The Weekly Dispatch

June 10 - 16

2013-06-16T00:00:00-07:00

Hello, and welcome to the Dispatch for June 10 − 16!

This is the second dispatch in the new format, and the first “off week,” so this week is just the world briefing. I’ll have a longer form essay again next week.

World Brief

Iran

Hassan Rowhani, a cleric and former nuclear negotiator, was elected President in a landslide on Saturday, securing 50.7% of the vote, more than 30% more than the next closest candidate and enough to avoid a run-off. Rowhani was seen as the most moderate candidate, and received a huge boost on Tuesday when Mohammad Reza Aref, the reformist candidate, dropped out and endorsed Rowhani.

Rowhani was the most moderate of the presidential candidates, but that’s not saying much: all six candidates were approved by the Guardian Council, which rejected several other candidates seen as challenging to Ayatollah Ali Khamenei. While the president doesn’t have a lot of power in the country, his victory is very much a victory for the moderate and reformist groups in Iran: both the moderates and the reformists had threatened to boycott the elections, but at the last minute decided to throw their support behind Rowhani. The size of his victory over the other candidates - especially combined with the poor performance of Saeed Jalili, seen as Khamenei’s personal pick - suggests the political tide may be turning against the conservatives and hardliners in Iran.

North Korea

On Monday, North and South Korea agreed to high-level government talks aimed at re-opening two joint projects, including the Kaesong industrial plant closed in the latest spate of threats by the DPRK. On Tuesday, though, the planned talks collapsed over a dispute over who would attend the talks: South Korea proposed to send their unification minister, requesting the North do the same. The North responded by offering to send a lower-ranking official; when the South responded in kind, the North accused them of “grave provocation” and cancelled the talks. On Sunday, North Korea proposed high-level bilateral talks with the US government.

NightWatch points out the North’s guest list shell game with South Korea indicates the North has no real interest in the talks - the North’s original offer of talks proposed the countries send ministerial-level officials, and they clearly reneged on this offer. The offer to the US would likely meet the same fate - the DPRK isn’t offering talks because it wants to, it’s offering talks because China has demanded them, and it’ll take any flimsy excuse it can to call them off and claim injury.

Syria

The Obama administration announced on Thursday that it had concluded the Syrian Government had used chemical weapons on its own people several times in the past few months. In response, the US would begin supplying the rebels with weapons and ammunition.

My sense is this has less to do with the use of chemical weapons - the incidents the administration indicates were back in October, and the evidence now is just as strong as it was then - and more to do with the string of military defeats the rebels have suffered recently. The Syrian army, with strong support from Iran and Hezbollah, have retaken rebel territory and are staging for an attack on Aleppo. The loss of that city would be a huge - possibly fatal − blow to the rebellion. As reluctant as the administration has been to get involved in Syria, it clearly doesn’t want the Assad regime to survive, and it especially doesn’t want Hezbollah and Iran to get credit for the victory. Arming the rebels, despite concerns over islamists in their ranks, is the only way to prevent that from happening now. Once again, Syria is bereft of good options.

Turkey

The showdown in Turkey between Prime Minister Recep Tayyip Erdogan and protestors angry at his increasingly autocratic government continued this week. On Monday, Erdogan agreed to meet with leaders of the protest movement on Wednesday, a promise he undercut by ordering police to clear the square on Tuesday. A meeting with a group of protest leaders on Thursday led to a tentative agreement in which construction in the park would be postponed until after a hearing against the plans, but many protestors rejected the agreement and vowed to stay in the park - as one protestor put it, “Of course the prime minister has to respect the courts – that’s the rule of law, it is not a concession.” On Saturday evening, riot police stormed the park, using tear gas and rubber bullets to eject the protestors. The protestors vowed to return, while on Sunday Erdogan held a triumphant rally with his supporters in Istanbul.

The protests are almost certainly not over - the brutality of the police crackdown on the original park protestors was what sparked nearly three weeks worth of widespread protests to begin with. What is over, though, is Erdogan’s broader political ambitions: Erdogan, who is barred from serving more than two terms as prime minister, has been trying to amend the constitution to create a more powerful president with hopes of being elected to that office. Already even his allies were lukewarm to the idea; after this debacle, it’s almost certainly dead. The protestors may not succeed in saving Gezi Park, but they have effectively brought down Erdogan.

Thanks for joining me, and my best for the week ahead!

Eric

May 28 - June 9

2013-06-09T00:00:00-07:00

Hello, and welcome to the Dispatch for May 28 - June 9!

Starting with this Dispatch, I’m switching up the layout. I started the Dispatch to help me improve my writing and my analytical skills. It’s worked well for a year and a half, but I’m finding myself without enough time to write anything in-depth. To more closely align this project with my other goals, I’m changing the format - I’m going to keep the world briefing, though it’ll be a bit shorter, and I’m going to start including a longer, more in-depth essay every other week. I’m hoping this will give me the chance to explore a variety of issues more deeply while still offering value to you, the reader.

As always, let me know what you think, and thanks for reading!

World Brief

Domestic Surveillance

The Guardian and the Washington Post this week published two documents illustrating the scope of the NSA’s domestic surveillance programs. The first is a court order instructing Verizon to turn over all call records to the agency; the second a set of powerpoint slides describing a system called Prism which purports to give intelligence agents access to all customer records from a variety of web companies including Google, Apple, Microsoft, Facebook, Yahoo, and more.

The companies mentioned in the Prism program have all issued similar denials, stating they A) have never heard of Prism, B) don’t give the government a “backdoor” into their systems, and C) only comply with legal requests. None of that’s particularly reassuring: Prism is an internal NSA codename, the slides are sparse on technical details, and, as the Verizon court order shows, a request being legal doesn’t make it a lot less concerning. Some transparency might help the government make its case: it’s possible, as the President and several members of Congress asserted, that the program is limited, focused only on specific threats, and both useful and necessary to national security − but right now, all we’ve got to go on are a handful of slides and an alarmingly over-broad secret court order.

Syria

The EU failed to renew an arms embargo against Syria, opening the door for Britain and France to supply weapons to the uprising. Both countries have said they will not do so, though, unless peace talks fail. Opposition leadership announced they would not participate in talks, though, until they got resupplied with weapons and ammunition.

The announcement by the UK and France was designed to put pressure on Assad ahead of the peace conference. The last couple weeks, though, have been particularly bad for the opposition - Hezbollah and Iran have helped the Syrian army with its most successful offensive to date, forcing the FSA to abandon a key city entirely and putting the rebels in their weakest bargaining position in more than a year. Neither the rebels nor the Assad regime are placing any real stock in the peace talks - why on earth anyone else is remains a mystery.

Honduras

The Mara Salvatrucha and the 18th Street gangs, the two most violent gangs in Honduras, declared a cease fire with the government in exchange for help rehabilitating their members.

This is extremely similar to a truce last year in El Salvador between the two street gangs, both of whom were originally LA-based street gangs whose members were deported back to Central America. If the overall peace holds, it could be a significant change, both for Honduras, which has the worst murder rate in the world, and for drug trafficking through Central America.

Venezuela

Prices rose more than 6.1% in Venezuela in the month of May alone, raising the annualized inflation rate to 34.2%.

Most of the price pressure is due to economic mismanagement during Hugo Chavez’s presidency and rampant government spending leading up to the 2012 election, but it’s Chavez’s already unpopular successor Nicolas Maduro who will have to pay the bill. Back in April, I predicted a rough few years for Maduro - his United Socialist Party has secured its support largely through government-funded social programs and widespread subsidies, but the inflation they’re producing is becoming a huge drag on the economy. Maduro has neither the charisma nor the rising oil prices that kept Chavez afloat; he’s going to have to choose between Chavez’s “21st century socialism” and a functioning economy.

Penguins in Turkey

On May 31st, after four days of protests over park redevelopment plans, Turkish police stormed Taksim Square, attacking protestors with water canons and tear gas. News of the crackdown on what’s quickly become the largest protests in recent Turkish history spread quickly on Twitter and international media, but inside the country, CNN Turkey showed a documentary on penguins. The penguins have since become a symbol for the protests, showing up in graffiti, internet memes, and even on the shirt of an actor interviewed on CNN Turkey. There’s a reason the penguins have become such a symbol: CNN Turkey’s penguin documentary, more than the park itself, represents what these protests are really about.

A Bit of Turkish History

The modern Turkish state was founded in the 1920s out of the ashes of the Ottoman empire. The Turkish Republic is the brainchild of its first President, Mustafa Kemal, later given the honorific title of Atatürk, or Father of the Turks. Atatürk designed Turkey as a modern, secular nation-state abolishing the Sultinate, establishing a representative democracy, and pressing for equal rights and representation for women. He is still celebrated today as the father of modern Turkey. In the decades that followed, though, the repression of Islam, the oppression of the Kurdish people, widespread corruption, and a series of repeated coups have cost the Kemalists much of their support among the people.

The rise of the Justice and Development Party (the AKP), a center-right Islamic party, in 2002 was largely seen as a repudiation of the Kemalists. The party’s leader, Recep Tayyip Erdoğan, has been Prime Minister for 12 years now, and the AKP has won every election since with nearly 50% of the popular vote. For his part, Erdoğan has made good on his mandate: Turkey’s GDP has grown rapidly last decade, a series of court cases against generals seem to have blunted the threat of military coups, the peace process with the Kurds is starting to show fruit, and Turkey has been taking a much more active and prominent role in the world stage. So how does a popular, democratically elected government with a strong performance record wind up facing the sort of protests we’re seeing?

The Penguins

There’s no one thing which has turned Turkey against Erdoğan. Even though almost all of Turkey identifies as Muslim, the AKP’s attempts to impose a moral code on a nation accustomed to a secular, modernist lifestyle have rubbed many the wrong way. A recent law banning alcohol sales at night or within 100M of a mosque or school met with annoyance by many Turks. Even in a country where 80% don’t drink, the law seemed paternalistic and overbearing. Erdoğan’s decrees encouraging women to have at least three children so the nation can grow strong and attempts to outlaw abortion came off ham-handed and out of touch. The rapid redevelopment of Istambul is another component of the anger. Erdoğan’s government has concentrated on construction as a driver of economic growth, and several protestors expressed their anger over the number of shopping malls being developed without public input. In a particularly tone-deaf move, a bridge over the Bosphorus strait is now being named after an Ottoman Sultan responsible for a massacre of Alevis, a group that makes up about 10% of the Turkish population. The common thread across all the protestors’ complaints is what is seen as Erdoğan’s attempts to shape Turkey in his own image as an Islamist nation.

This is where the penguins come in. Until the police crackdown, the protests at the park were relatively minor. The attack by the police, though, and the accompanying media blackout, have become a focal point for the anger in Turkey against Erdoğan. The proper lens for the Turkish protests is Occupy, not Tahrir: the protestors aren’t looking to overthrow the government, they’re protesting a government they don’t feel is listening to them. Erdoğan has said that he could put a million supporters in the street if he wanted, which is completely beside the point: there’s hundreds of thousands of people already protesting, and their main complaint is that a democracy isn’t supposed to be winner-take-all.

Erdoğan or the Nation

Erdoğan has been defiant since the protests began, vowing to go forward with the redevelopment plans. He threatened to send his own supporters into the street, has called the protestors “looters” (a phrase they now wear with pride), and has spoken ominously of “running out of patience” with the protests. Should he succeed in ending the protests by force, it will be with chilling effects on Turkey’s democracy. The Taksim protests are larger and more widely supported than the Occupy protests ever were. They represent the legitimate grievances of a large portion of the Turkish population and a serious push-back against a growing authoritarianism on the part of the government. There’s no way to end these protests by force and still have a representative system afterward.

Any peaceful end to the protests will have to involve the AKP. There’s simply no other legitimate opposition to speak of - many of the protestors even voted for the AKP. Fortunately, while Erdoğan may be the face of the AKP, the party is not monolithic. Others in the party have taken a more conciliatory tone, most notably Abdullah Gul, Turkey’s President. Gul is a cofounder of the AKP (along with Erdoğan) and was responsible for having the the police pulled out of Taksim Square after the initial crackdown. He gave a spirited defense of the right to protest shortly thereafter, and has been working to try to calm the situation. Gul and others in the AKP represent the best chance for both a peaceful end to the protests and the political change required to prevent their re-emergence.

I suspect this will end with Erdoğan backing down. He has a lot of support, but he doesn’t have the sort of support either inside or outside the government to be able to end the protests by force. My guess is that the rest of his party will pull enough support from him to force him to back off or to resign. Turkey is still a democracy, and Erdoğan is not a dictator. The other remaining wildcard is the military. While Erdoğan largely brought them to heel, it’s unlikely they’d sit idly by and watch Erdoğan steamroll the protestors. For the AKP, then, the choice is either bring Erdoğan back into the fold or face the possibility of another coup. I suspect they’ll choose option 1.

Final Thoughts

I hope you’ve enjoyed the Dispatch this week, and I hope you like the new format. My intention right now is to publish the brief news summary weekly, and to have a longer essay attached every other week. I’ve found a week’s news is easier to summarize than two, but one week’s a pretty quick clip for longer-form writing. As always, I welcome feedback!

Thanks for joining me, and my best for the week ahead!

Eric

May 20 - 27

2013-05-27T00:00:00-07:00

Hello, and welcome to the Dispatch for May 20 − 27!

Note: This week’s dispatch is a bit short because it’s a holiday.

Syria

The Lebanese group Hezbollah has made good on its earlier promises to become more involved in the Syrian civil war, supporting the Syrian Army’s recent assault on Qusayr, a rebel-held city used for transporting supplies. After several days of fighting, Hezbollah’s leader Hassan Nasrallah declared the group’s full commitment to the fight to save the Assad regime in Syria. The group’s increased involvement in the civil war is spreading the conflict into Lebanon; minor street battles have raged all week in the north of that country, and a pair of rockets that hit Beirut were blamed on Syrian rebels.

Hezbollah relies on Iran for weapons, money, and supplies. The Assad regime in Syria has been the main conduit for Iranian support; if Assad falls, Hezbollah’s access to its patron will be severely curtailed. The peace talks, on the other hand, offer a better outcome, since any peace agreement will wind up preserving at least some of the current regime’s power. How much power Assad retains depends on how strong his hand is at the negotiating table - in other words, how much territory he still holds. If Hezbollah can help Assad take back parts of the country before negotiations begin, they may be able to preserve their current support network. In that case, Hezbollah’s support for the regime will pay dividends for the group, both by maintaining its current resource pipeline and by buying favor with both the Assad regime and the Syrian military.

The US has hesitated to arm the rebels because of the extremist groups among them. The fear is that weapons could wind up in the hands of al-Qaeda affiliated groups, or worse yet, a rebel victory could provide a safe-haven for extremists. That’s a possibility. On the other hand, if the Assad regime survives, Hezbollah, a group that the US has declared a terrorist organization which does Iran’s dirty work, might get a huge boost in its operational capabilities, as well as a vast new territory to operate from.

North Korea

The Chinese press revealed on May 19 that a Chinese fishing vessel was seized by North Korea on May 5. The Chinese report said North Korean authorities had asked for $98,000 in ransom. A day after the seizure was made public, the boat was returned; the owner said he did not pay the ransom. On May 22, North Korean Vice Marshal Choe Ryong-hae made a visit to China, the highest-ranking North Korean official to do so since Kim Jong-Un came to power in 2011. The meeting was apparently not a social call: China repeatedly emphasized its desire for a de-nuclearized Korean peninsula and apparently instructed the DPRK to resume multilateral talks with South Korea and the west.

The fishing boat incident is bizarre: the piddly amount of ransom demanded and the huge likelihood of blowback from the Chinese indicates it was a rogue DRPK naval group, not an officially sanctioned action. China’s handled these seizures before with relative quiet, but the Kim regime’s stock in China is pretty low right now. The North Koreans have enshrined nuclear weapons in their constitution – it is literally against DPRK law to end its nuclear program − so denuclearization talks aren’t likely to be productive. China’s made it clear, though, that the last couple months’ rhetoric and instability are not to its liking, and forcing the North back to the table would be a huge embarrassment for the regime, even if the talks don’t go anywhere. My guess is China is also banking on what happens if the regime falls: nuclear weapons make what’s already a bunch of messy scenarios much, much worse.

Niger

On Tuesday, suicide bombers struck a military base and a French-owned uranium mine in the northern part of Niger. The Movement for Oneness and Jihad in West Africa, or MUJAO, an islamist group which had been fighting in Mali, claimed responsibility. A day later, Mokthar Belmokhtar, a militant whose group attacked an Algerian gas refinery in January, also claimed responsibility.

This is the first major terrorist attack in Niger. The targets and the groups responsible leave little doubt this is spillover from Mali (itself spillover from Libya, as a Nigerien official pointed out). The attack in Algeria, the campaign in Mali, several attacks in Libya, and now the attacks in Niger show the geographic range of the groups. The militant groups are not particularly capable - a French force of a couple thousand was capable of routing them from Mali. Unfortunately, the African militaries intended to replace the French aren’t terribly capable either. Even in the two attacks in Niger, the Nigerien army apparently required reinforcement by French special forces to repel the militants. This doesn’t bode well for France’s attempts to withdraw from the region, nor the territorial integrity of the countries affected.

Thanks for reading, and my best for the week ahead!

Eric

May 13 - 19

2013-05-19T00:00:00-07:00

Hello, and welcome to the Dispatch for May 13 − 19!

Turkey

On Monday, the Financial Times reported on an energy deal between the Turkish Government and the Kurdish Regional Government of Northern Iraq. The deal, confirmed a day later by Prime Minister Erdogan, includes a partnership with Exxon Mobile on oil exploration in the Kurdish autonomous region in Iraq.

The Financial Times says the deal has been in the works for a while, and this might explain the sudden success of the peace talks between Turkey and the PKK. For the Kurds, this will be a huge win; they’ve been in conflict with the central government in Baghdad over oil revenues for the better part of a decade, and this deal loosens the Kurds’ dependence on oil infrastructure in the rest of Iraq. For Turkey, the deal promises more secure energy supplies at a better price and will allow them to cut imports from Iran as the US has demanded. The US has been cool on any oil deal that doesn’t include the Iraqi government so far, but given the state of the Iraqi government right now, I’m guessing the administration will take the win on Iranian oil and let this one go. So far, the deal is a great example of political realities trumping historical animosities.

North Korea

On Monday, after a week of relative calm on the peninsula, North Korea replaced its Armed Forces Minister, retiring a general who had been responsible for sinking a South Korean warship and shelling an island. A day later, an aide to Japanese Prime Minister Abe made an unannounced trip to North Korea for four days of talks. On Sunday, the DPRK launched four short-range anti-ship missiles into the sea of Japan.

The clearest signal this week was the launching of the anti-ship missiles: while South Korea and the US decried the action as a matter of policy, the tests were as non-threatening as a missile test gets. The Kim regime is obviously playing to a domestic base, but it looks like they’re not trying to provoke their neighbors with this launch - the short-range anti-ship missiles aren’t particularly impressive. The last few months of provocations have been an absolute disaster for the DPRK: they lost the Kaesong industrial complex and the $90M/month it provided, the Chinese cut off their bank accounts and starved them of oil for a month, they provided fuel to the hawks in South Korea and Japan to strengthen their own military forces, and they got slapped with another round of Security Council sanctions. We’ll see how the next few months go, but the first half of this year should provide enough fodder to demote or fire half the military command - if it leads to a bit less political jockeying in the DPRK, we may finally get some peace and quiet from the hermit kingdom.

Iran

What looked to be a quiet presidential election in Iran opened up on the 12th with last-minute applications by two candidates. The first, Esfandiar Rahim Mashaei, is the protege and chosen successor of current president Mahmoud Ahmadinejad; the second, former President Ali Akbar Hashemi Rafsanjani, is a cleric who supported both the Islamic Revolution in 1979 and the dissident Green Movement in 2009.

Both men are seen as a challenge to the existing political establishment, though Rafsanjani is the more interesting of the two: he was seen as close to Ayatollah Khamenei, and apparently helped orchestrate his ascension after Ayatollah Khomeini’s death. His support of the Green Movement uprisings in 2009 caused him to fall out of favor with the establishment, but he is still a member of the Assembly of Experts. He has been endorsed by the leaders of the 2009 Green Movement and is seen as the best chance for the moderates in Iran.

Iran is facing enormous economic challenges, due in large part to the sanctions it faces - estimates of its inflation rate are between 30% to 100% per year, and that’s not likely to improve anytime soon. That level of economic collapse is dangerous for a regime: the Arab spring was kicked off by protests over food prices and water scarcity. Given the challenges the country’s facing, Khamenei and the Iranian Revolutionary Guard should seriously consider just giving this one to Rafsanjani - if he succeeds in repairing Iran’s economy, great, the revolution continues and everyone gets to keep their heads; if not, in five years they can send the moderates into the woods and claim a “new start.” That’s damned unlikely, though - more likely is a replay of 2009, with a rigged election and a nasty crackdown to follow.

Nigeria

Following the massacre in Borno last week, Nigerian President Goodluck Jonathan declared a state of emergency in the northeast of the country, granting the military broad powers to combat Boko Haram. The military was quick to take up the mandate, launching a series of airstrikes on militant camps on Friday.

The Nigerian army hasn’t acted with restraint so far, and Goodluck’s declaration won’t be good news to anyone living in the northeast. The big question is the affect an all-out assault on the group will have on Nigeria’s neighbors: Nigeria is bordered by Niger to the north, Chad to the east, and Cameroon to the south. Boko Haram has already been active in Cameroon and Chad is just shy of ungoverned. Niger looks the most stable of the three, but the recent insurgency in Mali and the presence of a new US military drone base underline the country’s vulnerability.

Japan

Japan reported annualized economic growth of 3.5% for the first quarter, a phenomenal pace for a country whose growth has been effectively zero for nearly two decades. The growth has been partly attributed to the extremely aggressive monetary policy pushed by Prime Minister Shinzo Abe. On Friday, Abe announced a plan for more than $680Bn in infrastructure investment, as well as a focus on regulatory overhaul to improve economic efficiency.

Abe has committed to an extremely aggressive economic policy, one in many ways the opposite of the Eurozone’s austerity-first policies. Early signs are encouraging - exports rose 3.8% in the first quarter and the Japanese stock market rose more than 70%. This isn’t because Japan is in any better shape than Europe: it’s debt levels are estimated at 230% of GDP and the ossified regulatory structure and rigid labor market have shouldered much of the blame for Japan’s stagnation, while the Bank of Japan has steadfastly refused to engage in monetary expansion despite nearly two decades of near-deflation (the BoJ board has expressed its concerns about the new policy as well). Abe still needs to show his policies can make growth stick - Japan faces several daunting challenges, including a rapidly aging population - but it’s good to see someone somewhere actually taking growth seriously.

Thanks for joining me, and my best for the week ahead!

Eric

May 6 - May 12

2013-05-12T00:00:00-07:00

Hello, and welcome to the Dispatch for May 6 - 12!

North Korea

The Bank of China, a state-owned bank that is the second largest in China, closed the account of North Korea’s Foreign Trade Bank this week as required by recent sanctions on that country. On Tuesday, North Korea moved two medium range missiles off “launch-ready” status, easing fears of another pending missile test.

The bank’s move is inconvenient for the DPRK, but there are other institutions they can still do business with, even within China. The real significance is diplomatic: the bank is state-owned, which means the shutdown is a political decision. China is finally exerting real pressure on North Korea, which has, under Kim Jong-Un, spurned China on multiple occasions recently. NightWatch noted a bit ago that China had not exported any oil at all to North Korea in February; that, combined with the banking decision suggests China has decided to remind the Kim regime of its status and obligations. Whether or not it works remains to be seen - the recent bellicosity from the regime suggests internal politics are at play, but relocating the two missiles is a positive sign. Nobody expects the situation on the Korean peninsula to be resolved anytime soon, so seeing some indication of outside limits placed on the North’s range of action might be the best we get for now.

China

The Pentagon directly accused the Chinese government of hacking American military and commercial networks in its annual report to Congress. China refuted the claims, as it has refuted previous accusations over cyberattacks.

This is the first time the US Government has openly accused the Chinese government of hacking US computers. Chinese hackers have been increasingly aggressive in the last few years, and while private investigations have pointed to the Chinese government, US officials have not commented on the record until now. I doubt the US will take any serious action to retaliate - despite all the recent rhetoric about cyber-warfare, nobody’s going to jeopardize US-China relations over this sort of low-level espionage. Still, I’d expect these accusations to get louder, and I’d expect to start seeing trade action against China until it gets its act together. Already, several Chinese telecom companies are effectively blocked from US government contracts, and I suspect the administration will try to make the Chinese hacking program more costly and much more public going forward.

Pakistan

After a week of violence, including the kidnapping of the son of the former Prime Minister and a spate of bombings on election day, Pakistanis went to the polls on Sunday. The Pakistan Muslim League (PML-N) party looks to have won a handy majority, though the final results are not yet in. The party is headed by former Prime Minister Nawaz Sharif, who was deposed by the military in 1999.

If Sharif and the PML-N form a government, it will be the first time power has peacefully changed hands in Pakistan in the 40 years since the current constitution was drafted. The head of the military has stated the military will not intervene, and so far that seems to be the case. The cloud of violence over the election, though, is deeply troubling; many candidates were not able to campaign for fear of attack by the Pakistani Taliban. While the military’s absence from politics is generally laudable, this does seem like one area they could provide some value.

Guatemala

After a long and complicated trial, a Guatemalan court sentenced General Efraín Ríos Montt, the former dictator of Guatemala, to 80 years in prison for committing genocide and crimes against humanity over the Guatemalan military’s attempts to exterminate the Maya Ixil Indians during the early 1980s. Montt is the first former head of state to be put on trial for genocide by a national tribunal.

Montt ducked an earlier indictment attempt in 2007 by getting elected to parliament. His term ended in early 2012, and he was arrested shortly thereafter. Previous attempts to bring charges have been blocked by prosecutors and judges loyal to the general, and this trial was nearly scuttled as well. I’m glad to see justice done in Guatemala.

Syria

A brief note on Syria: I discussed the allegations of sarin use in the last dispatch, and I mentioned that they were still just that, allegations. Since then, the rhetoric and the intelligence have gone in opposite directions: much of the intelligence community agrees there’s no real evidence of sarin use, while the political rhetoric is moving increasingly towards intervention in Syria. While I’ve endorsed arming the opposition in the past, I want to reiterate: As of now, there is no real evidence the Assad regime has used sarin gas. The Obama administration’s “red line” has not been crossed, and suggestions to the contrary are inaccurate.

Thanks for joining me, and my best for the week ahead!

Eric

April 29 - May 5

2013-05-05T00:00:00-07:00

Hello, and welcome to the Dispatch for April 29 - May 5!

Nigeria

On April 22nd, Nigerian officials reported a clash between the Nigerian military and Boko Haram, a militant group, leaving more than 185 people dead. On May 1st, Human Rights Watch disputed the government’s account of the clash and accused the military of going on a rampage, burning more than 2000 houses and killing over 200 people. The Army denies the claims, but villagers from the town recounted stories of soldiers dousing houses with petroleum and lighting them on fire.

Nigeria is home to one of the bloodiest insurgencies in the world right now. The country is largely split between the ruling Christians in the South and the Muslim minority in the North, and the gross inequality between the two groups has fueled ongoing conflict. Boko Haram, an islamist group whose name loosely means “Western teachings are forbidden,” is the latest group to take up the conflict, and they’ve waged a bloody bombing campaign for more than two years, leaving hundreds dead. The military has contributed to the casualty count as well: its responses to attacks by Boko Haram are often indiscriminate attacks against villages, though the attack in April was large even by the standards of the conflict. Boko Haram’s behavior is deplorable, but it’s in line with the group’s aims: the rampant violence is meant to cause the collapse of the Nigerian State. The Military’s actions are just senseless, and it’s hard to see how it accomplishes anything but turning more people against the government and destabilizing the state further.

Myanmar

Another wave of anti-Muslim violence struck Myanmar on Tuesday when a Buddhist mob burned more than 100 homes, ransacked two mosques, and injured 10 people, one fatally, after a muslim woman collided with a buddhist monk while walking down the street.

The attacks are the first since March, when ethnic tensions spilled into riots. The anti-muslim sentiment has been an ongoing problem for Myanmar in the last year, with more than 200 people killed so far and tens of thousands displaced. Human Rights Watch has accused the Myanmar government of encouraging the ethnic violence, and footage from the attacks in March show police standing by while the mobs rampage. The violence and the government’s complicity are particularly disappointing given the recent promising moves towards democracy in the country - in the last year and a half, the country held elections, freed hundreds of political prisoners, and has liberalized the press. It has been praised highly by the US and the EU, but the recent campaign against the muslim minority should prompt some consideration before the last of the sanctions against the country are lifted.

India

On April 15th, around 30 Chinese soldiers advanced more than 10km past the Indian border into disputed territory, setting up a small camp with several tents and a banner declaring the area Chinese territory. After a three week standoff and several attempts at negotiations, the Chinese soldiers finally withdrew on May 5th.

While the Chinese government was quick to point out the border between India and China is not well defined, the incursion was a fairly transparent attempt to push China’s claim on the territory (the banner was a nice touch). China has several outstanding territorial claims with neighbors, and it has been getting more assertive in sending patrols to areas it considers its own, but this was fairly brazen.

Syria

On Tuesday, Hassan Nasrallah, the leader of Hezbollah in Lebanon, warned the group could become more heavily involved Syria on behalf of the Assad regime. On Friday and Sunday, a series of airstrikes attributed to Israel struck several Syrian military installations, including missile storage facilities and a research center connected to Syria’s chemical weapons program. Israel has not yet officially confirmed the strike, and while the Syrian government called the airstrikes a “declaration of war,” the country has not indicated any official response yet. Meanwhile, the British Defense secretary said the evidence offered of chemical weapon use by the Syrian government was “too degraded” to be conclusive, while a group of UN Inspectors announced they had strong suspicions that opposition groups had themselves used sarin gas.

Hezbollah has already been active on behalf of the Syrian regime for some time, but Nasrallah’s announcement is the first by the group that hints of their activities in the region. The Syrian regime has been one of the primary supporters of Hezbollah, serving both as a source of weapons and as a conduit to Iran, and the group has affirmed its loyalty to the Assad regime several times already. When asked about the airstrikes, Israeli officials responded “The state of Israel is protecting its interests and will continue doing so” - reports suggest the targets of the Israeli attacks were Iranian missiles destined for Hezbollah. The Israelis are betting that the Syrian army is already too busy to respond, which seems like a good bet – the last thing the Assad regime needs is another front in the war. The question is how seriously Iran takes the threat of losing Syria. The country has been Iran’s main point of influence in the broader Middle East - if Iran sees Israeli intervention in Syria as a serious threat to its own strategic landscape, Israeli action may lead to a broader conflict even if the Syrians opt to turn a blind eye.

The chemical weapons are a larger issue. I mentioned last week that the evidence for government was extremely shaky — a problem compounded by the Syrian opposition’s history of half-truths and exaggerations. It’s not looking better as the week goes on, and if the UN inspector’s reports wind up being true — and that’s a big “if,” especially since they’re in the country at the invitation of the Assad regime itself — it would almost certainly kill any proposals to funnel arms to the opposition. For the regime, the only possible reason to use chemical weapons right now is to test whether or not the West is serious, and that’s entirely too dangerous a game when the Syrian Army is still capable of inflicting plenty of damage the old fashioned way. Already after a week of rumor, the US is closer than it’s come in two years of conflict to getting involved - Assad’s managed this war too closely so far to screw up this badly now. For the opposition, on the other hand, accusations of chemical weapons use are the only thing that seems like it will get them the outside help they’re desperately seeking, which means any claims need to be subject to extreme scrutiny.

Thanks for joining me, and my best for the week ahead!

Eric

April 22 - 28

2013-04-28T00:00:00-07:00

Hello, and welcome to the Dispatch for April 22 − 28!

This is the third in a series of increasingly weekly dispatches. I’m hoping to keep it up.

I’ve also added the New York Times’ Emphasis plugin - it allows you (and me) the ability to link to specific paragraphs within a dispatch, instead of just the dispatch itself. I’ve mostly added it so I can cross link to other posts more easily, but if it’s the sort of thing you’d find useful, check the link above to see how to use it.

Syria

Israel claimed this week to have proof that the Syrian regime used chemical weapons in an attack that took place on March 19. The White House said on Thursday that US intelligence agencies had come to a similar conclusion, which the administration has previously said would be a “red line” in the Syrian conflict. On Friday, President Obama said that the US was still waiting for more conclusive evidence before deciding how to proceed, as the current evidence remains unreliable.

There are three reasons for the White House’s caution. First, the evidence is still spotty: the soil samples passed through many hands on their way to the intelligence agencies, the symptom reports are largely hearsay, and the rebels have been known to fake evidence of attacks in the past. Given the stakes, it’s prudent to wait until more solid evidence is available. That said, the evidence isn’t that shaky, and the situation in Syria isn’t going to allow much proper investigation - at the end of the day, this matter will be decided on the basis of intelligence assessments, not hard evidence. Second, the last time the US made bold claims about WMDs and a dictator in the middle east, it didn’t go particularly well - US claims of this sort are subject to a lot of scrutiny right now. Finally, though, we frankly don’t want to get involved. The US and the West have done everything possible to avoid actually committing military resources into a messy situation, and the hesitation to make a declaration on Syrian chemical weapon use is certainly driven in part by a desire to put off involvement as long as possible. This is a noble goal after a decade of military adventurism, but it’s starting to become untenable.

If the evidence continues to accumulate that the Syrian Army used chemical weapons, the US will be forced by its own rhetoric to act. Obama has called chemical weapon use a red line often enough that, if it becomes clear Assad has crossed that line, not taking action would be a substantial blow to US credibility abroad. This doesn’t seem a particularly compelling reason to go to war, but there are numerous conflicts around the world that are at least partially held in check by the credibility of US military assurances - including Israeli concerns over the Iranian nuclear program and the state of affairs in the South China Seas. A breach of US credibility in Syria would have effects beyond the Syrian conflict.

There are two actions the US could take to tip the balance of power in the Syrian conflict without actually putting boots on the ground. First, we can start actually arming the rebels. Fears of weapons being funneled to extremists are overblown - the extremists are already far better armed than the rest of the Free Syrian Army - and I think this is almost certain to happen if the White House decides the “red line” has been crossed. This would also give a boost to the groups most palatable to the US and restore part of our reputation among the opposition - there will still be a Syria five years from now, and it would be nice if the people in charge had good things to say about the West. The second, more costly, action would be imposing a no-fly zone over Syria, disabling the Syrian air force. The largest force disparity between the opposition and the government is in air power - the FSA is capable of taking and holding territory, but they’re still extremely vulnerable to the Assad regime’s air force. Removing the threat of bombings would allow the opposition true safe havens within the country and strengthen their hand significantly. The Syrian air force and air defenses are strong enough that this is a high-cost action, but neutralizing Syria’s air force would also mean the West could dodge questions of sending anti-air weapons to the opposition altogether, which would significantly lower the danger posed by weapons falling into extremist hands. The Free Syrian Army is underfunded, underarmed, fractious, and unable to effectively counter the Syrian air force - and despite all that has still managed to wage an effective campaign against the government. With any real outside support at all, I’d expect the tides to shift in favor of the opposition.

After Iraq, Afghanistan, and Libya, the US is extremely wary of getting involved in another conflict in the Middle East. The problem is, after 50-plus years of US engagement in the world, we’re too big and too connected to the rest of the world to be able to pull back like we want to. Syria is increasingly an example of this: the resentment building against the US in Syria isn’t because we got involved, it’s because we’ve avoided involvement in the face of mass atrocities and slaughter on the part of the government. If we ignore the use of chemical weapons, we’re sending a strong signal to the world, and not a good one.

Iraq

Iraq’s simmering sectarian conflicts exploded on Tuesday when government forces stormed a protest camp, resulting in a gun battle that left 26 people dead. That assault sparked several days of sectarian conflict across the country, leaving at least 40 more dead.

Prime Minister Nuri al-Maliki has managed to drag Iraq back into the sectarian war it just barely survived during the worst days of the American occupation. The day after American forces left Iraq, Maliki, a Shia, ordered the arrest of his Sunni Vice President on charges of running a death squad. The sectarian situation hasn’t improved since then - Maliki has continued to use government forces to persecute and arrest prominent Sunni leaders on flimsy evidence, and the Sunni minority in Iraq has started talking about joining their brothers in Syria in the fight against the Shia, who rule both Syria and increasingly Iraq. This is a sharp and unfortunate turnaround from the days of the Sunni Awakening, in which the Sunni militias turned against al-Qaeda fighters and helped end the country’s ferocious civil war. If there’s hope for Iraq right now, it’s that Maliki isn’t particularly popular even among Shia - Iraq is, for now, still a democracy. If the country can survive Maliki’s tenure for another year or so, the next elections may see him out.

Turkey

The Kurdistan Workers Party, or PKK, declared its fighters would withdraw from Turkey on May 8, marking a significant step in ending nearly 30 years of armed conflict in the country.

The withdrawal is the next step in a peace process which, after being stalled for years, started showing real promise this year. The tide seems to have shifted for the Kurds: they control the Kurdish region of northern Iraq, the Syrian army has left Kurdish lands in Syria, and, if the Turkish peace process continues, they could have a home in Turkey again. For Turkey, this looks like a political play: F. Stephen Larrabee of the Rand Corporation suggests Turkish Prime Minister Erdogan is looking to shore up Kurdish support for a bid at the presidency next year. Whatever the cause, the end of a 30-year insurgency is good for all parties.

Thanks for joining me, and my best for the week ahead!

Eric

April 15 - 21

2013-04-21T00:00:00-07:00

Hello, and welcome to the Dispatch for April 15-21!

Astute readers will note the events in Boston this week are missing. They were omitted after consideration for two reasons: first, I’m assuming anyone reading this has already been glued to the news out of Boston all week anyway - there’s really no need for a recap at this point. Second, I simply have nothing else to add right now: there’s a lot of theories about motives, affiliations, and outside groups, but nothing solid. If it looks like there’s some solid evidence to tie this to other conflicts or events, I’ll certainly aim to cover that, but right now there’s nothing but speculation.

Regular readers will also note this breaks a recent Dispatch trend by appearing to actually be a Weekly dispatch. I’m trying to get the Dispatch somewhat back on track - it’s actually a bit less stressful when it’s on a real schedule.

