparent that this was no ordinary day. This was to be Black Thursday, and for a number of well-known stocks, no buyers could be found at any price. A constricting ripple of fear spread over the stockholder floor and to every corner of the nation. Robert Sylla: We in financial history view the crash proper as a period of about three weeks from October 24th, 1929, until about November 11th or 12th, 1929. That´s when the Dow Jones Average fell from roughly 300 down to slightly under 200, so it lost 33% of its value in that three week period. The worst days were October 28th and 29th, Black Monday and Black Tuesday, stocks lost about somewhat over 20% of their value. So two-thirds of the crash proper happened on those two days at the end of October. Narrator - Ed Murrow: Still there were no takers as values continued to fall. October 29th, the bottom fell out of the market. No buyers were to be found for anything. In that one fateful day 60-million shares had changed hands. In a day which left the mighty national shrine a bedlam of horrors. Robert Sylla: It is true that over the next few years the stock market went vastly lower, but what people sometimes forget is from November 11th or 12th, 1929, until sometime in April 1930, the stock market recovered most of the ground, almost all the ground it lost in the crash proper. That is, it rose from slightly under 200 all the way back up to around 300 again from November '29 to April 1930. Peter Spencer: It was episodic. We saw interest rates going up and the stock market moved down 10%, 15% and it seemed to settle there for a couple of weeks and then it broke down again moving down by another similar amount, and that kind of pattern of sharp falls followed by what appeared to be a stabilisation. That continued well into the summer of that year, and eventually the fact that interest rates were not cut meant that those downward lurches continued. Annabelle Quince: For a lot of people, whether it´s true or not, there´s a clear connection between the 1929 crash and the Depression that followed, and I suppose that´s the sort of chronic fear now, that any crash in the stock market could lead to a much broader and wider depression. Harold Bierman: Yes that´s absolutely true. Annabelle Quince: And is that fear justified, do you think? Harold Bierman: Well the market had crashed in December of ´29, it was still down but not as far down as in September, and economic variables were not that bad. Weren´t as good as the summer of ´29, but weren´t that bad. So you had a situation where if the Fed had allowed the banks access to more money, an ability to lend, lowered interest rates, that sort of thing, it might have avoided the Depression. Certainly Friedman and Schwartz in their classic study of 1929 identified the tightening of money by the Fed in the winter of ´29 as being a major factor leading to the Depression. So I think it was a combination of the stock market crash and an ill-conceived policy on the part of the Federal Reserve that led to the real Depression, real downturn in incomes of corporations and so on. Before the 1930, the economic outputs of corporations indicated prosperity; after the winter of ´29-´30 there was less optimism. Things started to look dark, and they got darker and darker from ´30 to ´31, ´32. Narrator - Ed Murrow: The arteries of commerce were clogged, with 5,000 bank failures, 45,000 miles of railroads fell into bankruptcy. Big business that didn´t fail, retrenched and contracted; 12 million unemployed. 1931 brought the breadlines, and the soup kitchens and the apple sellers and more unemployment, 50 million now. This indeed was total Depression. Annabelle Quince: One of the things that happened after the crash in 1929 was that there was real problems in the banking industry, and I suppose when people look at the problems that happened then, and the problems that are happening now in terms of the various banks to do with the subprime market, are there comparisons there as well? Robert Sylla: Well there´s a superficial similarity. American banking was quite different back in the 1920s. We had tens of thousands of banks, many of them just having one office and making loans to local communities. Now we´ve had a lot of consolidation in our banking system. I mean here´s a rough statistic: there were three times as many independent banks in the United States in 1929 as there are today. So we´ve consolidated our banking system a lot. When our banking system was not so consolidated back in the 1920s, it was much more vulnerable to banking panics, because the banks were less diversified, just having one office and lending to a small community. So what happened then in 1930–33, is all kinds of these banks failed, and the reason was the Depression itself; the bottom fell out of the economy and what might have been good loans at higher prices, when prices went down a lot, borrowers couldn´t repay their loans, therefore the banks couldn´t repay the depositors, and we did not have deposit insurance then. We got many of our current banking protections as a result of the debacle of 1930–33. Now in the current period it seems to me that our banking is much safer, we do have deposit insurance, the Federal Reserve