It is nothing of the kind. Obama’s DSG replicates all of the flawed strategic assumptions of the Bush era. Reading a short statement at a press briefing at the Pentagon to unveil the DSG, President Obama spoke of “enduring national interests” in maintaining the unparalleled U.S. military superiority, “ready for the full range of contingencies and threats” amidst “a complex and growing array of security challenges across the globe.”

Obama made no attempt to outline the basis for his claim that the security threats to America are growing, or to provide his own definition of “enduring national interest.” The terms “full-range,” “contingencies,” “threats,” or “security challenges,” are not value-neutral. Obama used them within a paradigm which treats the entire world as a legitimate sphere of interest of the United States. The consequence is that there will be new wars, as unrelated to the realist understanding of this country’s national interest as have been those in the Balkans under Clinton or in Iraq and Afghanistan under Bush.

Far from heralding “the massive $450 billion in defense budget cuts over the next 10 years” the President stated that “global responsibilities demand leadership, the defense budget will still be larger than it was toward the end of the Bush administration.” This means that the rate of growth will slow down somewhat—and 45 billion a year is a drop in the $16 trillion ocean of debt—but there will be no “cuts.” Obama further stated that our defense spending “continues to be larger than roughly the next ten countries combined.” It is less than the rest of the world combined—the preferred neocon level of spending—but it is still much more than America needs, or can afford to spend.

The DSG claims that in the decades ahead it will be the task of the United States to “confront and defeat aggression anywhere in the world.” “Even when U.S. forces are committed to a large-scale operation in one region,” it declares, “they will be capable of denying the objectives of - or imposing unacceptable costs on - an opportunistic aggressor in a second region.” This means that the totality of what the DSG treats as American commitments and interests around the world will continue to exceed the ability of the United States to defend them.

A strategically innovative president would accept the limits of American power and seek to establish a rational correlation between its ends and means. He would turn America into a “normal” power pursuing limited political, economic, and military objectives in a world populated by other powers doing the same. But Obama and his team remain wholly unwilling to do any such thing (not to mention his likely Republican opponents). His view of America’s role in the world still produces strategic blueprints for new self-justifying interventions around the world—interventions which are not merely unnecessary but detrimental to U.S. interests. “Making the world safe for democracy” has morphed since 1917 into many strange pursuits: making Libya, Syria, and Bosnia safe for the Islamic radicals; making Kosovo safe for the KLA. Under Obama the bipartisan continuity of methods and objectives has remained intact. The continuity of imperial assumptions and practices remains unbroken.

The DSG is a flawed document. The key issue of ends and means of American military power is still unexplored, and will remain so regardless of what happens next November.

A day earlier Defense Secretary Leon Panetta said American troops in the Persian Gulf region do not require any build-up for a possible military conflict with Iran. “We are not making any special steps at this point in order to deal with the situation,” he said. “Why? Because, frankly, we are fully prepared to deal with that situation now,” Panetta explained.

In the meantime the European Union is on track to agree to an oil embargo against Iran at the EU foreign ministers’ meeting next week.

The latest rhetorical escalation follows President Obama’s decision on December 31 to apply sanctions against any institution dealing with Iran’s central bank, effectively making it impossible for most countries to buy Iranian crude oil.

Chinese Premier Wen Jiabao criticized the U.S. position in comments published on January 19, and on the same day foreign ministry spokesman Liu Weimin said that “sanctions and military threats will not help solve the problem but only aggravate the situation.”

On Wednesday Russian Foreign Minister Sergei Lavrov said the military option mooted by U.S. would ignite a disastrous, widespread Middle East war. “Unilateral sanctions against Iran has nothing in common with the desire to keep the nuclear weapons nonproliferation regime unshaken,” Lavrov said.

Unsurprisingly, the neoconservative advocates of a preventive war against Iran are delighted. They see Tehran’s threat to block the Strait of Hormuz as a “golden opportunity” to force the issue by military means:

A military plan would have to include the elimination of the offending Iranian ships or submarines laying mines, and the destruction of missiles that might menace shipping. Most of Iran's navy would find itself gracing the bottom of the sea as a result. Meanwhile, major U.S. Marine amphibious landings on Iran's coast and Army airborne drops deep inside the sparsely populated Hormozgan region would have to create a physical cordon and an occupied buffer zone between Iran and the Strait of Hormuz. It would be a very long time before the West gave this territory back to Iran.

Furthermore, the argument goes, by seizing Hormozgan, the West would have a forward base within Iran from which to conduct attacks on known nuclear sites: “Strike aircraft (and, more worrisome to Iran's regime, Special Forces troops) would be just 60 to 90 minutes away from Iranian nuclear sites. Iran's threat to block the Strait of Hormuz has given the West new options.”

The issue that remains moot is not whether Iran is developing a nuclear weapon—let us assume that this is a documented fact, though it is not—but whether an Iranian nuclear weapon would be a threat to the United States. What are the motives of the Iranian decisionmakers? To threaten Europe, thus necessitating an American antimissile shield along Russia’s western borders in Central Europe? To threaten the United States even, regardless of a guaranteed hundred-fold retaliation to any attack? Or to protect Iran from what her leaders perceive to be a threatening environment?

Iran has one neighbor to the west and another to the northeast who were both invaded by the United States over the past 11 years. Neither Afghanistan nor Iraq would have been invaded had they actually possessed weapons of mass destruction. Iran’s eastern neighbor is Pakistan, an unstable and unpredictable nuclear power. In the wider neighborhood there are two other key players with an atomic arsenal, India and Israel, with Turkey not far behind. Under the circumstances, having an independent nuclear deterrent is a perfectly rational option for the government in Tehran to pursue—any Iranian government, Islamist or secular, monarchist or republican, pro- or anti-Western. That option is based on the realities of the security equation and not on the millenarian zeal of Shi’ite fanaticism or on genocidal Jewhatred, as the proponents of war would have us believe. Even if Iran were to garner an arsenal of a dozen devices, which would take a decade at least, the overall strategic balance would remain fundamentally unaltered. Indeed, the political climate in the region may actually improve: Iran would feel safe from an American attack and therefore at least potentially less likely to indulge in destabilizing proxy interventions in the region, notably in Lebanon.

Israel may have reason to feel threatened by Iran’s long-term plans, but it is up to Israel to consider her options and to act accordingly. She may well decide on a robust response, like her bombing of the Osirak nuclear plant in Iraq in 1981, with all the attendant risks and uncertainties. She should not expect the United States to do the job on her behalf, however.

The Saudis would also feel uncomfortable with a nuclear-armed Iran across the Gulf, and that would be a good thing. The more the royal kleptocrats in Riyadh focus on potential threats in the neighborhood, the less likely they are to escalate their global proliferation of Islamic extremism, which they have lavishly financed for decades. In any event, as the example of North Korea shows, the possession of the bomb by a single actor does not necessarily lead to a sudden nuclear rush in the region.

The second objection is technical. Regardless of its formal or substantial justification, can a U.S. war against Iran be kept limited and winnable? The initial intent may be to execute bombing raids against a dozen or perhaps two-dozen specific targets, but would that merely set Iran’s efforts back by two or three years? And what if Iran retaliates by detonating dirty bombs in downtown Tel Aviv and midtown Manhattan? What if the Iranians treat a U.S. attack not as a limited action that, in the War Party’s calculus, would produce a limited response, but as an existential struggle comparable to Khomeini’s all-out reply to Saddam’s attack 30 years ago?

If the Iranians respond forcefully, the advocates of limited air strikes against nuclear installations are certain to demand troops on the ground, regardless of risks and consequences, because our “credibility” would be at stake. In reality, America’s credibility would be terminally undermined by the resulting Iranian quagmire. An all-out “Operation Iranian Freedom” is not a rational option, because even with our unsurpassed military capabilities, the United States would not be able to mount a full-fledged invasion.

The third predictable consequence of a U.S. attack on Iran would be a global economic meltdown of unprecedented severity and magnitude. Not only would Iran’s output of some four million barrels per day be halted, but the maritime traffic through the Straits of Hormuz would come to a standstill for months on end—regardless of outcome. The resulting global energy crisis would make the aftermath of the Yom Kippur War pale in comparison, pushing a barrel to $300 within weeks and making the economic and financial crises of the past three years in Europe and the United States seem like the good old days.