Venezuela

Hugo Chavez’s chosen successor Nicolás Maduro won an unexpectedly narrow victory against opposition candidate Henrique Caprilles, taking 50.6% of the vote to Caprilles’ 49%. Caprilles’ supporters took to the streets on Monday after being denied a recount, but by Tuesday, a sharp state crackdown left 7 people dead and prompted Caprilles to call off a march planned on Wednesday for fear of further violence. On Thursday, the National Electoral Council agreed to an expanded audit of the vote, though on Friday Maduro was sworn in as President.

The outcome is an embarrassment for Maduro and the Chavistas. Maduro was expected to win handily - Chavez had beat Caprilles himself by around 10 points less than 6 months ago. Given the advantages Maduro had - almost unlimited access to state funds, use of the state television station, and the blessing of Chavez himself - it’s likely he would have lost in a fair election. Given the widespread allegations of voter fraud, intimidation, and ballot stuffing, it’s likely he lost this one too, but that’s not how Venezuela under Chavez works. Chavez is dead, though, and given Venezuela’s flagging economy and the tough choices that will need to be made over the next few years, Caprilles and the opposition stand a good chance during the next election - provided Maduro doesn’t turn to the Army or his more militant supporters to shore up his support.

Pakistan

Former Pakistani President Pervez Musharraf, who returned late in March intending to take part in the upcoming Presidential Elections, has been confined to his house for at least two weeks to face charges of terrorism for firing judges in 2007. Musharraf has had a rough couple weeks: After a tepid reception upon his return, Musharraf was approved to run for parliament in a northern district before being banned by election officials. Disqualified from running for office, his bail was revoked by the courts, who ordered him arrested on the spot. He fled the court to his fortified villa, which has now been declared a “sub-jail,” though on Thursday he was re-arrested and brought back in front of the court, which placed him under house arrest for the next two weeks.

Musharraf’s ill-advised return appears to have been a flight of self-delusion for the former general, but it does pose some danger to the fragile politics of Pakistan. The courts will almost certainly rule against Musharraf: the head of the Supreme Court, Iftikhar Muhammad Chaudhry, was one of the judges removed by Musharraf in 2007, and the frontrunner in the current election is Nawaz Sharif, whose previous term in office was cut short by Musharraf’s 1999 coup, so it’s fair to say he doesn’t have many friends outside the military in Pakistan right now. The question is how many friends he has at all - the military so far has responded tepidly to Musharraf’s return, but the Pakistani courts have never indicted a general like this before, and there’s a possibility that a ruling against Musharraf could lead to a dangerous showdown between the military and the courts.

Guinea Bisseau

A US Grand Jury indicted Antonio Injai, the head of Guinea-Bisseau’s armed forces, on drug- and weapon-trafficking charges following a months-long DEA sting operation leading to the arrest of the former chief of the Guinea-Bissau navy José Américo Bubo Na Tchuto. The charges underscore recent accusations by both the DEA and the UN that the country is a major trafficking hub in West Africa.

The details from the DEA indictment are eye-popping: Na Tchuto’s brazenness and the sheer volume of cocaine discussed are stunning. Last April, the Guinea-Bissau army took over the country in a coup, and the military has been running the show since them. The country’s response to the indictment was to fire their top intelligence official for failing to spot the DEA sting operation, which I think says all that needs saying about the government’s stance. The real question is what the indictments will actually accomplish: the country is already well-known as a narco-trafficking hub, and the army was already known to be involved, so there’s not a lot of news here.

Italy

After repeated attempts to elect a new President, a required step to calling new elections, the Italian parliament re-elected current President Giorgio Napolitano to a second seven-year term.

Giorgio Napolitano is the first president to be re-elected in the Italian republic’s 67-year history. He is currently 87, which means he’s extremely unlikely to make it through a full 7-year term. His re-election is an open admission of the absolutely dismal state of Italian politics.

Thanks for joining me, and my best for the week ahead!

Eric

March 31 - April 14

2013-04-14T00:00:00-07:00

Hello, and welcome to the Dispatch for March 31 - April 14!

Note: This Dispatch was written on Sunday. Developments on Monday are not covered.

I missed a couple weeks for a couple reasons, but the Dispatch is back. I’m going to move writing back to Sunday - it’s too easy to slip during the week. Also, I’m now self-hosted again - tumblr gave me a few issues - so do let me know if you see any problems. Note the RSS feed has changed (same URL, but it’s been regenerated), so there may be some oddness there, and some associated weirdness with Mailchimp. That said, if you’re reading this in an RSS reader or an email, it’s obviously working well enough.

I also have a new post up on Bitcoin on my other blog - if you’re interested in the crypto-currency, you can read my take here:

Bitcoin is a 21st Century Hawala

So, let’s get to it!

Venezuela

Venezuelans went to the polls today to decide who will succeed Hugo Chavez, who passed away last month. Pre-election polls had Nicolás Maduro, Chavez’s vice president and chosen successor, ahead of opposition leader Henry Capriles by more than 10% leading into the elections.

Capriles and the opposition might be dodging a bullet here. Venezuela’s economy is in poor shape, and it’s not heading towards recovery. If Maduro wins, he will have to consolidate his hold over the fractious groups that make up Chavez’s movement; clean out the rampant corruption that threatens the movement’s support among the people; deal with soaring crime rates, rampant inflation, and falling oil production; and figure out how to maintain Venezuela’s role in the region without its charismatic leader. It’s going to be a rough term regardless of who’s in office, but it would have been a death knell for the opposition to take power for the first time in 14 years in light of all the challenges Venezuela faces. As is, unless Maduro is a much, much better politician than he seems to be, I think he and the rest of the Chavistas are in for a nasty few years. I’ll be very interested to see if the movement holds together in light of the extremely serious challenges it faces.

Update: Preliminary results indicate Maduro won by a mere 51-49.

Syria

The head of al-Qaeda in Iraq announced a merger with the al-Nusra Front, a prominent Syrian opposition group, on Tuesday. The al-Nusra Front followed up a day later by publicly pledging its allegiance to al-Qaeda, though it backed off from the talk of an actual merger. The group had been blacklisted by the US State Department for its ties to al-Qaeda in December. On Wednesday, Secretary of State John Kerry met with the Syrian opposition, pledging more US support for the opposition, though that aid is still restricted to nonlethal items like flak jackets and communication equipment.

The US has been reluctant to send weapons to the Syrian opposition in fear that they could wind up in the hands of groups like the al-Nusra Front. It’s a bit late for that, though: the al-Nusra front is already by far the best armed and trained group in the opposition thanks to its ties to the Iraqi insurgency. Because of that, the US’s caution, while understandable, has spawned exactly the situation it sought to avoid: al-Nusra is the best armed group in the opposition, which means it is the most capable and successful of the rebel groups. Its power and prominence is directly derived from its ample support by outsiders, while the secular groups the West prefers are languishing for want of weapons. As John McCain put it, “I can understand why a fighter in Syria is not comforted by the fact that he might get a flak jacket, especially when he’s being pounded with Scud missiles and air power.” We’re not making friends by refusing to arm the people we ostensibly support in Syria, we’re breeding resentment and increasing the comparative strength of the groups we don’t want assuming power. In the meantime, any semblance of secular Syrian opposition bleeds and dies for want of proper support.

North Korea

After more than a month of bluster and aggressive moves, including the closure of an industrial complex shared with the South, North Korea moved a pair of medium-range missiles into place on the east coast of the country, indicating it plans to attempt a missile test. South Korea and the US have warned the country not to go forward, while Japan has threatened to shoot the missile down. The most likely date for the launch would be April 15, the birthday of Kim il-Sung, the first leader of North Korea.

An assessment by the Defense Intelligence Agency, the Pentagon’s intelligence service, made the rounds this week. The previously-classified assessment declared with “moderate confidence” that the DPRK could now make a nuclear missile small enough to be delivered by a ballistic missile, while cautioning the device’s reliability would be “low.”

Finally, US Secretary of State John Kerry visited China in hopes of eliciting that nation’s support in finding a solution to the tensions on the peninsula. The meeting was apparently productive, with China indicating support for both denuclearization and continued peace talks.

The DIA report would be alarming, but the DIA has a bad track record assessing military capabilities - other intelligence agencies disagree with their assessment of the DPRK’s capabilities, and I do as well. North Korea so far has managed to test two quasi-successful nuclear devices underground and has managed to successfully launch one of its ballistic missiles - it’s highly unlikely they could successfully launch a nuclear ballistic missile right now.

The most likely resolution to the current crisis is a missile launch on the 15th. As long as the North doesn’t do anything stupid, like launch it at Japan or South Korea, that’ll probably be the end of the current crisis. That said, if the North miscalculates and provokes either country into shooting down the missile, the crisis could easily escalate. Neither South Korea nor Japan are in any mood to let the North slide right now.

Kerry’s trip to China looks successful — the Chinese seem to be losing patience with the North after repeated snubs by Kim Jong Un. I’m guessing Kerry also pointed out how much US military hardware was being moved into the region because of the recent tensions - far from buffering China against the West, the DPRK has done wonders for improving ties between the US and South Korea and Japan. The last thing China wants now is a war sending a wave of refugees across the North’s border.

Egypt

It’s been a rough month for Egypt’s embattled president Mohammed Morsi. After riots forced the police from Port Said, the military has taken over the city, sparking calls for military intervention elsewhere in the country. In Cairo, clashes between supporters and opponents of the ruling Muslim Brotherhood last month gave way to far more disturbing sectarian clashes between Coptic Christians and Islamists, which left several dead. The country’s suffering economy is taking its toll as well - in late March, the government announced it would start rationing subsidized bread, a further stress on the nation’s poor, and chronic food and fuel shortages and regular blackouts plague the country.

I’m frankly not sure what the path ahead looks like for Egypt. Morsi is a failed leader. He was never able to walk the line between his party, the Muslim Brotherhood, and the rest of Egyptian society well enough to shore up his support; he failed to reform the police and the interior ministry; when pressed, he turned the police against the protestors again; he’s lost control of at least one major Egyptian city; the economy has spiraled even further down; and the military is starting to play a prominent role in internal politics again. At this rate, there’s no way Morsi survives as Egypt’s leader - if he were half the politician he’d need to be to fix this mess, he wouldn’t be in it in the first place.

As to the rest of the country, the basic problem is that the country’s revolution didn’t actually challenge the country’s power structures. Both the Military and the Muslim Brotherhood are factions from the Mubarak era, the judiciary is still stacked with Mubarak’s judges, the police and the interior ministry are still designed as tools of repression, not security or safety, and nobody’s managed to clean out the widespread corruption or interest groups that built up over 40 years of autocratic rule. In the two years since Mubarak was overthrown, the country has not had a genuinely representative government: parliament was dissolved almost instantly, Morsi was the product of intense back-room dealings, and the current “constitution” was a rough hatchet job on the Mubarak-era version.

I don’t know what the road between here and a functioning Egyptian government looks like. The most likely event now is that the situation on the street continues to deteriorate until the military removes Morsi from power. At that point, if the leaders of the military are smart, they’ll take the time to ensure a transition to a genuinely representative government, one that has some legitimacy to the protestors in Cairo, Port Said, and the rest of Egypt. Given how badly the transition was screwed up last time, though, I don’t have a lot of confidence.

Thanks for joining me! Hopefully the Dispatch will be back on a more regular schedule in the next couple weeks.

Eric

March 7 - 18

2013-03-18T00:00:00-07:00

Welcome to the Dispatch for March 7 - 18!

North Korea

In an unanimous vote, the UN Security Council passed a new round of economic sanctions against North Korea following the country’s recent nuclear test. In response, the DPRK declared the 1953 armistice agreement with South Korea nullified and began making motions to prepare for military action, though only rhetoric has followed so far.

NightWatch has been following North Korea’s actions closely, and much of the below is at least informed by his analysis - if you’re interested in more information, I encourage you to subscribe to NightWatch.

NightWatch notes that the DPRK has taken several “high-cost” actions that indicate preparation for a conflict above and beyond the normal cheap rhetoric and military tours. Many high-ranking officials are now living underground, reserve units have been called up, and non-military industrial production has been halted. NightWatch notes that these are extremely expensive actions to take, since they strongly impact civilian life, cut food production and available resources, and run the risk of promoting backlashes amongst an already restive population - this indicates the North is serious about the latest round of provocations. NightWatch judges the next two to three weeks as the most likely window for any DPRK military action, as early April is the planting season, when keeping civilian military reserves out of the fields becomes even more expensive.

It’s highly likely that the North will engage in some sort of military provocation with the South soon, though this doesn’t mean they want an actual war - as bellicose as the rhetoric from the North is, they well know war would be suicide for the regime. The most likely scenario right now is that the North is trying to reshape the negotiating landscape, and any pending attack on South Korea will be intended to show that the armistice, and the negotiating positions built up around it, are well and truly dead. They’ve been stuck with a losing hand for a while, and with China losing patience, the North may see this as their last opportunity to secure a better deal before their Chinese patrons start really tightening the screws. The question now is what role Kim Jong-Un is really playing in all this: he’s either a 28 year old with scant leadership experience playing the most dangerous game of brinksmanship in the world, or he’s been relegated to a figurehead by the military, who rely on the constant state of near-war to justify their positions of privilege in the otherwise bankrupt state. Neither case is good.

Cyprus

On the brink for a number of years, Cyprus began negotiating a bailout from the IMF, ECB, and European Commission, collectively known as the Troika, earlier this month. The final package was agreed upon on the 15th, but it included a startling provision: a one time 6.75% levy on all deposits under EUR100,000 and a 9.9% levy on all deposits over EUR100,000. The provision prompted a bank run in Cyprus, forcing the closure of the country’s banks through this week, and the Cypriot Parliament resoundingly rejected the agreement on Tuesday. Cyprus is seeking to renegotiate the package now, and is also considering other options for obtaining the needed capital.

There’s a lot to unpack here, so let’s start with the biggest and most consequential aspect of the situation, the demand by the Troika that ordinary Cypriots’ savings be confiscated to pay for the bailout. This is the dumbest policy move from the Eurozone since, well, possibly ever - and that’s a stiff field after the last 5 years of shitty economic policy. The one iron-clad rule of banking regulation is that you never touch small savings, because that will instantly cause bank runs, which turn small banking problems into giant catastrophes. Until now, the Eurozone has insisted that small depositors are sacrosanct, even if their wages, jobs, livelihood, and chances at any sort of reasonable economic future were not, and that small concession has prevented giant queues outside banks and further bank collapses. Now, while trying to convince people that the levy doesn’t actually violate that promise, the Troika has made the worst possible move they could have, spooking not just Cypriots but anyone in any country in the Eurozone which might possibly face some form of banking hardship - which, at last glance, was just about all of them.

The baffling part is that the total bailout amount needed by Cyprus was about $10Bn, which is a rounding error for the Eurozone at large. After almost a year of relative stability, the Troika threw the entire Euro area into chaos over a bit more than half of NASA’s annual budget. There’s a lot of politics at play here: Cyprus is known as a banking haven and they’ve been playing loose with their banking regulations for a while, a lot of the money in Cypriot banks is Russian, and it’s an election year in Germany - not a great year to go hat in hand to the German public. That’s no excuse for policy this bad, though, and especially over an amount of money smaller than Yahoo!’s market cap. In general, if the amount of money required to prevent this sort of problem wouldn’t even make it onto Forbes’ top 10 list, just sign the goddamn check and be done with it.

The root problem is that the Eurozone is still treating a banking problem like a sovereign debt problem. The blueprint for Cyprus is the same as it was for Ireland and Spain: the banks collapsed, forcing the government to take on the banks’ debts, sparking a sovereign debt crisis. The real problem is that the banks should have been regulated and backstopped by the ECB in the first place, but instead of just recapitalizing the banks, the Eurozone has insisted on lending to national governments, which means the governments are now deeply in debt for the money needed to prop up the banks. That, combined with highly counterproductive austerity programs, have turned a banking crisis into an economic and political disaster. The US faced the same scenario in 2008, but because the Federal Reserve stepped in to backstop the banks directly, we’ve largely escaped the morass the Eurozone has blundered into. Until the ECB and the European Commission start dealing with the banking problem as a banking problem and stop trying to project a morality play onto the situation, they’re going to keep lurching from self-created crisis to self-created crisis.

Pakistan

On March 16, the Pakistani government completed its full 5-year term in office, the first civilian government ever to do so. Elections of a new government are expected in early May.

The PPP, Pakistan’s ruling party, leaves behind a country wracked with corruption, crumbling infrastructure and a weakening economy and facing the rise of militant islamists and social discord. Their tenure has been checkered at best, but few expected them to make it this far. I’ve been extremely pessimistic about Pakistan this year, and I still am, but this is a milestone to be celebrated.

Thanks for joining me, and my best for the weeks ahead!

Eric

February 18 - March 6

2013-03-06T00:00:00-08:00

Welcome to the Dispatch for February 18 - March 6!

This week: Chavez is dead, Cuba is in trouble, Italy elected a comedian, and Kenya’s not sure who it elected.

(Apologies for running a bit late this week - Venezuela threw a wrench in my already-behind-schedule schedule)

Venezuela

Venezuelan President Hugo Chavez died on March 5. According to Venezuela’s foreign minister, elections will be held within 30 days, with Vice President Maduro taking power until then.

Chavez’s tenure in Venezuela is mixed at best. Venezuela has the lowest level of income inequality in the region, a wide variety of social programs aimed at the poor, and a vastly increased profile abroad. At the same time, Chavez’s capricious management has led oil output, increasingly the lifeblood of the Venezuelan economy, to fall dramatically, foreign investment has all but vanished, and inflation is soaring. Widespread repression of the press and of dissent, though, marred his tenure even more than his economic mismanagement or foreign adventurism.

His legacy is now in the hands of his party: with 30 days until the election, it’s a good bet Chavez’s chosen successor Nicolás Maduro will be elected to replace him - given Chavez’s outsize stature and recent passing, it will be almost impossible to run a decent opposition campaign. The question is the longer-term survival of Chavez’s party, and with it, the Bolivarian movement he championed. Bolivia, Ecuador, and Cuba have all benefited handsomely from Chavez’s oil money and international ambitions, but given Venezuela’s economic state, it’s unlikely the country can continue its role as the region’s patron without the charismatic man at the top. The death of Chavez may mark the death of the new Left in the Americas.

Cuba

President Raul Castro announced this would be his final term as president, marking the end of the Castro era for Cuba. His presumptive heir is Vice President Miguel Díaz-Canel Bermúdez.

Cuba relies heavily on both the Castro legacy and on Venezuela’s largess to support the regime. Raul’s announcement and Chavez’s death mean that in five years when Bermúdez takes power, he will face a nation in uncharted territory, devoid of both its patron and its saint. After 50 years of economic mismanagement, they don’t have a hell of a lot else left.

Italy

Italy held general elections on February 26. No party received enough votes to make a majority, with a three way split emerging between the left-wing Democratic Party, Silvio Berlusconi’s center-right People of Freedom part, and the Five-Star Movement, a protest party headed by a stand-up comedian. A new election became a virtual certainty after Beppe Grillo, head of the Five-Star movement, rejected the idea of joining a coalition government.

The Italian elections have panicked investors in the Eurozone. The relative calm of the last few months was bought by the ECB’s promise to buy Euro country bonds as needed, but that was predicated on the countries’ adherence to austerity policies. At the least, Italy’s programs are on hold until the next election, and both Berlusconi’s party and the Five-Star Movement have rejected the austerity program entirely.

This shouldn’t be surprising to the Eurozone leaders, though. The austerity programs have been enormously unpopular (as well as wildly unsuccessful), and eventually the leaders implementing them were going to wind up in front of their electorates again. Even if the austerity programs made economic sense (which, again, they don’t), they’re unsustainable in a democratic system. Forcing a country to sustain several years of double-digit economic contractions is a recipe for political chaos and economic collapse - many of the Euro countries are in dire need of reform, but without some form of growth-supporting policies, reform efforts are doomed.

Kenya

Kenya is awaiting the results of its presidential elections, held March 5. While flaws in the electronic tabulation system have delayed official results until at least the end of this week, early results were showing Uhuru Kenyatta, who is facing charges at the ICC, in the lead.

Kenya’s 2007 presidential elections sparked a wave of ethnic violence that left more than a thousand people dead (that incident sparked the charges against Kenyatta). While the vote was largely peaceful, the long delays and the looming prospect of a run-off have the country on edge. Kenya is also heavily invested in the fight against al-Shabaab, the Islamist militant group in Somalia. The group has recently retaliated with several attacks inside Somalia, and any period of instability will be bad for Kenya and probably bad for Somalia as well.

Thanks for joining, and my best for the week ahead!

Eric

February 3 - 17

2013-02-19T00:00:00-08:00

Welcome to the Dispatch for February 3 − 17!

This week: Chuck Hagel makes history, Syrians want to talk, French want to leave, North Koreans want attention, and Venezuela wants a President, preferably a living one.

Hagel Nomination

After a long and contentious debate, the Senate Armed Services Committee approved Chuck Hagel’s nomination to Secretary of Defense. The victory was short-lived, however: two days later, Senate republicans filibustered the nomination, the first time ever a candidate for Secretary of Defense has been blocked. By Sunday, the opposition seemed to have eased, though: both Lidnsey Graham and John McCain (who had initially opposed a filibuster) said they would end their attempts to block the nomination.

Senate Republicans said they were opposed to the quick vote on Hagel’s nomination and that they needed more time to get answers to their questions about Hagel. The White House nominated Hagel largely because he’s a former Senator - they had hoped to avoid exactly this scenario. Historically, Congress has been reasonably deferential to the President to fill his own cabinet, but those days are obviously gone. Hagel’s troubles largely spring from some ill-advised comments he made about the “Jewish lobby” being too powerful; the groups aligned against him right now are almost exclusively pro- Israel organizations.

Syria

The Syrian opposition offered its backing to a surprise offer by Sheik Ahmad Moaz al-Khatib, the head of the Syrian opposition coalition, to negotiate with the Assad regime, offering Assad himself exile in exchange for immunity from prosecution. The group clarified its conditions on the 15th, saying that they would negotiate with the government, but not Assad himself or members of the military.

The government has not fully endorsed negotiations, though they have not rejected the notion outright either. The question is whether the opposition is cohesive enough to engage in real negotiations and to implement an agreement if one were reached.

Mali

French soldiers have secured most of Mali, despite occasional outbreaks of fighting. The militants have largely retreated into the deserts to the north of the country, though fears persist of their return. The French are pledging to hand over patrol duties to African forces under the auspices of a United Nations mission as soon as feasible.

There’s already signs the militants intend to wage some form of guerrilla warfare, though that’s a huge improvement over the open warfare they were waging a month ago. The big question is the future of the Malian government and the Malian army — both are in as bad shape as they were when this mess started, if not worse. The real challenge for Mali is twofold: first, solving the political crisis in Bamako, and second, figuring out some agreement with the Tuareg so this doesn’t happen again.

An interesting note: In the rubble of Timbuktu, the AP found a 10-page letter detailing Al Qaeda in the Islamic Mahgreb’s strategy in Mali, including an assessment of how they failed and a prediction that they would be driven from Mali by outside forces. The strategy is remarkably clear-headed and reasonable for a self-declared jihadi movement - which might explain why it doesn’t seem to have reached the fighters on the ground.

North Korea

North Korea conducted its third nuclear test on the 11th, detonating a device estimated at around 6 kilotons. Governments around the world were quick to decry the test, and the South Korean government responded by demonstrating a new cruise missile with a range of over 600mi, long enough to hit nearly anywhere in the North.

The nuclear test is all bluster. Nothing else about the device is known except that it was around 6Kt and that the North claims it was a nuclear device. Whatever the talk from the rest of the world (including the UN), though, the only voice that matters now is China’s. The North Koreans are heavily dependent on China for food, fuel, and trade. The Chinese use North Korea both as a strategic buffer between themselves and the American-allied South Koreans and as a distraction to keep the West busy, and until the North becomes more trouble than it’s worth to Beijing, expect this sort of noise to continue. There’s some indication this line is approaching: the latest missile and bomb tests have been done in spite of Chinese orders to the contrary, signs the younger Kim is flouting China’s good will.

On the much, Much more speculative side, NightWatch notes the (unverifiable) reports of an Iranian delegation attending this test, as has apparently been the case in the past, and asserts that at this point the North Korean nuclear program is functionally the Iranian nuclear program. It’s an interesting point, and could help to reconcile some of the disparities in Iran’s nuclear posture: there’s no real sign they’re trying to build a bomb, but they’re building all the infrastructure to do so with no real apparent civilian nuclear power program. Outsourcing R&D to North Korea could give Iran a lot of political cover while still allowing them to build a bomb if they decide do so.

Venezuela

The Venezuelan government released photos of Hugo Chavez in his hospital bed in Cuba on the 15th, the first time the Venezuelan President has been seen since leaving for surgery on December 11th. Three days later, the government flew Mr. Chavez back into Venezuela and immediately moved him into a military hospital in Caracas. He has not been seen since.

Hugo Chavez’s entire political movement is built around the man himself, and it appears he is direly ill. His party has insisted he’s still running the country, but the opposition is insisting ever louder that he’s not fit to lead and new elections should be held. They have a point - when the best you can say is “He’s adjusting to the breathing tube nicely,” well, it’s time to face facts. Nobody in Venezuela’s government has either the popular support or the credibility of Chavez: if he goes, “Chavismo” and the entire ruling political structure of the last decade goes with him.

Thanks for joining me, and my best for the week ahead!

Eric

January 22 - February 2

2013-02-02T00:00:00-08:00

Welcome to the 2nd Dispatch of 2013!

This week: Riots in Egypt, French in Mali (but no Islamists), Centrists in Israel, Women in the Military, and Incrementalism in Congress.

Egypt

Riots broke out in several cities in Egypt on the second anniversary of the country’s January 25 uprising. The riots, which started as a political protest, escalated sharply on the 26th as soccer fans in Port Said took over the town in response to a court case regarding a riot last February. The riots grew further after clashes with the police left several protestors dead, and on the 27th, Egyptian President Morsi declared a state of emergency and a curfew in Port Said and two other cities. Neither the police nor the curfew stemmed the violence, and on the 29th, the head of the military warned the state was in danger of collapse if the riots continued. The violence culminated in street battles outside the presidential palace on Friday, which left one protestor dead and several dozen wounded.

For all the Egyptian Revolution accomplished, it’s never seemed quite complete. Mubarak was removed from power by his own generals, and most of his state apparatus remains intact. Most of the last year in Egypt has played like a long game of insider baseball — long-established factions like the military and the Muslim Brotherhood vying for control, with Mubarak-appointed judges in the middle. The issues that brought the people to the street were never resolved, and Morsi’s ham-handed declarations of extra-constitutional power have stoked fear and anger in the streets. The “opposition,” many of whom are also holdovers from the Mubarak era, have been just as powerless to control what’s happening in the streets. I’m not sure what will result from these riots, but they’re a major black eye for Morsi and the Muslim Brotherhood and the police actions in the street are a stark demonstration that Egypt hasn’t come far enough since Mubarak’s departure.

Mali

The French military has retaken most of Northern Mali in just a couple weeks, meeting shockingly little resistance along the way.

After a few early skirmishes, the Malian conflict looked like it was going to be a slog. It wasn’t — the militants chose not to engage, and just left. This was a smart move — the Islamists are an alarmingly capable force, but attempting to hold North Mali in the face of a legitimate army would’ve been an incredibly costly failure. The big question now is, what happened to several thousand well-armed and trained Jihadis? NightWatch suspects they’ve gone to Libya, while the recent attack in Algeria suggests they still have reasonably free mobility through that country, and Sudan, a historic home to Salafi groups, is on the verge of collapse. The Saharan region is much, much more dangerous than previously thought.

Israel

Yesh Atid, a new centrist party, shook up Israeli politics, capturing 19 of the 120 parliament seats in national elections on the 22nd. While current Prime Minister Benjamin Netanyahu is almost certain to serve another term, Yesh Atid is now the second-largest party in the Knesset. The party is largely focused on domestic and “pocket-book” issue that resonate with middle-class and urban Israelis.

Yesh Atid’s rise is a sharp turn for Israeli politics, which have seemed increasingly religious and conservative over the last few years. Among other issues, the party is strongly in favor of removing the exemptions from army service and typical schooling for ultra-Orthodox Jewish groups, who have had an outsize impact on Israeli politics lately. The party is mostly concerned with internal Israeli affairs, so it’s hard to tell what impact they’ll have on Israel’s stance towards either Iran or Palestine, but it’s nice to see a move towards more centrist, modern, and secularist politics in the Israeli mainstream again.

Briefs

US Senate

The Senate agreed to a small package of procedural reforms aimed at reducing some of the deadlock of the previous years. Included were two changes, one which would allow certain bills to pass within a day or two after a simple up-and-down vote, and another which reduces the opportunities to filibuster bills.

The changes are window-dressing: Senators can still “filibuster” bills without actually having to stand up and talk for hours, prove they have the votes to block a bill, or even be present for the vote. That said, progress is progress, especially for Congress.

Pentagon

The Pentagon announced it will lift the restriction on women in combat roles by 2016.

And it’s about time. Interestingly, the change is being pushed internally by the Joint Chiefs of Staff, not imposed from outside. The policy change reflects what many have noted has been the reality on the ground in Iraq and Afghanistan, where any role that involves leaving the base is functionally a combat role.

Thanks for reading, and my best for the weeks ahead!

Eric

January 7 - 21

2013-01-21T00:00:00-08:00

Welcome to the first Dispatch of 2013!

This is the first dispatch in the new, shorter format. I’ve tried to focus the analysis a bit more on the conclusions, though that comes at the expense of more general background info. I’d love feedback, and suggestions are always welcome.

Mali

France started military activities in Mali after the Islamists advanced towards Sévaré, a major Malian military outpost. While French airstrikes halted that advance, the Islamists took over Diabaly, another Malian city to the west. The French have now deployed several hundred soldiers and plan to deploy up to 2000 total to fight the Islamists.

France’s intervention in Mali has finally shed some light on the nature of the Islamists controlling the country’s north, and it’s not good: the fighters seem well-armed, capable, and dedicated. The French are in for quite a fight — which, frankly, is why nobody else wanted to get involved.

Algeria

Shortly after the French began operations in Mali, a group of Islamist militants took over a BP gas field and refinery in the Algerian desert. After a couple days’ standoff, the Algerian army assaulted the refinery. In the ensuing melee, 37 hostages were killed.

The militants’ attack has been called a response to the French action in Mali, but there are a couple inconsistencies: first, the attack seems to have been planned well in advance, and second, the militants who attacked the refinery are from a splinter group which broke off from the main al-Qaeda group in Mali. In all likelihood, this was an opportunistic attack that took advantage of a geopolitical crisis to draw more attention (in the same way the Benghazi attack did). The Algerian response to the attack, and its bloody aftermath, though, ought to temper demands the Algerians get more involved in the Malian crisis.

Venezuela

On January 8, Vice President Nicolás Maduro informed Congress that President Hugo Chávez was too sick to return from Cuba to take the presidential oath. Chávez, who won re-election to a third term in October, has been battling cancer for two years.

Chávez has been battling cancer for about two years now. Before returning to Cuba in December, he named Maduro his chosen successor, but it’s not clear the “Chavismo” movement would survive without Chávez. If Chávez doesn’t make it, this year is going to be chaotic in Venezuela, though it might be good for Venezuelan politics in the longer run - Chávez has played an outsize role in both Venezuelan politics and the region at large.

US Debt Ceiling

House Republicans offered President Obama a three-month increase of the Debt Ceiling, putting off the threat of a default, as long as the Senate agreed to pass a budget.

The “three month” number is significant: in March, Congress needs to authorize new spending for government agencies and the fiscal cuts deferred in January come due again. The GOP offer rearranges these cuts, meaning the GOP can duke it out with the White House over spending in March without having to risk an actual default. The GOP’s already lost a couple battles this year, so I’d expect March to get ugly.

Thanks for joining me, and my best for the weeks ahead!

-Eric

Welcome to 2013

2013-01-07T00:00:00-08:00

Astute readers will note this post is about a week late. I’ve been sitting on it for a while, for a few reasons. First, I underestimated how long it was going to take - not a new phenomenon for the Dispatch. Secondly, though, is that after spending a year or so reading far more learned people than I, I feel it’s a bit naive for me to bill this post as anything larger than what I learned this year. So, with that in mind, I hope you enjoy my recap of 2012. I’ll cover some overall trends for 2012, and then make my predictions for the hot spots in 2013.

Trends from 2012

The Empire Strikes Back

In 2011, Popular Protests were the dominant theme. In 2012, the state reasserted itself. The Arab Spring ran aground in Syria and Bahrain, the Occupiers were rolled up by local police, and Anonymous was gutted by the loss of the LulzSec/AntiSec team after one of their leaders turned informant. Egypt spent the year torn between two of the oldest institutions in the country, and the Russian people re-elected Vladimir Putin to a 3rd term. The lesson from 2012 is that it takes more than street protests and the trappings of democracy to truly upend the state: State power structures run much deeper than they seem. The upshot is that populism is no longer a dirty word in politics - we may finally get to exorcise Reagan’s ghost.

Democracy is Hard

I mentioned Egypt and Russia above, but democratic difficulties were widespread this year. Beyond the rigged elections in Russia and the obvious power games in Egypt, Tunisia and Libya both struggled to solidify their post- Revolution states. I suspect difficulties in all four countries have to do with the fact that all are relatively young democracies - even Russia only shook off the Soviet system two decades ago, though their experience should give pause in considering the future of other three. I suspect a few years time (assuming the new governments survive) will see a much better political scene in these countries, but 2012 was a stark reminder just how hard it is to form a functioning government.

Coups are Up

The coups in Mali and Guinea Bissau, as well as the rebellions in the Central African Republic and the Democratic Republic of the Congo, are extremely concerning. Mali was a direct effect of the Libyan revolution - a keen reminder that even “clean” military actions have unexpected consequences. Guinea Bissau has turned into a narco-state, with the military heavily supporting drug traffickers. The rebellion in the Democratic Republic of Congo threatens to unleash the Hutu-Tutsi rivalry again, a conflict which has lead to untold atrocities in the past. As to the Central African Republic - there’s not much new there, actually. Central and West Africa had a good few years - it’s disheartening to see these hot spots flare up again. Unfortunately, with the West retrenching abroad and the Chinese flooding the region with money, I don’t expect Africa to get much more stable in the new year.

Austerity’s Not Working

Finally, if there’s one absolute iron-clad lesson to take from 2012, it’s that austerity doesn’t lead to growth. After four years of austerity following a recession, Greece has shed nearly 15% of its GDP, and around 1 in 4 are unemployed. The big danger now is Golden Dawn, the fascist party, which is growing in popularity and political clout amid signs even the police are beginning to support them. Greece is not an outlier either: even Germany ended the year with practically zero growth. The US economy was also threatened by premature deficit reductions - the so-called “fiscal cliff,” averted at the last second by a horridly dysfunctional Congress. It’s a bizarre political world that, in the face of everything we’ve seen from Europe and the US, will still countenance serious conversations about austerity amidst recessions.

2013 Hot Spots

One thing I’ve learned this year is that predicting the timelines of world events is extremely difficult: events tend to move in punctuated equilibria, where a situation will look relatively stable for far longer than you’d expect before suddenly flipping. The situations mentioned below look unstable - their trends are not pointing towards any equilibrium I can see - but “muddling through” and “doing nothing” can be stable options for a surprisingly long time. Take the list below with a grain of salt, but these are the areas I’m watching.

The China Seas

I mentioned the South China Sea last year, and this year I’m adding the East China Sea, where the Senkaku Islands, a small outcropping of uninhabited rocks, is bringing China and Japan close to armed conflict. The real issue is the same as it was last year: an increasingly assertive China is attempting to re-establish itself, sparking fears among its neighbors of a new Chinese imperialism. In 2012, the Chinese clashed with the Philippines, the Japanese, and the Vietnamese in the Seas, and the US strategic “pivot” to the East is set to ratchet up the tension even further. The Senkaku Islands are likely to be a focal point: the long animosity between China and Japan, a newly-elected hawkish government in Japan, and the close military ties between the US and Japan are setting the stage for the first real military clash in the region. It’s unlikely to be the last, though: the rise of China is the biggest trend of the 21st century, and the Seas are sure to be hotly contested.

Pakistan

For the first time, the Pakistani army listed the Islamist rebellion in the northern tribal areas as their biggest threat this year. A spate of attacks across the country has finally convinced the army that the Taliban in the North, not India in the East, is where they need to focus - though a growing Islamist sentiment among the military troops has some observers worried that the army may not be able to reliably fight the tribes in the north. Pakistan has become the most dangerous nation on earth: a country with an unstable government, an army with wide autonomy and a history of taking over the government, an Islamist insurgency in the north that is growing increasingly aggressive, and a nuclear arsenal.

Sudan

Some observers have called Sudan a failed state already, but pressure on Omar al-Bashir’s government is increasing after South Sudan split the country and took most of the oil. The many internal conflicts aside, the lack of oil money is starting to erode the Sudanese state, and a regime collapse is not out of the question this year.

The Debt Ceiling

The US will reach the debt ceiling again in February, and the GOP has already promised another bruising fight over increasing it. The last time they fought this battle, US debt got downgraded and the “resolution” created the Fiscal Cliff. President Obama has vowed not to allow a repeat of that catastrophe, but his options are limited, and I don’t think we’ll get to March without some sort of political circus.

The Future of the Dispatch

I’ve enjoyed writing the Dispatch this year, and I’ve learned quite a lot while doing so. It’s been great to have a focal point for my writing, something that’s forced me to actually focus my thinking and create (reasonably) regular output. I’ve learned quite a bit this year, but the biggest thing I’ve learned is that I’m still an amateur when talking about international relations: I’ve read quite a lot about different subjects, but I don’t have a real theoretical foundation in IR, and that’s handicapped my ability to really dig into several subjects on anything more than a surface level. I’m going to fix that this year - I’ll be spending a lot of free time studying IR theory and statistics, and I’m hoping it’ll help my writing going forward. The biggest drawback to the Dispatch in its current form, though, is that it takes a phenomenal amount of time to write, and I simply don’t have a lot of free time these days. So, in the interest of continuing to write the Dispatch while also fulfilling my other goals for the year, I intend to make the Dispatch less of an in-depth work and more of a quick primer. I’ll be putting longer-form works on my Notes blog, and I’m certainly hoping my other studies will help me make more use of the limited format. I enjoy writing the Dispatch, and I hope a shorter version will still be of some value.

