Another inequality gap in the world is emerging: broadband usage. If you use a smartphone, you should count yourself among the world’s elite. The top 10% of broadband users consume 90% of the world’s bandwidth. Obviously, this bottleneck will only get worse in the future. So talk fast now.
The European economic situation does not appear to be moving in any direction. Italian bonds yields remain high, Hungary’s debt was declared junk by Fitch, who now joins S&P and Moody’s in that assessment, and economic activity appears to be weakening. And yet the official mantra of European governments remains “austerity,” a policy that will only deepen the economic weakness in the short run. It is truly mind-boggling how ill-advised that policy is under these circumstances.
The EU has announced that it supports “in principle” an embargo on Iranian oil exports. A final decision on an embargo won’t be made until the end of January and it appears that some exceptions to the embargo will be allowed. The ball now goes to the Iranian court–we’ll see how they respond to this set of sanctions. The Eu clearly wants to muddy the waters about the embargo in hopes that there won’t be a decisive “flash point” to set off the Iranians. Perhaps the Iranians will make that interpretation in order to avoid a confrontation. If a confrontation does occur, the price of oil will go up quite dramatically for at least a short period of time. It doesn’t help that the US and Israeli militaries are planning a major joint exercise this spring–the largest in the history of the US-Israeli alliance.
The Obama Administration has announced plans for a new military strategy that seems to downplay the US military role in Europe and emphasizes the Pacific instead. President Obama took the unusual step of announcing the new strategy from a briefing room in the Pentagon–a move that decidedly stamps his name on the new strategy. It is a shift away from the Army/Marine focus of the wars in Afghanistan and Iraq to a more Air/Naval approach. The new strategy not only reflects a change in the assessment of threat, but also a change in the budget realities facing the US.
Charles Grant has an extended essay on the problems facing Europe in the most recent issue of Foreign Policy. It is a very sobering read, but is right on the mark.
The Obama Administration tends to be very low-key in the conduct of its foreign policy. The apparent decision to engage the Muslim Brotherhood in Egypt is an example of this attribute. Needless to say, the decision is bound to raise a great deal of controversy, but it is unquestionably the right thing to do. It is far better to try to come to an accommodation, particularly when the situation is so uncertain. At the very worst, both sides will at least understand the basis of any possible disagreement. At best, perceived problems may not in fact exist.
The erosion of the middle class in the United States and the world is a potentially very destabilizing development. This essay in the Washington Post outlines the reasons why a middle class is so central to the preservation of a liberal order.
The movement to expand the power of the state has picked up speed recently. The US has passed new security laws which allows for the indefinite detention of American citizens. Even though President Obama said he would not invoke those powers, we don’t rely on good will for the protection of rights–only laws are sufficient to prevent abuse. And Hungary has changed its constitution to centralize greater power to the state. Israel is considering legislation to reduce the autonomy of its Supreme Court. That this movement is picking up speed is troubling. That there seems to be little organized resistance to this movement is even more troubling.
Additional troubles emerge in Nigeria as protests against fuel price increases spread. Nigeria is one of the world’s largest producers of petroleum, but because it lacks refinery capabilities, it is forced to import refined products such as gasoline (the same is true for Iran). The fuel price increases are spreading all across the world as fears of a conflict in the Persian Gulf continue to fester. It is quite odd to see price increases in energy when all the economic data point to an economic slowdown–hardly a usual scenario.
The drumbeat on Iran is getting a little faster and louder. The key variable in this calculation is actually the timing of the US Presidential election. A classic example of how domestic politics can determine foreign policy–one of the reasons why realists hate public opinion.
An interesting development in American trade policy: for the first time since 1949, the US top export to the rest of the world is refined petroleum products. Usually, the top export is aircraft. But this development highlights the increased demand for petroleum in the world. So the US imports petroleum, refines it, and then sells it abroad. Next time you buy gasoline, think about what it would have cost if all refined products were restricted for domestic use (a lot less).
Climate Change is one of the most difficult issues to address in world politics. The degree of cooperation necessary to avoid the worst scenarios is virtually unimaginable within the current political framework. And the cooperation necessary has to happen long before the worst effects are realized. The most recent data is particularly discouraging.
