The Astana Summit of the Organization for Security and Cooperation in Europe (OSCE), held on December 1-2, 2010, was a unique event. The decision to hold it was not easy. The balance of opinions wavered under the weight of opposing arguments until the very last moment.
Perhaps, the most serious argument against the summit was whether there was a point at all in holding a summit of an organization which, in fact, has already fulfilled its mission? The OSCE had come successful out of the Cold War era, helped dismantle the Iron Curtain, and instill the Helsinki principles in the post-totalitarian countries of Eastern Europe and the CIS.
Now, Europe has changed, and the world has become a different place. Therefore, as proponents of this view have asserted, in modern circumstances, the OSCE could only aspire to take its proud place in a global museum of history. This view is still reflected in some of the numerous assessments of the outcome of the Astana summit.
I never shared this opinion. On the contrary, I believe that the value of the OSCE is exactly in the fact that, at times of different, critical years for Europe and the world, its goals and principles have remained a universal basis for maintaining and strengthening security in the vast area of the northern hemisphere from Vancouver to Vladivostok.
In July 1992, speaking at the third summit of the CSCE in Helsinki, I called for the beginning of a similar process in the Asian continent. A few months later, in October of the same year, speaking from the rostrum of the 47th session of the UN General Assembly, I proposed the idea of convening a Conference on Interaction and Confidence-Building Measures in Asia (CICA). Today, the CICA is a successful security structure, which acquired the status of a fully-fledged international organization. Its work involves 27 Asian states. That is 90% of the continent’s area, inhabited by half of the population of the world.
Isn’t this compelling evidence of the strength of the “Helsinki Spirit” as a global factor?
The Astana summit: a step into the 21st Century
My proposal to convene the OSCE summit in Astana was based on a number of considerations.
First was my deep conviction that, in the 21 century, the OSCE can and must use all of its vast experience to build an ambitious new security system spanning the entire Eurasian continent, the space surrounded by four oceans, from the Atlantic to the Pacific, and from the Arctic to the Indian.
Second, it was important to recover the OSCE from the critical state in which it found itself.
After the 1999 Istanbul Summit, the Organization failed to keep up with the rapid pace of global change.
Although it managed to freeze the local conflicts in its area of responsibility – namely those in the Balkans, Transniestria, Nagorno-Karabakh, Abkhazia and South Ossetia, – it has not been able to find a way to resolve those conflicts. New sources of complex challenges and security threats, such as international terrorism, drug trafficking, transnational crime and illegal migration, have sprung up far beyond Europe, while the OSCE participating states have developed differing approaches to understanding the fundamental issues of military, humanitarian and economic dimensions of security.
Third, it was necessary to restore the value and effectiveness of direct dialogue among the leaders of the OSCE.
It is hard to achieve trust without direct dialogue and without summits. Some participating states have had a whole generation of political leaders who had never met each other at an OSCE summit.
I further developed all of these arguments in favour of convening a summit in an address to the OSCE Permanent Council, during bilateral meetings with my colleagues, heads of state and government, and in speeches at a number of fora held under Kazakhstan’s chairmanship in the OSCE. I am grateful to my colleagues, the heads of state and government of the OSCE, for their support of my arguments.
At the Istanbul summit in 1999, the OSCE essentially stopped at the open door of the 21st century.
Now, it was able to cross the threshold in Astana. It was a difficult step, but it has now been made.
This bold step has become a unifying success for the entire Organization, and the beginning of its renewal.
The Astana Summit, attended by 73 official delegations from all participating states and partners, as well as key international organizations, demonstrated their readiness to further the dialogue about the necessary changes in the largest international security structure.
It should be noted that the OSCE summit in Astana was simultaneous with such major international fora as the EU-Africa summit in Tripoli and the Climate Change Conference in Cancun in Latin America. Despite this, the OSCE summit in Astana became the most representative forum of the Organization.
Not without pride, I would venture that Kazakhstan’s chairmanship of the OSCE has played an important role in this success.
The energy of Kazakhstan’s chairmanship
As we assumed the OSCE Chairmanship in January 2010, we put forward a plan for the renewal of the OSCE and implemented it with the wide support of all our partners.
A key task of Kazakhstan’s chairmanship has been to expand and strengthen the field of consensus on fundamental issues of security. We have continued the process of establishing a common approach by all the OSCE participating states to the understanding of present threats and challenges.
This was especially important in order to find coordinated responses to them and, in general, to build confidence within the Organization.
Kazakhstan has introduced innovation into this process, building on multi-country dialogue through consultations with representatives of such authoritative global and regional institutions as the UN, the Comprehensive Nuclear-Test-Ban Treaty Organization, NATO, the EU, the Council of Europe, SCO, CIS, CSTO, OIC and others. Their delegations attended the Astana Summit of the OSCE.
The political lexicon of the OSCE firmly embraced the concept of a common and indivisible area for Euro-Atlantic and Eurasian security.
We have methodically worked on all three baskets of the OSCE.
Collective efforts to renew and strengthen the regime of arms control and confidence-building measures acquired new dynamics.
This makes it possible to complete the process of modernizing the 1999 Vienna Document in 2011.
At the same time, the agreement on the beginning of substantive negotiations on issues of entry into force of the Adapted Conventional Armed Forces in Europe Treaty (Adapted CFE) is of special importance.
Furthermore, the negotiation processes over settlement of frozen conflicts in the framework of the OSCE have been updated.
As the OSCE chair-in-office, Kazakhstan has worked to strengthen the OSCE’s capacity in conflict prevention, crisis management and post-conflict rehabilitation.
The work of the Minsk Group to resolve the conflict in Nagorno-Karabakh was also activated.
We have been actively involved in resolving the political crisis in Kyrgyzstan in close cooperation with the United Nations, Russia, the United States and other countries. Kazakhstan continues to play an important role in stabilizing the situation in that country and in the restoration of economic damage caused by internal conflict.
We have encouraged our OSCE partners to expand their participation in the peace settlement in Afghanistan and its economic revival.
Kazakhstan has provided Afghanistan with many different kinds of assistance.
We have allocated funds to educate domestically one thousand young Afghans who will learn the most needed peaceful professions. Food has been delivered and agreements to build several economic facilities in Afghanistan have been signed.
We are convinced that Kazakhstan’s contribution to resolving the Afghan problem could be useful as an example to all OSCE participating states.
Kazakhstan’s Chairmanship has drawn the attention of our partners to a number of issues of relevance to Central Asian security.
Specifically, we held a donor conference on the Aral Sea, and promoted the idea of adopting, in the OSCE format, the “Water and Rights” Programme as an international legal framework for resolving water issues of the region affected by water shortages.
This has become Kazakhstan’s contribution to the renewal of the economic and environmental basket of the OSCE, in light of the global trends and contents.
We have also drawn the attention of our partners in the Organization to the need for a consolidated search of ways to overcome the consequences of the global financial and economic crisis.
Kazakhstan has proposed to carry out work on the high-quality implementation of the Maastricht Strategy of the OSCE and adapting it to a post-crisis environment.
Within the third, human basket, Kazakhstan as a multi-ethnic and multi-religious state, has actively promoted the idea of an intercultural and interreligious dialogue.
Convened by Kazakhstan’s Chairmanship in Astana in June 2010, the OSCE High-Level Conference on Tolerance and Non-Discrimination confirmed the importance of the exchange of experience in ensuring interethnic and interfaith accord.
Its participants highly praised the model of peace and accord among 140 ethnicities and 46 faiths successfully implemented in Kazakhstan.
They have called for active use of the capacity of the OSCE in addressing nationalism, religious intolerance, racism, xenophobia and anti-Semitism.
Overall, Kazakhstan’s Chairmanship in the OSCE has provided dynamism to OSCE’s entire work. We approached this noble mission with a deep sense of responsibility and fully accomplished the objectives we have set for ourselves.
In their addresses at the Astana Summit, heads of state and government and heads of delegations praised Kazakhstan’s vigorous efforts as Chairman of the OSCE.
Kazakhstan, which shut down the Semipalatinsk nuclear test site, fully relinquished its nuclear arsenal, realized the idea of establishing the CICA and has actively promoted the integration in Eurasia, has once again proven itself a responsible member of the global community.
OSCE’s Global Geometry
In geopolitics, the shortest distance between the two points is not always connected by a straight line. For the OSCE, a road from Istanbul to Astana has taken eleven years.
This is why the historic value of the "Astana Commemorative Declaration: Towards a Security Community" is indisputable.
First, it confirms the relevance of the principles on which the Organization was based and the commitment of all 56 participating states to the norms and commitments adopted within it, starting with the Helsinki Final Act, the Paris Charter, the Charter of European Security, and other instruments.
Second, the Eurasian vector of the OSCE has been enshrined for the first time ever.
The Astana Declaration particularly noted that the security in the OSCE area is inextricably related to the security in neighbouring regions, especially, the Mediterranean and Asia.
It set the goal of establishing common and indivisible Euro-Atlantic and Eurasian security community as the primary goal for the OSCE in the new century.
