What on Earth is Going On?: A Crash Course in Current Affairs

2003-6: Attacks in Iraq on UN, US and Shi’ite targets by Abu Musab al-Zarqawi’s ‘al-Qaeda in Iraq’ (thousands killed and injured)

2007: Car bombings in Algiers, Algeria (roughly 90 killed, 350 injured)

2008: Danish Embassy bombings in Islamabad, Pakistan (6 killed, 24 injured)

advocated offensive jihad to rid the world of non-Muslim influences. He also declared that any Muslim not living under Sharia law is automatically an apostate (i.e. guilty of renouncing their faith), a crime punishable by death. This idea has been used by al-Qaeda to justify the killing of fellow Muslims. Bin Laden has been quoted as saying that Afghanistan under the Taleban regime of 1996-2001 was the ‘only Islamic country’ in the world.

What are its roots?

Whilst fighting against the Soviets in Afghanistan in 1984 for the CIA-funded Mujahedeen (see Afghanistan), Osama bin Laden co-founded the Maktab al-Khidamat (‘Services Office’), an organisation which raised funds and recruited foreign jihadis, or ‘Afghan Arabs’, for the war effort. In 1988 bin Laden split from Maktab al-Khidamat, taking with him a loyal following; this was the core of what would later become known as al-Qaeda. After the Soviet defeat in Afghanistan, bin Laden directed his jihad towards American targets. His fervent anti-American stance has been well known since 1990, when he publicly denounced his own country, Saudi Arabia, for allowing US forces on to its soil in order to repel Saddam Hussein’s invasion of Kuwait. From 1992-6 bin Laden and al-Qaeda operated out of Khartoum, the Sudanese capital, where they were joined by members of EIJ (Egyptian Islamic Jihad). EIJ’s leader Ayman al-Zawahiri subsequently became deputy leader of al-Qaeda. In 1996 bin Laden and al-Zawahiri were expelled from Sudan and granted a safe haven by the Taleban regime in the mountains of Afghanistan, which became al-Qaeda’s new headquarters. In 1998 bin Laden, al-Zawahiri and three others (as the ‘World Islamic Front for Combat Against the Jews and Crusaders’) issued a fatwa calling for the deaths of Americans and their allies, despite the fact that they did not possess the necessary Islamic qualifications to do so.

How is it funded?

Bin Laden is extremely rich himself, having been born into a prominent Saudi family, and he has close ties with wealthy Islamist sympathisers across the Muslim world. Funds are channelled to al-Qaeda from a variety of sources, including hawalas (small money-brokering operations), Islamic charities, fake companies, lightly regulated banking centres (e.g. Dubai and Liechtenstein) and commodities such as Angolan diamonds or Afghan opium, which can be transported easily and traded for cash or weapons. Identifying the sources of funding for al-Qaeda and other Islamic militant groups is a major aspect of counter-terrorism operations against them.

‘We love death. The US loves life. That is the difference between us two.’

OSAMA BIN LADEN, November 2001

Banking

What do commercial banks do?

Commercial banks, which include high street banks and building societies, operate a fairly simple business model: they borrow money from depositors (those who open an account at the bank and deposit money in it) at low rates of interest, and make a profit by lending it out at higher rates of interest. The sorts of loans offered by banks vary, and include business loans,

overdrafts, career-development loans, and mortgages (in which building societies specialise). Banks must keep hold of a certain amount of money (the ‘cash reserve ratio’, set by the government) in case depositors wish to withdraw their money. It is vital that banks manage their risk well; some of their riskier loans may default, so banks must set their rates of interest carefully to allow for this and still remain profitable.

What do investment banks do?

Broadly speaking, investment banks help raise capital for clients by investing their money (corporate finance), manage company takeovers (mergers and acquisitions) and trade securities in the global markets. Securities are financial products that are tied to the value of an underlying asset (see Stocks and Bonds and Hedge Funds). Investment banks can structure and sell new and complex types of security, including CDOs (Collateralised Debt Obligations); these contain slices of different debts of varying risk, some of which may be ‘mortgage-backed’ (see Credit Crunch). Investment banks also seek to profit from trading in the foreign exchange markets and insure other people’s bonds against default by issuing Credit Default Swaps. Investment banks do a lot of lending and borrowing between themselves, lending to each other at a rate of interest known as the LIBOR (London Interbank Offered Rate), which is adjusted on a daily basis.

What was the Glass-Steagall Act?

This was legislation passed in 1933 to separate commercial and investment banking practices in the US. It was introduced after the Wall Street Crash to regulate the banking system and to protect depositors’ money from the riskier practices of investment banking. The Glass-Steagall Act was repealed in 1999, allowing for the creation of ‘universal’ banks (e.g. Bank of America), which engaged in both commercial and investment operations. Some financial commentators have recently claimed that this deregulation was one cause of the credit crunch, as it allowed former commercial banks such as Citigroup to trade in risky sub-prime mortgage-backed securities and CDOs. In 1999 Citigroup was the largest bank in the US by asset size, but in November 2008 it had to be rescued by a massive US Government bailout having lost vast amounts of money as a result of its sub-prime exposure.

What does the Bank of England do?

