Underlying Problems in the Newest China-U.S. Steel Dispute

On October 30, 2009, the U.S International Trade Commission decided to open an anti-dumping and countervailing investigation into Chinese seamless steel pipes referred to generally as Oil Country Tubular Goods (OCTG). They are mainly used for oil drilling.

A few days ago, the Commission decided to slap Chinese steel-pipes exporters with tariffs ranging between 10.36% and 15.78%. An additional 96% tariff rise may be on the horizon in the spring.

The complaint, brought forward by 7 American OCTG producers and the United Steelworkers (USW) - a very powerful labour union - was not the first time the U.S. steel industry got its way. In 2002, the George W. Bush administration, under political pressure from Congress, imposed a 30% tariff on steel imports from major European and Asian partners (although it was lifted the next year.)

This case itself is, on the surface, a typical trade dispute.

The USW and the producers allege that Chinese producers benefit from massive government subsidies and dumping margins ranging from 40 to 90 percent. According to the USW, the increase in Chinese imports of steel pipes are made worse by the global recession that increased the impact on jobs in the steel and pipe manufacturing sector. USW president, Leo Gerard, claims that 2,400 jobs have been lost as a result since the beginning of 2009. Considering the OCTG industry employs roughly 6000 workers, this represents about 40% of jobs, a sizable figure indeed.

The Chinese, for their part, blame the loss of jobs on external factors they claim are totally out of their control. Daniel Porter, a lawyer representing the Chinese steel exporters, said the U.S. OCTG industry was hurt by a boom-and-bust cycle that resulted when the price of oil soared to about $140 a barrel in the summer of 2008, only to drop below $50 less than a year later. Higher oil prices spurred more drilling, which caused oil companies to order more of the pipes. Those orders dried up when prices fell, causing a drop in demand for steel pipes. Which "has nothing to do with imports”according to Porter.

But under the surface, this seemingly minor trade irritant may be a harbinger of bigger problems to come as a result of the massive structural problems in both economies.

On the U.S. side, the debt burden is clearly unsustainable, and there is no doubt that for the economy to recover sustainably, it will have to produce more than it consumes. This means exporting more than it imports which would reduce the current account deficit. In this light, it seems like a sensible strategy to curb Chinese imports taking jobs and market share away from U.S. workers and firms (Paul Krugman estimates 1.4 million jobs lost to Chinese mercantilist policies.) But what if the U.S. is protecting the wrong industry? What if its comparative advantage in steel and steel-byproducts production, is no longer there? This report by Howard F. Rosen reveals just that. The U.S. should be focusing on restructuring its economic machine towards goods and services it can export as a result of its competitive advantage, not defending an industry that is no longer competitive - textbook 101 economics and the therapy U.S. trade officials and economists have been preaching to the world for decades.

On the Chinese side, the problem is one of excess capacity created by the same mercantilist policies that are hurting other economies. A devalued currency in combination with inefficient state-owned and/or heavily subsidized exporting firms are causing more to be produced than can be sold on world markets. This means that should Western markets (especially the U.S.) further cut-back on Chinese imports in a bid to recalibrate their fiscal and trade balances - which they will inevitably have to do - Chinese exporters would be in even more trouble. These firms would inevitably have to shut down and lay off workers - not something China's rulers want to see. All the more reason for China to commit to creating a domestic market base at a faster rate, which will only come when the average Chinese consumer begins to save less and spend more.

(photo from Technosoft Resources)

Snacks for Thought: December 23, 2009

1. Is Russia the answer to a rejuvenated West?
2. Turkey's increasing presence in the Middle East: neo-Ottomanism or neoliberal engagement?
3. Syria's economy coming in from the cold
4. Getting the Chinese consumers to compete with their American counterpart will take some time

Winds of change in the Middle East

Read and reflect on this interesting analysis by a former British Intelligence Agent on the shifting geopolitics of the Middle East. What this will mean for the Israeli-Arab 'peace process'(if that expression can still be uttered with a serious face), Western policies in the region, the involvement of non-Western rising powers such as China, Russia, Brazil and India, and the future of inter-Arab politics, is still up in the air at this point.

But perhaps the most important question for me when I read the piece is whether it is analytically honest and correct to speak of a 'northern' vs. 'southern' paradigm in the region? I'm going to think about this myself for a bit longer.

Either way when Condoliza Rice spoke of a 'New Middle East', I doubt she was referring to whatever is starting to take shape now.

GA on hold for a bit

Fellow readers, as you have surely noticed blogging has slowed to a grind in the past few months. Rest assured that blogging activity will return to normal in a few weeks. Blogs will be sporadic and few-and-far-between until then.

What happened to Obama's pragmatism?

The fact that a president with an unprecedented level of support, both nationally and internationally, takes charge of America's highest public office is no guarantee for a successful presidency.

I for one, have nothing but admiration for Obama the Man, but whether Obama the President can live up to the expectations thrust upon his shoulders by the superstar aura that so naturally comes to him is another question altogether.

Now I am by far not the first, nor even the millionth, to be bringing up the 'expectations vs results' dilemma. The more expectations you have to succeed, the more pressure is on you to demonstrable concrete results. And this usually means that your adversaries are all the more determined to see you fail.

This is all the more reason to question Obama's decision to bring up the military's controversial Don't Ask Don't Tell Policy regarding gays and lesbians. I have nothing against supporting gay rights, but as one of Obama's supporters, I want to see him succeed.

When the President is facing such a difficult environment at home (see economic crisis and health reform), complex problem abroad (see a stalled Middle East Peace Process, the continuing saga of the Iranian nuclear crisis, and a deteriorating situation in Afghanistan), and when the Right is fighting tooth-and-nail to delegitimize him, the last thing he should want to do is create opportunities for his adversaries to unite around.

It could very well be that Obama and his team have come out in favour of rescinding the Don't Ask Don't Tell Policy for exactly this reason: to rally liberals and progressives at a time when the right is increasingly vocal and unwilling to compromise. But for a president who approaches governing from a centrist philosophy of pragmatism, it would not change the fact that Obama already has much on his plate to chew, and adding another controversial issue on his convoluted policy agenda simply doesn't seem very 'pragmatic' at this point in time.

(Photo from AP)

Guerrilla diplomacy in an increasingly complex international system

To start off, my apologies for the low blogging activity lately, I am absolutely swamped with work and with academic requirements.

Nonetheless, I would like to turn your attention to Daryl Copeland, a most interesting diplomat/scholar. I encourage you to get a hold of his new book 'Guerrilla Diplomacy: Rethinking International Relations', or read some reviews.

I attended one of his talks today at the University of Ottawa. He was quite engaging and offered some fresh insights into the state of the diplomatic discipline.

Well, he essentially echoed what many of us 'non-diplomats' already suspected - diplomacy is hurting, and its hurting real bad. As he puts it, "diplomacy does not have a very good reputation today" because not only is the practice seen by many as ineffectual in an increasingly militarized international policy setting, but diplomats themselves no longer understand what diplomacy really is.

In his opinion, the only hope for saving this ailing profession is to radically overhaul the current diplomatic business model and more creatively using the diplomatic resources at our disposal. The Guerrilla Diplomat is his answer. Read here to find out what he's talking about.

The end of GDP? Not quite but lets reconsider

Joseph Stiglitz has an interesting piece regarding the effectiveness of our current GDP-heavy economic measurement approach to public policy. But Stiglitz is not implying the 'end of GDP' as a crucial measure for public policy - at least I hope he's not. As he says after all:

'The fact that GDP may be a poor measure of well-being, or even of market activity, has, of course, long been recognized.'

And we still use the measure because it does reveal crucial data about the state, structure and direction of an economy (when measured correctly.)

What he is getting at is that over-reliance on GDP-based public policy will cause more problems as the fundamental structures of the global economy continue to change, and as the ramifications of economic growth are increasingly felt on the environment and other areas of our lives.