New U.S. daily high temperature records exceeded daily cold records in December by a ratio of 1.8 to 1, a margin of 80%. The overwhelming excess of heat records continued into New Year’s Day, when the 116 high maximum records set or tied absolutely crushed the one lonely low minimum record…. The annual value [of […]/p
via Mother Nature is Just Getting Warmed Up: December Heat Records Exceed Cold By 80%, Annual Ratio Hits 2.8-to-1.
Iran has tested a new missile which it claims has stealth characteristics. If true, then the test signals a dramatic shift in Iran’s ability to control the Strait of Hormuz. Additionally, Iran announced that it has successfully fabricated a nuclear fuel rod, a step that isn’t really a step in the direction of a nuclear warhead, but one that demonstrates increasing expertise in nuclear technology. Thus far, there hasn’t been an independent assessment of these claims. Needless to say, however, the claims have heightened tensions in the region.
South Korean has offered a tentative olive branch to North Korea, hoping that tensions on the peninsula do not continue to rise. Kim Jong-eun has been named the Supreme Military Commander, so it appears as if his position in the North is stable as of now. Once again, the situation remains fluid, so nothing is yet certain.
The Christian Science Monitor has a nice summary of what to look for in the Middle East for the coming year. As with all predictions, one shouldn’t take them too seriously. But it is a nice list of things to watch out for as the year unfolds.
It was a bad year for the world’s stock markets. According to the Financial Times today, global stock market capitalisation dropped 12.1 per cent to $45.7 trillion. Asian stock markets were hit quite hard, with “Japan’s Nikkei index losing 17.3 per cent this year, Hong Kong’s Hang Seng index 20 per cent, and the Shanghai Composite 22 per cent.” Losses in stock markets are not unusual, and most investors accept them as a matter of course. But these losses have to be made up somehow, or productive investments will suffer. What is unusual about these losses is that there aren’t many markets that offer any promise of long-run profitability so investments will likely stagnate. If that happens, then a return to robust economic growth any time soon is highly unlikely. The best returns for the were in US Treasuries–a good thing for the US government.
The Obama Administration has waged an aggressive war against those it regards as terrorists using drone strikes. We don’t know very much about the drones or how they are used, but many are beginning to question how drone warfare is changing American foreign policy. Joshua Foust asks some very important questions about drones in an article in The Atlantic.
There has been a continuing protest in the village of Wukan in China. The protest is unusual in that there has been a vigorous internet discussion of the issues, a somewhat counterintuitive event in China. Here’s an interesting essay on why the Chinese government has been so willing to allow open discussions of the protest. The essay suggests that open discussions are the way that the government gets “real” information about what is going on in the country. Obviously, there are limits to this openness.
Egypt’s military cracked down on non-governmental pro-democracy groups today. The move is puzzling since the military must have known that the international reaction to such a move would be profoundly negative, and that the action would dishearten the liberal sectors of Egyptian society. It appears as if the move is designed to protect the position of the military in any new government.
China’s rise to world power has been relatively smooth, compared to similar historical power changes. But 2011 was a somewhat contentious year, as many of China’s neighbors began to bristle at some of China’s activities. Such difficulties are not unusual, and one should not blow them out of perspective. There is an added complexity since many of China’s neighbors are US allies and look to it as a counterweight to Chinese power. The US must navigate these waters carefully so that China is not persuaded that the Americans are boxing it in.
A great article by Paul Wood of the BBC on the protests in Syria. It is both insightful and quite revealing about what is going on in that country.
Through MEMRI, a foreign language translation service, we have access to an Iranian website that outlines how Iran will close the Strait of Hormuz. It is quite detailed but probably overestimates the effectiveness of Iran’s weaponry (all military plans share this very common defect). It seems fairly clear that Iran could cause serious problems to the oil tankers passing through the Strait–it need not be 100% effective to make insurance rates for those tankers to become prohibitively expensive. The Washington Post had an article today, downplaying the likelihood of any blockage of the Strait. If you read the article carefully, however, there is nothing that substantiates the headline.
The Italians were able to seel two-year bonds at greatly reduced yields today which was a very good sign. The euro, however, suffered a major crisis of confidence in the day.
It’s not immediately clear what really happened, but these bolts out of the blue are worrisome precisely because they don’t seem to have a reason. We’ll have to keep an eye on this.
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