The Knights of Columbus fraternal organization aims to extend its Catholic values and financial expertise into a new subsidiary that will provide investment guidance to Catholic institutions.

“The Catholic community has traditionally been served by investment managers with a broad, rather than Catholic, focus,” Supreme Knight Carl Anderson said Dec. 19. “We believe a Catholic firm committed to Catholic values can offer a more compelling solution for Catholic entities.”

The New Haven, Conn.-based organization has announced a new subsidiary named Knights of Columbus Asset Advisors, which is currently being registered as a financial advisor.

The subsidiary is intended to provide a suite of fixed-income and equity investment strategies designed for Catholic institutional investors, the organization said. Investments will be managed according to guidelines from the U.S. Conference of Catholic Bishops.

Anthony Minopoli, the Knights of Columbus’ chief investment officer, noted that the Knights of Columbus presently manage $22 billion in insurance and pension assets.

“We believe these investment capabilities will translate beautifully to the faith-based market,” Minopoli said.

The Catholic fraternal organization has 1.8 million members around the world. Members and their families are eligible for coverage under the organization’s insurance program.

The fraternal organization highlighted its 39-year consecutive top rating of A++ from A.M. Best, a leading credit ratings agency for the insurance industry.

It was also listed as a World’s Most Ethical Company by the Ethisphere Institute, a research center on best practices in corporate ethics and governance.

The post Knights Of Columbus To Offer Catholic Investing Guidance appeared first on Eurasia Review.

Writing in the journal Lancet Global Health, researchers from Cambridge University’s Department of Sociology examine the links between the International Monetary Fund (IMF) and the Ebola outbreak in West Africa.

According to the authors, joined by colleagues from Oxford University and the London School of Hygiene and Tropical Medicine, IMF programs over the years have imposed heavy constraints on the development of effective health systems of Guinea, Liberia and Sierra Leone – the cradle of the Ebola outbreak that has killed more than 6,800 since March this year.

The researchers say that economic policy reforms advocated by the IMF have undermined the capacity of health systems in these three nations – systems already fragile from legacies of conflict and state failure – to cope with infectious disease outbreaks and other such emergencies.

“A major reason why the Ebola outbreak spread so rapidly was the weakness of healthcare systems in the region, and it would be unfortunate if underlying causes were overlooked,” said lead author and Cambridge sociologist Alexander Kentikelenis.

“Policies advocated by the IMF have contributed to under-funded, insufficiently staffed, and poorly prepared health systems in the countries with Ebola outbreaks.”

By reviewing the policies enforced by the IMF before the outbreak – extracting information from the IMF lending programs between 1990 and 2014 – the researchers were able to examine the effects on the three West African nations, and identified three key policy impacts that led to the weakening of the already fragile healthcare systems in these countries:

Firstly, the IMF required economic reforms that reduced government spending. “Such policies have been extremely strict, absorbing funds that could be directed to meeting pressing health challenges,” write the researchers. Although the IMF responded to concerns raised about the impact of these policies by incorporating “poverty-reduction expenditures” that aimed to boost health budgets, the researchers found these conditions were often not met.

“In 2013, just before the Ebola outbreak, the three countries met the IMF’s economic directives, yet all failed to raise their social spending despite pressing health needs,” said Professor Lawrence King, co-author and Cambridge sociologist.

Secondly, the IMF often requires caps on the public-sector wage bill, directly impacting the capacity of these nations to hire and adequately pay key healthcare workers such as doctors and nurses. An independent evaluation of the IMF in 2007 stated that these limits are “often set without consideration of the impact on expenditures in priority areas”.

“Wage limits set by the IMF have been linked to a ‘brain drain’ of health workers in countries that need them most. For example, the IMF imposed restrictions on wage spending in Sierra Leone over the 2000s. At the same time, the number of health personnel in the country plummeted,” said King.

Thirdly, the IMF campaigns for decentralized healthcare systems. While the idea behind this is to make healthcare more responsive to local needs, the researchers say that in practice this makes it difficult to mobilize coordinated responses to outbreaks of deadly diseases such as Ebola.

However, in recent months, the IMF has announced $430m of funding to help combat Ebola in West Africa, leading IMF Director Christine Lagarde to say it is “good to increase the fiscal deficit when it’s a matter of curing the people [...] The IMF doesn’t say that very often.”

“The IMF’s recent change of heart about prioritizing public health instead of fiscal discipline is welcome, but this is not the first time we have heard such rhetoric from the IMF leadership. It remains to be seen whether this time is different,” said Kentikelenis.

The authors of the Lancet article point to that journal’s own Commission on Investing in Health, which calls for increases in public health spending and attention to hiring and training health workers. “The experience of Ebola adds a degree of urgency to the implementation of its recommendations,” they write.

The post IMF Lending Undermined Healthcare Provision In Ebola-Stricken West Africa, Claims Report appeared first on Eurasia Review.

Qatar has pledged its “full support” to Egypt, an official statement said, ending more than a year of regional isolation over its support for Cairo’s ousted Islamist president.

“The security of Egypt is important for the security of Qatar… the two countries are linked by deep and fraternal ties,” said a statement from the office of the Qatari Emir Sheikh Tamim bin Hamad Al-Thani.

The statement came a day after Egyptian President Abdel Fattah El-Sisi met in Cairo with a Qatari envoy.

After the meeting with Sheikh Mohamed bin Abdel Rahman Al-Thani, El-Sissi’s office issued a statement saying: “Egypt looks forward to a new era that ends past disagreements.”

In its statement Sunday, Qatar thanked Saudi Arabia for its mediation in a diplomatic crisis that had seen several Gulf states pull their ambassadors from Doha.

Meanwhile, the Gulf Cooperation Council and the Arab League on Sunday commended Custodian of the Two Holy Mosques King Abdullah for his successful initiative to reconcile Egypt and Qatar.

“It will open a new chapter in Egypt-Qatar relations,” said Nabil Al-Arabi, secretary-general of Arab League. He hoped that the two countries would expand cooperation in all areas.

“King Abdullah’s initiative became successful because of his position as a respectable Arab leader,” said GCC Secretary-General Abdullatif Al-Zayani.

Egyptian political parties also commended Saudi Arabia’s efforts under the leadership of King Abdullah, to strengthen Arab unity.

“King Abdullah’s initiative to end the conflict between Qatar and Egypt deserves applause,” said Nagy Al-Shihabi, president of the Democratic Generation Party.

“This meeting shows King Abdullah’s continuous efforts to improve inter-Arab relations and complete the reconciliation between Egypt and Qatar,” Al-Shihabi said, adding that it would strengthen Arabs to confront challenges.

Ahmed Kamil, spokesman of Popular Current Party, also praised King Abdullah for his efforts to narrow the differences between Qatar and Egypt, adding that it would have good results.

The post GCC, Arab League Commend King Abdullah For Cementing Arab Unity appeared first on Eurasia Review.

Jordanian authorities executed 11 Jordanian men by hanging on December 21, 2014, ending an eight-year de facto moratorium on the death penalty, reports Human Rights Watch.

The official government news agency, Petra News, announced that authorities had executed the men inside Suwaqa prison, 70 kilometers south of Amman. Interior Ministry Spokesman Ziad al-Zu`bi told Petra News that the sentences “had previously been issued by the Serious Crimes Court for crimes of murder that [the men] committed. Afterwards the sentence[s] became final when upheld by the Court of Cassation…”

“With these executions, Jordan loses its standing as a rare progressive voice on the death penalty in the region,” said Sarah Leah Whitson, Middle East director. “Reviving this inherently cruel form of punishment is another way Jordan is backsliding on human rights.”

The Jordanian cabinet established a special committee in November to explore a resumption of executions. However, the cabinet made no public statement on the topic prior to the December 21 executions. A member of the committee that oversaw the executions told Ammon News the men were put to death by hanging.

On December 21, activists and news websites furnished what they said were the names of the executed men, their case numbers, and the years in which they were convicted. But details of individual trials were not available.

Since Jordan’s last executions in mid-2006, King Abdullah II had not signed further execution orders. According to the Jordan Times, in late 2005 the king told an Italian newspaper, “in coordination with the European Union, we would like to modify our Penal Code. Jordan could soon become the first country in the Middle East without capital punishment.”

But Jordanian lawmakers did not modify the penal code or other laws to remove the death penalty, and judges continued to hand down execution sentences. Jordanian law allows capital punishment for crimes of murder, terrorism, treason, and espionage, among others.

In December 2014, Jordan’s governmental National Center for Human Rights released its report for events of 2013. This stated that Jordan’s Serious Crimes Court had handed down 20 death sentences in 2011, 13 in 2012, and 7 in 2013. The report also stated that, by the end of 2013, 109 persons were on death row. The Interior Ministry spokesman told the al-Sabeel news website that prior to December 21, 2014, the number of death row inmates had risen to 122.

Executions in Jordan require endorsement from the king and the Court of Cassation, Jordan’s highest court. Article 39 of the constitution states: “No death sentence shall be executed except after ratification by the King …”

Human Rights Watch opposes capital punishment under all circumstances, as a practice unique in its cruelty and finality.

In 2013, following similar past resolutions, the United Nations General Assembly called on countries to establish a moratorium on the use of the death penalty, progressively restrict the practice, and reduce the offenses for which it might be imposed, with the view toward its eventual abolition. UN Secretary-General Ban Ki Moon has also called on countries to abolish the death penalty.

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A report yesterday by Frank N. Magid Associates Inc. found that the portion of 13- to 17-year-old social-media users in the U.S. on Facebook slipped to 88 percent this year from 94 percent in 2013 and 95 percent in 2012. In the same period, Twitter Inc. and messaging applications rose in popularity in that age group, the study showed.

The Menlo Park, California-based company first warned a year ago that teens weren’t using its website as often as before. Facebook stopped discussing teen usage on its earnings calls after last year’s disclosure alarmed investors. While the issue was all but forgotten as the company’s advertising revenue reached new highs, it’s a bigger concern now, according to Tero Kuittinen, a managing director at Magid in New York.

