Secondly, the Europeanization process of Turkey took a new turn in the post- World War II era as the regional integration processes in Europe led by NATO, the Council of Europe and the European Economic Community (EEC- forerunner of the EU) emerged as three key pillars of Turkey's Europeanization in the security, political and economic spheres respectively. After joining NATO and the Council of Europe as a full member, Turkey signed the Ankara Agreement for full membership with the EEC in 1963. However, after the end of the Cold War, the EEC transformed itself into the EU in 1992 and started EU membership negotiations with the former Warsaw Pact countries, but not with its NATO ally, Turkey (with which only a Customs Union was established in 1996). This led Turkey to freeze its relations with the EU in 1997. After intense discussions among the EU members and lobbying by the United States in favor of Turkey, the EU revised its policy towards Turkey and declared it a candidate country for full EU membership in the 1999 Helsinki Summit. Finally, the EU confirmed that Turkey had fulfilled the Copenhagen Criteria by adopting new civil and penal codes as well as implementing a number of human rights reforms in December 2004.

Thirdly, Turkey has made significant progress in actual accession negotiations with the EU. These negotiations formally started with the adoption of the Negotiation Framework by the Council of the European Union in October 2005. By early 2010, Turkey was able to open negotiations on the following 12 out of the 35 chapters since June 2006: Science and Research; Enterprise and Industrial Policy; Statistics; Financial Control; Trans-European Networks; Consumer and Health Protection; Company Law; Intellectual Property Rights; Information Society and Media; Free Movement of Capital; Taxation; and Environment. Turkey is very likely to open negotiations on the following four chapters when it meets the specific benchmarks as demanded by Brussels: Public Procurement (3 benchmarks); Competition Policy (6 benchmarks); Food Safety, Veterinary and Phytosanitary (6 benchmarks); and Social Policy and Employment (2 benchmarks).

Fourthly, despite Turkey's considerable progress in the negotiations, it is not certain yet that Turkey could negotiate all of the 35 chapters. The EU Council already froze the opening of eight chapters over Turkey's rejection to open its ports and airports to traffic from Cyprus in 2006. These chapters include: Free Movement of Goods; Right of Establishment and Freedom to Provide Services; Financial Services; Agriculture and Rural Development; Fisheries; Transport Policy; Customs Union and External Relations. The Greek Cypriots also blocked six more chapters, namely; Education and Culture; Foreign Security and Defense Policy; Judiciary and Fundamental Rights; Justice, Freedom and Security; Energy and Freedom of Movement for Workers (which was also blocked by Germany and Austria). Another obstruction came from France in June 2007 as Paris blocked the expected opening of the Chapter on Work towards the European Monetary Union in addition to the following five Chapters due to their 'direct bearing on full membership': Agriculture and Rural Development (already suspended by the EU Council); Economic and Monetary Policy; Regional Policy and Coordination of Structural Instruments; Financial and Budgetary Provisions and Institutions.

Lastly, Turkey's prospects for full EU membership have suffered a huge blow as, at present, France, Germany and Austria offer only a special status for Turkey within the EU rather than full EU membership. Nevertheless, a special status is very unlikely to meet expectations of Turkey's elites as they already enjoy a special status with its customs union with the EU. Under these circumstances, Turkey's eventual success in the negotiations for full EU membership depends mainly on its capacity to solve its structural economic development problems as this could change the image of Turkey in Europe positively: a change of image from a burden for the EU into an asset for the EU. It seems that economic costs and benefits of Turkey's EU membership could be decisive in the final decisions of France and Germany, the most influential members of the EU that pay for the costs of EU enlargement. Another important challenge for Turkey is that the bilateral political differences of Turkey and Turkish Cypriots with Greece and the Greek Cypriots need to be settled with a balanced approach by the key European powers. Currently, the EU decision to integrate the Republic of Cyprus that - at present - represents only the Greek Cypriots before a sustainable settlement complicates Turkey's prospects for full membership considerably. This is quite ironic since it was not the Turkish Cypriots, but the Greek Cypriots who rejected the EU-backed UN plan in April 2004. Last but not least, the continuity of the support from the United States and Britain is essential for keeping Turkey's hopes for eventual full EU membership alive.

To conclude, Turkey has significant reasons to push for eventual full EU membership despite some difficulties ahead. Turkey's full EU membership is likely to serve as confirmation for the success of its Europeanization strategy, which carries in itself a positive vision not only for Turkey, but, also for both the EU and the Western world.

Secondly, Turkey's energy relations with Caspian Sea countries have been determined by its overall objective of an energy corridor between the Caspian Sea and Europe that could serve as an alternative to the existing Russia-dominated energy corridor between the two. At present, the European Union countries receive energy from the Caspian Sea region through Russia as Russia imports energy from other post-Soviet states in the Caspian Sea region; namely, Kazakhstan, Turkmenistan and Azerbaijan at very low price levels, and re-exports these energy supplies to the EU member countries at very high price levels. The creation of an alternative energy corridor between the Caspian Sea and Europe could decrease the price for natural gas for European energy consumers by increasing the competition in the market.

