Category: Geopolitics

Some in Congress Get Smart on Iran

Beyond smarter sanctions, though, the US needs to start exercising smart power in Iran. This means identifying areas in which our current policies are counterproductive — and getting out of our own way. For example, the world recognized what a crucial role social media services like Twitter and Facebook played in the events in Iran this summer, yet current US sanctions actually prohibit Americans from providing Internet communications software to the Iranian people. Microsoft and Google have both shut down instant messenger services because their programs are enabled by a download not authorized for export to Iran under US law. The same can be said for anti-surveillance software that allows Iranian users to surf the web free of government spying.

Just this summer, the Senate authorized $20 million for the development of software and other programs that allow users in Iran to bypass government censorship and monitoring efforts. But current laws still prohibit an American from sending these programs to Iran!

Did you know that after one of Iran’s most terrible natural disasters — the 2003 earthquake in Bam that killed over 25,000 people — the Iranian government sought advice from American engineers to reinforce thousands of primary schools around the country to make them more earthquake-proof? Sadly, that type of assistance was deemed “dual-use” under US sanctions, and the Americans were barred from making the trip. –Patrick Disney – Assistant Policy Director at the National Iranian American Council

via Patrick Disney: Some in Congress Get Smart on Iran.

How Wall St. Enabled Unsustainable European Welfare States

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come. Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

via Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis – NYTimes.com.

Don’t Get Giddy About China

There is a Russian proverb that says our fate plays out on the exact path we take to avoid it. This is the story of China in a nutshell. Policy makers have accumulated forex reserves in large part to avoid a balance of payments crisis, and yet the massive reserve accumulation has meant a parallel accumulation of high-powered money and an epic credit expansion over not just the past year, but over the past four or five leading to dangerous asset and credit bubbles manifesting throughout China’s real economy and financial markets.

Chinese policymakers appear to be trying to spur private consumption by building out social safety nets. While better social safety nets are an important and positive development, the fundamental answer for policy makers to improve the allocation of capital (and in so doing to shift China Inc. away from its export/production orientation to a more sustainable consumption driven model) is only going to come from a combination of four key policy initiatives, in order of importance:
·         Interest rate liberalization
·         Exchange rate regime liberalization
·         Major reform liberalization in the service sector, especially in financial / banking sector, which is currently dominated by state players.
·         Liberalization of rural land ownership rules.
None of these is likely to happen soon, unfortunately, given the political reality – even in a one-party country like China – that it is difficult to implement tough-medicine reforms during a period of global economic stress, and this is especially true for President Hu Jintao and Premier Wen Jiabao as the country gets closer to its next leadership transition cycle in 2012.

If I am wrong about the bearish scenario for China above, I think it will be because I am too optimistic. A possible worst-case scenario is that the bursting of China’s credit bubble leads to a second-wave global credit crisis and a freeze in global financial markets no matter what the People’s Bank of China or the US Federal Reserve does to reflate markets – and we get a classic global liquidity trap scenario and a major debt-deflation Great Depression redux.

via Asia Sentinel – Don’t Get Giddy About China.

Allied Mole in 3rd Reich Uncovered

The documents, uncovered in the Churchill Archives in Cambridge and the National Archives, show that Knopf and his sub-agents alerted British Intelligence to German plans for an invasion of Malta in 1942, relayed Rommel’s intentions in North Africa and revealed Hitler’s fatal obsession with capturing Stalingrad on the Eastern Front.

The Führer was “determined to capture Stalingrad at all costs”, Knopf reported. Hitler’s disastrous assault on the Russian city, which led to the destruction of the German 6th Army, is seen as a turning point in the war.

via Uncovered documents reveal spy who fed information on Hitler’s secrets – Times Online.

As the World Turns

Even though the waning of American hegemony can be clearly seen on the horizon, the fundamental reality is that it’s a long way off. China’s economy is basically only Japan-sized, and the country faces massive challenges starting with the fact that the majority of the population is still impoverished peasant farmers. India is even worse off. Japan is in demographic decline. Europe isn’t an actual country and can’t really make foreign-policy decisions.

In other words, our power is slipping away, but only very slowly.

via As the World Turns | The American Prospect.

Can Russia Modernize?

Putin is the tsar. He has both money — the government’s budget and the oligarchs’ fortunes — and the coercive power of the state firmly in his hand. He is the arbiter at the top and the trouble-shooter in social conflicts below. His most precious resource is his personal popularity, which adds a flavor of consent to his authoritarian regime.

But none of that is good enough. The 75 percent of Russians who make up the Putin majority are essentially passive and seek only the preservation of a paternalistic state. Putin can sit comfortably on their support, but he cannot ride forward with it. The best and brightest are not there.

