The Globalist http://www.theglobalist.com Daily online magazine on the global economy, politics and culture Thu, 29 Jan 2015 22:08:27 +0000 en-US hourly 1 Notes From Athens: The Syriza Policy Illusions http://www.theglobalist.com/notes-from-athens-the-syriza-policy-illusions/ http://www.theglobalist.com/notes-from-athens-the-syriza-policy-illusions/#comments Thu, 29 Jan 2015 07:00:28 +0000 http://www.theglobalist.com/?p=39443 By Holger Schmieding

The debate in Greece is too caught up on four major delusions.

Credit: Frank Dürr - www.flickr.comThe debate in Greece is too caught up on four major delusions.

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By Holger Schmieding

The debate in Greece is too caught up on four major delusions.

Credit: Frank Dürr - www.flickr.com

Just back from Athens, I feel almost compelled to shout it from the rooftops: It’s not about the debt. It’s the economy, stupid (to borrow a phrase from James Carville)!

In Athens, many of the discussions revolve around the debt: How much will Europe cut the burden now that Greek voters have asked for it? Or: Wouldn’t it be cheaper for Europe to write off half its claims on Greece than to risk losing it all?

The four delusions

The new Greek government and its voters are in for a reality shock. The debate in Athens seems to suffer from four delusions.

Delusion 1: It’s about the debt, not the economy

Now at 175% of GDP, Greek public debt is very high. But Europe and the IMF have already seen to it that the debt is bearable with low interest rates, long maturities and generous grace periods.

The European promise remains: If Greece stays the course of supply-side reforms, the debt service will not suffocate Greece. In return for reforms, Europe can and will offer even lower interest rates and longer maturities. Asking for a cut in the nominal debt is pointless.

For the sake of argument, assume that the creditors were to write off half the Greek debt and return Greece to full capital market funding thereafter.

On its remaining debt of 88% of GDP, a post-default Greece not eligible for ECB purchases and pursuing Syriza-style policies might soon have to pay more interest than the 4% of GDP Greece actually paid on its debt in 2014. Bad deal.

The massive Greek debt is mostly the result of deep-rooted structural problems such as an overstaffed and inefficient public sector, an overregulated private sector and an inflexible labor market.

If Greece is a bad place to invest and create jobs and if its bureaucracy and tax system scare away businesses, Greece cannot get the sustained growth and tax revenues it needs.

If Syriza indeed reverses many of the useful, if incomplete labor market and public sector reforms of the Samaras government and stops privatizations, it is difficult to see how creditors could ever agree to lend more money to a borrower who is destroying its potential to grow and service its debt.

A large-scale reversal of pro-growth reforms is a much bigger breach of Greece’s obligations to its creditors than a modest fiscal overshoot. It’s about creating a competitive economy for the long run, not about the debt or a fiscal number for one year.

Delusion 2: It’s all about Greece

Greece matters. Europe would love to keep Greece in the euro and on the path to growth. Europe is happy to fund the process, but only if Greece keeps laying the foundations for sustained growth. Tough love means that help is conditional.

Remember the bigger European reform picture: In the early 1980s, Thatcher reformed the labor market and other sclerotic institutions in Britain. In the early 1990s, Scandinavian countries overhauled their welfare systems. From 2003-2005, Germany cured its structural malaise through labor market and welfare reforms. It was tough and unpopular at the time, but it worked.

The grand European project now is to keep Spain, Portugal and Greece on the reform track, while nudging big Italy and France to follow suit. This is how Europe as a whole can become as competitive in a globalized world as Sweden, Switzerland, Germany and Slovakia already are today, to name just a few.

Seen from Brussels and Frankfurt, from Berlin, The Hague and Tallinn, this is about Madrid, Rome and Paris, much more than about Athens.

Funding lunacies — such as reregulating the Greek labor market, creating a bad precedent and rewarding a populist who reneges on his country’s obligations and makes it less rather than more competitive — is not part of the plan.

That the German ultra-left (Die Linke) is applauding Syriza’s every move is as telling as it gets: After all, they are the legal successors to the Communist party that had built the wall and driven East Germany into the ground until it collapsed. Not a good company to keep.

Delusion 3: Ignore the IMF, outvote Berlin, send the troika packing

Greece would like to “negotiate” with Europe about the debt, seeking allies to outvote the pesky creditor countries. Well, try to “outvote” your bank next time you ask for a new loan while threatening to default on your old mortgage. Good luck.

Europe has time and money, a Greece mired in uncertainty has little of either. Nothing can happen, not even a simple extension of the end-February deadline for the pending troika review of Greek progress, unless the parliaments of creditor countries agree. Reform reversals and schmoozing up with other populists such as Spain’s Podemos won’t exactly help.

The IMF has its serious flaws. It did insist far too much on short-term austerity rather than long-term structural reforms initially. But that is history. It is hard to believe that the parliaments of creditor countries would grant Greece any new loan unless the IMF as part of the full troika has certified beforehand that Greece is on the right track.

And could Greece really boot out the troika, of which the ECB is part, and still expect the ECB to continue preventing a potential collapse of the Greek banking system through emergency liquidity assistance for long? Love it or hate it, Greece has to deal with the only willing lenders it has.

Delusion 4: Southern comfort

According to its new finance minister Yanis Varoufakis, Greece wants to work with Italy, Spain and Ireland on a new growth strategy for Europe. Making some comments against “austerity” may be easy.

But would the governments in Spain and Italy really want to support Prime Minister Tsipras, only to encourage their own populist opponents at home who have thrown in their lot with Syriza?

And being able to fund themselves at record low market rates, would Spain and Italy want to send their spreads over Germany soaring by joining a debate on debt write-offs? Not very likely.

The risk to watch: Political contagion

My best bet remains that, facing reality, Tsipras will eventually get real. A patient Europe will offer face-saving compromises. As a wily and power-conscious operator, Tsipras could still do a Lula-style U-turn instead of ending up in history books as the prime minister who broke his country.

But it could be a close call. And it could well be a rough ride for Greece first before Syriza bows to reality. If worst came to worst in Athens, and I still believe it won’t come to that, Europe would rather cut its losses than fund the perennial basket case into which an overdose of populist policies could turn Greece.

The risk of accidental Grexit is real, at 35%, well below par — but still serious. Fortunately, Europe would have the defenses it needs to contain the potential financial and economic contagion.

The real issue to watch in Europe is the risk of political contagion. Will the likely clash between Syriza and reality deflate the allure of populists in Rome, Madrid and Paris or stoke the populist anger against the indignities of real life? We bet that reason will prevail despite the occasional hiccup.

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Greece: Playing the Russia Card Against Europe? http://www.theglobalist.com/greece-playing-the-russia-card-against-europe/ http://www.theglobalist.com/greece-playing-the-russia-card-against-europe/#comments Wed, 28 Jan 2015 19:41:20 +0000 http://www.theglobalist.com/?p=39446 By Holger Schmieding

If Greece wants to play the Russia card, it has some questions to consider first.

Credit: Ed Yourdon - www.flickr.comIf Greece wants to play the Russia card, it has some questions to consider first.

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By Holger Schmieding

If Greece wants to play the Russia card, it has some questions to consider first.

Credit: Ed Yourdon - www.flickr.com

Perhaps the weirdest story I heard during my visit to Athens was that the new government might even try to get bridge finance from Russia if Europe does not accept Syriza demands. In a way, Syriza is indeed schmoozing up to Russia:

1. Syriza chose the pro-Russian right-wing populists of ANEL, the Greek version of UKIP and AfD, as their coalition partner over pro-European Potami.

2. Just hours after taking office, Prime Minister Tsipras went to see the Russian ambassador on Monday.

3. The new foreign minister, Syriza left-winger Nikos Kotzias, comes with a pro-Russian reputation.

4. Greece is now threatening to veto new EU sanctions against Russia.

A Russian angle could theoretically complicate matters. That would propel the Greek issue very much into the realm of geopolitics, in which concerns far beyond those of debt dynamics, economic growth and structural reforms are paramount.

Even a distant threat that Greece might leave NATO and sell a naval base to Russia would be a serious matter not just for Europe but also for the United States.

So perhaps Greece playing around a little with a Russian card could get Europe and the United States to focus on geopolitics rather than fiscal bean counting?

And with many in the United States – like the IMF – apparently believing that Greece needs a cut in its nominal debt burden anyway (solely at the expense of Europe, of course), might that strengthen the hand of Greece in its demands for a big debt-write off?

Well, it ain’t that easy. Before Syriza plays a supposed Russian card, it will need to consider three questions:

1. Would Russia pay up?

When Cyprus desperately tried to get money to avoid asking for a European bailout, its then-finance minister came home from a begging trip to Moscow for a couple of billion euros on March 19, 2013 — completely empty-handed. And that was when Russia was still awash in oil money.

2. Could Russia pay up?

The problem in Greece is not one of plugging a short-term fiscal gap of a few billion euros. Even a Russia in deep recession could perhaps cough up that amount now that Putin might want to go for any geopolitical advantage, after having wrecked his relations with Europe and the United States by invading parts of Ukraine.

