Make Sense of the World: Weekly Report


December 24, 2013 07:51 EDT

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

This week, researchers found a large reservoir of melt water under Greenland ice "that persists throughout the winter." The melting of ice has been causing a rise in sea levels for the past century. The implications of this discovery are still unclear, but it has put into focus global warming and rising sea levels. How 7 billion Homo sapiens manage their relationship with the environment is going to determine the future of the planet. Already, we are facing an extinction crisis with dozens of species going extinct every day. Something has to change before we run out of time.

North America

After the attacks on September 11, 2001, the US responded with a quest for security. It waged two wars, engaged in torture, and started eavesdropping on conversations around the world. Americans never had an honest debate about the tradeoff between liberty and security for two reasons.

First, they were going through a paroxysm of patriotism under former President George W. Bush. Second, they were unaware of the extent of surveillance that they were being subjected to. That debate is now finally taking place.

In a damning 68-page judgment, Federal District Judge Richard Leon called the methods of the National Security Agency (NSA) "arbitrary invasion" that was "almost Orwellian." The case was brought forth by Larry Klayman, a conservative activist, and another case brought by the American Civil Liberties Union (ACLU) is being heard in New York. Both the right and the left are uniting to protect the Fourth Amendment that guarantees citizens "their persons, houses, papers, and effects, against unreasonable searches and seizures." A presidential advisory panel recommended scaling back some NSA surveillance because fundamental values such as the protection of privacy and civil liberties "have been eroded by excessive intelligence collection." In his final press conference for 2013, President Barack Obama promised a review of NSA surveillance. The issue is already under review by Congress.

The focus on the issue will bring technology giants into the spotlight as well. Companies like Google and Facebook are in possession of an incredible amount of data pertaining to individuals around the world. The presidential panel has already called for a focus on personal privacy. Under the current economic system, the fiduciary duty of executives of any company is to maximize profits for their shareholders. Citizens’ right to privacy is not their primary concern and that is where elected representatives are likely to step in to create stricter rules to protect privacy. Germany already has strict rules, Brazil is drafting similar regulations and, given current trends, such rules are inevitable in the US.

The US Federal Reserve (Fed) announced that starting January it "will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month." The Fed also promised to keep interest rates lower for longer than expected. Both Dow Jones and S&P 500 indices rose to record highs. The Taper, as this measure is called, will reduce the flood of money into the economy and mitigate the building up of bubbles whether in housing, technology or emerging economies. The Fed is in a tricky situation because it is trying to stimulate a still weak economy while avoiding the kind of bubbles that led to the Great Recession which began towards the end of 2007. The Taper was overdue and it signals the start of the normalization of US monetary policy.

In a landmark ruling, the Canadian Supreme Court struck down bans on brothels, street solicitation, and living on the earnings of prostitution in a unanimous 9-0 decision. It gave the Canadian government one year to change the country's prostitution laws. Under Prime Minister Stephen Harper, Canada has drifted to the right but this ruling is momentous and pushes the country in a progressive direction. Now, Canada will have to engage in a messy and complex debate as to how to regulate prostitution.

Latin America

As widely predicted, Michelle Bachelet won the second round of elections to become Chile’s president. She was the country’s first female president who was in office from 2006 to 2010. Evelyn Matthei, her defeated rival, had voted for a continuation of military rule under General Pinochet in the 1988 plebiscite. Furthermore, unlike Bachelet’s father, who was imprisoned and tortured by the Pinochet regime, Matthei’s father was a loyal member of the junta.

As leader of the Socialist Party, Bachelet is promising free, universal and non-profit education. She also promises more equality and a replacement of Chile’s dictatorship-era constitution. Bachelet received 62% of the vote and becomes the first person to be voted in as president for a second time. The fact that barely 42% of the electorate turned up to vote took the gloss off her otherwise impressive victory. Bachelet is a pragmatist and Chile is likely to continue to do well economically while making social progress.

Brazil’s unemployment rate dropped to a ten-year low to a mere 4.6%. The seemingly positive change disguises one key fact: fewer Brazilians are working and even fewer are looking for work. The unemployment rate measures the number of people actively looking for work as a percentage of the labor force. So the statistic is misleading. What is more revealing is that the Brazilian economy shrank by 0.5% in the third quarter. With an inflation rate of 5.77%, Brazil is in no position to adopt the quantitative easing of the US to devalue its currency. The alternative is structural reforms such as reducing red tape, curbing corruption, and improving infrastructure. These are hard to achieve and Brazil’s political leadership has yet to display enough appetite for tough reforms. As of now, Brazil is headed for a period of economic weakness.

