Official data released on (February 28, 2017) showed that demonetisation hasn’t pushed the economy into a retreat as most feared, with its short-term adverse impact to a large extent restricted to construction and financial services. Real GDP growth in the December quarter, in the midst of which the note ban came into effect, came in at a respectable 7% (though lower than 7.4% in the previous quarter) and the gross value added (GVA) was 6.6%, with the difference explained by robust indirect taxes and reining in of subsidies.

Upward revision of GVA estimates for 2015-16 led to downward corrections in GVA for Q1 and Q2 of the current fiscal but despite this, there were marginal upward revisions in the rates of GDP expansion in these quarters, thanks to a surge in indirect taxes.

Solid performance by the “agriculture and allied sectors”, pump-priming by the government on the consumption side, better-than-expected performance by mining and manufacturing sectors and a seasonal — though larger-than-usual — pick-up in private consumption masked whatever negative effect the note swap exercise had on the economy, going by the Central Statistics Office’s data.

However, as the GDP was slowing even before demonetisation and the note swap has indeed had an incremental adverse effect on it, both GDP and GVA growth for 2016-17 have been projected to be much lower than in the previous year. In the second advance estimate, the CSO has kept the GDP growth estimate for the current financial year at 7.1%, the same as in the first advance estimate released in early January, and GVA growth at 6.7%. But given that 2015-16 GDP growth, which was seen at 7.6% at the time of the first advance estimate, was subsequently revised to 7.9%, the CSO’s latest take on 2016-17 growth is virtually more sanguine than its previous estimate.

While the CSO’s GDP estimate for 2016-17 is evidently higher than that of most others (see chart), many analysts said the growth assumed by it for the second half (6.8%) was optimistic. “Given the fact that the fall from H1 to Q3 is not much, I don’t think that we should then necessarily assume that the rebound in Q4 is going to be very sharp,” said Aditi Nayar, economist at Icra. Stating that the GDP number is better than expected, Saugata Bhattacharya, chief economist at Axis Bank, said, “Since growth slowdown (due to demonetisation) has been shallower than expected, and in line with the RBI’s projections, the probability of rate cuts going ahead has come down.”

The minutes of the monetary policy committee’s meeting released last week indicated that it changed its stance from “accommodative” to “neutral” because the growth drag from demonetisation is expected to fade soon. India Ratings reiterated its view that “much of the impact of demonetisation will be visible in Q4FY17 leading to an overall GDP growth of 6.8% in 2016-17”.

Economic affairs secretary Shaktikanta Das said: “This year’s GDP (growth) is around 7%, based on available numbers. Nothing can be deciphered on anecdotal evidence. Demonetisation only impacted consumption in some cities, since most purchases happened on credit or debit cards. The so-called negative impact, if relevant, was only temporary.”

The 7% GDP growth forecast for the third quarter helped India maintain the coveted tag of the world’s fastest-growing major economy despite demonetisation, better than China’s 6.8% in the December quarter.
While analysts pointed out the lack of congruity between the CSO’s estimate and other high-frequency data and corporate results, chief statistician TCA Anant said all available data have been made use of in the second advance estimate, including corporate performance up to the December quarter, sales of commercial vehicles, railway freight, etc, for the first “9/10 months of the financial year”.

According to the CSO, with production growth of foodgrains during 2016-17 kharif and rabi seasons being 9.9% and 6.3%, respectively, the farm sector grew a robust 6% in Q3 from 3.8% in the previous quarter and compared with a 2.2% contraction in the year-ago quarter. Despite the anecdotes of industrial clusters hit by the note ban during the period, manufacturing grew a healthy 8.3% in Q3 on a robust base of 12.8% in the year-ago quarter and compared with 6.9% in Q2 this fiscal. Mining also posted a smart recovery from a fall of 1.3% in Q2 to a robust expansion of 7.5% in Q3. The bad performers on the output side was “financial services, etc”, which posted a modest 3.1% growth in Q3 compared with 7.6% in the previous month, and construction which grew just 2.7% in the December quarter.
Government final consumption expenditure (GFCE) posted a 19.9% growth in Q3 against 15.2% in the previous quarter, the CSO said. Given that 17% growth in GFCE is estimated for the whole of 2016-17, it needs to grow at 17.4% in Q4. Considering that the Centre, as is seen from the April-January fiscal data separately released by the Controller General of Accounts, has slowed down spending in the later months of the year, the spending boost must come from PSUs.