Last but not least, we’d witness internal consolidation of the Iranian regime, a calcified theocracy devoid of ideas and solutions as it faces economic stagnation and political tensions. Domestic squabbles and the infighting of recent months would be forgotten, and any sign of opposition to the regime would be equated with treason. There would be no Iranian Spring for decades to come. On the other hand, without the unifying effect of an external threat the mullahs’ regime may yet prove more vulnerable to implosion than we would otherwise suspect.

Instead of considering a military action against Iran with no clear exit strategy at a prohibitive cost to our core interests, Washington would be well advised to prepare a strategy for dealing with Iran—even as a putative nuclear power. Deterring and containing Iran would be easier than deterring and containing the Soviets 50 years ago. The country’s regime, admittedly unpleasant, is neither suicidal nor tainted by the blood of untold millions, as the two communist nuclear powers had been.

Real concerns about Iran’s nuclear program exist; they are also present in Moscow and Beijing. It is still possible and politically profitable for Washington to pursue bilateral diplomacy based on an offer of U.S. security guarantees to Iran in return for a rigorous supervision regime and a formal pledge that Iran refrain from developing nuclear weapons. A reasonable agreement would also allow Iran to enrich uranium to the extent needed for power generation and accept Iran’s right to the enrichment technology, so long as she agrees to subject her entire nuclear program to international oversight.

By pursuing sanctions similar in intent and likely consequences to FDR’s sanctions against Japan in 1941, the Obama administration may produce similar outcomes. That would be a disaster for all concerned.

An explosion ripped through a Catholic church during Christmas Mass near Nigeria’s capital Abuja on Sunday morning, killing at least 25 people. A radical Muslim group, Boko Haram, claimed responsibility for the attack and another bombing in the city of Jos, as explosions also struck the nation’s predominantly Muslim northeast. The Christmas Day attacks show the growing national ambition of Boko Haram, was responsible for some 500 murders this year alone. The assaults come a year after a series of Christmas Eve bombings in Jos claimed by the militants left at least 32 dead and 74 wounded.

Egypt’s dwindling Copts have seen their position deteriorate over the past year from precarious to perilous. Already facing discrimination and harassment from Mubarak’s secular regime, they now see that things could get a lot worse under the Islamists who are poised to take power. Their annus horribilis started on New Year’s Day 2011, when a powerful car bomb targeted a Coptic church in Alexandria, killing 25 parishioners and wounding nearly 100 just as they were finishing midnight Mass. The next turning point was the Maspero massacre on October 9, when 27 unarmed Christian protesters were killed and hundreds more injured, not by some shadowy Islamic extremists but by the military.  An official commission—established by the Army—has unsurprisingly absolved the Army of all responsibility for the killings.

The country’s eventual transition to what passes for democracy in the Muslim world is going to make matters far worse for the Copts, who are fearful the army and courts will no longer be able to shield them from ever-greater discrimination and harassment. The writing is on the wall. The Freedom and Justice Party, a wholly-owned subsidiary of the Muslim Brotherhood, won the second round of the three-stage parliamentary elections last Wednesday and Thursday, taking 38 of the 59 seats contested; an even more radical group, the Salafist Nour Party, won 13 seats. The adherents of political Islam, in other words, have captured 86 percent of all seats contested. Their spiritual leader is Sheikh Ali Gomaa, the Grand Mufti of Egypt, who in a recent video reminded the faithful that Christians are kuffar, or infidels. After quoting Quran 5:17 (“Infidels are those who declare God is Jesus, son of Mary”) he went on to declare that any association between a human and God (shirk) is the greatest sin: “Whoever thinks Christ is God, or the Son of God, not symbolically—for we are all sons of God—but attributively, has rejected the faith which God requires for salvation.”

The Sheikh’s position is eminently mainstream in the Muslim world, which may explain the fact that he is still hailed in the West as a moderate. Three years ago, in a U.S. News article titled “Finding the Voices of Moderate Islam,” Lawrence Wright described him as “a highly promoted champion of moderate Islam”: “He is the kind of cleric the West longs for, because of his assurances that there is no conflict with democratic rule and no need for theocracy.” His assurances, indeed… On this form watch out for the Coptic Exodus of 2012, on par with that of the Christians in Iraq since the “liberation” of 2003.

Iraq's dwindling Christian population marked Christmas on Sunday with religious leaders calling for peace, days after attacks across Baghdad killed dozens. A week after US forces completed their withdrawal from the country, a senior bishop noted that little was being done to prevent a continuing Christian exodus from Iraq. As worshippers gathered for Sunday morning Christmas services, their churches were guarded by armored security vehicles, heavily-armed soldiers and policemen patrolling the surrounding streets and guarding rooftops. “Our faithful are like everyone in Iraq—they have fear,” Chaldean Bishop Shlemon Warduni told AFP. “They feel there is no peace, no security, so they go where they can live in peace. We don't agree, we don't want them (to go), but they say, 'If we don't go, can you ensure my life, can you ensure my job, can you ensure the future?' … The government cannot ensure their lives, how can we ensure their lives?”

The Christian community in Iraq was some two million strong before the US-led invasion of 2003. Up to four-fifths are estimated to have left the country in recent years following a series of attacks by Muslim extremists. On October 31, 2010, an Al-Qaeda assault on a Baghdad church left 44 worshippers, two priests and seven security force members dead. “We have concerns about the US withdrawal, despite the security forces saying it will be safe,” says Louis Sako, Chaldean archbishop of Kirkuk. “There has been a failure to ensure the safety of Christians—the security forces are not sufficiently prepared to ensure the protection of Christians. Even though we have repeatedly asked to raise the level of security, the results are not encouraging.” According to Sako, 57 churches and houses of worship in Iraq have been attacked since the invasion, with more than 900 Christians killed and more than 6 000 wounded.

Syria has the largest Christian community in the region, some 2.5 million strong. Most of them are supporting President Bashar Al Assad amidst ongoing protests in the country. A Syrian Christian explained that they prefer “a brutal dictator who guarantees the rights of religious minorities to the uncertain future that Assad’s departure might bring.” It is not to be doubted that if the Obama Administration is successful in its stated objective of bringing Assad down, the Christians in Syria will follow their Iraqi brethren into exile.

Two thousand miles further east, Asia Bibi, a mother of five children, is one of a dozen Christians in the province of Punjab currently awaiting appeal or execution under Pakistan’s scandalous blasphemy laws. On Christmas Day, after a year in jail, she will not be able to say prayers or to see her children and husband. She is being held in isolation, has not been allowed to bathe for over two months, and cannot stand unsupported. It is worthy of note that Punjab governor Salmaan Taseer was assassinated last January and Federal Minorities Minister Shahbaz_Bhatti was killed in March for defending Asia Bibi and criticizing Pakistan’s blasphemy laws.

Pakistan has a constitution that guarantees religious freedom, but murders, discrimination, and violent harassment of its small Christian minority are persistent. Any dispute with a Muslim—most commonly over land—can become a religious confrontation. Christians are routinely accused of “blasphemy against Islam,” an offense that carries the death penalty. Charges of blasphemy can be made on the flimsiest of evidence—one man’s word against another, and since it is invariably a Muslim’s word against that of a Christian, the outcome is preordained. The ease with which blasphemy charges can be made to stick has led to a spate of malicious complaints motivated by personal enmity and greed, especially for the Christians’ land. On many occasions Christians charged with blasphemy have been murdered before their cases reached the courts.

The scene is the same in Alexandria, Aceh, Istanbul, Prishtina, Karachi, Nazareth... Heavily armed police guard churches as hostile crowds look on. Wherever Muslim numbers dominate, Christians have reason to fear for their safety.  The majority know Sheikh Ali Goma is right. The refusal of the People of the Book to acknowledge him, Muhammad, as the messenger of God doomed them to unbelief and eternal suffering after death (Kuran 5:72-73). Christians are mortal sinners and their condemnation is irrevocable: “God will forbid him the garden and the fire will be his abode… They blaspheme who say: Allah is one of three in a trinity; for there is no god except One Allah. Christ the son of Mary was no more than an apostle; many were the apostles that passed away before him.” (5:75)

As he progressed from a moral teacher to the secular ruler of Medina and master of people’s destinies, Muhammad made the final break with the Jews and Christians, who are fiercely denounced. The Muslims must be merciless to the unbelievers but kind to each other. (48:29) “Whoso of you makes them his friends is one of them.” (5:55) The punishment for resistance is execution or the cutting off of hands and feet from opposite sides. (5:33) Muhammad was no longer trying to convert; Allah is a repetitive polemicist rejoicing in infidel suffering.

