Monthly Archives: April 2009

Five Stories You Might Have Missed

A new report issued by the International Monetary Fund on Saturday suggests that the globally economy will contract by 1.3 percent in 2009 with a slow recovery beginning in 2010. While the United States has been pushing countries to expand stimulus spending, the IMF said that existing stimulus spending already committed for 2009 should be sufficient to address the crisis. A Friday meeting of the finance ministers of the G7 countries was more cautious, concluding that, “the pace of decline in our economies has slowed and some signs of stabilization are emerging,” but simultaneously warned that “downside risks persist.”

In news outside the global economic crisis from the last week:

1. The outbreak of a new flue strain has raised concern in Mexico, as 68 people have died and more than 1,000 have been infected. The World Health Organization is monitoring the situation to determine if it is likely to reach pandemic status. While the Mexican government is urging people to remain calm, authorities have already canceled more than 500 public events and many residents in Mexico City have opted to stay home rather than travel for shopping and work. Tests have also confirmed the virus has made people in California, Texas, Kansas, and New York ill.

2. Elections in Iceland have produced the country’s first center-left government. The previous government of Iceland had been forced to resign as a result of the devastating impact of the global financial crisis on the country. Preliminary election results give Johanna Sigurdardottir’s Social Democrats 30 percent of the vote. With their coalition partner, the Left Greens’ 22 percent of the vote, the coalition appears well-positioned to drive the political agenda in Iceland. Sigurdardottir becomes the first openly gay person elected head of state in the modern world. The first item on her agenda: Icelandic membership in the European Union.

3. While the Obama administration is hoping to resume the six-party talks with North Korea, the government of North Korea appears to be taking a more hardline stance. Earlier this month it test fired a long-range missile, sparking a confrontation with the UN Security Council. Last week, the government of North Korea last week announced it would put two U.S. reporters on trial, charging them with illegal entry and “hostile acts.” Additionally, after expelling international atomic inspectors two weeks ago, North Korea has announced its intention to resume plutonium extraction. It is widely believed that North Korea already possesses enough plutonium for six to eight nuclear bombs. According to some observers, the deteriorating relations between North Korea and the West may be part of the country’s efforts to force the United States into direct, bilateral negotiations.

4. The sharp upsurge of violence in Iraq, including two suicide attacks that killed 75 people outside a Shia shrine in Baghdad on Friday, have raised concerns that Iraq is sliding back into civil war. Recent attacks raise the concern of sectarian violence, suppressed by a strong U.S. presence over the past year, but never entirely defeated.

5. Reversing a longstanding policy of the Bush administration, Secretary of State Hillary Clinton announced on Thursday that the United States would be willing to work with a Palestinian government backed by Hamas so long as the organization met international demands to renounce violence and recognize Israel’s right to exist.  The Bush administration had refused to work with Hamas, which has effectively controlled the Palestinian government since it defeated its rival, Fatah, in elections in 2007. Meanwhile, Israeli Prime Minister Benjamin Netanyahu is under pressure to engage meaningfully in international diplomacy and to be seen acting.

And because it was such a busy week internationally, here are two bonus stories from this week:

6. The rebel Tamil Tigers in Sri Lanka on Sunday declared a unilateral ceasefire, a move almost immediately rejected by the government. An operation launched by the government last month has effectively confined the Tamil Tigers to a small enclave in the northern part of the country, and the government is expected to announce the defeat of the Tigers any day. But the United Nations has described the situation as a humanitarian disaster, with more than 6,500 civilians already killed and as many as 100,000 refugees created as a result of the fighting.

7. It was announced on Friday that China has become the world’s fifth largest holder of gold reserves, with 1,054 tones of gold. Seen as part of a broader strategy to diversify its nearly $2 trillion in foreign exchange reserves, the government of China has slowly been building its gold reserves over the several years. However, even with the recent purchases, China has a level of gold reserves (as a percent of its total reserves) far below that of the United States and other developed countries.

South Africa’s Elections

The BBC announced the final election results from South Africa. According to its reporting, the ruling African National Congress won 65.9% of the vote, a decisive majority but falling just short of the 2/3 majority needed to amend the country’s constitution. The Democratic Alliance’s second place finish—with 16.66% of the vote—was based on its regional support in the Cape.  The new Congress of the People, formed by breakaway members of the ANC, was never able to establish itself as a real alternative to the ANC as many electoral observers had forecast. Turnout was an impressive 77.3%.  South Africa uses a closed-list proportional representation electoral system, which means that seats in the parliament are distributed to political parties based on the percentage of the popular vote they win.  So the ANC’s 65.9% of the popular vote entitles it to 65.9% of the seats in parliament.

