A World Connected: Globalization in the 21st Century 9780977992201

Table of contents :
Contents
Preface
Introduction
Economy and Trade
Diplomacy
Security
Society
Culture
Health and Environment
Demography and Migration
Anti-Globalization
Innovation
Global Governance
Interviews

Citation preview

A World Connected

Globalization in the 21st Century

Preface by Richard C. Levin Edited by Nayan Chanda and Susan Froetschel

A YaleGlobal Online Ebook Yale Center for the Study of the Globalization/New Haven, USA

First published in the USA in 2012 by YaleGlobal Online Yale Center for the Study of Globalization New Haven, CT 06520 Copyright © 2012 Yale Center for the Study of Globalization All rights reserved. No portion of this e-book may be reproduced in any fashion, print, facsimile, electronic, or by any method yet to be developed, without express written permission of the Yale Center for the Study of Globalization. Photos: Courtesy of Reuters A World Connected: Globalization in the 21st Century Edited by Nayan Chanda and Susan Froetschel Includes preface by Richard C. Levin ISBN: 978-0-9779922-0-1

Cover design: Debbie Campoli Book design and typesetting: Lynne Reichentahl and Debbie Campoli

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Contributors Morton Abramowitz Graham Allison Hakan Altinay Christopher Anzalone Mohammed Ayoob Ashok Bardhan Pranab Bardhan Hans Blix Clifford Bob James K. Boyce Dieter Braeuninger Joseph Chamie Anita Chan Nayan Chanda Gordon G. Chang Carolyn E.B. Choksy Jamsheed K. Choksy Michele A. Clark James Cuno Anthony P. D’Costa David Dapice Alex David Kemal Dervis Sadanand Dhume Bo Ekman Jonathan Fenby Richard W. Fisher Ann Florini Thomas L. Friedman Susan Froetschel Ioannis Gatsiounis Jayati Ghosh

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Dru Gladney Bernard K. Gordon Alkman Granitsas Richard N. Haass Jim Hansen Riaz Hassan Humphrey Hawksley David L. Heymann Dilip Hiro Richard Hornik Yanzhong Huang Dwight Jaffee Harold James Rami G. Khouri Peter Kwong Pascal Lamy Jean-Pierre Lehmann Richard C. Levin Andrew Lih Bertil Lintner Richard G. Lipsey Terrence Lyons Rebecca MacKinnon Mary Kay Magistad Kishore Mahbubani Ashok Malik Peter Mandaville Michael Mandelbaum Peter Mandelson Bruce Mazlish Suketu Mehta Branko Milanovic

A World Connected: Globalization in the 21st Century

Contributors Barry Mirkin N.R. Narayana Murthy Chandran Nair Paula R. Newberg Léonce Ndikumana Rohini Nilekani Sharon Noguchi William D. Nordhaus Joseph S. Nye Jr. Rajendra K. Pachauri Thomas Palley George Perkovich Michael Pettis Clyde Prestowitz Lant Pritchett Gustav Ranis Sean Randolph Ahmed Rashid Carmen M. Reinhart Michael Richardson Bruce Riedel Alexis Eva Ringwald Mary Robinson David J. Rothkopf Patrick Sabatier Shyam Saran Jonathan Schell Orville Schell Amartya Sen Shen Dingli Shim Jae Hoon James Gustave Speth

Joseph Stiglitz Bruce Stokes Strobe Talbott Ramesh Thakur C. Peter Timmer Jonathan Unger Vivek Wadhwa Immanuel Wallerstein Jeffrey Wasserstrom Gabriel Weimann Patricia Wruuck Guobin Yang Ernesto Zedillo

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Contents Preface 8 Introduction 10 Economy and Trade 15 Diplomacy 56 Security 101 Society 140 Culture 177 Health and Environment 213 Demography and Migration 252 Anti-Globalization 290 Innovation 328 Global Governance 366 Interviews 405

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Preface As President of Yale University, I often participate in ceremonies dedicating new or renovated facilities. Ten years ago, on November 19, 2002, I drove to the newly refurbished Betts House for such an occasion, where, instead of cutting a ribbon I clicked on a mouse to launch YaleGlobal Online. The founding of the Yale Center for the Study of Globalization in the previous year and the launch of YaleGlobal created an important new bridge connecting Yale to an increasingly globalized world, and put us in a stronger position to contribute to the discussion about its evolution. It is now widely understood that the world has become smaller and more interconnected. The revolution in communications technology has brought the world closer together and changed the way we think. The movement of capital across borders is now instantaneous, and the movement of people, products, and pollution is freer and faster than ever before. These facts make comprehensive governance of the economy impossible at the level of the nation-state. International institutions are needed to regulate trade, capital flows, and environmental degradation. Isolation is not an option. For the past ten years, YaleGlobal, edited by Nayan Chanda, former editor of the Far Eastern Economic Review and The Asian Wall Street Journal Weekly, has provided a steady stream of original reports on and insightful analysis of our interconnected and interdependent world. Cross-cultural influences have always been a part of Yale’s history and tradition. Yale was founded with a gift from Elihu Yale, former governor of the East India Company in Madras (now Chennai) India. Yung Wing, the first Chinese student to come to a U.S. university, graduated from Yale in 1854. But only recently has intensified globalization created tremendous opportunities for Yale and other universities around the world. YaleGlobal is one response to these opportunities, and I am delighted to see how it has blossomed in the past decade. Its rich content,

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produced by Yale faculty as well as scholars and experts worldwide, is accessed daily by thousands of people in some 160 countries. Reproduced in newspapers and other websites, YaleGlobal articles are read by millions of readers all over the globe. I hope that this collection, A World Connected: Globalization in the 21st Century, will prove to be a handy guide to understanding the complex and evolving phenomenon of globalization. It is a compendium of carefully selected articles from the more than one thousand essays that YaleGlobal has published. Yale University continues to adjust its curriculum and programs in order to analyze and understand the full array of global challenges confronting our planet. Global security is threatened by instability in the Middle East and by persistent terrorism that strikes almost randomly at civilized peoples around the world. Global prosperity is threatened. The global free trade regime that brought hundreds of millions out of poverty in the past quarter century is in jeopardy because of the parochialism of nations unable to see the common good. And unless we resolve to cooperate and do something about our environment, the biodiversity of the planet will continue to diminish at an alarming rate, and global warming will transform the conditions of life and livelihood around the world. With intelligent and timely analysis, YaleGlobal and its first e-book, A World Connected: Globalization in the 21st Century, perform the valuable task of raising awareness about our interconnected world and highlighting the need for international cooperation and better governance. Richard C. Levin President, Yale University

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Introduction Ten years ago, on a chilly November day, an improbable venture was launched in a corner of the Yale University campus – an online multimedia magazine to explore the phenomenon of globalization and promote debate and analysis on that highly contentious subject. As the flagship publication of the Yale Center for the Study of Globalization, YaleGlobal Online was not meant to be a general magazine on international affairs, nor a publication devoted to business and the economy, so often considered to be synonymous with globalization. YaleGlobal’s mission was to follow globalization as it unfolds in all spheres of life. Our mission is informed by our understanding of globalization as a historical process, a process that has increasingly connected the world and grown ever since early humans left their homes in search of better and more fulfilling lives. Commerce, proselytization, travel and conquest are but a few of the channels of connection that have tied the world together ever more tightly. YaleGlobal’s foundational essay, “Coming Together,” and a PowerPoint presentation “What Is Globalization?” lay out the perspective through which the magazine set out to observe and analyze the process. With the belief that it touches all aspects of life, allowing communities, countries and continents to become interwoven, we set out to examine world events with a wide-angle lens. A broad view of the world in constant mutation is an impossible task, producing a diffused image. Instead, we chose to view world events through the stereoscopic lens of interconnectedness and interdependence. Whether the news concerned trade, security, diplomacy, culture, labor, health or the environment, our authors try to view the developments from the specific perspective of connections and their resulting interdependence. Every week for the past ten years YaleGlobal has published analyses of world developments viewed from a global perspective. As we dig into our archives of

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more than 1,300 articles, we see globalization through time-lapse photography. Our specific focus on interconnectedness lets us experience globalization as a living organic process encompassing all of humanity. With hindsight, it can be seen as a process that slowly turns, twists, splits and unites as it transforms our lives. It has been a daunting but exhilarating task to select some 100 essays from this rich collection spanning a decade. We have been struck by how prescient many of our authors were in analyzing events as they happened. They spotted trends early in the globalization process that proved to be the new reality in the years that followed, with consequences affecting life in many parts of the world. Week after week our authors focused on events that illuminated the interwoven strands of globalization. Eminent scholars and personalities were interviewed on global issues, and authors’ biographies remain as they appeared with articles at the time of publication.Taken together, the essays and transcripts offer in a nutshell a history of globalization in the first decade of the 21st century. The warps and woofs of global interconnections and their varied consequences are impossible to capture in one narrative. We have thus grouped the essays under the broad headings of Economy and Trade, Diplomacy, Security, Society, Culture, Health and Environment, Demography and Migration, Anti-Globalization, Innovation and Global Governance. In an ironic coincidence, Strobe Talbott, director of the newly minted Yale Center for the Study of Globalization in 2001, had just begun the first staff meeting of the Center when a passenger airline, American Airlines Flight 11, flew into the World Trade Center. Those in the meeting of September 11, including one of the editors of this volume, could not miss the significance of where the process of globalization had brought the new century. At stake then and now are almost all aspects of life shaped by years of global interactions with consequences that leap boundaries and defy neat categorization. The world economy has experienced more profound changes from global integration than any other domain, influencing the political-diplomatic structure of the world. Although the US was the world’s sole superpower, the rising economic and military might of other countries and empowered globally connected individuals

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pose unprecedented challenges. Economic inequality and exploitation of developing countries create instability and resistance that threatens society and world security. Those countries that had failed to benefit from globalization or were marginalized have emerged as a chief threat to disrupt an integrated world. Migration, legal and illegal, has grown so much that 250 million people now live in countries where they were not born. Global commerce, travel and internet communications have transformed societies generating blowback from traditional religious groups and minorities that feel threatened. With every new technology, people are exposed to new ideas from diverse parts of the world, fostering creativity as well as resistance. Increasing connectedness of communities and countries has exposed us all to communicable diseases and, in 2003, contributed to the SARS pandemic; rising international trade, greater exploitation of resources and the resultant pollution that also crosses borders affect us all, as do accelerated greenhouse gas emissions that increase the specter of climate change. Social, economic and environmental fallout from growing global connections has spawned yawning inequalities and anti-globalization movements. Financial globalization led to the rise of the international Occupy movement. As always in history, new challenges deliver innovative responses. How fast these responses evolve, how effectively they resolve the problems, will determine the nature of globalization in the years ahead. The most serious challenge is for the citizens of the world and sovereign governments to recognize the irreversibly interconnected character of life today where existential problems are of a global nature, which can only be tackled through global cooperation. Understanding a problem is the beginning of finding a solution. We hope that our modest volume, a selection of rich, complex perspectives found in the archives of YaleGlobal Online, will serve as a contribution towards that goal. I would like to thank Yale University President Richard C. Levin, who took the initiative to launch the Center for the Study of Globalization and has shown a personal interest in YaleGlobal; Vice President Linda Koch Lorimer, an indefatigable supporter of the project; and Strobe Talbott and Ernesto Zedillo, the two successive directors of the Center, for their unstinted encouragement and support.

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Associate Director Haynie Wheeler has been an ever-enthusiastic champion of YaleGlobal, ready to tackle any problem that presented itself. Susan Froetschel’s tireless efforts both in editing and offering thoughtful contributions have been an essential part of not only the magazine’s success but also of this particular volume.

Web Developer Debbie Campoli’s work keeps us on track and her beautiful design, maps and infographics add to the aesthetics of the magazine. She is responsible

for designing the cover of this volume. I am also grateful to former assistant edi-

tors Anthony J. Spires, Jenifer Kwan and Nils Bertil-Wallin and a succession of Yale undergraduate editorial assistants for their hard work and many innovative contributions.

Nayan Chanda Editor, YaleGlobal Online

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A World Connected: Globalization in the 21st Century

Economy and Trade

The economy has experienced more profound changes from global integration than any other domain. Expanded use of container shipping along with falling tariff barriers has led to phenomenal growth in trade volume. Banking and financial deregulation

combined with reliance on technology and the internet has created vast trade and financial networks that operate with the touch of a computer key.

The speed of transactions and the integration of economies have resulted in huge gains by some corporations and countries, but also created growing imbalances

between creditor and borrower nations and yawning economic inequalities within

nations. The world’s major economies have shifted rankings, with China overtaking Japan to climb into second place and intent on catching up with the United States. The US and China are rivals, but also financially tightly connected. China saves

money and invests in US debt, while the US borrows more than 40 cents of every dollar it spends.

Globalization of economies and trade has reduced poverty, contributing to improved

living standards. Unfortunately, however, national regulations have not kept pace

with the intricate network of global connections. The last decade produced a rude

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awakening, first with the US subprime crisis and then the eurozone crisis spreading misery around the globe. Many nations toyed with the notion of protectionism or so-called economic patriotism, but fearing retaliation, stopped short.

Another phenomenon arising from economic integration has been the power of

emerging economies known as the BRICS – Brazil, Russia, India, China and South Africa – identified by an investment firm for their rapid growth and sudden wealth

rather than any formal political connections. Other countries, particularly in Africa, suffer as their elites borrow funds, misuse aid and squirrel away profits, aided by foreign banks. Any nation with natural resources is a target, as competition intensifies for raw materials, particularly oil and gas. But tight financial binds also force cooperation, taming some rivalries and encouraging many short-term partnerships of convenience. Repairing growing economic imbalances and keeping trade flowing freely remain a challenge for an increasingly integrated world.

The Great Reverse Clyde Prestowitz “The balance of influence in this region is shifting rapidly to China – not yet the balance of power, but the balance of influence.” That statement, made recently to

me by a senior leader in Singapore, is an early indication of how a new, third wave of globalization is ending the era of the West’s global dominance and restoring Asia to its traditionally powerful and influential role.

The history of the past 500 years has largely been the story of the dynamism and expansion of first European and then American power. The initial wave of global-

ization was launched in the late 15th century by the early Portuguese and Spanish explorers. The high technology of that day was embodied in the Spanish galleon and the navigating skills that guided it.

Using this technology, intrepid Iberian captains could go anywhere the wind blew,

enabling the kings of tiny Portugal and Spain to lay claim to nearly half the world. Soon thereafter, the Dutch and English developed the joint stock company and

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built the “capitalist road” by enabling the amassing of large amounts of capital on a relatively low-risk basis with the potential for very large gains. And the gains were

sought largely in the East, where the legendary wealth of the Indies beckoned, for at this time, the standards of living in the West were well below those of the East.

By the end of the 18th century, the countries of the European periphery had combined their technological leadership with low-cost labor – sailors from the lower rungs of society were routinely pressed into service – to acquire huge empires in Asia and elsewhere.

The second wave of globalization began at about the time of the founding of the

United States, with the onset of the Industrial Revolution. The steam engine and

After two centuries of

Over the next 200 years, this further accelerated the rise of western wealth and

China and India are

still had by far the world’s biggest and most powerful economy, with the area we

places.

new manufacturing technology multiplied productivity and wealth a thousandfold.

western domination,

dominance. In 1776, the year of the American Declaration of Independence, China

poised to claim their

now call India and Pakistan following close behind. Indeed, at this time, Asia accounted for well over half of global gross domestic product. Industrialized mass

production dramatically reversed the balance; by the end of the 20th century, the US and Europe accounted for two-thirds of global GDP, while Asia was responsible for only 20 percent.

In the 1990s, four developments laid the foundation for the third wave of globalization, which is now leading to the Great Reverse. In the wake of the Tiananmen Square incident, the leaders of China concluded that the only way to hold onto power

was to bring China fully onto the “capitalist road.” India, seeing the rapid success of

China, also decided to abandon its socialist protectionism in favor of getting on the capitalist freeway. At about the same time, the conclusion of the Uruguay round of trade talks, along with China’s inclusion in the World Trade Organization and the

opening of most countries to foreign investment, removed most of the classic barriers to the global flow of goods and capital. Finally, the development and deployment of

the internet after 1995 largely negated time and distance as significant cost factors for a vast number of products and services.

China is now, without question, the location of choice for most manufacturing. Its huge population provides a continuing supply of low-cost labor. By widely opening

the doors to foreign investment, emphasizing education of technologists, and pro-

viding major incentives for technology transfer, it has combined inexpensive labor

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with technology to create a huge competitive advantage similar to that enjoyed by the Portuguese and Spanish half a millennium ago.

This is not just a matter of low-tech, labor-intensive manufacturing. On my recent trips to China, I have visited state-of-the-art plants for manufacturing semiconductors

and other high-tech products equal in quality to those produced in the West and at less than half the cost. Moreover, in recent interviews, top Silicon Valley venturecapital executives emphasized their plans to shift startup companies’ research and development activities to China or India as fast as possible. Indeed, some said they

would not fund any startup that lacked a China or India R&D strategy. The logic is

simple: There are a lot of good technologists in those countries who can do much of the high-tech work at 10 to 15 percent of the cost in the West.

India has not yet become the same magnet for manufacturing as China, but it’s clearly

the location of choice for software development and many other services. Again, one should be careful of the conventional wisdom that thinks only in terms of call

centers and grunt programming. For example, the British National Health Service recently announced that it is shipping all blood samples to India, where they’ll be analyzed and the results faxed or emailed to the appropriate medical facilities in the United Kingdom.

As a result of these kinds of development, both China and India have enjoyed annual GDP growth of about 10 percent over the past several years. In fact, China has

been racking up such growth for the past 20 years. Projected into the future, these growth rates show why the senior Singapore leader made his comments about the

shift of the balance of influence. By the year 2025, China’s current GDP of about $2 trillion, adjusted for the undervalued renminbi, would be $16 trillion, and India’s current GDP of $700 billion would be about $5 trillion. Over the same time, the

current US GDP of $11 trillion would reach $21 trillion if it grows at the average rate of US growth of the past 40 years. Even if these estimates are well off the mark, they

show a dramatic narrowing of the gap between Asia and the West. China is already the biggest trading partner for Japan, Korea and the other key economies of Asia. Its influence will only grow, as will that of India.

To this must be added the demographic story. Europe is literally dying. Its people

are aging rapidly, and birthrates are far below those necessary to maintain current

population levels. By 2050, the population of Germany, for example, will shrink from

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the present 83 million to about 75 million. This will put a severe limit on European growth prospects. The United States, by dint of immigration and high Hispanic

birthrates, will maintain small population growth, but age substantially over the

next 45 years. Because of its one-child policy, China will also begin to age rapidly in about 20 years. But half of India’s nearly 1 billion people are presently under the age

of 25, and there is no one-child policy here. Thus, in the long run, the 21st century

could well turn out to be the Indian century. In any case, it will surely be the century in which Asia resumes its historical position of economic power and influence. Washington, 2 September 2004 Clyde Prestowitz is the author of Rogue Nation: American Unilateralism and the Failure of Good Intentions. He is also president of the Economic Strategy Institute and a former trade negotiator in the Reagan administration.

Africa Needs Fair Trade, Not Charity Mary Robinson The leaders of the G8 nations made some progress in fighting global poverty at

the Gleneagles Summit in July through new commitments to increased aid and

debt relief. No previous G8 meeting has done as much to support development in

the world’s poorest countries, particularly in Africa. But while the G8’s steps were

welcome, they are insufficient to ensure that all developing countries fulfill the UN

Millennium Development Goals by 2015. A major stumbling block continues to be the reforms needed to create a more just world trade system.

If the world’s wealthiest nations truly are committed to supporting African efforts to foster sustainable development and good governance, they must also be prepared

to actively reform trade rules so that Africa can do more to secure its own future, rather than relying solely on aid. If poor countries could increase their share of

world exports by just 1 percent, they could lift 128 million people out of poverty. In Africa alone, this would generate US$70 billion – more than five times what the continent receives in aid.

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In recent months, I have visited two African nations, Mali and Mozambique, to

better understand the critical role of cotton and sugar trade in fostering economic and social development. The success or failure of these two industries – the Mali

cotton industry and the Mozambique sugar industry – is directly linked to current and future US and EU trade policies.

Experts generally agree that the current regimen of US cotton subsidies has adversely

affected world cotton prices – down by 30 percent between 2004 and 2005 – resulting in substantially reduced income to West and Central African cotton growers, like

Allowing producers to export to a subsidyfree world market would lift many out of poverty.

those in Mali. Estimates from Iowa State University’s Food and Agricultural Policy Research Institute suggest that since 2001, the four West and Central African cotton

producers – Benin, Burkina Faso, Chad, and Mali – have suffered export losses of around US$382 million due to US policies.

This slump has had a terrible impact on African countries. More than 10 million people in West and Central Africa depend on cotton for their livelihoods. There are few alternatives for generating income for social services, such as education and

healthcare, and for maintaining macroeconomic stability. For these countries to escape the poverty trap and move away from foreign aid dependence, improving their ability to trade – on fair terms – in products which they can produce competitively

is crucial. Cotton producers in Mali want to work their way out of poverty, not to receive development handouts.

The situation for sugar producers, like Mozambique, is similar. Mozambique is third from the bottom on last year’s UN human development index. Three out of four people

live on less than US$2 a day. An HIV/AIDS infection rate of 15 percent coincides with a high incidence of malaria, cholera and tuberculosis. Infrastructure is virtually

nonexistent – only one decent road runs up the edge of the country – but the land is fertile and could develop quickly with more agricultural production and trade.

The sugar industry currently employs at least 22,000 people and supports many

thousands more. Estimates suggest that Mozambique could double its sugar production by 2007, given support and time to grow. The women in a village near the sugar factory I visited had benefited from their cash crop, but feared this was about

to change. They questioned me closely about what exactly I would do about it. “We need a tractor,” they said. “We need money to sow a new crop of sugar cane. We need to continue to sell our sugar at good prices in Europe.”

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But the future of the industry in Mozambique and other sugar-producing African countries, including Malawi, Zambia and Ethiopia, is under threat. WTO rules require the EU to bring its sugar regime into line with world commodity trade rules.

A complex and longstanding system of price support, tariffs and quotas, must be

reformed to stop overproduction and dumping. Managed properly, these changes could benefit many poor countries. Managed badly, they will protect the biggest

and richest EU producers at the expense of small farmers, both in Europe and the developing world.

Current proposals include a 39 percent price cut for sugar in Europe by 2008. This sudden and dramatic change would hurt both fledgling industries, like Mozambique’s, and small farmers in Europe. The proposals would not even eliminate Europe’s

surplus, which is being challenged at the WTO. The least developed countries will get unlimited access to the EU market for their sugar from 2009, but the value of this access would be seriously compromised by the proposed price cut.

Fairer trade policies comprise only one component necessary for lasting and sustainable development in Africa. Equally important is increasing the level of domestic and

foreign investment in local economies, as well as steps towards good governance to which many African countries are committed – from fighting corruption to building up effective institutions such as the courts, police and public services.

Improving the status of women is also vital. Women already provide up to 80 percent

of household food production in sub-Saharan Africa. Still, in too many countries, the continued denial of women’s rights to land and property, in addition to unequal

wages and working conditions, is holding back efforts to improve living standards and achieve sustainable development.

Trade is a key engine of development, and American and European policymakers must consider the impact of their trade policies on people in the developing world. It

will not be easy to design a fairer system that pleases everyone; I am acutely aware of

the political difficulties involved in reforming agricultural policies in the US and EU. Support for domestic agriculture – for instance, subsidies that promote environmentally friendly farming and rural development – is certainly justified. But the

current system is simply unfair. It concentrates payments on large-scale commercial agri-business while failing the vast majority of domestic small-scale farmers

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and consumers, at the same time harming millions of people in the world’s poor-

est countries. We need to bring home the fact that trade is not only a key engine

of development; it is also a crucial factor in economic justice. Trade policies can directly affect people’s access to fundamental rights – to an adequate standard of

living, health, food and education. Trade ministers should wake up every morning with this in mind.

In the lead-up to the UN World Summit in September and the WTO Ministerial in December, a real opportunity exists to achieve the further reforms needed to make 2005 a truly historic moment in the fight against global poverty. What must be at the forefront of our thinking is the notion of shared responsibility. The changes

needed – in rich and poor countries alike – to lift millions of people out of poverty

have nothing to do with charity. They are about fairness. They are about seeing our

fates as one human family being increasingly interconnected. They are about granting all people the right to a decent livelihood and a sustainable future. Dublin, 23 August 2005 Mary Robinson, former president of Ireland and former United Nations High Commissioner for Human Rights, is president of Realizing Rights: The Ethical Globalization Initiative.

Globalization’s Hidden Benefits Richard W. Fisher Citizens and companies do not seek to do business in faraway places for the sheer adventure of it. They do it because it makes them better off. This is the natural process

of capitalism, constrained by the cost of transport and information and accelerated

by technologies that make it cheaper to move goods, services and ideas. Globalization will proceed apace unless or until the governmental authorities intervene to stop it. Policymakers in both the political and monetary realms must come to grips with this if we are to fulfill our mandates.

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A few numbers tell the story of the world’s march toward globalization: •

Trade as a percentage of gross world product has risen from 15 percent in 1986 to nearly 27 percent today.

•

In the past two decades, the stock of foreign direct investment assets has nearly quadrupled as a percentage of gross world product.

•

More people than ever are crossing national borders – for business and pleasure. On average around the globe, countries received just one foreign visitor for every 100 people in 1950. By the mid-1980s there were six, and since then that number has doubled to 12.

•

Since 1991, international telephone traffic has more than tripled. The number of cell phone subscribers has grown from virtually zero to 1.8 billion – 30 percent of the world population – and Internet users will soon hit 1 billion.

Many analysts highlight globalization’s private-sector benefits – the strength built by competing as well as the gains from trade, specialization and productivity that

come with expanding markets. But globalization offers less certainty for the pub-

lic sector. An essay in the 2005 annual report of the Dallas Federal Reserve Bank

analyzes the interplay of globalization and public policy and points to a correlation between increasing globalization and measures that promote faster growth, lower inflation, higher incomes and greater economic freedom.

The economic logic is straightforward. Competition brings benefits to the public

sector the same way it does for the private sector. Because factors of production are increasingly mobile in an era of globalization, governments vie to gain and hold

onto them. Mobile factors flee economies that burden them with high taxes, exces-

sive regulation and capricious administration. They gravitate toward countries that offer the best opportunities to increase profits or paychecks. The economic benefits of productive factors give nations incentives to pursue better economic policies.

The study relies on the globalization index devised by A.T. Kearney and Foreign Policy magazine, which ranks roughly 60 countries from the most to the least globalized. It includes cross-border trade and investment as well as measures for technologies

that shrink the world, people-to-people connections and government participation

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We should celebrate, not denigrate, globalization.

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in the global community. The US is the world’s fourth most globalized country, behind Singapore, Switzerland and Ireland. Iran comes in last.

We looked at how the countries in the A.T. Kearney/Foreign Policy index fared on

18 measures of public policy, from the World Bank, the Fraser Institute, the Heritage Foundation, Harvard University and Transparency International. Overall, as nations become more globalized, they tend to be more open to international trade, maintaining lower tariffs and reducing other barriers. They are more open to foreign

capital, allowing foreigners to participate in their economies as direct and portfolio investors. Increasing globalization is associated with fewer and better-administered regulations, a more favorable corporate tax environment and policies that stimulate innovation.

In countries with a higher degree of globalization, policies tend to support more accountability in the private and public sectors. These nations are more likely to

maintain courts that recognize property rights and enforce the rule of law. Their governments are more effective and less corrupt. Policies in these more globalized countries tend to be more stable, essential for long-term planning by business.

The study has implications for monetary policy. Inflation is the central banker’s

nemesis – the Lex Luthor of the monetary realm. It cripples the poor and destroys the purchasing power of the elderly and others who live on fixed incomes. It erodes incentives to work and save and debases investment. Today, money is probably the

most mobile factor of production. In a nanosecond, it can scurry to any part of the world with a squeak of a computer mouse. Nations that fail to control inflation find they cannot retain their own capital or attract money from other countries, except

at high interest rates. They end up not only with high inflation but also with lower

investment, higher interest rates and slower growth. Most countries want to avoid these outcomes. They want to retain capital and attract it from other countries. Low inflation helps them do so. Over the past 30 years, there has been a marked decline

in inflation across the world – particularly among the nations most integrated into the world economy.

Not every government policy has improved with globalization. For example, the

Federal Reserve study found no evidence of a link between increasing globalization and fiscal restraint. Governments tend to get bigger as nations become more

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interconnected to the world economy. Public transfers and subsidies increasingly pervade nations as they globalize, and personal income taxes become more burdensome as well. Globalization has less influence on fiscal policy, perhaps because richer

nations have the means to spread those riches through their societies. Likewise,

labor-market flexibility does not generally improve as economies open up to the

rest of the world. As long as workers refuse to acknowledge they are competing in

a global economy, they petition wealthy governments to protect their jobs. Labor market rigidities slow job growth and raise unemployment, in turn creating a greater demand for expensive safety nets for idle workers.

Recent demonstrations in France show the political difficulty of enacting even relatively modest changes in regulations that hamstring hiring and firing, raise costs and increase unemployment. The French government yielded to those protests – but it is encouraging that the French government recognized that restoring competitiveness

requires loosening of the country’s labor laws. And not all French youths protested the law. As a business school graduate, Boris Mallereau, 27, had moved to London

to find work. “Here, I might lose my job more easily, but I can find another job just as easily,” he said in a Financial Times article. “French people don’t realize that a robust job market is in itself a form of job protection.”

Other countries realize the value of nimble labor markets in an ever more connected

world. They are beginning to enact reforms. Firms continue to seek the best workers

for the money, wherever they may be found, especially as advances in telecommunications, transportation and supply-chain management bring the world closer together. Labor’s best option in a globalized world is to adapt, compete and get stronger.

With the important exceptions of fiscal and labor policies, the Dallas Fed study

concludes that globalization is associated with better policies. Of course, there

is a chicken-and-egg problem of whether globalization improves public policy or whether nations that improve their policies succeed in becoming more globalized.

It is probably both. We should celebrate, not denigrate, globalization. It is associated with better government policies, ones that lead to higher living standards and greater economic freedom. Dallas, 4 July 2006 Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas.

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Economic Patriotism Blind Alley in Globalized World? Patricia Wruuck The battle over Arcelor, Europe’s biggest steel company, was about more than a

merger. The success of Mittal’s bid posed a setback to economic nationalists who seem to be on the rise lately. Arcelor’s shareholders accepted the bid of India-born

Protecting favorite industries only postpones inevitable changes that can also be helpful.

Lakshmi Mittal despite the board’s opposition. This should be taken as an encouraging sign: Economic rationale defeated economic patriotism. Yet cross-border

mergers remain sensitive and highly politicized – prompting politicians to interfere in business decisions.

Six months after his company launched a hostile takeover bid for the Luxembourg-

based steelmaker Arcelor, Lakshmi Mittal finally succeeded. On June 25 Arcelor’s board agreed to sell the company to Mittal Steel for $32.2 billion. Mittal-Arcelor will

be by far the world’s largest steel company in terms of output, revenue and market value. Shareholders approved of the deal because the two companies complement each other, both in the types of steel they produce and their geographical focus.

In addition, the newly created giant will enjoy other advantages such as increased

negotiating power with suppliers and synergies in purchasing, manufacturing and marketing.

These tangible arguments persuaded shareholders to oppose the opinion of the

board. Arcelor’s board tried various tactics to discourage the deal: First, the board

changed the holding structure of Dofasco, a recently acquired steelmaker, turning it into a poison pill for Mittal, who planned to sell that part of Arcelor after the merger.

Then the board tried to foster an alternative deal with the Russian steel company Severstal acting as a white knight. During negotiations, Arcelor’s Chairman Guy

Dollé even dropped disrespectful remarks, hinting that Mittal Steel did not share European “cultural values,” criticizing Mittal for “mono-cultural management” and

denouncing his bid as “monkey money.” The board lobbied for political support,

but the results were mixed. Early on, the governments of Luxembourg and Spain, where major production sites of Arcelor are located, and France tended to oppose the deal. Later, officials were careful in publicly voicing their opinion.

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On other occasions, politicians were more active. Last year, mere rumors of a bid

from American PepsiCo for the French yogurt-maker Danone caused French Prime Minister Dominique de Villepin to embrace economic patriotism. PepsiCo never

made an offer, but the fear of a takeover triggered new legislation making it easier to protect businesses in strategically-related sectors from foreign takeovers. For some, this may extend to “strategically important” yogurt-makers.

Even within Europe, takeovers and cross-border mergers remain controversial. To avert a hostile takeover of the French utility provider Suez by Italia-based Enel, the French government tried to broker a tie-up between Suez and state-owned

Gaz de France, immediately challenged by unionists for reducing the 80 percent

government stake in the public company by more than half. At the same time, the Spanish government favored a merger of Endesa and Gas Natural – both Spanish companies – over a bid for Endesa by the German energy company E.ON. Both

deals, still pending, cause much discussion within Europe: Many call for the state to

promote national champions, while others raise concerns because these strategies

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harm the single market. At present, the most powerful measure at the EU Commis-

sion’s disposal for defending competition is to launch an infringement case against interventionist governments.

Ideally, a bidder’s nationality should not play a role in mergers, in particular within

the European single market which guarantees explicitly free movement of capital. Apart from that, given global operations of big companies, national categories often no longer fit anyway. Economic patriotism and globalization don’t fit together, but the two are closely connected. Globalization creates opportunities for increased specialization, division of labor and productivity growth as well as pressure for adjustment, for instance in labor markets.

Such changes can often be painful, making it tempting for governments to shield

targets from competition and opt for protectionist measures instead. Fears of un-

employment easily mix with security concerns and, unfortunately, also chauvinism. States have a vague feeling of losing sovereignty due to globalization. Governments feel crimped about their scope of control, and citizens worry about a loss in benefits and their economic future. These concerns led to recent outbursts of economic patriotism, both in and outside Europe.

The economic patriotism currently in evidence goes beyond classic protectionism

and extends to industrial-policy measures. The state aims to protect the domestic market against competition from abroad through classic obstructions, as well as presumes for itself the right to shape corporate decisions at home, for instance, by promoting national champions.

The line between industrial policy in the sense of government influence at home and protectionism in the sense of trade barriers to the outside world is increasingly

blurred. In addition, discussions about economic patriotism mirror the classic debate about how much state intervention is good for the economy: Is it the government’s task to “save” domestic companies from foreign takeovers, and what are the costs and benefits of these interventions?

In fact, the theoretical grounds for state intervention are narrow. Economic theory mostly confines state activity to creating framework conditions such as investing

in infrastructure or basic education. If there is a functioning market, governments

should not intervene, for instance, by supporting a particular company. Markets

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use information fast and flexibly, and constitute the most efficient mechanism to allocate resources.

This point is a core problem of state intervention: Governments wanting to support

individual companies or industries must make choices under uncertainty. As a rule, governments rely on less information than what’s available through the market

process. Only under the assumption of market failure, economic theory provides a rationale for government intervention. If market imperfections exist, cases for

intervention may arise. One prominent example is the aerospace industry where

increasing returns to scale yield size advantages for companies operating under oligopoly. Here, governments can skew competition, for example, by giving subsidies to domestic producers. This is generally referred to as “strategic trade policy,” where governments deliberately influence strategic relationships between companies.

A number of problems are related to these interventions: Other governments may

retaliate, and countries can get caught up in a subsidization race or reciprocal barriers. The selection of strategic industries can be prone to vested interests. In addition, politicians tend to select high-visibility image-building projects. Some officials

also choose to denounce cross-border mergers in public, finding it easy to appeal to people’s fears, for example about job loss, and gain popularity.

Empirically, it is more than questionable whether interventions improve domestic

firms’ competitiveness or serve the economy as a whole. A study by Deutsche Bank Research – “Economic Patriotism-New Game in Industrial Policy?” EU-Monitor No.35 – compares different varieties of economic policy in Europe – ranging from relative openness to more frequent state intervention. The study finds no convincing

evidence in support of economic patriotism. However, sound evidence exists for the

fundamental importance of a liberal economic framework, showing that openness

and competition have a beneficial impact on economic growth. This argument is

confirmed by experiences with the European single market, where economic integration and increased competition have led to gains in economic welfare as well as lower prices for consumers.

Cross-border mergers are a sign of ongoing internationalization of business. More

firms join forces to compete globally, including those from developing countries

such as India and China. Foreign bids should be judged on their business merits, regardless of nationality. In this respect, politicians and business people should

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follow the example of Arcelor’s shareholders. Resorting to economic patriotism, raising barriers and shielding companies from competition is not a promising strategy because it only postpones rather than addresses change. Frankfurt, 8 August 2006 Patricia Wruuck is an independent economic analyst with Deutsche Bank Research in Frankfurt and the author of “Economic Patriotism – New Game in Industrial Policy” for Deutsche Bank Research.

The Yin and Yang of US Debt Ashok Bardhan and Dwight Jaffee American homeowners worried about dwindling property values and the burden of adjustable-rate mortgages may not care to know what made their mortgages so affordable. Increased purchase of US Treasury bills, agency bonds and mortgage-

backed securities by foreign government institutions that made mortgages so low,

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however, has worried economists. With the US economy reeling from multiple shocks,

economists have another source for concern – the increasing role played by foreign

institutions and sovereign wealth funds, mostly belonging to emerging economies, in financing imports of goods and services to the US that support its lifestyle.

By virtue of the very structure and logic of international trade, the large and continuing purchases of US securities by foreign investors are yin to the yang of the equally

large and continuing US trade deficits. Americans buy more than they can pay for. One consequence of purchases by foreigners of US debt securities has been to help

lower US interest rates and mortgage rates, with estimates ranging from 50 to 90 basis points. Increasingly, therefore, there exists the corresponding risk of rising

Growing American

reduce or reverse these purchases. This raises relevant questions: Is this stream of

for both lenders and

interest rates, dollar depreciation or related dislocations were foreign entities to

debt has consequences

financing sustainable? What could be the consequences of a reversal of these flows?

borrowers.

Although the US current account deficit – the gap between US import of goods and services and its exports – has been checked somewhat by the falling dollar in 2007, it still amounts to over 5 percent of US GDP, and foreign-surplus countries continue

to accumulate a greater net amount of dollar-denominated securities. While these facts have been in place for some time, the distinguishing features in recent years

have been the cast of investors doing the financing, the extent of their holdings, and their motivations.

As of the middle of 2007, foreign investors held almost $5 trillion in US equities and

foreign direct investment, almost $3 trillion of US corporate bonds and more than

$2 trillion of US Treasury securities. Foreign ownership of US Agency securities,

bonds and mortgage-backed securities, MBS, issued or backed by agencies such as Ginnie Mae, Fannie Mae and Freddie Mac totaled just under $1.5 trillion. While the

absolute amounts may be large, it’s the share held by foreign investors of total US securities outstanding that conveys the significance of these global financial flows. The foreign share of US Treasury securities shows the greatest penetration, almost

45 percent of all US Treasury securities outstanding. This share has grown rapidly, from less than 20 percent of the total as recently as 1994. The foreign share of

agency securities has also grown rapidly, rising from about a 6 percent share in

1994, to over a fifth of the total US agency securities outstanding. Foreign official

institutions, which include central banks, as well as most sovereign wealth funds,

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own the major share – 74 percent of Treasury securities and 59 percent of agencies

– of these foreign holdings of US debt securities, but only 8 percent of all foreign holdings of US equities.

Asian entities are the most prominent foreign investors, and hold 31 percent of

all US Treasuries outstanding, 13 percent of all agency bonds and agency-backed mortgage pool securities, but relatively small shares of US corporate bonds and

equities, while European investors hold over 16 percent of all US corporate bonds, but relatively small shares of all other security classes.

In terms of individual country holdings, Chinese entities hold close to 10 percent of

all US Treasuries, 6 percent of agency bonds and MBS, with much smaller shares of US corporate bonds and equities. Japanese investors claim about 13 percent of US Treasuries, 3.5 percent of US agency bonds and MBS. Russia and the Middle Eastern oil exporting countries hold smaller shares. Most of the growth in these holdings, particularly those of China, has taken place since 2000.

Recently, there’s been increasing concern regarding the sustainability of these foreign capital inflows, particularly from China, in the wake of the ongoing financial

crisis and the depreciating dollar. The impact, in case of a slowdown or a reversal of these flows, will tend to depend on the substitutions and whether the alternative investments stay within the US dollar-denominated universe. For example, a movement by Chinese institutions out of Treasuries and into agencies, or vice-versa,

is unlikely to have much impact on the interest-rate spread, because of their close substitutability, and none on the dollar, both being dollar-denominated.

Diversification into euro-denominated securities, however, would create pressure

for the dollar to depreciate relative to the euro. It would also pressure the dollar

to depreciate against the Chinese yuan, although how much would depend on the

Chinese central bank’s exchange-rate policy at the time. In addition, if the market were to interpret the transaction as a signal of a new Chinese government policy to allow the yuan to float more freely against the dollar, then the exchange-rate adjustment could be swift and large.

Given the focus on China’s intentions and their sizeable holdings, it’s possible that even a minor change in their policy direction vis-à-vis purchases and holdings of US securities could have major impact on the expectations of market participants

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regarding the future trajectory of the yuan-dollar relationship. At the same time, there would be a sizeable increase in interest rates, both through the price-yield channel and inflationary pressures.

Although there are a number of other significant players, including oil-exporting

countries, the future role of China in global capital flows remains critical. Among the reasons given for China’s investments in US securities, the political economy

surrounding the maintenance of a relatively undervalued yuan vis-à-vis the dollar

to promote exports to the US, gets particular prominence. The current development strategy in China seems to rely on an implicit consumption tax created by an undervalued yuan, imported goods cost more, in order to expand export-driven employment and deal with ongoing pressures of job creation.

On the other hand, the case for diversification rests on the low returns on present

investments, as well as future fears about the dollar trajectory. The forays into private equity, as well as attempts at other private stakes by the newly government-created

China Investment Corporation, tasked to better manage a part of the reserve bonanza have not been particularly successful, and calls increase within China to use the funds for broader social and economic goals in what is after all a developing country, with about 300 million poor, according to recent World Bank estimates.

At the same time, a global shortage of creditworthy debt instruments has created

low yields, making it difficult to find productive investments. The major role played

by the US institutions in financing global debt and equity operations, regardless of where actual investments are taking place, determines the need for channeling funds through the US. Most foreign investors, and not just China, are therefore on the horns

of a dilemma, and the need to ensure good returns on their investment while not

wanting to be the last one out of the door gives the situation its knife-edge quality. Over the past decade or so, the benefits of international trade happen to have paradoxically landed on one of the most land-locked asset classes imaginable, namely

US housing and mortgage markets. A global savings glut and emerging economy

reserves recycled back into the US managed to create a low-interest environment that indirectly may have fed the current crisis.

While foreign investors might be tempted to transfer to non-dollar denominated assets leading to dollar depreciation, inflation and related dislocations, there are slim

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chances of abrupt change on the part of anyone. Despite recent turmoil, continuing purchases by foreigners indicate that there’s no loss in appetite for US securities. Berkeley, 4 April 2008 Ashok Bardhan is senior research associate at the Fisher Center for Real Estate & Urban Economics and Dwight Jaffee is professor, Haas School of Business, both at the University of California, Berkeley.

US and China Must Tame Imbalances Together Michael Pettis The financial crisis roiling the world is surprising in that there’s little surprise. While

triggers for financial crises throughout history differ, the underlying causes have been the same. Every financial crisis in history has been preceded by a long period of excess liquidity growth. It’s no different this time, nor is the sharp debate raging

about finding the scapegoat. Without trying to apportion blame, it’s clear that the US-China trade imbalances that created this surge in liquidity are major factors

behind the current crisis, and policymakers in Washington and Beijing share the primary responsibility to readjust their economies.

Excess liquidity growth typically occurs for two reasons: First, financial innovation or new money sources can lead to sharp increases in underlying money – for example the development and expansion of joint stock banks in the 1820s, the securitization of mortgages in the 1980s, or large gold or silver discoveries in the 19th century.

Second, massive global imbalances are recycled – like German reparations in the 1920s or petrodollars in the 1970s.

During the period of excess liquidity growth, several factors set the stage for the

subsequent crisis – asset prices rise as money flows into asset markets, risk appetite rises as risk premiums decline and risky investments prove profitable, and the

perceived value of liquidity declines as trading volume surges. When this happens,

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regulatory attempts to reduce risk in the financial system generally fail. When any part of the financial system is constrained from taking on risk, the market simply evades these constraints in one of three ways:

It innovates around them, it generates or develops new and unregulated parts of the financial system, or it conceals regulatory violations.

The recent explosion of derivatives, incorrectly blamed for the current crisis, was simply an efficient way to accomplish all three, and was no more the real “cause” of the crisis than investment trusts were in the 1920s or out-of-control real estate

lending was in 1980s Japan. The financial system was simply adjusting, as it must and always does, to surging liquidity and rising risk appetite.

The recent liquidity surge, to which the current crisis is the inevitable denouement, had its roots in the 1980s, when the securitization of US mortgages converted a

huge pool of illiquid assets into highly liquid securities, subsequently reinforced by the recycling of the Japanese trade surplus with the US in mid-decade. The process took off after 1998. During this time US household savings declined to rates never before seen and the US trade deficit, which until then had rarely exceeded 1 percent of GDP, rose to levels unmatched in US history.

During this period several Asian countries, led by China, began running policies

aimed at generating trade surpluses and accumulating foreign-currency reserves to the extent that net capital flows from developing countries soared to the highest

recorded levels in history. It’s notoriously difficult to sort out causality in balanceof-payments relationships, but the fact that this process seems to have begun in 1998 suggests a reaction to the Asian crisis of 1997, a shocking event for Asian policymakers to this day.

The fundamental relationship in this global balance of payments was between China and the US. With Chinese policies aimed, explicitly or not, at promoting production and constraining consumption, China produced far more than it consumed.

As part of its trade surplus, China accumulated dollars, subsequently invested in the

US. This capital export did not occur in the form of private investment, but rather

as forced accumulation of foreign-currency reserves, which were recycled back to the US largely in the form of purchases of US dollar assets by the People’s Bank of

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China, PBoC. Since China sets the value of its currency, PBoC had no choice but to accumulate reserves in this manner.

This recycling process functioned as a great liquidity generator for the world, converting US consumption into Chinese savings, which were recycled back into US

financial markets through massive PBoC purchases of US securities. There are several self-reinforcing aspects to this system that pushed it to the extremes ultimately

taken. In the US the torrent of inward-bound liquidity boosted asset prices. As real estate and stocks surged, substantially raising US household wealth, households

We’re now in the second stage of the crisis, in which tradesurplus countries must adjust after the forced adjustment in tradedeficit countries.

diverted a rising share of their income to consumption.

At the same time since rising liquidity forces financial institutions to adjust their balance sheets to accommodate money growth, they increased outstanding loans. With banks eager to lend and households eager to fund consumption, it was only

a question of time before household borrowing ballooned and an increasing share of current income was diverted to consumption rather than savings. Since the late

1940s US households have saved between 6 and 10 percent of US GDP, but after 1998 household savings began plummeting, reaching an unprecedented level of near zero by 2007.

Meanwhile in China, as foreign currency poured into the country via its trade sur-

plus, the PBoC had to create yuan to purchase the inflow. In China most new money creation ends up in banks, which primarily fund investment as consumer lending is

a negligible part of bank lending. The PBoC tried to constrain excess credit growth, but it surged anyway, mostly off balance sheet, in rapid loan growth among policy

banks, exempt from the loan constraints, or in the unregulated informal banking sector. As expected, loose monetary policy resulted in explosive growth in financial risk-taking, even as regulators tried to constrain the growth.

With Chinese investment surging, industrial production grew faster than consumption and real estate prices soared. As the gap between production and consumption

grew, so did China’s trade surplus, which resulted in more foreign currency pouring into the country, thus reinforcing the cycle.

This trade and capital relationship between the two countries, with each country locking itself unwillingly and accidentally into self-reinforcing monetary traps,

caused the imbalances to get so out of hand. It also ensured that adjustment would

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be brutal. With US asset markets plunging and US banks unwilling to lend for con-

sumption, one-half of the relationship is adjusting sharply. China’s equally sharp and necessary adjustment should not have been a surprise.

We’re now in the second stage of the crisis, in which trade-surplus countries must

adjust after the forced adjustment in trade-deficit countries. However, the US is so much larger than China and adjusting so rapidly, there’s a real risk that the Chinese

economy will be overwhelmed. Policymakers, especially in the US and China, must ensure that this adjustment takes place in the least disruptive way possible. This requires that as the major trade-deficit and trade-surplus countries, the US and China must coordinate fiscal and monetary policy so as to slow the process down.

US fiscal policies, in other words, should not be aimed at replacing collapsing US

household demand with government demand. This would only perpetuate the imbal-

ance. They should be aimed primarily at providing traction for Chinese fiscal policy, which ultimately must be responsible for creating enough demand to absorb Chinese

overcapacity. Unfortunately it’s far from obvious that policymakers, especially in China, understand the risk. Beijing, 6 January 2009 Michael Pettis is a finance professor at the Guanghua School of Management, Peking University, and author of The Volatility Machine: Emerging Economies and the Threat of Financial Collapse.

European Union in Crisis Jonathan Fenby Buffeted by the worst recession in 50 years, the biggest and most successful pan-

national venture of our time – the European Union – is in danger of unraveling. There’s growing fear that the whole European project may be damaged as protectionist pressures mount and the downturn sharpens differences among countries.

Countries that rubbed along when the going was good now find themselves scram-

bling for national solutions in place of a collaborative effort. Papering over cracks

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that always marked the European club becomes steadily more difficult as companies

close, jobless queues lengthen, banks report record losses and the public calls for solutions that escape politicians.

Safeguarding national interests, as leading EU governments attempt, as opinion poll

ratings fall and popular protests emerge, can easily shade into protectionism. This would undermine the single European market and the supposedly level playing field

at the base of the 27-nation community, with the bigger members letting smaller, weaker economies, some recent members, crash into the wall. Easing financial rules

Playing a blame game, European governments seem ready to throw weaker members out of the lifeboat.

is a natural reaction in hard times, but could undermine the regulations governing

the euro common currency, to the delight of some EU leaders who have long resented the iron hand of the central bank in Frankfurt. Growing antipathy to workers from the new member nations could damage the EU’s open-door policy.

It’s now plain that European governments failed to appreciate the scale and depth

of the crisis; the assertion to parliament last year by British Prime Minister Gordon

Brown that British banks had been saved – by a slip of the tongue he said the world had been saved – has become a bad joke with a string of worsening results from the City of London, topped by a £10 billion loss for the HBOS bank, taken over by Lloyd’s

last autumn. The initial schadenfreude of mainland Europe towards the so-called

Anglo-Saxon neo-liberals of the US and Britain has been replaced by something close to panic as the crisis spreads from the financial world to the real economy.

If Brown’s reputation as the economic manager has taken a nasty drubbing, events

have turned the electoral promises of economic liberalization from France’s President Nicolas Sarkozy on their head.

The German model looks vulnerable to the downturn in world trade, with a 2.1 percent contraction in gross domestic product for the last quarter of 2008, the sharpest

drop since reunification in 1990. France, Italy and Spain also recorded much bigger GDP declines than expected during the same quarter.

The euro common-currency zone countries face their worst recession with GDP dropping by 1.5 percent in the fourth quarter of 2008. The bond market reflects concern

about state finances in Spain, Portugal, Italy, Ireland and Greece. Unemployment is rising and, according to some estimates, may go up by 50 percent this year.

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Adding to the threat of this economic and financial fog enveloping Europe is the

rise of popular anger, especially with elections due in Germany and Britain in 2010. The ire against bankers is spreading with riots in Greece, Latvia, Lithuania and

Bulgaria. Trade unions claim to have convinced a million people to join a January national protest in France, called against Sarkozy’s policies, but couched in the broader context of the downturn as marchers identified the president with forces costing jobs and security expected from government. Though globalization has

greatly benefited European companies, open borders and free trade elide with the toxic financial waste in a broad brush rejection of the past decade.

The call for politicians to “do something,” quickly, to end the crisis is whistling for

the moon. There are no short-term solutions. But it’s not a demand which government leaders can ignore, and the deeper danger rests in their reaction. Speaking at

a 13 February meeting of the Group of Seven finance ministers in Rome, German minister Peer Steinbrück warned that protectionist measures could turn a financial

crisis into a rerun of the 1930s disasters. Indeed, there are disturbing signs of rising populist protectionism.

Given Sarkozy’s hyperactivism, it’s not surprising that France should be at the eye

of the storm after he announced a €6.5 billion aid plan for French automakers, suggesting that they should repatriate production from Central Europe to protect jobs at home. That set protectionist alarm bells ringing in Brussels and brought caustic

rejoinders from the Czech Republic, which took over the rotating European Council presidency from France this year and has been annoyed by the French leader’s

patronizing remark that Prague was doing the best it could in the job. Nor did the

French president help cross-channel relations when he used a television interview to deride the British economic model for depending too heavily in financial services:

Downing Street hit back, citing figures showing that manufacturing represents a bigger slice of the British economy than in France. But Sarkozy is far from alone.

German firms have gained an advantage with government measures to reduce nonwage labor costs. An applause-grabbing remark to a Labour Party conference about

“British jobs for British workers” has come back to haunt Brown as workers protesting foreign labor brandish placards with his words. Banks in Britain helped by the government are told to lend to the domestic market, not to foreigners. Questioned about this, Chancellor of the Exchequer Alistair Darling responded taxpayers expect

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this and that other governments should do the same. Aid packages for French and

German banks go against the spirit of EU competition policy. Despite summit meetings and expressions of good will in seeking joint solutions, the actions of major EU

countries make it clear that priorities are overwhelmingly domestic, whatever the repercussions for weaker neighbors and, longer term, for themselves.

The French leader has long chafed under the budget limits set by the European

Central Bank, and governments in countries hard hit by the crisis are likely to agi-

tate for relaxation of rules, even if this brings them into conflict with the Germans. “In a time of economic crisis, we see atavistic instincts emerging,” Czech Foreign

Minister Karel Schwarzenberg told The New York Times in mid-February. Prime Minister Mirek Topolanek warned against “beggar-thy-neighbor” policies among the 27 member states and called a EU summit to coordinate policies.

This was meant to be the year when the EU marched on to a new stage in its development, with president of the European Council serving 30 months rather than the

present six-month rotation and a newly anointed diplomatic chief giving the community more global clout. Whether that happens is a matter of crystal-ball gazing. All that’s evident is the economic crisis risks tearing holes in Europe’s fabric woven over the last 50 years.

A government should be capable of looking beyond immediate challenges to co-

operating in finding solutions. That, one might naively think, is the purpose of an association like the EU. Yet there’s little sign of such action so far. Despite Steinbrück’s warning, Europe is not about to revert to the 1930s. But in the conflict

between the Union’s broad communitarian ambitions and immediate imperatives bearing down on politicians, it’s clear which is winning, with potentially damaging long-term consequences. Paris, 16 February 2009 Jonathan Fenby is author of On the Brink: The Trouble with France and works for Trusted Sources, a London-based research service.

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A Cash-Strapped US Faces Diminished Political Clout Michael Mandelbaum This month marks the second anniversary of September 15, 2008, a date that will be

remembered as one of the worst moments in the history of the global economy. On that day US investment bank Lehman Brothers collapsed, triggering a major financial

crisis and dramatically worsening a worldwide recession whose effects are still felt. The date also matters in the history of international politics, accelerating what is

destined to be the most important international political trend of the second decade

of the 21st century: the growing financial obligations of the United States government. Coping with these obligations will limit the resources available for American foreign policy, thereby reducing the nation’s international role.

Because that role is so important – the United States acts as the world’s de facto government, providing to other countries many of the services that governments typically furnish to the societies they govern – this will have a major, and in all likelihood dangerous, impact both on the global economy and on international politics. That impact is the subject of my book The Frugal Superpower: America’s Global Leadership in a Cash-Strapped World. In the years leading up to the Lehman collapse, the United States substantially increased its national debt. To cope with the financial crisis that the collapse brought about, and the deep recession that it aggravated, the US government borrowed more

money, further expanding this debt. Most ominously for the country’s fiscal future

and for its foreign policy, the bill the American government expects to pay for its principal entitlement programs for the elderly – Social Security and Medicare – will

soar in the decades ahead with the retirement of the 75 million members of the socalled baby boom generation, who were born between 1946 and 1964.

Because the government cannot borrow all the money necessary to meet these obligations and because the cost of paying the interest on trillions of dollars already borrowed will rise sharply, the US will have little choice but to raise taxes and reduce

benefits for all citizens. In these circumstances, the domestic support for foreign

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policies of all kinds will fall sharply. Americans will feel considerably less gener-

ous than in the past about providing the funds for their country’s foreign policy,

and the government will have less to spend on it. Consequently, the United States will do less in the world in the future than it has in the past. This will transform international relations.

The events of September 2008 and thereafter have already eliminated an important international economic role of the United States. With Americans spending less and

saving more, their country has ceased to be the world’s consumer of last resort, on which other countries can rely to buy the products they make for export.

Another major international economic role is still intact, but because of mounting

national debt, looks increasingly shaky: The dollar remains the world’s principal

currency, but as much because of the lack of a viable substitute as because of affirmative global confidence in American economic dependability. That confidence is beginning to waver. The long-term continuation of the special status of the American currency in world markets is not assured.

As for international politics and international security, some tasks that the United

States has carried out will almost certainly be eliminated. The use of American military forces to protect people persecuted by their own governments, which the United States undertook in Somalia, Haiti, Bosnia and Kosovo, will not be repeated.

Nor will the strenuous military effort to foster political stability and democracy in which the American government is engaged in Afghanistan and Iraq be launched elsewhere or even continued in those countries for much longer.

The deterioration of the US fiscal condition will also affect the American defense budget. By one estimate, the US accounts for about 45 percent of the world’s military

expenditures. Pressure to reduce these expenditures will increase over time, which will, in turn, affect the rest of the world because most defense spending supports

missions that are of major importance to global security. Specifically, the personnel

and weaponry paid for by the defense budget make a US military presence possible in three crucial regions – East Asia, Europe and the Middle East.

In the first two regions, that presence helps keep order by serving as a buffer between

and among countries that are not actually hostile to one another but that harbor

fears that hostility might someday arise. The American security role in Europe re-

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assures the Western Europeans that if Russia should attempt to intimidate them, the United States will protect them as it did during the Cold War. At the same time,

the American military presence in Europe and the enduring alliance with Germany reassure Russia that Germany itself, which invaded Russia twice in the first half of the 20th century, will not become an aggressive military power again.

The similar US role in East Asia reassures the countries there that they have a means

of counterbalancing China, while reassuring China that Japan, like Germany an

American ally and one that invaded and occupied the Chinese mainland in the 20th century, will not reprise its past pattern of conquest. The American military presence

in both regions, although reduced from Cold War levels, enables the countries in

each to feel that their region is safe and that they can behave accordingly, just as a policeman on patrol imparts a sense of security to a neighborhood. Any drawdown of US forces in Asia will add to the nervousness of the countries of the region, which face an increasingly powerful and assertive China.

In the Middle East, American military power serves to contain Iran, whose government is deeply and openly committed to, and works actively for, overturning the

existing political and economic arrangements in the region. An American military presence in some form will be necessary to deter Iran as long as the clerical regime holds power in that country, a presence that will be all the more urgently needed if that regime succeeds in its efforts to acquire nuclear weapons.

Growing US debt, and the measures necessary to cope with it, will make it more

difficult to sustain American military deployments in each of these regions, and a substantial reduction of American forces in any of them could well have adverse

political and economic consequences. An American withdrawal from East Asia or Europe could produce heightened suspicion, perhaps leading to arms races among

the countries of these regions, which would threaten trade and investment in both. A diminished American presence in the Middle East could trigger a regional war, which would threaten the availability of its oil, on which the global economy depends. In short, the impact on all countries, not only the United States, of the growing

financial obligations of the American government could be serious indeed, especially since no other country or group of countries is willing or able to do what the

United States does around the world. With so much wealth destroyed and with the sharp downturn in production, the direct, short-term economic consequences for

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the world of the 15 September 2008, events have already been severe. The indirect geopolitical consequences could, over the long run, turn out to be even worse. Washington, 31 August 2010 Michael Mandelbaum is the Christian A. Herter Professor of American Foreign Policy at the Johns Hopkins School of Advanced International Studies. This essay is adapted from his book, The Frugal Superpower: America’s Global Leadership in a Cash-Strapped Era, published by PublicAffairs.

Elites Loot Africa as Foreign Debt Mounts James K. Boyce and Léonce Ndikumana It was an African equivalent of stealing the Brooklyn Bridge, and for four years, nobody noticed. From 2007 to 2010, $32 billion in public funds went missing from

Angola. The unexplained money outflow from sub-Saharan Africa’s second largest oil exporter was revealed in a December International Monetary Fund report, which pegged the loss as equivalent to one-quarter of the country’s gross domestic product.

This financial hemorrhage comes at a staggering human toll. Despite its great oil wealth, Angola is home to some of the world’s poorest people. Human Rights Watch,

which reports periodically on corruption and mismanagement of oil revenues, notes

that “social indicators remain low in Angola and the population has limited access

to social services.” Of every 1,000 children born in Angola, 160 die before reaching their fifth birthday, according to World Bank data.

Angola’s missing billions are only the latest example of a perverse phenomenon that

operates in the shadows of the international financial system: massive outflows of capital from some of the most impoverished countries in the world. As documented

in Africa’s Odious Debts, sub-Saharan Africa has experienced more than $700 bil-

lion in capital flight since 1970. This far surpasses the region’s total external debts, which amount to roughly $175 billion. Some capital flight is motivated by a search

for higher returns and lower risks, but in Africa much has been driven by the aim of hiding illicitly acquired wealth in safe havens abroad.

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Far from being heavily indebted, Africa is in this sense a net creditor to the rest of

the world. But there is a fundamental difference between the continent’s external assets and its external debts. The assets are privately held by a small stratum of

wealthy individuals: Capgemini and Merrill Lynch estimate in their latest World Wealth Report that Africa has about 100,000 “high net worth individuals” with a total of $1.2 trillion in liquid assets. The debts, on the other hand, are owed by the African people as a whole through their governments.

Capital flight does not disappear from the face of the Earth: Every dollar that leaves

Africa lands somewhere else. The favored destinations are bank secrecy jurisdictions

– euphemistically called “tax havens” – where a cloak of anonymity protects wealth

Far from being heavily

mental organization Global Witness traced $1.1 billion from Angolan oil revenues

net creditor to the rest

holders not only from the taxman but also the rule of law. In 2002, the nongovern-

indebted, Africa is a

to a single private bank account in the British Virgin Islands.

of the world.

Bank secrecy jurisdictions are not confined to treasure islands. The United States

itself is a major destination for illicit funds. US Treasury Department officials concede that banks routinely accept deposits of money that enters the country in violation of existing laws. Moreover, under current law US banks are not prohibited

from handling proceeds from many activities, including tax evasion, that would be considered crimes if committed within the United States.

The complicity of banks in African capital flight goes beyond the provision of safe havens. Banks also provide loans to African governments. Some of the borrowed

money has wound up in private accounts at the same banks that made the loans. In

2007, for example, a French police investigation identified multiple bank accounts held by Gabonese president Omar Bongo at BNP Paribas and Crédit Lyonnais, both of which had also provided loans to Gabon’s government.

Africa’s Odious Debts traces links between foreign borrowing and capital flight.

There is a strong correlation between the two: For every dollar of foreign borrowing in sub-Saharan Africa, on average more than 50 cents leaves the borrower country in the same year. This tight statistical relationship suggests that Africa’s public external

debts and private external assets are connected by a financial revolving door. Common

mechanisms for diversion of borrowed money into private pockets include inflated procurement contracts for goods and services, kickbacks to government officials, and direct deposits of public funds into the bank accounts of politically influential

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individuals. In the case of oil-exporting countries like Angola, many of the loans

are backed by a lien on future oil revenues. Oil-backed loans are doubly attractive

to creditors: first, because they typically pay interest rates well above the average and, second, because the contracts stipulate that the proceeds from the country’s oil sales will go into offshore accounts from which debt service is deducted before any revenues go to the oil-exporting country.

A “key component” of Angola’s unexplained loss of $32 billion, according to the International Monetary Fund report, “appears to be due to the transfer of funds

to escrow accounts held abroad in excess of the debt servicing for which those accounts were intended.”

The revolving door is an example of what economists call a “principal-agent problem”

that occurs when some people depend on others as agents to conduct business on

their behalf. In finance, the hazards arise on both sides of transactions when banks lend other people’s money and governments borrow in other people’s names.

On the creditor side, bankers are supposed to serve the interests of their deposi-

tors and shareholders by making prudent loans that will be repaid with interest. In practice, however, loan officers often are rewarded mainly for “moving the money,”

getting the loans out the door – an issue that has attracted attention at the US Federal Reserve in the wake of the subprime mortgage crisis.

On the borrower side, government officials are supposed to negotiate and disburse loans to serve the interests of their citizens. Instead they may borrow in the name

of the government, line their personal pockets and those of their cronies, and leave the public saddled with the debt.

The hemorrhage of Africa’s scarce resources can be curbed. Efforts by African gov-

ernments to recover wealth stolen by past officials have won international backing from the Stolen Asset Recovery Initiative launched by the World Bank and United Nations Office on Drugs and Crime.

Internationally, tougher anti-money laundering laws and tougher enforcement of

existing laws are needed to staunch illicit financial flows from Africa to safe havens abroad.

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More transparent information about financial inflows to African governments would also help. The Publish What You Pay campaign, launched by global civil society

organizations a decade ago in the wake of disclosures about the theft of Angolan oil

revenues, promotes disclosure of corporate payments for natural resource extraction. Similarly, a Publish What You Lend campaign could strengthen transparency and accountability in financial markets.

Last but not least, African countries can and should selectively repudiate odious

debts incurred by past regimes where the borrowed funds were not used for the benefit of the public,and creditors knew or should have known this to be the case.

Bankers threaten that repudiation of such debts would bring new hardships as the debtor country is cut off from access to new borrowing. But with selective repudiation, legitimate creditors would have no reason to fear, as their debts would continue

to be honored. Moreover, repudiation will benefit the many countries that currently pay more in debt service than they receive in new loans.

These steps would not only benefit the people of Africa, but also strengthen future

incentives for the exercise of due diligence by creditors and for responsible borrowing by governments. Banking on capital flight is a symptom of deeper defects in our international financial architecture. What’s needed, in Africa and abroad, are reforms tough enough to ensure that banks serve the people rather than fleecing them. Amherst, 27 February 2012 James K. Boyce and Léonce Ndikumana are the authors of Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent, published in October 2011 by Zed Books in association with the Royal African Society, the International African Institute and the Social Science Research Council.

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BRICS Alliance Looking for Cement Ashok Malik This past week the drama of a human torch screaming past Tibetan demonstrators overshadowed the summit of the BRICS economic grouping. The fact that Tibetan

protests against visiting Chinese president Hu Jintao dominated media reports rather than a diplomatic gathering was not just the question of emotion prevailing over acronym and number. It also showed the limited appeal of the BRICS concept,

Emerging economies value relations with the US more than their own loose alliance.

based more on pious wishes than reality.

A handy acronym for its constituent countries – Brazil, Russia, India, China and

South Africa – BRICS has been described as more a “talking shop” than a formal alliance. At the summit, the heads of government of the five countries agreed to study the feasibility of a “BRICS Bank,” a proposed multilateral development agency

modeled on the World Bank. They urged the West to act with fiscal responsibility

and, in attempting to recover from the post-2008 crisis, not create excess liquidity and add to inflationary pressures on BRICS economies.

The five leaders committed to trading within the bloc using the currencies of BRICS countries rather than the US dollar. Exuberance on this count was sobered by

statistics of intra-BRICS trade: estimated at US$230 billion in 2011, of which $74 billion, or a third, came from India-China trade. Brazil-China trade was about the

same quantum. Russia-China trade accounted for another $60 billion. Remove these three pivotal bilateral links and intra-BRICS trade drops to virtually nothing. The BRICS nations also sought more voting rights for themselves in the Interna-

tional Monetary Fund. They warned of a conflict against Iran, concerned that any

resultant oil shock would hurt countries like India and China. On Syria, the BRICS countries called for dialogue. Russia, which sees the Syrian situation as a test of its

great power self-identity and is sympathetic to the Assad regime, spoke of a BRICS humanitarian assistance program in Syria. Others were not so sure. In the end, despite their calibrated rhetoric, each of the BRICS countries values its relationship with the United States far more than with the four other BRICS countries combined.

Each is actually quite happy with an international system driven by American economic and technological supremacy, underwritten by American security guarantees.

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Indeed, misgivings and mutual suspicions within the BRICS family also interfere

with efficacious collective action. Take the proposal of a BRICS Bank. Given China’s weight in the quintet, such a bank would almost certainly become a projection of Chinese economic power – just as the Bretton Woods institutions reflected postwar

American power and the Asian Development Bank reflected Japanese power. New Delhi and Moscow are understandably wary of pouring in capital towards creating an agency that furthers Chinese interests.

Part of the problem with BRICS is that it’s seen as an artificial construct, not a bloc forged by war, political commonalities or economic synergies. At its core is the Russia-

India-China triumvirate of the 1990s, RIC, mooted by the Russians in an attempt to

balance American hegemony, a throwback to Soviet Union thinking. Increasingly,

however, it became obvious that economics rather than ideology would define 21st century diplomacy, and Russia was an inappropriate leader in this respect.

In 2001, Goldman Sachs published a report on the four major emerging economies – those with trillion dollar GDPs – and coined the abbreviation BRIC. Diplomatic

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sources say the idea of expanding the RIC framework to countries such as Brazil

was already and independently being discussed. Nevertheless, a New York–based investment bank essentially invented a new international grouping. Soon after

South Africa lobbied to join the big four, although its GDP was valued far below the

trillion dollar threshold. It got in because the others felt an African presence would add to the symbolism.

How does New Delhi see BRICS? Is this the new, albeit smaller and more manage-

able Bandung Conference/Non-Aligned Movement? If the imperative is economic,

is BRICS truly representative of emerging economies? Should Russia really be on the list, given it will scarcely have an economy to talk about once gas prices soften or Europe gets access to alternative sources of energy such as American shale gas? If

South Africa is part of the BRICS conversation, why not Nigeria, an African economy much the same size? Finally, what of Indonesia, still recovering from the Asian flu when Goldman Sachs coined the acronym in 2001, but a surging economy now?

The questions multiply when one considers the several, often intersecting blocs

India and China have signed up for, sometimes to spite each other, but more often not to be left out of any new club. All compete for attention and priority, and nobody

is sure which one could shape the rest of the century and which will fade away. Consider the alphabet soup: •

IBSA: The India, Brazil and South Africa collective of developing-country

democracies, seen as New Delhi’s hedge against Beijing’s BRICS domination. When it came to the Arab Spring, however, IBSA failed to articulate a non-western position on democracy and civil liberties •

SAARC: The South Asian Association for Regional Cooperation has eight member countries, including India, and nine observers, including China

•

SCO: The six-member Shanghai Cooperation Organization is powered by China and, to a lesser degree, Russia as a hedge against American pres-

ence in post-9/11 Central Asia; India is one of four observers •

ASEAN + 3: The ASEAN bloc and Japan, South Korea and China

•

ASEAN + 6, sometimes called ASEAN +3 +3: The ASEAN +3 and New Zealand, Australia and India

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•

EAS: The East Asia Summit, a meeting ground for the ASEAN +6 and Russia and the US, sometimes called ASEAN +8

•

BASIC: Brazil, South Africa, India and China, acting together in climatechange negotiations.

Principal promoters of each of these bodies have different and limited motivations.

These could be democracy projection, India and IBSA; economic heft, China and BRICS; an ad hoc alliance aimed at a specific bargain, BASIC and carbon emissions

targets; marking geographies of strategic interest, with China wanting India out of

Central Asia and accepting it as only a secondary actor in southeast and east Asia even as India argues for a smaller Chinese footprint in South Asia.

At the broadest level, BRICS represents a non-western – but decidedly not antiwestern – template of growth and development, and of modernity. At an everyday

level, it sees itself as a pressure group beginning to challenge a vulnerable Europe for the role of Uncle Sam’s junior partner.

In New Delhi, the one hard message the BRICS countries conveyed was in demanding a greater share of voting rights at the IMF, probably from the European quota. It’s apparent they would want a BRICS technocrat to head the fund sooner or later. However, they were also quick to emphasize that the proposed BRICS Bank – if it

ever takes off – would only complement, not seek to displace, American stewardship of the World Bank.

As such, more than Washington, it’s Brussels and the European capitals that need to look over their shoulders and watch out for BRICS. On their part, the BRICS members are watching their own backs, looking out for the growing giant, China. New Delhi, 2 April 2012 Ashok Malik is a senior journalist and columnist in New Delhi. He writes for a variety of Indian and foreign publications on, primarily, India’s political economy and foreign policy, and their increasing intersection.

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The Fallacy of Protectionism Pascal Lamy Protectionism has been described as “the dog that didn’t bark” in the long, troubled night of the financial crisis; remarkable precisely because of its absence.

In the years since the crisis erupted, the world economy has borne witness to spiking

unemployment levels, to Europe’s debt woes, rising food prices, sluggish growth in the United States and now a slowdown in emerging countries. But one feared scenario has not materialized: a big wave of 1930s-style trade protectionism.

In late 2008, with financial markets in free fall, many dreaded a repeat of the Great

Depression, complete with spiral of tit-for-tat trade restrictions. Global trade was collapsing at a startling pace, squeezed by declining demand, plummeting commodity prices and a credit crunch-induced scarcity of trade finance. In the space of

six months, world merchandise trade fell by almost 20 percent, wiping away nearly four years’ worth of growth.

To be sure, there have been worrying signs of the traditional propensity of nationstates to turn inwards when the global economic outlook is bad. Some major economies introduced a raft of restrictive measures, such as trade remedies, new licensing

requirements for imports and state aid to industry. The aggregate scope of these measures, however, has been limited. Why was this? First, governments understood that fiscal and monetary policies can stimulate

domestic demand, and used both to considerable effect. In the early 1930s, as many economists have noted, most governments were still trapped in fiscal and

monetary orthodoxy. Tariffs were one of few policy levers visible to them – a lever that many pulled, in desperation to show that they were doing something about mass unemployment.

Second, two decades of rapid international integration – and, crucially, awareness of growing interdependence – meant that policymakers appreciated the merits of keeping economies open.

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This interdependence is linked to the final important factor that contained protec-

tionism in the midst of the crisis: the rules, norms, and transparency offered by the World Trade Organization.

The internationalization of production that had so visibly bound economies together prior to the crisis was underpinned by the predictable trading environment provided

by WTO rules. When the crisis broke, the WTO’s combination of monitoring and surveillance and a firm framework of rules worked to deter knee-jerk protectionism.

Since January 2009, the WTO has issued regular reports on governments’ use of

trade restrictive measures. Together with the United Nations and the Organization for Economic Co-operation and Development, the WTO monitors how the Group of

Closing off markets

protectionism, documenting new policies to restrict or facilitate trade.

crisis, and nations

In sum, trade tensions have increased, but trade wars have been absent. Govern-

their citizens.

20 leading economies comply with their pledges to refrain from trade and investment

does not protect after should instead secure

ments introducing import barriers have, in the main, cited the WTO rulebook to

justify the moves. Countries feeling wronged by the measures have responded not with unilateral retaliation, but by using the WTO’s well-tested litigation procedures.

The WTO has proved its worth as a collective insurance policy against the disorder of unilateral action.

Yet we cannot be complacent. Dark clouds loom on the horizon for trade. Gloomy growth forecasts suggest that export demand may fall short of governments’ hopes.

The WTO recently had to revise downward projections for trade volume growth in 2012 to 2.5 percent, down from 3.7 percent in spring. So long as unemployment remains stubbornly high – the International Labour Organization forecasts that

in 2013 an additional 7 million people will join the 200-million-strong ranks of

the unemployed – pressure to curb imports will persist. In addition, many major economies are already testing the political limits on the use of fiscal and monetary

stimulus. If policymakers feel that these policy options have run their course, protectionism may regain its allure.

Already there is growing cause for concern. Our monitoring work indicates that governments continue to introduce new trade restrictions without stepping up

the removal of older measures. The trade restricting measures introduced by G20 governments since October 2008 now cover almost 3 percent of total world merchandise commerce – an amount roughly double Brazil’s share in global trade.

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Trade restrictions have a tendency to shift from temporary crisis-fighting measures

to industrial policies that are more difficult to unwind. Procedural and administra-

tive roadblocks at borders are making traders’ costs unpredictable. Perhaps more ominously, protectionist rhetoric favoring import substitution as a growth strategy is enjoying a revival even in some G20 member countries.

The irony is that in the modern global economy, creeping protectionism is not a successful recipe for achieving its main goal, that is, to boost exports. Thanks to the

dramatic rise in the fragmentation of production across countries, the import content of exported goods has doubled in the past 20 years to 40 percent. Intermediate

goods, not final products, now account for more than half of global trade. We no

longer trade in products, but in tasks. In a world of global value chains and ‘Made in the World’ products, impeding imports amounts to shooting your own exporters

in the foot. Consumers struggling with stagnant wages would see their purchasing power weakened further. Developing countries could see hard-won gains rolled back.

If governments are to maximize the contribution of trade to better jobs and improved living standards, they must reframe the narrative surrounding it. The traditional

“imports bad/exports good” framework needs to give way to “export success depends also on easy access to imports.” The focus must be on adding value, not crude bilateral trade balances. To support such efforts, the WTO has been working with partners such as the OECD to develop statistics that reflect trade in value added; the first batch of numbers is due in December.

In the shorter term, there are concrete steps governments could take to keep international trade flowing. Unwinding recent restrictions is an obvious starting point.

Although the broader Doha round negotiations are currently at an impasse, countries could move forward towards a WTO agreement on trade facilitation, which would lower trading costs by slashing customs-related red tape and simplifying border procedures for traded merchandise.

They could cooperate on how to minimize the trade costs or distortions arising from

divergence in non-tariff measures without compromising the pursuit of health,

safety or environmental objectives. Governments could also work together with

the Basel regulators to ensure that much-needed banking sector regulations do

not unintentionally make trade finance less available and affordable, especially for poor countries.

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Over the long run, domestic social policy will be central to resisting protectionist

backlashes and keeping trade open. Trade will always be vulnerable if the efficiencies it creates are perceived to benefit only a fortunate minority. Government action

can help equip people to profit from the global marketplace, cushion the blows of creative destruction and curb inequality.

A crisis is an opportunity to learn. In a world where protectionism does not protect governments must take more sophisticated approaches to supporting domestic

growth and social protection. It is important that this be one of the fundamental lessons that we collectively learn from this crisis. Geneva, 31 October 2012 Pascal Lamy is director-general of the World Trade Organization.

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Diplomacy

Over the past centuries the filaments of trade, travel and diplomatic contacts increasingly connect countries with one another. While such contacts have flourished in recent years, borderless globalization nevertheless depends on nation-states.

Although the start of the 21st century was marked by the domination of a sole superpower, it was a power like Gulliver, tied to the ground by ragtag insurgents and the

opposition of other smaller states. US power was stretched thin with the invasions of Afghanistan and Iraq, and the war against Al Qaeda and other extremists was bogged down by a troublesome ally like Pakistan. Even after the US withdrawal from

Iraq, US relations with countries in the region continue to be problematic. Rising military tensions in the Persian Gulf brought into renewed focus the dimensions of the dichotomy between Shia and Sunni populations and the disparate economic and

energy resources they possess. Most countries agree that to create a peaceful and

stable world, everyone must adhere to a nuclear nonproliferation regime, but they cannot agree on the ways to do so. Division in the UN Security Council has made restraining the nuclear ambitions of North Korea and Iran impossible.

Political disunity among nations has resulted in cooperation in other areas, but also creates new problems. China, a major beneficiary of globalization, seeks to use its

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new economic and military power to make its own rules, but shirks taking responsibility for global issues. Tensions between a rising China and the United States

threaten to roil beneficial trade and financial relations, placing the two countries on a path toward confrontation. China’s assertiveness also continues to rile its Southeast Asian neighbors.

Nations seek partners who share their concerns about the most pressing challenges,

be it terrorism, nuclear proliferation, unfair trade practices and distribution of limited

resources, poverty and conflicts, or climate change, none of which respect borders. For globalization to improve relations among sovereign countries, bringing peace and prosperity, requires mutual concessions and multilateral cooperation. Old-style national power struggles are antithetical to globalization in the 21st century.

US Can’t Rely Solely on Might Joseph S. Nye, Jr. Just over a year ago the Bush administration published its National Security Strategy,

which articulated a dramatic change in its foreign policy outlook after the events of September 11, 2001. The new strategy declared that “we are menaced less by fleets and armies than by catastrophic technologies falling into the hands of the embittered

few.” Instead of strategic rivalry, “today, the world’s great powers find ourselves on the same side - united by common dangers of terrorist violence and chaos.”

The rhetoric of the new strategy attracted criticism at home and abroad, but critics

notwithstanding, the distinguished Yale historian John Lewis Gaddis, in an article

for a November/December 2001 issue of Foreign Policy, “Bush’s Security Strategy,” has compared the new strategy to the seminal days that redefined American foreign

policy in the 1940s. The new strategy responded to the deep trends in world politics that were illuminated by the events of September 11. Globalization, for instance, has

proved itself to be more than just an economic phenomenon; it has been wearing away at the natural buffers that two oceans and distance have always provided to the

United States. The implications of state failure are also clear: Dreadful conditions

in poor, weak countries halfway around the world can have terrible consequences for the United States.

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The gravest threat, however, is posed by the privatization of war. One surprise

attack by a transnational terrorist group killed more Americans than the state of

Japan did in 1941. The democratization of technology over the past decades has made terrorists more lethal and more agile, a trend that is likely to continue. Traditional state-centric analysts think that punishing states that sponsor terrorism can solve the problem. Such punitive measures might help, but in the end they cannot stop individuals who have already gained access to destructive technology. After all, Timothy McVeigh in the United States and Aum Shinrikyo in Japan were not sponsored by states. The privatization of war is not only a major historical change

Washington has done far better on identifying the ends than the means.

in world politics; its potential impact on US cities could drastically alter the nature of American civilization.

This is what the new Bush strategy gets right. What the United States has not yet sorted out is how to go about implementing its new approach. Washington has done far better on identifying the ends than the means.

According to the strategy, the greatest threats that the American people face are transnational terrorism and weapons of mass destruction, and particularly their

combination. Yet because of its transnational nature, meeting that challenge requires the cooperation of other countries. The willingness of other countries to cooperate

in dealing with transnational issues such as terrorism depends in part on their own self-interest, but also on the attractiveness of American positions.

Soft power lies in the ability to attract and persuade rather than coerce. It means that others want what the United States wants, and there is less need to use carrots and sticks. Hard power grows out of a country’s military and economic might.

Soft power arises from the attractiveness of a country’s culture, political ideals and policies. When US policies appear legitimate in the eyes of others, American soft power is enhanced. Hard power will always remain crucial in a world of nation-states

guarding their independence, but soft power will become increasingly important

in dealing with the transnational issues that require multilateral cooperation for their solution.

The need for international cooperation in Iraq has moved to the foreground, but

the manner in which the Bush administration handled the diplomacy leading up to

the war has made others reluctant to help. The war’s negative effect on American

soft power has forced the United States to incur the lion’s share of the costs for the

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rebuilding effort. The contrast with the example of the first Gulf War is instructive. In that conflict our allies picked up the majority of the tab, thanks in large part to

the fact that the first President Bush painstakingly assembled a broad coalition of allies long before the first shot was fired. Soft power helped the United States shape the international agenda without arousing widespread suspicion or resentment.

In many respects the Iraq War represented the unfinished business of the 20th

century. The UN Security Council resolutions mandating the destruction of Iraq’s nuclear, biological, and chemical weapons programs date back a decade. North Korea and Iran, on the other hand, pose the first real tests of the national security strategy.

North Korea’s flagrant record on weapons proliferation is beyond dispute, and its negotiators have declared that Pyongyang already has nuclear weapons. What is left

to negotiate? Plenty. President Bush’s recent suggestion of a multilateral security guarantee demonstrates that he understands the dangers of going it alone on North Korea. He has little choice but to continue negotiations with the full realization that

they will be difficult and have no guarantee of succeeding. In addition to the threat posed by its hard power, the United States will need its soft power to maximize

the cooperation of the other parties at the table. If negotiations fail, multilateral

cooperation among the regional players will become more, not less, important. But

the clock is running quickly in this case. The North Koreans already claim to have

a bomb, and plutonium reprocessing at the Yongbyon nuclear facility has begun. There is no margin for error here. Talks are scheduled to reconvene next month, but the prospects for a resolution remain dim. Much will depend on whether China, Pyongyang’s principal supplier, decides to exercise its potential leverage.

Iran offers yet another test with a different timeframe. In October, Iran agreed to

allow the International Atomic Energy Agency to conduct wide-ranging special inspections and temporarily suspend operation of the centrifuge enrichment facilities

that it had secretly constructed. But that will not be enough to solve the problem. Iran

claims that as a party to the Treaty on the Non-Proliferation of Nuclear Weapons, it has the right to enrich uranium for peaceful purposes.

In a sense, the NPT was born with a loophole. Even if a country allows inspections, it can legally accumulate enriched uranium, or reprocessed plutonium, under the

guise of a peaceful energy program, and then suddenly declare that circumstances have changed and withdraw from the treaty. It could then produce nuclear weapons

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at short notice. If Iran were to do this, it would add to the dangers in an unstable region and would likely begin unraveling the nonproliferation regime worldwide.

President Bush should approach Europe, Russia and others and persuade them to offer Iran a deal that would plug the loophole. Russia, which is helping Iran

construct a nuclear energy reactor at Bushehr, could offer Tehran a guarantee of

low enriched uranium fuel and reprocessing of the reactor’s spent fuel in Russia. The deal could be given teeth by a UN Security Council resolution that the United States would endorse.

The resolution could include a stick declaring that further proliferation of nuclear weapons would be a threat to peace under the charter, and that any country moving

in such a direction would be subject to sanctions. The resolution could also include a carrot guaranteeing Iran access to the non-dangerous aspects of nuclear-energy technology. The pot could be further sweetened by offers to relax existing sanctions and a security guarantee if Iran remains non-nuclear.

Because of Iran’s suspicion of the US, subtle American diplomacy could persuade Europe and Russia to launch the proposal, and Washington could then announce its support. Given the paucity of issues on which the US, Russia, Europe and the UN

are in close agreement, such a proposal offers a rare opportunity for a multilateral solution to a vital concern.

Cambridge, 17 November 2003 Joseph S. Nye, Jr., is the dean of Harvard University’s Kennedy School of Government.

North Korea’s Nuclear Gamble Shim Jae Hoon The North Korean underground nuclear test on 9 October has sent shockwaves – weak on the Richter scale but shaking the core of the East Asian security and the existing geopolitical balance in Asia underpinned by the US nuclear umbrella. North

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Korea has taken a giant step backward by choosing the nuclear option in its desperate attempt to avoid regime collapse and thwart the reunification of the peninsula

under South Korean control. Instead of reinforcing the shaky Kim Jong Il regime, weakened by decades of economic mismanagement and Stalinist dictatorship, the

nuclear gambit is likely to put the country and its population to the severest test of its existence. Yet, given the complex calculation of its neighbors, a concerted move to restrain North Korea won’t be easy either.

From Beijing to Tokyo to Seoul and Washington, Kim’s dangerous gambit has set

alarm bells off for a tough response from the US or the United Nations. With China and Russia reluctant to back tough sanctions on the North, the administration of US

North Korea has taken

way. Depending on the level of tension, the US, though mired in wars against terror

by choosing the nuclear

or the Yellow Sea. Strong enforcement of the Proliferation Security Initiative under

attempt to avoid regime

President George Bush has little option but to deal with the crisis in a non-military

a giant step backward

in Iraq and Afghanistan, could respond with a naval blockade in the Sea of Japan

option in its desperate

which North Korean ships are halted and searched for potential exports of weapons

collapse.

of mass destruction, could add to the North’s economic and security hardships. The

US-South Korean military alliance stands poised to counter all forms of provocations which Seoul officials say are likely.

Beyond Korea’s border, the North’s nuclear test has raised widespread concern for

a domino effect in Asia. Analysts suggest that Japan, South Korea and Taiwan could eventually opt for their own nuclear programs to counter threats from North Korea

if they find the US distracted. This feeling appears especially palpable in Japan following North Korea’s repeated test-firings of missiles in that direction. Not only has

this inflamed public opinion, it has triggered fresh debate in Japan over revising its postwar pacifist constitution that restricts its armed forces to home defense. The North Korean provocation also comes on the heels of the rise of an assertive new prime minister, Shinzo Abe. He has termed the nuclear test as “unpardonable.”

