Fair Observer's extended report of the week's events. [Note: Click here for the summary version.]
The deal with Iran has put downward pressure on oil prices. The country is known to have the world’s fourth largest reserves. Sanctions “cut Iran’s oil sales from 2.5 million barrels per day (bpd) in early 2012 to 1 million bpd.” Now some of this oil will start flowing into the international market. This might be good news for a beleaguered world economy.
Canadian Prime Minister Stephen Harper, who has dragged his country to the right, is facing a Senate expenses scandal and a fall in popularity. However, Canada’s Jewish community is honoring him for his steadfast support of Israel at a gala fundraiser where the proceeds will go towards creating a bird sanctuary named after him in Israel.
In the US, President Barack Obama’s healthcare reforms continue to run into trouble. The deadline of November 30 has passed but the website is still far from ready. The automated part of the enrollment system to pay insurers will not be ready until the spring of 2014. The Obama administration has delayed a crucial part of the law and has given small businesses an extra year to provide their workers with insurance.
The fundamental issue is that the US has an infernally complex healthcare system. Employer-based healthcare is a relic of wage controls during the war years and adds an onerous burden on small businesses. Obama’s reforms will provide more people with insurance and improve the cover for many Americans. However, they do not address the twin problems of cost and complexity. Both of these are likely to exacerbate in an economy where healthcare comprises a ridiculous 17.2% of the GDP, when the average around the world is 9.5%.
The US economy continues to stutter. Unemployment rose for October after falling for the last few months and manufacturing orders declined. Yet, since March 2009, stock markets have been rising with both the Dow Jones Industrial Average and NASDAQ Composite close to record highs. House prices are on the rise too and Bitcoin, a digital currency, has crossed the $1,000 mark. This is worrying. Not only is Bitcoin’s software system under strain, it is yet unclear how governments are going to react to it. New asset bubbles are brewing and the economic risks facing the US are much larger than policy makers acknowledge.
A member of the Occupy Seattle movement has been elected to Seattle City Council. Kshama Sawant is a socialist economics professor who only immigrated to the US after marriage and argues for workers taking over factories if companies attempt to move them elsewhere. It is important to note that this the first time since 1916 that a socialist has won a city-wide election in Seattle. The US is seeing levels of inequality reminiscent of a century ago. Sawant’s positing of failed ideas from the past but also economic woes has provided her a receptive constituency.
Meanwhile, the American Enterprise Institute has pointed out the exponential rise in college textbook costs. In the last ten years, prices have gone up by 82% and an era of open-source textbooks might be on its way. Senators Al Franken of Minnesota and Dick Durbin of Illinois have introduced a bill titled, the “Affordable College Textbook Act,” which is likely to go nowhere but which is going to put pressure on the cozy cartel of universities and publishers that has relentlessly pushed the cost of education up without any demonstrable improvement in quality.
Three issues confronting Brazil capture the challenges facing the region.
The first is a land dispute. In the state of Mato Grosso do Sul, tensions have been rising between the indigenous people and settler farmers. The history of the Americas and much of the world is the marginalization of indigenous people by settler farmers. In Latin America, indigenous people have lost their lands, languages, and belief systems in the face of colonizing European settlers and the proselytizing Catholic Church.
Mato Grosso do Sul has the largest indigenous population in Brazil. They comprise 9% of the population but they own only 0.7% of the land. In 2010, a court granted the Terena ethnic group exclusive rights over the land. Unsurprisingly, farmers dispute the judgment and this has led to clashes. The Brazil National Force has been deployed as a result. Brazil and the rest of Latin America have to redress historic injustices and protect marginalized indigenous populations while maintaining social peace. The challenge is profound and there are no easy solutions.
The second pertains to race, another incendiary issue in a continent where the white descendants of Spanish conquistadores and Portuguese colonizers still rule the roost. Lazaro Ramos and Camila Pitanga, two Afro-Brazilian stars, were replaced by Rodrigo Hilbert and Fernanda Lima, two blond actors, for the 2014 World Cup draw in Brazil, leading to fury against FIFA. The fact that this incident led to such a furor is an indicator that old stereotypes are being questioned and Brazil is on the path to confronting the issue of race instead of ignoring it as in the past.
The third is the collapse of a crane at a nearly completed stadium for the 2014 World Cup. Large-scale corruption has led to increased costs, long delays, and fatal accidents as Brazil rushes to get projects done in time. Brazil has to figure out how to limit graft if it is to have better infrastructure.