seems to do a much better job of managing its monetary policy today than it did in the 1930s, you know, people from Milton Friedman and many other noted economists, kind of blamed the Federal Reserve for getting us into the Great Depression. The Federal Reserve seems much more astute today. Nonetheless, the housing bubble led the banks into over-lending and now the banks are losing money. They´re not failing, not many of them are closing their doors, but they´ve certainly taken their lumps in terms of banking profits. For some of the same reasons, they made unwise loans, just as they did back in the 1920s. Annabelle Quince: In the last few months, unlike 1929, the US Federal Reserve has dramatically cut interest rates in response to the subprime mortgage crisis. What is uncertain, however, is whether these cuts will be enough to kick-start a failing US economy. Harold Bierman: I´m not critical about those efforts, but I think it was John Maynard Keynes, or one of his buddies, that said you can´t push on a string, you can lower interest rates, but what you want are corporations to invest and consumers to buy and that doesn´t necessarily happen just because you´ve lowered interest rates. The market will be somewhat encouraged by the lower interest rates; house mortgages will come down in terms of cost, those are all good things in today´s market. Whether they´ll achieve the objective or not I don´t know, but in addition, Congress is about to pass $150 billion, $160 billion package to stimulate the economy. That´ll do something, but whether it´ll work or not, we don´t know. I´m optimistic that one way or another we´ll avoid a full-blown Depression recession, and after 12 months the real estate market will come back. After all, the ability to produce a whole lot of industries were touched by the subprime mortgage mess and I´m optimistic that we´ll find a way out of it. But could bad things happen? Yes. Should you live your life based on bad things happening? No. Annabelle Quince: So in essence, I suppose what you´re saying that we have learnt quite a lot since 1929, but in essence when the first major stock market bubble in modern times occurred, which was in the 1920s, we really had no idea how to deal with it, did we? Peter Spencer: That´s precisely it. Annabelle Quince: And since then you think that the levers that the Federal Reserve now have in terms of the use of interest rates and what we´ve learnt about interest rates, really is enough to ensure that we won´t slide into that kind of severe recession depression again? Peter Spencer: Yes, I think that is right. I wouldn´t think that we´re in for the kind of decade-long depression that we saw then, and were ultimately only lifted out of by the war. Annabelle Quince: You say that as though you sound as though you´ve got your fingers crossed. Peter Spencer: Well as I said earlier, you have to reach for a pretty large piece of wood when you´re saying something like that. But no, I´m as confident as an economist can be of that. Harold Bierman: Well I think it´s important to stress the fact we don´t really understand the crash of ´29. I would say that most people and I include academics in the mix, do not understand why the stock market crashed in 1929. But the important lesson is yes, a drastic crash can occur without a seemingly good general reason. It can just be a narrow segment of the market, and today we have the subprime mortgage mess, which is a narrow segment of the market. Is it enough to trigger an overall decline? It already has. Is it going to turn into more of one? The person who knows that is going to get awfully rich. Annabelle Quince: On today´s program you´ve heard from Robert Sylla, Harold Bierman and Peter Spencer. Archival material today came from the documentary `I can hear it now 1919–1949´ and was narrated by Ed Murrow. Today´s sound engineer was Jenny Parsonage. I´m Annabelle Quince and this has been Rear Vision on ABC Radio National. Thanks for your company read less
Sat September 13 2008
Seven years after the terrorist attacks of 9/11, the World Trade Center site in New York is still largely a big hole in the ground. Why has rebuilding taken so long? TRANSCRIPT: Keri Phillips: Thanks for joining me for Rear Vision on ABC Radio National. I´m Keri Phillips. Woman: We heard a big bang and then we saw smoke coming out and everybody started running out and then we saw the plane on the other side of the building, and there was smoke everywhere, people were jumping out the windows, and then I heard that another plane hit. Oh my God. George W. Bush: I want to reassure the American people that the full resources of the Federal government are working to assist local authorities to save lives and to help the victims of these attacks. Keri Phillips: It´s now seven years since the terrorist attacks of 9/11 but the World Trade Center site in New York is still largely a big hole in the ground. In July, the owner of the 16 acre site scrapped the rebuilding schedule, saying nearly every project is delayed and over budget. The work on the five skyscrapers, the transport hub and the memorial, won´t be finished by 2011, the 10th anniversary of the strikes that brought down the Twin Towers. Today, Rear