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Monday, August 5, 2013

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Wednesday, June 13, 2012

Change of address

I'm moving!
Daughter Pauline has created a new blog site for me so all new thoughts, articles and news will be added to that.

 www.peterbernfeld.com

Blimey Guv'nor, me a dot com. Hope I don't burst. All the articles on this site will be on the new one so I hope you take a look. Don't forget to change your bookmark.

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Saturday, June 9, 2012

Syria. Why no intervention by NATO?


                          
It’s all the fault of the former colonial power (for once not the UK)
Why is Turkey getting involved in all this?
You can understand Russia’s position, but the Chinese stance?

Before a taking a look at what’s behind the current mess in Syria, take a quick look at these links.
Confused by conflicting advice on salt intake? If you aren’t then maybe you should be.

You’ve all read of the Muslim Brotherhood, now read about them.


The Alawites rule Syria. Who are they exactly?

Officially, the Alawite sect is Shia Muslim, well sort of. Oh dear, getting complicated already. Shia and Sunni Islam parted ways over who was to succeed Muhammad as the leading figure in Islam. The Alawites take the Shia view on this, which naturally makes them unpopular in certain quarters, particularly the seventy-four percent of the Syrian population who are in fact Sunnis. Now don’t run away with the idea that this means the Alawites make up some twenty-six percent of the Syrian population. Estimates vary slightly, but it’s probably safe to say that thirteen to fifteen percent of the Syrian population is Shia, most of whom are Alawite. So let’s pull a figure out of thin air, because everybody else seems to, and state categorically that maybe twelve to fourteen percent of the Syrian population are Alawite. ‘Maybe’ is being categorical? As good as you’re going to get here, or anywhere else come to that. Even that font of knowledge, the CIA World Handbook isn’t too sure about it.

 Allow me to put this in some sort of perspective. Syria is a sort of secular-Muslim country, ruled over by a sect that constitutes perhaps twelve percent of the population. Ten percent of the population of Syria are Christians of one sort or another, so perhaps it’s only an accident that Syria isn’t a Secular- Muslim country ruled by Christians. Now that would have upset several apple-carts, wouldn’t it. The ultimate victory of Richard Coeur de Lion, and Salah ad-Din (Saladin) spinning in his grave.

Before moving on, let me just say that the Alawites have other differences from the Shia branch of Islam. They believe that Ali, Mohamed’s son in law was a divine figure, which puts them totally beyond the pale as far as the Sunni are concerned and a bit suspect in Shia eyes. They also embrace the Seven Pillars of Islam. All the rest make do with Five Pillars. Alawites also celebrate some Christian and Zoroastrian festivals, include Socrates and Plato amongst their list of prophets and believe in transmigration of souls. Naughty people come back as dogs or pigs, but righteous people return with ‘more perfect bodies’. Interesting thought, maybe if I’m good I could come back as Bo Derek and I’d never have to worry about having a date on Saturday nights again.

So moving on, how come the Alawites rule Syria? It’s all the fault of the former colonial power you see. France. This as I said makes a change from it being the fault of the British. After the First World War, in an attempt at exporting Equalité, possibly Fraternité but not Liberté, the French authorities decided that the minorities in Syrian society should be encouraged to enter some form of Government Service. The Alawites came from a mainly rural background, so they were deemed suitable canon fodder and rather than having to educate them and put them in the civil service, the Alawites were encouraged to join the army. Go forward to the revolution in the seventies when Bashar’s Dad Hafez seized power and most of the army were Alawite. Today, those who aren’t Alawite are so closely identified with the Assad regime that they might as well be, they’ll probably all be swinging from adjacent lampposts in the near future. Or will they?

Why does Russia support the Assad Regime?

Good question. On the face of it, you’d have to say they were backing a losing horse. They did of course support Pa Hafez, but the Russians aren’t known for their sentimentality in foreign policy.

Russian exports to Syria were worth $1.1 billion in 2010 and its investments in the country were valued at $19.4 billion in 2009 according to The Moscow Times.

Since the start of the so-called Arab Spring Russia has been losing client states and old friends at an alarming rate, but there is more to it than bidding a tearful farewell to aging dictators. The first question of course is how is Syria paying for Russian weaponry and whatever else the Russians succeed in flogging them?

Well here’s a clue. You see, at the collapse of the Soviet Union, Syria owed the unlamented communist state some US$13.4 billion. If they thought that they were off the hook because the Soviet Union no longer existed, the ‘new’ Russian regime soon disabused them of that foolish notion.   They generously ‘retired’ US$9.8 billion of the Syrian debt, provided Syria agreed to buy it’s arms from them. Not a difficult decision, everybody else had the quaint notion that you actually sold arms. Sold as in received payment in return. The Russians were playing a longer game, as so frequently is the case.

The French might have given ‘easy terms’, but as the former colonial power, they were a bit out of favour and in any case, Syrian relations with the West have always been a bit problematic. Following Syrian support for the Americans in Gulf-War One, it would be reasonable to assume that the Americans would have ‘sold’ them arms. There was a problem of course. Syria was (and is) still ‘officially’ at war with Israel, so any American arms sales would have been counter to Israeli interests. I’m sure the idea was floated that if Syria agreed a peace deal with Israel then the weapons would have been forthcoming. At that time, Israel might have been amenable to doing a deal over the Golan Heights so perhaps you are wondering why it never happened. Well, wonder no more. The majority of Syrians are Sunnis. The majority of the Palestinians are Sunnis. Old man Hafez Assad was an Alawite who in the nineteen eighties massacred some tens of thousand of Sunni Syrians. Nah, he wanted arms with no strings attached. He didn’t get that of course, at least not as it turned out. Additionally, America can turn a bit sensitive if it’s military hardware is used against civilians. Unless it’s them using it against terrorists and their associates, in which case it’s OK. Provided nobody knows much about it.

Tartus. A Syrian port on the Mediterranean which since the early nineteen seventies has been a Soviet, now Russian, naval base. Recent talks between Syria and Russia have centred on expanding Tartus so that it can now take the largest Russian navy ships. In fact, Assad Junior agreed to Tartus becoming a permanent base for Russian nuclear-armed ships. Handy if you are a bit miffed at the American ICBM shield in Europe and want to make a point. The point being that you’ve got a credible naval presence in the Mediterranean, which might come in useful in all sorts of scenarios, including one where the Americans redeploy most of their ships from the Atlantic to the Pacific to counter, or not of course, a growing Chinese naval presence.