Thirdly, the legal dispute concerning the status of the Caspian Sea as a Sea or a Lake has increased Russia's leverage in the energy politics of the Caspian Sea region. Nevertheless, Russia's pragmatic decision to side with Azerbaijan and Kazakhstan, which claimed that the Caspian Sea was a Sea concerning the exploitation of the energy reserves in the Caspian Sea, and to side with Turkmenistan and Iran, which claimed that the Caspian Sea was a lake concerning the sovereign rights of the littoral states, suited the interest of Turkey and other members of the international community. In fact, Russia's cooperation with Azerbaijan and Kazakhstan in return for considerable shares in their oil and natural gas sectors cleared the way for the construction of the Baku-Tbilisi-Ceyhan Oil Pipeline and South Caucasus (Baku-Erzurum-Ceyhan) Natural Gas Pipeline. In return, Russia increased its share in Turkey's natural gas imports by constructing the Blue Stream Natural Gas Pipeline by 2002 in addition to the existing Western Russia-Turkey Natural Gas Pipeline which was constructed in the late 1980s. Meanwhile, Turkey also sought to construct a Turkey-Greece-Italy Natural Gas Pipeline (The pipeline between Turkey and Greece has been already completed) in order to establish an energy corridor between the Caspian Sea and Europe.

Fourthly, the success of Turkey's energy strategy has been heavily dependent on the success of the Nabucco natural gas pipeline project between the Caspian Sea and Europe. Turkey seeks to pump the natural gas from the Caspian Sea region via the Nabucco pipeline project to the following European countries: Bulgaria, Romania, Hungary and Austria. Turkey has already signed the intergovernmental agreement with these countries for the construction of the Nabucco pipeline. It is expected that the Nabucco natural gas pipeline project could realize Turkey's objective of creating an energy corridor between the Caspian Sea and Europe that is an alternative to the existing Russian-dominated energy corridor.

Lastly, for the success of its energy strategy, Turkey also needs to be very creative in developing new energy projects and in transforming itself into an energy hub. This is partly because Russia has recently intensified its efforts at constructing its South Stream natural gas pipeline that will provide natural gas to all of the Nabucco partners in Europe, with the exception of Serbia, replacing Romania. Besides, Moscow seeks to increase Turkey's dependence on Russia by expanding the capacity of the Blue Stream natural gas pipeline as well as constructing the Samsun-Ceyhan Turkish Straits "by-pass" oil pipeline. If Turkey comes up with creative projects, it could transform its dependence on Russian energy sources into an opportunity by constructing oil and natural gas pipelines between Ceyhan and Israel. This could not only create a solid basis for already strong relations between Turkey and Israel, but also transform Turkey into a real energy hub for the Eastern Mediterranean and the South Eastern Europe.

To conclude, although Turkey faces difficult challenges ahead to its energy strategy, Turkey's success in creating an alternative energy corridor between the Caspian Sea and Europe could have a very positive impact not only on its relations with the EU but also on Euro-Atlantic energy security as a whole.

There are several sources of Turkey's increasing influence in the Middle East. To begin with, the international fight against terrorism has increased the relevance of Turkey's secular model for the modernization of the Middle East. In fact, secularism is the fundamental principle of modern Turkey. Mustafa Kemal Ataturk, the founding father of Modern Turkey, designed and implemented a successful strategy of modernization for Turkey based on a secular model. Turkey's modernizing reforms included the abolition of the Caliphate, secularization of the educational system, the adoption of the Latin alphabet for the Turkish language and the promotion of women's rights. Turkey strengthened the institutional framework of its modernization strategy by joining the Western international institutions and developing a Western-type democratic political system with a functioning free market economy.

Secondly, Turkey's co-sponsorship of 'The Alliance of Civilizations' initiative in the post-9/11 era is also a factor that contributes to Turkey's increasing influence in the Middle East. Spanish President José Luis Rodríguez Zapatero put forward this initiative of the United Nations in 2005. Immediately, Turkey joined Spain in co-sponsoring this initiative that aimed to fight against extremism and socio-cultural polarization between Middle Eastern and Western societies. If unbridged, these cultural differences could be exploited by radical groups and terrorists for destabilizing the region. Besides, Turkey's policies have also contributed to the weakening of the 'Clash of Civilizations' hypothesis that sees civilizational clashes inevitable as radical groups that seek to deepen the cultural barriers find it difficult to explain Turkey's success in its Europeanization process since 1999.

Thirdly, Turkey's active contribution to international cooperation in the fight against terrorism in the Middle East also accounts for Turkey's increasing influence. In this respect, Turkey played an active role in the formation of the NATO Center of Excellence for Defence against Terrorism in Ankara. Besides, Turkey has also been playing a crucial role in the success of NATO's International Security Assistance Force (ISAF) mission in Afghanistan by sending one of the largest contingents. With its almost 2,000 troops, Turkey has been responsible for the security in the capital city of Kabul and Wardak province. Similarly, Turkey contributes to the Operation Active Endeavour naval operation of NATO in the Mediterranean Sea. This naval operation seeks to monitor and prevent any terrorist activity in the Mediterranean. Additionally, Turkey also played a crucial role in containing the spread of terrorism to the neighbouring countries of Iraq by initiating the Neighbours Conferences on Iraq as well as training Iraqi diplomats and security forces.

