Foreign Policy Blogs

The outlook for many BRICS nations does not look positive in 2016. With the exception of India, Brazil and Russia’s commodities-based economies will fail to grow significantly as China’s once resource hungry economy continues to slow.

The effect of the 2014-15 oil crash has had a negative effect on many oil exporting countries, and along with the BRICS, slow growth seems to have become the norm in much of Latin America and many other developing nations.

The 2008 Beijing Olympics was seen as China’s festival that marked its return as a major player on the world stage. The Olympic Games were there to flaunt around its economic success, despite it not having any measurable factor in China’s growth.

FIFA and the Olympic Committee sought to bring crowds into Brazil in 2014 and now in 2016. Since 2014, corruption and scandals have turned Brazil’s once claimed economic miracle into a mess. Corruption within its national oil company executives with links to Brazil’s governing party has turned popular opinion against the current elected government.

The FIFA World Cup highlighted the rift between internationally oriented elites and average Brazilians. Although essential economic and social issues continue to plague the country, the Rio Olympics are still on schedule to happen this year, to the detriment of Brazil’s deep economic recession.

Organizing any sort of international event in the midst of corruption and economic troubles is an unacceptable decision that often leads to little benefit for the average citizens. While the Olympic Committee seeks to broaden its appeal and host events in developing nations, there is no justifiable or studied measure to plan or adjust the obligations on host nations that fall on bad economic times.

Brazilians do not ask for a party when the government is rapidly accumulating massive debt. If the political class and elites of a society seek such projects, it is a clear sign that international prestige takes precedence over local necessities.

No Olympics should be allowed to take place when local citizens lose their homes, their health care or their rights as citizens. If this basic moral obligation cannot be met by FIFA or the Olympic Committee, imposing costs locals while sending the benefits abroad, then the Olympic spirit may already be extinguished. The upcoming Rio 2016 Olympic Games makes this point excessively clear.

The post Meeting International Obligations at All Costs: Rio 2016 appeared first on Foreign Policy Blogs.

Iowa Caucuses open. Argentina to introduce settlement offer. U.S. economy slows. Nations of TPP sign pact. Peace efforts in Syria continue. All in this Week’s Risk Outlook.

Today, Iowa voters will head to schools, churches, and homes to cast their votes for the Democratic and Republican presidential Iowa caucus. Being the first state in the United States to hold the nominating contest for the presidential election, Iowa has always had an outsize influence in presidential elections and candidates in both parties have aggressively courted Iowa voters.

Donald Trump and Secretary Hillary Clinton, the respective frontrunners of the Republican and Democratic Party nominations, are both under significant pressure to eke out a victory in today’s caucuses. Should either of them fall short, the upstart challengers for both candidates (Senators Ted Cruz and Bernie Sanders) would gain a significant media boost ahead of next week’s New Hampshire primary on February 9 and subsequent South Carolina primary and Nevada caucus.

Most recent polls have shown Donald Trump ahead of Senator Cruz in Iowa (although Senator Marco Rubio has risen in the polls too), with more moderate candidates occupying the next slots down. On the Democratic side, polls have been mixed: some have seen support for Senator Sanders exceed that of Secretary Clinton, while others have shown that she continues to maintain an edge. After the Iowa caucuses, however, Senator Cruz and Sanders face divergent paths. Although Sanders is the odds-on favorite to win the New Hampshire primary, Senator Cruz does not appear to be polling particularly well in the state, which tends to favor more moderate Republican candidates.

Some of the big questions to watch for as election results come in: will any Republican candidates drop out of the race following a poor showing? Will Senator Sanders be able to pick up sufficient support beyond the largely white states of New Hampshire and Iowa to create a broad coalition to gain the Democratic nomination? How will Secretary Clinton and Trump respond to their respective showings in the caucuses, and will this dent momentum for either of them?

On Monday, Argentina’s Secretary of Finance Luis Caputo will present a settlement offer to the holdout creditors of Argentina’s defaulted 2001 debts to the New York mediator between the Argentine government and major New York hedge funds. The holdout creditors may deliver their own offer, but were miffed during the last meeting when the Argentine government refused to sign a non-disclosure agreement regarding the offers.

The offer by the Finance Ministry represents the first serious offer by the Argentine government to resolve this issue, following multiple failed attempts by the Kirchner administration to work around the U.S. court system to pay non-holdout creditors. Should the offer by the Argentine government be accepted or a compromise reached, Argentina will be able to access international credit that has been shut off since Judge Griesa’s order freezing market access until the holdout issue is resolved.

This could allow Argentina to avoid a slip into recession this year as President Macri moves quickly to reduce Argentina’s trade and tax barriers to advance investment and growth in the country. Key commodity prices (including soybeans) have fallen in value over the past 6 months and have constrained government finances and consumer spending. Additionally, Argentina’s two largest trade partners, Brazil and China, are both experiencing economic headwinds, further limiting Argentina’s growth potential. A deal with holdout creditors could bring Argentina back to sovereign debt markets and move South America’s third largest economy forward.

On Monday, the U.S. Commerce Department will release consumer spending figures for households for December 2015, with many economists projecting a fall in growth momentum. This data will likely be paired with a further contraction in manufacturing in January for a third straight month, to be reported by the Institute for Supply Management.

Although a few world economies (including India and the UK) appear to be performing at or above economic expectations, the downwind forces affecting China, Brazil, Russia, Canada, and other major commodity producers has left the world economy in a relatively fragile position.

The strength of the U.S. economy is fundamentally important in preventing the world from descending into another major recession, making market reactions to such developments particularly important at this time. Stock markets have fallen precipitously over the past several months on continually falling oil prices and growth concerns in China.

Solid growth numbers (or at least numbers less pessimistic than estimates) could help bolster perceptions that the U.S. economy is improving following last week’s announcement that growth for the 4th quarter last year had been a disappointing 0.7%.

Otherwise, consumer spending and manufacturing statistics will support the argument that the world economy is slowing and may be headed for another recession.

Given the politically decisive timing (with presidential, congressional, gubernatorial and state legislative elections in November), poor economic figures could also have significant spillover effects into the U.S. political scene.

On Thursday, representatives of the 12 countries that constitute the Trans-Pacific Partnership agreement (TPP) are slated to sign onto the accord in Auckland, New Zealand. Legislative ratification, however, could be a complex affair for many of the Pacific Rim countries.

Canada’s new government has not yet indicated whether it will fully support the agreement’s ratification. Trade Minister Chrystia Freeland has said the government would sign the agreement to move the process forward, but has been non-committal on ratification.

The United States has congressional elections in November, and most major candidates in both parties for President have come out against the trade pact.

Additionally, Peru is slated to have April presidential and Assembly elections and Japan’s upper house will have its own elections in June. Left-leaning political parties in New Zealand as well as Australia are pushing members to oppose ratification of the agreement, and Malaysia’s ruling government is undergoing an expanding corruption scandal.

Ultimately, this means 12 countries with extremely complex political and economic obstacles will need to ratify this agreement, although it may enter into force if a sufficient number of countries (85% of GDP, meaning at the very least Japan, the United States, and Canada) sign it first.

On Tuesday, Secretary of State Kerry, Italian Foreign Minister Paolo Gentiloni and coalition partners will meet in Rome to discuss efforts to counter Islamic State forces in Iraq and Syria. This will be followed by a meeting of EU foreign ministers on Friday in Amsterdam to discuss peace talks in Syria and Libya.

It is difficult to gauge whether any serious developments may unfold in the course of talks, particularly considering many major opposition groups are concerned that the United States and Russia may seek to impose peace terms on the rebels. Significant roadblocks in peace talks have hardened, while the humanitarian situation in Syria has gained significant international attention and criticism. The Assad government has received condemnation over the blockades of several rebel-held cities, which has led to widespread starvation and may be a sign of war crimes by the government.

This article was originally published by Global Risk Insights and written by GRI analyst Brian Daigle.

The post Weekly Risk Outlook appeared first on Foreign Policy Blogs.

Talking with a Venezuelan seeking political asylum in the U.S., we asked her why she was leaving her country. “Venezuela does not offer a future anymore” she said. It once did.

Chavez’s 21st century socialism has failed and (sadly) has pushed Venezuela to the brink of one of the major humanitarian crisis in the region. There goes another lost decade for a Latin American country.

Between 2004 and 2008, Venezuela experienced an economic miracle. Its economy grew 10% per year on average, while GDP per capita expanded by 26%. Now Venezuela is going backwards. By 2018, the country is expected to return to the GDP levels of 2005, but with an additional 6 million people, a 20% population increase. Thus, GDP per capita will fall to 2000 levels by 2018, as if 18 years of economic activity had never occurred.

Venezuela’s economic crisis will have unprecedented consequences in terms of poverty. Encovi, a local survey on life conditions shows that in 2015, 76% of Venezuelans lived in poverty, up from 52% in 2014. The extremely poor increased by 9 million through 2015, or 25% of the population.[i] The local universities conducting the survey warn that this is a conservative estimate, for they are only assuming a 170% inflation.

Source: LATAM PM with data from IMF and ENCOVI 2015

On October 15 of 2014, surrounded by supporters of the PSUV and with a loud round of applause, President Maduro announced a 30% increase in the minimum wage bringing it in VEF$9,648.2 a month—or $9.95 taking the 968.8 USD/VEF exchange rate used in black market by most Venezuelans. The problem is that with the 205% inflation estimated for 2015 by the local think tank Ecoanalítica, a monthly food basket now costs eight times the minimum wage according to the NGO Center for Documentation and Social Analysis (CENDAS). The IMF estimates that inflation could reach 720% this year.

Venezuela based its economic model on public expenditure supported by oil revenues, which constituted 96% of the total country’s exports in 2014. According to ING Group, Venezuela needs a $125-dollar barrel to balance its budget, but its mix currently trades at around $24. Venezuela has no money; this is problematic in a country that imports pretty much everything. The port of Guaira, one of the main three trade ports in the country, now looks empty.

Source: LATAM PM with Google Earth images

Tariffs and price controls have also triggered shortages of food and essential products. CENDAS reported at the end of 2015 that 38% of the products that form the basic food basket are not available in the stores anymore. This includes milk, beef, poultry, sugar, wheat flour, pasta, sardines and canned tuna. Last year, the Venezuelan Pharmaceutical Federation reported that 70% of medicines are in short supply.

The drastic deterioration of life conditions is the reason why Venezuelans voted to end the hegemonic control of the PSUV, giving the opposition control of the National Assembly. However, in recent days, there has been an increasing confrontation between the two sides. The Assembly wants to pass an amnesty law for political prisoners. Maduro threatens to veto it. Following the initiative, Maduro declared a state of economic emergency—promptly blocked by the Assembly. The current political impasse has done little to provide any sign of relief for Venezuela’s economic implosion.

Now, the most important question is whether or not the opposition’s supermajority in the Assembly will call a referendum on Maduro’s continuity later this year. The opposition (MUD), formed by a coalition of more than 20 parties, is showing a lack of unity on the issue. Without the support of every single MUD’s deputy, the referendum will not be held. In the meantime, Maduro has threatened to take the fight to the streets, if necessary.

LATAM PM’s View: With or without referendum, the probability of a major social and political crisis will continue to grow, which in turn could have important implications for the region. Wealthy Venezuelans are already leaving their country in search of opportunities in Colombia and Ecuador. But as life conditions deteriorate fast, the risk of a mass exodus increases too.

[i] Extremely poor people are defined as those who do not have the income to eat 2,200 calories every day. Poor are those who cannot acquire that same basic basket plus essential services such as electricity and transport.

This article was originally published by LATAM PM

The post Going Backwards: The Crisis in Venezuela appeared first on Foreign Policy Blogs.

Old habits die hard for Hungary’s ruling elite.

