US Defense Secretary Ashton Carter blamed Iraqi military forces for the fall of the city of Ramadi. Carter noted that the Iraqi forces were not outnumbered by the forces of the Islamic State, but that they lacked the will to fight. The admission is a striking confession that the current US strategy of simply arming and training Iraqi forces was not working, but he offered no alternative. The city is about 100 kilometers from the capital city of Baghdad. But Shi’ite militias, backed by Iran, are mobilizing to retake the city. Once again, the US is dependent upon its erstwhile enemy to defend its interests. It’s not clear how long the US will continue this willful game of denying reality.
After four months of negotiations, the Greek Finance Minister indicated that there is not enough money to satisfy the IMF when its debt comes due next month. The statement is the most explicit one so far indicating that Greece is likely to experience a credit “event.” A credit event is actually a formal designation of the inability to pay which is made by a completely private organization called the International Swaps and Derivatives Association. The power to declare a credit event is extraordinary and it is made by a committee as described by the ISDA:
The ISDA Credit Derivatives Determinations Committees (DCs) each comprise 10 sell-side and five buy-side voting firms, alongside three consultative firms and central counterparty observer members. Their role is to apply the terms of market-standard credit derivatives contracts to specific cases, and make factual determinations on Credit Events, Successor Reference Entities and other issues, based on information provided to the DCs by credit default swap (CDS) market participants.
Note that there is no representative from any government or international organization that could be held accountable by any transparent mechanism such as an election. The fate of millions of people is determined by a small committee comprised of entities whose names we never know.
An international group of women activists completed a peace march across the Demilitarized Zone separating North and South Korea. The group of 30 wmoen were led by Gloria Steinem, the Irish Nobel Peace Prize-winner Mairead Maguire, and the Liberian activist Leymah Gbowee. They were met by angry protesters from South Korea who were angry that the women had cooperated with the North Korean regime which the protesters regard as an illegitimate regime.
The US conducted overflights over the areas in the South China Sea that China has claimed as its national territory. The Chinese ordered the US planes to leave immediately (eight times!). The fear is that China is trying to enforce a military exclusion zone in what the US and other countries regard as international waters. The risk of an overt confrontation is high, but the costs of allowing a country to unilaterally declare part of the high seas as sovereign territory are also quite high. For example, every eight hours an oil tanker sails those waters to deliver oil to Japan, and the possibility that those deliveries could be jeopardized during a time of crisis is likely something the Japanese would not be willing to tolerate. We will see how the game of chicken progresses.
The Islamic State has claimed responsibility for the bombing of a Shiite mosque in Saudi Arabia. If true, the act represents a direct challenge to Saudi control and will likely cause a firm response. Saudi Arabia has to take some responsibility for the success of the Islamic State since the IS espouses a policy quite similar to the Wahhabism practiced in Saudi Arabia. But the caliphate declared by the IS represents a direct challenge to the monarchy established in Saudi Arabia.
For several years we have worried more about ice melt in the Arctic than in the Antarctic since the ice in Antarctica did not seem to be melting nearly as quickly. But recent evidence suggests that since 2009 the rate of ice melt in Antarctica has increased far more than predicted. Ice melt in Antarctica is a more serious issue for the world as a whole since more of the ice in Antarctica rests on bedrock and would therefore contribute more to a rise in sea levels. Once again, what we didn’t know proves to be especially important.
One of the most interesting undercurrents of contemporary world politics is the growing belief that “Western” values are not universal. These values grew out of the Enlightenment and underpinned the period of European domination of world politics. Whether it be the debate on Asian values, the Chinese government’s explicit rejection of the idea of democracy, Hungary’s President Viktor Orban’s desire to build an illiberal state, or the Islamic State’s repudiation of the separation of church and state, many Enlightenment values are challenged. Jacob Soll has an excellent review of the idea of the Enlightenment that places these challenges in context.
