Venezuelan President Maduro has imposed a 60-day state of emergency which will allow him to seize property and to enforce draconian laws against protesters. Most observers expect that the state of emergency will last much longer than 60 days and most likely will extend throughout 2017. Venezuela has been experiencing electrical blackouts and economic activity in the country has plummeted while the inflation rate is exploding. The nationalization of property will allow the government to continue production of necessary foodstuffs and other household goods, as long as the government can find the people necessary to run the factories. Venezuela is clearly approaching a breakdown.
Last Thursday, NATO declared that its anti-missile base in Deveselu, Romania was operational. Anti-missile technology has a mixed record, but countries ignore their potential at their peril. In this particular case, Russia is very worried that its nuclear arsenal could be made obsolete if NATO’s anti-missile technology actually works (NATO is also working on a similar base in Poland). Russia therefore views the system as a highly provocative act, while NATO claims that it is purely defensive: a classic case of the Security dilemma.
The top 25 hedge fund managers in the world made collectively more than $13 billion, more than the GDPs of many countries in the world. The incredible income was earned despite the fact that many hedge funds did not have decent returns to their investors. Much of this money is contributed to political campaigns for candidates who campaign to lower taxes on the rich.
The economic situation in Venezuela continues to deteriorate. There are reports of widespread looting as many essential supplies and food have become increasingly unavailable. The government of President Maduro seems to be incapable of responding effectively to the crisis and Venezuelan society seems close to collapse. The country is under very tight currency and price controls that make it unlikely that food and supplies can be produced or imported profitably.
The Director of the International monetary Fund, Christine Legarde, has made her views on the possible British exit (“Brexit”) from the European Union quite clear. The outcomes for her range from “pretty bad to very, very bad.” The complexity of a British exit–undoing years and years of agreements upon which many corporations and governments have made long-term decisions–would likely freeze economic activity for an extended period of time. Investors will likely be unwilling to make any commitments until such uncertainties are resolved.
US, Canadian and European representatives left the inauguration ceremonies of Ugandan President Yoweri Museveni. Museveni was elected to his fifth term in office, but the abrupt departure of the Western officials was due to Museveni’s mocking criticism of the International Criminal Court (ICC) as well as by the presence of Sudanese President Omar al-Bashir who is under indictment by the ICC. The US itself is not a member of the ICC and has not signed the Rome Statute that created it.
The Pew Research Center has released its latest findings which indicate that the American middle class is shrinking in many of the metropolitan areas of the US. The report finds that “[f]rom 2000 to 2014 the share of adults living in middle-income households fell in 203 of the 229 U.S. metropolitan areas” and “The shrinking of the middle class at the national level, to the point where it may no longer be the economic majority in the U.S.” This economic data goes a long way to explain the popularity of Donald Trump and Bernie Sanders in the current presidential cycle. In the Financial Times, Roger Altman writes that:
“This economic pressure is not temporary either, because the trends undermining incomes — technology and globalisation — are in their early stages and still accelerating. All the talk from Mr Trump and Mr Sanders about building border walls and killing trade agreements misses the point. Such steps would have no discernible impact on these powerful trends. What is needed are bolder income support policies to cushion workers against them.
How weak are incomes? Today’s real median household income is $53,600, down nearly 7.5 per cent from the peak seen 20 years ago. And real median wages per hour have fallen 4 per cent since the financial crisis.”
The Treaty of Sèvres (10 August 1920) was an attempt by the allied powers to divide up the Ottoman Empire after World War I. Few talk about the treaty today because it was superseded when Turkey repudiated the treaty and declared its independence which was ratified in the Treaty of Lausanne (1923). But other parts of the Treaty were maintained in other treaties such as the Sykes-Picot Treaty. The significance of the treaty is that it represents a colonial failure as Britain and France tried to redraw the map, only to fail because of the opposition of the Turks and the Kurds. Interestingly, the Kurds were granted nominal independence in the Treaty of Sèvres but they rejected their own “state” because it was under British control.
The Brazilian Senate has decided to move forward in the impeachment process of President Dilma Rousseff. Impeachment is a singular process: it is not necessarily a legal trial since there really are no set procedures for the process (no “due” process); it is not supposed to be a political trial since simple political disagreement is not grounds for impeachment (otherwise, there would be no need for “votes” or “elections”). It is historically a messy process and that is precisely what Brazil is facing. Such degree of certainty augurs ill for the Brazilian economy and the Olympics.