It’s worth noting that in the seventies, arms exports to Syria accounted for ninety percent of Soviet military-related exports. Fairly recently, Russia lost out to the tune of US$4 billion in arms exports to Gaddafi. Currently, existing contracts with Syria are worth US$1.5 billion, or around ten percent of their annual exports, so one can understand why Russia is not keen to support any UN-inspired arms embargo on Syria. Of course, if Assad falls there is no guarantee that the new regime would continue to buy arms from Russia or allow them access to Tartus. More on that shortly.

I haven’t mentioned oil. Syria has some of course, but not all that much, so there is still a question of how they are paying for all the Russian equipment. A warm-water seaport has been a Russian dream of several centuries and in Tartus, on paper at least, they’ve hit the jackpot. I wonder what that’s worth?

                        Chinese Involvement


There is trade between China and Syria. China exports US$2.2 billions worth of goods and chattels to Syria and Syria exports US$5.6 millions worth of something to China. Yes, you did read that correctly, US$5.6 MILLION, or a bit less than one percent of the entire trade between the two countries. China is of course interested in what oil Syria has and is involved in developing new fields and extending the life of old ones. Why are they doing this? Well China feels the need to safeguard the supply of oil as much as it can and from wherever it can. The Chinese economy has to keep expanding at about ten percent per year to keep up with population growth and to avoid ‘trouble at mill’, as they say in Yorkshire. The Chinese economy is contracting of course, or at least not expanding at the required rate so there already is ‘trouble at mill’. Not to forget that there is still not a lot of love lost between China and Russia, so if Assad falls China may be well placed to step into the breach when the new Syrian regime slings the Russians out. It could also be that China just wants to give America ‘the bird’, and by not supporting UN resolutions aimed at the Assad regime, they can do this, causing the maximum annoyance with the minimum of effort. There might also be an element of one repressive regime supporting another.

               Where angels fear to tread?


So why isn’t America taking a stronger line? Is it merely wanting to get a UN resolution first and get Russia and China ‘on board’, or is there something else.

Much has been made of this being an election year in the States and as I pointed out in a previous article a second Obama term is not a given. Is this a case of wanting to ‘pussy-foot’ around until after the November election, or is it a case of keeping your powder dry for a confrontation with Iran. Certainly with economic conditions looking a bit ‘iffy’ on the home front, Obama might well be tempted to put on his sincerest face, look straight into the camera and announce that with a heavy heart America must once again take up arms in the altruistic pursuit of others freedom. This would boost the American economy and possibly make everybody feel a bit easier about re-electing him. With World opinion, with the exception of China and Russia, demanding that ‘something be done’ about Syria, this might appear to be a popular option on all fronts. So, why hasn’t it been done? After all, Russia has begun to make noises about relations between countries surviving a change in leadership, which if you were Assad might worry you somewhat. It hasn’t been done because it’s of what might come after the fall of Assad, and I don’t mean the ascendancy of the Muslim Brotherhood and yet another Islamist Government. America might well think that Sunni Islamists would have nothing to do with Shia Iran, and they could well be correct so the fall of Assad could be a poke in the eye for Iran, which might calm them down a bit. No, the clue comes in what happened when a Kurdish delegation went to Washington.

The Syrian Kurds didn’t get the reception they were hoping for. The US State department met them, but they were told to seek an understanding with the ‘Official Syrian opposition’. Shades of the French there, eh? We must be inclusive. America would not support a purely Kurdish opposition to Assad, but they would be sympathetic to Kurdish aspirations if they threw in their lot with the rest of the opposition. In other words, America wouldn’t entertain any sort of autonomous Kurdish region in Syria. Possibly because they have an idea what Assad’s fallback position might be. Possibly they don’t, that might not be unusual, but it is becoming if not clearer then at least a little less obscured.

                            Assad’s Game


Why does it appear as though Syrian government forces are trying to cleanse a coastal strip from the Turkish to the Lebanese border? Cleanse of non-Alawites that is. The fact that it’s going on not immediately obvious given the general mayhem in Syria right now, and I’m indebted to a Turkish journalist, Abdullah Bozkurt, who wrote a column in ‘Todays Zaman’, presenting a Turkish view of the situation. He raises some interesting points, some of which tie in with my previous comments concerning a Kurdish State.

 You’re just going to have to wait a couple of days for me to join up a few of the dots. Sorry and all that.

@peterbernfeld



Monday, June 4, 2012

Nato to overthrow Assad of Syria?




                         An unfinished revolution in Egypt, civil war in Syria and Iran seeking  WMD

Around the Right-Wing, Neo-Con world, the cry arises ‘why doesn’t somebody do something about the situation in Syria?’ By ‘somebody’, people have President Obama in mind even if they usually refer to America.

Start by taking a cool look at the latest events in Egypt. There was a leader-less revolution, a popular uprising against Mubarak. Once the protests started and the regime began to lose its grip on power, the previously banned Islamist parties stepped into the developing power vacuum. Due to their being organised, they won the election for the legislative body. Now however, as the reality of what they have voted for begins to sink in, the Egyptians have not voted en mass for an Islamist president. The people who started the revolution are still not politically organised, and are disappointed with the choices they have in the run-off presidential elections. In the meantime former president Mubarak has been sentenced to life imprisonment for causing the deaths of protestors, but the military commanders who carried out his orders have been acquitted. The Military of course are currently running the country so perhaps no surprises there. These verdicts have predictably brought protests from those who are staunchly anti-Mubarak and anti-military. There are fresh crowds in Tahir Square. It would be a mistake to think that they are all there because of the court verdicts. Some will be there because ‘their’ revolution has been hijacked, and gathering in Tahir Square is the only form of protest they can make. They are still not organised, nor do they have a defined leader, whereas the Islamists and the Military are organised and have leaders.

