5 October 2018   Leave a comment

Brazil will hold its national election on Sunday, but recent polls indicate that as many as 25% of the electorate remains undecided.  It is a hotly contested race with two front-runners:  Jair Bolsonaro who is a right-wing candidate who has expressed admiration for US President Donald Trump and  Fernando Haddad who is running for the party of  Luiz Inácio “Lula” da Silva, a popular left-wing former president who cannot run because of a corrruption conviction.  Although there is mush fire and fury in the current campaign, it is unlikely that the election will resolve the problems facing Brazil.  Vox describes the problems facing the country:

” Brazil was once seen as an up-and-coming developing country, with strong economic growth and a rising global profile. But in recent years, the economy has careened off course, in large part because corruption scandals have decimated the country’s most powerful companies, putting huge swaths of people out of work and weakening investor confidence.

“Nearly a third of Brazilians have struggled to buy food in the past year, and a quarter say they’ve had trouble affording adequate shelter, according to a recent Gallup poll. The unemployment rate is in the double digits, and some studies say extreme poverty has more than doubled since the mid-2010s.

“On top of this, Brazil is facing a serious security crisis. Murder rates are at an all-time high. The country’s biggest gang, Primeiro Comando da Capital (PCC) is rapidly expanding as it battles with rivals over important drug routes. Once-vaunted public safety strategies have failed to contain the mayhem, but there’s little consensus on how — or whether — to change course.”

The two major candidates are in many respects polar opposites and it is difficult to conceive of a compromise position that could bridge the gap between the two.  Elections are supposed to resolve matters, not make them more complicated.   But the Pew Research Center found in October 2017 that only about 8% of Brazilians thought democracy was a “very good” system.

India has announced that it will buy the Russian S-400 Long Range Surface to Air Missile System, disregarding the US sanctions on economic transactions with Russia.  The proposed purchased violates the Countering America’s Adversaries Through Sanctions Act (CAATSA) which was passed by the US.  It is an extraterritorial law–extending US national law to the conduct of other nations.  It is on the basis of this law that the US imposed sanctions on China for buying Russian military equipment, and is pressuring Turkey to not buy Russian arms.   India will likely ask for a waiver from the law, and whether the US grants it will be a real test of how committed the US is to Indian foreign policy

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Posted October 5, 2018 by vferraro1971 in World Politics

4 October 2018   Leave a comment

The International Monetary Fund (IMF) has conducted a review of global economic policies since the turmoil of the Great Recession in 2008-09. Generally speaking, global economic growth has been tepid since that time, an outcome that was not unexpected since the crisis was spawned by very high rates of debt that choked off money that could have gone into productive investments.  The IMF notes that there have been some important policy changes implemented in order to prevent a similar explosive growth of debt, but that these changes do not seem to have been entirely effective.  As The Guardian notes:

“The sequence of aftershocks and policy responses that followed the Lehman bankruptcy has led to a world economy in which the median general government debt-GDP ratio stands at 52%, up from 36% before the crisis; central bank balance sheets, particularly in advanced economies, are several multiples of the size they were before the crisis; and emerging market and developing economies now account for 60% of global GDP in purchasing-power-parity terms – which compares with 44% in the decade before the crisis – reflecting, in part, a weak recovery in advanced economies.”

The article goes on to link the growth in income inequality since 2008-09 as problematic since it may lead to a crisis of underconsumption, where there is insufficient demand in the economy to sustain economic growth: “Like many institutions the IMF has warned that rising levels of inequality have a negative impact on investment and productivity as wealthier groups hoard funds rather than re-invest them in productive parts of the economy. Without a rise in investment economies remain vulnerable to financial stress.”

Bloomberg has published an article that can only be described as devastating to the idea of fully globalized supply chains that underpin the global economy.  As the world has moved into digitized modes of production, there are very few modern products that are fully assembled in a single place.  Instead, most products are filled with components that are produced by the most efficient producers and then assembled in a final stage.  This approach to production creates extraordinary efficiencies that minimize costs and enhance value.  But the complicated networks of the different components require unbelievable coordination.  The networks also create opportunities for sabotage and surveillance that many thought were unthinkable because the advantages from such subterfuge would call into question the viability of the whole idea of globalization.

