One of the distinguishing features of Prime Minister Narendra Modi’s diplomacy has been his effort to rebuild the long-neglected Buddhist bridge to the world. Modi’s plans are likely to come into sharper focus this week as he addresses a conference called “A Global Hindu-Buddhist Initiative on Conflict Avoidance and Environment Consciousness” in the capital.
Ignore the ungainly title of the conference. But do note that it is being organised by the Vivekananda International Foundation, which is close to the Modi government and the Sangh Parivar, in partnership with the Tokyo Foundation and the International Buddhist Confederation.
A number of leading political and religious figures from across Buddhist Asia are participating in the initiative. Modi will also join the delegates in Bodh Gaya, where they will travel to after the conference concludes in New Delhi. External Affairs Minister Sushma Swaraj will deliver the valedictory address to the conference.
From a seeming personal fad of the PM, Buddhism has begun to acquire an unprecedented weight in India’s Asian policy. In his address to the parliament of Mongolia in June this year, Modi went beyond the notion of promoting India’s soft power to highlight the importance of Buddhism in dealing with the contemporary political challenges before Asia and the world. For one, he insisted that the spiritual values of Buddhism are deeply connected to the principles of democracy. “If we follow the ‘right path’ of the master,” Modi said, “it will also be natural to walk on the path of democratic values.” Modi added that “the convergence of Buddhism and democracy provides us a path to build an Asia of peace and cooperation, harmony and equality.” Modi also argued that Buddhism is “a call for each of us, as individuals and as nations, to assume the universal responsibility to mankind and our planet”.
That Modi was not being quirky in injecting religion into the messy debate on climate change was confirmed by none other than Pope Francis, who released the encyclical on climate change a few days later, insisting on our collective moral responsibility to pass on a clean planet to the next generations.
In Delhi, there is bound to be some unease at Modi’s attempt to bring religion into the conduct of Indian foreign policy. After all, independent India has consciously kept its diplomacy apart from religion all these decades. Even when India talked of shared culture and deep civilisational links with its Asian friends, Delhi was quite careful to edit religion out of it.
In being unafraid of bringing faith into foreign policy, Modi may be treading new ground in India. But he is quite in tune with an emerging international trend. Many leading powers are getting their foreign offices to be more attentive to religious issues. While many secular states have traditionally seen religion as a source of international conflict, some are beginning to argue that it might, under certain conditions, be a force for some good.
The avowedly godless Chinese Communist Party now deploys Buddhism as a major diplomatic tool to win friends and influence religious communities across the world. The deeply secular West European states are acknowledging the resurgence of religion as a major factor in world politics, especially on their doorstep in the Middle East, and are finding ways to cope with it. Although the professional US diplomatic corps has no religious bias, America’s political leaders have long seen the nation as the “chosen one” and its foreign policy as “god’s work”. More recently, Washington has begun to strengthen the institutional capacity of the United States government to deal with matters of faith. The US Department of State now has an Office of Religion and Global Affairs that advises the secretary of state on policy issues relating to faith and helps the US government agencies engage religious communities around the world.
While Modi must bring Indian foreign policy in line with this trend, he must also guard against the real dangers of faith-based diplomacy. Delhi must recognise that putting religion into statecraft does not mean privileging one faith over another. If Buddhism has the potential to reinforce India’s engagement with many East Asian countries, a similar outreach on Islam might boost India’s ties with the Muslim world. As the power of Christian groups rises across the world, Delhi also has a good reason to engage them.
India must also avoid creating any impression that its new interest in Buddhism is directed against any particular country. Even more important, Delhi must be acutely conscious of being drawn into religious quarrels of others or allowing external intervention in its own multiple contentions on faith. A purposeful engagement with key religious communities around the world could certainly lend new effectiveness to India’s international relations, but only when it is handled with great political care and diplomatic competence.
*The writer is a Distinguished Fellow at Observer Research Foundation, Delhi and a Consulting Editor on foreign affairs for ‘The Indian Express’
The Eurozone crisis continues to take centre stage. This column discusses how deep the EZ crisis is, how long it will last, and what should be the policy priorities. A number of findings emerge. First, the difference in labour market performance between the US and the Eurozone is one of degree but not of kind. Second, the economic consequences of the sovereign debt crisis will be mostly gone by 2018, but the political crisis will continue. Third, enforcing fiscal rules via political arm twisting is a recipe for disaster. Market discipline must instead be brought back, but without financial fragmentation. Limited and conditional Eurobonds are the best way to do so.
By Thomas Philippon*
Unemployment in the US vs the Eurozone
I first compare labour market dynamics inside the Eurozone with those inside the US (for a broader discussion of macro-financial stability, see Lane 2015). The US is a well-functioning currency area, but there is significant heterogeneity in credit and house price dynamics. This makes the US a relevant control group, as argued in Martin and Philippon (2014).
The unemployment rate is the most widely discussed statistic, but if we want to think about inefficiencies in the labour market it is more relevant to look at the rate of employment, the number of people working divided by the population that could be working. Figure 1 shows the employment rates of all individuals aged 15 to 64 in the US, the Eurozone, and France. Availability is limited for the Eurozone data and France provides a useful benchmark since it is always close to the median of the Eurozone.
Figure 1. Employment rate among 15-64 years old
Differences between Europe and the US appear smaller when we consider employment rates instead of unemployment rates. The drop in employment in the US is severe and long lasting and the recovery is weak, unlike with the unemployment series, suggesting that workers may have become discouraged. The decline in US employment also pre-dates the 2008 recession, as discussed in Moffitt (2012), suggesting structural, not cyclical issues. In Europe, on the other hand, employment rates have declined less, although they started from a lower level on average. Many European countries’ employment rates appear to be on an improving trend, often as a result of structural reforms, such as pension reforms.
Figure 2 presents total employment rates without controlling for differences in the age structure of the population. The top panel shows the average (unweighted) employment rate across states and countries. The middle panel shows the standard deviation and the bottom panel the coefficient of variation (the standard deviation divided by the mean). We observe a more persistent slump and more dispersion in the Eurozone than in the US, but these differences are smaller than with unemployment rates. In particular, the coefficient of variation increases significantly in the US as well. To paraphrase Darwin, I conclude that the difference in labour market performance between the US and the Eurozone, significant as it is, is one of degree and not of kind.
Figure 2. Employment rates in the Eurozone and the US
A tale of three crises: Finance, economics, and politics
The European crisis is in fact the sum of three crises, unfolding over different time frames. These differences confuse the commentators and lead to widely misleading predictions such as “now that the acute financial crisis is over, surely the economies will rebound”, or “now that unemployment rates are finally falling, surely the worst is over”.
The financial crisis is violent and short-lived.
Looking at 10-year government yields in the Eurozone, the sovereign debt panic starts in 2010 and peaks in 2012; by 2014 it is essentially over.
The economic crisis is much slower than the financial crisis.
We have seen earlier (Figure 2) that employment rates have barely begun to recover. What this means is that the worst in terms of employment is likely to happen after the end of the financial panic.
The political crisis is slower still.
Guiso et al. (2015) show that trust towards the EU has continuously declined from 2010 to 2013, and that the trend is unlikely to be reversed any time soon. This means that the worst distrust towards the EZ is likely to happen when the economic recovery is under way. It is not during the economic crisis that the political crisis is the most acute, but after.
Table 1. Persistence of financial distress vs. economic distress
A quantitative analysis of the persistence of the shocks, in Table 1, shows that the half-life of government bond spreads is of about two years (9 quarters). If a country experiences an increase of its rate of 100 basis points relative to the Eurozone average, then two years later we expect a spread of about 50 basis points. For the employment rate, however, the half-life is about eight years (33 quarters). Economic distress is much more persistent than financial distress. A formal test of the persistence of political shocks is hampered by data availability, but the data presented by Guiso et al. (2015) makes it clear that they are even more persistent than economic shocks.
This simple analysis suggests that the economic consequences of the sovereign debt crisis will persist until 2018, and that the political consequences will persist longer.
The Greek debacle
Greek people have suffered tremendously and the country is left with massive unemployment and a crushing debt overhang. As terrible as Greece’s depression might be, the right question to ask is: How much could we have avoided with better policies? The answer depends on how far back we start.
During the boom: reckless policies.
If we go back to the pre-crisis period, we find that most of the Greek drama would have been avoided with sensible policies. In Martin and Philippon (2014) we quantify the causes of the crises across the Eurozone and we find that Greece was (mostly) brought down by reckless government spending during the boom years. In that sense, and since Greece is a democracy, one can argue that it is first and foremost responsible for its own demise.
But we – governments, households, investors – all make mistakes, and this is why policymakers have devised mechanisms (such as debt restructuring) to deal with the consequences of these mistakes. A more directly relevant question is then: How badly was the Greek crisis handled? Or in other words, starting from 2009/2010, how much better could the Greek situation have been?
After 2009: only bad options.
The first thing to recognise is that, given how unbalanced the Greek economy was in 2009/2010, a major recession was inevitable. As Blanchard (2015) explains, “[h]ad Greece been left on its own, it would have been simply unable to borrow. Even if it had fully defaulted on its debt … it would have had to cut its budget deficit by 10% of GDP from one day to the next. These would have led to … much higher social cost than under the programs.”
But policy mistakes also made the situation. Some observers advocated an early debt restructuring, coupled with strong fiscal consolidation, but the perceived risk of contagion made it impossible to implement. Eventually, in 2012, Greece’s debt was reduced by approximately €100 billion. This was unfortunately too late – much of the macroeconomic damage was done.
Since an early restructuring was prevented by fears of contagion (legitimate or misguided, this is beside the point), I have argued (see Philippon 2015) that it is not fair to ask Greece to pay for the consequences of the delay. If one accepts this idea, then it follows that one should consider an alternative history – with an earlier debt restructuring – as a benchmark for Greece’s debt negotiation.
When I simulate the path of the Greek economy assuming an ‘early debt relief scenario’, I find that it is significantly better than the actual path in terms of GDP, employment, and debt dynamics. Based on these calculations, I argued that it would be fair to lower Greece’s target for primary surplus by at least 1.5%.
The 2015 tragedy.
The word ‘tragedy’ has been over-used to talk about Greece’s economic disaster. I do not use it to describe what happened between 2009 and 2013. Mistakes were made, but it is far from obvious that there were better alternatives available in real time.
What happened in 2015, however, does have a tragic flavour. The Greek people were led to believe that they could get a better deal if only they elected a different government. Instead, they got a worse deal, in all respects.
The first six months of the new Greek government, following the elections of January 2015, were a complete disaster.
In 2014, the real GDP of Greece grew for the first time since 2007, by 0.8%. Greece managed to issue bonds at 3.5%.
Unemployment was falling and GDP was forecast to grow by 2.5% in 2015.
Thanks to erratic and irresponsible policies, growth forecasts have been revised down to 0.5% and unemployment will be significantly higher than it would have been.
The tragedy comes from the clash between the economic and political dynamics described earlier.
Grexit might have made sense in 2008, but not in 2015. From 2005 to 2009, Greece accumulated a current-account deficit of 57.6% of GDP. Closing that gap required an increase in exports and a decrease in imports, which is difficult and painful to achieve without devaluation. So one could reasonably argue that an exit followed by a massive default and devaluation made sense at that time. But in 2015, the adjustment was done, painful as it was, and bygones should be bygones. A sensible policy would have been to focus on improving the economy going forward.
The 2015 elections and the ensuing negotiations, however, had nothing to do with economics. It was pure political theatre on both sides. Mr Tsipras won the elections and successfully destroyed his political opponents, inside and outside Syriza, becoming the only politician left standing and assured to head the country for at least a few more years. His tenure as prime minister has so far been a failure. On the other side, there was a clear desire in Germany to punish the new Greek government and teach a lesson to other populist movements in Europe. There are good reasons to fight populism and demagogy in Europe, but the idea that this is best done by imposing humiliating conditions in a Troika programme sounds particularly wrong-headed to me.
Concluding remarks and the way forward
What I take away from the previous sections is:
On one hand, the structural problems of the Eurozone are more severe than the ones facing the US, but that the differences are not nearly as large as what is commonly argued.
On the other hand, political risk and distrust (in a broad sense) will persist for a long time.
They will not dissipate simply because unemployment comes down. It is, therefore, important to plan for several years of political instability.