If anyone thought 2016 would bring with it a change in approach by Hungary’s ruling Fidesz Party they were sadly mistaken. The arrival of the New Year in Hungary has been marked by surging public discontent and street protests opposing proposed constitutional amendments that would provide the government with sweeping anti-terror powers.

Draft proposals leaked to the media suggest the government is seeking to amend the constitution by creating a new category of emergency: a “terror threat situation,” which, if declared, would enable it to issue decrees, suspend certain laws and modify others. Among some 30 proposed changes are controls on the internet, deployment of the army domestically, closing of borders and the imposition of curfews in areas affected by a terrorist threat.

Critics, including several opposition parties and civil rights groups, describe the vaguely defined “terror threat” legislation as a thinly veiled attempt by the government to clamp down on civil liberties. Unfortunately, the latest proposals represent the continuation of a longer term trend that has seen the gradual erosion of civil liberties under Victor Orbán’s Premiership.

The motivations for the ruling Fidesz Party’s authoritarian approach are complex, but one factor is undoubtedly the volatile and turbulent shifts the country’s political landscape has witnessed since the fall of communist rule in 1989. Viktor Orbán is the country’s only post-communist Prime Minister to have completed an entire mandate and be re-elected.

Part of this political turbulence can be attributed to the economic uncertainty the country experienced following the collapse of communism. As with the USSR and other soviet satellite state, the collapse of the communist regime in Hungary left a void in terms of institutional infrastructure and regulatory oversight.

This vacuum created a ‘wild west’ that offered fertile ground for wealthy individuals and speculators keen to exploit the absence of effective regulatory oversight and plunder the region’s resources. Hungary was no exception. Well documented, the now infamous Russian ‘oligarchs’ were quick to capitalize on the wealth of opportunities created by the collapse of communism. Less well known however are the Western entrepreneurs who also flocked to the region.

One of the most notable is Ronald Lauder the son of Hungarian Jewish immigrant Estée Lauder who successfully founded the family beauty-products empire. Lauder’s older brother, Leonard, assumed the helm of the company when their father, Joseph, died in 1983. Leonard subsequently took the company public, making him and his brother billionaires.

Seemingly lacking the business acumen of his brother, Ronald was keen to emulate his family’s success. Following a failed run for Mayor of New York, and his ignominious failure to secure the Republican nomination in 1989, Lauder presumably spotted his chance in 1994: his moment to step out of the shadow of his successful family, and establish his own identity.

Ronald set about establishing a string of commercial media and entertainment ventures across the former Eastern bloc countries. It all began to unravel, however, when it was revealed that a U.S. Attorney for the Southern District of New York was investigating Lauder’s television holding company, Central European Media Enterprises (CME), over allegations that the company had bribed state officials in Ukraine.

Perhaps most notably though was the media mogul’s dealings in Hungary. In 1996, Lauder was sued by his former business partner, Seymour Holtzman, for wrongful termination of their joint venture. Holtzman alleged Lauder had forced him out of their partnership in the Central European Development Corporation, the company he’d formed in Hungary in 1989. Describing Lauder, Holtzman explained to the Wall Street Journal that: “[Lauder] is mean-spirited …. He thinks he’s above everyone else.” The matter was eventually settled in court for an undisclosed sum.

But the Holtzman case was nothing compared with what was to come. In 1997, Perekhid Media, a Western-owned rival in Ukraine, brought a suit against Lauder and CME in New York, claiming that it had bribed Ukrainian officials, to essentially snatch from Perekhid a license which the company had obtained in 1993. Mr. Lauder had subsequently started a station called Studio 1+1 there using the license.

These questionable, some might say nefarious, business dealings by Western “entrepreneurs” help to demonstrate the aggressive business practices pursued by individuals across the Eastern bloc following the collapse of communism and help to illustrate how the economic turmoil fueled by the West has helped foster a culture of paranoia and an eagerness to hold on to power among Hungary’s political elite.

The post Any New Year’s resolutions Mr. Orbán? appeared first on Foreign Policy Blogs.

In the past few years, Saudi Arabia has not managed to make a single foreign policy decision that makes logical sense to anyone outside the Saudi royal family. Things started to go downhill for Saudi Arabia when it decided to inundate the oil market by pumping excess oil to suppress prices and recapture the market share lost to U.S. shale oil and other producers with higher operational costs.

Previously, Saudi troops helped suppress the Shi‘a uprising in Bahrain. Then came along the threat of ISIS. Making things worse, Saudi Arabia started bombing the Shi‘a Houthi rebels in Yemen, dragging the country in a protracted conflict. Government finances have taken a hit and its first sovereign bonds sale in decades occurred a few months ago. And now finally, following years of rhetoric, Saudi Arabia and Iran are now literally at each others necks.

One might be surprised by how the execution of a prominent Saudi Shi‘a cleric has sparked outrage throughout the region. Indeed, Iran also has not been quiet. Iranian proxies have controlled the so-called “Shi‘a crescent”—a crescent-shaped territory comprising of Iraq, Syria and the Shi‘a militia Hezbollah in Lebanon—for a decade now. But within Saudi Arabia, the Shi‘a minority (~25% of the population) have been relatively calm, despite massive government oppression excluding it from the wider Saudi society. Thus, the Saudi Shi‘a have been a time bomb waiting to go off. The execution of the cleric might have marked the point of no return.

The manner in which protesters in Tehran behaved, attacking the Saudi embassy, portrays the long standing animosity. The Syrian conflict has degenerated into a Shi‘a-Sunni sectarian war. Iran is replacing its own troops in Syria with Pakistani Shi‘a volunteers.  The current standoff sparked off on January 4 is sure to define the path the region is going to take in 2016. And it is not going to be a pretty one.

Since protesters in Tehran set fire to the Saudi embassy, Bahrain, the United Arab Emirates, Kuwait and Qatar have downgraded their diplomatic relations with Iran. They have not gone to the extent of cutting diplomatic relations with Iran because of the economic and demographic links they must sustain for their own stability. Iran replied by accusing the Saudi coalition of bombing its embassy in Yemen on purpose.

Some have come to speculate that the Saudi-Iran crisis has been engineered toward preventing Iran from releasing a further 500,000 barrels per day on the market over the next month as the sanctions are lifted. Further, some speculate that an all-out war between oil producing nations will finally cause long anticipated hikes in the oil price. High prices are essential to the proper functioning of the Gulf country finances if they are to maintain autocratic regimes supported by massive social transfers to their population. In that case, some parties do have an incentive to find ways to prevent Iran’s increased oil supply.

Iran strikes an uneasy balance between democratic institutions and its theocratic nature. A plethora of different factions are represented in its ruling elite. Rouhani comes from the more moderate faction who manage to take over power since the more hardline faction of Ahmadinejad almost destroyed the country’s economy. One can speculate that Saudi Arabia intends on increasing Sunni-Shi‘a tensions so that public support in Iran reverts back to the hardliners. The Saudi embassy on fire surely made the fundamentalists happy while undermining the moderates’ attempt to portray to the world a progressive Iran.

Iran has a dynamic and vibrant young population which has grown to favor more engagement with the West. The failed 2009 “Green Revolution” was an attempt by these youth to end the rule of the hardliners. If they return to power, they will have a lot of youth dissent to curb. That means a lot of additional human rights violations which will lead to new sanctions being imposed.

Iran badly needs economic growth to avoid being sidelined. For it to retain the title of defender of Shi‘a Muslims, it must have the ability to support Shi‘a governments and factions abroad. Indeed, Hezbollah, Assad and Iraqi Shi‘a militia all depend on Iranian support. Hence, ironically, the fundamentalists have to support the moderates to run the country efficiently in order to achieve their goals of regional hegemony.

Developments in the Middle East will depend heavily on how Iran and Saudi Arabia react to each other’s actions. Rouhani will have to ensure that the Iranian Revolutionary Guard Corps does not carry out overt aggressions. The missile test in October and the recent detaining of two U.S. patrol boats near Qatari waters were risky. A country of Iran’s stature has the right to develop its own ballistic missile system and to detain trespassing naval vessels. Brazil has its nuclear-powered submarines and Pakistan has its nuclear weapons. No one is imposing sanctions on them for that.

The difference is that Iran has lost its reputation as a responsible member of the international community since 1979. It needs to rebuild it and the Rouhani government has taken a lot of positive steps toward that direction. Paraphrasing President Obama, Iran is too large a country to keep isolated from the rest of the world. The world also needs to understand that Rouhani cannot immediately act friendly with the West—Iranians have grown up to loathe the West for decades. To stay in power, Rouhani must be seen as protecting Iranian interests and its self-perceived power. If he is seen as a Western stooge, the fundamentalists will return to power.

The post Saudi Arabia-Iran: Tensions and Intertwined Futures appeared first on Foreign Policy Blogs.

Photo By Abdolreza Mohseni

Iran will present its new oil contracts during a scheduled conference in February 2016 in Tehran. By 2020, the country hopes to increase crude production to about 6 million barrels per day (bpd), an increase compared to levels produced before the sanctions imposed by the West in response to its nuclear program.

But Tehran will probably need much more time to achieve this desired level of production. To develop new oil fields and ensure better infrastructure, Iran needs an additional $100 billion in financing from foreign investors. And while lifting sanctions will open up possibilities for external financing, the country also needs international oil companies to establish activities on Iranian soil. This could be a challenge, as binding regulations have historically made it difficult for energy companies to operate in Iran.

The lifting of sanctions brought the oil price down: Iran is the second largest producer, behind Saudi Arabia for conventional oil, and is fourth behind Venezuela, Saudi Arabia and Canada if we include unconventional crude. Beyond the impact of lifted sanctions, the slowdown in global growth, the strength of the U.S. shale industry and the global glut of oil supply (a surplus estimated at one million bpd) continue to fuel the downward spiral of the market.

Can a Public Private Partnership (PPP) provide the solution for the financing of energy infrastructure projects, at a time when Iran is facing declining revenues as a result of years of crippling sanctions? Iran’s new contract model is designed to gain the interest of international oil companies to participate in joint venture projects. Under the new Iranian Petroleum Contract, a foreign company would have several years to explore and develop deposits followed by 10 to 15 years of production rights. Meanwhile, the Iranian state oil company, The National Iranian Oil Co., would compensate the foreign company depending on the deposit, production volumes and oil prices.

Iran needs to consider a PPP and a legislative framework that would give more flexibility than the current contract in place.

Investments in the Energy Infrastructure

The introduction of a PPP in the new Iranian Petroleum Contract (IPC), would also allow the private sector to supply public services and infrastructure in the energy sector—both fundamental to the development and growth of Iran. The current oil price, which is at a record low, presents an excellent opportunity to create and maintain oil fields and, consequently, provides some scope for private and public sector. Crucially, it would allow the country to address its battered infrastructure, which have suffered from crippling sanctions and chronic underinvestment.

If companies are reviewing their budget in the development and exploitation of deposits, they have a chance to regain some of that capital through oil sales. If a project is technologically more difficult, it might gain higher income. So even if it requires more investment, it will yield greater returns. Investors will also be engaged in projects over a longer period, which should encourage greater production.

Management is key in the energy sector—partnering private and public actors will prove effective for improving service delivery. Reducing costs and time of executing projects is a priority in a very volatile market. The private sector has the ability to implement project within time and budget and eliminate cost overrun due to delays, a significant financial incentive.

The aim is not to prioritize the private sector but to balance risks in both sector associated with their own duties. This type of partnership mobilizes all the human and financial resources (public, private, international) and thus avoid costly disruptions in public investment programs, during periods of recession and budget cuts.

