Global Economies

“In theory these three countries forging a true partnership could start a new chapter in world history,” states Sibal.

But Sibal maintains that the RIC dialogue may not have as much promise as originally anticipated because “the validity of most of the premises underlying it has been shaken.”  Now that the United State’s sole superpower status has waned, as a result of the wars in Iraq and Afghanistan and the 2008 financial crisis, there is not as much need for Russia, India and China to come together to balance the global power structure.

China provides the most dramatic example of the current realignment in geopolitics. As Sibal puts it: “Since the RIC dialogue began China’s economic rise has been spectacular, with its economy now overtaking Japan’s in size.  China’s self-confidence has bounded and nationalist feelings are being fed at home.”

Despite its rapidly growing economy and population, Sibal believes India is in many ways the weakest member of the RIC dialogue.  Though India is a member of the G20, it is not a permanent member of the Security Council, which limits its role in the RIC in key decisions on global peace and security issues. 

Of the three countries, India and Russia have the most common interests—especially when it come to countering the terrorism and religious extremism that is ravaging Afghanistan and Pakistan, endangering Central Asia and even southern Russia.  Even so, this bond may not prove strong enough to successfully maintain the RIC dialogue.

Sibal concludes: “The RIC dialogue was a grand idea that failed to live up to expectations because the conditions in which it was set up changed rapidly.”

Photo: "Moscow Kremlin" (CC BY-NC 2.0) by Alexey Kljatov (ChaoticMind75)

Paskal began her presentation with the aphorism “Geography makes history,” and went on to show how disasters change the course of history. Her main message: “In order to understand the geopolitical and the geoeconomic, we must understand the geophysical.”

To make her case, Paskal cited examples from China, the Arctic, and the U.S. , starting with Hurricane Katrina, a primary example of how one natural disaster can dovetail into an international crisis. New Orleans’ infrastructure was not designed with the natural landscape in mind, so when Katrina hit the coast, it wreaked havoc.  Not only was the city destroyed, but Katrina demolished the coastal infrastructure and oil rigs, bringing down 457 pipelines and diminishing the Gulf’s oil production by 57.37%.

"We need to look at not just how we’re affecting the environment, but how the environment’s affecting us,” Paskal pointed out.

To show how environmental change may lead to political conflict, Paskal explored territorial sea rights through the lens of the Maldive Islands.  A mere 6 feet about sea level, the Maldives have already lost 15% of their land area to rising sea levels caused by global warming. As islands like these disappear, the solution is to use materials like sand to build them up again, at which point the islands are no longer considered natural, but, rather, man-made. Why does this matter? A natural island has a 200 mile exclusive economic zone, while a man-made island has only a 500 meter zone.  This raises a myriad of issues such as water sharing, and how we govern international waters and international territories. 

As Paskal concluded, “Geography makes history, but environmental change makes geography.”  

EastWest Institute Global Security fellow, Danila Bochkarev, writes an article in The Moscow Times discussing Russia's increasing role of power in the Arctic.

The Center for Media Freedom and Responsibility lists 36 media killings in 2009, when the Maguindanao Massacre occurred. This year, four cases of media killings have been recorded. Over 1,000 cases of extrajudicial killings were recorded under the Arroyo administration. Barely a hundred days into the recently installed Aquino administration, seven activists have been killed. Activists and militants, as well as the United Nations Special Rapporteur on Extrajudicial Killings, attribute this to the government’s counter insurgency program, Oplan Bantay Laya (Operation Freedom Watch), a policy that remains in place to date.

Indeed, the prospects for peace and security in the Philippines and the Asia Pacific are, to say the least, unpromising. Social injustice remains the biggest obstacle to peace and security in the Philippines. We are a backward agricultural economy that, to date, has failed to concretely recognize in practice the right of tillers to own the land. 70% of the Philippines’ peasants do not own the land they till. Some 10,000 farmers working the land owned by the king of the Philippines, President Benigno Aquino III, are in the middle of a legal battle to lay claim to the land. At least 2.7 million Filipinos are unemployed, while those who managed to find work remain among the lowest paid workers in the region, deprived of job security and benefits. 

