Olduvaiblog: Musings on the coming collapse

Home » Posts tagged 'Iran' (Page 2)

Tag Archives: Iran

Iran Sends Warships Toward US In “Message To America” | Zero Hedge

Iran Sends Warships Toward US In “Message To America” | Zero Hedge.

The strategy of appeasement, such as the one recently enacted by the US toward Iran, has its pros and cons: the pros are that the thawing in traditionally icy relations may lead to better trade relations and the spread of the debt-funded Pax Americana to one more country. There are also cons, like for example the “appeased” country no longer terrified of the “appeaser”, whose resolve it will then commence testing until the credibility of its presumed superpower is tested by increasingly more. This is precisely what America’s enemy number 1 (if mostly for public consumption) until recently, Iran, has just done.

Iranian warships dispatched to the Atlantic Ocean will travel close to U.S. maritime borders for the first time, a senior Iranian naval commander said Saturday. The fleet, consisting of a destroyer and a helicopter-carrying supply ship, began its voyage last month from the southern Iranian port city of Bandar Abbas. The ships, carrying some 30 navy academy cadets for training along with their regular crews, are on a three-month mission.

The commander of Iran’s Northern Navy Fleet, Admiral Afshin Rezayee Haddad, said the vessels have already entered the Atlantic Ocean via waters near South Africa, the official IRNA news agency reported.

Reuters reports, citing Admiral Haddad, that “Iran’s military fleet is approaching the United States’ maritime borders, and this move has a message.”

The message is simple: you give an inch, and they take a mile. For now Iran is just testing how much it can get away with as the US seeks to appease the nation as part of its latest diplomatic directive. And as long as the US does not respond vigorously, Iran will continue testing.Then again considering that the US 5th naval fleet is positioned in Iran’s backyard just across the Persian Gulf, can anyone blame them?

More from Reuters:

Haddad, described as commander of the Iranian navy’s northern fleet, said the vessels had started their voyage towards the Atlantic Ocean via “waters near South Africa”, Fars reported.

Fars said the plan was part of “Iran’s response to Washington’s beefed up naval presence in the Persian Gulf.

In Washington, a U.S. defense official, speaking on condition of anonymity, cast doubt on any claims that the Iranian ships were approaching U.S. maritime borders. But the official added that “ships are free to operate in international waters.”

The United States and its allies regularly stage naval exercises in the Gulf, saying they want to ensure freedom of navigation in the waterway through which 40 percent of the world’s seaborne oil exports passes.

U.S. military facilities in the region include a base for its Fifth Fleet in the Gulf Arab kingdom of Bahrain. Iran sees the Gulf as its own backyard and believes it has a legitimate interest in expanding its influence there.

 

 

Fars said the Iranian navy had been developing its presence in international waters since 2010, regularly launching vessels in the Indian Ocean and the Gulf of Aden to protect Iranian ships from Somali pirates operating in the area.

And while we await to see what the US response to this unprovoked Iranian aggression (as it will be penned by the media) will be, here is the most recent breakdown of US Naval forces around the world protecting all of America’s national interests.

 

Finally here is the just tweeted take by the Pentagon:

Iran ships to US waters? Aspirations not new. Freedom of seas applies to all, so long as they understand responsibilities of that freedom.

— Rear Adm. John Kirby (@PentagonPresSec) February 9, 2014

Do more to prevent war | www.timesrecord.com | The Times Record

Do more to prevent war | www.timesrecord.com | The Times Record.

BY DAVID SWANSON
GUEST COLUMN


David Swanson

David Swanson

Polls showed a large percentage of us in this country supporting the invasion of Afghanistan in 2001 and even — though somewhat reduced — the invasion of Iraq in 2003. But not long after, and ever since, a majority of us have said those were mistakes.

We’ve opposed attacking Iran whenever that idea has entered the news. We opposed bombing Libya in 2011 and were ignored, as was Congress. And, by the way, advocates of that happy little war are rather quiet about the chaos it created.

But last September, the word on our televisions was that missiles must be sent to strike Syria. President Barack Obama and the leaders of both big political parties said they favored it. Wall Street believed it would happen, judging by Raytheon’s stock. When U.S. intelligence agencies declined to make the president’s case, he released a “government” assessment without them.

Remarkably, we didn’t accept that choice. A majority of us favored humanitarian aid, but no missiles, and no arming of one side in the war. We had the benefit of many people within the government and the military agreeing with us. And when Congress was pressured to demand approval power, Obama granted it.

It helped more that members of Congress were in their districts with people getting in their faces. It was with Congress indicating its refusal to support a war that Obama and Kerry accepted the pre-existing Russian offer to negotiate. In fact, the day before they made that decision, the State Department had stressed that Syrian President Bashar al-Assad would never ever give up his chemical weapons, and Kerry’s remarks on that solution had been “rhetorical.”

The war in Syria goes on. Washington sent guns, but refrained from air strikes. Major humanitarian aid would cost far less than missiles and guns, but hasn’t materialized. The children we were supposed to care about enough to bomb their country are still suffering, and most of us still care.

But a U.S. war was prevented.

We’re seeing the same thing play out in Washington right now on the question of whether to impose yet more sanctions on Iran, shred a negotiated agreement with Iran, and commit the United States to joining in any war between Israel and Iran.

In January, a bill to do all of that looked likely to pass through the Senate. Public pressure has been one factor in, thus far, slowing it down.

Are we moving away from war?