“You look at Facebook and you say, ‘Wow, something really changed in 2014,’” Kuittinen said. “If kids are starting to use so much of their daily time on messaging apps, surely it’s going to hurt somebody.”

Among 13- to 17 year-olds, Twitter usage climbed 2 percentage points to 48 percent, according to the report.

While more people use Facebook and its messaging app than any competitor, its user base tends to be older, with 55 percent of Facebook Messenger users being 37 or younger. By the same measure, 86 percent of Snapchat Inc.’s users and 83 percent of Kik Interactive Inc.’s users are under 37. Facebook sought to buy Snapchat last year for more than $3 billion, and was rebuffed.

Apart from Snapchat, messaging applications like WhatsApp are also popular with teenagers.

Vanessa Chan, a spokeswoman for Facebook, declined to comment on Magid’s report.

The post Facebook Popularity Decreases Among Teens appeared first on Eurasia Review.

By Jayshree Sengupta*

It is unbelievable that inflation about which we were so worried even a few months ago has come down to zero. For the last few years, the monetary policy was all about controlling inflation for which interest rates were hiked umpteen times. RBI governor Raghuram Rajan has maintained that the fear of high inflation has not yet disappeared completely. In November 2014 however, not only did the Wholesale Price Index came down to zero, but retail inflation or the Consumer Price Index also was at a low 4.4 per cent. It should bring much relief to the common man and woman because the real reason for inflation coming down is a fall in vegetable prices and of course petroleum prices.

Food inflation has come down from 15.4 per cent in November 2013 to 3.1 per cent in November 2014. Vegetable prices came down by 28.6 per cent, mainly because of lower onion prices and also due to cheaper transportation costs. Overall, food inflation in November was 0.6 per cent as compared to 19.7 per cent last year. It is creditable that the Modi government has been instrumental in an increase in the supply of vegetables which has contributed to the easing of inflation.

The main contributor, however, of lowering inflation is the fall in petroleum prices as a result of higher supply from the US and lower global demand in the face of the unwillingness on the part of the Organization of the Petroleum Exporting Countries to cut supply. Yet, there is little rejoicing about the sudden and steep fall in inflation and already there is talk of deflation creeping up in the economy which is always a bad sign and will lead to low profits for corporate sector, retrenchment and low demand. A lot of urging and nudging is going on to make RBI change its stance and lower interest rates. While it is not a panacea for triggering a higher level of growth, it would certainly help industrialists in undertaking new investments/innovations that could lead to enhanced competitiveness.

More worrisome, according to some economists, is the falling industrial growth which has shrunk by 4.4 per cent. Manufacturing growth, whose component in the Index of Industrial Production is the highest at 75 per cent, fell by 7.6 per cent. Perhaps both factors – lack of new investment and slowing demand — are at play in bringing down manufacturing growth even though export growth has risen in the last one month. Exports grew at 7.3 per cent in November but imports rose by 26.8 per cent. Gold imports rose by 500 per cent. Imports of coal also rose.

The slackening of domestic consumer demand has been due to the long term inflationary trend and perhaps insecurity due to slower economic growth and lack of jobs for the youth. External demand has definitely slackened due to the stagnant growth in the EU and tepid economic recovery in the US.

Manufacturing growth contributes most to creation of jobs and even though IT and service industries are the fastest growing sector in the economy, its potential for job creation is low because it often requires technical expertise and knowledge of English. Every year around 10 million people are entering the labour force, mostly young. Unless manufacturing growth is faster, jobs will not be created. Today people are worried about job security even when they have jobs and are reluctant to part with money for increasing demand for consumer durables and capital goods.

The common man or woman is worried about rising health and education expenditure. High school and college fees and exorbitant rates of hospitalisation are making everyone except the super-rich cautious about spending. Fear of resurgent inflation is also there at the back of people’s minds.

Many are, however, spending on gold which also shows their lack of confidence in the country’s economic future. The substantial increase in gold imports has contributed to the widening of the trade deficit. The rupee which is vulnerable to the various fears about the current account deficit getting out of hand is already coming down vis-a-vis the dollar. A lower rupee will help exports no doubt but may create problems of volatility which is not good for attracting foreign investors.

The Prime Minister’s ‘Make in India’ slogan is a good idea if India can bag more foreign investment and it can increase employment and output and manufacturing growth. But as is well known, various hurdles remain. The environmental clearance requirement and difficulties in land acquisition are both seen as big hurdles by investors and the government has to take a clear stand. Both land distribution and environment are important for the country’s future. There will always have to be safeguards for those who lose their land to rapid industrialisation under the Land Acquisition Act 2013-Right to Fair Compensation, Resettlement and Rehabilitation, Transparency in Land Acquisition. It contains elements of land sellers’ rehabilitation and employment programme and added responsibility of the buyers. This Act should be supported and not amended. The country’s long term interests have to be kept in mind and there also has to be more employment generation through higher industrial growth. It is a big challenge for the Modi government which is committed to faster clearances and approvals and yet cannot alienate the small and tribal land owners.

The problem with slow industrial growth is that tax collections will also be poor and it raises the important question of whether the government will be able to meet the fiscal deficit target. Where will the government find the money to finance all its multi-crore projects? Various disinvestment targets have been singled out and the process could be expedited. Selling off coal blocks is also on the agenda.

On the whole, whether the government can keep its promise of providing jobs for all, reducing subsidies through direct cash payment, having a cleaner India and having a higher manufacturing growth, will have to be seen in 2015. Chances of having high GDP growth as hoped for by the Finance Minister will require much work on the industrial front, specially in providing good infrastructure. Unless industrial growth steps up, GDP growth cannot be higher.

*(The writer is a Senior Fellow at Observer Research Foundation, Delhi)

The post India: Inflation Zero And Fears Of Deflation – Analysis appeared first on Eurasia Review.

This week’s passing into law of Australia’s Migration and Maritime Powers Legislation Amendment Act, which comes on the heels of a year of tightened border controls and refugee intake policy changes, could chill regional cooperation. Experts say it reflects global trends of treating migration as a security problem, and acknowledge that might be an important avenue for Southeast Asian regional policy development.

Since September 2013 Australia has run Operation Sovereign Borders (OSB), a military-led initiative the government describes as an effort to “to combat people-smuggling and protect Australia’s borders”. Navy ships intercept boats carrying asylum seekers, who are then detained in off-shore processing centres, the conditions of which have been criticized repeatedly, including by the UN Refugee Agency (UNHCR). Only one boat has made it to shore in 2014, to resounding cheers of “success” by the government, and condemnation by the UN High Commissioner for Human Rights, who said OSB was “leading to a chain of human rights violations”.

In November 2014 Australia reduced its resettlement quota from Indonesia from 600 to 450 and said no refugees registered (with UNHCR) after 1 July 2014 would be eligible for resettlement, sparking criticism from Indonesia, which cited the country’s own current refugee bottleneck (it is host to around 10,000 refugees, who experience notoriously long waits).

Australia portrayed the move as an export of its domestic success, “designed to reduce the burden, created by people smugglers, of asylum seekers entering Indonesia”. But critics say it “puts into serious question the humanitarian rationale for Australia’s resettlement program.”

Anne Hammerstad, a lecturer at the UK’s University of Kent and author of a new book on the history of UNHCR as a global security actor, told IRIN: “Part of the problem is that the whole migration topic has become securitized.” She argued that attitudes on migration have shifted – to the detriment of refugees – from humanitarian empathy to nationalized security. “9/11 harmed refugees and migrants generally – it straight away became an issue of border control and national security and dangers to society,” she said.

But that governments understand migration as a security issue, others say, could indicate an effective avenue for fresh regional policy dialogue.

“The fact that OSB has stopped the boats is a window of opportunity. It should be the start of a conversation not the end of it,” said Travers McLeod, chief executive officer at the Centre for Policy Development (CPD), an Australian think tank. CPD has been attempting to defuse Australia’s contentious immigration debate, which McLeod called “a political hot potato without a compass.”

Boats may, indeed, have stopped arriving in Australia, but asylum seekers in Southeast Asia have not stopped undertaking perilous journeys. According to UNHCR data released in November, around 54,000 people (all but 1,000 departing from Bangladesh and Myanmar) have undertaken irregular maritime journeys in the region in 2014. These numbers are up from previous years, showing a 15 percent increase from 2013, and triple the number of departures from 2012.

“While it’s foolish to strip away at the [1951 Refugee] convention itself, we have to realize there are different ways countries can work toward the protections the convention enshrines,” McLeod said, explaining: “In some places [migration] is a trafficking issue, in some places it’s about controlling the flow, in some places it’s a security issue, [and] in many cases it is about access to protection.”

Going it alone

The report on a July 2014 CPD roundtable meeting for Southeast Asia’s migration stakeholders, titled Beyond the boats: building an asylum and refugee policy for the long term, explained that Australia’s migration debate treats forced migration “primarily as a matter of domestic politics, rather than regional policy” and that denial of access to Australia for maritime arrivals “risks closing the protection space”.

Indonesia and Australia are co-chairs of the Bali Process, a regional 50-member mechanism established in 2002 to combat people-smuggling, which has been criticized for failing to produce regional results while serving Australia’s political interests.

Pointing to the November resettlement reduction from Indonesia, Maria O’Sullivan, a law lecturer at the Castan Centre for Human Rights Law at Monash University in Melbourne cast doubt on Australia’s regional commitment: “If Australia does wish to establish a wider regional framework between countries in Southeast Asia, a ban on resettling asylum seekers from Indonesia, one of Australia’s most important regional asylum partners, seems contrary to this.”

According to McLeod, the CPD dialogue, because it was conducted under the anonymizing “Chatham House” rules, allowed regional stakeholders to speak more openly than they do when representing their countries in public. He said: “What we saw at the roundtable was the value of including representatives from Indonesia and Malaysia. Their presence changed the tenor of the discussions and facilitated a richer understanding of the issues.”

Government hats off?

The political sensitivities around migration among governments in the region, including security concerns, mean a more private approach to cooperation might be necessary. CPD report recommendations include establishing a “Track II” regional dialogue.