Last but not least, an important source of Turkey's increasing influence in the Middle East stems from its contribution to the political and socio-economic modernization of the region. This is central to the attempts at dealing with the root causes of terrorism in the Middle East. Turkey's success in combining a democratic system with a dynamic free market economic structure enables it to contribute to the peace-building initiatives as well as third-party mediation in major conflicts throughout the Middle East in the post 9/11 era. These contributions of Turkey serve to marginalise radical groups and the terrorists in the Middle East considerably. Western countries and some of the Middle Eastern states view Turkey's constructive roles in the modernization of the region very positively. Consequently, this enables Turkey to project more soft power in many parts of the Middle East.

To conclude, Turkey's increasing influence in the Middle East contributes to the efforts at dealing with the immediate security challenges as well as the root causes of terrorism in the region.

There are certain features of the Iranian Government that Hume would have easily taken notice of. It is a mixed form of government with authoritarian and democratic elements. It is also a theocracy and this would have immediately caused Hume to be suspicious. Such a mixed constitution would suggest to Hume, in line with the analysis he made of 18th century constitutions, the possibility of conflict of interest amongst the supporters of the various elements. He would have started with experience and the most striking experience, an experience in which demonstrations were quickly and readily encountered with violence, is a possible starting point. He would note the passions that were involved on both sides and would wonder at how these came to be unleashed and what forces or means would be available to reconcile them (as a liberal-minded person he would be interested in promoting harmony) in order to restore stability.

To say that the Islamic Republic does not lie and therefore the criticisms that the elections were invalid because of cheating were not justified is to appeal to authority (in this case the alleged moral authority of the Islamic Republic). It has also the potential of reasoning in a circle. The empiricists answer would have been to undertake an empirical investigation of the facts concerning the way in which the election was run, supervised and the results recorded. The Supreme Leader's statement was consistent with his belief but not with the belief of countless others who felt that there was an element of fraud in the election outcome. The very construction of the decision and the terms in which it was communicated (an unexamined faith in the state) substituted an act of faith for an act of reflection or of investigation. This is itself would be enough to generate instability given the number of protesters involved. If the role of the Supreme Leader and the associated Council is really that of a kind of constitutional court or something of that order then the normal order/rules of such a body is that evidence is expected to come before any final decision. Hume would wish to know the rules that constrain actions at this level. The appeal to authority also implied that those involved in protesting were essentially disloyal to an ideal.

Hume would have also looked at the composition of political parties or sects/factions (depending on how he may have adapted 18th century terminology). Hume, in looking at factions in his day divided them into factions "from interest, from principle and from affection". It is clear that the interest of North Tehran differ from those of Ahmadinejad's supporters (poorer people from other parts of the city and country). Interests for Hume are significant, understandable and can be objectively demonstrated. In this there may be the possibility of trade-off between interests. It is in the interests of both the rich and poor in Iran that Iran be stable and prosperous. But there has to be a means by which the trade-offs can be articulated. However support for Ahmadinejad from the poor may also mean that the "affection" principle also applies.

Those factions that stem from principle are more difficult because they cannot readily accommodate any other point of view or easily find a basis in compromise. Iran's governmental structure has strong theocratic and non-negotiable political elements. Hume would suggest that such theocratic minds would be "impatient of opposition" even with respect to minor matters of opinion. There would be, in such circumstances, a general tendency to repression. Challenging the results of an election process in the context of different interests and a well-defined party of principle is likely to result in rigidity and rejection. Hume would not have been surprised on the basis of past experience. For Hume bad constitutions insisted upon when times, circumstances or "manners" change, give rise to ongoing instability as the Roman constitution did towards the end of the Roman Republic.

Where clergy are involved in government, at whatever level, then they can, according to Hume, also become parties of interest. Hume might wonder whether the conflict between the moral authority of the given religion and the actual political practices would rupture or reinforce such associations. Rupturing may be starting to happen in Iran. Hume would probably wish to identify the interests and hence the self-interests of the clergy within the existing government system. His general view of religion was that it itself would engender misguided ideas and hence misjudged and authoritarian political actions. On that basis alone he would hope for their removal. Tranquility, imposed by suppression, for Hume would not mean the elimination of various interests, merely their transformation into something "more real and more pernicious". Suppressing demands for greater democracy will simply prolong the instability. Blaming foreigners, an act which most Iranians must regard as ludicrous, and as evidence of the state's capacity to lie, side-steps the moral issues. Given the authoritarian response (no cheating by definition) the blame has to be allocated somewhere.

Second, the demands of the protesters are very specific. The protesters are concerned about having their votes counted and, given questions regarding the legitimacy of the "results," call for a re-election. The fact that they are seeking their rights as specified by the Iranian Government made their campaign far more effective and robust. They point to violations of election laws and merely seek to remedy those violations.