Presidential candidate Ahmed Shafiq, the last Prime Minister under former President Mubarak and widely seen as 'the army's candidate', has accused his Islamist rival, Mohammed Mursi, of wanting to create a sectarian state. Shafiq has accused Mursi of intimidating Coptic Christians and of wanting to repress women. Mursi has pooh-poohed this, saying that if elected he would resign from the Muslim Brotherhood and that there is no intention to force Egyptian women to take to the veil. Pull the other one Mohammed, that’s like saying the present Pope, who before he became Pope and was merely Cardinal Ratzinger the Prefect of the Sacred Congregation for the Doctrine of the Faith, the historical Inquisition, on becoming Pope resigned from the Inquisition and no longer supports anything that he was previously charged with upholding. I’m not quite sure how wanting to introduce Sharia Law squares with not expecting women to dress ‘modestly’, i.e. wear a veil in public and Mursi has not as yet explained. There will be some Egyptians who are thinking that this is not why they overthrew Mubarak. Some of these people will be in Tahiti Square but most will not. At least they won’t be until those calling for Mubarak’s retrial and wanting the death penalty have found something else to occupy them and left, then a new demonstration will most likely start.

 In Egypt, America supported the idea of democracy but was castigated in some quarters for abandoning long-term ally Mubarak. Bugger democracy, the Neo-Cons wanted at all costs a non-Islamist government. Didn’t America realise, so the argument went, what would happen if Mubarak was overthrown? One wonders what these pundits think America was supposed to have done? By America of course, they mean Obama. By the Right’s reckoning, somehow or other America should have engineered a transfer of power from Mubarak to a representative government that would maintain the status quo vis a vis Israel, have popular support and keep the Muslim brotherhood in check. A great trick if you can pull it off, but pretty much impossible in reality. All America could do was to be seen to support democracy, hold their nose and deal with whatever government was elected, hoping to influence them after the dust had settled. The Right blames Obama for throwing an ally to the wolves and thus, amongst other things, showing America as an unreliable friend. This is a view shared by staunch democrats and now nervous friends such as Abdullah of Jordan, the House of Saud and probably most of the other Gulf rulers. Interesting bed-mates, assuming you think the Right is actually interested in democratic democracy.

What should Obama have done? To try to influence events on the ground was clearly a non-starter, so should America have done something behind the scenes? The problem with this train of thought is exactly who do you exert pressure on and to what end? Obama did put pressure on the Egyptian Military to ensure that elections took place, to abide by the results and hand over power once a president was elected and a constitution approved. What more should he have been done? Nothing, frankly. Anymore would have been seen as meddling in Egyptian internal politics, which would have been the kiss of death for any candidates that America supported.

Teddy Roosevelt's advice to ‘speak quietly and carry a big stick’ is apt here. Once there is a functioning government in Egypt, that will be the time to try to influence events. Obama certainly has spoken quietly and in the form of financial aid, he has a big stick. The question is, will he use it if is in America’s interests that he do so? The Right of course say ‘no’. Their view of Obama is that he is anti-American, anti-Israel and pro Islam. How can an American president be anti-American? Simple, he doesn’t put his country’s interests first, according to his detractors. By that, they mean he doesn’t put what they view as America’s interests first.

Anti-Israel and pro Islam? The Right will point to the fact that Obama has encouraged the formation of an Islamist Government in Egypt, has not criticised the Turkish Government for it’s anti-Israel stance and it’s meddling in Syrian internal affairs, has encouraged the nascent Syrian opposition to include Islamist elements and has not acted fast enough over the Iranian attempts to acquire nuclear weapons. They will assert that Obama has pressured Israel to make concessions to the Palestinians whilst not applying pressure the other way. All American aid to Israel, in whatever form it takes, is merely a continuation of what was agreed by previous administrations and Obama has watered it down where he can. That he has been largely unsuccessful they say is due to Democrats’ support for Israel which even a Democrat President cannot ignore.

An unpopular but more charitable and in my view correct assessment of Obama is that he has tried a different approach to Middle East diplomacy, but  that approach has been overtaken by events on the ground. The question now is does he realise this and will he be ideologically capable of changing direction, always assuming that he is re-elected.

You might recall that Syrian President Bashar Assad is quite happily massacring his own people, ignoring UN resolutions and clinging on to power long past the time when most pundits had assumed he would be found cowering in the sewer pipe of history. How can this be? Why has America, fresh from the successful installation of a democratic government in Libya, not bombed the living daylights out of Syrian Government Forces in support of the Opposition? Why did they not either force a resolution through the UN or ignore the UN and act earlier?

To answer that is actually quite simple. It’s a two- part answer, and in part one I’m going to examine some arguments put forward by politicians and journalists of a right-wing persuasion as examples of typical muddled thinking. These arguments have appeared in various op-ed pieces around the World, but without naming names, they regularly feature in the Jerusalem Post. Israel is right next door, so the situation in Syria is of particular immediate interest to them.

The argument goes that NATO/America/ UN/the West, take your pick, missed an opportunity months ago to take decisive military action against the Assad regime and thus establish some sort of democratic government that would in some way or other be beholden to whoever had helped them and might not be Islamist in nature. Think of the tens of thousands already killed and others who may yet be killed when a civil war breaks out. All this could have been avoided if America/NATO et al had only acted.

There are two immediate problems here. For many months, there was civil unrest but no organised opposition, no ‘leaders of the revolution’, a lot like the situation in Egypt, where their revolution is about to enter it’s second phase. So exactly who should America support in Syria, ‘the people’? What happens after they bomb Syrian Government Forces? What do ‘the people’ do then? Where does the idea that American intervention would have ensured a western-orientated or at least western-sympathetic government come from? What evidence is there to support this notion? None, in a word.

Perhaps I should define ‘the Right’, or at least what I mean by it. I don’t mean those who are ‘conservative’ in their politics. I do mean those who believe that the interests of America and her allies are best served by deploying troops to foreign lands and imposing a political system, social norms and vaguely Judeo-Christian concepts of justice, law and order on an unwilling population, largely unfamiliar with what is being imposed on them. It took the West five hundred years to establish what we today consider as democracy, it’s not something that you can simply graft onto a new vine and expect it to flourish in five minutes.

Does any of this mean you shouldn’t defend your own values and hard-won freedoms? No, of course not, quite the opposite in fact. Having respect for other peoples’ way of life and religious beliefs doesn’t mean rolling over and playing dead. Sometimes you’re going to have to fight for what you believe in. Sometimes you’re going to have to insist that migrants coming to your country have to accept your laws and your way of life or don’t come. But sometimes you’re going to have to accept that others’ have different concepts of justice and freedom. Now I happen to believe that in ‘The West’, and you could substitute ‘democracies’ if you’re more comfortable with that word, we’ve pretty much got it right and particularly totalitarian Islamic countries have got it wrong, but I believe in leading by example, not by hitting them over the head. At least, not as a first option. If you are genuinely threatened then you have to respond, but not necessarily by invasion.

