The List

Après Moi, le Déluge

Five reasons that Europe will rue the loss of Nicolas Sarkozy.

"I'm not saying, 'After me, chaos,'" French President Nicolas Sarkozy told the newspaper Le Figaro with a wink in an interview published Friday, April 20, on the eve of the first-round election that saw him lose to Socialist Party leader François Hollande. But if Sarkozy was trying to make the indelicate point that, without him, the country is doomed if his looming electoral defeat in the May 6 runoff comes to pass, it's not just France facing an uncertain future. It's all of Europe. Critics like to paint the incumbent as "L'Omniprésident" and a "barbaric child," but the repercussions from his all-but-certain electoral rebuke might be vastly larger than "Tsarkozy's" critics take his ego to be.

1. The revenge of nationalism. Enthusiasts of the European project have more to fear than a historically strong showing by Marine Le Pen and her National Front party. Hollande's own brand of nationalism is equally suspicious of European austerity and Anglo-American cooperation. (He made waves announcing he won't go along with Britain and the United States in coordinating a release of strategic oil reserves.) Hollande's rise signals that leftist nationalism is no less ascendant than its equivalent on the right. Yet observers on both sides of the Atlantic have focused their fears on nationalist reactionaries, such as those dominating Hungarian politics, and have underappreciated two key developments.

First, thanks to the intimate center-right partnership between Germany's Angela Merkel and Sarkozy, the European left is quickly beginning to realize it does not hold a conceptual monopoly on transnationalism. The grand political project of putting nationalism in harmony with both globalization and ever-deeper European integration may express fundamentally liberal dreams. But its greatest proponents appeared on the right of center. Radicals' opposition to that project ensured that the respectable European left was unable to become its champion, while a man like Sarkozy faced no similar obstacles. Not until this election cycle has serious opposition to the harmonizing project emerged on the right. Sarkozy has tried to respond by pandering on immigration, but he is grasping. The respectable right is now the center of gravity for Europe's transnational hopes -- and the respectable left must consider what alternative to offer. For Hollande, who will likely now actually have to govern, the answer is simple: rediscover the nation as the focus of justice, and the state as its source.

Second, a deep disagreement over nationalism is brewing on the right, with the potential for far greater conflict than will be seen on the left. Norway's mass murderer Anders Behring Breivik might be crazy, but his transnational mission statement -- that European civilization is under mortal threat -- has broad conservative appeal. The burning question, if the right is right, is whether Europe as they have known and loved it can be saved on a nation-by-nation basis or whether a more unifying, transcendent approach is required. Some, such as Le Pen, answer resoundingly that only France, for instance, can save the French. Increasingly, other conservatives and reactionaries will demand that only a concerted, pan-European effort can measure up to the vast scale of the continent's religious and demographic change. A Sarkozy loss will strike a powerful blow against the idea that the conventional, center-right compromise on the nationalism question has any integrity. The European Union institutionalizes only one vision of transnationalism. In the long run, huge political possibilities could be opened up by a groundswell of right-wing interest in transcending the nation-state. In the immediate term, however, Sarkozy's departure will cause more people to fear transnational thinking as a vehicle for right-wing agendas.

2. The eclipse of economics. Despite Sarkozy's reputation as an egomaniac, the world has long recognized that he has been Merkel's junior, not senior, partner. Merkel flexed her financial muscle over the whole of the continent, while poor Sarkozy was required to skip across the Mediterranean, to Libya, to make a difference. Sarkozy's leadership on Libya earned him nary a blip in the polls -- not just because war is controversial or even because it is expensive, but because the dominant view has been that politics itself is the subservient accessory in Europe to all things economic. The monstrous totality of Europe's economic crisis has created the captivating story that if it isn't finance, it doesn't really matter. Stubbornly, however, democracies continue to require periodic elections.

The ouster of Sarkozy is an event large enough to reveal that politics still matters. Sarkozy could in that way become the antithesis of Italian Prime Minister Mario Monti -- removed by voting citizens instead of installed from over their heads. Monti himself is caving in to the realities of popular politics. Paradoxically, in terms of public opinion, the most powerful position for a politician to be in these days may be out of office. Much of Europe is unknowingly waiting for an out-of-office nationalist to reassert the primacy of politics on every level over the monetary rule of appointed bureaucrats.

