Friday, November 21, 2014

More than 52 years later

               Who are some of our closest neighbors? Canada and Mexico are the obvious ones. Our relationships with the two countries are pretty good. Each nation is part of NAFTA after all. Now, what other nations are there which are right on our doorstep? The Bahamas and Cuba are the other two that come into mind. For the most part, we are pretty friendly to our neighbor countries. Cuba is the sole, sore exception to that rule. What was once America’s play spot and sugar plantation has now become one of our antagonists.

               Why is this so? Some countries around the world believe that Cuba is a friendly country. Ask Ebola-stricken Liberia, which has over 100 medical personnel and doctors fighting the deadly virus and helping the overburdened hospitals. They've also sent doctors to help with the 2010 Haiti earthquake, 2005 Pakistan earthquake, and the 2004 Sri Lanka Tsunami this past decade. Last year alone, they sent nearly 4,000 healthcare workers to help service Brazil’s rural areas. For a large portion of the world, they have helped the world prosper.

               Some might argue that it is because of Cuba’s Communist Government. Since the fall of Batista’s brutal regime, Cuba has been in the hands of the Castro brothers. However, our relationship with other communist countries has not resulted in a continuous embargo. Since the 1970’s, we have repaired our relationship with the People’s Republic of China, using it as a counterweight to Soviet expansion. The US has also begun to ameliorate their relationship with Vietnam’s communist government. For nearly 2 decades throughout the 20th Century, the US has frowned upon the Vietnamese communist’s existence. Whether it was through supporting French or the capitalist south US has sought to eliminate the communist government in favor for a west-favoring regime. In total, around 50,000 Americans soldiers were killed during the Vietnam War. Meanwhile, we have now begun to trade weapons with the Vietnamese. More specifically, the US is selling lethal maritime arms to the country. It reveals a distinct change. Instead of trying to eliminate the government or create John Rambo movies against the evil Vietnamese, we are now trying to covertly support its naval territorial rights within the East/West Philippine/South China Sea.

               So why do we still have a ~50 year embargo against Cuba? Was it due to their choice to accommodate Soviet aggression against the US, which was within their own self-interests? It was one of the few occasions that the Cold War almost went Hot.  If given the order, US bombers would have performed several air-to-surface strikes against the known Cuban missile sites within 15 minutes. We are geographic neighbors. In fact, there are several areas within the Florida Keys that are closer to the communistic island than the nearest capitalistic behemoth known as Walmart. The main reason for the embargo lies within our own domestic politics and demographics. A lot of Americans were financially harmed by Castro’s revolution and several Cubans were forced to seek refuge within the US. Those that were forced to give up their property and flee Castro’s regime have not forgotten or lessened their hatred. The Cuban exiles have maintained a strong presence within domestic politics. Their power can easily be seen in the exceptional US policy towards Cuban migrants. The ‘Wet Foot, Dry Foot’ policy is unique amongst the region. Numerous Haitians are turned back while several Cubans who won their race against the Coast Guard are allowed to stay. The Cuban diaspora is powerful. It is also the main reason why Cuba still has an embargo against it.

Tuesday, November 18, 2014

#fueelestado: Mexico's Peña Nieto Struggles at Home, Abroad

Even in this polar weather, it's hard not to feel the rage boiling over in nearby Mexico.

In late September, 43 students at a teacher training school in Guerrero went missing. They had traveled to the town of Iguala to protest against government corruption. Investigations paint a grim story: eyewitnesses report that after violent clashes with police, the 43 were arrested and herded into police vans at the mayor's orders. Members of the same police force have since confessed to Mexico's Attorney General that they handed the students over to Guerreros Unidos (GU), a drug gang in southern part of the state. This month, GU members finally led authorities to the landfill where they killed the students and and burned their bodies. The remains are so badly burned that DNA analysis is expected to take weeks.

Anti-corruption protests have been raging throughout Mexico, from the Guerrero State Congress to the National Palace in Mexico City. The incident, along with multiple mass graves authorities uncovered in the search, highlights the brutal gang violence plaguing Mexico's rural areas. It also raises serious questions about corruption and the ties between gangs and politicians.

Firefighters arrive to try to extinguish several burning vehicles in front of the state congress in Chilpancingo on 12 November, 2014.

