by David Steven | Jan 11, 2009 | Climate and resource scarcity, East Asia and Pacific, Global Dashboard, Global system, London Summit, North America
[youtube]http://www.youtube.com/watch?v=iRzr1QU6K1o[/youtube]
In last month’s New Atlantic, James Fallows had a fascinating interview with Gao Xiqing, Chief Investment Officer at China’s sovereign investment fund, and the man responsible for a significant chunk of China’s huge holdings of American dollars.
Gao – who Fallows dubs one of the US’s new banking overlords – thinks Americans need to learn some humility and fast.
“The simple truth today is that your economy is built on the global economy,” he says, “and it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.”
The US should disentangle itself from expensive overseas conflicts, Gao believes, raise its diplomatic game, and – above all – tell its citizens to get saving as part of a “long-term, sustainable financial policy.”
It’s all well and good, but maybe Fallows should have pushed Gao a little harder on whether China’s own financial policy is sustainable. After all, despite recent appreciation, the yuan remains substantially under-valued against both the dollar and the euro – the main reason why the Chinese has ended up holding so much Western debt.
Gao’s comments on the dollar are somewhat contradictory (and reflect all the ambiguity of China’s own dollar position). On the one hand, it defends its status as a reserve currency. The US is still the most viable and predictable market, he says. But on the other, Chinese investment in the dollar is widely unpopular at home. According to Gao, China’s citizens ‘hate’ its support of rich Americans (“people eating shark fins”) at the expense of “poor [Chinese] people eating porridge.”
More significant than public pressure, perhaps, is Gao’s belief that the dollar is highly likely to lose value over the short to medium term (with a corresponding appreciation for the yuan). This will wipe billions of Chinese reserves (reserves that have only been built up through consumption foregone) – while challenging China’s export-led growth model:
We are not quite at the bottom yet. Because we don’t really know what’s going to happen next. Everyone is saying, “Oh, look, the dollar is getting stronger!” [As it was at the time of the interview.] I say, that’s really temporary. It’s simply because a lot of people need to cash in, they need U.S. dollars in order to pay back their creditors.
But after a short while, the dollar may be going down again. I’d like to bet on that! The overall financial situation in the U.S. is changing, and that’s what we don’t know about. It’s going to be changed fundamentally in many ways.
Unravelling these imbalances seems certain to be ugly. Reading George Cooper’s book, The Origin of Financial Crises, on a plane the other day, I was struck by strong parallels between today’s economic woes, and a crisis we have heard little about recently – the ‘Nixon Shock’ that led to the end of the Bretton Woods system. (more…)
by Alex Evans | Jan 11, 2009 | Conflict and security, Middle East and North Africa
“Israel’s current assault on the Gaza Strip cannot be justified by self-defense. Rather, it involves serious violations of international law, including war crimes. Senior Israeli political and military leaders may bear personal liability for their offenses, and they could be prosecuted by an international tribunal, or by nations practicing universal jurisdiction over grave international crimes. Hamas fighters have also violated the laws of warfare, but their misdeeds do not justify Israel’s acts.”
The Guardian? The Independent? No, actually – it’s from an op-ed by a law professor in the Wall Street Journal. When the WSJ of all papers starts running opinion pieces accusing Israel of war crimes, you start to think that Israel’s bleeding international legitimacy has started outright haemorrhaging.
Then you see even the Bush Administration declining to veto Security Council Resolutions against Israel – and you know for sure.
by Alex Evans | Jan 3, 2009 | Conflict and security, Global Dashboard, South Asia, UK
With just over a couple of weeks to the inauguration, it’s finally sinking in: Barack Obama’s Presidency is going to imply some pretty fundamental changes to the global war on terror. Serious thinking on how to dismantle Guantanamo is well underway – as is discussion about which of America’s allies will be willing to welcome its detainees (Australia and Britain both profess reluctance; Portugal, on the other hand, looks well on course for a special relationship with the new Administration). A sea change on torture and rendition also appears to be a racing certainty.
In Iraq, too, massive changes are underway. As well as the rich symbolism of the sock and awe incident, there’s now also yesterday’s more tangible proof of how far things have moved on: the Iraqi government has assumed control of the Green Zone.
Now, pause to wonder: are these changes likely to have a significant impact on the capacity of radical Islamist groups to recruit and retain committed volunteers – whether in Europe, the Middle East, South Asia or wherever? After all, Guantanamo, torture, rendition and Iraq surely represented four of the principal sources of the sense of grievance so essential to effective radicalisation. Does that mean the outlook on counter-terrorism is finally brightening?