Third, the document welcomed all initiatives to strengthen the OSCE and its ability to adequately and effectively address the challenges of the 21st century.
I would like to note that numerous proposals have been heard from the tribune of the OSCE Summit stressing shared motivation of all participating states to take the Organization to a new and higher level.
This is the essence of the "Astana spirit" brought into life in a difficult and open discussion.
An initiative by the President of the Russian Federation, Dmitry Medvedev, on the adoption of a legally binding Treaty on European Security is aimed at the creation of strong guarantees of indivisibility of the common security area.
Italian Prime Minister Silvio Berlusconi noted the importance for the OSCE of using the example of tolerance and mutual respect, which Kazakhstan and Astana demonstrated to the world during the summit.
All the ideas for strengthening OSCE mechanisms should certainly be viewed as a collective contribution to the process of rethinking the role of the Organization in consolidating global security.
I entirely support the position voiced at the Astana Summit by U.S. Secretary of State, Hillary Clinton, that, other than the OSCE, “there is no other regional organization as well positioned to do so”.
It is especially relevant when it comes to strengthening the Organization’s capacity in effectively responding to emerging threats and challenges, preventing and resolving grave conflicts in the entire area of its responsibility.
In its turn, Kazakhstan has also made proposals to strengthen the OSCE, and their significance was praised by the participants of the Astana Summit.
In our view, the global geometry of the OSCE in the 21st century should consist of the following targeted actions:
• First, Kazakhstan has called for interaction in strengthening global security among integration structures of the Eurasian continent. In terms of "East – West", it is the interaction between the European Union and NATO on one hand, and EurAsEC and CSTO on the other. In terms of "North – South", it is the interaction between the OSCE, CICA and the Organization of Islamic Conference, which Kazakhstan will chair in 2011;
• Second, we have proposed to single out the issues of financial and economic security as a separate basket of the OSCE. Today, the OSCE area and, overall, Eurasia, comprise the most promising areas of the planet’s economic growth – North America, the European Union, China, Russia, India, the Persian Gulf, and Southeast Asia. This is why it is important to look for ways of interaction among them through trust and effective security systems. I believe the OSCE has the potential to participate in the process of creating the world reserve currency, develop guidelines for coordinated monetary and financial policies, and cooperation and integration in the Euro-Atlantic and Euro-Asian area. In our view, there is a need to adopt a new document, "Maastricht Plus", in which it would be reasonable to reflect these issues. This position has received support in several speeches by heads of state and government at the Astana Summit, including by Greek Prime Minister, George Papandreou, and others. It is necessary to supplement the OSCE structure with councils on energy security and economic interaction;
• Third, in order to enhance the politico-military dimension, we have proposed to establish a specific OSCE forum to elaborate new contractual norms in disarmament and non-proliferation. There is also a need to establish the council at the level of ministers of the OSCE participating states to coordinate the fight against cross-border crime, drug trafficking and illegal migration;
• Fourth, we have called for honest and open interfaith dialogue. In his speech at the Cairo University in June 2009, US President Barack Obama fairly stated: "In order to move forward, we must say openly to each other the things we hold in our hearts and that too often are said only behind closed doors. There must be a sustained effort to listen to each other; to learn from each other; to respect one another; and to seek common ground.” I believe that it is possible to hold such a dialogue within the OSCE through the already available platform of the ‘Congress of Leaders of World and Traditional Religions’, which has regularly been held in Astana since 2003. In our view, it is necessary to develop the document “OSCE: Towards Tolerance in a New Decade,” which will outline the principles of interaction and cooperation among main religions of the world, especially between Islam and Christianity, for the sake of global confirmation of ideals of goodwill and fair world order;
• Fifth, within the OSCE, it is crucial to organize the work on forecasting various security issues as a separate dimension by creating an OSCE Security Institute.
It is also important to ensure that OSCE structures are equally deployed throughout the area of responsibility of the Organization, including in its Asian portion.
This process was initiated by the Astana Summit, held for the first time ever in Central Asia, beyond the geographic borders of Europe.
At the beginning of the century, in my book "A critical decade", I strongly refuted the thesis, imposed on us, about Central Asia as a part of a global arc of instability.
I believe in a different potential for the region: its ability to be a bridge between West and East, North and South.
After the OSCE Summit in Astana, one may say that Central Asia has avoided the fate of becoming an area with down-sized security mechanisms.
Today, Kazakhstan and all the Central Asian states have entered the international arena as an important link in strengthening Eurasian and global security.
This is necessary for strengthening our new states which will be all celebrating the 20th anniversary of their independence in 2011.
I must note that the OSCE Summit in Astana has positively influenced Kazakhstan. It has united our nation, strengthened belief in our ability to resolve incredibly difficult challenges and achieve our highest goals. We have shown that we are responsible before the world community, consistent and active in enhancing peace, stability and security.
The OSCE Summit in Astana has drawn a line under the complex period in the history of the OSCE. It opened a door into the future for the OSCE and gave it a unique chance for renewal. Now it is necessary to continue the joint work unabated. All proposals to reform the OSCE made in Astana should be thoroughly analyzed and taken into account while finalizing the OSCE Action Plan for the forthcoming years. I am convinced that the experience of Kazakhstan, which lead the OSCE in 2010, will be seamlessly developed by subsequent chairmanships: Lithuania in 2011, Ireland in 2012 and Ukraine in 2013, and others. At the same time, it is crucial that the OSCE high-level dialogue is not interrupted. This depends on the will and motivation of all OSCE participating states and their leaders. This is the main condition for ensuring the Organization’s efficiency, while strengthening the stability and security of its participating states. Globalization has closely tied the fates of different countries and peoples. We all share common objectives: peace and accord, progress and prosperity on the planet. It is these noble goals that constitute the global mission of the OSCE in the 21st century.
Source: www.neurope.eu
Monday, January 10, 2011
Sunday, January 09, 2011
China's Support for Kim Jong Il Drives Japan, South Korea to Bolster Ties
China’s military buildup and failure to condemn North Korean aggression are helping Japan and South Korea overcome their economic rivalry and a decades-long legacy of distrust to pursue closer military ties.
Japanese Defense Minister Toshimi Kitazawa and his South Korean counterpart Kim Kwan Jin hold talks in Seoul today, the first in almost two years. Each country sent observers to the other’s military drills with the U.S. for the first time last year, following attacks by Kim Jong Il’s regime that killed 50 South Koreans.
The threat from North Korea may blunt opposition in the south driven by animosity toward Japan for its 1910-1945 occupation of the Korean peninsula. Closer ties between Asia’s two most developed exporters and main U.S. allies may also irk China, which bridles at America’s presence in a region where it wants to exert greater influence.
“China surely won’t approve of this, not to mention the strong opposition from South Koreans who still have bad feelings against Japan,” said Choi Jong Kun, a professor of political science and international studies at Yonsei University in Seoul. “The military relationship between South Korea and Japan still has a lot of hurdles to overcome.”
Kitazawa on Jan. 5 said he wants to discuss with Kim an agreement to share military goods and services, which Japan already has with the U.S. and Australia. South Korea’s Ministry of National Defense said that while no agreements will be signed, the meeting will “provide an opportunity to strengthen military ties to a higher level.”
Legacy of Occupation
South Korea says 176,000 of its citizens were drafted by Japan as soldiers, labor workers and sex slaves during the occupation. Japan’s Prime Minister Naoto Kan in August offered “deep remorse” for the annexation, which South Korean President Lee Myung Bak called “a step forward,” while noting there were still issues to be resolved, including victims compensation.
Japan and South Korea are also industrial rivals. While South Korea’s gross domestic product remains about a sixth of Japan’s, its economy has outperformed that of its neighbor in every quarter bar one for the past 10 years. Korea’s benchmark Kospi Index quadrupled in that period. Japan’s Nikkei 225 Share Index fell by about a quarter.
Suwon, South Korea-based Samsung Electronics Co. overtook Sony Corp., based in Tokyo, as the world’s largest maker of flat-panel televisions in the past decade, and is now the most- profitable company in the two countries. Hyundai Heavy Industries Co., based in Ulsan, helped South Korea take Japan’s place as the world’s biggest shipbuilding nation.
U.S. Urging
The U.S. is urging South Korea and Japan to boost military cooperation after North Korea on Nov. 23 shelled Yeonpyeong Island, killing four people. The U.S. and Japan also backed an international report that found a North Korean torpedo sank one of the South’s warships in March, killing 46 sailors.
Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, said on Dec. 8 in Seoul that he hopes U.S. military exercises with South Korea will include Japanese participation to “cement our unified position on the threat posed by North Korea.”
China, North Korea’s biggest ally, refused to condemn either attack and criticized the Japan-U.S. drills in December as an obstacle to easing regional tension.
“Some are playing with knives and guns while China is criticized for calling for dialogue, is that fair?” Foreign Ministry spokeswoman Jiang Yu said on Dec. 2.
Credit Market Concerns
The cost of insuring Japanese and South Korea government debt jumped after the shelling. South Korea’s five-year credit default swaps rose 17 percent on Nov. 23, the biggest one-day gain in two years, data compiled by Bloomberg show. Japan’s CDS gained 27 percent in the six days following the attack.