McLeod told IRIN he thinks a “Track II” format, in which participants from around the region can gather and discuss policy without officially representing their respective constituencies or governments, could extend the comfort level achieved at the CPD roundtable by mimicking regional security talks.

“The Track II format is usually used for discussions about trade or security – it’s clear that migration is itself a security issue for many of the governments concerned – so it’s a format that could work well,” he said, echoing research that has found unofficial policy dialogues to be a crucial component in Southeast Asian regional cooperation.

Migration’s “perfect storm”

While the regional dialogue may need to allow focus on migration as a security issue, that discussion alone won’t erode the global construal of migrants as a threat. For Hammerstad, that task is broader – and involves restoring public understanding that migration has been a human behavior throughout history.

“The question is how to get to a point where societies receiving migrants feel that the balance is OK,” she said. Calling the current global migration situation “a bit like a perfect storm”, she explained: “We have refugee receiving countries feeling like their economy is not very solid, coupled with large-scale humanitarian crises and record level migration.”

The current debate, she says, includes a “knee-jerk reaction that migration is unnatural and that the people who migrate are there to abuse your system and take advantage, rather than people who want to prosper in a different place than their home. It’s a lack of empathy in public discourse.”

The post Australia: New Migration Bill Shifts Task To Security – Analysis appeared first on Eurasia Review.

Qatar has booked two recent successes in what has become an uphill struggle to improve its tarnished image: a papering over of its rift with Saudi Arabia and the United Arab Emirates sparked by Qatari support for the Muslim Brotherhood and reports that it may be interested in acquiring London Premier League club Tottenham Hotspur FC.

The successes come against the backdrop of a host of news reports that have done little to polish Qatar’s controversial image. The possible Tottenham acquisition could generate a counter dote but risks reviving debate whether Gulf states are in part using the purchase of high profile soccer clubs as a reputational management tool or in the words of human rights critics reputation laundering.

To be sure, Qatar’s reported interest in Tottenham is driven by more than its immediate reputational issues. Like its Gulf rival, the United Arab Emirates which owns Manchester City FC, Qatar has long been believed to want an English Premier League presence. Efforts a couple of years ago to acquire Manchester United foundered on disagreement over pricing. Qatar’s most prominent European trophy is Paris Saint-Germain FC (PSG) alongside sponsorships that include FC Barcelona.

Yet, that is where the trouble starts. Reports in Israeli and Jewish media suggest that Barcelona may want to end its association with Qatar when their sponsorship agreement terminates in 2016. Barcelona is said to be concerned about persistent reports of Qatari involvement in the funding of terrorism, including its support for Hamas, the Islamist group associated with the Brotherhood that controls the Gaza Strip.

Barcelona has yet to comment on the reports and it was not immediately clear whether or not they were part of an intermittent Israeli campaign to further sully Qatar’s image. Israel has criticised Qatar for its support for Hamas. Israel’s ambassador to the United Nations Ron Posner went as far as describing the Gulf state as a ‘Club Med for terrorists’ in an opinion piece in The New York Times.

Reports of Qatari association with funding of terrorism however go far beyond Hamas, a group on which the international community is divided. No Arab state has proscribed Hamas despite brutal crackdowns on the Brotherhood in Egypt and the banning of the Brothers in Saudi Arabia and the UAE and their designation as a terrorist group by the United States and the European Union. The European Union’s designation was recently called into question by a ruling by the Court of Justice of the European Union that reversed the designation.

Similarly, the banning of the Brotherhood by the three Arab states has not sparked similar moves by the United States, the EU or the United Nations, all of which have taken Egypt, Saudi Arabia and the UAE to task for human rights abuses, including in their crackdowns on the Brotherhood.

Gulf states opted to gloss over fundamental differences over the Brotherhood with this month’s return to Doha of the ambassadors of Saudi Arabia, the UAE and Bahrain who had been withdrawn in March in protest against Qatari support for the Brotherhood and the holding of a Gulf Cooperation Council (GCC) summit in the Qatari capital. The fragility of the agreement to set aside differences was however evident from the fact that the summit was cut back from two days to one, assertions by participants that the proceedings had been tense, and the fact that Qatar has not broken its ties to the Brotherhood.

To pacify its critics, Qatar earlier this year asked seven Brotherhood leaders to relocate from Doha but did not withdraw their residence permits or ask their families to leave. The group’s controversial spiritual leader, Sheikh Yousef al Qaradawi, a naturalized Qatari citizen and prominent fixture on state-owned Al Jazeera, remains resident in Doha, but has in recent weeks not appeared on the television network. It was not clear whether his disappearance from Al Jazeera is permanent or as in the past temporary. As part of the setting aside of their differences Qatar and Egypt have further agreed to gradually improve relations broken off as part of the Gulf rift and Qatari support for Mohammed Morsi, a Muslim Brother who was elected president of Egypt but removed from office in a military coup.

Allegations of Qatari tolerance of funding of terrorism this month took a serious turn with the identification as a global terrorist by the US Treasury of Abdullah al Nuaimi, reportedly a former head of the Qatar Football Association. Mr. Al Nuaimi was one of several Qatari nationals that have been designated as terrorism financiers not only by the US but also by the EU and the United Nations.

The Treasury charged that Mr. Al Nuaimi had “provided money and material support and conveyed communications to al-Qa’ida and its affiliates in Syria, Iraq, Somalia and Yemen for more than a decade.  He was considered among the most prominent Qatar-based supporters of Iraqi Sunni extremists,” the Treasury said.  It said Mr. Al Nuaimi had transferred at least $2.6 million to Al Qaeda, had served as an interlocutor between Qatari donors and Al Qaeda in Iraq and assisted the group in its media communications. It also said Mr. Al Nuaimi had channelled funds to Al Shabab jihadists in Somalia and Al Qaeda in the Arabian Peninsula (AQAP) in Yemen.

Qatar has rejected allegations that it turns a blind eye to funding while Mr. Al Nuaimi has denied the Treasury claims. There has however been no indication that Qatar has launched an investigation of its own into the Treasury assertions. Mr. Al Nuaimi is believed to remain a free man in Qatar fuelling allegations that he has close ties to senior officials in the Qatari government and ruling family.

A historian of religion, who was detained in 1988 for his opposition to government-led reforms particularly regarding women’s rights, Mr. Al Nuaimi was released in 1991 on condition that he no longer would speak out publicly. Although Mr. Al Nuaimi was originally arrested on the orders of the then emir, Sheikh Hamad bin Khalifa Al-Thani, he was received by Sheikh Hamad after the emir had ordered his release. Qatari newspapers said that the current emir, Sheikh Tamim bin Hamad Al Thani, who also serves as chairman of Qatar’s National Olympic Committee (NOC) and is a member of the International Olympic Committee (IOC) as NOC head gave Mr. Al Nuaimi an award for his contribution to Qatari sports in 2010. Sheikh Tamim was at the time crown prince.

Qatar has defended the maintaining of open lines to all parties to a conflict as part of their mediation-focused foreign policies that allows the Gulf state to step in at times that others  are unable to propose solutions or build bridges. “I am very much against excluding anyone at this stage, or bracketing them as terrorists, or bracketing them as al-Qaeda. What we are doing is only creating a sleeping monster, and this is wrong. We should bring them all together, we should treat them all equally, and we should work on them to change their ideology, i.e. put more effort altogether to change their thinking,” Qatari Foreign Minister s Khalid bin Mohamed al-Attiyah told an international security conference in Manama in December 2012. Al-Attiyah was referring to Syria but his remarks go to the heart of Qatari policy.

Speaking on CNN in September 2014, Qatar’s emir, Sheikh Tamim, said that “we have to see the difference between movements. I know that in America and some countries they look at some movements as terrorist movements. In our part of the region, we don’t. But if you’re talking about certain movements, especially in Syria and in Iraq, we all consider them terrorist movements. And we don’t accept any fund for those and we don’t accept anybody funding those groups… We have a strong law against funding terrorist groups… There are differences that some countries and some people that any group which is — which comes from an Islamist background are terrorists. And we don’t accept that.”

Qatar shares with its Gulf detractors a desire to ring fence the energy rich region from the winds of political change that have recently swept the Middle East and North Africa. But contrary to its critics, it believes it can best do so by supporting forces of change elsewhere in the region. Its approach appears to have a degree of resonance among the Arab public.

Despite the fact that public opinion in the Arab world has soured towards the popular Arab revolts as a result of the coup in Egypt and the turmoil in Libya, Yemen, Iraq and Syria according to recent research by Zogby Research Services, most of those polled with the exception of Saudi and UAE nationals felt that Egypt was far worse off following the military coup.

Only a majority of Lebanese and Emiratis believed that the Brotherhood had played a negative role in Egypt but only Turks said that the group played a positive part in their own country. In Egypt itself opinions were evenly divided, suggesting that popular support for the Brotherhood as increased since the crackdown on the group by general-turned-president Abdel Fattah Al Sisi.

With the exception of Egyptians, Emiratis and Saudis, most of those polled judged Saud Arabia’s role in the region as negative.

While Qatari positions did not witness a wholesome rejection in the poll, its image problems were worsened not only by the terrorism designations and the Israeli campaign but also efforts by the UAE to undermine its rival’s credibility. And the problems challenging Qatar’s image don’t end there.

World soccer body FIFA is set to decide in March on the dates for the 2022 World Cup to be hosted by the Gulf state. That decision coincides with a deadline for the creation of an independent commission to oversee reform of Qatar’s controversial labour sponsorship ship system that puts migrant workers at the mercy of their employers. The system has been denounced by trade union and human rights activists.

A Qatar-sponsored study of its labour legislation by British-based law firm DLA Piper recommended the establishment of the commission. FIFA executive committee member Theo Zwanziger, who is in charge of working with Qatar on the labour issue, warned that Qatar could be deprived of its hosting rights if it failed to meet the deadline.

Further tarnishing Qatar’s image was an Associated Press investigation that disclosed that Qatar paid foreign workers to attend soccer matches in otherwise often empty stadia to counter often biased criticism that it lacks a soccer culture or history. A poll among Qataris earlier this year cited the paying of migrant workers to be fans as a reason for reluctance to attend matches, alongside among others weather, scheduling, and traffic.