So what should be done?
Keep cool and continue building the banking union
Firstly, policymakers need to keep a cool head. This might sound obvious but the hysterical discussions surrounding the Greek crisis show that there is no lack of stupid ideas and bad policy advice. I find most annoying the ‘Eurozone is not an optimal currency area’ arguments that repeat commonplace ideas without providing any actual insight.
The interesting question is: What does it take to have a stable currency area? In my view, the traditional approach missed the most important piece –the banking union. Forget labour mobility, a common language, or even a federal budget.1 A banking union is the one piece of financial architecture that should have been built before the crisis. Véron (2007) asked in 2007 whether Europe was ready for a banking crisis. How many others saw that critical point? Thankfully the banking union is under way and should be supplemented by a capital market union (Véron and Wolf 2015).
Reforming the Eurozone.
The Greek crisis has exposed deep flaws in the functioning of the Eurozone. It needs to become more accountable, more transparent, and more efficient.
A possible solution is to merge the position of ECFIN commissioner with that of president of the Eurozone. At the same time, the enforcement of fiscal discipline should be entrusted to an independent division within ECFIN. We also need a Eurozone chamber within the European parliament where EZ issues would be discussed and where the President of the Eurozone would be confirmed and heard on a regular basis.
More markets, less politics.
The externalities that exist in a currency union create the need for strict fiscal discipline among member states. The difficult issue is how to impose this discipline effectively. Bénassy-Quéré (2015) explains clearly how the logic of the Maastricht treaty proved faulty, and the Greek debacle shows that we should not rely on finance ministers to impose discipline on each other. The political dynamics are simply too destructive.
Imposing mechanical balanced-budget rules like in the US is not an option since we do not have a federal budget or a common pool of safe sovereign debt. Countries need to retain some fiscal discretion simply because there is no fiscal discretion anywhere else in the system.
We need instead to bring back market discipline. It would have been much better for everyone if the markets had told the Greek government that their economic plans made no sense, instead of other finance ministers. Markets are neither stable nor particularly smart, and they impose discipline too late and too abruptly.
Markets, however, have one fundamental advantage over politicians – they punish but they do not humiliate.
Traders vote with their feet, they do not want to teach lessons, they do not seek revenge. One can complain that markets forget too quickly, but in this case I would argue that this is a critical advantage.
The fundamental challenge, then, is to revive market discipline without creating the risk of sudden stops (Merler and Pisani-Ferry 2012). This is why we need to reopen the eurobonds debate.
Eurobonds, or at least Eurobills.
Eurobonds were widely discussed in 2010 and 2011 but they were not implemented, probably because they were not the right choice as a crisis management tool.
The combination of ESM and OMT did the job. But the lively debates that took place at the time were nonetheless insightful.2 Here is a quick summary of what most participants agreed on:
A currency union needs a shared safe asset.
That safe asset should not be the bonds of one particular member because this could trigger episodes of sudden stops and flight to safety. The price of a safe asset should increase in bad times, providing cheap funding to its issuers precisely when it is most needed.
A shared safe asset would be very useful for banking regulation and for the conduct of monetary policy.
The banking aspect is particularly important in my opinion. Banking supervision cannot continue to treat all sovereign debt as risk free. On the other hand, it would make no sense for the Eurozone to simply give up its safe assets. The solution is to treat individual sovereign debt as risky and to introduce new safe assets at the same time.
Avoiding moral hazard is a priority but we should recognise that moral hazard is already present in the current system and we should look for an improvement, not a first-best solution.
I would also argue that providing some insurance (as in the form of eurobonds quotas) is likely to reduce moral hazard by making the no-bailout option more credible. There will always be a bailout option, pretending otherwise is foolish. But we can minimise the set of circumstances where bailouts take place.
I view the blue/red bond proposal of Delpla and von Weizsäcker (2010) as the most elegant solution. Had Europe implemented a banking union together with the Delpla and von Weizsacker proposal, there would not have been a crisis at all. After the crisis, however, the legacy debt makes the transition a lot more difficult. A less ambitious proposal is to introduce eurobills, as proposed by Hellwig and Philippon (2011). The idea is to mutualise the short end of the yield curve – to avoid fragmentation of the money markets – but not the long end – to maintain market discipline. That same logic that was later applied to the OMT, and it worked exactly as predicted. I would therefore propose the introduction of eurobills together with the gradual strengthening of the no-bail-out clause by adjusting the prudential requirements on sovereign debt. In the long run, we would move to a blue/red debt market where markets would help enforce fiscal discipline.
About the author:
* Thomas Philippon, Professor of Finance, Stern School of Business, NYU and CEPR Research Affiliate
References:
Bénassy-Quéré, A (2015), “Maastricht flaws and remedies”, Note du CAE (English version), forthcoming.
Blanchard, O (2015), “Greece: Past critiques and the path forward”, iMF direct blog.
Bofinger, P, L Feld, W Franz, C Schmidt, and B Weder di Mauro (2010), “European redemption pact”, VoxEU.org, 9 November.
Brunnermeier, M, L Garicano, P Lane, M Pagano, R Reis, T Santos, M Pagano, D Thesmar, S Van Nieuwerburgh, and D Vayanos (2011), “ESBies:A realistic reform of Europe’s financial architecture”, VoxEU.org, 25 October.
Corsetti, G, L Feld, P Lane, L Reichlin, H Rey, D Vayanos, and B W di Mauro (2015), A new start for the Eurozone: Dealing with debt, Monitoring the Eurozone 1, CEPR.
Delpla, J and J von Weizsäcker (2010), “The blue bond proposal,” Bruegel policy brief, May.
Guiso, L, P Sapienza, and L Zingales (2015, April), “Monnet’s error?” EIEF Working Paper.
Hellwig, C and T Philippon (2011), “Eurobills, not Eurobonds”, VoxEU.org, 2 December.
Lane, P (2015), “Macro-financial stability under EMU”, CEPR Discussion Paper 10776.
Martin, P and T Philippon (2014), “Inspecting the mechanism: Leverage and the great recession in the Eurozone”, Working Paper NYU.
Merler, S and J Pisani-Ferry (2012), “Sudden stops in the Eurozone”, Bruegel Policy Contribution.
Moffitt, R A (2012), “The reversal of the employment-population ratio in the 2000s: Facts and explanations”, Brookings Papers on Economic Activity 1, 201–264.
Philippon, T. (2015), “Fair debt relief for Greece: New calculations,” VoxEU.org, 10 February .
Véron, N (2007), “Is Europe ready for a major banking crisis?” Policy brief, Bruegel, August.
Véron, N and G Wolf (2015), “Capital markets union: a vision for the long term”, Bruegel Policy Contribution, April.
Yagan, D (2014), “Moving to opportunity? Migratory insurance over the great recession”, manuscript January.
Footnotes:
1 For the US, Yagan (2014) finds that despite migration flows that were in principle large enough to provide full insurance, migration has provided only 7% insurance; the 2006 residents of the average local area have borne 93% of the area’s idiosyncratic labour demand shock during the Great Recession.
2 Four proposals were discussed in details: Delpla and von Weizsäcker (2010), Bofinger et al. (2010), Brunnermeier et al. (2011), and Hellwig and Philippon (2011). See also Corsetti et al. (2015).
“If you are the world’s leading energy economy, you produce energy, that’s what you do.”
“A government can stay irrational longer than it can stay solvent.”
“Even in the short term, you’re dead, if you commit suicide.”
The first quote modifies a GEICO commercial describing a free-range chicken (If you’re a free range chicken, you roam free, that’s what you do), the second, the famous John Maynard Keynes quote about markets (The market can stay irrational longer than you can stay solvent), the third, another famous Keynes quote (In the long run, we’re all dead).
Together, the three quotes provide a framework for analyzing Saudi options heading into the December 4 OPEC meeting in Vienna and its choices vis-à-vis the OPEC outsiders (all members but Saudi Arabia and its Gulf Arab allies, Kuwait, UAE, Qatar) – reconciliation, separation, or divorce.
If You’re a Free Range Oil Producer…
Despite low oil prices, Saudi Arabia is maintaining its investment in its oil industry. Saudi Aramco Chairman Khalid Al-Falih indicated in March that Saudi Aramco would not cut investment. James Crandell, a Cowen & Co. oil analyst cited in this article, who has tracked oil companies’ budgets for many years, estimates that Aramco and its Kuwaiti and UAE counterparts will increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion).
On it’s website, the Saudi Arabian General Investment Authority (SAGIA) identifies Saudi Arabia as the world’s premier energy economy, describes the outlook for the Saudi energy sector as never having been brighter or more secure and poised for unprecedented growth, diversification, and profitability, and asserts that the high oil revenue environment has spurred a boom in both oil and non-oil development projects.
SAGIA is not making idle claims. It lists energy-related projects totaling $318 billion (no timeframe specified), which is, in SAGIA’s words, “large-scale capital spending [is] applied to building new capacity and expansion of existing facilities.” Of this, the Saudi government will finance $239 billion, while private investors will finance $79 billion, as well as investments in refining (which it does not specify).
If You’re a Government…
According to an August 26 Bloomberg article, the Saudi government is seeking ways to “reduce investment in 2016 “…as the drop in oil prices over the last year has put a strain on the nation’s finances.”
In fact, Saudi government revenue and expenditure data suggest that the Saudis must do far more than “reduce investment” in 2016: the precipitous drop in oil prices—a consequence of their new policy—has put Saudi Arabia on an unsustainable financial path.
The two tables that follow, which should be viewed as directional rather than precise since some input data is estimated, illustrate the severity of the Saudi financial challenge. The first shows that Saudi defense spending—a Saudi priority, given its external conflict with Iran and its internal security situation—has steadily increased as a percentage of Saudi net crude export revenue (export revenue minus Saudi Arabia’s estimated $5 production cost), the planned annual Saudi government budget, and the planned annual government revenue (budget/revenue data from the U.S-Saudi Arabian Business Council), and that will reach an estimated ~73.4 percent of net crude export revenues in 2015, as these revenues fall nearly 50 percent from 2014. Were Saudi defense spending to be financed entirely from net oil export revenues in 2015, the spending would consume ~73.4 percent of these revenues.
Given they depend largely on imported defense equipment, services, and expertise, and crude revenues reportedly comprise 90 percent of Saudi budget revenue, it is clear that net crude export revenue is critical to financing the Saudi military.
The defense spending for 2011, 2012, and 2013 draws on the Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database Constant U.S. dollar spreadsheet. In a CNN article quoting SIPRI for 2014, the author’s guesses for 2015 (6.25 percent increase) and 2016 (3.5 percent increase), based on Saudi Arabia’s conflict with Iran.
Net export revenue is based on average annual OPEC Basket prices for 2011, 2012, 2013, and 2014 of $107.46, $109.45, $105.87, and $96.29 respectively, with an estimated $51.81 for 2015 (based on actual average monthly prices through August of 53.97 and $50 from August through December), and $50 (undoubtedly too high or too low) for 2016. Annual export volume is based on the IEA’s monthly Oil Market Report’s Table 2 (Summary of Global Oil Demand) and Table 3 (World Oil Production). Export revenues are net of $5/barrel production cost.
However, defense spending isn’t the only claim on net crude export revenues, the Saudi budget, and budget revenues. The U.S.-Saudi Arabian Business Council provided the following data on the Saudi government’s 2015 budget. It puts totalnon-defense spending at $163 billion, which is 71.43 percent of the 2015 budget and 85.89 percent of 2015 budget revenues:
Adding estimated defense spending ($85 billion) and the U.S.-Saudi Arabian Business Council’s data on non-defense spending ($163 billion) yields Saudi government spending that totals $248 billion, or 204.5 percent of estimated net crude export revenues (versus 118.3 percent of 2014 net export revenues).
Much Higher Volume and/or Much Higher Prices
The net export revenues Saudi crude exports generated in 2014 are, simply put, impossible to attain given Saudi policy. The following table shows how much crude the Saudis would have to export in 2015 at various OPEC Basket price points to match the revenue their crude exports generated in 2014 (based on 2015’s 6.31 mmbl/day average exports (IEA data) at the 2014 average OPEC Basket price of $96.29 per barrel (minus $5 production cost).