But the Achilles heel of Greece is the need to backstop the banking system. According to Kathimerini, the emergency liquidity assistance for Greek banks as authorized by the ECB had reached a peak of 135 billion euros at the time of the Greek repeat election in June 2012 before then falling back to zero by May 2014.

That is a big number. The conclusion is obvious: The ECB is the only possible backstop for Greek banks in the euro. If Greece decided to renege on its obligations to Europe and the IMF and turn to Russia instead for a small bridging loan, ECB support for Greek banks would have to stop. Put differently, a Russian loan would not help Greece at all.

3. What would Greeks say?

While some at Syriza may indeed suffer from Soviet nostalgia, perhaps believing that Putin’s version of the old Comecon would be preferable to the European Union, this is not what Greek voters were led to expect.

For the sake of argument, just suppose that Greek bank customers would one day wake up to learn that their deposits are now backed by the Russian rather than the European Central Bank.

Would they take that quietly? Or might that spark the very run on banks which the knowledge that there is a backstop is supposed to prevent?

The double-populist coalition of Syriza and ANEL, beyond their innate inclination for a pro-Russian line, may occasionally toy with the idea of playing a Russia card.

But they would be toying with a key national interest. Greece sits in an exposed corner of Europe, close to war-torn regions such as Syria and Libya and next to a big neighbor, Turkey, of which it is still a little afraid.

To exchange wealthy and powerful allies, Europe and the United States, for a Russia that is visibly crumbling under its economic incompetence, would not be a wise choice. Chances are that Greeks would not let Syriza-ANEL get away with that.

Greece needs fresh money and a reliable backstop. It can get that only from Europe and the IMF. Flirting with Russia won’t help Greece secure better terms from the only realistic lenders it has.

And as to a Greek veto against potential new sanctions against Russia, yes, that would also irk Europe a bit. But Europe has all the lawyers it needs to find a way around that if it really has to.

When UK Prime Minister Cameron vetoed the Eurozone’s new fiscal pact in December 2011, it was adopted nonetheless by a coalition of the willing (25 out of 27). Europe can be quite flexible when it has to get around attempts to obstruct its greater plans.

4. Could China be an alternative to Russia for Greece?

Unlike Russia, with its gradually dwindling reserves that are badly needed to back up to foreign-currency debt of its flagging companies, the Chinese have foreign exchange reserves galore, a full 3.8 trillion.

Well, perish the thought. The perennial rumor that China might save Greece by buying its bonds first made the rounds just before Greece crashed in early 2010.

China wants hard assets, not soft bonds. It has invested in Greece’s Piraeus harbor.

Learning that the new Greek government, as one its very first acts, just cancelled the pending privatization of a further part of the harbor, which China’s Costco had been slated to buy, does not exactly make it likely that Greece can strike a deal with the hard-nosed state capitalists of China.

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Wishful Thinking About Poverty in America http://www.theglobalist.com/wishful-thinking-about-poverty-in-america/ http://www.theglobalist.com/wishful-thinking-about-poverty-in-america/#comments Wed, 28 Jan 2015 07:00:22 +0000 http://www.theglobalist.com/?p=39325 By Stephan Richter

It takes determination not to see the facts on U.S. poverty for what they are.

Michael Rosenquest / flickr.comIt takes determination not to see the facts on U.S. poverty for what they are.

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By Stephan Richter

It takes determination not to see the facts on U.S. poverty for what they are.

Michael Rosenquest / flickr.com

It is always intriguing to see an eminent conservative thinker get so hung up in his own empire of thoughts that he can’t see how he ends up undermining his own case.

A recent example is George F. Will’s “The Welfare State Mushrooms.” At the beginning of an all-Republican majority U.S. Congress, it is worth examining his argument, since it is designed to provide the sheet music from which all Republicans are meant to sing.

Mr. Will starts out his reflection with the ominous assertion that “America’s national character will have to be changed if progressives are going to implement their agenda.”

For a hyper-traditionalist and history buff like Mr. Will, this is a very quick way to run counter to the historical facts, in pursuit of claiming conservative thought as the one true American ideology of old.

Memo to columnist: The United States previously underwent a “Progressive” era. It lasted roughly from the 1890s to the 1920s and is associated with venerable Presidents such as Teddy Roosevelt, Woodrow Wilson and Howard Taft.

Given that prior episode of a clearly delineated historical period, America’s national character won’t have to be changed, just revert to where it once went before.

A rising tide of welfare?

Echoing a recent analysis by Nicolas Eberstadt, “American Exceptionalism and the Entitlement State,” Mr. Will also laments that “America today does not look exceptional at all.” The proof he sees in the data pudding is the rise in needs-based transfer payments throughout the land.

George Will’s lament brings to mind an old adage of John Maynard Keynes: “When my information changes, I alter my conclusions. What do you do, sir?”

The after-effects of the recent recession are certainly not felt in Mr. Will’s socio-economic circles, not least thanks to the Federal Reserve’s QE program, which boosted the stock market wealth of those happy few Americans with such assets in bulk.

The struggle down below

But even as the 2008 recession hit, the top 1% of Americans had already captured 23% of the national income, up from just 9% in 1976. Meanwhile, the average household’s annual income growth has been slowing with each recovery. For much of the 1980s, it was 1.7% a year, then 1.4% a year in the 1990s and then 0.2% from 2002 to 2007.

By the time the most recent recession arrived, median income growth had flattened for ordinary Americans so much in the “good” times leading up to it that they emerged on the other side in 2012 making 10% less money each year than they had made a full decade earlier.

No question, for those who have made it, America still looks and feels like the Promised Land. But there is a vast flipside to all that glory – those who are truly struggling. Supporting those in need is certainly something that a wealthy society like the United States can afford, especially considering the high moral self-perception the rich have of themselves in this land.

Bismarck’s concession

Mr. Will also helpfully explains that Europe’s social democracy advanced since the late 19th century in large part because of rigid class structures blocking upward social mobility. True.

But if even an arch-conservative militarist such as Germany’s Otto von Bismarck at the time saw the need to give workers health care, accident insurance and health insurance, one must wonder about one question: Why are 21st century Republicans in the United States still trying to prevent all Americans from having similar coverage?

That’s a thought worth pondering at some length, especially since German health care delivery, as it happens, is quite cost-efficient to this day – in sharp contrast to the U.S. case (wholly independent of Obamacare).

The United States, as Mr. Will continues to believe, relies completely on “upward mobility based on merit.” But that is exactly the factor that has changed.

A loss of economic mobility

Americans might be confused hearing this. But according to all relevant socio-economic indicators developed by the OECD – where the U.S. government has always played a strong hand in economic data management – there cannot be any doubt that U.S. excellence in terms of social mobility is a thing of the past.

If anything, the United States now excels on such 19th century, rigid European factors such as the self-replication of economic elites.

Of the OECD economies with income data similar to that of the United States, U.S. social mobility ranks near the bottom. There is a relatively high correlation (0.47) between the earnings of U.S. parents now and the subsequent earnings of their children as adults.

Neighboring Canada, for example, has a much lower correlation (0.19), indicating that poorer children are much more likely to become wealthy adults there than in the United States. It is as if the “American Dream” has migrated up north, to become a “Canadian Dream.” In the United States, in contrast, the rich kids stay rich and the poor kids stay poor.

Even the more famous (and more literal) form of U.S. mobility – moving freely about the land in search of better economic opportunities elsewhere – has almost come to a standstill.

Many Americans, unable to sell their homes owing to the continuing vagaries of the real estate market or fearful of leaving their employer-tied health plans without another job already lined up, are stuck where they are. They cannot simply set out across the plains to start a new life.

To avoid any misunderstanding: None of what has been said above means that truly talented people, including immigrants, cannot use the U.S. education and entrepreneurship system to strike it rich as the American Dream promised.

But the existence of that birth-advantage escalator for some individuals means that being wealthy is by no means just a question of talent and will power.

The welfare state fantasyland

Any highly developed society with vast pockets of wealth has its polar opposite – really poor people. And while Mr. Will and Co. don’t tire of beating the old dead “welfare state” horse yet again, they never mention that the abuses that once existed – and which they may well have been right to castigate a quarter century ago – were addressed.

That rightsizing of the welfare state, after all, was done by none other than Bill Clinton, a Democrat, from a humble background.

If there is a resurgence of the level of transfer payments to welfare recipients now, that is not due to any relaxation of the standards under which people qualify for welfare. (Indeed, the bar to obtain and keep benefits remains quite high.)

Nor is it the result of some sweeping cultural degradation foisted upon the good and hard-working American people by “progressives,” as Will ultimately insists. There is little to suggest struggling Americans have become newly enthusiastic about being compelled to seek help – including from the government – to make ends meet.

Rather, a re-growth of transfer payments is a pure function of some obvious and adverse economic developments.

It takes real will and determination not to see the facts for what they are.

Sadly, like Mr. Will, the new Republican Congressional majorities are more likely to operate on poverty theories grounded in such avoidances than to confront the challenges with real solutions.