Sweden’s Saab won a $4.5 billion deal to supply 36 fighter jets to Brazil. Boeing suffered because Brazil was miffed by revelations that the NSA was spying on President Dilma Rousseff. Rousseff was inclined towards the Boeing deal and expected to announce the agreement during her visit to Washington DC. Both the visit and the deal fell through. In the cost-benefit analysis, NSA spying was probably not worth it. Dassault Aviation was unable to profit from Boeing’s troubles despite French President Francois Hollande’s visit to Brazil. Saab’s shares have jumped 30% after the deal and the Brazil contract has ensured its arrival among the big league of fighter jet manufacturers.

Raul Castro, brother of Fidel and current Cuban president, followed up his handshake with President Obama with a call for "civilized relations" with the US. He called for improved relations and asked the US to drop its demand of regime change. He revealed that Cuban and American officials have been meeting over the last year to discuss immigration and the reestablishment of a postal service. Since taking over from his brother, Castro has inaugurated economic reforms. Now, small-scale, private businesses in nearly 200 fields have been legalized. This week, Cuba loosened restrictions on buying foreign-made cars. Citizens, entrepreneurs and investors will keep a close eye on one of the last remaining old-school communist economies for emerging opportunities.


Russian President Vladimir Putin pardoned and released the former oligarch Mikhail Khodorkovsky after ten years in prison for fraud and tax evasion. At the time of his arrest, Khodorkovsky was Russia’s richest man and he has since been Russia’s most famous prisoner. In a deal brokered by Germany, Khodorkovsky asked for a presidential pardon for family reasons and Putin granted him clemency on humanitarian grounds. After release, he was flown to Berlin where he astutely chose the Berlin Wall museum at Checkpoint Charlie, the former crossing point between East and West Berlin, as the venue for his press conference. He declared that he will be working for the release of all political prisoners throughout the world.

Analysts are reading many meanings into Khodorkovsky’s release. Some believe this is Putin’s ploy to improve Russia’s image and attract foreign investment. The release will reduce the heat on Russia for its poor human rights records and for targeting homosexuals. It would lead to a less eventful Olympics at Sochi. Some think that Putin aims to take away the martyr status of Khodorkovsky and reduce him to a relatively insignificant exile. Others like Maria Alyokhina, a member of Russian punk band Pussy Riot, and Greenpeace activists are also being released under an amnesty law signed by parliament. Still, others believe that the former oligarch has been released because he is not much of a threat. Most Russian people detest Khodorkovsky because he built his fortune on ill-gotten gains that were stolen from the state as the Soviet Union collapsed.

This has been a busy week for Putin. Earlier, he promised Ukrainian President $15 billion and lowered the price of gas from $400 to $268 per thousand cubic meters to draw Ukraine closer to Russia. Joint industrial projects and increased trade are also on the agenda. While pro-EU Ukrainian protesters continue to throng Kiev’s Independence Square, numbers are now dwindling. Previous rallies drew as many as 500,000 people, but this Sunday the number fell to 100,000. Despite the protests, Ukraine will now move into the Russian arc of influence. It is Russia’s biggest foreign policy coup since the end of the Cold War. This is probably Putin’s finest hour in the Kremlin. After the triumph in Syria comes the victory over Ukraine. Also, Putin is winning via checkbook diplomacy that had so far been the forte of the US and the EU. Yet given the fragility of both Ukrainian and Russian economies, this victory might by Pyrrhic.

Xenophobia is on the rise in Europe. On January 1, nine countries, including Germany, Britain, France and the Netherlands, will lift all remaining curbs on immigrants from Bulgaria and Romania. A wave of fear of being swamped by poor immigrants has taken hold. People are worried about immigrants overwhelming their schools and social security systems. British tabloids, long the bastion of prejudice and hatred, have termed the immigrants "benefit tourists."

Not all is bleak in Europe, however. In Sweden, thousands of people demonstrated against racism and Nazism, a week after a neo-Nazi attack on a similar protest.

Middle East & North Africa

In Egypt, former President Hosni Mubarak’s sons, Gamal and Alaa, were cleared of any wrongdoing as was Ahmed Shafiq, a former prime minister under Mubarak. At the same time, former President Mohammed Morsi and 35 other top Islamists were charged with conspiring with foreign groups to commit terrorist acts. The "terrorist plan" was said to date to 2005 and involve the Palestinian group Hamas, the Shi'ite Islamist government of Iran and its Lebanese ally, Hezbollah.

The episode demonstrates that the military rulers of Egypt are using the judicial system to conduct a vendetta against Islamists and strengthen their hold on power. Since the coup of July 2013, hundreds of supporters of the Muslim Brotherhood have been killed. The organization has been driven underground. Protests have been curbed and a new constitution is being drafted that will ban all religious parties. The Egyptian military seems to be taking a leaf out of the Algerian military’s suppression of Islamists in 1991 that led to a decade-long civil war. So far, the Brotherhood is sticking to peaceful resistance but it remains to be seen how it continues to behave as the military tightens the screws. Egypt is headed for hard times.

