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At the behest of Saudi Arabia, Pakistan has made a strategic shift from its so far neutral position on Syria’s civil war – to one that portends to back the Syrian rebels and even provide them with arms through Riyadh.
The shift will have serious regional consequences as it has already deeply antagonised Iran, which supports the Syrian regime, and angered Pakistan’s large Shia community which could prompt further sectarian conflict. It is also bad news for Afghanistan, where Pakistan-Iran rivalry may restart once US troops leave that country.
Until recently, the US was always the world’s “consumer of last resort”. Since the collapse of the Bretton Woods exchange rate system in the early-1970s and the subsequent huge increase in cross-border capital flows, the US easily absorbed more and more of the world’s surplus savings. This was particularly so in recoveries after US recessions. The US current account moved into modest deficit in the late-1970s and into much larger deficit in the 1980s. Thereafter, the deficits got even bigger, reaching a peak of almost 6 per cent of US gross domestic product before the onset of the global financial crisis.
The latest US recovery is, thus, unique. This time, the current account deficit has continued to shrink. Lots of explanations are offered, most obviously the decline in America’s dependency on imported fossil fuels thanks to the shale energy revolution. Yet, if that were true, Saudi Arabia and other oil producers should be running much smaller current account surpluses; mostly, they are not. Continue reading »
The Russian decision to authorise troop deployment in Ukraine raises profound questions – for Russia, for Ukraine, for the west and for the international community as a whole. What does Russia seek to accomplish by threatening this use of force? What does this mean for European security and international order? How should the west respond? Continue reading »
The 2014 Winter Olympics in Sochi may have proved a distraction for Russia and its president, even as events in Ukraine were fast and furiously upsetting the old, pro-Moscow political order. But no sooner were the Olympic flames extinguished Vladimir Putin turned his full attention to influencing developments in the neighbouring country. His military chiefs ordered a major military exercise – involving almost 150,000 troops, hundreds of tanks and artillery batteries, and dozens of aircraft and ships – to start on Friday and last four days.
What is behind this dangerous military escalation? At the very least, a military exercise on this massive scale, so close to the borders with a sovereign state, is meant to send a stern message to the new leaders of Ukraine that there is a limit to that nation’s independence. Moscow has refused to recognise the new political order in Kiev, denouncing the parliamentary ouster of President Viktor Yanukovich as “armed mutiny.” Any new government in Ukraine will need to take account of Russia’s interests, or so the message goes. Continue reading »
A careful reading of recent policy statements in advanced economies points to an intriguing possibility: after being forced into quite a similar stance, individual central banks will try to implement more differentiated monetary policy approaches. The driver is greater evidence of multispeed economic growth. The challenge is for other components of economic policies to support the more differentiated set of central bank policies. And what is fundamentally at stake is the much-desired shift from policy-induced growth to genuine self-sustaining private sector engines. Continue reading »
Japan’s recovery programme is showing promising early results. Last autumn the economy enjoyed its fourth successive quarter of growth, its best performance in more than three years.
Many observers rightly praise the Bank of Japan’s shift to positive inflation targeting for contributing to the country’s recovery. Yet monetary policy is only one of the three “arrows” called for in Prime Minister Shinzo Abe’s programme for the Japanese economy. Also important are fiscal consolidation and structural reform. These initiatives, too, are moving in the right direction with the right priorities. But like monetary policy, they need to be bold to succeed. Continue reading »
An intense debate has broken out among western law enforcement officials, intelligence agencies and academics about who or what today constitutes al-Qaeda. It is an important debate because AQ – the network and the ideology – remains a potent force and still one of the greatest threats to global stability.
The US intelligence chief James Clapper said last month that 7,000 foreign fighters have joined AQ affiliates and other groups in Syria to fight Bashar al-Assad’s regime. AQ now officially recognises branches of its network in seven new regions in Africa and the Middle East, while major European cities have become AQ recruiting centres for disaffected Muslim youth. Continue reading »
Unless you are over 50, you will not remember the days before energy exports became a potent geopolitical weapon. At the onset of the second world war, the US supplied about 63 per cent of the world’s oil, with a barrel of oil costing about a dollar (roughly $17 in 2014 dollars). Decades later, an important shift took place when the US reached its peak oil production in 1970; as output became squeezed, oil was shifting from a suppliers’ market to a demand market.
The low energy prices of the 1960s and early 1970s are unlikely ever to return, but with the development of new drilling technologies in the US and a surge of new production there and elsewhere, the balance of power has begun to shift yet again. And in 2014, the impact of that trend on global oil markets – and on international politics – will begin to emerge. Continue reading »
Tensions are running high in northeast Asia, yet remarkably little diplomacy is taking place. China and Japan are not communicating and there are only infrequent political exchanges between South Korea and Japan. Surprisingly, a notable exception to this dearth of diplomacy is the current dance between Shinzo Abe’s Japan and Vladimir Putin’s Russia.
Asia still struggles with its historical legacy, and the Russo-Japanese experience is no exception. Russia and Japan were the belligerents in one of the most spectacular naval battles of all time – the 1905 Battle of Tsushima, in which the Russian fleet was annihilated by a tactically superior Japanese squadron. Their traumatic history has proved difficult to overcome. In the last days of the second world war, the Soviet Union seized four Japanese islands in the Kurils in the northwest Pacific Ocean and expelled the Japanese citizens who lived there. These four islands (also known as the “Northern Territories” by the Japanese) have been lodged like a bone in the throat of Russo-Japanese relations ever since. Continue reading »
The battle of the London airports is heating up. Although the Airport Commission, headed by Sir Howard Davies, is not due to give its final recommendation until after the 2015 general election, the two big contenders locked horns last month over their consultation processes and noise impacts.
At this stage, Heathrow has the loudest voice, and perhaps the most business support, but Gatwick provides a real, and under-appreciated, challenge. As more evidence is produced, the underdog may yet win the prize. Either way, the competition between them will sharpen the debate and likely result in a better outcome. Continue reading »
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