Thirteen centuries of Islam have effectively eliminated Christianity from the land of its birth. The terminal decline of the Christian remnant in the Middle East has been accompanied by the indifference of the post-Christian West to its impending demise. Once-thriving Christian communities are now tiny minorities, and in most countries of the region their percentages have been reduced to single digits. Whether they disappear will partly depend on Western leaders belatedly expressing their outrage at Christian persecution. According to David Parsons, media director for the International Christian Embassy in Jerusalem, there is clear historic precedent for such outside intervention in the Arab/Muslim world to protect Christian communities:

As Ottoman rule over the Middle East began to wane, the Great Powers moved into the region, each concluding deals with the Sultanate in Istanbul to provide protection to various imperiled Christian denominations. British envoys arrived to safeguard Protestant interests, France the Lebanese Christians, Russia the Orthodox folds. The Vatican also stepped in to aid certain sects… These Western interlocutors all brought with them schools, hospitals and other modern institutions, thus vastly improving the education, health and job opportunities of the local Christians. With this benevolent influx also came advances for all peoples of the region. Some locals are sure to object to any renewed Western intervention on behalf of Middle East Christians as a form of neo-colonialism. But no one has territorial designs here anymore.

It is just a matter of plain human decency, Parsons concludes: “No coddling of Islamist regimes! Sanctions if necessary! Someone has to do something to help stop the endless bleeding of Eastern Christianity.”

It is a near-certainty, however, that that “someone” will not be the U.S. Administration of President Barack Obama.

If the Jewish or Muslim population of America or Western Europe were to start declining at the rate at which Christian communities are disappearing in the Middle East, there would be an outcry from their coreligionists all over the world. There would be government-funded programs to establish the causes and provide remedies. The endangered minority would be awarded instant victim status and would be celebrated as such by the media and the academy. By contrast, when the President of the United States visited Jerusalem in October 1994, he was steps away from the most sacred Christian shrines but did not visit any of them. He did not meet a single representative of the Christian community, which remained invisible to him. A decade later, as busloads of American evangelicals stare at the Western Wall dreaming of a rebuilt temple that will provide an eschatological shortcut through history, the remnant of that community is on the verge of extinction—unseen and unlamented.

The one crucial difference between the Gospels and the Kuran is God’s love and His desire to redeem sinners by way of sacrifice. Without sacrifice there is no forgiveness, no atonement and no reconciliation that gives meaning to life and creation. Without it there is no salvation, which is why no true Muslim can ever be saved.

Kim was the son and heir of North Korea’s long-term Communist dictator Kim Il-sung. He was born in late 1941 in the Soviet Far East, where his father commanded a Red Army brigade composed of Korean and Chinese exiles. His official biography was doctored, however, to claim that he was born on Korean soil in 1942, in an area controlled by the Communist resistance forces led by his father. Everything else that is officially known about him is also a lie, including the miraculous signs that supposedly attended his birth (according to the official North Korean News Agency it was accompanied by the appearance of a bright star in the sky and a double-rainbow that touched the earth), the details of his education, and the intricacies of his complex family life. What we do know is that he was a film buff with a collection of 20,000 foreign movies and a connoisseur of fine French cognacs, neither of which appears to have softened his propensity to cruelty and capricious eccentricity.

By 1982 Kim Sr. had bestowed on him several senior Party, legislative, and military posts. As heir-apparent he took the designation of “Dear Leader” and was hailed as “the worthy successor to the cause of the revolution.” A grotesque personality cult was swiftly built around him, similar to the one enjoyed by his father, whom he succeeded on Kim Il-sung’s death in 1994. Hymns were composed in his honor, his images were hewn into rocky mountainsides, and his pictures added to those of his father in every office, classroom, and home.

In the late 1990s Kim Jong-il invested heavily into the already bloated military (songun, “army first”), with an emphasis on the nuclear program which was crowned with an A-bomb test in 2006, and a second shortly after President Obama’s inauguration. He pursued his father’s ruinous economic policy of strict autarky (“self-reliance,” juche) with fanatical zeal, effectively ending foreign trade even with North Korea’s only foreign friend, China. Economic mismanagement eventually resulted in a catastrophic famine which is conservatively estimated to have claimed over two million lives, or ten percent of the population, by 1997.

In late spring 2009 Kim Jong-il started grooming his youngest son, Kim Jong-un (b., 1983), as his successor. The youngster was duly designated “The Brilliant Comrade,” but since the rules of succession had not been formally announced prior to Kim Jong-il’s death it is uncertain whether it will proceed uncontested. His ability to establish himself in power will depend primarily on the loyalty of the army top brass and the willingness of the narrow ruling elite—which includes several relatives from his grandfather’s extended family—to respect Kim Jong-il’s wishes. The first signs are encouraging for the youngster: the ruling party has called on the nation to unite “under the leadership of our comrade Kim Jong-un,” and he was also named head of the committee that will oversee his father’s funeral on December 28.

On the foreign front the successors will inherit a position fairly stable in the short term. Kim Jong-il proved a capable negotiator, extracting a series of American concessions in return for a halt to his nuclear weapons buildup. The U.S. put North Korea on its list of state sponsors of terrorism after North Korean agents planted a bomb that blew up a South Korean passenger jet in 1987, on Kim Jong-il’s direct orders, according to one of the agents who was caught alive. In October 2008 the Bush Administration agreed to remove Pyongyang from its terrorism blacklist in return for the North’s commitment to dismantle its nuclear program. The deal was reached within the framework of the six-party talks (China, Japan, Russia, the United States, North and South Korea), whereby Pyongyang agreed to allow teams of international inspectors to visit its Yongbyon plutonium-processing facility in return for much needed foreign aid.

Playing the nuclear card—the only one he had amidst economic ruin and political isolation—had paid handsome diplomatic and economic dividends to Kim Jong-il over the years. “When the history of this era is written,” Graham Allison, a Harvard professor and expert on proliferation, was quoted in The New York Times as saying, “the scorecard will be Kim 8, Bush 0.” But if “he was the greatest master of survival, against all odds,” added Andrei Lankov, a North Korea expert at Kookmin University in Seoul, “it was his own people who paid the price, and the price was pretty high.”

Whoever succeeds Kim, the United States should plan on withdrawing the remaining American troops from the Korean peninsula. It should be left to the countries immediately concerned—South Korea, Japan, China, and Russia—to deal with his successors to the best of their abilities. The U.S. response to Communist aggression in Korea in the summer of 1950 was fully justified. In the ensuing decades it was necessary to maintain U.S. forces in South Korea, as neither China nor the USSR could be relied upon to keep Kim Il-sung in check. Over the past three decades, however, the picture has been altered beyond recognition. China and Russia owe no favors to Pyongyang and are loath to underwrite its ruinous economic policies at home, let alone to condone any adventurism abroad. More importantly, South Korea is now one of the most powerful economies in the world. It has the financial and scientific wherewithal to become a first-class military power. It is more than capable of checking threats from North Korea, which remains mired in an Oriental brand of Stalinism—the most oppressive police state in the world, and one of the poorest in terms of per capita consumption.

As I noted in this column over three years ago, removing the American umbrella from South Korea would be beneficial to both sides because the U.S. would be disengaged from a spot where the dangers of continued military presence exceed benefits, while South Korea would be forced to end its dependence on Washington for its defense:

American withdrawal would prompt South Korea finally to become a mature, self-reliant regional power fully responsible for its self-protection, as befits one of the most highly developed industrial economies in the world. It would also force it to diversify its portfolio of foreign contacts, possibly leading to a Russian-South Korean or a Chinese-South Korean alliance, either of which is preferable to an open-ended American guarantee… America has no national interest in retaining troops in Korea or in continuing to protect Seoul. Old habits may die hard, but the 55-year habit of garrisoning South Korea has to be kicked because it is dangerous, expensive, and unnecessary. To the argument that South Korea’s military is not strong enough to withstand the threat from the North, the answer is clear: only by removing our tripwire can America finally force South Korea to upgrade its military and to make its people assume the full economic and political burden of defending their own country. For exactly the same reason American troops should be removed from Japan and Germany. A strategic anachronism five decades old would thus be finally ended.