“It’s important for the U.S., South Korea and Japan to cooperate more closely at a time when the Korean peninsula is increasingly unstable,” said Tsuneo Watanabe, a senior fellow at the Tokyo Foundation think-tank. “Japan-South Korean accords are vital for smooth operations among the three countries.”
Today’s talks coincide with U.S. Defense Secretary Robert Gates’ visit to China to mend military ties cut off a year ago after the U.S. announced a $6.4 billion arms sale to Taiwan.
Gates two days ago said Chinese military development has “the potential to put some of our capabilities at risk,” adding that the Asian country may be developing a stealth fighter more quickly than the U.S. had believed. It marked the second time in a week a Pentagon official had said the U.S. may have underestimated the speed of China’s weapons development.
Japan last month said it would shift the focus of its national defense toward China in a report that criticized a “lack of transparency” in Chinese military spending.
“South Korea’s rising global profile has helped it overcome its minority complex toward Japan,” said Dong Yong Sueng, a fellow on economic security at the Samsung Economic Research Institute in Seoul. “The current geopolitical situation serves as a good opportunity for them to overcome their history.”
Source: www.bloomberg.com
Japanese Defense Minister Toshimi Kitazawa and his South Korean counterpart Kim Kwan Jin hold talks in Seoul today, the first in almost two years. Each country sent observers to the other’s military drills with the U.S. for the first time last year, following attacks by Kim Jong Il’s regime that killed 50 South Koreans.
The threat from North Korea may blunt opposition in the south driven by animosity toward Japan for its 1910-1945 occupation of the Korean peninsula. Closer ties between Asia’s two most developed exporters and main U.S. allies may also irk China, which bridles at America’s presence in a region where it wants to exert greater influence.
“China surely won’t approve of this, not to mention the strong opposition from South Koreans who still have bad feelings against Japan,” said Choi Jong Kun, a professor of political science and international studies at Yonsei University in Seoul. “The military relationship between South Korea and Japan still has a lot of hurdles to overcome.”
Kitazawa on Jan. 5 said he wants to discuss with Kim an agreement to share military goods and services, which Japan already has with the U.S. and Australia. South Korea’s Ministry of National Defense said that while no agreements will be signed, the meeting will “provide an opportunity to strengthen military ties to a higher level.”
Legacy of Occupation
South Korea says 176,000 of its citizens were drafted by Japan as soldiers, labor workers and sex slaves during the occupation. Japan’s Prime Minister Naoto Kan in August offered “deep remorse” for the annexation, which South Korean President Lee Myung Bak called “a step forward,” while noting there were still issues to be resolved, including victims compensation.
Japan and South Korea are also industrial rivals. While South Korea’s gross domestic product remains about a sixth of Japan’s, its economy has outperformed that of its neighbor in every quarter bar one for the past 10 years. Korea’s benchmark Kospi Index quadrupled in that period. Japan’s Nikkei 225 Share Index fell by about a quarter.
Suwon, South Korea-based Samsung Electronics Co. overtook Sony Corp., based in Tokyo, as the world’s largest maker of flat-panel televisions in the past decade, and is now the most- profitable company in the two countries. Hyundai Heavy Industries Co., based in Ulsan, helped South Korea take Japan’s place as the world’s biggest shipbuilding nation.
U.S. Urging
The U.S. is urging South Korea and Japan to boost military cooperation after North Korea on Nov. 23 shelled Yeonpyeong Island, killing four people. The U.S. and Japan also backed an international report that found a North Korean torpedo sank one of the South’s warships in March, killing 46 sailors.
Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, said on Dec. 8 in Seoul that he hopes U.S. military exercises with South Korea will include Japanese participation to “cement our unified position on the threat posed by North Korea.”
China, North Korea’s biggest ally, refused to condemn either attack and criticized the Japan-U.S. drills in December as an obstacle to easing regional tension.
“Some are playing with knives and guns while China is criticized for calling for dialogue, is that fair?” Foreign Ministry spokeswoman Jiang Yu said on Dec. 2.
Credit Market Concerns
The cost of insuring Japanese and South Korea government debt jumped after the shelling. South Korea’s five-year credit default swaps rose 17 percent on Nov. 23, the biggest one-day gain in two years, data compiled by Bloomberg show. Japan’s CDS gained 27 percent in the six days following the attack.
“It’s important for the U.S., South Korea and Japan to cooperate more closely at a time when the Korean peninsula is increasingly unstable,” said Tsuneo Watanabe, a senior fellow at the Tokyo Foundation think-tank. “Japan-South Korean accords are vital for smooth operations among the three countries.”
Today’s talks coincide with U.S. Defense Secretary Robert Gates’ visit to China to mend military ties cut off a year ago after the U.S. announced a $6.4 billion arms sale to Taiwan.
Gates two days ago said Chinese military development has “the potential to put some of our capabilities at risk,” adding that the Asian country may be developing a stealth fighter more quickly than the U.S. had believed. It marked the second time in a week a Pentagon official had said the U.S. may have underestimated the speed of China’s weapons development.
Japan last month said it would shift the focus of its national defense toward China in a report that criticized a “lack of transparency” in Chinese military spending.
“South Korea’s rising global profile has helped it overcome its minority complex toward Japan,” said Dong Yong Sueng, a fellow on economic security at the Samsung Economic Research Institute in Seoul. “The current geopolitical situation serves as a good opportunity for them to overcome their history.”
Source: www.bloomberg.com
Thursday, January 06, 2011
How Oil Could Kill the Recovery
There are plenty of reasons to be optimistic about the U.S. economy. Workers are earning more, consumers are spending more, banks are lending more, and companies are ready to hire more. But if there's one number that could derail the recovery, it's the price of a barrel of oil.
Economists and watchdog groups are nervously monitoring the rising price of crude, now hovering around $90 -- down from a 2008 high of nearly $150. "Oil prices are entering a dangerous zone for the global economy," warns Fatih Birol, chief economist of the International Energy Agency. "High oil prices threaten to derail the fragile economic recovery," echoes Sylvia Pfeiffer at the Financial Times. Meanwhile, other economists say there's very little reason to think oil should spook the fragile recovery.
Who should we believe, and why should we care in the first place?
WHY SHOULD YOU CARE?
The short answer is that expensive oil is poisonous to an oil-driven economy. Every severe oil spike in the last 50 years has been followed by a deep recession.
Here's the more complicated answer. The United States imported $400 billion of oil in 2008, nearly 3 percent of GDP -- or more than half the total cost of Social Security. Unlike Social Security, those hundreds of billions of dollars leave the country and don't get recycled into our economy. They're empty calories.
When gas prices rise, American consumers can buy the same amount of gas for more money, which makes us poorer; or they can buy less gas, which makes the economy weaker. In the last decade, the price of crude increased from $1.50 to $3.50, and Americans kept filling up their SUVs. Only at $4.00 did Americans recoil, reducing their total miles driven fell for the first time in 30 years by 100 billion miles.
Some economists say the oil spike helped cause the Great Recession. By making it more expensive to commute, they argue, high oil prices both made Americans poorer and reduced the demand for suburban homes, thus hastening the housing collapse. A less dramatic interpretation would say that the Great Recession was caused by the credit crunch on Wall Street, but exacerbated by the historic rise in oil prices.
In the Great Recession, the price of a barrel of oil fell by almost 70 percent. But now oil prices are climbing, for at least three reasons. First, higher global demand raises the price of oil if global supply cannot keep up. Second, as capital becomes more available throughout the world, investors might return to bidding up the price of oil. In 2008, experts estimate that up to a third of the $150 price of a barrel of oil was pure speculation rather than natural supply and demand factors. Third, in the U.S., a weak dollar makes oil, like most imports, more expensive for consumers. So what happens now?
THE CASE FOR FEAR
If you thought $4 gasoline was bad, wait a year. Americans will pay $5 for a gallon of gasoline by 2012 as global demand grows faster than oil producers' supply, predicted John Hofmeister, the former president of Shell Oil and current head of Citizens for Affordable Energy. Without a significant investment in alternative energy sources, we're on a collision course with "blackouts, brownouts, gas lines, [and] rationing."
Hofmeister's math can be summed up in one graph, from the Center for American Progress, which shows projected oil consumption for the U.S., China and India. As China and India join the global middle class, global demand for oil will skyrocket past its 2008 levels, when a barrel cost $147.
Insatiable global demand for oil isn't the only thing that could push up prices. A coup in one of the many unstable oil-producing countries could produce a supply shock. A more likely culprit would be speculation. In 2008, investors with a glut of capital placed their money on commodity futures, driving up the price of oil. As the economy recovers, those investors might return to their old habit -- especially if inflation starts to pick up in the U.S. and investors look to oil as a hedge.
Any of these scenarios are enough keep economists awake at night. "If oil prices went back to the $140 dollar range, it would be a disaster," said Daniel Weiss a research fellow at CAP, "because oil spikes almost always produce economic recessions."
