In recent years many demonstrations of prototypes have been held to showcase futuristic autonomous technologies such as unmanned naval systems/drones. Both the US and UK, on the one hand, as well as Russia and China, on the other, have tested their autonomous naval systems. What does this autonomous technology revolution at sea mean for strategic stability in the maritime commons?

By Ramesh Balakrishnan*

The large scale adoption of naval autonomous technologies is still many years, if not decades, away from reaching fruition. Nevertheless, there is an emerging consensus that naval autonomous systems (both combat and non-combat modules) will be gradually inducted by advanced navies the world over, both for strategic and competitive reasons as well as for rationalising their burgeoning manpower costs.

Sooner or later, the international legal fraternity and the policy communities would have to arrive at a consensus on negotiating the ethical and human dimensions of deploying autonomous weapon platforms, which would include sea-based unmanned systems.

Unmanned Autonomous Payloads at Sea

Contrary to the popular perception that naval autonomous weapon systems are entirely novel platforms slated for future induction in navies, the reality is far more complex and nuanced when approached from a historical perspective. Semi-autonomous naval technologies have treaded an evolutionary path, performing both lethal and non-lethal tasks over many decades. For example, ‘fire and forget’ torpedoes have been used as attack weapons against submarines.

Human operated and onboard/catapult launched ‘Scan Eagle’ unmanned aerial vehicles have been deployed for carrying out intelligence, surveillance and reconnaissance missions. Somehow, the technological and operational evolution of these platforms never really gained widespread traction and adoption; other ‘purpose built’ naval prototypes have meanwhile found applications as Unmanned Underwater Vessels (UUV) in commercial, academic, scientific experiments for performing primarily non-combat roles. In general, navies have been slow to embrace unmanned vehicles as part of their strategic repertoire.

Other services of modern militaries have more successfully adapted these technologies and mainstreamed them into their operational doctrines. The coalition counter terrorism missions in Afghanistan, Pakistan, Yemen and Somalia over the past decade is a case in point. Other air forces have been successfully deploying armed Unmanned Aerial Vehicles (UAVs) and unarmed versions of similar platforms in increasingly complex combat missions.

Such missions involve firing missiles on ground-based targets and engaging in more intrusive Intelligence, Surveillance and Reconnaissance (ISR) missions in combat zones. Taking a cue from the success achieved by their counterparts in the air force, navies are increasingly interested in deploying drone technology in the maritime theatre.

The Strategic Dimensions of Naval Autonomous Systems

As and when these autonomous technology platforms enter the naval domain, the ‘stealth’ and ‘autonomous’ decision making features (Artificial Intelligence (AI) driven robotics) of these drones/weapons platforms have profound strategic ramifications for the future of naval warfare. Specifically, autonomous systems could play a pivotal role in performing the following strategic manoeuvres at sea:

Mine Countermeasures (MCM):
Today, most mine countermeasures in strategic choke points in the open seas would have to be undertaken by surface ships and minehunter vessels. As Anti-Access/Area-Denial (A2/AD) and sea denial strategies assume salience, autonomous systems could dramatically tilt the strategic balance in favour of those navies in possession of such advanced technologies.

Anti-Submarine Warfare (ASW):
ASW is accomplished by deploying attack submarines monitoring littoral shores, frigates, helicopters on board aircraft carriers and high tech airborne maritime surveillance aircraft. The US Defence Advanced Research Project Agency (DARPA’s) futuristic anti-submarine unmanned vessels would enable the US navy to conduct long duration submarine tracking in hostile littoral environments. Nuclear attack submarines that are suited for ASW could be deployed elsewhere in seas far from the home base, while the ASW role is assigned solely to autonomous systems.

Intelligence, Surveillance and Reconnaissance (ISR):
Patrol vessels and surveillance aircraft are the primary assets which are deployed by navies to collect intelligence and monitor the maritime domain. They are useful in extracting an accurate picture of the battlespace during war time and enhance domain awareness during peace time.

Autonomous platforms gather real-time 24 x 7 intelligence and perform instant data analysis to sense threats before they materialise. Moreover, they provide ‘actionable’ intelligence to surface ships, which are then able to engage with the threat. Moreover, autonomous systems drastically improve the range of sonar equipment, thus contributing to assured surveillance at sea.

Sabotage/Subversion:
Stealth drones sabotage communication links by targeting and damaging undersea communication cable networks which carry the bulk of global communications. They are designed to launch attacks on enemy navies in the open seas without detection. The ‘Stealth’ capabilities of navies would see a huge boost and serve as a force multiplier in future, by facilitating deep-water maneuvers in the ocean beds close to enemy littoral waters.

Strategic Technologies or Costly Showpieces?

When evaluating the efficacy of naval autonomous platforms, it is pertinent to assess the unique ‘strategic effects’ of autonomous technologies. Do autonomous systems decisively outperform their manned counterparts in a sea-based confrontation with an adversary? In the absence of demonstrable benefits in the form of an exceptional leap in strategic advantage stemming from superior technology, innovative operational concepts/Command and Control (C2) and substantial reduction in the cost of ‘manning’ these systems, such technologies could end up as costly showpieces.

All in all, unless a vast network of autonomous naval assets are deployed in the air, on the surface, just below the surface, underwater and in the deep ocean beds and the manpower costs involved in operating these systems are estimated with a fair degree of accuracy, they may not be able to deliver the stealth required to deter potential enemies.

In this regard, navies could learn a lot from their land and air counterparts about the efficacy of these new technologies and their application for strategic purposes. As with all such strategic technologies, while bolstering deterrence at sea, autonomous technologies are more likely than not to simultaneously render a veritable jolt to strategic stability, fuelling a new arms race at sea.

*Ramesh Balakrishnan is currently pursuing the MSc. (Strategic Studies) programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. He was previously a Research Intern in the Cyber and Media Initiative at the Observer Research Foundation, New Delhi.

In the globalized world of today, CPEC is important in the South Asian region, as it plays a crucial role in creating networks that connect countries socially, economically and politically.

The China Pakistan Economic Corridor (CPEC), also known as a multi-billion dollar project, is heralded as a game changer for Pakistan’s economy and regional cooperation. An extension of China’s ambitious Initiative, ‘One Belt, One Road’ (OBOR), aims to connect Asia with Europe, the Middle East and Africa via roads, railways, pipelines, communication networks and industrial economic zones. The principal purpose of this project is to link the Gwadar Port in southwestern Pakistan to northwestern region of Xinjiang in China and to provide Pakistan energy and communication infrastructure.

China and Pakistan have developed strong bilateral trade and cooperation over the years now. China has gradually emerged as Pakistan’s major trading partner both in terms of imports and exports. Initially, it was in 1963 when both the countries signed their first bilateral long term trade agreement, the establishment of their commercial links. In 2006, they signed the Free Trade Agreement (FTA) that was implemented in 2007. FTA was also signed on Trade in Services in 2009 that became active in the end of that year.

Pakistan is an important partner in the CPEC due to its exceptional geographical location that facilitates CPEC in smooth connectivity between South and East Asia. It has become the main hub of trade activities between countries within the region. This geographical location gives Pakistan the central role in terms of increased regional economic integration through CPEC. It brings huge economic potential and business opportunities for people.

The China-Pakistan friendship in the form of CPEC is not only limited to strengthen the economic and trade ties between both countries, but it also promotes common prosperity and development for the whole region. It is been noted that 3 billion people which is 40% of the global population will tend to benefit from this project. China has invested in many countries such as United States and Saudi Arabia and others and has managed only 2 to 3% in return, but it will gain more in Pakistan, from CPEC.

Being the largest projects in history of bilateral relations between Pakistan and China the total cost of the program was estimated as USD 46 billion, though recently the figure has increased to USD 51 billion after China committed to fund the Karachi-Lahore rail line. It was planned that USD 34 billion would be spent on energy infrastructure and remaining amount is for basal infrastructures. The process of the largest regional project, the China Pakistan Economic Corridor (CPEC) is estimated to achieve its target by 2030.

It is also expected that the economic activities being undertaken under the umbrella of CPEC would represent a positive image of Pakistan and would serve as an incentive for companies from other countries to come and invest in Pakistan. The existing political and economic landscape of Asia is experiencing a new epoch of economic revival, bilateral and multilateral arrangements. The rise of China awakens hope and optimism of development for countries in the region. China highly believes in cooperation for the common interests and its remarkable progress has spread its influence across the borders.

Through CPEC, Pakistan can said to be a rising regional power to balance her position against other regional powers in the South Asian region such as India. Who does not share much support for CPEC and had repeatedly opposed it. India also recently threatened Pakistan by isolating the country internationally but failed to do so. As Pakistan is now, considered an influential country internationally and it seeks worldwide investments.

But to what extent can that be useful to Pakistan if its own local industries are being affected by it. Here, the construction of CPEC raises numerous concerns that need to be addressed. The impact of CPEC on the country’s domestic industries can be worst especially those that are at the stage of infancy or smaller in size vis-à-vis the gigantic Chinese industries. Flooding of the Chinese products is the greatest fear of Pakistani industries.

The Chinese industries have been successful in achieving the economies of scale over the years because of a huge domestic market, industrial-friendly policies and scores of incentives from the government. The foremost priority of a country should be set by considering interest of the local industry and then borders for free trade could be opened up. Due to the already unsettled problems existing in Pakistan such as electricity and gas shortages, high production costs and the terrorism and extremism threat, the domestic industries have been unable to produce according to its full capacity.

The main concern is about the exports of the country as shipments have reduced to less than $20 billion from $24 billion in the past two years and are still on fall. According to the IMF, the CPEC will help lift Pakistan’s economy as Chinese companies invest in Pakistan it will increase the country’s foreign direct investment and other funding inflows but it may face difficulties in the longer run in repaying them back. This is evident from the IMF report that showed the imports under CPEC could rise up to 11 percent of the total projected imports which is equal to $5.7 billion. And the exports will touch 2.2 percent of the projected GDP in the year 2020. The country’s external financing needs from $11 billion for the current fiscal year will increase to $17.5 billion in 2020.

Since it will take time to improve the pace of inflow to the country, Pakistan needs to be cautious about the increasing CPEC related outflows because the repayment obligations on the loans taken from Chinese banks will most probably rise after the year 2021. However, the IMF is certain about the corridor in clearing these payments but that too in the longer run with no guarantee. Therefore the unmanaged outflows can prove to be detrimental to Pakistan’s economy in the longer run. CPEC should facilitate Pakistan in bringing up its infant industries and enabling them to compete in the international market. It will only be beneficial for Pakistan if it boosts its exports.

Pakistan’s economy is highly complementary to that of China and exists in a win-win cooperation of investment, energy, human capital and technology. China is specialized in technology but it needs market for its products and raw materials. On the other hand, Pakistan has abundant intact raw material but needs access to technology to list its industrialization process. Other than this Pakistan has abundant of labor that it can offer. It is one of those countries with highest youth population, by giving them basic skills and training, they can easily be consumed by Chinese industrial sector. This will also provide employment opportunities for the people that have been unemployed for a long time.

Moreover, the free trade agreement (FTA) between China and Pakistan also did not benefit the latter much as the arrangement gives an edge to China and promotes more imports than exports from Pakistan. Therefore, Pakistan should be careful in signing the second phase of FTA with China in future.

The cooperation of both the countries in tackling the shortcomings of the project is highly advised. Pakistan needs to be given some leverage for its products to enable the local industry to compete well against its competitors. Overall, CPEC is supposed to be a win-win situation that would bring gains to both the partners without exploiting each other through dumping of goods or high price wars, for Pakistan, its exports need to be improved in order to facilitate its local production

In order to achieve full potential benefits of the CPEC, it is necessary to take effective measures to mitigate the risks within the country. When the country is strong internally it will perform well at the external level.

First of all there is a dire need to protect the local industries by framing polices that aims to offer incentives for boosting productivity and pushing exports. Thus empowering the local producers and enabling them to compete successfully on the international level. Secondly, there is a need to strengthen the institutions that will ensure a check and balance on trade practices so that no unfair or illegal trade takes place. Thirdly and most importantly, the right atmosphere needs to be provided for CPEC that includes an improved climate conditions, good governance and a securitized environment to enable CPEC investments to generate the resources that can be used to cover their own associated outflows.

*The writer works for Strategic Vision Institute Islamabad and can be reached at hirakhan4425@gmail.com.

By Ulrich Speck*

There is a growing fear in Central Europe that the next US President might give Russia a free hand in its neighbourhood, further emboldening Putin and undermining European security.

The upcoming US President is not a policymaker; Donald Trump is a dealmaker. He has written an entire book about ‘the art of the deal’. His background will probably shape his approach to the US Presidency: politics as a succession of deals. Trump’s main criticism of current US foreign policy has, indeed, been that his predecessors were poor dealmakers: they allowed competitors, especially China and Mexico, to get a bigger piece of the cake than they were entitled to; and they let US allies become free-riders whose defence is being subsidised by America.

To change these equations and to gain a better deal for the US: that is what Trump probably has in mind when thinking about foreign policy. Hence his choice of Secretary of State, Rex Tillerson, Chairman and CEO of ExxonMobil, a giant oil company. Trump has praised Tillerson as a ‘world class player and dealmaker’, capable of negotiating ‘massive deals’ in Russia.

When Central Europeans hear the forthcoming US Administration talk about deals with Russia, their primary reaction is not to associate the idea with the business world. What is more likely to come to mind is Yalta, a city in Crimea –now occupied by Russia– where in 1945 Franklin D. Roosevelt, Winston Churchill and Joseph Stalin fought out their plans for the post-war settlement. Yalta later became synonymous with the division of Europe into spheres of influence, with Central Europe unhappily ending on the Soviet-dominated side.

Today it is one of the goals of President Vladimir Putin to make Russia ‘great again’: to turn the country –despite the fact that economically it currently ranks (in GDP terms) between Korea and Australia– into a major global player, on a level with the US and China. In Putin’s concept of greatness, a sphere of privileged influence, of direct control, is indispensable. By applying any kind of pressure, including military force, Moscow is trying to force its neighbours into submission, from Georgia to Ukraine. The West has put up various degrees of resistance to this policy, but has never officially accepted Moscow’s view that only one successor state, Russia, is fully sovereign while the others must submit to Russia. The struggle over Ukraine has even become a major flashpoint in the West’s relations with Russia.

As suggested by some of his campaign rhetoric, Donald Trump may think he can overcome these tensions and, as a professional dealmaker, hammer out a lasting agreement with Russia. It would not be that surprising. Both George W. Bush and Barack Obama underwent honeymoon periods with Putin, only to discover after a while that Moscow’s foreign policy goals were incompatible with the liberal international order for which the US continues to play the role of guarantor.