A hardliner, Abe has hinted at taking further actions including total suspension of trade and banning North Korean vessels from docking in Japan or navigating inside

its territorial waters. That, according to specialists in Seoul, would mean blocking the shipment of Japanese electronic components that could be used for the North’s missile development. Reports here suggest that the North depends on Japanese electronic parts for its missile-guidance system.

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Most immediately, Japan is the prime sponsor of tough UN sanctions against North

Korea. As rotating chairman of the 15-member UN Security Council, Japan is draft-

ing a resolution calling for tougher sanctions under Chapter 7 of the UN Charter, authorizing the use of military force in the event of North Korea failing to comply.

It’s the kind of resolution that was imposed on Saddam Hussein’s Iraq before the US invasion. It is thus much tougher, with far more implications, than Resolution

1695 adopted 15 July that called on member countries to ban transfer of money or other resources that could be used for development of the North’s nuclear weapons. A key question is whether China and Russia, Pyongyang’s former backers, will find

it comfortable to reject the second resolution in view of international condemnation provoked by the North. China opposed inserting the Chapter 7 clause in the

first resolution, arguing that the US could use it to seek an Iraq-like military strike. Immediately after the nuclear test, Beijing issued a toughly worded statement criticizing it as “brazen,” the strongest expression China has used against Pyongyang so

far. Shortly thereafter, however, it reverted to calling for “calm” and “dialogue” in resolving the crisis, an indication that Beijing may not join in the Chapter 7 draft.

Kim conducted the test against the background of China and Japan holding their

first summit meeting in years to mend relations soured by previous Prime Minister Koizumi’s visits to the Yasukuni Shrine honoring Japan’s war dead, including those convicted of war crimes. Abe was visiting Seoul for similar fence-mending talks with

President Roh when the news hit him. At Abe’s talks with presidents Hu Jintao and Roh Moo Hyun, China and South Korea closed ranks with Japan announcing they would cooperate in responding firmly to the North’s provocation.

Whatever Kim sought to achieve with his nuclear test, he appears destined to pay a high price for his defiance. In Seoul, President Roh came under heavy criticism for underestimating the North’s belligerence; the ruling center-left party began

debating the need for overhauling his so-called sunshine policy of reconciliation. Roh, normally accommodating of the North, has accused Pyongyang of “playing

with fire.” By far the biggest casualty of the North Korean test is Roh himself and his engagement policy.

With the ruling party members of parliament alarmed at the growing prospect of losing the forthcoming presidential election slated for December 2007, their

policy of accommodation and reconciliation based on largess for the Kim regime

will undoubtedly be entirely overhauled. Among the prospective casualties of the

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policy review are the Kumgang Mountain tourism project, which the Roh govern-

ment has subsidized with taxpayer money and the Kaesong Industrial complex for which South Korean businessmen have invested tens of millions of dollars. Halting these two projects will have the effect of choking the financial pipeline to Pyongyang

worth tens of millions of dollars each year. Even without the nuclear blast, Seoul

is already under pressure to modify these payments under the recently passed UN resolution banning money transfer.

Suspension of the money flow will deliver a staggering blow to the North’s battered

economy, which depends on China and South Korea for food and fuel following the 1994-2000 famine that reportedly killed up to 2 million people. Even more crippling

will be the US military blockade. In the worst-case scenario, such a blockade, by adding military pressure over food shortage, could shake the regime’s foundation.

China is reportedly petrified by the prospects of millions of hungry North Koreans flooding into its territory in the event of regime collapse or other forms of instability. Beijing could be exaggerating this danger, but there’s no denying that an

unstable Pyongyang is the last crisis China wants along its 1400-kilometer border with North Korea.

That makes it unlikely for China to use its leverage to stop Pyongyang from abandoning its nuclear capability. A reunification of the peninsula under the South’s control

has never been China’s option, given the North’s role as a buffer against Japan and the US. Already sharing borders with three of the world’s five nuclear powers, China

does not want a military confrontation with the US across the border with the North.

Given this strategic imperative, the US options on North Korea are indeed limited. Seoul, 10 October 2006 Shim Jae Hoon is a Seoul-based journalist and columnist.

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US and Pakistan: An Insecure Alliance Paula R. Newberg It’s hard to know whether US President George W. Bush’s visit to Pakistan is a desperate act to shore up an ailing ally, a cheerleading trip to spur on the American

anti-terror campaign, or a simple photo opportunity on the road to India. No matter. When the president arrives in Islamabad he will find a deeply troubled government and a country suffused with discontent. Pakistan’s governance problems are

significantly affected by its relationship with the US just now – and it’s President Bush’s job to help craft a long-term solution to southwest Asia’s security problems and Pakistan’s own stability.

The American-led anti-terror campaign lies close to the heart of Pakistan’s many

woes. Despite almost 70,000 Pakistani troops deployed near the Afghan border,

the Pakistan government’s seeming impotence in fighting militancy – which the US uses to justify its own clandestine border operations – appears politically hamhanded, tactically incompetent, diplomatically awkward, remarkably inconsiderate

of public opinion and thus, oddly complicit with Al Qaeda supporters. US bombing campaigns along the border with Afghanistan leave civilian fatalities and public

disapproval in their wakes. To Pakistani villagers, it looks as if a foreign army is waging war on their territory.

Gathering and analyzing intelligence are not public sports. Pakistan and the US

claim that their most successful collaboration is in sharing information – and say no

more. The current global climate of distrust and fear, and a long, troubled diplomatic history with the US, call for both governments to handle their alliance carefully

and above all, sensitively. Instead, both traffic in secrecy, duplicity and dishonesty

in dealing with their own citizens and, in so doing, foment further distrust among their own citizens. The wages of this shadowy war tax Pakistan’s clumsy political system more than it can bear.

A renewed local insurgency in Baluchistan is stoking the fires of national discontent. Bush’s advisors have no doubt told him the province is a unruly place whose old-fashioned guerrillas score points against the central government while they

skirmish among themselves – and hence, today’s battles, like those of old, will fade

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away with little cost to Islamabad. Such optimism would be unwarranted. It’s true

that tribal politics can be nasty – but it’s also true that Islamabad has never treated

Baluchistan as a full partner in its unwieldy federal system, whether in the distribution of natural gas revenues or encouraging political participation.

What Baluchistan has been good for, sad to say, is its astonishingly permeable border with Iran and Afghanistan – good for war, smuggling, corruption and rebellion. Indeed, the porous border areas between Pakistan and Afghanistan have always

helped define security policy for both states. But all roads run in two directions: Baluch insurgents found refuge in Afghanistan in the 1970s, Pakistan supplied the

Afghan mujahidin in the 1980s through Baluchistan, refugees have ranged freely

Pakistan has to be

toward Pakistan to fuel insurgency anew.

President Bush’s anti-

across the mountains and plateaus in all directions, and today, weapons travel

more than a stop on terror campaign.

Although Pakistan and its allies express support for the idea of closing the Pakistan-

Afghan border, success has been limited: Weapons and militants continue to move,

even when revenues from black market activities shrink. This is why Afghan President Hamid Karzai is so keen to keep the borders closed and step up the hunt for Al Qaeda. But with army installations now insurgent targets, it’s easy to see how Islamabad – and potentially, the US – might wrap these secular Baluch nationalists under a broader terrorist flag.

What a mistake. As the anti-terror campaign holds larger meaning for Pakistan’s domestic politics – it’s equally about the fundamental, if ignored, role of citizens in

making policy – so Baluchistan continues to remind Pakistan’s government, and should remind the US, that tribal and ethnic identities provide a political vocabulary when national identity and enfranchisement are absent.

That fragile national identity, framed by almost six decades of unresolved debate about the country’s political structure, has left society open to many competing visions of its future. Little wonder, then, that Islamist parties can so easily provoke disturbances by renting crowds to protest policies or events. It is also easy to turn all

the people’s anger –whether about Danish cartoons or a missile attack on suspected Al Qaeda – against General Pervez Musharraf’s principal backer, the US.

Pakistan keeps edging toward the moment when it cannot govern itself, but recovers

almost miraculously from each moment of crisis. Musharraf’s military government

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is demonstrably weak, even as the military enriches itself on the backs of civil so-

ciety, takes over civic institutions and cumulatively unravels the country’s frayed

social compact. As a result, more than 35 percent of Pakistanis are profoundly poor, borders are inadequately defended and citizens cannot redress grievances against the government, militant groups, foreign interlopers or allied armies.

Musharraf has had many opportunities to correct these ills -- but hasn’t. He has pilloried opposition politicians when they criticize military rule, given the army

free rein in civic life, and diminished vital civic institutions, including courts and legislatures. Musharraf has failed to reconcile the army’s shallow modernism and the increasingly recondite sectarianism of militant – if officially powerless – political

parties. It’s an uneven match: Pakistan’s Islamist parties are more often loud than correct and generally fare poorly in elections unless they cooperate with the military.

President Bush will soon step onto this disputed landscape. If past experience is a

guide, he will see Pakistan solely through the focused lenses of the anti-terror campaign, view the military as the only effective national institution – what a military government always says -- and thus limit his vision of a future, constructive USPakistan relationship. If he does so, he will misread this complex country, and the US and Pakistan will miss an opportunity to correct the course for their relationship and for the Pakistani state.

Although Pakistan’s present predicaments are neither solely the result of this com-

plicated alliance nor only the outgrowth of tired and misguided military rule, it has become the joint responsibility of the president and the general to turn their alliance to domestic political good.

To Pakistan’s profound detriment, this never happened when Field Marshal Ayub

Khan, General Yahya Khan and General Zia ul Haq ruled from the 1960s through the 1980s. Following his illegitimate seizure of power and subsequent misrule,

Musharraf’s broken promises to cede power to civilian rule have indelibly marked

his tenure, too. This time, the first step – small as it may seem in the shadow of global terror – is a fundamental shift in Pakistan’s governance.

Little in Pakistan, and in its region, will improve until the military understands

that the time for its rule has passed. Under no circumstances should the US force, or appear to force, a change of regime. But if Bush seeks a stable, well-grounded,

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respected alliance between the US and Pakistan, he will have to push for an elected,

representative government that can negotiate such an alliance, fulfill its mission and salvage security for the entire region. New York, 28 February 2006 Paula R. Newberg is dean of Special Programs at Skidmore College.

A Path to Global Disarmament Hans Blix Among the threats to world security is the possible development or the possession of weapons of mass destruction in some states “of concern,” notably Iran and

North Korea. The program for enrichment of uranium in Iran and the production of plutonium and possible enrichment of uranium in the DPRK take place in tense

areas and constitute acute political problems. In both cases, there are fears that the production of enriched uranium and plutonium may lead – and in the case of the DPRK has led – to production of nuclear weapons that may be used. The concerns

are acute in the neighborhoods of these countries: South Korea and Japan; Israel and the Middle East.

Linked to these concerns are fears about possible domino effects. The aversion to

nuclear weapons is deep-rooted in Japan, and it would take much to provoke Japan

to move toward such weapons. If that were to happen, tensions with China would dramatically increase.

The efforts of the US and other states taking part in the six-power talks in Beijing have wisely aimed at removing the incentives of the DPRK to develop and pos-

sess nuclear weapons: A common understanding was reached in September 2005, envisaging that the whole DPRK nuclear program would be eliminated with strict verification introduced. The North and the South would confirm an agreement

made in 1992 to have neither enrichment nor reprocessing plants. The government of the North was further told that it would receive economic assistance and assurance that it would not be subject to armed attacks from the outside. It was

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also told that normalized relations could be opened with the US and Japan. In the

course of one year, the welcome understanding has gradually vanished. Incentives have given place to invectives. The US has inflicted economic punishment on the DPRK for alleged participation in counterfeiting. The DPRK has refused to return to

talks unless the punishment is lifted. DPRK has performed missile tests – and now threatens a nuclear test. De-escalation is acutely needed on both sides – perhaps

through action similar to that taken by former US President Jimmy Carter when he flew to see President Kim Il Sung in June 1994.

Among the threats to world security is the possible possession of weapons of mass destruction in some states “of concern,” notably Iran and North Korea.

In the case of Iran, the risk of a domino effect seems less clear. The Arab states

would worry about a nuclear non-Arab Iran. So would perhaps Turkey. Unlike

Japan, however, these states have a long way to go to acquire nuclear capability.

Unlike the DPRK, Iran has declared that it only seeks a capacity to enrich uranium to supply power reactors with fuel.

The IAEA and intelligence agencies around the world have examined the Iranian

contention. While the IAEA has not – yet – concluded that the aim of the Iranian program is to make a weapon, others declare this conclusion with as much conviction as they showed about an Iraqi nuclear-weapon program in 2003.

A number of circumstances are invoked to show that Iran’s intention is to make

weapons, including that the program was kept secret for many years in violation of Iran’s obligations to the IAEA; that a research reactor under construction is an

excellent producer of plutonium; and that a nuclear-weapon design was obtained from the Pakistani scientist A.Q. Khan, not only centrifuges for uranium enrichment. Iran likely had inconsistent aims during the some 20 years before achieving the

ability to enrich gram or milligram quantities of uranium to some 5 percent. Also, the Iranian government is likely more divided than united behind the enrichment program.

It is not meaningful to conjecture about Iran’s “real” intentions. After all, even if purely peaceful today, these could change in the future.

What is certain is that Iran – and any other country – would be a couple of years

closer to a weapons option if it were to have an industrial capability for enriching

uranium. Notably, the intense concern about Iran is part of a more general concern

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about the possibility that more countries may seek enrichment capability and thereby be years closer to a weapons option.

Some factors could persuade Iran to suspend, at least for a while, its program for enrichment:

The European states, while arguing that Iran does not need a capability to enrich

uranium, wisely seek to demonstrate that they understand and endorse Iran’s ambition to move into high technology – including nuclear. They declare themselves ready

to assist Iran in this ambition by facilitating investments; offering advantages for

trade and finance, including support for membership in World Trade Organization; and transferring nuclear technology for peaceful uses and assuring a nuclear-fuel supply, thereby acknowledging the legitimacy of an Iranian program for peaceful use of nuclear energy.

Missing in the negotiation are two elements that only the US could contribute and that were put on the table for North Korea: assurances about security, because holding

out a promise about a dialogue is not enough, and assurances about official relations. One may assume that the Iranian government is concerned about the huge US

military presence in Iraq, Pakistan, Afghanistan and elsewhere in the region and remembers the US actions that toppled Iran’s democratically elected Mohammad

Mossadegh in 1953. The Iranians may also conclude that the US and Israel will be reluctant – after Iraq and Lebanon – to use military force, and that on balance Iran could be safer from armed attacks and subversion if it suspended enrichment. Such

a conclusion would be more likely if security assurances were part of the package

offered to Iran in return for suspension of enrichment. Yet any readiness to make such an offer is not apparent.

Further, the Iranian government may well feel that it was treated unjustly by the

industrialized world, when Iran was the victim of Saddam Hussein’s aggression in

the 1980s, and that it has been unfairly ostracized. The US has offered to participate in discussions with Iran, provided that the country first suspends its enrichment

program. This may not look as magnanimous in Teheran as it does in Washington. In the case of North Korea, the US does not ask for any payment to sit down and

talk, but instead seems ready to offer normal official relations as a part of a negotiated settlement. A similar offer might be a valuable chip for Iran.

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Three other points regarding negotiations: First, the UN Security Council and ne-

gotiating powers have demanded that Iran suspend its enrichment program prior to any talks. This may look like a technical negotiation matter, but which player in a game is willing to give up its trump card before play begins? Perhaps a time-limited

suspension starting with the talks would offer a way out of this self-inflicted dilemma. Second, what is the reason for the haste? I do not exclude the possibility that the

Iranian side wants to drag its feet, seeking to increase its leverage by building another cascade of centrifuges – just as North Korea may increase world anxiety by

reprocessing more plutonium. Nevertheless, it would be several years before Iran could enrich enough material to make bombs. There’s time for talks. Waving the

sanctions card might not facilitate negotiations. It is by no means axiomatic that carrots must be coupled with the waving of sticks. The latter may simply provoke

a national wish in Iran to stand tall. Those who say that one should not lose time should remember that, with the DPRK, the world does not seem so impatient. Yet, in

that case, the world is dealing with a country that may already have nuclear bombs. Finally, there is a crying need for a revival of global-disarmament efforts, with

further development of and respect for the United Nations. There might be a better chance to dissuade others – including North Korea and Iran – from developing

nuclear weapons, if the nuclear states began, themselves, to move away from these weapons and, thereby, strengthen world security. Stockholm, 5 October 2006 Hans Blix, former director general of the International Atomic Energy Agency, is chairman of the Weapons of Mass Destruction Commission based in Stockholm.

Iraq: The Withdrawal Syndrome Richard N. Haass There is an old saying when it comes to determining the value of real estate: location,

location, location. Increasingly, a variation holds true for predicting the course of US policy toward Iraq: withdrawal, withdrawal, withdrawal.

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To be sure, there are alternatives. One is to increase the level of American troops. This is something that can be done, but only by a small amount and then only temporarily. The US Army cannot stand the current level of deployments and operational tempo indefinitely. More important, there is little evidence to suggest that more

troops will turn around the security situation on the ground in Iraq and slow or end

the sectarian conflict. Failing that, there is no chance that the political situation on the ground in Washington, DC, will long support a policy that has already claimed nearly 3000 American lives and cost hundreds of billions of dollars.

Another alternative would be to declare Iraq a ward of the international community and establish some form of trusteeship until such a time that Iraq’s government can

The situation in Iraq is

going to happen as there is no appetite or capacity in the United Nations or among

democratic constitution

assert authority over the entire country. However desirable this might be, it is not

getting worse despite a

its member countries for taking on such a difficult task.

and several successful elections.

The real choices facing the US at this point all involve withdrawals of one kind or another of US military forces from Iraq. But all withdrawals are not equal. To the contrary - they differ fundamentally in their pace, rationale and consequences.

The strong preference of President George Bush and his administration is for performance-based withdrawals. This has been the stated US policy for some time and remains so. “Staying the course” may have been jettisoned as a phrase, but it remains

as a policy. The idea is that the 144,000 American forces - together with the 17,500

soldiers from coalition partners - will only come out of the country as Iraqi military and police forces demonstrate they can assume the security burden and maintain

order. This is the most desirable option, as it would create a stable Iraq that would

no longer require a massive and costly American and international presence. It is also desirable in that it would avoid the direct and indirect costs of withdrawing before the objective of building a sustainable order was realized.

The problem lies not in the desirability of this approach but with its feasibility. The

situation in Iraq is getting worse despite a democratic constitution and several suc-

cessful elections. Terrorists, Sunni insurgents and Shia militias are targeting and killing one another, government forces and officials, and civilians. Iraqi government

forces, despite being trained, equipped, advised and supplemented by American

troops, show few signs of being able to maintain order in the country’s center, home to Baghdad and most of Iraq’s approximately 8 million Sunnis.

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A second withdrawal option, one often put forward by various Democrats, is cal-

endar-based. This approach is based on an assessment that a performance-based

policy cannot succeed, that the day will never arrive when the Iraqis can stand up sufficiently so that the US can safely stand down. This option comes the closest to a classic exit strategy, one in which US policy is determined by the calendar rather

than by conditions on the ground. The advantage of such an approach is that it cuts

the immediate costs – human, military, and financial – of maintaining a presence and allows US forces to recover and be used elsewhere.

The obvious downside is that conditions in Iraq would almost certainly deteriorate further, producing a full-scale civil war that would kill and displace tens, even hundreds of thousands. Such a war could draw in one or more of Iraq’s neighbors

and spread to other parts of the Middle East. What is more, the US reputation for dependability and steadfastness would suffer. This could only encourage terrorists

and radical forces and states in the region and beyond, and discourage America’s friends and allies in the region and beyond.

A third approach to withdrawals can best be described as conditional. Under such an approach, the US would inform the Iraqi government – ideally, following intense

consultations – that US troops will be removed unless the Iraqis demonstrate that they are able and willing to meet certain tests or standards by a specified date. Such

standards could be military, i.e., achieve a certain level of proficiency, or political,

i.e., gain broad agreement on new power- and revenue-sharing arrangements. Most likely, they would need to be both.

This third, conditional-withdrawal approach is another way of casting the first

two approaches. If the Iraqis meet the tests in time, then this form of withdrawal

resembles the existing performance-based strategy. However, if the Iraqis fail to meet the tests, then the withdrawal would take place after the deadline had passed. It thus would come to resemble in practice a calendar-based exit strategy, with the important difference that a substantial share of the onus for the policy change would

ostensibly be on the Iraqis for their shortcomings rather than on the US stemming from a lack of resolve.

This last option of conditional withdrawal is hardly ideal, but it is the least bad

course available to the US. This is a time for realism, not ambition. Under this approach, two initiatives could help. One, already alluded to, is to link continued US

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military effort to the brokering of internal arrangements that provide for consider-

able regional autonomy, the sharing of revenues derived from oil sales, minority rights and the standing down of militias. Additional economic aid could be tied to

such agreements as a way of increasing the incentive of Iraqis to show more flexibility and moderation.

A second would be to propose that governments with a major stake in Iraq’s future meet with Iraq’s leaders in a formal gathering. The model here would be the so-called

6 plus 2 forum that was used to ease Afghanistan’s transition from Taliban misrule

to democracy. The goal would be to limit some forms of external interference - and to encourage those forms of involvement that could help put Iraq back on its feet.

This would require the participation of both Iran and Syria, two states who have

contributed to Iraq’s internal problems, but who also have a stake in its territorial integrity and viability.

It’s quite possible, of course, that neither of these efforts will yield fruit. Persuading Iraqis to agree to a new pact that is enough for most Sunnis and not too much

for Iraq’s Kurds and Shia will be exceedingly difficult. Meanwhile, several of Iraq’s neighbors may not be willing to curb their mischief-making. Iraq could well descend into all-out civil war.

If this happens, US forces should be withdrawn from Iraq’s center, as there is little

or nothing they could accomplish there in such circumstances. Iraq, an ill-advised and poorly executed war of choice, would be effectively a failed state for some years.

In the meantime, the US would have to look for ways to offset this foreign-policy

setback by demonstrating that it could still be an effective and reliable actor, something that could involve reinvigorating diplomacy between Israel and both Syria and

the Palestinians, tabling new offers to North Korea and Iran, or doing something to

halt the unraveling of Afghanistan or the genocide in Darfur. Failing in Iraq, however expensive, would not preclude succeeding elsewhere. New York, 31 October 2006 Richard N. Haass is president of the Council on Foreign Relations and author of The Opportunity: America’s Moment to Alter History’s Course.

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The Globe’s Most Important Relationship Morton Abramowitz Together China, Japan and the US are today’s most important trilateral relationship. Regional and global economic integration – along with increasing openness, mobility and democratization – is currently shaping US-Chinese-Japanese relations.

Only domestic politics or virulent nationalism could disrupt what promises to be a positive new decade for great-power relations in East Asia. The three countries are not in an expansive mood.

• China still grows rapidly, deriving significant clout and thereby as-

suming a new world role. Despite a recent leadership transition, Chi-

nese leaders remain preoccupied with mitigating massive distortions of growth, ensuring a successful Olympics and preventing regime change. Its military modernization arouses American angst and some regional

hedging, and its international engagement has moved beyond the Asian

platform. Yet China continues to be out of step with the political morality of leading countries and shows increasing heartburn with international

badgering. China has a long way to go in exercising international leadership.

• The next US president, scheduled to take office in early 2009, will

probably inherit at least two wars, both continuing to drain high-level at-

tention and resources, contributing to polarization and declining government capabilities. Restoring American attention to the region, particu-

larly Southeast Asia, could be difficult. Both Republican and Democrat

candidates and their foreign-policy gurus maintain 20th-century rheto-

ric, enamored with US global leadership. Not recognizing the profundity of change, the US obsesses on China’s rise, oblivious to American im-

pact on others. Its present economic downturn adds new complexity to America’s influence and global role.

• Japan remains a major world economic player, but its economy lacks

dynamism. Slow to define a comfortable global role for itself, Japan

wants to be a “normal” nation without its postwar defense limitations.

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But it has not achieved that status. Japan remains fearful of China’s

competition even as both economies become more entwined. Japan and China have one major concrete dispute – maritime claims. The US and Japan each value their alliance, but generally the US takes Japan for

granted. The US would like to see greater Japanese influence in South-

east Asia – the absence of which was clear when most East Asian nations did not support Japan’s efforts to win a permanent UN Security Council seat.

Relations among the three powers, with some perturbations, e.g., the current fracas

over US military vessels visiting Hong Kong, have improved in recent years. What-

China, Japan and the

has emerged on key issues with productive dialogue underway. US-Japanese ties

regional and global

Liberal Democratic Party’s diminishing clout.

than alone.

ever political problems arising from trade, substantial Sino-American cooperation

US can better solve

intensified during the Koizumi era, but have some current hiccups raised by the

problems together

Most important, Sino-Japanese tensions have diminished, trade grows rapidly, highlevel visits have resumed and both countries recognize the need to check nationalist forces despite territorial differences. Still, China and Japan lack serious dialogue.

In the much-heralded six-party talks on the North Korean nuclear issue, China

provided useful leadership, and the Bush administration did an about-face, resurrecting Clinton’s pragmatic policy of bribery. Yet, the verdict on these talks is not in – and depends on verification of North Korea’s holdings of nuclear material.

Washington largely views East Asia through a strategic and military lens. The US remains a central pillar in Northeast Asia security, and most Asian countries welcome

its presence as a balancing factor. From a policy standpoint, continuing US preoccupation with China’s growth and modernization obscures China’s rapid integration

with East Asia, the rise of more independent powers with growing confidence and the notion of an East Asian ethos.

Despite the US central role in the region, particularly in Northeast Asia, any US policy must start with the recognition that its influence has declined – a positive consequence of the rise of Asian economies. Asian nations are not only economic

competitors, but also the home of American multinationals. So relations naturally are more balanced. Diffusion of power requires the US to focus on its competitive

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prowess while dealing with Asia in a give-and-take way on issues like energy and East Asia’s economic integration.

North Korea and China, two ongoing security problems on which the US military

structure in East Asia is based, are also changing, both on a trajectory toward some better resolution:

• In the final days of Chen Shui-Bian’s premiership, we may witness the last big stirrings of Taiwanese assertion. However, despite increasing

military buildups, with Taiwan the major focus of the People’s Liberation Army, the threat of a unilateral declaration of independence has dimin-

ished along with the threat of war. Cool heads on both sides of the strait

increasingly recognize the necessity to manage the conflict through negotiations and normal economic workings, not confrontation. The potential destabilizing element is domestic politics, in the US, China or Taiwan, as leadership changes. Despite domestic political rumblings, strategic clar-

ity dominates US policy toward Taiwan – keep it frozen until Beijing and Taipei sort the matter out themselves.

• Predictions about North Korea, with its opaqueness and uncertain

leadership transition, require more caution. Recognizing that its survival depends on change, North Korea is slowly becoming addicted to South

Korean largesse, Chinese trade and investment, and more contact with the world. The immediate uncertainty is North Korea’s denucleariza-

tion; if that ends badly, the climate will again change, but not necessarily toward hostilities.

The security focus should be reducing Sino-American and particularly Sino-Japanese tensions and searching for frameworks of continued cooperation. Continued

globalization of trade, finance and culture help, but also produces discontents and economic nationalism. Thus leadership, as the Bush administration has provided

against congressional protectionism, is key. Additional steps that might contribute to better trilateral relationships include:

• The US and Japan should not pursue an “alliance of values” with Aus-

tralia and India, largely an amorphous anti-Chinese move that does little to deter China or improve regional security.

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• On the other side, Japan deserves to be a permanent member of the

Security Council, and China should end its opposition. Such a Chinese move – unfortunately unlikely in the near future – could change the climate in East Asia and the world.

• East Asia can benefit from consultative forums, including a trilateral one, formal or informal. This idea, long favored by nongovernmental

organizations, is rejected by China because of the US-Japan alliance, with possible complaints from other countries and skepticism from all as to its worth. But with relations sufficiently developed, such a forum could, for example, be an offshoot of the G8 meeting, of which China should soon

be a regular member. China, Japan and the US have plenty to talk about besides North Korea.

• Efforts toward deeper, more formal East Asia economic and political

integration have lagged due to the complexity and Sino-Japanese rivalry on how to organize the region. Unless these powers – like Germany and France in Europe – find an accommodation, the project will stumble

along. The US, largely absent from this debate, is apparently still addict-

ed to Asia-Pacific Economic Cooperation, which is becoming, but doesn’t have to be, a vehicle for diluting East Asian cooperation. Movement

toward an East Asian economic community, not a Pacific one, offers the best vehicle for peaceful security structure in East Asia.

The last part of the 20th century was dominated by dualities like the Cold War. The 21st century is shaping up with multiple power-centers, calling for multilateral policy

approaches. China, Japan, the US – and throw India and Russia into the mix: Asia quickly becomes ground-zero for great power relations in the decades to come. Let’s hope consultation and integration win the day. Washington, 8 January 2008 Morton Abramowitz is a senior fellow at the Century Foundation. His book with Stephen Bosworth, Chasing the Sun – Rethinking East Asian Policy, was published in 2006 by the Century Foundation Press.

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Where Is the World Headed? Immanuel Wallerstein As the world heads into the next decade, there are two arenas where we can anticipate

great turbulence - the geopolitical arena and the world-economy, with the relative decline of US geopolitical power now acknowledged by almost everyone and which even President Barack Obama cannot reverse.

We’ve moved into a truly multipolar world where the power of relatively weaker

states is suddenly much greater. The Middle East this year is but one example: Turkey brokers long dormant negotiations between Syria and Israel. Qatar brokered a

negotiated truce between fiercely opposed factions in Lebanon. Egypt seeks to broker negotiations between Hamas and Israel. The Palestinian Authority has resumed

negotiations with Hamas. And the Pakistani government has entered into a de facto truce with the Taliban inside the zones bordering Afghanistan. What’s significant about each of these actions is that the United States opposed all of these negotiations and has simply been ignored, without serious consequences for any of the actors.

Alongside the US, European Union and Japan there is now Russia, China, India, Iran, Brazil as the putative leader of a South American bloc, and South Africa as the putative leader of a southern Africa bloc.

There’s an immense amount of jockeying for alliances, with internal debate about optimal partners and plenty of uncertainty about what they will decide. In addition,

other countries like Poland, Ukraine, Korea, Pakistan, Egypt, Nigeria, Mexico and Canada are unsure about how to maneuver. Clearly the new geopolitical situation is quite unlike anything the world has known in a long time. It isn’t quite total anarchy, but it is certainly massive geopolitical disorder.

This geopolitical disorder accompanies acute uncertainties about the world-economy.

There is first of all the issue of currencies. We have lived, since 1945 at least, in a dollar-stabilized world. The decline of the US, in particular its decline as a dominant

locus of world production, combined with the overstretch of its debt, has caused a serious decline of its exchange rate, one whose end point is unclear but probably still lower.

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This decline of the dollar poses a serious economic dilemma for other countries, particularly those which have placed their increasing wealth into dollar-denominated

bonds and stocks. These countries are torn between wanting to sustain the US as

a significant purchaser of their exports and the real losses they incur in the value of their dollar-denominated assets as the currency declines and pondering when

to abandon it. But as with all financial exits, the issue for the holders of assets is timing – neither too early nor too late.

Will some other currency replace the dollar as the reserve currency of the world? The

obvious candidate is the euro. Whether it can play this role or whether European

governments wish to play this role is uncertain, although it’s possible that this role

As the world heads

may be thrust upon it.

into the next decade,

If not the euro, might we have a multi-currency situation - one in which the dollar,

where we anticipate

world transactions? The answer here is akin to the question of geopolitical alliances.

geopolitical arena and

there are two arenas

the euro, the yen, possibly the Chinese renminbi and the pound are all used for

great turbulence - the

It would not be total anarchy, but it would certainly be disorder, and the world’s

the world-economy.

governments and producers would feel most uncomfortable, not to speak of the world’s pensioners.

Many large countries have seen large increases in both their productive output and

level of consumption. Take the so-called BRIC countries – Brazil, Russia, India, and China – which harbor something like 60 percent of the world’s population. The

increase in their output and consumption levels has led to an incredibly increased

demand for energy, raw materials, food and water. Something must give. We could have a major worldwide inflation, as the prices of all these commodities continue

to zoom upward, fueled by surging demand and speculation. We could then have massive protectionism, as governments seek to safeguard their own supplies by limiting any and all exports.

As we know from past experiences, this could create an erratic vicious circle. Or we could have massive shortages felt here and there, resulting in high mortality rates and serious additional environmental catastrophes.

Governments assaulted by reduced real revenues, under pressure not to increase taxes to compensate, might cut back in the three key domains of education, health and old-age pensions. But these are the domains that, as part of the democratization

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of the world over the past two centuries, have been the key demands that publics

expect of governments. Governments unable to address the maintenance of these

three forms of social redistribution would face a major loss of legitimacy, with uncertain consequences in terms of civil uprisings.

Now this entire short-run negative picture is exactly what one means when one

says that the system has moved far from equilibrium entering into a state of chaos. Chaos, to be sure, never goes on forever. Chaotic situations eventually breed their own resolution in what Ilya Prigogine and Isabelle Stengers called “order out of

chaos” in the English title of their classic work, Order Out of Chaos: Man’s New

Dialogue With Nature, published by Bantam. The original title was La nouvelle alliance: Metamorphose de la science, published by Gallimard in Paris, 1979. As the authors emphasized, in the midst of a bifurcation, there is creativity, there is choice, but we cannot be sure what choices will be made.

In the battle between the left and the right, the former had a vertiginous rise in the

19th and especially the 20th century. The left mobilized support on a vast scale and

very effectively. There came a moment in the post-1945 period when it seemed to be succeeding everywhere in every way.

Then came the grand disillusionments. The states where the anti-systemic movements came to power in one way or another were in practice far from what the

popular forces had expected and hoped to institute. And the irreversibility of these

regimes turned out to be another illusion. By the early 1990s, triumphalism had

disappeared amongst the world left, to be replaced by a widespread lethargy, often a sense of defeat.

And yet, as we know, the subsequent triumphalism of the world right fell apart as well, most spectacularly in the utter fiasco of the neocon assertion of a permanent

US imperial domination of the world. From the 1994 Zapatista uprising to the successful shutdown of the 1999 Seattle meeting of the World Trade Organization to

the 2001 founding of the World Social Forum in Porto Alegre, a reignited world Left reemerged on the world scene.

We live in a chaotic world environment and it’s difficult to see clearly, as if trying to make one’s way forward in a major snowstorm. Those who survive both use

a compass to know which direction to walk and also examine the ground inches

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ahead to make sure they do not tumble into some hole. The compass guides our middle-run objectives – the kind of new world-system we wish to build. The ground

inches in front of us is the politics of the lesser evil. If we don’t do both, we’re lost.

Let us debate about the direction of the compass, ignoring the states and ignoring nationalism. Let us nonetheless engage with the states and nationalism in the short

run, so that we avoid the crevices. Then we have a chance of survival, a chance we will achieve that other world that is possible. New Haven, 10 July 2008 Immanuel Wallerstein, senior research scholar at Yale University, is the author of European Universalism: The Rhetoric of Power, published by New Press in New York.

Globalization in Trouble Bernard K. Gordon The benefits of trade have been frequently noted by supporters of globalization.

Jagdish Bhagwati recently stated that a half-billion people in India and China have been pulled out of poverty as a result of economic growth stemming from trade.

Singapore’s prime minister has similarly cited his region’s “astonishing rise in prosperity” and its “more than doubling or even tripling of per capita GDPs” as “clear

evidence of the benefits of free trade and globalization.” Both make the point that trade has been the key to the post-World War II explosion of world economic growth and the widening prosperity it has brought.

Less widely acknowledged is that this economic growth developed within a largely stable global political background, based on a postwar international security structure

itself grounded on two American alliances: NATO in Europe and with Japan in East

Asia. But now, because of differences over mutually acceptable “burden-sharing,” both alliances are in trouble and so too is the pace of globalization.

In NATO the issue is the number of troops members will commit to their joint mis-

sion in Afghanistan. Washington hoped that would be a main focus of a January NATO meeting in London, and President Barack Obama set the stage in December

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at West Point. He reminded all that after September 11 “For the first time in its his-

tory, the North Atlantic Treaty Organization invoked Article 5 – the commitment that says an attack on one member nation is an attack on all.”

Yet in Afghanistan, where the fight to deny sanctuary to terrorists continues, the

interest of the allies is ebbing. Some 35,000 American troops are already in Afghanistan, and another 30,000 are being sent. But aside from Britain’s sizeable

contingent of 9,000 troops, commitments are declining. Among the other NATO members, though each has suffered significant casualties, burden-sharing has so

In Afghanistan, where the fight to deny sanctuary to terrorists continues, the interest of the allies is ebbing.

far meant little. Canada, France, Italy and the Netherlands have each deployed

roughly 3,000 in Afghanistan. Germany has 4,000 and was urged to bring that to

7,000, but days before the London meeting, Chancellor Angela Merkel preemptively announced she would send just 800 more. With no other NATO member at

anywhere near those numbers, the NATO meeting turned instead to its principally noncombat Afghan roles.

There is of course little public support in Europe for more troops, as Germany’s case

illustrates. Its new defense minister, Karl-Theodor zu Guttenberg, caused a public

stir when he referred to the Afghanistan mission as a “war” rather than with the

usual euphemisms. His predecessor and a top general lost their jobs when Afghan civilian casualties resulted from German military actions, despite their convoluted and restrictive “rules of engagement.”

Those restrictions stem from the detestation of war, evident throughout Europe. Its peoples, as military analyst Colin Gray writes, have been “thoroughly debellicized,” and nowhere more than in Germany itself, as I’m often reminded by a woman whose

father and uncle were hanged by Hitler after the failed 20 July 1944 plot. She was

too young to remember them, but vividly recalls how, with her mother and sister,

she walked across a devastated Germany in 1945 hoping to escape the advancing Red Army. 

Those memories have produced a rejection of war under any circumstances that

must to be overcome if NATO is to deliver the equitable Afghan burden-sharing promised by its alliance with the United States. Obama put NATO on notice in his

Nobel acceptance speech: “There will be times when nations—acting individually

or in concert—will find that force is not only necessary but morally justified.” He added that “America cannot act alone. This is true in Afghanistan.”

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This is a test that NATO, in terms of its own security and potential to corrode alliance

cohesion, should not want to fail. There are already American concerns that NATO

is becoming mainly a talking shop. Europe’s often blinkered outlook on Russia’s growing revisionism promotes calls to reduce America’s foreign involvements, to be better prepared for threats at home.

Burden-sharing differences are also at the heart of alliance troubles with Japan, where the issues are US forces and military bases on Okinawa. These have long

faced much local opposition to noise and related problems, and in 2006 Japan and the US hammered out an agreement to move some forces to less crowded areas on Okinawa and others to Guam. But implementation was interrupted when Yukio Hatoyama‘s Democratic Party of Japan won a victory last August. 

That ended the 50-year dominance of Japan’s Liberal Democratic Party, under whose

auspices the Okinawa agreement was negotiated. Although Hatoyama’s election reflected essentially domestic issues and much dissatisfaction with the LDP and

Japan’s bureaucrats, Hatoyama had long argued for a “more equal” relationship with the United States, and his coalition included many who resisted the alliance and opposed the Okinawa bases. 

Evidence the alliance was in trouble peaked in October when Defense Secretary

Robert Gates stressed in Japan that the 2006 agreement should be implemented without delay. Japan’s response has been that no decision would come until at

least May, although Prime Minister Hatoyama personally asked President Obama

to “trust me,” and his foreign minister gave similar assurances to Secretary of State Hillary Clinton.

Among the many complications are that Okinawans have long been regarded by

many main-island Japanese as “second class” citizens whom Tokyo would not wish to further offend by implementing the 2006 Agreement. Another is that some

American officials reportedly suggest that the bases are less critical to US defense needs than is publicly argued.

America’s response has combined an aura of patience about Japan’s domestic problems with a simultaneous insistence that the 2006 agreement – though negotiated by

prior governments in both nations – needs nevertheless to be implemented. Likewise, Senate Foreign Relations Committee Chairman John Kerry said, “this is a time to

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give Japan a little breathing room” and pointedly noted Japan’s decision to end its refueling of allied ships aiding the Afghanistan effort.

Today’s Japan and NATO burden-sharing differences evoke earlier statements by two

former secretaries of the US Department of State. In 1965, New Zealand, a member of the the Australian, New Zealand, US Security Treaty alliance, announced that it would no longer accept any nuclear-powered or nuclear-armed US Navy ship. 

Washington effectively then canceled New Zealand’s treaty membership. Dean Rusk, wrote to a Wellington newspaper that an alliance with the United States

should not be confused with a call-girl’s phone number – for use “only when the need arises.” Another came during the 1980s when Thailand sought to close a US

base there. George Shultz responded that “The United States does not stay where it is not wanted.” The base was closed. 

These NATO and Japan troubles should remind all concerned with globalization

of the need for an underlying international political structure. None existed in the 1930s, when regional blocs led instead to the fragmentation of world politics that

made impossible the globalization and expanding prosperity characteristic of the postwar era. 

In stark contrast, this era has rested ultimately on a US-centered alliance structure which provided the political stability that fostered widening globalization. Insufficient

burden-sharing in both the NATO and Japan alliances threatens that structure and needs quickly to be resolved because it threatens continuing globalization as well. Washington, 12 February 2010 Bernard K. Gordon’s most recent book is America’s Trade Follies, Routledge 2001. He is professor emeritus at the University of New Hampshire.

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China Defends Its Core Interests in the World Orville Schell After speculation to the contrary, President Hu Jintao confirmed that he’s coming to Washington for upcoming nuclear proliferation talks. Not long after, Washington

announced a delay in announcing any decision on whether China has been judged a “currency manipulator,” a dictum Congress requires that the US make on each country by April 15th.

Principle of reciprocity

What’s more, Hu’s recent hour-long phone conversation with President Barack

Confucian tradition

enshrined in China’s

Obama on 1 April leading to these announcements could signal a much-needed

thaw in US-China relations. It’s about time. Here in Beijing, in the wake of the Dalai Lama’s recent visit to the White House, the Taiwan arms sales and Google’s

retreat to Hong Kong, one can’t help escape a growing chill towards America. And in Washington, fair or not, many have come to view US conciliatory gestures over the past year as having failed to elicit equal response from Beijing.

Indeed, since coming to office, the Obama administration has bent over backwards to signal its desire for friendlier relations with China. Secretary of State Hillary

Clinton and Obama both displayed an unusual solicitude towards their hosts on their respective trips to China. Among other concessions, Clinton promised that human rights issues could not stand in the way of the two countries tackling global problems like the economic crisis or climate change, and Obama even postponed his October meeting with the Dalai Lama in hopes of smoothing the way to a successful

November summit. In Washington’s view, Beijing responded without reciprocity in Copenhagen and then harped on issues like Tibet, Taiwan and currency exchange, chilling promise for more collaboration.

Then came the Google furor, which deeply unsettled Chinese officialdom. After all, here was the most dynamic, iconic company in the world suddenly walking away

from part of its business in the most rapidly growing market in the world. Chinese blogs and chat rooms have been ablaze with defensive rebuttals to the company’s

departure and its implicit critique of Communist Party’s ground rules for foreign IT companies operating in the China market. Many insist that internet “filtering” – it’s

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rarely referred to as “censorship” here – is simply part of China’s quotidian rules and regulations for doing business.

Given China’s new militancy, even truculence, many in Washington began to wonder

if the Chinese really do want friendlier relations. And if they do, don’t they understand the concept of reciprocity?

The truth is that Beijing does want better relations, but often this aspiration gets lost in clumsy political bluster. Curiously, the notion of reciprocity is not alien to China. In fact, the idea is deeply rooted in its own Confucian tradition.

The Analects, or Lunyu, the classic of Confucian political philosophy that sinologist Simon Leys described as being “to Confucius what the Gospels are to Jesus,” provide

a virtual roadmap for creating and maintaining mutually reinforcing relationships.

In The Analects, written around 500 BCE, the sage tells one of his disciples that

his doctrine has only “one single thread running through it” – and that is, “Loyalty and reciprocity, and that’s all.” Another disciple asks, “Is there any single word that should guide one’s entire life?” and Confucius replies, “Should it not be reciprocity? What you do not wish for yourself, do not do to others.”

In classical Chinese, the character used for the idea of “reciprocity” is shu, which carries a broader resonance of “tolerance,” “generosity” and even willingness to

“excuse,” “forgive” and “show mercy.” It also implies that one’s actions towards others – or by implication between countries – invariably conditions their responses and vice-versa, in an endless dialectic chain of cause and effect.

In the Confucian universe of shu, a concession made as a demonstration of good intention should not simply be accepted by the recipient as something “won,” but should serve as a catalytic gesture which then presents an opportunity, even an obligation, for the counterpart to reciprocate with a comparable gesture.

So, what has prevented Beijing from re-embracing this Confucian notion? Aside from

the fact that Confucianism was savagely attacked and denied by Chinese revolutionaries during the past century, a fear that manifesting an abundance of shu might make China appear too conciliatory, thus weak, has also served as an impediment. President Obama learned something himself about appearing too weak when he was criticized at home for his seemingly supine deportment in Beijing. The Chinese

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explanation for their own posture is that issues like Tibet, social stability, Taiwan arms sales, are all hexinliyi, or, core interests, which brook no compromise.

As State Councilor Dai Bingguo, who oversees China’s foreign policy, explains,

“China’s number one core interest is to maintain its fundamental system and state security; next is state sovereignty and territorial integrity; and third is the continued

stable development of the economy and society.” But, with so many interests coming

under the rigid rubric “core,” only a narrow margin of territory remains for Chinese diplomats to maneuver and actually negotiate.

Over the past century and a half, the Chinese have come to view international relations as a ruthless competition in which the interests of weak nations like China were almost always trumped by the more powerful. But given its recent rise and new

economic power, the idea of China as a victim or a world unto itself as in the Mao

era, in a universe where one nation’s gain is always another’s loss, is increasingly outmoded and counterproductive.

After all, China has become an ever more prominent member of the global com-

munity. As a member of the World Trade Organization, it has benefited enormously from the transnational web of connectivity arising around the advance of globalization. Thus, it is somewhat disingenuous for its leaders to imagine that they can

irrevocably corral off whole hemispheres of activity as lying completely outside the sphere of common interest. Simply put, with the benefits of global citizenship come new obligations of global responsibility

One way that the US can help China’s leaders feel more comfortable with these new responsibilities and adopt a more reciprocal posture in negotiating them is to ensure

that friendly gestures are embraced in a way that allows China to see how such interactions can convey a new self-confidence and magnanimity rather than weakness.

There’s little time to waste. The Obama-Hu conversation has created a new, un-

expected moment of thaw in an increasingly frozen relationship, but the moment could pass. After all, it’s still possible that the US-China relations could become

derailed in American acrimony over the loss of jobs to China, the US imbalance of

payments, the vagaries of currency exchange, or leadership disagreements or civil unrest in China.

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Many issues still divide the two countries. But, Chinese leaders should not fail to

appreciate that Obama and Clinton have extended a new hand of friendship. If China’s leaders truly want better relations, now is the time to recognize that these intentions are genuine and find their own ways to respond in kind. If China’s future increasingly depends on Beijing being more flexible and reciprocal, then there’s no better place to look than its own traditions. Beijing, 5 April 2010 Orville Schell is director of the Center for US-China Relations at the Asia Society and founder of The Initiative for US-China Cooperation on Energy and Climate Change.

China’s Foreign-Policy Balancing Act Shen Dingli China is better off due to its extensive international engagement. Yet such engage-

ment is double-edged, increasingly exposing China to regional unrest such as the current turbulence in Libya. Chinese investment and laborers were at risk there,

and required swift action. Beijing’s effort at protecting its physical investment interests, verbal insistence on the longstanding principle of non-intervention, as well

as support for and compromise on the United Nations Security Council resolutions

imposing sanctions, which indeed constitute interference in Libya, reveal China’s ever-complicated calculation of interest as well as its pragmatic diplomacy.

Contrary to the suggestion that Beijing is becoming more assertive, China faces more challenges, both structural and incidental, that pressure it to respond publicly. While China’s foreign policies are intended to be conducted with more visibility now, some

of its responses are viewed by others as pushy or over-reaching. External pressures, notably from the US, could be forcing China’s hand in responding too quickly, too forcefully, to classic security dilemmas, particularly in its own backyard.

China’s foreign relations in East Asia have experienced turmoil over the past year. For instance, with Japan, Beijing demanded last September that Tokyo immediately

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release a Chinese captain whose fishing boat collided with a Japanese government

vessel near Diaoyu/Senkaku islands. China has long claimed sovereignty over the

territory, but the fast, stern approach, combined with a temporary hold on exports of rare-earth materials, could have added strain to its public diplomacy with Japanese at large.

The most serious challenges facing China have been from the Korean Peninsula. Rather than returning to the six-party Talks, the DPRK staged a series of contentious

moves in 2010. Although China was uncertain of Pyongyang’s role in sinking of the Cheonan, a South Korean naval vessel, the North’s artillery barrage on Yeonpyeong in November, which killed civilians, is indisputable. After the first wave of shelling,

Delicate handling and

China neither criticized the ROK for staging a shelling exercise too close to the North

help China regain the

China was silent, unhelpful in preventing the North from threatening a second wave.

consistent policies can

nor condemned the DPRK for shelling Yeonpyeong and violating international law.

trust of neighbors.

China was uninterested in addressing this issue, subsequently blocking a statement of condemnation from the UN Security Council.

China’s security environment is increasingly challenged by the United States, which

has shown renewed interest in the Asian region, taking advantage of regional tensions to shore up its alliance with both South Korea and Japan. Washington also is revamping relations with some ASEAN countries, urging them to hedge against China. In July 2010, US Secretary of State Hillary Clinton openly challenged China’s position

on the South China Sea, asserting US interests and calling for peaceful resolution

of territorial disputes, in addressing the ASEAN Regional Forum ministerial meeting in Hanoi. In addition, China has increasing disputes with the US in regard to freedom of navigation inside China’s Special Economic Zone. The two nations still have not resolved disagreements over interpreting the relevant rights under the UN Convention on the Law of the Sea.

It makes sense to ponder why these challenges have emerged, how China may have

contributed to them and how they might be averted in the future. China’s rise per se is a source of its growing confidence, but too fast a rise and too much confidence

could foment tension between China and other nations. For instance, China’s growth

rate over the past decade is 10 times higher than that of the United States. If it sustains this fast rate, China could surpass the US in total output in another decade.

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Similarly, China’s official defense budget in 2010 was $78 billion, 50 percent higher

than Japan’s and 150 percent more than India’s. The 2011 official budget at $91.5 billion could exceed the total expenditures from Japan and India. Even if China

has the best intentions and transparency, the neighbors’ response is predictable.

A number of China’s neighbors are apprehensive about Beijing’s fast rising power and respond with hedging while calling for dialogue.

China has viewed US arms sales to Taiwan as insulting. Yet, Beijing has bided its time

in the hope that the US would respect China’s rise and end its interference. Against the backdrop of the global financial crisis and US commitments in Afghanistan and

Iraq, Beijing may have concluded that the time to end the US weapons sales has

come. That may be why, a year ago, China demanded that the US end such sales, or find itself “truly sanctioned.” Indeed, China sanctioned the US while hurting itself, by freezing military-to-military exchanges for 2010.

Sometimes China tends to move more slowly than the US in responding to individual

incidents. So China’s DPRK policy appears, at best, contradictory. While Beijing tries to normalize its relations with Pyongyang, moving away from a “lips and teeth”

relationship, it continues to protect “traditional” bonds, preventing sanctions on the North for its behavior.

For instance, the UN Security Council has ordered comprehensive sanctions against

the DPRK for its nuclear/missile development, except humanitarian aid. Yet, China

is reportedly in talks with the DPRK to develop harbors and other infrastructure. If such South Korea press reports are true, this could move beyond the UN limit of aid for “humanitarian purposes.”

Although China has regarded the ROK as a “strategic partner” since 2008, it waited five weeks to issue condolences after the Cheonan’s sinking, a sharp contrast to two high-profile welcomes for North Korea’s leader last spring. China’s unwillingness or

inability to speak out fairly about violations of international law in the Yeonpyeong case does not boost its diplomatic profile or win international support.

Beijing and Washington may have clashed, unnecessarily, over “China’s core national interest” concerning the South China Sea. Such core national interest is most

important in terms of substance and therefore most narrowly defined in terms of

scope – China’s sovereign soil, space and waters rest within 12 nautical miles from

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its sea baseline. The adjacent water, exclusive economic zone, and the rest of the South China Sea as contained by the “nine-dashed-lines”– except for islands claimed

by China and associated territorial waters – are important, but not core interests

for China. This should be clearly stated to avoid unnecessary conflict and aid China in securing its legitimate security environment.

China’s complicated security environment may extend from the outgrowth of three

factors: external pressures, China’s fast rise and its own performance. US security pressure on China persists, but Beijing’s handling of that pressure increasingly

accounts for complications in its security environment. The mutual distrust and suspicion between China and other parties, especially the US, at a time of China’s rise, increase mutual hedging.

Beijing is influential in many international affairs, contributing greatly to alleviating

regional tensions and global concerns. That said, it must also understand the undesirable consequences of its own actions in shaping its security environment. More

delicate handling and specific responses could ease a number of security dilemmas and help it ride out the rough waters.

China could better position itself to reduce some of those challenges. In fact, dealing

with maritime disputes primarily through international law, stabilizing the Korean Peninsula through proactive balancing and working with the US to allay each other’s legitimate concerns are the remedies to smooth the latest rough patch. Shanghai, 15 April 2011 Shen Dingli is a professor and director of the Center for American Studies and executive dean of the Institute of International Studies at Fudan University in Shanghai, China.

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Burma Delivers Its First Rebuff to China Bertil Lintner At a time when Asian countries are increasingly worried about China’s growing

assertiveness, Burma’s rejection of a huge Chinese hydroelectric dam project has raised new questions: Is this a rare victory for civil society in a repressive country?

Or does it indicate an internal dispute over the country’s dependence on China? Regardless of the answers to these questions, the public difference over a close ally’s project marks a new stage in the Burma-China relationship.

On 30 September, Burma’s new president, Thein Sein, sent a statement to the

country’s parliament announcing that a joint venture with China to build a mega-

dam in the far north of the country had been suspended because “it was contrary to the will of the people.” The US$3.6 billion The Myitsone Dam would have been world’s 15th tallest and submerged 766 square kilometers of forestland, an area bigger than Singapore.

It’s unclear if Chinese counterparts were consulted before the decision was made

public. Burma has depended on its powerful northern neighbor for trade, political

support and arms deliveries since the West shunned the Burmese regime following massacres of pro-democracy demonstrators in 1988.

Public opinion may have played its part. Under the 2006 deal, 90 percent of power

generated from Myitsone would have gone to China. Anger over environmental

destruction galvanized people against the regime in a way that the country had not seen for years. The dam was a dagger in the heart of the Kachins, the predominant

ethnic minority in the area. Pro-democracy leader Aung San Suu Kyi threw her support behind the anti-dam movement. Many made their voices heard over Facebook – a new tool for anti-regime activists.

People inside Burma can’t protest openly, but “Save the Irrawaddy” meetings have been held in Rangoon. Burmese exiles have staged anti-Chinese demonstrations outside Burmese and Chinese embassies abroad.

Anti-Chinese sentiment is growing in Burma, especially in the north where Chinese

influence is the strongest. According to reports from Kachin State, many Chinese

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nationals working in the state, including traders, have fled to China following the outbreak of hostilities between the Kachin Independence Army and government forces.

But public opinion has never been a strong factor when it comes to influencing

the Burmese regime. The regime doesn’t want to risk another outbreak of antigovernment protests similar to the 2007 monks’ movement and invite international condemnation with more US and EU sanctions.

Dissatisfaction within the armed forces over China’s growing influence in Burma is a more likely reason for the move to suspend the dam project.

Shelving of gigantic

Burma has historically had a strained relationship with its northern neighbor. From

Chinese hydroelectric

maintained a cordial relationship with the non-aligned democratic government of

to the West.

the establishment of the People’s Republic of China in 1949 until 1962, Beijing Prime Minister U Nu.

Burma was the first country outside the communist bloc to recognize the new regime in Beijing. After General Ne Win staged a coup d’etat in 1962, the Chinese, long wary

of the ambitious, sometimes unpredictable general, prepared for all-out support for the insurgent Communist Party of Burma, or CPB.

Anti-Chinese riots in Rangoon in 1967 – orchestrated by military authorities to deflect public anger over a deteriorating economy – provided an excuse for Chinese to

intervene. On New Year’s Day 1968, armed CPB units entered northeastern Burma from China’s Yunnan Province. Over the next decade, China poured more aid into the CPB effort than any other communist movement outside of Indochina.

A clandestine radio station, the People’s Voice of Burma, began transmitting from the Yunnan side of the frontier in 1971. Thousands of Chinese streamed across the border, providing additional support to the CPB.

Mao’s death in 1976, and the subsequent return to power of the pragmatist Deng

Xiaoping, marked the beginning of the end of massive Chinese aid to the CPB. Sup-

porting revolutionary movements in the region was no longer in Beijing’s interest. Still, China coveted Burma’s forests, rich deposits of minerals and natural gas, and hydroelectric power potential.

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Ending Chinese support to the CPB ushered in a more cordial era in Sino-Burmese

relations, the relations growing by leaps and bound after the 1988 bloody suppression of pro-democracy movement in Burma. Apart from supplying Burma with

vast quantities of military hardware, by 1991, Chinese experts assisted in a series of infrastructure projects. Chinese military advisers soon arrived, the first foreign military personnel stationed in Burma since the 1950s. Cross-border trade between China and Burma boomed.

More recently, China has provided Burma with low-interest loans, and Chinese investment in the sanctions-hit economy is substantial, particularly true of the

energy sector. For example, an agreement on a gas pipeline from the Bay of Bengal will be supplemented with an oil pipeline designed to allow Chinese ships carrying Middle Eastern oil to skirt the congested Malacca Strait.

The heavy dependence on China has led to consternation among many Burmese military leaders. Those leaders do not forget that they once fought against the

China-backed CPB, that their comrades were killed by Chinese arms. Aung Lynn Htut, a former intelligence officer who sought US political asylum in 2005, drew on those memories in a September commentary for The Irrawaddy, a website run by Burmese exiles.

China has called for talks after President Thein Sein’s statement, but skeptics point

out that a 2009 internal report by the China Power Investment Corporation, the company behind the dam, said that the size was unnecessary and called for the

project to be scrapped. And China still has contracts to build six other mega-dams

on the Irrawaddy and source rivers. That Thein Sein dared to make his public statement reveals a wrinkle in Sino-Burmese relations – and how Burma may try to balance foreign relations, perhaps returning to its former policy of strict neutrality and non-alignment.

Some academic observers assert that Beijing’s influence over the Burmese government is exaggerated. China, the argument goes, “has not been as successful in winning Burma’s confidence as often is reported,” as suggested by Andrew Selth,

author and strategic studies researcher. The source of Burma’s arms suppliers of-

fers evidence: Although China provided Burma with up to US$1.6 billion worth of military hardware since 1989, the regime has recently turned to Russia, Ukraine and North Korea to diversify its arms-procurement program.

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Instead of democratizing the country, Burma’s new government seems to have chosen to play “the China card,” an attempt to win support of the West. An unsigned

opinion piece in The Bangkok Post, written by a Burmese government official, reportedly approved at the highest level in Naypyidaw, lays out its position: “We do not

want our country to become a satellite state of the Chinese government. However, Western countries should not force us into a corner where we have no option but to increasingly rely on China.” 

In this context, “force” means insistence on genuine democratic reforms. From the regime’s point of view, improved relations with the West could be accomplished simply by playing up the Chinese threat, with the hope of diminishing Western

criticism of the regime. But the regime has time and again stressed that how the country is governed is an internal matter. The West must decide if it will play along. Chiang Mai, 3 October 2011 Bertil Lintner is a Swedish journalist based in Thailand and the author of several works on Asia, including Blood Brothers: The Criminal Underworld of Asia and Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan.

Oil and Gas in Islam’s Fault line Jamsheed K. Choksy and Carol E. B. Choksy Because access to oil and natural gas is a major driving factor for foreign policy, it

is necessary to look strategically at groups controlling the future of supplies. Un-

derstanding the changing power balance between Sunnis and Shiites, or Shias, in the Persian Gulf and Arabian Peninsula region also offers insights into the growing

unrest there over democratic rights. The religious schism between Shiites and Sunnis that emerged in the 7th century, now mixed with oil, gas, political power and military muscle, has acquired a new volatility that goes ignored at international peril.

Policymakers, the public and scholars recognize that Sunnis make up the majority of Muslims and that Shiites form a small minority. According to a Pew Research Center study in 2009, “Of the total Muslim population, 10–13 percent are Shia Muslims and 87–90 percent are Sunni Muslims.”

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However, global generalization fails to focus on demographic distributions in the Persian Gulf and Arabian Peninsula. Nor does it take into account the geopolitical

impact of Muslim sectarianism and the strategic implications of the Sunni-Shiite divide for access to natural resources from that energy rich region.

As Saudi Arabia and its Sunni partners draw increasingly upon crude oil and natural

gas resources to meet the demands of an energy-hungry world, Iran and its nearby Shiite partners hold on to similar resources not by choice but through sanctions and

strife. So, in the long run, nations in the region with predominantly Shiite populations could determine who receives much-needed resources.

When official demographic distributions, from CIA World Factbook July 2012 estimates, for the Persian Gulf and Arabian Peninsula are examined, it becomes evident

Sunnis comprise 36 percent of the overall population whereas Shiites make up 60 percent. Other Muslim groups, Bahais, Christians, Jews, Zoroastrians and Hindus constitute the remaining 4 percent (see Figure 1).

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Bahraini and Kuwaiti monarchies vest power in Sunni populations, augmenting

their numbers by granting citizenship to Baloch and Pashtuns from Pakistan and Afghanistan while repressing the aspirations of their own Shiites. Official figures place

Shiite citizenry at 65 percent of Bahrain’s population and 30 percent of Kuwait’s,

although unofficial tallies by the Council on Foreign Relations and by Islamic Web suggest at least 75 percent of Bahrainis and 55 percent of Kuwaitis follow Shiism.

Likewise Saudi Arabia, another Sunni monarchy, presents itself as overwhelmingly of the Wahhabi sect. Yet official Saudi demographics also under-represent that

kingdom’s Shiite population, estimated by scholars at 25 percent. Qatar and the UAE too have larger numbers of Shiite citizens than officially reported.

One reason for countries

One reason for those countries understating their Shiite populations is obvious:

populations is obvious:

Shiites tend to occupy oil and natural gas rich regions yet rarely share equally in

in Sunni hands.

understating their Shiite

Retaining political power in Sunni hands. Another reason is increasingly relevant: the profits. A third reason has to do with global politics: The region’s Sunni leaders

fear the West will pressure them into more power sharing and wealth distribution in order to ensure sociopolitical stability.

Indeed scholarly tallies place the approximate total number of Sunnis at 54,702,317

and of Shiites at 102,357,949, or 33 percent and 62 percent respectively, of overall population in the Persian Gulf and Arabian Peninsula region.

Proven crude oil and natural gas reserves, from CIA World Factbook January 2011

estimates, are equally revealing as to how each Persian Gulf and Arabian Peninsula

nation’s Sunni and Shiite populations correlate with control of energy resources (see Figure 2).

Those countries which officially claim Sunni majorities, namely Saudi Arabia, Yemen, Qatar, Kuwait and the UAE have approximately 493 billion barrels of proven crude oil reserves. States there with official Shiite majorities, namely Iran, Iraq and Bahrain, have 252 billion barrels of proven crude oil reserves.

But Sunni-majority nations have been steadily increasing export of crude oil to the world, 11 million barrels per day in the case of Saudi Arabia, thereby depleting

reserves. Production in Iraq has ramped up only slowly, since the end of Western military action there in December 2011, to 3 million barrels per day. Iran has seen

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its energy exports fall well below capacity during the past decade, due to mounting

US and UN economic sanctions, to less than 3 million barrels per day despite locating additional potential reserves.

Likewise, the same Sunni states have approximately 41,907 billion cubic meters of

proven natural gas reserves, or about 28 percent more than the Shiite states’ 32,872 billion cubic meters.

Proven gas reserves in Iran are being depleted less, due to international sanctions reducing output from a high of 189 billion cubic meters in 2010, and those in Iraq

are only slowly ramping up to around 140 billion cubic meters. Moreover, Iran has

identified untapped potential reserves. But since 2010 both Qatar and Saudi Arabia

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have increased production by 11 billion cubic meters and 26 billion cubic meters, respectively, from previous total outputs of 117 billion cubic meters and 84 billion cubic meters.

So from an energy resource control standpoint, too, Shiites could make significant impacts both positively and negatively on the world’s supplies in the future. Oman

has approximately equal numbers of Sunnis and Shiites – both are minorities to an Ibadi Muslim majority – and so is unlikely to be involved directly in the region’s sectarian energy politics.

Along the Persian Gulf and on the Arabian Peninsula, Sunni leaders are cracking

down against Shiites seeking more proportionate benefits. Bahrain’s Sunni ruling class punishes the country’s Shiite majority for attempting a revolt while boosting Sunni numbers by recruiting immigrants. Saudi Arabia’s monarchy uses its military

to enforce the regime’s authority in that country’s largely Shiite inhabited northeastern oil-rich areas and in Bahrain.

In Yemen, Zaydi Shiites supported by Iran are seeking political autonomy from a

Shafi Sunni government sustained by Saudi Arabia and the US. Many nations display reticence in condemning those regimes for human rights violations because the

world’s economy needs Arabian crude oil. To safeguard the energy trade, American

forces are based in every Sunni-administered nation in the region. British and French militaries utilize those US bases, and France has a naval facility in the UAE. As a result, Shiite hostility builds against the US and EU.

Even if the Saudis succeed in politically uniting the Arabian Peninsula, the region’s Sunnis may not be able to constrain an increasingly cooperative Iran and Iraq Shiite

partnership from eventually gaining dominance. Bahrain is unlikely to remain under Sunni minority rule over the long term, and once controlled by its Shiite population will tilt toward Tehran. The same political transformation could occur in Kuwait too.

Moreover, US-led sanctions against Iran will not persist indefinitely and, while they do, are providing a deferred benefit of conserving that nation’s energy resources.

Eventually in coming decades countries like Iran, Iraq, Bahrain and possibly Kuwait

with large Shiite populations could well play greater roles in deciding which other

nations receive much-needed energy exports —not just crude oil but natural gas— from the Persian Gulf and Arabian Peninsula. As of now the US and EU are seen

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by those populations as siding with their Sunni archrivals. Stability in this region depends on political power-sharing and religious tolerance between Sunnis and Shiites. The West needs to assist in ensuring those outcomes. Bloomington, 25 May 2012 Jamsheed K. Choksy is professor of Iranian, Islamic, and International studies and a senior fellow of the Center on American and Global Security at Indiana University where he served as director of the Middle Eastern studies program. He also is a member of the US National Council on the Humanities at the National Endowment for the Humanities. Carol E. B. Choksy is adjunct lecturer in Strategic Intelligence and Information Management at Indiana University. She also is CEO of IRAD Strategic Consulting, Inc. This analysis is based on a study funded by the Center on American and Global Security at Indiana University.

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Security

Security threats associated with globalization were underscored in September 2001,

when a relatively small group of actors known as Al Qaeda planned and executed a

suicide attack on the world’s most powerful nation. Soon after, the US and NATO forces invaded Al Qaeda’s base of operations in Afghanistan. The longest war in

US history, along with a lengthy detour into Iraq, was divisive both at home and with overseas allies. Fears about encroaching globalization and the two-pronged invasion raised concerns of Muslims around the globe. The struggle also attracted marginalized Muslim youth to join what many labeled “a war against Islam,” despite

assurances to the contrary. Extremist groups like Al Qaeda, though resented by the vast majority of the world’s nearly 1 billion Muslims, use the connections delivered

by globalization, such as social media and the like, to recruit and plot violent attacks that shake global interdependence. With growing insecurity of marginalized countries like Pakistan, Yemen, Somalia, Libya and Syria, the anti-terrorist struggle has taken center stage for the West.

Other security concerns, of course, are indirect, rivalries rather than conflicts, spurred

by a rising China. Globalization has brought enormous wealth to China, allowing it to

challenge US hegemony in Asia. As the economies of Europe and the United States

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struggle with debt, their corporations increasingly eye emerging markets in Asia. Many Asian nations strive for balanced relationships with the world’s two largest

economies, viewing China as an economic partner and the US as a security guarantor. The spread of nuclear technology has introduced another dangerous element in the

interconnected world. Nuclear weapons are essentially useless. A nation that tried using such weapons of mass destruction could expect retaliation and condemnation.

Yet nations like North Korea and Iran regard these weapons as tools of defense that

could deter attacks and symbolize power. North Korea or Iran must be convinced to end their programs. But nuclear powers must also set an example by meeting the Non-Proliferation Treaty’s terms and reducing their own stockpiles.

Bush at the Rubicon Strobe Talbott George W. Bush keeps telling the world he is still open to a peaceful solution in Iraq,

but acts as though he believes there is no such thing. Recent visitors to the Oval Office are struck by the president’s single-mindedness on this subject. No matter what they come to discuss – the economic stimulus package, themes for the State

of the Union message, the fiscal plight of the American states, trade policy, judicial

appointments, the emerging field of Democrats who want his job two years from now – - Bush brings the conversation quickly to Iraq and the urgency, as he sometimes puts it privately, of “getting this thing done.” This week he went public with his impatience: The inspections were turning into “a rerun of a bad movie,” he said, “and I’m not interested in watching it.”

A few presidential friends and advisers have pointed out, ever so politely, the perils of going to war, especially now. Osama bin Laden and Al Qaeda are still at large and eager to exploit what they will portray as the latest crusade of the infidels.

The impasse in the Arab-Israeli conflict plays into the strategies of Osama and

Saddam alike. Meanwhile, half a world away North Korea is using the American preoccupation with Iraq to rush ahead with its own nuclear-weapons and ballisticmissile programs.

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Bush responds to these cautions with a combination of body English and skeptical

comebacks that make clear he just isn’t buying the argument. He seems convinced

that if the war goes well, it will deprive future terrorists of made-in-Baghdad biological, chemical and nuclear weapons; it will remove from the Middle East one of Israel’s most dangerous enemies and thus, perhaps, make peace more likely down the road; it will eliminate from the Gulf a tyrant who has bullied his Arab neighbors;

and it will send a signal that the U.S. is serious about bringing down any regime it regards as a menace to world peace.

Thus, Bush seems to have reached the banks of his own Rubicon – the point at which

he feels he has heard enough of the arguments against what his instincts tell him he

Can the leader of the

that determines how it will be judged. He wants to end the debate with action and

nation be persuaded to

should do. He understands that it is the consequence of a decision, not the rationale

world’s most powerful

dispel the doubts with success. So the question becomes, what will constitute a suc-

go against his instincts?

cess that vindicates the biggest gamble of Bush’s presidency?

In the near term, the crucial requirement is that the war neither drags on nor spreads.

Once the first American cruise missiles slam into Iraqi anti-aircraft batteries, command bunkers and presidential palaces, Saddam will try to draw Israel into the

fighting, thereby stirring up the passions of the Arab street and, he hopes, igniting a conflagration in the Greater Middle East and perhaps as far away as Indonesia.

The most worrisome danger zone is South Asia. A wave of antiwar protests in

Pakistan could sweep President Pervez Musharraf aside and bring to power radi-

cals who would have their fingers on the only deliverable nuclear weapons in the Islamic world. That development could, in turn, provoke India to exercise its own version of the preemption doctrine that the Bush administration made famous and fashionable last fall.

In order to avoid a cascade of unintended consequences, Bush must use the firepower he is assembling in the Gulf as a terrible swift sword that beheads Saddam

in a single stroke. Even if the war is quick and contained, the aftermath is sure to

be messy, protracted and expensive. Keeping a large, fractious and initially headless country under control will require foreign occupation and reconstruction on a massive scale. The US, which cannot undertake that task by itself, will look to a

consortium of regional and world bodies. The willingness of others to join will de-

pend in large measure on whether they feel they had a say in the decision to go to

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war in the first place and whether the operation is seen to have been authorized by the UN. That argues for Bush curbing his impatience with the UN Security Council and bringing that body along with him as the showdown continues, even if it means a delay in the war.

In the longer term, judgments of the wisdom of what Bush does this winter in Iraq

will take account of the conduct of American foreign policy around the globe during the remainder of his term. The best aftermath of yet another display of Uncle

Sam’s military prowess would be a period in which American diplomatic skill and leadership return to the fore, notably in the Middle East.

If, instead, a thumping triumph in Iraq solidifies the administration’s proclivity to give short shrift to the rest of the world’s views, the US could find itself with few

friends and allies when it runs into trouble on some future battlefield – or, for that matter, on the occupied territory of post-Saddam Iraq. Washington, 23 January 2003 Strobe Talbott is the president of the Brookings Institution. He was deputy secretary of state in the Clinton administration and the first director of the Yale Center for the Study of Globalization.

America’s War on Terror Goes Awry in Pakistan Ahmed Rashid A year and half after American Special Forces swept away the Taliban government

of Afghanistan, the group is alive and well, spreading their ideology to new horizons

in neighboring Pakistan. The apparent survival of the Taliban – most of their senior leaders now live in Pakistan – and the persistence of their ideology points to the

monumental failure of the American war on terror. The group’s reemergence as a political force also bodes ill for civil liberties in Pakistan, a key US ally, and for the prospects for democratization in other Islamic countries.

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Last October, an alliance of fundamentalist Islamic parties rode on widespread an-

ger at the American war in Afghanistan to take power in Pakistan’s sensitive North

West Frontier Province, NWFP, which borders Afghanistan. The alliance has since ordered compulsory prayers for the population and created a Taliban-style Department of Vice and Virtue to enforce their rules. Their broader campaign, to turn all

of Pakistan into a state modeled after the Taliban, is only one of several crises that

have paralyzed Pakistan and its nine-month-old civilian government. Many Pakistani

politicians believe that President General Pervez Musharraf and the army may be on the verge of wrapping up parliament and re-imposing military rule.

In June Musharraf travels to Washington and London and is likely to ask for an

The group’s reemergence

Pakistan’s return to democracy, in return for arresting some 450 members of Al

bodes ill for civil liberties

tion in Iraq. However, the present crisis in Pakistan is almost entirely of the army’s

and for the prospects for

despite elections, reconstitution of parliament and restoration of the Constitution.

Islamic countries.

endorsement from President George Bush and Prime Minister Tony Blair to curtail

as a political force also

Qaeda, agreeing to talks with India on Kashmir, and supporting US-led military ac-

in Pakistan, a key US ally,

making, as it attempts to remain the most powerful political player in Islamabad

democratization in other

On June 1, the six-party Alliance of Islamic parties, the Mutahidda Majlis-e-Amal, or MMA, which rules the NWFP, ordered the closure of offices, shops and schools at prayer time to allow males to head to the mosque. The newly formed Department

of Vice and Virtue will recruit young Islamic zealots to enforce such rulings on the streets. The MMA parties, ardent supporters of the Taliban, continue to assist and

support the Taliban’s guerrilla war against the US and the Afghan government forces in Afghanistan. Before the fall of the Taliban, the Department of Vice and Virtue in Afghanistan had unlimited power to harass the local population.

In June, the NWFP Assembly passed the Sharia, or Islamic law, bill, which will further dramatically change the province’s educational, judicial and financial systems and bring them in line with fundamentalist Islamic laws. A few days earlier, when

the bill was tabled in the NWFP parliament, MMA supporters went on a celebratory rampage in Peshawar, the capital of the province, tearing down advertisements showing women, destroying satellite television connections and attacking offices of

foreign multinationals. The MMA has ordered schools in the NWFP to replace boy’s

uniform of trousers and shirts with traditional dress and require girls to cover their heads. The police, which takes orders from Islamabad, stood by quietly, refusing to control the mobs.

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Emboldened by its successes, the MMA has also demanded that the government

impose Sharia law throughout the country. So far, Musharraf has been silent. “Far from criticizing the MMA or reigning in its militants, the military’s intelligence agencies have worked overtime to pave the way for their forceful entry into the

corridors of power,’’ said an editorial in Pakistan’s Friday Times, a leading liberal political weekly.

Some politicians are convinced that the army and the Inter-Services Intelligence,

ISI, are allowing the mayhem to continue so that Musharraf, also army chief, can dismiss the parliament that he helped form nine months earlier, in a much-ballyhooed “democratic” election, and then re-impose military rule.

The MMA came to power in the NWFP following last October’s controversial elections,

in which the army and ISI helped the MMA win a majority of seats in the province. The MMA also won nearly a quarter of the seats in the National Assembly. In the process, the army sidelined major secular parties including Nawaz Sharif’s faction of

the Pakistan Muslim League and Benazir Bhutto’s Pakistan Peoples Party. Through the elections, the army brought to power in Islamabad a pro-army faction of the PML, anointing a pliant Baloch politician, Zafrullah Khan Jamali, as prime minister.

Since October, the Islamic groups, including the MMA, and the secular opposition

who control about a third of the seats in the National Assembly, have refused to accept Musharraf’s demands that he stay on as both president and army chief for the next five years. They have also refused to accept Musharraf’s package of amendments to the Constitution that would give the army a permanent political role.

Musharraf has refused to compromise, despite intense negotiations between the

Jamali government and the opposition. In retaliation, the combined opposition

has disrupted every session of the National Assembly, making it impossible for the Jamali government to function.

The army does not want to give up an iota of power and sees the present civilian government as a façade behind which it can continue to rule, fill all the plum jobs in

the government, and conduct its own foreign policy. Despite the so-called return to civilian rule, between 600 and 700 military officers still occupy key jobs in government

ministries and state-owned corporations, while elements in the ISI have continued

to give clandestine support to the Taliban in Afghanistan and to Kashmiri militants.

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For decades, the army’s natural allies have been the Islamic parties, but now the

tables are turning as the Islamists see their moment to turn Pakistan into a theocratic state. The MMA are banking on their support within the army and the intelligence services. They have gone out of their way to revile Musharraf as a stooge of the Americans, while praising the army’s commitment to Islam.

In a rich irony, the Americans have in fact strengthened the army in order to fight terrorism. Since September 11, the US has pandered to the army’s policies by once again forging an alliance with it, much as it did during its fight against the Soviets

in Afghanistan during the Cold War. Washington sees Musharraf as holding Pakistan together and ignores the political parties and civil society. Its endorsement of the October elections that international observer groups, including the European Union, have condemned as rigged has only helped the MMA by decimating the secular parties and institutions of civil society.

Now the Bush administration is asking Musharraf for up to 6,000 troops to be part of the peacekeeping forces in Iraq and may well try to enlist Pakistani intelligence

in helping undermine the Iranian government. Washington already owes Musharraf

for catching Al Qaeda leaders, even though the army has refused to apprehend a

single senior Taliban leader – most of whom live in Pakistan. All this will only give more leverage to Musharraf when he talks to the Americans.

But Washington’s shortsighted policies have tended to ignore such domestic crises,

choosing instead to focus on the war on terror in Afghanistan. This will only hasten

Pakistan’s turn towards Islamic fundamentalism as the MMA gets stronger and more strident in its demands. It will also further undermine hopes of a return to genuine

civilian control of the army and make a mockery of Washington’s rhetoric about furthering democracy in the Islamic world. Left unchecked, the rise of the MMA,

the latter-day Taliban, in a nuclear-armed Pakistan that’s locked in conflict with a nuclear India over Kashmir will have grave consequences for the region. Lahore, 4 June 2003 Ahmed Rashid is the author of Taliban: Militant Islam, Oil and Fundamentalism in Central Asia and Jihad: The Rise of Militant Islam in Central Asia.

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For Iran, Nuclear Program Is a Matter of National Pride George Perkovich To experience nationalism wrapped in nuclear power, Iran is the place. Officials,

professors, and taxi drivers all would tell a visitor that Iran does not want “the bomb,” but only “nuclear technology” or “the fuel cycle” needed to run power reactors.

Indeed, nuclear weapons would make Iran vulnerable and isolated, insist officials and regime opponents alike. Iranians want nuclear technology to show the world

that their nation is advanced, fully developed and strong – that Shiite Iran is the greatest society in Southwest Asia. Enriching uranium and generating electricity

within the rules of the international nonproliferation system satisfies these objectives better than bombs.

Civilizational pride makes Iranians loathe being seen as rule-breaking, lying aggressors in quest of nuclear weapons. Cannily putting their shady nuclear past

behind them, they project themselves as a sophisticated, law-abiding member of the international community seeking nuclear fuel-cycle capabilities. But Iran’s

recently uncovered nuclear practices and its unsettled neighborly relations deepen many people’s conviction that new rules are needed to manage nuclear technology.

A promotional videotape from Iran’s atomic energy organization trumpets the call

for Iran’s acceptance in the existing nuclear elite. Pictures of nuclear installations are interspersed with blooming flowers and snowcapped mountains in a paradisiacal

montage. An enthusiastic narrator trumpets in English, “Iran is a country of intel-

ligent people.” A young worker at the uranium conversion plant in Isfahan holds a small canister of uranium hexafluoride, which can be processed into fuel for power plants or bombs, while other young men reach to touch it as if a sacred artifact.

“Our people feel great pride because our young Iranian scientists can produce nuclear fuel, the most important part of the fuel cycle, despite all of the sanctions

and pressure from the West,” explains Iran’s chief nuclear negotiator Hassan Rohani. Another official notes privately, “US pressure has unified the people in wanting nuclear technology, even more because the US says we can’t have it.”

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Rather than prepare the public to accept a backing away from nuclear technology, Hashemi Rafsanjani, chairman of the Expediency Council the driving force behind

the nuclear program since the late 1980s, stokes nationalist resistance. He says Iran is willing to apply unprecedented monitoring and control on its nuclear activities, but the United States rejects this because Washington truly aims to keep Iran from becoming a developed country. Oil will run out soon, he argues, and countries like Iran will need nuclear technology in order to develop. Washington’s attempt to deny this is payback for its dependence on Persian Gulf oil in this narrative.

Iranians want US respect, but not on terms imposed by Washington, especially if those terms reflect a dim view of Iranian civilization. Iranians, inside and outside the

Iran’s uncovered nuclear

How can the United States treat Taliban-infected Pakistan as an ally, indulging its

people’s conviction that

ace? “Pakistan – is that a country?” an influential Iranian conservative asked me.

manage nuclear tech-

government, display injured pride at the idea of becoming an international pariah.

practices deepen many

careless possession of nuclear weapons, but regard Iran as the world’s worst men-

new rules are needed to

Iranians see Japan as a model for their future: “We want what Japan has,” a leading Tehran professor insists. “If Japan can have the fuel cycle and stay happily in the NPT, why can’t we?”

Because Iran is not Japan. Japan recognizes all its neighbors; Iran does not accept the existence of Israel. Japan does not support organizations engaged in violent

struggle and targeting noncombatants; Iran does. Japan has not been lying about its

nuclear activities for the past 20 years. Differences between Japanese and Iranian approaches to human rights and global economic integration also explain international confidence in Japan’s nuclear responsibility – and doubts about Iran’s.

Even if Iran were more like Japan, the world cannot accommodate more nuclear Japans. Terrorism and unstable global security dynamics make it too risky to allow new factories for separating plutonium and enriching uranium as Iran seeks. Iran’s insistence on purely peaceful intentions may be genuine, but intentions can change too quickly for comfort in states with nuclear-weapons capabilities.

The Bush administration, Mohamed ElBaradei of the International Atomic Energy Agency and Kofi Annan, UN secretary-general, agree that the interpretation of

nonproliferation rules must be updated to keep additional states from acquiring

facilities to produce potentially dangerous nuclear materials. The Nonproliferation

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Treaty’s vague Article IV right “to develop research, production, and use of nuclear energy for peaceful purposes” should not be interpreted to endorse additional states acquiring uranium-enrichment or plutonium-separation facilities.

Lacking the temperament to build an international consensus on better rules, the

United States aims to unite a coalition of willing “good guys” to keep “bad guys” like Iran from acquiring potentially dangerous technology. According to this logic,

bad guys are illegitimate by definition, so their interests need not be recognized or accommodated. And if bad guys have sympathizers, they, too, should be ignored.

The problem, of course, is that the United States alone – or even with the UK, France,

and Germany – cannot coerce Tehran to accept an interpretation that neither it nor

a majority of the world thinks is fair. Coercion of a state as proud and powerful as Iran can only work if the vast majority of its neighbors and counterparts are unified in pressing sanctions and isolation. No significant coalition will support US or Israeli

military force. And that unity will come only if the “rule” being enforced appears fair enough to encourage voluntary compliance.

The Iranian strategy now is to play by the rules and demonize Washington for trying to change them. Tehran presses the IAEA to certify its compliance with nonproliferation standards, and therefore allow it to resume uranium-enrichment and plutonium programs without sanction. Iranian officials hint they will accept any European-suggested verification measures to prove Iran’s peaceful intentions. Iran will do anything but give up its “right” to enrichment capability.

As chief negotiator Rohani put it, “termination of fuel cycle activities as demanded of Iran means you have killed the NPT. If you take out Article IV, all developing

countries will step out of the treaty…. Termination is war between the North and the South. The Americans say forget about Article IV, forget about the disarmament

promised in Article VI…. The US today is trying to create a second discrimination, one between those that have peaceful nuclear technology and those not allowed to have peaceful nuclear technology.”

Washington’s challenge is to prevent Iran from isolating it! The United States and

EU are right on the substance, but to garner international support they must make tradeoffs that the Bush administration resists. If options for national nuclear fuel-cycle

development are to be constricted, then concessionary international energy coopera-

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tion needs to be expanded – perceptions of neocolonialism must be debunked. If controls on proliferation of dual-use technology to new countries are to be tightened,

then commitments by nuclear-weapon states to dismantle their arsenals and quit building new nuclear weapons must also be tightened. Iran is mounting a fairness campaign; the United States and EU must counter with a better one. Tehran, 21 March 2005 George Perkovich is vice president for studies at the Carnegie Endowment for International Peace and co-author of Universal Compliance: A Strategy for Nuclear Security.

Keeping North Korea from the Brink Gordon G. Chang Militant North Korea has put forth the ultimate plan to ensure global tranquility. In mid-December, the official Korean Central News Agency announced the country would give up its nuclear weapons—just so long as every other nation does so as well.

The offer, undoubtedly insincere, puts America on the spot. Washington started talking with North Korea about its bomb program in June 1993. Since then, the two nations have conducted discussions in every conceivable format.

In August 2003, at Washington’s insistence, they initiated talks in a six-party setting – China, Russia, South Korea and Japan joined the deliberations. Yet this

multilateral effort has floundered like past negotiations. Last March Pyongyang

proposed turning the ongoing discussions into “disarmament talks.” American officials managed to brush aside the proposal at the time, but now North Korea has raised the issue again.

It is unrealistic to think that Pyongyang will let the matter drop, especially because

North Korean leader Kim Jong Il is allying himself with a popular cause. The Bush administration would like to develop a new generation of nukes to go along with

a strategic doctrine that emphasizes their use to strike enemies, even non-nuclear

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ones. North Korea, by claiming it is unfair for the US to develop nuclear weapons for offensive purposes and not permit others to possess them for defense, is tapping into an argument that resonates in many quarters of the planet.

The world’s arms-control regime, embodied in the Nuclear Non-Proliferation Treaty,

rests on a two-tiered foundation: The NPT permits five nations to possess nuclear weapons. The other 183 signatories do not have them – or at least are not supposed

to. This structure has been surprisingly stable from the treaty’s inception in 1970. So far, the members of the lower tier of the nonproliferation treaty’s caste system

As globalization spreads economic wealth around the world, the current arms-control regime is under attack.

have accepted their position largely because of their abhorrence of the bomb – the so-called “nuclear taboo.”

There are, however, signs that “nuclear apartheid” won’t last much longer. As globalization spreads economic wealth – and eventually geopolitical power – around the

world, the current arms-control regime is under attack. With so many complaints, the have-nots will resist continuing with an arrangement that leaves them on the wrong end of the great divide.

Countries are beginning to reframe the global discussion away from the aversion to these weapons, focusing instead on the discriminatory nature of a nonproliferation regime that freezes the military advantages of a select circle of nations. Now

Kim is challenging the five recognized nuclear powers – the United States, Russia, Britain, France and China – to follow through on their NPT pledges to engage in good faith efforts to disarm.