THE CASE FOR CALM
"I'm not too worried about oil crippling a comeback this year," said Christopher Steiner, author of $20 Per Gallon. "There are a lot of reasons why we shouldn't expect oil to go much over $100 per barrel."
First, he cited greater supply. OPEC is producing more oil and has healthier inventories than in 2008. Second, he cited lower demand. The United States, Europe and Japan are all importing significantly less oil than we did when prices passed $140 a barrel.
"In the next few years, if we're still recovering, and China and India join the global middle class, then eventually we'll probably hit $5 gas," Steiner said. "But overall, I think 2011 will be pretty boring on the oil market. The memories of 2008 are too fresh, and nobody wants a repeat."
That includes OPEC. Extreme oil prices are obviously bad for importers, but they're also bad for exporters. Oil producers like Saudi Arabia want oil expensive enough to mint healthy revenue, but cheap enough to keep the world's consumers from fleeing to alternative sources of energy.
"The Saudis believe their ideal price is $80 a barrel," Weiss said, "because that's the price point where they can make lots of money but not spur conservation efforts."
Weiss, an advocate for developing clean alternatives to oil, acknowledged that even if alternative technologies don't come on line in the next few years, the president has ways to fight an oil spike. For example, without congressional approval he could sell oil from the Strategic Petroleum Reserve, which is now at 100% capacity with 726 million barrels, to cushion the blow for families if oil prices spike.
WHAT SHOULD WE WANT
Oil blots our economic outlook. To get the export-driven recovery White House economists want, we need two ingredients: a weaker dollar to make our goods cheap and strong foreign consumers to buy our stuff. Ironically, a weak dollar and strong global demand would also conspire to make gasoline more expensive. In fact, if you wanted to design a scenario where oil prices would not budge, you'd probably wish for a strong dollar, a weak global economy, and a slow recovery in the U.S.
So what should we wish for?
Wish for a recovery, of course. Up to a third of the $147 price tag for 2008 oil came from investor speculation, according to one congressional report, and few people expect a sequel in 2011. With inflation weak, there's little reason for investors to pile onto oil commodities as a hedge. A strong global recovery will lift global wealth. It will enrich Americans, who will buy from Asia, which will enrich Asia, which will buy from America, and on it goes.
Oil probably won't kill the 2011 economy. But eventually, the world will have to find a way to satiate its relentless and growing appetite for energy that doesn't rely on a single scarce resource.
Source: http://www.theatlantic.com
Economists and watchdog groups are nervously monitoring the rising price of crude, now hovering around $90 -- down from a 2008 high of nearly $150. "Oil prices are entering a dangerous zone for the global economy," warns Fatih Birol, chief economist of the International Energy Agency. "High oil prices threaten to derail the fragile economic recovery," echoes Sylvia Pfeiffer at the Financial Times. Meanwhile, other economists say there's very little reason to think oil should spook the fragile recovery.
Who should we believe, and why should we care in the first place?
WHY SHOULD YOU CARE?
The short answer is that expensive oil is poisonous to an oil-driven economy. Every severe oil spike in the last 50 years has been followed by a deep recession.
Here's the more complicated answer. The United States imported $400 billion of oil in 2008, nearly 3 percent of GDP -- or more than half the total cost of Social Security. Unlike Social Security, those hundreds of billions of dollars leave the country and don't get recycled into our economy. They're empty calories.
When gas prices rise, American consumers can buy the same amount of gas for more money, which makes us poorer; or they can buy less gas, which makes the economy weaker. In the last decade, the price of crude increased from $1.50 to $3.50, and Americans kept filling up their SUVs. Only at $4.00 did Americans recoil, reducing their total miles driven fell for the first time in 30 years by 100 billion miles.
Some economists say the oil spike helped cause the Great Recession. By making it more expensive to commute, they argue, high oil prices both made Americans poorer and reduced the demand for suburban homes, thus hastening the housing collapse. A less dramatic interpretation would say that the Great Recession was caused by the credit crunch on Wall Street, but exacerbated by the historic rise in oil prices.
In the Great Recession, the price of a barrel of oil fell by almost 70 percent. But now oil prices are climbing, for at least three reasons. First, higher global demand raises the price of oil if global supply cannot keep up. Second, as capital becomes more available throughout the world, investors might return to bidding up the price of oil. In 2008, experts estimate that up to a third of the $150 price of a barrel of oil was pure speculation rather than natural supply and demand factors. Third, in the U.S., a weak dollar makes oil, like most imports, more expensive for consumers. So what happens now?
THE CASE FOR FEAR
If you thought $4 gasoline was bad, wait a year. Americans will pay $5 for a gallon of gasoline by 2012 as global demand grows faster than oil producers' supply, predicted John Hofmeister, the former president of Shell Oil and current head of Citizens for Affordable Energy. Without a significant investment in alternative energy sources, we're on a collision course with "blackouts, brownouts, gas lines, [and] rationing."
Hofmeister's math can be summed up in one graph, from the Center for American Progress, which shows projected oil consumption for the U.S., China and India. As China and India join the global middle class, global demand for oil will skyrocket past its 2008 levels, when a barrel cost $147.
Insatiable global demand for oil isn't the only thing that could push up prices. A coup in one of the many unstable oil-producing countries could produce a supply shock. A more likely culprit would be speculation. In 2008, investors with a glut of capital placed their money on commodity futures, driving up the price of oil. As the economy recovers, those investors might return to their old habit -- especially if inflation starts to pick up in the U.S. and investors look to oil as a hedge.
Any of these scenarios are enough keep economists awake at night. "If oil prices went back to the $140 dollar range, it would be a disaster," said Daniel Weiss a research fellow at CAP, "because oil spikes almost always produce economic recessions."
THE CASE FOR CALM
"I'm not too worried about oil crippling a comeback this year," said Christopher Steiner, author of $20 Per Gallon. "There are a lot of reasons why we shouldn't expect oil to go much over $100 per barrel."
First, he cited greater supply. OPEC is producing more oil and has healthier inventories than in 2008. Second, he cited lower demand. The United States, Europe and Japan are all importing significantly less oil than we did when prices passed $140 a barrel.
"In the next few years, if we're still recovering, and China and India join the global middle class, then eventually we'll probably hit $5 gas," Steiner said. "But overall, I think 2011 will be pretty boring on the oil market. The memories of 2008 are too fresh, and nobody wants a repeat."
That includes OPEC. Extreme oil prices are obviously bad for importers, but they're also bad for exporters. Oil producers like Saudi Arabia want oil expensive enough to mint healthy revenue, but cheap enough to keep the world's consumers from fleeing to alternative sources of energy.
"The Saudis believe their ideal price is $80 a barrel," Weiss said, "because that's the price point where they can make lots of money but not spur conservation efforts."
Weiss, an advocate for developing clean alternatives to oil, acknowledged that even if alternative technologies don't come on line in the next few years, the president has ways to fight an oil spike. For example, without congressional approval he could sell oil from the Strategic Petroleum Reserve, which is now at 100% capacity with 726 million barrels, to cushion the blow for families if oil prices spike.
WHAT SHOULD WE WANT
Oil blots our economic outlook. To get the export-driven recovery White House economists want, we need two ingredients: a weaker dollar to make our goods cheap and strong foreign consumers to buy our stuff. Ironically, a weak dollar and strong global demand would also conspire to make gasoline more expensive. In fact, if you wanted to design a scenario where oil prices would not budge, you'd probably wish for a strong dollar, a weak global economy, and a slow recovery in the U.S.
So what should we wish for?
Wish for a recovery, of course. Up to a third of the $147 price tag for 2008 oil came from investor speculation, according to one congressional report, and few people expect a sequel in 2011. With inflation weak, there's little reason for investors to pile onto oil commodities as a hedge. A strong global recovery will lift global wealth. It will enrich Americans, who will buy from Asia, which will enrich Asia, which will buy from America, and on it goes.
Oil probably won't kill the 2011 economy. But eventually, the world will have to find a way to satiate its relentless and growing appetite for energy that doesn't rely on a single scarce resource.
Source: http://www.theatlantic.com
Wednesday, January 05, 2011
GLOBAL MARKETS-Equity, oil and euro stumble on risk reappraisal
By Mike Dolan and Jeremy Gaunt
LONDON, Jan 5 (Reuters) - World equities, oil prices and the euro retreated from early new year highs on Wednesday, with underlying economic optimism reined in by wariness about lingering debt woes, possible data surprises and wildcard risks.
In a pattern investors say may well be repeated throughout 2011, a burst of new year investor optimism over the past week quickly fell prey to profit taking and correlation trading that automatically links moves in one security to the buying or selling of another.
Commodity price falls -- which some say were accelerated by a fall in the flood-hit Australian dollar and generalised U.S. dollar strength -- continued for a second day in a row. This, in turn, all put pressure on previously buoyant world equities.
Oil, which had only a few days ago looked to be heading to $100 a barrel again, fell back below $89 a barrel in London. [O/R]. Prices of both commodities and equities, however, remained around at multi-year highs.
World stocks as measured by MSCI .MIWD00000PUS were down 0.5 percent, though still within a few points of highs last seen in the third quarter of 2008.