This time, however, it may be different. Trump has shown no interest in the liberal international order. Lacking a broader historical and political background, he even seems unaware of the fact that America has been the architect and guarantor of just such an order since the end of World War II. His concept of America’s international role appears to be one in which the US is the leading military power in a somewhat Hobbesian world in which each country must look after itself. American interests are defined mainly in economic terms, and his criterion for a good deal seems to be an immediate benefit for America. In the past, US Administrations had included the interests of allies and partners in their definition of America’s interest, as well as the protection of a certain global order. This may very well change with Trump.

There are other potential motives for Trump to try to cut a deal with Putin. He wants to focus more than Obama on the fight against radical Islam in the Middle East and may want to work more closely with Russia in the region (ignoring the fact that the latter is not primarily fighting ISIS in Syria but aiming to keep Assad in power). Another motive could be that Trump’s main adversary appears to be China. Trump may want to side up to Russia with the aim of isolating and weakening China. In order to get Russia to support American goals, Trump might consider offering Putin a free hand in the Russian neighbourhood –with no more sanctions and no more US engagement in the region, to start with–.

Such a deal over the head of Europe’s leaders might make sense to Trump. For Europe, however, it spells disaster, mainly for two reasons. First, the Kremlin would see such an agreement not just as an acknowledgment and acceptance of what Russia has achieved so far. It would also see it as encouragement to further advance its ambitions: to force Ukraine and the other post-Soviet non-Nato members into submission, to weaken and to undermine Nato and the EU and to divide and rule in Europe.

Secondly, the problem of Russian foreign policy is not Western resistance. It is the mismatch between ambitions and means. Russia’s main tools in its neighbourhood are military power and the co-opting of local elites by means of corruption. Russia has failed to offer public goods –such as investment and good governance– and offers no positive prospects for economic and political development. For that reason, many of Russia’s neighbours in Eastern Europe and the Southern Caucasus have moved away, or attempted to, from the Moscow-dominated sphere by building closer ties with EU countries, the US and Nato.

A deal between Putin and Trump would not change the underlying reality –the fact that the genie is out of the bottle, that Russia’s neighbours will not accept full submission under Moscow’s rule again–. It is not Western influence which undermines the Kremlin’s influence in the former Soviet space but its failure to deliver the kind of governance people want. If the West were to cease trying to help stabilise these countries, and if Russia were to feel entitled to force them to knuckle under, there would be a greater sense of despair and more conflict and emigration, not less.

US interests, at least as Trump might define them, could therefore clash with Europe’s interests. For Trump, great-power cooperation with Russia in the Middle East and against China may be the priority. But for Europeans, stability in Central and Eastern Europe is the prime security interest. For Europe, confronting an emboldened, aggressive Russia bent on reconquering territory and regaining its influence on the continent is a huge challenge. Resisting Russian pressure without US support would be a nightmare.

About the author:
*Ulrich Speck, Senior Research Fellow, Elcano Royal Institute | @UlrichSpeck

Source:
This article was published by Elcano Royal Institute

Trump’s economic plan has sent stocks ripping higher for six weeks straight. But what’s going to happen to stock prices when Congress gives Trump’s plan a big thumbs down? Has anyone thought about that yet?

And what about the Fed? Does anyone seriously think that Fed chairman Janet Yellen is going to sit on her hands while Trump launches a $1 trillion fiscal stimulus package that triggers a sudden burst of growth followed by a sharp uptick in inflation?

No, Yellen’s not going to sit on her hands. She’s going to raise rates to prevent the economy from overheating which is going to throw cold water on Trump’s pro-growth government-spending plan.

So why has the Dow Jones Industrial Average (DJIA) climbed more than 1,600 points and gained nearly 10% (“the biggest post-election rally on record”) when Trump’s plan is either going to be derailed by the Fed’s higher interest rates or blocked by the obstructionist Congress? It doesn’t make any sense, does it? And if the plan doesn’t survive in its current form, then stocks are going to retrace all the gains they’ve made in the last month and a half. That’s roughly 1,700 points erased in the blink of an eye.

Bottom line: Trump’s Santa Rally could turn into a stock market bloodbath unless he’s able to deliver on his promises, which doesn’t look very likely. Check this out from Bloomberg:

“President-elect Donald Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt “dangerous” and said he wants any tax overhaul to avoid adding to the deficit.

“I think this level of national debt is dangerous and unacceptable,” McConnell said, adding he hopes Congress doesn’t lose sight of that when it acts next year. “My preference on tax reform is that it be revenue neutral,” he said…

The Committee for a Responsible Federal Budget, a nonpartisan think tank, has projected that Trump’s plans would increase the debt by $5.3 trillion over a decade, with deficits already over $600 billion a year and rising on autopilot…

What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,” he said. “Take you back to 2009. We borrowed $1 trillion and nobody could find that it did much of anything. So we need to do this carefully and correctly and the issue of how to pay for it needs to be dealt with responsibly.”… (McConnell, Warning of ‘Dangerous’ Debt, Wants Tax Cut Offsets, Bloomberg)

It doesn’t sound like McConnell is a big fan of Trump’s economic plan, does it? So why has the Dow risen to within 26 points of the 20,000-mark if that’s the case?? Do investors think that Trump can simply issue an executive order and force Congress to do what he wants?

Good luck with that. The deficit-crazed Republicans are just as committed to austerity as ever, mainly because slashing government spending coupled with low interest rates is a tried-and-true method of transferring obscene amounts of money to the 1 percenters. Why would they tinker with a mechanism that works perfectly already?

They won’t, at least not to the extent that it’ll have any meaningful impact on the living standards of millions of working people across America. Congress is going to prevent that at all cost. And so will the Fed. Just listen to what Yellen had to say to a journalist from the Washington Post last week following the FOMC meeting. She was asked point-blank whether she thought the economy needed more fiscal stimulus or not. Her answer:

“Well … I called for fiscal stimulus when the unemployment rate was substantially higher than it is now. So with a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished, So I would say at this point that fiscal policy is not obviously needed to help us get back to full employment … But nevertheless, let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance of policy.”

Nice, eh? Yellen threatens Trump with three more rate hikes in 2017, torpedoes his $1 trillion infrastructure plan with a wave of the hand, and then has the audacity to deny that she’s dictating policy.

Of course she’s dictating policy. What else would you call it?

Yellen is saying as clearly as possible, that if Trump launches his fiscal spending plan, the Fed’s going to slap him down by raising rates. If that’s not a threat, then what is??

(BTW, the NY Times Neil Irwin commented on this very issue just days ago when he said, “any stimulative fiscal policy from the Trump administration could well face an equal and opposite tightening of monetary policy by a Fed that raises interest rates.” In other words, the Fed holds all the cards.)

But in Yellen’s defense, we should add that Trump’s infrastructure scheme wasn’t going to work anyway. The whole thing is another shabby giveaway to private-equity investors. It’s NOT a serious effort to rebuild America’s crumbling infrastructure or provide good-paying jobs to qualified construction workers.

According to economist Alan S. Blinder, “Trump’s plan would provide “an 82% tax credit to attract private-equity investors into the infrastructure business.” … (So) ” A $3 billion public-private “partnership”… could be financed like this: $2.5 billion in municipal bonds, $410 million in tax credits from the federal government, and $90 million in private equity. This means $90 million in private money winds up controlling a $3 billion asset. Mr. Trump likes leverage, but isn’t 33-to-1 a little ridiculous?”

Great. In other words, the public takes all the risk, while privately-owned businesses nab all the profits. When have we heard that before?

And there’s more too:

“Infrastructure projects selected in the traditional way, by governments, are chosen based on public benefits, the community’s ability to pay—and sometimes crass political favoritism…

Under the Trump plan, project selection would be left to profit-seeking investors, using the same criteria they use to decide which hotels to build, for example.”… (Trump’s Infrastructure Mistake, Alan S Blinder, Wall Street Journal)

Princeton professors Alan S. Blinder and Alan B. Krueger write that the president-elect wants to draw in private money—but do investors swoon to fix leaky school roofs?

See? This isn’t about rebuilding America or putting people back to work or even getting more money circulating in the economy. This is just another ripoff by a flim-flam man who wants to use his power as president to enrich his crony buddies. Trump might be a hero to millions of working people who think he’s got their interests at heart, but the facts just don’t match the rhetoric. His infrastructure plan is just another elitist swindle aimed at enriching the few at the expense of the many.

According to Blinder there are much better alternatives to this private equity hocus pocus, like “Build American Bonds (BABs), a special breed of municipal bonds … which can use them for routine maintenance and other projects that lack a revenue stream … for the great bulk of infrastructure needs, BABs would be a far superior solution. If the Trump administration is serious about making our public infrastructure great again, it should worry less about finding ways to make the rich richer.” (WSJ)

Then again, if Trump’s real objective is to boost employment and increase growth, there are much easier ways to go about it, like suspending the payroll tax on everyone making under $75,000 per year or adding a few hundred dollars per month to Social Security payouts or expanding the food stamps program to include more applicants. None of these ideas will help to rebuild America’s dilapidated bridges or pothole-strewn roads, but they do put more money into circulation pronto which increases demand, activity, hiring, capital investment and growth. More growth means upward pressure on stagnant wages, rising standards of living, strengthening of the middle class, and the beginnings of a virtuous circle. Trump’s infrastructure plan will achieve none of these. It won’t even push stock prices higher. It’s a dead-loss for everyone except the PE mandarins.

But there parts of Trump’s economic plan that could push stocks much higher, in fact, they could take today’s moderately-inflated stock market bubble and turn it into the most gargantuan asset-price balloon of all time. We’re talking about Trump’s tax cuts. The president elect wants to reduce the corporate tax rate from 35 percent to 15 percent and, at the same time, initiate a “repatriation holiday”, which will allow tax-dodging US corporations to bring “more than a trillion dollars in corporate cash parked overseas” back to the US paying a measly 10 percent tax on the total. Trump thinks the surge of capital reentering the US will boost employment, productivity and growth, but the experts disagree. They know it’s another giveaway to Wall Street. Get a load of this from Bloomberg:

“Deutsche Bank: “If a repatriation holiday is introduced at a ~5 percent rate, as opposed to the generally proposed 5-14 percent rates, 10 percent even by Trump, then we think ~$500 billion will be repatriated in 2017. These funds will go to a combination of dividends, buybacks, onshore debt reduction, Mergers and Acquisitions and capex…”

JPMorgan Chase and Co.: “Cash repatriation alone could boost shareholder payouts by ~$350 billion … we estimate that buybacks from repatriation alone could add ~$1.30 to S and P 500 earnings per share, assuming that 60 percent of potential payouts come in the form of buybacks.”…

JPMorgan Chase and Co.: “We estimate that Trump’s corporate tax plan, which incorporates a 15 percent statutory federal tax rate, would add roughly $15 to S and P 500 earnings.”
(Wall Street’s 2017 Forecasts Are Doomed If Trump Doesn’t Follow Through On Campaign Promises, Bloomberg)

There’s a lot of room for error.

Get the picture? None of this money is going to dribble down to the working stiffs who cast their ballots for Trump in the presidential election. Heck, no. Every dime is going into stock buybacks and bigger dividends for fatcat CEOs and their voracious shareholders so they can rake in bigger profits while the country continues its downward spiral into insolvency and depression. That’s what this tax fiasco is all about, rewarding the millionaires and billionaires in Trump’s coterie of dodgy friends.

So, yeah, stocks could rise even higher on back of more than a trillion dollars of new capital flowing into the markets, but that money is not going to do jack for anyone who punches a clock for a living. And that should matter to the people who voted for Trump thinking that he had their interests at heart, because he doesn’t have their interests at heart. It’s a joke. Trump’s economic plan focuses entirely on the welfare of the mega rich plutocrats like himself. Everyone else gets mere table scraps.

And that’s why Trump’s supporters should be so disappointed, because they stood by him through the most vicious campaign in history and helped to shoehorn his sorry posterior into office. And now he has sold them down the river.

Thanks a lot, Don.

By Abhijnan Rej

The assassination of the Russian ambassador to Turkey, Andrei Karlov, in Ankara on Monday caps an already-troublesome year for Turkey that saw an unsuccessful coup and a spate of high-intensity terrorist attacks. The geopolitical ramifications of Karlov’s assassination – and the degree to which Russia would seek concessions from Turkey as compensation – is not yet clear.

What is evident is that the ebb and flow of Turkey’s trajectory in the recent years closely parallel the three of the greatest risks to the post-war liberal international order. These risks are the growing fissure between Islamism and the West – in Europe and its periphery, the rise of authoritarian leaders within ostensibly democratic frameworks, and the visible fragility of American alliances and the security architectures that sustain them.

Modern Turkey, as envisioned by Mustafa Kemal Ataturk after the collapse of the Ottoman empire, was to be a staunchly secular state. The Turkish military saw to it that Ataturk’s conception of the state remained intact. Turkey would become a frontline Western state in the American anti-Soviet containment policy, as a member of Nato and other collective security mechanisms.

But Europe never fully opened up to Turkey as one of its own. Despite Bush Jr’s exhortations that Turkey be admitted to the European Union – and therefore serve as a model for other Muslim-majority states to emulate – European powers never warmed to this idea. This was a cause of resentment among many Turks.

With Recep Tayyip Erdogan at helm, Turkey’s flirtation with Islamism began to acquire an institutional character. Erdogan imagined Turkey’s role as a buffer state between Europe and West Asia as leverage to obtain significant concessions from the EU while, at the same time, playing the Sunni-Shia conflict for its own geopolitical advantage. This in turn, and much like Pakistan, exposed Turkey to Islamist violence on its own soil. Instead of consolidating its image as a secular republic, Turkey today embodies a schizophrenic relationship – between Turkey as a nominal ally of the West, and as a country with a significant Islamist base.

When pundits talk about the rise of illiberal democracies led by authoritarian leaders, Turkey is at the top of the list of examples. What started out as a fringe movement on the edge of Europe – in Hungary and Poland – now appears to be mainstream. First PM, and then president, Erdogan has cracked down on the press and aligns his policy priorities as a conservative Muslim. Much like other authoritarian leaders of our era, he also enjoys significant support from the Turkish people. The extent of this became clear during the failed coup this summer when people took to the streets to foil it.

Erdogan has also publicly challenged Turkey’s long-term commitment to Western-led alliances. A couple of months ago, he hinted at Turkey seeking membership in the Shanghai Cooperation Organization (SCO) – a Sino-Russian central Asian security framework. In fact, Turkey seems to have internalised, for the moment, that Russia as a temporary ally serves its long-term calculations better than America as a permanent friend.