So far, the US nuclear umbrella has discouraged other nations from developing their own arsenals of atomic weaponry. South Korea and Taiwan, for instance,

have abandoned their own bomb programs in return for security assurances from Washington. Japan has not weaponized its large plutonium stockpile for the same

reason. Although these and other nations may not want America to disarm, many others do – and some of them are in a position to go nuclear.

Algeria, Syria, Saudi Arabia, Egypt and even Brazil are perhaps a decade from acquiring the bomb if they accelerated their current efforts, and Iran is undoubtedly

closer than that. Mohamed ElBaradei, the head of the UN’s International Atomic

Energy Agency and the winner of the 2005 Nobel Peace Prize, estimates that 40 nations or more could develop nuclear weapons within a few years.

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So Kim Jong Il needs to be disarmed soon because other leaders, especially Iran’s “atomic ayatollahs,” see him as the test case for Washington’s resolve and skill. In a contest determined by credibility and finesse as much as by raw might, the US will have to build worldwide momentum against North Korea’s nuclear program.

To do that, the US could make a dramatic gesture by unilaterally scrapping a large portion of its own weapons and asking other nuclear powers to do the same. Reduction of nuclear stockpiles around the world would not persuade Kim to give up

his small arsenal – he would undoubtedly like to still have his finger on a button – but it would create the desire, and even the urgency, on the part of other nations to disarm him. With global momentum against him and without external support, the North Korean would have little alternative but to allow weapons inspectors to tread where even food-aid monitors cannot now go.

The counterintuitive aspect of this tactic – creating a global wave against North

Korea by showing America’s cooperation with efforts to reduce nuclear terror – is that it carries virtually no cost for the US. American planners want to reduce the

size of the nation’s strategic nuclear force anyway as it is far larger than necessary to counter existing threats. The Pentagon’s stockpile is so big and well protected

that elimination of most of its nukes would have no discernible effect on either the nation’s security or its ability to protect allies.

The arsenal, even after a substantial reduction, could still survive a first strike by another nation, for instance. More than half of America’s warheads are carried

on ballistic-missile submarines, which are undetectable when submerged. Each

“boomer” – the US Navy has about nine of them on patrol at any one time and 14 altogether – is permitted under existing arms control rules to carry the destructive

power of 1,536 Hiroshimas. Just one of a sub’s 24 missiles can make Central America uninhabitable for 150 years. The US president can give the order to eliminate all

human life on this planet several times over. If he decides to reduce his arsenal so that he can kill everyone only once, are his constituents any less safe?

They certainly will be less safe if the US cannot disarm North Korea. Over time, every nation that wants the bomb will get the bomb. Eventually, terrorists will secure

a nuclear device. Straight-line extrapolations are often wrong, but this scenario is compelling.

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Our world is on the brink of an age more perilous than any other period in history, including the first two decades of the Cold War. It is comforting to think that we could meet tomorrow’s challenges with yesterday’s approaches, but that’s unrealistic.

“There are times in history when the middle way does not work anymore,” says a Bush administration official concerned about the lack of options regarding North Korea’s nukes. “We have worked our way into that.”

To obtain security in a far less structured environment, the existing nuclear powers will probably have to cooperate with one another and make concessions. Big reduc-

tions of arsenals and eventual disarmament may seem like extreme dreams, but there is no known alternative that is assured of preventing dozens of new nuclear states, some of them with links to terrorists, and the almost certain disintegration of global order.

Kim Jong Il has announced a challenge that cannot be indefinitely dismissed. At

least for the moment, America can give up virtually nothing and still gain much in return. It’s unlikely the opportunity will last long. New York, 16 February 2006 Gordon G. Chang is the author of Nuclear Showdown: North Korea Takes on the World, published by Random House.

Time to Bury a Dangerous Legacy – Nuclear Weapons Jonathan Schell Policymakers often debate the possibility of getting rid of nuclear weapons and, if

so, how. But behind that question lies a more fundamental one: Do we in fact want to be in a world without nuclear weapons? That is, can we concretely picture a world without nuclear weapons as a place to abide in, for the long haul?

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The answer from many of the most adamant opponents of nuclear abolition is “No.” These critics argue that abolishing the weapons, while possible, would impose a new set of problems.

First, they say, conventional war, freed from the constraints imposed by nuclear arms,

would revive. Second, nuclear weapons could quickly return to the scene. A Saddam

Hussein or a Kim Jong Il, tempted to fill a power vacuum, would step forward with

an atomic bomb and give orders to a helpless world. Third, a chaotic nuclear arms race would ensue, maybe accompanied by conventional or even nuclear war. The name given to these interlocking dangers is breakout.

Do we in fact want to

The conclusion might seem peculiar. How can there be more nuclear danger in a

be in a world without

ment: Supposedly nuclear deterrence not only prevents nuclear war, but also prevents

we concretely picture a

world without such weapons than in one with them? But there’s a logic to the argu-

nuclear weapons? Can

conventional wars, especially great-power wars. So why give up nuclear weapons?

world without nuclear

The initial reply is obvious. Human beings are fallible. A single mistake in the

abide in, for the long

nuclear realm can mean the end of cities, nations or all of us. Fallible human nature

and instruments of annihilation make bad company, and should be parted. Let’s

remember the deterrence formula – a threat to use nuclear weapons that aims to produce non-use.

The trouble is that the world is held perpetually on a knife’s edge, uncertain about witnessing the non-use that’s hoped for or the use that’s threatened.

The second, more complicated, reply requires us to recall two root facts of the

nuclear age: First, the nuclear danger was born of scientific discovery; therefore, it’s imperishable. Nothing’s more durable than a piece of scientific information – not

nations, not empires, not even religious faiths. Once scientific results are acquired, we simply can’t remove them from the collective mind of humanity. That’s why I like

to speak of “the bomb in the mind.” This knowledge available over the long run to

all competent minds, not any hardware, is the true bedrock of the nuclear dilemma. Second, the destructive forces made available by this invention are unlimited, exceeding the human substance by far – for there’s no city on earth that cannot be destroyed by just one of these devices and no civilization that can withstand a few hundred.

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The world still has some 25,000 nuclear weapons. In both availability and annihi-

lating power, the bomb is universal.

It is the root of the bomb in science that underlies the fears of breakout, creating

an anxiety that abolition would be fraud because the knowledge of how to make nuclear weapons would remain in the hands of nations. Some nations could choose to build bombs again or perhaps hide away old ones.

Those who fear breakout underestimate the scope of their central insight. Their assumptions center on the abolition-agreement cheaters, that they would remember how to build nuclear weapons, while overlooking the fact that intended victims would

also possess this knowledge. Some victims could respond in weeks, others in months. Let’s say that nuclear weapons have been abolished and Kim Jong Il whips back the

veil of secrecy to reveal a small nuclear arsenal. There’s no possibility that he could

disarm the latent nuclear capacity of the rest of the earth with his puny force, or its overwhelming conventional forces.

His asset rapidly dwindles in power, and he must make a choice. Threaten with the

bomb? But by every measure of power, the world knows that it outmatches the tiny

state and refuses to accede. Using the bomb is a sure path to suicide. In short, the rogue regime has two hopeless options.

Any way one looks at breakout, the more it turns out that an old lesson of the nuclear

age applies: Nuclear arms look powerful – they seem to be “absolute” weapons, as people used to say – but actually detonating them to win political gains has thus far been impossible.

In fact, tiny nations with no nuclear capacity regularly best the great nuclear powers. Strategic theory, which teaches that a nuclear-armed country is irresistible,

denies such an outcome, but history shows many examples. Consider the Soviets in Afghanistan in 1980.

They had tens of thousands of nuclear weapons, yet no evidence suggests that they

even dreamed of making the slightest nuclear threat. Likewise, consider the British in Suez in 1956 – their nuclear monopoly failed to give them the smallest shred of an advantage, and they had to cancel their enterprise.

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Perhaps the most interesting example is China’s defeat by North Vietnam in 1979. Once again, its nuclear monopoly could not save it from failure.

The merest glance at nuclear strategy over the decades illustrates a related point. In

practice, nuclear strategy has been a mental construct – another sort of “bomb in the mind” – consisting of “psychological” moves, appearances, bids for “prestige,” feints and bluffs aimed at “audiences,” not least domestic political audiences. Henry

Kissinger was speaking for a generation of strategists when he wrote in 1957, “Until power is used, it is… what people think it is.” No one had used nuclear weapons

since Nagasaki. Therefore, Kissinger continued, “the impact of the new weapons

on strategy, on policy, indeed on survival, depends on our interpretation of their significance.”

Such examples from history suggest that supposed irresistible influence of a nuclear

monopoly shrivels down virtually to nothing. If the superpower Soviet Union could

gain no advantage from thousands of nuclear weapons over the Afghan mujahedin, are we supposed to imagine that in a world free of nuclear weapons, the entire Earth,

including its greatest powers, would quail before some cheater brandishing a tiny nuclear arsenal? The idea that the world could thus be held hostage is ridiculous.

But the point is not to rehearse a list of improbable, bloodthirsty scenarios. The point is that the verdict that nuclear arms have rendered on conventional war would outlast the removal of the hardware.

We make a mistake by conceiving the bomb as an object or a collection of objects.

Instead, nuclear weaponry is like a magnetic field that now pervades our world and always will. Even where nuclear weapons are not present, the know-how for making them remains active and alive, imposing its restraining influence.

Neither great powers nor small can extract an aggressive advantage from a capacity available to all – not today and certainly not in a world free of nuclear weapons.

The conclusion: It may well be easier to ban the bomb than we might think. We’ve already gone far in banishing the thing to this shadow world, this impotent play of psychology and appearances – play whose sole sensible aim is in any case to prevent any use. Would it be so hard, then, to banish this useless phantom?

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A world free of nuclear weapons is a good, safe place to be – a decent place, free of the dishonor of threatening to kill tens of millions of our fellow human beings. We should go there. New Haven, 19 March 2008 Jonathan Schell is the author of The Fate of the Earth, among other books, and The Seventh Decade: The New Shape of Nuclear Danger. He is the Harold Willens Peace Fellow at The Nation Institute and a visiting lecturer at Yale University.

Time to Bury a Dangerous Legacy – Nuclear Terrorism Graham Allison One month after the terrorist assault on the World Trade Center and the Pentagon,

on 11 October 2001, President George W. Bush faced a more terrifying prospect. At that morning’s presidential daily intelligence briefing, George Tenet, the director

of central intelligence, informed the president that a CIA agent codenamed “Dragonfire” had reported that Al Qaeda terrorists possessed a 10-kiloton nuclear bomb,

evidently stolen from the Russian arsenal. According to Dragonfire, this nuclear weapon was in New York City.

The government dispatched a top-secret nuclear emergency support team to the city.

Under a cloak of secrecy that excluded even Mayor Rudolph Giuliani, these nuclear ninjas searched for the bomb. On a normal workday, half a million people crowd the area within a half-mile radius of Times Square. A noon detonation in Midtown

Manhattan would kill them all instantly. Hundreds of thousands of others would

die from collapsing buildings, fire and fallout in the hours thereafter. The electromagnetic pulse generated by the blast would fry cell phones and other electronic communication. The wounded would overwhelm hospitals and emergency services. Firemen would fight an uncontrolled ring of fires for days afterward.

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In the hours that followed, Condoleezza Rice, then national security adviser, analyzed

what strategists call the “problem from hell.” Unlike the Cold War, when the US and the Soviet Union knew that an attack against the other would elicit a retaliatory

strike or greater measure, Al Qaeda – with no return address – had no such fear of reprisal. Even if the president were prepared to negotiate, Al Qaeda has no phone number to call.

Concerned that Al Qaeda could have smuggled a nuclear weapon into Washington as well, the president ordered Vice President Dick Cheney to leave the capital for

an “undisclosed location,” where he would remain for weeks to follow – standard procedure to ensure “continuity of government” in case of a decapitation strike

A clear agenda combined

a dozen government agencies joined the vice president at this secret site, the core

prevent a nuclear 9/11.

against US political leadership. Several hundred federal employees from more than

of an alternative government that would seek to cope in the aftermath of a nuclear explosion that destroyed Washington.

Six months earlier the CIA’s Counterterrorism Center had picked up chatter in Al Qaeda channels about an “American Hiroshima.” The CIA knew that Osama bin Laden’s fascination with nuclear weapons went back at least to 1992, when he attempted to buy highly enriched uranium from South Africa.

Al Qaeda operatives were alleged to have negotiated with Chechen separatists in Russia to buy a nuclear warhead, which the Chechen warlord Shamil Basayev claimed

to have acquired from Russian arsenals. The CIA’s special task force on Al Qaeda

had noted the terrorist group’s emphasis on thorough planning, intensive training and repetition of successful tactics. The task force highlighted Al Qaeda’s preference for symbolic targets and spectacular attacks.

As CIA analysts examined Dragonfire’s report and compared it with other bits of

information, they noted that the September attack on the World Trade Center had set the bar higher for future terrorist attacks. Psychologically, a nuclear attack would

stagger the world’s imagination. New York was, in the jargon of national-security experts, “target rich.”

As it turned out, Dragonfire’s report proved to be a false alarm. But the central

takeaway from the case is this: The US government had no grounds in science or logic to dismiss this possibility, nor could it do so today.

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There’s no established methodology for assessing the probability of an unprecedented

event that could have such catastrophic consequences. Nonetheless, in Nuclear Terrorism I state my considered judgment that if the US and other governments just

keep doing what they are doing today, a nuclear terrorist attack in a major city is more likely than not by 2014.

Richard Garwin, a designer of the hydrogen bomb whom Enrico Fermi once called,

“the only true genius I had ever met,” told Congress in March 2007 that he estimated a “20 percent per year probability of a nuclear explosion with American cities

and European cities included.” My Harvard colleague Matthew Bunn has created

a model that estimates the probability of a nuclear terrorist attack over a 10-year period to be 29 percent – identical to the average estimate from a poll of security experts commissioned by Senator Richard Lugar in 2005.

Former Secretary of Defense William Perry has expressed his own view that my

work may underestimate the risk. Warren Buffet, successful investor and legendary oddsmaker in pricing insurance policies for unlikely but catastrophic events,

concluded that nuclear terrorism is “inevitable.” As he has stated, “I don’t see any way that it won’t happen.”

The good news is that nuclear terrorism is preventable by a feasible, affordable

agenda of actions that, if taken, would shrink the risk of nuclear terrorism to nearly zero. A global strategy to prevent this ultimate catastrophe can be organized under a Doctrine of Three No’s: No loose nukes, no new nascent nukes, no new nuclear

weapons. The first requires securing all nuclear weapons and weapons-usable material, on the fastest possible timetable, to a new “gold standard.” The second does not

allow for any new national capabilities to enrich uranium or reprocess plutonium.

The third draws a line under the current eight and a half nuclear powers – the five members of the Security Council and India, Israel, Pakistan and North Korea – and says unambiguously: “Stop. No More.”

The US cannot unilaterally sustain a successful strategy to prevent nuclear terrorism. Nor can the necessary actions simply be commanded, compelled or coerced.

Instead, they require deep and steady international cooperation rooted in the recognition that nations share a common threat that requires a common strategy. A Global Alliance Against Nuclear Terrorism is therefore in order. The mission of this

alliance should be to minimize the risk of nuclear terrorism by taking every action

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physically, technically and diplomatically possible to prevent nuclear weapons or materials from falling into the hands of terrorists.

Constructing such an alliance will require the US and other nuclear-weapons states

to confront the question of a “fourth no”: no nuclear weapons. While US or Russian

possession of nuclear arsenals is not a major driver of Iran’s nuclear ambitions, and while bin Laden would not be less interested in acquiring a nuclear weapon if the US

eliminated its current arsenals, the proposition that nuclear weapons are necessary

for the security of US and Russia but intolerably dangerous if acquired by Iran or South Africa is difficult to sell to nuclear have-nots.

The question of a categorical “fourth no” has come to the fore with the January 2007

opinion piece in the Wall Street Journal by George P. Shultz, William J. Perry, Henry

A. Kissinger and Sam Nunn, calling upon the US and other states to act to realize their Non-Proliferation Treaty commitment and President Ronald Reagan’s vision of “a world free of nuclear weapons.”

Towards that goal, the immediate agenda should be to devalue nuclear weapons and

minimize their role in international affairs. This should begin with nuclear-weapons

states pledging to the following principles: no new national enrichment, no nuclear tests, no first use of a nuclear bomb and no new nuclear weapons. Faced with the

possibility of an American Hiroshima, many are paralyzed by a combination of denial and fatalism. This is unwarranted. Through a combination of imagination, a clear agenda for action and fierce determination to pursue it, the countdown to a nuclear 9/11 can be stopped. Cambridge, 14 March 2008 Graham Allison is the director of the Belfer Center for Science and International Affairs at the Harvard Kennedy School. He served as assistant secretary of defense for policy and plans, and is the author of Nuclear Terrorism: The Ultimate Preventable Catastrophe, Macmillan, 2005, in which the argument stated here is developed at book length.

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What Motivates the Suicide Bombers? Riaz Hassan Suicide bombing attacks have become a weapon of choice among terrorist groups because of their lethality and ability to cause mayhem and fear. Though depressing, the almost daily news reports of deaths caused by suicide attacks rarely explain what

motivates the attackers. Between 1981 and 2006, 1200 suicide attacks constituted 4 percent of all terrorist attacks in the world and killed 14,599 people or 32 percent of all terrorism-related deaths.

The Suicide Terrorism Database in Flinders University in Australia, the most com-

prehensive in the world, holds information on suicide bombings in Iraq, PalestineIsrael, Afghanistan, Pakistan and Sri Lanka, which together accounted for 90 percent

of all suicide attacks between 1981 and 2006. Analysis of the information contained therein yields clues: Politics more than religious fanaticism has led terrorists to blow themselves up.

The evidence from the database largely discredits the common wisdom that the

personality of suicide bombers and their religion are principal causes. It shows that

though religion can play a vital role in recruiting and motivating potential future

suicide bombers, the driving force is a cocktail of motivations including politics, humiliation, revenge, retaliation and altruism.

The configuration of these motivations is related to the specific circumstances of the political conflict behind the rise of suicide attacks in different countries.

On 4 October 2003, 29-year-old Palestinian lawyer Hanadi Jaradat exploded her suicide belt in the Maxim restaurant in Haifa killing 20 and wounding many more. According to her family, her suicide mission was in revenge for the killing of her brother and her fiancé by the Israeli security forces and for crimes perpetrated by

Israel in the West Bank by killing Palestinians and expropriating their lands. The

main motive for many suicide bombings in Israel is revenge for acts committed by Israelis.

In September 2007 when American forces raided an Iraqi insurgent camp in the

desert town of Singar near the Syrian border they discovered biographies of more

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than 700 foreign fighters. The Americans were surprised to find that 137 were Libyans and 52 of them were from a small Libyan town of Darnah.

The reason why so many of Darnah’s young men had gone to Iraq for suicide missions was not the global jihadi ideology, but an explosive mix of desperation, pride, anger, sense of powerlessness, local tradition of resistance and religious fervor. A similar mix of factors is now motivating young Pashtuns to volunteer for suicide missions in Pakistan and Afghanistan.

Apart from one demographic attribute, that the majority of suicide bombers tend to be young males, the evidence has failed to find a stable set of demographic,

Suicide bombing attacks

to suicide bombers’ personality or socioeconomic origins. With the exception of a

of choice because of

activity and personality disorders.

mayhem and fear.

psychological, socioeconomic and religious variables that can be causally linked

have become a weapon

few cases, their life stories show no apparent connection between violent militant

their ability to cause

Typically, most suicide bombers are psychologically normal, deeply integrated into

social networks and emotionally attached to their national communities. Randomly

attached labels such as “mad” denote one’s inability to fathom the deeper reasons, but don’t advance understanding of the causes of the phenomenon of suicide bombing. Rather, they impede us from discovering its real nature, purpose and causes.

Understanding the terrorist organization’s logic is more essential than understanding individual motivations in explaining suicide attacks. Suicide bombings have

high symbolic value because the willingness of the perpetrators to die signals high resolve and dedication to their cause. They serve as symbols of a just struggle, galvanize popular support, generate financial support for the organization and become a source of new recruits for future suicide missions.

Suicide bombings serve the interests of the sponsoring organization in two ways:

by coercing an adversary to make concessions and by giving the organization an advantage over its rival in terms of support from constituencies. Contrary to the

popular image that suicide terrorism is an outcome of irrational religious fanaticism, suicide bombing attacks are resolutely a politically motivated phenomenon.

Humiliation, revenge and altruism appear to play a key role at the organizational

and individual levels in shaping the subculture that promotes suicide bombings.

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Humiliation is an emotional process that seeks to discipline the target party’s behavior by attacking and lowering perceptions of whether the target deserves respect.

The actions of the US prison guards at Abu Ghraib played on what it meant to be an honorable, self-respecting subject in Iraqi society. The disciplinary practices humiliated the prisoners, but were also felt and seen as humiliating to all Iraqis.

In the months following the release of the Abu Ghraib photos, daily suicide bombing attacks in Iraq increased dramatically. Similarly, counterinsurgency operations

involving random house searches, interrogations, arrests and other violations of human dignity were followed by an increase in suicide attacks.

People tend to have a strong aversion to what they perceive as injustice, with the dark side manifested as revenge. One consequence of the desire for vengeance is

an individual’s willingness to endure sacrifice to fulfill the act. Contemplation of revenge can appear to achieve a range of goals, including righting perceived injustice, restoring the self-worth of the vengeful individual and deterring future injustice.

Revenge is also a response to the continuous suffering of an aggrieved community. At the heart of the whole process are perceptions of personal harm, unfairness and injustice, and the anger, indignation and hatred associated with such perceptions.

Men attach more value to vengeance than women; and young people are more prepared to act in a vengeful manner than older individuals. It is not surprising, then, to find that most suicide bombers are both young and male.

The meaning and nature of suicide in a suicide bombing are strikingly different

from ordinary suicide. Suicide bombing falls into the category of altruistic suicidal

actions that involve valuing one’s life as less worthy than that of the group’s honor, religion or some other collective interest. Religiously and nationalistically coded attitudes towards acceptance of death, stemming from long periods of collective suffering, humiliation and powerlessness enable political organizations to offer

suicide bombings as an outlet for their people’s feelings of desperation, deprivation, hostility and injustice.

For the individual, participating in a suicide mission is not about dying and killing alone, but has broader significance for achieving multiple purposes – from

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personal to communal. These include gaining community approval and political

success; liberating the homeland; achieving personal redemption or honor; using martyrdom to effect the survival of the community; refusing to accept subjugation; seeking revenge for personal and collective humiliation; conveying religious or

nationalistic convictions; expressing guilt, shame, material and religious rewards; escaping from intolerable everyday degradations of life under occupation, boredom,

anxiety and defiance. The configuration of these purposes varies and is an outcome

of specific circumstances of the political conflict behind the rise of suicide attacks as tactic and weapon.

The causes of suicide bombings lie not in individual psychopathology but in broader

social conditions. Understanding and knowledge of these conditions is vital for developing appropriate public policies and responses to protect the public.

Suicide bombings are carried out by motivated individuals associated with community-based organizations. Strategies aimed a finding ways to induce communities to

abandon such support would curtail support for terrorist organizations. Strategies for eliminating or at least addressing collective grievances in concrete and effective

ways would have a significant and, in many cases, immediate impact on alleviating the conditions that nurture the subcultures of suicide bombings. Support for suicide

bombing attacks is unlikely to diminish without tangible progress in achieving at least some of the fundamental goals that suicide bombers and those sponsoring and supporting them share.

Adelaide, 3 September 2009 Riaz Hassan is ARC professorial fellow and emeritus professor in the Department of Sociology at Flinders University, Adelaide, Australia. His book Life as a Weapon: The Global Rise of Suicide Bombings will be published by Melbourne University Press.

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World Order Without a Hegemon: Compete and Cooperate Dilip Hiro While there is a broad consensus about the relative decline of the United States

as a superpower, political commentators have debated about emerging political

rivalries. A study of recent events, however, shows that instead of a straightforward

bipolar or multipolar relationship, simultaneous cooperation and competition will

be the likely template of relationships among the major powers – United States, China, the European Union, Russia, India and Brazil. The new pattern of fluid and

ever-changing relationships between such powers will underscore the end of the

uncontested global supremacy in economics, politics, military and culture that the United States has enjoyed since 1991.

Attempts by each of the players to obtain the best economic and political advantage for themselves while cooperating on issues of common concern are likely to produce

tension as well as unexpected accommodation and temporary alliances. The sharpest example of engagement and containment is the relationship between Beijing

and Washington. On one hand, the People’s Republic of China has been buying US Treasury bonds to assure the stability of the US market for its export and acquiring US assets with its trade surplus. On the other it has been developing area-denial

weapons and anti-satellite and cyber-warfare capabilities to be used against the US in case of a conflict over Taiwan.

Since the Chinese yuan is pegged to the US dollar, it is in the mutual interest of China

and the United States to ensure that the greenback’s exchange rate with respect to other major currencies does not deteriorate too much. That forecloses Beijing’s

option of unloading its massive US dollar reserves in large tranches. So it is almost mandatory that the world’s largest economies cooperate. By contrast, in Taiwan, the

interests of the two nations clash. The PRC regards Taiwan as a breakaway province is resolutely committed to recovering it. Since 2002, it has held combined military exercises twice a year aimed at capturing Taiwan. It has put in place a coordinated

network of short- and medium-range ballistic missiles, mobile and stationary, to overpower Taiwan’s air defenses and missiles network.

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On the other side, America has continued to sell advanced weapons to Taiwan in accordance with the Taiwan Relations Act of 1979; and senior Pacific Command officers have started observing Taiwan’s annual Han Kuang armed forces exercises to judge the island’s military preparedness. Recently, the Obama administration announced the sale of $6.4 billion worth of advanced weaponry to Taiwan, including

anti-missile missiles. In return, Beijing threatened sanctions against the American companies involved in supplying these weapons. Its military claimed its first success in downing a missile in midflight as part of its anti-missile defense.

Similarly, competition and cooperation marks relations between the PRC and Russia

since 1996 when they cosponsored the formation of the five-member Shanghai Fo-

It is almost mandatory

with the successor states of the Soviet Union, the forum was later expanded to six

economies cooperate.

rum. Originally begun with the modest aim of China delineating disputed boundaries

members, renamed the Shanghai Cooperation Organization and moved to Beijing. Since then the bonds between Beijing and Moscow have strengthened, with the two

nations holding joint military exercises in China’s Shandong Peninsula in August 2005. Although Russia has clamped down on ethnic Chinese migrants and traders,

this has not affected the Chinese acquisition of sophisticated Russian weapons like

the Russian Kilo Class submarine equipped with anti-ship SS-N-22 cruise missiles designed to counter the US Navy.

China’s economic interest also called for close ties with Russia, which has emerged

as the largest exporter not only of natural gas, but also of oil, the commodities key

to China’s industrial progress. Last year, reeling from the double whammy of low energy prices and the global credit squeeze, Russia’s leading oil company and pipeline

operator agreed to provide 300,000 barrels per day in additional oil to China over

25 years for a $25 billion loan from the state-controlled China Development Bank. But such cooperation does not preclude differences in the foreign policy of the two

neighbors. Iran is a case in point. Yielding to Washington’s relentless pressure, Russian president Dmitry Medvedev said at a press conference at the United Nations in

September 2009 that “Sanctions rarely lead to productive results, but in some cases sanctions are inevitable.” In contrast, China continues to express its opposition to economic sanctions against Tehran. The two countries also differed on Moscow’s tough approach on Georgia. Repeating China’s longstanding tenet of respecting the

territorial integrity of the UN member-states, China refused to support the Kremlin’s recognition of South Ossetia and Abkhazia as independent states.

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Another example of a mixed relationship comes from China’s relations with its

Asian rival India. Although the PRC has settled its land border disputes with all other neighbors, it has refused to do so with India. But that did not stop China from becoming India’s number one trading partner in 2008.

While noting with some trepidation that New Delhi was busily upgrading its military

facilities on the Andaman and Nicobar Islands to the north of the strategic Malacca Strait, Beijing has held joint military exercises with India in the region. Although India has signed a favorable civil nuclear agreement with the US and expanded its military cooperation and commercial ties with Washington, this has not prevented

Indian Prime Minister Manmohan Singh from signing an arms deal, up $10 billion, with the Kremlin during his recent visit to Moscow.

On one hand the negotiations between Russia and America to replace the recently

expired START I, the Strategic Arms Reduction Treaty I, are reportedly going well. On the other hand, the national-security strategy that the Kremlin adopted in May 2009 describes the main threat to Russia as the US acquisition of a first-strike capability – a prospect that has not disappeared by the concession made by the

Obama administration on replacing Bush’s land-based anti-missile defense shield in Poland and the Czech Republic with sea-based anti-missile defense.

Whereas the Kremlin’s relations with Washington are far from warm, its ties with Germany, the leading member of the 27-strong European Union, the world’s largest

trading entity, are uncommonly cordial. Transcending party politics, they remain as strong with the conservative government of Angela Merkel as they were during the Social Democratic administration of Gerhard Schröder.

In the course of finding alternatives to oil in the aftermath of the quadrupling of

petroleum prices in 1973-74, West Germany decided to buy natural gas from the

Soviet Union in 1975. Now Germany receives almost half of its gas supplies from Russia’s Gazprom.

It was in Europe that the concept of multipolarity of power was born during the Napoleonic Wars in the early second decade of the 19th century. The major European powers resolved never again to allow the emergence of another Napoleon to conquer

the continent. Out of this concert arose the doctrine of the balance of power. It held

in Europe for a century, until the start of World War I. Unfolding now is the global

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extension of this doctrine, with major powers cooperating and competing with one another to ensure that none emerges as the sole superpower. London, 24 February 2010 Dilip Hiro’s latest book is After Empire: The Birth of a Multipolar World, published by Nation Books, New York.

Globalizing Insurgency Christopher Anzalone Heart-wrenching images of emaciated and dying children in Somalia have brought the country back to the world’s attention. The difficulty in delivering food to the needy

because of the opposition of the Islamist Somali insurgents has also put a spotlight on Harakat al-Shabab al-Mujahideen. Famine or not, al-Shabab’s “jihad” continues. Even before the United Nations declared famine in parts of the country, suicide

attacks by al-Shabab on an African Union post in the Somali capital of Mogadishu

drew world attention to the role of Somali diaspora in the insurgency. Of the two

suicide bombers dispatched by the Somali Islamist-insurgent movement Harakat al-Shabab al-Mujahideen, or Movement of the Warrior-Youth, one was 27-year-old

Somali-American Farah Mohamed Beledi, killed before he could set off his device.

In July, Omer Abdi Mohamed of Minnesota pleaded guilty to charges that he had

facilitated the travel of young Somali-American men to Somalia to join the insurgent movement. 

The famine may have given al-Shabab new opportunities. The insurgent movement

has its own emergency drought-relief committee, currently headed by Hussein ‘Ali Fiidow, formerly an official in al-Shabab’s governing administration in the district of Banaadir, where Mogadishu is located. This committee organized modest relief programs that included collection of food, water and medical supplies as well as

refugee camps. Senior al-Shabab leaders, including Hasan Dahir Aweys, recently visited one of these camps in the Lower Shabelle district. 

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Despite these efforts, the massive scale of the famine has proved to be too much for the insurgent movement to deal with alone, leading al-Shabab leaders to state publicly that they would allow international humanitarian aid organizations to

operate in territory under its control. However, some organizations, including the World Food Program, previously barred from distributing aid because they were allegedly disrupting sales by Somali farmers in 2006, remain banned.

Since its rise to public prominence following the US-supported December 2006

invasion of Somalia by Ethiopia, al-Shabab has sought foreign recruits to bolster

Since its rise to public prominence, al-Shabab has sought foreign recruits to bolster its military strength.

its military strength. It emerged as the main insurgent group fighting Ethiopian military occupation of Mogadishu and other parts of Somalia.

Al-Shabab has aggressively recruited in Somali diaspora communities in Europe, North America, East Africa and the Middle East, estimated to be 1.5 million. Estimates

suggest that al-Shabab has attracted around 1,000 recruits from the diaspora and

several hundred non-Somali Muslim recruits. A controversial Homeland Security congressional hearing convened by US Representative Peter King produced a report that claims 40 Americans, most of Somali descent, have joined the movement.

It’s difficult to draw a single general profile for al-Shabab recruits.  A number of Somali-American recruits, including Beledi, came from single-parent households, leading lives of petty crime.  Others, such as Abdisalan Hussein Ali, were enrolled

in college before joining. Many of the Minneapolis recruits, including Beledi and

Shirwa Ahmed, a Somali-American who carried out a 2008 suicide bombing in Somaliland, attended the city’s Abubakar as-Saddique Mosque.

The lion’s share of attention from western media and law-enforcement agencies

has focused on al-Shabab’s ability to attract scores of men from Somali immigrant families in the United States, Canada and Western European. Evidence suggests,

however, that the movement views East African recruitment a priority. There are

several reasons for this: The largest Somali communities reside near East Africa, along the Kenyan-Somali border in places such as the Eastleigh district of the Kenyan

capital of Nairobi. Travel logistics for regional recruits are simpler. Somali refugees

in East Africa also endure economic hardships in countries such as Kenya, making them more susceptible to recruitment. Regional recruits typically require less time to adjust to the battlefront than those coming from Europe or North America.

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Finally, al-Shabab maintains an established support network throughout East Africa, useful for fundraising and potential refuge during battlefield setbacks.

Many recruits from Somali diaspora communities are wooed by al-Shabab’s mixing of a relatively simple creed composed of a peculiar form of militant Islamism with

appeals to Somali nationalism. Most of the estimated 20 Somali-Americans who

traveled to Somalia and joined al-Shabab did so when the Ethiopians were still oc-

cupying Mogadishu and other parts of the country in support of the Transitional Federal Government. Other non-Somali recruits are Muslims, like American al-

Shabab member Omar Hammami, also known by the nom de guerre Abu Mansur al-Amriki, or the American. 

The movement’s media foundation, the Al-Kata’ib, or Brigades, continues to produce

increasingly polished propaganda films that serve as recruitment vehicles. Young

Somalis in North America and Britain have been targeted since 2007, as evidenced

by the appearance of multiple English-speaking young men in insurgent films released in 2007 and 2008. A lengthy video recruitment message released in August

2008 from Saleh ‘Ali Saleh al-Nabhani, an Al Qaeda operative in East Africa with Kenyan and Yemeni citizenship, was subtitled in English. More recent al-Shabab videos have also included subtitles or narration in English.

Al-Shabab’s appeal for East African recruits is best illustrated by a film produced

by Al-Kata’ib and released in November 2010. The 35-minute film, Message to

the Ummah and Inspire the Believers, features nine foreign fighters identified by country of origin. 

The video is subtitled in English and Swahili, and also includes spoken parts in Arabic,

English, Swedish and Urdu. Of the nine recruits, six come from countries near East Africa including Kenya, Tanzania, Ethiopia and Sudan. The other three are identified

as from Britain, Sweden and Pakistan and address the camera in English, Swedish and Urdu. A tenth recruit, also an English speaker, is not identified by country.

Al-Kata’ib’s decision to subtitle Message to the Ummah in Swahili, the lingua franca

of East Africa, is indicative of the movement’s interest in East African recruitment.

Swahili, a Bantu language, is spoken by some 35 million people in the region including Tanzania, Kenya, Burundi, Uganda, Somalia, South Africa and the United

Arab Emirates. The film closes with spokesman ‘Ali Mahamoud Rage smiling and

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saying in a mix of Arabic and Swahili, using a common Swahili phrase: “And we

say to our people/family in East Africa: Welcome to Somalia, hakuna matata [there are no worries].”

In its recruiting appeals, al-Shabab’s methods vary depending on the audience. For

the Somali diaspora, appeals rely on a mix of Somali nationalism and militant Islamism that painted first the Ethiopian military and now the African Union Mission in Somalia, a 9,000-soldier force in Mogadishu, as foreign interlopers propping up a

corrupt government. Al-Shabab’s call to non-Somali Muslims is largely transnational.  For example, Swedish recruit Abu Zaid in Message to the Ummah speaks about Lars

Vilks, the controversial Swedish cartoonist who drew derogatory cartoons of the Prophet Mohammed that offended many Muslims around the world, both militants

and non-militants. These calls are not Somalia-specific and are aimed at a wider audience of discontented Muslims. Similar religious exhortations, combined with Somalia-centric messaging, are also made to the Somali diaspora.

Al-Shabab’s desire and ability to recruit from outside the country signals both strength

and domestic weakness. On the one hand, its recruitment networks abroad have proven to be relatively successful in attracting diaspora recruits through diverse

recruitment appeals based both on a virulent interpretation of Somali nationalism and militant Somali Islamism, influenced by the notions of a militant Islamic transnationalism. However, the insurgent movement’s need to recruit abroad is also a sign that it’s incapable of meeting manpower needs domestically. Montreal, 23 August 2011 Christopher Anzalone is a PhD student in the Institute of Islamic Studies at McGill University. His research focuses include Islamist movements, contemporary jihadi movements, Shiite Islam and Islamist visual culture. Much of his current work is focused on Harakat al-Shabab al-Mujahideen in Somalia.

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Asia Caught Between Rivals China and US Jean-Pierre Lehmann As Europe dithers and the US nervously watches its unemployment rate, a China-led

Asian rise is accepted as the new reality. Less noted is the anomaly of an Asia increasingly integrated with the Chinese economy and militarily more reliant on the US.

At a retreat in Hayman Island, Queensland, for Australian CEOs, a security expert

noted that this is the first time in Australia’s history that its major economic partner is not concurrently the major strategic partner – initially the UK followed by the US.

China has become for Australia, as it has for many nations in Asia Pacific and indeed

around the world, especially those engaged in commodity exports, its key engine

of growth. Yet Australia has been one of the closest strategic and military allies for the US, from World War II to Korea to Vietnam and Iraq. The planned stationing of 2500 US troops in Darwin, reflecting the Obama administration’s tilt to the Pacific, is meant to consolidate these ties. The US and China are not belligerents, yet rivalry is growing. Being between the two is uncomfortable to say the least.

There are many hotspots, perhaps hottest of all the South China Sea, which Beijing has declared to be part of its “core interests” with Washington insisting on

freedom of navigation. Besides competing claims to resources, there are disputes over nomenclature. The Vietnamese, for example, whose relations with China are among the tensest in the region, resent the name used by the West and perception

of giving in to a Sino-centric perspective. The Vietnamese call it the Eastern Sea. In a recent confrontation between Chinese and Philippine vessels in the Scarborough Shoal area, Beijing claims it as part of its territorial waters in the South China Sea. Manila prefers the West Philippines Sea.

Many in the Asia Pacific region regard the concept of China’s peaceful rise with

skepticism. The Philippines has been a longstanding ally of the US, and even Vietnam, erstwhile enemy, increasingly looks to Washington for protection. Since the

end of the Vietnam War in 1975, America’s military presence in Southeast Asia has been, on balance, benign and welcome. At the same time, the region’s economies

have become increasingly dependent on China. At $362.3 billion in 2011 China has recently overtaken Japan as ASEAN’s third biggest trading partner, after the EU

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($567.2 billion) and the US ($446.6 billion). However trade between China and

ASEAN is growing faster: a 24 percent recorded increase in 2011. Reflecting this

growing relationship, in January 2010 China and ASEAN concluded a free trade

agreement – CAFTA. In population terms, it’s the world’s biggest market and, in GDP, third biggest.

The actual physical US military presence in terms of troops in the region is concentrated in Korea and Japan, with small numbers in Southeast Asia – the Philippines,

142; Singapore, 163; and Thailand, 142. However US influence is being strengthened

While cozying up to China for trade, Asians turn to the US for security.

especially through the American naval Pacific Command. Main ties are with Austra-

lia, the Philippines and Singapore with upgraded military with Thailand, Vietnam, Malaysia, Indonesia and Brunei.

Moving north to the Korean Peninsula, Pyongyang has just failed in its initial attempt at launching a long-range missile. Consequences of this loss of face remain an unsettling mystery. Also mysterious is the exact relationship between Beijing

and Pyongyang and the degree of PRC influence. For Seoul, this is not a matter of sheer academic interest. Korea’s share of trade with China, at 27 percent, is greater

than that with Japan and the US combined, 8 and 11 percent, respectively. There

has not been a peace treaty to conclude the Korean War, only an armistice, and in view of the Orwellian nature of the North Korean regime and its apparent nuclear ambitions, the Korean peninsula stands out prominently as one of the most likely

theaters of military conflict in Asia. Thus Korea depends arguably more than any

other Asian nation on the US for security. The number of US troops stationed in South Korea – 28,500 – ranks third in parts of the world without conflict after Germany, 53,766, and Japan, 39,222.

In the first half of the 20th century, Japan emerged as Asia’s greatest economic and

military power. From 1932 with the establishment of the puppet state of Manchukuo until Japan’s defeat in September 1945, Tokyo sought to establish its Greater East Asia Co-Prosperity Sphere. After Japan’s surrender, the American occupation

initially sought to chastise and weaken the country both militarily and economically. Following the Communist victory in China in 1949 and the Korean War, the

US rapidly sought to help Tokyo rebuild the economy and turned the country into a passive but loyal, acquiescent ally. Japan did not fight in either the Korean or

Vietnamese wars – in good part because of its “peace constitution” imposed in early years of US occupation – but provided vital logistic and material support.

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Throughout the decades Tokyo has acceded to US demands. Japan became the

world’s second biggest economic power and by far Asia’s largest. But given the war memories, Tokyo followed what it referred to as a low-profile policy in Asia in the

second half of the 20th century. Most striking in this century, especially since China overtook Japan as the world’s second economic power, is how invisible Japan had

become. In forums and conferences on Asian issues, Japan is often absent, mentioned only in passing.

Japan’s economic dependence on China, with China having surpassed the US since 2008 in becoming Japan’s biggest trading partner at over 20 percent and fastest

growing destination for Japanese outward investment is deep. Exports to China –

mainly capital and intermediate goods as China emerged as hub of Japan’s global

supply chain – is a rare dynamic force in an otherwise anemic economy. Japan has also multiple issues with China, including over territory, notably confrontation

over the Diaoyu/Senkaku Islands in the East China Sea, and in economic matters, a recent example being China’s ban on export of rare earths to Japan required for its high-tech manufacturing industry.

In Southeast Asia, Japan or the Korean peninsula, one notes the same dichotomy

between economic reliance on China and military tension with it. Without resolving

this contradiction, none of the Northeast Asian countries, China, Korea or Japan, can play a leading role. Hence most of the onus for institution building has fallen

on ASEAN, the organization of 10 Southeast Asian nations. There has been a proliferation of initiatives, such as ASEAN + 1, ASEAN + 3, ASEAN + 6, the ASEAN

Regional Forum ARF, the Chiangmai initiative, the East Asian Community and more. This reflects what’s referred to as ASEAN centrality. Much of the deliberations in the formation of these initiatives involve who to include and who to exclude, while

seeking to involve China but not offend the United States. This is the case with efforts to establish the Trans Pacific Partnership, pushed by Washington. Tokyo, Seoul

and other Asian capitals hesitate in light of China’s apparent exclusion – hence, the conundrum as countries find themselves between a rock and a hard place.

The situation in Asia Pacific is perilous and unsustainable. Under these conditions, it’s highly unlikely that robust regional institutions will emerge in the near future. And the fact that much of China’s economic prowess depends to a considerable

extent on the big American market and investment opportunities put additional

wrinkles on triangular US-Asia and China relations. With weak global governance

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and leadership, the Asia Pacific Region for all its economic success keeps flounder-

ing on uncertain seas.

Hong Kong, 30 April 2012 Jean-Pierre Lehmann is emeritus professor of international political economy, IMD, Switzerland, founder of The Evian Group, senior fellow at the Fung Global Institute in Hong Kong, and visiting professor at Hong Kong University.

Al Qaeda’s Resurgence Bruce Riedel Last year on the day after US forces killed Osama bin Laden, the group he founded

was seen by some as on its last legs. No more. While under siege by drones in Paki-

stan and increasingly in Yemen, Al Qaeda not only received a new lease of life from the Arab Awakening, but has created its largest safe havens and operational bases in more than a decade across the Arab world. It’s not a popular movement, but its

ideology, organization and lethal power promise to be a long-term challenge to the world.

Since President Barack Obama came to office in 2009, there have been almost 300 lethal drone strikes in Pakistan flown from bases in Afghanistan, most of which

targeted Al Qaeda operatives. Along with the raid on Abbottabad, the offensive has decimated the group’s leadership in Pakistan, putting it on the defensive. Its new leader, Ayman Zawahiri, works from hiding and is fighting to survive.

But Al Qaeda is not alone. Allies in Pakistan, like Lashkar e Tayyiba, the group that

attacked Mumbai in 2008, or the Afghan and Pakistani Taliban, are under little or no pressure. LeT and the Afghan Taliban, focused as they are on non-Pakistani targets, still enjoy Pakistani intelligence patronage, even as the ISI fights the Pakistan Taliban.

The capacity of some of these groups, especially LeT, to cause global mischief, even

provoke a war in South Asia between India and Pakistan, is undiminished. Three of the five most wanted on America’s terrorist list, Zawahiri, LeT’s founder Hafeez

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Saeed and Taliban leader Mullah Omar are in Pakistan. Only Zawahiri is hiding, the other two enjoy the ISI’s backing. Zawahiri, too, likely has powerful protectors. Like the rest of the world, Al Qaeda was surprised by the revolutions that toppled dictators in Tunisia, Egypt, Libya and Yemen. Its ideology of violence and jihad was

initially challenged by the largely nonviolent revolutionary movements that swept

across North Africa and the Middle East. But Al Qaeda is an adaptive organization. It has exploited the chaos of revolutionary change to create operational bases and new strongholds from one end of the Arab world to the other.

In North Africa, Al Qaeda in the Islamic Maghreb, AQIM, a franchise of the Al Qaeda

Al Qaeda is unpopular,

in Mali named Ansar al Dine, or Defenders of the Faith. Together they’ve effectively

of failed governance,

heritage of the fabled city of Timbuktu, much as Al Qaeda and the Taliban destroyed

Muslim world.

global terror organization, has successfully aligned itself with a local extremist group

yet takes advantage

taken control of the northern two thirds of Mali. Now they’re destroying the Islamic

chaos throughout the

Afghanistan’s historical treasures in the years before 9/11.

AQIM has long been among Al Qaeda’s weaker franchises. Created from an Algerian

terrorist group in 2006, it had some early success blowing up the United Nations headquarters in Algiers, but for most of its existence it’s been confined to kidnapping

westerners traveling in the remote deserts of Algeria, Mali, Mauretania and Niger

and other criminal enterprises. UK sources say it raised €50 million this way. This spring after a military coup in Mali, AQIM found a partner in Ansar al Dine, and

together they swept out government forces from the north of Mali. Then the two

turned on a Tuareg independence movement which had initially been their partner. Now they control a vast Saharan stronghold the size of Texas.

AQIM’s exact role in the murder of US Ambassador Chris Stevens in Benghazi on 9/11’s anniversary is being investigated. Moroccan and French leaders are now

labeling the new AQIM stronghold in Mali the gravest threat to regional stability in more than a decade. The combustible mix of AQIM, Ansar al Dine and Tuareg rebels is complex and dangerous. All are well armed, thanks to looting Libyan de-

pots after the fall of Muammar Gaddafi. AQIM has acquired weapons from Libyan caches that probably make it the best armed Al Qaeda franchise in the world today.

In Egypt another Al Qaeda jihadist stronghold is developing in the desert of the Sinai Peninsula, long a depressed and angry backwater in Egypt. After the revolu-

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tion disaffected Bedouin tribes in the Sinai cooperated with released jihadist pris-

oners from Hosni Mubarak’s jails to begin attacks on security installations and the Egypt-Israel gas pipeline. The jihadists in the Sinai have pledged their allegiance

to Zawahiri, and he has repeatedly endorsed their attacks on Israeli targets. Libyan weapons have also found their way into the Sinai.

In Yemen, Al Qaeda in the Arabian Peninsula has exploited the fall of Ali Abdallah

Saleh’s dictatorship to take over remote parts of the south and east of the country.

It lost control of several towns to government counterattacks this summer, but it struck back with deadly attacks on security targets in Sana’a, Aden and other ma-

jor cities. AQAP has launched three attempts to attack targets in the United States since 2009 – only luck and good intelligence cooperation between the US, UK and

Saudi Arabia have foiled them so far. Increasingly drones are attacking AQAP in the deserts of Yemen, killing operative Anwar al Awlaki and Inspire editor Samir Khan,

both US-born. Awlaki still inspires – a Bangladeshi arrested last week for planning to bomb the Federal Reserve Bank in New York says he was a follower.

In Iraq the 2007 surge was supposed to destroy Al Qaeda’s franchise, the Islamic State

of Iraq. Despite enormous pressure and repeated decapitation of senior leadership,

the group has survived and recovered. It appeals to the Sunni Arab minority, which

feels oppressed by the Shia-dominated government. Al Qaeda in Iraq focuses its attacks on the Shia regime, which it labels a modern “Safavid evil den,” a reference

to the Shia Persian Empire in the 17th century that ruled Iran and Iraq. Its leader,

Abu Bakr al Baghdadi, has promised more attacks in Iraq and in the United States. Al Qaeda in Iraq is also working to export its jihad into the chaos and civil war in Syria. Zawahiri called for jihadists across the world to flock to Syria this spring to

join the uprising against the Bashar al Assad regime and the Alawite minority that supports it.

For Al Qaeda, Assad and the Alawis are a perfect target: Many Sunnis believe Alawis

to be a deviationist sect of Islam akin to Shiism that should be suppressed. While

Al Qaeda is a small part of the opposition in Syria, it brings skills in bomb-making and suicide operations.

Now jihadist websites are reporting every day that new Al Qaeda “martyrs” have died in the fighting in Damascus and Aleppo from Saudi Arabia, Palestine and

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Egypt. Reliable reports from journalists speak of bands of jihadists operating in the

country with a loose affiliation to Al Qaeda and composed of Muslim fanatics from as far away as Pakistan, Bangladesh and elsewhere.

The longer the civil war in Syria goes on, the more Al Qaeda will benefit from the chaos and sectarian polarization. It will also benefit from the spillover of violence from Syria into Lebanon, Turkey, Iraq and Jordan that’s all but inevitable.

Al Qaeda’s success in capitalizing on revolutionary change in the Arab World comes despite a lack of broad popular support. It remains an extremist movement that

appeals only to a small minority. But terrorism is not a popularity contest. Al Qaeda today is stronger at the operational level in the Arab World than it has been in years, and its prospects for getting even stronger are rich. Washington, 22 October 2012 Bruce Riedel is a senior fellow at the Saban Center in the Brookings Institution and adjunct professor at the School for Advanced International Studies at Johns Hopkins University. His most recent book, Deadly Embrace: Pakistan, America and the Future of the Global Jihad, was released in paperback in 2012.

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Society

Global commerce, travel, internet communications along with expanded wealth

have transformed societies. Large cities have emerged as the hubs of globalization, attracting large-scale migration from rural interiors and causing great social transformation. Newcomers influence fresh trends that challenge traditions, producing

disparate responses among nations and citizens who have overlapping roles as citizens, workers, consumers, policymakers and investors. In lands with political and economic upheavals, the corrupt take advantage of ease of travel and other aspects

of globalization to prey on the vulnerable. Trafficking of women and children has

emerged as one of the sinister threats of 21st century globalization. Offshoring jobs to poorer countries can lead to environmental disasters and exploitation of workers.

Nongovernmental organizations identify problems and shape societies’ responses to globalization. Thanks to Twitter and the internet, citizens focus new attention on

struggles in far corners of the world and put pressure on governments. However,

with the rise of the global media, the struggle of tens of thousands of civil organizations to attract international attention has, ironically, become more problematic.

Globalization also challenges long-held traditions, particularly religion; and encour-

ages debate about how to adapt beliefs and practices for a modern world. Social

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changes wrought by global connections have encouraged oppressed minorities to

rise in protest against non-responsive governments. As certain parts of the world

developed more quickly than others, cornering more global resources, economic inequality has grown. With increased consumption by the middle classes in developing countries and rampant speculation comes the specter of world shortages of oil, food and water. As concerns over global poverty and shortages grow, so does the debate over the role and effects of aid programs. Does aid help or hurt the poor?

Rising unemployment and economic stagnation, particularly in authoritarian societies of the Middle East, have sparked citizen outrage. Aided by global connections, young and the old have challenged the established order and demanded responsive

government. The overthrow of oppressive regimes, however, has introduced new problems as impacts spread across borders into neighboring countries.

Human Trafficking Casts Shadow on Globalization Michele A. Clark Sasha sits across the table from me in a sun-filled room. It is mid-May. Pink tulips arch their long stems to follow the light, and a breeze fills the room with a gentle touch. This pleasant scene is a misleading backdrop for the sordid story that unfolds.

She shows me a Polaroid picture: her room in Amsterdam’s red light district, where

she spent over a year providing sexual favors for as many as 36 men a night, a sex slave in a country where she was an illegal alien with no friends and no protector,

and where fear of reprisal against her young daughter bound her to her traffickers. In 1996, Sasha was 26 and worked as a waitress in a small town of the Czech Republic to support herself, her daughter and her alcoholic husband. After a childhood rife

with sexual abuse and multiple rapes, already on her third marriage and watching her country struggle to emerge from a collapsed economy, she felt trapped in a cycle of abuse and poverty.

She was approached at work by a Czech man who promised her a lucrative job in

Germany. Believing that she would save money to ease her family’s difficulties, she

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accepted the offer and left for the West along with three other women. Her fears

began when her contact refused to return her passport once crossing the border and were confirmed when she arrived at her destination – a sleazy bar on the outskirts of a German city. Once there, she was gang-raped repeatedly to obtain compliance and eventually taken to Amsterdam’s red-light district, forced to join other women, each making as much as US$80,000 tax-free for her traffickers during her first year. Sasha is one of an estimated 2 to 4 million women and girls who are globally trafficked

for purposes of commercial sexual exploitation and forced labor every year. Along

Traffickers reap huge profits at the expense of society’s most vulnerable.

with growing trade and effortless world travel, globalization has also ushered in an

increase in the trafficking of human flesh. The problem is so extensive that every

country in the world can be considered a country of origin, transit or destination. Primary countries of demand include Western Europe, North America and parts of the Middle East and Southeast Asia.

Trafficking as a modern phenomenon was propelled onto the world stage in the

1990s. Traffickers, taking advantage of transparent borders, broadband communication, and political and economic upheaval as well as mass migrations of people, have preyed on the vulnerable. The displaced persons, the war victims, the poor and those seeking the opportunities of the West to improve the quality of their lives, have turned trafficking into a booming business as well as a tragic fixture of our times.

During the past decade, human trafficking has been systematically documented and

debated on a large scale. But in this age, when increasing hostility toward immigration goes hand in hand with ever-growing mass movements of people, the terms

have blurred. A lack of clarity surrounding the definition of commonly used words such as smuggling, trafficking and illegal immigration deflects attention away from the real plight of victims covered by these definitions.

Smuggling implies a contractual relationship between those seeking to leave a country

and those acting as agents to assist entry into another country. Usually, the relationship ends once the migrants arrive at their destination and pay their legal fees. Illegal immigrants are individuals who travel to another country seeking employment

without proper documentation. They may or may not have been smuggled. Human

trafficking, on the other hand, is a business involving coercion, abduction, fraud, deception, abuse of power as well as abuse of vulnerability of women and children for purposes of forced labor or prostitution. Only the trafficker gains.

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Some advocates claim that the demand fuels the trade, and that opposing the legalization of prostitution must be at the core of any successful anti-trafficking measure.

Other advocates claim that, because women are denied access to education and subsequent economic opportunities, they’re vulnerable to exploitation.

While there is legitimacy in each of these perspectives, a more accurate analysis of

the problem begins with the recognition that countries of origin as well as destination share in the culpability. In countries of origin, women voluntarily seek to leave

their homes, not knowingly seeking to enter a life of indentured servitude or commercial sexual exploitation, either because they have been lured by the lifestyle of the developed world or, at a more basic level, because poverty, the absence of work, or political repression at home drive them to seek a better life abroad despite the

risks. In many countries of origin, migration is encouraged because governments cannot provide jobs or basic care. In other countries, where children are expected

to provide for their parents, some parents act as agents, selling their children into

the commercial sex industry or into forms of indentured servitude and slave labor. A large number of trafficked women come from countries where the rule of law

and civil society are at the mercy of political upheaval, or are merely in embryonic stages. Consequently, the governments of these countries pay little attention to the responsibility for their citizens that should come with sovereignty. Legal systems

as well as entrenched social and cultural traditions contribute to conditions of vul-

nerability for women and children. Some of these include early or forced marriage, discriminatory legal practices, lack of access to education and opportunities, and exclusion from responsible leadership positions.

Countries of destination, or demand, are traditionally affluent countries of opportunity where prostitution may or may not be legalized or regulated. Women are trafficked into the legal sex industry or into the underground sex trade, depending on the laws, but there is a market in both legal systems. Whether prostitution is

legalized or not the women like Sasha are slaves. Tragically, legal systems are such that the woman is frequently arrested and charged as an illegal alien or criminalized

upon returning to her home country for being in possession of forged documents. Traffickers are rarely convicted.

Governments and NGOs around the world have begun to respond to this modern form of slavery. Current anti-trafficking programs in countries of origin focus primar-

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ily on awareness and education campaigns as well as legislative reform. Currently,

the US Trafficking Victims Protection Act of 2000 mandates that countries make

serious and sustained efforts to meet minimum standards to eliminate trafficking

in persons. The act lists criminalization of trafficking as one of these standards. The European Union requires that accession countries demonstrate compliance with EU

laws, including the Council Framework Decision of July 2002 on Combating Trafficking in Human Beings. However, little is being done to provide alternatives for

women who feel that they have no choice but to leave their homes. It’s necessary to combine public education and legislative reform with economic assistance and to ensure that adequately funded development projects include elements that address endemic vulnerabilities of women and children.

In countries of destination, emphasis must be placed on compassionate treatment of victims who are considered as illegal immigrants, detained and subsequently

deported with little care for emotional and physical needs, or for the fact that they

were victims of a violent crime and not criminals themselves. The UN Protocol to Prevent, Suppress and Punish Trafficking in Persons treats the trafficked person

as a victim, as does the US law but to date, few countries have modified their laws to reflect this emphasis.

The continued treatment of millions of women and children as a commodity – be it sex slave or indentured servant –speaks volumes of the global community’s failure

to offer protection and opportunity across gender and age. The rapid proliferation of human trafficking and related brutality casts a dark shadow over the benefits that

globalization has offered to many. Globalization has made the world a smaller place, but at cost to many of the most vulnerable. It’s time to extend the benefits to all. Prague, 23 April 2003 Michele A. Clark is co-director of The Protection Project of the Johns Hopkins University School of International Studies in Washington, DC. The Protection Project is a human rights research institute working towards establishing an international framework for the elimination of trafficking in persons, especially women and children.

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Marketing Humanitarian Crises Clifford Bob In summer 2004, as the Darfur crisis edged into the world’s consciousness, UN

Under-Secretary-General for Humanitarian Affairs Jan Egeland made a striking

admission. Pondering why Darfur had suddenly attracted international interest

when other bloody conflicts had not, Egeland told The New York Times: “I don’t know why one place gets attention and another not. It’s like a lottery, where there

are 50 victimized groups always trying to get the winning ticket, and they play every

night and they lose every night. I myself have said that the biggest race against the clock is Darfur, but in terms of numbers of people displaced, there are already more in Uganda and the eastern Congo.”

Egeland’s perplexity is shared by many. Why do a few issues electrify the press and galvanize nongovernmental organizations, NGOs, while most others fail to elicit international concern? Why, for instance, did Mexico’s 1994 Zapatista rebellion catalyze

a vibrant international support network, when longstanding indigenous activism across Latin America created no such response? Why have the Tibetans amassed

worldwide backing when the Uighurs – another Chinese minority of like size, facing

analogous threats, and making similar claims – remain far less celebrated abroad? These questions are not just academic. Press attention and NGO activism can alter the dynamics of conflict. Expanded resources, experienced activists, and new contacts with key policymakers can strengthen dissident movements and pressure repressive governments or negligent multinationals to improve their records. While

the international spotlight is no guarantee of peace or justice – witness Darfur – in many cases it can shape local conflicts.

In explaining disparities in international concern, Egeland’s lottery theory no doubt

holds some truth: Luck plays a role in many social phenomena. But deeper analysis

reveals an underlying rationality. Unfortunately, this does not take the form of a “meritocracy of suffering,” as suggested by some scholars and NGO staff. In this

rosy view, vigilant journalists would persistently report on the world’s “hot zones,” selfless NGOs would tirelessly scour the globe for the “neediest cases,” internet

websites would instantly provide access to virtual victims, morality and principle

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would reliably explain who gains support, and sustained overseas activism would usually ameliorate distant suffering.

The reality is different. Even cursory observation shows that many of the world’s worst problems remain off the international agenda. Civil and interstate war in the Congo since the mid-1990s has scarcely registered overseas, notwithstanding millions

of deaths. For much of the 1980s and 1990s, Sudan’s North-South confrontation, with similarly horrific casualties, also remained little known. In recent decades,

smaller-scale conflicts and human rights violations from Mauritania to Indonesia

Groups needing aid compete to market their plight and win global attention.

to Colombia, have likewise remained relatively invisible outside their home states despite large human losses.

Yet, while a “meritocracy of suffering” remains illusory, there is logic, albeit a more cold-blooded logic, to the distribution of international concern. Gaining attention is

far from easy. At any one time, numerous wars, massacres, famines and diseases vie

for notice. The competition may be indirect: Seldom does one needy group malign another. And sometimes attention to one victim helps others nearby or bearing similar grievances elsewhere. But competition is nonetheless real.

The main reason is that resources devoted to international issues are simply too small to meet the needs of the world’s poor, diseased and conflicted. Even the largest

NGOs complain of too few funds – and constantly campaign for more. For its part, the United Nations annually highlights a handful of “forgotten crises.”

In this context, NGO support is best conceived not simply as altruism but also as exchange. On one side are myriad victims desperate for support, on the other NGOs with meager but critical resources. This creates a lopsided power relationship strongly

favoring NGOs. While many have good intentions, NGOs carefully choose where they devote their scarce money, personnel and time. In addition, they have internal

needs – pleasing funders and constituents while sustaining and expanding their

organizations. Therefore, NGO views of what constitutes a major problem, NGO predilections for certain tactics and NGO demands for accountability – themselves

a reflection of northern perspectives or fads – profoundly shape the field on which needy groups compete for support.

Not surprisingly, the victims most likely to gain are those whose profiles most closely

match NGO preferences – not necessarily the most desperate. In some cases, NGOs

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search out distant clients who epitomize an ongoing campaign, as happened in the

late 1990s when Sudan finally rose to the international agenda on a wave of organizing by powerful Christian-based constituencies in the US. For these activists, a war in which northern Muslims repressed and enslaved southern Christians was

not only criminal; it also served as a potent symbol for broader concerns, making religious-based persecution a core human rights issue and boosting religion’s role in American foreign policy.

But, while the southern Sudanese were eventually “discovered” by overseas allies, most local aid-seekers must sell themselves. In this, marketing matters considerably.

While there are numerous strategies, all aim to raise international awareness and enhance a group’s appeal to distant NGOs. With email, websites, cellular phones and

personal lobbying, those facing persecution use every available means to publicize

their cause. In the welter of competing claims, many turn to protest or force to attract notice. This was a key Zapatista strategy, invading a major Mexican city, then

using the resultant media frenzy to project the Indians’ plight overseas. In this, the

Zapatistas affected CNN and other media as much as the CNN effect helped them. But winning attention is only half the story. Many groups must reframe their claims,

tactics, organizational practices and even their identities to fit the concerns of foreign audiences. The Tibetans’ international reputation as a uniquely spiritual people owes much to these requisites. Reciprocally, outside audiences often insert their own

visions into local struggles having quite different ends. India’s Chipko movement, perceived internationally as an environmental cause in which indigenous people opposed harsh state development policies, was in fact grounded in longstanding claims for a new state to be carved out of Uttar Pradesh.

Victim groups differ in their ability to deploy marketing strategies, with economic, educational, and organizational inequalities systematically favoring some over

others. Those from high-profile countries, especially those having pariah regimes or notorious leaders; those with superior resources; and those with pre-existing

international contacts hold the upper hand compared to similarly oppressed groups

that, through historical or geographical accident, lack such advantages. In this

context, a leader skilled in English, educated in a northern university or familiar with NGO repertoires can make a crucial difference. Mexico’s Zapatista rebels are a case in point. Composed of a few thousand poor and indigenous peasants, the Zapatistas benefited greatly from their outsider spokesperson. Subcomandante

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Marcos, a polyglot ladino and gifted communicator, was crucial to the Zapatistas’ spurring foreign solidarity.

In sum, the allocation of international activism has logic. But, contrary to the despair

of Egeland and the optimism of cheerleaders, it is grounded in vast differences in power between the NGOs and the needy groups they selectively assist. In this context, local groups are far from helpless. Marketing matters –but only a fortunate few gain major support.

Pittsburgh, 21 February 2006 Clifford Bob, assistant professor of political science at Duquesne University, is the author of The Marketing of Rebellion: Insurgents, Media, and International Activism, published by Cambridge University Press in 2005. This article is based on the book.

Megacities, Mega Dreams for a Connected World Suketu Mehta On July 27, 2005, Bombay experienced the highest recorded rainfall in its history – 37 inches of rain in one day. The torrent showed the best and the worst about the

city. Hundreds of people drowned. But unlike New Orleans, after Katrina hit, there

was no widespread breakdown of civic order; though police were absent, the crime rate did not go up.

That was because Bombayites were busy helping one another. Slum dwellers went

to the highway and took stranded motorists into their homes and made room for one more person in shacks where the average occupancy is seven adults to a room. Volunteers waded through waist-deep water to bring food to the 150,000 stranded in train stations. Human chains formed to get people out of the floodwaters. Most of

the government machinery was absent, but nobody expected otherwise. Bombayites helped one another, because they had lost faith in the government helping them.

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On a planet of city-dwellers, this is how most human beings are going to live and cope in the 21st century. Wherever we live, whether it’s a hamlet in Holland or a skyscraper in Seattle, we will not be untouched by what happens in megacities

like Bombay. Disease and genius, crime and religion, poverty and wealth, are all maximized there, and, given the cheap availability of airfares, are coming soon to a theater near you.

With 15 million people, Bombay is the biggest, fastest, richest city in India, a city

simultaneously experiencing boom and civic emergency; an island-state of hope in a very old country. Because of the reach of the Bollywood movies, Bombay is also

a mass dream for the peoples of India. Everything – sex, death, trade, religion – is lived out on the sidewalk. It is a maximum city, maximum in its exigencies, maximum in its heart.

Every day is an assault on the individual’s senses. The exhaust is so thick the air boils

like a soup. There are too many people touching you, in the trains, in the elevators,

when you go home to sleep. You live in a seaside city, but the only time most people

get anywhere near the sea is for an hour on Sunday evening on a filthy beach. It doesn’t stop when you’re asleep either, for the night brings the mosquitoes out of

the malarial swamps, the thugs of the underworld to your door, and the booming loudspeakers of the parties of the rich and festivals of the poor.

Why would anyone leave a brick house in the village with its two mango trees and its view of small hills in the East to come here?

So that someday the eldest son can buy two rooms in Mira Road, at the northern

edges of the city. And the younger one can move beyond that, to New Jersey. Discomfort is an investment. Like ant colonies, people here easily sacrifice temporary pleasures for the greater progress of the family. One brother works and supports the

others, and he gains satisfaction from the fact that his nephew takes an interest in

computers and will probably go on to America. Bombay functions on such invisible networks of assistance. In a Bombay slum, there is no individual, only the organism.

There are circles of fealty and duty within the organism, but the smallest circle is the family. There is no circle around the self.

India frustrates description because everything said about it is true and false simultaneously. Yes, it could soon have the world’s largest middle class. But it now

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has the world’s largest underclass. And so with Bombay: Everything is expanding

exponentially: the call centers, the global reach of its film industry, its status as the

financial gateway to India, as well as the slums, the numbers of destitute, the degradation of its infrastructure. The city’s planners have set their eyes on Shanghai as a model for Bombay. The government has approved a McKinsey-drafted document

titled “Vision Mumbai,” aiming to turn Bombay into “a world-class city by 2013.” As the architect Charles Correa noted of the plan, “There’s very little vision. They’re more like hallucinations.”

Bombay is expanding rapidly, but needs to upgrade essential civic services: roads, sewers, transport, health, security.

Bombay needs to upgrade dramatically essential civic services: roads, sewers, transport, health, security. But, as one planner said, “The nicer we make the city, the

more the number of people that will come to live there.” Most migrants to Bombay

now come from the impoverished North Indian states of Uttar Pradesh and Bihar. Bombay’s problems cannot be solved without solving Bihar’s problems. And that means that agriculture has to become viable again for the small farmer. Abolishing trade-distorting subsidies in the US and the EU would go a long way toward making,

say, Indian cotton competitive with US cotton. Bombay is at the mercy of national and international factors beyond its control. Its fate will be decided not just locally,

but – given India’s overcentralized decision-making – in New Delhi and in the course of arcane, secretive trade negotiations in Washington and Geneva.

Indian governments could take some immediate steps. There’s no reason Bombay should be the capital of Maharashtra state. Shifting the state government to Navi Mumbai across the harbor, as originally intended, would free large amounts of space in the congested office district of Nariman Point.

Beyond that, legislation should establish a strong executive authority for the city, with real decision-making power. The office of the mayor is currently no more than a figurehead; the city is run at the whim of the chief minister, and the state’s interests

are not necessarily those of the city. Smart and brave architects and planners attempt to work with the state government. The city, which contributes 37 percent of

all taxes paid in India, gets only a small fraction back from the central government in the form of subsidies.

There is also no reason Bombay should have a naval base, which currently occupies a large part of the island city. It could be relocated further down the coast. Efficient

utilization of the eastern docklands area could also alleviate the pressure for land;

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instead of schools, parks, public spaces, the city gets luxury housing and shopping

malls. In the city’s center, 600 acres desperately needed for public use have instead been given to developers – a bad augury for the city.

So why do people still live in Bombay? “Bombay is a bird of gold,” a Muslim man

in the Jogeshwari slum, whose brother was shot dead by the police in the riots and who lives in a shack without running water or toilet, told me. A Golden Songbird, it

flies quick and sly, and you must work hard to catch it, but once it’s in your hand, a fabulous fortune awaits for you.

This is but one reason why anyone might still want to come here, leaving the pleasant trees and open spaces of the village, braving the crime and the bad air and

water. It’s a place where your caste doesn’t matter, where a woman can dine alone

at a restaurant without harassment, and where you can marry the person of your

choice. For the young person in an Indian village, the call of Bombay isn’t just about money. It’s also about freedom. Bombay, 14 June 2007 Suketu Mehta is a fiction writer and journalist based in New York. His first book, Maximum City: Bombay Lost and Found, was a Pulitzer Prize finalist. Suketu Mehta also contributed text, along with Ardashir Vakil and Bombay Jadoo, a book of photographs by Betsy Karel, published by Steidl in Germany. “Jadoo” is the Hindi word for magic.

Blood, Tears, Toys and NGOs Anita Chan and Jonathan Unger The rush is on to buy Christmas toys galore. Western consumers want cheap merchandise, and Chinese workers labor to manufacture them. But this year, customers

are cautious about the shiploads of toys coming out of China, ever since the massive

recalls started in August. The western news media and political cartoonists almost

exclusively point the finger at China, as if the country was guilty of negligently injuring American children.

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In the recent jousting between the US and the Chinese government over toy recalls,

the Americans took the moral high road from the start, putting Beijing on the de-

fensive. The Chinese government soon conceded and declared it would be stricter with its inspections.

Not often noted in the uproar was that the toys shipped from China are mostly made

by Hong Kong firms using cheap labor in China. Their factories in China make toys for big brand-name companies such as Mattel and Disney, based on designs that the

American corporations provide. So when western children swallowed magnets from

poorly designed Mattel toys, who should be blamed? In September, Mattel, after recalling 21 million toys, apologized to the Chinese government for allowing China to take the rap for the recalls. Even the lead-paint problem could be traced to the door of a Hong Kong businessman who, squeezed between rising costs and Mattel’s

demands for a low price, had substituted a cheap paint in his China-based factory. So who was at fault? Companies like Mattel, plus the Hong Kong businesspeople

who produce for them in China, and, yes, the US and Chinese governments – who hold responsibility for lax inspections of the goods flowing between their shores. But the western news media targeted China.

Senator Hillary Clinton expressed a common sentiment when, in a campaign speech

in Iowa on November 20, she observed there had been 72 recalls of toy models so

far this year: “That’s approximately 32 million individual toys. And more than 99 percent of them were made in China.… If China expects to do business with the United States, they’re going to have to meet higher standards.”

In the western media reports, as in Clinton’s speech, the identity of the victims is

clear – it’s “our children” who are endangered. Period. Here, too, the lens gets distorted. No mention has been made of the many hundreds of thousands of Chinese workers who labor under dangerous conditions, making toys and many hundreds of other kinds of export products.

If lead paint is used, workers are the ones exposed to lead hour after hour. In numerous industries, all too often workers are exposed to noxious fumes and dangerous machinery. They are poor migrants from China’s countryside, and they endure

workdays averaging 11 hours, six to seven days a week, to earn take-home pay of $100 or less a month.

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In China, a truly frightening number of such workers suffer from occupational

diseases and industrial injuries. As just one example, a survey of hospitals in the Pearl River Delta region of Guangdong Province revealed that in a recent year they

had dealt with more than 40,000 fingers that had been chopped off by machinery. Another Chinese source states, more alarmingly, that in the factories of Shenzhen in a recent year 17,000 limbs were severed.

The neglect of safety standards in these factories used to be more severe before the big brand-name corporations that contract out their production to China-based

factories came under attack in the 1990s in an anti-sweatshop campaign by western nongovernmental organizations. In response, the western companies have introduced

Multinational firms

ers’ factories. Without such monitoring, there would surely be even more injuries

products and global

themselves on their CSR efforts. But in the lead-paint recalls fiasco, the companies

afford a lawless

corporate social-responsibility programs, CSR, and started monitoring their suppli-

with brand-name

and poisonings today. In multinationals’ various reports, they never cease to pride

reputations can’t

involved became silent on CSR.

work environment in China.

Most of the CSR programs have made little headway in improving the conditions of

workers who contract occupational diseases or are injured. Bosses simply discard most of them with scant compensation. Traumatized, they are in need of legal,

moral and financial support. To secure adequate compensation requires them to run a gauntlet of legal procedures they can ill afford.

Increasingly, they have begun turning to people similar to themselves who have

become paralegals. Many of these are former workers who had been injured or contracted occupational diseases and sued their bosses for compensation. After settling

their own cases, they began helping others to do the same, and over time they have become increasingly conversant with the law and legal proceedings.

In the Pearl River Delta region alone, there are now some 500 such paralegals, known

in China as “citizens’ agents.” To support themselves, most charge a percentage of the compensation when a case is successful. Some register as a legal counseling

service; others attach themselves to law firms, and yet others set up NGOs, though normally these need to be disguised by being registered as businesses

By 2007, these citizens’ agents had become successful to the point of arousing

open hostility from some manufacturers, and they had come to the attention of the

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provincial government. The authorities started to clamp down on their activities by disqualifying them from providing legal representation.

On the same day that Senator Clinton presented her speech, on the other side of the

globe in Shenzhen, the Delta’s biggest locus for export industry, Huang Qingnan, a paralegal who headed a labor NGO, was brutally attacked in broad daylight by two thugs, who inflicted a number of vicious stab wounds. One of his legs was repeatedly

hacked and almost severed. At the time of writing, Huang is still in critical condition,

and if he survives, may lose his leg. Huang was already badly scarred and deformed due to an industrial fire, which had led him to become a paralegal.

The assault against him followed on the heels of two recent daytime hooligan attacks against Huang’s NGO office. In the first of these, as a warning, several men destroyed the NGO’s doors with iron bars. In the second incident, a larger group of thugs wielding steel poles smashed the office and its equipment and threatened workers there seeking legal aid, while several local policemen looked on.

Several Hong Kong labor NGOs are mounting an international campaign to draw attention to Huang’s plight and the dangerous conditions facing labor NGOs in the area. The campaign asks the Chinese government to bring the culprits to justice.

The brutality against Huang could herald the beginning of a new stage in the Delta’s labor history. It also puts new pressure on the multinational corporations whose

brand-name products, such as iPod, are produced in this area. The corporations

do not want it said that their brand-name goods are produced in a lawless, repressive environment. The toy recalls may be only first of the publicity nightmares the companies will need to fend off. Canberra, 13 December 2007 Anita Chan and Jonathan Unger are academics at the Australian National University’s Contemporary China Centre.

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The Threat of Global Food Shortages C. Peter Timmer The potentially serious consequences of sustained high food prices were recently underlined by Robert Zoellick, president of the World Bank, who suggested that 100

million individuals could be pushed below the poverty line, thus wiping out seven

years of gains against poverty. There is however no agreement as to what explains the dramatic rise in food prices. Absent global understanding between producer and consumer countries, current high prices could last for a long time.

Four basic drivers seem to stimulate rapid growth in demand for food commodities:

first, rising living standards in China, India and other rapidly growing developing countries, which lead to increased demand for livestock products and the feedstuffs

to produce them; secondly, stimulus from mandates for corn-based ethanol in the

United States and the ripple effects beyond the corn economy, stimulated by intercommodity linkages; thirdly, the rapid depreciation of the US dollar against the euro

and a number of other important currencies, which drives up prices of commodities priced in US dollars; and finally, massive speculation from new financial players

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searching for better returns than in stocks or real estate. Underneath all of these demand drivers is the high price of petroleum and other fossil fuels.

Figure 1 shows an impressionistic attribution of the four demand factors causing the

recent run-up in food commodity prices. The figure also shows the recent component

of the “normal” long-run decline in food prices that has been experienced over the

past two centuries or so and a modest recovery from the lows reached in the early part of this century. However, the surge in food prices that has attracted so much attention did not start until 2005 or so, depending on the commodity. Substantial speculative investments in food commodities seem to have started only in mid-2007. Each of the four demand-driven causes differs slightly for each basic commodity, but

the underlying forces are similar. For rice, however, the story is more complicated,

as seen in Figure 2. The actual production/consumption balance for rice is favorable. The problem is that a few importing countries, the Philippines in particular, are trying to build up their stocks to protect themselves against shortages going

forward. Of course, if every country or individual consumer acts the same way, the hoarding causes a panic and shortages, leading to rapidly rising prices. Even US consumers are not immune from this panic.

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Such price panics have been fairly common over the past 50 years, but the hope was that deeper markets, more open trading regimes and wealthier consumers that

could adjust to price changes had contributed to market stability. This was wishful thinking, as it turns out, as the recent price record for rice shows.

For some food commodities, especially wheat, drought and disease have also led to significant supply shocks. Normally these would cause only modest increases

in price, with supplies from stocks and a pattern of year-round production in the northern and southern hemispheres dampening upward movements. But wheat

stocks were at historic lows even before the bad crops rippled around the world in 2007, and the spike in wheat prices has been dramatic. The recovery of Australia’s

For some food com-

prices since early April.

wheat, drought and

Inter-commodity linkages triggered the current spike in rice prices. In India, as in

led to significant

wheat crop currently being harvested has caused a significant decline in wheat

modities, especially disease have also

other parts of the world, drought and disease damaged the 2007 wheat harvest.

Thus the national food authority had less wheat for public distribution. Importing

as much wheat as in 2006 – more than 7 million metric tons – would be too expensive because of the high prices in world markets. So the food authority announced it needed more rice from domestic production. India – the second largest rice exporter

in the world, with 5 million metric tons last year – put barriers on rice exports, and other rice exporting countries followed suit, as rice prices started to spike.

The newly elected populist government in Thailand did not want consumer prices

for rice to go up, and the commerce minister openly discussed export restrictions from Thailand – the world’s largest rice exporter, with 9.5 million metric tons last

year. On 28 March rice prices in Thailand jumped $75 per metric ton. Since then, prices have continued to skyrocket and now, when rice is available at all, it costs more than $1100 per metric ton. This is the stuff of panics.

Rice stocks in Asia have come down over the past decade, but that was a sensible

response to growing reliance on trade as the buffer. Holding rice stocks in tropical

conditions is extraordinarily expensive, so a smoother flow of rice internationally reduces wasteful stockholding. Now that the exporting countries put bans on rice

exports, nearly all countries will be forced to resort to domestic stockpiles. That is a real tragedy for poor consumers and economic growth.

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The most volatile element in the food commodity boom is the “hot money” in search

of the next investment boom after the crash in tech stocks followed by real-estate

derivatives. The real trigger for the current spike in food prices is speculative behavior on the part of large investment/hedge funds with hundreds of billions of dollars looking for the next price bubble.

The combination of a rapidly falling dollar, movement of investment funds into commodities, especially petroleum, and then out to other commodities is the trigger

needed for the food market to explode. The Bank of International Settlements in Basel estimates that hundreds of billions of dollars are invested in commodity funds.

The need for changes in trade policy in the world rice market is clear. With India, Thailand and Vietnam – the three largest exporters to the world rice market – all

more or less withdrawn from the market, and importers such as the Philippines and a number of countries in Africa increasingly desperate to lock in supplies, there’s a

need for a high-level forum to get all countries to agree to keep their borders open to rice imports and exports, even in times of crisis. Otherwise we have a 1930s-

style depression with beggar-my-neighbor policies causing each economy to spiral downwards.

The longer-run question is whether supply dynamics will begin to match the rapid growth in demand. In past episodes of high food prices and fears of Malthusian

crises, supply responses have been vigorous, albeit with a lag, returning world food prices to their long-run downward trend.

This time, arguments increasingly suggest that there is little supply response left in the system, for three basic reasons: •

there is little high-quality agricultural land to be opened;

•

the yield potential of existing agricultural technologies has been static

for decades: closing the gap between this yield ceiling and actual farmer practices is the only source of increased output, and this gap has been closing rapidly everywhere except Africa; and •

the costs of inputs needed to achieve higher yields are high and rising, especially for fuel, fertilizer and water.

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Unless major exporters and importing countries can arrive at an agreement to cool

the hoarding and speculative binge, the prospect is that high food prices will be a market reality for many years. Palo Alto, 5 May 2008 C. Peter Timmer is a visiting professor with the Program on Food Security and Environment, Stanford University, and non-resident fellow with the Center for Global Development, Washington, DC.

The Paradox of Muslim Weakness Sadanand Dhume In the years since 9/11, two broad narratives have emerged in the West to explain the nature of the so-called war on terror. On the right it has become commonplace

to equate Islamism – the ideology that seeks to order 21st century societies by the medieval norms enshrined in Islamic sharia law – with a long line of totalitarian

threats to liberal democracy. Victor Davis Hanson of the Hoover Institution, for

instance, calls it a “foul apparition that has succeeded fascism, Nazism, and communism as the world’s next bane.” The left, not surprisingly, sees the issue as a

product of poverty or flawed policies toward the Middle East. Robert Fisk of The Independent blames Islamist terrorism on “political situations and injustice in various parts of the world.”

Both views are flawed. Conservatives rightly emphasize the power of Islamism as an idea and the global ambitions of its adherents, but fail to acknowledge the movement’s lack of military and intellectual heft, or its limited global appeal compared to communism in its heyday. Liberals correctly point out that talk of a Muslim takeover

of Europe is delusional, or at the very least premature. But they fail to see that in the Muslim-majority societies of Asia and the Middle East Islamism remains a powerful

and growing force. Better organized, better motivated, backed by the threat of violence

and protected by cultural norms that prohibit any criticism of Islam, Islamists are

able to alter the nature of society even where they don’t hold formal power. Unless beleaguered moderates from Iraq to Indonesia can find a way to stand down the

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mob and broaden the war of ideas, they’ll continue to lose ground to a tenacious movement that believes it has both God and history on its side.

At first glance the familiar comparison of the war on terror with the Cold War appears reasonable enough. Like communists, Islamists value the group over the individual, justify the use of violence for political ends and nurture an almost visceral antipathy

to a world order dominated by wealthy liberal democracies. Moreover, in this new

Cold War, Moscow and Beijing can easily be swapped with Riyadh and Tehran, Karl Marx with Al Jazeera’s equally hirsute Yusuf al-Qaradawi, and the Soviet’s World

Islamists, even when not in power, wield fear and faith to pressure their societies in conservative directions.

Federation of Democratic Youth with the Saudi-funded World Assembly of Muslim Youth. The threat within – once symbolized by western communist parties and their

sympathizers – is now represented by such Islamist-friendly groups as the Council on American-Islamic Relations and the Muslim Council of Britain. Moreover, the

argument goes, whereas communist and capitalist proxies skirmished in such remote corners as Angola and Afghanistan, Islamists have brought their battle to the heart

of the West. Suddenly New York, London and Madrid are as much battlegrounds as Beirut and Baghdad.

Plausible though it appears, this formulation exaggerates Islamist strength and

underestimates the effectiveness of the West’s institutions and the resilience of its societies. True, Islamist intimidation has curbed free speech in some places: The Dutch and the Danes must tread lightly when criticizing Islam or contemplate a life of bodyguards and safe houses. But it has also spawned a generation of bold Muslim

thinkers in the West – Ayaan Hirsi Ali, Irshad Manji and Asra Nomani to name just three – who are willing to ask the uncomfortable questions that tend not to be

asked in their countries of origin. Terrorism has been contained; only foiled plots make the front pages these days. Moreover, Islamism, steeped in a joyless literal

reading of Islam, cannot hope to extend its appeal in the West beyond a minority of a minority – those Muslims drawn to its stark utopian vision. Osama bin Laden’s visage will never grace nearly as many t-Shirts as Che Guevara’s.

The weakness of Islamists in the West is matched by the backwardness of the Muslim

world. In its prime the Soviet Union could reasonably claim to match the United States in such varied fields as chess, ballet, mathematics, Olympic sports, aviation technology and space exploration. Strip away the accident of oil wealth from Muslim

lands and we’re left with societies that cumulatively boast fewer achievements than a single mid-sized Asian power, albeit an exceptional one, such as Korea.

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This reality makes it easy to dismiss the Islamist threat, as do most western liber-

als, or to shrink its dimensions to the activities of a handful of terrorist groups – Al Qaeda or Southeast Asia’s Jemaah Islamiyah. Yet, paradoxically, it’s precisely

the sorry state of Muslim societies that makes Islamism such a formidable force.

Reminded daily that they are recipients of God’s final revelation, a large minority of Muslims – perhaps between 10 and 15 percent – embrace the Islamist idea that

the cause of their backwardness lies not in a failure to embrace modernity but in a failure to fully embrace their faith. Many more, while not Islamists themselves,

are broadly sympathetic to a worldview that’s steeped in conspiracy theories and compulsively blame Muslim failures on outsiders. Jews, Americans and Freemasons are favorite bogeymen.

Of course, neither religious obscurantism nor a lack of self-criticism is a Muslim

monopoly. India has its Hindu fundamentalists who riot against Muslims and attack painters and scholars, America its Christians waging war against Darwin in the classroom. Nonetheless the danger to liberal democracy that Islamists pose in Muslim countries is of an entirely different order.

Islamists, although almost always a minority, tend to be better motivated and better

organized than their opponents. Weak or sympathetic courts and police allow them

to use violence or the threat of violence to control the public square – whether by driving the local edition of Playboy out of Jakarta or capturing the road to the airport in Beirut. Cultural norms – even in relatively open countries such as Malaysia and

Indonesia – put any public criticism of Islam out of bounds. The Spaniard who supports contraception and gay rights can flatly declare that he doesn’t care what the Bible says or what the Pope thinks. An Indonesian or Pakistani who says the same

about the Koran and the Prophet Mohammed invites charges of “Islamophobia” and threats of violence.

The influence Islamists exert on the streets and on public discourse has had consequences. Even where they have not claimed formal power – as in Egypt or Pakistan or Indonesia – Islamists have led their societies in an illiberal direction. In Egypt, female university students come under greater pressure to wear the headscarf today

than they did a generation ago. In parts of Pakistan, Islamists have declared war on

music and soap operas. In Indonesia Christians and heterodox Muslims such as the Ahmadiyya often find their churches and mosques under siege.

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In each of these countries those who reject the Islamist message – who believe that

gender equity, freedom of speech and freedom of conscience are universal values and not merely western ones – must do so with one hand tied behind their backs.

So while talk of Islam’s inroads in Washington, London and Paris may indeed be overblown, the special conditions in the Muslim world ensure that the threat to

liberal democracy in Jakarta, Kuala Lumpur and Islamabad is not about to disappear any time soon.

Washington, 27 May 2008 Sadanand Dhume is the author of My Friend the Fanatic: Travels with an Indonesian Islamist, a book about the rise of radicalism in the world’s most populous Muslim country.