In Libya NATO intervened but by and large restricted themselves to support from the air. The result was that the campaign to overthrow Gaddafi took longer than it might have done, but the fact that ‘foreign boots’ didn’t overtly touch Libyan soil doesn’t seem to have made much difference to the political landscape. The country is in a mess, and human rights abuses continued to take place after the fighting was over. What finally emerges is yet to be clear, but it shows no sign of being particularly fond of the West or being more democratic than tribal in nature. At least, for the moment, Libya remains one country, despite an attempt at regionalisation. Not perhaps a stunning success, but as yet not a failure. The cynical would say give it time and it will be. I would say think of the five hundred year flowering of democracy in Europe, then dramatically shorten that timescale because of instant communications, mass media and social media. Don’t over-estimate the impact of facebook and twitter, but equally don’t dismiss them out of hand as the playthings of a bored, decaying Western culture.


 America and her allies went crashing into Iraq and failed to impose a government particularly grateful or well disposed towards the West. In fact, it’ll be something of a miracle if the country holds together as a single entity, and there’s one clue as to why nothing has been done in Syria. Iraq really can’t be portrayed as an example of successful military intervention and America, in the quiet of the night, realises it. If you are going to send in the troops, you have to buy into the concept of nation building, with all that entails in terms of economic burden and time. A strong case can be made for nation building in some circumstances, but there is no ‘half-way house’. It’s all or nothing.

The evidence seems to point to the fact that American/NATO intervention may staunch short-term bloodshed but doesn’t result in a government that is well-disposed towards the West, or at least anti-Islamist, Islamists being the big bogey-men of the Right just at the moment.

So why hasn’t America intervened in Syria? Has the ‘penny dropped’ that the only way to intervene is by nation building? Probably not, but there are other reasons why nothing has happened. In the second part, we’ll take a look at some of those reasons.


@peterbernfeld






Saturday, June 2, 2012

All the Presidents are men


So, you want to be President of America do you?


In the run up to the American November Presidential elections it’s amusingly distracting to put actual the policies of the candidates to one side, always provided you can determine what they actually are, and take a look at some statistics.

Obama is POTUS (President of the United States) number forty-four. There have been forty- three Presidents incarnate but forty- four terms of office. Grover Cleveland managed to get himself elected for two, non-consecutive eight-year terms, possibly proving that you can in fact fool most of the people most, if not all, of the time. Since nineteen fifty-one, under the terms of the 22nd Amendment, a person can only serve two terms as POTUS. Franklin Roosevelt died early in his fourth term during the Second World War, which was undoubtedly why the 22nd Amendment was introduced. Edward the Seventh, when Prince of Wales, famously said of his mother Victoria that it was all very well having an Eternal Father in heaven but one didn’t need an Eternal Mother on earth. Possibly America sat up and took note of his comment.

Of the forty-three Presidents, four died in office of natural causes, four were assassinated and Nixon famously jumped before he was pushed. Additionally there were six assassination attempts made against incumbent presidents, Gerald Ford holding the dubious distinction of having inspired two people try to kill him on separate occasions, and one attempt was made against Teddy Roosevelt when he decided to have another shot at being president, having successfully served two terms. Oops bad taste moment, I meant when he decided to make a further attempt at the Oval office having already served two terms. This means that POTUS has an equal 9.3% of either dying of natural causes whilst in office or of being assassinated. If however we lump together assassination attempts against incumbent presidents and successful assassinations, we find that the chances of somebody trying to be the leading actor in their own version of ‘The Day of the Jackal’ is 23.24%. The assassination technology gets better with time, so the odds of success have probably increased. Not a comfortable position to be in, I would have thought. For an incumbent president, that is. If you had almost a twenty-five percent chance of your being killed in the office, would you not be tempted to change your office for one with a more tranquil view?

Of perhaps more interest in this election year is the fact that of the forty-three Presidents, ten failed to secure their second term. Of the ten, three have failed since the Second World War. It would appear that getting that coveted second term is not the shoe-in that casual observers of the show might have imagined. To play with some statistics, and we all know about statistics don’t we, it would appear that 23.25% of all presidential candidates failed to be re-elected. That doesn’t sound so bad, but let’s look at elections post World War Two.

Perhaps voters became less deferential or perhaps the World became a more volatile place, that’s open to (another) debate. There have been twelve presidential elections from nineteen forty-five until two thousand and eight. Twenty-five percent of candidates were not re-elected. That perhaps isn’t the end of the numbers game though. If you take the view that a ‘run of bad luck’ started in 1976 when the ever-unlucky Gerald Ford failed to be re-elected, there have been eight elections and the percentage chance of failing to be re-elected increases to 37.5%. The other unsuccessful incumbents were Jimmy Carter in 1980 and Bush Senior (H.W.) in 1992. Obama may well be losing some sleep, and it’s probably nothing to do with Michelle telling him he’s in, as his re-election campaign posters announce. This could be unusually subtle play on words for an American political campaign or it could be unintentional, like Romney’s campaign poster that spelled America ‘Americia’. I suppose that could have been unusually subtle as well, in which case the folks down in Langley, Virginia are probably planning some office remodeling, another round of fake vaccinations and of course they still have a chance to actually kill Castro before he dies of old age.

To round off and up this game of musical numbers, POTUS has a twenty five percent chance of experiencing an assassination attempt and just at the moment a thirty-seven percent chance of not being elected for a final term. Why do they bother?

It’s the status, stupid! It certainly isn’t the power because the American system was designed so that the holder of the executive office doesn’t in fact have that much. To be sure, he (so far) is perceived as the most powerful man in the World. After all, isn’t there somebody who trails him around with the ‘nuclear football’, you know, where all the nuclear codes are kept? Now I don’t know this for a fact but I also reckon that at least one of the secret service men has been briefed to confirm that POTUS is not actually having a ‘brain fart’ if he ever reached for it and to stop him if he is. Probably by a bullet between the eyes. So much for absolute power then. I mean if you can’t nuke a country that has really annoyed you what’s the point of it all? Doing a Bush Junior and invading somewhere allegedly because a dictator tried to kill your Dad and because your Vice President’s oil company, allegedly, is finding business a bit slack is all very well, but for real satisfaction, you need to be able to order up a bright flash without having to consult anybody. Anyway, if POTUS had any real power Bush Junior would have ‘retired’ Bill Clinton for beating his dad in an election. See what I mean, it’s just not worth it.