This is why despite a serious conflagration last November – when Turkey shot down a Russian fighter jet – Erdogan has been more than keen to make nice with Putin. This is also why Turkey will, in all certainty, heavily crack down on groups that it suspects to be behind Ambassador Karlov’s assassination while publicly blaming US-based dissident Fethullah Gulen as the culprit. It goes without saying that given the diametrically opposite stances of Turkey and Russia over Syria, this is a tightrope act.

Though Erdogan seems to be using the possibility of a Russia-Turkey entente as a bargaining chip to strike a deal with the West – shades of another populist, Donald Trump, here – this has the potential to unnerve the US. To wit, this would be the first time, should Turkey indeed join the SCO, that a Nato member is also part of a pact that has Nato’s greatest worry, Vladimir Putin, as a leader. Should countries like Turkey exhibit wavering commitment to the US-led security architecture, this does not bode well for the future of the architecture itself.

The canary in the coal mine is Turkey. Its trajectory will serve as the best indicator of the future of the liberal world order in the years to come.

His name is Mohammad Hanif Atmar, and he has been a very prominent political figure in the past 15 years, being so popular that almost all Afghan people and most international politicians know him.

When the first time he caught the attention of the international sector, particularly the US and UK, he was being framed as a new-found rising star in the eyes of “the Americans” (of course those non-military American power-brokers who make their way in and out of Kabul and the US embassy).

The streets of Kabul were filled with rumors about the implications of Biden’s visit on January 10, 2009 including talk of another “regime change”.
Speculation in the wake of Biden’s visit was fueled in part by critics who hold senior posts in Karzai’s own administration. Among the comments that circulated in the Afghan capital were that Biden flatly had told Karzai he was on his way out, and that the incoming U.S. vice president’s visit to the Afghan Interior Ministry during his stopover was really an effort to find a suitable replacement.

Interior Minister Mohammad Hanif Atmar was tipped by some to be a possible presidential candidate, and Biden’s visit with him was seen by some observers as a significant gesture.

To be honest, I have no way of knowing “who” and “how many” of “the Americans” were pushing his name. Of course, at that time, Mr. Ashraf Ghani (the current president) was in no ways in the picture for the Americans. Ergo, the Americans and British came up with the current government structure (unity government) and asked Atmar to be the candidate for the presidential elections and the aftermath would be as the Chief Executive Officer of the Afghan government but he did not agree. Analytically, based on his capability, proficiency and intelligence he was the only option for the Americans and British when they had not even thought of Mr. Ghani.

Before the presidential elections of 2014, it was he who designed Mr. Ghani’s team (his vice presidents) and told him the positive outcome of the team he had designed. Meanwhile, President Karzai believed that he was making things in accordance to his plan and intention. In his first days of taking over the office as National Security Advisor to the President, there were rumors that he was targeting the Jeshadi leaders and/or warlord in one or other way. Furthermore, some two months ago another strong rumor turned peoples’ attention that Mr. Atmar planed a coupe against President Ghani.

According to several secret sources pertinent to power players (power brokers) in ARG (the palace) and its peripheries, a collective move for toppling Ghani from power was organized. Seizure of the Palace, was unilaterally organized by Hanif Atmar, the National Security Adviser to the President and was supported by Hamid Karzai, but foiled in the bud.

Recently, President Ashraf Ghani, in a meeting at the palace, passed a satirical comment, by saying that there was no need to send students to study political science abroad to the US or Europe, while they can do so in Laghman province, (the birth place of Atmar). He really meant the coupe, because the coupe was spawned mainly by the Laghmanies; him and his deputy Akhtar Ibrahimi.

Moreover, Dostum (Afghan Vice-President) accused the National Security Council (indirectly Mr. Atmar) for the recent attack on him. Additionally, the rumors add that Dostum assassination was also part of the coup agenda. Akhtar Ibrahimi had been tasked right from the outset to kill Dostum at an opportune time and no wonder why he was looking for someone to have as his deputy who could do the job.

Now, since, a senior Afghan official (Ahamd Eshchi the former vice-chairman of Dostum and governor of his home province of Jawzjan in the north) says he was violently kidnapped and sexually molested on the orders of Vice-President Abdul Rashid Dostum spreads more fear among the warlords and politicians. According to the rumors, the warlords and some other politicians believe that Ahmad Eshchi was part of the plan to attack and assassinate Dostum but it was failed. Later, Atmar and his key partners secretly exposed the secret so Dostum could react against Ahmad Eshchi, and he did.

In conclusion, the warlords and other out-pictured politicians are trying to overcome the fear. They believe that Atmar, who has a strong hold on most interior affairs, is also in deep and long-lasting contacts and relations with foreigners particularly the US, British and Russia, which might not only pave the road for this astute, nimble and bold manager and leader to be the coming or next president, but also wash them up as he has already started with the Vice-President Abdul Rashid Dostum.

Analytically, the accusation of planning a coupe against President Ghani does not make any sense for many reasons. First, the accusation was made by one group and/or party only, namely, the Jamiat. Secondly, in the presence of the foreign troops and political institutions toppling Ghani’s government would be a dream only.

Thirdly, even if it were true, the victims of the coupe would be President Ghani and CEO Abdullah, but no reactions have been seen from their end so far.

Furthermore, planning the attack on Dostum’s convoy by the National Security Council and/or Atmar is childish. Dostum should not forget that his right hand man Faizullah Zaki is one of the most senior officer in the National Security Council. Additionally, he in an interview with the media said that 90% area of where he had gone to fight against Taliban was controlled by Taliban. Saying that, on a military mission to an area where the armed opponents are all around should have such consequences.

Moreover, pulling Atmar’s leg in Eshchi’s case is ways naive and foolish, as it could be believed if Mr. Vice-President does not enjoy a background full of similar cases. Elaborating on that, Atamr was not in the current position when Dostum offended the exact inaction against Akbar Bai in early 2008. Finally, the warlords especially, the northern alliance feel the fear not because Atmar is to wipe them out anyways, but to bring reforms and stability into the Afghan political system, which is of course an eye bramble at any rate. Non-lasting enjoyment for the warlords particularly Jamiat is to an end now, it’s no more the time and opportune for them if Bismillah Khan is dismissed from the interior ministry but appointed and approved for the ministry of defense. It should be now or after a decade, an Atmar or an X.Y.Z, things shall get changed and of course into a reform, educated, systematic and developed manner.

*Najibullah Azad is an advocate, consultant, author, researcher and founder of Focus Research & Investigation Center, Kabul. He can be reached at: nj.aazad@gmail.com and https://www.facebook.com/Nj.Azad/

At the two Western and Eastern geographic extremes of the Mediterranean basin, Spain and Israel –both OECD member countries– have been developing over the past three decades in totally different directions. Spain is increasingly looking North towards the EU but also towards Latin America, while Israel is actively developing its relations with emerging economies such as India and China and strengthening ever more its relations with the US. Could it be that the two countries are ignoring each other and missing out on potential complementarities?

By Alfred Tovias*

Before Spain’s accession to the European Community (EC), the latter considered Israel and Spain in tandem in the context of a Global Mediterranean Policy, as they both represented semi-industrialised economies in the same league. The demographic and economic structures of the two countries have diverged since then, offering clear prospects of fruitful cooperation, especially in the fields of energy and technology.

Analysis¹

Why is this subject conceptually of interest and why is it topical?

It is of analytical interest because both microeconomic theory and the theory of economic integration make ample use of the concept of rivalry (susbstitutability) and complementarity. Basic economics show the importance of the distinction between substitutes and complementary goods, as observed by the Classics and Neo-classics more than a century ago. For instance, a rise in demand for a given good generates a rise in demand for its complement, while the reverse happens if it is a substitute. But closer in time, regarding rival and complementary economies, at the end of the 1950s James Meade –a Nobel prize in Economics– proposed important criteria to gauge a priori whether a particular integration scheme between any two countries could lead to net trade diversion or net trade creation, and one of the criteria was rivalry and complementarity. He predicted that integration between two rival economies (say the US and the EU) would likely lead to net trade creation because integration was likely to allow redeployment over the entire integration area of scarce resources on a more rational basis (in passing, a likely effect of the TTIP that was being negotiated until recently), whereas integration between Australia and Japan, two complementary economies, would lead to net trade diversion. Clearly, after a Free Trade Area or a Customs Union were to be agreed upon between these two countries, Australia would start importing from Japan goods previously manufactured, eg, in South Korea (because of the new discrimination in favour of the now preferred Japanese goods), rather than redeploy its own resources, since Australia does not have a manufacturing industry to redeploy. South Korea, being a rival economy to Japan (and not to Australia), would protest to Australia for having preferred Japan as a privileged trade partner (and be envious of Japanese exporters).

The subject is topical because among Mediterranean developed countries Spain and Israel are said to share many economic similarities and hence are in some sense rival, not complementary, economies. This opinion was and is still shared by those underlining geo-economic factors such as both countries being located at the same geographic latitude and having a semi-arid climate dominating most of their territory. Moreover, they are both Mediterranean coastal states at similar distances from Central Europe –eg, from Austria, Germany and Poland–. They both border the Arab world.

In terms of primary resources, the weather, land and vegetation result in a Mediterranean agriculture. Coal and water are scarce (particularly compared with Central and Eastern Europe), as is crude oil. Important discoveries of gas by Israel have substantially altered the Israeli energy balance. Note that both Spain and Israel are very rich in solar energy, a renewable energy resource. Environmental risks of maritime origin are similar, as large parts of their respective coasts share the same sea. Both countries suffer from the relative salinity of their soil and from seasonal forest fires. Also, because Spain and Israel are intensively exploiting their non-business tourism potential (be it for leisure, cultural or religious reasons), both are subject to its seasonality.

Another commonality is that Spain and Israel have Europe as their main trading partner and they had until 1986 similar contractual relations with the EU. Until that year Spain and Israel were considered by the European Community (EC) as Mediterranean partners in the so-called Global Mediterranean Policy (GMP). It is commonly accepted that Europe has had and still has a strong influence on both countries in shaping demand patterns. And distance in international trade still plays a substantial role for three types of products: bulk goods (eg, construction materials and furniture); perishable goods (eg, flowers, fresh fruit and vegetables); and distance-sensitive goods and services (most of them –eg, textiles in fast and short business models, intermediary products based on just-in-time logistics, medical services, tourism and engineering). Not surprisingly, all these goods and services have been present in the export baskets of both countries for a long time. Medical and long-term tourism feature prominently in their exports of services (eg, Eilat and the Canary Islands compete against each other in the winter and retirees settle on the Mediterranean coasts of both countries).

Note that their similar distance to poor Sub-Saharan African countries (SSA) is also important in economic terms as it allows distance-sensitive services to be supplied from Israel or Spain alternatively. For instance, both Israel and Spain have construction companies working in SSA. Israel cannot yet be present in North Africa as Spain is, but should there be peace between Israel and the Arab world, both Spain and Israel could compete in the Maghreb, Libya and Egypt in certain agricultural markets, inward medical tourism, fertilisers, solar energy and so on.

In a nutshell, these circumstances clearly spelled out the case for arguing for a long time that both economies shared similar production and demand structures.

But is that so? Might this story have now been overtaken by events?

The changing degree of overlap of the two economies

It was the decision taken by the EC-6 (under pressure from France) to have a GMP with Mediterranean Non-Member Countries (MNMCs) in 1972 that led to conflating Spain and Israel in the same class of countries. The EC thus gave preferential treatment, commercially speaking, at the time to certain MNMCs, including Spain and Israel; both were then considered to have similar economic structures by the EC authorities in Brussels. Hence, agricultural and manufactures originating in the two countries were treated in the same way.

Subsequently, Spain became a full member of the EU in 1986 and started benefitting, among others, from the Common Agricultural Policy. This caused a net trade diversion in Spain’s favour and against Israel as far as food and other agricultural products were concerned. Light industry products (food processing, toys and clothing) were also in the same case. Already at that time, the author of this paper argued that Israel had not much to fear in the long run and that the countries that should be far more worried were Morocco, Tunisia and Egypt (which at that point seemed much less alarmed than Israel). Interestingly, the Spanish Foreign Ministry was actually worried by the effect of its membership for its Maghreb neighbours. But returning to Israel, the situation was aggravated somewhat when in 1992 the Single Market, including Spain and not Israel, was completed (eg, EU food standards and essential requirements were tailored according to the needs of Spanish producers, not Israeli ones, as Israel was not at the negotiating table).

But, over time, other resources in the two countries have been and are being exploited more intensively than up to the 1980s; and these resources are idiosyncratic to each country and quite different and dissimilar.

Analytically, the factors’ proportion theory of international trade, devised in the 1930s, helps us to understand the composition and direction of exports of a specific country as compared with the rest. If two countries export the same products (goods and services) to the same countries, they can thus be considered similar or rivals. So, according to this theory, on what does the similarity hinge? On having similar relative factor endowments, using similar technologies and facing similar relative consumption patterns at home and in their principal export markets. For this theory, still one of the most used and useful to predict trade patterns, two countries are similar independently of their relative economic size.

This has more recently been said to be erroneous, as it overlooks the fact that there is a type of goods and services whose likelihood of being exportable depends on the absolute size of the domestic market, namely goods for which economies of scale and mass production play a significant role. Even with globalisation, there is a so-called ‘home country bias’. All other things being equal it is still easier to sell in the domestic market than to try to sell the product abroad, even in the case of the EU Single Market. Overseas importers using the same currency and respecting the same regulations still have the obstacle of using different languages or more simply of insufficient cross-border roads and bridges along their frontiers.²

As regards absolute economic, demographic and market sizes, for instance, Spain and Israel are in altogether different leagues. Spain, with a population of 46 million, is an economy in the G-20; Israel is not. This also means that Spain was probably able to export cars after acquiring experience in the 1960s in its huge local market, allowing mass production and decreasing costs, after which it became feasible to start exporting these goods abroad. Israel tried to do the same with cars but failed miserably because its local market was so small.

Leaving aside products sensitive to absolute market size, it is interesting to focus on the theory of factors’ proportion and ask, first, if Spain and Israel have been facing similar consumption patterns at home and in their principal partners. The answer is broadly yes, insofar as both countries have until recently been concentrating their exports on developed-country markets, basically the EU and the US. Of course, the exception is defence industries where, very early on, already in the 1960s, Israel adopted countertrade agreements with the US whereby it would make set-offs to pay for part of its arms procurements from the US (eg, electro-optical equipment), long before the present boom in high-tech exports to the US market. Another typical exception to the rule was Israeli exports of kosher food products to cater for the needs of orthodox communities in the US, Canada and the UK. But, basically and for a long period, Israel and Spain were using the same medium-range, standardised technologies in the production of goods and services (such as textiles and clothing, toys, chemical products, fruit and vegetables). True enough, the use of sprinklers and growing vegetables under plastic in agriculture was invented and/or initiated in Israel but imitated by Spain not much later on. So discussing the similarities and non-similarities of Spain and Israel essentially boils down to comparing relative factor endowments over time.

