The Globalist http://www.theglobalist.com Daily online magazine on the global economy, politics and culture Fri, 01 Aug 2014 23:46:35 +0000 en-US hourly 1 Russia Through the Vodka Glass http://www.theglobalist.com/russia-through-the-vodka-glass/ http://www.theglobalist.com/russia-through-the-vodka-glass/#comments Fri, 01 Aug 2014 21:00:03 +0000 http://www.theglobalist.com/?p=21912 by Alexei Bayer

(Credit: - Eugene Ivanov Shutterstock.com)Can Russia's recent history be explained through a vodka glass?

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by Alexei Bayer

(Credit: - Eugene Ivanov Shutterstock.com)

This is part one of a three part Globalist Paper on Vodka’s impact on Russia.

Many nations of the world are associated with their favorite poison. The French are forever linked with red wine. The Germans are inconceivable without a mug of their favorite beer. The Irish go hand-in-glove with whiskey.

No prizes for guessing what alcoholic beverage the Russians are most fond of. It's vodka, of course. The drink seems to be as old as Mother Russia herself. And it appears as if every Russian imbibes it first with his — or her — mother's milk.

So, it might come as a surprise to learn that vodka as we know it today was invented relatively recently — in the 19th century.

And that the inventor of modern vodka — who discovered in 1894 that the stuff is best when it is exactly 40% alcohol (80 proof) — was the world-renowned chemist Dmitry Mendeleev.

Professor Mendeleev is otherwise known around the world for compiling the Periodic Table of Chemical Elements.

Not that Russians did not drink vodka before Mendeleev. The first mention of vodka in Russian history dates back to 1386. It was brought there by the Italians.

True, when vodka assumed its modern 40-degree strength, it represented a major shift in the alcoholic content of the drink.

But perhaps the most significant shift in vodka consumption occurred as a result of the Bolshevik Revolution. The revolution’s grand design was to transfer to workers and peasants the means of production — which, in turn, was supposed to remove exploitation.

That exploitation and alienation, according Lenin and his cohorts, was the main cause of excess drinking in pre-revolutionary Russia.

The planned economy of vodka

But — wouldn't you guess? — Russians kept drinking even more under communism. Except that the business of distilling and selling vodka very quickly began to reflect the political and economic peculiarities of Soviet society.

For example, in the 1960s, there were only two varieties of vodka on store shelves at any one time — one slightly cheaper and the other a bit more expensive.

Both cost around 3 rubles. The cheaper brand, Moskovskaya, cost Rb 2.87, which included a 12-kopek deposit for the bottle.

The more expensive brand, known around the world as Stoli — Stolichnaya — went for Rb 3.12. Those two price tags were known by heart to every Soviet citizen — man, woman and child.

Both brands came mainly in half-liter bottles which, once opened, could not be recapped. That, more than anything else, reflected prevailing Soviet mores at the time.

Troika’s a charm

You see, in line with the collectivist ethos of communism, most people drank vodka in groups of three.

In front of a food store where vodka was sold, you would likely see disheveled men trying to put together a troika. Each would contribute a ruble — and the half-liter bottle yielded exactly three glasses.

Arranged in that communal way, you never really needed to recap the stuff. Since a bottle of vodka cost around three rubles, that number also became the common price of all types of goods and services — from fixing a leaky faucet to buying a truckload of stolen logs for your wood-burning stove.

Still, this being the Soviet Union, there were plenty of rules and regulations concerning the national drink. For example, vodka was sold only starting at 11 am — and the last store closed no later than 11 pm.

But then again, there were numerous ways around all those rules. For example, taxi drivers could sell you a bottle of vodka at any time of day or night — with a hefty mark-up, of course.

Many people believe that it was U.S. President Ronald Reagan — and his uncompromising stance against the Evil Empire — that finally broke the back of communism. This is probably a mistaken view.

Creeping capitalism profiting from vodka

The collapse of communism was slow. In my view, the first signal appeared in the early 1970s — when the Soviet government suddenly raised the price of a bottle of vodka.

You see, the government — with its monopoly on trade in alcohol — always made a lot of money on the sale of the stuff. At the same time, it also fought a battle against drinking.

After all, vodka cost countless man-hours in lost work — and resulted in numerous workplace accidents, highway fatalities and illnesses.

But toward the start of the 1970s, the Soviet government realized that there was nothing it could do about the supposedly enthusiastic "builders of communism" imbibing huge quantities of vodka.

Hence, the Soviet government figured it might as well make more money off the habit.

There was, however, a problem. Along with alcholism, communism was supposed to have eliminated numerous other capitalist ills, such as inflation. So, the government could not just raise the price of a bottle of vodka.

Instead, it decided to remove the familiar brands — the Stoli and the Moskovskaya — and instead rolled out two new ones. The only problem was that they cost Rb3.62 and Rb4.12, respectively — a price hike of around 25% to 30%.

This made it a lot more inconvenient to get together in groups of three — each person now had to contribute a ruble and significant change, instead of just a ruble bill, as had been the case in the past.

Moreover, the new brands were much worse in quality.

As goes vodka, so goes the economy

But by far the worst consequence was the slow, vodka-led onset of creeping inflation. Remember, the price of a vodka bottle had a significant multiplier effect throughout the entire Soviet society and economy.

As a result, you now had to pay more for all those small services or stolen goods. As the price of vodka rose, so did all those other prices.

Inflation, as economists know, slowly eats the economy from the inside. As inflation made its way through the economic system, it severely undermined and weakened it.

When Mikhail Gorbachev — the last communist party boss — finally started on his courageous program of economic reforms, the whole seemingly solid edifice of the Soviet economy collapsed around his ears.

But it had already been undermined by decades of vodka-led inflation.

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Can China Maintain Social Peace? http://www.theglobalist.com/can-china-maintain-social-peace/ http://www.theglobalist.com/can-china-maintain-social-peace/#comments Fri, 01 Aug 2014 18:36:44 +0000 http://www.theglobalist.com/?p=30110 by John West

(Credit: hxdbzxy - Shutterstock.com)China’s young people feel under intense pressure.

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by John West

(Credit: hxdbzxy - Shutterstock.com)

China’s youth is experiencing growing frustrations. The government will have to do more to maintain social peace.

A significant part of this group is well-educated, tech-savvy and hooked into global culture. Growing numbers of them now study overseas. Since 1978, some 1.5 million Chinese students and scholars have traveled overseas for studies.

However, there is a real divide between China’s urban and rural areas. The massive expansion in higher education in China has mainly benefited young people living in cities. In the countryside, the quality of schools and access to computers are inferior.

Moreover, with an income gap between urban and rural dwellers of 4-to-1, people living in rural areas have far fewer resources available to them — and thus have a much greater chance of living in poverty. Never mind that rural youth also have much less exposure to social media and pop culture.

A tale of two youths

That does not seem so terrible given that two-thirds of China’s youth population live in the city. However, there is a crucial distinction to be made: Half of these young people, in effect, are full urban citizens, thanks to the residency status of their parents, while the other half aren’t so lucky.

Under China’s “hukou” system, it lacks those rights – and is, in effect, an urban underclass. The fact that half of China’s rural youth have moved to cities does not really help when it comes to the most important tool of self-advancement – education.

They may live in the city, but they are still tied to holding an agricultural “hukou” (household registration). This hukou registration system was implemented by Mao in the 1950s to restrict the movement of farmers to the city.

While people are now free to move around China, they only have access to education, health and other social services in the locality of their hukou. The lack of access to such services in the city by rural migrants is one factors driving China’s widening inequality.

The Chinese government has announced its intention to loosen the hukou system over time. But we will have to await the outcome, as empty promises have been made in the past.

One reason for skepticism is that relaxing the hukou system would have adverse budget implications for city governments. Many urban residents are not keen to share their privileges with country bumpkins, to put it charitably.

No pushovers anymore

This underclass generally ends up in a lower skilled job and in the informal sector. With few rights and protections, they often suffer labor rights abuses.

They are also much less likely to be members of the Communist Party, still a very important mechanism for economic and social advancement in China. All in all, they suffer from wide-ranging social discrimination.

This hukou system represents not only a serious social injustice, but also a great waste of human resources.

The reason why all of this is not just of great national interest in China, but also a global concern is that China’s young workers are also less docile and accepting of their lot than their parents.

As China’s pool of surplus labor is drying up, younger workers are not shy to express their discontent about labor rights abuses, as evident in the growing labor unrest.

What is the “Chinese dream” of China’s urban underclass? Quite simply to become urban citizens — and receive respect.

Difficulties from top to bottom

Meanwhile, don’t think that life is all that wonderful for young people at the top of the ladder. Most come from one-child families, and are under immense family pressure to succeed and find a good job. Even though they might be better educated, for those who have studied at second or third-tier universities, finding a job is not so easy.

Driven by prestige, all families want their children to study at university, rather than doing vocational training. The result is that graduate unemployment is much higher than the country’s overall unemployment rate.

The one-child policy has also produced a competition for wives. The resulting shortage of girls is an added stress for young men, who are under pressure to get a job, car and apartment. Otherwise, they have little prospect of ever getting married.

A further complication in China’s male dominated society is that finding a suitable wife is now complicated by the fact that girls are now performing much better at school. Chinese boys, for their part, still prefer a less well educated wife. That leads to further mismatches.

One trend is for “A-grade” boys to marry B-grade girls, and B-grade boys to marry C-grade girls, leaving D-grade boys and A-grade girls without a partner.

The growing number of “left-over” women is also partly explained because some young women have become “too old” after many years of study. Another frustration for young women is that employers still favor young men when they have management or professional-level jobs to fill, despite the “gender-reality” of school results.

A society under duress

The plight of China’s youth is just another element of the great stresses afflicting Chinese society. The government is taking some measures to address the frustrations of its youth.

But as China’s economic growth is set to remain on a lower trajectory in the coming years, frustrated youth may well test China’s social and even political stability.

Where such stresses can lead has been witnessed around the globe during the Arab Spring – an event of great concern to China’s leadership and a field of intense study on their part.

Editor’s note: This article bases some of its discussions on a recent Brookings Institution conference – How China’s youth are transforming Chinese society.