Thanks for reading, and here’s to a great 2013!

Eric

December 10 - 24

2012-12-25T00:00:00-08:00

Hello, and welcome to the Final Dispatch for 2012!

Syria

The Russian Government signaled they see an outcome in Syria which doesn’t include Assad for the first time, a major diplomatic shift, though a couple days later Sergei Lavrov, the Russian foreign minister, made clear his country wouldn’t be involved in ousting the Syrian leader. Mr. Lavrov also said the Syrian government was working to safeguard its chemical weapons, an assertion Israeli officials tentatively agreed with.

On Dec 16th, the Independent’s Patrick Cockburn wrote an excellent piece from Damascus, where he has been for ten days. He makes three assertions, which broadly square with other reports I’ve read. First, he expresses alarm at the increasingly sectarian nature of the conflict, due mostly to growing populations of extremists in the opposition (including the al-Nusra front, which the US labeled a terrorist organization, describing the group as a franchise of al-Qaeda in Iraq). I’ve read mixed reports of the degree to which the majority of rebels are genuinely Islamist - apparently the easiest way to get funding and weapons from the Qataris and Saudis is to grow a beard and hold a Koran - but it’s definitely present and it’s definitely a problem. Second, he asserts the government is not nearly as close to collapse as rumored - much of the rebel gains have been due to a change in the government’s military strategy that involved abandoning remote posts. Cockburn says Damascus itself feels relatively secure, and even Homs is in better condition than reported. Again, that squares with what I’ve read - the regime isn’t collapsing yet, and his talk about the rebel’s gains being illusory mirrors some of what I’ve seen, but frankly, nobody chooses “abandon remote outposts” as strategy “A”, and the government’s tactics seem largely limited to aerial bombardment, which is completely insufficient for dealing with an insurgency. His final complaint is against the media coverage, and I’m absolutely on his side on that one - the day-to-day reporting on Syria has been atrocious, and it’s only been through the hard work of a few very talented journalists that it’s been possible to get anything of a reasonable picture of the situation on the ground.

My longer-term forecast remains the same - at some point (and I’d wager within the next few months), the Assad regime will fall because there’s enough money and pressure on the side of the rebels to keep the war going and very little still propping up the Assad regime. Cockburn’s article, though, is a sober reminder that optimism is not a substitute for facts.

North Korea

On Dec 11, North Korea successfully launched a satellite into orbit, a major accomplishment following two prior failures. South Korea and the west called the launch a missile test in disguise, and US naval vessels were on hand to intercept the rocket if it veered towards Japan. The satellite reached orbit, but appears dead, with an erratic orbit and no signals detected. Later analysis of debris from the rocket launch showed signs that the rocket’s design was military in nature.

The evidence collected by the South Koreans is the missile was basically glued together out of other rocket engines the North Koreans already have. Whatever it is, though, it’s estimated to have a several thousand mile range, which is a pretty substantial upgrade from their previous rockets - as they say, if it’s stupid but it works, it’s not stupid. The consensus of the intelligence community is that North Korea’s “space” program is a thinly-veiled missile program, the proceeds of which are currently being sold to Iran (Iranian observers were on hand for the failed April launch). China’s silence after the launch is a bit curious, though - While they’re N.Korea’s only real ally in the region, they’ve expressed their anger before for these sort of tests, which they see as potentially destabilizing to the region. Everyone else seems to have shrugged their shoulders, though, so the Chinese may be fine to let this one slide.

Egypt - Referendum

In two rounds of voting, the Egyptian Draft constitution was approved, garnering around 64% of the vote. The turnout was exceptionally low, though, at around 30% of eligible voters.

NightWatch did the math and concluded that, in a country of 82M, the referendum garnered 5.5M votes. There’s an urgency in Egypt to get a constitution in place, but a poorly written document passed by barely 7% of the country (or 20% of eligible voters) isn’t going to satisfy anyone and certainly isn’t going to have the legitimacy to draw together the fractious parties that make up the Egyptian government.

Briefs

Italy

Prime Minister Mario Monti, who took office in November 2011 after former Prime Minister Silvio Berlusconi resigned in disgrace, announced his resignation on December 9th after losing the backing of Silvio Berlusconi’s party. Berlusconi, who was convicted of tax fraud and sentenced to nearly four years in prison in September, expressed interest in running in the next elections, but has not yet fully committed.

Fiscal Cliff

With less than a week to go before the “Fiscal Cliff,” House Speaker John Boehner threw in the towel after one last attempt to get a “Plan B” measure passed in the house failed in the face of defections from his own party.

It’s extremely unlikely Boehner will lose his speakership, but it would certainly be nice to have a Speaker of the House that can actually speak for the house. Boehner’s spent the last two years being kneecapped by his own party, which means the negotiating process is A) negotiate with Boehner B) Agree to a deal C) Boehner gets shot down by his own party D) and calls you an asshole for suggesting the bill he agreed to.

Secretary of State

President Obama nominated Senator John Kerry as Secretary of State to take over after Hillary Clinton resigns. Kerry’s nomination was widely expected after UN Ambassador Susan Rice withdrew from consideration.

Final Notes

This wraps up an entire year of Dispatches - thank you for reading, I hope they’ve been informative! There will be two more posts in the next week - a wrap-up of 2012, and my prospectus for 2013 (similar to last year’s first post), which I intend to have out on the 30th and the 1st.

Thank you for joining me, and Happy Holidays!

Eric

November 15 - December 9

2012-12-09T00:00:00-08:00

Hello, and welcome to the Dispatch for November 15 to December 9!

We’re running a week or so late after the Thanksgiving holiday, but I’ll try to get us back on track for the last dispatch before the New Year and my 2012 roundup.

Israel/Palestine

The conflict in Gaza came to an end on November 21 following a cease-fire negotiated primarily by Egypt. Both sides claimed victory, though several large issues, including long-term security agreements for Israel and an end of the embargo on Gaza were left to be fleshed out later. A week later, at the request of the Palestinian Authority, the United Nations General Assembly voted to confer Nonmember State status on Palestine, implicitly recognizing Palestine as a state. Following the vote, which the US and Israel lobbied heavily against, Israel announced the resumption of development on a settlement east of Jerusalem. The new settlement, called E1, is highly contentious, as it would effectively cut the West Bank in two.

The conflict in Gaza and the UN vote are certainly bad news politically for Israel, but the Israelis haven’t shown any particular sensitivity to the opinions of either the UN or Europe in the last few years. Even under President Obama, who has been notably cooler to Israel than Bush was, America is still a staunch Israeli ally, which means Israel has the backing of the most powerful military, economy, and diplomatic apparatus in the world, and that’s frankly unlikely to change no matter what Israel decides to do. Hamas has claimed victory in the Gaza conflict, and in some way, demonstrating the ability to generating enough international pressure on Israel to force a ceasefire can be considered a victory, but the fact is that what the Israelis demonstrated is that Hamas is absolutely not a military threat to Israel. The E1 settlement in the West Bank renders a functioning state there almost impossible, further neutering the PLO. From a purely tactical standpoint, Israel is in a much stronger position now than they were a couple weeks ago. My guess is that the Israelis are willing to allow the clock to count down for a while — there’s no benefit to Israel in any real negotiations right now, and they’re clearly not under any serious threat from either region, so the best move for now is no move.

In the long run, though, Israel has to come to terms with the Palestinians somehow. There are two real solutions: the two-state solution and reintegration. The Israelis are gradually, settlement by settlement, destroying the viability of the two-state solution, which leaves reintegration as the only real option. The Israelis are deeply opposed to this — the Israeli populace has been shifting to the right in recent years, and one of the core demands for negotiations is that the Palestinians recognize Israel not just as a nation, but as a Jewish nation. Fully including the Palestinians in the political process, though, would mean more than a third of Israel’s voting population would be Palestinian; it’s hard to see how Israel could then hold onto its ideal of a Jewish nation. The only other option is an apartheid-style tiered state, a disturbing outcome for a country formed in response to an attempted ethnic cleansing. Israel scored a short-term victory by cutting the West Bank in half and further suppressing the Gaza Strip, but the Israeli people will face some very existential questions in the not-too-distant future.

Egypt

On November 22, President Morsi issued a decree declaring himself above judicial review and declared that the courts could not dissolve the Constitutional Committee. The move sparked immediate anger and protests from the liberal and secular opposition, as well as several high-level resignations. In response, Morsi has pressed to hurry the process of drafting the new constitution, presenting the draft on the 29th of November and promising a referendum on December 15. Protests have continued, with clashes in the street between liberal groups and supporters of Morsi’s party, the Muslim Brotherhood, that have caused several deaths and hundreds of injuries. On December 8, Morsi rescinded most of his decree, but still stuck to the Dec 15 date for the referendum and made a veiled reference to martial law to protect the poll. This did not mollify the protestors.

President Morsi massively overplayed his political hand, but the decree merely highlighted the existing state of Egyptian politics: without a constitution or a parliament and with the military seemingly under his control, Morsi is a de facto dictator. I don’t think he intends to stay that way - he has seemed genuinely interested in establishing a new Egyptian State, albeit one with an Islamist bent - but for now, Morsi is the Egyptian State. That said, there simply isn’t enough trust in the Egyptian political system for the Nov 22 edict.

The liberal factions leading the protests are by no means a majority in Egypt, and many of them are old-guard members of the Egyptian elite, not the youth who led the revolution in the early days. The Muslim Brotherhood’s estimate is that the majority of Egyptians who vote will support the Brotherhood, and it’s likely a good bet, if for no other reason than the Egyptian people are tired of chaos. The protests have been a surprisingly large show of force, though, and I think the secularists have realized that if they’re not a majority, they can be a spoiler in the streets - a rare breath of power for a group that’s been almost entirely shut out of the revolution they started.

The wildcard in Egypt is the military, who have largely stayed uninvolved, aside from a small show of force outside the presidential palace. Until the recent protests, it seemed as though Morsi had gained the upper hand over the military, but if the chaos worsens in the streets and the police are unable to retake control, we may see moves from the military - I suspect the last couple weeks have already seen some awkward negotiations between Morsi’s faction and the military leadership.

There are now three dangers in Egypt: The first is that Morsi does as many leaders under threat do, and attempts to consolidate his power further. He already has the mantle of state, and the Muslim Brotherhood is by far the largest political faction in the country; if he can tighten his hold over the military, whose current leadership already owes him their position, the secularists fears of a new dictatorship could be realized. The second danger is the military itself - while it has stayed off the streets so far, if the chaos continues, the military may decide to seize power again, using the protests as an excuse for “securing the nation.” The third is that the secularists may decide their best option is to shake the board up again, and the best route there is in creating enough chaos to provoke the military onto the streets again. The next event to watch is the constitutional referendum on the 15th; until then, the country is holding its breath.

Mali

On November 11, ECOWAS, the Economic Community of West African States, agreed to a plan to send 3,300 fighters into Northern Mali to wrest control of the region from Islamist militants. While the African Union is still trying to get funding for the mission and the head of UN Peacekeeping operations said any real intervention is unlikely for at least another 9 months, the growing consensus seems to have caught the attention of the occupying militias - the head of al-Qaeda in the Islamic Maghreb, one of the invading militias, released a message urging Malians to reject “foreign fighters” on their land, while on December 5, representatives from the main Islamist militia Ansar Dine, the Tuareg rebel MNLA, and the Malian government sat down for preliminary talks. The glacial pace of the international response and the Malian government’s willingness to negotiate, however, have lead disaffected Malians in the North to start forming militias in preparation for an attempt to remove the invaders themselves.

I’ve expressed skepticism before over peace talks in Northern Mali, and I’m still not sure what the aim is. For the Malian government, negotiating with the Islamists and the Tuaregs doesn’t seem likely to restore their control of the region. The Tuareg rebels may have some legitimate (and longstanding) grievances, but their role in precipitating the crisis - and, frankly, the fact that they already lost a power contest with the Islamists - doesn’t exactly give them a big claim on the territories right now. As for the Islamists, they’re a group of unwanted foreigners who exploited a local ethnic conflict to create a new base of operations in which they’ve destroyed priceless artifacts, terrorized the local population, and generally made a nuisance of themselves – they have no standing whatsoever for any claim on the territory, nor should one be granted to them. The negotiations are a severe sign of weakness from the parties promoting them. The sole purpose of the peace talks now is for the militants to try to undercut efforts to organize military action against them.

With the ECOWAS military action the better part of a year away, the action in Mali will have to come from other actors. The most dangerous of these are the civilian militias, the only group who seems eager for battle. The history of civilian militias in open conflict tends to be one of war crimes and chaos. The Islamists have also shown themselves a reasonably capable force, so the prospects of a successful counter-attack by lightly trained civilians seems somewhat grim. The bigger concern is what becomes of a large, armed, civilian militia after the crisis is over. The second possibility is that the Tuaregs will join forces with the Malian army in exchange for some autonomy or power- sharing deal. The Malian government seems interested in this option, and the Tuaregs have little left to lose, but combining two rather ineffective fighting forces doesn’t make an effective one. The final option is that either another regional power or a western government decides the risk of a new al- Qaeda base in northern Africa is too dangerous and takes unilateral action. The Malian government wouldn’t accept this sort of intervention, but they’re apparently not in a position to dictate what happens inside their borders anyway.

Syria

US and other western intelligence agencies raised alarm this week over signs Syria had begun mixing the precursors for chemical weapons. President Obama warned once again that use of chemical weapons would likely prompt a military reaction from the US.

The pressure is increasing on the Assad regime. The rebels have shown they can shoot down the Syrian jets and helicopters, they’ve all put neutralized the government’s tank columns, and the regime hasn’t been able to field an effective infantry force for months. The war is becoming an existential threat to the Syrian regime, and without some credible exit strategy for Assad, the choice will become one between war crimes and death. The danger now is that there is no real cohesive opposition with whom to develop a ceasefire or transition; even if the Assad regime would agree to an exit, there’s no government in waiting. Anarchy in a country with a massive supply of chemical weapons and a civil war increasingly sectarian in nature is an extremely dangerous prospect.

Thanks for reading, and my best for the week ahead!

Eric

October 29 - November 14

2012-11-15T00:00:00-08:00

Hello, and welcome to the Dispatch for October 29 to November 14!

I’d love to say I was waiting for the conclusion of the Chinese summit or the European Troika meeting (or that I was prescient enough to predict what happened in Israel), but I honestly just didn’t get around to writing until today. Apologies for the tardiness - I think it’s a good dispatch, though, and I hope you’ll agree.

Let’s get to it!

US Election

Barack Obama was re-elected president on Nov 6, defeating Mitt Romney with a margin of 2.5 million votes (or around 2.9%) and 126 electoral votes.

By now an incredible amount of ink has been spilled about this election, so I’ll be a bit spare in my analysis. My wonderful girlfriend rightly reminds me that I don’t actually have the data to back up any of this, so the following should be read as nothing more than my opinion.

The biggest problem the Republican party faced was demographics - after a year of talking about forced deportations, border fences, voter ID laws, and the danger of China, the Republican party lost the hispanic, black, and asian votes by significant margins. This isn’t overwhelmingly different from the Republicans’ performance with these groups over the last decade, but the groups now make up larger percentages of the population. Paired the demographic changes with what seems to be an increased embrace of gay rights (Maine, Maryland, and Washington all approved same-sex marriage laws), and it appears several of the tenets of the GOP’s 2012 platform will be even more expensive in 2016.

More concerning for the GOP should be that Obama passed 276 electoral votes before the totals were in from either Ohio or Florida, both exceedingly close states expected to determine the election. Virginia broke solidly Democratic, as did Colorado, Wisconsin, and several other battleground states. Whether the Democrats can carry these states again in 2016 is an open question, but it looks like the days when Ohio determines the election may be at an end. For the GOP, this is bad news: the so-called “swing” states swung to the Democrats by an average margin of 3.5 points, and even if Romney won Florida and Ohio, Obama would still have won the election. In total, this year presented a much, much worse electoral map for the GOP than expected.

The real losers in this election were the Tea Party and the Super PACs. Several GOP Congress members faced primary challenges from PAC-supported Tea Party candidates - Karl Rove’s American Crossroads PAC alone spent almost $250M on various races - and in many cases, the results were disastrous. The one senate seat the Democrats picked up was in Indiana; there, six-term Republican senator Dick Luger lost a well-financed primary challenge from Richard Mourdock, a Tea Party backed candidate. Mourdock would later make statements during a debate opining on God’s position on rape, losing his election and giving the GOP a black eye in the process. Luger won his last re- election with 86% of the vote - Tea Party-aligned PACs spent several million dollars to hand a senate seat to the Democrats.

The next four years should be a soul-searching experience for the GOP - unlike 2008, Obama was a much more vulnerable candidate this year. They have no-one to blame for this loss but themselves.

China

The Chinese Communist Party promoted a new slate of leaders to the top of the party, affecting a once in a decade transition of power. While the identity of the new party leader and President of China Xi Jinping has been known for several months, the composition of the Politburo Standing Committee, the highest decision-making body in the nation, was until now unknown. Reports over the last couple months have pointed to a larger than normal amount of jockeying and infighting among the Chinese elite during the transition.

The leadership of China is of some significance to the US, so this transition is worth watching. Chinese politicians are not elected, typically getting their positions through either personal relationships or family ties, which means the scope of any leader’s ability to influence policy is the strength of his power base relative to other factions. By most reports, Xi is coming in with a very strong hand - a series of scandals and corruption cases have given the faction controlled by Hu Jintao, the outgoing president, a bit of a black eye - but it still remains to be seen what sort of latitude the new President has. Much of the speculation so far is basically Kremlinology, since the party tends to be fairly tight-lipped, but it’s unlikely the leadership change will be cause for any real major reforms in China - whatever faction the new leaders are from, they’re still of the same system.

Israel

On Wednesday, the Israeli Defense Force assassinated the head of the Al- Qassam Brigades, the military wing of Hamas, in a precision airstrike. The Al-Qassam Brigades have threatened retaliation, but the Israelis are already readying ground forces and have issued a warning to Hamas fighters to stay out of sight for the next few days.

This is a dangerous move for Israel. They seem to have decided they can either withstand or prevent the immediate blowback from this attack and that it’s worth whatever the cost might be for such an aggressive action, but the long- term outcome is more questionable. This works long-term for Israel under a short list of assumptions: 1) Jaabari contributed significantly to Al-Qassam’s operation capabilities and its influence among other groups, 2) Hamas’s retaliation will be containable, and 3) going forward, Hamas’s more moderate political arm will be able to exert itself over the weakened Brigade, with whom it has been sparring for much of the year. In short, Israel is assuming this is a short-term risk to its security to ensure a better long-term outcome. I’m skeptical. Al-Qassam has been rather restrained so far this year, and the idea that the public bombing of a prominent figure will benefit those in Hamas who favor diplomacy is a rather dubious one. Unless Jaabari was absolutely the glue holding Hamas’s militant wing together, I find it very unlikely this breaks well for Israel.

Greece

The Greek government approved another round of austerity measures, pushing through a budget for 2013 which included $12Bn in spending cuts in addition to another package of $17Bn worth of structural reforms. On Monday, members of the European Central Bank, European Commission, and the International Monetary Fund - the so-called “troika” - met in Brussels and agreed to give Greece two more years to meet the required debt levels of 120% of GDP, pushing the deadline from 2020 to 2022. The debt level is currently near 190% of GDP.

For Greece to hit its target by 2022, it would need to either grow its economy or shrink its debt by about 6% per year for the next decade. Given that this year Greek GDP shrank by roughly 6% and it’s forecasted to drop another 5% next year, the target is insane. Presumably someone in the troika has a calculator, but its use is not evident in these demands.

The latest round of austerity measures hit public salaries, including for the first time the police and the military. This could be dangerous given the increasingly cozy relationship between the police and Golden Dawn, the rapidly growing Greek fascist party. The state of the Greek economy, the growing failure of the Greek government to be able to provide basic goods and services, the rising popularity of Golden Dawn, and increasing reports of police acting on behalf of the group all point to serious danger to the Greek state over the next year without a concerted effort to stabilize the country.

Thanks for joining me, and my best for the weeks ahead!

Eric

October 15 - 28

2012-10-28T00:00:00-07:00

Hello, and welcome to the Dispatch for October 15-28!

Colombia

Officials representing the Colombian Government and FARC, the leftist rebel group, announced peace talks in Havana in November aimed at ending the nearly half-century of armed conflict in the country. While several previous attempts at talks have been unsuccessful, this new attempt, which has been promoted in part by Cuba and Venezuela, is being met with optimism due to both sides’ perceived willingness to come to the table without preconditions.

These negotiations are the result of a concerted effort by Colombian President Juan Manuel Santos to resolve the conflict through two paths: while the Colombian military continues to press the group, which is at its weakest in nearly 50 years, Santos has also tried to pave the road to reconciliation, passing a land reform law and declaring the fight an ‘armed conflict,’ which imposes certain international obligations on both sides. For their part, the FARC has agreed to stop kidnapping, and seems genuinely interested in these negotiations (for starters, the group’s leader showed up — unlike the last attempt in 1999).

The list of challenges to reconciliation are immense. First, it’s not clear what the scope of these talks will actually be. The Colombian government has so far insisted it will not discuss matters of land reform, while FARC says there cannot be any peace process that doesn’t deal with the issue. It’s not clear whether there will be an amnesty for FARC soldiers, who have been accused of brutality, kidnapping, and war crimes, which may be critical to reaching peace — the Colombian government has been mum on the issue so far, but the notion is understandably unpopular among those caught in the crossfire of the conflict. Even if the group does agree to disband, several challenges will need to be addressed: it’s not clear how the Colombian economy will absorb thousands of poorly educated former guerrillas; the current Colombian reintegration program, while well-intentioned, is severely flawed; FARC’s long guerrilla war has spawned several offshoot groups and rightwing militant opponents which would need to be dealt with; and finally, several factions in FARC have moved from politics into the drug trade, which means the formal end of FARC may surface the existence of groups akin to the narco-cartels in the rest of the region. These are daunting challenges, but after almost 50 years of conflict, they’d be a welcome change for the country.

Palestine

The Emir of Qatar visited the Gaza Strip, the first foreign dignitary to do so since Hamas gained control of the region in 2007. The Emir pledged $400M in aid, upping a prior offer of $250M from earlier this year.

David Roberts writes for Foreign Policy that this move seems more aimed at Iran than Israel, and I generally agree - Hamas split from Syria and Iran back in February as the Syrian conflict started to heat up, and since then the group has been mending ties with other Arab groups in the region. Both Egypt and Qatar have been supporting Hamas, but both have been pushing for peace in the area - Egypt has been heavily involved in negotiating cease fires after recent exchanges with Israel, and Qatar has been pushing for reconciliation between Fatah and Hamas. For all Israel’s hand-wringing, a Hamas backed by Egypt and Qatar, both of whom seem genuinely interested in peace, is a whole lot better than a Hamas backed by Iran.

South Africa

Widespread labor unrest continues in South Africa, where more than 80,000 striking workers have brought platinum and gold mining operations nearly to a halt. The strikes began in early August and quickly escalated when police shot and killed 34 striking miners. The strikes spread quickly, in part due to the killings and in part the government’s response — more than 270 striking workers were arrested and charged under a “common cause” law with the murder of the miners shot by the police. The mine owners initially responded forcefully, with one main platinum producer firing nearly 12,000 workers, but have begun backing down as financial losses from the closed mines mount. The strikers are demanding a raise from $550 to around $1500 per month — roughly the median income in the country.

The mine workers have accused the main national union, the NUM or National Union of Mineworkers, of being too close to both the ruling African National Congress and the mining companies themselves, and most of the strikes have been “wildcat” strikes, or strikes not approved of by the union leadership. Some of the tension has been driven by the rise of the AMCU, a new union formed to combat the perceived collusion between the NUM and the mining companies.

The African National Congress, or ANC, has run South Africa for its entire post-apartheid history, nearly 18 years now. The group was the primary opposition to the apartheid regime, and naturally became the party in power after apartheid’s fall. Both the previous and current presidents have faced corruption cases, but with no real opposition, the ANC’s rule continues. Their response to the strikes so far has been police action and tough talk against the workers, which has bolstered the workers’ claims that the government is too close to the mining companies.

The South African government has generally had wide support among the wider world for two reasons: The first is that they were the party of Nelson Mandela and the group that shepherded South Africa through the post-apartheid era; the second is that, by the standards of most of their neighbors, the country was a paragon of good governance. One party rule, though, is never good for governance, no matter what guise it takes — the lack of legitimate opposition leaves the door open for graft and corruption. The sentiment among South Africans now seems to be turning — after 18 years, the scars of apartheid are starting to fade and the glow is wearing off the ANC. South African politics sound due for an opposition party.

As for the mining companies - One of the companies, AngloGold, stated the shutdown of its operations (with more than 24,000 of its 35,000 staff on strike) is costing it around 30,000oz of gold in lost production per week. 30,000 oz of gold, at $1700/oz (the average price this year), is $51M per week, or about $1450 per worker. The workers are currently getting paid around $125 per week, and are striking for a raise to about $375/week.

Final Thoughts

Astute readers will note I haven’t written about the US Presidential election since I threw my hands up over the whole matter earlier this year. I intend to break that embargo early this week, as it looks like I won’t have the opportunity for much longer.

Thanks for joining me, and my best for the week ahead!

Eric

October 1 - 14

2012-10-15T00:00:00-07:00

Hello, and welcome to the Dispatch for October 1 - October 14!

Iran

An announcement on the 23rd that the Iranian central bank would supply US dollars to importers of certain goods prompted panic selling of the Iranian Rial. By October 1st, the Rial had shed 40% of its value on unofficial exchanges (the government exchanges are tightly controlled). The drop, which the Iranian president attributed in part to the US-led sanctions, prompted demonstrations in Tehran, including a strike by merchants in the Grand Bazaar.

Iran’s economic woes are only partially due to the sanctions, and Iranian anger now is mostly over economic mismanagement, not the nuclear program - many Iranians consider the nuclear program their national right, even if they’re not particularly fond of the regime or interested in nuclear weapons. The question is whether the sanctions will cause Iranians to rally to the regime - Ahmadinejad is not particularly popular, but there are elections in the spring, and while the Ayatollah remains the sole decision-maker on the nuclear program, the outcome of the elections could have some impact on how the public perceives both the economy and the nuclear program. One thing I have heard repeatedly, though, is that a genuine revolution in Iran is vanishingly unlikely right now.

Greece

Greek Prime Minister Antonis Samaras warned October 5th that without urgent financial aid, the country could collapse, pointing to the rise of the neo-fascist Golden Dawn party as a sign of the danger facing the nation and comparing the situation to Germany before WWII. Recent reports from Greece indicate the Greek police are increasingly siding with Golden Dawn, underlining the danger to the country. The Guardian reported allegations by several anti-fascist protestors of police brutality and torture, Vice attended the opening of a play in Greece and found the police more interested in protecting Golden Dawn than the attendees, and the New York Times reports that the group’s popularity is rising in much of Greece as it begins to replace services the state no longer can afford to provide.

There’s sharp historic irony here: The main opponent of aid to the Greeks is the German central bank, an institution formed after World War II with an explicit mandate to prevent the economic conditions that led to the rise of the Nazi party from recurring in Germany. The rise of Golden Dawn is the most concerning development in the Eurozone now - the ECB needs to get in gear and start actually working with the Greek government to get money flowing back into public coffers as soon as possible to avoid that government falling to a bunch of fascist thugs. Whatever the cost of bailing out the Greek government, it will be an absolute bargain compared to dealing with what happens should that country collapse.

Mexico

On October 9th, Heriberto Lazcano, the leader of the Zetas cartel, was killed by Mexican marines. The marines, responding to a report of armed men at a baseball game, stopped a suspicious SUV, resulting in a brief firefight that killed both the driver and passenger. The bodies were sent to a local morgue, and it wasn’t until after a group of armed men broke in and took the body that the Mexican government realized who the man was. Mexican authorities claim there are already signs that the Zetas are uniting behind the group’s second in command Miguel Trevino, which may help avoid the bloody secession fight some have feared.

There’s a saying among counter-narco officials about traffickers: “We’ve got to be lucky every time - they only have to get lucky once.” Apparently that goes both ways. The leader of the Zetas cartel, one of the most ruthless, effective, and feared criminal organization in modern history, met his end not as the result of a full military assault on his stronghold but after a traffic stop outside a baseball game. Lazcano was one of the most dangerous men in the world, and he died under circumstances so mundane that the Mexican government didn’t even realize what had just happened until hours later.

The Mexican Navy’s assertion that the Zetas are already uniting under Trevino is over-optimistic; it was announced barely a day after Lazcano’s death. If true, it could spare Mexico another bloody intra-narco conflict, but it’s entirely too early to tell how the situation will break - the Zetas have had several internal conflicts already, and Trevino is known as a trafficker, not a military man like Lazcano was, so he may well face challengers within the organization.

Syria

On October 3rd, a mortar landed in a Turkish town, killing 5 civilians. The Turkish military responded with more than 5 days of artillery fire into Syria and a parliamentary resolution authorizing Turkish military action in response to the cross-border fire. In the wake of the shelling, Turkish media reports the Syrian government agreed to keep military forces at least 6 miles from the Turkish border. Rebels in Syria warned that continued inaction from the west was leading to severe shortfalls in weapons and ammunition and increasing extremism among fighters.

Turkey has been looking to establish a buffer zone inside Syria for some time due to concerns over both the influx of refugees and the increasing violence on the border. A single mortar was apparently all it took for the Turks to get their wish.

I’ve been extremely hesitant to endorse any sort of action in Syria. The situation has been a mess from the beginning: the rebels have been disorganized and largely ineffective, it’s not at all clear they’re supported by the majority of the populace, and, unlike Libya, there’s been no corresponding political entity that could hope to take over after the Assad regime fell. Frankly, most of that is still true, but our calculus may need to shift due to two trends: first, the increasing role and effectiveness of the Islamist fighters, who are receiving plenty of support from abroad; second, as the fighting drags on, even the moderates in Syria are starting to turn against the west - and who can blame them, after nine months of dithering? Ultimately, Assad is going to fall, and the question then will be who has built up enough support to shape the future of Syria. The prospects for anything approaching a secular, democratic Syria are rapidly diminishing as we continue to debate whether or not we’re going to support the rebels in any material way. If we want any real hope of a Syrian outcome that isn’t either a bloodbath or a hostile Islamist state, we need to start actually providing real weapons - including desperately-needed anti-air and anti-tank weapons - to the moderate and secular groups in the country while they still exist. Inaction is a choice too, and we’re in real danger of losing even the possibility of a friendly outcome in Syria.

Briefs

Argentina/Ghana

Ghana seized an Argentinean Naval Frigate on October 3rd on behalf of a US hedge fund which had filed suite in the country. The hedge fund has been awarded claims against the Argentine government by US courts of between $1Bn and $1.6Bn over losses stemming from Argentina’s 2001 sovereign debt default, and has been tracking the vessel for some time, waiting for it to dock at a friendly port. The Argentinean government is working to have the court order rescinded, but on the 11th, Ghanian courts ruled the seizure legal, and the tall ship remains docked in Ghana.

Lawsuits against governments are fairly normal, but an actual asset seizure, especially of something like a naval ship, is highly unusual. It’s hard to imagine this happening even to the most destitute of Eurozone countries - it’s no wonder Argentina feels put upon by the international community.

Venezuela

After a heated campaign, Hugo Chavez won his fourth re- election, extending his rule to 2019. The perennial western bête noire faced his stiffest opposition yet, but still won 54% to 45%, with more than 80% of Venezuelans voting.

Thanks for joining me, and my best for the weeks ahead!

Eric

September 18 - 30

2012-09-30T00:00:00-07:00

Hello, and welcome to the Dispatch for September 18 - 30!

Embassy Riots Followup:

Following the release of an inflammatory YouTube video two weeks ago, a series of protests rocked the Middle East, resulting in the storming of several American embassies and the death of the American ambassador to Libya. While the protests themselves have largely abated, given the severity of the events, I wanted to follow up on some of the aftermath of the riots.

Libya

Thousands of Libyans took to the streets of Benghazi on the 21st in frustration over the killing of the widely popular American ambassador. The protestors seized control of the headquarters of several militias, including those of Ansar al-Sharia, a Salafi group thought responsible for the ambassador’s killing. The Libyan government seized on the popular momentum on the 24th, issuing a decree that all militias not under the control of the Defense Ministry disband and leave government property. The militias pushed back, though, attacking a hotel housing members of the National Congress, injuring two people.

Libya today looks to be a power struggle between two main factions: the Islamist militias, who, while instrumental in defeating Qaddafi, are looking for a government based on strict Sharia law; and the elected government and the rest of the Libyan citizens who have shown repeatedly that they’re interested in a legitimate, mostly secular, representative government. The militias have played a valuable role in both liberating the country and in securing vital infrastructure in the post-Qaddafi power vacuum (Ansar al- Sharia, in addition to their less-laudable activities, acted as security for the main hospital in Benghazi), but ultimately they don’t share common cause with the Libyan people. The popular action on the 21st indicates the people are likely to be the victors here, but Libya has certainly not stabilized yet.

Egypt

Grand Mufti Ali Gomaa, Egypt’s highest religious authority, issued a statement on the 20th calling for Muslims to show restraint in the face of insults against the religion. A week later, though, Egyptian President Mohammed Morsi joined the leaders of several other nations, including Libya and Pakistan, in calling for limits on free speech at the UN.

The call for limits on free speech are troubling, though anti-blasphemy laws are nothing new in the region. Morsi continues to show he is his own man: though he seems sincerely interested in a democratic Egypt, he seems in no way interested in pandering to the west or America. He does seem interested in stability in the region, though - especially stability fostered by a resurgent Egypt - and that does line up with American interests. The Grand Mufti’s statements are laudable, though I frankly don’t know how much weight they will carry. He is already known as a moderate, and has made his opinion on extremism clear, which means he may not have a lot of influence over the sort of groups which were involved in the embassy riots.

Pakistan

The Pakistani government declared a national holiday on Friday the 21st, encouraging peaceful protests over the film. The protests rapidly turned violent, leading to 19 deaths and more than 160 people wounded. A Pakistani Cabinet Minister offered a $100,000 reward for the death of the person behind the film.

Pakistan is the most dangerous and unstable country in the region right now. The ISI (Pakistani Intelligence) has used Islamic extremist organizations as proxies in Afghanistan and India for the better part of two decades, and these groups and their offspring are now entrenched in Pakistan. Several analysts have written about the rising tide of Islamism in the Pakistani Military, suggesting the organization might not be able to be counted upon should Pakistan attempt to take control of its northern territories. The Pakistani government practically endorsed the riots, and the bounty offer is illegal in the country but appears to have drawn little more than faint condemnation.

The US Drone program in Pakistan is partially responsible for Pakistan’s recent turn towards extremism - I will have more on this topic later.

Eurozone

Mass protests broke out in Spain on Tuesday as protestors marched on Parliament to protest planned austerity measures. The protests were met with a harsh response by riot police, with around 32 people injured in the melee. Meanwhile, in Greece, the Guardian reports that the police are increasingly referring citizens to the neo-fascist Golden Dawn party to settle law enforcement matters.

Despite every scrap of evidence to the contrary, the EU continues to push austerity as a panacea for Europe’s woes. While the protests in Spain are notable (as are those in Portugal, Greece, France, and Italy), the Guardian’s report from Greece is much more troubling. The biggest danger in the Eurozone is posed by groups like Golden Dawn. Economic matters can generally be dealt with, but the breakdown of civil society and the increased prominence of fascist groups presents a very real danger not just to Greece but to the rest of Europe. The rise of the national socialist and fascist groups of the 1930’s was in no small way a response to the economic hardships of the era - Golden Dawn’s ascent in Greece should make policymakers extremely nervous.

Somalia

The Islamist militant group al-Shabaab was routed from its last stronghold, the city of Kismayo, by Kenyan troops on Friday. The group has sworn to continue to fight as a guerrilla force.

This is another piece of good news for Somalia following the elections earlier this year. If al-Shabaab keeps its promise to switch to insurgency-style tactics, Somalia could be in for a rough time, though the country is still in a better position now that the group has been routed from all its territory. It remains to be seen whether the country can keep these gains after the African Union forces depart: al-Shabaab is itself the offspring of an earlier Islamist group that was routed from Somalia in 2006. Somalia has been a country without an effective government since 1991, so it’s entirely too early to declare victory.

Thanks for joining me, and my best for the week ahead!

Eric

August 27 - September 17

2012-09-17T00:00:00-07:00

Hello, and welcome to the Dispatch for August 27 - September 17!

Obviously I’m off schedule this week, but I wanted to make sure to cover the riots at the Embassies. I should be back on schedule for the next Dispatch. This is a long one, and includes some content written a couple weeks ago.

Embassy Riots

On September 11th, following the release of a film insulting Islam, a group of ultraconservative Islamists rioted at the US Embassy in Cairo, scaling the embassy walls and replacing the American flag with an Islamist flag. On the same day, riots outside the US diplomatic mission in Benghazi, Libya escalated into an attack on the embassy that left the US Ambassador to Libya and three other state department employees dead. Over the following few days, protests erupted in Yemen, Sudan, Tunesia, Lebanon, and several other countries.

This was the first time a US Ambassador has been killed since 1988. The attacks came as a shock in the wake of the Arab Spring, which many in the West watched with optimism, so it’s worth taking a close look at what really happened here.

The Film

The backstory behind the film is bizarre. The production quality is absolutely atrocious, and all of the dialogue mentioning Mohammed or Islam in the film was clearly dubbed after production. Both the cast and the crew of the film have stated they were deceived about the purpose of the film, claiming they were told it was about an Egyptian warlord from 2000 years ago. The film appears to be the sole brainchild of its producer, a Coptic Christian parolee who appears to have been responsible for dubbing the dialogue. The film was promoted by various right-wing and Coptic groups, including Pastor Terry Jones of Florida, famous for burning Korans, and was published on YouTube in Arabic a few days before Sept. 11. It somehow came to the attention of the religious establishment in Egypt and was widely decried, with both the Grand Mufti Ali Gomaa and the Muslim Brotherhood calling for protests over the movie. From there, word of the obscure film spread throughout the Middle East, prompting calls for protests from religious leaders.