Poverty remains high and the rich-poor gap continues to widen. According to the Forbes Asia list, the net worth of just the twenty richest Filipinos reached $20.4 billion, an amount that is roughly the equivalent to the combined income of around 12 million Filipino families. Efforts of previous administrations to court multinational companies and other investors with the hopes of bringing in employment and boosting the economy have not had much impact on the poorest communities. In the first quarter of 2010, the Philippine economy posted an impressive 7.3% growth, which was attributed to an increase in remittances from overseas Filipino workers and election-related spending. But the supposed growth in the economy trumpeted by the government has not trickled down to the impoverished sectors. This has not translated to improved services for health and education; it has not translated to socialized housing, higher wages or improved benefits, or to an improved, modernized agriculture.  

This situation of immense poverty and social injustice is a situation that inevitably breeds conflict. As a matter of fact, the most war-torn areas in the Philippines, the Autonomous Region of Muslim Mindanao is the most impoverished region in the country. Poverty incidence in ARMM is at 56%, a far cry from the national poverty incidence level of 32%. The region is also home to tens of thousands of evacuees who have been forced to leave their communities as a result of armed conflict and intensified militarization. Armed groups like the Moro Islamic Liberation Front as well as the New People’s Army which led three decades of rebellion, persist in the far-flung rural communities of Mindanao. 

Intervention from countries like the United States has not helped at all in the peace process with both the MILF and the National Democratic Front. In 2008, the US government has managed to encroach in Mindanao communities and manipulate a supposed peace agenda and a Memorandum of Agreement on Ancestral Domain with Congress-funded organizations like the US Institute of Peace. An assured protection of US interests in the mineral rich lands of Mindanao was part of the deal. The MOA-AD was later deemed unconstitutional by the Philippine Supreme Court. 

On the other hand, peace negotiations with the NDFP conducted with previous administrations have been bogged down repeatedly. While a Comprehensive Agreement on the Respect for Human Rights and International Humanitarian Law was achieved during the administration of former President Fidel Ramos, the succeeding governments of Joseph Estrada and Gloria Arroyo did not recognize this landmark agreement. Both governments adapted an all out war policy in compliance with the US Counter Insurgency Guide which instructs governments to disarm, dismantle and reintegrate revolutionary forces instead of addressing the root causes of conflict.

Several moves have been initiated by parliamentarians, non-governmental organizations, civil society groups and church organizations as well as local government units towards the resumption of peace talks. This year, the Philippines became the 17th country to adopt a national action plan for the United Nations Security Council Resolution 1325 which emphasized the need for governments to specifically address the impact of war on women and girls and recognize women's contributions to conflict prevention. It also emphasized the need to support local women’s peace initiatives and indigenous processes for conflict resolution. 

Peace negotiations with the three month old Aquino administration have yet to begin but barely 100 days into the Aquino presidency the prospects are dim. In President Aquino’s first state of the nation address, preconditions have been set for the resumption of talks and revolutionary groups like the NDFP see these preconditions as moves towards bringing revolutionary movements to capitulation. Philippine parliamentarians have, in various venues brought forth the issue of peace and security in the country. Legislation is being proposed and laws like the Anti-Torture Law have been passed to help address issues of peace and security in the country.  International bodies like the United Nations as well as the Inter Parliamentary Union have been very helpful in compelling the Philippine government to take action against extra judicial killings, political persecution and human rights violations. Many sectors are looking forward to the immediate resumption of peace negotiations, and towards the implementation of concrete measures that will put in place comprehensive social and economic reforms.

For indeed, the road to peace goes far beyond negotiations and talks. It goes beyond the passage of legislation and the campaign and intervention of independent bodies and international human rights organizations. A people will know no peace in the midst of poverty, injustice and aggression.

Rep. Luzviminda C. Ilagan, Representative to the 15th Congress, Gabriela Women’s Partylist

President Barack Obama’s talk about the need for a “smart grid” sounds, well, smart. What’s not to like about the idea of an electricity grid that can work at top efficiency? By wrapping power transmission lines in advanced information technologies and the Internet, a smart grid would enable us to integrate alternative energy sources such as rooftop solar panels and local wind turbines into the power supply, balance supply with demand and optimize the flow of power to each consumer—even down to the level of individual appliances. It would vastly improve the reliability, availability and efficiency of the electric system. As currently envisaged, however, it’s a dangerously dumb idea.

The problem is cybersecurity. Achieving greater efficiency and control requires hooking almost every aspect of the electricity grid up to the Internet—from the smart meter that will go into each home to the power transmission lines them­selves. Connecting what are now isolated systems to the Internet will make it possible to gain access to remote sites through the use of modems, wireless networks, and both private and public networks. And yet little is being done to make it all secure.

