EDITORIAL : THE SUNDAY NATION, KENYA

Quick word from CBK should send rates down

On Thursday, the Central Bank took a bold decision to lower its indicative lending to 16.5 per cent signalling an end to the high interest rate regime.

While the decision seems to have been taken as a way to spur economic growth — first-quarter figures show growth had slowed to 3.2 per cent, the lowest since the country recovered from the turbulence of the post-election violence — it inspires little faith that the country is out of the woods.

The raising of the base lending rate to 18 per cent last December was done to help tame runaway inflation at the time at 19.72 per cent and strengthen the local currency that was under pressure from imports and had taken a beating to a low of Sh107 to the dollar in October.

The idea was simple: limit the amount of credit in the economy and by extension slow consumption, especially of imported goods. This seems to have worked, but the real reason why the country faced the turbulence is yet to be addressed.

As CBK moves to make credit affordable, consumers will find it easy to borrow to fund consumption, kicking off another wave of inflation. And as producers and suppliers move to meet increasing demand, they will import more, putting the shilling under renewed pressure.

The knee-jerk reaction will be to make credit expensive, and this as we now know has adverse effects on economic growth.

As previously argued, the only solution to the shilling and high cost of living problem will be for the government to encourage local production and value addition to agricultural produce, aggressively seek more export markets, especially within Africa, and to make it expensive to import luxury goods.

To consumers of bank loans CBK’s latest decision gives hope that they will get a reprieve in lower monthly repayments. While the bank has done its part, the ball is now in the court of the commercial banks court to transmit this to the consumers.

Then it is hoped that the decision to lower lending rates will be made with equal zeal and magnitude as exhibited when banks were pushing the rates up.

Stop premature campaigns

On Friday, President Kibaki called on politicians to desist from early campaigning.

The President’s advice makes a lot of sense because, all things remaining constant, the earliest the General Election can be held will be in March next year.

As it is, presidential hopefuls have been criss-crossing the country for campaign rallies that have effectively put the country on an electioneering mode.

The problem with our campaigns is that they are noisy and disruptive affairs that often have the effect of bringing development pursuits to a standstill.

And, because of their adversarial nature, they tend to create the impression of a build-up that can only end in conflict.

This, in turn, frightens away investors who sensibly hold back until the elections are held and concluded.

Given our painful experience with the 2007 disputed presidential election result, this should be poignantly real for our politicians.

Although peace has returned to parts of the country that bore the brunt of the violence, there exists underlying animosity and suspicion among communities.

Even more importantly politicians, particularly Members of Parliament, have pending tasks which should be keeping them busy and away from the campaign trail.

These should preoccupy politicians who should cease premature campaigning.

EDITORIAL : THE NEW POLAND EXPRESS, POLAND

Steve Sibbald's Column

Saturday 7th July, 2012

Each week the NPE team scours the Polish press looking for the main stories and it’s fair to say that many of the articles pick themselves.

However, over the last few editions there’s been an abundance of stories and we’ve had a tough time choosing what to include and what to leave out. It’s almost as if now the football fest is done and dusted, the media’s got a huge backlog of stories it just can’t wait to thrust upon us.

A perfect example is this week’s rather sinister news about 26-year-old Robert F. who is set to appear in court in a few weeks for apparently “insulting the president”.

The case is by no means new and revolves around the man’s website antykomor.pl which has been online for a while and gets its kicks by poking fun at Mr Komorowski.

A couple of months ago Poland’s Internal Security Agency (ABW) raided the man’s home, and seized his computers as evidence. The president has since stated that he had no prior knowledge of the raid and one of his advisors has even pointed out that Mr Komorowski was one of those who hit the streets back in the day fighting for the right to free speech.

Now I don’t know the president personally, but he has always struck me as a fairly decent chap and certainly one of the more respectable guys in charge of the country (disclaimer). However the whole case has a rather sinister air about it and something doesn’t quite feel right.

If Robert F. is eventually found guilty of “insulting the president” then where does it leave others? Column writers, bloggers, message board users, couples at the bus stop... the list goes on. 

Watch this space carefully and for the time being watch your mouth.

EDITORIAL : THE CITIZEN, TANZANIA

WE MUST BE VERY CAUTIOUS ON THE URANIUM RESOURCE

If endowment of  natural resources were  the  major yardstick of  economic development, some countries in Africa, a continent sweepingly characterised as poor,  would rank very highly on the charts of exemplary achievers.

This isn’t the case, and represents the often-cited paradox of resources being a curse rather than a blessing.  Regrettably,  that  cruel reality registered belatedly in the African continent, but more regrettably, even after the ‘registration’, either nothing, or very little is being done to curb the trend.

The chief reason lies in  such misdeeds as greed, corruption and political opportunism. Past and current civil wars, as well as instability in countries like Sierra Leone and the Democratic Republic of Congo,  are to a large extent fuelled by  the desire to plunder or control resources like minerals and forest products for selective benefits.