A Qatari acquisition of Tottenham would no doubt at least temporarily refocus some of the negative reporting on the country. But it could also revive assertions that wealthy Gulf countries are seeking to launder their reputations through soccer acquisition. Human Rights Watch charged the UAE with just that in 2013 while former English Football Association chairman Lord Triesman called for making a country’s human rights record one of the criteria for establishing whether a state entity or member of a ruling family passes the “fit and proper person test” for ownership of a Premier League club.

The post Potential UK Club Acquisition Could Help Qatar Polish Its Image – Analysis appeared first on Eurasia Review.

By Paul Bartlett*

Kazakhstan’s flagship international cycling team will have to sweat it out until February to see if it can compete that year in major international road races, including the Tour de France. A series of doping scandals has tainted the team. But where international sports officials see serious infractions, Kazakhstanis tend to see an international plot to steal their glory.

Five Kazakhstani riders from the Astana stable failed drug tests in quick succession this year, triggering an investigation by the sport’s governing body, the International Cycling Union (UCI). The cycling team – known as Astana Pro Team – is bankrolled by Kazakhstan’s sovereign-wealth fund, Samruk-Kazyna. The team, which has produced Tour de France winners several times, helps promote Brand Kazakhstan globally.

The UCI has awarded the team a provisional license for the 2015 World Tour on condition that an independent body, the University of Lausanne’s Institute for Sport Sciences, carries out an audit of the team’s management practices. Specifically, the audit will seek to determine the extent of management’s responsibility for the doping failures and what changes have been made to prevent future instances of doping. The Institute is due to report its findings in February.

“In the case of the Astana Pro Team, this remains a very serious situation for our sport given the number of doping cases,” said UCI President Brian Cookson in a statement released after the December 10 ruling.

Cookson added that he considered the team “on probation” until the audit is completed.

Astana’s latest troubles began when rider Valentin Iglinsky tested positive in August for EPO, a banned substance that boosts production of red blood cells. He admitted guilt and was kicked off the team.

In October, officials announced that Iglinsky’s elder brother, Maxim, who was part of Team Astana’s Tour de France squad this year, had also tested positive for EPO. He was suspended. In addition, three members of Astana’s second-tier Continental Team, which feeds into the main group, tested positive for anabolic steroids this year.

Astana Pro Team Manager Alexandre Vinokourov, the face of Kazakhstan cycling internationally, insists that the skein of positive tests is an aberration. “In the last week, there have generally been a lot of lies told against us,” he told sport.zakon.kz on December 11 after UCI’s decision on the provisional license. “Someone clearly didn’t want Astana to get a license.”

Vinokourov dismissed suggestion that the constant scandals are indicative of an institutionalized problem. He claimed that the UCI ruling proves “this is not systematic doping, this is a one-off situation, an Iglinsky brothers’ family one, shall we say.”

Doping is nothing new in Kazakhstan. When Astana entered the world of cycling sponsorship in 2006, the problems were already clear. In 2006, Vinokourov secured funding from his native Kazakhstan for his Liberty-Seguros team, which was based in Spain, after its backers bailed over a doping scandal.

The following year, Team Astana was born from the ashes of Liberty-Seguros and awarded an UCI World Tour license, allowing it to compete in the top-flight of international cycling. During the 2007 Tour de France, Vinokourov tested positive for illegal substances following a blood transfusion. He and his team were banned from the Tour that year; his team was also banned the following year and he for two more years.

Under new management and with a new look – including riders Alberto Contador and the controversial American Lance Armstrong, who was banned for life for doping in 2012 – Astana bounced back to take Tour de France titles in 2009 and 2010. But the victories were fleeting. Contador was later stripped of his 2010 title after failing a doping test. Astana produced the Tour winner again this year.

A common thread through this checkered history is the presence of Vinokourov, the poster boy of cycling in Kazakhstan. A native of the country’s north, Vinokourov rose to the very top of global cycling, winning Olympic gold in 2012. Though he then retired from active competition, he has remained a key figure in Team Astana’s management.

Following the team’s latest spate of failed drug tests, there has been increasing international pressure for Vinokourov to be investigated.

But in Kazakhstan Vinokourov remains untouchable. Despite his doping offense, he is one of the country’s ambassadors for Almaty’s 2022 Winter Olympics bid. Vinokourov is also facing charges in Belgium that he bribed a fellow rider, Russia’s Alexandr Kolobnev, to throw a race.

That colorful past is no problem in Kazakhstan, says Almaty-based analyst Aidos Sarym.

“Both officials and ordinary people like it when sportsmen from Kazakhstan bring victory, but few people consider how these victories are achieved,” Sarym told EurasiaNet.org. “Society doesn’t have the notion that doping is evil. For that reason, evidently, society doesn’t condemn Vinokourov or other sportsmen. People rather think up conspiracy theories and find a plot in this.”

Conspiracy theories are certainly rife in the Kazakhstani media. Sports.kz journalist Alexander Strelnikov wrote in November that “external enemies” are just jealous of Astana’s successes and trying to ruin the team.

“First the media again, after several years, starts dwelling on the subject of Alexandre Vinokourov’s possible commercial dealings with the Russian Kolobnev,” Strelnikov continued. “Then, when it becomes clear that this old story is not for some reason having the desired effect, suddenly one after the other people start latching onto the use of banned substances by Kazakhstani cyclists.”

*Paul Bartlett is an Almaty-based freelance writer.

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More good news regarding Guantánamo, as four Afghans have been released, and returned to Afghanistan in what US officials, who spoke to the New York Times, “are citing as a sign of their confidence in new Afghan President Ashraf Ghani.”

The Times added, “Obama administration officials said they worked quickly to fulfil the request from Ghani, in office just three months, to return the four — long cleared for release — as a kind of reconciliation and mark of improved US-Afghan relations.”

The Times also noted that there is “no requirement that the Afghan government further detain the men” — Shawali Khan, 51 (ISN 899), Abdul Ghani, 42 (ISN 934), Khi Ali Gul, 51 (ISN 928) and Mohammed Zahir, 61 (ISN 1103) — adding that Afghanistan’s government-appointed High Peace Council also “requested the repatriation of the eight Afghans who are among the 132 detainees remaining at Guantánamo,” 63 of whom have been cleared for release.

The release of the men had created tension in Washington D.C., with defense secretary Chuck Hagel, who is required to certify to Congress that it is safe to release prisoners, refusing to sign off on their release after Gen. John F. Campbell, the senior US commander in Afghanistan, “raised concerns they could pose a danger to troops in the country.”

However, administration officials also said that Gen. Campbell and all the “military leaders on the ground have now screened the move.” Australia’s ABC News explained that a senior US official had said that the four men were “identified as ‘low-level detainees’ who were cleared for transfer long ago and were not considered security risks in their homeland.” They were “originally detained on suspicion of being members of the Taliban or affiliated armed groups,” but a second senior US official said, “Most, if not all, of these accusations have been discarded and each of these individuals at worst could be described as low-level, if even that.”

I have been writing about these men’s cases for many years, and have had no doubt that there has never been any reason for their detention. In an article in July 2012, I explained their stories as follows:

Shawali Khan, whose habeas petition was denied in September 2010, was a shopkeeper, who seems, quite clearly, to have been falsely portrayed as an insurgent by an informant who received payment for doing so. To add further shame to the ruling, the judges of the D.C. Circuit Court refused his appeal [in] September [2011], apparently consigning him to Guantánamo forever on an apparently legal basis. [Also see a profile here by Len Goodman, one of his lawyers].

Abdul Ghani [was] a poor villager who scavenged for scrap metal, [and] was put forward for a [military commission] trial in 2008 because the authorities claimed that he had played a part in attacks and planned attacks as part of the insurgency against US forces. Ghani has always refuted the charges, and the charges against him were dropped before George W. Bush left office, and have not been reinstated. [Also see a profile here by Lt. Col. Barry Wingard, one of his lawyers].

Khi Ali Gul [was] captured in Khost and accused of taking part in a bomb plot and being part of a Taliban assassination team. During his long years in Guantánamo, he has stated that he fought with US forces in Tora Bora, and described one occasion when “the Americans were sleeping and we were guarding them.” He added, “If I were their enemy, I would have killed them all.” He was captured at a checkpoint, where, he said, “there were some people that I had a dispute with,” and he added that they “told the American soldiers a lie,” and he was then arrested.

Mohammed Zahir, 48 years old at the time of his capture in July 2003 … stated in Guantánamo that he was a teacher, and said that he had been set up by Taliban sympathizers, who arranged for his arrest by telling lies to the US forces. In contrast, however, the US authorities claim[ed] that he was employed by the Taliban in the Secret Information Office in Ghazni, and that he “possessed information associated with weapons caches, arms dealings and Taliban personalities.”

It is worth noting, however, that these claims were almost certainly dismissed when he and the other men were approved for release in 2009 by President Obama’s high-level, inter-agency Guantánamo Review Task Force.

Looking to the future, the New York Times pointed out that, for President Obama to close Guantánamo, he “faces the challenge of working out what to do with any detainees who aren’t cleared for transfer — either because the United States wants to prosecute them or continuing holding them because they are considered too dangerous to release.” Only ten men are facing — or have faced — trials, and the rest are in the unacceptable position of being “considered too dangerous to release,” even though the task force that made those recommendations admitted that they had insufficient evidence to prove their claims — or to put the men on trial. All but those facing trials — so currently 59 of those still held — are gradually having their cases reviewed by Periodic Review Boards, which have so far reviewed the cases of nine men and recommended six for release.

However, while President Obama needs to press ahead with the release of all the prisoners cleared for release, the biggest outstanding problem for him, if he is to fulfill his promise to close the prison, which he made on his second day in office in January 2009, is to somehow overcome the huge obstacle raised by Congress, which “has passed legislation blocking detainees from coming to the US for detention or trial,” as the Times put it.