The video itself is ultimately irrelevant. It was such a hatchet-job of a film and produced with such limited support that it’s more an act of vandalism than a proper piece of media: the film was obviously never designed to be watchable, it was designed to pack as much vitriol and blasphemy into 14 minutes as possible. It’s the equivalent of a Westboro church protest - blatant shit-stirring - and it’s a good bet most of the protestors hadn’t actually seen the film.

So if the film doesn’t matter, then what happened in the streets?

The Protests

It’s worth splitting the events out into three areas: Libya, Egypt, and the rest of the region.

The protests at the Libyan embassy resulted in the deaths of four State Department workers, including the Libyan ambassador. The people who killed the ambassador, though, were not protestors. They were heavily armed, with assault rifles, rockets, and smoke grenades, and apparently pursued the ambassador some way before managing to kill him. The Libyan security forces apparently fought back strongly, and the newly-elected Libyan parliament issued a rapid and strong apology and denunciation of the killing. It appears the ambassador’s killing was premeditated, and the protests were either used as cover or stirred up for the purpose. There are two lessons from Libya: The first is that the country is far from under control, and Salafist (ultra- conservative Islamist) militant groups are largely free to operate at will. This is bad. The second, though, is that the new Libyan government will engage with the west. They are not strong enough yet even to exert control over the whole country, but as the new government develops, it looks to be a possible ally in the region. This is good.

The protests started first in Egypt, and were strongest there, stretching for several days and involving street fights with security forces. There were peaceful protests, but several of the more hard-line Salafist groups took the opportunity to exert themselves in the street. The concerning part is that the Egyptian security forces, which, unlike Libyan forces, can still exert control of the streets, did not contain the protests for the first couple of days. More concerning was the new Egyptian president Morsi’s long wait before decrying the violence at the embassies - it took a call from President Obama and a reminder of the several billion dollars of aid money Egypt is expecting from the US to jar him into action. This is concerning: it implies Morsi either politically cannot decry the expressions of the ultra-conservative elements in Egypt or is not willing to do so. While some changes in the US/Egypt relationship were expected after the Mubarak government fell, the US has been sincere in its efforts to promote democracy in Egypt. Morsi’s first reaction, combined with calls by his party, the Muslim Brotherhood, for more protests in the streets following the embassy violence, are not a good sign for future US/Egypt relations. The death of the Libyan ambassador was a tragedy, but events in Egypt may well cast a longer shadow.

Events in both Libya and Egypt still fit into the broader regional landscape. Ultra-conservative Islamist elements have been a feature of the region for some time - the Arab Spring moved the dictators out of the way, which means these groups are more visible, but they’ve been there all along, along with anti-Western sentiment. This doesn’t mean these are majority positions - though in several countries, they appear to be significant enough that governments are having to tread carefully in dealing with the protests. The Arab Spring was (rightly) cheered in the West, but many of the dictators replaced survived in part because they were supported by the West and because they cracked down on exactly the sort of ultra-conservative groups which have promoted these protests. I don’t think the sentiments expressed over the last few days are broadly representative, but it’s a fair bet it will take some time to figure out exactly what form the relationship will take between the West and the nations of the Middle East.

Eurozone

Mario Draghi, the head of the European Central Bank, announced on September 6 a plan for open-ended, unlimited purchases of distressed sovereign European debt by the bank. The move, by far the most aggressive by the bank, would still tie bond purchases to austerity measures, but does promise to lower borrowing rates across the Eurozone.

If the ECB had announced this plan two years ago, the Eurozone wouldn’t be where it is now. The continued demands for austerity are unfortunate, but likely a political necessity to get the plan approved. The new plan doesn’t solve all of Europe’s problems - Spain, Italy, and Greece all still face significant economic hurdles, but Draghi has managed to finally backstop the Eurozone: if the ECB actually goes through with the bond purchases, the EU will now be able to avoid a sovereign default. The big remaining question is whether Germany will go along with the plan. The Bundesbank, Germany’s central bank, was the one “No” vote for the ECB’s plans, and German courts are deciding this week whether the European Stabilization Fund (the previous attempt to save the Euro) will go through. It’s still possible for Europe to snatch defeat from the jaws of victory, but for the time being, this is extremely good news.

US Economy

Federal Reserve Chairman Ben Bernanke announced a new bond purchasing program aimed at stimulating the lackluster US economy on the 14th. The new program will largely aim to buy mortgage bonds to increase consumer spending, and does not have a fixed duration, with the Fed announcing it will continue the program even after the economy starts to pick back up.

The Fed’s actions are unlikely to have an immediate or drastic effect on the economy. Interest rates are already exceedingly low, and it’s unlikely lower rates will spur much more spending than they have already. Paradoxically, the Fed’s promise to keep rates low until at least 2015 is part of the reason this move won’t strongly affect the current economic outlook: Anyone looking to borrow knows rates will stay low, and most borrowers are still facing a slow and uncertain economy. Still, the size and length of this program, and its implicit promise to allow some inflation, should help push the economy forward a bit - for all its other maneuvers, the Fed so far has been extremely timid when facing any prospects of inflation, which has limited the size, duration, and impact of previous acts. With inflation well below two percent, the Fed has finally decided the job market is the more pressing concern.

The current economic climate isn’t crying for monetary (Fed) stimulus. Interest rates have been as low as they’ve ever been for several years now, with salutary effects in the financial markets but little apparent effect on the broader economy. The problem is and continues to be high unemployment and low demand, not lack of funding. The fundamental mechanism by which monetary policy aims to affect the economy is by making money and loans cheaper, and therefore inducing borrowing and spending - but without demand and with uncertain economic prospects, few businesses are willing to invest in anything right now. Compounding the problem is the “Fiscal Cliff” slated for the beginning of next year, in which expiring tax cuts and draconian budget cuts aim to put another brake on an economy that’s almost in reverse. What the economy needs right now is proper leadership, not more money, and Bernanke has been urging Congress to do something, anything, for the better part of a year now. It looks like the Federal Reserve has finally decided that, whatever little benefit their action may have, it’s better than nothing, especially if Congress fails to act before next year.

Bahrain

Note: This section was written before the embassy events occurred.

It was brought to my attention last dispatch that I hadn’t covered Bahrain - this is true. The bulk of the events in Bahrain occurred last year before I began writing the Dispatch, but it’s a story that deserves to be heard, and the situation continues. There’s quite a bit to unpack here, so this is going to be a long section.

Background

Bahrain is an island nation off the coast of Saudi Arabia in the Persian Gulf. A small, oil-rich nation, its population is around 500-600 thousand, though at any given time there are several hundred thousand expatriates from other nations. The country is predominantly Muslim, and predominantly (60-70%) Shia. It has been ruled by the al-Khalifa family, a Sunni tribe, since the late 1700s, and the al-Khalifas have relied heavily on sectarian tensions to keep power. Bahrain is a member of the Gulf Cooperation Council, a group of Arab oil-producing nation on the Arabian Peninsula, and is the home of the US Navy’s 5th Fleet, which patrols the Persian Gulf.

The Uprising and the Crackdown

Al Jazeera produced an excellent documentary on the Bahraini uprising in June, entitled “Bahrain: Shouting in the Dark”. I recommend watching that for a more in-depth (and certainly more visceral) background.

The Bahraini uprising began February of last year as the local expression of the Arab Spring. Three days of peaceful protests at Pearl Roundabout in Bahrain calling for a more representative government and equal rights for the majority Shia population ended in violence with a pre-dawn raid by the police which resulted in the deaths of four protestors. The following day, the army opened fire on a group of protestors marching back to the square, killing one more protestor and wounding several more. The attacks sparked even larger protests, this time calling for the King’s ouster, and by February 22, more than 150,000 Bahrainis had joined the protests at Pearl Roundabout - Bahrain’s population is around 500,000.

On March 14, after several more weeks of protest, the Gulf Cooperation Council agreed to send troops to help the Bahraini monarchy put down the rebellion, sending thousands of troops, mostly from Saudi Arabia, to Bahrain. On March 15th, the King declared a state of emergency, and on the 16th, more than 5000 troops stormed Pearl Roundabout, violently clearing the plaza. Over the following weeks, security forces systematically targeted protestors and opposition figures, invading the hospitals and arresting doctors who treated protestors, knocking down Shia mosques, and beating, arresting, and torturing opposition figures. Since then, the government has continued targeting Shia neighborhoods - a recent report by Physicians for Human Rights called out the Bahraini security forces for firing tear gas directly into houses in Shia neighborhoods, which can cause severe medical problems.

The crackdowns in March fractured the popular movements. Protests and crackdowns have continued since, and the government seems caught between a reformist faction led by the Crown Prince, which has attempted to negotiate with the opposition, and a hardline faction led by the Prime Minister. Arrests of opposition leaders have continued, and the government has stepped up rhetoric decrying the protests as Iranian-led Shia machinations aimed at destabilizing the country.

Analysis

It’s worth noting that the Bahraini crackdown is the first time the Peninsula Defense Force, the Gulf Cooperation Council’s security force, has ever actually engaged an opponent. That it’s first real use was to put down a popular uprising is extremely telling. There’s also some question as to the amount of latitude in dealing with the protests the al-Khalifas actually have given their reliance on Saudi Arabia - the Saudis have been just as ardent in putting down any sign of a Shia uprising in their own country, and are generally extremely hostile towards the Shia.

There’s an opening for Iran to stir the pot in Bahrain as well: Bahrain’s uprising is mostly Shia, increasingly sectarian (due to the government’s own actions), and is already creeping towards violence. Given the proximity of the country to Iran, and the fact that groups with Iranian ties have operated there in the past, there’s a genuine possibility Iran could eyeball Bahrain as a cheap way to sow chaos in the back yard of two of its regional foes. Increased instability or a truly violent Shia uprising in the country would cause significant problems for both Saudi Arabia, which has managed to keep a lid on its own Shia population over the last year, and the US, which would be faced with the prospect of a violent insurrection right outside one of its largest and most important naval bases.

For the US, the Bahraini uprising and the al-Khalifa’s violent reaction should prompt some introspection as to our geopolitical ties. American hands have largely been tied in Bahrain due to both the strategic importance of the naval base and our reliance on Saudi Arabia’s petro-largesse to bankroll our other adventures in the region. In short, because of our oil dependency, we’ve been unable to even comment loudly as the autocratic rulers of a regime we heavily support violently repressed their own people. Among the dividends of the world’s largest military and deepest pockets is apparently not genuine strategic autonomy: our silence as the Bahraini Shia have been abused by their own government does grave harm to our image in the region and provides further material for those rallying against us. Our energy problem leads us to back dangerous autocrats, push coups, spend trillions of dollars on occupations and other military adventurism, ignore overwhelming evidence of climate change, spoil natural habitats, and sow instability around the world. There is simply not a single other strategic US objective that has done more to tarnish our image, destroy our credibility, and force us to either engage in or support despicable, immoral behavior than our reliance on petroleum, and Bahrain’s crackdown, and our impotence throughout, should be cause for serious reflection.

Additional Reading

* In the Kingdom of Tear Gas - Gregg Carlstrom for the Middle East Research and Information Project * Bahrain’s triangle of conflict - Reza H. Akbari, Jason Stern for Foreign Policy * A Revolution Paused in Bahrain - Cortni Kerr, Toby Jones for MERIP

Briefs

Iraq

The Iraqi vice president, a Sunni, was sentenced to death by the predominantly Shia government for allegedly running a death squad in Iraq.

Somalia

The new Somali parliament elected a former political activist, Hassan Sheik Mohamud, as its new president. Mohamud survived an almost immediate attempt on his life the next day while giving a press conference.

Thanks again for joining me, and my best for the weeks ahead!

Eric

August 13 - 26

2012-08-27T00:00:00-07:00

Hello, and welcome to the Dispatch for August 13 - 26!

My new schedule is working out much better for me - I think this is much closer to a sustainable pace given the rest of my workload, and it also helps smooth out the news cycle a bit, though I do worry about landing slightly behind the curve on some stories. More tweaks to come, I think, but for now, let’s get started!

Iran

Iran kicked off the two day summit of the Non-Aligned Movement on Sunday. The summit is attended by delegates from more than 118 nations, including U.N. Secretary General Ban Ki- Moon, Indian Prime Minister Manmohan Singh, and Egyptian President Mohammed Morsi. Earlier in the week, the New York Times reported that Iranian currency traders are now heading to Afghanistan and to Iraq to skirt sanctions and to obtain US currency.

The Iranians are using the NAM summit to show they are not nearly as isolated internationally as the US has claimed. With more than 120 nations, including the leaders of two US allies and the UN Secretary General in attendance, the point is well made. India in particular has been resistant to the US’s efforts, and has improved its trade ties with Iran in the past couple years (though they’re likely getting good prices - the sanctions on Iran haven’t been completely toothless). The reports about currency trading in Afghanistan and Iraq are especially stinging for the US: both countries have been the recipients of enormous amounts of US spending, the very currency being traded to the Iranians in violation of US sanctions.

The picture painted is of both the limits of US influence and the growing capability of non-Western nations. Iran is being protected in the UN by Russia and China; it is being supported economically by China and India; and Egypt, Afghanistan, and Iraq have all worked to improve their ties with the country this year. Despite the US’s best efforts, Iran remains both a regional power and an integral member of the international community. The sanctions have taken their toll, but the threat of attack by the US seems distant now - by all evidence, the US (rightly) sees a nuclear Iran as manageable, and certainly there’s no plan to do anything important before November 6th. This leaves an Israeli strike as the remaining wildcard. Given the very public dissent over the wisdom or timing of such a move among the Israeli elite and clear lack of US support for an attack, that seems unlikely for the time being.

Syria

On Monday, President Obama warned Syria that the US Military could intervene in Syria were there signs of chemical weapons either being used or being transferred or lost to outside groups. The conflict in Syria is spilling over the Lebanese border, culminating this week in a spate of kidnappings between rival Sunni and Shiite families.

The US continues to resist getting involved militarily in Syria, but Obama’s statement is the second very public warning over its chemical weapons, which are the one factor that would force US action, at least on a limited scale. Unfortunately, there are very few scenarios now which wouldn’t prompt US intervention. The Saudis and the other Gulf States won’t let the Free Syrian Army fail, which means that unless the Alawite regime throws Assad overboard in a bid for peace, the conflict becomes a fight for survival for Assad. The longer the fight drags on and the more desperate things get for the current regime, the more likely it is the chemical weapons get deployed. Even if Assad gets deposed without using the weapons, the chaos following the government’s collapse would provide too ripe an opportunity for enterprising groups to make off with them.

Global Economy

The economy of the Eurozone as a whole contracted last quarter, as modest growth in France and Germany was offset by sharp contractions in Spain, Italy, Portugal, and Finland. The UK also dropped back into recession, contracting by 0.5% in the second quarter. Meanwhile, the US Fed indicated that it might start a third round of monetary stimulus to help boost the flagging US economy.

After two and a half years of austerity-only policy, both the EU and the UK are back in recession. Policymakers have now tried austerity-only policies in the UK, Germany, France, Italy, Spain, Greece, and Portugal, and the results are absolutely awful across the board. There’s not a single country where austerity policies have resulted in anything looking like growth, and yet policymakers keep doubling down across Europe. So far the US has dodged the Austerity bullet and stayed out of another recession because the Federal Reserve is politically independent. Calls for austerity in the middle of the recession were insane three years ago and are just batshit now - no one sound of mind can look at the numbers coming out of Europe and have any illusions that austerity is a viable growth-producing policy.

Briefs

Russia

Three members of Pussy Riot were sentenced to two years in prison on charges of “hooliganism motivated by religious hatred” after what was largely seen as a politically motivated show trial. The ruling prompted outrage in the west - though as the Guardian’s Simon Jenkins pointed out in an editorial, Russia is hardly alone in jailing its citizens to “send a message,” and the US’s outrage rings particularly hollow following the crackdown on the Occupy movement this last year.

Somalia

Somalia swore in a new Parliament this week in a process that, while flawed, has prompted hope for the future of the nation. With the help of the international community, Somalia has managed to both curb piracy and largely remove Al Shabab, raising hopes for the future of the chronically chaotic country.

Final Thoughts

One more story popped up that I didn’t get to cover above:

From the NYT: Capitol Dome Is Imperiled by 1,300 Cracks and Partisan Rift

The Capitol dome is in dire need of repairs - it’s cracked, leaking, and starting to rust. The bill for the repairs, though, is $61M, and the House won’t approve the money because of budget concerns this year.

There’s fiscal prudence, and then there’s watching the crown jewels of the nation collapse in upon themselves. It would be difficult to conceive of more potent symbolism than seeing the Capitol dome collapse due to Congress’s bizarre fixation on austerity at a time when interest on federal debt is practically zero and the unemployment rate is still above 8%.

Thanks for joining me, and my best for the weeks ahead!

Eric

July 29 - August 12

2012-08-12T00:00:00-07:00

Hello, and welcome to the Dispatch for July 29 - August 12!

As you’ve no doubt noticed, the Dispatch has been rather inconsistent recently. While I enjoy writing the Dispatch, it’s rather a lot of work, and I’ve been having a hard time balancing it against the rest of my schedule. Because of that, I’m shifting the Dispatch to a biweekly schedule for the foreseeable future. Sorry for the recent inconsistency - as always, the Dispatch is a work in progress!

South China Sea

The Chinese government appointed a legislature of 45 people and a garrison of soldiers to govern a group of small islands in the South China Sea in a move widely seen as an attempt to assert China’s claim to more than 770,000 square miles of disputed territory. China has been increasingly bold in its attempts to assert its claims in the South China Sea, sending patrol ships throughout the region and issuing stern warnings against American intervention in what they see as their territory. Other nations in the region have begun responding to China’s posturing: The Philippines are dramatically increasing military spending and building closer ties with the US, while Vietnam, whose territorial waters most overlap the Chinese claim, announced they would hold live-fire naval exercises in the region.

China’s claims to the sea, the so-called ”nine-dotted line,” overlap the territorial claims of nearly every other country in the region. The country has dramatically stepped up its attempts to assert its claim this year, which has alarmed both neighboring countries and the US. The islands China is claiming aren’t particularly valuable - the five islands covered by China’s new legislators are home to all of 1,100 people - but the sea itself is important to China for several reasons. From a military standpoint, the Chinese are surrounded by US allies, and the territorial waters allotted under the UN maritime treaties are too close to offer any real strategic buffer. Economically, China is determined to ensure they have access to the valuable shipping lanes through the sea. The region is also suspected of having rich deposits of minerals and oil, and are valuable fishing waters. Finally, there’s a historic element here, as well: China has a long history of influence in the region, going back through several dynasties. However, the UN Maritime Treaties were signed during a time when China was cut off from the international community; because of this, China feels it has been unfairly shut out of what is its historic claims, and does not feel particularly bound by the UN agreements. This is likely to be the single largest area of international dispute this year.

Russia

The trial of Russian punk band Pussy Riot came to a close this week, with the band members delivering their closing statements on the 8th. The band was arrested in March on charges of “hooliganism motivated by religious hatred” following a performance in the Cathedral of Christ the Savior, the seat of the Russian Orthodox Church, in which they decried the Church’s open support for Putin. The trial has become the international face of the Putin regime’s crackdown on dissent, which started shortly after Putin took office for his third term.

A good rule of thumb: If the action you’re contemplating to silence critics of your rule is going to result in several months of your name plus the words “Pussy Riot” showing up in headlines around the world, you might want to reconsider. Newspapers exist to sell copies, and there are no two words in the English language more likely to do so than “Pussy” and “Riot.” Putin’s regime managed to crack down brutally on protestors following his re-election with almost no widespread notice from the wider world, which might be why they thought they could get away with a show trial for the three singers. Pussy Riot is a political performance art group: they exist to draw attention to broken political processes. In that, whatever the court ultimately decides to do with them, the group has succeeded. Nobody watching this farce can have any illusions about the nature of Putin’s rule.

Mali

Djibril Bassolé, Burkina Faso’s foreign minister, traveled to northern Mali on the 8th, meeting with Iyad ag Ghali, the head of Ansar Dine, the militant Islamist group which has taken control of the region. Bassolé stated on his return that Ghali “had shown himself open to a negotiated solution.”

Ansar Dine is a group of militant outsiders who exploited the chaos in Libya and a long-running tribal feud to take control of territory that isn’t theirs, impose Sharia on those who don’t want it, destroy ancient artifacts, and create a safe haven for terrorist groups. Their presence in Northern Mali is bad for everyone in the region. It’s not immediately clear what Bassolé is attempting to accomplish here: Ansar Dine wants to keep the territory they took, and presumably everyone else wants them out - This is not a situation that would seem to call for negotiation.

Myanmar

The Guardian reported this week on the plight of Myanmar’s minority Rohingya ethnic group in the wake of sectarian riots which broke out in early June. Following the Military’s declaration of a state of emergency in early June, both Human Rights Watch and Amnesty International accused the Burmese police of a widespread campaign of abuses against the Rohingya, who the Burmese government do not consider citizens. Facing a flood of refugees, Bangladesh has passed laws criminalizing sheltering the Rohingya and banned aid groups attempting to help the group.

The state of the Rohingya is a sharp contrast to the otherwise good news out of Myanmar this year. While the country held relatively open democratic elections for the first time this year, the continued repression of various ethnic groups, including the Kachins in the north and the Rohingya in the west, are a serious and continued black mark on the Myanmar government. Elections, no matter how free, are not a license to ignore serious human rights violations for the Myanmar government or the rest of the world.

Briefs

Syria

The Iranian Secretary of the Supreme National Security Council visited both Damascus to meet with the Assad regime and Beirut to meet with the Secretary General of Hezbollah. NightWatch points out that the apparent ease with which the Iranian minister was able to come and go in Damascus doesn’t suggest a region wracked with fighting. The situation in Syria continues to be difficult to assess due to particularly poor or ill-sourced reporting.

Egypt

Egyptian President Morsi replaced several top military officials, including Field Marshal Tantawi, the head of the military council which ruled Egypt after Mubarak was deposed. The decision was said to have been made in consultation with the armed forces, though it came as a shock to most outsiders; Tantawi has been the face of the Egyptian armed forces through a protracted power struggle with Morsi and the Muslim Brotherhood. It’s too early to tell exactly what this means, but as the move was apparently made in consultation with the armed forces and the military has so far not responded negatively, this looks more like rearranging deck chairs than any legitimate shift in Egypt’s power balance.

Thanks for joining me, and my best for the weeks ahead!

Eric

July 16 - July 24

2012-07-25T00:00:00-07:00

Hello, and welcome to the Dispatch for July 16-23!

I’m continuing on last week’s theme of covering larger, slower-developing stories. This week, we’re revisiting Syria, looking at America’s failed corn crop, and touching briefly on the latest banking scandal at HSBC.

Syria

As always, Syria has been heavy in the news the past few weeks. Three stories in particular stuck out: On July 11, Nawaf al-Fares, Syria’s ambassador to Iraq, announced he had joined the Syrian opposition.

On July 18, a bomb blast in Damascus killed three top Syrian officials, including Assad’s brother-in-law, the Syrian Minister of Defense, and the regime’s Crisis Management Chief. Two days later, Syria’s intelligence chief died of wounds from the bombing. Finally, on July 19, the Free Syrian Army 0seized several border checkpoints, including all four crossings into Iraq, while the Syrian Army battled rebels in Damascus.

Put together, these three stories, more than any of the diplomatic maneuvering at the UN, point to the end of the Assad regime.

Al-Fares, the Iraqi ambassador, is not important just for the title he held: he is the head of a huge Sunni tribe which straddles the Syrian/Iraqi border. Syria, like much of the Middle East, is a patchwork of tribes. The Sunnis who hold a high position in the Assad regime usually do so because of family ties or political expediency, and al-Fares is no exception. His defection, more than most, could cause trouble for the regime, as his tribe is large, powerful, and is well positioned on the eastern border to cause problems for the regime.

The bombing was notable for two reasons: First, the men who were killed were significant figures in the Assad regime. Paramount among them is Assad’s brother in law, Assef Shawkat. He was seen as a central figure in the regime’s crackdown, though all four were trusted members of Assad’s inner circle. They will be extremely difficult for the regime to replace, and their absence may significantly curtail the regime’s flexibility. The bombing itself is of note as well: the attack was in the style of the Sunni extremist groups which have started to play a more prominent role in the rebellion. This is possibly the most consequential victory for the rebels so far; that it may have been accomplished by Sunni extremists is highly concerning.

Finally, the FSA border seizure validates an announcement by Israel that the Syrian army had pulled troops from the Golan Heights border region to deal with the uprising in Damascus. While several of the border crossings have since been reclaimed by the Syrian army, their seizure shows the Syrian army may be reaching a limit on where and how it can project force. They’re still better armed, better trained, and more capable than the fractious rebel forces, but they’re starting to get overwhelmed.

Overall, the picture that’s emerging doesn’t look good for the Assad regime: they’re losing support across the country, their command structure has been decapitated, and they’re running up against the limits on the Army’s ability to hold the whole Syrian territory. The concern is that there still is not a viable alternative government: there’s no single group with the support, credibility, and cohesiveness ready and able to step up as the new Syrian government.

Finally, one other story has been making the rounds: On Monday, the Syrian Interior Minister made an announcement concerning the country’s chemical weapons. He said three things: the Syrian regime was safeguarding its chemical weapons, they would not be used against Syrian civilians, and they would only be used to respond to foreign attacks. Much of the media seems to have run with the third point, saying Syria has threatened to use chemical weapons if attacked. This is a bit ridiculous. It comes as a surprise to nobody that Syria has chemical weapons; this is the first time they’ve acknowledged the fact, but it’s been well known for years that the regime has a massive stockpile of chemical weapons. It should also come as little surprise that the weapons are intended for use in case of an invasion. Sarin gas makes poor interior decoration, and indeed has few uses off the battlefield. The Syrian regime’s statement was in response to recent concerns by the US and Israel over the status of those weapons, and the message was intended to allay the sort of fears that would lead either NATO or the IDF to attempt to secure Syria’s chemical weapons. Whatever threat might have been contained in the message covered well-travelled ground, and certainly didn’t deserve the attention it has earned.

Crops

Thanks to Jon Buzan for general guidance and info

A crippling heat wave has wreaked havoc on the US corn crop, prompting the USDA to lower its output forecast by 18% and driving Corn futures up by over 40%. While a warm spring had lifted farmers’ hopes, June brought disaster: the worst drought in 56 years, with more than 55% of the country experiencing some form of drought. A weak harvest in South America earlier this year due to drought conditions is compounding the problem, and the governments of both Russia and Kazakhstan announced their crops would disappoint this year due to inclement weather. US Corn prospects are so dim that US livestock companies are looking to import corn from Brazil to make up the shortfall.

I’ll start with the elephant in the room, climate change. The short version is, it’s both extremely difficult and too early to draw conclusions about whether or not human influenced climate change had a hand in this drought. However, a recent study published by NOAA points to climate change as a likely driving factor behind a spate of severe weather events last year, indicating the likelihood of extreme weather has increased dramatically since the 1960s. Whether or not this year’s drought will be linked to climate change, both the scientific consensus and an increasing body of evidence point to human-driven carbon output as a clear threat to our climate, and, as this year’s crop shows, inclement weather is cause for concern.

Growers were perhaps overly optimistic this year too. After last year’s poor harvest, farmers took hope from an early spring and seeded more land than usual, but the mild winter may well have contributed to the severe drought sweeping the country.

The biggest issues domestically are likely to be economic. Farmers may lose most of their crops, and with it most of their revenues. Agriculture has been largely spared the recession so far – food tends to be extremely income inelastic (that is, people do not necessarily buy less as the cost goes up), especially corn-based food – but losing a crop is a different story. Insurance companies are now going to have to pay out on a far, far larger set of claims than usual, and if there’s one thing the last 5 years have taught us, it’s that when a financial company is under stress, there’s probably another one at risk too. There will be a series of ripple effects to producers of farm equipment, farm laborers, and other companies involved in the harvest, transit, storage, and processing of the grains involved. Finally, several of the states in the grain belt derive most of their state budgets from agriculture; a failed harvest could increase the number of states and municipalities facing bankruptcy, and the US economy is hardly in a place to absorb further bad news.

On a global scale, the impact is likely to be far more dire. The US exports nearly half the world’s corn and nearly a third of the world’s wheat and soy; a disaster in US agriculture is a disaster for the world. In 2008, a spike in food prices led to food riots across the globe, and the Arab Spring of 2011 coincided with another period of high food prices. The tie between food prices and global conflict has been studied extensively; little good will come of another year’s failed harvest, especially given the turmoil we’ve already seen this year.

HSBC

While the LIBOR affair is still working its way through the banking system, HSBC has added another scandal to the industry: on July 17, a US Senate subcommittee released a 340-page report detailing how lax compliance controls at HSBC enabled a host of groups, from Mexican drug cartels to Saudi terrorist financiers, to move money through HSBC’s banks to and from the US, flouting money laundering laws. The report also accused the Office of the Comptroller of the Currency of turning a blind eye to HSBC’s lax controls.

The LIBOR scandal is both a more widespread and certainly a more costly scandal – the LIBOR rate affects the cost of nearly every financial transaction in the world – but this scandal deserves note because of the sheer breadth of groups HSBC did business with. It’s rare to have a single scandal involve Mexican drug cartels, Saudi Arabian terrorist financiers, Iranians, Cubans, Sudanese, and Burmese. HSBC seems to have categorically violated every single US banking sanction over a four year period; it would be difficult to imagine how they could have broken more US banking laws. The head of HSBC’s internal control division resigned, as well he should, though the chairman of the company during the period investigated by the Senate is now a British minister and thus unlikely to face significant sanction. The scope of the scandal, though, suggests problems at a large number of HSBC affiliates: this is not the product of one department, or one lax regulator, but that of a large portion of HSBC. Focusing on who specifically is to blame misses the point: HSBC as a whole apparently became a go-to shop for money launderers across the globe.

Thanks as always for joining me, and my best for the week ahead!

Eric

July 1 - July 15

2012-07-17T00:00:00-07:00

Hello, and welcome to the Dispatch for July 1 through 15!

I devoted this week to clearing a couple stories that have been simmering for a while - none of the topics this week are New, but they are ongoing and noteworthy.

Let’s get started!

LIBOR Scandal

On June 28th, the Financial Services Authority, the UK’s financial regulatory body, levied a $450M fine against Barclays Bank. The penalty is due to the findings of an investigation into attempts by the bank to manipulate the London Interbank Offered Rate, or LIBOR, one of the benchmark numbers used to set interest rates on a wide variety of financial instruments. In addition to Barclays, the Royal Bank of Scotland, HSBC, and Lloyds are also facing investigations, and a series of lawsuits filed in courts around the world suggest at least 12 other major banks were involved in the scandal.

The scale of this scandal is phenomenal. Three factors will be particularly significant:

First, while it appears UK regulators neither endorsed nor encouraged the rate fixing, they did completely fail to investigate the matter until now, and not for lack of evidence of wrongdoing. It’s hard to critique actions taken during the financial crisis, but in 2008 it seems the regulators turned a serious blind eye to bank behavior. At the same time, it’s unlikely only UK banks were involved with the crisis, so there’s a question of whether and to what degree regulators elsewhere were negligent as well.

Second, a vast, vast majority of credit instruments are indexed to LIBOR, including credit default swaps and other insurance schemes. Any companies which have been adversely affected by movements of LIBOR during the time the FSA says the rates were being manipulated may have legal claims against the banks involved. Charles Schwab has already filed suit against 16 banks, alleging the banks’ actions cost investors more than $45Bn, and it’s likely many, many more lawsuits will follow.

Finally, the scale of the scandal and the casual nature of the emails exchanged during the conspiracy period suggest, as many analysts have posited, a widespread cultural indifference to regulation in the financial services industry. In the (admittedly unlikely) event regulators decide to dig further into the banks, it’s almost certain the LIBOR scandal wasn’t the only breach of rules occurring.

In all likelihood, the result of this crisis will be a series of fines on the order of a few hundred million dollars against a few banks. Banking regulators, here and around the world, have, since the beginning of the crisis in 2008, been at great pains to describe the banks as robust, trustworthy institutions, and I’d be frankly shocked to see that change now. The fundamental problem with the financial services industry is cultural: it was cultural in 2006 and 2007 when the entire industry turned a blind eye to the house of cards that was the CDS trade; it was cultural in 2008 and 2009 when they took in billions of rescue funds, payed massive bonuses, laid huge bets with taxpayer money, and rigged LIBOR; it was cultural in 2010 and 2011 when they spent millions in profits generated from taxpayer- and federal reserve- supplied funds lobbying against regulations and oversight; and it’s cultural in 2012 when the head of Barclays testifies the Bank of England told him to rig interest rates. Regulators have been repeatedly shocked by the degree to which large, respected institutions have flouted the rules, and the reason the institutions have been willing to do so is because the regulators have been by-and-large toothless. A $450M fine is barely a slap on the wrist to a company that made $7Bn last year. Absent significant new oversight or regulation, expect more scandals of this sort.

Mali

After pushing the Malian military out of the northern half of the country, the Tuareg rebels and Ansar Dine, their Islamist allies, fell out over questions of how to govern the region. After a brief conflict, Ansar Dine and al-Qaeda affiliates claimed control of the entire northern region. The Islamists have since begun destroying historic Sufi shrines and temples across the region, decrying the centuries-old monuments as un- Islamic.

The world has been slow to respond to events in northern Mali so far. This is partially due to the coup which displaced the democratically-elected government in Mali and allowed the rebel groups the opening to consolidate their hold over the northern half of the country; the leaders of the coup have behaved extremely poorly since taking control and have earned little sympathy from the leaders in the rest of the region. The rapid displacement of the (relatively moderate) Tuareg rebels by the Islamists should help spark more aggressive action, though: the groups occupying the north now are avowed al Qaeda affiliates, and the Malian army is clearly incapable of removing them on its own. The region’s proximity to Europe should help motivate the West into supporting action to bring the area back under control. Unfortunately, the damage to Timbuktu’s heritage has already been done.

Honduras

US DEA agents shot and killed a suspected drug smuggler on July 3, the second incident in a month in which US agents have shot suspected traffickers in Honduras. The incidents are part of a pattern of increased DEA presence in Honduras; in May, DEA agents were involved in a botched raid that reportedly ended with four civilians dead and sparked riots in the country. Honduras has increasingly become a focal point in the War on Drugs; unlike many in the region, the country’s government is friendly to the US, and has allowed three new military bases to combat the drug trade.

In the wake of the original incident in May, the DEA stated its agents operated solely as support for Honduran troops, and would not engage in firefights unless their lives were threatened. Apparently that’s no longer the case, and given the spate of incidents DEA agents have been involved with over the last two months, it’s questionable whether that restriction ever was in place. The US’s close relationship with Honduras is particularly troubling given the current Honduran government: having won power in the wake of a 2009 coup after other opposition parties withdrew in protest, the administration of President Lobo has been accused of a series of politically motivated killings and other human rights abuses. The US’s increased presence comes as always with heavily increased military aid, which will help shore up the repressive government.

Honduras’s problems with smuggling and drug gangs are the same faced across the region: Heavy demand from the US combines with corrupt law enforcement officials to enable narco-cartels to operate with impunity in the region. The US’s response so far has been to flood countries along the smuggling routes with money and military equipment while pressing for wildly unpopular policies such as forced aerial eradication of suspected opium farms and aggressive military interdiction of suspected smugglers. The net result has been to increase the overall levels of violence, provide weapons and training to corrupt military officials (the Zetas, now one of the most violent and powerful cartels in the region, began as US-trained counter-narco troops), and to generally alienate the populace. The policy has not materially affected the availability of drugs in the US, and has cost us dearly overseas.

Everywhere they operate, the cartels are enabled by corrupt officials and complicit governments. US policy aims would be furthered far more by promoting solid, competent, transparent, accountable governance in the region than by paramilitary raids. In that light, that the US has doubled down on the Honduran project is rather disheartening.

Final Thoughts

All three of these stories exist because of the limitations of our current political climate: the LIBOR scandal is a product of years of economic zeitgeist that have severely constrained our ability to properly regulate financial institutions; our escalating affair with a corrupt Honduras reflects our inability to objectively evaluate the War on Drugs; and Mali’s crisis, and the potential danger it presents to the rest of the world, persist because the West has war fatigue after a decade bogged down in the Middle East. These are stories that shouldn’t have happened.

(Ok, that was a bit of a down note to end on. Here’s a video of fainting goats to wash it down with.)

Thanks for joining me, and my best for the week ahead! Eric

June 26 - July 1

2012-07-03T00:00:00-07:00

Hello, and welcome to the Dispatch for June 26 - July 1!

Health Care

The Supreme Court ruled the individual mandate in the Affordable Care Act is constitutional, though only when interpreted as a tax. The ruling, anxiously awaited by both parties, affirms one of the Obama administration’s signature accomplishments. Surprisingly, the deciding vote was that of Chief Justice Roberts, widely seen as a conservative justice, who joined the four liberal justices in forming the majority.

The Supreme Court ruling is a big win for the Obama Administration, but Roberts’ opinion is more notable for the why than the what. Roberts treated the mandate as a tax because it lacks any serious associated criminal charge, but in doing so he also rejected the Administration’s assertion that the mandate was allowed under the Constitution’s Commerce clause, which states Congress can regulate interstate commerce. The Commerce clause, along with the Necessary and Proper clause, have formed the constitutional underpinnings for a vast array of federal laws since the early 1800s. In ruling the mandate was not allowed under the Commerce clause, Roberts set a limiting precedent on what can be covered as Commerce, and thus what Congress can regulate or legislate. I suspect this will be the true long-term effect of the Court’s ruling, whatever the eventual fate of the PPACA.

Mexico

With 95% of the vote counted, official polls from Mexico’s presidential elections showed Enrique Peña Nieto of the Institutional Revolutionary Party (PRI) ahead by 6%.

The PRI ruled Mexico for 71 years, gaining a reputation for corruption and electoral fraud that lead to their eventual ouster in 2000. Since then, Mexico has faced a host of problems, including a faltering economy and an increasingly bloody drug war, which may explain PRI’s recent success at the polls. There may be other factors at play, too: a week before the elections, the Guardian revealed evidence that Televisa, the largest television network in Mexico, had funded and run a campaign for Peña Nieto in 2009, helping him secure the governorship of Mexico State, his stepping stone to the Presidency. Given the PRI’s past, the allegations are exceedingly troubling in a country already struggling with widespread corruption.