The plunder,  as well as evil  schemes hatched by an alliance of foreigners and corrupt nationals  to ensure that the majority  owners   of those resources are exploited  will continue, so  long as some individuals in ruling circles subordinate  nationalistic and patriotic interests to private ones.   

But even in resource-rich  countries where patriotic goodwill is plentiful,  this helps very little, and in some cases not at all,  because they are at the mercy of  powerful corporate interests in the industrially and economically powerful nations. The magnitude can only be reduced if governments in poor countries like Tanzania exercise extra caution,  to avoid signing  contracts. that literally  translate into mortgaging their wealth  away for so-called peanuts. 

This, indeed, is what Tanzania, for one, has learnt fairly belatedly. Governments of the post-economic liberalisation era decided to  engage full gear – as it were –  in  exploiting its vast mineral resources.

Foreign investors

But lacking the financial and related means to undertake that most demanding  financial and technological enterprise,  they have inescapably relied on the participation of foreign investors, whose activities are largely seen as representing exploitation of  Tanzanians.

The original, and essentially noble mission of Tanzanians  to exploit  their mineral resources for their collective benefit has by and large been turned upside-down. Fortunately, remedial measures are being taken, thanks in part to sentiments raised by MPs and activists.

Sentiments in similar vein are  also gathering momentum on the land question, to ensure that a judicious balance is struck between  the country benefiting from huge foreign  investments in tracts of land, and not antagonising the many citizens who are  relocated elsewhere. Many of these claim that  they are  given compensations that don’t match the value of the vacated land.

Uranium deposits in Tanzania, currently in the exploratory stage, represent essentially good news,  but potentially bad news too. Good, if the government ensures that it avoids replicas of the lopsided mining sector contracts, and bad if it pursues a lax approach that would spell economic disadvantages.

Equally importantly, Tanzania, which is a signatory to the Nuclear Non-Proliferation Treaty and the Nuclear Safeguards Agreement, must be on full alert, considering that the resource is, in  virtually  equal measure, highly beneficial and highly destructive.

The benefits include low-carbon electricity production and life-saving medical applications such as X-ray machines. The manufacturing of  nuclear weapons and creating warfare-induced panic are among the negative aspects.

Beyond striving to reap maximum benefits  as hosts of the resource, the country,  as a member of the global family, should, in partnership with good-willed stakeholders,  endeavour to ensure that Tanzania-sourced uranium is not abused as an agency for fuelling warfare. It must play the angel; not the devil.

EDITORIAL : THE EL UNIVERSAL, COLOMBIA

Al mal tiempo, buena cara

El IDEAM anunció el 5 de julio pasado que su pronóstico de 65 % de probabilidad de un fenómeno de El Niño para el segundo semestre de 2012, que comenzaría en julio y se agudizaría en diciembre, fue confirmado por la Administración Oceánica y Atmosférica de los Estados Unidos (NOAA, por sus siglas en inglés). Es decir, la sequía está asegurada.

Desde hace varios años venimos advirtiendo en este espacio que el cambio climático dará al traste cada vez más con el orden de los regímenes de tiempo seco y mojado en el país, especialmente en la Costa Caribe. Los gobiernos locales deberían prepararse para aprovechar lo inevitable, los extremos entre sequías e inundaciones, en vez de padecerlo de brazos cruzados.

Más allá de un plan de desagües pluviales, no hemos visto un plan de urbanismo de Cartagena una planificación sensata de cómo contrarrestar la situación inversa: las sequías.

Como parece saberlo todo el mundo, el incremento en el nivel medio del mar quiere decir que la cuña salina se trepará cada vez más por los ríos y humedales del país. En el caso de Cartagena, una sequía acentuada como la que se aproxima, que le restará mucho caudal al Canal del Dique, podría salinizar la toma de agua dulce para el acueducto en las lagunas aledañas. Allí debería haber más previsión e información, si no de parte de la Alcaldía, al menos de Acuacar, la compañía público privada que nos concierne a todos.

Las sequías también son oportunidades que el Gobierno nacional y las administraciones locales no pueden desperdiciar. Es el momento de impulsar más la elevación del terraplén de la carretera Troncal de Occidente entre Corralito (Arjona), y el puente de Gambote, que también tiene que ser hecho nuevo.

También es hora de mejorar los distritos de riego del departamento de Bolívar, incluyendo las alturas de los embalses de Matuya y demás para almacenar mucha más agua y poder regar la tierra fértil de Marialabaja y sus alrededores, que no alcanza su potencial agrícola por no tener agua suficiente. Las obras entonces futuristas del gobierno de Lleras Restrepo (1966-1970) no solo no se completaron, sino que hoy tendrían que ser ampliadas solo para cumplir con su proyección original.