A smart man might take the Eisenhower approach to the presidency and improve his golf game. A really smart man might not bother at all and aim at being a Supreme Court Judge. I haven’t checked but I don’t think many have been assassinated and it’s a job for life. Failing to be re-elected does not look good on the old CV and the after-dinner speaking fees are, I am reliably informed, less for a single-term president. Nobody wants to hear what you would have done next and positively nobody likes a moaner.

Of course, presidents seem to be getting younger, or am I experiencing the same age-related shift in perception whereby all policemen seem to be on day-release from school? Assuming that they are getting younger, and in Obama’s case will be around his mid-fifties when he leaves office, if he is re-elected, what do you do then?

@peterbernfeld


Tuesday, May 29, 2012

When is a bubble not a bubble?



Shock, horror. America to raise taxes


Needing to raise money for social programs, what does any Government do?
Either it can sell off assets or it can raise taxes.

Pakistan and the CIA

When is a vaccination program not a vaccination program?

American Treasury Bonds

In case you’d forgotten or not noticed in the first place, this year is an American Presidential election year. That’s right, it’s approaching that time when incumbent Presidents can either stop worrying about being re-elected and start worrying about how history will judge them or will be spending a lot of time writing their memoirs.

It’s also that time when Republicans will be desperately trying to demonstrate that Democrats are really ‘closet communists’, which translates into Democrats believe in radical, i.e any, social reform. The sort of reform that if any government in Europe tried to introduce it there would be people rioting in the streets. Rioting against benefit cuts.
So what has President Obama got up his sleeve that is so exercising the right? In two words, tax increases. Did I say up his sleeve? That would imply sleight of hand and the tax increases have been announced and are on the statute book, so no surprises there, surely?

Right now, American Treasury Bonds prices are, in simple terms, expensive to buy when looking at the yield. In the latest auction, seven-year bonds offered an effective yield of 1.18%. In reality, the nominal yield was 1.25% but the bonds were selling above par, at 100 14/32. Relax, that’s the end of the figures. What do they actually mean?

They mean that with the financial uncertainty in Europe, the ‘Fed’ can offer a low-yield bond and investors see them as a safe haven for their money. It’s as simple as that. The thing about ‘T Bills’ is that they are readily sale-able, unlike some stocks, which can tank and become unsaleable at almost any price. So what’s the ‘shock horror, bursting asset bubble’ story here?

America is raising the rate of Capital Gains Tax. From a current rate of 15% to 23.8% by Jan 1st 2013. That’s in law; it’s going to happen. The Right, or sections of the right-wing Republican media in America, are hopping up and down, shouting that the tax rate ‘might’ go up to 33.8% during 2013 if Obama is re-elected. Well, it might. Doubtless, he is planning to introduce some sort of welfare benefit reform during his last term, to secure his place in history as the President who actually did something for the underprivileged in American Society. Did I say the Right is hopping up and down shouting? Not strictly-speaking true. It’s only certain elements of the Republican press who think that the people who hold T Bills are incapable of reading the financial papers. Some blood-curdling figures are being bandied about. A tax-rise of 58% is already in law and it might be as high as 125%, apparently the largest tax rise in American history. Cripes, daylight robbery. Or is it?

Strictly speaking, considering the tax-rise from 15% to 23.8% already in law that represents a rise of 8.8%, and 8.8 is 58% of 15. Sounds cataclysmic doesn’t it, the end of financial civilisation as we know it. The ultimate triumph of communism over capitalism. Republicans are congenitally incapable of making any distinction between Socialists and Communists. Certainly, a rise of 58% sounds worse than saying the Capital gains Tax is going up from 15% to 23.8%.

There are predictions of a financial meltdow(n). Investors scrambling to sell T bonds before Dec 31st to avoid these extortionate ‘Goddam Commie’ tax increases. The price of T bonds plummet, the bubble bursts, worse than the property market etc etc, the final apocalyptic collapse of the American Dream. Er, not so fast. To pay capital gains tax, you have to actually make a capital gain and given that the American economy is showing signs of hesitant recovery the T Bills may not be selling above par at those yields for much longer. They’ll remain a haven for those looking for safety, but other investment opportunities may present themselves, meaning that investors and institutions change their portfolios, seeking a higher dividend yield. In other words, the price may well fall as individuals and institutions unload them irrespective of any tax increases, but of course a natural economic cycle doesn’t make a good ‘shock horror’ story, does it? And let’s not forget, taking a American-centric view, if jobs and manufacturing industries are sucked back into Europe and manufacturing output/exports rise there, the perceived safety factor of American Treasury Bills will diminish, also cutting prices. So no capital gain to pay tax on and not so much an asset bubble bursting as one deflating. Private investors might well decide to retain their holdings and take the guaraneed yield, it depends at what price they brought the bonds in the first place. Oh that’s right, they brought at above par. Not much of a bubble then, more a hedge against continuing uncertainty, except that there is no uncertainty about the tax rises. They’re not an uncertainty they’re a fact.

Some final figures and these reveal something of a surprise. China owns America, right? Everybody knows that, it’s common knowledge. Is that so? T Bills, aka American Government debt, are currently valued at US$14.3 Trillion. The value of the Chinese holding? US$1.2 Trillion or less than 10%. In fact, us dammed foreigners, long-lunch and excessive vacation taking crypto-communists to a person, hold about 31% of American Government debt. To put that another way, American individuals and institutions hold about 69%. See, I can play around with figures as well. If you compare that with France, where some 59% of Government debt is held outside of the country, it doesn’t sound so bad. And of course America is still seen as a safe haven for your money whilst France is seen as …. Insert your own word or phrase.

The CIA and the fake vaccination program


The CIA set up a fake vaccination program in Abbottabad in order to obtain DNA samples from children living in what was suspected, and eventually proved to be, Bin Laden’s lair. The vaccination program was aimed at Hepatitis B and usually it takes three doses before the vaccine has a chance of being effective. Allegedly only one dose was adminisistered.

