Normative Narratives


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Conflict Watch: In Negotiations With Iran, Nuclear Rights and Nuclear Wrongs

I don’t even want to acknowledge hopefully-soon-to-be-former Prime Minister Netanyahu’s address to Congress. Thomas Friedman sums up my feelings on the situation nicely:

I think such a deal would be in America’s interest if — if — it includes Iran agreeing to constant, intrusive and unannounced inspections of, and limits on, all bomb-making capacities and if, even after the specified 10 years, there are more-than-the-usual inspections. I would also welcome Congress accompanying the deal by granting the president formal authorization — right now — to use “any means necessary” to respond should Iran try to break out of the deal.

I still don’t know if I will support this Iran deal, but I also have a problem with my own Congress howling in support of a flawed foreign leader trying to scuttle the negotiations by my own government before they’re done. Rubs me the wrong way.

Letting the Israeli Prime Minister use Capitol Hill as the backdrop for a speech meant to undermine active negotiations involving not only our government, but the governments of the worlds most powerful countries, is indefensible.

The P5+1 Iran negotiations are an example of the international community working together towards a common goal. Inviting Netanyahu to Capitol Hill did not promote American values, it undermined the very Post-WWII international order America helped build.

Update: As if inviting Netanyahu to speak was not enough, today 47 GOP senators wrote a note to Iran’s leaders in another attempt to undermine negotiations.

The end of March deadline for a framework agreement is approaching, the sides are familiar with their counterparts interests and red-lines, and potential bargaining space has become clearly defined–we will know soon whether or not an agreement can been reached.

A few key issues remain in the negotiations:

  • Nuclear rights of Iran (number of centrifuges)
  • Preventing a “sneakout” / lengthening “breakout” time (international monitoring rights / acceptable levels of uranium enrichment)
  • Easing sanctions as slowly as possible / longest possible duration of the deal
  • How to manage Iran’s nuclear activities after the “sunset” period

“Break-Out” Time and “Sneak-Out” Capacity:

The efforts focus on the fate of Iran’s three major “declared” nuclear facilities, and on lengthening the “breakout” time for Iran to produce enough fuel for a single bomb. But those declared facilities are crawling with inspectors and cameras.

Unstated is the fear of a more problematic issue, referred to as “sneakout.” That describes the risk of a bomb being produced at an undetected facility deep in the Iranian mountains, or built from fuel and components obtained from one of the few trading partners happy to do business with Tehran, like North Korea.

The goal is to “make as airtight as possible” the language that would allow highly intrusive inspections to track the precursors and parts that feed Iran’s uranium complex, according to one participant in the negotiations.

The American officials are highly attuned to the findings of a once-classified 2007 National Intelligence Estimate that concluded that Iran ended its headlong race for a bomb in late 2003. But it also concluded that smaller-scale activity continued, and warned that “Iran probably would use covert facilities — rather than its declared nuclear sites — for the production of highly enriched uranium for a weapon.”

Behind the efforts to close a nuclear deal with Iran this weekend lies a delicate question that has been little discussed in public: how to design an agreement to maximize the chances that Western intelligence agencies would catch any effort to develop an atomic bomb at a covert site.

During his interview with Charlie Rose, Morell warned that the focus on declared centrifuges is misplaced, because he expects that if Iran were to try to build a bomb, it would do so in secret. The only protection against that, Morell said, is unannounced inspections at any place in the country at any time.

“If you are going to have a nuclear weapons program, 5,000 is pretty much the number you need,” Morell, now a CBS analyst, said on Charlie Rose. “If you have a power program, you need a lot more. By limiting them to a small number of centrifuges, we are limiting them to the number you need for a weapon.”

This fact that bombs require fewer centrifuges than power is a source of frustration for Albright, a physicist with the Institute for Science and International Security.

“I wish it were reversed,” he told us. “Then we could easily tell if the program was for weapons.”

A bomb requires about 25 kilograms of U-235 enriched to the 90 percent level. If an agreement limits Iran to about 9,000 centrifuges, that would be sufficient to produce enough bomb-grade material but would leave Iran well short of the capacity to generate fuel to power nuclear power plants.

The “Sunset” Problem:

One major issue is the “sunset” problem — that is, what happens after the accord, which would limit Iran’s nuclear program in return for lifting economic sanctions, expires. The length of the accord has not been decided, but it could be 15 years or less.

Prime Minister Benjamin Netanyahu of Israel expressed alarm in his Tuesday address before Congress that Iran would be free to vastly expand its network of centrifuges, which are used to enrich uranium, after the accord ends. That, Israeli officials have argued, would greatly compress the time that Iran would need to develop nuclear weapons and would encourage Arab nations in the region to follow suit.

Administration officials assert that that criticism is off base. But they have yet to detail what combination of verification measures and possible constraints on Iran’s nuclear activities would remain in place.