The ongoing war in Afghanistan, and White House efforts to extend it beyond this year, might suggest otherwise. The military budget that still eats up, across various departments, roughly half of federal discretionary spending, and which is roughly the size of all other countries’ military spending combined, might suggest otherwise. The failure to repeal the authorizations for war from 2001 and 2003, and the establishment of permanent practices of surveillance and detention and secrecy justified by a permanent state of war, might suggest otherwise. As might the ongoing missile strikes from drones over a number of nations.

But you’ll notice that they don’t ask us before launching drone strikes, and that their assurances that no innocent people are harmed have proven highly misleading.

War may be becoming acceptable only as what its advocates have long claimed it was: a last resort. Of course if we can really make that true, we’ll never have a war again.

DAVID SWANSON will be speaking at 3 p.m. Feb. 15 at Curtis Memorial Library in Brunswick.

Guest Post: Underneath Their Autocratic Rulers, Russia And U.S. On Diverging Societal Paths | Zero Hedge

Guest Post: Underneath Their Autocratic Rulers, Russia And U.S. On Diverging Societal Paths | Zero Hedge.

Submitted by L. Todd Wood, a former special operations helicopter pilot and bond trader.  


Underneath Their Autocratic Rulers, Russia and U.S. on Diverging Societal Paths

As the State of the Union address highlighted, both the Russia Federation and the United States have leaders that lean toward various degrees of autocratic government to achieve their agendas.  President Putin rules with an iron fist and treats the legislative branch as an afterthought to use as needed but otherwise ignores.  President Obama declares he will use executive action to get what he wants and quietly uses government agencies to intimidate and stifle his opposition in flagrant abuses of power.  Putin has dismantled the Russian free press and imprisoned vocal opponents.  The majority of the American press does Obama’s bidding for him while the administration puts movie makers in jail.

Underneath the tyrannical policies of the two Presidents, American and Russian society are diverging.  First let’s look at welfare – it really doesn’t exist in Russia.  If you’re a single mother raising your child alone, the state will pay you less than $50 a month.  Unemployment insurance is also miniscule.  The minimum wage is around $200 a month.  I recently asked a Russian friend what they would receive if they lost their job.  Her answer was, “It’s my problem, why should the government pay?”  Health care is free but of very low quality.  Russians with money typically choose private care and buy their own private health insurance.

In the United States, we are seeing an obscene explosion of the nanny-state.  Obamacare has been exposed as a huge wealth redistribution scheme.  The CBO states that the ACA is a disincentive to work.  Disability payments are skyrocketing.  The number of Americans receiving food stamps has doubled and is spiraling out of control.  Welfare work requirements have been weakened.  The left continuously pushes to add more immigrants to the government dole and refuses to enforce current immigration law.

The difference in the tax code between the two countries is also striking.  If you live in New York, the combined government tax bite is above sixty percent.  It is a safe bet that any Democratic state government will continue to try and raise taxes.  Obama raised rates on the top earners in America and would boost them across the board if he could.  In Russia, the individual tax rate is a flat thirteen percent.  There is an eighteen percent VAT and the corporate rate is twenty-four percent.  If Russia could remove her corrupt barriers to entry, her economy would explode higher.

The difference between the two nations when approaching geopolitical challenges cannot be more extreme.  The United States has shown a willingness to abandon long standing allies time and time again on the global chessboard.  Whether it be Israel, Poland, or Saudi Arabia, the Obama administration has shrank from global leadership and left a gigantic vacuum for President Putin to happily fill.  Russia has shown a willingness to ignore Western political correctness and stand up for Russian long-term interests.  One only has to look to the Iranian nuclear issue, the Syrian situation, or the Snowden embarrassment to see evidence of Putin schooling the American government.  The American position seems to consist of avoiding conflict and appeasing adversaries rather than standing up for historical American values, our allies, and our way of life.

One of the most interesting differences that has been inconveniently obvious in the international press is the Russian refusal to embrace the religion of global warming.  While the American government strives to shut down energy economic engines of power, Russia uses energy to achieve its national goals.  Putin has been quoted as describing the climate change alarmist agenda as a marketing scheme.  Putin has not bought into the madness of crowds to the benefit of Russia.

Perhaps the most curious cavern between the United States and Russia is their approach to religion.  The church was effectively shut down during the Soviet experiment.  However, in the last few decades, the Russian Orthodox Church has roared back to favor in Russian government opinion.  President Putin has even felt emboldened enough to accuse the West of being morally decadent.  The Democratic Party in the United States has largely morphed into an atheistic, anything goes, hedonist entity.  One only has to look at the refusal of the Obama administration to enforce marijuana laws in America to find evidence of this fact.

I recently had a conversation with a young urban professional in Moscow.  Their comment to me was that most young Russians were embarrassed of the communist revolution in Russia.  “They killed our best people,” this person commented.  I find it curious that the Rolling Stone recently published an article extolling the benefits of the teachings of Karl Marx and echoing the mindset of many of the current millennial generation in America.  When the youth of American are yearning for communism, I fear America must relearn the very harsh lessons of the past.  If Russia can ever deal with the specter of corruption, her society may leap to the future.

Angela Merkel Furious At Nuland’s “Fuck The EU” Comments | Zero Hedge

Angela Merkel Furious At Nuland’s “Fuck The EU” Comments | Zero Hedge.