Tzipi Hotovely, Israel’s deputy foreign minister, gave a speech on Thursday in which she asserted that Israel has a right to all of the territory in the Biblical land of Israel. Hotovely does not support the two-state solution and believes that Israel has the right to annex all of Palestine. She used Biblical references to that right leading one diplomat present at the speech to remark that “..it’s the first time anyone has asked us to use verses from the Torah for public diplomacy abroad.” As of now, the speech has yet to be reported in the US media.
The Islamic State took control of the Syrian city of Palmyra, further tightening its grip on central Syria and Iraq. The city is renowned for its ancient Roman ruins, but the takeover is rattling those who believe that the Islamic State is much stronger than has been believed. The advance comes after the takeover of the Iraqi city of Ramadi, which is not far from the capital of Baghdad. It does not appear as if the strategy of using just airpower to contain the Islamic State and President Obama has come under harsh criticism from hawks in the US.
The Anglo-Persian Oil Company was created in 1903. It was a British company that forged a tempestuous relationship with Iran that ultimately led to the Iranian nationalization of it oil resources in 1951. When the oil company was reborn, it became British Petroleum and is now known as BP. The relationship between the British government and BP is long-standing–for a long time, there were always two representatives of the British government on the Board of Directors, and the British government had a veto over all company operations that affected British foreign relations. That formal cozy relationship over time became more “Americanized” as the institutional links between government and oil companies became a matter of personal relationships and unstated assumptions for both government and companies. The legacy of that relationship is quite pronounced in the current operations of BP. The issue is quite delicate when it comes to the public concerns over carbon emissions.
Malaysia and Indonesia have stated that they are willing to offer “temporary” assistance to Rohingya refugees, but that they would not take any more refugees other than the 3,000 already rescued. The move is a partial victory for the refugees who have been sailing around in search of any country to take them in. Thailand has refused to offer even temporary shelter. The rich countries, such as the US, are willing to grant financial assistance, but have not indicated any willingness to offer sanctuary to any of the refugees. The tragedy continues.
Seven years after the onset of the Great Recession, some have begun to ask the question of whether any lessons were learned from the near-collapse of the financial industry. There have been some efforts, most notably in the Dodd-Frank legislation that attempt to regulate the worst behavior of the financial firms that cost the global economy close to $7 trillion in 2008-09. Unfortunately, the answer seems to be no. A report by the University of Notre Dame, commissioned by the law firm Labaton Sucharow “surveyed more than 1,200 people in the financial-services industry—account executives, wealth advisors, financial analysts, investment bankers, operations managers, and portfolio managers—in both the U.S. and the U.K. to look at whether increased regulations, along with calls for a cultural change, have had any demonstrable effects.” According to Bourree Lam:
“So how does the financial-services industry view its own behavior, legally and ethically? Not so great, it turns out. Nearly half of the respondents felt that it was likely that a competitor has engaged in unethical or illegal activity in order to gain an edge. Perhaps more shocking are those who say they’ve witnessed such wrongdoing: 23 percent reported personally observing or having firsthand knowledge of misdeeds. That number jumps to 34 percent when looking only at those earning more than $500,000, suggesting that enhanced status and earnings bring a higher likelihood of witnessing wrongdoing.”
I suspect we should prepare to get ready for the Great Recession, Part 2.
Russia has banned “undesirable” international organizations which are defined as any “foreign or international organisation that presents a threat to the defensive capabilities or security of the state, to the public order, or to the health of the population”. The move is designed to prevent those organizations from having an effect on the upcoming national elections in 2016. It is viewed by many as an attempt to prevent the further infiltration of Western ideas into Russian civil society. The legislation will further the isolation of Russia from international civil society. The move is also troubling because it appears as if Russian society is suffering from willful inattention to serious domestic problems such as the spread of the HIV/AIDS virus throughout the country.
Farmers always have a difficult life, and non-farmers really have a hard time understanding those difficulties. The natural rhythm of agricultural life is to become deeply indebted at the beginning of planting season and then hope for a good harvest to repay those debts. When the harvests are bad, farmers really have no place to turn. In India, the rate of farmer suicides is extraordinarily high and the society as a whole has not come to grips with the problem. Forty-one farmers commit suicide every day in India.