Their exports would have to reach ~12.7 mmbl/day in 2015—~6.4 mmbl/day more than 1H 2015 average daily exports—at a $50/barrel export price ($45 net of production cost) to generate the same revenue 2014 crude exports generated.
This implies total domestic production at ~16 mmbl/day, 3.5 mmbl/day than capacity), given domestic consumption at 3,330,000 barrels/day (IEA). Were production total IEA estimated capacity, 12.5 mmbl/day, exports could reach ~9.2 mmbl/day—2.9 mmbl/day more than it currently exports. $67.50/ barrel would be needed to generate the same revenue as in 2014. (In current market conditions, increasing exports by 2.9 mmbl/day would drive global prices below the August 26 OPEC basket price of $40.51).
Since 2011, the Saudi share of global output has ranged from 10.2 percent (2011) to a maximum of 10.5 (2012), and averaged 10.4 percent in the 1H 2015. Producing at current maximum output (~12.5 mmbl/day) equates to a 13 percent global share. The following table shows the Saudi output required to maintain a 13 percent share of global output through 2020, assuming 2016 output at 98 mmbl/day and net increases of 500 mbls/day annually through 2020. (At 16 mmbl/day, the Saudi share would be 16.5 percent).
Reaching both 12.5 mmbl/day and ~16 mmbl/day output levels would require a forceful offensive against other OPEC members—in other words, the OPEC outsiders. Since 2011, OPEC’s share of global crude output has ranged from ~39 percent-to-41 percent. The following table shows that the increase in Saudi share of OPEC output that a 13 percent and 16.5 percent global share would require through 2020, assuming the Saudi increase in output came exclusively from OPEC, and taking into account the production increases the Saudi’s Kuwaiti and UAE allies have announced (the distribution of the increases by year is arbitrary).
If You’re A Free Range Oil Producer, Do You Produce Even More Even If It’s Irrational?
A recent article on Oilprice.com lays out a strong case for Saudi maintaining its current offensive against other oil producers.
This article shows that the Saudis cannot achieve, or even come close to, their estimated 2014 net export revenue if they prolong their current strategy. They can’t achieve the output necessary at a $50/barrel OPEC basket price (16.5 mmbl/day), and they are unlikely to achieve the $67.50 OPEC basket price they need at their 12.5 mmbl/day maximum production capacity, since the additional 2.4 mmbl/day output (and exports) over 1H 2015 average output would drive prices further down.
This doesn’t mean the Saudis won’t stay the course despite its peril to their own situation. To repeat the two modified Keynes quotes at the beginning of this article:
“A government can stay irrational longer than it can stay solvent.”
“Even in the short term, you’re dead, if you commit suicide.”
Total said Tuesday it has signed an agreement to sell its service station network and commercial sales, supply and logistics assets located in Turkey to Demirören for €325 million (around $356 million). The transaction is subject to the customary approvals.
“The transaction is yet another illustration of the Group’s strategy of actively managing our asset portfolio,” said Philippe Boisseau, Member of Total’s Executive Committee and President of Marketing & Services. “After operating in Turkey for several years, we conducted an in-depth review of our position and the competitive environment. We concluded that it would be difficult to attain a large enough retail market share to achieve the level of profitability expected for our operations worldwide.”
Total will, however, maintain a petroleum product marketing presence in Turkey through its lubricant activities, including a blending plant in Menemen and odorless LPG operations. The two businesses will be transferred to a separate company prior to completion of the sale.
As the sale was being finalized, Total said it paid particular attention to Demirören’s ability and commitment to support the growth of the divested assets and to respect the Group’s human resources policies.
Until the transaction closes within the next few months, Total Oil Türkiye will continue to operate its activities in liaison with the buyer and in strict compliance with applicable regulations, especially antitrust regulations.
Sri Lanka’s President Maithripala Sirisena called on all political parties to end politics of conflict and extend a helping hand to strengthen the politics of consociation initiated by the government.
Pointing out that one major national party ruled the country for 35 years and the other main party ruled for 32 years, Sirisena urged all the Members of Parliament representing different political parties to cooperate with the government’s determined initiative to usher in a new political culture of consociation.
Sirisena made the statements Tuesday at the opening session of the 8th Parliament of Sri Lanka. He said that the post conflict era is the most suitable time for Sri Lanka to work as a joint force to face all the internal and international challenges.
Sirisena emphasized that the launching of this new culture of unity under a national government would be immensely helpful to build reconciliation between the communities and speed up socio economic progress to achieve human development targets set for 2020 and beyond.
Sirisena said that the government, while formulating development programmes, would incorporate proposals from the election manifestos of UNP, UPFA, TNA and JVP into his Presidential Election manifesto, ‘Maithri Palanayak’ and arrive at a common program of action.
Sirisena said that the proposed 20th Amendment to the Constitution already provides the format for a new electoral system and it would be the responsibility of the new Parliament to agree on a proposal to do away with the detested preferential system and introduce a new electoral system acceptable to all the political parties as well as the civil society.
“21st Century is Asia’s century. We are fortunate to be geographically located in a position most suited to obtain maximum benefits from the economic opportunities available when Asia stands as premier economic center of the world,” President Sirisena said. He added that it is the responsibility of all of us the formulate economic plans and strategies to make maximum of the available opportunities.
Sirisena said the main focus of the foreign policy of the government would be the principle of Asia-centric middle path. In this globalized world and new world order, we have to learn from each other and our foreign relations will continue to be based on openness and friendliness, he said.
“I am happy to declare that my government has succeeded in changing our image satisfactorily to ensure the rise of our glory and pride among the international community,” Sirisena said.
Sirisena further pointed out that the Parliament will be responsible to decide whether the post of executive Presidency is needed any longer and if yes, what should be the responsibilities of this position.
“My government will continue to crackdown on corruption and punish those who exploit national resources no matter who they are and there will be no political interference in the appointment of officials,” Sirisena said.
Sirisena invited all intellectuals in the country and all Sri Lankan intellectuals living abroad to join in the effort to build a new country.
Sirisena also outlined the plans of the government for growth of agricultural economy, raise local food production, take effective action to eradicate menace of drugs and alcohol, strengthen the public sector, to attract foreign investments and to formulate a new youth policy incorporating recommendations made by the 1990 Commission Report on Youth Unrest.
Sirisena, emphasizing the imperative need for protection of environment, said that economic development should be based on Buddhist economic principle as described in the words of Buddha, ‘Santhushti Paraman Dhanan’ (Happiness is the Supreme Bliss).
There is an “out” for Californian parents and children dreading the July 2016 implementation of the state’s recently adopted Senate Bill 277 — draconian legislation eliminating exemptions to child vaccination mandates. That out is homeschooling, and many Californian parents are spending this year exploring homeschooling and preparing for a homeschooling future.
While children attending government and private schools, as well as other entities including daycares, in the state will be mandated starting next summer to submit to a state-set vaccination schedule with virtually all exemption means eliminated, the new law does not apply to children in homeschool.
Californian father Davis Fairon says in a KGO-TV news story that the vaccination mandate is a threat to freedom. States Fairon, “we’re not allowed to think for ourselves; we’ve got to do what the government tells us to do.” Fairon and his wife have decided to homeschool and not to vaccinate their baby according the state’s vaccination schedule.
Other parents in California will make the same decision. Anita Chabria provided in a Guardian article last week a window into some of the ways the state vaccination mandates are pushing California parents to opt for homeschooling. In her article, Chabria tells the stories of two mothers who are taking, or considering, the homeschooling leap because of their desire to protect their children from dangers related to the California state government’s vaccination mandates:
Lyn Elliott, a mother of a 20-month-old girl, says she is taking a serious look at home schooling because of the law. While her daughter Rebel is ‘mostly vaccinated,’ there are certain shots she feels are unnecessary ‘and that I feel have risks.’
Next summer she will have to face the choice of giving vaccinations she does not want, or lose access to daycare – where some of the vaccine requirements will also apply. A single parent after her husband died in a motorcycle accident, she says home schooling could mean a critical drop in her income, but it’s a move she feels compelled to make.
‘For myself and my personal situation, school was something I was somewhat looking forward to,’ she says. ‘I think it would actually be more beneficial for [Rebel] to be in public school but I am not willing to take that risk or let them make that decision for me just to make my life easier.’
Nicole Arango, a 34-year-old mother of two, said she faced a similar choice and decided to move forward with home schooling now.
She recently moved from Oxnard, California, to Simi Valley with her son, Ryan, 13, and daughter, Juliet, 6. Because Ryan had an adverse vaccine reaction when he was young, Arango has chosen not to vaccinate further. Rather than put them in school in their new town for a year and have to pull them out when the law goes into effect, she is beginning home schooling this fall.
‘I was already kind of on the fence about home schooling anyway but the vaccine law really pushed me over because that’s not something I’m going to have shoved down my throat,’ she said. ‘I feel like I have no other alternative.’
Homeschool supporters across America have often been effective in defending a homeschooling zone of liberty. Indeed, fear of taking on homeschool defenders appears to be a reason the California government has chosen not to subject homeschool children to the new law.
But, homeschooling families and their supporters becoming complacent could allow local, state, or national governments to impose new mandates — regarding vaccination or any of numerous other matters — on homeschooling families. Indeed, there is an organized effort to subject homeschooling to a multitude of authoritarian “reforms” in all states. Such reforms include government registration of homeschools, background checking of homeschool parents, standardized testing and portfolio reviewing of homeschool students, random home visits and additional testing for “flagged” homeschool families, and the same medical requirements (including vaccination mandates) for homeschool students as for students in government schools.
In other words, the effort is underway to obliterate all the freedom from government mandates that homeschooling offers and to even use homeschooling regulations as a means to create additional government intrusions into families and homes.
Can homeschooling families and their allies repel the “reform” onslaught and even remove some of the current government restrictions on homeschooling? For the sake of liberty, let us hope the answer is “yes.”
In a new set of pastoral guidelines for the upcoming Holy Year of Mercy Pope Francis has made some significant moves, allowing all priests to forgive the sin of abortion and granting SSPX priests the faculty to forgive sins.
“One of the serious problems of our time is clearly the changed relationship with respect to life,” the Pope said in a Sept. 1 letter addressed to Archbishop Rino Fisichela, President of the Pontifical Council for the New Evangelization, charged with organizing the Jubilee.
In today’s society “a widespread and insensitive mentality” has become an obstacle to welcoming new life, with many who don’t fully understand the deep harm done by the “tragedy of abortion,” he said.
However, Francis also noted that there are many women who, despite thinking abortion is wrong, feel that they have no other choice.
“I am well aware of the pressure that has led them to this decision. I know that it is an existential and moral ordeal. I have met so many women who bear in their heart the scar of this agonizing and painful decision,” he said.
A woman who obtains an abortion automatically incurs a latae sententiae (automatic) excommunication, as well as those who assisted her in the process. Normally the sin of committing an abortion can only be absolved by a bishop, or certain priests appointed by him.
For specific occasions such as Advent or Lent, some bishops extend this faculty to all priests within their diocese.
However, Pope Francis is taking it to a universal level. He said that the forgiveness of God can’t be denied to a person who has sincerely repented, especially when the person comes to the Sacrament of Confession in order to be genuinely reconciled with the Father.
Because of this, Francis said, he has allowed all priests for the Jubilee of Mercy “to absolve of the sin of abortion those who have procured it and who, with contrite heart, seek forgiveness for it.”
In another significant move, Francis has also allowed priests from the Society of St Pius X to “validly and licitly” hear confessions during the Holy Year.
“This Jubilee Year of Mercy excludes no one,” the Pope said in his letter, explaining several bishops have informed him of the society’s “good faith and sacramental practice,” albeit combined with an “uneasy situation from the pastoral standpoint.”
The Society of St. Pius X was founded by Archbishop Marcel Lefebvre in 1970 to form priests, as a response to what he described as errors that had crept into the Church following the Second Vatican Council. Its relations with the Holy See became strained in 1988 when Archbishop Lefebvre consecrated four bishops without the permission of Pope John Paul II.
The illicit consecration resulted in the excommunication of the five bishops; the excommunications were lifted in 2009 by Benedict XVI, and since then, negotiations between the Society and the Vatican to re-establish full communion have continued.
In his letter, Francis expressed his confidence that solutions to recovering full communion with the priests and superiors of the Society could be found in the near future.