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Corruption Campaign in China: What it Means for the World http://www.theglobalist.com/the-corruption-campaign-in-china-what-it-means-for-the-world/ http://www.theglobalist.com/the-corruption-campaign-in-china-what-it-means-for-the-world/#comments Thu, 31 Jul 2014 20:55:57 +0000 http://www.theglobalist.com/?p=30169 by Stephan Richter

(Credit: SFT HQ - Flickr.com)The arrest of a top official might be the first shot in a battle to root out corruption in China.

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by Stephan Richter

(Credit: SFT HQ - Flickr.com)

The news that Zhou Yongkang is now under investigation is of great importance not just for China, but also in a global context. The rest of the world had listened with considerable interest to the announcement by President Xi Jinping to make the fight against corruption a hallmark of his leadership.

That battle is important because it is a key ingredient in securing the dynamic development of the Chinese economy for the long haul – and hence address the future aspirations of the Chinese people.

Editor’s note: This article originally appeared in the China Daily.

The historical record in quite a few countries and regions of the world indicates that when economies undergo transformational boom times, there is plenty of opportunity to engage in acts of corruption.

Smart countries put an end to those practices as soon as they can. They do so for two key reasons: First, corruption undermines the true growth potential of an economy. And second, it only benefits a small coterie of people who control decision-making processes about economic projects.

Returning to revolutionary traditions

The historical record also indicates that one may hope that the problem is restricted to just a few bad apples, so to speak. But whether or not that is true can only be ascertained as part of applying the rule of law.

And that, in turn, means that everybody in society is held to the same standards. Given the egalitarian traditions of the Chinese revolution, achieving such equality before the law should be seen as being fully within the arc of historic achievements — rather than as something that militates against it.

Any Westerner who has witnessed discussions in China about the rule of law and moving to a country increasingly governed by contracts comes away fascinated about the excitement felt by many Chinese experts. Ultimately, a China where everybody is equal under the law represents a cultural innovation that is in the nation’s true self-interest.

The Zhou Yongkang case, if all goes well, can be seen as the opening shot in China’s campaign to clean house. The key to a successful fight against corruption – and the core indication of a truly enlightened political leadership – is that it will allow the anti-corruption campaign to go where the evidence leads it.

That may not be always pleasant, but is the key precondition for a thorough housecleaning – and to root out, to the maximum extent possible, future efforts to betray the country and its people.

One final notion about cases in the Western world, such as the legal troubles that France’s former President Nicolas Sarkozy presently finds himself in. More often than not, these cases are due not to acts of personal corruption.

Usually, legal cases are brought against such former leaders there because they channeled campaign contributions to their political parties. That doesn’t make these diversionary financing strategies any less illegal, but they certainly don’t have the stench of personal corruption.

In conclusion, any nation with great aspirations and great potential, such as China amply has, is well served by a leadership that makes the fight against corruption and for transparency a cornerstone issue of its term in office. The long-term benefits of such an approach, if it is fully executed, will be reaped by generations to come.

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5 Facts on the Biggest Predicament for Israel http://www.theglobalist.com/the-biggest-predicament-for-israel/ http://www.theglobalist.com/the-biggest-predicament-for-israel/#comments Thu, 31 Jul 2014 05:30:35 +0000 http://www.theglobalist.com/?p=30053 by The Globalist

(Credit: Arkady Mazor - Shutterstock.com)Adverse demographic trends are at the heart of the problems for Israel.

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by The Globalist

(Credit: Arkady Mazor - Shutterstock.com)

1. The population of Israel at the end of 2012 was just under 8 million.

 
2. Of the 8 million people living in Israel in 2012, three-quarters were Jewish – and just over a fifth Arab (with some Christian and Druze).

3. In the whole land controlled by Israel, including the West Bank and Gaza Strip, there are now about 12 million people.

4. As of April 2012 Jews constituted a minority in the lands under Israeli rule – 5.9 million Jews compared to 6.1 million non-Jews.

5. The Jewish minority in land controlled by Israel is growing smaller, given that the Arab birth rate is higher.

Source: The Central Bureau of Statistics (Israel) and Israel:drifting towards disaster? (Prospect).

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China’s Battle Against Corruption Gets Serious http://www.theglobalist.com/chinas-battle-against-corruption-gets-serious/ http://www.theglobalist.com/chinas-battle-against-corruption-gets-serious/#comments Wed, 30 Jul 2014 15:45:35 +0000 http://www.theglobalist.com/?p=30114 by Frank Vogl

Chinese President Xi Jinping (Credit: Kaliva - Shutterstock.com)China’s Xi follows anti-corruption textbook, but still has a way to go.

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by Frank Vogl

Chinese President Xi Jinping (Credit: Kaliva - Shutterstock.com)

In his determined efforts to fight corruption, China’s President Xi Jinping is following the textbook to the letter. His guru could well be Professor Robert Klitgaard, now at Claremont Graduate University in California.

As the distinguished South African academic has written, there are three rules to be followed in a successful campaign against corruption:

1. “Put the fight against corruption at the center of creating a new government.”

2. “Create a core of qualified well-paid government leaders.”

3. “Demonstrate that impunity is over by frying some big fish.”

And this is where the current news is so encouraging. Few fish (although Xi and the Chinese press prefer to say “tiger”) are bigger in China than Zhou Yongkang. The Chinese official media has reported that the 71-year-old Zhou has been arrested. He is now being investigated by the government’s anti-corruption agency, the Central Commission for Discipline Inspection.
 
Zhou is the first former member of the Politburo to be arrested in China in many decades. For five years until he retired in 2012, he was the nation’s chief of security. In that capacity, he directed China’s police and intelligence services.

He also had enormous power over large parts of industry, notably in the energy sector as well. As an omen of what was to come, a number of his subordinates had been arrested in recent months.
 
True to the Klitgaard script, Xi has placed loyal and skilled officials at the Central Commission. That demonstrates that no individual, however powerful and senior in the Chinese Communist Party, is above the law.

By going after a number of top level officials and stripping them of their influence, Xi is not just asserting his authority and sending out powerful signals. He is, in effect, creating a new government.

Long overdue attack

The attack on corruption in China is long overdue. Corruption is rampant. Many government and Communist Party officials enjoy great wealth. And they have long placed wives and sons and daughters and other relatives in key business positions that have assured them of formidable fortunes.

The arrest of Zhou will rattle the nerves of officials and Party members across China. They will be asking: who will be next? They will be replacing Rolex watches with cheap time-pieces and ensuring that they are not seen shopping at the many top luxury Western stores that abound in Beijing, Shanghai and other cities.
 
But ordinary Chinese citizens, who are likely to welcome the anti-corruption drive, may still be skeptical. They may wonder if this is just a purge by Xi of actual and potential political opponents, rather than a sincere long-term effort to eradicate corruption.
 
To convince people in China and abroad that he is determined, Xi needs to embark not only on high-profile arrests, but also on fundamental public policy changes, starting with the legal system.

Why the secrecy?

The current Chinese system enables Xi to be the public prosecutor, the jury and the judge at the same time. Moreover, all of these roles can be played in secrecy. 

Everyone who is accused of a crime in China knows that he will almost certainly be found guilty. And so it will be with Zhou. He has scant opportunity to protest his innocence. He may not be able to select his own defense.  His trial is likely to be in secret. In short, there is no due process.
 
So far, Xi has shown no inclination to change the legal system. Nor has he indicated a willingness to start making government activities transparent and so make government and Party officials publicly accountable.

The details of most public procurement contracts are not published, yet decisions by officials on who wins contracts and on what terms are prone to bribery when shrouded in secrecy.

Next, there is considerable opacity when it comes to the taking of gifts by government officials and Party members. Not only do business people regularly provide gifts to officials, but gift giving is remarkably also often the way in which lower level officials ingratiate themselves with superiors — and manage to climb the power ladder.
 
The Chinese people also have no idea about the compensation levels of senior officials and Party members. That means they have no way to determine if the life styles of these officials is commensurate with their official incomes. 

This underscores why transparency across almost all aspects of government practices is essential if Xi is serious about ending impunity. If he wants to know about how to get this job done, Professor Klitgaard has many pragmatic ideas to share.

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Hedge Funds as Bottom Fishers http://www.theglobalist.com/hedge-funds-as-bottom-fishers/ http://www.theglobalist.com/hedge-funds-as-bottom-fishers/#comments Wed, 30 Jul 2014 12:00:51 +0000 http://www.theglobalist.com/?p=30100 by Stephan Richter

(Credit: Gary Yim - Shutterstock.com)How America’s rich ruthlessly exploit the dysfunctional U.S. political system.

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by Stephan Richter

(Credit: Gary Yim - Shutterstock.com)

This is truly rich – and likely to happen only in America. On the one hand, the U.S. capital city of Washington, D.C. pretends it can run the universe. On the other hand, it simply opts out of the proper conduct of national affairs when it comes to protecting the interests of the American people at large.

The latest case in point: corporate tax inversions. This process is used by companies that relocate their headquarters outside the United States solely for tax purposes (in order to benefit from a lower corporate tax rate, say, in the UK).

Faced with this very transparent tax-dodging device, only the latest such maneuver engineered by America’s tax lawyers and accountants, mighty Washington finds itself incapable of coming up with an effective defense. More specifically, it deliberately constructs its incapacity to keep it from acting in the public interest.

Efficiency — or bottom fishing?

And now U.S. hedge funds, never missing an opportunity to go bottom fishing and further hollowing out the nation’s economic fabric, have discovered an investment “strategy.” They are eager to find companies that stand to benefit from tax inversions as the latest trend to invest in.

This is just more evidence that obliterates any suggestion that these funds are interested in making capitalism more efficient, which is the noble claim they often hold out.

In reality, hedge funds are tools of the rich, by the rich and for the rich. More often than not, their strategy is to benefit from the inefficiencies and dysfunctions of the U.S. political system. Quite some capitalism that.

Method to the madness

But it gets worse. Hedge funds are doubling the ante. They make a political system that is already rigged to serve the interests of the rich even more so.

This is how it works: First, America’s rich use their ample bank accounts to spread campaign finance contributions. With most politicians of both political parties always eager to be on the take, that money buys them a lot of acquiescence among the moneygrubbers.