A Civil Society Emerges From Earthquake Rubble Guobin Yang May’s massive earthquake that hit China shook more than buildings, loosening many of the restrictions that stood in the path of an emerging civil society. Disaster allowed

citizens to join in a nationwide effort to comfort victims. Civil society, once confined to the virtual space of the internet, has hit the ground in an unprecedented way.

Unusual alacrity and openness of the official Chinese media was a key factor. The quake hit at 2:28 pm 12 May, and China’s Xinhua News Agency broke the news 18 minutes later. At 3:55 pm, about an hour and a half after the quake, Xinhua reported that Party Secretary Hu Jintao had given instructions about emergency relief efforts and Premier Wen Jiabao was on his way to the earthquake region.

Another half an hour later, military helicopters headed for the epicenter to help

with rescue efforts. Thus began the most extensive and rapid national mobilization in recent Chinese history. Troops forged into the quake regions in an all-out

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rescue effort. Civilians from around the nation descended on the provincial capital

Chengdu to offer help. National television provided round-the-clock live coverage. Also remarkable were the scope of voluntary citizen organizing and the openness

of civic communication. Citizen groups mobilized rapidly, both online and offline. On the day of the earthquake, Tianya.cn, a popular online community, launched an online fundraising project in partnership with four other portal sites and Jet Li’s One

Foundation. By noon, 15 May, the project had raised RMB 24 million, or US$3.5 million, for disaster relief, mostly from online individual donations.

The day after the earthquake, several environmental and educational nongovern-

Using social media,

and volunteers fanning out in the streets for fundraising and blood drives. On the

mobilize on disaster

mental organizations in Beijing initiated a Green Ribbon campaign, with members

Chinese citizens

same day, 57 civic groups issued a joint statement calling for concerted disaster

relief.

relief efforts among all NGOs. The same day, 51 other groups jointly established an office in Chengdu to coordinate NGO relief activities.

Much of the civic organizing was done through websites, mailing lists, blogs and online communities. For example, ngocn.org, a major information hub for Chinese

NGOs, set up a special bulletin board for the NGO relief office in Chengdu to post announcements. The internet proved crucial for timely, extensive, and in-depth

coverage. Large websites, both commercial and government-owned, set up special earthquake sections. Professional reporters and common citizens alike posted witness

accounts in multimedia formats, with personal stories, images and digital videos of relief efforts filling cyberspace.

The openness of the media and the scale of civic organizing are unprecedented, along

with the government’s temporarily relaxed control of two sensitive areas of Chinese life. It’s tempting to view this as an exceptional case under exceptional circumstances.

The earthquake was so destructive, one might reason, that the government simply

could not afford to handle the disaster without mobilizing the public, and such mobilization depends on an open media environment. Burma’s response to the recent

cyclone suggests, however, that catastrophes alone are not a sufficient explanation. Three other factors merit emphasis in China’s case: First, the government’s open media approach shows that Chinese leaders have learned lessons from previous

events. Initial information control during the SARS crisis in 2003 and the toxic

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pollution of the Songhua River in 2005 created a social crisis. Rumors flourished. Fears struck deep. Under pressure, the Chinese government opened up information channels, restoring confidence and order in society.

Second, the open media environment produced immediate impact. It opened space not only for information, but also for expressing public sympathy. Many people

stayed online for hours on end, seeking information, expressing grief, sharing tragic

stories about victims and heroic tales about survivors, aid workers and soldiers digging in the rubble. Circulation of these stories of profound sadness and compassion generated a sense of national solidarity, which energized civic action.

Third and most importantly, the unprecedented scope of citizen participation was

not a surprising turn of events, but rather the logical outcome of more than 10 years

of small-scale but persistent grassroots citizen activism since the mid-1990s. Few of the various forms of civic action following the earthquake are new. Chinese NGOs

are no stranger in using the internet for organizing, fundraising, coordination and

communication. In a 2003 survey of 129 NGOs, I found that 82 percent already had internet connectivity, while only two organizations did not own a computer. Considering the rapid diffusion of the internet during the past five years, Chinese NGOs undoubtedly reached even higher levels of connectivity and sophistication.

Furthermore, many NGOs involved in the relief efforts have been active for years.

One of the 57 NGOs that issued the May 13 joint NGO statement was Han Hai Sha, literally meaning Oceans of Sand. The members of this small, unregistered environmental group have worked patiently, in low-profile fashion, on desertification and other environmental issues since 2002. Joining 50 other NGOs to set up the

Chengdu relief office, 1kg.org is a web-based organization in operation since 2004. Combining tourism with charity, it organizes young college students to carry “one

more kilogram” when they travel to rural and poor regions. This one kilo could be books, stationery and other donations for rural schools.

Online communities contributed to civic mobilization, and these, too, are built over time. Tianya.cn, launched in 1999 and one of the most active online communities in the relief efforts, has built its huge customer base of millions of registered users

by nurturing a culture of participation. Many users, of course, go online for socializing and entertainment. But Tianya is also known as a hotbed for online protest and other forms of activism.

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Last but not least, Chinese citizens and NGOs alike were more aware than ever

before of NGOs’ potential role in Chinese society. The absence of NGOs during the

snowstorm disaster early this year was keenly felt, suggesting widespread recognition of the NGO presence. Thus as soon as the earthquake hit, NGO activists began to ask themselves: Shouldn’t we do something this time around?

If the civic effervescence following the earthquake was indeed the outcome of a longer process rather than an anomaly under exceptional circumstances, it means that

this activism is just another step in a prolonged process, albeit, perhaps, a bigger

step than usual. Gauging the longer-term impact is valuable, but perhaps it’s more important to understand the many small steps along the way. The gradual and small

changes in the past have not always been appreciated by outside observers, if only

because many often remain under the radar of political analysts. To the extent that

a virtual civil society arose after the earthquake it did so on the basis of more than 10 years of civic activism.

The challenge for the Chinese government is whether it has the will to institutionalize the moral energy and social capital generated in the past few weeks – and

whether it has the will to institutionalize citizen participation and media openness. To some extent, this still depends on what new steps citizens will take. Some ad hoc citizen organizations established for the relief efforts already have plans to turn

themselves into permanent disaster-relief organizations. The responses the groups

receive from government agencies will convey intriguing messages if and when they apply for registration.

Singapore, 5 June 2008 Guobin Yang is an associate professor at Barnard College and a visiting senior research fellow at the East Asian Institute of the National University of Singapore. He is the author of The Power of the Internet: Chinese Citizen Activism Online.

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Underdevelopment and Aid: Search for a Right Balance Gustav Ranis As the world is currently in the grips of a severe financial crisis, with its impact hitting the real economy almost everywhere, large divisions are emerging among rich country governments and economists as to how to deal with global poverty, not only

for humanitarian but for enlightened reasons of self-interest. The crisis is likely to intensify these divisions, suggesting to some that this issue should be set aside until

the storm passes, especially since there has long been skepticism all around as to the effectiveness of foreign aid in furthering our objectives.

Yet long before the latest crisis emerged, the terrorist attacks of 9/11 triggered thinking about the relationship between poverty and security.

The US National Security Strategy Memorandum of 2002 listed foreign aid as a

critical anti-terrorism instrument and one of the three main pillars of US foreign policy. Reinforcement followed from the Bono/Jeff Sachs/NGO quarters, seized

with the priority of achieving the Millennium Development Goals set up by the

United Nations. While not all promises have been kept, the volume of foreign aid has increased in recent years, despite mounting economic malaise in most OECD countries.

On the other hand, aid effectiveness has been subject to mounting doubts for several

reasons: William Easterly and Dani Rodrik, for example, have pointed out that aid is often counterproductive. In fact, there is general acknowledgement – even by

the World Bank and the International Monetary Fund – of the failure of structural adjustment lending, tied to conditionality enshrined in the free-market principles

of the Washington Consensus. This aid giving has often deteriorated into annual ritual dances, with donors initially insisting on reforms but ultimately yielding to the need to disburse – a feature well understood by recipients.

The joint World Bank/IMF Poverty Reduction Strategy Papers which followed in 1999 succeeded in slashing customary conditions by half to an average of 30 per

country. However, most independent observers agree that these poverty-reduction

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plans are not really recipient “owned,” still prepared with the aid of massive manu-

als, subject to detailed approval by the World Bank and IMF. At a 2001 Kampala meeting, 15 African countries denounced the latest poverty-reduction strategy as the same old structural adjustment loans in sheep’s clothing.

Admittedly, there have been some innovative institutional changes on aid, including

establishment of the US Millennium Challenge Corporation, MCC, which is sup-

posed to reward countries for behaving well in relation to now 17 criteria, including, for example, trade policy and public expenditures on health, and thus represents

a move in the direction of “ownership.” However, the MCC provides only project grants in recognition of past performance, not future intentions, and its record to

Europe and the

Moreover, the move of the US Agency for International Development deeper into

their aid programs,

assistance, suggests that short-term foreign-policy objectives rather than poverty

recipients to achieve

date indicates exceptions are made to reward countries considered strategic friends.

US could fine-tune

the State Department, with its director now doubling as overall director of foreign

working closely with

alleviation threaten to dominate.

multiple goals.

Also fueling skepticism is that aid can contribute to two versions of the so-called Dutch Disease. With respect to the better known first version, the impact of aid

flows rendering the exchange rate too strong and thus discouraging labor-intensive exports, this risk has been documented by several cross-country studies, especially

with respect to African countries. But a second strand, to my mind, is more harmful

and difficult to avoid, and that’s the impact on decision-making. Instead of facilitating reforms, aid may, in fact, permit persistence with inappropriate policy regimes. Foreign-aid flows can be accompanied by a relaxation of domestic development

efforts, e.g., inducing a decline in domestic savings. It can also generate a spike in corruption and rent-seeking behavior, even capital flight.

Another source of the skepticism on the effectiveness of foreign aid arises from the escalating number of public and private spigots, both within any one donor group

and across the donor community. A multitude of principals, working with different recipient country agents, competing for projects and giving conflicting advice,

escalates transactions costs and contributes to disillusionment with a process once viewed with such optimism in the 1950s. Some developing countries have indeed

asked for vacation months from the onslaught of visiting missions. The still dominant US Foreign Assistance Act of 1961 is top-heavy with special interest barnacles accumulated over many decades.

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Realistically, while a new administration will likely consider a major overhaul of

US aid, there are many more pressing issues on its platter. Moreover, one should not expect to start from scratch, either with respect to zero-based budgeting or the

quality of foreign assistance. Donors and domestic lobbies have pet projects, and history exercises a heavy hand. We must therefore anticipate a continuation of some

business-as-usual annual country aid programs, even if more limited in size, given budgetary pressures.

However, consistent with the need to enhance the quality of aid, opening of new

aid windows, say by the World Bank and the European Union – initially on a pilot basis – could make a big difference. Such an initiative, however, must be consistent with the following conditions:

For one, it should be acknowledged that policy-based program lending remains the

best instrument for achieving “growth with poverty alleviation” objectives in the developing world. Given the well-known fungibility of resources, the country is still

the only sensible “project,” and the default position of some critics such as Easterly

and Rodrik, to return to a “projects-only” approach, continues to make little sense. Second, the donor community should permit such new windows to act like banks, or to be more passive, letting would-be borrowers take the initiative but ready

to respond, if and when a would-be recipient presents a reform package deemed

politically and economically viable. While admittedly large uncertainties attach to what is precisely the right reform package for a particular country at a particular time, such a package has a better chance if genuinely cobbled together by various domestic stakeholders.

Third, an applicant country needing help in formulating such a reform package

should look to independent third parties, not the major donors who will find it difficult to avoid repeating the mistakes of the past. For the same reason, such help should preferably be financed by foundations or NGOs.

Fourth, the would-be borrowing country would present a “self-conditionality” list. Given the difficulty of any government to do everything at once on a number of

policy fronts, realism calls for restricting this number to a few critical bottleneck areas over any three- to five-year period.

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The donors, acting like banks, would not simply sign on the dotted line, but negoti-

ate contents and conditions of the proposed reform package. In the final analysis, agreement may or may not be reached in every instance. There should be absolutely

no compulsion to lend, and some countries may not be interested in or able to use

the new windows over some periods of time. Consequently, prolonged fallow years should be viewed as normal, not failure.

The credibility of this new plan requires the ability to commit funds for successful applicants over a three- to five-year period, long enough to match domestic

adjustment requirements occasioned by the reforms. The availability of several

new windows would also reduce the current plethora of competitive spigots while avoiding donor monopoly.

The critical element of restored aid credibility also requires that if self-conditionality terms are not met, disbursements are indeed cut.

Admittedly, the obstacles to adopting such an initiative are formidable. It requires a change in the culture in both aid-giving and aid-receiving countries deeply embedded

over five decades: OECD parliamentarians must be willing to give up some favorite physical demonstration projects; executive branches must be willing to give up using

such flows as an instrument to enhance short-term foreign-policy objectives; and

recipients must accept the notion that such aid is meant to reduce the inevitable adjustment pains caused by real reforms, not remove the pressure.

The stakes are high, but if the current opportunity for change is missed, the skeptics will have had their way.

New Haven, 27 October 2008 Gustav Ranis is the Frank Altschul Professor Emeritus of International Economics at Yale University. He was assistant administrator for programs and policy at the Agency for International Development, 1965-67, and has written extensively on aid and development.

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An Ethnic Struggle in China Goes Global Dru Gladney It took just minutes for news of an attack on Muslim migrant workers that left at least

two dead in a toy factory in Southern China to travel 3,000 miles to their homeland, the Uighur Autonomous Region known as Xinjiang. Ten days later, the ensuing riot

in Urumqi, the capital of Xinjiang and largest city in all of Central Asia, led to 156 dead and more than 1,500 arrested. The Chinese government reacted swiftly and harshly to stop the protests, but also attempted to seal off the region and shut off

access to global media. However, the government did cover much of the uprising

on their own state-run television stations and allowed foreign journalists into the riot zone.

Sympathy protests have not only spread to the traditionally restive southern oasis towns of Kashgar and Khotan, but also as far away as the Netherlands, Munich

and Istanbul, where large numbers of Uighurs have staged protests in front of the Chinese embassies.

The Chinese government has blamed a female Muslim American émigré Rebiya

Kadeer, as well as international organizations based in Washington, Munich and London, for masterminding the uprising from afar. At the same time, in Washington,

the US government is preparing for the release of the remaining 17 Uighurs from Guantánamo, Cuba, to the tiny island country of Palau, after previously resettling

several others in Bermuda and Albania. From the South Pacific to the Caribbean to Southern China to the heart of Central Asia, a previously unknown group of

Muslims from a remote corner of China have captured the world’s attention. The new media of Twitter, Skype and YouTube have linked these disparate peoples and

places like never before. Spreading across China and around the globe almost instantaneously, the events in Urumqi have brought attention to a minority Muslim people, heretofore widely unknown.

After decades of civil war, the region known as Eastern Turkestan was brought firmly under Chinese control when it was “peacefully liberated” by the People’s Liberation

Army in 1949. At that time, the Han population was approximately 5 percent of the

total, with the Uighur population in the vast majority. With unchecked migration

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into the region, the Han often received preference for both skilled and unskilled jobs,

further marginalizing the indigenous Uighurs, especially the younger male working

population. Not finding work at home and prevented from travelling abroad, many

Uighur men were forced to look for work across China, leading to ethnic rivalry of the kind seen in the Xuji toy factory in Shaoguan, Guandong.

Some suggest the immigration could have been stopped at the border. Resembling less the Tibetan unrest of 2008 than the Rodney King riots of 1990s Los Angeles, when a brutal beating of an African-American man by the police triggered widespread

violence, this uprising was the worst violence in Xinjiang since the founding of the

People’s Republic. The uprising has nothing to do with separatism, terrorism or Is-

The government

activists – whether they are Uighurs, Tibetans, Taiwanese or Falun Gong members.

stop the protests, but

This “mass incident” was precipitated by fatal attacks on Uighur workers, mentioned

the region and shut

admits being startled when she mistakenly walked into a dormitory for male Uighur

media.

lam. Yet China makes little distinction between separatists, terrorists and civil rights

above, due to an “unintentional scream” of a female Han Chinese worker who now workers. This led to the spread of a false rumor that the Uighurs had raped two Han Chinese women, disseminated by Han workers disgruntled that more than

800 Uighurs from Xinjiang received priority for jobs in the factory. There are now approximately 1.5 million ethnic minorities working in Guangdong alone through

a state-sponsored preferential employment program. Underlying ethnic tensions in Xinjiang that provided fertile conditions for such an angry response suggest that a cure might not be easily found.

For the past 50 years, the Chinese government has tried through minority affirmative-

action policies and strict controls to integrate the region known as Eastern Turkestan into a harmonious part of the People’s Republic. The last census taken in the

Xinjiang Uighur Autonomous Region revealed that though the nearly 8.4 million Uighur residents maintain a bare majority in their own land, 42 percent, while the resident Han Chinese population has risen to 38 percent.

Nevertheless in terms of education, health and mortality, the Uighur lag far behind

the Han in quality of life, and even behind most other Muslim groups in the region. There are seven other official Muslim minorities in Xinjiang, including more than 1 million Kazakhs and 500,000 Hui, as well as Kyrgyz, Uzbeks, Tajiks and others.

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Despite the extraordinary transformation of the region due to economic investment and infrastructural development, with the goals of harvesting vast mineral and oil deposits and further integrating the region into China, the Uighur people argue that they have not benefitted as much as have the masses of Han migrants. The viral online

dissemination of this conflict suggests that global communications not only foster greater awareness of this region, but may even exacerbate its underlying problems. The tensions between Han and Uighur in Xinjiang have been simmering for decades,

but the downturn in China’s economy as part of the global fiscal crisis has caused

further pressure, as the Uighurs feel discriminated against in their own region. The fact that protests took place initially in Urumqi, where Uighurs are only 12.8 percent

of the population and Han are 75.3 percent, is significant in that previously most of the violent incidents took place in the southern oasis towns such as Kashgar, Khorla,

and Khotan, where Uighurs are much more numerous. Due to the rural nature

and inaccessibility of these towns, separated by vast deserts and high mountains, news rarely reached the outside world. Now, thanks to the widespread availability of electronic media, especially in urban centers like Urumqi, the Uighurs can give voice to their anger and seek world sympathy.

The viral conditions for this epidemic include severe unemployment, unequal opportunities, uneven distribution of wealth and ethnic discrimination. New media allow

for rapid global dissemination and diverse means for transmission of information

as well as disinformation. Uighurs are dispersed worldwide through an active and

increasingly connected diaspora, eager to effect change in their homeland. Some estimate that there are nearly a million Uighurs outside of China, with the majority

dispersed across Central Asia, Turkey, Saudi Arabia, Europe, Australia, Canada and

the United States. Increasingly, the Uighur community in Washington, DC, led by Rebiya Kadeer, is speaking with a more unified voice. Following the example of the Tibetan Government in Exile, it has disavowed independence, supported greater autonomy and peaceful resolution of conflicts, and rejected violence and radical Islam.

After the riots in Tibet last year, the world is beginning to see that Xinjiang faces many problems related to sovereignty and Chinese rule, and that these problems

have less to do with religious conflict than with social justice, ethnic relations and

equal opportunity. Given the ubiquity of the new media, containing the ethnic unrest spreading across China and indeed the world is a challenge. News and popular

expression have continued to find its way out of China despite the government’s

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efforts to halt its spread. A remedy needs to be found not in shutting down these new media, but in addressing the complaints and general well-being of its populace. Claremont, 9 July 2009 Dru Gladney’s most recent book is Dislocating China: Muslims, Minorities, and other Subaltern Subjects. He is president of the Pacific Basin Institute at Pomona College.

18 Days That Shook the Middle East Rami G. Khouri The populist political revolt sparked in Tunisia and capturing its biggest prize in

Egypt will transform the Middle East, because in the realm of politics and culture,

what starts in Egypt always ends up spreading to the entire region. From Pharaonic empires five millennia ago to Islamism, socialism and Arabism in the past century,

from peace treaties with Israel to modern cinema and Salafist terrorism, major phenomena born in Egypt spread to the rest of the Middle East and sometimes to the world. We should expect history to repeat, as Egypt pulls out of a self-imposed

mediocrity and marginalization of the past four decades and regains its role as the dynamic center of Arab ideology, politics and culture.

How Egypt transforms itself remains to be seen, as it will surely experience bumps, diversions and regressions on the road from military-backed authoritarianism to civilian-based democracy. We’re likely to see a free and broadly democratic Egypt

develop that elusive prize denied to the Arab people for the past century: a stable,

self-defined governance system, credible and legitimate because it’s based on fair representation and real accountability.

Axiomatically, democratic governance in Egypt at the heart of the Arab world must reflect the four principal value systems and social configurations that define the Arab

world to various degrees, namely Arabism, Islamism, tribalism and cosmopolitanism. Such a system that faithfully reflects public opinion is likely to trigger changes in policies around the region and the world.

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Several clear implications can be identified as this process starts, related to six

principal actors with whom Egypt interacts across the Middle East: Arab countries,

Iran, Israel, Turkey, the USA and Europe.  A democratic Egyptian government that

reflects public opinion will support democratic transformations and more accountable governance throughout the region. Egypt first gave the Arabs a sense of their

own collective Arabism in the 1950s and 1960s, and is likely to regain a regional role as the spearhead of a new pan-Arab identity anchored in the twin processes of genuine self-determination and a collective commitment to democratic governance that’s deeply desired across the region.Critical will be the role played by rule-of-law

What happens in Egypt spreads throughout the Middle East.

institutions that Egypt pioneered nearly a century ago, including a free press, an independent judiciary, credible rather than sham constitutionalism, and dynamic

institutions of civil society, human rights activism, lawyers and other professional associations.

The peace treaty with Israel will remain intact because war is not a desirable option for either country, yet the current Egyptian-Israeli cold peace will be radically rebalanced. Widespread indignity felt by Egyptians who see themselves as the jailers of

Gaza on behalf of Israel and Washington will give way to a realistic policy by which Egyptians use their ties with Israel to push the latter to adopt a more law-abiding

stance towards the Palestinians, Syrians and Lebanese. Just as the US maintains peaceful ties with Russia and China, but needles them constantly about human

rights and other problem issues, so will Egypt keep peace with Israel, but raise the temperature on issues of profound national concern to Arabs.

The Palestine issue remains a principal lens through which most ordinary Arabs view their relations with Israel and the US, and Egypt’s resumption of a leading

regional role will reflect this in its relations with Israel. The hope is that Israelis

would put away frenzy and zealotry and understand the profound significance of

a democratic Egypt: Responding to the legitimate concerns of Arab public opinion while safeguarding basic Israeli needs and rights within the 1967 borders can be a

win-win situation for all. The Arabs should now re-launch and clarify their 2002 Arab Summit Peace Plan, and Israelis simultaneously should engage diplomatically on the basis of that proposal that offers both sides their key needs and demands.

Egypt’s influence on conditions in Iran will be complex, even contradictory. Egyp-

tian and Arab popular sentiment at once admires Iranian defiance of the US, Israel and the western world that tries to limit Iran’s nuclear technology capabilities.

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But that popular sentiment does not want to emulate the Iranian heavy-handed

governance system dominated by authoritarian theocrats. Democratic Arabs will

support Iran’s resistance against western threats, sanctions and double standards, as well as the desire by many Iranians to change their system into a populist and accountable democracy.

Turkey will be a great beneficiary of Arab democratization, as more open, dynamic

Arab societies learn from Turkey’s great leap forward in constitutionalism, republicanism, democracy and economic vibrancy, all wrapped in Turkey’s latest contribution to human civilization: a soft and tantalizing brand of Islamo-secularism.

The balance among all these forces and identities in Turkey has the best chance of being repeated in many ways in Egypt, where Islamist social and personal values

are strong, but the will for secular democracy is stronger. The great regional prize to be grasped one day will be the convergence of values and governance systems

among equally democratic Egypt, Iran and Turkey – a prospect more likely today than it was just weeks ago.

The US and Europe will react to all this in bewilderment at first, as has been the

case in recent weeks. The pair is unsure about how to navigate the transition to the ultimate end of colonialism finally underway, and remains confused about how to deal with self-confident Arabs and defiant Muslims.

Mass Arab resentment against western support for Arab autocrats and Israeli colonizers has not surfaced yet in the current transformations, but it lurks below the surface.

Arabs react to the deeds and policies of western governments, not their rhetoric. Those policies, in the eyes of most Arabs, have lingered for decades somewhere

between chronically unjust and criminally complicit. Arab democratization waves should be seen as an opportunity for a fresh start for all concerned. Arab governments can engage the West on the basis of shared values and common interests,

while the West can once more try to come to terms with the structural Arabism and

Islamism in public opinion that will permeate new Arab secular governance systems.   Egypt’s transformation, with Tunisia’s and others to follow soon, will quickly affirm that the three principal tests of American and European sincerity in the period ahead are whether:

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•

These western countries act with civility and composure in dealing with Arab Islamists who participate in free democratic systems, instead of

repeating the mistake of boycotting Hamas when it won the Palestinian election in 2006 •

They give the same priority to Arab human and political rights as they do to Israeli fears;

•

They accept that 350 million Arab men and women can forge stable,

productive and satisfying societies only if the rights of Arab citizens are

affirmed above the self-inflicted distortions of Arab, Israeli and western security agencies.

It’s hard to exaggerate the impact that a democratic Egypt will have on the en-

tire region, as Cairo resumes its role as the fulcrum and wellspring of Arab identity, ideology and influence, after two generations of self-induced irrelevance.

Boston, 16 February 2011 Rami G. Khouri is director of the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut, a syndicated columnist and book author.

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Culture

For those wary of globalization’s buffeting force, culture often seems the most reliable

anchor of stability. Yet the dissemination of languages, religious beliefs, attitudes and values is fluid, shaped by globalization’s ebb and flow. That process led two religions

of the desert, Christianity and Islam, to spread throughout the world. Globalization

has changed every aspect of culture from the material and style of clothing to new culinary creations to art and literature. Transformations that once happened over

the course of centuries have accelerated. More cross-cultural encounters have also led to stiffer resistance. With every new technology, whether it’s mobile devices,

the internet, Facebook or Twitter accounts, people are exposed to new ideas from anywhere in the world. New forms of entertainment or political movements inspire adherents, allowing soccer to emerge as a global sport and Occupy protesters to engage in global planning.

Growing awareness of other cultures also ignites cultural nationalism that governments sometimes use to strengthen their own positions. Muslim immigrants insist

on wearing head coverings in countries where they are a minority which provokes secularist opposition, but Muslims also adapt western-style rap music to express devotion and discontent. Lesbian, gay and trans-gender communities who have

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long lived in the shadows of tradition-bound societies gain courage from foreign films and literature to claim their rights. Women increasingly pursue education, join

the workforce, and choose their own destinies rather than accept roles dictated by

society. Attempts by government or religious authorities to censor opinions bring rebukes and derision. The censorship backfires, immediately drawing global attention to the very ideas that the authorities try to hide.

In the 21st century, globalization has empowered individuals to be the arbiters of culture. Never before in history could a lone voice, like that of 14-year-old Malala in

Pakistan, bring an immediate and global response. Never before have ideas leaped so quickly from one discipline to another. Never before has the world’s rich diversity

been so celebrated, even as the global public becomes ever more collectively and tightly linked.

Globalization and God Bruce Mazlish In our increasingly globalized world, a commonly held view, found in newspaper

headlines, magazine stories and television images of religiously inspired violence, is that “God is winning.” Secularism, on this account, has run its course. What is called “prophetic politics,” it’s argued, is a better guide to the present and the future.

I wish to argue in opposition, that the religious resurgence is getting disproportionate attention as the media distorts the reality in which secularism – defined as an

indifference to or rejection of religious belief and ritual – has been steadily gaining ground.

A longer-term and more extensive view suggests that present-day displays of religious fervor are a result of the successful process of secularism, not a sign of its

decline. What we are witnessing is the rearguard reaction to the threat of modernity and globalization. It’s the position of people who feel they are losing the fight and, in desperation, are returning to “traditional” belief – only in this case, tradition in

religion has been supplanted by radical reformulation, as also happened in earlier episodes.

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What is the evidence for surging secularism over the long term? China, where one fifth of the world’s population exists, is not undergoing a religious revival – the

Falun Gong movement is, in fact, not very successful there – and nationalism in a communist dress seems to fill the needs of authorities as well as the majority of the population. Russia, though witnessing a religious revival, is basically not a religious

society. The same could be said for Japan, though for utterly different reasons and setting aside Shintoism, a “secular” faith. So, too, Europe, home to another one half

billion of the world’s peoples, has become increasingly secular, despite occasional flares of the religious spirit. The most recent tribute to the forces of secularism, lost in the uproar over Pope Benedict’s short remark about Islam, is his admission that

the Catholic Church’s real enemy in the West is an increasingly secularized society.

Thus it is the Middle East and Africa and the Moslem and Christian faiths found there, that are mainly at issue. The US is a special case, a secular society, marked by religious elements fighting a rearguard battle to retain their slipping dominance.

In fact, religion is really religiosity, i.e., excessive ritualistic expression of sentiment on one side and substitute nationalism on the other. The transmutation of

religion into politics is key. We witness not a search for spirituality or even for a

more peaceful world. Instead, religiosity is to be found mainly in aspiring states,

where authoritarian leaders offer neither stability nor economic development. In short, religious revivalism is a sign of failed secularism, unable to bring about the good society. Iran is one such example and post-Soviet Russia another pale version of what is happening.

Secularism is growing even in areas claimed for the revival of religion. Secularism

seeps into all cultures by a thousand openings. It comes through computers, videos and other means of globalization whereby the hedonism of the West is conveyed. Whatever the mullahs or preachers say, their flock is exposed to worldly images,

and these stir up righteous indignation. Yet the promoters of religion resort to the same tools of globalization to spread their own messages: cell phones, computer messages, television and so forth. The cry of the muezzin is no longer only intoned

from the tower but from the satellite dish as well. At what point does the medium become the message?

There is nothing totally new in the combination of religion and politics; it is their

renewed strength and globalized aspect that allows some to say God is winning. As remarked, the turn to religion is a natural reaction in a time of troubles, increased

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fear and enormous anxiety. Exacerbating the mix, stable structures of life and gov-

erning power have visibly broken down in many quarters of the globe. Add to this, politicians and leaders, or would-be leaders, opportunistically stoke the fires of fear. The smoke from these flames obscures the deeper trends of our times.

In religious language, God moves in mysterious ways. For example, we can discern,

if dimly, the tentative rise of questioning in Islamic religion itself. We need to recall

that Christianity in Europe went through similar turmoil in the 19th century. Embraced by reactionary monarchs – not mullahs in this case – Christian belief was gradually attacked in the theological schools. Both Hegel and Feuerbach started their studies there. The Young Hegelians were believers who began to question their

faith on the grounds of reason. It was from inside as much as from the secularizing forces of the modern state that the hollowing out of Christianity began. Something

similar can be glimpsed as happening in the theological academies of the Islamic world. Even in the theocracies of Iran and Saudi Arabia, public life – with ordinary

citizens pushing the bounds of what’s permissible – is escaping bit by bit from the control of the mullahs.

The tension between religion and secularism is a slow process, two-steps forward, one step back. Secularism is carried by the modernity that uproots and dislocates millions of people today, and the impact is doubled by globalization. The US itself is not immune from the forces at work. Feeling constantly besieged by the powers

of reason and science, made anxious by the threat of terrorism, drawing on almost three centuries of religious fundamentalism, many priests and preachers of the religious word feel threatened that their positions as authority figures are being usurped by other voices. Education seems slipping from their grasp.

We need to step back from the immediacy of the historical moment and remind

ourselves of the underlying forces at work in our increasingly globalized world, making for increased interconnectivity and interdependence, based on expanding ties of trade and media exchange. Much time-space compression is one result. Science and technology, and the exercise of rationality on which they are based, loom ever larger for good or evil.

It should hardly be surprising that, in the face of the long-term processes leading

to a more secular world, many seek comfort in what they see as the winning team of God. Theirs, however, is a short- run triumph in the places where it occurs, act-

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ing as a momentary, though enormously important, hiatus in the steady, if erratic, movement to the everyday reality of secularism.

Policy based on incomplete understanding leads to poor decisions. It causes us to

overlook the political aims behind the religious rhetoric; to see a conflict of civilizations, with civilization being reduced to religious affiliation instead of the nationalist

and regional rivalries for power that it embodies. If one looks through the lens of secularism, negotiations and compromises are possible in a way denied by religious separatism. When God is seen as winning, humanity loses. This statement does

not deny the importance of religion. It simply puts it in the proper context, where, masquerading its true political intent, religion battles against a surging secularism. Cambridge, 28 November 2006 Bruce Mazlish is professor of history emeritus at Massachusetts Institute of Technology and the author of The New Global History, Routledge, 2006.

A Clash of Civilizations in Europe? Patrick Sabatier A year after the wave of violent demonstrations throughout the Muslim world,

protesting the publication of caricatures of the Prophet Mohammed by a Danish newspaper, frictions between Europe and the Muslim world multiply, threatening to make the “clash of civilizations” a self-fulfilling prophecy: •

Pope Benedict XVI outrages the Muslim world by quoting remarks criti-

cal of Mohammed by a 14th-century Byzantine emperor. •

Berlin’s Deutsche Oper considers canceling the staging of an opera by

Mozart, for fear a scene exhibiting the severed heads of several prophets, including Mohammed, might incite Muslim violence. •

A French philosophy teacher flees and lives under police protection, targeted for murder by Islamists, after writing an op-ed piece that attacked Mohammed’s blessing of violence in the service of religion.

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•

Former British Foreign Secretary Jack Straw unleashes a furor by call-

ing on Muslim women to remove their veils, suggesting that not seeing

a person’s face made him feel “uncomfortable.” Amid Muslim protests, incidents of harassment of veiled Muslim women have been reported.

These controversies move beyond the usual xenophobic and anti-immigration concerns of the far right about the perceived intolerance, aggressiveness and even incompatibility of Islam with European core values. They also feed dangerous strains of so-called Islamophobia throughout Europe.

These clashes are a toxic byproduct of a globalized media system.

These clashes are to some extent a toxic byproduct of a globalized media system.

Instant information and misinformation, through satellite television and the internet, tend to obscure complex issues, feed on widespread ignorance on both sides

and pour oil on long-simmering fires of historical resentment, economic frustration

and political conflict. The large and fast dissemination of extremist minority views on isolated events whip up collective passions, making a dialogue based on tolerance and rational criticism more difficult. To that extent, it might be argued that globalization plays in the hands of Islamists who preach jihad, or holy war, against the West, and those who dream of Europe walling itself against Islam.

Conflicts between a fundamentalist version of Islam and European societies based

on secularism, liberal democracy, individual rights and non-discrimination of the sexes reawaken in European minds ancient fears, steeped in centuries of wars and invasions – all the more so since the phenomenon takes place under the persistent

threat of Islamic terrorism, which has struck Madrid and London since 2001 and targets other large European cities.

Conflict is aggravated by the pressures born out of immigration from Muslim countries across the Mediterranean, making Islam, with more than 20 million believers, one of the European Union’s major religions,. The conflict is also highlighted by the

debate around EU candidacy of Turkey, whose 60 million Muslim inhabitants have elected an Islamist-influenced government.

Robert Redeker, a French philosophy teacher and author, known for his abrasive criticism of all religions, launched a virulent attack on Islam in the 19 September

issue of the conservative daily Le Figaro – savaging the blessing of violence in the Koran and harshly characterizing Mohammed as a “teacher of hatred – looter,

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Jew-killer and polygamist.” The next day, the popular Egyptian preacher Youssef al-Qaradawi denounced Redeker on Al-Jazeera television, and Redeker received

death threats after an Islamist group posted his address, cell-phone number and photos online, calling on Muslim “lions” to kill him, as Dutch filmmaker Theo van

Gogh was killed in 2004 in Amsterdam by a 27-year old Moroccan immigrant. Van Gogh outraged militants by making a film denouncing the oppression of women in Islamic societies.

Redeker’s predicament, reminiscent of Salman Rushdie’s after Ayatollah Khomeini’s

1989 fatwa called for the British author’s murder, has roused support from French unions, civil-liberties defense groups and politicians of all stripes. Prime Minister Dominique de Villepin denounced the threats as “unacceptable,” defending freedom

of expression. The incident has fueled a debate between those intent on defusing

tensions by refraining from criticism of Islam and those who view that attitude as appeasement.

Redeker’s essay, admittedly provocative, was written to protest Pope Benedict’s

apology for a speech given 12 September in Ratisbonne, Germany. The Pope had quoted Emperor Manuel II Paleologus who, circa 1400, assailed use of the sword to

spread Mohammed’s teachings. The quote prompted furious protests from Islamic preachers, threats of diplomatic retaliation by Muslim governments and violent

street demonstrations that led to murder of a nun. Benedict XVI expressed his regret for a “misunderstanding.” To Redeker and many other Europeans, the apology smacked of appeasement.

The sense of a creeping surrender of central values such as freedom of expression and the right to criticize, even lampoon any creed and faith, was compounded by the

decision of Berlin’s Deutsche Oper director to cancel showings of Mozart’s Idomeneo for fear of violence by Islamist extremists. German Chancellor Angela Merkel reacted: “Self-censorship out of fear cannot be tolerated.” The 30 September headline of the

daily Libération asked: “Is it still possible to criticize Islam?” The opera, originally scheduled for November, may yet be performed later under police protection.

The absence of clear denunciations by moderate Islamic theologians, preachers and representatives to calls of violence and censorship is perceived as a sign of Islamists’

growing clout. It also feeds suspicions that silencing criticism of religion is, like

female oppression, part and parcel of Islam. The threats against France, recently

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reiterated by Al Qaeda deputy Ayman al-Zawahiri, for the 2004 law prohibiting the

Islamic veil in schools and public-service jobs have reinforced the feeling that Islam is trying to force its prejudices on secular European societies.

On the one hand, then, Muslims react more violently and internationally to criticisms they deem blasphemous and Islamophobic. On the other, books and essays

denouncing Islam as “the new totalitarianism,” in the line of fascism and communism, have been popular since the 2002 anti-Muslim bestseller by Italian journalist

Oriana Fallaci, The Rage and The Pride. European fear of a “green peril” is a mirror image of Muslim phantasms of a western conspiracy against Islam,” an inexorable spiral of false perceptions fueled by the media cauldron of instant television images and internet pronouncements by radicals.

All this obscures the fact that Muslim furor, as shown during the caricature controversy, is often staged for media consumption by small groups of extremists while the

vast majority of Muslims remain indifferent. Over 70 percent of Muslims living in Europe, according to a 2005 European-wide study, describe themselves as hostile

to Islamists. Most practice a peaceful and tolerant brand of Islam, and many wish for the emergence of a European form of Islam through reforms that adapt the faith to the modern world.

But a daily diet of violent news, images and threats – many bloodthirsty acts by Muslims against other Muslims – distracts European eyes from the extreme diversity of

Islam and its deep divisions along sectarian, ethnic or theological lines. The silence

of tolerant Muslims ends up making militant Islamism the only message of Mohammed heard by Europeans, the very aim of proponents of jihad and xenophobes. The

dire prediction of André Malraux, made half a century ago, might one day become true. “The political unification of Europe would require a common enemy,” said

the author and Gaullist minister of culture in 1956. “But the only possible common enemy would be Islam.” Paris, 17 October 2006 Patrick Sabatier is a French author and columnist.

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Who’s Afraid of a Head Scarf? Mohammed Ayoob The current political crisis in Turkey, couched by Kemalist circles as a conflict between

Islam and secularism, goes far beyond such simplistic formulation. It’s as much a tussle between the country’s democratic imperatives and the autocratic impulses of the military top brass long used to dictating terms to Turkey’s civilian rulers.

Above all, it’s a struggle between the new social and political forces represented by

the AKP, or Adalet ve Kalkınma Partisi, and the entrenched political and economic elite denoted by the epithet “Kemalist.”

The AKP’s rise to power in 2002 sent

The issue of secularism versus Islam is, therefore, just one element in the standoff between the ruling AKP and its civilian and military opponents. This was demonstrated

in particular by the memorandum on the military website that all but threatened a military coup if Foreign Minister Abdullah Gül were elected to the presidency. The

memorandum underscored the symbiotic nature of the relationship between secularism and authoritarianism as conceived by Kemalists – and consequently, threw

into sharp relief the close relationship between democracy and the free expression of religion, including the wearing of the headscarf by the prospective first lady.

The AKP’s rise to power in 2002 sent a clear message to the broader Middle East that Islam and democracy are compatible and that, in fact, a party with Islamic

roots could come to accept secular political values while retaining commitment

to an ethical code that drew inspiration from Islam. It also signaled that Islamist parties elsewhere, as in Egypt or Algeria, can moderate if the right circumstances prevail and regime repression ceases.

In a surprise turnaround, AKP also became the primary proponent of Turkey’s entry

into the European Union. Its advocacy of Turkish accession to the EU resulted in

part from its attempt to consolidate democracy in Turkey by using the Copenhagen criteria to force the military to desist from intervening in politics. That advocacy was

also, in part, a response to interests of the new provincial bourgeoisie, beneficiaries of economic liberalization and AKP’s financial backbone.

AKP’s emergence as a post-Islamist, conservative democratic party out of the womb

of an Islamist movement is a sign of the maturity achieved by Turkey’s Islamists,

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thanks largely to their incorporation into what was becoming a relatively open

political system. Their transition from Islamism to post-Islamism entailed a shift from emphasizing implementation of sharia law to accepting the secular state while

infusing society and polity with moral values based on Islam, what anthropologist

Jenny White has termed “Muslimhood.” A similar trend is visible in the other major democracy in the Muslim world, Indonesia, where Islamically inclined political

formations have had little hesitation in accepting the secular character of the state. Kemalist elite are entrenched in the military, the bureaucracy, the legal system and the upper echelons of the academia. They regard both democratic consolidation –

entailing the political empowerment of the hitherto economically deprived, politically disempowered and religiously observant population of Anatolia – and Turkey’s

eventual entry into the EU as threatening to their economic and political interests. Kemalists used the Gül candidacy as the ideal opportunity for raising the slogan of

“secularism in danger,” in an attempt to hide other major contradictions in Turkish society, namely those between democracy and authoritarianism as well as the new

and the entrenched social forces. Derailing the democratic process and returning to

the semi-authoritarianism characteristic of the Kemalist state was the only way the elite could retain privileges. Hence, the midnight memorandum threatened military intervention if AKP went ahead with Gül’s election to the presidency.

The major thrust of the AKP agenda is threefold: democratic consolidation, economic

liberalization and Turkish accession to the EU. These goals threaten entrenched elements of the Turkish elite. Democratic consolidation as well as accession to the EU

could adversely affect the corporate interests of the military, which has projected

itself as the guardian of Kemalist ideology that espouses a centralized state, a conception of Turkish nationalism that does not permit ethnic or cultural differences, and a definition of secularism that makes religion subservient to the state. Not many

people outside Turkey realize that the Directorate of Religious Affairs appoints and controls religious functionaries in the country and vets Friday sermons. DRA is the second largest public employer after the armed forces in Turkey.

Unfettered democracy would upset many of these equations, above all by permanently

sending the military back to the barracks and making the general staff subservient to civilian rulers. It’s no wonder that the military and its civilian supporters,

long presented as the vanguard of modernization, have become lukewarm about

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Turkey’s entry into the EU. They have attempted to derail this process by adopting ultranationalist positions on entry-related issues to embarrass the AKP government.

The Kemalist elite are also wary of economic liberalization and Turkey’s integration into the international economy on a free-market basis. State handouts pamper the

elite. Beyond a bloated defense budget, state subventions concentrated in Istanbul and Ankara in a largely statist economy shield the elite from international and even

domestic competition, a root cause of Turkey’s economic malaise for several decades. With World Bank pressure and the election of AKP, this Gordian knot was cut and the country launched on a healthy economic trajectory reflected in the GDP growth

of 8.9 percent in 2004 and 7.4 percent in 2005 with inflation down from about 60 percent in 2000 to 8.2 percent in 2005.

The AKP could usher in needed economic reforms because its base includes the

provincial bourgeoisie comprised of entrepreneurs who do not depend on state

subvention and are not afraid to compete in the international arena. That the base is more religious and conservative was a bonus for the AKP’s “Muslim democrats.” However, this should not blind anyone to the fact that the AKP has come to represent

new economic forces in Turkey, radically changing economic and social balance in the country. Consequently, economic dynamism has shifted from the metropolitan centers, such as Istanbul and Ankara, to the provinces in Anatolia. Cities and towns of the interior, such as Kayseri and Konya, have become powerhouses of the Turkish economy, further threatening state-dependent economic actors.

Couching the debate in terms of secularism versus Islam and highlighting the issue that Gül’s wife wears a headscarf allow the Kemalist elite to hide real intentions that relate to the preservation of economic and political privileges and only incidentally to safeguarding secularism.

The ban on the headscarf in government offices can be traced to Turkish laws prohibiting the use of Islamic dress except for religious functionaries. However, the

headscarf has been embroiled in controversy since the 1980s when in the wake of a military coup the attempt was made to ban it in educational institutions to depoliticize the student body.

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If the Kemalists really believe that a prospective first lady’s headscarf poses mortal

danger to the secular state, then they demonstrate a mammoth lack of faith in the

secular foundations of the Turkish state. If one headscarf-wearing woman residing in the presidential palace can shake these foundations to the core, then they were never as deep as they were made out to be.

Fortunately, this is not the case. Turkish secularism is healthy and robust – and the

AKP’s transformation into a post-Islamist, conservative democratic party, à la the

Christian Democrats of Western Europe, is testimony to this fact. The accession of an AKP figure to the presidency will complete the evolution of the AKP into a postIslamist party. It will also send a message to moderate Islamists in countries such as Egypt and Algeria that there is a constitutional route to power and that their success

in taking this route depends as much on their willingness to transform themselves

as it does on changing the nature of regimes currently in power in those countries. East Lansing, 10 May 2007 Mohammed Ayoob is university distinguished professor of international relations, Michigan State University. He is the author of the book Many Faces of Political Islam, published by the University of Michigan Press.

Hollywood Still Seduces the World Ioannis Gatsiounis President Bush’s foreign policy is said to have unleashed an intense and potentially irreversible strain of anti-Americanism around the world, one in which the

line between hating American leaders and culture is blurring. And yet Hollywood, a symbol of US hegemony if ever there was one, is appreciating greater success

abroad than at home. International ticket sales account for 60 percent of overall box office receipts, up from 40 percent three years ago. Home-video sales are said to be the fastest-growing revenue sector in Tinseltown, and that doesn’t include the

millions watching pirated copies. Meanwhile American television shows attract a record number of foreign program buyers, even though licensing fees have increased sharply in most markets. So what gives?

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Part of the answer lies in trade liberalization. Part rests with shrewder, more globalminded marketing. Major studios are beefing up overseas divisions and signing

foreign partnerships. Warner Bros., for instance, recently penned a $2 billion deal with Abu Dhabi’s largest real-estate firm, Aldar, to build a studio and produce films

and videogames – thus targeting the Arab world, 60 percent of which is under 25 and regarded as entertainment hungry.

Lower labor costs and fewer regulations also inspire moves abroad. Major Hollywood studios set up production houses in China, to better tap growing interest in films. Hollywood’s production costs decreased in 2005 by 4 percent while marketing costs jumped 5.2 percent.

US films sell more

The industry has always welcomed international talent, from Marlene Dietrich to Sean

at home.

tickets abroad than

Connery, but as Hollywood pushes its product aggressively abroad, executives view

international talent as evermore critical in promoting films abroad. In The Kingdom Jamie Foxx stars beside Palestinian actor Ashraf Barhom, who plays a brave Saudi

Arabian police officer. The Last Samurai stars Tom Cruise and Japanese actor Ken

Watanabe, scoring well in Japan. Brazilian actress Alice Braga joins Will Smith in I Am Legend. Hollywood tackles transnational hot topics like religion, Kingdom of Heaven; terrorism, Munich; deadly viruses, I Am Legend; and the oil trade, Syriana.

In short, Hollywood is thinking bigger and bigger – with no less than the world in mind. But none of this sufficiently explains why Hollywood enjoys unprecedented

success abroad in an era of rampant American-bashing. The common explanation for the contradiction has been that the world makes a distinction between American

culture and its foreign policy; that the more sweeping variety of anti-Americanism is confined mostly to intellectuals and religious zealots.

But over the last few years in Europe and Asia I’ve encountered more ordinary

citizens baldly denouncing America. It is not just America’s politics, they carp, but

“hypocritical” values, a “hollow” pop culture and disbelief about voters reelecting Bush. A poll from the Pew Global Attitudes Project supports such anecdotal evidence,

finding that favorable opinions of American people among Indonesians dropped from 56 percent in 2002 to 46 percent in 2005, and also fell in Great Britain, Poland,

Canada, Germany, France, Russia, Jordan, Turkey and Pakistan. To be sure Bush’s

foreign policy and his successful reelection bid precipitated a broader disdain for America. That makes Hollywood’s growth abroad all the more noteworthy.

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Still, typical all-American fare plays well in international theaters. Spider-Man 3 was

the biggest worldwide opener in history, raking in $375 million. The Simpsons Movie, featuring “America’s first family,” grossed nearly $333 million abroad, double what it did stateside. Hollywood’s most successful titles abroad tend to be special effect-

heavy – Titanic, Harry Potter, Pirates of the Caribbean and Jurassic Park – and animation and digital wizardry such as Shrek, The Lion King and The Incredibles.

Ironically perhaps these films tend to do better than those critical of the US, such as

Fahrenheit 9/11, Syriana and American Beauty. Moo Hon Mei, marketing director for Twentieth Century Fox Malaysia, said this trend has remained largely undisturbed in Southeast Asia over the years and “doesn’t look set to change anytime soon.”

Either way, viewers of Hollywood pictures are hard pressed to ignore that they are

invested in an American product – the American flag here, the country’s natural splendor there. Hollywood tendentiously celebrates America’s brand of dynamism, from its confidence and cool to its technological and creative preeminence.

And generally people like what they see, a fact reflected not only in the numbers Hollywood posts, but in official backlash and its impact. In December, China banned

the release of US films for at least three months. The success of American films at the expense of local fare is said to have influenced the decision. South Korea relies

on a quota that requires local films to play 146 days of the year, a number halved as part of the US-Korea bilateral trade agreement.

In March Javad Shangari, a cultural adviser to Iranian President Mahmoud Ahmadinejad, accused Hollywood of being “part of a comprehensive U.S. psychological

war aimed at Iranian culture,” in response to the film 300, which some critics sug-

gested was anti-Persian. A government spokesperson added “Cultural intrusion is among the tactics always used by the aliens.”

In Malaysia, authorities barred moviegoers from Mel Gibson’s The Passion of the Christ to protect Muslim “sensitivities,” but pirated versions were readily available

at stalls around Kuala Lumpur. China’s street corners are rife with pirated Hollywood movies, and young Iranians adore American films, often edited or banned.

Hollywood’s portrayals of America as a den of iniquity may even feed some misconceptions. In the Pew poll more than 60 percent of Lebanese describe Americans as greedy, violent and immoral, yet Lebanon is one of Hollywood’s hottest markets in

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the Middle East. The fact that Hollywood is a hit in such places signals, at the least, a healthy fascination with what’s perceived as depravity of America and, more likely,

a gap between what people say and what they actually think about the country. A young Malaysian woman accounted for complexity in her relationship with the US

when she articulated her affinity for Hollywood in broad terms, saying that it enabled her “to imagine doing things not practiced or accepted at home.”

Hollywood doesn’t specialize in just “sin,” and audiences do not merely line up for a peek at sin.“[Hollywood] allows people abroad to learn about American society and especially affluence, fashions, consumption patterns, etc., that people are interested

in, never mind their anti-American attitudes,” said Paul Hollander, editor of the essay collection Understanding Anti-Americanism. Edward Said lamented US power in this respect, that is, ideological power: “All cultures tend to make representations

of foreign cultures… to master or in some way control them. Yet not all cultures

make representations of foreign cultures and in fact master or control them.” This representation is sometimes expressed dialectically, vis-à-vis depiction of the self.

With anti-Americanism reaching record highs, Hollywood is not only a powerful

ideological tool, but arguably a necessary one. The success of Al Gore’s An Inconvenient Truth, for instance, reminded the world that, yes, some US politicians genuinely have the world’s interest at heart.

Hollywood’s window into the US complicates the world’s relationship with the na-

tion. It challenges the malicious simplifications of American politics and culture, inculcated through politically motivated critics, religious institutions, governments,

schools and media. In doing so, Hollywood challenges the impulse to dismiss and demonize, and in our polarizing world it could do much worse. Kuala Lumpur, 28 January 2008 Ioannis Gatsiounis, a New York native, has been living and writing in Asia for most of the last eight years.

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Who Owns the Past? James Cuno Unprecedented global travel and cultural exchange help make the world a smaller place but ironically, they also stir national pride. Nationalism, combined with business calculation, now threatens to segregate antiquity that belongs to all of the humanity.

Most nation-states have cultural property laws that restrict the international move-

ment in archaeological artifacts found within their borders. But some antiquities

are undocumented, lacking evidence of archaeological circumstances or removal. In the current debate over the acquisition of undocumented antiquities, the world’s

archaeological community has allied with nationalistic programs of nation-states. Nations can and do bring charges of possession of, or conspiring to possess, stolen property against people and institutions holding objects covered by the relevant

ownership laws, as seen with the Republic of Italy’s charges against the former J. Paul Getty Museum curator, Marion True or Peru’s charges against Yale University with regard to contested Machu Picchu artifacts. More often than not, such laws

are perceived as free of politics – the stuff of objective, reasoned best practice and indifferent government regulations

Nothing could be further than the truth. Government serves the interest of those in power. Once in power, with control over territory, governments breed loyalty among their citizens, often by promoting a

particular identity and history. National culture – language and religion, patterns

of behavior, dress and artistic production – is at once the means and manifestation of such beliefs, identity and loyalty, and serves to reinforce governments in power. Governments can use antiquities – artifacts of cultures no longer extant and in every

way different from the culture of the modern nation – to serve the government’s

purpose. They attach identity with an extinct culture that only happened to have shared more or less the same stretch of the earth’s geography. The reason behind such claims is power.

At the core of my argument against nationalist retentionist cultural property laws – those calling for the retention of cultural property within the jurisdiction of the

nation-state – is their basis in nationalist-identity politics and implications for in-

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hibiting our regard for the rich diversity of the world’s culture as common legacy.

They conspire against our appreciation of the nature of culture as an overlapping, dynamic force for uniting rather than dividing humankind. They reinforce the dangerous tendency to divide the world into irreconcilable sectarian or tribal entities.

Sadly, the public discussion about nationalist retentionist cultural property laws focuses on their role, which foreign governments and the archaeological community

promote, as a means of protecting the integrity of archaeological sites. It’s argued that the laws inhibit looting and consequent illicit trade. But this is only partly true. Over the decades in which they’ve been in place, strengthened by international

conventions and bilateral treaties, the looting of archaeological sites has continued.

Antiquities from

and this is what we should be arguing about – is to preserve nation-states’ claims

to humanity, not

jurisdiction. This happens just as the world is increasingly divided along national-

emerged centuries

In fact, many archaeologists claim it’s increased. The real purpose of such laws –

great cultures belong

of ownership over antiquities found or presumed to have been found within their

nation-states that

ist, sectarian lines.

later.

The alternative to consigning the protection of our ancient heritage to national

jurisdiction is the United Nations, specifically its cultural body, UNESCO. Sadly, UNESCO’s Achilles’ heel is its grounding in nation-state politics and its respect for

nationalism. For example, relying on its charter, the organization maintained that it could not prevent the destruction of much of the Kabul Museum’s extraordinary

collection in 2001. This occurred in the aftermath of the destruction of the monu-

mental Buddhas at Bamiyan, led by Taliban forces controlling the Afghan government at that time, who thus had sovereignty over Afghanistan’s cultural property. The UNESCO special envoy to Afghanistan had discussed the edict with the Afghan

foreign minister before the destruction, but in the end UNESCO only condemned the actions, watching as the collection was attacked.

Earlier, UNESCO had discouraged the foreign acquisition of antiquities likely to

have been pirated from Afghanistan during the calamitous 1980s war with the So-

viet Union. As a result, many stayed in Kabul as Afghan cultural property became subject to the Taliban’s destruction.

Similarly, after the 2003 invasion of Iraq, UNESCO failed to protect the Baghdad

Museum and the archaeological record of that vital part of the ancient world. Instead,

the organization called for the return of any undocumented antiquities thought to

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have been improperly removed from that divided, failed state. UNESCO unambiguously respects the nation-state and vests authority in it, as revealed by the preamble

of the 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property, which claims that “cultural property constitutes one of the basic elements of civilization and national culture,” that true value can be appreciated only in relation to the fullest possible information regarding its origin, history and traditional setting.

Ironically any state can denounce a UNESCO Convention “on its own behalf or on behalf of any territory for which territorial relations it is responsible” and simply ignore it altogether. To date, 30 years later, the convention has failed because it

cannot contradict the authority of member states. Meanwhile, the world is losing

our common ancient heritage through theft and destruction, poverty, development, warfare and sectarian violence. No amount of international conventions and agreements that proclaim to respect the “collective genius of nationals of the State”

can overcome the obstacle of nationalism, the age-old route out of international agreements.

Archaeologists go along because they depend on nation-states to do their work. Nation-states hold antiquities and archaeological sites as national cultural property, and control access. Nations that have hosted excavations depend in great part on the

work of foreign archaeologists for the raw material of their nationalist ideologies,

not to mention the tangible property that fuels their tourism economies. Archaeologists, especially those who benefit from working in host university museums, should examine their support of nationalist retentionist cultural property law. Many collections could not have been formed since the implementation of these laws.

Archaeologists should work with museums to counter the nationalist basis of laws, conventions and agreements, and promote a principle of shared stewardship of our

common heritage. Together we should call attention to the failure of these laws to

protect our common ancient heritage and perversion of that heritage by claiming the archaeological record as a modern nation’s cultural property

The recent rise in nationalist and sectarian violence and the pervasive misunderstanding, even intolerance of other cultures, adds urgency to the need of resolving these differences. Ignorance of the interrelatedness of cultures overlooks that we all

have a stake in their preservation. One need only consider the loss of the Gandhara

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sculptures in the Kabul Museum – which bore reference to the region’s historic

place at the crossroads of Asia, where Greek, Chinese, Indian, Pagan, Buddhist

and Hindu cultures influenced one another over centuries – to recognize what we lost in their destruction: sublime evidence of the basic truth of culture. It’s always

mongrel, made of numerous and diverse influences from contact with new and strange experiences. This was as true in antiquity as it is as today.

An understanding that ancient and living cultures belong to all of us could contribute

to greater respect for the differences among us and serve as a counterargument to

the call for cultural purity that flames sectarian violence. We can do better. Arguments between museums and archaeologists over the acquisition of undocumented antiquities are a diversion from real arguments, which ought to be between those who

value antiquity and the nationalist governments who manipulate it for political gain. Chicago, 21 April 2008 James Cuno is president and director of the Art Institute of Chicago, and the author of Who Owns Antiquity? Museums and the Battle Over Our Ancient Heritage, published by Princeton University Press in 2008.

Nations Say “I Do” to Marriage Equality Joseph Chamie and Barry Mirkin Same-sex marriage is a new social phenomenon and, indeed, the label of homosexuality is relatively new, offered by German psychologist Karoly Maria Benkert in 1869.

Even so, homosexual unions have been documented in Greece, Rome, China and elsewhere in the world since the days of antiquity, with varying mixtures of curiosity

and nonchalance, praise and horror. But only with the modern era have increasing

numbers of countries, regional governments and religious institutions sanctioned

the right to legal marriage for couples of the same sex, along with all the economic protections and benefits this provides for partners and children.

In the late 20th century, movements emerged worldwide – first in Europe and then spreading to other regions – to regard marriage as a basic human right to be extended

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to same-sex couples. The public demands were extraordinary indeed, given that

during most of the 20th century, many homosexuals kept their preferences secret, and others perceived same-sex marriage as an oxymoron.

Seven countries, five US states, Washington, DC, and several Latin American cit-

ies have legalized same-sex marriage. The Netherlands ushered the way in 2001, the first nation to permit same-sex couples to marry legally. This historic decision

marked a turning point, with demands for equality reverberating across borders.

Barriers fell as Belgium (2003), Massachusetts (2004), Canada and Spain (2005),

Gays and lesbians worldwide reject policies that leave their status in economic and legal limbo.

South Africa (2006), Norway and Sweden (2009) each approved legislation. Court

decisions can go both ways: Massachusetts declared denial of marriage rights for

same-sex couples as unconstitutional in 2004; while national courts review samesex marriage embraced by Mexico City, Buenos Aires and Tierra del Fuego province of Argentina in early 2010.

After lying hidden from public view for centuries, the phenomenon exploded, and

globalization of the media, technology and activism certainly played a role. Television situation comedies, soap operas and reality shows, notably in the UK and US,

delivered affable gay characters to family living rooms. The popular and critically

acclaimed US television series Friends featured the first lesbian wedding on primetime network TV in 1996, enshrining the concept into popular culture, and the fans did not flee.

Sudden expansion of technological communications, particularly the internet, and

worldwide diffusion from books, movies, television and news stories told homosexuals that they are not alone, rallying marriage-equality movements and generating public support. Proponents of same-sex marriage relied on internet and cell-phone social networking for both dating and building coalitions.

At the same time, a proliferation of secularism and corresponding decline in the influence of religious doctrines were underway, a trend reinforced by the global

emphasis on individual human rights coupled with court decisions that challenged

public sentiment and legislation prohibiting same-sex marriages. The rise of HIV/ AIDS and campaigns to confront the pandemic through the promotion of stable

relationships also raised public awareness and mobilized demands for homosexual

rights. This awareness and accompanying historic changes in marriage laws arrived amidst considerable controversies and divisive litigation. Reactions to same-sex

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marriage have been intense and sometimes even violent, with many commentators

as well as much of the general public having little factual knowledge about same-

sex marriages. The actual number of legal same-sex marriages worldwide remains small – about 100,000 by the end of the decade. After initial surges following

legalization, annual levels of same-sex marriage in the European nations make up about 2 percent of marriages. 

All in all, laws and policies addressing same-sex couples have changed worldwide in the direction of increased tolerance, social acceptance and decriminalization,

especially among younger generations. Growing numbers of governments, including

Cyprus, Iceland, Luxembourg, Portugal, Slovenia, and Nepal are now considering legislation to permit same-sex marriage or, at least in this mobile society, to recognize

same-sex marriages legally performed abroad, as is the case in France, Israel and Japan. Importantly, public opinion polls around the globe, especially in developed

nations, show strong support for recognizing same-sex couples as partnerships or civil unions. Recognition and acceptance of same-sex civil unions is entrenched

throughout the Western Hemisphere, including Argentina, Brazil, Columbia, Ecuador and Uruguay as well as in Australia and New Zealand.

Nevertheless, opposition remains intense, particularly among religious groups,

because of the widespread belief that marriage by its nature is a union between a man and a woman, intended to protect reproduction.

The issue is especially litigious in the United States. Although marriage is a state matter in the US, same-sex marriage has evolved into a major legal issue for the nation

as a whole. Other debates focus on the acceptability of homosexuality itself. Some

countries only recently decriminalized same-sex sexual relations between consenting adults, such as China in 1997 and India in 2009.

In some 80 countries, same-sex sexual relations remain illegal, with penalties ranging

from fines and prison terms to physical punishment and death. Polls suggest that majorities of the public in some African and Asian countries, such as Nigeria and

the Republic of Korea, claim that homosexuality can never be justified. Recently, violence and threats of death punishment for homosexuality and arrests of gay

couples have occurred in a number of African nations, including Kenya, Malawi, Uganda and Zimbabwe.

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Arguments on the topic of same-sex marriage fall into two camps. Those favoring same-sex marriage point to basic human rights, egalitarianism, stable partnerships,

monogamy and safe sex and integration of minorities into mainstream society. Opponents resist redefinition or any undermining of traditional marriage or families, promotion of a homosexual lifestyle, change in social mores, as well as question the limited research on children raised by homosexual parents.

A good deal of the opposition to same-sex marriage arises from a fundamental rejec-

tion of the use of the word “marriage” with respect to same-sex couples. While some are prepared to compromise on the issue and recognize same-sex unions, they are unwilling to let the term marriage be applied to such unions.

Irrespective of one’s position on this contentious issue, same-sex marriage is increasingly viewed as more than a private matter between two consenting adults; marriage imposes notable social, economic and political consequences, with respect

to rights, benefits, responsibilities, privileges and services. Moreover, the implications of same-sex marriage extend well beyond the borders where it’s permitted, influencing international relations and diplomacy, global norms and regional politics.

Modifications in marriage laws affect many laws on adoption, divorce, child custody, inheritance, end-of-life and other health decisions, as well as international

migration. Governments that do not recognize same-sex marriage must increas-

ingly confront the thorny issues of granting divorce, determining child custody, or dealing with the immigration of same-sex foreign spouses in marriages performed outside their jurisdictions. 

The institution of marriage has undergone fundamental transformation. In addition

to the diversity of marital unions, non-traditional arrangements – such as cohabitation, non-marital childbearing, assisted reproduction and surrogacy, interracial and

interreligious unions as well as divorce and separation have become commonplace and more acceptable. 

In the years ahead, social tensions and legal challenges concerning same-sex marriage – as well as more broadly the human rights of homosexuals – will intensify,

especially as international migration brings cultures into closer contact. Same-sex marriage will remain a controversial part of the social, political and legal landscape both nationally and internationally for the foreseeable future. Dismissing or ignoring

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these developments is not an option. Governments that directly address concerns over same-sex marriage could decrease economic ramifications and reduce conflict and possible violence in the long run. New York, 14 April 2010 Joseph Chamie is research director at the Center for Migration Studies, and Barry Mirkin is an independent consultant.

World at Play: Soccer Takes on Globalization Branko Milanovic For many of the billion spectators who watched the soccer World Cup opening in

Rustenburg, South Africa, the word “globalization” may have come to mind. From advertisers to spectators, soccer embodies globalization like no other sport. And for players, soccer embodies globalization like no other profession. The market for

professional soccer players is, by far, the most globalized labor market. A Nigerian

or Brazilian soccer player can get a job more easily in Europe or Japan than a skilled surgeon or engineer. Out of some 2,600 professional players in the five top European

leagues – England, Spain, Italy, Germany and France – almost 800 are expatriates,

defined as those born and recruited in a country different from the one where they

play, according to data published by Professional Football Players Observatory for the last soccer season.

The greatest push to free movement of labor in soccer came in 1995 after the so-called Bosman ruling. Belgian player Jean-Marc Bosman complained to the European Court of Justice against rules that then limited the number of foreign players to two

or three per club. The rules were, Bosman argued and won, in flagrant violation of freedom of movement and non-discrimination labor laws within the European Union.

The ruling lifted limits on EU players, and soon other limits on African, East Euro-

pean or Latin American players were formally abandoned or made irrelevant. Thus, global mobility in one small market, for top professional soccer players, became

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almost complete. Today, many of the best clubs have no players at all from their “own” countries. The Inter Milan squad had no Italian starters only a few weeks ago when winning Europe’s most prestigious competition, the Champions League.

Suppose that similar global mobility of labor were to spill to other professions? If medical doctors could move with equal ease from Cameroon to Spain or Italy, as Samuel Etoo, the Inter Milan striker did; or engineers could move from Ivory Coast to France and then England, as London Chelsea’s Didier Drogba did?

From advertisers to spectators, soccer embodies globalization like no other sport.

Soccer could provide clues to what this new world of mobility, largely unhindered by national borders, might look like. Globalization of the world’s most popular game

is responsible for two developments: The first one cannot be easily quantified, but most observers agree that the quality of the game has improved: players have greater physical stamina, with better ball control and technique.

But also, global mobility of labor combined with a capitalist system, in which the

richest clubs can buy the best players without salary caps or other limits, concentrates quality more than ever before. A handful of richest soccer teams buy the best players and collect the most trophies, thus boosting their popularity, developing

an international fan base, selling more jerseys and advertisements, adding to their coffers and, in turn, buying better players.

The gap between the top clubs and the rest has widened in key European leagues. During the last 15 years, all English soccer championships but one were won by the so-called “Big Four”: Manchester United, Chelsea, Arsenal and Liverpool.

The concentration is greater in Italy: Only once during the last 20 years has a club outside the top four won the Italian Serie A. It’s no surprise that the top four Italian clubs, like the top four English clubs, are on the list of the 20 richest clubs in the

world. In Spain, Real Madrid and Barcelona shared 17 out of the last 20 championships. In Germany, 13 out of the last 16 championships were won by two clubs.

Winners of the European Champions League are consistently from a narrowing circle of top, richest clubs. The champions league is played annually, and over a five-

year period, there theoretically could be 40 different teams in the quarter-finals. In

the mid-1970s, that number was around 30. Since then, every successive five-year

period produced a smaller number of teams, with only 21 in the period ending in

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2010. The day could come when the same eight teams play in the quarterfinals, year in and year out – a trifle boring indeed.

At the club level, globalization combined with commercialization thus produces two

outcomes: better quality of the game, which is tantamount, in economics, to greater output; and greater concentration of winning clubs, which is tantamount to greater

inequality. The question is, can greater output be preserved while mitigating the

effects of inequality? Yes, though not at the club level discussed so far. Only at the

national level – say, team USA, team England – where different rules imposed by the Federation Internationale de Football Associations, FIFA, apply. At the national

level, expatriates cannot play for the countries where they live, but must play for countries of origins.

To some extent, this reverses the “leg drain,” most famously so once every four years

during the World Cup – akin to Cameroonian doctors based in France returning

from time to time to perform operations in Douala or Yaoundé. For example, in this World Cup, out of 23 footballers on either Cameroonian or Ivorian roster, one plays at home. For Ghana, there are three domestic players (out of 23), and in the

case of Nigeria – zero. Even reclusive North Korea has on its roster three players who do not play in the country.

It would seem that this reversal should equalize the outcomes somewhat, particularly as players from small African leagues play in larger English or Spanish leagues,

much as a doctor from the developing world returns with skills and connections

acquired after an education at Stanford or Yale. And indeed, differences between national teams, most notably at World Cup games, have steadily decreased. At the

last three World Cups the average difference in goals per game between winning and losing teams has ranged between 1.2 and 1.3, as opposed to 1.7 some 30 years ago. The decrease is sharper for the top eight national teams: from 1.6 to 1.

In other words, the gap in performance between national teams is small, with most

games ending with one goal separating the two sides, in ties, or overtime tiebreakers in the knockout stage. Unlike at the club level, the top-eight tier among nations

competing for the World Cup is more open: Since 1986, at least one new national team, never before been a member of the elite eight, has made it to this august stage:

Ukraine in 2006; Senegal, Turkey, South Korea in 2002; Croatia and Denmark in 1998; Romania and Bulgaria in 1994, etc.

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Nation-level soccer suggests that globalization can be made sustainable and reduc-

tion in inequality is surely part of that sustainability. But for that, global rules must accompany globalization, whereby losers get something for agreeing to play the

game. Translated into everyday language of economics, some brain drain may be reversed by imposing special short-term return duties on migrants.

This would require international coordination whereby rich countries would issue

work permits, obliging the migrants to spend one of, say, each five years working in their own country. A stint back home would be a condition for extension of work

permit, with the system continuing for three or so rounds. To have real bite, the

system would require policy coordination by most rich countries. Whatever its exact modalities, a more open-minded immigration policy should be combined with

special duties for migrants, the biggest beneficiaries from freer movement of labor, from which their countries of origin would derive some benefit too. College Park, 15 June 2010 Branko Milanovic is a professor at the School of Policy, University of Maryland. His books include Worlds Apart: Measuring International and Global Inequality and Income and Influence: Social Policy in Emerging Market Economies.

The Rise of Islamic Rap Peter Mandaville Listening to South Asian Muslim teenagers in this post-industrial British city, one can understand how Islamic faith and American hip-hop music coexist. Searching

for music that reflects their own experiences with alienation, racism and silenced

political consciousness, many teens, even quasi-religious groups, turn to the urban music of black America.

Despite the recent popularity of a pop-oriented variant of nasheed devotional music, the acts with the largest followings are not Muslim nor do they focus on overtly

Islamic themes. Rather, the teens offer a litany of popular culture icons – American hip-hop and rap artists including Jay-Z, the late Notorious B.I.G. and Tupac

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Shakur. Young South Asian Muslims throughout Britain have widely adopted and thoroughly adapted symbols and styles of African-American urban culture. Slang combining northern English colloquialisms, Bengali and American gangsta culture infuses daily conversations.

Social ills – drugs, gangs, unemployment – are common in British cities, and racial tensions can run high. A collective sense of identity emerges from this common urban experience, across different national settings – hence the transatlantic currency

of the hip-hop movement, and presence of Islamic references in hip-hop culture, through quasi-Muslim religious groups such as the Five Percenters.

On the streets of

Seeking to validate the impulse that lies behind the popularity of this music, but

Britain, Muslim hip

recently experimented with Muslim versions of hip-hop. As Abdul-Rehman Malik,

politics.

direct its outward expression in more positive directions, a number of artists have an observer of the UK’s Muslim music scene puts it, “they’re searching for a cultural and political expression that they can marry to their religious beliefs.” The fusion is sometimes a tough sell, however – not least of all because of persistent debates within Islam as to the permissibility of music.

Beginning with the group Mecca2Medina in London in 1997, the Muslim hip-hop

movement has grown with impressive speed even as it struggles to achieve mainstream recognition within both the Muslim community and the wider hip-hop scene. Many Muslim artists cite passing references to Islam in mainstream hip-hop, and in their minds, the natural extension is to bring a religious identity front and center.

For some, hip-hop is also a vehicle for engaging world politics. Figures like FunDa-Mental frontman Aki Nawaz attracted controversy for the 2006 album All Is War, which some viewed as glorifying terrorism. The music of another edgy act, Blakstone, features aggressive and confrontational lyrics.

While well-known American rap and hip-hop artists, such as Mos Def and Lupe Fiasco, express a Muslim identity, they do not make religion or politics an explicit

focus of their music so as to avoid discomfort or rejection by the music industry. Many Muslim hip-hop artists, such as the female spoken word duo Poetic Pilgrimage,

complain about persistent racism, even within Muslim communities in the West, contending that their work transcends ethnic and racial barriers.

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This legacy of racial tension, while rarely a focal point of contemporary nationalsecurity policy, has reared its head in the form of multiple efforts in recent years to

reinvigorate the figure of Nation of Islam activist Malcolm X. For example, shortly

after Barack Obama’s 2008 election, Al-Qaeda’s deputy leader Ayman al-Zawahiri released a video statement castigating the US president as a “house slave” in contrast with the hardline confrontational politics of Malcolm X.

Pointing to another side of the American civil rights leader, a British government– funded counter-radicalization project – combining traditional Islamic scholarship and social consciousness with hip-hop sensibilities – seeks to mobilize urban British

Muslim youth around what they see as more cosmopolitanism impulses of Malcolm X after his break with the Nation of Islam and subsequent global travels. AbdulRehman Malik, a driving force behind the Radical Middle Way, expects popularity of Islamic hip-hop to grow:

“Hip-hop is our way of seeing Islam in situ, in our place – a way of reflecting the anger

of the Muslim street by creating discursive spaces for the expression of that anger. But it has to be real, and it has to resonate: your rap is only as good as the depth of

its message.” Thinking about radicalism this way permits better understanding of other forms of oppositional politics framed in terms of Islam, as well as recognition of the appeal of Muslim politics as connected to broader histories of global exclusion.

These developments become more significant when one considers the demographics of Islam, with some 70 percent of the world’s 1.5 billion Muslims under the age of 30. Embracing hip-hop could be a fad or signal young Muslims’ growing affinity

with leftist values. Islam, however, has never fit comfortably on a political spectrum defined in conventional terms of right and left.

The Islamic worldview is socially conservative in most of its mainstream forms,

but the centrality of social justice in Islam has always meant that Islamic parties

share some common ground with the left – even where the politics between them are contentious.

Leftist parties in the Muslim world historically haven’t hesitated to couch their

rhetoric in religious terms when so doing was perceived as useful – witness Zulfikar Ali Bhutto’s description of Pakistan People’s Party policies in the early 1970s as

Musawat-i-Muhammadi, or “Muhammad’s egalitarianism.” Iran’s Islamic Revolution

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was received as essentially a project of the developing world in many quarters, with

supporters from Nigeria to Indonesia and even some outside the Muslim majority world citing Khomeini’s anti-hegemonic credentials.

Today we see sparks of growing cooperation between Islamists and leftists in the

Middle East, although so far this speaks more to a realization by opposition leaders that it’s politically expedient to play down differences. This marriage of convenience extends to Islamist-leftist engagement on the global level, with both sides

regarding the other warily even as they occasionally make common cause. In 2004, for example, the Bangkok-based NGO Focus on the Global South partnered with

Hezbollah to host a strategic-planning conference in Beirut for anti-Iraq War and anti-globalization movements, prompting criticism from other left-leaning groups in Lebanon opposed to Hezbollah.

A common anti-war stance provided space for coordination between Islamists and the global justice movement on other occasions. For example, the Muslim Association of

Britain, affiliate of the Muslim Brotherhood, organized in concert with several anti-

globalization groups the huge 2003 anti-war rally in London. The same association sent a delegation to the 2006 World Social Forum meeting in Venezuela, although again the motivation was more shared antipathy to the Bush administration rather than real ideological affinity.

In other cases, however, engagement between Islamic movements and the left

has had more substance. In Europe, Muslim groups and the Green Movement

have shared platforms, and no less a figure than Tariq Ramadan has had ongoing if fractious dialogue with the altermondialisation movement, France’s distinct current of anti-globalization thought. One also cannot help but notice the

recent spate of texts on Islamic liberation theology – inspired by Latin America’s dissident Catholic-Marxist fusion from the 1960s and 1970s. Muslim thinkers

from Ali Asghar Engineer in India to South Africa’s Farid Esack and the IranianAmerican cultural critic Hamid Dabashi have articulated varied, often sharply

contrasting accounts of the relationship between Islam and social-justice activism. While these new arenas of Muslim politics do not yet represent mainstream political

Islam, it’s significant that the actors and networks largely bypass the established old guard of modern Islamism such as the Muslim Brotherhood. In other words,

young Muslims, dissatisfied with the failure of conventional Islamist groups to de-

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liver results, may be searching for alternative avenues of political expression and mobilization – iPods firmly in hand. Bradford, 19 August 2010 Peter Mandaville, associate professor of Government & Islamic Studies and codirector of the Center for Global Studies at George Mason University, is the author of Global Political Islam.

Confucius Versus Avatar – The Winner Is… Mary Kay Magistad What do you as member of an official Chinese film board do when the Hollywood science fiction film Avatar smashes Chinese box-office records during its first three

weeks in theaters? What if online chat sites are buzzing about the uncanny parallels between the fictional film plot – of developers raping the land and forcibly evicting the people – and real life in China? If protesters start to use Avatar as a rallying cry

against land grabs in southern China, amidst a dispute with Google and disagreement between the US and Chinese governments, about whether information should be allowed to flow freely to the Chinese public?

Apparently, you claim commercial reasons for pulling Avatar from most of the

theaters where it’s showing and substitute a Chinese-made film about Confucius

that contains a message – respect for hierarchy – considered more appropriate for mass consumption.

The problem is, the 22 January opening of Confucius proved so anemic that the Chinese Film Board has already backpedaled, agreeing that cinemas without 3D screens

can continue to show the 2D version of Avatar. Meanwhile, state enterprises and government offices have been block-booking Confucius tickets for their employees.

Some theaters are giving away free Confucius tickets with Avatar tickets. Others are

enticing those who buy Confucius tickets with the opportunity to purchase much

sought-after Avatar tickets.

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And through it all, China’s outspoken online community lets it rip: “Confucius is the enemy of democracy and freedom,” wrote one users of the Chinese chat site

Tianya. “He only tells people to become slaves, subject to exploitation and oppression.” Another agreed: “Confucius is an ---kisser. That’s why all these government officials like him.”

Some on Tianya called for a boycott of Confucius, the movie, to teach the Chinese

Film Board that it can’t shove propaganda films down viewers’ throats. Others

voiced skepticism of an earlier explanation given by State Administration of Radio, Television and Film Vice Director Zhang Hongsen that pulling Avatar from 2D theaters was strictly a commercial decision, since ticket sales for 2D cinemas were only

Audiences want what

for 3D or IMAX [viewings of Avatar], only 20 percent of the 2D seats are taken,” he

struggles to censor

natural to pull the 2D version. That’s how the market works.”

land rights or distract

Chinese internet users retorted that there are still long lines and full houses for the

for hierarchy

bringing in one-third of Avatar’s total take. “While it is extremely hard to get tickets

they want – China

was quoted as saying in the Guangzhou-based newspaper Southern Daily. “So it is

film on protecting with film on respect

2D version of Avatar, and for good reason. Most Chinese cinemas don’t have 3D

capability, and most Chinese moviegoers can’t afford to pay twice as much to see the movie in 3D anyway. Avatar had been showing on 2,500 screens, one-third of them 3D or IMAX. All told, the movie had taken in $76 million in China as of 17 January, after a three-week run, surpassing last year’s 2012 and Transformers 2.

Speculation has been rife about why Avatar was really pulled. Many suspect it’s because the themes in Avatar were too close to the bone for the Chinese government’s

comfort. “What is Avatar about?” asked one contributor on the website Mop. “It’s about the government’s forced evictions of people, and about them risking their lives to protest. No Chinese director dares to touch this topic.”

Even a commentator for The Global Times, a newspaper under the umbrella of the Communist Party–run People’s Daily said the plot in Avatar was “the spitting image of the violent demolition in our everyday life.”

If it seems a stretch that Chinese audiences are relating to 10-foot-tall blue aliens with

tails in an environmental paradise under threat from greedy developers, consider

the parallels. China’s breakneck pace of development in recent years has come at a steep cost to the environment and caused an estimated 30 million people nationwide

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to be evicted from their homes and communities. Local governments then sell the

land to developers, not the original residents, and pocket tidy profits. This is possible because, in China, all land technically belongs to “the people,” which is to say, the state. Even upscale urban dwellers cannot buy their own land; only the house

or apartment that sits on it, for a 70-year lease. Farmers and villagers are generally

given 30-year leases. Many of the 90,000 or so demonstrations in China each year are related to land rights.

Against this backdrop, it’s little wonder China’s film authorities would rather turn the public’s attention to a different kind of message.

Enter Confucius. Once vilified by Mao Zedong as a feudal counterrevolutionary,

Confucianism has more recently been promoted by China’s leaders as a moral code for modern China, one that happens to encourage respect for the existing hierarchy.

A core part of Confucius’ original message was that leaders must lead with be-

nevolence and morality, must respect the law and avoid corruption. Mao Zedong preferred the political philosophy of Legalism, put forth by a later philosophical

rival of Confucius, Han Fei. Legalism emphasizes using the law as a tool to keep the

population under control, that everyone except the ruler can be punished. It was

a philosophy favored by many of China’s emperors, who followed the policy of “ru wai, nei fa” – being outwardly Confucian, but inwardly Legalistic, promoting the

morals of Confucianism to the general public to discourage challenges and unrest, while using the law as a tool of control.

In the film Confucius, a beatific Chow-Yun Fat as the great man himself counsels

leaders of warring states to “put your country ahead of yourself” and “without ci-

vility, a state will descend into chaos.” He also tells leaders to be ethical and avoid corruption. One retorts, “Victory and defeat are what matter, not ethics.”

As a film, Confucius is neither entirely awful nor likely to win international awards.

It’s put together as though the director doubted a film focused entirely on the inner life of Confucius and his ideals could really hold a Chinese audience. So instead

of character development and complexity of plot, the film offers elaborate period

costumes, settings and the kind of epic, high-tech arrow-flinging battle scenes that have become a staple in mainland Chinese films about ancient China. “I think they were borrowing from Braveheart, except the director of that movie did a better job,”

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sniffed a young movie-goer named Mao, as she came out of one of the first showings at a Beijing cinema. But she admitted to finding the story of Confucius touching.

Another young woman, about to go in to see the film, said she didn’t know or care so much about his philosophy; she just wanted to see Chow-Yun Fat. As for reports

that Chinese authorities may be trying to limit how many Chinese see the provocative themes in Avatar, lest they get ideas, she snorted. “That’s ridiculous. I think we should all be able to watch whatever we like.”

Just days before, China’s state-run media accused Google and US Secretary of State Hillary Clinton of “information imperialism” for more or less making the same suggestion.

Beijing, 25 January 2010 Mary Kay Magistad covers Northeast Asia for The World.

One Country, Many Voices Jeffrey Wasserstrom Four years ago, when the Beijing Olympic slogan was “One World, One Dream,” global audiences were wowed by a Chinese spectacle that began with a Confucius quote describing the pleasure of welcoming friends from afar.

Now, the sounds coming from China and grabbing our attention are not spirited

drumming but angry chanting about settling scores. It’s worth comparing the re-

cent street actions in China, triggered by an ongoing dispute over control of specks of land known as the Diaoyu Islands in Chinese, the Senkaku Islands in Japanese,

with the mesmerizing gala of the Beijing Games. The two spectacles offer a striking study in contrasts – and intriguing parallels. Let’s start with contrasts. The 2008 spectacle, choreographed by filmmaker Zhang Yimou, was held in one locale and, though filled with historical allusions, included no nods to Japanese

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invasions or direct references to Chairman Mao. Today’s demonstrators, marching

through streets across China, carry portraits of Mao and refer continually to past atrocities committed by Japanese soldiers.

The Communist Party, keen to remind the populace that it once battled imperial-

ism and now protects China from foreign bullying, tries to guide the anti-Japanese protests. In some cases, especially in the capital, according to journalists such as NPR’s Louisa Lim, the government has been doing more than that: directly stagemanaging demonstrations and ordering employees, including plainclothes police,

China’s orchestrated spectacles, from Olympics to antiJapan protests, give an illusion of unified worldview.

to join the parades. Not all protests are choreographed. In some cities, demonstrators have departed from official scripts, slipping in complaints about corruption,

calls for reform or laments about China lacking a strongman leader like Mao. The government finds the protests useful, but also worries they’ll spin out of control.

International response to the 2008 and 2012 spectacles diverged. Foreign com-

mentators criticized elements of fakery in the former, such as the beautiful voice of one girl presented as belonging to another, and a North Korea–like kind of lockstep

conformity. On the whole, though, critics found more to applaud than complain about, expressing appreciation of a China presented as respecting tradition, but

eager to move forward and make friends. This year’s street displays, by contrast, have been roundly condemned.

The comparisons may be more intriguing. One parallel concerns the desire of China’s

leaders to convince domestic audiences that conflicts in society and among party factions are part of the past. The Opening Ceremonies emphasized the theme of

harmony in a country where everyone works together for common goals. The current protests likewise play up an us-versus-them stance toward Japan, helping

divert attention from the Bo Xilai scandal and its revelations about the dark side of party factionalism.

Another connection is the tendency of many foreign observers to underestimate the

diversity of China’s population. When entrancing or appalling spectacles capture global attention, commentators too often fall into the trap of forgetting how selective

a window these events provide on the thinking of a large, heterogeneous group of

individuals. The 2008 games inspired a host of comments that overstated China’s degree of uniformity. The anti-Japanese protests are doing the same.

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Zhang’s 2008 production inspired many generalizations about the Chinese, including claims that all share an intense admiration for Confucius and respect for their country’s

ancient history. This line of thinking also informed high profile books published in the wake of the Games, such as When China Rules the World and Henry Kissinger’s

On China. The sense conveyed was that, leaving aside restive ethnic groups such as Tibetans and Uighurs and some daring dissidents, the Chinese people are on the same page when it comes to beliefs and the past. This isn’t so.

For instance, while many Chinese admire Confucius, many prefer Taoist sages,

frequent Buddhist temples, or have always been or recently become Christians. Yes, some Chinese have a reverential attitude toward the distant past, but many couldn’t

care less about events that happened before they were born, let alone millennia ago. The Chinese were not even on the same page about the Opening Ceremonies. Many liked it but, as Geremie Barmé noted at the time in China Beat, some intellectuals labeled its treatment of China’s past as disappointing: One lamented looking forward

to a “banquet” of delectable historical morsels, only to get a “hot-pot” of mishmash.

And writing in The Diplomat, Susan Brownell stresses that in China, as in the West, the show’s similarity to a rigid North Korean state-run spectacle became an issue.

Generalizations about Chinese people tend to get more play than they deserve.

Sparking concern just as the recent anti-Japanese outburst began was a passing comment in an otherwise admirable New York Times op-ed by political scientist Peter Gries, which referred to “most Chinese” feeling that “the Japanese are ‘devils.’”