One possible reason why not, of course, has to do with Gaza. Olmert’s rationale for Israel’s attacks is not hard to discern – Hamas ended its ceasefire, there’s an election in February, he wanted to rebuild Israel’s credibility after the 2006 debacle in Lebanon, there was only a brief window of opportunity before Obama’s inauguration. But even so, the fact that Israel’s attacks have so far killed 436 Palestinians (compared to 172 dead in Mumbai) will clearly fuel a sense of outrage among many – including this blogger – and will provide a powerful recruiting sergeant for Islamist groups everywhere.
But another answer to the question of sources of grievance after Bush can be found by taking a stroll down my local high street, in a part of East London that has one of the highest proportions of Muslims in the capital.
Today, the activist posters you see on lamposts and on the walls of the shops selling mobile phone skins and international calling cards have one key message: end the undeclared war on Pakistan. If you visit Hizb ut-Tahrir’s website, meanwhile, you find that just beneath the coverage of Gaza from the last fortnight, it’s Pakistan that’s the focus of attention and grievance – a point made even clearer by this youtube video of theirs from the start of December.
[youtube:http://uk.youtube.com/watch?v=uI47aQVLoq0]
You might think it odd that Islamist opinion in the UK should be focusing on a relatively small number of drone attacks in Pakistan when a major troop surge is about to take place over the border in Afghanistan. But think again, and you realise that of course it makes eminent sense for Hizb ut-Tahrir to focus on the grievance of most direct relevance to Britain’s large diaspora community – and to weave political Islamism into long-standing fears about Pakistan’s territorial integrity.
Barack Obama’s arrival in the White House represents a welcome turning point on many components of the ‘war on terror’. But the evolving situation in Pakistan (on which Obama is hawkish, remember) may well represent another – especially here in the UK. If Obama steps up US attacks on Pakistan’s border areas, then many British Muslims will doubtless listen to what Gordon Brown has to say about it with keen interest…
by Charlie Edwards | Dec 31, 2008 | Conflict and security, Middle East and North Africa
Two of my favourite blogs, MountainRunner and Danger Room highlight the IDF’s attempt to win over the blogosphere using Twitter and You Tube. Why? Because according to the head of the IDF’s press team: “The blogosphere and new media are another war zone, we have to be relevant there.”
The YouTube channel was created with the aim of distributing footage of precision airstrikes. Interestingly YouTube took down some of the ‘exclusive footage’ showing the IDF’s operational success in operation Cast Lead against Hamas extremists in the Gaza Strip, but appears to have returned some of the footage due to popular demand.
Elsewhere the Israeli consulate in New York hosted a press conference on Twitter in order to answer the public’s questions regarding the situation in Gaza. How one measures the success of the twitterference is difficult but, as both Matt and Nathan point out, reducing the Israeli-Palestinian conflict to tweets of 140 characters or less makes for interesting reading:
‘We hav 2 prtct R ctzens 2, only way fwd through neogtiations, & left Gaza in 05. y Hamas launch missiles not peace?’,
‘we’re not at war with the PAL people. we’re at war with a group declared by the EU& US a terrorist org’.
by Charlie Edwards | Dec 29, 2008 | Global Dashboard, Global system
- Mexico: The world’s leading narco state will, unnoticed, dissolve into total chaos destabilising the surrounding region.
- Middle East: February elections in Israel will see Binyamin Netanyahu being voted in while President Mahmoud Ahmadinejad will be voted out in Iranian elections in June.
- Asia: H5N1 will return with a vengeance.
- Bosnia: A growing culture clash between conservative Islam and the country’s avowed secularism will result in an increase in violence in the country.
- Africa: Robert Mugabe will be assassinated.
- UK: There will be no election in 2009.
- Turkey: Prime Minister Recep Tayyip Erdogan will abandon further attempts to join the European Union and instead turn East and focus on regional diplomacy.
- Iraq: Elections will be relatively peaceful in much of the country.
- Somalia: The US or France will be drawn into a short, intense ground war in the South West of the country.
- Afghanistan: In May Britain will increase the number of troops in the country. In October a European deal with the Obama administration will see France, Germany and Italy do the same.
* I will happily blog when these predictions are proven wrong.
