Okay, it’s that time of year when we are all supposed to commit ourselves to performing nearly impossible tasks over the next twelve months. I will play the game. Here is the list of areas where I will try to bring economics into economic policy debates in 2019.

1) Patent and copyright monopolies are government policies:

This one is pretty simple, but that doesn’t mean it is easy. It should be pretty obvious that these and other forms of intellectual property are government policies explicitly designed to promote innovation and creative work. We can (and have) make them stronger and longer, or alternatively make them shorter and weaker, or not have them at all. We can also substitute other mechanisms for financing innovation and creative work, including expanding those already exist. (Anyone hear of the National Institutes of Health?)

Incredibly, most policy debates, especially those on inequality, treat these monopolies as though they were just given to us by the gods. It is endlessly repeated that technology has allowed people like Bill Gates to get incredibly rich, while leaving less-educated workers behind. But that’s not true. It is our rules on patents and copyrights that have allowed people to get enormously wealthy from technological developments. With a different set of rules, Bill Gates would still be working for a living.

There are a few pieces on the topic here, here, and here (chapter 5).

2) Patent and copyright rents are equivalent to interest payments on government debt:

This is a point that directly follows from the recognition that patent and copyright monopolies are government policies. We can think of granting these monopolies as alternatives to direct government spending.

This is clearest in the case of prescription drugs. Currently the federal government spends roughly $40 billion a year to finance biomedical research through NIH and other government agencies. Suppose it instead spent $100 billion, largely displacing the private pharmaceutical industry. This money would support not only the development and testing of new drugs, but bringing them through the FDA approval process. Then almost new drugs could be sold at generic prices, which would generally be less than one-tenth the price of a patent protected drug.

In this scenario we would all recognize the $60 billion in additional research spending as an addition to the debt which would lead to interest payments in future years. But we treat the patent rents that the drug industry receives (currently around $360 billion a year or 1.8 percent of GDP) as somehow being free to the country.

Well, fans of economics should see the drain from $360 billion in patent rents to the drug industry as being equivalent to the drain from an additional tax burden of $360 billion. After all, it really doesn’t matter to most people whether the government has a tax on drugs that comes to $360 billion annually or the industry can use its patent monopolies to raise prices by this amount.

For some reason this point never comes up in debates on the budget deficit and debt. That makes zero sense.

3) Austerity has costs

It is now widely accepted among economists that governments around the world were overly concerned about budget deficits following the Great Recession. The United States, the euro zone, and the United Kingdom all turned towards deficit reduction in 2011, following an initial period of stimulus. This turn to austerity slowed growth and needlessly kept millions of people from having jobs. It also contributed to an upward redistribution of income, especially in the United States, as high unemployment reduced workers bargaining power and prevented them from securing real wage gains.

Not only did austerity have a large short-term effect, it also had a substantial long-term effect. One result of millions of people being unemployed for long periods of time is that some number will become unemployable, as they no longer have the necessary skills to get work or develop problems with alcoholism and other issues. The children of unemployed workers also tend to do less well in school. And, lower levels of output will lead to less public and private investment, which means the economy will be less productive in the future.

The lasting impact of unnecessary austerity can easily be several percentage points of GDP. While this loss is huge compared to the impact of other policies, for some reason the perpetrators of the policy of unnecessary austerity are never held accountable in public debates.

The best comparison here is the treatment of proponents of protectionism. Donald Trump and his followers in pursuing a trade war are routinely derided in both the opinion and news sections for needlessly jeopardizing the health of the economy. Yet, the proponents of austerity back in 2011, which includes pretty much the entire Republican party, along with “fiscal responsibility” groups like those sponsored by Peter Peterson, advocated and implemented policies that were far more damaging to the economy.

The same is true in the United Kingdom, where the austerity imposed by the conservative government beginning in 2011 has done far more damage to the country’s economy than can be expected from an orderly Brexit. Yet, the latter are routinely derided in the media, while the damage done by the former goes largely unnoticed.

I am not an advocate of foolish protectionist policies (although some of the policies associated with “free trade” are in fact protectionist, like longer and stronger patent and copyright protections), but I do like to see serious discussions of economic issues. Tariffs and other trade restrictions generally hurt growth, but needless austerity hurts growth much more. If the people advocating trade restrictions are foolish, then the austerity proponents are really really foolish. It would be great if these issues were reported in a consistent manner.

4) We can have trade in highly paid professional services

One of the standard lines in the story of globalization is that manufacturing workers in rich countries have lost out because hundreds of millions of people in the developing world can do the same work for a fraction of the pay. This is true, but it is also true that there are tens of millions of smart and hardworking people in the developing world who would be prepared to work as doctors, dentists, and in other highly paid professions in the rich countries at a fraction of the pay of the people now in those positions. We structured our trade policy so manufacturing workers have to compete with workers in the developing world and doctors and dentists mostly do not.

This is again a policy choice. We can design trade deals to have clear standards that professionals in the developing world would have to meet to work in their profession in the United States, but having met these standards, they would be able to work in the United States with the same freedom as a native born citizen. The gains from adopting this approach would be enormous (it’s the same argument for gains from trade generally), my calculation is that it would be close to $100 billion a year (0.5 percent of GDP) in the case of foreign trained doctors alone.[1]

Given the power of the lobbies of doctors and other highly paid professionals, we are unlikely to see much progress in trade liberalization in this area any time soon. But, we should at least be clear in telling the story of globalization. Manufacturing and other less-educated workers have been hurt by globalization because we designed it to put them in competition with low paid workers in the developing world. Doctors, dentists, and other highly paid professionals have not been hurt because we decided to leave in place barriers that protect them from such competition.

5) Shareholders have an interest in reducing CEO pay

CEO pay has skyrocketed in the last four decades. Somehow, the conventional story is that shareholders are in cahoots with the CEOs to give them ever larger paychecks. This makes zero sense.

CEO pay is a subtraction from profits in the same way that pay for assembly line workers, retail clerks, or custodians is a subtraction from profits. Shareholders are usually not happy if their retail clerks get higher pay, with no corresponding increase in productivity, compared with clerks in other companies. For the same reason, they should have no desire to see their CEOs get more money than necessary for their performance.

There is overwhelming evidence that CEO pay does not correspond to the return they provide shareholders. I did a short study on this issue with Jessica Schieder at EPI, where we looked at the impact of the limit of the tax deductibility of CEO pay for health insurers, that was part of the Affordable Care Act (ACA). We used a wide variety of specifications and in none of them were we able to find any negative impact on pay. This is in spite of the fact that the ACA unambiguously raised the cost of a dollar of CEO pay to shareholders, which should mean that CEO pay would fall after adjusting for earnings growth, revenue growth, share prices growth, and other factors.

The most plausible reason why CEO pay doesn’t fall is the corruption of the corporate governance structure, with top executives essentially picking the board, which then determines their pay. Unlike the shareholders, the board has little incentive to reduce the pay of their friend the CEO.

Contrary to what is often asserted in the media, shareholders actually have not done well as a group in recent years. After adjusting for inflation, returns have averaged just 4.5 percent annually over the last two decades. This compares to a long period average of more than 7.0 percent. Reducing CEO pay could up this by 0.1-0.2 percentage points.

While stock shares are disproportionately held by the rich, it is better to see money go to shareholders than CEOs. Middle class people hold stock through their 401(k)s, as do pension funds. By contrast, every dollar going to a CEO is going to someone in the top 0.01 percent of the income distribution.

But more important than the distribution between shareholders and CEOs is the impact on the wage structure more generally. We would likely be in a very different world if CEOs were earning $2-$3 million a year instead of $20 to $30 million.

Getting CEO to ordinary worker pay ratios back to the levels of 1960s or 1970s will be a huge battle, but an essential first step is realizing that shareholders are allies in this battle. The story is pretty straightforward arithmetic, which unfortunately means that it will be difficult for economists to understand it.

6) A large financial sector is a drain on the economy

The financial sector plays an important role in a modern economy. It allocates capital from savers to those who wish to borrow. A poorly functioning financial sector is a drag on growth. The same is true of a bloated financial sector.

The financial industry is an intermediate sector, like trucking. This means that it does not directly provide benefits to households, like a housing, health care, or education. For this reason, we should want a financial sector that is as small as possible for carrying through its function, just as we would want the trucking sector to be as small as possible to deliver the goods in a timely manner.

Over the last four decades the narrow financial sector (securities and commodity trading and investment banking) has more than quadrupled as a share of the economy. It would be difficult to argue that capital is being better allocated or that savings are more secure today than 40 years ago.

This means we have little to show for this enormous expansion of the financial sector. It would be comparable to seeing the size of the trucking sector quadruple with nothing to show in the form of faster deliveries or reduced wastage. Finance is of course also the source of many of the highest incomes in the economy.

These facts make for a strong case for measures that reduce the size of the sector, like financial transactions taxes, reduced opportunities for tax gaming, and increased openness in pension fund and endowment contracts. In any case, it is important to recognize that a big financial sector (as in Wall Street) is bad for the economy, not the sort of thing that we should be proud of.

7) Putting numbers in context

Okay, this is not actually economic policy, but rather reporting on economics. It is standard practice for reporters to tell readers that we will spend $70 billion next year on food stamps or $20 billion on Temporary Assistance to Needy Families (TANF), the federal government’s main cash welfare program. Almost no one has any idea what these numbers mean, just that they are very large. The problem is compounded when we get numbers over multiple years, like the $867 billion farm bill, when it is often not even made clear that the spending is over ten years.

This is a serious political problem because when people see really big numbers going to foreign aid, food stamps, TANF, and other categories of social spending, they think this is the bulk of their taxes. In reality, these items are small change in the whole budget. Food stamps are about 1.8 percent of the budget, TANF less than 0.5 percent.

Yes, I know that many people think all their tax money goes to these programs because they are racist and want to believe that all their tax dollars are going to black and brown people who benefit from these programs. But the reality is that many people who are not racist also believe that a grossly disproportionate share of their tax dollars go to social spending of various sorts.

It is difficult to believe that this misperception does not undermine support for these programs. For my part, if I thought that 20 percent of the budget went to TANF I sure as hell would not support the program. If we spent that large a share of the budget on TANF and still had so many people living in or near poverty, it clearly is not a very effective program. Incredibly, the groups that work on these issues in Washington seem completely unconcerned about the reporting on these programs.

The most absurd part of this story is that there is no other side. Everyone in the news business knows that no one has any idea how much money $70 billion for food stamps is or $867 billion over ten years. And, it only takes a few second to add context, like the share of the federal budget or the spending per person or family.

I thought I scored a big victory on this issue when Margaret Sullivan, then the Public Editor of the New York Times, completely endorsed this point in a column. She got the wholehearted agreement of David Leonhardt, who was the paper’s Washington editor at the time. I assumed this meant a change in policy, which given the NYT’s role in the media hierarchy, would soon be followed by other news outlets.

But, nothing changed. We still get really big numbers which are absolutely meaningless to almost everyone who sees or hears them. This can and must change.

Happy 2019?

Okay, so those are my New Year’s resolutions for 2019, I want to change policy debates in these six areas and reporting on budget numbers and other big numbers that are not understandable to the media’s audience. Do I have much chance of succeeding? Well, how many smokers will give up cigarettes? How many people will start exercising and lose 20 pounds? I’ll do my best and we’ll see.

Notes.

[1] We can easily deal with the “brain drain” issue. We know the countries these professionals come from. We can compensate for their loss so that they can train two or three professionals for everyone that comes here. This is the sort of compensation that trade economists always talk about, with the winners making payments to the losers.

This originally appeared on Dean Baker’s blog.

By Santo D. Banerjee

The concept of sustainable blue economy is gaining momentum, including at the highest levels of decision making, encouraging proponents of the growing movement to believe that humans can use the ocean as a tool for lifting people out of poverty, all the while protecting its valuable ecosystems.

It was not surprising, therefore, that the first-ever Sustainable Blue Economy Conference, held in Kenya in November 2018, brought together thousands of ocean experts and activists to discuss how to sustainably use the ocean, and according to experts, the conference proved to be an important stepping stone towards the next anticipated UN Ocean Conference in 2020.

As Kenyan President Uhuru Kenyatta said in his remarks, it provided an international forum for advancing global conversation on the two important pillars of the Blue Economy: on one hand, sustainability, climate change and controlling pollution; on the other, production, accelerated economic growth, jobs and poverty alleviation.

Earlier, in September 2018, 12 heads of state from around the world and the UN Secretary-General’s Special Envoy for the Ocean, Peter Thomson, launched the High-level Panel for a Sustainable Ocean Economy to catalyse bold solutions for ocean health and wealth.

“I’m very pleased to see that 1,500 voluntary commitments have now been registered in our global effort to support SDG14, to conserve and sustainably use the resources of the ocean,” said Ambassador Thomson.

Recent commitments include: The Association of Arctic Expedition Cruise Operators will contribute to the UN Environment Clean Seas initiative by drastically cutting back on single-use plastics on Arctic cruise vessels and include shoreline clean-ups in its programmes.

The Government of Mauritius has committed to restore its mangroves and hold mangrove education events, as well as map its mangrove ecosystems by June 2020 to overcome knowledge gaps and offer an early warning system to identify threats.

The Associazione Mediterraneo Ricerca e Sviluppo in Italy is working to protect the habitat of bottlenose dolphins in the Sicilian Channel and increase scientific knowledge about them.

The Mundus Maris organization launched a small-scale fisheries academy in Senegal to serve as a space for reflection, training and knowledge-sharing for local fishermen.

All of the ocean commitments are required to submit progress reports once a year until the completion of the initiative to maintain active status. A “traffic light” transparency system on the platform shows the status of each commitment.

To follow-up on the implementation of the voluntary commitments, to catalyse and generate new voluntary commitments, and to facilitate collaboration among different actors in support of SDG 14, the UN has launched nine thematic multi-stakeholder Communities of Ocean Action (COAs).

Each community is coordinated by designated co-focal points who work together with the UN Special Envoy for the Ocean and UN DESA in carrying out the activities. The nine COAs are: Coral reefs; Implementation of international law as reflected in the United Nations Convention on the Law of the Sea; Mangroves; Marine and coastal ecosystems management; Marine pollution; Ocean acidification; Scientific knowledge, research capacity development and transfer of marine technology; Sustainable blue economy; and Sustainable fisheries.

Against this backdrop, UN Special Envoy for the Ocean Thomson said: “The international community has a universal plan to reverse the cycle of decline in which the Ocean has been caught – I refer of course to SDG 14, the ocean goal. The nine COAs set up at the United Nations to steward the voluntary commitments will work with the organizations that made these new commitments to assist in their implementation and thereby help us along the road to achievement of all ten of SDG 14’s targets.”

But what do we mean by a “blue economy”? Madhushree Chatterjee, Chief of the Natural Resources and Interlinkages Branch of United Nations Department of Economic and Social Affairs (DESA)‘s Division for Sustainable Development Goals told the January issue of UN DESA Voice:

“The blue economy comprises a range of economic sectors and related policies that together determine whether the use of ocean resources is sustainable. An important challenge of the blue economy is to understand and better manage the many aspects of oceanic sustainability, ranging from sustainable fisheries to ecosystem health to preventing pollution.

“Secondly, the blue economy challenges us to realize that the sustainable management of ocean resources will require collaboration across borders and sectors through a variety of partnerships, and on a scale that has not been previously achieved. This is a tall order, particularly for Small Island Developing States (SIDS) and Least Developed Countries (LDCs) who face significant limitations.”