Yes, the character for “demon” is embedded in a term for the Japanese sometimes used in China, and patriotic education drives do go to great lengths to keep alive

the memory of the Rape of Nanjing and other historic acts of Japanese aggression. It’s a big leap, though, to conclude that most Chinese view all Japanese as less than

human. Many Chinese are capable of being appalled by what Japan’s soldiers once did in China without assuming that all Japanese are devilish.

The recent protests have involved just a fraction of the population of any Chinese city, and people joined marches for varied reasons – visceral hatred, just doing their

job, specific anger over Tokyo’s actions vis-à-vis the disputed islands, or eagerness to participate in a protest of any kind.

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Some Chinese are critical of the anti-Japanese protests. Novelist, racecar driver

and blogger Han Han clearly is. He published a powerful essay in 2010 about the hollowness of that year’s partially orchestrated anti-Japanese protests and has just written a sequel mocking the notion that smashing Toyotas proves one’s patriotism.

Each of his posts is read by roughly a million people, and he’s not the only popular writer satirizing the protests.

A recent Atlantic.com article by Helen Gao describes an illuminating online poll. Chinese readers were asked this summer what citizenship they’d prefer for a child born on the disputed islands. The comment thread for the poll suggests that respondents weighed patriotism against a desire for their offspring to enjoy free expression, clean

air and safe food. While many answered that they’d like this imaginary child to be

a PRC citizen, more preferred that their offspring grow up Taiwanese or Japanese. We can learn about China from spectacles. If staged or simply permitted by the

government, they offer insights into leaders’ thinking. If participants choose to join,

we get clues about beliefs and passions. Equally revealing, though, are the debates

taking place in dorm rooms and teahouses, on street corners and online, which are

wide-ranging and undermine the notion, promulgated by the Communist Party and some foreign commentators, that nearly everyone in China shares a unified worldview. Irvine, 24 September 2012 Jeff Wasserstrom is the author of China in the 21st Century: What Everyone Needs to Know, co-editor of Chinese Characters: Profiles of Fast-Changing Lives in a Fast-Changing Land, Asia editor, Los Angeles Review of Books; Chancellor’s Professor and Chair, History Department, University of California at Irvine; and editor, Journal of Asian Studies.

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Health and Environment

From the moment humans learned to light a flame, nature has retreated more than it would have from wildfire alone. Civilization expanded by using stored energy from

the sun in the form of fossil fuels to obtain food and shelter and propel vehicles. The consequences of the increasing connectedness of communities and countries have also brought greater exploitation of resources along with the resultant pollution.

The growth of countries and improvement of living standards due to industrial development and the transportation revolution, have also resulted in the buildup of

greenhouse gases. Globalization of the 21st century is marked by growing concerns

about global warming and irreversible climate change, threatening species and ultimately human civilization. Fast- depleting water tables resulting from population growth and industrialization are already grave concerns.

Increasing trade and travel have allowed pathogens to travel with humans, unleashing pandemic disasters like the Black Death or Spanish flu, causing tens of millions of deaths.

AIDS arose in Africa and then quickly spread throughout the world. Increasing integration of the globe brought the first pandemic of the 21st century – SARS. Troubling

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environmental conditions, like air pollution and ultraviolent radiation from holes

in the ozone layer, threaten cancer and other illnesses. Rising temperatures spur mosquito-borne diseases like dengue, meningitis and malaria.

Rising industrialization, demand for improved living standards, prosperity and

livelihoods are linked with energy consumption and a wasteful way of life. Attempts

to control any of these are often regarded as threats to economic growth. Unlike the gradual damage caused by pollution and rising temperatures, hard-hitting natural disasters are prompting questions about whether economics should trump environmental protection. Awareness is building about the consequences of nuclear

disasters, storm surges and rising seas, oil spills – problem after problem flowing over borders at tremendous economic costs.

Growing awareness about the inter-related issues of clean energy and public health

has provided opportunities for governments to pursue collaboration. It is now clearer than ever before that health and environmental problems are of a global scale and demand global leadership, investment and cooperation.

Still Not Too Late to Prevent a Doomsday James Gustave Speth Greater awareness of the seriousness of the challenge of global warming and other

environmental threats is accompanied by an emerging sense of helplessness. The task ahead appears too daunting to take on. But it should not. Despite the gravity of our predicament, the situation is far from hopeless. Solutions, including the

policy prescriptions and other actions needed to move forward, abound. We need but use them.

It has taken us time to realize that the premier environmental challenges are the global-scale ones. Throughout the 1970s, the US worked exclusively on domestic

environmental issues, and we made good progress. So the realization around 1980 that even larger challenges were massing on the global front came as a rude awakening. Climate change, devastation of ocean fisheries, deforestation in the tropics, loss of species, land deterioration and other unwanted processes were occurring on

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a frightening scale and pace. We were building a fool’s paradise here in America by concentrating on local environmental concerns while ignoring these global-scale ones. Beginning in the 1980s governments acknowledged these larger issues and the need

to address them. Measures were put in place, principally broad treaties framed by the problems and not aimed at their underlying drivers. The steps that governments

took over the past two decades represent the first attempt at global environmental governance, and it’s an experiment that has largely failed.

The disturbing trends that motivated the international community 20 years ago

continue today essentially unabated: 36 nations lost 10 percent or more of their

With an emerging

and about a fourth of all land is degraded to a degree sufficient to reduce its pro-

ment of citizens and

population growth. Acid rain and smog on a regional scale are damaging plant and

not lost for saving the

forest cover in the 1990s. About three-fourths of the world’s dry lands are degraded,

international move-

ductivity. Water withdrawals climbed sixfold in the 20th century, twice the rate of

scientists, all hope is

animal life over significant areas of the globe. Protection of the ozone layer is the

environment.

notable exception to this sad conclusion.

In the end, what can reliably be said about the prospect for humans and nature? A pessimist might conclude that the drivers of deterioration are too powerful to

counter, that our economy is too dependent on unguided growth and laissez-faire, that our politics cannot accommodate long-term thinking, and that our society responds only to major crises.

Weighed against this, there are hopeful signs and encouraging developments. Scientific understanding is greatly improved. Population growth is slowing, and the

proportion of the world’s people in poverty is being reduced. Technologies that can bring a vast environmental improvement in manufacturing, energy, transportation and agriculture are either available or close at hand. We are learning how to harness

market forces for sustainability, and major schemes for capping and trading emissions of climate-changing gases are emerging. International environmental law has

expanded, ready for a new phase. Environmental and other civil society organiza-

tions have developed remarkable new capacities for leadership and effectiveness. Private businesses, environmental organizations, and local governments the world

over are taking impressive initiatives often far ahead of international agreements or other government requirements. The environment is emerging as a force in business

strategic planning. Europe, at least, is providing real leadership on the policy front.

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Helpful trends outside the environmental arena are discernible. Globalization of many descriptions is eroding sovereignty. We are seeing the slow but steady emergence of

a global civil society, as likeminded organizations in many countries come together. In many places, especially in Europe, one can see psychological disinvestment in the nation-state and the strengthening of local and global citizenship. These trends should enhance prospects for international cooperation, both official and unofficial.

However, the needed changes won’t simply happen. No hidden hand is guiding technology or the economy toward sustainability. The issues on the global environmental agenda are long-term, chronic and complex, with genuine, farsighted leadership from

elected officials at a premium. We’ve not seen this leadership emerge, and we have waited long enough. What we need now is an international movement of citizens

and scientists, one capable of dramatically advancing the political and personal actions needed for the transition to sustainability. Environmentalists are often said to be part of “the environmental movement.” We need a real one.

Eventually, leaders in the political and business worlds will see that it’s in their

self-interest to promote the transition to sustainability. But the evidence to date is that, absent some new force in the picture, they will be much too late in coming to this realization.

The best hope we have is a coalescing of a wide array of civic, scientific, environmental, religious, student and other organizations with enlightened business leaders, concerned families and engaged communities, networked together, protesting,

demanding action and accountability from governments and corporations, and taking steps as consumers and communities to realize sustainability in everyday life.

A new movement of consumers and households committed to sustainable living could

drive a world of change. Young people will almost certainly be centrally involved in any movement for real change. They always have been. New dreams are born most easily when the world is seen with fresh eyes and confronted with impertinent questions. The internet is empowering young people in an unprecedented way – not just by access to information but by access to one another and to a wider world.

An immediate priority should be to get the United States back into the game with

Europe and Japan. In the long run, the United States being an outlier in environmental policies is not helping US industry or the economy. The US is falling behind,

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for example, in environmental and energy technology – a big business – as well as new approaches to environmental protection, both areas where the United States once had the lead. More fundamentally, the world will not get far in this field without

American leadership. Not only is the US a big source of problems, as with climate change, but it is also essential to cooperative solutions, as with reversing resource deterioration in the developing world. The world needs a United States that leads by example and diplomacy, with generosity and compassion.

A phenomenal expansion of economic activity is projected for the decades immediately ahead. Down one path, this growth can protect, regenerate and restore the

environment. It can provide sustainable livelihoods for the world’s poor and lead

to large improvements in quality of life for all. There is still world enough and time to realize this future. But it will not be won without a profound commitment to

urgent action. President John F. Kennedy often told the story of the aged Marshal

Lyautey of France debating with his gardener the wisdom of planting a certain tree. The gardener argued, “It will not bloom for decades.” The marshal replied, “Then plant it this afternoon.” New Haven, 10 March 2004 James Gustave Speth, dean of the Yale School of Forestry and Environmental Studies, served most recently as administrator of the United Nations Development Program. He founded the World Resources Institute and co-founded the Natural Resources Defense Council. This article is adapted from his latest book, Red Sky at Morning: America and the Crisis of the Global Environment, Yale University Press, 2004.

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The Sovereignty of Disease David L. Heymann Information about infectious disease outbreaks travels today at speeds and in ways not imagined just 30 years ago. Individual countries can no longer ignore the disease

or hide reports.1 No recent infectious disease outbreak exemplifies this better than

that of Severe Acute Respiratory Syndrome, or SARS, in 2002-2003.2 Detected by

reports on the internet, the SARS outbreak demonstrated that the global community has assumed the role of reporting infectious diseases that threaten to spread internationally, aided by the ease and power of electronic communication through

the World Wide Web. The global community responded to the SARS outbreak with a rapidity and scale never before seen for an emerging infectious-disease outbreak. From the start of the SARS outbreak, networks of epidemiologists, clinicians and

virologists from around the world linked together to participate in its containment. They freely shared information among themselves and with the scientific community, identifying a new coronavirus as the cause of the outbreak, providing the best

possible guidance for patient management and defining the risk factors for infection and modes of transmission.3 Individual chains of transmission from persons

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who carried infection to countries such as the Philippines, Mongolia and Vietnam. Illustration from SARS: How a Global Epidemic Was Stopped.

In many instances the detection and response to the SARS outbreak appeared to infringe on national sovereignty, challenging the preexisting norms that countries have the exclusive right to control the information they communicate and the public

health measures they apply.4 The World Health Organization, WHO, first asked

countries to report probable cases of SARS in real time with electronic reporting. As real-time epidemiological evidence showed that persons with SARS spread the disease internationally by air travel, the WHO then asked countries to screen airline

passengers and prevent those with SARS or a history of contact with SARS from

Outbreaks of disease

traveling.

demand rapid global

Finally, as epidemiological evidence continued to show that persons with SARS

and protection.

response for monitoring

were traveling internationally and that other factors might also contribute to SARS transmission, the WHO asked international travelers to postpone travel to areas where SARS was occurring.

Despite widespread social disruption and economic loss, countries willingly collaborated in these measures of global solidarity. International travel to affected areas fell

by 50 to 70 percent, hotel occupancy dropped by more than 60 percent, and businesses in tourism-related areas failed. Bio Economic Associates of Massachusetts estimates the direct and indirect costs of the outbreak at nearly US$100 billion.

The book SARS: How a Global Epidemic Was Stopped describes these events that led to stopping the epidemic. It traces the SARS epidemic from its origins in the

Guangdong Province of China to its international spread from a hotel in Hong Kong where a doctor infected in Guangdong stayed overnight and inadvertently infected persons who then carried the virus to neighboring Asian countries and as far away as

Canada. It likewise details the epidemiology, natural history, and clinical signs and

symptoms associated with human infection using easy-to-understand terminolo-

gies that make the book useful for health workers at all levels of the health system and of interest to the general public. Through personal stories and accounts of the

outbreak, the book follows the epidemic from the initial description of an unknown

respiratory disease in Vietnam by Carlo Urbani, a public health hero who himself

became infected and died, to the last known cases of infection related to laboratory accidents in Singapore and China.

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Chapters describe meetings at the highest political level, such as a meeting of the

WHO regional director in the Western Pacific Regional Office and the former min-

ister of health of China in late March 2003 to urge more transparent informationsharing; the infection’s impact on hospitals’ ability to maintain working conditions as health workers became infected; and elaborate measures taken by some countries

to screen international travelers or quarantine those who had been exposed to infection. The book analyzes sites such as the Amoy Gardens Complex in Hong Kong, where 329 residents appear to have been infected by a series of events that led to

environmental contamination of their bathing areas and events such as Flight CA 112 from Hong Kong to Beijing, where at least 22 passengers and 2 crew members were infected by a passenger with signs and symptoms of SARS – explaining the role

in amplifying transmission of the SARS co-Virus. Illustrations show the individual chains of transmission from persons who carried infection to countries such as the Philippines, Mongolia and Vietnam.

In late 2003, another infectious agent that had first been shown to cross the spe-

cies barrier between animals and humans in 1997 – the avian influenza virus, or H5N1 – began spreading rapidly in poultry throughout Asia.5 Asian governments

have openly reported infected poultry flocks and human H5N1 infections as they

occur, keeping both their own citizens and the international community informed. While some delays are inevitable, as officials await confirmation from international

reference laboratories, nations continue to provide reports despite financial consequences in the agricultural sector and culling of entire flocks. With human-to-

human transmission of avian influenza suspected in a family cluster in one region of Thailand in 2005, the government recruited volunteers to conduct farm-to-farm searches for any additional clusters of human cases or unreported outbreaks in poultry. In China, Laos, Cambodia and Indonesia – where outbreaks likewise occurred in poultry – governments issued reports after confirmation in poultry or humans and freely shared epidemiological information from outbreak investigations. As

H5N1 spread to Europe and Africa, countries likewise reported disease in poultry,

migrating avian populations and humans. Interests of national and international

public health that became the norm during the SARS outbreak continue to prevail; they are no longer masked by concepts of national sovereignty.

The recent international spread of another infectious disease, polio, has likewise demonstrated solidarity among countries. Since 2003, the wild poliovirus has spread

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to 25 previously polio-free countries, and these countries have freely exchanged

genetic information about these viruses through the global polio surveillance network, linking each imported virus to its country of origin. The shared information has shown that northern Nigeria and northern India are the source of the virus in

these re-infected countries, and neither country attempted to deny this fact.6 China recently reported another infectious disease, an outbreak of Streptococcus suis in

pigs that then spread among 206 humans with 38 deaths, and freely shared detailed

information about the investigation and control activity. 7 Such solidarity in surveillance and response affirms that the new standards for reporting and responding

to public health events established during the world’s response to SARS continue to prevail over issues that might once have been considered the sole domain of a sovereign nation.

SARS, polio and the H5N1 will not be the last new infections that flourish amid the conditions in a globalized world. Unlike SARS, emerging infections do not always transmit so easily from human to human. Some will emerge, cause illness in humans and then disappear, perhaps to recur at some time in the future. Others will emerge,

cause human illness and transmit for a few generations, become attenuated, and likewise disappear.

And still others will emerge, adapt to human populations and become pandemic or

endemic, and remain intrinsic parts of our human infectious disease ecology. SARS: How a Global Epidemic Was Stopped shows how our globalized world set new norms

and standards in infectious disease reporting and response, and provides many of the lessons needed to face these future public health assaults.

1 Heymann DL, Rodier G. Hot Spots in a Wired World. WHO Surveillance of Emerging and Re-emerging Infectious Diseases. Lancet, 5 December 2001, 1: 345-353.

2 Heymann DL, Rodier G. Global Surveillance, National Surveillance and SARS. Emerging Infectious Diseases, 2004, 10 (2): 173-175.

3 Heymann DL, Rodier G. SARS: A Global Response to an International Threat. The Brown Journal of World Affairs, Winter/Spring 2004, X (2): 185-197.

4 Fidler DP. SARS, Governance and the Globalization of Diseases. Plagrave Macmillan, 2004:50-60.

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5 World Health Organization. Situation Updates, Avian influenza. http://www.who. int/csr/don/archive/disease/influenza/en

6 Global Polio Eradication Initiative. Global Case Count. http://www.polioeradication.org/casecount.asp

7 World Health Organization. Outbreak Associated With Streptococcus suis in Pigs in China: Update. http://www.wpro.who.int/media_centre/news/news_20050816.htm Geneva, 6 June 2006 Dr. David L. Heymann is director of the Communicable Diseases Program at the World Health Organization.

Is Water the Next Oil? Rohini Nilekani Is water the next oil? Motives behind the question vary, depending on who asks the

question. Those who see water as a future core commodity – therefore as profitable a prospect as oil – pose the question to create the right market conditions for

water trade. Those who see the potential for conflict arising from scarcity compare diminishing freshwater to oil’s depleting reserves. Those who see an environmental

threat from mismanagement of water see parallels with the abuse and waste of oil. So there are lessons to be learned from how we have managed oil on this planet over the past century and more. The oil crisis confronting the world today is much like the looming crisis in water, with depleting supplies, unequal distribution and access,

and the inevitable specter of rising costs and increasing conflict around the sharing of this vital natural resource. As with oil, water exploitation adds to intergenerational debt that will be hard to repay. The uncontrolled, rapacious exploitation of oil has led to unintended consequences, and if we continue on a similar trajectory with water, the oil crisis will seem like the trailer of a horrible disaster movie.

Ironically, our untrammeled use of oil fuels the crisis in water. Burning of fossil fuels

has led to global warming, the melting of glaciers and ice caps, and early snowmelts

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that cause flooding in areas that can hardly bear another burden. And it may also

cause the climate to fluctuate in a way that brings too much rain in some places, too little in others. In addition, the move to replace oil with biomass-based fuels will intensify water use, not so much for sustaining our life and this planet as to sustain our lifestyles.

All this is worth thinking about at the individual level, because if change really happens, it must begin within the individual consciousness.

The challenges are immense. The first, of course, is that the earth has a finite amount

of usable water, despite it being a beautiful blue planet. The 2.5 percent of usable planet water is in a precarious balance with glaciers and fossil groundwater remaining

intact. Another challenge is the inefficiencies and inequities in how water is used.

Agriculture consumes 70 percent of the world’s water, much of it to produce what we eat. There is tremendous wastage in our agricultural processes, though the levels are somewhat stable or even improving slightly.

Demand for domestic water has risen sharply over the century, which again brings us back to questioning what we as individuals can do. The sectoral demand on water

is increasing rapidly within both industry and domestic settings. Competing demand

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will create pressure on the agriculture sector, perhaps leading water-scarce regions to produce less food and outsource food production to water-rich countries, spurring concerns about the food security of individual nation-states.

Poverty, power and inequality are at the core of the water issue and not scarcity, as the UN Development Programme Human Development Report 2006 powerfully

argues. And herein lies the rub. Since we have taken water for granted, we must face the alarming inequality in safe water. More than 1.5 billion people lack access to adequate water and sanitation. If poverty is bad, then poverty without water is hell

Population growth, pollution, waste and global warming all threaten the world’s water supply.

on earth. Recently, the Millennium Development Goals have supplied a normative framework for governments to prioritize how water is delivered. Still, not enough

money or resources flow into this sector. Worldwide, only 5 percent of all interna-

tional aid goes into water and sanitation. We are still far from universal access to good water for life. And this inequity instigates the raging debate around water today. Another critical problem for the water sector is wastewater and pollution of our

ponds, streams, lakes and rivers. No one can estimate the costs to clean our water resources and how much of the damage is irreversible.

So maybe it is time to apply the lessons learned from the management of another natural resource – oil. It’s safe to say that with oil, among other mistakes, we have

seen overuse; gross inequity in benefit sharing across both geography and time of

what is essentially a common property; poor environmental management; an overarching supply-side focus; the use of technology to speed unsustainable extraction; and the lack of effective global governance.

For water, therefore, we need to focus on demand management and universal access, affordable pricing, pollution control and source sustainability. We need to use

technology not to extract water more efficiently from the bowels of the earth, but to

replace the use of water with other means where we can, especially to reverse our use of freshwater to carry human waste.

And we need urgently to set up more appropriate platforms for negotiation and

regulation that are truly participatory across the globe. These steps are much easier written about than done. So where should one begin?

Already some work is underway to restore good practices or generate new ones: One

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example is that of reversing the practice of using water to flush and carry human waste. European cities such as Oslo have introduced vacuum-flush toilet systems

that use little or no water. Gaining ground in South Asia is eco-sanitation, which provides a viable alternative to water-borne sewage and also converts human waste into nutrient-rich fertilizer.

For source sustainability, New York City has made a creative breakthrough by supporting the preservation of forests in the watersheds of the Catskill Mountains, after

finding it more cost-effective to preserve the watersheds that supply the metro’s drinking water than to build costly treatment and source-augmentation plants.

Demand management is perhaps the trickiest issue of all. How do we convince

ourselves to use much less water? Perhaps the urban consumer is the key to solving some of the problems.

Urbanites are removed from the natural world, and urban demand fuels new and unsustainable uses of water. And yet, the urbanite is arguably more integrated with the global economy and increasingly understands its pitfalls. If there is to be a change in human consciousness, the urban mind is fertile ground.

We must focus quickly on making the invisible visible. Much of our incompetence

stems from a lack of awareness. We need to reduce the knowledge gaps if water consumers are to make more virtuous choices about products and lifestyles that abuse water.

But if such inquiry is to deliver creative solutions, then people must internalize

the locus of control. They must see themselves as not only part of the problem but also part of the solution. As a Chinese proverb says, “Tell me, I forget. Show me, I remember. Involve me, I understand.”

Among the most important lessons to be taken from the history of oil is not taking essentials for granted. Conserve oil, but also conserve water. If our Hummers are a

red flag in oil, maybe our Jacuzzis are the same for water. A new universal water ethic could eliminate our lethal bottleneck of overpopulation and wasteful consumption.

Can the water crisis be prevented from becoming a catastrophe? Can we all change the way we think of water? Now that we know every drop counts, can we count every

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drop? We will soon find out. And it will be bitter irony if our freshwater reserves are depleted before our oil wells have run dry. Bangalore, 31 May 2007 Rohini Nilekani is chairperson of Arghyam, a charitable foundation that supports a safe and sustainable global water supply.

In Search of Common Sense Bo Ekman The process of globalization has transpired for ages, but during the past century

its development grew exponentially, paced by population explosion, technological revolution and economic hyper-growth. However, as people, economies, societies,

cultures, production systems are increasingly more intertwined, we find ourselves without effective political mechanisms to create solutions for the whole. While the new problems do not recognize any national boundaries, every nation has sovereign power over its own territory to pursue its own interests.

The Tällberg Foundation thus proposes a project to put forward new frameworks for international negotiations, new constructs for agreements and, consequentially, new or changed institutions for global governance.

The initial objective is to develop recommendations for the long-term viability of humanity’s relationship with nature. We will use well-tested planning methods used

by the most successful companies to develop strategies and structures for global operations: advanced planning in their long-term development, experiments and prototypes, research and product development combined with risk analyses.

Such planning is missing in the international systems of negotiations that should guarantee welfare and security for all. Responses today emerge based upon the capriciousness of spontaneous crises that erupt from changes in the balance of

power. This is not a well-reasoned approach. Environmental and climate issues are

themselves, by definition, systems problems. No one nation can solve the climate

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problem; no one nation controls the solution to “its” water problem. Unfortunately,

the world now relies on a system that thrives on economic growth. To question the

idea of growth is a modern taboo. That growth should have limits is not in our time a politically or economically acceptable perspective, but environmental crises and climate change would say otherwise. Current trends of growth destabilize our future.

The political rhetoric of the day is that continued high global economic growth is compatible with avoiding the effects of climate change. This has not been proved. Our lack of knowledge is our greatest risk.

All serious research demonstrates that our one planet does not suffice to meet

All parties must be part

one technology, no one policy, no one set of values or single nation, can restore or

political agreement that

of the Earth. China cannot do it nor the US or the EU. Perhaps least likely is the

development that is

the growth ambitions of everyone in the current technological infrastructure. No

of the process toward

guarantee the future of the environment, security and livelihoods for all the people

can lead the way toward

United Nations.

truly sustainable.

The American invasion of Iraq clearly demonstrated that the institution does not have the authority to limit a superpower’s ambition to maximize its own interests.

But all parties must be part of the process toward political agreement that can lead the way toward development that is truly sustainable.

The new reality born of globalization is “the territory of the whole.” It is a commons. Yet today we lack political debate about how to organize our global society. Instead,

distrust among nations and groupings of nations has grown steadily for many years

within multilateral organizations, particularly the UN and WTO – with conflicts

among poor and rich nations, between the North and South, East and West, among various religions, ethnic and cultural spheres.

There is also a sense of resignation in the international system over the ever-increas-

ing gap between expressed promises, agreements in force and results delivered. A plethora of examples can be found among environmental issues. Despite more than

500 international treaties now in force, it is a scientifically established fact that the sustainability of Earth’s ecosystems continues to be undermined.

The combination of economic growth and globalization has engendered an intensification and exploitation of natural resources unparalleled in history. The technological

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infrastructure, primarily energy production, is not compatible with the growth that

6.6 billion people see as their vision of the future. The problem is that too many in too short a time strive after too high a material standard of living relative to the

planet’s capacity for delivery. We are caught between our own material ambitions and the Earth’s supportive capacity. That is our dilemma.

Within 30 years the world’s population will grow to 9 billion. This population will place the ecosystem under an enormous stress. Economic growth and thus the

accompanying exploitation of natural resources must not take place under any

circumstance at unacceptable levels. “Business as usual” is, with today’s knowledge, not an alternative. We must discover new formulas for politics, economy and

business models: “Business as sustainable.” Today’s private and public insurance systems are designed to accommodate the risk landscapes of the past century, not those of the future.

Water is but one example of a resource with alarming imbalances throughout the

world. In northwestern Europe, parts of North America and South America, water is plentiful.

However, in large areas of Africa, the Middle East, Pakistan, India, China and western and southwestern US, water is approaching critical levels. The shortages are greatest in the most densely populated areas. Today, 1.2 billion people do not

have access to safe freshwater, and 15 percent of Earth’s rivers do not reach the sea. In areas of China, the situation is acute. Groundwater levels are sinking in many regions of the world. Global warming will hasten this process as will changes in

rainfall patterns. Of all the water on Earth barely 2.5 percent is freshwater, and of this amount less than 1 percent is directly accessible to humans and animals in lakes,

rivers, reservoirs and aquifers. It’s not altogether unlikely that we will be forced to exploit Greenland, for example, to meet the growing human need for freshwater.

The struggle for natural resources will harden geopolitical tensions, with resulting military conflicts and terror. The conflicts will appear first over access to freshwater

in the Middle East, Africa and Asia. In our time there are no longer new worlds to which millions could once emigrate. In the worst case, a drawn-out fight for survival awaits us, as the international systems of economy, finances and logistics erode.

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Efforts are underway to develop new forums to manage globally shared issues,

including the G8 summits, the European Union and the African Union, the Asean grouping, along with many international agreements and conventions.

The global problem areas include climate and ecosystem effectiveness, energy provi-

sion, poverty eradication and equity, economic growth and technological development, and security.

Management of immense global-systems issues is too often fragmented, handled from the perspective of solitary nations’ relative economic and military strength. In this age of globalization, the world needs new principles and models to meet the fast-

growing mutual dependencies. The Tällberg Forum 2008 will pursue new systems

for sustainable and secure development upon which humanity ought to agree. The Tällberg Foundation will organize a series of workshops in seven national capitals in

cooperation with diverse partners. The full potential of the internet will be explored

for debate, with a goal that the process will develop global public opinion that does

not stem from individual political, national or economic interests. The project will be a “test track” for new prototypes that manage the problems that yesterday’s models no longer can manage.

One Swedish tradition might serve as a model: Allemansrätten literally means

“Everyone’s Right” or “Common Right.” Not a law, it is a centuries-old principled practice protected by the Swedish Constitution: Everyone shall have the right of

access to nature. You may go anywhere as long as you heed the common sense of

freedom and responsibility concisely expressed in the phrase, “Do not disturb, do not destroy.”

Stockholm, 12 October 2007 Bo Ekman is chairman of Tällberg Advisors and founder and chairman of the Tällberg Foundation.

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Global Climate Change: Taking the Battle to the Campus Richard C. Levin We are at last awakening to the reality of global climate change. The report this month by the worldwide team of scientists of the Intergovernmental Panel on Climate

Change stated that global warming is unequivocal and that most of the warming over

Governments may dawdle, but universities and other institutions can take the lead in reducing greenhouse gas emissions.

the last half century is likely due to greenhouse gas emissions from human activity.

No previous report of the respected panel, which was formed in 1988, has been so

conclusive. There is less certitude about what to do and who will take the initiative. Governments and corporations are obvious candidates for leadership in confront-

ing the threat of global climate change. But there is also need to take the battle to university campuses, where the world’s future leaders should join the fight by taking measures that communities at large will be asked to adopt.

Without dramatic action over the next half century, we face the threat of rising sea levels and massive economic disruption. Substantial costs cannot be avoided without a dramatic effort to reduce the emission of greenhouse gases.

Recently, 10 large corporations and four leading environmental groups announced support for US legislation to introduce a cap-and-trade system for carbon-dioxide

emissions. The benefit of such as a system is that it produces a tangible limit on emissions – they are “capped” – while allowing the parties within a sector or in-

dustry whose emissions have an overall cap to buy and sell, or “trade,” portions of that total emissions allowance.

Another way to curb emissions is for governments to impose a “carbon tax” on the

companies or individuals that produce emissions. A tax will produce an uncertain

amount of environmental benefit, but may be more practical for reaching millions of households than a cap-and-trade scheme, which has been effective in regulating the sulfur-dioxide emissions of large entities such as public utilities.

The call for legislation is welcome news, but not enough. Our governments have failed to take effective action so far. The US is most deficient, but even among the

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governments that signed the Kyoto Agreement, most have not taken sufficient steps to ensure that national targets will be met by 2012.

We cannot wait for our governments to act, though they must act if the problem is ultimately to be solved. Large organizations all over the world with the power to act

independently should take matters into their own hands and begin to reduce greenhouse gas emissions now. We need to demonstrate that resisting global warming is

feasible and not prohibitively expensive. By showing leadership in action, not just

in words, we will make the necessary response by governments much more likely, in part because they will be more confident that significant laws and policies in response to climate change will be accepted by those they represent.

Several large global companies, including General Electric, have started down this path, and so has Yale, along with other universities. I have called upon my colleagues

at some of America’s best-known institutions to join Yale in committing to ambitious greenhouse gas reduction programs of their own.

At this year’s World Economic Forum in Davos, I met with the leaders of 23 global

universities and urged them to join this effort. Universities are a natural place to

demonstrate that global warming can be resisted and its adverse long-term consequences avoided. It is, after all, our scientists who identified the causes and effects of climate change and who research ways to address it. And it is our students who, in

the coming decades, will have the responsibility for ensuring that the opportunities

for the health and prosperity of future generations will be no less abundant than they have been for the generations that preceded them.

Here’s why universities must act today. Collectively and decisively, we can set a

powerful example for the next generation of leaders who will increasingly interact with one another on global issues.

We can demonstrate that it is possible to reduce emissions dramatically, even while

accommodating the continuing growth and development of our campuses. If we succeed, so can others.

At Yale, we committed in 2005 to reduce our greenhouse gas emissions to 10 percent

below the 1990 level by the year 2020. This represents a 43 percent reduction from

our 2004 level, even while our plans call for 15 percent growth in our physical plant.

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We intend to reach this ambitious goal by a combination of strategies, including: •

Conservation within existing buildings,

•

Sustainable construction of new buildings,

•

More efficient production and distribution of energy on campus – Yale

produces its own steam, chilled water and two-thirds of its electricity by co-generation, •

Use of energy from renewable sources on campus,

•

Direct participation in off-campus production of renewable energy.

We have already reduced campus greenhouse-gas emissions by 6 percent in one year. Among other measures, we have installed more efficient controls and sensors

to regulate heat, air conditioning and lighting; we have begun to modify our power plant and distribution systems for greater efficiency; and we run our campus bus

fleet on a blend of ultra-low-sulfur diesel and carbon-free biodiesel fuels. A simple step we have taken is keeping our buildings a couple of degrees cooler in winter and

warmer in summer than in the past. Students have supported our commitment on many fronts. As community members, students reduced energy use in our residential colleges by 10 percent in 2006; as researchers, they contribute to the dialogue

on climate science; as activists, they continue to raise the question as to how our universities ought to assist in shaping a vision for the future.

The good news is that many of the investments required to reduce carbon emissions

actually save money in the long run. The astonishing news is that we estimate that

we can reach our 2020 goal – a 43 percent reduction in emissions from current level – at a cost that is below 1/2 of 1 percent of our annual operating expenses.

Any organization can afford this level of sacrifice to ensure the future of the planet. Yale’s strategy depends on conservation, renewable energy and participation in carbon-offset projects in roughly equal measure. All three approaches can be part of

any organization’s strategy. It is important, however, that carbon offsets produce real

environmental benefit. Carbon markets in the US, in the absence of governmentally

imposed caps, are immature. Carbon offsets, sometimes called “renewable energy

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certificates,” can currently be purchased at prices well below the cost of creating

incremental supplies of renewable energy. As long as this persists, purchasing offsets in the market will have no environmental benefit. Thus, at Yale, we only count offsets created by direct investment in new sources of supply.

For institutions in developing countries, where growth needs to be more rapid, a reduction to 10 percent below 1990 levels is too much to expect. But a 10 percent

reduction below today’s levels, or even a no-growth-in-emissions policy, would be a reasonable and constructive aspiration. On a global level, it would be unreasonable

and unjust to maintain the wide disparity in nations’ per-capita emissions well into the future, but a worldwide collective effort in greenhouse gas reductions must still

be the goal. Universities are the natural leaders of such an effort, but other nonprofit organizations, municipal governments and for-profit businesses should heed the call as well. Our future depends on it. New Haven, 26 February 2007 Richard C. Levin is president of Yale University.

A Carbon-Constrained World Chandran Nair Mitigating climate change is the most daunting challenge of this century. Fortunately,

years of effort and calls to action by environmental experts and other specialists are making an impact on popular attitudes. Less fortunately, most of us still grope in the dark trying to find a credible framework to structure an adequate response.

Much faith has been placed in market-based solutions such as carbon-emissions trading. But while such measures may lead to curbing – even reducing – emissions

in developed countries, they will almost certainly fall flat in developing countries, especially the fast-growing economies of China and India, where 40 percent of the

global population lives. The reality of such measures is that the rich nations demand sacrifices of people who are scratching a miserable living. Even in booming China, almost half the population, more than the US or European populations, still

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struggles to get by on US$2 or less a day. No government, democratic or otherwise,

will adopt complex global trading schemes run by foreign interests and risk dashing their people’s economic aspirations.

But laying blame elsewhere or invoking inequities to defend inaction will not change

the fact that relentless consumption – on the march in every corner of the world – can only increase the use of fossil fuels. We must look for other answers.

One such area which has received almost no attention to date is the behavior of the

Energy consumers and producers bear moral and environmental responsibilities – and cannot neglect future generations.

world’s principal fossil- fuel producers. These can be divided in various ways – between

principal crude-oil producers and exporters including Middle Eastern states such as Saudi Arabia, Iran, Kuwait and the United Arab Emirates, plus Russia, Mexico,

Canada and Venezuela, and the principal coal producers and exporters, including China, the United States, India, Russia, Australia and Indonesia. These can also be divided another way – between those with high per-capita carbon-dioxide emissions and those with low emissions.

Unsurprisingly, those with high emissions are also rich – the US, Australia and

Canada plus the wealthy states of the Gulf, Saudi Arabia, the United Arab Emirates, Qatar and Kuwait.

Put simply, among the wealthy members of the world’s core group of fossil-fuel

producers are the world’s worst carbon-dioxide producers. Other countries may be rich, but tend to use far less fossil fuels and energy per capita: Japan, for example,

the world’s second largest economy, ranks 32nd in terms of per-capita emissions, far below the world’s largest economy, while the US ranks 10th, with the top nine positions dominated by small rich nations.

While the populations of these countries combined amount to less than 10 percent

of the world population, their per-capita carbon-dioxide emissions range from five to 20 times that of the world’s poorer countries, including China and India.

These countries have a responsibility – moral and environmental – to cut emissions.

They should commit to reducing per-capita emissions by half as soon as possible and strive for the current global average, given that some leading scientists predict the world already approaches the safety threshold of CO2 concentrations in the

atmosphere. This is not a pipe dream. Japan’s per-capita emissions – 9.8 tons – are

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half those of the US and Canada’s total of 20 tons, and a quarter of the UAE and Kuwait’s total of 38 tons.

Sadly, we see the opposite behavior, with excesses unfolding in places like the UAE, with extreme urban development embracing indoor ski slopes to underwater hotels.

And inhabitants of the western Australian city of Perth, on the back of a resources boom, now have the largest “ecological footprint” per capita of any city in the world, 9 hectares per person. The ecological footprint is defined as the economic, social and

environmental costs associated with resource consumption, land use and impacts on the bio-sphere. Such extravagance is possible only because of super-cheap energy and unrestrained resource exploitation. In Abu Dhabi, electricity costs 3 cents

per kilowatt hour – compared to 40 cents in Europe. Petrol, at 30 cents a liter, is cheaper than water.

So while it’s often said that environmental damage and poor decisions on sustainability are due to the lack of funding as governments make a tradeoff with the need for economic growth – the truth is the exact opposite.

It isn’t China or India that should be seen as the worst culprits when it comes to

climate change, but some of the world’s richest states, which also happen to be well endowed with fossil-fuel resources. We need to remind these energy-producing

countries that they have a responsibility to strike a balance between their desire to keep driving economic growth and an awareness that decisions taken today may well compromise the ability of others and future generations to share in the common good.

On a domestic level, these rich energy producers must make dramatic changes in the

way they view environmental protection and sustainable-development initiatives. This means pricing oil and other energy sources properly within their own borders and curbing excessive use.

Limits can be achieved only by tough and even draconian regulatory policies en-

forced by individual countries. Measures could include the use of creative financial instruments implemented locally to incentivize carbon reduction and thereby also allow for deployment of appropriate technology.

And on an international level, these producers must assume greater responsibility towards the stewardship of their resources. Yes, oil and other fossil fuels have been

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key to the world’s economic growth over the last two centuries, but simultaneously it has taken us to the brink of climatic disaster.

Given that the main producer nations do not need to generate more wealth from

energy exports to sustain their populations, a limit on exports would be a prudent way to discourage rampant consumption globally. It would also encourage those that need more energy for economic growth to focus on greater efficiency and developing alternative sources, including nuclear energy.

Taking the “producer responsibility” principle one step further, especially at a time

when oil prices keep hitting new record highs, we should also require energy producers to put part of their fossil-fuel revenues towards aggressively developing and commercializing technologies to reduce emissions, capture carbon dioxide and

even make renewables such as hydro, wind and solar as well as nuclear energy viable alternatives for global use. Such initiatives must move beyond embracing the

gimmicks around sustainability such as the public-relations blitz surrounding the pursuit of carbon-neutral cities in the Gulf countries or emissions-trading schemes of Europe and the US.

Channeling funds to global-sustainability initiatives could occur by implementing a

global tax on key producers, for creating a fund that would support development of cost-effective, efficient, clean forms of energy. Other uses for the fund could include

implementing conservation measures in poor countries or even addressing chronic

problems of underdevelopment – a much better use of excess wealth than building futuristic cities or snow resorts in the desert.

The Gulf nations, the US, Canada and Australia should take the lead in supporting,

creating and managing this fund with the help of wealthy nations such as Japan and the EU. Acting together, these energy-producer nations have the financial muscle to make a huge difference – and can go a long way towards helping the world put

together an overall framework to coordinate responses from around the world and

allow us to stop thinking in a piecemeal fashion. The threat of climate change must be addressed in a just and effective manner. Hong Kong, 3 July 2008 Chandran Nair is founder and CEO of the Global Institute for Tomorrow.

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Can We Reverse Global Climate Change? Jim Hansen Western governments are pretending to take actions that alleviate climate change.

But their cap-and-trade approach is a minuscule tweak to business-as-usual. Cap-

and-trade is a Temple of Doom for life on our planet, worshipped by lawmakers who are afraid to confront fossil special interests. What is needed is a gradually

rising fee on the carbon content of oil, gas and coal, with proceeds distributed fully

to the public. This will spur innovation in efficiency and carbon-free energy, while providing the public the funds needed to transition toward the clean energy world of the future.

Carbon tax and dividend is the solution to reducing reliance on coal, gas and

Cap-and-trade is supposed to answer climate change by setting targets for emission or capping it by issuing permits to emitting industries. To begin with, cap and

trade is a misnomer. A cap increases the price of energy, as a tax does. It is wrong and disingenuous to try to hide the fact that a cap is a tax. Other characteristics of the cap approach is that because of price volatility it enriches millionaires on Wall Street and other trading floors but offers the public little. Offsets are usually allowed

and often poorly substantiated and verified, creating more uncertainty. The case in point is the European experience: they spent $50 billion on carbon trading, their CO2 emissions actually increased, and the largest payment went to a German coal-

burning utility! Cap-and-trade is fraught with opportunities for special interests, political trading, obfuscation, accounting errors and outright fraud.

As with any law, caps can and will be changed, many times, before 2050. The fact is that national caps have been set and are widely rejected. When caps are accepted,

they are often set too high – as happened with Russia. If a complete set of tight

caps were achieved, global permit trading would likely result in a Gresham’s Law effect – “bad money drives out good.” Some countries will issue too many permits or fail to enforce requirements. These permits, being the least expensive, will find their way into the world market and undermine the world cap.

Caps are also extremely hard to enforce, as demonstrated by the Kyoto Protocol.

In some cases, even with highly respected countries such as Canada, the extent of failure to meet commitments was enormous. The biggest problem with a cap tax

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is that it doesn’t solve the problem. The public soon learns that it is a tax. And be-

cause there is no dividend, the public will revolt before the cap tax is large enough to transform society.

For these reasons and because they believe a cap-and-trade approach will continue

to stymie international negotiations, many of the top American economists from across the political spectrum vigorously oppose cap and trade. Notable among these are William D. Nordhaus, Joseph E. Stiglitz and N. Gregory Mankiw.

A successful plan must recognize geophysical constraints and economic reality.

The geophysical fact is that most of the remaining fossil fuels must either be left

in the ground or used only where the CO2 is captured and returned underground. The economic reality is that we will not move to an era beyond fossil-fuel emissions until a substantially higher price is applied across-the-board to all carbon

fuels, such that efficiency and carbon-free energies rapidly increase. In addition, I contend, public acceptance of the needed rising carbon price demands complete transparency and fairness.

It is easy to speak of a planet in peril. It is quite another to level with the public

about what is needed, even if the actions are in everybody’s long-term interest. It seems they would not dream of being honest and admit that an increased price for fossil fuels is essential to drive us to the world beyond fossil fuels.

How can emissions be reduced? With policies similar to those being promoted

elsewhere: mileage efficiency standards for vehicles, power-usage standards for

appliances and electronics, retrofitting of residential and commercial buildings for

efficient heating and cooling, urban revitalization promoting walkable and bikeable communities, land-use policies encouraging proximity over sprawl, and wholesale conversion of the electricity energy source from fossil fuels to carbon-free solar and wind resources.

A higher carbon price is needed to transform consumer and lifestyle choices to make zero-carbon energy and energy efficiency less expensive than fossil fuels;

to spur business investment, innovation and associated economic activity; and to

move the nation to the cleaner environment beyond the fossil fuel era. The carbon price will need to be significant, and the public and businesses must understand

that it will increase in the future. It should be applied to all fossil fuels – oil, gas

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and coal – uniformly at the source, say, the first sale at the mine or port of entry.

A price on emissions that cause harm is essential. Yes, a carbon tax. A carbon tax with a 100 percent dividend is needed to wean us off fossil fuel addiction. A taxand-dividend mechanism would allow the marketplace, not politicians, to make investment decisions.

Coal is not only the largest fossil fuel reservoir of carbon dioxide, it is the dirtiest

fuel. Coal is polluting the world’s oceans and streams with mercury, arsenic and other dangerous chemicals. The dirtiest trick that governments play on their citizens

is the pretense that they are working on so-called clean coal or that they will build power plants that are said to be capture ready in case technology is ever developed to capture all pollutants.

A carbon tax on coal, oil and gas is simple, applied at the first point of sale or port of

entry. The entire tax must be returned to the public, an equal amount to each adult, a half-share for children. This dividend can be deposited monthly in an individual’s

bank account. A carbon tax with a 100 percent dividend is non-regressive. On the

contrary, at low- and middle-income people will find ways to limit their carbon tax and come out ahead. Profligate energy users will pay for their excesses.

Demand for low-carbon high-efficiency products will spur innovation, making products more competitive on international markets. Carbon emissions will plummet as energy efficiency and renewable energies grow rapidly.

Will the public accept a rising carbon fee? Surely – if the revenue is distributed 100 percent to the public and if the rationale is well-explained. The revenue should not go to the government to send to favored industries. Will the public just turn around

and spend the dividend on the same inefficient vehicles? Probably not for long, if there are better alternatives and the public knows that the carbon price will continue

to rise. And plenty of innovators will develop alternatives. Of course, cost incentive alone is insufficient – efficiency and building standards also must be improved.

Marshaling public opinion and political will is a tremendous task, given the forces aligned for business-as-usual. In Washington there are four energy lobbyists for every

congressional representative. Political leadership is desperately needed. We must recognize our responsibility to our children and grandchildren, our moral obligation

to them and the millions of species that will suffer by our choice to take or not take

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needed actions. Cap-and-trade is the Temple of Doom. It locks in disasters for our children and grandchildren. It does nothing to preserve a planet resembling the one

that we inherited from our elders or allow continued existence of the remarkable species that cohabit Earth with humanity. New York, 14 May 2009 Jim Hansen is director of the NASA Goddard Institute for Space Studies and adjunct professor of earth and environmental sciences at Columbia University’s Earth Institute. He presented his carbon-tax proposal before the US House of Representatives Committee on Ways and Means.

Global Warming Is Real and Has Consequences William D. Nordhaus An opinion piece in The Wall Street Journal, 27 January 2012, by a group of 16

scientists, “No Need to Panic About Global Warming,” contained many of the standard criticisms of climate skeptics in a succinct statement. The essay argued that the

globe is not warming and delaying policies to slow climate change for 50 years will have no serious consequences. At a time when we need to clarify public confusion about the science and economics of climate change, the scientists have muddied the waters. Here, I describe some of their mistakes.

Their first claim is that the planet is not warming. More precisely, “Perhaps the most inconvenient fact is the lack of global warming for well over 10 years now.”

It’s easy to get lost in the tiniest details here. Most people will benefit from stepping back and looking at the record of actual temperature measurements. Figure

1 below shows data from 1880 to 2011 on global mean temperature averaged from

three sources. We don’t need complicated statistical analysis to see that temperatures are rising. Furthermore, they’re higher during the last decade than they were in earlier decades.

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One of the reasons that drawing conclusions on temperature trends is tricky is that the

historical temperature series is highly volatile. The presence of short-term volatility

requires looking at long-term trends. A useful analogy is the stock market. Suppose

an analyst says that because real stock prices have declined over the last decade,

which is true, it follows that there’s no upward trend. Here again, an examination of the long-term data quickly shows this to be incorrect.

The last decade of temperature and stock market data are not representative of

longer-term trends. The finding that global temperatures are rising over the last century-plus is among the most robust findings of climate science and statistics.

Their second argument is that warming is less than predicted by the models: “The

lack of warming for more than a decade – indeed, the smaller-than-predicted warming over the 22 years since the UN’s Intergovernmental Panel on Climate Change (IPCC) began issuing projections – suggests that computer models have greatly exaggerated how much warming additional CO2 can cause.”

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What’s the evidence on performance of climate models? Do they predict the histori-

cal trend accurately? Statisticians routinely address such questions. The standard

approach is to perform an experiment in which modelers put the changes in CO2 concentrations and other climate influences in a climate model and estimate the resulting temperature path, case 1, and then modelers calculate what would happen

in the counterfactual situation, case 2, where the only changes were due to natural

sources, for example, the sun and volcanoes. They then compare the actual temperature increases of the model predictions for all sources, case 1, with the predictions for natural sources alone, case 2.

The finding that global temperatures are rising over the last century-plus is among the most robust findings of climate science and statistics.

This experiment has been performed many times using climate models. A good ex-

ample is the analysis described in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Several modelers ran both cases 1 and 2 described

above – one including human-induced changes and one with only natural sources. This experiment showed that the projections of climate models are consistent with recorded temperature trends over recent decades only if human impacts are included.

The divergent trend is especially pronounced after 1980. By 2005, calculations using

natural sources alone under-predict the actual temperature increases by about 0.7 degrees Centigrade, while calculations including human sources track the actual

temperature trend closely. The IPCC report concluded: “No climate model using natural forcings [i.e., natural warming factors] alone has reproduced the observed global warming trend in the second half of the twentieth century.”

The skeptics next attack the idea of CO2 as a pollutant: By this they presumably

mean that CO2, by itself, is not toxic to humans or other organisms within the range of concentrations that we’re likely to encounter, and indeed higher concentrations may be beneficial.

The question here is whether emissions of CO2 and other greenhouse gases will cause net damages now and in the future. This question has been studied extensively. The

most recent thorough survey by the leading scholar in this field, Richard Tol, finds a wide range of damages, particularly if warming is greater than 2 degrees Centigrade.

Major areas of concern are sea-level rise, more intense hurricanes, losses of species

and ecosystems, acidification of the oceans, as well as threats to the natural and cultural heritage of the planet.

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A final point concerns economic analysis. The 16 scientists argue, citing my research,

that economics does not support policies to slow climate change in the next halfcentury:

A recent study of a wide variety of policy options by Yale economist William

Nordhaus showed that nearly the highest benefit-to-cost ratio is achieved for a policy that allows 50 more years of economic growth unimpeded by greenhouse gas controls. This would be especially beneficial to the lessdeveloped parts of the world that would like to share some of the same

advantages of material well-being, health and life expectancy that the fully developed parts of the world enjoy now.

I did the research and wrote the book on which they base their statement. The

summary is based on poor analysis and an incorrect reading of the results. The

first problem is an elementary mistake in economic analysis. The authors cite the

“benefit-to-cost ratio” to support their argument. Elementary economics teaches

that this is an incorrect criterion for selecting investments or policies. The appropriate criterion for decisions in this context is net benefits – that is, the difference between, not the ratio of, benefits and costs.

Suppose we consider two policies: Policy A has a small investment in abatement of CO2 emissions. It costs relatively little, say $1 billion, but has substantial benefits, say $10 billion, for a net benefit of $9 billion. Now compare this with an effective and larger investment, Policy B. This second investment costs more, $10 billion, but

has substantial benefits, $50 billion, for a net benefit of $40 billion. B is preferable

because it has higher net benefits: $40 billion for B as compared with $9 billion for A. But A has a higher benefit-cost ratio – a ratio of 10 as compared with 5 for B.

In designing the most effective policies, we must look at benefits minus costs, not benefits divided by costs.

My study is just one of many economic studies showing that economic efficiency points to the need to reduce CO2 and other greenhouse gas emissions immediately.

Waiting another 50 years is not only economically costly, but will also make transition more costly when it eventually takes place. Current economic studies also suggest that the most efficient policy is to raise the cost of CO2 emissions substantially,

either through cap-and-trade or carbon taxes, to provide appropriate incentives for businesses and households to move to low-carbon activities.

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Yes, there are many uncertainties. That does not imply that action should be delayed.

If anything, the uncertainties would point to a more forceful policy – one starting sooner rather than later – to slow climate change.

The 16 scientists urge avoiding alarm about climate change. I’m equally concerned by those who allege that we’ll incur economic catastrophes if we take steps to slow

climate change. The claim that cap-and-trade legislation or carbon taxes would be

ruinous to our societies does not stand up to serious economic analysis. We need to approach the issues with a cool head and respect for sound logic and good science. New Haven, 4 April 2012 William D. Nordhaus is Sterling Professor of Economics at Yale University. He has received support for research on the economics of climate change during the last decade from the National Science Foundation, the Department of Energy and the Glaser Foundation. Other than research associated with these and any future grants, the author declares no conflict of interest. This version was adapted by YaleGlobal from his 22 March 2102 article, “Why the Global Skeptics Are Wrong,” in the New York Review of Books, with the author’s permission.

World Momentum Builds for Universal Health Coverage Yanzhong Huang It might seem surprising, but just as the world is recovering from the most serious financial shock since the World War II, governments around the world are engaging in serious discussions on how to expand health coverage.

This new wave of universal health coverage, or UHC, has touched nearly 100 countries, all studying how to institute government-funded programs of health care. This

concept is taking off in populous countries and traditionally UHC “blind spots,” such

as Indonesia, China, India and South Africa. Combined, these four countries account

for 40 percent of the world’s population. Unlike the US, emerging economies are

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not buying the argument that health care is largely the responsibility of individuals

and businesses, with a public provision relegated to special interests, including the elderly, veterans and the indigent.

The first wave came in the 19th century after German Chancellor Otto von Bismarck introduced comprehensive medical care that covered large segments of blue-collar workers. Germany’s 1883 Health Insurance Bill and other social legislations formed

the basis of the modern welfare state. In the post–World War era, most industrialized democracies and many socialist countries established health programs so that all people had access to affordable health care. According to the International Labor

Organization, nearly 50 countries had attained near universal health coverage by

Despite recession, emerging

2008.

economies follow Europe’s

The next wave is among emerging economies. In India, a national health-insurance

health coverage.

lead, striving for universal

scheme geared towards increasing access for the poor, known as RSBY, started rolling

in April 2008. So far it has enabled 100 million to have cashless, paperless, portable access to inpatient health care provided by more than 8,000 public and private

hospitals across the country. The country’s Planning Commission is considering a

report from a high-level expert group, calling for provision of easily accessible and affordable health care to all Indians by 2022.

Similar dynamics are observed in China, which announced plans to pump $124

billion into its health sector in January 2009, in a bid to achieve “safe, effective,

convenient and affordable” health care by 2020. By the end of 2011, 95 percent of

the Chinese citizens have already been covered by some form of health insurance. While UHC programs and initiatives vary across countries, the government political

and financial support allows the cost burden of health care to be shared widely and evenly, health-care services to be better utilized, and the health status of individuals to steadily improve.

If all goes well, nearly all the world’s population will have access to affordable basic health care in one decade – a true milestone in human history in view of the fact that 1 billion people today lack access and 150 million people face catastrophic costs each year because of direct payments for health care.

It sounds counterintuitive that universal health care gains momentum as the global economy remains sluggish and many developing countries are still facing tight budget

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constraints. Financial capacity does matter. The low-resource setting of many na-

tions in sub-Saharan Africa may partially explain why only two countries, Rwanda and Ghana, have made significant strides toward UHC in this region. By contrast, robust economic development and fiscal revenue growth in China and India have enabled these governments to invest in their long-neglected health care sector.

That however does not mean that achievement of UHC is linked to a country’s GDP

size. As noted by Laurie Garrett and others in a 2009 Lancet article, countries with

low GDPs such as Costa Rica, Cuba, Gambia and Gabon attained more impressive prepaid coverage than countries with much higher GDPs. Indeed, countries that introduced nationwide health-insurance schemes are found not only in upper-

middle and high-income economies, such as Brazil, Thailand and Taiwan, but also in low-income or lower-middle-income economies, including Bangladesh, Philippines and Sri Lanka.

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Many of these economies, including Sri Lanka, Malaysia and Indonesia, and to a lesser extent, Brazil and Thailand, have adopted some key aspects of the Beveridge Model which funds UHC through a government service paid directly through tax

revenue. Others, such as Taiwan, Mexico and Turkey, choose the national health

insurance model under which payment comes from a government-run insurance program that covers every citizen. Still others, such as South Korea and Costa Rica,

rely on compulsory social health insurance financed jointly by employers and employees through payroll reduction, or the Bismarck Model.

In most countries, though, UHC is pursued through a mixed model of funding. Chile, for example, finances UHC through a public social insurance fund that combines the

Bismarck contribution model with tax-financed care under the Beveridge approach for those without income. Political commitment and health-system capacity are

equally critical in this process. According to Kwesi Eghan, a senior program associ-

ate for the nonprofit international health organization Management Sciences for Health, many African governments lack the political will to introduce UHC plans or the ability to develop innovative funding mechanisms to pay for them.

Despite decades of robust economic growth, China and India did not seriously consider UHC until it became clear that economic development does not trickle down. For China, the fourth-generation leaders’ populist lurch coupled with the

2002-03 SARS debacle and the 2008 global financial crisis underscored the need to

expand health care to stimulate domestic consumption and ensure social-political stability. For India, the government pays more attention to UHC than before not only because it’s convinced of the necessity of a healthy labor force to compete in

the global economy, but also because the delivery of public goods and services has become an election issue since the mid-2000s. As a former vice president of the

World Bank, David de Ferranti, recently noted, in implementing UHC it’s often 90 percent about the politics and 10 percent technical design.

Of course, at issue is not just scalability, but sustainability as well. How to sustain existing programs instituted for achieving UHC is a major concern in low-income

and lower-middle-income economies. In Rwanda, a nation with a successful UHC

program, foreign donors contributed 53 percent of the country’s total health expenditure. In Sri Lanka, another successful example, there is concern about the

government’s ability to continue to provide health services free at the point of delivery. Indeed, UHC programs in even high-income economies are struggling to

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cope with rising health-care costs, flattening economic growth, the globalization of diseases, population aging, the rise of non-communicable diseases and increasingly costly medical technology.

The foremost challenge however is to ensure that money is spent on targeted beneficiaries, which would entail improving efficiency and quality on the supply side.

As William Hsiao of Harvard University observed, in almost all the countries implementing national health insurance, most of the money spent ultimately went into the pockets of doctors, nurses and other hospital staff. Again, political commitment

is needed to reform the system to avoid UHC becoming another income-transfer program.

More than three decades ago, French philosopher and social theorist Michel Foucault

reminded us that the principal aim of political rule was to “improve the condition of the population, to increase its wealth, its longevity, and its health.” Population health and well-being are issues of governance. No matter how imperfect many existing UHC schemes may be, they constitute a global movement worth sustaining. New York, 9 March 2012 Yanzhong Huang is senior fellow for global health at the Council on Foreign Relations. He is also an associate professor and director of the Center for Global Health Studies, John C. Whitehead School of Diplomacy and International Relations at Seton Hall University, and editor of Global Health Governance: A Scholarly Journal for the New Health Security Paradigm.

Seizing the Moment for Clean Energy Ann Florini Critics have rightly panned President Barack Obama’s response to the BP oil spill

– but for all the wrong reasons. In comparing the spill’s devastation to that of 9/11, he hoped to make the crisis the turning point for US energy policy just as terrorist

attacks transformed the country’s approach to national security. Critics focus on Obama’s lack of specifics and a relative absence of compelling rhetoric we’ve come to

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expect from this president. The bigger problem, however, isn’t style, but substance:

Obama’s surprising unilateralism during an Oval Office address to the American

people and in comments since misses a key opportunity to reassert American global leadership.

Obama accurately outlines the immediacy, scale and scope of the energy challenge. Security for the US, indeed the globe, requires a future largely free of dependence on fossil fuels. The world has known this since the oil shocks of the 1970s.

But problems caused by fossil-fuel extraction, transport and consumption are much

larger than the geopolitical vulnerabilities recognized but ignored for four decades.

The transition from

warming, continue to erode coastlines around the planet, the mounting environmen-

energy requires united

stability on an extraordinary scale. The people who live and work near the world’s

leadership.

From the devastation of the BP oil spill to the expanding oceans that, thanks to global

fossil fuels to green

tal costs of the developed world’s ongoing carbon bonfires threaten prosperity and

global action – and US

coal and oil deposits often suffer most cruelly, not just from poisoned lands and waters, but also from rapacious abuses of governments corrupted by the easy money. Such problems cannot be resolved by unilateral American action. Yet Obama frames his remarks around the call for energy independence. Energy “independence” is

politically useful language, but dreadful policy. Real energy independence, in which the United States would neither buy nor sell energy sources or services, is both unattainable and unwise.

It is unattainable at a minimum for however long it takes for the nation to transition completely to a transportation system that does not need much in the way of

the petroleum products on which the US transportation sector is at present almost entirely dependent. And in a world where prosperity needs trade and cross-border investment, it makes little sense to set independence in and of itself as a goal. 

With regard to energy, a focus on “independence” undermines chances for enormous potential gains via cooperation.

Energy goods and services, like food, clothing, computers and all the other elements

of modern life, not to mention the investments needed to produce them, cross bor-

ders. That trade, if governed by well-designed rules that serve public interests, can lead to big gains in efficiency and choices for consumers. Even a clean-technology

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US energy system will depend on trade in energy technology components and services. The anticipated US clean-energy firms will need global-scale markets, not

merely national ones. If those US companies are to compete in a truly free market that serves the public interest, global rules must ensure that any subsidies support

public interests, as in clean technology, not private ones – and that such subsidies allow appropriate competition.

Rules and institutions currently governing international energy investment, production, service delivery, trade and consumption are a horrendous mess. Govern-

ments everywhere subsidize dirty fuels at the expense of clean ones. Cross-border investments that would put capital to use on fostering clean-energy transactions are hobbled by inadequate rules that fail to protect public interests. Wild surges in

oil prices have discouraged businesses from investing confidently in clean-energy alternatives that are not economically competitive when oil prices are low. And the

absence of international mechanisms that price fossil fuels at the true costs of their environmentally dirty production and consumption makes it difficult, if not impossible, to challenge the continued dominance of oil and coal. 

In short, Obama’s vision of America’s energy future needs more than American national technological ingenuity and determination. It needs an efficient global

marketplace with effective international rules, enabling the world to wean itself off fossil fuels and transition to an entirely new energy system. Those rules must cover a range of arenas: They need to provide ways of taming oil price volatility. They need

to protect the legitimate interests of investors in energy projects while ensuring that

governments maintain the capacity to regulate those projects to protect the public interest, in contrast to the current web of bilateral investment treaties that too often

are biased in favor of investors. They need to ensure that donor agencies, whether

governmental or private, coordinate and rationalize their development assistance

programs so that they systematically promote the energy transition without penalizing the poor.

All this requires a different kind of American ingenuity, more like the innovativeness

displayed in the face of the adversity during World War II than the spending binge that followed 9/11. And it must be American. Even in these days of globalization and

the rise of Asia, large-scale international cooperation flounders without American leadership. Europe has focused for decades on its intra-regional development and is

currently consumed by internal travails. Rising powers such as China and India still

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focus primarily on their overwhelming internal challenges and rarely put forward major proposals for international cooperation. Just as the United States led the

construction of the post–World War II international order, it must lead the world to new frameworks that can set the rules to foster the energy transition.

This requires a more inventive American leadership from the kind that created the United Nations, the International Monetary Fund, the World Bank and other institutions of the post– World War II order. The days of creating big overarching

organizations are over. Instead, what’s needed is patient and systematic reform of a whole series of inadequate or poorly designed rules and institutions.

Fortunately, opportunities abound. At US instigation, the G20 already has the problem

of perverse energy subsidies on its agenda. The International Energy Forum brings together major oil producers and consumers and could provide the venue for an ef-

fective arrangement on oil-price stability. The International Energy Agency, which despite its name is comprised only of wealthy industrialized countries, has made serious efforts to reach out to such emerging players as China for discussions about how the world can transition to a rational and sustainable energy path, an effort

the US has supported and can promote – and indeed, energy is already among the more successful components of the US-China Strategic and Economic Dialogue. A concerted drive to devise appropriate trade rules might have the double benefit of revitalizing the moribund Doha round.

It’s essential for the Obama administration to ensure that any comparison to 9/11 does

not become inadvertently more apt than the president intended. After that earlier

crisis, the US underwent a long and painful experience born of shortsighted nationalism and hubris. Obama is, of course, a pragmatic, talented and thoughtful president

leading a very indebted government and confronting many challenges left by his predecessor. He now should seize the moment born of catastrophe to achieve his stirring

vision of a clean-energy future that benefits both the United States and the world.

Singapore, 1 July 2010  Ann Florini is professor at the LKY School of Public Policy, National University of Singapore, director of the NUS Centre on Asia and Globalisation, and senior fellow at the Brookings Institution.

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Demography and Migration

Historically, population movements have been a major driver of globalization and economic and social transformation. War, famine and natural disasters force emigration. Uneven economic development prompts both the poor and the ambitious to seek

opportunities in other lands. The need for manual labor and special skills has acted as a pull factor in promoting migration. Some welcome the new influences, and yet there is also an inevitable increase in intolerance. During times of economic growth,

developed countries lure skilled labor from the developing nations. During economic downturns, popular opposition can rise to bar immigration, though countries always compete for top talent. Lopsided demographic bulges of young or old require new

policies as governments readjust distribution of resources. Uneven distribution of resources as basic as water can fuel rising tensions, conflict or emigration.

Many representatives of diasporas do not forget their homelands, sending remittances to family members who remain behind. Immigrants living in wealthy nations

can be powerless, or they can wield great influence on politics in their homeland,

more so than those who never left. Religious and ethnic differences can contribute to stark cultural differences, insecurity, injustices and a lasting legacy of bitterness that can influence politics in neighboring lands.

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Government austerity with education, health care and family programs spreads

uncertainty throughout societies and reduces incentives for the long-term and

costly task of raising children prepared for global competition. Greater wealth also

influences birthrates over time. Ready access to contraceptives and education in the wealthiest economies contribute to women focusing on careers and delaying or even forgoing childbirth.

Demographers project trends over a generation or century. While they may not

agree on the exact number of people who will inhabit the planet in the year 2100, governments should toss out their policies of denial – and instead coordinate and prepare for the most obvious political realities headed their way.

The Future of Migration Lant Pritchett The late 19th and early 20th centuries are well known as an era of massive migrations. Europeans settled in the United States, Canada, Australia, as well as Argentina

and Brazil. Standing on the cusp of the 21st century, it’s clear that another wave of

mass migration is poised to break down the barricades protecting the world’s rich and developed countries. There are five irresistible forces in the international sys-

tem that, if left unaddressed, will soon lead to greater labor mobility and migration across national boundaries.

During modern times, the greatest gaps in wealth and living standards have shifted away from differences within a country to differences among people around the globe.

Inequalities in wages and standards of living have become larger than ever before in history, far greater than the inequalities that prompted so many to leave Europe

during the migration age. Studies estimate that in the 19th century only 10 percent

of income disparities could be attributed to the average income of the individual’s

respective country. In contrast, today over 60 percent of the world’s wage and standard of living inequality is derived from differences in incomes between countries. Such inequalities may not seem immediately relevant to the issue of migration.

However, for individuals with similar qualifications – like education, labor market

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experience, and physical strength – nearly all income differences are associated with location. Migrating to richer countries allows people to boost their earnings without

additional investments in health, education or other personal characteristics. When

migrants move, their wages are almost identical to workers in their adopted country, creating sometimes enormous incentives to relocate.

The second major force that is increasing pressures for migration is the shift in

what might be deemed an optimal population of various countries due to economic forces. A country’s optimal population depends upon various economic, political,

Irresistible forces are building for another era of mass migration.

and geographic circumstances and poses the question, “How many people would live in a given spatial territory if there were perfect mobility and people could choose to move elsewhere?”

For example, say there is global labor mobility – how many of the 10 million people

living in Niger would remain there? Would people choose to move to less densely

populated areas? Likewise, if there were open borders between Nicaragua and the industrialized world, how many of Nicaragua’s 5 million people would remain there

after 10 years? The answers to both questions depend on the relative economic opportunities in each country.

If the optimal population of a country doesn’t change, labor mobility is not really

that important. Optimal populations may remain stable either because certain fundamentals don’t change or other factors compensate for changes. Without changes in the geographic and economic interactions of a country, a region’s attractiveness,

and thus its optimal population, remains stable. Antarctica, for example, has been

entirely unaffected by labor mobility because its attractiveness as a destination for human populations has remained the same across time.

The interaction between wages and labor mobility is therefore governed by a simple supply and demand dynamic: If labor supply is elastic and there are location-specific

changes in labor demand, population shifts will result, though with little change in real wages.

In contrast, if labor supply is inelastic and population movement is limited, there will be little change in population and large changes in wages. The evidence suggests

there are, in fact, large geographic shifts in labor demand that lead to increased pressures for migration.

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The third powerful force for the future of migration is divergent demographic futures resulting from different birthrates. Nearly all of Europe has witnessed immense

changes in fertility behavior that have caused a massive contraction in national populations. The UN projects that the labor force of many European countries

and Japan will not only cease to grow, but actually decline in coming years. This

contraction has several implications. The most obvious surrounds the financial viability of current pensions and social transfers. Indeed, the future “support ratio” of labor forces aged 25 to 64 to the “retirement aged” population seems daunting. Even under current conditions, the viability of these systems is questionable. But

if support ratios fall to projected levels, either tax rates will need to skyrocket or benefits must be drastically cut.

In contrast, there are many countries whose populations are soaring. One of the fundamental principles of economics is that differences create incentives for exchange. These demographic differences are thus creating an incentive for better labor flow.

However, in many countries population decline may prove too drastic to be alleviated by migration. Italy’s labor force, for example, will need to be composed of 45

percent foreign born workers by 2050, if current population projections are correct. The fourth powerful force behind increased migration is the increased interconnectedness of the world in terms of trade, capital flow, communications and travel. The

international system has created a mechanism for negotiating reductions in trade barriers. However, it’s hard to make a compelling case for additional reductions to barriers to markets for goods while labor mobility is ignored. Goods markets are

already deeply integrated. And while there is evidence of large “border” effects that inhibit trade, the price differences across countries are small relative to wage gaps. One could argue that this international system has created conditions in which labor mobility will become part of the agenda.

A general equilibrium model proposed last year by some economists estimates that

allowing labor movements that would increase host country labor forces by only 3 percent would lead to world gains of $156 billion.

Though this number represents less than 1 percent of world GDP, it is in fact three

times larger than all official development assistance and far greater than the estimated gains from the proposed remaining trade liberalization, or$104 billion.

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Finally, while there is enormous attention to technological changes that are reduc-

ing the pressures for labor movements, for example, media attention to call centers and outsourcing of service workers, there are also growing demands for jobs that are not mobile. In the US Labor Department’s prediction of the top 10 occupations

with the largest job growth, seven were location-specific, including registered nurses, waiters and waitresses, and retail salespersons.

The five forces outlined here are setting the world up for a massive migration unlike anything seen in the modern era. To meet the challenges of these pressures, governments, businesses and communities must think carefully about their current policies and readjust them as necessary, with a long-term view in mind.

O’Rourke KH, Williamson J. Globalization and History: The Evolution of a Nineteenth century Atlantic Economy. MIT Press. 1999.

Rama M, Raquel A “A Database of Labor Market Indicators Across Countries.” Cambridge, 5 November 2003, unpublished. Cambridge, 5 November 2003 Lant Pritchett is lecturer in public policy at Harvard University’s John F. Kennedy School of Government. This article is adapted from a paper he presented at “The Future of Globalization: Explorations in Light of the Recent Turbulence,” a conference hosted by the Yale Center for the Study of Globalization 10 October 2003.

Europe’s Next Immigration Crisis Alkman Granitsas Although a wave of race riots in France caught the world’s attention in late 2005, another immigration problem is emerging in Europe that has yet to make headlines.

Around the periphery of Europe – in the Balkans, Eastern Europe, and along the

Mediterranean – a new group of countries is playing host to immigrants from foreign

shores. The question arises, Will these new destination countries follow the path of alienation and intolerance forged by Western Europe during the last forty years?

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The last decade has been a dangerous period for many of Western Europe’s new arrivals in Germany, England and France with fire bombings of immigrant hostels,

racially motivated attacks in small German towns, immigrant riots on the streets

of Britain and so on. Anti-immigrant feelings have also manifested themselves in semiofficial expression with the election, or near election, of rightwing demagogues like Jörg Haider in Austria, Jean-Marie Le Pen in France or Pym Fortuyn in the Netherlands.

In each case, a combination of three factors helps stoke anti-immigrant feelings: the

total number of immigrants, the pace at which they come, and a sense of economic insecurity in the local population.

A new wave of intolerance

Not surprisingly, the regions with the highest percentage of foreign-born residents

threatening economic

sweeps through Europe,

are the most developed, namely North America, with 13 percent, and Europe, 7.7 percent – as people move where there is economic opportunity.

And the gap between rich and poor countries is growing ever wider. According to the United Nations, in 1913 the richest countries on earth were 10 times wealthier than the poorest. In 2000, the difference was 71 times.

According to the UN, the number of migrants around the world is at an all-time

high – there are almost 200 million international immigrants, more than double the 84 million of 30 years ago. Relative to total world population, one out of every

35 persons on earth is an international migrant. This means that international immigration is a fact of life and growing.

But for many of the new destination countries in Europe, the transformation has been profound and sudden. Take Greece, for example: Until 20 years ago, the country

was one of the most ethnically homogenous in Europe, with as much as 98 percent of the population identified as Greek. But after a 15-year immigration boom, one

out of every ten residents in Greece, and almost one in five in the center of Athens, is now foreign born.

The vast majority came from neighboring Albania, but there are growing numbers

of West Africans, Chinese, Pakistanis and Arabs too, and almost all are illegal residents. Likewise in Italy, over the last 20 years the number of foreign-born legal

residents has grown from around 300,000 to more than 2 million. In Spain, which

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has received waves of immigrants from North Africa, there are some 4 million legal and illegal newcomers, combined making up about 10 percent of the population.

The pace and the number of newcomers have started to stir anti-immigrant feelings. In Greece early last autumn, one of the stranger political gatherings of Europe

passed almost unnoticed by the outside world on the streets of Athens. Some 150 or

so rightwing youth – purportedly from Spain, Italy, France, Germany and Greece – met in the center of the city in the first ever pan-European meeting of racist, anti-immigrant groups.

Polls throughout Europe have shown that youth, often competing with immigrants for scarce jobs, are usually the most opposed to immigration. Last year’s meeting

itself was a dud, attracting far fewer participants than hoped for by the organizers, the Greek extreme right group Golden Dawn. But that the meeting took place at all is remarkable.

Meanwhile, in parts of Eastern Europe, the extreme right is experiencing its own small renaissance. In Poland, rightwing extremist groups have gained influence since last year’s elections. And in November, anti-immigrant fascist groups marched

through the center of Moscow. Although the immigrant populations in Russia and Poland remain small for now, the continuing shock of 15 years of post-Communist

economic adjustment has manifested itself in signs of intolerance. In Russia, for example, hate crimes have been rising steadily for several years.

So, what is the tipping point? When do attitudes in new destination countries go from acceptance to intolerance?

“Some would argue that there is a threshold in Europe, say, around 10 percent of the population,” suggests Anna Triandafyllidou, a senior research fellow focusing on immigration at Eliamep, a Greek think tank. “Above that threshold, intolerance gets out of control.

But more important than the total size of the population is the rate of increase and

under what conditions, how fast it has happened. As far as patterns go, you might

say, although it’s a bit of simplification, that northern and western Europe were the first hosts and faced the first problems. And now central and eastern Europe are following suit.”

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Take a look at racist attacks in Germany, where there have been immigrants for decades, most notably Turks and Greeks taken in as guest workers from the 1960s onward to work in the country’s resurgent industries. But the worst forms of extremist

violence took place throughout the 1990s. That’s when the number of hate crimes

rose steadily, peaking at 14,724 in 2001. Those attacks coincided with the economic

downturn that followed German reunification and during a rising wave of immigration – between 1991 and 2003 some 14.2 million immigrants arrived in Germany.

When there are too few jobs, either nationally or within certain regions, antagonism

between locals and newcomers grows. Again, looking at the case in Germany, a

disproportionate number of racist incidents take place each year in the east, where unemployment ranges around 15 percent, double the rate in the western part of the country. That is despite the fact that eastern Germany has relatively few immigrants.

Throughout Western Europe, the pattern is the same. In 2001 the UK witnessed a

summer of racial violence in the towns of Bradford, Oldham and Burnley. All are located in the economically depressed north of England, and all had seen a relatively

recent influx in new immigrants. In France, there has been a striking rise in the number of racial attacks on Corsica against the island’s mainly Moroccan immigrant

community. It’s worth noting that Corsica is by far the poorest region of France,

with the second highest ratio of immigrants – some 10 percent of the population. The highest ratio is found in the city of Paris and the surrounding suburbs, the epicenter of the riots in 2005.

So even though last autumn’s rightwing gathering in Athens proved to be more ridiculous than riotous, one must wonder if it’s a sign of things to come. What would

it take for the opposition to gather steam or, worse, break into fire bombings and street attacks? As a whole, Europe still has not squarely confronted the issue of

immigration. Now, another chapter of intolerance looms as the poorer countries of Europe follow the path of their richer neighbors. Athens, 11 April 2006 Alkman Granitsas is a freelance journalist based in Athens.

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Hard Work, Furtive Living: Illegal Immigrants in Japan Sharon Noguchi A ski cap pulled low to conceal her wavy brown hair, Luz Martinez stands near

Kawasaki Station, hoping to avoid any appearance of loitering in the busy terminal regularly staked out by Japanese immigration officials. After 11 years of illegal work in low-paid jobs, Martinez has become adept at blending in with the crowd. She

is one of an estimated 220,000 illegal migrants who live in Japan, most of them workers from China, Southeast Asia, South Asia and Latin America.

She was fired from her last job, packing fruit for a Dole Japan affiliate. After 16

months, she took a sick day and was told not to show up again. Martinez, not her real name, and her fellow foreign laborers experience the flip side of the polite,

safe Japan that western tourists and foreign business people encounter. Japanese

society extends little protection from exploitation for powerless illegal immigrants. Their numbers will undoubtedly swell now that Japan’s birthrate has sunk to 1.29 children per woman, well below the replacement level. In 2005, Japan’s population

dropped for the first time since the government began keeping records in 1899, a

year ahead of projections; births fell 4.2 percent and deaths increased 5.4 percent. With the population beginning an accelerating decline, factories need assembly-

line hands, retirement schemes seek contributors, and producers want consumers. The government does not issue visas for manual laborers or for immigrants. For decades, Japan had been one of the few countries to industrialize without drawing on immigrant labor, relying instead on rural residents and women.

But during the bubble economy of the late 1980s, an acute labor shortage prompted Tokyo to grant long-term visas to Japanese descendants abroad, up to the third

generation. The assumption was that such immigrants would easily fit into Japanese society, more so than other foreigners.

Today, more than 350,000 Latin Americans, most of them ethnic Japanese, live

with their families in Japan. These legal immigrants do the so-called “3D work,”

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the dirty, dangerous and difficult jobs shunned by middle-class Japanese. They

are joined by illegal immigrants, foreign students, and trainees – primarily Asians ostensibly in Japan to learn skills to use back home, but who in reality supply docile low-wage labor.

About 1.9 million foreigners are registered in Japan. Combined with illegal entries, non-Japanese make up 1.5 percent of Japan’s population, a tiny proportion compared to immigrant populations in Europe and North America. The challenges so familiar to officials in the US, Europe and Australia are thus relatively new in Japan.

Official policy has not come to terms with the labor deficit, and without government

Japan needs, but does

Business voices, such as the Keidanren, or the Japan Business Federation, and Toyota

help.

action, employers will meet the growing demand for workers with illegal immigrants.

Chairman Hiroshi Okuda, have called for importing foreign labor. Prime Minister Junichiro Koizumi and legislators must decide whether to open the gates to mass

immigration or prepare for a markedly shrunken economy. Yet recent central government initiatives focus on controlling or expelling those foreigners already here. In June, to better monitor foreign residents, officials announced a plan that could require them to carry IC chip identification.

Those workers without visas keep a low profile. “We stay to ourselves,” said U

Sein, a pseudonym adopted by a Burmese asylum seeker in an interview a year ago. “Outside, I don’t talk.” Several months later he was apprehended and thrown in immigration jail.

Globally, the human flow from rural to urban areas, from developing to industrialized countries continues to surge, defying police barriers, jail and laws. In Japan, the

influx is about to balloon, with a ready supply of laborers from China. Desperation drives most illegal workers. Some, like Sein, have fled repressive governments. Most

left crumbling economies and seek a way to support families back home. Many, like

Martinez, enter on short-term visas. As Japan has eased visa requirements for some

neighboring countries, Asians slip in on false third-country passports. In November police announced that they had discovered 200 foreigners with fake passports, many forged in China.

Once in Japan, illegal immigrants face further barriers. Martinez, from Lima, Peru,

was promised a good job in Japan by a friend of a friend. Although she had paid a

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broker $1,000, that job never materialized. With persistence, she found work packing frozen fish in Nagoya.

By word of mouth and cell-phone messages migrants learn which shops or labor

contractors risk fines by disregarding workers’ legal status. The contractors provide labor for small- and medium-sized businesses dependent on immigrants, including

auto-parts factories, chemical processors, box-lunch assembly lines, hotels, restaurants and the sex industry.

Because companies avoid employing them as regular employees, illegal migrants reap few benefits. Though in theory labor laws protect everyone, illegal foreigners

have little leverage against low wages, long hours, grueling conditions and paying kickbacks – legal or not.

It’s not unusual, for instance, for factory workers to flip-flop weeks between night and day shifts, or for employers to require workers to put in unpaid overtime. Hours and assignments shift suddenly when demand slackens or surges.

Martinez has held 13 jobs in 11 years here, but never with health insurance. She pays her own medical expenses – even after she scalded her hand in a vat of broth at a soup plant and after stomach and back pain immobilized her at a tile-painting

factory where workers wore no masks. After she was fired from packing fruit, she checked for her withholding refund. The company still owed her about 220,000

yen, or $1,000, in withholding tax, she explained, because she had not earned the taxable minimum. “But there was no form in the envelope, and when I asked the

contractor, ‘Where is the tax refund?’ he pretended to be surprised and said, ‘The factory didn’t include it?’”

Martinez, a streetwise woman, saw an ad by Kanagawa City Union, one of the few

unions that span industries and companies to represent foreign workers. Yet union

power is limited, as is migrants’ assertiveness, and the vast majority of illegal workers are not unionized. Angry, she considered filing a claim to recoup her money,

but backed off when a union adviser warned that her former employer could report

her to immigration officials. She calls such contractors and companies “unscrupulous thieves.” Like other foreign laborers, she has quietly endured humiliation and intimidation: “The psychological abuse is worse than the physical hardship,” she said. Some union activists believe Tokyo tolerates illegal immigrants at the behest

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of industry, to suppress wages. Immigrant advocates suggest that Japan can ease

its labor shortage simply by legalizing illegal immigrants, allowing workers already acclimated to the country to surface legally. But Japan shows no interest in granting

any amnesty. Police and immigration authorities stage raids at train stations and sweep neighborhoods like Tokyo’s Kabukicho, where immigrants cluster. In the public’s eye, illegal immigrants are criminals.

Martinez rejects this categorization. “We abide by the law. But what about their

compatriots, who break the law and abuse all of us here? What do they want, for us

to disappear? Then what would they do? They don’t want to do this kind of work.” The plight of hidden toilers in Japan’s growth engine like Martinez not only throws light on the dark side of globalization but also shows the Achilles’ heel of Japan’s

economy. Faced with the reality of a declining working population and a growing need to care for the elderly, Japan carries its underhanded solution to the problems at its own peril.

Tokyo, 2 March 2006 Sharon Noguchi is a staff writer with the San Jose Mercury News in California. From fall 2004 to spring 2005, she received a Fulbright fellowship to research immigrant worker communities in Japan.

Chinese Migration Goes Global Peter Kwong Since the end of the Cold War, some 181 million people have left their homes to find

opportunities elsewhere in the world, not only from the poor nations to the rich, but from the poor to the less poor nations.

This movement is fluid, its impact not confined to individual nations. And perhaps no

group has had more visible impact than the 18 million Chinese who have left China since the economic reforms of the late 1970s – just over half of the approximately 35

million Chinese who live outside of China in what has become known as the Chinese

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diaspora. Chinese emigrants these days, be it skilled professionals, businessmen or laborers, prefer North America and Western Europe as their destination, but also settle for Argentina, South Africa, Mauritius, Israel, Dubai or the like, countries not

previously associated with the notion of Chinese migration – 150 countries in all. In Romania, Chinese immigrants eliminated labor shortages created after some 2 million Romanians emigrated to Spain and Italy after the fall of communism. Chinese women employed in Romanian textile factories are paid US$260 per month – four

times more than what they would earn in China, but a sum for which Romanians are no longer willing to work.

Migrants from the world’s most populous nation influence more than 150 countries.

The driving force behind Chinese emigration is the monumental demographic shift

of its 1.4 billion population induced by China’s rapid economic expansion. Some 200 million people have left homes in rural China for jobs in the cities. The unprecedented influx has created overcrowding, social disorder and downward pressure on wages in the cities, as the Chinese economy, even with impressive double-digit

growth, fails to create enough jobs to accommodate all rural migrants. Thus the most ambitious among them see leaving China as an attractive option.

The post–Cold War global migration, however, takes place within the old framework

of nation-states. While the capital and goods flow freely across national borders to the drumbeat of open markets and free trade, the movement of people is all but free.

Ordinary citizens of developed receiving nations are unwilling to accept mass immigration in fear of losing their jobs, clinging on to the concept of national borders as a guarantee against such fears.

But their concerns are not shared by employers, who want to hire immigrants to cut

costs and hope that the force of global migration will weaken national labor movements and labor standards. Thus, although jobs wait for the mobile plucky takers in many nations, unless they’re skilled professionals, the immigrants must enter borders illegally or on temporary visas.

Chinese emigrants are so motivated that they willingly pay organized crime networks tens of thousands of dollars to be smuggled to their destinations by perilous means, often with tragic consequences.

In 2000 British authorities found 58 illegal Chinese immigrants asphyxiated aboard a tomato truck in the port city of Dover.

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Governments make repeated attempts to strengthen border controls and beef up

criminal sanctions against illegal immigrants and their smugglers, but so long as there is demand for migrant labor, the illicit migration goes on. In fact, legislation

that strives to make migrants more “illegal” only increases their vulnerability, therefore cheaper for the employers to engage. The profits from smuggling also increase.

It now costs $30,000 for a Chinese to be smuggled into the UK and $70,000 to the US – roughly double of what it was a little more than a decade ago.

After illegal immigrants enter a country, they have no access to regular labor markets or the benefit of labor-protection laws. Forced underground, Chinese immigrants

squeeze into niche trades, usually employed by co-ethnic subcontractors. Because such immigrants work for and alongside fellow Chinese by necessity, not by choice, they become targets for resentment and accusations of sticking to their own. In

late 2006 local residents in Tonga – furious that the Chinese businesses recruited

Chinese from China instead of employing from the local population – looted and burned more than 30 Chinese-run shops.

Of course, Chinese workers don’t necessarily have common interests with their Chinese bosses. While some 2,000 Chinese entrepreneurs own a quarter of the

textile businesses in Prato, Italy, an army of low-wage workers recruited in China

works long nights, sweatshop-style, to produce low-cost “Made in Italy” fashions for export to Eastern Europe. In New York City, Chinese restaurant and garment workers frequently wage battles against their co-ethnic employers for abuses such as

withholding of back wages and confiscation of service tips. Because American unions

refuse to consider them a part of America’s legitimate working class, the workers must fight it alone, without help from the labor authorities. Isolating immigrants

and denying them labor protections not only worsens conditions for them, it also

contributes to the deterioration of labor standards for all workers. And in the end, none of the measures heretofore taken have deterred immigration.

The disconnect between national policy and the logic of global migration underlines the necessity for governments to work together in finding new ways to protect citizens’ living standards while guaranteeing immigrants the right to work without undue exploitation.

Unfortunately, most politicians are interested in exploiting anti-immigrant sentiments to generate populist support and win elections.

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Russia’s Far East region has about 100,000 permanent Chinese residents. Most

are merchants, selling clothes, toys and other consumer goods. Since their inflow coincided with the dwindling of Russian population in the region, a belief has taken

hold among many Russians that China has adopted a state program of “Moving to the North.”

