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Gaza: The Result Of Destroying Resistance – OpEd

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By Osama Al Sharif

The coming few hours will determine the fate of an Egyptian initiative to implement a cease-fire between Israel, which has accepted the deal, and Palestinian resistance groups in Gaza. Hamas has said it is studying the offer, but wanted guarantees that the blockade on the Strip will be lifted. Israel, on the other hand, said that the cease-fire would be followed by steps to dismantle Hamas’ rocket capabilities and make Gaza a demilitarized area. The gap between the two sides remains wide more than a week after Israel launched a vicious aerial campaign against Gaza.

Like all of Israel’s brutal assaults on the besieged Gaza Strip, Palestinian civilians end up paying the ultimate price. In 2008 when Israel launched “Operation Cast Lead” more than 1,400 Palestinians perished in the three-week incursion, the majority were civilians including children, women and elderly and when Israel struck the Strip again in November 2012, more than 130 Palestinians were killed — again mostly civilians — in the eight-day assault. In both cases Hamas and other resistance movements responded by firing rockets on southern Israeli towns and settlements. Hostilities ended when intermediaries succeeded in forging a truce, which usually benefited the Israeli side.

Gaza has always been at the center of the Palestinian-Israel conflict. It is the birthplace of the first intifada in 1988, which led to the emergence of Hamas, an offshoot of the Muslim Brotherhood. It is home to about 2 million Palestinians, mostly refugees and displaced persons — the victims of successive Israeli wars against the Palestinians. It is one of the most crowded places on earth, with meager natural resources and poor public services.

Since Israel’s unilateral withdrawal from Gaza in 2005, the strip has been under siege from land, sea and air. Since then Israel has been targeting so-called militants in an attempt to undermine the infrastructure of resistance movements. The situation became worse when Hamas expelled Fatah leaders from Gaza in 2007 and displaced the government of the Palestinian Authority (PA).

The current onslaught on Gaza by Israel may be different from previous attacks. The assault was initiated by Israel after the kidnapping and killing of three Israeli youths near Hebron three weeks ago. Israel accused Hamas but provided no incriminating evidence. Parallel to a wide security operation in the West Bank, during which Israel rounded up more than 700 Palestinians associated with Hamas, including those who were released under the Shalit deal, the Israelis launched a vicious air campaign against hundreds of targets in Gaza.

This time the Palestinian response was qualitatively different. Hamas, Islamic Jihad and others fired hundreds of rockets, mostly locally made, against various targets in Israel. Unexpectedly, upgraded missiles with a longer range rained on Jerusalem, Tel Aviv and Haifa, among others. Some were intercepted by Israel’s Iron Dome anti-missile system. But the psychological effect of these crude rockets was enormous. The Israeli response was ruthless; firing missiles on homes, mosques, hospitals and public buildings resulting in civilian deaths. Still, and by the end of the first week, with more than 30 children killed, the Palestinian capacity to fire rockets on Israel has been unaffected. Israel warned of a land incursion, but its objectives were unclear. Was Israel about to re-occupy the Strip, or was it only looking for a brief intrusion?

Hamas said that any cessation to hostilities must guarantee the lifting of the blockade and the release of Palestinian prisoners. Spokespersons for the military arm of the movement said they were ready for a ground battle and that they had more surprises awaiting the Israelis. They called on Egypt to intervene again and open the Rafah border crossing.

Israel says the objective of operation “Protective Edge” is to dismantle the capacity of militants to launch rockets against Israel. But previous operations had failed to achieve the same goal. Why would this time be any different? If Israel, where more than two million of its citizens are constantly scurrying to find shelter every time warning sirens are sounded, gives up now, it will be a terrible blow to Netanyahu. And if it decides to wage a land incursion it risks suffering casualties and getting sucked into the Gazan quagmire.

On the other hand, Hamas says it cannot go back to the November 2012 truce agreement, which was mediated by former Egyptian President Muhammad Mursi. Since then, it has incurred heavy political losses following the overthrow of Mursi and the crisis in Syria which forced it to part ways with its Damascus and Tehran allies. It had to succumb to pressure to conclude Palestinian reconciliation under which President Mahmoud Abbas had the upper hand. Ending the Gaza blockade has become a matter of life and death, not only to millions of Gazans, but to the resistance groups as well.

This is why this latest conflict is different. Both parties want something that is difficult to attain. Ironically, both Israel and Hamas are under tremendous pressure and are wary of the next step. But there is another potential loser; Abbas, whose search for a political solution had suffered when Netanyahu rebuffed him, will find himself even more isolated and weak if the Palestinian resistance is destroyed. And if Israel succeeds in defeating Hamas, what would stop Israel from relocating him, and his PA, to Gaza where far right Israeli politicians say the future Palestinian state should be established?

The price of destroying the resistance will be high and will be paid by all Palestinians.

Email: alsharif.osama@gmail.com

The post Gaza: The Result Of Destroying Resistance – OpEd appeared first on Eurasia Review.


Japan’s Rising Security Challenges – Analysis

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Japan’s decision to reinterpret its pacific constitution to allow the right to collective defence has angered China. It is crafting a more active role in security and defence in response to rising instability in Northeast Asia.

By Barry Desker and Bhubhindar Singh

ON 1 JULY 2014, the Japanese cabinet decided to “reinterpret” its post-World War Two pacifist constitution by allowing the right to collective self-defence. This marks the end of Japan’s self-imposed ban on military assistance to an ally under attack and would allow the overseas deployment of the Japanese military. China immediately condemned the decision.

The Abe government has taken significant steps to boost Japan’s defence posture. It has strengthened Japan’s navy and air force, enhanced its patrol and surveillance capabilities and is building an amphibious capability. Japan and the US are in the process of revising the US-Japan Guidelines for Defence Cooperation for the first time since 1997. These measures are supported by Abe’s defence budget increases, which reversed the 11-year trend of reducing defence budgets.

Removing constraints on security policy

Shinzo Abe is reforming the post-war agenda and removing constraints that have prevented Japan from pursuing an activist security policy. But these developments have been criticised in Beijing and Seoul. The level of suspicion towards Japan reached its peak when Abe visited the Yasukuni Shrine in December 2013, becoming the first Japanese prime minister to visit Yasukuni in seven years. These suspicions were reinforced by the release of a report on World War Two sex slaves in June this year. The report claimed that the 1993 Japanese Government apology resulted from behind-the-scenes negotiations with South Korea and suggested that it was not based on solid evidence, opening the way for pressure to retract the apology in the future.

However, Japanese security policy measures undertaken by Abe are part of a long-term trend since the early 1990s that point to Japan crafting a more active role in security and defence affairs. Japan’s actions should be seen as defensive measures in response to the rising instability in the Northeast Asian region. The build-up of defence capabilities reflects Japan’s emergence as a normal state.

Long-term trajectory

An early measure was the incorporation of humanitarian and disaster relief operations, including peacekeeping, into the Self-Defence Force (SDF)’s mandate. With the passing of the ‘Law Concerning Cooperation for United Nations Peacekeeping Operations and Other Operations’ in 1992, the SDF was authorised to participate in United Nations-mandated peacekeeping operations (UNPKOs).

Japan has also expanded the responsibilities of Japan’s Self-Defence Force (SDF) in the context of the US-Japan security alliance. The SDF is now authorised to provide active rear-area support to US forces not only during a direct attack on Japan (as stipulated by the 1978 US-Japan Defence Cooperation Guidelines and Article 5 of the US-Japan Security Treaty) but also during contingencies in the Asia Pacific region that have an impact on Japanese security. More recently, Japan participated in the Afghanistan and Iraq wars, expanding the area of deployment of its defence forces.

Other developments in Japanese security policy include Japan’s contribution to the international anti-piracy efforts in the Gulf of Aden, participation in the Proliferation Security Initiative (PSI) and diversification of strategic partnerships beyond the US to include strategic partnerships with Australia, India, Philippines and Vietnam.

The enhanced role of the military in the formulation of security policy was highlighted by the elevation of the Japan Defence Agency (JDA) to Japan’s Ministry of Defence (JMOD) in 2007.

Enhancing regional stability

These Japanese actions should not be perceived as deliberate attempts to destabilise the regional security environment. They are a reaction to the rising levels of perceived threats from North Korea and China and a response to growing American criticism of Japan as a ‘free rider’ benefitting from the umbrella provided by US defence expenditure.

North Korea’s continued development of its nuclear and ballistic missile capabilities worries Japan. Defence planners are pre-occupied with responding to a nuclear warhead on a missile targeted at Japan.

China’s strategic rise is another long-term concern for Japan. The rapid increase and lack of transparency in Chinese defence expenditure is an immediate source of anxiety. Although still a distant second to the US (which spends four-and-a-half times more than China), Chinese defence expenditure dwarfs the Japanese defence budget.

China has added an aircraft carrier to its naval fleet to facilitate its capability to project power, developed stealth fighter jets (J-20) to boost its air force capability, and is able to destroy or disable another nation’s military assets from afar by deploying anti-ship/carrier missiles, modern submarines and cyber and anti-satellite weapons.

For Japan, China is perceived as unilaterally threatening the existing international order. Some examples include China’s declaration of an Air-Defence Identification Zone (ADIZ) in November 2013 covering the East China Sea, and Chinese behaviour in the East China and South China seas. Recent exchanges between Japanese and Chinese representatives at international meetings have been reminiscent of the Cold War, when the US and Soviet Union accused each other of increasing tensions and being provocative.

Peace and stability in Northeast Asia requires the emergence of strong, stable regimes committed to cooperating with one another and building an increasingly integrated region. A dynamic Japan is therefore a source of stability.

Effective domestic institutions within Japan, the pacifism of large sections of its population and active civil society provide reassurance while the resilience of the US-Japan military alliance acts as a constraint on Japanese adventurism.

Negative domestic actions

Nevertheless, Japan’s denial of its World War Two role has undermined its effort to develop the defence capabilities of any normal state. Its image regionally and internationally has been tarnished by denying past events. Japan should refrain from behaviour that escalates bilateral tensions.

It is important for Japan to engage its immediate neighbours, China and South Korea. These three countries should strengthen defence and foreign ministry interactions and embark on confidence building measures. Unless Japan’s relations with its immediate neighbours improve, it will be constrained in playing a wider role in international affairs.

Barry Desker is the Dean, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University in Singapore, and Bhubhindar Singh is an Associate Professor at RSIS.A version of this commentary was published in The Straits Times.

The post Japan’s Rising Security Challenges – Analysis appeared first on Eurasia Review.

Before The Next ISIS, We Need Nonviolent Counterterrorism Strategies – OpEd

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There are three easy paths any rational politician could advocate that will decrease hostilities, prevent the emergence of new terrorism recruiting environments and empower local communities to engage in nonviolent conflict resolution strategies.

By Erin Niemela

A relatively new group engaging in non-state political violence, ISIS, the Islamic State of Iraq and Syria, recently called for the creation of an Islamic state in Iraq and Syria and a continuation and strengthening of jihad during Ramadan, according to a video that emerged through social media. ISIS, born of Al Qaeda members in Iraq and matured in the Syrian civil war power vacuum, is so radical that Al Qaeda “disowned” it. As if its goals of coerced dominance aren’t bad enough, Al Qaeda criticized ISIS for its brutality against civilians and Muslims. Repeat: Al Qaeda criticized ISIS. For brutality.

Enough is enough. All violent counterterrorism-intervention policies have completely failed. We’re sowing and reaping perpetual tragedy with this violence machine and the only people benefiting are sitting on top of a mountain of cash in the conflict industry (I’m looking at you, Lockheed Martin.) It’s time for a major shift in conflict management strategies. Can we finally start listening to the numerous scholars and studies with scientifically supported strategies for nonviolent counterterrorism? Here is a three-step strategy all sensible persons (and politicians) should advocate:

First, immediately stop sending funds and weapons to all involved parties. This is the easiest of the three. Ten years of terrorism-making and we still think our guns aren’t going to fall into the “wrong” hands? The hands they fall into are already “wrong.” If you need a good example, take a look at our darlings, the Free Syrian Army, and their blatant human rights violations, such as using child soldiers, documented by Human Rights Watch in 2012 and2014.

Second, fully invest in social and economic development initiatives in any region in which terrorist groups are engaged. In his 2004 book, “Nonviolent Response to Terrorism,” Tom Hastings, Ed.D., professor of conflict resolution at Portland State University, questions: “What if the terrorists – or the population base from which they draw – had enough of life’s necessities? What if they had secure jobs, decent living standards, drinkable water and healthy food for their children? Do we seriously think they would provide a recruiting base for terrorism?” Harvard lecturer Louise Richardson, author of the 2007 book “What Terrorists Want” makes the same argument, and Kim Cragin and Peter Chalk of the Rand Corporation drew the same conclusion from their 2003 study on social and economic development to inhibit terrorism. ISIS gained some of its current strength from economically providing for the families of fallen fighters, promising education to young boys (and then handing each a weapon), and capitalizing on grief and anger in Syrian communities. If we want to weaken ISIS and any other group engaging in terrorist activities, we have to start focusing on the needs they fill in those communities. Local communities in the region should be self-sustainable and civilians should feel empowered to provide for themselves and their families without taking up arms or using violence.

Third, fully support any and all nonviolent civil society resistance movements. Whoever is left – give them whatever support is needed the most. Erica Chenoweth and Maria Stephen, in their 2011 groundbreaking study on civil resistance, “Why Civil Resistance Works,” found that “between 1900 and 2006, nonviolent resistance campaigns were nearly twice as likely to achieve full or partial success as their violent counterparts.” In addition, successful nonviolent resistance campaigns are less likely to descend into civil war and more likely to achieve democratic goals. We should have fully supported the nonviolent Syrian revolution when we had the chance. Instead, we gave legitimacy to the violent rebel factions – those same groups now fighting alongside Al Qaeda and ISIS. If we send our unconditional support to whatever nonviolent civil society actors are left on the ground in Syria, Iraq, Afghanistan and Libya, we might just find that the best remedy for terroritis has been right in front of us the entire time – civil society.

These are three easy paths any rational politician could advocate that will decrease hostilities, prevent the emergence of new terrorism recruiting environments and empower local communities to engage in nonviolent conflict resolution strategies. We’ve had centuries to discover that violence doesn’t work, hasn’t worked and won’t work. It’s time to try something different. Global leaders need to get on board the logic train and put some serious and sustained effort into nonviolent counterterrorism strategies. Otherwise, it’s only a matter of time before ISIS starts criticizing the next group for wanton violence and human rights abuses.

Erin Niemela is a Master’s Candidate in the Conflict Resolution program at Portland State University, PeaceVoice editor and PeaceVoice TV channel manager.

