Make Sense of the World: Weekly Report

Fair Observer’s extended report of the week’s events. [Note: Click here for the summary version.]

There are times when the ground beneath our feet shakes. Events occur and, even as they are unfolding, we realize their historic significance. As the news of the nuclear deal between Iran and the P5+1 breaks, it is clear that this is a seismic shift which will define history.

North America

Canada, usually lost in shadow of its more powerful neighbor, witnessed three important developments. First, in four by-elections that are seen as a prelude to the 2015 election, everyone is talking about the middle-class. Income inequality is a hot topic and Prime Minister Stephen Harper is facing a strong challenge from the left.

Second, Canada’s reaction to the deal with Iran has been hostile. Its foreign minister has declared that it is sticking to sanctions. It demonstrates how far Canada under Harper has moved to the right and its image as a liberal state is vestige of the past.

Third, Harper has criticized Justin Trudeau, the son of Canada’s iconic 15th prime minister – his patrician rival – for using illegal drugs. Trudeau admitted to smoking marijuana following his election to the House of Commons – a much lesser sin, by comparison, than Toronto Mayor Rob Ford’s, who still refuses to resign after admitting to smoking crack cocaine while severely inebriated.

At heart, behind all three developments is a bigger question about what kind of society Canada wants to be. Harper’s market-driven economics, social conservatism, and macho foreign policy will be up for question not just in the coming days but right until 2015.

In the US, headlines are all about the deal with Iran — a staggering development given the toxic nature of relations between the two states since the 1979 Revolution. Tehran’s support of Bashar al-Assad’s regime in Syria, Hezbollah, and even Hamas has not endeared it to the US where many hold Iran to be a terrorist state.

In Iran, few can forget the CIA-led coup of 1953 when Mohammad Mossadegh, the country’s first democratically elected leader, was deposed because he demanded 50 percent of the country’s oil revenues from the Anglo-Iranian Oil Company (AIOC) — later British Petroleum — instead of the 16 percent it was then paying Iran. Even Iranians opposed to the regime see the US as an evil imperialist that exploits the Middle East and supports a Jewish state that has stolen land from Palestinians. There is an element of truth to both American and Iranian narratives, but both sides demonize each other far too much.

President Barack Obama and Secretary of State John Kerry have taken a bold gamble in pushing forth the Iran deal. (The best summary of the deal can be found on the White House website.) The most important thing to remember about the agreement is that it is an interim one. The overwhelming majority of sanctions will remain. Iran will get temporary relief for accepting restrictions on its nuclear program.

If this deal works, it will define Obama’s second term, but it has opponents both at home and abroad. Allies like Israel, Saudi Arabia, Qatar, Kuwait and Canada are opposed to the deal. More importantly, Obama and Kerry face opponents at home. Senators from both sides of the aisle are against the deal and might propose new sanctions legislation to spike it, leaving Obama in an uncomfortable position of having to use his veto powers. Such an action would be foolish. It would diminish the ability of the US to negotiate any agreement because the word of its president or secretary of state would not count for much.

The past week was one when Americans wallowed in memories from the past. Exactly 150 years ago, on November 19, 1863, President Abraham Lincoln gave the Gettysburg Address at a cemetery still smelling of death after Union troops pushed back the Confederate Army in their first major victory. It seared itself on the world’s historic consciousness with his iconic words — “of the people, by the people and for the people” — acting as an inspiration to democratic movements around the globe.

On that day, Europe was still ruled by monarchs and aristocratic elites, and much of the rest of the world was in turn ruled by Europeans. Slavery was a central issue for the civil war, and both parties believed God was on their side. American democracy was in peril and Lincoln’s speech is a solemn celebration of the ideals for which his troops were laying down their lives.

It is ironic that the historic week of the Gettysburg Address should be the one when chasms between Democrats and Republicans became so deep and wide, that the former felt compelled to exercise the “nuclear option” and change filibuster rules in the Senate. This means that all executive branch and judicial nominees, except to the Supreme Court, can now be confirmed with a simple majority vote instead of the 60-vote supermajority that has so far been the norm.