Then those same politicians, predictably enough, prove unwilling and/or incapable of enacting at least a straightforward defense against whatever the egregious practice of the day is, whether tax inversions, “death taxes” or what have you. Coming up with sensible proposals to reform U.S. corporate taxes isn’t that difficult.

Improper PR

Hedge funds, meanwhile, are all too happy about the world they get to operate in. They have PR handlers that misleadingly claim that the industry is all about more efficiency, implying that their existence raises the nation’s productivity.

And they also claim to add to the “liquidity” of markets. That certainly sounds good, but is another cynical misrepresentation of fact. Hedge funds only add liquidity to markets to the extent required to game the system in the perverse ways they concoct to benefit the very wealthy.

In truth, their business model has next to nothing to do with that. It is about exploiting a rigged political game and/or rigged markets in order to protect the material interests of the rich (who are their clients).

In fact, the markets aren´t so much rigged as – just imagine – that they are naturally inefficient markets. Hedge funds take advantage of that, but not at all in an effort to make them more efficient.

Wealth makes right

Rather, they do so purely for their own personal and their exclusive clients´ gain. In fact, hedge funds want these inefficiencies to remain locked in place — so that they can exploit them.

Perpetrating such frauds and delusions only works in a nation that worships money above all else, while being mathematically anumeric and politically naïve at the same time.

In the United States, as things stand, wealth makes right. Once upon a time, that may have been a Calvinist trait. In today´s world, the “wealth makes right” principle basically applies in underdeveloped societies, not developed ones.

Savor the irony – and the self-destructiveness not just of those hedge fund practices, but also of those traits in the population at large, when viewed at a national level.

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12 Ways Tunnels Shaped Warfare http://www.theglobalist.com/12-ways-tunnels-shaped-warfare/ http://www.theglobalist.com/12-ways-tunnels-shaped-warfare/#comments Wed, 30 Jul 2014 12:00:48 +0000 http://www.theglobalist.com/?p=29996 by The Globalist

The Cu Chi Tunnels in Vietnam.(Credit: Aleksandar Todorovic - Shutterstock.com)From antiquity to Gaza, tunnels let insurgents take on a powerful enemy

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by The Globalist

The Cu Chi Tunnels in Vietnam.(Credit: Aleksandar Todorovic - Shutterstock.com)

1. By providing concealment, tunnels are a labor-intensive but cheap alternative to battlefield engagement.

2. In more than 2,000 years of warfare, tunnels have mattered most for their impact on the psychology of combatants.

3. The value of tunnels is magnified in asymmetric conflicts: a small insurgent force takes on a more powerful enemy. Tunnels let the insurgent change the rules of engagement.

4. In the 1st century A.D., Germanic troops dug tunnels and ambushed their Roman opponents from seemingly unoccupied ground.

5. In the Bar Kokhba revolt in Judea in 132-136 A.D., Jewish rebels used tunnels to launch raids on superior Roman forces.

6.
In 256 A.D., Sassanian armies dug a tunnel under a Roman fortress. When the Romans dug a counter-tunnel, the Sassanians filled their tunnel with sulfur dioxide gas, the first instance of chemical warfare.
 

7. In WWI, British miners dug 22 mines under German trenches and detonated 19 of them in June 1917, killing 10,000 German soldiers.

8. In the Vietnam War, the Viet Cong dug more than 200 miles of tunnels at Cu Chi, from which they launched attacks and then disappeared.

9. The Chu Chi tunnels are a symbol of the determination of the Viet Cong and patriotic struggle, now promoted as a tourist site by the Vietnam government.

10. Islamic extremists in Afghanistan, Pakistan and Yemen are thought to be constructing tunnel networks in response to US drone attacks.

11. In 2006, Hamas used a tunnel to attack an Israeli army post, kill two soldiers and take one hostage. The operation lasted six minutes. The hostage was traded five years later for 1,000 Palestinian prisoners.

12. Tunnel tactics have rarely, if ever, fundamentally altered the course of a war — but they have always been effective in sowing fear.

Source: Gerard DeGroot, The Enemy Below (Washington Post)

 

 

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The Perils of Russian Propaganda http://www.theglobalist.com/the-perils-of-russian-propaganda/ http://www.theglobalist.com/the-perils-of-russian-propaganda/#comments Tue, 29 Jul 2014 05:30:55 +0000 http://www.theglobalist.com/?p=30026 by Carl Bindenagel

Vladimir Putin (Credit: ID1974 - Shutterstock.com)How Putin's propaganda machine defeats itself.

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by Carl Bindenagel

Vladimir Putin (Credit: ID1974 - Shutterstock.com)

One of the tactics in war fighting is the use of misinformation to mislead the enemy. Russian propaganda is a weapon being used against Europe. Vladimir Putin has made his choice. He has made Europe the enemy of Russia.

And he has made it clear that European (and universal) values, including rule of law, protections for minority rights and respect for a country’s boundaries, are anathema and antithetical to Russian ethnic nationalism.

In order to “deal” with a sagging economy, those are the instruments that Putin has used to animate his country and provoke war.

As Russian propaganda targets the West, it is becoming less successful. Yes, there are still some “Putin-huggers” in Western Europe that have been produced by Russia via its payrolls. But their efforts are becoming ever more ludicrous since Russia evidently has a fundamental issue with the most basic conceptions of truth and honesty.

Weaponizing history

Putin has repeatedly characterized the decline of the Soviet Union as the “greatest catastrophe of the 20th Century.” That is an astonishing and an alarming claim. After all, his assertion is that the end of the Cold War is worse than both World Wars in his mind. That claim, twisted as it is, should be taken seriously.

It is only logical therefore that Putin’s propaganda not only seeks to “reshape” the present. His propaganda also reshapes the past — via revisionist history.

Consider Sergei Naryshkin, the Speaker of the Russian Duma and one of the Russian officials on the sanctions list by the United States and the European Union. He was also charged by Putin to approve new history books for Russia, in which Stalin is rehabilitated as a “modernizer.”

One of Stalin’s policies, of course, was to commit genocide against Ukrainians in the form of the Terror Famine in 1932-33.

Emptying Europe’s bread basket

Eight decades on, the fighting in Ukraine is Putin’s war to weaken Ukraine. He aims to make Kiev submissive to Moscow. The war is as much anti-Ukrainian as an expansionist ethnic-Russian project.

Russian claims of fraternity with Ukraine are a disguise for the domination of Ukraine, and that policy is a long-standing Russian policy.

Russian aggression in Ukraine is really an attack against ethnic Ukrainians under the pretense to protect ethnic Russians in Ukraine. Mind you, they were not a beleaguered population in Ukraine until Russian propaganda and interference produced the crisis.

Europeans are generally hesitant to jump to conclusions and take meaningful action. However, Putin’s choice is to attack the idea of a peaceful Europe head on. His deceits have been so blatant that he has succeeded only in one thing – making Europeans wake up and see him for the man he really is: a 21st century despot.

Then as now

In 1932-1933, Russians closed the borders of Ukraine and prevented travel in or out of the country. Next, they removed all the grain from the “breadbasket of Europe.” That included grain for food and for planting. They then sold it on international markets for foreign currency, in order to finance the industrialization of Russia.

The policy was not an agricultural policy, but at once a Russian industrialization policy and a targeted anti-Ukrainian policy. That policy deliberately and systematically starved to death 11 million Ukrainians in the Terror Famine.

When a rumor reached Poland of the famine, Poland sent a train load of grain for relief. Russians turned it around at the border, saying that the rumor was false, allowing Ukrainians to die.

Then as now, Russia aims to beat Ukraine into submission.

Europeans face a clear-cut choice: Europe has given Putin far too many chances to step back in the past months and he has abused all of them. Not punishing Russia for its attacks in Europe is not a way to avoid conflict. Rather, it allows Russian duplicity to go unpunished.

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When U.S. Hedge Funds Abuse the Rule of Law http://www.theglobalist.com/abusing-the-rule-of-law/ http://www.theglobalist.com/abusing-the-rule-of-law/#comments Tue, 29 Jul 2014 05:30:54 +0000 http://www.theglobalist.com/?p=30042 by Uwe Bott

(Credit: CGinspiration - Shutterstock.com)In the battle of New York vs. Argentina, hedge funds plead innocence, while gaming the system.

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by Uwe Bott

(Credit: CGinspiration - Shutterstock.com)

On Wednesday, Argentina is likely to default again on its sovereign debt. After its mega-default on some $100 billion in December 2001, it is now likely to default on those bonds that were restructured in 2005 and 2010.

Why is it that Argentina, once again, cannot pay? Well, that’s actually not the issue. Argentina can pay and has paid its semi-annual payment to the trustee of the restructured bonds, the Bank of New York Mellon.

Without getting fully into all the legal tangles – and they are mind-numbingly complex – there is a broader point to be considered in the battle of New York vs. Argentina. It concerns the role that New York-based hedge funds play in the global financial game.

Wolves in sheep’s clothing

In essence, they try to present themselves as sheep, while they really are wolves. Let me explain: Unlike most of Argentina’s bondholders, NML Capital and Aurelius Capital Management bought Argentine bonds in 2002 and 2003, after Argentina had already defaulted. For that reason, they were able to buy these bonds for pennies of their face value.

Why on earth would they do that, you ask? Because from the get go, they intended to use – or rather abuse — the legal rights of holders of bonds issued under New York law for one purpose only, to make Argentina pay the full amount at a later point in time.

Argentina managed to obtain restructuring agreements from its bondholders in 2005 and 2010 that paid them 30 cents for each dollar owed and over a much longer maturity.

The hedge funds rejected these restructurings. They knew that New York law was on their side.

The letter of the law

You see, most bond agreements at the time provided that even a supermajority of bondholders could not force so-called holdouts to accept a restructuring deal. In other words, those who did not participate could still insist on full payment.

Now, in the abstract this makes sense. Investors who buy bonds at face-value should expect full payment of interest and principal. Since a bond is a contract, they should not be bound by the consent of other bondholders who agree to lesser terms in order to help out a country that is in a pinch.

But this is not the case here. The two hedge funds bought these bonds after they had already been defaulted upon. They knew full well that the Argentine government would never offer — and could not offer — full payment. NML Capital and Aurelius Capital Management’s premeditated choice was to sue Argentina in U.S. courts.