The post Before The Next ISIS, We Need Nonviolent Counterterrorism Strategies – OpEd appeared first on Eurasia Review.

Blue Dollar, Black Market: The Illegal Exchange Rate As Financial Indicator In Argentina

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By Nikki Hager

“Cambio! Cambio! Cambio! Money exchange!” It is impossible to walk down Florida Street in downtown Buenos Aires without hearing arbolitos offering to illegally buy and sell U.S. dollars. Arbolitos lead people who want to exchange pesos for dollars into alleyways, office buildings, or false storefronts that appear to be financial entities, travel agencies, or antique boutiques. Even exchange houses that buy and sell dollars legally will often operate in the illegal market. In these cuervas, pesos are exchanged for dollars, at 125 to 150 percent of the legal rate.

Argentina’s economy is receiving a great deal of international attention, but not for its illegal dollar market. Rather, international focus is centered on whether or not Argentina is capable of paying more than $1.3 billion USD to NML Capital, as mandated by a U.S. court.[i] NML Capital is one of the so-called “vulture” firms that purchased discounted Argentine bonds following the county’s 2001 debt default. Throughout the past decade, Argentina has made agreements with 93 percent of creditors that discounted the bonds by one third. Language in the terms of the original bonds mandates that Argentina not only pay NML Capital, but also the remaining 7 percent of “holdout” creditors. In total, the payments reach over $15 billion USD.[ii]

Given that international transactions are usually carried out in U.S. dollars, the country will need to use its dollar reserves to make the payment. Of utmost concern is whether Argentina has enough dollar reserves, since they have been drastically shrinking following the 2009 global financial crisis.[iii] The $15 billion USD payment would consume over half of Argentina’s reserves, rendering other debt payments impossible, resulting in default and economic collapse.

A shortage of U.S. dollars creates numerous other problems for Argentina’s economy. Perhaps the most obvious manifestation is the existence of the “blue dollar,” a euphemism for the black market for U.S. dollars in Argentina. The blue market developed after President Cristina Fernández de Kirchner and her administration placed restrictions on the purchase of dollars in 2011. Today, dollars are only sold for travel outside the country and require documentation to AFIP, the country’s tax agency, before the purchase is permitted.[iv] The exchange rate in the blue market, however, runs substantially higher than the legal exchange rate, peaking at almost double the legal rate in May 2013. The price for the blue dollar is also extremely volatile, in part reflecting the existing economic and political climates of the country.[v]

The existence of the blue market implies a general distrust in the nation’s currency, resulting from a century of extreme economic booms and busts. Hyperinflation, numerous devaluations, and several bank defaults have left Argentines wary of the peso’s stability, causing a widespread practice of saving or investing in dollars instead of pesos and capital flight. Consequently, the aforementioned restrictions on dollar purchases were implemented to curb these practices.[vi]

In addition, the Fernández de Kirchner administration recently came under fire for falsifying government inflation statistics and other financial indicators. INDEC, the country’s statistics agency, manipulated data, making inflation appear around 10 percent in 2013. Independent economists, however, estimate the actual rate to be around 25 percent during the same time period.[vii] An underestimated inflation rate indicates artificially low poverty rates and influences other financial indicators as well, painting an erroneously rosy picture of the Argentine economy.

Given the pervasiveness of the blue dollar and the inconsistencies among the economic statistics, the value of the blue dollar can serve as an accurate indicator of the country’s economic and political climates. The presence alone of a parallel dollar signifies a demand for dollars that exceeds the amount the state is able to supply and has severe negative implications.

Dipping Reserves and Soaring Demands

The restrictions on dollar purchases were implemented with two principal goals: stop the depletion of federal dollar reserves and curb capital flight.[viii] President Fernández de Kirchner dipped into Central Bank reserves to finance budget deficits with dollars. Normally, deficits are financed through international credit markets, but Argentina largely lost its credit access following its 2001 default.[ix] The country needs dollars for other reasons beyond paying vulture funds. For example, dollars are required to finance energy imports, which recently increased substantially. The government is also required to make payments in dollars on the newly nationalized oil company YPF that it purchased from Spanish firm Repsol in 2012.[x] Additionally, dollar reserves are needed to fund international debt—payments totaling around $15 billion USD between 2010 and 2012.[xi]

The demand for dollars goes beyond international transactions. Individual Argentines often save and invest in dollars, fearing further economic instability. Since the 1970s, Argentina has used five different currencies, experienced 14 devaluations, and witnessed two large-scale bank defaults in 1990 and 2001.[xii] Any time the economy begins to show signs of faltering, Argentines take refuge in the dollar. According to the book Estoy verde: dólar, passion argentina,

“[Argentines] buy dollars like they’ve always bought dollars. The thought is, after the next devaluation, you can use dollars to purchase things at half the price… Money serves as a medium of exchange, unit of account, and a reserve of value. When it loses its function as a reserve of value, a stronger currency replaces the weak.”

As a result of their tumultuous economic history, Argentine citizens depend heavily on the U.S. dollar as an instrument for savings and investments. Thus, popular fear generated from past economic meltdowns serves as a driving force for the blue dollar market.

Argentines fear that another devaluation is coming, especially in light of the country’s rocky economic history. Pesos lose purchasing power with each sustained wave of inflation and devaluation, and recent bank defaults have caused distrust in the banking system. Argentine savers often turn to dollars as a way to store their wealth.[xiii] Stashed inside homes or stored in foreign bank accounts, the average Argentine possesses $1,300 USD, more per capita than any other country in the world outside of the United States. By comparison, their neighbors in Brazil average six USD per person.[xiv]

Furthermore, according to Estoy verde, Argentines associate fluctuations in the prices of the dollar with those found in general prices as a result of years of inflation. For example, it is assumed that if the price of the dollar increases 25 percent, then prices can be expected to increase 25 percent. The majority of young people also hold this belief, despite the fact that they never have been affected by hyperinflation.

The practice of saving and investing in dollars keeps the demand for them high. The trend is so prevalent that the government sold around 80 billion dollars to Argentine savers between 2007 and 2011.[xv] Despite the restrictions and efforts by the government to regain confidence in the peso, demand for dollars remains high. Rather than switch to the peso, numerous Argentines turn to the illegal market and pay a substantially higher price, a sign of serious mistrust in the peso.

Why are People Shouting in the Streets? Mechanisms of the Market

The practice of purchasing dollars illegally is widespread—it is estimated that an average of $10 million USD is exchanged on the blue market daily.[xvi] Despite the outward openness of the blue dollar, the internal mechanics are considerably complex.

As the majority of global transactions are carried out in dollars, Argentine firms have access to dollars through international business exchanges. Firms are still subject to dollar restrictions and regulations, although there is an incentive for businesses to engage in money laundering, since dollars can be sold at 125 to 150 percent higher on the black market.[xvii] Corretas, or brokers who have access to dollars, often work out of brokerage houses. Brokers operate on two levels: en blanco, or legally within financial markets, and en negro, on the black market. They report the majority of their earnings to AFIP, but retain a portion to sell on the black market. The brokers are in constant contact with the cuervas, or places where the dollars are sold, and make agreements regarding prices and amounts. Delivery boys then transport the dollars from the broker to the cuerva, usually on their body. Both the delivery boys and the cuervas run the risk of being robbed or stopped by police, a crime that can carry up to an eight-year jail sentence. The cuervas subsequently sell the dollars at an even higher rate and employ the arbolitos, who draw in customers from the streets.[xviii]

Dollars come from other sources as well, including from neighboring countries where it is legal to purchase them. Soy and agricultural exporters also keep a portion of the dollars they earn from exporting to foreign markets in order to sell them on the black market. This practice is especially lucrative, as the exchange rate for soy is kept artificially low, at around three to five pesos to the dollar. Agricultural exporters can then sell the dollars at 10 to 12 pesos to the dollar, doubling or tripling their original exchange rate. [xix]

There are also other means to obtain dollars. “Blue chip swaps” are when dollar-denominated bonds are purchased legally in pesos, then transferred to the United States where they are sold for dollars. Another loophole for attaining dollars is through offshore and international bank accounts.[xx] Millions of dollars flow through Uruguay, a short boat ride away from Buenos Aires. President Fernández de Kirchner has gone as far as to employ dollar-detecting dogs to sniff out and stop dollars from flowing across the border.[xxi]

Despite attempts by the Fernández de Kirchner administration to legally reduce the importance of the dollar and restore public confidence in the peso, there is no real effort by the government to stop the illegal blue dollar market. Rather than crack down on the illegal exchange, state officials meet with important brokers to negotiate the price of the blue dollar.[xxii]

The Value of Blue Dollars as an Economic Indicator

According to Estoy verde, the value of the blue dollar reflects basic supply and demand models. As the demand for dollars increases, so does the price of the blue dollar. The price of the blue dollar consistently changes with economic and political events. Given the historic practice of buying dollars during economic declines, it follows that an increase in the price of the blue dollar reflects popular distrust in government policy and the peso.[xxiii]

Price of dollars over time

Initially, the value of the blue dollar correlated with increasing restrictions implemented by the government. President Fernández de Kirchner enacted the first round of restrictions in December 2011 that required AFIP approval for individual transactions.[xxiv] In May 2012, approvals for dollar purchases plummeted, causing the price of the blue dollar to increase significantly. Blue dollar prices reached as high as six pesos to the dollar that month, compared to the legal rate of around four and a half. In July of the same year, the administration explicitly banned the purchase of dollars for saving, causing the price to skyrocket to almost seven pesos compared to the legal rate of 4.6.[xxv]

The more restrictions imposed to prevent capital flight, the higher the price of the blue dollar. The price rose sharply again in May 2013, following legislation granting amnesty for dollar-hoarding, tax evaders, and money launderers to encourage investors to bring dollars back into the country.[xxvi] This occurred at the same time that the administration began experiencing scrutiny for both its high levels of inflation and faulty statistics.[xxvii] Demand for dollars skyrocketed, causing the biggest spread to date, 5.25 pesos to the dollar to the black-market 10.5.[xxviii] Despite a significant gap between the rates, the administration vowed there would not be another devaluation.[xxix]

However, the official exchange rate began to fall sharply in January 2014, due in part to shrinking reserves. The administration reneged on its vow and devalued the peso to eight pesos to the dollar. Its value dropped 18 percent in that month alone, making it among one of the world’s worst preforming currencies. The blue dollar soared once again, reaching an all time high of 13 pesos to a dollar in February.[xxx]

For the next few months following the devaluation in February, economic conditions appeared to improve; the blue dollar was falling, interests rates were up, and a new, more accurate consumer price index started to restore INDEC’s creditability.[xxxi] However, just as the economy was looking up, the blue dollar began to rise again in early June in anticipation of the upcoming decision in the U.S. Supreme Court case regarding Argentina’s sovereign debt. After the Court refused to hear the case and the administration’s refusal to pay the debt holders, the price climbed again. It then fell significantly once the administration agreed to negotiate.

The Future of the Blue Dollar

While Argentina was granted a month long extension to come to an agreement with the holdouts, the future of Argentina’s debt payments remains unclear. Until it appears that the country is able to make a deal, it is likely that the price for blue dollars will increase.

A number of scenarios could play out in Argentina that could influence the value of the blue dollar.

First, the government has effectively issued 40 billion new pesos since January. Such a sizable increase in the money supply could continue to send inflation soaring, further reducing the value of the currency relative to the dollar. High inflation also jeopardizes already damaged confidence.[xxxii]

Second, other factors could potentially diminish the size of the country’s dollar reserves as well. Instability in Iraq and the Middle East threatens to increase the price of oil, increasing the cost of energy imports, which again needs to be paid in dollars. Additionally, there is a drought that will likely harm soy and agricultural exports, which are purchased in dollars. Fewer exports mean fewer dollars for Argentina’s reserves.[xxxiii]

However, the most daunting scenario would occur if Argentina is unable to come to an agreement with the holdout firms, therefore leading to a default on its debt. When Argentina defaulted on over 100 billion dollars of debt in 2001, it caused massive economic turmoil and resulted in the corralito, or bank closures. The poverty rate surpassed 50 percent of the population. Today, its debt is double what it was in 2001. The fall out from a default could be catastrophic.[xxxiv]

In any combination of these scenarios, it appears that the value of the blue dollar will climb. The risk of default threatens already weary confidence in the banks, which could cause more Argentines to withdraw pesos from saving accounts in order to invest in black market dollars. The possibility of another devaluation also looms, as the government’s ability to use reserves to prop up the official exchange rate. This could exacerbate the spread as well.

President Fernández de Kirchner’s goals of stabilizing reserves and stemming capital flight have failed. Given the historic ties between the dollar and confidence in the economy, dollar restrictions further mistrust in the local currency. Rather than spending and investing in pesos, Argentines pour wealth into the black market, doing nothing for the country’s economy.

Nikki Hager, Research Associate at the Council on Hemispheric Affairs

References

[i] “Argentina’s debt fight: What it is, why it matters,” Associated Press, June 30, 2014, accessed July 1.

http://www.cnbc.com/id/101799525#.

[ii] Ibid

[iii] “Argentina’s Bonds: A Good Week For Some Investors,” Economist, June XX, 2014, accessed June 24.

http://www.economist.com/news/americas/21604612-vulture-funds-win-legal-victory-over-argentinas-government-good-week-some-investors

“El Gobierno hará hoy “una presentación formal” ante el juez Thomas Griesa: pide “condiciones justas y equitativas para el 100% de los bonistas,” La Nacion, June 23, 2014, accessed June 24.

http://www.lanacion.com.ar/1703784-capitanich-presiona-a-la-corte-para-que-opine-sobre-los-holdouts-y-dice-que-el-rol-del-congreso-es-apoyar-al-gobierno

[iv] “Argentina’s economy: The blue dollar,” Economist, June 2, 2012, accessed June 24 2014.

http://www.economist.com/node/21556273

[v] Ibid

[vi] Ibid

[vii]“Argentina’s new inflation index: Pricing power,” Economist, Feb. 22, 2014, accessed June 25.

http://www.economist.com/news/americas/21597020-will-countrys-statisticians-now-be-allowed-do-their-work-pricing-power?zid=305&ah=417bd5664dc76da5d98af4f7a640fd8a

[viii] Economist, Op. Cit. 4.

[ix] Associated Press, Op. Cit. 1.

[x] Economist, Op. Cit. 4.

[xi]“ Argentina’s Fernandez de Kirchner wants creditor talks,” BBC News, June 20 2014, Accessed June 26, http://www.bbc.com/news/business-27951439.