Third, the dispute is about elections and not democracy. Unfortunately for Iranian protesters, that battle for democracy was lost even before the election. There are rather restrictive election rules that often disqualify candidates from running for office, and in a way, the elections are predetermined in Iran. What makes the 2009 election interesting is that despite "pruning" the list of nominees who could run for office, the handling of the voting and subsequent release of "official" results raised a number of questions about the legitimacy of the count. The battle is not between "Islamic hardliners" and "democrats" but hardcore "Islamists" and lite "Islamists". The so-called reformers are very much products of the Islamic Revolution. Iran did have a reformist regime from 1997 to 2005 and there is no indication that if the reformist returns to power, their rule would be any different than that of ex-president Khatami. Namely, they will pass legislation to bring Iran closer to the international community, only to have the rules overturned by one of the semi-elected institutions. The only area of improvement is in the social area, namely the government will back off its "morality police" rule and allow the people to do what they want in the country and give them a bit of "breathing" room. The idea that reformers coming to power will solve some of the problems that Western countries have with Iran is merely wishful thinking.

Fourth, the protesters have already achieved a couple of enormously important objectives. The Iranian regime now knows that the voters are fully aware of their rights and will protect them. Future elections in Iran will be closely monitored, and they will have less room to control these elections. More importantly, however, the crisis highlighted the role of the "Supreme Leader." Oddly, most of the rhetoric of the protesters is not directed at Ahmadinejad but Khamenei. Frequent references to the Khamenei as the "dictator" are a clear personal and institutional challenge to him and to his office. The fact that demonstrations occurred even after he forbid it means a lot in terms of his power and legitimacy in the future. The fractured ruling elite is the necessary first step for change in Iran.

Fifth, the current situation had provided the seeds for future changes in Iran. The strategic choices of the protesters as well as their nonviolent means provide them with a wonderful tool for political change in the future. Failure of the political regime in Iran to satisfy the needs of the protesters may lead these people to articulate more demands and more serious changes to the current system in Iran. Only then, may true democracy emerge in Iran.

There are too many MPs. This has come about in a number of ways. Devolution has reduced the volume of government business coming from Wales and, more especially, Scotland. Scotland is over-represented at Westminster. Even in England, constituencies are of varying sizes and fewer representatives would be appropriate. The fact of the EU has also changed the nature of business. Have fewer MPs, pay them more and give them the resources to undertake the sort of research that would make Parliamentary Committees a more effective means of scrutinizing the executive. These ideas are around but they are unlikely to be pushed until the present mood passes. Voters are simply angry and have expressed their anger at the polls.

Under normal circumstances, the Parliamentary whips are too strong. The Scottish Parliament is elected on a proportional basis, Westminster on a first-past-the –post. Scotland, once a Labour fiefdom, is learning to use the new system effectively. The Westminster system requires strong parties and party discipline is carried out by the whips. The Prime Minister controls a vast amount of patronage and can use this to guarantee support, even in a crisis such as Brown is facing. Power, under normal circumstances, has deserted the Commons and will only return if MPs count on a more independent basis. Giving them resources is one thing (this will help) but changing the underlying power-relations probably requires a change in the voting system. Under proportional representation the Commons would return to life.

The end of a government, and make no mistake, we are witnessing the dying throws of Labour in power, tends to come quickly as power unravels one strand at a time. Brown is in this position at the moment. He is faced with a very cross electorate, upset with the present performance of government and with the political institutions themselves. he is also faced with a restless Parliamentary party. This crisis is not just one of policies but of underlying problems requiring radical constitutional change. Brown is not capable of recovering. He can call an election quickly and put the government and country out of its misery or he can linger on till the bitter end. If this was the approaching end of a Tory government, he would already be gone and a new leader in place but the Parliamentary Labour party does not know which way to jump.

The financial crisis as experienced in the countries of the EU is highly complex. The financial crisis has impacted all European financial markets. Stock markets have experienced dramatic falls in stock values. Capital markets have been disrupted. The operation of a number of significant financial institutions has been hindered by the lack of liquidity and some banks have been threatened with bankruptcy, leading to special action by the financial authorities. Building sectors, construction and property have encountered problems but only the UK has experienced losses in value in the private housing market that are equivalent to losses in the United States. The consequences of all of this taken together have been felt in the real, as opposed to the monetary, economy. The impact has been significant.

The present economic breakdown in Europe is possibly the most serious economic crisis since the end of the Second World War. Highly destructive effects of the crisis with more expected to come have already been experienced. Industrial production in the EU taken as a whole fell in 2008 by 11.5% (EUROSTAT estimate). GDP in the same period fell by 1.3%. The deterioration in members states has varied with dramatic declines in GDP having been seen in Estonia (-21%), Spain (-19.5%) and Sweden (-18.5%) and less dramatic outcomes experienced in Germany (-2.1%), France (-1.2%) and Italy (-1.8%). During 2008 however the most recent members of the EU maintained slow growth. Since then most of the Central European economies have experienced significant problems as the impact of the financial crisis has come to be felt in Hungry and, given the financial interrelationships, also in Austria. Unemployment grew overall by 1.2%. This overall figures masks significant problems in Spain. Germany is the biggest European economy and if the situation in Germany continues to deteriorate with the further loss of international and regional export markets, further problems will be experienced. European countries outside the EU, particularly Russia and the Ukraine, have also felt the negative consequence s of the financial crisis.