And they won. Going strictly by the letter of the law, Judge Thomas Griesa, a federal judge for the U.S. District Court for the Southern District of New York, ruled in favor of the hedge funds.

The spirit of the law

After his ruling was upheld and the Supreme Court rejected a hearing on it, Argentina had to comply on June 30. It did not. The 30-day grace period will expire on Wednesday. Without payment to the hedge funds, Argentina will have to default again.

But the issue left unaddressed is this: Is this really a question of the letter of the law — or is it a question of the intent of the law? Specifically, is this not a stellar example for “two wrongs don’t make a right”?

True, Argentina should have complied with its debt obligations and surely could have afforded to pay more than the 30% of face value to all investors. But the hedge funds’ exploiting the letter of U.S. law after buying defaulted bonds for pennies and then asking for full repayment flies in the face of what justice is all about.

The Argentine government has taken out advertising in the New York Times describing the hedge funds as vultures. No tears should be shed over a totally mismanaged Argentine economy and a people who willfully elect one populist government after another.

But that does not mean that one cannot feel utter disgust for funds which abuse U.S. rule of law to profiteer at the expense of many and for the benefit of a few.

If nothing else, this is tantalizingly close to an exercise in unabashed legal imperialism.

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The Vanishing Russian Male http://www.theglobalist.com/the-vanishing-russian-male/ http://www.theglobalist.com/the-vanishing-russian-male/#comments Tue, 29 Jul 2014 05:30:46 +0000 http://www.theglobalist.com/?p=29922 by The Globalist

Credit: A. Steffen - Shutterstock.comRussian males have one of the highest mortality rates outside of Sub-Saharan Africa.

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by The Globalist

Credit: A. Steffen - Shutterstock.com

1. Russian males have one of the highest mortality rates in the world outside of Sub-Saharan Africa.

2. Of every 1,000 Russian 15-year-olds in 2012, 339 are expected to die before reaching the age of 60.

3. The high mortality rate for Russia’s males is mainly attributed to high rates of cardiovascular disease, alcoholism and accidental injuries.

4. Russia ranks 26th-worst among all countries in the world in terms of male mortality.

5. Of the countries with higher mortality rates than Russia, all but two are located in Africa.

6. While Sub-Saharan Africa and Russia have similar male mortality rates, Russia’s GDP per person – at $14,000 – is far higher than Sub-Saharan Africa’s, at only $1,624.

7. Globally, 187 males out of 1,000 who were 15-years-old in 2012 are not expected to survive to their 60th birthday.

8. Russia’s male mortality rate is, thus, about 80% higher than the global rate.

9. Mortality estimates are based on the trend of data from the recent past and could be improved through advances in medicine, public health or safety standards.

Data From: World Health Organization, with analysis by The Globalist Research Center

 

 

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Asia: the Challenge to Turn Enmity into Amity http://www.theglobalist.com/asia-the-challenge-to-turn-enmity-into-amity/ http://www.theglobalist.com/asia-the-challenge-to-turn-enmity-into-amity/#comments Mon, 28 Jul 2014 09:00:49 +0000 http://www.theglobalist.com/?p=29964 by J.D. Bindenagel

An unidentified soldier stands guard in front of a portrait of Mao. (Credit: Hung Chung Chih - Shutterstock.com)Risks of unresolved territorial conflict threaten peace in Asia.

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by J.D. Bindenagel

An unidentified soldier stands guard in front of a portrait of Mao. (Credit: Hung Chung Chih - Shutterstock.com)

Burgeoning conflicts in the Western Pacific have captured world attention. Ever-more combative conflicts over competing claims between Japan and China over the Senkaku/Diaoyu Islands in the East China Sea have led to confrontation in the air and on the sea.

That China and Japan seem so determined to go toe-to-toe with each other is an ominous trend.

Lurking behind modern leaders are the ghosts of nationalisms past. Resurgent nationalism had terrible consequences in Europe as recently as the breakup of Yugoslavia. Now it is a dangerous challenge to a peaceful global order that all nations must have an interest in if the prosperity of their people is to advance.

Even now, the Europeans are again seeing the rise of ethnic nationalism linked with the use of force by Russia in Ukraine. Russian action in Ukraine recalls the tragic and bloody disintegration of Yugoslavia.

The return of nationalism

World leaders will also look to China and Japan as those countries work to manage their interwoven history. China suffered humiliation at the hands of Imperial Japan. Japanese apologies have been inadequate, and have not gained acceptance from neighboring countries or helped the region move beyond historical grievances.

Resorting to nationalist appeals is a quick, but highly risky device for leaders to try to drum up domestic support. Abroad, nationalism increases fear and animosity in reaction.

In Europe, Russian President Vladimir Putin is aggrieved with the outcome of history and the demise of the Soviet Union – in his mind, the “greatest geopolitical catastrophe of the 20th century.” He now seeks to reverse the effects of history by making an effort to shape current events to recover what he thinks Premier Gorbachev lost in territory and influence.

Putin may be completely misguided, but it is important to understand what motivates him. After all, the sense of affliction and the appeal of ethnic nationalism are not just in his mind, but in the minds of many Russians.

Not forgiven, not forgotten

In China, Japan has failed to achieve acceptance of its acknowledgment of the historic wrongs during the conquest of Nanjing. The controversial visit by Prime Minister Abe to the shrine at Yasukuni provided another significant symbol of a deficit of justice for China.

Japan and China seem caught in a vortex of each country’s cultural vortices. In Japan apology is associated with shame and in China, the wounds of the Second World War sow seeds of new nationalism.

It is apparent that President Xi is promoting a return to the nationalist past in China. For example, he openly recognized Confucius’s contributions to Chinese culture and history. There is understandable interest in traditional Chinese culture, as a part of a political effort to stabilize the country in the aftermath of great economic growth and change.

The Chinese dream

However, promoting nationalism at the cost of rule of law and collaboration with neighbors takes China in the wrong direction.

President Xi has set out to achieve “a Chinese dream” of a “great rejuvenation of the Chinese nation.” The first three priorities, according to him, are:

    ■  restoring Taiwan to China,
    ■  regaining the Diaoyu or Senkaku islands from Japan and
    ■  “taking back sovereignty of the South China Sea,” a maritime territory that is disputed by more than 10 countries.

China is pressing its claims backed by force – which end up undermining its peaceful rise to global power status. The South China Seas confrontation is dangerous.

The middle kingdom extending South

Recent unilateral placement of a deep-sea oil rig by the Chinese National Overseas Oil Company (CNOOC), to assert Chinese claims to the disputed Paracel Islands, has alarmed the United States, Vietnam and others in East Asia.

Although there has been a public groundswell of anti-China sentiment and Vietnam has a compelling desire to defend its maritime territory, as the smaller country, Vietnam has few good options. So Vietnam has to choose a course carefully.

Hanoi knows it needs stable relations with China. Ironically,
given the 1968-1975 war with the United States, it looks to the United States to support stability in the region.

As a result of China’s actions, its neighbors may be forced to seek outside assistance and military cooperation to counterbalance a more aggressive China. That, of course, is the polar opposite of what China ultimately aims for.

Defusing Conflict in the South and East China Seas

To move forward with unilateral energy exploration in the South China Sea, China is using the placement of a deep-sea oil rig to assert its claims to the disputed Paracel Islands. The move has concerned Vietnam and other regional powers, which also claim territorial rights over the waters and islands in that area.

The United States, for its part, is concerned over regional stability, the openness of global commercial sea lanes, as well as legal status issues.

Beijing’s decision will likely prompt Vietnam to deploy its coast guard or naval vessels to assert its own claim to the area and accelerate its efforts to draw in foreign partners for oil exploration and production. But Beijing is calculating that Vietnam will be unwilling and unable to make any serious attempt to stop the Chinese drilling.

Even as Beijing ambitiously claims the entire South China Sea, bounded by the so-called nine-dash line, it has no real presence on any island (besides a few atolls and reefs) in the distant Spratly Island chain.

In addition to China, Malaysia, the Philippines, Vietnam, Brunei and Taiwan have claims in the island chain. China’s navy is not good enough to overcome the logistical challenges such distances present, so its ability to project its dominance throughout the maritime sphere is limited.

Instead, Beijing’s strategy seems to consist of three steps:

    ■   China uses the nine-dash line as a historical justification for its intrusions into disputed waters.
    ■   China enforces its claim in tactically advantageous areas where it has an actual presence, such as the Paracel Islands and the Scarborough Shoal, which it seized from the Philippines in 2012.
    ■   China continues to develop its military and technological capabilities to carefully push its maritime boundaries farther without antagonizing all of its neighbors at once.

Despite growing nationalisms, within and in reaction to China’s rise, which threaten peace, efforts should be made to work cooperatively with China — not to contain it. Japan, China and other nations such as Vietnam and the Philippines should set aside the unresolved issues and turn to joint management of national interests in fishing, energy and resource development.

Codes of conduct in the East and South China Sea are necessary to manage maritime operations. Joint maritime policing, adherence to the Law of the Sea and maintenance of the freedom of the seas for shipping, could also help to avoid political miscalculation and military confrontation.

Most important, the Chinese, Japanese and regional leaders should set aside the use of force to resolve tension, such as those over the Paracel, Senkaku/Diaoyu and other Islands.

From technical cooperation to regional peace

To move forward, it may seem insufficient to focus on seeming technicalities such as developing practical mechanisms for maritime cooperation. And yet, it is precisely such “technical” issues that have the potential for trust and confidence building measures.

That is very much the lesson of Europe in the 1970s. The path embarked on through détente there, via the OSCE and other organizations and processes made true continent-wide reforms and cooperation possible.

Given that hands-on experience, a suitable framework for governments to develop deeper cooperation and collaboration must address the following dimensions:

    ■   Agreeing on the rule of law for resolution of disputes.

This is a primary commitment not to use force to resolve disputes. Adherence to the UN Convention on the Law of the Sea (UNCLOS), implementation of international law and conventions about territories and skies as well as the Code of Conduct and an international convention/ law on cyber and data security are critical for dispute resolution.

    ■   Building international structures for consultation, negotiation and cooperation.