A few short months after Putin cornered the US state department into a disastrous foreign relations dead end with the false flag Syrian escalation which achieved none of the predetermined nat-gas-to-Europe pipeline ambitions, instead alieanting the US from both staunch allies Saudi Arabia and Israel, the Russian president has just managed to inflict yet more pain on US foreign policy this time by infuriating (even more) a core US ally in Europe – Angela Merkel. Just two days after the phone recording of Victoria Nuland emerged in which she not only made it explicitly clear it was the US who was the puppetmaster behind the Ukranian opposition with the traditional CIA tractics as was expected all along, but also explained just how the US freels toward the EU with the now infamous “Fuck the EU” comment, Angela Merkel called the obscene remark “absolutely unacceptable.”

And then, Nuland not knowing when to stop, proceeded to insert foot in mouth just a little deeper: “”I am not going to comment on private diplomatic conversations. But it was pretty impressive tradecraft. The audio was extremely clear,” she told reporters during a visit to Kiev.”

At least she indirectly complemented Putin on being smart enough to not only intercept what appears to have been an unencrypted phone call, but to release it at just the right time as the entire world’s attention turns to Russia and by extension, the Ukraine.

Because in retrospect Putin does deserve praise: having won the Ukraine over Europe’s cries of horror, he has also managed, in the past year, to alienate the US from Israel, Saudi Arabia and now, Germany. And all this without saying a single word, let along firing a shot.

So now that we know the apriori winner, the loser has no choice but to engage major damage control, which is borderline delusional. From Reuters:

[Nuland] said she did not foresee damage to relations with opposition leaders, saying they “know exactly where we stand in respect of a non-violent solution to the problem.”

 

Of relations with Russia, she said Washington and Moscow had “very deep, very broad and complex” discussions on a range of international issues including Iran and “frank and comradely discussions” on Ukraine.

 

U.S. officials did not deny the authenticity of the recording and said Nuland apologized to EU colleagues for the comment.

 

Angela Merkel, already furious with Washington for several months over reports that U.S. officials bugged her own phone, found Nuland’s remarks “totally unacceptable”, a spokeswoman for the German chancellor said.

Yet, it’s one thing to delude oneself that the US is still the undisputed world’s superpower, it is far worse to express the kind of hubris that Nuland did, when she communicated and discussedconfidential US geopolitical strategy on an unencrypted phone line – traditionally a fireable offense, if not worse.

In Washington, U.S. officials said Nuland and Pyatt apparently used unencrypted cellphones, which are easy to monitor. The officials said smart phones issued to State Department officials had data encryption but not voice encryption.

 

In Nuland’s call, apparently recorded about 12 days ago when Ukrainian opposition leaders were considering an offer from Yanukovich to join his cabinet, she suggested that one of three leading figures might accept a post but two others should stay out. In the end, all three rejected the offer.

The biggest loser here, however, continues to be the Ukraine, whose people are facing a cold winter without assurances they will have Russian nat gas, and a government that is a chess piece in an ongoing power play between Europe and Russia, now that the CIA has taken a back seat. Incidentally, Russia made it quite clear that it demands Ukraine’s full allegiance and as Russian finance minister Anton Siluanov told reporters overnight, Russia  would withold its second loan payment to the troubled nation unless the Ukraine, which owes a “not insignificant” sum for natgas, makes the payment.

In other words, just like Greece has become a money “tolling” intermediary for the ECB and German banks, in which Europe pretends to bail out the crushed country when in reality it is just funding debt payments to its own banks, so the Ukraine has now become an intermediary, in which loan payments from Russia go to pay… Russia’s Gazprom. And in the process Russia pulls the Ukraine from the European sphere of influence and back into that of the New Normal USSR.

Game, set, match Putin. Again.

But wait, there’s more. Because Putin, unsatisfied with simple making a mockery of the US State Department, decided to rub it in some more. The Hill reports:

Rising animosity between the former Cold War powers was on full display Friday when Russia chose a former figure skater who tweeted out a racially charged picture of President Obama for the symbolic lighting of the Olympic cauldron.

 

Russian President Vladimir Putin hoped hosting the first Games since the 1980 Moscow Olympics, which the U.S. boycotted, would showcase a “new Russia” emerging from the ashes of the Soviet Union as he enters his 15th year in power.

 

Instead the U.S. and its western allies have consistently painted the picture of a corrupt autocracy.

 

The media’s focus on the persecution of gays in Russia, terrorism and Russia’s lackluster infrastructure – many hotels don’t have potable water even though the Games are estimated to have cost more than $50 billion, the most ever – have further infuriated the Kremlin.

 

“I understand how the press here works. They need hot issues in order to be read, to have high circulation,” Sergey Kislyak, Putin’s envoy to Washington, told The Washington Diplomat last month.

That’s ok – as long as the US population can keep itself distracted from the sheer implosion of US standing internationally by looking at tweeted images of decrepit toilets and busted Sochi plumbing from a self-indulgent US press corps, and continue feeling good about itself, then all is well. After all, that’s just what Putin wants.

Its Great Lake Shriveled, Iran Confronts Crisis of Water Supply – NYTimes.com

Its Great Lake Shriveled, Iran Confronts Crisis of Water Supply – NYTimes.com.

Launch media viewer
An abandoned ship rusts in the mud on the south shore of Lake Urmia, where only 5 percent of the water remains, Iranian environmental officials say. Morteza Nikoubazl for The New York Times

LAKE URMIA, Iran — After driving for 15 minutes over the bottom of what was once Iran’s largest lake, a local environmental official stepped out of his truck, pushed his hands deep into his pockets and silently wandered into the great dry plain, as if searching for water he knew he would never find.

Just an hour earlier, on a cold winter day here in western Iran, the official, Hamid Ranaghadr, had recalled how as recently as a decade ago, cruise ships filled with tourists plied the lake’s waters in search of flocks of migrating flamingos.