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Modi’s India: A Reality Check http://www.theglobalist.com/modis-india/ http://www.theglobalist.com/modis-india/#comments Wed, 28 Jan 2015 07:00:15 +0000 http://www.theglobalist.com/?p=39406 By Stephan Richter

A double take on economic planning and dynamism in India.

Credit: narendramodiofficial www.flickr.comA double take on economic planning and dynamism in India.

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By Stephan Richter

A double take on economic planning and dynamism in India.

Credit: narendramodiofficial www.flickr.com

After all the hoopla and excitement of the Obama/Modi visit, it’s high time for a reality check on the real hurdles India faces, despite the announcements professing a new powerful partnership brought about by the visit.

Wrapping up a trip to India, with some rupee bills left in my pocket, I stopped by the airport bookstore. With their generally very rich offerings and low prices (no thanks to Amazon), bookstores are one of the delights of India.

In a rush to get to my departure gate, I scanned the bookshelves quickly and was glad to find a suitable title: “India 2020: A Vision for the New Millennium.”

It looked like just the book to buy in order to see how Indians, amidst all the Modi hoopla, are planning to get their country on the road for a brighter economic future. I quickly flipped through the pages – and decided to use up my remaining 500 rupee note (=$3).

Of course, I should have known the error in my ways. Who can seriously publish a strategy to remake an entire country by 2020? That doesn’t allow for a lot of time to execute the plan.

In my own defense, I can only say that Prime Minister Narendra Modi surely knows that he has no time to waste. Dynamism on economic reform is his overriding mantra.

Cracking the book open as soon as we were airborne, I soon discovered that the book, authored by A.P.J. Abdul Kalam, a former President of India, had been published back in 1998 – soon to be two decades ago.

Persistent problems plague India

Even so, reading the book turned out to be a valuable exercise. For starters, the book felt very apropos in listing and detailing all the challenges India faces today.

For example, the book powerfully recites a minister’s comment that there are three classes of Indians – those who have ample access to fresh clean water, those that have it very intermittently – and those who never have it. That is still very true today.

The book’s various chapters address pertinent agenda items such as “Manufacturing for the Future,” “Technology Vision 2020,” “Health Care for All” and “The Enabling Infrastructure,” as well as the ever-green question of “Can India Become a Developed Country?”

The 300-plus page book, just like any good study, also contains a whole lot of tables and figures to detail the status of the problems, the goals and the means to get there.

And it had relied on the wisdom of many eminent Indians as chairpersons to spearhead the various task-forces established for the preparation of the study.

Impressive as the tome was (and still is), there is just one problem. Given the 1998 publishing date, obviously very little of what was laid out in the form of a solid national agenda back then has actually been accomplished since.

And therein lies a deeper message. A key part of the problem is the immensity of the task. Doing strategic planning in India is a daring act mainly for two reasons:

First, the endlessly complex Indian landscape, politically, ethnically, culturally and so forth.

Second, India also has to contend with backwardness in so many places that achieving real progress is a task that boggles the mind. It is said with good reason that India lives simultaneously in the 16th century and the 21st.

Insurmountable problems?

But for all its human talent and enormous human energy, achieving a real structural step forward in a nation that will soon have 1.6 billion people basically defies imagination.

China, a “tanker” of similar population size, benefitted from its top-down approach – but even given that, one finds a whole lot of confusion, overlap and lack of coordination there.

No doubt, with his personal dynamism, determination and track record, Prime Minister Modi is India’s best shot at making progress. All of these personal qualities were on ample display during Republic Day, which this year included U.S. President Barack Obama as a special guest.

However, since independence, India has never suffered from a lack of planning. In fact, the planning dimension has perhaps been its defining feature since the days of Nehru. What has been in short supply by comparison is the ability to execute.

The comparison to the U.S. economy is instructive in this regard. Both countries feature a very litigious business culture, which can impair meaningful progress – only in India’s case the impairment is much starker still.

Support from the United States

Both countries also have strong federal systems, with states jealously protecting their independence and relative autonomy. That, too, makes the execution of sweeping national visions, no matter how necessary or well thought out, more difficult.

But all those who worry with good reason about the effects of political gridlock on the economic performance of the United States should take a look at India. The United States, with all the vested interests it has, is easily malleable virgin territory by comparison.

Mr. Modi is certainly aware of all that. His hope is that U.S. investors will seize the investment opportunity and help remake/modernize India.

He should think again. One current pet peeve of large U.S. corporations, as evidenced by both the ongoing TPP and TTIP negotiations, is the investor-state dispute settlement mechanism.

Given that India’s courts are notorious on being decades behind on the settlement of land disputes large and small, that simply does not augur well for U.S. engagement — or that of other major nations, except perhaps China.

The latter outcome, however, flies in the face of the strategic rapprochement that the United States and India are seeking to perform right now, including the progress achieved during the Obama visit.

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Can Modi Copy Deng? http://www.theglobalist.com/can-modi-copy-deng/ http://www.theglobalist.com/can-modi-copy-deng/#comments Tue, 27 Jan 2015 07:00:56 +0000 http://www.theglobalist.com/?p=37925 By Sanjeev S. Ahluwalia

India's leadership needs to change, modeling China may be the answer.

Credit: Nisarg Lakhmani - www.shutterstock.comIndia's leadership needs to change, modeling China may be the answer.

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By Sanjeev S. Ahluwalia

India's leadership needs to change, modeling China may be the answer.

Credit: Nisarg Lakhmani - www.shutterstock.com

The thought of Modi, an original and innovative doer if ever there was one, copying anyone seems so implausible that the first instinct is to perish the thought at birth. But it is interesting to list how Modi could “do a Deng” for India.

Deng Xiaoping inherited a China wracked by the inefficiencies of Communism. Five decades of communism had deadened the innately entrepreneurial spirit of the Chinese people.

But Deng also inherited a China blessed by the upside of communism, which had created a highly disciplined party cadre across the country. This body of people is indeed much like India’s bureaucracy, except for one crucial difference: the Chinese Communist Party basically marches to a single drumbeat.

That “drummer” is the country’s President/General Secretary/Chairman – Deng then, Xi now. In contrast, the Indian bureaucracy is a discordant orchestra with multiple political conductors.

Mao built his Party cadres to weed out all those who either were, or could become, dissenters to his thoughts. Deng used the very same party to unleash the Chinese “animal spirits.”

And municipalities and provinces in China compete viciously with each other to achieve the highest growth numbers in a no-holds-barred, single-minded commitment to the bottom line.

Can Modi do a Deng for India?

Unlike China, India is a soft state. Our citizens live in an asymmetric economic and political environment. On average, our citizens are as economically deprived as the Chinese were.

Even so, they have also become accustomed to significant levels of personal and political freedom that are more typical of a developed democracy. Significant interest groups all receive a special package of subsidies tailored just for them.

That package may not be very substantial in an individual context. And it may be threatened by inflation and increasing public fiscal stress. The important thing is that it exists – as a symbol that the (Indian) state “cares.”

This has led to a significant problem in India’s domestic political economy. Citizens often vote as a reflection, or in anticipation, of subsidies received from whichever political party or government.

The only way of getting Indian citizens to vote beyond subsidies is to rapidly enhance their individual incomes to a level where largely stagnating subsidies no longer mean much. For this to happen, private sector jobs based growth is the key.

Global economy forces India’s hand

Unfortunately, the world economic environment is now even less supportive of inefficient economies than it was in the “go-go years” until 2008. India remains a hugely inefficient economy because of the high transaction cost of doing business, even for domestic entrepreneurs. Some of this is due to a very inefficient and decentralized but systemic corruption.

What can Modi do considering all these circumstances?

The most fundamental achievement he has to accomplish is to significantly increase transparency and depoliticize economic regulation.

This can be achieved by one simple step – transferring powers to autonomous, technical regulators. No other measure has the clear-cut potential to vastly reduce the space for India’s brand of “crony capitalism.”

That aside, five other fundamental institutional changes are required so that Team Modi can really target poverty, enhance growth and increase private sector employment.

First, Modi has to radically change the manner in which appointments are done at the Union government level in Delhi. The most important step is to adopt a merit based system.

The PMO – the prime minister’s office – urgently needs to have an HR department as an anchor. Its purpose is to identify and track potential officers for the senior-most positions, using a variety of indicators.

Mind you, it is said with good reason that the most powerful institution in China is the personnel office of the CCP.

Second, to improve the effectiveness of India’s government, while preserving its diversity, Modi has to ruthlessly prune the political executive and the bureaucracy of any and all elements who are, or have been, ineffective or complicit in corruption.

This is not about launching a witch hunt for the corrupt. It is more about identifying effective politicians and bureaucrats (of which individually there is an oversupply) and putting them in the right positions.

Uniting national leadership

Third, India is not governed from Delhi alone. That is why Modi has to corral those Chief Ministers of all states that are similarly inclined to pursuing a growth strategy.

Some, but not all, of these top elected politicians hail from BJP governments. But the real issue here is to form alliances, not for political survival, as was the practice in the past, but for national growth.

