By Robert Lyle
Washington, March 12
(RFE/RL)
A dramatic shift in the makeup of the world�s population is looming in the not-too-distant future and it will have an impact that could make it the transcendent political and economic issue of the 21st century.
The change is the aging of the populations in all of the developed and many of the developing nations of the world. The United Nations, the World Bank, the Population Research Institute, and many more say it will be the most significant demographic shift in history.
It will see those over 65 years of age, who historically made up no more than 2-3 percent of the total population and who now amount to about 14 percent of today�s developed world, becoming 25-30 percent of the population within another 30 years.
Where only one person in every 40 was over 65 at the time of Julius Caesar and even Thomas Jefferson, current generations will see the elderly become one in every four or even one in three people.
The effects of this shift could bankrupt the richest nations, transform cultures, turn political systems upside-down, and switch the division between rich and poor nations into a battle between the old and the young.
In the following three stories, RFE/RL�s economics correspondent in Washington looks at the problem itself and what some are already doing to deal with it:
A Wake-Up Call On The Demographic Future
Describing global aging as an as-yet-unseen iceberg which lies dead-ahead, on a collision course with the major economies of the world, Peter Peterson says national leaders everywhere need to wake up to the fact that this demographic shift cannot be avoided. It is inevitable:
�The iceberg essentially is the fact that the number of elderly, due to a wonderful blessing called increased longevity, and a baby boom that followed the second world war in many countries, are already born and they can be counted.�
Peterson, a former U.S. Commerce Secretary who now chairs the Blackstone Group, a leading New York investment bank, as well as the Council on Foreign Relations and the Institute for International Economics, is most concerned about the economic impact of hitting this iceberg.
In his new book �Gray Dawn,� Peterson says that to be able to pay promised pensions to this bulging post-65 population over the next 30 years, government�s would have to spend an extra nine to 16 percent of their GDP (gross domestic product) annually simply to fulfill old-age benefit promises. They would have to increase payroll taxes by 25 to 40 percent, an impossible burden, says Peterson, where such taxes already run as high as 40 percent in some European countries:
�However you measure the costs, they are unsustainable. I looked at it in terms of the unfunded liabilities, by which we mean the benefits that have been earned but for which nothing has been saved. Those numbers for the developed world including health care, are a stunning 70 trillion dollars or so, which would be many times the public debt of the countries.�
In Germany, Peterson says pension costs are projected to rise from 11 to nearly 17 percent of GDP, in Italy, from 13 percent of GDP to over 20 percent. Peterson says that pension benefits alone owed to future generations amount to between 100 and 250 percent of GDP of the developed world.
Making the aging population even heavier is the fact that birth rates in most developed nations have fallen to record lows. Italy has the lowest rate in the world at 1.2 children per woman�s lifetime (it�s less than one in many parts of Italy), but the nations of Central and Eastern Europe are no better � the Czech Republic, Romania and Bulgaria are also at 1.2, Latvia, Estonia, Slovenia and Russia at 1.3 and Ukraine is at 1.4.
In fact, says the United Nations, of the 23 nations in the world with fertility rates beneath 1.5, 20 are in Central and East Europe. That means, according to the OECD (Organization for Economic Cooperation and Development), that while in 1960 there were 6.8 workers to support each retiree, by the year 2030, that ratio will drop to just 2.5 workers for every elderly retiree.
�Birth rates have fallen so dramatically, particularly in Europe, we�re going to be confronting a totally new situation in the work force, which is a rapidly shrinking work force. For example, in Japan, between the years 2000 and 2010, based on people that are now born, they�re going to experience a 25 percent drop in their workforce under the age of 30.�
By way of contrast, the picture is the exact opposite in the Middle East, Central Asia and Africa, notes Peterson, where fertility rates are the highest in the world � just over 5 children per woman�s lifetime � while life expectancy is among the lowest � 60 years in Kazakhstan and Iraq, under 50 south of the Sahara. In the year 2030, for example, Peterson says that while half the Italian population will be over age 52, half of the Iraqi population will be under 25. The political implications of that difference are very large indeed for the world, says Peterson.
Italy may be the first to reach a senior population of 18.5 percent in three years, but the rest of Europe and the major industrial nations will not be far behind.