The conservative candidate, Juan Orlando Hernandez, has been declared the winner of the Honduran presidential elections. His rival, Xiomara Castro, continues to dispute the result and police are cracking down on his supporters. Hernandez has his work cut out to tackle the opposition, powerful gangs and a poor economy.
Peruvian President Ollanta Humala is facing a scandal pertaining to his links with Óscar López Meneses, who is serving a prison sentence for his involvement in espionage, extortion, and an embezzlement racket run by the intelligence chief of former President Alberto Fujimori. Suspicion that Humala, who is a former army officer, is running a parallel intelligence operation for political purposes is undermining his credibility. After years of military rule, Peru and other countries of Latin America are still in the process of establishing checks and balances to curb those in power. This process will continue and many scandals will occur in the process.
In the Ukraine, nine years after the Orange Revolution took off in November 2004, protesters are again thronging the streets of Kiev. Again, the man in charge is President Viktor Yanukovych. He has refused to sign a deal with the European Union (EU) that would have led to closer Ukraine-EU ties.
Ukrainians are torn over two visions of the future. Most desire greater democracy and closer integration with the EU. Others want to retain their historic ties with Russia. Both Russia and the EU are engaging in a tug of war over Ukraine, amplifying the internal tensions. With Yanukovych digging in his heels and resorting to repression, turmoil seems set to continue in Ukraine for some time to come.
After two months of post-election wrangling, Germany finally has a government. A “grand coalition” has been forged between the center-right CDU-CSU parties and the center-left SPD party. Chancellor Angela Merkel’s CDU-CSU bloc might have won 41.5% of the vote and the election, but the SPD seems have won the negotiations. Scarred by its last coalition with Merkel that lasted from 2005 to 2009, the SPD has bargained hard and the 185-page agreement will be a nightmare to implement. Germany will now have a minimum wage of €8.50 per hour. The retirement age will fall from 67 to 63. Nuclear plants will be shut down and investment in infrastructure will fall. The SPD has thrown the 2003 reforms made by its former leader, Gerhard Schröder, out of the window.
Gone is the prudence that Germany has been famous for. People are living longer so the idea that they should retire earlier is irresponsible populism that Merkel herself has condemned in the past. Besides, the idea of a national minimum wage is unconvincing at best. Unemployment will rise in former East Germany where wages begin as low as €6.00 per hour. Historically, unions and employers have negotiated on wages. Germany’s famed Mittelstand, the small industries that power its export performance, has been famous for retaining workers instead of firing them. Wage flexibility has been a key reason it has been able to do so. Under the new “grand coalition,” Germany’s economy will suffer with terrible consequences for the rest of the eurozone.
Elsewhere in Europe, Standard & Poor's stripped the Netherlands of its triple A credit rating. With France’s credit rating already downgraded, Europe’s economic woes are set to continue.
After years of malfeasance, Silvio Berlusconi, the former Italian prime minister, has finally been expelled from the Senate. He dominated politics for 20 years and ruled Italy like his fiefdom. Now, he might just be convicted for corruption, something that should have occurred years ago if Italy had any rule of law. Despite his legal troubles, Berlusconi still controls a vast media empire and massive financial resources. He will continue to remain a dark force in Italian politics.
In Libya, Benghazi is back in the news. The country’s new military, which is still in training, is battling Islamist militants and militias that fought the late dictator, Muammar Qaddafi. The power struggle between the government and the rebels will continue.
In Syria, fierce fighting rages on. Government troops recaptured a Christian town in the mountainous Qalamoun area overlooking the main highway to the north of Damascus. The conflict has already spread to Lebanon with an escalation of fighting in the northern city of Tripoli between Alawites in the Jabal Mohsen district and Sunnis in neighboring Bab al-Tabbaneh.
Now that the Iran deal is done, there are hopes for peace from a second round of talks between the Syrian government and the rebels. Dubbed Geneva II, these talks are supposed to begin on January 22. This is, however, unlikely, because long-dormant forces have been unleashed. Ethnic and religious divisions combined with the involvement of foreign powers, such as the US, the UK, Israel, Saudi Arabia, Qatar and Iran, mean that the modern equivalent of the Thirty Years’ War will a need 21st century counterpart to the Peace of Westphalia. As of now, this seems a long way off.
Egyptian military leaders seem to be determined to roll the clock back to the Hosni Mubarak years. As per a new law, protesters will have to seek approval from police three days before their demonstration. The interior ministry will have the right to block rallies that could "pose a serious threat to security or peace.” The “deep state,” as Egypt’s security establishment is known, seems to be deepening further. An Egyptian court has sent 21 female supporters of Mohammed Morsi, the former president, to prison for 11 years. Seven of these are under 18. In the meantime, crime is surging as the country focuses more on repression than on governance.
