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Leading Indicators: Off-the-Radar News Roundup

Posted By Judah Grunstein 12 Mar 2010 - ASEAN's secretary-general will visit China next week at the invitation of the Chinese foreign minister. The visit comes in the context of increasing concerns in Southeast Asia over effects of the China-ASEAN Free Trade Agreement, which took effect on Jan. 1.

- Ukraine's parliament formed a government coalition in support of recently elected President Viktor Yanukovych, and approved his former campaign manager as the country's new prime minister. The move puts an end to the period of hostile co-habitation between the country's head of state and head of government that existed under the Yushchenko-Tymoshenko Orange coalition. Yanukovych's coalition includes the Communist Party and a former Orange coalition member, marking the official close of the post-Cold War period.

- In separate deals signed with Sri Lanka last week, China and India committed more than $400 million to developing the island nation's rail infrastructure, with China also signing on to build an airport. The conventional wisdom is that Sri Lanka has become the latest arena for the Asian powers' rivalry, with both trying to take advantage of the end of the civil war to extend their influence.

- The ill will in Europe over the U.S. Air Force tanker tender debacle is far from dissipating, with a spokesman for the French Defense Ministry saying, in reference to the Northrop-EADS tanker that initially won the bid, "[I]t is difficult to understand how an aircraft that was declared in 2008 to respond perfectly to American needs no longer meets these needs after a modification of the tender." He added, "European countries can legitimately ask for an explanation." Would the senator from Boeing care to respond?

- The EU Observer has obtained more details of the draft organizational plan for the European diplomatic corps that Catherine Ashton is planning to submit to EU officials, as well as some of the frontrunners for the various posts.

- Pakistan's navy successfully test-fired a series of missiles and torpedoes today in the Arabian Sea, saying they would "send a message of deterrence to anyone harboring nefarious designs" against the country. I found the Bush administration's Manichean references to good vs. evil a bit heavyhanded, but I think U.S. foreign policy discourse would benefit from greater use of terms like "nefarious" and "dastardly."

- You might not have noticed, but Turkey and the IMF agreed to suspend prolonged talks on reaching a stand-by agreement. If so, you're not alone. Markets, too, have so far ignored what some observers are calling a "historic transformation in Turkey-IMF relations," suggesting that the IMF deal is not as essential to the Turkish economy as some have argued.

Researched by Kari Lipschutz.

U.S. Power in an Age of Transitions

Posted By Judah Grunstein 12 Mar 2010 I just got through reading a few unrelated blog posts that combine to make for an interesting discussion of the U.S. response to shifting regional dynamics in Asia and the Middle East. Hugh White sketches how he thinks the U.S. should adapt its Asia strategy to accomodate China's rise, while Tobias Harris exposes the limitations of the "losing Japan" narrative. Meanwhile, Elias Muhanna argues that the U.S. narrative of a moderate vs. militant divide in the Middle East fails to take into account how the landscape has shifted there, quoting this from a Washington Post op-ed by Rob Malley and Peter Harling to describe how the two poles look today:

One, backed by Iran, emphasizes resistance to Israel and the West, speaks to the region's thirst for dignity and prioritizes military cooperation. The other, symbolized by Turkey, highlights diplomacy, stresses engagement with all parties and values economic integration.

The choice of Turkey here is noteworthy, since it's the poster child for countries that, in the face of the radically increased possibilities for trade and relations offered by the globalized world, insist on not being forced to limit themselves by the outmoded dynamic of picking sides. That's also the theme of White's post -- and Harris' -- regarding both our allies and friends in Asia. For now, China is very carefully playing its hand to avoid putting them in the position of doing so, which makes developing a forward-looking American policy for Asia all the more complicated. Containing China's regional influence would be counterproductive, even if it were possible. But neither is it a question of abandoning our allies and friends who depend on our presence to keep Beijing honest.