Europe's FTSEurofirst 300 .FTEU3 was down 1.0 percent. Earlier, Japan's Nikkei .N225 closed down nearly 0.2 percent after hitting a 7-1/2 month closing high on Tuesday.
"There might just be an element of nerves creeping back into the market as investors return to their desks," said Keith Bowman, equity analyst at Hargreaves Lansdown.
NEW YEAR HANGOVER
A number of market moves were put down to investors adjusting positions after end-of-year balancing of portfolios.
Investors were also awaiting U.S. jobs data due on Friday for confirmation that the world's largest economy is recovering, a key factor in recent equity rallies. A early cut of the month's private-sector employment reading was due on Wednesday.
"Growth in the labour market is one of the biggest deciding factors for markets this year, that is why we are seeing investors a bit cautious ahead of the (jobs) numbers. If the job figures are good, we could see a push higher," said David Jones, market strategist at IG Index.
The ADP National employment survey for December, a precursor to Friday's non-farm payrolls report, was due at 1315 GMT while U.S. ISM non-manufacturing data was set for 1500 GMT. ECON
"There is some optimism with regards to the U.S. economy, but that is mixed with concerns over where Europe is going in the short- to medium-term. We are likely to remain very data sensitive," Bowman at Hargreaves Lansdown said.
Stocks related to commodities acted as the main drag on bourses. Anglo American (AAL.L), BHP Billiton (BLT.L), Kazakhmys (KAZ.L) and Rio Tinto (RIO.L) shed 1.5 percent to 3 percent.
Commodities were hit hard on Tuesday, with the Reuters-Jefferies CRB index .CRB closing nearly 1.6 percent down as energy, metals and agricultural investors took profits on the heady gains made on thin holiday volume over the past two weeks. [COM/WRAP]
The sell-off continued in some areas on Wednesday. Copper futures, for example, fell two percent in London. The Australian dollar AUD= was down about 0.5 percent.
European chemical shares were among the fallers, with the STOXX Europe 600 chemicals index .SX4P down 1.6 percent on concerns about a slowdown in world demand.
Chemicals market leader BASF (BASFn.DE) fell 3.3 percent, with traders pointing to profit taking following a strong run. The stock had gained almost 22 percent since early October.
FIRMER DOLLAR
The dollar took some of the blame for commodities' slide, holding firm on hopes for U.S. economic recovery. [FRX/]
Market players said the dollar's rise and the partly related drop in commodities this week have been driven by position unwinding.
"The move over the past two weeks was somewhat exaggerated, having taken place in thin liquidity. With liquidity now coming back on stream, the markets are now reassessing some of the moves," said Sue Trinh, strategist at RBC Capital Markets.
The dollar index, which measures the greenback's value against major currencies, rose 0.4 percent to 79.75. .DXY
The euro dipped 0.6 percent to $1.3212 EUR=, with traders nervy over the higher yields paid by Portugal at its latest Treasury bill auction on Wednesday and reports about European Union plans to insist in future on senior creditors accepting writedowns on the debt of ailing EU banks.
Core German government bond yields fell as demand grew for safer assets and peripheral euro government debt yields climbed after the Portuguese auction.
"On the face of it the auction met solid demand given the healthy cover ratio, though this obviously comes at a much higher yield than the previous six-month Portuguese offering last September," said Credit Agricole strategist Orlando Green.
Source: www.reuters.com
LONDON, Jan 5 (Reuters) - World equities, oil prices and the euro retreated from early new year highs on Wednesday, with underlying economic optimism reined in by wariness about lingering debt woes, possible data surprises and wildcard risks.
In a pattern investors say may well be repeated throughout 2011, a burst of new year investor optimism over the past week quickly fell prey to profit taking and correlation trading that automatically links moves in one security to the buying or selling of another.
Commodity price falls -- which some say were accelerated by a fall in the flood-hit Australian dollar and generalised U.S. dollar strength -- continued for a second day in a row. This, in turn, all put pressure on previously buoyant world equities.
Oil, which had only a few days ago looked to be heading to $100 a barrel again, fell back below $89 a barrel in London. [O/R]. Prices of both commodities and equities, however, remained around at multi-year highs.
World stocks as measured by MSCI .MIWD00000PUS were down 0.5 percent, though still within a few points of highs last seen in the third quarter of 2008.
Europe's FTSEurofirst 300 .FTEU3 was down 1.0 percent. Earlier, Japan's Nikkei .N225 closed down nearly 0.2 percent after hitting a 7-1/2 month closing high on Tuesday.
"There might just be an element of nerves creeping back into the market as investors return to their desks," said Keith Bowman, equity analyst at Hargreaves Lansdown.
NEW YEAR HANGOVER
A number of market moves were put down to investors adjusting positions after end-of-year balancing of portfolios.
Investors were also awaiting U.S. jobs data due on Friday for confirmation that the world's largest economy is recovering, a key factor in recent equity rallies. A early cut of the month's private-sector employment reading was due on Wednesday.
"Growth in the labour market is one of the biggest deciding factors for markets this year, that is why we are seeing investors a bit cautious ahead of the (jobs) numbers. If the job figures are good, we could see a push higher," said David Jones, market strategist at IG Index.
The ADP National employment survey for December, a precursor to Friday's non-farm payrolls report, was due at 1315 GMT while U.S. ISM non-manufacturing data was set for 1500 GMT. ECON
"There is some optimism with regards to the U.S. economy, but that is mixed with concerns over where Europe is going in the short- to medium-term. We are likely to remain very data sensitive," Bowman at Hargreaves Lansdown said.
Stocks related to commodities acted as the main drag on bourses. Anglo American (AAL.L), BHP Billiton (BLT.L), Kazakhmys (KAZ.L) and Rio Tinto (RIO.L) shed 1.5 percent to 3 percent.
Commodities were hit hard on Tuesday, with the Reuters-Jefferies CRB index .CRB closing nearly 1.6 percent down as energy, metals and agricultural investors took profits on the heady gains made on thin holiday volume over the past two weeks. [COM/WRAP]
The sell-off continued in some areas on Wednesday. Copper futures, for example, fell two percent in London. The Australian dollar AUD= was down about 0.5 percent.
European chemical shares were among the fallers, with the STOXX Europe 600 chemicals index .SX4P down 1.6 percent on concerns about a slowdown in world demand.
Chemicals market leader BASF (BASFn.DE) fell 3.3 percent, with traders pointing to profit taking following a strong run. The stock had gained almost 22 percent since early October.
FIRMER DOLLAR
The dollar took some of the blame for commodities' slide, holding firm on hopes for U.S. economic recovery. [FRX/]
Market players said the dollar's rise and the partly related drop in commodities this week have been driven by position unwinding.
"The move over the past two weeks was somewhat exaggerated, having taken place in thin liquidity. With liquidity now coming back on stream, the markets are now reassessing some of the moves," said Sue Trinh, strategist at RBC Capital Markets.
The dollar index, which measures the greenback's value against major currencies, rose 0.4 percent to 79.75. .DXY
The euro dipped 0.6 percent to $1.3212 EUR=, with traders nervy over the higher yields paid by Portugal at its latest Treasury bill auction on Wednesday and reports about European Union plans to insist in future on senior creditors accepting writedowns on the debt of ailing EU banks.
Core German government bond yields fell as demand grew for safer assets and peripheral euro government debt yields climbed after the Portuguese auction.
"On the face of it the auction met solid demand given the healthy cover ratio, though this obviously comes at a much higher yield than the previous six-month Portuguese offering last September," said Credit Agricole strategist Orlando Green.
Source: www.reuters.com
Tuesday, January 04, 2011
Green agenda sidetracked by global economic focus
For years, the bumper-sticker slogan of the environmental movement has been: "Think globally, act locally."
As 2011 dawns, the global perspective is increasingly lost in immediate concerns about the economy while local action seems stronger than ever.
Local issues including clean water and air, recycling and transit have become givens for generations of Canadians who came of age after activism went mainstream in the 1960s and '70s. In Canadian cities, no one puts up with visible polluters any more. Recycling is taken for granted, cloth shopping bags have elbowed aside plastic and bike clothes are the new chic in some circles.
But the momentum for action on climate change, the primary focus of international environmental action for the past 15 years, has stalled.
In the recent midterm elections in the United States, the environment was rarely on the radar. The issues were the economy, jobs, health care and security. One of the big losers was any prospect that the U.S. would be going ahead with a cap and trade system for controlling greenhouse gas emissions.
The legislation that would have instituted cap and trade was already stalled before the midterm elections over concerns that it could kill jobs and the incoming Republican tide will likely wash away any vestiges of enthusiasm for further action.
More than half of the incoming Republican legislators, who are changing the balance of power in Washington, are on the record as being skeptical about climate change science.
The Conservative government in Ottawa is taking its cues on the issue from Washington. Ministers argue that we'd be risking Canadian jobs if we take action to reduce emissions that makes us less competitive with the U.S.
The waning interest in concrete action on climate change isn't found only in North America.
The lack of progress in the latest round of UN-sponsored climate change negotiations in Cancun reflected the general lack of interest in the issue among nations that are struggling through the continuing economic slowdown.