On Friday, President Obama issued a statement objecting to Congress’s latest restrictions on closing Guantánamo, in next year’s National Defense Authorization Act, calling the closure of Guantánamo a “national imperative.” He also pointed out that, despite having recently released the last three prisoners in the Parwan Detention Center (formerly known as Bagram), “the detention facility at Guantánamo Bay, Cuba, remains open for the 13th consecutive year, costing the American people hundreds of millions of dollars each year and undermining America’s standing in the world.” He added, “The continued operation of this detention facility weakens our national security by draining resources, damaging our relationships with key allies and partners, and emboldening violent extremists.”

The Times also noted that some supporters of the closure of Guantánamo — and I count myself in this camp — question “whether the United States has the authority to continue detaining prisoners captured in the Afghan conflict after the end of combat operations at year’s end.”

J. Wells Dixon, an attorney with the Center for Constitutional Rights, said, “We will certainly expect to see legal challenges to continued detention at the end of hostilities, which is just in a couple weeks.”

Dixon, who worked on Shawali Khan’s case, “said he hopes Khan can reunite with his father and brother after nearly 13 years at Guantánamo.” Specifically, Dixon said, “He was sent to Guantánamo on the flimsiest of allegations that were implausible on their face and never fully investigated. He never should have been there.”

This is not only true of the four Afghans just released; it is also, I have long maintained, true of some, or perhaps most of the eight Afghans still held — Obaidullah, for example, Mohammed Kamin and Karim Bostan.

I hope we will shortly be hearing about more releases from Guantánamo — including Shaker Aamer, the last British resident in the prison, also cleared for release, who is the focus of a high-profile campaign, We Stand With Shaker, that I launched a month ago with a colleague, Joanne MacInnes. In the meantime, however, it is worth sparing a thought for these four men whose implausibly long ordeal — imprisoned for 11 or 12 years without adequate explanation — has finally come to an end.

The post Four Insignificant Afghan Prisoners Released From Guantánamo – OpEd appeared first on Eurasia Review.

Iran says the recent major US policy shift to restore diplomatic relations with Cuba invalidates Washington’s decades-old strategy of sanctions and isolation.

Iranian Foreign Ministry Spokeswoman Marzieh Afkham said that Cuba’s resistance over the past 54 years since the country’s revolution has “proved that the policy of isolation and sanctions pursued by domineering powers against the will and resistance of independent nations and governments is fruitless and ineffective.”

Pointing to the US acknowledgement that isolating Cuba had been ineffective, the Iranian official said the recent development surrounding Washington-Havana relations could be a step toward decreasing tensions in the region.

Iran’s Foreign Ministry spokeswoman has also dismissed a UN resolution on alleged human rights abuses in the Islamic Republic, saying UN mechanisms have turned into a political tool in the hands of the West.

Marzieh Afkham condemned any use of resolutions for political gains.

Iran dismisses the approval and content of such resolutions, Afkham said, adding “it is regrettable that the UN’s human rights mechanisms and tools are abused by certain Western countries”, some of which blatantly violate human rights themselves.

Afkham said the resolution was adopted based on biased and unreliable sources, adding that Iran has already responded to the allegations in the resolution based on well-founded evidence.

The Iranian official said that the anti-Iran resolution was passed at a time when Israel’s crimes along with growing terrorism and extremism constituted the main source of crisis in the Middle East.

Iran is committed to international rules and regulations and seeks to promote the human rights condition in the country as well as in the region and the world, she said.

The Iranian Foreign Ministry spokeswoman has also condemned a recent deadly terrorist attack by Boko Haram militants in Nigeria.

Afkham lamented the death of civilians in the raid and urged the immediate release of all the abductees.

According to reports, Boko Haram militants raided a small village in northeastern Nigeria, killing 35 people and abducting about 185 others, mostly women and young girls.

The post Iran Says Policy Of Isolation, Sanctions Against Nations Futile appeared first on Eurasia Review.

New Iranian central bank directives have put an end to the payment of daily interest on deposits, and only a minimum one-year deposit is allotted interest at 22 percent. Reports indicate, however, that some financial institutions are still offering daily interest rates at 27 percent per annum.

The joint meeting of bank executives and directors of the Central Bank set interest rates between 10 to 22 percent depending on the length of the fixed term. Interest will be paid on fixed deposits of at least one month, which will earn a 10 percent interest rate. The highest interest rate of 22 percent will only be allotted to fixed deposits of one year or longer.

The Mehr News Agency reports that new directives will be implemented starting Monday December 22.

The report adds that violation of these regulations will lead to written warnings followed by cash fines for repeat violations.

The move comes after President Rohani announced that the Money and Credit Council must adjust interest rates to reflect the declining inflation rate.

The post Iran Central Bank Announces New Rules For Interest Paid On Deposits appeared first on Eurasia Review.

With Christmas less than a week away, Santa and his helpers have been busy receiving stacks of letters from children around the world, according to the United Nations postal agency, which estimates the total this year will climb above 7 million.

The Universal Postal Union (UPU) released data this week showing that Posts in countries around the world have been going the extra mile as 25 December approaches, making sure that mail addressed to Santa Claus and other popular holiday figures – from the Three Wise Men and Saint Nicholas to Ded Moroz – gets the attention it deserves.

Although the global total of letters handled by elves in Santa’s mail room remains stable, Canadian and French Posts saw record numbers of letters processed last year, with the high volumes projected to repeat in 2014, according to UPU, which is a specialized agency of the UN.

Canadian elves replied to letters written in more than 30 languages, including Braille, many of which were addressed to Santa using his own special postal code: H0H 0H0.

In Portugal, Santa Claus (Pai Natal) is making sure some 2,000 disadvantaged children see their Christmas wishes come true. Their letters are published on a dedicated website and available at post offices across the country. Anyone can sponsor a letter and offer a child the gift they wished for. Correios delivers these packages free of charge, on behalf of Pai Natal, of course.

“Toys still dominate the Christmas wishes, but requests for clothes, pets or even brothers and sisters are increasing,” says Isabel Tavares of Correios Portugal.

A similar pattern was identified in Sweden, where Santa’s post office received about 22,000 letters last year.

“Santa receives letters from kids all over the world, many from Asia. They often send wishes for good fortune and good health rather than toys. The latter are more common for the European kids,” says Maria Ibsen of Swedish Post.

On the other side of the Atlantic, 20 post offices across the US are participating in the “Letters to Santa” programme. In New York City, where about 500,000 letters are processed each year, the program is nicknamed ‘Operation Santa’.

Because Santa is a universal superstar, he has addresses in many parts of the world. Posts often use this time of the year to teach children about the importance of properly addressing letters to their favourite holiday figure.

Established in 1874, the Universal Postal Union (UPU) has its headquarters in Berne, Switzerland’s capital. It is the world’s second oldest intergovernmental organization and has been a United Nations specialized agency since 1948.

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Tropical herbivorous fish are beginning to expand their range into temperate waters – likely as a result of climate change – and a new international study documents the dramatic impact of the intrusion in the Mediterranean Sea.

Temperate waters are typically dominated by algal “forests” and have naturally low levels and limited diversity of herbivores, the researchers say. But as tropical fish move into these waters, they are consuming much of the plant life and changing the habitat as well as the manner in which different species interact.

Results of the study, which was funded primarily by the Pew Foundation, have just been published in the Journal of Ecology. It builds on a previous study documenting the move of tropical fish species into temperate waters that recently was published in Proceedings of the Royal Society B.

“The introduction of tropical fish into more temperate regions is troubling and this new study gives a vivid example of what can happen when non-native species occupy a new ecosystem,” said Fiona Tomas Nash, a courtesy professor of fisheries and wildlife at Oregon State University and a co-author on both studies.

“We now know that the arrival of tropical fish into temperate areas is occurring on an increasing basis around the world,” she added. “This is the first attempt to characterize what impacts these fish are having – and the mechanisms driving these impacts.”

In this latest study, an international research team surveyed roughly 1,000 kilometers of coastline in the eastern Mediterranean to study two species of tropical fish called rabbitfish. They were introduced to the region through the Suez Canal and now have become a dominant component of the total fish biomass in the southernmost part of the eastern Mediterranean.

This part of the Mediterranean has two distinct areas – one with warmer regions that attract abundant numbers of rabbitfish, and colder regions where they are very rare or completely absent. Where abundant, their damage has been striking: a 65 percent reduction in canopy algae, a 60 percent reduction in overall benthic biomass (algae and invertebrates) and a 40 percent decrease in the total number of plant and animal species.

“The fear is that if the colder regions warm just a bit through climate change or some other mechanism, rabbitfish will begin moving into those areas as well,” Tomas Nash said.

To learn more about how the rabbitfish changed the ecosystem, the researchers videotaped fish feeding in the Mediterranean off Turkey in two areas – one dominated by tropical rabbitfish and the other dominated by native temperate fish. They were surprised by what they found. Native temperate herbivorous fish actually had higher consumption rates than the tropical rabbitfish. “We did not expect to see that,” Tomas Nash said.

But while native fish targeted only adult macroalgae, the two species of rabbitfish fed complementarily – one targeted the mature kelps while the other fed almost exclusively on emerging algal “recruits,” or juvenile plants.

“The result is that one species denudes the forest and the other prevents it from recovering,” said Tomas Nash, who also has a faculty appointment with the Mediterranean Institute for Advanced Studies in Spain.

A study off Japan by collaborators found that the introduction of tropical species there, including rabbitfish and parrotfish, resulted in the loss of kelp forests and the emergence of non-native corals in as little as 20 years.

In the first paper, the researchers outlined how tropical herbivorous fish primarily along west boundary currents are moving into temperate zones, including South Africa, Brazil, the Gulf of Mexico, Australia and Japan, as well as the Mediterranean. Other areas, including the Pacific Northwest of the United States, have not seen sustained spread of tropical species likely due to prevailing currents and because surface waters are too cold due to seasonal upwelling.

The researchers found algal forests in the waters off Greece had not been severely affected because only the rabbitfish that feeds on adult algae is present and in relatively low densities. They have just begun studies of rabbitfish and chub arrivals in Australia.