So what does all this mean for South Africa?

Well, most obviously, it means that the ANC will continue to dominate South African politics, as it has since the country overturned apartheid in 1994. Jacob Zuma, the ANC’s leader, will be named president.

But Zuma’s victory raises concerns about increasing ethnic tensions in South Africa. The BBC’s Farouk Chothia asked the question, “Will Zuma bring tribalism to South Africa?” Zuma’s use of race and ethnicity during the campaign (often referred to as tribalism) may have brought tensions in the “rainbow nation”—as Nelson Mandela described South Africa—to the surface. Tensions between blacks and whites, between Afrikaners and English-speakers, between Zulu and Xhosa, appear to be on the rise. Justice Malala, a columnist with the Johannesburg Sunday Times newspaper, commented, “This is exactly the sort of divide-and-rule tactic used by Mbeki to alienate some sections of the country…It implies that there is a hierarchy of South Africanness: that some among us are more patriotic, more African, more deserving, than others.”  New challenges for the rainbow nation.

Five Stories You Might Have Missed

It was a busy week in international diplomacy. President Barack Obama removed some restrictions on travel to Cuba. But the U.S. continues to demand political reform in Cuba as a precondition for further opening of relations between the two countries. Much has also been made of the encounter between Obama and Venezuelan President Hugo Chávez. Chávez gave Obama a gift and signaled his willingness to improve relations with the United States. The United States, however, opted not to attend a United Nations conference on racism due to the conference’s inclusion of Zionism on its agenda.

1. A draft of the final communiqué of the G8 meeting (the final communiqué will be released on Monday) concedes that the world is unlikely to meet the Millennium Development Goals agreed to in 2000. The MDGs include measurable targets to improve the plight of the world’s poor by 2015, including halving the number of hungry, having the number of people who live on less than $1 per day, eliminating gender disparities in all levels of education, and cutting child mortality rates. While the G8 statement will stress the need to achieve a consensus on agricultural reform, it does not include any specific financial pledges. For most observers, this makes the meeting—the organization’s first to deal specifically with agriculture—a failure.

2. Journalist Roxana Saberi was sentenced to eight years in prison after being found guilty of espionage by an Iranian Revolutionary Court. Saberi holds dual U.S.-Iranian citizenship and has been employed as a freelance journalist by many leading Western news agencies, including NPR and the BBC. Saberi’s sentence was longer than most observers had expected, and the trial and sentencing were condemned by the U.S. government. Iranian President Mahmoud Ahmadi-Nejad is urged the judiciary on Sunday to permit Saberi to defend herself in court.

3. Elections scheduled for Wednesday in South Africa appear to be on track, and the ANC appears well-placed to secure another two-thirds majority in the national legislature. Barring an extraordinary development, Jacob Zuma, the leader of the African National Congress, will be the next president of South Africa.

4. A suicide car bomb killed 25 soldiers and police as well as two civilians in Pakistan on Saturday. The Taliban claimed responsibility for the attack, which injured more than 60 people, and said that the attack was a response to U.S. drone strikes in Pakistan.

5. The International Monetary Fund agreed to unlock a $16.4 billion standby loan for the government of Ukraine. While the move is seen as a reflection of the growing confidence the international community has in the Ukrainian government, it also signals the continuing challenges posed by the global economic crisis. As part of the package, the Ukrainian government unilaterally adopted a series of tough concessions, bypassing parliament and undermining popular support.

The (Continuing) Problem of Piracy

Earlier this week, Secretary of State Hillary Clinton outlined a four-point plan for dealing with the continuing problem of piracy off the coast of Somalia. After a recent increase in attacks, including the much-discussed kidnapping of the captain of the Maersk Alabama, Clinton’s plan is an attempt to develop a more compressive solution to the problem. The Clinton plan includes:

  1. Sending an envoy to the upcoming Somali donor’s conference to develop a plan to improve the situation in Somalia.
  2. Increasing the multilateral response to piracy by expanding U.S. cooperation with the Con tact Group on Piracy Off the Somali Coast (CGPCS).
  3. Encouraging greater criminal prosecution of pirates by the states of the international community.
  4. Eliminating the financial incentive for piracy by tracking and freezing pirates’ assets and by refusing make concessions or pay ransoms for captured prisoners or ships.