How can building a blue economy help us achieve the SDGs? Chatterjee said: “The blue economy concept seeks to promote economic growth, social inclusion and preservation or improvement of livelihoods while at the same time ensuring environmental sustainability – all issues integral to the 2030 Agenda.

“So, to build a blue economy, we will need to put sustainability at its centre. This will require careful attention to all decisions and their cross‑sectoral implications. We will need to ensure that policies do not undermine each other and that interlinkages are leveraged for the benefit of people, planet and prosperity.”

Why is a healthy ocean so important for current and future generations? “The world’s oceans – their temperature, chemistry, currents and life – drive global systems that make the earth habitable for humankind. Our rainwater, drinking water, weather, climate, coastlines, much of our food, medicines and even the oxygen in the air we breathe, are all provided and regulated by the sea,” noted Chatterjee.

Living oceans absorb carbon dioxide from the atmosphere and reduce climate change impacts, she added. The oceans also provide convenient transport routes for everything from food and fuel to construction materials, chemicals and household items. Moreover, UN Environment estimates the cumulative economic impact of poor ocean management practices is at least $200 billion per year.

“The declining health of our ocean shows that the world is simply not doing enough. However, as part of the 2017 UN Ocean Conference, a diverse range of stakeholders, from local grassroots organizations to governments, NGOs and the private sector, committed to reversing the decline of ocean health through saving our mangroves, alleviating the impacts of ocean acidification, halting plastic pollution and more,” said Chaterjee.

She added: Those 1,400+ commitments are now grouped into nine Communities of Ocean Action, and UN DESA is providing a platform for them to work together. Now, it is time to ramp up the implementation of such initiatives, identify gaps, exchange ideas, find creative solutions, scale up where possible and, most importantly, to work together to implement Sustainable Development Goal 14 – life under water.”

By Jayasri Priyalal*

Imagine the feelings of millions of Americans holding their pay cheques during the festive seasons and at a time getting ready to face the harsh winter, as a consequence of the partial government shutdown decision of President Donald Trump.

This single most incident can be interpreted as the culmination of the LPG strategies of the Liberal, Libertarian, and Neo-Liberal order with an ultimate objective to get rid of state intervention for market forces to reign into government.

Before the reader get confused about the LPG strategies, let me explain what it stands for. The Neo-Liberal policies that were dictated through Washington consensus team were founded on Liberalization, Privatization and Globalization to drive the free market economies to spur economic growth across the regions to uplift millions out of poverty.

End result has been the weakening of governments with huge debts resulting from pro-longed financial deficits, and strengthening of Multinational Corporations and related supply chains that amass wealth-hiding earnings in tax heavens. Libertarians believed that people are living in markets instead of societies.

Privatization of profits and socialization of problems are the end gains of the policy divergence of the past four decades. Unfortunately, the policy makers do not appear to have learnt lessons of the failures of the system. Yet, they are prescribing the same polices with a higher dosage while disrupting the rule based multilateralism.

In the absence of new alternatives, populism is being championed as a policy option as seen in many electoral triumphs in Europe and in North and South America. As we witness today, it is very clear that many democracies are fast turning into oligarchies and governed with the 1 percent beneficiaries of LPG strategies by the ‘one percent for the one percent’ widening the inequalities in income, wealth, education and basic health services for the remaining 99 percent of the sandwiched class in the economy. Thus, LPG strategies have enabled Tax heavens for 1 percent and social hell for 99 percent.

The privileged few are all out to secure eternal immortality less concerned for sustainable growth, whereas the marginalized are bewildered to fight against unjust widening inequality. Extractive economic and political systems are under control of the privileged and work in tandem.

Sincere hope of the common man and woman in the street is to enable an inclusive growth for shared pr0sperity for all. Yet, this has become a distant dream as they often rally round to change the governments with the ballot democratically. However, although they change the governments, the policies remain same without any improvements to uplift their quality of life.

Frustrations are growing as many witness who have become poorer than their parents even after having better education and acquiring new skills and competencies. In the emerging new platform economies, people find work but not jobs as their parents found to plan for a family and contributing towards social progress. Instead, race to the bottom being accelerated under the LPG strategies in a savings drying, consumption driven and debt burden economies.

These causes and effects have not been correctly understood and realized by the policy makers in the global North, worsening the situation as uncertainties pave the way for election of populist leaders instead of rallying policy makers towards viable and sustainable options for greater good.

Trade wars, and reverse globalization campaigns being initiated by the policy makers in the global North are only addressing the symptoms of the policy divergence as such. This writer is of the view that resulting uncertainties in the society may hinder the trust and confidence in the existing democratic political systems. The impact of such uncertainties will be felt by the whole global markets eroding the superficial gains made by a few at the expense and pain caused to many.

In order to address the root causes the political leadership needs to work towards policy coherence instead of policy divergence for shared prosperity for all.

To make this happen, policy makers should step into design innovative and creative action plans in line with the 4th Industrial revolution achievements. Similarly, new performance and productivity measuring indicators need to be agreed upon. It is high time that economists realize that the performance indicators of the 1st Industrial Revolution era such as Return of Equity and Returns of Investments are outdated short term indicators which are not compatible with the current digitally disrupted era of acceleration termed as the 4th Industrial Revolution by Klaus Schwab of the World Economic Forum.

First things first, in order to restore the trust and confidence in the electoral political systems it is high time the elected politicians mobilize themselves to make policies instead of allowing think tanks, non-governmental organizations dictate options on policy makers who are bankrupt with new ideas.

In the current era of acceleration flow of ideas, collective thoughts run across through social media in split seconds. In this digitally connected world very soon connectivity is to supersede national sovereignties. As such our mission needs to be realigned with “Think Locally, and Act Globally” mindset and not the other way the mantra prescribed to facilitate the failed neo liberal order.

*The writer is the Regional Director responsible for Finance Sector of UNI Global Union, Asia & Pacific Organization – Singapore.

By Stephen Zunes*

Donald Trump’s sudden decision to remove U.S. forces from Syria appears to have been impetuous and ill-considered — apparently a result of a conversation with Turkey’s autocratic president Recep Erdoğan. That doesn’t mean, however, that the United States should remain in that country.

It’s quite reasonable to question how and why Trump made his choice. This doesn’t mean it wasn’t the right one, however.

First of all, the presence of U.S. forces in Syria is illegal. There was never any authorization by Congress, as mandated by the U.S. constitution, to send troops there, making the frantic bipartisan calls for congressional oversight regarding the withdrawal particularly bizarre.

There’s also the matter of international law. While the brutality of the Syrian regime and the mass atrocities it has committed do raise questions regarding its legitimacy, it is nevertheless illegal for a country to send troops to another country without either the permission of that government or authorization by the United Nations.

One can make a case that the presence of foreign troops within a nation-state’s borders against the will of that country’s recognized government, and without the authorization of the UN Security Council, is nevertheless justifiable — if it is to protect the population from mass killing. There’s little to indicate that this is why U.S. forces are in Syria, however.

Lest one think that protecting civilian lives is a high priority for the United States, let’s remember that U.S. forces were responsible for many hundreds of civilian deaths in the assault on the Syrian city of Raqqa.

According to administration officials supporting the ongoing deployment of U.S. troops inside Syria, the main reason for staying was to counter Iranian and Russian influence. They had largely given up on pursuing the remnants of the so-called “Islamic State,” or Daesh. There had been little mention from the administration of protecting the Kurds.

So, basically Washington was saying is that it has the right to send troops into a foreign country and keep them there because we don’t like the fact that the country’s government has close strategic ties with (and some armed forces in their country from) two governments we don’t like.

This is a rather startling justification for the deployment of U.S. combat troops. It would establish a very dangerous precedent, particularly with no debate in Congress as to whether the United States should engage in such a provocative policy.

Like other debates over the years on the wisdom of withdrawing U.S. forces from foreign entanglements, those who insist that U.S. forces remain are based on rather dubious arguments.

First, some say that a U.S. departure would lead to a revival of Daesh. Contrary to what Trumps says, the group hasn’t been defeated in Syria. However, they have been relegated to a small strip of territory near the Iraqi border, only a tiny fraction of the vast “caliphate” they once ruled. The Kurdish-led Syrian Democratic Forces (SDF) should be strong enough to resist their expansion, especially since the U.S. has pledged to use air power to fight them in such an event.

Second, others worry that the Syrian regime will quickly reclaim Kurdish territory in northern Syria. But Syrian forces are probably stretched too thin at this point to seize most of the vast areas of northern Syria currently controlled by the SDF.

Though falling well short of the kind of egalitarian anarchist utopia that some Western leftists have claimed, Syrian Kurds have nevertheless organized one of the most democratic, popular, and well-functioning governing structures in the Middle East. During the past couple of years, they were able to make accommodations with the Syrian regime in several areas where government forces did move in — without violence and without any U.S. support that would have enabled them to keep control.

The most legitimate concern is in regard to Turkey moving its forces into northern Syria to attack the SDF and slaughtering many thousands of Kurdish civilians in the process.

During a number of periods over the past few decades, Turkish forces have engaged in just this kind of brutal repression in Kurdish areas of their own country in the battle against the PKK militia, which has close ties to the Kurdish forces leading the SDF. That is a real possibility, though it seems unlikely they would engage in the same kind of savagery against the civilian population as they did within Turkey, whom they saw as traitors for supporting the PKK and threating the country’s national integrity.

More pertinently, how are 2,000 U.S. troops in such a vast area an effective deterrent for Turkish intervention? They did nothing to halt the Turkish offensive that seized the SDF-controlled Afrin region back in March, for example. Given the small number of U.S. troops in an area more three times the size of Lebanon, it would be easy for Turkish forces to avoid confronting U.S. troops while slaughtering Kurds, and it would be hard to imagine Trump moving U.S. troops into position to stop it.

A more effective deterrent than simply keeping U.S. troops in Syria would be for Washington to make clear to the Turks that the United States will suspend all arms transfers and strategic cooperation with Turkey if it moves any more troops into Syrian territory.

The United States has set up the Kurds only to abandon them on at least three occasions in recent decades, and it is naive to think it would have come out differently this time. If the goal is to keep U.S. forces in Syria until their legitimate rights are recognized and there was no longer a threat from Syrian or Turkish forces, U.S. troops would likely be there for decades to come. Without the support of Congress and a broad consensus of the American public for such a policy, it makes more sense to withdraw.

Regardless of all the above, perhaps a case could be made for keeping U.S. forces in Syria if the United States had a more competent commander-in-chief. However, given the risks of confrontations with Russian or Iranian forces and the sheer complexity of the situation in that country, it is frankly dangerous to have American troops in such a volatile area under Trump.

Americans are tired of endless overseas wars. Regardless of Trump’s questionable motivations and lack of strategic forethought, now is not the time to demand further U.S. troop deployments in the Middle East.

*Foreign Policy In Focus columnist Stephen Zunes is a professor of politics and coordinator of Middle Eastern Studies at the University of San Francisco.

By Edgardo Ayala

As he milks his cow, Salvadoran Gilberto Gomez laments that poor harvests, due to excessive rain or drought, practically forced his three children to leave the country and undertake the risky journey, as undocumented migrants, to the United States.

Gómez, 67, lives in La Colmena, in the municipality of Candelaria de la Frontera, in the western Salvadoran department of Santa Ana.

The small hamlet is located in the so-called Dry Corridor of Central America, a vast area that crosses much of the isthmus, but whose extreme weather especially affects crops in Guatemala, Honduras and El Salvador.

“They became disillusioned, seeing that almost every year we lost a good part of our crops, and they decided they had to leave, because they didn’t see how they could build a future here,” Gómez told IPS, as he untied the cow’s hind legs after milking.

He said that his eldest son, Santos Giovanni, for example, also grew corn and beans on a plot of land the same size as his own, “but sometimes he didn’t get anything, either because it rained a lot, or because of drought.”

The year his children left, in 2015, Santos Giovanni lost two-thirds of the crop to an unusually extreme drought.

“It’s impossible to go on like this,” lamented Gómez, who says that of the 15 families in La Colmena, many have shrunk due to migration because of problems similar to those of his son.

The Dry Corridor, particularly in these three nations, has experienced the most severe droughts of the last 10 years, leaving more than 3.5 million people in need of humanitarian assistance, a report by the United Nations Food and Agriculture Organisation (FAO) warned as early as 2016.

Now Gómez’s daughter, Ana Elsa, 28, and his two sons, Santos Giovanni, 31, and Luis Armando, 17, all live in Los Angeles, California.

“Sometimes they call us, and tell us they’re okay, that they have jobs,” he said.

The case of the Gómez family illustrates the phenomenon of migration and its link with climate change and its impact on harvests, and thus on food insecurity among Central American peasant families.

La Colmena, which lacks piped water and electricity, benefited a few years ago from a project to harvest rainwater, which villagers filter to drink, as well as reservoirs to water livestock.

However, their crops are still vulnerable to the onslaught of heavy rains and increasingly unpredictable and intense droughts.

In addition to the violence and poverty, climate change is the third cause of the exodus of Central Americans, especially from Guatemala, Honduras and El Salvador, according to the new Atlas of Migration in Northern Central America.

The report, released Dec. 12 by the Economic Commission for Latin America and the Caribbean (ECLAC) and FAO, underscores that the majority of migrants from these three countries come from rural areas.

Between 2000 and 2012, the report says, there was an increase of nearly 59 percent in the number of people migrating from these three countries, which make up the so-called Northern Triangle of Central America. In Guatemala, 77 percent of the people living in rural areas are poor, and in Honduras the proportion is 82 percent.

In recent months, waves of citizens from Honduras and El Salvador have embarked on the long journey on foot to the United States, with the idea that it would be safer if they travelled in large groups.

Travelling as an undocumented migrant to the United States carries a series of risks: they can fall prey to criminal gangs, especially when crossing Mexico, or dieon the long treks through the desert.

Another report published by FAO in December, Mesoamerica in Transit, states that of the nearly 30 million international migrants from Latin America, some four million come from the Northern Triangle and another 11 million from Mexico.

The study adds that among the main factors driving migration in El Salvador are poverty in the departments of Ahuachapán, Cabañas, San Vicente and Sonsonate; environmental vulnerability in Chalatenango, Cuscatlán, La Libertad and San Salvador; and soaring violence in La Paz, Morazán and San Salvador.

And according to the report, Honduran migration is strongly linked to the lack of opportunities, and to high levels of poverty and violence in the northwest of the country and to environmental vulnerability in the center-south.

With respect to Guatemala, the report indicates that although in this country migration patterns are not so strongly linked to specific characteristics of different territories, migration is higher in municipalities where the percentage of the population without secondary education is larger.

In Mexico, migration is linked to poverty in the south and violence in the west, northwest and northeast, while environmental vulnerability problems seem to be cross-cutting.

“The report shows a compelling and comprehensive view of the phenomenon: the decision to migrate is the individual’s, but it is conditioned by their surroundings,” Luiz Carlos Beduschi, FAO Rural Development Officer, told IPS from Santiago, Chile, the U.N. organisation’s regional headquarters.

He added that understanding what is happening in the field is fundamental to understanding migratory dynamics as a whole.

The study, published Dec. 18, makes a “multicausal analysis; the decision to stay or migrate is conditioned by a set of factors, including climate, especially in the Dry Corridor of Central America,” Beduschi said.

For the FAO expert, it is necessary to promote policies that offer rural producers “better opportunities for them and their families in their places of origin.”

It is a question, he said, “of guaranteeing that they have the necessary conditions to freely decide whether to stay at home or to migrate elsewhere,” and keeping rural areas from expelling the local population as a result of poverty, violence, climate change and lack of opportunities.