The US is a nation built by immigrants who fled persecution in the Old World. While minorities such as Native Americans were conquered, African Americans were enslaved, and Asian Americans were interned, the idea of preventing tyranny of the majority has remained a powerful one. Filibuster rules in the Senate were designed for protecting the minority. Senators could speak endlessly and a supermajority of 60 was needed to override filibuster.

With the increasingly partisan divide in Washington DC, filibuster has been used indiscriminately by Republicans to oppose Obama’s nominees for executive and judicial positions. In three weeks, Republican senators shot down three Obama nominees for the US Court of Appeals for the DC Circuit, the nation’s second highest court. Obama was right in pointing out that in the six decades before he assumed power, filibuster was used against only 20 presidential nominees while it has been used 30 times in the five years he has been in office.

However, Obama fails to point out that in his first two years as president, he failed to put forward nominees for vacant positions. In those two years, Democrats controlled the House and had a supermajority in the Senate. There would have been no need to change filibuster rules if Obama had acted then. In fact, Republicans have a fair point when they criticize him for not sending in nominations for approval.

It turns out that judicial appointments are crucial to Obama’s second term. A number of regulatory issues will be up for hearing in the DC Court of Appeals. At the moment, the court is evenly divided with four Republican and Democrat appointees. It has already ruled against limiting bets in the commodity derivates markets, undermining a key goal of the financial reforms passed by the Dodd-Frank Act that seek to curtail speculation. Democrats do not want other rulings that chip away at their legislation, while approving Obama appointees has become a priority. In private, many rue the lost opportunity of Obama’s first two years. A stitch in time saves nine, and nowhere is that truer than in politics.

The change of filibuster rules is the result of the rise of a new kind of Democrats. As the Republican Party has been taken over by the Tea Party, senators like Jeff Merkley and Elizabeth Warren have emerged in the Democratic Party to hit back. The standoff over the debt ceiling is a classic example of the fundamentalism that has infected the Republican Party. The Eisenhower Republican is nearly extinct. The debt ceiling is a debate over the pro forma fulfillment of the obligations that the US government has already assumed. It is unbelievable that this should even be up for discussion. The sovereignty and credit of the US cannot be up for question.

Furthermore, holding the world economy ransom is not just irresponsible but criminal. The day that the US defaults on its debt will be the moment when it can kiss its superpower status goodbye. The dollar will no longer be the world’s reserve currency. The US will no longer be able to live off cheap debt. Sure, there is a debate to be had over large deficits, increased regulation, and the debt burden; but the way Republicans have been doing it has cost them their credibility. It has radicalized the Democratic Party and it has decided to do away with filibuster rules.

Since the civil war, the US has never been so divided. Democrats have played their ace. It is now time for the Republicans to respond. They are warning that Democrats will regret the move. They control the House and could react with fury when they reconvene after Thanksgiving. Even if this fury is short lived, it seems unlikely that any legislation will be passed until the elections of 2014. Even the immigration bill which was passed through bipartisan support in the Senate will probably be spiked by Speaker John Boehner. If the Republicans feel cut to the bone, then expect a recurrence of another fight over the debt ceiling and a greater risk of default.

The US remembered President John F. Kennedy with much nostalgia on the 50th anniversary of his assassination in Dallas. For Americans, his youthful optimism trumped his flaws.

The truth of the matter is that Kennedy is overly glamorized. He expressed support for the Civil Rights Movement and promised to put a man on the moon. He might have been more reluctant than President Lyndon B. Johnson to put troops in Vietnam to bolster the French. However, Kennedy presided over fiascos such as the Bay of Pigs and was unable to push through civil rights legislation because he had poor personal relationships with members of Congress. It is only when Johnson became president that the civil rights agenda moved forward thanks to his grit, guile and determination. The past is more complicated than portrayed in American media. Today, that furthering of civil rights is taking the form of legalizing of same-sex marriage. Illinois became the 16th state to do so, following hot on the heels of Hawaii.

The Department of Justice has fined JPMorgan Chase a record $13 billion, roughly half its annual profit, for failing to fully disclose the risks of buying mortgage-backed securities from 2005 to 2008. Bad behavior was endemic on Wall Street in the boom years. Now, the government seems to be signaling that it will hold banks responsible for what went on.

