The Greek debt crisis has highlighted German economic power in stark relief. For many in Europe, Germany has pursued its own interests using the standard of European integration as a cover. The reality is far more complex than a simple replay of “the German problem.” Brendan Simms is Professor in the History of International Relations at Cambridge and has written a very thoughtful essay on what the crisis revealed about the flaws in the integration experiment that allowed German power to increase so dramatically. He concludes by posing scenarios in which the power of Germany can be reconciled to the idea of a united Europe.
The IMF has made it clear that it will not participate in a third Greek bail-out unless there is an “explicit and concrete agreement” to reduce Greece’s total debt burden. It is unlikely that the European Commission and the European Central Bank could find enough money to offer Greece meaningful help without IMF contributions. But those two institutions are adamantly opposed to any debt forgiveness. Given that Greece is also having a difficult time coming up with an acceptable plan, the likelihood of any resolution to the debt situation any time soon is remote. But Greece needs to pay the European Central Bank 3.2 billion euro on 20 August.
Turkey has been launching heavy air strikes against Kurds in Iraq after some initial strikes against the Islamic State. The air strikes end a shaky two-year truce between the Kurds and the Turks, and seems to be an attempt by Prime Minister Erdogan to shore up domestic political support. The Turks claim to make a distinction between Syrian and Iraqi Kurds, but the distinction is largely spurious. By attacking the Kurds the Turks are seriously compromising the US-Kurdish alliance against the Islamic State.
Greece is far from the only debt-troubled state in the system. Puerto Rico, officially a Commonwealth Territory of the United States, has announced that it cannot repay about $72 billion of debt. Interestingly, even though it has borrowed any money from the IMF or any of the insitutions associated with Greece, the solutions offered for its debt crisis are remarkably similar to the austerity program of the troika. The Centennial Group, a private think-tank partially composed of many hedge funds that own Puerto Rico’s debt, has issued a report entitled “For Puerto Rico, There is a Better Way.” Their advice? Lay off teachers and close schools so that the debt can be repaid.
Mullah Mohammad Omar was the leader of the Taliban in Afghanistan in 2001 when the government of that country refused to hand over Osama bin Laden to the United Nations and the United States after the attacks on the US on 11 September 2001. He was an elusive leader and all US attempts to apprehend or kill him during the long war in Afghanistan were futile. We have found out today that Mullah Mohammad Omar died in 2013. His death has led to a split within the Taliban which has complicated attempts to forge a peace agreement in Afghanistan.
Migrants eager to enter Great Britain have stormed the Channel Tunnel leading to increased security in both France and Great Britain in an effort to stem the dangerous flight route. There are thousands of migrants camped out near Calais, France who wish to go to Great Britain since the British do not have national identity cards and it is easier to blend into the British economy. The migrants try to jump on trucks and trains as they pass through the tunnel and many have died. The crisis in the tunnel is the extension of the crisis that exists in the dangerous route across the Mediterranean into Italy.
There is a part of the global economy about which we know very little: the offshore economy that disguises wealth in order to avoid national taxes. There are a large number of sovereign states that have banking laws that defend almost complete secrecy. Because of those laws it is very difficult to estimate the size of this offshore economy. But a new report suggests that this untaxed wealth ranges between $21 and $32 trillion (for comparison purposes, the US economy is about $18 trillion). The loss of the tax revenues associated with the offshore economy is simply staggering.
The existence of the offshore economy has an interesting dynamic on politics. Recent studies have attempted to assess the impact of donor contributions to public policy. The evidence suggests that wealthy donors assess national problems in pretty much the same manner as non-wealthy donors. But wealthy donors favor remedies to those problems which differ a great deal from the policies supported by the non-wealthy. Not surprisingly, the policies favored by the wealthy are usually the ones that are implemented. The chart below shows the fascinating disparity:
Note that the wealthy and the general public are in broad agreement that income inequality is not a prerequisite for America’s prosperity and that current income inequality is too great (the columns on the right). But the wealthy and the general public do not agree that the government should take action to reduce that inequality. A fascinating conclusion.
US President Obama became the first American President to address the meeting of the African Union. The meeting was in Ethiopia and Obama gave a speech that both praised African leaders for the substantial progress their countries have made in recent years but was also highly critical of the corruption that seems to pervade many African politics and economies. He received the most applause when he criticized leaders who stayed too long in office–a pointed reference to the President of Burundi.
French farmers protested last week against lower prices for their products forced by growing imports from other European countries. The French agricultural sector has long been protected by the government: many in the country regard the rural sector to be an important part of French culture. Others regard the farmers are a well-organized political constituency. The protests involve blocking roads and dumping manure in front of shops that sell foreign foods. The protests complicate efforts to stabilize the French economy which has been plagued by high unemployment.