Most European countries are attempting to muffle the impact of the recession. The really significant measures are taken by national governments and these are of an internal and independent nature. Most government expenditures to counter-act the recession are focused on infrastructural projects and to support banks and other financial institutions. There is a problem in that increased government expenditure results in increased government deficits unless fiscal policy is also tightened. Benefits through expenditure must be set against the loss of consumer spending through tightened taxation. Countries in the Euro-zone are constrained to keep any deficit within prescribed limits and this in itself, in principle, imposes a form of financial discipline not applicable, for example, to the UK. Fiscal tightening is, as of this week, now also part of the UK’s approach. The concern is to avoid future inflation. The European Central Bank has acted to reduce interest rates and is prepared to take further action should this be required. It is worth noting that amongst economists, there is no settled view as to the effectiveness or otherwise of the package of measures that have been put in place.

With respect to the EU as a whole, the commission has accepted a stimulus plan but this is, when compared to actions by national governments, relatively modest (amounting to US$ 5 billion). Energy-saving investment projects and rural development projects are targeted. The EU has also accepted a US$50 billion aid package for new member states and has allocated funding to strengthen the International Monetary Fund. Such actions will have potentially beneficial consequences for some Central European economies such as Hungry. The development of a European Institution concerned with financial supervision to help prevent future de-stabilizing bubbles is under investigation.

One clear point of principle has emerged from the otherwise unsatisfactory, and indeed politically disputatious, process of finding a unified and coordinated approach to the various crises. Essentially countries have made their own responses that relate to their self-interest as interpreted by the politicians. The European Commission has made it clear that the Single Market is not to be sacrificed to economic expediency. France, for example, had tried to impose protectionist conditions on any state-aid to industrial firms such as car makers. This is a significant point of principle. There will be further strains to encounter particularly if new members in Central Europe continue to experience long-term problems when the crisis has passed elsewhere.

Russia, during the system transformation away from central planning introduced many changes in its economic environment in ways that superficially looked similar to many other countries of Middle and Eastern Europe. Russia started constructing the framework of a market system. However deep-seated cultural characteristics and historical background meant that a more moderate model of transformation emerged in Russia when compared, for example, to Poland. Planned economic reforms concerned large state, economic units which during last decades of central planning almost completely implemented socialist economic guidelines. The first policy actions were accompanied by the severe and deep crisis that was essentially the outcome from the previous and ineffective model of economy. This crisis was observed in all sectors of the Russian economy, the general result of which was a dramatic decrease of the generated GDP or GDP per capita. Significant decreases of industrial production, investment and private consumption took place and strong inflationary pressures as well as rise in unemployment were felt. Despite this “economic shock”, the first stage of implementation of system transformation of the economy was continued largely through the support of international organizations. Internal prices were partly liberalized, gradually widening the scope of market forces; privatization of public enterprises was initiated as well as creation of the basics of the capital market. Russia became more open to the external influences and trade. Foreign trade became subject to limited liberalization and conditions were created for the inflow of the foreign capital. Reorientation in international cooperation was visible. The EU became significant in the supply of capital and of goods. The results of the above actions were a gradual macro-economic stability and the initiation of a slow process of economic growth.

However, those positive trends drastically stopped in the middle of 1998 when a severe currency crash took place in the Russian economy. The profound financial crisis uncovered the weaknesses of transformation process. This crisis resulted mainly from faulty methods applied for reform and for the construction of market mechanisms. Lack of the right institutional arrangements for an effective federal state was of key significance. Public finances went into deficit. System changes, as it turned out, were of an ostensible nature which in reality implied escalation of former malpractice. The appropriation of elements of national economy by the newly-born oligarchic groups was one of the most significant abuses. Strong national control (direct and indirect) in many branches of industry, trade and services reduced the chances of realizing the advantages of market-oriented production. What followed was low competitiveness in the main sectors of the Russian economy. With low prices for the energy exports, problems persisted with respect to maintaining the internal and external balance in the economy.

Visible improvement of the economic situation, observed systematically from 1999, came with increasing export prices of oil and underground gas, a gradual inflow of foreign investments and partial order of internal economic affairs. Taken together, these events created conditions for the restoration of economic growth. Special attention should be paid to terms of trade which were beneficial at that time and enabled Russia to improve economically. Significant increase in GDP and GDP per capita was noticed as well as the abrupt increase of foreign exchange revenues. Over 1996-2007, GDP of Russia increased by 65%; foreign investments amounted to USD 76 billions and the surplus in the current account and central budget appeared.