However, the more painstaking task of reforming the financial system has yet to be achieved. The 2,300-page Dodd-Frank Act remains a badly drafted monstrosity, and the various rules to bring it to life will take time to draft and are unlikely to prove terribly effective. During the crisis, many banks were deemed “too big to fail.” Today, they are even bigger to fail. It is clear that if banks are too big to fail, chances are that they are too big. They should be broken up. Currently, moral hazard and systemic risk have amplified. Financial reform is still unfinished business.

Spotify raised $250 million on a $4 billion valuation. It has yet to make a profit despite increasing revenues and users. Cheap money from the Federal Reserve seems to be leading to what Shakespeare called “fire burn, and cauldron bubble” for certain asset prices such as stock in technology companies. Yet, as inflation remains below two percent and unemployment remains above the 6.5 percent target, it will be difficult for the Federal Reserve to unwind its stimulus to the economy. Policy makers are sailing uncharted territory and, for all the sound and fury, few people have any idea of where exactly the economy is headed.

Latin America

The big development in Latin America is that Brazil is making strides towards better governance. As a country that only recently emerged from the shadows of military dictators, Brazil has had to deal with governance issues such as rule of law, corruption and human rights abuses. Bit by bit, it is making slow but steady progress. On November 15, its Supreme Court issued arrest warrants for José Dirceu and 11 others. These were among the 25 convicted for corruption last year. The culture of impunity for politicians is changing and Brazil might be pointing the way forward for the rest of Latin America.

Meanwhile, Brazil is facing major challenges in its preparations of the 2014 FIFA World Cup and the 2016 Olympics. The preparations are costing more and taking longer. Rampant corruption has bedeviled construction. As President Dilma Rousseff faces reelection next year, she is trying to change things around by privatizing a large chunk of the country’s infrastructure. Her government raised $9.1 billion by privatizing two major airports. More auctions are to follow. Brazil has suffered from years of underinvestment in infrastructure. Now with international events looming and the memory of street protests earlier this year, Rousseff is courting infrastructure investment not only to prepare for the events, but also to spark economic growth.

In Colombia, the government and the rebel group FARC agreed on two of the six issues on the agenda during peace talks in Cuba. President Juan Manuel Santos faces reelection and his rival, Oscar Ivan Zuluaga, backed by former President Alvaro Uribe, opposes these discussions. The Green Party’s candidate is Ingrid Betancourt, who was held hostage by FARC for six years. Rumors of a FARC assassination plot against Uribe are swirling around. In the midst of the coming election, making progress and lasting peace will be an arduous task but, so far, the negotiations are proceeding well.

Venezuela continues to suffer from the caudillo curse. Lawmakers have granted President Nicolas Maduro powers to rule by decree. He claims that he will lead an “economic offensive” against spiraling inflation and food shortages. Venezuela’s economy is in free fall. Inflation is at 54 percent, basic goods such milk and cooking oil are hard to come by, and the bolivar is trading at 60 to a dollar — ten times the official rate. Maduro’s action will exacerbate the crisis. His populist measures such as forcing stores to slash prices are designed to win municipal elections on December 8. Sadly, Venezuela faces economic ruin under his leadership.

In Argentina, Guillermo Moreno, the trade secretary, resigned after Axel Kicillof, a former Marxist professor, assumed charge as the new economy minister. Moreno brought in exchange controls and manipulated statistics on inflation. Kicillof has advocated more interventionist policies and Argentina’s economy seems to be doomed until Cristina Fernández is voted out as president.

In Honduras, both presidential candidates are claiming victory. Already beset by gang violence and drug trafficking, the country faces further turmoil in the coming days.

Europe

Germany is the heart of Europe. Scarred by its past and still burdened by guilt, it is a reluctant leader. It retains a suspicion of strong leadership and favors consensual politics in a system underpinned by proportional representation. In the post-war era, this system worked well. Now, it is failing Germany. Two months ago, national elections took place. Chancellor Angela Merkel won and her conservative bloc secured 41.5 percent of the vote and came within five seats of an absolute majority.

