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West Bank Clashes After Friday Prayers

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Several riots were reported throughout the West Bank Friday afternoon following weekly sermons.

Around 350 Palestinians demonstrated in Hebron, Israel Radio reported. Rioters were hurling rocks and Molotov cocktails at police, who were responding with non-lethal means to disperse the protesters.

Another hundred people were demonstrating and assaulting security forces near Nablus, where soldiers were using rubber bullets and other means to quell the mob. Three Palestinians were lightly injured there and evacuated to hospital in Nablus.

In Kalandiya, north of Jerusalem, several dozen Palestinians were rioting. One man was said lightly injured by a rubber bullet fired by security forces.

Small riots of several dozen protesters were also reported in two locations near Ramallah and another near Qalqilya.

Prayers in the Temple Mount ended peacefully, with around 40,000 Muslim worshipers attending the weekly sermon, Israel Radio reported.

Israeli police had said earlier that they would not bar young Muslim worshipers from Friday prayers at Jerusalem’s al-Aqsa Mosque, despite a week of spiraling violence in the city including a Palestinian terror attack on a synagogue.

It was the second week running that the restrictions were lifted at the flashpoint Temple Mount compound after months of limited entry.

“So far, restrictions on entry of worshippers will not be imposed,” police spokeswoman Luba Samri said in a statement late Thursday.

Israel eased restrictions at Temple Mount last week after US Secretary of State John Kerry announced agreement on steps to reduce tensions in talks in neighboring Jordan, which has custodial rights at the compound.

The site, which is holy to Jews as well as Muslims, has been the focus of months of unrest in East Jerusalem, that has spread to the West Bank and Arab communities across Israel, and raised fears of a new Palestinian uprising.

Clashes at the compound are usually led by younger Palestinian men, some of whom earlier this month hurled rocks and firecrackers at police who entered the compound and chased them to the entrance of the mosque.

In recent weeks, police have tried to preempt unrest by limiting male entry to those over 35 and in the past have barred those under 50.

Police said Thursday they had arrested five Arab-Israelis on suspicion of smuggling into Israel thousands of fireworks, knives and other weapons destined for Palestinians in east Jerusalem.

They said that two containers which arrived by sea from China were marked “Christmas decorations” for delivery to the Beit Hanina neighborhood.

On Tuesday, two Palestinian cousins from East Jerusalem stormed into a synagogue in west Jerusalem’s Har Nof neighborhood, armed with a gun and axes. They killed four Jews at prayer and a Druze traffic cop who tried to stop them before they were shot dead.

By Itamar Sharon

Original article

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‘A Transformative Post-2015 Development Agenda': What Role For South Africa? – Analysis

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By Neuma Grobbelaar

Followers of the discourse around international development will be aware of the important debates that took place at the UN General Assembly during September 2014. The ambitious theme of the 69th session of the UN General Assembly, “Delivering on and implementing a Transformative Post-2015 Development Agenda” has set the scene for the negotiations to be pursued in the Open Working Group on the Sustainable Development Goals and other expert committees and related dialogues and working groups on the post-2015 development agenda.

Policymakers, civil society groups, business and researchers are all expected to make their voices heard on the framework that will replace the Millennium Development Goals (MDG) by September 2015. How is South Africa contributing to this debate and what does it have to offer as a development partner towards the noble goal of improving the plight of the world’s marginalised poor?

President Jacob Zuma emphasised during his remarks in the General Assembly debate that South Africa continues to regard the New Partnership for Africa’s Development (Nepad), which was adopted by African leaders in response to the global call for action triggered by the MDGs 15 years ago, as Africa’s ‘socio-development blueprint’. He further noted that “the African Union’s Vision 2063 will, together with Nepad, and other socio-economic development programmes, be the cornerstone and foundation of Africa’s Development Agenda going forward”.

South Africa’s reference to Africa as its focus in the post-2015 debate is significant. It underscores the centrality of the continent in South Africa’s world view, its foreign policy and ultimately the articulation of its role as a development partner in its region.

Why is it that the South African government articulates its development interventions largely through the prism of its foreign policy towards Africa?

Describing South Africa as a ‘donor’ is anathema to almost all South African policymakers, yet the paradox is that the country has played a significant development role in its region since its transition to democracy in 1994. Most people know that South Africa has been a significant recipient of aid since 1994 of around $1 billion a year. But South Africa is also an important ‘giver of aid’. A 2006 review by the National Treasury concluded that South Africa’s ‘ODA’ is comparable with countries such as Sweden and Norway. More recent estimates suggest that South Africa is surpassing even the ODA target set for traditional donors of 0.7% of GDP. South Africa is an active participant in many of the fora where global development is being discussed and also contributes substantially to development institutions – especially those with a focus on Africa.

Yet, many of South Africa’s regional development activities can hardly be described as ‘donor aid’ or ‘donor assistance’ in the traditional DAC sense. The OECD-DAC criteria of development aid sit uneasily with the activities that South Africa undertakes in the region. Conceptually they also do not square with South Africa’s world view. Rather, South Africa’s development interventions are framed within the broad interpretation of South-South cooperation suggesting an exchange of resources, technical expertise and peer learning.

The principles that inform South Africa’s approach on the ‘right’ to development are contained in the country’s constitution. As a product of the crucible that has framed rights and responsibilities in post-Apartheid South Africa, it is not only one of the most progressive constitutions in the world, it is also unique in the extent to which it includes justiciable socio-economic rights – not only political rights.

How is this relevant in the broader context of South Africa’s development role? In a very reductionist way, it means that South Africa views the pursuit of peace and stability in its region and the socio-economic development of the continent as mutually reinforcing and equally important development interventions. It is therefore no surprise that many of South Africa’s ‘development interventions’ in Africa fall under the rubric of peace-building, conflict mediation, post-conflict reconstruction and stabilisation in partnership with mainly African actors — often under a UN and/or AU mandate. In addition, South Africa invests heavily in African institution-building, infrastructure development and regional integration. For example, South Africa played a leading role in engineering the reform of the African Union (AU), the adoption of the New Partnership for Africa’s Development (Nepad) and the African Peer Review Mechanism (APRM). It also provides substantial support to these institutions and bodies alongside several other regional institutions, such as the Pan–African Parliament, the Southern African Development Community (SADC) and to regional peace operations and peace-building efforts. And it is also a significant contributor to concessional lending institutions with a focus on Africa, such as the World Bank (WB) and the African Development Bank (AfDB). Lastly, it has played an active role in calls for the reform of key global development finance institutions such as the World Bank and the International Monetary Fund (IMF). It is also a founding member of the BRICS Development Bank, now billed the New Development Bank.

The above initiatives demonstrate the primacy of Africa in South Africa’s external engagement, but also the South African government’s strong belief in the principle of subsidiarity. This latter point underpins its efforts to strengthen regional institutions and initiatives. It has also informed its efforts to improve cooperation between the UNSC and the AU Peace and Security Council during its two terms on the UNSC and to actively seek enhanced North-South and South-South cooperation in its global engagements.

While SAIIA’s research and that of other research institutions have shown that a variety of South African government departments are involved in development interventions in the region – such as the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA) – better coordination of South Africa’s efforts is also required; hence the discussion around the long-awaited launch of a South African development partnership agency or SADPA. First mooted in 2009, the establishment of SADPA is still awaited.

The global discussion on the successors to the MDGs in 2015 takes place against the background of the global constraints on mobilisation of new funding posed by the fall-out from the 2008 financial crisis; the related slow recovery in developed economies; and the emergence of powerful economies in the South, which continue to experience higher rates of growth than the industrialised world, yet face growing socio-economic inequalities. Thus a post-2015 development agenda has to consider the balance between the industrialisation aspirations of developing countries and planetary boundaries specifically related to climate change and sustainability; and the desire for inclusive growth and development.

What role for South Africa in this global process?

South Africa’s positioning and identity as a relatively small Southern actor provide it with comparative advantages in undertaking development partnerships and thus in contributing meaningfully to the global debate.

Besharati (2013) suggests that South Africa enjoys particular comparative advantages as a development partner. These include:

  • Proximity and ‘insider’ status: South Africa’s own unique experiences of development and a shared identity and geography with the region enhance its capacity to engage with countries in the region.
  • Specialised expertise: While South Africa is not an experienced ‘donor’ it has significant strengths and capacities to share with the region. These include a strong track record in peace-building, reconciliation and democracy, mainly drawing from its own experiences. The South African government firmly believes that development is not possible without peace and stability. South Africa also has significant experience in ‘state and institution’ building that is complemented by its human resource development and capacity-building in Africa. For example South African government departments are heavily involved in the training of African civil servants.
    Public financial management: This is a key competency of the South African state. The South African Revenue Service (SARS) has won international plaudits for the way it manages revenue collection, customs management and domestic resource mobilisation. South Africa plays a leading role in the Collaborative Africa Budget Reform Initiative (CABRI) and in the African Tax Administration Forum. It is also a leading member of the C-10 (representing the Committee of Ten African Ministers of Finance and Central Bank Governors) and in regional capacity-building in statistical analyses and information-gathering.  It is also the only African member of the G20 – a key global economic governance forum. The discussion around the 3rd Conference on Financing for Development taking place in Addis Ababa in July next year is a key policy process with significant implications for development finance against the backdrop of dwindling resources.
    Infrastructure: South Africa is a significant player in the development of the region’s infrastructure – both in framing and politically driving key African infrastructure projects such as the Programme for Infrastructure Development in Africa (PIDA). In addition, the country is providing extensive project financing and financial support through the IDC and the DBSA for regional water, transport, energy and telecommunications infrastructure.
    But there are at least three more areas which the South African government should harness to play a meaningful role in this global process.
    Its strong epistemic community and the regional capacity building initiatives of South Africa’s civil society: South Africa has a robust and regionally engaged civil society that is involved in a range of capacity-building activities across the continent. Drawing on significant experiences in constitutional justice, mediation, peace-building, but also deep research expertise on regional integration, conflict analysis and early warning, trade and investment and Africa’s engagement with the rest of the world, South Africa has a significant platform on which to build a fuller South African development partnership offering to the continent – with important insights for the rest of the world.
    Regionally engaged private sector: South Africa’s relative economic strength as Africa’s most developed and second largest economy combined with its robust and regionally engaged private sector are contributing significantly to the continent’s development. South Africa is the biggest African investor in the continent and its FDI stock of US$ 18 billion in 2012 places it in second place (ahead of China) of developing country investors in Africa. There is a huge, ongoing debate in development circles on how to engage the private sector in development. There is much potential for the further exploration of innovative public-private partnerships in the region involving both South African and other international corporates.
    Bridge-builder: This comparative advantage is slightly more amorphous than the advantages previously identified. South Africa is an active member, participant and engaged observer in a range of global initiatives and fora (such as the WTO, the World Bank, the Africa Partnership Forum, the G20, the IMF, the OECD, the UN and its various agencies, IBSA and the BRICS), and in a range of African fora and institutions (such as the AU, SADC, the AfDB, Nepad, the PAP, SACU). This unique position enables South Africa to both seek to represent African perspectives in these fora, while also attempting to develop a consensus around African interests and concerns. This is a difficult role: South Africa has not been ‘elected’ or ‘appointed’ to fulfil this role by other African states, nor do African interests converge in every instance with South African interests. Nevertheless, South Africa’s active role in global affairs and in its region provides an opportunity to leverage and elevate Africa’s development concerns through multiple fora and initiatives.

As President Zuma highlighted in his address to the UN General Assembly, Nepad and the AU vision for 2063 inform South Africa’s and Africa’s developmental approach. Some African countries will not have attained the MDGs by 2015. The efforts in this regard should not be abandoned. Agenda 2063 aspires to a continent based on inclusive growth and sustainable development, where development is people-driven with a particular emphasis on women and youth, and which is peaceful and secure with good governance, respect for human rights, justice and the rule of law. These aspirations are similar to many of the proposed new goals (which flow from the MDGs). South Africa can play a pivotal role in facilitating the integration of these goals into the AU’s vision so as to ensure full ownership of not only the continental but also the global process.

It is also useful to consider that addressing the world’s development challenges require the building of successful partnerships that straddle traditional ideological and geographic boundaries (i.e., both North-South, South-South and trilateral models). Development partnerships should also not be seen only through the prism of the state’s interventions. Development practitioners and states will need to embrace and engage unlikely partners, such as the private sector and civil society actors and epistemic communities more pro-actively in the spirit of true partnership and cross-sectoral problem-solving. South Africa’s bridge-building skills can be exercised in the context of its chairing of the G77+China at the UN in 2015. If the South African government is able to meaningfully harness all the existing capacities in its arsenal, it is clear that it will also position the country as a capable and effective development partner and effective contributor to the current discourse on a post-MDG development framework.

Neuma Grobbelaar is the Director of Research at SAIIA. She is the author of a report Rising Powers in International Development: the State of the Debate in South Africa that was funded by the Institute of Development Studies (IDS). The report was produced by the Rising Powers in International Development (RPID) programme based at IDS, which aims to build mutual understanding and learning around development between the UK, the BRICS countries (Brazil, Russia, India, China, and South Africa) and other rising powers.

This article was published at SAIIA

The post ‘A Transformative Post-2015 Development Agenda': What Role For South Africa? – Analysis appeared first on Eurasia Review.

Pakistan And Russia Sign Defence And Military Cooperation Agreement – Analysis

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By Dr Subhash Kapila

Pakistan and Russia signed a ‘Defence and Military Cooperation Agreement’ on November 20 in Rawalpindi during the significantly first-ever visit of a Russian Defence Minister to Pakistan in the changing security environment.

Coming as it does virtually on the eve of the visit of the Russian President to India, what does one in India read in the latest political signalling by Russia in South Asia? Was India kept in the loop by Russia of the signing of the ‘Defence and Military Cooperation Agreement’ with Pakistan? Is it just connected with the impending exit of US Forces from Afghanistan or is it a recasting of its strategic blueprint by Russia in South Asia? The Indian policy establishment needs to decipher this.

Significant was a statement in the Pakistani media quoted in inverted commas attributing it to the Russian Defence Minister extolling the Pakistan Army for its role in combatting terrorism and that today the whole world wants to do business with Pakistan. Is it reflective of Russia’s changed perceptions on Pakistan and Pakistan Army?

The Russian Defence Minister Serge Shoigyo and the Pakistani Defence Minister Khawaja Asif had wide ranging discussions on security issues preceding the signing of this Agreement not in Islamabad, the seat of the Government, but in Rawalpindi the location of Pakistan Army GHQ.

Intriguingly, for just a one-day visit to Pakistan, the Russian Defence Minister was accompanied by a 41 member delegation.

No details of the Agreement have been released in the public domain but media reports indicate that it also covers a wide range of military equipment. The supply of Russian MI-35 Transport/Combat Helicopters was specifically mentioned. The Russian envoy to Pakistan later stated that the deal to supply Russian MI-35 helicopters stood “politically approved” and that price negotiations would now be underway.

The Russian Defence Minister also had a meeting with Pakistani PM Nawaz Sharif who expressed appreciation for Russian support in Pakistan’s’ full-membership of the China-Centric Shanghai Cooperation Organisation. Increase in trade ties was also stressed besides greater engagement on discussion of regional and international security issues.

Comments

In a curious coincidence of timings, the Russian Defence Minister’s visit to Pakistan and signing the ‘Defence and Military Cooperation Agreement’ between Pakistan and Russia was taking place while the Pakistan Army Chief, General Sharif’s visit to United States was ongoing.

Obviously, the spadework for this Agreement would then have been undertaken much in advance of Pak Army Chief’s visit to USA.

Importantly, IATR TASS reported that Russia had lifted the arms embargo on Pakistan and this would facilitate supply of wide range of military equipment to Pakistan Army.

In connection with the above the Pakistani media highlighted that Russia had in effect downgraded India in terms of its military relationship from one of “Exclusive Military and Technical Partner” to one of “Preferred Partner”. The media attributed this downgradation to India’s increased defence purchases from USA.

Russia in the past at different occasions has been engaged in political signalling reverberations to India that it has other options in South Asia.

Could China have goaded Russia towards signing a ‘Defence and Military Cooperation Agreement’ with Pakistan in light of the unfolding dynamics in Afghanistan?

Whatever be the case, this development does inject some strategic doubts in those who believe that the Russia-India Strategic Partnership is a significant and enduring one.

Strangely, Indian media does not seem to have highlighted this development proclaimed by Pakistan as “a milestone achievement” and a “landmark cooperation pact”.

(Dr Subhash Kapila is a graduate of the Royal British Army Staff College, Camberley and combines a rich experience of Indian Army (Brigadier), Cabinet Secretariat, and diplomatic assignments in Bhutan, Japan, South Korea and USA. Currently, Consultant International Relations & Strategic Affairs with South Asia Analysis Group. He can be reached at drsubhashkapila.007@gmail.com)

The post Pakistan And Russia Sign Defence And Military Cooperation Agreement – Analysis appeared first on Eurasia Review.

Myanmar: Disappintment With Elections 2015 And Constitutional Amendments – Analysis

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By C. S. Kuppuswamy

Hopes for amending the 2008 Constitution prior to the 2015 elections have been quashed with the announcement of Thura Shwe Mann, the speaker of the Union Parliament on Tuesday the 18th November 2014, that the amendments will be carried out only after the 2015 elections. This announcement was closely on the heels of the declaration of the military MPs in the Parliament on 17 November 2014 of their strong opposition to changes in the constitution.