According to various reports, not only was the CIA unable to actually obtain a DNA sample, but also they failed to complete the vaccination program. The Pakistani doctor who was apparently unwittingly recruited to run the program has recently been sentenced to thirty-three years for treason, plus another three years if he doesn’t pay a fine.
Now quite rightly the WHO (World Health Organisation) and other organisations connected with providing immunisations have pointed out the damage that this does to immunisation campaigns in areas where the motive behind them is already suspect, at least according to locals who fear that they are being sterilized or worse. A couple of questions remained unanswered. In fact as far as I can tell, they haven’t even been asked, in public at least.

What would it have actually cost the CIA to complete the vaccination program? Didn’t the doctor, a respected Pakistani surgeon who had worked in the area for a number of years, question the amount of vaccine he was given? Perhaps more interesting is why did he remain in the area after the raid on the Bin Laden compound? The CIA is not commenting, but I wonder if in the rush to condemn such apparently heartless behavior people are missing the fact that the program might have been completed? I’m certainly not an apologist for the CIA, and definitely not if the facts in this case are true, but it does seem to me that there is a bit of a shortage of facts on the ground. The trial of the doctor was held in secret and under the jurisdiction of a tribal court rather than the Pakistani High Court. Given that Abbottabad is a mere thirty- one miles from Islamabad, the capital of Pakistan, wouldn’t you have expected a highly public visible trial in a High Court?

Of course, the conventional answer to that is because the Pakistani government was complicit in hiding Bin Laden they would want to avoid a public trial. Doesn’t wash. What seems to be emerging, in general terms, is that the ISI (Inter Services Intelligence) agency, or at least sections of it, were complicit in hiding Bin laden. This was long-suspected by the Americans and had had poisoned US/Pakistan relations, aka slowed the flow of American funding to Pakistan, for a number of years. The Pakistan Government is involved in a long-running power struggle with the Military and ISI. It would have surely been to their advantage to hold a public trial. Under the Tribal court system that brought charges against him, the doctor had no access to a lawyer and was not present in court. He does have the right of appeal, but to which court? Interestingly, the Tribal Court that tried him has no jurisdiction in the area where the alleged fake program took place. As an aside, the Pakistan legal process can take years, with judges granting lengthy adjournments for seemingly minor reasons. The Tribal system is much faster in dispensing justice.

As I said, I am no apologist for the CIA, but there are some questions here that have not been publicly answered. Given that there was no public presentation of evidence, the statement that the vaccination program was not completed is based on hearsay evidence, obtained in an area where America and the CIA are not exactly flavour of the month. I can well believe that the CIA mounted an operation to obtain confirmation that Bin laden was present in the compound, after all the Seal team operation did amount to a gross violation of Pakistani sovereignty whichever way you look at it. Would the CIA have been so clumsy and obvious? Maybe, but it does seem to me that there has been a bit of a rush to judgement by those who are not members of the CIA supporters club. They may well be correct in their assertions. Or they may not. I think we should be told.

@peterbernfeld

Sunday, May 27, 2012

Bubbles, pretty bubbles: unfortunately not in a champagne glass.



                                                       The Russian Economy

I’ve pulled these statistics from a number of sources, but most of them seem to agree. I’m assuming that most of you are no more interested in economic minutiae than I am, with the proviso that as always ‘the devil is in the details’.
Russia
Ø      Is the largest producer of oil in the World and has the eighth largest reserves.
Ø      Is the second largest producer of natural gas and has the largest gas reserves.
Ø  Has the second-largest coal reserves and is the third largest exporter of coal, mainly to the Asia/Pacific region (AIPAC)
Ø      Annual exports valued at US$429.4 Billion
Ø      Annual imports valued at US$247.7 Billion

So, they’re basically laughing and can afford, this time, to take on America in a High-Tec arms race, right? Weeeell, remember that devil lurking in the details?
Ø      80% of exports are either commodities or defense-related equipment
Ø      The biggest trading partner is the EU, 46.8% of over-all trade
Ø      Exports to the EU are 44.8%. Next is the US at 5%, yes 5%!
Ø      75% of direct foreign investment comes from the EU member states

With the EU currently enjoying some minor financial difficulties, the picture isn’t looking quite so rosy. The EU member state that trades the most with Russia is Germany, and they’re a little preoccupied with Southern Europe right now. They’ll be keen to maintain their exports but may well want or need to cut down on imports, particularly if the Euro is devalued. Gosh did I say that? Well it did just occur to me that one way of attracting manufacturing industries into Europe, and providing the  growth that Queen Angela doesn’t seem to be so keen on, would be to devalue the Euro. Hell fire, that might even make it easier for Greece to remain in the Eurozone. Maybe that’s why QA isn’t so keen on growth, because as far as I can see that’s about the only way of stimulating the European economy. Devalue the Euro, exports become cheaper and more attractive outside the EU, imports become too expensive for ‘the workers’, which also stimulates production within Europe. With wages effectively lower, foreign manufacturers might just be tempted to move back into Europe, Toyota for example. Any bets on who will be the first European politician to say ‘the Euro in your pocket is not worth any less this morning’?

Given the strong possibility of the odd Geo-political hiccup torpedoing Russian exports, gas for example, personally I wouldn’t be worrying about creating stealth ICBMs and having any sort of spending contest with America. Why did I mention gas? Well readers in Europe will remember in 2009 there were concerns about the physical supply of Russian gas. There was a spat in the Russian Federation and although they denied it, the amount of delivered gas dropped off until Moscow smacked Kiev (Ukraine) round the head.  Naturally, this occurred during a particularly cold spell in Europe, and in Ukraine as well come to that, and there were uncharitable mutterings that Ukraine had ‘siphoned off’ some of the gas from the pipeline to Europe which runs through it’s territory. The same thing happened earlier this year, so whatever the problem is (Ukraine wants more money for allowing the pipeline to go through it’s territory perhaps?) it obviously hasn’t been solved just yet.

Enter Israel and Cyprus, not such an unlikely pair as they both have problems with Turkey. There have been major gas fields discovered in Cypriot and Israeli waters. The two countries are co-operating in the development of these fields and there are estimates that these finds  potentially constitute the second biggest available supply of natural gas to Europe. Perhaps the supply will be more reliable. Perhaps Greece would like to build a pipeline across its territory, with all the attendant economic benefits. There are of course political problems with Turkey, but a deal seems to have been cut with Lebanon which had originally claimed that the Israeli Leviathan Field was partially in Lebanese waters.