“The greatest damage that we documented was off Turkey, which may be serving as the proverbial canary in the coal mine,” Tomas Nash said. “The barrenness of the underwater habitat is unique and quite striking – it is spread over hundreds of kilometers.”

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Argentina is the only country in the world that was ‘developed’ in 1900 and ‘developing’ in 2000. Various explanations highlight the roles of trade openness, political institutions, financial integration, financial development, and macroeconomic instability. No study has so far attempted a quantitative assessment of the relative importance of each of these competing factors. This column presents new evidence suggesting that financial development and institutional change are two main factors behind the unusual growth trajectory of Argentina over the last century.

By Nauro F Campos*

Once upon a time, Argentina was a very rich country. There is little disagreement that this time was in the period before WWI. According to della Paolera and Taylor (2003), Argentina’s 1913 level of per capita income (USD 3,797 in 1992 US Dollars) compared favorably to that of France (USD 3,452) and Germany (USD 3,134.) Large inflows of foreign physical, human, and financial capital shored up the expansion of primary products exports (grain, meat, wool and leather) which fueled rapid economic growth.

Disagreement is seldom about whether the fall occurred and mostly about when and why. Some argue that the decline started with the Great Depression (e.g. Diaz-Alejandro 1985). Conde (2009) associates its beginning with WWII, Taylor (1992) argues for 1913, and Sanz-Villarroya (2005) estimates an even earlier structural break in 1899, while Campos et al. (2012) report Bai-Perron estimates supporting two main structural breaks (1922 and 1964). Yet by 1947 Argentina was still ranked 10th in the world in terms of per capita income and della Paolera and Taylor (2003) estimate that the ratio of Argentina’s to the OECD’s income declined to 84% in 1950, to 65% in 1973, and then to 43% in 1987. It rebounded in the 1990s but with the run-up to the 2001 crisis again reverted (Figure 1).

Figure 1. Ratio of Argentina’s GDP per capita to developed countries’ GDP per capita, 1885-2003

Note: Authors’ calculations using GDP per capita data from Maddison (2007), Western Europe is: Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Sweden, Switzerland and United Kingdom. US-CAN-NZ-AUS is Australia, Canada, New Zealand and the US.

A vast literature emerged offering various competing explanations for such extraordinary long-run relative economic decline (Taylor 2014). One reason that has received considerable attention is increased competition in international markets (especially from Australia, New Zealand, and Canada) during and after WWI and the concomitant decline in migration and foreign capital inflows. Finance has also received a great deal of attention with the Argentine decline linked to low savings rates and associated high population dependency rates (Taylor 1992). A key role has also been attributed to international financial integration as there may have been excessive dependence on one source of foreign capital (U.K.) with changes in global leadership (U.S.) contributing substantially to the Argentine decline (Taylor 1998).

Another well-researched reason is trade openness (Diaz-Alejandro 1985). The ratio of exports and imports to GDP in Argentina exceeded 50% in the pre-WWI period, declined throughout the inter-wars years (from about 45% to 20%), and practically did not exceed 25% after 1945.  It is still debated whether this was driven by the disruption of international trade during WWI and the Great Depression, or by the adoption of protectionist policies by successive Argentinean governments. These declining trade-to-GDP ratios may also reflect the failure to diversify away from agriculture and the exhaustion of the agricultural frontier (Debowicz and Segal 2014).

Many argue that macroeconomic policies in general – and their inconsistency and the resulting macroeconomic instability in particular – are also to blame. For instance, della Paolera et al. (2003) show how public deficits throughout Argentinean history play an important role in explaining the decline.

More recently emphasis has turned to institutional factors. Acemoglu and Robinson (2006, p.7) note that “The political history of Argentina reveals an extraordinary pattern where democracy was created in 1912, undermined in 1930, recreated in 1946, undermined in 1955, fully recreated in 1973, undermined in 1976, and finally reestablished in 1983”. Alston and Gallo (2010) identify the onset of widespread electoral fraud in the 1930s as a turning point and argue that this erosion of the rule of law is a main reason for the decline.

A horse race worth watching?

We use the power-GARCH framework and annual data from the 1890s onwards to provide a quantitative assessment of the relative importance of each of these competing explanations (trade openness, macroeconomic instability, institutional change, domestic financial development, and international financial integration), focusing on four different types of effects:

• direct (on mean economic growth),
• indirect (via growth volatility),
• dynamic (short- and long-run),
• and structural breaks

Regarding the direct effects on economic growth, the PGARCH multivariate analysis reveals a robust positive effect of the development of domestic financial institutions (private and savings bank deposits to GDP) as well as a negative growth effect from the instability of informal institutions (chiefly general strikes and guerilla warfare). As for the indirect effects on economic growth (through growth volatility), the results support negative roles for formal political instability (constitutional changes) and trade openness. The numerous constitutional changes and the radical changes in trade policy have significantly contributed to dampen the ‘expected’ part of growth volatility, and this in turn has a further negative effect on economic growth. In terms of the dynamic effects, the results suggest that changes in political institutions and international financial integration (U.K. interest rates) have affected Argentine growth negatively in the last hundred years or so both in the short- and in the long-run. Interestingly, the effects of political instability are larger in the short- than in the long-run, while those for financial development are negative in the short- but positive (and larger) in the long-run (Campos et al. 2014).

These combined results suggest that financial institutions and political institutions exhibited first-order effects on Argentina’s economic growth path since the 1890s. Their preponderance is justified on the basis that their effects are significant either directly or indirectly, and in both the short- and long-runs, and accounting for structural breaks. The direct growth effect of financial development is positive, but has a negative short-run effect and a larger, positive long-run effect. Hence Argentina’s fall is better explained by institutional change – informal political instability has a negative direct effect and negative short- and long-run impacts on growth, while formal political instability has equally significant and negative indirect growth effects (Campos et al. 2012 show that these results are also obtained for a much wider range of measures of political and financial institutions).

There are additional results worth mentioning. For instance, international financial integration may also contribute to the fall because both short- and long-run effects are negative, yet there are no robust direct or indirect effects. Trade openness may have contributed as well, because short-run and indirect effects are negative, yet no long-run effects were found. Accounting for structural breaks suggest that trade openness may have been important before 1930, while macroeconomic instability may have been particularly important in more recent years (after 1970.)

Crises’R’Us

What lessons do we draw? One may be tempted to portray the Argentine experience as the clearest case of post-1820 stagnation over a century – that is, of secular stagnation stricto sensu. One indeed may be tempted to derive as a main lesson that Argentina ‘proves’ that secular stagnation is a real possible outcome of any forthcoming ‘lost decade(s)’ in Europe (Crafts 2014.) Yet I do not believe that this is the main lesson. Instead it is one that economic historians already knew for a while (cf. Haber et al. 2007) but that has been, to a large extent, ignored by the rest of the profession – institutions do matter but among them, political institutions and financial institutions seem fulcral. We should try to do more to understand not only how these two sets of institutions individually affect growth but also how the manner in which they interact may ultimately shape economic development.

About the author:
*Nauro F Campos
Professor of Economics and Finance at Brunel University and CEPR Research Affiliate

References
Acemoglu, D, and J Robinson (2006), Economic Origins of Dictatorship and Democracy, Boston: Cambridge University Press.

Alston, L, and A Gallo (2010),  “Electoral Fraud, the Rise of Peron, and Demise of Checks and Balances in Argentina”, Explorations in Economic History, 47, 179-197.

Campos, N, M Karanasos, and B Tan (2012), “Two to Tangle: Finance, Instability and Growth in Argentina”, Journal of Banking and Finance, 36, 290-304.

Campos, N, M Karanasos, and B Tan (2014), “From Riches to Rags, and Back? Institutional Change, Financial Development, and Growth in Argentina since the 1890s”, Bonn: IZA DP 8654.

Crafts, N (2014), “Secular Stagnation: US hypochondria, European disease?”, in Teulings, C. & R. Baldwin (eds), Secular Stagnation: Facts, Causes and Cures, CEPR Press.

Conde, R (2009), The Political Economy of Argentina in the Twentieth Century, Cambridge: Cambridge University Press.

Debowicz, D and P. Segal (2014), “Structural Change in Argentina, 1935–1960:  The Role of Import Substitution and Factor Endowments”,  Journal of Economic History 74, 230-258.

Diaz-Alejandro, C (1985), “Argentina, Australia and Brazil Before 1929”, in D. Platt, & G. di Tella (Eds.), Argentina, Australia and Canada: Studies in Comparative Development, 1870-1965 (pp. 95-109). New York: St. Martin’s Press.

Haber, S, D North, and B Weingast (Eds.) (2007), Political Institutions and Financial Development, Palo Alto: Stanford University Press.

Sanz-Villarroya, I (2005), “The Convergence Process of Argentina with Australia and Canada: 1875-2000”, Explorations in Economic History, 42, 439-458.

Della Paolera, G and A Taylor (2003), “Introduction”, in G della Paolera and A Taylor (Eds.), A New Economic History of Argentina, Cambridge: Cambridge University Press.

Della Paolera, G, M Irigoin, and C Bózzoli (2003), “Passing the Buck: Monetary and Fiscal Policies”, in G. della Paolera and A Taylor (Eds.), A New Economic History of Argentina, Cambridge: Cambridge University Press.

Taylor, A (1992), “External Dependence, Demographic Burdens and Argentine Economic Decline after the Belle Époque”, The Journal of Economic History, 52, 907-936.

Taylor, A (1998), “Argentina and the World Capital Market: Saving, Investment, and International Capital Mobility in the Twentieth Century”, Journal of Development Economics 57: 147–84.

Taylor, A (2014), “The Argentina Paradox: Microexplanations and Macropuzzles”, NBER Working paper 19924.

The post The Riddle Of Argentina – Analysis appeared first on Eurasia Review.

The Sri Lanka government said that the country is placed 89th out of 146 nations in the Forbes’ Best Countries for Business 2014 ranking, while India was 93rd.

The Sri Lanka government said in a statement that Forbes noted, “however, low tax revenues are a major concern. A large trade deficit remains a concern, but strong remittances from Sri Lankan workers abroad help offset the trade deficit.”

