The fallout from the publication of the Panama Papers has begun, but it will be a long time before we recognize the full dimensions of the scandal. Many of the memos reproduced do not use names, but only references to some people that are indirect and have to be broken down and traced. Prime Minister Sigmundur Gunnlaugsson has heard calls for his resignation because the memos indicate that he hid millions from discovery in an offshore bank. So far, he has refused to resign: his defense is that avoiding taxes is perfectly legal. Other politicians so far identified in Argentinian President Mauricio Macri, Pakistani Prime Minister Nawaz Sharif, and Russian President Vladimir Putin. This event is a real tipping point. Using offshore banks to avoid taxes is perfectly legal because the laws have been written to make them legal. But these legal loopholes are not available to ordinary people because they require very large investments which most people cannot make. Even if the investments are legal, the massive shift of taxation from the very rich to those who those with more limited means is a morally reprehensible act. Will the governments act to change the laws?
Under the deal forged by German Chancellor Merkel, the European Union, and Turkey, the first refugees in Greece were sent back to Turkey. The deal is that for every refugee admitted to Greece, one would be sent back to Turkey. In return, Turkey gets €6 billion and visa-free travel in the EU for its citizens. The refugee camps in Greece are miserable and tense over the agreement, and most human rights activists believe that the deal violates international law. But the EU believes that it can longer handle the political ramifications of a continued influx of refugees and believes that this deal is the best that can be done.
The US, Australia, and the Philippines have begun an 11-day military exercise in the South China Sea. Apparently, the exercise involves the retaking of a sea-based oil rig from hostile forces, an exercise that could hardly be missed by the Chinese. The challenge to the Chinese claims of maritime sovereignty in the region continues; we will see what the Chinese response to this event will be.
There has been a massive leak of over 11 million documents from a law firm in Panama, Mossack Fonseca, one of the world’s largest providers of offshore banking services. Offshore banking is the primary method of disguising money from tax authorities, but we don’t have much hard information about how much wealth is involved. But one has to be very rich to afford such services, so the method is usually used by very rich individuals or corporations. The leak of these documents, known as the Panama Papers in the media, is the first solid evidence we have had about the process. The papers indicate that very prominent politicians–in Iceland, Russia, China, and other countries–have used the method to cover up massive corruption. There appears to be no one we can trust.
We have a very difficult time assessing the well-being of people who live outside of the economic mainstream. We can gather incredible amounts of data on people who interact frequently in the market place: we know how much money they have, what preferences they have, how much they save, and so forth. But the poor are significantly more strategic in how they interact with the economy: they tend to live in places that don’t have a lot of access to electricity, computers, and all the other devices that automatically generate information. This difficulty, however, is creating tremendous opportunities for those who are gifted in the analysis of “big” data. By using clever metrics on unusual interactions gathered by satellites and other ubiquitous devices, we are getting a better grip on those who are forced to live in the shadows.
The US is contemplating a dramatic increase in the number of ground troops it currently maintains in Syria. Even though US President Obama has repeatedly said he would not send combat troops to Syria, the US is finding it necessary to develop stronger ties with Arab forces in Syria. Its main ally in Syria, the Kurds, is usually mistrusted by Arab populations, and the US believes that only with a stronger Arab forces can Daesh (the Islamic State) be defeated. The stealth build-up of combat troops is worrisome.
Heavy fighting has broken out in the region of Nagorno-Karabakh, an enclave under control of Christian Armenians surrounded by mostly Muslim Azeris in the country of Azerbaijan. The relations between Armeniz and Azerbaijan over the status of Nagorno-Karabakh is long-standing, but became quite volatile after the disintegration of the former Soviet Union of which both countries were a part. A truce was arranged in 1994, but the issue has never been settled, and it is hard to imagine how it could be resolved given the way the borders are currently drawn. At this stage of the violence, it is hard to determine exactly what led to the outbreak, but more information will become available over time.
Wikileaks has published the transcript of a conversation between two IMF officials worrying about the possibility of a Greek sovereign debt default coinciding with the British referendum on exiting the European Union. The IMF has a difficult time justifying giving credit relief to Greece because its official policy is not to lend to countries if they have “unsustainable” debts. So the IMF believes that the European Union has to come up with the money to give to Greece to avoid a debt crisis in June when its debt payments are due. But Germany is very reluctant to lend any more money to Greece because many German citizens do not wish to bail out the Greeks. The transcript quotes Poul Thomsen, the head of the IMF’s European Department as saying:
“What is going to bring it all to a decision point? In the past there has been only one time when the decision has been made and then that was when [the Greeks] were about to run out of money seriously and to default. […] And possibly this is what is going to happen again. In that case, it drags on until July, and clearly the Europeans are not going to have any discussions for a month before the Brexits…”
The idea that the IMF would threaten to pull out of the negotiations as a way of levering Germany to offer Greece additional economic help is hardly diplomatic and places the IMF in a very uncomfortable political role. Needless to say, the Greeks are angry that their possible debt default and all its associated turmoil is the pawn in this power struggle.