Israel has been exploiting its huge relative abundant human capital endowment, and Spain has been exploiting since early on the access of its people to the European labour markets –already during the Franco regime and then upon entry to the EU–; but Spain has also used its huge potential for developing intra-industry trade based on economies of scale and diversification and being part of international value chains (eg, in the car industry). Israel, on the other hand, has been excluded from this because of the ‘invisible boycott’. Manufacturing multinationals have been reluctant to settle in Israel for fear of jeopardising their business in the Muslim world (a fear probably grossly overrated).

Another example of Spain having a tremendous advantage over Israel is that it possesses a world language, Spanish, which allows Spanish investors a clear lead in all Latin America over other OECD countries, including Israel. Contrary to what is frequently said in Israel, namely that language and culture are no longer important for trade and FDI as what is important is knowledge of English and Israelis have a far better average level Southern Europeans, this seems unlikely. The gap between Spain and Israel is widening because the latter’s citizens are becoming increasingly lacking in knowledge of foreign languages other than English (and except Russian) compared to before the 1970s (when one could hear German, French and Spanish in Israeli marketplaces).

A widening gap between the two economies

The argument here is that the economic structures of the two countries have been diverging over time. Israel has developed its high-tech industry focusing on defence, telecommunication and Internet products; Spain has specialised first in standard, then in medium technology manufacturing products, mass inward tourism and exporting financial, educational and construction services massively to Latin America. Also, the direction of exports of the two countries has increasingly diverged, with Israel exporting increasingly to the US, India and China, and Spain focusing on the EU (which has a market share of more than 60% of total exports) but also on Latin America and the Maghreb, where Israel is absent.

FDI in both countries has followed the pattern indicated for trade structures: in Spain there has been massive investment in tourism-related construction, including infrastructures (airports, roads, leisure ports); Israel has seen massive inward  investment in high-tech by US companies. With the help of US government aid it has been able to develop a weapon industry that could be tested in the battlefield (a pleasure that Spain leaves happily Israel to exert) , hence making it very attractive to defense and security consumers elsewhere, e.g. unmanned drones.

Both countries have been diverging also in terms of their demographics, something with huge economic consequences for the future:

Whereas in the 1950s, 60s and 70s both societies were young (although for different reasons), this has changed progressively in Spain in the past three decades. Birth rates have plunged drastically there, but not yet in Israel. The current (2014) fertility rate for Spain is 1.32 children per woman, insufficient to be able to replace the present population over time (not counting on inward migration). This rate is actually one of the lowest in the OECD. In Israel it is 3.08 children per woman, ensuring replacement. The reasons for this state of affairs are well known: women’s emancipation in Spain came with democracy at the end of the 1970s (with divorce, abortion, etc); in Israel there was no change from the past (since Israel was already more modern in that respect than Spain under Franco and less modern than Spain in the last decade). The gap in population growth trends between Spain and Israel is certainly not due in the past two decades to migration outcomes. Contrary to what happened before, in the last two decades immigration into Israel has slowed down to almost a standstill, from a peak in 1993. This contrasts with a wave of migration into Spain, particularly from South America, which peaked only around 2008 with the onset of the financial crisis. But the permanent annual immigration flow is still around 200.000. Although a proportion of these immigrants will eventually leave, if something, Spain is more of an immigration country nowadays than Israel and not the other way around.

One important demographic feature is actually a paradox: because both countries have similar Mediterranean diets and excellent health services, their life expectancy is among the highest in the world according to the WHO (2015) and very similar, at 82.8 years in Spain and 82.5 in Israel. Men actually fare better in Israel (80.6) than in Spain (80.1 ) whereas female life expectancy is notably higher in Spain (85.5) than in Israel (84.3).

Demographically, the two countries have widely differing population structures, which huge economic implications for the future. In Spain 18% of the population is aged over 65, while the figure in Israel is 12%. The population aged under 15 accounts for only 15% of the total in Spain and 27% in Israel (right after Mexico in the OECD). In short, Spaniards will have an enormous health-related expenditure, proof of which is that Spain is already spending more in health than the average OECD country (9.2% of GDP) and much more than Israel (9.4% and 7.8% of GDP respectively). In the future, Spain will also have a huge productivity problem because of its demographic structure. In other words, a population becoming on the whole older will have to allocate more money for its pensioners and their health problems, which entails money for consumption eating up savings and hence not being free for investment. This can be partially solved by rapidly raising the retirement age, by making it easier for women to both raise a family and work, by taking in more migrants and by making sure that FDI is permanently available so as to offset what is lacking domestically. In any case, productivity is bound to suffer if less rather than more young people enter the labour market in coming years. Israel does not seem likely to face this problem for the next three decades at least, so there is no real pension crisis. But in one respect both countries do face another related problem: a lack of adequate worker training to match the needs of investors and capitalists, who base their long-term economic calculations and prospects on a country’s comparative advantages.

Here Israel has a very difficult problem ahead: high-tech industries require much human capital but also ingenuity, which in Israel as elsewhere is very scarce. Thus, there is an increasing income inequality on the horizon, and a huge share of the population does not even want to try to excel in scientific or technical studies because of their choice of lifestyle. Reference can be made here to large sectors of the Israeli population who are ultra-orthodox (Haredis), and their share in the total is increasing. Fortunately, Israeli Arabs do not seem to reject scientific professions if the opportunity arises. It is quite impressive, when visiting pharmacies and hospitals, to see the amount of Arab Israelis working as professionals and mingling quite contentedly with other Israelis.

Spain has a problem with part of its youth but not for the same reason. Clearly there is a huge inadequacy in the education received by most young Spaniards and thereby a significant shortfall in matching the needs of its industry; admittedly, the tourism industry does not require many technicians and engineers, but no young man or woman in Spain should expect to receive a huge wage if working only in tourism, whose Achilles’ heel is seasonality. For one thing, Israel spends substantially more than Spain in education (4.3 % and 3.3% of GDP respectively), although the results achieved are not too encouraging if judged by the results of PISA exams, where Israel and Spain are barely achieving the OECD average (and having all to envy when considering the Finns and the French).

Dealing with inequality as a flashpoint, OECD statistics for 2013 show that both Israel and Spain are more unequal societies than the average measured by the Gini Index, but Israel more so than Spain(but also more than Portugal and Greece), although in the last five years the two countries’ indexes have been converging; inequality, however, should be a more serious problem for Israel than for Spain because the economy’s future is based on selling original ideas, which is not widespread among the public at large. On the other hand, Israel has an excellent record in terms of employment as both general and youth unemployment are low (respectively 5.5% and less than 10% in 2013) compared with the OECD average (7.9% and 16% respectively) and much better than Spain, where youth unemployment reached 55% in 2013 and general unemployment was at 26.1%. Employment rates by gender are also higher in Israel than in the OECD and far higher than in Spain. The same holds for annual hours worked.

In what sense are Israel and Spain still rival economies?

At present, one should clearly focus on GDP per capita, a measure of the production side of productivity and of the consumption side of the standard of living.

Clearly, over the last three decades, and looking at IMF, World Bank and CIA statistics, the GDP per capita of the two countries held similar rankings in the world league. On the whole, until the Great Recession, Spain was leading Israel by 5% to 10%, but the situation has reversed since then. The latest OECD data for 2013 show that the figure for Israel was US$33,000 while for Spain it was US$32,523, with the OECD average at US$37,701. Where do the two countries stand as regards other OECD members? The answer is between the trio Japan, Italy and Korea on the one hand and the trio Slovenia, the Czech Republic and Greece on the other. That is not bad at all.

Digging further, when asked about welfare, Israelis affirm that they are happier than most other people in the OECD including Spain. However, when the UNDP publishes its Human Development Index each year –based not only on GDP per capita but also on life expectancy, health and education–, Spain is systematically higher than Israel.

So the question is which of the two countries is better prepared economically for the medium term (20-30 years)? This is difficult to tell.

Guided strictly by macroeconomic statistics, one would be inclined to answer that Israel is; to illustrate this, there are several hard arguments:

• Investment in R&D in 2012 reached 3.6% in Israel, 2.4% in the OECD as a whole and 1.3% in Spain: que inventen ellos, paraphrasing the Spanish philosopher Miguel de Unamuno.
• Israel’s investment in infrastructure has been increasing in the last decade at high rates, regaining the time lost in the 1980s and 90s. This contrasts with Spain’s record, where its efforts date back to the period after Spain’s entry into the EU, with the help of European funds. To illustrate the point, according to OECD figures for 2014, Israel invested six times more than Spain in absolute numbers in road construction. This can partially be explained by a wish by successive Israeli governments to catch up with Europe (including Spain).
• The general government net financial debt as a percentage of GDP has been doubling since 2008 in Spain, reaching 100% now, while in Israel it has dropped to 60% in the same period (despite having to finance a small war in 2009-10).
• The saving rates of the two countries are currently widely different. Spain’s low rate (2.9% of income) contrasts with Israel’s high rate (10.3%), which is similar to the figure in Germany and the Netherlands. The gap is certainly partly due to the huge recession still affecting most Spanish households.
• Israel’s population has increased at an annual rate of 1.8% to 1.9% over the past eight years. Spain’s has decreased since 2013 at a rate of -0.3%, steadily declining since 2007 at the onset of the great recession, when in Israel the annual rate was around 2% (see above for the reasons underlying the phenomenon).

The very different demographic profiles add to the argument.

However, as always, there are other factors that will not burden Spain’s economic potential, unlike Israel, which must deal with its geopolitical environment. The best way to compare the relative political risk assigned by foreign investors to Israel and Spain is by looking at long-term interest rates. They are still substantially higher (although decreasing over time) in Israel than in Spain (1.7% and 1% respectively for the year 2014) and this is even more significant given that the macroeconomic data for the former are much better than for the latter.

Not only is the political environment an obstacle to Israel’s growth and development but also its natural environment. Spain is far less polluted and less polluting (in terms of CO2 emissions) than Israel, which is at the OECD average (Spain is at 6 tonnes per capita while Israel is at 10 tonnes). All other things being equal, large countries like Spain tend to be less densely populated than smaller ones, like Israel. Not surprisingly, they are also cleaner. For instance, for similar relative rates of private-car use, it appears that the rate of air and Ghg emissions is much higher in Israel than in Spain. Not only is high population density an environmental factor working against Israel but also the exiguity of good land for agricultural use, which Israel, but not Spain, offsets by using huge amounts of fertilizer per unit of production. The so-called nutrient balance is at 93.4kg per hectare in Israel but at 11.3kg in Spain. The environmental gap in Spain’s favour could grow even more not only because it is a champion in renewable energies: in 2010 Israel entered a new era after discovering huge gas deposits close to its shores, thereby increasing the environmental risk for most of the Israeli population, settled on the Mediterranean cast. Dr Gonzalo Escribano, an analyst at the Elcano Royal Institute, has rightly argued that since Spain is taking security risks by relying for 60% of its gas consumption on a single country (Algeria), it has an obvious interest in cooperating with Israel as the two countries are complementary in terms of non-renewable energy resources, not rivals.

And then one must not forget the very important dissimilarity between Spain and Israel which cannot make the two countries rival economies: their relative economic size.

Spain will always have a huge absolute, although decreasing, advantage over Israel in terms of economic power and size. In terms of GDP, Spain is still five to six times larger than Israel, because its population is also five to six times greater. In that respect, Spain will also be able to look down for a while on Israel, as it does on Ireland, another roaring tiger. Israel will never be among the G-20, but Spain will be. In perspective, however, in the 1980s Spain was seven to eight times larger than Israel in economic terms; currently, it is ‘only’ five to six times greater.

It should be noted that the fact that Spain is a 46-million population economy very much limit the phenomena that so much hurt Israeli consumers, namely private monopolies and oligopolies. The latter are less likely in large countries such as Spain, Mexico or Turkey. In Israel there are only two large banks because it is such a small country. Housing in Israel is so expensive because urban land is very scarce and agricultural land is slowly disappearing. Food is expensive not only because food distributors form oligopolies but also because farmers are artificially sheltered from foreign competition. This is a kind of paradox: Israel is in many cases a less open economy than Spain, when theory would suggest that it should be the contrary. Spain has chosen to be part of the European Single Market and the euro-zone and to live with strong all-European competition. It is interesting to note that according to OECD indicators, Spain has become a slightly more open economy than Israel, reversing previous trends. Bravo for Spain, but bad for Israel…

Conclusions

For a long time, until the 1980s, Spain and Israel were considered by the economic experts of international organisations such as the World Bank, the IMF, the OECD, GATT, UNCTAD and the EC itself as so-called NICs, namely Newly Industrialised countries. Sometimes they were referred to as semi-industrialised economies because of the importance in their export baskets of agricultural and mineral extraction products (including phosphates and cement).

A decisive moment for both countries came with the southern enlargement of the EC in 1986.

For Spain it meant open and unimpeded access to the vast agricultural, fisheries and agro-business markets of Central and Northern Europe, allowing the development of a huge and sophisticated food industry. A second advantage of accession was the possibility rapidly exploited by Spanish entrepreneurs of integrating EU-based value chains, known as intra-industry trade by international economists. The car industry is a good example. Proximity to Europe played a role in the development of a sophisticated clothing industry based on a rapid turnover of stocks for a public eager for changing fashions more than seasonally. Accession to the EU was also a reinforcing factor for the tourism sector, which was already booming by 1986.

For Israel it became clear that basing its future on the export of agro products was a non-starter given the fast-growing urbanisation of its fertile coast and Spain’s entry into the EU, Israel’s principal export market for fruits and vegetables. Advanced agricultural technologies, of which Israel had made a name for itself since its creation, could not counter the handicap of the exiguity of the arable land available. Exploiting the Mediterranean tourism potential was out of the question as long as there were no clear signs of peace on the horizon. Nor was it possible to attract multinationals to integrate value chains because of the invisible influence of the Arab boycott. On the other hand, the ever-increasing strategic links with the US since the Six-Day War made it possible to develop fruitful cooperation in the development of both hardware and software linked to defence and security. Israel started to develop and export weapons, defence technologies and also optical instrumentation. Many of these products and services are of double use and Israeli firms progressively started to be interested in developing security products for the civilian markets. The early growth of high-tech industries already in the 1990s is not only due to the link with the US but because the country had the human capital resources to develop those industries. Apart from the existence of top-class universities and technological institutes, Israel benefited in the early 1990s from the unexpected inflow of citizens from the former Soviet-Union, that had just collapsed, including thousands of engineers and mathematicians, that were rapidly integrated into an expanding sector. By the year 2000 the high-tech industry was established.