Compare that with Iran, whose more upfront hostility and belligerence makes it easier to rally the region's friendly governments, but not their publics, who make for sympathetic audiences for Tehran's message, especially since al-Qaida has been discredited as the "local underdog" sticking up for Muslims in the face of Western opporession. The result is that a policy of containing Iran is more politically feasible, but will be effective only if it's accompanied by a real shift in what U.S. policy delivers on the ground. A two-state solution to the Israel-Palestine conflict and some real commitments to popular reforms in the Arab world would be a good place to start, but I'm not holding my breath waiting for either.

Finally, as luck would have it, Defense Industry Daily's morning roundup happened to point me in the direction of this Andrew Krepinovich paper (.pdf) on the challenges that China and Iran's growing anti-access/area denial capacities pose to U.S. military planners. The tie-in, of course, is that the U.S. ability to underwrite stability in Asia and the Middle East depends on the latent deterrent of U.S. military power. That will prove even more crucial in the decade to come, to insure that the regional shifts currently taking place progress and evolve in ways that reinforce a stable, integrated and peaceful order.

In other words, the Turkey model, and not the Iranian model -- but also, as White argues, not the American primacy model. Krepinovich's paper is the first of two, with the second to treat the U.S. AirSea Battle strategy meant to respond to access denial efforts. The broader strategic challenge, though, is to make sure U.S. military power remains an effective deterrent, without destabilizing what is at present a fragile and jittery transition period. That is, without making a hamhanded grab for dominance.

There are certainly risks to an approach of measured restraint in the face of emerging powers, and as Japan demonstrated in the late-1980s, predictions of inevitable rise should be taken with a grain of salt. But even if China levels off, the advantages to the U.S. of a more evenly distributed security burden are clear, even if it comes at the cost of sharing the benefits of influence as well.

Leading Indicators: Off-the-Radar News Roundup

Posted By Judah Grunstein 11 Mar 2010 - Indian officials said that India and Russia will sign a civil nuclear cooperation agreement as well as the final draft of the many-times-revised Admiral Gorhkov refitting contract during the visit of Russian Prime Minister Vladimir Putin. A visa pact facilitating business travel also figures prominently in the stack of deals to be inked.

- Meanwhile, India's defense minister confirmed before the Indian parliament that India had formally requested to purchase 10 U.S.-made C-17 transport planes, for a price of $1.7 billion. This comes on top of last year's $2.1 billion deal to purchase eight U.S.-made maritime patrol aircraft. This is more evidence of an Indian shift toward a balanced procurement basket, even if it remains heavily weighted toward Russian-made big-ticket items.

- Afghan President Hamid Karzai arrived in Islamabad yesterday for a two-day visit that included a meeting with Pakistani President Asif Ali Zardari, as well as meetings involving high-level defense, interior and foreign affairs officials from both countries.

- IMF President Dominique Strauss-Kahn said that South African President Jacob Zuma lobbied him to resume the fund's lending to Zimbabwe in a meeting on Tuesday, but that due to the political situation in the country, such a move was not yet possible. The news here is that Zuma has now pressured both the EU and the IMF to end their aid and development embargoes, despite having received no significant political returns on his recent re-investment in brokering a deal to save Zimbabawe's "frozen solution" power-sharing government. In other words, he's carrying water for Zimbabwean President Robert Mugabe, even though Mugabe stiffed him, which suggests that Zuma's got serious problems back home.

- Germany's foreign minister is on a tour of South America , in an effort to make up lost ground in a region long neglected by Berlin. Stops include Argentina, Uruguay, Brazil and Chile.

- The head of Gazprom's Italian partner company in the South Stream pipeline project proposed combining that project with the EU's troubled Nabucco pipeline, long cast as a rival to South Stream. Look to see this suggestion pop up more and more in the coming months. When you hear it coming from either Moscow or Brussels, pay attention.

- Chinese telecom giant China Mobile announced it would pay $5.8 billion for a 20 percent stake of a Shanghai development bank as part of its plans to enter the mobile banking market. If you think wireless and telecom are huge now, wait until they begin driving massive flows of liquidity across the developing world. The possibilities are mind-boggling. Consider that one of the factors driving desertion and payday AWOLs in the Afghan security forces is the lack of a national banking system, forcing grunts to hand-deliver their paychecks back home.