More than the bad memories ushered in by German economic domination, the real danger to increased fiscal unity in Europe is the longing to live into a future where political ideas and political decisions once again are possible. Being political again means being free from the tyranny of economic considerations. And we all know where that could lead.

3. The rise of boring. Sorry, but nothing about Merkel -- or Britain's David Cameron, or virtually every other European leader -- is thrilling. Virtually everything about Sarkozy, however, has been sensationalistic. To pull Sarkozy offstage is to make European leadership the most boring it has been since the 1970s. Sometimes, as American conservatives attest, boring is good (behold, ladies and gentlemen, the power of Calvin Coolidge). But for Europe, boring comes at a time when the longing for meaningful politics is accompanied by a leadership class that lacks the most primal prerequisite of political authority: the language of command.

Often, we now reflexively think of demagogic despotism when we think of commanding language. That can happen. But in reality, language is commanding whenever it calls something into being by putting the personal honor of the speaker fully at stake. If people like Hitler were the only consequence of that, human beings would have been doomed long ago. Affirmatively commanding language is a tall order, but the degree of challenge involved is not an adequate explanation for its absence from politics in Europe. Where are today's de Gaulles and Churchills? The problem is the particular kinds of people who have grown into Europe's leadership class. They're not wired for it, or they don't believe they are. And they surely haven't been trained for it.

Sarkozy is far from perfect, but he has come closer to making authoritatively commanding declarations than any current European leader (save Pope Benedict XVI). And the pope, of course, isn't a political figure. It's not at all clear that Sarkozy has a second act in him, and he has no clear successor. The likely result is a boring place holder, one of a growing number in Europe.

4. Kicks for America while it's down. The United States needs France. Yes, that sounds like a joke, but France is the only country capable of leading Europe politically. However close a relationship with Germany that the United States requires, once beyond the realm of economic survival, the point of diminishing returns is quickly reached. Simply put, the United States cannot do anything of political consequence solely through a partnership with Germany. But with a real, live European-style socialist in Paris, U.S. President Barack Obama will face a Hobson's choice: work closely with Hollande and incur the wrath of Republicans, or distance himself from Hollande and squander yet another opportunity to ensure that Europe's future is as fully as possible in the hands of its greatest power.

In a grim irony, Hollande's intransigence on the oil reserve issue has the potential to make Obama appear impotent even in his relations with a European socialist. How could Obama tell the American people that he can't get them relief at the pump because a newly elected, cheese-eating surrender monkey won't let him coordinate his energy policy with the international community? Absurd situations like these are the electorally fatal stuff of legend -- and perfect ammunition for Republican presidential candidate Mitt Romney, whose critical narrative of Obama is already, despite grains of important truths, so spectacularly absurd.

The bigger picture, however, is that American life is made substantially more difficult by Hollande's inevitable and foreshadowed refusal to lead Europe and make Europe a leading force in the world. The political inspiration that only France can provide Europe will have to be played once again by a United States that is historically tired of playing that role. A U.S. Treasury spokesperson has already declared that the United States has no intention of supplying more money to the IMF to substitute for an adequate eurozone firewall. America's traditional desire not to squander its energies on managing European problems is poised to return with full force, and not just within a single major political party. A weak France led by a colorless holdover from a defunct past is not just bad news for France, no matter how frustrated voters have become with Sarkozy. It's awful news for the United States and for any U.S. president obliged to figure out how to help Europe out of its current morass by doing anything other than writing checks.

5. The triumph of inwardness. During his time in office, Sarkozy almost single-handedly kept Europe in the game of international politics, from Africa to the Middle East to Iran. If he is gone, European interventionism will go with him. It is only a matter of how long it will take. Sarkozy has reintegrated France into a NATO actively diminishing its obligations. Hollande, with roughly zero diplomatic experience, vows he'll pull France from Afghanistan this year. He will bring to France an inwardness that is dominating the rest of Europe -- for the first time ever.

Actually, that's not entirely true. After gallivanting around Egypt, Napoleon Bonaparte chose to create a brief but striking moment of European inwardness -- selling off Louisiana to the Americans and expending military effort outside Europe only upon rebellious Haiti. Napoleon's interest in an inward turn for Europe (yes, including Russia) was only a means to an end. What Napoleon wanted to accomplish was the political unification of Europe. Today's inward-turning Europeans seem to want no such thing. They have no taste for grandeur and no sense of what empire could mean in the absence of colonial exploitation. As a consequence, their version of a politically inward-looking Europe will be a weak Europe, whereas a politically inward-looking United States has not been so and is still not fated to be.