As Islamists grow in strength in Syria, the US and other Western powers are getting lukewarm in their support for the opposition. This week, the international community indicated that they might accept the continuation in power of Syrian President Bashar al-Assad. This has created a rift between Western powers and its Sunni allies led by Saudi Arabia. Fearing that Syria could become a center for global jihad, the US is sympathetic to the Russian idea that the Alawites, with their experience of five decades in the army and security, are the best bet against Islamists.

While the US is mellowing its position on Syria, so is Hezbollah. Its leader, Hassan Nasrallah, has for the first time accepted the possibility of peace with Uncle Sam. This is a big change from Hezbollah’s earlier position of absolute hostility. Nasrallah has signaled to the US that there is no sacred or existential war, and that they could do business together. He went on to declare that "Hezbollah believes in the finality of the Lebanese entity" and that Lebanon was the home of all its people.

After the outbreak of the Syrian Civil War, Hezbollah is now a regional actor. As the sands shift in the Middle East and the US countenances a new life with both Assad and Iran, new rapprochements are in order. Hezbollah is demonstrating that it is politically astute enough to adapt to changing times.

Meanwhile, Iran has declared that its nuclear talks with world powers are making slow progress. After a hiccup earlier this month when talks were suspended because the US expanded a sanctions blacklist, negotiations are back on track. In his final press conference of the year, Obama promised to veto any sanctions that the Congress might propose in the New Year to give peace a chance. It is early days yet but, so far, there is cause for hope.


South Sudan is experiencing full-blown conflict. President Salva Kiir and former South Sudanese Deputy President Riek Machar are engaging in a bloody power struggle. Machar’s troops have captured Bentiu, the capital city of Unity state. The death toll from a week of violence has crossed 1,000 and the number of internal refugees has crossed 100,000.

South Sudan became independent only in 2011 after a 22-year civil war. It has over 200 ethnic groups with the Dinkas and the Nuers as the largest among them. About 98% of the country’s budget comes from oil revenue. State formation in Africa has often been a battle for power and patronage. Rival tribes end up jostling with each other whether it is Nigeria, Kenya or Zimbabwe. Unless outsiders can mediate some ceasefire or compromise, South Sudan will suffer yet another civil war.

In Nigeria, attacks by Boko Haram Islamists have killed more than 1,200 people since May. The US has already declared Boko Haram a terrorist organization and announced a $7 million bounty for Abubakr Shekau. President Goodluck Jonathan has sent thousands of troops aided by air cover to crush the four-year uprising. Mobile networks have been switched off, making news about what is going on hard to get. Many suspect the government of human rights abuses, civilian killings, and dishonesty about its own fatalities.

The US ambassador to the UN visited the Central African Republic where grotesque violence persists despite the presence of French and American troops. Religious hatred is compounding ethnic divisions in the country. After Christian militia slaughtered 60 Muslims, Islamic Séléka Coalition rebels killed almost 1,000 people in two days. This violence is likely to continue because no major power has the will to deploy troops in the country and French soldiers will not be enough.

The drama surrounding the trial of Kenyan President Uhuru Kenyatta at the International Criminal Court (ICC) continues. The prosecutor asked for a delay in the trial because a key witness was not willing to testify, while another one confessed to giving false evidence. The trial has proved deeply divisive and, in an earlier report, the author discussed how some believed that the court was imperial while others thought that it was the last recourse to justice. That debate will die down because it seems unlikely that the ICC will be able to put together enough evidence to convict Kenyatta.

Even by African standards, Uganda set new standards for draconian laws against homosexuality. Its parliament has passed a bill that punishes certain acts of homosexuality with life sentences. Anyone caught counseling, reaching out or providing services to homosexuals can now be packed off to prison, too.

There are three knock-on effects of the law. First, state persecution will rise. Second, people will practice their sexuality under the radar, increasing risky behavior and HIV infections. Finally, organizations working with high-risk groups will effectively be barred from helping them. One hopes that other African states do not adopt such discriminatory and counter-productive legislation.

Central & South Asia

Radical Islamist groups are growing in strength in Tajikistan. Repression is backfiring in a country characterized by chronic poverty, high unemployment, and widespread corruption. A 2009 law criminalizes any religious activity not registered with the state, bans private religious education, and limits the number and size of mosques. A 2011 law bans minors from attending organized religious events, effectively ensuring that under-18s cannot enter mosques. This is turning frustrated youths to secret radical groups.