As he puts it:

'If we have poor measures, what we strive to do (say, increase GDP) may actually contribute to a worsening of living standards. We may also be confronted with false choices, seeing trade-offs between output and environmental protection that don’t exist. '

which causes conflict when,

'political leaders are told to maximize it, but citizens also demand that attention be paid to enhancing security, reducing air, water, and noise pollution, and so forth – all of which might lower GDP growth.'

Well these tensions are only going to become more pronounced as capital, labour, technology and ideas increasingly escape the control of state sovereignty in a globalizing world.

In this respect, improving our measurement approaches to public policy is a great start to be sure, but I feel that the number-one priority should be for states and stakeholders to come together through formal and informal mechanisms to 'talk' and craft shared visions for public policy issues on a more global level.

The debate is a very complex one to be sure. But to me, if public policy in the 'hyperconnected' 21st century is going to meet the global challenges that confront us, it seems almost imperative that global governance mechanisms would be the most logical and effective means to bring about real and sustainable advances in socio-economic wellbeing.

But i'll stop here since I feel I am now pushing the debate beyond what Mr. Stiglitz intended.

Putin's indirect advice to Obama

Prime Minister Putin, of Russia, isn't happy with the competitiveness of Russia's industrial sector. So he simply opts to 'tell' engineers and business-leaders to be more productive. The man certainly has a right to demand that government payouts are used wisely to spur efficiency, innovation and quality products.

Putin is pulling the name-and-shame trick out of his magician's hat.

But while Mr. Putin is at it, he could also just 'tell' Russians to start having more babies, considering Russia's declining demographics and the threat this poses for the country's economic prospects.

Maybe Obama should do the same thing and just 'tell' the American automakers to improve their competitiveness, and scold the healthcare sector into becoming more efficient and freeing-up money for his reform agenda.

See how simple things are on the other side of the world, why do American's have to make everything so complicated?

Snacks for Thought: August 31, 2009

Snacks for thought presents thought provoking news, analysis and debates from around cyberspace.

1. Do private schools ultimately harm a society's educational system?
2. Three possible scenarios for global geopolitics after the economic crisis.
3. China's not-so-subtle message to India.
4. The dark side of Dubai.
5. Israeli saber-rattling against Iran and its history of unilateral military actions.

New article on American Foreign Policy

Hey everyone, I encourage you to check out my new article published today by The Atlantic Community.

Knowledge and its discontents in the Islamic World

Al Jazeera's Arabic language satellite feed featured an interesting debate the other day. A talk show, called al-Itijah al-Mouaakes (Cross Current), features opposite and competing arguments to issues of interest to Arabs and the Middle Eastern region in general. The theme of this particular show was 'public sex education' - a controversial topic in the culturally and religiously conservative region.

The point that struck me was not the debate on the topic itself (although interesting to be sure), but how fast the conversation shifted from whether public sex education was a good or bad thing, to a heated argument on the merits of the sources used to understand human sexuality in the first place.

The debaters were as far apart in their opinions as they were in their backgrounds and qualifications. One was a religious professor at Egypt's famed Al-Azhar University - widely regarded as the heart of Islamic learning in the world; the other a secular Egyptian intellectual and medical researcher.

The Islamic scholar argued that Islamic texts, traditions, and culture, provided ample answers to the modern problems and questions of human sexuality required to ensure the healthy, and above all, "moral" preservation of society. The secular researcher would have none of it, and fervently defended his position: secular knowledge has evolved in the past centuries to tackle complex issues and problems about the world we live in that traditional sources of knowledge could no longer adequately answer - sexology was a byproduct of this phenomenon and should be embraced, not rejected.

The show ended with both debaters no closer - and by all accounts, even farther - from reaching a concensus than when they had started. But what is the relevance of this story?

For me, the debate was reflective of the overall struggle for knowledge, and power, existing between two social groups in the Middle East. Claiming authoritative knowledge determines who does the research, for what aims, and how it is interpreted and ultimatelly applied. Secularists will continue to deny the legitimacy of many traditional sources of knowledge to answer modern problems of the social world we live in. Traditionalists will relentlessly accuse secular knowledge to be innaplicable to Islamic norms, values and social order at best, and as a cunning ploy by the West for internal domination of the Islamic world at worst.

add-on: some broad comparisons can be made with the Big-Bang vs. Creationism controversy that was raging in the American public education system.

Slow on the blogging this month!!

This month has been really hectic with academic and professional engagements. Blogging will naturally be very sporadic and few-and-far between in the meantime.

Postings should pick up in September I hope.

China Cursed the Middle East

The legendary journalist and Middle East expert, Robert Fisk, asks a question that is surely on the minds of millions: why is the region finding it so difficult to shake off its melancholy and embrace the fruits of peace, economic development, and modernity?

Well Mr. fisk, I will tell you the answer, but you must promise to keep it between me, you, and the millions of internet users around the world.

The ills of the Middle East started when the Chinese cursed the region ions ago. Yes that's right. Confucius is probably behind the region's troubles. So much for Samuel Huntington's theory of an Islamic-Confucian civilizational alliance. The real fact of the matter is that the Chinese have always been jealous of Middle Easterners for some - still obscure - reason.

Many people have heard of the Chinese curse, "may you live in interesting times." But what is less known to most is the rest of it; "may you fall under the eyes of the authorities" and "may you find what you are looking for."

Do you see the connection yet? No? Allow me to explain.

"May you live in interesting times"

Well, this one is pretty self explanatory. What region of the world is more volatile, or 'interesting', than the Middle East today?

But believe me, from my frequent trips to the region, the majority of Middle Easterners would trade their 'interesting region' for the mellow, ordered, and predictable lives of a Swede, Norwegian or Swiss, any day.

"May you fall under the eyes of the authorities"

Contemporary Middle Easterners have grown up under the tender and big-brother watch (insert sarcasm here) of their respective governments for decades. As a matter of fact, these governments are so good at 'taking care' of the 'best interests' of their citizens that their citizens vote them into office year after year, decade after decade. But Middle Easterners probably wish the authorities could be a tad less concerned about them, and allow them to look after and think for themselves once in while.

"May you find what you are looking for"

Black Gold under the desert. Now that is something the Arabs never saw coming. The majority probably wish they still never had. The resource curse isn't just a fancy academic concept. Just ask Iraqis today. How you ever met a genie that grants infinite riches free of charge?

So the next time the world asks why the Middle East is hurting today, or why it can't seem to get its act together, the answer lies not in colonial Europe, Israeli expansionism, or radical Islam. The responsibility lies with those jealous and ill-wishing Chinese!

NATO PR Campaign

NATO is trying to revitalize its image by stressing the importance of the alliance's core values and connect with younger people. Here is an example of this initiative via YouTube.

Comments are welcome and encouraged as usual.

Snacks for Thought: July 21, 2009

Snacks for Thought is a weekly round-up of thought provoking news, commentaries and opinions from around the web.

1. Although this is a joke, AIDS's impact on human life, economies and entire cultures isn't.
2. Microsoft experiments with price elasticity in the midst of the economic crisis. Will it work?
3. Which way should U.S. foreign policy go? Let the debates begin.
4. Israeli settlements are pretty costly for the Israeli taxpayers: nobody said colonialism was cheap.
5. The Arab world's plethora of problems is nothing new.
   

Fly mighty eagle...fly...?

Today, America's eagle perches lonely, confused, and distraught at the tip of the global pyramid. It was not always this way. Back in 1947, with America emerging from the death and destruction of World War 2 as the newly crowned leader of the Free World, a young and astute diplomat by the name of George Kennan wrote the following in his infamous article 'X':

Soviet pressure against the free institutions of the Western world is something that can be contained by the adroit and vigilant application of counterforce at a series of constantly shifting geographical and political points, corresponding to the shifts and maneuvers of Soviet policy, but which cannot be charmed or talked out of existence.