Sarkozy has been irresistible in his way, if not always an irresistible force. Whatever his electoral fortune may be, his appreciation for projecting French power outward was too committed to a misbegotten vision of France as a world power. What matters most as a counterforce against a weak, self-defeating European inwardness is that France be a European power -- committed to projecting its ideals and its energy outward across the continent, not across the globe. Sarkozy's failure here will likely persist to defeat the efforts of his center-right successors, if they choose to labor at a French interventionism that neglects the possibility of shaping Europe first and foremost.

Europeans and Americans should worry about this sort of defeat, too -- even if currently the majority of the French don't seem to. By the time a French leader comes to the fore capable of learning from these mistakes, the follies of Hollande and his more extreme opponents may have ensured an irreversible European tragedy.

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The List

Glencore: What the Documents Tell Us

Read Ken Silverstein's riveting investigation of Glencore, the "biggest company you never heard of." Below are some of the documents he uncovered in his year of reporting on the hyper-secret, shady global commodities giant.

It is big, very big. The 1,637-page initial public offering (IPO) prospectus Glencore released last year revealed just how vast its reach is: The company controls more than half the international tradable market in zinc and copper and about a third of the world's seaborne coal; is one of the world's largest grain exporters, with about 9 percent of the global market; and handles 3 percent of daily global oil consumption. All of this, the prospectus says, helped the firm post revenues of $186 billion in 2011. Click here to see the prospectus document.

It is not afraid of operating in high-risk "frontier" regions. In a report on the IPO, Deutsche Bank says the company "benefits directly from the volatility" in global commodity prices -- especially in poor countries. Consider what the bank identifies as Glencore's "key drivers" of growth: copper in the Democratic Republic of the Congo (DRC), coal in Colombia, oil and natural gas in Equatorial Guinea, and gold in Kazakhstan. Deutsche Bank delicately calls these places "frontier regions" or "challenging political jurisdictions" -- put simply, they all offer a dangerous mix of extraordinary natural wealth and various degrees of instability. (See page 12.)

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It is well-connected in failed states. Glencore has managed to do business in the DRC, the poster child of the resource-cursed failed state, with the help of Dan Gertler, a diamond businessman from Israel who is known for his intimate ties to President Joseph Kabila. (He even reportedly has lent Kabila his private jet.) Glencore and Gertler are, through subsidiaries, shareholders in Katanga Mining. In 2009, Glencore sold stock in Katanga at roughly 60 percent of its market value to Ellesmere Global Limited, a British Virgin Islands firm whose "ultimate owner is a trust for the benefit of the family members of Dan Gertler," according to Canadian insider-trading records. Ellesmere quickly sold the stock back to Glencore at close to full market price, netting a profit of about $26 million.

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It pays associates in unusual deals. In another example, detailed in this March 2011 contract, Samref Congo Sprl, a subsidiary 50 percent owned by Glencore, waived its rights of first refusal to acquire an additional stake in Mutanda Mining, a copper and cobalt producer, from Gecamines, Congo's state-owned mining company. Samref instead recommended that the shares be sold to Rowny Assets Limited, one of the offshore firms owned by Gertler's family trust. (See clauses C and D on pages 3-4 of the Gecamines contract.) It's not clear why Samref would have passed on the Gecamines offer, because business records and documents suggest that Gertler's trust picked up the Mutanda shares for a fraction of their value. Plus, the president and vice president of the Panama-registered Samref Overseas S.A., which owns Samref Congo Sprl, are both Glencore officials, and the vice president, Aristotelis Mistakidis, is even one of the handful of Glencore executives who became billionaires after the IPO. "We preferred to invest our money in developing Mutanda -- building the mines and the plant," Glencore spokesman Simon Buerk said in an e-mail explaining why the firm did not buy the shares.

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It knows how to look the other way. In Congo-Brazzaville, Glencore bought oil from shell companies set up by the state oil company's head, Denis Gokana (conveniently trained at its London office), according to a lawsuit by Kensington International, a Cayman Islands-based corporation. Glencore complied with court orders and was not charged, but the ruling judge wrote that he "did not consider that Glencore's personnel ... could not have appreciated that Sphynx Bermuda [another company named in the suit that had contracted with Glencore] was somehow linked to the Congo (although ignorant of the exact nature of the link) and that payment would ultimately go to the SNPC [National Petroleum Company of the Congo].)