These must have enough power and rights to judge and re-enforce countries respect for laws and conventions. States can build and are building on the East Asian Summit, ASEAN, ASEAN Regional Forums and ASEAN +3 (China, Japan, South Korea) with observers from the United States, India, Australia and New Zealand.

China, Japan and South Korea could create a Trilateral Group to address regional issues in East and North East Asia.There are many issues to be addressed including enhancing transparency in government policies, granting information rights/data protection of people in all countries and managing jointly large marine ecosystems.

    ■   Integrating Asian economies into the global economy.

This process takes shape via the WTO, International Financial Institutions (IFIs) and regional economies as well as rules of global governance. Cooperation among states can also improve rights, safety and life conditions of workers and promote Corporate Social Responsibility.

    ■   Assisting in reconciliation, especially for historical grievances

This is a pre-condition for regional security. Unresolved conflicts are the seeds of nationalism and new confrontation such as those ongoing over the Senkaku, Paracel, Spratley Islands and the Scarborough Reef.

Conclusions

    ■   Efforts should be made to work cooperatively with China — not to contain it, while taking care not to engage in nationalistic antagonisms.
    ■   Japan, China and other nations such as Vietnam and the Philippines should set aside their unresolved issues and turn to joint management of national interests in fishing, energy and resource development.
    ■   Codes of conduct in the East and South China Sea are necessary to manage maritime operations.
    ■   Joint maritime policing, adherence to the Law of the Sea and maintenance of the freedom of the seas for shipping, could also help to forestall political miscalculation and military confrontation.
    ■   Most important, the Chinese, Japanese and regional leaders should take the use of force off the table to resolve tension, such as those over the Paracels, Senkaku/Diaoyu Islands, Scarborough Reef and other disputes.

Japan has a special role to address post WWII reconciliation. It could and should have done much more to give real substance to its apologies, as the Germans have done.

At least since 1970, Germany has taken a comprehensive and credible approach to atoning for its Nazi past. The country has fully acknowledged the horrors it created, not least in its own school curricula.

The longer term challenge — in Europe, involving Russian ethnic nationalism or in Asia with Chinese nationalism — is how to turn enmity into amity.

Then as now, the best way to proceed is to begin with small steps in the resolution of many disputes. And this is where Japan’s Prime Minister must do much more than (implicitly) point the finger at China.

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The Shifting Landscape for Iran’s Women http://www.theglobalist.com/the-shifting-landscape-for-irans-women/ http://www.theglobalist.com/the-shifting-landscape-for-irans-women/#comments Sun, 27 Jul 2014 12:00:09 +0000 http://www.theglobalist.com/?p=29565 by The Globalist

(Credit: Vladimir Melnik - Shutterstock.com)Surprising Insights from a key country in the Middle East

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by The Globalist

(Credit: Vladimir Melnik - Shutterstock.com)

1. 60% of Iranian university students are female.

 
2. The unemployment rate for women under 25 stands at 42.3% in Iran – double the average for young people.

3. The World Economic Forum’s Global Gender Gap Report ranked Iran 130th out of 136 countries for women’s economic participation and opportunity.

4. Population growth in Iran has fallen from 3.2% in the early 1980s to 1.2% in recent years, due in part to family planning policies.

5. In Iran, divorce is on the rise and marriage is declining — as women refuse to have children and instead seek higher education and more senior-level jobs.

6. Ayatollah Ali Khamenei, Iran’s supreme leader does not consider women’s unemployment a primary concern.

7. However, Iran’s pro-reform first vice-president considers women’s unemployment “a serious threat” and priority for the government.

Source: Iranian Women Rights Remain Hostage to Political Infighting (Financial Times).

 

 

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11 Reasons the Mekong River Could Spark Asia’s First Water War http://www.theglobalist.com/asias-upcoming-water-wars/ http://www.theglobalist.com/asias-upcoming-water-wars/#comments Sun, 27 Jul 2014 07:00:31 +0000 http://www.theglobalist.com/?p=29840 by The Globalist

The Mekong River (Credit: Thanyapat Wanitchanon - Shutterstock.com)China dams the Mekong, threatening other nations’ peace and livelihood

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by The Globalist

The Mekong River (Credit: Thanyapat Wanitchanon - Shutterstock.com)

1. The Mekong River is a gigantic fish factory and crop irrigator. For example, half of Vietnam’s rice crop comes from the Mekong Delta.

2. It serves as an economic lifeline for tens of millions of people in five Southeast Asian countries.

3. The Mekong River is so long that — if it were in the US — it would stretch from Los Angeles to New York.

4. Just under half the Mekong River’s length is in China, which first started damming it in Yunnan more than 20 years ago.

5. China has nearly 20% of the world’s people, but only about 6% of its fresh water.

6. To move away from coal-fired power plants, China plans to build more dams.

7. The two newest Chinese dams, the Xiaowan and the Nuozhadu, can hold enough water to drown an area the size of London in water 24 meters deep.

8. Dams block fish from migrating to their spawning grounds — and their bursts of water scour riverbeds and disrupt fish breeding patterns.

9. China was one of three nations to vote against the UN’s 1997 treaty governing shared international rivers and has never negotiated management of the Mekong.

10. China is not a member of the Mekong River Commission — even though 44% of the river’s course is in China.

11. The Mekong River equals the South China Sea as a longer-term threat to peace and stability in the region.

Read More: Tibet Water Wars

From Troubled Waters, The mighty Mekong river is the new front line in the global battle over water (Financial Times).

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Clinton-itis as a National Disease http://www.theglobalist.com/clinton-itis-as-a-national-disease/ http://www.theglobalist.com/clinton-itis-as-a-national-disease/#comments Sat, 26 Jul 2014 05:30:58 +0000 http://www.theglobalist.com/?p=29955 by Stephan Richter

(Credit: JStone - Shutterstock.com)Clinton moneymaking, national "conversations" and the US policy agenda.

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by Stephan Richter

(Credit: JStone - Shutterstock.com)

The Clinton clan is back in the national, if not global spotlight, largely due to the presumed presidential candidacy of Hillary. While a lot of attention rightfully has been heaped on their moneymaking by doing nothing but talking, it is important to realize that the phenomenon they represent goes far deeper than just the Clinton family.

Bill and Hillary Clinton are just the most visible symbol of what really is a national disease. Republicans are guilty of it just as much as the Clintons are. And that disease – which has gripped Washington, U.S. corporations, the media and national elites – has a real price.

The United States used to pride itself in the past for its pragmatism and action orientation. But in recent decades, it has devolved from a “Yes, We Can” to a “No, We Can’t” – or better yet: “We’re Great at Pretending We Can” – nation.

For proof, just consider this stunner: The same old problems – in fact, the agenda that Bill Clinton either left incomplete or abandoned early in his term in office (remember the infrastructure, skills and education affordability deficits?) – are still with us in all their gory glory.

No problem – to the elites

Not that this would trouble Washington’s elites – or the elite families anywhere in the country. They are doing just fine. Focused on hedge fund income streams and private jets, they live in their own parallel universe. And their offspring, well endowed with trust funds and “legacy” access to pricey Ivy League universities, are all taken care of, thank you.

There is just one problem: How to mimic action and progress as far as the rest of the nation is concerned? As it stands, to mask the deliberate political gridlock, the prevailing Washington culture is very happy to rely on acts of symbolism.

Of course, it is an old phenomenon in the U.S. capital to consider a job “done” once a blue-ribbon commission on whatever critical topic had issued a big – and preferably “definitive” – report highlighting the need for something to change. As if that alone changed anything.

But things have gotten much worse in the past decade – not least because of what’s happening to the media. Starved of advertising revenues, they are desperately seeking ways to survive.

To make ends meet, “news” organizations are now keen on hosting events and/or dialogues and conferences, largely for corporations. That gives their clients – pardon, “partners” – a soapbox for sounding good. And it creates a much-needed revenue stream for the media company in question.

The media grovel for money – and who benefits?

How this benefits the rest of the nation is much less clear. The media and its corporate or industry association partner ostensibly get together for an event to “fix” a real world problem. They profess to “leverage” each other’s skill sets and core competencies. The plan they concoct has to be “scalable” in the real world, as well as “replicable” and “sustainable.”

Ultimately, most of this talk is delusional. It is truly a case of “putting lipstick on a pig.” In the meantime, U.S. media sport phrases such as having plenty of “national conversations,” whether on race, the environment, poverty or what have you. At those occasions, the same trite, superficial bromides are issued, as if to embalm the real issues.

You can be sure that the country is never challenged in those “conversations” to confront seriously the lingering structural implications, regardless of its warped racial history or what have you.

No doubt, though, it is a great tool for the upper 1% (and their eager supplicants) to assuage their collective bad conscience for a moment, before flying off to a remote Caribbean island in a private jet (or at least the next talkfest on the other U.S. coast).

The endless series of corporate-sponsored events does not help the nation to get ahead. Treating Americans to “a conversation” is no replacement for good old-fashioned policymaking and compromising.

Mellifluous words of American “conversations”

As things stand, on many a subject, America’s elites may mouth mellifluous words to talk a responsible game, but they almost always shy away from a real (and costly) re-envisioning of America. In their own world, they have maximum personal flexibility. Their assets aren’t too tied to the mother ship.

What’s missing in all this, at a minimum, is any kind of systematic approach – one in which government would bring resources and a planning approach to bear, along with holding people accountable.

That is something that the modern United States seems incapable of. Republicans definitely don’t want it. And Democratic elites don’t want it either anymore, lest they upset their campaign contributors and corporate partners.

Where does that leave the country as a whole? Ironically at the same point where George H.W. Bush, the 41st President of the United States was when he accepted the presidential nomination at the 1988 Republican National Convention in New Orleans.

In a mental frame oozing of patrician thinking, Bush Sr. referred to America’s clubs and volunteer organizations “a thousand points of light.” He saw this force as able to “keep America moving forward, always forward—for a better America, for an endless enduring dream.”

Derided at the time by Democrats as a happy-go-lucky, passive government copout, Bush’s philosophy has since then pretty much become the reigning doctrine of the Democratic Party’s top movers and shakers. “Public-private partnerships,” whether warranted or not, are now sprinkled into virtually every Democratic speech.