In the meantime, “motivated by the need to respond to the good of these faithful, through my own disposition,” he declared that those who approach priests of the Society for confession during the jubilee “shall validly and licitly receive the absolution of their sins.”
Pope Francis also turned to those who, due to reasons of age, illness or incarceration, will not be able to walk through the Holy Door in order to obtain the plenary indulgence connected with the jubilee.
Each of the four major basilicas in Rome has a holy door, which are normally sealed shut from the inside so that they cannot be opened. The doors are only opened during jubilee years so that pilgrims can enter through them in order to gain the indulgence.
In May it was announced that as part of the Holy Year for Mercy, holy doors will for the first time be designated in dioceses, and will be located either in the cathedral or in a church of special significance or a shrine of particular importance for pilgrimages.
For the elderly and sick, often confined to their homes, the Pope said that living their illness and suffering with “joyful hope” and attending Mass, receiving communion and participating in community prayer, “even through the various means of communication,” is a way that they can receive the jubilee indulgence.
In regards to prisoners, Francis said that they will be able to obtain the indulgence in the chapels of the prisons.
He said that directing their thoughts and prayers to God each time they cross the door of their cell would signify their passage through the Holy Door, “because the mercy of God is able to transform hearts, and is also able to transform bars into an experience of freedom.”
The Pope also pointed to how a jubilee indulgence can be obtained for the deceased, and encouraged faithful to pray to the Saints for them during Mass, that “the merciful Face of the Father” free them of the remainder of every fault.
Francis then turned to the corporal and spiritual works of mercy, explaining that the experience of mercy “becomes visible in the witness of concrete signs as Jesus himself taught us.”
Therefore, each time that someone personally performs one or more of the 13 works of mercy, such as feeding the hungry, visiting the sick, burying the dead, willingly forgiving offenses, comforting the afflicted or praying for the living and dead, that person will “surely obtain the Jubilee Indulgence.”
For all those who will celebrate and experience the grace of the jubilee either as pilgrims in Rome or in their individual dioceses, Francis prayed that the indulgence would be “a genuine experience of God’s mercy” for each one.
He affirmed that in order to receive the indulgence one must make a pilgrimage to the Holy Door, either in Rome or in their diocese, “as a sign of the deep desire for true conversion.”
In addition to the cathedrals and shrines where the Holy Door of Mercy will be opened, the Pope also designated that the indulgence could be attained in the churches traditionally identified as Jubilee Churches.
He stressed the importance of remembering that the reception of the indulgence must be linked “first and foremost to the Sacrament of Reconciliation and to the celebration of the Holy Eucharist with a reflection on mercy.”
It will be necessary, he said, “to accompany these celebrations with the profession of faith and with prayer for me and for the intentions that I bear in my heart for the good of the Church and of the entire world.”
Al-Shabaab insurgents Tuesday at dawn attacked an African Union base, entering the structure. Sources confirmed that the militants, in battle against the Somali central authorities, targeted the Janale base, around 80km south-west of Mogadishu, in the Lower Shabelle region.
Local witnesses said they heard a loud explosion near the entrance of the base, run by Burundian soldiers, followed by an exchange of fire.
In a statement, the Islamists claimed the attack, that they killed “dozens” of AU soldiers. No official toll of the attack has been released.
In the month of June, al-Shabaab insurgents killed dozens of Burundian soldiers after attacking an AMISOM post north-west of the capital. The 22,000-strong AU contingent over the past months has however gained grounds over the insurgents, forcing them out of their strongholds in the south-west.
All the residents of the Mari El village of Maly Shaplak have decided to protest the fact that the Russian postal service has not delivered mail to them or to neighboring villages for more than a year by deciding not to take part in the upcoming elections. The authorities are ignoring us, so we will ignore them residents say.
One resident says no one has gotten any mail for about a year, and all of them are fed up with official indifference. They have complained but nothing has happened. And postal officials have dismissed their complaints as “unreliable,” a term that in this case may constitute “a non-denial denial” (pg12.ru/publicnews/view/1067 and mariuver.com/2015/09/01/derevnja-otk/).
“They don’t think about us, but we are supposed to think about them?” he said in explaining the decision of the villagers to take this action.
This is not the first time residents of this village have been infuriated by the attitudes of outside officials. In August 2010, then-President Dmitry Medvedev visited Maly Shaplak during his tour of Mari El. Not only were people kept up all night waiting for him, but they were forced to wash the roads twice before he got there (mariuver.com/2010/08/11/derevnja-medvedev/).
That incident went viral on the Internet at the time, the portal says, and led to “a quite stormy reaction among activists of the global net.”
After enduring much criticism for its tepid reaction to China’s assertive behavior, there are signs that Washington is considering a stronger stance. For several decades, U.S. official publications had repeated what was, in essence, a mantra: the People’s Liberation Army (PLA) is progressively improving its weapons and training, although it is decades behind the United States military. Implicit in the mantra was the assumption that the PLA likely always would be decades behind the US. This view also conveniently overlooked the reality that the Chinese military was unlikely to challenge the US globally, where the U.S. does possess a preponderance of power, rather than regionally, where it is stretched thinly.
One indicator of the change in tone occurred in April, when the Office of Naval Intelligence released its first unclassified report on the Chinese navy since 2009.[1] ONI predicted that, by the end of the decade, the PLA Navy (PLAN) will have completed its transition from a coastal force to one capable of multiple missions around the world, adding that PLAN had launched more ships than any other country in 2013 and 2014 with comparable increases planned for 2015 and 2016.
A major revelation of the ONI report was the first public acknowledgment that the ships of China’s newest destroyers, the Kunming, or Luyang III (052D) class, are outfitted with new generation indigenous supersonic, vertically launched YJ-18 anti-ship cruise missiles. With a reported cruise range of as much as 180 kilometers and a terminal sprint range of 40 km at Mach 2.5-.3.0 speeds as well as a sea-skimming flight capability and a command data link, the YJ-18 is extremely difficult to defend against.
The submarine fleet, ONI reported, has also been augmented, and is expected to number at least 70 by 2020. More capable models are being phased in: eight conventionally-powered Yuan class boats are being added to the existing twelve. Like the older Song class, the Yuan are capable of launching YJ-18 missiles, but have the added advantage of air independent power systems which enable them to increase the time they can stay submerged and hence render them harder to detect. In terms of nuclear submarines, Shang-class boats are replacing older Han-class SSNs, and the expected deployment of Jin-class nuclear-powered ballistic missile submarines will provide the PRC with its first credible at-sea second strike nuclear capability. The JL-2 ballistic missile that the Jin is equipped with has a range of approximately 4,598 miles. According to the U.S-China Economic and Security Review Commission, this gives the PRC the ability to conduct nuclear strikes against Alaska if launched from waters near China, against Alaska and Hawaii if launched from waters south of Japan; against Alaska, Hawaii and the western portion of the continental United States if launched from waters west of Hawaii; and against all 50 U.S. states if launched from waters east of Hawaii.[2] The Chinese air force is developing two stealthy fighters, the J-20 and J-31 which, however, are not expected to become operational for several years. If, as expected, existing issues can be resolved, the planes could present a serious challenge to fifth-generation U.S. fighters.[3]
Moreover, the ONI report noted, China’s coast guard and maritime law enforcement fleets, which back up PLAN’s missions, are larger than those of other claimants to disputed territories in the East China and South China seas—-Japan, Taiwan, Vietnam, Indonesia, Malaysia, and the Philippines —combined. China commissioned its first aircraft carrier, the Liaoning, in 2013, and a second carrier, to be entirely indigenously produced, is under construction. Advances are also being made in unmanned aerial vehicles and in cyberspying. In the latter, two separate breaches of U.S. government databases holding personnel records and security-clearance files exposed sensitive information about at least 22.1 million people, including not only federal employees and contractors but their families and friends.
In May, a month after the release of the ONI report, a second meaningful event occurred. Commander of the Pacific Fleet Admiral Samuel Locklear, who had been a leading candidate to succeed General Martin Dempsey as head of the Joint Chiefs of Staff, was passed over in favor of General Joseph Dunford. Locklear’s 2013 comment that he considered climate change to be the major security threat to the Asian-Pacific region had aroused widespread criticism. Locklear was believed to be echoing the Obama administration’s views at the time so as to position himself for promotion. Presumably, those views had changed. Locklear, who had been lobbying for the Joint Chiefs job for some time, had applied for a delay in retirement so that he could be considered. Subordinates, requesting anonymity, described the admiral as “accepting the administration’s near-mythical China narrative no matter how towering the evidence against it” and currying favor with Washington to the detriment of what, in their opinion, constituted prudent security policy.[4] Locklear’s April 2015 testimony to a Senate Armed Services Committee hearing in review of the Defense Authorization Request for Fiscal Year 2016 and the Future Years Defense Program supports this opinion. Although the admiral did not repeat the climate change theory, his testimony did not dwell on Chinese aggression but rather advocated “continuous dialogue” and advised that “the U.S. will need more transparency and understanding of Chinese intentions in order to minimize friction and avoid miscalculation or conflict in the future.”[5]
Also in May, a U.S. P-8A Poseidon reconnaissance plane accompanied by a CNN news crew flew over a disputed area which China has been expanding and broadcast to television audiences worldwide the warnings issued by PLAN to leave immediately.[6] Shortly thereafter, U.S. Secretary of Defense Ashton Carter, speaking at the inauguration of Admiral Harry Harris as new PACOM, stated bluntly, “There should be no mistake: the United States will fly, sail, and operate wherever international law allows, as we do all around the world.”[7] In his keynote address to the annual Shangri-La Dialogue a few days later, Carter singled out China for criticism and again asserted the U.S. right of transit according to international law.[8] Adding substance to his words, newly appointed Commander of the Pacific Fleet Admiral Scott Swift joined another surveillance flight in July.[9]
In August, in a third indication of Washington’s increased willingness to admit the security threat posed by Beijing the U.S. Defense Department issued an Asia-Pacific Maritime Security Strategy. It noted that, despite claiming indisputable sovereignty over the islands in the South China Sea and the adjacent waters and that it held “sovereign rights and jurisdiction over the relevant waters as well as the seabed and subsoil thereof,” the Chinese government had left unclear the precise nature of its claims, including whether the PRC claims all the maritime area located within the line as well as all the land features therein. It had also unilaterally established an air defense identification zone (ADIZ) overlapping those of Japan and South Korea, and with more stringent regulations than other ADIZ. Whereas other claimants had sought to reclaim portions of what they consider to be their territories, China had as of June 2015 reclaimed more than 2,900 acres, amounting to 17 times more land in 20 months than all other claimants had for the past 40 years.[10] These assertive claims had led to a proliferation of dangerous incidents, including, in August 2014, a Chinese J-11 fighter crossing directly under and doing a barrel roll over an American P-8A Poseidon approximately 117 nautical miles east of Hainan Island—i.e., in international waters.
A subtext of the Defense Department document appears to be an administration effort to counter domestic criticism that there has been little substantive progress to implement what President Barack Obama, in a speech to the Australian parliament in November 2001, termed the pivot to Asia. The United States, the strategy document stated, has 368,000 military personnel in the Asia-Pacific region, more than a quarter of whom are west of the international date line. Over the next five years, the navy is to increase the number of Pacific Fleet ships outside U.S. territory by 50 percent; by 2020, 60 percent of naval and overseas air assets will be home ported in the Pacific. The Marine Corps presence will also be enhanced. Freedom of Navigation exercises have proceeded at an increased tempo, as have training and exercises with allies and partners. The 2014 iteration of the annual RIMPAC exercise was the largest on record, with 22 nations participating, including to a limited degree, China. U.S. marines have trained Japanese Ground Self Defense Force (SDF) units in such activities as retaking islands. New guidelines for Japan-U.S Defense Cooperation will enable the US military and the SDF to work more closely together. In Indonesia, the April 2015 SEASURVEX exercise included a flight portion over the South China Sea for the first time. The annual joint U.S.-Philippine Balikatan exercise was the largest and most sophisticated to date and, significantly, involved a territorial defense scenario in the Sulu Sea, with SDF personnel observing. High-level visits between U.S. and Indian leaders, the latter having territorial issues with China as well, have established the basis for closer defense ties. India and the U.S. conduct annual MALABAR exercises.