Russia’s economic growth led to greater pro-activity in the region. Russia mostly undertook efforts towards reintegration by proposing and initiating many integration-focused initiatives. Currently, within the borders of the CIS, there are formally few integration groups most of which Russia is party to, and the main entity. Moreover, along with integration groups there are multiple bilateral preferential economic agreements, which connect Russia in many configurations with many countries of the region. Most significant examples of such economic integration in the region are the Common Economic Space (CES) or Eurasian Economic Community (EAEC). As a result in the area of the CIS there is a complicated network of economic connections, which are not yet transparent. Integration projects undertaken by Russia strengthen its impact on various countries of the CIS and secure the role of the regional hegemonic leader, particularly in Central Asia. The current expansion of Russia, Georgia notwithstanding, is not of military but financial or economic in nature. In particular, energy-related pressure imposed on many countries of that region sets the example. Integration groups being created, despite of the premises of the complete partnership and mutual economic priorities, in reality are a specific tool of Russian politics.

Russia acts to impose pressure not only on the countries located in its direct sphere of influence but also wider afield. Different types of economic pressure, such as the manipulation of the power to control the flow of natural gas, but still with political references are also visible in reference to Central Europe and indirectly in reference to the EU members as a whole. Therefore, there is a great need of an open dialogue and establishing relations based on partnership between the EU as a whole and Russia, which might be beneficial for both parties, and help protect countries such as Poland. Competition in this respect, which sometimes reminds of the Cold War confrontation, is not an appropriate strategy in the modern globalized world. The relationship is one in which the Russian economy needs markets for its oil and gas if it is to experience further economic development and Western Europe needs Russian imports. It seems that Russia with the support of the EU should concentrate more on continuation of the real system transformation, including further economic modernization and diversification of economy and constructive use of its own potential.

The devaluation of the national currency started in reference to convertible currencies, enabling introduction of the internal exchange of the zloty. In settlements with the trading partners of the former block of the Council for Mutual Economic Assistance, transition to convertible currencies took place. The government decided to introduce the new exchange rate regime. Initially, it was a regime of the fixed exchange rate (1990-1991), later “moderate devaluation” (so-called “crawling pegs”), meaning fixed and gradual decrease of the zloty exchange and from 2000, the system of fully-floating rate. Liberalization of the trade of goods abroad was performed, breaking the former monopoly of public trade centers.

The whole process of economic transformation was established on the basis of new legal regulations. Private ownership in the economy became the main priority. Administrative reform, also focused on the needs of the new economic system, was implemented. In 1999 the significant changes were introduced to local government management. The institutional framework for a market economy was created.

The transformation was based on shock tactics and in Poland these partly brought the expected results. The policy towards macroeconomic stability turned out to be successful. The inflation rate decreased significantly. Slowly, balance between market and government was achieved in many economic sectors. In particular, on the consumer-related level, a permanent victory over the crisis-ridden, “shortage” economy was visible.

Significant costs of the transformation process were imposed on the society. Personal real income was reduced, which in the conditions of realistic prices, implied impoverishment of the huge part of the society and as a result a forced reduction of demand. At the same time, the process of restructuring, including liquidation of unprofitable entities and privatization of enterprises, led to unemployment. Given the previous system unemployment was a completely new phenomenon. Moreover, unemployment had a clearly structural (long-term) nature and simple methods of limiting its impact did not bring perceptible short and midterm results.

Transformation, at the time, was an unprecedented process. In fact, at the beginning of the nineties, none of the countries in the world was implementing such drastic changes in its economic and political system. Due to lack of both theoretical as practical research, as well as practical experiences Poland was on an extremely risky path.

The transformation in Poland partly brought expected basic effects: The framework for a functioning market economy was built (mechanisms and market institutions), a new financial system was built from the beginning and many legal regulations were introduced. There was a great opening towards the external environment, which meant liberalization and reorientation of foreign trade, as well as creation of conditions for the inflow of foreign capital. Significant changes took place in reference to the structure of economy and the level of its innovation. Moreover, transformation enabled preparation of the economy for meeting the economic conditions for integration with the EU.

The process of transformation also became a source of many serious problems. The introduced changes, though necessary, resulted inevitably in social stress including the rise of unemployment, unequal incomes, un-even development in the regional system and bankruptcy of many enterprises. There were also problems related to ineffective and sometimes controversial privatization, excessive bureaucracy, faults of the legal system and also general weakness of the central and local authorities' administration. Problems related to underdevelopment of infrastructure and too low competitiveness of economy, persist.

The process of transformation in Poland, after two decades, is not yet complete. It is essential to adapt the competitiveness of economy to dynamically changing conditions in the global economy. Further investment, leading to greater modernization of economy is required. The outward migration of skilled labor and visible demographic problems (ageing society and increasingly slower birth rate) are aspects that are worrying. There are those who have benefitted from the transformation process and those who have suffered. Overall, the transformation has been positive especially with respect to consumer interests. Problems remain including the issues of competitiveness, the establishment of an appropriate set of social and economic infrastructure to sustain an equitable market economy and adjusting effectively to international pressures.