Neighboring Israel is in limelight too for two reasons. First, a draft law is seeking to evict 200,000 Bedouin residents from the southern Negev desert. The Netanyahu government claims that it is seeking to modernize the Bedouin, and improve their quality of life, echoing the 19th century claims to “civilize natives” by white colonialists. The United Nations High Commissioner for Human Rights is alarmed by proposed Israeli action, which essentially constitutes a land grab where a poor ethnic minority will be further marginalized. Second, Israel has approved the construction of 800 new settler homes in the Occupied West Bank, flouting international law and ignoring US requests. This ensures that the defunct peace process is all but dead.
Turkey has reached a deal with Iraqi Kurdistan to export oil and gas via pipelines. The Iraqi government is incensed, claiming that it alone had the authority to manage Iraqi energy resources. It fears losing control of Iraq, which is in the middle of a bloodbath. The UN is worried by “execution-style” killings and the death toll for 2013 has crossed 8,000. Late last year, Iraq denied Turkey’s energy minister the permission to land in Baghdad. Turkey, with a population of over 80 million and annual $60 billion energy bill, is hungry for energy and trying to diversify its supplies. So, even though both countries agreed that the deal would need the approval of Iraq’s central government, tensions between Ankara and Baghdad will persist.
East African nations have announced a monetary union. Borders in Africa have long been arbitrary, cutting across old trade ties and stymieing economic potential. The decision by Kenya, Tanzania, Uganda, Rwanda and Burundi to merge currencies over the next ten years will boost trade and improve their economies. These countries have already created a common market and single customs union. Huge challenges lie ahead but the declaration of a currency union is a most positive development.
Kenya has already launched a $13.8 billion railway project that will connect the port of Mombasa to the capital, Nairobi. The railway built and financed by China will also connect Kenya to Uganda, Rwanda and South Sudan. Uganda and Kenya have discovered oil, while Tanzania has vast natural gas reserves. Infrastructure has long been a stumbling block but the new projects promise to increase employment, attract foreign investment and increase economic growth.
As China continues to pour money into Africa, France keeps sending in troops. French soldiers will be tripled in the Central African Republic (CAR) over the next couple of weeks to prevent what the UN fears might be another genocide. France continues to maintain a military presence in Mali where the leader of the March 2012 coup has been arrested and charged with “murders and assassinations.”
Angola has faced charges of “banning” Islam after shutting down most of the country’s mosques. The government denies the charges but this largely Catholic country has long had a reputation for intolerance. Religious organizations have to apply for legal recognition in the country. Of the 83 organizations that have been approved so far, all of them are Christian. Angola brings into focus the battle for souls in Africa between Christianity and Islam. Tribal divisions are often amplified by religious fervor, which might exacerbate existing conflicts.
The International Criminal Court (ICC), based in The Hague, has asked Kenyan President Uhuru Kenyatta to, “as a general rule, be present in court.” African states earlier in the month unsuccessfully tried to get the UN Security Council to suspend the trial, arguing that Kenyatta would be distracted from governing his country. The decision is controversial and is evoking strong emotions. Supporters of the decision argue that given Africa’s poor governance structures, lack of rule of law and absence of an independent judiciary, the ICC is the last resort for Africans seeking justice. Opponents believe that the court is neo-colonial and that it targets African leaders exclusively, leaving out the likes of former British Prime Minister Tony Blair who should be tried for his role in the Iraq War.
Blair’s role in Africa has come under scrutiny. South Africa’s ex-president Thabo Mbeki claims that Blair plotted a military intervention in Zimbabwe and sought his help to get rid of Robert Mugabe, Zimbabwe’s president. Blair denies the charge but his reputation is tarnished further because there is corroborating evidence from Lord Guthrie, the former British chief of defense staff. This will give further ammunition to those who still mock Blair for being a poodle to George W. Bush, and for being a moralizing old-school English imperialist.
Afghanistan’s president, Hamid Karzai, is upping the ante in his standoff against the US. He has accused the US of cutting military supplies, including fuel, to put pressure on him to sign the Bilateral Security Arrangement (BSA). The BSA would provide a legal basis for US troops to stay on in Afghanistan once the NATO combat mission ends next year. Karzai has signaled that he might not sign it until after the spring national elections. The BSA drama will continue with twists and turns.