Back to Russia. Apart from exporting oil, coal and gas, their manufacturing industry is in a bit of a mess and suffering from lack of investment. The Russian banking industry spent about one third of its foreign reserves, US$600 billion, in 2007 propping up the Ruble, and although it held its value, the economy has not expanded to any great extent. Reliance on commodity exports is a reliance on the price of commodities, oil in particular, and the price has swung wildly. The Russian banking industry additionally received a US$200 billion injection of liquidity during the 2008/09 global financial crisis to help non-energy or exporting businesses repay loans when foreign investments pretty much dried up. They avoided a slump but growth remains a problem, as does a shrinking workforce and a basic lack of infrastructure throughout Russia. And don’t mention the grain harvest. A look at the figures reveals that Russia periodically has a problem feeding itself.

To give but one example, there is precious little foreign investment in the Russian coal industry. Total investment in the Russian coal industry is running at US$2 billion per year, of which US$40million is direct foreign investment, around 2%. This is a representative example of the problems of attracting foreign investment. Corruption is rife in Russia and they haven’t quite got around to sorting out the laws pertaining to private property and private investment. Given time they will. Given time Putin may succeed in shifting local manufacturing over to a more High-Tec base. Given time Russia may be able to financially take on the USA in a High-Tec arms race, but not right now.

One final thought about coal. Russia is the third largest exporter behind Indonesia and Australia. In the last couple of years, the industry has shifted its export efforts from Europe, due to falling demand for coal there, to the AIPAC region. In the AIPAC region, China is the biggest importer, but China owns the Australian mining industry. China is also heading for a fall. Yes true their economy is growing at 6.7% pa, but it needs to grow at around 10% pa if it wants to provide jobs for all new entrants to the workforce. Except some of those jobs are about to be exported to Europe, with Toyota leading the charge.

Looking at the over-all picture, one might say that if Europe catches a cold then Russia is going to get a dose of flu, given that a collapsing Europe desperate to attract jobs and not able to afford imports will effect the AIPAC region’s economic performance by sucking in manufacturing industries and hence jobs. That will lead to a fall in demand for Russian exports.

Whilst Putin may not be completely convinced about democracy, nobody could accuse him of not having Russia’s best interests at heart. He just needs to realise that those interests would be best served by a period of introspective economic reform and growth promotion rather than indulging in global politics. Given the potential of the Russian economy, if he can overcome decades of inertia and resist the temptation to replay the Cold War, then in a decade or so Russia will be a High-Tec economic power to be reckoned with. Then it will be the counterweight to America that Putin would like it to be. In the meantime, America isn’t about to collapse, despite the gloom and doom merchants. More on that next time, but in the meantime…..

Made that call yet Vladi?

@peterbernfeld

You might like to take a look at America's Chronicle 'Click click'
For further facts on the Russian economy dart your digit here 


Saturday, May 26, 2012

Spotted Blog?



This week I thought I’d give you a series of seemingly random dots, explore them individually then join them up in a series of articles, all a little shorter than previous ones. Sort of easily digestible bite – sized chunks if you will.

To start with though, a bit of literary news and a shameless unsolicited plug. Not actually a plug for my efforts as such, although I can tell you that one of my articles is slated for publication in Latitudes and Attitudes magazine in October or November. http://www.seafaring.com/Click here.

No, I want to mention an old chum of mine, Larry Jeram-croft who’s published a couple of cracking good books on Amazon The first one in the series, Sea Skimmer,
Is a fictional novel set during the Falklands War. Or is it? Fictional that is. This year is the 30th anniversary of the campaign and Larry, who was a helicopter pilot in the Royal Navy at the time of the conflict, is putting extracts with comments from his logbook on his blog, http://sowethereyet.blogspot.com/clickety-click.

For those who’ve read the book this will be a fascinating insight into the truth behind the fiction (always supposing the book is fiction). For those merely interested in military history it will provide a glimpse of what it was like to sail to the South Atlantic and go to war. OK, unsolicited plug over (er, cheque in the post then Old Boy?….. just kidding, this will come as a surprise to Larry. A pleasant one I hope).
To finish the literary news on a personal note, it would seem that Emma the Agent has found an illustrator for the Trembling Tim stories. I’ve seen some initial drawings and although there’s some ‘fine tuning’ to do, it’s all looking hopeful. More news as and when I have some.

Right then, let’s explore the first random dot.

Is Russia about to repeat a historical mistake?

A recent BBC report stated that Russia has just tested a new ICBM. Apparently, they’ve tinkered around with the first stage booster to make the launch more difficult to detect. It also has multiple warheads, which will make the whole kit and caboodle more difficult to detect and shoot down. Those ‘nasty ole Merkins’ have developed an anti-missile system and are installing it in Europe and other places. THEY say it’s for protection against possible rogue nuclear states or terrorist organisations that acquire nuclear weapons (and the ICBMs to deliver them? Come on chaps, really!) Vladi Putin sees this as a threat to Russia so they’ve developed the ‘stealth ICBM’.

A threat? Well yes, if you think that a purely defensive system would allow your ‘now sort-of friend and traditional long-term enemy’ to launch a nuclear strike against you whilst being immune from a retaliatory strike. Haven’t we been here before? Vladi, do yourself and the Russian economy a favour and give Gorbie a call. I’ll come back to this, but first.

Let’s connect a couple of dots. America has heavily backed development of the Israeli ‘Iron Dome’ anti missile system. Just recently, this system has successfully destroyed 90% of the small missiles fired at Israel by Hamas, from Gaza. A connection here, you might think, as in technology transfer? You know, ‘we’ll give you guys a budget to develop an anti-missile system. The chances are that you’ll get to extensively field-test it because we can always rely on the Palestinians to make a series of militarily futile but highly irritating attacks on Israel instead of sitting down and talking. Once we know it works, we can incorporate it into our new missile shield’.