Background

With the 2015 General Elections in view there was a countrywide clamour for amending the 2008 Constitution. The government appointed in July 2013 a 109- member Joint Committee to review the Constitution. A huge number of proposals had been received by this committee. The committee submitted its report on 31 January 2014. The recommendations of the committee as well as fresh proposals by members are now being discussed in the parliament and the discussions are to be concluded by 25 November 2014. The whole exercise appears to be futile now, with the well-entrenched Army calling the shots finally.

Controversial Provisions that were sought to be amended:

  • This Constitution is heavily loaded in favour of the Tatmadaw (Defence forces) giving it a national political role with 25% of the seats reserved in the central and state legislatures (Sections 109, 141 and 161 of Chapter IV) and immunity for all actions earlier taken by the military junta (as SLORC and SPDC) under Section 445 – Chapter XIV (Transitory Provisions).
  • The National Defence and Security Council is the most powerful body under the Executive branch of the Union Government with the President, Vice-Presidents, the Speakers of both houses, the C-in-C, the Deputy C-in-C of the Defence Services and Ministers (presently Army Officers) of some key departments as members (Sec 201 of Chapter V-Executive). A study of the Constitution will reveal that on a number of instances the president has to act in co-ordination with or on the recommendations of this council.
  • The Commander-in-chief of the Defence Forces has been endowed with sweeping powers when a state of emergency is declared in the country or in a state as per the provisions in Chapter XI of the Constitution.
  • The procedure for amendment of most provisions of the Constitution (chapter XII-Article 436) is very restrictive in that it requires the prior approval of “more than 75% of all the representatives of the Pyidaungsu Hluttaw (Union legislature – both houses) after which in a nation-wide referendum only with the votes of more than half of house who are eligible to vote”. Thus it gives virtually a ‘veto’ for any change in the constitution.
  • Sec 59 (f), Chapter III of the 2008 Constitution which stipulates the qualifications for the President and the Vice Presidents reads “shall he himself, one of the parents, the spouse, one of the legitimate children or their spouses not owe allegiance to a foreign power, not be a subject of a foreign power or citizen of a foreign country.” At the time, the Constitution was drafted, it was widely believed that this section was aimed at precluding Aung San Suu Kyi from taking up the post of President.

National League for Democracy (NLD)-Disappointment:

It is a blow to the NLD, with Aung San Suu Kyi at the helm, which had been vigorously campaigning for the amendment of the 2008 Constitution by holding public meetings and rallies all over the nation. It had formed a Committee of its own to examine the Constitution, held discussions with members and the general public and had submitted the recommendations. The NLD has also had discussions with other political parties and ethnic groups.

The NLD was keen that the 2008 constitution is amended before the 2015-elections. For this purpose it held a number of public rallies at various cities since May 27, 2014 and wound up this campaign on July 19 (Martyr’s day). During this campaign the party had reportedly gathered over 5 million signatures in support of constitutional amendments before the next general elections. Though the main focus is to amend Article 436 (which gives a virtual veto the military) the party was hopeful of amending Article 59 (f) also which debars Suu Kyi for the presidency because of her children being British Citizens. It is not only a blow to the NLD, but also a disappointment to Suu Kyi personally in particular as well as to the young and rising political leaders of the party.

Nyan Win, spokesman of the National League for Democracy, said an effective Army veto in Parliament meant the NLD could not prevail in its efforts to overhaul the Constitution during an ongoing debate in Parliament. “Calculate the ratio mathematically. We cannot win (the fight to change key sections of constitution),” said Nyan Win listing both the clause that bars Suu Kyi and the one that gives the military the final say on amendments.

Thura Shwe Mann-Opts for ‘No change’ for the next Elections

Thura Shwe Mann, the speaker of the Union Parliament and leader of the USDP (Ruling Party) declared categorically in a press conference on 18 November 2014 that amendments to the Constitution will be only after the 2015 elections. After discussions and finalisation of the bills, a referendum will have to be held and that will be done in May 2015. He added that the referendum is a difficult matter and it is planned to enact laws in order to accomplish the referendum.

He asserted that the 2015 elections would be run in line with the laws prescribed in the Constitution. For the Constitutional amendments the new government would continue to consider it after forming the Parliament beyond 2015.

The Military shows its teeth

The military had all along its own reservations in amending the constitution. To put an end to all speculations, it has now openly objected to any change in the key provisions of the constitution and in addition have suggested some amendments to expand the role of the National Defence and Security Council.

Reactions

Aung San Suu Kyi when asked for her reactions by a reporter she replied nothing special at present. No doubt, it should have been a major disappointment. She would need some time to make her future plans.

“If none of articles of the 2008 Constitution can be amended and the 2015 election is held based on the current Constitution, it will be very hard to expect that the election will be a free and fair one” Khu Oo Reh, General Secretary, United Nationalities Federal Council (The Irrawaddy 18 November, 2014).

“We want to amend the Constitution through the political dialogues. It is not easy to amend the Constitution in the inner circle of the parliament and therefore we must try to do it from the outer circle of the parliament” Sai Leik, the spokesperson of Shan National League for Democracy (SNLD), said (Eleven Myanmar-19 November 2014.

“If they really love the country and the people, the Constitution should be amended. I suppose that if they amended beyond 2015, they would still grasp the power until 2020,” Nyaing Serk, the chairman of Chin National League for Democracy, said.

News Analysis

The decision to amend the Constitution only after 2015 elections has been well timed after the recent ASEAN Summit and the visit of the US President, so that the international reaction does not affect these events.

The objection of the military to the amendments to the Constitution has been on expected lines.

Thura Shwe Mann had reneged on his earlier commitments to have the amendments carried out at least six months before the 2015 elections. With his military background and strong and close association, could be have gone against the military? It is doubtful.

The NLD led by Aung San Suu Kyi is being pushed to the wall and some hard decisions to be made now. If it boycotts the election it will be to its detriment. If it takes part, will it nominate somebody else for the President as Suu Kyi is barred to contest under the Constitution?

This decision to postpone the amendments is likely to affect the signing of the Nationwide Ceasefire agreement also.

The ethnic factions looking for a federal set up in the political dialogue must also be disappointed with this postponement.

Thus the reform process has also regressed considerably under this situation. Is it back to “Square One”? It is difficult to say, but all the noise and activities whether in the amendment to the constitution or in getting on to a ceasefire or move towards national reconciliation, appear to have been in vain.

The post Myanmar: Disappintment With Elections 2015 And Constitutional Amendments – Analysis appeared first on Eurasia Review.

Establishment Of NDB And AIIB: Shifting Economic Base From West To East – Analysis

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By Hari Bansh Jha

The recently established New Development Bank (NDB) by BRICS member countries and Asian Infrastructure Investment Bank (AIIB) by 21-member Asian countries with their headquarters in China herald a shift in economic power from the West to the East. It is speculated that these two monetary institutions would dwarf the size of West-supported World Bank (WB) and the Asian Development Bank (ADB).

Only time will tell how NDB and AIIB emerge as alternative source of funding in the international financial market. But it has almost become certain that the era of West’s control over the international financial resources has started eroding.

The first jolt to the international financial institutions like the WB and IMF was exhibited when the five BRICS countries, including Brazil, Russia, India, China and South Africa made an agreement for the establishment of the long awaited NDB with its headquarters in Shanghai, China in July 2014. NDB would have capital of $100 billion. Lending from this bank will start in 2016. China would contribute $41 billion in this bank; while India, Russia, Brazil each would pay $18 billion and South Africa would pay $ 5 billion.

Need for the creation of NDB was felt because of the discriminatory attitude of the West towards the developing countries. The BRICS member countries accounting for almost half of the world’s population and about one-fifth of global economic output have only 11 per cent of the votes at international financial institution like the IMF. Both the WB and the IMF are based on weighted voting system, which provide the rich countries a big say in the management. There are informal arrangements whereby the American is always at the top in the WB; while the European is in top position in IMF. In those monetary institutions, the developing countries don’t have enough voting rights.

Expectation is that the NDB with its total capital of $100 billion would meet short term liquidity requirement of the member countries. An effort has been made to avoid China’s dominance on the bank; for which India is made president of the bank for the first six years and after this Brazil and Russia would have turns with five years each.

Commenting on the formation of NDB, Indian Prime Minister Narendra Modi said, “The BRICS Contingent Reserve arrangement gives BRICS nations a new instrument for safeguarding their economic stability. This is an important initiative at a time of high volatility in global financial markets.” Nobel Prize winner Joseph Stiglitz said it is “an idea whose time has come.” Such a bank could play a strong role in rebalancing the world economy. It might also help channel hard earned savings in emerging markets and developing countries in the most productive sectors, rather than funding the amount in housing markets of the rich countries.

It is likely that NDB would take less assertive position with regard to conditions attached to loans than the WB. It would mobilize resources for sustainable infrastructural development projects in BRICS and other emerging economies and developing countries. Resources from this bank would be invested in power sector, ports, roads, telecommunication net works, water and sewerage.

Like the NDB, the establishment of AIIB by the 21 Asian nations, including Nepal, India, China, Pakistan, Sri Lanka and Bangladesh in Beijing on 24th October 25, 2014 will prove another milestone in financing infrastructure projects in the Asian region. China played a key role in establishing this bank after it failed to enhance its voice in multilateral organizations like the WB and the IMF.

AIIB would have registered capital of $100 billion, which far exceeds the capital of $ 67 billion of ADB. It is, therefore, likely that AIIB would somehow affect the image of ADB, the West-backed multilateral lender that finances projects in Asia. Perhaps, this is one of the reasons why the USA and its close allies Japan, South Korea, Indonesia and Australia remained conspicuously absent from AIIB.

With regard to the formation of AIIB, Takehiko Nakao, President of ADB said that AIIB would help meet the gap in demand and supply of funds for investment in the infrastructure sector in the Asian region. Ben Steill, Director of International Economics added, “China wants to be a lender as well as borrower at concessionary rates, as this gives them policy influence over those countries to which it directs funds.”

However, like the paucity of funds with the ADB, the NDB and the AIIB would also suffer from resource crunch as they have too little capital to tackle infrastructure deficits and halt short-term liquidity pressures. ADB has at its disposal only $10 billion to lend for investment in infrastructure sector. But the demand of investment in infrastructure in the emerging markets and developing countries is likely to increase from $0.8-0.9 trillion per year to $1.8-2.3 trillion per year by 2020. The Asian region would need $ 8 trillion by 2020 for investment in infrastructure sector. India alone needs $1 trillion to finance in infrastructure sector. Even a small country like Nepal needs to make an investment to the tune of $18 billion in the infrastructure to qualify for the status of developing country by 2022.

Fears linger that China, number two economy in the world could try to assert greater influence over the NDB and AIIB. China has larger percentage of share in total capital of NDB and 50 per cent share in AIIB; when Japan and USA together have only 25 per cent share in ADB. In such a situation, China might like to expand its political mileage among the member countries, though it does not have de facto veto power in those institutions. Often, China has constructed roads in Africa in exchange for access to commodities without caring for environmental norms. It is, therefore, needed that no one country controls the lending and other operational activities of NDB and AIIB. It is only then that these financial institutions could have some role in improving global financial governance system.

(Jha is Professor of Economics and Executive Director of Centre for Economic and Technical Studies in Nepal)

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NATO Praises Montenegro Military Reforms

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By Drazen Remikovic

The NATO Military Committee, the Alliance’s highest military authority, praised military and institutional reforms in Montenegro, which is hoping to receive an invitation for membership in the western military alliance next year.

General Knud Bartels, the chairman of the NATO Military Committee, praised the reforms that Montenegro has implemented in the defence sector, and expressed gratitude for the participation of Montenegro’s staff in international missions. ‘

‘The co-operation between NATO and Montenegro has been exceptionally good. Montenegro and NATO are already closely engaged concerning maritime security and environmental protection which benefits Montenegro, a Mediterranean country with maritime economic interests and maritime infrastructure,” Bartels said during an October 28th visit to Podgorica.

During the visit, NATO officials observed a demonstration of the capabilities of Montenegro’s military units, as well as an equipment and weapons display at the Milovan Saranovic military base in Danilovgrad. The demonstration allowed the NATO officials to see the progress Montenegro has made in terms of defence reforms.

So far, Montenegro has undertaken reforms that include implementation of the Strategic Defence Review, the reorganisation of the army, the establishment of a department for military intelligence and security operations and participation in international missions and operations.

“Defence reforms were very successful, which is evidenced by the conclusions of the recent NATO summit in Wales, when the Allies voted to open intensified and focused dialogue with Montenegro, which could lead to an invitation for NATO membership at the end of 2015,” Sanela Djozgic, spokeswoman for the defence ministry, told SETimes.

She said Montenegro will continue with defence sector reforms with the aim of achieving the standards for full NATO membership.

“Special emphasis will be placed on further implementation of the Strategic Defence Review, the completion of the reorganisation of the army and the transition from brigadier to battalion level by the end of this year, the modernisation of the army and the establishment of the system of control of airspace,” she noted.

According to experts, the most significant achievements in the field of defence reform is the abandonment of army conscription and the transition to full professional staffing, the army’s adaptation to new missions and tasks, and the army’s constant and effective engagement in supporting civilian structures after natural disasters.

“In the future, special attention will be devoted to better equipping and modernisation,” Aleksandar Dedovic, executive director of the Alfa Centre, a Niksic-based NGO focusing on security issues, told SETimes. “What is certain is that there is no one system or state that is able to make its own decisions on all modern challenges and threats, such as crime, corruption, terrorism and incitement events. Therefore, it is now a top priority to reform the system of collective security with the aim of reducing its costs and develop skills for a common response.”

He added that it is necessary to promote an effective response capability by integrating Montenegro’s capacity regionally and globally.

“This is the essence of the NATO concept of smart defence and the EU concept of pooling and sharing capabilities,” Dedovic added. “As for when Montenegro will get an invitation to join NATO, I expect that the public support will be higher, once the call is quite certain.”

Based on a survey conducted by the Ipsos Agency in March, 46 percent of Montenegro citizens support the country’s accession to NATO.

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Russia’s Position In The Struggle Against ISIS – Analysis

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By Hasan Selim Ozertem

Changing balances in the Middle East were made more visible after ISIS’s invasion of Mosul on June 12, 2014. Coming to take command of 30,000 militants in such a short period of time, ISIS has transformed from a militia into a full-fledged organization that has come to play the lead role in these shifting balances in the region. Consequently, the issues of Syria and Iraq, which had taken a backseat to developments in Ukraine, were rocketed back to the top of the international agenda.

The shock felt after ISIS rapidly gained control over large swathes of territory in Iraq and Syria was to be seen all over the world. Back in January, US President Barack Obama met a question about ISIS with derision: “The analogy we use around here sometimes, and I think is accurate, is if a JV team puts on Lakers uniforms that doesn’t make them Kobe Bryant.” Maybe it was this type of thinking that led to the statement issued by the White House in the end of August acknowledging that it had not yet formulated any kind of strategy against ISIS.

It was only at the end of the summer that the traces of a US-made strategy became evident. Accordingly, NATO members, and later a variety of Arab states, came together to form a broad coalition to fight ISIS. It was within this context that military air operations targeting ISIS in Syria’s north and Iraq were launched. Though airstrikes accelerated, the US and other Western states repeatedly expressed their unwillingness to deploy ground troops to the region. With this backdrop, the idea of training and equipping local actors gained momentum; after the reestablishment of a functioning central government in Iraq, operations in the northwest of the country were increasingly conducted by the Iraqi National Army, the Peshmerga, and Shia militias. When it comes to Syria, the question of which actors are going to be trained and equipped still remains without a clear answer. The Syrian Kurds’ Democratic Union Party (PYD) and moderate opposition forces like the Free Syrian Army are the names that are most often brought up. Nonetheless, when discussing the future of Bashar Assad in this environment, all eyes turn to Russia.

Russia’s changing agenda

Moscow’s approach to the Syrian crisis was apparent from the very outset. Russia firmly indicated its opposition to toppling the Baath party with an operation similar to that seen in Libya while also resisting any and all military options, together with China, in the United Nations Security Council (UNSC). At the same time, by supplying the Assad government with military and financial assistance, Russia soon became just as important as Iran in terms of support granted to the Baath regime in Syria. However, when the 2013 use of chemical weapons in Ghouta, a suburb of Damascus, was verified, thus crossing a redline for the US, Russia’s introduction of a proposal that would remove these chemical weapons from Syria strengthened its position not only in region, but also in the international arena.

Meanwhile, the unsuccessful attempts of Viktor Yanukovych’s government to quell the demonstrations in Kiev’s Independence Square forced Russia to concentrate on this crisis nearer to its borders. After Russia’s annexation of Crimea and the emergence of a profound crisis in Eastern Ukraine, the West’s policies against Russia toughened. Consequently, the topic of Ukraine surpassed Syria and Iraq on Russia’s agenda when the negative effects of disintegrating relations with the West reverberated throughout its economy.

Russia’s doubts about the coalition against ISIS

Despite Russia’s preoccupation with Ukraine, it has still actively participated in the rapidly developing disputes on what kind of action should be taken against ISIS. Here, different views on the future of the Assad regime have collided, and it is in this respect that Russia’s Minister of Foreign Affairs Sergei Lavrov’s statements clearly illustrate Moscow’s approach to the matter at hand.