The solution to the problem of piracy depends largely on how the problem of piracy itself is framed. Blogging at FP, Elizabeth Dickinson notes that Somalia is quickly becoming one of the world’s largest hostage crises. But in framing the problem primarily as one of criminal activity, she advocates policing solutions. Chris Blattman highlights the problem of incentives—essentially, that piracy pays.  He’s right, but again, this frames the problem as one primarily of criminality, leading again to solutions of increased policing. And at least three of Clinton’s proposals also fall into this camp.

But if we think of piracy as not just an act of criminality but also as a rational decision in the context of the failed Somali state, then solutions to the crisis must extend beyond increasing patrols and prosecutions. Since 1991, Somalia has effectively been without a government, and has instead been ruled by local militias and which have essentially divided the country into their own private fiefdoms. In the absence of a central authority, the formal economy has similarly collapsed, cutting off options for gainful employment for Somalis. In the absence of other options, young men turn to the militias (or piracy) for employment. As long as there remains no other viable options, piracy will continue to be a problem in Somalia. The long-term solution to the problem of piracy thus rests not just in treating it as a simple criminal activity. Any pirates arrested and tried could quickly be replaced from a waiting pool of recruits. Instead, real effort must be made to establish a stable political economy in the country. Unfortunately, this is probably the hardest of Clinton’s four proposals; it is also the most necessary.

Five Stories You Might Have Missed

The problem of piracy off the coast of Somalia continues to be a problem for the international community. Despite the presence of U.N. sanctioned international forces—which at times has among others involved U.S., E.U., Indian, German, British, French, and Portuguese naval vessels—Somali pirates last week attacked a U.S.-flagged ship and seized control of an Italian-flagged tug. The U.S. navy is engaged in a standoff with pirates who kidnapped the captain of the Maersk Alabama after its crew prevented them from taking control of the ship. In another standoff, French forces stormed a yacht held by pirates on Friday. One hostage and two pirates were killed in the operation.

In news from outside the Gulf of Aden last week:

1. The government of Thailand declared a state of emergency in Bangkok, the country’s capital, on Saturday, hoping to bring to a close the recent uptick in anti-government protest in the country. Under the terms of the state of emergency, the power of the government to arrest and detain people is significantly expanded, and large gatherings are banned. The opposition labeled the state of emergency as “an act of war.” An estimated 80,000 people took to the streets of Bangkok on Wednesday, demanding the resignation of the government of Prime Minister Abhisit Vejjajiva, who has been in office for five months. On Saturday, protestors in the Thai resort town of Pattaya forced the cancellation of a three-day summit of the Association of South East Asian Nations, embarrassing the Thai government.

2. The United Nations Security Council appears to be moving forward with a statement condemning last week’s rocket launch by North Korea. The statement, expected to be approved by the body on Monday, is a compromise between the demands of the United States and Japan for a resolution condemning the launch and China and Russia’s desire for a more cautious approach. Sanctions imposed by the UN Security Council following a North Korean nuclear test in 2006 have not been effectively enforced, but the current statement would permit the Security Council to extend or expand the sanctions.

3. Alberto Fujimori, former president of Peru, was sentenced to 25 years after being found guilty of human rights violation on Tuesday. Fujimori was elected president in 1990, but staged in coup in 1992, suspending the constitution and closing down Congress. At the time, the country was engulfed in a civil war, with the government fighting against the Shining Path and Tupac Amaru revolutionary movements. During the war, both sides regularly engaged in kidnapping, murder, and other crimes against humanity. Fujimori was the first democratically elected leader in Latin America to be tried in country for human rights violations and his trial is widely viewed as a potential model for other countries to follow.

4. The trial of Iranian-American journalist Roxana Saberi is expected to begin this week. Saberi, who has worked for the BBC, National Public Radio, and Fox News, among others, was arrested by the government of Iran on charges of espionage two months ago. Saberi’s trial would complicate overtures by the U.S. government to enter into formal, country-to-country negotiations with Iran over the status of its nuclear program.

5. Political instability seems to be the rule of the day in the “privileged sphere of influence” claimed by Russia. Thousands of protestors have taken to the streets of Tbilisi, demanding the resignation of Georgian President Mikheil Saakashvili. The protests lack a unified theme, but common points of concern include increasing unemployment, Saakashvili’s poor handling of the war with Russia last August, and his attempts to limit the independence of the judiciary. Meanwhile, the constitutional court in Moldova granted Vladminir Voronin’s request to recount ballots from last Sunday’s disputed presidential election. Voronin’s community party won nearly half the popular vote and would get to choose the country’s next president. But anti-communist groups have refused to recognize the outcome and ransacked the president’s offices lat week.