Now, the ships are rusting in the mud and the flamingos fly over the remains of the lake on their way to more hospitable locales. According to figures compiled by the local environmental office, only 5 percent of the water remains.

Iran is facing a water shortage potentially so serious that officials are making contingency plans for rationing in the greater Tehran area, home to 22 million, and other major cities around the country. President Hassan Rouhani has identified water as a national security issue, and in public speeches in areas struck hardest by the shortage he is promising to “bring the water back.”

Lake Urmia

Experts cite climate change, wasteful irrigation practices and the depletion of groundwater supplies as leading factors in the growing water shortage. In the case of Lake Urmia, they add the completion of a series of dams that choked off a major supply of fresh water flowing from the mountains that tower on either side of the lake.

“Only some years ago the water here was 30 feet deep,” Mr. Ranaghadr said, kicking up dust with each step on the dry lake bed. In the distance, spots of land — once islands where tourists would spend vacations in bungalows overlooking the blue waters — were surrounded by plains of brown mud and sand. “We just emptied it out,” he said with a sigh, stepping back into the car.

Iran’s water troubles extend far beyond Lake Urmia, which as a salt lake was never fit for drinking or agricultural use. Other lakes and major rivers have also been drying up, leading to disputes over water rights, demonstrations and even riots.

Major rivers near Isfahan, in central Iran, and Ahvaz, near the Persian Gulf, have gone dry, as has Hamoun Lake, in the Afghanistan border region. Dust from the dry riverbeds has added to already dangerously high air pollution levels in Iran, home to four of the 10 most polluted cities in the world, the United Nations says.

But nowhere is the crisis more pronounced than at Lake Urmia, once one of the largest salt lakes in the world — at 90 miles long and roughly 35 miles wide, it was slightly larger than Great Salt Lake in Utah. Environmentalists are warning that the dried salt could poison valuable agricultural lands surrounding the lake, and make life miserable for the three million people who live in its vicinity.

Along what used to be a lakeshore boulevard, worn-down snack bars and dressing rooms are testament to the days when people from across Iran would come to water-ski on the lake or cover themselves in its black mud, which is said to have healing powers.

About two decades ago, a local villager, Mokhtar Cheraghi, began to notice the water line receding. “First a hundred meters, then two hundred meters. After a while, we couldn’t see the shoreline anymore,” he said, standing in what was once his thriving cafe, Cheraghi’s Beach. “We kept waiting for the water to return, but it never did.”

Most people in the area blame the half-dozen major dams the government has built in the region for the lake’s disappearance. The dams have greatly reduced the flow of water in the 11 rivers that feed into the lake. As an arid country with numerous lofty mountain chains, Iran has a predilection for dams that extends to the reign of Shah Mohammed Reza Pahlavi.

Dam construction was given renewed emphasis under Mr. Rouhani’s predecessor as president, Mahmoud Ahmadinejad, who as an engineer had a weakness for grand projects. Another driving force is the Islamic Revolutionary Guards Corps, which through its engineering arm, Khatam al-Anbia Construction, builds many of the dams in Iran and surrounding countries.

Half an hour’s drive into the mountains above the city of Urmia stands the mighty Chahchai Dam, collecting water that would otherwise have reached the lake. The dam, finished during Mr. Ahmadinejad’s first term, now holds a huge lake itself, which local farmers use for irrigating their lands.

“Some of Urmia’s water is here,” said Mr. Ranaghadr, raising his voice over the howling winds that blow down from the surrounding snowcapped peaks. “The people here need water, too, is what they say.”

Besides producing badly needed electricity, the dams are intended to address the water shortage. But too often, the water is wasted through inefficient irrigation techniques, particularly spraying, Mr. Ranaghadr and other experts say.

In recent decades, the amount of land dedicated to agriculture in the region, the country’s heartland, has tripled, with many farmers growing particularly thirsty crops like grapes and sugar beets, Mr. Ranaghadr pointed out. His department has calculated that about 90 percent of all the water that should end up in the lake is sprayed on fields.

In a 2005 book that he wrote on national security challenges for Iran, Mr. Rouhani estimated that 92 percent of Iran’s water is used for agriculture, compared with 80 percent in the United States (90 percent in some Western states).

“They turn open the tap, flood the land, without understanding that in our climate most of the water evaporates that way,” said Ali Reza Seyed Ghoreishi, a member of the local water management council. “We need to educate the farmers.”

The lake has also been attacked from underground. As part of the government’s drive to promote local agriculture, large landholdings were divided into smaller plots, and most of the new owners promptly dug new wells, soaking up much of the groundwater.

Commentary: 2014: A Risky Year in Geopolitics? | The National Interest

Commentary: 2014: A Risky Year in Geopolitics? | The National Interest.

What are the biggest political risks for 2014?

There are plenty of potential crises to keep us up at night in 2014. There are tensions between China and Japan in the East China Sea and elite-level executions in North Korea. Violence continues to worsen in the Middle East with a resurgence of a more localized Al Qaeda, a deteriorating security environment in Iraq, and 2014’s biggest geopolitical pivot point: the make-or-break Iran nuclear agreement. If the P5+1 and Iran strike a deal, it would be a huge boon for the Obama administration, but it would leave Iran economically emboldened and looking to backstop Shia initiatives across the region, putting it even more at odds with Saudi Arabia. A deal is, on balance, more likely than not. But if it falls through, it means a spike in oil prices, in addition to the likelihood that Israel strikes Iran before it can sprint to nuclear-breakout capacity. All of these geopolitical concerns are front and center for the coming year.