The PPPs are not a solution to a budget crisis led by its sanctions or simply low oil prices. But as a mean to optimize resources, PPPs are a contractual arrangement over the long term by which the public sector transfers to the private sector all or part of conception, financing, operation and maintenance responsibilities. Contrary to conventional wisdom, PPPs contracts enable government to determine the tariffs for users, standard levels to be achieved and met. The Iranian government will still be involved in the supervision of the PPP contract and ensure that public service objectives are met.

While Iran has huge economic and human resources, improving the economic situation will depend heavily on political reforms and major economic changes. The ideological nature of Iran’s system makes it difficult to bet on political and economic reforms capabilities.

A Competitive Edge for Iran?

Iran is at present estimated to hold about 157 billion barrels or 9.3% of world reserves. In comparison, Iraq has 150 billion and Saudi Arabia almost 266 billion barrels. Iranian production in late 2013 was 3.558 million bpd against 3.751 million bpd a year earlier, a 6% decrease relative to 2011. Iranian crude oil is light, with a low extraction cost. However Iranian deposits have low recovery rates (between 20 and 25%), which require investment and the injection of more gas into the wells.

 The new Iranian Petroleum Contract could potentially give an advantage to Iran over its competitors in terms of attracting new investments. If we look at it by sector, the most prominent one to benefit from such a partnership would clearly be Iran’s energy industry. The U.S. and other foreign investment in Iran’s energy sector should grow rapidly, allowing Iran to develop its production capacity and export oil, gas and petrochemicals.

Several international oil companies have already shown interest in the new contracts. Royal Dutch/Shell, Total and Eni were in Tehran during the last three months to discuss investment opportunities through the so-called ‘special conditions contracts’ to reserve ownership for exploration and development.

Immediately after the lifting of sanctions, European companies will probably be the first to invest. They have the most recent experience of doing business with Iran and will be less constrained by their own governments. It is common to see international players parterning with local businesses who have a good knowledge of the terrain.

Attracting Investors

Low oil price may have been the catalyst for the promulgation of PPPs. Iran’s new Petroleum Contract will be able to invite private companies and international investors to finance and operate energy assets at an attractive price. It will be interesting to watch the development of PPPs in Iran and evolution in the current volatile market as confidence will progressively build through an increase in the quality and quantity of projects coming in line.

To be viable in terms of attracting foreign investment, the new IPC should include four key things: appropriate risk allocation, a sound financial package, reliable concessionaire consortium and favorable investment environment. In order to do so, energy projects should be aligned with both public and private parties and ensure the appropriate management structures and procedure to obtain application of those four core aspects.

The success of the new Iranian Petroleum Contract model also depends on the specific fiscal terms of the agreement, which have not yet been finalized or announced. And even if Iran really managed to sign new contracts with foreign energy companies, these companies will still face major obstacles when it comes to actually investing, operating and advancing these contracts.

Iran can eventually return to production levels it had before the sanctions, but it will probably take much longer than the ‘immediate effect’ promised. Ultimately, fiscal terms that Iran will offer to foreign energy companies under its new contract model might be appealing enough to overcome the significant challenges that come with operating in the country.

In these partnerships, private companies can offer innovative design, project management skills and risk management expertise. A PPP IPC will require the private agent to take full responsibility for the performance of the asset over a long term, so that efficiencies arising from long term investment and asset management could be realized.

A diversified service can be adopted through these contractual relationships: concession contracts, lease-develop-operate, and build-operate-transfer among others. A collaboration between public and private sector for the purpose of delivering a project traditionally provided by the public sector.

The sole challenge will be to find the right balance between private sector capacity, government regulatory function and public satisfaction. Adding the political and social obstacles that will come through different phases of projects, the lack of legal framework and the rising of tariff to cover the costs of projects may face some important challenges. This new financing model will allow the presence of foreign investors in projects but in an operational and reasonable manner.

Only time will tell, but there are efforts being made to attract international investors in Iran. Future work is clearly needed before a PPP can be added to Iran’s economic model in a satisfactory manner. Partnership, if precisely planned and structured, can be a powerful tool not only to keep public company viable but also to address cost and investment challenges, improve efficiency and service quality, increase expertise, attract more rapid and substantial investments in infrastructure and new energy technologies.

The post A Public Private Partnership for Iran’s New Petroleum Contract? appeared first on Foreign Policy Blogs.

Piraeus Port, Greece. By Jeffrey @flickr

After what seemed like never ending negotiations between the Greek government and the Troika—the European Commission, the European Central Bank and the International Monetary Fund—to settle Greece’s financial lifeline, the ordeal finally came to an end last August, and the gaze of the world drifted away from Athens.

Instead, all media pundits were fixed on the beaches of Lesbos and the human tide washing up on its shore, and on Syria, the source of so much of the misery from which the boatloads of refugees had fled.

But those with a vested interest in the successful implementation of the €86 billion bailout package agreed between Athens and its creditors, not least of all the Greek people, couldn’t afford to take their eyes off Greece. And in December, as Alexis Tsipras’ Syriza-led government finally passed the budget for 2016 and signed the first privatization deals required to access the bailout funds, some of the attention slowly began shifting back to the fortunes of this debt-laden economic basket case. And unfortunately, not many are happy with what they see six months since the signing of the deal meant to bring Athens out of the worst political conundrum the European Union has ever seen.

To begin with, let’s look at the relatively successful (and relatively painless) privatization of Greece’s airports, a key condition for the nation’s international creditors. In mid December negotiations concluded between the Greek government and a consortium consisting of Fraport, a German transport company, and Copelouzos, a Greek energy company, to lease and manage 14 airports.

Negotiations to lease the airports began under the previous government, but the deal looked to be dead in the water following Syriza’s rise to power on an anti-austerity platform. But now, having been force-fed a strong dose of economic realism, the radical leftists finally signed off on an agreement which will bring in €23 million in annual rental payments and over €300 million in investment in the airports´ facilities.

All in all, the deal is worth €1.4 billion over the 40 year length of the lease. Its final signing also marks a welcome sign that the Syriza government has woken up to the realization that if Greece is ever to extricate itself from its economic woes, it needs to make friends rather than enemies of parties who are willing to invest in its future.

But the privatization of Greece’s airports is only one side of the coin, as the debate over the future of the nation’s seaports still remains unresolved. The Greek shipping industry is the largest in the world, a major provider of employment, and is considered to be the very identity of the country; one of the few remaining symbols of national pride. But if Greece is to maintain its preeminent position as a world leader in shipping, then its ports and associated infrastructure will need continued investment and support.

However, given the country’s finances, the Greek government is clearly in no position to meet those needs using its own resources. Even Syriza has already come to this conclusion, and has agreed as part of the latest bailout program to sell a 51% stake in the port of Piraeus, the country’s largest. At least that was what investors were led to believe would happen, and while reports have emerged that the privatization would indeed go through, the road thus far has been far from smooth, leaving investors jittery about the government’s next steps.

After being postponed three times, bids were finally accepted on December 22 for the majority stake in the port. Maersk Group’s APM Terminals, and Philippines-based International Container Terminal Services have expressed interest in the offer, but China’s Cosco is thought to be the lead contender to seal the deal. That Cosco has continued in its pursuit of the share purchase despite the obstacles thrown in its way by the Greek government is testament to the value of the proposition on offer.

As well as the postponements, the whole process has been stymied by the announcement of the intention to bring all of Greece’s shipyards under a central public body (in other words: nationalization) as well as plans to increase taxes on local shipping operators. All these factors taken together paint an unsettling picture of a government that seems hell bent on scaring away foreign investors ,while at the same time removing existing ones from the country.

Exactly what the government hopes to achieve by exasperating the operators in an industry that is so vital to Greece’s recovery is anyone’s guess, but potential foreign investors will likely remain on their feet until Athens sends a strong signal that it is serious about privatization to dig its economy out of a manmade hole.

But what could really be the undoing of this government and push Greece right back to the precipice is the slow pace of reform of the pension system. The terms of the bailout require a reduction in pension payments, but the government, fearing the political backlash this would cause, claims that there have already been 12 cuts to pension payments since the beginning of the crisis and the system is already streamlined to the bone.

Instead of cuts, the government wants to set higher contributions from existing workers and employers. However, the fact so many people already pay and receive wages under the table in order to avoid paying any contributions in the first place will render such an approach unfeasible until the government cracks down on tax avoidance.

Whereas Syriza once stood against austerity and attracted the support of the majority of Greek people who also opposed it, the fact of the matter now is that whether they like it or not the Syriza-led government is an austerity government. The Greek people are all out of alternatives.

Apart from the Golden Dawn,or from Syriza’s point of view, the best way forward would be to leave the foot dragging and recalcitrance behind, be upfront with the public, and convince them that despite the tough road that lies ahead they are the best party to lead them on the path of economic recovery. Syriza must take a hard and clear stance with its population about the necessary reforms. If Greece wants to remain a member of the Eurozone, this is the road that must be travelled, regardless of the party in government.

When looking into the political history of many of the world’s most complex issues, often there is a strong sense of injustice in communities on both sides of a conflict. Injustice comes from the belief that one group or individual has a disproportionate amount of power, and abuses that position to its benefit, its family’s needs, or the needs of its interest group or political party.

In societies with little corruption, once the creation of unjust mechanisms and institution becomes entrenched, it is almost impossible to return  to a system of balanced and equal justice. In some cases, revolutionary ideals can change a corrupt system, but more often than not it leads to extreme violence and a new system that takes on their own forms of corrupt practices.

Politicking in the modern era reflects many of the same tactics that could rightfully be seen as spurning on absurd religious ideals of the past. Civil discourse has taken generations to develop as a means to have civil conflicts with fellow citizens with a difference of opinion.

This tradition is increasingly being lost. Modern political dialogue seeks to label an adversary as inherently evil. If someone is “evil”, then all ideas must come from a place where the individual, their family or group are acting against the greater good of the society. If the corrupt can claim their adversaries are corrupt, then there is no perception of justice. When every conflict great and small is taken in terms of good vs. evil, no progress can be made and corruption becomes more of a nuance than a lack of accountability.

With such a system in place, corruption will never face justice as powerful groups in black and white societies benefit the most when there is no room for truth and civil discourse. With entrenched corruption, it is inevitable that a nation’s finances will wane and debt will grow. Those in power act according to their self-interest, and if challenged by others in society, they promptly label their challenger as evil, discrediting him or her.

For generations in Colombia, revolutionary groups have claimed that their narco-business was a form of resistance against a corrupt government. The revolutionaries killed many innocent people, and the response by the government also produced civilian causalities.

In Mexico, with the current government being seen by many as not only being inherently corrupt, but having knowledge and perhaps a role in the death of dozens of protestors, the view is that an evil government gives rise to a Robin Hood. Justice is therefore seen as the only alternative, often by any means necessary. Sean Penn and other journalists who engage with narco traffickers take the position that, if they operate in a system where the government itself is inherently corrupt and unjust, then the alternative must be in some sense a righteous one. Often this impression leads to the death of many innocents, at the same time converts the narrative into one of justice against evil.

While this narrative is not unique to one region of the world, it divides discussions into those of “us vs. them.” It promotes not only the status quo, but often hurts those who need justice the most. In the big discussion of El Chapo and the Mexican government, the citizens of Mexico are almost never mentioned.

In a debate between Republicans and Democrats, the distain each side feels towards the other will do more to give rise to added corruption by an elite that has little regard for the people they wish to govern.

In Brazil, corruption scandals have triggered historic debt levels and suffering for its people, leading two million people to take to the streets and demand justice. If there is a method to dispel the dominant narratives, justice can perhaps relinquish the ills of corruption. However, this may only occur when finances are in shambles and debt is affecting each citizen personally. This is happening in Brazil, and only after there were no other choices left.

Trump’s “Making America Great Again” echoes Reagan’s “Let’s Make America Great Again” (Photo credits below)

Part 1 of 2: Can Trump win?