They see the Chinese as a sign of a creeping annexation of Russian territory. Add-

ing to the fears is the fact that China controlled most of that region until the 1850s. President Vladimir Putin plays on this fear when he warns that, if the government does not introduce immigration restrictions, people in Russia’s Far East could soon

all speak Chinese – even as his experts agree that Russia needs Chinese labor and resources to develop this region. Since the fall of communism in Eastern Europe, many conservatives in the US consider China a principal threat to the US and call for military containment, reminiscent of the Cold War era. Periodically, they accuse

Chinese Americans of acting as the “fifth column” for China, as when they called for the investigation of Chinese-American contributors to President Bill Clinton’s re-election campaign, suspected of helping the Chinese government channel money to influence US politics.

Despite signs of growing anti-Chinese sentiment in many quarters of the world, the

Chinese government remains largely silent. For one, it has no incentive to tamper

with the exodus of its citizens, which eases domestic unemployment and reaps the benefits of remittances to the tune of US$20 billion a year. Secondly, any active

involvement could arouse suspicion regarding the loyalty of the overseas Chinese. But China should not remain a detached spectator of global migration, especially

as it grapples with its own problem of illegal immigration from North Korea. As a nation both on the receiving and sending side, perhaps China is uniquely suited to wrestle the issue from the clutches of narrow-minded national politics and place it on

the agenda of international forums. Countries with graying populations in northern Europe, Japan and even China need young workers to maintain growth required for social stability. The issue of global migration has assumed global urgency and deserves timely attention and appropriate multinational treatment. New York, 17 July 2007 Peter Kwong is a professor in the Asian American Studies Program of Hunter College and professor of sociology with the City University of New York.

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IT Workers on the Move With Globalization Anthony P. D’Costa With economic globalization, talented professionals are on the move. One visible group is information-technology workers. They hail from select developing countries

such as India, China, the Philippines and Eastern Europe who move to the OECD economies. The motivations for moving are mainly economic, seeking better jobs

and higher income, although interlocking social factors such as family unions also influence the pattern of mobility.

It’s an important part of the “new economy.” For example, US spending on IT

and software services exceeded all investment in industrial capital equipment and accounted for 47 percent of all nonresidential investment in 2004. Most OECD countries want a share of this sector, but they face challenges in obtaining technical

talent locally. The labor market mismatch contributes to international mobility, but is compounded by the specter of declining fertility rates, an aging population and

unpopularity of technical studies. China and India have become the major suppliers of technical professionals, with India having the largest pool of young people.

Immigration policies shape the mobility of IT professionals. Because of shortages, OECD governments have eased the entry of foreign skilled workers. For example,

the US has an employment-sponsored non-immigrant work visa called the H-1B, available to foreign professionals in specialty occupations and valid for six years.

In 2005, 287,418 H-1B visas were approved; of these, 43 percent or 123,590 such visas went to Indian citizens, and 44 percent “were for workers in computer-related

occupations.” Other visas such as the L-1 support intra-company transfers of personnel from one international location to another. The mobility of Indian IT professionals began with onsite services in the US, followed by offshore development.

Both entailed temporary movement of talent. As IT grew everywhere, demand for Indian talent soared, increasing salaries, compensation packages and labor mobility. There are both positive and negative effects of international mobility. In the 1970s the

outflows of talent were viewed as brain drain and public waste. If there is a relatively

large outflow of talent over a long period, economic growth could be reduced, poverty

increased and inequality worsened. The Philippines may fit this unfortunate bill.

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Inequality results from a relatively smaller share of and greater demand for highly-

skilled professionals, evident from the huge income differential between Indian IT professionals and others. Today emigration is seen as international mobility with

several positive externalities such as remittance income, national human capital development and national links to international innovation centers.

Remittance-income contributes foreign exchange and potentially economic development. A World Bank estimate put the total remittance inflows to developing countries

at $126 billion in 2004. Remittance income raises the economic well-being of most

Emigration of technology workers from developing countries no longer seen as brain drain.

households. Nationally, this source of income source helps offset international debt

obligations and allows importation of critical technologies. The engagement of IT professionals with a globalized industry brings in large export revenues, complementing the remittance income. Today, India’s foreign exchange reserves are nearly

$200 billion. Too rapid an expansion in foreign currency inflows leads to currency

appreciation and inflationary pressure, known as the Dutch disease, commonly associated with oil economies. The rising value of the Indian rupee could undermine the competitiveness of both non-IT and IT exports.

With international mobility there’s also a migration “premium,” meaning higher salaries for IT workers as they have better prospects to work abroad. Hence, demand for technical education increases and subsequently educational infrastructure

expands, thus raising the average education level over time. A migration premium

also suggests a wage-cost spiral that could erode India’s wage arbitrage advantage and compel firms to strategically diversify into higher-value production or face

bankruptcy. High wages could drive out small and medium enterprises too, leaving large firms to cherry-pick the best talent.

But international mobility also means that Indian, Chinese and other professionals get to interact with their international counterparts located in innovation centers

in the OECD countries. This facilitates the exchange of technical and commercial knowledge and opens up new export business opportunities. The strong links between

Bangalore, Shanghai and Silicon Valley are illustrative of this global network. One

such international network is the Indus Entrepreneurs, or TiE, initiated in Silicon Valley in 1992 by Indian IT entrepreneurs. It has more than 40 chapters and 6,000 members worldwide. Similarly the Chinese Institute of Engineers in the US has strong links with its counterpart in Taiwan.

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Mobility contributes to national human capital development – witness the expansion

of educational institutions in the southern Indian states of Karnataka and Tamil Nadu, training tens of thousands of engineers and IT professionals each year. In India

engineering admissions increased fivefold between 1992 and 2004. The number of

IT admissions increased from 73,000 students in 1992 to 342,000 in 2004. In the Philippines too, mobility has raised the share of mathematics and computer-science graduates between 1995 and 2000 from 7 to 10 percent of all tertiary graduates.

Mobility suggests that sending countries could gain their expatriate talent back if professional and economic opportunities were attractive, as they are increasingly so

in China, India and Taiwan. Governments are busy courting talent by establishing R&D centers and science-technology parks.

These initiatives are designed to enhance the quality of economic growth by deploying expatriate talent for international competitiveness. Taiwan and China, and to a

limited degree India, have experienced the return of high-skilled IT professionals. Reverse international mobility is important as evidenced by the fact that 10 of the

top 20 Indian software firms were launched by nonresident Indians from the US. Clearly favorable economic and social conditions, some of which are policy-induced, could tap into the overseas brain bank.

Rich countries benefit directly from the subsidized supply of foreign IT workers. Foreign talent helps maintain industry profitability. There are other benefits too. It has been estimated by M.A. Desai, D. Kapur, and J. McHale in 2002 that the US

government collects nearly $23 billion in payroll taxes from Indian H-1B visa holders alone. Indian and Chinese engineer-entrepreneurs in Silicon Valley contribute

to US employment in R&D and design. Receiving countries also benefit from foreign students’ revenues but more importantly from the future availability of highly educated foreign professionals.

While businesses complain about shortages, US labor groups argue shortages are a fiction. The truth lies somewhere in the middle. The reality is that as technology

changes, older workers fall behind, while young professionals from India and China cost less and are knowledgeable about current innovations. Companies naturally prefer to hire young, technology savvy IT professionals rather than retrain existing

workers. By hiring foreigners, OECD firms focus on their core competencies, while the foreign professionals benefit from higher incomes and skill upgrading.

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Politicians are sensitive to local pressures for job protection. In an election year

with a recession looming for the US, large xenophobic sentiment could raise its ugly

head. However, job losses, while real, might be a result of structural, cyclical and technological factors rather than alleged unfair foreign competition. Of course, undue

reliance on foreign talent could increase unemployment and depress wages for local

IT workers. Consequently, inequality could rise, although the mechanisms for this outcome are complex. Globalization is a complicated beast and so are its outcomes. The mobility of IT professionals suggests a range of costs and benefits for both receiving and sending countries, with the latter benefiting handsomely. The real

test will be whether the US and India can cope with the deep economic and social divisions that globalization seems to leave in its wake. Copenhagen, 9 April 2008 Anthony P. D’Costa is a professor of Indian Studies at the Copenhagen Business School, Copenhagen and editor of the book series Technology, Globalization, and Development as well as India’s Changing Role in the Global Political Economy. He analyzes the topic at length in The International Mobility of Talent Types, Causes, and Development Impact, published by Oxford University Press.

Will the Crisis Reverse Global Migration? Jayati Ghosh Migration has been a leading means of greater global integration, and as the economic crisis has gripped the developed world, many worry about its impact on

such integration, especially falling remittances. A closer examination of the nature of migrant workers’ role in the economy suggests more complex outcomes, with somewhat less impact than feared.

The United Nations estimates that the global stock of migrants is now more than 200 million, even excluding temporary, irregular and illegal migrants. Most of these

migrants hail from developing countries: In the developed world, excluding the

former Soviet Union, the share of migrants in total population more than doubled

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between 1960 and 2005, from 4 percent to nearly 10 percent, while it has declined in less developed countries. As the crisis unfolded, there was fear that international migration and associated remittances would be among the first casualties.

Most of this migration has been driven by economic forces and has given rise to rapidly expanding remittance flows, which have become the most important source of foreign exchange for many developing countries. The International Monetary

Fund estimates total remittance flows to developing countries to be nearly $300 billion in 2009, significantly more than all forms of capital flows put together. This has provided crucial foreign exchange and been a major contributor to balance-

of-payments stability for countries as far apart as the Philippines and Guatemala

The crisis will affect

significant role in domestic consumption.

than feared and in

and even for large countries like India and China, where remittances have played a

migration, but less more complex ways.

Other elements of global integration have been adversely affected by the crisis: Exports have declined sharply across the world, and capital flows have deglobalized

in that foreign direct investment, portfolio capital and bank lending to developing

countries have almost collapsed. It’s only to be expected that when economic activity slows or contracts in destination countries, migrant workers are the first to be laid off and sent home. Since a lot of recent economic migration has been explicitly

short term with respect to meeting specific labor shortages in the host economies, this is even more likely.

That is why by late 2008 it was widely predicted that remittance flows would quickly

show signs of decline, and initial reports also bore this out. By August 2008, remittances into Mexico, dominantly from workers based in the US, were already down 12 percent compared to the previous year. There was also evidence of declining

remittances from other countries that relied strongly on them, such as Bangladesh, Lebanon, Jordan and Ethiopia.

As the crisis unfolds, it’s clear that the patterns of migration and remittances may

be more complex previously imagined. In several countries, such as India, remittance inflows have continued to increase. To some extent, this, too, can be expected

because even if the crisis leads to large-scale retrenchment of migrant workers forced to return home, they would also bring their accumulated savings. In such a case,

there could even be a temporary spike in remittances rather than a continuous or sharp decline because of the crisis. Eventually, as adverse conditions for overseas

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employment worsen, this would lead to a decline in remittance inflows. A sharp decline in migration and remittances is not inevitable. One aspect frequently

ignored in the discussions on migration is the gender dimension. International

migration for work is highly gendered, with male migrants finding dominant representation in manufacturing and construction sectors, while women migrants are

concentrated in service sectors such as the care economy, broadly defined as activities ranging from domestic work to nursing.

Female migrants are also far more likely to send remittances home and typically

send a greater proportion. Also, male migrant workers find that incomes are more linked to the business cycle in the host economy, so their employment and wages tend to vary with output behavior. Thus job losses in the North during this crisis have been concentrated in construction, financial services and manufacturing, all dominated by male workers.

By contrast, the care activities dominantly performed by women workers tend to

be affected by variables such as demographic tendencies, institutional arrangements and the extent to which women work outside the home in the host country.

Employment in such activities is often unaffected by the business cycle or at least

responds to a lesser extent. Therefore female migrant workers’ incomes are more stable over the cycle.

This in turn means that source countries that have a disproportionately higher share

of women emigrants, such as the Philippines and Sri Lanka, would tend to experience less adverse impact in terms of falling remittances. Indeed, in the Philippines,

the most recent data indicate that remittance flows are still increasing slightly, at an annual rate of around 2 percent. This does not mean that there will be no impact, but certainly the adverse effects will be less and take longer to evolve than if the migration had been dominated by male workers.

The crisis has had limited impact on patterns of migration for other reasons, too. For example, one expectation was that return migration would be dominated by the workers hardest hit, expected to be the undocumented, irregular or illegal migrants

mostly in low-wage and low-skilled occupations, who do not qualify for official support such as welfare benefits or social security from the host country.

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Initial evidence belies this expectation because, for one, such migrants may be un-

willing to face possibly more fragile and insecure employment conditions in their

own country. Many developing countries have been hit worse by the financial crisis that originated in the US economy. So the push factors that operated to cause international migration in search of work remain as strong as ever. The unwillingness to return in such a context may be stronger in cases where the undocumented migrants

have already developed some local social networks that allow them to survive for a period while they look for other employment.

In the host country, undocumented migrant workers may be preferred by employers

who view them as a cheaper source of labor than legal migrants or local workers. In the context of this crisis, preference for inexpensive labor may become sharper, yet another reason why women migrants may be affected less severely, since women dominate the undocumented category.

In any case, one of the basic pull factors still remains significant: Demographic

transition in the North increases the share of the older population requiring more

care from younger workers from abroad. The current crisis may temporarily slow down the ongoing process of international migration for work, but it’s unlikely to reverse it.

New Delhi, 14 July 2009 Jayati Ghosh is professor of economics at the Jawaharlal Nehru University, New Delhi.

Diasporas Shape Politics From Afar Terrence Lyons and Peter Mandaville On 14 October 2010, it was announced by the Transition Federal Government in Mogadishu that Mohamed Abdullahi Mohamed – a US citizen employed by New York’s Department of Transportation – had been appointed prime minister of

Somalia. Most candidates running for the Liberian presidency in 2005 launched their campaigns in front of audiences in the United States. That same year, in the

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immediate aftermath of Ethiopia’s post-election crisis, both the ruling party and

the opposition sent high-level representatives to address diasporas in Europe and North America. Until its defeat last year, the diplomatic and, to some extent, military strategies of the Liberation Tigers of Tamil Elam, or LTTE, in Sri Lanka were largely determined by figures in London and Toronto.

Development experts and economists have long recognized the economic role of

diaspora remittances, and national security analysts point to links between some

diasporas and extremist movements. Less understood is the question of how dia-

The need to understand how diasporas shape political outcomes is paramount.

sporas shape everyday political outcomes around the world and how patterns of transnational politics are increasingly the norm.

The mantra “all politics is local” continues to ring true, but with globalization those same politics may be determined by actors and processes playing out thousands of miles from the local setting.

Whether trying to assess the impact of diasporas in terms of exacerbating civil wars

or promoting peace, contributing to democratization efforts or transforming the meaning and practice of citizenship, the need to understand how diasporas shape political outcomes is paramount.

New forms of media from blogs to satellite television to SMS text messaging have expanded the geography of political agenda-setting. Many transnational movements

strategically use segments of their constituencies in different parts of the world to

advance a common agenda. Akin to a division of labor based on comparative advantage, each segment of the network pursues activities most effectively accomplished in particular locations.

So, for example, Muslim Brotherhood–affiliated networks might focus on fundraising in North America, where private philanthropy is more highly developed than in

Europe, but use the United Kingdom as a base for coordination due to relative its proximity to the Middle East.

If an organization is banned in one country, such as LTTE, fundraising and critical operations shift to other locations. When authoritarian regimes stifle political discussions and organizations in one location, as in Ethiopia, leaders and processes in other locations gain stature.

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Migrant remittances, reaching an estimated $338 billion in 2008 in the developing

world, remain part of the story insofar as political endorsements often accompany cash sent home. Large populations in war-torn Somalia as well as earthquakedevastated Haiti depend upon remittances for survival.

Like all financial transfers, remittances have political consequences. In some cases patron-client relationships that have long existed within small communities have

become globalized. Patrons with access to resources often live abroad. If someone in rural Liberia wishes to appeal to the central government in Monrovia for support,

the closest social link may be a cell phone call to a relative in Philadelphia known to have political connections in the capital. Geographic distance does not prohibit political influence; physical distance matters less for patron-client relationships than social proximity. Neo-patrimonialism has gone global.

Moving beyond the conventional ethnic lobbying of host-country governments, today’s

transnational activists target a variety of pressure points. Ethiopian Americans, for example, have sought to influence Washington to change its policies toward Addis Ababa, actively pushing for the Ethiopian Democracy and Accountability Act in

2007. At the same time, they demonstrate in front of NGOs like the Carter Center,

multilateral institutions such as the World Bank, media outlets like The Washington Post, and other locations of transnational influence. They reach out to human rights

organizations, seeking to frame conflicts within Ethiopia as “genocidal” to counter

Addis Ababa’s characterization of opposition groups as “terrorists.” Facing political unrest after election, the Ethiopian state indicted opposition leaders in Addis

Ababa, including two US university professors and Ethiopian-Americans who ran websites and controlled campaign funds from abroad.

In some cases, governments and ruling parties in the homeland have tried to “reclaim citizens,” luring diasporas to remit money or invest in the homeland through

granting political rights, including extraterritorial voting rights or reserved parliamentary seats for diaspora representation. But participation is low and tends not to have meaningful impact on political outcomes.

Some efforts to claim migrant loyalty reach back to older 19th-century forms of

nationalism constructed around blood ties. A New Yorker remains a Dominican if one has Dominican ancestors, for example; yet a Haitian living in the Dominican

Republic, regardless of years or generations, is not a Dominican citizen. In other

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cases, the regime seeks to challenge the diaspora’s legitimacy and block political access to the homeland. In Cuba, the ruling party has long blamed the Miami exile community for the country’s problems. Certain diasporas, rather than embraced, are perceived as threatening, vilified as traitorous.

Diasporas linked to states and those that are stateless have distinct differences. Some

of the most highly mobilized networks support movements to liberate a homeland,

as among the Tamils, Eritreans, Palestinians, Irish, Armenians and Kurds. In these cases the perceived danger to one’s kin, and the absence of a state to organize the nation’s defense foists that responsibility onto those in the diaspora who can speak

for the vulnerable. In other cases the host country has a hand in mobilizing a particular diaspora when geopolitical or security interests are perceived to be at stake

– hence the role of the US government in activating Iraqi and Afghan Americans during the first half of this decade.

Some researchers, such as Paul Collier in his work on the links between resources and insurgencies, suggest that countries with large diasporas are more likely to

experience civil wars than those without. According to this logic, the ability of diasporas to raise funds for insurgents back home allows rebels to pursue violent military strategies and resist compromise.

Beyond fundraising, conflict-generated diasporas often have symbolic attachments to the homeland and tend to see politics in stark black-and-white terms. The impulse

to demand categorical goals may come more easily to those at a distance who don’t

endure the costs of the violence. Symbolic politics or “long-distance nationalism” tends to strengthen confrontational leaders and undermine compromise.

Diasporas can be a force for peace. For years the Irish Northern Aid Committee

dominated the Irish-American diaspora’s links to the conflict in Northern Ireland and sustained the most militant leaders. In the 1990s, however, a group of IrishAmerican leaders created Americans for a New Irish Agenda to create a constituency

for peace. The latter lobbied US President Bill Clinton to give Gerry Adams a visa and support the peace process in general.

Overall, diasporas do not seem predestined to play particular political roles or impose

a specific qualitative impact on homeland politics. Like other political parties, interest groups or insurgencies, they mobilize to influence political agendas across the

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spectrum. Diasporas are not necessarily liberal or radical, tolerant or chauvinistic, any more than political parties or interest groups are inherently liberal or radical, tolerant or chauvinistic.

Modern diasporas challenge contemporary notions of how political life should be

organized. Globalization and human migration disconnected the territorial state that regulates politics from the transnational actors and processes that influence outcomes. Some bemoan the emergence of long-distance nationalists who attempt

to shape homeland politics, seeing them as irresponsible and dangerously unaccountable. But such transnational engagement is likely to grow as a part of political life in the coming decades.

Fairfax, 19 November 2010 Terrence Lyons and Peter Mandaville co-direct the Center for Global Studies at George Mason University. The research, on which this article is based, funded by the John D. and Catherine T. MacArthur Foundation, is in Globalization & Diasporas: Local Politics from Afar, Hurst & Co Publishers.

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Demographics Define Israeli-Palestinian Future Joseph Chamie Countless words have been spoken and written, several wars and numerous armed clashes have taken place. Thousands have died, with more injured and suffering. Yet, after more than 60 years of struggle, numerous diplomatic initiatives, agreements and peace offers, intergovernmental conferences and behind-the-scenes

negotiations, comprehensive resolution to the Israeli-Palestinian conflict remains disappointingly elusive.

Nevertheless, the Israelis and Palestinians are meeting again in an attempt to negoti-

ate a settlement. This latest peace-fest, the first in 20 months, is the ninth attempt at peace since 1979, when negotiators identified the final status issues.

Although this round of negotiations was launched with considerable fanfare and political spin, the talks are teetering on the verge of collapse following Israel’s

decision not to extend the moratorium on settlement construction. Whatever the outcome of these current negotiations, significant demographic changes now underway create political realities that will likely overtake any proposed peace plan if it is long in coming.

To be sure, resolving the Israeli-Palestinian conflict involves overcoming obdurate

obstacles and successfully aligning many interlocking and intricate pieces. However, the fundamental ingredients for a peace deal are relatively straightforward.

First is the important matter of borders for the two states. Not surprisingly, each

side has its respective positions – varying from extreme rejection to equitable accommodation – on how best to slice up historic British Palestine.

Perhaps the most promising outcome is that Israel returns to its June 1967 borders, give or take a few negotiated settlements in the West Bank and some compensatory territorial swaps. Also, to unite the two components of a Palestinian state, a land corridor connecting the West Bank and the Gaza Strip must be worked out.

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The second issue concerns the right of return for the Palestinians refugees of the 1948 war that established the Israeli state and their millions of descendants. Given

the current circumstances, the most promising compromise is for the Palestinians to (a) concede that there would be no right of return except for a small proportion

of refugees for humanitarian purposes, such as family reunification, and (b) accept compensation for their displacement and losses.

Among the most sensitive issues to negotiate concerns the status of Jerusalem. Here again the staked out positions of each side differ greatly. The Palestinians

insist on making East Jerusalem the capital of their new country; the Israelis are

adamant on a unified Jerusalem under their control. Perhaps the most promising

Contrasting birthrates

locating their capital in the East and Israelis in the West. In addition, both parties

Palestinians will in-

Old City’s holy sites.

politics.

solution in general terms is for the two parties to share Jerusalem – Palestinians

between Israelis and

would sign on to an international agreement establishing mechanisms to share the

fluence Middle East

The fourth major ingredient for achieving a peace accord relates to the vital matter of security. The United States or NATO would have to give both Israelis and

Palestinians security guarantees. In addition to monitoring implementation of the peace agreement, this would likely include stationing troops along the common

borders. To stop potential arms traffic into a future Palestinian state, troops would be required to monitor borders with Egypt and Jordan.

The fifth key issue is the recognition of Israel, the end of all hostilities and full normalization of relations with all Arab states, including Saudi Arabia and Libya. This

would involve an Israeli-Syrian peace agreement that includes Israeli withdrawal and return of the occupied Golan Heights to Syria. And of course, other normal

interstate matters must be suitably resolved among the parties, including water, trade, transportation, travel and communication.

Despite the resumption of peace talks, the clarity of the major issues to be addressed

and the professed good intentions of the negotiators and their supporters to achieve

a just and permanent settlement, the outcome of the restarted peace talks remains uncertain. Each side has powerful factions resisting a peace accord in part because

they are convinced that the passage of time is on their side. Some Israelis and their supporters envision the expansion of Jewish Israel over all of biblical Israel and the transfer or removal, both voluntarily and involuntarily, of the Palestinians into nearby

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countries. In contrast, some Palestinians and their supporters foresee protracted

conflict leading to voluntary departure of most Jewish-Israelis to the United States

and Western European nations and subsequent establishment of a Palestinian state in the former British Palestine.

However, time may not be on either side. Differential rates of population growth already redefine the relative demographic standing of Arab-Israelis, Jewish-Israelis and Palestinians. The Palestinian population is expected to grow more rapidly than

the Israeli population due primarily to higher birthrates. Consequently, over the

coming decades the difference in the numbers of Israelis and Palestinians will shrink, with long-range projections pointing to convergence toward numeric equivalence, a critical demographic inflection point.

Also, while demographic projections indicate that the Jewish-Israelis will continue to be the large majority in Israel for the foreseeable future, it will be increasingly

challenging for them to increase or maintain their current dominant majority of

approximately 75 percent. The primary underlying reason is the fact that the fertility rates of Arab-Israelis are about one child higher than those of Jewish-Israelis.

With regard to immigration, past flows of Jewish immigration to Israel were substantial, contributing significantly to the growth of the Jewish-Israeli population. However, despite high levels of immigration in the past, in particular from the

republics of the former Soviet Union, the proportion Jewish among the Israeli

population has declined from a high of 89 percent in 1958 to 75 percent, primarily the result of higher rates of growth among non-Jewish Israelis.

Moreover, it’s important to note that after Israel, which accounts for approximately

42 percent of world’s Jews, the largest numbers of Jews reside in the United States – nearly 40 percent – followed by France, Canada and the United Kingdom, all

less than 4 percent. Relatively few from the Jewish populations in these developed

countries are likely to exchange comfortable lifestyles and economic opportunities for a more precarious residence in this troubled, unstable region.

And Israel is not immune to emigration of its own Jewish citizens. With attractive educational, employment and other opportunities abroad and difficulties at home, increasing numbers of Israelis have chosen to travel and live in other countries.

Estimates of the number of Israelis residing abroad range from about 800,000 to

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1 million – 11 to 14 percent – with about 60 percent settled in the United States and a quarter in Europe.

Given the tragic past, the knotty state of current affairs and many formidable ob-

stacles to overcome, it’s undeniably difficult to envision an outcome to the current peace talks other than the status quo. However, continuation of the status quo

undermines the credibility and diminishes chances for achieving a lasting and just peace agreement. Indeed, the persistence of the status quo may soon give the

Palestinians no choice but to forgo a state of their own and push for the right to be Israeli citizens with equal rights, including voting. For Israel, continuation of the status quo seriously challenges its democracy and predominately Jewish character.

In short, Israelis and Palestinians need to make difficult choices. If they don’t do so soon, the future will be made for them, and it’s unlikely to be peace. New York, 6 October 2010 Joseph Chamie, former director of the United Nations Population Division, is research director at the Center for Migration Studies.

Childless by Choice Joseph Chamie and Barry Mirkin While considerable media attention has focused on the world’s population reaching

the milestone of 7 billion, another demographic phenomenon receives little notice:

the rise in number of people who choose not to have children. Against a birthrate of less than two children per woman in nearly all western countries and a growing number of developing countries – a rate that assures a decline in population – rising

voluntary childlessness will have consequences for government programs for the

aged, undesirable implications for the elderly and other repercussions, including smaller cohorts of children, increased population aging and demographic imbalances among educational groups.

When early marriage is close to universal and birth control is practiced little, less than

3 percent of women remain childless by the time they reach their late 40s. Until the

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early 1960s and the introduction of reliable family planning methods – namely, the

oral contraceptive pill – childlessness within marriage was almost entirely involuntary. The modern era provided more education opportunities for women, leading to

later marriage, careers, lower proportions marrying, greater use of contraception and abortion, and changes in women’s role and status. As a result, the proportions of childless women in developed countries and many developing countries are well above 3 percent.

Increasing numbers of women attend schools and universities, pursuing employment,

More people decide against having children, presenting quandaries for governments and the elderly.

career development and self-enrichment. Consequently, women start childbearing later in life than they did in the past. Among OECD countries, for example, between

1970 and 2008 the average age at which women had their first child increased from 24 to 28 years. In Germany, Italy and Switzerland, the average age of first childbirth

of women is higher, approaching 30 years. As a result of delayed childbearing, older women may find it difficult to become pregnant.

Childlessness rates are strongly connected to women’s educational levels. Women with university education, for example, are more likely to be childless than those

with secondary education. In addition, young women who are highly educated are more likely to choose employment and postpone family building. Another contributing factor to higher rates of childlessness among highly educated women is their reluctance to marry a less educated man. By and large, women, especially those

highly educated and seeking gender equality, have more to lose in terms of employment, careers and related opportunity costs than men when they become parents.

In most of the less developed countries the percentage of childless women in their late 40s is typically under 10 percent. And in some populous nations, such India, Indonesia, Pakistan, South Africa and Turkey, the proportion of women remaining

childless by their late 40s is below 5 percent. In contrast, in the majority of developed countries childlessness among women at the end of their reproductive careers is above 10 percent.

In some countries, such as England, Germany, the Netherlands and the United States,

the proportions are substantial, with approximately one in five women in their late 40s remaining childless. Higher proportions are observed in Italy and Switzerland, where one in four women in their late 40s is childless. (See graph)

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In Australia, Germany, Italy and the US, the proportion of childlessness among women in their late 40s has doubled over the past three decades.

Government policies can influence the childbearing rate. Maternity and paternity

leave, childcare, part-time employment, job security, cash allowances, tax credits

and other financial incentives are among the measures to encourage childbearing. Punitive polices are also tried like prohibiting abortion or contraception and restricting girls’ education and women’s employment. Providing tangible support to couples is an especially critical factor influencing childbearing decisions. For

example, in France, where the childlessness rate is around 10 percent, government policies and programs, including maternity/paternity leave, nurseries, afterschool

programs and child allowances, facilitate family building and women’s participation in the workforce.

With a childless level similar to France, but a lower birthrate, Russia is considering pronatalist policies, such as financial support to families with three or more children

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and free land plots, raising student scholarships and reducing real estate costs.

More desperate measures to encourage childbearing are also proposed, including

reinstating a childless tax that existed in the Soviet Union between 1941 and 1992, whereby childless men aged 25 to 50 and women aged 20 to 45 paid an extra 6

percent of their monthly salaries to the government. Other low-fertility countries, such as the Ukraine and Germany, also debate a special tax on men and women who remain childless by choice.

Childlessness is often not a clear lifestyle choice, that is, women deliberately pursuing individual satisfaction and rejecting childrearing responsibilities. Most remain

childless after a series of childbearing postponements, including higher education, employment, absence of a suitable partner, separation or divorce. In the US, young single, childless women now earn more than male counterparts, attributable to the higher education attainment, and this may account for women’s difficulties in finding a suitable partner.

Men and women, especially in more developed countries, are also becoming more realistic about their expectations of family building, recognizing that many mar-

riages end in separation and divorce. The cultural pressures to marry and have children are considerably less than they were in the past, while remaining childless is increasingly viewed as a viable lifestyle option.

Historically, childlessness was a rare occurrence and had limited demographic consequences at a time when most families were large. Today, with smaller families, the demographic impact of childlessness is more consequential.

In the US, for example, the percentage of women in their 40s with three or more

children fell from 59 percent in 1976 to 29 percent in 2010. In Italy, a nation with a tradition of large families, the percentage of women in their 40s with four or more children dropped from around 17 percent in the early 1980s to less than 5 today.

Voluntary childlessness contributes to keeping fertility below the replacement level

– on average about two children per woman – which reduces the size of the future

labor force, boosts the proportions of elderly and thereby increases old-age depen-

dency ratios. In turn, this can lead to more program support for the elderly, less support for education funding and other community programs for children. These demographic changes have far-reaching implications, especially with regard to the

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domestic labor force, immigration levels, voting patterns, taxation, pension expen-

ditures, education funding and health-care costs.

Recent evidence suggests that aged childless couples, especially women, are likely to

be disproportionately affected. In Italy, studies have found that older non-parents

lacked the health care and social support that adult children and professional caregivers could provide. Similarly, in the US, based on the experiences of several states,

childless older adults were likely to have higher medical costs and more complex health-care needs than older couples with children.

The population of childless aged couples, especially women, is expected to grow

rapidly. In Italy and the US, for example, the population of childless women aged

65 or older is expected to nearly quadruple over the next four decades. These pro-

jections raise questions about the provision of care for childless women and men upon reaching advanced ages. With the decline in large families and upswing in childlessness, the low fertility rates in many developed countries are unlikely to

rebound to replacement levels anytime soon, especially given relatively high levels of youth unemployment, the continuing economic recession and gloomy prospects for a rapid, painless recovery.

The current severe budget deficits facing many developed countries and acrimonious negotiations on the future of the welfare state will likely result in reduced government

entitlements, especially for older persons. A vivid example was the recent axing of the

newly approved US long-term insurance program even before it was implemented. Given the anticipated substantial cutbacks in entitlements, already underway in

European nations, it’s doubtful that governments can provide sufficient financial and human resources to care for the growing numbers of elderly without children. New York, 2 March 2012 Joseph Chamie is the former director of the United Nations Population Division and Barry Mirkin is an independent consultant.

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US Lags in Race for Tech Talent Vivek Wadhwa From all appearances Silicon Valley is booming, but it’s a deceptive image. The

sources of innovation which have always powered the Valley are seeping away, tak-

ing with them the lifeblood of a giant technology wealth machine. A steady stream of immigrant innovators are saying goodbye to America and heading home.

Rents and salaries are soaring in Silicon Valley. The tables are full for breakfast at Buck’s in Woodside and The Creamery in San Francisco with venture capitalists quizzing young masters of the digital universe in search of the next Facebook or Instagram. Across the Bay Area, free lunch is served, preferably organic and local. But many talented individuals no longer find the US an attractive place.

While everyone remains busy counting the many billions in future IPO earnings or big buyouts by Google and Microsoft, few have noticed that the immigrant entrepreneurs who have increasingly driven technology sector growth in Silicon Valley are

leaving for greener pastures. Google, Instagram, Tesla, Yammer, Sun Microsystems and PayPal all count immigrants among their key founders. So signs that the tide of immigrant founders flowing into the US technology sector have reversed must be taken seriously by anyone who cares about maintaining the country’s global leadership in this economically critical area.

AnnaLee Saxenian, dean of the School of Information at University of California, Berkeley, documented that in 1998, Chinese and Indian computer scientists and

engineers were running one-quarter of the region’s high-tech firms. In that year alone, these firms accounted for nearly $17 billion in sales and more than 58,000

jobs. In 2006 and 2007, I worked with Saxenian to update this research. We surveyed 2052 tech companies founded between 1995 and 2005; the proportion of

immigrant-founded companies in Silicon Valley had increased to 52.4 percent.

Nationwide, the proportion was 25.3 percent, and these companies generated sales of $52 billion and employed 450,000.

That research received significant media coverage. Not surprisingly, we began to

receive emails from young immigrant entrepreneurs. Rather than telling us how great it was to launch a business in Silicon Valley, or the US in general, a significant

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portion of those missives contained tales of visa hell and immigration limbo. From their viewpoint, the free-flowing ideation and the fast company formation of Silicon

Valley did not match the legal red tape required for people not born in America to start and run a business in this country.

During spring and summer of 2012, our research team conducted a follow-up survey

of 2042 tech companies with at least $1 million in revenues, the latest and most

comprehensive survey to date on the topic. Like previous surveys, we included a significant cohort of companies from Silicon Valley and the Bay Area. Our research

team found significant decline in the percentage of technology companies headed by immigrants in Silicon Valley and signs of the beginning of a drop in other parts

US sets up roadblocks;

of the country.

other nations offer

The drop, reversing more than two decades of increases, is troubling. More troubling

to skilled tech workers.

speedy path for residency

still, the drop occurred precisely when the country should have experienced rapid increase in immigrant entrepreneurship. During the late 1990s and the early 2000s,

the US government dramatically raised the number of immigrant tech workers

allowed to enter this country with H-1B visas from roughly 65,000 to 195,000, in response to the Y2K crisis and a boom in the technology industry.

These visas are the most common pathway to permanent residency in America

for skilled immigrants. Silicon Valley remains the premiere destination for skilled

workers in the US. Outside of Wall Street, engineers and technologists in the Valley earn the highest salaries of almost any profession. There should be a large upswing

in immigrant entrepreneurship in Silicon Valley, yet the very opposite appears to be occurring.

Many factors contribute to this drop. The slowdown in the US economy has contrasted with still-growing economies in China and India, the home countries of the largest percentages of immigrant founders. This is compounded by the challenges that immigrant tech founders face in obtaining visas.

Indian and Chinese H-1B holders face waits of 10 years or more to attain a green

card or permanent residency. Once starting the process, they can stay. Current US immigration law allocates no more than 7 percent of the permanent residency visas

to any one nationality, and Chinese and Indian immigrants comprise far more than half of the skilled immigrant labor pool. The result is a massive, growing bottleneck

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that chains skilled immigrants to employer-sponsored jobs. To make matters worse,

their spouses are often as qualified as visa holders, yet prohibited from working in the US at all.

This bottleneck has created an enormous pool of highly skilled workers and families

waiting for green cards—with no guarantees. The workers could wait for green cards

for the most productive parts of their career and be forced to leave with nothing. US

laws mandate that if a H-1B worker gets laid off, he or she must leave the country

immediately. Even skilled workers who start companies that may provide employment to US workers can’t secure US work visas. Entrepreneurs who pay taxes and

provide much needed US technology jobs are forced to shutter businesses due to

Draconian immigration policies. For example, Anand and Shikha Chhatpar started two companies that employed several workers and paid more than $250,000 in taxes. Yet the US government forced them to stay in India where they have created jobs.

Many other talented immigrants that do obtain the right to work in the US via H1Bs are trapped into barren career trajectories that undersell their talents. These

workers can only work for the companies that sponsor their visas. Employers know they’re less likely to lose these workers than more mobile American citizens, so they offer lower salary increases and keep them in less challenging jobs. That same immigrant is legally prevented from engaging in any outside work, stifling the creative impulses of some of the most highly-skilled workers in the US economy, sometimes permanently.

Other governments have taken notice of US immigration-policy failings. Australia, a country of 22 million, hands out nearly as many employment-based green cards

for permanent residence each year. The US, Canada, Germany, the UK and Israel, among others, have set up streamlined visa policies to award skilled technology

workers a fast path to permanent residency. Chile has taken the radical step of offering $40,000 to fund startups relocating to the country, along with subsidies for office space and initial employee hires.

The irony of all this is that the US remains the overwhelming destination of choice for founding a company. The startup ecosystem and institutional knowledge of how to start companies runs deep, allowing for lightning-fast transition from idea to

product to sales. As Alex Salkever and I explain in our book, The Immigrant Exodus, with only a few simple changes to policies, the US government could reverse this

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decline. The changes would cost US taxpayers practically nothing, and accelerate

job creation and innovation without taking away jobs from native-born Americans. One simple program – a startup visa for foreigners to launch companies in this country – could quickly create hundreds of thousands new jobs.

For now, the US has a protectionist labor market for technology skills. By opening up

this labor market, we would ensure that Silicon Valley and other tech hubs continue to provide the spark needed to dig the economy out of its deep hole. San Francisco, 26 October 2012 Vivek Wadhwa is vice president of academics and innovation at Singularity University; fellow, Arthur & Toni Rembe Rock Center for Corporate Governance, Stanford University; director of research at the Center for Entrepreneurship and Research Commercialization at the Pratt School of Engineering, Duke University; and distinguished visiting scholar, Halle Institute of Global Learning, Emory University. He is the author of Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent.

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AntiGlobalization

Global connections – whether for spreading commerce, religion or culture – and the influences of other lands have been welcomed as much as resisted. Countries

and special interests have often eschewed the back and forth of global connections, wanting to send their exports and ideas out into the world but resisting the products

of others. Due to a media revolution and the ability to exchange information, those

affected by globalization can organize instant anti-globalization movements. Media advances spurred by the growing internet have enabled individual opponents of

globalization to connect, coordinate and oppose globalization in organized ways. An online report of an atrocity can ignite the passions of strangers on the other side of the world.

The 1999 demonstrations in Seattle against a World Trade Organization ministerial meeting attracted protesters from around the globe and marked a turning point. The protests, violent as they were, did not spring from nationalism; a motley group presented a global, loosely united front to challenge the lofty and remote power of governments, multinational corporations and financial institutions.

Large segments of marginalized populations scattered throughout the world – the poor, the young, the unemployed – increasingly perceive globalization’s opportunities

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and costs as unevenly distributed among or within societies. Everyone wants to be on the winning side of globalization rather than its victim. Traditional working-class

and middle-class groups in developed countries, too, have felt disenfranchised as outsourcing and offshoring have shifted jobs overseas. While globalization has helped

multinational corporations and financial institutions earn enormous profits, rising income inequality has fueled anti-globalization sentiment. Countries must respond

with innovative education, specific job training, public health care, and retirement programs that ensure security across generations and classes. Resentment born of inequality will create social upheavals that threaten global integration.

Lessons from History: Globalization Then and Now Harold James Many people wish that globalization would simply stop. After September 11, some critics of globalization, such as the British philosopher, John Gray, thought that the

process they detested so much had indeed come to an apocalyptic end. This view fails to specify what has replaced globalization. It is also wrong. The world is still

very interdependent, though that interdependence makes for a great vulnerability. Since September 11, the debate about globalization has changed in two significant

ways. The first is a direct product of the terrorist attack. Every part of the package

that had previously produced such unprecedented economic growth in many coun-

tries – the increased flow of people, goods, and capital – now seemed to contain obvious threats to security. Students and visitors from poor and especially from

Islamic countries might be “sleeper” terrorists, or they might become radicalized

through their experience of western liberalism, permissiveness or the arbitrariness of the market economy. It soon became apparent that customs agencies scarcely

controlled the shipment of goods any longer, that explosives, even atomic, biologi-

cal and chemical weapons might easily be smuggled. The free flow of capital and complex bank transactions might be used to launder money and to supply funding for terrorist operations.

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It’s natural and legitimate to suggest that all these areas should be subject to more intense controls. But every sort of control also offers a possibility for abuse by people

who want controls for other reasons: because skilled immigrant workers provide

“unfair” competition; because too many goods are imported from cheap labor countries; or because capital movements are believed to be destabilizing, producing

severe and contagious financial crises. A new debate about the security challenge offered the chance to present older demands for protection of particular interests in

a much more compelling way. Protectionists of all sorts suddenly had a good story.

Demand for more controls was characteristic of past eras in which globalization broke down.

The demand for more controls – almost always dressed up as a concern for national security – was characteristic of past eras in which globalization broke down. The most chilling experience of the intensification of controls during the last century was

in the Great Depression. Many of the policies implemented in the 1920s and 1930s,

such as immigration restriction or trade control, were not fundamentally novel, but they could be dressed up in a new way as answers to the security issues raised by the

First World War. They were more extreme versions of ideas developed in the 19th century as protective shields from the fierce winds of international competition. As

the world economy looked more disorderly and threatening in the aftermath of the First World War, such solutions appeared even more attractive. What had before

1914 been safety nets against excessive globalization became after the World War gigantic snares strangling the world economy. Capital controls were introduced to

combat speculative exchange movements, quotas to supplement tariffs in restricting unwelcome trade.

People who might move capital because they thought that regimes were unstable were

depicted as national traitors. In Central Europe, against a background of ferocious

anti-Semitism, capital control legislation was used in particular to penalize Jews. In a recent analogy, during the Asian crisis of 1997-8, in many ethnically diverse states,

such as Indonesia or Malaysia, it was claimed that the Chinese population saw itself

as belonging to a greater China, particularly liable to move funds, and hence was

regard as a security risk. With increased uncertainty and a high likelihood of war in the Middle East or the Gulf, it’s easy to think that Arab or Islamic transactions will be scrutinized as subversive of security.

Terror has helped to create a new mood of suspicion, of polarization, and of a search

for enemies – and that indeed was one of its purposes. In this way terror has inevitably enhanced the vulnerability of the world to new economic shocks. 

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The second new development looks as if it is independent of the terror issue, although

it too revolves around the discussion of America’s role in the world. Economist Paul Krugman quickly concluded that Enron’s impact would be more dramatic than the

damage done by September 11. The combination of worldwide stock-price declines with the revelation of some major cases of accounting fraud in the United States has produced a moral crisis of capitalism. Particularly outside the United States,

countries, politicians and business leaders who previously listened to Americans

proclaiming the superiority of the American way of life, now have acute Schadenfreude. Enron was the banana skin on which American capitalism slipped. Prominent

European business executives like Jean-Marie Messier, Ron Sommer, and Thomas Middelhoff are blamed and sacked for being too Americanized. In many countries, a fierce debate started about the pay and compensation of senior business figures.

Again, there are historical parallels for such a response. In previous periods as today,

greater market integration and increased long distance trade created new opportunities and new riches. But in the past, many people felt that there was something

illegitimate about the great gains and resulting large inequalities. The Renaissance and the great age of European explorations was also a period of great poverty because of population growth rather than because of the dynamism of the economy. Moralists such as the fiery Florentine friar Savonarola or the dyspeptic German Martin Luther

fulminated against luxury and long-distance trade. Luther contended that “foreign

trade, which brings from Calcutta and India and such places wares like costly silks,

articles of gold, and spices – which minister only to ostentation but serve no useful purpose, and which drain away the money of land and people – would not be permitted if we had proper government and princes.” In the late 19th century, Karl

Marx, Richard Wagner and others excoriated the ills of luxurious, sinful capitalism. The expansion of trade had often been associated with new opportunities for

greed, corruption and self-enrichment; and many commentators rapidly reached the conclusion that this was all there was to the new developments.

Most of the protesters then thought in terms of some simple moral alternative, theological or quasi-theological. In the mid-20th century, there were apparently

simple and appealing alternative models – offered by leaders who saw it as their mission to formulate a new philosophy for the state, Mussolini, Hitler or Stalin.

Today’s globalization, apparently driven by financial flows and financial institutions,

offers many examples analogous to the scandals of the past. Enron looks as if it will

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be the starting point of a new debate, but the outcome of that debate is unclear. An immediate response is to call for more regulation, but regulation is always designed

to do something. What should the goals of a new regulation be? In the 20th century, the regulatory traditions reflected one of two opposed social philosophies: one

conservative, designed to stop new developments that might be dis-equilibrating

or disturbing, and the other social democratic, designed to provide compensation for the victims of change and innovation.

But these old political movements of the 20th century are largely exhausted. Classic

conservatism is dead because the world is changing too rapidly for conservatism as stasis to be coherent or appealing any more. Classic socialism has also largely

disappeared politically, because the rapidity of change and the mobility of factors of production across national frontiers erode traditional labor positions in exactly the same way. The bankruptcy of these two very respectable but quite outmoded

positions leaves the path open for a new populism, based on an anti-globalization groundswell, that is inward-looking and likes the idea of the revival of the nation as

a protective bulwark against foreign goods and foreign migrants and foreign own-

ership. The populist reformulations are fundamentally at odds with the universal values which still form a core of western political traditions.

The alternatives that at the moment command more electoral sympathy are anticorruption, in practice anti-incumbent, movements, and consumer-interest advocacy.

Politics in advanced industrial countries have become in the post–Cold War, new globalization era, increasingly centered around this twin set of issues, which do not

raise classical redistributional themes nor fundamentally challenge the process and

progress of globalization. All of these developments had become apparent before the stock market collapses and the corporate scandals.

Sometimes it’s claimed that this transition is due simply to the end of the Cold War,

which in providing convenient external enemies held politics frozen in place. This thesis is true to the extent that no other compelling and overarching issue replaced the Cold War. Then more or less simultaneously, the Italian Christian Democrats

disintegrated, the British Conservative Party suffered from a succession of “sleaze” cases, France’s political parties competed in trading revelations and allegations

about François Mitterrand’s corruption on the one hand and the affairs of Jacques Chirac’s Gaullists on the other, the funding practices of Helmut Kohl’s “system”

were exposed, and President Bill Clinton moved from one fundraising and campaign

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finance scandal to another. Enron and Halliburton appear to offer another type of link between business and political corruption.

Exposure of corruption as the major form of domestic politics in every industrial

country has brought a politics of negativity. A more positive modern political direction is concerned with the protection of consumer interests: the restriction of

tobacco advertising, automobile safety, and – and for Europe – food safety in the face of a succession of scares about disease and infection. Almost always these new

political issues are attached to the globalization debate. The products from faraway pose a threat. For a long time, before the eruption of BSE and then foot-and-mouth

disease, the European food safety obsession focused on the alleged and undemonstrated perils of US hormonally fed beef, and then on the possible dangers of genetic

engineering. Then BSE and foot and mouth seemed new cases of the perils of trade in foodstuffs that went across national borders. Continental Europe saw them as cases of British lack of hygiene and recklessness, while Britain blamed foot and mouth on waste products imported from China.

Disgust at traditional politics, revulsion against the immorality of the market, and the search for homegrown answers to the moral crisis: These were and are the

characteristics of the downward phase of the cycles of integration and disintegration which the world has repeatedly seen. But at the moment there is no simple and

coherent ideological solution to the challenge posed by globalization, unless it is the very radical one of some versions of Islamic fundamentalism. Princeton, 5 February 2003 Harold James is professor of history at Princeton University.

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It’s Right to Rebel Amartya Sen The world in which we live is both remarkably comfortable and thoroughly miserable. There is unprecedented prosperity in the world, which is incomparably richer than ever before. The massive command over resources, knowledge and technology

that we now take for granted would be hard for our ancestors to imagine. But ours is also a world of extraordinary deprivation and staggering inequality. An astonishing

number of children are ill-nourished and illiterate as well as ill-cared for and needlessly ill. Millions perish every week from diseases that can be completely eliminated, or at least prevented from killing people with abandon.

The dual presence of opulence and agony in the world that we inhabit makes it hard

to avoid fundamental questions about the ethical acceptability of the prevailing arrangements and about our own values and their relevance and reach.

One of the questions that we have to face immediately is this: Given the gravity and consequences of the contrasts between the comforts and the miseries that we see

in the world, how do most of us manage to live untroubled and unbothered lives ignoring altogether the inequities that characterize our world? Is the avoidance

of ethical scrutiny the result of our lack of sympathy for one another – a kind of moral blindness or breathtaking egocentrism that afflict and distort our thinking

and actions? Or is there some other explanation that is consistent with a less nega-

tive view of human psychology and human values? The obdurate optimist tends to hope, if only implicitly, that things will get better soon enough. The combination of processes, such as the flourishing market economy, that has led to the prosperity of some in the world will presently lead to similar prosperity for all. In this glowing perspective, the doubters tend to appear soft in head, whether or not they are kind in heart. “Give us time – don’t be so impatient,” asserts the voice of contented optimist.

On the other side, the stubborn pessimists acknowledge, indeed emphasize, the continuing misery in the world. But they are frequently enough also pessimistic

about our ability to change the world significantly. “We should change things if we

can, but to be realistic, we really cannot,” goes that argument. Pessimism can, and often does, lead to a quiet acceptance of a great many ills.

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It is in this general context that we must view the doubts about globalization that

we see in the world today, including the protest movements that have made organized international meetings so hard to hold. These protests have many features – some rather hard to tolerate, including arrogance and violence – but can be, at

one level, seen as a challenge to the ethical complacency and inaction generated by the coalition of optimists and pessimists. The protest movements are often

ungainly, ill-tempered, simplistic, frenzied and frantic, and they can also be highly

disruptive. And yet, at another level, they also serve the function, I would argue, of

questioning and disputing the unexamined contentment about the world in which we live. In this sense, the global doubts can help broaden our attention and extend the reach of policy debates, by confronting the status quo and by contesting global

resignation and acquiescence. That, it can argued, is a creative role of doubts, even if some of the presumptions and many of the proposed remedies that go with the protest movements are themselves under-examined and unclear. It’s important

to recognize that the question-mongering role of doubts can itself be creative and productive, and we have to separate the disruptive parts of the protest movements from their constructive function.

The protest movements can, thus, be seen as expressing creative doubts. But doubts

about what? There is, I would argue, a serious interpretational issue here. The

protesters often describe themselves as “anti-globalization”? Is globalization a new

folly? And are the protesters really against globalization, as their rhetoric suggests? The so-called anti-globalization protesters can hardly be, in general, anti-globalization,

since these protests are in fact among the most globalized events in the contemporary

world. The protests in Seattle, Melbourne, Prague, Quebec and elsewhere are not isolated or provincial phenomena. The protesters are not just local kids, but men and women from across the world pouring into the location of the respective events to have their global voice heard.

Is globalization a new folly? I would argue that globalization is neither especially

new nor ia folly. A historical understanding of the nature of globalization can be quite useful here. Over thousands of years, globalization has contributed to the

progress of the world, through travel, trade, migration, spread of cultural influences, and dissemination of knowledge and understanding, including of science

and technology. To have stopped globalization would have done irreparable harm to the progress of humanity.

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Furthermore, even though globalization is often seen these days as a correlate of Western dominance, consideration of history can also help us understand that globalization can run in the opposite direction as well. To illustrate, let us look back at the beginning of the last millennium rather than at its end. Around 1000 A.D.,

global spread of science, technology and mathematics was changing the nature of

the old world, but the dissemination then was, to a great extent, in the opposite direction to what we see today. For example, the high technology in the world of 1000

A.D. included paper and printing, the crossbow and gunpowder, the clock and the iron-chain suspension bridge, the kite and the magnetic compass, the wheelbarrow

and the rotary fan. Each one of these examples of high technology of a millennium

ago was well-established and extensively used in China and practically unknown elsewhere. Globalization spread them across the world, including Europe.

A similar movement occurred in the eastern influence on western mathematics. The

decimal system emerged and became well developed in India between the second

and the sixth centuries, and was used extensively also by Arab mathematicians soon thereafter. These mathematical innovations reached Europe mainly in the

last quarter of the 10th century, and began having major impact in the early years of the last millennium, playing a major part in the scientific revolution that helped transform Europe.

Indeed, Europe would have been a lot poorer – economically, culturally and scientifically – had it resisted the globalization of mathematics, science and technology at that time. And the same applies, though in the reverse direction, today.

To reject globalization of science and technology on the ground that this is western

influence would not only amount to overlooking global contributions drawn from many different parts of the world that lie solidly behind so-called western science and technology but would also be a daft decision practically, given the extent to which the whole world stands to benefit from the process.

To identify this phenomenon with the “western imperialism” of ideas and beliefs, as the rhetoric often suggests, would be a serious and costly error, in the same way that

any European resistance to eastern influence would have been at the beginning of

the last millennium. We must not, of course, overlook the fact that there are issues related to globalization that do connect with the imperialism – the history of conquests, colonialism and alien rule remains relevant in many different ways – but it

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would be a great mistake to see globalization primarily as a feature of imperialism. It is much bigger, much greater, than that.

The importance of global contact and interaction applies to economic relations

among others. Indeed, there is much evidence that the global economy has brought prosperity to many different areas on the globe. Pervasive poverty and nasty, brutish

and short lives dominated the world a few centuries ago, with only a few pockets of rare affluence. In overcoming that penury, modern technology, as well as economic

interrelations, has been influential. And they continue to remain important. The economic predicament of the poor across the world cannot be reversed by withholding from them the great advantages of contemporary technology, the well-established

efficiency of international trade and exchange, and the social as well as economic merits of living in open rather than closed societies. Rather, the main issue is how to

make good use of the remarkable benefits of economic intercourse and technological

progress in a way that pays adequate attention to the interests of the deprived and

the underdog. That is, I would argue, the principal question that emerges from the

anti-globalization movements. It is, constitutively, not a question about globalization at all, and the linkage with globalization is only instrumental and contingent. Cambridge, 19 November 2002 © Copyright Amartya Sen Amartya Sen is Nobel laureate in Economics, 1998, and Master at Trinity College, Cambridge. This article was abridged and adapted from comments he gave at a seminar on globalization arranged by the Falcone Foundation, in memory of Antonio Falcone, on 23 May 2001.

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Unpopular Globalization: Why So Many Are Opposed David Dapice The world economy has performed well in recent years – but the mood in rich nations is uneasy. The reason: While globalization fuels economies, citizens see little

gain. They tend to blame globalization rather than specific policies for economic stagnation and growing retirement and health crises. And for politicians seeking to avoid necessary but unpopular policy changes, that is just as well.

Western economies recovered from the burst of the technology bubble and the

fallout from the so-called war on terror. Unemployment is falling in the US, EU

and Japan while inflation remains muted. Gross Domestic Product growth rates, corporate profits and stock prices are up.

Yet a recent survey conducted for the World Economic Forum reports that more than

half of those responding in the EU and nearly two out of five in the US anticipate a bleak economic future. Most economists see growth, trade and global economic integration as threatening some special interests but on the whole helping everyone. Still, what if the sum of “special interests” represents the majority?

The attitudes in the US – historically an optimistic society, fluid and adaptable – are

most surprising. Yet real wages, with all data in constant prices, have fallen from $9 an hour in 1973 to $7.50 in 1993, before rising to $8.25 in 2002 and falling gently since then. Real compensation, which includes fringes such as health insurance,

did rise 20 percent from 1992 to 2005 – but that is only half of the growth in labor productivity, the measure economists use to assess efficiency shown by output per person-hour. Productivity growth has fattened corporate profits, which rose, after

taxes, from 5.2 percent of GDP in 1992 to 7.5 percent in 2005, tying an all-time record. Corporate profits and executive compensation have also soared. Pundits

commonly link these trends with economic integration and free trade agreements. Yet, the trends have more to do with automation, immigration and the US trade deficit than with globalization per se. The low saving rate in the US workers has created the trade deficit, not free trade.

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Likewise, US worries about soaring health care costs are not linked to free trade. Rather, the US health care system is exquisitely inefficient. The US government

does not provide universal health care, but ends up spending more per capita on health care than total per capita spending by Canada on its federal health care. Yet

15 percent of the US population, or more than 45 million, are uninsured, and tens of millions more have inadequate insurance. A Canadian born today can expect to live 80 years; a Costa Rican 78 years; a US baby only 77 years. Out-of-control medical

spending threatens to bankrupt corporations and government at all levels. Workers spend ever more of their paychecks on health care as double-digit cost increases eat

up meager pay gains. Globalization has little to do with US health care, but certainly influences global business decision: Witness the decision of Toyota to build its new plant in Canada.

Blaming globalization for workforce anxiety in the US and Europe is misguided.

In Europe, the health care system is cheaper and produces better outcomes. But the Europeans still worry as jobs go offshore and the graying population complicates the

financing of a comprehensive social safety net, thus leading to budgetary pressures for less generous treatment and pessimism about future access.

The mood would remain glum even if unemployment rates in Europe fell and private job growth, now weak, improved. Governments promise generous pensions, but with the baby boom-generation retiring, these are becoming less affordable.

As with health care, financing these benefits will become unbearable unless older people work longer and pensions are delayed or reduced.

US workers also face retirement uncertainty, with even profitable companies like IBM abandoning defined-benefit pensions. Many companies, such as those in the

steel and airlines industries, use bankruptcy as a tactic to eliminate pension obligations. Most workers run their own retirement savings accounts, even though

research points out the pitfalls. US Social Security, already modest, is replacing an

ever-lower share of previous income, but at least it is certain and indexed to inflation. This bit of certainty might explain why so few supported the reform proposed by President Bush

Perhaps the potential of holding a good job poses the greatest uncertainty. US layoffs

in many industries continue to make headlines. Manufacturing employment, stable

from 1980 to 2000, lost 15 percent of its workers during the last five years due to foreign competition, and those laid off are not likely to find new manufacturing

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jobs. Employers even outsource services, though the scale is small, with perhaps 1 percent of all service jobs affected.

In most of Europe, the pace of private sector job growth has been painfully slow, particularly in Germany. Unemployment rates, though falling, are still in the 8 to 10 percent range. The government imposes high taxes to finance the social benefits, including high unemployment compensation. Laying off workers is difficult and

expensive. Thus, many firms create new jobs or move old ones to Eastern Europe.

The possibility of hordes of immigrant workers snatching jobs that go unwanted by most living in wealthy nations – indeed, the specter of a low-cost Polish plumber helped explain France’s rejection of the EU constitution. – threatens even nontraded sectors.

If the typical worker’s job is insecure, with stagnant wages and uncertain pensions, the voter understandably becomes skeptical of the benefits of global economic

integration. It is all well to point out the advantages of low prices evident at any Walmart, but the tradeoff is inadequate. It is rational to prefer a stable life even if

that comes with a lower return. After all, many people prefer bank accounts to junk bonds. The question, of course, is if such a choice is possible. And if possible, would slowing global integration move the outcomes in a more stable direction?

Most analysis suggests that free trade does not, by itself, destroy jobs. High taxes on employment or high trade deficits – both caused by other factors – can depress

employment, or at least discourage creation of good jobs. While trade does create benefits such as low prices, and these benefits show up in rising real per capita

disposable income in the US, the distribution of benefits is uneven. Most wealth outside of housing is concentrated in the top 10 percent of the population, and a disproportionate share of the growth in disposable income is due to growing non-wage

payments such stock sale and dividends. In other words, buoyed by globalization, corporate income surged while the average citizen had little gain. Indeed, from 1999

to 2004, the share of US households making less than $35,000 a year, in constant prices, rose while those making more than $75,000 fell. This happened while debate

about globalization was at its peak, and many associate such shifts with the process.

In Europe, many blame globalization for sluggish growth and high unemployment. If economic integration with the world is not a major cause of these problems, why do politicians resort to protectionist rhetoric? Many do not want to deliver the real

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message: In the US, both consumers and government need to save more, which

would mean less spending or higher taxes. Europe requires cuts in benefits and taxes,

along with labor flexibility, to attract younger workers. The few politicians who try modest versions of these messages have not done well with voters. Perhaps someone

gifted could sell what is inevitable to the unwilling. But for now, the anxious have misdiagnosed the malady – and the cure will continue to cause hurt. Medford, 2 February 2006 David Dapice is associate professor of economics at Tufts University and the economist of the Vietnam Program at Harvard University’s Kennedy School of Government.

No Globalization, Please – We’re French! Patrick Sabatier Students occupying the Sorbonne, riot police battling demonstrators, cars burning on the chic tree-lined boulevard near the Eiffel Tower – are these the images of

an anti-globalization riot? Is this hide-bound France resisting the onset of global norms of a flexible labor market and free trade, as many foreign commentators insist? A look behind the headlines shows that the discontent goes much deeper

than mere revolt against a law that allows for easy firing of young employees. The French government, which has engaged in stealth globalization while espousing

populist anti-globalization rhetoric, has been caught in its own trap. By creating two

Frances – one of insiders who enjoy the fruits of globalization and state protection and another of have-nots – the government of President Jacques Chirac has set the stage for the explosive protests.

Sure, the demonstrations began against the proposed law allowing easy hiring and firing for workers under the age of 26, during their first two years of employment,

without reason. Foreign analysts quickly concluded that the roots of this resistance

rest in a French refusal to adapt to the iron rules of globalization by abandoning an overgenerous social safety net and adopting labor rules similar to those prevalent in the US, the UK and other liberal countries.

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This analysis overlooks the fact that the failures of the French political system drive

these demonstrations as much as this particular legislation. The labor law has been

a mere spark setting fire to a combustible political landscape. The present explosion resulted from the collision between a weak economy with endemically high unemployment and the terminal illness of a paternalist Gaullist regime built in the

nationalist 1960s, whose standard-bearers are President Chirac and Prime Minister Dominique de Villepin.

In recent years, France increasingly acts as a citadel besieged by the evil forces of

Populist posturing comes head to head with stealth globalization.

globalization. The word itself has become a synonym for loss of jobs, lower wages,

and harsher working conditions, all attributed to unfair competition from countries in the developing world, where unionization, social laws, and even basic democratic rights are unknown or systematically ignored and where wages are abysmally low.

These fears fueled French voters’ resounding rejection of the EU Constitution. The EU has become, for many of the French, a Trojan horse for increased and unfair job competition from the new Eastern European members of the union, epitomized by the specter of the “Polish plumber,” supposedly allowed to steal work from French craftsmen because of the lower wages and minimal social rules in his native country,

added to a loss of social protections because of Brussels-mandated deregulations and privatizations.

Those fears of globalization have paradoxically been fueled not only by the Left, whose

ideology traditionally emphasizes social rights, public services and the regulating role of the national state, but also by the supposedly pro-business Right. Chirac

has opposed World Trade Organization and European reforms in the defense of endangered French farmers; de Villepin has positioned himself as the main expo-

nent of “economic patriotism.” But exaggerated fears of globalization, the playing up to protectionist reflexes for domestic political gains, are not just a French story, as shown by recent uproars in the US over the proposed Chinese buyout of an oil company or Dubai control of operations at six ports. In France, anti-globalization tendencies have been fueled by a social crisis grown out of the very success of the French economy’s opening to the world. Besides the UK, France has attracted the

most foreign investment in Europe. One out of four private-sector employees works

for exporting firms, and one out of seven works for a foreign company. Over a third

of the valuation at the Paris Bourse is made up of foreign capital. And globalization has been good to big French companies, which announced record profits this month,

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a 28 percent increase over the previous year, thanks to strong world demand, with shareholder dividends increasing by 30 percent.

All this fuels suspicions among the French that not everyone has a piece of the globalization pie. It also supports the criticism, even voiced by some business leaders, that companies have been guilty of neglecting medium- and long-term investments,

in R&D and job creation, to satisfy the gluttony of financial markets and shareholders. At the same time the gap has increased between two tiers of the population:

The “haves” are made up of the moneyed classes, shareholders, property owners

but also workers holding permanent jobs with big companies or the public sector, who enjoy all the benefits of the safety net and liberalizing policies of the present government. The “have nots” are the growing mass of the unemployed (over 10

percent of the workforce), those who can’t find anything other than precarious, short-term, low-skilled and low-paid jobs, termed MacJobs, even when they belong to the middle class.

The ranks of the have-nots are growing. More are college-educated degree-holders.

The student demonstrators of spring 2006 fear being condemned to the have-not

category, alongside those suburban unschooled who rioted last November, 40 per-

cent of whom are unemployed, a protest that was as much a social explosion as a problem of integrating immigrants or ethnic or religious tensions. The protesters direct outrage not against globalization as such, but at perceived injustices in the

redistribution of its benefits, at the targeting of young people for special labor legislation. A deep distrust of the political system has emerged from the incoherent policies of the successive conservative governments of Chirac, following the failures

of the socialist Left to enact reforms. More often than not, the students say, politicians ignore their campaign promises.

This double-talk has been particularly obvious on the question of globalization. Government leaders promised to uphold the “French social model” against the

pressures of globalization, while at the same time implementing actual policies that

introduced liberal reforms by stealth. For example, the government has opened energy and transportation sectors to competition, allowing foreign groups to operate within France, while employees – truck drivers for instance – work under different labor laws. The government attracts foreign investments by granting special tax status to expatriates and multinationals.

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Opposition to the latest French proposal about youth employment has less to do with a French hostility to globalization than with an acute domestic political crisis

– made more virulent by the refusal of the government to engage, prior to the crisis,

in any social dialogue on the reforms proposed in the labor market and educational

system. The only similarities between the near-mythical student uprising of May 1968 and the present movement are that both mark the coming-of-age of an entire

generation, through street confrontation with a conservative government. But in 1968, France was confident of its economic standing and post-war social model.

Its youth fought the weight of a parochial society and traditional culture in order to modernize and globalize it. Today, French culture is thoroughly modern and

globalized. Its youth, beyond reacting to the anxiety born of an economic slump, essentially protest failed policies.

Most understand that the French social model must be reformed in the age of globalization, but they want it accomplished without forfeiting the legacy of democratic

ideals of equity and social justice. That may be as idealistic as their parents’ cause,

but could be just as useful in the long run in a country that – as argued by Jacques Marseille, a history professor at the Sorbonne – seems to know no other way to modernize than street confrontations. Paris, 28 March 2006 Patrick Sabatier is deputy editor of the Paris daily Liberation.

Could Globalization Fail? Thomas Palley Around the world there are growing rumbles about globalization, and these rumbles

are not confined to activist anti-globalization movements. In East Asia, the financial crisis of 1997 left a jaundiced sense of globalization, though robust economic

recovery has tempered that. Globalization’s standing has also been badly damaged in Latin America by the meltdown of the Argentine economy in 2000 and successive

financial crises in Brazil in 1999 and 2001. In Europe, new fear about globalization is surfacing in a range of countries. In Poland it has taken the form of concern

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about foreign capital taking over the Polish banking system, and foreign takeover fears also permeate France and Italy. In France and Germany, working people link globalization with pressures to dismantle the social democratic state.

Among Americans, outsourcing of service-sector jobs has become a top concern, possibly the top concern. Opposition to free trade has crept up the income and

social-strata ladder to include educated white-collar workers. This new opposition

comes on top of existing resentments among blue-collar workers at the loss of wellpaying manufacturing jobs.

These developments have raised concerns about the durability of globalization among

Policies that spawn

“Will Globalization Survive?” at Washington’s prestigious pro-globalization Insti-

rather than free trade

published a new book, Global Capitalism: Its Fall and Rise in the 20th Century,

economic crisis.

its supporters. In April 2005, Martin Wolf of the Financial Times gave a lecture titled

economic inequality

tute for International Economics. More recently, Harvard professor Jeffry Frieden

could bring about an

featured at a recent International Monetary Fund book forum. Frieden supports globalization, yet the final section of his book is titled “Global Capitalism Troubled,”

and he ruminates on the possibility that, like the globalization of the 19th century, today’s globalization may falter.

Looking back to the history of what some historians call the “first globalization” can be highly instructive. However, one problem is an implicit tendency to identify

its end with the beginning of World War I in 1914. This is wrong and contributes to historical misunderstanding that impedes understanding modern globalization. The first globalization ended with the Wall Street Crash of 1929 and the ensuing

Great Depression. That said, WWI was hugely significant because it permanently transformed political conditions. Consequently, when the economic order collapsed

in 1929, the response was profoundly affected by the political conditions created by

WWI. In the US, Britain and France, the war created political and social conditions that fostered a turn to social democracy. In Germany, the onerous economic burdens of the 1919 Treaty of Versailles fostered a turn to Nazism.

This history has enormous significance for understanding today’s predicament. The

first lesson is that politics did not bring down the first globalization, which suggests

that politics will not bring down globalization. The economic crisis of 1929 brought

down the first globalization, suggesting that economic crisis will bring down today’s

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globalization. The second lesson is that whereas political developments preceding

1929 did not cause the crash, they mattered enormously for the international response. That too is critical for today.

Governments substantially recreated the pre-war economic system after World

War I. Britain and France held on to their empires, and the 1920s saw a revival of international trade and investment whereby trade exceeded peak pre-1914 levels. Technological innovation flourished in the form of automobiles, airplanes and consumer durables, and Britain returned to the gold standard in 1926.

However, as with the pre-1914 system, the reconstructed system distributed prosperity extremely unevenly. In the US, wealth and income inequality grew during

the roaring 1920s. In Britain, the industrial midlands and north suffered from persistent stagnation because of an overvalued exchange rate. And prosperity sim-

ply bypassed Germany. Additionally, there was a popular turn to isolationism in response to the carnage wrought by the war. The system was therefore unpopular, and consequently it had few defenders when the crash came. That lesson holds for the current globalization, which is also unpopular and feared.

The so-called first globalization crashed because of inherent financial fragility.

Banking systems lacked modern safety nets such as deposit insurance and lenders

of last resort, and the gold standard was also intrinsically fragile because countries could demand payment in gold.

Consequently, the system was vulnerable to panics, and the danger increased as financial markets and banking systems grew because the supply of gold, the backing

asset, was fixed. Once panic started, it was near impossible to stop. Banking systems collapsed, bankruptcy and deflation set in, and the rest is history.

This history suggests that if today’s globalization crashes it will also be because of economic factors, but those factors will differ from the past because the system is different. The New Deal era created a system that remedied earlier financial fragility

by restricting private ownership of bullion, and creating deposit insurance and lenders

of last resort. It also created a new social democratic mass consumption economy in which income was more broadly shared owing to unionization, minimum wages, and social security provisions. However, a social democratic mass consumption economy is expensive for individual capitalists, giving them an incentive to evade

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its costs. That has been a driving force behind globalization since 1980, and that is the contradiction in today’s system.

Business has a private incentive to escape the system to countries with lower costs.

Yet, it still needs mass consumption. The system needs a solid middle class, but is also driven to hollow out that middle class. This contradiction has been papered over

by consumer borrowing provided by deregulated financial markets and a 25-year asset price boom. The problem is that such borrowing risks prove unsustainable if incomes are hollowed out, and that could stop the economic merry-go-round. If that

stoppage produces an economic crash, globalization may crash, too. Globalization will lack political support, after being a primary cause of a hollowed-out middle class.

The pattern of retreat is difficult to predict. One possibility is a return to a world of tariffs and quotas. A second response may be the emergence of regional trade and investment blocs. A third response that would preserve globalization would be the establishment of new domestic and international rules that support a social democratic

mass consumption economy. All three scenarios challenge today’s elite’s program. Finally, if the global economy crashes, it will be important to correctly identify the economic causes. The Smoot-Hawley tariff was passed in June 1930. Its economic effects were minor for the US given the pre-existing high tariff structure and the minimal extent of US engagement in trade. Indeed, those effects may even have

been beneficial in that spending switched from imports to domestically produced

goods. Yet, for 75 years, free traders have sought to blame Smoot-Hawley for the

Depression and thereby make a case for free trade. The rooster crows at dawn, but does not cause the sunrise. Smoot-Hawley did not cause the Depression. Likewise, trade stalemate and failure of the Doha trade round will not cause the next economic

crisis. However, they may coincide, in which event rest assured that globalization boosters will argue causation. Washington, 13 April 2006 Thomas Palley runs the Economics for Democratic and Open Societies Project, and is the former chief economist of the US-China Economic & Security Review Commission. He is the author of Plenty of Nothing: The Downsizing of the American Dream and the Case for Structural Keynesianism, Princeton University Press, 1998. His writings can be found at www.thomaspalley.com.

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To Counter Gobalization, Denmark Tries Flexicurity Bruce Stokes Sarah Surratt is a serial casualty of the trade wars. For 21 years, Surratt worked for

Allied Signal in Kannapolis, North Carolina, until her job was moved to Mexico in

1992. She was lucky to snare an administrative assistant’s post at local textile maker Pillowtex. But in July 2003, she was again out of work, when Pillowtex, unable to compete with rising imports, shut down, laying off 4,800 people. Surratt then found

work at a local community college, making 29 percent less than she did at Pillowtex. Surratt is not alone. The average American who loses his or her job due to trade

stands a one-in-two chance of making less money in a new position, assuming he or she can get one. In a recent study by the US Government Accountability Office

of four plants shuttered because of imports, three of ten laid-off workers had not found a job after more than a year of looking. Facing the likelihood of prolonged unemployment and a cut in pay, it is little wonder that American workers – and their

counterparts in Germany, France and Italy among other industrial nations – worry about trade and its potential adverse impact on their lives and those of their families.

American economists and business leaders, and their soul mates in the UK, have long bemoaned such sentiments as rank protectionism. Preferring to focus on the benefits

of globalization – the impetus to productivity brought by international competition and consumers’ windfall from lower cost imports – Anglo-Saxon globalization

boosters have ignored the human and societal costs attendant with adjustment to more open economies.

American and British defenders of free trade argue that to compete globally, economies must be open, with highly flexible labor markets enabling them to adjust rapidly

to changing commercial conditions. In today’s world, any attention to the needs of

the losers is little more than a slippery slope to protectionism, a prescription for deadly economic rigidity and so very French!

But morally it is unacceptable that competitiveness trumps compassion. And practi-

cally it is possible to have an economy that is both successful in the global market-

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place and socially responsible. Take Denmark. The Danes – in a policy response to

globalization that they have dubbed “flexicurity” – have struck a successful balance

between labor market flexibility and a social safety net. Denmark’s payoff has been the highest employment rate in Europe, a dramatic drop in long-term unemployment and the most equal income distribution among industrial countries.

Flexicurity is a three-legged stool whose successful balance depends on businesses’

ability to hire and fire with ease, workers’ willingness to accept change and government’s provision of ample unemployment benefits and help with retraining. Today, Denmark has one of the most flexible labor forces in the world. On an index developed

by the World Bank, measuring the difficulty of hiring a new worker, the rigidity of

Denmark invests in an

of 100 being the worst, Denmark scores a 20, Germany 55 and France 66.

thus reducing public

rules on working hours and the costs involved in dismissing a worker, with a score

adaptable workforce, fear of change.

One reason is that the cost of a new hire in Denmark, in terms of taxes associated

with bringing on a new employee, is just 0.7 percent of his or her salary. In Germany, hiring costs 21.3 percent of salary; in France, 47.4 percent. And, unlike many European countries, Denmark has few labor laws. As a result, for more than three

quarters of the Danish workforce it is possible for employers to vary weekly hours of work to allow for fluctuations in production.

In return for not resisting change, workers get a strong social safety net. The lowest paid laid-off workers in Denmark receive 90 percent of their lost income, while unemployment benefits for more highly paid workers decline proportionate to

their previous earnings. Despite such benefits, about half of those who register for

unemployment are out of the unemployment system within six months and 70 percent find a job within a year. The US Department of Labor reports that the average unemployed person draws unemployment benefits for 15.9 weeks, but that does not reveal whether the worker found a job or not.

This success rate is, in part, attributable to the government’s tough-love approach

with the unemployed. After a year without a job, people must enter retraining in another field. They have no choice. If they refuse to seek work, their benefits are cut.

The third leg of flexicurity is the Danish government’s commitment to provide

workers with the retraining they need to upgrade skills or to find new employment.

Companies can enroll workers in short-term retraining programs, with the govern-

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ment picking up the tab for the course and workers’ salaries. The government will

also pay part of the initial salaries of unemployed people if an employer will take them on and agree to retrain them. Such benefits don’t come cheaply: Taxes equaled

49.6 percent of the Danish economy in 2004, compared with 43.7 percent in France, 34.6 percent in Germany, and 25.4 percent in the US.

As a result of such public support, a 2003 survey found that more than half of Danish workers had taken part in supplementary training or skill development over the previous 12 months, more than in any other EU country.

Better training has enabled firms to introduce new and more flexible types of work organization, helping keep Denmark globally competitive. For example, Unimerco, a Danish tool-making firm has evolved from making nail guns to producing highly

specialized drills for the auto and aerospace industry. The firm was voted the best place to work in Denmark, for organizing production around small teams of workers, paying all production employees the same and allowing them to own half the company.

The price tag for flexicurity demonstrates Denmark’s commitment to a social safety

net and constant upgrading of its workers’ skills. In 2003, Denmark spent 4.4 percent of its GDP on income maintenance and training. Germany spent 3.5 percent, France 2.95 percent and the US just 0.5 percent.

With the EU mired in slow growth and high unemployment and with its much-

hyped recent efforts to bolster competitiveness in tatters, the success of the Danish economic and social model has attracted the attention of the European Commission. The EU plans a summit on flexicurity by the end of 2007.

But transplanting flexicurity is not easy. Former German chancellor Gerhard Schroeder aped Denmark’s reforms by cutting the duration of unemployment benefits. But

those who administer the new German program are not nearly as tough as Danish labor counselors and, as a result, costs went up, not down. The French are trying to make it easier to fire young people. The result has been rioting in Paris.

Danes say their model won’t work if elements are cherry-picked. The lesson is that flexibility without meaningful security will be resisted. At the same time, the globalization-induced pressure for both greater business flexibility and an enhanced

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worker safety net is being felt in the US, where long-term unemployment is rising and wages are stagnating.

Nevertheless, Denmark, as the quintessential social democratic welfare state, is an unlikely role model in a post-Reagan era that celebrates small government, low taxes

and market-based solutions to economic problems. So, the Danish experience may ultimately prove more illustrative than prescriptive for the US.

Nevertheless, the Danish experience demonstrates that a more adaptable labor

force supported by ample unemployment benefits and mandatory retraining is a

boon for workers, companies and countries in an increasingly competitive international economy. Faced with the same globalization-driven market forces and social stresses, both non-Scandinavian Europe and the US would do well to consider their own variants of flexicurity. Washington, 18 May 2006 Bruce Stokes, the international economics columnist for the National Journal, a weekly Washington public policy magazine, is also a journalism fellow with the German Marshall Fund of the US, which supported research for this article.

Globalization: When Cure Is Worse Than Malady Richard Hornik A new specter haunts Europe: a frightened, angry and badly fractured body politic. Elections in the past year from Germany to Poland to Italy have resulted in weak

governments with razor-thin majorities, reliant on marriages of political convenience that once would have been thought impossible. And the short-term political future

of the US looks no better. Though George Bush has another 30 months in the White House, he will most likely be forced to contend with a Democratic majority in at least one chamber of Congress.

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Political paralysis is not always dangerous, but most developed and transitional

countries face daunting economic and social problems ranging from persistent unemployment to underfunded pension programs to massive public deficits to

unregulated immigration. Finding solutions to challenges of that magnitude requires a national consensus that no politicians on the immediate horizon have the prospect of building.

To a large degree, politicians are reaping the whirlwind of more than a decade of overpromising and scapegoating. The collapse of communism and increased pace

Attempts to halt globalization can cause more harm than global economic integration itself.

of globalization that followed were supposed to create a rising economic tide that

would lift all boats in developing and developed economies alike. Any transitional pains that resulting huge commercial shifts would inevitably cause would be fleeting.

Everything from the expansion of the World Trade Organization and the European

Union, to the “reform” of government pension systems to force workers to work longer than originally promised were sold with the same political snake oil: “Take a

bit of pain now,” politicians and pundits assured the public from Warsaw to Washington, “and we’ll all cross that shiny bridge to a new prosperity in the 21st century.”

Instead, workers of the world – whether former iron mongers at the Lenin Shipyard in Gdansk or erstwhile executives of Enron – are now united in a grudging

appreciation of why American capitalism was so much more successful than Soviet communism: Unfettered competition ruthlessly wipes out old institutions and ways of doing business, allowing more efficient actors and methods to take their place.

Half a century ago, the economist Joseph Schumpeter gave the process the evocative name of “creative destruction.” But even Schumpeter could not anticipate the

acceleration of the process when globalized, and the global workforce cannot view

that brilliant insight with a scholarly detachment. For the workforce, no job is safe. For all but the very wealthiest, working lives will henceforth be spent worrying about tomorrow’s paycheck, health benefits and pensions.

That anxiety has been driving centrist politicians out of office since 1992 when George

H.W. Bush executed the most remarkable fall from electoral grace this century. For the foreseeable future the crucial political issue in most of the developed world will be how to resolve the tension between the efficiency imperatives of economic growth and the personal security desires of an increasingly frightened and disoriented body

politic. Deficit spending can temporarily serve as a balm for the public’s distress. But

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once the taps run dry, parties at both ends of the political spectrum in Europe and

the US will be left with self-defeating policies of raising trade barriers, defending domestic industries in distress, limiting social benefits to citizens deemed true and wrapping it all in patriotic bunting.

The immigration bill passed by the US House of Representatives is among the most nativist pieces of legislation seen since the 1920s. The bipartisan congressional

resistance to the sale of an American oil company to a Chinese one, of a cargo-

handling service to a Dubai entity, not to mention saber-rattling about the value of the Chinese currency, is matched in sociocultural issues like the reintroduction of

a constitutional amendment to ban flag burning – cosponsored by none other than New York’s supposedly liberal Senator Hillary Clinton.

In Europe and Asia, a more troubling model has taken shape, with ideological underpinnings that resemble fascism: reliance on the leadership of a strong, selfappointed elite; a mixed economy with a largely free market at the bottom, but

one that is rigged in favor of state or crony-owned conglomerates at the top; and a nationalist raison d’état that verges on racism.

The first European variant of this model developed, ironically, in Italy where Silvio Berlusconi promised to lead an economic revival while appealing to the baser social

prejudices of the electorate. The appeal is demonstrated by the fact that, although Berlusconi delivered on almost none of his promises, he had the longest run as

prime minister in Italy since World War II, and barely lost the latest election to the admired Romano Prodi.

If you want to see just how strange electoral politics can get, examine the current coalition now leading Poland. The ruling, right-of-center Law and Justice Party, has

gone to the opposite ends of the political spectrum to cobble together a majority in parliament, allying itself with the leftwing populists from the Self-Defense Party and the rightwing Catholic nationalists of the League of Polish Families. And the Czech Republic could soon be in a similar fix. Elections in early June left the two main coalitions with exactly half the seats in the lower house of parliament.

The next place to experiment with what might be oxymoronically called “patriotic globalism” could be France, a country never shy about protecting what it regards as

its national patrimony. The final, almost pathetic days of the presidency of Jacques

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Chirac encapsulate the challenges facing a modern, western government. The government erects as many walls as feasible to foreign control of any of its leading

industries – including stopping the takeover of a yogurt company. Yet France’s

position within the EU has prevented erection of meaningful barriers to the adverse

effects of globalization, particularly in terms of employment. And the notion of

creating jobs by limiting the workweek to 35 hours only made matters worse. The shortage of employment opportunities, particularly for young people, exacerbates the already-difficult task of assimilating a rapidly growing immigrant population.

The politician best placed to take advantage of this growing crisis is Interior Minister

Nicolas Sarkozy who has carved himself a role as defender of France’s economic sovereignty and a tough-minded enforcer of the law. But Sarkozy’s potential Socialist

opponent in the 2007 presidential election, Ségolène Royal, has made it clear she won’t be outflanked on the right or left. On the right hand, she suggests a crackdown

on teenage criminals, including sending them to boot camps, and for the left end of the political spectrum, she criticizes the freedoms given to employers when the 35-hour work week was imposed.

From an economic standpoint, the dislocation that stems from the transition to a

post-industrial, globalized economy, whatever that may turn out to be, will probably last another 10 years. But the discomfort and resulting public anger will likely

increase, and that will only intensify the polarization of electorates in Europe and

North America. If politicians at both ends of the political spectrum continue to win votes by pandering to the worst fears and basest instincts of a frightened electorate, it seems only a matter of time before the resulting governments indulge in the self-destructive grand gestures that could lead to a global trade war or a violent

anti-immigrant backlash or both. As the world discovered 80 years ago, the dislocations wrought by globalization’s creative destruction are nothing compared to the economic chaos unleashed when efforts are made to halt the process. New York, 27 June 2006 Richard Hornik is director of Southeast Asia Programs with the Independent Journalism Foundation. He has been an editorial consultant specializing in corporate governance and social responsibility issues since retiring from Time Inc. in 2002.

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The Double Edge of Globalization Nayan Chanda An electrician who came to my house to repair some lights asked what I did at Yale.

He was shocked that I worked at the university’s Center for the Study of Globalization. “Isn’t it true that globalization destroys the rainforest?” he asked, explaining his

surprise. Although I do not work for globalization, his concern is valid and shared by many who take to the street protesting globalization.

That charge holds if, by globalization, one simply means expanded international trade.

The other charge, that multinational companies wreak havoc on the global environment by moving operations to countries where environmental regulations are weak

or nonexistent, is a little more difficult to prove. A recent World Bank study shows that clearing forests to grow crops accounted for some 20 percent of global carbon emissions. But the bank has found little evidence that companies chose to invest

in such countries to shirk pollution-abatement costs in rich countries. Instead, the

most important factor in determining the amount of investment was the size of the local market. It has also been found that within a given industry, foreign-operated plants tended to pollute less than local peers

The World Trade Organization, and by extension globalization, also stands accused of destroying the global environment. Expanding trade driven by globalization

has brought about increased fishing, destruction of forestland, and the spread of polluting industries to the developing world. In a November 2005 report, the UN

Food and Agricultural Organization reported that each year about 18 million acres of the world’s forests – an area the size of Panama or Sierra Leone – are lost due to deforestation.

Serious critics of globalization acknowledge that deforestation cannot be laid at the

door of globalization alone. But they rightly point out that globalization does serve

as both a conduit and an accelerator for many of the forces that cause the loss of forest cover worldwide.

By encouraging trade, globalization encourages consumption, which leads to more logging worldwide. Governance at both local and global levels has failed to promote

conservation and reforestation. China is a case in point. A major beneficiary of glo-

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balization as the world’s factory, it increasingly turns to other countries to meet its burgeoning demand for food. That is good news for Brazilian farmers who want to

cash in on China’s growing demand for soybeans: The environmental organization

Greenpeace estimates that more than 2.5 million acres of tropical forest have been cleared in recent years to plant soybeans. Greenpeace also claims that there is “a 7,000 km chain that starts with the clearing of virgin forest by farmers and leads directly to chicken nuggets being sold in British and European fast food restaurants” and labels the British import of soy animal feed from Brazil as tantamount to “forest crime,” according to an article in The Guardian.

Intense international trading affects the environment, but also raises global awareness.

China’s blazing economic growth, supplying cheap products to the world, has other

costs, too. Accelerated burning of coal and use of chemicals to fuel the export ma-

chine pollute not only China’s air and water but the world’s environment as well. A 2004 study found that the jet stream dispersed chemicals like mercury, spewed by factories in China, to locations thousands of miles away. A researcher traced a plume

of dirty air from Asia to New England, where analysis of collected samples revealed the chemicals had originated in China, reported the Wall Street Journal in 2004.

A major change between globalization of the past and now is the visibility of the

connections. In today’s hyperconnected world, the backlash can rise and prolifer-

ate faster than in the past. The instantaneous transmission of news and images has turned the thoroughly connected and even marginally connected citizens of the

world into spectators and consumers of ideas and information. Images of natural disaster and human suffering elicit instinctive human sympathy and support in the wake of a tsunami or an earthquake.