 I wonder if the new American ABM system has a snazzy name, how about ‘Strategic Defence Initiative’? Oh wait; they’ve already used that. A system which can successfully destroy a metre-long metal tube in flight probably wouldn’t have too much trouble with tracking multiple warheads, but hang on a minute; didn’t the former-Soviets trumpet their MIRV (multiple independently targetable re-entry vehicle aka 6-10 nuclear warheads on one launcher) as the answer to any anti-missile shield system? MIRV might have given a first-strike capability then because the SDI technology was ‘some years away’ from development. Now it isn’t, we are now those ‘some years away’, and Iron Dome has shown that small targets can be regularly intercepted in flight. Sure the range needs improving, but the basic technology has been proven. The former Soviet Union is the former Soviet Union because they went bust trying to match American technology, real or imagined. The ‘Third World War’ was the first war in history won by one side outspending (and out-bluffing) as opposed to out shooting another. Well, the Americans always were good poker players, that hasn’t changed. Has the Russian economy changed since the heady days of Communism? I think we should take a closer look, but not right now.

                                                                         Pakistan


Pakistan has been complaining that America has been violating its sovereignty recently. They cite the Seal-teams’ unannounced raid on the late and in most quarter’s unlamented Bin Laden’s bijou town compound in beautiful downtown Abbottabad. Surely you remember that? The small compound situated next door to the Pakistani military academy, where presumably they train the Pakistani military to be ever vigilant, alert and watchful. Oh OKAY, it was just under a mile away, so it’s perfectly understandable that they missed it. Or knew exactly where it was, depending on whether you are the Pakistan Army, the Pakistan Government or ISI (Inter-Services Intelligence). No, let’s be fair about this, you would probably have to be in the ‘right’ department of ISI to know where Bin laden was, the other departments were busy helping the CIA look for him, on an expenses plus daily rate basis. Nothing like a unified approach to national security, is there? You just can’t beat it, unless you don’t tell them what you’re up to in their country. Anyway, Abbottabad has apparently long been a favourite tourist destination, so perhaps the Pakistan tourist authority is missing an opportunity here. Certainly visitors were attracted to Abbottabad, so what are they complaining about?

Apparently, heaven knows why, the Pakistan military is miffed that the Americans (never NATO you notice, always ‘The Americans’) manage to track down and kill Al Qaeda and Taliban members residing in Pakistan with apparent impunity. That’s both residing in apparent impunity and crossing the border with apparent impunity. Sometimes they chase them across the border in hot pursuit, sometimes they just cross the border and have a general nose round to see who they can turn up and sometimes they send drones across which have a lengthy nose around then kill people. Usually the right ones, but let’s not split hairs.

The Pakistanis are of course absolutely correct. This is a gross violation of their sovereignty but what really miffs them I suspect is there’s actually bugger-all they can do about it. Apart from actually cooperate with NATO (sorry, ‘The Americans’) in the fight against International Terrorism. Or Afghani freedom fighters, as some in ISI prefer to call them.

All this is complicated because Pakistan has nuclear weapons and if not ICBMs then launchers that can reach most of India and/or Afghanistan. India of course has just test-fired a missile that could hit parts of China, should Chinese troops ever misread their maps and cross the border into India looking for food or alternative employment. India is also a pal of the Americans, or at least was until they didn’t cut down on their imports of Iranian oil enough to keep Madame Clinton and her boss happy. Maybe if they did buy more oil from Saudi, which has ambitions of empire in the Gulf region to counter the growing Iranian military threat, then the Americans might sell them their ABM system. They don’t really need it, they ‘outgun’ Pakistan in every sense of the word but it would be handy to be able to threaten Pakistan with a first-strike that Pakistan wouldn’t successfully be able to respond to whilst not actually having to carry out the threat. After all, they might need the missiles to keep out job-seeking Chinese. What? Read on.

Castles (Toyota factories) in Spain

So, Toyota is about to build a new factory in Spain. Exporting one million cars a year they say to Europe (they’ll be cheap, economy models then) and the East coast of the USA. If things go according to plan the new plant will be operating 24/7, be the most modern cost-efficient and green –energy using plant that Japanese money (or EU subsidized funding) can buy and will provide direct employment for twenty-five thousand Spaniards. Plus no doubt associated jobs, which some estimate as high as two or three for every direct employee. This contrasts with a Toyota plant in China which currently exports to the east Coast of the USA amongst other places, which is not very energy efficient being built in the eighties and that Toyota have announced that they are closing. This plant creates NINE other related jobs according to the Chinese. Well, it did. Now it’s closing. Cheaper to manufacture in Europe now? Well there is a health care system in place in Spain, in China Toyota has to provide health care for its employees. The Chinese have occasionally gone on strike to get higher wages, and they have succeeded in their aim. The Spaniards may well be happy to get a job. Of course, the new plant will need steel to build the cars. It might be steel produced by an Indian-owned company but it probably won’t be steel produced in India because one of the rationales for building the plant in Spain is to cut down on shipping costs from China. Or India, as the case may be. Lucky the Indians have a deterrent to keep all those new Chinese job seekers out then. They’ll have enough of their own if steel manufacture moves to Europe because all those European countries have available work-forces and are now industry-friendly because they need to attract external investment. Like the sea, the tide of jobs flows one way, then after a while, it flows another.

Luckily, India has a friend who at a pinch has an ABM system available. They just have to cut down on oil imports from Iran, which is trying to develop ICBMs and nuclear weapons. They, Iran,  won’t succeed, probably because of sanctions and because their air-defence system (ADS) couldn’t cope with a determined aerial bombardment, launched by somebody who is determined that they won’t get nuclear weapons. Israel say, who has developed the Iron Dome anti-missile system with funding from America, so they can incorporate the technology in their new AMB missile shield that has Vladi Putin so worked up. Make that call Vladi, NOW!
The Iranian ADS might have posed a credible threat IF they had the Russian SA300 Surface to Air Missile system (SAM). They signed a contract with Russia in 2007, or not depending on which version of events you believe, and are anxiously, or futilely, awaiting delivery. They hope before the Americans repair their F22 Raptor aircraft that have allegedly been deployed to the Middle East.

In the meantime

Queen Angela (Merkel) is not enjoying the French revolution and wishes the revolting French could afford to buy their own damn cake and preferably eat it somewhere else.
America has a new investment bubble bulging. It’s actually a Government inspired one, but it does throw up some interesting statistics which give lie to a couple of urban myths.

Next time let’s take a look at the Russian economy and who knows, if Greece succeeds in staying in the Eurozone Chinese companies might be opening up new manufacturing plants there instead of in Guangdong.

@peterbernfeld