A semi-formal partnership among the United States, Australia, and Japan has existed for some time; in November 2014, President Obama, Japanese Prime Minister Abe Shinzō, and Australian Prime Minister Tony Abbott held their first trilateral meeting, agreeing to expand cooperation. Naval cooperation with Vietnam has been expanded; Singapore is to become the center of a regional maritime domain awareness network.
So far, these manifestations of increased concern fall into a category that might be called signaling. China has it turn signaled back, and the message is defiant. A defense white paper issued just before the Shangri-La dialogue began vowed a strong defense of China’s sovereignty, security and development interests. Separately, a sweeping new national security law was passed, aimed as much at suppressing domestic dissent as external threats. Other new laws have extended the regulations on adapting civilian ships for military use, and the government began laying the diplomatic and legal foundations for establishing a base in strategically-located Obock, on the northern coast of Djibouti. A Chinese admiral warned that, if confronted with a threat in the South China Sea, his government would not hesitate to establish another ADIZ covering that area,[11] something Washington has been attempting to head off since Beijing’s announcement of an East China Sea ADIZ two years ago. A contra-indication of the administration’s resolve on China was the decision not to publicly blame Beijing for the hacking of Office of Personnel Management data,[12] as was its inclusion of China in RIMPAC 2015 despite strong congressional opposition.
It is not clear what actions Washington would take if, for example, the PLA should fire on an American surveillance plane flying within the area China insists is within its territorial waters. It is also unclear how much United States’ actions in defense of freedom of navigation in the area are backed by neighboring states, even those who have expressed the most anxiety about the PRC’s encroachment on what regard they regard as their territories. Countries both large and small are reluctant to take actions that might anger China. Many of these countries also hold military drills with China.[13] Corruption and mismanagement in some countries mean that aid given for the improvement their militaries is wasted.[14] And there is domestic opposition to joining with the United States to protect their islands. For example, one day after Philippine Foreign Ministry Voltaire Guzman requested American help to protect resupply boats to disputed territories, currently being interdicted by Chinese ships, Xinhua quoted former Filipino president Joseph Estrada as accusing the United States of interfering in the internal affairs of his country and opposing its military deployment in the South China Sea.[15] When, in 2007, Beijing as well as the Indian left wing registered dissatisfaction with the presence of Japan at the MALABAR exercises, India subsequently declined to invite Japan, although it has been invited to the 2015 iteration. And, despite Indonesian defense officials’ complaints that China claims part of Indonesia’s Riau Islands Province, the country’s foreign ministry has stated that there is no territorial issue between the two countries.[16]
Given the ambivalence among many of its allies and partners in the region about protecting their claims, it would be unwise for the United States to do more than insist, as it has since at least 2010, that that all disputes be settled through peaceful negotiation. At the same time, to protect its own interests as well as those of allies and partners, Washington must continue to forcefully back its assertions that it will not countenance the interdiction of freedom of navigation.
Whereas a decade ago U.S. policy aspired to draw China in as a responsible member of the international community, it now seems to have decided on a more minimal goal: to prevent China from disrupting the security of the Asia-Pacific region and beyond. There are no easy solutions. Should the deceleration of the PRC’s economic growth impede its aggressive activities, that may do more than any actions by Washington to mitigate current tensions.
About the author:
*June Teufel Dreyer a Senior Fellow in FPRI’s Asia Program as well as a member of the Orbis Board of Editors. She is Professor of Political Science at the University of Miami, Coral Gables, Florida. Her most recent book is China’s Political System: Modernization and Tradition (ninth edition, 2014). Her current project is a book on Sino-Japanese relations, under contract to Oxford University Press.
[16] No author, “Indonesia’s Military Flexes Muscles as South China Sea Dispute Looms,” Jakarta Globe, March 14, 2014; Panca Hari Prabowo, “Natalegawa Denies Territorial Dispute with China over Natuna Islands,” Antara, March 19, 2014.
In his press conference in the afternoon of August 23, Pakistan NSA Sartaj Aziz accused India of setting diplomatic pre-conditions for the National Security Advisor-level talks and trimming down the agenda for the talks in violation of the Ufa joint statement. Stressing upon the second paragraph of the Ufa joint statement, Aziz appealed to global think tanks to look into the Indian position of keeping the NSA level talks exclusively centered upon terrorism. Reportedly, Pakistan has also contacted United Nations with the same representation.
The second paragraph of the Ufa statement reads as follows: “They (both prime ministers) agreed that India and Pakistan have a collective responsibility to ensure peace and promote development. To do so, they are prepared to discuss all outstanding issues.” According to Sartaj Aziz, proceeding upon this Pakistan proposed a “comprehensive agenda” for NSA-level talks covering outstanding issues particularly the issue of Jammu and Kashmir.
In her press conference later in the day, India’s External Affairs Minister Sushma Swaraj said that Pakistan’s insistence on Sartaj Aziz’s planned meeting with Hurriyat separatists in New Delhi as well as the attempts to broaden the agenda of NSA level talks is in violation of the spirit of the Shimla agreement and Ufa joint statement.
In view of all this, it becomes necessary to review the Ufa joint statement as well as the circumstances in which Prime Minister Narendra Modi and his Pakistani counterpart Nawaz Sharif met at Ufa. The reference point shall be that which of the two countries should have insisted upon the clarification of Hurriyat red line in the Ufa Joint Statement itself. A closer look at the events preceding and accompanying the July 10, 2015 Ufa talks shall make things clear. Last year, India cancelled the Foreign Secretary-level talks when the Pakistani High Commissioner in New Delhi Abdul Basit invited Hurriyat separatists for prior consultations. It was clear that India won’t engage with Pakistan anymore if it tries to admit Hurriyat as a third party on Kashmir either directly or indirectly.
Pakistan itself acknowledged this red line when Basit postponed an Iftaar party for Hurriyat leaders this year so that it does not closely precede or succeed the Modi-Nawaz meeting in Ufa. So by insisting upon Sartaj Aziz’s meeting with Hurriyat separatists, Pakistan was deliberately going back upon its acknowledgment of the red line that such interactions with Hurriyat shall not coincide with India-Pakistan bilateral engagements.
However, it is ironical that Aziz accused India of violating the democratic rights of Hurriyat separatists. Pakistan should ask itself whether it would allow Gilgit-Baltistan (a part of the historical state of Jammu & Kashmir) activists, who are calling for an end to Pakistani occupation, to meet the Indian envoy in Islamabad. Leave alone allowing Gilgit-Baltistan and Balochistan separatists to meet foreign envoys, Pakistan does not even allow its own citizens to discuss the plight of these regions amongst themselves.
This year in May, Pakistani authorities disallowed a seminar on the topic “Baloch Missing Persons and the Role of the State and Society”, and its venue, Karachi University’s Arts Auditorium was sealed. The session was somehow organized by social activists in the Karachi University lobby as Pakistani security forces searched through the cars to stop invitees not connected with the university.
In China, Pakistan’s closest ally, it is unthinkable for any foreign envoy to have a meeting with Tibetan or Uighur activists. China also objects to foreign leaders meeting the Dalai Lama in their own countries. The Uighur Muslims have consistently alleged encroachment upon their religious freedom by Chinese authorities, but Pakistan has always maintained a conspicuous silence.
Pakistan has been constantly referring to acquiescence of the A.B. Vajpayee and Manmohan Singh governments in allowing the meetings of Pakistani representatives with Hurriyat separatists. What Pakistan fails to understand is that the Modi government is not bound by such precedents. The Modi government has every moral and legal right as well as duty to discontinue any practice which it considers as being detrimental to the sovereignty and integrity of India as the Indian Constitution allows restrictions on freedoms on this ground. For this purpose it is entitled to its own judgment and not bound by the judgments of the previous governments.
Pakistan’s stress upon the second paragraph of the Ufa joint statement (quoted above) is also misplaced in view of the rules of interpretations of such instruments. Legal and diplomatic instruments are to be read as a whole for the purposes of interpretation and special provisions exclude the general ones. It is correct that second paragraph of the Ufa joint statement constitutes the intent of both sides to discuss all outstanding issues. But it does not lay down any framework for such discussions. The only framework which the Ufa statement lays down relates to five issues, namely: terrorism, border firing, release of fishermen, religious tourism and expedition of 26/11 trial. The meeting of the two NSAs was to be specifically related to “all issues connected with terrorism”.
Clearly, the Ufa joint statement envisaged the taking up of the issues in a stage-wise manner and laid down a special framework for first taking up of issues which have often killed the composite dialogue between the two countries. The Ufa statement tried to build upon the past experience that the composite dialogue process should be sustainable to reach any conclusion, and for it to be sustainable, issues connected with terrorism and border violence must be addressed on priority basis before the two countries proceed to take up the next ones.
The spirit of Ufa was not comprehensiveness; it was about prioritizing more important issues and clearing up the landmines which have always killed the Composite Dialogue process.
*Divya Kumar Soti is a national security and strategic affairs analyst based in India. He can be contacted at editor@spsindia.in
Amid sharp political polarisation, Bangladesh is presently witnessing resurgence of radical Islamism. Some of the recent developments in the country, for example, the arrest of several militant leaders and activists, revelation of their terror plans and killings of bloggers, amply demonstrate that the religious extremists and Islamic terrorists are desperately trying to make inroads into the volatile polity. The activities of the new radical Islamic groups like Ansarullah Bangla Team (ABT), al-Qaeda-affiliated Ansar al-Islam and some other obscure outfits constitute one of the biggest internal security challenges for the government.
The rapid expansion of home grown and jihadi-affiliated militant groups has raised fears of radical Islamisation of the Bangladeshi society. The youths coming from rural background are mostly attracted to madrassas owing allegiance to Wahabi and Salaafi schools of thought. The religious teaching imparted by them is different from the Sufi-inspired Islam which has been followed by the vast majority of the population for centuries. Some private universities have also become hotbeds of religious extremism. It is a matter of serious concern that such educational institutions are fast turning into primary recruitment centres for the militant outfits.
On May 26, the Bangladesh government banned the ABT for its alleged involvement in the murders of three bloggers. The ABT was the sixth militant outfit to be outlawed. Earlier, the government declared five militant groups, namely, Hizb ut-Tahrir, Jama’tul Mujahideen Bangladesh (JMB), Harkatul Jihad Bangladesh, Jagrata Muslim Janata of Bangladesh and Shahadat-e Al-Hikma, as proscribed organisations. The law enforcers want the government to forbid some more extremist groups such as Hizb ut-Tawhid, Kaleema-e-Jamaat, Hizbul Mahadi, Jamaat-ul-Muslemin and Islami Dawati Kafela. Reports suggest that nearly 14 radical Islamic outfits are presently under watch.
Among the new radical Islamic outfits, the ABT has emerged as a potent threat to the civil society. It is an al-Qaeda-affiliated militant group that began its activities in 2007 as “Jama’tul Muslemin”. Reports say the ABT, which was initially funded by various NGOs, became inoperative when its financial resources dried up. But it managed to resurface in 2013 as ABT.
It came under the scanner about three years back after the security forces launched a countrywide crackdown on extremist elements. In its bid to hog the media limelight, the ABT took credit for the blogger killings on Twitter. It is also reportedly planning to attack Bangladesh-origin bloggers living abroad like the UK and Germany.
The outfit’s growing activities is a matter of concern as its radical agenda includes establishment of a Sharia state in Bangladesh by subverting the democratic system. The security forces intensified operations against the ABT after it issued letters threatening to liquidate 10 prominent personalities, including Home Minister Asaduzzaman Khan and prime minister’s adviser H.T. Imam.
Some Bangladeshi youths were motivated by the September 2014 video message released by al-Qaeda chief Ayman al-Zawahiri. The dreaded international outfit launched its wing called al-Qaeda in Indian Sub-Continent (AQIS) to wage jihad in South Asia. The Bangladesh branch of AQIS, Ansar al-Islam, which had been active in recent months, claimed responsibility for killing three bloggers.
In a major breakthrough, the elite Rapid Action Battalion (RAB) arrested chief coordinator of AQIS in Bangladesh, Maulana Maniul Islam, his adviser Maulana Jafar Amin and ten other activists from Dhaka in early July. The RAB also recovered huge cache of arms, explosives and incriminating documents from their possession and claimed that they were making frenetic efforts for a terror strike in the capital city.