The United States is preparing to introduce a critically important new variable to its foreign policy: a new President. Despite continuing predictions of his campaign fading, Donald Trump remains a viable candidate and therefore important to the global community. President Ronald Reagan’s path to victory in 1980 might serve as a model for Trump’s eventual election. But if elected, will Trump’s foreign policy also echo Reagan’s?

Reagan was elected by reaching voters outside the Republican Party—”Reagan Democrats.” Like Trump, Reagan was already widely known before he ran in 1980. He was a film actor beginning in the late 1930s into the 1950s. He served as the president of the Screen Actors Guild during the Congressional inquiries in Communists in Hollywood. A former radio sportscaster, he bolstered his all-American image as a spokesman for General Electric in the 1950s. In the 1960s, he became a Republican, and gave a popular speech for presidential candidate Barry Goldwater. Reagan himself ran successfully for California governor in 1966 and 1970, and unsuccessfully for president in 1968 and 1976.

Trump’s large personality, eponymous hotels, 1987 New York Times bestselling book, and popular television program, The Apprentice, have made him widely known. But in 2011, he also had the highest rates of unfavorability of any potential candidates. Trump lacks political experience, compared to Reagan and to most of his current rivals. But the other Republican frontrunners in the race so far have been a neurosurgeon with no political experience and a first-term Senator, while nine sitting or former governors from states like New York, Florida, Texas, and Ohio have been essentially non-factors.

The context in which Reagan ran in 1980 was also central to the election, though. The United States was at the end of two decades of upheaval: the assassinations of President Kennedy and Martin Luther King, Jr., the civil rights and anti-Vietnam War movements, President Nixon’s resignation, and economic “stagflation.” The taking of American hostages by Iranian revolutionaries, two oil-price crises, and the Soviet invasion of Afghanistan made the Middle East a complicated and controversial political, economic, and security issue.

In 2016, the United States enters its 16th year of fighting in Afghanistan, and nearly as long in Iraq, while Taliban, ISIS, and other difficulties persist. The long, slow recovery from the 2008 financial crisis is threatened by the global stock market plunges of early January 2016. Police shootings, immigration, and health insurance are politically divisive social issues. The rise of China, Russia, and Iran increasingly erodes the hegemony the United States held for the decade after the Cold War ended.

Will the personality of Trump and the context of American and global politics create a dynamic like the one that elected Reagan?

The first step is within his own Republican Party. (Candidates of each party compete during this winter and spring for their party’s nomination, beginning in the rural state of Iowa on February 1. Parties could essentially make their choices by March 1, “Super Tuesday,” when 12 states hold their contests, or continue as late as June.) Trump leads a party that is older, whiter, more Christian, more Southern, and more male than the Democratic Party. His nationalism and brashness—he has made insulting comments recently about women, immigrants, Muslims, his own national party organization, and even American prisoners of war—appeal at least in tone to a plurality of Republicans. Each insult generates punditry on his imminent decline. But unlike the 2012 campaign where several Republicans cycled through the top spot and out of the race, Trump has so far held his lead over several months.

The next step would be in the general election, presumably against Hillary Clinton. She has a strong resume: active First Lady, U.S. Senator from New York, and Secretary of State, in the national spotlight for more than 20 years. She is potentially the first female president, following the first African-American president. Her husband, former President Bill Clinton, was and remains very popular among Democrats, but the effect of his history with women is a wild card. Like Trump, though, she has high unfavorables, along with an open investigation into her handling of State Department email, and lingering questions about what happened during the attacks on the U.S. consulate in Benghazi.

What does Trump needs to defeat her? Reagan received 26% of the Democratic vote in 1980, compared to 10 and 7% for the Republican candidates in 2008 and 2012. Reagan got 54% of independents, 48% of moderates, and 36% of Hispanics—all much higher than the Republicans in 2008 and 2012. Trump doesn’t just need Republican turnout; Trump needs Democrats.

Turnout numbers are always difficult to predict. Presidential elections get higher relative turnouts among Democrats than during off-years: President Obama’s elections were followed by historic Republican Congressional gains in 2010 and 2014. Will Hillary Clinton be able to get Obama’s supporters to come out a third time?

It is the race to 270 electoral votes, not a popular majority, that ultimately matters. Democrats are seen as holding a big advantage in “safe states” months before any votes are cast. A December 2015 poll by CNN put Trump ahead of Hillary Clinton in the South and the Midwest, and behind in the Northeast and West. It put him ahead in rural areas, behind in urban areas, and tied in suburbia. The key “swing states” of Florida, Virginia, Ohio, Pennsylvania, Wisconsin, and Colorado are divided among these categories, not persuasively favoring either candidate. Can Trump win enough of these swing states with the help of Democratic voters? One recent poll offers that Trump could get 20% of the Democratic vote.

U.S. elections are typically close: The last seven presidential elections have been won by an average of 5% of the vote (49-44); the last three by 3.5% (50.6-47.1). Only once since World War II have Americans elected the same political party three times consecutively: Reagan-Reagan-George H.W. Bush, 1980-1988.

History suggests much stands between today and the November 2016 election. In January 2008, an NBC/Wall Street Journal poll gave Hillary Clinton a 15-point lead (47–32) over Senator Obama. Throughout 2007 New York City mayor Rudy Giuliani led the Republicans, until Mike Huckabee and then John McCain took leads in early 2008. For the moment, it looks like Clinton vs. Trump—very different candidates, each with high negative ratings, and in a pattern in American presidential elections where the final popular vote is close. If Trump were to win the nomination, he has a chance at the presidency.

Part 2 will consider what a Trump foreign policy might look like.

Photo credits: Reagan poster , 1980 Republican Convention, Trump in cap.

Still photo from ISIS Indonesian recruitment video (Australian Broadcasting Corporation)

The start of 2016 has been a foreboding one for countries facing the threat of terrorism, following attacks last Thursday in Paris and Cairo, and again last Friday on the coast of Egypt’s Red Sea and in Philadelphia, all claimed by followers of the Islamic State (IS). Whether these attacks were coordinated or the acts of lone wolves is uncertain at this time, as is the extent of the IS networks operating in these countries.

While much of the media attention is focused on the threat of IS to Americans, Europeans and North Africans, less attention is being paid to the citizens of Southeast Asian nations. Southeast Asia is home to about 15% of the world’s 1.6 billion Muslims, many of whom have gone to fight in Iraq and Syria under the banner of IS, or have been radicalized while at home.  One such Southeast Asian country on the forefront of the battle against IS is Indonesia, home to the world’s largest Muslim population, which has over the past year successfully crushed militant cells.

In December, Indonesian authorities announced a string of raids had led to the capture of nine IS sympathizers suspected of planning bomb attacks and the seizure of bomb-making equipment found across the island of Java. Authorities suspect the bombs were to be used in attacks against President Joko Widodo, government offices, and public landmarks.

Borobodur, the world’s largest Buddhist temple and a UNESCO World Heritage Site, had seen increased security after an apparent bomb threat by IS-affiliated Islamists last year.  There are an estimated 1,000 Islamic State sympathizers across a population of 250 million in Indonesia, many of whom are returning from fighting with IS in Syria, radicalized and battle-hardened.  The IS representative leadership is thought to be based in Solo, a city in the center of Java, known as a hotbed for Islamic unrest.

Indonesia has banned support for Islamic State and warned its citizens against joining IS, although most of its Muslim population practices a moderate form of Islam. Indonesian nationalism is founded on the doctrine of Pancasila, which stresses pluralism and diversity and strongly opposes the establishment of an Islamic state.  The leader of the country’s al-Qaeda-linked Jemaah Islamiyah (JI), Abu Bakar Bashir, pledged his allegiance to the Islamic State from his jail cell in August (JI was behind the Bali bombings in 2002 that killed 202 people).

While Indonesia is not publicly declaring their support for airstrikes against the Islamic State in Iraq and Syria, they are not dismissive of the threat which IS poses across the Indonesian archipelago. Some of their citizens have homegrown grievances and are likely to be emboldened by the success of IS and declare ties to the terrorist organization, potentially traveling to Iraq and Syria or carrying out terrorist actions at home.

More worryingly, battle-hardened militants returning from Iraq and Syria may bring both skills and networks with which to join forces with locals (or foreigners)—Malaysian authorities are already expressing concern over networks forming between Malay-speaking militants from Malaysia and Indonesia, who have formed a combined fighting unit in Syria, and whom may join forces once home.

Greater efforts at intelligence-sharing, such as that which took place in December among Indonesian authorities, the U.S. Federal Bureau of Investigation and the Australian Federal Police, should be encouraged throughout Southeast Asia. The potential of IS to threaten Indonesia and the rest of Southeast Asia is real and should not be minimized—after all, returning militants from the Afghan war against the Soviet Union from 1979–1989 were responsible for the founding of both Abu Sayyaf in the Philippines and JI in Indonesia, both of which are still active today.

There is often a great deal of information available about injustices done against groups that are in dire need of assistance. Most of these ethnic minorities are known to be in a predicament by the international community. The starkest failure after the lessons of the Second World War and atrocities in the Balkans was the incapacity of the international community to take actions to prevent a modern genocide in Rwanda.

With further atrocities taking place in Iraq and Syria, the international community must stop the oppression against certain groups. Indeed, the lesson of Rwanda has been almost entirely ignored in 2015. Political leaders actively obscure discussions on genocide and media coverage does little to prevent another humanitarian disaster. A defined obligation is required to cut through the rhetoric.

Not assisting those in need is not considered a crime in most legal traditions. It would be difficult to prove that an individual was aware of the need and level of care required in order to successfully help a victim. In the event that members of the international community would be legally obligated to help, there must be some definition of who would be deserving of such assistance.

The group in need first has to be known to be in a situation where a possible genocide may take place. The international community, once aware of the threat, must be shown that assistance can be provided to the group in need. Finally, the capability must exist for that assistance to be successfully administered by the international community. While many regulations and laws exist to prevent genocide in modern times, there has been a lack of humanity and legislation used to save minority groups in Iraq and Syria.

Kurdish forces have often been alone fighting for the liberation of many minority groups in Iraq and Syria. The severe lack of support by Western allies and the Iraqi government  has allowed for a well-known genocide to take place in the region. Assistance to Kurdish forces has been requested openly for an extensive period of time with little assistance coming with the condemnation of atrocities.

Small militias have been assisting Kurdish forces while Western powers and the Iraqi Army lag behind. With knowledge of the situation, and the ability to help, the success that could take place in the fight against genocide in the region is shown by the Kurds themselves. Their small, badly equipped forces are losing soldiers and civilians are being murdered while world leaders continue to bicker. The international community should be liable for its lack of support and the deaths of innocent civilians.

The Yazidi question is one for the international community, as their extinction would be eminent without the assistance of Kurdish forces. The current debate on which American President or Presidential candidate has encouraged ISIS more does nothing to stop a genocide. The entire world  has knowledge of men, women, and many children being subject to rape, torture and death. Some groups have been successful in rescuing girls and women from ISIS who were previously taken as slaves.

To stop this atrocity, the international community is capable of taking action beyond using planes or placing climate issues above the lives of many communities that have existed for centuries. Rwanda should be taken as a reminder to Never Forget, yet again. If humanity as a whole can clearly state that genocide should be stopped without fail, without red tape, qualifications or justifications, then there would be no need for a legal obligation to act in the advent of a genocide. Rwanda’s genocide is taking place again, but in Iraq and Syria.

Britain and China have been developing a closer relationship.

China and Great Britain have had a long but often fraught historical relationship with each other. The UK has been accused in recent years of sending the signal that it is willing to compromise its democratic values in its eagerness to deepen Chinese business ties with Britain.

