31 August 2008

Britain's Economy a Mess, Finance Minister Admits

Britain's Chancellor of the Exchequer, Alistair Darling, told The Guardian on Saturday that the prognosis for the British economy is "arguably the worst" it's been in 60 years. Meanwhile, rumors persist that that senior members of Prime Minister Gordon Brown's cabinet will soon attempt to remove Brown as Labour Party leader (and, therefore as Prime Minister):

http://www.guardian.co.uk/politics/2008/aug/30/economy.alistairdarling/print

Another Round of Corrupt Privatization in Russia?

The New York Times reported this morning on efforts to privatize Russia's vast and relatively unproductive agricultural sector. Breaking up large, Soviet-era collective farms into family farms didn't work: the small, privately-owned farms created by decollectivization failed and most of Russia's farmland remained in collective farms. Now the Russian government is considering plans to consolidate the collective farms into large, corporate factory farms on the American model. Western investors and Russian oligarchs (Russian businessmen who made their fortunes, generally through corrupt insider trading, when Russia privatized state-owned industries and resource extraction firms) alike are lining up to cash in:

http://www.nytimes.com/2008/08/31/business/worldbusiness/31food.html?pagewanted=1&_r=1&sq=russia%20farms&st=nyt&scp=1&adxnnlx=1220245227-EwZJ%20GM5FKNwuaj9XM4qcA

More Bad News from the Caucasus

The Republic of Chechnya is a predominantly Muslim component of the Russian Federation located in the Caucasus. In the past 13 years, Chechen separatists have fought two wars against the Russian federal authorities, seeking independence. The second of these two wars resulted in a crushing defeat for the Chechen separatists; Chechnya is currently governed by Ramzan Kadyrov, one of the wealthiest men in Chechnya. Kadyrov has a large private militia, which has been implicated in the kidnapping, torture and murder of Kadyrov's political opponents. Kadyrov and his militia are allowed to do as they please by the Russian federal government, so long as they maintain Chechnya's status as a constituent part of the Russian Federation.

Just west of Chechnya lies the Republic of Ingushetia, another predominantly Muslim component of the Russian Federation. Ingushetia is governed by a former KGB general whose authority is maintained by Russian federal troops, comprised primarily of ethnic Russians and Ossetians. Ingush separatist guerrillas have attacked the Russian federal forces that patrol Ingushetia, and have resorted to terrorist attacks as well.

Today, an Ingush journalist who had been sharply critical of Russian policy in Ingushetia, Magomed Yevloyev, died while in police custody in Nazran, Ingushetia's former capital and principal city:

http://news.bbc.co.uk/2/hi/europe/7590719.stm

Yevloyev's death, apparently at the hands of security forces, recalls the murder two years ago of Anna Politkovskaya. Politkovskaya, a Russian journalist highly critical of Russia's war in Chechnya and of human rights conditions in that republic, was shot to death in her Moscow apartment building. An officer in the Russian Federal Security Service (FSB) was implicated in the murder but never prosecuted. The FSB was known during the Soviet era by the acronym of its former name, the KGB.

Both Chechnya and Ingushetia border the predominantly Georgian Orthodox independent state of Georgia. Prior to 1991, Georgia was a constituent republic of the USSR; the Soviet dictator Joseph Stalin was a Georgian. Earlier this month, Russian troops invaded Georgia when its president, Mikheil Saakashvili, sent Georgian troops to retake two independence-minded regions of Georgia, Abkhazia and South Ossetia.

The Republic of North Ossetia-Alania, a predominantly Russian Orthodox constituent of the Russian Federation, lies (as you might expect) just north of South Ossetia and just west of Ingushetia. Confused? Here's a link to a map:

http://news.bbc.co.uk/2/hi/europe/3632274.stm

28 August 2008

Britain in Recession

The US economy has proven surprisingly robust in the past year, continuing to grow even as the financial and housing sectors declined. Recent data released by the federal government indicate that the economy grew at annualized rate of 3.2% during the second quarter -- a fairly typical rate of growth for the American economy.