Yet, Germany has been governed by a caretaker government because Merkel needs to form a coalition with one of the other three left leaning parties: the Social Democrats (SPD), the Greens, or Die Linke — the descendent of East Germany’s Communist Party. The SPD is making populist demands such as lowering the pension age and increasing benefits, namely because it is scarred by its previous coalition experience with Merkel. SPD demands have been condemned by most economists, business leaders, and Germany’s venerated central bank. They were reminiscent of the disastrous policies of French President Francois Hollande. In the short-term, Germany would be better off with another election, but it remains to be seen if cautious Merkel is willing to pull the trigger. In the long-term, Germany needs to reform its electoral system so that it becomes less dysfunctional and more governable.

Ukrainian President Viktor Yanukovych has put on hold a historic deal with the European Union (EU). Ukraine was supposed to sign association and free trade agreements with the EU. The release of jailed opposition leader Yulia Tymoshenko, who is still on hunger strike, was one of the conditions for the agreements. The EU is criticizing Russia for torpedoing the deal because it wants Kiev to join the Moscow-led Customs Union, which includes Belarus and Kazakhstan.

Protests reminiscent of the Orange Revolution in 2004 have broken out in Kiev. Ukraine is witnessing a struggle between those who look west and those who look east. Yanukovych is the leader of the latter and it is unlikely that he will be cowed down by protests to embrace the EU. Under President Vladimir Putin, Russia is going to fight tooth and nail to keep Ukraine in its sphere of influence. The EU currently lacks economic vitality and political leadership to win against Putin.

A member of a far right group and a former leader of a neo-Nazi party that was banned has become the regional governor of Banska Bystrica in central Slovakia. His election is part of a pan-European trend. Far right parties are on the march as Europe suffers economic turmoil and governing elites seem increasingly out of touch with their electorates.

Middle East & North Africa

The Middle East is still reeling from the news of the nuclear deal between Iran and the P5+1. The most interesting development is in Israel. Prime Minister Binyamin Netanyahu has condemned the agreement, calling it a “historic mistake.” Saudi Arabia is seething with fury and its silence is deafening. Kuwait and Qatar are not pleased either. At heart are old rivalries playing out. The Sunni Arab states have long seen Shi’a Iran as a rival. Differences, ethnicity and faith are deep-rooted, as are more practical fears of a downward pressure on the price of oil with Iran adding to global supply. In this instance, religion, economics and geopolitics combine to make a perfect storm.

Now that a deal has been signed, Iranian President Hassan Rouhani, Foreign Minister Mohammed Javad Zarif, and other moderates have their task cut out. Just as Obama and Kerry have to win over recalcitrant members of the Senate, the Iranian moderates have to convince Supreme Leader Ayatollah Khamenei and other hardliners that the deal is worth it. They will have to show that Tehran can retain some of its nuclear energy program and its dignity in the process of making peace. The negotiations at home might turn out to be much tougher than the ones abroad.

The most interesting developments are occurring in Israel. Americans running for office have long felt compelled to tout their commitment to Israel to improve their chances of success. Netanyahu has for far too long forgotten that Israel is a junior partner. Bolstered by the hold of AIPAC — the lobby group of American Jews that backs Israel — on American politics, he has tried to undermine Obama. During the 2012 presidential election, Mitt Romney paid Israel a visit to further a perception that Obama was abandoning the country. Netanyahu’s constant inflammatory rhetoric and his speech in the UN discredited him. Jon Stewart, the comedian who happens to be Jewish, brilliantly pointed out the ludicrousness of Netanyahu’s speech.

There is a feeling that Obama pushed for the Iran deal to ensure that Israel did not initiate a unilateral strike on Iran’s nuclear facilities. There is no guarantee that the deal will work but, if it does, the biggest loser will be Netanyahu. The tail was wagging the dog for far too long. Finally, the dog has wagged the tail. Netanyahu has long been discredited internationally. He is seen as a war monger who wants to run an apartheid version of Israel, building settlements in the West Bank in contravention of international law. Finally, he might start to lose credibility at home and a real pro-peace alternative might emerge in Israeli politics.

The deal has much wider implications for the region. Iran has considerable influence in Iraq, Syria and Lebanon. Iraq is going through a bloodbath. The death toll for November alone exceeded 350. The Syrian Civil War is in danger of spilling over into Lebanon. Thirty years after the suicide bombing on the US Embassy in Beirut, an al-Qaeda-linked terror group has attacked the Iranian Embassy in the capital. Both American and Iranian interests intersect on many points of the world map and pouring resources into more strife will not help either country, especially as both face massive economic challenges at home. More importantly, Obama and Kerry are aiming to create a détente in the region. The last thing the US wants is a wider regional conflagration, one with Saudi Arabia starting its own nuclear program or Israel dragging the US into another war it cannot afford at a time when it is trying to unwind a draining decade in Afghanistan and Iraq.