Apparently, the Chinese military decided that the risks were worthwhile.  It tried to subvert the supply chain by infiltrating the makers of microchips (through bribery and intimidation) with its own chips that would give it access to the hardware of any computer using the corrupted chips.  According to Bloomberg the gambit was discovered by Amazon Web Services which was checking on the reliability of servers made by a company named Elemental it was going to use for its cloud services:

“[Amazon] hired a third-party company to scrutinize Elemental’s security, according to one person familiar with the process. The first pass uncovered troubling issues, prompting Amazon Web Services to take a closer look at Elemental’s main product: the expensive servers that customers installed in their networks to handle the video compression. These servers were assembled for Elemental by Super Micro Computer Inc., a San Jose-based company (commonly known as Supermicro) that’s also one of the world’s biggest suppliers of server motherboards, the fiberglass-mounted clusters of chips and capacitors that act as the neurons of data centers large and small. In late spring of 2015, Elemental’s staff boxed up several servers and sent them to Ontario, Canada, for the third-party security company to test, the person says.

“Nested on the servers’ motherboards, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design. Amazon reported the discovery to U.S. authorities, sending a shudder through the intelligence community. Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. And Elemental was just one of hundreds of Supermicro customers.

“During the ensuing top-secret probe, which remains open more than three years later, investigators determined that the chips allowed the attackers to create a stealth doorway into any network that included the altered machines. Multiple people familiar with the matter say investigators found that the chips had been inserted at factories run by manufacturing subcontractors in China.

“This attack was something graver than the software-based incidents the world has grown accustomed to seeing. Hardware hacks are more difficult to pull off and potentially more devastating, promising the kind of long-term, stealth access that spy agencies are willing to invest millions of dollars and many years to get.”

All the companies involved have vigorously denied that the hacks occurred or were successful, but one could hardly expect them to admit such egregious security lapses.  Indeed, I suspect that this story will not receive much attention because of a fear of panic.  But it is instructive to note that the stock of Super Micro Computer fell by -41.12% today.  Warfare in the 21st century takes forms that Napoleon would find hard to comprehend. 

Posted October 4, 2018 by vferraro1971 in World Politics

3 October 2018   Leave a comment

The International Court of Justice (ICJ) has ruled against some of the sanctions the US re-imposed on Iran after the US left the Joint Comprehensive Plan of Action (JCPOA–commonly referred to as the Iranian Nuclear Agreement).  Specifically, the ICJ ruled that the re- imposition of sanctions on certain goods violated the 1955 Treaty of Amity, Economic Relations, and Consular Rights between Iran and the US which gives the ICJ jurisdiction over legal disputes between the two states.  The Court ruling is straightforward:

”  THE COURT,

Indicates the following provisional measures:

(1) Unanimously, The United States of America, in accordance with its obligations under the 1955 Treaty of Amity, Economic Relations, and Consular Rights, shall remove, by means of its choosing, any impediments arising from the measures announced on 8 May 2018 to the free exportation to the territory of the Islamic Republic of Iran of

      (i) medicines and medical devices;

      (ii) foodstuffs and agricultural commodities; and

      (iii) spare parts, equipment and associated services (including warranty, maintenance, repair services and inspections) necessary for the safety of civil aviation;

(2) Unanimously, The United States of America shall ensure that licences and necessary authorizations are granted and that payments and other transfers of funds are not subject to any restriction in so far as they relate to the goods and services referred to in point (1);

(3) Unanimously, Both Parties shall refrain from any action which might aggravate or extend the dispute before the Court or make it more difficult to resolve.

There is no likelihood whatsoever that the US will obey this ruling as the ICJ has no enforcement powers.  Indeed, immediately after the ruling the US pulled out of the 1955 Treaty. 

Jen Kirby has written a very succinct piece for Vox  on how the trade agreement among the US, Mexico, and Canada–once known as as NAFTA–has changed.  Many of these changes are largely symbolic, but there are some important provisions that benefit certain economic sectors.  The Washington Post summarizes the changes:

“A handful of major industries scored big wins in President Trump’s North American trade agreement — at times at the expense of ordinary consumers in the United States, Canada and Mexico.

“The winners include oil companies, technology firms and retailers, but chief among them are pharmaceutical companies, which gained guarantees against competition from cheaper generic drugs.”

It seems as if the new trade deal does not change much in terms of trade, i.e., lowering tariffs or quotas or the other types of constraints on the movement of goods and services.  Instead, it seems to focus more on how labor and capital are treated across borders.  In a sense, it seems more like a cartel agreement designed to control competition more than a trade agreement to facilitate movements across borders. 

Posted October 3, 2018 by vferraro1971 in World Politics

2 October 2018   Leave a comment

The Pew Research Center has conducted another poll of America’s global image.  The results are depressing:  Many in the world do not hold a very favorable view of US policies on some important issues although the the overall US favorability rating remains positive. 