Enter Medvedev. His Internet-surfing, compassionate and generally liberal image helps recruit a key constituency — those beyond the reach of Putin himself — to Putin’s plan. They include the country’s most apolitical citizens and its brainy, techy youth. Whether the plan succeeds is another matter.

via The Kremlin Two-Step | Opinion | The Moscow Times.

Why is Haiti so Poor?

Haiti, once called The Jewel of the Antilles, was the richest colony in the entire world. Economists estimate that in the 1750s Haiti provided as much as 50% of the Gross National Product of France. The French imported sugar, coffee, cocoa, tobacco, cotton, the dye indigo and other exotic products. In France they were refined, packaged and sold all over Europe. Incredible fortunes were made from this tiny colony on the island of Hispaniola.

The ultimate causes of Haiti’s misery are human. They are rooted in greed and power. Both the international community and Haiti’s rulers have continuously assured the destruction of Haiti’s colonial wealth and the creation and continuance of her misery.

1. The international community’s role.

1. French colonial contribution.

2. The international boycott of the new nation of 1804.

3. The French debt of 1838.

4. The United States Occupation, 1915-1934.

5. Post World War II United States domination.

2. The role of Haiti’s rulers.

1. Slave-like labor systems in the early republic.

2. The elite’s protection of its wealth.

3. Haitian corruption.

4. Human rights violations as a tool of oppression.

via Why is Haiti so Poor?. Continue reading “Why is Haiti so Poor?”

‘Doomsday Clock’ Moves One Minute Away From Midnight

Pervez Hoodbhoy, member, BAS Board of Sponsors, professor of high energy physics, and head, Physics Department, Quaid-e-Azam University, Islamabad, Pakistan, said: “We may be at a turning point, where major powers realize that nuclear weapons are useless for war-fighting or even for deterrence. Threats to security are more likely to come from economic collapse, groups bent on terrorizing civilians, or from resource scarcity exacerbated by climate change and exploding populations, rather than from conflict between nuclear-armed superpowers. Against these new threats, nuclear weapons are a liability because their possession by a few countries stimulates desire in other countries and complicates things immensely.”

via ‘Doomsday Clock’ Moves One Minute Away From Midnight — NEW YORK, Jan. 14 /PRNewswire-USNewswire/ —.

Is Ayatollah Sistani Iran Regime’s Biggest Threat?

Yet ironically, the regime may face its greatest threat not from within, but from outside the country. Ever since June’s contested election, observers have been keeping a close watch on Grand Ayatollah Ali al-Sistani (who hails from Iran but resides in the holy city of Najaf, Iraq), considered the highest living authority in all of Shiite Islam. Sistani comes from the “quietist” tradition of Shiite theology, one that, unlike the Islamic Republic’s ruling doctrine of velayat-eh faqih, holds that clerics should abstain from becoming directly involved in politics. So far, he has refrained from condemning the regime’s actions. But his clout is so strong in the Shiite world that, were this to change, the Islamic Republic would arguably no longer face just a political crisis within Iran, but also a crisis of religious confidence among all Shiites.

via WPR Article | Iran Faces Down Its Grand Ayatollahs.

Cracks in the Jihad

Today, the holy war is set to slip into three distinct ideological and organizational niches.

The first niche is occupied by local Islamist insurgencies, fueled by grievances against “apostate” regimes that are authoritarian, corrupt, or backed by “infidel” outside powers (or any combination of the three). Filling the second niche is terrorism-cum–organized crime, most visible in Afghanistan and Indonesia but also seen in Europe, fueled by narcotics, extortion, and other ordinary illicit activities. In the final niche are people who barely qualify as a group: young second- and third-generation Muslims in the diaspora who are engaged in a more amateurish but persistent holy war, fueled by their own complex personal discontents. Al Qaeda’s challenge is to encompass the jihadis who drift to the criminal and eccentric fringe while keeping alive its appeal to the Muslim mainstream and a rhetoric of high aspiration and promise.

Al Qaeda’s altered design has a number of immediate consequences. The global jihad is losing what David Galula called a strong cause, and with it its political character. This change is making it increasingly difficult to distinguish jihad from organized crime on the one side and rudderless fanaticism on the other. This calls into question the notion that war is still, as Clausewitz said, “a continuation of politics by other means,” and therefore whether it can be discontinued politically. Second, coerced by adversaries and enabled by the Internet, the global jihadi movement has dismantled and disrupted its own ability to act as one coherent entity. No leader is in a position to articulate the movement’s will, let alone enforce it. It is doubtful, to quote Clausewitz again, whether war can still be “an act of force to compel the enemy to do our will.” And because jihad has no single center of gravity, it has no single critical vulnerability. No matter what the outcome of U.S.-led operations in Afghanistan and other places, a general risk of terrorist attacks will persist for the foreseeable future.

via Cracks in the Jihad.