 The Economist

As President Enique Peña Nieto faces this roiling situation at home, he also finds himself burned by scandal abroad. This week, Bloomberg reported that Mexico abruptly cancelled a $4.3 billion high-speed railway deal with China Railway Construction Corp., a prominent Chinese construction firm. The cancellation followed the revelation that the unrivaled CRCC bid included Grupo Higa. Interestingly, Grupo Higa's boss also owns the credit firm financing Nieto's private, $7 million home. The cancellation is a significant blow to China-Mexico relations. Nieto himself has been trying to attract Chinese FDI in Mexico, and this collapsed deal is sure detract from his confidence-building measures.


Such scandals are undermining Nieto's legitimacy at home and abroad. As his international business relations suffer, Mexico seethes at his perceived indifference over domestic issues. Various analysts have called for reform in Nieto's Mexico, including anti-corruption, targeting crime and strategic security reform. Will such reforms be enough to save his faltering political career? Protests are already calling for his resignation, and the Chinese are unlikely to ever do business with him personally.

While change in leadership may put out fires temporarily, many of Mexico's underlying issues will remain. No matter who is in charge, Mexico's leader will need to enact significant changes in terms of corruption, which seems to underpin many of the current developments. Transparency in large-scale business deals and personal finance may be a good place to start. At home, incentivizing state security forces may cut down on ties to cartels, saving the lives of many and bolstering the leader's political credit. It's about time; the people of Mexico deserve it.

Monday, November 17, 2014

Twenty Three Years as a Ruler -- Long Enough?

"Land of cotton", "Home of silk", "Nation of Silk Road history" -- these nicknames make Uzbekistan stand out from its neighbors (Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan) in Central Asian region. Given the population size of 31 million, the newly independent (from the USSR) country represents one of the most authoritarian nations across the world with its 76-year old president, Mr. Islam Karimov, staying continuously 'reelected' since 1991. 

According to the official data, GDP per capita in Uzbekistan is the 3rd highest (after Kazakhstan and Turkmenistan) in the region and amounts 4,060USD. However, critics state that if the country's economy was allowed to operate within free market rules, every Uzbek would have access to over 20,000USD per annum. Corruption and political elite controlled circulation of goods and services prevent Uzbek economy from development, even if the annual growth remains being among the highest (c.a. 6.5 per cent) in the developing world. Thus, minimum salaries today (including in capital city, Tashkent) hardly bypass 90USD/month amount. President Karimov does not see the problem as a matter of survival for the population, but rather opposes growing external (labor) migration (in order to increase their standards of living, tripling their monthly wages at least) of Uzbeks (especially, young men and women) to Kazakhstan and Russia.

Uzbekistan is the world's 5th leading nation in production of cotton: 3.4 million tons of the "white gold" were harvested in 2014. Only the political elite and, primarily, the ruling family members, do not accept the fact of annual injuries and fatalities during poorly equipped process of picking cotton. Vast majority of workers and students of government institutions (i.e., schools and universities) are continuously forced to join the field work and demanded to meet minimum quotas, such as collecting 133 pounds (a season) if you are a student and 177 pounds - if you are a teacher. In response to the growing number of deaths in cotton fields (smoke inhalation, tragic incidents due to lack of equipment security inspection), President Karimov "congratulated" Uzbeks, calling them "my dears", for common accomplishments and asked to "be patient" in seeing future prosperity of the country.

In fact, local people are known to be the most resilient in the region: letting their government exercise the limitless authoritarian power and enrich the ruling clans. Some consider that notion as being an outcome of the massive shooting and killing of hundreds of civilians with President Karimov's command during street protests in Andijan (in 2005). All that people were demanding back then was economic reforms and protection of human rights. Today, after series of sanctions and embargo imposed on Uzbekistan from limited list of international partners (i.e., the EU) and provision of technical support (from Human Rights Watch and International Labor Organization) to the Government in order to monitor human rights violations, foreign analysts observe somewhat improvement in the conditions that Uzbeks live. Inspired by the international support, sometimes youth organize peaceful protests in public (where unrestricted) places around Tashkent to express their views on presence of state-sponsored labor exploitation in cotton fields and cases of torturing human rights activists reporting to foreign media outlets on violations in Uzbekistan.
Tentative progress in protection of labor rights noted by ILO in 2014 could be considered as an achievement of the effectively working government of Uzbekistan. If only..if only the out-flowing information was reliable, as the media outlets, as well as Uzbek personnel working for international organizations and even embassies, are absolutely censored and closely monitored by the "secret" agencies appointed by Karimov's growing clan. The world has already witnessed the split occurring within the ruling family (unusual for society with strong family ties): Islam Karimov's famous daughters -- a diplomat, pop star, model, and businesswoman Gulnara (currently under house arrest for bribing Telecommunication and Trade companies that brought billions in damage to the Uzbek government) and an Ambassador to UNESCO (Geneva) Lola (who tries to distance herself from the ongoing clashes within Karimov's family) -- seem to oppose their aging father's regime and, most recently, the "opposition" expanded, as President's grandson joined the 'club of warriors', asking Islam Karimov for political reforms. One can only hope that the younger generation of Karimov's clan are not seeking to replace their (family) leader by themselves, as the next presidential election is upcoming in March 2015.