The drop in confidence in the US seems to be related primarily rooted in the question of leadership and is most dramatic among important US eiropean allies:

Statistics such as these call into question the ability of the US to command support for important policy initiatives it may wish to implement.  The lack of confidence makes strong alliances very difficult, despite shared interests. 

The US-Chinese competition in the South China Sea has heated up.  A Chinese war vessel challenged the USS Decatur by sailing within 45 meters of each other, a very dangerous maneuver.  According to Business Insider:

“The Chinese ship, reportedly the People’s Liberation Army Navy (PLAN) Type 052C Luyang II-class guided-missile destroyer Lanzhou (170), part of the Chinese navy’s South Sea Fleet, took on the US Navy’s Arleigh Burke-class destroyer USS Decatur (DDG-73) during a close approach near Gaven Reef in the disputed Spratly Islands.

“The Chinese vessel ‘conducted a series of increasingly aggressive maneuvers accompanied by warnings’ for the US Navy ship to “leave the area,” Pacific Fleet revealed in an official statement Monday. US Navy photos first obtained by gCaptain and confirmed to CNN by three American officials show just how close the Chinese destroyer got to the US ship.

The US Naval Institute quotes Cmdr. Nathan Christensen, a U.S. Pacific Fleet spokesman on the incident:

“U.S. Forces operate in the Indo-Pacific region on a daily basis, including the South China Sea. As we have for decades, our forces will continue to fly, sail and operate anywhere international law allows. All operations are designed in accordance with international law and demonstrate that the United States will fly, sail and operate wherever international law allows. That is true in the South China Sea as in other places around the globe.”

The Chinese, of course, have a different view of the encounter.   The China Times, a usually reliable media outlet reflecting official Chinese policy, said this:

“The US repeatedly sends military ships without permission into seas close to South China Sea islands, seriously threatening China’s sovereignty and security, damaging Sino-US relations as well as military ties and harming regional peace and stability,” said Wu Qian, spokesperson of the Ministry of National Defense.

“Wu said the Chinese navy ship conducted an identification and warning process to drive the USS Decatur away on Sunday, a day before China’s National Day.

“China has irrefutable sovereignty over the South China Sea islands and the waters around them, and the situation there is progressing well thanks to the hard work of China and countries in Southeast Asia, Wu noted.”

Photograph of the US-Chinese Encounter in the Chinese Sea

Posted October 2, 2018 by vferraro1971 in World Politics

1 October 2018   Leave a comment

My apologies for not posting these last two nights.  I have had a miserable cold and have just been sleeping.

The announcement that Russia was sending its most sophisticated anti-aircraft missile system, the S-300, count many analysts by surprise.  The move represents a substantial stiffening of Russian commitment to the Syrian government.  It is also a serious threat to the Israeli and US air force, both of which have enjoyed air dominance in the region for many years.  In particular, the S-300 system represents a serious threat to the most sophisticated jet fighter in the US arsenal, the F-35, which has yet to be deployed by the US in the Middle Easy but has been deployed by Israel.  The total cost of the F-35 has gone over one trillion dollars in recent years.  The deployment leaves little doubt that Russia intends to call all the shots in Syria from now on, and it will be difficult, if not impossible, to dislodge it from that position of dominance. 

F-35

Markus Brunnermeier, Rush Doshi and Harold James have published a fascinating essay in the Washington Quarterly comparing British-German economic competition in the early 20th century with US-Chinese economic competition in the early 21st century.   The analysis is compelling and leaves me with the clear sense that some lessons have not been learned.  Technological competition clearly gives short-term advantages in strategic bargaining, but it also makes the stakes much higher.  The competition also has global implications, since the two sides try to impose standards for their preferred technology for others.  The essay also shows how corporate interests can strongly influence national interests. 

The US and Canada have agreed to new trading terms which will preserve the basic parameters of NAFTA, but we will have to be careful not to call it NAFTA (it will be called the U.S.-Mexico-Canada Trade Agreement, or USMCA).  The major changes include the dropping of restrictions on US dairy products imported into Canada, primarily from the US state of Wisconsin and and agreement that more components of automobiles exported between Mexico, Canada, and the US have to be produced in factories that pay more than $16 dollars an hour.  The deal will likely harm Canadian dairy farmers and Mexican autoworkers, and will likely increase automobile prices for US consumers.  But President Trump’s major objective, the scrapping of a dispute resolution system that sidesteps US courts, was not agreed upon, leaving Chapter 19 of the NAFTA agreement intact.

