This article titled “Stasi files row as Britain refuses to return documents to Germany” was written by Helen Pidd in Berlin, for guardian.co.uk on Wednesday 28th December 2011 22.04 UTC

Britain has been accused of “sheltering communists” after refusing to hand over a cache of Stasi files revealing the names of British spies who worked for the East German secret intelligence agency during the cold war.

The cache belongs to a set of mysterious microfilm images, known as the Rosenholz (Rosewood) records, that contain 280,000 files giving basic information on employees of the foreign intelligence arm of the former GDR.

The records were obtained by the CIA in murky circumstances shortly after the fall of the Berlin Wall. American agents analysed the data before distributing relevant portions to countries in which the Stasi were active.

A swath of files relating to Stasi activity in the UK were given to MI5 by the Americans in the 1990s. Now Germany wants the files back, to add to its extensive archives on the GDR’s ministry for state security, commonly known as the Stasi.

If the files are returned to Germany, they will be made available, unredacted, to scholars and historians. That means that British Stasi sympathisers and spies could be outed for the first time.

Today, Germany only has those sections of the Rosenholz discs pertaining to activity in former West Germany – though the governments of Norway, Denmark and Sweden recently indicated they were ready to hand over the Rosenholz files they were given by the CIA more than 10 years ago.

Since the return to Berlin of the West German portion of the Rosenholz files in 2003, a number of public figures have been outed as Stasi collaborators, most recently a priest who allegedly spied on Joseph Ratzinger, now Pope Benedict XVI .

“We need access to these British files in order to understand the cold war, which was a war fought by secret intelligence operatives all over the world,” said Helmut Müller-Enbergs, one of the world’s leading scholars on the Stasi.

With fellow academics, he is demanding that Britain return the Rosenholz files to the Stasi archives in Berlin. “Given that the Brits have long been considered world class in intelligence gathering, it is especially important for us to understand how the Stasi was able to operate in the UK.”

“The UK is not a country known for sheltering communists, so why then will they not reveal to us who in Great Britain was working for a communist regime?” said Müller-Enbergs, a researcher at the Stasi archives in Berlin (BStU) and visiting professor at Gotland University, Sweden.

Roland Jahn, the federal commissioner for the Stasi archive, said: “These records could offer an important complement to those Stasi files we already have, and thus make an important contribution to the reappraisal of the role of East German state security in Europe.”

The Stasi archives already encompass 69 miles (111km) of files, including 39m index cards, 1.4m photos and 34,000 video and audio recordings. But the Rosenholz files are key because of the systematic and deliberate destruction of most of the records relating to a Stasi division known as the Hauptverwaltung A (HVA), which was responsible for running an extensive network of spies in the west.

When the Berlin Wall fell in November 1989, a high level committee agreed (with the blessing of the West German chancellor Helmut Kohl) that the HVA archives should be destroyed – a decision described by Die Zeit recently as one of the worst mistakes made during reunification .

The microfilmed files obtained by the CIA – in what the Americans described as a “clandestine operation” which may have included a pay-off to a rogue KGB agent – are the key because they contain copies of the card indexes of the HVA, listing the real names of all the agents, informers and targets of the Stasi’s foreign operations.

Put together with files already in the BStU’s possession, they allow scholars to build up a picture of who the spies were, who they were spying on and how the Stasi carried out missions abroad.

Herbert Ziehm, deputy head of the disclosure/information division of the BStU, said it would be “lovely” for Britain to return their portion of the Rosenholz files. “Then we would be able to see exactly who was spying for the Stasi in Britain – from other sources we already know what information they were delivering, but this would enable us to work out who they were,” he said.

Ziehm was part of the negotiating team which persuaded the US to hand over the Rosenholz discs to Germany’s Stasi archives in 2003.

Even just getting those Rosenholz files pertaining to east and west was a drawn-out process, he said: “The negotiations took a number of years. “The Americans were reluctant to co-operate for some time.One CIA agent put it like this: when you get some loot from a mission, you don’t share it.” Ziehm believes the CIA obtained the files in 1992 “at the very latest”.

Ziehm said the files are important in puzzling how the Stasi operated abroad. “We already had three-quarters of the information – Rosenholz gives us the opportunity to gain the missing quarter,” he said.

Thomas Wegener Friis, an associate professor at the Centre for Cold War Studies at the University of Southern Denmark, said the return of the files was about transparency rather than naming and shaming.