The excerpt is highly revealing, and helps make sense of America's foreign policy decisions for the next four decades. First, Kennan identifies the threat as 'Soviet pressure against the Western world', and by doing this provides a clear focal point for American cognitive, diplomatic and material resources. Secondly, he proposes a strategic plan for applying power via a Newtonian logic of action and reaction. Wherever Soviet pressures posed a direct and credible threat to American interests, the U.S. would apply a countervailing force to neutralize and possibility scale back Moscow's influence. Third, the operational theater was purposely kept fluid and vague because the struggle was understood to be of global proportions. Geopolitical hotspots focused on countries with ambivalent or uncommitted political loyalties to Washington or Moscow.

It is fascinating that this short excerpt can encapsulate so clearly American grand strategy for the next four decades. The message was clear: containment of Soviet expansionary pressures must be counteracted, but only in limited geographic 'pressure points', and with manageable effects on world and regional instability. Everybody, friend and foe alike, knew their role, understood the rules, and clearly understood the potentially disastrous consequences for breaking them - Mutually Assured Destruction (MAD.)

CIA and Western intelligence operatives played a sometimes dangerous, always twisted, and occasionally comical, game of cat and mouse with their KGB counterparts in almost every corner of the globe. But fundamentally, both sides committed to the rules of the game. In an ironic way, Kennan's containment policy was helpful for Soviets as well. It drew clear lines in the sand. Some areas were fair play for competition, others were absolute red lines. If the message wasn't clear enough, the Cuban missile crisis reiterated that fact in no uncertain terms.

But unless you've been living on Mars, the Cold War is over, the Soviets are history, and America is the only superpower standing. Its navy freely navigates and polices the seas, its economic system has been adopted by its former Communist adversaries, and its economy and military spending dwarf those of its closest competitors. Despite all this, America has no discernible grand strategy to speak of today.

Many strategic thinkers, both within and outside the American government, are no-doubt nostalgic for the days of bipolarity (two superpowers.) Things were much simpler then. As long as the Communism and Soviet threat remained, policy differences were a matter of style over substance.

But two decades after the fall of the Berlin Wall, America's eagle is confused and distraught. Debilitating wars abroad, a plummeting international image, gargantuan domestic economic problems, and increasingly confused military and diplomatic establishments, all underwrite the sorry state of contemporary American grand strategy. America seems to be wondering aimlessly with diminishing friends and increased resistance to its power around the world.

The fundamental problem lies in Washington's inability, or unwillingness, to respond to the changing nature of international relations. New powers are emerging on every continent demanding more autonomy, more respect, and a louder voice in the management of the planet's affairs. The Chinese, Indians, and Russians are pushing for a gradual shift away from the dollar and to a new international reserve currency. The Europeans are looking to solidify their political union in order to capitalize on the growing economic power of the continent. Brazil is becoming the unquestioned regional leader in South America - once America's jealously guarded 'strategic back yard.' Saudi Arabia and Iran are both cognizant of America's waning capabilities and influence, and have started taking more assertive stances in the Middle East.

If America is to regain its swagger, it will have to base its foreign policy on an entirely new grand strategy. This strategy will have to take into consideration America's capabilities and aspirations on one hand, and the capabilities and aspirations of the emerging powers on the other. America's fundamental geopolitical and geoeconomic interests need not be compromised in the process. On the contrary, reliance on diplomacy, cultural exchanges, scientific engagement, aid, and above all...humility, will go a long way towards engendering the kind of good-will and trust that will allow America to adopt a more flexible approach to international relations. Brute force, and an over-reliance on military power should only be considered a last resort.

It is heartening to see Obama desperately trying to turn the tide. He has spoken of order above idealist adventurism, and democracy by persuasion as opposed to gun barrels. He has steered away from dictating, and has spoken of shared responsibilities - basically telling countries such as China to try and handle all the international responsibility they could stomach. He seems cognizant of the fact that the Neoconservative dream for an unrivaled 'American century' is simply inaplicable to today's international environment. Regardless of its superiority in military and economic power, America cannot continue operating as if it was business as usual. America must once again become 'in' and not merely 'of' the international community.

Obama has kicked off his young presidency with a massive public relations campaign spearheaded by a number of historic speeches in Cairo and Ghana, among others. His political capital is unprecedented and it will be very difficult for foreign governments to say no to him if he comes to the table with sensible proposals for collaboration and shared commitments to make the world a better place. Climate change, peace in the Middle East, democracy and human rights, and the global economy, as well as a range of international issues are problems looking for solutions. America, after experiencing the debilitating policies of the Neoconservatives on climate change, the War on Terror and nuclear non-proliferation, can mitigate the harm done to its reputation and interests across the world. What Washington needs is a bipartisan commitment to turn rhetoric into action, and action into progress on a number of international policy tracts.

It is no longer beneficial for America to try to preserve its Eagle's superior, but increasingly lonely, position at the helm of the global power hierarchy. Getting it to fly again is what American grand strategy should really aim for, and this cannot be done without help from emerging powers. The question is, can Washington muster the political will to enter into a complicated grand bargain with the rest of the international community - as messy and complicated as this may be?

The French Revolution & Institutional Reforms

Here is a very interesting piece of research that analyzes the economic effects of the French revolution on other countries in Europe. I'm going to sum up the points that I found most interesting:

1. The package of reforms the French imposed on areas they conquered included the civil code, the abolition of guilds and the remnants of feudalism, the introduction of equality before the law, and the undermining of aristocratic privilege.
2. Overall, our results show no evidence that the reforms imposed by the French had negative economic consequences. On the contrary, there is fairly consistent evidence from a variety of different empirical strategies that they had positive effects. In particular, our results are strongest for the later part of the nineteenth century, which we see as evidence for the fact that French-induced reforms created an environment favourable to the Industrial Revolution, which reached Continental Europe precisely in those decades.
3. Why did these reforms work when other externally-imposed reforms often fail? One possibility...is that its success may have been due to the fact that the reforms it imposed were much more radical than is typically the case. Many reforms fail because they are de facto reversed shortly after the implementation... The French, instead, reformed simultaneously several aspects of economic, social and political institutions of the “ancient regime” of Europe, thereby significantly weakening the powers of local elites and making a return to the status quo ante largely impossible.

Economic overview of BRIC countries

Here is an overview of the economic performance of the BRIC countries (Brazil, Russia, India & China) in the current global crisis. This should give us an idea of the economic health and future outlook of the world's leading emerging markets. Keeping an eye on these four economies is especially important considering the share of world GDP that they account for (close to 15%.) Since Goldman Sachs economist Jim O'neill coined the term 'BRIC' a few years back, the world has been waiting and watching to see if the big four will live up to the expectations thrust upon their shoulders by international investors and companies looking to take advantage of profit opportunites.

China

Growth pulled back from an extraordinary 13% in 2007 to 9% in 2008. This was the lowest rate since 2002. The IMF projects growth to slow to 6.5% in 2009 before picking up again to 7.5% next year.

China's heavy reliance on export-led development made it especially vulnerable to the contraction in global demand. Fortunately, the government had saved much of its revenue in foreign exchange reserves (exceeding US $2 trillion at one point) and was able to respond with massive liquidity injections into the economy to offset the large drop in exports.

In the absence of significant aggregate demand recovery in developing countries - especially the U.S. - China is reconsidering its export-led growth strategy and looking to stimulate domestic consumer demand. But as previously touched upon here and here, the problem for Chinese planners is not simply one of fiscal and monetary policy. It is a social policy problem. How to change the 'culture of thrift' among the masses and turn them into spending machines. China's tumultuous contemporary history has forced many Chinese to follow a rigid doctrine of 'work hard' and 'save your shiny penny for the rainy day'. Changing society's risk-averse spending habits will not be an easy task.