Lavrov’s answer to a question posed on the coalition formed in Wales during a press conference with Mali’s minister of foreign affairs starkly indicate the points which separate Russia’s stance from that of the West.[1] Lavrov expressed that Russia had been attempting to draw international attention to the threats posed by ISIS and other radical groups for several years. He then went on to stress the differences between Russia and the West’s approach to the crisis, pointing out that while in the eyes of the West terrorism in Syria has been regarded as an offspring of the Baath government’s policies and therefore necessitates the incontrovertible resignation of Bashar Assad, Russia has urged for a political solution to combat these terrorist groups with the Syrian government, albeit to no avail. Consequently, he criticized the Western view that claimed “these terrorist attacks can only be denounced jointly with the demand that Assad step down”. In the same statement, Lavrov asserted that while the Iraqi government had been asked to approve US airstrikes in the areas controlled by ISIS in accordance with the principle of sovereignty beforehand, the failure to ask for the same permission from Syria conflicts with the norms of international law and action taken in the country has been wrongly justified by the Western states’ desire to overthrow the Assad government. He also mentioned his worries that airstrikes could target not only the areas controlled by ISIS militants but also battalions loyal to the government in order to weaken the position of Bashar Assad in Syria. With this speech, Lavrov delivered an important message to the international community in the immediate wake of the NATO Wales summit, expressing how Russia evaluates the process and illuminating the country’s concerns about the possibility that the Assad government could be targeted during operations against ISIS in Syria.

Lavrov expressed similar positions during a press conference with his Venezuelan counterpart, Rafael Ramirez, in Moscow. Here, he stated Russia’s belief that actions to be taken in fighting terrorism should be based on the solid foundations of international law and proceed, above all, with the consent of the legitimate authorities of the states on whose territory such terrorist threats exist. Lavrov also stressed that it was unacceptable to use antiterrorism slogans to mask the true pursuit of regime change.[2]

In the middle of October, Lavrov had a meeting with US Secretary of State John Kerry in Paris, where they discussed not only the incidents in Ukraine, but also issues related to the fight against global terrorism. After the meeting, rumors spread that Russia had given the green light to sharing intelligence with the US, yet these claims have since been refuted by Lavrov. Here he stated that Russia is not a participant of any coalition and that its aim is to increase the capacities of legitimate governments.

Furthermore, on October 20, Lavrov spoke at a meeting of the United Russia Party where he harshly criticized the West for equipping Syrian opposition with arms. He emphasized that by equipping the actors which it depicts as moderate, the West aims to augment these groups’ potential to topple the Assad government, asserting that if any kind of coalition is going to be established, it should be subject to international law and therefore require a resolution granted by the UNSC.

In his speech at the Valdai Forum held on October 24, Vladimir Putin employed a similar tone to that of his foreign minister. In his speech, Putin declared that necessary steps to combat ISIS were not taken. Conversely, he argued, erroneous policies were pursued such as granting financial and arms assistance to the Syrian opposition. After faulting the West and its allies, Putin questioned the reasons for airstrikes altogether.[3]

What is Russia doing?

As mentioned above, for now, Russia’s priority remains the state of affairs in Ukraine and the economic problems connected therewith. However, this does not mean that Russia is totally indifferent to events in Middle East. Moscow still continues to grant political aid to the Assad government, while at the same time taking some steps to increase the capacity of Iraqi security forces in terms of training and technical assistance.

According to the 4 billion dollar agreement signed between Iraq’s Maliki government and Russia in 2012, Iraq is anticipated to purchase equipment from Russia in order to reconstruct its air force, with the provision of attack helicopters, high-tech fighter aircraft, and air defense systems being an especially critical aspect of the deal. However, the sudden growth and rapid territorial expansion of ISIS in June put Iraq in a precarious position, especially considering that the state hosted an air force that was more-or-less nonexistent. With this in mind, Iraq came knocking on Russia’s door to ask for assistance, to which Russia responded by sending 5 pre-used Sukhoi-25 model jets along with technical experts. It should be noted that these jets became well-known for their use in Afghanistan, where they undeniably eased the burden that had been placed on the ground forces stationed there. Subsequently, since 2013, Russia continues to provide Iraq with multipurpose and attack helicopters, such as the Mi-35 and Mi-28 respectively, which are known for their efficiency in counter-terrorism operations.[4]

Referring to the Lebanon-based newspaper Al-Mustakbel, Radio Free Europe published a story in October that Russia and Iran were to establish a joint base of operations in Baghdad to combat ISIS, where Russian experts would instruct the Iraqi army on how to utilize Russian weapons, train pilots, and provide similar services.[5] Additionally, in a statement released on October 23 by the Russian Ministry of Emergency Situations, it was declared that Russia had provided Kurds in Erbil with humanitarian aid including food, blankets, and electricity generators.

Summarizing these points, Russia’s contributions to the fight against ISIS in Iraq should not be underestimated. Though its name is not mentioned as a partner of the coalition, Moscow has supported the Iraqi central government and the Kurds by employing a strategy that focusses on capacity building and humanitarian aid.

Conclusion

Since September, Russia has continually criticized the strategy of the US-led coalition. For Moscow, it has been the West’s decision to supply the Syrian opposition with arms that is especially seen as a double standard, as it foresees that these non-state actors who receive Western support will ultimately become a threat to the Assad government. On the other hand, Russia has also repeatedly emphasized the need to cooperate with Damascus and thereby to act in accordance with international law and avoid the violations of Syria’s sovereignty that come with airstrikes and the struggle against terrorism in the country. Russia’s strategy in Iraq embraces the most vulnerable part of country, therefore ameliorating problems related to the capacity of Iraqi soldiers and the discipline of the army. With the implementation of current contracts related to the training of security forces and the provision of high-tech weaponry, very important steps have been taken by Russia in improving the Iraqi air force since June 2014. Alternately, by sending humanitarian aid to the Kurds in the north of the Iraq, Russia has actively attempted to mitigate the suffering of civilians in the area. In fact, when you look at the policies that Russia has pursued in Iraq, despite being preoccupied with the crisis in Ukraine, the country has gone further than just symbolically showing its presence in the region. In this way, it has also been following a policy that seeks to secure the maintenance of its relations with the government that will come after that of Maliki. In Syria, Russia continues with the policy it has pursued since 2011, characterized by the proclamation that targeting and overthrowing the Assad government would constitute a breach of its redline.

1.For the full transcript of Sergey Lavrov’s press conference with Mali’s Foreign Minister Abdoulaye Diop, see: http://www.mid.ru/brp_4.nsf/0/4CD66CC926B83B4C44257D4E006155F4 .

2.For the full transcript of Sergey Lavrov’s press conference with Venezuelan Foreign Minister Ramirez, see: http://www.mid.ru/bdomp/brp_4.nsf/e78a48070f128a7b43256999005bcbb3/b4716e465be0051044257d6c001cf86a!OpenDocument.

3. For the full transcript of Vladimir Putin’s speech at the Valdai Forum, see: http://eng.news.kremlin.ru/news/23137/print.

4. “Iraq is Buying, Fielding Russian Weapons Again”, Defense Industry Daily, 2 September 2014; http://www.defenseindustrydaily.com/baby-come-back-iraq-is-buying-russian-weapons-again-07571/.

5.Joanna Paraszczuk, “Iranian, Arab Media: ‘Russia-Iran Anti-IS Operations Room’ In Iraq”, RFERL, 23 September 2014; http://www.rferl.org/content/under-black-flag-russia-iran-islamic-state-iraq/26652736.html.

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Catholic Church Marks 500 Years In Myanmar

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By John Zaw and Michael Sainsbury,

Thousands of Catholics arrived in Yangon on Friday for the start of a three-day celebration of the 500th anniversary of the arrival of Catholicism in Myanmar.

Cardinal Oswald Gracias, archbishop of Mumbai, attended the opening ceremony of the celebration at St Mary’s Cathedral in Yangon on behalf of Pope Francis, bearing with him the good tidings and love of the pontiff to the people of Myanmar.

“Today is not just a day of great joy and festivities but one of reflection on what we can do or not do, how much more we can dedicate ourselves to the Gospel, how we can transform society and how we can better serve the people of Myanmar,” Cardinal Gracias said.

In his welcome speech for the Indian cardinal, Archbishop Charles Bo of Yangon celebrated the endurance of the Myanmar Church amid difficult times.

“Poverty and persecution — even death — have met our people, but never did our people flinch from witnessing to their faith,” Archbishop Bo said.

“The faith that was cemented with tears and blood unites us today from every corner of Myanmar.”

Christianity remains a small minority in predominantly Buddhist Myanmar. Catholics number about 750,000 out of a population estimated at just over 50 million, according to a controversial census conducted this year.

The Church has grown significantly in the years since General Ne Win seized control of the country and initiated his disastrous Burmese Way to Socialism, which saw the expulsion of missionaries and the near-complete isolation of the country.

Now, Myanmar is exporting priests and Religious to other countries, Archbishop Bo told ucanews.com in an interview at his residence ahead of Friday’s festivities.

“Since the government announced its program of reform in 2011, many other [Religious] orders have shown up in Myanmar, as it’s such a fertile ground for novices. So there is a lot of competition,” Archbishop Bo said.

He added that Myanmar currently has 300 seminarians preparing for the priesthood, and that the Church has seen considerable growth, particularly in rural areas, in recent years.

“In Myanmar, typical of developing countries, you will get whole villages of 10 to 20 people joining [the Church] all at once. The headman makes a decision to join, and everyone else follows,” he said.

Archbishop Bo added that he hoped Pope Francis would schedule a visit to Myanmar some time next year as part of his focus on Asia. The pontiff visited South Korea in August for World Youth Day and will make Apostolic trips to Sri Lanka and the Philippines in January next year.

The Church’s commemoration comes at a pivotal time in the history of the country, as Myanmar’s quasi-civilian government struggles to follow through with its transition to democratic reform after decades of military rule.

The Church has a significant role to play in that transition, said Father Maurice Nyunt Wai, executive secretary of the Catholic Bishops’ Conference of Myanmar.

“What we need today is to be involved in nation-building, the peace process and national reconciliation. The Church must be a voice for the voiceless, and it must stand for the people of marginalized [communities],” he told ucanews.com on Friday.

A national ceasefire with Myanmar’s armed ethnic groups have been a central part of the government’s reform process, but it has been marred by ongoing violence in many of the country’s ethnic states.

Most recently, the Myanmar military on Wednesday shelled an officer training academy in Kachin state near the Chinese border, killing 23 cadets — just days after a state visit by US President Barack Obama, during which he warned that the country’s progress toward reform was not irreversible.

Bauk Naw, a catechist from Banmaw diocese in Kachin state, said the Church has played a vital role in caring for displaced Kachin communities uprooted by intermittent fighting over the last two years in Myanmar’s northeast.

He was one of about 4,000 Kachin who traveled to Yangon to mark the Church’s 500-year-long history in Myanmar.

The three days of celebration will culminate with an event at a Yangon football stadium on Sunday, attended by Papal Nuncio Adolfo Tito Yllana of the Philippines.

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Ukraine: Poroshenko Heckled, Biden Escapes Angry Protesters In Kiev

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US Vice President Joe Biden backed out from appearing with Ukrainian President Petro Poroshenko at a memorial ceremony in Kiev on Friday, when the US Secret Service determined it “wasn’t a good idea” after a crowd became “unruly,” a pool report said.

“When Biden’s motorcade arrived on outskirts of what had become very large and somewhat unruly gathering, many chanting ‘shame’ at Poroshenko. … [U.S.] [S]ecret [S]ervice decided wasn’t a good idea for Biden to wade in,” according to the pool report.

Cans were thrown at Poroshenko at which point Biden’s motorcade decided to quickly turn around and flee the scene.

Biden, who has been in Ukraine with his wife, Dr. Jill Biden, was in Kiev on Friday morning to participate in a wreath-laying ceremony for people killed in demonstrations earlier this year. However, a crowd that was first around 200 people quickly grew at Poroshenko’s arrival. The pool report said there was “little apparent interference” by Ukrainian security for Poroshenko.

The crowd frustrated by Petro Poroshenko’s failure to stabilize the country in any shape or form asked: “Who is a hero for you, Poroshenko?”, “Who killed the protesters?” and “Down with Poroshenko!” They also attacked him for failing to keep a promise to confer the title of national hero on the victims, which would bring financial benefits to their families.

There has been several public displays of anger against Poroshenko, who was elected in May after Viktor Yanukovich was forced out in a coup.

Biden is in Ukraine as part of a five-day trip that began in Morocco and will end in Turkey. While in Ukraine, Biden is to talk to Ukrainian leaders about their election as they begin to set up a new government.

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IMF’s Analysis Of US Economy: Faulty Assumptions And Bad Policy Advice

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By James M. Roberts

The International Monetary Fund’s (IMF’s) 66-page report on its 2014 consultation with the U.S., pursuant to Article IV of the IMF’s Articles of Agreement, repeats a number of long-standing, orthodox, and desirable policy recommendations that urge the U.S. to confront its many long-term fiscal and monetary challenges. This year’s report also contains an unprecedented number of audacious, highly politicized, and controversial proposals that appear to be an effort by the IMF to support the bulk of the Obama Administration’s statist economic policy agenda.

Overall, the latest IMF report is decidedly hostile to free enterprise. It promotes a heavy-handed, top-down approach to financial regulations, explicit taxpayer backing of financial sectors, and other expansions of the welfare state and big government—from recommending an increase in the U.S. minimum wage and adoption of “more proactive labor market policies” to a broad endorsement of Obamacare, a call for carbon taxes, and a recommended increase in the maximum taxable earnings for Social Security purposes.BG-IMF-US-economy-chart-1-600

A reasonable person studying the heretofore measured and circumspect reports conducted by the IMF about the U.S. economy during the past several decades (and, indeed, numerous contemporary IMF reports about other countries that exhibit similar restraint and sensitivity so as not to appear biased) could come to only one conclusion: The 2014 IMF analysis of the U.S. economy is the most starkly partisan in the long history of Article IV consultations.

Instead of meeting its statutory obligation to deliver difficult but necessary policy advice to a member country in deep financial straits by demanding immediate action by U.S. lawmakers to adopt structural entitlement reforms to control U.S. spending and debt growth, the IMF seems to be willingly following the Obama Administration’s federal budget playbook by urging immediate spending and tax increases—identifying for future action only a few very meek and ineffective suggestions for moderate entitlement tweaks.

Harvard economics professor Greg Mankiw has called the IMF’s faith that some forms of “expansionary” government spending (such as on infrastructure) will spur growth the “free-lunch view.” It might be “theoretically possible,” says Mankiw, but he is skeptical “about how often it will occur in practice.”[1]

In short, adoption of the IMF’s policy recommendations would not solve the problems confronting the U.S. They would, instead, inflict damaging tax increases, create a less stable financial system, introduce a whole host of new policy dilemmas, and put U.S. taxpayers at risk.

In this Backgrounder Heritage Foundation scholars analyze in detail the many areas where IMF economists get it wrong, and make recommendations to help them get back to fulfilling the original mandate of the IMF: to “facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction.”[2] Lacking that, Congress and the Obama Administration should assiduously avoid the IMF’s advice.

IMF Channels Obamanomics on U.S. Minimum Wage

The IMF report urges an increase in the U.S. minimum wage rate, claiming that an increase would raise incomes for millions of the so-called working poor.[3]

Ironically, a minimum-wage hike would have the opposite effect. As Heritage’s James Sherk testified last year, minimum wage laws often “hold back many of the workers its proponents want to help.”[4] Even worse, an Express Employments Professionals survey showed that “a whopping 38 percent of employers said that they would lay off employees if the proposed [minimum wage] hike went into effect.”[5]

Those layoffs would be toughest for young workers. Sherk reports that “the vast majority of minimum-wage workers are second (or third or fourth) earners in their family,” that many of them are between the ages of 16 and 24, and that most of them work part time. These entry-level positions are where they gain experience so they can quickly move up to higher-paying jobs.[6]

The IMF claim that the U.S. minimum wage is low “compared both to U.S. history and international standards”[7] is also wrong. In fact, as Heritage has reported, “Correctly adjusted for inflation, the minimum wage currently stands above its historical average since 1950.”[8]

Perhaps IMF analysts were not aware that more than 500 economists—including three Nobel laureates—have told Congress that President Obama’s proposal to raise the minimum wage would be a job killer.[9] In any case, by embracing major tenets of redistributive Obamanomics, the IMF has left no doubt that it has departed from the orthodox policy advice of fiscal discipline and market-oriented reforms it has heretofore given to countless developing countries.[10]

Congress and the Administration should ignore IMF calls for a higher minimum wage. Instead, they should take immediate steps to increase the productivity of America’s middle-class workers. Under President Obama, tax increases on individuals and businesses have held down wages because they have hindered worker productivity. After taxes, businesses have less money to invest in plants, equipment, and technology—which means that workers cannot be more productive. In addition, the President’s war on fossil fuels—oil, natural gas, and coal—is killing the creation of high-paid energy jobs.

Recommendation: In order to increase the wages of the average U.S. worker, Congress and the Administration should be cutting taxes and dramatically expanding U.S. drilling and mining capacity for hydrocarbons.

IMF Misses the Mark on U.S. Labor-Market Reforms

The IMF report emphasizes “raising productivity growth and labor force participation” as the first of five goals necessary to strengthen America’s economic recovery and improve its long-term outlook. Despite this correct diagnosis, the IMF then proceeds to offer the wrong solutions.

It is true that low labor-force participation is dragging down economic growth. The labor-force participation rate in the U.S. is lower today than it was in 1978, when significantly fewer women participated in the labor force.[11] Fewer people working means not only reduced economic output, but additional stress on the federal budget through reduced tax revenues, and wasted resources through government transfers.