The above conclusions from October 2008 still stand, word for word. It is to be feared that the Obama Administration will not contemplate an American withdrawal from Korea because of its newly-fangled policy of encircling China, which is manifest in the decision to station U.S. Marines in Darwin, in northern Australia. In view of President Obama’s sudden outburst of bellicose oratory at the sixth East Asian Summit in Bali last month (China must “play by the rules” and stop her “military advances,” he declared, and the United States “will send a clear message to [the Chinese] that we think that they need to be on track in terms of accepting the rules and responsibilities that come with being a world power”) the GIs will stay put along the 38^th parallel for many years to come.

The dilemma facing the country was summed up by Dr. Fleming [start watching at 0:05:15] at a symposium at Belgrade’s Media Center on December 5. How does a small and weak nation respond to the challenge of a hostile and mighty foreign power which seeks to subjugate it? What is the right balance between defiance and subservience? That dilemma will not be resolved by a party program or by intellectuals writing manifestos. The only way to meet the challenge is to maintain faith and identity… and to procreate. In other words, the solution to Serbia’s woes is not structurally different from the solution to the malaise of some bigger and more important countries on both sides of the Atlantic which are also experiencing moral and cultural decrepitude and demographic decline.

This was inevitably the topic of conversation at a dinner we shared that evening with Dragan Acović, our polyglot friend whose professional and social pursuits make him one of the best informed people in Belgrade. His assessment was gloomy: the West may be declining, but Serbia’s decline is far swifter. The country may be further fragmented (Vojvodina, Sanjak) well before America finally gives up her imperial pretensions and the European Union disintegrates under the weight of its insoluble contradictions. The cumulative effect of relentless Western hostility over the past two decades, currently on display in northern Kosovo, has taken its toll. Belgrade’s political scene is dominated by a corrupt “pro-European” coalition led by the Democratic Party (DS) of Boris Tadić. While it claims to be more patriotic, the leading opposition party—the Serbian National Party (SNS) of Tomislav Nikolić—is almost equally enthusiastic about the alleged advantages of joining the EU, and just as ambivalent when it comes to maintaining and defending Serbia’s claim to Kosovo. The Socialists (SPS), opportunistic as ever, are likely to remain in the ruling coalition no matter who forms the government after the next election. The Democratic Party of Serbia (DSS) of my old friend Vojislav Koštunica and Šešelj’s Radicals (SRS) may get a third of the vote between them but are more or less certain to remain in the opposition.

On Tuesday, December 6, we attended an international conference on World War I in the Balkans which was jointly organized by the Institute for Contemporary History in Belgrade and the Russian World Institute in Moscow. The opening, at the ornate Senate Room of the National Assembly, was a major affair attended by government ministers and by the Russian Ambassador, Aleksandr Konuzin, who was to host a large reception at the Embassy in the evening. The following day, however, it transpired the conference itself was practically ignored by the Belgrade media. According to one of the organizers, editors received a discrete signal from on high that appearing too chummy with the Russians was not a good idea on the eve of the much anticipated EU decision on Serbia’s application for candidate status.

In the event Brussels said “no,” as expected, and Mr. Tadić pretended to be surprised. The rest of the country remained indifferent. Most Serbs have finally realized that the benefits of EU membership are dubious at best, and that the never-ending escalation of demands by the European Commission won’t stop short of Belgrade’s formal recognition of Kosovo’s independence. In any event, candidate status is meaningless without a timetable for accession—and that is something Serbia and the rest of the Western Balkans (save Croatia) will not get for many years to come. Gripped by financial woes and internal divisions the EU is in a state of chronic crisis. Germany and France in particular are not interested in admitting a cluster of poor and potentially troublesome countries. In their view letting Greece in was a mistake, let alone Bulgaria and Rumania.

On Wednesday morning, having presented our papers at the Great War Conference, Dr. Fleming and I headed to Studio B, Belgrade’s most popular local TV station, for a live interview. The presenter was pretty yet intelligent, the conversation fast flowing, and we were in decent form. It was good to be back at the same studio where, 20 years ago, I had my first live appearance before a TV camera. It would be trite to say “it seems like yesterday,” but it does. Scary.

The drive from Belgrade to Banja Luka (220 miles) took us for the most part across Croatia’s flat and boring Slavonia region. Border formalities are kept to a minimum these days, enabling us to make the journey in just over three hours. Seeing the speedometer hover around 125mph (200km) Dr. Fleming calmly asked me not to wake him up if we are about to die as he would prefer not to be stressed out at that moment; whereupon he promptly dozed off.

Banja Luka, the capital of the Republika Srpska—the Serb half of Bosnia-Herzegovina—has doubled its population to over 300,000 since the beginning of the Bosnian war. It seems cleaner and more prosperous than Belgrade; the people look better dressed and happier. The students in my class at the School of Politics are attentive, smart, and ask interesting questions. They are unburdened by the fetters of political correctitude (one young man implied that I was way too soft on Islam!) and comfortably rooted in their identity. The discussion following Dr. Fleming’s lecture on the U.S. foreign policy last Thursday indicated that they are also well informed on global affairs. They are most unlikely to accept eventual “Bosnification” and the reduction of the Republika Srpska to an empty shell, which is still the preferred scenario in Washington.

The dinner with Professors Tanasković and Nagradić on Thursday evening gave us an opportunity to pick up some local political gossip and to exchange views on the future of Bosnia. We all agreed that the “international community” (i.e. the United States and its Euro-satellites) has neither the political will nor the resources to impose a centralized, unitary state on the Serbs. Prof. Tanasković, a leading European expert on Islam, also regaled us with the stories of his Western colleagues expressing surprise at the triumph of hard-core Islamist parties in Egypt and Tunisia. He noted the tendency of Western liberals to project their own image into the world of Ikwanis and Jihadis, immediately looking for some mystical divide between “hard-liners” and “moderates” where in reality a numbing ideological uniformity prevails.

The following evening, after my final lecture and Dr. Fleming’s final interview, we were entertained by another old friend, Bishop Jovan (Ćulibrk), whose enthronement in Peć I attended three months earlier. We first met Fr. Jovan (as he was then) in Montenegro in 1998, when a young monk stood up after one of Tom Fleming’s addresses and asked him if he agreed with the proposition that the American War Between the States was a contest between Unitarian Yankees and Southern Trinitarian Christians. Dr. Fleming answered that he understood the conflict far better than 99 percent of Americans. Of course we became friends…

Bishop Jovan now has the difficult task of providing spiritual guidance and support to the dwindling Serb population of Metohija (aka Western Kosovo, in the parlance of the internationals), establishing rapport with the upper brass of local KFOR contingents (mainly Italians), and defending the interests of his Church vis-à-vis the Albanian authorities. Judging by our evening together he approaches this task with good cheer rooted in strong faith. Becoming a Prince of the Church has not gone to his head.

On Saturday morning, just before departing for Belgrade, we were received by the Bishop of Banja Luka, Jefrem, at his splendidly renovated palace. His Grace expressed regret that the rhetoric from Washington is still encouraging the Muslim (“Bosniak”) proponents of Bosnia’s centralization to hope for a revision of Dayton that would effectively liquidate the Republika Srpska. This is the single most disruptive factor preventing an agreement among Bosnia’s three constituent peoples on a viable long-term model of statehood, the Bishop said. He also fully agreed with the view that maintaining faith and culture is the key to survival in the uncertain times ahead.

Back in Belgrade we spent a lovely Saturday evening with a young couple, the Stanojlovićs, at a restaurant with a band that is equally at home with Serbian, Hungarian, Russian and Greek folk music. Bojan and Jovana raise four children—a rarity anywhere in Europe except in Kosovo and Albania. Their family preoccupations are characteristic of true conservatives everywhere: how to protect their children from the unwelcome intrusion of the state, with its absurd concept of “rights” and its invitation to the five and six-year-olds to rat on their parents if they get a slap on the backside. In this unhappy respect Serbia has already joined the “international community”…

The final show for Dr. Fleming was on Sunday afternoon at the Institute for European Studies, where Miša Đurković, Serbia’s foremost paleo-equivalent, introduced him. I was too tired to join them and a few others for dinner afterwards, but I understand that a jolly good time was had by all until the wee hours. The Serbs have very good reason to feel apprehensive about the future, but that does not mean they will stop enjoying the present.