Additional Reads

Two interesting reads recently concerning Mexico:

* Cocaine Incorporated digs into the history and structure of the Sinaloa cartel, Mexico’s largest drug cartel. It’s a great read, and the sheer amount of money and corruption that makes an organization like the Sinaloa viable is incredible.

* The Kingpins digs into the effects of the cartels and drug money on the political situation, and paints a picture in places so absurd that one begins to wonder what sort of person would actually want the job of cleaning up that mess bad enough to try to rig an election for it.

Thanks for joining me, and my best for the week ahead!

Eric

June 19 - June 25

2012-06-25T00:00:00-07:00

Hello, and welcome to the Dispatch for June 18 - 25!

It’s been a busy week, so let’s get right to it:

Pakistan

In a surprise move Tuesday, the Pakistani Supreme Court forced the dismissal of Prime Minister Yousaf Gilani, citing the contempt of court conviction the court leveled against him earlier this year. The ruling Pakistani People’s Party nominated Makhdoom Shahabuddin as the new Prime Minister the following day, but mere hours later, the Supreme Court issued an arrest warrant for Mr. Shahabuddin over drug charges, blocking his nomination. The PPP responded by nominating and electing Raja Pervez Ashraf as the new Prime Minister. Mr. Raja’s election is particularly notable as he is the former minister for water and power - Pakistan earlier this week faced several days of riots due to widespread power outages and a soaring heat wave.

The Chief Justice of the Supreme Court, Iftikhar Muhammad Chaudhry, has a long-standing grudge against the head of the PPP, President Zardari, which is the underlying reason for this spate of judicial activism. That said, Chaudhry has been aggressive, but he hasn’t had to overstep the law: Zardari has an outstanding corruption charge in Switzerland, which provided the opening for the contempt charge against Gilani, and the fact is the man they nominated to replace him already had a drug charge awaiting a warrant. The new Prime Minister is also facing allegations he took kickbacks on the construction of power plants during his tenure - a charge all the more damning given the terrible state of Pakistan’s power grid.

Zardari, the Pakistani President, came to power after his wife, Benazir Bhutto, was assassinated. Before he took office, he was known as “Mr. 10 percent” for taking kickbacks on government contracts. It’s difficult to really fault the Pakistani Supreme Court’s activism given the apparent difficulty the PPP is having finding people without pending corruption charges to proffer as Prime Minister.

Iran

The third round of nuclear talks between Iran and a group of six nations (the US, UK, France, Germany, Russia, and China) ended in disappointment this week as the negotiators failed to even commit to another meeting, deciding instead to have “technical experts” meet to determine whether there is enough common ground for new talks.

The talks were handicapped from the outset by both a lack of trust and fundamental misunderstandings on both sides. The Iranian’s key demand is a recognition of its right to enrich uranium for peaceful purposes, but the six powers believe the Iranian nuclear program is ultimately a weapons program. The proposal by the West was almost laughable, though: in return for stopping enrichment, shipping out their uranium, and shutting down their nuclear facility, the Iranians would get parts to repair their civilian airplanes and fuel for their nuclear reactor. There’s something to be said for starting negotiations with a lowball bid, but you do run the risk of insulting your negotiating partner if you go too low.

Egypt

After an early victory announcement last week, Egypt’s election commission announced Wednesday they would need more time to review charges of fraud before announcing an official winner. After several days of escalating tensions, including large scale street protests, the commission declared Mohammed Morsi of the Muslim Brotherhood the President of Egypt. Morsi is Egypt’s first civilian president, though he comes into a severely weakened presidency: the Military dissolved parliament and issued an interim constitution giving itself widespread power last week.

Egyptian politics have been rather difficult to read. It’s clear there’s a large amount of back room dealing between the Muslim Brotherhood and the Supreme Council of the Armed Forces, and this week’s delay in announcing the winner was almost certainly due to ongoing power jockeying between SCAF and the Brotherhood. SCAF has the guns and the power, but the Brotherhood can put people in the streets. The deal right now seems to be that the Brotherhood gets the Presidency, but the military keeps control of national security and foreign relations. That leaves Morsi to deal with the economy and the rest of the internal situation in Egypt - a challenge whose prospects for success don’t bode well for the Brotherhood in the next elections.

Israel/Palestine

In response to airstrikes on Gaza, Hamas launched its first attack against Israel in over a year, firing more than 100 rockets into Israel over three days before acceding to Egyptian efforts to broker a cease-fire. Violence flared again on Saturday following Israeli airstrikes, though by Saturday evening, a new truce had been struc k.

(Many an analyst has run aground on the rocky shores of the Israel/Palestine conflict, so I encourage you to take my thoughts here with a larger grain of salt than usual.)

Hamas as an organization is undergoing some rather large changes. Amid evidence of some internal power struggles this year, they’ve broken ties with Iran, and until this week, they’ve managed to keep relative calm in Gaza. My suspicion is this is closely tied to the Muslim Brotherhood’s ascension in Egypt. Hamas was born out of the Muslim Brotherhood, and when they announced their split from Iran, they did so in Cairo - their new patron is almost certainly the Brotherhood. If this is true, it means stability in the Gaza Strip is now tied to the success of the Muslim Brotherhood in Egypt. Despite hand-wringing about the rise of the Islamists in Egypt, this could wind up working rather better for Israel. Hamas’s former patron, Iran, was solely interested in causing problems for Israel. The Brotherhood, on the other hand, is both interested in peace in the region and concerned with the fate of the Palestinian people themselves. If this past year’s cease fire is indicative of the direction Hamas’s political wing would prefer to go, the Brotherhood’s ascent may wind up being the best thing to happen to the Israel-Palestine peace process in years.

Syria

On Tuesday, a Russian ship apparently transporting refurbished attack helicopters to Syria turned back mid-journey after its insurance contract was revoked by its British issuer at the behest of the British government. Two days later, a Syrian pilot became the first defector from the Syrian Air Force, flying his jet into Jordon seeking asylum. Also this week, the New York Times and the Guardian published a pair of articles shedding light on efforts to supply weapons to the Free Syrian Army: the Guardian reported on the weapons sales, including a transfer of two Shabiha prisoners from the Free Syrian Army to their Arab weapons suppliers, while the New York Times reported on the CIA’s presence in Turkey, where they are attempting to make sure the supplied weapons are not diverted to the growing extremist and Al-Qaeda aligned groups. The biggest event of the week, though, was the downing of a Turkish fighter jet by Syrian air defense. Turkey, a NATO member, has asked for a consultation with NATO to determine its response.

This is the first time I’ve seen insurance contracts used as a coercive force, though I doubt it will be the last. The defection may help explain why the Syrian government has been reluctant to involve the Air Force in putting down the uprising: the Air Force has been seen as a stalwart pro-Assad group so far, so a defection among their ranks is a sign of more widespread weakness in the regime.

The most consequential event this week by far was the downing of the Turkish fighter jet. Turkey is a member of NATO, which means that if it is under attack, it can invoke Article 5 of the NATO charter - the mutual defense clause - which would oblige the rest of NATO to help the country defend itself. Turkey has yet to do this, but the fact that it now has reason to do so dramatically changes the situation around Syria. Until now, the West has been trying to maneuver the Security Council into supporting some sort of intervention, but it has been stymied by Russia. The downed Turkish fighter now gives NATO all the justification it needs for military intervention in Syria. It’s hard to overstate how much this changes the diplomatic landscape: until now, there’s been no legitimate threat of force against Syria, and Russia has been able to veto any strong action against the country. Now that Syria has attacked a Turkish jet, there’s an opening for legitimate military action against Syria that bypasses Russia. The next round of diplomatic proposals to both Assad and the Russians will no doubt press this point home.

Thanks for joining me, and my best for the week ahead!

Eric

June 11 - June 18

2012-06-18T00:00:00-07:00

Hello, and welcome to the Dispatch for June 11-18!

The Dispatch is a day late this week because as of Sunday night two of the big stories of the week were still up in the air. Moving forward, however, the Dispatch will be moving to Monday night, as I rather like having a weekend.

Egypt

Egypt held run-off elections for President this week, the first since Mubarak fell. The run-offs pit the two largest power centers in Egypt against each other: the military, which took power after Mubarak’s fall, represented by Ahmed Shafik; and the Muslim Brotherhood, the Islamist political group which won a majority in parliament in January, represented by Mohammed Morsi. The elections themselves were overshadowed, however, by the Egyptian Supreme Court, which ruled the election of nearly a third of the members of Parliament illegitimate, and ordered the body dissolved. The military quickly instated martial law, and the Supreme Council of the Armed Forces, the military’s governing body, declared it would assume legislative powers, as well as convene a council to draft Egypt’s new constitution. The elections were held on Saturday and Sunday as planned, and Mohammed Morsi, the Muslim Brotherhood’s candidate, won, though what his role will be remains to be seen.

The nature of the Egyptian Revolution has been a subject of debate since Mubarak left power. While the most oft-repeated narrative has been that of a popular uprising, many analysts have pointed to the military’s strong and continued roll, as well as Mubarak’s military background, as evidence of a military coup. The protests in the street were the catalyst, but the real shift in power wasn’t to the people, it was from one member of the military to another, and that’s where it’s stayed. Events of this week would seem to enforce that view.

There’s another side to the situation worth noting, though, and that’s the role of the Muslim Brotherhood in post-Mubarak Egypt. Before the courts dissolved Parliament, the Muslim Brotherhood was on track to control both the Legislature and the Presidency. There’s also evidence of Brotherhood attempts to take control of the drafting of the new constitution; attempts to form a constitutional commission have been repeatedly stymied by boycotts by both liberal and hardline Islamist representatives reacting to Brotherhood overreaches. The Brotherhood and the military have been meeting repeatedly since Mubarak’s fall, and much of Egypt’s recent domestic politics can be seen as an extension of the power dynamics between these two groups. The military is legitimately concerned about the Brotherhood taking full control of the country - the dissolution of Parliament may be more a response to Brotherhood overreach than SCAF ambitions.

Either way, the winner this week was not Democracy, a fact the Egyptian people are keenly aware of: polls indicate the voter turnout was around 25%.

Greece

Greece held a second round of Parliamentary elections this week, after the last round failed to produce results. The two main parties in the election were the center-right New Democracy party, who had pushed for Greece to stay in the Eurozone, and Syriza, a coalition Leftist party which had promised to fight Greece’s imposed austerity. The New Democracy party received a plurality of the votes, but not enough to avoid having to form a coalition government.

Prospects look better for actually forming a government this time, but Greek politics of late haven’t tended towards geniality, so it’s anyone’s guess whether this election will actually yield a government. The election ultimately wasn’t about whether Greece should stay in the Euro or not - the vast majority of Greeks don’t want to leave the currency, and even Syriza wasn’t arguing for Greece to exit the Euro - but whether and on what terms it should attempt to renegotiate the loan agreement signed in October. Syriza argued for a much more assertive negotiating stance, but even New Democracy has argued the loan agreement and its attached austerity measures need to be renegotiated. The rest of Europe appears to be falling in line with this view, if for no other reason than a paralyzed Greek government can’t pay anyone anything.

Syria

After slightly more than 3 months in the country with little to show for their efforts, the United Nations peacekeeping mission in Syria announced it was suspending operations because the region had become too violent to continue. Russia, one of Syria’s few remaining supporters, has dispatched two warships to the region to protect its remaining citizens and assets in the region.

There are now three problems in Syria. The first is Bashar al-Assad. After a year of increasingly bloody crackdowns, there’s no future for Syria that includes Assad. The Russian warships have raised some eyebrows due to Russia’s continued support for Assad, but a higher Russian profile in the region will expose the country to more of the heat in the region, which could force the Russians to make a choice about whether they’ll continue to support Assad or not. Should the Russians decide the Syrian situation has become too costly, they could pressure Assad to step down - a case much more easily made with two warships and a tank column.

The second problem is the Syrian opposition, which is at best incoherent. The Free Syrian Army may be the most cohesive faction, and while their military capabilities have apparently increased quite a bit, the recent chaos in Libya shows what happens when the militias are stronger than the government. The Syrian National Council has very little support inside Syria, and hasn’t managed to become the unifying front they’d hoped to be. There are a few dozen other groups in play, but nobody apparent with the ability and the respect required to actually act in a governing role. If Assad is taken out of the picture, there’s no group in the opposition ready to step in to replace him, but there are now plenty of heavily armed militias.

The third problem would be the reaction of other groups in the country to Assad’s departure. Among the more concerning are the Shabiha, the militias who have been blamed for the recent massacres. The groups are ostensibly pro- Assad, but there are questions about how much control over them the central government really has. Should the Assad regime collapse, the Shabiha may go with, or they may spawn another faction vying for power. They’re well-funded and clearly prone to violence, a bad combination in a country with a power vacuum. Another concern are the emerging Sunni extremist groups - Syria has become a magnet for extremist groups in the region, and in the event of either a full collapse or the emergence of an Islamist government, these groups could wind up taking up residence in the country.

The Syrian situation is close to full collapse. Between international pressure on the Syrian regime, increased incidence of the sort of massacres that tend to attract NATO interventions, a more assertive opposition, and no real clear road to a post-Assad government, the country is in a very precarious position. The situation will almost certainly require a settlement between the Syrian opposition and the Syrian government sans Assad, most likely negotiated by external players and probably with significant military presence at hand to keep the independent factions from going rogue or attempting to drag the country into a deeper civil conflict of the sort Iraq endured after Saddam Hussein’s fall.

Thanks for joining me, and my best for the week ahead!

Eric

June 4 - June 10

2012-06-11T00:00:00-07:00

Hello, and welcome to the Dispatch for June 4 - 10!

This week’s dispatch is fairly brief - there were a number of stories over this week, but only two that really rose to the front. I expect a bit soon, though - between the elections in Egypt and Greece and the buzz from Syria, I suspect next week will be rather interesting.

Burma

Burmese president Thein Sein warned that a flare-up of sectarian violence between the Muslim minority group, known as the Rohingya, and Buddhists in the country’s western state of Rakhine may threaten the country’s move to democracy. The violence, which started on Monday with the killing of 9 Muslims in retaliation for the murder of a Buddhist woman, has claimed 7 more lives and caused the government to declare a state of emergency in the region.

The president’s warnings are apparently serious: the country’s constitution allows for the army to take over the country in times of national crisis. It’s unlikely the sectarian violence in will spill too much further - the violence is concentrated around the Muslim minority, who mostly live in the western- most part of the country - but the President’s concerns do underline the fragile nature of the Democratic transition in Burma. While the country has made enormous strides in the past year or so, the military and its affiliates are still very well represented in Burma’s power structures. With so much still unclear about the country’s rapid transition to democracy, the president’s apparent fear of a return of the Army’s rule is concerning.

Spain

The Spanish government announced the country had secured over $125Bn in bank bailout funds from the Eurozone. The news followed growing concerns over the solvency of Spanish banks, including a downgrade by Fitch and an assessment by the IMF that Spanish banks need more than $50Bn to remain solvent. Unlike most of the Eurozone bailouts, this seems to have come with almost no strings attached.

Spanish Prime Minister Mariano Rajoy is taking a victory lap right now, and he deserves it: the Spanish bailout is one of the most proactive and generous actions by the Eurozone so far. Most of the banking bailouts have come with strict austerity demands or other restructuring requirements, but all evidence so far is Spain managed to get a nearly string-free bailout. What’s more, the amount of money offered by the Eurozone is more than double the IMF’s estimate of what Spanish banks need to stay afloat.

There’s two possibilities here: The first is that the Spanish government finally made the Eurozone financial leaders blink. The EU might be able to survive a Greek exit, but the Spanish economy is three times the size of the Greek economy, at over a trillion dollars - the Eurozone wouldn’t survive a messy Spanish exit, a point the Spanish government has made loudly and repeatedly the last few months. The size of this bailout suggests the Eurozone may be acting decisively to get ahead of the crisis and prevent further contagion effects from fears of a Spanish collapse. The other possibility is that the Spanish economy is in a whole lot worse shape than even the IMF suspected. The Eurozone agreed to the bailout fairly quickly, and they haven’t been known for generous packages so far, so I’m left wondering if there’s something worse on the Spanish books than we’ve seen so far.

Thanks for joining me, and my best for the week ahead!

Eric

May 21 - June 3

2012-06-03T00:00:00-07:00

Hello, and welcome to the dispatch for May 21st through June 3rd!

I apologize for my absence again last week. I spent the weekend hauling furniture from San Francisco out to Berkeley, and by Sunday evening I frankly didn’t have the strength left to lift the lid on my laptop. We’re mostly settled in to our new place here amid the fresh air and greenery, so I should be able to get back on a consistent schedule now.

Egypt

Elections: Egypt held its first round of presidential polls on May 25. The top two candidates, who will face each other in runoff elections later this month, were Mohamed Morsi, of the Muslim Brotherhood, and Ahmed Shafik, the prime minister under Hosni Mubarak. The success of Shafik, seen to represent the old regime, has sparked particular anger: demonstrators gathered in the streets outside his offices after the results were announced, and the offices were set on fire sometime that evening.

NightWatch declared the elections a fraud immediately, an analysis with some merit. There are at least three alternative narratives: First, many Egyptians are tired of the uncertainty and chaos that have plagued Egypt since the revolution, and may be concerned to cede too much to the Islamists. Second, while those who support the Muslim Brotherhood and those who support the Army had one candidate each, the liberal/secular/moderate vote was split between three candidates — the sum of the votes for the three runners up exceeds that of either Morsi or Shafik. Third, the Muslim Brotherhood and the Army are the two best-organized actors in the country right now, so it’s not surprising their candidates managed to get the most voters out.

Whatever the cause, the results aren’t great. Neither the Army nor the Muslim Brotherhood are particularly popular in Egypt right now, and a victory by either group would concentrate a lot of power in the country into one set of hands. A victory by Shafik in particular would almost certainly put people out into the streets again - and with good cause, too: a win by Shafik is almost unthinkable absent manipulation by the Army.

Mubarak Verdict: Former Egyptian President Hosni Mubarak was sentenced to 50 years in prison for his role in the deaths of more than 800 protestors last year. His interior minister was also convicted, though six police commanders and his sons were acquitted. The broad acquittals were met with anger by Egyptians, who took to the streets in protest.

The case has been extremely poorly handled by the prosecutors - neither the charges brought against Mubarak nor the evidence was as strong as it could have been - but Mubarak’s conviction was a foregone conclusion from the start. Both the many, many crimes the man committed in office and the consequences of an acquittal for Egyptian stability meant a life sentence at the least. Still, much of Egypt would have preferred to see him hang, and the acquittal of most of the police commanders has caused protests in the streets again.

Egypt is in a very fragile place right now: between the poor outcome of the presidential elections and the half-hearted prosecution of Mubarak, an awful lot of Egyptians are starting to protest again. The outcome of the runoff elections on the 16th & 17th of this month - and their perceived fairness - could have serious consequences for stability in the country.

Syria

Lebanon: The Syrian conflict is increasingly bleeding across the border to Lebanon, with skirmishes breaking out between Sunni and Alawite militias in Tripoli.

So far the Lebanese army and various political leaders have been able to keep a lid on the conflicts, but Lebanon is a country with a long history of civil wars, strife, and armed militias. With strong Shia groups (including Hezbollah) and Sunni groups present, a protracted Syrian civil war could easily spill over into Lebanon.

Houla: On May 25th, a combination of Army artillery and armed militiamen killed more than 108 villagers in Houla. The Syrian government has denied responsibility for the massacre](http://www.nytimes.com/2012/06/04/world/middleeast/assad-condemns-houla-massacre-blaming-outside-terrorists.html?pagewanted=all), while residents have pointed the finger at the Shabiha, pro-government militias who have played a strong role in the government’s crackdown on protestors.

Unfortunately, the situation in Syria hasn’t improved in any way that makes any sort of intervention more palatable — which is why the West, for all its talk, is still sitting on its hands. The Free Syrian Army is still not strong enough or cohesive enough to stand up to the government’s troops, the opposition still isn’t coherent enough to form a legitimate government, there’s a huge threat of sectarian violence if the government does fall, and there’s increasing evidence of links to al-Qaeda and other extremist groups among the Syrian opposition (whether the opposition wants them there or not). There’s nothing that looks like a viable military solution that doesn’t end in a decade of occupation.

The only thing that looks like a potential viable solution is getting Assad to stand down and trying to form a unity government, and right now Assad still has too much support for that. Both the Russians and the Iranians are supporting the regime, and China is staying uninvolved, which is making pressuring the regime next to impossible.

Additional Reads: Two further reads on Syria for the week.

The first is a piece from the New York Times on opposition to Syrian intervention by the Russian Orthodox Church, a strong political force in Russia. Syrian christians have strong ties to the Russian Orthodoxy, and the church fears that an avowed Islamist government in Syria would lead to persecution of the country’s christians - Assad, for all his flaws, has generally let the christian minority be.

The second was published by the Guardian, and talks about the origins of the Shabiha. The author is a Syrian journalist, and he does state that some of the claims about the Shabiha cannot be verified. Nevertheless, it’s a good read, and an interesting look at the “Ghosts of Syria.”

Iran

The second round of talks over Iran’s nuclear program ended with no deal, but an agreement to meet again in Moscow on June 18th. Both sides described the talks as productive, and both expressed optimism that a deal could be reached.

The sticking point appears to be whether or not Iran can continue to enrich its own nuclear fuel. Iran insists it has a right to do so, while the six nations involved in the talks are unwilling to accede that point. Nevertheless, the talks seem to be proceeding, which is a good sign.

The next round of talks are the last before the Eurozone embargo kicks in on July 1st - Iran will be keen to reach a deal by then, but they’re not going to accept any deal that doesn’t include some immediate easing of the sanctions, and they’re not going to accept a deal that forces them to give up their civilian nuclear programs. There’s definitely room for negotiation, but it’s got to be legitimate negotiations - the international community isn’t going to get all of its demands, and it isn’t going to get anything without giving Tehran something in return.

SpaceX

SpaceX’s Dragon cargo capsule launched, docked with the ISS, and was successfully recovered in the Pacific this week, completing the first successful commercial cargo flight.

I’m thrilled to see private space flight start to take off. I’m a huge fan of space exploration, but it’s extremely unlikely NASA’s budget will be restored anytime soon. It’s great to see space flight moving beyond the sole province of governments and to see the private sector start to get interested in space.

Final Thoughts

This is shaping up to be a busy month. Aside from elections in Egypt and another round of negotiations with Iran that are starting to want for deliverables, the situation in the Eurozone is starting to intensify too: Spain intends to try to sell a round of bonds this month, the success or failure of which could have serious consequences for the EU; and the Greeks go back to the polls on the 17th. Stay tuned - it’s going to be interesting.

Thanks for joining me, and my best for the week ahead!

Eric

May 14 - May 20

2012-05-20T00:00:00-07:00

Hello, and welcome to the Dispatch for May 14 - 20!

My apologies for the absence last week - I’m in the middle of both moving and changing jobs, and last week I just didn’t have the time to keep up with the news throughout the week. This coming week may be a bit sparse as well, but once June starts I should be able to get back on a better schedule.

That said, let’s get started!

Malawi

Joyce Banda, the new president of Malawi, announced she would try to lift the country’s ban on homosexuality, a move that breaks with some less encouraging news from elsewhere in Africa this year.

Banda became president after the former president, Bingu wa Mutharika died of a heart attack. Mutharika had been displaying increasingly concerning autocratic tendencies, and his death was followed by a couple tense days as the former president’s cabinet tried to prevent Banda’s succession. Malawi looks to have dodged a bullet.

China

The Chinese government relaxed bank reserve requirements to help offset signs of weakened growth, lowering the percentage of deposits large Chinese banks must hold in reserve (and not lend out) from 20.5% to 20%.

There’s been talk of slowing growth in China this year, but growth has slowed because of steps the government has taken to fight inflation. This announcement shows just how much firepower the Chinese central bank has in reserve - comparably large US banks need only hold 10% of deposits. (Higher reserve ratios slow lending, reducing both the availability of credit and the amount of money in circulation.)

EU

It’s been a big couple weeks in the Eurozone:

Greece

After a fractious election, the Greek parliament failed to form a government. Syriza, a leftist coalition which picked up 17% of the votes in the recent election, acted as the spoiler, refusing to form a coalition with any party hoping to uphold Greece’s much-hated IMF loan agreement. New elections are slated for June 17, and early polls suggest the far left will pick up even more votes. Fears of a Greek euro exit have returned in force in the wake of the failed attempt to form a government, and Fitch lowered Greece’s credit rating to near Junk status.

Italy

The head of an Italian nuclear energy company was shot in the kneecap, an attack with strong echoes of a spree of attacks by a terrorist group in the 1970s. The attack, along with a string of other recent attacks on tax collectors and government officials, prompted the Italian government to redeploy more than 24,000 police and military officials to increase security in the nation.

France

New French president Francois Hollande took office this week, and met with German chancellor Angela Merkel almost immediately after. Hollande also announced his cabinet, which kept mostly to the center and did not include Martine Aubry, the head of the socialist party. Hollande has promised to follow more pro-growth policies and push for the same from Germany.

Germany

German chancellor Angela Merkel’s party lost a major election in Germany’s largest state, taking only 26% of the vote, an 8% decline from the previous elections. Their rivals, the Social Democrats, won nearly 40% of the vote in an election seen largely as a referendum on Merkel’s austerity policies. Merkel announced later in the week that she would support some stimulus programs for Greece and a more growth- oriented policy for Europe at large.

German austerity hasn’t been popular anywhere, apparently even in Germany - and no wonder. Germany is one of the only countries in the Eurozone with a growing economy - even France posted stagnant growth numbers for the first quarter. Greece has shed around 25% of its GDP over the last 3 years, Spain has unemployment above 25% (and around 50% for youths), and Italy is worried about anarchists shooting people in the knee. The good news is, after the recent series of elections, it looks like the political tide is turning in Europe. Even Merkel, who has been steadfast in her support of austerity, is starting to back down.

The big question right now is Greece. The UK government recently estimated the cost of a messy Greek departure from the Eurozone at $1Tn, and that might be undershooting the mark if it sparks further crises in Spain or Italy. The Greeks at this point are ambivalent about staying in the Eurozone: arguments about the dangers of economic collapse are ringing rather hollow in a country where austerity measures have already driven unemployment over 21%. The real danger is to the rest of the Eurozone now. The Germans may not like the idea of bailing out Greece, but their recent economic performance didn’t come from the blue: the country has done extremely well under the Euro, and it has possibly the most to lose from a messy Euro exit. At this point, though, it’s hard to see Greece staying on the Euro. Currency depreciation is the only thing that might save the country’s economy now, and the only way to do that is to return to the Drachma.

US

NDAA

A federal judge blocked a provision in the recently signed National Defense Authorization Act that allowed the federal government to indefinitely detain people suspected of supporting terrorist organizations without trial. District Judge Katherine Forrest ruled the provision was too ill-defined and that the government had failed to adequately explain what would constitute support, leading to serious concerns over the scope of activities covered under the provision.

Economy

While the Jobs report was mostly steady this week, two other numbers were more positive: Housing starts (Real Estate construction projects) increased by 2.6%, while overall industrial production rose 1.1%, the largest gain since 2010.

Both of these numbers are very, very good. The economy is growing slowly, but the two indicators are good signs of fundamental improvements in the economy, and a good sign for future growth. Jobs numbers tend to be trailing numbers (the last thing companies do is hire more people), but industrial activity and housing starts tend to be leading indicators.

Debt Ceiling

House Speaker John Boehner warned the White House and Congress this week that he intended to hold up another increase in the debt ceiling unless it was accompanied by further spending cuts.

Economically, this is just as bad an idea as it was last time; the single worst thing the US could possibly do for both the domestic and the world economy is to toy with defaulting on our debt. The US economy is showing some signs of life, even despite headwinds from the EU crisis, but now Boehner’s threatening to plunge the markets back into chaos. Even if the debt ceiling does get raised, it’s this sort of political gamesmanship that cost the US its Triple-A rating last year, and while the markets shrugged off the spectacle last time, eventually someone’s going to blink.

Politically, this is insane. The debt ceiling debacle last year carried a massive cost for the Republicans: that fracas was a turning point for perception of the GOP both among the general public and in the White House, and it’s hard to point to a genuine political victory since then. Revisiting the issue, especially after trying to vote this week to renege on the terms they agreed to last year, is just not a good move. It’s a baldly political move, and it seems to be one of the few the GOP has this election, but it’s an incredibly weak hand, and the potential to backfire is enormous.

Final Thoughts

I stated at the beginning of this year that the tension in the Eurozone would be between the people and the bondholders. That seems to be what’s playing out now: recent elections in Greece, France, and Germany have all turned on the Eurozone crisis, and in all cases, the winners have been the ones who have sided with the people against austerity. Recent trends in Greece and Italy are concerning - the success of the fascist party in Greece and the rising violence in Italy warn of the dangers of inaction and of economic collapse - but overall, I think Europe may have just turned a corner in its handling of the crisis.

In economics, and especially in macroeconomics, it’s extremely difficult to run experiments. Usually, the best we can do to test a hypothesis is try to gather past economic data and fit it to our model. The results are usually fairly unsatisfying, and it’s very hard to solidly falsify a theory. The Eurozone has, by this point, run as good an experiment as I can imagine on the link between austerity and economic growth. The results are not good. Angela Merkel said this week that deficit reduction and economic growth reinforce one another. She got it half right: Absent bad policy, economic growth will certainly reduce deficits. Deficit reduction, on the other hand, seems to have very little to do with positive economic growth.

Thanks for joining me, and my best for the week ahead!

Eric

April 30 - May 5

2012-05-07T00:00:00-07:00

Hello, and welcome to the Dispatch for April 30 - May 5!

China

A series of high-level meetings between the US and China was derailed by the arrival of Chen Guangcheng, a Chinese dissident, at a US embassy following a dramatic escape from house arrest. After several days of frantic negotiation, the US and China came to an agreement that met Mr. Chen’s criteria, including his desire to stay in China: he and his family would move to a different part of China, and he would be allowed to study law at a university. Upon leaving the embassy and meeting with friends and family, Mr Chen changed his mind and plead with the US to take him back in and allow him to temporarily come to the US. After further negotiations, the US and China announced Mr. Chen would be allowed to come to the US to study law at NYU.

Originally, Chen wanted to stay in China to continue his work - the Chinese government has a history of letting dissidents travel abroad and then refusing them re-entry, effectively shutting them out of the country. That’s likely what will happen now: Chen’s new agreement allows for him to go to NYU, but it doesn’t say much about him coming back.

Both sides wanted this matter off the table. The US and China have a solid working relationship, one whose importance is only growing as China rises. Neither country wanted the high level talks derailed by one person’s case, as evidenced by the speed and flexibility with which the groups negotiated - and the concessions made by the Chinese along the way. Human rights are a point of conflict between the US and China, but they’re one part of a wide and complex relationship.

Aghanistan

President Obama signed the strategic partnership agreement with Afghanistan, laying out the terms for US/Afghan relations for the next decade. Arriving in secret, Obama stayed in Afghanistan for six hours before leaving. Hours after he departed, the Taliban attacked a compound in the capital, killing 7.

Obama spoke of the coming dawn in Afghanistan, but a look at the conditions under which he arrived and departed from the country say more than his speech about Afghanistan in 2012.

Bloomberg has an excellent read on the trip to and from Afghanistan. The level of secrecy and precaution required to fly the president into the capital of the country doesn’t speak of a country on the mend.

Mali

Forces loyal to the former president attempted a counter- coup this week, but after several days of fighting, their efforts seemed to fail. The countercoup was led by the former president’s Presidential Guard; the military junta says the guard took up arms after the junta attempted to negotiate peace with the group, while other reports said the junta had attempted to arrest the head of the guard.

ECOWAS has attempted to negotiate a 12-month timeline for Mali to transition back to civilian government, but the military junta has not agreed to this yet. Early in the week, Captain Sanogo, head of the junta, spoke about the future of Mali, hinting at the junta’s continued role in Malian politics. Despite promises to the contrary and a string of failures in the north, the coup leaders seem intent on retaining power. In light of this, ECOWAS’s 12-month timetable for a transition seems both overly generous and overly optimistic: in two months, this group of mid-level soldiers have gone from promising a swift transition to civilian rule after giving up half the country to rebels in the north to hinting of their central role in Mali’s future.

Burma

Aung San Suu Kyi’s National League for Democracy took the oath of office unaltered and joined the Burmese Parliament, dropping their earlier objection to some of the wording of the oath.

This was the right move. Burma has made incredible strides in the last year, but it’s still not a completely free country. The NLD has waited 20 years for a chance to actually join Parliament; passing it up over a matter of semantics had almost zero upside.

The good news from Burma continues.

EU

France

François Hollande defeated Nicolas Sarkozy in this week’s presidential elections, largely seen as a referendum on the EU’s austerity measures. Hollande said he will continue to balance France’s budget, but will focus on raising taxes to do so, and will press for more growth-promoting measures in the EuroZone.

Greece

Greece’s Parliamentary elections raised more questions than it answered, with the two main parties dropping from controlling a combined 78% of the parliamentary seats down to 34%, far shy of the needed majority to form a government. A coalition of far left parties won 16% of the vote, while a far-right neo-nazi party took nearly 7% of the vote, enough to secure 21 seats in parliament. If a coalition government cannot be formed within three days, new elections will be called.

The Greeks have been at the vanguard of the Euro crisis from the beginning. These elections are as pure an expression of electoral anger as you’re likely to see. The Greeks are furious about the bailout package and the austerity measures, and increasingly about the entire Eurozone - no wonder, at 20% unemployment and an economy that’s contracted 20% over 3 years - and that fury was evident in a complete breakdown of Greek politics. France’s vote was no less a protest vote. The French economy hasn’t fallen as much as Greece’s, but the French are feeling the effects of the Eurozone’s austerity measures as well.

The recent successes of Far-Right parties in the Eurozone elections is concerning. My sense is that the fundamental factor driving their current growth is high unemployment, but the danger is that any group that gets power brings its entire agenda with it, not just the parts that may have appealed to desperate or angry voters.

Thanks for joining me, and my best for the week ahead!

Eric

April 23 - April 29

2012-04-30T00:00:00-07:00

Hello, and welcome to the Dispatch for April 23 - 29!

This has been an extremely busy week for me, and because of that, this is going to be an extremely short dispatch.

Egypt

The Salafis, a broad group of ultra-conservative Islamists, endorsed a liberal Islamist for president in a surprise move this week.

The Islamists move is a sign of dissatisfaction with the Military Council and the Muslim Brotherhood, the two current political powers in Egypt. The Brotherhood already has control of Parliament, and after initially promised not to field a candidate, the group reneged when they couldn’t find anyone to endorse. The Salafis’ endorsement makes Abdel Moneim Aboul Fotouh, a former Muslim Brotherhood member and very liberal Islamist, close to the front-runner in the race.

My sense is the Brotherhood is concerned first and foremost with making sure the military abdicates power. It’s entirely possible they will wind up backing Fotouh, even over their own candidate, if it looks like he could win the election.

Pakistan

Prime Minister Gilani was found guilty of Contempt of Court for failing to re-open a corruption case against Pakistani President Zardari. His punishment was imprisonment until court adjourned a few minutes later.

While the sentence seems ridiculous, Contempt of Court is a felony charge sufficient to bar someone from holding office in Pakistan. Effectively, the Contempt charge ends Gilani’s political career. He’s appealing, but the message from the Court’s short sentence was pretty clear, and it’s unlikely his conviction will be overturned. As NightWatch noted, it looks like Gilani took one for the team: Any appeal trial will take time, and then elections will have to be held, a new prime minister picked, and the entire court charade will need to start again. Gilani’s sacrifice just bought his party a good year’s grace from a hostile court.

Liberia

Charles Taylor, warlord and former Liberian president, was found guilty of war crimes by the Special Court for Sierra Leone.

Charles Taylor’s war in Sierra Leone became the archetype of African conflicts. The child soldiers, the mutilations, the blood diamonds: this the vocabulary by which we know African civil wars. The effects of his rule are still being felt in both Liberia and Sierra Leone. It’s hard to imagine what true justice would look like in this case; some events cut so deeply the only thing left to do is move on.

China

A blind dissident escaped house arrest and apparently made his way to the US Embassy. While the story remains officially unconfirmed by either the US or China, a senior US diplomat has apparently been dispatched to handle the situation before high-profile meetings between the two countries this week.

A couple months ago, the vice mayor of a Chinese city showed up at an American embassy and attempted to defect. He was eventually rebuffed and left the embassy, sparking the downfall of a prominent Chinese politician, ripples of which are still being felt. It’s going to be much harder for the US to turn away a blind advocate for democracy who has spent the better part of a year and a half under unofficial house arrest and who has been praised by Hillary Clinton. So far the Obama administration has done a good job of skirting the line between constituents in the US and partners in China, but returning Mr. Chen to China would be a severe black eye for an administration which has vocally promoted democracy and democratic movements around the world.

Russia

Vladimir Putin handed control of United Russia, his political party, over to outgoing president (and incoming prime minister) Dmitri Medvedev.

United Russia’s image has been tarred by electoral scandals, including the Parliamentary vote which sparked protests across Russia this year. Putin is trying to distance himself from the party and its scandals, but United Russia has been crafted in his image: it’s Putin’s party, and nobody’s likely to forget it – especially not with Dmitri Medvedev, widely regarded as Putin’s lapdog, at the helm.

Thanks for reading, and sorry for the brevity - next week I’ll be back to full length.

My best for the week ahead,

Eric

April 16 - April 22

2012-04-22T00:00:00-07:00

Hello, and welcome to the Dispatch for April 16 - 22!

France

The first round of voting in the French presidential elections took place on Sunday. Nicolas Sarkozy, the current president, has been running a tough race against Francois Hollande, the Socialist Party candidate. Hollande beat Sarkozy in the first round, with 28.5 percent of the vote to Sarkozy’s 27.1. Most surprising, though, was far-right candidate Marine Le Pen’s strong showing, garnering 18% of the vote.