The grid is already more open to cyberattacks than it was just a few years ago. The federal government has catalogued tens of thousands of reported vulnerabilities ­in the 200,000-plus miles of high-voltage transmission lines, thousands of generation plants and millions of digital controls. Utilities and private power firms have failed to install patches in security software against malware threats. Information about vendors, user names and passwords has gone unsecured. Logon information is sometimes unencrypted. Some crucial systems allow unlimited entry attempts from outside.

As the power industry continues to invest in information tech­nology, these vulnerabilities will only get worse. Smart meters with designated public IP addresses may be susceptible to denial of service attacks, in which the devices are overwhelmed with spurious requests—the same kind of attacks now made on Web sites. Such an attack could result in loss of communication between the utility and meters—and the subsequent denial of power to your home or business.

The smart grid would also provide hackers with a potential source of private information to steal. Just as they use phishing attacks to elicit passwords, credit-card numbers and other data stored on home computers, hackers could find ways of intercepting customer data from smart meters. A sophisticated burglar might use these data to figure out when you’re away on vacation, the better to rob your house.

Customer data could also give hackers a way to bring down the grid. Smart meters injected with malware, for instance, could disrupt the grid just as networks of PC botnets—home computers hijacked by viruses—now disrupt the Internet. A network of drone smart meters could cause a swath of the grid to power down, throwing off the grid’s electrical load. The imbalance would send large flows of electricity back to generators, severely damaging them or even blowing them up.

A smart grid isn’t a bad idea if we build cybersecurity into it from the start. But we’re not doing that. Under the smart grid funding programs, part of the fiscal stimulus package, the government has released $3.4 billion for a nationwide smart grid and plans to spend more than $4 billion more, but the Department of Energy has only recently begun to address the security requirements. So far utilities have been so focused on tamping costs that they haven’t been willing to pay for robust across-the-board security measures. Regulation alone won’t be enough.

What we need is a partnership among the standards setters, the regulators and industry to build security into the system from the ground up. These measures would include procedures for assessing the security of smart grid devices and other systems, for certifying personnel and business processes, and for compensating power companies for their security investment. We also need more research into improving the security of computer chips and other hardware that gets installed in the grid. We need a plan to deal with grid failures. We need international cooperation and research into forensic technology to deal with attacks from abroad. The energy sector could take a page from financial firms, which do a good job of ensuring that Internet-based transactions are secure. We do not need to abandon the idea of a smart grid. But we need to be much smarter in planning it—with cybersecurity as a key element, not an afterthought.

Click here to read this piece in Scientific American.

I am sad to share the news that John W. Kluge has just passed away at the age of 95. Our hearts and prayers go out to his wife Tussi, his children and wider family. John has been a stalwart friend, confidante and benefactor of the EastWest Institute, including his making a decisive gift nearly a decade ago that made it possible for us to create a meaningful Endowment. John received EWI’s Corporate Statesman Award (at a dinner together with an award to his lifetime friend David Rockefeller, Sr. – the event was led by his friends Don Kendall, Sr. and John Whitehead). John chaired a number of our annual Awards Dinners and introduced us to a wide swath of important people who have helped the Institute substantively and financially. He served as a trusted confidante and advisor to me for many years.

John was particularly proud that without his intervention, his son John Jr., secured a position at EWI several years ago and has worked himself up to being an indispensable member of the team. The last time I was with John, Sr. in Palm Beach earlier this year, we discussed how proud he was to see his son care so much about changing the world and his pride that this was being done at the EastWest Institute.

John W. Kluge is one of those friends and colleagues who does not come into our lives very often. We will miss him greatly. His legacy and commitment will be carried within us.

Letters or cards can be sent to Gail Manley who will forward them to Tussi, John and the family. Click here to read the official obituary from the New York Times.

Gail Manley
EWI New York Center
11 East 26th Street
20th Floor
New York, NY. 10010

As readers of this newspaper will know, the OSCE spans three continents, brings together about 15 per cent of humanity, has 56 members, and has four out of five permanent seats in the UNSC. There is another regional organization that also spans three continents, represents the aspirations of a bigger slice of humanity (about 25 per cent), and has 57 countries as members, but none with a permanent seat in the UN Security Council.