Most West European media professionals tend to subscribe, consciously or not, to a neoliberal world outlook in general and to the tenets of multiculturalism in particular. In other words, they tend to accept the principle that recognition and positive accommodation of demands and special political and moral claims of various ethno-racial, religious, or sexual minorities are obligatory through “group-differentiated rights.”

The result is an obsessive favoritism of allegedly disadvantaged groups, such as Third World societies in general, Third World immigrants in particular, and most notably Muslims in Western Europe. The BBC and other media outlets thus routinely described the rioters in French banlieus six years ago—who were overwhelmingly of Arab-Muslim origin—as “angry French youths.” The term was technically correct, of course, assuming that most of them were indeed French citizens, but it was journalistically misleading to the point of dishonesty.

These assumptions have become culturally, psychologically and institutionally internalized in the West European mainstream media. Behind the veneer of all-embracing diversity, however, we find a carefully calibrated scale of acceptance or rejection of “the Other” depending on the cultural and political preferences of the media professionals themselves. Their insistence that there are many self-validating, closed systems of perception, feeling, thought, and evaluation—each associated with a racially, ethnically, religiously or sexually defined group—effectively rejects the legacy of the Western civilization, and specifically its insistence on the standards of reason, evidence, and objectivity, and principles of justice and freedom that apply to human beings as such. The result is a moral and intellectual relativism, which enables the media elite to pick and choose which group or nation will be approved for the status of sanctified victimhood, and which will be denied the benefit of the doubt, let alone sympathy, in the reporting and analysis of its foreign and domestic policies or its cultural and social developments.

Any serious discussion of the image of Russia in the Western media in general, and in those of Western Europe in particular, has to start with the recognition that Russia has been firmly and decisively relegated to the latter category by the Western elite class in general and the European media elite in particular. “It sounds paradoxical,” said Foreign Minister Sergei Lavrov, referring to the Western attitude toward Russia, “but there was more mutual trust and respect during the Cold War.” His correct hint is that the regimes in Brussels and Washington detest a post-Soviet Russia—the state that no longer is subservient, as it had been in the 1990s, but reviving its patriotic and Christian roots—more than the Cod War leaders of the West hated the USSR.

Let me focus on a specific, well documented example which is seven years old. It is hardly possible to envisage an orgy of terrorist savagery more deprived than that staged by Chechen jihadists and their foreign cohorts in Beslan in September 2004—at the end of a week in which two Russian passenger planes were blown up in mid-air and a lethal bomb exploded outside a Moscow metro station. All these attacks were terrorist in character and, in the case of Beslan, Islamic in the method of execution; yet the reaction of the European media was characterized by (1) blaming the victim, (2) ridiculing Russia’s claim to be battling terrorism, and (3) advising “dialogue” with the Chechen terrorists and effective Russian capitulation to their demands.

The problem of such visceral bias, stereotypical quasi-reporting and quasi-analysis is by no means new. The collapse of Russia’s institutions and social infrastructure under Yeltsin was accompanied by hyperinflation that wiped out savings and reduced the middle class and pensioners to penury. Its leading lights—Anatoly Chubais, Yegor Gaidar, Boris Nemtsov and Vladimir Ryzhkov—were nevertheless hailed in the European media as “pro-Western reformers” sans peur et sans reproche. Their political factions, lionized by the Western media, were duly supported by the quasi-NGO network funded in part by the Western taxpayers.

The parallel wholesale robbery of Russian resources by the oligarchs and fire-sale of drilling concessions to their Western cohorts such as the BP, became a contentious issue in Russia’s relations with the West only a decade later, with the arrest of Mikhail Khodorkovsky. Media allegations of “Putin’s revenge” against the Yukos boss may have been worthy of serious investigation (which was lacking) but they disregarded the fact that—quite apart from his political ambitions—Khodorkovsky was guilty of fraud and tax evasion on a massive scale.

The West European media commentary brought to mind the manner in which Brezhnev’s propaganda had built Rudi Dutschke and Angela Davis into political martyrs. And while last month’s court proceedings in Kiev against Yulia Tymoshenko may have left a lot to be desired, the Western media disregard for her proven record of corruption and venality was equally predictable. Her transgressions are irrelevant in the context of the ideological usefulness of her constructed victimhood with clear anti-Russian implications and connotations.

There is absolutely no evidence, by contrast, that Anna Politkovskaya was killed on Putin’s orders, as claimed or suggested in dozens of West European mainstream media outlets With no evidence whatsoever, that assumption was immediately made when she was shot in November 2006, and gravely presented as near-certainty by the usual “experts.” But when a leading opposition politician was shot in May 2007 in Georgia, the event was barely mentioned in Europe: just try a Google search for “Guram Sharadze.”

Talking of Georgia, the anti-Russian stereotypes most notably prevailed over common sense and journalistic integrity at the time of Saakashvili’s attack on South Ossetia in August 2008, with the British media leading the pack in their attacks on Russia’s “aggression” and Western “passivity.” I am not going to bore you any longer with detailed quotes, we all remember it well.

While never missing an opportunity to hector Russia on democracy and criticize her human rights record, the West European media have been notably silent on the discriminatory treatment of large Russian minorities in the former Soviet republics. In Latvia and Estonia the Russians are subjected to arguably the worst treatment of any minority group by any member of the European Union, or (with the exception of Turkey) of NATO. Latvia and Estonia have been allowed by the West flagrantly to break promises made before independence.

All along, the mainstream media verdict on both sides of the Atlantic depends on an actors’ status on the ideological pecking order of the media elite itself, not on his words and actions as such—in line with the Leninist dictum that the moral value of any act by anyone is determined by that act’s contribution to the march of history. Putin’s current approval rating of 60 percent is thus cited as further evidence of his manipulative populist demagoguery and yet another “proof” that democracy remains underdeveloped in Russia.

Parallel with the denial of legitimate Russian interests in the “near abroad,” the Western media elite views Russia as a state with limited sovereignty even within her post-Soviet borders. No aspect of its domestic policies, from education (“ethnocentric”), immigration (“restrictive”), or religion (“discriminatory to the non-Orthodox”) to corruption (“rampant”), homosexual rights (“appalling”) and the legal system (“inefficient and corrupt”) has escaped scathing media criticism. That a “truly democratic” Russia can be only the one that is subservient both domestically and externally to the demands and ideas of the Western media elite is accepted on both sides of the European political spectrum as an axiomatic fact.

The notion of Russia’s fundamental illegitimacy and limited sovereignty was explicit in April 2007, when Moscow rejected Great Britain’s demand for the extradition of Andrei Lugovoi, suspected by British officials of murdering his fellow ex-KGB officer Alexander Litvinenko. “Time for a row with Russia,” pontificated The Guardian: “Russia has to learn that it cannot act with impunity. We need to make our condemnation of Russia’s appalling human rights record clear… We need to complain vigorously about… the mayor of Moscow’s banning of this weekend’s gay pride march… [W]e should not be afraid of ruffling Putin’s feathers.” A similar article was published in most major dailies all over Europe. Hardly any had mentioned that the issue of extradition between Britain and Russia was in some way linked to London’s point-blank refusal to extradite to Russia Boris Berezovsky, a corrupt arch-oligarch, or Akhmed Zakayev, accused of a host of horrendous terrorist crimes in Russia. That a British court blithely accepted Zakayev’s claim that he would not get a fair trial, and could even face torture in Russia, went unreported. If Russia, on the other hand, dares reject a Western extradition order for a Russian citizen, then it’s time for another paroxysm of rage that transcends the political divide.

In recent weeks, and particularly following the September 23 announcement that V.V. Putin would again run for presidency next March, we have witnessed yet another campaign of facile media stereotyping. The tone was set as early as September 25 by The Daily Telegraph, which expressed “fears that Vladimir Putin was railroading Russia into an outright dictatorship … as he set course to be the country’s longest-serving leader since Josef Stalin.” Boris Nemtsov’s absurd claim that “Putin will provoke a mutiny among the Russian people” was widely circulated as a serious prediction, reflecting a hint of wishful thinking.

The similarity of reactions to Russia on the right and left ends of Europe’s media spectrum reflects the perception that Russia belongs to a tradition that is both alien and unworthy of multiculturalist tolerance. This is an unreasoning phobia that goes beyond mere rhetoric. Its cause is not in a misunderstanding of the Russian mindset and tradition but, quite the contrary, it is due to the accurate assessment by the media class that Russia as such is an obstacle to the realization of their political, economic, and ideological preferences in the modern world.