Meanwhile, as a rising China has become the world’s second most powerful nation, the American-Chinese relationship has become more competitive recently, with pacts such as the Trans-Pacific Partnership (TPP) seemingly designed to exclude China from membership. In turn China has launched its own charm offensive, the so-called ‘One Belt, One Road’ Eurasian development strategy, which it believes will see more Asian and Western countries follow in Britain’s footsteps and join Chinese-friendly institutions and trading blocs.

The UK wishes to participate in both China’s One Belt, One Road projects and remain close to America on matters such as European security or cross-Atlantic trade like the proposed Transatlantic Trade & Investment Pact (TTIP). While China’s rise is complicating the position of unbroken hegemonic authority the U.S. has enjoyed in East Asia for the last 70 years, Britain relinquished Hong Kong, its last significant position there, in 1997. It no longer possesses the strength to substantially alter the balance of power in the region and has more to gain from staying out of the numerous security disputes littering East Asia.

Above all the UK needs to avoid being dragged into controversies such as America’s hostility to China’s naval expansion in the South China Sea. Although Beijing’s position on the issue is in violation of the UN Convention on the Law of the Sea (UNCLOS), which it has ratified, such territorial disputes should remain confined to the regional states which sustain them.

America and China will continue to compete with each other over security arrangements in the East Asian region and for economic influence globally. Despite the renewal of conflict in the Middle East and the return of Russian adventurism there and in Europe, in the longer term China is the state actor that matters and Asia is the battlefield of 21st century superpower rivalry.

East Asian relations in particular are often seen through a U.S.-China lens, with Beijing’s foreign policy interest towards European nations such as the UK thought of as being limited. Therefore the UK’s recent moves have surprised Western observers: London shocked its U.S. ally when it unexpectedly joined the Asian Infrastructure Investment Bank (AIIB) in March 2015. The UK government has made improving Sino-British relations a priority ever since 2013, when Beijing put UK-Chinese ties into the deep freeze in response to the Dalai Lama’s visit to Downing Street.

While the UK government has correctly gauged that China is an indispensable global partner, it has miscalculated the relative strengths of the two sides’ bargaining positions. The willingness of the UK government to allow Chinese investment into the UK in sectors such as nuclear power, ease visa restrictions, and reduce criticism of human rights has been causing increasing unease at home and abroad. As a second-tier global power Britain will exercise significant political influence with Beijing only if it works through its partners in Europe to negotiate the terms of its engagement there. The present solo negotiation with China, whilst trying ineffectually not to annoy its main America security partner, is a fragile policy which will crumble at the first serious crisis it encounters.

Instead the UK would achieve more of what it wants, and give away less political capital in the process, if it managed Anglo-Sino relations through a European mechanism such as the EU-China summits at Brussels. Much as Europe has come together to deal with Russia’s use of gas as a strategic weapon, this slow but collective foreign policy method is a surer way of dealing with an economically indispensable but politically awkward nation like China.

The UK remains a key financial centre for Chinese businesses and its firms still have close ties to the Chinese overseas territory of Hong Kong. But it is the European Union as a whole which is China’s largest trading partner, and Beijing is the EU’s second largest partner after the US. After Asia, Europe was Chinese people’s biggest destination for overseas travel, receiving 3.43 million Chinese visitors, an increase of 10.4%.

The EU has become China’s biggest source of imports, now trading at well over €1 billion a day. In short it is Europe as a whole, rather than any individual member state, which is an influential partner in Chinese eyes. While China is trying to diversify its economy away from reliance on manufacturing, the size of the EU’s market makes it too important for Beijing to simply ignore.

Britain has already been a great beneficiary of China’s economic rise over the past three decades and it is in the UK’s national interest for this blossoming relationship to continue. Over ten years alone imports grew from £11.4 billion in 2004, to £37.6 billion in 2014. China has become the UK’s second largest import partner behind America, now accounting for 7.0% of all UK imports in 2014, compared with just 3.3% in 2004.

As Beijing opens up its service sector to foreign investors, analysts have predicted Britain’s foreign direct investment (FDI) assets in China could rise hugely in worth from £6.6 billion in 2014 to a possible £25.6 billion by 2020. Indeed the UK’s Chancellor George Osborne has set himself a target of making China Britain’s second biggest trading partner by 2025.

China and Britain therefore have a joint interest in developing greater Sino-EU integration, despite the history of trading rows between the trading bloc and the superpower. The UK has been supporting Chinese efforts to develop the yuan as global trading currency, anticipating British financial services will be one of the main beneficiaries of the appearance of off-shore yuan trading markets.

Reflecting this, the UK government has proposed schemes to study connecting the stock markets in Shanghai and London, and to reach a free-trade pact between Beijing and the EU. Analysts speculate that with the UK’s specialization in financial services, health care, clean technology and life sciences, Britain is well positioned to gain from Beijing’s shift towards a more services- and consumption-based economy if Britain can leverage its position within the EU to tie China and Europe closer together.

By choosing the European route instead of the bilateral one to negotiate its trading relationship with Beijing the UK maximizes its leverage with both its European partners and China, which is useful for a medium-sized ex-colonial power. By minimizing the concessions it needs to make to China on sensitive issues such as Tibet or Xinjiang, Britain can also avoid alienating other important partners like Washington.

Irritants such as the long-running dispute over the South China Sea have been inflaming the US-Sino discourse again and hostile attitudes are always easy to find in a period in which US politicians are running for the Presidency. Beijing has also complicated matters for itself by adopting a strident and an uncompromising tone over its territorial issues that has alarmed its neighbors and international opinion in recent years.

China remains a difficult nation for Western governments to deal with politically, but a vital one for their companies and economies. The greatest diplomatic challenge for the EU in the 21st century will be how to harmonize Chinese-European relations without alienating America. London can play a pivotal role in this as the channel through which China’s currency and businesses reach the global status that its leaders crave for reasons of national prestige.

But in order to have the political muscle to do so it will have to work with other European leaders on the continent instead of seeing them as competitors for Chinese investment. For this reason Britain’s leaders may find their China goals achievable only if they focus their flexible bargaining skills much closer to home and ignore the temptations to head straight to Beijing to cut deals ahead of their European partners and rivals.

Incumbents are in trouble these days. The opposition is winning, from Argentina’s Macri, Venezuela’s MUD to Nigeria’s Buhari. But the opposition who takes power rarely is able to maintain its grip on it for more than a few months; France’s Hollande and Egypt’s Morsi are examples. Politics is not what it used to be: power has become more elusive than ever before.

When oppositions win by significant margin, the  tendency is for sweeping changes. The previous regime’s symbols are torn down. Its leaders are investigated, arrested and prosecuted for corruption. Policies are thrown out the window. New constitutions are drafted and the previous regime is kept out of politics.

Instant action to prove that all of the previous regime’s wrongdoings will be wiped off and that the new government will turn a brand new chapter is the norm. This has happened in Sri Lanka since the Mahinda Rajapakse regime was toppled by Maithripala Sirisena on January 8th. Over the past year, Sirisena has realized that turning the page is never as easy as they promised on the political stage.

However in stark contrast to the situation in Sri Lanka, Myanmar has taken a different path thanks to Nobel Prize laureate, Aung San Suu Kyi. Her National League for Democracy (NLD) won 77% of the upper and lower house seats that were contested. In the end, the NLD won 124/224 in the House of Nationalities (Amyotha Hluttaw) and 255/440 in the House of Representatives (Pyithu Hluttaw).

This gives them the majority required to appoint the President and Vice-President and pass new legislature without compromise by overcoming the military plus USDP bloc. But surprisingly Suu Kyi has chosen to compromise with the incumbent military-led regime rather than using her newly found power to wipe the slate clean.

Some may find this surprising and even claim that she is not using the mandate provided to her with utmost confidence by the people of Myanmar for change; change that removes the military from the machine of governance. But she is following the strategy that will bring about the best for her country and people.

Promoting pragmatism and realism might stem from her genes and from the lessons learned in 15 years of house arrest. Her genes because her father, also fathered her nation—the Union of Burma—bringing together a country divided between various factions during the colonial era and World War II. He achieved it through sheer pragmatism, not through a democratic mandate. If Aung San had not been assassinated, maybe Myanmar’s fate would have been much different today.

Now, his daughter has the chance to right the wrongs. But it cannot be done overnight. It will take decades and she knows it. She also knows that her personal fame and charisma can be utilized to sustain the popular mandate required for political stability.

Suu Kyi’s realism has sometimes looked liked ignorance and cruelty. She remained steadfastly silent over the plight of the Muslim Rohingyas, fearful of harming the Buddhist majority vote. Maybe she knew that the only way to make things better for the Rohingyas in the long run was to ensure she won by a large margin and change the governance structure for the better.

She also refrained from giving any specific policy promises on how she will improve Myanmar’s situation. She did not promise to prosecute the military for its crimes or corruption. She only asked for a chance to change things. This is in stark contrast to Sri Lanka, where specific promises of prosecution against graft of the previous regime and more welfare to the people have put the new regime between a rock and a hard place. Suu Kyi is in a hard place but she does not have a rock rolling towards her. She has the liberty to chart a course without breaking any electoral promises.

Currently she is holding ‘transition talks’ with the military (Tatmadev in Burmese) and the leaders of the incumbent regime. Officially the NLD will take over power in February. This prudent act is aided by both Suu Kyi’s pragmatism and, strangely, the military-drafted constitution. The constitution ensured that the new government cannot take over power immediately after an election, and that the military had a strong say in government despite a massive electoral loss. It was this guarantee of holding on to a piece of the pie after the transition that ensured a smooth transition.

Worldwide, we have seen bloody transitions of power from autocracy to democracy. Most were bloody because idealism wanted to chase away evil completely. The de-Baathification in Iraq post-2003 is a very good example. In the attempt to create a democratic Iraq, Baathists were completely removed from every level of governance in the country; from military to bureaucracy. The results has been a weak, unprofessional army and government agencies that are unable to provide public services. The Baathists ended up leading insurgent groups and collaborating with ISIS.

Democracy is yet to take root in Myanmar. One successful election that gives a landslide victory to one party thanks to the charisma of one individual is hardly democracy. Democracy needs to deepen. For that, stability must prevail and people need to feel secure. Only then will the NLD get its legitimacy and politicians will be seen in a more positive light. This is a vital issue if political entrepreneurship is to happen in the future.

The NLD is used to being in the opposition, rallying public rage against the Tatmadaw. Its not used to governing a country of 50 million people. Even Suu Kyi has not been in the role of an administrator for a long time. Her work at the UN was decades ago.

The Tatmadaw and USDP have individuals well-versed in the intricacies of governance. Their methods might have been flawed at times, but their experience and their connections are vital.

Suu Kyi will have to continue to employ a strict sense of pragmatism. Acting on emotions and passions is a nonviable option. Idealism is a flawed approach to apply in Myanmar. The Tatmadaw and the USDP have committed crimes and atrocities. They have looted the country’s wealth and resources. Over time investigations will have to be carried out on those matters.

But not everyone will be prosecuted. Not every war criminal who harmed minorities can be prosecuted. Some figures with a considerable grasp on power cannot be simply chased out of power. If Suu Kyi tries that, she might end up being the devil she is fighting. Surely Kissinger and Bismark would support this point of view. As a nation matures it needs pragmatic leadership and realist policies. Suu Kyi seems to have understood that.

Kurdish peshmerga stand guard on the outskirts of Kirkuk in June 2014. Photo credit: REUTERS/Ako Rasheed

Iraqi Kurdistan is protected by its fierce and respected military forces, the peshmerga. Yet, each of the two main political parties in the Kurdistan Regional Government—the Kurdistan Democratic Party (KDP) and Patriotic Union of Kurdistan (PUK)—controls its own peshmerga regiments.

The peshmerga only answers to the party they are tied to, with both the KDP and PUK using its control of the peshmerga to gain influence over other political agencies.