The IMF’s prescription for this problem is to advocate “proactive labor market policies that lower long-term unemployment and raise participation.” While the IMF does not outline specific policies, “proactive” is usually code for more government intervention in the market, which would only translate to higher costs for employers and thus fewer jobs. High costs imposed by government are already impeding job creation.BG-IMF-US-economy-chart-2

 

According to the April 2014 survey by the National Federation of Independent Business, only 8 percent of small and independent businesses say it is a good time to expand facilities. They cite taxes and government red tape as their two biggest concerns.

Unlike the federal government, which effectively has access to an unlimited credit card, private businesses operate under budget constraints. If a business, for example, is required to pay workers 15 percent more, provide mandated benefits, or insure itself against costly litigation, it will have to cut some jobs. By contrast, Washington has become accustomed to passing on higher costs to future generations through a massive accumulation of debt.

Recommendation: There are many ways the U.S. government can help stimulate employment and workplace empowerment without burdening employers with higher costs or adding to the size and scope of the federal government. Some of these solutions are to:

  • Reduce unnecessary and costly regulations;
  • Reward work through lower taxes while minimizing disincentives to work through government transfers;
  • Allow private businesses to make their own employment decisions;
  • Learn from the successes of new, innovative businesses that are flourishing under minimal government regulations as ways to reduce costs for other businesses; and
  • Restore or add work requirements to means-tested federal programs.

Following the Obama Administration’s Playbook on the Federal Budget

If policymakers follow IMF guidance, they run the risk of encouraging inaction by U.S. lawmakers, who must adopt structural entitlement reforms to control U.S. spending and debt growth. That is because the IMF emphasizes relatively minor institutional budget reforms to “lessen fiscal policy uncertainty,” citing “recent experience of debt ceiling brinkmanship and the government shut down,”[12] but withholds mention of any bold and fresh approaches to tackle America’s looming entitlement spending crisis that would truly serve the nation’s long-term interests.

In so doing, the IMF’s meek suggestions seem to follow the Obama Administration’s federal budget playbook by focusing on immediate spending and tax increases—leaving even very modest entitlement tweaks for a future Administration.[13] Despite a doubling of the U.S. public debt in the years since President Obama came into office,[14] the IMF rashly calls for “expand[ing] the near-term budget envelope”—that is, actually increasing spending. To add insult to injury, the IMF report also recommends adding a national value-added sales tax (VAT) and job-killing new carbon taxes on top of the current U.S. tax burden, all of which would end up fueling even higher federal spending.

To its credit, the IMF does include a call for “[f]orging agreement on a credible, medium-term consolidation plan [that] should be a high priority and include steps to lower the growth of health care costs, reform social security, and increase revenues.”[15] In conjunction with the IMF’s suggestion to implement some of President Obama’s immediate spending initiatives, however, such an agreement at this point could be harmful: It would increase spending and taxes today and leave the U.S. on its dangerous fiscal trajectory. Adopting a budget agreement is important, but it cannot be just any budget agreement.

An IMF recommendation for carefully designed mechanisms to trigger revenue or spending adjustments if targets are breached—automatic triggers that kick in when Congress fails—are a key feature of successful fiscal consolidation plans. Such triggers should reduce spending to reduce the deficit and debt.

Unfortunately, in the current policy environment in Washington, automatically triggered tax increases would merely enable greater spending, which is the opposite of spending control. As Heritage economist Salim Furth points out, tax increases to reduce the deficit are much worse than spending cuts for the economy.[16] A spending trigger could operate like sequestration (which the IMF criticized),[17] or it could trigger actual policy reforms, such as increasing the retirement age, adopting a more accurate inflation index to curb entitlement benefit growth, or reducing benefits for upper-income earners.

The IMF also recommends an automatic process that would raise the debt ceiling once agreement is reached on the broad budget parameters. This recommendation appears to be designed to provide political cover for lawmakers who want to authorize additional borrowing.[18] Retaining the requirement that Congress vote to increase the debt ceiling has high public visibility and is an opportunity to hold Congress and the President accountable for failing to control spending and waste, and for authorizing money for pork projects.[19]

In keeping with the American tradition of checks and balances, Congress and the Administration must be publicly required to put the budget on a path toward balance with structural entitlement reforms.[20] They should stand accountable to the American people for any projected future debt increases. As Heritage analyst Romina Boccia wrote earlier this year:

A vote to increase the debt ceiling is a highly public affair and an opportunity to hold Congress and the President accountable for failing to control spending and waste and for authorizing money for pork projects. An actual debt limit forces Congress and the President to confront the debt limit more frequently. The fact that Congress has not increased the debt limit by an amount so large that it would not reach it for years is testament [to the fact] that constituents pay attention to debt limit votes and seek to hold their officials accountable for excessive borrowing.[21]

Another IMF recommendation would shift the budget cycle from an annual review to a two-year period (with the possibility of supplemental budget resolutions during that two-year window under clearly specified conditions). Proponents of the two-year budget cycle argue that it would provide more certainty to agencies about their funding.

Yet Congress already uses multiyear authorizations as a tool, and a two-year cycle is not necessarily the best time frame for multiyear projects. Proponents of the two-year cycle also argue that it would free Congress to conduct important oversight work. This assertion makes the very large and unrealistic assumption that Congress is falling behind in its oversight responsibilities for lack of time. Senator Tom Coburn (R–OK) says, “Ignoring their responsibility to conduct oversight and determine if a given federal program is effective, members of Congress are often beholden to special interest groups and would rather continue funding an old program instead of eliminating it.”[22]

As for the possibility of supplemental resolutions, a two-year cycle makes these very likely due to the estimating challenges for the $4 trillion enterprise known as the federal budget. As former House Budget Committee staffer Patrick Louis Knudsen has warned, more supplemental spending “would risk depleting the budget resolution as a vehicle for defining either public policy or fiscal discipline and would risk institutionalizing the spend-as-you-go practices of recent years.”[23] Finally, given the general breakdown of budgeting in Congress, a two-year cycle is no less likely to suffer from stop-gap measures, and could indeed exacerbate problems in the current process.[24]

As recently as 2011, the IMF warned that the U.S. lacked a “credible strategy” to stabilize its mounting public debt.[25] Little has changed in the U.S. debt outlook since then: The U.S. still lacks a credible action plan to prevent public debt from growing far beyond the size of the U.S economy, or gross domestic product (GDP), before today’s preschoolers go off to college or work.[26] Such a strategy must begin with putting entitlement spending on a more sustainable long-term path, particularly by reforming health care and retirement programs for the elderly.

Recommendation: Instead of parroting Obama Administration policies, the IMF should return to the drawing board to identify budget reforms that will actually curb U.S. spending and reduce its debt.

Increasing the Payroll Tax Cap Will Not Fix U.S. Social Security

Due to the United States’ massive debt and unsustainable long-run deficits, the IMF necessarily recommends some policy reforms aimed at reducing future deficits, including Social Security’s deficits. Some of these recommendations are worthy of immediate implementation, but one would prove detrimental to economic growth.

According to the most recent report by the Social Security Trustees,[27] the Social Security and Disability Insurance programs have a 75-year unfunded liability of $13.4 trillion.[28] This means that when the two trust funds run out of money in 2033 (under current projections), all Social Security benefits would be cut to about 77 percent of their previous or promised levels.[29]BG-IMF-US-economy-chart-3-600The IMF report provides four recommendations to help shore up the Social Security program:[30]

  1. A further gradual increase in the retirement age (potentially with steps that link the future retirement age to average life expectancy or other actuarial indicators of the solvency of the system);
  2. An indexation of benefit programs and tax provisions to the chained consumer price index (C-CPI) (rather than the standard CPI);
  3. A modified benefit structure to increase progressivity; and
  4. An increase in the maximum taxable earnings for Social Security purposes.

Before evaluating these recommendations, it is important to consider the ultimate goals of reforming Social Security. The first goal is to return Social Security to its original intent of providing real insurance to prevent outliving one’s savings, as well as to supplement the income of elderly individuals who are no longer able to work. The second goal is to create a financing structure that ensures Social Security’s long-run financial security. Moving toward these two goals will increase the likelihood that the program remains viable for future generations of Americans.BG-IMF-US-economy-chart-4-600

Based on these goals of reform, the IMF’s first two recommendations should be implemented immediately, as they are both logical and straightforward to implement. The third recommendation deserves additional consideration, but the fourth should be dismissed outright because of the distortions it would create in the U.S. labor market and the drag it would create on economic growth.

The first recommendation in the IMF report makes sense given the fact that life expectancy in the U.S. has increased by 20 years since the first Social Security check was written in 1940.[31] Furthermore, the American economy has been transformed from an industrial to an information-based economy that has reduced the physical demands of most U.S. jobs. Consequently, Social Security has shifted from a program aimed at relatively short-term support for elderly individuals who are generally unable to work, to a program that provides potentially decades-long income support and that encourages individuals to stop working earlier than they otherwise might. Indexing the retirement age to life expectancy would better meet the program’s intended goal of supporting elderly individuals who are no longer able to work and who may have outlived their savings. Moreover, indexing the retirement age to reflect more realistic life expectancy would move the program toward long-run solvency and limit the need for future reforms.BG-IMF-US-economy-chart-5-600

The second IMF recommendation, to replace the current inflation adjustment with the more accurate chained consumer price index (C-CPI), is another commonsense and achievable reform. The C-CPI is a more accurate measure of inflation than the standard CPI. According to the Congressional Budget Office, the C-CPI “provides a more accurate estimate of changes in the cost of living from one month to the next.”[32] Social Security’s current inflation-adjustment measure reflects prices paid by less than one-third of the population and it does not take into account the fact that people’s purchasing patterns respond to changes in prices.[33]

Implementing the chained CPI would maintain individuals’ purchasing power and would eliminate the existing policy of providing excess benefit increases. Moreover, high-income Social Security recipients benefit the most from the current inflation measure.[34] Over a 10-year period, for example, a high-income retiree receives $7,623 in excess benefit increases compared to only $3,549 for a median-wage earner and $2,813 for a minimum-wage earner.[35] Indexing tax provisions using chained CPI is separate from Social Security’s cost-of-living index, and should only be considered as part of broader tax reforms.

The IMF’s third recommendation to reform Social Security, which calls for a more progressive benefit structure, deserves consideration. As an income insurance program originally set up to help reduce poverty among the elderly, it makes little sense that Social Security provides the largest benefits to individuals with the greatest earnings while failing to provide even poverty-level benefits to the lowest earners.[36]

Rather than tinker with the benefit structure in a way that would still result in the highest earners receiving the highest benefits, Social Security could better achieve its goal of insurance against poverty in old age through a flat benefit at least equal to the poverty level. A flat benefit for all eligible Americans would have the added advantage of reducing overall revenue requirements, which would help confront the program’s unfunded liabilities and eventually allow a reduction in payroll taxes.

The IMF’s final recommendation calling for an increase in the payroll tax cap should be dismissed outright. Raising the payroll tax cap would result in exorbitant marginal income tax rates: The top combined federal and state income tax rate in California, for example, would amount to an astronomical 70 percent. Also, while raising the payroll tax cap would increase payroll tax revenues, it would reduce other federal, state, and local income tax revenues. Employers would respond to higher payroll taxes by reducing wages; as a result, other federal, state, and local income tax revenues would decline.[37] Additionally, both employers and employees would respond to higher taxes by shifting incomes to non-taxable benefits, reducing hours of work, and making other behavioral changes that would significantly reduce economic growth as well as total federal, state, and local tax revenues. Depending on the magnitude of these economic responses, raising the payroll tax cap would generate no more than 80 percent of statically projected revenue gains, and could in fact generate no net revenue increase at all.[38]

Although the IMF report does not provide specific recommendations related to the Disability Insurance (DI) component of Social Security, it does cite the DI Trust Fund’s impending insolvency in 2016. The DI program provides a vital safety net to millions of truly disabled Americans. To protect benefits for those who truly need them while also protecting the hard-earned tax dollars of working Americans, policymakers should carefully examine the DI program’s eligibility criteria and pathways to recovery. This could include fostering accommodations to keep workers with less severe disabilities employed, encouraging beneficiaries to return to work as they are able, and implementing reforms to the judicial process and continuing disability reviews to preserve the integrity of the DI program.[39]

Social Security is a significant contributor to the United States’ abysmal and unsustainable long-term fiscal outlook. The IMF report offers some commonsense reforms that could make a sizeable reduction in Social Security’s projected deficits, but additional reforms to the structure of the program, such as shifting to a flat-benefit payment, would improve the program’s finances for long-run sustainability, and target benefits more appropriately.

Recommendation: U.S. policymakers should ignore the IMF’s counterproductive recommendation to raise the payroll tax cap. An increase in the payroll tax cap would hamper economic growth in the U.S. and create a further drag on the sluggish U.S. labor-market recovery.

Other IMF-Recommended Tax Increases: Much Damage to U.S. Economy

The IMF report contains several other suggestions purported to provide ways for the U.S. to strengthen its economic recovery and improve the U.S. economy’s long-term outlook. In fact, in many cases, these recommendations would have the opposite effect. U.S. policymakers would do well to ignore almost all of them, too.

One of the IMF’s themes in the 2014 report is “keeping public debt on a sustained downward path.” There is certainly broad agreement that the U.S. must reduce the size of future deficits soon. The disagreement lies in how to achieve it.

The IMF would have the U.S. reduce its deficits by massively increasing the burden it inflicts on American taxpayers. It wants Congress to raise taxes by:

  • Instituting a VAT;[40]
  • Repealing or scaling back the mortgage-interest deduction;[41]
  • Significantly raising the gas tax; and
  • Raising income taxes through greater real bracket creep with the chained CPI.

IMF-proposed tax increases could take additional trillions from Americans each year. All that extra revenue flowing to Washington would greatly increase the size of the government and shrink the private sector. It would stifle economic growth, which would contradict the IMF’s stated goal of helping those in need. The IMF proposes that Congress reduce taxes by a comparatively trifling amount by increasing the Earned Income Tax Credit and offering an ineffective hiring tax credit.

A VAT alone could increase Americans’ tax burden by trillions each year. Most developed countries have VATs. The U.S. is the rare exception. The lack of a VAT is one of the ways the U.S. has been able to keep its tax burden relatively low. Businesses remit the VAT to the government at each stage of the production process, and customers ultimately bear the entire burden of the tax. To consumers it might seem like a retail sales tax. It can raise huge amounts of revenue from taxpayers inconspicuously, however, because unlike the sales taxes most U.S. states levy, the VAT does not have to be printed on receipts. It can be imbedded in the price of products. That is why lawmakers in countries with expensive and big governments favor it. Adding a VAT on top of all the other taxes Americans already pay would allow Washington to expand greatly—and quietly. This is a major reason it should be avoided.

Repealing, or scaling back, the mortgage-interest deduction is another bad IMF proposal. Under an income tax such as the U.S. has, if interest income is taxable to lenders, it should be deductible to borrowers. A deduction is not necessary if interest income is untaxed. Either method prevents taxes from artificially influencing investment decisions. If the U.S. followed the IMF’s suggestion, it would allow the tax code to be a negative influence on investment in housing. Contrary to popular opinion, because mortgage lenders pay tax on their interest income, the mortgage-interest deduction keeps taxes from negatively influencing the decisions of families to buy homes. Properly understood, it is not a subsidy. The only way Congress should lessen the mortgage-interest deduction, or any interest deduction, is if it simultaneously eliminates tax on interest income, although this type of reform is not what the IMF has in mind. The IMF desires a tax increase, the negative consequence of which it apparently does not consider.

A higher gasoline tax would be similarly detrimental. The gas tax is intended as a user fee to fund roads, bridges, and other surface transportation infrastructure. However, at least a quarter of gas tax revenue funds other projects, such as bike paths, mass transit, and interpretative (explanatory) signage in places such as national parks. A significant portion of a higher gasoline tax receipts, therefore, would go to these projects instead of those that Congress intended to fund through the legislation. Congress should refuse to consider changing the gas tax until the federal government reverts to a system that fully appropriates those revenues only for the purposes for which they were originally intended.

The chained CPI presents a more accurate measure of inflation. Nevertheless, indexing current marginal tax rate brackets to the chained CPI would be another significant and inappropriate tax increase. Tax brackets that determine the marginal tax rates that Americans pay are adjusted upward each year so taxpayers only pay taxes when they have real, post-inflation income increases. Switching to the chained CPI for income tax purposes would raise taxes because brackets would rise less each year, thus subjecting more income to higher rates. While it would make sense to switch to chained CPI in tax reform where such a change could be offset by other policy changes so it does not raise tax revenue overall, doing it outside of such a process would be nothing more than another revenue grab.

The IMF makes two worthwhile suggestions that Congress should heed: (1) It wants Congress to make the research and development (R&D) credit permanent, and (2) reform the badly outdated corporate income tax system.

Updating the corporate tax system for the 21st century is vital for restoring economic growth. At 35 percent, the U.S. has the highest corporate tax rate in the developed world as defined by members of the Organization for Economic Cooperation and Development (OECD), and is one of only a few in that group that taxes the foreign income of its businesses. The antiquated system is the reason for the recent wave of corporate “inversions”—the practice of U.S. businesses merging with a foreign entity and moving the new business headquarters outside the U.S. Other developed nations have lowered their rates and stopped taxing foreign profits by moving to territorial systems in recent years. The U.S. fell significantly behind by standing still.