“It’s not just a question of outing people – though we should not be shy to name those who worked for the Stasi abroad,” he said. “More important is being able to understand how intelligence agencies worked on an operational level during the Cold War. It will allow us to learn lessons for the future.”Asked by the Guardian why Britain refused to hand over the Rosenholz files, the Foreign Office, which handles press requests for MI5 and MI6, said: “We don’t comment on intelligence matters.”

No Briton has ever been prosecuted in the UK for spying for East Germany, according to Anthony Glees, professor of politics at the University of Buckingham and director of its Centre for Security and Intelligence Studies.

In 1999, the then home secretary, Jack Straw, told MPs that MI5 was investigating more than 100 Britons suspected of having been Stasi agents.

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This is the kind of attitude I’ve been waiting to see from our friends in Europe. Up to now they’ve said very little about their ever growing radical Muslim population. These radicals often take to the streets to denounce Jews and America. But there’s at least one woman in Germany who’s not going to take it anymore. She’s says she ashamed that radical Muslims can express their Hitler like views on the streets of Germany. She wonders where the outrage is?

This article titled “Nato to take control in Libya after US, UK and France reach agreement” was written by Nicholas Watt, Nick Hopkins and Ian Traynor in Brussels, for The Guardian on Wednesday 23rd March 2011 01.42 UTC

Britain, France and the US have agreed that Nato will take over the military command of the no-fly zone over Libya in a move that represents a setback for Nicolas Sarkozy, who had hoped to diminish the role of the alliance.

Barack Obama agreed in separate phone calls with Sarkozy and David Cameron that political oversight would be handed to a separate body made up of members of the coalition, including Arab countries such as Qatar and the United Arab Emirates, which are outside Nato.

The agreement, which will have to be put be to all 28 members of Nato, indicates the alliance is on course to resolve one of its most serious disagreements. The alliance had been starting to splinter as it tried to comply with Obama’s demand that Washington be quickly relieved of command of the air campaign.

The Libyan leader Muammar Gaddafi criticised the air strikes which he said breached the UN charter and were “by a bunch of fascists”. In a televised address he promised victory over the coalition: “In the short term, we’ll beat them, in the long term, we’ll beat them.”

Sarkozy moved to portray the agreement as a Franco-American success. In a statement, the Élysée Palace said: “The two presidents have come to an agreement on the way to use the command structures of Nato to support the coalition.” But the agreement represents a blow for Sarkozy, who had tried to persuade Britain to set up an Anglo-French command for all military operations in Libya. That idea was strongly resisted by Britain which said Nato was best placed to run the military operations.

Obama, who spoke to Cameron and Sarkozy in separate phone calls during his tour of Latin America, agreed that:

• Nato will assume the day-to-day military command of the no-fly zone, using the alliance’s military structures. The operation could be run by Admiral James Stavridis, the US supreme allied commander in Europe, who works from the Nato’s military headquarters in Mons, Belgium.

• Political oversight will be provided by members of the coalition and not by Nato. Sarkozy will say this shows Nato is not in complete command, as it was in the bombing campaign against Serbian targets during the 1999 Kosovo campaign. In a traditional Nato-led operation, political control would be provided by the North Atlantic Council, the main political decision-making body of the alliance.

The plan will be put to the council on Wednesday, which will hold its third meeting in as many days at ambassadorial level. All 28 members of Nato will have to agree on the proposal. Downing Street adopted a more cautious approach than the Élysée when it confirmed that Cameron and Obama had agreed that Nato should play a key role. A spokesman said: “The prime minister and the president agreed that good progress had been made in Nato on command and control of military operations, that Nato should play a key role in the command structure going forward, and that these arrangements now needed to be finalised.”

Diplomatic sources said progress on the new structures emerged as France and Turkey started to give ground. France softened its stance after Britain and the US agreed that the international coalition would have political oversight but that Nato would have to assume military control. London and Washington were supported by newer members of Nato, such as Romania and the Czech Republic, who said they could only support the campaign if it was run by Nato.

A phone call between Obama and the Turkish prime minister Tayyip Recep Erdogan led to what was described as a more pragmatic approach. “Turkey has become more flexible in the last day or so,” one diplomat said. Turkey, the third largest member of Nato, and which has a predominantly Muslim population, had highlighted tensions within the alliance when it launched a strong attack on France. Sarkozy had tried to reach out to the Muslim world by playing down Nato’s role in Libya.