As examined by Mario Fumerton and Wladimir Van Wilgenburg for the Carnegie Endowment for Peace in December 2015, plans have existed for decades to merge and unify all peshmerga forces under one Kurdistan government agency that could effectively command all soldiers.

Calls for this were made in 1991 after the region separated from Saddam Hussein’s Iraq, and were renewed in 2014 as ISIS advanced towards Kurdistan’s capital Erbil. However, it hasn’t happened yet and significant roadblocks remain.

Fumerton and Van Wilgenburg delved into the complicated history of, and challenges to, successfully consolidating the peshmerga. Especially given ISIS advances in Iraq, a strong and united peshmerga is critically important to the stability of Kurdistan and the region at large.

What is more, without a unified peshmerga unplagued by political partisanship, “Iraqi Kurdistan cannot become a consolidated democracy, preventing it from eventually winning international recognition as an independent state.”

The authors also recommended that the U.S.-led military coalition in Iraq dissolve its current party-based peshmerga training academies and in their place initiate a single training facility for all peshmerga.

Dealing with peshmerga armies separately is just one indication of how Kurdistan “politics are dominated by militarized parties.” Kurdistan is unlikely to gain much support for recognition as an independent state if this political environment persists.

Given the ongoing reliance on peshmerga in the fight against ISIS, strengthening the peshmerga organizational structure and unifying their oversight would provide a much more stable basis of operations. Coalition forces would be wise to make this a priority.

In these extraordinary times of fear, anger and sense of helplessness, hate and cruelty are common human reactions. These are the times that bring out the worst, and sometimes the best in individuals, groups and states.

No wonder militarism and terrorism are on dangerously accelerated course. Both are driven by men with myopic vision, who galvanize the uninformed masses with half-truths and propaganda that are seldom exposed as such.

Left uncontested, this phenomenon is likely to set many states on fire and rip them apart in ways far beyond most of us could imagine. Already, it has wrecked many developing countries, and counterintuitively poisoned foreign policies and the rule of law in a number of Western nations.

In that context, the question of the century ought to be: “How can we stop this trend and backtrack our way to normalcy?” Meanwhile, the pendulum of radicalism swings between toxic pandering and political pandemonium.

Disinfecting the discourse

Almost a decade ago, in an article entitled Islamophobia and the Specter of Neo-McCarthyism, I wrote “…winning hearts and minds will remain a tall order so long as the neo-McCarthy windmills continue to operate in full force and generate the negative energy of fear and hate that sustain political polarization.” However, I have never in my wildest dreams fathomed that a hyper-panderer, the front-runner of the Republican Party, would be campaigning on what could only be described as a hate platform.

In order to thoroughly understand radicalism, we must not succumb to fear. We must scrutinize narratives and never give the leading actors on all sides the absolute authority to think for us and subjectively frame our perceptions. In that spirit of objectivity, in order to effectively deal with radicalism, the calculus must include U.S. foreign policy and the ever invasive Western hegemony.

Michael Scheuer, a former CIA officer who led the operation to hunt Osama bin Laden has presented this argument in his books and various interviews: “None of these [terrorists] were attacking the United States because we have liberties, or elections; or because we have women in the work place.” Instead, they were outraged by “the conduct of our [interventionist] foreign policy.”

Meanwhile, the definition of terrorism still remains a political riddle of serious consequence. Therefore, the prevalent perception that often goes without any scrutiny is that terrorists are people who simply hate us for who we are and for our values. They are individuals or groups that officials in government label as such extrajudicially.

Field day for islamophobes

Exploiting the rising tide of hysteria in the U.S. and Europe, Donald Trump started to run on an anti-immigrant and islamophobic platform that advocates banning Muslims from coming to the U.S. and squeezing them out by denying them re-entry when they travel abroad.

While the tragic and indeed terrorist events in Paris and San Bernardino may have exacerbated it, the anti-Muslim hysteria of ‘they are here and we’re all going to die’ is the byproduct of strategic hate-mongering that goes back two decades.

There are various think-tanks, hate-specialist pundits and media groups such as Fox News and I Heart Media—the rebranded infamous Clear Channel. With virtually around the clock rants and raves against Islam and Muslims, the latter media group is the undisputed command center of paranoia and Islamophobia. It now owns more than 800 radio stations in over 150 markets that target certain demographics that consider jingoism a patriotic litmus test and foreign policy a road-map of who we should attack next.

In order to deny Muslims their constitutionally guaranteed civil liberties and civil and religious rights, radio personalities such as Rush Limbaugh, Sean Hannity and Glenn Beck repeat ad nauseam that “Islam is not a religion. Islam is a political ideology that wants to rule the world.” Presidential candidates such as Ted Cruz use that line of argument to blur the line between Muslims and violent extremists.

Most of the polls—some apparently being notoriously biased—confirm broad-based negative perception toward Islam. However, unlike their older counterparts, younger Americans regardless of party affiliation, espouse favorable perception about Islam and Muslims—especially college-aged ones. This latter trend certainly gives a sense of reassurance that the future is not as grim as many perceive it.

Turning the tide

Countering this anti-Muslim campaign, the White House has wasted no time in condemning Trump’s Muslim ban proposal. It was “totally contrary to our values as Americans” said Ben Rhodes, the Deputy National Security Adviser.

The Congress swiftly joined the executive branch to condemn Trump’s toxic polarization. House Speaker Paul Ryan who is also Republican delivered perhaps the harshest criticism and exposed the absurdity of Trump’s anti-Muslim campaign. “Not only are there many Muslims serving in our armed forces dying for this country, there are Muslims serving right here in the House working everyday to uphold the Constitution,” said Ryan.

At the state level, speaking at the Islamic Society of Boston Cultural Center, the largest mosque in New England, Chief Justice Ralph Gants (who happens to be Jewish) told the Muslim community “you do not stand alone…You have a Constitution and laws to protect your right to practice your religion, to protect you from discrimination and the denial of your equal rights, and to protect you from acts of violence that might be committed against you because of your religion or your nation of origin.”

In the entertainment business, many Americans like Oscar-winning Michael Moore, have expressed unequivocal outrage over Trump’s proposal. Moore went the extra mile. He crossed the picket line of hate by launching a “We Are All Muslim” campaign.

In academia, many have expressed their solidarity. Larycia Hawkins, a tenured professor of political science, has been suspended and her tenure has been jeopardized for saying Christians and Muslims worship the same God and for wearing a hijab.

At a personal level, a Christian friend of mine, Dr. Robert Reber, former dean of Auburn Seminary, wrote me this: “I have felt almost sick over the anti-Muslim reactions in this country which are often spurred by political figures and uninformed, if not racist, individuals in our society and Christian communities. It makes me so sad and wanting deeply to reach out to Muslims.”

Silver lining in the sky

Routinely our collective conscience gets traumatized by terrorist attacks carried by non-state actors and wars carried by mighty states. In a knee-jerk response to such traumatic experiences, narratives of hate and extreme reactions of one kind or another develop, and they, in due course, become the accepted norm.

Though Muslims have never been under greater threat within the U.S. than today, I believe that America is already in the process of calibrating its understanding of Islam and Muslims and ostracizing merchants of hate.

Contrary to the perception promoted by extremists on both ends that we are in an existential religious war, Muslims are not out there to hunt down Christians. These two faith communities, as well as the Jewish community, have lived together and prospered for centuries. And, despite the relentless campaign to demonize mosques as breeding grounds for terrorists, these spiritual sanctuaries are morally bound to promote all that is good and to forbid all that is evil.

Recently, in Mandera, Kenya, a group of Muslim passengers that media appropriately dubbed as the Mandera Heroes put their lives on the line in order to shield their fellow Christian passengers from being executed by al-Shabaab members who raided their bus.

These acts of solidarity against evil could ultimately diminish stereotypes and break the political walls that divide us. But we need the media, especially in the West, to not exclusively focus on the negatives and to celebrate this kind of heroism.

Collective Fate

With the current trajectory of deceptions and denials, we are collectively set to pay an enormous price in lives, security, displacement, and economic loss. Hate crimes and vandalism of mosques are at an all-time high. And the more  provocations continue, the more terrorist outfits such as ISIS will effectively radicalize and gain recruits.

Radicalism justifies terrorism in the same way that demonization justifies militarism. And, as it is apparent throughout the Middle East and many other parts of the world, terrorism and militarism fuel each other.

Let us be honest with ourselves—after all, our lives and the future of humanity depend on it. Militarism and terrorism are the two sides of the same coin and anti-Western and Islamophobia are simply their reflections. Now, how can we work together for our mutual interest?

Via Otrams

By Artur Kluz and Mikolaj Firlej

A currently debated topic is the impact of unprecedented advancements in breakthrough technologies on various areas of public policy. Optimists praise how technology changes our lives through enhanced communication, empowering individuals, raising awareness and spreading democracy throughout the world. Pessimists stress the repercussions of technological advancements: tottering digital security, and the rise of inequality—especially in countries exposed to progressive technologies.

In the areas of foreign policy and diplomacy, technology has brought about a tremendous amount of change. As Hillary Clinton once said during her tenure as Secretary of State: “Just as the internet has changed virtually every aspect of how people worldwide live, learn, consume and communicate, connection technologies are changing the strategic context for diplomacy in the 21st century.”

This article aims at presenting the most pressing challenges that stem from the relationship between advancing technologies and foreign affairs. In our point of view, the impact of breakthrough technologies on foreign affairs can be seen through accelerating transformation in five significant areas: security, institutions, participation, dialogue and leadership.

Security: Geopolitics online

The widely proclaimed shift from state-centric politics to non-governmental identities described as “shadowy networks of individuals” was first addressed openly by U.S. President George Bush in his 2002 National Security Strategy. It is true to some extent, that traditional underlying influences of state power are no longer the dominant catalysts at play. Indeed, the evolution of technology has empowered individuals and created new commanding media capable of challenging existing national supremacy, while directing a new world order. Although powerful-by-technology individuals play an important role, international relations are still mostly dependent on geographical variables and interests.

In the Information Age it is certain that the ever-increasing amount of global data and online storage of valuable information will bring incommensurable and occasionally conflicting value systems into ever closer contact. The proximity of country and entity online systems is increasingly hazardous.

In this era of fast information transfer, along with the rapid development of new-generation technologies, international relations among states are conflicting more so than a decade ago. However, states are much weaker and less capable of mitigating arising challenges in controlling security, popular discontent and cultural fragmentation.

The recent U.S.-China Summit on cybersecurity exposed all of the aforementioned problems. Tensions between these two countries have concerned recent cyberattacks, mainly against U.S. government computers. Presidents Barack Obama and Xi Jinping have agreed that their governments refrain from online theft of intellectual property for commercial gain, but Obama emphasized that he might still impose sanctions if the Chinese continue to sponsor cyber-intrusions.

The Summit showed, however, that technology can bring concurring values or interests into constant confrontation without clear and sufficient evidence of particular guilt and responsibility. It also presented how individuals like Edward Snowden—empowered by technology—can bring another dimension to state relations. The notorious whistleblower overshadowed evidence of the last U.S. cyber-espionage attack against China before the Summit and thus changed the negotiating position of the U.S. government.

Institutions: Redefining actions by institutions and alliances

International organizations (IOs) and alliances such as North Atlantic Treaty Organization (NATO) benefit hugely from data-driven technologies enabling them to deliver better service and exchange large volumes of information in real time. One may ask though, whether current IOs and alliances are prepared to tackle complex threats such as financial, development, online security and climate change challenges?

There is a growing concern that IOs founded after WWII, such as the United Nations (UN), International Monetary Fund, and NATO are out-of-date, stagnant and with ineffective decision-making processes to handle arising challenges. One cannot deal with today’s war-mongering neurotics with passive and verbose institutions, only “considering sanctions” as a means of mitigation.