- Brazilian President Luiz Inacia Lula da Silva asked U.S. President Barack Obama to send a negotiating team to resolve a dispute over U.S. cotton subsidies that the WTO has already decided in Brazil's favor. Brazil yesterday published a list of 102 U.S. products that will face higher tariffs in the event a deal is not reached. Adding insult to injury, Lula remarked, "If the United States had, along with Brazil, made a deal in the Doha Development Round, we would not be fighting now, and the African people would be selling their cotton in the U.S. and Europe."

Researched by Kari Lipschutz.

Major Sporting Events Impact Housing Rights

Posted By Juliette Terzieff 11 Mar 2010 Governments and international sports bodies routinely fail to protect area residents from forced evictions ahead of large sporting events, independent United Nations investigator Raquel Rolnik told journalists this week.

While the International Olympic Committee has initiated a plan to respond to housing concerns, the soccer governing body FIFA has failed to respond to repeated requests to make guaranteed respect for housing rights a part of the bidding process, the Associated Press reported .

As of 2016, any country vying to host an Olympic Games will have to make a clear commitment on housing issues. But in a report to the U.N. Human Rights Council, Rolnik reported claims that over 20,000 people are being moved out of their homes ahead of the soccer World Cup in South Africa this June and July.

International sporting events like the World Cup or the Olympics have a history of attracting the attention of human rights advocates -- both for violations attached to preparations for the event, and for the general rights situation in host countries.

A prime recent example is the 2008 Beijing Olympics, when human rights advocates from around the world used the resulting global spotlight to raise concerns on a wide array of issues. Activist groups targeted China over domestic concerns ranging from media freedom and freedom of association, to housing and privacy rights. Activists also encouraged Western governments and multinational corporations to put pressure on Chinese authorities to use their leverage as Sudan's largest arms supplier to help end conflict in the Darfur region.

After the games ended, however, many human rights groups claimed the rights situation had deteriorated as a direct result of Beijing having hosted the event.

Human Rights Watch has called on the IOC to create permanent mechanisms to monitor the rights situations in host countries before and after future Olympic Games.

The upcoming 2014 Winter Olympic Games in Sochi, Russia, are also likely to draw significant attention from rights advocates. Sochi is located in the eastern Black Sea region -- an impoverished area home to widespread corruption and frequent violence associated with organized crime, and close to conflict zones in Ingushetia, Abkhazia and Chechnya.

Russia is also a regular target for attacks over its human rights record. Rights activists are already tying their concerns over a spate of abductions and murders of human rights lawyers, activists and journalists to the Olympics. Earlier this month Reporters Without Borders reiterated its concerns over the lack of media freedom in the Sochi region.

EU Foreign Policy: Ashton Strikes Back

Posted By Judah Grunstein 11 Mar 2010 If you've been following the saga of the EU's foreign policy wars, you know that: 1) EU "foreign minister" Catherine Ashton has taken some heavy fire for what critics consider an underwhelming start to leading the union's common foreign policy in the post-Lisbon era; and, 2) there's been a barroom brawl going on behind the scenes for influence in the powers and staffing of the future European diplomatic corps, known as the EAS.

So with regard to the first point, it's interesting to read this EU Observer account of Ashton's visibly more-assured appearance before the European Parliament to give her vision of EU foreign policy. Particularly noteworthy was her openness to examining the question of a permanent headquarters for EU defense operations. This apparent shift in her stance comes in the aftermath of a meeting with French Defense Minister Hervé Morin to discuss the subject, and in the context of a long-running historical standoff on the issue between the French (stubbornly for) and the British (adamantly against) that at times resembles a religious war. Ashton's willingness to play evenhandedly here suggests that she might adopt a more independent position vis à vis the British foreign office than critics have suggested. Meanwhile, her pointed protest to U.S. Secretary of State Hillary Clinton regarding U.S. sanctions on European companies doing business with Iran suggests that she is far from the pushover that critics have portrayed.