Egemen Bagis, Turkey’s Europe minister, accused the French president of exploiting Libya for his own electoral needs. Sarkozy has been the biggest opponent of Ankara’s ambitions to join the European Union. “A European leader began his election campaign by organising a meeting that led to a process of air strikes against Libya. He acted before a Nato decision, and his act was based on his subjective evaluation of a UN resolution,” said Bagis.

The agreement came as William Hague, the foreign secretary, declared that the Arab spring is likely to be more significant than 9/11. Hague told the Times CEO Summit Africa: “We are only in the early stages of what is happening in north Africa and the Middle East. It is already set to overtake the 2008 financial crisis and 9/11 as the most important development of the early 21st century, and is likely to bring some degree of political change in all countries in the Arab world.”"This is a historic shift of massive importance, presenting the international community as a whole with an immense opportunity. We believe that the international response to these events must be commensurately generous, bold and ambitious.”

The foreign secretary added that the international action against Libya – and the demands for freedom – meant that Robert Mugabe and other authoritarian leaders in Africa would eventually face justice. Hague said: “Governments that use violence to stop democratic development will not earn themselves respite forever. They will pay an increasingly high price for actions which they can no longer hide from the world with ease, and will find themselves on the wrong side of history. Governments that block the aspirations of their people, that steal or are corrupt, that oppress and torture or that deny freedom of expression and human rights should bear in mind that they will find it increasingly hard to escape the judgment of their own people, or where warranted, the reach of international law. The action we have taken in Libya, authorised by the United Nations Security Council, shows that the international community does take gross violations of human rights extremely seriously.”

The agreement on the military command of the no-fly zone came as key military British figures expressed dismay at No 10′s handling of the conflict, suggesting the prime minister’s office is subverting commanders conducting the operation. Officials resent the way No 10 appeared to undermine General Sir David Richards, the country’s most senior military officer, who rejected ministers’ claims that Gaddafi might be a legitimate target. Sources said that by identifying Gaddafi as a target, Britain laid itself open to the charge that “if you kill him, it was premeditated, and if you don’t, you have failed”.

Additional reporting by Richard Norton-Taylor and Simon Tisdall

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This article titled “Image of France as a generous welfare state marred by grim reality” was written by Phillip Inman Economics correspondent, in Paris, for The Guardian on Monday 21st March 2011 17.46 UTC

Thousands will pour into the Galeries Lafayette this week to enjoy the last few days of the spring sales and beat the recession. Tourists and Parisians will find huge discounts on designer clothes on every floor of the ornately domed department store that dominates Boulevard Haussman, Paris’s main shopping street.

As a measure of confidence, the sales present a gloomy picture of France’s middle classes and their appetite for shopping. Marc Jacobs, Chloé and Lacoste offer 30% discounts. Givenchy dresses are knocked down by 40% and the Galleries’ own ranges can be bought for 50% less than the list price. Only Prada, Dior and a handful of international brands hold their value .

Like their British counterparts, French shoppers can only be enticed with massive bargains. Technically, France like Britain, has escaped recession. But to ordinary French workers, blue and white collar, the pain of the last two years lingers. Shopping is expensive even in the sales, especially when a mix of high taxes and punishing national insurance leaves you with one of the lowest rates of take home pay of any western country. Only Belgium and Hungary exceed its average 45% tax on pay.

France appears to have a natural order still in place with food and wine at its heart and a generous welfare state to support the sick, the elderly and those out of work. Yet this picture disguises a slow decline, made worse by the financial crisis, that leaves the average French family struggling to make ends meet.

Loïc Sadoulet, a professor of economics at the Paris-based business school Insead, says the word that sums up France is disconnect. By which he means the rosy image and the dour reality are miles apart.

A trip on the Paris Metro makes the point. It was always dowdy, if not a little shabby, which most residents and visitors accepted as part of its charm. Now there are major stations closed for refurbishment and some passageways are reminiscent of ancient caves with green slime and blown plaster adding to the effect. The construction at one station of glass screens to prevent passengers falling on the tracks can only be described as makeshift, with bits of wood screwed to the platform floor to hold the metal posts in place.

Paris train workers joined the protests against pension reforms last October and closed the city for several days after similar shutdowns in 2007, 2005 and 2003, over government plans to cut pensions and welfare.

