Monthly Archives: August 2013

One thing about America’s imminent intervention in Syria is painfully simple: this is a no-win situation for the US. A good choice does not exist.

Given the options available, a limited punitive strike in reaction to Bashar al-Assad’s chemical weapons use is decidedly the correct course of action – both on moral grounds as well as from a pragmatic perspective weighing US national security interests. The use of chemical weapons was in fact a game changer, and the issue goes well beyond the war raging in Syria. This is when American leadership matters: there is no one else left standing who can deliver a reminder that weapons of mass destruction won’t be tolerated, however awkward and belated that reminder may be. Read more >>

The British Parliament’s rejection of a motion endorsing UK participation in expected military action against Syria is nothing less than stunning – an event with a political significance that transcends the immediate debate over whether and how to respond to what appears to have been wide-scale use of chemical weapons by Syrian government forces against civilians in their own country. Read more >>

Veterans of intervention recognise the signs: a ghastly atrocity against civilians tips reluctant politicians and public opinion into action. The chemical attacks last week in the Damascus suburbs of Ghouta have echoes of the massacres in the Bosnian town of Srebrenica or more recently the imminent killing of civilians in Libya by the forces of the late dictator Muammar Qaddafi. In each case, caution is put aside as the moral and geopolitical costs of inaction appear greater than the costs of action.

Syria seems today to have reached that point. The regime’s belated agreement to let the UN weapons inspectors cross town to investigate what happened in Ghouta may reflect that it realises it risks isolating itself as a pariah. In the UK and France, commentators and politicians have made up their minds that it is time to do something about Syria. Government forces could only have instigated such an attack, with UN weapons inspectors just arrived in town, in order to seek a psychological knock-out blow against the rebels: if Bashar al-Assad can do this with impunity and still the West dithers, goes his implicit message to his opponents, then the rebels should give up on ever getting the western weapons and military support they had counted on. Read more >>

There will be many catastrophic outcomes to the present political chaos in Egypt, but the one that every Muslim dreads which will have the worst consequences for the wider Arab and Islamic world will be the increasing spread of sectarianism and intolerance that will now flourish out of the Arab world’s most important state and Islam’s bastion of thought, learning and tolerance for centuries.

Even as the Muslim Brotherhood and the army continue to battle it out in Cairo’s streets, Egypt’s vulnerable Coptic Christians are getting the blame – for siding with the military or the US, or for just being different. Ten per cent of Egypt’s 85m people are Christian and they have seen dozens of their churches and other symbols burnt down over the past two years. Read more >>

With much of the world’s attention fixed on the drama playing out in the streets of Egypt, the civil war in Syria that has claimed as many as 100,000 lives grinds on in the shadows. But new allegations of massive use of chemical weapons by the regime of Bashar al-Assad have once more brought Syria into focus and raised anew the question of what more, if anything, should be done to stop what is going on there.

The US, France and the UK have called upon the UN Security Council to undertake an urgent investigation of this latest evidence of the possible use of chemical weapons that may have caused the deaths of hundreds. Meanwhile, Barack Obama’s administration is in a grave predicament, much of its own making. The US president has, on several occasions, declared that Syrian use of chemical weapons would cross a “red line”, constituting a “game changer” that would alter his calculus of what his country was prepared to do. Read more >>

August is usually considered a bad month for implementing major changes to investment strategies. With so many traders on holiday and with volumes at seasonally subdued levels, liquidity can be quite patchy. Yet, this time around, there are good reasons why investors may wish to reconsider the conventional wisdom of waiting for the autumn to reposition their portfolios.

The next few months promise to be particularly tricky and volatile for markets, with uncertainty coming from the US, Europe, Japan and the Middle East. Read more >>

Complaints about public officials’ short time horizons are well rehearsed: the gripe is usually that too many activist policies result from pandering to voters and special interests. But the reality is that measures are often discarded before they have a chance to work. Then, having not really tried, policy makers claim that the target was unattainable. In macroeconomics, it is the unemployed who suffer most from this repeated failure to follow through. Read more >>

President Barack Obama has decided not to bring his influence to bear on Egypt. In a statement on Thursday, he spoke out against this week’s violence in the country and cancelled forthcoming joint military exercises, declaring that “our traditional co-operation cannot continue as usual”. But in effect, business as usual was what he championed. These were largely symbolic gestures that did not undermine implicit American support for the Egyptian military.

The US link to the generals is longstanding. That is the backdrop for the decision to acquiesce in July’s military coup against the Egyptian president, the Muslim Brotherhood’s Mohamed Morsi. It was a significant foreign policy misstep, compounded by the Obama administration’s subsequent statements and decisions. In early August, secretary of state John Kerry described the military as “restoring democracy”. At the time, it was incorrect. This week it has become a stain on the White House. Read more >>

If economic growth were correlated with ministerial hyperactivity, France would be bouncing back from recession even faster. President François Hollande has instructed his ministers to minimise time spent with their nearest and dearest, and told them that if they must take a break, it has to be in France, ideally punctuated with visits to local factories and employment agencies. Unemployment does not take a holiday, he explained.

