Since independence, the relations between Slovenia and Croatia were essentially very good. We are one of each others’ main trade partners, Slovenes are welcome at Croatian cost and Croats on Slovenian ski slopes. A few issues remain unresolved after the breakup of Yugoslavia that kept the politicians and journalists busy, but did not have much impact on trade, tourism or friendly personal relationships. One of the major issues was the border. There are a few disputed details on land and a larger chunk of disputed sea.

Image: Area of disputeed area of the sea hashed in red.

Maritime Border Issue

For the last twenty years the Slovenian position on this was fairly clear, regardless of the political parties on power. Slovenian red lines were the Slovenian contact with the High Sea and the jurisdiction over most of the Gulf of Piran, as it was under Slovenian control at the time of proclaiming independence in 1991. The positions for the negotiations with Croatia traditionally had bi-partisan support in Slovenia.

The two countries came closest to reaching an agreement in 2001 with Drnovšek-Ra?an Agreement that the two prime ministers agreed upon in 2001. This agreement was (1) compatible with Slovenian red lines and (2) enjoyed bi-partisan support in Slovenia. Later Croatia withdrew support from it. In Slovenia this agreement remained to be considered as the minimum of what would be acceptable.

The Pahor-Kosor agreement

In 2009 prime ministers Pahor and Kosor reached an agreement to submit the issue to an Arbitral Tribunal to deliver a final solution that would have to be automatically accepted by both sides. In Croatia, the agreement was given an almost unanimous support in the parliament, while in Slovenia the agreement has been criticized by the opposition parties (Janez Janša’s SDS being the strongest), but not limited to them.

Voiced opponents of the agreement cross the left-right political divisions and include fierce opponents of opposition leader Janez Janša, former and current members of coalition parties, experts on maritime law, as well as founding fathers of the independent Slovenia like France Bu?ar or respected intellectuals like Boris Pahor.

The disagreement

The opponents of the Agreement believe that (1) the agreement is not defined in a way that would enable the Tribunal to reach a decision within the Slovenian red lines and (2) that there has been no bi-partisan support for such negotiation platform with Croatia. While (1) can be a matter of debate, (2) is a fact.

Unlike the Croatian government, the Slovenian Government did not submit the Agreement to a 2/3 majority vote in the parliament (where it would likely fail) but decided, in agreement of all parties, to call a national referendum. It will take place on June 6th and the Slovenes will decide whether to go forward with the Agreement or not.

The issues of the campaign

The referendum campaign in Slovenia is generally on two issues:

1. Can the agreement result in an outcome that will include territorial contact of Slovenia to the high seas and in the control of most of the Bay of Piran?
2. Is Slovenia right in claiming this in the first place?

Supporter position on outcomes:

Yes, because the Agreements says that a task of the Tribunal is to determine “Slovenia’s junction to the High Sea” … applying more than just the international law. To support this impression they translated term junction as “contact” in the Slovenian translation of the Agreement.

Opponent position on (1):

No, because as also per Agreement the borders on land and sea will be determined exclusively by international law and this will result in only a half of the Bay of Piran. The border at sea will end in Italian waters making territorial contact with the high seas impossible.

They also claim, that the provision of determining the “junction” will not very likely result in territorial contact of Slovenian waters with the international waters. If this was the intent, the provision would use the term “territorial contact” and not “junction”.

The fear was reinforced by the statement in the very Law with which Croatia adopted the Agreement. In this law it claimed that “Nothing in the Arbitration Agreement between the Government of the Republic of Croatia and the Government of the Republic of Slovenia shall be understood as Croatia’s consent to Slovenia’s claim to its territorial contact with the high seas“. Indeed unilateral statements were not to be taken into account by the Tribunal, however Croatia, in this very same law, claimed, that the statement was made in agreement with Slovenia and that Slovenia and Croatia, together, informed EU presidency and the US about this.

Slovenia did not formally deny or protest at the time, neither did the US and Sweden. Today US, Sweden and Slovenia claim that the statement in the Croatian law is untrue. At best, then, Croatia adopted the agreement on false pretenses and it will be interesting to see how the Croatian parliamentarians will react to this act of bad faith.

Supporter position on Slovenia’s “rights”

Between the lines, through the experts and opinion makers, the case is being built that Slovenia’s claims are unrealistic. That one should get it over with. Indeed a lot of Slovenians are fed up with the matter. Large part of the international community has also been convinced, that Slovenia cannot claim more than a line through the middle of the Gulf of Piran, as per international law.