A patrician philosophy becomes a business

And nobody is a bigger practitioner — and personal beneficiary – of the Bushian concept than Bill Clinton, his successor who has transformed that philosophy into a lucrative business model.

But the strategy of turning public policy into lucrative personal opportunities certainly doesn’t end with Clinton. Every new NGO, every new initiative needs a CEO and senior staff, usually equipped with very handsome salaries.

Another thousand separate and redundant points of light, even if staffed with ex-Clinton and (soon) ex-Obama staffers, aren’t the answer to the United States’ problems. Lucrative though upholding that hoax may be for those participating in the scheme, this is not a sign of the vitality of a nation, but of its lack of earnestness in solving the really big problems.

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Reining in Corporate Tax Evasion http://www.theglobalist.com/reining-in-corporate-tax-evasion/ http://www.theglobalist.com/reining-in-corporate-tax-evasion/#comments Fri, 25 Jul 2014 15:12:50 +0000 http://www.theglobalist.com/?p=29949 by Uwe Bott

Credit: sapfir - Shutterstock.comA win-win for the U.S. economy.

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by Uwe Bott

Credit: sapfir - Shutterstock.com

The most innovative part about this age-old problem is the ever-changing vocabulary that has been created to describe it. Tax evasion has become tax “avoidance.” The latest cause célèbre is tax “inversion.”

Unfortunately, “enhancing” the English vocabulary in such nebulous ways with new terms is about the only thing that is going on with regard to tax reform in the Untied States.

True, at 35% of profit, the United States has one of the highest nominal corporate tax rates in world. But don’t be confused by that statement.

As a report published by the non-partisan Government Accounting Office (GAO) found in May 2013, lawyers and accountants employed and retained by all those profitable U.S. corporations made sure that their clients paid U.S. federal income taxes amounting to no more than about 13% of their pretax worldwide income in 2010 (latest data available).

What’s worse, the Citizens for Tax Justice reported that 26 major U.S. corporations paid no net federal corporate tax at all between 2008 and 2011.

Astonishingly, these companies made more money after taxes than before taxes. Savor the prominent names among them: Boeing, Verizon, Mattel and Duke Energy.

All these fine companies consider themselves icons of the American business firmament. Their patriotic garb notwithstanding, they are relentless in their intent and action to undermine American society and its future prospects by engaging in their favorite sport — ruthlessly gaming the tax system.

Lack of will

So let’s get real: The only reason why U.S. corporations can evade and avoid fair taxation is our collective lack of political will. Perversely, Democrats and Republicans alike in the U.S. Congress – supposedly the representatives of the “people” — are actively aiding and abetting that process.

Why? Because owing to the dysfunctions of the U.S. political system, they are critically dependent on donations from corporate America.

In the process, other than in terms of (false) rhetoric, they have sold out the original promise underpinning of the American Dream — fairness and equality — to the narrow interests of their donors.

What could be done if we had a functioning political system that was truly established to serve the legitimate interests of the American people, rather than just pretending to do so?

Simple solutions

It’s really quite simple. First, mergers and acquisitions should not allow U.S. corporations to become corporations of more “tax-friendly” jurisdictions (a process now referred to as tax inversion). They should be taxed in the United States, provided they continue to be managed here and maintain business in the U.S.

You see, it is matter of law how we define “headquartered” or “subject to U.S. taxes,” not some God-given classification.

Second, the United States should tax all foreign income of U.S. companies – just as it is actually done to all U.S. citizens who work outside the United States. A series of bilateral tax treaties would make sure that any unfairness (in the form of double taxation) is avoided. Such treaties exist with regard to U.S. citizens working abroad.

Third, tax havens should be shut down permanently. It is as tiring as it is misleading to hear the whining from policymakers about the existence of tax havens and how they destroy the tax culture of corporations. In fact, it is totally within our own control to render these perverse structures useless.

Tax terrorism

When it comes to terrorist financing, the U.S. government has proven quite capable of monitoring and freezing all financial flows to and from so-called “sanction countries” through the Office of Foreign Assets Control (OFAC).

The only reform that is required is a straightforward step: Just add all tax havens to the so-called OFAC list. This one measure makes U.S. corporations instantly criminally liable, should they choose to invest or place their assets there. That will surely get their attention – and, likely, ensure compliance.

Fourth, once tax revenues owed to the U.S. government have been successfully repatriated, then the politicians in the U.S. Congress can look at the country’s corporate tax code.

A roadmap to prosperity

As it stands, small and medium size enterprises (SMEs) were the only ones who really bore the brunt of the United States’ high corporate tax rates because they lack the means of evasion, avoidance or inversion.

Here again, the solutions are straightforward. One could either create a progressive corporate tax code, one that doesn’t effectively exempt large corporations or reduce the current rate to somewhere around 15%, without losing a dime of revenues.

How might this all end? Lower tax rates would help SMEs to become more profitable allowing them to create jobs. But guess what: The United States might even become an attractive destination to foreign companies because of new and low marginal tax rates.

So, Republicans and Democrats: You want to create jobs, improve inequality and set us up on a course for sustainable growth? Here is a roadmap. Now get on with it.

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Dazzling Singapore’s Deep Contradictions http://www.theglobalist.com/dazzling-singapores-deep-contradictions/ http://www.theglobalist.com/dazzling-singapores-deep-contradictions/#comments Thu, 24 Jul 2014 05:30:18 +0000 http://www.theglobalist.com/?p=29904 by John West

Credit: Migel - Shutterstock.comThe clean veneer surrounding Singapore starts to show cracks.

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by John West

Credit: Migel - Shutterstock.com

Visitors to Singapore can’t help being dazzled by Asia’s only global city. Marina Bay. Sentosa Island. Botanical Gardens. Temples. Museums. Casinos. Luxury hotels. Shopping on Orchard Road and lots more.

But scratching below the surface reveals a system struggling for survival.

Singapore was not born to authoritarian government led by Lee Kuan Yew, despite his now almost divine status. Some argue that the late 1950s and early 1960s was a golden era for Singaporean democracy.

Many of the foundations of Singapore’s current society, like the Central Provident Fund and the Housing & Development Board, were established then.

The end of an era

This period came to an abrupt end in 1963 with “Operation Coldstore” by which Lee eliminated his political opposition. Over 100 members of Barisan Sosialis were arrested and detained on the false pretext that they were part of a communist conspiracy.

Singapore’s 1965 expulsion from a two-year union with Malaysia was an emotional shock for Lee Kuan Yew and his People’s Action Party (PAP). But once Lee got over that, he led the city state on a miraculous journey of authoritarian capitalism.

In the space of four decades, Singapore’s economy has risen to become one of the world’s most advanced, with virtually the highest GDP per capita in Asia, if not the world. However, despite its flashy hard infrastructure, soft infrastructure is a weak point. This shows up in poor creativity and innovation performance.

Several key ingredients makeup the Singapore policy cocktail.

Open trade and investment. Education and a strong work ethic. Migrants for both high skilled and low skilled jobs, interestingly, Singaporeans typically slot into the middle of the labor market in their home country. And a strong guiding hand of government. Singapore might practice the rule of law, but only one party determines the law.

Socially engineered Singapore

Despite its capitalist pretensions, Singapore is very much a
“nanny-state.” Over 80% of the population lives in public housing. Social engineering is at the heart of Singapore’s social contract.

As in communist China, some arms of government are propaganda machines and actively engage in manufactured nationalism. The media is also officially controlled. Indeed, the whole public sphere is controlled by the state.

Restrictions on individual freedom, in the name of collective welfare, are widespread. Human rights abuses and harassment of political opponents to the ruling regime are too common.

For a long time after Operation Coldstore, there was little effective opposition to Lee Kuan Yew’s regime, which today is led by Lee Hsien Loong, one of Lee’s sons. Over recent times, though, wider and wider cracks have opened up in the Lee edifice.

Opposition on the rise

The Singapore Workers’ Party has progressively emerged as a coherent and credible rival to the PAP. Following the 2011 elections, this center-left party now holds 9 of the 99 seats in the national parliament. The PAP only won 60% of the vote in these elections, its lowest ever score.

In tandem with the rise of the Worker’s Party as an alternative political force, public opinion is becoming less compliant. Jobs, migration, housing and congested infrastructure top the list of popular concerns. Citizen activist groups are pushing to preserve urban heritage against the never-ending onslaught of new construction.

A 2013 White Paper on population made lots of waves. It proposed an increase in Singapore’s population from today’s 5.3 million to possibly 6.9 million in 2030.

With a fertility rate of 1.3 children per woman, even less than Japan, much of the increase would come from immigrants. They already account for almost 40% of the population. This provoked a strong negative public reaction. Thousands of protesters then assembled at Speakers’ Corner in Hong Lim Park to express their displeasure.

The sound of silence

There is also much “silent protest” in Singapore. Taxi drivers, tour guides and many others make jokes about the Lee Kuan Yew system, as well as about the man himself and his seeming immortality.

He is now 90 years old. When he finally departs the scene, the loss of moral authority and historical legitimacy will test his successors.

Despite the veneer of meritocracy, the Lee-system seems a fairly closed shop. In a recent book, Michael Barr has uncovered Singapore’s complex and covert networks of power.

He argues that they are a deliberate project initiated and managed by Lee Kuan Yew, designed to empower himself and his family. Barr identifies the crucial institutions of power, like the country’s sovereign wealth funds and the government-linked companies.

Qualitative indicators also suggest that something is wrong in Singapore’s society. According to one survey, more than half of Singaporeans would emigrate if they could. Already about 300,000 live overseas, usually the young and well-educated.

Other surveys suggest that Singapore is the most emotionless country in the world, and that Singaporeans are less likely to feel positive than any other people in the world!

From serfs to citizens

The basic issue is that Singapore is not a real country. It is a family enterprise, a family empire, which is masquerading as a state.

Singapore’s residents are more like modern feudal subjects. They increasingly want to become citizens. Towards the end of my recent visit, I asked a professor of politics “What do these ungrateful Singaporeans really want?”

“A less mean version of Lee’s PAP,” he retorted. “Does the PAP have it in them? That is less sure.”

How all these contradictions play out over the coming years will be fascinating. The next elections are as soon as 2016.