The interrogation of arrested operatives revealed that they had planned to float outfits in the names of “Dawat-e-Tabliq” and subsequently, “313 Badar Sainik”. The RAB said the militant leaders’ larger objective was to “join AQIS after al-Qaeda’s full expansion in Bangladesh”.
The security forces’ offensive against the Islamic terrorists continued, and on July 27, acting chief of JMB Abu Talha was arrested along with seven activists. In the wake of massive counter-militancy operations, the JMB was trying to regroup by developing links with the Islamic State of Iraq and Syria (ISIS) and al-Qaeda. The law enforcement agencies are worried about JMB’s nefarious designs to attack the country’s high-profile personalities and major infrastructure facilities.
During the last one year, police nabbed at least 15 ISIS operatives. Its detective branch also detained one person named Abdullah Al Galib on May 31 claiming he had floated a new radical outfit called “Jund At-Tawheed Wal Khalifah”. Inspired by ISIS’ initial success, Galib and his associates were recruiting members and collecting funds for jihadi activities. The security forces are apprehensive about the potential of the militant outfits to destabilise law and order as they frequently indulge in crimes like bank robbery and extortion to sustain themselves.
Another disturbing trend has been Pakistan-based Lashkar-e-Toiba’s (LeT) training of Rohingya refugees in the use of weapons. Intelligence inputs say LeT’s two front organisations, Jamaat-ud-Daawa and Fala-I-Insaniyat Foundation, are quite active among the Rohingya youths under the cover of relief and rehabilitation. The security experts caution that Myanmar, Bangladesh and India’s eastern states may experience a sudden spurt in Islamic militancy unless the sinister schemes of LeT are nipped in the bud.
Containing Islamic terrorism has remained a key challenge of governance for the Awami League (AL) government. Despite introducing stringent anti-terror laws and pursuing relentless crackdown on Islamic militants since coming to power in 2009, the menace of terrorism could not be completely uprooted from Bangladesh’s soil. The government tried several militant leaders and executed some of them as part of its policy of zero-tolerance towards terrorism. However, the militants imbibed with jihadi ideology overcome occasional setbacks and reappear under different banners.
Bangladesh’s civil society is seriously concerned over the growing jihadi activities in the country. The AL government has been facing strong criticism for its failure to rein in radical Islamic forces especially after the killing of four secular-rationalist bloggers in the last six months. The Bangladeshi intelligentsia says such killings clearly indicate the government’s inability to contain growing religious intolerance in the society. Its lacklusture response to bloggers’ security concerns gives the impression that the government lacks political will to address the larger problem of religious fundamentalism.
The AL government refrained from publicly condemning violent attacks on bloggers who peacefully expressed their views against religious fanaticism. The government deplored the killing of blogger Niladri Chakraborty on August 7 for the first time under pressure. The AL leaders say religious extremists are orchestrating the killings to destabilise the country. The home minister assured that efforts are on to identify the killers of Niladri and bring them to justice. But the online activists are skeptical as the investigating agencies have not made much headway in any of the bloggers’ murder cases.
The resurgence of religious extremism is to be viewed against the backdrop of Bangladesh’s current political dynamics. The seemingly unending political feud between Prime Minister Sheikh Hasina and opposition leader Khaleda Zia has offered much-needed reprieve and opportunity for the radical Islamists to make forays into the polity.
The AL government must initiate comprehensive measures to arrest the rising tide of Islamic fundamentalism and reinstate the secular fabric of the constitution. The government, which often boasts of its secular credentials, has to protect the liberal and independent thinkers from the onslaught of dogmatic and oppressive religious leaders. The threatened online activists insist that they constitute a small minority group which neither has power nor influence to “claim justice from the government”. The Hasina government should immediately act against the radical Islamists because the barbaric killing of bloggers may tarnish Bangladesh’s image as a moderate Muslim nation before the international community.
*Dr. Rupak Bhattacharjee is an independent political analyst. He can be reached at editor@spsindia.in
The visits in the Museum of Heydar Aliyev in the center of Nakhchivan city, at the Monument of Koroghlu, Monument of Babek and the Zaviya Madrasa Building, were the highlight of my visit in the Autonomous Republic of Nakhchivan in early October, 2014.
The museum of Heydar Aliyev was inaugurated on May 10th, 1999; it contains a breathtaking collection of the childhood years, youth and of the family of Azerbaijan’s National Leader, Heydar Aliyev. In the main collection of the museum there are is an extensive collection of paintings, government documents and signed letters and resolutions by Heydar Aliyev. I was impressed to see in the stands of the museum the original copies of the agreements signed with the Republic of Turkey and the Islamic Republic of Iran. The museum has an informative collection of letters and requests that citizens of Azerbaijan have sent to the national leader of Azerbaijan during the period of 1991-1993, when Heydar Aliyev worked as the Chairman of the Supreme Assembly of the Nakhchivan Autonomous Republic.
In this museum are perfectly preserved the personal belongings of Heydar Aliyev, such as office supplies and paperwork that he used every day. At the main hall of the museum is viewed a tapestry with the image of Heydar Aliyev with a military uniform was truly remarkable, it contained vivid color which made it look so awe-inspiring. According to Ambassador Manuel Rodríguez Cuadros, a Former Foreign Minister of the Republic of Peru in 2003-2005, who had joined me in this memorable visit: “the Museum of the family, life and public service of Heydar Aliyev has an impactful architecture, with a very well organized collection and the statue of Heydar Aliyev, sitting in front of the Museum is inspirational, moving, and an example of perfectionism in the Azerbaijani School of Art and Sculpture.”
In the Museum there are exhibited over 2,380 items, in the library of the institution there is a wide range of journals, albums and books, that greatly reflect the life and activities of Heydar Aliyev.
Together with Ambassador Rodríguez Cuadros, I had the privilege to visit the Monument of Koroghlu. This marvelous piece of sculpture was constructed in 1988; Koroghlu square is located by Aziz Aliyev Street, in the City of Nakhchivan. The lively statue of Koroghlu has been erected in this square and demonstrates once again the visionary culture of the Nakhchivani people that is rooted in sculpture, landscape paintings and carpet weaving artistic styles.
Nakhchivan is also home of the Carpet Museum which was established in 1998. This museum welcomes over ten thousand visitors a year and has a collection of over 3,700 exhibits, including 310 carpets that are displayed in the museum (piled and unpiled kilim, sumax, varni, shadda, palaz, cecim and others). Visitors will also find carpet wares such as mafrash, heybe, chanta, torba, khurjun, orken. The carpets belong to the XVIII and XIX centuries; they are genuine samples of Ganja-Gazakh, Guba-Shirvan, Garabagh, Tebriz-Nakhchivan carpet weaving schools. I was also able to observe household utensils, copper trays, pottery and porcelain table ware, and ancient national dresses were preserved in the premises of the Museum. On March 19, 2010, the Museum had moved into a newly reconstructed building.
The Monument of Babek is located at the intersection of Aligulu Gamkusar Street and Alinja District, in front of the Railway Station, in the square called Babek Square since 1989. The rising statue of folk hero Babek was erected by sculptor E. Jafarov, a highly honored Artist of Nakhchivan Autonomous Republic. In the square there is also located a park for railway workers, household, catering and commercial service facilities.
After observing the sculptural characteristics of Nakhchivan School of Art at the Monument of Babek, together with other distinguished dignitaries from Latin America and Europe, we decided to have lunch at the Nagshijahan Hotel and Restaurant located at the Village of Shakarabad in Babek district. Nagshijahan is in the shores of Nakhchivan River; the restaurant has two big halls with 200 and 140 guest sitting capacity, respectively and is well known regionally for making the best traditional and typical food of Nakhchivan. On this occasion we had for the first time: Sogan Dolmasi (just like it is served in the Kengerli Region with onions from Garabaglar); Arzuman kuftesi (with dried apricots, plums, roasted in oil, walnut kernel, finely cut onions and coriander that are toasted separately) and a stuffing that is prepared for chicken, beef and chicken meat with vegetables is prepared and boiled for thirty minutes.
Our next day’s destination was the Zaviya Madrasa Building. It is a historical – architectural monument in the city of Nakhchivan. The architectural appearance, structure and composition of the building are peculiar to the rich traditions of Nakhchivan architectural school of the XVII-XVIII centuries. During the Government of Talibov Vasif Usif oglu, this building with uncharacteristic architectural aspects of Azerbaijani Architecture and Civil Engineering values of Nakhchivan, was extensively renovated in the recent years.
Afterwards we visited the Nakhchivan State Art Gallery which was established in 1982. The Paintings of distinguished Azerbaijani Artists are preserved and displayed in this Museum which according to international art critics has an importance of Global proportions. In the galleries of the Nakhchivan State Art Gallery are located more than 400 paintings, portrait and graphic works done by Bahruz Kangarli, the founder of the realist painting school of Azerbaijan.
According to Ambassador Rodríguez Cuadros: the paintings of Shamil Gaziyev [displayed in this museum] have a special importance as they embody the natural beauty of Azerbaijan and the cultural traditions that are deeply engraved in the social emancipation of the people of Nakhchivan.” Other painters that are present with their works at the Museum are: Mikail Abdullaev, Maral Rahmanzade, Huseingulu Aliyev, Shamil Gaziyev, Sabir Gadimov, Sayyad Bayramov, Ulviyya Hamzayeva and other internationally renowned painters of Azerbaijan and Nakhchivan.
Cultural initiatives and strategic Tourism projects have received a special priority and impetus by the Autonomous Government of Nakhchivan, it is admirable and comforting to see that a tremendous progress of these areas is taking place thanks to the leadership of Mr. Talibov Vasif Usif oglu and his team. Nakhchivan is a region that always attracts young generation of tourists and those who once have visited this region always look forward to come back and enjoy the beauty of nature and cherish the genuine artistic and architectural centuries old tradition of Nakhchivan, the cradle of culture and visual art in the crossroads of Eurasia.
A petition to the UK parliament calling for Israeli Prime Minister Benjamin Netanyahu to be arrested for war crimes when he arrives for a state visit later this month has gained nearly 100,000 signatures.
The e-petition had 91,426 signatures on Tuesday. However, despite nearly reaching the 100,000 target that would allow it to be considered for debate in parliament, the UK government has ruled out arresting Netanyahu when he arrives in London.
In its response to the call for his arrest over the deaths of Palestinians during Israel’s Gaza offensive last year, the government said: “Under UK and international law, certain holders of high-ranking office in a state, including heads of state, heads of government and ministers for foreign affairs are entitled to immunity, which includes inviolability and complete immunity from criminal jurisdiction.”
Damian Moran, a software designer from Manchester, northwest England, told Anadolu Agency he launched the petition on Aug. 7 because “I have had enough”.
The petition calls for Netanyahu to be arrested under international law over the “massacre of over 2,000 civilians in 2014.”
Moran, 38, said: “I never really understood the Palestine conflict until about 10 years ago when I did some actual research on it and was horrified by what I found. I could empathize greatly with Palestinians with all the horrors they faced.”
He added that Netanyahu “destroyed over 50 mosques, two churches and a center for the disabled. The most despicable acts where attacks committed against seven different UN shelters for people fleeing the conflict.”
In July last year, Israel launched Operation Protective Edge against Gaza. More than 2,160 Palestinians, mostly civilians, were killed and some 11,000 injured before a cease-fire was signed in August.
Moran said he did not expect Netanyahu to be arrested.
“With the current Prime Minister [David] Cameron, who supported South African apartheid and supports the current apartheid in Israel, it wouldn’t happen but it sends a clear message that he [Netanyahu] is not welcome in the UK and that we haven’t forgotten,” he said.
The petition is supported by the Palestine Solidarity Campaign, the Stop the War Coalition and Friends of Al Aqsa.
Anti-Israel protests are expected during Netahyahu’s visit. His meeting with Cameron is to reportedly focus on the Iran nuclear deal and the Israel-Palestine peace process.
The fallout from the latest stalemate in India-Pakistan relations may be a great deal worse than what happened during earlier such standoffs.
The reason is that the two countries appear to have reached a dead end where negotiations are concerned. While India insists on putting terrorism on top of the agenda, Pakistan wants Kashmir to be the core issue.
The prospects for forward movement in mutual exchanges are also being negated by India’s rather naïve belief that its case on terrorism has never been stronger in view of the recent capture of two militants who came from across the border to enact more Mumbai-style mayhem.