The assorted editorialists and talking heads are following in the footsteps over 800 years old, of the sack of Constantinople during the Fourth Crusade in 1204. The Franks did not understand, or care, that the New Rome on the Bosphorus was the guardian and protector of the West against the same enemy we all face today. Their insistence on Byzantium’s submission to the Western political and cultural model opened the way for the Jihadist onslaught against Europe that did not stop until it reached Vienna in 1683. Replicating the same Western folly with Russia today brings to mind Talleyrand’s comment on Napoleon’s execution of the Duc d’Enghien: “It is worse than a crime; it is a mistake.”

The mistake will be very hard to rectify. The unforgivable sin of the Russians, in the eyes of the Western media elite, is that they are still defined by their ethnic, cultural and religious identity. In spite of almost a century of horrendous ordeals and tribulations, Russia is still a recognizable nation, rooted in the continuity of its culture, faith, and collective memories—perhaps the last major European nation which is still recognizably itself.

By contrast the Western postmodern multiculturalism has numerous secondary manifestations (one-worldism, inclusivism, antidiscriminationism) that demand engagement abroad and wide-open immigration doors at home. In either case the impulse is neurotic and its justification is gnostic. It reflects the collective loss of nerve, faith, and identity. It produces cultural and demographic consequences unprecedented in history. It is built on the arrogant conviction that neoliberal ideology contains the blueprint for the solution to the dilemmas and challenges of human existence, that certain enlightened abstractions—democracy, human rights, secular humanism etc.—can and should be spread across the world, and are capable of transforming it.

Both these forms of insanity have a “left,” variant (one-world, post-national, compassionate, multilateralist, Gramscian, therapeutic, Euro-integralist) and a “right,” neoconservative one (democracy-exporting, interventionist, self-aggrandizing). While often differing in their practical manifestations, both paradigms are utopian. Their roots are in the legacy of the Enlightenment. Both maintain that Man is inherently virtuous and capable of betterment. These are two sects of the same Western heresy. Its fruits are in the Christophobic “liberal democracy” of our own time.

The cultural roots of the Western media elite are no longer discernible in what they cherish but in what they reject: they hate European societies founded on national and cultural commonalities, with stable elites and constitutions and independent economies. They regard all permanent values and institutions with open animosity, which is why they support the amorphous fluidity of the European Union. They oppose democracy in post-communist Eastern Europe because it may produce governments that will base the recovery of those ravaged societies on the revival of the family, sovereign nationhood, and the Christian faith. They therefore support political parties and NGOs all over Eastern Europe that promote the entire spectrum of postmodern isms that have atomized the West for the past four decades: the embrace of deviancy, perversion, and morbidity as the litmus test of “Western” credentials. At the same time, “democracy” in America and Western Europe alike is a corrupt process run by an elite class that conspires to make secondary issues important and to treat important issues as either irrelevant or a priori illegitimate.

It is futile to expect the Western media elite to stop treating Russia as “the Other,” and to stop wishing for its disintegration, all by itself. As Russia’s ambassador to NATO Dmitry Rogozin has wondered, “The NATO gamekeepers invite the Russian bear to go hunting rabbits together. The bear doesn’t understand: why do they have bear-hunting rifles?” Well, because they’d like to kill the bear and carve him up, or else make him pliant and obedient to their whims, a tame dancer in the global circus.

There are some who might dismiss my concerns, saying “ah, but Russia is a powerful country, the dogs bark but the caravan moves on.” This is extremely short-sighted. The overall tenor of Western media reporting on Russia helps lock policy into concrete undesirable forms, notably on the issue of visas (in the case of Europe) and WTO (in the case of the U.S.). This is a phenomenon Russia ignores at its peril. The fact that both the European Union and the U.S. are bankrupt and their global power is objectively declining, is not cause for immediate comfort. The circumstances, where the authors of policy maintain ambitions far beyond the resources objectively available to them are those that can give rise to miscalculation, with disastrous results.   It is all the more reason that Russia cannot afford to be complacent about policy formation in either Brussels or Washington and why, for its own self-interest, Moscow should actively seek to affect it with lobbying and soft influence.

TO CONCLUDE: For the past two decades Russia has been trying to rearticulate her goals and define her policies in terms of traditional national interests. The old Soviet dual-track policy of having “normal” relations with the West, on the one hand, while seeking to subvert it, on the other, gave way to naïve attempts in the 1990’s to forge a “partnership.” By contrast, the early 1990’s witnessed the blossoming of America’s attempt to assert her global hegemony. This ambition created an ironic role-reversal; it precluded any suggestion that Russia has legitimate interests, externally or internally. The justification for the project was as ideological, and the implications as revolutionary, as anything concocted by Zinoviev or Trotsky in their heyday.

That a “truly democratic” Russia must be subservient to the propositional matrix is still axiomatic on both sides of the Atlantic. “Democracy” is thus defined in the spirit of Lenin: it depends on one’s status in the ideological pecking order and on one’s contribution to the march of history. In this progression the reshaping of Russia’s soul is the final stop. In that respect any gap between the Sorosite “Left” and neo-Cold-War “Right” is a matter of degree rather than kind. In this context, Russia’s ambassador to NATO, Dmitry Rogozin, stated something remarkable three years ago, in an interview with Russia Today (November 18, 2008): “There is a new civilization emerging in the Third World that thinks that the white, northern hemisphere has always oppressed it and must therefore fall at its feet now… If the northern civilization wants to protect itself, it must be united: America, the European Union, and Russia. If they are not together, they will be defeated one by one.” Rogozin’s statement reflects an understanding of the commonalities shared by Europeans and their overseas descendants—an understanding as accurate as it is odious to the Western elite class. It indicates that, in some important ways, Russia is freer than the West: No American or EU diplomat of his rank would dare make such a statement (even if he shared the sentiment), or hope to remain in his post after making it.

Western multiculturalists in the media and academia oppose any notion of “our” physical or cultural space that does not belong to everyone. They deny that we should have a special affinity for any particular country, nation, or culture, but demand the imposition of their preferences upon the whole world. They celebrate any random mélange of mutually disconnected multitudes as somehow uniquely “diverse” and therefore virtuous.

Ideologues will deny it, but in the decades to come Europe, Russia, and America will be in similar mortal peril. In the end there will be no grand synthesis, no cross-fertilization, and certainly no peaceful coexistence, between the North and the Third World. There will be kto kogo. The short-term prospects for fostering a sense of unity among Europeans—Eastern, Western, and American—are dim and will remain so for as long as the regimes of all the major states of the West are controlled by an elite class hostile to its own roots and cultural fruits.

We need a paradigm shift in the West that would pave the way for a genuine Northern Alliance of Russia, Western Europe and North America, as all three face similar existential geopolitical and demographic threats in the decades ahead. I don’t know if this alliance will materialize. I do know that, if it doesn’t, our civilization will be in peril. To prevent that outcome, it is essential to (re)affirm the principle of “preserve and augment,” to be inspired by the constant creative renewal of society without stagnation or revolution, and to rely on the commonalities of the spiritual traditions, history and culture of the extended European family, from Anchorage via Berlin to Vladivostok.

Only hours earlier Berlusconi had lost his parliamentary majority after Umberto Bossi, leader of the Northern League and his key coalition partner, called on him to resign. After meeting him for an hour on Tuesday, President Giorgio Napolitano said the Prime Minister had understood the implications of the vote and accepted the “urgent need” for the country to respond quickly to the demands from Brussels for legislative action in line with the European Commission diktat. The immediate challenge for his successors will be to put together a stable enough government—possibly led by non-party technocrats—able to apply sweeping EU-dictated austerity measures in a country that has had, on average, about one government a year since the Second World War.

The Italian political class is breathing a collective sigh of relief, but it seems clear that no domestic combinazioni could have forced Berlusconi to go so soon. Only weeks ago he seemed impregnable. The immediate cause of his pending departure is the pressure from Berlin and Paris to make Italy take a hefty dose of the bitter medicine already prescribed to Greece, and the loss of faith in Berlusconi’s ability to administer it. This is the first time a major European country, and a founding member of the Six at that, has had its domestic political arrangements so decisively impacted by the dominant EU powers.