[xii] Estoy Verde, 84

[xiii][xiii][xiii] Estoy Verde

[xiv] Ibid

[xv] “The Argentine Peso: Clamped,” Economist, Nov. 16, 2013, accessed June 26,

http://www.economist.com/news/finance-and-economics/21589919-heavy-handed-controls-foreign-exchange-spawn-elaborate-dodges-clamped

[xvi] Ibid

[xvii] “Argentina: Scenarios for the Foreign-Exchange Market,” Itaú BBA, June 7 2012, accessed June 27

https://www.itau.com.br/itaubba-es/analisis-economicos/publicaciones/macro-vision/argentina-scenarios-for-the-foreign-exchange-market

[xviii] Estoy Verde

[xix] María Soledad Sánchez, “Interacciones económicas, interacciones simbólicas. Una aproximación etnográfica al significado social del dólar blue en Argentina,” Antípoda: Revista de Antropología y Arqueología, ISSN-e 1900-5407, Nº. 17, 2013 , pgs. 133-152, accessed July 7, 2014

[xx] Estoy Verde

[xxi] Karina Martinez-Carter, “Argentina’s Dollar Sniffing Dogs,” Bloomberg Business Magazine, Jan. 12, 2012, accessed July 3, 2014

http://www.businessweek.com/magazine/argentinas-dollarsniffing-dogs-01122012.html

[xxii] María Soledad Sánchez, Op. Cit. 19

[xxiii] Estoy Verde

[xxiv]Daniel Politi, “Dollar Fever,” Latitude: New York Times, July 24, 2012, accessed July 1, 2014

http://latitude.blogs.nytimes.com/2012/07/24/argentinas-ban-on-the-purchase-of-u-s-dollars-wont-help/?_php=true&_type=blogs&_r=0

[xxv] Ibid

[xxvi]Hugh Bronstein, “UPDATE 2-Argentina takes new measures as black-market peso sinks,” Reuters, May 7 2013, accessed July 1, 2014.

http://www.reuters.com/article/2013/05/07/argentina-peso-idUSL2N0DO2EI20130507

[xxvii]Economist, Op. Cit. 7

[xxviii] “¿Qué pasará con el valor del dólar si la Argentina le paga a los fondos buitre?,” El Dólar Blue Blog, June 24, 2014, accessed June 26.

http://blog.dolarblue.net/2014/06/que-pasara-con-el-valor-del-dolar-si-la.html

[xxix] Ibid

[xxx] Economist, Op. Cit. 4.

[xxxi] “Argentina’s economy: Creeping toward normality,” Economist, April 1, 2014, accessed July 1.

http://www.economist.com/blogs/americasview/2014/04/argentinas-economy?zid=305&ah=417bd5664dc76da5d98af4f7a640fd8a

[xxxii] El Dólar Blue Blog, Op. Cit. 28.

[xxxiii] Ibid

[xxxiv] Estoy Verde

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Extension Looks Likely For Iran Nuclear Talks – OpEd

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By Barbara Slavin

The word out of Vienna is that an Iran nuclear deal will not be completed by a July 20 deadline.

Secretary of State John Kerry told reporters in Vienna on Tuesday that while marathon negotiations that started two weeks ago have made progress, “it is clear we still have more work to do.”

That the sides cannot quite close all the gaps is as much a function of politics as are technical concerns over aspects of the Iranian nuclear program. So much is riding on these negotiations that for either side to give in too quickly would likely be viewed negatively by key constituencies around the world and back home.

Iran has sunk more than $100 billion into its nuclear program in lost investment and oil revenues caused by economic sanctions. It has seen its main nuclear facility sabotaged by cyber war and lost five scientists to assassination.

A proud nation that currently chairs the non-aligned movement, Iran sees the negotiations as a way to assert its rights to a civilian nuclear program as a signatory of the nuclear Non-Proliferation Treaty (NPT) and to also underline what it views as a double standard that rewards countries such as Israel and India that have developed nuclear weapons outside the NPT. Supreme Leader Ayatollah Ali Khamenei also worries that he and his regime will lose face if Iran looks overeager to reach a deal — even if that deal were to profoundly serve the interests of the long-suffering Iranian people.

The United States and its allies have also paid a price for sanctions against Iran, yet the five permanent members of the UN Security Council plus Germany (P5+1) have shown remarkable unity and tenacity in demanding that Iran place verifiable curbs on the program in return for sanctions relief. Even though only seven countries are taking part in the negotiations, the issue of nuclear proliferation is of global concern and a top foreign policy priority of President Barack Obama. Washington is under pressure from Israel, Arab states and the U.S. Congress to produce an agreement that is as tough as possible. The delay in the talks shows that the P5+1 are also fighting hard to get their way.

In near-constant consultations that have followed conclusion of an interim nuclear agreement last November, the negotiators have made considerable progress. They have reached understandings about modifying a reactor that could yield plutonium and removing large scale uranium enrichment from an underground facility that would be difficult to destroy in a military attack. Iran has accepted intrusive inspections and is discussing questions about possible past military nuclear research. The parties are stuck over the number and type of centrifuges Iran can maintain for enriching uranium to low levels and the duration of restrictions on Iran’s civilian nuclear activities – Iran appears to accept at most seven years; the P5+1 wants at least a decade.

Glimmers of compromise are visible. Iranian Foreign Minister Javad Zarif told the New York Times this week that Iran would be willing to essentially freeze its program at current levels, with about 10,000 centrifuges operating, and convert all enriched uranium into a powder form. He said Iran would guarantee for the duration of the agreement not to build a plant that could turn the powder back into gas, thus insuring it could not be enriched further to potential weapons grade.

The P5+1 are looking for a lower number of centrifuges – no more than 6,000 – or other steps that would make it technically impossible for Iran to produce enough fissile material for a nuclear weapon without detection in under six months. One possible compromise would allow Iran to phase out its antiquated machines for a smaller number of more sophisticated centrifuges.

Fortunately, the interim agreement made provision for a possible six-month extension of negotiations. Zarif alluded to this when he told reporters in Vienna at a news conference called to follow and complement Kerry’s: “Enough progress has been made in the talks to continue diplomacy after July 20. The final deadline for the talks is November 25.”

Extending the interim accord is not automatic, however. If the negotiators feel they are close and need only a few weeks more, they might just continue the current terms. If they seek a longer extension, however, Iran will surely want to repatriate more of its oil revenues – currently bottled up in foreign banks – in exchange for continuing to restrict uranium enrichment.

As time goes on, political dangers of an extension multiply. Members of the U.S. Congress who appear to oppose a deal with Iran are already threatening to try to pass new sanctions and sending letters to Obama that try to define an agreement in terms the Iranians will not accept.

Bureaucratically, negotiations may also become more difficult after October, when Catherine Ashton – the long-time European Union foreign affairs chief who has shepherded these talks for five years – steps down, along with Deputy Secretary of State Bill Burns, a top official dealing with Iran over two U.S. administrations. Meanwhile, mid-term Congressional elections in November could flip the U.S. Senate over to Republican control and further constrict Obama’s already minimalist legislative agenda.

Skeptics about an Iran accord need to recognize that, ultimately, nothing can stop Iran from developing nuclear weapons if its leadership chooses to do so. The best insurance that Iran won’t do this is to bind it back into the international community through trade, investment and people-to-people ties. Failure to reach a nuclear agreement means a likely end to P5+1 unity over sanctions – especially if the U.S. is seen as the more intransigent party. In Iranian domestic politics, failure would push the pendulum away from President Hassan Rouhani back toward Mahmoud Ahmadinejad-era hardliners, with dire consequences for the reform movement.

With everything else that is going wrong in the region – Syria collapsing, Libya in flames, Israel and Gaza rocketing each other again and barbarians at the gates of Baghdad – surely it is in everyone’s interests to resolve the long-standing impasse with Iran. If they don’t achieve success by Sunday, negotiators will have earned the right to a brief vacation–but they should get back on the job as soon as possible.

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FBI Warns Driverless Cars Could Become New ‘Lethal Weapon’ For Terrorists

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Self-driving cars are being assessed as a “game changing” vehicle and a potential “lethal weapon” according to an internal FBI report, and could be exploited by criminals or terrorists seeking to program explosive-stuffed cars to be self-driving bombs.

The report was obtained by the Guardian after the newspaper made a public records request. FBI predictions included the statement that self-driving cars would ultimately “have a high impact on transforming what both law enforcement and its adversaries can operationally do with a car.”

Criminal “multitasking” is being anticipated despite the potential beneficial impact on road safety, and there have been sporadic suggestions that the vehicles could operate as rolling bombing platforms for terrorists – a means by which to conduct suicide bombings without the suicide aspect.

Companies like Google are in the process of developing the self-driving cars which are without a steering wheel and would travel at just 25 mph.

The vehicles use a combination of lidar (laser ranging), radar, video cameras and GPS to overcome obstacles on the road and reach a destination safely.

While still a prototype, the possibility that the cars could “revolutionize” high speed car chases and other criminal activity is on the cards.

“Autonomy … will make mobility more efficient, but will also open up greater possibilities for dual-use applications and ways for a car to be more of a potential lethal weapon that it is today,” said the report.

One possibility that was expressed was the chance that people could shoot from the windows of self-driving cars without having to worry about keeping an eye on the road.

In a section of the report sub headed ‘Multitasking’, it states that “bad actors will be able to conduct tasks that require use of both hands or taking one’s eyes off the road which would be impossible today.”

The FBI report runs contrary to the message that self-driving vehicle developers are trying to put out the cars are safer than those operated by people.

Google has stated of its prototype that: “They’ll be designed to operate safely and autonomously without requiring human intervention. Our software and sensors do all the work. The vehicles will be very basic but they will take you where you want to go at the push of a button.”

However, the FBI does anticipate some benefits when it comes to catching criminals.

“Surveillance will be made more effective and easier, with less of a chance that a patrol car will lose sight of a target vehicle,” said the report.

“In addition, algorithms can control the distance that the patrol car is behind the target to avoid detection or intentionally have a patrol car make opposite turns at intersections, yet successfully meet up at later points with the target.”

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German Deputies May Use Typewriters To Counteract US Espionage

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Deputies of the German Parliament are seriously considering the use of typewriters in order to counter espionage on the part of the US, Chairman of the Bundestag Committee of inquiry into the activities of the NSA in Germany Patrick Sensburg stated on air of the German TV station Das Erste.

Sensburg answered in the affirmative the presenter’s question whether the deputies were going to start using typewriters. The surprised journalist inquired whether the official was joking, but received a negative answer, the Rossiyskaya Gazeta newspaper informs.

Besides, Sensburg noted that his committee has already got one mechanical typewriter, which could be used for internal communications along with codified e-mail and crypto telephones, NEWSru.com reports.

“We should try to keep our internal communications in secret, use encrypted e-mail, crypto telephones and implement other measures which I cannot disclose now,” stressed Sensburg.

The spy scandal between Germany and the United States broke out in October, 2013, when it became known that US intelligence agencies were able to wiretap phone conversations of Chancellor Angela Merkel. Means of communication of some deputies of the Bundestag also became objects of electronic espionage, ITAR-TASS reports.

In early July, 2014, an employee of the Federal Intelligence Service of Germany and an employee of the country’s Ministry of Defense fell under suspicion in cooperation with US intelligence agencies.

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Israel Agrees To UN Request For Humanitarian Ceasefire

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Israel on Wednesday agreed to temporarily halt its assault on Gaza after United Nations Special Coordinator for the Middle East Peace Process Robert Serry called for a “humanitarian ceasefire.”

The ceasefire will come into effect on Thursday between 10 a.m. and 4 p.m., an Israeli military spokesperson said.

The Israeli Defense Ministry said that the ceasefire was meant not only for humanitarian reasons but also for Gazans to see the damage wrought by Israel in the last week and a half, Israeli news site Ynet reported.

Additionally, the army forbade residents of Beit Lahiya, Shujaeiya, and Zeitoun in the northern Gaza Strip from returning to their homes after 3 p.m.

In recent days, the army has massed along the northern border and issued evacuation notices for more than 100,000 residents, raising fears of a full-scale ground invasion.

Many residents of the northern Gaza Strip, however, have nowhere else to go, as Gaza’s borders with both Israel and Egypt are fully closed to travelers as they have been for the majority of the last seven years.

The move came hours after the killing of four Palestinian children playing on a beach provoked international outrage, on a day in which 23 Palestinians were killed and dozens injured on the ninth day of the Israeli assault on Gaza.

Ahed Atef Bakr, 10, Zakariya Ahed Bakr, 10, Mohammad Ramiz Bakr, 11, and Ismail Mahmoud Bakr, 9 were playing on a beach in Gaza City when an offshore Israeli boat fired shells at them, killing them all and injuring a number of others.

Also on Wednesday evening, two more Palestinians succumbed to wounds suffered in Israeli airstrikes earlier in the day.

The Palestinian Ministry of Health identified the two dead as Hussam Jamal Shamlakh, 23, and Muhammad Kamel, Abd al-Rahman, 30, who were both from Gaza City.

222 Palestinians have been killed and 1,670 injured in nine days of Israeli assault on the besieged coastal enclave, while one Israeli has been killed and four injured in rocket fire launched into Israel.

Israel says the assault is meant to target Hamas and end rocket fire onto Israeli towns, but critics charge that rocket fire only increased after Israel launched a major campaign across the West Bank in June that killed half a dozen Palestinians, injured 130, and detained more than 600 Hamas-affiliated individuals in response to the kidnapping of three Israeli youths.

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EU Courts Support For Space Code Of Conduct – Analysis

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By Rajeswari Pillai Rajagopalan and Daniel A. Porras

The attempt at global governance of outer space has been gaining momentum in recent years. There are multiple efforts underway — the European Union-proposed International Code of Conduct for Outer Space Activities, the Russia- and China-proposed draft Treaty on the Prevention of the Placement of Weapons in Outer Space (a revised text of which was presented June 10 at the Conference on Disarmament) and the Prevention of an Arms Race in Outer Space are the most prominent.

The EU’s code of conduct, in particular, has been gaining considerable momentum. The EU drafted this document back in 2008, but with the exercise being limited largely to the European countries it did not enlist much support from the international community. Initially the EU had set a deadline of 2012 to get an international endorsement, but international criticism of the code was too strong for the EU to ignore.

While there are debates and disagreements on substantial aspects of the EU code, a major chunk of the criticism is aimed at the process by which it was developed. Addressing this, the EU held its first open meeting in Vienna in June 2012. In an effort to reach out to countries and understand regional concerns, the EU also hired the U.N. Institute for Disarmament Research to hold regional conferences on the development of an international space code of conduct in Malaysia, Ethiopia, Mexico and Kazakhstan. Critically, the EU held three open-ended consultations on the development of the code — the first in Kiev, Ukraine, in May 2013, the second in Bangkok in November 2013 and the third in Luxembourg in May 2014 — in an effort to make the process truly international. However, these remained only of a consultative nature, with states offering their views on the most current drafts of the EU code but not participating in any drafting exercises.