Opponents position on Slovenia’s “rights”

They claim that Slovenia has good historic reasons to expect Croatia not to make problems with a very tiny fraction of their long coastline.

• the land border between Yugoslavian republics Croatia and Slovenia, drawn in the 1950s, did not follow ethnic lines of division. In that case the border would be on the river Mirna, giving Slovenia both coasts of Gulf of Piran and enough coastline for the 12 mile strip to have contact with high seas. Slovenia is not disputing this border though. Last thing we need is another Bosnia type mess.
• the land border between Yugoslavia and Italy after the 2nd world war was drawn in a way in which about the same number of Yugoslavs remained in Italy as Italians remained in Yugoslavia. However, it was only Slovenians that were left in Italy, and it was mostly Croatia that gained territory and coastline. In fact the part of the Adriatic that was purely inhabited by the Slovenes (between Trieste and Monfalcone) remained in Italy. To make matters worse, the communists “encouraged” Italians to leave their homes in Yugoslavia and move to Italy. This did not help in how Italy was treating the Slovenian minority there. It was very much unlike the Germans in South Tirol.

The opponents of the referendum rightly claim that these facts are not properly reflected in the proposed Agreement and will have zero impact on how the maritime border between Slovenia and Croatia are drawn. They also believe that it would be a proof of “good neighborly relations” if Croatia would acknowledge this.

Disclaimer: The author is presenting his personal views. He is sceptical about the Arbitration Agreement.

Here is a comparison of the tag clouds for the “Project Europe 2030” report of the Reflection Group on the Future of Europe and the Europe 2020 Strategy. In both cases words like “EU”, “Europe” etc. were deleted.

First Europe 2020 then Project Europe 2030:

Each morning, hundreds of planes are landing in Brussels airlifting the politicians, civil servants, researchers, businessmen to meetings in the capital. Since mid last week this airlift came to a standstill. Brussels Airport has been closed and access to Brussels limited to those that can take a train or car. While this could just work for the original EU6, the train is not an option for the EU27.

But we are well in the 21st century and when we privately need to talk to someone in a different time zone, we use the Internet; tools like Skype, Google Talk, Messenger or any of the other internet technologies that allow us to see and hear the person on the other end. Researchers use more elaborate collaboration tools such as Adobe Connect, Webinar or Webex or combine voice or text chat with collaborative text editing environments such as Google Docs.

None of that is possibe with the officials in the Comission, Council or the Parliament. The first thing I noticed when moving into my office in Justus Lipsius was how well it was firewalled. Skype, of course, did not work. Even secure web pages do not work, because any decent browser would complain that the firewalls are trying to cheat with certificates. The culture of on-line collaboration with the officials is therefore non existent. Pity, because an on-line meeting with screen sharing and collaborative document editing can be more productive that a real meeting.

Here’s what should be done:

• the Great Firewall of the Union should be opened so that at least one free “few to few” real time voice and video conferencing tool would be available. Skype, as a European invention, would be a natural candidate. This would create a culture of real time collaboration among civil servants in Brussels. It would also create pressure on the national bureaucracies to do the same.
• a fraction of the money that the airlines will be requesting from Brussels to offset the “natural disaster” should be diverted into a buildup of in-house, secure video conferencing and screen sharing facilities. This should be IP based so that not special equipment or software purchase would be need by the participants. Like Adobe Connect. A high end system that could be used on a ministerial level should be set up as well.
• the European council should lead by example, holding some of its meetings on-line.

People that fly to Brussels in the morning typically have to wake up between 4 and 5AM to catch a flight to a meeting starting between 9 and 10 around Schumann. They bring their sleep deprived grumpiness to the tables of European decision making and all they can look forward to are the incredible queues at the Brussels airport security controls in the evening.

Massive replacement of person-person meetings with videoconferencing could also result in a happier European politics.

We know it as a platform where:

• website or other on-line source (any web site or media store like iTunes),
• media (e.g. MP3),
• local software or client (e.g. Media Player) and
• device (PC, Mac, Phone, Flash Drive, Netbook …)

are not coupled with each other. Many competing companies are providing products or services for each of the components.

This open model resulted in huge innovation over the last two decades, and spawned a lot of competition in creating the websites, media formats, software and the devices, driving the price down and quality up. All this possibly at the expense of the content providers who have huge problems protecting their content, because, to be universally playable, all parts of the system need to be well documented and interoperable, with any kind of security and copy protection clumsily pasted on top of it all.

Apple Closing the Web?