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It has a criminal past. Leveraging ties to dictators has always been at the heart of the business empire built by famous fugitive Marc Rich. Although Rich left the firm in the 1990s, Glencore profited handsomely by dealing with Saddam Hussein under the 1996-2003 U.N. Oil-for-Food Program, which allowed the Iraqi dictator to trade limited quantities of oil in exchange for humanitarian supplies. The U.N.'s Independent Inquiry Committee reported in 2005 that Hussein had awarded special "allocations" to companies and individuals who were friendly to the regime -- including Pakistani businessman Murtaza Lakhani, a Glencore agent and conspicuous regime sycophant. The Iraq Survey Group, the U.S.-led fact-finding mission sent after the invasion, concluded that Glencore was "one of the most active purchasers" of oil under the Oil-for-Food Program and had paid $3,222,780 in "illegal surcharges." Glencore was not charged in the scandal. It claimed it was unaware surcharges were being paid and that Lakhani's high fees reflected the extra risk of doing business with Iraq, not slush money for bribes. (See page 144.)

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It stashes money in tax havens. Another reason Glencore is so rich: Its effective global tax rate for 2010 was just 9.3 percent, in large part because nearly half its 46 subsidiaries are incorporated in "secrecy jurisdictions," opaque financial havens like the Netherlands, according to a report by the NGO Publish What You Pay.

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Its business partners have been investigated for bribery. Glencore's shady dealings reach around the world. To take just one example, a 2008 U.S. Senate report revealed that an unidentified client of the LGT Group, a bank owned by Liechtenstein's royal family, discussed setting up a Panamanian shell corporation and bogus foundation to pay bribes on Glencore's behalf. "A small portion of the payments go ... to the USA and Panama and may be classified as bribes," reads an internal LGT memo. The client, a Glencore agent, had set up the account in 2002; prior to that, Glencore had made such payments directly, the memo says. An LGT executive refused to testify to the Senate about whether the bank had set up the Panamanian corporation or foundation as requested.

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It has worked with Romanian criminals. In the mid-2000s, Glencore used an Israeli agent named Yoav Stern, who also represented the Romanian interests of Yakov Goldovsky, who had previously been convicted in Russia for asset-stripping state-run enterprises. Another Glencore business partner here was Romanian businessman Marian Iancu. Glencore sold him crude oil through an offshore company he controlled, Faber Invest & Trade, for processing at the Rafo refinery in Romania. Iancu was indicted for tax evasion and money laundering in 2006 and convicted in late 2011. A WikiLeaked U.S. State Department cable described Rafo as "embroiled in a web of corruption, money laundering, fraud and criminal charges" and included Faber among its "shady entities."

It has done deals with oligarchs. Glencore funneled roughly $2 billion through an offshore company to the oligarch Mikhail Gutseriev, described in a WikiLeaked cable as "not known for his transparent corporate governance." Reportedly booted by the Kremlin as chief of the state-owned oil firm Slavneft for resisting the company's privatization, Gutseriev made a comeback with Glencore's help. The cash infusion allowed Gutseriev to establish RussNeft, now one of Russia's largest oil companies. Glencore owns nearly half the equity of four of RussNeft's oil production subsidiaries and has sole rights to market its oil.

It has high-level political protection:  In Kazakhstan, Glencore owns slightly more than half of Kazzinc, a huge gold, lead, and zinc producer. Because corruption can make the country treacherous terrain for foreign investors, they often require a powerful local sponsor with close contacts to the resident, Nursultan Nazarbayev. Glencore's is one of the best: Bulat Utemuratov, a major investor in Verny Capital, Kazzinc's second-largest shareholder with a 42 percent stake. In March 2011, a group of opposition politicians issued a public letter complaining that Kazzinc and other former state firms had been privatized under murky conditions that allowed Utemuratov and other insiders to pick up vast stakes thanks to their ties to the ruling family. Glencore could be stripped of its assets in the country, said the letter, adding, "Upon any change of regime in Kazakhstan to a democratic one, any acquisition of any shares in Kazzinc ... will be subject to review."