Looking ahead, Spain will have to adapt its production and export structures to a changing demography, which makes it one of the oldest societies in Europe and in the world at large. The increasing mechanisation of labour-intensive processes and even medium-range technologies in the food and car industries is another challenge, because the level of human capital is found wanting by many multinational companies that might prefer moving to some Central and Eastern European countries or to the Far East.

For Israel, the nature of the challenges ahead is different than for Spain. There is no problem, at least for several decades, with its demographic structure, very young by OECD standards, which will well serve the economy. The real problem and one of the principal challenges it seems, will be simply maintaining the current levels of its existing human capital. First, the effects of the former Soviet immigration of the 1990s seem to have been exhausted. Secondly, the growth of the population due to the large number of children born into orthodox families is not likely to translate into the creation of just the kind of human capital needed in high-tech industries. The other two challenges are of a nature that, fortunately for Spain, the latter does not confront. The first is a hostile political environment, translating into high political risk as perceived by foreign investors. The second, not frequently and sufficiently underlined by policy experts, is Israel’s small geo-economic size. Clearly these latter two factors can only (and even then partially) be overcome by making peace with its neighbours.

From the above analysis, it is obvious that the scope of economic cooperation between the two Mediterranean countries considered is immense and has so far not been duly examined or exploited by enterprises in either country. This analysis should provide some food for thought in this respect.

About the author:
*Alfred Tovias, The Hebrew University

Source:
This article was published by Elcano Royal Institute

Notes:
¹ I would like to thank to Professor Alejandro Lorca, of the Universidad Autónoma de Madrid, and Dr Gonzalo Escribano, of the Universidad Nacional de Educación a Distancia and the Elcano Royal Institute, for their useful comments on an earlier draft of this paper.

Last Wednesday, the Trump transition team disclosed the remarkable news that Ezekiel Emanuel, MD, an architect of Obamacare, was Mr. Trump’s first official guest of the morning. The spokesman demurred with respect to the details of the conversation, but I can guess: Dr. Emanuel was urging Mr. Trump to remain in office only one term, in accordance with Dr. Emanuel’s principle that people should be cut off at age 75.

Dr. Emanuel proclaimed this doctrine in The Atlantic in October 2014. Mr. Trump will turn 75 in June 2021, only half a year after beginning his second term (if elected again). So, surely Dr. Emanuel was just asking Mr. Trump to do himself and everyone a favor by not wasting everyone’s time taking a second run at the presidency.

But seriously, it is not a bad idea for the president-elect to meet with Dr. Emanuel. As I have previously noted, Dr. Emanuel threw in the towel on Obamacare in September 2014. Most of those associated with the law have not been so forthright in admitting it did not achieve its goals.

What was especially interesting about Dr. Emanuel’s change of heart was his insistence that the federal government could not force change on the health system. Instead, he now encourages policies which allow states to innovate. That has long been a Republican principle.

Let’s hope Dr. Emanuel’s visit to President-elect Trump signals acts of contrition from Obamacare’s many other “architects.”

This article was published by The Beacon.

(RFE/RL) –Lawmakers in the U.S. House of Representatives have accused the fugitive national security contractor Edward Snowden of communicating with Russian security agencies while he is exiled in Moscow.

The accusations were contained in a classified House Intelligence Committee report, parts of which were released publicly on December 22. The evidence backing up the specific accusations about Snowden allegedly communicating with Russian agencies, however, remains classified.

Seen as a heroic whistle-blower by some, and a selfish traitor by others, Snowden in 2013 leaked 1.5 million documents he acquired while working as a contractor for the National Security Agency, the premier U.S. electronic surveillance agency. The materials prompted a furious public debate about the legality of some of the agency’s programs, about privacy concerns, and about U.S. snooping on its allies.

Snowden ended up flying to Hong Kong, and then to Moscow in June 2013, where he has lived in limbo since American authorities revoked his passport. U.S. prosecutors have charged him with violations of the 1917 Espionage Act.

Since that time, he has continued speaking about privacy concerns and made clear he wants to return to the United States if he gets certain legal protections.

Many in Congress, however, have excoriated him, and the newly declassified report by what is formally known as the Republican-led House Permanent Select Committee on Intelligence reflected that continuing anger.

“Snowden caused tremendous damage to national security, and the vast majority of the documents he stole have nothing to do with programs impacting individual privacy interests,” the report said. They “instead pertain to military, defense, and intelligence programs of great interest to America’s adversaries.”

The report said that since his arrival in Moscow, Snowden “has had, and continues to have, contact with Russian intelligence services.”

The report redacts the source for this assertion, saying it is classified. But it also cites a National Public Radio interview conducted in June with Frants Klintsevich, who is deputy chairman of the defense and security committee in Russia’s lower house of parliament. In the interview, Klintsevich was quoted as saying, “Let’s speak frankly: I think that he did share intelligence. This is what security services do.”

Snowden responded quickly to the report’s release, posting a series of messages to Twitter dismissing its findings:

After three years of investigation and millions of dollars, they can present no evidence of harmful intent, foreign influence, or harm. Wow.

— Edward Snowden (@Snowden) December 22, 2016

Snowden’s case has generated sympathy among some privacy advocates, and his plight has been the focus of an Oscar-winning documentary and, more recently, a loosely fictionalized political thriller by renowned Hollywood director Oliver Stone.

In September, White House spokesman Josh Earnest brushed aside questions about whether Snowden might be pardoned by President Barack Obama, a call Stone made himself.

“Mr. Snowden should return to the United States and face the very serious charges that he’s facing. He will, of course, be afforded the rights that are due to every American citizen in our criminal justice system, but we believe that he should return to the United States and face those charges,” Earnest said.

By Nick Cunningham

Oil prices are probably already high enough to spark a rebound in shale production.

The IEA says that in the third quarter of 2016, the U.S. shale industry became cash flow neutral for the first time ever. That isn’t a typo. For years, the drilling boom was done with a lot of debt, and the revenues earned from steadily higher levels of output were not enough to cover the cost of drilling, even when oil prices traded above $100 per barrel in the go-go drilling days between 2011 and 2014. Even when U.S. oil production hit a peak at 9.7 million barrels per day in the second quarter of 2015, the industry did not break even. Indeed, shale companies were coming off of one of their worst quarters in terms of cash flow in recent history.

That all changed around the middle of 2015 when the most indebted and high-cost producers went out of business and consolidation began to take hold. E&P companies began cutting costs, laying off workers, squeezing their suppliers and deferring projects that no longer made sense.

By 2016, oil companies large and small had shed a lot of that extra fat, running leaner than at any point in the last few years. By the third quarter, oil prices had climbed back to above $40 and traded at around $50 per barrel for some time, replenishing some lost revenue. That was enough to make the industry cash flow neutral for the first time in its history.

That suggests that moving forward, the shale industry could move into cash flow positive territory. Oil prices seem to be trading safely above $50 per barrel for the time being, and OPEC cuts could induce more price gains. The industry is now focusing on shale plays that have lower breakeven prices, namely, the Permian Basin and some parts of the Bakken. That has companies like Concho Resources, Murphy Oil, Devon Energy, Pioneer Natural Resources and EOG Resources all stepping up their spending levels heading into 2017.

Wood Mackenzie suggests that $55 per barrel is a sweet spot for the oil and gas industry to rebound, a level that is only slightly above today’s prices. At $55 per barrel, the shale industry is cash flow positive and will grow accordingly. “If we stay (at $55 a barrel), the world’s biggest oil companies start to make money again. If we go back down to $50 (or lower) in 2017…then those companies are in the negative territory and they go back into survival mode where they have been in the last two years,” Angus Rodger, WoodMac’s research director for upstream oil and gas, said in a report. He estimates that OPEC’s cuts could succeed in pushing oil prices sustainably up to $55 per barrel. Even taking into account some cheating, WoodMac concludes that a 75 percent compliance rate with the promised cuts would get the markets to that price level.

Still, the seeds of disappoint have already been sown – it is just a question of whether or not they will sprout. The U.S. dollar is at its strongest level in nearly a decade, which will weigh on global crude oil demand. Also, hedge funds and other money managers have staked out the most bullish position on oil futures in more than two years. That has succeeded in running up prices this month, but it also sets up the market for downside risk. Should data emerge in the coming months that some OPEC members are cheating, the net-long positions could unwind. Those liquidations tend to happen quickly, so a sharp fall in oil prices is not out of the question.

“If confidence around the compliance with cuts wavers, the market will necessarily correct lower, considering that it also faces the twin headwinds of resilient U.S. production and a stronger dollar environment as the Fed begins to hike rates,” Harry Tchilinguirian, an analyst with BNP Paribas, told S&P Global Platts.

And while the financial markets present risk, the physical market is also up in the air. Of course, OPEC cheating is a possibility. But with U.S. shale producers already stepping up drilling, production could come back quicker than many expect. Weekly EIA data shows gains of nearly 300,000 bpd since the end of summer. On top of that, disrupted output from Libya and Nigeria – two countries not subjected to the OPEC cuts – could begin to come back. An oil tanker docked at Libya’s largest oil export terminal, Es Sider, this week, was the first tanker to load up Libyan oil from that terminal in more than two years. Libya hopes to add another 300,000 bpd in output in 2017 after adding as much in 2016.

Even with those negative risks in mind, the shale industry is getting back to work. If oil prices can stay roughly where they are right now, the industry could become cash flow positive for the first time ever next year.

Source: http://oilprice.com/Energy/Energy-General/US-Shale-Is-Now-Cash-Flow-Neutral.html

Australian authorities have foiled a “very substantial terrorist plot”, arresting a number of suspects who allegedly plotted a “multi-mode attack” involving guns and improvised explosives in central Melbourne over the Christmas holidays.

Seven people were detained following overnight raids by Victoria Police, the Australian Federal Police and Australian Security Intelligence Organisation (ASIO) on Friday. Five people are still in custody and are answering questions about the alleged terrorist plot.

“Overnight our police and security agencies have disrupted a very substantial terrorist plot,” Prime Minister Malcolm Turnbull said at a press conference.

Police believe that Islamic State/(IS, formerly ISIS/ISIL)-inspired terrorists wanted to use explosives and other weapons on Christmas Day to target locations in the city, including St Paul’s Cathedral, Federation Square and Flinders Street Station.

“What they have uncovered is a plot to explode improvised explosive devices in central Melbourne in the area of Federation Square, on or about Christmas Day,” Turnbull noted.

The suspects planned to attack public sites with weapons and explosives, Victoria Police Chief Commissioner Graham Ashton Commissioner told journalists, adding that that four of the people arrested were Australian-born and aged in their 20s.

“The age groups range between 20 and 24 or 25. There is another suspect in this matter who will be charged that was an Egyptian-born Australian citizen. All the others were Australian-born,” he said.

“We believe [they are] self-radicalized. They are inspired by ISIS and ISIS propaganda,” Ashton added, saying there was no suggestion of international assistance to suspected terrorists.

The Chief Commissioner said that those detained wanted to use a “multi-mode attack” that would involve an explosion and the use of assault weapons.

“We believe it was certainly going to involve an explosive event … we gathered the makings of an improvised explosive device,” Ashton said. “A substantial number of people could have been injured in the attack, from what we’ve seen.”

Victorian Premier Daniel Andrews, who called the plot an “act of evil” promised to increase the police presence at public places in Victoria over the Christmas period.

According to Turnbull, Australian authorities have managed to thwart 12 major plots since September 2014, when the terror threat level was raised. Following 25 counterterrorism operations, some 57 people now face terrorism-related charges.

In recent times, China appears to be closely monitoring the movement of the Dalai Lama and has been protesting to every country that has received the Dalai Lama or given prominence to him.

It is strange that China which is a large country with huge population, strong economy and mighty military power is giving an impression that it is scared of the Dalai Lama, who is a frail elderly person with no military at his command and only possessing attributes of goodwill for everyone.

China opposes the Dalai Lama everywhere

Even after six decades of occupying Tibet, China seems to be concerned that the independent spirit of Tibetans living in exile around the world continue to remain very high. China seems to be so scared of the Tibetan spirit that it opposes the visit of the Dalai Lama to any country in the world.

Due to objection from China and fearing China, Sri Lanka refused to give visa to the Dalai Lama, in spite of millions of Buddhists living in Sri Lanka. A few weeks back, the U S President Obama received the Dalai Lama through the back door, to keep China in good humor.

Measures against defiant Mongolia

The recent visit of the Dalai Lama to Mongolia was opposed by China and China caused crisis in Mongolia to punish the defiant Mongolia. Mongolia’s crisis followed it’s reception of the Dalai Lama last month, triggering a slew of economic measures by China against Mongolia.

China took exception to the statement by Mongolian ambassador to India seeking India’s financial support to override Mongolia’s economic difficulties.

China objects to invitation to the Dalai Lama

Now, China has slammed India for inviting the Dalai Lama for a function in New Delhi, when the Dalai Lama was present in the opening session of the Laureates and Leaders for Children Summit, organized by Nobel Laureate Kailash Satyarthi’s Children’s Foundation on December 10.

In a strongly worded response, China said “Recently in disregard of China’s solemn representation and strong opposition, the Indian side insisted on arranging for the 14th Dalai Lama’s visit to the India presidential palace and participation in the event with the Indian President and meeting with President”. China asserted that it was strongly dissatisfied and firmly opposed.

Moral power versus military power

When China invaded helpless and defenceless Tibet ,it resulted in thousands of Tibetans fleeing from their motherland. Tibetan exiles are now living all over the world mostly as refugees.

The Dalai Lama and Tibetans living around the world as refugees follow the philosophy of Gautama Buddha, which essentially reflects peace and tranquility in their mindset and with malice for none. They are hoping that one day or other, Tibet will once again become an independent country living upto it’s traditions and value systems

The Dalai Lama and many thousands of Tibetan refugees living across the world now enjoy enormous moral power, as the world is conscious of the fact that great injustice has been done to Tibet by China.

The world is highly impressed by the quality of leadership provided by the Dalai Lama to Tibetans, which is symbolized by malice towards none and love for peace everywhere. It is remarkable that the Dalai Lama has not spoken disparagingly about China in any forum, inspite of the enormous sufferings inflicted on the Dalai Lama and Tibetans by China.

There is no doubt Tibet is hanging like Damocles Sword on China. Chinese leadership wrongly thinks that world conscience can be silenced and the presence of the Tibetan refugees and the Dalai Lama can be hidden by forcing every country in the world to ignore the Dalai Lama.