To update the system, Congress needs to lower the corporate tax rate to no more than the 25 percent that is the OECD average (and preferably lower, because individual U.S. state corporate income taxes increase the overall rate). Also, the U.S. should switch to a territorial system that would no longer tax the income that U.S. businesses earn abroad.[42]

If the U.S. implemented the IMF’s recommendations, the American economy would come to resemble (even more than it already does) the economies of many European nations. These countries have substantially higher taxes, much larger governments, commensurately smaller economies, and fewer economic opportunities in general. Perhaps this is not surprising since many of the economists at the IMF are, in fact, proponents of the European welfare state model.

Recommendation: U.S. policymakers should consider the source of this policy advice, and ignore most of it. (The two exceptions are the recommendations to update the corporate tax system and to make the R&D credit permanent.)

Obama, Wall Street, and the IMF: All Wrong on Carbon Taxes

Another IMF recommendation is that the United States “should introduce a broad-based carbon tax.”[43] In so doing, the IMF thus echoes the Obama Administration, which has been calling for carbon-cutting policies ever since taking office.[44] Establishing such a tax on carbon emissions would increase unemployment and fail to raise additional revenue for the government.[45]

The IMF report is similar to another study—by former Treasury Secretary Hank Paulson and former New York City Mayor Michael Bloomberg titled “The Economic Risks of Climate Change in the United States.” Paulson and Bloomberg also advocate the imposition of U.S. carbon taxes.[46]

The IMF position also echoes previous policies promoted by IMF managing director Christine Lagarde—a long-time advocate of carbon taxes—as well as IMF staff in previous consultations. As French finance minister, Lagarde was on a 21-member United Nations panel that produced a 2010 report calling for the mobilization of “$100 billion a year by 2020 to help poor countries adapt to climate change and reduce emissions of carbon dioxide trapping the sun’s heat.”[47] In 2004, the IMF staff advocated higher energy taxes in the U.S. and pushed specifically for carbon taxes after the Obama Administration took office in 2009.[48]

The IMF case for carbon taxes is misguided. As The Heritage Foundation’s Nick Loris explains, a “carbon tax would be an enormously high, regressive energy tax that would needlessly destroy jobs and economic growth.”[49] To make matters worse, the tax would not make a dent in reducing global greenhouse gas emissions and therefore would have no noticeable impact on global temperatures.[50] In addition, carbon taxes are regressive and fall most heavily on the poor.[51]

Recommendation: The U.S. should reject the carbon tax. Instead of listening to the IMF, U.S. policymakers should follow the lead of Australia which, led by a new conservative government, repealed Australia’s distortionary and job-killing carbon taxes this year and lifted price controls on electricity to encourage market-based production of power.[52]

IMF Solution to Safer Financial System: More Risk for U.S. Taxpayers

In sections of the Article IV consultation report dedicated to areas such as housing finance and banking regulation, the IMF’s proposals have a common theme—more government intervention and greater risks for the American taxpayer, instead of an emphasis on market-based solutions.

IMF Report Gets Housing Finance Wrong. The IMF report highlights the importance of achieving a safer financial system. Its policy recommendations would, however, achieve just the opposite, while putting U.S. taxpayers at risk.[53] For example, the report recommends that the U.S. create a housing finance system that includes the following:[54]

  • A substantial first-loss risk borne by private capital (rather than taxpayers);
  • An explicit public backstop that is limited to catastrophic credit losses with risk-based guarantee fees; and
  • A role for regulatory agencies in setting underwriting standards.

These supposed reforms appear to be taken directly from the housing finance bills that recently stalled in the U.S. Senate. The main problem with these ideas is that they would leave the U.S. housing market in nearly the same state it was in before the 2008 financial crisis.[55]

One of the only real differences from these proposals and the pre-crisis U.S. housing finance market is that these plans would convert implied government backing into explicit government backing—hardly a win for U.S. taxpayers.

Under these proposals, new companies would replace the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which were bailed out by U.S. taxpayers in 2008. These new companies, just like Fannie and Freddie, would be bailed out in the event of a catastrophic failure. The difference is that this bailout would be made explicit ahead of time instead of simply implied, as it was prior to 2008.

Supporters of the proposed Senate bills claimed that the legislation would require more private capital (from the new firms) than the GSEs had. This argument ignores the fact that the GSEs started out with strong capital requirements. Congress has never been able to maintain adequate private capital requirements at these institutions, so there is simply no reason to expect a different result this time.

The IMF’s recommendation is even stranger given its preoccupation with financial stability. The U.S. housing system, with a more extensive system of government guarantees in the housing market than nearly all other developed nations, suffered a more severe downturn than most countries. For instance, U.S. volatility of home prices and home construction from 1998 to 2009 was among the highest in the industrialized world.[56] Furthermore, mortgage default rates in Western Europe and Canada were much lower than in the U.S., even amid rapidly falling home prices during the 2008 crisis.[57]

Recommendation: Notwithstanding all of the predictable negative outcomes outlined above, the IMF has decided to promote policies that would propagate the less-stable U.S. system. They should not be followed.

IMF Report Gets Financial Stability Wrong. The IMF report promotes the idea of regulatory harmonization and urges U.S. leadership in this regard. The report states that the “U.S. should also continue to play a lead role in advancing the global regulatory reform agenda, ensuring common practices across countries, and limiting the opportunities for regulatory arbitrage.”[58]

While the idea of regulatory harmonization across countries sounds plausible on the surface, in fact it would encourage or require all banks and financial firms to act in lockstep, taking the same risks, opting for the same investments, and catering to the same investors. This, of course, is the classic recipe for bubbles, which in turn are the classic cause of financial crashes.

Thus, promoting a single regulatory framework for all of the world’s financial firms could actually result in more instability—the opposite of what the IMF purports to want. For instance, the Basel requirements (first implemented in the 1980s) encouraged firms to hold the same types of assets. A main cause of the recent crisis was that so many firms purchased mortgage-backed securities issued by Fannie Mae and Freddie Mac to lower their capital costs specifically because the Basel system assigned these assets low-risk weights.[59] As a result, the entire financial system was susceptible to any problems with just that one class of assets. Adopting one common framework going forward, then, would lead to more fragile financial markets.

Recommendation: U.S. policymakers should give agencies such as the Federal Reserve less regulatory authority, not more, and give no credence to the IMF’s suggestions of standardizing the risks that all financial firms can take.

IMF Report Gets Capitalism Wrong. Even more broadly, the IMF ideas in these sections of the report reinforce the impression that the IMF favors a heavily regulated, European-style economy instead of a vibrant private capital market. The IMF report echoes and repeats several anti-market myths—as well as the so-called solutions to these supposed problems—currently being propagated by the Financial Stability Oversight Council (FSOC) that the Dodd–Frank financial-regulation law created in 2010. The FSOC is the committee of regulators responsible for identifying so-called systemically important financial institutions (SIFIs).[60] The IMF report states:BGIMFUSeconomytable1600

In particular, a tail risk where there was a precipitous attempt by investors to exit certain markets—perhaps exacerbated by outflows from ETFs [exchange-traded funds] and mutual funds as well as near-term market illiquidity—could trigger an abrupt and self-reinforcing re-pricing of a range of financial assets.[61]

This passage amounts to an endorsement of the FSOC’s report on asset-management firms that suggests asset managers should be highly regulated because they allegedly cause systemic risk.[62] Asset managers make purchases only on behalf of their customers, so they collectively owe them nothing in the event of a market crash. Customers accept the risk, and asset managers merely transfer funds—their activity does not add to systemic risk.

Nevertheless, the FSOC is currently setting the stage to pre-identify large asset managers as SIFIs. This process would itself create systemic risk because it would announce to the market that the government will not let these firms fail. Since the FSOC’s authority is so broad and the SIFI designation process is so ill defined, all financial firms will face constant uncertainty over which sort of regulations will be handed down next. The proposed SIFI process biases the financial system in favor of riskier behavior because it minimizes the chances that creditors will lose money.

Recommendation: Overall, the FSOC leads a massive top-down regulatory approach that can ultimately dictate to companies which financial activities are acceptable. This approach is wholly incompatible with a private market, and the U.S. should reject it.

Conclusion

Every year, the long-term economic survival of the United States is more imperiled by the continuing failure of U.S. policymakers to deal with the crisis of growing entitlement spending (such as on Medicaid, Medicare, and Social Security). Right now that spending is locked on autopilot to an unsustainable future. IMF analysts understand these risks well enough but they, also, have failed to deal with them. Instead of fulfilling the IMF’s mandate to put forward politically difficult but sensible budgetary proposals and other fiscal and monetary solutions that would reduce the role of the government in the economy, IMF analysts have joined the chorus of what Ronald Reagan used to call the Washington “tax-and-spend” crowd. In so doing, Professor Mankiw’s “free-lunch thinkers” at the IMF have become part of the problem.

About the authors:
BG2976Contributors600

Source: This article was published by The Heritage Foundation.

References:

[1] “The IMF on Infrastructure,” October 1, 2014, Greg Mankiw’s Blog, http://gregmankiw.blogspot.com/2014/10/the-imf-on-infrastructure.html (accessed October 24, 2014).

[2] News release, “2014 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission,” International Monetary Fund, July 2014, http://www.imf.org/external/np/ms/2014/061614.htm (accessed October 21, 2014).

[3] Katie Little, “IMF Calls On the U.S. to Hike its Minimum Wage Rate,” CNBC, June 16, 2014, http://www.cnbc.com/id/10176204 (accessed July 29, 2014).

[4] James Sherk, “What Is Minimum Wage: Its History and Effects on the Economy,” testimony before the Health, Education, Labor, and Pensions Committee, U.S. Senate, June 25, 2013, http://www.heritage.org/research/testimony/2013/06/what-is-minimum-wage-its-history-and-effects-on-the-economy.

[5] Katrina Trinko, “How Many Layoffs Would a Higher Minimum Wage Lead To?” The Daily Signal, March 20, 2014, http://dailysignal.com/2014/03/20/many-layoffs-higher-minimum-wage-lead/.

[6] James Sherk, “What the Times Doesn’t Say About the Minimum Wage,” Heritage Foundation Commentary, February 19, 2014, http://www.heritage.org/research/commentary/2014/2/what-the-times-doesnt-say-about-the-minimum-wage.

[7] News release, “2014 Article IV Consultation with the United States of America, Concluding Statement of the IMF Mission,” para. 3.

[8] The Heritage Foundation, “Facts About the Minimum Wage,” Heritage Foundation Factsheet No. 136, January 30, 2014, http://www.heritage.org/research/factsheets/2014/01/facts-about-the-minimum-wage.

[9] Patrick Tyrrell, “More Than 500 Economists Agree with the CBO: $10.10 Minimum Wage Would Kill Jobs,” The Daily Signal, March 17, 2014, http://dailysignal.com/2014/03/17/500-economists-agree-cbo-10-10-minimum-wage-kill-jobs/.

[10] Salim Furth, “Stimulus or Austerity? Fiscal Policy in the Great Recession and European Debt Crisis,” Heritage Foundation Backgrounder No. 2920, June 9, 2014, http://www.heritage.org/research/reports/2014/06/stimulus-or-austerity-fiscal-policy-in-the-great-recession-and-european-debt-crisis.

[11] Rachel Greszler, “IMF Advice Misses the Mark on U.S. Labor Market,” The Daily Signal, July 11, 2014, http://dailysignal.com/2014/07/11/imf-advice-misses-mark-u-s-labor-market/.

[12] News release, “2014 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission.”

[13] The Heritage Foundation, “President Obama’s 2015 Budget: How Government Expansion Will Limit Opportunity, Slow Economic Growth, and Erode Financial and National Security,” Heritage Foundation Backgrounder No. 2903, April 14, 2014, http://www.heritage.org/research/reports/2014/04/president-obamas-2015-budget-how-government-expansion-will-limit-opportunity-slow-economic-growth-and-erode-financial-and-national-security.

[14] Romina Boccia, “The Sure Path to American Decline,” The National Interest, November 6, 2013, http://nationalinterest.org/commentary/the-sure-path-american-decline-9365 (accessed June 27, 2014).

[15] International Monetary Fund, “United States,” IMF Country Report No.14/221, July 2014, http://www.imf.org/external/pubs/ft/scr/2014/cr14221.pdf (accessed September 19, 2014).

[16] Salim Furth, “America’s Austerity: It’s the Tax Increases,” Heritage Foundation Issue Brief No. 4086, November 14, 2013, http://www.heritage.org/research/reports/2013/11/america-s-austerity-tax-increases-and-deficit-reduction.

[17] Christopher Rugaber, “IMF to US: Economy Sounder, But Ditch the Sequester,” The Christian Science Monitor, June 15, 2013, http://www.csmonitor.com/Business/Latest-News-Wires/2013/0615/IMF-to-US-Economy-sounder-but-ditch-the-sequester (accessed June 27, 2014).

[18] Romina Boccia, “Blank Check: What It Means to Suspend the Debt Limit,” Heritage Foundation Issue Brief No. 4149, February 14, 2014, http://www.heritage.org/research/reports/2014/02/blank-check-what-it-means-to-suspend-the-debt-limit.

[19] Romina Boccia, “How Congress Can Improve Government Programs and Save Taxpayer Dollars,” Heritage Foundation Backgrounder No. 2915, June 10, 2014, http://www.heritage.org/research/reports/2014/06/how-congress-can-improve-government-programs-and-save-taxpayer-dollars.

[20] Stuart M. Butler, Alison Acosta Fraser, and William W. Beach, “Saving the American Dream, The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” The Heritage Foundation, May 2011, http://savingthedream.org/about-the-plan/plan-details/SavAmerDream.pdf.

[21] Boccia, “Blank Check.”

[22] Boccia, “How Congress Can Improve Government Programs and Save Taxpayer Dollars.”

[23] Patrick Louis Knudsen, “An Analysis of Selected Budget Process Reforms,” Heritage Foundation Discussion Paper No. 16, April 11, 2014, http://www.heritage.org/research/reports/2014/04/an-analysis-of-selected-budget-process-reforms.

[24] Romina Boccia and Michael Sargent, “The Federal Budget in 2013: Dysfunction Revisited,” Heritage Foundation Issue Brief No. 4189, April 1, 2014, http://www.heritage.org/research/reports/2014/04/the-federal-budget-in-2013-dysfunction-revisited.

[25] Romina Boccia, “How the United States’ High Debt Will Weaken the Economy and Hurt Americans,” Heritage Foundation Backgrounder No. 2768, February 12, 2013, http://www.heritage.org/research/reports/2013/02/how-the-united-states-high-debt-will-weaken-the-economy-and-hurt-americans.

[26] The Heritage Foundation, “Publicly Held Debt Set to Skyrocket,” Federal Budget in Pictures, 2014, http://www.heritage.org/federalbudget/national-debt-skyrocket.

[27] Social Security Administration, The 2014 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, July 28, 2014, http://www.socialsecurity.gov/OACT/TR/2014/index.html (accessed October 8, 2014).

[28] Rachel Greszler and Romina Boccia, “Social Security Trustees Report: Unfunded Liability Increased $1.1 Trillion and Projected Insolvency in 2033,” Heritage Foundation Backgrounder No. 2936, August 4, 2014, http://www.heritage.org/research/reports/2014/08/social-security-trustees-report-unfunded-liability-increased-11-trillion-and-projected-insolvency-in-2033.

[29] Ibid.

[30] News release, “2014 Article IV Consultation with the United States of America.”

[31] Greszler and Boccia, “Social Security Trustees Report: Unfunded Liability Increased $1.1 Trillion and Projected Insolvency in 2033.”

[32] Rob McClelland, “Differences Between the Traditional CPI and the Chained CPI,” Congressional Budget Office Nonpartisan Analysis for the U.S. Congress, April 19, 2013, http://www.cbo.gov/publication/44088 (accessed October 8, 2014).

[33] Rachel Greszler and Romina Boccia, “Social Security Benefits and the Impact of the Chained CPI,” Heritage Foundation Commentary, May 21, 2013, http://www.heritage.org/research/reports/2013/05/social-security-benefits-and-the-impact-of-the-chained-cpi#_ftn6.

[34] Ibid.

[35] Ibid.

[36] Greszler and Boccia, “Social Security Trustees Report: Unfunded Liability Increased $1.1 Trillion and Projected Insolvency in 2033.”

[37] Rachel Greszler, “Raising the Social Security Payroll Tax Cap: Solving Nothing, Harming Much,” Heritage Foundation Backgrounder No. 2923, August 1, 2014, http://www.heritage.org/research/reports/2014/08/raising-the-social-security-payroll-tax-cap-solving-nothing-harming-much.

[38] Ibid.

[39] Rachel Greszler, “Payroll-Tax Reallocation Would Rob Social Security and Prevent Necessary Disability Insurance Reforms,” Heritage Foundation Backgrounder No. 2940, August 14, 2014, http://www.heritage.org/research/reports/2014/08/payroll-tax-reallocation-would-rob-social-security-and-prevent-necessary-disability-insurance-reforms.

[40] Curtis S. Dubay, “The Value-Added Tax Is Wrong for the United States,” Heritage Foundation Backgrounder No. 2503, December 21, 2010, http://www.heritage.org/research/reports/2010/12/the-value-added-tax-is-wrong-for-the-united-states.

[41] Curtis S. Dubay, “The Proper Tax Treatment of Interest,” Heritage Foundation Backgrounder No. 2868, February 19, 2014, http://www.heritage.org/research/reports/2014/02/the-proper-tax-treatment-of-interest.

[42] Curtis S. Dubay, “A Territorial Tax System Would Create Jobs and Raise Wages for U.S. Workers,” Heritage Foundation Backgrounder No. 2843, September 12, 2013, http://www.heritage.org/research/reports/2013/09/a-territorial-tax-system-would-create-jobs-and-raise-wages-for-us-workers.