In the case of El Salvador, while there is government awareness of the impacts of climate change on crops and the risk it poses to food security, little has been done to promote public policies to confront the phenomenon, activist Luis González told IPS.

“There are national plans and strategies to confront climate change, to address the water issue, among other questions, but the problem is implementation: it looks nice on paper, but little is done, and much of this is due to lack of resources,” added González, a member of the Roundtable for Food Sovereignty, a conglomerate of social organisations fighting for this objective.

Meanwhile, in La Colmena, Gómez has given his wife, Teodora, the fresh milk they will use to make cheese.

They are happy that they have the cow, bought with the money their daughter sent from Los Angeles, and they are hopeful that the weather won’t spoil the coming harvest.

“With this cheese we earn enough for a small meal,” he said.

By Caleb Mills

In the midst of rising tariffs and economic uncertainty, a chord of relief was struck when on December 2nd, President Donald Trump and Chinese leader Xi Jinping announced a much-needed truce in their emerging trade war. Needless to say, businesses on both sides of the Pacific breathed a sigh of relief in mere hours. Hong Kong’s Hang Seng index climbed 2.5% and the Shanghai Composite index jumped 2.6%. Japan’s Nikkei 225 index rose 1%. In the West, the UK’s FTSE 100 index, the CAC40 in France, and Germany’s DAX were all up by about 2% at the end of the day.

But a truce isn’t peace, and that has been reflected by the political maneuvering in both Washington and Beijing as the two governments prepare for the next round of trade negotiations. Which begs the question: What’s going on?

While this temporary armistice may have been struck in Buenos Aires during the G20 Summit, the origins of the US-China trade war goes way back to predate Trump’s populism or Xi’s imperial governance.

Trade relations with China, as well as many other Asian nations, for America, has always had more than just pure capitalistic benefit at heart. After all, it wasn’t until 1979 that the United States even established ‘normal’ economic ties with the Chinese. Up until Richard Nixon’s attempts to thaw relations during the Vietnam war, and President Deng Xiaoping’s liberalization of economic policy, the U.S. position on China had remained the same: passive containment. But it lacked heart, particularly in the face of greater foes such as the Soviet Union. In some cases, like with the Nixon Administration, Washington even viewed China’s contentious relationship with Moscow as potential shrapnel to be logged against the Kremlin.

In fact, the average American had a rather positive view of China as a result. In 1979, Gallup polling showed China’s favorability rating in the U.S. was 64%. In fact, up until the early 90s, China remained relatively popular, peaking at 72%. Even in the past five years, Uncle Sam’s Pacific neighbor has hovered in the 45% approval range back home.

Hoping to avoid conflict while still spreading Western concepts of economics and governance, much of America’s reasoning for a purposefully lax trade policy with China was the hopes that the connection would lead Beijing into the 21st Century as, at the very least, a neutralized threat. And to an extent, it worked. In 2001, the United States even backed China’s entrance into the WTO. But perhaps in an ironic twist to the US foreign policy of self-preservation and human rights, these initiatives designed to push China toward a freer market worked a little too well.

There’s even a term for it: Red Capitalism, which also happens to be a book written by Fraser J. T. Howie, a researcher who’s conducted extensive studies on China’s maneuvering in international markets. When asked about the recent truce, Howie told the Washington Post in an email “Markets should be happy, in that the worst is postponed. But I don’t see the West ever going back to business as usual with China. Too many genies have been let out of bottles.”

China took advantage of the open-door policy given to them by the United States in trade and used it to their advantage. Trade between the two nations reached $211.6 billion in 2005, compared to the $2.4 billion exchanged in 1979. From  2001-2005, the volume of US-China trade increased an average of 27.4 percent a year. As a result, the United States has become the top market for Chinese merchandise and China is buying up more U.S. goods, with U.S. exports to China rising 21.5 percent in each of the last four years.

But China hasn’t been the only one utilizing these open markets. By 2030, it’s expected that US exports to China alone will be a staggering $520 billion, according to a report from the US-China Business Council. To put that into perspective, the combined trade between Beijing and Washington in 2017 was worth $710 billion dollars. The United States has continuously operated as a high-value trade partner for the Chinese, providing trucks and construction equipment, which totaled profits of $6.7 billion in 2014 and $7.1 billion in 2015. US exports to China made 1.8 million new jobs and $165 billion in GDP in 2015 according to the same report.

Overall, while cheaper Chinese products have created a damaging trade deficit and led to the dissolution of countless U.S. jobs over the years, it’s also necessary to note that this imbalance hasn’t been without its positive effects. It’s estimated by the US-China Business Council that the flood of cheaper products have lowered overall prices in the marketplace by around 1.5%, which when taking into consideration that the average family in the states made $56,500 a year in 2015, means that this trade balance saved these families around $850 a year.

The reasons behind this trade deficit of $335.4 billion are rather straightforward and simple: American businesses’ reliance on cheaper Chinese products have led to the U.S. importing more than it exports to Beijing.

Many argue that the main reason for the economic imbalance between these two superpowers –  China’s overall cheaper pricing – is purely an artificial ploy by the government. By devaluing the yaun, China’s currency, at a rate of 40%, Beijing has kept it below free-market levels. While China did agree in 2005 to a 2.1% increase in the yaun’s value, it pales in comparison to the work needed to restore the currency to normal levels, a claim backed up by the director of the Institute for International Economics, C. Fred Bergsten, among others.

Strangely enough, unlike the vast majority of issues that face the United States, the problem of trade with China is a matter that draws bipartisan support. A recent UBS poll shows that 71% of U.S. business owners want a tariff increase on Chinese products, a belief shared by 59% of high-value investors in the same survey. Even politicians seem to agree on the issue for the most part.

“China’s refusal to play by international economic rules cripples our ability to compete on a level playing field.” Sen. Chuck Schumer, current Senate Minority Leader said back in 2006. Republican Lindsey Graham (R-SC) sponsored a bill in that year that would have levied a 27.5 percent tariff on all Chinese imports unless the yuan was significantly revalued. However, the bill never made it to President Bush’s desk, as it was withdrawn in March after the two lawmakers visited Beijing.

President Trump’s surprise victory in November of 2016 shook the dynamic of this decades-old relationship to its core. His populistic rhetoric and his position as the US champion of protectionism made some think that as a man, as an idea, he was unelectable. But Donald Trump didn’t invent the concept of ‘America First’ all by himself; he carefully utilized the seed of discontent that had been sowed years ago. His talk on China had always been tough, a mirrored reflection of much of his positions in general on the campaign trail.

“China is neither an ally or a friend — they want to beat us and own our country” – a tweet from Trump on Sept. 21, 2011.

“We can’t continue to allow China to rape our country and that’s what they’re doing. It’s the greatest theft in the history of the world.” – another from the campaign trail in May 2, 2016.

But when Trump made his first visit to the Chinese mainland early in his term, hints at a more moderate tone seemed to emerge. “I don’t blame China,” Trump said in Beijing. “After all, who can blame a country for being able to take advantage of another country to the benefit of its citizens?” But then, for a while, it seemed like maybe the 2016 candidate was back in the saddle.

Tariffs on products worth around $250 billion were levied on Chinese products by the Trump administration in 2018, with Beijing responding with tariffs of its own. But the G20 Summit resulted in some concrete results, with the Chinese Foreign Ministry confirming that the two leaders had instructed their teams to intensify talks. A truce in economic hostilities was also announced, a period to be accompanied by talks that should last around 90 days. A 40% decrease in Chinese tariffs on U.S. cars is also rumored to be in the works.

Yet some analysts argue that the issues go far deeper than just a trade deficit. Barclay’s Ajay Rajadhyaksha told CNBC in October at the Barclays Asia Forum in Singapore: “This is not the U.S. and NAFTA. This is not the U.S. and the European Union … There is a significant part of the US administration that is worried about China’s technology ambitions. The administration wants fundamental changes in how the Chinese treat intellectual property, how they talk to technology companies looking to invest in China. This is not about the trade deficit. If it was, it would be easy to solve.”

Saying that it’s almost impossible to come to any truly comprehensive conclusion on the full impact of the world’s most powerful trade relationship is an understatement, but it’s not hard to see that things have changed, and probably permanently. “Business as usual” isn’t a term we can accurately use anymore when talking about these two giants of the Pacific. The partisanship may continue, as well as the political hearsay, but the facts remain the same. A lot rides on the coming talks, and the impact they will have on the global economy is unpredictable.

I guess you could say: “it’s complicated.”

The opinions, beliefs, and viewpoints expressed by the authors are theirs alone and don’t reflect the official position of Geopoliticalmonitor.com or any other institution.

Besides the 1MDB scandal, the failure of the Barisan Nasional (BN) government to deliver equitable development to the different states has been one of the factors that led to its historic electoral defeat at the recent General Election (GE14). How far can the PH government reform the federal system?

By Najwa Abdullah*

Speaking in Singapore in November 2018, Malaysia’s Deputy Defence Minister Liew Chin Tong made a striking comment about the force behind the historic 14th General Election (GE14); it was not about whether it was a victory for the Mahathir-led Pakatan Harapan (PH) or the Najib-led Barisan Nasional (BN). What resonated clearly and consistently in the election was the sentiment rejecting the Najib administration. According to his view, the GE14 should be understood as a call to put an end to the Najib administration rather than an outright support for the PH.

While public opinion remains in favour of the PH government, the honeymoon period may not last much longer, given the political and economic challenges. The PH government knows it has to formulate and implement some reforms to sustain popular support or risk the opposition making gains.

Reform, Federalism and Supremacy of the Centre

One area for policy reform is the implementation of federalism. Promise number 24 in the PH manifesto: “Revive the true spirit of federalism”, which aims to restore autonomy and integrity of the states, the status of East Malaysia as equal partner, as well as administrative integrity, merits particular attention.

The supremacy of the federal government is enshrined in the Constitution of Malaysia, in which matters regarding taxation, finances, trade, external affairs, defence, and social affairs fall under federal responsibilities, whereas state power is limited to religious affairs, local customs, and resources.

Nevertheless, based on the Malaysia Agreement of 1963 (MA63), the states of Sabah and Sarawak (also Singapore before it left Malaysia in 1965) were accorded an equal status with Peninsular Malaysia in the Federation. This provides Sabah and Sarawak special rights and greater independence, such as exclusion from the Parliament’s authority with regards to laws about land and local government, and entitlements to special annual grants and additional sources of revenue.

Given the dominance of BN, the federal governments over the years were able to sidestep constraints to the detriment of some of the states. First and foremost, the status of Sabah and Sarawak was seen as downgraded after they were classified in the same category as the other states in Peninsular Malaysia, based on the 1976 Constitutional Amendment during the Hussein Onn era.

Oil Royalty for States

Another case in point is the petroleum royalty issue in Sabah, Sarawak, Kelantan, and Terengganu. The 1974 Petroleum Development Act (PDA 1974) limited the role of the four states to that of a contractor to Petronas, in which case they are entitled to 5% oil royalty. This has been a longstanding issue between the Federal Government and the four states.

Sabah and Sarawak, as the largest oil-producing states, have demanded an increase to at least 20% of oil royalty in the past several years. Meanwhile in Kelantan and Terengganu, the BN governments had been inconsistent with the royalty payment.

While it refused to give Kelantan the 5% royalty by arguing that the offshore oil production facilities were located beyond the state’s maritime borders, it had granted it to Terengganu since 1978 albeit the oil productions were located 220 kilometres offshore. The issue of preferential treatment became more pertinent when Terengganu fell to PAS in 1999 and the oil royalty payment stopped in 2000.

Urban-rural Divide

Since independence, the federal government has had a great influence on development at all levels. Although the development grants are available for every state, the federal government reserves the rights to specify and control the development projects.

Development issues became at times highly politicised in both BN and opposition-led states. Consequently, inequality remains evident in certain parts of Malaysia despite the impressive record of economic growth and poverty eradication over the years.

Many rural-based states remain behind in terms of infrastructure and quality of life. According to Malaysia’s Department of Statistics in 2017, unemployment rate was the highest in Sabah (5.6%), followed by Terengganu (4.5%), Kelantan (3.6%), Perlis (3.5%) and Sarawak (3%). Besides, in 2016 Kelantan and Kedah were also named the poorest states, of which GDP per capita were only RM12,812 and RM19,152 respectively, far below the national average of RM38,887.

In GE14, this issue, along with the oil royalty, apparently contributed to antipathy of the Kelantanese people towards Mahathir and Najib on the basis of financial discrimination and intentional under-development in the state. As a result, PH – which comprises the PAS splinter party Amanah as well as PKR, DAP and Bersatu — lost in every seat it contested in Kelantan while BN lost some of its state seats.

Future Trajectory

In the race to win the GE 14, PH promised to deliver up to 20% oil royalty to Sabah, Sarawak, and other oil-producing states, as stated in its manifesto. In June 2018, at the National Finance Council Meeting, Mahathir reportedly said that the PH government would channel at least 5% oil royalty to Kelantan and Terengganu.

In October 2018, PH launched a special committee for the review of MA63, which seeks to restore Sabah and Sarawak’s status as equal partners in Malaysia. Upon the launch, Liew Vui Keong, minister in the Prime Minister’s Department and chairman of Warisan, stated that the issues of equitable wealth distribution and oil royalty would be included in the review. However, any attempt to amend the Constitution would require PH to have a two-thirds majority in Parliament.

A reform of federalism to make the distribution of income more equitable will go a long way to placate the states that have long called for the reforms. It may also help to strengthen political support for PH in these states, especially in Sabah and Sarawak. However, as we can see in reform processes in many countries, the implementation will be very tough, especially given that PH is a coalition of parties with differing priorities.

Expectations have risen in those states that will benefit from the reforms but at the same time, the federal government has many priorities to manage. For instance, on the oil royalty issue, given the PH government’s struggle to reduce the federal debt, Sabah and Sarawak will likely need to wait longer for an increase in payment.

Moreover, the continued political volatility in federal politics and increasing pressure from the opposition following the anti-ICERD rally have not been helpful and a distraction to the reform agenda. Will these recent developments lead to a concrete outcome on the issue of federalism?

*Najwa Abdullah is a Research Analyst with the Malaysia Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

The benefits of the China-led Asian Infrastructure Investment Bank and the New Development Bank have outweighed the costs and they are working well with their older counterparts to promote Asian development. But more needs to be done.

By Pradumna B Rana*

The new multilateral development banks (MDBs) — the China-led Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), both established in 2014 — represent a wave of decentralisation in development financing. These new MDBs were once widely considered a threat to existing MDBs, such as the World Bank and the Asian Development Bank (ADB). But this concern has proved unwarranted.

Governance of the global development financing system may have improved because of ‘healthy competition’ and functional cooperation between new and old MDBs. This means that the impact of decentralisation and the establishment of new MDBs is neither good nor bad, but rather conditional on how well they can work with existing institutions.

Unhealthy Competition: The Costs

Early on, many had opined that the creation of new MDBs could have significant costs. New institutions would presumably have a different member base, geographical reach and focus compared to existing institutions.

This divergence would lead to the decentralisation and fragmentation of global governance — particularly because China is not a member of the OECD’s Development Assistance Committee (DAC), which oversees and coordinates international development assistance.

A patchwork system would emerge and spur ‘unhealthy’ competition, the argument continued, with institutions taking different approaches and developing their own lending modalities and policy solutions. Old and new MDBs would also compete for some of the same clients, raising the incentive to reduce standards to attract clients who would have opportunities for forum shopping and arbitrage.

But signs of ‘unhealthy’ competition between new and old MDBs have not emerged. Instead, competition has been ‘healthy’. The creation of the two new MDBs has been beneficial to the existing development financing architecture in general, and to the World Bank and the ADB in particular.