The US guided missile destroyer the USS William P. Lawrence sailed within 12 nautical miles of the Fiery Cross Reef, a built-up island claimed by China. In response, China scrambled fighter jets and three Chinese warships shadowed the US vessel. US President Obama is scheduled to visit Vietnam soon, a country that also claims the area around the Fiery Cross Reef. The dispute between China, which claims the South China Sea as its national territory, and virtually every other state on the planet, which believe that the area should be demarcated according to the UN Conference on the Law of the Seas, continues. China is clearly not backing down from its claim.
The Kew Botanic Gardens in Great Britain has issued its annual report on The State of the World’s Plants. Its conclusions are stark: one in 5 plant species is in danger of extinction. The report indicates that”there are currently 390,900 plant species known to science, not including algae or moss” and that human activity is the greatest threat to the survival of many of these species. Given the dependence of the human species on plants for food, medicine, and other uses, the loss of 20% of the world’s plants could be devastating. On another front, the US Department of Agriculture reported today that more than a quarter of the bee colonies in the US were lost in the winter of 2015-16. The loss of the pollinating bees could be another threat to the food chain.
The US and 28 other countries have signed on to the “Kigali Principles” under the auspices of the UN. The Kigali Principles give UN peacekeeping forces the right to use armed force to protect civilians even without formal authorization from the UN or the country from which the peacekeepers hail. The principles help the UN avoid the humiliation of having peacekeeping troops in a conflict region that cannot protect civilians because they are not authorized to do so. The UN endured that humiliation in the conflicts in Bosnia in 1992-94 and in Rwanda in 1994 because members of the UN Security Council refused to authorize the use of force by the peacekeepers.
Later this month, US President Obama is going to be the first sitting President to visit Hiroshima, the Japanese city that was destroyed by an atomic bomb at the end of World War II. At the time, few Americans, and, for that matter, relatively few people in the world, had strong negative feelings about the bombing. Both World War I and II had unleashed horrific violence and there were bombings during World War II that actually killed more people than were lost in Hiroshima. But over time, attitudes toward the bombing have changed. It is doubtful that Obama will apologize for the bombing, but it is clear that the weapons can never be used again.
Rodrigo Duterte was elected President of the Philippines, marking yet another right-wing populist leader in the world. Duterte had been the mayor of the city of Davao in the southern Philippines where he earned the nickname of the “punisher” for his vigilante-style approach to governance. At the same time, however, the Philippines elected its first transgender member of Congress, Geraldine Roman.
Ed Hawkins of the University of Reading in Great Britain has created a stunning animation showing how global temperatures from 1850-2016 have spiraled out of control. The graphic is compelling and dramatic evidence of how quickly things can change.
The political situation in Brazil became murky today as the acting speaker of the lower house of Congress annulled the impeachment of President Dilma Rousseff because of procedural irregularities. The Senate had already approved the impeachment bill and had been moving toward a trial of President Rousseff. It was unclear whether the Senate would return the impeachment bill to the lower house or what the possible steps forward would be. Investors were spooked by the move as political uncertainty is a certain enemy of financial stability.
Kenya has announced that it intends to close all refugee camps in the country in “the shortest time possible.” There are about 600,000 refugees, mostly from Somalia and South Sudan, in Kenya and virtually all of them fled the widespread violence in their countries. If the refugees are force to go back to their former countries, they almost certainly will experience retribution. The international community, both governmental and non-governmental, have protested the decision, but Kenya believes that the refugee camps have become locations from which those opposed to the Kenyan government can launch attacks.
The International Consortium of Investigative Journalists has released a searchable database of almost 320,000 offshore companies and the names of people associated with those companies. There are many legitimate uses of an offshore company and it is a serious mistake to assume that an offshore company is automatically involved in illegitimate activities. But the secrecy shrouding these companies makes it very difficult to separate good from bad activities. Secrecy is a way to launder drug money, sex trafficking money, arms deals, and other nefarious activities. Secrecy also enables people to avoid paying taxes on their wealth. It is difficult to imagine that the beneficial uses of offshore companies outweighs the detrimental uses. The estimates of how much money is hidden away in these companies varies widely: low estimates are about $7 trillion; high estimates are about $42 trillion.
Another human rights activist, Khurram Zaki, has been assassinated in Karachi, Pakistan. Zaki was a prominent blogger who maintained a prominent Facebook site, Let Us Build Pakistan. He had argued against religious extremism and promoted a religiously liberal society. The Hakimullah faction, named after Hakimullah Mehsud who was killed by an American drone strike in 2013, of the Pakistan Taliban took responsibility for the murder.