The Pakistanis, however, have taken not only to denying that such captives are from their country, but have decided to present their own dossiers on alleged Indian involvement in terrorist activity in Baluchistan and elsewhere.
What these accusations and counter-accusations entail is a dialogue of the deaf, as former external affairs minister Yashwant Sinha of the BJP said at the time of the cancelled NSA-level talks.
A deadlock of this nature where a breakthrough is virtually ruled out can engender a sense of desperation. Some sections of the political establishment in India may well feel that since there is little chance of Pakistan deterring the terrorists, especially those in the India-centric Lashkar-e-Taiba (LeT), why not take out some of their leaders via clandestine operations of the kind which the Americans carried out against Osama bin Laden ?
There is little doubt that such a strike will have wide popular acceptance in India. Since Bollywood mostly has its finger on the pulse of the people, it is not surprising that it has come out with at least three films depicting such cross-border hits by Indian intelligence personnel – Phantom, Baby and D-Day.
Dawood Ibrahim, portrayed by Rishi Kapoor, is the villain in D-Day who is abducted and brought over to India in a feat which was partly the theme of a real-life botched operation, which is now being investigated to ascertain whether Dawood played a role in scuttling it via his agents in India.
The new national security adviser, Ajit Doval, is believed to be a person who is not squeamish about carrying out such attacks. The cross-border raid by the army on the camps of the Naga and other insurgents in Myanmar is said to have been his handiwork. However, an assassination on foreign soil, or an abduction of a terror mastermind, will be a first for India – if they are ever carries it out.
What will be Pakistan’s response ? Its national security adviser, Sartaj Aziz, has already warned India against bullying his country since it is a nuclear power. Pakistan’s former president, Pervez Musharraj, has also said that India will not dare to carry out a Myanmar-type attack on Pakistan for fear of reprisals.
Notwithstanding such sabre-rattling, an open war is unlikely even if the parading of a Dawood or a Hafiz Saeed in India will be mortifying for Pakistan, and especially for its gung-ho army.
Their humiliation and the sense of impotence will be the same if the corpses of these deadly terrorists are shown on TV. Since a war is unlikely with probably even “all-weather friend” China advising against it, the most that Pakistan may do is to organize another 26/11 or an attack on Indian parliament like the one which the LeT and the Jaish-e-Mohammed carried out in 2001.
But, Pakistan will know that such recourse to terrorism will be another black mark against its name and will indirectly validate the reason for India’s act of exasperation. The latter’s vexation will be all the more understandable because Pakistan hasn’t changed in the least even after the massacre of its school children in Peshawar by the country’s homegrown terrorists – or the snakes in its backyard, as Hillary Clinton said.
Pakistan had said at the time that it will no longer make any distinction between good and bad terrorists. But, the subsequent months must have told its policy-makers in the army and the Inter-Services Intelligence (ISI) – the so-called Deep State – that however heart-rending the sorrow among ordinary Pakistanis over the shedding of innocent blood, the value of the “good” terrorists in the eyes of the Pakistan establishment, viz. the LeT, is too high because of the role they play in keeping India on edge.
Since a war is no longer feasible, especially as India grows stronger both economically and militarily, and the international community becomes readier than before to accept India’s case on Kashmir, it is only the “good” terrorists who will be able to serve Pakistan’s “cause” by needling India. Besides, it was the “bad” terrorists, viz. the Tehreek-e-Taliban, who were responsible for the carnage in Peshawar and not the LeT.
If India is already involved in helping the insurgents in Baluchistan and Karachi, as Pakistan says, it is but one step for New Delhi to bring Dawood or Hafiz Saeed into its sights. Incalculable as the consequences of such targeted terrorism will be, to many it will appear to be the only way to deal with an incorrigible neighbour.
*Amulya Ganguli is a writer on current affair. He can be reached at amulyaganguli@gmail.com
About three years ago, my dad was driving the truck he uses for his landscaping business in Phoenix, Arizona when he was pulled over. Two patrol cars cornered him for making a wide right turn.
Yes, you read that right: Multiple police officers went out of their way to stop my dad for supposedly making a right turn too wide.
The traffic cops grilled my dad and his coworker about their immigration status. They let my dad, a Mexican immigrant and U.S. citizen, go on his way without even issuing a warning. Then they arrested his coworker, who happened to be an undocumented immigrant.
What seemed like a normal drive to work turned into a nightmare.
Traffic stops that often begin with this kind of racial profiling, along with parking tickets and other minor offenses, have led to two-thirds of the record 2 million deportations during the Obama administration. These daily expulsions have instilled a culture of pain and fear among all our nation’s immigrant communities.
When some of those communities urged their local governments to do something about it, about 300 cities responded by becoming something called a “sanctuary city.”
Maybe you’ve heard a lot about these places lately but don’t know what a sanctuary city is.
It’s a term for localities where police officers don’t have the added responsibility of acting as federal immigration authorities. As a result, people won’t be deported without a compelling reason, more families will remain united, and police officers will get to focus on the already tough job of policing real criminals instead of racially profiling drivers.
Sanctuary cities serve everyone’s interest.
They boost public safety and foster trust between local law enforcement and immigrant communities. Undocumented immigrants can work, go to school, and live their lives without constant fear of deportation. They’re no longer afraid to report crimes or assist in a police investigation. This restores a bit of the human dignity that immigrants are too often robbed of.
Studies have shown that sanctuary cities are actually safer than other places. But one tragic incident has ignited a debate in Congress and the 2016 presidential race.
Earlier this summer, Kathryn Steinle was shot and killed in San Francisco. Juan Francisco Lopez-Sanchez, the alleged shooter and an undocumented immigrant, had a long criminal record, including drug charges and several deportations. He’d just been released after serving time for re-entry into the country, an act that’s considered a felony.
Presidential candidates and politicians are taking advantage of this incident to justify their extremist anti-immigrant views. But studies show that native-born Americans commit crime at a higher rate than immigrants and are five times more likely to be serving time in prison.
There’s no reason to presume that undocumented immigrants are a menace to society. Yet before starting its August recess, the House passed a bill that would deny federal law enforcement funding for sanctuary cities. This measure would reverse years of progress by immigrant rights organizations, local governments, and local police associations.
Steinle’s death was a terrible tragedy. But scapegoating undocumented immigrants won’t make San Francisco or the rest of the country any safer.
What became of my dad’s co-worker? Following that traffic stop arrest, he was detained by local authorities for a couple of days and then handed over to immigration officers. He spent two months in an immigration detention center.
A compassionate judge granted his release because his eldest son was on the brink of becoming a U.S. citizen, and the man obtained a temporary work permit. Happy endings to stories like these would become rarer if anti-immigration House lawmakers get their way.
*Cecilia Velasco is the New Mexico Fellow at the Institute for Policy Studies. IPS-dc.org
“Had the economy been fundamentally sound in 1929 the effect of the great stock market crash might have been small…. But business in 1929 was not sound; on the contrary it was exceedingly fragile. It was vulnerable to the kind of blow it received from Wall Street. Those who have emphasized this vulnerability are obviously on strong ground. Yet when a greenhouse succumbs to a hailstorm something more than a purely passive role is normally attributed to the storm. One must accord similar significance to the typhoon which blew out of lower Manhattan in October 1929.”
Extracts from The Great Crash: 1929, John Kenneth Galbraith, First Published 1955, Chapter 10: “Cause and Consequence”, Page 204.
The virus that spread to stock markets around the world and nearly destroyed the global financial system in 2008 has reemerged with a vengeance sending global equities deep into the red and wiping out more than $5 trillion in market capitalization in less than two weeks. On Tuesday, before the opening bell, major market index futures in the US plunged more than 400 points signaling another violent day of selling ahead. Worries that a slowdown in China will impact global growth pushed Asian and European markets deep into negative territory while US futures indicate that the Dow Jones is headed for its ninth triple-digit day in ten sessions. The deluge of bad news has battered confidence in the Fed and “sent global equities to their worst monthly slump in more than three years”. Millions of Mom and Pop investors have sold out already and are headed for the exits. Here’s a recap from Bloomberg:
“Mom and pop are running for the hills. Since July, American households — which account for almost all mutual fund investors — have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse.
Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds, said economist Dana Saporta.
“Anytime you see something that hasn’t happened since the last quarter of 2008, it’s worth noting,” Saporta said in a phone interview. ….Withdrawals from equity funds are usually accompanied by an influx of money to bonds, and an exit from both at the same time suggests investors aren’t willing to take on risk in any form.” (“Fed Up Investors Yank Cash From Almost Everything Just Like 2008“, Bloomberg)
While the slowdown in China may be the spark for recent volatility, it certainly isn’t the cause. There’s a growing consensus that the real problem originated in 2008 when the Fed refused to write-down the debts from the insolvent banking system thus creating the conditions for another calamitous financial crisis sometime in the future. And while the Fed’s zero rates and titanic doses of liquidity might have helped to ease the symptoms by flooding the system with cash, the underlying issues remain the same. Thus, as the medication has worn off, the virus has reappeared stronger than ever revealing the ineffectiveness of the Fed’s remedies and the urgent need for alternate therapies.
Stocks are massively overpriced due to the setting of interest rates below the rate of inflation which creates a subsidy for speculators. The policy has had the precise effect that the Fed intended, it has generated a humongous asset bubble in stocks and bonds transferring trillions of dollars to Wall Street banks and financial institutions. According to Yale economist Robert Shiller, the only time stocks have been this “high or higher were in 1929, 2000, and 2007—all moments before market crashes.”
Robert Shiller: “…Bonds, and increasingly real estate also look overvalued. This is different from other over-valuation periods such as 1929, when the stock market was very overvalued, but the bond and housing markets for the most part, weren’t. It’s an interesting phenomenon.”
At the same time bankers and hedge fund managers have been raking in record profits on financially-engineered products that neither add to overall productivity or improve the broader economy, ordinary working people have seen their wages stagnate, incomes plunge and their prospects for a comfortable retirement vanish along with their ever-dwindling 401-K. According to investment guru John Hussman:
“U.S. wages and salaries have plunged to the lowest share of GDP in history, while the civilian labor force participation rate has dropped to levels not seen since the 1970s. Yet consumption as a share of GDP is near a record high.”
The problem is that the Fed must prevent the real economy from growing, otherwise, workers wages will improve, prices will rebound, inflation will rise, and the Fed will be forced to raise rates. And, of course, higher rates are what Wall Street fears most, in fact, the six year bull market was built entirely on cheap, plentiful liquidity that has inflated historic bubbles in financial assets across-the-board. Even the slightest uptick in rates will bring the whole fake edifice crashing to earth, which is why any talk of “normalization” sends stocks into a nosedive.
This is why policymakers will continue to slash budget deficits and implement other austerity measures to cut off the vital flow of fiscal support to the real economy. A thriving economy with low unemployment, rising incomes and wages, and positive inflation is the death knell for zero rate shenanigans, like stock buybacks, where a company repurchases its own shares to push prices higher to boost executive compensation and reward shareholders. Buybacks are type of stock manipulation that used to be banned but are presently, all the rage. Interestingly, Barron’s attributes the recent turnaround in the market to a surge in buybacks that staunched the bloodletting on Wall Street. Take a look:
“Like the Wizard of Oz, who was revealed as nothing more than a man behind a curtain working some cool special effects, stock buybacks might not be the great and powerful market force they were thought to be.
What do I mean? Two weeks ago, the Standard & Poor’s 500 began to sell off as concerns about China, commodities, and emerging markets made headlines. But just as the popular benchmark looked like it was entering free fall, it suddenly reversed. Who was the mysterious savior rescuing the markets? Articles published soon after the remarkable rebound were quick to point out that trading desks at Goldman Sachs and Morgan Stanley had seen the most corporate buying on record, suggesting it was share buybacks that kept the market afloat.” (“Pushback on Buybacks,” Barron’s)
So, a surge in buybacks actually turned the markets around and stopped a selloff?