In British Columbia, Premier Gordon Campbell has made the fight against climate change a centrepiece of his regime, often to the discomfort of many in his caucus and his supporters in the business community.
With Campbell's departure early in the new year, it's not clear whether the Liberal government will be as enthusiastic about pushing forward with initiatives that can be construed as adding costs to operating a business in B.C. Some of the candidates for his job have already called for a pause on both cap and trade and further increases in the carbon tax.
What will continue is the progress being made through the pursuit of energy efficiency, driven by U.S. concerns over strategic concerns as well as fear of sharply rising energy costs.
Over the past two decades, significant gains have been made by automakers in improving the efficiency of the vehicles they manufacture.
Plug-in electric cars, which could have a significant advantage in British Columbia -- where most of our electricity is generated from water power -- are expected to be players for the next few years, but even small advances in the fuel efficiency of more conventional vehicles translate into millions of litres saved and carbon dioxide that won't be released in to the atmosphere.
The new mood in Washington is expected to take some of the heat off the Alberta oilsands, which remain the single most visible environmental issue in Canada. The oilsands, called tarsands by their opponents, are the target of multiple campaigns by the well-funded and organized international environment movement. But they also have powerful proponents among Americans who view the oilsands as a friendly source in a world where much of the available energy is controlled by more hostile regimes.
The energy battleground in British Columbia will be the $5.5-billion Enbridge Northern Gateway Project, which calls for a pair of pipelines from Alberta to the deepwater port of Kitimat.
Environmentalists and many first nations oppose the project on several grounds: the potential of a breach in the pipeline, the risk of a tanker accident and general opposition to anything connected to the oilsands.
Our need for energy will also be at the centre of what will be a continuing battle over the proposed Site C dam on Peace River, as well as controversial run-of-river hydro projects.
The fight over fish farms will also continue to fester, with part of the focus on the Cohen Commission, which is looking into what was supposed to be the collapse of the sockeye stocks before the massive run this fall raised even more questions about what is really going on.
Source: http://communities.canada.com
As 2011 dawns, the global perspective is increasingly lost in immediate concerns about the economy while local action seems stronger than ever.
Local issues including clean water and air, recycling and transit have become givens for generations of Canadians who came of age after activism went mainstream in the 1960s and '70s. In Canadian cities, no one puts up with visible polluters any more. Recycling is taken for granted, cloth shopping bags have elbowed aside plastic and bike clothes are the new chic in some circles.
But the momentum for action on climate change, the primary focus of international environmental action for the past 15 years, has stalled.
In the recent midterm elections in the United States, the environment was rarely on the radar. The issues were the economy, jobs, health care and security. One of the big losers was any prospect that the U.S. would be going ahead with a cap and trade system for controlling greenhouse gas emissions.
The legislation that would have instituted cap and trade was already stalled before the midterm elections over concerns that it could kill jobs and the incoming Republican tide will likely wash away any vestiges of enthusiasm for further action.
More than half of the incoming Republican legislators, who are changing the balance of power in Washington, are on the record as being skeptical about climate change science.
The Conservative government in Ottawa is taking its cues on the issue from Washington. Ministers argue that we'd be risking Canadian jobs if we take action to reduce emissions that makes us less competitive with the U.S.
The waning interest in concrete action on climate change isn't found only in North America.
The lack of progress in the latest round of UN-sponsored climate change negotiations in Cancun reflected the general lack of interest in the issue among nations that are struggling through the continuing economic slowdown.
In British Columbia, Premier Gordon Campbell has made the fight against climate change a centrepiece of his regime, often to the discomfort of many in his caucus and his supporters in the business community.
With Campbell's departure early in the new year, it's not clear whether the Liberal government will be as enthusiastic about pushing forward with initiatives that can be construed as adding costs to operating a business in B.C. Some of the candidates for his job have already called for a pause on both cap and trade and further increases in the carbon tax.
What will continue is the progress being made through the pursuit of energy efficiency, driven by U.S. concerns over strategic concerns as well as fear of sharply rising energy costs.
Over the past two decades, significant gains have been made by automakers in improving the efficiency of the vehicles they manufacture.
Plug-in electric cars, which could have a significant advantage in British Columbia -- where most of our electricity is generated from water power -- are expected to be players for the next few years, but even small advances in the fuel efficiency of more conventional vehicles translate into millions of litres saved and carbon dioxide that won't be released in to the atmosphere.
The new mood in Washington is expected to take some of the heat off the Alberta oilsands, which remain the single most visible environmental issue in Canada. The oilsands, called tarsands by their opponents, are the target of multiple campaigns by the well-funded and organized international environment movement. But they also have powerful proponents among Americans who view the oilsands as a friendly source in a world where much of the available energy is controlled by more hostile regimes.
The energy battleground in British Columbia will be the $5.5-billion Enbridge Northern Gateway Project, which calls for a pair of pipelines from Alberta to the deepwater port of Kitimat.
Environmentalists and many first nations oppose the project on several grounds: the potential of a breach in the pipeline, the risk of a tanker accident and general opposition to anything connected to the oilsands.
Our need for energy will also be at the centre of what will be a continuing battle over the proposed Site C dam on Peace River, as well as controversial run-of-river hydro projects.
The fight over fish farms will also continue to fester, with part of the focus on the Cohen Commission, which is looking into what was supposed to be the collapse of the sockeye stocks before the massive run this fall raised even more questions about what is really going on.
Source: http://communities.canada.com
Monday, January 03, 2011
India’s stature in global system
In the year that went by, India’s foreign policy has been largely dictated by its effort to secure more partners around the world. Especially in the Asian continent, evident from the regularity of high-level diplomatic visits. It has been New Delhi’s intent to create a zone of friendship around. With the phenomenal rise of neighbouring China with which India has not had the best of relations, the Manmohan Singh Government has been serious about increasing India’s foothold.
As the world takes baby steps toward securing the still fragile global economic recovery, the importance of countries like India has undoubtedly risen. In the changed circumstances, the salience of groups like the G20 of which India is a primary member, have dramatically increased. Moreover, the country’s economic performance and the opportunities in store for any country to do business with India have increasingly attracted attention.
Significantly, it is in this context, that the visit from the leaders of all the five permanent members of the UN Security Council assumes importance. The Russian President Medvedev’s recent visit completed a full circle. His visit followed that of Britain’s David Cameron, the US President Barack Obama, France’s Nicolas Sarkozy and China’s Premier Wen Jiabao.
Apart from the symbolic importance, all the leaders who came calling in 2010 were men on a mission. They meant business and concluded their visits conversing on a host of issues concerning both sides and re-assessing the relations besides inking a lot of agreements spanning a lot of areas.
Among the P-5 members, India has had the most complex and difficult relationship with its neighbour and rising power China. The two countries share a protracted border dispute and do not see eye to eye on a number of vital issues, including the culpability of Pakistan for heightened anti-India terrorism.
But, this does not take away the kind of traction that India has been able to gain in its relationship with the major powers in the elite club of the Security Council. Apart from China, all the other four countries in the P-5 including the US which had been dilly-dallying has come out strongly in favour of a permanent seat for India in an expanded Security Council in the future.
China has maintained a rehearsed and rather lame assurance. The most that Beijing continues to say and one that was repeated in the joint communique recently is, “China attaches great importance to India's status in international affairs as a large developing country, understands and supports India's aspiration to play a greater role in the United Nations, including in the Security Council.”
But, New Delhi should not be hugely concerned about this because it also emphasizes Beijing’s insecurity of a rising India. Besides, the issue is not something that will pay immediate dividends. It serves like a secure investment that paves the way for understanding in a number of other strategic issues.
The fact that Britain, France, Russia and the US support India’s aspirations for a permanent seat does not mean that the reform would happen in the near future. However, it surely gives the message that for these countries, New Delhi is a responsible international player and the presence of India in the club would not be a liability for them.
In the field of civilian nuclear energy, India has come out quite a winner. The exception again is the Chinese side that concentrates on doing nuclear business with Pakistan, a country with a shoddy non-proliferation record. Wherein its own nuclear scientist AQ Khan was exposed as a czar of the nuclear black market.
Otherwise, major countries, including erstwhile skeptics have come around to either signing or at the least discussing the possibility of cooperating with New Delhi in the field of civilian nuclear energy. Nuclear commerce with India is the buzz in the international system and the niche and cooperation that follows it should be used as a launching pad for extending cooperation in other areas.
In fact, the India-US ‘123’ agreement really served as the ignition, which combined with the Nuclear Suppliers Group waiver (NSG) led to the windfall. France came out as one of the earliest and strongest supporters of India joining international nuclear commerce. The synergy between Russia as a major energy producing country and India as a major energy consuming country is the catchphrase for India-Russia cooperation in this field. Indeed the results are encouraging.
Undoubtedly, as expected, the Nuclear Liability Bill has raised some concerns among foreign countries hoping to invest in India’s nuclear energy market. The good part is that countries wishing to do business with India have not taken strong positions against the Bill. This gives New Delhi some space to negotiate as to how its domestic concerns can be balanced with the demands of international nuclear commerce. This issue has to be worked out in a graduated manner that will not hamper the vital interests of any side.