This has become the main sticking point. I have heard ideas floated of pre-authtorizing U.S. military / UNSC response as a deterrent. The international community needs an effective and possibly automatic mechanism in place should Iran decide to pursue nuclear weapons during / after any potential agreement.

Deal or No-Deal?:

As a Jewish-American, I am as apprehensive as anyone about the idea of a nuclear Iran. But in order to move forward we must recognize the nuclear rights of the Iranian people, while addressing the legitimate security concerns a nuclear Iran would cause.

I have heard people argue that Iran does not need nuclear power because it is an oil producer. But from the perspective of sustainable development, building a nuclear power industry would help Iran diversify it’s economy and produce zero emission energy.

While the P5+1 nations are clearly negotiating from stronger economic ground, it could be argued that Iran is negotiating from a stronger geopolitical position. The Iranian government, while lacking in may human rights aspects, does a decent job of meeting the economic and security needs of its people. Furthermore, Iran is contributing significant ground troops in the fight against ISIL, something that is in short-supply in the American led coalition.

Given the current security context in the Middle-East, a challenge to the Khamenei regime is unlikely. The Iranian leadership knows the international community needs as many stable parties in the region as possible. The narrative of a power asymmetry between the two sides–that Iran needs a deal more–has been overblown.

It has been acknowledged by all sides that negotiations are a long-shot. President Obama recently said any agreement would have to include at least a 10 year freeze of sensitive nuclear activities, an idea the Iranian camp quickly stated was “unacceptable But the two sides continue to talk, showing that despite harsh rhetoric bargaining space still exists. Progress continues to be made, and all evidence suggests Iran is not using negotiations to stall while developing a nuclear bomb:

“Over the last year and a half, since we began negotiations with them, that’s probably the first year and a half in which Iran has not advanced its nuclear program in the last decade,” Obama said in a December 2014 conversation with CNN’s Candy Crowley.

Obama’s comments were largely accurate, according to experts. The agreement signed in November 2013 has made it harder for Iran to produce weapons-grade nuclear material, we found. International observers report that Iran complied with the terms of the temporary agreement. The amount of enriched uranium is less, and the country’s facilities to produce weapons-grade material has been curtailed.

Getting a deal done is not determinant of success. A bad deal is not better than no deal, it is just a bad deal; coming away with an agreement just to claim a diplomatic success would be catastrophic. But, contrary to what Bibi would have you believe, a deal with Iran need not be inherently “bad”.

In my opinion, a failure of the negotiation process would not be failing to reach a deal. A failure would be letting prejudices and distrust undermine the possibility, however remote, of reaching a “good deal”.

Regardless of the outcome, these negotiations have brought to the forefront certain issues Ayatollah Khamenei can no longer hide from. Is Iran’s nuclear program for peaceful or military purposes? Whats more important, Iranian national sovereignty or the standard of living of Iranian people? These questions will be answered by actions, not words, for the whole world to see. 

In the event of no-deal, it will be important that the international community can credibly claim they did everything they could, and that Iran was an unreasonable negotiating partner. In order to meet this criteria, we must ask for meaningful concessions from Iran (long-term unfettered access by inspectors, slow easing of sanctions) and making meaningful concessions ourselves (recognizing Iran’s legitimate nuclear rights).

Despite efforts from all sides to derail the negotiations, it appears all diplomatic avenues are thankfully being exhausted.

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Green News: The U.S. and China Discuss Energy Poverty, Sustainable Development in Africa

“Common But Differentiated Responsibilities”:

During the recent APEC summit, President’s Obama and Xi Jinping announced what could be a landmark environmental agreement. The U.S. pledged to reduce carbon emissions by 26 percent to 28 percent from 2005 levels by 2025. China pledged to reach peak emissions by 2030, while increasing its renewable energy consumption to 20% of total consumption (China currently gets about 10% of its energy from zero emission sources).

This announcement has been received well by the international community. With the two largest GHG emitters on board (in gross emissions, the map above shows per-capita emissions), many believe this announcement could galvanize support for a legally enforceable climate treaty, to be finalized during the 2015 UN Climate Change Conference in Paris.

Another potential area of cooperation, which has received far less attention but is nonetheless significant, were discussions between the U.S. and China regarding clean energy investment in Africa (original article):

The United States is considering partnering with China on improving electricity in Africa and the proposal could be part of bilateral discussions when President Barack Obama visits Beijing next week, two sources involved told Reuters.

The 48 countries of sub-Saharan Africa, with a combined population of 800 million, produce roughly the same amount of power as Spain, a country of just 46 million.

The shortage imposes a massive burden on economies in the continent, constraining growth and leading to hundreds of millions of people remaining mired in poverty.

China’s policies in Africa have also been described by some African leaders as “neo-colonial” – lending money to impoverished states to secure natural resources and support state-owned Chinese construction companies.

U.S. Secretary of State John Kerry hinted this week that discussions during the APEC conference to conclude a Trans-Pacific Partnership (TPP) would involve energy agreements in other parts of the world.