Healthy Competition and Functional Cooperation: The Benefits

The reasons for this are threefold. First, the new MDBs have helped to partially fill the massive infrastructure financing gaps facing Asian countries. The ADB estimates that developing Asian countries need to invest US$26 trillion from 2016 to 2030 — or US$1.7 trillion per year — if the region is to maintain its growth momentum, eradicate poverty and respond to climate change. Domestic resources and old MDB financing alone would not be enough to meet this need.

The new MDBs have also encouraged the World Bank and the ADB to pay greater attention to infrastructure, triggering a funding race and an infrastructure boom. In 2015, the World Bank announced the launch of the Global Infrastructure Facility and the ADB restructured its balance sheet and enhanced its lending capacity. Following the 2014 Brisbane Summit, the G20 also established the Global Infrastructure Hub in Sydney.

Second, the establishment of the new MDBs led existing MDBs to streamline their operational procedures. The World Bank and, to a lesser extent, the ADB have been accused of bloated bureaucracy and stringent procedures, resulting in inefficiencies. Newer institutions do not suffer from these problems. Their eagerness to secure clients and claim a seat at the development table encourages them to expedite approval of new projects, which has pressured existing banks to become more efficient.

Third, ‘healthy’ competition has benefitted the new banks themselves. The AIIB and the NDB had to hit the ground running. They could not be complacent and assume that developing countries would flock to them out of displeasure with the traditional MDBs. They had to be efficient, compete for business and account for domestic populations’ concerns about the social and environmental impacts of their projects.

Functional complementarity and cooperation between the old and new MDBs is also strong, stemming from memorandums of understanding (MOUs) that the World Bank and the ADB have signed with the AIIB and the NDB. Functional areas of cooperation in the MOUs include knowledge and information sharing; country, sector or firm-specific cooperation; regular consultation and co-financing. So far, most projects financed by the AIIB and the NDB have been co-financed with the World Bank or the ADB.

Net Benefits and Future Actions

‘Healthy’ competition and functional complementarity, therefore, define the relationships between old and new MDBs, to the benefit of developing countries across Asia. Going forward, the new and old MDBs should seek to further enhance these benefits while minimising the costs of ‘unhealthy’ competition or a race to the bottom.

As the global oversight body for international economic institutions, the G20 could help promote healthy competition within a collaborative framework. At the 2011 Seoul Summit, the G20 issued a number of principles for cooperation between the International Monetary Fund and regional financing arrangements. Similar principles would be useful in enhancing cooperation among old and new MDBs.

Efforts must also continue to reform World Bank governance and give greater voice to dynamic emerging markets. Past reform efforts have proceeded at a glacial pace and either need to be accelerated or a new modality needs to be identified. China and China-led institutions should also seek membership of the OECD’s DAC to promote greater transparency in their assistance programmes.

*Pradumna B Rana is Associate Professor and Coordinator of the International Political Economy Programme in the Centre for Multilateralism Studies at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore. An earlier version appeared in the East Asia Forum.

Lasith Malinga has copped an over-rate fine in his first match as full-time captain, after Sri Lanka were found to be one over short of their target. Malinga will be fined 20% of his match fee, and his teammates 10% of theirs. More importantly, Malinga will face suspension if his team commits another over-rate offence over the next 12 months. “Malinga pleaded guilty to the offence after the end of the match and accepted the proposed sanction, so there was no need for a formal hearing,” the ICC release said.

Sri Lanka captains have repeatedly fallen afoul of over rates over the last few years, with Upul Tharanga, Angelo Mathews and Dinesh Chandimal all having suffered fines and demerit points.New Zealand 371/7 (Guptill 138, Williamson 76, Taylor 54, Neesham 47*) beat Sri Lanka 326 (Dickwella 76, Kusal Perera 102, Neesham 3-38) by 45 runs Martin Guptill smote a 14th career ton, Kane Williamson cruised to 76 off 74, and James Neesham clubbed 47 not out off 13 – hitting five sixes in an over – to launch New Zealand to a monstrous total, which despite a valiant Kusal Perera hundred, Sri Lanka fell short of by 45 runs.

Thanks to the start provided by Niroshan Dickwella, who made 76 off 50, and Danushka Gunathilaka, who joined him in a 119-run opening stand, Sri Lanka had the foundation to pull off an epic chase. Apart from Kusal Perera, however, no other batsmen responded. All four batsmen from Nos. 4-6 fell for less than 20, and struck at less than run-a-ball. In the end, too much was left to Kusal Perera, who despite an incredible hand, was battling an asking rate of over 15 when he got out in the 46th over. With him went all realistic chances of a successful chase, though hopes had been dwindling well before that.

Although Guptill made by far the game’s biggest score, hitting 138 off 139 balls, it was Neesham – playing for New Zealand for the first time in over a year – who made the more impactful contributions. Having arrived late in the innings with the bat, he tonked Thisara Perera in the arc between the sightscreen and midwicket five times in one over – the bowler so emphatically rattled by Neesham’s hitting that he even bowled a waist-high full-toss halfway through. With 33 runs having been scored off the first five balls of his over, Thisara was at risk of bowling the most expensive ODI over ever. But the last ball, a low full toss, was only struck to long-on by Neesham.

He did hit another six to finish the innings though, and then would come back and strike with the ball. He claimed the vital wicket of Dickwella, moving a wide length ball back off the seam slightly to draw an inside edge – the ball then ricocheting back into the stumps. He had earlier had Gunathilaka caught down the legside, and would later bounce Dinesh Chandimal out as well. In a game in which no other frontline bowler went at less than five an over, Neesham took three wickets and maintained an economy rate of 4.75 across his eight overs.
Sri Lanka have been fined for maintaining a slow over-rate Almost as good was legspinner Ish Sodhi, who took 2 for 53 from his 10 overs, and was instrumental in sucking the momentum out of the Sri Lanka innings, just as they were looking to accelerate into the death overs. This, despite struggling for control of his legbreak in the early overs, and battling a leg injury of some description, for which he spent some time off the field.
Jimmy Neesham launches one over cow corner Getty Images
Earlier, both Guptill and Williamson’s innings had been smooth from the outset, and it was their 163-run second-wicket stand that formed the spine of New Zealand’s innings. The boundaries came rapidly for Guptill through the Powerplay, and he was particularly severe when the Sri Lanka bowlers pitched wide, which they did too often.
He practically skated through the middle overs, happily working Sri Lanka’s spinners into the outfield on a surface that was offering little turn. Whenever they offered him the chance to free his arms, he did so gleefully. There was an especially memorable six over extra cover off the legspin of Seekkuge Prasanna to bring up his fifty, then a swept six off Lakshan Sandakan a few overs later. As Guptill and Williamson’s scores swelled, the Sri Lanka spinners appeared more and more toothless. Neither created any clear-cut wicket chances.

Williamson played another one of his effortless innings, scoring heavily behind square on the offside to begin with, before runs began to come for him right around the ground. He used his feet to the spinners, and had even less trouble turning the strike over than his partner. He had looked good for a century until Pradeep bowled an off-cutter that Williamson was slightly late on – the ball bouncing back on to the stumps. He made 76 off 74 balls.

After Sri Lanka had been set their mammoth target, Dickwellla began to attack it in characteristic fashion, getting down on one knee to scoop the quicks over his head; slinking around the crease to make room to hit through the offside. He led the charge in the Powerplay, at the end of which Sri Lanka were 70 for no loss.

For Kusal Perera, there were early signs he was in excellent touch. He crashed his sixth ball – a short one from Neesham – to the deep square leg boundary, and clubbed four more fours from his next 15 balls. On errors of length, he was brutal, flicking overpitched deliveries over midwicket, and slamming the short, misdirected ones past square leg.

New Zealand were careful not to feed his punishing cut, though, which meant that he only occasionally scored through the offside. He raised his fourth – and perhaps best – ODI hundred by drilling Matt Henry through the covers, but by the end of his innings had scored over 75% of his runs to leg.

In fact, it was a ball way outside off stump – one that he perhaps should have cracked past cover point – that was his undoing. Batting on 102 off 85 balls, he reached out to hit an angled delivery from Boult, and wound up only sending a top edge high into the gloves of debutant Tim Seifert, who had run towards point to complete the catch.

Sri Lanka may be content with the fight they showed with the bat, but familiar woes have led to another ODI loss. Perhaps chief among those is lack of penetration through the middle overs. Neither Sandakan nor Prasanna could claim a wicket, allowing that giant Guptill-Williamson stand to flourish. New Zealand meanwhile, kept finding wickets through the middle overs, and ultimately claimed a comfortable victory.

By Samir Saran and Harsh V. Pant

Every year, the Raisina Dialogue convenes experts from a diverse cross-section of disciplines and professions to address the most challenging issues facing the global community. It is fair to say that for the past few years, the common sentiment is that we live in an age of “disruption,” given the upheavals that have characterized global politics over the last decade. As the dialogue prepares to convene once again in 2019, the world is evolving in response to these disruptions. Older systems of management are straining or already broken, but the new regimes, rules, and concepts that could replace them are still forming. This year, Raisina will take stock of the immediate consequences of these disruptions, and explore how these consequences inform our visions of the emerging world order.

The redrawing of our mental maps of the world is perhaps the most consequential development. The tensions and instability emanating from North America and Europe have reinforced the fragility of the Atlantic system: that it won’t be able to sustain its role as the lynchpin of the international order.

To be sure, the world’s wealth and military power is still concentrated in the Western hemisphere, but the trans-Atlantic system, as it emerges from an extended period of soul-searching, is more likely to look inward than outward. Events in 2018 have confirmed that the future will be scripted by the seminal changes underway in the Indo-Pacific, Eurasia, and the Arctic. Yet it is also true that these expressions have not been normalized in our geopolitical lexicon, despite the fact that new flows of trade, energy, and information are changing our understanding of these regions.

Some countries, especially China, sense opportunity in this political churn and have taken the lead in crafting new economic and strategic propositions. Meanwhile India, Japan, Russia, Turkey, the United States, Australia, and some European states are attempting to cobble together their own responses to the shifting landscape. As this transition unfolds, it is certain that the near-simultaneous rise in the wealth and importance of the Indo-Pacific, Eurasia, and the Arctic will fuel competition among these and other geopolitical actors to try to mold the world in ways that sustain or advance their national interests. The norms they draft, the partnerships they choose, and the institutions they support will define the potential and limits of connectivity and collaboration — and set the stage for competition and conflict.

Even as this unfolds, the United States and China are engaged in an escalating dispute over the future of global security, innovation, industrial development, and trade. Each country’s domestic politics help to shape the contours of this competition.

The clash between “America First” and the “China Dream” may significantly reshape global trade and security, and will reinvigorate a debate once considered long resolved, over the “right” political model.

History has witnessed contests between an incumbent power and an aspirational challenger before — and the results have often been devastating. If past is prologue, what prediction should we make about the future?

Yet, the Sino-American contest is also distinct from great power rivalries of the past. Tensions in cyberspace and the digital realm have received the same, if not more, attention than traditional clashes over territory. Indeed, cyberspace is no longer insulated from sovereign interests. From the European Union’s General Data Protection Regulation to China’s cyber sovereignty ambitions, the fault lines in the digital world are mimicking developments in the physical realm. Can 20th century institutions like the World Trade Organization create rules for the digital economy that balance the imperative of the open internet with national interests? What role will private technology platforms play in the governance and security of digital spaces? More importantly, can the internet ever realize its democratic promise? With digital platforms morphing from tools of empowerment to instruments of propaganda and polarization, the future of cyberspace, contrary to its original promise, looks less global and less democratic than ever before.

It is not surprising that cyberspace and emerging technologies more broadly are a flashpoint between global powers, given their potential to simultaneously create new asymmetric warfare capabilities and entrench existing power structures.

Indeed, the fourth industrial revolution will continue to transform geopolitics. Over the past two years, more than a dozen countries have released national Artificial Intelligence (AI) strategies, reflecting their intuitive understanding that pulling ahead of the innovation curve will translate into economic and political power. And although national strategies are proliferating, global institutions appear gridlocked, with conversations on cyberspace norms in the United Nations stuck in the past. Increasingly it appears “AI nationalism” is the defining global mood.

An era of technological transformation has also caused states to seek new avenues for providing paychecks, social protection, and a larger purpose to local communities. Globally, inequality has pushed politics to a point of inflection and encouraged the economics of populism. The velocity of proliferation and growth of robotics and AI will continue to exacerbate economic divisions. Countries with mature political, economic, and social institutions, invariably the first deployers of future technologies and sometimes the hardest hit when robots replace humans at work, are already struggling to craft a response. The prognosis for emerging nations, who must discover development pathways beyond the export-led model that was once their ladder to prosperity, is even grimmer. Is talk of a “universal basic income” a short-term fix, a long-term inevitability — or is an exhausted world simply running out of ideas?

This transformation is also forcing countries to search for a new equilibrium between individual, enterprise, and state. When today’s technology giants were born at the turn of the 21^st century, they were driven by the utopian desire to connect communities and democratize knowledge. Today, these platforms find themselves at the frontiers of national security; their algorithms have transformed the public sphere; and they have created new business models that have altered the relationship between labor and capital. Increasingly, the digital infrastructure that forms the substrata of daily life is owned by private actors. Their commercial choices are dictating not just the relationship of individuals with each other, but also the individual’s relationship with the state — even with a foreign state.

In an age of swift technological and political change, social and personal ethics and values are critical to a writing of the future.

The Massachusetts Institute of Technology recently published the results of one of the largest-ever studies of moral preferences, using responses to a variation of the classic “trolley problem.” Unsurprisingly, they found that moral preferences diverge widely based on identity, both personal and national. Such experiments allow us to gauge just how challenging it will be to arrive at a consensus on the ethical design of emerging technologies; and how contentious their deployment may prove. “Code” may not be just “law” anymore; indeed, “code is life” may be the new dictum. Whether the line is drawn between the East and the West, the Left and the Right, or even between communities and technology platforms, questions of whose ethics and which ethics are unlikely to get any easier to answer.

Each of these developments underscore the fact that we are now witnessing the creation of a new world. It is no coincidence that global experts should gather in New Delhi to discuss, debate and analyze today’s transformations. After all, as a country that will be critical to the emergence of a new order, India best epitomizes the transitions that are underway globally. India is a “boundary nation” straddling the line between the old and the new. As an emerging power, it has long expressed frustration with the international system; yet it is also the most natural steward of the liberal order during its period of transition. Located at the intersection of emerging geographies, it will connect the politics of the Indo-Pacific with the dynamics of Eurasia. And it must deliver stability and progress to over a billion individuals as they transition from the industrial realities of the 20^th century to seek opportunity in a 21^stcentury knowledge-based economy.

These are the boundaries at which conversations on global politics will take place. And as yesterday’s disruptions lead us to a new normal for tomorrow, participants at the 2019 Raisina Dialogue will try and paint a picture for a world order that is to come. The questions and debates are complex. Which state, or states, will claim leadership in the 21^st century? Can democracies prove resilient in the face of polarization and populism? And can societies summon the wisdom and courage to navigate the technological disruptions of the fourth industrial revolution? In an attempt to provide some answers, the Observer Research Foundation (ORF) and War on the Rocks will publish a series of essays in the days leading up to the Raisina Dialogue. These essays will inform and shape the debates in New Delhi and beyond, and we hope that they will help us tease out a consensus as participants in the Raisina Dialogue attempt to navigate today’s complexities.

This article originally appeared in War on the Rocks

China and India step up soft-power competition with contemporary art and new forms of display.