The Bank of England is the UK’s central bank, providing banking services both to the government and to the banking system. Its job is to maintain financial and monetary stability in the UK economy (‘financial’ relates to finance, which is the commercial activity of providing funds and capital, whereas ‘monetary’ refers to the amount of money in circulation, its rate of growth and interest rates). The Bank of England issues banknotes, acts as ‘lender of last resort’ for the other banks, and controls the UK’s gold and foreign exchange reserves. The Bank became independent from the government (which had nationalised it in 1946) in 1997, since when it has been responsible for setting UK interest rates. Its Monetary Policy Committee adjusts interest rates to keep inflation in line with the Chancellor’s annual inflation target stated in the Budget, which is based on the Consumer Price Index.

How do interest rates affect inflation?

Inflation is a general increase in prices across the economy. It is estimated with either the Retail Price Index (RPI) or the Consumer Price Index (CPI), which are calculated by adding together the prices of a selection of goods and services (exactly which ones differ in each index). Inflation occurs when demand (the amount of money being spent in the economy) exceeds supply (the goods and services produced by the economy); this creates competition for goods and services, which pushes prices up. A small amount of inflation is normal in a growing economy, but the Bank of England adjusts interest rates to ensure inflation remains low and stable in order to achieve price stability.

Interest rates control the price of borrowing and the value of saving—if they are low, borrowing is cheap and saving is not especially worthwhile, but when they are high, borrowing is expensive and saving more worthwhile. Adjusting interest rates therefore influences consumers’ spending habits, and controls the demand for goods and services—if demand far exceeds supply, interest rates can be raised to discourage spending and lower demand, whereas if supply exceeds demand (which could cause a general lowering of prices known as deflation), or demand is lower than usual (for example during a recession), interest rates can be lowered to encourage spending. In January 2009, to encourage spending to combat the recession brought on by the credit crunch, the Bank lowered interest rates to 1.5%—the lowest in the Bank’s 315-year history—then lowered them again in February, to 1%, and then again, in March, to 0.5%.

‘It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.’

HENRY FORD, US car tycoon

Basque Country/ETA

Where is it?

The Basque Country is a rugged and beautiful region of northern Spain and south-western France that straddles the Pyrenees and borders the Bay of Biscay. It is made up of seven provinces—four in Spain and three in France—and is a popular tourist destination that includes cities such as Bilbao and Pamplona, and the seaside resorts of Biarritz and San Sebastián. The Basque people are one of Europe’s most ancient ethnic groups, and they have fought hard to hold on to their culture and land over the centuries. Their language, Euskara, is one of the oldest in the continent, and isn’t related to any other. The French Basque region (Pays Basque) has mostly avoided the violent struggle for independence associated with its Spanish equivalent (País Vasco).

How is Spain governed?

Compared to most other nations in Western Europe, Spain is remarkable for its decentralised system of government. The 1978 Constitution, which marked the return to democracy following Francisco Franco’s fascist dictatorship, allowed Spain’s local regions to become ‘autonomous communities’ with their own government and parliament, ruling themselves with differing degrees of independence from the central government in Madrid. There are now 17 of these autonomous communities, including Andalusia in the south, Catalonia in the north-east and the Basque Country in the north (this is composed of three of the four Spanish Basque provinces, while the remaining province, Navarre, is a separate autonomous community). The Basque Country currently enjoys the highest level of autonomy, with education and tax collection among the responsibilities of the region’s parliament.

How did the Spanish Civil War affect the Basque Country?

During the 1936-9 Spanish Civil War the Basque people sided with the republican government against the nationalist forces of General Franco. Franco was the latest in a long line of threats to the Basque Country, which had in its troubled history held off Romans, Vikings, Visigoths and Moors. When Franco came to power in 1939 he sought retribution, and punished the region for its resistance by banning its language and neglecting its economy. It was during Franco’s reign that the group ETA appeared in 1959, and it has remained active ever since.

What is ETA?

ETA stands for Euskadi Ta Azkatasuna (‘Basque Homeland and Freedom’). It is a separatist organisation calling for complete independence in all seven provinces of the Basque region in both Spain and France. Spain, the European Union and the US all regard the group as a terrorist organisation, and since forming it has been responsible for killing over 800 people. Police, politicians and the general public have all been victims of ETA’s violent campaign—for example, police chief Melitón Manzanas was murdered in 1968; Spanish Prime Minister Luis Carrero Blanco was assassinated in 1973; and a car bomb set off by ETA killed an American tourist in 1985. ETA’s political wing, Herri Batasuna (‘Unity of the People’), was formed in 1978 in reaction to the new Spanish constitution, and fostered close links with the Irish republican party Sinn Féin.

What did the Spanish government do?

In the 1980s, Felipe Gonzalez’s government made a botched attempt at combating ETA by setting up Anti-Terrorist Liberation Groups (GAL); essentially these were mercenaries charged with assassinating key members of the separatist organisation. However, 10 of the 28 people killed by the GAL between 1983-7 turned out to have nothing to do with ETA, which led to the jailing of some of those who had set up the death squads.

Does ETA have public support?