These last few months have seen an outpouring of new studies on ice melt caused by climate change. In short, much of the new evidence suggests that rising sea levels are going to be much more extreme than we have assumed in the past, largely becuase of significant underestimates of ice melts on land masses such as Greenland and Antarctica (as opposed to sea ice which, even if it does melt won’t raise sea levels by much. Climate Central has published some interactive maps on how sea rises of 2 feet compare with sea rises of 6 feet on some major American cities. If you are familiar with either Boston or Miami, these maps will look familiar.
Boston
http://www.climatecentral.org/wgts/2016-slr-sliders/upton-boston/index.html?utm_source=ext&utm_medium=embed&utm_campaign=ss-riskzone-sliders-upton
Miami
http://www.climatecentral.org/wgts/2016-slr-sliders/upton-miami/index.html?utm_source=ext&utm_medium=embed&utm_campaign=ss-riskzone-sliders-upton
Turkish President Erdogan is in Washington, DC and it has become clear that US-Turkish relations are not very good. Turkey and Washington disagree on the priorities of enemies and friends. Turkey has decided that Syrian President Assad and the Kurds are less serious enemies than Daesh (the Islamic State). The US regards the Kurds as allies and Assad as a less serious enemy and Daesh as the most serious enemy. Washington also disagrees with Erdogan’s stance toward human rights and its position toward the treatment of Syrian refugees. It is unlikely that the TUrkish-American rift can be healed as long as either Obama or Erdogan remain in office.
The US is beefing up its forces in NATO to signal an increased capability to respond to Russian military moves in Eastern Europe. The US is going to position three combat brigades in Europe along the Russian border, a force of about 4,200 soldiers in addition to the already stationed 62,000 American soldiers in Europe. The move caps off several earlier ones designed to bolster the American presence in Europe in response to Russian moves in Ukraine that are considered quite provocative. The earlier moves were matched by Russia is a clear demonstration of the dynamics of the Security Dilemma. We will see if these additional moves trigger off additional Russian moves.
The fourth Nuclear Security Summit is currently going on in Washington, DC. The conference is dedicated toward enhancing the security of both military and civilian nuclear processes in order to prevent proliferation of nuclear weapons. This year’s conference is marred by the absence of Russia which has refused to participate because of differences over its behavior in Ukraine. It is unlikely that any major decisions will be made at this year’s summit, but ongoing discussions about security of nuclear materials is absolutely essential to future security.
In many of the previous models of climate change, the issue of ice melt in Antarctica has not been a major concern. Ice melting at the poles has not been well-understood, but two UMass researchers have developed a model of ice melt in Antarctica which more closely mathces the historical records of previous periods of global warming. The new model indicates that ice melt is proceeding in a faster manner than has been so far measured, and that the previous models have underestimated the level of sea level rise by about half because of that error. The new research indicates that many coastal cities could be in serious trouble by the end of this century.
Hungarian President Viktor Orban has used inflammatory rhetoric to justify his government’s refusal to go along with the European Union’s refugee proposals. Orban was campaigning in favor of a referendum to be held in Hungary this coming fall that asks the following question: “Do you want the EU to prescribe the mandatory relocation of non-Hungarian citizens to Hungary without the approval of the Hungarian parliament?” Orban claimed that there were 900 “no-go” zones in European cities, where the zones are defined as beyond the control of the central government because of the influx of refugees. The whole notion of “no-go” zones is bogus: there are, and have always been, areas of every city which are more or less dangerous than others. That degree of danger is not remotely related to the number of refugees.
According to a new Reuters/IPSOS Poll, about 63% of the American population believes that torture is “often or sometimes” justified. Given the reaction to recent events, this number is not surprising, but it still remains depressing. People need to think more carefully about what constitutes torture and whether it is at all effective in obtaining information. Most evidence suggests that it is not. But what is unquestionable is that torture degrades the torturer, and destroys the integrity of the country that sanctions it.
Analysts have a difficult time understanding the motivations of those who resort to terror, and an even more difficult time trying to determine the dynamics of a group that espouses the use of terror. S. Alexander Haslam and Stephen D. Reicher have conducted some interesting research on the dynamics of a terrorist organization using some of the insights provided by the Milgram and Zimbardo experiments. Their analysis is provocative and highly enlightening.
The newspaper that is the authoritative voice of the government of North Korea, Rodong Sinmun. ran an editorial that warned the North Korean people that “We may have to go on an arduous march, a time when we will again have to eat the roots of grass.” The government appears to be anticipating very difficult economic times as the new sanctions against the government cut off key sources of export money to the government. The phrasing of the editorial refers to earlier hard times under Kim’s grandfather and father. The people of North Korea deserve far better than what they have received.
The amount of the Arctic covered by sea ice last winter was the lowest ever recorded (to be fair, records only date back 37 years). The average sea ice coverage from 1981-2010 was about 6 million square miles; last winter it was about 5.6 million square miles. While it is clear that the Arctic is changing, what is not clear is what effect those changes might have on the planet as a whole. There are genuine uncertainties about what a warmer Arctic might mean for the rest of us, although it is a disaster for those who live in the Arctic year round, like polar bears.