By John Zarobell*

Though the concept certainly predates his analysis, Joseph Nye’s work on soft power has opened a stream of claims regarding the exercise of power outside of the formal channels of governance. As globalization has distributed economic benefits around the world more broadly, emerging economies are stepping up to express their role as actors in the global sphere.

Two approaches are observed – one more organized and controlled in China and another more spontaneous in India, sponsored by individuals and corporations.   

Ambitious projects such as China’s Belt and Road initiative aim to remake global trade with a central position for the PRC. While China is shoring up its sphere of influence through economic partnerships, its leaders launched a five-year plan to build 3,500 museums in five years; they completed this in three years in 2012 and have added hundreds every year since. There is a hint of civic largesse, but China is also signaling its cultural centrality, aiming to demonstrate the enduring edifice of Chinese civilization and the authority it confers on the Chinese people and state to rule over an ever-widening domain.

Government support is one of several means through which art can transform into soft power. India, among rising global economies, can make similar claims to global centrality and a case for global significance as a producer of culture. Because India does not have the same state resources devoted to cultural institutions as China does, museums have not played a central role. Nonetheless, one private initiative has sought to put Delhi on the art world map. The Kiran Nadar Museum of Art is built around the private collection of a single individual with the goal of leaving large impact. This institution’s scope has been to engage with a wider variety of Indian contemporary art than any other museum. Thanks to the funding of touring exhibitions and catalogues, this museum has provided a broader spectrum of South Asian contemporary art than can be seen in most Western museums. KNMA has also commissioned new works to promote the capacity of contemporary South Asian art. One caveat of this institution and others discussed here: KNMA is not overtly national in its character, but seeks to promote South Asia art more broadly. Bucking the trend of tempestuous national politics between India and Pakistan, KNMA works with artists on both sides of the border as well as from Bangladesh and Sri Lanka. In this sense, one might categorize this as an expression of regional soft power, offering a pan–South Asian vision of cultural development.

In the era of globalization, the museum may no longer be the primary site for encounters with contemporary art, replaced by the biennial and the art fair. These two forms of festival, offering cultural riches to cosmopolitan elite and local inhabitants for a limited time, have proliferated due to their comparable flexibility. India arrived late to the biennial party, initiating its first, the Kochi-Muziris Biennial, in 2012. Notably, artists acting as organizers and curators advanced this initiative, and selected artists have run the biennial since. The idea came from Mumbai-based artists Bose Krishnamachari and Riyas Komu, both from Kerala state, who conceived an exhibition venue far from the commercial capitals of India. Their aim was primarily to provide a new platform for contemporary art in India and do so where it might have impact on the local population. Access to art is provided in a variety of formats as contemporary artists present murals, public art projects, performances, architectural installations and other works. This biennial has attracted the attention of the art world and local government, but has not transmitted the same kind of cultural authority as more publicized biennials such as the Dhaka Art Summit and the Shanghai Biennial. Nevertheless, the artist-run Kochi-Muzriis Biennial has credibility in the art world because it does not aim for commercial promotion.

The India Art Fair, held annually in Delhi, is another story. Its focus is commercial and self-promotional and, in recent years, the fair has become notable for hosting more visitors than any other art fair in the world, including an impressive 128,000 visitors in 2013. Founded in 2009 by Neha Kirpal, the fair has grown considerably, receiving international acclaim. Its traditional focus on Modern Indian Art has helped build the value of paintings of leading Indian artists such as M.F. Husain and Tyeb Mehta to more than $1 million. Such valuations serve as a marker of the relative significance of these artists to the global culture and establish a metric for art produced in India. More importantly perhaps, the fair lures art enthusiasts – who happen to be business and cultural leaders – to India to see the most recent contributions by India, and South Asia more broadly, to the domain of global culture. The fair, like the biennial and the museum, argues for the depth and vibrancy of India’s culture in a global market. As proof of success, the fair attracted interest of MCH group, the largest producer of art fairs internationally and owner of the Art Basel brand, which bought a majority share in 2017. Several changes resulted, including a new director, but what has not changed is promotion of Indian civilization and culture among the global elite. The question remains, can a multinational corporation be counted on to promote India’s national image abroad?

Of course, there is a long history of the use of art as soft power, and it makes sense to apply some recent examples to this new situation. The Cold War was a standoff of hard power – nuclear-weapons buildup to achieve mutual assured destruction – but actual battle lines were drawn through a series of proxy wars between the US and USSR and efforts to win over newly independent post-colonial nations to capitalist or socialist ideologies. The US side deployed visual art to promote freedom of the American way of life. Artists in communist countries were expected to produce propaganda for the cause of the state, dubbed Socialist Realism by Western art historians, while American artists were free to experiment with whatever techniques they could conceive, leading to the development of Abstract Expressionism. Artists such as Jackson Pollock, Willem de Kooning or Mark Rothko generated abstract painting with such little regard for external realities that it seemed they were creating something entirely new. The art history notion of progressive development in the arts helped the US government make the case that American painting was avant-garde, ahead of its time and leading in a competition to achieve cultural superiority. By the1960s, the United States had not only taken the position of the world’s most powerful state and economy, it was also the capital of culture.

So we might look to Asia as a site of competition, not only with American political and cultural dominance, but also between two rising powers. China may not see itself in deliberate soft-power competition with India over art, but the government’s support of art swings both ways. For many years, Chinese artists produced Socialist Realism as a government-sanctioned form of painting. Art schools there still train painters in these techniques. Needless to say, the current generation of globally recognized Chinese contemporary artists do not follow this line. The most famous, Ai Weiwei, left the country, and the government destroyed his studio. The Communist Party’s goal of controlling national imagery can conflict with Chinese artists’ success in international venues. On the Indian side, the state does not see this form of soft power as worthy of investment, focusing arts expenditures on cultural heritage for the most part, but has produced a group of elites who seek to promote the image of India and South Asia as an incipient leader in the broader domain of global cultural production.

*John Zarobell is associate professor and chair of International Studies at the University of San Francisco.  Formerly, he held the positions of assistant curator at the San Francisco Museum of Modern Art and associate curator at the Philadelphia Museum of Art. He is a contributor to Artsy, Art Practical and the San Francisco Art Quarterly and he has curated exhibitions of modern and contemporary art. His first book, Empire of Landscape, was published in 2010 and his next, Art and the Global Economy, was published with University of California Press in 2017.

Read an excerpt of Art and the Global Economy.

Read a review of Art and the Global Economy.

Governments contend with debt and sluggish growth; many worldwide risks – known and unknown – could add complications.

By David Dapice*

Mick Jagger of the Rolling Stones once studied economics, but gave it up for singing. When asked why he left economics, he reputedly said, “There are too many variables.” Anyone, skilled in forecasting or not, must share the feeling. The US economy finished the year with low unemployment and inflation, GDP growth near 3 percent, and a volatile stock market up from the 2016 presidential election, if not for the year. Despite high corporate profits though, investors are nervous about hard-to-predict variables.

In short, there are risks, many anticipated and others unknown. While most economists see US growth near 3 percent for 2018, few would rule out a recession as possible if not probable by 2020. Indeed, four out of five chief financial officers from major companies expect a recession by 2020. Likewise, the International Monetary Fund forecast the world economy would grow at 3.7 percent in 2018 and this year. But the forecast is fragile, dependent on a lack of major shocks.

The trade war looks likely to be extended and intensified. If escalated, it will slow growth in both the United States and China, as well as countries that sell to them. This is because tariffs act much like an oil price increase in an oil-importing country, creating price pressures while decreasing economic activity. Oil is not greatly responsive to prices in the short term – it takes time to do much more than turn down the thermostat or drive less. Anything transported by oil or using oil – most products – costs more. People have less to spend after paying for more costly oil. While imports from China may be more price responsive, it takes time to shift production elsewhere. The dislocation to US farmers and other exporters hurts economic activity while imports cost more. Economic activity slows even as prices rise. The US Federal Reserve, in a bind, must decide whether to cut interest rates, allowing inflation to grow, or raise them and increase unemployment.

The trade war alone would not be a huge concern. US trade with China is 3 to 4 percent of GDP, and even with tariffs, the impact is only a few tenths of a percent in lost growth. However, China is slowing and has a lot of bad debt in its credit system. A sharper decline in growth is a real possibility despite China’s ability to pump up credit growth again – something that aggravates its long-term problems. With lots of empty real estate and a shrinking workforce, China is in a weaker position than a few years ago.

Many emerging markets export to China, and weaker demand for raw materials would hurt their growth. Emerging markets are already stressed: Many governments or local corporations borrowed US dollars at a time when interest rates were low, and now the strong dollar and rising interest rates make repayments burdensome. The IMF shows China growing at 6 percent or a bit more for 2019 to 2021, but again, this assumes no major disruption. Improving projected growth in Latin America and Africa depend on this assumption.

Then, of course, there is the overall uncertainty for Europe: Brexit, Exitaly, France’s yellow-vest clashes, political uncertainty in Germany. If the euro were to fail or a major economy such as Italy faced rising interest rates that create Greece-like problems, the path is uncertain: Would the European Central Bank again “do whatever it takes” and expand buying of government bonds? Would Germany veto this? The members of the Italian coalition, unaccustomed to governing, struggle to compromise even with each other. Given the size of Italy’s economy and its debt, held by many euro banks, a debt implosion would have a significant contractionary impact on euro bank lending and the EU economy as a whole. The obvious solution is to create money, but that may not happen. Brexit, in contrast, would be terrible for the United Kingdom if disorderly, but not a disaster for the European Union. The IMF shows EU growth falling from 2.7 percent in 2017 to 1.8 percent by 2020, and this could be optimistic.

Economists forecast the US economy to slow to a respectable if unexciting 2.5 percent or so in 2019, but below 2 percent after that. This reflects sluggish productivity growth and a stable labor force as baby boomers retire and the forecast assumes no major disruption from a government shutdown or constitutional crisis. Still, there is a reckoning from the tax cut and 2018 spending spree, curiously begun at a time of full employment. The government is generating trillion dollar deficits when revenues are high. Long-term Treasury yields are falling now, suggesting slowing growth. This could lead to lower short-term Treasury rates and a weaker dollar, which ironically would tend to drive up borrowing costs, especially with the huge deficits. Higher long-term interest rates – which the Federal Reserve does not normally control – would hurt housing, autos and some investment; raise the deficit in itself; and make loans for infrastructure repair more expensive. The reduction in “fiscal space,” essentially the flexibility to react to adverse events with fiscal policy, is another real uncertainty weighing on investment.

It is useful when thinking about economic growth to take the perspective of a business. New investments must pay for themselves. This may be easier with new software, which saves labor and can pay for itself in a year or less, but is much harder with a factory or piece of machinery while the outlook is muddy. Brexit uncertainty has depressed investment in the United Kingdom, for example. One reason Donald Trump’s attempt to encourage coal is not working is uncertainty over a possible carbon tax or similar regulation. Consider investing in Europe with the EU’s existential problems or the United States with its inability to conduct sustainable fiscal policy or repair infrastructure. Businesses and investors prefer caution to a near-death experience or bankruptcy. This caution translates into lower productivity growth – in the United States, labor productivity growth has been less than 1 percent a year since 2010. With slow growth in the number of workers and slow growth in output per worker and depressed investment levels, it is not surprising that overall growth is slowing.

Then add the list of unknown unknowns: Will there be a cyber-apocalypse? – the question was raised not by some wild-eyed cyber-punk but the US 2018 Economic Report of the President. The hacking of a half billion names from a major hotel chain, attributed to official Chinese hackers, gives some idea of what might happen if the financial system or the utility grid came under determined attacks from an unfriendly government or criminal group. Disruptions to oil supply if Iran blocked routes is another low-probability event that cannot be ignored though oil stockpiles and alternative sources would soften that blow to an extent. Such shocks would be severe and hard to predict. Both known risks and unknown shocks could interact to produce more severe and surprising outcomes.

The upside of these problems, even migration and climate change, is that they are amenable to better policy – which does not make those policies popular or easy. The political class must find a way to be honest with voters and persuade them that what is necessary is reasonable. That requires listening as well as making speeches. Nations can tackle these challenges together, or find them impossible to resolve alone.

*David Dapice is the economist of the Vietnam and Myanmar Program at Harvard University’s Kennedy School of Government. 

By Brig. (Retd.) V. Mahalingam*

Following the September 11, 2001 attacks, the US, supported by its western allies, invaded Afghanistan with the stated aim of dismantling the Al Qaeda network, removing Taliban from power and creating a viable democratic state to deny terrorists a base to recruit, train and operate from. 17 years later, after having spent more than a trillion dollars and the death of tens of thousands, violence continues unabated in an inconclusive war in Afghanistan. Unmindful of the violence that continues to be unleashed by the Taliban to maintain pressure, Washington has initiated the process for a dialogue with the terror outfit. Now, it has abruptly announced the withdrawal of 7000 of its 14000 troops deployed in Afghanistan, possibly to convince the Taliban that it is serious about withdrawing its forces.

It is ironical that the US, much against its touted principle of no talks with terrorists, is now seeking the Taliban’s cooperation to end the war and is probably willing to accommodate the terror group within Afghanistan’s power structure, giving an impression that it is desperate to extricate itself. Needless to say, with the 2020 Presidential elections fast approaching, Trump is keen on fulfilling his election promise to end the war in Afghanistan. The Taliban has not responded to the US announcement of partial withdrawal. Instead, in an arrogant message, it has warned the US that if it did not leave Afghanistan it would meet the same fate as the erstwhile Soviet Union.

Taliban’s Stance

The Taliban has been consistent in this stand, having maintained an upper hand militarily. According to the latest quarterly report of the US Congress created office of the Afghanistan Special Inspector General for Afghanistan Reconstruction (SIGAR), as of July 31, 2018, the government of Afghanistan has uncontested control over only 56 percent of the territory, while 32 per cent is contested.

Speaking to reporters in Moscow, Sher Mohammad Abbas Stanikzai, a Taliban representative who attended the Russia-organised meeting on November 09, 2018 on peace in Afghanistan, said: “Our demand for the peace process has two parts, the first part is with Americans; all those matters which are related to Americans like the withdrawal of their forces, the black list and officially recognizing our political office (in Qatar) and other issues which are related to the Americans; they should be discussed with the Americans; they should be discussed with America on the table. And, “Those matters which are related to the Afghan side which are mostly internal affairs like the future government, the constitution and there are many other issues; can be discussed with the Afghan side.” He also stated that the Taliban does not consider the current government in Afghanistan as legitimate.

The Taliban’s demands for peace in Afghanistan have been that all foreign troops must leave, full Islamic law and customs must be implemented, and the political system must not conflict with the Sharia. Wahid Mojdah, an analyst and former diplomatic aide under the Taliban regime from 1999 to 2001 says that the Taliban is not in a hurry and their “goals are religious, not political.”

In an effort to pressure the Trump administration as a part of its physiological warfare, the Taliban, in its capacity as the ‘Islamic Emirate of Afghanistan’, has issued a 17000-word appeal to the American people asking them to pressure US officials to end the 17-year old conflict in Afghanistan.

Diplomatically, the Taliban has gained international recognition, thanks to the efforts of US, Russia and China to get them to the dialogue table. Rightly or wrongly, Russia and China have been viewing the Taliban as a counter to the Islamic State (ISIS), which latter they believe is the main and more toxic threat. With diplomats from different countries frequenting its office in Doha, the Taliban has further added value to its stock.