An apocryphal story about France’s slide from greatness goes back to the decision in 2005 on where to hold the 2012 Olympics. It is said the top brass from the IOC arrived for a fact-finding mission just as the Metro workers began another strike. A quick look through the records showed that the frequency of strike action meant there was a strong likelihood an Olympic year would be no exception. With little else to separate the bids, London was declared the winner.

True or not, the French establishment vowed revenge and last year president Nicolas Sarkozy pushed through a law forcing vital public services to provide a minimum service during industrial action. Railway workers will be among the state employees caught by the law.

Recent polls have revealed the confusion many French workers feel about the colourful and sometimes violent protests against Sarkozy’s welfare cuts and plans to end decades old employment protections. A majority say the reforms are necessary while telling pollsters they support the protests.

This perplexing need to adopt both sides of the argument has paralysed debate, especially on pensions and the totemic 35 hour week. Unlike Germany, which has spent 10 years discussing and implementing reforms with a view to becoming more competitive, the French have reached a position of stasis. Apart from the new strike law and bill freeing universities from state control, pensions reform is almost all Sarkozy has to show for his four years in power.

Next month the Paris-based think tank, the OECD, will publish its biannual report on the French economy. It is expected to argue the Elysée palace must move more quickly to tackle a low growth, high unemployment economy that could spark widespread social unrest .

Antonio Gurria, the OECD boss, will stand next to finance minister Christine Lagarde and politely urge her to free small and medium sized businesses from the straitjacket that has stifled growth and innovation for decades.

Innovation has tended to come from France’s industrial behemoths – France Telecom, Renault, engineering firm Alstom and Compagnie Générale des Eaux, the water company that spawned media giant Vivendi and Veolia, a waste management firm that empties many of the UK’s dustbins. Others such as Pernod Ricard and the luxury goods maker LVMH dominate their industries. However, the government’s support and reliance on their tax revenues has been at the expense of smaller firms.

The strategy is also undermined by the vulnerability of these large businesses to innovative rivals with access to cheap skilled labour. Renault and Peugeot have seen Mercedes, BMW and Audi sweep them aside in the race for Asian customers. Air France remains loss making and the oil business Total, with its close links to France’s former colonies, is vulnerable to the changing political weather in many of the world’s hotspots. Last week it was forced to suspend production in Libya and is embroiled in bribery allegations over deals in Iraq.

Hervé Boulhol, the OECD’s France expert, says the country’s finances have deteriorated for the last 35 years. Since the financial crash the situation has worsened. “The public finances must be fixed because while France has been largely immune to the worst of financial crisis, at least so far, it needs to address deep-seated problems,” he says.

Boulhol reels off a list of measures that Sarkozy could implement to bring the country more firmly into the 21st century. First it must get more women into work by reforming a tax system that encourages them to stay at home to reduce the household’s taxable income. The result is the lowest employment rate among the 30 rich nations assessed by the OECD.

Second, its benefits system, which accounted for 3.5% of GDP in 2005, first in the OECD rankings, must be reformed. It is a source of Gallic pride but the system is largely universal, and boosts the incomes of the richest, as much as the poorest. Boulhol describes it as “regressive spending” that would be better channelled to the poorest. It may be the main reason middle income couples have continued to have children, unlike Italian and German families, but offering the same benefit to the wealthy is “just about writing cheques to people who are not going to change their behaviour,” he says.

A third problem is that France has the largest number of people in retirement as a proportion of the overall population.

The battle last year, which saw school cooks join teachers, factory workers and students on the streets of Paris, Marseille and Lyon, was eventually won by Sarkozy. A law pushing up the minimum retirement age to 62 was passed along with measures that mean younger workers must wait till they are 67 to pick up their full entitlement.

Bruno Tardieu, a full time official at one of the country’s most active anti poverty groups, ATD Quart Monde, is concerned that a growing number of working class people are being shut out of the benefits enjoyed by a decreasing number of white collar workers. He says every town is blighted by high unemployment, while 26% of young people are out of work compared with 20% in the UK.

A volunteering scheme designed to put 200,000 young people back into the workplace is directed largely at college educated under 25s and not those with poor qualifications. Tardieu will meet government officials this week to focus on ways to include low skilled people in the scheme.

“It is elitist. Poor groups don’t know it exists. It offers very low pay. And it presumes the young person will be housed and subsidised by their parents, which is often not possible for people from poorer families,” he says.

Back at Insead, Sadoulet argues that the French fear of Anglo-Saxon capitalism has paralysed the debate and left poor workers to bear the brunt of globalisation.