Not so the British economy, which appears to be the first major industrial economy to head into a full-blown recession (a decline in production of goods and services lasting two or more successive quarters) as a result of the worldwide weakness of the banking sector. Britain is now suffering its first recession since the early 1990s; according to polls, millions of British workers fear for their jobs. Ironically, this has created a retail sales decline that can only result in layoffs. Worse, inflation in Britain is at its highest rate since the early 1980s. Prime Minister Brown should take note: the last cycle of stagflation (simultaneous recession and high rates of inflation) in the 1970s ushered in 18 years of Conservative governments:

http://www.guardian.co.uk/business/2008/aug/28/economicgrowth.interestrates

24 August 2008

Iranian Leader Endorses Ahmadinejad for Second Term

Iran's Leader, the Ayatollah Ali Khamenei, has endorsed controversial Iranian President Mahmoud Ahmadinejad's likely bid for a second four-year term. While Khamenei, as Iran's Leader, has tremendous political power under the Iranian Constitution, it is unusual for an Iranian Leader to become so closely involved in Iranian electoral politics; Ahmadinejad's likely opponents, after all, are conservative supporters of Iran's Islamic regime. (Moreover, if the Leader considered any Iranian presidential candidate insufficiently supportive of the current regime, he could simply remove that candidate from the ballot).

Khamenei's endorsement also comes after several years in which he was rumored to disapprove of Ahmadinejad's populist economic policies and reliance upon Iran's Revolutionary Guards for political support. Last November, an influential Tehran newspaper linked to Khamenei launched a blistering editorial attack on Ahmadinejad -- something that it would not have dared to do without Khamenei's explicit prior approval (see Blog post dated 21 November 2007). Iranian politics are famously complex, so it's hard to determine why Khamenei has made a show of support for Ahmadinejad at this juncture -- perhaps the move is intended to demonstrate Iranian solidarity in the face of US and Western European demands that Iran cease its uranium enrichment operations:

http://news.bbc.co.uk/2/hi/middle_east/7580290.stm

23 August 2008

Chinese Press Criticizes Government Support of Top Athletes

In a striking development, opinion pieces on the website of China's official news agency, Xinhua, and in China Youth Daily (the newspaper of the Chinese Communist Party's Youth League) have criticized the Chinese government's development of special facilities for the exclusive use of elite athletes -- a project at least partially responsible for China's apparent success in the Beijing Olympics. The opinion pieces criticize the Chinese government's spending on the facilities as wasteful, unfair and contrary to the Olympic spirit.

The current issue of The Economist not only reports on the criticism in the Chinese press of the establishment of elite athletic facilities in China, it includes a "medal count" table comparing countries by the number of gold medals per capita won (by press time) at the Beijing games. Interestingly, neither the US nor China has won a particularly remarkable number of gold medals once their large populations are taken into account. Who are the real "gold medal" countries? Read the attached article to find out:

http://www.economist.com/world/asia/PrinterFriendly.cfm?story_id=11985394

Are Nigerian Banks Sound?

An article in this week's issue of The Economist questions the soundness of Nigeria's banks. Most Nigerian politicians and business leaders, of course, keep their personal funds in British and European bank accounts and hedge funds:

http://www.economist.com/world/mideast-africa/PrinterFriendly.cfm?story_id=11975488

19 August 2008

How War with Georgia Will Affect Russia

The 15-21 August 2008 issue of The Guardian Weekly includes two opinion columns that take starkly different views of the Russo-Georgian war. The titles of the pieces reflect the diverging views expressed by their authors. David Clark's column, "The West Can No Longer Stand Idle While the Russian Bully Wreaks Havoc," first appeared in The Guardian on 11 August:

http://www.guardian.co.uk/commentisfree/2008/aug/11/russia.georgia

Thomas de Waal's piece, "Georgia's Volatile Risk-Taker Has Gone Over the Brink," first appeared in The Observer on 10 August:

http://www.guardian.co.uk/commentisfree/2008/aug/10/georgia.russia

Finally, this week's issue of The Economist concludes its coverage of the conflict by examining the likely effect of the war on Russian society and government:

Yet the people who are likely in the end to pay the biggest price for the attack on Georgia are the Russians. This price will go well beyond any sanctions America or the European Union could impose. Like any foreign aggression, it will lead to further stifling of civil freedoms in Russia.