Here is Smith on the laboring poor and the notion of relative deprivation. Smith throughout his writings is very good on the idea of relative evaluations.: “The labour and time of the poor is in civilized countries sacrificed to the maintaining the rich in easy and luxury. The landlord is maintained in idleness and luxury by the labour of his tenents, who cultivate the land for him as well as for themselves. The moneyed man is supported his exactions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full enjoyment of the fruits of his own labours; there are no landlords, no usurers, no tax gatherers. We should expect the savage should be much better provided than the dependent poor man who labours both for himself and others. But the case is otherwise. The indigence of a savage is far greater than that of the meanest citizen of any thing that deserves the name of a civilized nation” Lectures in Jurisprudence, vi. 26.

Here is Smith on the minimum acceptable social bonds: “Society, however, cannot subsist among those who are at all times ready to hurt or injure one another. The moment the injury begins, the moment the mutual resentment and animosity take place, all the bands of it are broke asunder, and the different members of which it consisted are, as it were, dissipated and scattered abroad by the violence and opposition of their discordant affections. If there is any society among robbers and murderers, they must at least, according to the trite observation, abstain from robbing and murdering one another. Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it”. Theory of Moral Sentiments II.ii.3.3

So there is much more to Smith, as Sen also argues, than his construction as the so-called author of the “bible of capitalism”.

Merkel, the German Chancellor, is a different and tougher personality. Her current political stance is based on a fiscal conservatism that is in marked contrast with the situation facing Gordon Brown. This is merely a current political expression of a long-standing German fear of inflation. In the post-World War II world, Germany, in a difficult economic climate will always chose unemployment over inflation. Its institutional arrangements were designed to avoid the hyper-inflation and instability of the Weimar Republic. UK leaders, especially in the Labour party, will favor inflation over unemployment. Merkel was opposed to a further stimulus package in German because of the long-standing monetarist approach to financial regulation and conservatism. That she became reconciled to increasing the Special Drawing Rights of the IMF, and IMF finance in general, suggest that she feels that a significant (absolute) contraction in World Trade would be deflationary (itself a problem as consumers postpone purchasing decision in the hope of getting the goods even cheaper in the future)with significant consequences for German exports. The prospects for international inflation in the longer-term are significant. Merkel, and Germany in general, do not really like money for poor countries without “strings attached”.

Gordon Brown has had a reasonably good summit. He seemed to be at the centre of the action though the role was very much shared with Obama. Obama seemed to have a good time, if his broad grin on many informal photographs is anything to go by. The President made the most of the diplomatic gathering to meet as the new guy of the block with significant world leaders, including the Presidents of Russia and of China. The world, not just France and Germany, will not be lectured to on economic policy by the Americans as a result of the crisis and it perceived origins in the United States. Obama, going for strong domestic economic stimulation, seems to have stepped with great care, though he was clear that world recovery needed additional action elsewhere. But Brown still has a domestic policy problem. His government is in debt. Further domestic stimulation is problematic. Increasing the debt even further takes away from the flexibility of future governments. Yes, inflation now is not a problem, but what about down the line? The UK preference differs from that of Germany but there is still domestic disagreement. He needs to see the world economy starting to expand as much as for the sake of the UK economy as for the rest of the world. He had a good summit but his political career is still under threat and his policy options are restricted..

Ruskin’s response to the ugliness of capitalism—capitalism, for him, produced ugly and polluted landscapes, ugly and unhealthy townscapes, ugly and greedy economic behavior— was aesthetic, as it was for the twentieth-century writer, D.H. Lawrence. Ruskin’s longer term wish was for a system that was capable of naturally painting the white and worn faces of the London poor with healthy color. Ruskin was concerned that Britain’s factories produced two outputs: goods and broken and divided men. He challenged manufacturers and merchants to take into account a full understanding of the costs of production measured in human terms. Ruskin was deeply concerned that far from moderating the selfish drive, the very image of economic man heightened it in the day-to-day ruthlessness of market oriented production. He was deeply suspicious of what he saw as the greedy fiction of “economic man”. Nature in this respect was capable of imitating art. Set our standards of discourse too low, Ruskin felt, and human behavior would soon follow. Whether intended or not, economic man by its very construction recommended “bad” behavior.

Ruskin is concerned about the true nature of wealth and he attempts to get his ideas though to his middle-class audiences with striking imagery. Thus: "So, also, the power of our wealth seems limited as respects to the comforts of the servants, no less than their quietude. The persons in the kitchen appear to be ill-dressed, squalid, half-starved. One cannot help imagining that the riches of the establishment must be of a very theoretical and documentary character" (UTL, 40).

This domestication of the issue of economic well-being had the potential to shock his middle-class, and servant-employing, readers. For Ruskin, wealth must translate into wellbeing before it can really count as wealth. Here he is referring both to individual households and to the nation as a household or estate. Given this insight, Ruskin moves from what I have called “a heap of things” to people themselves: “Perhaps it may even appear, after some consideration, that the persons themselves are the wealth”.