Robert Kaplan has written an interesting essay on the art of war. His historical analysis is well-informed, and his argument is straightforward, but very difficult for great powers to understand fully. The key to the survival of power is to learn how to not fight.
Empires were once the pre-eminent political structures in the world, and there was a wide variety of forms of governance within them. There are supreme difficulties in comparing them, but analysts always try. Balaji Viswanathan gives the argument for ranking the Mongols as the greatest empire ever. It is a highly persuasive case. In fact, it is hard to imagine how the world would have evolved without the unification of Europe and Asia forged the the Khanates.
Speaking of empires, Cossacks in St. Petersburg dedicated a new statue of Russian President Putin. It portrays a bare-chested Putin dressed in the toga of a Roman Emperor. The statue was the brainchild of Andrey Polyakov, the Ataman of the Cossacks in St. Petersburg. Mr. Polyakov has also issued Russian passports to “Alaskan Cossacks” in an effort to reclaim Alaska for Russia. The US purchased Alaska from Russia on March 30, 1867, for 7.2 million U.S. dollars (about two cents per acre). Mr. Putin celebrated by scoring 8 goals in an exhibition hockey game (I wonder how the goalkeeper calculated the benefits of blocking Mr. Putin’s shots).
There was a protest march in Accra, Ghana, against electricity shortages in the country which have devastated the economic growth of the country. Reliable power is one of the most debilitating characteristics of many African economies. Energy infrastructures are expensive and difficult to maintain, but it is virtually impossible to have sustained economic growth if electrical supplies are irregular and sporadic. People in the richer countries take power supplies for granted, but there is a great deal of evidence that even in the rich countries, the energy grid is becoming somewhat fragile.
US Special Operation troops conducted a raid into eastern Syrian and killed a senior Islamic State leader, kidnapped his wife, and rescued a Yazidi woman being held hostage. It is rare for the US to send in ground troops into Syria–it represents a substantial increase in the American commitment to “degrade and destroy” the Islamic State. The US prefers to conduct air operations to minimize the risk of casualties. The raid also signals that the Islamic State is the enemy of both the Assad regime and the US, although the US adamantly denies that it is allied with Assad. The US has long called for Assad to be removed from office.
Protesters are targeting the 400ft long, 355ft tall Royal Dutch Shell oil rig currently in Seattle harbor. It is scheduled to be towed to the Arctic where is will begin to pump oil. The protesters fear the possible environmental damage of pumping oil in the fragile Arctic, as well as the commitment to continue using carbon-based fuels that contribute to global warming. Shell has allocated about $6 billion to exploration in the Arctic and is clearly expecting that there is a lot of oil in the region.
The tragedy of Rohingya refugees is getting worse as several countries are refusing entry to boats filled with the desperate people. Malaysia, Indonesia, and Thailand are turning back the refugees who have no place to go. Generally, the coast guards of these countries give the refugees food and water and send them away. It is quite clear that sentiment against the boat people is quite negative. An op-ed piece in the Malaysian paper, Star Online, makes it very clear that people regard the refugees as a threat. The UN General Secretary, Ban Ki-Moon, has issued an urgent appeal to the surrounding countries to accept more refugees.
The US Congress is apparently rethinking its earlier vote opposing fast-track authority for the Trans-Pacific Partnership (TPP), the trade agreement currently being hammered out by 11 Pacific countries. We actually know very few of the details of the pact as it has been decided thus far since all the discussion have been secret. One of the most troubling details that we do know about concerns protections for investors. These clauses are known as investor state dispute settlement (ISDS) provisions which allow investors to sue governments if policy changes or even court rulings substantially affect the value of their investment. An example of how these tribunals can be used can be found in Argentina and Uruguay where both states passed legislation to reduce smoking and the tobacco companies went to the ISDS and claimed that they should be compensated for the profits lost from these measures. The cases are still pending.