US – Taliban Dialogue

At the end of July 2018, the US reversed its longstanding policy that any peace process would be ‘Afghan owned and Afghan led’. Days after the Taliban had called on Afghans to boycott the scheduled parliamentary elections, Alice Wells, the US Principal Deputy Assistant Secretary of State in charge of South and Central Asian affairs, met Taliban leaders in Doha. Paradoxically, the Taliban has appointed five former commanders who had spent more than a decade as prisoners in Guantanamo Bay as its representatives at the political office in Doha. The talks were held in the absence of any representatives from the ruling Afghan government.

On September 21, 2018, the US appointed Ambassador Zalmay Khalilzad as the Special Representative for Afghanistan Reconciliation. Since his appointment, Khalilzad has been travelling to Pakistan, Afghanistan, Russia, the United Arab Emirates (UAE), Qatar, Saudi Arabia, Belgium, Uzbekistan and Turkmenistan, in an effort to find a solution to end the Afghan war. He successfully advocated the postponement of the Presidential elections in order to focus attention on the peace process and protect it from political interference. The elections have now been postponed to 2019. It is possible that the postponement of elections was proposed to please the Taliban which is averse to it, being contrary to Islamic Law. Khalilzad held three days of talks with the Taliban from November 16 to 18, 2018 at Qatar. Khairullah Khairkhwa, the former Taliban governor of Herat, and Mohammed Fazel, a former Taliban military chief, attended these talks. Khairkhwa and Fazel were among five senior Taliban members released from Guantanamo Bay in 2014 in exchange for US soldier Bowe Bergdahl, who was captured by the Taliban after walking off his base in Afghanistan in 2009.

The third meeting between US officials and the Taliban took place at Abu Dhabi from December 17 to 19, 2018. Apart from Khalilzad, representatives from Pakistan, UAE, and Saudi Arabia attended this Pakistan sponsored meeting. Taliban officials from the movement’s political headquarters in Qatar, two representatives sent by Mullah Yaqub, elder son of Taliban founder the late Mullah Mohammad Omar, and three representatives from the Haqqani Network were said to have been present. It is significant that among those who attended the meeting, Saudi Arabia, UAE and Pakistan were the only three countries that had recognised the Taliban government during its five-year rule from 1996 to 2001. After the meeting, Khalilzad gave an interview to Tolo News on December 20, 2018, which gives an indication of US thinking on its future course of action in Afghanistan. This raises a number of issues and concerns.

Is the Taliban in control of all the terror groups operating in Afghanistan?

The Taliban has a number of splinter groups and there are conflicts of interests among them. The fact that Mullah Yaqub was asked to send two representatives to the Pakistan sponsored talks in Abu Dhabi and three representatives of the Haqqani Network were present in the same meeting says it all. When Mullah Omar’s death became public knowledge, his son Mullah Yaqub is said to have walked out of the meeting convened to appoint Mullah Mansoor as the successor. Will Haqqani Network and Islamic State Khorasan Province (ISKP), an affiliate of ISIS which has its own factions, fall in line with the Taliban? Given internal rivalries between various factions and terror groups, will accommodating the Taliban within the power structure of Afghanistan end terror and bring peace to the country and to its people?

Larger issues being ignored at the peril of long term peace in the region.

The US, Russia and China seem to be ignoring or misreading the larger issues of the conflict in Afghanistan. The Taliban, who refer to themselves as the ‘Islamic Emirate of Afghanistan’, are a Sunni Islamic fundamentalist political movement. The conflict in Afghanistan is not borne out of differences between the Afghan Government and the Taliban to be settled by peace talks. It is a conflict of ideology, faith and beliefs. The Taliban wants to govern the country under Islamic Law and not under a man-made Constitution. Till date, it has not cut off its links with the Al Qaeda. It is also noteworthy that there has not been any major fight between the Taliban, Al Qaeda and ISIL in Afghanistan. They seem to be silently accommodating each other, though many believe that ISIL and Taliban are rivals. Their hidden agenda is to establish a Pan Islamic Caliphate in Afghanistan and beyond governed by Sharia Law. Pakistan, with the tacit support of a few Sunni Muslim countries, is seeking to institute its own control on Afghanistan through the Taliban as its proxy to achieve its larger geopolitical objectives. What we are witnessing today in Afghanistan is not an isolated incident limited to the country. This malady has affected a number of countries cutting across continents in one form or the other. The Islamic movement cannot be contained within the borders of Afghanistan.

Has the Security Situation in Afghanistan changed?

“What we are doing is preventing the homeland from being attacked,” said Lt. Gen. Kenneth McKenzie Jr., the nominee to lead CENTCOM, during a hearing before the Senate Armed Services Committee on December 04, 2018. Speaking about withdrawal and the military capabilities of the Afghan Security Forces, he stated “If we left precipitously right now, they would not be able to successfully defend their country……” Has this situation changed?

While in power, the Taliban had allowed militants from around the world to congregate in Afghanistan and facilitated the Al Qaeda to plan and execute the 9/11 attacks. Are there any guarantees that the Taliban will prevent Afghanistan from once again becoming a base and a terrorist haven to take forward Islamic Jihad beyond Afghanistan?

The US perhaps realises that it has lost the war and has no chance of winning. It probably doesn’t matter to Trump as to who rules Afghanistan or how its people are governed. He seems to have reconciled himself to the fact that Afghanistan may become an ‘Islamic Emirate of Taliban’ with Sharia Law being imposed with or without the consent of the people. Being far away, Trump probably hopes that the US will be spared a renewed jihadi threat.

Conclusion

Some analysts are of the opinion that the Pakistan-Russia-China nexus will control Afghanistan through Pakistan’s proxy, the Taliban. This may be true in the initial stages. But once the Taliban consolidates itself and prepares itself to launch its next phase, they are bound to lose control. The Taliban may even attempt to establish an Islamic State in Pakistan in keeping with Ayman al-Zawahiri’s first guidelines for jihad, wherein he states: “In Pakistan, the struggle against them complements the fight for the liberation of Afghanistan from American occupation; then it aims at creating a safe haven for the Mujahideen in Pakistan, which can then be used as a launching pad for the struggle of establishing an Islamic system in Pakistan.”  In his envisioned model for the state of Pakistan in the book Sapeeda-e-Sahar Aur Timtamata Chiragh, Zawahiri writes: “The state called the Islamic Republic of Pakistan is, in no way, an Islamic state; neither in terms of the ideological base (its constitution) nor its practices… Time is not far away when Islam will gain dominance in South Asia in general and Pakistan in particular.”

Since the US has announced its partial withdrawal from Afghanistan and may probably withdraw completely, the responsibility to ensure that Afghanistan does not go the Jihadi way may fall on Russia. Though China has its security establishment in Badakshan Province of Afghanistan, it is not clear as to how far it will get involved in preventing the establishment of a terror state.

With the Taliban having established its base in the North, the chances are that once it consolidates its position, terrorists based in the country may take forward the Jihadi movement Northwards across the Amu Darya to link up with militant groups in the Ferghana Valley. This area is densely populated with deeply religious people, and is shared between Uzbekistan, Kyrgyzstan and Tajikistan. Hizb ut-Tahrir (HT) and its splinter groups Akramiylar and Hizb un-Nusrat, as well as Uzun Soqol (Long Beards), Nurcular, Tabligh Jamaat, Lashkar-e-Taiba, Hizballah, the Islamic Movement of Uzbekistan (IMU), the East Turkestan Islamic Movement (ETIM), the Islamic Movement of Central Asia (IMCA), and the Islamic Jihad Group (IJG) are all active in the area.

Rather than waiting for the situation to deteriorate, it is time to think through the implications of the US withdrawal from Afghanistan, the possibilities of the US initiated Peace Talks fructifying, and its responses should things go wrong. India has not been invited for peace talks and as such. Apart from keeping a close watch on the developments and movements of militants in and out of Afghanistan, it may not take any active part for the present. Indian Muslims including those in the Valley are unlikely to be swayed by the so called Jihadi movement. However, should Taliban take control of Afghanistan, the country needs to be prepared for Pakistan channelling some of the Afghan based terror groups to the Kashmir Valley. The Government would do well to activate its strategic communications machinery to keep the people, especially those in the Valley, informed about the happenings in Afghanistan and its implications so as to counter Pakistani propaganda which is bound to gather steam as events unfold.

Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.

*About the author: Brig. (Retd.) V. Mahalingam is a security affairs analyst.

Source: This article was published by IDSA

By S. Chandrasekharan

In the elections held on December 30, the Awami League led Alliance won 288 seats with the BNP led Alliance winning only 7 seats.  Three seats went to others. It is a land slide victory for Hasina and her party- the Awami League.

Though it was known that the Awami League had an edge in the elections, no one could have predicted or assessed such an overwhelming victory that had had routed the entire opposition.

After ten years Bangladesh had an ‘inclusive election’ and 39 political parties participated in the elections.

As in the 2014 elections, there were 18 election related deaths and over 200 were injured.  Of the deaths 8 were from the Awami League Front, 4 from the BNP Alliance and one each from the Jatiya and Liberal Democratic Parties.  Three civilians were also killed.

There have always been deaths related to elections as in 2010- ten deaths and 2014- 18 deaths.  That the violence was not related to one single party alone was pointed out by Sheikh Hasina who said that in the current campaign ten of her leaders and workers were killed including the Awami League President in Patnitala of Naogaon.   

It is reported that on the election day there were 23 major incidents of clashes between the Awami League and the BNP workers. In 22 booths re poll has been ordered by the Election Commission.

While Dhaka was relatively peaceful, elsewhere across the country there was violence particularly in Cumilla, Chattogram, Rangmati, Cox’s Bazaar, Bagura, Noakhali, Narsingdi and Gazipur.

There were allegations of vote rigging, intimidation and irregularities from several parts of the country including Dhaka city.  There were some specific allegations, like non-availability of ballot papers when people came to vote, premature closing of some polling booths, polling agents of some parties being chased away etc.  It is hoped that the Election Commission would go into specific allegations in due course.

Having lost very badly, a matter of surprise even for them, leaders of opposition have not taken kindly to the results.  Some comments worth noting were

• Dr. Kamal Hossain of Jatiya Oikya Front-  “We regret this so-called result.  At the same time, we demand fresh polls under a non-partisan government.
• Alamgir- Secretary General of BNP:  ‘It is a cruel farce on the nation.  This election has caused harm to the nation.’

The Jatiya Party led by Ershad made a complete U turn just before the election.  Aggrieved in not getting the desired number of seats (they were offered only 29 seats), the party had decided to field in 145 other constituencies.  Later Ershad on his return from Singapore on the eve of elections declared that he was back for “Sister Hasina!”

The big loser is the BNP.  Earlier, the BNP and the Awami League were ruling alternatively.  The BNP made the big mistake in boycotting the elections in 2014 and the Awami League had a walkover.  It was BNP’s belief that the international community will not accept such an election – but they were mistaken. 

The second mistake they made was in  unleashing an unacceptable level of violence in the aftermath of the last elections.  The effect of the violence could still be seen. The BNP leaders have been going in and out of the courts for the last few years and quite a few have been sentenced.  Those evading arrests could not come out and work for the elections.

 The BNP also took its own time to decide to participate in the last elections and had kept even its own top leaders and the cadres guessing.  Lastly, its association with extremist religious groups like Jamaat only discredited their democratic credentials. Above all, their leader could not only stand for elections, but had to spend her time in jail for various offences.  Her son- her anointed successor is still in London evading imprisonment in Bangladesh.

It is hoped that Sheikh Hasina will be generous enough to close all cases except major crimes like murder or grievous injury, relating to violence in the last 2014 elections.

For India, the result is to be welcomed.  The Indian insurgents who were cooling their heels in the Myanmar-China border and were hoping to return to their former bases in Bangladesh in the event of BNP coming to power cannot do so in the near future. The connectivity projects between and through Bangladesh will get a fillip for the general prosperity of the region. 

Above all what is to be noted is – there are many irritants and many more can be expected between Bangladesh and India- but Sheikh Hasina who should be expected to safeguard the sovereignty of her country will not go against the interests of India.

Meeting the world’s growing demand for protein nutrition through sources of protein other than meat could prevent millions of unnecessary deaths per year and drastically reduce greenhouse gas emissions, according to new research conducted by the Oxford Martin School for the World Economic Forum. The research, published in the report Alternative Proteins also finds that the nutritional needs for a future world population of 10 billion can be met sustainably, and with positive health consequences, through a combination of innovative protein sources, improved production systems and changed consumer behaviour.

The report is unique in its focus on both the human health and environmental impacts of meat consumption. For human health, the research finds that switching from beef – the base case of the analysis – to other protein sources could reduce the overall global burden of diet-related deaths by 2.4%, with that number climbing to 5% in high- and upper-middle-income countries. This will be increasingly important given the projected demand for meat from emerging middle classes.  

At the same time, in terms of environmental impact, 2010 data shows that production of beef alone was responsible for 25% of all food-related greenhouse gas emissions. With demand for protein set to soar, such demand will place huge pressure on the environment. The report finds a striking difference between the greenhouse gas emissions of beef production and other sources of protein. While beef, for example, has an emissions intensity of 23.9 kilograms of CO₂ equivalent per 200kcal, beans, insects, wheat and nuts emit 1 kilogram or less CO₂ equivalent for the same nutritional value. Other sources such as tofu, pork, alga and chicken produce only 3-6 kilograms CO₂ equivalent.

The 13 sources of protein analysed in the report include beef, pork and chicken; fruits and vegetables that can be eaten naturally or processed, such as beans and peas; processed non-animal substitutes such as tofu, wheat-gluten products or mycoprotein; and novel products such as culture meat, insects and alga spirulina.

“It will be impossible to sustainably satisfy the world’s future demand for meat. What this report shows is that it can be possible to produce enough nutrition for 10 billion people and improve people’s health without necessarily giving up meat – even red meat – altogether, through innovation in products, improvements in how we produce beef, pork and chicken, and an effort on the part of the consumer to embrace a more diverse diet,” said Dominic Waughray, Managing Director, World Economic Forum.

While the data highlights the positive joint health and environmental benefits of alternative proteins, it also details the scale of the challenge in building a more sustainable food system. On the technical side, for example, while lab-grown beef is seen by many as a much more environmentally friendly alternative to traditionally-reared beef, the report finds that current production methods are energy intensive. The report notes the possibility of changing this trajectory: as production processes mature and production is scaled up, leveraging renewable energy sourcing and localizing production in cities (much like craft beer is today), the environmental benefits of lab-grown meat could be enhanced significantly.

As important as the technical (and corresponding financial) side of innovation is, a positive story around alternative proteins is also needed to change political thinking. With each of these elements in place, we could be in line for a true transformation. The report calls for transformation in four sectors:

• The food industry, which is called on to invest in new alternative proteins to help scale up production and offer consumers a wider range of options
• The livestock industry, which must work with others (including government) to develop incentives for farmers to adopt more sustainable production processes
• The feedstock industry, where production must shift towards creating inputs for alternative proteins (alongside creating more sustainable feedstock)
• Government and regulators, which must design rules to govern a wave of new alternative proteins to protect the public from health risks and unsubstantiated claims, and to support the various sectors in their transformations

Supporting farmers

Another important message in the report is that alternative protein is only one part of the solution to make food production more sustainable and human lives healthier. For instance, the report also calls for animal feed innovation, such as insects, which present a critical opportunity, particularly for farmers in Europe and North America.