To the EU’s credit, numerous views were taken on board in subsequent drafts in an effort to increase international support for the text. The last round of open-ended consultations involved 63 countries and a total of 111 participants. Over the three consultations, more than 80 countries took part in the process. A new draft of the EU code is expected to be released later this summer, along with the announcement of what lies ahead for the code.

While there has been progress over the last few years in terms of garnering greater support for the EU code, there appear to be a few outstanding issues that need further elaboration and alteration to make the code more appealing. In an edited volume brought out by India’s Observer Research Foundation in March, many of these issues were addressed by officials who were closely associated with the debate. This volume contained both regional perspectives and debates on substantive and procedural issues. Some of the issues raised in the volume and those that remain to be addressed by the EU in a satisfactory fashion are detailed here.

Many countries, including Russia, China, Ukraine, Mexico, Thailand, Brazil and Ethiopia, have argued that the code should be restricted to only peaceful uses of outer space and that it should be retitled to reflect as much. The EU, on the other hand, articulated the need to have a comprehensive document that will deal with safety and security for both peaceful and military uses of outer space. Countries such as the United States, Japan, theUnited Kingdom, Italy, Germany and Canada made a strong case for the inclusion of security issues because of the dual-use functions of space assets. If anything, the argument that there is a need for a broader instrument encompassing both the civilian and security aspects is also gaining momentum around the international community. Compartmentalization may not be a useful approach, and outer space activities likely need to be approached in a holistic manner.

One of the concerns that many countries expressed is how signing on to a code may restrict their options in the future. These concerns have come from countries, mostly in Africa and Latin America, that are not yet spacefaring but have ambitions to be so. The concern is very similar to that found in the debates on the regulation of carbon emissions, particularly since even the imposition of space debris mitigation guidelines will inherently invoke additional costs in order to ensure clean and responsible space activities. The perception is, therefore, that this is an instrument proposed by the established spacefaring powers to slow down the entry of newcomers into this domain. On the other hand, there is an emphasis on international cooperation in the EU code that might lead to benefits such as technology transfers, but this also raises some concerns. A code could, ideally, list out certain broad norms for engagement and cooperation. Cooperation that is totally unregulated has the potential to spur regional and international insecurities, and even contribute to an arms race in space. A section on international cooperation in the code might outline certain rules of engagement in order to attract support from emerging space actors. Alternatively, the established spacefaring states that are pushing for the adoption of the code could make independent political arrangements to ease access to space technology to those states that adopt the new framework.

Another concern is about the categorical reference in the code to the right to self-defense under Article 51 of the U.N. Charter, which reiterates the sovereign right to national self-defense. Countries across Latin America and also a few African countries have found the reference to Article 51 as particularly objectionable. Under their legal culture, such a reference could be seen as something that will accelerate the process of space weaponization. Also, given that these countries are in the nascent stages of developing their space capabilities, they do not yet have counterspace technology to defend themselves even if the need arose. Again, under their legal culture, they argue that an obvious reference makes it easier for greater space powers to justify resorting to military solutions in space rather than diplomatic means. Other countries, including the United States and India, see this reference as being in line with the language of the U.N. Charter.

The reality is that a reference to or the absence of such a right in the code changes nothing. It already is part of international law, enshrined in the U.N. Charter. Thus, the states find themselves at an impasse with some saying that if nothing changes, why keep it, and others saying that if nothing changes, there is no need to strike it. Many states will have a difficult time selling the code back home depending on this particular reference.

Lastly, if one is to see a meaningful process leading to a successful completion of the EU code, there has to be better accommodation among the major powers. Lack of consensus to deal with challenges has contributed to slow development of space norms. However, the need for a new regime is real given the growing challenges in outer space from an arms race to space debris and radio frequency interference. Under the current international climate, where political differences between states are major hindrances in instituting legal measures, the code is a good effort.

A final word on the way forward for the EU code. The next stage might be to shift from a consultative to a negotiating phase, before moving to hold a diplomatic conference that could call upon state parties to sign and endorse the mechanism. Also, some states have called for a U.N. endorsement in order to make the code a truly international instrument.

Given that the consultative phase has now been completed, the EU seems poised to finalize the code. It is likely that a significant number of states will be ready to adopt it, including the EU, the United States and their allies, as well as some developing countries in Africa and Latin America. However, many of the states whose space activities could pose a threat to the safety and stability of outer space could see the code as a hindrance, and much like other agreements dealing with carbon emissions or missile proliferation, they simply will not sign.

(Dr. Rajeswari Pillai Rajagopalan is a Senior Fellow at Observer Research Foundation in Delhi. She served in India’s National Security Council Secretariat from 2003 to 2007. Daniel A. Porras is a Visiting Fellow at Observer Research Foundation. He formerly was the project manager at the U.N. Institute for Disarmament Research on the project to facilitate the development of an international code of conduct for outer space activities)

Courtesy: Space News, July 24, 2014

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Pakistan: Sukuk Offers Enormous Potential – OpEd

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In countries like Pakistan the governments facing shortage of revenue, indulge in borrowing to meet their developmental expenditures. While the conventional banks have been the key beneficiaries of such borrowing, Islamic financial institutions (IFIs) face serious liquidity management problems as these can’t invest in Riba-based instruments like Treasury Bills and Pakistan Investment Bonds (PIBs). Issue of Sovereign Ijara Sukuk and corporate Sukuk on one hand offer an opportunity to invest in Riba-free instruments and on the other hand open a venue for IFIs to manage their liquidity in a more prudent manner. Over the years the Government of Pakistan (GoP) has successfully mobilized funds for the infrastructure project and the latest being mobilization of over Rs49 billion equivalent to US$495 million through yet another Ijarah Sukuk.

Through this Sukuk the State Bank of Pakistan (SBP) has mobilized funds against M-3 Motorway for a period of three years. This is the first Sukuk that has been issued during the current fiscal year (2014-15). M-3 is a 52 kilometer long strip of motorway situated in Punjab that connects Faisalabad with M-2 near Pindi Bhattian.

This Sukuk has been issued in accordance with the provisions of the Ijara Sukuk Rules 2008. As per transaction mechanism, profit on the GoP Ijara Sukuk will be based on the rental rate benchmarked against the latest weighted average yield of the 6 month Market Treasury Bills or 6-month PKRV (as per FSCD circular 13 dated September 06, 2008). In addition, the rental rate as mentioned may be adjusted based on the difference between estimated supplementary rental and actual maintenance expenses of the underlying asset.

Further, it was also decided that for this particular issue of Sukuk (M-3), the total auction participation of a single Primary Dealer (PD) would be capped at Rs 25 billion or 20 per cent (whichever is the lower) of Total Demand and Time Liabilities-Islamic (excluding FE-25 deposits) of the respective PD Islamic bank / Islamic window of that particular PD. For this purpose, Total Demand and Time Liabilities-Islamic as of 28th March, 2014 were used. The central bank also reserved the right that in case any PD breached the aforesaid limit, it could cancel all or some of the bids of the bank concerned.

The Islamic Banking Department of SBP shall be responsible for monitoring: 1) proper execution and 2) the legal documentation as per approved Shariah structure, to ensure Shariah compliance and seamless management throughout the tenor of the Sukuk and at the time of maturity of the Sukuk. The SBP has advised all the designated PDs for the Sukuk to ensure meticulous compliance with the instructions issued.

Sukuk is an alternative Islamic finance instrument for conventional bonds. This is a certificate that represents ownership in underlying real asset(s). Islamic law does not permit interest and hence conventional coupon paying bonds are impermissible as per Islamic law. However, Islamic law allows sale and lease of real assets and the resulting income in the form of profit on sale or rental income stream on lease of assets. Holders of Sukuk share the lease or profit income generated from the ownership of real assets that the Sukuk certificate represents.

Sukuk has emerged as an instrument of choice after 2008 financial crisis. Not only Muslim countries, but non-Muslim majority countries are also taking interest in it. UK treasury has issued a Sukuk worth £200 million. It became the first sovereign state outside the Muslim world to issue an Islamic bond.

In Pakistan, capital market is not very developed and most of the formal sector financing takes place through banks. Due to political instability and policy inconsistency, usually, the long term investments are not very popular among the investors. In the last few years, only a handful of IPOs had been made. The bond market is also very small and dominated by sovereign issues than corporate bonds.

While investors had found comfort with bank investments even though these do not offer inflation beating returns, most savers with adequate risk apatite look to invest in secondary market for equities. Karachi Stock Exchange has been offering immaculate that encourages investors to invest in liquid stocks for parking their surplus money.

There are many reasons why corporate bond market did not develop as per expectations in Pakistan. The national savings scheme instruments issued by the GoP offer very attractive yields and these are almost risk free. Some national saving scheme instruments are also tax-free and hence after-tax yield on such instruments are even higher as compared to the corporate bonds.

In Pakistan, prior to the latest issue, 78 Sukuk had been issued amounting to Rs 637.43 billion. Out of these 32 Sukuk issues of Rs 100.10 billion have been fully redeemed. The GoP had issued Ijarah Sukuk in the past to meet its escalating borrowing requirements.

Entities like Water & Power Development Authority (WAPDA) and Sui Southern Gas Company Limited (SSGC) had also issued Sukuk in past. Karachi Shipyard and Engineering Works also issued an Ijarah Sukuk in 2007.

Sovereign Ijarah Sukuk issued by the GoP have been structured in such a way that it allows the government to utilize surplus liquidity of IFIs. The Sukuk holders are also able to earn Shariah compliant income. It also facilitates Islamic banks to manage their liquidity as well as meet statutory liquidity requirement stipulated by the central bank of Pakistan.

Within the corporate sector, Sitara Chemical Industries Limited, Wateen Telecom, Engro Chemicals, Dawood Hercules, Century Papers & Boards, Attock Generation, Arzoo Textile, Liberty Power, Amreli Steels, Eden Builders, Quetta Textile, Pakistan American Fertilizers, PEL and Kohat Cement are some of the companies that had issued Sukuk in past. Out of these, only one private sector entity Maple Leaf Cement defaulted on Rs8 billion Sukuk in 2009.

Recently, K-electric (formerly KESC) issued Rs6 billion Sukuk that were to be listed Karachi and Lahore stock exchanges. There was no Pre-IPO placement and the entire amount of Sukuk issue was offered to retail investors and it was fully subscribed in a matter of few hours.

Through issue of more Sukuk, the investment class assets universe will expand and it will also enable those seeking Riba-free return to effectively diversify their portfolios. Treasuries of Islamic banks will also have an expanded set of investment avenues. It will increase liquidity of these Sukuk and generate wider interest among all investors in the economy to consider investing in these investment vehicles.

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Soccer Pitches: An Emerging Battleground For Control Of Iraq – Analysis

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Iraqi soccer pitches have emerged as an alternative battleground in the struggle for control of Iraq between the Islamic State, the jihadist group that controls chunks of northern Iraq, and embattled Prime Minister Nuri al-Maliki.

Iraqi officials said the broadcasting last Sunday in Baghdad’s Al-Shaab International Stadium of the World Cup final between Germany and Argentina was intended as a show of defiance against the Islamic State, formerly known as the Islamic State in Syria and the Levant (ISIL), which has banned soccer in territory it controls and reportedly ordered the closure of sports facilities and forbidden the wearing of shirts with images imprinted on them, including soccer jerseys.

In addition, Iraqi Football Association (IFA) officials announced that they would be organising soccer matches across areas of Iraq under government control in protest against the Islamic State’s targeting of players and fans. They said they would focus on areas that have been attacked by the Islamic State including:

  • Diyala province where five people were killed and 17 wounded by a bomb planted under the seats of a stadium in Ballour as boys aged 10 to 17 were playing;
  • Al Nahrawan where nine people were killed and 21 wounded in a bomb explosion during a soccer match;
  • Al Madaen where a bomb in a stadium killed one and wounded six others, including an Iraqi member of parliament;
  • Al Zafaaraniya where a bomb killed four people, including three players, and wounded 11 others;
  • Al Qalaa where a bomb in a stadium killed one and wounded 11;
  • Kirkuk where two players were killed and four others wounded;
  • Al Qaim where police foiled a stadium bombing by discovering a vehicle rigged with explosives.

The Islamic State further signaled its dim view of soccer in a purported letter to world soccer governance body FIFA demanding that the group deprive Qatar of the right to host the 2022 World Cup.

The Islamic State has positioned itself with the spate of attacks and its letter to FIFA squarely in the camp of those jihadists and Salafists, puritan Muslims who want to emulate life at the time of the Prophet Mohammed and his immediate successors, who oppose soccer as an infidel creation intended to distract the faithful from their religious obligations.

Attacks by Boko Haram in Nigeria and Al Shabab in Somalia and Kenya spiked during the World Cup with both groups targeting venues where fans gathered to watch matches on huge television screens.

The anti-soccer jihadists are strengthened in their resolve by fatwas or religious opinions issued by one segment of the Salafist clergy opposed to any form of entertainment which they view as a threat to performance of religious duties. The views of those clergymen are opposed by other Salafist imams who argue that the Quran encourages sports as long as it is in line with Islamic precepts.

They are also opposed by those militant Islamists who recognize the recruitment and bonding advantages of soccer and unlike groups like the Islamic State, Boko Haram and Al Shabab attribute some importance to garnering public support rather than seeking to impose puritan Islamic rule by sheer force.

“In Nigeria, football is a religion. It is one of the few things that brings the country together across ethnic and religious lines… Football is often an escape from the ugliness of everyday life, and that is even more true in a region under a cloud of insecurity for the last few years… (Terrorism) forces a change in lifestyles. Public gatherings in North Eastern Nigeria, even to celebrate a festival of football…are likely to attract a high price. You cannot watch a game without looking around nervously from time to time,” said Nigerian journalist Joachim MacEbong.

Mr. MacEbong could have said the same of Iraq or East African nations where soccer fans are targets.

The Islamic State, despite its anti-soccer campaign has not shied away from using soccer in recruitment and propaganda videos.

And there are signs that opinion about soccer is divided even within its own ranks as well as within the larger community of those who empathize with the views of the likes of the Islamic State, Boko Haram and Al Shabab.

The mosque in Mosul, the major Iraqi city occupied by the Islamic State, where self-declared caliph Ibrahim Bin Awad Alqarshi aka Abu Bakr al-Baghdadi, who as a student was known as a talented soccer player, made a rare public appearance earlier this month was packed with men, many of whom were sporting soccer jerseys

Similarly, an online review by Vocativ of jihadist and militant Islamist Facebook pages showed that many continue to be soccer fans. They rooted for Algeria during the World Cup but switched their allegiance to Brazil, Italy, England and France once the Algerians had been knocked out of the tournament despite their condemnation of the Europeans as enemies of Islam.