“The TPP is not only a trade agreement but also a strategic opportunity for the United States and other Pacific nations to come together, to bind together,” Kerry said in a speech in Washington on Tuesday.

“Second, powering a clean energy revolution will help us address climate change while simultaneously jump-starting economies around the world,” Kerry added.

Approximately 1.3 billion people in the world live without access to energy, 95% of which live in Sub-Saharan Africa or developing Asia. Without access to energy, it is impossible for a society to modernize; energy access is an indispensable component of poverty reduction. How those who currently live without access to energy fulfill their energy needs will be a primary determinant in meeting global emission targets.

According to the International Energy Agency, 2/3 of known fossil fuel reserves must stay in the ground in order to reach global emissions targets. This will require both ambitious climate agreements from large emitters such as the U.S. and China, as well as aggressive investments in clean energy in countries that do not currently emit as much.

(For more reading on Africa’s Energy and Economic landscape, check out the 2014 World Energy Outlook Special Report on Africa)

Natural Resource Revenues, Accountability, and Development:

The Post-2015 Development Agenda, while appreciating the role of official development aid (ODA) in financing development initiatives, also recognizes the limits of relying on such a volatile source of funding. In order to reliably secure the finances needed for sustainable human development, developing countries will need to mobilize natural resource revenues in a responsible way.

This is admittedly  tall order. Historically, the “natural resource curse” has led natural resource revenues to be extracted by corruption rulers, cementing the rule of regressive, extractive regimes. Nigeria’s Sovereign Wealth Fund, while imperfect, provides a model for bringing transparency and accountability to natural resource revenue management.

Neocolonialism and corruption will not lead to development. When it comes to investing in Africa, the “return on investment” is in creating stable, resilient allies, who can positively contribute to global security and become new markets for trade; it is a long-game, not a short-game.

Lots of people have their hands out to grab resource “rents”. Therefore, a strong network of accountability is required if natural resource revenues are ever to benefit a countries poor / marginalized. This network includes social accountability (individuals, civil society organizations, and NGOs); corporate accountability (businesses operating in developing countries); and good governance at all levels (local, national, and international).

The Extraterritorial Responsibilities of Global Leadership:

During the APEC summit, President Obama urged China to be a partner in ensuring world order:

U.S. President Barack Obama said on Monday a successful China was in the interests of the United States and the world but Beijing had to be a partner in underwriting international order, and not undermine it.

“Our message is that we want to see China successful,” Obama told a news conference. “But, as they grow, we want them to be a partner in underwriting the international order, not undermining it.

He urged China to move “definitively” to a more market-based exchange rate and to stand up for human rights and freedom of the press.

At the risk of sounding cliche (or like a Spiderman move), with great power comes great responsibility. If China wants to be recognized as a global leader, it must show the world it is capable of fulfilling the obligations associated with such a role.


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Green News: US-EU Free Trade Agreement–Putting the Cart Before The Horse


Negative Externality

Original article:

Officials familiar with the EU’s proposal have told Reuters the European Union will offer to lift 96 percent of existing import tariffs, retaining protection for just a few sensitive products such as beef, poultry and pork.

“This is just the first step, but it sends a message that no sector will be completely shielded from liberalization,” said one person involved in preparing the EU offer. The official declined to be named because of the sensitive nature of the talks. Two other European officials confirmed the offer.

Tariffs between the United States and the European Union are already low, and both sides see greater economic benefits of a transatlantic accord coming from dropping barriers to business.

The United States and the European Union are seeking to seal a trade deal encompassing half the world’s economic output, hoping it can bring economic gains of around $100 billion dollars a year for both sides.

All moves to lower the cost of trade are seen as beneficial for companies, particularly automakers such as Ford, General Motors and Volkswagen, with U.S. and European plants.

EU cars imported into the United States are charged a 2 percent duty, while the EU sets a 10 percent duty on U.S. cars. Including even higher duties for trucks and commercial vans, the burden for automakers amounts to about $1 billion every year.

I have generally been supportive of the US-EU Free Trade Agreement. Two large developed economic blocs dedicated to human rights principles should be able to draft a reciprocal FTA without the adverse human rights implications of the Trans-Pacific Partnership Agreement (TPP) (whether they will remains to be seen).

However, another concern comes to mind. It is a concern that is inherent to all free trade agreements, but more-so the further the geographical distance between partners. I am talking about emissions released from the transportation of goods. In the absence of a global carbon pricing mechanism, environmental concerns are likely to take a backseat to immediate economic interests.

Trade agreements result in increased emissions from the shipment of goods. The purpose of any FTA is to increase the flow of goods by lowering the cost of doing business between partners. Emissions from trading represent a “negative externality“–a cost to society not reflected in the market price of a good. In the absence of a carbon-tax, when the only considerations for transatlantic trade are comparative advantage and transactions costs, any U.S.-E.U. FTA will naturally result in greater emissions than “socially optimal”. Remember, the main purpose of a carbon tax is not to raise revenue, but to reduce carbon emitting activities in favor of more environmentally friendly substitutes.