It is obvious that moral power of Tibet is gaining strength over the military and economic power of China. It remains to be seen as to how long China can hold on to it’s ill-gotten Tibet.

The issue is whether China will succeed in seizing control over a large semi-enclosed sea bordered by five Southeast Asian states plus Taiwan and China.

By Marvin C. Ott*

(FPRI) — Author’s note: The translation is verbatim and not edited into literary-grade English. This was done in the belief that the unpolished language of these translations successfully conveys the spirit and meaning of the original. Translation done by Yang Tang, Scholar Intern, Woodrow Wilson International Center for Scholars.

America’s prolonged involvement in armed conflict in the Middle East and Afghanistan has obscured an important truth: the most consequential strategic confrontation on the planet has been building, not in Iraq and Syria, but in Southeast Asia where the U.S. and China are locked in a contest over the future of the South China Sea – and ultimately the rest of the region.

In stark and oversimplified terms, the issue is whether China will succeed in seizing control over a large semi-enclosed sea bordered by five Southeast Asian states plus Taiwan and China. The busiest and most important sea lanes in the world are found in that sea. It is also a rich ocean fishery that sits over potential seabed oil and gas reserves – how substantial they are remains an open question. What is not in question is that effective control over the South China Sea would allow China to credibly threaten the commercial lifelines that sustain the economies of both the Republic of Korea and Japan. The potential for conflict comes from China’s determination to assert sovereign possession and control at the expense of other claimants (Vietnam, Malaysia, Brunei, Indonesia, and the Philippines) and those maritime nations that view the South China Sea as “high seas” and the sea lanes as a global commons. The most potent obstacle to China’s ambitions is the American Navy operating under the U.S. Pacific Command. But the presence of U.S. naval combatants has not deterred China thus far. Over the last three decades, Beijing has undertaken a huge program to build and deploy modern and increasingly capable maritime military forces. The accompanying message to Washington is that the time has come for the U.S. military to withdraw from China’s backyard. China’s dramatic “island-building” campaign is a key element in Chinese strategy. In the process, China has seized a number of atolls and semi-submerged reefs, and through massive dredging operations, it has created permanent sites for ports, airfields, and barracks.’

In one sense, it is surprising that the South China Sea has only become a serious issue in the last few years. The “nine-dash line” that circumscribes the South China Sea on Chinese official maps ’ actually predates the People’s Republic and was the invention of its predecessor, the Nationalist or Kuomintang regime. But for several decades, this putative boundary was shrouded in obscurity, ambiguity, and inattention. Chinese officials seldom mentioned it, and during the few occasions when the government was asked to clarify its meaning (and precise demarcation), there was no coherent response. The reasons for this lack of clarity were, in fact, clear enough. Deng Xiaoping, China’s post-Mao leader, liked to quote a traditional Chinese saying that translates: “Bide your time and conceal your capabilities until you are ready to act.” In Beijing’s mind, the nine-dash line marked a rightful international boundary, but for most of the period since it was first drawn, China lacked the military capability to enforce it. So Beijing chose to bide its time until that capability had been created. By the end of the first decade of this century (ca. 2008-10), China judged that its long wait was over – sustained investments in China’s capacity to project military power into its “near seas” had borne fruit. Beijing launched its first aircraft carrier in 2015, but more importantly, it had built and deployed advanced submarines, fighter aircraft, missile systems, and surveillance capabilities – supported by a number of surface warships or heavily armed “maritime enforcement” vessels. Together with the creation of a number (eight at last count) of actual or potential military outposts on newly built “islands,” these deployments constitute a coordinated military strategy to establish Chinese sovereign control. These “facts on the water” have been accompanied by numerous official statements asserting China’s “indisputable sovereignty” over the South China Sea. President Xi Jinping has publicly described the sea as Chinese territory “since ancient times.”

President Xi notwithstanding, China’s assertions of historical and legal possession of the South China Sea are entirely mythical. China has no plausible case for ownership of the South China Sea under international law – a fact that was conclusively determined in the recent decision by the International Tribunal on the Law of the Sea (ITLOS). Nevertheless, Beijing has continued to publicly insist on its claim – and has continued to act accordingly.

The extraordinary disconnect between China’s stated position on the one hand and the legal and historical merits on the other raises an important question. Is China’s publicly stated position an authentic expression of the views of the Chinese leadership or is there an element of public posturing designed to give China leverage in some future negotiation over the ultimate status of the South China Sea? The question is a live one because American diplomats and scholars still report conversations with their Chinese counterparts suggesting that Beijing’s real position is softer than its public pronouncements. The question then becomes what are the views of those who really count when it comes to China’s security/defense policy – i.e., the leadership of the People’s Liberation Army (PLA) and the Communist Party of China (CCP)? One important window into the former (and by implication, the latter) is what PLA analysts are saying to their own people. This is revealed in untranslated articles in Chinese military journals intended for a PLA audience.

A great deal of analysis and commentary from official Chinese sources on international affairs are available online. Some of it is translated into English and intended for an American or other foreign audience, but much of it is untranslated and intended for a limited domestic audience or for internal government use. With tensions rising in the South China Sea and with U.S. and Chinese maritime forces operating in ever closer proximity, it is important to understand how these developments are being portrayed to a domestic, particularly military, readership within China.

With this requirement in mind, we have translated articles from three Chinese military publications: The Liberation Army Daily, China National Defense News, and China Military Online. These constitute only a tiny sampling of similar material, but they are representative of that larger body of work. They provide important insights into the assumptions and perceptions of Chinese officials – civilian and military – when it comes to the increasingly fraught South China Sea.

Translations of Chinese Text

Below you will find texts originally written in Chinese that have been translated into English.

China Doesn’t Fear or the Trouble on the South China Sea

Publisher: China National Defense News

Author: Zhang Jie

Date: 2015-04-21

Recently, some related or unrelated countries have displayed their existences in different forms on the South China Sea issue. Most importantly, those countries bring China new challenges. From foreign media’s perspective, it is more effective for China to fight back in actions instead of words.

Japan will use “foreign aid” to pressure China

Japan doesn’t belong to the region of the South China Sea, but recently, it has meddled with the affairs frequently. For example, Japan discussed maritime security issues and made a statement at the G7 meeting. Analysts believe that with the adoption of this statement, Japan has the tendency to strongly pull other Member States of G7 for supporting its own policy, and even put pressure on China.

Vietnam makes balance on the policy of “both sides”

Analysts believe that the current Sino-Vietnamese relation is getting warmer, but it still has latent instability. Therefore, China needs to make full preparations. According to some analysts, they believe that the Vietnamese’s attitude toward China has two sides. On the one hand, Vietnamese would like to talk about tradition and friendship instead of completely deadlock-Vietnam relations. On the other hand, it has large-scale importation of foreign submarines, early warning aircraft, anti-submarine aircraft, and other weapons. It is obvious that the military is trying to shorten the gap for confrontation with China in the South China Sea.

Some experts point out that Vietnamese is using the strategy to play balance between the United States and Russia. In order to pull the involvement of the US in the South China Sea for counterbalancing China, Vietnam procures arms from the United States. Meanwhile, it draws Russia for counterbalancing the US. Therefore, the relation between China and Vietnam is currently in a period of relative calm. However, China must be prepared because nobody will secure Vietnam’s action in the future.

Philippines relies on another’s power to frighten others

Another troublemaker over the South China Sea, the Philippines, is frequently provoking China by having the “mouth battle.” According to the analysis, the Philippines will resume restoration and reconstruction activities in the disputed area of the South China Sea. In fact, it suspended these activities because of the undesirable impacts against China’s arbitration. Therefore, the Philippines have reached their purpose by gaining political support from the US and using provocative words towards China brazenly.

China’s Construction over the South China Sea is legitimate

When Hong Lei, the spokesman of Foreign Ministry held a regular press conference, he reiterated main goals for building and maintaining facilities of the Nansha Islands. The targets include improving the relevant function of reefs and personnel’s working and living conditions. In addition, it is significant for China take international responsibilities and obligations to execute search and rescue at sea, disaster prevention and mitigation, marine research, meteorological observations, environmental protection, safety of navigation, and fisheries service’s. The type of construction should be regarded as a matter within China’s sovereignty which is fair, reasonable, and legitimate. There is no doubt that it does not affect any country, thus China hopes relevant parties can treat the issue properly.

Positive Interaction from Both Sides Should be the Right Path Instead of the Unsustainable Cold War Mentality

Publisher: China military online

Author: Zhan Xiaozhuo

Date：2015-07-04

On May 30, US Secretary of Defense Ashton Carter gave a speech titled “The United States and the Asia-Pacific Security Challenges” on the 14th Shangri-La Dialogue conference. Based on his speech, it stressed that the US is committed to maintaining peace and stability in the Asia-Pacific, while it has high-profile sound in the South China Sea; the US is eager to develop the constructive Sino-US relation, while it likes to make irresponsible remarks on China. Carter’s tangle reflects a deep paradox which stands for following the old routine of “zero thinking” of the US, showing muscle, and shielding allies. Thus, the fact is that it is failing in achieving the goal of maintaining stability in the region. During these past few years, many hot and controversial issues have been raised up under the US implementation of rebalancing Asia-Pacific and it is not accidental.

(Three key points)

A. When dealing with the South China Sea issue, it is useless for the United States to strengthen its system of alliance. Instead, it will only complicate the issue.

B. China welcomes the United States to play a constructive role in the Asia-Pacific. From Chinese perspective, it hopes the US will fully respect and accommodate the major interests and legitimate concerns of the countries in the region.

C. Building a positive interaction between China and the US is vital for containing regional security, and the new relationship should start from the region of Asia-Pacific.

Abe Has a Strong Determination for Interfering the Issue of the South China Sea

Publisher: China National Defense News

Author: Wen Weiru

Date: 2015-07-02

Recently, the Japanese Maritime Self-Defense Force and Philippine Navy held joint naval exercises in the South China Sea. Although the exercises were called the “disaster relief training” in the name of humanitarian aid and the size of participating troops was not large, it could not cover up Japan’s intentions in the South China Sea. In the last few years, Japan has deliberately strengthened security cooperation with the Philippines, trying to further expand its involvement as the fulcrum of the intensity of the South China Sea affairs. Therefore, the small-scale military exercises conveyed an important signal: Japan is ready to intervene in the South China Sea issue.

“Big attempts” behind the “Little exercises”

A. To let P-3C anti-submarine patrol aircraft firstly fly into the airspace of the South China Sea by taking advantage of the chance of exercise.

B. To indicate that the Japan-Philippines bilateral military interaction has taken a substantial step.

C. To test Chinese reaction to other countries’ involvements in the South China Sea affairs.

Small role can also lead to a big war

A. Firstly, Japan has regarded the Philippines as an entry point to intervene in the South China Sea issue. Japan promises to provide assistants on economics, diplomacy, defense, and even on public opinion to the Philippines. In addition, Japan takes advantages of the Philippines’s fear to China, continuously demonstrating that Japan would like to play a balancer over the issue of the South China Sea.

B. Secondly, the following policy of Japan will offer strong military supports to Vietnam, Malaysia, Brunei, Indonesia which are the countries having disputes on reefs and sea with China in the South China Sea. In addition, it will use Japan – ASEAN meeting mechanism effectively, drawing and encouraging ASEAN countries to come together. Under such circumstance, the Philippines, Vietnam, and other countries will show more active attitudes towards the South China Sea issue.

It is not difficult to find Japanese strategy in the South China Sea issue from a long term. The strategy is that using the existing “small triangle” coalition forces (Japan-US-Australia; Japan-US-Philippines) as the backbone of the South China Sea and drawing relevant countries to create the Asian version of NATO for the purpose of containing China.

Foreign countries do not underestimate China’s determination for safeguarding its legitimate rights and interests

Publisher: Liberation Army Daily

Author: Qingjie Pang

Date: 05-16-2015

Recently, US officials have claimed that in order to maintain freedom of navigation in the South China Sea, the US military is considering using aircraft and ships to take radical action against the expansion of the Nansha Islands which are built by China. The actions include commanding naval reconnaissance aircraft to fly over the islands, and sending warships to 12 sea miles away from the waters within the reefs. It is said that the plan was awaiting approval from White House.

The people who have some basic understandings about the situation in the South China Sea will undoubtedly feel inexplicable “surprise” when they see this news. Who has given the US confidence and courage to meddle China’s normal activities within its sovereignty? The United States appears to be so “sublime,” standing on the moral high ground by declaring freedom of navigation in the South China Sea. However, when Vietnam, the Philippines, and other countries started “massive construction projects” on the island and reefs which were stolen from the South China Sea, the US chose to ignore it. Obviously, the United States has double standards towards the issue of China and the South China Sea.

This reminds the public of other acts taken by the United States. The US denounces other countries’ network theft, while it uses “PRISM” to control countries including its allies. The US judges other countries’ human rights situations, while it neglects its domestic racial discrimination. There is no doubt that the US cannot measure fair and justice by using double standards, especially over the construction of the reefs on South China Sea. Instead, it shows its selfish and capricious hegemony. For example, some US forces are trying to contain China under a cold war mentality. As a great and powerful nation, such acts conducted by the United States are outdated and detrimental to its own image.

Regarding to the construction of Nansha Islands, it is an entire reasonable and lawful action within Chinese sovereignty. Since China’s construction is not only referring to “nine-dotted line,” but also stationing on Chinese reefs. Therefore, it is completely wrong to say that the ultimate target for the Chinese military is to build reefs is to expand its military power. From Chinese perspective, the government has clearly announced that the goal for expanding operations of reefs is keeping peace. The spokesman of Chinese Foreign Ministry has pointed out that “one of the purposes for China to station in one part of the reef-building is to better fulfill China’s search, rescue, and security of sailing in the South China Sea. In addition, China has international responsibilities and obligations of safety, marine scientific research, and other aspects of commitment.”

In fact, when it comes to territorial disputes, China is always upholding constructive positions. China has already negotiated and settled the border issue with twelve countries which have a common land border with China. Based on the South China Sea issue, although there are some vexatious countries, China always advocates developing negotiated settlement of disputes through dialogue, showing enough patience and sincerity. China’s patience and sincerity should be regarded as following the consciousness of “community of destiny,” pursuing cooperative diplomacy with neighboring countries, and playing a responsible role for keeping steady of international and regional environment.