Le Pen’s surprising outcome may not be the boon for Sarkozy commentators are suggesting. Sarkozy’s deep unpopularity is largely due to the economy and the Eurozone crisis: like those in many other countries, the French are none to happy over continued austerity measures, slow growth, and what many see as overreaching by the IMF and Germany. Le Pen’s National Front party is an ultra-nationalist populist party which endorses leaving the eurozone and starkly limiting immigration. Their recent popularity reflects the growing anti-Euro sentiment in France more than any particular conservative turns. Sarkozy is the face of the Eurozone in France, and it’s questionable how many of Le Pen’s voters would turn out for him. In that, Le Pen’s turnout may be more promising for Hollande than Sarkozy: it’s a sign of just how deep the resentment towards Sarkozy’s embrace of the Eurozone runs in France today.

Burma

The recent Burmese elections are paying dividends: The EU announced a 1-year suspension of the sanctions against the country, Japan announced it would forgive more than $3.7Bn in debt, and the US Treasury Department said it would allow financial transactions in support of aid and development projects in the country. The celebration may be premature, though: The NLD is protesting the oath of office, which currently obliges members to “safeguard” the Burmese constitution, saying unless the phrase is changed, they cannot take the pledge.

On the surface, the conflict looks needlessly semantic, and my immediate instinct is that this may be a test to see just how far the military’s newfound appreciation for democracy goes. There’s plenty of reason for the NLD to be cautious, though. It’s not at all clear there’s unanimity among the military, who make up most of parliament, in favor of the recent liberalization moves - should the NLD take an oath to safeguard the constitution and then attempt to rewrite it, they may wind up imprisoned, or worse.

That said, Aung San Suu Kyi, the leader of the NLD, has spent almost 15 years under house arrest as a democratic activist, so it’s certainly believable the NLD is making a stand on principle.

Mali

Though it has been nearly 10 days since Traoré, the head of the National Assembly, was sworn in as interim president, the leaders of the coup have not given up power yet, as evidenced early this week by the arrests of at least 5 leading political figures. The military made no statement about the arrests.

The coup leaders have pledged to restore democracy, but midnight arrests of senior political figures is not a reassuring sign. Traoré may be the Interim President, but the men with the guns are still making the rules. The longer they stay in power, the bigger the temptation to try to sway the outcome of the eventual transition back to civilian leadership.

Sudan

After a campaign of bombings from Sudan, the South Sudanese army pulled back from Heglig, an oil-rich region along the disputed border. The conflict continued over the week, with the Sudanese military striking several areas in South Sudan amid increasingly bellicose rhetoric from the Sudanese president Omar al-Bashir.

The Sudanese cease-fire in 2005 and the referendum for independence in 2011 were monumentally important to resolving relations between two fundamentally different nations, but they left several issues undecided. The border was loosely defined at best, and substantial areas (including Heglig) are legitimately claimed by both sides. The oil revenue sharing remains a contentious point, with the majority of production in South Sudan but the only pipelines running through Sudan. The citizenship of Southerners in Sudan was never resolved, and South Sudan has been slow to issue passports to its citizens. Until these issues are resolved, either by internal negotiations or with the help of outside mediation, the two countries will continue to come to conflict. Even then, historic prejudices may spark conflicts from time to time, but at least then neither side will be able to claim legitimacy while invading their neighbor.

Syria

Amid scattered violence, UN observers began arriving in Syria on Monday, and by Saturday, the Security Council had agreed to increase the number of observers to 300 (the original limit of 30 was widely criticized as inadequate to patrol a country slightly larger than North Dakota). To the shock of the Syrian opposition, though, Col. Himmiche, the leader of the UN’s advance team, announced the observers wouldn’t patrol on Fridays, the traditional day of protest in Syria.

The shared sentiment in Syria is, “If you’re not going to patrol on Fridays, why the Hell are you even here?” Fridays are the days of protest, both in Syria and across the region - skipping Friday patrols is like skipping DUI checks on St. Patrick’s day.

Also, note that the continuing violence in Syria is coming from both sides: the government hasn’t stopped cracking down on protestors, but a spate of bombings and other attacks have hit government troops as well. Neither side is sticking to the cease-fire agreement.

US Election

While Mitt Romney has begun merging his campaign staff in with the RNC, there are still deep divisions within the GOP. Senator Dick Luger, a six-term senator from Indiana, became the latest prominent Republican to face a Tea Party primary challenge. He was joined later in the week by Orin Hatch, who narrowly missed a supermajority in Utah’s primary and will now face a primary challenge in that state.

The action in this year’s election is in the Senate races: enough seats are up for grabs to shift the balance of power in Congress towards the GOP, a change which would hamstring Obama’s second term even more than his first has been. It will be interesting to see the interplay between the Senate races, where many of the candidates have strong Tea Party ties and are likely to run on a more conservative platform, and the presidential race, which will be fought on much more centrist lines.

Thanks for joining me, and my best for the week ahead!

Eric

April 9 - April 15

2012-04-16T00:00:00-07:00

Welcome to the Dispatch for April 9 - 15!

Sudan & South Sudan

The simmering conflict between Sudan and South Sudan took another step towards outright war this week when South Sudan took over the town of Heglig, a disputed city home to Sudan’s largest oilfield. The African Union decried the move as “illegal,” and Sudan responded with airstrikes. Skirmishes continued throughout the week, dimming prospects of a peaceful resolution.

South Sudan gained its independence after a long civil war, a brokered peace treaty, and a referendum in January 2011. While relations between the two countries were only ever cordial at best, the largest conflict was over oil: South Sudan holds more than 75% of the combined countries’ oil, while Sudan holds the pipeline and port required to get it to market. After Sudan threatened to take what it wanted from the pipes, South Sudan shut down oil production and threatened to build a pipeline through Kenya, a process that would take at least a year. There’s little hope for a peaceful agreement and both countries are suffering for lack of revenue. Sudan may have a harder road ahead than South Sudan: like many regimes, the government of Omar al-Bashir has stayed afloat through bribes furnished through oil money. Without oil money for bribes, the government’s days are numbered, and the only other group in the country with any power are the Islamists who invited Bin Laden to set up camp in the mid-1990s.

North Korea

After weeks of buildup, North Korean’s much anticipated satellite launch ended in failure, with the rocket breaking up over the Pacific. Two days later, Kim Jong-Un, in his first address to the nation, declared military technology continued to be the top priority, extolling the progress made by his father and grandfather.

The rocket’s failure is humiliating for North Korea: staged to celebrate the 100th birthday of Kim Il-Sung, the founder of the nation, it was meant to show how far the country had come. The launch was a thinly veiled demonstration of the country’s missile technology — an NBC correspondent who saw the actual satellite expressed doubts about whether it was real or just a mock — and the launch came at the cost of scuttling a deal for more than $200m in American food aid. Kim Jong-Un’s speech to the nation, though, was an interesting development: his father, Kim Jong-Il, rarely ever spoke in public. Kim Jong- Un’s willingness to speak publicly and apparently likeness to his grandfather, practically a deity in North Korea, may prove his most useful assets, especially during what’s rumored to be a messy succession.

South Korea warned earlier in the week it saw signs of preparations for a nuclear test; in light of the failed rocket launch it’s definitely possible the North will attempt to repair some of the damage to its image with a new nuclear test.

Egypt

In a sweeping decision on Saturday, Egypt’s High Election Commission disqualified 10 candidates for president, including the three front runners: Omar Suleiman, Mubarak’s intelligence chief, seen as the military’s candidate, was disqualified because the 30,000 signatures he needed to run could not be verified; Hazem Salah Abu Ismail, a Salafist representing ultra-conservative Islamists known for his vitrolic anti-West speeches, was disqualified because his mother was an American citizen; and Khairat el-Shater, the Muslim Brotherhood’s candidate, was disqualified due to a prior conviction under the Mubarak regime.

Omar Suleiman’s departure from the race is a bit of good news for Egypt; it’s hard to see him as anything but a representative of the military and the old regime. Likewise, Abu Ismail’s disqualification should sooth some nerves in the West, though the well-timed discovery of papers verifying his mother’s American citizenship do imply some outside help in the process. The concern now is how the Salafis will respond to seeing their candidate removed, especially with apparent help from their avowed enemies in the West. The Muslim Brotherhood suspected el-Shater’s candidacy might not pass muster, so they have another candidate ready to take his place if need be.

This is a strange bit of news altogether, though. Suleiman was seen as the military’s man - to have him disqualified by a commission appointed by Mubarak is rather surprising. It’s absolutely possible - hell, it’s likely - that the court action is completely above board and as-reported, but given everything else Egypt has been through, I’m not sure I’ll believe this one until the military actually abdicates control of the country.

Iran

Iran, the US, UK, France, Germany, Russia, and China met for the first round of talks aimed at resolving the nuclear impasse. No concrete steps were made, but the six countries were satisfied that the Iranians were serious about negotiating this time (the 2011 talks ended almost immediately), and follow-up talks were scheduled for May 23.

Iran is obviously playing for time: the longer they can keep negotiations going, the longer they can forestall any military action, and the better any negotiated agreement is likely to be. That said, I suspect the six nations are playing for time too: Nobody wants a war with Iran, and as long as the negotiations are ongoing and appear fruitful, the international community can pressure Israel to refrain from attacking. The consensus is that Iran’s goal isn’t to have a nuclear weapon right now, but they do want to have the option of making one if they need to. The only country with a serious objection to a non-nuclear but “screwdriver-ready” Iran is Israel: the rest of the international community is more concerned about avoiding another long and costly conflict in the Middle East.

Foreign Policy published a piece by Hossein Mousavian which does an excellent job detailing the many reasons Iran has to be mistrustful of the West. Negotiations are a two-way street, and there aren’t too many compelling reasons for the Iranians to expect the West to hold up their end of the bargain.

Summit of the Americas

The Summit of the Americas was held this week in Colombia. Unsurprisingly, drug policy was the headline topic, with the Colombian president proposing a global taskforce to overhaul drug policy around the world, though President Obama flatly rejected any talk of legalization. The talks ended without any consensus statements, though, largely due to concerns over the continued exclusion of Cuba from the meetings.

The drug issue is the 900lb gorilla of intra-American relations. The United States is the largest consumer by far of illicit drugs, but most of the costs of dealing with the issue have been borne by Central- and South-American countries, and there’s ample reason to criticize the current policy. This week, the AP reported that there were signs the Zetas, a paramilitary narco-cartel formed by former Mexican special forces trained by the US, and Mara Salvatrucha, a Guatemalan group made of gang members deported from the US, were beginning to work together in Guatemala. Both groups sprang from US efforts to crack down on the drug problem, and both have grown into a huge threat to Central American security. It’s no wonder patience is wearing thin south of the US border.

The second point of contention between the US and the rest of the Americas is Cuba: but for some small changes in immigration, US policy towards Cuba hasn’t changed since the Cold War, and the rest of Latin America has run out of patience with the US position. Cuba may be nation non grata to the US, but its ties with the rest of the Americas - especially Bolivia, Nicaragua, and Venezuela - are rather strong. The United States’ continued insistence on barring Cuba from the Summit is starting to cost us diplomatically.

Ultimately, between Brazil’s ascendency as a global power, the Americas’ growing fatigue with heavy-handed and tone-deaf policy from the US, and the spread of Mercosur (the South American equivalent of the European Union), the American nations are finding themselves less reliant on the US and less willing to accede to US demands in the region.

South China Sea

The Philippines and China found themselves in a standoff this week when the Philippine navy tried to arrest the crews of 8 Chinese fishing boats for illegal poaching. Two Chinese surveillance vessels arrived and positioned themselves in the way of the Philippine ship, sparking a three-day standoff over a small shoal 140mi off the Philippine coast. The standoff was resolved on Saturday, with all 8 Chinese ships returning to China.

China has been increasingly assertive in its claims to territory in the South China Sea. China claims most of the sea as its territory, a claim disputed in various places by the Philippines, Viet Nam, Japan, and Indonesia. Most of the disputees are US allies or signatories, which is why the disputes are so tense: the Chinese see any US infringement in the region as a direct challenge. As China grows more assertive, I expect this region to get more volatile.

Thanks for joining me, and my best for the week ahead!

Eric

April 2 - April 8

2012-04-08T00:00:00-07:00

Hello, and welcome to the Dispatch for April 2 - 8!

A quick note: Starting with this dispatch, I’ll be citing stories older than one week where necessary. A number of stories have come up which tend to look like routine politics until a week or two later, and I’d rather be able to give a comprehensive read on an event than miss something based on a 7-day window. The world’s done an awful poor job conforming to my schedule so far, and I’ve little reason to expect it to do so in the future.

That said, let’s get started!

Mali

The Tuareg rebels declared the northern territories an independent nation, calling it Azawad. The declaration was immediately rejected by the African Union and several other international parties, though the AU and France also turned down the Malian coup leaders plea for military assistance. The coup leaders announced that, in exchange for immunity from prosecution, they would hand over power to the National Assembly within days, and deposed President Toure officially stepped down to facilitate the transfer of power.

The Tuareg’s historic homeland covers parts of Algeria, Libya, and Niger as well as Mali, which may explain the chilly reception from both the African Union and ECOWAS. The group also has ties to groups claiming affiliation with al Qaeda, which hasn’t won them friends in the west either.

Syria

As April 10th, the deadline for a cease-fire agreed upon under terms brokered by the UN, approaches, violence continued in Syria. At the end of the week, the Syrian government said it would not enact the cease fire without written guarantees from the rebels that they too would stop fighting. Hopes for a cease-fire were also undermined by Saudi Arabia and Qatar, who pledged significant financial and material support to the rebels.

The “Friends of Syria” are not providing weapons directly, but with more than $100M earmarked to pay for the Free Syrian Army’s salary, they might as well. It’s little wonder the Assad regime is lukewarm on the prospect of a cease- fire.

Egypt

Following rising tensions between the Muslim Brotherhood and the military leadership and a dearth of other candidates to endorse, the Brotherhood backed away from an earlier pledge to abstain from the election and announced a candidate for president. On Sunday, another candidate was announced: Omar Suleiman, Mubarak’s former intelligence chief.

When Mubarak was deposed, many observers noted it looked an awful lot more like a coup than a revolution: the crisis in Egypt ended with Mubarak in the hands of the military, not the people. Suleiman’s candidacy fits this narrative: when things started looking sour for Mubarak, he offered Suleiman as his replacement. For several months now, the military and the Muslim Brotherhood have been sparring over who will ultimately control Egypt, and Suleiman looks to be the military’s next play. The Brotherhood may have decided it couldn’t risk not running a candidate, even if the move scares away some potential supporters.

Yemen

In the aftermath of the unrest which removed former President Saleh, Yemen’s south continues to be a center of unrest. The government has not managed to fully re-establish control, despite its best efforts, and al Qaeda’s Yemeni branch is becoming well rooted in the area, as evidenced by a spate of recent attacks. Adding to the government’s woes, troops loyal to the former president’s half- brother Saleh al-Ahmar shut down Yemen’s largest airport for a day to protest al- Ahmar’s sacking by President Hadi, one of nearly 20 firings intended to clear the military ranks of loyalists to the old regime.

Saleh’s resignation earlier this year left a number of open questions, including the disposition of his friends and family members in key government positions. The firings and subsequent airport takeover aren’t going to settle any nerves in Yemen. Until the new government can deal with the remnants of Saleh’s regime and get full control over the military, it won’t be able to tackle the problem in the south, which means the al Qaeda affiliate will continue to have a free hand. President Hadi may possibly have the worst job in the world.

China

Chinese Prime Minister Wen Jiabao called for the breakup of China’s four biggest banks, saying their monopoly on finance is beginning to slow China’s economic growth. Wen’s statement follows on another talk he gave at the end of March admonishing the Chinese government to do more to tackle corruption.

All four banks are state-owned and massively well connected, which is why Wen’s statement is particularly worth note.

Final Notes

I’m always reluctant to spend too much time talking about al Qaeda or its affiliated groups - the group is just too much of a hot issue, and American news in particular tends to be extremely sloppy in dealing with al Qaeda. They’ve been largely removed from Afghanistan and Pakistan, but the news from North Africa and Yemen this week are signs of the vitality of their affiliates. In general, though, Al Qaeda tends to operate in conjunction with other local groups: the group itself is relatively light on manpower, and tends to act more as training, logistics, and support for local movements. This makes them an extremely amorphous group, but it also is a weakness, since the local groups usually have goals that don’t match al Qaeda’s brand of International Jihad. This was effectively the lesson of the “Sunni Awakening” during the Iraq war - separating al Qaeda from their local supporters can be an extremely effective means of shutting down the group’s activities in a given area. The situations in Mali, Yemen, and Somalia are going to get more scrutiny in the coming weeks, and I guarantee the al Qaeda connection will become part of the news. Keep in mind the distinction between al Qaeda proper and other local Islamist groups: most groups operating in the region don’t have aims on the sort of international actions al Qaeda aspires to, and the presence of “al Qaeda-affiliated groups” does not actually tell one an awful lot in that region - several of the rebel groups in Libya during Gaddafi’s overthrow had links to al Qaeda as well.

Thanks for joining, and my best for the week ahead!

Eric

March 26 - April 1

2012-04-01T00:00:00-07:00

Hello, and welcome to the Dispatch for March 26 - April 1!

My thanks this week to Luis and Harlan, who helped me better understand the situation in Argentina and direct my research. There’s no substitute for knowledgable and interested people, and I’m fortunate to have such good friends.

Let’s get started!

Mali

ECOWAS, the Economic Community of West African States, issued a warning on Wednesday to the leaders of the Malian coup, pressing them to restore the democratic government and placing peacekeeping troops on standby. The Tuareg rebels in the north took advantage of the chaos surrounding the coup and seized a swath of territory, culminating in the capture of Timbuktu on Sunday. Facing pressure from abroad and a severely deteriorated security situation, the coup leaders announced they would restoring the constitution and transfer power back to a transitionary government as soon as possible.

To say the coup has failed spectacularly is an understatement. Within one week, the leaders of the coup allowed the Tuaregs to capture more Malian territory than they have in almost a century of uprisings; indeed, with Timbuktu, they’ve now realized their full territorial ambitions. When civilian government is restored, it will be in a severely disadvantaged position as it attempts to negotiate the future of the northern region of the country. Last week, world leaders said the age of the coup was past, this week shows they may be right.

Myanmar

Nobel prize winner Daw Aung San Suu Kyi won a seat in Sunday’s much- anticipated parliamentary elections, according to her party, the National League for Democracy. The NLD itself is said to have won at least 40 of the 44 available seats.

Myanmar’s parliament consists of 664 seats, only 44 of which were contested this election. Still, the move is enormously symbolic: A year ago, it would have been unimaginable to see the NLD, and especially Aung San Suu Kyi, whose 15-year house arrest came to symbolize the country’s repression, in parliament. The speed of the country’s liberalization has been breathtaking, and as yet observers are left scratching their heads over the cause. The most credible theory is that the leaders of the military junta, now rather wealthy old men, would rather retire peacefully as heroes than wait for the Arab Spring to arrive at their door. In any case, the government is making all the right moves, and, as Hillary Clinton put it, that’s quite a nice sight to see in a season thus far dominated by Syrian tanks.

Argentina

The Obama administration announced it was suspending trade benefits to Argentina over the country’s failure to pay $300M in awards to two American companies. The administration said it did not believe Argentina had acted in good faith concerning the awards, granted in the aftermath of the country’s 2001 default.

The $300M is owed to two companies: one is CMS Energy, an energy firm who won bids on large energy concessions in Argentina in the mid 90s, and the other to Azurix, a subsidiary of Enron, which won a bid to supply water around the same time. Both bids were awarded during a raft of privatizations taken as concessions for IMF loans during the 1990s, and the two companies were among the holdouts in Argentina’s debt restructuring during their 2001 default.

The history between Argentina and the US since WWII has been checkered at best - starting with the Marshall Plan, under which European nations were blocked from purchasing goods and services from Argentina in a bid to discredit Perón, the Argentine president at the time. The story since has been one of coups, debts, corruption, and concessions to external creditors, the end result of which is Argentina, once the 7th largest economy in the world, finds itself still struggling to access foreign credit markets. Argentine governance has frequently been fraught with corruption and ill-advised policy, but it’s awful hard to see any balance in this move: Argentina now joins Sudan, Syria, and Belarus as the only countries in the world ineligible for trade benefits, due mostly to two companies’ demands for more concessions from a bankrupt nation.

Oil Markets

The French Energy Minister confirmed talks with the UK, US, and Japan about releasing oil from the countries’ strategic reserves to bring down crude prices. The Saudi oil minister said his country would bring as much oil to market as needed to keep prices down, stating that high oil prices were beginning to have an effect on European growth. On Sunday, President Obama announced there was enough oil supply on the market to go forward with another round of sanctions targeting Iran’s oil exports without affecting global energy prices.

In a bit of election-year irony, the slow economic growth is helping the Obama administration take a hard line on Iran: oil demand is low, in part due to sluggish growth in Europe and slower than expected demand from China. The talk of releasing oil from the strategic reserves, though, belies the optimistic talk of Saudi supply. Iran is the second-largest producer of oil in the world, with output around 30% of Saudi Arabia’s. It’s extremely hard to imagine a scenario where shutting Iran out of the oil markets doesn’t impact prices.

As an aside: the Strategic Petroleum Reserve exists to handle genuine emergencies and short-term supply disruptions. Seeing it used it for what are fundamentally political purposes is an extremely poor development. If the administration thinks the benefits of pressuring Iran to abandon its nuclear program outweigh the potential cost of an increased price of oil, let them make that case, but to dip into the emergency fund by choice instead of necessity is both disingenuous and potentially dangerous.

Health Care

The Supreme Court heard arguments over the Patient Protection and Affordable Care Act, or Obamacare, this week. The case focused on the “Mandate,” the requirement in the law that individuals buy health insurance or pay a penalty. The Obama administration was confident at the start of hearings the law would stand, but by mid-week, the Justices’ questioning led many to believe they would strike the law down.

While it was expected the court would break along ideological lines, leaving Justice Kennedy the pivotal vote, Kennedy’s questioning of the Administration’s lawyer was extremely sharp, surprising most observers. The Justices have indicated their decision will be all or nothing: either the Mandate, and thus the law, stands, or the Mandate falls and the entire 2700-page law will be revoked.

The government’s arguments in favor of the mandate have centered on the Commerce Clause and the assertion that, at some point, everyone interacts with the health care market - because the government can regulate the health insurance and care markets, and because everyone will use the market eventually, the government has the ability to regulate the terms on which people enter that market. The argument of Attorneys General representing the states suing the government point out that this reasoning can be stretched to cover nearly every industry, including food: can the government thus compel us to buy broccoli as well? Either side can quote a large body of case law - going back to 1792, in some cases - and, no matter the ruling, the decision promises to be highly contentious.

Final Thoughts

I’ve talked before about my distrust of complexity - in fact, the Obama administration’s attempts to mold the oil markets to prevent spillover from Iran was the background for my previous comments on complexity, and that situation isn’t looking a lot better to me than it did then.

The individual health care mandate, the subject of the Supreme Court’s scrutiny, is another example of complexity serving ideology: the mandate exists to solve the inability of people with pre-existing medical conditions to get health insurance, and the subsequent bankruptcy of people whose only mistake was to get cancer. By all measures, the regulation against pre- existing coverage bans is wildly popular: 85% of people support it in recent polls. The only way to make that regulation economically viable, though, is to dramatically increase the number of healthy, dues-paying people on insurance company rolls. The mandate is designed to keep private insurance companies in business while achieving the rather laudable social goal of preventing the sick from being left to die on the streets. The problem is, it might be unconstitutional. The other problem is, it’s a terrible patch to a broken model.

We’re at a crossroads: we can either have profitable, market-driven insurance companies, or we can have a society in which an illness is not a death sentence, economic or otherwise. The mandate kicks the can down the road, but it’s not clear what other problem it solves: whatever its other virtues, it’s impossible to call a system in which individuals are compelled to buy health insurance a “free market solution.” If we really want coverage for those with dire illnesses, it’s well time to drop the pretense and move to the system we’re trying to jury-rig our way into: single-payer universal health care.

I’m not arguing whether single-payer is the best system - my argument is: if we’ve decided we want people who are sick to receive affordable medical care, the only way to accomplish that goal in a market-based system is apparently through actions which remove any real basis by which we can call the system market-based. At that point, the only thing we add to the system by pretending to include private enterprise is an incredible amount of complexity and bureaucracy, both in regulatory bodies and in the insurance companies themselves. It would be far, far better, cheaper, and more direct to cut out the middleman and enact what we’re really striving for than to keep patching together a broken system in hopes of creating a serviceable health care system.

Whatever the system we decide on, it’s well time we have a serious discussion: if we want a market-based solution, we need to accept the consequences, which will be measured in lives. If we’re not willing to accept the cost of a market system, we need to stop pretending half-measures will do the job and commit to paying the price of our moral preferences.

Thanks for joining me, and my best for the week ahead! Eric

March 19 - 25

2012-03-26T00:00:00-07:00

Hello, and welcome to the Dispatch for March 19-25!

You may have noticed the Dispatches have been short recently – this is largely due to time constraints. I’m still looking for a good way to handle smaller stories that tend to get cut on Sunday night. One step I am taking, though, is in being more aggressive about retiring stories whose fundamental details haven’t changed. The GOP nomination was the first such story, and Syria has become the second - I’m hoping clearing stories in which there’s nothing new to report will give some breathing room for the rest of the world.

For now, though, let’s get to the Dispatch!

Mali

A group of junior army officers ousted the Malian president on Thursday, citing the government’s poor handling of the struggle against a Tuareg rebellion in the north of the country. Coming just days before a scheduled election, the coup was widely denounced by the UN and across Europe, though at the end of the week it was still uncertain whether the soldiers were fully in control of the country.

The coup is an echo of the Libyan revolution: many of the Tuareg rebels fought for Gaddafi and returned home with better arms and training. The Malian army, at 7,000 strong, has been at a severe disadvantage in the fight; it’s unsure what the coup leaders hope to accomplish to solve this imbalance. On a broader level, this is the first big ripple in Africa from Gaddafi’s fall: the former Libyan dictator spent a lot of money on a lot of weaponry, quite a bit of which was never accounted for. Dispersing large amounts of new cash and weaponry into an already politically unstable region isn’t a recipe for smooth seas: I suspect we’ll be seeing the ghost of Gaddafi again in Africa.

China

A week after the Communist Party purged Bo Xilai, a prominent party member, rumors of gunfire in Beijing, military vehicles on the street, and potential coup attempts swept Chinese blogs.

Ordinarily I wouldn’t cover this story, as none of the claims are verifiable, but NightWatch had some excellent commentary on Thursday and Friday. NightWatch’s argument is that, while the rumors themselves are not particularly credible, the fact that a large part of the web-using Chinese populace finds reports of gunfights between political factions plausible casts a sharp light on the image of stability and solidarity China has projected in recent years.

Syria

Clashes in an upscale neighborhood of Damascus early in the week and military action in regions the government thought cleared of rebels showed the insurgency’s resilience in the face of continue government action. The UN Security Council passed a resolution exhorting the Syrian government to call a cease-fire and promoted Kofi Annan’s peace plan, the first time China and Russia have backed such a resolution.

The Syrian narrative now is well-established: The insurgency, well rooted but poorly organized, too widespread to be easily quashed; The Syrian government, able to take territory and inflict damage, yet unable to truly impose its will on the country; the International community, horrified at the civilian massacres, but stymied by divisions among nations and among the rebellion. There’s little prospect for any dramatic changes for now, and less still for any resolution to the Syrian situation anytime soon. For the time being, the Syrian situation is in stalemate.

Iraq

In anticipation of the Arab League meeting in Baghdad next week, followers of Moqtada al-Sadr staged a rally in Basra, with nearly a million people marching in the streets. Al Qaeda in Iraq staged their own demonstration, setting off dozens of car bombs across the country on Tuesday, killing nearly 54 people and underlining continuing insecurity in the nation.

The common thread between Sadr’s display and Al Qaeda’s attacks is Iraqi President Nuri al-Maliki’s recent moves to consolidate his power. Following the US departure, Maliki, a Shi’ite, had the Sunni Vice President arrested, and has worked to both marginalize the Sunnis in government and shore up his own base. Al Qaeda, primarily a Sunni group, has been resurgent in the region due to Sunni anger at the Maliki government. Sadr, on the other hand, sees Maliki’s intransigence as an opportunity. Formerly the head of the Mahdi army, Sadr commands widespread support in Iraq - witness this week’s demonstration, which put more people on the streets than the demonstrations in Tahrir Square - and looks to be positioning himself to take advantage of Maliki’s declining popularity to boost his own power.

Iran

I had the opportunity this week to attend a panel on the Iran-Israel crisis. The speakers were Avner Cohen, a nonproliferation expert who wrote the history of the Israeli nuclear program; Karim Sadjadpour, an expert on Iran who’s written extensively about the Iranian government and Ayatollah Ali Khamenei; and Shibley Telhami, who for 10 years has been one of the principal investigators in the Arab Public Opinion Survey (full bios).

Avner Cohen spoke on the Israeli perspective. His assertion is that Israel’s principal concern is the loss of their “Benign Monopoly” on nuclear weapons in the Middle East: the Israelis currently enjoy the ability to escalate a military conflict as quickly as necessary. Cohen expressed concern over the volume and severity of Israel’s rhetoric, fearing it could bind Israel to take some extremely costly and inadvisable military action.

Karim Sadjadpour addressed the Iranian side of the conflict. He stated the three defining features of the current Iranian leadership (composed of “Principalists,” the more conservative school of Iranian leaders) are “the Hajib, Hatred of the US, and Hatred of Israel.” He believes the current regime will resist engagement with the West out of fear it could lead to reforming Iranian society; the Principalists feel this would be the death of the Iranian Revolution. However, the regime is not suicidal, either: it can be bargained with, cajoled, or otherwise influenced, and containment is a definite possibility.

Shibley Telhami spoke largely about the results of polling in the Middle East. He said that, when asked what the most dangerous country in the region was, the consistent answer across the Middle East was Israel. Telhami also mentioned that support across the region for international intervention in Iran was nearly non-existent, largely due to mistrust of the West and a feeling of double standards concerning the Iran. Among Israelis, 90% of those polled thought Iran would eventually get a nuke, and 2/3rds said they could live with that.

The three speakers generally agreed on several things: First, if Iran does get a bomb, the odds of it winding up in terrorist hands are essentially nil - it’s just not a narrative that works out. Likewise, the odds of either Iran or Israel ever using a nuclear weapon are vanishingly small. The primary concern for the US is Iran’s antipathy towards Israel: Telhami quoted David Frum, George W. Bush’s speechwriter, as saying “You can hate Israel or build nukes, but you can’t do both.”

Ultimately, the problem was succinctly summed up by Shibley Telhami: Any resolution must be agreeable to Israel, Iran, and the US. Israel won’t agree to just containing Iran’s nuclear program, Iran doesn’t want to reconcile with the West in any meaningful way, and the US doesn’t want to go to war. That leaves an awful small amount of ground for an attainable agreement.

Final Thoughts

The NATO intervention in Libya and its aftermath show how even military actions we would consider highly successful have ripples across the world. The Malian coup is a particularly dramatic outcome, but Libya figures in the Iranian nuclear crisis as well: Gaddafi gave up his nuclear program in 2003, and 10 years later, NATO forced a regime change in the country. To the Iranian leadership, this is a cautionary tale. The Syrians learned from Gaddafi that the international community’s apparent red-line is air power: the Syrian army has largely kept their planes grounded while attacking the rebellion. The NATO intervention in Libya, which started as a no-fly zone and turned into regime change, factored highly into Russia and China’s veto of UN Security Council action against Syria: both countries felt duped after their vote for the Libyan no-fly zone, and neither is particularly inclined to support NATO adventurism now. Even in Libya itself, the promised democracy has not yet materialized: stitching together a society from highly disparate elements is proving highly challenging. This is the danger in military action: we don’t know where all the threads lead. Even in something as laudable as the intervention in Libya, which almost certainly saved thousands of lives, if not the whole city, has had consequences across the globe. It’s a lesson to keep in mind when considering foreign intervention: chaos is the rule of the world.

Thanks for reading, and my best for the week ahead!

-Eric

March 12 - 18

2012-03-18T00:00:00-07:00

Hello, and welcome to the Dispatch for March 12-18!

Israel/Gaza

The assassination of the head of a militant group in the Gaza Strip by the Israeli army sparked several days of rocket attacks and Israeli airstrikes. By mid-week, a cease-fire brokered by Hamas and Egypt had largely restored calm in the region, though sporadic attacks continued through the week.

A few notable facets to the story: First, Hamas was apparently instrumental in de-escalating the violence and bringing about a cease-fire - that’s quite a step for the organization. The negotiations were apparently conducted with the help of Egypt, which isn’t surprising, given the link between Hamas and the Muslim Brotherhood. I expect to see a bigger role for Egypt in the Israeli- Palestine peace process in the future. Second, Israel announced their “Iron Dome” rocket defense system successfully stopped the majority of the rockets which were heading towards civilian areas. The Iron Dome has the potential to take one of the few potent weapons militants in Gaza have from them. A successful deployment should reduce Israel’s safety concerns, but it tips the balance of power in the region even further towards Israel - it remains to be seen what impact that will have on the peace process.

Afghanistan

The killing of 16 Afghani civilians by a US Army Sergeant has focused popular anger against the US and NATO. The Taliban announced a suspension of the peace talks in Qatar, and Afghani President Karzai demanded the US confine its troops to base until their departure.

Iran

SWIFT, the Society for World Interbank Financial Telecommunication, announced they would cut Iranian banks out of their system this week to comply with EU sanctions against the country.

Being cut out of SWIFT functionally cuts Iranian banks off from the rest of the world. This is the first time a country has been banned from SWIFT, and will make it very difficult for Iran to transact with other countries or acquire currencies other than its own. The sanctions against Iran were already extremely harsh, this will tighten the vise even more.

Syria

The Syrian opposition suffered both tactical and organizational setbacks this week. The Syrian military routed the opposition from Homs and Idlib, prompting several high-profile members of the Syrian National Council to resign from the group. The resigning members accused the SNC of being opaque, rigid, autocratic, and overly influenced by the Muslim Brotherhood, as well as of not supporting the armed uprisings.

The biggest problem the opposition has had so far is their lack of organization. There have been protests around the country and armed oppositions in various places, but they’ve been fractured, and because of that, they’ve had a very hard time holding territory or creating a more sustained rebellion. The resigning members, which include highly influential opposition leaders, have indicated they will form a new group; hopefully they can accomplish what the SNC hasn’t.

Russia

Citigroup added up all of Putin’s re-election promises and discovered that, for the Russian government to fulfill them all, oil would have to rise to $150 per barrel and stay there.

Obviously if oil hit $150 per barrel (a 25% rise), it would be a drag on the world economy, but it’s not there and it’s not likely to get there anytime soon. Putin made most of the new promises to get people off the streets. If he fails to deliver, it’ll add even more fuel to the opposition next cycle.

North Korea

The North Korean government announced it would launch a satellite to commemorate the 100th birthday of Kim Il-Sung, the founder of North Korea. The announcement flies in the face of the recent agreement with the US, which explicitly forbade missile tests. The North Koreans have often used “satellite launches” to test new missile technology.

Greece

The new Greek bonds generated by last week’s deal began trading this week and are already selling at severely depressed levels. A European Commission report acquired by Reuters found the Greek government would likely have to implement even more austerity measures to meet the 2013 and 2014 goals set for the country by the EC.

All the good money’s on a Greek default: The deficit goals the Greeks need to meet to secure funding to avoid a default are set as a percentage of GDP, which has been falling like a stone, in no small part because of the austerity measures. The upshot now is that most Greek debt is held either by public institutions or the extremely adventurous: the net effect so far of the austerity and bailout deals has been to reduce the contagion from whatever Greece winds up doing as much as possible, so when the Greeks either default or leave the Eurozone, they shouldn’t drag half the world along with them.

Thanks for reading, and my best for the week ahead!

Eric

March 5 - 11

2012-03-12T00:00:00-07:00

Hello, and welcome to the Dispatch for March 5-11!

Syria

The Syrian government allowed both the Syrian Arab Red Crescent (the local Red Cross affiliate) and the UN Humanitarian Chief to visit Baba Amr after spending several days blocking access to the city. Rebels accused them of cleaning up signs of bloodshed and atrocities, but even after the army was done, the destruction was evident. The UN also sent a special envoy, former Secretary General Kofi Annan, to try to negotiate a cease fire, a possibility rejected by both Assad and the rebels.

The attempt to clean up the city is a quaint notion in the age of YouTube.

John McCreary, author of NightWatch, has been highly skeptical of reports of the size and strength of the Syrian Rebellion. On Thursday, he wrote a comment which more clearly defines the size of the Syrian uprising (The section on Syria is midway down the page). In trying to assess the uprising, he broke Syria down not as the 14 governates (“states,” roughly) that comprise it but as the 61 districts (“counties”) that make up those states. He found that the rebellion was active in only 12 different districts, and much of the action was small street demonstrations. He points out the level of activity is much, much lower than during the insurrections against NATO forces in either Afghanistan or Iraq: there’s an uprising, but it looks more like a police problem than a legitimate threat to the regime. This is a much different view of events than has been presented in most of the media, and goes some way in explaining both why Assad is still in power and why the US (and many others) have been extremely reluctant to get involved.

This is, of course, only one analysis from one person, but John is an extremely well-respected analyst, and his read on this squares with an awful lot of the reports coming from the region.

Afghanistan

The New York Times wrote this week about the incredible levels of graft and corruption in Afghanistan, a problem NATO has found impossible to unroot thanks to complicit courts and political interference. More worryingly were guidelines on the role of women issued by the Ulema Council, Afghanistan’s top clerics. The guidelines are not legally binding, but were published by President Karzai’s office, and later endorsed by the President himself.

Combined with last week’s Koran burnings, subsequent riots, and the deaths of several American and British soldiers at the hands of their Afghani partners (followed by this week’s killing of 16 Afghani citizens by an American soldier), we have a pretty good picture of the Afghanistan we leave behind. After 11 years, untold dead on both sides, and trillions spent, Afghanistan is a country rife with corruption, slipping to the Taliban, and hostile and distrustful of the West. The best one can hope is that this serves an object lesson the next time we consider military adventurism.

Pakistan

The former head of the ISI admitted in court to spending more than $15m attempting to sway the 1990 Parliamentary elections. While the admission doesn’t come as a shock to most Pakistanis, the ISI has long been seen as untouchable, so the trial itself is already quite incredible, and that the ISI has actually been forced to admit and identify its wrongdoings is unprecedented.