India

The IMF predicts the Indian economy will slow its growth to 4.5% for 2009 before picking up slightly to 5.6% for 2010. The Indian ruling party (Indian National Congress) has won a strong mandate to govern in the recent federal elections. This should ensure the Congress's ability to continue moving forward - albeit at a gradual and careful pace - with its liberalization and reform measures for the economy.

A growing Indian middle class is responsible for increased import demands which has increased the current account deficit. On the export side, India is majorly reliant on Chinese demand for primary resources such as steel and minerals to feed China's industrialization boom. India is well aware of its junior partner position with respect to China, this is a motivating reason pushing it to diversify its economic links with the outside world in order to offset China's increasing economic power.

Brazil

The IMF predicts an economic contraction of -1.3% in 2009 before resuming growth at 2.2% in 2010. But Brazil is likely to make it out of the crisis in relatively good shape and without too much deterioration in its economic fundamentals. This is largely due to the government's fiscal prudence over the years, and its 'old fashioned' regulation policies which have kept banks in line and away from adventurism into risky waters of global finance. Exports have taken a hit like all countries, but much like China, government policies to stimulate the domestic economy have been quick and substantive. This has led to a deterioration in its fiscal position but should not be a cause of investor panic, if anything because most governments around the world are in the same boat.

Brazil has also been one of the most outspoken advocators of global financial coordination and reform of international institutions. It has used its relative position of strength amidst the recent global problems to push the case of developing countries for more democratic and equal decision-making power within international organizations.

Russia

Russia has undoubtedly been the hardest hit of the BRICs from the global crisis. The IMF predicts a -6.5% contraction in 2009, before growth picks up by 1.5% in 2010. Their are two main reasons for this large economic deterioration. First, Russian banks and companies were highly integrated into Western financial markets and as a result exposed to toxic assets. Secondly, the Russian government's primary source of revenue comes from exports of oil, which suffered large price drops on international markets.

The Russian government is trying to comfort its citizens and pledges that a repeat of the 1998 crisis, in which millions of Russian lost their life savings, will not be forthcoming. Russia's policy so far has been to focus on supporting banks and enterprises in need of financing by targeting those deemed most essential to the economic prosperity of the nation. The total amounts contributed as of April 2009 amounted to 6.7% of GDP - more than most G-20 government interventions so far.

Snacks for Thought: July 5, 2009

Snacks for thought is a weekly round-up of thought-provoking news, commentaries and opinions.

1. In typical economist fashion, Brad Delong can't seem to make up his mind on whether to blame Alan Greespan's low-interest rate policy prior to the crisis.
2. Another piece on America's power decline in the world and how to deal with it.
3. Arable land and global food security: creeping colonialism?
   
4. Wall Mart: where everyday low prices mean more jobs for the faithful
5. Sweet-talkers beware!!!
6. Costa-Rica, the Dominican Republic, and Jamaica top the list of the good life survey.

International relations, political economy and history from an unlikely source

The FBI released more documents of its interviews with Saddam Hussein prior to the dictator's transfer to Iraqi control and ultimate execution.

The information released in the documents is golden. Saddam Hussein discusses many issues, ranging from international relations, to political economy and development, to history and personal relations.

He was clearly squeezed out of every available piece of information before being sent to the gallows. His accounts will be incorporated into many books on Iraqi and Middle Eastern affairs in the future I am sure.

Here is the link to 27 declassified FBI documents for those of you interested.

Happy Canada Day!!

To all of my fellow Canucks. Enjoy the party and stay safe!

Snacks for Thought: June 28, 2009

Snacks for thought is a weekly round-up of thought-provoking news, commentaries and opinions.

1. Want to be a professional 'threat-mongerer'? Find out how here.
2. U.S. consumers: from the 'paradox of gluttony' to the 'paradox of thrift?'
3. The 'relativity' of freedom.
4. Forget paint-ball, this is the real deal!
5. For great powers, Central Asia is a femme fatal; so seductive it kills.
   

It's time for a sensible policy towards Hamas

The following article is a guest contribution and does not necessarily reflect the point of view of the editor or anyone else associated with this blog.

The apparent victory of Iranian President Ahmadinejad has created uncomfortable questions about what it means to support democracy in the Middle East. Similarly, while the defeat of Hezbollah in the recent Lebanese elections was widely perceived as evidence that democracy may actually be a worthwhile venture, what would have happened if Hezbollah had emerged triumphant, as it nearly did? Renewed public interest in this subject provides a unique opportunity to finally establish a Canadian foreign policy towards the Israeli-Palestinian conflict based on realistic politics, not rhetorical posturing. Especially as Canada’s international partners rush to embrace diplomacy and dialogue as the new rules of the game, the question begs to be asked: does current Canadian policy towards Hamas make sense?

After Hamas won the Palestinian parliamentary elections in 2006, many Western countries found themselves in the awkward position of having endorsed a democratic process that produced a winner widely considered to be a terrorist organization. Unfortunately, Canada followed the unimaginative example of other countries, refusing to recognize Hamas as the legitimate leadership of the Palestinians and simply ignoring their democratic credentials. First, this revealed that Canadian support for democracy had been functionalized; in other words, the extension of democratic rule in the Middle East is to be encouraged only as long as ‘we’ like the results. Second, Canada was left without a legitimate Palestinian partner, inhibiting the development of coherent policies on both complex and mundane issues, such as how to induce Hamas to recognize Israel or how to effectively distribute humanitarian assistance in Gaza. Third, this approach undermined international efforts to facilitate the establishment of an equitable peace settlement between Israelis and Palestinians.

At the time of the 1993 Oslo Peace Accords, Hamas was supported by only 15% of Palestinians. Hamas has since gained popularity – and power – because of the corrupt incompetence of its political predecessors. Hamas also operates various social and humanitarian services which have become increasingly vital to Palestinian society due to international economic strangulation. Finally, many decades of Palestinian suffering under domination and occupation have created a volatile mood of anger and frustration that Hamas represents. Hamas has thus become a fixture in the Israeli-Palestinian conflict that can no longer be ignored. Accepting the role of Hamas is necessary to politicize the Palestinian struggle, a process which will serve as an impetus for Palestinian aspirations to be channeled through the ballot, not the bullet.

Encouragingly, Hamas leaders have already declared their willingness to accept a settlement based on a Palestinian state in the pre-1967 borders of the West Bank and Gaza. By incorporating Hamas into the international system, Canada can nurture such pragmatic qualities by using incentives to encourage moderation and punitive measures to discourage militarization.

A framework of direct and unconditional engagement with Hamas does not diminish Canadian opposition to terrorism. The violence employed by Hamas is rightly condemned as morally repugnant and politically counterproductive. But it is problematic when the international community reduces the Israeli-Palestinian conflict to an issue of terrorism, not of human rights. Beyond the shroud of terrorism is the ultimate tragedy of the Palestinian people. A foreign policy exclusively fixated on terrorism will collapse due to its own hysteria and Manichaean rigidity. In any case, if we accept the conventional definition of terrorism as indiscriminate violence against civilians in pursuit of political objectives, it becomes difficult to ignore the recent Israeli invasion of Gaza in pursuit of its own political objectives which left over 1,000 civilians dead.

The only way to diffuse this situation is through facilitating the realization of legitimate Palestinian aspirations while condemning the use of illegitimate tactics – that is, terrorism – to achieve these goals. This requires the destruction of the sanctimonious notion that Palestinians are ‘other than us’ – that they have some innate proclivity towards violence, or that they lack the sophistication to understand the democratic process. Hamas has been created by the wretched circumstances of the Palestinians, by the failure to achieve the basic (or ‘inalienable’) Palestinian right to statehood. So long as their national aspirations continue to be stifled, certain Palestinians will invariably conclude that violence is necessary to resist Israeli militaristic expansionism.

