Make Sense of the World: Weekly Report

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

This week, the world remembered Mahatma Gandhi’s heir. Nelson Mandela was a man for all ages. He combined courage with compassion to lead South Africa to a new beginning. The apartheid-scarred land emerged as the Rainbow Nation and though huge problems persist, it is only because of Mandela that the country avoided civil war. We need more leaders like him in the 21st century.

North America

After the crisis and acrimony of recent times, Democrats and Republicans got together to hammer out a two-year budget deal. This is terrific news for the US economy. In the short run, it avoids another government shutdown and the specter of default by the US government. In the long run, it raises hopes of a grand bargain in the future where a combination of tax increases and spending cuts on Medicare, Medicaid and Social Security could put the US on a sound financial footing. That will have to wait until the 2014 elections are over. For now, there have been minor cuts in some payments to those who provide Medicare treatment and an increase in fees on airlines, and the business of government can go on.

The Volcker Rule was finally passed. It has been subject to much delay and great wrangling but will now take effect. The rule derives from the voluminous Dodd-Frank Act and is named after the former chairman of the Federal Reserve, who earned his reputation busting inflation in the 1980s. The rule bars banks from speculating with their own money. It completes the process of financial reform triggered by Dodd-Frank. Although the rule is complex and ambiguous, with the word “reasonable” appearing in numerous places — and while it will certainly be challenged in courts — banks at least have some certainty about the limits placed on them.

With the enactment of the Volcker Rule, the post-economic crisis regulatory overhaul is largely complete. There are now guidelines about dismantling large financial institutions, derivatives trading, bank’s capital requirements, and risky mortgages. It remains to be seen if such an onerous, complex, and poorly drafted set of regulations will work. “Too big to fail” is even bigger to fail. To quote Jesse Eisinger, the economy is overly “financialized” and the reforms just tinker with the existing system. When the next crisis occurs, more fundamental reforms will be needed.

The biggest technology companies, including Google, Microsoft, Facebook, Twitter and Apple, called for a limit to government surveillance. They want clear legal rules and enhanced review by the courts. It is less an act of conscience and more of an attempt to regain the trust of the public. The increase in state surveillance certainly needs rolling back. However, the big issue is not only the information which the government gathers but what these big technology companies themselves possess. There is increasing unease that a society of “big brothers” is developing, while the right to privacy is being diluted both by the government and by technology giants.

Two further trends are important. The US Congress wants more scrutiny over new arms export rules. The White House is resisting. At heart is the clash between the idealism of avoiding the flow of arms to conflict zones and the realism of boosting competitiveness for arms exports. It will be interesting to see how the US resolves this eternal dilemma. US oil consumption in November rose to a five-year high. This means that the US economy might be chugging back to a recovery and 2014 is likely to see an increase in oil prices.

Latin America

Uruguay legalized marijuana. It is the first country to do so. Led by President José Mujica – an extraordinary leader – the Senate has voted to give the government the right to control the growing, selling and use of marijuana. The US-led War on Drugs is a dismal failure. In a previous weekly report, it was mentioned how Afghan opium production has reached a record high. The violence in Mexico is chronicled on a daily basis as gangs battle each other and the government to keep control of the narcotics trade. The fact of the matter is that there is a tremendous global demand for drugs. The effort to control supply despite the massive international investment in police, soldiers and prisons has failed. Many, including flamboyant entrepreneur Richard Branson, have been calling for an end to the War on Drugs.

Two-thirds of Uruguayans oppose the law but Mujica is a man of conviction, who has pushed through legalization of abortion and same-sex marriage as well. An austere leader who does not use a motorcade, abjures the fancy presidential palace and donates most of his salary, President Mujica is running a government with decent budget deficits and debt levels that have earned investment grade credit scores from the three top rating agencies. With refreshing candor, Mujica has admitted that the country may not be totally prepared and the law is an experiment to take users away from clandestine dealers. Whatever happens, this is the start of a new era and the world will be watching Uruguay very closely.

In neighboring Argentina, President Cristina Fernandez de Kirchner, unlike Mujica, does not have a reputation for either probity or competence, and neither do most other politicians. Police in 14 of Argentina’s 23 provinces are on strike demanding better pay and improved working conditions. This has led to a wave of looting that has spread to 19 provinces. Federal forces have been dispatched but, so far, they have not been able to restore order. The current problem will add to Argentina’s woes as it struggles with surging inflation and pitiful international credibility.

Mexico’s energy reforms, discussed in the previous weekly report, have gone through. The 75-year old state monopoly on oil and gas will go. A sovereign-wealth fund will invest oil revenues for the long-term after covering any shortfall in the government budget. The energy reform is radical and could pave the way for a more buoyant Mexican economy. The devil will lie in the details. Secondary legislation and implementation will determine the fate of President Enrique Peña Nieto’s bold gamble, but he has certainly taken a bold step in the right direction.