Also, as the issue of terrorism becomes ubiquitous in all bilateral and multilateral, New Delhi, intends to make other major power acknowledge the seriousness of this threat in the Indian context. Whereby, we saw a general pattern where the burgeoning economic partnership between India and China did not translate in optimistic gestures on other issues of core interest.
Apart from the Chinese Premier, other leaders of the P-5 including President Obama were quite categorical in their condemnation of the existence of safe havens across the border. True, be it Britain, France, Russia or the US, there will be differences and opposing viewpoints on many issues, expected in any broad-based relationship, but at this juncture there seems to be no conflict of interest on any core issue.
But, on the Chinese front, there are some hardcore issues that could seriously impede the relationship. Adding to the inevitable competition between the two rising powers in the same geographic region, China through the stapled visa issue has continuously poked at the question of India’s sovereignty.
This time around, India took the right move towards a restraint aggression by diverting from the norm and not making any reference to Chinese sovereignty on Tibet and the ‘One China' policy, so dear to Chinese ears. The burgeoning economic relationship between New Delhi and Beijing is often flaunted as the hallmark of ties but in this department too, all the huge bilateral trade figures are nothing more than a chimera until the trade imbalance is not corrected.
So, as 2010 came to an end and India’s stature in the international system became more cemented than ever, its ties with the major powers of the world increased in some substantial areas. But as a country that aspires to sit at the high table of diplomacy and make its viewpoints counted in international decision-making, India should be more pro-active in its foreign policy making.
The milestones achieved last year should serve as launch pads toward substantial engagements in the years ahead. And an opportunity to better assess the loopholes that could hinder India’s ambitions in the future.
Monish Tourangbam, INFA
Source: http://www.centralchronicle.com
As the world takes baby steps toward securing the still fragile global economic recovery, the importance of countries like India has undoubtedly risen. In the changed circumstances, the salience of groups like the G20 of which India is a primary member, have dramatically increased. Moreover, the country’s economic performance and the opportunities in store for any country to do business with India have increasingly attracted attention.
Significantly, it is in this context, that the visit from the leaders of all the five permanent members of the UN Security Council assumes importance. The Russian President Medvedev’s recent visit completed a full circle. His visit followed that of Britain’s David Cameron, the US President Barack Obama, France’s Nicolas Sarkozy and China’s Premier Wen Jiabao.
Apart from the symbolic importance, all the leaders who came calling in 2010 were men on a mission. They meant business and concluded their visits conversing on a host of issues concerning both sides and re-assessing the relations besides inking a lot of agreements spanning a lot of areas.
Among the P-5 members, India has had the most complex and difficult relationship with its neighbour and rising power China. The two countries share a protracted border dispute and do not see eye to eye on a number of vital issues, including the culpability of Pakistan for heightened anti-India terrorism.
But, this does not take away the kind of traction that India has been able to gain in its relationship with the major powers in the elite club of the Security Council. Apart from China, all the other four countries in the P-5 including the US which had been dilly-dallying has come out strongly in favour of a permanent seat for India in an expanded Security Council in the future.
China has maintained a rehearsed and rather lame assurance. The most that Beijing continues to say and one that was repeated in the joint communique recently is, “China attaches great importance to India's status in international affairs as a large developing country, understands and supports India's aspiration to play a greater role in the United Nations, including in the Security Council.”
But, New Delhi should not be hugely concerned about this because it also emphasizes Beijing’s insecurity of a rising India. Besides, the issue is not something that will pay immediate dividends. It serves like a secure investment that paves the way for understanding in a number of other strategic issues.
The fact that Britain, France, Russia and the US support India’s aspirations for a permanent seat does not mean that the reform would happen in the near future. However, it surely gives the message that for these countries, New Delhi is a responsible international player and the presence of India in the club would not be a liability for them.
In the field of civilian nuclear energy, India has come out quite a winner. The exception again is the Chinese side that concentrates on doing nuclear business with Pakistan, a country with a shoddy non-proliferation record. Wherein its own nuclear scientist AQ Khan was exposed as a czar of the nuclear black market.
Otherwise, major countries, including erstwhile skeptics have come around to either signing or at the least discussing the possibility of cooperating with New Delhi in the field of civilian nuclear energy. Nuclear commerce with India is the buzz in the international system and the niche and cooperation that follows it should be used as a launching pad for extending cooperation in other areas.
In fact, the India-US ‘123’ agreement really served as the ignition, which combined with the Nuclear Suppliers Group waiver (NSG) led to the windfall. France came out as one of the earliest and strongest supporters of India joining international nuclear commerce. The synergy between Russia as a major energy producing country and India as a major energy consuming country is the catchphrase for India-Russia cooperation in this field. Indeed the results are encouraging.
Undoubtedly, as expected, the Nuclear Liability Bill has raised some concerns among foreign countries hoping to invest in India’s nuclear energy market. The good part is that countries wishing to do business with India have not taken strong positions against the Bill. This gives New Delhi some space to negotiate as to how its domestic concerns can be balanced with the demands of international nuclear commerce. This issue has to be worked out in a graduated manner that will not hamper the vital interests of any side.
Also, as the issue of terrorism becomes ubiquitous in all bilateral and multilateral, New Delhi, intends to make other major power acknowledge the seriousness of this threat in the Indian context. Whereby, we saw a general pattern where the burgeoning economic partnership between India and China did not translate in optimistic gestures on other issues of core interest.
Apart from the Chinese Premier, other leaders of the P-5 including President Obama were quite categorical in their condemnation of the existence of safe havens across the border. True, be it Britain, France, Russia or the US, there will be differences and opposing viewpoints on many issues, expected in any broad-based relationship, but at this juncture there seems to be no conflict of interest on any core issue.
But, on the Chinese front, there are some hardcore issues that could seriously impede the relationship. Adding to the inevitable competition between the two rising powers in the same geographic region, China through the stapled visa issue has continuously poked at the question of India’s sovereignty.
This time around, India took the right move towards a restraint aggression by diverting from the norm and not making any reference to Chinese sovereignty on Tibet and the ‘One China' policy, so dear to Chinese ears. The burgeoning economic relationship between New Delhi and Beijing is often flaunted as the hallmark of ties but in this department too, all the huge bilateral trade figures are nothing more than a chimera until the trade imbalance is not corrected.
So, as 2010 came to an end and India’s stature in the international system became more cemented than ever, its ties with the major powers of the world increased in some substantial areas. But as a country that aspires to sit at the high table of diplomacy and make its viewpoints counted in international decision-making, India should be more pro-active in its foreign policy making.
The milestones achieved last year should serve as launch pads toward substantial engagements in the years ahead. And an opportunity to better assess the loopholes that could hinder India’s ambitions in the future.
Monish Tourangbam, INFA
Source: http://www.centralchronicle.com
Saturday, January 01, 2011
EDITORIAL: A remedy for Japan's ills
This is really a bleak year-end for the nation.
Just one year and four months since the Democratic Party of Japan came to power in a historic regime change, Japanese politics is in an unimaginable and distressing shambles.
Amid the prolonged economic malaise, the nation faces a deepening fiscal crisis, a rapidly aging population and an alarmingly low birthrate.
While many industrialized nations are struggling to recover from the global recession, emerging countries have returned to the growth track.
The security environment around Japan is beginning to change significantly. But the politics in this nation is failing to address these serious policy challenges. The political paralysis is spreading the strong sense of hopelessness among the people.
A historically bad situation
What should be done to dig the nation out of its hole? We can't expect much from our politicians, who appear rudderless and adrift.
The fate of this nation rides on whether it can deal effectively with two key challenges: integrated wholesale reform of the tax and social security systems and the promotion of free trade agreements (FTAs) with major partners.
Although Japan's overall population began to trend down in 2005, the working-age population had already started shrinking in the mid-1990s.
The steady decline in the number of Japanese who work, pay taxes and spend money is at the root of the lengthy economic stagnation.
Meanwhile, the number of retirees is growing fast. According to demographic calculations, there are currently slightly less than three working-age people for every retired person. Two decades down the road, there will be less than two. By that time, the working-age population will have contracted by more than 14 million.
Such a harsh demographic situation is probably unprecedented in human history.
Japan's public pension and health-care insurance systems were basically designed during the era of high economic growth, when young people of postwar generations led by baby-boomers kept joining the national work force every year.
Now, the nation's economy is sputtering as the labor force shrinks, meaning the burden on generations still working is getting heavier.
An unbiased, straightforward look at the nation's economic and demographic realities, which are totally different from those in the high-growth era, makes it glaringly obvious that the social security system cannot be maintained without a major overhaul.
State finances at breaking point
Adding to the nation's woes is the colossal budget deficit, the largest as a percentage of gross domestic product among industrialized nations.
The dire state of state finances is a result of decades of financing social security and public works expenditures with debt in the form of government bonds. The government finances are on the brink of collapse.
It is necessary to rein in growth in the budget deficit while raising new money to finance social security programs and fix the system. This is a formidable challenge that requires the public to brace for a significant increase in their burden.