The rise of populist politics in the US and Europe is one of the dangerous consequences of the Great Recession that began in 2008. The argument, to which I subscribe, is that globalization has economically and politically disenfranchised workers by lowering wages, and that the populist anger is directed toward the elites who have profited from globalization. The evidence supporting this argument, however, is mixed, and Daniel Gros notes the discrepancy in Europe between more- and less-educated citizens in Europe, and how some of the best performing economies in Europe are witnessing the strongest populist response.
Greece has passed the tax and pension reforms demanded by the European Central Bank, the European Union, and the International Monetary Fund as preconditions for additional loans to help the country repay its international debts. The reforms will exact additional pain on Greek citizens as the austerity measures reduce the spendable incomes of most of them. Protests broke out in Greece prior to the Parliamentary vote and one should expect that the protests will only deepen.
If one needs fodder for nightmares, one need look no further than the report issued by the Global Challenges Foundation, “Global Catastrophic Risks, 2016”. The report looks at the probabilities of events such as catastrophic climate change, nuclear war, natural pandemics, supervolcanoes, and every other way we define catastrophe. The report outlines the steps that need to be taken by the global community to be prepared to react to such events–good advice, but unlikely to be heeded.
The US is planning a massive military drill, the International Mine Countermeasures Exercise, in the Arabian Gulf (the Iranians insist that that body of water is called the Persian Gulf), the Sea of Oman, the Gulf of Aden, and the Red Sea. The US 5th Fleet is involved as are over thirty countries, and the purpose is to assure safe passage through maritime choke points–over thirty percent of the world’s oil sails through the Strait of Hormoz. Iran, however, believes that the US is actually conducting activities that are hostile to the regime and has threatened to close off the Straits in retaliation. At its narrowest point, the Straits have a width of only 54 km.
Austria has indicated that it wishes to impose border controls at the Brenner Pass, a route that many refugees use to move from Italy to Austria. There were large protests against the move on the Italian side as people indicated that they do not wish to see the open passage between countries in the Schengen Plan. Italian police tried to control the protest, but Austrian police did not intervene.
Brenner Pass
Drought is affecting large areas of the planet. Zimbabwe is suffering so much that it is thinking about selling some of its wild animal stock to raise money. Cambodia is witnessing the deaths of many of its farm and wild animals due to lack of water. Canada is facing a catastrophic fire as large forested areas of Alberta and Saskatchewan have completely dried up. One can never say that any particular event is “caused” by climate change, but the confluence of these events provides a strong case.
Several countries in the south of the European Union have labored under austerity programs imposed by the European Central Bank, the EU, and the IMF. These programs are designed to make the ailing economies more competitive, and the incentive for these countries to accept these cutbacks to human services is the prospect of receiving additional loans to service their sovereign debt. A new study, however, indicates that virtually all the bail-out money goes to private banks which hold the debt: only 5% of the bail-out money is used to stimulate the economy. The rest goes out of the country to large banks that hold the sovereign debt.
Sadiq Khan has been elected the mayor of London, becoming the first Muslim to hold that high office, bucking the anti-Muslim sentiment that seems to be growing in Europe. Khan is the son of immigrants to Great Britain and campaigned on a platform of police reform, opposition to a British exit from the European Union, and on a strong environmental effort to make London a “green” city. London is one of the most ethnically and religiously diverse cities in Europe, and this election is testimony to the growing power of the Labour Party after years of Tory rule.
Sadiq Khan
The Guardian has published a video of a firefight between Daesh (the Islamic State) and American and Kurdish forces in which an American SEAL was killed. US President Obama has steadily increased the number of US combat troops in Syria and Iraq but has promised that they only serve in an advisory capacity. No one had any illusions that an “advisory” role excluded combat, but the video shows that US troops are fully engaged in combat roles.
In response to NATO’s moves in placing rotating military forces in Poland and the Baltic States, Russia has announced the formation of three new military divisions for its western and southern military districts. It was unclear whether the new Russian forces would also be “rotating”. The provision is necessary since Russia and NATO agreed in the 1990s not to increase their permanent forces in hopes of diminishing the threat of war. But ever since the controversy over Ukraine there has been a steady escalation of forces and provocative actions by both sides.
Russian Military Districts
General Sisi, the leader of Egypt, has stated that “Western” human rights do not apply universally and are inappropriate in judging civic society in Egypt. The General made the comments to a US Congressional delegation and it will be interesting to see how the comment will be conveyed to the American people. Sisi has been under great pressure for placing journalists under controls by the Egyptian state and he shows little responsiveness to outside influence to alter course.
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