“Jihadis are in some ways like any other fans – they support the local favourites,” wrote Versha Sharama, who conducted the review.

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Nuke Proliferation In East Asia Affects International Security – Analysis

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By Valentina Gasbarri

The 10th anniversary of the adoption of the UN Security Council Resolution 1540 on April 28, 2014 can be especially propitious for standing back from the perennial present of international security issues and evaluating longer-term trends.

The threat posed by the spread of nuclear weapons and ballistic missiles is one of the main security challenges of the 21st century. The fall of the Berlin Wall and the end of the Cold War led to a gradual reduction both in the security framework and in the perception of security.

In order to address this challenge and develop appropriate solutions, accurate risk factors analysis is required, as well as the ability to generate a multi-dimensional response: promoting the development of a comprehensive non-proliferation regime while also trying to explore how nuclear energy can safely be harnessed for sustainable economic development. The implications of nuclear proliferation for international relations are difficult to predict but profound.

First, the spread of nuclear weapons and ballistic missiles has had a deep impact on the bipolar system, freezing the most dangerous regional conflicts. This is the argument developed by “the school of realists”, in particular Kenneth Waltz, who believe that “more may be better” in the basic rationale of State actors.

Second, proliferation may affect the way wars may be conducted. Indeed, during the Cold War the competition between the two superpowers was merely the “continuation of politics with other means”, because a real war was avoided given the high destructiveness of the new technologies. There is also a widespread fear that these weapons may fall under the control of terrorists or other no-State actors who would be immune from threats of retaliation.

Atomic ambitions

International efforts to stem the spread of nuclear weapons typically focus on the atomic ambitions of the Democratic Republic of Korea (DPRK) and Iran. The leaders of the two countries still remain unmoved by international condemnation and pressure. In their power perception, national security and international prestige derive from nuclear weapons and this view seems more compelling than the penalties and sanctions resulting from multilateral diplomacy (Res 1718, 1874, 2087, 2096 and 1965). Indeed, a comprehensive approach to non-proliferation seeks to dissuade leaders from pursuing nuclear weapons capabilities as a source of national prestige and security defence strategies.

The current North Korean nuclear crisis cannot be fully understood without a reference to both the historical nuclear ambitions of North Korea and its economic plight. Indeed, the DPRK remains isolated, economically under a near collapse, facing a devastating humanitarian crisis. Its decision to withdraw from the nuclear Non Proliferation Treaty in 2003 and to restart graphite moderated reactor and nuclear ballistic tests have sparked international concern over nuclear proliferation and regional concern about the imminent crisis.

These concerns are heightened by the DPRK ballistic missile programme and the potential proliferation of both nuclear and ballistic missile knowledge and components. According to the US intelligence estimates, the DPRK already has one or two nuclear devices and the ballistic missile development programme includes the NODONG and TAEPO DONG series of missiles. The International Atomic Energy Agency (IAEA) notes two distinct phases in the development of the DPRK’s nuclear programme: a first stage started with an agreement with the then Soviet Union for the cooperation in nuclear research in 1956 and a second phase with the construction of a natural uranium reactor at the Yongbyon complex in 1986.

In spite of international condemnation and the UN Security Council Resolutions, North Korea continues to launch short and long-range rockets. The last launch was on July 2, 2014, defying UN ban on the country testing such weapons. The launch came days before Chinese President Xi Jinping’s scheduled state visit to South Korea.

Nuclear multilateral negotiations

The efforts to prevent North Korea’s pursuit of nuclear weapons are among all the longest running and least successful ones in international security of the past quarter century. Despite the very remote prospect for solving the crisis through multilateral dialogue, the crisis has had the interesting effect of bringing together all regional countries in the Six-Party talks, in collaborative efforts towards a common regional security.

Some promising breakthroughs occurred in 2005 and in 2008, with North Korea’s commitment to abandon its nuclear programme in exchange for development aid. Disagreements over the verification protocol stalled the process: North Korea was still in the US terrorism list and multilateral negotiations have not been held since 2008.

Two recent developments in particular have diminished political support for accommodation and engagement: North Korean participation in the construction of a nuclear reactor in Syria, destroyed in an Israeli attack in 2007 and the continuation of the North Korean nuclear tests.

Nuclear Security Summit held in The Hague on March 24-25, 2014, the P5 Meeting and the conclusions of the G7 highlighted that North Korea nuclear problem is a multi-faceted problem with not just global implications for the non-proliferation regime and global war on terrorism, but also regional and local implications for the security of Northern East Asia and the Korean Peninsula. The need for a global zero tolerance to the development of nuclear programmes as well as the need to create a binding legislation to face the current threats, has also been stressed.

However, despite the common goal of the main actors involved, namely Japan, China, South Korea and USA, each country has different priorities in exactly how to resolve the crisis that in turn could prove divisive depending on how the crisis continues to unfold.

Japan’s Security Challenges and Opportunities

Japan’s protection under the US nuclear umbrella, as the main off shore security provider in the region, has virtually eliminated any need for it to develop nuclear weapons on its own over the past half-century. Indeed, Japan’s non-nuclear posture is often perceived to be rooted in strong national consensus based on emotional reactions to the 1945 bombings of Hiroshima and Nagasaki and the 1954 Daigo Fujuryu-maru incident.

In order to protect the territories and military forces from threats of North Korean attacks, the US, Japan and South Korea have deployed ballistic missile defence. During 2009 and 2012 North Korean long-range missile tests, the US and allied forces reportedly made ready and available a number of ballistic missile defence systems, in addition to the intelligence gathering capabilities sent into the region. In response to the exacerbated tensions in April 2013, the US deployed a ballistic defence system in Guam.

Even the reliability of the US-Japan alliance, the North Korea nuclear threat, the regional background of a rapidly growing China in the process of military modernisation and the global challenge to the nuclear non proliferation regime created the context to reconsider Japanese security policy. An important step has been the revision of the post-war peaceful Constitution on July 1.

Adopted in a cabinet resolution, the amendment to the Article 9 of the Constitution represents an historic move to reinterpret the country’s post-war peaceful defence policy. It is a victory for Prime Minister Shinzo Abe and it will widen Japanese military options by ending the ban on exercising “collective self-defence”. Japan would exercise the right of collective self-defence only when “clear danger” exists to the lives of people in countries “with close ties” to Japan and military intervention should be limited to the minimum amount necessary.

Reinterpreting the war-renounce art. 9 will give Japan a more active role in coming to the aid of an ally, in particular the US, and also the justification for reconsidering the rationale behind the alliance as a further consequence. [Read also: http://www.ipsnews.net/2014/07/opinion-japan-remains-committed-to-advancing-vibrant-diplomacy/]

Another additional element which can impact Japan’s approach to security and to the North Korea nuclear menace is the recent decision of lifting part of the unilateral sanctions imposed along with the UN Security Council Resolutions in the wake of nuclear tests carried out by DPRK. This renewed approach of Japan to the nuclear crisis comes after the meeting between the two countries in Beijing and it contains the obligation for North Korea to re-investigate the disappearances of Japanese citizens during the 1970s and the 1980s.

Alignment Despite Antagonism

The role Beijing chooses to play in the light of Pyongyang’s accelerated nuclear activities and provocative rhetoric has highlighted the emergence of China as a geopolitical conflict mediator. In fact, beyond the North Korea crisis, the future configuration of the Korean Peninsula will be a major determinant of the geo-strategic balance in East Asia.

The course of China will be determined primarily by the sustainability of its economic prosperity, the adaptability of its political system to economic and social pressures, and the management of relations with the United States. The United States and China share a common set of overarching goals with regard to the Korean Peninsula: both wish to see a stable and non-nuclear North Korea. Considering how to achieve those aims, however, and under what terms exposes divergent priorities and strategic preferences between Washington and Beijing.

China’s role as host of the Six Party Talks and as North Korea’s chief benefactor, confirms the critical importance of its role in the US policy towards North Korea. In addition, China’s permanent seat on the Security Council ensures its influence on any UN action directed at North Korea. In addition to being North Korea’s largest trading partner by far, China also provides considerable emergency and humanitarian assistance in particular in food and energy aid as essential lifeline for the regime if Pyongyang. It is clear that Beijing cannot control Pyongyang’s behaviour, particularly in the cases of provocative nuclear tests and missiles launches, but even temporary cessation of economic and energy aid is significant for North Korea.

Beijing also fears the destabilizing effects of a humanitarian crisis, significant refugee flows over its borders and of a consideration on how other nations, particularly the USA, would assert themselves on the peninsula in the event of a power vacuum.

Valentina Gasbarri is a Junior Expert of the European Instrument for Democracy and Human Rights (EIDHR). She has a strong background in East-Asia geo-strategic relations, development issues and global security studies.

The post Nuke Proliferation In East Asia Affects International Security – Analysis appeared first on Eurasia Review.

Treacherous Presidential Policies: The Costs Of Growth In Peru – Analysis

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By Scott W. Downs

Peru’s burgeoning economy is a result of the government’s two decades of pro-mining policies and free-trade agreements. President Ollanto Humala presides at a time when the extraction and exportation of natural resources has earned international acclaim. The International Monetary Fund (IMF) indicated in a 2014 report that 70 percent of Peru’s foreign direct investment (FDI) comes from mining. China, the United States, Canada, Switzerland, Australia, Mexico, and Brazil are among the leading investors. The Peruvian Ministry of Energy and Mining (MEM) anticipates an estimated $57 billion USD in new global investment over the next three years. [1] Regardless of the economic windfall predicted by the MEM, existing water purification, taxation, and illegal mining regulations do little to reduce the negative side effects of mineral trade on Peru’s inhabitants.

The economic policies set into motion by Presidents Alberto Fujimori and Alan García Pérez exploited Peruvians through violence and pollution.[2] Extraction projects continue to affect towns surrounding worksites negatively because of such factors as displacement, water contamination, and deforestation. Ignoring these aspects will leave Humala with a legacy of human rights parallel to his predecessor’s legacy, something he should not desire. The President now finds himself in a somewhat precarious position; his legacy will juxtapose economic prosperity for the wealthy with exploitation of the poor.[3]

Decades of FDI Courtship

During the 1990s, Fujimori privatized state-owned mines, lowered mining taxes, and eased environmental standards for extractive industries.[4] These reforms created welcoming conditions for foreign investors that revitalized mining. Jeffrey Bury, Associate Professor of Environmental Studies at the University of California, Santa Cruz, stated in 2007 that Fujimori’s approach to mining was “neoliberal reforms” targeted at integrating Peru “into the rapidly globalizing international economy.”[5] Fujimori enacted policies that solicited large international mining projects to repair an economy dogged by inflation.[6]

Unfortunately, growth-inducing economic policies were concurrent with gross human rights violations. The Truth and Reconciliation Commission (CVR) published evidence of atrocities committed under Fujimori’s authoritarian rule in a 2003 report.[7] The CVR found the Fujimori regime to be responsible for massacres, thousands of abductions, countless executions, the formation of death squads, and abusive detentions.[8] President Alan García, like Fujimori, carried out wrongful arrests of organizers and protestors for the sake of industrial expansion.[9]

The platform for foreign investment established by Fujimori invited expansion and became the basis of free-trade agreements enacted by Presidents Alejandro Toledo and Alan García Pérez during the early 2000′s. The United States-Peru Free Trade Promotion Agreement (PFTPA) and the Trans-Pacific Partnership Agreement allowed Toledo and García to further entice FDI, especially in the mining sector. Policies adopted to solicit transnational investment brought praise from the World Bank (WB). The WB stated, “[P]rudent macroeconomic policies and a favorable external environment enabled an average GDP growth rate of 6.4% between 2002 and 2012.”[10] The trend continued in 2012, the first full year of President Humala’s leadership, where mineral extraction industries represented over 14 percent of Peru’s $203.8 billion USD Gross Domestic Product (GDP)—almost $30 billion USD.[11]

The Ministry of Energy and Mining, the National Tax Authority, and the Ministry of Finance all supervise the taxation of the $30 billion USD derived from mining.[12] These bureaus regulate through corporate income taxes, royalties, liens, and concession rights.[13] To be more inviting to extractive investors, free-trade agreements eliminate double-taxation between trade-partners.[14] Counterbalancing the taxes, deductions are made available to organizations that elect to extend their projects towards infrastructure development, nullifying the costs of concessions.[15] The United States accounting firm Price Waterhouse Cooper (PWC) offers praise for the investment climate in the South American country, stating in a 2013 report, “Mining companies can find the political and socio-economic environment within Peru very attractive.”[16] Many transnational firms share PWC’s opinion of Peru’s emerging economy, deeming it worthy of extensive investment.

With little regard for social cost, illegal mining reached unprecedented levels during the 2000s as the global demand for precious metals continued to increase.This ailment has plagued the nation for decades and is now rampant with estimates of unlicensed operators ranging from 100,000 to 550,000. Miguel Santillana from the Institute of Peru discussed some of the damage these unregistered miners leave in their wake, citing “environmental damage … including mercury contamination of water and destruction of the Amazon forest, as well as … increased crime and corruption.” Illegal extraction is one of the many obstacles Humala needs to address more aggressively. [17]

Unlicensed Complications

Unregulated miners represent a tremendous loss to the government. The Peruvian Treasury loses an estimated $500 million USD annually from unlicensed laborers who leave pollution and financial damage in their wake.[18] The projects compliant with regulation emit less mercury and lead than their counterparts.[19] In an effort to recoup lost tax revenue and temper the ecological contamination caused by these illicit activities, Congress signed legislation in 2012 offering illegitimate operators a two-year period to register and become compliant with trade regulations.[20] As the April 19, 2014 deadline arrived for registration, more than 30,000 miners, or 30 percent, ignored the invitation for amnesty.[21] Ernesto Ráez-Luna, an Advisor to the Ministry of the Environment, acknowledged the impracticality of the commission, stating, “You can’t prosecute or arrest 100,000 people.”[22] Meanwhile, Humala’s administration succeeded in vilifying unregistered miners as the predominant cause of environmental degradation.

In a modest effort to address the tens of thousands of non-compliant miners, the administration formed a commission to evaluate the illegal activities. The most notable response was a police raid in the town of Huepetuhe shortly after the April registration deadline that seized and destroyed $20 million USD in heavy machinery.[23] Illegal miners function as a convenient scapegoat for soil and water contamination, but these problems stem from decades of inadequate regulation. Whether extracting minerals by licensed or unlicensed miners, the value seems to outweigh the environmental costs.