The Global Database of Events, Language, and Tone (GDELT) is an ambitious attempt to map news events all across the globe in real time. The project monitors new events in more than 65 languages and takes in 600,000 to a million news stories every day. It then maps the stories geographically and shows “heat maps” of what is going on in the world. It now has a data base that goes back 30 years and is constantly being refined. I recommend going to the site and looking at the maps–verbal descriptions do not convey the process well.
US Secretary of State John Kerry is going to Beijing to try and head off a military confrontation in the South China Sea. The fact that the Secretary of State himself is going is an index of the seriousness of the matter. As China continues to build up isolated reefs in contested waters, the US is sending naval vessels to ensure freedom of navigation in the sea. The hard-line Chinese newspaper, Global Times, made this statement about US actions:
“But if it ventures to violate the bottom line, the US will make the South China Sea a powder keg. Washington will be too naive to think that China will exercise forbearance and self-restraint in that scenario. It should keep in mind that China is a major power with nuclear weapons, and there is no way that US forces can take reckless actions in the South China Sea. Considering China’s proximity to this area and determination to defend its sovereignty, the US, although equipped with the strongest military forces, will stand no chance of overwhelming China. Besides, the long-term chaos will eventually deprive the US of its patronage to other countries in the region, which will only be victimized by the war.”
We will keep an eye of this.
China has warned the US to respect its territorial waters in the South China Sea. The statement is in response to an American intention to test the freedom of navigation in the disputed waters. China is not the only country building up reefs in the area–Vietnam, Malaysia, and the Philippines are doing the same thing. The possible confrontation over the issue is worrisome: there is precious little room for compromise on territorial matters.
Iran fired warning shots at a Singaporean tanker ship in the Persian Gulf. The ship sought assistance from the United Arab Emirates and there was no escalation of the violence. The incident follows the Iranian seizure of a cargo ship flying the falg of the Marshall Islands–a ship that was subsequently released after the settlement of a commercial dispute between the owner of the cargo ship and Iran. The incidents raise tensions between Iran and its Arab neighbors, and the Obama Administration is attempting to reassure the Arab states through security assurances and the sale of advanced military equipment. Such efforts will not, however, ease the tension. They will simply raise the stakes for both sides. In the meantime, the Congress has passed a bill that gives it the right to review the Iranian nuclear agreement, and possibly prevent the US from lifting sanctions if the Congress does not believe that the agreement is in the US national interest. President Obama has indicated that he will sign the bill. We will see if the law in simply a Trojan horse for mischief.
Chinese President Xi Jinping is hosting Indian Prime Minister Narendra Modi as the two discuss improving Indian-Chinese relations. It was the first time President Xi had invited a foreign leader to his father’s home province of Shaanxi, and analysts are hoping that the invitation is a sign that the two sides might be seriously considering the resolution of a border dispute along the Himalayas. There is great suspicion between the two powers, and it would be difficult to imagine a quick resolution of the tensions. Two great powers coexisting side-by-side are rarely tension-free.
Australian and Japanese scientists have confirmed that an el Niño event will occur in the Pacific this year, and expect it to be a moderate to strong pattern. The pattern is associated with weather extremes throughout the world. Some of these patterns may be useful–typically in such a year California receives above-average rains. But in other areas of the world, droughts and very high temperatures occur. We have not seen a strong el Niño since 1997.
The Vatican has recognized the state of Palestine. The treaty will solidify the status of Catholic Churches in territory controlled by the Palestinian Authority, and it further legitimizes the legal status of Palestine. Israel indicated that it was disappointed with the move and that it would not further the peace process. There are about 136 states that currently recognize Palestine as a state.
The situation in Burundi continues to be unstable as President Nkurunziza refuses to back down from his threat to run for a third term. The crisis in Burundi, however, is unlikely to remain confined to its borders. Rwandan President Paul Kagame has made noises to run for a prohibited third term, as have the Presidents of Congo-Brazzaville and the Democratic Republic of Congo. In addition, the ethnic rivalries between the Hutu and the Tutsi spill over into all these countries.
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