Meanwhile, Pakistani Prime Minister Nawaz Sharif is in Kabul to hold talks with Karzai. The two men will discuss peace negotiations with Taliban leaders and boosting economic ties. Pakistan has released Mullah Baradar, the former number two in the Taliban, to promote negotiations.
Pakistan has a new army chief. Raheel Sharif takes over from Ashfaq Kayani. Sharif superseded the senior most army officer, Haroon Aslam, who has now retired. This arguably strengthens the hand of Nawaz Sharif, Pakistan’s democratically elected leader. Raheel Sharif takes charge as army chief at a time when Pakistan faces enormous internal challenges, with the Taliban still controlling important parts of the northern tribal areas.
Imran Khan, the charismatic opposition politician, is stridently advocating talks with the Taliban and an end to the US policy of drone strikes. He has revealed the name of CIA’s station chief on a television talk show and accused him of “committing murder and waging war against Pakistan.” He has also vowed to retaliate for the killing of Hakimullah Mehsud, the leader of the Pakistani Taliban, by blocking NATO supply lines to Afghanistan. This saga will roll on and US-Pakistan tensions are likely to intensify.
Two developments in India epitomize its contradictions. First, India’s historic mission to Mars showcases the strength of its scientists and its mastery of complex technology. India’s space program will develop new capabilities and the country might capture more of the $304 billion global space market that includes launching satellites. Second, another gang-rape shows that women remain extremely vulnerable in India. This incident occurred soon after a major scandal in which a celebrated senior journalist sexually assaulted his female subordinate. Worse, a retired Supreme Court judge is embroiled in a major scandal for molesting an intern.
India is a country where more women have held high office than the US. Yet gender discrimination, sexual exploitation and violence against women are the norm. Indians worship goddesses at the same time as practicing female foeticide. The 2011 census birth sex ratio is 917 girls to 1,000 boys. India needs movements akin to the ones led by the 19th century reformer, Ishwar Chandra Vidyasagar, if women are to find it an acceptable place to live.
Finally, a retired police officer who was investigating the assassination of Rajiv Gandhi, a former prime minister who was Nehru’s grandson and husband of Congress leader Sonia Gandhi, has admitted that he incorrectly recorded the statement of one of the accused who is now on death row. This issue has largely been ignored by the Indian media, but the case clearly needs re-examination to avoid a miscarriage of justice.
In response to China extending its air defense identification zone over tiny islands in the East China Sea, the US sent two B-52 bombers into the area. China responded by scrambling fighter jets. China, Japan and South Korea dispute control over these islands, which are currently under Japanese administrative control.
There is a deep history of conflict involving these three countries, two of which are close US allies. All four parties are now flying jets over the disputed territory in a dangerous game that needs to end. The dispute in Asia is reminiscent of the European disputes over territory before World War I and all parties need to be careful about escalating tensions.
China is increasingly acting provocatively with its neighbors. Its aircraft carrier docked in the southernmost province of Hainan to conduct sea trials in what it calls the South China Sea and what the Philippines refers to as West Philippines Sea. Both countries are in a territorial dispute and China’s behavior raises the tensions between them. China’s actions are likely to push its neighbors into the arms of the US as they seek protection against their more powerful neighbor.
As India celebrates its Mars mission, China has launched its first rover mission to the moon. The space program is a priority for China’s new leadership and the rover will search for natural resources on the moon. China might be planning exploitation of the moon’s natural resources in addition to its plan to build a working space station by 2020. The US and not just China’s neighbors are bound to feel nervous about its growing ambitions.
In Japan, the ruling Liberal Democratic Party that is neither liberal nor democratic, has used tensions with China to push a draconian law curtailing freedom of information through the lower house of the Diet. The government argues that the law is needed for a new national security council to function. This is nonsense. If the law is passed, government officials could be locked up for ten years and journalists for five for leaking state secrets that will be defined by shadowy bureaucrats in a wide range of ministries and agencies. In a land where the Fukushima nuclear disaster is an all too recent memory, workers speaking out about safety risks of nuclear plants and journalists publishing what they say could be conveniently locked away. Shinzo Abe, the patrician prime minister, is wrecking democracy and it seems unlikely that Japanese voters will mount enough pressure on him to back off.
In Thailand, protesters continue to defy Prime Minister Yingluck Shinawatra’s government and clashes have broken out. Suthep Thaugsuban, the opposition leader, met Shinawatra and declared that he would not accept anything other than her resignation. Thaugsuban is acting like a thug by relying on the power of the mob and refusing to work through constitutional means. He and his supporters are likely to run out of steam. However, the political struggle between the Shinawatra clan and the establishment is likely to continue.
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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