Indians must urgently realize that it is in the nature of network economies that they create spillovers across state boundaries. Businesses pay great attention to such opportunities, since they prefer to locate where land is cheap, labor is abundant and they can rely on a pre-existing infrastructure nearby.

Andhra Pradesh’s Chief Minister Naidu previously used this model of cross border spillovers from Karnataka and Tamil Nadu to his state’s benefit. Western UP and Haryana have similarly benefited from the economic dynamism of Delhi, remarkably irrespective of what their State Governments were up to.

This shows that it is actually not necessary to have every chief minister on Team Modi’s bench. Just getting 50% onboard, sprinkled across the country, can generate strong growth impulses nationally.

Fourth, the key administrative unit, where the proverbial rubber hits the road, are India’s 604 Districts in rural areas and around 3255 “towns.” It is at this level that all reform and change is implemented.

Unfortunately, this level of administration remains completely divorced from any direct responsibility by the Union-level government for achieving the three point agenda of growth, jobs and poverty reduction in their own areas.

This disconnectedness has to change if we Indians ever want to “Do a Deng.” This is not that difficult: China determines local targets for national objectives. We must do the same.

Deng he is not

Among many other steps that need to be taken in that regard, technical competence and gravitas need to be restored to district and local body administrations. Today, local “planning” is more about appeasement of local politicians rather than about achieving national objectives.

That is why every District and Town will also need base line studies of jobs, poverty levels and the size of the local economy. Their annual growth and poverty reduction targets and achievements must be available publicly to create a clear sense of accountability.

China’s system of promotions up to the next higher level of the administrative ladder is based on past performance and the gravity of the problems mastered. There is a lesson in that for India as well.

Prime Minister Modi does not have a centralized Party-based executive to rely upon, as Deng did. But, in keeping with India’s virtues and traditions, he can – and he must – forge a team of politicians, bureaucrats and non-government professionals who have a passion for lifting India out of poverty via economic growth and private sector jobs. Many are waiting for his call.

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The Obama/Modi Duo: A Summit of Democracies http://www.theglobalist.com/the-obamamodi-duo-a-summit-of-democracies/ http://www.theglobalist.com/the-obamamodi-duo-a-summit-of-democracies/#comments Mon, 26 Jan 2015 19:38:42 +0000 http://www.theglobalist.com/?p=39307 By Ronald Meinardus

President Obama’s visit to India has shown the world where his sympathies lie.

Credit: Ronald MeinardusPresident Obama’s visit to India has shown the world where his sympathies lie.

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By Ronald Meinardus

President Obama’s visit to India has shown the world where his sympathies lie.

Credit: Ronald Meinardus

It has not been a visit of the usual kind. Barack Obama’s three-day sojourn in India seals a shift in U.S.-Indian relations with wider regional implications. The new alliance is driven by personal motivation of the elected leaders of the two nations. That is quite extraordinary.

The new dynamism goes beyond the usual diplomatic niceties when, as was the case in New Delhi, the host tells the press, “Barack and I have forged a friendship. There is openness when we talk, and we also crack jokes.” Personal chemistry is an important factor in politics.

Of bigger importance is the understanding communicated by both leaders that it is in the strategic interest of the two biggest democracies of the word to move closer together.

A brighter future

For many Indians, Narenda Modi personifies the hope for a better future. Many associate his leadership with the aspiration that their country may move ahead and overcome mass poverty and underdevelopment.

Modi has a track record of a man who gets things done from his past as a three-term Chief Minister of Gujarat. There, his recipe of deregulation and economic reforms produced visible results.

Recent forecasts of the International Monetary Fund (IMF) and the World Bank have fueled fantasies of economic expansion in Indian minds. According to these reports, India’s economy would grow faster than China’s in 2016, making it the most dynamic of all major economies in the world.

It is crucial to view these numbers in perspective. While China’s share of the global economy is 12%, India accounts for little over 2%. At the same time, the juxtaposition of these figures highlights the enormous potential dozing in India with its 1.25 billion people.

Narendra Modi is determined to unlock this potential. The United States will assist him in this Herculean task. This has been one of the key messages of the summit meeting in New Delhi. U.S. companies have set an eye on India’s gigantic market. Thus far, however, many investors have been held back due to India’s often vexing regulations.

The approximately three million diaspora-Indians in the United States are another driving force behind the Indian-American entente cordiale. Their political impact has grown over the years and has been compared with the influence of the Jewish lobby in Washington.

Geostrategic goals

The Delhi summit of democracies dealt not only with economic issues. The upgrading of bilateral relations is first and foremost political – with wider geostrategic implications.

Clearly, Narendra Modi is the driving force behind the initiative. He wants India to advance from a regional power on the South Asian subcontinent to a respected global actor on the various international stages.

Washington is supportive of the high-flying aspirations of the Indian leader. In New Delhi, President Obama said that he is in favor of reforming the United Nations and that India deserves a permanent seat at the Security Council.

The Indo-American closing of ranks reflects a novel orientation of New Delhi’s foreign policy. Gone are the days of nonalignment and neutrality. With the end of the cold war and the disappearance of military blocks, the old policy of nonalignment has lost its basis.

In this environment, reorienting towards the singular global superpower is a calculated strategic option. In light of perceived hegemonic ambitions of China this strategic choice becomes even more attractive, according to many Indians – and they are joined by Asian neighbors with similar concerns.

Unruly neighbors

Many in the region view expansive, even expansionist tendencies of Chinese policies with growing anxiety. Open border disputes with Beijing stand in the way of harmonious Indo-Chinese relations.

Again and again, these disputes cause serious diplomatic disruptions, as seen during the visit of Chinese President Xi Jinping to India in September of last year.

New Delhi is taking pains not to present the invigorated strategic partnership with the United States as an anti-China-front. At the same time, India does not miss an opportunity to enhance political (and also military) relations with China’s neighbors, be it South Korea, the Philippines, Japan or Vietnam.

Washington is following this outreach with sympathy. A subliminal anti-China message is difficult to overhear as the U.S. and Indian leaders emphasize that the friendship of their two peoples is first and foremost based on a common set of values – the values of freedom and democracy.

There exists an unofficial alliance of Asian democracies, of which countries like India, South Korea, the Philippines and also Japan are regular and permanent members. The People’s Republic of China does not qualify for this group.

With many symbolic gestures of allegiance and friendship in India, President Obama has shown to the world where his sympathies lie.

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India: Getting Back to No. 2 http://www.theglobalist.com/india-getting-back-to-no-2/ http://www.theglobalist.com/india-getting-back-to-no-2/#comments Mon, 26 Jan 2015 07:00:45 +0000 http://www.theglobalist.com/?p=39268 By The Globalist

India used to have the world’s second-largest economy. Can it reclaim that position?

Credit:  Don Mammoser - Shutterstock.comIndia used to have the world’s second-largest economy. Can it reclaim that position?

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By The Globalist

India used to have the world’s second-largest economy. Can it reclaim that position?

Credit:  Don Mammoser - Shutterstock.com

1. In 1870, India had the second-largest economy in the world, according to historical GDP data originally compiled by the late economist Angus Maddison.

2. At this time, China had the world’s largest economy — approximately 40% larger than India’s.

3. India’s economy was in turn about 30% larger than Britain’s, India’s colonial occupier.

4. As such, India was the most valuable component of the British Empire.

5. A century later, in 1970, had fallen behind the heavily industrialized economies of the North America and Western Europe.

6. Beginning in 1991, India began dismantling strict government controls over the economy and privatizing state-owned enterprises.

7. These reforms have led to rapid economic growth and a rising standard of living.

8. By 2008, India’s economy had more than tripled in size since 1990.

9. As a result, India was the third-largest economy in the world — behind the United States and China and ahead of Japan.

10. As of 2008, India’s economy was only about a third of the size of the U.S. and Chinese economies.

The Upshot

While China may soon overtake the United States as the world’s largest economy, it may be many more decades before India can overtake the United States to regain the number two spot.

Data source: Maddison Project, University of Groningen. Analysis by The Globalist Research Center.

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On Top of India: The Neemrana Fort-Palace http://www.theglobalist.com/on-top-of-india/ http://www.theglobalist.com/on-top-of-india/#comments Sun, 25 Jan 2015 07:00:23 +0000 http://www.theglobalist.com/?p=37231 By Stephan Richter

A visit to one of the world’s most magical hotels.

Neemrana Fort (Credit: Wikicommons)A visit to one of the world’s most magical hotels.

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By Stephan Richter

A visit to one of the world’s most magical hotels.

Neemrana Fort (Credit: Wikicommons)

Disclosure: No, I was not comped by the hotel or paid by any interest or tour sponsor to write this.

Over the years, my various attempts to visit India had been stifled by the shenanigans of India’s visa bureaucracy. Eventually, I took solace in the Kafkaesque notion that India was really like a castle to which humble people like myself might never get access.

So it was only fitting that, when I finally made it into India (aka the castle), I would end up spending my first two days in India at a truly magical, yet castle-like place, the Neemrana Fort-Palace.