But above all, two essential questions best categorize the major political risks of 2014. For many of the world’s predominant emerging markets, it’s an internally focused question: How will key developing countries adapt to upcoming elections or implement ambitious agendas—and what does it mean for their behavior beyond their borders? For the United States, the question is externally focused. The international community perceives America’s foreign-policy behavior as increasingly unpredictable. Is the United States disengaging internationally? How will policymakers define the role that the US should play in the world? Much depends on these concerns, as America’s relationships with its allies become increasingly fraught.

When you add these two questions to the more conventional geopolitical security uncertainties, there is one clear answer: the erosion of global leadership and coordination will become more apparent and pronounced in 2014.

How will emerging markets respond to internal challenges?

This year, we will see domestic distractions in emerging markets, from election cycles to unprecedented reform agendas; do not expect them to play a significant role internationally that does not cohere with their more pressing priorities at home. We are in the midst of a new era of political challenges for emerging markets, as slowing growth, sputtering economic models, and rising demands from newly enfranchised middle classes create heightened uncertainty. As recent protests in Brazil, Turkey, Thailand, Colombia, Ukraine and Russia have shown, new middle classes have new demands—and are willing to take to the streets if they go unmet.

It is in this context that six of the world’s largest emerging markets—Brazil, Colombia, India, Indonesia, South Africa and Turkey—will hold national elections in 2014. In all six countries, the incumbent party will have ruled for a decade or more, but since coming to power, few of them will have faced an electoral cycle quite like this. Political, social, and economic dynamics in each of these countries vary immensely, but elections raise the risk of prevote populist policymaking in all of them. As emerging-market growth wanes, many of these countries need to implement economic reforms in order to enhance productivity and continue enriching their citizens. But as elections loom, the fears of politicians grow, and substantive reform of pensions, privatization, labor markets, and taxation will stall. Nor will the outlook improve substantially post-elections. We are likely to see second mandates of weaker leaderships—a political environment that is by no means ideal for big-bang reforms.

While these six emerging markets are the most important players for the global economic community, the emerging market elections story extends much further. A total of forty-four democratic emerging-market countries accounting for 36 percent of the world’s population will hold national elections this year. Growing middle classes across the emerging market space are expecting more and better services precisely as governments’ capacity to deliver (economically and politically) is diminishing. That leaves emerging market governments with their hands full at home.

Among emerging markets, Turkey is especially vulnerable in 2014. The country faces spillover effects from the civil war in Syria and a re-emergence of the Kurdish insurgency. More worryingly, Prime Minister Erdogan’s increasingly aggressive behavior is a huge variable at a time when he is likely to become president. Expect uncertainty and conflict over the division of powers between him and the prime minister.

China, by far the most important emerging market in the world, certainly does not face electoral pressure; in fact, the new leadership under Xi Jinping has consolidated power quickly and efficiently since the leadership transition in late 2012. But China will face demands from its constituents and domestic distractions all the same, as its economy is now undergoing a dramatic shift. The new leadership has embraced far-reaching reform to a greater degree over president Xi Jinping’s first year than we’ve seen in the past two decades. Beijing will prioritize reform over more rapid economic growth in 2014, likely focusing on reforms that address public concerns to bolster its political strength and popular legitimacy. Expect social-policy reform at the forefront, with energy policy as another priority. We could also see financial reform moving more quickly than current consensus would indicate.

These reforms constitute a huge potential positive for China’s investment climate and potential integration into the world economy. Beijing must, however, tread carefully: there are many dangerous moving pieces attached to the reform agenda. There will be losers in the reform process as industries go out of business, officials get purged, and firms come under heavy regulatory scrutiny. If reforms move too quickly, they could destabilize the ruling party from within, as these key stakeholders push back to protect their vested interests. To protect against public and bureaucratic backlash, the leadership is using anti-corruption and reeducation efforts to intimidate reform opponents within the party while using new technologies to mitigate public dissent. But if the reforms fail or are widely perceived to be moving too slowly, political instability and popular protest could grow. That is only magnified by the fact that Beijing is doing this in the context of a fundamentally changed information environment, where the proliferation of information leaves the ruling party more beholden to the demands of its citizens—and where rapid shifts in popular sentiment can arise quickly and unexpectedly. Missteps could undermine the broader reform process and the leadership itself.

If— or perhaps, when— there are bumps in the road, Beijing will try to divert public anger toward foreign targets. Xi Jinping’s first substantial foreign-policy move was to announce an Air Defense Identification Zone in the East China Sea; that caters to widespread anti-Japanese sentiment within China. Should trouble emerge domestically, the Xi government might be willing to deflect attention by playing up this antagonism. On the other hand, in the longer run, if China implements its reform agenda successfully, it could empower the regime to project its regional influence still further.

Russia is one emerging market where, under President Putin’s rule, there is a great willingness to intervene on the international stage—but often in unpredictable ways. Putin remains the single most powerful individual in the world, but two worrying trends are converging: his popularity has slipped, and after a decade of rising expectations, Russia’s economy is stagnating. This makes Russia under Putin, a leader unusually capable of getting big things done quickly, far less predictable at home and abroad.

Is the United States disengaging internationally?

As Putin injects uncertainty by intervening abroad, the United States is doing so as well—but predominantly by disengaging.