En el área rural de Cartagena el verano también crea oportunidades para construir un gran embalse –por ejemplo, en el arroyo Tabacal y cuenca hidrográfica aledaña-, que no solo garantizaría el agua al norte de Cartagena, sino que sería un control de inundaciones indispensable para los barrios populares vecinos de la ciénaga de la Virgen.

Sería bueno que alguien comenzara a gobernar la ciudad, lo que implicaría trabajar no solo en las consecuencias previsibles del cambio climático, sino en un plan integral de desarrollo urbano para librarnos de la tiranía de los planes parciales, con frecuencia parches determinados solo por los intereses particulares del momento.

La planificación urbana tiene que ser técnica y continua, sin depender de la coyuntura.

EDITORIAL : THE ASHARQ ALAWSAT, SAUDI ARABIA publish in London

Is Tlass’s defection not important?

08/07/2012

By Tariq Alhomayed

One of the officials associated with the tyrant of Damascus rushed to say that the defection of Brigadier General Manaf Tlass “means nothing” adding “if Syrian intelligence had wanted to arrest him it would have”. So can we believe this statement? Is it possible that Tlass’s defection is not important to the al-Assad regime, which is arresting and killing all those who oppose it, even children? This is not to mention the fact that Manaf Tlass was a childhood friend of al-Assad. The simple answer to this is: nonsense!

The defection of Manaf Tlass is like an earthquake; this represents a blow to the heart of the regime! Repressive regimes, such as the al-Assad regime, do not accept its prestige being compromised, which is something that it engineers out of iron and fire. So how can the defection of al-Assad’s childhood friend be meaningless? More than this, the defected brigadier general is the son of the former Syrian Defense Minister, Lieutenant General Mustafa Tlass, who himself was a personal friend and companion of Hafez al-Assad. Whilst Tlass senior did not defect from the regime of al-Assad senior following the Hama massacre, despite the fact that he was a Sunni military commander, as is his son today. Mustafa Tlass also knew Hafez al-Assad from before the coup that brought the al-Assad family to power in Syria. Therefore, the defection of Manaf Tlass is important, and represents a painful blow to the tyrant of Damascus. Tlass defected today, taking the opposite course of action pursued by his father – who remained loyal to the regime – which means that he is aware that there is no hope of al-Assad’s survival, and that the ship will inevitably sink.

The defection of Manaf Tlass, the childhood friend of al-Assad, means that an important repository of secrets about Bashar al-Assad is now open to the West. Tlass will have information regarding those close to Bashar al-Assad, the composition of his current regime, and what is truly going on in the corridors of Damascus today. This is not to mention that Tlass will have insider information regarding the regime’s thinking and management of its crimes and suppression of the peaceful Syrian revolution over the past 17 months. This is something that has persisted to the point that the Syrian people have been forced to take up arms to defend their lives and honor. He will also be aware of other information regarding the previous history of the al-Assad rule, whether in Syria, Lebanon or Iraq, and much more besides. In addition to this, Tlass’s defection means the death of the Sunni alliance with al-Assad, for this defection is an important indication that the Sunnis who benefit from allying with al-Assad are no longer able to justify the regime’s crimes against the Syrian people.

The story does not stop here, for the defection of Tlass – a commander of the Republican Guards, under Maher al-Assad – means that the scope of disunity and fragmentation in Syria has increased, even reaching the forces most trusted by the al-Assad family. This represents a crack in the unity of the regime, whilst it also means that al-Assad is no longer in control of Syria. This is something that has been stated by numerous sources, and something that I previously mentioned in this column. Therefore the defection of Manaf Tlass, which is accompanied by other defections from the Damascus regime, means that al-Assad is no longer in full control of all of Syrian territory. More importantly than this, al-Assad is no longer even in control of his own military leadership, and this automatically means that the al-Assad police state is incapable of differentiating between who is with it and who is against it, even in the circles closest to al-Assad personally!

Therefore, the claim that Manaf Tlass’s defection from the al-Assad regime is not important – as is being repeated by the regime itself – is nonsense. This is nothing more than an attempt to absorb this shocking earthquake, which will no doubt be followed by other fatal after-shocks.

EDITORIAL : THE NIGERIAN TRIBUNE, NIGERIA,

President Morsy’s great challenge: Egypt’s trust deficit

The election of President Mohamed Morsy more resembles a dramatic screenplay than real life.

Despite being a candidate of a party formerly banned by the Mubarak regime, Morsy won Egypt’s first open presidential race by beating Mubarak’s former prime minister and symbol.

If it were a movie, dramatic music would play as Morsy took his oath of office and the story would end there.

In reality, as Morsy takes office, he must now face the many problems inherited from Mubarak.

In particular, he will have to address one of the worst legacies of the Mubarak regime—Egypt’s trust deficit.

Decades of government secrecy, corruption, and flagrant disregard for the rule of law under Mubarak have cast a shadow of distrust across society.

Surveys taken in the years leading up to Mubarak’s ouster depict a public with little trust in government.

The data is alarming: just 16% of Egyptians had confidence in their local government and a little over half had confidence in the government generally.

A 2010 survey conducted by the Egyptian Information and Decision Support Centre revealed more than 94% of Egyptians believed government corruption constituted a serious problem in their country.

The accusations and conspiracy theories that surfaced during the recent presidential elections demonstrate the transitional government has not restored the people’s trust.

If President Morsy is to be successful, he will have to address this trust deficit.

President Morsy is not the first post-revolution leader to face this problem and the experiences of other countries may by informative for the new president.

In countries such as South Africa, Tunisia, and the former Communist states of Eastern Europe, newly elected leaders turned to transparency promoting policies to restore the trust of their people after the fall of corrupt and oppressive regimes.

Among these policies are freedom of information laws (FOIL).

FOIL, also known as access to information or right to information laws, gives citizens the right to access information in the government’s possession, unless such disclosure would threaten an important public interest such as privacy or national security.

FOIL has become a widely recognised standard for good governance—at least 90 countries have adopted such laws.

It is argued FOIL improves public confidence in government in at least two ways.

First, by publicising the government’s activities, FOIL shines a light on both government virtue and corruption.

The people will know when the government is acting efficiently, competently, and honestly.

It is also widely believed the resultant transparency will deter government corruption, wastefulness, and incompetence for fear of detection.

Second, by opening the inner workings of government to the people, FOIL empowers citizens to take part in the governing process, to monitor policy, and to defend their rights.

Egypt is at an opportune time to adopt such policies.

It is presumed President Morsy will be the head of state during the writing of Egypt’s new constitution and during the formation of Egypt’s next parliament.

Although it is not yet clear the exact extent of the president’s power, he can use his influence to press for a Constitutional Amendment that recognises the right of the people to access information in the government’s possession.

Before parliament was dissolved in June, members were reviewing proposed freedom of information laws.

When parliament reconvenes, the president can and should again use his influence to encourage parliament to adopt a robust freedom of information law.

So far, President Morsy has demonstrated an interest in both building public trust and in a citizen’s right to information.

Since the announcement of his victory, trust has been a consistently mentioned topic in President Morsy’s post- victory speeches and meetings.

According to his Nahda Project on the Freedom and Justice Party’s website, Morsy endorses “Building a comprehensive network system for fighting corruption…[and] recognising citizens’ right to obtain government information.”

It would be a perfect ending to the story of his presidency if he could replace Mubarak’s legacy of secrecy and corruption with his own legacy—a trust surplus.

Media and the Islamists in Egyptian press

As many Egyptians are watching Mohamed Morsy’s performance during his first 100 days in office, commentators tackled the fierce confrontation between the Islamists movements, particularly the Muslim Brotherhood, and the media.

These comments ranged from,claiming there is an attempt by Islamists to control the national media institutions, and criticisms of the Shura Council, to reactions of commentators against what they call a systematic defamation campaign against Islamism and President Morsy.

Free speech was discussed, in an interview with Islamist reformist Rachid Al-Ghannouchi of Tunisia.

Another issue, of less significance, was the demand of some policemen that they be free to grow their beards, which again, brought debates on post-revolution personal freedoms versus institutional rules and regulations.

National press belongs to its sons
Diaa Rashwan
Al-Masry Al-Youm

DiaaRashwan depicts the rush of the Islamist majority in the Shura Council to control the national press.

The hurry of the Islamist block in attempting to seize the national press has come when the same Shura Council members have not yet completed their part in the Constitutional Drafting Committee.

This prompted Rashwan to question the intent of the Islamists.

He suggested they are making use of the pre-revolutionary legislation governing the relationship between the Shura Council and national press, before awaiting the completion of the post-revolution constitution, which is expected to open the doors wide for free press.

Rashwan sees that Islamists are acting as if they were on a holy mission to purify the national press, regardless of what the sons of these governmental institutions and their elected Syndicate of Journalists might say.

He claims this is done in order to achieve two main goals.

The first is to settle old accounts with some of the national press icons who used to slam Islamists and their project, and the second is to appoint loyalists with the Islamist worldview on the heads of national press establishment.

Rashwan advises President Mohamed Morsy to act as a referee between the authorities, including the press, to avoid the return of national press to the Mubarakmodel.

Satanisation of Islamists
Karima Kamal
Al-MasryAl-Youm

Karima Kamal examines the violence committed by Islamist extremists after the ascension of Mohamed Morsy to the presidency.

These incidents lately included the murder of a student strolling in a park with his fiancée in the city of Suez, the murder of two musicians in Al-Sharqiya province, repeated attacks on women not complying with the ‘Islamic dress code’, and an assault in a coffee shop in Nasr City district in Cairo by armed bearded men.

Kamal rejects the argument propagated by the Freedom and Justice Party and the Al-Nour Party, whereby they consider themselves under a state security conspiracy to vilify and satanise them before the people.

In Kamal’s estimate, this argument ignores the long history of Islamist violence in Egypt, including, the assassination of FaragFouda, the assault on the Nobel laureate Naguib Mahfouz, and the robbery of Coptic jewelry based on fatwas praising such attacks.

The most recent example of this are the controversial statements made by Yassir Burhami, a member of the Constitutional Drafting Committee, regarding women and Copts.

While Morsyonly condemned the incidents, Kamal urges him to take deeper measures to tackle the crux of the issue, as this is the only salvation from religious fascism.

Security is mandatory, and the beard is optional
Fahmi Howeidi
Al-Shorouk

FahmiHoweidi examines the excessive media coverage of an issue, which he considers to be of minor weight.

This issue is the demand raised by some police officers to be granted the freedom to grow their beards.

Howeidi blames the media for concentration on this issue rising to the point that it was being discussed by Field Marshal Hussein Tantawy in one of the recent meeting of the Supreme Council of Armed Forces.

On the other hand, both religiously and practically, Howeidi sees that there is no issue with police officers not being able to grow their beards, as the priority should be to comply with the rules and regulations of security institutions, and to grant security to the wider population.

Howeidisummarises the fatwas issued by the Maliki, Shafei, Hanafi, and Hanbali schools regarding beards, and cites some of Al-Azhar’s prominent Islamic scholars, and even the Grand Mufti Sheikh Ali Gomaa, supporting the view that having bearded policemen dealing with Copts will ultimately cause sectarian tensions.

Howeidi concludes his column by stating that the greatest fallacy is to prioritise what is mandatory above what
is optional.

Half an hour with Al-Ghannouchi
Ahmed Al-Sawi
Al-Shorouk

Ahmed Al-Sawi takes the opportunity of the visit made to Al-Shorouk newspaper by the Tunisian Prime Minister Rachid Al-Ghannouchi, and conducts a conversation with him regarding the relationship between religion and politics.

Al-Ghannouchi suggests that while religion and politics are inseparable, a distinction should be made between what is religious, and what is political.

He states that secularism is not atheism, but an attempt to regulate the state to grant freedom of expression and belief.

He cites his initiative to depoliticise mosques across Tunisia.

Al-Ghannouchi cites the Prophet Muhammad’s first two actions when his migration from Makkah to Madinah was completed; building the mosque, and establishing the ‘Sahifa’ or the constitution, whereby Muslims and Jews were a single political entity.

When Al-Sawy mentions the recent events in Egypt where mosques have been exploited by religious groups in favour of, or against,particular electoral candidates, and asked him, ‘Why don’t you offer lessons from your initiative to our Egyptian Islamists?’

Al-Ghannouchi replied that he had learned these concepts from prominent Egyptian Islamic thinkers such as Mohamed Imara and Selim Al-Awwa.

Ghannouchi questioned Al-Sawi back, ‘Why don’t you in Egypt allow such thinkers to have a say in the future of the country?’

The Minister of Interior and the ‘practicing’ criminal
Khalid Montassir
Al-Watan

Khalid Montassir expresses skepticism following the statement made by the Minister of Interior regarding the murder of a young man in a park in the city of Suez, while walking with his fiancée.

In lieu of describing the procedures and event that led to the arrest of the culprits, the Minister of Interior attacked the media, and stated that the criminals do not belong to any political or religious affiliations but at the same time, they were religiously ‘practicing’.

This particular term aroused Montassir’s anger, as it reduced the parameters of religious practice to merely wearing a jilbab and growing a beard, and deprives it from its core essence.

Montassir warns that the murderers of FaragFouda and Naguib Mahfouz did belong to any religious or political movements, but they found in some fatwas enough justification to aim their Kalashnikovs at those they disagree with.

Omar Abdul-Rahman had an infamous statement, ‘If Naguib Mahfouz did not speak up, Salman Roshdy would have shied away’.

While Al-Nour Party’s MP Ali Wanis was staunchly defended by those ‘practicing’ Muslims, after his video-recorded sexual scandal, Montassir slams the moral bankruptcy of these factions who interfere in others personal affairs,considering themselves more virtuous.

President Morsy’s crisis with the media
Ammar Ali Hassan
Al-Watan

Stressing the sanctity of freedom of the press and media, Ammar Ali Hassan rejects the methods employed by the Muslim Brotherhood to counteract what they see as a systematic defamation campaign against their entity and President Mohamed Morsy.

Such reactions were manifested in the attempt by the Brotherhood to purchase numerous private satellite TV channels, and to appoint loyal editors-in-chief in national press establishments, making use of their Shura Council majority.

Hassan regards this as an attempt to silence those who oppose them, in what constitutes a replication of the numerous legal barriers against free speech which existed during Mubarak’s era. He considers these policies as outdated.

Rationally speaking, Hassan denounces the attempts by many to crucify Morsy only after one week of taking his oath as president.

However, he feels comfortable with experienced commentators examining Morsy’s performance in several fields of governance and policies.

While Hassan condones the anxiousness of the Muslim Brothers facing the rising mocking tone in the press aimed at president Morsy, he considers the courts as the only legal arena to counteract anyone who might exceed the limit.

He denounces the systematic rumor-spreading, vilification, and accusation of treason hurled at anyone daring to criticize Morsy and the Freedom and Justice Party.

EDITORIAL : TODAY'S ZAMAN, TURKEY

Will governmental folly now allow for a cyber crisis?

8 July 2012 / KENNETH ROGOFF, SUNDAY’S ZAMAN

CAMBRIDGE –- When the financial crisis of 2008 hit, many shocked critics asked why markets, regulators and financial experts failed to see it coming.

Today, one might ask the same question about the global economy’s vulnerability to cyber-attack. Indeed, the parallels between financial crises and the threat of cyber meltdowns are striking.

Although the greatest cyber threat comes from rogue states with the capacity to develop extremely sophisticated computer viruses, risks can also come from anarchistic hackers and terrorists, or even from computer glitches compounded by natural catastrophe.

A few security experts have voiced great alarm, including, most recently, Jonathan Evans, the head of the British Security Service (MI5). By and large, however, few leaders are willing to compromise growth in the tech sector or the Internet in any significant way in the name of a threat that is so amorphous. Instead, they prefer to establish relatively innocuous working groups and task forces.

It is difficult to overstate the dependence of modern economies on large-scale computer systems. But imagine if one day a host of key communications satellites were incapacitated, or the databases of major financial systems were erased.

Experts have long identified the electricity grid as the most acute vulnerability, since any modern economy would collapse without power. True, many skeptics argue that with reasonable low-cost prophylactic measures, large scale cyber-meltdowns are highly implausible, and that doom-mongers overstate the worst-case scenarios. They say that the ability of cyber-terrorists and blackmailers to take the global economy to the brink, as in the 2007 Bruce Willis movie Die Hard 4, is utterly fictional.

It is difficult to judge who is right, and there are important experts on both sides of the debate. But there do seem to be an uncomfortable number of similarities between the political economy of cyberspace regulation and of financial regulation.

First, both cyber-security and financial stability are extremely complex topics with which government regulators can hardly keep up. Industry remuneration for experts is far in excess of any public-sector salary, and the best minds are continually bid away. As a result, some argue that the only solution is reliance on self-regulation by the software industry. One hears this argument for many modern industries, from big food to big pharma to big finance.

Second, like the financial sector, the tech industry is enormously influential politically through contributions and lobbying. In the United States, all presidential candidates must make pilgrimages to Silicon Valley and other tech centers to raise money. Excessive financial-sector influence was, of course, a root cause of the 2008 meltdown and remains deeply implicated in today’s continuing eurozone mess.

Third, with slowing growth in advanced economies, information technology seems to hold the moral high ground, just as finance did until five years ago. And crude attempts by governments to enforce regulation are likely to prove ineffective in protecting against catastrophe, while all too effective in strangling growth.

In both cases –- financial stability and cyber security –- the risk of contagion creates a situation in which a wedge can form between private incentives and social risks. Admittedly, progress in the technology sector overall often produces huge social-welfare gains, which arguably outstrip those produced by all other sectors in recent decades. But, just as with nuclear power plants, progress can go awry in the absence of good regulation.

Finally, the greatest risks come from arrogance and ignorance, two human characteristics at the heart of most financial crises. Recent revelations about the super-viruses “Stuxnet” and “Flame” are particularly disconcerting. These viruses, apparently developed by the US and Israel to disrupt Iran’s nuclear program, embody a level of sophistication far beyond anything previously seen. Both are deeply encrypted and difficult to detect once inside a computer. The Flame virus has the capacity to take over a computer’s peripherals, record Skype conversations, take pictures through a computer’s camera, and transmit information via Bluetooth to any nearby device.

If the world’s most sophisticated governments are developing computer viruses, what guarantee is there that something won’t go awry? How can we be sure that they won’t “escape” and infect a much broader class of systems, or be adopted for other uses, or that future rogue states or terrorists won’t find a way to turn them on their creators? No economy is more vulnerable than the US, and it is arrogance to believe that US cyber superiority (to all except perhaps China) provides it with impenetrable security from attack.

Unfortunately the solution is not so simple as just building better anti-virus programs. Virus protection and virus development constitute an uneven arms race. A virus can be just a couple hundred lines of computer code, compared to hundreds of thousands of lines for anti-virus programs, which must be designed to detect wide classes of enemies.

We are told not to worry about large-scale cyber meltdowns, because none has occurred, and governments are being vigilant. Unfortunately, another lesson of the financial crisis is that most politicians are congenitally incapable of making difficult choices until risks actually materialize. Let us hope that we are lucky for a while longer.

21st-century political economy transition
by C. Warren Neel*

8 July 2012 / ,

Political economics have an interesting history in every part of the globe. Changes that have been made vary in nations, even where the common goal is to benefit the citizens.

Viewing the evidence of the past 200 years affirms that a nation’s success has a tendency to generate a different model or some significant modifications, particularly during a crucial change in the business cycle.

Today’s global economic issues reflect changes in the financial wellbeing of countries. Political models are also undergoing change in national and international governments, particularly where there are new elections of leaders. When aware of these changes, one wonders if the global historical pattern of political economics thesis challenges the antithesis, and a synthesis is formed.

The US government is an example of the changing process, having spent most of the 1900s defining “who we were not.” Even while dealing with recessions, inflation and a variety of other economic issues, political actions appear to be dictated by a vision that policies would be designed and implemented to avoid communism. Democracy indeed had a powerful antithesis that pressured action.

In reality, the mirror of communism was used by virtually all political leaders to define what the country would not become and dictated what should be done to make sure democracy remained. Then in the mid-1980s when Russia abandoned the communist model, the US lost the reference that defined its actions.

Because countries no longer have the communist reference and no longer have individual political clout as in the past, it is becoming evident that emerging changes will continue to affect politics, making the public wonder if the political-economic model that dominates the “democracy model” in the US and new forms of government in Europe and Asia will now move nations to a global model of governance rather than that of individual country. If not, will it simply modify countries’ governance practices?

Major evidence reflecting change began appearing with the G-8 of the 1970s. Now it has become the G-20 and will move even further and continue to influence monetary and fiscal policies. Moreover, the growth in capital markets and their daily assessment of global activities add to the new emerging model of political economy. With each passing year, such critical financial policies are becoming more coordinated among nations, rather than having a single country dictating policies and having complete control over their economy. As evidence, the G-8 recently met to discuss monetary and fiscal policies. That has happened before, but this time it appeared different in that it is increasingly necessary for nations to coordinate policies and actions.

The period following the 1980s has produced enormous growth in technology. The results appear to be a major source of sea change to virtually every facet of the 21st century and thus are affecting all countries.

One of the major items creating political and economic change is technology. It appears to be developing, affecting virtually every industry and, ultimately, creating a major source for a different economic thesis that a host of nations will have to deal with in this century. Healthcare, retail, manufacturing and education are but a few examples. Delivering better healthcare is gradually being shifted toward individual responsibility, with the analysis of individuals and community wellbeing available immediately online. Forms of surgery are even being done by robots. Retail firm sales are growing online as pattern sales analysis is reducing the necessary inventory in stores to service a specific location. This has resulted in more rapid inventory turnover and an increase in gross margins. Manufacturing is changing due to a host of technology that is replacing labor. Education is also being affected, altering the delivery of the content to students in grade schools and universities.

The most notable statistic that reflects major change is the employment patterns that traditionally follow a business cycle. In the 1980s the accepted outcome of a typical business cycle was, in the US, 5 percent unemployment. The past four years have remained above 8 percent, and the pattern is not following the historical model. Stimulus funds have also not materially affected the pattern, as was very much the case in the past. Reality suggests that layoffs have resulted in a modest increase in increased capital investment in technology that enhanced the service and product outcome rather than rehiring. Thus the substitution of capital for labor is part of the sea change that is occurring.

Decisions made by companies will obviously continue to reflect a different model of service to customers and collectively continue to reflect a change in the historical business cycle of recovery.

The technology era is providing major changes, even to classic principles of economics. Perhaps the most significant change is, in principle, the economy of scale. Since the start of the industrial revolution, firms have always focused on growing to increase profits and compete very effectively. This era of technology could be replacing that principle with the “economy of agility” as a major objective. How quickly can a firm change its competitive edge in the global economy could become the focal point, not just size.

The emerging 21st century has begun to modify the traditional means of a government’s economic control. The borders of a nation, its states, countries and cities have been viewed in large measure as reflecting the rights and responsibilities of citizens. Now borders have begun to experience changes because of the technology. Tax collections, property values and a host of other changes appear to be absent from policies that have been significant in defining a government’s authority and responsibility.

The question remains as to how the democracy model changes will occur or if they will. Increasingly, evidence does suggest change is under way and will continue to alter the form of a nation’s and the globe’s political economic model.

EDITORIAL : THE KOREA HERALD, SOUTH KOREA

Japan’s militarization

Japan has recently alarmed its neighbors by taking a series of moves that suggest the world’s third-largest economy is rushing its comeback as a military powerhouse. 

Since the early 1990s, Japan has slowly but steadily proceeded toward militarization despite the constraints posed by its so-called peace constitution. 

Dubbed the “no-war” clause, Article 9 of the constitution renounces war and the right to use force as a means of resolving international disputes. It also declares that Japan will never maintain land, sea and air forces, as well as other war potential.

Yet the country has managed to expand its military capacities and broaden the scope of activity for its Self-Defense Forces. For this, Japanese policymakers circumvented the constitutional roadblocks by continually revising their interpretations of Article 9. 

Now, Japan’s major political parties are pushing for a radical reinterpretation of the clause or an outright amendment of it as part of their bid to overhaul the nation’s security policy and become a “normal state.”

Last week, a committee under the Japanese prime minister released a report calling for a reinterpretation of the constitution to recognize Japan’s right to exercise collective self-defense, the hallmark of a normal state.

Thus far, the Tokyo government’s official stance on the issue has been that the peace constitution does not recognize Japan’s right of collective self-defense, although it is set out in the United Nations Charter.

According to this view, Japan cannot use armed forces against a third country that is attacking an ally, for instance, the United States, while in contrast, under a mutual defense treaty, the U.S. is obliged to use force against a country that attacks Japan.

The panel’s report notes that as this conventional interpretation undercuts Japan’s value as a security partner, Tokyo must review it to enhance security cooperation with the U.S. and other allies.

Coming from a panel put directly under the prime minister, the report is widely seen as signaling the beginning of the Japanese government’s campaign to give a whole new spin to the no-war clause.

The report caused concern in Seoul as it raised the possibility of Japan deploying its troops in South Korea in the event of North Korean aggression against the South. To many Koreans, this is as nightmarish as a North Korean invasion of the South.

For Seoul’s policymakers, a more serious worry may be the move by Japan’s conservative political parties to amend Article 9. They have put forward revision of the clause as a campaign pledge for the next general election. 

The Liberal Democratic Party declared in April that it would amend the constitution to empower Japan to exercise collective self-defense. 

The Osaka Restoration Association, a right-wing political party led by Osaka Mayor Toru Hashimoto, a rising star in Japanese politics, said it would put the revision of the no-war clause to a referendum.

Last month, Japanese lawmakers made another move that sounded alarm bells for Korea and other neighbors. In revising the Atomic Energy Basic Law to set up an independent nuclear regulatory agency, they rewrote a clause to add “national security” to the uses of nuclear energy.

The addition was made without any public discussion, spawning the suspicions that Japanese lawmakers colluded to pave the way for Japan to produce nuclear weapons. 

Japan’s impetus for security policy reform comes from the perceived threats posed by an increasingly assertive China and a nuclearized North Korea. This is understandable, if not acceptable. 

Yet Japan’s reaction to these threats cannot be taken for granted as the country is not trusted by its neighbors. Korea and other countries in the region believe Japan has not overcome the imperial impulse that led it to colonize its neighbors and stage a devastating international war. 

They note that Japan has not yet sincerely repented for its responsibility for World War II. Japanese politicians frequently visit the Yasukuni Shrine which enshrines a number of Class A war criminals. They also have no qualms about rationalizing Japan’s aggression and brutal colonial rule. 

Japan’s militarization will escalate an arms race in the region. To prevent this, countries in the region should be able to set up a collective security system like NATO. 

Yet since a NATO-like structure in this region is still a remote possibility, Seoul needs to reassess Japan’s strategic intentions and recalibrate its own security policy based on the region’s changing security dynamics.

Green light to Jeju base

The Supreme Court has put an end to the drawn-out dispute over the construction of a naval base on Jeju Island by ruling that the Ministry of National Defense has proceeded with the project in a lawful way.

The top court’s final verdict has cleared a big obstacle to the project, ensuring that the construction of the important naval base will go ahead as planned.

The lawsuit was filed by residents of Gangjeong Village on the island in 2009 to stop the base construction, which they claimed would damage the area that has been designated a Biosphere Reserve by UNESCO.

They took issue with a minor procedural flaw that the Ministry of National Defense allegedly made in the process of approving the project. The top court affirmed that there was nothing illegal about the way the ministry pushed ahead with the project.

Now that the final decision has been made, the villagers should bury the hatchet and cooperate in building the naval base. They should not forget the harm they have done to the nation by filing a suit three years ago.

Their legal action provided a good opportunity for a wide array of political groups to gather and stage violent protests against the government. The peaceful village soon turned into a battleground between protesters and police.

Protestors included not just village residents and environmental activists but opposition party members, labor activists, civic group leaders, dissident students, pro-North Korea activists and “professional” protestors who make a living by participating in rallies.

Politically motivated protesters offered all kinds of nonsensical reasons to oppose the project for opposition’s sake. Their primary aim was to deal a political blow to the government by stopping the project. 

Due to their occupation of the project site, construction work had to be halted for 74 days. Such an incident should not be repeated. 

The naval base was first proposed by President Roh Moo-hyun in 2005. He foresaw its strategic importance. Yet many politicians who worked for him and advocated the project during his term changed stance and led the rally against it. Such opportunistic behavior should be punished by voters.

Now the base has become strategically much more important than in 2005. Tensions are rising in Northeast Asia as major players are eager to beef up their sea power amid growing competition over maritime territory and natural resources in deep water.