The group in question is the Organization of Islamic Conference (OIC), the world’s only “regional organization” based around a religious attribution. Apart from its 57 members (Muslim majority states), there are a number of states or entities as observers: Bosnia and Hercegovina, Thailand, Russia, the Central African Republic and the Turkish Cypriot government.

The OIC has its own Development Bank, its Islamic UNESCO (ISESCO), the Islamic International Court, the International Islamic News Agency, and a host of subsidiary and affiliated organizations. It does not of course represent in a direct political sense all Muslims, but it does purport to speak on behalf of the “umma” (the community of Muslim believers worldwide).

Osama bin Laden wrote often of the Umma, expressing on occasion the hope that it would rise again to a prominent place in world political affairs, and be recognized again for high achievement in the arts and sciences. I mention that not to credit the source in any way, but to demonstrate that the sentiment about an organized Islamic resurgence is seen as a good mobilizing tool. That aspiration is shared by many leaders in the Islamic world, and it is captured in the Charter of the OIC: “to work for revitalizing Islam’s pioneering role in the world”. This vision, one I share, is the departure point of this analysis.

There are other high ambitions expressed in the OIC charter, including the more familiar idea of a “common market”, albeit an “Islamic Common Market”. Turkey, also an aspirant for EU membership, is actively promoting both parts of this OIC agenda: scientific and technological advance and regional economic integration.

The OIC revised its original 1972 Charter only in 2008. At the time, Indonesia’s President, Susilo Bambang Yudhoyono, declared that as a result of the new charter "the possibility of an Islamic Renaissance lies before us".

The OIC is a leading force in the fight globally against violent extremism.  In 2008, the conference declaration noted: “We continue to strongly condemn all forms of extremism and dogmatism which are incompatible with Islam”. The OIC is also leading a global campaign against rising Islamophobia around the world, a phenomenon documented by independent sources.

To many observers, the OIC is an imperfect organization, to be faulted for its internal divisions, for its hostile attitude to Israel, for what some see as its ingrained anti-semitism, and for its extreme political diversity (from monarchies, dictatorships, and radical regimes to democracies of varying stripe).

That view does not capture the essential dynamism and progressive character of the evolutionary path on which the OIC has been set for number of years. Nor does it speak to the sense of injustice over Palestine that for its part, it carries into many political forums.

A full assessment of the trajectory of this interesting organization would be very useful. One thing is clear. The OIC wants a new partnership with the West, and some countries are beginning to respond to that. The path to regional and wider international power and authority may be long and rocky, but the OIC and its member states have a vision for regional and global economic and scientific development that is definitely beginning to change the world for the better. Let’s work with them.

So far, international aid has been directly largely at the crucial task of helping the flood’s victims survive from day to day. But as the flood waves recede, we must recognize that the country faces a tide of unfolding challenges. Only by understanding the economic devastation wrought by the floods can we begin to reckon the kind of long-term assistance Pakistan requires for true recovery.

Pakistan’s struggling economy depends heavily on its huge swathes of rich farmland, much of which has been wiped away by the floods. Water has caused damaged to homes of 4.6 million farmers.  More than 100,000 cattle have perished and seven million hectares of agricultural land are submerged. World Bank president Robert Zoellick estimates that crops worth $US1 billion have been destroyed. For a country where agriculture accounts for more than 21 percent of gross domestic product and employs 45 percent of the labor force, the long-term consequences will be dire, writes The Sunday Telegraph’s Nicola Smith, adding: “For farmers the destruction of crops, cattle and land has crippling financial consequences, plunging many into debt and deep poverty.”

Moreover, floods have inflicted widespread damage on infrastructure. In cities, flood waters have destroyed electricity installations, roads and phone lines.  About 1,000 villages in flood-hit districts of southern Punjab are without power. The destruction could set Pakistan back many years (if not decades), further weaken its feeble civilian administration and add to the burdens on its military. More than 5,000 miles of roads and railways have been washed away, along with some 7,000 schools and more than 400 health facilities, according to the The New York Times.

In the past, friends and allies of Pakistan have asked the country to do more to secure its borders; the flood threatens those efforts. “Pakistan's floods have not just devastated the lives of millions of people, they now present an unparalleled national security challenge for the country, the region and the international community,” The Telegraph’s Ahmad Rashid warns. “Lest anyone under-estimate the scale of the disaster, all four of Pakistan's wars with India combined did not cause such damage. It has become clear this week that, unless major aid is forthcoming immediately and international diplomatic effort is applied to improving Pakistan's relations with India, social and ethnic tensions will rise and there will be food riots.”

While extending a temporary lifeline to rescue the victims may help them survive from one crisis to another, assistance facilitating a gradual recovery is necessary to revive the country’s economy. Such a strategy would see Pakistan’s trade partners easing restrictions and raising import quotas. Allowing greater market access for Pakistan’s textile goods in particular would be a significant step, as the textile sector comprises over 50% of the country’s export and about 40% of the its manufacturing jobs. Additionally, countries importing manpower for their service sector should consider recruiting laborers from Pakistan’s flood-hit area as a means to support the affected families. Such measures will ease the pain of losses and facilitate a smooth rehabilitation.

“The international community needs to be ready to support Pakistan in a lasting manner,” states the European Union’s Foreign Affairs chief Catherine Ashton, adding “This will be a significant element for the long-term recovery. A safe, secure, stable and prosperous Pakistan is in the interests of the EU and the wider international community.” Underlining a sense of urgency, Ashton points out: “You have vast parts of Pakistan affected by floods; it’s immensely, strategically significant, and the situation will sadly get worse and worse. There’s a real need to demonstrate the international community as a whole can react.”

Thus, the pressing question is not only how the international community will provide immediate relief for Pakistan’s 20 million affected people, but whether and how it will mobilize resources for their long-term recovery. The nature of the aid Pakistan receives and how it is used will determine if the nation heads towards decades of dependency or towards a path of recovery, revival and sustainability.

 Mr Abbas spoke on BBC Arabic about the costs and consequences of Pakistan's floods and their national and regional implications. 

We have a problem! One of the world’s leading telecoms providers, Huawei of China, sells critical equipment to America’s closest allies in Europe and Asia but many in the United States want to block its expansion there on national security grounds.

The warnings have been raised on several occasions, but most recently by eight U.S. senators in a letter to President Obama, citing Huawei’s past trade with Saddam Hussein’s Iraq, its current trade with Iran, and the risk that the Chinese government might plant secret code in some of the equipment that would undermine U.S. national security.

According to the letter: “British, French, Australian, and Indian intelligence agencies have either investigated Huawei or expressed concern that its products could facilitate remote hacking and thereby compromise the integrity of the telecommunications networks in their countries.”
This is of course technically possible. There are precedents where it has been done with equipment from other providers. Two policy problems emerge here: one to laugh about, and one to get very serious about.

First, some fun. If key U.S. allies in Europe, including Britain, already heavily rely on Huawei products and services for basic broadband services, then the clever Chinese armed forces may already be able to neutralize key NATO members. Under one of the biggest telecom procurement contracts ever, signed in 2005, Huawei has been a critical supplier for British Telecom’s high speed broadband. BT has called Huawei a “world class supplier”. Ooops! There goes Britain.

Is the reverse also true? Have the clever American spies planted secret codes in the telecoms and IT equipment sold by leading US suppliers around the world, including to China? We should note that some of China’s modern warships depend on supply of foreign technology, including in some cases foreign communications equipment.

The founder of Huawei, Ren Zhengfei, used to be a member of the Chinese armed forces. This is one source of suspicion of Huawei. Ironically, according to one source, he was denied Communist Party membership because of the Kuomintang political background of his parents. And he was pushed out of the army in the first big wave of demobilizations under Deng Xiaoping in 1982.

Seriously though, and this second point is very important, overcoming the mis-trust of Huawei in the United States is important. To do this, China needs to take certain steps alone and China and the United States need to work together on yet other measures.  For its part, China must do something about the unremitting and massive attacks from its territory on foreign networks and confidential data. Of course, its choices are limited both technically and politically. But according to a well-informed source, the Chinese government does have in place the potential for physical control of all internet gateways for traffic passing into and out of China. It needs to work on strategies for reversing the growing mis-trust of it on account of its global electronic invasion.

Together, the governments of China and the United States need to work with their leading corporations to set up a system for guaranteeing supply chain integrity. This has complex technical and political aspects, and it probably can never be 100 per cent guaranteed. But comprehensive new measures need to be put in place. Huawei has been  honoured as Vodafone’s Supplier of the Year and has been given the Financial Times' Arcelor Mittal Boldness in Business award, among others. But China needs to do more. The anxious Americans could also relax a little. Security interdependence in ICT is here to stay. American politics needs to come to terms with that and work out with China the rules that protect their separate and their mutual interests.