A century and a half after Italy shook off first Austrian rule and then French tutelage and became independent, it is still vulnerable to the vincolo esterno, the external constraint. The pressure started in late August when Jean-Claude Trichet, President of the European Central Bank, and his Italian successor, Mario Draghi (who took over the ECB on November 1), jointly warned Berlusconi that “pressing action by the Italian authorities is essential to restore the confidence of investors.” Over the ensing two months, however, he did little to demonstrate Italy’s ability to reduce its massive public debt and stimulate growth. The concern in Brussels and Berlin was unsurprising: Italy’s economy is three times the size of Greece, Ireland and Portugal combined. The EU would be unable to raise enough capital to bail her out if it were to default on its debt payments. A failure of any kind in Italy would finally destroy the eurozone as a whole.

On October 23, at the first of two most recent Euro-summits dealing with the eurozone crisis, Berlusconi was told by Angela Merkel and Nicolas Sarkozy to bring a convincing reform blueprint to the next EU gathering which was scheduled in Brussels only three days later. Their smirks and contemptuous treatment of the Italian premier prompted even his political foes back in Rome to start murmuring Euro-skeptic heresies. (The humiliation also prompted Berlusconi to make some unprintable remarks about Chancellor Merkel’s appearance and feminine charms.) He returned to Brussels on October 26 with a hastily drafted package of measures to boost growth and cut Italy’s public debt, but Frau Merkel is said to have been underwhelmed by more promises of future measures. Her decision that Berlusconi should go—with Sarkozy merely pretending to count in the making of that decision—is probably some two weeks old.

This is the end of an era for Italy and the end of a mercurial and ultimately disappointing career. Personal idiosyncrasies that may have seemed relatively harmless and politically irrelevant in the 1990s, or even a decade ago, have turned grotesque, with il Cavaliere at 75 seemingly losing all vestiges of self-control in his personal life. The Roman Catholic Church, once a quiet supporter, has turned against him. Famiglia Cristiana, an influential weekly, deplored Italy’s “moral emergency” last summer and accused Berlusconi’s friends of “defending the indefensible.”

His bunga-bunga parties, as we now know, were not vicious rumors spread by vile reporters, but real-life events that make decent Italians blush. His resulting legal problems have severely curtailed his ability to function as an effective chief executive.

The real problem is that he has been ineffective all along. Berlusconi’s rise on the ruins of the corrupt old system—managed for decades by the Christian Democrats and their smaller satellites—was based on the twin promise of “clean hands” and managerial efficiency. Being the richest Italian alive seemed a solid credential regarding the latter: he was supposed to be “Italy’s Thatcher.” He was Prime Minister in 1994-1995, then for five full years starting a decade ago (2001-2006), and currently since 2008, making him the longest-serving leader of a G-8 country and second only to Mussolini at the helm of Italy. He has enjoyed comfortable parliamentary majorities and unique media influence—in part thanks to his Mediaset empire—that should have enabled him to enact and apply a bold vision of Italy for the 21^st century.

Berlusconi has failed; worse, he has not really tried. His private peccadilloes and often dubious business practices (which have also created a never-ending stream of lawsuits) could have been overlooked had he not left Italy, after almost ten years in office, in no better state than he found her in 1994. The economy is grotesquely over-regulated, yet the old system of corrupt government contracts and phony jobs for the well-connected is alive and well. The central bureaucratic machine is as bloated and inefficient as ever. An estimated third of potential tax revenues remain uncollected. Italy is, in terms of growth, the sick man of Europe: only Zimbabwe and Haiti had lower GDP growth than Italy in 2000-2010. The public debt, at $2.6 trillion, is 120% of GDP. A quarter of Italy’s under-30s are unemployed and another quarter is subsisting on dead-end, 1,000 euros-per-month jobs in mamma’s care, thus contributing to a demographic collapse far worse than that in Central and Northern Europe. There was no improvement in productivity under Berlusconi: Italy’s international competitiveness has actually declined over the past decade. Public spending has been outstripping growth for years; since 2009, it has accounted for more than one-half of the GDP. There is no way—on current form—that the country can bring its finances in order and stimulate serious growth at the same time. There is equally no way it can be bailed out by others.

Italy is still one of the most civilized countries in the world and one of the most pleasant to live. To remain that way, Italy needs to find a formula to remain herself, while adjusting to the financial and economic realities of the Old Continent by quitting the euro, devaluing, and managing her own interest and exchange rates. It was time for Berlusconi to go because he has not been able or willing to make a difference. Among his many memorable quips—some of them funny, some just plain embarrassing—the most absurd by far is his 2006 boast, “I am the Jesus Christ of politics. I am a patient victim. … I sacrifice myself for everyone.” This is nonsense. Berlusconi sacrificed nothing and served himself. Italy deserves better.

First a disclaimer: I do not like George Papandreou any more than I ever liked the rest of the clan. His late father Andreas—a redistributionist demagogue leading a scandalous private life—presided over Greece’s descent into public indebtedness, from 20% of the GNP when he took office in 1980 to over 80% when he completed his second term in 1989. By the time he died in 1996 after a third term of office, the country was irredeemably weaned off the steady diet of fiscal responsibility bequeathed by the Colonels.

Secondly, what Papandreou has achieved—a temporary stabilization of his domestic position and a stronger hand to seek an even better deal from his ruffled northern creditors—is not necessarily in the Greek interest. On balance Greece would be better off leaving the eurozone, reintroducing the drachma, defaulting, devaluing, and pulling herself by her bootstraps in the years to come. Argentina suffered capital flight just before her 2002 default and some trouble attracting foreign investment in its immediate aftermath, but in the long term the devalued peso made Argentine exports cheap and competitive abroad, while discouraging imports and producing a hefty trade surplus. An aggressive revenue-collecting program (of the kind Greece can and should emulate) further helped keep the books well balanced. By January 2006 Argentine foreign currency reserves had reached $28 billion.

Being an Euro-socialist at heart, Papandreou preferred a tactical coup de main that strengthens his hand while changing nothing in Greece’s unenviable strategic position. But at a tactical level he did well. As I wrote on Tuesday, on the domestic front Papandreou’s gamble made sense:

The center-right opposition has withheld support from the austerity plan forced upon Papandreou by Brussels, but it has no alternative strategy of its own. He does not want to be the sole villain of the piece, and the debate preceding the referendum would force his opponents to declare what they would do differently. Judging by the change of government in Lisbon earlier this year, after the Portuguese government lost the austerity vote, the answer is—nothing much. Papandreou does not want a repeat performance in Athens, and his decision presents the New Democracy with a dilemma. As The Economist blog points out, “The hope is that the opposition, recognising that there is little choice but to implement agreed upon policies and understanding that the public is likely to reject the deal, will be forced to support the government’s austerity measures, thereby making the referendum unnecessary.

Well, this is exactly what happened. Well done Papandreou! Alas, poor Greece …

On the foreign front I still suspect that Germany (but not France) may have been briefed in advance of Papandreou’s referendum gambit, and that he will use the aftermath of the scare to exact an even greater “haircut” in the weeks to come—primarily to the detriment of the three big French banks. If he survives the no-confidence vote tomorrow—as I expect he will—be ready for another Danaian gift or two to Brussels in the weeks to come. And sell your euros, fast.

On the domestic front Papandreou’s gamble makes sense. “Papandreou’s call for a referendum was a last resort,” according to The New York Times “meant to gain broader political support for the unpopular austerity measures… without forcing early elections.” In  fact it is more than that. The center-right opposition has withheld support from the austerity plan forced upon Papandreou by Brussels, but it has no alternative strategy of its own. He does not want to be the sole villain of the piece, and the debate preceding the referendum would force his opponents to declare what would they do differently. Judging by the change of government in Lisbon earlier this year, after the Portuguese government lost the austerity vote, the answer is—nothing much. Papandreou does not want a repeat performance in Athens, and his decision presents the New_Democracy with a dilemma. As The Economist blog points out, “The hope is that the opposition, recognising that there is little choice but to implement agreed upon policies and understanding that the public is likely to reject the deal, will be forced to support the government's austerity measures, thereby making the referendum unnecessary.”

On the more important foreign front, prima facie, it is those wily, Levantine Greeks—at their worst again—wrongfooting “Europe.” To make matters worse, they are doing so a mere three days before the G20 summit, which was supposed to garner foreign support (read: Chinese, possibly Japanese) for resolving the Eurozone debt crisis. For as long as the Greek outcome remains uncertain, no foreign government is going to give Europe the money for the enhanced bailout fund.