Precious Metal Violence

Among the 12 sought-after minerals in the country, those with the highest demand on a global scale are iron, lead, copper, silver, and gold.[24] Extensive copper deposits rank Peru third in the world for extraction, with 1.3 million tons of the mineral mined annually.[25] The nation is also third in the world in silver mining, producing 111.3 million ounces each year.[26] The desire to maintain this favorable international ranking affects, to a large extent, the legislative agenda of Humala, much as it influenced his predecessors.

President García featured tax cuts in his administration. From 2007 to 2011, total tax receipts fell from 20.6 percent to 14.9 percent while FDI dramatically grew. Yet, in spite of the reduction in tax revenues, regional and local governments have been able to accumulate billions of soles in reserves for their jurisdictions. Legislators could have appropriated resources towards the development of “water treatment, roads, education [or] health care,” but unfortunately they have not.

Vehement displeasure with departmental and national legislators has inspired violence which has resulted in over 2,300 injuries and close to 200 deaths. [27] When indigenous opposition mounted against the Santa Ana silver mine owned by Bear Creek Mining Corporation in April of 2011, protestors declared their objections to continual contamination of the water supply and the poisoning of agricultural crops.[28] The 4,000-person protest began with barricades preventing access to service roads and escalated to an aggressive march on police at Inca Manco Cápac International Airport near Juliaca, Peru. The assigned police force responded by killing six people and wounding 30. Protestors responded by burning tires and throwing rocks at police.[29]

Tragic stories such as these are abundant among the isolated communities throughout the Andes region, which suffer as a result of toxic drugs and violence. In the May 2014 monthly summary of recent social conflicts, released by the Defensoría del Pueblo, 100 of 135, or 74.1 percent, of the cases related to inflammatory activities at the mines.[30] The evidence indicates that violence is still rampant under Humala’s presidency, and the frequent uprisings result from disagreements between transnational corporations, laborers, community groups, and activists. Protestors often contest the perpetual contamination of water and soil, but are all too often dismissed in favor of the value of ore.

Trickle-Down Contamination

A growing opposition has set the pursuit of precious metals against the need for clean, drinkable water. For his part, President Humala counters that citizens may enjoy wealth from ore extraction, as well as clean water. Yet mining uses reservoirs for cooling processed materials causing contaminants to seep into the soil causing biological destruction. [31] The present requirements are inadequate and emphasize the importance of metal extraction to the economy. Mining reforms mandating more rigorous water purification processes would draw Peru closer to the standards of its neighbors.

According to the Blacksmith Institute, mining produces the third highest level of toxic pollutants of all global industries.[32] Mercury, a byproduct of gold refining, has poisoned 20,000 hectares of Peruvian rainforest.[33] Recent studies of the southeastern region of Madre de Dios, renowned for its abundance of gold, revealed that 80 percent of all adult inhabitants had toxic levels of metal in their systems.[34]

Another lethal hazard affecting mining communities is lead, which seeps into the water supply and soil, and even floats in the air.[35] A 2009 study by the Carnegie Institute for Science (CIS), in partnership with the World Health Organization (WHO), discovered toxic residues near mining towns in unsettling quantities. As CIS stated, “[O]ur assessment that 1.6 million people in Peru could be exposed to lead in soil indicates that political will and resources are urgently needed to reduce the effect of exposure on the cognitive development of future generations.”[36] Ernesto Ráez-Luna, an Advisor to the Ministry of the Environment, reiterated this concern warning that continuous exposure to pollutants would lead to members of local communities “having an IQ that is five, 10 or 15 points lower than they would have had in optimum environmental conditions.”[37]

While many ecological studies are dismissed in favor of economic policy, Peru’s Minister of Environment, Manuel Pulgar-Vidal, emphasized the value of this type of research, declaring that it is “fundamental for decision makers in order for them to take action and make policies that aim to preserve the sustainable use of these resources and services.”[38] Peru has embraced the prosperity brought by mineral extraction, yet remains irresponsible with poisonous toxins generated from mining worksites. Instead of reaping the benefits of trickle-down economics, communities closest to the mines suffer from trickle-down contamination.

Case Study: Minas Conga

The Minas Conga project in Cajamarca, Peru embodies the heated dispute of minerals versus water. This transnational venture is a partnership between Newmont Mining Corporation, Buenaventura, and the World Bank.[39] It is a $4.8 billion USD example of how economists envision implementation of the PFTPA. Newmont, based in Denver, owns a 51 percent stake, with Peruvian partner Buenaventura owning 43 percent, and the World Bank holding the remaining balance.[40]

Approximately 17,000 people find themselves downstream from the massive operation, which predicts over $10 billion USD in extractive revenues over the next 20 years.[41] Local opponents worry amalgamation will continue to contaminate natural water sources. They fear another spill similar to the one by a Newmont sub-contractor in June 2000, which dumped 335 pounds of liquid mercury onto a highway leading to a worksite.[42] To alleviate this concern, Newmont agreed to build four reservoirs to ensure clean water throughout the existence of the new mine.[43] However, in spite of the financial commitments made by the Newmont consortium, they lack public support for the Minas Conga project, as violent protests led to a halt in construction in 2011.

Necessary Regulatory Reform

Peru’s tremendous economic growth in recent decades stands in stark contrast to the continual suffering of the communities near mineral extraction sites. Relaxed permitting requirements for mining projects, loose tax regulation, and a general disregard for environmental violations have hurt rather than helped Peru’s mining communities.

The urgent need to increase mining oversight is clear. The relentless pursuit of foreign investment requires greater regulation to halt the contamination of soil and water. In particular, the extended exposure to mercury, lead, and other hazardous byproducts of the trade continue to poison many of those living locally. Exploited citizens and laborers protesting working conditions have grown defiant, leading to hundreds of violent incidents over the past 25 years. Pollution caused by unlicensed artisanal mining further complicates these issues.

While President Humala campaigned on an anti-mining platform, he has become still another champion of neoliberal economic policy in line with his predecessors Fujimori, García, and Toledo. Unless he is able to tighten the screws on the ensuing pollution, expand licensure, and curb violence, his legacy will be that of willful negligence and the side effects of irresponsible exploitation will remain a blight on the country’s economic achievements.

Scott W. Downs, Research Associate at the Council on Hemispheric Affairs

References

[1] Fei Han et al., “Peru: Selected Issues,” International Monetary Fund (2014), accessed June 16 2014, http://www.imf.org/external/pubs/ft/scr/2014/cr1422.pdf .

[2] Jo-Marie Burt, “Guilty as Charged: The Trial of Former Peruvian President Alberto Fujimori for Human Rights Violations,” The International Journal of Transitional Justice 3 (2009): 384-394. Accessed June 19 2014. doi: 10.1093/ijtj/ijp017, http://ijtj.oxfordjournals.org/content/3/3/384.full.pdf+html ; Frank Bajak, “Peru’s Gold Mine Conundrum,” Huffington Post, accessed June 24 2014, http://www.huffingtonpost.com/2011/11/25/peru-gold-mine_n_1113475.html .

[3] Peggy Pinedo, “Peru Makes Progress Against Illegal Mining,” Infosurhoy, April 18 2014, accessed June 22 2014 http://infosurhoy.com/en_GB/articles/saii/features/main/2013/06/18/feature-01 .

[4] Martin Bergel, “CONACAMI: a National Organization Facing Mining Multinational Companies in Peru,” Choike, accessed July 13 2014, http://www.choike.org/nuevo_eng/informes/3940.html

[5] Bury, Jeffrey. 2007. “Mining Migrants: Transnational Mining and Migration Patterns in the Peruvian Andes.” Professional Geographer 59, no. 3: 378-389. Academic Search Premier, EBSCOhost (accessed June 19, 2014).

[6] Ibid.

[7] Jo-Marie Burt, “Guilty as Charged: The Trial of Former Peruvian President Alberto Fujimori for Human Rights Violations,” The International Journal of Transitional Justice 3 (2009): 384-394. Accessed June 19 2014. doi: 10.1093/ijtj/ijp017, http://ijtj.oxfordjournals.org/content/3/3/384.full.pdf+html .

[8] Ibid.

[9] Frank Bajak, “Peru’s Gold Mine Conundrum,” Huffington Post, accessed June 24 2014, http://www.huffingtonpost.com/2011/11/25/peru-gold-mine_n_1113475.html .

[10] “Peru Overview,” The World Bank, accessed June 18 2014, http://www.worldbank.org/en/country/peru/overview .

[11] “Country at a Glance,” The World Bank, accessed June 18 2014, http://www.worldbank.org/en/country/peru .

[12] “Mining Peru: Country Mining Guide,” KPMG International (2013), accessed June 16 2014, http://www.kpmg.com/PE/es/IssuesAndInsights/ArticlesPublications/Documents/Country-Mining-Guide-Peru.pdf .

[13] Ibid.

[14] Sandra Orihuela, “Mining 2014: Peru,” Law Business Research LTD, accessed June 26 2014, http://latinlawyer.com/reference/topics/46/jurisdictions/19/peru/ .

[15] Ibid.

[16] Orlando Marchesi, Fernando Gaveglio and Humberto Salicetti, “2013 Mining Industry: Doing Business in Peru,” Price Waterhouse Cooper (2013), accessed June 16 2014, http://www.pwc.com/pe/es/doing-business/index_en.jhtml .

[17] The Editors, “Peru’s Illegal Mining Metastasizes Into Social and Political Problem,” World Politics Review, May 6 2014, accessed July 3 2014, http://www.worldpoliticsreview.com/trend-lines/13762/peru-s-illegal-mining-metastasizes-into-social-and-political-problem

[18] Peggy Pinedo, “Peru Makes Progress Against Illegal Mining,” Infosurhoy, April 18 2014, accessed June 22 2014 http://infosurhoy.com/en_GB/articles/saii/features/main/2013/06/18/feature-01 .

[19] Ibid.

[20] Cecilia Jamasmie, “Peru’s President Allegedly Financed Campaign With Illegal Mining Funds,” Mining.com, June 12 2014, accessed June 22 2014, http://www.mining.com/perus-president-allegedly-financed-his-campaign-with-illegal-mining-funds-93081/ .

[21] Peggy Pinedo, “Peru Makes Progress Against Illegal Mining,” Infosurhoy, April 18 2014, accessed June 22 2014 http://infosurhoy.com/en_GB/articles/saii/features/main/2013/06/18/feature-01 .

[22] Ibid.

[23] Rodrigo Abd and Frank Bajak, “Peru Security Forces Trash Illegal Mining Machines,” The Associated Press, April 29 2014, accessed July 3 2014, https://news.yahoo.com/peru-security-forces-trash-illegal-mining-machines-040539283.html

[24] Orlando Marchesi, Fernando Gaveglio and Humberto Salicetti, “2013 Mining Industry: Doing Business in Peru,” Price Waterhouse Cooper (2013), accessed June 16 2014, http://www.pwc.com/pe/es/doing-business/index_en.jhtml .

[25] Cecilia Jamasmie, “Peru set to Regain World’s Second Largest Copper Producer Place This Year,” Mining.com, April 20 2014, accessed June 22 2014, http://www.mining.com/peru-set-to-regain-worlds-second-largest-copper-producer-place-this-year-26694/

[26] Staff Writer, “Top 10 Silver-Producing Countries in 2012,” Silver Investing News, April 21 2013, accessed June 22 2014, http://silverinvestingnews.com/18530/top-10-silver-producing-countries-in-2012.html

[27] Alana Wilson, “Peru’s Social Conflict is About More Than Mining,” Fraser Forum September / October (2012): 15-17, accessed June 25 2014, http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/articles/perus-social-conflict-is-about-more-than-mining.pdf

[28] Franklin Briceno, “Peru Cancels Mine After Police Kill 6 Protestors, Wound 30,” Huffington Post, June 25 2011, accessed June 22 2014, http://www.huffingtonpost.com/2011/06/25/peru-mine-protest-santa-ana-bear-creek_n_884587.html

[29] Ibid.

[30] “Reporte de Conflictos Sociales No. 123, Mayo 2014,” Defensoria del Pueblo, accessed June 26 2014, http://www.defensoria.gob.pe/modules/Downloads/conflictos/2014/Reporte-Mensual-de-Conflictos-Sociales-N-123-2014.pdf

[31] Alana Wilson, “Peru’s Social Conflict is About More Than Mining,” Fraser Forum September / October (2012): 15-17, accessed June 25 2014, http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/articles/perus-social-conflict-is-about-more-than-mining.pdf

[32] “Top 10: Toxic Pollution Problems 2012, Mining & Ore Processing,” Blacksmith Institute, accessed June 24 2014, http://www.worstpolluted.org/projects_reports/display/98

[33] Cecilia Jamasmie, “Peru’s President Allegedly Financed Campaign With Illegal Mining Funds,” Mining.com, June 12 2014, accessed June 25 2014, http://www.mining.com/perus-president-allegedly-financed-his-campaign-with-illegal-mining-funds-93081/

[34] Cecilia Jamasmie, “Mercury Pollution Linked to Illegal Gold Mining in Peru Reaches Lethal Levels,” Mining.com, March 25 2013, accessed June 25 2014, http://www.mining.com/mercury-pollution-linked-to-illegal-gold-mining-in-peru-reaches-lethal-levels-73281/

[35] Alexander van Green, et al, “Lead Exposure From Soil in Peruvian Mining Towns: A National Assessment Supported by two Contrasting Examples,” The World Health Organization, August 28 2012, accessed June 26 2014, http://www.who.int/bulletin/volumes/90/12/12-106419/en/

[36] Ibid.

[37] Peggy Pinedo, “Peru Makes Progress Against Illegal Mining,” Infosurhoy.com, April 18 2013, accessed June 18 2014, http://infosurhoy.com/en_GB/articles/saii/features/main/2013/06/18/feature-01

[38] “Minister of Environment for Peru and UNFCCC COP 20 President Highlights New Report On Amazon Security Agenda,” Global Canopy Programme, January 28 2014, accessed June 18 2014, http://www.globalcanopy.org/sites/default/files/Press%20release%20-%20Minister%20of%20Environment%20for%20Peru%20and%20UNFCCC%20COP%2020%20President%20highlights%20new%20report%20on%20Amazon%20security%20agenda.pdf

[39] Lynda Sullivan, “Peru’s Conga Mine Conflict: Cajamarca Won’t Capitulate,” Upside Down World, May 1 2014, accessed June 19 2014, http://upsidedownworld.org/main/peru-archives-76/4823-perus-conga-mine-conflict-cajamarca-wont-capitulate

[40] Ibid.

[41] Frank Bajak, “Peru’s Gold Mine Conundrum,” Huffington Post, accessed June 24 2014, http://www.huffingtonpost.com/2011/11/25/peru-gold-mine_n_1113475.html .