To underline the point, the presidential spokesperson declared portentously that “power will not be on holiday” this year. Furthermore, ministers have been set homework: the whole cabinet must be back on parade at the Elysée Palace on August 19, ready for a discussion on the state of France in 10 years’ time. Read more >>

It is strange to see the equivalent of a political campaign over succession at the US Federal Reserve. After all, the chair is a presidential appointment, subject to Senate confirmation. It is not an election and, in the past, deliberations over these appointments have always been private. However, leaks have fed a widespread perception that President Barack Obama will soon nominate either Lawrence Summers, his former chief economic adviser and former Treasury secretary, or Janet Yellen, the current vice-chair of the Fed board of governors, to the four-year term that begins in late January. Supporters of each, including some in the White House, are campaigning publicly, trying to sway the president.

But this decision should not involve popularity or politics. Nor, like Supreme Court appointments, does it need to consider questions of balance. And it is not, like cabinet appointments, a matter of appointing an adviser to the president. Quite the contrary. The Fed is both independent of the executive branch and, more important, the most powerful group of financial firefighters on earth. So its chair is the world’s most important crisis manager. It was the Fed’s massive intervention that saved the world from a full-on global depression, following the collapse of credit markets in late 2008. Given recent history, it is just a matter of time before its emergency tools are required again. Read more >>

It’s a funny thing about Washington: everyone complains about it, but no one ever seems to leave. Take former House leader Richard Gephardt. The Missouri Democrat twice ran for president as a voice of organised labour. Today he pockets $7m a year to lobby on behalf of corporate clients and advise them on busting unions. Or consider former journalist Jeffrey Birnbaum, who used to write exposés of the lobbying trade for The Wall Street Journal. Today he works for Haley Barbour, Mississippi’s Republican former governor who is now one of the most influential lobbyists in Washington.

Such fables of political principles discarded, betrayed or rented by the hour fill the pages of Mark Leibovich’s alarming and amusing new book This Town . Mr Leibovich captures the Gilded Age atmosphere of a capital where influence has been commoditised and marketed as never before. It is a gallery of rogues – some charming, some merely roguish – who flourish as the capital’s fundraisers, fixers, party-givers and talking heads. Read more >>

With interest rates floored near the nominal zero bound and with balance sheets having already expanded significantly, central bankers are placing greater emphasis on forward guidance to influence private sector expectations and behaviours.

By credibly committing to a transparent path, central bankers hope to avoid the instability that often accompanies changes to monetary policy. In the meantime, they would continue to support activity and markets, thereby providing more time for their economies to heal and for other policy making entities to get their act together. Read more >>

The European Central Bank is the only major monetary authority in the world that does not publish the detailed minutes of its proceedings nor the voting record of the members of its decision-making body. The discussions which have been recently started by some ECB governing council members have raised expectations that major changes will soon be introduced. These expectations may be disappointed. Read more >>

There are few places on earth as beguiling to visitors as Mongolia. Virtually everything about the place represents a seeming contradiction and a rare potential. Surrounded by undemocratic Russia and Communist China and with virtually no legacy of pluralism, Mongolia has nevertheless built an emerging democracy and this year played successful host to a global gathering for the Community of Democracies. Now a peaceful nation with a small military that has supported 15 peacekeeping missions around the world over the past decade, Mongol hordes under the command of Genghis Khan once conquered most of the known world.

Mongolia has moved exceedingly slowly to develop the most extensive deposits of globally necessary minerals and high quality coal that it possesses. The nation recognises that responsible exploitation and management of these reserves will make it a wealthy country able to spread prosperity to its people. And despite a heritage distinct from much of Asia, Mongolia nevertheless has become a vibrant member of the continent’s emerging community. Read more >>

Is it a coincidence or an effective new strategy that a spate of astonishing prison breaks in Iraq, Libya and Pakistan carried out by al-Qaeda has coincided with the movement’s leader promising to free its members worldwide – including those held in Guantánamo Bay?

Ayman al-Zawahiri, based in the Pakistan-Afghanistan borderlands, has been designated leader of al-Qaeda since the killing of his mentor Osama bin Laden in 2011. In his first audio recording for many months – posted on the internet at the end of July – he slammed US treatment of hunger striking inmates in Guantánamo and swore to free them all: We pledge to God that we will spare no effort to free all our prisoners … very oppressed Muslim everywhere.” Read more >>

Zimbabwe’s election demonstrates a dangerous trend. If bullets do not fly and heads are not broken, many outsiders, notably neighbours, are happy to declare with relief that the poll appeared broadly free and fair.

The art of stealing elections “peacefully” before the international observers arrive is advancing. In Zimbabwe, rural election rolls in areas supporting President Robert Mugabe appear to have been inflated with the names of the dead and impossibly old. Opposition area lists seem to have contracted. Local poll watchers claim it could have cost the opposition 1m votes. Activists for parties other than Zanu-PF were harassed and intimidated. Read more >>