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The World Bank: The Data Gatherer That Did Not Gather Data http://www.theglobalist.com/the-world-bank-the-curious-story-of-the-data-gatherer-that-did-not-gather-data/ http://www.theglobalist.com/the-world-bank-the-curious-story-of-the-data-gatherer-that-did-not-gather-data/#comments Wed, 23 Jul 2014 12:00:18 +0000 http://www.theglobalist.com/?p=29844 by Bernard Wasow

World Bank headquarters in Washington, D.C. (Credit: The World Bank - Flickr.com)The World Bank subtly dodges debate about income inequality in rich countries.

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by Bernard Wasow

World Bank headquarters in Washington, D.C. (Credit: The World Bank - Flickr.com)

Any good servant knows to steer clear of family fights. Why should this be less true of public servants?

So it is that the World Bank – which serves the countries of the world – appears to be avoiding one of the most hotly contested political economic issues in the rich countries: trends in income distribution. It is doing so not by misrepresenting information, but simply by failing to report it.

One might have expected the World Bank, which ably assembles and organizes so much economic and social data, to help shed light on the question of whether income distribution steadily is becoming more unequal.

After all, careful study of historical tax data bearing on this question has made an unlikely international superstar of a modest French economist, Thomas Piketty.

It may be somewhat surprising, therefore, to learn that World Bank data provided no more than a single observation of income distribution for any of the richest countries, from 1960 to 2013.

Handling the truth

The data in question are the shares of total income of various deciles and quintiles of the population. The World Bank compiled those data from the results of household survey data provided by member countries. As with other data series, the quality and quantity of income distribution data tend to improve as countries get richer.

If we line countries up by per capita income, the World Bank steadily provides more and more income distribution data as income rises. This is normal, as poorer countries generally have weaker data gathering capacity than richer countries and the World Bank relies on data provided by members.

The steady improvement in the availability of income distribution data works well – until it comes to an abrupt stop when income rises above about $20,000 (roughly the income level of Estonia).

In fact, the World Bank database contains not a single country with income higher than Slovenia’s ($26,000) with enough information to calculate a change in income shares (of course, a minimum of two observations are needed to look at changes).

Among the countries thus conveniently excluded from this potentially embarrassing exercise are Greece, New Zealand, Korea, Spain, Italy, Iceland, Japan, France, the UK, Ireland, Finland, Belgium, Australia, Germany, Bahrain, Canada…and so on (the total number of these richest countries is 35).

An odd silence

Mind you, it is not as though the World Bank’s standard operating procedure is to report only one year’s worth of income distribution data per country.

Indeed, for the 189 countries with per capita income data, there is an average of 4.6 observations of income distribution per country. That is, if you drew the name of one of these 189 countries at random, you could expect to find income distribution numbers for 4 or 5 years before 2013.

If and when those data points are available, you can then ask some questions. Is there evidence of a trend in income distribution? Has inequality been rising?

If the country you drew by chance turned out to be Brazil, you would find 26 years of income distribution data. For Poland, it is 19 years of data, for Thailand 14 and Turkey 11.

All told, of the 189 countries in the World Bank database, 107 have income distribution observations for at least two years, so at least one change in income shares can be observed.

All data, no observation

Applying the same percentage to the 35 richest countries, we would expect to find 20 of them with two or more years of data. However, such wealth obviously has its data-obscuring advantages. Not one of these richest 35 countries in the World Bank database has more than one year of data on income distribution.

Although there are countries at every income level that lack income distribution numbers, there is a definite pattern to the availability of data.

Between very low income (per capita income corrected for purchasing power) and income in the $15,000-$20,000 range, richer countries tend to have more observations of income distribution than poorer countries.

For example, countries with income of about $1,000 per year (Rwanda’s level) average about three years of numbers for income distribution (three observations).

Countries with income of about $10,000 (Jordan’s level) average about seven observations — and countries with income about $15,000 (Chile’s level) average nine observations of income distribution.

But then, above an income of about $20,000 (Estonia), income distribution data drop off sharply. After we have moved beyond Latin America’s and Eastern Europe’s income level, we are offered no more than one observation for income distribution for each of the richest OECD countries and no observations for small, resource rich countries.

Mum is the word

The figure below shows the moving average of the number of observations of income distribution per country for the 189 countries arranged by per capita income. To the right of the vertical blue line, there are no countries with more than a single observation.

wasow-chart-income

What are we to make of this? It is not as though individual rich countries from which data are compiled lack income distribution numbers.

Indeed, the United Nations University offers an income distribution database with many observations for rich countries, including numbers from government sources.

Certainly, there are always good reasons to view data skeptically, but this is true of all countries and of virtually every data series collected and reported by the World Bank.

No, the availability of data is not the problem. I think that the failure of the World Bank to provide income distribution data that would inform the discussion of income distribution trends in the rich countries is simply a convenient way for the World Bank to avoid fueling controversy that could come back to burn it.

Researchers would use World Bank data to bolster claims about growing income inequality in many rich countries — and to advocate policies that bear not on poverty alleviation but on fairness. This is a policy debate the World Bank does not want to be associated with.

In short, what we are dealing with here is an implicit demonstration of who is upstairs and who downstairs in the world economy. Good servant that it is, the World Bank may inform on workers and tradesmen, but for the big guys upstairs, mum is the word.

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The New (Dis)Order of the Middle East http://www.theglobalist.com/the-new-disorder-of-the-middle-east/ http://www.theglobalist.com/the-new-disorder-of-the-middle-east/#comments Tue, 22 Jul 2014 05:30:41 +0000 http://www.theglobalist.com/?p=29807 by Einat Wilf

Credit: PeterPhoto123 - Shutterstock.comTo understand the Middle East today and its future, the Europe of the 19th century provides intriguing parallels.

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by Einat Wilf

Credit: PeterPhoto123 - Shutterstock.com

To understand the Middle East today and its future course, the Europe of the 19th century provides some intriguing parallels. The shared characteristics of the two places and centuries shed light on the magnitude of transformation that the Arab world is undergoing. Reflecting on these parallels provides cause for both hope and fear.

Amidst this bloody fight, a new architecture of the Middle East can be detected. As the Cold War’s domination of the geopolitics of the Middle East recedes, a new architecture is emerging, reminiscent of that of Europe in the 19th century.

It is an architecture of mid-sized powers engaging in ever shifting alliances and covert and overt struggles to expand and protect their spheres of influence. Like 19th century Europe, there is a strong connection between countries vying for influence and the cohesiveness of their national, ethnic, sectarian and religious identities.

It is no accident that the top mid-sized regional powers which have not had a history of being subject to the Ottoman Empire – Turkey, Iran and Israel – are those that enjoy the most distinct sense of national identity.

The confident three — Turkey, Iran and Israel

Turkey, for obvious reasons, already went through the difficult process of establishing itself as a country with a distinct identity. As the heir to the seat of the Ottoman Empire, it is a natural regional power in the areas that were previously under imperial control.

While there is still much to be done in terms of greater openness, democratization and national expression for minorities, Turkey’s regime and coherence are only marginally threatened by the delayed “Ottoman Spring.” Turkey is therefore well placed to play the role of a regional power.

Iran was never part of the Ottoman Empire. In addition to its distinct Islamic Shiite identity, it has a historic Persian identity that provides it cohesion and coherence.

While its regime is highly vulnerable to the ideas of the “Arab Spring,” its national identity is less so. Iran’s national identity seems stable even though there are minorities that might demand greater voice, such as the Azeris or the Kurds.

Even if Iran’s regime were toppled, its borders and national coherence are likely to remain intact. Coupled with its vast resources and power, Iran is also well placed to play the role of a regional power. It has clear interests in expanding its sphere of influence, particularly when it comes to the Shiites of the Middle East.

Israel’s case

Israel is the third non-Arab regional player in the region. Israel has been traditionally viewed as a foreign and colonial insert in the Middle East. It is seen as even more an outcome of the colonial carving of the Ottoman Empire than countries such as Jordan, Iraq and Syria.

However, the historical connection between the Jewish people and their land points to a possible transformation of Israel and the story of Israel in the context of the “Arab Spring.” In this new context, the perception of Israel in the Middle East might change from that of a colonial foreign insert to the national expression of the Jewish people, indigenous to the region.

The Jewish people began their struggle for national expression with the European “Spring of Nations,” which is where they were located in the 19th century. However, given that their national aspirations were always directed to the Land of Israel, they are more properly thought of as a nation that arose to demand its self-determination in the Ottoman context.

Given that “Spring of Nations” came to the lands of the Ottoman Empire more than a century and a half later, it is only now that the Jewish people can hope to become accepted as an indigenous people in the lands of the Ottoman Empire.

Their unique story can now be understood as straddling both the European Spring of Nations and the “Ottoman Spring.” The idea of Jewish self-determination was born in Europe, but it could only be realized in their ancient homeland, an area previously under Ottoman control.

The self-determination of the Jewish people then finally comes of age and could become accepted and locally integrated with the “Ottoman Spring.”

Israel’s democracy and power mean that it is not domestically vulnerable to the “Arab Spring.” At the same time, the acceptance of Israel as a legitimate actor in the Middle East has been the greatest obstacle to its ability to be an integral, and certainly an overt, party to alliances in the region.

If this negative perception changes, Israel might find itself openly accepted as a legitimate regional power.

The confused ones: Egypt, Saudi Arabia

While the top regional powers in the areas previously under Ottoman control are non-Arab, among those in the Arab world, Egypt and Saudi Arabia are the most substantial players.

Egypt always enjoyed distinct cohesive character given its identity as a nation and people that date back to pre-Islamic times. Saudi Arabia, while an outcome of the artificial carving of the Ottoman Empire, always enjoyed heightened status as the historical seat of Arab identity.

However, unlike Turkey, Iran and Israel, the ideas and forces of the “Arab Spring” all present substantial challenges to the regimes of Egypt and Saudi Arabia. These regimes therefore need to invest far more of their efforts in preserving domestic stability, while also seeking to play a substantial regional role.

One more regional power worth mentioning is the new “Czarist” Russia. This is no longer the Soviet Union superpower player of the Cold War era.