The US Department of State has issued its Trafficking in Persons Report for 2015. The report covers sex trafficking, child sex trafficking, forced labor, bonded servitude, domestic servitude, forced child labor, and child soldiers. The report makes for very grim reading. Modern slavery is pervasive and well-disguised. Unfortunately, it is also tolerated by a very large number of countries and corporations that close their eyes to the practice. The number of prosecutions for the crime are pitifully small.
The criticisms of the nuclear accord with Iran continue to unfold. Many of the criticisms are off-point: they treat the accord as something other than a non-proliferation agreement. Leon Wieseltier is a very prominent critic of the agreement and has written a passionate critique of it in The Atlantic. The main thrust of the critique is quite straightforward:
“This accord will strengthen a contemptible regime. And so I propose—futilely, I know—that now, in the aftermath of the accord, America proceed to weaken it. The conclusion of the Joint Comprehensive Plan of Action should be accompanied by a resumption of our hostility to the Iranian regime and its various forces. Diplomats like to say that you talk with your enemies. They are right. And we have talked with them. But they are still our enemies. This is the hour not for a fresh start but for a renovation of principle. We need to restore democratization to its pride of place among the priorities of our foreign policy and oppress the theocrats in Tehran everywhere with expressions, in word and in deed, of our implacable hostility to their war on their own people.”
Essentially, Wieseltier is suggesting that nothing less than a change of regime is a satisfactory conclusion.
Violence flared up again at the al-Aqsa mosque in Jerusalem. The mosque sits on that Muslims regard as the Noble Sanctuary and Jews call the Temple Mount. Violence as been endemic this year as some Jews attempt to pray at the holy site, a practice that was banned by Israeli authorities after the capture of East Jerusalem in the 1967 war. The controversy over the site is perhaps the most intense conflict in the world: the Israeli and Palestinian demands on the Old City of Jerusalem are profoundly incompatible.
Reports from Greece indicate how deep the split between Prime Minister Tsipras and the more radical members of his Syriza party actually was. According to published reports, the more radical members of the party had mapped out a process by which Greece could have left the euro and returned to its old currency, the drachma, in the dead of night. It was an audacious plan, involving taking over the Greek Central Bank, and suggests how difficult it has been for Tsipras to maintain control of the government. Interestingly, the plan had the virtue of being secret and the transformation would have occurred in the dead of night which would have avoided many of the critical problems associated with a return to the drachma. Nonetheless, leaving the euro would have been highly destabilizing to the Greek economy.
As Chinese power continues to increase, both globally and regionally, its military power has triggered a classic “security dilemma” in East and Southeast Asia. Robert Jervis wrote the most elegant description of the dilemma in World Politics in 1978. (Robert Jervis, “Cooperation Under the Security Dilemma,” World Politics, Vol. 30, No. 2 (Jan., 1978), pp. 167-214). What China regards as actions only designed to protect Chinese interests, its neighbors view the actions as threatening to their interests. Ultimately, Chinese power must (and will) be accommodated, but the key is to do so in the least violent manner possible.
US President Obama visited Kenya today, and delivered a very straightforward defense of LGBT rights in a country where homosexuality is a crime. According to the Los Angeles Times:
“I’m not equivocal on this. If somebody is a law-abiding citizen who’s going about their business or working in a job and obeying the traffic signs and doing all of the other things that good citizens are supposed to do and not harming anybody, the idea that they’re going to be abused because of who they love is just wrong,” Obama said.
“As an African American in the U.S., I am painfully aware of what happens when people are treated differently under the law.”
Kenyan President Kenyatta labelled the matter a “non-issue.” The difference in views is clearcut. As a committed liberal, Obama believes that all individuals are endowed with certain rights while Kenyatta believes that culture and history can be applied to the interpretation of those rights. It is too bad that the media decided not to report on the substantive nature of the difference.
The US campaign against the Islamic State is complicated by both its enemies and its allies. Although both sides are unwilling to acknowledge that they are cooperating, the US and Iran have been working together to attack Islamic State forces. And recently, Turkey announced that it would start bombing Islamic States sites in Syria–a welcome change of policy to the US. But the Turks are also starting to bomb Kurdish sites even though the Kurds have proven to be the US’s most reliable ground allies in the fight against the Islamic State. None of these activities are strategically consistent, and it is hard to determine how things will fall out.