“The referendum … is probably the final bell before Greece defaults and quits the euro,” The Guardian was quick to conclude. “The repercussions would be incalculable, for Greece but also for Europe.” The announcement came “out of the blue, it’s surprising, very risky,” says Norbert Barthle, the ranking member of Chancellor Angela Merkel’s Christian Democratic Union. French President Nicolas Sarkozy is “dismayed” by the Greek plan, according to Le Monde.

While the French have every reason to be unpleasantly surprised, the Germans may protest too much. Were they really surprised? Call me paranoid, but on the basis of platitudinous official statements, we still cannot decipher what was on the agenda five weeks ago during the visit to Berlin by Papandreou and his finance minister Evangelos Venizelos. Had it been to simply reassure the markets that they were willing to accept a comprehensive solution to the debt crisis, they could have issued a couple of press releases from their Athens cabinets. On the other hand, working out a subtle, mutually beneficial scenario with Frau Merkel would have required a discrete tete-à-tete encounter.

Let us speculate. On current form there is no doubt that the Greeks would vote “no” in the referendum—possibly by a two-thirds majority. As the date of the vote draws near (probably in late December or early January), the bankers—mainly French bankers holding Greek bonds, that is—will start sweating. Suddenly even the 50 percent “haircut” agreed on October 26 would look good in comparison to Greece’s sovereign default—the nightmare scenario that would follow a “no” vote like night follows day. A last-minute suggestion from Berlin to raise the “haircut” to 65 or 70 percent would still seem preferable to the prospect of getting nothing at all.

I’d say it is an even bet that the Parisians would go for it, thus further reducing Greece’s debt burden at no cost to the German exchequer and at bearable cost to the modestly exposed German banks. Sarkozy would have no choice but to recapitalize Societe Generale and others, thus jeopardizing France’s credit rating and making himself ever more vulnerable to various future diktats from across the Rhine. Papandreou calls the referendum off or else presents himself as a heroic David getting the best deal possible, hence winning the vote.

The writing is already on the wall. French banks exposed to Greek bonds slumped within hours of the referendum: Societe Generale tumbled 13 percent and BNP Paribas and Credit Agricole fell more than 10 percent. By noon Tuesday, the European bank index was down over six percent, wiping out the gains that followed the announcement of the EU rescue deal on October 26. European stocks sank to their lowest level in five weeks. (Washington may have been as surprised by Papandreou’s announcement as Paris, but has no reason to complain: Treasuries rose on the news from Athens, extending the biggest rally in 30-year bonds since March 2009.)

We could not predict the referendum, but the weakness of the rescue package has been evident all along. The euphoria just before the weekend was short-lived. Had I had a few million handy last Thursday and Friday I would have gambled on the put options, as the markets on both sides of the Atlantic swung up in response to the EU package. In reality it was not much of a “deal” to start with, and now it is in disarray.

Papandreou’s “bombshell” announcement appears to make little sense. His government is in jeopardy, his personal credibility with his EU colleagues is collapsing, and his chance of getting a “yes” vote is nil. And yet he is a shrewd politician, the heir to Greece’s foremost political dynasty.  Why would he do it? There is more than meets the eye here. What we need to ask is Cui bono?

Greece’s private-sector debt is now down to 100 billion euros, and the country will continue its long road to nowhere with zero growth, cuts and austerity. Even after the 50 percent write down its debt is still 90 percent of the country’s GDP and for as long as it stays in the euro the burden can never be paid off. To make the banks agree to the deal, however, the euro zone governments had to offer them inducements in the form of “credit enhancements”—bureaucratese for provision of low-cost government liquidity—worth over a third of the “haircut” itself.

More significantly perhaps, the European Financial Stability Facility (EFSF) will be boosted to €1tn ($1.4tn)—which may not be enough to preempt another crisis in a big southern economy, such as Italy or Spain. Merkel’s plan is to use the facility to provide insurance on new Italian and Spanish government bonds, but private investors are yet to be convinced that the fund will actually pay out in case of a large sovereign getting into trouble. If the insurance option is not embraced by private investors, the EFSF’s one trillion euros will be woefully insufficient to contain even the likely fallout from Grece’s half-default, let alone a major future crisis. This is the main weakness of the deal reached in Brussels. The European Financial Stability Fund needs to be expanded to be credible, and yet it cannot be done without issuing Eurobonds which the Germans unsurprisingly refuse to underwrite.

The elephant in the room is the euro itself. Back in 1990 the common currency was a French idea, the late François Mitterrand’s condition for his approval of Germany’s reunification. In theory it was supposed to remove exchange rate risks from the euro zone market, reduce the costs of transactions, stimulate cross-border trade, create an area of monetary stability, and force member countries to practice fiscal responsibility. The unstated intent was to curtail the power of the Deutschmark and to bind reunited Germany more closely to Europe. It was to be Chancellor Helmut Kohl’s burnt offering on the altar of European integration. In January 2002, colorful new banknotes and coins replaced national currencies in the initial 11 countries of the Eurozone.

In the early years the plan worked to the advantage of the periphery. All of a sudden, it was possible to obtain loans in Athens, Madrid or Dublin at interest rates as low as those in Berlin or Frankfurt. The result was a period of southern rapid growth—largely financed by northern capital in quest of fresh opportunities—and German stagnation. The “PIIGS” (Portugal, Ireland, Italy, Greece and Spain) used the cheap cash not to modernize their economies, however, or to increase their competitiveness, but to finance speculative projects and to indulge in excessive public and private consumption. Tens of billions went into building booms along the Spanish Costas and into Greek government bonds. Ireland’s growth reached 4.5 percent in 2004, fueled by a property boom but not accompanied by an improvement in its international competitiveness.

However seemingly disadvantageous for the Germans, the new situation proved to be a blessing in disguise for them. The periphery was awash in investment funds and it was temporarily oblivious to the fact that it could no longer defend its markets against future German imports through periodic devaluations. The Germans grasped the implications, however. The manufacturers realized that their only chance was to become ever more efficient and globally competitive. The workers had to endure years of flat wages and high unemployment. The fruits have been ample: since 2007 Germany’s export-led economy has continued growing in spite of the crisis. Its budget deficit will drop to zero in 2014 and likely move into the black thereafter.

A conspiracy theorist may argue that the Germans had known all along that the euro would create a captive market for their export juggernaut. The southern periphery could no longer protect its domestic markets from the deluge of better made, more efficiently produced German goods by resorting to occasional devaluations vis-à-vis the Deutschmark. The gap was bridged by northern commercial banks supplying loans for southern purchasers of mainly German goods. The southern periphery is now caught in a triple bind: its exports cannot grow because they cannot be boosted by devaluation, its domestic demand cannot be stimulated because they are forced to implement draconian austerity measures, and its economies are additionally burdened by high interest rates on German-led, multi-hundred-billion rescue packages.

By design or by default, Germany appears to have created a new European order which it dominates more effectively than she ever controlled the short-lived New European Order seven decades ago. The trouble is that the financial and political burden of the euro-project is becoming almost as steep for Germany as the price of running the global empire continues to be for the United States. Writing off a significant portion of southern debt, a la Greece’s “haircut,” creates a precedent that may create similar expectations in other, much larger troubled economies. The alternative is to continue making large net transfers and putting together ad-hoc rescue packages when crises erupt, but the will of the German political and financial establishments to continue doing so is wearing thin. The periodic crises will continue until the euro is taken apart, or until the four PIGS—and perhaps Italy, too—are expelled from the Eurozone.

Euro-enthusiasts predictably argue that without monetary union the exchange rates would fluctuate wildly and destroy the Union. In reality, trying to keep the euro zone afloat at any price is the biggest threat to the Union. For as long as the euro is upheld, the European Central Bank will be trying to square the circle of operating a single monetary policy and uniform interest rates for a widely different group of countries. The results will be periodical emergencies all along the periphery. They will take different forms at different times—a fiscal crisis here, a banking collapse there, a property slump everywhere—but like the erupting lava finding its way through the Earth’s crust, the crises will never stop and can never be resolved.

Only on the ruins of the Eurozone, or perhaps after it is reduced to its northern, hard-currency, inflation-free core, will it be possible to recreate a self-adjusting exchange rate mechanism reflecting different countries’ economic efficiencies and fiscal policies. Once it is accepted that the euro had always been a political project not justified by economic considerations, the ongoing drama would be finally over. Such outcome would benefit Europe and the rest of the world.