[42] Peter Hecht, “Peasants in Peru Near Shutdown on Mercury Spill,” MAC: Mines and Communities, March 5 2005, accessed June 16 2014, http://www.minesandcommunities.org/article.php?a=1384

[43] “Conga: Overview,” Newmont Mining Corporation, June 2013, accessed June 24 2014, http://www.newmont.com/node/4937

The post Treacherous Presidential Policies: The Costs Of Growth In Peru – Analysis appeared first on Eurasia Review.

US, EU Announce Tougher Sanctions Against Russia

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(RFE/RL) — The United States and the European Union significantly strengthened sanctions on Russia over Ukraine on July 16, with Washington for the first time directly targeting Russia’s banking, military and energy sectors.

U.S. President Barack Obama announced the new sanctions over what he called a failure by Russia to take concrete steps to stop an escalation of violence in eastern Ukraine.

“I’ve repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine,” Obama said, adding that he had said this directly to President Vladimir Putin.

“What we are expecting is that the Russian leadership will see once again that its actions in Ukraine have consequences,” said the president.

The Treasury Department used its authority for the first time under a separate executive order to sanction several top Russian banks and energy companies.

Under Secretary for Terrorism and Financial Intelligence David S. Cohen said in a statement,“Because Russia has failed to meet the basic standards of international conduct, we are acting today to open Russia’s financial services and energy sectors to sanctions and limit the access of two key Russian banks and two key energy firms to U.S. sources of financing, and to impose blocking sanctions against eight arms firms and a set of senior Russian officials.”

The entities include Rosneft, a state-owned oil company, state-owned bank Vnesheconombank, natural gas producer Novatek and Gazprombank, the financing arm of Gazprom.

U.S. firms would still be allowed to do business with the firms, according to the Treasury Department, but prohibited U.S. entities from issuing new debt longer than 90 days maturity. A senior administration official said that the measure would restrict their access to capital markets because of the dominance of the U.S. dollar worldwide.

The list did not include Russia’s state-controlled natural gas company Gazprom, nor its CEO, Aleksey Miller. The company has cut its supply to Ukraine over a payment dispute.

The shift in targeting sectors of the Russian economy indicated a harder approach to Russia by the Obama administration as the Ukraine crisis continues with no resolution in sight.

Past rounds of sanctions had mostly focused on sanctioning individuals and banning them from traveling to the United States.

The Treasury Department simultaneously sanctioned five more Russians under that authority, including Sergey Beseda, Commander of the Fifth Service of the FSB, Duma Deputy Chairman Sergei Neverov, Minister for Crimean Affairs Oleg Savelyev, Aleksandr Borodai, prime minister of the self-proclaimed Donetsk People’s Republic and Igor Shchegolev, an aide to Russian President Vladimir Putin.

The administration also sanctioned the self-proclaimed Donetsk and Luhansk People’s Republic, Fedosiya Enterprise, a Crimean oil company, and several Russian arms manufacturers, including Kalashnikov. (The Treasury Department clarified that existing owners of the weapons in the U.S. would not be subject to sanctions.)

In a first reaction to the U.S. sanctions, Putin warned that the move will take relations with Russia to a “dead end” and damage U.S. business interests in his country.

Putin told reporters on a visit to Brazil, “Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end, and cause very serious damage.”

Meanwhile, European Union leaders also agreed to expanded sanctions against Russia, after a marathon meeting in Brussels.

But the EU, which has a far deeper economic relationship with Russia than the United States, was more restrained.

An EU statement at a summit in Brussels said the measures will target “individuals or entities who actively provide material or financial support to the Russians decision-makers responsible for the annexation of Crimea or destabilisation of eastern Ukraine.”

The statement said that European countries would agree on names and entities by the end of the month.

The 28 leaders also agreed to suspend new investments in Russia by the EU’s European Investment Bank (EIB) and European Bank of Reconstruction and Development (EBRD).

Russian Deputy Foreign Minister Sergei Rybakov responded in a statement to Interfax news agency, saying”We condemn those politicians and officials behind such actions, and confirm the internation to adopt measures, that will be received in Washington quite painfully and strongly.”

With reporting by Luke Johnson in Washington and Rikard Jozwiak in Brussels

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The Effects Of Ukrainian Crisis On Europe’s Energy Security – Analysis

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By Hasan Selim Ozertem

With the elections of May 2014, with part of its lands annexed, economic problems, and security issues resulting from rebellions in the eastern provinces, the country of Ukraine has elected Petro Poroshenko as its president. Considering that heavy industry in Ukraine is located in its eastern provinces, security and economic issues are interlaced. In this regard, the armed struggle taking place around the towns in the east of the country is occurring on delicate ground in terms of territorial integrity and economic considerations.

Economic issues are not limited to the non-functionality of the economic institutions. Since the New Year, there has been a serious problem arising from disagreement over prices in the Russian-dominated energy sector, and this problem transformed into a crisis by June.

Subsequent to the political crisis, Russia has increased the price per thousand cubic meters of gas from $268.5 to $485. The change of government in Ukraine and its failure to pay Russia for gas influenced this hike in prices. Russia applied the new prices and billed the Ukrainian government $4.5 billion for gas. The Kiev administration, faced with the sudden increase in cost, has found this price unacceptable and has refused to pay. This circumstance risks a new crisis evocative of the 2006 and 2009 crises. While Gazprom ceased gas transport to Ukraine starting on 16 June, the company also declared that gas transport would continue thereafter dependent on payment in advance.

The main concern of experts in the last few months has been the possibility of the situation deteriorating. The Ukrainian government and Gazprom worked for an extensive amount of time on an agreed price for gas, along with help from the EU. Ukraine indicated that a price of $326 per thousand cubic meters was acceptable; Gazprom reduced its original price to $385. During these negotiations, Ukraine made a payment of $786 million to Gazprom.

Nonetheless, the Ukrainian government did not accept a temporary agreement because the discount of $100 per thousand cubic meters was contingent on Ukraine changing its customs rates. Therefore, the current arrangement is not permanent and the discount must be institutionalized by an official agreement. This process did not result in a solution and the subject was brought before the International Court of Arbitration in Stockholm. Gazprom is prosecuting Ukraine for the amount of $4.5 billion while Ukraine claims that due to Gazprom’s monopoly it overpaid $6 billion resultant of price increases and is further demanding that Gazprom provide compensation therefore.

But the issue goes beyond the disagreement concerning payment. Russia reduced its gas prices for Ukraine in December 2013, only to raise the price again shortly afterward. Russia claims that this increase was only according to economic principles, but actors in Europe refute this claim. These European actors consider Russia to be using energy as a political instrument. The EU is considering these emerging risks from a security perspective, and expediently published a new energy strategy in May. Another concern of Europe is that the current disagreement over gas prices will continue into the winter.

New energy strategy of Europe

In the strategy paper prepared by the EU Commission for the European Council, while possible gas interruptions in the winters of 2014 and 2015 were also discussed, some suggestions were made for managing interruptions in gas supply such as revision of storage capacities, reductions in the demand for gas, and use of reverse technology in gas pipelines. At the same time, the question of how consumption patterns should be changed in the medium-term was also discussed in the paper.

In this regard, renewable energy technologies become prominent, and the necessity of different energy sources for the healthy management of demand for gas is emphasized. At the same time, gas imports in the form of liquefied natural gas (LNG) are also being granted importance, and new explorations in North America, Qatar, Australia, and East Africa are expected to be prioritized in the European market.

In addition, an LNG plant with a capacity of 24 billion m3 being built in the eastern US, and to become operational between 2015 and 2017, has led to an expectation of gas trade between the US and EU. Moreover, the dialogue between the US and the EU about energy security in the context of the G7 seems stronger.

In this context, in the declaration dated May 6 that was published subsequent to the meeting of the G7 countries’ energy ministers in Rome, it is indicated that energy shall not be used as a kind of political pressure or instrument to threaten security, and that the diversification of natural gas sources and that the diversification of natural gas sources should be pursued in two main ways. The first corresponds to taking the necessary steps to improve the LNG market in the upcoming period, and the second refers to developing new routes of gas delivery to Europe via the Southern Gas Corridor.

Correspondingly, in the declaration published subsequent to the summit of leaders in Brussels, the central location of energy security on the collective agenda was emphasized, and the diversification of energy resources and necessity of modernizing current infrastructure was mentioned. The points stressed in the declaration can be considered a sign that these subjects are becoming more important in the political sphere.

Reaction of Russia

Russia is disturbed by the developments toward liberalization in the European market. In particular, strengthening dynamics of competition in the market, and eliminated barriers to gas trade among the European countries weaken the advantages of Gazprom’s monopoly position. Correspondingly, the average price paid for Russian gas in the European market has declined from $400-410 to $350-360 in 2012. This adversely affects Gazprom’s profits.

Intending to operate in Europe despite all these changes, Russia faced another problem after the Ukrainian crisis, namely, the EU’s changing attitude toward the South Stream gas pipeline project. The EU decided to suspend the project while Russia tried to continue its activities through Bulgaria and Serbia. It then faced a new issue when Bulgaria decided to cooperate with the EU on the matter. Gazprom, determined to pursue its activities in Serbia, announced in June that it will finish construction in the country by 2015, adhering to the old timetable. After this, it once again demonstrated its determination to continue its project, despite the EU, via the agreement signed with the Austrian company OMV on July 24.

On a different note, Russia states that it has an alternative market in Asia. In May, Russia responded to the EU’s policy of discourse without action with the critical and concrete move of inking a $400 billion energy agreement with China. Amid doubt about the future success of the EU’s complex strategic goals, Russia solidified its long-term relationship with China.

Considering all these developments, it can be said that both Russia and the EU are searching for important openings for 2015. However, while the gaps in the EU decision-making mechanisms (due to its composition of 28 member states) cause some disruptions in the process of implementation, Russia’s vertical government structure seems to exhibit significant advantages when it comes to decision-making. Russia’s weakness is that it could not foresee the transformations in its energy-dependent economy. In this respect, it seems difficult to predict which side will be a in a better position after 2015.

This article was first published in Analist Monthly Journal’s July Issue.

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Islamic State’s Saudi ‘Mufti’ Slain In Iraq

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A Saudi mufti with the Islamic State (IS or Daesh) has been killed in Iraq by the country’s armed forces, says an Iraqi news site, quoting an Iraqi military commander.

“Daesh mufti Abu Osama Al-Qahtani was killed inside a building in Baiji, Tikrit, along with four of his assistants in an air raid that targeted an IS meeting on Tuesday,” Lt. Gen. Ali Al-Freiji, commander in Saladin province, was quoted by Waradana as saying.

Al-Qahtani apparently succeeded another Saudi, Othman Al-Asiri, as mufti of the extremist Islamic State, after Al-Asiri was killed in Syria last year.

Al-Asiri, who had a Ph.D. in jurisprudence, was previously fired from the faculty of King Khalid University in Abha for sympathizing with the Al-Qaeda network. Al-Asiri had also been previously arrested in the Kingdom for killing seven people in a car accident.

Sources said Al-Asiri had joined IS and had held several training sessions for group members in Aleppo and Latakia prior to his death.
Earlier reports said a number of Saudi militants have quit the Islamic State movement after they were disillusioned with the group’s activities.

Known previously as the Islamic State of Iraq and the Levant (ISIL), the group had been engaged in a deadly rivalry with other Sunni groups fighting to topple the government of Syrian President Bashar Assad.

It had executed or assassinated fighters of rival Islamist groups, such as the Nusra Front, and the Western-backed moderate groups.
Led by an ambitious Iraqi militant known as Abu Bakr Al-Baghdadi, the Islamic State group unilaterally declared the establishment of an Islamic state, or caliphate, in the lands it has seized in Syria and Iraq.

It proclaimed Al-Baghdadi the head of its new self-styled state and demanded that all Muslims pledge allegiance to him.

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Areas Of Saudi-US Cooperation – OpEd

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By Joseph W. Westphal

Having recently arrived as the US Ambassador in Saudi Arabia, my wife Linda and I have been overwhelmed by the warm welcome we have received here from Saudis of all walks of life. As I start to roll up my sleeves and get to work, I wanted to share some of my observations on how I see the US-Saudi partnership, both on a governmental level, and on a personal level. I see diplomacy as a person-to-person interaction, and I look forward to meeting Saudis from a variety of backgrounds to advance our bilateral bonds in the coming years.

I would like to take this opportunity to offer my warmest greetings to the Saudi people for the holy month of Ramadan. I hope that in Saudi Arabia and throughout the region we will keep the focus always on what brings us together: Family, compassion, charity, and peace.

This US-Saudi relationship is one of our closest and most valued relationships in the region, and indeed in the world. Over the years, Saudi Arabia and the United States have partnered to tackle some of the toughest challenges facing the world. President Obama reaffirmed these close ties when he visited Riyadh on March 28. The US has had an important friendship with Saudi Arabia for many decades based on our shared interests in regional security, trade and investment, energy, and education, as the president, in that meeting of more than two hours, made clear.

US-Saudi trade now reaches $70 billion and Saudi Arabia is America’s 9th largest trading partner worldwide. The US remains Saudi Arabia’s largest trade partner, with US exports to the Kingdom growing by 76 percent since the beginning of President Obama’s administration in 2009. The bilateral Trade and Investment Framework Agreement, signed in 2003, provides a forum for the US and Saudi Arabia to explore ways to advance economic relations, and less than a year ago we signed an Open Skies Agreement.

Our agricultural exports, which have reached record high levels in recent years, have provided Saudi consumers with unmatched quality and consistency. Our bilateral cooperation on agricultural, environmental and health issues has grown as well. Saudi Arabia is now our partner in the Global Methane Initiative, which strives to decrease the effects of climate change by lowering methane emissions. Our two countries have been partners in the health sector for over 30 years — both in the public and private sector — and this cooperation continues to grow between our health ministries and other ministries and organizations through research collaborations, university programs, and exchanges of experts. For example, the US centers for Disease Control and Prevention (CDC) works very closely with the Ministry of Health on the MERS-Coronavirus situation and has a team in Saudi Arabia now working daily with Ministry of Health experts. We also have excellent collaboration on renewable and alternative energy and energy efficiency. We also enjoy robust collaboration on a range of energy issues, including renewable and alternative energy, a partnership that will only grow stronger as increasing US oil production further aligns US and Saudi interests in global energy markets.