As for the knives coming out in Brussels, the turf war has to date pitted the supranational European Commission against the intergovernmental European Council, with the European Parliament siding with the former due to its greater oversight role over it. But now it appears that there are the makings of an internal struggle within the Euoprean Council, with the so-called Visegrad states -- Poland, Hungary, Slovakia and the Czech Republic -- demanding more posts for their national diplomats in the EAS as well. Collectively, they have the same voting weight as France and Germany combined, and a host of other "second-tier" EU member states are rallying to their position.

For American observers who have difficulty making sense of all of this, imagine the U.S. where: 1) the federal prerogative (EU Commission) over state law was severely curtailed, limited mainly to issues affecting interstate commerce and external trade policy; 2) the president (European Commission head) took his marching orders from a council of state governors (European Council, now permanently presided by the so-called "EU president"), with particular policy areas overseen by councils of state secretaries; and, 3) Congress (European Parliament) had oversight over the president, but less so over the council of governors.

Now throw in the fact that: 1) the European Commission already has delegations throughout the world to conduct the policy initiatives for which it has prerogative (trade and aid); 2) the national governments, of course, maintain their embassies; and, 3) the EAS is institutionally mandated to assume some, but not all, of the responsibilities of both, and it's not terribly clear which ones they are. Now you've got an idea of the kind of institutional bind in which Ashton and the EU find themselves.

All of this will be resolved, although perhaps not as quickly (April) as had been hoped. What's at stake is which precedents are set. Even those can shift over time, but they will determine the default setting for the institutional balance of power in the EAS. And if one thing is certain, in the EU, changing the default setting is not an easy task.

Leading Indicators: Off-the-Radar News Roundup

Posted By Judah Grunstein 10 Mar 2010 - Indian officials reported that India was close to finalizing a deal with Russia for the construction of two more reactors at the Kudankulam nuclear power plant, to go along with the two Russian-built reactors already due to be completed later this year. The deal could be among those signed during Russian Prime Minister Vladimir Putin's visit to India tomorrow. India also expressed interest in participating as a donor country to a Russian nuclear fuel bank project.

- Deteriorating relations between Uzbekistan and Kyrgyzstan have led to closed border crossings and increased violence along the two countries' border in the Fergana Valley.

- Brazil announced a list of 102 U.S. products that will be targeted with raised tariffs in retaliation for U.S. subsidies to American cotton growers. The Brazilian minister of development at the same time insisted that Brazil would prefer resolving the issue through negotiations. The announcement coincided with a previously scheduled visit to Brazil by U.S. Commerce Secretary Gary Locke.

- The U.S. Embassy in Kyrgyzstan denied that a training center for Kyrgyz security forces to be built with U.S. funds represents a U.S. effort to establish a military base in the south of the country. The news here is not the denial, which is unverifiable, but the need to issue it.

- The Russian Defense Ministry denied reports that it was planning to purchase Italian-made armored vehicles. Again, the news here is not the denial, but the need to issue it. This bears noting, in conjunction with the controversial purchase of the French-built Mistral-class naval vessel: The idea that Western arms sales to Russia will strengthen Russian capacity misses the point, because the Russian military will fill these needs one way or the other. The fact that Russia even considers buying these weapons systems abroad, or feels obligated to deny reports to that effect, is testament to the sclerotic weakness of the Russian arms industry, and is essentially good news, strategically speaking.

- U.N. officials announced on Monday that Turkey will send up to 160 riot police to Haiti , complementing the 52-member police team already participating in MINUSTAH.

- The U.S. Air Force tanker contract controversy continues to be poorly received in Europe . Britain's business secretary and former EU trade commissioner, Lord Mandelson, has reportedly written to the White House with concerns over the signals sent by the handling of the contract, and the European Commission pointed out that the EU-U.S. trade imbalance in arms sales heavily favors U.S. contractors -- for now. During the 2008 election campaign, there was some anxiety in Europe and elsewhere that President Barack Obama would prove to be a trade protectionist. I dismissed them at the time, but it would be hard to argue he's a free trader these days.