Revving up the FTA strategy is vital for the fate of Japan, which depends on trade for its economic well-being.
China and other Asian nations are marching vigorously toward a wealthier future. The robust economic growth of these countries offers a great economic opportunity for Japan by increasing the number of potential customers for Japanese businesses in the region.
Japan has every reason to try to capitalize on the economic vigor of these neighboring countries by eliminating its barriers to trade.
Prime Minister Naoto Kan has decided to consider Japan's participation in the Trans-Pacific Partnership agreement.
However, the Kan administration is waffling on the issue in the face of strong opposition from the farm lobby, which warns that the step would "destroy Japanese agriculture."
But the government should take this opportunity to shift its policy and focus on making Japanese agriculture competitive enough in the international market to thrive on exports.
Japan is not alone in struggling with thorny problems. One challenge common to industrialized nations is how to maintain social security benefits and economic growth in a matured society.
Over the decades, European nations have built up a high-welfare, high-burden society through a trial and error process.
Many European countries are now wavering over whether to lower the level of welfare benefits in the face of a fiscal crisis.
In reality, though, there aren't many plausible policy options available despite high-profile public debate on these issues. There is no magic solution to the woes.
Still, political parties tend to exaggerate and play up the differences of their policy agendas from those of their rivals during election campaigns. That's because they cannot hope to win elections unless they convince voters that they have different plans to solve the problems.
But this strategy raises unwarranted expectations among the public, which inevitably turn into disillusionment. The evils of election politics are a common problem for industrialized nations.
And Japan is no exception.
The DPJ came to power by making many alluring promises to voters, claiming the money to finance its policy proposals could be raised easily by eliminating wasteful government expenditures and reforming the budget.
It is no longer possible for the ruling party to deny that its financing plan was not based on reality.
Bold compromise possible?
The ideas of integrated reform of the tax and social security systems and promotion of free trade agreements were once explored by the government of the Liberal Democratic Party.
The LDP kept dragging its feet on these ideas because it feared these proposals would cause it to lose elections.
The proposals now being considered by the DPJ-led government are not that different from the LDP's ideas.
Both initiatives represent long-term reforms requiring 10 or so years of political efforts. If so, the only way forward for Japanese politics is cooperation between the two major parties with the ability to win a public mandate on these reforms.
The LDP is bent on forcing the DPJ-led government to dissolve the Lower House for a snap election as early as possible. But public support for the LDP shows no signs of rising.
If the nation faces a general election under the current political situation, a huge number of voters will not know what to do with their ballots because there is no party they want to support. Such a prospect raises grave concerns.
Even if the LDP regained control of government, it would not be able to implement effective reform without gaining the cooperation of the opposition parties.
If Kan is truly seeking deliberations with the opposition parties, he should be prepared to take major steps toward compromise that would be required of both the ruling and opposition parties by, for example, returning the party's campaign promises to a clean slate and proposing a drastic rewriting of the budget proposal.
Japan's export potential is still very strong. Japan's technology and brand appeal still receive high praise. Even as the economy stagnates, Japanese society has maintained stability and it is also blessed with abundant nature. If politicians can only make the effort to resolve the various issues facing the nation, the fog that clouds the future will surely be swept away.
During these New Year's holidays, there will likely be many occasions when family members and relatives who live far away can again gather together. We hope this occasion can be used to think about what can be done in the future to stop placing a further burden on our children and grandchildren as well as how to preserve a prosperous Japan.
Source: http://www.asahi.com
Just one year and four months since the Democratic Party of Japan came to power in a historic regime change, Japanese politics is in an unimaginable and distressing shambles.
Amid the prolonged economic malaise, the nation faces a deepening fiscal crisis, a rapidly aging population and an alarmingly low birthrate.
While many industrialized nations are struggling to recover from the global recession, emerging countries have returned to the growth track.
The security environment around Japan is beginning to change significantly. But the politics in this nation is failing to address these serious policy challenges. The political paralysis is spreading the strong sense of hopelessness among the people.
A historically bad situation
What should be done to dig the nation out of its hole? We can't expect much from our politicians, who appear rudderless and adrift.
The fate of this nation rides on whether it can deal effectively with two key challenges: integrated wholesale reform of the tax and social security systems and the promotion of free trade agreements (FTAs) with major partners.
Although Japan's overall population began to trend down in 2005, the working-age population had already started shrinking in the mid-1990s.
The steady decline in the number of Japanese who work, pay taxes and spend money is at the root of the lengthy economic stagnation.
Meanwhile, the number of retirees is growing fast. According to demographic calculations, there are currently slightly less than three working-age people for every retired person. Two decades down the road, there will be less than two. By that time, the working-age population will have contracted by more than 14 million.
Such a harsh demographic situation is probably unprecedented in human history.
Japan's public pension and health-care insurance systems were basically designed during the era of high economic growth, when young people of postwar generations led by baby-boomers kept joining the national work force every year.
Now, the nation's economy is sputtering as the labor force shrinks, meaning the burden on generations still working is getting heavier.
An unbiased, straightforward look at the nation's economic and demographic realities, which are totally different from those in the high-growth era, makes it glaringly obvious that the social security system cannot be maintained without a major overhaul.
State finances at breaking point
Adding to the nation's woes is the colossal budget deficit, the largest as a percentage of gross domestic product among industrialized nations.
The dire state of state finances is a result of decades of financing social security and public works expenditures with debt in the form of government bonds. The government finances are on the brink of collapse.
It is necessary to rein in growth in the budget deficit while raising new money to finance social security programs and fix the system. This is a formidable challenge that requires the public to brace for a significant increase in their burden.
Revving up the FTA strategy is vital for the fate of Japan, which depends on trade for its economic well-being.
China and other Asian nations are marching vigorously toward a wealthier future. The robust economic growth of these countries offers a great economic opportunity for Japan by increasing the number of potential customers for Japanese businesses in the region.
Japan has every reason to try to capitalize on the economic vigor of these neighboring countries by eliminating its barriers to trade.
Prime Minister Naoto Kan has decided to consider Japan's participation in the Trans-Pacific Partnership agreement.
However, the Kan administration is waffling on the issue in the face of strong opposition from the farm lobby, which warns that the step would "destroy Japanese agriculture."
But the government should take this opportunity to shift its policy and focus on making Japanese agriculture competitive enough in the international market to thrive on exports.
Japan is not alone in struggling with thorny problems. One challenge common to industrialized nations is how to maintain social security benefits and economic growth in a matured society.
Over the decades, European nations have built up a high-welfare, high-burden society through a trial and error process.
Many European countries are now wavering over whether to lower the level of welfare benefits in the face of a fiscal crisis.
In reality, though, there aren't many plausible policy options available despite high-profile public debate on these issues. There is no magic solution to the woes.
Still, political parties tend to exaggerate and play up the differences of their policy agendas from those of their rivals during election campaigns. That's because they cannot hope to win elections unless they convince voters that they have different plans to solve the problems.
But this strategy raises unwarranted expectations among the public, which inevitably turn into disillusionment. The evils of election politics are a common problem for industrialized nations.
And Japan is no exception.
The DPJ came to power by making many alluring promises to voters, claiming the money to finance its policy proposals could be raised easily by eliminating wasteful government expenditures and reforming the budget.
It is no longer possible for the ruling party to deny that its financing plan was not based on reality.
Bold compromise possible?
The ideas of integrated reform of the tax and social security systems and promotion of free trade agreements were once explored by the government of the Liberal Democratic Party.
The LDP kept dragging its feet on these ideas because it feared these proposals would cause it to lose elections.
The proposals now being considered by the DPJ-led government are not that different from the LDP's ideas.
Both initiatives represent long-term reforms requiring 10 or so years of political efforts. If so, the only way forward for Japanese politics is cooperation between the two major parties with the ability to win a public mandate on these reforms.
The LDP is bent on forcing the DPJ-led government to dissolve the Lower House for a snap election as early as possible. But public support for the LDP shows no signs of rising.
If the nation faces a general election under the current political situation, a huge number of voters will not know what to do with their ballots because there is no party they want to support. Such a prospect raises grave concerns.
Even if the LDP regained control of government, it would not be able to implement effective reform without gaining the cooperation of the opposition parties.
If Kan is truly seeking deliberations with the opposition parties, he should be prepared to take major steps toward compromise that would be required of both the ruling and opposition parties by, for example, returning the party's campaign promises to a clean slate and proposing a drastic rewriting of the budget proposal.
Japan's export potential is still very strong. Japan's technology and brand appeal still receive high praise. Even as the economy stagnates, Japanese society has maintained stability and it is also blessed with abundant nature. If politicians can only make the effort to resolve the various issues facing the nation, the fog that clouds the future will surely be swept away.
During these New Year's holidays, there will likely be many occasions when family members and relatives who live far away can again gather together. We hope this occasion can be used to think about what can be done in the future to stop placing a further burden on our children and grandchildren as well as how to preserve a prosperous Japan.
Source: http://www.asahi.com
Subscribe to:
Posts (Atom)