The threat of global warming, a matter of increasing concern, increasingly claims

front-page attention in newspapers around the globe. A New Haven electrician is globally aware, worrying about destruction of the Amazon rainforest and how that might impact the world’s climate.

Global warming has the potential to shrink the global economy by 20 percent and cause economic and social disruption on a par with World Wars I and II and the Great Depression, according to a report prepared by economist Nicholas Stern. The connection between carbon-emitting economic growth and increasing trade and industrialization brought by globalization is unmistakable.

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As world trade grows and millions of factories join the global supply chain, as mines are exploited and timber is felled to meet rising consumer demands, increased pol-

lution is often the price. Pollution hits the originating country first, contaminating its soil and water, but soon is absorbed in the atmosphere, where it becomes a global problem – poisoning the air and bringing acid rain to other parts of the world.

The millions of migrants who might be forced out of their homes because of flooding

caused by global warming are still in the realm of speculation. Surprisingly, despite

the availability of energy-efficient technologies and know-how, little use is made of

them. The world seems paralyzed about how to face the threat of global warming. The world’s top emitter of greenhouse gases, the United States, has refused to sign

the Kyoto Protocol, and the nations that have signed it have been inconsistent with its implementation, making only perfunctory attempts to grapple with the challenge of global warming.

Yet there is dramatic evidence that with the commitment of nations and effective global governance, it is possible to avert dangerous trends. Thanks to concerted action

taken in combating ozone depletion through the Montreal Protocol, the ozone hole has shrunk. There are even signs that as a result of economic growth, urbanization

and enlightened public policies born of global awareness, more nations are reversing the longstanding trend toward destruction of their forests.

Life in every country today is so inextricably intertwined with the rest of the world

that failure to appreciate this interdependence and its long-term effects could risk

the world’s drifting toward a major crisis. The international system is lacking institutional capacity to address the issues we face. The current ineffective state of the United Nations in tackling some of the major humanitarian disasters illustrates the dilemma. Blaming the UN makes little sense, however.

Rather, the root cause is the unwillingness – or inability – of key actors on the global scene and their constituencies to empower the UN to a level that corresponds

with tomorrow’s global realities and possibilities. A multitude of nongovernmental organizations worldwide – the new preachers – have performed valuable services in addressing many problems raised by interconnectedness.

But nothing can replace the power of sovereign governments working in concert to tackle global challenges. Although no one is in charge of globalization, history

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shows that political power can channel or obstruct the multitude of currents that feed globalization, and lead to a change in course. New Haven, 28 June 2007 Nayan Chanda is director of publications and editor of YaleGlobal Online. This essay is adapted from his book Bound Together: How Traders, Preachers, Adventurers, and Warriors Shaped Globalization, published by Yale University Press in May 2007.

Has Globalization Deepened Inequality? Dieter Braeuninger Skepticism has been growing in Europe and the US over globalization. Besides

globalization opponents, established economists and politicians question whether undisputed benefits of the global division of labor come at increasingly heavy costs,

especially social injustice. However, a closer look shows that a growing economic gap in developed countries has more to do with evolving technology than with global connectedness.

Several months ago US Federal Reserve Chairman Ben Bernanke cautioned about widening inequality in the US, and German Federal President Horst Koehler refers to social injustice in Germany. Both the Fed chairman as well as the German president pledge sensible political reactions, especially greater effort in education.

It is not possible to reverse the global division of labor that globalization has brought.

As Bernanke, Koehler and many other economists warn, neither is protectionism a solution. Insulation against the global market would be a burden to manufacturing

companies dependent on components and other inputs from emerging markets.

Consumers would be forced to pay higher prices for imported goods, leading to a decrease in domestic demand. The result of protectionism would hence be a loss of economic prosperity, which would disadvantage the less mobile employees even more.

The solution to the economic gap has to be found in forward-looking strategy combining new educational policy, health care and benefits.

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The challenges are clear. Income inequality has risen in the industrialized world with

skilled workers’ incomes rising faster than compensation for low-skilled labor. An

international comparison that economists use to determine economic inequality,

Gini coefficients, shows the problem. The average Gini coefficient for private households’ net income for the Organization for Economic Cooperation and Development

countries climbed from 0.29 in 1985 to 0.31 in 2000. This means income inequality has gone up by 6 percent, as the Gini coefficient 0 stands for perfect equality and 1 for absolute inequality where one person has all the income and everyone else has nothing. Recent data for the European economies suggest the trend continues. Above-average inequality can be found in the UK, Italy, Spain and especially the US,

with 0.37, while income is less concentrated in Germany with 0.29 and especially the Nordic countries.

Evolving technology, has spurred a growing income gap in industrial

It would be inaccurate simply to conclude that wages of high-income earners have

increased faster than those of low-income earners. A major source of income inequality actually is unemployment. In many countries, there exists a strong correlation

between the increase in unemployment, which mainly affects the low-skilled, and income inequality. While unemployment often follow business cycles, the long-lasting

distributional trends nevertheless point to other more structural causes of growing

wage differentials. The media often blame globalization as the major driving force. Economists, however, believe that globalization takes a backseat.

Instead, they identify the strong pace in technological progress and, in particular, the

revolution in IT as the engine of change. The triumphant advance of the microchip,

the PC and the internet kick-started a wave of automation, as well as a transition to flexible and accelerated production processes. This not only boosted productivity, but

also resulted in a shift from labor-intensive to capital-intensive production methods. The winners are hence both owners of capital goods as well as the highly qualified labor force. Investments into modern IT-dependent production facilities need

extensive capital funds. The installation and utilization of these facilities require qualified specialists. In addition, the new technologies allow the replacement of less qualified labor through physical capital, such as machines and computers.

Globalization and geographic dispersal of the labor force accentuate these changes.

The global labor force has risen fourfold since the beginning of the 1980s. The supply of basic labor has increased enormously. The globalization of labor affects the

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industrial countries in three ways: It leads to a strong expansion in trade, more extensive direct investment and manifold migration.

World trade has grown by an average of 7.1 percent yearly since 1980 and therefore

has almost sextupled in less than a generation. Emerging markets and developing countries increased their share of global exports by 25 percent to 37 percent. Even

greater than the rise in trade has been the increase in foreign direct investment – a value of US$916 billion in 2005 compared to $55 billion in 1980.

According to economic theory and experience so far, trade leads to specialization

and differentiation of production as well as more intensive competition, thereby

increasing prosperity. The worldwide elimination of trade barriers has opened new

and promising markets for companies based in the industrial countries. By offshoring production, firms optimize their production processes beyond national borders. Companies exploit economies of scale in the long run. But the greatest gainers from

globalization are the consumers. They benefit from a more diverse supply of goods and services at lower prices.

Despite the many benefits, increasing specialization poses challenges to the industrial countries. In particular companies and workers producing labor-intensive

products face strong pressure from competition. Change has always accompanied trade. However, evidence points to an unprecedented pressure to adapt today, given

the dynamics in the three dimensions of globalization and in the technical progress. Responding to this structural change requires a flexible, mobile labor force. Mobility

of the less skilled is crucial in this context. As long as less-skilled workers cannot shift to more productive tasks, increasing income inequality remains a threat.

The goal is evident. As many citizens as possible should participate in the gains of globalization. In view of the promising yield so far from investments in international

capital markets, it would be possible to reduce income inequality within the labor force by increasing personal capital formation, especially by broader shares ownership. In Germany, only 7 percent of households own shares compared to more than 25 percent of households in the US. This reflects a more risk-averse attitude among

the population in Germany, but also the impact of the expanded state-pension and public-health insurance schemes. Enhanced private capital formation in Germany

and other European countries is all the more important as the public schemes can no longer provide a sufficient level of benefits given the imminent aging population.

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There’s a need to strengthen education and further training. The correlation between individual qualifications and personal income is high. Most importantly, education

and training act as an effective shield against unemployment. In general, it should not be accepted that in countries such as Germany, Italy and the US, basic skills – for

instance in reading and or math – are no more than on par with or, indeed, below

the OECD average. Education and basic vocational training need to be enhanced over any individual’s lifetime.

For the less skilled workers, employability is a key concept. Training should include

individual-related measures to improve personal skills and social competence as well as other assistance in removing impediments, through mobility, i.e. transportation, aid or childcare. Income support, in the form of a negative income tax, should accompany such policies.

A dynamic economy finds it easier to achieve equitable participation in the benefits

generated by globalization. Hence, much depends on sound economic policy that strengthens the growth forces and uses prosperity generated by globalization to

provide a basic safety net, with health and retirement benefits. All in all, much can be done to increase the number of globalization winners in the industrial countries. Frankfurt, 6 February 2008 Dieter Braeuninger works as senior economist at Deutsche Bank Research, the Deutsche Bank Group’s think tank in Frankfurt, Germany. This article is based on a study by Braeuninger: “Globalisation and Distribution – Industrial Countries Also Face the Challenge,” Deutsche Bank Research, Current Issues, November 2007.

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Superclass and the Inequity of Globalization David Rothkopf Like nature, power also abhors a vacuum. On the global stage this has meant that

thanks to weak or underdeveloped international institutions and a general lack of consensus as to how to manage this integrated and interdependent world, a superclass

of elites is stepping in to fill the void. They pursue their agendas often unchecked by institutions representing the will of the people at large, operating with a freedom

typically impossible in nation-states where the checks and balances of governance

have evolved to help counteract the over-concentration of power in the hands of the few. What is more, the market-centric approaches regularly advocated by this

private sector–dominated group seem to have resulted what may well be the most inequitable world in history, posing a palpable danger to international stability.

The power structure of a society is like any other product of its citizens, be it a city or a system of beliefs. It’s an artifact, a cultural fingerprint, one which distinguishes

the society from past and future eras or from other civilizations and which can offer

clues to the society’s rise and fall, the degree of order or chaos within it, and a sense of its collective priorities. Generally all citizens are touched by and help in creating

the power structure and its internal dynamics through their actions, reactions or simply their tolerance of others’ actions.

Today’s global elite offers an excellent window into the forces shaping our era and hints at the tensions that may shape the decades ahead. These international elites

form a group that shapes globalization more than any other and at the same time is a small, coalescing community that has globalized far more rapidly than any

other. Members of the global elite have more in common with one another than they do with the men and women of their countries of origin, reflecting a growing

cultural disconnect between this global community and counterparts back “home.” Comparatively fewer members of this elite derive their power from political sources

than similar international elites did, even in the fairly recent past. By my reckoning, nearly two-thirds of the contemporary global elite – the superclass of 6,000

described in my recent book – derive power from private enterprises that have grown

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enormously and frequently rival states in terms of their influence and the resources

at their disposal. In today’s world, for example, the top 250 companies have annual sales equivalent to about a third of global GDP. More than 100 companies report

annual sales in excess of $50 billion dollars, whereas only 60 or so countries report an annual GDP in excess of $50 billion.

Even accounting for the fact that sales and GDP are apples and oranges in economic terms (the latter measuring value-added), this gives a useful thumbnail measure of comparative wealth. The people who control these institutions rival in power most officials of big governments and far outstrip those from small governments. Exxon

Mobil, for example, had profits last year that were greater than the GDP of Bahrain

To ensure world

and Yemen combined.

stability, a superclass

This concentration of power, another distinguishing characteristic of our modern

needs to be reined

driving globalization

elite, exists in all areas – political, military, business, financial and cultural. Of

some 4,300 religions, only 20 have more than one million adherents, and only two

have more than one billion. The 26 member states of NATO are responsible for 85 percent of all global defense spending, while one, the US, is responsible for more defense spending than other member-nations put together.

Past elites were dominated by members who inherited power, and status was often linked directly to holdings of assets, notably land. Today’s elite draws more power from institutional affiliations and therefore is a more transient group, with members resigning, retiring or being dismissed from jobs and thus losing their influence.

Networks have always played a role in enabling relationships among past elites, but

thanks to modern travel and telecommunications, networks within this group cover far greater distances and enable alliances that touch far more people.

The requirement I used to define membership in the superclass is the ability to

influence millions of lives across borders on a regular basis. Few people would have

met such a standard even 100 years ago. I identified more than 6,000 individuals

with comparative ease. But the exact size of the group was of far less interest than the changing nature of modern power and what that might imply. As a group, the

6,000 are unrepresentative of the global population at large: 94 percent are male,

over 60 percent live on one side of the Atlantic or another, the average age is over 60 and, according to an analysis of a substantial sample, 30 percent went to one of just 20 universities.

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Even as globalization and the spread of market mechanisms have reduced absolute poverty in the world and raised the bottom in many societies, this era’s elites preside

over a system that is the most unequal in modern history. Inequality has grown within countries and among them. A century ago, the wealthiest nations were on

average nine times richer than the poorest; today they are more than 100 times as

rich. Only 30 years ago, the richest nation in the world had 88 times the wealth of the poorest; today it has more than 270 times the wealth. In the US, nearly all the

benefits of growth in the past decade have accrued to the top 10 percent of society; while the top .01 percent has seen incomes grow 112 percent, the incomes of the

bottom 90 percent grew by only 2 percent. The benefits of global growth accrue to

fewer people. The richest 1,100 people in the world today have a net worth that’s almost double that of the 2.5 billion people earning the least.

Such facts raise serious questions about the viability of the current global power

structure, as most of history is littered with the story of elites that rise, over-reach and are brought down. But today, mechanisms to counterbalance these transnational actors have yet to emerge. Most countries are reluctant to cede sovereignty to the

kind of global-governance mechanisms that might ensure that the future is shaped by the will of the many rather than that of the few.

We have yet to reach the intellectual or philosophical threshold where we can even begin to question the widely accepted view, born of western elites, that markets

should be an ever less-fettered arbiter of the distribution of wealth, or champion an alternative to the failed policies of communism.

There is increasing evidence to suggest that high functioning markets, seeking efficiency as they do, favor enterprises of scale, which in turn puts more resources

and power in the hands of fewer people, providing the broad benefits promised as their most important byproduct at an unsatisfactorily slow rate.

Yet markets offer great benefits, and governments to date have often been inefficient, corrupt or both. Supporting what is often deficient in order to manage the

flaws of what is often super-efficient seems like a bad option, but there is no better

one. We must begin to focus on how to innovate in the area of global governance

with the same kind of creativity that we would expect of innovators in business, finance, science or the arts.

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But the first decades of the global era suggest a troubling phenomenon, and our

tolerance of that phenomenon, our collaboration in accepting it, and the gross inequities that mark our era may well be seen in the future as one of the artifacts of our time by which history defines us all. Washington, 14 May 2008 David J. Rothkopf is a visiting scholar at the Carnegie Endowment for International Peace and is the author of Superclass: The Global Power Elite and the World They Are Making, Farrar Straus & Giroux, 2008. His most recent previous book is Running the World: The Inside Story of the National Security Council and the Architects of American Power.

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Innovation

All through history new ideas and technological innovation have traveled from

country to country, continent to continent, bringing in their wake economic benefit and social progress. They have also invariably created new problems. A great idea

emerges, inspiring countless others to pursue the necessary education to catch up and join in the development of new industries like automobiles, aircraft or telecommunications. Globalization in the 21st century has simply speeded up the process of

transfer of knowledge via the internet and the pace of innovation. Billions of people who were earlier isolated now enjoy the benefits of connectivity through cell phones,

internet and television. Global connections have enabled the birth of a collectively produced encyclopedia and individual news blogs that promote citizen awareness of progress as well as problems anywhere in the world. Necessity, crises like climate change, will continue to drive innovations.

A host of government regulations and policies on patents, subsidies to favored industries, immigration restrictions and protectionist tools for national or economic security can block research and the spread of new ideas. Failure to promote scientific

and technological education, an infrastructure suitable for innovation, is a self-

imposed economic threat. Disparate education levels also contribute to widening

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income gaps, both within countries and among them. Countries can nurture talent

within their borders or entice the most skilled workers from other lands. Internet connections contribute to collaboration for research but also internet dissidence and

leaked documents that reveal the secret, complicated lives of governments. Other challenges for governments emerge when criminals and terrorists use the internet to

steal money and industrial secrets or share lethal means to launch attacks, bringing institutions to their knees and killing civilians.

The quest for innovation is twisting and elusive, with no certain roadmap. The

challenge of 21st century globalization is how to keep open the flow of ideas and innovations to promote prosperity and wellbeing while blocking the enemies of civil society from exploiting the open information system.

Build an Encyclopedia: Everybody Is Invited Andrew Lih In the last 10 years, the internet has opened up incredible amounts of information to

ordinary citizens. But using the internet can be like walking into a library where the books are all lying on the floor in piles. While tools like Google allow some structured

search, much of the data from such searches are outdated or of questionable value. Some web enthusiasts have taken up the task of organizing information through a democratic means that only the internet allows: an encyclopedia of the people, by the people, completely free to copy and distribute.

This people’s encyclopedia of the Web, a free site called Wikipedia, has provided a

novel solution by inviting individuals to participate in the process of rationalizing and updating web content. At the heart of this movement are wikis, websites that

allow users to directly edit any web page with one click of the mouse. The Hawaiian word for “quick,” WikiWiki, is the basis for the online encyclopedia’s name.

Wikipedia, the largest example of these collaborative efforts, is a functioning, usercontributed online encyclopedia that’s become a popular and highly regarded reference

in just three years of existence. The goal was to create an encyclopedia that could be

shared and copied freely while encouraging people to change and improve the con-

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tent. Each article has an “Edit this page” button, allowing anyone, even anonymous passersby, to add or delete any content on the page. It seems like a recipe for disaster

and chaos, but the history of such edits is tracked and the collaboration has produced

surprisingly credible content that’s been evaluated and revised by the thousands of international visitors to the site. For many, it finally realizes the original concept of World Wide Web creator Tim Berners-Lee – an online environment where people not only browse content, but freely and actively exchange information.

The Wikipedia project was started by Jimmy Wales, head of internet startup Bomis.

Wikipedia is a usercontributed online encyclopedia that’s become a popular and highly regarded reference in just three years.

com, after his original project for a volunteer, but strictly controlled, free encyclopedia

ran out of money and resources after two years. Editors with PhD degrees were at the

helm of the project then, but it produced only a few hundred articles. Not wanting

the content to languish, Wales placed the pages on a wiki website in January 2001 and invited any internet visitors to edit or add to the collection.

The site became a runaway success in the first year and gained a loyal following,

generating more than 20,000 articles and spawning translations in more than a dozen languages. After two years, it had 100,000 articles, and in April 2004, it exceeded 250,000 articles in English and 600,000 articles in 50 other languages.

More than 2,000 new articles are added each day across the various languages. And according to website rankings at Alexa.com, Wikimedia has become more popular than traditional online encyclopedias such as Britannica.com and one of the top 600 most heavily visited websites on the internet.

What could possibly allow this completely open editing system to work? Because

wikis provide the ability to track the status of articles, review individual changes and discuss issues, they function as social software.

Wiki websites also track and store every modification made to an article, so such operations are not permanently destructive. Wikipedia works largely by consensus, with users adding and modifying content, trying to reach common ground along the way.

However, the technology is not enough on its own. Wales created an editorial policy

of maintaining a neutral point of view, or NPOV, as the guiding principle. “NPOV is

an absolute non-negotiable requirement of everything that we do,” he says. According to Wikipedia’s guidelines, “The neutral point of view attempts to present ideas

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and facts in such a fashion that both supporters and opponents can agree.” With this policy, the grassroots project established journalistic-style principles – sticking to facts, attributing sources and maintaining balance.

As a result, articles on contentious issues such as globalization have benefited

from the cooperative and global nature of Wikipedia. Over the last two years, the

entry has had more than 90 edits by contributors from the Netherlands, Belgium, Sweden, the United Kingdom, Australia, Brazil, the United States, Malaysia, Japan and China. It provides a manifold view of issues from the World Trade Organization

and multinational corporations to the anti-globalization movement and threats to cultural diversity.

At the same time, malicious contributors are kept in check because vandalism is easily undone. Users dedicated to fixing vandalism watch the list of recent changes, fixing problems within minutes, if not seconds. A defaced article can quickly be

restored to an acceptable version with just one click of a button. This crucial asym-

metry tips the balance in favor of productive and cooperative members of the wiki community, allowing quality content to prevail.

A growing number of people are recognizing Wikipedia’s credibility. News publications

such as the Houston Chronicle and the Sydney Morning Herald have cited Wikipedia

in articles ranging from carpal tunnel syndrome to weapons of mass destruction.

The website has even been cited during litigation. In July 2003, a Wikipedia article on profanity was cited in a motion to dismiss a case in a Colorado court.

The project’s neutral point of view policy has provided a touchstone for quality information on the internet. In an April 2004 dispute over Google’s search results for

the term “Jew,” online activists were able to displace the controversial top ranking JewWatch.com site with Wikipedia content. By encouraging internet content creators

to link to Wikipedia’s “Jew” article, grassroots organizers boosted its popularity so

that it would be returned first. On the discussion area of the website Joho the Blog, user Joe Buck recommended Wikipedia as a “nice, neutral candidate to quickly push the hater site out of first place.”

Wikis are just starting to receive recognition for generating credible collaborative

content. Perhaps the toughest part of Wikipedia’s future is how to manage its own success. While Wikipedia has recorded impressive accomplishments in three years,

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its articles have a mixed degree of quality because they are, by design, always in flux, and always editable. That reason alone makes many wary of its content. But first-time visitors are typically impressed with what the community has developed, considering the decentralized and international nature of the effort.

Wales envisions someday a “1.0” version of Wikipedia – a tangible product in printed

form or CD-ROM, serving as a reference work for those not connected to the Internet. But this vision is still far from reality, as there remains contentious debate

on how to do something that’s unnatural for a wiki – freeze its content. Until then, thousands of contributors will keep typing away, like a massive cyber ant colony, working on the largest encyclopedia in the world.

By trusting users first and establishing filters only when necessary, wikis show how

good faith and simple technology have utilized the power of diverse individuals to create collaborative works. As a result, Wikipedia allows any user to act as producer

and consumer in a free marketplace of knowledge. As the world becomes increasingly integrated, Wikipedia helps illustrate how the internet will play a crucial role in keeping apace of new knowledge and understanding of the global community. Cambridge, 5 May 2004 Andrew Lih is an assistant professor at the Journalism and Media Studies Centre at the University of Hong Kong.

China’s Internet: Let a Thousand Filters Bloom Rebecca MacKinnon In early June, Chinese trying to create blogs on a Microsoft-hosted service using words

like “democracy,” “freedom” or “human rights” in the title received a rude reminder message: “The title must not contain prohibited language, such as profanity. Please

type a different title.” This warning equating democracy and freedom to profanity

marks a new milestone in the continuing battle for free expression in China, with a

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western software behemoth openly throwing its weight behind government censors. And this is only the tip of the iceberg.

More insidious than the open restriction on the blogging site is the invisible but fine mesh of censorship that China has installed, thanks to the assistance from leading western firms. China is now engaged in an even larger investment in technology

that would help control what its citizens can read on the web and what they can express. This system of censorship has undermined earlier optimism about the internet ushering an era of free expression in China.

How effective is this system? Not 100 percent, by any means, because tech-savvy

This system of censor-

system conclude that, as far as the Chinese Communist Party is concerned, it’s ef-

earlier optimism

Initiative, ONI, in conjunction with Harvard’s Berkman Center for Internet and

ushering an era of

Chinese internet users are prevented from accessing material deemed off-limits by

China.

users can find ways around internet blocks. But experts who have studied China’s

ship has undermined

fective enough to be worth the money and effort. A recent study by the Open Net

about the internet

Society, reveals an increasingly sophisticated set of mechanisms through which

free expression in

the Chinese government.

Though government statements emphasize anti-pornography crackdowns, ONI found

the primary focus of China’s filtering system to be on political content. Public security organs and internet-service providers employ thousands of people – nationwide, at

multiple levels – as monitors and censors. Their job is to monitor everything posted online by ordinary Chinese people and delete objectionable content.

The key to the filtering system, however, is automated technology – equipment and

software courtesy of US companies – enabling China’s service providers to enter hundreds of thousands of banned keywords and web addresses for automatic blocking.

And this automation is where the true power lies. The Cisco routers sold to China have the ability to block not only the main addresses for websites, but also specific

sub-pages while leaving the rest of the site accessible. So, for instance, Chinese censors can allow access to most areas of Stanford University’s website, while blocking

a sub-section within that domain, a page for Stanford’s followers of Falun Gong, a religious group banned in China. The same capability allows access to Google’s main search page, while blocking specific search results based on banned keywords or web addresses.

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Promotional material for the routers – which can deploy up to 750,000 filters – emphasizes the granularity of Cisco’s filtering capabilities. This granularity of censorship

enables China – to a larger degree than previously thought possible – to have its cake and eat it too. China has plugged its citizens into the internet connectivity they

need to trade and communicate with the world. But at the same time, the picture of the world as seen by most Chinese internet users is heavily skewed in the regime’s

favor. Information showing the Chinese government in a positive light, or at least being responsive to admitted problems, is easily accessed. Critical information exists

online, but is kept at the level of specific complaints and relatively tame localized gripes. Only the most determined and tech-savvy internet users succeed in accessing

web pages about Chinese authorities’ human rights abuses or information relating to the Taiwan secession movement. On the other hand, information about Japanese

atrocities, US abuses at Abu Ghraib and belligerent vitriol supporting attacks on Taiwan if it declares independence are easily found in Chinese cyberspace. Thanks in part to this filtered view of the world, nationalism and xenophobia have found fertile

breeding ground in Chinese cyberspace, while the pro-democracy movement has not. China is clearly not sitting on its current success. It has undertaken a massive internet

infrastructure upgrade with a US$100 million project called ChinaNet Next Carrying Network, or CN2. The project is big business for the companies awarded CN2 contracts: Cisco Systems and Juniper Networks, France’s Alcatel, and China’s only

major player in the internet router market, Huawei Technologies. Over the next 12 months, new routers will be installed in 200 cities throughout China. State-of-the art the routers have more granular filtering mechanisms. Thus, experts predict the new network will enable the Chinese government to control and monitor online speech even more tightly.

Are US companies responsible when the Chinese government deploys their technology to stifle free speech on the internet? If the internet is going to change China in the long run anyway, how much does their complicity really matter?

A heated debate continues in the media and in cyberspace: Robert Scoble, a Micro-

soft employee who maintains a popular technology weblog, rose to his company’s defense against a storm of criticism. “We must comply with the local laws if we want to do business there,” he wrote, claiming to have encountered an “anti-free-speech” stance from students, professors and officials in China.

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Outraged Chinese bloggers called for a boycott of MSN Spaces. One of China’s

most famous bloggers called Microsoft “evil.” A few days later Scoble backed down, admitting that he was wrong. Microsoft as a company, however, has stuck to the

following statement: “MSN abides by the laws and regulations of each country in which it operates.”

Human rights groups want to hold such companies responsible for facilitating

restrictive government policies. Others point out that by hooking China up to the World Wide Web, Cisco has ultimately done much more to expand freedoms in

China than to stifle them. Cisco spokespeople say they are merely selling technology

to China and cannot control how it gets used. But the ONI’s authors point out, “It

is unlikely that Cisco would choose not to provide customer support or training for specific functionality of their products.”

This spring, US Congressman Christopher Cox reintroduced the Global Internet Freedom Act, legislation that would support the development of technologies to

foil attempts by non-democratic governments to jam or filter the internet. The

proposed text declares, “The success of United States policy in support of freedom

of speech, press, and association requires new initiatives to defeat totalitarian and authoritarian controls on news and information over the internet.”

The act says nothing, however, about the role played by American technology companies in the creation of these controls – passively or actively. According to ONI, it’s difficult to believe that Cisco, Nortel Networks, Sun Microsystems, Juniper,

and 3COM do not know how their products are used by certain customers. There needs to be greater public examination of exactly how US technology companies are

conducting their business. What do they know, and when do they know it? There

should be consequences for companies found to be deliberately aiding censorship and political repression.

Cambridge, 28 June 2005 Rebecca MacKinnon is a research fellow at Harvard Law School’s Berkman Center for Internet and Society and co-founder of Global Voices Online, a global citizens’ media project. From 1998 to 2001 she was CNN’s Beijing bureau chief and correspondent and spent a total of 10 years working as a journalist in China and Taiwan. Her weblog is at RConversation.com

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Anxious America Susan Froetschel The US once had a working formula for innovation. Inventors imagined products, factories efficiently transformed ideas into reality, and businesses adapted, creating millions of jobs along the way.

Yet an anxious America, with its intense security concerns about terrorist infiltration and technology leaks, along with fears about losing jobs to immigrants, discourages

many potential innovators. Unless current restrictions are eased or a concerted effort is made to encourage science and technology education among American students, the US will face economic crisis.

Notwithstanding Microsoft, Apple or Google, several indicators point to the decline:

First, US students have little interest in science or engineering as a career. Second,

patents filed by US inventors have started to decline, whereas patents from Asia are steadily increasing. Third, US manufacturing employment peaked in 1979, and shop-floor innovation vanishes as companies make more consumer products

overseas. Finally, companies scramble to secure more overseas talent, and a survey

soon to be released by the Kauffman Foundation reports that 40 percent of 200 multinational corporations plan relocating some R&D within the next three years, many preferring expansion in India and China.

The US once countered such trends by attracting scientists from other nations. Snatching foreign help is easier than nurturing homegrown scientists – and other countries have caught on. So the old methods for recruiting foreign talent may no longer work.

For now, students from Asia, Russia and Eastern Europe keep US college math

and science programs afloat. About half of all science students are non-US citizens, reports the US Council of Graduate Schools, but applications from Chinese and Indian students declined by 15 and 5 percent, respectively, in 2005 from the previous

year. Australia, the UK, Singapore, even China, lure students who would have once studied in the US and, after graduation, stayed on to work. Alarmed about fewer

students pursuing science and postdoctoral research, universities protest the visa restrictions and background checks.

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But security measures remain bureaucratic, so universities also head to the countries

with eager students. State universities of Florida, Texas and Michigan are among the dozens that have started operations in China and India. Students who would have once started careers in the US stay overseas.

US employers struggle to hire foreign scientists, too, because of fears of exacerbating unemployment. The US Immigration Act of 1990 formalized the visa program to attract professionals to specialty occupations, especially in science and math.

Universities like Harvard and Yale, firms like General Electric and Bristol-Myers Squibb, and public research powerhouses like NASA and Los Alamos National

Laboratory recruit hundreds of scientists who hold the visa known as H-1B. India,

An anxious America, with

eventually apply for citizenship.

terrorists and technology

Politicians, buffeted by demand from special-interest groups, debate the value of

potential innovators.

China and Canada are leading contributors of such employees, and many workers

security concerns about leaks, discourages many

the H-1B. So the annual cap has jumped up and down over the years: When the investment climate was hot, industry persuaded politicians to hike the number; in hard times, labor interests demand reductions. The cap was originally set at 65,000 in 1990. Amid fear of massive computer outages associated with Y2K, Congress

swelled the cap to 195,000 for three years starting in 2000. Then the cap returned to 65,000, with special deals for Chile, Singapore and Australia, disguised with

different letters and numbers. Education and nonprofit research institutions have always been exempt from the limit. In fiscal years 2005 and 2006, visa caps were reached on the first available day.

Initially the biggest obstacles for foreign scientists willing to work in the US were the visa caps and fees of thousands of dollars, often not covered by companies.

Since 9/11, visa applicants undergo a two-prong background check. First, the US Department of Labor certifies that no willing or qualified Americans are available for the position, and the Department of Homeland Security, DHS, and the US Immigration and Citizen Services run the same screening performed for those applying

for citizenship or permanent residency. For FY 2003, DHS approved 94 percent of the applications.

The visa program has its critics. Some complain that the program encouraged a

brain drain by removing talent from developing countries. Others complain that the arrival of foreign scientists depresses US salaries.

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So US politicians juggle the number of visas, debating whether more or less will

actually increase the nation’s pool of scientists over the long term. Two opposite drives are underway in the US Congress: The House of Representatives would like to restrict the visa program, while the Senate would welcome more foreign students to the US. Companies lobby Congress for higher caps, particularly for scientists with advanced degrees.

Increasing the visas may not bring the best scientists to the US. Foreign professionals anticipate hostility in a US anxious about job security and national security.

And domestic and foreign scientists alike share anxiety about the high cost of living in science-driven communities like Boston or northern California. Post-doctorate scientists earn less than $50,000, while the CEOs who find new ways to manipulate profits earn millions.

More parents urge students to think twice before pursuing a science career. US

unemployment statistics are hardly encouraging: According to the Institute of Elec-

trical and Electronic Engineering, unemployment for engineers has risen from 1.4 percent in 2000 to 4.3 percent in 2003; for computer scientists, from 2 percent in 2000 to 5.5 percent in 2004.

The anxiety in the US could mean more scientists, even US citizens, will seek opportunity elsewhere. Take Atique Rahman, a native of Bangladesh, who was an early H-1B applicant. After earning a doctorate degree in biochemistry from Oregon State

University in 1989, he worked at the Roche Institute of Molecular Biology in New

Jersey, cloning a gene for an enzyme. He then joined Yale University in 1992 as an associate research scientist in digestive disease with the Department of Internal Medicine, where he cloned another gene. His research did not offer immediate

applications, and he left academia. After a failed business venture unrelated to his

research, he returned to biotechnology in 2001, but this time in Bangladesh, where he develops a biotechnology education program. A 2005 report from the Ameri-

can Electronics Association confirms that Rahman’s decision is part of a trend for other countries of the subcontinent: “The highly skilled, Indian-born talent that

once flooded to the US is now returning home, turning America’s brain drain into India’s brain gain.”

The net effect of shutting the door to foreign scientists, the homeward journey by others, could mean less international recognition for the US. Half of US Nobel physics

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and chemistry laureates in this century were born in foreign countries or of foreign

parents, and a recent World Bank report suggests that every 10 percent increase in foreign graduate students leads to a 6 percent increase in patents. Of course, most patents do not carry the value of electricity or broadband inventions that revolutionize

everyday life. The Organization for Economic Cooperation and Development notes that US creation of high-value patents has been stagnant since 1996.

High-value innovations do not emerge in a vacuum. Creating an environment that recognizes creativity – and high-value invention – requires nurturing and respect. Closing the door to scientific talent out of fear and suspicion, discouraging scientists through neglect and low wages, is not how the US should alter the disturbing trends – falling numbers of students, scientists and patents – that will eventually erode prosperity.

New Haven, 14 March 2006 Susan Froetschel is assistant editor of YaleGlobal Online.

Deadly Conversations Gabriel Weimann Terrorism and the internet conjure up images of online beheadings and dire warnings of attacks by Al Qaeda. Use of the internet to recruit terrorists or coordinate

attacks is also well known. Less understood is how the internet has emerged as a

battleground for ideas among terrorists and Islamic militants. The open, often vicious debate on the web dispels the common view of all militants being of the same

feather and offers clues to the motivations and fears of disparate groups tarred by the same brush of terrorism.

Our eight-year analysis of more than 4,800 terrorist websites, forums and chat rooms reveals several forms of dispute. Members of the terrorist community use the internet to present disagreement within their network, with examples found in online discourse of Al Qaeda supporters and mentors. For example, a lingering inner

debate focused on Al Qaeda’s attacks in Saudi Arabia during 2001-2003. Al Qaeda’s

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online magazine, Sawt al-Jihad, or Voice of Jihad, devoted an issue to this debate

in January 2004. One anonymous author seeks to justify the jihad in Saudi Arabia: “My Muslim Mujahid brother, can you not see Muslims killed in Afghanistan, and

then in Iraq...? Can you not see the Muslims in this worst condition of shame,

humiliation, pain, harm, and injury? Can you not see that the headquarters of the war was from the [Arabian] Peninsula and that the center of all kinds of logistical

support was this land, which the Prophet, may peace be upon him, commanded be purified from the polytheist?”

More than a propaganda tool, the internet offers terrorists a forum for debating strategy.

Terrorists also use the internet to attack, sometimes ferociously, other groups. The

Chechen rebels, for example, criticized Hamas for eagerness to meet with Russian leaders after their victory in the 2006 Palestinian election. On May 30, 2004, Hamas published a press release on its official website, discussing the Khobar attack in

Saudi Arabia, where 22 people, most foreigners, were killed by an Al Qaeda–related group during a 25-hour hostage ordeal:

“While we reject this kind of attacks, we wish to emphasize that they harm the security

and peace of our countries, and the national and Islamic interests. Therefore, we call those responsible for these attacks to stop them, and preserve the interests and security of their country and nation, especially while our nation is facing external threats and challenges.”

With the internet, terrorists also launch personal campaigns against other terrorists.

Jihadi websites, as well as the Arab media, often criticized Abu Musab al-Zarqawi, “the Emir of Al-Qaeda in Iraq,” until his death in June 2006. The first criticism came from an influential cleric of the Jihadi-Salafi movement: Abu Muhammad

al-Maqdesi, the Jordanian-Palestinian Islamist scholar and spiritual guide of alTawhid wal-Jihad in Jordan and Iraq. In an online interview, he criticized Islamist insurgents in Iraq for the mass killing of Muslims. On 5 July 2005, he repeated his

criticism that “the indiscriminate attacks might distort the true Jihad,” generating a wave of online responses by Jihadi scholars, clerics and youth.

Later, a religious dispute emerged between al-Zarqawi and his spiritual mentor Abu

Muhammad al-Maqdisi, primarily on Islamist websites and from there spreading

to the Arab media. The debate focused on the legitimacy of attacking Muslims and noncombatant non-Muslims: al-Maqdisi criticized “the extensive use of suicide

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operations” that killed many Muslims, and stated that suicide operations were not a

traditional Islamic means of warfare, but rather an exceptional means, for use only in specific circumstances. Posting an online audiotape in May 2005, al-Zarqawi

responded, trying to justify the victimization of Muslim civilians within the context

of Jihad and suggesting that Allah had ordered the killing of infidels by all means, even if this resulted in the death of infidel women, children or Muslims. In July

2005, al-Zarqawi published another statement, discarding al-Maqdisi’s accusations,

rejecting his teachings and praising the advice of other trusted ulama. He argued

that al-Maqdisi had no right to criticize the fighters in Iraq since he had not taken part in the Iraq Jihad.

Specific operations also become the focus of heated online debates. For example, Abu Basir al-Tartusi, a Syrian Jihadi scholar residing in London, leveled harsh

criticism against the 7 July 2005 London bombings. On 9 July 2005, he published

a fatwa on his website that protested the killing of British civilians as a “disgraceful

and shameful act, with no manhood, bravery, or morality. We cannot approve it nor accept it, and it is denied islamically and politically.” Abu Basir’s fatwa drew angry

responses in Jihadi forums, which led him to publish another online declaration,

“The Love of Revenge or the Legal Ruling,” on 11 July 2005. This in turn produced a long, unsigned online response, “The Base of Legitimacy for the London Bombings and Response to the Disgraceful Statement by Abu Basir al-Tartusi,” which recalled some Islamist justifications for the September 11 attacks.

The anonymous author of the counter-fatwa claims that Muslims need no fatwa each

time an attack takes place on enemy soil since “This is an integral part of the Muslim Sunnah,” or the Prophet’s traditions. He urges that Muslims show joy for every

tragedy suffered by oppressors, resisting any sympathy. Moreover, he claims that any condemnations of the London bombings contradict Islam: “I warn my believing brothers to stop criticizing their brothers, the Mujahidin, especially these days.”

Often the virtual battle is among various terrorist websites, representing different

groups affiliated with the same movement. The Al-Tajdeed website, operated by the

Saudi Islamist opposition in London, launched such a struggle against alhesbah. org, a leading Islamist site that often posted messages from Al Qaeda. Al-Tajdeed accused Al-Hesbah of serving Arab and western intelligence agencies, as well as

exposing the founders of the famous Al-Ansar website, including the operator known

as Irhabi 007 and other members of the Global Islamic Media Front. On 5 March

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2006, Al-Tajdeed published an article signed by “Omar bin Hanif,” titled “A Series of Exposures of Spies – [Who Is] the Traitor who Sold Irhabi 007?”

After Al-Hesbah went offline, Al-Tajdeed attempted to attract jihadists who had used

Al-Hesbah by promoting alternative websites such as Al-Akhbar and Al-Alamiyya. However, on 4 April 2006, Al Qaeda posted a communiqué on several forums rejecting the accusations against Al-Hesbah for the arrest of Al Qaeda members and Irhabi 007: “we stress that these allegations are false. Everything we know about

our brothers in Al-Hesbah is good – and even if we assume, for the sake of argument, that [the website] had been infiltrated, [we assure you that] … the fall of the

brothers had nothing to do with the Internet.” Al-Tajeed responded immediately, arguing that the communiqué was fake, an attempt by Arab-Zionist intelligence apparatuses to maintain “the Al-Hesbah espionage site.” The site reappeared April 14, 2006, with a statement blaming the attacks for the website’s month-long absence and noting that precautions had since been taken.

Terrorists rely on the internet as a channel of communication, not always harmo-

nious. The analysis of the online controversies and disputes reveals the terrorists’ mindset, opening a window to a world we know little about. These sites can serve those who fight terrorism. By learning the inner cleavages, security officials can find

practical ways to support the voices that oppose terror, broaden gaps within these dangerous communities and channel the discourse to nonviolent forms of action. Washington, 13 July 2006 Gabriel Weimann, is professor of communication at Haifa University, Israel, and a former senior fellow at the US Institute of Peace, Washington, DC. He is currently a visiting professor at the School of International Service, American University, Washington, DC. An extended version of this article on terrorist debates was set to be published in a future issue of Studies in Conflict & Terrorism.

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Silicon Valley Expats Spur Innovation in India Sean Randolph Throughout history, diasporas have reflected economic or political disruptions,

ultimately enriching the receiving countries. Silicon Valley’s dynamic churn is the latest example, as many Chinese and Indian migrants are returning home, ready to lay a new foundation for innovation and growth.

For some Chinese, immigration to the United States reflected despair in the wake of the 1989 Tiananmen massacre; for others, it represented economic opportunity

at a time of economic stagnation. Indians left for similar reasons, though less po-

litical: India’s economy offered little future for the talented and ambitious, while

opportunities abroad promised a better life. Seeking jobs and education, many of the best and brightest came to Silicon Valley.

Powerful push-pull dynamics made California a draw. Its universities offered world-

class education. Programs in engineering and computer science drew Indians in particular. This coincided with the run-up to the dot-com boom and was acceler-

ated by the Y2K scare, which generated massive demand for programmers to fix the problem. The gap was filled by importing engineers, primarily from India.

By 1986, nearly 60 percent of Indian Institute of Technology engineering graduates

were migrating overseas, mostly to Silicon Valley. Research by Berkeley’s AnnaLee

Saxenian found that by 1990 a third of the Bay Area’s science and engineering workforce was foreign born. One fourth of its engineers – 28,000 – were Indian, more

than half with advanced degrees. By 1998, as the tech boom neared its peak, 774 of

the 11,443 tech firms started since 1980 had Indian CEOs. From 1995 to 2005, 15 percent of Silicon Valley startups were launched by Indians – the largest number for

any immigrant group. Today about half of California’s 475,000 Indian immigrants live in the San Francisco Bay Area, making it the second largest community in the

country after New York. Its profile is unique: median income is $107,000, 75 percent of adults have at least a bachelor’s degree, and 70 percent are in management or professional positions.

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The economic contributions are impressive. Immigrants from India have founded iconic Silicon Valley firms such as Sun Microsystems (Vinod Khosla), Brocade

(Kumar Malavalli), Cirrus Logic (Suhas Patil) and Hotmail (Sabeer Bhatia). Behind this lie pivotal contributions to technology innovation, including ethernet (Kanwal

Rehki), fiber optics (Narinder Kapany) and the Pentium chip (Vinod Dham). Many

Indian entrepreneurs, having achieved success, have gone on to become venture capitalists, investing in and supporting a new generation of startups.

A new migration is underway, which promises to jumpstart innovation in India. It

A new diaspora of tech workers takes off in search of opportunity.

has three drivers: reduced opportunity in the US after the dot-com collapse and the second recession in a decade; sustained growth of 8 to 9 percent in India, which may

now offer more entrepreneurial opportunity than the US; and India’s development as a technology platform and market with global scale.

Students are part of the story. India sends more students to the US than any country, including China. Most study computer science, business and engineering at the

graduate level. But while many of the best students continue to come and Silicon

Valley remains a draw, perspectives are shifting. In the past most planned to stay indefinitely, but many now arrive expecting to return home, perhaps with a few

years work experience. Regressive US immigration policies are a factor, but opportunity is the driver. Those who return, and others assigned by their companies short-term, find a receptive environment. While not lacking for business leaders or entry-level engineers, India is short on middle- and upper-level managers with

the skills needed by global companies. Venture capital is also in its infancy. This is where Silicon Valley comes in.

In addition to employing tens of thousands of engineers, companies such as Intel, Google, Cisco and Oracle are staffing top levels of their India teams with California employees of Indian origin. The India offices of venture firms such as IDG Ventures and Sequoia Capital are also led by returnees, who team with local partners. As many as a third of the participants in entrepreneurial forums such as Delhi’s “Startup

Saturday” are returnees. Conversations readily turn to schools, colleagues and favorite restaurants in San Francisco. Flights between San Francisco and Bangalore, where many Bay Area firms have R&D centers, run full as entrepreneurs, employees

and investors travel both directions. Lufthansa’s “Bangalore Express” is one of the airline’s most heavily trafficked routes and its second-largest long-haul market.

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Institutional intermediaries also play a role. The Indus Entrepreneurs (TiE) started in San Jose in 1992 as a dinner group of Indian expats, with the idea of supporting local entrepreneurs. Eighteen years later, TiE runs a global network of 53 chapters

with 11,000 members in 12 countries. The largest contingent outside the US is in India, supported by active links to the mothership, TiE Global, in Santa Clara.

The Bay Area-based Wadhwani Foundation, led by Aspect Development founder and

Symphony Technology Group chair Romesh Wadhwani, also promotes entrepreneur-

ship. Projects include the Wadhwani Center for Entrepreneurship Development at the Indian School of Business, and the National Entrepreneurship Network. The network, which aims to help Indians start companies, engages 233 institutions, 350 instructors and 250,000 students. Faculty from Stanford and other US universities help with curriculum and faculty development. Another Valley resident and co-

founder of Indian IT giant HCL, Yogesh Vaidya, runs a national network of schools to train recent graduates in the skills needed to work in global enterprises.     

This combination of money and experience can be potent. Bala Manian, a founder of six Bay Area companies, is a case in point. His latest startup ReaMetrics, based in Silicon Valley and Bangalore, employs a team laced with returnees. Manian

moves between the Valley and Bangalore every six weeks, focusing also on his role as investment committee chair of India Innovation Fund. Most of the entrepreneurs approaching the firm have US and Valley roots.

Through all this a cultural conversation is taking place. Despite its success in IT, an

army of engineers and world-class educational institutions, risk-taking in India is not engrained and failure is usually permanent – in contrast to Silicon Valley where the startup ethos is pervasive, risk-taking is expected, and failure is accepted. Few

technological breakthroughs have originated in India, and an entrepreneurial innovation culture has yet to take hold, as the highest goal of university graduates is typically to work for a major IT firm, not start a company.

Silicon Valley venture funds, and advisers such as Silicon Valley Bank, aren’t just bringing capital and supporting entrepreneurs. They also bring the experience,

networking and hands-on support that help convey the Valley’s entrepreneurial

ethos. Recent beneficiaries include the first consumer internet company in India to

go public (Nauri.com, funded by Kleiner Perkins), India’s first online gaming com-

pany (Kreda, funded by IDG Ventures), India’s version of Expedia (Make My Trip.

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com, funded by Sierra Ventures), and Café Coffee Day, India’s answer to Starbucks (funded by Sequoia Capital.)   

With its large market and many low-income consumers, India is developing its own brand of innovation, based on effective and low-cost services and technology deployment. Initially targeting domestic markets, potential applications are global.

This homegrown entrepreneurship will gather momentum of its own. But for now, India’s Silicon Valley diaspora is proving a key resource for both countries, recycling

to India much of the energy, creativity and experience that made the Valley a global technology icon.

San Francisco, 2 September 2010 Sean Randolph, president and CEO of the Bay Area Council Economic Institute, is the author of a recent study Global Reach: Emerging Ties Between the San Francisco Bay Area and India.

New Energy Frontiers Expand Global Connections Alexis Ringwald Maybe it was the inspiring announcement about plans for construction of India’s first multi-megawatt solar photovoltaic power plant or the recent carbon-market mania that fueled global interest in India as the next clean-energy hotspot. Or it

may be escalating concerns about India’s unreliable electricity infrastructure, and anxiety about urban congestion and pollution with galloping consumer demand for personal mobility.

It’s become clear that India, after China, will experience the greatest increase in energy and greenhouse gas emissions globally. To sustain 8 percent annual economic growth and support its expanding population, India’s primary energy demand must

multiply three to four times, an increase that moves India from the world’s fourth largest energy consumer to third largest by 2030, after China and the US.

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Currently India ranks fifth globally in installed electric power capacity with nearly 145 GW, mostly from coal; for comparison, the US has 1076 GW and China has more

than 710 GW. For a country of India’s size, 145 GW is clearly not enough. More than 400 million Indians do not have access to any electricity.

To address this gap, India’s current Five-Year Plan calls for 80 GW of new electric

power to be built between 2007 and 2012, including 14 GW from renewable energy – a massive buildup.

For transport and industry, meanwhile, India relies heavily on oil imports to meet

75 percent of its needs, a dependence that would rise to above 90 percent by 2030 if

alternatives are not promoted. Natural gas, likewise, presents challenges of import

dependence and rising prices. In short, India’s energy situation is precarious, and decision-makers recognize the need for alternative energy.

In reconciling the nation’s emerging global ambitions with an obligation to protect a

planet on which one out of every six people will be Indian, policy leaders must take

critical steps today to avoid locking in to an obsolete high-emissions trajectory. “If

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India wants to be a global superpower, it must also take on global super responsi-

bilities,” said Jairam Ramesh, minister of state for power. With new infrastructure constructed every day, decisions made today will last throughout this century.

Despite that awareness, though, India’s leaders find it difficult to take a unified

stance on climate change, especially due to an enduring gap between rich and poor.

Although India’s overall CO2 emissions at 1.2 gigatons per year are on a path to

make India the third largest emitter of energy-related CO2 by 2015, the per capita average is 1.67 tons, dwarfed by 23 tons in the US or Europe’s 11 tons. Therefore,

Lacking fossil fuels, India must innovate with alternative energy sources.

the argument goes, India has a large allowance within which emissions may grow.

A Greenpeace report “Hiding Behind the Poor” points out that India’s highest income group emits 4.97 tons of CO2 per capita, near the world average of 5.03 tons (see

Figure 1). For simplification in calculations, a rate of $1 equals 40 rupees is used.

The emissions from this high-income group consisting of 1 percent of the country’s population are 3.7 times more than 73 percent of the population earning less than $125. Thus, concludes G. Ananthapadmanabhan, executive director of Greenpeace

India, in an interview with the Times of India, “India’s low average per capita emissions is due to the over 800 million poor population whose emissions are negligible.”

Ironically, the poor are especially vulnerable to climate change, and over 60 percent of the country’s population directly depends on climate-sensitive sectors like agriculture, forestry or fisheries for their livelihoods.

Environmental impacts, meanwhile, include temperature increases higher than

the average global rise predicted by the UN Intergovernmental Panel on Climate

Change; increasingly unpredictable monsoon patterns; rising sea levels; retreating Himalayan glaciers that reduce India’s freshwater source; and increased frequency of extreme weather events.

Threats to national security may also arise if conflicts emerge over energy, water or migrating refugees with neighboring nations like China, Bangladesh or Pakistan. Moreover, because of its heavy dependence on coal, India may be more susceptible

to the impact of future changes in international climate-change treaties, including carbon and tax penalties. In sum, according to calculations by the Carbon Disclosure

Project, “the cost of climate change in India could even be as high as a 9-13% loss in GDP by 2100 compared to a ‘no climate change’ scenario.”

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Ambivalence or inaction on the carbon emission front, therefore, is not in India’s

interest. The country’s first National Climate Action Plan, unveiled this year, promotes long-term strategies for advancing India’s development and climate-change objectives. Such initiatives are a good start, but more is needed to shift India towards a path that secures its superpower aspirations.

A critical part of the solution rests in promoting renewable-energy technologies

as a way to address concerns about energy security, economic growth in the face

of rising energy prices, and environmental degradation. As the only country in the world with a separate Ministry of New and Renewable Energy, India has 12.6 GW of renewable energy, excluding large hydro, representing about 9 percent of total electricity capacity. Today, India is ranked fourth globally for installed wind capacity and second for biogas generation.

Several trends underscore the growing momentum towards a low-carbon energy economy in India:

Investment in renewable energy is on the rise. With an increasingly favorable regulatory and policy environment along with a growing number of entrepreneurs and

project developers, India ranked as the third most attractive country to invest in renewable energy, after the US and Germany, in the 2008 Ernst and Young Country

Attractiveness Indices. Increasingly, it is key progressive state-led initiatives that determine the rapid pace of renewable-energy development in India.

“What isn’t measured, can’t be managed,” asserts the carbon mantra. Amid escalating

global pressure for companies and individuals to consider their carbon footprints, analysts anticipate unprecedented demand for individuals and technologies that can

measure and manage tremendous amounts of data on energy and emissions. The Indian information technology sector can assist in these climate-change services.

Fundamental to lifting millions out of poverty in India is the development of rural

economies. In low-income areas, microfinance institutions already seek clean, distributed energy products or services for their clients. At the same time, renewableenergy companies look for opportunities to access untapped markets for their off-grid

energy products. This new trend towards partnerships between micro-financiers and clean energy companies can help clients expand existing businesses, start cleanenergy shops or set up micro-utilities in areas with no grid or grid unreliability.

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Several major corporations could also drive India’s clean energy market for 2008. To tap the supply of workers for enlarged operations in rural India, companies discover the need to bring electricity to these areas as well.

But emission clouds are on the horizon. Projected growth in India’s personal transport and road haulage is predicted to be higher than historical rates. On top of increased

energy consumption, recent research by the Center for Science and Environment shows that new vehicles in Delhi actually emit more CO2 per km than earlier vehicle models.

Creative carbon crusaders in both India’s private and public sectors stretch their imaginations to identify new ways to reduce greenhouse-gas emissions. As the

fourth largest emitter of such emissions, India is the largest contributor of Clean Development Mechanism projects and the second largest after China in terms of carbon credits issued. Building on the country’s tremendous drive over the past few years, the trends suggest that renewable energy can be one of India’s most essential sustainable solutions.

With “climate change” and “growing energy demand” as the sensational headlines of the year, “clean energy” seems poised to become an indispensable mantra for India’s future development. New Delhi, 19 August 2008 Alexis Eva Ringwald was a Fulbright scholar in India researching clean energy finance and climate change. She graduated from Yale University with a dual BA/ MEM degree in environmental management. She expresses gratitude to the US Educational Foundation in India as well as The Energy and Resources Institute.

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The WikiLeaks Ravage Shyam Saran The release of diplomatic cables from US embassies across the world, courtesy of

WikiLeaks, is unprecedented only in the sheer volume of material and the extraordinary range of subjects they cover. In 1979, the world was treated to a smaller but

nevertheless revealing set of cables from the US Embassy in Teheran taken over by Iranian revolutionary guards. Then, too, there was embarrassment, but the impact was limited in scope. Diplomatic behavior did not change. The willingness to exchange

information and assessments on a confidential basis, the essence of diplomacy, was hardly affected. After WikiLeaks, diplomats and leaders will be mindful of what they say to foreign interlocutors, out of fear of reading their comments in the newspapers the next day, but how long this lasts remains to be seen.

If this release is a one-time event, the impact may recede over time. After the dust

settles, it will be business as usual. If there are serial leaks, the fallout will be more enduring. The material itself is not as damaging as the fact that it involves ongoing

events and dramatis personae in key leadership positions. No doubt, for some time to come, political leaders, senior officials and diplomats will be wary about trading confidential information and candid assessments with one another.

This can only be a loss to the craft of diplomacy that’s so central to avoiding misunderstanding and misperceptions among international actors and maintaining international peace. Players will be tempted to stick to official stances, substitute rhetoric for real conversation and avoid straying from formal positions. Some of this

will be the result of conscious choice; some will be the consequence of subliminal

caution. Much will be in response to official directives from alarmed governments. Ironically, the attempt to celebrate transparency in one sphere may lead to a premium on opacity in another.

For several countries, the impact of WikiLeaks will influence not only diplomatic conduct but domestic politics.

Conversations between Indian officials and US leaders or diplomats, reported in these cables, could well revive suspicions of US meddling in India.

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Depending on reported conversations or subjective assessments by US diplomats, some who figure in the cables will be branded either as US stooges or champions of the national interest.

The US Embassy’s assessment that India was unlikely to carry out punitive military operations against Pakistan even if there was another Mumbai-type of terrorist attack

because of a fear of nuclear escalation, has already been taken, in some quarters, as evidence of US contempt of Indian capabilities and doubts about India’s will to fight.

Massive leak of classified reports heightens mistrust at a time when diplomacy is crucial.

The opposition will find it tempting to attack those in power associated with the

policy of closer relations with the US. In Pakistan, one wonders about General Ashfaq

Kayani’s musings on a possible replacement for President Asif Ali Zardari and the effect on Zardari’s already beleaguered position. And since it’s known that there are

divisions in the Chinese leadership on how to deal with North Korea, there could

be domestic political consequences for a Chinese official airing the possibility of a united Korea under Seoul with Chinese acquiescence.

Much of the material released so far does not break new ground. In fact, the cables mostly confirm what’s already widely known about US perspectives on international

issues and assessments of different world leaders. These may be expressed in more

colorful language and in a more forthright manner, but at the end of the day, few major surprises are sprung, certainly not to assiduous newspaper readers or those in the diplomatic business.

There are exceptions. It did come as a surprise that US diplomats are asked to gather

incredibly detailed personal data, credit card numbers and DNA included, on foreign counterparts, a job that would be more appropriate to intelligence operatives.

This disclosure will certainly complicate the work of US diplomats. I expect Indian and Chinese ambassadors in New York paying in cash rather than with credit cards the next time they take US counterparts to dinner!

The revelation that the Chinese may be willing to accept a united Korea under Seoul,

if true, is newsworthy. And of concern to India specifically, is an obscure remark attributed to a senior British official, who “expressed support for the development

of a ‘cold war’–like relationship between India and Pakistan that would ‘introduce a degree of certainty’ between the two countries in their dealings.” It’s not at all

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clear in what form this “support” would likely be extended, particularly against the

background of numerous expressions of concern over the security of Pakistan’s nuclear weapons, its relentless pursuit of a larger nuclear arsenal and the acquisition of tactical nuclear weapons which have dramatically lowered the threshold of nuclear-weapon exchange. What, one wonders, is the “degree of certainty” to which the official alludes.

The overall impact of WikiLeaks will increase constraint and decrease trust. Firstly,

both information- and assessment-sharing among nations will likely become constrained and restricted precisely at a time when these are required more than ever

before to prevent misunderstanding and misperceptions in a rapidly changing international landscape. US diplomacy alone won’t suffer, the constraint will disrupt international diplomacy in general.

Secondly, while the disclosures do not spring major surprises, they will influence US

domestic and regional politics of several countries and affect the political fortunes of current political leaders and actors – from Silvio Berlusconi to Zardari.

Thirdly, the WikiLeaks effect will last longer if there’s a series of such disclosures in the coming weeks and months. The threatened release of internal documents of

banks could have serious repercussions for the market. The spread of the internet and the ease with which confidential information in many countries is being regularly accessed and disseminated in our digital age may point to a more enduring and broader challenge than the current disclosures.

Governments across the world have shown an inability to come to terms with 24/7 news coverage and instant media. Without a thought-out strategy to manage communications in general, hiding less from their citizens, governments will find it

virtually impossible to keep pace with, let alone manage, new social media such as Twitter, Facebook and the blogosphere.

Rather than hunker down in the face of the WikiLeaks, damaging as they may appear to be, it would be worthwhile for governments to learn to ride the communications wave rather than be swept aside by it. It’s inevitable that there will be severe

limitations put in place for the handling of confidential information, but these by

themselves are unlikely to eliminate the risk of future WikiLeaks-type disclosures.

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There must be, in parallel, a strategy that develops capacity within governments, to understand and influence the impact that digital media, social network sites,

electronic media and the internet in general are having on the creation of public and political opinion, both at home and abroad. This will enable them to deal with

future WikiLeaks as part of managing the overall challenge of a much more interconnected and instantly perceived real-time world. New Delhi, 6 December 2010 Shyam Saran is former foreign secretary of India.

In a Borderless World, Innovation Reigns Supreme Ashok Bardhan Wounds inflicted on the US economy by the Great Recession will require more time to heal. The economic recovery underway has been feeble and stuttering, and

employment growth is anemic at best. At the same time, the emerging economies,

led by China and India, have continued their explosive growth with barely a pause. All this has fueled concerns about future US competitiveness, its standard of living, and sources of job creation.

Many of these concerns owe their origin to the phenomenon of offshoring which started with the relocation abroad of factories and manufacturing jobs. US multi-

nationals transferred production from the US to East Asia, then importing much of the output of these foreign investment projects. There was impeccable business logic behind the act, as long as the production costs were significantly lower and the

quality acceptable. Manufacturing employment in the US fell from 20 million in 1980

to about 11.5 million today. But that was fine, said many sanguine economists. After all, over the same period the economy added close to 40 million new services jobs.

Next, there was a wave of offshoring of services jobs from the US due to a confluence of technological and institutional factors, including rapid development of the

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internet, the opening up of English-speaking economies, like India, and, of course,

the large wage differences between workers in the US and developing countries. Accounting, payroll, indeed any activity that was internet-enabled, could in principle

be carried out from afar. Again, many policymakers assured the agitated that there

was little to worry about – the job loss was temporary and only low-end services and software jobs were migrating, leaving high-paying innovative activity and R&D jobs anchored in the US.

Now, the inexorable tide of offshoring has engulfed R&D and innovation as well. While there is an ongoing debate about the impact of offshoring on jobs in the US, there is a fairly broad consensus that the only sustainable path for continued growth

in both jobs and living standards is through innovation. Innovation would raise living standards not only through continued increases in productivity, but also through the creation of new goods, which could be sold to the rest of the world. Innovation is

supposed to lead to the creation of high-paying jobs and confer significant benefits

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on both firms and employees, at least temporarily, until perhaps the monopoly is dissipated or production moves abroad and the cycle repeats itself. Consumers

would benefit too, both from the value generated by the new goods or services, as well as their exchange for imported goods on favorable terms.

Given the central importance of innovation in today’s environment, concerns are being raised about job creation in the US and the implications of rising productivity and

technological innovations in other countries. How widespread is this phenomenon of globalization of innovation? Could the Next Big Thing originate abroad, especially

As innovation slows, the source for the next wave of good jobs remains unknown.

in emerging economies, and if so what are the implications for US leadership in high-tech industries and for US economic prospects more broadly?

Several academic papers and newspaper articles have documented the rise of the

offshore, captive R&D labs of western multinationals in China, India and Eastern

Europe. The list of major US firms with research centers in Bangalore, Beijing, Shanghai and other locations in emerging economies reads like a Who’s Who of the Fortune 500.

Heads of these centers have gone on the record to state that the potential size of

these markets, their rapid advance to the technology frontier and, in many cases,

their capacity to be early adopters of new technology make it imperative that western firms base considerable innovative resources in emerging economies. These activities indirectly give a huge boost to purely indigenous innovation efforts as well.

Since globalization implies increased international specialization and division of

labor, it is possible that these efficiencies and the larger numbers of people from diverse creative environments involved in research and development may result in an increase in the size of the “innovation pie.” Everyone could benefit. A benevolent

scenario would involve continuing innovation in the US at the “higher” end, as well

as innovation abroad closer to big markets and rising living standards everywhere. Despite the possibility of the next big wave of innovations originating abroad the location-specific advantages of the US and Silicon Valley remain considerable.

Given the vast support structure of innovation in place there – the venture capitalists, lawyers, accountants, investment bankers – as well as the universities and

other expertise available, many of those foreign firms would likely base significant operations in the US.

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After all, the US is still the largest market as well as a springboard for launching products worldwide. Silicon Valley and other technology hotspots in the country

could still reap significant economic benefits, including well-paying jobs, from innovation occurring abroad.

Still, other countries are developing this soft infrastructure and will be in a better position in the future to appropriate most of the economic gains from innovation.

The crucial issue, therefore, is how to boost domestic R&D and innovative activity. However, as US economist Tyler Cowen and others have pointed out – developed

countries may have reached a plateau in innovation. The Economist notes, “...eco-

nomic engines in the rich world are running ever slower as countries exhaust easy sources of rapid growth.”

Many technological advances in our parents’ and grandparents’ lives – air travel, television, antibiotics, automobiles and others too numerous to name, completely altered the daily flow of their lives in diverse ways.

In comparison, apart from the admittedly revolutionary impact of information technology, have our lives been impacted, and will they continue to be impacted in a

similar fashion? Have the low-hanging fruits of scientific discovery and technological

applications already been plucked? There is, after all, no law in nature, science or in

economics that suggests that transformative discoveries and inventions automatically follow from large amounts of money thrown into the effort.

This is not to suggest that the wheels of innovation have run aground, but perhaps that we are in a more transitional stage of innovation, the one-more-blade-in-therazor-makes-a-better-shave or the one-more-me-too-drug moment. Also, much of the time savings and enhanced convenience of many innovations are not reflected

in statistics, particularly if the monetization of these advances is problematic for whatever reason.

Perhaps innovation develops in punctuated equilibria, in fits and starts, and we could

be in a stage of temporary stasis. Or, the slowdown is a result of the preponderant share of services in the economies of developed countries. Productivity growth in many services activities is problematic.

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Most of our past breakthroughs have involved tangible goods, and even services

provision and delivery is ultimately manufacturing dependent. While the question – where is the next wave of high-paying jobs going to come from – is particularly acute for developed countries, it is a global issue. Indeed, rapid manufacturing

productivity growth in places like China and the increase in services sectors have resulted in stagnation in manufacturing employment there.

The continuing twin problems of low employment growth and inequality in the US are facing the twin specters of slowing innovation and globalization. Berkeley, 4 April 2011 Ashok Bardhan is an economist at UC Berkeley.

Can Social Media Campaigns End Child Labor? Humphrey Hawksley Intervention has become a trademark of international politics since the end of the

Cold War, from Bosnia and Timor in the 1990s to Iraq, Afghanistan and Libya in the past decade. The cocktail of military action, aid and trade has decided the des-

tiny of millions, but with limited ability to create long-term successes. Many places targeted with intervention remain violent. Conflict and hunger – often unreported – continue to blight Africa.

But another style of intervention may prove to be that elusive piece of the jigsaw puzzle on how a society moves from conflict and poverty to wealth and development

– corporate intervention that targets those at the bottom of the supply chain rather than relying on the drip-down effect from the top. At the bottom are societies that

deliver the raw materials for consumer goods filling stores in the West. But their

citizens fail to share in the wealth, often working in appalling conditions, barely making a living.

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The most horrific example is the millions of children forced into work to produce cocoa for chocolate, cotton for clothing and coltan for cell phones – just to name a

few products on shelves of glittering shopping malls across the world. What’s long been seen as a humanitarian issue that percolates from time to time on television screens to pull at heart strings is fast becoming a commercial issue that risks profits.

Attitudes towards abusive labor practices in many company boardrooms barely

seem to have changed for centuries. In 1758, the French writer Voltaire describes

a meeting between his classic hero, Candide, and a dismembered sugar worker in Surinam who explains: “When we work in the sugar-mills and get a finger caught in the machinery, they cut off the hand; but if we try to run away, they cut off a leg:

Global consumers hold

in Europe.”

with informed choice.

I have found myself in both situations. It is the price we pay for the sugar you eat

At the start of the 20th century, George Cadbury, founder of the chocolate company

now owned by Kraft, persuaded Britain to boycott cocoa from Portuguese São Tomé and Príncipe because slaves were used in its production.

Critics, however, have suggested that the boycott was timed to give Cadbury a

commercial advantage. Today, campaigners are told that a boycott would harm

the livelihoods of the very people it aims to protect, while damaging profits of a company that’s an investment for many consumers’ pension funds.

At the end of the 20th century, a series of investigations exposed brutal child slavery

in the Ivory Coast in West Africa. Children were being trafficked to farms, shackled

and their feet cut so that they couldn’t run away. Those who tried to escape were beaten.

Large chocolate companies, such as Nestlé, Mars and Hershey, were aware that

much of their cocoa came from the Ivory Coast as it supplied almost half the world’s cocoa. Initial reactions to the investigation were denial and threats of litigation.

Only after pressure from the US Congress did they sign an agreement in 2001 to eradicate what they described as the “worst forms of child labor” by 2005. But they

failed to meet that and other deadlines, while consumer demand increased and activists accused the industry of being in an immoral nexus with corrupt governments.

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Ten years after the agreement was made, in March 2011, a US-sponsored study

reported that as many as 1.8 million children in Ghana and the Ivory Coast are involved in cocoa-related work. Many are at risk of being kept out of school, working in dangerous conditions.

The report carried out by Tulane University, supported by the US Department of Labor, declared the industry’s efforts had “not been sufficient” and it needed to do

more. A BBC investigation in November found children working throughout the cocoa belt, separated from their families, exposed to pesticides, using machetes with

no protective clothing to harvest cocoa pods. Children appeared more prevalent among the workforce than they had been a decade earlier. This industry is not alone. Clothing brings in global revenue worth more than US$2 trillion a year. Yet most high

street retailers and designers have little idea of where cotton comes from or how it’s

harvested and processed. The supply chain includes the trafficking of children who

work in factories where cotton dust causes the lung disease byssinosis – common during the industrial revolution after which similar working conditions were banned. Many clothing companies claim it’s not their responsibility, but that of suppliers and foreign governments, to ensure good labor practices. Until now, they’ve viewed

social and environmental issues as irritants that cause higher costs and more constraints. They have created units dealing with corporate social responsibility, which

are kept away from core business, channeled into a public relations machine aimed at maintaining reputation.

It’s here that a sea-change may be unfolding: First, social networking and internet

transparency are making consumers more aware and, therefore, more powerful. Second, with expanding markets, companies need secure supply chains.

For example, in the Ivory Coast, aging cocoa trees must be replaced. But farmers, kept impoverished by cocoa for years, search for alternative crops that can provide a better future for their families. The chocolate companies therefore need to provide

incentives. Third, new buyers from countries such as China, Brazil and Russia view

supply-chain security as fundamental to their own survival. They’re examining how

to bypass traditional methods where the livelihoods of already struggling farmers

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are too dependent on unpredictable market fluctuations. It’s not inconceivable that over the next decade these newcomers will set up new, direct source-to-store supply chains to protect revenues.

Until now, this had been the preserve of the Fair Trade movement, much derided by mainstream manufacturers.

A few multinationals have begun to move. The world’s biggest food company, Nestlé, has commissioned an independent audit on how its cocoa is farmed. In January Apple hired the same organization to keep track on its behalf.

Clothing retailer Marks and Spencer is carrying out a similar study. These investigations will almost certainly confirm what activists already claim – child-labor abuse in African cocoa fields, cotton farms and processing, and mines to produce cheap metals for our high-street gadgets.

The question is how corporations will intervene to bring change. If they’re to succeed, corporations and governments must work together on providing acceptable standards

of schooling, health and transport. Cozy deals between corrupt administrations and

wealthy multinationals at the expense of citizens must end with auditors such as the Fair Labor Association, traceability experts Historic Futures and others keeping

watch. The specter of multibillion dollar industries using raw products farmed by malnourished and enslaved children would become unconscionable.

Multinationals already spend much effort mapping out targets and market projections

in business plans. But they have little idea – and few discussions – of how the world

might look should such supply-chain interventions come to fruition. According to

the United Nations, there are an estimated 150 million child workers between ages 5 and 14 years old worldwide

That is half the population of the United States who, instead of growing up impover-

ished and illiterate, could emerge within a generation as an educated force capable of transforming the international economy. This would allow the poorest families to

themselves become taxpayers, society stakeholders and consumers. Within corporate

boardrooms, many might argue that this is an unworkable, naive pipedream. But they should then read up on the eras when Voltaire was banned for being subversive

and George Cadbury was fretting over the source of his cocoa – and how corporate

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intervention took western societies through exactly the same process upon which the global society is now embarking.

San Pedro, Ivory Coast, 10 February 2012 Humphrey Hawksley is a BBC World Affairs correspondent. His latest book is Democracy Kills: What’s So Good About the Vote. His latest film, Our World: The Supply Chain Children, was shown on BBC World News.

How Weibo Is Changing China Mary Kay Magistad It was the last straw for Shanghai graduate student Wu Heng, when he heard that

restaurants near him were using toxic chemicals to make pork taste like beef. He

started a food-safety blog out of his dorm room in January. In April, he got 10,000 hits. In May, he got 5 million. “Word spread on Weibo,” he says with a grin.

Weibo – China’s version of Twitter – has created a vigorous virtual public square

since it was launched by the Chinese internet company Sina three years ago this month. The site, which allows users to post photos, videos, comments and messages,

has since expanded with scorching speed. It now boasts some 350 million users.

“These days, a lot of people use Weibo as their main source of information, and information on Weibo can pass very fast,” says Wu. “So I update my Weibo account every day, with the latest news on food safety.”

Food safety is but one of the hot-button issues that have raised a public outcry on Weibo, providing a new source of public pressure on the government. A similar

outcry came last summer after a high-speed train crash killed 40 people, just days

after the expensive and high-profile project was rushed into service. Weibo comments mocked official excuses and attempts to cover up bad management. “This

is unprecedented in Chinese history,” says Kaiser Kuo, director of corporate com-

munications at Baidu.com, the leading Chinese search engine. “There’s never been a time when there’s been a comparably large and impactful public sphere. It’s now driving, in many ways, the entire national dialogue.”

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So far, China’s leaders are ambivalent. On the one hand, Weibo gives them a win-

dow into public opinion they never really had before, letting at least some people blow off steam online rather than on the street. On the other hand, China’s leaders

are neither used to nor comfortable with public scrutiny, much less public ridicule. Wang Chen, who heads China’s State Internet Information Office, has said that Weibo and other microblogs should “serve society,” and not threaten public security.

Exactly what does threaten public security is open to interpretation, and Sina and

other microblog providers are expected to interpret broadly as they exercise censorship on behalf of the government. Critical comments are wiped away; entire Weibo

Weibo is just three years

when his account was closed in June. He’d written a comment criticizing China’s

fierce.

accounts are sometimes deleted. Popular blogger Isaac Mao had 30,000 followers space program as a waste of money.

A couple of months earlier, Chinese microbloggers woke up on a Saturday morn-

ing to find the message: “Recently, comments left by microbloggers have started to contain much illegal and detrimental information, including rumors.” To clean

up these rumors, the message continued, Weibo would suspend its comments section – the function that allows lively, often irreverent discussion – for three days.

“People who didn’t say something before, they start to realize there’s something

wrong with this system,” Mao said at the time. “I think they [censors] fear if they shut down Weibo totally, it will backfire. But they’re testing to see how people respond to

more restrictions. Because Weibo is now a battleground between the official voices and the voices of civil society.”

Not necessarily, says Chinese blogger and journalist Michael Anti. He says Weibo

has its uses for official circles, too. “Now, when someone in the central governments wants to take action against a local government or some princelings [children of senior

party leaders], they put the news directly on Weibo or Twitter,” he says. “Microblog-

ging is really changing the pattern of how we follow news, and how news is leaked.”

If Weibo is a battlefield, he says, the government seeks to occupy it, not destroy it. And lest ordinary citizens think they can get creative in their own political uses of Weibo – Anti has his doubts. “You can’t use Weibo to organize a social movement,” he says. “Because as soon as you use the word ‘gather,’ the keyword would get picked

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up, and the warning would be sent to the local police station. So even before you gather at the restaurant, you’ll already have the police there. I call it Censorship 2.0.”

The government’s current squeeze on Weibo includes requiring users to use real

names when they register –inconsistently enforced – and, especially in the run-up

to this autumn’s leadership transition, to keep comments “harmonious.” A Harvard study released in June, led by social science professor Gary King, found that about 13 percent of China’s social media content is deleted by censors, though, curiously, many negative comments are allowed to stay.

“Posts with negative, even vitriolic criticism of the state, its leaders and its policies are not more likely to be censored,” said the study report, adding that China’s online

censorship program focuses on “curtailing collective action by silencing comments that represent, reinforce or spur social mobilization.”

Not surprising, then, that news of Hong Kong’s mass demonstrations in recent

weeks, against increasing Mainland Chinese government control, made only the

most fleeting of appearances on Weibo. Still, Chinese Weibo users are using what

Baidu’s Kaiser Kuo calls “delightful creativity” in using homonyms, puns and word-

play to get messages across. Those who want to post longer, edgier messages often post them as photos, to get around both censors and the word limit. Kuo says social media companies are left to balance between following the law and letting the virtual public square that’s their customer base thrive.

“Internet companies in China serve two masters,” he says. “They need to keep users happy, and none of them labor under the illusion that people prefer censored search

results…. We are obliged to obey the law in China. And we are also compelled to explore the elasticity of our boundaries.”

Many a Chinese Weibo user is doing exactly that, transforming the relationship

between Chinese citizens and their government. “Before, it was very much one-way

communication; the government disseminated information to the public” says environmentalist Ma Jun, whose Beijing-based Institute of Public & Environmental Affairs runs a popular website that maps, names and shames polluting factories

around China. “But Weibo is different. It’s created, for the first time, a sort of equal two-way communication.”

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Ma says Weibo has been a godsend for his website, both in spreading the word

and collecting information about polluters, with people who see pollution sending details and photos to add to his map. He says the central government has been

fairly supportive, even when local government officials have come to his office to try convincing him to remove embarrassing data.

That doesn’t mean democracy is about to break out. Ma says, for all the heady

change Weibo has brought in its first three years, civil society in China is still in its

infancy. “For thousands of years, this country was ruled top down, and it doesn’t

have a long tradition of transparency or public participation in decision making,” he says. “Now, it’s quite a critical moment, because the country is facing all these

challenges. The environmental challenge is just one of them. There are many other

social challenges. If we want to go through these smoothly, there’s an increasing understanding that the government alone cannot fully micromanage all these challenges. It needs the society to help.”

An increasingly vocal and growing Chinese middle-class is proving itself willing, even insistent, on playing that role – and a 3-year-old called Weibo is making it ever harder for the government to ignore those voices. Beijing, 9 August 2012 Mary Kay Magistad is East Asia correspondent for PRI/BBC’s The World.

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Global Governance

Ever since the dawn of civilization humans have devised rules and regulations for the

smooth functioning of society and the economy. Growing contact among societies

and states required the formulation of rules and adherence by all participants. As the world has become more and more integrated, the complexities of economies,

technologies and societies have grown. Challenges emerging from global economic development – trade, travel, pandemics, climate change and terrorist threats – have

made global governance a pressing issue. Whether globalization will continue to bring benefits or harm large numbers of the world’s population ultimately depends on finding the right type of global governance and cooperation.

Global governance is not global government. Instead, organizations large and small – including the United Nations, the World Trade Organization, the World Health

Organization, the World Bank, the International Monetary Fund or any number of

groups created by international treaties, for example, to protect marine resources, organize satellite communications or conduct criminal investigations – emerged

as the result of shared concerns followed by cooperation to solve global challenges. The selfishness and irresponsibility of a few can pose dire consequences for the

entire planet. All the facets of modern globalization –speed, mobility, disregard for

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national borders, intense global competition for resources and wealth – contribute

to problems too complex and vast for any one nation to solve. These include the

trade and financial imbalances, climate change or nuclear-weapons proliferation – any one of which threatens the well-being of all. Like any organization, institutions born out of modern globalization could be improved. Collective action can be more

transparent, more balanced and representative, more publicized. The contributions of global institutions in, delivering behind-the-scenes stability to everyday

transactions are often underestimated and go unappreciated. Reversing the gains in global governance is unthinkable, and YaleGlobal writers contend that more global governance is needed.

We Have to Make Globalization Work for All Joseph Stiglitz As recently as the 1990s, globalization was still viewed with enormous optimism. “Globalization American-style: was to bring unprecedented prosperity to all countries

in the world. Flows of capital had increased sixfold. There were new trade agreements that were heralded as introducing a new era, and economists talked about what these would do for jobs, for prosperity in the US. But by the end of the decade,

all of a sudden globalization appeared to look quite different. The WTO meeting in

Seattle was supposed to open up a new set of trade negotiations. Instead of a new round, there were unprecedented riots – on a scale the US had not seen in 20 years.

If trade agreements were bringing prosperity to developing countries, protesters did not seem to know it.

There were some very good reasons for much of this unhappiness. A study done

by the World Bank pointed out that the poorest region in the world, Sub-Saharan Africa, was actually worse off by about 2 to 3 percent than before. Even before the study was released it was evident that there were a large number of problems. Most

visibly, there was crisis in East Asia, followed by the global financial crisis of 1998. On the other hand, globalization did have some successes, particularly in the initial growth of East Asia. In the preceding three decades, countries like Korea saw their

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per capita incomes increase eightfold. Poverty was almost eliminated, literacy had become universal, health standards had been improved, life expectancy had increased

– all these gains were based on globalization. But this globalization was very much defined on these countries’ own terms. The growth of these countries was based on export-led growth and absorbing knowledge, particularly technology, from the most

advanced industrial countries. The Asian example proves that when globalization is properly managed, it can bring enormous benefits, bringing not only economic

growth but even well-distributed growth. But when not well managed, when not done selectively, it can have very adverse effects.

With better management of the global economy, millions could be lifted out of poverty.

The end of the Cold War opened up new opportunities to try to create a new, global economic order – a global economic order based more on a set of principles, on ideology, on ideas of social justice. The world had the chance to set up a level playing

field. We missed that opportunity. I think most people – policymakers, academics and most of the public – did not have a clear vision of what we wanted or what should

have been created. But the commercial and financial interests did have a vision of what they wanted. They wanted to seize this new opportunity to expand – to create

a world that would open up new markets for themselves, for the corporations of the advanced industrial countries. And they used the US government to advance that perspective. So what happened was that the US, and Europe participated in

this to some extent, used its economic power, its position as the sole economic and

military superpower. It used its position to create a set of policies, in the area of trade in particular, that were grossly unfair. And we are now reaping some of the consequences.

The economics behind the inequities are fairly easy to understand. Asymmetries were

incorporated into trade agreements, so that the developed countries could demand that the developing countries take away their trade subsidies, take away their trade

barriers, all for the goods in which the industrialized nations had a comparative advantage. And then developed states did not reciprocate. Manufactured goods,

which had been the center of the discussions in trade for the preceding 50 years, were an increasingly small part of the American economy. Employment in manufacturing is now down to 14 percent of the American labor force. So it just is not as important – services are the dominant sector, and so it’s quite natural that America

wanted to focus the discussion on that area. But what were the services that were

on the agenda? For the most part, financial services, in which the United States has

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the comparative advantage – one could call them the new export industries. The services not on the agenda were maritime services, construction services, services that are intensive in unskilled labor – that is, those services in which America did not excel. And the US remains extremely protectionist in those areas.

Because globalization was driven by what I call a “special privilege” agenda, the fundamental problems underlying globalization were not addressed. And it is the global

financial system that creates the most trouble. There were six financial crises in a period of six years, and these were not the first crises. What is particularly disturbing

is that while we were talking about how wonderful the globalized financial system is in addressing the problems of risk, the developing countries were left to carry the burden of interest rates and market volatility. This has had enormous consequences

for the developing countries. In Latin America, in the beginning of the 1980s, many countries sank into a debt crisis. They may have defaulted on their loans, but they were still forced to carry the burden of interest rate volatility.

There is a second major problem with the current globalized system. The global

reserve system has enormous peculiarities and is the underlying source of much instability. One source of concern is that the United States is effectively borrowing money from much poorer countries. To put it another way, the US today has an

enormous trade deficit – running at $600 billion a year, borrowing more than $1.5 billion a day. To put it another way, it means that the richest country in the world is unable to live within its means. Meanwhile, the US is content to lecture the poorer countries about why they should be living within their more limited means.

There are some more lessons that I think ought to emerge from the instabilities over

the past 10 years. The first is that capital market liberalization and trade liberaliza-

tion can expose markets to enormous risks. Thus one needs to carefully craft these policies to sequence and pace reforms. Otherwise one can have enormous costs

without benefits. A second related issue is the fundamental problems in the distribution of risk in the global reserve system that I referred to earlier – larger states

need to assume more responsibility and alleviate burdens on developing countries. Globalization entails the closer integration of the countries of the world, and that means there is going to be more interdependence. Our welfare, our well-being, will

depend on others, and it will depend on how globalization is managed. America, as the sole superpower with the strongest economy, has to be willing to play a special

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role. There are reforms that would make globalization work better, work better both

for developed countries and the developing countries. It is imperative – if we want a better and more equitable world, or even if we just want a safer world – that we undertake these reforms.

New Haven, 17 October 2003 Joseph Stiglitz is a Nobel laureate in economics, former chief economist at the World Bank, and professor of economics and finance at Columbia University. This article is adapted from a speech he delivered on October 10, 2003, at a conference on Future of Globalization: In Light of Recent Turbulence organized by the Yale Center for the Study of Globalization and the World Bank and held at Yale University.

China, India Superpower? Not so Fast! Pranab Bardhan The media, particularly the financial press, are all agog over the rise of China and India in the international economy. After a long period of relative stagnation, these

two countries, nearly two-fifths of the world population, have seen their incomes grow at remarkably high rates over the last two decades. Journalists have referred to their economic reforms and integration into the world economy in all kinds

of colorful metaphors: giants shaking off their “socialist slumber,” “caged tigers”

unshackled and so on. Columnists have sent breathless reports from Beijing and Bangalore about the inexorable competition from these two new whiz kids in our complacent neighborhood in a “flattened,” globalized, playing field. Others have warned about the momentous implications of “3 billion new capitalists,” largely from China and India, redefining the next phase of globalization.

While there is no doubt about the great potential of these two economies in the rest

of this century, severe structural and institutional problems will hobble them for years to come. At this point, the hype about the Indian economy seems patently premature, and the risks on the horizon for the Chinese polity – and hence for economic stability – highly underestimated.

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Both China and India are still desperately poor. Of the total of 2.3 billion people in these two countries, nearly 1.5 billion earn less than US$2 a day, according to

World Bank calculations. Of course, the lifting of hundreds of millions of people above poverty in China has been historic. Thanks to repeated assertions in the international financial press, conventional wisdom now suggests that globalization is responsible for this feat. Yet a substantial part of China’s decline in poverty since 1980 already happened by mid-1980s, largely as a result of agricultural growth,

before the big strides in foreign trade and investment in the 1990s. Assertions about

Indian poverty reduction primarily through trade liberalization are even shakier. In the 1990s, the decade of major trade liberalization, the rate of decline in poverty by

some aggregative estimates has, if anything, slowed down. In any case, India is as

yet a minor player in world trade, contributing less than 1 percent of world exports. China’s share is about 6 percent.

What about the hordes of Indian software engineers, call-center operators, and

backroom programmers supposedly hollowing out white-collar jobs in rich coun-

tries? The total number of workers in all possible forms of IT-related jobs in India comes to less than a million workers – one-quarter of 1 percent of the Indian labor

force. For all its Nobel Prizes and brilliant scholars and professionals, India is the largest single-country contributor to the pool of illiterate people in the world. Lift-

ing them out of poverty and dead-end menial jobs will remain a Herculean task for decades to come.

Even in China, now considered the manufacturing workshop of the world – though

China’s share in the worldwide manufacturing value-added is below 9 percent, less than half that of Japan or the United States – less than one-fifth of its labor force

is employed in manufacturing, mining, and construction combined. In fact, China

has lost tens of millions of manufacturing jobs since the mid-1990s. Nearly half of the country’s labor force remains in agriculture – and about 60 percent in India. As per-acre productivity growth has stagnated, reabsorbing the hundreds of millions of peasants will remain a challenge in the foreseeable future for both countries.

Domestic private enterprise in China, while active and growing, is relatively weak, and Chinese banks are burdened with “bad” loans. By most aggregative measures,

capital is used much less efficiently in China than in India, even though in terms of physical infrastructure and progress in education and health, China is better poised

for further economic growth. Commercial regulatory structures in both countries are

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still slow and heavy-handed. According to the World Bank, to start a business requires

in India 71 days, in China 48 days, compared to 6 days in Singapore; enforcing debt contracts requires 425 days in India, 241 days in China and 69 days in Singapore.