Researched by Kari Lipschutz.

European Monetary Fund and the Greek Debt Crisis

Posted By Judah Grunstein 10 Mar 2010 The big news on Monday regarding the Greek debt crisis was the momentum gathered over the weekend by a proposal for a European Monetary Fund for the euro zone. Initially proposed by the German finance minister, the proposal was immediately embraced by the EU commissioner for monetary affairs. Now comes the inevitable backlash , which is necessary if only to get an idea of the realistic contours such a plan might assume. The major question concerns whether such an institution would require amendments to existing treaties , with that depending on what kind of linkage it would have to actual monetary policy. It seems increasingly clear, though, that just its hefty price tag will make it a long-term project rather than an immediate fix .

Meanwhile, credit default swaps -- and particularly "naked" shorts consisting of speculative purchases of default insurance on debt one doesn't hold -- are increasingly being lined up in the EU's crosshairs . That the jury is still out on how big a role such trading is playing in the Greek crisis is in many ways politically irrelevant, and will become increasingly so if the EU or individual member states are ultimately forced to bite the bullet and pony up some cash for Athens. In that case, they'll need to deliver some scalps, and further Greek austerity at the cost of potentially contagious social meltdown is unlikely to be the remedy of choice.

I can't help but get the feeling regarding the financial crisis that we're so busy admiring the size of the tsunami we narrowly escaped that we're blind to the one bearing down on us. There's little doubt that when it is definitively over, the Great Recession will result in a great deal of positive construction and regulation, as did the Great Depression. But I'm not convinced we've yet felt the necessary pain to push those reforms through, and I'm not convinced the measures already adopted will prove enough to avoid the next round.

Normalizing a Nuclear Middle East

Posted By Judah Grunstein 10 Mar 2010 "Israel makes provocatively timed inflammatory announcement" seems to be a headline with plenty of mileage these days. While the settlement announcement during Vice President Joe Biden's visit is getting the spotlight, I'd say the news out of Paris -- where Israel's infrastructure minister announced its intentions to build a civilian nuclear reactor -- is even more significant, for muddying the waters on so many different high-stakes fronts at once. To bullet-point them in no particular order:

- It puts France and the U.S. on the spot regarding a potential non-NPT "India exception" for Israel, at the very moment when both are trying to round up support for sanctions against Iran's non-compliant -- but NPT-bound -- nuclear program.

- It normalizes the simultaneous possession of an opaque weaponized nuclear program and a transparent civilian nuclear program at the very moment when fears of this very normalization are at the top of the regional agenda.

- It illustrates the glaring contrast between Israel's perception of Syria's rights as an NPT signatory (i.e., unilaterally bombed-out suspect facility) and its perception of its own presumed rights as a non-NPT signatory nuclear weapons state (i.e., international cooperation in developing a nuclear energy program).

There are already many ways in which Israel's "ambiguous" (i.e., silent) nuclear posture significantly complicates the effort to simultaneously normalize civilian nuclear energy in the Middle East while discouraging a regional nuclear arms race. But vividly broadcasting the inconsistencies of that posture in such a tone-deaf way displays either an ignorance of the optics surrounding the issue or a willful disregard of them.

2010 has been a pretty bad year so far for Israeli diplomacy. Hopefully it gets better, because it's hard to see how it could get worse.

Dire Warnings from Papandreou in D.C. Visit

Posted By Roland Flamini 09 Mar 2010 Greek Prime Minister George Papandreou speaks in calm, measured tones, but he is clearly determined to do what it takes to pull the debt-crushed remnants of his country's economy out of the fire. This week he is in Washington campaigning for a unified front against the "unprincipled" financial speculators who are betting that his crisis-hit country will default on its loans. At the Brookings Institution on Monday, he called for joint a U.S.-EU "initiative in dealing with speculators."