The New Development Bank, comprised of Brazil, Russia, India, China, and South Africa, has joined with the new Asia Infrastructural Investment Bank which was pioneered by China. The two new banks have been set up to offer alternatives to the financial institutions set up under the Bretton Woods system, primarily the IMF. The old banks have long operated under the primary influence of the US and Europe and there is deep sentiment that those banks do not represent the interests of emerging economies very well. The new banks are clearly ambitious and face formidable challenges, but one can only hope that they can shake up the world of international development economics.
Politics and economics are always laggard ideas; the ideas that truly move societies come from the arts. The Enlightenment could never have happened without the Renaissance. There is a young Vietnamese, Nguyen Vu Son, currently studying in Oklahoma who has issued a You Tube video entitled “Fuck Communism.” Needless to say, this video is considered highly subversive in Vietnam and Son has risked a great deal for himself and his family. The video, however, has been viewed many times in Vietnam so apparently there are some who think much like him about the corruption in Vietnamese government.
One of the conditions for the Greek bailout was that Greece put up for sale a number of public assets to private investors. The sale is supposed to raise 50 billion euro, but it is unlikely to be that successful. But the list of assets that are subject to the sale is large, and involve some industries that clearly involve the public interest such as ports, water and sewage facilities, airports, and oil and natural gas companies. The sale of some of these assets will be difficult for many Greeks to accept and will likely cause some resistance to the plan.
Burundi President Pierre Nkurunziza has won a disputed third term even though he was constitutionally prohibited from a third term. The opposition refused to participate in the election, and most outside powers have signaled their unwillingness to work with Nkurunziza. The outcome is likely to produce an unsettled and possibly violent situation in Burundi.
US President Obama cam into office with two ongoing wars: Iraq and Afghanistan. His campaign promises were to end both wars, and, indeed, he has announced the end of “combat” missions in both countries. But he has also continued to extend the US presence in both countries and the US is still bombing in both. In fact, the wars have not ended, and the US is increasingly involved in the conflicts in both Libya and Syria. At the end of his Administration, the US is likely to be involved in four wars. On the other hand, Obama has overseen the opening of Myanmar, the restoration of ties with Cuba, and the Iranian nuclear agreement. Quite a mixed bag.
Myanmar sentenced 152 Chinese nationals to life imprisonment for illegal logging in the northern part of the state. The sentences are especially harsh and suggest that Myanmar authorities are angry about the attention the Bejing government has given to Myanmar opposition leader, Aung San Suu Kyi. The arrests were made in Kachin province which has been the site of rebel activity against the Myanmar government for many years. The sentences suggest that China and Myanmar, once the closest of allies, have drifted very far apart.
Israeli Prime Minister had made it very clear that he regards the nuclear agreement with Iran as an “historic mistake.” There is also considerable evidence that many supporters of Netanyahu are gearing up to oppose the deal in Congress. However, it is a serious mistake to regard Israeli views on the agreement as monolithic. Israel is an incredibly diverse country, and there are many there who regard the agreement as consistent with Israeli national interests.
The US, Japan, and India are planning joint naval exercises in the Indian Ocean, a move that will likely antagonize China. Such exercises are designed to familiarize the militaries of the different countries with weapons capabilities and the compatibilities of communications. India has been reluctant to host such activities in the recent past, but the Chinese have docked their submarines in Sri Lanka and Pakistan, and India apparently believes it needs to demonstrate its alliances to maintain its independence.
In 2009, US President Obama promised to close the military prison at Guantanamo Bay in Cuba. Those plans have never been realized because the US Congress refused to have any of the prisoners sent to US jails and many countries refused to take in their citizens. It appears as if Obama is finally going to honor his promise and close the facility that has been a terrible stain on the honor of the United States.
The Pew Research Center has done a study on the growth of the global middle class in recent years. The study suggests that, while the world has made progress in reducing absolute poverty, the effort to raise living standards remains a painfully slow process. The study finds that:
“In 2011, only 16% of the world’s population was living on $20 or more daily, a little above the U.S. poverty line. By global standards, that constitutes an upper-middle or high-income existence. And most of these people still lived in the economically advanced countries in North America, Europe and the Asia-Pacific region.”
The article has an interactive feature which allows readers to compute their annual incomes relative to the rest of the world. For those of us who reside in the higher income countries, the results give a good indication of how privileged we are.
Anti-immigrant sentiment is spiking in Germany as the country is confronted with a large number of refugees and asylum-seekers. The sentiment has led to the torching of refugee shelters in Germany–as many as 150 shelters have been set on fire in the first six months of 2015. Unfortunately, the flow of refugees is not expected to diminish at all. There is no country in the world that is not experiencing this antipathy toward immigrants, and the trend is politically very dangerous and morally indefensible.
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