His arguments for economic regulation and the modification of market principles are based on reason and reasonable administration. The flow of resources in an economy is compared to the flow of rivers, each need “administering intelligence”: "The course neither of clouds nor of rivers can be forbidden by human will. But the disposition and administration of them can be altered by human forethought. Whether a stream shall be a curse or a blessing, depends on man’s labour and administering intelligence "(UTL, 46).

Ruskin’s notion of value is distinguished from price and based upon biological principles and environmental respect and on aesthetics (readily recognized by Adam Smith as part of the judgments involved in moving beyond subsistence). The nature contradiction to “wealth” in this sense was “Illth”. Ruskin was very aware of unregulated capitalism’s potential to take the natural resources of this world and of turning them into dangerous rubbish.

With respect to consumption in a capitalist society, Ruskin was very aware of the need for households to be ethically motivated. Demand, for Ruskin, is romantic in origin. It should be regulated not just by the imagination but by the “heart”, by consideration of the impact that expenditures will have on the “condition of existence” caused for producers, by consideration of a fair price. There is a direct line that goes from Ruskin to the fair trade movement, whether this line is acknowledged or not. Ruskin exhorts his readers to look directly and carefully, as he had done, at the economic world around them and to “raise the veil boldly” rather than filter their impressions through abstract and conventional political economy. His closing acts in Unto this last places the moral responsibility for prevailing economic conditions in the hands of the consumer, in the potentially availing hands of his readership.

Ruskin felt keenly the urgency of improving the lives of poor people for the time span for changing lives is limited by the length of life considered. He would have approved of John Maynard Keynes notion that in the long-run we are all dead. He would have approved of the rise of the fair trade movement and its institutional location in agencies such as Oxfam: their values are his values. He would be shocked to see China and India (to a lesser extent than China) repeating the problems, in their rush for growth, of the Industrial Revolution. The environmental degradation and the abuse of the health of the poor in that context would have astounded him. That product adulteration, a form of dishonesty that Ruskin attacked time and again, could even now claim the lives of babies would have angered him. He would have been appalled at the suicides in India blamed on the impact of corporate capitalism and genetically engineered seeds and the consequent rise of indebtedness in rural lives .

Ruskin would encourage us to look at social phenomenon as directly as we can and respond not simply with conventional analysis but with concern, imagination and compassion. This willingness “to raise the veil boldly” that separates us intellectually, morally and emotionally from the problems of poverty and economic justice is, I think, the enduring legacy, and hence understanding this capacity is the enduring “meaning” of Unto this last. Ruskin's ideas though set in a different time have a lot in common with the ideas of soem of those currently protesting prior to the G20 meeting in London.

Globalization was in difficulty even before the financial crisis. The promise of the Doha Round to prevent further protection and free-up agricultural trade, withered, lingered and eventually died. There was already a protectionist mood abroad, not only in emerging economies but in the U.S. Congress. Economic policy, like the so-called economic science itself, is contingent on historical circumstances. Economic regulation was out for a long time, now it is back. It is hard to see what the right thing to do is. The British government is seeking to develop another package of measures. The Bank of England is not so sure. Obama’s policies have been criticized by some European politicians though it is denied that there is an EU/US split. It is hard to see how the Unted States can avoid massive inflation down-the-line. There is an intellectual as well as a political confusion. It is hard to see how protectionism can be avoided if national economies try to re-establish growth through stimulus measures. The leakages are enormous. Open economies do not respond well to Keynesian-type policies and current circumstances are not routine.

We will need to wait to see how the G20 meeting will handle the issues. The British Prime Minister, Gordon Brown, has pushed the global line vigorously but even with the EU there is no consensus line. He will need to work hard if he is to get anywhere.

The other aim of his visit was to reinforce the “special relationship”, as Britain describes its foreign policy relationship with the United States. Since the 1950s Britain has looked at its foreign policy in terms of the Commonwealth (a loose association of states of the former Empire); Europe and the special relationship as America’s strongest ally. Most people in the United States know nothing of this relationship and Britain’s sensitivity about its significance looks odd. It is hard to see why the United States would wish to continue this relationship if, in Brown’s own understanding, Europe has the most consistent pro-American leadership in years. If the chances of multilateral cooperation because of a new administration are great, why would the United States need Britain? Of course, the United States could squander this chance by becoming protectionist and the squabbling between Europe and the United States could become intense. I wonder where Britain would be in that context. The United States wants a Europe that it can talk directly with but thus far this is not really available given the rejection of the constitutional proposals.

The ending of intense periods of globalization in the past has been fraught. The war in Afghanistan is moving against the United States and its allies and Britain is significant here. Britain is still needed. The Russian economy is in turmoil and it is not clear when or how the economic situation will impact on political stability there. Eastern Europe is in significant danger of economic collapse. Economic crisis soon becomes political crisis. Who knows what might happen next and who will need what kind of relationship and with whom? Britain should stop posturing about its “special relationship” with the United States. Brown should concentrate on making the G20 meeting effective by whatever cooperative means, particularly within Europe, he has at his disposal. Brown cannot prevent the United States turning to protectionism, but a firm line from all European leaders working together might.