Vision looks at what´s happened to Ground Zero. Paul Goldberger is the architecture critic for The New Yorker and the author of `Up From Zero: Politics, Architecture, and the Rebuilding of New York´. He says that the city was in a state of trauma after the attacks and people were divided over what best to do with the site. Paul Goldberger: There were some who wanted to hold off on any decisions for a long time. There were some who felt it was wrong to build ever, and then there were some who wanted to do as much as we could, as fast as we could. And in that category was the then Governor, George Pataki, I think in large part because he felt if he could show that he had overseen rebuilding of the site rapidly, efficiently and productively, it might put him in a position to run for President in 2004. Well, as we know, he certainly did not run for President in 2004, or any other year. But what he was trying to do was take what he thought was the shortest and most direct route to getting things built quickly, and that was to leave all the players in place. You know, the Twin Towers had been built by the Port Authority, which is a large sort of public agency controlled by both New York and New Jersey. The Port Authority had leased the Twin Towers to a private real estate developer, Larry Silverstein, so we already have a somewhat odd situation of semi-public property that has been leased to private owner, and the Governor thought that if he just let them in effect rebuild, rebuild what they had there before, which was 8-1/2 million square feet of office space, and a lot of shopping and stores, then that would be the quickest route, and the only thing is of course, it wouldn´t be rebuilt in exactly the form it was before, wouldn´t rebuild two hundred-and-ten-storey towers but some other kind of configuration. Anyway the Governor turned out in fact to have been catastrophically wrong, because he did not take into account the fact that there are not only all kinds of other points of view here, but that everybody felt because this piece of land was so important, so unusual and so extraordinary, that everybody had a sort of vested interest in it, everybody felt they were a stakeholder to some extent in it, not just the agency that built the World Trade Center and the private real estate developer who technically owned it at that time, or leased it, but also of course all of the families of people who had been killed there, but also the companies that had had business in that area, people who lived in that area. When the World Trade Center went up in the late 1960s nobody lived in Lower Manhattan, it was a sort of desolate financial district. But over the years, it had become a much more diverse, interesting, vibrant neighbourhood, with a lot of people living in it, and so they all had a vested interest, because this was outside their front door. And then of course there were the tourists and all the other New Yorkers. And in a sense, just about everybody anywhere, because everybody was watching this very carefully. So that was part of the problem, too many different people wanting too many different things. Sorting it all out became extremely difficult and time-consuming, and there were also horrible fights about who was going to pay for everything, insurance proceeds, where they would go, all of that sort of stuff. Keri Phillips: Kurt Andersen is a New York novelist and journalist, former architecture and design critic at Time Magazine. Kurt Andersen: You know right a way for instance, Rudy Giuliani who was Mayor when it happened, his instinctual response was `Well, let´s not build anything there, let´s just leave it and make it a park´, which was, frankly, to me a beautiful response, that didn´t get any traction and within a matter of weeks and months, was not even on the table as a possibility. So then it became this complicated process. The grown-ups said `No, it´s a piece of land that is worth billions of dollars, and it has real estate value and these buildings were destroyed and have insurance value´, and all of the sort of banal realities of the marketplace came back to the fore, and therefore it became a real estate question, of how much retail space do we need to build? How many offices do we need to build? Should it be offices or should it be apartments? But really, it became a real estate discussion, and to some degree an urban planning discussion. But then it became this sort of public discussion where they invited architects and planners to propose different ideas and designs for what would replace the World Trade Center, and those were indeed these giant public forums with thousands and thousands of citizens off the streets, expressing their opinions about things. But again it was - people were sort of making - the authorities were making it up as they went along, and those public discussions, as it turned out, had no binding authority. Paul Goldberger: The next critical factor I think was the enormous outpouring of public interest and concern for the site. Most people didn´t understand for quite a while that the Governor had made the decision he did, because the Governor also talked a great deal about wanting an open planning process, wanting