Although both Dussehra and Diwali fell in the December quarter, the 10.1% growth reported by CSO in the private consumption expenditure looked puzzling to most analysts (but some said use of old notes for consumption might have contributed to the rise). So was the 3.5% growth in gross fixed capital formation, which was declining for the previous three quarters.

Given that nominal GDP growth has been projected at 11.5% for 2016-17, compared with 10% in the last fiscal, it may offer more leeway to the government to improve spending in the next fiscal and yet contain fiscal deficit, which is expressed as a ratio of the nominal GDP, at the targeted 3.2%.

Discrepancies — the difference between the supply and demand side of GDP — turned negative after a gap of four quarters (-Rs 6,767 crore) in the December quarter, compared with Rs 45,378 crore in the second quarter and Rs 30,645 crore in the first quarter. In the last quarter of 2015-16, discrepancies touched a massive Rs 1,43,210 crore, causing a flutter then and raising doubts about the credibility of the country’s data collection mechanism. When private final consumption expenditure, gross fixed capital formation, government final consumption expenditure, change in stocks, valuables, and net exports exceed the overall GDP (based on the supply side data), discrepancies turn negative.

Analysts expect the exports sector to contribute more to GDP growth in the coming quarters, despite the demonetisation blues, thanks primarily to a favourable base. In real terms, the export growth for 2016-17 has been projected at 2.3%, compared with -5.4% in the last fiscal. Despite demonetisation, merchandise exports rose 2.3% in November, 5.7% in December and 4.3% in January.

Courtesy: The Financial Express, dated March 1, 2017

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According to a new report from the OECD, the Indian economy is expanding at a fast pace, boosting living standards and reducing poverty nationwide. Further reforms are now necessary to maintain strong growth and ensure that all Indians benefit from it.

The Survey, launched  (March 1, 2017) in New Delhi by OECD Secretary-General Mr. Angel Gurria and Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India, Shri  Shaktikanta Das, hails India’s recent growth rate of more than 7% annually as the strongest among G-20 countries. It identifies priority areas for future action, including continuing plans to maintain macroeconomic stability and further reduce poverty, additional comprehensive tax reforms and new efforts to boost productivity and reduce disparities between India’s various regions.

Key findings

  • The latest OECD Economic Survey of India 2017 finds that the acceleration of structural reforms and the move toward a rule-based macroeconomic policy framework are sustaining the country’s longstanding rapid economic expansion.
  • The implementation of the landmark GST reform will contribute to making India a more integrated market. By reducing tax cascading, it will boost competitiveness, investment and job creation. The GST reform – designed to be initially revenue-neutral – should be complemented by a form of income and property taxes, the Survey said.
  • There is a need to make income and property taxes more growth-friendly and redistributive. A comprehensive tax reform could help raise revenue to finance much-needed social and physical infrastructure, promote corporate investment, enable more effective redistribution and strengthen the ability of states and municipalities to better respond to local needs, according to the Survey.
  • The OECD points out that achieving strong and balanced regional development will also be key to promoting inclusive growth. Inequality in income and in access to core public services between states and between rural and urban areas is currently large across India, while rural poverty is pervasive. Continuing efforts to improve universal access to core public services is essential.
  • Recent changes in India’s federalism model have given states more freedom and incentives to modernize regulations and tailor public policies to local circumstances. Ranking states on the ease of doing business is opening a new era of structural reforms at the state level and will help unleash India’s growth potential. Further benchmarking among states and strengthening the sharing of best practices, particularly labor regulations and land laws could add to the reform momentum.
  • Raising living standard in poorer states will require increasing productivity in the agricultural sector. With employment expected to gradually shift away from the agricultural sector, urbanization will gather pace. Thus, better urban infrastructure will be needed to fully exploit cities’ potential for job creation, productivity gains and improving the quality of life.