Some of this decline in consistent US foreign-policy engagement is determined by structural international changesFirst, there are too many increasingly influential countries that need to be at the table for a negotiation to have global impact, making it more difficult to coordinate effectively at the multilateral level. On top of this, a distracted German-led Europe is focusing inward on economic prerogatives of repairing the eurozone and restoring competitiveness; for foreign-policy engagement, the United States would much prefer the more geopolitically aligned UK and France driving European affairs. Emerging markets, particularly Russia and China, are more willing to challenge US preferences abroad.

Some of this new American foreign policy tack derives from tectonic shifts in the US domestic picture. In the 2012 election, just 5 percent of voters ranked foreign policy as their priority, and widening income inequality is persuading many Americans that they do not share the benefits of US engagement abroad. With a reactive, risk-averse approach to foreign policy along with a weaker second-term foreign-policy team, the Obama administration’s preferences and recent actions have magnified the issue considerably. The White House has made a handful of important missteps in the last year, even if many were at least partially the product of circumstance. The NSA scandal in the wake of the Snowden revelations has undermined the United States around the world. The need for attention at home amidst congressional infighting, a government shutdown, and the Obamacare rollout fiasco has come with significant foreign-policy opportunity cost—perhaps most importantly, Obama’s need to miss the APEC summit. Obama’s vacillation on whether to strike Syria undermined US credibility, and when the chance for a chemical-weapons agreement arose (thanks to an internationally engaged Vladimir Putin…), Obama jumped at the chance to take the deal and chalk it up as a justification for Washington remaining a spectator to the broader civil war.

Add all of these factors together and it seems that a perfect storm of US foreign policy decline is brewing. A poorly defined, more risk-averse US role in the world has allies frustrated with and uncertain about Washington’s longstanding policy preferences and commitments. They are actively questioning some American security guarantees and worrying about Washington’s reluctance to deploy military, economic, and diplomatic capital.

This new period of uncertainty for American foreign policy will impact US relations with countries around the world—but by no means equally. Despite their consternation, America’s closest allies don’t have viable alternatives. Mexico and Canada are far too economically integrated with the US to effectively hedge the relationship with outreach to other major powers. For Japan, Israel and the UK—the United States’ preeminent ally in each of their respective regions—the same is true strategically. As a result, they are particularly exposed in an increasingly leaderless world order.

That’s not the case, though, for the US’s second-tier allies, who have flexibility in structuring their strategic partnerships. This a much larger group, including Germany, France, Turkey, Saudi Arabia, the United Arab Emirates, South Korea, Brazil, and Indonesia. All have governments that consider it unwise to bet too fully on the US, and they are preparing to hedge their position by shifting their international orientation accordingly.

The prime example is the deterioration in US-Saudi relations. In recent months, the Saudi leadership has rejected a seat on the UN Security Council and penned forceful op-eds in Western publications, explaining Saudi consternation with American policy in the Middle East—the Iran nuclear deal in particular—and the need for Saudi Arabia to “go it alone.” The Brazilians and Germans have been particularly vocal in their opposition to NSA practices in the wake of the discovery that their leaders’ personal emails had been monitored by US intelligence.

The implications of these shifting alliances will be stark. US corporations are primed for new challenges. Post-Snowden, American firms that rely on collecting or sharing information, such as telecoms, banks and credit-card companies, may encounter a more hostile regulatory environment in countries like France, Germany and Brazil. US defense companies selling into countries such as Turkey and the Gulf states could also find themselves on the losing end of a tilt away from the United States. And expect Washington’s multilateral agenda to suffer, as “coalitions of the willing” become harder to establish and important trade deals like the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership lose some momentum. Confusion over US commitments will complicate choices for countries balancing security and economic interests between the US and China; some Asian governments may align more closely with Beijing. And as the US is no longer perceived as a credible driver of the single global marketplace, a weakening of international standards is likely in the years to come. We might see faster fragmentation of the Internet, more disjointed financial regulation, a weaker NATO, and an even more fragmented global environment.

But despite its waning foreign-policy engagement, the US is not in economic decline.Investors continue to look past America’s many challenges and bet heavily on the US economy.In fact, driven by an energy revolution, game-changing technologies in diverse sectors, favorable demographics, and strong underlying political and social stability, the American economic story remains among the most dynamic and exciting in the world.The United States may be hamstrung by issues such as its yawning gap between rich and poor and its increasingly ineffectual secondary-education system, but for now at least, corporate investment and international support for the US dollar remain robust. So despite Washington’s inconsistencies on the international stage, America’s allies—and the international community—are set to struggle with it most.

In 2014, as emerging markets look inward and American foreign policy goes wayward, the only certainty is that international coordination is eroding. That will generate a more volatile global landscape and unforeseen crises.

Ian Bremmer is the president of the Eurasia Group, global research professor at New York University and a contributing editor at The National Interest.

Image: Flickr/Beverly Goodwin. CC BY 2.0.

After Davos, The China-Japan ‘Cold-War’ “Situation Is Getting Worse” | Zero Hedge

After Davos, The China-Japan ‘Cold-War’ “Situation Is Getting Worse” | Zero Hedge.

China and Japan’s war of words reveals a larger struggle for regional influence akin to a mini Cold War. Last week’s tempestuous pissing contest in Davos, which The FT’s Gideon Rachman notes, left people with the belief that “this is not a situation that is getting better; it is getting worse.” Following Abe’s analogies to WWI, China’s Yi compared Abe’s visit to the Yasukuni shrine to Merkel visiting the graves of Nazi war criminals and as the rhetoric grows the US has asked for reassurance from Abe that he will not do it again. So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeymanSound familiar to anyone else?