Canadians across the political spectrum should agitate for a foreign policy towards Hamas that is aligned with Canadian interests, and Canadian values. The development of diplomatic relations with the political wing of Hamas is a good place to start. Such boldness and vision may help Canada become a catalyst for change that can finally pierce the devastating cycle of terrorism and violence in the region.

(Paul Davis is a graduate student at the Norman Paterson School of International Affairs at Carleton University in Ottawa. He can be reached at paul.timothy.davis@gmail.com)

The unholy trinity: Iran, Afghanistan and the United States

With all the coverage around events in Iran, I have yet to run across a serious analysis on the potential repercussions on Afghanistan and America's interests in the country. Caught between hyperbole idealism and starry-eyed liberalism, some have failed to understand the potential damage to U.S. and Afghan interests resulting from continued instability in Iran. Some voices have decried Obama's "week-kneed" response to the Iranian crisis. Allow me to explain why the President of the United States has carefully weighed his words on Iran.

Obama's 'timid' response to the crisis is highly influenced by his high-priority focus on Afghanistan and all the stakes that follow. It is not a secret that Obama trotted his way into the Oval Office with a desire to refocus American strategy from the unpopular Iraq war to the, less unpopular but just as tricky, Afghanistan conflict.

Reflecting his president's wishes for a change in direction, the military's new commander in Afghanistan, General Stanley McChrystal, has ordered a 60-day review of America's fighting and nation-building strategy and operations. His priorities list includes: improving the American military's image amongst Afghan civilians; shifting from an emphasis on drug 'eradication' to drug 'interdiction'; and coordinating with regional security and military forces to work on a more comprehensive and inclusive regional approach. General McChristal took the role in an atmosphere of thawing relations between Washington and Tehran.

Less than a month ago, at an international conference on Afghanistan that took place in the Hague, many saw glimmers of a possible rapprochement in Iranian-American cooperation. The Americans agreed to have Iranian diplomats attend, and the Iranians reciprocated by declaring their country was "fully prepared to participate in the projects aimed at combating drug trafficking and the plans in line with developing and reconstructing Afghanistan." A NATO spokesperson hailed the conference as "unprecedented" and lauded Iran's presence and "positive noises" with respect to Iran's statements.

Understanding the conference's outcome requires us to be aware of the overlapping interests between the two nations. Both administrations have much to gain if they can overcome their mutual distrust of one another, and bypass the entrenched domestic obstacles in their respective political systems.

Both will have to seriously consider rapprochement if they hope to achieve serious and sustainable progress in Afghanistan. The Afghan government has a hard enough time with its neighbour to the east, never mind pondering what kind of position it would find itself in if Tehran suddenly decides to 'stir the pot' as well.

We are rarely reminded that Iran has nearly 2,000,000 Afghan refugees - legal and illegal - currently residing in its territory. It is also rarely mentioned how important a role Iran plays in the economic development of Afghanistan by utilizing its road networks to provide the Afghan economy with consumer goods and export outlets. We are also hard-pressed to here about the effective role that Iran plays in countering - as best as possible under the current situation - the narcotics trade that crosses its borders on a daily basis. A role that the United Nations Office on Drugs and Crime has publicly praised on numerous occasions, and going as far as calling Iran's efforts a "massive sacrifice."

While popular media outlets such as Time magazine quotte misinformed American officials accusing Iran of supporting the insurgency in Afghanistan, other more judicious voices overlook the propaganda and bring forward constructive thinking. For example, while testifying before the U.S. House Committee on Oversight and Government Reform, Karim Sadjadpour identified three overlapping security and strategic interests that could easily set the stage for engagement between Tehran and Washington. These include:

1. Engaging Iran as a “responsible stakeholder” in Afghanistan. A strategy which has little cost and potentially enormous benefits.


2. Considering the Afghan refugees presence, Iran does not stand to gain from continued instability in Afghanistan. And given its violent history with the inherently anti-Shia Taliban, Tehran has no interest in seeing their resurgence.


3. With one of the highest rates of drug addiction in the world, Iran has a strong interest in seeing narcotics production in Afghanistan eradicated. Iran’s agricultural expertise could be enlisted to help Afghan farmers plant alternatives to opium poppies.

Writing only three weeks ago, George Gavrillis calls for an Af-Ir strategy (I know, it sounds likes half-ear but overlook that please.) He makes the argument that while USD $8 billion are earmarked for Pakistan to help it essentially behave more like Iran towards Afghanistan, the money would be a much better investment if Iranian cooperation could be harnessed in the West. This would reinforce Kabul's position with regards to the militant threats from the south and east of the country by giving it a powerful rear-guard political backer to its west. Now this option may not bode well for American interests in terms of zero-sum calculations, but it is worth remembering that unless the United States plans to stay in the country for decades, it will eventually have to accept strong Iranian-Afghan relations as a prerequisite for developing a sustainable Afghan regime that can survive in the volatile region.

Of course, any hope of this happening is pinned on Washington and Tehran coming together at the meeting table and engaging in hard bargaining in order to strike a mutually acceptable bargain in the region. If the new military leadership in Afghanistan has any chance of making on-the-ground progress during the small window of opportunity available, it will need the diplomatic channels to lead the way.

Stuck in the molasse is the fragile Afghan government, nervously following events in Iran, and probably secretly praying for America to muzzle its approach towards the Iranian regime in order to not derail the possibility for such a regional framework. Pakistan is more than enough for Afghanistan to deal with at the moment and an 'uncooperative' Iran would surely further weaken Karzai's regime.

A prelude to Iran-U.S. post

A post on events in Iran and their relationship to U.S. foreign policy and the regional geopolitical order is on the way. In the mean time, here's an interesting piece to get you thinking - courtesy of Paul J. Saunders posted in the Washington Post.

The lunch was missed, so was breakfast

A conversation about economic theory was instigated by the most random discussion topic today: the Just-15-more-minutes-of-sleep Syndrome that most of us suffer from.

Basically, my brother and I were lamenting the fact that if we could only wake up 15 minutes earlier every day, we would not have to rush through eating our breakfast (if we even have time for that), and we would be able to make ourselves a nice lunch to bring with us to work - thus cutting back on our daily expenses and being able to save for that long-anticipated vacation at the end of the summer.

Which got us talking about the most basic assumption of mainstream economic theory: that human beings are 'rational actors' who are also 'utility maximizers' (looking to increase their happiness, however they measure happiness.)

But waking up an extra 15 minutes early could be for the rational utility maximizing human being the farthest thing from 'happiness' at that particular moment (think back to the comfort of your bed on a cold winter morning and how 'happy' you are to be there.) Hence, the decision to 'maximize utility' by sleeping 15 minutes.

Which brings us to another concept and econojunky term, "opportunity cost". This is essentially a fancy way of saying 'what you give up to get something else.' Now the opportunity cost of 15 minutes extra sleep would likely be: a good breakfast; the cost of paying for your lunch at work as opposed to bringing one with you from home; and the regret that builds up every passing day knowing that all you have to do to remedy the situation is have some will power and wake up earlier.

So later in the day, you'll likely think back and realize that your decision not to wake up 15 minutes earlier was pretty irrational. In hindsight, the value of the 15 minutes of extra sleep decreases exponentially. Because you think in actual 'utility maximizing' fashion, and not in the 'pseudo-rationality' (my brother's term) that characterizes your lazy and hazy morning thought processes.

So when your thought process changes so drastically from morning to noon, you realize how dodgy the entire assumption of homoeconomicus as a rational utility-maximizing actor really is.

So where am I going with this?

Well, considering the magnitude of the banking collapse that we witnessed in the U.S., and in light of the incredibly shocking admission by ex-Federal Reserve Chairman Alan Greenspan that “those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief”, it is clear that the assumption is beyond flawed, it is actually dangerous.