The war in Georgia has demonstrated convincingly who is in charge in Russia. Just as the war in Chechnya helped Mr Putin’s rise to power in 1999, the war in Georgia may now keep him in power for years to come. As Lilia Shevtsova of the Carnegie Moscow Centre argues, if Mr Medvedev still had a chance to preside over a period of liberalisation of Russia, this opportunity is now gone. The war in Georgia will make Russia more isolated. Worst of all, it will further corrode the already weak moral fabric of Russian society, making it more aggressive and nationalistic. The country has been heading in the direction of an authoritarian, nationalistic, corporatist state for some time. The war with Georgia could tip it over the edge.


"A Scripted War." The Economist. 16-22 August 2008: 26.

18 August 2008

Kidnapping and Murder in Mexico

In addition to its war against drug cartels, Mexico is plagued by another form of organized crime: kidnapping. Several hundred Mexican citizens are kidnapped for ransom every year; 59 kidnapping victims have been murdered in just the past two years. Public outrage at what appears to be the endemic level of violent crime in Mexico reached a peak earlier this month when the partially decomposed body of a 14 year-old boy, the son of a sporting goods magnate, was found in the trunk of a car in Mexico City; the boy had been kidnapped in June and had been murdered, notwithstanding his family's payment of ransom. Worse still, a number of policemen -- including a police commissioner -- have been arrested in connection with the murder, deepening the public perception that the Mexican police are thoroughly corrupt. Mexican President Calderón, after all, called out the military to take on Mexico's narco-traffickers because so many Mexican police officers and officials are in the pay of the drug cartels:

http://news.bbc.co.uk/2/hi/americas/7553633.stm

The Growth of Chinese Nationalism

This week, Newsweek reports on the rise of nationalistic, and even jingoistic, attitudes among well-educated, middle-class Chinese men and women in their twenties. These attitudes appear to be as prevalent among Chinese who have studied abroad as they are among Chinese who have never left China.

It's important to remember that, while affluent young people in China may be enthusiastic about adopting the technological and lifestyle trappings of the West (e.g., espresso, iPods and the Internet), this does not mean that they are embracing Western political values, let alone Western attitudes on such touchy issues as Taiwan and Tibet:

http://www.newsweek.com/id/151730/output/print

Russia Commits to Pulling Back Its Troops in Georgia

Although Russia has committed to withdrawing its troops from non-disputed portions of Georgia (i.e., Georgia other than Abkhazia and South Ossetia), Russian troops remain in those undisputed areas. They control Georgia's key highways, and have been looting Georgian military bases -- taking what might be useful to the Russian military and destroying any Georgian equipment that might be used against them. Russian troops control access to the strategic Georgian city of Gori and to Georgia's port at Poti; they are also massed about 35 km from the Georgian capital, Tbilisi.

Last week, Russian President Medvedev stated that, by attempting to restore its control over South Ossetia and Abkhazia, Georgia had forever surrendered its sovereignty over those territories -- and that Russian "peacekeepers" would remain in South Ossetia and Abkhazia indefinitely. This week, Russia began to move SS-21 missile launchers into South Ossetia; the launchers, when armed, will be capable of striking Tbilisi. Russia also announced that, even when it does pull its troops back to South Ossetia and Abkhazia, it will reserve its right to station "peacekeepers" in a buffer zone with Georgia, 14 km. into undisputed Georgian territory:

http://news.bbc.co.uk/2/hi/europe/7567184.stm

13 August 2008

Cease-Fire in the Caucasus

A cease-fire agreement negotiated by French President Nicolas Sarkozy appears to have taken hold in Georgia, although there are reports of continued or resumed fighting. Under the agreement, Russia will gain de facto if not de jure control of South Ossetia and Abkhazia -- two regions that have sought separation from Georgia since the collapse of the Soviet Union in 1991. (Most people in South Ossetia are believed to support separation from Georgia and either Ossetian sovereignty or union with Russia. Most people in Abkhazia are believed to support separation from Georgia -- but only because Abkhaz separatists have since 1993 "ethnically cleansed" Abkhazia of most of the Georgians who lived there in 1991).

Russia's humiliation of Georgia follows its defeat of a separatist movement in the Russian republic of Chechnya. (Russian military campaigns in Chechnya between 1994 and 2000 left at least 20,000 Russian soldiers, 20,000 Chechen rebels and 50,000 civilians dead). For an analysis of the Russo-Georgian War's effect on relations between Russia and the West, read this article by the BBC's Paul Reynolds:

http://news.bbc.co.uk/2/hi/europe/7557915.stm

11 August 2008

Saakashvili: Russia in Control of Most of Georgia

Russian troops landed in Georgia's second breakaway region, Abkhazia, on Sunday. Today, those troops advanced beyond Abkhazia, into regions of Georgia that have not sought secession. Meanwhile, Russia continued to bomb military bases deep inside Georgia, including bases located near the Georgian capital, Tbilisi.

Russia has thus far rebuffed attempts by the European Union and the Group of 7 (G7) nations -- the US, Canada, Britain, France, Germany, Italy and Japan -- to broker a cease-fire. Russia may be intent upon "regime change" in Georgia, i.e., replacing the elected government of pro-Western president Mikhail Saakashvili with a government that will cede South Ossetia and Abkhazia to Russia, which will not seek Georgian membership in NATO, and which will generally support Russian policy in the Caucasus.

President Saakashvili has also accused Russia of attacking his country in order to capture or destroy the Baku-Tbilisi-Ceyhan pipeline, one of the few crude oil pipelines supplying Europe that does not originate in or cross Russian territory. The pipeline was developed largely in an effort to break the Russian near-monopoly on oil and natural gas sales in Europe -- a monopoly that has enriched and empowered Russia, and led to its striking (if none too subtle) reemergence as a significant world power:

http://news.bbc.co.uk/2/hi/europe/7554507.stm

09 August 2008

Russo-Georgian War Deepens

The armed conflict between Russia and Georgia deepened today. Russia has apparently bombed the town of Gori, which is not in the South Ossetian combat zone. The bombs, intended for a military base in Gori, also fell on civilian residences and killed about 60 people. Moreover, separatist fighters (armed by Russia) in Abkhazia, another Georgian "breakaway region," launched fresh attacks today on Georgian troops in the disputed Kodori Gorge:

http://news.bbc.co.uk/2/hi/europe/7550804.stm

A background piece by BBC writer Kevin Connolly provides an excellent introduction to the conflict:

http://news.bbc.co.uk/2/hi/europe/7550780.stm

08 August 2008

The Future of the Mexican Left

The August 2 issue of The Economist reports on the missteps of -- and the divisions within -- Mexico's left-wing opposition party, the Partido de la Revolución Democrática (PRD). These foibles are preventing the party from benefiting politically from public dissatisfaction with Mexico's slowing economy and the government's fruitless war against narco-traffickers:

http://www.economist.com/world/americas/PrinterFriendly.cfm?story_id=11848932

Russian and Georgian Forces At War

Russia has sent troops across its internationally-recognized frontier with Georgia to aid separatist fighters in the Georgian region of South Ossetia. South Ossetia has enjoyed practical independence from the Georgian government since a brief civil war in 1992; Georgia recently sent troops to the region to restore its authority, precipitating renewed clashes with South Ossetian separatists.