 

As The WSJ reports,

U.S. officials say they are seeking assurances from Japan that Prime Minister Shinzo Abe won’t repeat a visit to a war shrine that angered China and South Korea and will ask Mr. Abe to consider reaffirming Tokyo’s previous formal apologies over World War II in a bid to ease tensions in East Asia.

 

But even as Washington looks for calm, Seoul and Beijing bristled again this week over new comments by Mr. Abe on his shrine visit, underscoring the challenges the U.S. faces in its diplomatic push.

The FT sums up the tensions in Davos last week…

 

Via Shannon Tiezzi via The Diplomat,

Lately, it seems that Japanese officials can’t sneeze without incurring the wrath of the Chinese — and vice versa. So it’s no surprise that even conciliatory statements from Shinzo Abe have been soundly rebuffed. On Thursday, Abe wrote a message, published in local Chinese-language papers, conveying greetings for the lunar new year. According to Reuters’ translation of the Japanese-language version, Abe insisted that Japan has “taken the path of peace” since World War II, and “nothing has been changed in the policy of continuing to uphold this position.”

Friday, Abe further extended the olive branch. According to Channel NewsAsia, Abe told a parliamentary session that “Japan and China are inseparable.” He also expressed his desire for the two countries to restart diplomatic meetings. “Instead of refusing to hold dialogue unless issues become resolved, we should hold talks because we have issues,” Abe said.

China flatly rejected these overtures. Responding to earlier requests for a bilateral dialogue, Qin Gang responded with bitter sarcasm: “Such kind of dialogue will be of no effect. Chinese leaders are very busy. Let them spend more time on things useful and effective.” China has repeatedly expressed its position that no diplomatic meetings between China and Japan can be held until Shinzo Abe proves his sincerity. During Friday’s press conference, Qin Gang laid down a specific path for restarting dialogue: Abe should declare that “I will pull back from the precipice, immediately admit and correct mistakes and make no more visits to the Yasukuni Shrine.”

As I wrote earlierat this point it seems impossible that anything Abe will do will satisfy Chinese leaders (the things he could do, like apologizing for his visit to Yasukuni and/or Japan’s imperialistic past, are incredibly unlikely). To Chinese officials, Abe is “self-contradictory,” as an editorial in China Daily put it. Unless Abe apologizes for and refrains from repeating actions that upset China (from visiting Yasukuni to building up Japan’s military), China will dismiss as insincere his rhetoric about dialogue and peace. Meanwhile, from the Japanese perspective, were Abe to devote the rest of his administration to proving his friendship to China, it would have obvious negative repercussions for Japanese interests.

So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?

Ever since the Cold War ended, strategists have been warning leaders to drop the “Cold War mentality.” But it apparently hasn’t worked, because that is exactly what we have right now between China and Japan. The two countries identify so strongly as rivals that it’s impossible for either country to do or say anything without triggering a response from its counterpart. The tensions pop up in the most unexpected places – during Abe’s Africa tour, during a global economic summit in Switzerland.

Even the strong economic ties between China and Japan haven’t helped forestall tensions. In fact, it’s the other way around – tensions are eroding the economic relationship. The Telegraph recently reported that, according to a poll, 60 percent of Chinese business leaders are unwilling to work with Japanese firms. In 2012, China-Japan tensions even erupted into outright calls to boycott Japanese products, with rioters targeting Japanese businesses and restaurants. While Japan’s business view of China is less affected (according to The Telegraph, 80 percent of Japanese are willing to continue trade with China and South Korea), economic interests are shifting to other regions, notably Southeast Asia. Economic ties are likely to continue worsening. It’s certainly hard to see the next round of negotiations on a trilateral China-Japan-South Korea free-trade agreement going off as planned in February 2014.

As with the Cold War, part of the problem is that both China and Japan willfully read each other’s every move as a challenge or threat. For all the distrust between China and the United States, the problem hasn’t reached this level (yet). The U.S. has too many potential enemies (Russia, Iran, North Korea) and too many global interests for China to realistically interpret every diplomatic or strategic maneuver as somehow anti-China (although certainly some hawks within China do try). Japan, with its more limited global presence and strategic interests, is a different story. Meanwhile, as China is currently limiting its military build-up and strategic goals to the near seas, it’s easy for Tokyo interpret each move (for example, a new air defense identification zone) as directly aimed at Japan.

My colleague Zachary wrote Friday that one byproduct of the United States’ decline could be the emergence of regional hegemons. We might be seeing the beginning of this process now, with China and Japan in a Cold War-style battle, not for global power but for regional dominance. The territorial dispute highlights this by increasing the possibility of military conflict, but even if the Diaoyu/Senkaku Islands were to sink into the ocean tomorrow (one possible benefit of global warming) the tensions would remain. It’s a regional Cold War, currently being fought with words but with an arms race looming on the horizon. And, like the Cold War, tensions are unlikely to end until one country claims victory.

Peter Schiff Destroys The “Deflation Is An Ogre” Myth | Zero Hedge

Peter Schiff Destroys The “Deflation Is An Ogre” Myth | Zero Hedge.

Submitted by Peter Schiff via Euro Pacific Capital,

Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom… they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

A January 5th article in The Wall Street Journal described the economic situation in Europe by saying “Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s.” Really, blighted the lives of millions? When was the last time you were “blighted” by a store’s mark down? If you own a business, are you “blighted” when your suppliers drop their prices? Read more about Europe’s economy in my latest newsletter.