The E.U. and U.S. “are seeking to seal a trade deal encompassing half the world’s economic output, hoping it can bring economic gains of around $100 billion dollars a year for both sides”; this economic gain should be subject to a carbon tax. An agreement encompassing half of the worlds output, between ideologically aligned partners, is an excellent opportunity to begin implementing new human rights and environmental norms. Failure to do so mainly serves large corporations (although partly consumers as well in the form of higher prices, depending on the elasticity of demand for a good), at the expense of vulnerable groups and future generations.

With all the political rhetoric about overcoming inequality and the costs of environmental degradation, and in light of the damaging effects of human rights violations on economic development and national / global security, it would be a grave mistake for the governments involved to continue to put GDP growth above all else. This outdated priority undermines other foreign policy and domestic goals the U.S. dedicates vast resources towards. 


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Conflict Watch: The Deteriorating Syrian Civil War and Humanitarian Crisis

The Syria sinkhole

The Syrian opposition recently offered a dangerous ultimatum, which is symbolic of the overall deterioration for the prospect of a political transition in Syria:

“The Syrian opposition will not attend the proposed Geneva conference on the crisis in Syria unless rebel fighters receive new supplies of arms and ammunition, the top rebel military commander said Friday.

‘If we don’t receive ammunition and weapons to change the position on the ground, to change the balance on the ground, very frankly I can say we will not go to Geneva,’ Gen. Salim Idris said in a telephone interview from his headquarters in northern Syria. ‘There will be no Geneva.’”

“Mr. Assad’s military position has been strengthened by flights of arms from Iran and the involvement of thousands of fighters from Hezbollah, the Lebanese militant group. The change of fortunes on the battlefield was illustrated last week when the Syrian military and Hezbollah fighters captured the town of Qusayr.”

“The proposal to hold talks in Geneva at a point when the Syrian opposition has suffered a bitter reversal has led many in the opposition to question the West’s strategy. In effect, they say, Mr. Kerry is insisting that the Syrian opposition sit down with representatives of a Syrian president who appears as determined as ever to hang on to power and at a time when the opposition’s leverage has been diminished.”

“‘There is agreement on one point within opposition circles: the regime, Iran and Hezbollah, supported by Russia, aim to win; the U.S. aims for talks,’ said Frederic C. Hof, a senior fellow at the Atlantic Council and a former senior State Department official who worked on Syria transition issues. ‘This helps to explain the opposition’s reluctance to attend a Geneva conference and the difficulties it’s having organizing itself around a coherent goal.’”

“At the State Department, Mr. Kerry and his aides have long said that it is vital to change Mr. Assad’s “calculation” about his ability to maintain his grip on power in order to facilitate a political transition.”

“At a meeting in Istanbul in late April, Mr. Kerry announced that the Supreme Military Council should be the only funnel for providing Western and Arab military support to the opposition.”

“General Idris said that while the West has been debating how much military assistance to provide to the moderate opposition, extremist groups like the Nusra Front have begun to play a more prominent role in the struggle against the Assad government.

‘They are now winning sympathy from the people,’ he said. ‘They are very well financed.'”

This is essentially textbook protracted social conflict (PSC). The Syrian government denied the majority of Syrians the human rights they believed they deserved. Peaceful protests were met with violence, turning the ideological divide into a civil war. As the war has progressed, opportunistic extremist groups (Al Nursa for example), seeing a void in Western support for the rebels, have filled that void.

This further complicates American intervention, as arming the rebels could eventually lead to greater military capabilities for anti-American Jihadist organizations.

The call for greater European intervention is well heard, and steps have been made in order for Europe to put itself in position to provide weapons to the opposition should peace-talks not bear fruit (which is not unlikely, but they must at least be attempted). But the Syrian opposition has to realize it cannot try to force military aid, that it must play ball and prove in open forum that Mr. Assad’s “calculations” will not be changed (except to be further emboldened by bolstered support while the opposition loses momentum).

It is an order of operations thing; I truly believe that if the opposition comes to Geneva and makes a real attempt to negotiate a political transition, that if that attempt failed, European powers would provide more military support to the Syrian Supreme Military Council.

Another Western ally that is being dragged into the Syrian sinkhole is Israel. This past week, fighting broke out along the Golan Heights.

“The United Nations Disengagement Force (UNDOF) monitors the buffer zone between Syria and the Israeli-occupied Golan Heights.”

“Austria – which contributes about one-third of UNDOF’s troops – has announced its decision to withdraw its soldiers, reportedly citing a lack of freedom of movement and an unacceptable level of danger to its personnel.”