That means, says Peterson, that governments must deal quickly with the pension and retirement systems which will be unsustainable and will sooner or later grind to a halt:
�It�s going to have to stop and the question is under what circumstances. Are we going to reform these programs on a timely and I think humane basis or are we going to wait until there�s some kind of huge financial crisis where we actually hit the iceberg. And then I think the effects of that would be quite Draconian, because there are millions and millions of elderly who depend on these programs in their retirement years.�
The proof of this danger is shown clearly in the nations in transition in Central and Eastern Europe and Central Asia, says Peterson. The old communist system tried to meet the aging challenge head on and failed, he says. They promised universal public retirement systems with pay-as-you-go financing, generous benefits, early retirement, lax disability standards and plunging fertility rates, but without the economic growth necessary to keep them solvent.
�In America, about half of the workers in America are on company pensions and those programs are very largely funded and they�re set aside. But in these (former) communist countries, the retirement programs of the employees are as unfunded as the public retirement programs. So you have a kind of double whammy on there.�
Peterson says the choices in most of the nations of the world are clear but not very appealing � raise the age of retirement, lower benefits, increase immigration, boost birth rates or a combination of all of these. The easiest choice is to greatly increase private savings, to make people themselves responsible for some of their retirement income:
�But life is a choice of alternatives and at some point our democracies have to confront the fact that if the taxes we�re talking about are unthinkable and the financing of them is unthinking, we have to confront the fact that these programs have to stop. I hope we don�t feel that the only way we can approach this problem is to hit the iceberg.�
Alternatives to hitting the iceberg are now being discussed.
Almaty, (THE GLOBE)
The biblical story acted out over and over in Israeli�s relations with the rest of the world is the story of the boy David who defied the giant Goliath, and last week in a new stage of the battle over Jerusalem Israel took on the role of David against not only its Arab neighbors but the European Community and the United States.
The latest battle was precipitated in February when European Union ambassadors insisted on meeting with Palestinians in East Jerusalem at the PLO�s Orient House. Israel captured that territory in the 1967 Middle East War, but the Palestinians insist it should be the capital of a new Palestinian state. The refusal of EU ambassadors to cancel their meeting was followed by a statement telling Israel that Jerusalem and East Jerusalem are separate entities.
IS IT POLITICS BY NETANYAHU OR AN ISRAELI
CONCENSUS?
Some observers say that Benjamin Netanjahu has pushed the issue into the spotlight to bolster his re-election chances in May. �When Israel is under attack, when it is criticized by Europe, the U.S., there�s this general sentiment of rallying around the flag,� said Israeli political analyst Chami Shalev according to CNN reports.
The Israeli cabinet responded to the EU view of Jerusalem with a declaration that Jerusalem �will remain forever under the sole sovereignty of the state of Israel. . . . The position that Jerusalem is a (separate entity) is ... totally unacceptable to Israel.�
The Israeli embassy in Almaty has issued a report on the status of Jerusalem to counter any idea that Israelis themselves are divided on the question of the city�s fate.
THE HEART OF THE JEWISH PEOPLE
The foreign service document supports the Israeli government�s determination to hold on to �the centre of Jewish consciousness for over three thousand years�No other city has played such a predominant role in the history, culture, and religion of a people as has Jerusalem for the Jews.�
To dispel any illusions of divisions in Israeli society, the authors repeatedly stress that there has always been a national consensus in Israel on the status of Jerusalem. �The heart of the Jewish people� will endure for eternity.� The report says �Spiritually and politically, Jerusalem was, is and always will be the capital of the Jewish people.�
However, some of the strongest language is, not surprisingly, saved for questions regarding the possibility of granting jurisdiction of part of the city to the Palestinians. The authors emphatically deny that there is any basis in international law to divide the city. The status of Corpus Separatum (separate entity) for the city, originally proposed by the UN General Assembly in 1947, �was a non-binding proposal, which never materialized�(and became) irrelevant when the Arabs rejected the UN Resolution and invaded the fledging State of Israel.�
ISRAELI POSITION PUTS ARAFAT IN A
POLITICAL MINE FIELD
Meanwhile, the Palestinian Liberation Organization (PLO) has reconfirmed its intention to declare a Palestinian state on may 4, just two weeks before the Israeli election. That date will mark the end of the five-year period of autonomy set out in the Oslo accords. Signed by Israel in 1993, the accords provide for negotiations on final status of West Bank and Gaza Strip
Palestinian leaders have become increasingly frustrated by the lack of progress in the talks and blame Israeli intransigence. The PLO views the declaration as an important lever to get the talks back on track.