Iran

The Iranian government made two moves which could be seen as conciliatory: First, the Iranian government agreed to resume talks on its nuclear program, which the international community hopes will help stop Iran’s uranium enrichment programs. The Iranian Supreme Court also overturned the conviction of an American convicted of spying and sentenced to death, another source of friction between the US and Iran. Israeli Prime Minister Netanyahu visited the US, urging President Obama to take a harder line on Iran. Obama, for his part, urged the Israelis to have patience, cautioning against too hasty military action and delivering a stern rebuke to Republican lawmakers who have been calling for harsher action on Iran. Some good news for Israel, though: Hamas declared they would take no part in an Iran/Israel conflict.

It seems that both Iran and the US are working towards the same goal: preventing Israel from engaging in a military strike against Iran. Israel’s stance does seem to be having an effect on Iran, though: the Iranians have been expending a good amount of effort to try to convince the rest of the world they’re not building a nuclear bomb. Iran has a range of reasons for wanting their nuclear program to continue — there are legitimate domestic reasons to enrich uranium — but events of the past few months have severely undermined Iran’s strategic position, and I suspect they don’t want to risk an Israeli strike at the moment. For now, it pays to play the international game, and that means giving the Americans more reasons to keep the Israelis at bay.

The statement from Hamas should help calm some nerves in Israel. There’s a couple items wrapped in that bit of news: most immediately, the Hamas/Iran relationship is clearly over. Israel still has to worry about Hezbollah in Lebanon, but that’s an awful lot better than having to worry about both groups. In the longer run, the statement reinforces some of the other recent promising signs from Hamas, and that’s very good news for both the Israelis and the Palestinians.

Russia

The Organization for Security and Cooperation in Europe (OSEC) stated that, while the Russian presidential elections were cleaner than the Parliamentary elections in December, there were still numerous instances of fraud, and, more to the point, no actual opposition. Protests continued on Monday, though at a more subdued pace, and mostly petered out by the end of the week. Still, reports of higher turnout and some local council wins by protestors offered a silver lining to an otherwise dismal display of democracy.

The OSEC’s report cuts to the crux of the matter: Putin may be unpopular in the city, but there’s simply no credible, independent opposition anywhere. Part of this is because Putin’s government has actively opposed dissent, but part of the problem is that Russia is still living in the shadow of the Soviet Union and its collapse. The protest movement in this election show Russia’s politics may be opening up: it didn’t happen this election, and it may not by next election, but there’s enough new blood voting now to generate a legitimate opposition party. In light of this, seeing some of the protestors winning council seats is a very good sign, since it could provide a new party with a “bench” of people with some experience to draw from.

Libya

A group of tribal leaders declared a large swath of eastern Libya a semi- autonomous state, rebuking the National Transitional Council which is nominally in charge of Libya. The NTC decried the move, threatening to retake the area by force before later admitting they don’t have the troops necessary to do so.

Fundamentally, the NTC is an unelected group of Benghazis who were the first ones to get the West involved. There’s been conflict even before Gaddafi fell over the NTC’s leadership, and they’ve never been able to really assert themselves as the ruler of Libya. The goal for the group right now needs to be reaching an accord with the other rival tribes on what the Libyan state should look like, holding elections to get there, and then stepping out of the way — and doing so quickly, because they don’t have the authority to hold Libya together by themselves.

China

The China Development Bank announced an agreement with its counterparts in Brazil, India, Russia, and South America promoting trade in Chinese Renminbi and cross-country loans in each country’s respective currencies.

In search of economic independence, all five countries have been looking for an alternative to the US dollar for trade purposes, and for obvious reasons the Euro’s off the list. The hope is to gain some insulation from the economies of both the US and the Eurozone - the five nations’ economies have all grown far faster than either the US or the EU, and having an alternate trade currency will help maintain some distance from the headwinds against both those economies.

Brazil

Brazil surpassed the UK to become the 6th largest economy in the world, despite growth slowing to only 2.7% last year.

The news follows a spate of good news from Brazil, and nearly a century of South America being a byword for corruption and economic collapse. I was lamenting the lack of news from Latin America in the Dispatch - I’m pleased to have some rather good news from the region here.

Uganda

A brief note on the Kony 2012 video, care of Foreign Policy. The cliff notes: Joseph Kony is no longer in Uganda. His supporters number slightly above 100, not 30,000. There’s an international manhunt, supported by the US, against him right now. The US has shown no signs that it’s considering cutting its commitment to the hunt. One can’t but wonder, then, what the Invisible Children group actually intends to do with the Kony 2012 money (which certainly shouldn’t go anywhere near the president of Uganda, Yoweri Museveni, who’s been in power for 25 years amid charges of corruption and human rights abuses).

EU

Greece

Greece managed to get 86% of its private lenders on board for the debt swap deal — lower than hoped, but more than enough to invoke the “collective action” clauses to force the deal on the remaining 14%. Because the collective action clause was used, the ISDA voted that the Credit Default Swaps would pay out, a reversal from their stance last week.

The debt swap deal is sufficient to release funds from the IMF that Greece needs to stay afloat, but between a horrific recession, negative growth, and deep austerity measures, there’s good reasons to continue to be pessimistic about Greece’s future. Even after the debt swap (which reduced debt to private holders by around 80%), Greece’s Debt/GDP ratio is still 120%, well in excess of what’s considered ‘stable.’ It still looks like there’s a high probability of a Greek default or an exit from the Eurozone. The upshot to this deal, though, is that it gets a lot of Greece’s debts off the books of outside entities, which means that when Greece does default, the contagion should be far more limited — which, frankly, was probably the entire point of the exercise.

Spain

The Spanish government announced its deficit target this year was 5.8%, higher than the 4.4% agreed upon with the European Commission. Spanish Prime Minister Mariano Rajoy asserted the issue was a matter of national sovereignty, saying that given the country’s current economic performance, the previous target was no longer realistic.

The problem the Eurozone has always faced is the distance between what happens in Brussels and the facts on the ground in its member countries. The EU is fundamentally an economic agreement without the accompanying political alliance, and because of that it has massive internal tensions between member governments, who must answer to their voters, and the strength of the union itself. Spain is the first of the “troubled” countries to test the EU’s new rules, but it’s not likely to be the last: one look at what the EU’s austerity rules are doing in Greece is enough to rouse the populist in any self- preserving politician.

US

GOP Primaries

Super Tuesday came and went: Romney won 225 of the 416 available delegates to Rick Santorum’s 89.

There’s not much to be said here. I’ve written the last thing I intend to write on the GOP nominations on my other blog. The short version: Mitt Romney gets the nomination and loses to Obama in the elections. Unless something dramatic happens to upset that prediction, I’m not covering this story again.

Women’s Health

The recent controversy over the mandated birth control coverage in the Affordable Health Care act has sparked a spate of action across the country concerning Women’s health and reproductive rights.

Texas

Texas passed a rule blocking any of the $35M in federal money earmarked for women’s health under Title X from going to Planned Parenthood because the organization provides abortions. The Federal government declared the rule illegal and has threatened to cut all $35M in funding from Texas; Governor Rick Perry said the state would cover the loss, though he didn’t specify where the money would come from.

Virginia

Governor Bob McDonnell signed into law a bill requiring women undergoing an abortion to have an ultrasound, though they wouldn’t be required to actually look at the screen. The bill was amended to only require an abdominal ultrasound, not the transvaginal ultrasound required by the original text.

2012 Elections

In the wake of the birth control controversy and other women’s rights issues, the New York Times found rising sentiment against the Republican party among women across the political spectrum. The Obama re-election campaign is eager to take advantage of the Republicans’ rising disfavor among women, planning a nationwide push to attract female voters.

Final Thoughts

In a year full of bizarre politics, the debate over contraception takes the cake. I didn’t live through the original culture wars, but between Rush Limbaugh’s horrendous, invective-filled, and downright creepy attacks on a college activist, the GOP’s non-repudiations of those attacks, the farcical attempts to reframe the issue as one of religious liberty, and the nationwide drive to see who can pass the most offensive bill targeting women, I feel like I’m getting a pretty good review. It seems a bit odd addressing the original contraception question, because the response to the matter shows well that the controversy was only nominally ever about who pays for contraception, but in the interest of addressing anything that could even pass as a reasonable defense of this sort of blatant misogyny, I think it’s worth taking a look at the health insurance issue.

In the US, Health Insurance has typically been treated as part of the overall employee compensation package, along with wages, 401k matching, and vacation time. With the new rule from the Obama administration, the responsibility for providing birth control to employees of religious organizations is placed solely in the hands of insurance companies. The insurance companies are paid in part by the employer, but again, this is considered in the same way as your wages: your insurance plan, for all intents and purposes, is the same as your salary, a payment provided to you as compensation for your labor. The idea that your employer has some right to dictate how you use any part of your compensation would be a dramatic infringement on your rights as a worker: your employer has no more right to tell you not to get birth control than they do to tell you not to eat pork or drink alcohol in your free time. That employees can spend their salary on whatever they please hasn’t been up for discussion at any time in the modern era in this country, and neither the Catholic Church nor anyone else has successfully tried to prevent by legal means its employees from buying condoms or any other manner of sinful product. Either we need to redefine insurance as something other than a form of compensation, in which case we’re opening the door to much larger questions, or we accept insurance for what it is, an inducement to work, and place it in the broader context of the Employer-Employee relationship — which is to say, neither the property nor the tool of the employer, and therefore unaffected by any particular quibbles the employer may have about its usage.

Thanks for joining me, and my best for the week ahead!

Eric

February 26 - March 4

2012-03-04T00:00:00-08:00

Welcome to the Dispatch for February 26 - March 4!

I’m whole and healthy again, and we’re back to a full-length dispatch this week — so, without further ado, let’s get started.

Syria

The Free Syrian Army abandoned the Baba Amr district of Homs after nearly a month of bombardment by the Syrian government, calling the move a “tactical retreat” and citing the increasing humanitarian costs to the remaining residents. The Red Cross was barred from entering the district by the Syrian government, drawing further sharp rebukes from the international community.

The stalemate continues: Neither the rebels nor the government can effectively hold territory in Syria. The rebels don’t have the organization, support, or supplies to mount a fully cohesive opposition, while the Syrian regime can’t rely on its own army, limited to security forces which lack the size and strength to put down the rebellion once and for all.

China

A Uygher attack on a crowd in western China underscored ethnic tensions in the region, where both Uyghers (a Turkic Muslim minority) and Tibetans have been under increased pressure from Chinese state police.

China’s ethnic conflicts — and the government’s preferred method of resolving them — is instructive in parsing China’s reluctance to take a hard line on the Syrian regime.

North Korea

North Korea agreed to suspend its nuclear enrichment and weapons programs in exchange for 265,000 tons of food and a statement of non-aggression from the US.

North Korea tends to vacillate between aggression and famine; the country hasn’t been able to feed itself effectively for more than 20 years. These agreements seem to crop up whenever a harvest fails or the Chinese get angry, and aren’t terribly indicative of policy directions. Still, it’s positive news, and should help defuse tensions on the peninsula.

Pakistan

The Pakistani Supreme Court revived a 13 year old vote tampering case against the ISI, the second challenge to the powerful group by the courts in less than a month. The PPP, the party of embattled president Zardari, won an overwhelming victory in senate election this week, securing 32 of the 49 seats.

It was a good week for civilian government in Pakistan, though observers warn against placing too much stock in the Supreme Court’s case against the ISI. The Senate elections are a clearer victory: the PPP has been under intense pressure by the military, but the decisive electoral win shows the people still support the first civilian government since Musharraf. The military started the year aggressively pushing its way into politics, but both the courts and the civilian government have shown themselves much stronger than expected.

Iran

The Iranian government reported a very high turnout for this week’s parliamentary elections, though their claim is disputed by reports from individuals in Iran. Early reports show gains for the ultra- conservatives, though the elections were boycotted by most opposition groups.

Most reformist candidates were barred from running, leading to a contest between the conservatives who support President Ahmadinejad and the ultra- conservatives who support Ayatollah Ali Khamenei, the supreme leader. To the reformists, the election was essentially rigged: most of their candidates were under house arrest for weeks ahead of the election. Gains for ultra- conservative hard liners at a time when Iran is already under extraordinary economic pressure in large part due to Ali Khamenei’s nuclear ambitions are unlikely to contribute to long-term stability in Iran.

Al Jazeera published an excellent editorial on the current state of internal politics in Iran.

Russia

Despite several weeks of protests in Moscow, Vladimir Putin won the Russian presidential elections with 65% of the vote, more than enough to avoid a runoff. Opposition leaders promised protests, citing strong evidence of voter fraud.

Putin’s victory was never really in doubt: with strong support from the electorate and a shallow field of opponents, the election was all but a foregone conclusion. Given that, the widespread evidence of voter fraud, with thousands of reports of tampering from around the country, is absolutely bizarre. Russia’s demography at this point seem to be split between those who remember the Soviet Union and the disastrous collapse afterward and those who do not: the former are far more likely to vote for stability, safety, and Putin, and as long as that group continues to vote, Putin and his supporters will continue to hold sway in Russia.

Greece

The International Swaps and Derivatives Association decided that Greek bonds had not suffered a “credit event,” and therefore Credit Default Swap (CDS) contracts would not be required to pay out.

In Layman’s terms: The ISDA decided that a 70% loss in the value of Greek bonds was not a default or a loss significant enough to warrant a payout to those who had taken insurance contracts against losses on the bonds. This would be like having the back half of your car taken off by a semi and your insurance company refusing to pay out because they didn’t deem the event an “accident.” By no rational standard at this point can one consider a CDS an effective hedge against loss, a point that should have been abundantly clear after the collapse in 2008. No insurance company in the world can insure against the sort of systemic risk manifest in something like the Greek default, and anyone who assumes they can is either delusional or cares more about what things look like on paper than whether they take a loss or not.

US

GOP Primaries

Mitt Romney got back into stride, starting with primary victories in Michigan and Arizona and capping the week with endorsements from Rep. Eric Cantor and Sen. Tom Coburn, two highly influential Conservatives.

The endorsement from Cantor deserves note: Cantor is highly influential, extremely conservative, and, for most of the Obama administration, has been the face of the Tea Party in Congress. Romney’s problem so far has been appealing to Republicans like Cantor - his endorsement could signal the GOP is finally coalescing around Romney. This Tuesday, also known as Super Tuesday, 10 states hold their primaries. A strong win could finally cement Romney’s nomination.

Senate Elections

Senator Olympia Snowe of Maine announced this week she would not seek reelection this fall, citing the hyper-partisan atmosphere of Congress. Snowe is a liberal Republican, and has been one of the few senators to regularly support the Democrat’s bills. Snowe’s withdrawal opens up a seat that was considered secure: she had no credible opposition from either party.

Thanks for joining me, and my best for the week ahead!

Eric

February 20 - 26

2012-02-26T00:00:00-08:00

Hello, and welcome to the Dispatch for February 20 - 26!

I spent the better part of this week with a nasty cold that I’m still shaking off, so this week’s dispatch is rather brief - we’ll be back to full length next week.

Afghanistan

NATO troops at Bagram Airbase mistakenly incinerated several copies of the Koran. The incident sparked riots that continued through the end of the week, despite apologies from NATO and President Obama and appeals for calm from Afghani President Karzai.

Yemen

On Tuesday, Yemenis went to the polls to finally close the door on Ali Abdullah Saleh’s 22-year rule. The election was largely a formality, as the only candidate was Saleh’s vice president Abed Rabu Mansour Hadi, but it paves the way for broader changes in the country.

Syria

Hamas announced its support for the Syrian opposition this week, formally denouncing the Assad regime which has supported the group for years.

Hamas is an offshoot of the Muslim Brotherhood, which recently won a majority of the seats in Egypt’s parliament. In snubbing Syria, they also snub Iran - it’s unlikely the group did so without securing other backers first, and it’s likely those backers are in Cairo. This will complicate relations between Egypt and Israel. Once the dust settles in Syria, Israel is likely to face a very different Palestinian situation.

US

Foreign Affairs published an essay this week about the current state of US national security. Entitled “Clear and Present Safety,” it’s a good, clear- eyed look at the incredibly safe world the United States finds itself in today.

“Clear and Present Safety” By Micah Zenko and Michael A. Cohen

Thanks for reading! My best for the week ahead,

Eric

February 13 - 19

2012-02-19T00:00:00-08:00

Hello, and welcome to the Dispatch for February 13 through 19!

The Dispatch this week is shorter than normal - surprisingly few stories bubbled up, though I’m pleased to say there’s news from Syria, including a link to an excellent interview about the opposition movement.

Let’s get started!

Iran

On Monday, a bomb severely wounded an Israeli diplomat in India, and another was discovered attached to an Israeli car in the Eastern European country of Georgia. Another bombing was thwarted in Thailand when one of the bombs detonated prematurely, injuring one bomber, now in custody. The Israeli government claimed Iran was behind the attacks.

Three nearly simultaneous attack attempts in three different countries across the world, targeting Israeli citizens, using the same “sticky bombs” Iran accused Israel of using on its nuclear scientists: it’s hard to conclude this was anything but a message to Israel. Iran has shown it has global reach and it’s not afraid to target Israeli citizens should Israel attack. The other message is that Iran isn’t nearly as good as Mossad yet: not a single person was actually killed in the attacks.

The Guardian’s Middle East editor Ian Black wrote an excellent piece this week about the true danger posed by Iran; I highly recommend a read.

Syria

The UN General Assembly voted for a resolution of disapproval against the Syrian government over its continued crackdown, a largely symbolic move. On Thursday, the head of NATO declared that, even with UN support, NATO would not intervene in Syria, stating that the situation on the ground was too complicated for NATO to take action. This assessment was buttressed by US officials’ statements linking al Qaeda to the bombings in Aleppo last week. On Saturday, anti-government protestors marched in Mezze, a middle-class neighborhood in Damascus that sits near the Presidential palace.

The marches in Damascus are a very good sign. Protests in Mezze imply a larger, more stable, and more widely supported movement than what we’ve seen already.

Al Jazeera published two Q&A sessions with a reporter who’s been on the ground in Syria over the last few months. If you’re interested in the Syrian situation, these are a must-read: by far the best, most well-rounded reports I’ve seen about the Syrian uprising. Part One - Part Two

Greece

After a day of rioting in Athens in response to Greece’s latest austerity measures, Eurozone finance ministers indicated Greece would have to wait to find out whether the measures were sufficient to secure the loans they desperately need to avoid default. By Thursday, word spread that Wolfgang Schäuble, the German finance minister, was pressing to let Greece default.

Schäuble isn’t the only EU minister pushing for a Greek default, though he may be the only one in a position to make it happen. If the Greeks don’t get the bailout money and are forced into default on top of the austerity measures they just passed, expect things to get very ugly in Greece very fast. Unfortunately, the math doesn’t work an awful lot better for many of the other members of the EuroZone. The EU continues to press fiscal austerity upon its members, an affront to national sovereignty that isn’t playing well anywhere outside Germany.

China

The Chinese Vice President Xi Jinping, largely expected to be the next President, visited the US this week, meeting with both lawmakers and citizens across the country.

Xi was notable for his openness and charm, a striking contrast to current president Hu Jintao. This may lead to better communication between the US and China, but it’s unlikely to change the relationship much: China and the US have a relationship built on shared interests and mutual respect. Despite the image promoted by both the media and some politicians, the two nations are surprisingly close already, if not in agreement on all issues.

US

Budget

President Obama unveiled his budget proposal for 2013 this week. The plan contains both tax increases on the wealthy and plans to boost infrastructure spending.

Mitch McConnell, the leader of the Senate Republicans, called the budget a “campaign document,” and he’s not off the mark: the budget expresses many of the same themes Obama pushed in the State of the Union and other recent speeches. That said, it’s a good move in a direction that many Obama supporters wish he’d gone much sooner.

Congress

The House and Senate passed an extension of the payroll tax cut in a surprisingly bipartisan vote that gave quite a few victories to the Democrats.

This was a rare victory for the Democrats: the extension got passed without accompanying cuts, without cutting insurance, without giving almost anything up at all. The Republicans’ claim to victory is that the Democrats can no longer use this as an election year issue; it takes a lot of effort to call that a silver lining.

Drones

A federal law passed this week requires the FAA to create new guidelines allowing the use of unmanned aerial vehicles by both fire and law enforcement groups and by commercial entities. The guidelines for emergency services must be finalized within 30 days; commercial groups should be covered by September of 2015.

Drones have the potential to be one of the most disruptive of the new technologies emerging in the 21st century. The US Army has shown their effectiveness as a force multiplier abroad, and their combination of low cost and high utility bring a suite of capabilities into the hands of the average individual previously restricted to militaries and government agencies. In the hands of law enforcement agencies, drones may help prevent crime and keep officers out of harm’s way, but the same drones can be used by criminal groups to collect intelligence on police movements or border security, and weaponizing a drone can be as easy as attaching some explosives and a remote detonator. As prices get lower (the Parrot drone is down to $300 now) and capabilities expand, drones will become a game-changing technology.

Final Thoughts

In forming our opinions of the world around us, we must always be wary of biased and incomplete information. Recently, the coverage in Syria and Iran have been particularly difficult to navigate. In Syria, until the Al Jazeera interviews mentioned above, it was extremely difficult to find credible accounts of the opposition. Western news sources were almost pollyannaish in their coverage, but that didn’t square with events on the ground, and much of the reports critical of the opposition were of questionable veracity. The same problem has dogged coverage of Iran: much of the media coverage has hewed to a narrative that tacitly endorses the Israeli view of Iran. Again, though, this is a hard narrative to swallow. Most of the Iranian rhetoric has been around national security and sovereignty, and even a cursory look at their history would affirm Iran’s fears in that regard. The Guardian’s editorial is one of a few pieces I’ve seen recently that acknowledges what recent events ought to have made clear about the size of the threat posed by Iran; in the meantime the good money is on the US and Israel attacking Iran sometime this year based largely on the reported Iranian threat.

The problem is that even when a news source intends to promote a balanced view, both the writing process and the editing process are editorial in nature. Every fact that is or isn’t reported, every line that gets cut, every quote used, every word chosen is an editorial decision - and this process can only work from the available information, which suffers its own biases. This makes it difficult, even with outlets that intend to be balanced (such as this one), to find non-biased coverage, and that makes it extremely difficult to form a balanced and well-informed opinion.

I encourage you to read with a critical eye. My golden rule is moderation: If something seems too good, too bad, or too incredible to be true, it normally is. The most reliable fact I’ve found is that people are just about the same everywhere: there’s no such thing as an “other”, and reports claiming such a thing exists deserve a high degree of scrutiny.

Thanks again, and my best for the week ahead! Eric

February 6 - 12

2012-02-12T00:00:00-08:00

Welcome to the Dispatch for February 6 - 12! There’s no administrative news this week, so let’s get right to it.

Syria

The assault on Homs continued this week. With no real prospect of outside intervention, the Syrian Government continued its bombardment of the city.

30 years ago, Bashir al-Assad’s father ended an Islamist uprising by shelling the city of Hama to the ground, killing more than 20,000 people. His son is continuing in his tradition. Last week, it was unclear how strong the rebellion actually was. Reports conflicted on the cohesiveness of the group, its support among the general populace, its accomplishments, and its resources. The question as of a week ago was whether this was a movement that reflected the will of the people or an isolated uprising. None of that matters this week. This week, the Syrian army moved in on Homs, and this may well be the last we’ll hear of Syrian opposition for another 30 years. I sincerely hope I’ll have something new to write about Syria next week, because there’s nothing good about “no news” in this case.

Greece

After a week of tense negotiations, increasing demands, and riots in the streets, the Greek government voted in favor of a package of austerity measures demanded of them as a condition of receiving $33Bn in IMF loans. The loans will help Greece avoid a default, but come with extremely harsh conditions, including a 22% cut in private sector wages.

I previously asserted that the EU would find some way to keep Greece solvent and in the Eurozone, but it appears that was predicated on the EU actually wanting Greece to stay. The Guardian’s Larry Elliot thinks Germany wants them out, a conclusion that’s hard to escape in the face of the incredible austerity demands. At some point, one must wonder what exactly the Greeks gain by both staying in the EU and not defaulting; it’s hard to see a scenario in which a 20% wage cut leads to the sort of growth needed to allow the country to pay its bills without outside assistance. In either case, the situation is far from over: the Greeks are out in the streets for the sixth day, there have already been several resignations from the Greek government, and the unemployment rate is already 21% - and that’s before the austerity measures kick in. The Greek debt is unsustainable, but the political situation is increasingly so as well.

Pakistan

The Pakistani Supreme Court called the ISI, the Pakistani Intelligence Service, to account on two cases this week. The first case centers on eleven suspected militants who disappeared shortly after their trials, the second around charges of vote-rigging from the 1990 elections. The court also rejected the Prime Minister’s appeal to avoid a contempt of court charge, stating proceedings will begin on the charges on Monday.

My original prediction minimized the role of the court, but that looks to be inaccurate. The Court seems intent on putting itself back as the third center of power in Pakistan. The charges against the ISI are welcome by many, and are certainly an interesting challenge to an organization seen as outside the law. This represents an interesting change in the dynamic in Pakistan: the story thus far has largely been of conflict between the military and the civilian government. The Pakistani courts have a long history of respectability and integrity; their involvement in what’s been a rather sordid affair all around may offer some welcome news.

Israel-Palestine

Hamas and Fatah announced progress this week in forming a unity government: Mahmoud Abbas, the president of Fatah, would become the Prime Minister of a joint Hamas/Fatah government. The agreement is another step in the fulfillment of an agreement signed in May 2011, and removes a particularly sticky roadblock from the process.

Israel is understandably upset: much of the world considers Hamas a terrorist group, and the group has been the driver of many of the attacks against Israel. Despite its checkered history, there’s reason to believe the group can be negotiated with. It has offered long-term truces in the past, and has indicated its willingness to work within the peace process in recent years. The biggest concern, however, is the cohesiveness of the group and its ability to control other militants in the region. As the largest and most active group in Palestine, Hamas is frequently held to account for any attacks against Israel, but its control over the territory is not absolute: it may be impossible for the group to fully stop attacks on Israel from Gaza, and that could severely undermine the peace process.

Russia

The Guardian this week reported on a widespread campaign to pay bloggers and internet users to push pro-Kremlin and pro-Putin articles, comments, and videos. The campaign was revealed in hundreds of emails obtained by a Russian group under the Anonymous umbrella.

China

The Financial Times reported that the Chinese government has instructed its banks to roll over nearly $1.7Tn (Rmb10.7tn) in loans issued as part of the country’s stimulus plan.

It’s long been known that the skeleton in China’s closet is the outstanding municipal loans used to fund the enormous boom in construction and development over the last decade. China’s hope is that it can grow fast enough to wipe out the debt before its banks are forced to acknowledge the size and scale of the outstanding loans. The pattern is the same as was faced by Korea, Japan, Hong Kong, and many others: Growth, fueled by debt, followed by a financial crisis, and eventual recovery. The size of China’s economy, though, gives one pause when considering a potential financial crisis.

US

California

A federal court this week ruled that Proposition 8, the prohibition against same-sex marriage, was unconstitutional, stating in their decision that, “Proposition 8 serves no purpose, and has no effect, other than to lessen the status and human dignity of gay men and lesbians in California.”

This is the second court ruling against Prop 8. In both cases, the courts have ruled that the law serves no purpose except discrimination, and such laws are plainly unconstitutional. The next step, should Prop 8’s defenders choose to appeal, is a Supreme Court challenge.

GOP Primaries

Rick Santorum won the Minnesota, Missouri, and Colorado primaries this week in a stunning victory. Mitt Romney came back with a win in Maine, avoiding a completely devastating week, but Santorum’s three victories mean the GOP race is far from over.

It’s still extremely likely that Mitt Romney will be the GOP nominee, but Santorum’s wins show how far the GOP is from consensus. As the Guardian’s Michael Cohen put it, the big winner so far is Obama.

Congress

The Senate and House this week both passed the STOCK act, designed to outlaw insider trading by members of Congress. The House’s version of the bill, however, strips a provision requiring “Political Intelligence Consultants,” professionals who collect information from Congress members to sell to hedge funds and other clients, from registering their activities in the same way that lobbyists do.

Final Notes

History repeats itself: The Syrian President shelled a city like his father did, the Chinese flirted with a financial crisis like the one that took down the Asian Tigers, and the Greeks got hit with a modern Treaty of Versailles. The sense of inevitability in some cases can be overwhelming. That said, Martin Luther King’s long arc of history bent a bit closer to justice in California, and the trend across most of the world still seems to be towards democracy: in Russia, the existence of a paid government propaganda group was unveiled by an avowedly pro-democracy group, and in the US, popular outrage lead to Congress voting away some of its own power. It’s easy to get discouraged, but there’s hope for us yet.

Thanks for joining me, and my best for the week ahead!

Eric

January 30 - February 5

2012-02-05T00:00:00-08:00

Hello, and welcome to the Dispatch for January 29 through February 5!

First, a quick administrative note: The Dispatch now has a mailing list - if you’d prefer to receive the week’s Dispatch by mail, sign up for email delivery here.

This was a big week, though by the end of it, not a lot seems to have changed. Actions are built on foundations, though, and much of this week’s news feels foundational: what seem like small changes here or there can affect the space in which decisions can be made, and spark larger changes in the future.

With that said, let’s get started!

Iran

UN Inspectors toured Iran’s nuclear sites over three days this week. Iran’s professed hospitality notwithstanding, the inspectors said many of their questions went unanswered, and they will return in February. Meanwhile, the rhetoric between Iran and the West continued to heat up: on Tuesday, James Clapper, the Director of US Intelligence, declared that the Iranians were increasingly targeting the US and its allies abroad, citing the alleged assassination plot against the Saudi ambassador as evidence. His assertions were given further weight by Ayatollah Ali Khamenei, who pledged continued Iranian support to militant groups targeting Israel and reaffirmed Iran’s commitment to its nuclear program. Israel, meanwhile, declared Iran was working on a missile with a range of over 6,000 miles - long enough to hit the US - though the US downplayed the Israeli statement as speculation.

Iran’s overtures to the inspectors are a maneuver to buy time. Barring an incredible Iranian screwup, the inspectors simply won’t find any incriminating evidence. Similarly, the statements by Khamenei shouldn’t be taken for much worth. Iran’s supported proxy groups in the region for decades and will continue to do so.

Clapper’s statements are more concerning: Iran targeting US assets and allies is a foundation for military action. The combination of Clapper’s statements and the Defense Department’s downplay of Israel’s statements suggest an internal conflict over the Iranian situation. The Israelis are extremely concerned: they consider a nuclear Iran an existential threat, and are seriously considering a military strike. The US, on the other hand, is weighing the cost of another war against whether or not they can live with Iran as a nuclear state. Clapper’s statements indicate a military strike is a very real, very serious possibility.

As a side note, the alleged plot against the Saudis that Clapper mentioned was both extremely sloppy and highly out of character for the Iranians - absent extremely compelling evidence yet to come, it’s as hard to take the accusation at face value now as it was when it was first made.

Syria

After a week’s worth of negotiations, Russia and China vetoed a Security Council resolution intended to pressure Assad into standing down. The Syrian army meanwhile launched a large counterattack against the rebels, ending with a bloody assault on Homs that took more than 200 lives.

Attacks on Iranian citizens accused of being military personnel increased, prompting Iran to warn against travel to the country. The announcement is a black eye for Iran and its aspirations of regional power: Assad has been one of Iran’s most steadfast allies.

Russia and China are still upset over the Libyan resolution: they feel duped (and perhaps not unfairly) after the resolution, which authorized a no-fly zone, was used as cover to intervene in Libya. Neither country feels it is part of “the West,” and both harbor concerns about such a resolution being targeted against themselves or their allies - it’s not that many years since the end of the Cold War. The US and its allies expended a lot of political capital in deposing Qaddafi, and as a consequence the negotiations over Syria are suffering.

Egypt

Protests continued against the Military ruling council this week. The Muslim Brotherhood briefly sided with the military, standing against the protestors, but that changed by mid-week: On Wednesday, a bloody soccer riot broke out, claiming more than 74 lives. The military and the police were accused of everything from incompetence to complicity, and reports from the incident about police inaction were damning. Riots broke out the next day outside the Interior Ministry in a conflict that left at least 12 protestors dead.

The riots have been led by soccer hooligans known as Ultras, militant groups somewhere on the spectrum between a social club and a gang. During the protests at Tahrir Square, it was the Ultras who fought off Mubarak supporters during the “Battle of the Camel,” and there are accusations that the riot on Wednesday was sparked as retaliation. The Ultras on the street will do nothing good for Egyptian stability.

Russia

Vladimir Putin found himself increasingly on the defensive, and allowed this week that he may not win a decisive first-round victory in the march elections. Despite sub-zero temperatures and reports of police pressure, tens of thousands of protestors marched against Putin in the center of Moscow. Putin’s spokesperson said the march was the work of “foreign powers.”

Once seen as the Dictator of Russia, Putin is increasingly under fire by a middle class that’s tiring of his strongman antics. It’s extremely unlikely he’ll lose the election, but he will return to office far weaker than in the past. The Russian people want Democracy, not a Dictatorship.

China

The African Union inaugurated its new headquarters this week, a $200M structure built and paid for by China as a sign of the country’s increased trade and involvement in the region. That involvement carries risk, though, as the Chinese learned this week when 29 Chinese workers were abducted by Sudanese rebels over an oil dispute. Also in China this week, the Wukan village held free elections as part of an agreement that ended the village’s protests in December.

It’s too early to call a democratic movement in China, but some of the rising leaders in China are notably more open to democratic practices than their predecessors. The experiment in Wukan will be closely watched, but the trend towards democracy has long been predicted as China grows wealthier and more connected to the rest of the world. A more democratic China will be less able to endanger its citizens, which may force China to re-evaluate some of its partnerships in Africa.

Mali

The Toureg rebels, former supporters of Qaddafi, have brought the arms supplied by the Libyan dictator back to Mali and are using them to wage an increasingly violent campaign in the north of the country.

Qaddafi’s money and weapons cast a long shadow over Africa, and they’re likely to continue doing so. Mali is the first place these weapons are showing up; it’s not likely to be the last. In Qaddafi’s last days, Libyan transports were seen heading to Algeria, Niger, and Zimbabwe.

Afghanistan

A leaked NATO report painted a bleak picture of the organization’s progress in the country. The report is largely drawn from interrogations of Taliban and al Qaeda detainees, and describes Pakistani backing as the lifeblood of a spiritually reinvigorated Taliban. Most damningly, the report asserts that corruption in the Afghani government has gotten bad enough that many Afghani citizens prefer life under the Taliban.

It’s worth noting that similar circumstances allowed the Taliban to take over the country in the mid-1990s.

Eurozone

Despite rumors to the contrary early in the week, the 27 EU leaders confirmed their commitment to Austerity in Brussels on Monday. By Tuesday, however, a set of horrible unemployment numbers - including a rate of 22.9% in Spain and 19.2% in Greece - led at least one IMF official to press for plans beyond just austerity.

The numbers coming back from Greece, Spain, Ireland, Portugal, Italy, and others are clear: Austerity isn’t leading to Prosperity. More concerning, though, is that the unemployment rate among 16-24 year olds is nearing 50% in Spain and Greece - a sure recipe for social unrest.

US Politics

GOP Primaries

Mitt Romney appeared back in control in Nevada, garnering 47% of the vote, more than double Newt Gingrich’s 22.7%. The win puts Romney in a strong position for the next major contest on March 6th, Super Tuesday.

Congress

The Senate voted this week to take up a resolution prohibiting members of Congress from trading on non-public information. Previously the practice had occupied a legal gray area; the bill would ban it outright.

An optimist’s viewpoint here is that Congress, responding to poor polling numbers and increasing mistrust by the public, is taking steps to both quash corruption and to improve the institution’s badly damaged image. A cynic would gauge the likelihood of Congress actually cutting off a significant stream of income to be very low, and might be tempted to conclude Congress is getting most of its money through other, less public means. A realist might decide that power and money are always linked one way or another, and that, for better or for worse, persons in positions of power will wind up wealthier than before - the best one can hope for is they’ll make good policy in the meantime.

US Economy

Banks

The New York Times analyzed five major US banks, and found that, while they have $80Bn in exposure to the Eurozone, they’ve insured against all but $50Bn of it using Credit Default Swaps.

That phrase ought sound familiar: CDSs were the theoretical hedges most banks had against the mortgage markets, and are a big reason why AIG is all but state-owned right now. It’s extremely doubtful that any insurance policy will be effective in the face of a full collapse of the Eurozone, and to assume otherwise would be unwise.

Jobs

The unemployment rate dropped to 8.3%, as low as it was when President Obama took office, according to the Labor Department on Friday.

Unemployment numbers are always fraught. They’re subject to revision, they don’t capture discouraged workers, and there are various other tricks involved that make it difficult to take the number as canon. That said, the report is extremely positive, and should give Obama a good boost in the polls. It’s still too slow, there’s still too many discouraged people, it still doesn’t cover people with jobs that are worse than what they had before, but it’s an awful lot better than before.

Final Thoughts

The most interesting news to me this week was from China. China has long been held up as the alternative to the western way - the country that disproves the link between democracy and success. My position on that for some time has been that it’s simply too early to tell: China’s economy has been growing rapidly, and it is already massive, but it’s still in a reasonably early stage of development. I harbor strong doubts about China’s ability to have both a comfortable middle class and a strong authoritarian state, and I suspect hand- wringing or self-doubt on behalf of liberal democracy is premature at best.

My best for the week ahead, and thanks again for reading!

Eric

January 23rd - 29th

2012-01-30T00:00:00-08:00

Welcome to the Dispatch for January 23 through 29!

Most of the Dispatch this week centers on the Middle East. This isn’t due to lack of activity in other parts of the world. Europe continues to deal with economic woes, Boko Haram is making life miserable in Nigeria, and opposition to Putin continues to grow in Russia. Much of the week’s events seemed to be a continuation of the prior week: movement in one direction or another, but no real change in the narrative. The general rule for inclusion in the Dispatch is that a story must be significant (“likely to be remembered in a decade”) and have changed from the prior week. That second criteria is why Syria is making its first appearance in the Dispatch: While the uprising’s been ongoing, this week seems to have been a watershed week, and it’s the first time I’ve felt enough has changed to warrant an entry.