Kindle, Nook and much of the Apple Store stuff signal a possible end of this model. But with music and videos is it a lot like putting the ghost back into the bottle. Any device can play an .mp3 and any website can sell it. Not to mention the P2P networks.

The last major media area where the digital has not taken over the material are newspapers and magazines. So if one could make a closely linked system between a website, a device, its software and the media format, one could offer something very special to the content owners: reliability that people will pay for content and that they will not be able to copy it. And that is worth trillions! Rumors are that Apple is doing just that:

The press will be the killer app for the device, but if the people had their wallets out, they will try to sell any other digital stuff as well.

Turning the tables

On the short run at least, this closed model is good for the content authors. Quite likely a lot of quality content will be exclusive to this device. It offers a sustainable business model, contrary to the advertising model (the Google model) which is not. Why? With the economy increasingly digital, advertising material stuff to support digital content will eventually bite its tail. More and more of the digital will have to be supported with ads for less and less material.

But the closed system can be disastrous for innovation everywhere else in the chain, and disastrous for the richness of the content that we read. We have seen Apple censoring the content of its on-line store. Asking a single company for an opportunity to distribute information is open society’s the worst nightmare. It will not be one US company indexing all (European) content, it will be a company deciding what (European) content can be available on-line.

(There is little incentive for those devices to offer access to free content. It would be like selling printers who could use free ink. But surprise me.)

Need for functional separation

Therefore, the regulators will have to look at this very carefully. In the chain of digital content production, distribution and consumption we will need what was called “functional separation of telecoms”. The latter is irrelevant today. But breaking links between Amazon and its reader, Barnes Nobe and its reader, iWhatever and Apple Store and iTunes … will be essential.

Awarding president Obama the Nobel Prize for peace shows how desperate the West is for leadership out of the economic, social and environmental crisis; for leadership in the times when it is worried about its decline. It demonstrates how clueless it is about matters of the future. Instead, the bubbly economy and the virtual media society could use a reminder that deeds, not words matter.

The news about Obama’s Nobel was broken to me on Friday morning via Twitter. In deep mistrust I followed the link to a page which looked quite professional, and had a link to a video from a news conference; live from Oslo, it said. An elderly man in a small room with a couple of reporters. Could be a hoax. Well done. But not impossible, given the trick they tried to pull.

Then the news started to come in from major agencies and news sites but I still could not believe it. With all due respect to the energy, passion and hope that president Obama brought into the global politics, where was the achievement worthy of a Nobel Prize? What was the deliverable? What was the results? Its impact? Some winners at least signed a peace of paper or made a good movie.

They do not give Oscars for promises of good movies or Nobel prize for physics for a promise of good research. Even president Obama’s supporters thought the award was premature. “If president Obama was half the man he made us think he is, he would have turned Nobel down” best captures my first reaction. Surely, president Obama we respect and indeed place a lot of hope into, cannot accept a prize given not for achievement, but for, apparently, good will, hope, and promises.

But there is an area of human endeavor that rewards promises.

Lately it has kept us very busy. It’s called economy. Money could be made if one is able to convince other people about the promises on good future returns. The belief in the promises is inflating the bubbles, and the reward for this bubble building, for many, have been some quite good profits. At least before the crisis when the bubbles burst. It must have been this spirit of living on the future hopes that has guided not only the bankrupt economy, but the Nobel Committee as well.

There are deep theories as to why bubbles keep appearing in the business cycles, but to make a complicated story short, bubbles are inflated because people see no better real alternative into which they would invest for the future. In the absence of investment opportunities into new products or services they invest in existing stock or real estate which is therefore getting more and more expensive. This hurts the economy, because the money poured into the bubbles is not used for other, perhaps on the long run more sensible investments.

Is there a parallel with the bubbles in economy and the Nobel Prize of Obama?

Yes there is. And it does not show a nice picture. Not of president Obama, but of the Nobel Committee and the society the committee is a part of. Nobel Prize for Obama is not so much a problem of a president that has yet to show results, it is a problem of a civilization, of the West, of Europe part of which is Norway, that lacks ideas and seeks a magic bullet to solve its mounting problems.

In choosing, that president Obama is the silver bullet, it is demonstrating a lack of self respect and total lack of confidence that the political, business and economic leaders in the West can sort out the economic, social, political and environmental mess in which we are. We invest our hopes in president Obama, because apparently we do not see any other investment opportunity. What makes matters worse is that Nobel Prize for Peace need not be about hope at all. The committee went an extra mile to make it that.