Palestinians also fear that backing down from their threat would help hard line Prime Minister Benjamin Netanyahu in the upcoming elections by giving credibility to his counter-threats. Netanyahu has repeatedly warned that the unilateral declaration of statehood is unacceptable and would void Israeli obligations under the Oslo accords.
Fearing for the consequences for the peace process, Europe and the United States continue to urge Palestinian leader Yasser Arafat to delay the declaration. However, the political costs at home of such a policy reversal would be difficult to swallow for the already battered politician.
CONCLUSION:
Tension is again rising in Middle East, as the Oslo peace accords approach their deadline. Both sides remain firm and far apart in their positions and the answers are unclear. What is clear that until some kind of compromise is reached, there will be no settlement and no lasting peace.
BERLIN, March 23 (AFP)
Berlin, for decades a divided showcase of free enterprise and of the �superiority of communism�, moves back center stage this week when EU leaders gather in Germany�s historic capital to decide on the future of the European Union.
The special EU summit Wednesday and Thursday, called to agree on a new financing package for the bloc for 2000-2006, will be a curtainraiser of sorts for the move to Berlin of the German parliament and government later this year.
Hosted by Chancellor Gerhard Schroeder, the European Union meeting will be a first for Berlin, long shunned by international organizations as a highly sensitive place in the East-West power struggle.
For nearly 40 years Moscow nixed West Berlin � an �island� inside the communist east under British, French and US control heavily subsidized by West Germany � as a venue, so it not cast a cloud over East Berlin, the capital of the Soviet Union�s closest ally.
Today, the city, population 3.4 million, is undergoing a dramatic facelift as Germany�s political center is shifting 600 kilometers (400 miles) to the east with the opening of the historic parliament building, the Reichstag, scheduled for April 19.
The building spree and renovation of existing buildings to make the city fit for its new political role � after a 41-year interlude when Bonn was officially named temporary capital � comes at costs of about 20 billion marks (10 billion euros, 11 billion dollars).
Government offices are to move into renovated structures, some once the seat of Nazi ministries, which were built when the city was also the capital of Prussia, Germany�s largest state until it was disbanded in 1947, two years after the end of World War II.
Other offices are still under construction, like the new chancellery, Schroeder�s future office, which faces the historic parliament, now seat of the Bundestag.
The neo-Renaissance Reichstag, which was renovated by British architect Norman Foster and crowned with a new walk-in dome, is to be one of the two power centers in the new Germany.
Its restored splendor on the former borderline between East and West Berlin dramatically symbolizes refound unity, 10 years after the collapse of one of Europe�s most hardline communist regimes.
Unlike Bonn a city with a past, where wars and the Holocaust were decided and an intellectual and artistic elite, many Jews, left an indelible mark in the Roaring Twenties, Berlin � and Germany � are now facing the challenge of proving those wrong who are looking for signs that things could go awry once again.
As the united country is set to celebrate the 50th anniversary of the creation of a democratic West Germany, questions are being raised whether the move from the Rhine to the Spree river will also change the substance of Europe�s economic giant.
West Germany�s capital Bonn sat in the economic heartland of the European Union, inside a booming crescent running from southern England to northern Italy.
But while once centrally located in Germany, Berlin suffered after World War II, and to this day, from its position far away from political and business leaders in Frankfurt, Munich and Hamburg as well as in Brussels, London, Paris or Milan.
If you have not left West Berlin by the age of 40, you will never make it, the ambitious said when the city was still divided and the many company headquarters � Siemens, the central Reichs- (Bundes)bank and Deutsche Bank to name but a few � had long left and moved to �safe� West Germany.
But with only 70 kilometers (45 miles) from the Polish border, Berlin could become the EU�s gateway to eastern Europe if this week�s summit meeting agrees on the Agenda 2000 reform package that is to open the path to memberships of former communist countries.
�Berlin is the only place where one can live in the West without leaving the East,� said Volker Hassemer, a former member of Berlin�s city government.
If and when Poland, the Czech Republic and other central and eastern European countries join the European Union after 2000, Berlin will no longer be the eastern outpost of a western bloc but a new center in a redesigned EU, and one of the cities where European policy can be made.
All Over the Globe is published by IPA House.
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