by David Steven | Nov 15, 2008 | Conflict and security, South Asia
In an email exchange with George Packer, David Kilcullen sounds a pessimistic note about prospects in Afghanistan. The situation is ‘dire’ but there’s a chance to win it around.
He’s even more downbeat about Pakistan:
Pakistan is extremely important; indeed, Pakistan (rather than either Afghanistan or Iraq) is the central front of world terrorism. The problem is time frame: it takes six to nine months to plan an attack of the scale of 9/11, so we need a “counter-sanctuary” strategy that delivers over that time frame, to prevent al Qaeda from using its Pakistan safe haven to mount another attack on the West. This means that building an effective nation-state in Pakistan, though an important and noble objective, cannot be our sole solution—nation-building in Pakistan is a twenty to thirty year project, minimum, if indeed it proves possible at all—i.e. nation-building doesn’t deliver in the time frame we need. So we need a short-term counter-sanctuary program, a long-term nation-building program to ultimately resolve the problem, and a medium-term “bridging” strategy (five to ten years)—counterinsurgency, in essence—that gets us from here to there. That middle part is the weakest link right now. All of that boils down to a policy of:
(a) encouraging and supporting Pakistan to step up and effectively govern its entire territory including the FATA [Federally Administered Tribal Areas], and to resolve the current Baluch and Pashtun insurgency, while
(b) assisting wherever possible in the long-term process of state-building and governance, but
(c) reserving the right to strike, as a last resort, at al Qaeda-linked terrorist targets that threaten the international community, if (and only if) they are operating in areas that lie outside effective Pakistani sovereignty.
by David Steven | Nov 15, 2008 | Global system, London Summit
In our paper on Bretton Woods II (pdf), Alex and I provide rather a gloomy assessment of financial crisis – which we suggest is going to last longer than many think…
Given that we now face what Gordon Brown has described as “the first truly global financial crisis of the modern world”, our bet would be that it takes as long as a decade to bring it fully under control.
Let’s unpack the assumptions behind our pessimism. We start from the premise that, six months back, experts were overly optimistic about how far-reaching the meltdown would be. This is based, in part, on April’s Progressive Governance summit, where heads of state were (a) clearly freaked out; (b) fairly sure they grasped the problem, if not the solutions; (c) not acting as if they expected any further big surprises.
Consider, too, what the IMF’s Dominique Strauss Kahn was saying at the time. He was as worried by inflation, as he was by economic slowdown. Although he was forecasting a “rather important, serious slowdown in economic growth” – the expected pain wasn’t really that bad:
Something around 0.5 percent as a rate of growth for the United States in 2008 and a slight recovery during 2009-an average of 0.6 percent for 2009, which is both linked to the financial turmoil, of course, but also the business cycle.
Next, we look at the lessons of earlier banking crises that, in developed countries, have tended to take four or five years to unravel, cost around 12% of GDP to resolve, and lead to a cumulative loss in output equal to almost a quarter of GDP. The figures are drawn from this useful chart prepared by PIMCO’s Michael Gomez:
Then add in what we know about the banking crisis that gripped Japan in the 1990s, which the IMF ascribes to “accelerated deregulation and deepening of capital markets without an appropriate adjustment in the regulatory framework”. Hiroshi Nakaso’s account is worth reading in full – seven years of crisis management and fire fighting as a senior manager at the Bank of Japan.
“When the bubble burst in the early 1990s, no one expected it was going to usher in such a prolonged period of weak growth in Japan,” he writes. Policy makers underestimated the seriousness of the problem, while banks lacked the ‘foresight and courage’ to confront their predicament head on.
At the time there was considerable schadenfreude in the West about Japan’s failure to get to grips with its crisis. It was eight years or so before its policy makers even found the levers that would begin to inch the crisis towards a solution. Are we right to assume that we’ll now do better? (more…)
by David Steven | Nov 15, 2008 | Articles and Publications, Reports
Paper by Alex Evans and David Steven on financial reform and wider multilateralism, published ahead of the G20 ‘Bretton Woods II’ Summit (November 2008).
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