In Colombia, Bogota’s mayor, Gustavo Petro, was dismissed by Inspector General Alejandro Ordóñez, an ultra-traditionalist Catholic whose position gives him the power to fire public officials if they break the law. Ordóñez also banned Petro from public office for 15 years. Tens of thousands of people have been protesting and Ordóñez’s action has been condemned. Colombia needs reforms to curb authoritarian acts in the future.

Europe

The Ukrainian saga described in the previous weekly report rolls on. Over 200,000 people have rallied in Kiev to protest against President Viktor Yanukovych. They want him to sign a deal with the European Union (EU) from which he pulled out at the last minute. US Senator John McCain visited Kiev and walked among the crowds to encourage protesters. Yanukovych is meeting Russian President Vladimir Putin on Tuesday. Putin has been perceived to be the driving force behind Yanukovych’s pulling out of the EU deal. Customs delays and a ban on Ukrainian chocolates put pressure on Kiev. Putin wants Ukraine to join a Russian-led customs union instead. The ongoing protests are the largest since Ukraine’s Orange Revolution of 2004 and reflect the divisions in the country as it remains torn between Russia and the EU.

Putin has shut down RIA Novosti, one of Russia’s leading news organizations, and Voice of Russia, an international radio station. Both RIA Novosti and Voice of Russia have a long history and decent reputations. Although they have Soviet roots, beginning in 1941 and 1929, respectively, they have reflected some diversity of opinion and recently covered the trial of opposition leader Alexei Navalny. Putin has announced the launch of Rossiya Segodnya (Russia Today), a news agency that will inform foreign audiences about Russian policy and public life. Dmitry Kiselev, a frightening Kremlin loyalist who demonized homosexuals and argued for their hearts to be buried or burnt on prime-time television, takes over as the boss of the new organization. He has declared his mission to be “the restoration of fair treatment of Russia.” Putin’s Russia is careering down an increasingly authoritarian path with jingoism, intolerance, and international muscle flexing as its defining features.

For the past month, rumors have been circulating regarding mass arrests and severe mistreatment of terror suspects in Russia’s federal republic of Tatarstan. From September, seven Orthodox churches have been set alight, and police had reported that an explosive device had been found near a religious site, resulting in brutal, indiscriminate arrests. Unlike neighboring Chechnya or Dagestan in the troubled region of the North Caucasus, Tatarstan had always boasted a peaceful coexistence between its two main religions of Islam and Russian Orthodox, so this is a worrying development.

Three years ago, Ireland was on the brink of bankruptcy. A debt-fuelled property boom and an overextended banking sector ended the Celtic Tiger boom. The International Monetary Fund, the European Commission, and the European Central Bank lent the country €67.5 billion to enable it to ride out the crisis. Ireland stoically pushed through spending cuts, asset sales and reforms. It has now become the first eurozone economy to exit the rescue program and will no longer be seeking further funds from its lenders. The Irish achievement is impressive and EU leaders are crowing about it as an example for other stricken economies. Sadly, these countries lack Ireland’s political will and competitive advantages that include a highly educated workforce, light regulations, and a decently diversified economy. Ireland is doing well again and will do better. The eurozone still has a long way to go.

Middle East & North Africa

Mohammed Badie, the leader of the Muslim Brotherhood, turned on his accusers when he appeared in court. He asked them as to why they were not investigating the killing of his son, the burning of his house and his group's offices. Since the Egyptian military overthrew Mohammed Morsi, the former president now on trial, it has increased its pressure on the Brotherhood.

Egypt is going through its bloodiest chapter in recent times. The military has killed hundreds of Badie’s supporters while 200 soldiers and policemen have lost their lives to Islamist ire, mainly in the Sinai. The military is set to close 62 private schools run by the Muslim Brotherhood. Protesters continue to be dispersed by riot police using tear gas and water canons. A second set of judges have already resigned from the trial of the Brotherhood leaders. The deep divisions in Egypt are raising the specter of a fully-fledged civil war that plagued Algeria in the 1990s.

After Islamists seized warehouses on the Syrian-Turkish border, the US suspended “non-lethal” military aid to the rebels. US-backed rebel forces have been ineffectual so far. More and more factions have been throwing in their lot with Islamist groups that receive more generous funding from the Gulf Arab states. The recently created Islamic Front is growing in power and US influence is eroding. Meanwhile, the Syrian army has retaken a road that connects Damascus to the coast. As per the current deal, Syria’s toxic chemicals will be transported via this road to the port city of Latakia, where they will be picked up for destruction. Russia has offered to provide transport for the chemicals.