Bubbles burst, and bubbles of hope burst as well. There are no silver bullets, bubble economy is not sustainable and on the long run it is hard work and hard work alone that pays. We have plenty of hard work to do, from cleaning the environment down to improving social care for people. These are real problems that require real solutions, not good looking web-pages, blogs and nice speeches.

In our digital times, where the reflection on the internet is more important than the reality it reflects, where the image carries more weight than the real thing, and where a promise may be a substitute for delivery, the message of the Nobel Committee could not be more off the mark. This bubbly economy and this virtual media society could use a reminder that deeds, not words matter.

In the summer of 2008, when the fuel prices were at their highest, I published an op-ed in the European Voice. I supported the idea that president Sarkozy had at the time, namely, to reduce the VAT and excise duties on petrol, to make it cheaper. The argument was that if the CO2 is indeed the enemy then it should have a price, and this price needs to be the same regardless if CO2 is emitted by a car, a powerplant or a production of a steak.

In January on this blog I criticized the idea of NASA’s Jim Hanson to tax carbon at the port of entry. Not only it would create trade wars and will be seen as an excuse for protectionism, it will make the economies of countries with such tax less competitive to economies without the tax. Exactly the same is the problem with carbon caps and emission trading schemes. Carbon intensive industries are “leaked” to countries where such measures do not exist.

Today I am reading about president Sarkozy’s proposal for a carbon tax. This is a step in the right direction, in particular if the taxation will indeed be the same for all sources of CO2. One wonders, for example, why an additional tax on vehicle fuels that already are heavily taxed. But this can be improved in the process.

The beauty of a properly constructed carbon tax is manyfold:

1. It would save the planet and fight climate change. Cleaner would be cheaper. It would shift investment into cleaner industries and jobs, into energy efficiency. Because of a single price of carbon, the market will pick technological winners and loosers. Because it will be a tax on consumer goods, there would be no such thing as carbon leakage. Those that buy energy intensive stuff will suffer. Regardless if the product is French or Chinese.
2. It would save the budgets and reduce taxation of work and capital. Crisis is causing unemployment and lower taxation of work would make the workforce cheaper. And we will need capital to get the economy going again. It would help pay for the excessive government spending during the financial crisis.
3. It would save the market economy and welfare state. As Prof. Mario Monti wrote “To achieve their social objectives, governments must be able to use their budgets effectively or they will abuse the market.” To put it in other words, because some governments create very good tax environments, others would rig the markets or prevent competition, so that businesses from low tax enviromnets would not have the advantage over others. A consumer-end carbon tax would have to be quite uniform across the EU (like VAT is), otherwise consumers would shop for products where they are not carbon-taxed. Carbon tax would create a level of tax harmonization that would strengthen the tax sovereignty of all governments. There would be no carbon tax havens.

Carbon tax is a solution to many of the main problems of today. Because of its contribution to fighting climate change it comes from a moral high ground and carries the sense of urgency a new tax needs to fly with the voters. Besides, it would only make sense if Brussels would do the ugly job of directing it to member states.

Yes, it is a tax, and most will hate it for that, but it is fairer than just about any other tax. You live dirty, you pay! And the repayment of those deficits will have to come from somewhere. So it better come from where it can do more good than its moneys worth

July 20 1969 is one of those dates that many of us remember. I was 7 then. We had a black and white TV with a cherry wood casing and yellowish buttons and dials. There was only one TV channel and most of the time it was airing not Slovenian but Yugoslav programs. However, TV Ljubljana was perhaps the only TV station from behind the iron curtain that had a live transmission of the moon landing. One of the commentators was an engineer, a colleague of my father, otherwise specializing in geology and earthquakes.

Yes, it was a big step for mankind. Are we still making steps or do we prefer sitting in the pub?

In June I visited the Smithsonian in Washington DC. Hollywood has this ability to show space travel, rockets, and shiny equipment as if they were out of this world. But in a museum you see the real stuff. A computer that has less capacity than the processor in my microwave. The knobs, the buttons, the wiring, the clothing and zippers, primitive even compered to my skiing outfit. It all looks so fragile and this makes the endeavor of NASA and the astronauts all that much grander. It was far from a sure thing. It was a gamble. But a controlled, engineering gamble where the odds were a matter of calculation. Done with a slide rules and gut feeling not by googling on MacBooks.

I felt the same when seeing the replica of Santa Maria a few years back. It is not a ship. It is, by today’s standards, a boat. But humanity dared to venture into the unknown with that. Had they asked Sancho Pansa then, I’m sure he would have opted for more farm subsidies, cheaper wine and better chairs at the local pub, instead of shipbuilding.