Human beings may think in utility maximizing terms sometimes. But usually this is done in hindsight. That is fine, and I have no problem with that. But to have built the edifice of modern financial systems on this most flawed assumption that people will 'always' act in a utility-maximizing way and to continue to promote it and teach it as such is not only intellectually lazy, but self-destructive as we saw all too clearly.

The modern financial capitalist system was suffering like the millions of us from the Just-15-more-minutes-of-sleep Syndrome - except for them it was more like decades of pushing the snooze button so as not to wake up and face the reality of having slept-in.

Now the system was forcefully woken up, the breakfast was missed which weakened the system from day to day, the lunch wasn't made which has cost billions to the taxpayers, and the days of regret and self-flagellation will be numerous.

Snacks for Thought: June 20, 2009

'Snacks for thought' is a weekly round-up of thought-provoking articles, commentaries and opinions:

1. Social media vs. the state: repercussions from the Iranian situation - http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/06/20/the_repercussions_of_a_twitter_revolution/
2. Chinese government bailouts helping high-rollers bet their way out of recession? - http://business.timesonline.co.uk/tol/business/economics/article6538574.ece
3. Shanghai Cooperation Organization congratulates Iran's president on victory. For those who ever doubted this was a big geopolitical tug-of-war, read this article and ponder - http://www.sptimesrussia.com/index.php?action_id=2&story_id=29285
4. Israel's Foreign Minister says "settlements are not an obstacle for peace." No, he's right, making such statements is the real obstacle to peace - http://www.jpost.com/servlet/Satellite?cid=1245184877876&pagename=JPost%2FJPArticle%2FShowFull
5. Culinary integration and its 'nation-building' powers - http://www.spiegel.de/international/zeitgeist/0,1518,631213,00.html
6. Turkey's multidimensional foreign policy may be a strategic opportunity to expand the EU's influence in the Middle East - http://www.worldpress.org/Mideast/3351.cfm
7. Theories of the Chinese Revolution - http://understandingsociety.blogspot.com/2009/06/theories-of-chinese-revolution.html
8. This photo captures Latvia's fiscal and economic problems quite well I think - http://blog.foreignpolicy.com/posts/2009/06/19/friday_photo_riga_rumble
   

The energy powerhouse of the future? Bolivia?

Of all the countries of the world, should someone ask me who I thought would be an energy power in the future, I would try and sound smart by answering something outside-the-box like "some impoverished central African country with lots of untapped oil reserves?"

But the real answer lies in South America, Bolivia to be precise. It reportedly has half the world's known supply of Lithium, which is used in electric car batteries. Yea you heard that right, half the world's supply!

Bolivia may start to become a rather important country in world affairs sooner than one would expect.

Amidst the wreckage, a giant stands tall: China and the Shanghai Cooperation Organization

Forget the fact the the Shanghai Cooperation Organization is named after a Chinese city. China's real stamp-of-power in this multilateral grouping, which includes China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, is economic.

Up until the beginning of the crisis, which came on the heels of the precipitous drop of global oil prices, Moscow and Beijing were managing the organization as equals - more or less. But the global financial crisis, which has hurt rich and developing countries alike, will have important ramification on the SCO's internal power configuration. This will not come from any explicit Chinese efforts to assert dominance, but instead from differences in economic power and structure. Simply put, China can channel its massive accumulated wealth inwards to stimulate its domestic consumer because its economy is based on manufactured goods. Russia does not have that option, as 40% of its GDP comes from commodities such as oil, gas and minerals. Chinese consumers can buy more Hello Kitty and electronic devices, Russian households cannot simply consume more gas, iron and aluminum.

Here's how Russia's former Prime Minister and well-known scholar Yevgeniy Primakov puts it:

"Russia will not come out of the crisis anytime soon. Russia will most likely come out of the recession in the second echelon - after the developed countries. The trap of the present crisis is that it is not localized but is worldwide. Russia is dependent on other countries. That lessens the opportunity to get out of the recession in a short period of time." "In China too, as in Russia, exports make up a significant part of the GDP. The crisis smacked them and us. The difference is that China exports ready-made products, while on our country [Russia] a strong raw material flow was traditional. What are the Chinese doing? They are moving a large part of the ready-made goods to the domestic market. At the same time, they are trying to raise the population's solvent demand. On this basis, the plants and factories will continue to operate and the economy will work. We [Russia] cannot do that. If raw materials are moved to the domestic market, consumers of such vast volumes will not be found. Raise the population's solvent demand? That merely steps up imports."

China is stepping up its role as the primary 'donor country' in the organization. It has recently extended a $10 billion loan to the SCO, following its $25 billion loan to Russia and $15 billion loan to Kazakhstan the past two months. On the surface, these Chinese gestures are undertaken in a spirit of 'cooperation and mutually shared interests'; Germany's intelligence services calls it a 'geopolitical metamorphosis'.

Regardless of China's ultimate goals, the old adage still holds true, "the hand that lendeth can also easily taketh away."

Genuises I tell you! Genuises!

The CIA is a world renowned and widely respected organization. But when you read this...

people at the CIA said the problem was always the disposal plan. They wanted to get the intelligence but they never considered what to do with these people afterwards. You’ve violated all their rights so it’s really hard to put them on trial. At one point, they even talked about putting them all on boats that would perpetually circumnavigate the globe.

...you think, "boats that would roam around the oceans forever?" Like really?

Krauthammer's acceptance speech

Those of you who have heard of Charles Krauthammer - the man who wrote 'The Unipolar Moment' and coined the term unipolarity in international relations parlance - will be interested in reading his acceptance speech upon receiving the 2009 Eric Breindel Award for Excellence in Opinion Journalism.

Now there is no doubt that he is an intelligence man with an astute political agenda. But his attack on the "ideological and intellectual monopoly" of the left in the mainstream media obscures the real point: he is a neoconservative ideologue who failed miserably along with the rest of his ideological buddies to grow any sustainable roots in the American and international political scenes during the eight disastrous years of W's administration.

That neoconservative ideology and policies - be it foreign or domestic - failed, is no fault of the 'Communist media', but a direct result of the men and women who led the United States government into quagmires abroad, and profligacy at home.

Of course, he has since conveniently distanced himself from the core neocon elites on issues such as the Iraq War. But this will not change the fact that the men and women who thought-about, formulated and implemented the policies under Bush were mostly implementing the ideological vision of the 'right', of which Mr. Krauthammer is a staunch supporter. Look where that brought the world...

Internet censorship and the good life

Having just completed a 5 months academic stint in Turkey followed by a 3 week stay in Syria, I am itching to give my two cents regarding internet censorship by authorities. Both countries practice it widely.

I am completely and unequivocally against it. No matter what the side benefits may be (such as protecting children from pornographic content), the principle of censoring open-source information, and the slippery-slope risks that usually arise when authorities - especially unelected and undemocratic ones - begin to determine what is and what is not appropriate for civil society to see, have no place in our 21st century 'global village.'

Turks had YouTube blocked, while Syrians did not allow Blogger, Facebook and a host of other online content to be viewed by their populations.

Besides the fact that in both countries tech-savvy young generations laughably bypassed the filtering efforts by simply using different IP addresses or software such as UltraSurf, the thought of having some narrow-minded technocrat, judge or security official decide what is appropriate for me to read and think is anathema to my idea of progressiveness, freedom and the good life.

Which brings me to China. Many people will almost reflexively bring up the Rising Dragon as living proof of the absurdity of my claim that censorship needs not impede development. This assumption misses the point that tall buildings, nice shopping malls and a richer population do not equal an emancipated people who are free to think, inovate and hold their governments accountable as they see fit. Besides, when was the last time China invented a revolutionary invention? Gun powder and the printing press. But how many thousands of years ago?