“‘Everyone agreed that UNDOF should continue in its mission, even if it is temporarily reduced in its ability to fulfill the current mandate,’ Ambassador Mark Lyall Grant of the United Kingdom, which holds the rotating presidency of the Council for June, told reporters after closed-door talks on the latest developments.

“‘Everyone felt that UNDOF played a key role in guaranteeing the 1974 ceasefire disengagement agreement between Israel and Syria and also acting as a conduit of communications, including in the last few days between Israel and Syria,’ he added. ‘It was therefore an important symbol of the stability across the Israel-Syrian border.'”

Russia has offered to replace the Austrian troops. Aside from the obvious conflict of interest Russian troops would represent in Syria, the offer was rejected on legal grounds:

The UN has declined a Russian offer to bolster the understaffed peacekeeping force in the cease-fire zone between Israel and Syria. Austria has said it would be withdrawing its troops from the Golan Heights.

UN spokesman Martin Nesirky said on Friday that permanent Security Council members were barred from deploying peacekeepers in the Golan Heights, under the terms of the 1974 cease-fire agreement between Israel and Syria.”

Israel would like to remain out of the Syrian Civil War, but the small military power continues to collect intelligence on the Syrian military and strongly reaffirms it’s right to protect itself:

“The confluence of events confronted Israel with the complex reality of a civil war just across the border in which both sides are hostile to the Jewish state. Hezbollah has vowed in recent weeks that it would facilitate attacks on Israel through the heights. And the most effective rebel force is made up of radical Sunnis aligned with Al Qaeda, while many of the other militias are led by self-identified Islamists.

The result has been a kind of paralysis in Israeli society, where options are debated but no clear consensus has emerged about which outcome of the Syrian crisis is preferable or how to prepare for it.”

If Western powers decided to intervene militarily, they would have to rely on Israeli military supremacy and geographic position to support the operation (Turkey is another important geopolitical ally, while Egypt remains a bit of a wild card). The Syrian opposition and Israeli leaders should be in communication with each other (if they are not already) as they are likely to need to have a working rapport in the foreseeable future.

All the while, the silent majority of Syrian refugees and internally displaced peoples continue to bear the brunt of the suffering and human rights violations, threatening regional stability in the Middle-East:

“The United Nations launched a $5 billion aid effort on Friday, its biggest ever, to help up to 10.25 million Syrians, half the population, who it expects will need help by the end of 2013.”

“The appeal comprises $2.9 billion for refugees, $1.4 billion for humanitarian aid and $830 million for Lebanon and Jordan, the biggest recipients of Syrian refugees.”

“The appeal updates and multiplies the existing aid plan for Syria, which sought $1.5 billion to help 4 million people within Syria and up to 1.1 million refugees by June. The worsening conflict soon overtook those projections.

The new forecasts expect the refugee population to more than double to 3.45 million from 1.6 million now, based on current numbers arriving in Lebanon, Jordan, Turkey, Iraq and Egypt.

But it assumes the number of needy Syrians inside the country will remain static until the end of the year at 6.8 million. The number of internally displaced Syrians is also assumed to stay where it is now, at about 4.25 million.

That means the current plan could again turn out to be an underestimate if the fighting goes on.”

“‘We have reached a stage in Syria where some of the people, if they don’t get food from the World Food Programme, they simply do not eat,’ the WFP’s Syria Regional Emergency Coordinator Muhannad Hadi said.”

“A few months ago I would like to recall that there was a donors’ conference in Kuwait, and Persian Gulf monarchies promised to donate hundreds of millions of dollars to the U.N. agencies in order to help Syria,” Russian ambassador in Geneva Alexey Borodavkin added.

“I don’t think that the amounts mentioned in Kuwait ever reached these agencies and were ever used to help the Syrian people.”

World powers are famous for committing money for development / humanitarian purposes and falling short on those commitments. And often it is for understandable reasons, as it is difficult to be sure the money is going where it is supposed to go. But given the global attention and direct UN involvement in the Syrian humanitarian crisis, these fears need not prevent commitments from being fulfilled.

It is difficult to be optimistic about a political end to the Syrian Civil War. Mr. Assad seems recently emboldened, while the opposition continues to shoot itself in the foot. Hopefully the opposition rethinks its position; only with Western support can they hope to remove Assad from power, be it politically or militarily.  All Syria’s most vulnerable can do is sit back and watch, and hope the the UN can raise the aid needed to keep them alive as the conflict grinds towards its eventual conclusion.


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Conflict Watch: The U.S. is Teaching China How to be a World Power

“In remarks directed at China, Defense Secretary Chuck Hagel spoke Saturday of a “growing threat” of cyber-attacks against the United States and called on America and its allies to “establish international norms of responsible behavior in cyberspace.”

“The United States has expressed our concerns about the growing threat of cyberintrusions, some of which appear to be tied to the Chinese government and military,” he said in a speech largely devoted to the Obama administration’s defense posture in Asia.

“At the same time, Mr. Hagel stressed the need for more talks between the American and Chinese militaries to build trust and reduce the risk of miscalculation at a time of mounting rivalry.