Two years after bloody clashes broke out in Egypt on Mohammed Mahmoud Street that led to the end of military rule, the events that shake the country are not popular protests but a diplomatic row. Egypt expelled the Turkish ambassador and Turkey responded in kind. Both countries downgraded ties and tensions between them have risen. Turkish Prime Minister Recep Tayyip Erdogan called for the release of Mohammed Morsi, the ousted president of Egypt, while in Russia. Erdogan has been one of the fiercest international critics of Morsi’s ouster and has called it an “unacceptable coup.” He has been using the four-finger salute — the symbol of Morsi supporters — and his party has been forging close ties with the Muslim Brotherhood. As leader of an Islamist party long sidelined by the military, Erdogan has strong sympathies for his fellow Egyptian Islamists. He is also trying to keep up Turkey’s international profile that has been buffeted after the Taksim Square protests.

But, most importantly, what is at stake is a clash between two visions for the future. The Egyptian military wants to emulate Algerian generals and keep the Islamists in check. It runs a massive patronage network and has a strong support base in society. It is fighting to keep others off its turf and has no intentions of being defanged like the Turkish military. Erdogan aims to bolster political Islam that reflects the values of the Middle East and is no longer deferential to the West. He sees Morsi as a junior ally who could shape the future in a new light and inaugurate a new era in history.

Africa

As described last week, the situation in Central African Republic is deteriorating. The UN Office for the Coordination of Humanitarian Affairs (OCHA) has long been describing the situation in the country as “a tinderbox,” because Muslims and Christians are pitted against each other in a brutal civil war that has led to a complete breakdown of law and order. The Guardian reports that the country is on the verge of genocide and UN Secretary-General Ban Ki-moon is planning to send 9,000 troops, if the Security Council approves. This could take months and there is a possibility that the UN might draw from its peacekeeping missions in Africa to launch an emergency response. France is sending 800 troops to the country but this is unlikely to be enough. This crisis demonstrates that the African Union has to become more robust in dealing with humanitarian crises.

Meanwhile, Mali has voted in parliamentary elections that have gone off peacefully. However, this is unlikely to bring peace to the country. Tuareg rebels do not buy into the Malian state. Identities in the country are still largely tribal. Therefore, national elections to a parliament are too removed from the lives of voters and have little significance beyond headlines for the press. Mali is still a de facto French colony with French troops trying to keep the peace and ensuring that extreme Islamists do not take over.

In Zimbabwe, President Robert Mugabe’s government is descending to new depths. Its stated goal is the “indigenization” of the economy. Therefore, it has warned owners of foreign firms in certain sectors that they will be arrested after January 1, 2014. After having targeted white farmers, the government is gunning for Nigerian and Chinese traders. Certain sectors of the economy are now reserved for locals and include retail and wholesale business, hairdressers, beauty salons, bakers, employment agencies, agriculture, transport, estate agencies and advertising agencies. After more than three decades in power, it seems Mugabe can do no right and is leading Zimbabwe to one disaster after another.

The most heartening development in Africa is the open defiance by South African newspapers of their government. They have published images of President Jacob Zuma’s private residence in Nkandla that the government has spent $20 million to refurbish. The government had asked them not to publish the photos on the grounds that it would be a violation of security laws, but the newspapers rebelled and went ahead. Times LIVE had the best headline: “So, Arrest Us.” This challenge to political authority is a shot in the arm for the young South African democracy, which might inch its way towards greater transparency and lesser corruption under the watchful gaze of a feisty fourth estate.

Central & South Asia

Afghanistan has been all over the news this week. The Loya Jirga, the Afghan tribal assembly of more than 2,000 elders, approved the Bilateral Security Arrangement (BSA). President Hamid Karzai is refusing to sign it, causing headaches to the US that wants a speedy conclusion to the issue. The BSA will allow the US to station 15,000 troops after 2014. If the famously unreliable and unpredictable Karzai does not sign the BSA, then the US will pull its troops out of Afghanistan, the same way as it did in Iraq.