to hear everybody´s views. Well in fact, he didn´t really, because the most important decisions had been made in private, but there was a lot of public discussion, endless public hearings, programs, all kinds of sessions as well as all kinds of things written by journalists, and there was one key moment in the summer of 2002, so a little bit before the first anniversary of 9/11, when six initial plans had been released a few weeks earlier, I should say. Oh, and by the way, I should mention that the Governor created a new agency called the Lower Manhattan Development Corporation, intended to oversee the rebuilding. Which made it only more complicated, because you had both the Port Authority and Larry Silverstein, but then you had a third agency, the Lower Manhattan Development Corporation in there as well. And the struggle between those three, it was really a true triangle and each pulling and pushing made everything enormously complex and difficult. The Lower Manhattan Development Corporation released in the spring of 2002 what he´d said were going to be six alternative visions for the site. And people expected that that would be truly six different options, it would be maybe one would be housing, maybe one would a park, maybe one would be a memorial, and so forth. Well, it turned out they were really six different ways to arrange office buildings on the site. But what architects call The Program, which is to say what functions are going to go there, was exactly the same across all six projects. And they were all done by one architect, so they were really just sort of variations on a theme, but they were pretty much the same. Well, at a large public meeting in the summer of 2002, those plans were violently shot down by I think it´s fair to say, an outraged citizenry, at which point the officials in charge had a rather awkward decision to make: either they could change direction somewhat, or say they were changing direction, or they would have to say We didn´t really mean it when we said we wanted to hear what the public thought, because we´re ignoring it. What they did was rather clever and sly. They said they were going to re-think everything and they were going to reach much higher and they opened up the process to architects from around the world, and invited them to submit proposals for a new master plan for the Ground Zero site. But the program never changed. It was still all this office space, a lot of retail space, and a memorial to those who died of course, but that was basically it. There was no other program, no other idea permitted. Keri Phillips: The competition excited a great deal of interest around the world. Ultimately the master plan created by Daniel Libeskind, whose designs include the Jewish Museum in Berlin, was chosen. But Paul Goldberger says he had very little power over what was to be built. Paul Goldberger: A master planner is not the same as an architect, and so all of Libeskind´s ideas for what sort of buildings should go there, were dismissed, and the buildings became much more conventional, the pressure to continue to operate this as a profit-making piece of real estate ultimately pushed other things aside, and that´s pretty much where we are now. That´s real shorthand of course, I can tell you a lot more details such as the fact that the Freedom Tower, which is the main building that was envisioned as the symbolic high point of the site and the sort of symbolic replacement of the World Trade Center, the design for it by Daniel Libeskind did not come to pass. It was a much more ordinary design by Skidmore Owings and Merrill, the architect preferred by Larry Silverstein, and then that design had to be radically re-done when the security officials reviewed it and said they felt it was not secure enough and they had it re-done with a 20-storey high solid base, 200 feet high, nothing but in effect a bunker. So it became a very forbidding and uninviting and cold and anti-urban and anti-social design, and many people felt that despite the fact that it was called the Freedom Tower, it was a terrible advertisement for freedom. I said at one point it should have been called the Fear Tower, not the Freedom Tower because it seemed to be suggesting quite the opposite. Probably it will only be occupied by government offices because private tenants so far at least, have shown no interest in moving into it. And there´s also been a series of problems with cultural institutions that were invited to the site, and they´re never given money to actually build, and so forth. So at the end of the day it´s turned out to be really just a commercial project and not a place in which we have been able to show the world what America could do and might wish to stand for. Keri Phillips: You´re with Keri Phillips on ABC Radio National. Today on Rear Vision we´re hearing about what´s happened at Ground Zero since the terrorist attacks brought down the Twin Towers in Lower Manhattan in 2001. Newsreader: Officials in New York say the project to rebuild the World Trade Center is behind schedule and $3-billion over budget. Reporter: The New York Port Authority says only part of the memorial will be completed in time. The Authority says the centrepiece of the