The Brazilian Democratic Movement Party (PMDB) has pulled out of the ruling coalition in the Brazilian Congress. The move makes it more likely that President Dilma Rousseff might be impeached as her Congressional support weakens. Although she has yet to be directly linked to the corruption that seems to be pervasive within the Brazilian government, it seems clear that she is suffering from the bad behavior of her colleagues. The PMDB departure leaves the Brazilian government in disarray, not a good situation for the world’s seventh largest economy.
Political violence in Burundi has continued unabated since the election last July of President Nkurunziza to an unconstitutional third term. Despite the intervention of the African Union and the United Nations, as well as many non-governmental organizations, the government continues to hunt down those who oppose Nkurunziza. Civil strife is, unfortunately, not a stranger to Burundi and there are legitimate fears that another civil war could be brewing. This time, however, the attention of the world is focused on refugees from other areas of the world, and the situation in Burundi has not gotten much attention at all.
The state of Maharashtra in India has decided to enforce a total ban on the sale of cattle for consumption. Cows are sacred in the Hindu religion but bans on their slaughter were rarely enforced until the election of Narendra Modi of the Bharatiya Janata Party (BJP). The BJP emphasizes the Hindu national character of India and has elevated Hindu tradition into law. The ban on slaughtering cows has had a serious effect on the livelihoods of many in India, the world’s largest exporter of beef. The ban is also profoundly discriminatory against non-Hindus in India.
Russia plans to build a naval base on one of the Kurile Islands. Those islands were “awarded” to the Soviet Union as part of the settlement of World War II but Japan has never officially recognized Russian sovereignty over the islands. The dispute has prevented the two countries from ever signing a formal peace treaty to end World War II. The Russian move comes at a time when Japan is moving to expand its military capabilities beyond the purely defensive posture imposed on it by the terms of the American-written Constitution.
The ability of terrorist attacks to manipulate public opinion is undeniable. But the threat of terrorism has an effect which is disproportionate to the likelihood of it occurring; there are many other threats which are far more likely and deadly that the public tends to discount. Jeremy Shapiro has an interesting article on how terrorism is able to achieve its ends.
Police broke up a demonstration comprised of right-wing agitators at the Place de la Bourse in Brussels. There have been ongoing solidarity demonstrations at that location to show sympathy for those killed and injured in the recent terror attacks. But the right-wing agitators were demonstrating against Muslims and immigrants, and police had to break up the demonstrations before violence got out of control The agitators made no secret of their contempt for liberal society.
Many Mexicans celebrate Easter by burning effigies of evil people on the Saturday before Easter Sunday. This year, apparently, effigies of Donald Trump were in high demand to be burned. Trump has not endeared himself to the Mexican population with his campaign rhetoric, and the Mexicans were delighted at the opportunity to return the scorn. US Secretary of State expressed his point of view that the current Republican primary elections were an “embarrassment” to the United States.
A Pakistani Taliban faction, Jamaat-ul-Ahrar, claimed responsibility for a bomb blast that targeted Christians in Pakistan. The bombing occurred in a park outside the city of Lahore and killed 65 people and wounded over 300. The Pakistani government, led by Prime Minister Nawaz Sharif, has been less than effective in addressing the power of extremist groups in Pakistan and the attack in Lahore is a direct challenge to his government.
The most recent edition of The Economist focuses on an issue that has received little attention in the current debate about income inequality in the US: the lack of competition among firms in the US. According to the article:
“But one problem with American capitalism has been overlooked: a corrosive lack of competition. The naughty secret of American firms is that life at home is much easier: their returns on equity are 40% higher in the United States than they are abroad. Aggregate domestic profits are at near-record levels relative to GDP. America is meant to be a temple of free enterprise. It isn’t.”
The facts do not correlate with the rhetoric about the “free” market in the US. Power in being increasingly concentrated in a smaller number of corporations. Again, from the article:
” Our analysis of census data suggests that two-thirds of the economy’s 900-odd industries have become more concentrated since 1997. A tenth of the economy is at the mercy of a handful of firms—from dog food and batteries to airlines, telecoms and credit cards.”
Perhaps it is time to dust-off the anti-trust laws.
Turkish journalists who published an article accusing the Turkish government of secretly funneling arms to the Syrian government are being prosecuted for violating national security. The trial is being conducted behind closed doors, and many are outraged at the violations of human rights in Turkey. President Erdogan chastised the foreign envoys sitting outside the courtroom, telling them that “…this is not your country, this is Turkey”.
China has detained over 20 people who signed a letter asking that Chinese President Xi Jinping resign from his leadership position. The letter was posted on the blogsite Wujie News. The letter has been taken down but a cached version can be accessed here (the original is in Chinese but Google can translate it for non-Chinese speaking people). The letter is a fairly broad-based critique of Xi’s leadership, but it seems as if the biggest concern is the way Xi has concentrated power in his own hands.
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