His remarks were immediately challenged by a Chinese general in a question-and-answer session after his speech. A delegate to the conference, Maj. Gen. Yao Yunzhu, director of the Center for China-America Defense Relations at the Academy of Military Science in Beijing, said she was not convinced — and China was not convinced — that the United States wanted a “comprehensive” relationship with China. The new United States policy in Asia and the Pacific amounts to containment of China, General Yao said.”

Mr. Hagel responded that Washington wanted more transparency in military dealings with China. “You have to talk to each other, be direct with each other, be inclusive,” he said.”

Over all, he said, the United States will keep its “decisive military edge,” an oblique but distinct reference to American military superiority. China has announced an 11.2 percent increase in military spending this year, part of its rapid military modernization.

He stressed that new technologies would entail spending fewer resources in a smarter way, saying that the Navy had launched an experimental drone from an aircraft carrier last month for the first time. It was a feat, he said, that ushered in a new era of naval aviation. Unstated — but understood by many in the audience — was the fact that China just last year put into service its first aircraft carrier, an old Ukrainian vessel refitted by the Chinese.

Mr. Hagel also said the United States would deploy a solid-state laser aboard the Ponce, a naval vessel, next year. He said it would provide “an affordable answer” to counter threats like “missiles, swarming small boats and remotely piloted aircraft.”

The complex relationship between the U.S. and China has been a recurring theme here at NN. The two countries combined account for roughly 1/4 of the world’s population and 1/3 of global economic output. The relationship between the two countries has become even more important as technological advances continue to make the world “smaller”.

The new major threat to U.S. security is cyber-attacks. Not terrorists attacks on U.S. soil, not an invasion from a foreign enemy, but cyber-attacks. The world is connected through the internet and other satellite technologies, and there is no turning back from further integration. The problems facing the world in the 21st century require cooperation, coordination, and global governance. This is why we see so much emphasis on transparency and accountability in international relations, because what happens in one country has direct effects on other countries in today’s globalized world.

It is because of this that the U.S. is taking such a hard-line approach with China. The U.S. must have very conclusive evidence to continue to name the Chinese government and military as the source of many cyber-attacks in America. America’s leaders fully understand the complexity and importance of our relationship with China; it is because of this that the U.S. generally treads carefully with regards to China–we pick our battles.

But the U.S. is also making it abundantly clear that while national sovereignty may be enough to avoid international military intervention (as Russia and China continue to emphasize with regards to the Civil War in Syria), it is not a shield which a country aspiring to become a hegemonic power can hide behind.

Sustainable hegemonic power requires transparency and accountability. It requires a strong citizen base, with investments in human capital and overall enjoyment of life. It requires the freedoms and social capital needed for people to pursue meaningful lives, to innovate and push the frontiers of whatever industry their passion lies in. It requires a long-term vision of the world, and sustainable development policies to realize that vision. It requires post-modern values and an appreciation of human rights for all people in the world. And it requires a modernized military to back up your normative view of the world.

China is an economic power, but not yet a global power. Until China loosens the reigns of authoritarianism, and provides its people with the hope and optimism that equality of opportunity, social mobility, and freedom of expression bring, China will not realize it’s true growth potential. In recent years China has made great strides in reform and modernization, but in reality has only begun the process.

President Obama is set to meet with Chinese President Xi Jinping on June 7th and 8th. “On his previous U.S. visit last February, President Xi proposed the concept of “a new type of relationship between major countries, a concept which was accepted in March 2013 by Tom Donilon, National Security Advisor to the President Obama. American Treasury Secretary Jacob Lew, Secretary of State John Kerry and Chairman of the Joint Chiefs of Staff Martin Dempsey have all visited China recently and raised concerns over North Korea’s nuclear program, cyber security, trade and military communications.

We have not seen the U.S. accept many diplomatic initiatives proposed by China and perhaps the most pressing concern in U.S. circles centers on just what form the “new type of relationship between major countries” will take. The meeting is also a great opportunity for both sides to voice their concerns and reach some kind of consensus.”

President Obama will likely address President Xi directly over matters such as Cyber-security, the Korean Peninsula, and the Syrian Civil War. Part of being a global power is taking an active role in international affairs, and going beyond fulfilling the negative rights of a “do no harm” international policy.

The United States has almost a century of experience being a modernized hegemonic power; China can learn from our experiences and expedite the modernization process, or it can continue to hide behind the shield of “national sovereignty”, depressing its future growth potential.

If Xi wants to really change the relationship between China and the U.S., trusting that the U.S. has China’s best interests in mind is a good place to start. The U.S. is not trying to undermine Chinese development–the two countries are too interdependent on one another. The first step towards achieving Xi’s goal is building real trust and friendship between the countries leaders. 