Gates’ New Pentagon Budget

The Obama administration’s Pentagon budget proposal gives some indication about the thinking of the new administration on the role and status of U.S. forces abroad. Most telling is the decision to phase out production of the F22 Raptor and other high profile, high-tech weapons systems. According to Gates, these systems are not suited for the new missions of the U.S. military, which have tended to focus on counter-insurgency operations and nation building. Blogging at Small Wars Journal, Lt. Col. Paul Yingling argues that, “Unlike previous eras of great power politics, the United States now has more to fear from weak states than strong ones.” (His entire talk is brief and makes a compelling case.)

The single-largest obstacle to reforming the military to enable it to address contemporary challenges comes, according to Yingling, not primarily from the military but from the bureaucracy. The F22 Raptor, for example, costs about $360 million per copy. Parts for the aircraft are produced in 44 states, making it a Congressional boondoggle. Members of Congress who have production facilities in their home states are unlikely to oppose the project, no matter how ill-suited the plane may be to current operational needs. As a result, the military gets what Congress wants it to have.

The details of Obama’s plans have not been made public yet, and the quadrennial forces review is not scheduled to be undertaken until next year. Nevertheless it seems clear that we must avoid the temptation to fight the last war. The Cold War is over, and massive state-on-state conflict seems increasingly unlikely. Future threats are far more likely to come from non-state actors, like al Qaeda, or (increasingly) from threats like global climate change or state collapse. And no matter how technologically advanced an F22 is, it’s unlikely to help address those challenges.

Five Stories You Might Have Missed

The headlines this week were dominated by the G20 summit in London. The final communiqué produced by the summit committed $1.1 trillion to the International Monetary Fund (little of which was actually new money) and pledged some reforms for the structure of the institution. But the G20 was unable to agree on a new global stimulus package and failed to create an effective system of regulating global finance.

In other news from the last week:

1. Nuclear politics moved in two opposite directions over the weekend.  North Korea on Sunday launched a rocket over Japan and into the Pacific Ocean. The launch, widely viewed as a precursor to the development of an intercontinental ballistic missile system capable of striking the western United States, produced a sharp rebuke from other states, including Japan, South Korea, and the United States. According to a statement issued by the government of North Korea, the rocket successfully delivered into orbit a satellite transmitting revolutionary songs back to the earth.  But according to reports from the Pentagon, the rocket and its payload fell into the Pacific Ocean after the second stage of the rocket failed to properly ignite.  The U.N. Security Council is scheduled to take up the topic on Sunday afternoon.

2. As part of a policy review commissioned by the Obama administration, the United States government is considering a dramatic change in policy vis-à-vis Iran. While the U.S. has maintained its steadfast opposition to Iranian enrichment efforts, Iran has maintained its sovereign right to enrichment of nuclear fuel. The irreconcilability of the two positions has led the administration to consider dropping its opposition to Iran’s uranium enrichment in exchange for increased access by international monitors to Iranian nuclear facilities. It is generally believed that Iran currently maintains approximately 5,500 centrifuges and has amassed a stockpile of 1,000 kg of low-grade uranium, enough to produce one nuclear bomb if the uranium were sufficiently enriched.

3. A meeting of the NATO heads of government produced an agreement to deploy 5,000 additional troops to Afghanistan to monitor upcoming elections and train Afghan soldiers and police. Importantly, the alliance also agreed to appoint Anders Fogh Rasmussen, the Danish prime minister, as its new secretary-general. Rasmussen’s appointment was initially opposed by the Turkish government, whose opposition was driven by the controversy over anti-Muslim cartoons in Danish newspapers last year. Rasmussen was nevertheless appointed to direct the organization, but his position as secretary-general raises concerns about the wisdom of appointing a director whose appointment is regarded by the Muslim world as an affront.

4. A lawsuit filed in U.S. federal courts under the Alien Tort Claims Act against Royal Dutch Shell is moving forward. Shell is being sued for their involvement in the execution of human rights activist Ken Saro-Wiwa by the government of Nigeria in 1995. In bringing the suit, lawyers are hoping to force Shell to disclose their role in human rights violations in the Ogoni district of Nigeria. The case, which is scheduled to commence in New York on May 26, is also widely viewed as a test case to determine if multinational corporations can be sued for damages for their operations abroad.

5. U.S. officials announced on Thursday that it will expand the scope of funding extended to help Mexico’s anti-drug initiatives. Under the Merida Initiative, the U.S. originally committed to providing the Mexican government with $300 million to help in anti-drug efforts. In response to calls by the Calderón government, some now believe that the U.S. may expand the initiative to as much as $1.4 billion.