A friend had invited me to participate in his MBA classes on globalization at the nearby NIIT University. He suggested to stay at what he described as an interesting hotel nearby. That turned out to be the best tourism advice I have ever received.

I figured that spending a few days in “real” India, before spending a week in Delhi for conferencing, talks and interviews, would be the smart thing to do. The country, after all, is still overwhelmingly rural (with close to 70% of the population living in rural areas).

On the road to the castle

The Indian state of Rajasthan, where the university and hotel are located, is largest state by land area. It is located just to the southwest of Delhi and one of its poorest states measured by income.

After landing at Delhi’s international airport, I met up with a driver who took me to Neemrana, a village just off the Delhi-Jaipur highway, just over 100 kilometers away from the airport. It turned out that passing that distance was anything but a sprint.

Soon after leaving the airport, we drove for what seemed like a long while through Gurgaon, one of India’s biggest business hubs. Many of the world’s Fortune 500 companies have set up operations there.


Industrial park (Credit: Wikicommons)

However, for all the talk about modernizing India, the “Delhi-Jaipur Highway” wasn’t much of a highway. It is more of a patchwork of country roads with some really rickety stretches, although some sections actually resembled a modern highway. Even those, however, were a far cry from what one sees in China these days in terms of road surface quality and the like.

Air pollution was a big factor that morning as well. Haze was everywhere. Even though this was November – and hence no longer the hot season – the fields we saw off to the side of the highway were dry, if not arid.

Housing in the middle of nowhere

In between, there were some traces of industry. Strangely enough, there were housing complexes nearly everywhere – even in what seemed to be the middle of nowhere.


New residential buildings (Credit: Wikicommons)

Evidently, developers just snatch up whatever tract of land they can get their fingers on and build an assembly of high-rise apartment buildings. Their hope – it’s not a real business plan – is to sell to anybody who can come up with money for the steep down payment (usually in the 40% range).

The “build it and they will come” approach, of course, has disastrous consequences for traffic and the environment, given the disconnectedness to any kind of urban planning and/or public transportation, which mars these new abodes for India’s burgeoning middle classes.

Those developers do have plenty of chutzpah. They are fond of giving these building complexes, even though they rise from the dust, all sorts of fancy names like Green Paradise.

However, none of what one would imagine going along with that image, say, trees or grass, is visible. The world of make belief seems to be a key selling point.

As we rode along the highway, I also came across plenty of evidence of India’s public defecation problem. Male drivers, always at liberty to relieve themselves, would just stop their cars and trucks on the side of the road-called-highway – and urinate.

The haze didn’t get any better the further away from the airport we got, even well after we had entered rural Rajasthan. The reason is that the state’s government, in order to advance the economic fortunes of its people and increase the low level of per capita GDP, has set up industrial zones galore to attract manufacturing facilities.

A highway? 2.5 hours for 100 km

Then there were cows. We saw them ambulate rather freely around the roadside towns and villages we passed through on our way to Neemrana. They were stunning in their serenity, as if floating over and among the people, trucks and cars.


Cows graze the dusty grass off of the highgway (Credit: Wikicommons)

When we finally turned off the Delhi-Jaipur road, after what seemed like 2.5 hours (impressive for a 100 km stretch of “highway”), we finally approached Neemrana.

In the village, there were, of course, more cows – in all colors and running the entire gamut from skinny to very bulky.

Approaching the gate

But where was the famed hotel? All I had seen up to this point had reminded me of the more stressed out parts of Vietnam, another Asian country that is trying to catch the global manufacturing wave, with all the whitening-greying air pollution that entails.

The driver found some heavily weathered sign directing us to the Fort-Palace hotel. It seemed surreal. From the polluted industrial landscape we had entered into a village structure that was basically untouched by the centuries that have passed it.

I began to have doubts about my choice of location for my first two nights in India. Little did I know. After a few more turns of the village road and after ascending the most roughhewn, but still drivable cobblestone path I have ever experienced, we arrived at the gate of the fort-hotel.

And then everything turned magical. The photos really speak for themselves. The hotel, consisting of an amazing array of little pavilions stacked into one another in the most fluid of ways, is literally engraved into the side of a steeply rising mountain.

It seems too pretty to be real. And indeed, it has a touch of being the Indian equivalent of Germany’s picturesque Neuschwanstein Castle – only this one stemmed from the 15th century, not the 19th.


Neemrana Castle (Credit: Wikicommons)

Heavenly India

Part of a group of heritage hotels, the Neemrana Fort-Palace, with all its nooks and crannies, offers a perfect get-away. In fact, I later found out that one of The Globalist’s contributors got married there. That must have been quite a spectacular affair.

Even though alone, I was assigned a beautiful multi-room apartment with an expansive view over the village and the increasingly industrialized plain extending to the end of the horizon below.


Patio overlooking village (Credit: Wikicommons)

For the next two days, I spent most of my time in what I consider the ideal bio cycle. I alternated between swimming in the two stunning outdoor pools, terraced into different levels of the mountain-hotel, proceeding to resting, reading, writing and editing, only interrupted by eating, to then start the cycle anew.

In between, there were many moments of pinching myself and doublechecking my eyesight. I had to make sure that what I was seeing was real – and not mere imagination.

The landscaping, the views, the food, the kindness of the staff, the Alpine coldness of the water in the two swimming pools, the consequential rigor with which Aman Nath and Francis Wacziarg, the two visionaries behind the concept, built it all up, were truly captivating.

Best of all, I had found entry to the castle, both literally and figuratively. What a spectacular one (both Neemrana and India) it turned out to be!

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9 Facts: Saudi Arabia’s Shiite Problem http://www.theglobalist.com/9-facts-saudi-arabias-shiite-problem/ http://www.theglobalist.com/9-facts-saudi-arabias-shiite-problem/#comments Sat, 24 Jan 2015 07:00:47 +0000 http://www.theglobalist.com/?p=39283 By The Globalist

Saudi Arabia is 93% Muslim. But it is more divided than it appears.

Thamer Al-Hassan / FlickrSaudi Arabia is 93% Muslim. But it is more divided than it appears.

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By The Globalist

Saudi Arabia is 93% Muslim. But it is more divided than it appears.

Thamer Al-Hassan / Flickr

1. Less than 2% of the world’s Muslims live in Saudi Arabia, where the religion was founded by Mohammed in the 600s.

2. With 1.6 billion adherents worldwide, Islam is the world’s second-largest religion — accounting for 23% of the world’s population (as of 2010).

3. Saudi Arabia’s 25.5 million Muslim population is, in fact, only slightly more than the number of Muslims in China (24.7 million).

4. While Saudi Arabia’s Muslims represent 93% of the country’s population, Muslims in China represent just 1.8% of that country’s population.

5. Saudi Arabia’s Muslim population is, in fact, only the 16th-largest in the world.

6. The kingdom’s Muslim population is about ten times smaller than that of Indonesia, the world’s most-populous Muslim-majority nation.

7. About 85% of Saudi Arabia’s Muslims are Sunnis, including just-deceased King Abdullah and the Saud ruling family, and the other 15% are Shiites

8. Since the Arab Spring of 2011, attempts by Saudi Arabia’s Shiite minority to gain greater economic and political rights have been thwarted – sometimes violently – by the Sunni-controlled government.

9. This sectarian dispute has brought the ruling family into increasing conflict with Shiite groups such as Hezbollah and ISIS and Shiite-dominated governments in Iran.

Sources: Pew Research Center’s Global Religious Landscape and “Saudi Arabia Has a Shiite Problem” By Frederic Wehrey (Foreign Policy, December 3, 2014), with additional analysis by The Globalist Research Center.

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An America That Says No – To Itself http://www.theglobalist.com/an-america-that-says-no-to-itself/ http://www.theglobalist.com/an-america-that-says-no-to-itself/#comments Sat, 24 Jan 2015 07:00:41 +0000 http://www.theglobalist.com/?p=39275 By Stephan Richter

After the State of the Union speech, a United States that can’t agree on anything?

NASA HQ PHOTO / flickrAfter the State of the Union speech, a United States that can’t agree on anything?

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By Stephan Richter

After the State of the Union speech, a United States that can’t agree on anything?

NASA HQ PHOTO / flickr

A quarter century ago, Shintaro Ishihara published a now (in)famous essay under the title “The Japan That Can Say No.” In his 1989 think piece, the man who later became Governor of Tokyo argued that the time for Japan to act as a “yes man” to the United States was over.

After Barack Obama’s second-to-last State of the Union speech (and the hardline reception it found among Republicans), we may have arrived at a similarly stunning moment in the annals of modern politics.

Is the world about to experience an America that, despite its official name, is so dis-united that, owing to the lack of any meaningful cooperation, it is in essence saying “no” to itself? Is this a responsible way to demonstrate U.S. “leadership” globally?

After all, in order to solve its pressing domestic problems, a country needs to preserve a sufficient amount of bipartisanship. And of those, there are actually many in the United States, despite its relatively better economic performance when compared to other nations.