Hopefully the meeting between the two reform-minded leaders will act as a catalyst to allow the U.S and China to begin building this relationship. The U.S. government can provide the Chinese government with the leeway and responsibility in global affairs it desires, if the Chinese government can prove it can be more transparent and accountable for its actions.

It will be interesting to see how each side views the talks, and what sort of changes in U.S.-Chinese relations occur.


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Economic Outlook: (Hopefully Learning) Lessons From Japan

Japanese economic policy, named “Abeconomics” after Japan’s Prime Minister Shinzo Abe, offers a natural experiment from which the U.S. can draw lessons. There is a much more obvious natural experiment for the U.S., which is U.S. economic policy, but those against “Quantitative Easing” are never short on reasons for why QE hasn’t debased the dollar / led to soaring interest rates on U.S. bonds (but soon will ahhtheskyisfallingmoralhazard!!!!!). Perhaps Japan’s experience, which is further removed from the U.S., can allow us to be more objective in our analysis.

The basis for expansionary monetary policy is due to “liquidity trap” macroeconomics. When the Fed cut’s interest rates near zero, non-traditional means of using monetary policy are the only policy choice left to stimulate aggregate demand and reduce unemployment (as far as monetary policy goes, fiscal policy is another story to be addressed shortly).

Both the U.S. and Japan have greatly increased the supply of money in attempt to revive the economy. QE in the U.S. has basically quadrupled the Feds holdings since 2008, while Abeconomics has doubled Bank of Japan’s (BoJs) holdings. In the U.S., the dollar has remained strong despite QE. In Japan, the Yen has slid in value (and this is a desired result, to increase export competitiveness):

“Normally a weakening exchange rate might be taken as a sign of decline. The yen has fallen nearly 14 percent against the dollar this year, and no currency has fallen more except the Venezuelan bolívar.

In Japan’s case, it is a sign that the policies put in place by Mr. Abe and Haruhiko Kuroda, chairman of the Bank of Japan, are starting to work. A weaker yen makes Japanese exports more competitive around the world.”

The U.S. probably benefit from a slightly weaker dollar, making exports more competitive which could help revive U.S. manufacturing and renewable energy industries (among others). I believe the USD role as primary international reserve currency (60% of international holdings) are keeping the dollar strong despite QE. Foreign holders do not want to see the value of their reserves go down, so the dollar continues to be the safe-haven for investments despite unprecedented monetary stimulus.

How effective have these policies been? U.S. unemployment has dropped to 7.5%, although underemployment and people dropping out of the labor market may be producing a rate that doesn’t capture the stagnation in the job market in the U.S. Japanese unemployment sits at 4.1%, a rate that for the U.S. would currently constitute an economic pipe-dream.

Japan certainly has its issues, but it is not letting doomsayers dictate its economic policy. Despite much higher gross government debt to GDP (Japan has roughly 235% debt to GDP ratio, while the U.S. is at about 107%) Japan is pursuing fiscal stimulus. Abeconomics includes a 2-2.5% of GDP stimulus plan for Japan. Compare that with the fiscal contraction in the U.S.

So the U.S. and Japanese economic policies give us a natural experiment. Both are advanced countries with highly skilled labor forces and strong financial markets. Both are pursuing monetary expansion. One of the countries, despite a much higher debt-to-GDP ratio, is also pursuing fiscal stimulus, while the other is pursuing fiscal contraction. Granted Japan went through years if not decades of stagnant growth before flipping the script to “Abeconomics”. The U.S. is “only” 5 years removed from the Great Recession. Do we really need to wait decades before we pursue policy that we know will stimulate the economy and reduce unemployment / the output gap?

As Keynes said, “In the long run, we’re all dead”. It is not enough to say give it time and things will get better. Peoples skills and confidence in their abilities are deteriorating in the U.S.. The output gap is large and growing, and spending on safety-net policies will not decrease until unemployment goes down (hence “automatic stabilizers”). Hopefully Japan’s successes will inspire confidence in fiscal stimulus; if a country with twice as high of a debt-to-GDP ratio (and an unemployment rate almost half as low) can benefit from fiscal stimulus, surely the U.S. can as well.


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Conflict Watch: Syria (Update), Seperating “Positions” and “Interests”

Negotiation almost always plays a part in resolving any political, economic, or philosophical / ideological divide. Negotiation theory proposes that by moving past each side’s positions (which tend to be incompatible), and instead focusing on each sides interest, bargaining space can be created where seemingly none exists. Whether arguing with a friend, or trying to negotiate the end of a bloody civil war, the first step is almost always getting the right people to come to the table together and talk with open minds:

“The [Syrian National Coalition] regime must take a clear stand (on dialogue) and we say we will extend our hand for the interest of people and to help the regime leave peacefully,” he said in separate comments to Al Jazeera television.”

But Assad thinks he can win the war against the rebels, whom he still describes as terrorists:

“Assad has described the rebels as foreign-backed Islamist terrorists and said a precondition for any solution is that Turkey and Sunni-ruled Gulf Arab states stop funding, sheltering and arming his foes.”