Many IOs are increasingly losing their ability to govern and implement necessary measures to oversee the unregulated realms that technology has created. As recently as 2 October 2015, Sushma Swaraj, External Affairs Minister of India, criticized the UN for failing effectively to address new challenges to international peace and security.

In her view, the UN needs reform, stressing the importance of new, more transparent working methods and claiming the need for permanent membership by African and Latin American countries: “How can we have a Security Council in 2015 which still reflects the geo-political architecture of 1945?” reflected Swaraj. This recent call for action is only one example of growing concern over the condition of the UN in expecting that real change will come sooner or later. 

Participation : Social media and online platforms drive profound change in foreign policies

Although many observers note how the social media platforms such as Facebook and Twitter change global connectivity, the reality is that new technologies do not necessarily create democratic evolution online. Three major obstacles are identified.

First of all, new technologies empower individuals but can breed clusters of extremism, abuse, xenophobia and violence expressed on a number of online media and channels. One recent example is the enormous number of fake and distorted images of refugees with mocking memes that have circulated online as a kind of response to the widely proclaimed action of welcoming refugees (#welcomerefugees).

Secondly, authoritarians including countries and separate individualist entities benefit from technology. For instance, in Syria the internet is another weapon of war. The control of connections and website content gives the government great power during the ongoing conflict. Authoritarian governments are able to control technologies and use them to undermine social activism, thus gaining new forms of control and power.

Thirdly, the ineffective implementation of technology can be both a harmful and costly endeavor. It was the case of Healthcare.gov in the U.S., where even supporters of so-called “Obamacare” described the platform as a faulty and extremely overpriced governmental tech launch. Indeed, governments and institutions often grapple with poorly developed and protected platforms that cause more challenges than benefits.

The risks of both adapting and managing new technologies are as profound as not evolving to technological advancements. A number of countries have experienced major repercussions from either not adapting or not adequately managing technological evolution in recent times. With five billion more people set to join the digital world, these challenges shall remain on political and global agendas for years to come.

Dialogue: The art of diplomacy and international policy is not vanishing but being reinvented

Breakthrough technologies enable instant contact and thus create ease in managing diplomacy and organizing political dialogue. Referring back to traditional 18th or 19th century diplomacy, formal representatives had to wait for weeks or even months to receive relevant instructions and courses of action. As such, the points on agendas covered only the most important items needing to be addressed.

Nowadays, new technological channels have replaced outdated forms of communication. Officials have continuous access to instantaneous and live networks empowering not only organizational dialogue, but providing international communications enhancing responsiveness, action and regulation. That being said, currently most ambassadors and politicians use Twitter to interact with officials, policymakers and citizens.

So called “Twitplomacy” has been seen as a form of public diplomacy as it has been used not only by officials but also millions of citizens across the globe. “Twitter has two big positive effects on foreign policy: It fosters a beneficial exchange of ideas between policymakers and civil society and enhances diplomats’ ability to gather information and to anticipate, analyze, manage, and react to events,” writes former Italian Foreign Minister Giulio Terzi in his preface to the book entitled Twitter for Diplomacy. Indeed, 140 characters have changed drastically the way officials communicate with each other.

Another profound example is the Virtual Embassy of the United States to Tehran in Iran. The Virtual Embassy was developed by the U.S. State Department after the closure of the U.S. Embassy in Tehran. This Embassy has the same status as other traditional U.S. Embassies apart from one significant detail: diplomacy operates on a virtual level.

These are only two examples, whereas in different parts of the world, so-called ‘digital diplomacy’ has grown enormously in popularity, and this trend is likely to continue. However, as significant and impactful new progressive communication channels may be, a need still exists for fostering and strengthening official communication between countries and international entities.

There is an absence of effective digital platforms that could be used to assist in critical decision-making processes between different governments. Authorities often struggle to cooperate on the most essential issues during regular summits, formal gatherings and multilateral forums. Critical information exchanged is rarely archived and translated into actionable communication. A prime opportunity presents itself here for creating sustainable and prominent platforms for dialogue and decision making to enhance global governance and responsiveness.

Leaders: The human factor is still important but more complex

Although technologies serve leaders across the world as new sources of both power and governance, they require an increasingly complex formulation of regulations and rules of conduct, which can be difficult to structure, and enforce. Political leaders constantly are critiqued and assessed by analysts and pundits on their responsiveness to new technologies. In particular, the prominence of public opinion in political domains is a significant point for discussion. New technologies add another dimension to the classical dilemma faced by politicians—how to propose and implement effective policies while mitigating public popularity.

Henry Kissinger was right when he pointed out that “the mindset for walking lonely political paths may not be self-evident to those who seek confirmation by hundreds, sometimes thousands of friends on Facebook.” In this age of new breakthrough technologies, politicians and leaders do not require simply the authoritative support of policies by respective experts. Such support also very often is advocated by prominent online influencers having little or no direct linkage to political realms: celebrities, online commentators and corporations.

In today’s world, being a politician is more than just “taking a stand and being passionate” with a sense of devotion and responsibility for personal actions as Max Weber wrote long time ago. Politicians need to be pop-stars, too. New technologies bring another dimension into classical political dilemma—how to mitigate popularity and at the same time make tough decisions. In a world that is disseminating public opinion to the masses at an increasing rate and prominence, understanding the role of technology and its importance in political popularity has never been so complex.

Technology may be seen as a driver for both power and legitimacy in the areas of foreign affairs and diplomacy. What we need today are leaders who not only understand the complexities of technology, but who also use this technology to promote a global culture of human encounter that meets the legitimate needs of all peoples.

Artur Kluz, lawyer, foreign policy advisor and venture capital investor. He is a General Partner/Founder of Kluz Ventures, the investment firm focused on breakthrough technologies and global growth strategies.

Mikolaj Firlej, Master of Public Policy student at Blavatnik School of Government, Oxford University. Former Advisor and Assistant to the Secretary of State at the Chancellery of the Prime Minister of Poland.

The visit last month of Xi Jinping to Vietnam—the first visit of a Chinese president in 10 years—came at a crucial point in deteriorating relations, resulting from China’s construction of artificial islands and assertion of sovereignty in the disputed South China Sea (referred to as the East Sea in Vietnam). Xi’s visit was also significant coming shortly before Vietnam’s five-yearly congress in January, amid some uncertainty over whether the new leadership will lean toward Beijing or Washington.

Hanoi’s ties to Washington have grown since the Chinese parked an offshore oil rig off Vietnam’s coast in May 2014, and Xi’s visit last month was seen by many, including Carlyle Thayer, a Vietnamese expert and emeritus professor at the University of New South Wales, as an attempt to counter America’s influence. Thayer believes Xi used the visit to request a toning down by the Vietnamese side of a number of recent public comments asserting Hanoi’s sovereignty over the South China Sea.

Yet Hanoi has long been adept at playing Beijing off of Washington, as part of its “three nos” foreign policy—no military alliances, not allowing any country to set up military bases on Vietnamese territory, and not relying on any country for combating others (although an interesting juxtaposition occurred as Xi addressed the Vietnamese National Assembly while Japan’s defense minister was meeting his counterparts in Hanoi).

Despite the heated rhetoric over sovereignty issues, and the talks with Tokyo, Hanoi will be reluctant to hamper significant bilateral economic relations with Beijing.  China is Vietnam’s largest trade partner—trade and investment between Vietnam and China grew a robust 16% in the first nine months of 2015, reaching some US$60 billion. During this same period, Vietnam exported some $12.4 billion in goods to China.

During the meeting between Xi and Vietnamese party chief, Nguyen Phu Trong, the latter proposed that the two Communist nations lead the way forward in implementing the 2002 Declaration on the Conduct of Parties in the South China Sea (DOC) and agree on a Code of Conduct in the South China Sea (COC). For his part, President Xi emphasized China’s economic muscle, pledging $300 million in concessional loans toward the construction of the Mong Cai-Van Don highway project in the northern province of Quang Ninh and another $250 million in preferential loans toward the Cat Linh-Ha Dong urban overhead railway project in Hanoi. Xi also promised $129 million in social welfare aid over the next five years toward construction of schools and hospitals.

Yet amongst all the announcements of Chinese economic assistance, Japan and Vietnam agreed to hold their first ever joint naval exercise, with a Japanese warship expected to visit Cam Ranh Bay, a strategic naval base in Vietnam’s East Sea.

Before Xi left Hanoi, he addressed a crowd of young Vietnamese, declaring, “China rejects that a country should seek hegemony once it grows strong,” adding, “China will deepen mutually beneficial cooperation, interconnection and interworking with neighboring countries including Vietnam, [and] will always be a close comrade with socialist countries, a reliable friend with developed countries.”

Indeed, in the face of perceived threats from Beijing, Vietnam has embarked on its greatest military build-up in decades, albeit starting from a low base following economic problems after the Vietnam War and a dwindling level of support from its weakened Cold War patron, the Soviet Union. Yet Russia is now back, providing meaningful levels of support, according to Reuters, the Stockholm International Peace Research Institute, the International Institute of Strategic Studies and Vietnamese state media:

   NAVY

Vietnamese crews, supported by Russian advisors, operate four Russian-made, Kilo-class submarines from a purpose-built base in Cam Ranh Bay in south-central Vietnam.

Another two submarines are expected to arrive in 2016 and the entire fleet is expected to be fully operational by 2017. The Vietnamese 636.3MV Kilos are equipped with both anti-ship and land attack variants of the Klub cruise missile, heavy torpedoes and mines.

Vietnam is also acquiring Russian-designed ships equipped with anti-ship missiles and other weapons. The fleet currently includes 2 Gepard frigates, 6 corvettes and 18 fast-attack missile boats. New vessels will have enhanced anti-submarine weapons.

Less visibly, Vietnam has strengthened its coastal defenses with anti-ship artillery batteries and the mobile Bastion K-300P system, equipped with Orynx cruise missiles. The Orynx can also be fired from ships, planes and submarines.

Foreign security experts say Vietnam has made it potentially costly for China’s navy to operate within 200-300 nautical miles of its coast—an ability it did not have a decade ago.

This may be further boosted by a future deal to buy the Indian-Russian produced BrahMos missile, a supersonic anti-ship weapon that is the world’s fastest cruise missile. Chinese analysts say Beijing’s reclaimed islands in the South China Sea will give it extra protection against Vietnam’s strength from its southern coast.

    AIR FORCE

Vietnam operates an expanding fleet of 30 Russian-supplied Su-30 MK2 fighter-bombers, which patrols its military bases over the Spratlys. Hanoi also has older squadrons of Su-27s and even older Russian craft.

Though far outnumbered by China’s air force, which includes similar planes, Hanoi’s military chiefs have upgraded and expanded air defenses. It has obtained Israeli AD-STAR 2888 early warning radars and Russian-built S-300 surface-to-air missile batteries.

Vietnam had extensive experience in using earlier Russian-built systems to shoot down U.S. jet fighters and B-52 bombers over northern Vietnam during the Vietnam War.

Hanoi is also in talks with European and U.S. arms manufacturers to buy additional fighter jets, maritime patrol planes and unarmed surveillance drones.

    ARMY

Vietnam maintains a conscript-based force of an estimated 450,000 troops.

It has recently started manufacturing Israeli rifles under license, and also used Israeli and European technological help to refit up to 850 Russian T-59 and T-55 tanks.

Parliament this year passed laws lengthening compulsory military service from 18 months to two years, as well as extending deferments to allow more university students to serve after completing their studies.

During Chinese President Xi’s visit to Vietnam last month, he invoked the Golden Rule during his parting speech, saying, “Chinese people advocate such belief, do not do to others what you would not have them do to you.” While Vietnamese may have appreciated the fine rhetoric emanating from the Chinese leader, paraphrasing a quote from Confucius, Hanoi’s leadership appears not to be so taken in, given the extensive military buildup as outlined above.