Assessing the G20

The G20 summit has now concluded with a final communiqué outlining the common points of agreement between participants. The blogosphere has already parsed the outcomes, and the reviews are decidedly mixed. The meeting failed to create of a stricter system of global financial regulation; nor did it establish global stimulus package, two of the most important (and admittedly the most controversial) items on the agenda.

According to the Baseline Scenario emerging markets (like China, India, and Brazil) were the big winners, as the Europeans lost control of the International Monetary Fund’s managing director position. Most observers, however, were much more sanguine. Blogging for Foreign Policy, David Rothkopf described the meeting as important for its symbolism but falling short in substance.  Paul Krugman generously described the outcome as “better than I expected,” pointing to the increase in funding for the IMF.  And Dani Rodrock called the outcome “a glass half full.”

But in the Financial Times, Chris Giles notes that the G20’s communiqué likely overstates the actual increases in funding for the IMF. While Barack Obama and Gordon Brown were touting the $1.1 trillion in new funding for the IMF, the actual figure was probably far less than that…probably closer to $100 billion, according to Giles.

In reality, the final outcome of the G20 summit probably will do little to address the global economic crisis. As Clive Crook concludes,

In the longer term, it matters even more that the governments of some huge and (until recently) fast-growing economies, such as Brazil, China, and India, are being given a bigger voice…Valuable as entrenching the G-20 and reviving the IMF may be, though, the most urgent need at this summit was to deal with the immediate danger of a worsening global slump. Designing a coordinated fiscal stimulus to expand global demand, keep people at work, and relieve the pressure for competitive devaluation and new trade restrictions — the means by which governments traditionally try to export their unemployment — was the prize that mattered most.

While Brazil, China, and India will almost certainly garner greater influence in the international financial institutions as a result of the shift, such a shift was likely to occur with or without the summit. China’s $2 trillion is U.S. dollar-denominated assets makes it a critically important player in international economic discussions.  And its suggestion of moving away from the U.S. dollar as the global reserve currency demonstrates its willingness to use its position to influence international talks.

Will the G20 Bust?

The G20 is meeting in London tomorrow. It is supposed to address the ongoing global economic crisis. But there appears to be some widespread disagreement between its members over how precisely to do that. Germany and France are pushing for stricter financial regulation. The United States wants Europe to commit more money to their economic stimulus efforts. Argentina, Brazil, South Korea, and China want a greater say in the international financial institutions.

Not surprisingly, the blogosphere is alive with discussion of the G20 spectacle. France’s threat to walk out of the G20 meeting unless agreement is reached on “key issue” of offshore tax havens was greeted with ridicule by Dani Rodrik. Gideon Rachman argues that the G20 is focusing on the wrong issues; that unless the problem of toxic assets in the banking sector is addressed, no financial stimulus or regulatory changes can be successful. Alex Evans and Rob Elliott both argue that the G20 should not forget the environment in their discussions.

And Daniel Drezner, who always seems to be at the forefront, has already leaked the G20’s final communiqué, the Miracle of London, in which all the G20 parties get everything they want, thereby resolving the world’s economic crisis and achieving the goals of Security Council reform and concluding the Doha Round in one fell swoop—okay, this was an April Fool’s gag, but a good one!

But back in the real world, I’m suspicious that the G20 will not be able to produce any real agreement. The problem is that, despite his popularity, Obama faces an uphill battle in convincing the other G20 countries that they should sacrifice for his program. As Clive Crook surmised, Obama’s nice guy image buys only so much goodwill. This is a classic example of the free rider problem. The G20 members are each hoping that the other members will bear the cost of stimulating the economy, saving them from having to do it themselves. At the same time, no single country has the hegemonic position necessary to advance real, fundamental reform of the global financial system. As a result, I believe we are more likely to see piecemeal changes to the international financial institutions. Perhaps the International Monetary Fund will move to an open selection process for its Managing Director. But any real restructuring of financial regulations would depend on closer cooperation between the United States, Europe, China, and other leading financial players. And I don’t see that in the cards. Hegemonic stability theory tells us that the construction of any effective and powerful international regime (such as a global system of financial regulation) requires the existence of a hegemon willing and able to create and enforce norms, and having the economic, technical, and military capacity to do so. The United States was clearly this country after World War II, as was the United Kingdom during the period of Pax Britanica. The overriding question, then, is whether or not the United States (or some other country) plays that role today. Of that, I’m not sure.