Russia, a federation that includes a North Ossetian republic, has extended Russian citizenship in recent years to many South Ossetian residents, giving it a pretext for intervening in what is, under international law, an internal conflict in a neighboring country.

Both Georgia and Russia were constituent republics of the Union of Soviet Socialist Republics; Joseph Stalin, who led the USSR for more than 25 years, was a Georgian. The border between Georgia and Russia was established during the Soviet era. Following the collapse of the Soviet Union in 1991, ethnic tension flared throughout the Caucasus: separatist movements grew up in the Georgian regions of South Ossetia and Abkhazia and, more famously, in the Russian republics of Chechnya, Dagestan and Ingushetia. Relations between Russia and Georgia turned frosty in the 1990s, when Georgia was governed by former Soviet Foreign Minister Edurad Shevardnadze. In 2003, Shevardnadze was deposed in the "Rose Revolution;" one of the leaders of that revolution, Mikheil Saakashvili, was subsequently elected President. Under Saakashvili, relations with Russia deteriorated further, as Saakashvili promised to restore Georgian control in South Ossetia and Abkhazia, ousted Russian troops from military bases in Georgia and sought Georgian membership in NATO.

Here are two BBC articles about the crisis. As you read these articles, ask yourself how Russia might react if an outside power sent troops to drive Russian forces from Chechnya or Ingushetia:

http://news.bbc.co.uk/2/hi/europe/7550354.stm

http://news.bbc.co.uk/2/hi/in_pictures/7549035.stm

07 August 2008

That '70s Show: Britain Suffers Inflation as Energy Costs Mount

A recent article in The Economist evaluates Britain's economic future, now that the country is no longer energy self-sufficient:

http://www.economist.com/world/britain/displaystory.cfm?story_id=11792847

06 August 2008

China Hosts the Olympic Games

With the Olympic Games opening in Beijing on Friday, Monday's ambush of a police patrol in the city of Kashgar, in northwestern China, raised new concerns about security at the Games. According to Chinese authorities, two men armed with knives and explosives attacked a police unit Monday, killing 16 policemen and injuring 16 others. The attack took place in Xinjiang province, near China's borders with Pakistan and Afghanistan. A majority of the people in Xinjiang are Uighurs, a predominantly Muslim ethno-linguistic group. (There are about 20 million Uighurs worldwide; about 10 million are Chinese citizens). The Chinese government has blamed Monday's attack on Uighur separatists; some experts are skeptical of this claim:

http://www.nytimes.com/2008/08/05/world/asia/05china.html?sq=china%20xinjiang%20police&st=cse&scp=1&pagewanted=print

Writing in today's New York Times, Jim Yardley examines how the Chinese Communist Party (CCP), which governs China, has adapted to the profound economic and social changes that have swept China over the past twenty years. In particular, Yardley analyzes how the CCP has encouraged and taken advantage of the growth of Chinese nationalism (including Chinese pride at hosting the Olympics) to legitimize its continued monopoly on political power:

http://www.nytimes.com/2008/08/07/sports/olympics/07nationalism.html?_r=1&ref=world&pagewanted=print

Debate Over the Future of Pemex Reflects Continuing Political Division in Mexico

Petróleos Mexicanos (Pemex), Mexico's state-owned and state-operated oil company, has long been the engine of Mexico's economic development. But Pemex is troubled: Mexico's proven oil reserves are slowly being depleted, and production of both crude and refined oil is falling. Mexico's political leaders agree that the survival of the Mexican oil industry over the long term requires the development of wells far out to sea, in deepwater not yet fully explored for oil. But they do not agree how deepwater oil exploration and well development should take place. The debate in Mexico's Congress over the future of Pemex reflects a profound division between economic liberals (as that term is used outside the US) and economic populists. The fact that the populists, who are members of the left-wing Partido de la Revolución Democrática (PRD), believe that the last presidential election was stolen from the PRD candidate only adds to the bitterness of the debate:

http://www.economist.com/world/americas/PrinterFriendly.cfm?story_id=11791596

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