There was strong support for ETA in the Basque provinces during Franco’s reign and into the 1980s: more than half of those surveyed in a poll there in 1979 felt ETA’s militants were ‘patriots’ or ‘idealists’. However, in general, support for ETA has waned since the Franco years as the group sought civilian rather than military targets and its actions became increasingly bloody. In 1997, 6 million Spaniards protested against ETA’s killing of a young local councillor from the Basque region.

Recently ETA’s strength has been sapped further; its political wing was banned in 2003, and, despite broken ceasefires and continued car-bomb attacks on politicians, judges and journalists, the Spanish government—under the leadership of José Luis Rodriguez Zapatero since 2004—seems to be winning the battle against the organisation. ETA’s military commander Garikoitz Aspiazu Rubina and suspected leader Javier López Peña were both caught in 2008; in all some 750 suspected members of the organisation have been detained since 2000. In March 2009, ETA suffered another big blow when 29 years of nationalist domination in the Basque Country came to an end as the Basque Nationalist Party failed to muster a majority in the region’s elections. This paved the way for the Socialist Party and Popular Party to create an informal coalition. They strongly support the Basque Country remaining part of Spain, and have promised to boost funding to combat ETA.

Guernica

The Spanish artist Pablo Picasso painted his iconic image of Guernica, a town in the Basque Country, after more than one and a half thousand people were killed when bombs were dropped by the Luftwaffe in 1937, in the first major air raid specifically aimed at killing civilians.

Basquetball

The second-largest Basque city of Vitoria-Gasteiz is home to one of Europe’s top basketball clubs, Tau Ceramica. In addition, the Basque people have produced a number of star sportsmen over the years, including the footballers Xabi Alonso, Mikel Arteta, Didier Deschamps, Bixente Lizarazu; rugby players Serge Blanco and Imanol Harinordoquy; cyclist Miguel Indurain and golfer José María Olazábal.

Blogging

What is a blog?

A blog is a page or site on the internet which is updated with material, usually on a regular basis, by a single writer (‘blogger’). Bloggers can post anything from breaking news to essays, opinions and diaries, often including photos and links to other websites.

What do bloggers write about?

Bloggers write about anything, from what they ate for supper to who they believe is going to win the next general election. Some see blogs as a quick and easy way to communicate their thoughts to a wide audience, but others may simply write in order to clear their thoughts—an online diary. One unifying factor about the majority of blogs is that they are, to varying degrees, personal: ‘A blog is a personal diary. A daily pulpit. A collaborative space. A political soapbox. A breaking-news outlet. A collection of links. Your own private thoughts. Memos to the world.’ (Blogger.com)

Are they popular?

Absolutely. Blogging has become a global phenomenon. There are no conclusive statistics on how many blogs there are, but certainly well over 100 million. The popularity of blogs varies enormously, with some attracting few or no visits while others are highly influential and command big readerships.

Who came up with the term?

In 1997 Jorn Barger—an American whose blogs vary from essays on artificial intelligence to James Joyce—came up with the term ‘web log’ when he began logging a daily list of links to websites he had visited. ‘Web log’ was shortened to ‘blog’ by Peter Merholz, a prolific blogger himself, in 1999. However, blogs were in existence before they were given these names. Justin Hall is seen as a pioneer—he began back in 1994 while an intern at Wired magazine. He posted just shy of 5,000 pages worth of entries in 11 years before throwing in the towel.

Dirty laundry

Airing your thoughts on the internet means that anyone might stumble across them, including your employer. In 2004 flight attendant Ellen Simonetti was initially suspended and then fired from her job at the American airline Delta because of photos posted on her blog ‘Queen of Sky’, in which she wrote about the adventures of an anonymous air hostess. One of the photos showed her dressed in uniform, with the company logo visible, which prompted the airline to take action. Similarly, Catherine Sanderson was sacked in 2006 from her secretarial job when her boss stumbled upon her popular blog, ‘Petite Anglaise’, about her life as a Brit in Paris. Although she never named her employers, they claimed that the photos of her on the site identified her, and therefore the firm. Sanderson won a groundbreaking case in which she sued the company for wrongful dismissal and has since written a book, also called Petite Anglaise.

Sleazy does it

Matt Drudge (www.drudgereport.com) is one of America’s best-known bloggers. In 1998 the one-time maverick, who now commands great respect, broke the news that the magazine Newsweek had decided against running a story on President Bill Clinton’s liaison with a White House intern from 1995-7. The following day he revealed her name: Monica Lewinsky. His story was published on a Saturday, and was seized upon by other websites, but it was not until the Wednesday that it appeared in the newspapers.

Diplomatic own goal

Arsenal fan David Miliband, who is also the UK’s Foreign Secretary, got into hot water in 2008 when he aired frustrations on his blog about the Champions’ League quarter-final in which his team lost 4-2 to Liverpool and bowed out of the tournament. The comments in his blog, which is part of the Foreign Office’s website, included criticism of Swiss defender Philippe Senderos, who apparently ‘left half of north London cursing that he was ever let into the country’. An attaché at the Swiss Embassy responded that although the defender may not have had his best game, that was ‘not a reason for a diplomatic incident between two friendly nations’.

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