[43] News release, “2014 Article IV Consultation with the United States of America, Concluding Statement of the IMF Mission,” para. 11.

[44] Coral Davenport, “President Said to Be Planning to Use Executive Authority on Carbon Rule,” The New York Times, May 28, 2014, http://www.nytimes.com/2014/05/29/us/politics/obama-to-offer-rules-to-sharply-curb-power-plants-carbon-emissions.html?_r=1 (accessed July 29, 2014).

[45] David W. Kreutzer and Nicolas D. Loris, “Carbon Tax Would Raise Unemployment, Not Swap Revenue,” Heritage Foundation Issue Brief No. 3819, January 14, 2013, URLhttp://www.heritage.org/research/reports/2013/01/carbon-tax-would-raise-unemployment-not-revenue.

[46] Kate Gordon, “The Economic Risks of Climate Change in the United States: Executive Summary,” Risky Business, June 2014, http://riskybusiness.org/report/overview/executive-summary (accessed July 29, 2014).

[47] Arthur Max, “UN Panel: New Taxes Needed for a Climate Fund,” Bloomberg Businessweek, August 5, 2010, http://www.businessweek.com/ap/financialnews/D9HDEAI00.htm (accessed July 29, 2014).

[48] News release, “United States: 2004 Article IV Consultation—Staff Report; Staff Supplement; and Public Information Notice on the Executive Board Discussion,” July 2004, http://www.imf.org/external/pubs/ft/scr/2004/cr04230.pdf (accessed July 29, 2014).

[49] Nicolas Loris, “A Carbon Tax Is a Terrible Idea: Here’s Why,” The Daily Signal, June 24, 2014, http://dailysignal.com/2014/06/24/carbon-tax-terrible-idea-heres/.

[50] Kreutzer and Loris, “Carbon Tax Would Raise Unemployment, Not Swap Revenue.”

[51] Derrick Morgan, “Conservatives for a Carbon Tax?” Heritage Foundation Commentary, June 7, 2013, http://www.heritage.org/research/commentary/2013/6/conservatives-for-a-carbon-tax.

[52] Rob Taylor and Rhiannon Hoyle, “Australia Becomes First Developed Nation to Repeal Carbon Tax,” The Wall Street Journal, July 17, 2014, http://online.wsj.com/articles/australia-repeals-carbon-tax-1405560964 (accessed September 19, 2014).

[53] Norbert J. Michel, “IMF Wants U.S. Taxpayers to Shoulder More Risk,” Heritage Foundation Issue Brief No. 4254, July 24, 2014, http://www.heritage.org/research/reports/2014/07/imf-wants-us-taxpayers-to-shoulder-more-risk.

[54] News release, “2014 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission.”

[55] John L. Ligon and Norbert J. Michel, “Fannie and Freddie 2.0: The Senate Does Not Get the Government Out of the Market,” Heritage Foundation Issue Brief No. 4201, April 18, 2014, http://www.heritage.org/research/reports/2014/04/fannie-and-freddie-20-the-senate-does-not-get-the-government-out-of-the-market.

[56] John L. Ligon and Norbert J. Michel, “Why Is Federal Housing Policy Fixated on 30-Year Fixed-Rate Mortgages?” Heritage Foundation Backgrounder No. 2917, June 18, 2014, http://www.heritage.org/research/reports/2014/06/why-is-federal-housing-policy-fixated-on-30-year-fixed-rate-mortgages.

[57] Ibid.

[58] News release, “2014 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission.”

[59] John L. Ligon and Norbert J. Michel, “Basel III Capital Standards Do Not Reduce the Too-Big-to-Fail Problem,” Heritage Foundation Backgrounder No. 2905, April 23, 2014, http://www.heritage.org/research/reports/2014/04/basel-iii-capital-standards-do-not-reduce-the-too-big-to-fail-problem?ac=1.

[60] Norbert J. Michel, “The Financial Stability Oversight Council: Helping to Enshrine ‘Too Big to Fail,’” Heritage Foundation Backgrounder No. 2900, April 1, 2014, http://www.heritage.org/research/reports/2014/04/the-financial-stability-oversight-council-helping-to-enshrine-too-big-to-fail.

[61] News release, “2014 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission.”

[62] U.S. Department of the Treasury, Office of Financial Research, “Asset Management and Financial Stability,” September 2013, http://www.treasury.gov/initiatives/ofr/research/Pages/AssetManagementFinancialStability.aspx (accessed July 23, 2014).

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Managing Indo-Pacific Crises – Analysis

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By Koh Swee Lean Collin and Darshana M. Baruah

Tensions in Asia are rising over unresolved territorial disputes and sovereignty issues. In contrast to the immediate post-Cold War period, recent tensions are characterised by the evident proclivity of some, if not all, parties towards the threat or use of limited force. As a much preferred tool of statecraft, maritime platforms tend to be the archetypical instrument for this sort of diplomacy.

The spike in maritime encounters in recent years has largely involved coastguard-type forces in disputed waters of the East and South China Seas. More recently, though, regular naval ships have begun to appear on the scene. Not only do heavily armed warships cast an ominous shadow over the coastguard vessels operating on the frontlines, at times they become involved, for instance by directing fire control radar at opposing military assets in the vicinity. Moreover, these numerous encounters between rival maritime patrols in the regional flashpoints are now being augmented by aerial encounters involving highly capable fighter jets and sophisticated surveillance assets.

Escalation

The risk of collision, especially in the constrained littorals that characterize the region, has risen as a result of these encounters. The risk is arguably higher in the air – one need only recall what happened to the Chinese J-8 interceptor that crashed after colliding with a U.S. Navy EP-3E reconnaissance aircraft off Hainan Island in April 2001. Dangerous close-proximity aerial and surface maneuvers aside, operational miscalculations prompted by misperceptions of the other party’s intent, fed by endogenous factors such as psychological stress at moments of high tension, may result in an inadvertent resort to force.

The risk rises further still if modern combat systems, characterized by long-range, short response time, high precision, and heavier destructive power are involved. As the stakes in a potential confrontation can be extremely high (involving, for instance, the loss of an entire platform and many of its crew) local commanders may feel compelled to escalate. And should over-zealous local commanders decide to take matters into their own hands, the outcome could be devastating.

Regional Initiatives

Perhaps it is with such dire scenarios in mind that – notwithstanding the public hardline stances adopted by the countries to those disputes – efforts are afoot to develop mechanisms that can help manage potential crises stemming from inadvertent aerial and maritime standoffs. China and Japan, for instance, recently began informal talks on establishing one such mechanism. Even more notably, during the last Western Pacific Naval Symposium in April 2014 naval leaders agreed to adopt a Code for Unplanned Encounters at Sea (CUES), a non-binding standardized protocol of safety procedures for naval and aerial forces.

These ideas are hardly new. They originated from the Cold War when close-proximity aerial and maritime encounters pushed rivals to favor operational naval arms control mechanisms that comprise transparency, communications and constraint measures. The Soviet-U.S. Incidents at Sea (INCSEA) agreement inked in 1972 was the premier example of that era.

The recent spate of close-proximity aerial and maritime encounters in the Asian flashpoints bring to mind the Cold War. The geopolitical context today is of course very different, and it would be imprudent to overhype present developments. Yet the operational risks involved are similar. Mechanisms conceived during the Cold War, such as the INCSEA agreement, remain relevant in Asia. In fact, they are arguably more relevant than ever given the multiplicity of actors involved in this era of interconnectedness and interdependence amongst nation-states. We are no longer just referring to actors in the Western Pacific.

India, for one, has become increasingly active in projecting its naval presence into the Western Pacific. And it is not impervious to potential encounters. Back in July 2011, the Indian warship INS Airavat was reportedly harassed by the “Chinese Navy” when it was sailing northward from the Vietnamese port of Nha Trang to Haiphong. Both Beijing and New Delhi sought to downplay or even deny this incident. Even if this was an isolated case, it demonstrates that maritime and aerial encounters may no longer involve only resident actors in specific regions. Extra-regional actors may potentially be involved.

An Indo-Pacific Air-Maritime Crisis Management Framework?

So perhaps it is prudent to examine the plausibility of an Indo-Pacific framework for crisis management at sea and in the air. This would take into account the interconnectedness and increasing strategic and economic importance of both the Western Pacific and the Indian Ocean seen in the context of the shift of the world’s economic and military balance towards Asia.

In addition, it takes into account Asia’s two rising powers – China and India – and their strategic forays, including the projection of military power into the two oceans. The reported visits by Chinese submarines to Sri Lanka signify Beijing’s firm resolve to not just maintain but elevate its military profile in the Indian Ocean. This is mirrored by India’s increasing naval presence in the Western Pacific, particularly in Southeast Asia.

While it may be presumptuous to assume that Sino-Indian aerial and maritime encounters will necessarily ensue simply because they have increasingly projected military power into the two oceans, it pays to be prepared. Misunderstandings and escalations of tensions stemming from close-proximity encounters might result in the absence of an existing mechanism. If Chinese and Indian ground forces can be involved in close-proximity incidents along the Line of Actual Control, is it not possible to envision similar encounters in the Indian Ocean and South China Sea?

Of course, there have been bilateral initiatives in this area in Southeast and Northeast Asian regions. But if an Indo-Pacific crisis management mechanism or framework is to be considered, it would be multilateral in nature.

One issue in multilateral operational arms control mechanisms is the sheer complexity imposed by multiple actors with diverse national interests, and the resultant potential for negotiations to be drawn out and vulnerable to stumbling over unreconciled differences. Still, a multilateral mechanism is possible judging by a recent initiative of the Association of Southeast Asian Nations (ASEAN).

ASEAN’s Direct Communications Link

Following a call made by Brunei during the 7th ASEAN Defence Ministers Meeting in May 2013, the sultanate hosted the first workshop on establishing an ASEAN-wide Direct Communications Link (DCL) in February 2014. This was shortly followed by the adoption of the Concept Paper on Establishing a Direct Communications Link in the ADMM Process at the 8th ADMM in Naypyidaw Taw on May 20 this year. The DCL, essentially a hotline, aims to be a permanent, rapid, reliable and confidential mechanism available to ASEAN defence ministers. According to the Concept Paper, though, it can also be used to coordinate regional responses to emergencies and crises. The plan is to implement the DCL in 2015 and progress towards this goal has been steady. ASEAN held a technical workshop on the DCL in Brunei on August 26-28, which discussed its operational concept as well as the technical parameters of the communication systems. If progress can be sustained, the DCL could be in place by the target date, which would coincide with ASEAN’s vision of creating a political-security community by 2015.

This DCL mechanism is a model worth looking at if an Indo-Pacific wide framework is to be considered in the future. However, this multilateral mechanism must first demonstrate its workability; only then will it be possible to consider expanding it into a wider arrangement. The ideal platform in this regard is the ADMM-Plus which was established in 2010, four years after ADMM, to include the eight extra-regional powers: Australia, China, India, Japan, New Zealand, the Russian Federation, South Korea and the U.S. The ASEAN Maritime Forum was also subsequently enlarged to become the Expanded ASEAN Maritime Forum, which includes the Plus-Eight partners. This “building block” approach is thus not unusual.

This wider arrangement couched within the Indo-Pacific geostrategic construct fits nicely within ASEAN’s objective of sustaining its centrality in an inclusive regional architecture. ASEAN can serve as an honest broker in an Indo-Pacific crisis management framework, encouraging mutual understanding amongst regional militaries and coastguards via a common regional platform. An Indo-Pacific air-maritime crisis management framework could naturally stem from this ASEAN DCL initiative, using ADMM-Plus as the avenue.

(Koh Swee Lean Collin is an Associate Research Fellow at the Institute of Defence and Strategic Studies, Singapore while Darshana M. Baruah is a Junior Fellow at Observer Research Foundation, Delhi)

Courtesy : The Diplomat, November 17, 2014

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Food Sovereignty Discourse In Southeast Asia: Helpful Or Disruptive? – Analysis

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The Indonesian government’s recent endorsement of food sovereignty as its formal policy framework signals a turn in food policy discourse in Southeast Asia. Is this helpful or a disruptive development?

By Jonatan Anderias Lassa and Maxim Shrestha

Food sovereignty , as opposed to food security, has recently been adopted as a formal policy framework by the new Indonesian President, Joko Widodo (Jokowi). In his Facebook page, Jokowi recently posted: “Food security is different from food sovereignty. Food security is simply the availability of foodstuffs (logistically) in warehouses and in the markets regardless of the origin whether from import or from locally produced. Food sovereignty means we produce and market our foodstuffs ourselves, while the surplus of agricultural crops is exported.”

Extrapolating on the external dimension, Jokowi said: “If we are sovereign in our food production, any disturbances abroad will not have a significant impact on our food reserve and we can still have adequate supply to feed our people.” Stressing the government’s firm commitment to food sovereignty, he added: “Our food sovereignty vision at the highest level is for our food production to overflow the local and international markets or at the very least, we have to be the largest food producer in ASEAN.”

Food sovereignty ideas

The concept of food sovereignty was first introduced on the sideline of the 1996 Food Summit by an international farmers’ movement, the La Via Campesina, as an alternative to the mainstream definition of food security which was officially adopted by the United Nations Food and Agriculture Organisation (FAO). In the last two decades, there has been a general acceptance among policymakers around the globe that “food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life”. However, this definition was not seen as adequate by some groups; it was seen as not giving enough attention to the questions of where, how, by and for whom food was produced.

The food sovereignty concept has been gaining popularity as a number of governments have officially adopted its framework and principles on a national level.

Via Campesina’s Forum for Food Sovereignty held in 2007 defined the guiding principles as follows: Local people have rights to define their own food, agriculture systems and biodiversity. Farmers should have access to land, water, seeds and livestock breeds and credit with a focus on marginal farmers include land reforms. Decision-making on production, distribution and consumption should be placed in the hands of the locals and not in the hands of markets and corporations. Priority must be given to local and national economies and markets and should empower peasant and family farmer-driven agriculture and artisanal fishers. Transparency in food trade must be guaranteed such that there is just income to all peoples and the rights of consumers to control their food and nutrition are protected. It implies new social relations free of oppression and inequality between men and women, peoples, racial groups, social classes and generation (inter-generational equity).

Food sovereignty and political attractiveness

The operationalisation of the food sovereignty concept, however, is not without difficulties. One of the debates is on where to locate the sovereignty (whether at citizens or states level), for which the concept requires a clearer definition. Indonesian Food Bill 8/2012 recognises the rights of the state and the nation to determine food policy which ensures people’s right to food and provides rights for the people to determine food systems that is appropriate with local resources. President Jokowi’s adoption of food sovereignty has been much clearer at the level of production and the governance of food sovereignty but is still less clear on how to sustain food access and nutrition security and food stability.

Food sovereignty can be politically attractive to strong nationalistic regimes (as seen e.g. in Bolivia and other countries) that can capitalise on the concept to win the hearts and the minds of the voters especially in the large agrarian economies. In the rice production regions of Southeast Asia, the movement arises from organised action among rice farmers where some simply meant rice sovereignty rather than food sovereignty. However, over time, there has been an expansion of the food sovereignty concept to include diverse types of food commodities and food systems.

In today’s neoliberal economic context, some have argued that food sovereignty can be used as a counter narrative to confront global land grabbing problems as well as unsustainable practices in local and international food systems.

Can food sovereignty save the world?

The question is can food sovereignty save the world? Scientists have argued that amid the continuous trend of reduced agricultural land, population change, climate change and the search for new technology to feed nine billion people in 2050, recent and future bio-technology may offer greater possibility for having the second green revolution with a vision of ecological sustainability. Concern, however, remains that if the concept is endorsed without critical review, it may defect from the future of food security.

The proponents of food sovereignty may be resistant to science-based innovation especially when it comes to genetically modified foods and related food biotechnology. It can be a challenge to future security because food sovereignty policy narrative embeds risk-averse behaviour into market and new bio-technological experiments, which in turn may give little space for future innovation. However, food sovereignty critique of GM foods remains valid as it concerns not only with food safety and risk but also the control over inputs and seeds.

In addition, concerns remain whether the framework may reinforce more food trade protection and endorse inefficient food self-sufficiency policy. Whether or not food sovereignty can offer better outcome for Indonesia, a more systematic study is recommended concerning cost and benefit of existing and alternative food security framework and policy options for a more rational policy of food sovereignty and security.

Jonatan A. Lassa and Maxim Shrestha are researchers with the Centre for Non-Traditional Security (NTS) Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.

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Obama: Immigration Accountability Executive Action – Transcript

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In this week’s address, the President laid out the steps he took this past week to fix our broken immigration system. Enacted within his legal authority, the President’s plan focuses on cracking down on illegal immigration at the border; deporting felons, not families; and accountability through criminal background checks and taxes. These are commonsense steps, but only Congress can finish the job. As the President acts, he’ll continue to work with Congress on a comprehensive, bipartisan bill — like the one passed by the Senate more than a year ago — that can replace these actions and fix the whole system.

Remarks of President Barack Obama
Weekly Address
Las Vegas, Nevada

Hi everybody. Today, I’m at Del Sol High School, in Las Vegas, to talk with students and families about immigration.

We are a nation of immigrants. It has always given America a big advantage over other nations. It keeps our country young, dynamic, and entrepreneurial. But today, our immigration system is broken, and everybody knows it.