While fighting continues, the UN is worried about refugees in both Syria and Lebanon. The harshest winter of a century is underway with storms and snow buffeting the area. Too many people lack adequate food, water and shelter. The first relief airlift to Syria from Iraq will deliver food and winter supplies to the mostly Kurdish northeast. More efforts will be needed in the coming weeks to avoid a humanitarian disaster. The UN has launched its biggest ever appeal and warned that three quarters of Syrians will need humanitarian aid in 2014.

US Secretary of State John Kerry is plowing his lonely furrow in pursuit of an elusive peace deal between Israelis and Palestinians. Israeli Economy Minister Naftali Bennett ridiculed the peace talks and proposed that Israel annex parts of the West Bank where most Jewish settlers live. He went on to say on public radio: “This is all a joke. It's as if we're discussing the purchase of a car with only half of its owners.” In another interview, Israeli Defense Minister Moshe Yaalon added: “There is no partner on the Palestinian side to reach a two-state solution for two peoples.”

As of now the peace process seems doomed because of Israeli intransigence and the lack of a credible interlocutor representing the Palestinians. Palestinian leader Mahmoud Abbas lacks credibility and only controls parts of the West Bank, while Gaza-based Hamas is deemed a terrorist organization by both Israel and the US. The good news is that Israel dropped its controversial plans to relocate Bedouins from the Negev. In an earlier weekly report, this author called the measure a 19th century colonial exercise.

Africa

In death as in life, Nelson Mandela dominates developments. His memorial service at Johannesburg’s Soccer City Stadium drew world leaders and thousands of his countrymen. The lashing rain could not dampen the spirit of those who attended. South African President Jacob Zuma got roundly booed. US President Barack Obama gave a rousing speech, calling Mandela a “giant of history” who “moved a nation towards justice.” Yet he was involved in two controversies.

The first was an innocuous one involving a selfie – the new fangled term for a self photograph using a digital camera or a smart phone. Obama was spotted having a cheery conversation with Danish Prime Minister Helle Thorning-Schmidt and British Prime Minister David Cameron, before joining in to take a selfie with them. Commentators disapproved of his behavior and the lack of decorum displayed by world leaders.

The second was a moment when Obama shook hands with Raul Castro, an act which drew criticism from many on the right. These critics forgot that while the US under Ronald Reagan had backed apartheid, Cuba under Fidel Castro had opposed the illegitimate white regime.

Mandela's memorial had a chaotic feel to it and the sign language interpreter turned out to be a fraud. He was gesticulating meaninglessly and had been charged with multiple crimes, including murder, in the past. Even Mandela’s funeral at Qunu was not bereft of controversy. There were rumors that Archbishop Desmond Tutu, one of his closest friends and a stalwart of the anti-apartheid struggle, might not have been invited. Now that his funeral is over, Africa and the world will adjust to life without a giant.

The striking development from Africa that has flown under the radar of most news organizations is the tenfold drop in child mortality in Yirimadjo, a community to the southeast of Mali’s capital Bamako. This drop has not been because of a new vaccine or pioneering development in healthcare. It comes from a new healthcare model that is deceptively simple. Instead of waiting for cases to be reported, healthcare professionals seek out prospective patients and treat them early. Over three years, the focus was on ensuring early access to care and prevention services. Education reform and removal of user fees for those who could not afford to pay has been a part of the effort. This new healthcare model is likely to be emulated elsewhere in Africa and other parts of the world.

In Nigeria, President Goodluck Jonathan has been strongly criticized by his predecessor, Olusegun Obasanjo. Earlier, a powerful faction of state governors joined the opposition. Obasanjo has accused Jonathan of failing to tackle Nigeria’s problems, including corruption, piracy, kidnapping and oil theft. Jonathan’s position has been weakening but this is the biggest blow that he has suffered so far. Obasanjo has declared that it would be “morally flawed” for Jonathan to seek reelection because that could hasten a slide back to military rule.

Kenya celebrates 50 years of independence with much soul searching not only about the progress made so far, but also the prospects of its president’s trial by the International Criminal Court. Meanwhile, the Kenyan capital, Nairobi, became the venue where the government of the Democratic Republic of Congo and M23 rebels signed a peace agreement, raising hopes of the end to one of Africa’s protracted conflicts.

Central & South Asia

In Afghanistan, the drama over the Bilateral Security Arrangement (BSA) continues. As discussed in previous weekly reports, Afghan President Hamid Karzai is continuing to raise the ante. He has been venting his frustration with continuing civilian casualties and home raids. The US has started planning the “zero option,” a post-2014 future with no US or NATO troops in the country.