The number of “year in, year out” workers are growing he says, as companies resist giving full benefits to new employees. After six months, staff accrue full employment rights. A short term, six-month contract can be rolled over for another term, but then the workers must be laid off. Studies show that after a year of work, usually on the minimum wage, these workers spend a year on the dole, hence the “year in year out” tag that dogs them.

“France has spent two decades ignoring the problem and the longer it is left the bigger it will become. The debate about what to do, who should shoulder the cost, and how best to encourage innovation, is in its infancy compared with the UK and Germany,” he says.

“There is still a knee jerk reaction that says simply tax the rich some more. But increasingly ambitious people are leaving, they are going to London, to Silicon Valley, and anyway, there simply aren’t enough rich people to pay for the current level of welfare bills”, Sadoulet says

Union leaders point to the success of the country’s banks and risk averse property market as reasons to be cheerful. Here was good reason to avoid the risk taking of the Anglo Saxons.

They have a point. Compare Sarkozy, who pledged €40bn (£35bn) to boost bank finances and a further €320bn to guarantee interbank lending, with Gordon Brown, who had to pledge about £850bn to prop up the British banking system, of which £117bn was pumped straight into the worst hit banks.

But while Britain suffers wild property crashes, prices in many areas of France keep rising and finished higher in 2010 on the year before despite predictions of a slump. The steady rise has taken prices beyond the UK and shut middle income families out of the market, or prevented them moving. The long-term effect is the same as in the UK, where the financial crisis has left the incomes and assets of the wealthiest largely untouched, while hitting the growing number of – young people, immigrants and unskilled workers – who stand on the outside of protected, unionised industries.

Much of the French establishment, like the wider population, supports the unions’ conservative, old world view that globalisation is to be feared, feeding the sense of paralysis.

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This article titled “Germany’s new boom: making money by making stuff” was written by Larry Elliott in Munich, for The Guardian on Monday 14th March 2011 22.00 UTC

Strolling the broad, prosperous streets of Munich, it is worth recalling the times over the past decade when Gordon Brown used to boast in his budgets about how the UK economy was leaving Germany for dead.

Now – following the most successful year for Europe’s biggest economy since the euphoria that followed reunification two decades ago – that looks like the sort of prediction English football fans make ahead of each World Cup: premature, based on little more than wishful thinking – and wrong. “We will have a golden decade now,” says Hans-Werner Sinn, president of Munich’s Ifo Institute, one of the country’s leading thinktanks. Sinn wrote a book early in the last decade, when unemployment was high and pessimism rampant, called Can Germany be Saved? His view then was that it could be. Now he says it has been.

The phrase “crisis, what crisis” also springs to mind outside the Audi plant an hour up the autobahn in Ingolstadt, where a happy band of German motorists have turned up to pick up their new cars, fresh off a one-kilometre production line churning out 2,500 vehicles a day, six days a week.

“2010 was our best ever year,” says Jurgen de Graeve, Audi’s head of communications. “At the beginning of last year it was clear the market was about to turn up but we didn’t expect it to happen so fast.”

Current trading conditions for Audi, as for the rest of German industry, have been transformed since the long, hard winter of 2008-09, when some factories slashed output by up to 90% as the financial crisis threatened a second Great Depression. Overdependent on its export sector, Germany suffered a 20% drop in manufacturing output in 2009.

But government wage subsidies meant companies could keep highly skilled workers employed part-time rather than throwing them on the dole, enabling industry to respond quickly to the pick up in global demand. There is now confidence the traumas of 2008-09 will help the country reinvent itself after a troubled period in which the economy was hobbled first by the costs of reconstruction in the former East Germany, then by the uncompetitive rate at which Germany joined the single currency, and finally by the collapse of the IT bubble in 2001.

It was then that the rumours of inexorable decline started to circulate. The list of defects was long: pampered workers; an over-generous welfare state; a too cosy relationship between companies and their bankers; the lack of a venture capital industry; too high a reliance on family-run manufacturing businesses; a population that was getting older and starting to shrink. Put together, the view was that for decades Germany had been living on past glories – the explosive growth of the Wirtschaftswunder, or economic miracle, in the 1950s and 1960s – and had allowed its economy to become sclerotic.

Now there is belief the good times are coming back, and that some of the weaknesses flagged up in the 1990s and 2000s have turned out to be strengths.

It will, however, take more than one year of powerful growth to convince sceptics – inside and outside Germany – that a second Wirtschaftswunder is guaranteed. The integration of the old communist lander is far from complete: money has moved from west to east, the people have moved in the opposite direction. Some Germans now say the old East Germany is the equivalent of a Potemkin village: the buildings have been given a makeover but the mass exodus of the young means there is no one living in them.

The skewed nature of Germany’s growth is also a concern. Unemployment is falling, and in rich states such as Bavaria it is below 5%, but there are few signs yet of a classic export-led revival broadening into a pick up in wages and consumption.

Heiner Flassbeck, once adviser to Oskar Lafontaine – briefly the leftwing finance minister to Gerhard Schröder – is one who says there is no real comparison with the 1950s and 1960s, when the proceeds of growth were shared by companies and their employees.

In those days, German workers worked hard and grew prosperous, earning higher wages as the factories they worked in became more efficient. Over the past decade, there has been another productivity spurt as German companies have overcome the handicap of an over-valued exchange rate on entry into the single currency by making themselves hyper-competitive. This time, though, workers have not enjoyed the fruits of their labour. Real wages have stagnated, consumption stayed weak.

“Over the next 10-15 years there has to be an increase in wages to shift demand from the export sector to domestic demand,” Flassbeck says, echoing the calls from the International Monetary Fund and the Organisation for Economic Co-operation and Development for Germany to play its part in evening out the imbalances in the global economy between those countries that run massive trade surpluses and those with chronic deficits. As the two biggest exporters in the world, China and Germany are seen as sharing a common problem: “Chermany”, it is said, needs to import more.

Flassbeck says that unless Germany does so at a European level the euro cannot survive because weaker countries will face permanent austerity.

Sinn believes that falling unemployment will eventually lead to increases in wages, which in turn will boost consumer spending. There is, though, little sign of Germany’s policy-makers hastening this process. They seem quite content with the combination of factors that help explain Germany’s comeback.

The first is Germany’s economic and political structure. Prosperity is far more widely spread across the country, with none of the excessive concentration of wealth in one region found in Britain. There is an emphasis on long-term growth rather than flipping assets, and boom-busts in the housing market are unknown.

Germany was not immune from the speculative mania, and one reason Angela Merkel is prepared to bail out the struggling economies of the eurozone is that German banks are up to their eyeballs in Greek, Spanish, Irish and Portuguese debts. But there was still an industrial bedrock. Thomas Mayer, chief economist at Deutsche Bank, agrees. “Looking back, some economies were putting too many of their resources into sectors such as real estate. Perhaps they overdid it. Germany benefits from an old-fashioned structure. What looked old fashioned was more durable. The UK has overdone it but it is not the only one. The Americans, the Irish and the Spanish all overdid it.”

So, while the City boomed and Wall Street became fixated by sub-prime mortgages and collateralised debt obligations, Germany concentrated on making stuff.

This was true of the prestige international names like BMW and Siemens, but it was also true of the hundreds of thousands of lesser-known names that make up the Mittelstand. These are companies, often family run and in many cases founded a century or more ago, that provide the hidden wiring for the global economy. Germany provides the kit that other companies need to make their products, and the Mittelstand companies have become expert at dominating their corners of the market.

It is not uncommon for a German company to have a global market share of 80% in a particular piece of equipment, and despite high labour costs customers keep coming back for the guaranteed delivery times, the reliability of the products and the after-sales service.

The second explanation for Germany’s renaissance is that the country finally embraced structural reform of its economy at least two decades after Margaret Thatcher and Ronald Reagan pioneered deregulation, privatisation and welfare reform in the UK and the US.

What happened, according to supporters of this theory, is that unlike Britain and America, Germany coped well with the oil shocks of the 1970s and 1980s so saw no need to change anything in the 1980s. Towards the end of that decade, and increasingly after reunification, the economy became increasingly sclerotic, but the warning signs were ignored by Helmut Kohl.

But by the early 2000s, the evidence of slow growth and high levels of unemployment was too powerful to ignore, so Gerhard Schröder introduced the Agenda 2010 reforms which cut business taxes, slashed the top rate of income tax, made pensions less generous, cut unemployment pay and allowed the shops to stay open later.

“Schröder didn’t get the full credit for what he did,” Mayer said. “He attacked all the sacred cows and paid the price by losing the election to Merkel. Industry embarked on a ruthless cost-cutting programme, they exploited new production techniques and IT to make their operations leaner and more profitable. Some parts of manufacturing were moved overseas but not all of it.

“It is an amazing comeback. The country seems to be a lot more dynamic.”

Flassbeck has a different view. He blames the timidity of the unions on the changes introduced by the former SDP/Green coalition. “There is no pressure for higher wages because of the fear of being fired. Schröder killed the unions. That’s a nice paradox.”

The third explanation is that German investors had their fingers burned in the financial crisis and are now keeping their money safely at home. That has provided the capital for an investment boom that will help keep German industry hyper-competitive in the future. Sinn says this is a real change from the period 1995-2008, when Germany had one of the lowest investment rates in the west. “The crisis has meant the perception of risk has changed.

“Investors see that not all glitters is gold.

“There was a period under the euro when lots of attractive investment opportunities seemed to be in other countries. Government bonds seemed to be absolutely secure so German banks invested there. The risk perception means that German savings now don’t go out of Germany.”

Finally, there’s China, where year after year of 9-10% growth has sucked in exports from Germany. In part this has been demand for German cars from a rapidly expanding middle class in Shanghai and Beijing, with Audi now expecting to sell more cars in China this year than it does at home.

But it is also the result of Germany’s global dominance in investment goods, the products countries need when building up a manufacturing capacity. Britain talks about breaking into the Chinese market: Germany has done so.

Are there lessons in this for Britain? Yes, says Martin Zeil, deputy prime minister of Bavaria. “All the countries that have kept the nucleus of their industry are more successful.” Bavaria has invested carefully in the region’s science and technology base, identifying future growth sectors such as green technology and life sciences and building up clusters of excellence that act as a magnet for investment. It takes more than a clutch of world class companies to provide a solid industrial base.

And yes too says Mayer at Deutsche Bank, who spent eight years in London watching the boom-bust come to grief. “You have to realise that Gordon Brown was wrong when he praised economic stability and high growth as the result of his policies. It was an illusion.

“A large part of the world was living on the drug of credit. The UK economy is so reliant on housing. It has a high social value. Everybody is obsessed with it. In Germany almost everybody rents.

“Britain was on a 10-year high and now it is doing cold turkey. You have to wean the economy off credit and rebalance towards production and traded goods. But it takes years and years and years. In Britain there is a tendency to take the easy way out, to just go for another gin and tonic.”

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This is no surprise, but I think it’s worth noting. The White House is refusing to call the murder of two airmen in Germany a terrorist attack.

U.S. State Department spokesman P.J. Crowley on whether the murder of two U.S. airmen was a terrorist attack:

“Was the shooting of Congresswoman Gabrielle Giffords a terrorist attack? I mean, you have to look at the evidence and look at the motivation and then you make a judgment,” Crowley told the Press.

Okay, I’ll make a judgement. The Muslim shooter said he became angry after watching a YouTube video of US military operations in Afghanistan. He told police that he went to the airport specifically to find Americans he could shoot as revenge for Afghanistan. He came upon a bus filled with US military personnel and began shooting. When he boarded the bus he screamed Allahu Akbar! (God is great) before shooting two airmen in the head. Had the gun not jammed even more people would have been killed.

My judgement is that an act of Islamic terrorism was committed against the US military in Germany. For some reason this administration is too chickenshit to call out terrorism by name. What happened to Gabrielle Giffords was a random occurrence and not tied to Islamic fanaticism. To suggest the two incidents are in any similar is outrageous.

(hat tip Conurls)

This article titled “Khodorkovsky film vanishes again as director says: ‘It’s like a bad thriller’” was written by Helen Pidd in Berlin and Miriam Elder in Moscow, for The Guardian on Monday 7th February 2011 20.46 UTC

The final edit of a documentary about jailed Russian oligarch Mikhail Khodorkovsky has been stolen from the director’s office in Berlin, just days before its world premiere.

In what police described as a “very professional break-in”, four computers containing the last cut of the film, titled simply Khodorkovsky, were removed from Cyril Tuschi’s premises.

The documentary was due to be premiered at the Berlin film festival next week.

Khodorkovsky, a fierce critic of Russian president Vladimir Putin, was once his country’s richest man but has been in jail on fraud charges since 2005 after falling foul of the Kremlin.

Although police have no leads in the case, there is suspicion that the theft is politically motivated and forms part of a Russian campaign against its critics.