Today we do not get transmissions from the moon. If there was one, it would be competing with some 100 other TV channels and a zillion clips on YouTube that would make even the Brüno movie an example of decency, good taste and intelligent humor. What would our kids watch? I would not bet on the moon. They might follow it on Twitter, together with what cereal Judy had for breakfast.

And we, adults, are not reaching for the moon anymore either. Yes, we need to eradicate poverty, provide a good school to everyone and an opportunity to find a job or create a business. But is it really the only political priority that everyone has beer and sausage, soccer game and a week in Mallorca?

In the recent months I am listening to the discussions on the follow up to the Lisbon Strategy. Which was fairly benign and unambitious to begin with. If there was any reaching for the stars, it would quickly be taken with a large dose of good old Brussels cynicism. It would say “Europe, the most … whatever … in the world”, but not take it seriously. And the debates today are how to make it even more … well … close to the citizen and such that would not stick in anyone’s throat. Close to that citizen, that is in love with Michael Jackson and Lady Di. That citizen, that may still give us votes if we would use the word “sustainable” or “modern” but would punish the term “structural reform”.

What happened to the idea, that politics should lead the public opinion, and not vice-versa. Why do we have citizens and voters like that? What happened to addressing issues and problems head-on? Did we do a mistake down the road? I wish we could change the way politics can be done in Brussels. That a would-be barroso would stand up and say:

“Ladies and gentlemen we hava a crisis at hand, and some bumpy road in the decades ahead of us. There is no time to waste. We can’t live on 20th century savings and 19th century delusions of grandness. We need change. We need reform. Deep. Painful at first. Yes, you heard me right, structural reform. And a third industrial revolution. Not in order to be able to provide beer and sausages for everyone, but for Europe that gave birth to Columbus, von Braun, Shakespeare, Tesla and Eiffel to be great again. Europe, not this or that member state. Medicines in my reform proposal are not pleasant, but hey, lets make use of the fact that I do not have to be elected by the citizens. I can be the bad guy. I can do the right thing, not what the fans of Michael Jackson and Lady Di would love me for. If you want me for the job, appoint me now. Or I’m out of here! There is work to be done.”

I guess a guy like that would get a few raised eyebrows. A silent pause. Then they someone would say in a loud voice:

NEXT!

France passed a law on digital piracy. FT reports:

Internet users who download films and music without paying for them would get three warnings before being cut off for up to a year. Until now action against illegal file sharing has been a matter for the French courts.

The debate in Europe is not if Internet piracy is legal or not, but whether we uphold the rule of law and make sure that a court has to decide to block a person off the internet, or this can be done by some other authority. Imagine that the highway toll collectors could ban people from using the highways if they though they are transporting fake Gucci bags:

Lawyers say France’s move to cut the courts out of the issue of internet access may contravene the European Convention of Human Rights and could spark conflict with Brussels. Long awaited reform of EU telecoms regulation has been held up by disagreements over whether the courts should be involved.

The bigger issue at stake here is are courts fit for the speed of the digital economy? The French obviously are not. And they are no exception. But the solution to circumvent them goes against more importnat principles of human rights and the rule of law. Besides, it would not hurt the economy if the courts would be more efficient on other matters as well.

Speaking of Global Governance and ideas on how new financial regulation will make future crises impossible, a quote from the movie “Other People’s Money” comes to mind:

Kate Sullivan: Someday, we’ll smarten up, change some laws, and put you out of business.

Lawrence Garfield: You can change all the laws you want. You can’t stop the game. I’ll still be here. I adapt.

The world is in a transition from industrial and information economy into conceptual economy. Value is in meaning, not in function. The resource of this economy are talents. They are empowered by information and communication technologies. The game is how to make use of all this talent.

Businesses do open innovation, governments should do open government. It does not end with transparency, it is about how decision-making in a society would rely on as many good brains as possible. You do this by (a) letting people, individuals, not governments decide and (b) when government has to make decisions, it should do it in an open way - provide a platform for reaching decisions and agreements among stakegolders.

Governments must take steps to support this conceptual economy. They should (a) create, attract, retain and empower talent, (b) provide technical infrastructure (internet for all) such that does not stifle innovation and competition and (c) think what kind of intellectual property rights would be most appropriate in an economy that is increasingly de-materialized.

This is a brief summary of a talk I gave yesterday at the European Internet Foundation. Speaking notes are attached.