Another important dimension of our ties is education. Saudi students have been attending American universities, colleges, and even high schools since the 1950s. One of the Custodian of the Two Holy Mosques King Abdullah’s accomplishments which we esteem the most is the scholarship program that bears his name. In 2005, prior to the King Abdullah Scholarship Program (KASP) there were fewer than 3,500 Saudi students in the US. Today, there are over 83,000 young Saudi men and women studying at our universities and colleges from coast to coast. Saudi Arabia now ranks fourth among countries sending students to the US. As of the most recent academic year, more than 50 percent of the current KASP students study in the US. We are proud to be the preferred destination for Saudi students and know that these young ambassadors will build ties that will support our partnership for decades to come. We applaud his vision, and we hope to welcome even more students in the future.

Last year, we issued 38,306 student visas out of a total of 126,300 visas between our three diplomatic facilities in Saudi Arabia. More than 90 percent of Saudi visa applications are approved, which is one of the highest rates in the world. All of these factors point to a country undergoing significant growth and modernization. Its place on the world stage is growing in importance and responsibility. From that fateful day in 1944 when President Roosevelt met with King Abdul Aziz on the USS Quincy and gave US recognition and support to this new country, our friendship, economic and political ties have grown and strengthened. Our leaders have affirmed the strong bond and partnership between our peoples.

President Obama has not only instructed me to continue strengthening the relationship, but to also build greater avenues to enhance the well-being of our mutual security, economies, and cultural interests. I have received such a warm welcome here. Personally, I look forward to doing everything I can to further strengthen US-Saudi cooperation in these areas during in my time in the Kingdom.

The writer is the US ambassador to Saudi Arabia.

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Ukraine Submits Evidence Of Russian Covert Action

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(EurActiv) — Kostiantyn Yelisieiev, the Ukrainian Ambassador to the EU, has provided the European Union with evidence of Russia’s support for separatists and called for tougher sanctions against Moscow, his office announced.

“Russia’s actions against Ukraine prove to be an implementation of a well-planned geopolitical strategy of turning it into a ‘failed state’. The plan is based on applying innovative models of warfare – hybrid warfare and the ‘controlled chaos’ approach that are tailored to fit realities and unique features of former Soviet Union territories, the document says.

The strategy of controlled chaos reportedly includes:

  • The creation of puppet “state” structures;
  • flooding the region with illegal weapons;
  • using foreign paid mercenaries to destroy regional infrastructure and harass local population;
  • weakening local economy and blocking state functions (e.g. law enforcement, justice, social welfare);
  • forcing a refugee crisis;
  • information warfare;
  • introduction of Russian “peacekeeping forces” .

According to Kyiv, within the 10-day ceasefire period which was declared on 30 June, the separatist fighters (which the Ukrainian side keeps calling terrorists) continued to attack the Ukrainian anti-terrorist operation (ATO) sites. Kyiv stresses that during this time, the Ukrainian side fulfilled its commitments. Nonetheless, 30 Ukrainians were killed, 79 wounded and one helicopter was shot down.

According to the document, every day, armed mercenaries on military armored trucks attempt to break into Ukraine from Russian soil, bringing in BM-21 GRAD artillery rockets, mortars, IGLA MANPADS, rocket-propelled grenade launchers (RPGs), and, recently, T-64 tanks and armed personal carriers (APCs). Up to 200 Ukrainian citizens and international representatives have reportedly been kidnapped and used as human shields against the Ukrainian ATO forces.

According to Kyiv, the separatists are destroying the infrastructure in eastern Ukraine. For example, on 10 June, the Kramatorsk Machine building factory was shelled, a gas pipeline in Poltava region was blown up and railway lines Ilovaysk-Kuteinikove and Ilovaysk-Mospine areas were destroyed, with freight wagons derailed in the first attack.

The total number of separatist fighters is estimated at “up to 6,000”. Near Donetsk, a ‘Battalion Vostok’, an organisation called ‘Oplot’ and a so-called ‘Donetsk People’s Army’ are active, while near Luhansk the strengths are the Russia Kuban Cossac’s Army ‘Donbas Kosh’ with commander Viacheslav Mikolaiovich Petrov, the “Russian United Army of the South-East” and “Kozytsyn’s Russian Cossacs”.

Photographs and details of several field commanders are included.

Several photos depict Russian equipment used by the separatists, including drones and Grad rockets. Photos depict a seized Russian T-64, registered at military base No 205, Budyonovsk, Stavropolskiy Krai, Russia. A captured APC is apparently equipped with shielding used exclusively in the Russian Federation. In photos of Kamaz and Ural army trucks that crossed into Ukraine at the Dolzhanskiy border checkpoint on 23 June, the tactical symbol of Russia’s 18th infantry brigade is visible on the vehicles’ doors.

Several photos show seized mortar shells, grenade launchers and IGLA missiles, complete with Russian markings.

According to the document, the Ukrainian An-26 transport, which was shot down on 14 July near Nizhnie Grachiki, was fired on from Russian territory, a photo apparently showing a Buk-type missile in pursuit, which ultimately destroyed the plane. Ukraine has no such missiles.

Screenshots of websites flash Russian telephone numbers for “Centres for recruiting of volunteers” to help the “peoples’ insurgence” in Ukraine.

Maps depict the shelling by Grad missiles on 12 July of the Ukrainian towns of Izvarino, Dyakovo, Zelenopilliya and Biryukovo from Russian territory, as well of mortar attacks on the Ukrainian border checkpoint Marynivka on 12 July, also from Russian territory.

The documentation also contains photos of the IDs of separatist militants, which clearly show their Russian nationality.

As part of the cover action, an information warfare campaign is reported against Ukraine, with reported cyberattacks at websites of the Ukrainian authorities and media, disinformation on Russia-controlled websites, network “trolling” etc.

According to a transcript, a saboteur detained in Odessa says:

“My task was to carry out active work in social networks, ‘disseminate’ information that I was receiving by e-mail and create groups looking for individuals ready to conduct sabotage activity in Ukraine […] First of all, they look for people to participate in combat. They are sent to Crimea and Rostov for training. Regarding sabotage, we are tasked to carry out provocations on behalf of the Pravyi Sector, National Guard, Svoboda etc. Like blowing up a bridge or a synagogue in Kyiv, Odessa or Dnepropetrovsk, water poisoning. For example, recently there was a task from Moscow to torture and kill the Communist Party leader in Slovyansk, as if it was done by the Pravyi Sector.”

“This is the moment of truth for the EU. An expression of the solidarity with Ukraine would be consistent and logical step. Member states should put international law, common democratic values ​​and common sense above their business and energy interests”, Yelisieiev was quoted as saying by the UNIAN agency.

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Israel Kills Four Boys On Gaza Beach, Injures Several Others

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Israeli raids on Gaza on Wednesday afternoon killed nine Palestinians, including six children, bringing the total number of Palestinians slain in nine days of Israeli assault to 222.

Four children were killed when Israeli forces shelled a beach they were playing on in Gaza City on Wednesday, medics said, in an incident witnessed by AFP journalists.

All four were on the beach when the attack took place, emergency services spokesman Ashraf al-Qidra said, with several injured children taking refuge at a nearby hotel where journalists were staying.

They were reportedly attacked by Israeli naval boats, witnesses told Ma’an, and were members of the same family.

The children were identified as Ahed Atef Bakr, 10, Zakariya Ahed Bakr, 10, Mohammad Ramiz Bakr, 11, and Ismail Mahmoud Bakr, 9.

A Guardian reporter who witnessed the attack, and helped provide first aid to two children injured by shrapnel, tweeted about the shelling.

Five Palestinians including a three-year-old were also killed on Wednesday afternoon in an airstrike in the Absan area of Khan Younis in the southern Gaza Strip.

Akram Muhammad Abu Amer, 34, and his brother Kamal Muhammad Abu Amer, 38, were killed in the airstrike, along with Hussein Abd al-Latif al-Astal, 23, Roqayya al-Astal, 70, Yasmin Mahmud al-Astal, 4, and Osama Mahmud al-Astal, 6.

Elsewhere, five people were injured including two critically in an airstrike on Shamlakh family home in Sheikh Ajleen neighborhood in southern Gaza City.

Muhammad Kamal Abd al-Rahman also succumbed to wounds from a bombing in Gaza earlier in the day.

The latest attacks brings the Palestinian death toll since midnight to 23, with 222 killed and 1,670 injured since Israel’s assault began last week.

A Gaza-based rights group says over 80 percent of the victims are civilians.

Earlier, Abdulrahman Ibrahim Khalil al-Sarhi, 37, was killed in an airstrike on the Zaytoun neighborhood of Gaza City while Omar Abu Daqqa, Ibrahim Abu Daqqa, and Khadra Abu Daqqa, 65, were killed in a strike targeting a civilian vehicle in Khan Younis.

Ashraf Abu Shanab, 33, was killed in Shabura camp in Rafah and Muhammad Abu Audah and Muhammad Zahouq were killed in an Israeli airstrike on the Abu Audah family home.

A five-year-old girl also died after falling from a building following an airstrike on a residential building in Rafah.

Islamic Jihad fighter Muhammad al-Dabari was killed in an airstrike on a Rafah building, while two men were killed in Khan Younis, while another man died from injuries sustained in an airstrike before midnight.

Gaza fighters have fired more than 1,200 rockets at Israel, which on Tuesday claimed their first Israeli life.

Overnight, warplanes struck about 40 sites across Gaza, among them political targets and the air force also dropped flyers warning 100,000 in northeastern Gaza Strip to evacuate their homes ahead of an air campaign east of Gaza City.

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Uganda: Homeless Children Face Violence, Exploitation, Says HRW

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Uganda is failing to protect homeless children against police abuse and other violence, Human Rights Watch said in a report released today. Street children throughout Uganda’s urban centers face violence, and physical and sexual abuse. National and local government officials should put an end to organized roundups of street children, hold police and others accountable for beatings, and provide improved access for these children to education and healthcare.

The 71-page report, “‘Where Do You Want Us to Go?’ Abuses against Street Children in Uganda,” documents human rights violations against street children by police and local government officials, as well as abuses by members of the community and older homeless children and adults. Police and other officials, including those from the Kampala Capital City Authority (KCCA), have beaten, extorted money from, and arbitrarily detained street children after targeted roundups. In police cells children have faced further beatings and forced labor, including cleaning the cells and police living quarters. On the streets, homeless adults and older children harass, threaten, beat, sexually abuse, force drugs upon, and exploit street children, often with impunity.

“Ugandan authorities should be protecting and helping homeless children, not beating them up or throwing them in police jails with adults,” said Maria Burnett, senior Africa researcher. “The government should end arbitrary roundups of street children and protect them from abuse.”

Over half of all Ugandans are under 15, and children are the single largest demographic group living in poverty. According to independent groups, local government officials, and police officers from the Child and Family Protection Unit (CFPU), the number of Ugandan children living on the streets is increasing, though the total number is not known.

Human Rights Watch interviewed over 130 current and former street children from December 2013 to February 2014 in seven town centers throughout Uganda. Human Rights Watch also interviewed 49 members of organizations providing assistance to street children, health care workers, international humanitarian and children’s organizations, police, and local government officials.

Human Rights Watch documented how police and officials threaten street children at night, and beat them with batons, whips, or wires to extort bribes or as a punishment for vagrancy. Some children hand over whatever small sums they have to avoid further abuse or detention. Scores of street children told Human Rights Watch that they fear the authorities and that police are a source of violence, not protection.

Children have sometimes been detained in police stations with adults and mistreated by cellmates. Many were released back to the streets after several days, or in some cases weeks, often only after paying a bribe or being forced to do work for the police. Other children have been transferred to one of the country’s national remand homes for juveniles accused or convicted of crimes or to the Kampiringisa National Rehabilitation Center, a juvenile detention center, even though they did not face any charges. Kampiringisa, outside Kampala, has been criticized by local nongovernmental organizations and parliament for inadequate staffing and deplorable detention conditions.

A 16-year-old boy from Jinja district who has lived on the streets of various towns for seven years told Human Rights Watch, “These police have to give us our rights. They should make us a home where we can be taken, but let it not be a police station, let it not have policemen so that it is not a prison. This is our country too. Let us not be strangers in our own country.”

Homeless children also are at risk of beatings and forced drug use from older homeless children or adults. Both boys and girls living on the street reported being raped or sexually assaulted by men and older street boys. In some instances, community members also harass, threaten, beat, and exploit street children. When a suspected or actual theft occurs, communities have converged on street children, occasionally carrying out mob violence.

Organizations working with street children told Human Rights Watch that police do little to investigate crimes against street children. Street children told Human Rights Watch that they rarely reported crimes by their peers or adults to the police for fear of reprisals, or that the police would beat or arrest them instead.

Because street children are often the first suspects for a crime, such as theft, police frequently arrest the children and detain them, often without charge. The Ministry of Gender, Labour and Social Development and local government officials periodically order general roundups of street children throughout the country. These roundups usually occur ahead of special events, official visits, or international conferences, or are a way for the ministry to be seen to be doing something about the perceived “problem” of street children. The head of the CFPU, a police unit tasked to address child abuse and neglect, told Human Rights Watch that, in Kampala, police are asked to provide security during roundup operations.

To find food to survive, children reported working as vendors, porters, domestic help, or laborers in homes, small restaurants, and other businesses. They were paid little for long hours of physically demanding and difficult work. Some children were victims of commercial sexual exploitation, reliant on sex work to survive.

“Instead of being able to turn to the police or local government officials for help when they’ve been abused, children find themselves living in fear of the authorities meant to protect them,” Burnett said.

The Ministry of Gender, Labour and Social Development is charged with protecting children and has created multiple programs and policies intended to protect the rights of vulnerable children. Uganda has also signed a number of regional and international child protection conventions and has put in place a legal framework designed to protect children’s rights, including those of street children. However, key state child protection agencies are failing to respond adequately or effectively to the needs of these children or to stop the abuses at the hands of the police and local authorities.

One staff member from an organization that helps street children told Human Rights Watch: “Government structures should not just be there in name. They should function. In Kampala, apart from beating them up, the government is doing nothing [for street children]. If all systems were working, you would not see these children suffering.”

The government of Uganda should end roundups and abuses against street children and investigate violence directed at homeless children. Rather than vilifying street children, the government should investigate and prosecute those responsible for abuse, including police and officials. The Uganda Police Force leadership should increase the number of officers working in the Child and Family Protection Unit to ensure there is ample staffing and resources to improve protection of vulnerable and homeless children in all districts. The government should ensure that street children have the same rights and protections under domestic, regional, and international standards as all other Ugandan children.

International partners should actively denounce roundups and police abuse of street children and coordinate with government and nongovernmental groups to carry out child protection systems. Donors should consider supporting organizations and activities throughout the country that help street children.

“For children to be effectively protected and cared for, the government should ensure that all children, including those on the streets, can find shelter and get an education,” Burnett said. “They should be treated with dignity and have the opportunity to find a safe way off the streets.”

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