That’s why, nearly two years ago, I came to this school and laid out principles for immigration reform. And five months later, Democrats, Republicans, and Independents in the Senate came together to pass a commonsense compromise bill. That bill would have secured our border, while giving undocumented immigrants who already live here a pathway to citizenship if they paid a fine, started paying their taxes, and went to the back of the line. Independent experts said it would grow our economy, and shrink our deficits.

Now, had the House of Representatives allowed a yes-or-no vote on that kind of bill, it would have passed with support from both parties. Today it would be the law. But for a year and a half, Republican leaders in the House have refused to allow that simple vote. Now, I still believe that the best way to solve this problem is by working together — both parties — to pass that kind of bipartisan law. But until that happens, there are actions I have the legal authority to take as President — the same kinds of actions taken by Democratic and Republican Presidents before me — that will help make our immigration system more fair and more just.

I took those actions this week. We’re providing more resources at the border to help law enforcement personnel stop illegal crossings, and send home those who do cross over. We’ll focus enforcement resources on people who are threats to our security — felons, not families; criminals, not children. And we’ll bring more undocumented immigrants out of the shadows so they can play by the rules, pay their full share of taxes, pass a criminal background check, and get right with the law.

Nothing about this action will benefit anyone who has come to this country recently, or who might try and come to America illegally in the future. It does not grant citizenship, or the right to stay here permanently, or offer the same benefits that citizens receive. And it’s certainly not amnesty, no matter how often the critics say it. Amnesty is the immigration system we have today — millions of people living here without paying their taxes, or playing by the rules. And the actions I took this week will finally start fixing that.

As you might have heard, there are Members of Congress who question my authority to make our immigration system work better. Well, I have one answer for that: Pass a bill. The day I sign it into law, the actions I’ve taken to help solve this problem will no longer be necessary.

In the meantime, we can’t allow a disagreement over a single issue to be a dealbreaker on every issue. That’s not how our democracy works. This debate deserves more than politics as usual. It’s important for our future. It’s about who we are, and the future we want to build.

We are only here because this country welcomed our forebears, and taught them that being American is about more than what we look like or where we come from. What makes us Americans is our shared commitment to an ideal — that all of us are created equal, and all of us have the chance to make of our lives what we will. That’s the country we inherited, and it’s the one we have to leave for future generations.

Thank you, God bless you, and have a great weekend.

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ISIS Hostage John Cantlie ‘Accepts Fate’ In New Propaganda Video

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Islamic State terrorists have released a new video featuring kidnapped photojournalist John Cantlie, who talks of “accepting his fate” as he criticizes a failed rescue attempt by US forces and Western unwillingness to negotiate.

The well-produced video appears, again, as a morality lesson to the West and has Cantlie apparently reading from a script, as he starts: “In this program I will tell you about a failed raid to rescue us and how it feels to be left for dead by your own government.”

“On July 4, Independence Day, the Americans did try to get us out of prison. Not by negotiation or prisoner exchange but by an incredibly complex, risky and expensive rescue attempt that failed,” he says, outlining the operation.

This is the seventh video featuring Cantlie. His previous one was from the besieged Syrian-Turkish border town of Kobani a month ago. There, he ‘covered’ IS gains against Kurdish YPG fighters. Experts believe there will be more episodes in the series of videos entitled ‘Lend Me Your Ears.’

The photojournalist now appears much more downtrodden than before.

Wearing orange fatigues, as previous Islamic State (IS, formerly known as ISIS/ISIL) prisoners, the 43-year-old talks for almost nine minutes about how the lives of Western prisoners in the Middle East are a “gamble” to their leaders, who are the real culprits behind his situation – not his captors.

Speaking of the botched attempt, he says: “Obama and Cameron act all shocked and appalled each time one of us is killed, but they have known this was coming for months.”

Appearing to be resolute, he admits that he “accepted [his] fate” long ago, that it will be “the same as [his] cellmates.”

His ordeal also follows that of fellow ISIS hostages, journalists James Foley and Steven Sotloff, and three aid workers, all murdered by IS.

The rescue operation Cantlie speaks of allegedly “involved two dozen Delta Force commandos, several Black Hawk helicopters, gunships, Predator drones, F18 Hornet Jets and refuelling aircraft.”

It was carried out on July 4, “American Independence Day.”

“It took weeks of rehearsals and must have cost tens of millions to perform – but we weren’t there,” Cantlie continues, adding that all it took for Islamic State to avert the attack was to move all the prisoners to a different location days in advance.

The lecture-style address leads up to a criticism of the US and British refusal to negotiate with terrorists, unlike France’s “record for paying out ransom demands, stating that ‘since 2008, [it] has reportedly paid $58 million of ransom payments to different Islamic groups, nearly 10 million a year.”

Cantlie is thought to be referring to an operation authorized by the US president – a nighttime effort in Raqqa the details of which were released in August.

“I will continue to speak out against this military action … for as long as the mujahedeen allow me to live,” he says at the end.

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Kenya: Al-Shabab Kills 28 Bus Passengers

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Police in northeastern Kenya say al-Shabab gunmen have ambushed a bus and killed 28 non-Muslims who were singled out from the 60 passengers on the bus.

Somalia’s al-Shabab Islamists have claimed responsibility for the attack, saying it was retaliation for recent raids Kenyan security forces carried out on mosques in Mombasa.

Authorities say the militants seized the bus Saturday 50 kilometers, or 31 miles, from the town of Mandera near Kenya’s border with Somalia.

The White House condemned what it called a horrific attack. It said the United States stands with Kenya to counter the threat of terrorism, and it affirmed its commitment to work with Kenyans to stop such atrocities.

Kenyan troops have gone into neighboring Somalia as part of an African Union force helping Somalia put down an al-Shabab insurgency.

The al-Qaida-linked group wants to turn Somalia into a fiercely conservative Islamic state. It once controlled most of central and southern Somalia but has steadily lost ground in recent years to government and African Union forces.

Kenya has been hit by a series of gun and bomb attacks blamed on al-Shabab since Kenya sent troops into Somalia in 2011. Kenyan troops are part of the African Union Mission in Somalia that is bolstering Somalia’s weak U.N.-backed government against the al-Shabab insurgency.

Al-Shabab has carried out two major attacks this year on the Somali presidential palace in Mogadishu.

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Obama Extends War In Afghanistan – OpEd

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News agencies reported Saturday morning that weeks ago President Obama signed an order, kept secret until now, to authorize continuation of the Afghan war for at least another year. The order authorizes U.S. airstrikes “to support Afghan military operations in the country” and U.S. ground troops to continue normal operations, which is to say, to “occasionally accompany Afghan troops” on operations against the Taliban.

The administration, in its leak to the New York Times, affirmed that there had been “heated debate” between Pentagon advisers and others in Obama’s cabinet chiefly concerned not to lose soldiers in combat.  Oil strategy isn’t mentioned as having been debated and neither is further encirclement of China, but the most notable absence in the reporting was any mention of cabinet members’ concern for Afghan civilians affected by air strikes and ground troop operations, in a country already afflicted by nightmares of poverty and social breakdown.

Here are just three events, excerpted from an August 2014 Amnesty International report, which President Obama and his advisors should have considered (and allowed into a public debate) before once more expanding the U.S. combat role in Afghanistan:
1)      In September, 2012 a group of women from an impoverished village in mountainous Laghman province were collecting firewood when a U.S. plane dropped at least two bombs on them, killing seven and injuring seven others, four of them seriously. One villager, Mullah Bashir, told Amnesty, “…I started searching for my daughter. Finally I found her. Her face was covered with blood and her body was shattered.”

2)      A U.S. Special Operations Forces unit was responsible for extrajudicial killing, torture and enforced disappearances during the period of December, 2012 to February, 2013. Included among those tortured was 51 year old Qandi Agha, “a petty employee of the Ministry of Culture,” who described in detail the various torture techniques he suffered.  He was told that he would be tortured using “14 different types of torture”. These included: Beatings with cables, electric shock, prolonged, painful stress positions, repeated head first dunking in a barrel of water, and burial in a hole full of cold water for entire nights. He said that both US Special Forces and Afghans participated in the torture and often smoked hashish while doing so.

3)      On March 26, 2013 the village of Sajawand was attacked by joint Afghan—ISAF (International Special Assistance Forces). Between 20-30 people were killed including children. After the attack, a cousin of one of the villagers visited the scene and stated, ”The first thing I saw as I entered the compound was a little child of maybe three years old whose chest was torn apart; you could see inside her body. The house was turned into a pile of mud and poles and there was nothing left. When we were taking out the bodies we didn’t see any Taliban among the dead, and we didn’t know why they were hit or killed.”

NYT coverage of the leaked debate mentions Obama’s promise, made earlier this year and now broken, to withdraw troops.  The article doesn’t make any other mention of U.S. public opposition to a continuation of the war.

Attempts to remake Afghanistan by military force have resulted in warlordism, ever more widespread and desperate poverty, and bereavement for hundreds of thousands whose loved ones are among the tens of thousands of casualties. Area hospitals report seeing fewer IED injuries and many more bullet wounds from pitched battles between rival armed militias whose allegiances, Taliban, government, or other, are hard to determine.  With 40% of U.S. weapon supplies to Afghan security forces now unaccounted for, many of the weapons employed on all sides may have been supplied by the U.S.

Meanwhile the implications for U.S. democracy aren’t reassuring.  Was this decision really made weeks ago but only announced now that congressional elections are safely over? Was a Friday night cabinet leak, buried between official Administration announcements on immigration and Iran sanctions, really the President’s solution to the unpopularity of  a decision affecting the lives of so many?  With concern for the wishes of U.S. citizens given so little weight, it is doubtful that much thought was given to the terrible costs of these military interventions for ordinary people trying to live, raise families and survive in Afghanistan.

But for those whose “heated debates” focus solely on what is best for U.S. national interests, here are a few suggestions:

1)      The U.S. should end its current provocative drive toward military alliances and encirclement of Russia and China with missiles.  It should accept pluralism of economic and political power in the contemporary world.  Present U.S. policies are provoking a return to Cold War with Russia and possibly beginning one with China.  This is a lose/lose proposition for all countries involved.

2)      By a resetting of policy focused on cooperation with Russia, China and other influential countries within the framework of the United Nations, the United States could foster international mediation.

3)      The U.S. should offer generous medical and economic aid and technical expertise wherever it may be helpful in other countries and thus build a reservoir of international goodwill and positive influence.

That’s something that nobody would have to keep secret.

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Asia And The Seas: Looking Back To Look Forward – Analysis

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By Vijay Sakhuja

Three Asian powers – China, India and Indonesia – have, in recent times, attempted to project their power potential by recalling their maritime histories. China has highlighted the Maritime Silk Road (MSR) that has foundations in the ancient world. Chinese President Xi Jinping promoted the MSR based on his reading of ancient Chinese maritime connections with Southeast Asia, India, Persia, the Arab world, and as far as Africa.

However, the MSR has invited sharp reactions from some Asian powers. They argue that China is reliving the era of Zheng He who led seven expeditions from 1405 to 1433. The Chinese fleet undertook expansive voyages and sailed through the Asian waters along the MSR, engaging in trade, projecting power, defeating challengers, and establishing spheres of influence. However, there are others such as Sri Lanka, the Maldives and Bangladesh who appear to be convinced that the MSR offers them immense opportunities and that they can benefit from the Beijing’s maritime prosperity.

India has chosen Project ‘Mausam’ to highlight its historical connection with the contemporary. ‘Mausam’ or ‘Mawsim’ in Arabic means ‘season’ during which, ships would undertake voyages and sail safely. The monsoon winds had facilitated the movement of peoples, cultures and trade across the Indian Ocean. Project ‘Mausam aims to “record, celebrate history, connect and re-establish communications between countries of the Indian Ocean world” for a better understanding of cultural values and concerns in the maritime milieu.

The newly-elected Indonesian President, Joko Widodo, has called on the people of Indonesia to be “as great in the oceans as our ancestors were in the past.” For Indonesia, the motto of the Indonesian Navy, ‘Jales Veva Jaya Mahe’, meaning ‘in the water, we are triumphant’, appears to be the driver.

Indeed, China, India and Indonesia were preeminent maritime powers during ancient times and had relied on the seas for a full realisation of their power potential. China’s Song and Ming Dynasties, India’s Chola Dynasty, and the Sumatran Srivijaya Empire had strong maritime aspirations and invested enormous capital in the development of a sophisticated maritime system. They were globalised powers and possessed formidable maritime capability that reflected in their shipping, ports and trade that crisscrossed the Asian waters, carrying goods, culture and people.

These states established political, economic, social, cultural and strategic networks as far as Africa, Eurasia, the Mediterranean and Persia – that which came to be referred to as the proverbial maritime silk route. They also developed naval power that was effectively used during periods of crisis. It is also true that Asian powers declined due to several internecine disputes and wars that resulted in their colonisation, which came from the seas.

In the 21st century, Asian powers are experiencing high economic growth, burgeoning maritime trade, a promising maritime science and technology base, and above all, a desire to build a robust maritime military capability. There is strong evidence of sensitivities about safety and security of sea-lanes, and forward presence of extra-regional navies, which is an issue of significant concern. In the case of China and India, naval fleets built around nuclear submarines, aircraft carriers, expeditionary platforms are gaining primacy, and for Indonesia, the focus is on building robust naval capability to address a string of maritime threats and challenges.

There are at least six reasons for Asian countries to evoke their glorious maritime past and celebrate it in the 21st century:

First, the Asian states are witnessing a flourishing maritime enterprise, which displays strong elements of interdependence. This is a mirror image of the sophisticated maritime trading system that emerged in ancient Asia that contributed not only to their growth, but had linkages with other trading systems of the Indian Ocean, the Mediterranean and the modern day Pacific.

Second, the Asian countries wish to demonstrate that during ancient times, they were highly interconnected and globalised and the seas had shaped their destiny in significant ways, and that they continue to do so.

The third possible reason is that the 21st century is indeed the period for the rediscovery of their maritime power with phenomenal economic growth built around trade, a bulk of which is carried out via the seas.

Fourth, the Asian powers have successfully shed the 400 years of colonial legacy that came from the seas, and are developing impressive naval capabilities to preclude dominance of their seas, protect trade over the sea-lanes, and to ensure safety of marine resources in the Exclusive Economic Zones.

Fifth, they are confident of contributing to Asian efforts to ensure order at sea. Finally, the sixth reason is that Asian countries wish to rely on the seas for a full realisation of their power potential and place in the international system.

Vijay Sakhuja
Director, National Maritime Foundation, New Delhi

The post Asia And The Seas: Looking Back To Look Forward – Analysis appeared first on Eurasia Review.

Cultivating The World, For A More Humane World – OpEd

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By Assistant Prof. Dr. Pham Huu Tien*

As we know, humanity is the nature of mankind and of all human communities. In this nature are converging both human instinct and social factors. In terms of the movement, such a nature is not constant, but it can change in a certain extent under the influence of the natural environment and social environment.

Through each development stage of history, the humanitarian nature is more and more complete. Through each progressive step of humanity, the expressive form of the humanitarian nature is more and more plentiful. The complete and the plenitude of this nature make our world more humane. It just reflects the development of a society and just prompts the development of that society.

Because every person, every community exists in every region, every country with certain features of geography, history, economics, social aspirations, therefore humanitarian nature should be diversified. Humanitarian nature in the objective aspect implies universality and particularity. In other words the picture of the humane world includes the similitude and the diversification. The absolute state towards universality or the absolute state towards the particularity is not only a mistake in the theory, but also bring negative effects in practice.

Humanity is not randomly yearning for a humane world, but primarily because of its high values. In the humanitarian world, the wealth of this country does not impoverish other country; the development of this nation does not abolish the growth of another nation; interests of each individual are in harmony with social interests; discrimination in a nation, ethnic, racial, gender, religion, disease … belongs to the past; kindness, empathy, sharing … are the basic criteria to adjust the relationship among the people in the present and future. Surely the world which we live in is not as it existed if only the absence of humanitarian nature. Today it is hard to find a valuable activity of the human community without the stamp of humanitarian values in one form or another. It is not a coincidence that the humanitarian theme gained special attention of governments, politicians, social activists, and scientist, international, regional and national organizations.

However, a question arises: Can we certainly affirm that our world is completely a humane world? Even the most optimistic persons cannot give an affirmative answer because of the dark color zone in the world panorama is now an undeniable fact. The wars between countries showed with many extents and many forms that some people were killed and injured and others who have to leave their homeland as millions of refugees have done during the latest centuries. Ethnic conflict in many countries is in the top position in the list of global problems of our time. Activities of terrorists have brought widowhood and heartbroken tears for women, taken away the songs and smiles of children. Wherever the perpetrator set their footprints, civilian cemeteries are built there. Tragedy of hunger and poverty in some regions of our planet has stripped the essential needs, which are awarded by the Creator. Status of diseases, especially diseases of the century is the permanent concern of the families in many countries. Many other inhumane acts are still standing in the fields of social life, etc…

Particularly in the area of science and technology, humanity is facing a paradox. On one hand, science and technology as the crystallization of human wisdom; is the product of man; has become a factor in the liberation of human in both physically and intellectually, multiplying human power. In particular, the achievements of the science and technology revolution today is being applied widely and quickly, which constantly changes the world face, narrow the geographic distances between continents, accelerate the level of development of each country and enhance the value of human times fund. We can say, science and technology in our time has become a fundamental motivation for the development of the society.