As the Cold War-era architecture of the Middle East has receded and the Soviet Union disintegrated, Russia has returned to its traditional place as a regional actor in the Middle East. Russia is now again a mid-sized power protecting its regional interests, and seeking to expand and defend its sphere of influence in the area that is in its immediate vicinity.

All of these regional powers appear to be engaging, to one extent or another, in a web of shifting alliances, overt and covert, to protect their immediate interests and to prevent as much as possible any threats to the stability of their regimes.

While these alliances have not yet coalesced into official treaties with memorable names such as “The Triple Alliance” and the “Entente Cordiale,” they already seem to be playing traditional sphere-of-influence regional politics that would put the Europeans of the 19th century to shame.

Shakier “nations” yet

Torn between these regional players and, notably, within themselves are Syria, Iraq and Libya, while other countries are in danger of being torn apart as well.

The borders of these countries do not match those of the peoples within them. They are still in the throes of bloody battles between the old identities of sect, tribe, religion, ethnicity, as well as the new identities created in the wake of World War I.

The European experience, especially with respect to Germany and Italy, demonstrates that the battles in Syria and Iraq could have a profound impact on reshaping the geopolitical architecture of the region, especially if coupled with extremist ideology.

As the Shiite parts of Iraq are becoming part of the Iranian sphere of influence and Iraqi Kurdistan establishes itself as a separate nation-state, could the Sunni parts of Iraq and Syria join together to truly become the “Islamic State of Iraq and Syria/Levant?”

Should the goal of the Al Qaeda-affiliated Islamist jihadists in Syria and Iraq to create an Islamic nation in the lands of Iraq and Syria/Levant be taken seriously?

Could the Islamic State of Iraq and Syria/Levant, if established one day, be the Arab equivalent of Nazi Germany? Could it be the newly formed state in the region’s midst based on a radical and murderous ideology?

This is only part of the litany of questions now seizing the Middle East, with uncertain – and potentially tragic – outcomes, much as was the case in the first half of Europe’s 20th century.

Editor’s note: This article was originally published in the Spring 2014 issue of Turkish Policy Quarterly (TPQ). This is an abbreviated version of the piece. To read the full article, please visit Turkish Policy Quarterly.

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Of Textiles and Tariffs http://www.theglobalist.com/tariffs-textiles-ttip/ http://www.theglobalist.com/tariffs-textiles-ttip/#comments Mon, 21 Jul 2014 16:00:06 +0000 http://www.theglobalist.com/?p=19648 by Sabine Muscat

(Credit: Onizu3d - Shutterstock.com)Lower tariffs could make quite a difference for the high-end fashion industry and for brand-conscious fashionistas.

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by Sabine Muscat

(Credit: Onizu3d - Shutterstock.com)

Another negotiating round on the presumed road to the Transatlantic Trade and Investment Partnership (TTIP) is upon us. Time to focus on some practical, real-life concerns.

Europeans living on the other side of the Atlantic are used to friends arriving with empty bags to buy Levi’s jeans, American Apparel shirts or Red Wing work boots, a brand that boasts of handcrafting its products in Minnesota or Missouri.

Many Americans spend their European vacations scouting for leather footwear and designer suits, not just because of the bigger selection but also because of the cheaper prices. Lovers of Italian or French luxury brands like Prada or Louis Vuitton know all about this. A Hugo Boss men’s suit costs upwards from $800 in the U.S. whereas prices start below 500 Euros in Germany.

It is true that most apparel sold in the U.S. or in Europe today is made in places like China or Vietnam. And a staggering 99% of shoes sold in the U.S. are produced overseas, according to the Footwear Distributors and Retailers of America.

Yet, the prospect of phasing out transatlantic tariffs gets more than a shrug from the industry.

“Only 3% of garment imports come from Europe”, says Julia Hughes from the U.S. Association of Importers of Textiles and Apparel who also admits to go on shoe buying sprees during trips to the other side of the Atlantic. But the volume is big enough – and both sides would benefit from a more unified transatlantic market.

This is true for the harmonization of standards – country of origin labeling to washing instructions and safety tests were discussed at the last round of TTIP negotiations in May. But the sector would also benefit from a more classic approach to a trade agreement – the lowering or abolition of tariffs.

Low-hanging fruit?

Tariffs are generally considered the low-hanging fruit in the complex free trade negotiations between the U.S. and the EU. Already low on both sides of the Atlantic, their planned elimination does not promise huge gains in economic growth.

While average tariffs in transatlantic trade are extremely low already (3.5% on average on the U.S. side, 5.2% in the EU), shoes and textiles are a notable exception. According to the European textile federation Euratex, the EU imposes maximum duties of 12% for American made bed linen.

In the U.S., the rates go even higher: up to 19.7% for knitted wool shirts for women or 28.2% for man-made fiber overcoat, 32% for man-made fiber t-shirt. French clothing exporters face tariffs of up to 40% when they sell their products in the U.S., according to EU trade commissioner Karel De Gucht.

American designers who cater to the luxury market, on the other hand, suffer from high duties on fabric imports from Europe. According to industry representatives, New York based groups alone pay $30 million a year for fabric imports.

Reducing these costs would potentially leave the U.S. fashion industry more money for hiring and investing in technology. Or, at least equally likely, simply more profits.

In a similar vein, Matt Priest, the spokesman for the Footwear Distributors and Retailers of America, claims that American shoe importers could invest more and create more jobs if the $54 billion industry were relieved of $2.3 billion duties a year. “And we are also anxious to lower the burden for our consumers”, he adds.

Lower prices: The lure of travel

But what the consumer would really get out of all this seems less clear. After all, “it is up to the retailers and distributors to decide if that reduction in cost will be reflected or not in the sales price”, writes Luisa Santos, the spokeswoman for Euratex.

There are signs that this will not necessarily be the case. LVMH, the owner of the brand Louis Vuitton, and Italian shoemaker Salvatore Ferragamo recently raised their retail prices in Europe to match the sums their customers from overseas (most of them from China) were willing to pay.

But what if the prices for Levi’s jeans and Hugo Boss suits really were to converge on both sides of the Atlantic? For some of us, this outcome might be the worst of all. After all, turning the U.S. and the EU into one big duty free zone would certainly take away some of the fun of transatlantic traveling.

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Will China be Able to Curb Adolescent Suicide? http://www.theglobalist.com/will-china-be-able-to-curb-adolescent-suicide/ http://www.theglobalist.com/will-china-be-able-to-curb-adolescent-suicide/#comments Sun, 20 Jul 2014 13:00:20 +0000 http://www.theglobalist.com/?p=29411 by César Chelala

(Credit: hxdbzxy - Shutterstock.com)Suicides rates soar in the face of China’s transformation. What can China do to reverse the trend?

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by César Chelala

(Credit: hxdbzxy - Shutterstock.com)

Suicides among youth have been a significant problem in many countries, but the number and the reasons for those happening in China are even more a cause for concern.

In the last few years, several studies have shown that adolescents and young people in China, Japan and other Asian countries have a large number of psychological problems that may lead them to commit to suicide.

Will China –and the other Asian countries- be able to curb those suicides that are becoming indicative of a society in crisis?

A budding suicide crisis

Although suicide is the fifth-leading cause of death in China, it has become the leading cause of death among young people. It is estimated that 287,000 people –- or one every two minutes — commit suicide every year in China.

Ten times that number attempt it — but are unsuccessful, according to the Chinese Center for Disease Control and Prevention. China now has one of the highest suicide rates in the world.

In 1897, Emile Durkheim, a French sociologist, was among the first to notice that there is a higher suicide rate among those individuals who are not socially integrated and didn’t have social support.

His observations may apply to many Chinese students who attempt suicide. Many of these students come from the interior to the country’s main cities and lack the support of their families.

Grim and stressful realities

There are several causes for adolescent suicides. In many cases, suicides relate to fear of performing badly in exams. Some experts believe that the one-child policy could also explain the rise in adolescent Chinese suicides. Because they grew up with no siblings, they are not used to dealing with difficult interpersonal problems.

According to Lin Kunhui, founder of Life Education and Crisis Intervention Center in Shanghai, young people face tremendous amounts of stress and have very few people to ask for help in solving their problems. In many cases, they confront simultaneous pressures from work, study and personal life.

Despite the extraordinary performance of the Chinese economy, many young people cannot find jobs and become depressed, contributing to the high number of suicides. Many graduates are unable to find jobs a year or more past graduation.

This is particularly problematic in rural areas, where people are poorer than in the cities and do not have good access to already scarce mental health services.

In addition, in rural areas there is abundant use of pesticides, which many people use to commit suicide. According to statistics from the World Health Organization (WHO), 58% of people who commit suicide in rural areas use pesticides to do so.

Home cooked pressures

The high number of suicides among Chinese adolescents result mostly from the extreme pressure from their families to perform well in school and excel in their studies. In addition to those pressures, teenagers experience feelings of isolation and loneliness which make them prone to attempt suicide.

Many young people kill themselves because they cannot bear the heavy pressure of the test-oriented education system, according to findings of the 2014 Report on China’s Education, also known as the Blue Book of Education.

In China, the school day can last as long as 12 hours. In many cases, Chinese students return to two to four hours of homework after finishing school. Chinese parents exert strong pressure on their children to perform well at school, strictly enforcing the demands of schoolwork on their children.

Identifying and assisting

Is it possible to lower the high suicide rate among Chinese teenagers, given the complexity of the problem? I believe so, if parents, teachers and friends can pick up signs of distress among the young. Certain characteristics –- such as depression, conduct disorders and situational crises — are associated with increased risk of suicide.

Young people may have some particular behaviors that indicate their intention to commit suicide. Among those behaviors are changes of appearance and conduct toward their friends.

Others may also be making some final arrangements such as giving away prized possessions or making suicidal threats through direct or indirect statements.

Because children and adolescents spend a substantial amount of time at school under the supervision of school personnel, school staff should be trained on the importance of risk factors and warning signs of suicidal behavior. At the same time, there should be increased communication among parents, teachers and school staff.

A good approach would be the creation of “Crises Response Teams” (CRT) made up of representatives from the students, the parents and the school administration, in charge of looking after students who exhibit behavior of concern.

In addition, students should have easy access to effective medical and mental health resources. Through a combined and comprehensive set of actions, China can effectively control what threatens to become a serious public health problem.

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