(photo from Newsline)

Snacks for Thought: June 12, 2009

1. When political actors play market: Ian Bremmer looks at the policy coordination failures during the global crisis (this guy wrote an interesting book called 'J-Curve' in which he examined the relationship between a country's openess to global ideas and economics on one hand, and authoritarian politics on the other.)
2. What do Zucchinis and sub-prime collateralized debt instruments have in common? found out here.
   
3. Both Washington and Damascus praise the results of the Lebanese elections: a rare occurrence that may be a signal of concrete rapprochement between the two sides.
4. More consumer spending, increasingly available credit and strong industrial production are testaments to Brazil's sound fiscal and monetary policies during the past seven years. Read about it here.
5. Wine without the headache? Is alcohol without the hangover on the horizon? Either way, this is reason enough for me to now be an official supporter of genetically modified food.
   

Middle East press reactions to Obama's Cairo speech

The following is a round-up of the Middle East's press reactions to Obama's long-awaited speech in Cairo addressing the Islamic world. The President clearly hit the right buttons.

Daily Star (Lebanon):

To measure the impact of such an innovative address, one even needs innovative tools, as well as time to digest it before completing the full evaluation. But we should remember the Cairo speech wasn't a show - it was an exercise in power politics of the first order. The credit here probably belongs to Rahm Emmanuel, Obama's chief of staff. Without Emmanuel, whose pro-Israeli sympathies can't be questioned, Obama wouldn't be taking on the pro-Israel lobby, whether on Palestine or Iran. Emmanuel has laid down a bruising challenge: come up with a better plan on these issues, or shut up.

Jordan Times (Jordan):

Those were indeed soothing words coming eloquently from the mouth of US President Barack Obama in Cairo on Thursday. And of course they were comforting because they come after eight years of George W. Bush who launched his crusade on “terror” - which many interpreted as a war on Islam - in the process invading two Muslim nations.

Saudi Gazette (Saudi Arabia):

Obama is not going to fix everything and probably not even most things in the Middle East. But he set the tone that rhetoric and slavish loyalty to one country at the expense of the rest of the region is not the answer to peace. His speech put Israel and Arab leaders on notice that it is no longer business as usual.

The National (UAE):

The US president may fail to achieve his designs for regional peace and security; it is a long way from a podium in Cairo to Palestinian statehood. And if rhetoric and a well-delivered speech could solve the complex problems plaguing the region, he would have done it already. Unfortunately it will be policy shifts, many of them painful, which will bring about an end to regional conflict. But he has made the first step; it remains to be seen how the Muslim world will answer.

Hurriyet (Turkey):

So long as Obama is the speaker and the text is good and he is a good orator, the speech had no chance but to be a good one. Was it historic? We will see in the future. But without a doubt, so long as Obama was delivering a speech concentrated on "U.S.-Islam", it was a significant address.

Haaretz (Israel):

For Israel, Obama's "Cairo speech" marks nothing less than a strategic revolution. During the Bush era, Israel was America's friendliest partner in the war on terror, and enjoyed military freedom of operation against the Palestinians, Hezbollah and Syria, for which it in return withdrew from the Gaza settlements. With Obama, Israel has to undergo a re-education, and will have to once again pass a test of its dedication to U.S. interests in the Middle East.

Asharq Alawsat (International):

The speech by Obama should have been given to us long ago by an Arab or Islamic leader, not an American one, as we are the victims of poverty, extremism, division and violence, in all its forms and under various pretexts. The Arab and Islamic public should have heard what they heard from Obama in all its clarity and openness a long time ago, with regards to the peace [process], the fight against extremism, the right to education and dignity, women's rights, the issue of minorities, democracy, and other issues.

Arab Times (Kuwait):

We should welcome the man who delivered a historic speech at our homes. Our greetings to you Aba Hussein! As expected, he approached us with a well-phrased speech. He clearly expressed his ideas and stands on various regional and international issues. We thought his visit was aimed at fulfilling the promises he made before his election to the White House. We are now aware that there’s more to the man than meets the eye. With full transparency, he discussed his policy on establishing new and strong relations between his country and others. We thought he would never utter some Arabic words to negate allegations on his lineage, particularly his African origins and Muslim father. Surprisingly, he was proud of his origins and he uttered some Arabic words clearly!

The political undertones of Israel's military exercises

Israel is currently undergoing the largest and most comprehensive military exercises in its history. Five days of ground, air and navy simulation drills are tactically meant to prepare the Israeli Defence Forces (IDF) for a total war scenario with Syria, Lebanon, the Palestinians and Iran. But there is a more calculated political aim to these drills.

The timing is meant to send a clear message to the Lebanese electorate about the dangers of electing the Hezballah-led coalition into a majority governing role for the first time in the militant movement's history.

On the heels of an article from germany's Spiegel magazine claiming to have inside sources implicating Hezballah officials in the death of ex-Prime Minister Rafiq el-Hariri, Israel is looking to further influence the political calculus of Lebanon's electorate and politicians alike ahead of the June 7 elections.

Defence Minister Ehud Barak has already warned, echoing statements by other top-ranking Israeli officials, that a Hezballah-led government would automatically make the Lebanese state an enemy entity. This means Israel would consider itself free to target any government and economic infrastructure it deems necessary in a future war with its tiny southern neighbour. The war games are meant to reinforce this heavy-handed policy.

(photo from PressTV)

In Damascus

Hey all!

I have finished my academic exchange semester in Turkey, and I am currently travelling around Syria. Blogging will naturally be much slower and could stop for the next few weeks.

I'll have much to write about as soon as I am back in Canada, that's for sure.

Iyad

Snacks for Thought: May 20, 2009

Snacks for thought is a weekly round-up of thought-provoking stories, commentaries and interviews from around the world.

1. When visiting Caesar; how diplomatic visits to the White House work - http://www.haaretz.com/hasen/spages/1086070.html
2. Great lecture by a world class mind on political violence. You will end this lecture with much to think about, I promise - http://www.youtube.com/watch?v=5Vgl9S3hpbc&feature=player_embed
3. Regional and country-specific assessments of the global crisis by Nouriel Roubini's RGE Monitor - http://www.rgemonitor.com/roubini-monitor/256736/green_shoots_or_yellow_weeds
4. Not as big, not as small as we thought? Martin Wolf assesses how influential to world history the global economic crisis will be - http://www.ft.com/cms/s/0/beb9b7e8-449f-11de-82d6-00144feabdc0.html

Kosovo: what after independence?

(this article has been translated from its original french version and does not necessarily reflect the views of the Editor or anyone else associated with this blog. The original article can be emailed on request)

The Parliament of Kosovo declared its independence over one year ago, in February 2008. Supported by the United States, France, Germany, and Turkey, among others, the tiny Kosovar state seeks to emancipate itself from the yoke of its obstructive Serbian neighbour, and establish itself as an independent and viable state. Serbia on the hand, considers Kosovo to be an integral part of its historic territory.

Yet Kosovo’s current situation as an enclave does not make things easy, especially for the transit of goods and energy through its territory. I vividly remember the horrendously long lines of trucks trying to cross over from Macedonia. On the security front, the presence of foreign European troops on its territory (French, German, Italian, Swiss…) provides it with a temporary security umbrella meant to deter Serbia from trying to recapture its ‘lost province’ by force.

But for the time being, and for the foreseeable future, Kosovo will remain a ‘protectorate’ of the European Union. Lets look at the case of Bosnia-Herzegovina, almost 14 years after the signing of the Dayton Accords : the country remains administered by the United Nations and without a clear future. The worst-case scenario would be for Kosovo to become another Bosnia – a puppet state who’s structures only stand thanks to UN support.