For a long time, it seems that the US has developed a “militaristic” habit through circumstances in Afghanistan, Iraq, and even Libya. The results of American military intervention are seen globally: frequent terrorist attacks in Afghanistan, increased sectarian conflicts in Iraq, and constant tribal clashes in Libya. In the South China Sea, the United States also shows off its military force and sends military aircraft and warships to China repeatedly for implementing close surveillance. After the collision of two military aircraft between both countries in 2001, the US still supported some vexatious countries instead of repenting its military actions. Nowadays, the United States is threatening to intervene China’s construction of islands and reefs through sending military aircraft and warships to the South China Sea. No one can deny that all of these hegemonic behaviors have demonstrated the continuation of the cold war mentality. The United States’ unwarranted interferences in China’s sovereignty led to tensions in the South China Sea again and again. China is justified in continuing work on reefs, while the United States seeks only to swagger in front of the other’s door. Therefore, when US officials accuse China of exacerbating tensions in the South China Sea, they may have to ask themselves who is exactly creating tensions in the region?

China has never been a militant nation, but it doesn’t show fear to war when it comes. It is impossible for the US, implementing saber-rattling, to force China to give up its legitimate rights. Instead, it will further arouse Chinese strong determination on safeguarding their legitimate rights and interests. President Xi has seriously claimed that: “Any foreign countries don’t expect that we will take our core interests to do business. Furthermore, we will not swallow the bitter pill which is harmful to our sovereignty, security and development interests.”

As the largest developing country and the largest developed country in the world, China will inevitably have differences and disagreements with the United States. However, cooperation should be regarded as the mainstream of building bilateral relations. The United States should pay attention to the overall situation of bilateral military relations and inject “positive energy” on remaining stability of global and regional areas. In order to develop military relations with other countries, the United States has to effectively abandon the outdated Cold War mentality and the bad habit on using military for provocation.

Major Themes in the Chinese Texts

A first reaction from reading these military commentaries is that there is little here that is genuinely surprising or novel. What the authors are saying to their own people tracks with what defense commentators have been saying to external audiences. Nevertheless, a careful reading is revealing. What emerges is a contrasting portrayal of China and the U.S. that is starkly Manichean – both strategically and morally. Some of the key points are:

• China’s sovereignty encompassing the maritime regions within the “nine-dash line” is assumed and unquestioned. ’Its activities within that space, notably the construction of artificial islands with infrastructure to house personnel, berth ships, and deploy aircraft, is entirely benign. The purpose of all this activity is to “better fulfill China’s search, rescue, and security” responsibilities including its obligations regarding “safety, marine scientific research and other commitments.” The environmental impacts of these activities go unnoted.

• China’s intentions are “constructive” and morally admirable. Where territorial disputes exist, advocates negotiated settlement “through dialogue showing patience and sincerity” – as evidenced by China’s record of settling land borders with 12 countries through [bilateral] negotiations. China’s “responsible role” in the region reflects its aspiration to build a regional “community of common destiny.” By clear implication, this community is not just a political or economic construct, it is a moral one.

• By contrast, the U.S. approach to the region and the South China Sea is morally defective – hegemonic, selfish, militaristic, and provocative. America’s “Cold War mentality” has created and stoked tensions that otherwise might not exist. U.S. “saber-rattling” is intended to intimidate China, but these efforts will fail. “China has never been a militant nation, but it doesn’t show fear . . . [U.S. actions] will further arouse China’s strong determination to safeguard its legitimate rights and interests.” The moral critique goes on to include U.S. hypocrisy, racism, and retrograde “Cold War mentality.” It is America’s responsibility to reform its behavior and act in a “positive” manner worthy of a “great and powerful nation.”

The authors note the presence of certain “vexatious countries” that assert territorial claims in conflict with China’s rightful sovereignty in the South China Sea. At no point is there any suggestion that the views of such countries should be taken seriously. This contrasts with work by analysts in academic settings (Shanghai International Studies University and Xiamen University) as well as the Foreign Language Institute of the PLA. In a selection of Chinese language articles focused on Malaysia, the authors are careful, but do suggest that an understanding of Malaysia’s interests and concerns can help guide a successful Chinese policy toward that country.

This article has a dual structure: an overview of the situation in the South China Sea followed by translations of Chinese materials related to this issue.

About the author:
*Marvin C. Ott is Visiting Professor, Johns Hopkins University, and Senior Scholar, Woodrow Wilson International Center for Scholars.

Source:
This article was published by FPRI.

By Giancarlo Elia Valori*

As by its fruit you will recognize the tree – as the Gospel reads, by his/her collaborators you will recognize the political leader. The government formed by the President-elect, Donald Trump, include few representatives from the Republican Party, yet another confirmation of the decline and fall of the parties in the West – a structure which, however, will be reborn under other forms. It also includes many military, particularly those most tacitly irritated with Obama’s policies, and many super-rich people.

The only strange presence in Trump’s Cabinet is the Chairman of the Republican National Committee, Reince Priebus, as Chief of Staff.

Hence if the government is in elites’ hands, hence political elites still count.

However, with a view to better understanding the structure and the future decision-making of Donald Trump’s Presidency, we need to delve into the personality of those appointed before January 20, 2017, the date on which he will be sworn in as President.

Michael Flynn who, by no mere coincidence, has been the first of his collaborators to be appointed, will be the Head of National Security.

Flynn has a complex personality: born in 1958, at the end of his career in the military, he was Director of the Defense Intelligence Agency until August 2014.

It is the primary military foreign intelligence Agency, which supposedly has approximately 17,000 people operating abroad, of whom over 65% are civilians.

In 2010 he published a polemical report on operational intelligence in Afghanistan, “A Blueprint for Making Intelligence relevant in Afghanistan” – a clear sign that the US intelligence services operating in that country were not efficient.

Flynn was also assistant Director of the National Intelligence, as well as senior officer of the Joint Special Operations Command.

Nevertheless he had to retire when he stated, also within the Administrations, that America was less safe than before 9/11 and that President Obama’s narrative of an Al Qaeda virtually reduced to nothing was false and dangerous.

However the real break with Obama’s Presidency took place when Flynn criticized the slow pace with which Obama wanted to support the anti-jihadist opposition in Syria, thus de facto favouring the growth of Al Nusra Front and of many other jihad small groups – in fact, they just had to fight against the “tyrant” Bashar al-Assad.

Exactly the same crazy policy line as Hillary Clinton’s.

After retiring Flynn created a small company, Flynn Intel Group.

Again in the field of intelligence, which rightly ranks first in Trump’s thoughts, unlike our funny rulers who use it for their internal struggles, the President-elect Trump has appointed the Republican Congressman, Mike Pompeo, as CIA Director.

Having clear Italian origins, he is still a member of the Tea Party Movement within the Republican Party and he is also Kansas representative.

He is the usual lawyer, just to reaffirm the witty remark by Alexis De Tocqueville according to which America is a country dominated by lawyers.

He graduated from Harvard Law School where he was an editor of the Harvard Law Review, but he had previously enrolled at the West Point US Military Academy, where he graduated first in his class. While serving as cavalry officer, he patrolled the Iron Curtain before the fall of the Berlin Wall.

His last military assignment was during the Gulf War.

He also founded Thayer Aerospace and Private Security, later renamed Nex-Tech Aerospace, before becoming President of Sentry International, an oilfield equipment company.

He has promised to the President-elect of “rolling back” the nuclear agreement with Iran.

Trump rightly knows that nuclear control is essential for any country’s power projection, while we made our excellent nuclear system be taken away through a miserable referendum in the hysterical wake of the Chernobyl events, which had nothing to do with nuclear power but much with the self-destruction of the Soviet system.

The fraud lay in the way and, above all, in the timing.

Furthermore, however, referendums on complex issues having great national relevance must never be held. This applies also to the next reform of the Constitution.

Along with Mike Pompeo, another politician, Jeff Sessions, has been appointed as Attorney General.

He served as Attorney for his home State, namely Alabama.

Certainly Trump has selected him because he was the leading Congressional opponent of illegal immigration.

Supporter of the war in Iraq, he introduced legislation to increase the death gratuity benefit for families of servicemembers to 100,000 US dollars. He is advocate of the most restrictive laws on drug use and believes that sanctity of life begins at conception – which would be obvious, but for many people it is no longer so.

He does not believe – and rightly so – in the rhetoric of climate change, which is the wrong extension, over time, of the particular trends of a climate phase. A mathematical error, over and above an ecological one.

Reince Priebus, the Head of the Republican Party, has been appointed as Chief of Staff.

Let us see why the Chairman of the Republican National Committee who abhorred Trump’s candidacy from the beginning was appointed to such an important position by the first victim of the Party, namely the new President.

Reince is an attorney and an American politician, the Chairman of the Republican National Committee.

Son of a father of German origin and of a mother of Greek descent, he did not graduate in Law directly, but he previously majored in English and Political Science.

In politics, he tried to reconcile the Tea Party Movement with the majority line of the “old” Republican Party and, before this policy being used by Trump as a winning strategy, he had set the goal of transforming the Party to be a force “from coast to coast” and no longer considering the losing logic of approaching electoral politics from a Red Democratic and Blue Republican State perspective.

A party united even with the Tea Party movement and the traditionally conservative fringes, in line with the current Republicans’ policy.

Stephen Bannon has been appointed as Chief Strategist and Senior Advisor to Trump’s Cabinet. He was executive Chairman of an important website in the American political debate, www.breitbart.com, which has offices in California, London, Jerusalem and Texas.

It is a usually well-informed website, which often deals with issues such as national security and “big government”.

Stephen Bannon is a businessman who has always worked as media executive and became chief executive officer (CEO) of Donald Trump’s election campaign.

In the United States Breitbart has always been considered a “far-right magazine online”, but in fact it appears as a well-informed conservative website.

His current post as Chief Strategist and Senior Counselor for Trump’s Cabinet has a very wide scope which, however, can guide and direct also the other members of the inner Cabinet.

Bannon had started his career in the Navy, by becoming special assistant to the Head of operations in the Pacific region.

Subsequently Bannon worked at Goldman Sachs as investment banker and, later, he and his colleagues left Goldman Sachs to found Bannon & Co. – a “boutique investment bank” specializing in the media sector.

In particular, he negotiated the sale of Castle Rock Entertainment to Ted Turner.

In 1998, Bannon and Co. was purchased by Société Générale.

Later he produced as many as 18 movies in Hollywood, including a documentary film about Ronald Reagan and he adhered to the Tea Party – yet another member of this movement in Trump’s team.

It is worth recalling that the Tea Party is a movement born in 2009 to defend free market and traditional American freedoms. It harshly criticizes excessive taxation in the country.

Bannon also founded the Government Accountability Institute, which monitors and checks the US governments’ efficacy in implementing the programs announced during the election campaigns.

Later he embarked on the adventure of the website Breitbart.

Trump has appointed him because he wants an integrated communication of his policies, which will be very different from the current US ones, especially as regards the relationship with NATO, which shall be balanced between Europe and the United States, as well as communication about and against the Islamic world.

But the true leader of Trump’s White House team is his son-in-law, Jared Kushner, the owner of Kushner Companies, who publishes the weekly New York Observer.

Like Trump, Jared Kushner has continued his father’s profession as real estate developer.

He is an orthodox Jew grown up in New Jersey. In 2003 he graduated cum laude from Harvard College in sociology, and then in Law from New York University.

During the election campaign of his father-in-law, Donald Trump, he was the architect of his digital, online and social media campaigns. He is believed to be responsible for the choice of Governor Mike Pence as Vice-President – in short, he was a perfect advisor for Donald Trump in all the phases of his election campaign.

He will probably be the real insider of his father-in-law’s government. Meanwhile, the White House rooms and kitchens have already been equipped for the kasherut.

The 45th President of the United States has two primary foreign policy goals: to gradually leave Europe to its fate and mend the relationship with Putin’s Russian Federation.

The new Secretary of State, Rex Tillerson, the CEO and Chairman of ExxonMobil is a personal friend of Vladimir Putin and Suchin, the Head of the former KGB members who have had a career in the Kremlin.

He has signed an agreement to explore and develop oil fields in Kurdistan, even against the Iraqi law, and he is a friend of the Iraqi Kurdistan’s leaders.

He has openly spoke against sanctions on Russia and has strongly supported the trade agreement with the Pacific region (TPP). He is also a prominent member of the Center for Strategic and International Studies (CSIS).

He is the man of the great thawing of relations with Russia, the axis of Trump’s next foreign policy, which is counterbalanced by rigidity vis-à-vis China that will probably lead to new agreements on monetary and financial exchange between the United States and China.

The other people appointed are technocrats (with similar political ideas): Tom Price, an orthopedic surgeon from Georgia, responsible for Health and Human Services; the millionaire Wilbur Ross, who advocates customs duties for China, as Secretary for Commerce; Betsy DeVos, education activist known for her advocacy of school free choice, as Secretary for Education; Nikki Haley, the Governor of South Carolina, of Indian origin, as Ambassador to the United Nations; Ben Carson, a black surgeon coming from a poor family, as Secretary for Housing and Urban Development. Probably other technocrats will be later appointed.

A government created to last, which really represents the professionals of the best “civil society”, as we call it – unlike “I Moribondi del Palazzo Carignano”, just to use the beautiful title of the memoirs of one of the first members of Parliament of the Kingdom of Italy, Petruccelli della Gattina.

It should be a model also for Italy.

About the author:
*Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “La Centrale Finanziaria Generale Spa”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title of “Honorable” of the Académie des Sciences de l’Institut de France.

Source:
This article was published at Modern Diplomacy

Is Donald Trump a Foreign policy Realist or a Huntingtonian crusader? And if he is or isn’t, what can we predict from his administration? This question needs an urgent assessment, as that might answer whether there’s a possibility of a massive civilizational war in Middle East, which will directly affect all great powers, including India.

The literature on this is still somewhat open-ended, and there is unsettled debate that went on for months. Dan Drezner started it, when he claimed that Realists should endorse Trump, as he had stark interest based and cynical approach unseen in American Foreign Policy consensus for a while. To his credit, he has, since then corrected his position, and now thinks Trump is Huntingtonian and believes in civilisational clash. However, the debate raged on. Rosa Brooks wrote that Trump has a coherent Realist foreign policy, as did Bjornson, in Dugin’s website in Russia. Rovere went ahead and even categorised Trump as Nixon-Kissingerian. Joni Ernst said she’s a Realist and she wants to vote Trump, although to be fair, there can be sufficient doubt that she knows what Foreign policy realism is. Luttwak recently wrote, Trump’s foreign policy ideas contain a lot of rationality and realism.

The push back against this was extreme as well, predictably, mostly from Realists. Walt wrote that Trump is quite obviously not a realist, as did Jeremy Shapiro. Zenko agreed and wrote the only realism that can be attributed to Trump is magic realism. Robert Kaplan concurred. John Mearsheimer, in fact went ahead and prescribed a neorealist foreign policy that Trump “should” follow, but which, for all practical purposes, is highly unlikely to pass given the reflexive blob-ian thinking prevalent in DC.