Indeed. This is how buybacks distort pricing, by countering normal supply-demand dynamics with infusions of capital that would normally be directed towards improving productivity. Weak regulations and cheap cash have changed the incentives structure so that easiest way to enrich stakeholders is by piling on more debt, raking off hefty profits, and leaving the wreckage for someone else to clean up. This is nihilistic rationale that drives buybacks. Keep in mind, the Fed’s low rates were sold to the public as a way to stimulate investment in the real economy. As it happens, hiring for full-time jobs is still at depression era levels while business investment (Capex) has collapsed. The bulk of earnings are being devoted almost-exclusively to goosing stock prices to reward insatiable CEOs and their do-nothing shareholders. Check it out:
“The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees…
Why are such massive resources being devoted to stock repurchases? Corporate executives give several reasons, which I will discuss later. But none of them has close to the explanatory power of this simple truth: Stock-based instruments make up the majority of their pay, and in the short term buybacks drive up stock prices. In 2012 the 500 highest-paid executives named in proxy statements of U.S. public companies received, on average, $30.3 million each; 42% of their compensation came from stock options and 41% from stock awards. By increasing the demand for a company’s shares, open-market buybacks automatically lift its stock price, even if only temporarily, and can enable the company to hit quarterly earnings per share (EPS) targets…
If the U.S. is to achieve growth that distributes income equitably and provides stable employment, government and business leaders must take steps to bring both stock buybacks and executive pay under control. The nation’s economic health depends on it….” (“Profits without Prosperity“, William Lazonick, Harvard Business Review)
There’s no chance the Fed will raise rates in the current environment. Corporate earnings and revenues have been shrinking since the forth quarter of 2014 which will make it harder for CEOs to justify adding to their debtload to repurchase more shares. As the appetite for buybacks wanes, stocks are bound to dip even lower putting more pressure on bank balance sheets and forcing corporations to divert more cash to debt servicing. The Fed’s threat to raise rates is merely a bluff to attract foreign capital to US markets and to prevent the dollar from falling off a cliff.
While it’s always possible that the markets could stabilize or stocks could rebound sharply, it’s more likely that we have reached a tipping point where the excesses are about to be wrung from the system through an excruciating downturn followed by an inevitable currency crisis. We expect the six year-long fake recovery to end much like it did in 1929, where one demoralizing selloff followed the other, and where the crashing of stock prices fueled the publics distrust of the central bank, the government and all of the nations main institutions. Here’s a brief summary from Galbraith’s masterpiece:
“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruiness fall. Even the man who waited out all of October and all of November, who saw the volumne of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenonmemon. The ruthlessness of its liquidation was, in its own way, equally remarkable.” ( Extracts from “The Great Crash: 1929″, John Kenneth Galbraith, First Published 1955, Page 130 Things Become More Serious)
As of this writing, the Dow is down 317, the S&P 500, down 37, the Nasdaq, down 71.
In 1928, famed British economist John Maynard Keynes predicted that technology would advance so far in a hundred years – by 2028 – that it will replace all work, and no one will need to worry about making money.
“For the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”
We still have thirteen years to go before we reach Keynes’ prophetic year, but we’re not exactly on the way to it. Americans are working harder than ever.
Keynes may be proven right about technological progress. We’re on the verge of 3-D printing, driverless cars, delivery drones, and robots that can serve us coffee in the morning and make our beds.
But he overlooked one big question: How to redistribute the profits from these marvelous labor-saving inventions, so we’ll have the money to buy the free time they provide?
Without such a mechanism, most of us are condemned to work ever harder in order to compensate for lost earnings due to the labor-replacing technologies.
Such technologies are even replacing knowledge workers – a big reason why college degrees no longer deliver steadily higher wages and larger shares of the economic pie.
The economic model that predominated through most of the twentieth century was mass production by many, for mass consumption by many.
But the model we’re rushing toward is unlimited production by a handful, for consumption by the few able to afford it.
The ratio of employees to customers is already dropping to mind-boggling lows.
When Facebook purchased the messaging company WhatsApp for $19 billion last year, WhatsApp had fifty-five employees serving 450 million customers.
When more and more can be done by fewer and fewer people, profits go to an ever-smaller circle of executives and owner-investors. WhatsApp’s young co-founder and CEO, Jan Koum, got $6.8 billion in the deal.
This in turn will leave the rest of us with fewer well-paying jobs and less money to buy what can be produced, as we’re pushed into the low-paying personal service sector of the economy.
Which will also mean fewer profits for the handful of billionaire executives and owner-investors, because potential consumers won’t be able to afford what they’re selling.
What to do? We might try to levy a gigantic tax on the incomes of the billionaire winners and redistribute their winnings to everyone else. But even if politically feasible, the winners will be tempted to store their winnings abroad – or expatriate.
Suppose we look instead at the patents and trademarks by which government protects all these new inventions.
Such government protections determine what these inventions are worth. If patents lasted only three years instead of the current twenty, for example, What’sApp would be worth a small fraction of $19 billion – because after three years anybody could reproduce its messaging technology for free.
Instead of shortening the patent period, how about giving every citizen a share of the profits from all patents and trademarks government protects? It would be a condition for receiving such protection.
Say, for example, 20 percent of all such profits were split equally among all citizens, starting the month they turn eighteen.
In effect, this would be a basic minimum income for everyone.
The sum would be enough to ensure everyone a minimally decent standard of living – including money to buy the technologies that would free them up from the necessity of working.
Anyone wishing to supplement their basic minimum could of course choose to work – even though, as noted, most jobs will pay modestly.
This outcome would also be good for the handful of billionaire executives and owner-investors, because it would ensure they have customers with enough money to buy their labor-saving gadgets.
Such a basic minimum would allow people to pursue whatever arts or avocations provide them with meaning, thereby enabling society to enjoy the fruits of such artistry or voluntary efforts.
We would thereby create the kind of society John Maynard Keynes predicted we’d achieve by 2028 – an age of technological abundance in which no one will need to work.
Among the hundreds of billionaires and megabillionaires in the U.S., there are more than several enlightened persons upset by the problems our society faces who could make serious improvements possible.
The next step is breaking down a roadblock of sorts. A prominent, very rich businessman summed it up when he said to me: “Ralph, we all know how to make a lot of money but we don’t have a clue as to what to do with it, including me.” It is not as if these super-wealthy are contemplating their navels. Many do give away lots of money but wonder if their giving is a stop-gap measure, while others refrain from donating unless they can be assured that their philanthropic investments are likely to deliver results.
It helps to make a distinction between charity and justice – both noble causes worthy of donations. Charity ministers to the immediate, often desperate needs of vulnerable populations. Charities support soup kitchens, clinics, renovate or build educational buildings, add services for the elderly, provide medicines for the poor here and in developing countries, help local school systems under budget restraints, and quickly respond to tragedies with disaster relief here and abroad. All of these causes are worthwhile (when these services and donations reach the appropriate recipients).
Justice directly confronts the challenge of preventing people from ending up in vulnerable situations. What causes over 15 million children in the U.S. to go to bed hungry each night? Why don’t we have universal public health care? Why aren’t public colleges and universities tuition-free like high schools in the U.S. and most western European countries? Why are our public works crumbling and creating unnecessary obstructions for disaster relief (reaching people stranded after hurricanes)?
Will charity ever begin to catch up with the consequences from corruption, self- preserving bureaucracies, man-made environmental damages, and governments indentured to avaricious special interests and concentrated corporate power? Not a chance.
It is advocacy promoting justice that seeks the prevention of the causes that lead to so much misery, institutional harm, poverty, and the loss of human life and potential. Repairing the wreckage of wars places huge demands on charity. Waging peace and negotiating arms control agreements places huge demands on justice.
Last fall, I proposed “Birth-Year Gifts to America,” which the very wealthy could jumpstart with other Americans around the country. So, for example, people in the birth-year of 1930 or 1935 or 1937 would organize to support and endow a self-renewing nonprofit, civic institution so as to improve the quality of life of future generations.
The steel magnate Andrew Carnegie’s philanthropy created many organizations, including the Carnegie Institution for Science, the Carnegie Endowment for International Peace, and the Carnegie Corporation of New York (a major foundation dedicated to the advancement of science). His most memorable gift was funding the establishment of over 2,500 free libraries in as many communities throughout the country. He insisted, however, that the localities provide the land to give themselves a stake. Talk about a legacy!
In my proposal, I suggested twenty-five such enduring ideas, which could be gifted to our country, that cover a large range of needed improvements in our society. Birth-years for people seventy to ninety years in age have thousands of people of means who, whether they are religious or not, really do not believe that they can take it with them.
You can view the entire list, which may stimulate you own birth-year project nationally, regionally, or locally, that advocates for justice through systemic creations or improvements of institutions at http://www.huffingtonpost.com/ralph-nader/how-birth-year-legacies-c_b_6446584.html or write to PO Box 19367, Washington, D.C. 20036 for a copy of the list.
Bringing together the billionaires who want to get things moving for a weekend roundtable could kickstart a new approach to meaningful and creative philanthropy. We would be pleased to host such a historic, serious deliberation to escalate informed wishes into actions.
Most progressives express disbelief that the very wealthy would ever support fundamental changes that would shift the power from the hands of the few to the hands of the many and create a much more equitable and prosperous society. We could have a culture that focuses on prevention of problems through justice and not just reacts to the disasters and inequality caused by such problems through charity. A cynical view ignores that having the backing of majority public opinion, coupled with the financial support of the wealthy, can produce positive results. (I strove to detail this potential in my book “Only the Super-Rich Can Save Us!” – a work of realistic political fiction.)
Nearly a century ago, the brilliant philosopher/mathematician Alfred North Whitehead declared that: “A great society is a society in which its men of business think greatly of their functions.” Today, those heeding the vision of Senator Daniel Webster, who, before the Civil War, said: “Justice, Sir, is the great interest of man on Earth,” will surprise their peers by moving from success to significance. They can begin this transition by connecting with advocates who have decades-long experience in seeking justice under dire conditions, with some success.
There are examples of the wealthy contributing to longstanding progressive improvements in society. There were wealthy philanthropists who funded many activities focused on the abolition of slavery and obtaining universal suffrage for women. The Civil Rights Movement received substantial financial backing from a handful of very rich families. In addition, numerous environmental groups today are reaping the benefits of wealthy supporters.
Now, with more wealthy individuals and families than ever, the funding of both charity and justice has become more feasible.
The Saudi Arabian General Investment Authority (SAGIA) in collaboration with the Council of Saudi Chambers (CSC) and the US-Saudi Business Council will host the high-profile US-Saudi Investment Forum in Washington on Friday to highlight the diverse and exciting investment opportunities in the Kingdom.
The forum will be held on the sidelines of the visit of Custodian of The Two Holy Mosques King Salman to the US beginning Thursday.
“This forum comes well in time after the Saudi government recently announced strategic spending and development initiatives worth hundreds of billions of dollars over the next 10 years,” said SAGIA Gov. Abdullatif Al-Othman, here Tuesday.
This business forum, he said, will go a long way in boosting commercial and investment links between the Kingdom and the US.
Al-Othman said that the forum would run alongside an “Invest Saudi” exhibition, featuring a number of Saudi public and private sector organization to showcase opportunities in the health, transport, ICT and mining sectors.
The SAGIA governor himself will lead a series of panels and bilateral meetings between the American and Saudi governmental and business communities to discuss the promising investment opportunities and investment climate the Kingdom has to offer, as well as initiatives to increase the volume of business between the two nations.
The Saudi-US forum will highlight the most important investment opportunities for the two countries and ways of development of relations and cooperation in economic and investment fields. The event will also seek to increase the volume of trade exchange in proportion with the size and potential of the Kingdom and US economies, and demonstrate areas of investments that thrive in the Kingdom in promising sectors.
A SAGIA statement released on this occasion said that these investments opportunities are a chance for the US companies to expand and increase the size of foreign investments in the light of the attractive investment environment in the Kingdom that offers numerous incentives and advantages to the foreign investor.
A huge delegation of business leaders and government officials will be at hand to inform American businessmen about the investment opportunities in the energy, transport, health, education, and other industrial and service areas. Top-notch businessmen and executives from Saudi Aramco, SABIC, SADARA, Maaden, Royal Commission for Jubail and Yanbu, Saline Water Conversion Corporation (SWCC), and National Water Company will take part in the event in Washington.
Many other top Saudi companies and their representatives including National Industrial Clusters Development Program, Saudi Industrial Development Fund, Saudi Industrial Property Authority and Economic Cities Authority will attend the forum and the exhibition.