According to a sister analysis prepared by the International Livestock Research Institute (ILRI) for the World Economic Forum Annual Meeting 2019, Options for the Livestock Sector in Developing and Emerging Economies to 2030 and Beyond, another key part of the protein story is smallholder farmers. This report highlights that 75% of all livestock-derived foods in Asia and 72% in Africa in 2010 were produced by small farms. These farmers live and work in very different circumstances. For instance, there were approximately 750 million rural poor livestock keepers living on less than $2 income per day in South Asia, East Asia and Pacific and Sub-Saharan Africa. With 70% or more of their total production costs going to labour and input costs, unique methods of sustainable intensification will be required. Ensuring that farmers can improve their livelihood and better manage their environmental impact of the livestock they keep will be a key factor in achieving a sustainable food system.

“Today, we have a unique opportunity to build the right food system for generations to come. The path towards this goal is at the crossroads between an ambitious transformation of traditional production to achieve sustainable growth, and strong support for alternatives and disruptive solutions. As a 167-year-old company with entrepreneurship at the heart of our values, our Group is committed to play an active role in this challenge, leading and supporting initiatives to collectively ensure that we can sustainably feed a growing world population,” Ian McIntosh, Chief Executive Officer, Louis Dreyfus Company.

“Meat production as currently practiced globally is unsustainable at the projected levels of growth, and as such will require new approaches to reduce environmental impact and will require a shift to more sustainable diets. Maple Leaf is committed to supporting consumer desire for more choices in their protein diet with plant protein-based foods providing an exciting path to both business and environmental value creation. In addition, we are equally committed to addressing the reconstruction of current meat production systems to ensure they fall in line with a sustainable future. We are moving at tremendous speed to bring innovation, scale and accessibility to provide consumers with a range of sustainable protein options,” said Michael McCain, President and Chief Executive Officer, Maple Leaf Foods.

The Forum’s Meat: the Future Initiative

The provision of universally accessible, safe, healthy and sustainable protein in line with the UN Sustainable Development Goals is a pressing issue that cuts across systemic challenges, such as consumption, the environment, food security, health and trade issues. It also offers a great opportunity to harness innovations in technology and science that the World Economic Forum has termed the Fourth Industrial Revolution.

Meat: the Future was launched in early 2018 by the World Economic Forum to help accelerate the agenda for change – and to stimulate new ideas and collaborations – working with leading economic policy, environment and food security experts, business leaders, civil society, investors and technology innovators from around the world. The initiative focuses on three pathways for change to the protein system: accelerating alternative proteins, advancing current production systems and driving consumer behaviour change.

By Frank Shostak*

Only a few months ago most economic commentators were sanguine about prospects for the US economy. Most of them did not expect an imminent downturn. Now all that has changed with most experts expecting the economy to enter a downward phase of the economic cycle by 2019. According to experts, the key factor behind the emerging downturn is the policies of the US President Trump in particular the imposition of tariffs on imports. Very few analysts however attribute the possible downturn to the decline in the annual growth rate of money supply. The exception here are the monetarists (i.e., the followers of Milton Friedman).

According to Friedman, the root of the business cycle is the fluctuations in the growth rate of money supply.

Friedman held that what is required for the elimination of these cycles is for central bank policy makers to aim at a fixed rate of growth of money supply:

My choice at the moment would be a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money. For this purpose, I would define the stock of money as including currency outside commercial banks plus all deposits of commercial banks. I would specify that the Reserve System should see to it that the total stock of money so defined rises month by month, and indeed, so far as possible, day by day, at an annual rate of X per cent, where X is some number between 3 and 5. The precise definition of money adopted and the precise rate of growth chosen make far less difference than the definite choice of a particular definition and a particular rate of growth.1

Now if economic cycles are caused by fluctuations in money supply growth, then it makes a lot of sense to eliminate such fluctuations. In this sense, the constant money growth rate rule seems to be the right remedy to eliminate such cycles.

What sets in motion these cycles is not fluctuations in the growth rate of money supply as such, but the fluctuations in the growth rate of money supply generated out of “thin air.” By money “out of thin air,” we mean money that is created by the central bank and amplified by fractional reserve lending by commercial banks.

An increase in the money supply out of “thin air” provides a platform for non-productive activities, which consume and add nothing to the pool or real wealth. Money out of “thin air” diverts real wealth from wealth generators to non-wealth generating activities, thus weakening the wealth-generating process.

The diversion occurs once various individuals that are the early receivers of this newly created money are exchanging new money for goods and services by contributing nothing to the pool of goods and services. Wealth generators that have not received this newly printed money discover that they can now secure fewer goods than before. (The increase in the prices of goods and services manifests this).

While the increase in the growth rate of such money stimulates non-productive activities, a fall in its growth rate undermines those activities. Their ability to divert real wealth from wealth generators is thereby curtailed.

Note that since non-productive or bubble activities do not generate any real wealth they cannot secure the goods they require without the support from newly created money.

Once the proportion of non-productive activities from overall activities starts to increase, this tends to put pressure on the profitability of companies. This in turn raises the likelihood of an increase in banks’ bad assets. Consequently, banks expansion of credit through the fractional reserve lending (i.e., the expansion of lending out of “thin air”) is likely to slow down, and this in turn is likely to weaken the growth rate of money supply.

In a fractional-reserve-lending world once the borrowed money is repaid to the bank and the bank does not renew the loan, the money disappears. In the case of non-fractional reserve lending, once the money repaid by the borrower, it is transferred to the original lender, and so no change in money supply is going to occur. (In the case of fractional reserve lending, once the money is repaid to the bank, it disappears from the economy as there is no original lender here to whom money is going to be returned).

A fall in the growth rate of money out of “thin air” is thereby going to undermine various non-productive activities that arose from and were supported by the fractional reserve bank lending. This sets in motion an economic downturn.

The expansion in money supply supports the emergence of non-productive activities. So if the fixed money rule were to be enforced, over time it would lead to the expansion of non-productive activities. (A fixed money supply rule is still about the expansion of money out of “thin air” though at a fixed rate). This is going to weaken the wealth generators and thus undermine the real economy.

We can conclude that Friedman’s monetary rule is simply another way of tampering with the economy and, hence, it cannot lead to economic stability.

The Gold Standard and Boom-Bust Cycles

Would the introduction of a gold standard eliminate boom-bust cycles? According to Friedman, what causes boom-bust cycles is fluctuations in the growth rate of money supply. On the gold standard there are going to be fluctuations in the growth rate of money supply. Hence, according to Friedman, the introduction of a gold standard is not going to eliminate business cycles.

It is true that the variability in the growth rate in the production of gold will create fluctuations in the growth rate of money supply. As opposed to the expansion in the money supply on a paper standard, however, the increase in the money supply on a gold standard will not result in an exchange of nothing for something. It will not result in the diversion of wealth from wealth producers towards non-wealth generating activities.

Being a commodity, apart from providing the services of the medium of exchange gold is also demanded for various industrial uses including jewelry. From this perspective, it is part of the pool of real wealth. So when gold exchanged for goods and services — something is exchanged for something else.

Note that the increase in the supply of gold is not an act of embezzlement or fraud. The increase in the supply of gold does not produce an exchange of nothing for something. Contrast this with the printing of gold receipts i.e. receipts that are not backed 100% by gold. This is an act of fraud, which is what inflation is all about. It sets a platform for consumption without contributing to the pool of real wealth. Empty certificates set in motion an exchange of nothing for something, which in turn leads to recurrent cycles.

In the case of the increase in the supply of gold, no fraud is committed. The supplier of gold — the gold mine — has increased the production of a useful commodity. Therefore, in this sense we do not have here an exchange of nothing for something. Consequently, we also do not have an emergence of bubble activities. A wealth producer (because of the fact that he has produced something useful) can exchange it for other goods. He does not require money out of “thin air” to divert real wealth to him.

On the gold standard an increase in the growth rate of money, which is gold, will not set in motion the emergence of bubble or false activities i.e. an economic boom. Hence, a fall in the growth rate of money supply is not going to create an economic bust — no bubble or false activities were created that are going to be destroyed by a slower money supply growth rate.

We hold that the disappearance of money out of “thin air” is the major cause of economic downturns. (The injection of money out of “thin air” generates bubble activities while the disappearance of money out of “thin air” destroys these bubble activities). On the gold standard, this cannot occur. On a pure gold standard, without the central bank, money is gold. Consequently on the gold standard money cannot disappear since gold cannot disappear unless it is physically destroyed, which is an unlikely proposition. We can thus conclude that the gold standard, if not abused, is not conducive of boom-bust cycles.

• 1. Milton Friedman – Dollars And Deficits – Prentice Hall Inc 1968 p 193.

*About the author: Frank Shostak‘s consulting firm, Applied Austrian School Economics, provides in-depth assessments of financial markets and global economies. Contact: email.

Source: This article was published by the MISES Institute

To mark the centenary of the end of World War 1, the Bulgarian National Archives has published a selection of soldiers’ diaries, giving a glimpse of the fear and deprivation they endured.

By Martin Dimitrov

“We all feel tired, exhausted, and nervous. Any minute could bring death to each of us. The bullets of the foes scream above our heads all the time. My situation is even worse – as I hold an officer’s responsibility.

“If our guards fall asleep and let the Serbs surprise us, they will take us into captivity or slaughter us, then take on all forces up Timov peak and cut off all the escape routes. This does not allow me to have even a minute of sleep.”

So wrote Bulgarian teacher and non-commissioned officer Mihail Kermenliyski from the 45^th Infantry regiment on August 21, 1916, as Bulgaria’s offensives during World War I ground to a halt and a war of attrition began.

Little did he know that the “Great War” was to drag on for more than two years and cost his country, and those who fought against it, dearly.

Yet, he kept documenting his and his platoon’s ordeals on the front, the curious places he visited in the territories the Bulgarian army occupied and the dire suffering of civilians in the rear.

Kermenliyski’s memories of the war – alongside those of eight other soldiers – have now been published by the Bulgarian National Archives as part of its commemoration of the passage of a century since the end of World War I, known as the Great War.

The National Archives have already digitalized thousands of pictures, documents and the names and places of death of all soldiers who lost their lives during the war.

“I believed that the centenary from the Great War should be the occasion to launch a wider public discussion about the role of Bulgarian state and society in this war, and its consequences,” Professor Veselin Yanchev, head of the Bulgarian History department of Sofia University, said.

“Unfortunately, the celebrations have remained in the circles of the historians, the military and those who are interested in history,” he added.

A forgotten war

Bulgaria entered the conflagration in 1915 on the side of the Central Powers – Germany, Austria and Turkey. Like them, it went down to defeat towards the end of 1918, losing much territory in the process.

“Maybe it is because this war gives us no reason for pride as a nation, so we don’t want to delve into it,” Professor Yanchev suggested.

There is much to learn, however, especially from the perspectives of soldiers themselves.

“This is the story of daily life on the frontline, where death and life meeting each other is commonplace. It contrasts with the big story – let’s call it the generals’ tale – of victories and heroism,” Mihail Gruev, director of the National Archives, says.

Gruev believes the diaries are important because they present the trauma of the soldierly experience in the trenches and in the rear-guard, which is an entirely new “truth” about the war by itself.

He says the selection of diaries aims to showcase a wider palette of memories, ranging from those of professionals soldiers through to frontline doctors and villagers – people from varying social backgrounds but who shared a sense of historicism.

The war was not the same for all of them, and the selection reveals a plethora of different feelings at its different stages.

“The enthusiasm felt at the start of the Balkan wars [of 1912-13] is missing, but there is no problem with mobilization and, from the autumn of 1915 till January 1917, the Bulgarian army is undertaking successful offensive operations,” Professor Yanchev noted.

Disillusion with and suspicion of politicians

Yanchev added that there was a shared understanding between the Bulgarian elites and common people that Bulgaria had failed to achieve its goals in the Balkan wars, and needed to make a final push. Initially, World War I led to this.

His words resonate with those of Mihail Kermenliyski, written from the days before Bulgaria joined the conflict.

“We all await with fear the news of mobilization, especially the poorest, who will leave their families in the current situation of unemployment and high prices. And why do we mobilize at a time when Bulgarian positions are not threatened?” he wondered in early September 1915.

Like many of the other diarists, he suspects the motives of the country’s leaders.

To him, the claim that Bulgaria needs to mobilize to maintain its position of “armed neutrality” is dubious.

“This masks the government’s drive for conquest. The hope of expanding the markets through the capture of new territories makes all the bourgeois parties that divided themselves into Russophiles and Russophobes until yesterday, come together,” he wrote.

Dr Petar Nedevski, who also fought on the Macedonian front, shared his feelings.

“I felt once more the well-known truth of history – that it knows no feelings and knows one motto and one motto only – the material interest,” he recorded, mulling the shifting geopolitical alliances.

Their comrade, Iliya Lambov, a teacher from Shumen who participated in the recapture of the Tutrakan fortress from Romania in the autumn of 1916, laments: “Imperialism, hegemony, how wide is your mouth and how narrow is your throat!”

But, despite his passionate anti-war outbursts, he keeps on fighting – even against Bulgaria’s former liberator from the Ottoman yoke, Russia, which sends Cossack detachments in support of its then Romanian ally.

“Curiosity! During a fight between us and the Cossacks, an under-officer died on our side. During his burial, the Cossacks cried over his grave like if it was their brother’s. Oh, you stupid Sergey Sazonov [Russian diplomat], if you, demon, did not exist, our knives wouldn’t be pointed at our Russian brotherly nation now,” Lambov wrote, shifting the blame for the conflict to the politicians.

“It is obvious that those poor and tired souls are not victims of official propaganda,” Gruev concludes.

Despite their very different political convictions  – some of the authors would later become ardent communists while others would join pro-fascist officers’ groups – they all share a sense of patriotism, and a conviction that the political elite has brought the war upon them.

Death seen everywhere as war drags on

Before politics, however, came the question of survival.

“Around us – oh, the horror! From our trenches to the first French foxholes the whole space is covered by the dead bodies of our soldiers. Entire lines of people killed by machinegun fire lie on the ground. Dead in the trenches. Bloody puddles everywhere. In a space that is no bigger than 500 square metres, there are around 300 to 400 dead”, writes Mihail Kermenliyski after a skirmish.

Tragic stories of single deaths sometimes resonate more with them than the plight of hundreds.

Zlati Koychev tells how a young Serbian woman with a blood-stained shirt, who was giving water to the advancing Bulgarian troops, told him that her new-born had been killed by a bullet while she was taking a look through a window.

“She let me in and I saw what she was saying was true – a small body in a tiny pool of blood, and two children crying over it. It was a moving picture. I moved onward.”

Other soldiers, like Mladen Kadzhelyanski writes, in passing, how he found out he had lost two of his children.

While death is literally everywhere, some of the most shaking accounts of it come from Dr Petar Nedevski.

“Every day about five to 10 people die in the field hospital. I do four or five amputations a day. A man’s heart fills with anguish, but he has to go on working, has to keep on sawing hands and feet to keep death at bay,” he writes.

And those are only the combat casualties – thousands more would pass away from malaria, scurvy and influenza, all fuelled by the poor material conditions of the army.

A communist sympathiser and soldier on the Gevgeli front, Lieutenant Varban Angelov, feels open contempt for his superiors.

“The officers and all those in direct communication with the higher ranks acutely and gratuitously engage in flunkey-like acts and cover everything in a gown of servility, especially when it comes to actual work, which they always describe as being perfectly well done,” he writes, acidly.

He is wary of government propaganda about victories on other fronts, as well as about the complicity of the newspapers – even if they come from his ideological spectrum.

Angelov blames his superiors’ incompetence for such unintended consequences as the pillaging of villages by their own army for scarce food and material.

He dismisses officers’ lack of tactical awareness on the battlefield, which might have not amounted to much during the short Balkan wars, but is exemplified now.