His government has introduced draconian reforms, but progress was being undermined, he said, by "the global power of poorly regulated markets . . . Traders and unprincipled speculators have forced interest rates on Greek bonds to record heights."

To this nit-picking reporter, however, Papandreou's account of how Greece got into this mess and how it plans to get out of it raised a couple of nagging questions. In October, Papandreou's socialists trounced the ruling conservatives to take over the government. The new administration, says Papandreou, then made the nasty discovery that the Greek budget deficit was double what the outgoing administration had declared -- and what had been a bad economic situation promptly became an urgent financial crisis.

The fact that the incoming government had to be told this by the outgoing one doesn't say much for the Socialists' vigilance while in opposition. Would the Republicans fail to notice if the Obama administration's budget deficit were not really $438 billion, which they say it is, but secretly more like $876 billion? Papandreou's explanation is that the conservative government and its trading agents were indulging "in all kinds of practices that were too opaque for us to see and prevent."

Secondly, in saying firmly that Greece was not asking for a bailout but would do its borrowing from the banks, Papandreou seemed to making a virtue out of necessity. In visits to Berlin and Paris, he garnered praise for his tough austerity program, but no talk of a bailout. Chancellor Angela Merkel, for one, knows better than to go against German public opinion, which is strongly against any financial support for the Greeks. And the IMF, in this situation the institution of last resort for Papandreou's government, is clearly skeptical of being able to help Greece on the scale required to stave off collapse. Greece raised $7 billion last week, but needs another $90 billion before the end of this year.

Thirdly, if Papandreou brought any concrete plan to Washington for combating Wall Street piracy, he did not reveal it at Brookings, where the not-so-veiled sub-text of his speech was a warning to Greece's European partners that they should consider helping Athens as insurance against being caught in the backwash should the worst befall his country. Or, to put it more crudely, if Papandreou goes down, he's taking everyone else with him. Greece's financial crisis, the prime minister cautioned, "is a challenge to our democratic institutions."

Leading Indicators: Off-the-Radar News Roundup

Posted By Judah Grunstein 09 Mar 2010 - Turkey's Interior Ministry is training the Sudanese police force in anticipation of the country's April elections. Sudan has been one of the problematic areas of Turkey's maverick "open arms" foreign policy orientation, but this seems like an area where even that could deliver some payoff.

- Russian Foreign Minister Sergey Lavrov seems pretty convinced the START follow-on nuclear arms control treaty between the U.S. and Russia will include a "legally binding" link to missile defense. I'm pretty convinced that's the kind of treaty that won't make it past the Senate.

- Russian President Dmitry Medvedev directed the Defense Ministry to open talks with South Ossetia with the aim of establishing a Russian military base in the broken-away Georgian province, along the lines of the arrangement already in place in Abkhazia.

- The European Parliament weighed in on the proposals currently circulating for the formation of the European diplomatic corps, demanding budgetary control and oversight powers over the service, and generally siding with the European Commission over the European Council in terms of influence within the new structure. That's to be expected, since the parliament has an oversight role over the supranational commission, and not over the national governments that make up the council.

- The European aircraft manufacturer EADS formally dropped out of the bidding for a U.S. Air Force tanker contract that it already won in 2008, only to see the deal returned to a tender following an appeal by U.S. competitor Boeing. EADS complained of new specifications that favored the U.S. defense contractor, and the entire maneuver is being viewed on the continent as a protectionist trade measure driven by nativist defense contracting concerns.

- Brazilian President Luiz Inacio Lula da Silva is poised to leave office with a 73 percent approval rating .

- Nigeria's Acting President Goodluck Jonathan took what appear to be his first steps toward seriously securing his grip on power by firing the country's national security adviser , a loyalist to ailing President Umaru Yar'Adua. Among other things, the former NSA was in a position to block the release of Yar'Adua's medical records, which might now see the light of day.

Researched by Kari Lipschutz.

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