China’s authoritarian system of government will likely be a major economic liability in the long run, regardless of its immediate implications for short-run policy

decisions. In the economic reform process, the Chinese leadership has often made

bold decisions and implemented them relatively quickly and decisively, whereas in India, reform has been halting and hesitant. This is usually attributed to the inevi-

tably slow processes of democracy in India. And though this may be the case, other factors are involved. For example, the major disruptions and hardships of restruc-

turing in the Chinese economy were rendered somewhat tolerable by a minimum

rural safety net – made possible to a large extent by land reforms in 1978. In most parts of India, no similar rural safety net exists for the poor; and the more severe educational inequality in India makes the absorption of shocks in the industrial

labor market more difficult. So the resistance to the competitive process of market reform is that much stiffer.

But inequalities, particularly rural-urban, have been increasing in China, and those

left behind are getting restive. With massive layoffs in the rust-belt provinces, ar-

bitrary local levies on farmers, pervasive official corruption, and toxic industrial dumping, many in the countryside are highly agitated. Chinese police records indicate a sevenfold increase in the number of incidents of social unrest in the last decade.

China is far behind India in the ability to politically manage conflicts, and this may

prove to be China’s Achilles’ heel. Over the last 50 years, India’s extremely heterogeneous society has been riddled with various kinds of conflicts, but the system has

by and large managed these conflicts and kept them within moderate bounds. For many centuries, the homogenizing tradition of Chinese high culture, language and bureaucracy has not given much scope to pluralism and diversity, and a centralizing, authoritarian Communist Party has carried on with this tradition.

There is a certain preoccupation with order and stability in China, not just in the

party; a tendency to overreact to difficult situations; and a quickness to brand dissenting movements and local autonomy efforts as seditious. It is in this context that one sees dark clouds on the horizon for China’s polity and therefore the economy.

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We should not lose our sense of proportion in thinking about the rise of China and

India. While adjusting its economies to the new reality and utilizing the new opportunities, the West should not overlook the enormity of the economic gap that exists between it and those two countries, particularly India. There are many severe pitfalls and roadblocks which they must overcome in the near future before they can

become significant players in the international economic scene on a sustained basis. Berkeley, 25 October 2005 Pranab Bardhan is professor of economics at the University of California, Berkeley, and co-chair of the MacArthur Foundation-funded Network on the Effects of Inequality on Economic Performance. He is chief editor of the Journal of Development Economics.

Don’t Give Up on WTO, Fix It Richard G. Lipsey One major target of those protesting globalization on behalf of the poor is the World

Trade Organization. Yet, as the administrator of our rules-based international trading regime, it especially benefits the smaller, less powerful nations, and no feasible alternative has been suggested.

At one extreme, the WTO’s opponents argue that all institutions supporting globalization should be abolished; the other extreme admits that globalization is inevitable, requiring some rules-based system, but the WTO is so defective that it does more harm than good. Before assessing these positions, we need to analyze globalization and the WTO.

New technologies and policies drove the globalization that began in the second half of the 20th century. Containerization and improvements in ship design greatly reduced

transport costs, while new information and communications technologies allowed worldwide coordinated production in ways that were impossible 50 years ago. As

a result, the 19th-century pattern of globalized trade – with developed countries exporting manufactured goods to less developed countries in return for agricultural

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produce and raw materials – has given way to a new pattern in which parts of individual manufactured goods are made throughout the world in a supply-chain system.

Protesters cannot roll back these far-reaching changes and the globalization that they enable, any more than the 19th century Luddites could end the factory system. In policy, governments have sought to reduce the high levels of tariff protection that

were erected from 1918 to 1939. The vision of post–World War II reformers was to

remove high tariff walls, thus reintegrating the world trading system and bringing

prosperity to all participants. The General Agreement on Tariffs and Trade, GATT,

The WTO may not be perfect, but elimination is a recipe for trade chaos.

was the enduring result. Through eight rounds of bargaining, members greatly reduced tariffs. World trade grew dramatically, and their economies prospered.

In 1995, the WTO replaced the GATT, an accidental creation resulting from US rejection of more ambitious initiatives. The WTO had a substantial institutional structure that had been lacking in the GATT.

Because the GATT had already reduced the trade barriers for which there was least resistance, the WTO has faced a tougher job. The powerful developed nations, the

majority of the charter members, had – albeit often reluctantly – accepted reduced trade barriers on manufactured goods for which they typically had competitive advantages. But they were reluctant to do the same in areas where they lacked

competitive advantages, particularly agricultural commodities and textiles. So the tougher issues – trade in services, intellectual-property protection and agricultural subsidies – had yet to be settled by an ever-growing membership that made the WTO rule of proceeding by consensus increasingly cumbersome.

At a series of biannual WTO ministerial conferences, the less developed countries applied pressure to deal with their priorities. The fourth conference began the Doha

round of negotiations, the first round since the WTO replaced the GATT. Progress has been slow, but considering the entrenched vested interests of the developed

countries, this is not surprising. The fifth conference in Cancun broke down with

little progress as a new grouping – 22 developing nations called the G22 – refused

to handle issues that concerned the developed countries while pressing for the end of EU and US agricultural subsidies.

The most recent conference in Hong Kong produced results that, although disappointing to many, were at least positive. Agreement was reached in principle to end

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all subsidies of agricultural exports by 2013, as well as giving more market access to

the poorest nations’ exports to the industrialized countries. The tough bargaining over details was postponed until this year. In the meantime, skepticism is justified.

Will the developed countries end export subsidization? This would be a good beginning, but not the end of the problem, since subsidization of production for the home market hurts producers in poor countries, denying them major export markets.

So, should the WTO be abolished as its harshest critics advocate? No, because the

WTO is the best hope for those who would be most oppressed in a lawless world – where the powerful, particularly the US and the EU, could behave as they wished. In contrast, as part of its rule-based regime, the WTO has a dispute-settlement

function that has heard more than 300 cases and settled many. Furthermore, having

the developed world listen to the G-22’s complaints in Cancun and then agreeing to

international negotiations to address them would have been inconceivable without the WTO.

But isn’t the enforcement of dispute settlements hindered by the disparities in

economic power? Nations with large economies can use trade sanctions against

small nations, but the small nation that tries the same sanctions against a large

nation often inflicts harm on its own economy. This is a major defect. But the dispute-settlement mechanism has accomplished much, and to discard it because

of imperfect enforcement would be unfortunate. Reform is needed instead – with larger economies agreeing to graduated-enforcement mechanisms, including stiffer penalties for themselves.

Is the WTO a failure because it does not permit trade sanctions on those who pollute

their environments or exploit their laborers? To the contrary, the poorest countries

fear that advanced countries would use environmental and labor standards written into the body of trade agreements, with trade sanctions for nonperformers, as concealed nontariff barriers. This is not to argue against WTO efforts to end slave

labor and eliminate forms of pollution with worldwide effects. But it is policy imperialism to argue that the poor must accept the standards of environmental and labor protection that the rich countries can only now afford.

Don’t the rich countries exert too much power over WTO negotiations? No doubt they do exert much influence on the behind-the-scenes negations needed to achieve

unanimity, often ignoring the poorer countries. But at least the meetings provide a

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forum for poor nations to speak out and broker alliances, such as the G-22, and for

using those alliances to exert influence on the developed nations. The alternative, no voice in a no-rules system, would be much worse.

Is the process undemocratic? Representatives of sovereign nations conduct the negotiations. So the protesters assume that they know better than their own governments

what is good for their country. This, while possible, seems unlikely considering that 155 governments, of all political stripes, remain members.

Isn’t the WTO a tool for those who advocate a doctrinaire form of laissez faire liberalism? There are indeed many WTO supporters who believe that the unaided

market will meet all social requirements – as well as many, including this author, who believe that the free market needs public-sector assistance if it is to meet societal

needs for justice and growth. Both sides agree that most, if not all, trade restrictions are harmful and, therefore, both support attempts to reduce such restrictions.

For sure, the WTO is a flawed institution – one that needs reform not abolition. Its bureaucracy is probably too small to handle the job. Decision-making by unanimous

agreement is cumbersome, encouraging blocking coalitions. One reform would be

a system of representation by countries selected according to such criteria as re-

gions, level of development, and trading interests, with a mechanism for rotation. In the meantime, until a better rules-based system for governing trade relations is developed, we need to support the one we have. Vancouver, 4 April 2006 Richard G. Lipsey is emeritus professor of economics at Simon Fraser University in Vancouver, BC, Canada. He has held posts in the UK and Canada and has been a visiting professor at Berkeley, Wisconsin and Yale universities. His latest book, written with Kenneth Carlaw and Clifford Bekar, is Economic Transformations: General Purpose Technologies and Long-Term Economic Growth, published by Oxford University Press in 2005.

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Irrational Exuberance to Bust: Bubbles Demand Regulation Kemal Dervis The last 15 years have been characterized by rapid, accelerating world growth, with

three interruptions: the Asian and then Russian financial crisis around 1997, the dot-com bubble burst around 2001, and most recently a financial crisis rooted in the US subprime mortgages and securitized investment vehicles. In all three cases “irrational exuberance” as well as regulatory failures in the financial sector led to

the shocks and growth slowdowns. The pattern suggests that there’s a strong case for overhauling regulation of the financial sector.

The Asian crisis was caused by excessive private capital flows to the emerging

markets with very open capital accounts and excessive appreciation of assets in or relating to these emerging markets. The ensuing capital-flow reversals and depreciations led to a growth collapse in these economies. The dot-com crisis was linked

to excessive asset appreciation relating to high-tech startup enterprises, mostly in the US. But the sectors affected represented only a small share of total asset values in the advanced economies.

The new crisis hit in mid-2007 and is still unfolding. A good part of the liquidity that

was provided to the world economy by the expansionary fiscal and monetary policies

following the dot-com bubble burst went into the housing sector. The combination of liquidity, in part due to low interest rates in the US and Japan, new complex

investment instruments and serious regulatory failures with regard to the financial sector in the rich economies, allowed a new asset bubble, focused this time on the housing sector and associated financial instruments.

Over the last two decades capitalism has changed its nature: The role of traditional industries and manufacturing has declined, the share of services has increased with the financial sector playing a leading role.

New economies of scale facilitated by the information revolution, global financial integration, regulatory changes in the US allowing commercial banks to engage in investment banking and other previously restricted activities, the emergence of hedge

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funds and private equity all resulted in a dominant financial sector. In the early 1980s, the share of the financial sector in both corporate value-added and profits in the US was about 6 percent. The share of financials in corporate value-added has steadily increased, reaching close to 10 percent in 2006-2007.

The share of corporate sector profits, however, climbed to an extraordinary 40

percent in 2007 – all going to a sector that in itself does not “produce,” as is the

case for automobiles, clothing or machinery, but “intermediates and organizes” the resources that do produce. The super-bankers, hedge-fund managers and owners

Financial regulation could moderate the quest for profits that contributes to one jumbo bubble after another.

of private-equity firms have become the new barons of 21st-century capitalism in many countries.

Many believe that this much increased role of the financial sector works in favor of greater efficiency, forcing out lethargic managers, encouraging a relentless search

for greater productivity, and allowing a constant restructuring that increases in-

novation throughout the economy. At the same time, immediate profits become a more important driver than long-term considerations. Projects that require long-

term investments and substantial upfront costs, with benefits accruing over many years, are unlikely to receive sufficient support in this environment where short-term incentives dominate.

The drive for ever-greater profits, which propels the system, often reaches unreasonable dimensions. At the end of the day, the rate of return on financial assets, on

average and over the long term, must reflect the rate of return in the real economy. That rate of return can be higher than the real GDP growth rate, but it cannot be expected to be multiple times the real growth rate of GDP forever. If real growth in an economy is 3 percent, a rate that most analysts would say potential output

cannot easily surpass in a sustained way in the most advanced economies, then it’s unreasonable to insist on double-digit profit rates year after year.

Of course globalization means capital can escape domestic constraints. But then the

real growth of the world economy sets long-term limits on what kind of return is, on average, feasible. The periodic asset bubbles may reflect an unreasonable pressure

in the financial sector to promise returns that in the aggregate cannot be achieved.

These promises keep being made, however, and asset bubbles keep emerging because the incentive structures in the financial sector are asymmetric: Managers

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reap great personal benefits from short term-profits, but pay comparatively little personal penalty when the bubble bursts.

Because asset-bubble bursts affect the entire economy, there’s irresistible political pressure to socialize the losses when they become too threatening. This socialization

of losses took place in the Asian and the dot-com crises. It’s again happening both

directly, with public money rescuing banks, and indirectly, when loose monetary policies lead to increased inflation, the cost of which will be borne by society as a whole. This does not imply that expansionary fiscal and monetary policies should be avoided to forestall an even more dramatic slowdown in the US and world economy.

But socialization of large parts of the financial-sector losses may encourage the next asset price bubble.

To avoid constant repetition of the scenario, it’s desirable to regulate the financial sector in a way that incentives become more symmetric, so that losses have serious financial consequences for those whose decisions cause them, and that rewards are

tied to long-term success. Such a degree of intrusive public policy is unnecessary in other sectors and will be resisted by market fundamentalists.

The fact, however, is that the financial sector can never be a purely private affair. It’s at the heart of the modern market economy and plays an organizing role that is

a public good. Its failure affects all citizens. Therefore, regulation that encourages responsibility, a longer-term horizon and an evaluation of risk by managers, is both fair and in the long-term interest of a well-functioning market economy.

We must ponder the next potential asset bubble. The impressive growth of India and China has increased the demand for raw materials, food and energy in a lasting

way – but the size and suddenness of recent increases in many commodity prices,

including gold, point to a speculative component. I’d not be surprised that two or three years from now we realize that the liquidity and macro-boost generated to fight

the subprime housing crisis ended up fuelling excesses in the commodity markets. If we want to reap the benefits of global opportunities in a steady fashion, rather than being subjected to recurring shocks from the financial sector, it may be time

to attack the root causes of these shocks in terms of financial-sector regulation that focuses on the nature of the structural problems in the sector, rather than using blunt macroeconomic instruments. Such tools may work in the short term by bailing

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everybody out, but often plant the seeds of the next financial storm. All this mat-

ters to the developing world: Regulatory troubles may cause growth rates in India

and China to decline significantly. They may rob Africa of the first real chance in decades to accelerate its progress.

On the one hand it’s argued that the “emerging South” will save the world economy from recession, that it should adapt to policies elaborated in the rich North and that it should take major responsibility in the fight against climate change. At the

same time the South is denied its natural place and weight in the decision-making

institutions of the international community. Countries must engage in the overdue effort to build better, more equitable global governance, not least relating to the financial sector. This includes a reform of the United Nations and the Bretton Woods system, so that the interdependent world we live in is regulated in a manner allowing

stronger participation by the emerging South and benefits accruing more equitably throughout the world economy. New York, 23 April 2008 Kemal Dervis is administrator of the United Nations Development Program, and this article is based on the Commencement Day Annual Lecture delivered at and organized by the Export-Import Bank of India, on 18 March 2008.

Time to Strengthen the IAEA Ernesto Zedillo The G8 leaders meeting in Japan during the second week of July noted that a growing number of countries look to launch peaceful nuclear power programs. The leaders

stressed the importance, as the nuclear club expands, of ensuring the nonproliferation of nuclear weapons and the safety and security of nuclear facilities.

Yet the organization responsible for maintaining the global nuclear order – the International Atomic Energy Agency – despite being a remarkable institution for

its achievements throughout its half a century existence, is struggling to do its job because of a chronic lack of resources.

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This year, I chaired an independent 18-member international commission that was

asked to look into the future of the IAEA. My colleagues and I were impressed by

the agency’s technical competence, whether in assessing Iran’s nuclear program or

helping to fight hunger by using nuclear techniques to breed more resilient varieties of rice. But we were frankly shocked to learn that the IAEA, one of the most

respected international organizations, has been operating virtually on a shoestring for nearly two decades.

The cost to the world of a single act of nuclear terrorism or a serious accident in a nuclear power plant would be incalculable. In contrast, the cost of strengthening

the IAEA to help prevent such catastrophes is modest. The resource situation of the

Global demands for

failing infrastructure. Vital elements of its work – for example nuclear safety and

the rise.

IAEA is now critical. Years of zero growth policies have left the organization with a security – are funded largely on an unpredictable and unstable voluntary basis.

IAEA Director General Mohamed ElBaradei was absolutely right a few weeks ago in

telling its Board of Governors: “There is a disconnect between what you are asking the Agency to do and what you are ready to finance.”

Core agency activities, such as monitoring the shutdown of North Korean nuclear

facilities, have had to be paid for through voluntary contributions solicited from member states because there are insufficient funds in the regular budget.

Likewise, the agency’s ability to analyze samples taken at nuclear facilities worldwide – essential for its independence and credibility in determining the nature of a country’s nuclear activities – is in serious jeopardy because of the obsolescence of

its laboratory equipment and chronic under-investment in its infrastructure. With a regular budget this year totaling just €289 million, the agency has rightly been described as an extraordinary bargain by many eminent persons.

In the commission’s report, we make recommendations on issues that world leaders

need to tackle as a matter of urgency. These include strengthening the nonprolifera-

tion regime, accelerating nuclear disarmament and meeting rising demands from developing countries for access to nuclear techniques to combat poverty, disease and drought. Ensuring safety in the use of nuclear energy and the security of nuclear

and other radioactive materials must also be high priorities. Unless the IAEA is given adequate human and financial resources, it will be unable to properly fulfill its

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crucial role in addressing these issues. First, we recommend an immediate once-off

cash injection of €80 million to enable the IAEA to, among other needs, refurbish its Safeguards Analytical Laboratory, SAL, and develop its Incident and Emergency

Response Center. Investment in infrastructure and IT projects, for example, has been deferred because of budgetary restraints.

The SAL, which evaluates sensitive samples taken at nuclear facilities and which must maintain accuracy, confidentiality, speed and cost-effectiveness, was built in

the 1970s, and both maintenance and investment in new equipment have suffered under the constrained budget. Through its Incident and Emergency Response Center, the IAEA coordinates international notification and assistance to help states

respond in the event of a nuclear accident or a terrorist attack and cope with the consequences. In such a crisis, effective plans for public communication are critical

to reduce the likelihood of panic, but the center does not yet have the resources to fully carry out this role.

Second, the effective budget freeze must end. Funding needs to be made secure

and predictable. The budget ideally needs to double by 2020. The extra resources would be used in a whole host of areas, from making sure that vital programs to combat nuclear terrorism are adequately staffed and equipped, to helping countries embarking on nuclear power programs develop the necessary infrastructure, safety regimes and waste-disposal mechanisms.

But it’s not just about money. The report calls for a reinforced global nuclear order, involving increased collective action, more transparency, tougher safety and security

standards and new nonproliferation measures. The IAEA’s authority to go after possible nuclear proliferators needs to be strengthened. Its inspectors should be given more powers to follow up suspected nuclear weaponization activities.

As has become clear from recent events, sometimes transparency going well beyond

the measures called for in the Additional Protocol is needed to provide confidence that a state’s nuclear program is entirely peaceful.

The Additional Protocol of the Treaty on the Nonproliferation of Nuclear Weapons, NPT, called for enhanced access and more intrusive inspections of countries’ nuclear programs in an effort to strengthen and expand verification and safeguards.

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Although nuclear safety has improved enormously in recent decades, the risk of

an accident at any given reactor must continue to be reduced. The IAEA role in persistently improving the global safety regime is critical and must be reinforced.

Therefore, the agency should work with member states to coordinate research to design reactors that are economical, safe and proliferation-resistant. It should be

given a key role in managing new multinational mechanisms to assure supplies of

nuclear fuel, at market prices, to countries with peaceful nuclear energy programs. This means that countries would not need to master the enrichment and repro-

cessing technology that provides nuclear-weapons capability. It is one of the most promising nonproliferation avenues now being explored, by the US, Russia as well as other countries.

None of this will take place in a political vacuum. Article VI of the NPT legally obligates the nuclear-weapons state parties to negotiate in good faith toward nuclear disarmament, and at the 2000 NPT Review Conference, they agreed that the treaty

represented an “unequivocal undertaking” to “accomplish the total elimination of their nuclear arsenals.” This commitment is an integral part of the NPT bargain.

World leaders need to make the reinvigoration of the nuclear nonproliferation regime a priority, with the nuclear-weapon states following up on their commitment to reduce and ultimately abolish their nuclear stockpiles. International nuclear verification will be essential as disarmament proceeds and the IAEA is uniquely suited to playing a central role. The agency should be tasked with monitoring the huge

stockpiles of fissile material that will be released from nuclear-weapons programs. What is needed is an ambitious reinvigoration of the grand bargain that was struck 40 years ago in the NPT. The renewed grand bargain will need to combine steps that

can be taken immediately with a vision for the longer term, and to draw in states that are not parties to the NPT.

The international community has unprecedented opportunities and significant challenges to tackle as the world moves into its seventh nuclear decade. Whether or not the much-heralded “nuclear renaissance” materializes, the use of nuclear technologies

throughout the world is certain to increase. They offer immense potential benefits

to humankind, but also pose complex and wide-ranging safety and security challenges. Reinforcing the IAEA is a vital first step towards meeting those challenges.

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New Haven, 7 August 2008 Ernesto Zedillo, director of the Yale Center for the Study of Globalization, was president of Mexico from 1994 to 2000.

Regulating the Global Commons – Transportation Michael Richardson Those who care about global climate change should pause before buying imported

goods or flying abroad for a holiday, or so many environmental activists urge. Ships and planes are the backbone of international trade and travel, yet largely evade

political scrutiny as sources of harmful air pollution and greenhouse-gas emissions that contribute to climate change.

The world’s fleet of 50,000 oceangoing vessels, in international waters far from land for much of the time, keeps a low profile on the greenhouse radar screen.

Meanwhile, the 15,000 large jet aircraft that carry millions of passengers around the

world have not yet been hit with the kind of carbon curbs and taxes being planned for energy-intensive industries because governments are reluctant to cap popular demands for cheap mass travel by air.

However, as public concerns intensify about climate change, pressure is growing

to include both the shipping and aviation industries in any new international deal to reduce greenhouse emissions. Neither is covered by the Kyoto Protocol, which expires in 2012, in part because of the complexity of attributing emissions from ships

and planes to individual states. Their inclusion in any Kyoto successor has major implications for trillion-dollar industries that must constantly invest in expensive new equipment and facilities to deliver cost-efficient service and stay competitive.

Ships carry 90 percent of trade by volume, including bulk commodities like oil and minerals and container cargoes of manufactured goods. In addition to passengers,

planes carry high-value perishable items and products for the far-flung global supply chain on a just-in-time basis.

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Major ports in Asia, Europe and North America closely follow any cleanup proposals for shipping because they’ll add substantially to business costs and could give some

maritime centers a competitive advantage unless the new controls are enforced by all trading nations. Airlines, too, are concerned at the prospect of regulation and foresee substantial extra costs as many operators struggle to make profits amid rising fuel prices and cut-throat competition.

Much depends on which emissions regulators tackle and how. For example, the

European Union provisionally includes aviation, but not shipping, in its emissions-

trading scheme. The shipping industry argues that its carbon footprint is relatively

small: Carrying goods by sea on vessels that burn oil-based fuel produces less than

The transportation

same distance by air. Compared with rail, the CO2 saving of sea transport would

environmental scrutiny.

2 percent of the CO2 that would be generated by freighting the same goods the

be 50 percent while with road transport using heavy trucks, it would be around 15 percent, according to this calculation.

Nonetheless, a study by a group of industry experts released in February concluded

that annual CO2 emissions from shipping reached 1.12 billion metric tons in 2007,

about 3.5 percent of global releases and nearly double the 650 million tons attributed to aviation. But ships are also a source of non-CO2 pollution. The International

Council on Clean Transportation, made up of transport and air quality officials from

a wide range of states, reported last year that ships produced more sulfur dioxide than all the world’s cars, trucks and buses combined. Environmental groups say that

ships account for between 8 and 10 percent of sulfur emissions from all types of fossil fuel and also contribute nearly 30 percent of global releases of nitrogen oxides.

Seaborne trade has surged by 50 percent in the last 15 years and is expected to continue expanding fast. In November, reacting to public concern about pollution from ships, the European Commission called on the International Maritime Organization,

the United Nations agency responsible for regulating marine pollution, to do more to combat climate change.

Proposals under review include tightening fuel standards, reducing funnel exhaust gases and using only shore-based electric power when in port. They could be adopted

by the IMO as amendments to global marine pollution laws as early as October and come into force in 2010. Reacting to calls for a cleaner industry, some shipping lines reduce speed to cut fuel costs; choose the most fuel-efficient routes; and design

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vessels with hulls, engines and propellers that use less energy. They have found that slowing a ship by 10 percent can result in a 25 percent reduction in fuel use.

While the IMO seeks international consensus, pressure builds in the US and Europe for national and regional regulation. If the IMO fails to produce credible and enforceable standards, sea-based transportation will be saddled with a patchwork quilt of regulations, slowing trade and increasing costs.

Meanwhile, environmental groups target aviation’s impact on global warming, although scientists on the UN’s Intergovernmental Panel on Climate Change estimate

that aviation contributes just 2 percent of the world’s manmade CO2, expected to

grow to only 3 percent by 2050. Giovanni Bisignani, director-general of the Inter-

national Air Transport Association, says that airline fuel efficiency has improved by 70 percent in the last 40 years, on target to achieve a further 25 percent gain by

2020. He adds that improvements in aircraft operations and traffic management,

as well as advances in design, limit annual growth of the aviation industry’s carbon footprint to 3 percent, even as air travel expands by about 6 percent a year.

However, critics assert that the airline industry underestimates its contribution to global warming and that improved technologies for reducing pollution will be more

than offset by the sheer growth of aviation, particularly in Asia, North America and

Europe. A recent report by Britain’s Royal Commission on Environmental Protection found that the net effects of ozone gas from planes, aircraft condensation trails and aviation-induced cloud cover is likely to triple the warming effect of aircraft emissions. The report concluded that if these estimates are correct and anticipated growth in plane travel occurs, aviation may be responsible for up to 10 percent of the human impact on climate by the year 2050.

There’s no doubt the industry is growing fast. In its latest forecast, European aircraft

maker Airbus says the world’s fleet of large passenger jets, more than 100 seats, will double in the next 20 years to nearly 33,000 aircraft. Airfreight will rise by 5.8 percent

annually in the same period. The greatest demand will come from the Asia-Pacific region. A big rise in the number of planes would mean more emissions, followed by increased pressure on makers of aircraft and their engines to cut pollution.

Europe is taking strides to lead the world in campaign to reduce greenhouse gas emissions and has drafted controversial plans to make all airlines flying in and out

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of the bloc buy pollution permits. The European Commission proposed in January

that airlines using EU airports would be included in the bloc’s emissions-trading

scheme from 2012. Under the scheme, yet to be approved by the European Parliament and the 27 member-states of the EU, airlines would gradually have to buy emissions certificates at auction.

The US government and many airlines insist there should be an international agreement first. They warn that without it, European airlines would risk retaliation,

including denied access or punitive taxes in other countries. Non-European airlines might shun Europe as a hub for long-haul flights. One point is clear: As the aviation

and shipping industries emerge from their sheltered status and face up to demands

for cleaner growth, they will be under the same pressure as other significant contributors to climate change to show that expansion no longer takes an unacceptable toll on the environment.

Singapore, 28 March 2008 Michael Richardson, a former Asia editor of the International Herald Tribune, researches transportation, energy and climate change at the Institute of South East Asian Studies in Singapore.

How Not to Kill the Oceans for Fish Alex David When I was a boy I saw the waves of the Atlantic Ocean turn mercury-silver and the water boil as mackerel herded bait fish into a small bay and onto a beach on the

west coast of Ireland. It is a picture of a bountiful ocean that has remained with me to this day. The oceans provide 2.9 billion people with at least 15 percent of their

annual protein requirement and more than 100 million people are involved in the fishing industry with more than half a billion dependent on the sector. Annual global

fish trade is worth $92 billion and the seafood industry as a whole probably more than $200 billion. Fishing is a lucrative business as well as a critical food security and livelihood issue, especially in the developing world.

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Yet all is not well in the oceans, the largest ecosystem on the planet Earth, and re-

versing the worrisome developments threatening to empty the oceans will require a concerted, global effort.

After the Second World War there was a massive expansion in fishing as the distant-

water fleets of the industrialized nations cast their nets and lines across the oceans. Acoustic and navigation technologies allowed us to find fish wherever they are, and to

catch them in increasing quantities by deploying greater numbers of more powerful

and larger fishing vessels with more and more sophisticated fishing gear. The result

Reversing the developments threatening to empty the oceans will require a concerted, global effort.

of this was that in the 1980s marine fish catches began to stagnate and are now in decline. Many iconic and economically important fisheries, such as the northwestern

Atlantic cod, have been lost. The large predators of the oceans – tuna, billfish and

sharks – are simply disappearing with populations falling to 10 percent or less of their unfished abundance. For some of these species extinction is a real prospect.

Depletion of fish stocks has been driven by open access to fisheries, encouraging

a damaging “race to fish” amongst fishers, as well as massive overcapacity in fishing fleets. Thanks to government subsidies, fishers continue to exploit depleted or

unproductive stocks. Each year governments spend about $20 billion on harmful

fishing subsidies. Global fleet capacity too has grown to about twice that required to harvest current fish stocks, undermining efforts to sustainably manage fisheries.

Efforts to reduce global fishing fleets are often met with fierce opposition from

fishers and supportive politicians. Using short-term socioeconomic justifications,

politicians have set fishing quotas way above those recommended by scientists. In

Europe, quotas have been 42 to 57 percent higher than scientific recommendations, and as a result 80 percent of European fish stocks are fished beyond sustainable levels compared to an average of 25 percent globally.

To exacerbate the situation 11 to 26 million tons of fish, worth between $10 billion

to $23 billion per year, are caught illegally. Parts of the developing world, with poor capacity to manage fisheries, such as east and west Africa are particularly hard hit by

this piracy. In some cases, such as in the blue-fin tuna fishery in the Mediterranean, blatantly illegal fishing and overfishing practices are encouraged by the extraordinary prices that some fish can fetch. Single blue-fin tuna have been reported to have been sold in sushi-loving Japan for more than $100,000.

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Fishing has other worrying effects on marine ecosystems. Overexploitation of target

fish stocks changes the structure of marine food-webs and their ecosystems. In the

worst cases, overfishing can interact with other human interference, exacerbating

climate-change effects. Overfishing of grazing fish such as parrotfish and surgeonfish from coral reefs decreases the resistance of the reefs to the effects of mass coral

bleaching, a result of increasing sea-surface temperatures since the late 1970s. In coastal waters off the United States and in areas such as the Black Sea, outbreaks of invasive jellyfish and the development of dead zones, areas of the sea where a lack of

oxygen kills almost everything, can be related to the combined effects of overfishing, pollution from agricultural runoff, shipping and climate change.

By-catch – the amount of unmanaged and wasted catch by fishing trawlers, another

effect of overfishing – is estimated at a staggering 38.5 million ton, about 40 percent

of marine fish catches. By-catch includes many iconic marine predators such as

oceanic seabirds and sharks and has reached levels that threaten these species with

extinction. The impact of bottom-fishing gear on seabed communities of ancient

corals, sponges and other species has become a major global concern, especially in the deep ocean where such animals may live for 4000 years and have little chance of recovering from fishing impacts.

Given the critical importance to future generations of the oceans for food security

and other benefits such as regulating the climate and contributing to the Earth’s

major nutrient cycles, we must change the way we manage fisheries. It may come

as a surprise, but we already know how to do this. One way to improve the sustainability of fisheries is to give ownership of the resource to the fishers. This is not a new idea and has been practiced since ancient times in the western Pacific where

fisheries were managed through territorial-use rights or customary marine tenure. Fishers are allocated a set proportion of the total allowable catch, and these quotas may be transferable – sold to other fishers – or non-transferable. Such systems tend

to reduce fleet overcapacity and make fisheries more economic, reducing the need for subsidies. Because they secure harvesting rights to fishers, they also encourage

long-term stewardship of marine resources and greater cooperation among fishers and fisheries managers.

Governance of fisheries must improve globally through the strengthening of international law and the improvement of the performance of states and regional fisheries

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management organizations charged with managing fisheries. Managers must have a comprehensive understanding of what fish are being caught and discarded; the ecosystem impacts of such fishing activities and politicians must follow scientific advice on catch limits to sustain fisheries over the longer term. These are obligations

under international law and are simply not being met. Recent news that the Food

and Agriculture Organization of the United Nations has successfully negotiated a new international agreement on port state measures to combat landings of illegally

caught fish is welcome. However, tackling illegal, unreported and unregulated fishing requires further efforts.

Finally, we have to change the approach to ocean management. It is possible through

technical measures to reduce by-catch in many fisheries and through careful consideration to avoid management measures that encourage discarding of unwanted

or low-value catches. However, the adoption of marine-protected areas on a large

scale across the oceans offers the greatest opportunity not only to improve fisheries, but also to maintain the species diversity and function of marine ecosystems and prevent the catastrophic collapses like the disappearing Atlantic cod that we

are witnessing. Studies have demonstrated that such protected areas rapidly lead

to the recovery of fish populations and increased survivability of fish to a large size. The improved reproductive capacity of such populations soon leads to an overspill

effect whereby fish stocks outside of the protected zones increase, benefiting fishers by increasing catches. The benefits to the marine environment are profound

with recovery of seabed habitats from the impacts of bottom fishing and increased

abundance and diversity of marine species. Such effects have been seen in marine reserves from the tropics, for example in St Lucia, and in temperate regions, such as Georges Bank in the Gulf of Maine.

Life began in the oceans and it behooves us to do our best to protect the life-sustaining oceans and their riches.

London, 18 September 2009 Alex David Rogers is reader and scientific director of the International Programme on the State of the Ocean.

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Global Governance: A Work in Progress Hakan Altinay Management of transnational issues through voluntary international cooperation

has come to be referred as global governance. The term sounds like global government, but it is really the opposite, as it refers to management of the transnational challenges in the absence of a world government. Neither transnational challenges nor attempts to manage them are new. We have had entities like the Rhodian Law of

the Sea, or Byzantine Law, which provided a framework to govern maritime losses.

The Hawala System has worked a thousand years through the proactive participation of countless actors across South Asia, Middle East and the Mediterranean. The

Hanseatic League provided an early glimpse of true multilateralism. Nevertheless,

the depth and breadth of current international cooperation around transnational issues are unprecedented.

Let’s review some of the manifestations of our existing international cooperation: It took several decades to develop a system to have telegrams across national borders.

And yet today owners of 4 billion mobile phones have a reasonable expectation that their phones will work seamlessly when traveling to another country. World Global System of Mobile Communications operators increasingly agree to sensible standard practices such as operators dedicating 112 or 911 to emergency services.

At a mundane level, money can be wired across countries with tremendous speed

and little inconvenience. SWIFT, the Society for Worldwide Interbank Financial

Telecommunication, and IBAN, International Bank Account Number, are two systems which expanded to many a task not routine even for the Rothschild Group.

We cooperate around the internet actively and every day. Tremendous amounts of data, information and knowledge are open to all 6.7 billion of us. Encylopédistes of the 18th century would be awestruck by what is available through Wikipedia,

JSTOR, Google Scholar and the like. Popular voice over internet protocol facilities such as Skype have rendered international telephony, a facility not available to

Napoleon or Genghis Khan, practically cost-free for billions. Creative Commons is

becoming a popular alternative to conventional trademarks practices. And, we all have access to trans-border broadcasting through satellite televisions, which makes

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diverse ideas and sufferings accessible to a great many, nurturing awareness and common humanity along the way.

We have assumed that traditional sovereign competencies of national states have been more resistant to international cooperation schemes. However, countries have

the facility to ask other countries to apprehend criminal suspects through INTER-

POL, the world’s largest police organization, which reports to have enabled 5,600 arrests in 2008. This is no minor achievement.

Our history is a story of trial and error, finding ways to cooperate across border, a process begun thousands of years ago.

We have rules governing safety at sea, pollution and even global maritime distress, search and rescue system. There exists an audit scheme, albeit a voluntary one, to

monitor compliance. Furthermore, we have a way to allocate satellite orbits, and the system is working with relatively little discontent.

We have mechanisms for global health challenges and even some vital successes.

Smallpox has been eradicated though international cooperation, and polio may be

next. The world has had the wherewithal to come up with ad hoc responses when traditional mechanisms did not suffice. The Global Fund to Fight TB, AIDS and

Malaria is one such ad hoc response with encouraging results. We have also managed to cooperate to protect the genetic diversity of main crops and established the Global Crop Diversity Trust.

The world has demonstrated crucial capacity to identify ozone depletion as a potential problem with global consequences and was capable of hammering out a setup where

the ozone-depleting gases have been phased out. The basic grammar of the ozone

problem is not so different from the climate change predicament, and the Vienna Convention and the Montreal Protocol are no small accomplishments.

The first example of an international normative campaign for global rules was the

antislavery movements of 19th century, and their efforts took more than 50 years to produce the first international treaty on the issue. Another seemingly gargantuan

task was around landmines, a popular ammunition of armed forces around the world. In the latter case, it took a mere seven years for a global consensus to outlaw

this once-popular weapon. There is now a new movement to establish norms con-

cerning the trade and transfer of small weapons, responsible for many more deaths than nuclear weapons. Another significant development was the formation of the

International Criminal Court. Not all the states are party to the ICC, yet its mere

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existence would surpass the most optimistic utopias of multilateralism proponents from the last century.

Amartya Sen has recently warned us against excessive fascination with ideal justice

at the expense of multiple and seemingly disjointed ways of decreasing injustice. The patterns of global cooperation of the last decades seem to support his argument.

Progress has been uneven and less than ideal, but on balance we should be encouraged by the advance of international cooperation and global governance on these multiple tracks. The more visible absence of progress is the exception and should

not be the basis of a debilitating cynicism. We need to celebrate our accomplish-

ments, and in the process muster the energy to overcome remaining challenges to a fuller global cooperation.

Two glaring gaps in existing global-governance schemes are effective procedures for Responsibility to protect and, of course, a framework to thwart climate change.

One of the earliest modern attempts to set transnational norms was around proper

conduct during the time of war. The first Geneva Convention dates back to 1864. Humanity has been aware of the ultimate crime of genocide, profusely vowing

since the 1940s not to let it occur again. Yet, what has come to be known as the responsibility to protect has been systematically abdicated. As long as humanity is

organized primarily through national states, there is an inherent problem to send national armies into harm’s way without clear national interest.

Yet, that is not the only option. Humans have always taken up arms in other countries for their beliefs. The international brigade at the Spanish Civil War is the most celebrated example, but the practice is older. The United Nations needs a mechanism

to accept volunteers and ensure adequate representation of all regions so that no

particular group ends up dominating the UN Army at any given conflict – and of course ensure their discipline during their mission as there are too many examples of

presumed rescuers harassing the very people they’re meant to rescue. One can even imagine a setup where not just UN Security Council but UN secretary-general or the

college of former UN secretary-generals can endorse a given mission, so that action

cannot be held hostage to veto by five permanent members of the Security Council. Climate change is clearly the most pressing issue confronting the globe. Business

as usual means that we will soon cross the point of no return in triggering a chain reaction of catastrophic results for human existence and civilization on planet Earth.

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The qualities of the underlying dynamics make climate change an especially difficult challenge: There are some 30 years between cause and effect, that is carbon emissions

and the full consequences of those emissions. The fact that significant percentages

of adults continue to smoke, despite its dangers, demonstrates that humans find it difficult to give up immediate gratification in anticipation of deferred costs over 30 years. As such, climate change is the collective action problem from hell. After

years of neglect, denial and foot-dragging, humanity now seems to have harnessed the wherewithal to address climate change. No other challenge brings home our epic interdependence. Therefore, a solution to the climate-change challenges could serve as the paradigm for solving other global public-goods problems.

Our history is a story of trial and error as we found ways to cooperate across border, a process begun thousands of years ago. The audit of the current state of international

cooperation and global-governance patterns shows that perseverance, creativity, pragmatism and vision are the answer, not despair or cynicism. New Haven, 26 January 2010 Hakan Altinay was a 2009 World Fellow at Yale University and is a senior fellow at the Brookings Institution.

The World Is Adrift as Nations Skirmish Kishore Mahbubani We live in a world of rising global angst, with a slew of global problems defying

solution. Nobody knows what will happen to key global currencies even a year from

now. Unemployment remains persistent in several developed countries. Social dis-

satisfaction is rising. Global warming defies a solution. Global terrorism continues. Against the backdrop of this rising global angst, the leaders of the 20 most powerful

countries met in Seoul November 11 and 12. Other than the release of fanciful communiqués and statements, nothing happened. The overwhelming consensus was

the G20 leaders essentially failed to address the key global challenges we face. This failure should not come as a surprise, and a simple structural reason explains why.

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The world has changed fundamentally. Humanity has not. Or, to put it more accu-

rately, humanity has not changed its organizing principles to deal with a changed world. A simple metaphor demonstrates how fundamentally our world has changed. Before the contemporary era of rapid globalization, when humanity lived in 192

separate countries, it was like living in 192 separate boats. Hence, all the world

needed was rules to prevent collisions. The 1945 rules-based order did just this,

while also allowing for some cooperation. Today, as a result of a shrunken world,

humanity no longer lives on 192 separate boats. Instead, all 7 billion of us live in 192 separate cabins on the same boat.

And though we live on the same boat, we have no captain or crew to manage the boat.

Powerful nations can’t

None of us would dream of sailing out to sea on a boat without captain or crew. Yet,

without protecting the

this is precisely what humanity is doing with Earth as we sail into the 21st century. Global problems require coordinated global actions to solve them: from financial crises to global warming, from pandemics to global terrorism. Yet, despite this,

we shy from creating institutions and processes of global governance. Note, global

governance is not global government. Despite this crucial distinction, no national government dares to espouse greater global governance.

If a boat catches fire on the high seas, it’s sheer folly to lock ourselves inside our

cabins to protect ourselves. We must step out of our cabins, cooperate with other passengers from other cabins and extinguish the fire.

And we did do this once recently. At the height of the recent global financial crisis,

the G20 leaders stepped out of their cabins, and at the April 2009 G20 meeting in London delivered a strong coordinated response, quelling the financial fires about to engulf the global boat.

Having succeeded once, the G20 leaders were expected to behave as though it was their responsibility to take care of the boat. Sadly, when the crisis was over, the G20

leaders retreated back into their cabins. This is why Seoul failed. This behavior was

not irrational. The G20 leaders are elected by the occupants of their cabins, not by the occupants of the boat.

This simple metaphor of the boat provides a powerful explanation of the world’s fundamental troubles. When sailing on the high seas, no captain would allow the

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passengers of any cabin to jeopardize the interests of the boat. But in the current organizing principles of the global order, we allow the occupants of privileged cabins to carry out activities that endanger our global boat.

Consider the persisting global financial crisis. The leading legislators of the most

powerful cabin on the boat, namely the US Congress, are convinced that the global economic crisis would be solved in one stroke if the Chinese government revalued the yuan by 15 to 20 percent. By contrast, most economic studies show that any such

revaluation would have a minimal effect on persistent US trade deficits. Looking for a scapegoat, the US legislators pick on the Chinese government.

The politicians do not want to focus on how their own actions jeopardize the economic

fortunes of the US. The US needs to reduce its indebtedness. Congress could make a big difference by severely reducing budget deficits. And it could do this by shedding

expensive agricultural subsidies and earmarks added to every budget. The recent

bipartisan commission, chaired by Democrat Erskine Bowles and Republican Alan Simpson, suggested bold steps the US Congress could take. However, to take any of these, members of Congress would need courage to stand up to special interests.

Since courage is in short supply in the US Congress, China provides a convenient scapegoat to avoid focusing on the real issue.

This was the ultimate test of the G20 leaders when they met in Seoul and discussed

unsustainable global imbalances. Could they revive the spirit of the London meeting and cooperate to save the world – or would they once again resort to putting

national interests ahead of global interests? The sad truth about our global order is that while our national leaders sometimes come together to cooperate in response

to a crisis, they fail to do the same when they confront a chronic situation. Seoul confirmed this.

Many of our current global problems are chronic problems, not crisis situations. Global warming is happening, but it’s happening slowly. Most of us won’t feel the effects tomorrow, but 20 to 30 years from now. And humanity responds to this

crisis with the wisdom of a frog. Throw a frog into boiling water and he jumps out immediately. Put him in a pot and allow it to warm slowly, much like global warming, the frog will remain contentedly in the pot. The most intelligent species of our

planet receives warnings about impending crises that will disrupt the lives of our children and grandchildren, and yet we do nothing.

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The G20 leaders can take a simple step to improve their performance at future meet-

ings. They should don two hats when they speak and perform – one as a national leader and another as a key global leader. He or she can also consistently reiterate one key obvious point. There would be little purpose served in protecting the interests

of the cabin if the boat as a whole is in trouble. And many of the problems afflicting

the cabins – economic disasters, global warming, pandemics and terrorism – can be solved only by coordinated global action. G20 leaders must demonstrate that they are both national and global leaders.

 The leaders can also undergo a simple test to prove that they’re doing the right thing

for the world. On its own, the G20 enjoys no legitimacy. The group just represents a random collection of countries, albeit some of the more powerful countries of the world. By contrast, the United Nations enjoys universal legitimacy. Hence, after

each G20 meeting, a report should be filed with the UN. The pressure of submitting

this report will, in a small way, remind the G20 leaders that their real mission is not just to protect their individual cabins but to protect the boat for all. Singapore, 23 November 2010 Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, National University of Singapore, is the author of The New Asian Hemisphere: the Irresistible Shift of Global Power to the East.

The World’s Responsibility to Protect Libyans Ramesh Thakur With Muammar Gaddafi’s bombers, tanks, artillery and naval vessels unleashing

firepower on urban centers, the rebels appeal for international intervention to prevent a massacre. Libya is at a turning point, a moment when the much-talked-

about responsibility to protect, or R2P principle, should trigger action led by the United Nations.

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But the organization is paralyzed by bickering members more concerned about their

narrow national interests. The pussyfooting response of Security Council members Brazil, India and South Africa – the rising global powers – has provided proof that they’re not ready for prime time as permanent members of the UN’s top body.

The weak-kneed response calls into question the United Nations’ value as protector

of the world’s population. The organization exists to bring about a world where fear

is changed to hope, want gives way to dignity, and apprehensions are turned into

aspirations. In the words of the illustrious Secretary-General Dag Hammarskjöld,

R2P is our instrument of choice to convert a shocked international conscience into collective action.

the United Nations was “not created in order to bring us to heaven, but to save us from hell.”

UN failures in Africa and the Balkans in the 1990s reflected many structural, political and operational deficiencies that accounted for its inability to save people from hell. Secretary-General Kofi Annan, scarred by the experiences of Rwanda and

Srebrenica that happened on his watch as head of UN peacekeeping, championed

the search for a new norm that would empower the world community to act to save at-risk populations.

A Canadian-sponsored international commission took up the challenge and formulated the innovative responsibility-to-protect principle in 2001.

In 2005, world leaders unanimously agreed that where governments manifestly

failed in their sovereign duty, the international community, acting through the

United Nations, would take “timely and decisive” action to honor the collective responsibility to protect people against crimes of atrocity.

This represents the idealized UN as the symbol of an imagined and constructed com-

munity of strangers. For 350 years from the Treaty of Westphalia in 1648 to1998, sovereignty functioned as institutionalized indifference. In 1999, international

interventions in Kosovo and East Timor broke that mold and were the backdrop to

Annan’s search for a new norm. R2P is the mobilizer of last resort of the world’s will to act to prevent and halt mass atrocities and mitigate the effects of sovereignty as organized hypocrisy, as Stanford University’s Stephen Krasner famously put it. It’s

our normative instrument of choice to convert a shocked international conscience into collective action.

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R2P meets the minimum requirement of the call to action of classical humanitarian intervention while protecting the bottom-line interests of developing countries,

thereby assuaging their legitimate concerns. It navigates the treacherous international shoals between the Scylla of callous indifference to the plight of victims and the Charybdis of self-righteous interference in others’ internal affairs.

Libya today is the place and time to redeem or renege on R2P’s solemn pledge. The people’s uprising against Gaddafi is tailor-made for R2P. Many people have already

been killed, and carnage is feared. After 42 years of autocratic rule, Gaddafi is using deadly violence to crush an open revolt against his dictatorship. He and his son Saif have vowed to fight to the last drop of their blood, deploying air, sea and land

forces. Putting all options on the table as the riposte to planes, bombs and tanks seems a pusillanimous response.

The UN Security Council, the Human Rights Council, Ban Ki-moon and his special

advisers on genocide prevention and R2P have called on Libya to respect its R2P,

human rights and international humanitarian law obligations. The Security Council

also imposed sanctions on Libya and referred Gaddafi to the International Criminal Court – a soft and deeply problematic option of kicking the ball out of play.

R2P is not solely about military intervention but, if it’s to have any meaning at all, must include that option as a last resort. Both for its own credibility and for the sake of Libyans, the Security Council must determine the appropriate protective measures, authorize them and urge those with the capacity to implement them.

Those who supplied Gaddafi with his weaponry have a particular responsibility to protect civilians from being harmed by their use. But how? Premature, over-eager outside intervention will pollute the revolution made of, by and for Arabs. Muslims have cause to be deeply suspicious of western military meddling.

Three sets of issues are involved: military capacity, legal authority and political legitimacy.

Boots on the ground may not be wanted, helpful or feasible. Instead, military operations would entail four sets of activities: surveillance and monitoring, stepped

up to 24/7 operations from the previous 10 hours a day, as well as humanitarian assistance, enforcement of the arms embargo and enforcement of a no-fly zone.

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Only the West has the military assets and operational capability for these tasks. But

NATO would be ill-advised to take any military action on its own authority. Calls grow for a no-fly zone, especially from rebels under aerial attack. Military analysts

are divided on the complexity and feasibility of the option: U.S. Defense Secretary Robert Gates says a no-fly zone requires destruction of the Libyan air force, others

add anti-aircraft batteries, and still others warn of mission creep and the risk of being branded western imperialists.

Yet a no-fly zone was successfully declared and enforced over Iraq to protect the Kurds for 12 years until 2003. It did not lead to mission creep: The 2003 war was

not a creeping progression from the no-fly zone, but a deliberate policy choice for independent reasons. The quality of Libya’s air force is suspect: “a known unknown.” A no-fly zone could tip the balance for Libyan air force officers’ motivations to bomb fellow citizens or defect, either to the rebels or the West.

The risks of mission creep and deepening quagmire leading to nation-building

would arise only if ownership of the uprising is appropriated from the Libyans by the West, as would happen with ground troops.

The chances of this are reduced with legal authorization from the UN Security Coun-

cil that’s restricted to the four military tasks listed above. The usual suspects have been reluctant to support such a resolution. Their opposition could be overcome if it becomes clear that the Arab, Islamic and African nations, as well as the mass of

defecting Libyan diplomats, support prompt and effective action to protect Libyan civilians, oust Gaddafi and promote democratic reforms.

If the Security Council dishonors the world’s collective responsibility to protect,

limited and legitimate action by NATO is still possible under clear mandate from

the African Union and Arab League, backed by the Organization of Islamic Conference and the Gulf Cooperation Council. Absent that, NATO guns should stay silent. In his speech to India’s houses of parliament on November 8, President Barack

Obama endorsed India’s quest for permanent membership of the Security Council,

but reminded listeners that global power carries responsibility for solving global problems. For the first time ever, the Security Council includes the powerful southern heavyweights of Brazil, India and South Africa, all weak and poor in previous decades and now vibrant, even ebullient democracies. They should have taken the

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lead to turn R2P from principle to actionable norm, providing the legal authority to utilize Western military capability on behalf of innocent victims.

Instead they’re among the biggest foot-draggers. Having failed the test of acting as stewards of world order that combines values and power, they have proven their critics right. They are not yet ready to join the top table as permanent members. Waterloo, 14 March 2011 Ramesh Thakur, professor of political science, University of Waterloo, was UN Assistant Secretary-General, a R2P commissioner and a principal author of its report. His most recent book is The Responsibility to Protect: Norms, Laws and the Use of Force in International Politics, 2011.

The Politics of Globalization Peter Mandelson As globalization transforms the world, societies and nations are becoming increasingly uneasy. Yet no one in China, Vietnam, India, or Botswana – let alone the

educated young adults in Europe or the US – is in a hurry to reverse integration into the global economy. Globalization drives trade and innovation, pushing down consumer prices, be it the basics of food and clothing or the luxuries of cars and computers. But the voracious appetite for energy and other natural resources leads to competition and unease, a global race that threatens stability.

Modern economic life seems to me to be characterized pretty simply: new opportunity for many, new uncertainty for most. And two views of globalization are emerging: first, the Davos view, seen from 10,000 feet of new opportunity and aggregate

growth and, second, the view from the factory gate where globalization is seen as a zero-sum game in which jobs and opportunities in the fast developing world are created at the expense of employment and the standard of living.

Anxiety also emerges among countries with different economic rules. Although

the narrative of free trade and liberal economics driving innovation persists, there

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is a more ambiguous reality, in which some states play by the liberal rules of free

economic competition when it suits them, and the rest of the time distort the costs of capital, protect and subsidize industry and operate opaque systems of regulation.

The tensions among the fastest growing emerging economies are as great, if not more so, than between developing and developed countries.

As global competition grows more intense, each country grasps any tool to gain advantage in others’ markets while protecting their own: Russia has set up a sovereign

wealth fund so that it can subsidize inward private equity investment. China has

By balancing competition with social protections, governments can control globalization.

added rules governing “national security,” adding to investment uncertainty as it seeks increased international access for outgoing investment. Australia has revised its takeover rules to prevent China buying up wholesale its natural resources.

That the economy has moved beyond our control creates anxiety – globalization is

something done to us rather than for us. Far from celebrating globalization, many plead for protection. To this, the financial crisis adds complexity. Unregulated fi-

nance capital grew ahead of our ability to manage it, ultimately causing the crash,

and for many this exemplified the unaccountable, volatile power of global markets. Jobs and pensions became collateral damage. This is the defining problem for 21stentury politics in the developed world.

Undermining globalization’s huge benefits are distorting interventions of state capitalism from one direction and anxious politics of an increasingly defensive developed

world from the other. The poorest countries are most likely to be uncomfortably squeezed by any clash of interests among the more developed countries. For these reasons, there’s urgent need to improve the politics of globalization.

Institutions are in place to shape globalization along with an array of public policy tools that aim for greater security. Yet the potential of the United Nations, the

International Monetary Fund, the G20, the World Bank and especially the World Trade Organization is underestimated.

The WTO is the only global organization operating in the economic sphere which sets multilateral binding rules with a disputes mechanism for settling conflicts. The

WTO must help raise the bar of openness in the global economy to generate growth and reduce poverty. States have surrendered more sovereignty to the WTO and the GATT over the last 50 years than to any other institution or system, possibly with

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the exception of the eurozone. The calculation is that a common set of rules for trade, binding on all, is better for all.

Governance of the trading system can go further. While bilateral free-trade agreements have opened trade in the global economy over the last two decades, they

cannot do what multilateral agreements can achieve. The WTO should be given

new powers to police free trade agreements for transparent and fair trade, and we

must exact a minimum ethical price for openness with no backsliding on previously agreed rights. The EU and the US in particular must be prepared to lead by example in the removal of tariff barriers and subsidies.

To achieve agreement on Doha we must have the courage of our convictions that trade and openness are essential for growth, and the determination to build the

domestic policy frameworks that will ensure that everyone, including the most vulnerable, can benefit. The West won’t win by engaging in a race to the bottom – and

must compete in the global economy through specialization and by adding value to everything we do. Developed nations can maintain their share of world markets by making more sophisticated products and incorporating technological prowess at

every stage. They must compete on quality rather than price. Collective action, led by government, can prepare these economies for global competition.

In fact, I have trouble conceiving of an intelligent response to globalization that

does not involve greater collective action. One of the biggest misconceptions about

globalization is that it forces us to make a trade-off between collective action and social protection on one hand and competitiveness on the other. This is not the

case. Globalization does not make strong social protections untenable. If anything, it makes them more essential.

Put globalization in context: It’s a powerful, ubiquitous trend, but hardly the cause

of everything bad or good in our economies. Research by the Carnegie Institute that

has examined US wage stagnation since the 1970s stresses the impacts of mechaniza-

tion in many workplaces, along with their de-unionization, and significant upward redistribution of income through the tax system as much as globalization. In other words political choices are involved.

The flexicurity models of Scandinavia – enabling workers to participate in the labor market and move confidently between jobs – have kept unemployment levels

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low during this recession. Taxpayer funds – spent to protect citizens against lifedestroying unemployment or ill health – actually hedges against higher costs of long-term unemployment and economic inactivity.

Social programs equip people to adapt and thrive. A society that ignores preventative care, leaving individuals to cover the costs of health care or unemployment, is an insecure society. Insecure societies are one political step away from protectionism and isolationism. Of course, there are limits to any policy of redistribution. It’s counterproductive to raise the share of pooled resources in a society to the point where individuals lose incentives to work or innovate. Education, the public science base, the shared infrastructure, these are the prerequisites for effective competition. Free markets do not provide these for societies alone.

Yet throughout the West, governments are retrenching under the pressure of sovereign debt and deficit reduction. In reshaping the roles of the state, leaders must

understand the limits of what governments alone can do. Markets and government must come together, asking how to balance free-market theory with social democratic intervention? How does social confidence underwrite economic success?  

The challenge is one of balance. Government cannot become monolithic. The desire to see business behave ethically cannot become suspicion of business in principle. Government that develops the capacities of citizens to do more than sink or swim

need not stifle competition, micromanage companies or develop national champions. Necessary debate about the politics of redistribution need not discourage individual

contributions or remove incentives for economic activity. The case for globalization needs to be remade for a new economic and political era. London, 8 April 2011 Peter Mandelson served four years as the European Commissioner for Trade. The essay is adapted  from a keynote speech delivered 11 March, 2011, to the Institute for Public Policy Research on the future of globalization.

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Interviews

Over the past decade YaleGlobal Online has conducted dozens of interviews and organized seminars on some of the most important aspects of globalization. Most

were recorded, with videos posted in YaleGlobal’s multimedia section. Some have since been posted on YouTube as well. To assist readers and scholars, we also provide transcriptions of the interviews.

In this section we present excerpts of five interviews that help enrich the discussion of globalization. Kemal Dervis, former Turkish minister of economic affairs and former head of the UN Development Programme, discusses the weakness of the international organization like the UN Security Council and offers suggestions to better manage the global order. N.R. Narayana Murthy, the founder of India’s

leading software company Infosys, a pioneer of the Indian outsourcing industry,

explains what it took to set up the operation and the role it plays in globalization. Nobel laureate Rajendra K. Pachauri, chairman of the Intergovernmental Panel on Climate Change, explains how his international organization organized thousands of researchers and reached the conclusion that humans have contributed to climate

change. Harvard professor Carmen M. Reinhart, co-author of This Time is Different: Eight Centuries of Financial Folly explains how the 2008 financial crisis came

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about and how it is a repetition of history’s many booms and busts, caused by the same factors of unfettered borrowing and absence of control. Thomas L. Friedman,

The New York Times columnist and author of the seminal book The Lexus and the Olive Tree, describes the nature of globalization and how it has evolved, as described in another book of his, The World Is Flat.

Developing Countries Should Have Bigger Say in the World Bank and IMF Interview with Kemal Dervis, 20 May 2005 Kemal Dervis, former Minister of Economic Affairs in Turkey and author of A Better Globalization, talks about reforming the United Nations Security Council and the role of international financial institutions. Nayan Chanda: The first question I’d like to ask is this issue of North Korea’s de-

claring to have nuclear weapons brings the question or world security right to the doorstep of the United Nations.

And the United Nations at this stage seems incapable of handling it, So how does one

move on this problem of world security if the Security Council is paralyzed because of differences that exist within the five permanent members?

Kemal Dervis: This is the heart of the security problem, the collective security problem.

I think the Security Council is the only institution really in the international system that does have power. Potential power, if you like. But too many times, that power

is deadlocked by the veto power of individual countries. One has to move to a more representative Security Council, but at the same time a Security Council that works. Global democracy cannot be just one country, one vote. You cannot have China

and Malta have the same weight in the international system. So one has to weight them both, a weight that reflects the size of the country and the population and the resources the country contributes to the international system. So one proposal is to

move to a Security Council that is more universal, with weighted voting. It’s tough,

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because the existing veto holders, of course, they have it. They don’t want to give it up. So it’s not an easy proposition at all.

Chanda: What you’re suggesting, this doesn’t require the United States or China to give up the veto, does it?

Dervis: Individual vetoes – maybe not immediately; there can be a transition period.

But 15 or 20 years from now, it will be very hard to justify, for example, that the

United Kingdom – which is an important country, but compared to India or China or even Brazil is a small country and will become smaller in time – should keep its individual veto power forever. Instead, I think Europe should have enough weight

in the system that a weighted majority voting system would give it de facto veto

power. The United States, by its size, population, resources, could block important decisions, could in a sense have a way to stop things that it really doesn’t want. But I think this has to be graduate. It’s only the very, very, very important decisions

that should be subject to large supermajorities, which would give these important

countries blocking power. In other cases, decisions should be made more easily by simple majorities or smaller supermajorities.

Chanda: Now if you could explain a little bit how the weightage works. What are the components of the weightage?

Dervis: The proposal I have – and, of course, other ways are possible – but the four weights that I propose are population – very important in today’s world, where we

want democracy to triumph.You have to give countries weight according to their population. But other things also should count: GDP, the resources a country has,

the part of the resources it contributes to global public goods; and also the capacity for peacekeeping in the security area – its military capacity to enforce security – should also be one of the weights. That’s what I’m proposing. And of course whether

one wants to weight this equally or give more weight to one of these factors is open to debate.

One of the points I often make is that if we had a strong system of collective security

that could have prevented, for example, the war in Yugoslavia, or the Iraq War, by joint collective action that would have influenced events much more, we could have

saved maybe $100 billion, $200 billion, $300 billion. So it’s so important that we get it right.

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Chanda: Prevention costs much less than curing. Dervis: Exactly. Exactly. Chanda: And prevention, of course, when things move to a stage where you have to take military action, is one. But before things reach that stage, there is a long period

where the economy is collapsing, and failed states are created. How do you address that question? How does one prevent that?

Dervis: The economic, social and environmental aspects of security are deeply

interlinked with the purely military aspects of security, or the physical aspects of security. Failed states – like Afghanistan was a failed state – lead to tremendous catastrophes. In Africa when governance breaks down, you have millions of Africans

dying. And also in Europe: We always say Africa, but you should remember that the tragedy of Bosnia was in Europe, was in the heart of Europe, so to speak. So we have to look at economic and social aspects, too.

And we have to have the mechanisms by which – before it gets to the disaster point – one doesn’t let the economic and social situation deteriorate to the point that it

then becomes very costly to fix it. And on the economic side, one has to distinguish

between the different kinds of countries. The very poor countries are getting some help; they need more. But there are still many problems even in the middle-income

countries. In my country, in Turkey, we have lots of very poor people. In Brazil – in Northern Brazil, in the slums around the Brazilian cities. Of course even in China and India, which are countries that are growing very rapidly, but inequality is a

problem; quite severe poverty still remains a problem in these countries. So you have to look at the poverty everywhere, not just in the poorest of the poorest countries.

Chanda: Now you are in a unique position to address this question raised by many

of the people who oppose globalization [regarding] the heavyhanded intervention by the IMF and World Bank.

You worked more than 20 years with the World Bank, and then you were back in Turkey as the minister of economic affairs at a time when the economy was collaps-

ing; 90 percent of GDP was going to pay foreign debt. You turned it around with

the help of the IMF and World Bank. So what would you tell the critics of the IMF and World Bank? Are they right? Are they wrong?

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Dervis: Well, I would say, like all international organizations, they are as good as the countries that make them up let them be. When we say, “The IMF does this, or the IMF does that,” we have to remember that it’s the big shareholders, the G7 countries, that make a lot of the really important decisions. And you know, it’s the same for the UN. It’s very easy to say the UN doesn’t do this, the UN doesn’t do

that, but does the UN have the means to do the things we want it to do? The same holds quite often for the IMF and World Bank.

I think they’re important institutions, they have to step in in crisis moments very

often, and people are in difficulty at that time. There’s a tendency sometimes to say the difficulty was due to the IMF, when I think the difficulty was there before. How-

ever, I also strongly believe – and I felt it in Turkey – that things have to change at the IMF and at the World Bank, that these institutions have to become much more

the institutions of the developing countries, as well. They cannot remain under this strong dominance of the G7, the richest countries. And that change is very important for those institutions to become more effective.

A Path to Economic Success Interview with N.R. Narayana Murthy, 5 June 2006 N.R. Narayana Murthy is founder of Infosys. Nayan Chanda: Mr. Narayana Murthy … is the founder and mentor-in-chief of Infosys, India’s second largest software company. Infosys was founded in 1981 with capital of $250, and today market capitalization is about $22 billion. Mr. Murthy, welcome. N.R. Narayana Murthy: Thank you very much. Chanda: Infosys has become an iconic institution in India. In the course of a very short time, it has risen to the top. How do you account for this meteoric rise of Infosys in the context of India?

Murthy: We celebrate our 25th year this year. Right from day one, when we founded

the company, when we sat for four hours to discuss what we should seek in this

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journey, we were all unanimous that we would seek respect. We would seek respect

from customers, from our employees, from our investors, from our lender departments, from the government and from the society. And we said, if we seek respect

from each of these stakeholders, we will do the right thing for them. And if we do the right thing for them, then everything will fall into place. So I’m happy that the company has not swerved from that part of taking respect right from day one to now. And that is perhaps the reason we have had what little success we have had so far.

Chanda: But in 1981, India was not at all friendly to enterprise. How did you work on those obstacles?

Murthy: Well, you know that entrepreneurship is all about courage, it’s all about

thinking about a powerful idea and then converting it into wealth. When we founded the company in 1981, we had tremendous friction to business. But there were

two important paradigm changes taking place at that time. First, of course, there was the PC revolution. Microsoft had started in 1976. Many computers and super

minicomputers had come into existence. Borland was about to announce the first 100,000 software.

In other words, we realized that the power of software would be unleashed in the

years to come, and number two, that software would become more and more de-

manded because the cost was going down and people were realizing the power of software. That was the first paradigm. The second is the paradigm of globalization.

I define globalization as sourcing capital from where it cheapest, sourcing talent from where it is best available, producing where it is most cost effective and selling where the markets are without being constrained by national boundaries.

Now, this we realized was a unique opportunity for countries like India, to release

the power of the availability of English-speaking technical talent to produce powerful software for the global market. And thanks to these two paradigms, I think, Infosys took off, though the first 10 years we had tremendous friction to business. And thanks to the economic reforms of 1991, Infosys took off from 1992. Just to

give you a data point, between 1981 and 1992, we grew our revenues from $130,000 in 1981-1982 to about $1.6 million in 1992, but from between 1992 and 2006 we

went from $1.6 million to $2.15 billion. In other words, we grew by a factor of approximately 1300 times in the second half, that is the last 12, 13 years, as against 10 times in the first 10 years.

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Chanda: You mentioned the 1991 reform. In March 1991, India was left with a total foreign reserve of $1.2 billion, which is worth two weeks of imports, and that’s ex-

actly the amount you’re worth today, yourself, according to Forbes magazine. And from what I recall, you initially took your engineers to the client site as well as what

is called body shopping. And that kind of model changed with the availability of satellites and then fiber optics, am I right?

Murthy: You’re right, because in the beginning, we had no access to data communication lines. It took us a year for us to get a telephone line. It would take us two years to get a license from Delhi to import a computer worth $50,000. In other

words, everything was stacked against us. So we realized that if we want to have a

growing business, then it was best if the talented teams of Infosys went to customers’ offices, to give the software to them, install it in support of them, rather than doing it from India.

But all of that changed in a dramatic manner with the economic reforms of 1991, because Dr. Manmohan Singh, at that time the finance minister and now the prime

minister, he did a few things that were remarkable: One, he removed licensing, which

meant that we did not have to go to Delhi and wait in the corridors to import anything. Second, we introduced current accounts convertibility. Until 1991, we couldn’t

set up offices abroad, we couldn’t travel easily, we could not hire consultants and quality brand equity from abroad, etc. All of that got changed when he introduced current accounts convertibility. Third, he abolished the office of the comptroller

of capital issue. This was an officer who determined at what price we would have

our IT loan. Dr. Manmohan Singh said, “Look you can decide the price at which you want to have your IT loan in consultation with your investment banker.” Then

officers realized we would get the fair price from the market – the market’s world was going to be the determinant – and that was another important thing he did to encourage entrepreneurship.

And finally, he allowed 100 percent equity for multinationals. IBM and Coca-Cola had walked out of India in 1977, and when he allowed these companies to have

100 percent equity, then what happened was, we had tremendous competition in India, not so much for market, because the market hardly existed, but for talent,

and because there was tremendous competition for talent in India we had to fight for talent in competition against these great multinationals, and that’s exactly what

made India’s companies stronger because that’s when we realized that we had to

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create a good infrastructure, we had to give good salaries, we had to give a good work environment, if we want to attract good people.

Chanda: What are the challenges you see for Infosys in maintaining its tradition? Murthy: Well, there are many, many challenges. First, we have to move up the value chain, which means you have to enhance per capita productivity. To do that we have

to become more and more relevant to our customers’ businesses and we have to learn to provide more and more end-to-end business solutions, innovative technol-

ogy. In other words, we have to do more consulting, we have to do more business assistance integration, etc. Second, we have to handle scalability in terms of the

number of customers, scalability in terms of the number of employees, in terms of physical infrastructure, technological infrastructure, etc. Third, I think the ability to work in multicultural teams is another important challenge. Fourth, we need to

create better infrastructure in the cities, because that’s where all our operations are…. Because if we want to become more and more relevant to customers’ businesses, if

we want to have greater and greater impact in the areas of business relevance, then

we have to be the main expert. We have to understand the business of the customer. So our focus has been to enhance the market readiness of our people in the domain knowledge. In fact, we have several initiatives in this area. We encourage our people

to get certified by industry associations at different levels. For example, we have

retail 101, retail 201, retail 301, banking 101, etc, etc. We do it so our people, over a period of time, have become more and more business domain knowledge-ready. Chanda: You have become more and more of a consulting company – Murthy: Absolutely. Chanda: – than just a software provider. Well, Mr. Murthy, thank you so much for your time.

Murthy: Thank you, thank you.

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The Science Is in on Climate Change Interview with Rajendra K. Pachauri, 21 April 2008 Rajendra K. Pachauri is chairman of the Intergovernmental Panel on Climate Change. Nayan Chanda: A considerable body of opinion which believes this talk of global

warming is a bit overblown fury based on some fragmented data and perhaps is only a cyclical thing and not something systemic. What do you say to the skeptics?

Rajendra Pachauri: Well let me first say … you refer to the report, which is the strongest testimony to the strength of what we produce. We mobilized the best

scientists and experts from all over the world. And they are selected on the basis of nominations sent by governments.

And the basis of CVs of the people nominated. Just to give you an example, in the

fourth assessment report, we got close to 2000 nominations and roughly 450 were selected as those who directly write the report.

Chanda: And these are scientists from every branch of science? Pachauri: Every branch of science, depending on the subjects we’re covering in the

full assessment. And over and above that, we have 2,500 reviewers, because every draft we write is reviewed by a whole range of experts and then at the second stage by governments. Each of the comments provided by the reviewers is carefully logged

and the authors decide whether to accept it or reject it. So if for some reason we

reject it, the reason have to be recorded. So you can’t think of a more transparent and open process than this. The second point I’d like to make is, the number of skeptics has been going down very rapidly….

Chanda: Tell us, in brief what the conclusion of the IPCC has been. Pachauri: Well first briefly let me explain how climate change has been caused by

human actions. We have been in the process of industrialization, consuming larger and larger quantities of fossil fuels, and there are other gases also which have the

same effect as carbon dioxide. Though carbon dioxide is, by far, the most important

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of these gases. Now before industrialization, the concentration of carbon dioxide in the atmosphere was 280 parts per million. It is now in the neighborhood of 380 ppp…. [T]his concentration level was last recorded 650,000 years ago. Now because

of this concentration, what happens is typically you get radiation from the sun, it

falls on the surface of the earth, and a good part of it is reradiated back into outer space. That is what has kept the temperature in a balance over a period of time… Chanda: The greenhouse effect? Pachauri: The greenhouse effect. But it’s not a smooth and linear change of temperatures only. As a result of interference with the entire climate system, what we have is, for instance, many more floods, changes in precipitation not only in average

levels, but also precipitation patterns. For instance, extreme precipitation events are on the increase.

We have many more heat waves, we have droughts, and of course the result of all

this is sea levels rise. And the sea is increasing in its level, both because of thermal expansion as well as melting of the ice bodies. Now that’s something that is visible.

The Arctic region has been warming at twice the rate of the rest of the earth, and this naturally contributes to more water going into the oceans….

Chanda: How do you explain the fact that the Nobel Peace Prize committee chose

to give IPCC – you and Al Gore – the award? What is the connection between peace and our climate?

Pachauri: Well I would say that the Norwegian Prize Committee has been very farsighted in this decision, which may sound a little self-serving, but the point is, the result of climate change is certainly sea level rise. This has inbuilt in it, the element of a displacement of a large population. If you look at the [data] even though it

may not be completely submerged beneath sea level, every time there is an extreme precipitation event, because of higher sea levels, the severity of the impacts is much worse than would have been the case otherwise.

If you look at the tsunami which took place four years ago, and let’s assume a similar

tsunami were to take place in 2050, when the oceans are maybe even 25 centimeters

higher, which incidentally is a fairly conservative estimate, look at the devastation it will cause. If you look at the impacts on agriculture… they are seeing the impact

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on yields and productivity of several crops. What’s that going to do to food security?

Whether it’s water scarcity, or impacts on agriculture, and a large number of poor

farmers in the developing countries are dependent on rain-fed agriculture. When rainfall patterns change, when droughts occur on a prolonged basis, on a repeated basis, what are [people] going to do? They’re going to move to areas where they feel they can at least live and survive. Doesn’t that create the danger of conflict?

So I think the Norwegian Nobel Committee understood the impacts of climate

change, and how these might get worse in the future, and therefore pose a major threat to peace in different parts of the world….

Chanda: That the large-population countries like India or China, because of their

drive to grow, because of pressure of population to do that, to get a better life, they have to produce power and their most likely source is coal. And the more they go

to coal-powered generation, the more CO2 is emitted. So how do you square this circle, that you need to have growth in order to reduce poverty, and at the same time growth may lead to poverty by the mechanism you mentioned?

Pachauri: Well I think firstly you must understand that climate change is being

caused today on account of historical factors. It’s in the process of industrialization which has taken the developed countries to unprecedented levels of prosperity, that we have emitted large quantities of greenhouse gases, and these are causing human-

induced climate change today. It’s for this reason that the framework convention on climate change clearly lays down a common but differentiated responsibility. And that differentiated responsibility requires that the developed countries take the first steps in reducing emissions.

Now logically what is expected is that while those countries reduce their emissions, the developing countries will continue to increase their emissions, but they don’t necessarily have to emulate exactly what the developed countries have done. And

therefore I would say that for local, domestic and international reasons, the develop-

ing countries should certainly look at a path by which they keep their emissions as low as possible, but naturally they’re not going to do this at a higher cost than what existing technologies will permit. And today as it happens, for a country that has

coal, they have no choice but to burn coal to produce power.But what I would say is that we should use coal as efficiently as possible… And to the extent possible, we

should also harness other technologies, like renewable energy technologies, which

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didn’t exist 100 years ago but they are available today. So we as developing countries have to exercise choices that will promote sustainable development.

Why the Financial Crisis, and What Is the Way Out? Interview with Carmen M. Reinhart, 7 October 2010 Carmen M. Reinhart, co-author of This Time Is Different: Eight Centuries of Financial Folly, is the Minos Zombanakis Professor of the International Financial Syystem at the Harvard Kennedy School. She discusses the causes behind the current financial crisis and the measures needed to recover and grow. Nayan Chanda: The title of the book is This Time It’s Different. Obviously it is a

sarcastic title; now tell us why the crisis that we are currently experiencing is not different from others.

Carmen Reinhart: Crises, economic crises, financial crises, are a lot like illnesses, in that if two people, one is 16 years and healthy otherwise and a 70-year-old that’s less healthy otherwise, get the same illness they’re going to manifest themselves in some

different ways but that there’ll be common symptoms, and this book is importantly devoted to those… common causes, common symptoms, common aftermaths.

This crisis, like most of the crises that we document, begins with a spark in financial innovation, securitization of mortgages, but most importantly that translates into a

lending boom, a borrowing frenzy and the United States, this is happening, this is

happening in Spain, this is happening in the UK, happening in Ireland, happening

in Greece. And this lending boom is fueled by borrowing from abroad, big current account deficits, large capital inflow borrowing from abroad to finance those deficits,

and not surprisingly when you have a lending boom that goes on and on the quality of your lending begins to deteriorate very markedly.

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Chanda: So this surplus of capital that was waiting to be invested was in the United States as well as abroad? And how did it happen? How did this buildup happen?

Reinhart: Well my coauthor Ken Rogoff together with Maurice Obstfeld, a former professor of mine, have written a lot also about global imbalances, and I’m going to

focus on that part of the global imbalance that is more germane to the crisis, that is,

I mentioned that the origins of this lending boom and the ability of financial institutions to lend were made possible by not only by very low domestic interest rates and relatively loose financial liquidity conditions, domestically, but also importantly

fueled by borrowing from abroad. And specifically, large capital inflows from China and other countries that were financing

Chanda: So they were stacking up a huge trade surplus, and they’re investing those surpluses in US Treasuries?

Reinhart: US Treasuries. And so liquidity was quite plentiful and when liquidity is quite plentiful, lending follows, and less and less emphasis is placed on the quality

of the lending, and let’s not forget that during these lending booms, it’s a feast and famine cycle, right, and this is a feast. And during the feast you have lots of lending, big booms in asset market. You have booming equity markets; more notoriously this

time you have booming real estate markets. And at some point during this process,

the leveraging really reaches a point where even small negative shocks can begin to call into question the solvency of many of those who had borrowed. After all,

much of the lending was, you know, you made a loan, a mortgage loan, not because

necessarily you thought the quality of the borrower was great but because after all the collateral, the real estate value, was going to keep going up and up. Chanda: That was the assumption. Reinhart: Indeed. Chanda: Now, the interest rate was kept low. What was the rationale for that? Why did the Fed do that?

Reinhart: I think the main reason one can point to is that monetary policy in the United States and in most economies, certainly the advanced economies, has a price

stability objective, and inflation was certainly not raising its head in a way that was

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alarming. So the case for the kind of very tight money for example that we saw in the late 70s, early 80s when we were trying to bring deflation down, you couldn’t really make a case for that.

I importantly want to highlight that’s the perfect-storm component is that you not

only had domestic liquidity but that you were borrowing heavily from abroad. Very large current account deficits – persistent, I may add, current account deficits – have been a hallmark of crises in advanced economies and emerging markets before World War II, since World War II, whichever way you want to slice the sample.

I also would highlight what is notable is when they become very persistent and very large and during that boom period is when ‘this time it’s different” is at its heyday

because when things are going well nobody wants to heed the signs that [say] well,

the last time that we saw debts go up this much, that suddenly it ended badly. You have to go back in the case of the United States to the Roaring Twenties to get the very rapid increase in private debt

Chanda: Which resulted in the Depression? Reinhart: Indeed. So when the going’s good you don’t find a very receptive audience

in saying, “Well, this is not going to last.” People have lots of reasons, in effect, why this time it’s different.

Chanda: So, looking back in the past we have seen this same phenomenon repeats itself. Now in terms of availability of foreign funds, this massive liquidity that came to the United States, isn’t that somewhat unique this time or was it the case before?

Reinhart: I would say it is unique to the United States, but not unique as a pre-crisis

phenomenon. If you look, let’s talk for a moment about the 1997-1998 Asian crisis. That crisis was for that region as significant as the subprime and its aftermath has been for the United States and for Europe. That crisis was preceded by the very same

kinds of patterns that I have described: large capital inflows, big current account

deficits – notably in Thailand and in Malaysia – lots of borrowing from abroad. One element for the Untied States where this crisis was different was that most often during the heyday of the crisis, you see a currency crash. You see the value of the

currency collapse. That was true certainly for Thailand, for Indonesia, for Malaysia, and so on. It was true for the UK in the current crisis for example. But what did we

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see? Well, the dollar is the reserve currency. Chanda: In other words, everybody wants to save their resources in dollars? Reinhart: Absolutely, so you had a flight into the dollar. Chanda: Despite the fact that US is having a crisis, still money was pouring in. Reinhart: Yes, it’s not often that you see people running into a burning building, but that’s what you saw during the fall of 2008. That is not the typical pattern. So each crisis no doubt will have its own flavor. But we indeed do document many common symptoms.

Chanda: So, that was one thing different. Now the deregulation that preceded the current crisis, is that what preceded like this in the past in US history?

Reinhart: Yes, but it’s not after World War II. The kind of world turbulence, especially in the advanced economies that we’ve seen since 2007, you have to go back to pre–World War II. So, this phenomenon is not one that policymakers in the United States or in Europe have faced before in their professional careers.

Chanda: The repeal of the Glass-Steagall Act, how much of a role did it play in this build-up of the debt?

Reinhart: That is an excellent but difficult-to-answer question but let me go with that. If you take a big perspective from 1800 on, 210 years approximately, if you look at an index of international capital mobility and you count the number of crises,

the banking crises per year, those periods in which capital mobility was very high, you had a lot of banking crises. Now, Glass-Steagall per se wasn’t about capital

mobility but it was about regulation of the financial domestic system and domestic

financial regulation has, however, often gone hand in hand with the regulation of international capital movements.

And so for example the period from World War II to the erosion of Glass-Steagall

in the early 1980s was a period of very low incidence of severe financial crises in both advanced and emerging markets. But as de facto, if not outright de jure, the capital markets begin to find ways around Glass-Steagall and liberalization takes

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hold we see the incidence of banking crises rise. Llaissez faire maverick financial markets are more volatile, they engage in more risk-taking and more crises follow.

Chanda: So the financial regulations that have now been drawn up, the Dodd-Frank Act, this is kind of like trying to close the barn door after the horse has fled?

Reinhart: Indeed, and the horse left a long time ago. I think it is moving in the right direction, but that’s about what you can say. It’s not particularly ambitious in terms of the levels of capital requirements.

Flattening World Challenges Imagination Interview with Thomas L. Friedman, 13 April 2007 Thomas L. Friedman is author many bestselling books. He is foreign affairs columnist for The New York Times. Nayan Chanda: Tell me about the new version of your book The World is Flat. Thomas Friedman: I’ve added I would say three major sections: first I redid a chapter on kind of rules for business operating in the flat world and I really built it on

what I consider now to be the iron rule of the flat world. when the world gets this

flat, when so many people have this much productivity, and this many distributive tools of innovation and collaboration, if you have an idea, Nayan, promise me you’ll

do it, because someone in Slovenia will. Because there’s too much education, too

much knowledge, too much connectivity and too much distributive tools of innovation –that whatever can be done, will be done.

Chanda: People talk about globalization as corporate driven, but what you are telling me is that it is driven by a lot of people, individuals and small companies.

Friedman: Exactly, what I’m actually saying is that when the world is flat, the biggest competition is between you and your imagination. And the idea that it’s all

multinational, that it’s all big corporate, well that is going on, but the other is going on just as well.

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Chanda: Because laying the infrastructure through which these transactions take place requires a lot of investment, is where the multinationals come in.

Friedman: That’s where they come in, and in this world, have no doubt, the big can act really big and really small

Chanda: There is a growing concern that this is going to lead to more and more job loss. And recently The Wall Street Journal had a piece in which it quotes Alan Blinder, the former Clinton economic advisor, as saying that up to 40 million jobs, American jobs, are going to be lost because of outsourcing.

Friedman: Well I think Alan is on to something. He’s understood that when this

much work can be made fungible, digitized, that it will go wherever it can go. Alan has contributed to the discussion with actually a very careful analysis of every job and even slices of different jobs, whether it’s lawyering or financial services or de-

sign, and saying “this slice, now, is so digitizable, it’s transferable” and that means if it can be done, it will be done.

Chanda: So the question then is, what does one do to cope with this possible job loss,

especially the middle class or educated class, which is new in America, blue-collar jobs have been lost since the 1970s, but this is something new.

Friedman: The key thing is to know what world you’re living in. And one of the

things I’ve done in the updated version of the book… is what I call the new middle.

We know what the old middle-class jobs were. A lot of those were blue-collar jobs, but what are going to be the new middle jobs? I think there are new middle jobs. Now, at both ends, there are jobs that are going to be fixed. At one end are people

who are really special and specialized: Michael Jordan, J.K. Rowling, your brain surgeon, no problem, they’re safe. They’re not going to be outsourced or digitized. At

the other end are people who are localized and anchored: your butcher, your baker, your candlestick maker, this camera-man here until they get a robotic camera, so they’re all fine.

But in between, there are a lot of jobs which are going to sort of come in and out of what I would say the middle class. Tell your kids, [to go for] anything green. Because

when the world is flat and 3 billion new consumers walk onto the flat world all with their own version of the American dream – a house, a car, a toaster, a microwave, a

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refrigerator, if we don’t find a cleaner, greener way to power their aspirations, we’re going to burn up, heat up, choke up the planet faster than even Al Gore predicts.

What does that mean? It means green design, green consulting, green manufacturing, green science, is going to have a huge new middle opportunity.

Chanda: The other aspect of globalization, which is that globalization is actually making people far more aware of the issues of climate change than it would be otherwise possible.

Friedman: There’s actually two things that globalization … well three things: One is

that the flat world is bringing 3 billion more people from low-impact environmental lifestyles to high-impact environmental lifestyles, as they buy cars, refrigerators and

microwaves, so that is intensifying climate change, from China, from India, from Brazil. That’s going on one track. But another thing that’s happening is that people

are also becoming aware it’s one world. It’s not that China’s my backyard, the EPA,

the American Environmental Protection Agency, has concluded that 25 percent of the polluting matter in the air above Los Angeles on some days comes from Asia,

comes from factories in China or desertification and sandstorms kicked up in Asia and brought over by atmospheric winds.

But the last thing that’s going on is that the world gets this flat. Social activists,

environmentalists, who want to bring pressure on bad actors, now have enormous leverage to do so. And that is the story of TXU, the Texas power company that said we’re going to build more coal-fired power plants, that we’re going to build eleven,

in your face, pal, and I’ve got the governor of Texas, Rick Perry, who’s approved it. That’s what TXU did. Well, it turns out that Kohlberg Kravis Roberts, a big buyout

firm, and TPG, another buyout firm, decided they were going to buy TXU. And they

put $45 billion on the table basically, $32 billion and about $13 billion in debt assumption, and the whole deal was held up, the whole deal was held up, Nayan, by two people who had no money on the table. Environmental Defense and the Natural Resources Defense Council, who are brought in by the buyers… Chanda: These are NGOs… Friedman: These are NGOs, environmental NGOs who are brought in by the buyer who said I don’t want to buy this company because you environmentalists have been

using the internet to run a campaign against them and we don’t want the trouble. So

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we want to buy this company, and they had an almost marathon, an almost day-long

negotiation, at the Mandarin Hotel in San Francisco to sort out the whole deal, and the people whose approval made the deal possible were the only two people who had no money on the table – the two environmentalists.

Chanda: But they had the power of the internet behind them. Friedman: The power of the flat world and the internet that they could leverage and the buyers did not want to take on that power.

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Nayan Chanda is Director of Publications of the Yale Center for the Study

of Globalization and editor of YaleGlobal Online. For nearly 30 years, he was with the Hong Kong–based magazine the Far Eastern Economic Review

as its reporter, diplomatic correspondent and editor. In 1989-90 Chanda was a Senior Fellow at the Carnegie Endowment for International Peace in

Washington. From 1990-1992 he was editor of the Asian Wall Street Journal Weekly. He is the author of Bound Together: How Traders, Preachers,

Adventurers and Warriors Shaped Globalization, which has been translated

into seven languages, and also the author of Brother Enemy: The War After

the War. He is a regular columnist for Times of India, Businessworld and the Straits Times. Chanda is the winner of the 2005 Shorenstein Award for

Journalism. He is a Nonresident Senior Fellow of the Brookings Institution and a member of the Advisory Council for Brookings Center for Northeast Asian Policy Studies.

Susan Froetschel joined YaleGlobal Online as assistant editor in 2005. Before that she taught writing and journalism at Yale University and Southern

Connecticut State University, while contributing articles and essays on business and the environment to newspapers and magazines. She is the author

of four novels, including Fear of Beauty, to be published by Seventh Street

Books/Prometheus in January 2013. The book, set in rural Afghanistan, is about a woman who struggles to learn how to read with the help of the Koran.

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