“Our [officers] are megalomaniacs and don’t feel the responsibility they have, they carry petty ambitions and are thirsty for fame,” he says.

Things are not much better in the men’s hometowns. Dr Nedevski laments the corruption and nepotism that have taken over war-weary Bulgaria during his absence.

Carnage of war leads to decay in values

This brewing contempt, especially for the political leadership, would later have important consequences for Bulgaria after the war

“What happened on the frontlines left such a lasting trace over the events of the interwar period that their impact can’t be ignored,” says Gruev, adding that the result was an “impressive devaluation of human life and values that fuels an environment ripe with assassinations, coup d’états, murder attempts, bloody civil strife.”

“There is a change of moral and values, violence and death stop being a moral barrier. The search for fast, violent solutions is not a Bulgarian patent, but has its expressions in Bulgaria as well,” Professor Yanchev adds.

Even while on the offensive, soldiers write little about heroic feats and more about the fear and dread they feel.

“With nervous anticipation we expect the order to advance. Nobody is calm, rifles’ gunlocks crack and bayonets are cleansed, shaky hands smoke one cigarette after another and people give each other courage and imitate self-control as we enter a little-known territory where we don’t know what to expect,” Kermenliyski writes on the day the Bulgarian army crosses into Serbian-controlled Macedonia.

Just before the key battle of Krivolak, he notes: “We knew that the attack will be fierce. We knew a lot of casualties would fall. Soldiers are pale from the expected advance and talk of how their children will be left orphaned.”

Even while on the offensive, Dr Nedevski is far from excited about Bulgaria’s victories. He has to endure the sight of dying soldiers in the field hospitals and of the dismembered and mutilated bodies in the trenches that Bulgarian troops take over.

At one point, after the battle of Derven, he tries rescuing two Bulgarian and Serbian officers who were wounded in the battle and shows extreme humility to both. “Both of them died on the same day. Let them rest in peace. They both served their fatherlands and had accomplished their duty impeccably.”

Soldiers struggle to maintain their humanity

The diaries of Nedevski and Kermenliyski also feature accounts of their travels around Kosovo, Macedonia and Western Thrace, which are abundant with anthropological comments and historical references – the Western-educated officers are well-versed and interested in the places they visit.

Both note the state of various cities, including Skopje and Pristina, and comment on their relations with local Albanian hetmans, Gagauz peasants and even describe a Dervish ritual.

They also show sympathy for the civilians and lament their precarious situation, regardless of the side they back.

“These Balkan houses without owners are a pathetic sight, with only cats left to meow and dogs to bark. There is little doubt that such abandoned property will become victims of retreating Serbian soldiers, followed by our own troops and then of marauders who will steal mercilessly the wealth piled up by labour for years,” Dr Nedevski writes about Papratina, a village in occupied Serbia.

Yet, as the war drags on, the little enthusiasm the soldiers have runs low. Most of the soldiers share similar accounts. Machine gun rattles, the use of dumdum (or expanding) bullets, forbidden by the Geneva Convention, airplanes fly above and bombard trenches, artillery carries on deadly barrages, which forces soldiers to hide in the depths of the tunnels underneath the trenches.

Not everyone’s days on the front are so eventful, though. Most of the days in Yancho Mandradzhiev’s diary end with the note: “Nothing much.”

His tales, like those of Mladen Kadzhelyanski, sprawl with descriptions of mundane daily duties, drills and pretending to be sick, rather than tales of horror or heroic feats.

For days on end, the only sign of enemy activity is a random bombardment by a French airplane. Yet life on the front can shattered on a whim, when the hellfire of enemy artillery wounds both of them.

They are sent to frontline hospitals, where boredom is complemented by the battle for survival – not from the wounds themselves but from the hunger and disease that take over.          

Historians say the turning point in the war for Bulgaria came after it captured all the land it had claimed before the war – only to learn that its fate it would not be up to the soldiers, but would be decided by the Great Powers.

Fatigue creeps in as defeat looms

“This is the shadow of doubt creeping in – we’ve achieved our goals, we just want to keep them, but this does not depend on our own efforts,” Professor Yanchev noted.

“So far, Bulgarian soldiers have fought short wars – the Bulgarian-Serbian war was two weeks’ long. The Balkan wars started in October 1912 and ended in April 1913, while the Second Balkan war lasted a month,” he recalled.

“But this is a three-year ordeal during which the major part of the Bulgarian youth is uprooted from their homes and their work and sent to the front. Problems with supplies of both soldiers and the population, the overwhelming requisitions, cause discord in the soul of the Bulgarian soldier,” the historian added.

Signs of attrition were noticeable as early as the autumn of 1916, only a year after Bulgaria entered the war.

“Today it’s a year since we put on the soldier’s coat. A long year, a heavy year, during which we started looking like anything but men. How long will that last, and when will the sun of peace shine rise and spread its light over the tortured humanity? This looks like a dream, a dream that will be hard to attain,” writes Iliya Lambov from the Northern front on September 23, 1916.

The tone of Dr Nedevski’s entries also changes as the tide of war starts changing. Offensives turn into stalemates and then into retreats, orderly at first, but then a full-blown scattering of soldiers, tired of war, by September 1918.

While he sees the coming defeat throughout 1918, the total decay of the army after the Entente powers break through at Dobro pole, a few kilometres from his own position in Macedonia, still catches him by surprise.

“The retreat of our troops is absolutely disorderly. Soldiers leave the front even when there is no pressure from the enemy,” he writes on September 16.

“The retreat of our army is full and the degradation is total. There is no hope,” he writes on September 23, adding that the lack of ammunition, artillery support and food makes further fighting impossible, even for those who would have kept it up.

“My pen can’t describe the disgrace we bear,” Nedevski writes on the last day of his war in the Sofia barracks. “I will leave this to those who brought them upon us.”

A global conflict

Before defeat stared them in the face, Bulgarian soldiers realized they were now fighting almost the entire world. [Unlike the Central Powers, the two Entente Powers, England the France, had immense colonial possessions].

Alongside Serbian, French and Italian soldiers, Nedevski notes French colonial troops from Senegal, Martinique, New Caledonia and Algiers among the prisoners-of-war captured in 1917.

Yet, their attitude towards the enemy is not always to dehumanise them. Vasil Yanchev says it often depended on the nationality of the adversary.

“On the relatively more peaceful Northern front, there are calmer relations with the Russian and Romanian soldiers, there is not so much of a denial of the humanity of the adversary,” he says.

This is not always the case with the Greeks and Serbs, who the Bulgarians despise for their role in the Balkan wars. [Both Greece and Serbia took much of the territory from the defeated Ottomans that Bulgaria had hoped to obtain].

“Allies – Vagabonds” is a common saying at the time, Yanchev adds, referring to the phrase Bulgarians used about their former allies-turned-enemies during the Second Balkan war.

“The Bulgarian soldier is far from all-forgiving or magnanimous but we can say that their accounts are free of extreme expressions of hate and bitterness against the adversaries,” Gruev said.

To the historian, it is clear that the authors of the diaries are aware that on the other side of the battlefield are other humans, most of whom are also not in the trenches by their own will.

One such example comes from the diary of Mihail Kermenliyski, who finds the letters of a fallen French soldier, intended for his fiancée. “She loves a cold, lifeless corpse which will tomorrow start decomposing… crows and dogs will eat the flesh. All that was dear to her is forever lost,” he laments.

His feeling resonates with that of the poet Dimcho Debelyanov, an army lieutenant who dies fighting the British in Macedonia around the same time. Before that, he wrote in his poem, “Dear Soldier”:

He’s a foe of ours no more –

For a wave the storm was driving

Swept all enemy survivors

Over to the other shore.

Who is he? Where did he fight?

Whose call brought him in defiance

On a day of whirlwind triumphs

Without triumph here to die?

Was he coming here to show

Pity when the trumpet sounded?

It was death he sought – he found it.

Now he’s dead he’s not our foe!

The majority of deaths during the single largest murder campaign of the Holocaust, called Operation Reinhard, occurred during a single three-month period, a new study reveals.

Not only does this study indicate that the murder rate during Operation Reinhard has previously been greatly underestimated, it also provides new insights into the profound efficiency of Nazi death camps and the systematic manner in which Jewish communities were murdered.

During the Nazi-German campaign to eradicate Jews during the second World War, a great portion of the Holocaust killings occurred during Operation Reinhard, which lasted from 1942 to 1943.

However, detailed records of the killings were largely destroyed by the Nazis, making it difficult to investigate how quickly the genocide was carried out. Deutsche Reichsbahn, the German National Railway, played a critical role in transporting millions of Jewish victims to the death camps, and the “special trains” that transported the victims were kept on strict time schedules.

Yitzhak Arad, an Israeli historian specializing in the Holocaust, compiled Reichsban data on 480 train deportations from 393 Polish towns and ghettos to three key death camps – Belzec, Sobibor, and Treblinka – during Operation Reinhard and estimated the number of victims on each transport.

Here, using Arad’s data, Lewi Stone estimated the rate at which the Nazis killed Jews during Operation Reinhard, showing that most of the murders occurred in only three months – August, September and October 1942.

Of the 1.7 million victims of Operation Reinhard, 1.32 million (78%) were murdered during these three months, or about 15,000 murders per day, every day. This finding implies that roughly 25% of all Holocaust victims were murdered during these three months of Operation Reinhard in 1942.

Compared to the 1994 Rwanda genocide, which has been suggested as the most intense genocide of the 20th century, the murder rate during Operation Reinhard was 83% higher, according to Stone.

Stone estimates that the Nazi’s murder campaign could have continued at this pace had there had been more victims living in Germain-occupied Poland, and instead the murder rate tapered off in November 1942 as a result of there being essentially no one left to kill, Stone says.

The ocean has a long memory. When the water in today’s deep Pacific Ocean last saw sunlight, Charlemagne was the Holy Roman Emperor, the Song Dynasty ruled China and Oxford University had just held its very first class. During that time, between the 9th and 12th centuries, the earth’s climate was generally warmer before the cold of the Little Ice Age settled in around the 16th century. Now ocean surface temperatures are back on the rise but the question is, do the deepest parts of the ocean know that?

Researchers from the Woods Hole Oceanographic Institution (WHOI) and Harvard University have found that the deep Pacific Ocean lags a few centuries behind in terms of temperature and is still adjusting to the entry into the Little Ice Age. Whereas most of the ocean is responding to modern warming, the deep Pacific may be cooling.

“These waters are so old and haven’t been near the surface in so long, they still ‘remember’ what was going on hundreds of years ago when Europe experienced some of its coldest winters in history,” said Jake Gebbie, a physical oceanographer at WHOI and lead author of the study published Jan. 4, 2019, in the journal Science.

“Climate varies across all timescales,” adds Peter Huybers, Professor of Earth and Planetary Sciences at Harvard University and co-author of the paper. “Some regional warming and cooling patterns, like the Little Ice Age and the Medieval Warm Period, are well known. Our goal was to develop a model of how the interior properties of the ocean respond to changes in surface climate.”

What that model showed was surprising.

“If the surface ocean was generally cooling for the better part of the last millennium, those parts of the ocean most isolated from modern warming may still be cooling,” said Gebbie.

The model is, of course, a simplification of the actual ocean. To test the prediction, Gebbie and Huybers compared the cooling trend found in the model to ocean temperature measurements taken by scientists aboard the HMS Challenger in the 1870s and modern observations from the World Ocean Circulation Experiment of the 1990s.

The HMS Challenger, a three-masted wooden sailing ship originally designed as a British warship, was used for the first modern scientific expedition to explore the world’s ocean and seafloor. During the expedition from 1872 to 1876, thermometers were lowered into the ocean depths and more than 5,000 temperature measurements were logged.

“We screened this historical data for outliers and considered a variety of corrections associated with pressure effects on the thermometer and stretching of the hemp rope used for lowering thermometers,” said Huybers.

The researchers then compared the HMS Challenger data to the modern observations and found warming in most parts of the global ocean, as would be expected due to the warming planet over the 20th Century, but cooling in the deep Pacific at a depth of around two kilometers.

“The close correspondence between the predictions and observed trends gave us confidence that this is a real phenomenon,” said Gebbie.

These findings imply that variations in surface climate that predate the onset of modern warming still influence how much the climate is heating up today. Previous estimates of how much heat the Earth had absorbed during the last century assumed an ocean that started out in equilibrium at the beginning of the Industrial Revolution. But Gebbie and Huybers estimate that the deep Pacific cooling trend leads to a downward revision of heat absorbed over the 20th century by about 30 percent.

“Part of the heat needed to bring the ocean into equilibrium with an atmosphere having more greenhouse gases was apparently already present in the deep Pacific,” said Huybers. “These findings increase the impetus for understanding the causes of the Medieval Warm Period and Little Ice Age as a way for better understanding modern warming trends.”

Studies focusing on using artificial intelligence (AI) neural networks to generate audio output from brain signals have shown promising results by producing identifiable sounds up to 80% of the time.

Participants in the three studies first had their brain signals measured while they were either reading aloud or listening to specific words. All the data was then given to a neural network to “learn” how to interpret brain signals after which the final sounds were reconstructed for listeners to identify. These results represent hopeful prospects for the field of brain-computer interfaces (BCIs), where thought-based communication is quickly moving from the realm of science fiction to reality.

The idea of connecting human brains to computers is far from new. In fact, several relevant milestones have been made in recent years including enabling paralyzed individuals to operate tablet computers with their brain waves. Elon Musk has also famously brought attention to the field with Neuralink, his BCI company that essentially hopes to merge human consciousness with the power of the Internet. As brain-computer interface technology expands and develops new ways to foster communication between brains and machines, studies like these, originally highlighted by Science Magazine, will continue demonstrating the steady march of progress, Teslarati reported.

In the first study conducted by researchers from Columbia University and Hofstra Northwell School of Medicine, both in New York, five epileptic participants had the brain signals from their auditory cortexes recorded as they listened to stories and numbers being read to them. The signal data was provided to a neural network for analysis which then reconstructed audio files that were accurately identified by participating listeners 75% of the time.

In the second study conducted by a team from the University of Bremen (Germany), Maastricht University (Netherlands), Northwestern University (Illinois), and Virginia Commonwealth University (Virginia), brain signal data was gathered from six patients’ speech planning and motor areas while undergoing tumor surgeries. Each patient read specific words aloud to target the data collected. After the brain data and audio data were given to their neural network for training, the program was given brain signals not included in the training set to recreate audio, the result producing words that were recognizable 40% of the time.

Finally, in a third study by a team at the University of California, San Francisco, three participants with epilepsy read text aloud while brain activity was captured from the speech and motor areas of their brains. The audio generated from their neural network’s analysis of the signal readings was presented to a group of 166 people who were asked to identify the sentences from a multiple choice test – some sentences were identified with 80% accuracy.

While the research presented in these studies shows serious progress towards connecting human brains to computers, there are still a few significant hurdles. For one, the way neuron signal patterns in the brain translate into sounds varies from person to person, so neural networks must be trained on each individual person. The best results require the best data possible, i.e., the most precise neuron signals possible, meaning this is something that can only be obtained by placing electrodes in the brain itself. The opportunities to collect data at this invasive level for research are limited, relying on voluntary participation and approval of experiments.

All three of the studies highlighted demonstrated an ability to reconstruct speech based on neural data in some significant capacity; however, also in all cases, the study participants were able to create audible sounds to use with the computer training set. In the case of patients unable to speak, the level of difficultly in interpreting the brain’s speech signals from other signals will be the biggest challenge. Also, the differences between brain signals during actual speech vs. thinking about speech will complicate matters further.