The omens for the US are not good. Karzai is posturing before the elections. The constitution prevents him from running, but his notoriously corrupt brother is in the fray and Karzai is trying to ensure that the presidency stays in the family.

Karzai seems to be preparing for a post-US world. He has turned down Pakistan’s offer to train Afghan officers and its line of credit to Afghans to take “what they want” from Pakistan Ordnance Factories. Instead, he has asked India for 150 battle tanks, 120 (105mm) field guns, a large number of 82mm mortars, one medium lift transport aircraft (AN-32), two squadrons of medium lift and attack helicopters, and a large number of trucks.

The situation in Afghanistan is a royal mess. As the author proposed in a conference in 2010 in the US Congress, the solution is a multi-party arrangement similar to the Concert of Europe in 1815. Russia, Iran, Pakistan, India and even China have to be involved if any deal is to stick. There are too many tribes, too many interests, and too many loyalties for a straight up bilateral deal that the US is trying to achieve. Even if the BSA is agreed upon, it is unlikely that the US troops will stay for long or have much influence. As of now, Afghanistan will end up with the Hazaras, the Uzbeks, the Tajiks, and the Pashtuns all going their separate ways. Different actors such as Iran, Pakistan and India will get involved leading to chaos. The Taliban will reemerge, even if they may never wield the power of yore.

In Pakistan, thousands are protesting American drone strikes. In Khyber Pakhtunwala province, protests are particularly intense. The fact of the matter is that drone strikes have created enormous ill will in Pakistan. They have certainly got rid of some dangerous figures, but there have been too many civilian casualties in the process. Blowback is inevitable and the most vulnerable figures when that happens will be members of the Pakistani elite that are seen as stooges of the US.

On a more positive note, Pakistan’s stock market ended up at a record high as oil prices fell after the Iran nuclear deal. If Pakistan can achieve economic growth along with some equity in society, the tensions tearing the country apart have some chance of dissipating.

Nepal held elections to its constituent assembly. Two of Nepal’s oldest parties are in a race for the top spot. The Maoists will be a distant third. They are already calling foul and are likely to plunge the country into political turmoil. India is happy with the results because the Maoists have lost. With its own Maoist insurgency, India is relieved not to have the Maoists in charge, supporting their brethren in India or cozying up to China. The truth is that Nepal has too many interests and far too much of inequity to become peaceful anytime soon.

In India, Narendra Modi, the leader of the Bharatiya Janata Party (BJP), is gaining popularity in the country with thousands turning out to hear him speak. The 2002 Gujarat riots are a black mark against his record because he is suspected of sanctioning the slaughter of Muslims. In 2005, the US not only revoked his diplomatic visa but also his tourist visa when he was due to speak on the invitation of American Indians, who tend to be overwhelmingly in favor of Modi. It was a decision of monumental naivety by then-Secretary of State Condoleeza Rice. The ruling Congress Party in India was never punished for active participation in the slaughter of the Sikhs in 1984, the rigging of Kashmir elections in 1987, or supporting the Liberation Tigers of Tamil Ealam (LTTE) – the Tamil terrorist organization.

Internationally, US allies such as Netanyahu and deposed dictators of Latin America or Middle East do not have a better record than Modi. Russian and Chinese leaders who are guilty of much worse crimes have never been targeted in the same way. Ironically, Modi is the most business-friendly of Indian leaders and is most aligned with American economic interests. Other countries, including US allies such as Japan, Canada and the UK, have established ties with Modi. If the opposition wins the upcoming Indian election, the US will have to make a humiliating U-turn for furthering its relationship with India.

The most shocking news in India is a sensational molestation case involving a senior media figure named Tarun Tejpal, the founder of an investigative magazine called Tehelka. He assaulted a staff member on two occasions and the organization tried to cover up for him. The moral turpitude of journalists in India is legendary. Top names in the country have been engulfed by scandal. NDTV journalists have long been suspected of cozying up with the establishment because most of them are children of senior bureaucrats.