project, the 541-metre tall Freedom Tower, might have to be scaled back if the $15-billion budget continues to blow out. The budget has been affected by the soaring price of commodities and the bureaucratic wrangling of 19 different city, state and federal agencies taking part in the project. Kurt Andersen: From the beginning there was talk of, and an intention, to build various cultural facilities, as a sort of suitable memorial, beyond The Memorial itself. And there would be a museum, there would be performing arts centre. Frank Gehry was hired to design one of those, and there would be a Freedom Museum. One by one, for various different political, financial, lack of vision, lack of political will reasons, those things have all gotten cut out of the plan. And now there is again, nothing but a plan for mediocre or worse commercial real estate, high rises, to be built. To me, it has turned into a kind of case study in dysfunctional civic design, and urban planning, instead of being what it briefly looked like, as I say, this sort of, a silver lining of this horrible attack was the opportunity to rebuild better than it had been and to create extraordinary designs and buildings. Well in the end, the building that´s being built, the so-called Freedom Tower, has as its main design feature, the fact that it´s 1,776 feet tall, thus referencing the year in which the United States was founded, 1776. If that passes for design excellence, we´re in big trouble. It´s interesting, I mean I think New Yorkers were highly displeased over the state of affairs for a couple of years, but at this point they´ve sort of forgotten about it almost, they´ve moved on and decided OK, you know, squandered opportunity, we don´t want to spend more time thinking about that, or for that matter, reminding ourselves of this horrible moment seven years on; what´s the point of bumming ourselves out even more by looking at what we haven´t been able to do to repair and heal the physical wound? Keri Phillips: As a construction site, the World Trade Center does have some extraordinary physical challenges. It was built on landfill dumped in the Hudson River, and to keep the river out, its foundations were set in a giant concrete box, like a swimming pool, that covered the entire 16 acres. Paul Goldberger: That´s the first difficulty. All those retaining walls and so forth which had to be rebuilt, reinforced, but kept, because of course those conditions still remain. Another difficulty is the fact that the site contains two different subway lines, plus trains that come on a special line across the Hudson River from New Jersey, all of which cross in different ways within those 16 acres. So there´s all of the complicated transit stuff going underneath. The site also has roads going around it, and will now have roads again going through it. One of the decisions that was made as part of the rebuilding process, that´s actually a very positive one, was the decision made to put back some of the streets. When the World Trade Center was built, it was a time when Super Blocks were very much in style in the `60s and everybody thought the best way to make a big urban development is to just create a huge concrete plaza that covers different streets and gives you enormous open space and the buildings are sort of plopped down like pieces of sculpture. Well we´ve now realised that that in fact is not a terribly good way to build a city, that conventional streets are really much better. And thankfully most parties agreed here that putting back at least several of the key streets was going to be a part of any plan, whatever we did. So that too is a complex complication, because the streets have to come back over the site where they´ve been removed. And then of course all the other things that exist in any site, sewage lines and electrical lines and all those other things that in a huge site, become even more complicated. And then, one more factor, is that because of the tragic history here, there was a belief that a particularly high level of security is going to be required, and the public officials said that rather than allow deliveries to each of these buildings individually, there would be an underground truck gathering place, where deliveries to all these various skyscrapers would come in, the trucks could be inspected to be sure that they did not contain any explosives or anything else dangerous, and then from there, underground, the different buildings could be reached. All that is also much more complicated, expensive and time consuming to build. The creation of that whole underground world is a legitimate reason for taking a while. I´m not sure it justified taking quite this long but it certainly explains why this could never have been done quickly. Keri Phillips: The need to provide a high level of security means that the New York City Police Department has also had a say in what could be built. Kurt Andersen: The understandable desire for security at this place that everybody imagines `Well, this is going to be another target´, that´s a legitimate fear, obviously, but it doesn´t blend well with any sense of great urbanism, or making this a living part of the city, and now and lately they are saying as