Bangladesh continues to remain in turmoil as old historic wounds are opened. Last week, Abdul Quader Mollah, a senior leader of the Jamaat-e-Islami party, was executed for war crimes committed in 1971. Bangladesh was ruled by Pakistan till 1971 and was subjected to discrimination, repression, rape, murder, and other human rights abuses by Pakistani troops and their collaborators.

Pakistan’s National Assembly passed a resolution condemning Mollah’s execution. The resolution also demanded that Bangladesh stop reopening the 1971 cases and that it drops charges against Jamaat-e-Islami leaders with a spirit of reconciliation. Pakistan’s behavior demonstrates that it has still not gotten over the loss of its former colony. Its attempt to interfere in Bangladesh’s internal matters has provoked backlash, while protesters in Dhaka are calling for a severance of ties with Pakistan. Bangladesh has also summoned Pakistan’s top envoy to register its protest. Tensions between the two countries will continue to simmer.

While Bangladeshis protest against Pakistan, Pakistanis are protesting against the US for its drone strikes in their country. The risks on the overland route for convoys have increased to such a degree that the US is considering the much more expensive options of using the northern Uzbekistan supply route or even flying supplies in.

Like Pakistan, India is also involved in a spat with the US, except it is for an inconsequential issue. An Indian diplomat was arrested for suspicion of exploiting her maid by underpaying her while making her work excessively. More importantly, she is suspected of creating false documents and lying to US officials.

The diplomat is the daughter of a senior Indian official and has a reputation for corruption. Instead of raising more substantive issues, the Indian elite is indulging in gratuitous faux patriotism and painting this issue in patriotic colors. US Secretary of State John Kerry has called to express regret but India is still acting in a juvenile fashion, not behooving a country with aspirations to great power status.

The more substantive development in India was the formation of government in Delhi by the populist anti-corruption Aam Aadmi Party (AAP), with the support of the corrupt Congress. It remains to be seen if this will inaugurate a new era in Indian politics or prove to be yet another failure like the Janata Party of the late 1970s that failed to govern despite its good intentions.

In Nepal, the Maoists have refused to join the coalition government but have agreed to enter the constituent assembly to draft a new constitution, raising hopes for peace.

Asia Pacific

The machismo in East Asia is increasing every week. Japan approved its first-ever national security strategy. It is a rollback of Japan’s peacetime constitution drafted after World War II and announces an expensive five-year military build-up. Following a draconian bill curtailing transparency that the author condemned, this nationalist step is unwise for an aging Japan with an ailing economy.

In China, Rear Admiral Yin Zhuo told the state-run People’s Daily that the US can sail freely but not interfere with China’s freedom to sail. If it does so, Yin has declared that "we will block you."

This issue comes to the fore after an incident when a US missile carrying cruiser almost collided with a Chinese ship when it was observing the maiden voyage of China’s new aircraft carrier. The statement might be more for internal consumption, but it demonstrates the increased nationalism coursing through East Asia. For peace to persist, the US has to accommodate the rising aspirations of a growing China, while China has to demonstrate more responsibility as it grows in power.

The most dramatic development in China is the downfall of Zhou Yongkang, a supporter of disgraced leader Bo Xilai. Zhou was a member of the 17th Politburo and a leader of the "petroleum mafia" of China, the state-owned oil giants. He also had a massive power base in his home province of Sichuan. By acting against Zhou, President Xi Jinping has demonstrated that he is China’s most powerful leader since Deng Xiaopeng. Zhou is being tried for corruption but observers are skeptical if this is part of Xi’s campaign to clean up the Chinese government. Instead of a fight against graft, most believe this to be a good old-fashioned purge.

For the first time, eight municipal governments in northeast Liaoning province have been fined $8.9 million for falling short of air quality standards. This is the first time a provincial government has imposed financial penalties on lower-level governments for pollution. Pollution has reached toxic levels in China and is increasingly an issue that both governments and people care about. Fines alone will not make China cleaner, however. The country will need to start factoring in costs to its environment while making economic decisions.

Meanwhile, Apple has signed a deal with China Mobile to supply iPhones. The world’s biggest phone company with the highest number of users will now offer its customers the most desirable phone. China now has another big corporate ally to lobby the Congress on its behalf.

In Thailand protests are proving ineffective as candidates sign up to contest elections. As mentioned in an earlier report, protesters are behaving irresponsibly and trying to block elections by using the power of the mob. This is not succeeding and 2014 will be the year of yet another election in Thailand.

In Cambodia, protests have broken out as well. Thousands have gathered in Phnom Penh’s Freedom Park to demand new elections or the resignation of Prime Minister Hun Sen, who has held power for more than 28 years. Here, they have good cause because a change in Cambodia is long overdue.

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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