The Journal is advancing a classic “wet sidewalks cause rain” argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse.  The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing.A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can’t afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy – -try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation

In another article two days later, the Journal hit readers with the same message: “Annual euro-zone inflation weakened further below the European Central Bank’s target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area’s fragile economy.” In this case, the paper adds “too little inflation” to the list of woes that needs to be avoided. Apparently, if prices don’t rise briskly enough, the wheels of an economy stop turning

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce’s Statistical Abstract of the United States, the “General Price Index” declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team.They certainly would have advised him to raise prices to increase sales. But Edison’s strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the Government seem to be perfectly aligned.

UN rescinds Iran’s invite for Syria talks – Middle East – Al Jazeera English

UN rescinds Iran’s invite for Syria talks – Middle East – Al Jazeera English.

The announcement came less than 24 hours after UN chief Ban surprised the US and others by inviting Iran to the Syria peace talks [AP]
The UN secretary-general has withdrawn his invitation to Iran to join this week’s Syria peace talks, saying he is “deeply disappointed” by Iran’s statements on Monday.

A spokesman for Ban Ki-moon announced the withdrawal less than 24 hours after Ban surprised the US and others by saying he had invited Syria’s closest regional ally.

The withdrawn invitation came shortly after Iran’s UN ambassador declared the Islamic Republic wouldn’t join the Syria talks if required to accept 2012 Geneva roadmap.

“The statement today in Tehran by the foreign ministry spokesperson fell short by some measure of what the secretary-general expected to hear,” said UN spokesman Martin Nesirky, adding that the UN has been in close contact with the US and Russians over the weekend.

Nesirky said senior Iranian officials had assured Ban that Iran understood the terms of his invitation.

“The Secretary-General is deeply disappointed by Iranian public statements today that are not at all consistent with that stated commitment,” Nesirky said.

“He continues to urge Iran to join the global consensus behind the Geneva Communiqué.”

The talks are set to begin Wednesday in the Swiss city of Montreux, with delegations from the United States, Russia and close to 40 other countries attending. Face-to-face negotiations between the Syrian government and its opponents, the first since the three-year civil war began, start Friday in Geneva.

‘Return to focus’

But Ban’s announcement on Sunday night that Iran was invited to Montreux angered Syria’s main Western-backed opposition group, which over the weekend had announced it would join the talks after intense international pressure.

The United States said on Monday it was hopeful after the UN withdrew Iran’s invitation and that all parties could refocus their efforts to end the Syrian civil war.

“We are hopeful that, in the wake of today’s announcement, all parties can now return to focus on the task at hand, which is bringing an end to the suffering of the Syrian people and beginning a process toward a long overdue political transition,” State Department spokeswoman Jen Psaki said in a statement.

Psaki said the purpose of the conference was to implement a 2012 plan to establish a political transition in Syria.

Iran, Russia Ruffle US Feathers With Oil-Swap Deal | Zero Hedge

Iran, Russia Ruffle US Feathers With Oil-Swap Deal | Zero Hedge.

This morning’s apparent U-turn in US-Iran relations – when the US demanded the UN rescind Iran’s invite to the Syrian peace conference having somewhat instigated their invitation in the first place – is a little confusing for some. However, as OilPrice’s Joao Peixe points out, reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that is sure to upset the powers that be in Washington.

 

Submitted by Joao Peixe via OilPrice.com,

Reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that could boost Iranian oil exports, prompting harsh responses from Washington, which says such a deal could trigger new US sanctions.

 

So far, talks are progressing to the point that Russia could purchase up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goodsaccording to Reuters.

 

“We are concerned about these reports and Secretary (of State John) Kerry directly expressed this concern with (Russian) Foreign Minister (Sergei) Lavrov…  If the reports are true, such a deal would raise serious concerns as it would be inconsistent with the terms of the P5+1 agreement with Iran and could potentially trigger US sanctions,” Caitlin Hayden, spokeswoman for the White House National Security Council, told Reuters.

 

Russian purchases of 500,000 bpd of Iranian crude would lift Iran’s oil exports by 50% and infuse the struggling economy with some $1.5 billion a month, some sources say.

 

Since sanctions were slapped on Iran in July 2012, exports have fallen by half and Iran is losing up to $5 billion per moth is revenues.

 

In the meantime, a nuclear agreement reached in November with Iran and world powers is in the process of being finalized, and the news of the potential Russian-Iranian oil swap deal plays to the hands of Iran hawks in Washington who are keen to seen the November agreement collapse.

 

The November agreement is a six-month deal to lift some trade sanctions if Tehran curtailed its nuclear program. Technical talks on the agreement began last week.

Under the terms of the tentative November nuclear agreement, Iran will be allowed to export only 1 million barrels of oil per day.

 

In mid-December, Iranian oil officials indicated that they hoped to resume previous production and export levels and would hold talks with international companies to that end.

 

This announcement sparked an immediate reaction from US Congress, which has threatened oil companies with “severe financial penalties” if they resume business with Iran “prematurely” following the six-month agreement reached in Geneva.

 

There are plenty of figures in Congress—Republican and Democratic alike—who are opposed to the deal. The key “Iran hawk” in US Congress, South Carolina Republican Lindsey Graham, has described the deal as “so far away from what the end game should look like”, which should be to “stop enrichment”.

 

The opposition in this case believes any talk between Tehran and Western oil companies is premature because they are convinced that we won’t see a comprehensive resolution after the six-month period, and that sanctions will be laid on stronger than ever before.

Yet again, it would seem, Iran is another proxy pissing match between the US and Russia… and remember, nothing lasts forever...

 

%d bloggers like this: