What Egypt Could Learn From Romania's Ceausescu

What is happening now in Egypt reminds me in an eerie way of the Romanian revolution in 1989. The internet is already abuzz with speculation that Egyptian president Hosni Mubarak might end up like his late friend, former communist dictator Nicolae Ceausescu, who was executed after a very short trial. It’s all down to what the army will do – will it side with the people or continue to protect an increasingly alienated dictator?

I really hope, for the Egyptians’ sake, that the similarity stops here. What happened in Romania after the revolution and the execution of the Ceausescus is a sad reminder that good times do not necessarily begin once the revolution is won, protesters are back from the streets and the dead are buried. Blaming only one person for the evil that has penetrated a country is an easy, but dangerous path to take.

In 1990, after the Ceausescus were gone and the Communist Party supposedly outlawed, the second ranks of his loathed secret police – the Securitate - quickly became the new ruling elite. Without a law preventing them from taking public office, former Securitate agents, informers and collaborators became politicians and created a powerful network of corruption and influence peddling that has engulfed the country ever since.

There have been various attempts to save the Romanian revolution and return its results to the original intended purpose – an end to the corruption that the communist system had encouraged – but they were all stifled by force, the most famous being the two-month long protest in Bucharest and the subsequent bloodshed caused by the miners’ descent on the capital. 

21 years after Romania’s revolution, corruption is omnipresent in the country, to such an extent that more than 10 percent of the population has emigrated in search of opportunities that are denied to them in their home country. 

Social and economic inequality has deepened, the health system is full of doctors that are so callous they would let patients die unless they receive substantial bribes and many teachers in state schools give grades to young pupils based on the “presents” they receive from pupils’ parents rather than on the pupils’ own knowledge.

On many occasions, employment is subject to bribe giving or “knowing” somebody in the right place, rather than depending on the candidate’s real abilities. The media is made up almost exclusively of local moguls who use the TV channels, newspapers and news agencies they own to blackmail, influence and pressure politicians or companies to do various things that benefit a small and corrupt elite.

Ironically, Romanians are nearly back where they started: 21 years after their own revolution, they don’t have a free media, corruption is as rampant (if not even more) as it was under the communists and the rift between the privileged, ruling elite and its cronies and the anonymous masses who barely make ends meet is deepening. 

Sure, they have freedom of speech and freedom of travel, and they take advantage of both. But I doubt that the more than 1,000 people who died in December 1989 sacrificed their lives so that the survivors can emigrate more easily.

That’s one lesson Egyptians could learn from the Romanians’ experience: once the Cairo revolution is over and Mubarak is out, don’t rely on the new people who come in to reform the system all by themselves. You must always be on guard and ready to defend democracy and the rule of law.

Does Freedom of Speech Lose You Money?

China has passed legislation dictating that only journalists with experience or qualifications in the business sector may write about stock and futures exchanges, Zinhua reports.

Now, in a democracy such a law would not really be possible nor, I should add, desirable. After all, freedom of speech is what allows each of us to write about whatever we want – and it’s up to the readers to make up their mind if they believe us or not.

But what about when those readers are traders who are making or losing millions of euros (dollars, yen, whatever free currency – not yuan, obviously, as that’s still tightly controlled) based on what’s written in the press and on the internet?

The Swiss Knife

Case in point: Portugal debt got hammered on Friday and the euro got hit by news reports that the Swiss National Bank had excluded Portuguese debt as collateral eligible for repos. 

The context of that story is that on Wednesday the Swiss National Bank confirmed it excluded Irish sovereign debt from the list of instruments it accepts as collateral for its repo operations.

(With repos, banks in need of cash can sell securities to the Swiss National Bank, committing to buy them back at a specific time for a higher price. By excluding Irish debt from the list of selected instruments for such operations, the SNB effectively reduced availability of cash to banks with high exposure to Ireland.)

The Irish news was first reported by an Irish blogger on January 4 but the exclusion actually happened in December 2010, when the SNB published the adjustments it made to the basket of instruments it accepts as collateral.

Portugal Shoots Itself in the Foot

On Friday, riding on the success this story had in spooking markets, Lisbon newspapers apparently reported that Portuguese debt had also been excluded by the SNB from its list of eligible collateral for repos. This scary piece of news was quickly re-printed by other media.

What few media reported, though, is something they could have found out by making a phone call to the SNB: a spokesperson told the few curious hacks who called that the Swiss central bank had stopped accepting Portuguese debt as collateral more than a year ago, because it no longer fulfilled the rating criteria.

If more journalists had made that call, this scary story would have looked totally different, with a headline saying something like “Old News: SNB Doesn’t Like Portugal’s Debt Either.” 

Swiss Precision?

But wait, it gets even better. It’s not just the journalists who sent out confused messages, it’s the central bank itself, apparently.

If initially it said it hasn’t accepted Portuguese debt as collateral for over a year because of ratings downgrades, later the SNB sent out a statement in which, according to Reuters, it said it actually never accepted it because of settlement issues.

Do we need a law like China’s in Europe? I don’t think so, seeing as we claim to be a democracy. But we do need authorities who promptly put out the correct message for markets. 

Oh, and journalists who think at least twice about the consequences of the stories they write – and about their accuracy, since they’re at it.