So what does the future hold for Kosovo ? Is it possible to reconcile Kosovars and Serbs ? Certain voices argue that granting entry to ex-Yugoslavia into the EU would serve to diminish tensions in the Balkans. Nothing could be less sure. While an integrated EU-led approach targeting enhanced socio-economic cooperation could certainly bring about rapprochement between the states, expecting Serbia’s grievances towards Kosovo to diminish is a giant leap of logic.

A war, even if unthinkable at the moment, cannot be ruled out in the long-run. Serbia certainly has ambitions to join the EU, but it has also made it irrevocably clear that Kosovo’s independence is impossible for it to accept. However, Serbia’s only source of support at the moment, Russia, is insufficient to push Serbia into a military confrontation: images of NATO bombardments in Belgrade vividly remain in the minds of Serbs. Kosovars on the other hand, are baskiing in their newly-gained independence and would want nothing less than to rejoin Serbia, where they felt oppressed and discriminated against by the Serbian government.

So what then ? A union with Albania perhaps ? For Albania, this would be a golden opportunity to create a ‘Greater Albania’ and reunite Albanian speakers in the region. However, as one of my Kosovar friends put it to me, Kosovars fear such a union would simply replace Serbian tutelage with an Albanian one. Instead, Kosovo banks on rapid economic development and a privileged partnership with the EU to solidify its independence.

Having said this, turning our backs on Serbia by failing to reach a regional politico-economic solution to the problem would be a grave mistake in the long-run - the wounds of the past would remain dangerously open…

Mathieu Lepaon is an international relations student and reservist in the French Army.

Hats off to India!

With the Congress-led alliance now sure to win a majority in the Indian elections, India is close to wrapping up the largest display of democratic participation the world has ever seen. Approximately 400 million Indians are estimated to have cast their ballots in this crucial election for the country and the region.

In voting for the Congress-led coalition, the Indian electorate sent a firm signal that it does not wish to follow in America's footsteps following its own terrorist outrage in Mumbai. On the heels of the attacks of November 2008 that killed 185 Indian and foreign citizens, the B.J.P-led opposition appealed to national security in its campaign efforts. Yet it did not pay political dividends. Voters understood full-well the political implications of voting for the Hindu nationalists who, in a time when neighbouring Pakistan is in flames, would have played into the extremists' hands and further destabilized the region.

To the extent that personalities matter, it is reassuring that the prime minister Dr. Manmohan Singh will likely remain in his post. His reputation as a wise and intelligent politician did not develop from thin air. His leadership and judiciousness following the terrorist attacks was a testament to his reputation.

Under tremendous pressure to act, the Prime Minister listened to all voices, including the hawkish ones. Yet in the end, he decided to rule out the military option, which would have further destabilized Pakistan and potentially triggered a massive conflict between the two nuclear armed rivals. In an act of diplomatic pressure, he opted to deliver to Pakistan an intelligence dossier with evidence proving the nationality of the assailants (who were all Pakistani), and assertively called on Islamabad to hand over all involved Pakistani citizens to face Indian justice.

Opponents at the time denounced his decision to refrain from attacking Pakistan as proof of his indecisiveness. Yet his decision was a textbook example of how not to give terrorists the attention and political credibility they seek.

The world has much to learn from the Indian governments' response in the face of terrorism and from the Indian electorate's fine display of political consciousness. Hats off to India.

(photo from Getty Images)

Global Think Tank Directory

Here's a useful initiative - a directory of think tanks dealing with international affairs issues from almost every country in the world. Great for research purposes.

French Military Bases in Africa

French troops patrolling N'Djamena Airport, February 2008

(This article was translated from its original French version and does not necessarily reflect the points of view of the Editor or anyone else associated with this blog. The original article can be emailed on request)

France still has ‘boots on the ground’ in several ex-colonial African states who were once part of its large empire. By establishing mutual cooperation and technical assistance agreements with these newly-independent states in the 1960’s, France has maintained a military presence in Chad, the Central African Republic and Djibouti, among others.

What are France’s interests, both strategic and political in these states? A careful analysis reveals these to be far from negligible, allowing France to exercise considerable influence over the internal affairs of these countries.

Lets take for example the events that unfolded in Chad during February 2008 when the government, under the leadership of President Idriss Deby since 1990, was attacked by a Rebel convoy traveling from Sudan. As the rebels headed straight for the Presidential Palace in Ndjamena (the capital), the situation turned critical for the government and its loyalist forces. The French government began an emergency evacuation of Europeans, especially French citizens. But the French role was far from limited to humanitarian evacuation efforts.

Under the aegis of acting to secure the evacuation of its citizens, French troops immediately took control of the main airport, making sure the government had access to its most effective means of riposte, the air force. As a result, and without ‘official’ French participation, the air force successfully squelched the rebellion and saved the government of President Deby from an imminent death.

In an impressive show of political and military craftsmanship, France was able to both protect the airport for evacuation measures, and safeguard its short-term economic and strategic interests. Strategically, France held its position in the region, which allows it to intervene rapidly in future crisis situations. Economically, the French military protects French firms (Total for example) that operate in the less than favourable security environments of the region – threatening these firms is to threaten the French military itself.

However, in the long-term it was France’s prestige that was on the line: few countries, besides the United States, can boast overseas bases of the kind France has in Africa. From this point of view, we cannot overlook the importance of the desert environment these bases provide for the training of the elite Marine Infantry Regiments. These bases maintain the military readiness of these troops for harsh climate operations.

Nevertheless, it is interesting to note how little the French government communicates regarding its presence in such areas, and how little it is questioned. The transparency that is demanded for operations in Afghanistan, or the reasons for the presence of French troops in Africa, are seldom given. It's as if that presence was self-explanatory.

Mathieu Lepaon is an International Relations student and reserve soldier of the French Army

(Photo from ABC News)

Obama and the power of ideas: Part 2

In part one of 'Obama and the Power of Ideas' we laid down our philosophical opinions about what ideas are, and how they may be used for good or evil in the world. As promised, we will now explore how President Obama can put to use the immense political capital he enjoys in America, and the world, to steer the ship of American foreign policy back into calmer waters.

Obama will be speaking next month in Egypt, a country that many Arabs still see as the heart of contemporary Arabic culture and identity. The speech's importance will depend on its content. Foreign public speeches, especially when they are delivered by the President of the United States, are important. They can affect public and elite opinions around the world in serious ways, and what region is more in need of soft-diplomacy than the Middle East today? The Cairo speech will be a chance for Obama to build on the idea upon which he was elected: change.

The speech must therefore inspire the millions of relatively deprived citizens of the region. It must remind the people that while their leaders may not necessarily hear their calls for political freedom, America does. But it will not force it on them or bring about such changes by throwing their societies into further disarray.

The speech must also heavily touch on the number-one problem of the Middle East - the Arab-Israeli conflict. Obama and his speech writers cannot possibly underestimate the importance of this conflict to the region's citizens. He must be steadfast in his support for peace and provide not simply empty rhetoric, but a clear message that peace between Israel and the Arabs will be at the top of his foreign policy agenda. If the message wavers in this regard he will almost instantly turn-off millions of listeners.

With regards to other regions of the world, Obama must continue to send the message that America is listening, not simply pretending too, and contemplating ways to accommodate the multiplicity of voices and interests. This is not an 'apologetic or appeasement' strategy like Obama's critiques claim. It is the smart thing to do in order to tame the surge in anti-Americanism that followed Bush's disastrous eight years in power.

Without softening the almost reflexive resistance to American power and ideals that has spread around the world, Washington will have a much harder time pursuing its interests without relying on 'hard-power'. Soft-power, of which public diplomacy is a crucial pillar, will have to be a cornerstone of his foreign policy strategy, not a by-product.

In this regard, Obama's decision to seek readmission into the United Nations Human Rights Council, after Bush withdrew from it, is a welcome development. After all, we have already seen what over-reliance on military strength and economic sanctions have achieved, do we really want more of the same?