well, `Well, yes, I know we talked about building these streets all the way through to have this be a vital, open part of the city again, but no, we want little police kiosks at every entrance and every corner. So do we really want a multi-billion dollar centre of mediocre real estate, mediocre architecture, that the main reminder of what happened to it on 9/11 is the fact that it is bristling with armed police officers, which is really unfortunate, and really, to my mind, suggests that Giuliani´s initial `Oh let´s just leave it as a park´, not only was that a kind of poetic impulse and response at the time, it may frankly, given the security that the New York police, firemen and others believe is necessary, it may have made more sense. Keri Phillips: Although Kurt Andersen makes it clear that he doesn´t blame survivors´ groups for the delays, their particular needs became an extra complication in planning negotiations. Kurt Andersen: Where the buildings should stand, the specific design of the memorial; whether the Freedom Museum was sufficiently pro-American, you know, anything that the leaders of these sort of ad hoc survivors groups decided was within their purview and rubbed them the wrong way in the prospects or not, the fact they were part of along with Murdoch´s New York Post, and the sort of right in New York city, some of those groups and their leaders were part of the objecting to the fact that this museum that was going to be part of the cultural centre, might ever have something that could be perceived or construed as anti-American, so it became this endless, stupid political debate, when there were opportunities for political debate. And again as I say, I mean they had a perfect right to weigh in strongly on whether the names of the victims should be alphabetical or whether police should be identified as police and all these - I understand that, but in terms of the other parts of the 16 acres and what museums should be here and what dance companies should be there, and whether these should be apartment buildings, or offices. I mean because there were no protocols for who had what role in this, everybody could claim whatever role they wanted, and so there was nobody coloured within the lines, everybody could either not step up when it was proper that they did step up, as I would argue the Governor of New York and probably the Mayor of New York didn´t step up when they should have, and then people like the survivors groups, when they felt what they had heard would be offensive to them, they would step up. So the rules of the road which obviously didn´t exist in a situation like this, but were never set up. From the beginning it was never clear who had what responsibility for what, and who had a say where, and it was a kind of participatory democracy run amok. Keri Phillips: The Freedom Tower, originally scheduled to open in 2006, is unlikely to be ready by 2011. Ultimately there´ll be four more office towers as well as what most agree is an inspired transportation hub designed by Spanish architect Santiago Calatrava. Those running the 9/11 Memorial and Museum, funded by public donation, say it will be ready for the tenth anniversary. It´s unclear when, if ever, the performing arts centre, currently without funding, will be built. Paul Goldberger: Right now though, I think one of the other important things to keep in mind is that Lower Manhattan´s changed so much between when the World Trade Center went up and when it went down. It´s now a diverse, interesting neighbourhood with lots of other residential components within it, as well as still an office component, and cultural facilities, restaurants, stores, all kinds of things that once weren´t there. I think in the end, what will save Ground Zero is the fact that those forces that have evolved and helped Lower Manhattan redevelop itself in the last 30 years, are all going to keep going. We might say in fact that the forces that were actually operating on that neighbourhood on September 10th, before 9/11 happened, those are the ones that are going to keep going and rescue things, not what we actually build on Ground Zero itself. But the larger, sort of more organic renewal of that whole part of New York City, which was interrupted and shaken and traumatised by the events of 9/11 understandably, but after a year or so, sort of got back on the track and continued to happen. And now in fact much of Lower Manhattan has become one of the hottest neighbourhoods to live in in the city. Keri Phillips: Paul Goldberger, architecture critic for The New Yorker. We also heard from Kurt Andersen, a New York journalist who´s also written about Ground Zero. And if you´re interested in finding out more about the buildings going up there, there are some good links on the Rear Vision website. The technical producer for Rear Vision today is Timothy Nicastri. I´m Keri Phillips. `Bye till next time. Donald Trump: In a nutshell Freedom Tower should not be allowed to be built. It is the worst pile of crap architecture I´ve ever seen in my life, and I don´t think we have to live with it. We want to rebuild the World Trade Center as the World Trade Center, a little bit taller, a lot stronger, just plain better. read less