“It’s like being in a bad thriller,” Tuschi told the Süddeutschezeitung. “Someone is trying to scare me and I must admit that they are succeeding.”

This is the second time the film has been stolen. A few weeks ago, when Tuschi went to work on the final edit in Bali, his hotel room was broken into and his computer hard drive taken, according to his PR agency.

Now Tuschi has moved out of his Berlin flat and is staying with friends after being warned that he should seek protection.

Asked whether he believed the latest theft was an attempt at intimidation by agents of Putin, Tuschi said: “I don’t know – but it would be a huge coincidence given that the material was stolen right at the end of production.”

The film premiere comes at a time when Khodorkovsky is facing another six years in jail, following a second trial that culminated in December. Opinion in Russia is deeply divided about a tycoon who became Russia’s richest man during the 90s era of “robber capitalism”, but who has conducted himself with dignity since his arrest on an airport runway in Siberia in 2003.

A number of prominent Russians have gone public about their support for the jailed oligarch – two in the past week. On Monday, pop star Alexander Buinov recanted a denunciation he and dozens of other celebrities signed up to in 2005. His move followed a similar volte-face by ballerina Anastasia Volochkova on Friday.

“Some people’s attitude towards Khodorkovsky is changing because he’s proved himself to be manly,” said Vladimir Pribylovsky, a political analyst. “Back when we had what you could call elections, the Kremlin needed to bring in votes and the case against him brought a big plus,” he said. “But when people saw that the other rich guys weren’t arrested, many started to sympathise with him.”

President Dmitry Medvedev, prone to more liberal rhetoric than Putin, has ordered his human rights council to review Khodorkovsky’s case, but the body carries no legal power.

“If it were a serious, professional undertaking, there wouldn’t be such a loud beating of the drums around it,” said Khodorkovsky’s main lawyer, Vadim Klyuvgant. “If it is really an independent analysis, we can see what will come of it. Legally, it has no meaning – but they can push informal actions.”

He said he believed support for Khodorkovsky was growing because the former tycoon has become a symbol for Russia’s warped justice system.

“Every person has a level of tolerance up to which they can be silent,” he said. “The divide between words on television and real actions has grown to be so large, that it hits people hard psychologically.”Tuschi said he had been threatened in Russia when he was making the film: “When I started the project, the journalist Anna Politkovskaya had just been murdered. I drove through Russia and realised that I had to fear the Russian police. I have nothing to worry about with German police, but in Russia it’s a different story,” he told the Berliner Zeitung.

“Once we were quite openly threatened. We were in Siberia on a train between Novosibirsk and Chita, where Khodorkovsky was in jail. Three young men attacked us. They were the regional representatives of the KGB. They knew exactly who we were and what we were doing there. It was very scary.”

For the Russians who spoke to him on camera, the consequences could be severe. The Russian daily Kommersant printed a front page story about the film which suggested those who took part may live to regret it. Khodorkovsky’s ex-wife Elena, who appears in the documentary, allegedly sent Tuschi an email on Sunday telling him he had made a mistake by giving an interview to a Russian journalist, the Süddeutschezeitung reported.

German-born Tuschi, whose parents are from Russia, has been working on the film for the last five years. The final 111-minute edit condensed 180 hours of interviews conducted all over the world. As well as speaking to Khodorkovsky’s ex-wife, Tuschi interviewed his mother and son, who is exiled in New York. But perhaps his biggest coup was a 10-minute interview with the inmate himself.

A spokeswoman for Berlin police said they were investigating the break-in but could give out no further information. There have been no arrests.

The film will still be premiered next week as Tuschi had already sent a copy to the Berlin film festival, said a spokeswoman for his distribution company.

guardian.co.uk © Guardian News & Media Limited 2010

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A quarter of Germans believe there were some positive aspects to Nazi rule, according to a poll published Wednesday—a finding that comes after a popular talk show host was fired for praising Nazi Germany’s attitude toward motherhood.

Pollsters for the Forsa agency, commissioned by the weekly magazine Stern, asked whether National Socialism also had some “good sides (such as) the construction of the highway system, the elimination of unemployment, the low criminality rate (and) the encouragement of the family.”

Forsa said 25 percent responded “yes”—but 70 percent said “no.”

Praising the 1933-45 Nazi dictatorship is taboo in Germany. The Nazis were responsible for the murder of some 6 million Jews and for starting World War II—a conflict in which at least 60 million people died, including more than 7 million Germans.