Where do we stand now, and ultimately what is Trump and how would he chart his foreign policy? The answer has two components in it, and one variable to tie it up.

Without going into theoretical details of what foreign policy realism is or what philosophical roots it traces its origins from, there are currently three primary assumptions that shapes a Realist foreign policy. First of all, Realists of all shades agree on the primary assumption that international system is anarchic, and there is no global policeman to enforce any international law or norms. As a result, norms, values, law, trade and domestic concern, while all important factors, fades in comparison to a Great power’s interest and spheres of influence, and raw aggregate power to achieve those interests. It is in this part, the Realist theory of IR and Realism as a foreign policy gets more complicated.

Assuming that states act primarily keeping their survival in mind, in international affairs, the existential threats for great powers therefore differ. For example, Syrian civil war, while a terrible human tragedy, is not an existential threat for American interests. Infact, other than North Atlantic, or Asia-Pacific, the two regions which are or can be considered existential for US hegemony, every other region of the world is an area where US can choose whether to engage in a conflict or not. Syria, of course, on the other hand, is the only middle-eastern warm water naval port for Russia, and an existential Sunni threat to Iranian influence in the region. For those two powers, it is not a choice, but a prime concern for their geopolitical influence.

Donald Trump tapped on to this transactional approach and public mood. A military strategy of Buckpassing or Bloodletting in Middle east would have been perfectly sufficient for maintaining overall American offshore balancing role, but instead, both the Liberals and Neo-Conservatives steadily spent American blood and treasure in a region which is of steady declining geostrategic importance.

Trump channeled some of the concerns Realists have long raised. NATO burden sharing and Middle East interventions are classic examples. Bob Gates and Ash Carter raised similar concerns about NATO but Europeans were too complacent thinking American security umbrella would forever be there to cover European security needs, as European states steadily decrease their military and Intel spending and increase social welfare…until Trump happened. Similarly, American public, just like majority of the academic Realists, is opposed to intervening in Middle East, as PEW surveys proved over and over again both during Libya and Syria. Trump understood and channeled such concerns, and therefore sounded like he is a stark Realist.

Unfortunately, there’s where the similarity ended. While raising important points, with regards to NATO and Middle East, Trump is on a collision course with China, something no Realist would advice, at least not at this stage. Realists believe in relative gains, and no Realist worth his salt would suggest starting a devastating trade war with China. No Realist would also radically alter Taiwan policy, simply because logically Taiwan is qualitatively no different than Georgia in 2008, and it is puerile to expect American cavalry to rush in to save Taiwan and risk war with China. Infact, Kissinger, in his last long interview, actively suggested that a burden sharing and G2 with China would benefit overall long term American interests more.

Similarly, while there is scholarly consensus among Realists that Russia is a declining power in the long term, with declining demographic trends, mono industrial economy, and one way brain drain, there is however no Realist who would suggest that Russia is not a Great power. While agreeing to the fact that there are areas where the West can cooperate with Russia, like Islamic terrorism, nuclear proliferation and space cooperation, Realists would still argue that Russia is the only country that can realistically pose an existential challenge to US, due to her sheer military might. Russia also has its own specific spheres of influence, just like any great power, which needs to be respected.

So, what evidence do we find of Trump’s policies? Till now, his foreign policy team is filled with either prospective Neocons, and clash-of-civilisation enthusiasts, who want to double down on a moral crusade with Islam and Islamism, and simultaneously antagonize the second biggest American peer rival in Asia-pacific. While it is unlikely, that Trump can go full Huntingtonian, even if he wants, as the structural constraints of world politics, as well as the logistical limitations of a global civilizational crusade will hinder such grand standing, it is fair to conclude, that the debate about Trump being a Realist is over for good. Trump, for all practical purposes, is a mercantilist, without any coherent vision or universal grand strategy, and his chosen team thus far is contradictory to his proposed isolationism. Only time will tell, which pull is stronger, further engagement and civilisational crusade, or a draw back from the liberal overreach America is already suffering from.

This article appeared at CLAWS

Scientists have discovered that climate change affects biodiversity most strongly in the most natural environments, as well as the most nutrient enriched environments. This means that these extremes are most susceptible to future changes in temperatures.

The results are just published in the highly regarded journal Nature Communications.

We still know fairly little about the specific impacts of climate change and human activity, such as nutrient enrichment of waterways, on broad geographical scales. Researchers from the Department of Geosciences and Geography at the University of Helsinki, the Finnish Environment Institute, and the Nanjing Institute of Geography and Limnology, Chinese Academy of Sciences have studied hundreds of microcosms in mountainous regions with the aid of natural temperature gradients in the studied areas, while modifying the enrichment level in field tests.

The results indicate that the bacteria in elevated tropical areas are similar to e.g. those in arctic areas. As a result of changes in temperature and aquatic enrichment, significant alterations occur in the microcosms, and as the enrichment increases, biodiversity reduces, said Associate Professor Janne Soininen.

Experiments in mountainous regions indicated that differentiating between the effects of temperature variations and aquatic nutrient enrichment can help us understand the possible effects of climate change in different environments.

The typically austere, i.e. nutrient-poor, waters in the north, for example, are extremely susceptible to temperature variations, and as the climate warms up, species that have adapted to the cold will decline. The only good news is that biodiversity may improve at first, as the climate warms up, as species that thrive in warmer areas increase, until biodiversity again starts to decline when the temperature continues to rise.

Another significant finding in this research was that, like plants and animals, different species of bacteria clearly live at different levels of elevation, and the bacteria in high mountain areas in the tropics are similar to the bacteria in arctic areas, due to the similar cold climate.

Roads are paved with obstacles than can interfere with our driving. They can be as easy to avoid or adjust to as far-away debris or as hard to anticipate as strong gusts of wind. As self-driving cars and other autonomous vehicles become a reality, how can researchers make sure these systems remain in control under highly uncertain conditions?

A team of automation experts may have found a way. Using a branch of mathematics called fractional calculus, the researchers created tools called disturbance observers that make on-the-fly calculations to put a disturbed system back on track.

Disturbance observers are not new to the world of automation. For decades, these algorithms have played an important role in controlling railways, robots, and hard drives. That’s because, unlike other algorithms that aim to minimize interference, disturbance observers rely only on the signals that go into and come out of a system; they know nothing about the interfering signal itself.

What is new is how automation algorithms have begun to perceive the world around us. Engineering processes previously described using Newtonian physics and calculus are being recast in the light of so-called fractional calculus. This more general form of calculus is better equipped to model the real processes that affect how automated systems operate, such as battery discharge and the memory-like behavior of electrical circuits.

Using fractional calculus, the team of researchers created a suite of observers that could accurately estimate disturbances of varying complexity. When tested on a model of a gas turbine, two observers clearly outperformed the rest. And when combined, the pair operated well under the harshest conditions, keeping close track of highly fluctuating disturbance signals.

Disturbance monitoring, however, is only half the battle. Once the signal associated with a disturbance is carefully measured, it has to be eliminated. Future studies will be dedicated to figuring out how disturbance observers can be coupled with other control elements to make machines operate even more smoothly.

United Nations Secretary-General Ban Ki-moon on Friday welcomed the adoption of a Security Council resolution which states that the establishment of Israeli settlements in Palestinian territory occupied since 1967, have “no legal validity,” constitute a “flagrant violation” under international law and are a “major obstacle” to a two-State solution and a just, lasting and comprehensive peace.

“The resolution is a significant step, demonstrating the Council’s much needed leadership and the international community’s collective efforts to reconfirm that the vision of two States is still achievable,” the UN chief’s spokesperson said in a statement.

“The Secretary-General takes this opportunity to encourage Israeli and Palestinian leaders to work with the international community to create a conducive environment for a return to meaningful negotiations,” the spokesperson added. “The United Nations stands ready to support all concerned parties in achieving this goal.”

Earlier this afternoon, the 15-member Council adopted the resolution by a vote of 14 in favour and with one abstention – the United States abstained from the vote. The resolution had been put forward by Malaysia, New Zealand, Senegal and Venezuela.

In the resolution, the Council reiterated its demand that Israel “immediately and completely cease all settlement activities in the occupied Palestinian territory, including East Jerusalem, and that it fully respect all of its legal obligations in this regard.”

The Council also underlined that it will not recognize any changes to the 4 June 1967 lines, including with regard to Jerusalem, other than those agreed by the parties through negotiations.

The resolution called for immediate steps to prevent all acts of violence against civilians, including acts of terror, as well as all acts of provocation and destruction, and for accountability in that regard, as well as for both parties to act on the basis of international law, including international humanitarian law, and previous agreements and obligations, “to observe calm and restraint, and to refrain from provocative actions, incitement and inflammatory rhetoric.”

It further called for compliance with obligations under international law for the strengthening of ongoing efforts to combat terrorism, including through existing security coordination, and to clearly condemn all acts of terrorism.

The Council also urged for intensification and acceleration of international and regional diplomatic efforts and support aimed at achieving, without delay a comprehensive, just and lasting peace in the Middle East on the basis of the relevant United Nations resolutions, the Madrid terms of reference, including the principle of land for peace, the Arab Peace Initiative and the Quartet Roadmap and an end to the Israeli occupation that began in 1967.

As Singaporean society becomes increasingly and intimately interwoven with technology, a new national security challenge may emerge which Singapore will have to contend with.

By Norman Vasu and Benjamin Ang*

Technology brings convenience even as it exposes societies to a wide array of risks. Many national security issues Singapore may face will emanate from the fact that our lives have fused with technology. Smart phones have become an extension of our brains, our devices watch our behavior as much as we watch them, and social media influences what we believe to be true.

This technological genie can neither be put back into the bottle nor should we attempt to be Luddites and avoid progress. As such, it behooves us to be aware of the possible dangers so that we can take steps to mitigate them.

Distortion of Perception

The viral spread of fake news and disinformation online gained international notoriety in this year’s post-factual US Presidential Election campaign. A major state actor (Russia) has been accused of manipulating opinion and decision-making to create discord, uncertainty, and doubt, to achieve its political objectives – the same tactics it has been accused of employing against Estonia and Ukraine in the near past.

This is worrying because any other state, or terrorist group, can easily adopt these tactics anonymously in situations where they feel diplomacy would be ineffective and all-out war would be too costly. Moreover, the tactics are also available to cybercriminals to exploit for profit.

While propaganda and psychological operations are old tactics of information warfare, social media groups have amplified their reach exponentially today, as each group self-selects and trusts its own messages, bypassing (and often rejecting) critical peer review, and supporting their own biases.

In these groups, teams of ‘trolls’ – malicious persons acting as group members – have completely bypassed mainstream media channels to create online persona, images, messages, videos, comments and campaigns that spread disinformation. These ‘trolls’ can be state-sponsored, or profit-driven (successful fake news websites earn substantial revenues from online advertisements), or even potentially artificially intelligent chatbots.

In addition, many social media platforms and search engines use computer programs and algorithms to filter what news posts or search results we see, generally to show us information which coheres with what we have liked before. This exacerbates the effect by creating filter bubbles or echo chambers where conspiracy theories thrive and facts can be dismissed. German Chancellor Angela Merkel called them out this year for this lack of transparency that “distorts perception”.

Facebook is now trying to combat the fake news plague. But many, even in technology-savvy Singapore, still do not recognise that their Facebook news feeds and Google searches show them the most popular results, not necessarily the most truthful or accurate ones.

Beyond Disinformation

Disinformation tactics are sometimes accompanied by cyberattacks, like the breach of the Democratic National Convention email servers this year, or the persistent low-level attacks on Estonia’s ministries, banks, and media in the past.

As the Internet connectivity and mass transport breakdowns this year reminded us how much Singaporeans rely on technology in daily life, we wonder if our highly-connected citizens, used to efficiency and stability, may be ill-equipped to deal with a slow drip degradation of services, especially if accompanied with fake news campaigns sowing discontent.

Even without cyberattacks, opportunistic adversaries can exploit societal changes with fake news. As the Fourth Industrial Revolution continues at pace in our technologically driven society, with artificial intelligence and automation replacing human work, many blue and white collar jobs may be eliminated forever. As a society, we need to ensure that economically displaced citizens are kept meaningfully engaged, lest they become vulnerable to misinformation campaigns promoting xenophobia, extremism and scapegoating.

Developing Resilience

Since attempts to spread fake news cannot be avoided, a great cyber wall cannot be created to protect us from every cyberattack, and the changes to society brought about by fast-paced technological change cannot be stopped, the best solution is to develop resilience all through society to mitigate these challenges.

At the individual level, resilience can be found through the learning of new enhanced skills of media literacy and critical thinking to deal with the new deluge of information. These are skills enabling Singaporeans to both discern between truth and falsehood online and to avoid contributing to the spread of falsehood and distorted information.

At the community level, we can build our cyber resilience by training to respond to attacks, just as we have fire drills and emergency drills today. At the industry level, beyond maintaining robust cybersecurity measures, businesses can build resilience by training to respond to breaches, and by maintaining backup systems that can be called upon in times of emergency.

Finally, at the state level, the government plays the key role of chief coordinator to encourage the development of resilience within society towards these new national security challenges. Overall, the social and technological challenges of the future cannot be avoided, and should certainly not be feared, but should be prepared for.

Norman Vasu PhD is Deputy Head of the Centre of Excellence for National Security at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Benjamin Ang is Coordinator of the Cybersecurity Programme in the same Centre. This appeared earlier in TODAY.

The Punjab government offered interest free loans to more than 400 Christian entrepreneurs on Dec. 20 at an event held in a Protestant cathedral as part of ongoing Christmas celebrations.

“We have come to share your joys in the house of God. Christians are our priority as we feel they are far behind others,” said Dr. Muhammad Amjad Saqib the chairman of the Akhuwat (brotherhood) Foundation during an address to beneficiaries of Chief Minister Punjab’s Khud Rozgar (self-employment) scheme at Central Cathedral of Praying Hands in Lahore.

“The Muslim majority must protect the rights of religious minorities who feel insecure in the country. It’s not about giving money but building a relationship of friendship,” said Saqib.

Each of the entrepreneurs received different loans ranging from 10,000 rupees (US$ 95) to 50,000 rupees (US$ 477). All up, $US 92,058 was given out in loans.

Informal moneylenders in villages and cities in Pakistan are known for exploiting needy people by offering private loans loaded with huge interests rates.

The Khyber Pakhtunkhwa Assembly in September passed a law that recommended up to 10 years imprisonment for those exploiting the poor in the guise of loans.