Rhetoric only goes so far

In particular, the clear political sentiment among middle class voters is that they are not even managing to tread in place. While wages stagnate for most, or even decline, and good jobs remain hard to come by, prices for many key items – from education to health care – keep rising.

Republicans maintain their principal stance of pinning the blame for all that’s wrong on Mr. Obama (witness, as one example, their critique of “Obamacare”). Playing of the blame game card obviously worked for Republicans in the 2014 mid-term elections.

But now, the question even for them is how much longer they can keep playing this card. At some point, voters in the center must wonder whether that is just a distraction maneuver.

Of course, there are those who will argue that gridlock — even of the severe, gotcha kind that we are seeing now — is all well and good. Elections, to be held in due course (2016), will resolve the current standstill. In the meantime, politicians of either side will just block each other in their zeal to implement partisan solutions.

More government, really?

Republicans like to argue that anything Obama and the Democrats are proposing will lead to “more government.” While that is their – so far rhetorically very effective — mantra, they know this is not true.

In reality, what the Obama proposals do lead to is more strictures on the vested interests of Republicans’ core clientele. But instead of admitting that, they raise the claim about “more government.”

There is a clear danger in that. Centrist voters may at some point wake up to the underlying reality that a very effective Republican rhetoric only has one real goal: protecting the interests of the well-to-do, while wrapping themselves in anti-government rhetoric.

Why wait?

The question is: Why wait? Take tax reform. Getting to agreement there really is a no brainer – by opting simultaneously for what Republicans want (corporate tax reform, to eliminate loopholes and bringing rates down) and what Obama has proposed (upping the low capital gains tax rate, to ensure that rich people’s effective tax rate isn’t lower than most Americans).

Taking both of these steps at the same time is the essence of politics – you got what you want, but also have to swallow some things you don’t like so much. Easy enough to accomplish – or so one should think.

Given that many U.S. lawmakers are lawyers, they should not act as absolutists, but be temperamentally suited to the fashioning of somewhat murky, but still effective compromises.

If instead, as the current odds are, Republicans are hoping to “meet” the President only on their terms – say, if and when he goes for items they like, such as Trade Promotion Authority and the transpacific and transatlantic trade deals under negotiation – then they basically keep proposing a very one-sided deal.

As a result, the U.S.’s national agenda may well stand still – to the extent that it can’t be shaped or tilted outside of the legislative process by the U.S. Supreme Court.

All of that, to put it mildly, is a very suboptimal outcome. And one that hinges on a complete Republican victory come 2016 (that is, a Republican will capture the White House). But if a Democrat wins, say, Hillary Clinton, then waiting two more years for “resolution” will prove to be time completely wasted on the road to compromise.

Why the United States matters globally

All of this is bad enough when viewed just within the confines of the United States. However, we live in a time when the global economy is facing more uncertainty collectively than has been the case in a long time.

At such a moment, to see a United States whose capital city and entire political process is at complete loggerheads is not what the rest of the world hopes for.

U.S. dynamism matters, for a whole host of reasons. Probably the biggest one of them is that a dynamic United States forces other countries to rethink their act. In contrast, a stalemated United States — one that basks in the false glory of protecting vested interests at home — only strengthens the forces of standstill elsewhere.

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10 Facts: Where the World’s Muslims Live http://www.theglobalist.com/where-the-worlds-muslims-live/ http://www.theglobalist.com/where-the-worlds-muslims-live/#comments Sat, 24 Jan 2015 07:00:39 +0000 http://www.theglobalist.com/?p=39224 By The Globalist

The world’s Muslim population is highly concentrated in the Asia-Pacific region.

edward musiak / Flickr.comThe world’s Muslim population is highly concentrated in the Asia-Pacific region.

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By The Globalist

The world’s Muslim population is highly concentrated in the Asia-Pacific region.

edward musiak / Flickr.com

1. In the Middle East and North Africa, the 317 million Muslims represent 93% of the region’s overall population.

2. Muslims in Middle East and North Africa make up only about 20% of the 1.6 billion Muslims worldwide.

3. The Asia-Pacific region is home to the world’s largest Muslim population.

4. At 986 million, the Asia-Pacific region’s Muslim population is over three times the number who live in the Middle East and North Africa.

5. Sub-Saharan Africa is home to the world’s third-largest Muslim population – at 248 million.

6. Muslims make up a minority of the overall populations of the Asia-Pacific and Sub-Saharan Africa regions – 24% and 30%, respectively.

7. These three regions are home to nearly 97% of all Muslims worldwide.

8. Elsewhere, Muslims are a small minority of the population.

9. In Europe, the 43 million Muslims represent just 6% of the population.

10. The 3.5 million Muslims in North America make up just 1% of the total population, while just 0.1% of Latin Americans are Muslim.

The Upshot

Muslims represent no more than 30% of the population in any region of the world – except one. The one region where they are in the majority, the Middle East and North Africa, is also the world’s most homogeneous population in terms of religious diversity.

Source: The Global Religious Landscape, Pew Research Center, with additional analysis by The Globalist Research Center

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Football in Kolkata http://www.theglobalist.com/football-in-kolkata/ http://www.theglobalist.com/football-in-kolkata/#comments Sat, 24 Jan 2015 05:00:22 +0000 http://www.theglobalist.com/?p=38346 By The Globalist

A 90 year old rivalry between two Indian football teams continues today.

india-kar-covA 90 year old rivalry between two Indian football teams continues today.

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By The Globalist

A 90 year old rivalry between two Indian football teams continues today.

india-kar-cov

Photography, painting and creative writing have been Saswata Kar’s passion from a very young age. Currently an information technology consultant, Saswata Kar’s ambition is to be a photographer and writer.

•  •  •

East Bengal against Mohun Bagan at Kolkata’s Salt Lake Stadium is the biggest derby in Indian football, attended by up to 100,000 people.

The two teams meet at least four times a year in league encounters – more if they clash in cup competitions. Their supporters care little about a new low FIFA ranking for India’s national team or news from Real Madrid or Manchester United. All that matters is their next derby.

The sides first played in 1925, and have clashed more than 300 times since. According to the most recent count, East Bengal has won 115 games, Mohun Bagan has won 85, and 105 have been drawn. A 1997 Federation Cup semi-final between them drew India’s largest ever football crowd: in front of 131,000 spectators, East Bengal won 4-1.

Both Kolkata-based, the two teams originally drew on different segments of society. Mohun Bagan was followed by people from western Bengal, while East Bengal’s supporters came from the east, in what now is Bangladesh.

Those distinctions have weakened over the decades. What hasn’t is that both team’s fans come from the bottom ranks of Indian society, working as laborers, rickshaw pullers, security guards or small-shop owners.

Most live below the poverty line, but hard as it may be to make ends meet, they still happily pay the US$0.50 entry fee for a game, where over 90 minutes, and despite tight security, they drink illegally brewed country liquor, let off fireworks and scream the foulest slang at opposition supporters.

Text and photographs by Saswata Kar


A Mohun Bagan supporter at his team’s 299th meeting with East Bengal in November 2011. Mohun Bagan won 1-0 thanks to a first-half penalty goal by their Nigerian striker Odafa Onyeka Okolie.






Photography, painting and creative writing have been Saswata Kar’s passion from a very young age. Currently an information technology consultant, Saswata Kar’s ambition is to be a photographer and writer.

The Other Hundred is a unique photo-book project (order here) aimed as a counterpoint to the Forbes 100 and other media rich lists by telling the stories of people around the world who are not rich but who deserve to be celebrated.

Its 100 photo-stories move beyond the stereotypes and cliches that fill so much of the world’s media to explore the lives of people whose aspirations and achievements are at least as noteworthy as any member of the world’s richest 1,000.

Selected from 11,000 images shot in 158 countries and submitted by nearly 1,500 photographers, The Other Hundred celebrates those who will never find themselves on the world’s rich lists or celebrity websites.

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The World’s Five Top Elections in 2015 http://www.theglobalist.com/the-worlds-five-top-elections-in-2015/ http://www.theglobalist.com/the-worlds-five-top-elections-in-2015/#comments Fri, 23 Jan 2015 14:05:32 +0000 http://www.theglobalist.com/?p=39229 By Bill Humphrey

Which countries’ elections are most worth watching — and why?

thierry ehrmann / Flickr.comWhich countries’ elections are most worth watching — and why?

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By Bill Humphrey

Which countries’ elections are most worth watching — and why?

thierry ehrmann / Flickr.com

#1: Greece

Can modern Greek democracy survive the combined effects of years of extraordinary fiscal mismanagement, a devastating recession and a sudden day of reckoning via structural reforms?

That’s the question the world is asking when Greece heads to the polls this coming weekend, beyond narrower questions of what might happen in the next six months.

Newcomer “Syriza” – a party with moderating rhetoric, yet still an unknown quantity – has led the polling average since November 2013, more than a year before snap elections were called.

Mr. Tsipras and company could shake things up – for good or ill – in the country whose ancestors gave us the word democracy.

On the other hand, modern Greek democracy is just 40 years old. Plato might forecast a turn to a less participatory form of the Kyklos (the ancient cycle of governance forms) is about due.