Although in its 23-year independent history Uzbekistan has not experienced free and fair elections yet, Islam Karimov is getting obviously old and, therefore, less attentive when it comes to even existing diplomatic relations with other states. Uzbeks who are currently working outside of their home country want to return to the fertile land [and rich for natural resources (including oil and gas)] of their parents and grandparents, raise their children themselves and not having to earn living for their families on a distance, and fully exercise their rights for freedom of expression and assembly. Whether the situation in Uzbekistan will change for better soon or not remains to be hard to envisage now. However, given the dissolution occurring within the heart of the problem -- powerful Karimov's clan, -- Uzbeks might prefer continuous (but soon-ending) patience over possible massive killing of protesters who after all will not be able to introduce the long-awaited change into the land of "while gold".

Islamic State’s New Jab at Legitimacy

On Thursday, Islamic State announced their intent to create their own currency resurrecting the ancient Islamic dinar from 634 CE. This has consumed Western media and led the vast majority to completely discount this move as doomed for failure. Islamic State continues to move towards a true state as it established a Treasury Department that will manage the new currency. ISIL's success in this endeavor is not necessarily important. The fact that they are taking this new step indicates that terrorist organizations intend to be a lasting entity with a permanent place in global affairs, not unlike the rise of many nation states in centuries past.

Certainly ISIL has huge impediments to overcome to pull this off, but it might have more value than the world seems to believe. Sure no bank in the world will accept ISIL’s currency on the sole basis it comes from a terrorist organization. They will also need to pull enough money together to buy the necessary material for widespread dissemination. Plus the logistics of minting a new currency haven’t been ironed out and will be even more difficult to pull off with constant airstrikes. The continuing battles over control in Syria and Iraq will work against a stable government and currency. But just because there are many factors working against ISIL’s plan does not mean it will not get off the ground or end in utter failure. 

To ISIL’s credit they have not disclosed exactly how and where they will mint their new seven coins, made out of gold, silver and copper. Doing so would only provide an easy target for drone strikes. Coming up with the money to produce the new coins may not be as difficult as it seems as they are considered one of the wealthiest terrorist organizations from ransom demands and confiscated oil sales. Changing its current store of currency into new money might appear counterproductive. Except doing so contributes to ISIL’s caliphate and reinstatement of Sharia law by eliminating the “tyrannical monetary system that was imposed on the Muslims [leading to] enslavement and impoverishment.”

Using precious metals for currency not only ties the new currency to its historic roots but also ensures the new dinar has intrinsic value from its inception. Even though the world will not accept the new dinar thereby delegitimizing its value on a global scale, it can certainly help establish legitimacy in ISIL occupied territory. As a fledgling currency with no international recognition it wouldn’t be too difficult to use on a local level that is wholly controlled by ISIL. Gold and other precious metals have long been the currency of choice as its value transcends what the government sets, until this century.

The U.S. may have been too quick in casting ISIL as just a destabilizing force in the region and the world would be remiss to write off this latest announcement as impractical and a nonstarter. Even if it fails at the local level, the fact that ISIL has “assembled a team of experts to figure out how it is going to work” indicates their commitment to the establishment of a true state. This level of bureaucracy meant to outlive individual leadership demonstrates a new and serious threat. ISIL does not have to succeed at this juncture in establishing a lasting currency. The longer Islamic State can outlast the airstrikes while holding onto power and territory the more legitimacy they will gain in the region until they can mint again.