The best country for business this year is Denmark, which ranked No. 1 three straight years between 2008 and 2010. The top10 includes also Hong Kong, New Zealand, Ireland, Sweden, Canada, Norway, Singapore and Switzerland.

Forbes’ annual ranking of the Best Countries for Business grades countries on 11 different metrics, including property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.

According to the Sri Lanka government, the Forbes report highlighted that the country “continues to experience strong economic growth following the end of the 26-year conflict with the Liberation Tigers of Tamil Eelam. The government has been pursuing large-scale reconstruction and development projects in its efforts to spur growth in war-torn and disadvantaged areas, develop small and medium enterprises and increase agricultural productivity. The government’s high debt payments and bloated civil service have contributed to historically high budget deficits, but fiscal consolidation efforts and strong GDP growth in recent years have helped bring down the government’s fiscal deficit. However, low tax revenues are a major concern.”

The government statement also highlighted that elsewhere in the report,  “The 2008-09 global financial crisis and recession exposed Sri Lanka’s economic vulnerabilities and nearly caused a balance of payments crisis. Agriculture slowed due to a drought and weak global demand affected exports and trade. In early 2012, Sri Lanka floated the rupee, resulting in a sharp depreciation, and took steps to curb imports. A large trade deficit remains a concern, but strong remittances from Sri Lankan workers abroad help offset the trade deficit. Government debt of about 80% of GDP remains among the highest in emerging markets.”

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By Gurmeet Kanwal*

Almost 130 innocent school children died in Peshawar on December 16 in one of the most brutal terrorist strikes in recent history. The Tehreek-e-Taliban Pakistan (TTP) claimed responsibility and called it a revenge attack for the Pakistan Army’s Operation Zarb-e-Azb in North Waziristan.

The deteriorating internal security environment in Pakistan has gradually morphed into its foremost national security threat. Karachi remains a tinderbox that is ready to explode. The Al Qaeda is quietly making inroads into Pakistani terrorist organisations like the Lashkar-e-Tayebba (LeT), Jaish-e-Mohammad (JeM), Harkat-ul-Jihad Al-Islami (HuJI), Tehreek-e-Nafaz-e-Shariat-e-Mohammadi (TNSM) and the Lashkar-e-Jhangvi (LeJ). The TTP has consolidated its position in North Waziristan and is giving the Army a tough time. Fissiparous tendencies in Balochistan and the restive Gilgit-Baltistan are a perpetual security nightmare.

Two successive Army Chiefs have publicly declared that internal instability is the number one national security threat. The Army is, however, relatively inexperienced in counter-insurgency operations. General Kayani had declared 2009 as ‘Military Training Year’ to re-orientate the Army towards internal security duties. Before becoming COAS, the current incumbent General Raheel Sharif had developed the training manuals for counter-insurgency. Over the last decade, the Army has deployed more than 150,000 soldiers in the Khyber-Pakhtoonkhwa and FATA areas. It has suffered almost 20,000 casualties, including about 5,000 dead since 2008. The total casualties, including civilian, number more than 50,000 since 2001.

Hurt by a series of Taliban successes in “liberating” tribal areas and under pressure from the Americans to deliver in the “war on terror”, in the initial stages the Pakistan Army employed massive firepower to stem the rot. This was the case when operations were launched to liberate the Swat Valley (Operation Rah-e-Rast, May-June 2009) and South Waziristan (Operation Rah-e-Nijat, October-November 2009). Unmindful of civilian casualties, fighter aircraft, helicopter gunships and heavy artillery were freely used to destroy suspected terrorist hideouts. This heavy-handed, firepower-based, approach without simultaneous infantry operations on the ground failed to dislodge the militants. But it caused large-scale collateral damage and alienated the tribal population even further.

Counter-insurgency operations against the TTP in South Waziristan drove most of the fighters to North Waziristan, but for long the Army remained reluctant to extend its operations to this province. North Waziristan has rugged mountainous terrain that enables TTP militants to operate like guerrillas and launch hit-and-run raids against the security forces. When cornered, the militants find it easy to slip across the Durand Line and find safe sanctuaries in the Khost and Paktika provinces of Afghanistan.

On June 15, 2014, the Pakistan Army and Air Force launched Operation Zarb-e-Azb (sharp and cutting) – their much delayed offensive against the TTP in North Waziristan. The operation began with air strikes and was subsequently followed up with offensive counter-insurgency operations on the ground. Approximately 50,000 regular soldiers are involved in the operation. The air operations were assisted by US drone strikes, which caused extensive damage. As a result of the operation, one million civilians left their villages and became refugees. Many terrorists are claimed to have been killed, most of them foreign terrorists.

There can never be a purely military or a purely political solution to an insurgency. A successful counter-insurgency strategy is a dynamic but balanced mixture of offensive operations conducted with a humane touch and socio-economic development. Political negotiations to address the core issues of alienation of the population and other political demands must also be conducted with the local leadership simultaneously. The tribal culture prevailing in the NWFP and FATA, with its fierce ethnic loyalties and diffused leadership, makes the task of the Army and the government even more difficult.

Creeping Talibanisation and radical extremism are threatening Pakistan’s sovereignty. If the Army fails to conclusively eliminate the scourge in the north-west, it will soon reach Punjab, which has been relatively free of major incidents of violence. After that, it will only be a matter of time before the terrorist organisations manage to push the extremists across the Radcliffe Line into India. There has already been one major incident of violence at the Wagah border on the Pakistan side. It is in India’s interest that the Pakistan government succeeds in its fight against radical extremism. Else, India will have to fight the Taliban at the Atari-Wagah border.

Political turmoil, internal instability, a floundering economy and weak institutions make for an explosive mix. Pakistan is not yet a failed state, but the situation that it is confronted with could rapidly degenerate into unfettered disaster. All institutions of the state must stand together for the Pakistani nation to survive its gravest challenge. The Army and ISI must concentrate on fighting the enemy within, rather than frittering away energy and resources on destabilising neighbouring countries.

*The writer is former Director, Centre for Land Warfare Studies, New Delhi.

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

Originally published by Institute for Defence Studies and Analyses (www.idsa.in) at http://www.idsa.in/idsacomments/PakistanIsHeadedForaDangerous_gkanwal_221214.html

The post Pakistan Headed For A Dangerous Denouement – Analysis appeared first on Eurasia Review.

(RFE/RL) — In 2014, the Islamic State (IS) extremist group emerged as one of the most powerful jihadi groups, rivaling even Al-Qaeda.

The extremist Sunni group now controls vast swathes of territory across Syria and Iraq and boasts thousands of fighters — including many from Western Europe. An anti-IS coalition led by the United States has mobilized more than 60 countries, including several Arab states, against the group.

Yet after months of air strikes, IS militants are still threatening to take over even more territory and are continuing to attract foreign fighters and execute Western, Syrian, and Iraqi hostages.

While the chaotic and rapidly changing situation on the ground in Syria and Iraq makes it very hard to predict what will happen in the coming months, RFE/RL asked a number of analysts and experts to evaluate what might we expect to see from IS as we move into 2015.

1. IS will push to take over more land across Iraq — and could take over Anbar Province

IS is “dependent upon constant victories and gaining and holding territory to maintain its base” and will continue to look for “targets of opportunity” to seize in Iraq and Syria, says U.S.-based analyst Joel Wing, who runs the Musings on Iraq blog.

These targets include key cities in Iraq’s largest province, Anbar, which local leaders have repeatedly warned will fall unless Iraqi security forces are given more military support from the Iraqi government.

Caleb Weiss, who co-writes The Long War Journal website, which tracks the war on terror, says Anbar’s provincial capital, Ramadi, and Amiriyat Fallujah (about 30 kilometers south of Fallujah) will continue to be points of contention as IS pushes to gain ground in the beleaguered province.

“[IS] already controls over 60 percent of [Ramadi] and unless the Iraqi security forces and our Sunni allies gets effective support, I think the entirety of Anbar’s capital will fall,” Weiss said.

Weiss suggests that we may also see IS becoming more active in western Anbar along Iraq’s border with Jordan.

Meanwhile, in Iraq’s eastern Diyala Province, IS will likely continue to find itself under pressure. Reportedly helped by the commander of Iran’s Quds Force, Qassem Suleimani, Shi’a militias and the Kurdish Peshmerga have already retaken several towns from IS, including Saadia and Jalawla. While IS will likely make a push in Diyala to regain lost territory (and lost prestige), the group could see more losses, as Iraqi forces continue to challenge it.

2. More U.S.-led coalition air strikes in Iraq and Syria

Coalition military leaders have reported signs that U.S.-led air strikes have forced Islamic State to switch from an offensive to a defensive strategy in Iraq and in parts of Syria, notably in the northern Syrian town of Kobani. 

These strikes look set to continue and may even intensify. Speaking to coalition leaders on December 3, U.S. Secretary of State John Kerry pledged to continue the campaign against IS for “as long as it takes,” while French President Francois Hollande has said France is willing to step up air strikes against IS.

Analysts warn that the West will need to do much more militarily in 2015 if the coalition is to make a noticeable impact against IS.

The West is “not committing anything near enough resources to make a real difference,” says Iraq analyst Wing. “Right now the coalition is more of a nuisance then a difference-maker in Syria and Iraq,” Wing says, noting that IS has been able to launch major attacks against Iraqi cities despite the strikes.

However, the U.S. is unlikely to commit combat troops to fight IS. As one senior U.S. administration official put it on December 3: “President [Obama] has been crystal-clear and does not envision a scenario in which U.S. ground troops would be in place.”

3. More U.S. support for Sunni tribes fighting Islamic State

As well as continued air strikes, we can also expect increased support from the United States to Iraqi Sunni tribesmen who are on the front lines in the fight against IS. A recent Pentagon document prepared for Congress stressed the importance of supporting Sunni tribal forces against IS and said the United States plans to spend $24.1 million arming them, including with AK-47s, rocket propelled grenades, and mortars.

However, support for the United States’ tribal allies should be “happening at a much larger scale,” says The Long War Journal’s Weiss, who believes that ensuring Sunni tribesmen are sufficiently armed will be “key to rolling back Islamic State advances” in the coming months.