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On March 1, 2017 the British government was defeated after the House of Lords said ministers should guarantee EU nationals’ right to stay in the UK after Brexit. The vote, by 358 to 256, is the first Parliamentary defeat for the government’s Brexit bill. However, MPs will be able to remove their changes when the bill returns to the House of Commons. Ministers say the issue is a priority but must be part of a deal protecting UK expats overseas. The bill will give Theresa May the authority to trigger Brexit under Article 50 of the Lisbon Treaty and begin official negotiations. The amendment backed by the Lords requires the government to introduce proposals within three months of Article 50 to ensure EU citizens in the UK have the same residence rights after Brexit. But it could be overturned when MPs, who have already backed the Brexit bill without amendments, vote on it again. The government is expected to attempt to overturn the defeat when the legislation returns to the Commons. The House of Common members expressed their disappointment on the House of Lords demand for an amendment in the Brexit bill. Theresa May’s leadership campaign before she became the British Prime Minister , had articulated the same position. In her view, it would be unwise to guarantee the rights of the three million or so EU citizens in this country, before other EU countries are ready to do the same for British citizens abroad. The opponents said May’s argument as distasteful and even immoral, because many people who have made their lives in the UK could be used, as “bargaining chips” in a negotiation.

Brexit was a decision in England after a referendum but its wisdom had been in question from the very beginning. Brexit is an abbreviation for “British exit,” which refers to the June 23, 2016, referendum whereby British citizens voted to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades. The arguments in favour of the Brexit included recurrent losses to Britain as payments to the EU and also pressure on employment and rents in Britain due to emigrant workers. Ahead of the vote, the government made a last-minute attempt to persuade peers not to change the draft legislation. Brexit Minister Lord Bridges said the government had been keen to reach an agreement with other EU nations on the issue. However, he said, “a small number of our European counterparts” insisted there could be no discussions until the formal Brexit talks begin once Article 50 had been invoked. But most peers wanted a unilateral move from the UK government.

Brexit issues are economic, human and political issues discussed during the campaign about the withdrawal of the United Kingdom from the European Union, which was supported in the Brexit referendum of 23 June 2016 with 52% of voters voting in favour of leaving the EU against 48% preferring to remain a member. According to many analysts Britain would face the adverse economic effect of exiting the European Union.   The President of the CBI said that Britain would face a “Pandora’s Box of economic consequences” if it crashed out of the European Union without a new trade deal in place. The Confederation of British Industry Community (CBI) is the UK’s premier business organisation, providing a voice for firms at a regional, national and international level to policymakers.

 Although the British Prime Minister Theresa May said that Britain would exit the single market and customs union, but it would seek to negotiate a comprehensive free trade deal with the rest of the EU. But many trade experts are highly skeptical that it will be possible to conclude such a deal by 2019, when the UK is due to leave the bloc, raising the prospect that Britain could be forced to trade with the rest of the EU on minimal World Trade Organization rules, meaning it would face tariffs on goods exports to the EU in just two years’ time.

The CBI president said, “A ‘no deal’ scenario may open a Pandora’s Box of economic consequences. The UK would face tariffs on 90 per cent of its EU exports by value and a raft of new regulatory hurdles.” These barriers would hurt firms on both sides of the Channel. The firms in the UK and across the continent firms are worried about this ‘worst-case scenario. Some are getting ready for it to reduce economic damage. A small minority of right-wing economists and a number of Conservative politicians argue that it would be economically better for the UK not to even attempt to sign a new trade deal and instead to relay on WTO rules. But analyst calls such kind of advocacy as dangerous and irresponsible which would ultimately damage the British firms and economy. Under WTO trading rules (which only mean that nations or trading blocs must levy a standard external tariff) British car manufacturers could face 10 per cent levies on exports to the Continent. UK food producers would also face large tariffs and painfully-reduced quotas on exports to the EU. According to one estimate last year the static cost to UK exporters of facing EU tariffs would be a minimum of £4.5bn, based on existing export patterns, and would almost certainly be many multiples of that. Economists from the London School of Economics have estimated that the WTO route would cause an almost 10 per cent hit to UK GDP, relative to otherwise, by 2030.

About opposition to Brexit former Conservative cabinet minister Lord Tebbit  said the debate in the house of Lords  seemed to focus on “nothing but the rights of foreigners”. Shortly after the Lords vote, MEPs in the European Parliament debated the status of EU migrants in the UK. Justice Commissioner Vera Jourova told MEPs that EU citizens in UK and British citizens elsewhere in the EU “deserve to know that their rights will be” after Brexit. She said the matter should be addressed “as soon as possible” but that negotiations could only begin after the UK has triggered Article 50.