The rise of the neo-Nazi “Golden Dawn” as a potent force in Greek politics offers that grim path. After all, the ancient Greeks also formalized the concepts of “oligarchy,” “aristocracy” and “tyranny.”

Stay tuned as well for how the Greek results – and subsequent reactions in Brussels and Berlin – play out in Spain, which will hold elections toward the other end of the year and faces somewhat similar circumstances.

#2: United Kingdom

Traditional late 20th century European democracy is taking a beating all over the map. Is the fabled Westminster System – at least as it has traditionally existed in its tripartite form since the arrival of universal male suffrage – finished in Westminster itself?

UKIP, the SNP and other parties outside the Big Three make another coalition government of some kind almost a certainty after May – likely with huge effects for the British populace and their place within the European Union.

With the de facto splintering off of Scotland and other elements of devolution elsewhere, ultimately what is at stake here is Britain’s own identity, such as the world has come to know it over the past century and more.

#3: Nigeria

Should a young democracy re-elect a civilian president from the same party that has won every election since 1998?

Should it do so despite his record of extreme incompetence in handling an insurgency that has now seized more territory than ISIS controls in Africa’s most populous nation and largest economy?

What if the alternative choice is a former military dictator and perennial also-ran?

These are the basic questions facing Nigerians in February’s election that will see once-accidental President Goodluck Jonathan of the People’s Democratic Party (PDP) face off against Gen. Muhammadu Buhari at the head of an increasingly powerful opposition coalition and amid plunging oil prices.

The country’s size and economic importance, as well as the alarming rise of Boko Haram, make this election a must-watch for the rest of the world.

#4: Mexico

Will Mexico’s capital city, the insulated Federal District, finally be shaken out of its slumber by a growing protest movement and other reactions to the total capture of Mexican state and local government by the cartels?

Congress is up for another election in June, but without a sea change in the Peña Nieto administration, few expect serious policy shifts at home, whatever the outcome of the parliamentary elections.

Still, if the past 25 years of world history are any guide, it is never safe to assume there will not be a spontaneous mass uprising that forces a revolution in governance, when people get fed up enough. Mexicans are certainly very close to this point of profound discomfort and frustration with its politicians.

Conclusion / #5

Democratic governance faces pivot points in national elections scheduled in Europe, Africa and the Americas in 2015.

However, amid all the dire news, one bright spot has already shone like a beacon in 2015, from Asia.

Earlier in January, Sri Lanka unexpectedly voted out Mahinda Rajapaksa, its strongman president, in early elections, and promoted his former health minister, Maithripala Sirisena, to the top post instead.

Rajapaksa departed the next morning after failing to rally support for a coup. Positive change at the ballot box remains possible.

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The Case for Syriza http://www.theglobalist.com/the-case-for-syriza/ http://www.theglobalist.com/the-case-for-syriza/#comments Fri, 23 Jan 2015 07:15:59 +0000 http://www.theglobalist.com/?p=39260 By Denis MacShane

Greece and the tragedy of modern history.

Joanna / flickr.comGreece and the tragedy of modern history.

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By Denis MacShane

Greece and the tragedy of modern history.

Joanna / flickr.com

Athens, Greece. The sun has never been so warm in a Greek winter. It shines on an election which will determine Greece’s future and quite likely vital parts of the future of Europe.

Greece’s new government after Sunday’s election (January 25) is likely to be headed by Syriza, a rag-tag and bobtail party of those who have been excluded from politics since the colonels were sent back to their barracks 40 years ago.

One thing is for sure: If Syriza decides to pursue an aggressive anti-European nationalistic and anti-market course, Greece will become a disaster zone.

But the odds are that Syriza will not do so. A strong and convincing case, one that ought to be embraced by every fair-minded European, can be made that the people of Greece are rising up against the rotten politics that has brought the country to its knees and made it the sick and poor man of Europe. Much of the crisis, though surely not all of it, is homespun after all.

Two parties over all

For 40 years, two parties – Pasok and Nea Democratia — headed by the same narrow group of men, often dominated by just one family like third-world tribes, have alternated in power.

They awarded jobs and contracts to their friends and allowed the professional middle classes and public sector unions to avoid all responsibility for paying taxes. And they shunned the actual task of governing – that is, reforming the state so it can deliver public services fairly and to all.

Syriza and its stylish and articulate young leader, Alexis Tsipras, have never been part of the Greek spoils system.

Granted, as elsewhere in Europe, the rhetoric may be anti-EU, but that’s simply politics. The overwhelming reality is that Greece’s long-time political elites not only have lost touch, but crucially also the confidence of the public.

So the election is a “throw-the-rascals-out” election. Greece is no different from the rest of Europe.

But Greece has suffered more than most countries. Its GDP dropped by 26%, unemployment rose to 27%, pensions were cut.

Greeks blamed the EU and painted moustaches on pictures of Mrs. Merkel. Syriza has been beating its chest it would challenge the Brussels orthodoxy and force Europe to be more generous.

Curiously, under a new government, Greeks may all of a sudden find that Europe is no longer such an ogre. Even the most hardline of anti-Greek bailout EU leaders in Finland and Germany have reluctantly accepted that forcing a Grexit – a Greek exit from the Eurozone or indeed from the EU – on the Greeks would be a disaster.

So Syriza will have to face up to an uncomfortable truth. The real problem is not Brussels, but Greece herself. It is the lack of competitive businesses and inward investment that holds Greece back.

A problem from within

The old system of clientelist politics in which governing parties slotted in their pals to key jobs and where bribes were paid openly to officials and politicians has not been reformed.

Athens should have the most stylish Riviera coastline in the world as it borders the beautiful, blue and ever warm Aegean. Yet, the coastline sports ugly highways, roads and rail lines along with derelict Olympic sites that planners cannot develop because of outdated laws.

Greece’s media and key shipping industries belong to a handful of oligarchs. They, in turn, dutifully but wholly self-interestedly supported politicians — as long as they got to keep their absurd privileges, especially paying no tax.

Every part of the Greek public and private sector needs reform to allow entrepreneurship and creativity to flourish. Greece does not need the old-style statist politics of hiring 100,000 new state employees to be paid for by taxpayers. It needs 10,000 new start-up businesses that can grow and hire young Greeks.

Does Syriza understand this is the key question?

In historic terms, Europe owes Greece a lot. In the Second World War, the Greeks held out long enough to delay Hitler’s attack on the Soviet Union so that it ended in a freezing disaster. And after 1945, Greeks resisted Stalin’s attempts to plant the Soviet Union’s red flag on the Parthenon.

In 1953, Greece supported Germany as German pre-war debts were wiped clean and Greece never even asked for the Greek gold stolen by Hitler to be returned. Why? It was felt, sensibly, that supporting post-war German reconstruction was a worthwhile affair.

Greece now has to change its own ways. If it makes the right move, the Syriza government deserves similar forbearance.

There is a danger that Syriza will mistake the left-wing rhetoric of its more militant activists and its supporters outside Greece for the reality of what needs to be done. If Syriza takes the Hugo Chavez road of leftist statism, it can indeed become the Venezuela of Europe – without the oil.

One must hope – even expect – that neither Tsipras nor the Greeks will be that stupid. The prospect of a country which may be able to make a fresh start by replacing a discredited elite with a fresh set of open-minded MPs is an alluring one.

But if tomorrow brings back the old politics of refusing to reform, modernize and make markets not the state the driving force in Greece, then the nation’s millennia-old penchant for tragedy will be confirmed once again.

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8 Facts: Where the Billionaires Are http://www.theglobalist.com/8-facts-where-the-billionaires-are/ http://www.theglobalist.com/8-facts-where-the-billionaires-are/#comments Fri, 23 Jan 2015 07:00:32 +0000 http://www.theglobalist.com/?p=39092 By The Globalist

Nearly 25% of the world's billionaires hail from a single country.

Credit: World Economic Forum - www.Flickr.comNearly 25% of the world's billionaires hail from a single country.

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By The Globalist

Nearly 25% of the world's billionaires hail from a single country.

Credit: World Economic Forum - www.Flickr.com

1. Just six countries — United States, China, United Kingdom, Germany, Russia and India — account for more than half (1,228) of the world’s 2,325 billionaires.

2. The United States alone (517) is home to almost a quarter of the world’s billionaires.

3. The United States has more billionaires than the next four countries combined — China (190), Britain (130), Germany (123) and Russia (114).

4. Sixth-ranked India had an even 100 billionaires in 2014.

5. Between 2013 and 2014, the number of Chinese billionaires increased by 20%.

6. That was almost twice the 11% increase in the number of U.S. billionaires.

7. Britain, Germany and India had slight decreases.

 
8. While the number of Russian billionaires increased from 108 to 114, their number — given the sharp decrease in the value of the ruble and the falling global price of oil — will quite likely fall in 2015.