Syrian refugees wait for mattresses, blankets and other supplies before being assigned to tents at the Zaatari Syrian refugees camp in Mafraq, near the Syrian border with Jordan. (AP)

Are Syrian refugees a threat to the security of the United States? In the wake of the deadly San Bernardino shootings, most Americans are on edge and many are reluctant to let in any more Muslims, especially Syrian refugees. Republican presidential candidates have picked up on this fear and the rhetoric is flying—Ben Carson compared them to “rabid dogs,” New Jersey Governor Chris Christie refuses to accept any “orphans under the age of 5,” and Presidential front-runner Donald Trump recently declared his plan to ban all Syrian refugees from entering the U.S. Both Carson and Trump even claim to have seen Muslims celebrating the fall of the World Trade Center on 9/11.

But the paranoia doesn’t stop there—more than half of state governors across the U.S. vowed not to take in any Syrian refugees. And last month, the U.S. House of Representatives voted to ban all Syrian (and Iraqi) refugees from entering the U.S. until more secure screening measures can be implemented.

Of course in the months leading up to the presidential elections, candidates are prone to making simplistic one-liners to cater to their constituency and advance their ratings in the polls. In reality, the problem of refugees for any country is quite complex—are the refugees fleeing political persecution or pursuing greater economic opportunity? How do we go about determining their motives and effectively screening claimants? Once refugees flee political persecution and land in a “safe” country, if they choose to forgo low-paying jobs in this safe country and immigrate to another country with better-paying jobs, are they then reclassified as economic immigrants? If we accept some from one religion, are we discriminating against other religions?

Since the November 12–13 attacks in Beirut and Paris, debate over immigration policy in many countries has intensified. In the U.S., the Obama administration revealed a plan to take in 10,000 Syrian refugees over the next year. Australia has agreed to take in 12,000 Syrian refugees after careful screening, a process authorities say could take up to a year. In Canada, authorities are busy screening around 100 people per day to reach an ambitious target of 25,000 by the end of year.

In Europe, Germany is struggling to deal with 180,000 refugees who have entered the country since the beginning of November. Each of these countries is toiling with the question of which refugees to accept—mothers and their children, the elderly, or young single males? Will Muslims, Christians, Jews, Yazidis, Druze, Bahá’ís, or Zoroastrians be accepted and in what numbers?

Since the brutal crackdown of a popular uprising in Syria by President Bashar al-Assad, the U.S. has accepted around 1,900 Syrians flown in by the Office of the United Nations High Commissioner for Refugees (UNHCR). Out of the 1,900 Syrian refugees living in the U.S., the vast majority are Sunni Muslim, with only 53 Syrian Christians, one Yazidi, and a handful of Druze, Bahá’ís and Zoroastrians.

This disparity is due in part to the way in which the refugees are selected, according to Nina Shea, director of Hudson Institute’s Center for Religious Freedom and a former commissioner of the U.S. Commission on International Religious Freedom. In a recent article for the National Review, Shea argues that the Syrian Christians in refugee camps face a wide range of discrimination and danger, including kidnapping and death. The U.S. relies upon the UNHCR for the vetting of refugees, and the UNHCR largely selects refugees for relocation and settlement from the rolls of the refugee camps. Most of the Syrian Christians have fled the refugee camps in fear, many traversing to Lebanon.

The process by which refugees are vetted by the U.S. needs to change to target those also outside of refugee camps, in order to allow the vetting of more persecuted religious minorities from Syria. U.S. presidential candidates, all of whom profess a strong belief in Christ and the teachings of Christianity, should have no hesitancy in accepting fellow Christians from Syria—those “rabid dogs” and orphans who have been persecuted halfway around the world.

American Christians should also welcome with open arms Syrian Christians and help them with the daunting task of resettling and adjusting to life in the U.S. Before the war, Christians in Syria numbered over 2 million and there were around 80,000 Yazidis, both groups having been subjected to abduction, sexual enslavement, forcible conversion to Islam, or beheading. Is it unrealistic to assume 10,000 acceptable refugees from these populations can be found and relocated?

Given the inflammatory rhetoric of American presidential candidates, the cautious posturing of U.S. lawmakers, and the paranoia of a fearful American population, the unfortunate truth is that choosing 10,000 Christians for immediate vetting may be the only way to quickly accept and settle any Syrian refugees in the coming months. Canada, citing security concerns, has chosen to accept only women, children and families, and refuse young, single men. Even under this conservative plan, more than half of Canadians oppose their resettlement.

Putting Christians on a fast-track vetting process would go some way toward reversing the discrimination already in place—to date, Syrian Christians have been allotted only 3% of the spaces for refugees in the U.S. despite comprising 10% of the Syrian population. While Syrian Muslims would continue to be subject to a more thorough and stringent security screening, Syrian Christians should be fast-tracked into the U.S. using appropriate screening methods to weed out imposters. Hopefully in the near future, these discriminatory screening policies can converge, and Americans can come to accept greater numbers of innocent refugees regardless of their faith. 

Via Richard Bistrong

Corruption is an affliction that blights much of the world. A perception study last year by Transparency International found that two-thirds of the world’s countries score below 50 on a scale from zero (highly corrupt) to 100 (very clean).

For many former communist countries still undergoing a period of cultural and institutional transition, corruption is a major barrier on the road to achieving its goals. It hinders competitiveness and makes investment decisions more difficult, while adding additional layers of cost and diminishing the ability for countries to provide adequate levels of welfare for their citizens.

Despite its shortcomings, one of the greatest single achievements of the European Union has been its success at mentoring and assisting former communist and Soviet states in their bid to transition to a functioning Western style democracy.

Romania is an interesting example of this process. Following the country’s accession to the European Union in January 2007, the country’s efforts to tackle corruption were modest at best. An investigation in 2012 into corruption levels in Romania by the  European Commission expressed serious concerns over the political situation and the ability to comply with fundamental principles of the Union.

Recently, however, evidence of progress has been more encouraging. Last year, the country’s National Anticorruption Directorate (NAD) successfully convicted 1,138 leading public figures, including top politicians, businessmen, judges and prosecutors. Furthermore convictions against high-level politicians and businessmen saw a significant increase compared to 2013; a shift in the anti-corruption drive that has continued into 2015 and has had a substantial social impact. A 2015 poll suggested that 60 per cent of Romanians trust the NAD, in contrast to only 11 per cent who express trust in parliament.

Perhaps the most high profile individual to be tainted by the clampdown on corruption is the country’s former Prime Minister, Victor Ponta, who stood down last month following mass protests triggered in part by charges of fraud, tax evasion and money laundering leveled against him. Other notable examples include Romanian media mogul, Adrian Sârbu, who was charged last year with tax evasion, money laundering and embezzlement and who is expected to stand trial in February 2016.

Ponta and Sârbu’s cases are particularly interesting as they indicate the endemic nature of corruption as well as its ability to traverse national borders with seeming impunity. One of Sârbu’s most notable business partners was Ronald Lauder, former US ambassador to Austria and son of the cosmetics tycoon Estée Lauder. Quick to identify the significant opportunities presented by the nascent media industry in Eastern Europe, in 1994 Lauder founded Central Media Enterprise (CME). By 1997, the news and entertainment company owned TV stations in Slovenia, Romania, Slovakia and Ukraine.

According to the New York Times, in Ukraine Lauder engaged with two local businessmen, Vadim Rabinovich and Boris Fuchsmann, whom the FBI and European law enforcement agencies suspect of having ties to Russian organized crime. In 2001 CME was investigated by US federal prosecutors over allegations it paid at least $1 million in bribes to Ukrainian officials for a valuable television license. These connections and allegations culminated in the magnate facing a lawsuit seeking $750 million in damages filed by rival broadcaster Perekhid Media Enterprises Ltd.

These examples demonstrate that while country’s like Romania have much work still to do in addressing rampant corruption, the fact that even serving Prime Ministers and leading international businessmen are no longer free from the spotlight of the justice system is enormously encouraging. The European Union deserves at least some credit for this transformation. It must not allow progress to slide.

The last 15 years has seen the creation of some of the most polarized media to ever exist in the last half century. The difference in perspective and truthiness from one media outlet to another is so divided that it has produced a narrative that can only exist in the solitudes of those who have a similar perspective. The common theme for all media and politically aligned parties is that their truth works against the elite.

Gaining a political foothold requires convincing  a polarized media and their supporters that the real stories are being hidden by some monolith of power, changing depending on who the elite of those opponents tend to be and their position of power in society. Both sides of the political spectrum have defined the battlefield of ideas that often do not exist as real societal issues.

If there is no single truth, lies can become powerful tools in an election. If lies can be legitimized, actions against opponents may go beyond simple media debates, shielding the application of justice and human rights if a criminal act can be silenced or validated.

The individual who wins the elections in the United States, France or Germany may be the one who can show not to associate with elites, even if they are some of the most wealthy and influential people to exist in those communities. A danger comes from over-reacting to someone who is the anti-elite as it turns simple media accounts into a mind numbing morass of phraseology and vitriol. The anti-elites put debaters in the position of being seen as defending an elite that works in the shadows against the interests of the general public.

This message might not resonate with the average citizen, but when their lives are directly affected or threatened, responses from either camp that tamp down discussions can promote grassroots support in the community against the ruling party at the time. Trends begin to play a more important role than policy as the latter fails to meet a certain standard of societal expectations. Those who last are those who are new to the game, and have been able to not use their power to corrupt or oppress. The left in Latin America, once considered a movement that would change North American dominance in the region, fell on their own sword for many of these reasons.

Brazil’s economic miracle was successful even before the rise in commodity prices wedded to a Chinese economic boom. Economic policy initially implemented under the former center right government before the electoral dynasty of the Worker’s Party (PT)  kept social policy in the forefront of the country’s agenda, while managing a balanced debt reduction strategy. Keeping the public debt under control and combining it with social programs placed Brazil to take full advantage of a commodities boom.

In recent years, the negative response to elitist international sporting events and the corruption that flowed between the PT and business elites has tarnished the party’s image and an confidence in President Rousseff’s government: her approval rates fluctuate around 10%. A citizen’s movement buoyed by an assertive judicial branch has gone beyond party politics in an effort to weed out corruption. Even former President Lula may be face criminal charges, and there is a strong popular movement to impeach President Rousseff.

Argentina was rocked by the death of a prosecutor investigating the former government’s tampering of information about an attack on the Jewish community. When he was found dead, documents revealed that he was on the verge of indicting President Cristina Kirchner herself, the populist leader of Argentina. In recent years, she had increasing difficulties to maintain her popular support and legitimize her socially-oriented, but fiscally irresponsible policy decrees. Her party recently lost an election to Macri, a pro-business candidate, with many in Argentina reorienting their distaste for an elite against the very government that routinely denounced the abuses of the high society.

Venezuela’s opposition gained a great deal of recent support as Chavismo and President Maduro lost the public’s trust. Despite an intensive media campaign in Venezuela promoting the populist government, the degrading state of Venezuela’s economy, standard of living and several violent actions taken against opposition politicians threatened to rob Chavismo of its political legitimacy. It is not possible to promote a narrative in Venezuela that no longer reflects the real issues in society, and while Maduro is still President, he could be the last supporter of Chavez’s revolution to hold power in the country.

2015 represents the beginning of the fall of those alleged elites, whether or not they are truly those in power. Often, political campaigning places those elites into power, but corruption scandals and the subsequent investigations and monitoring may put pressure on leaders to take actions to the benefit of society. Corruption tends to have deep roots, so while the mainstream media chooses sides, hopefully an intelligent community and assertive judicial community will push against elites from both political camps.