With that in mind, let’s get started!

Syria

The unrest in Syria deepened as the opposition arrived at the outskirts of the capital Damascus. The deteriorating security situation hamstrung the Arab League’s mission, leading the group to pull its monitors out of the country, and the leadership of Hamas has also fled the country. Meanwhile, Russia reaffirmed its commitment to the Assad regime in the face of international pressure, thwarting UN action against Syria.

The uprising in Syria has been building since March of 2011 amid serious and severe crackdowns. Until recently, though, the government still seemed firmly in control of the country, and it was fair to ask if the media was overstating the extent of the protests. In recent days, though, something changed: the protestors are more violent, better armed, and seem capable of taking and holding territory. The failure of the Arab League’s mission and Russia’s staunch refusal to allow sanctions or other UN resolutions against Syria means the situation can only be resolved by the factions on the ground. For all intents and purposes, this is now a civil war.

Iran

The EU agreed to an embargo on Iranian oil starting July 1. The Iranians responded by threatening to cut off European oil preemptively, but the damage to the Iranian economy is already starting to show.

Iran has stated that an embargo would be tantamount to a declaration of war, and it’s hard to see what else the US and EU can do to Iran at this point. The goal of the sanctions is to get Iran to negotiate over its nuclear program, but it’s unlikely the Iranians will make any serious concessions on that point. Iranians want a bomb because it’s the only iron-clad security guarantee they’re going to get. To put it mildly, the Iranians don’t trust the US - again, a position not without historical merit.

In this light, the sanctions have two fundamental flaws. The first is that, as mentioned, it’s awful difficult to see what the next step is. What’s left on the table after this set of sanctions fails shy of all-out war? The second, and potentially larger, issue is that these sanctions are having serious economic bite. A prosperous country is a peaceful country, but a country in dire economic straits is a country prone to violence and upheaval. This may be what the US is hoping for, but history doesn’t warrant much confidence in uprisings born of economic depressions, especially economic depressions caused by outside forces. An unstable, ultra-nationalistic country on the cusp of getting a nuclear bomb is perhaps not the ideal outcome.

The New York Times published an in-depth article on Israel’s position on attacking Iran, drawn from interviews with top Israeli officials including the Defense Minister, head of Mossad, and others. It’s a great read and includes a lot of backstory on Israel’s actions in Iran - I highly recommend it.

Libya

The Deputy Chief of Libya’s National Transition Council resigned in response to growing protests from across the country. Bigger news came from Bani Walid, where a group of fighters from the Warfalla tribe, previously strong supporters of Qaddafi, forced the NTC Militia from the city. The NTC Defense Ministry said their aims were not counter-revolutionary, but by the end of the week the NTC had yielded control of the city to the tribe.

Outside of a few areas, Libya is still an intensely tribal country, and the fighting in Bani Walid is best read in this light. The Warfalla tribe were supporters of Qaddafi, but so far they’ve made no move except to expel the NTC Militias to take back what they consider their city. This isn’t the first tribal conflict to emerge in the post-Qaddafi era, and it won’t be the last. The most likely outcome for Libya is a limited national government and local control in the hands of whatever group can claim the mantle of a regional government. This is a good blueprint to keep in mind for Yemen as well.

United States

Economy

The Federal Reserve announced it will keep interest rates near zero through late 2014 amid extremely low growth and inflation forecasts.

The Fed acknowledged some of the recent growth in the economy, but still feels the economy isn’t growing fast enough. This is true. Not only do we need to get back to positive growth and increased job creation, but we need to make up for the lost output from four years of nearly zero growth. Until then, it’s going to feel like a recession for an awful lot of people.

State of the Union Address

President Obama gave his State of the Union address this week, concentrating mostly on the economy and issuing a call for economic fairness. Included in the speech were calls for tax policies to stimulate manufacturing and more investigation into unfair trade practices, and a more general call for a sense of shared responsibility.

The speech gives a better preview of the Obama 2012 campaign than any specific policies: the administration has basically written off any grand policy movements until the election. Still, it’s good to see a more assertive side of Obama.

GOP Race

The Romney campaign unleashed a withering string of attacks that have pushed Newt Gingrich back to second place in Florida polls. The payoff comes on Tuesday at the Florida Primary, where Mitt Romney is favored to win by more than 10%.

Newt Gingrich this week discovered what Romney’s been spending all his money on this week. Mitt’s campaign is extremely well-run and well-funded, and while so far Romney has been able to spend most of his efforts on attacking Obama, the performance this week in Florida showed what kind of teeth his campaign can have. Obama’s campaign is in swing and has collected an enormous sum already. This campaign season is going to get ugly.

Final Thoughts

I touched briefly on the moral and political aspect of the economy when talking about Iran, but it’s incredibly important to recognize the importance of economic prosperity for peace and stability. A country in which the average person has the means to provide for themselves and their family tends to be a stable and peaceful country. In countries where this is not the case, we see extremism and violence; desperation makes fools of reasonable people. Al Qaeda and its offshoots are born of the economically disadvantaged, as were the fascist movements in Germany and Italy - the memories of which should be at hand as we work our way through the aftermath of the financial crisis. Justice is a cornerstone of free society, but it’s a double-edged sword: it’s no more just for a man to die penniless in the street by no fault but chance than it is for him to die by another man’s hand. Justice is not a concept confined to criminality, and societies in which men die injust deaths tend to be short lived and violently undone.

Thanks again for reading this Dispatch, and all my best for the week ahead!

Eric

January 15th - 22nd

2012-01-23T00:00:00-08:00

Welcome to the Dispatch for January 15th through the 22nd. It’s been a big week, but first, a couple quick notes:

First, you probably already noticed the new theme. Do let me know if there are any problems, but I find it rather more readable than the old one. I’ve decided the Dispatch will now cover from Monday through Sunday - a decision born largely of events of this week. It’s a bit tougher catching changes on the day of publication, but I think it’ll be an improvement. I’ve also included notes from a talk I attended this week - I often get the opportunity to see interesting speakers, so I’ll try to share a few more in the future. Finally, I’m omitting the “Comment” heading now - I think the divide is fairly self-evident.

That about covers the changes, so let’s get to the news.

Nigeria

On Monday, the Nigerian government announced a partial retreat on the fuel subsidy in response to both widespread protests and a massive spike in prices across the nation after just two weeks. Boko Haram added to the country’s woes with one of its largest attacks to date, a series of eight coordinated bombings killing more than 100 people.

Promises on the part of the government to use the subsidy money to improve infrastructure ring hollow to much of Nigeria’s population. As mentioned last week, the government is, and has been, notably corrupt. The Nigerian people have no reason to believe that any savings will come back to them – and good reasons to believe the contrary. The government has claimed the subsidy imposes an unsustainable fiscal burden. If that’s the case, this government’s days are numbered: the people simply won’t stand for the subsidy’s removal, and by all impressions the economy can’t sustain its removal either.

Pakistan

In response to pressure from the military, the courts, and the opposition, the Pakistani People’s Party agreed this week to call early elections. Prime Minister Gilani appeared in court to answer questions about corruption charges against President Zardari, though the court was adjourned to February without making any decisions.

The specifics of the case against Zardari are fairly inconsequential: the point of the proceedings is to remove the Zardari government without using tanks. Gilani’s court appearance serves to de-escalate the situation, and the offer of early elections should serve to keep the military satisfied for now. The most likely outcome looks to be early elections, probably late in summer, that end in Zardari’s party, the PPP, out of power one way or another.

Iran

The new round of sanctions against Iran caused fears over oil prices around the world. Saudi Arabia indicated it would increase its production to keep oil at a target price of $100 per barrel, while the Chinese met with the Saudi government to secure access to non-Iranian oil supplies. The mission appeared to be a success: later in the week, the Chinese Prime Minister issued a strongly worded condemnation of Iran’s nuclear program. Israel announced this week they had made ”no decision” on a military strike against Iran.

The turmoil in Iran comes at a very bad time for the oil markets. Prices are already under pressure due both to uncertainty from the Arab Spring and massive spending on the part of Arab countries attempting to keep their populations quiet. The US Sanctions on Iran are supposedly contingent on oil prices staying stable, but that seems nearly impossible: the US is relying largely on Saudi Arabia to make up the lost production, but there are serious doubts about Saudi production capacity. Iran’s contributions to the world oil supply are around 3.5 Million barrels per day, nearly a third of Saudi production. Any significant increase in oil price could be a severe drag on the already fragile world economy - the choice could soon be between putting pressure on Iran and preventing a global recession.

Egypt

The Muslim Brotherhood won 47% of the seats in Parliament, with another 25% going to a coalition of ultra-conservative Islamists. Egypt requested a $3.5Bn loan provision from the IMF to shore up the economy, which has been reeling since the uprising. The economic uncertainty this week lead to a gas shortage prompted by fears the gas subsidy would be suspended.

The Muslim Brotherhood’s victory surprised no one. They’re the only party that had any sort of existing organization, and they’ve been operating in Egypt for nearly 85 years. The Brotherhood is a relatively moderate party these days, and they’ve promised to promote ideals of individual liberty. The party is not particularly well aligned with the more conservative Islamists. With only 47% of the seats in Parliament, they’ll still need to form a coalition government, but it’s not at all certain with whom they’ll partner. Of note, though, is that this first Parliament will be responsible for drafting Egypt’s new constitution, so the makeup of the group is likely to bear heavily on Egypt’s identity for years to come.

Yemen

After an attempt at delaying elections earlier this week, Yemeni President Ali Abdullah Saleh left Yemen to head to the United States for medical treatment. While elections are scheduled for Feb 21, the year-long turmoil in the country has allowed militant groups in the south to gain more traction; this week they claimed control of a city within 100mi of the capital.

Saleh’s final departure is a pleasant surprise given the length and ambiguity of the negotiations preceding it. While an agreement on elections has been in place for some time, Saleh has made several contradictory statements on his intent. His departure address was met with some relief.

Burma

The New York Times reported that the Burmese military is intensifying its campaign against the Kachin ethnic group in the north of the country. This comes as an unfortunate followup to last week’s news on Burma’s rapid liberalization, and stands as a reminder of the length of the road left ahead.

Eurozone

Three stories out of the Eurozone this week:

Greece

The Greek government is getting close to a deal with private bondholders on debt restructuring. The two remaining sticking points are the interest rate, which the IMF wants below 3.5%, while creditors prefer above 3.8%; and a proposed exemption from the restructuring for bonds held by the European Central Bank, which private investors are not likely to accept.

European Central Bank

The ECB’s new bank lending program appears to be showing fruit. The program combines low interest rate loans to private banks with a strong recommendation that the banks buy sovereign debt. Italy and Spain’s interest rates have already improved.

Basel III Bank Regulations

France and Germany are trying to soften some of the language in the new Basel III banking regulations to prevent, in their words, ”negative effects on grow th.”

Overall, the Eurozone leaders appear to have gotten serious about dealing with the crisis. The moves from the ECB are in keeping with the letter of the Euro treaty, but are fairly aggressive, on the order of what economists have been saying are needed, and France and Germany’s attempts to soften the Basel regulations are essentially a backdoor bailout for their banks. What separates the Greeks and their borrowers are a couple tenths of a percentage point and a technicality about the ECB’s role - given the Euro leaders apparent adroitness with paperwork, it would be shocking if a deal weren’t reached.

US GOP Primaries

Early this week, Jon Huntsman, Jr. and Rick Perry dropped their bids. Romney was dogged by demands to release his income tax statements. After eventually doing so, he was criticized for paying a comfortable rate of 15%. The primary on Saturday capped a terrible week for Romney with a crushing defeat: Newt Gingrich won 40% of the vote to Romney’s 28%, dragging out an already tortuous primary season.

The Florida primary is held on the 31st, and we’ll find out if Newt’s challenge can stick. Gingrich remains the least popular candidate in the race among the general populace. At this point, it would be shocking to see the nomination go to anyone but Romney. The only real potential challenge could be a new contender - it’s obvious the GOP is not thrilled with its current options.

US Economy

The Times this week ran a fantastic article on Apple’s Chinese manufacturing. It’s a must read if you’re interested in the future of American manufacturing - be warned, the prognosis is grim.

Israel-Palestine

Sandwiched as I am between UC Berkeley and Stanford here in San Francisco, I have frequent opportunity to attend exceptional talks and lectures. This week, I took in a talk by Shmuel Rosner, an Israeli journalist who’s been covering the peace process for a number of years. He spoke on the Obama administration’s attempts at advancing an Israeli-Palestinian peace, and the missteps made along the way.

Note, the opinions expressed below are those of Mr. Rosner - I make no claim to their veracity or neutrality.

In Mr. Rosner’s opinion, the Obama administration’s biggest misstep was attempting to dramatically accelerate the process at the absolute wrong time. The Israelis don’t feel like the current Palestinian government is capable of either coming to the table or upholding a bargain if one should be reached - as such, they’re extremely reluctant to invest much in the current negotiations. The Israelis feel they got very little in return for agreeing to freeze settlements for nearly a year, and feel they were unfairly pressured by the Obama administration after making considerable concessions. Between that and the insistence on a 2-year timeline for an agreement, the Israelis feel they do not have a strong partner in the Obama administration.

Mr. Rosen states that the Israelis are already aware they cannot keep the West Bank; the question has become tactics, not strategy. Hamas continues to pose a problem, and without significant changes in the group, the Israelis would be unwilling to negotiate with any government that includes Hamas.

His final assertion is that it behooves the US to be a friend to the Israelis. The best progress on the peace process has come when the US has stood close at hand with Israel. He cautions, however, that no good treaties can be made during troubled times, and the Middle East right now is incredibly unstable. For the time being, Israeli sentiment is focused on domestic affairs, as it seems little progress is to be made elsewhere for now.

Final Notes

The two big trends this week were around the Iranian sanctions and the Eurozone. Both show the hand of technocratic intervention: in the case of the Iranian sanctions, the US is hard at work trying to invent away a rise in oil prices; in the Eurozone, the ECB and the governments of Germany and France are using complicated schemes and indirect action to reshape the financial situation. Complexity, to me, is not a virtue. These plans feel over- engineered, and I’m extremely suspicious of clever solutions to problems of this sort. It’s entirely possible the efforts on both parts will succeed, and my concern certainly isn’t born of any perceived deficit of talent on the part of the architects of either plan. The devil, though, is always in the details, and I’m highly suspicious of the ability of anyone to truly predict the outcome of a plan with so many moving parts. The history of the world is one of unintended consequences, and many of our stickiest problems today began as side effects of earlier efforts to solve the problems of yesterday.

Thanks again for joining me - my best wishes to all for the week ahead!

Eric

(My thanks to Des (@scholarus) for editing)

January 8th - 14th

2012-01-15T00:00:00-08:00

Hi all, and welcome back to the Dispatch. This is the second dispatch for 2012, and I’ve made some changes to the format. You’ll notice the summary of the news and the comments are more clearly divided, and I’ve embedded links to the relevant news stories. It’s difficult to summarize the news without adding slant, so I’ve opted to keep my summary to a minimum, which has the bonus of allowing more space for commentary and analysis. Again this week the dispatch took longer than expected, but I think my organization is getting better. It’s still a work in progress, and I thank you all for coming along.

My special gratitude to Harlan and Desiree for their consultation - you guys are awesome. As always, comments are welcome.

Iran

The US opened communication directly with Ali Khamenei, the supreme leader of Iran, for the first time in 30 years this week. US diplomats warned against closing the Strait of Hormuz, stating that a closure would result in military action. The Iranian threat follows another round sanctions aimed at stopping Iran’s nuclear program. Meanwhile, another Iranian nuclear scientist was assassinated, the latest in a series of assassinations and explosions targetting Iran’s nuclear program. In response to the attacks, Iran opened another heavily-fortified nuclear site this week.

Comment

Iranian-US relations have never recovered from the CIA-backed coup in 1953. The Iranians feel the US and Israel are a threat to their sovereignty, an opinion not without evidence. The Israelis have all but admitted responsibility for a series of accidents, assassinations, explosions, and other setbacks to Iran’s nuclear program. Further rounds of sanctions and military threats are unlikely to deter the Iranians: the current regime feels the only guarantee of security they have is in the form of a nuclear bomb. The real question at this point is how far the Iranians will go: even testing a bomb could be seen as sufficient provocation for either the US or Israel to launch military action.

Pakistan

Pakistani Prime Minister Gilani this week fired the Defense Secretary, provoking a strong rebuke from the Pakistani military. The move further escalates tensions between the civilian government and the military, which have been high since the revelation in December of a memo from the Pakistani ambassador seeking US military aid in preventing a military coup.

Comment

So far the Pakistani military has not shown signs that it will attempt a coup, the end of four prior Pakistani civilian governments. They have, however, been pressing the Pakistani Supreme Court to take action against Zardari’s government, hoping to remove the Pakistani People’s Party before elections in 2014. The Guardian put it best: this looks like “a coup by other means.”

Nigeria

Adding to the Nigerian government’s woes this week were nationwide protests over the end of the 50% subsidy on gasoline. One of the world’s largest oil producers, its shoddy infrastructure means Nigeria still has to import most of its gasoline, and the government has declared it cannot afford to continue the subsidy.

Comment

Nigeria is the poster child for the Resource Curse: it produces a fantastic amount of oil, but widespread corruption and very poor infrastructure means poverty and inequality are rampant in the nation. The gas subsidy is said to be costing the Nigerian government upwards of 25% of its national budget, but without the subsidy, a gallon of gas now costs $3.50 in a nation where the majority live on less than $2 per day.

Seun Kuti, one of the leaders of the protests, summarized the movement: “We, the people, subsidise electricity for the government by buying generators. We subsidise water by digging boreholes in our homes. We subsidise telephones by owning three mobile phones because we’re not sure which network will be working on which day. … Fuel subsidy was our only welfare, and it cannot be taken away.”

Burma

Note: Burma is also known as Myanmar. The name is disputed. The US and Burma will exchange ambassadors for the first time since 1990 in response to the freeing of 800 political prisoners. The prisoner release is a dramatic move that continues a spree of surprisingly rapid liberalization in the country, which has been ruled by a military junta for 50 years.

Comment

After 50 years of repressive rule, the Burmese government has nearly completely reversed course in barely a year, with no motive apparent. The pace of the change and its opacity have left observers wary, but there’s no indication so far that this is anything but a positive development. The US is normalizing relations, but it hasn’t lifted sanctions yet.

European Union

Standard & Poor’s downgraded the sovereign debt of nine different European countries this week. Among those downgraded was France, which lost its Triple-A rating (the highest possible rating), leaving Germany and the UK as the only countries with AAA ratings in Europe. Spain, Italy, and Portugal also got downgrades, with Portugal being relegated to junk status.

Comment

The downgrades largely confirm what the market has been saying for some time, and as such are unlikely to have a large effect. Politically, the downgrades could be an issue, but as far as bond-buyers are concerned, the downgrades change very little. Note the S&P was the ratings agency that downgraded US debt recently; yields on US Treasuries barely moved. More interesting than the downgrades is the S&P’s explanation, which noted in part that the austerity measures were doing more harm than good - a sentiment born out by the terrible recent performance of European economies.

For further commentary on the intractability of the Eurozone problem, I’ll defer to John Maudlin, a writer and analyst, who provided some of the best analysis I’ve seen on the matter in his newsletter this week.

US GOP Primaries

Note: For obvious reasons, US domestic matters are the hardest to write neutrally about. I’ll do my best.

The New Hampshire primaries were held this Wednesday, and to little surprise, Romney came in first - this time by a margin of nearly 15%, with 39% of the vote to Ron Paul’s 25% finish. John Huntsman, who had largely skipped Iowa to focus on New Hampshire, grabbed third with 16% of the vote. Rick Santorum and Newt Gingrich shared fourth at 9.4% of the vote, and Rick Perry took the remaining 0.7%, having essentially skipped the primary.

All eyes are now on South Carolina, the next primary on the 21st. Romney is favored to win, but Gingrich and Santorum are both expected to make a strong showing.

Comment

As I mentioned last week, everything up until Super Tuesday is just field clearing, so the current results should be taken with a wary eye. Romney continues to be the favorite to win the nomination, but that’s not out of any great swell of support from the GOP. At the moment, he’s the only man in the race who the party thinks could realistically beat Barack Obama, which is why he continues to win the primaries, but the Conservatives, the Evangelicals, and the Tea Partiers are still not particularly thrilled with Romney.

I’m still predicting Romney, though again, until Super Tuesday, it’s still up in the air. Of the remaining candidates, I think the only one that can give a legitimate challenge is Newt Gingrich - it’s possible he could perform as viable candidates in a general election, and the party might just vote for “Anyone But Romney.” (note: an earlier draft included Jon Huntsman as the other “Not Romney”)

US Politics

Obama’s chief of staff William Daley stepped down this week, ending a controversial year-long tenure. As Rahm Emanuel’s replacement, Daley never seemed to connect with either Congress or the White House, and his departure was foreshadowed by a dramatic reduction in responsibilities in November.

His replacement, OMB Director Jacob Lew, is a widely respected technocrat who served as budget director under Clinton and has strong ties on capital hill.

Comment

Daley wrote in 2009 that the Democrat’s road to success was through bipartisan deals with the Republicans, and that seems to be the policy he pursued. I’ll leave it to the poll numbers to assess that legacy.

Closing

I think the strongest piece of good news this week was from Burma: any occasion to see an end to repression and brutality is welcome, and to me, that outshines an awful lot of the rest of the tensions in the world.

My feeling is that Pakistan will be the country to watch for the next week, as I think it has the most potential for imminent change. Tensions with Iran are getting extremely high, and the buzz growing, but the main driver at the moment are the new sanctions, and until they really start to bite, I suspect that situation will stay on simmer - I don’t expect to see radical new developments in the next week.

That’s the dispatch for this week. Unlike last week, it should still be Sunday for most of you reading this - an auspicious sign for future Dispatches.

Thanks again for reading,

Eric

January 1st - 7th

2012-01-08T00:00:00-08:00

Hello all, and thanks for reading! This is the first real dispatch for 2012, for January 1st through the 7th. I’m still working on the tone and formatting, as well as my organization and schedule on the back end, so please do stick with me. As always, the “Ask” link is at the top and comments are at the bottom, so let’s get started!

Afghanistan

The top story comes from the Taliban, who announced this week they’ll be opening a political office in Qatar. Long seen as a necessary step for peace and an orderly NATO departure, negotiations with the Taliban have faced numerous setbacks, including impostors masquerading as Taliban representatives, resistance from all parties (including the Afghan government), and rumored interference from Pakistan. The move to open an office, especially in a neutral country like Qatar, is therefore a huge positive step: even if it bears little short-term fruit, an open official line of communication could well be crucial to Afghanistan’s future.

As part of the arrangement, the US will apparently be releasing several Taliban prisoners. Whatever else the deal may contain, it’s worth noting that this isn’t a one-sided deal or a move of desperation on the part of the Taliban. Over 11 years, the mission in Afghanistan has evolved to the point that success now rests on reaching an agreement with a group whose removal was once Goal #1.

Hamas

Ripples of the Arab Spring arrived in Palestine this week as a philosophical divide manifested within Hamas. The group’s exiled leader in Damascus announced a strategic shift towards non-violent protests and popular uprisings — an announcement quickly disputed by leadership on the ground in Gaza. The dispute shows the tension between the group’s ideological leadership and the practical concerns of the people on the ground: Political overtures aside, Hamas still feels itself a group under siege.

Egypt

The Muslim Brotherhood won a plurality of seats in the parliamentary elections, and the United States has backed away from a longstanding opposition to dialogue with the group, a policy dating to the Mubarak era. The elections in Egypt should provide a template for how to engage with Middle Eastern governments which actually reflect popular will.

Iraq

A less positive note from Iraq this week, as Prime Minister Nuri al-Malaki began reaching out to Asaib al-Haqi, a violent militant group allegedly tied to Iran. The latest in a series of discouraging moves from the Malaki government, it seems to be a response to moves by Moktada al-Sadr, formerly of the Madhi Militia, to capitalize on popular concerns over the Malaki government’s attempts to marginalize the Sunnis in Iraq. The move is particularly disheartening coming less than a month after the US departure.

Nigeria

Our second negative story this week comes from West Africa, where Boko Haram capped a 10-day spree of attacks with a bombing of a Christian church, killing 14.

Editor’s Note: Boko Haram is a hard group to pin down. Originating in Nigeria’s predominantly Muslim north, the group was relatively peaceful until their leader was killed in 2009. Their identity and the constitution of the group is ill-defined and highly disputed, and tensions in the northern region are extreme, with rumors of widespread police violence. Boko Haram’s capabilities are increasing, though, suggesting ties with other groups in the region and a more solid group identity - a dangerous trend.

Spain

Fallout from the Euro crisis continues to dominate Europe, with Spain this week reporting an unemployment rate of 22.9%. While potentially mitigated by a large ‘grey’ economy, the number is still deeply troubling. Spain must continue the austerity track, and growth estimates for the next year vary from 0 to -1.5%.

Hungary

Hungary’s new constitution, pushed through by the ruling party, took effect this week, to the chagrin of both domestic protestors and outside observers, including the UN, European Commission, State Department, and IMF. Among the controversial provisions are restrictions on the media and the dissolution of key checks on legislative power.

China

Chinese president Hu Jintao reiterated this week concerns about western cultural dominance in China. Describing the proliferation of western culture as an international attempt to weaken and divide China, the president indicated both increased state support for Chinese cultural projects and further restrictions on media the government finds “unacceptable.” Among the restrictions are regulations affecting microblogging sites, which have become a popular forum for discussing government policy and popular opinions.

US Elections

The Iowa Caucus was held this week on Tuesday. To little surprise, Romney won, though far less expected was Rick Santorum’s second place finish, losing by only eight votes. The strong finish effectively establishes him as the candidate of the evangelical wing of the Republican party; Michele Bachmann suspended her campaign, and Rick Perry is preparing to make a last stand in South Carolina. The New Hampshire primary is this week, and while Santorum is far less likely to succeed as he did in Iowa, it remains to be seen how strong a showing Mitt Romney can make. The 2008 election wasn’t clinched until Super Tuesday, and McCain was hardly the frontrunner in Iowa. The GOP field is still open.

US Politics

President Obama made four recess appointments this week, most notably Richard Cordray as director of the Consumer Financial Protection Bureau. The move is noteworthy because the Senate is technically “in Session” – continuing a practice started by Harry Reid during the Bush years, Mitch McConnell has been using a procedural loophole to keep the Senate “in session” to block just such appointments. The appointments appear to be legal, but they’re likely to face a strong challenge, and in either case they certainly won’t help mend fences.

US Employment

We’ll end the week on a more positive note: the economy added more than 200,000 jobs in December. The numbers are preliminary, and still far, far lower than ideal, but they extend a good run on jobs recently. We need more, but it’s a good trend.

Closing

In the future I’ll be using this section for some closing commentary and a few predictions, but other than some commentary on organizational methods or perhaps some platitudes on rocky starts in new ventures, I simply don’t have a lot to offer tonight, I’m afraid.

Thanks for reading, and I hope the week to come sees you well! Eric

Welcome to 2012

2012-01-01T00:00:00-08:00

2011 turned out to be a far more momentous year than expected. The Arab Spring started in Tunisia and spread almost everywhere, eventually coming home to roost in both America and Russia; The Eurozone crisis expanded to come to threaten the economy of the world as a whole; The Fukushima disaster killed the Nuclear industry’s nascent recovery and cast new questions on the future of energy; and Congressional deadlock paralyzed the US Government, producing some of the most embarrassing scenes my generation’s been witness to. We come then into 2012 a dramatically changed world, prompting us to take a moment to glance about and see where we stand.

The Economy

We enter 2012 facing a continuing crisis in the Eurozone that threatens to undo a decade’s work and realize an incredible amount of systemic risk. Coming fast on the heels of the largest recession since the 1930s, policymakers have been caught flat-footed, torn between demands for austerity from a conservative revival and persistent unemployment and slow growth. Last year ended with a bang as Britain decided to forgo a new fiscal treaty, leaving the remaining members of the Eurozone to move forward without the UK. Initially hailed as a major step forward, the new treaty proposal faces two problems: First, it’s not at all assured the rest of the eurozone members will sign it, with the Finish parliament already stating they won’t hold it binding; second, it’s profoundly undemocratic. This year in Europe will see conflict drawn vertically from the ECB all the way down to the streets to decide who will pay for the Euro’s shortfall: the ECB, the banks, the bondholders, or the people themselves.

The rest of the world faces its own economic challenges. The American economy continues to vacillate between small positive signs and a continuing overall malaise. China’s growth continues, but there are signs they may be reaching an inflection point: the rise of a middle class threatens to undermine both the tacit political agreement that’s kept the government unchallenged for a generation and the low wage manufacturing base which has driven its growth. In the long run, China will continue to grow — the fundamental strength of the economy and the sheer size of its population will guarantee that — but we’re beginning to see a change in the works.

The world now holds its breath as the three powers face their challenges: a stumble in the US, Eurozone, or China could spell disaster for the world economy. The upside isn’t great either: without a significant development somewhere, the world economy is on track for a pretty lackluster performance this year.

The Protests

If for nothing else, 2011 will be remembered as the year of the protest. Starting with the self-immolation of a vendor in Tunisia and spreading in no small part due to the proliferation of smart phones and social networking, a wave of popular protests swept the globe this year. At the start of 2012, we see a new government forming in Tunisia and Libya, ongoing strife in Egypt, protests over rigged elections in Russia, a Chinese city in open rebellion, and “Occupy” protests in nearly every major city in America. The complaints vary from region to region, but the underlying theme is anger at a political elite who’ve failed to listen to or respond to their constituency. The speed and ferocity of the protests caught the world off guard: quiescent populations seemed to erupt with a fury almost alien to recent generations; echoes of the 1960s ring throughout the world. These popular protests should continue to be a factor in 2012: while the political narratives are starting to shift, the themes driving the protests are still securely in place; the people’s work is not done.

Hacktivists, Crypto-Anarchists, and Cartels

While the emergence of Non-State Actors has been a factor for several years, 2011 was the coming out party for Anonymous, the hacker collective emerging from 4Chan. One of the stranger stories in an already marked year was the conflict between the Zeta Cartel, a non-state paramilitary narco-cartel, and Anonymous, an anarchist hacker collective: The Zetas kidnapped an Anonymous member involved in street action in Veracruz, and Anonymous threatened to make public a web of Zeta informants and agents if the Zetas didn’t release the kidnapped. The Zetas eventually relented, deciding to release the member instead of testing whether Anonymous had the resolve and skill to make real their threats. Despite the quiet resolution, this may have been the first true twenty-first century conflict: the Zetas are a private army in and of themselves, and Anonymous is a global brand. Neither one answers to any nation state, and should the two have descended into conflict, no government has the pull to stop them: a true post-national conflict, and an important signpost for the year ahead.

Rogue States and Regional Realignments

The death of Kim Jong-Il promises an interesting year on the Korean peninsula. The best summary I’ve heard of the Korean situation goes, “If anyone tells you they understand N.Korea, they’re either lying to you or to themselves.” My thoughts here should be taken with that sentiment in mind. The next year in the DPRK promises to be volatile. Rumor has it the younger Kim was responsible for the shelling of the South Korean island Yeonpyeong and the sinking of the South Korean naval vessel Cheonan, both actions taken to burnish his credentials with the military. If the military is slow in taking up the banner of Kim Jong-Un, we may see more aggression from the North. Alternatively, if he cannot solidify his power base, a coup is not out of the question. Chaos on the peninsula is not a scenario anyone wants; the outcome in the event of a coup is highly uncertain. It may be the best outcome for the North Korean people, though — it’s hard to see how things could get worse for them.

The Middle East is in transition as well. On the eve of the US leaving Iraq, the Iraqi president, a Shiite, issued an arrest warrant for the vice president, a Sunni, accusing him of terrorism. Iran is starting to play its hand harder in the region, increasing its influence over Iraq while attempting to reach out to other potential partners. With heavy investment from China, the Iranians have the sort of backing to make a big splash: the axis of the Middle East may soon turn around Saudi Arabia and Iran and their respective backers, the US and China. The Syrian president has been a historic ally of Iran; the resolution of the rebellion there will influence the balance of power in the region as well.

Pakistan has been a fair-weather friend by even the rather limited standards of international diplomacy, but the recent discovery and execution of Osama Bin Laden on Pakistani soil have driven a deep rift into US/Pakistan relations. More importantly, though, they’ve drawn bare a stark divide between the Pakistani Army and the civilian government: never on solid terms, the relationship is even more tenuous than imagined. In November, a memo came to light allegedly written by the Pakistani ambassador requesting US aid preventing a coup by the Pakistani military. Other payments promised included the whereabouts of several wanted terrorists and the disbanding of the Haqqani network, a rather severe bit of proof of what many suspected as Pakistan’s duplicity in the War on Terror. In any foreign affair, one must keep in mind domestic politics ultimately trump international demands. Pakistan’s reluctance to help the US has been apparent from the start; it’s not their war and they’ve done just fine leveraging their connections in the region. Nobody turns down a $60Bn check, especially without clear metrics for success, but we’ve worn out our welcome. In 2012, the US will need to decide whether it can continue its alliance with Pakistan or whether it needs to seek other friends in the region.

US Political Theater: Tragedies and Comedies

The US enters 2012 well positioned from a foreign policy standpoint, but from a domestic standpoint, 2011 has been an unparalleled disaster. The Republican party has turned the odd rules around the filibuster into a de-facto 60-vote requirement in the Senate, and the combination of their majority in the House and a deeply divided caucus has meant the 87-member Tea Party caucus has a dramatically outsized influence on the 435-member House. The payroll tax extension offers a small glimmer of hope that the deadlock of 2011 may give way to a more functional body, but I’m not overly optimistic. The big news in 2012 will be the presidential election. After a year’s circus of candidates that ranged from questionable to unelectable to just embarrassing, the three remaining republicans are Mitt Romney, Newt Gingrich, and Ron Paul. Republicans hate Romney, but he’s the only one who could possibly stand in a general election. Newt Gingrich has enough skeletons in his closet to stock a major anthropological study — not least of which that he was forced out in 1998 by his own party. I’ve few bad things to say about Ron Paul except that I strongly disagree with him about nearly everything and that he’s utterly unelectable to the general populace. So, Obama will probably face Romney in what’s likely to be one of the dirtiest and most well-funded campaigns on record, which should do wonders to heal the divides in America and usher in a new spirit of bipartisanship. I’d put my money on Obama, but my real interest is whether either the House or the Senate change hands — a move in either direction could portend far more for US politics than who occupies 1600 Pennsylvania.

Wild Cards

Chaotic though the scene may look, in all the above cases we’ve seen the unfolding of events far enough to be able to plot different scenarios; their visibility doesn’t mean we know how they’ll end, but we can make some guesses, and with guesses, we can assess risk. Risk in the world is fine: we know how to handle risk. We can prepare for risk. As Donald Rumsfeld said, though, it’s not the known knowns or the known unknowns, but the Unknown Unknowns that get us: the things we don’t even see coming. The Wild Cards. By their nature, the wild cards are hard to predict: if you can predict them, they’re not wild cards. There are certain developments I’ve seen this year, however, that have the signature of potential banner events for next year. My top four for 2012 are:

Russian Democracy

Russia is entering a state of transition: The election this year was blatantly rigged, and the people have taken to the street. The previously unflappable Vladimir Putin issued statements echoing deposed autocrats in the Middle East, from whom he also seems to have divined his PR strategy. If Putin stays, he’ll seek to consolidate his power further; if he goes, Russia could move strikingly towards democracy. Either way, Russia has the potential to make big waves this year — the test will be the presidential elections in April.

The South China Sea

China and the US are beginning to circle each other in the South China sea. China has been increasingly assertive in the region, and the US military is beginning to take notice. While it’s unlikely to turn into a full conflict, I expect to see increased tensions as China begins to realize its status as a superpower. As a brief aside, it’s important to recognize that the Chinese are almost entirely fenced in by American allies – events in the South China sea should be considered through the lense of a country looking down the barrel of a strong American military presence on their borders.

Al Qaeda in Africa

The third wild card is the Al Qaeda affiliates operating in Africa. Having been largely drummed out of Afghanistan and the larger Middle East, Al Qaeda affiliated groups in Africa have become more prominent, with the Yemeni branch attracting the most attention. These groups are operating in countries with even weaker governments than most of the Middle East in an area where Western powers have less reach.

The Bond Vigilantes

From Greece to Italy to Spain and, eventually, to France and Germany, spiking financing costs have been the mechanism by which the Euro crisis has spread. Reflecting market fears of a government’s solvency, they can be a self- fulfilling prophecy: Bond buyers worry that the government can’t pay its bills, so they demand higher yields from governments that now face higher costs and higher deficits, a vicious circle. So far, Greece, Italy, Ireland, and several other European nations have fallen victim to the bond market. It was alarming, therefore, to see yields on bonds from France and Germany, seen as the two strongest economies in Europe, begin to spike: a default by either France or especially Germany would destroy the Euro. This is the fear of the so-called “bond vigilantes”: if a country is perceived to be less than solvent, a vicious cycle of escalating financing costs can drive it to insolvency regardless of whether it would have survived otherwise. The problem is, the market’s shown itself so volatile that even radically unfounded fears may be enough to tip yields to the point that saner investors have to go with the flow. These tipping points can shock with their speed and set off devastating chain reactions across the globe, and given the last couple years and the increasing fears of sovereign debt defaults, I suspect the bond markets may wind up becoming another wild card for the year.

Wrap-Up

So here we are in 2012. Amid the chaos, I think it’s important to sit back and remember that stability is not necessarily good, and instability not necessarily bad. Chaos can be followed by positive developments, and instability can break bad cycles. In the Middle East, the Arab Spring has changed the dynamic from one of dictators and their wards to the potential for a government that legitimately works for its people for the first time in several generations. In the US, the Occupy movement has thrust the phrase “Income Inequality” into the popular discourse, and in Russia the protests may lead to a revitalized democracy in a country that was slumping back to authoritarianism. Above all, the chaos of 2011 and the uncertainty leading into 2011 was fueled by economic growth and an awakening middle class around the world: The fundamental thread connecting the Middle East, the Eurozone, US Politics, and Chinese transformation is the assertion of the people to their right to a good life. In this lens, 2011 was an amazing year, and 2012 has the potential to be even better.

Here’s to a great year.