On the other hand, the science and technology instead of being used for the betterment of human life it has been used for strange and destructive purposes with the man and nature , it even has betrayed a man that nuclear weapons, biological weapons and chemical weapons were an indisputable proof. The application of science and technology achievements has been based on a mechanical approach, without considering the organic relations among different areas of the social life, causing negative consequences. Many inhumane actions in science still have place of refuge.

The inhumane state as mentioned above there are not only burdens but also obstacles to the development of the concerned countries. Humanizing an inhuman environment is an urgent task and requires the efforts of the entire community with synchronic and feasible solutions. The institution to gather and to coordinate all forces in the region and the world for the humanitarian purposes is necessary. The option of dialogue must regularly be placed on the agenda of the governments; it must be in the inventory of the politicians responsible for the destiny of humanity. The economic cooperation between countries should be considered under the light of the humanitarian values ​​and the mutual benefit is an indispensable element. The humanitarian value needs diverse presence in building the culture, the education, the science and technology…as well as in the solubility of global problems of our time.

The humanitarian nature was shown during the existence of Vietnamese nation. Since the ancient time, the proverb “do love people as you love yourself” has become a traditional guidance of behavior for the Vietnamese people and current government. Humanity is a spiritual value of our nation. Today, humanity has always been part of the socio-economic development policies of the Vietnamese State. In the current globalization world, the humanitarian values ​​of the Vietnamese nation have the conditions to receive the humanitarian values ​​of other nations in the world and humanitarian values ​​of the Vietnamese nation are highly promoted.
The fact is that, the path to a humane world cannot happen in a short time, but the humane work being done today in many countries with various forms and with different scales will certainly reduce gradually the tragedy of humanity, it will be a significant brick in order to build a humanitarian castle, the aspirations of the nations for a humane world will become a reality sooner or later.

* Director of Institute of Policy, Law and Management, Hanoi, Vietnam.

The post Cultivating The World, For A More Humane World – OpEd appeared first on Eurasia Review.

Fighting ISIS From The Air: The Light Attack Alternative – Analysis

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By Fabrizio Bozzato and Guy Plopsky

With procurement funds steadily shrinking, requirements are markedly informed by budgetary constraints rather than mandated by capability considerations. Consequently, innovative and cost-efficient solutions are increasingly sought and valued. This is particularly true for counterinsurgency operations in low-contested environments in which the enemy possesses only negligible air-defense assets. In this regard, unorthodox and inexpensive options for air support are becoming ever more appealing both to military planners and political deciders. As a result, the light attack aircraft (LAA) category is gradually gaining attention globally as an expanding variety of more sophisticated systems are integrated in these low-cost platforms.

Whether one endorses or not the USAF push to retire the A-10, it is beyond doubt that the intended replacements – the F-15E, F-16, F-35 and B-1B – were not developed as dedicated close-air support (CAS) platforms for low threat contexts but designed for a wide range of missions in highly contested theatres. Their full potential would thus remain unheeded and their operational costs would stay out of proportion for the task at hand. This is especially true for fighting ISIS and other similar terror militias with no credible air defense. ISIS only possesses light anti-aircraft guns and a handful of man-portable air-defense systems (MANPADS) seized from Iraqi and Syrian army stockpiles. Even though they managed to down a small number of Iraqi helicopters, they are not capable of true air denial. Consequently, supersonic speed, stealth or advanced electronic warfare systems are not an imperative for missions over ISIS-controlled territory in Iraq. Hence, an enhanced employment of LAAs would free more high-end platforms for usage in specific areas where third parties have some air defense capability. Indeed, one does not need a bowling ball to play billiard.

In these circumstances, low-cost platforms capable of supporting a variety of aerial reconnaissance, surveillance and strike missions could fulfill the required tasks efficiently and inexpensively in close coordination with other forces. Currently, the industry offers a number of machines that may be apt for the job. Namely the turboprop-powered Embraer A-29 Super Tucano, the Hawker Beechcraft AT-6C Texan II, as well as the Textron AirLand Systems’ Scorpion Light Jet. All these platforms present several advantages in terms of affordability (both acquisition and ownership costs), promptness of delivery, simplicity of maintenance, reliability and safety, and interoperability with an array of systems. Besides, employing them would extend the service life of higher platforms as they would be flown less frequently. As for the fly-away costs, while a Block 52 F-16C/D comes for approximately $ 45 million and an F/A-18E/F for over $ 60 million, a Super Tucano is typically priced from $ 9 – 14 million and Scorpion Light Jets start off at under $ 20 million. The difference in operational cost per flying hour (CPFH) is equally significant. For example, the Scorpion’s estimated $ 3,000 CPFH is about one seventh than the F-16C/D’s and one tenth of what the USAF expects to pay for operating its F-35As.

Far from being akin to 1950s machines, all the above platforms are fitted with EO/IR sensors, all-glass cockpit featuring high fidelity multi-functional displays (MFDs), hands on throttle and stick (HOTAS) controls, advanced mission computers and head-up display (HUD). In addition, they are fully compatible with NATO systems; for example, the Super Tucano is certified with over 130 weapon configurations including a large assortment of precision guided munitions (PGMs). Safety-wise, the LAAs are equipped with a set of protective features that, apart from ejection seats, in the case of the turboprops also include armored cockpit and rotors. Additionally they can be fitted with missile warning and counter-measures dispensing systems. Also, due to their higher speed, they are arguably more survivable than helicopters. Moreover, even though these platforms are technologically enhanced, the risk of advanced tech appropriation in the event of a combat or operational loss is much lower than with high-end aircraft, as they do not feature sophisticated jet engines, advanced electronic warfare systems and other sensitive elements. Similarly, in the remote eventuality that a LAA is captured intact and used by the enemy, it can be easily destroyed by superior US or partner states’ air defense.

Allegations that the USAF would lose martial credibility and actual capabilities by fielding LAAs in combat are unsubstantial. On the contrary, the preference for smart and efficient theater solutions is what distinguishes future-oriented and tactically-flexible militaries from ossified and obsolescent Soviet-style models. Unlike in Syria, the large majority of ISIS assets in Iraq consist of small targets such as technicals, armored vehicles, artillery pieces, and individual operatives that can be neutralized with light PGMs. For this reason, heavy aircraft would be redundant for the task. Also, the deployment of LAAs would not in any way impinge upon the air supremacy of an organizationally virtuous force like the USAF. In other words, the USAF high-tech connotation and prestige would not be questioned but augmented. In fact, the LAAs are very suitable for regional use, as they possess a relatively large combat radius. And even more so when fitted with drop tanks granting them additional loiter time over the target area for strike coordinated air reconnaissance (SCAR) missions which, given the lack of forward observers on the ground, are essential for locating ISIS targets; the Scorpion, for example, is optimized for long endurance at slow speed.

In the light of their versatility, features and tactical value, the LAAs are particularly appealing to regional air forces and army aviation units, especially the budget attentive ones. It might be surmised that fielding attack helicopters makes such acquisition unnecessary. However, if compared with helicopters, these aircraft have greater combat radius, similar operational costs, carry a more diverse and heavier payload, and are more affordable. Illustratively, an AH-1Z Viper helicopter costs two to three times as much as a Super Tucano.

Moreover, the turboprops have a very good short take-off and landing capability and can operate from unprepared airstrips. In sum, the LAAs are valid territorial defense and close support planes, as well as a surveillance asset with armed attack capability. Therefore, they would be of great utility to the Iraqi and Jordanian militaries and integrate the air power of Saudi Arabia, UAE, Qatar and Bahrain. Tellingly, the UAE Special Operations Command is already employing 24 well-armed AT-802i “Air Tractors” light attack planes and Abu Dhabi is in discussions with Textron AirLand about purchasing the Scorpion. Moreover, the U.S. has approved an Iraqi request for 24 AT-6Cs and the Afghan Air Force will soon join the nine states in Africa, Asia Pacific and Latin America already flying Super Tucanos. Finally, the Iraqi and Lebanese air forces can count on a small number of lightly-armed Cessna AC-208B “Combat Caravans.”

Both the Super Tucano and AT-6C are highly reliable platforms. The former has been extensively fielded in anti-narcotic and COIN operations by several Latin American countries. The latter is based on Beechcraft’s T-6 trainer which is used to certify pilots in air forces ranging from Canada to Morocco. Notably, being Iraqi pilots normally trained on the T-6A, their familiarization process with the LAA variant is going to be expeditious. As for the Scorpion, even though it has yet to see service, its specificities make it an appealing candidate for the LAA role, as shown by its successful international debut at the Farnborough Air show in July 2014. Another potential candidate reaching operational capability is Paramount Group’s Advanced High Performance Reconnaissance Light Aircraft (AHRLAC). This South African single-engined turboprop platform is a cost effective solution designed for flexible roles previously carried out by four separately configured aircraft which can be used for both intelligence surveillance and reconnaissance tasks (ISR) or deliverance of light guided and unguided munitions against small highly-mobile and dispersed targets.

In the event of joint operations, LAAs should not be regarded as direct competitors to unmanned combat aerial vehicles (UCAVs) such as the widely-used Predator and Reaper. On the one hand, LAAs are less expensive to acquire and operate than UCAVs on the account of them not requiring the expensive support systems needed for remote control of unmanned aircraft. On the other hand, the two platforms can synergistically complement one another. UAVs would conduct ISR and enhance the situational awareness of Joint Terminal Attack Controllers (JTACs) and LAAs from above. The turboprops, on their part, would provide CAS. Being highly visible and acoustically imposing, these planes would cause significant psychological distress to the enemy and function as morale-booster to the ground troops. Warfare is not based only on deception, but also perception.

In conclusion, employing LAAs in anti-ISIS and other COIN operations would present a number of advantages and offer significant tactical apport. First of all, these platforms would serve as gap fillers in the case of the USAF and enablers for several regional militaries. Secondly, utilizing them would liberate synergies for more threat-intensive geostrategic theaters. Thirdly, it would economize on firepower without sacrificing effectiveness. Finally, it would mitigate inter-service budgetary rivalry as LAAs are financially viable and compatible with the doctrinal postures of both air forces and army aviation branches. Essentially, fielding LAAs would be an intelligent and affordable way to prize strategic aims over tech-centric means and biases.

About the authors:
Fabrizio Bozzato is a PhD Candidate at the Graduate Institute of International Affairs and Strategic Studies, Tamkang University (Taiwan).

Guy Plopsky is a Fellow at the Center for Advanced Technology, Tamkang University (Taiwan).

The post Fighting ISIS From The Air: The Light Attack Alternative – Analysis appeared first on Eurasia Review.

Canada Falling Short On Arctic Sovereignty – Analysis

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By Glen Watson

While some policymakers insist on debating the validity of climate change, Arctic sea ice continues to melt. Some scientists predict that the region will be free of summer ice in as few as 30 years. Without question, the effects of environmental change have led to increased activity in the region, ushering in new possibilities in Arctic shipping lanes and resource development.

With 162,000 kilometers of Arctic coastline, it is undeniable that the increased global interest in the Arctic region is a pivotal concern to Canada’s strategic interests.

The Harper government has branded itself as a resolute defender of Canada’s Arctic sovereignty. But prime ministerial photo-ops and patriotic victories of recovered wrecks will not be sufficient to protect those interests, and one might argue that the reality of the sovereignty situation does not measure up to the government’s tone of rhetoric.

In 2009 the Canadian government released Canada’s Northern Strategy, a document outlining four priority areas to guide the country’s Arctic policy: exercising sovereignty, promoting social and economic development, protecting the environment, and improving and devolving governance.

The following year, the Conservative government further detailed those pillars in their Statement on Canada’s Foreign Arctic Policy. Exercising sovereignty over the Arctic was established as the government’s number one priority and it was declared that “in pursuing each pillar, Canada was committed to exercising the full extent of its sovereignty, sovereign rights, and jurisdiction in the region.”

Traditional notions of sovereignty rest on a state’s ability to govern itself free from outside interference. Arctic sovereignty also encompasses Canada being able to effectively monitor and enforce authority over its Northern land, sea, and air.

To that end, the federal government has made a number of steps in exercising sovereignty in the Arctic.

In September, Canadian fighter jets intercepted two Russian jets just 75 kilometers off Canada’s Arctic coast, just one day after Ukrainian President Poroshenko stood in Parliament to thank Canada for its support as his country battled separatist rebels.

Canadian forces take part in annual exercises in the Arctic and also participate in NORAD’s northern operations. The Department of National Defence upgraded RADARSAT II to engage in Arctic surveillance, and the Canadian Space Agency intends to launch a Polar Communication and Weather mission in the years to come. The federal government also recently opened an army training center in Resolute Bay, Nunavut.

But the sum of these efforts pales in comparison to the well-documented, massive military build-up that Russia has undertaken in the Arctic, which includes permanently stationing troops in the region, modernizing facilities from the Soviet-era, and building a vast number of new defense facilities.

Part of the disparity in the military footprints of these two Arctic neighbors can certainly be attributed to the relative size of their standing armies and defense budgets. It would also be unfair not to acknowledge that the Harper government has accomplished more in the region than previous administrations. But when the Conservatives use the Arctic as a key feature of their political brand and the government’s foreign policy documents speaks of “putting the full resources of the government of Canada behind the exercise of sovereignty, sovereign rights, and jurisdiction in the Arctic,” one has to suspect that Ottawa is putting rhetoric ahead of reality.

For example, when the Harper government announced the training centre in Resolute Bay, the original plan called for a long paved runway, hangers, and a fuel storage facility. But the finished product is merely a small dormitory that is now being used to house scientists more than any military personnel.

Canada’s Icebreaker Woes

Canada is sorely lacking in both quantity and quality in terms of its icebreaker fleet. These ships are needed to patrol coastlines, undertake research, and carry out search-and-rescue operations, all of which can be read as functions of asserting sovereignty.

Canada’s fleet currently consists of two heavy icebreakers, four medium icebreakers, nine multi-purpose vessels, and two hovercrafts.

The most powerful vessel, the Louis S. St-Laurent, has been in active service since 1969.

The ship was slated to be decommissioned in 2017 when it was to be replaced by the new John G. Diefenbaker, which the government announced plans for in their 2008 federal budget. However, now that the Diefenbaker has been delayed until 2021-22 the aging St-Laurent will remain in service until then.

In comparison, Russia has 38 vessels, more than twice the combined number of the rest of the Arctic nations, including six nuclear-powered ships. The Russians are currently building a massive seventh vessel which is fourteen meters longer than any other icebreaker in the world, and will be capable of cracking through up to three meters of ice.

While this country’s history of underfunding Canada’s Coast Guard dates back well before the current administration, the Harper government’s willingness to put political subterfuge ahead of sound, transparent policy is fairly evident in the procurement of new vessels for the Arctic theater.

When the Conservatives first came to power in January 2006, they campaigned on a promise to budget $5.3 billion over five years to ensure Arctic sovereignty. The central tenet of this commitment would be, amongst other things, the purchase of three heavy icebreakers. By 2007 however, the promise of those three vessels was replaced by six to eight lighter Arctic Patrol Ships that lacked icebreaking capabilities.

Construction on those vessels had still not begun when the federal government announced a new National Ship Procurement Strategy in 2012. That strategy affirmed their plans to build between six and eight patrol ships within the next quarter-century. But the independent Parliamentary Budget Officer (PBO) released a report last week noting the unlikelihood of being able to afford that many vessels on the current procurement budget of $3.1 billion, and instead suggested that a maximum of four patrol ships is a more realistic expectation for that figure.

Like much of the analysis that has emanated from that office in recent years, the report was met with derision by the Conservatives. The federal government accused the PBO of using erroneous data, to which the PBO replied that the Conservatives had refused to provide them with all the information that they needed for their report.

Harper Setting His Sights on the North Pole

Another area in which Canada is seeking to exercise sovereignty relates to gaining international recognition to the full extent of its ‘extended continental shelf.’

The extended continental shelf is the area beyond an Arctic country’s ‘‘exclusive economic zone’ (EEZ), which stretches 200 nautical miles from coastal baselines. The United Nations Convention on the Law of the Sea (UNCLOS) prescribes that coastal states have sovereign rights to the resources within their EEZ, but when a state’s continental shelf can be shown to extend beyond the EEZ, it also enjoys sovereign rights to explore and exploit the resources of the seabed and subsoil. Given the vast resources that are said to be in the Arctic seabed, the economic impact of precisely defining Canada’s continental shelf is huge.

In December 2013, Canada sent a partial submission to the UN Commission on the Limits of the Continental Shelf. But just days after making the submission, which was ten years in the making and asserted that the Canadian continental shelf covers 1.2 million square kilometers of ocean, the Foreign Affairs Minister announced that Canada would widen its claim to include the North Pole despite lacking the scientific evidence to support it.

The announcement left scientists scrambling to conduct more research and forced officials to upgrade the St-Laurent with $7 million worth of state-of-the-art sonar technology to carry out further testing.

The Economist speculated that the move amounted to chicanery on the part of Prime Minister Harper, who recognized that Canada’s claim will not be reviewed by the UN Commission until well after the next election, meaning that there was no domestic political downside to claiming the North Pole.

This reading of the situation gained some credibility when the Foreign Affairs Minister would not dispute published reports that Harper interceded at the last minute to insist that the North Pole would be included in Canada’s claim.

That narrative is largely speculative, but if accurate, it does nothing to support Ottawa’s line of the sanctity of Arctic sovereignty. Instead, by interfering with the scientific process and allowing domestic politics to override the international legal procedure, the Harper government has again supplanted sound Arctic policy with blustery rhetoric.

This article was published by Geopolitical Monitor.com.

The post Canada Falling Short On Arctic Sovereignty – Analysis appeared first on Eurasia Review.

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