Karzai has been planning for that too. He visited New Delhi to meet Indian Prime Minister Manmohan Singh to discuss regional security and military cooperation. India promised two military transport helicopters, a scant consolation for the beleaguered Karzai whose wish list included 150 battle tanks, field guns, howitzers, and one squadron of attack helicopters. The Indian government is weak and facing electoral defeat. Foreign policy has never been high on its agenda and the military is shut out from the decision making apparatus. Karzai is only going to meet with heartbreak in his Indian romance.

Meanwhile, it turns out that the US military spent nearly a half-billion dollars on providing refurbished aircrafts to the Afghan Air Force. These planes, however, did not work in Afghanistan’s environment, leading the military to abandon the contract. The planes are now gathering dust and are likely to be destroyed. In many ways, the planes are a metaphor for the US war effort, which was riddled with inefficiency and waste. Few Americans in diplomacy, military or intelligence understood the complexity of operating in Afghanistan, and often acted at cross purposes. American efforts were often ineffective and wasted precious taxpayer money, whilst alienating local Afghans as well.

In India, the Supreme Court upheld the 1860 Indian Penal Code that criminalizes gay sex. A lower court had legalized gay sex in 2009, but now India’s highest court held that the Victorians who drafted India’s law had been clear in their definition of “unnatural sexual acts.” The court held that it was for parliament to legislate on this matter as it was beyond the purview of the courts. Hundreds rallied in several cities to protest the decision while the Bharatiya Janata Party (BJP), India’s main opposition party, welcomed the ruling. India’s religious groups, particularly Muslim and Christian, have also welcomed the decision.

Bangladesh won its independence from Pakistan in 1971, but it is still battling pre-independence ghosts. The battle between those who collaborated with Pakistan and those that fought for freedom still rages on. This week, Abdul Quader Mollah, a senior leader of the Jamaat-e-Islami party, was executed for war crimes committed in 1971. Mollah was found guilty of killing some of Bangladesh’s top professors, doctors, writer and journalists. Riots broke out after the execution. Many believe that Mollah’s trial was politically motivated and the domestic tribunal that found him guilty was much criticized. Turmoil in Bangladesh will continue.

In Pakistan, charges of high treason have been filed against former military ruler Pervez Musharraf. If convicted, he could be sentenced to death or life imprisonment. Pakistan’s turmoil is also set to continue.

Asia Pacific

In North Korea, leader Kim Jong-un's once influential uncle, Chang Song-thaek, has now been executed. The previous report termed his arrest dramatic, but his execution is simply extraordinary. Few really know what is going on in the hermit kingdom. The execution of a close family member is a first, even in North Korea. He has been accused of sins ranging from womanizing to selling natural products too cheaply.

North Korea is racked by poverty and hunger. It is controlled by a paranoiac leadership that indoctrinates its people from an early age. The execution and subsequent publicity are going to jar North Korean sensibilities. They raise questions about the stability of the country and the rationality of its regime. The deceased uncle was apparently close to China. Now, even North Korea’s godfather does not know what the errant son might be up to.

In an earlier weekly report, the author decried the passing of a draconian bill by Japan’s lower house of the Diet. Prime Minister Shinzo Abe’s government has rammed this bill through the upper house and it is now law. This law would put large parts of the government beyond the purview of scrutiny and allow for the imprisonment of those who reveal information arbitrarily classified as a “state secret.” Although Abe’s popularity has fallen, Japan’s democracy has taken a giant leap backwards. Using China’s provocations as an excuse, Abe has made Japan into a paternalistic authoritarian state where the politician and bureaucrat can hide behind the new law to avoid accountability. Japan has never been a terribly transparent country, but this law is the most regressive in the history of post-war Japan.

Following China, it was South Korea’s turn to announce an air defense zone. As the author has stated earlier, the current game of tit for tat is reminiscent of pre-World War I Europe. The air zones declared by China, South Korea and Japan all overlap. All these countries are flying jets to outdo each other. Japan has already turned repressive and might throw out its peacetime constitution. The other two countries are also seeing an upsurge in nationalism. If leaders of the three countries do not act with forbearance and wisdom, their nations will suffer immeasurably.

“Jade Rabbit,” China’s first lunar rover has landed on the moon’s surface. The rover will survey the moon's geological structure and surface and look for natural resources for three months. The landing craft will carry out experiments and make observations for a year. Although China lags behind the US and Russia, it is making impressive progress and its lunar soft landing represents a tremendous advance in its space program.

Finally, peaceful Singapore is yet another country with problems regarding immigrant construction workers. After an incident in which a drunken worker was accidentally run over by a bus, 400 workers rioted. Like Qatar and Saudi Arabia, Singapore does not treat its migrant workers well. The influx of foreign workers is already a hot political issue and will become more so after this incident.

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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