4. IS recruitment will continue, as will efforts to stop it

Recent reports suggest IS has relaxed or even given up on security measures for foreign fighters. The group is also expanding its network of training camps across Syria and has continued to attract recruits — including women — from Western Europe, Central Asia, and Southeast Asia.

This trend looks set to continue, particularly if the group can carry on attracting new recruits by lauding its gains in Iraq and Syria.

To counter the recruitment, we can expect to see increased attempts by governments to crack down on their nationals traveling to Iraq and Syria, and guard against local radicalization by clamping down on IS’s propaganda efforts. Steps have already been taken in Russia  to block pro-IS social media accounts and in Kazakhstan to ban and block an IS propaganda video. We can also expect to see governments in certain countries — particularly in Central Asia — continue to use the IS threat as a means to justify increased controls on religious freedoms.

5. IS training facilities will continue to spread

IS will keep on expanding its archipelago of training camps in Syria and Iraq, amid ramped up efforts to train the influx of recruits and existing fighters in those countries.

The U.S.-led coalition is likely to take steps to slow these efforts down.

The Long War Journal’s Weiss, who together with his colleague Bill Roggio has mapped 25 IS training camps across Syria and Iraq, says that coalition air strikes against these camps “might help cut down on [IS] recruitment and potentially [its] effectiveness.”

6. More local jihadi groups will pledge allegiance to IS

If IS can continue to make gains in Syria and Iraq, and if it can continue with its slick propaganda efforts, its influence is likely to spread as more local groups pledge allegiance to IS and its leader, Abu Bakr al-Baghdadi.

Groups in places like Sinai, Algeria, and Saudi Arabia have already sworn oaths of allegiance to Baghdadi, and experts in Libya have warned that the eastern town of Derma is emerging as an IS stronghold.

Aymenn J. al-Tamimi, a British expert on jihadi groups at the Interdisciplinary Center in Israel, says that the Sinai-based An-sar Bayt al-Maqdis’s recent pledge of allegiance to Baghdadi “consolidates the trend of moving towards alignment with IS in Gaza-Sinai, and that we may see another Gaza-Sinai jihadi group, the Mujahedin Shura Council in the Environs of Jerusalem (MSC), following [its] example.”

More breakaway groups in Russia’s North Caucasus may well pledge allegiance to IS, as the group’s increasing influence continues to destabilize and fragment the insurgency in that region.

– Joanna Paraszczuk

The post What’s Next For Islamic State? – Analysis appeared first on Eurasia Review.

North Korea appears to be experiencing a widespread Internet outage, just days after President Barack Obama warned the U.S. would retaliate for a cyber attack on Sony Corporation that was blamed on Pyongyang.

The reason for the massive outage is not yet clear. A State Department spokeswoman, when asked about the situation, declined comment.

However, she did say the U.S. government is discussing a range of options in response to the Sony hacking, some of which, she said, will be “seen” and some that “may not be seen.”

Doug Madory, a spokesman for the U.S.-based Internet analysis firm Dyn Research, said the Internet problems in North Korea could be the result of an attack.

Earlier, North Korea had called on the United States to apologize for implicating Pyongyang in the hacking of Sony Pictures and threatened to fight back in a variety of ways, including cyberwarfare.

The National Defense Commission for Pyongyang said in state media late Sunday that the U.S. government was wrong to blame North Korea for the hacking. It also said the claims are groundless.

Meanwhile, China’s Foreign Ministry said it does not have enough information to determine whether reports that North Korea used Chinese facilities to stage a cyberattack on Sony Pictures are true.

Foreign Ministry spokesperson Hua Chunying said Monday China is “opposed to all forms of cyberattacks” and would not reach any conclusions without having “enough facts.”

However, Hua said China is opposed to attacks on a third party “through making use of the facilities of another country” and is ready to have a “dialogue with other countries.”

The United States is in talks with China to possibly help block cyberattacks from Pyongyang.

Cyber theft

The request could be problematical because Washington has long said Chinese cyber theft has threatened U.S. defense secrets, hurt American companies’ competitiveness and cost American workers jobs.

President Barack Obama said the United States is reviewing whether to put North Korea back onto its lists of state sponsors of terrorism following the cyberattack on Sony Pictures, which U.S. officials blame on Pyongyang.

Speaking on CNN’s State of the Nation, Obama said he did not consider the hack an act of war, but a very costly, very expensive example of cyber vandalism.

Japan is also condemning the recent hacking attack. Chief Cabinet Secretary Yoshihide Suga said Monday Japan is maintaining close contact with Washington on the matter.

A member of the U.S. House Foreign Affairs Committee, Democrat Brad Sherman of California, is calling on his colleagues to double the budget for Voice of America and Radio Free Asia’s Korean broadcasts, in response to what he calls “vandalism and threats of violence to suppress speech in the United States.” VOA and RFA broadcast 11 hours of news and information programming in Korean daily. Sherman says that should be increased to 24 hours per day.

National security issue

Suga said cyberattacks also pose a serious problem to the national security of Japan.

“Regarding this case, our nation is coordinating closely with the United States and we support the measures taken by the United States in this regard. Cyberattacks are a serious problem related to the national security of our nation also, and we strongly criticize the hacking that took place,” Suga said.

North Korea denies it was responsible for hacking Sony Pictures’ computer network and posting embarrassing e-mails and other private data.

The hackers call themselves the Guardians of Peace and warned there would be a “bitter fate” for anyone attending a public showing of the movie “The Interview,” a film in which the CIA hires two journalists to kill North Korean leader Kim Jong Un.

Sony has canceled the scheduled December 25 release of the satirical comedy.

Launched a ‘counteraction’

On Sunday, North Korean state media reported the country’s Policy Department of the National Defense Commission issued a statement saying it is not aware of the country of residence of the hackers.

It said it has evidence the Obama administration was involved in the making of “The Interview” and warned that North Korea has already launched a “counteraction.”

Obama has criticized the film’s cancellation and warned such digital attacks are something the country will have to adapt to.

Pyongyang has said it can prove it was not involved in the attacks and has warned of “grave consequences” if Washington fails to accept the invitation for a joint investigation.

The United States has rejected the offer.

Sony Pictures chairman Michael Lynton told reporters Friday that the studio had no choice but to cancel the film’s release because American theaters were unwilling to show it.

Lynton did, however, tell interviewers that Sony did not give in to the hackers, and is trying to find some format for people to view the film, possibly through a video-on-demand service or over the Internet.

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By Emre Tunç Sakaoğlu

Russia is heading for the most severe financial crisis since 1998 when Moscow defaulted on domestic loans.

The Russian Economy Minister Alexei Ulyukayev was quoted by Russian media last Thursday saying his country’s economy is currently facing a perfect storm, due to a combination of Western sanctions, low oil prices, and the slow pace of global economic recovery. He also admitted that it is a crisis that Russia is going through, but his government lacks a concrete roadmap to tackle the country’s complex problems.

According to Ulyukayev, the persistent weakness of the ruble against the dollar leads to inflation, diminishing Russian consumers’ purchasing power. It also drains Russia’s savings and undermines Russian companies’ capacity to pay off their debts denominated in foreign currencies.

The Central Bank of Russia (CBR) previously appealed to foreign exchange interventions in order to support the ruble. It has spent around $80 billion with the aim of shoring up the ruble throughout this year.

Despite all efforts, a renewed round of wild swings in the ruble’s value hit Russian economy past week. The value of the ruble plunged to an all time low as exchange rates peaked at 80 rubles to dollar on Tuesday.

As the latest intervention in foreign currency markets proved insufficient to keep the value of the severely-weakened ruble against the dollar stable, CBR decided to increase the key lending rate to 17 percent from 10.5 percent that day, driving interbank rates up to a nine-year-high two days later.

The ruble finally settled at 62 rubles to the dollar at the end of last week, mostly recovering steep weekly losses which continued after a record loss over 10% last Monday. But it has already lost 46 percent of its value since early 2014.

Credit in short supply

Last week, CBR had to reassure domestic financial institutions that it would back them with additional capital in case they face further liquidity problems.

But the dramatic hike in interest rates imposed by CBR further added to downside risks to Russia’s economy as it is expected to dampen growth further according to a statement by Fitch, a prominent global rating agency. That is, due to the interest rate hike, credit will be less available and investments discouraged.

Analysts say credit lines provided by banks are already being reduced. Domestic money markets were severely hit as the bonds and equities of Russian companies which are used as collateral by Russian banks are declining in value due to narrowing margins.

The risks became all the more salient as CBR published a worst-case scenario the day after the tax hike, envisioning an annual contraction of 4.7 percent for 2015 in case oil prices remain at current levels.

Foreign capital flees

Capital outflows also threaten Russia’s economic prospects. Foreign exchange reserves are already depleting at a time when foreign investors’ confidence is shaken due to Russia’s unpredictable political and economic environment.

It is estimated by CBR that around $130 billion of foreign capital has been pulled from the country since the beginning of 2014 in search of safe-haven currencies like the U.S. dollar and the Japanese yen.

On the other hand, Russian President Putin reiterated during his annual end-of-year news conference last Thursday that capital controls will remain a last resort – a measure to be appealed only if prolonged efforts to maintain a tight monetary policy do not bear any fruit.

But experts opine that a deep recession looms, regardless of any emergency monetary measure that can be taken at this juncture, and there may be little alternative than introducing capital controls for Russia to avert a currency crisis next year.

Calls to diversify

Oil prices have been steadily falling throughout the year. The price of oil has dropped 45 percent since June, and plummeted especially after it was decided in November 27 at OPEC’s Vienna summit that production targets will be kept intact despite insufficient global demand.

Because oil is still the main source of state income and the country’s main export item, Russian economy remains highly sensitive to fluctuations in global prices and external markets.

Indeed, the ruble’s downward trajectory of the last couple of months has been fueled by the steady fall in the price of oil as much as it was by Western sanctions. And Russia’s troubled economy is heading into a recession as calls for restructuring and diversification have been turned a deaf ear for over a decade.

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