Posted October 1, 2018 by vferraro1971 in World Politics

28 September 2018   Leave a comment

Iran has openly accused Saudi Arabia and the United Arab Emirates (UAE) for the attack on the parade of Revolutionary Guards on 22 September. At the same time it announced that it had killed four militants on the Iranian-Pakistani border who Iran believes were involved in the attack.  The moves come after a strong push by the US and Israel against Iran in the United Nations General Assembly meeting.  The US is also trying to mobilize Arab states in the Middle East into an Anti-Iran alliance.  According to the San Francisco Chronicle:

“The Trump administration pressed ahead Friday with plans to create an ‘Arab NATO’ that would unite U.S. partners in the Middle East in an anti-Iran alliance.

“Secretary of State Mike Pompeo met in New York with foreign ministers from Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates to advance the project. The State Department said Pompeo had stressed the need to defeat the Islamic State group and other terrorist organizations as well ending the conflicts in Syria and Yemen, securing Iraq and ‘stopping Iran’s malign activity in the region.'”

There is little evidence that Iran, a nation committed to Shia Islam, is working the the Islamic State, a group committed to Sunni Islam.  The fact that Mr. Pompeo seems not to know that Iran has been fighting the Islamic State in Syria since 2011, as has been the the US, is incredible. 

The US and its allies have been quietly and slowly ratcheting up military pressure on China in the South China Sea.   The British sent the warship HMS Albion into the Sea and Japan sent a submarine.  He French have indicated that they are willing to send a warship in the contested area as well.  The US has sent two B-52 bombers through the region, asserting the right to navigate in international airspace.   In response, China refused to allow the USS Wasp, an amphibious assault ship, to dock in the port of Hong Kong.   The moves come against the backdrop of a deepening trade war and heated rhetoric over a second arms deal with Taiwan, which China regards as a renegade province. 

Posted September 28, 2018 by vferraro1971 in World Politics

27 September 2018   Leave a comment

A new study published in Science suggests that the warming of the Atlantic Ocean caused by climate change will likely lead to an increase in major hurricanes in the future.  The Abstract of the study states:

“…..we show that the increase in 2017 major hurricanes was not primarily caused by La Niña conditions in the Pacific Ocean, but mainly by pronounced warm sea surface conditions in the tropical North Atlantic. It is further shown that, in the future, a similar pattern of North Atlantic surface warming, superimposed upon long-term increasing sea surface temperature from increases in greenhouse gas concentrations and decreases in aerosols, will likely lead to even higher numbers of major hurricanes. The key factor controlling Atlantic major hurricane activity appears to be how much the tropical Atlantic warms relative to the rest of the global ocean.

The Washington Post places the projection in this context: “Considering the toll of the 2017 hurricane season, which unleashed 10 hurricanes in 10 weeks, and three of the five costliest hurricanes on record in Harvey, Irma and Maria, it is difficult to fathom the implications of similar circumstances repeating with even greater frequency.”  It remains to be seen whether this projection will come about, but it is something to worry about and it is probably better ti try to avoid it then to hope that it does not transpire. 

The US has asked the UN Security Council to maintain the sanctions on North Korea in order to force it to initiate the process of denuclearization, but China and Russia have pushed back.  US Secretary of State Mike Pompeo tried to walk a fine line in the discussions, simultaneously backing President Trump’s claim that real progress had been made at the summit meeting with Chairman Kim Jong-un while pushing for harsh sanctions.  China and Russia have taken the position that since progress has been made that the sanctions should be eased.  According to The Guardian:

“However, Wang Yi, the foreign minister of China, whose cooperation is essential to enforcing sanctions, said that ‘given the positive developments’ China believed the UN ‘needs to consider invoking in due course this provision to encourage [North Korea] and other relevant parties to move denuclearisation further ahead’.

“His Russian counterpart, Sergey Lavrov, backed the call for loosening the sanctions, arguing: ‘Any negotiation is a two-way street. Steps by the DPRK toward gradual disarmament should be followed by the easing of sanctions.’”

It seems like the US will lose this round.  It also seems clear that both Russia and China have already eased the sanctions on their own

One of the fundamental assumptions of imperialism, regardless of the time period, is that there are “civilized” and “uncivilized” societies and the the civilized societies have an obligation to bring the uncivilized into the blessings of modernity.  Often powerful societies use the label of “primitive” to justify their interventions.  The more we learn, however, of these so-called “primitive” societies is that they were incredibly complex and sophisticated.   Recent research in Mexico and Central America indicate that the Mayan society was an advanced civilization for its time.  The use of a technology called lidar has revealed some stunning archaeological finds:

“From the data, the team estimates there may have been about 7 to 11 million people living in the central Maya Lowlands during what was known as the Late Classic Period, which lasted from about 650 A.D. to about 800 A.D.”

Posted September 27, 2018 by vferraro1971 in World Politics

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