The Treaty of Lisbon, signed in December 2007, is the European Union’s most recent constitution – and Article 50 makes provision for countries that want to leave. It sets out the exit process but is deliberately vague – meaning member states could be forced to enter into long negotiations to thrash out the terms of any deal. A second legal challenge is set to further complicate the already labyrinthine Brexit process- that is Article 127. Pro-EU campaigners say Britain will have to organise its extraction from the European Economic Area (EEA) – and therefore the single market – separately to its departure from the EU itself. This is because the UK is currently part of two different agreements with their own exit procedures. Like Article 50 of the Lisbon treaty, which details the steps a country must take to withdraw from the European Union, Article 127 of the EEA agreement sets out the mechanism for leaving the single market. The government will argue that EEA membership ends when Britain leaves the EU, which is expected to happen in 2019. But the legal challenge proposed by think tank British Influence argues that Parliament should be able to vote on whether or not to trigger Article 127, blocking or delaying the possibility of a ‘hard Brexit’.

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Sometimes as now people are in a rejection mode prompted by their frustration over the way things move against their interest and aspirations. In such situations, political and economic ideas run counter to the established rational way of thinking. There is a sharp rise in support for extreme right wing ideology in the contemporary world, be it Brexit, Germany, Australia, United States, South Korea or now France. Some analysts are worried about this widespread drift towards extreme right and think it is a retrograde movement. Others think that too much of liberalism in their country has led to encroachment of the space of maximizing their self interest in trade, investment, economy and given birth to problems of unemployment, inequality, terrorism and migration. They also believe that liberal democracies now need to transform them in strong states premised on ultra nationalism so as to safeguard their own territorial, diplomatic and economic interests. There is a demand for taking safeguards against the competing countries which irrationally exploit advantages of liberalism and discourage the adversaries and non-nationals to desist them from taking undeserved economic, diplomatic and strategic advantages.

There is a remarkable upsurge of right wing populism in Europe. The Austrian Freedom Party has become the most popular party in Austria; with its support growing fastest among voters younger than 30 contrary to the earlier prevalent view that associated the party with racism, even neo-Nazism. A few years ago it was not possible in a Europe that was supposed to have left such prejudices behind. The Freedom Party’s rise is not an anomaly. Across the once placid political landscape of Western Europe, right-wing upstarts have created what Jean-Claude Juncker, president of the European Commission, recently termed “galloping populism.” He was referring to movements like the Sweden Democrats, the National Front in France, the Party for Freedom in the Netherlands and other voices on the far right calling for their once open countries to close up and turn inward. But the insurgency is not limited to Europe. All the rising rightist parties are aligned with Republican presidential candidate Donald Trump in what they encourage voters to fear: migrants taking your jobs, Muslims threatening your culture and security, political correctness threatening your ability to speak your mind and, above all, entrenched elites selling you out in the service of the wealthy and well-connected.

Many of the European and American political leaders say that  “political Islam,”, “is the fascism of today, and that is what we have to fight.” Such claims would have once been met with outrage in Europe, but no longer. Amid the political backlash to the refugee crisis in the summer of 2015, when more than a million asylum seekers from around the Muslim world came streaming into the E.U., a patchwork of populist movements have begun to call for Europeans to shut their borders to Muslim migrants, close Islamic schools and ban Muslim women from covering their hair or face in public. And they’re winning.

In recent months, the resurgence of nationalism across the E.U. has become so powerful that parties from the political mainstream have been forced to tilt sharply to the right as well, often retreating from their core principles of tolerance, openness and diversity. In France, some municipalities have banned Muslim women from fully covering themselves with so-called burkinis while swimming or lounging at certain beaches. The Danish parliament approved a controversial “jewelry law” in January that allows the government to confiscate valuables from arriving asylum seekers to help finance their accommodation.

Even the most seemingly far-fetched electoral upsets have begun to seem plausible, especially after the U.K. shocked the world by voting in June to leave the E.U. Brexit was driven in large part by the anti-immigrant rhetoric of the U.K. Independence Party, which has long called for Britain to shut its borders. The result cost then Prime Minister David Cameron his job, and the impact on E.U. integration–and on the British economy–is expected to be severe. But Trump, notably, has voiced his enthusiastic support. He has even linked himself to the insurgent forces that drove the Leave vote by saying on Twitter that he would soon be known as Mr. Brexit.

It won’t end with the U.K. Right-wing parties in France, the Netherlands and elsewhere have called for their own Brexit-style plebiscites on E.U. membership. Faced with pressure from the E.U. to accept their share of refugees, officials in Slovakia, Estonia, Bulgaria and Poland have said they want to take only Christian asylum seekers or none at all. The nationalist government in Hungary even called a referendum on the issue for Oct. 2, and the results are practically a foregone conclusion: Hungarians are sure to reject the E.U.’s plan for refugee resettlement, further eroding the union. Even in Germany, where shame over the Nazis has long provided resistance to the pull of nationalism, the far-right Alternative for Germany party (AfD) has broken into the mainstream. In a local election in early September, the AfD got more votes than the conservative party of Chancellor Angela Merkel in her own electoral district (both finished behind the Social Democrats). In another local election, held in Berlin on Sept. 18, Merkel’s Christian Democratic Union recorded its worst result in the capital ever.

What is right wing populism?

Right-wing populism is a political ideology that rejects existing political consensus and often combines laissez-faire liberalism and anti-elitism. It is considered populism because of its appeal to the “common man” as opposed to the elites. Populism is a political ideology that holds that virtuous citizens are mistreated by a small circle of elites, who can be overthrown if the people recognize the danger and work together.

Thomas Greven has identified three dominant features of rise of rightwing politics in Europe and America:

  1. Right-wing populism across Europe and the United States takes different forms depending on nationally specific factors such as political history, system and culture, but there are similarities. Populism’s central and permanent narrative is the juxtaposition of a (corrupt) “political class”, “elite”,or “establishment, and “the people”, as whose sole authentic voice the populist party bills itself.
  2. „ Right-wing populism adds a second antagonism of “us” versus “them”. Based on a definition of the people as culturally homogenous, right-wing populists juxtapose its identity and common interests, with are considered to be based on common sense, with the identity and interests of “others”, usually minorities such as migrants, which are supposedly favored by the (corrupt) elites. Right-wing populists are not necessarily extremists, and extremists are not necessarily populists. The latter, however, is very likely, as extremism lends itself to populism. The more ethno-centric the conception of the people, the more xenophobic the positioning against “the other”, and the clearer the desire to overthrow the democratic system of governance, the more likely it is that a right-wing populist party is also extremist.
  3. Right-wing populists also strategically and tactically use negativity in political communication. Supposed “political correctness” and dominant discourses are at the same time the declared enemies of right-wing populists and their greatest friends. They allow the staging of calculated provocations and scandals, and of the breaking of supposed taboos. As this resonates with the needs of the media in terms of market demands and the news cycle, right-wing populist receive a lot of free media.

Why the present wind of right populism is blowing?

The present wind seems to be blowing against morally correct liberal democracy, rise of neo-elites due to liberalization and globalization. During last three decades of liberal democracy and capitalism, privatization, liberalization and globalization were the buzzword. Roughly since 1980s, the world seemed to be revolutionized in the sense of economic reforms as well as aspirations for liberal democracy everywhere. There was a tendency to make the world a global village and establish modern democratic systems and welfare states. Even the developing economies started embracing market economy and economic integration through open and free trade. The result was increase in income, output and employment. But critics pointed out that the fruits of development and growth at the global level went asymmetrically to a few countries and at national level majorly to the elite and ruling classes.  Such analysts assert that the asymmetric and unequal benefits flowing from liberal states skewed the geopolitical matrices on one hand and deprived the common man of employment and a better living standard in the home economy. Thus the appeal of  slogans like “America First” or “no migrants please” or “bring manufacturing and business to America”  or “stop terror and lawlessness and give a semblance of presence of state” are consequence of such a new thinking. There are many such slogans ringing in Europe such as “Europe belongs to us”; “ the Burkini is a fundamentalist uniform”;  “Islam is not part of Germany” etc. Right wing populism is increasing.

There is hardly a democracy in Europe where that same sentiment would not ring true. Countries in the formerly communist East have been hit especially hard by factory closures, high unemployment and an exodus of young workers to the wealthier states of Western Europe. Trump and his doppelgängers along the Danube have been able to capitalize not only on fears of migration but also on angst over economic inequality, often with what seem like the same slogans in different languages. On immigration: Send them back! On Muslims: Keep them out! On the media: Full of lies! On the Establishment: Crooked! On the elections: Rigged! Even their tactics seem to run in parallel, especially when it comes to the politics of fear.

Is right wing populism good or bad?

Rise of right wing populism may be in accordance with the principle of economic, social and political isostacy- a natural rebalancing process, meant for “undoing the overdone” (by the previous systems). Nevertheless, for European elites, such chasms between feelings and facts are frustrating. The Europeans belong to the tradition of the European Enlightenment and the Age of Reason. They find it extremely hard to face down the emotional force of right-wing populism using rational arguments.

However, there are many problems. The fears fanned up by the right populism may not be based on truth. The use of propaganda not grounded in truth may be in lure of political edge over traditionally popular liberal democratic parties. Digital medium and social websites have made propaganda easier. It is common to see how lies are perpetrated unscrupulously to give an illusion of truth. We can see how refugee influx has been overstated in Europe. The influx of refugees slowed to a trickle in recent months after Europeans closed their borders to transiting migrants and reached a deal with Turkey to keep refugee boats off European shores. But that has done little to calm public fears of being overrun. In a 2015 survey titled “Perils of Perception,” the British research group Ipsos MORI found that Europeans tend to grossly overestimate the number of foreigners who are actually in their countries. In Germany, respondents said, on average, that 26% of the population was born abroad; the actual number is 12%. The discrepancy was about the same in France, Belgium, the U.K. and the Netherlands.

Also rather than giving solutions to the problems, the right wing populism may lead to provocation, instability and shattering of the systems as well as trust of the people. The right- wing- populist leaders talk about quick fixes and tailor made solutions of the problems, but  they may not be able to offer the people what they promise because things are not as easy to do as to claim. It will amount to betrayal of the people. We are living in a game theoretic framework in this competitive and hegemonic world. If Donald Trump thinks about ‘America First’, others would also think about ‘their country as first’. Protection by one country would lead to protection by other countries as well. If one country ignites ultra-nationalism, the other countries would also respond in the same coin.  The greatest irony is that people deep inside know that right wing populism is not an answer to the failures of liberal democracy, yet they cast their preferences in favour of right wing populism in anger. Rejection of the existing system is the main reason of people’s euphoria rather than acceptance of right wing populism.

What is the way out?

The answer lies in fearlessly and courageously standing in the headwinds of crisis times in which some pied pipers would try to use right wing populism to attract people for quick fixes, which would never be possible. Only rational thinking rather than impulsive feelings and anger can solve the problems of our times. Fishing in the troubled waters may be politically expedient, but regressive political and economic policies would entail a bigger cost. In post truth politics self righteousness is writ very large and this complicates problems making our stands irreconcilable.

Barack Obama rightly said in his farewell speech- “For too many of us, it’s become safer to retreat into our own bubbles, whether in our neighborhoods or college campuses or places of worship or our social media feeds, surrounded by people who look like us and share the same political outlook and never challenge our assumptions.  The rise of naked partisanship, increasing economic and regional stratification, the splintering of our media into a channel for every taste – all this makes this great sorting seem natural, even inevitable.  And increasingly, we become so secure in our bubbles that we accept only information, whether true or not, that fits our opinions, instead of basing our opinions on the evidence that’s out there.  This trend represents a third threat to our democracy.  Politics is a battle of ideas; in the course of a healthy debate, we’ll prioritize different goals, and the different means of reaching them.  But without some common baseline of facts; without a willingness to admit new information, and concede that your opponent is making a fair point, and that science and reason matter, we’ll keep talking past each other, making common ground and compromise impossible.”

He further points out- “It’s that spirit – a faith in reason, and enterprise, and the primacy of right over might, that allowed us to resist the lure of fascism and tyranny during the Great Depression, and build a post-World War II order with other democracies, an order based not just on military power or national affiliations but on principles – the rule of law, human rights, freedoms of religion, speech, assembly, and an independent press.  That order is now being challenged – first by violent fanatics who claim to speak for Islam; more recently by autocrats in foreign capitals who see free markets, open democracies, and civil society itself as a threat to their power.  The peril each poses to our democracy is more far-reaching than a car bomb or a missile.  It represents the fear of change; the fear of people who look or speak or pray differently; contempt for the rule of law that holds leaders accountable; an intolerance of dissent and free thought; a belief that the sword or the gun or the bomb or propaganda machine is the ultimate arbiter of what’s true and what’s right. …… But protecting our way of life requires more than our military.  Democracy can buckle when we give in to fear.  So just as we, as citizens, must remain vigilant against external aggression, we must guard against a weakening of the values that make us who we are.”

Angela Merkel has acknowledged that unhappiness over her refugee policy has helped drive some of her recent electoral losses, but she has also warned about the rising threat on the right. Merkel urged her fellow lawmakers to resist the “easy solutions” that the party is offering. “I am quite certain,” she said, “if we bite our tongues and stick to the truth, then we’ll win back the most important thing that we need, the trust of the people.”

 

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