In a scandal a couple of years ago, involving allotment of spectrum to mobile operators, it emerged that some were acting as brokers for politicians. Other organizations are no better. India gives the illusion of a free press but it is proof of the fact that co-option works much better than coercion. Tejpal is the personification of a malaise that runs much deeper. While the Pakistani press has been fighting for freedom, democracy and justice, its Indian colleagues have been fighting for ratings, favors and the proverbial 30 pieces of silver.

The World Health Organization and United Nations Children’s Fund have found that 638 million Indians defecate in the open. This lack of sanitation is having a disastrous effect on children, in particular. It causes microbial contamination that leads to diarrhea which results in malnutrition that, in turn, leads to poor cognition. Apparently, 48 percent of Indian children suffer from some form of malnutrition. India can never be taken seriously as a major power unless it solves basic issues of governance and learns to take care of its poor.

Asia Pacific

Tensions soared between China and Japan yet again, as Beijing declared an air defense zone over much of the East China Sea. At the heart of the dispute are the islands that the Japanese refer to as Senkakus, and the Chinese as Diaoyus. The US is supporting Japan and does not recognize China’s declaration. The Americans have more than 70,000 troops in Japan and South Korea. Their Pentagon spokesman has declared: “When we fly into this aerial zone, we will not register a flight plan, we will not identify our transponder, our radio frequency and our logo.” These are the four Chinese demands and it remains to be seen how it reacts.

Chinese saber rattling is unwise. Already, its neighbors including India, Vietnam, Philippines, South Korea, Japan and even Taiwan, are nervous about its rise to power. It has to realize that it is increasingly the 800 pound gorilla in the room and restraint might further its interests much more than rhetoric.

Though China continues to be ruled by the Communist Party, its leaders are increasingly trying to court popularity. The Internet is a key place for them to judge how well they are doing. Here, the action against Japan is proving to be popular. Europe has a lesson for China. In the early 20th century, European powers were evolving into modern democracies. Although women did not yet have the vote, suffrage was expanding and even Germany had regular elections under the Kaiser. Politicians found it easy to appeal to nationalism for popularity. This led to aggressive foreign policy positions and nations got involved in a tit for tat game where their patriotic populations egged them on to take the next step. Populations were very enthusiastic about going to war and particularly interested in revenge. The British wanted to make Germany pay until the pips squeaked.

China has many legitimate issues vis-à-vis Japan going back to World War II, but the way it acts detracts from them. In fact, its actions paint it as a bully and the inflamed passions of its netizens do not bode well for Asia. Chinese leaders have to tame the dragon of nationalism before it causes a conflagration that everyone will regret.

A comment by a young Chinese man has gone viral on the Internet. He said: “The rimimbi is failing the Chinese people.” By keeping its currency low by, China is importing inflation. In a CCTV video, people complained about inflation. Everything from the price of vegetables to houses was mentioned. Pollution was a major concern too. The export-driven Chinese economic policy based on cheap goods has reached its limits. Its monetary policy is leading to inflation and its industries are causing terrible pollution. The Third Plenum made some major declarations but the greatest challenge that China’s leaders face is transforming their economy a second time in three decades.

Protests have broken out again in Thailand. Its turbulent democracy has learnt how to conduct elections, but not to accept results or to register protests using the constitutional machinery. Street protests have their value when they occur infrequently. The Thai premier has a point when she appeals for an end to “mob rule.”

A volcano has erupted in Indonesia, but it is dwarfed by the volcanic row that has broken out between Indonesia and Australia. Revelations that Australian intelligence agencies tried to tap the phones of top Indonesian leaders have caused great offense in the Southeast Asian nation. Australian Prime Minister Tony Abbott’s ham handed reaction to the row and comment that Australia could not be expected to apologize for actions to protect itself were insensitive.

Abbott should realize that John Howard, the previous leader of his party who was a longstanding prime minister, established a reputation for Australia as a racist country. Most non-white diplomats refer to Australia as the most racist country in the Anglo-Saxon world. Australian behavior is viewed in the light of past actions such as the “White Australia Policy” and the Tampa affair. Perhaps Abbott does not care about external perception. Australia is a land teeming with resources, has a robust democratic system, and has followed prudent policies. It can live with a reputation for racism but if wants to change that, it will have to learn to be a little more sensitive to poorer nations.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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