Both sides have maintained that the other side must stop doing what it is doing as a precondition for negotiations. If neither side will budge, then Syria will be in what is known as a “hurting stalemate”, a situation whether neither side of a conflict advances or regresses meaningfully. Resources continue to be depleted, while people die as a result of fighting and malnutrition and Syria loses years [possibly decades] of economic progress and development. Alkhatib, a SNC leader, has drawn unfair criticism from some of his more radical supporters in offering to negotiate with Assad:

“Alkhatib said it was not “treachery” to seek dialogue to end a conflict in which more than 60,000 people have been killed, 700,000 have been driven from their country and millions more are homeless and hungry.”

Yesterday, the rest of the SNC seemed to have officially fallen in line with its leader’s softer stance; The opposition hopes Assad will be open to leaving if he is given amnesty for his role during the 22 month Syrian civil war:

Syria’s opposition coalition gave qualified backing on Monday to its leader’s surprise offer last week for a dialogue with President Bashar al-Assad to end the civil war, pressing him to respond definitively and even offering the added inducement that he could avoid trial if he resigned and left the country… “We say we will extend our hand for the interest of people and to help the regime leave peacefully,” Sheik Khatib said in the interview. “It is now in the hands of the regime.”

“Mr. Bunni [a Syrian human rights activist] also said, “If this goal, Assad stepping down, can be achieved through a political solution, then we are going to receive it in a positive way.”

The SNC has backed off its position that Assad must step down before negotiations can take place, in hopes of pursuing its interests of ending the bloody civil war and ensuing humanitarian crisis in Syria. It remains to be seen if Assad has reconsidered his position and is willing to put his interests (keeping his life and avoiding the shame/punishment resulting from a trial for war crimes against the Syrian people) ahead of his position that he will never willingly leave Syria.

The only way any progress can be made in the Syrian conflict is if: A) The two sides of the conflict agree to drop preconditions for talks or B) An outside power shifts the tide of the conflict by increasing support for either side (realistically, only the rebels have hopes of getting additional support, as Assad has few supporters left.)

One of Assad’s few remaining supporters, Iran, has seemingly become increasingly disenfranchised with Assad’s prospects for victory. If Iran decides Assad must go, then Assad will be without any official supporters in the region, and will have to seriously consider the SNC’s offer of amnesty:
“The army of Syria is big enough, they do not need fighters from outside,” Iran’s Salehi said in Berlin on Monday.

“We are giving them economic support, we are sending gasoline, we are sending wheat. We are trying to send electricity to them through Iraq; we have not been successful.”

“We believe that (deciding) whoever stays or goes is the right of the Syrian people. How can we interfere in that? We must strive to achieve national understanding, and free elections.”

Salehi, Russian Foreign Minister Sergei Lavrov and U.S. Vice President Joe Biden all met Alkhatib in Munich at the weekend and portrayed his willingness to talk with Syrian authorities as a major step towards resolving the war.”

However, questions still remain as to who will fill the power vacuum left by Assad’s departure, which has caused reluctance among Western powers to arm the Syrian rebels:

“The majority of the insurgents are Islamists but those affiliated with al Qaeda are smaller in number, although their influence is growing. For that reason, Western states have been loath to arm the rebels despite their calls for Assad’s ouster.”

The power vacuum created by Assad’ removal, coupled with the large costs associated with direct military intervention (not to mention such an action has been vetoed numerous times by China / Russia in the U.N.S.C.) have resulted in relative inaction by the West at the expense of the Syrian people. While the West slowly decides how best to handle the situation in Syria, regional actors Iran and Egypt may be able to play a bigger role in ending the civil war:

“Egypt is concerned by Iran’s support for Syrian President Bashar al-Assad, who is trying to crush an uprising inspired by the revolt that swept Mubarak from power two years ago. Egypt’s overwhelmingly Sunni Muslim population is broadly supportive of the uprising against Assad’s Alawite-led administration.”

I have supported Morsi’s rule in Egypt for exactly this reason. If Egypt can champion democracy and modernization in the Middle-East, while remaining an Islamic state, then it will be proof that Islamic culture and “Western values” can coexist, setting a valuable precedent in the region. Egypt can be a strong ally geopolitical ally to the west, both in the Middle-East and Northern Africa thanks to its location. Because of its Islamic population, other countries are much more likely to listen to what Egypt has to say than a Western power (Islamic nations often accuse the west of trying to impose “Western values” at the expense of tradition. Egypt can show them this is not true, that modernization and tradition are compatible).

One way or another, something has to give in the Syrian civil war. It is promising that there seem to be multiple avenues working towards Assad’s removal and a political resolution to the Syrian civil war. However, all this is contingent on Assad being a rational person and reconsidering his position in light of his increasingly bleak outlook. If Assad remains unwilling to come to a political compromise, military intervention may remain the only way to end the war.