Source: Wealth-X and UBS Billionaire Census 2014, with additional analysis by The Globalist Research Center

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The Globalist’s Top 10 Features on Greece http://www.theglobalist.com/the-globalists-top-10-features-on-greece/ http://www.theglobalist.com/the-globalists-top-10-features-on-greece/#comments Thu, 22 Jan 2015 22:23:31 +0000 http://www.theglobalist.com/?p=39254 By The Globalist

Understanding Greece's crucial role in Europe.

greek ballotUnderstanding Greece's crucial role in Europe.

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By The Globalist

Understanding Greece's crucial role in Europe.

greek ballot

[ 1 ] Greece: Potential Scenarios for a Prime Minister Tsipras

By Holger Schmeiding | Opinion polls are projecting a victory for the left at the coming Greek election.

Published on January 22, 2015

[ 2 ] Greek Theater and Europe’s Future

By Daniel Stelter | Why politicians welcome the Grexit debate – and why it will do little to solve Europe’s woes.

Published on January 12, 2015

[ 3 ] Greece: Exiting the Euro Or Not?

By Meghnad Desai | The Greek people and the German government may favor the same option.

Published on January 6, 2015

[ 4 ] Germany Vs. Greece: Behind the Headlines

By Holger Schmieding | Germany’s actual position on Greece.

Published on January 8, 2015

[ 5 ] China as Greece’s Savior: A Threat to Europe?

By Robert Hardy | How the upcoming privatization round in the Eurozone crisis helps China expand its foothold in Europe.

Published on July 16, 2014

[ 6 ] 2015: The Year of All Elections for Europe?

By Denis MacShane | Voters from Greece to Britain may finally decide if the EU will survive.

Published on December, 2014

[ 7 ] Time for Greece to Lead on Kosovo

By Denis MacShane | Can the new EU foreign affairs chief, Frederica Mogherini, move forward on the semi-frozen conflicts of the Western Balkans?

Published on November 26, 2014

[ 8 ] Greece: The Next Round of the Drama

By Holger Schmieding | Will Greece fall back into a deep fiscal crisis?

Published on December 23, 2014

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Europe’s Eager Islamism Understanders http://www.theglobalist.com/europes-eager-islamism-understanders-2/ http://www.theglobalist.com/europes-eager-islamism-understanders-2/#comments Thu, 22 Jan 2015 18:49:22 +0000 http://www.theglobalist.com/?p=39232 By The Globalist

Is Europe's long slumber about Islamist ideology about to end?

Globalist ChartroomIs Europe's long slumber about Islamist ideology about to end?

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By The Globalist

Is Europe's long slumber about Islamist ideology about to end?

Globalist Chartroom

Read: Europe’s Eager Islamism Understanders by Denis MacShane.

Islamism Understanders

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8 Facts: Counting Billionaires http://www.theglobalist.com/8-facts-counting-billionaires/ http://www.theglobalist.com/8-facts-counting-billionaires/#comments Thu, 22 Jan 2015 07:00:58 +0000 http://www.theglobalist.com/?p=39087 By The Globalist

There is only one billionaire for every 3.2 million people on Earth.

World Economic Forum / Flickr.comThere is only one billionaire for every 3.2 million people on Earth.

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By The Globalist

There is only one billionaire for every 3.2 million people on Earth.

World Economic Forum / Flickr.com

1. Worldwide, there were 2,325 billionaires (measured in U.S. dollar terms) as of 2014.

2. This is only 0.00003% — three one-hundred-thousandths of a percent — of the world’s population.

3. Put another way, there are about 3.2 million non-billionaires for every billionaire on the planet.

4. The number of the world’s billionaires is equal to only about a fifth of the year-round population of Davos, Switzerland (population 11,200).

5. Davos is the exclusive resort village in the Swiss Alps where many of the world’s richest people and corporate leaders gather to discuss world affairs at the annual World Economic Forum in January.

6. In 2009, the year after the global financial crisis, there were only 1,360 U.S. dollar billionaires.

7. In the five years since then, the number of U.S. dollar billionaires has increased by 70%.

8. That was more than ten times the cumulative 5.9% increase in the world population over this period.

 

Source: Wealth-X and UBS Billionaire Census 2014, with additional analysis by The Globalist Research Center

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Greece: Potential Scenarios for a Prime Minister Tsipras http://www.theglobalist.com/greece-potential-scenarios-for-a-prime-minister-tsipras/ http://www.theglobalist.com/greece-potential-scenarios-for-a-prime-minister-tsipras/#comments Thu, 22 Jan 2015 07:00:05 +0000 http://www.theglobalist.com/?p=39184 By Holger Schmieding

Opinion polls are projecting a victory for the left at the coming Greek election.

Arvnick / Shutterstock.comOpinion polls are projecting a victory for the left at the coming Greek election.

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By Holger Schmieding

Opinion polls are projecting a victory for the left at the coming Greek election.

Arvnick / Shutterstock.com

Opinion polls project a clear victory for the “coalition of the radical left” at the Greek election on January 25, with some chance that Syriza may not even need a coalition partner.

Scenario 1: Tsipras turns half-Lula

• Probability: 50%

Charismatic left-wing firebrands can, once in power, learn fast and pursue mostly sensible policies. To some extent, left-wingers can explain the need for a bitter medicine to their fellow left-wingers better than anybody else could. Former Brazilian president Luiz Inacio “Lula” da Silva is a case in point.

If Tsipras bows to reality, sticks to the fiscal prudence of the Samaras government, keeps in place the bulk of the pro-growth reforms beyond some token steps and accepts the steps on which the troika will insist to successfully conclude the final review of the current support program, he will be offered a generous follow-up deal of the kind which Samaras would get if re-elected.

The fiscal losses resulting from a temporary growth pause amid political uncertainty could be accommodated in such a follow-up program. Greece would by and large remain on track.

Scenario 2: Tsipras stumbles within six months

• Probability: 10%

The reality shock tears Syriza asunder within six months as its factions cannot agree whether to ditch the euro or abandon their economic policies. Forming a government can be easy. But it will take time for Syriza to realize how limited its options are.

With the economy in a weaker starting position than it was when Samaras and the troika failed to strike a deal in early December 2014, the IMF may well ask Greece to plug a gap of €3 billion in the 2015 budget rather than allowing any leeway for extra spending or reform reversals.

Whether Tsipras could get Syriza’s vocal left-wing to vote for such extra austerity, even if he wanted to, is a very open question. If the coalition of the radical left fell apart, Tsipras may lack the votes to form a government between a rump-Syriza and Potami plus Pasok.

After a brief interlude, new elections could usher in a more moderate government after Syriza has foundered on the rock of reality. The Greek economy would recover shortly after such new elections from the troubles of the interim period.

Scenario 3: Default within the euro

• Probability: 10%

Unable to agree with the troika on the conditions of the disbursement of the final €7.2 billion official support payment under the old program and hence not eligible for any concessions in a follow-up program, Syriza decides to default on its external creditors.

Unable to borrow from anybody, it would have to balance its primary budget in the midst of a new recession and financial turmoil. The key issue would be how Greece could get the ECB to still accept Greek collateral for refinancing operations and backstop Greek banks.

That would be extremely difficult even if Greece exempted bonds held at the ECB from a default. Greece would likely fall into a serious recession.

Scenario 4: Grexit

• Probability: 30%

Falling out with its official creditors and unable to secure any ECB support for its banks upon booting out the troika, Greece prints the money it can no longer borrow, blaming it all on supposedly evil creditors. The result of a Greek euro exit (Grexit) would likely be a deep recession and political unrest.

No longer subject to any outside constraint and in a charged atmosphere, Greece may undo many of its previous supply-side reforms, turning itself into a Venezuela without oil or an Argentina without the beef.

The damage to supply would more than outweigh any short-term boost to demand from unconstrained Greek money printing and the plunge of a new national currency.

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7 Facts: Billionaires Vs. the Rest of Us http://www.theglobalist.com/7-facts-billionaires-vs-the-rest-of-us/ http://www.theglobalist.com/7-facts-billionaires-vs-the-rest-of-us/#comments Wed, 21 Jan 2015 07:00:49 +0000 http://www.theglobalist.com/?p=39104 By The Globalist

Forget the top 1%, the top 0.00003% have all the money.

Andra MIhali / FlickrForget the top 1%, the top 0.00003% have all the money.

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By The Globalist

Forget the top 1%, the top 0.00003% have all the money.

Andra MIhali / Flickr

1. The total wealth of the world’s 2,325 U.S. dollar billionaires in 2014 was $7.3 trillion.

2. That is higher than the GDP of all but two countries (the United States and China).

3. It is equal to about a tenth of world GDP for 2013 ($76 trillion).

4. The world’s total wealth — the total value of its cash, stocks and investments, real estate and other property — is estimated at $232.5 trillion.

5. This means that just 2,325 people possess 3.1% of all global wealth.

6. By contrast, there are 3.2 billion adults worldwide who each have less than $10,000 in net assets.

7. The combined wealth of these 3.2 billion people, at $13.8 trillion, is not quite double the wealth held by the 2,325 billionaires — even though they outnumber the billionaires by 1.3 million-to-one.

 

Source: Wealth-X and UBS Billionaire Census 2014, with additional analysis by The Globalist Research Center

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