Yesterday, given a spate of bad economic data, I wondered which country would be the next to tap the IMF's new flexible credit line.
Today, the answer: Poland.
The country has sought a precautionary $20.5 billion dollar loan, to help it meet large short-term financing needs.
Poland hopes to adopt the euro currency in 2012; if taking the precautionary IMF loan demonstrates financial responsibility and helps keep the country's fundamentals sound, it should not disrupt that process.
Update: The head of the IMF indicates the organization will meet the request. "Its economic fundamentals and policy framework are strong, and the Polish authorities have demonstrated a commitment to maintaining this solid record," Dominique Strauss-Kahn said.
The current Great Recession is a global one, with even the most buoyant economies struggling. Reports today suggest that Japan may follow Georgia, Ireland, Switzerland, and Spain in suffering from deflation. Economic woes caused the collapse of the government of the Czech Republic. And dozens of other countries face similar specters.
All of which means the IMF, the international lender of last resort, has become very, very, very important. In the past, the IMF provided loans to countries out of ways to solve their own economic problems. In return for the loan, the IMF imposed strict conditionalities, requiring governments to clean up their act, sell assets, change tax policies, etc.
But the realities of the global recession mean that even countries with responsible policies may need IMF loans -- and may not want to accept them, for fear of the conditionalities and the optics. (See: Brown, Gordon.)
And the IMF, with its new $1 trillion budget, figured that out quickly. So, they changed the rules:
The IMF’s intention is to do away with procedures that have hampered dialogue with some countries, and prevented other countries from seeking financial assistance because of the perceived stigma in some regions of the world of being involved with the Fund.
To this end, the IMF announced the creation of a "flexible credit line" policy.
[It is an] insurance policy for strong performers, mainly emerging market countries. Access to the FCL is restricted to countries that meet strict qualification criteria. But once a credit line has been approved, a country can draw on it without having to meet specified policy goals, as is normally the case for IMF loans.
Mexico has already applied for the FCL loan, a $47 billion "precautionary credit line," last month. Question is, with new scary data emerging, which countries will be next to approach the IMF?
The United States is scrambling this morning to save a hostaged captain from Somali pirates -- calling in back up that includes FBI hostage negotiators, more warships, and just about every high-profile military and diplomatic figure who will reassure the American press. The drama is being scrupulously reported elsewhere (most recent update: the pirates want booty), so I'll save you the repetition.
I'm interested in a different question: Just how exactly have pirates managed to out-scramble the world's top navy? If neither the U.S. Navy, nor the EU, NATO, Chinese, Russian, Japanese, Chinese, and Indian vessels were able to spot this pirate attacker coming on the vast seas... how do the Somali pirates find the ships they hijack? In theory, the sea is equally vast and equally sparsely populated on both sides of the looking glass.
One interesting theory comes from NightWatch:
Several commentators highlighted the changed tactics by which some Somali pirate groups manage to seize ships far from the coast. What they do not provide is the hypothesis that this proves the existence of a well organized criminal syndicate with modern communications that link pirates to agents in port authorities from
Kenyato the Suez Canal. The business is too big and rich to fail simply because modern frigates are present.
It makes good sense. Why? Pirates have money and they can pay for tips. Port authorities, particularly in Kenya, are likely paid irregularly and poorly (particularly in comparison to pirate rates). The pirates have also shown that they are willing and able to infiltrate government authorities -- as they often do in their home in Puntland, Somalia.
No good news there. Cracking down on internal corruption among port authorities would be about as easy as, say, stopping a piracy epidemic in the Gulf of Aden.
Photo: U.S. Navy
Indispensible financial blogger Felix Salmon, Liam Halligan for The Telegraph, and the New York Times have been parsing the fine print of the G-20 Communique, which promised $1 trillion in additional funding to help ease the financial crisis and get countries growing again.
They note that countries, including the United States, are behind on their IMF funding -- the crux of the program -- and require various sorts of congressional approval; therefore, the funding push may be illusory. The NYT concludes: "Some of the money has yet to be pledged, some is double-counted and some would be counted in a 'synthetic currency' that is not actually real money."
In some sense, none of this should come as a surprise; the "$1 trillion" number hardly represented the sum of an ordered and pledged budget. The Communique included massive sums with little fine print. Member-states' contributions to international organizations always become backed-up. And the ink isn't dry on the page yet -- there's been little time to sort out which commitments will come to fruition first.
The New York Times notices a specific potential problem:
In perhaps the most novel move, the Group of 20 authorized the monetary fund to issue $250 billion in Special Drawing Rights, known as S.D.R.’s — a “virtual currency” whose value is set by a basket of real currencies like the dollar, euro and British pound. The I.M.F. will issue the S.D.R.’s to all 185 of its members, and they in turn can lend them out to poor countries.
Special Drawing Rights are not cash but a form of credit, against which a country can borrow. The Obama administration, which conceived the idea and sold it to the Group of 20, figures it would create between $15 billion and $20 billion in additional credit for the poorest countries.But there is a caveat here as well. For the program’s benefits to be felt globally, the United States and Europe will need to lend out their Special Drawing Rights. In the United States, that will require Congressional approval.
To say that the SDRs aren't a real currency is both true and false. They are a unit of exchange eventually backed with actual cash; the IMF collects money from the member-states to fund them.
And countries like Russia and China, as well as IMF representatives themselves, have called for massive revisions to the outmoded program, to make it useful for alleviating the recession. How that will work remains to be seen.
Plus, it seems early days to be sounding the death knell for the G-20 spending promises. Will the $1 trillion number prove correct? No. But that isn't to say the IMF won't massively expand to aid ailing countries -- ultimately the point of the summit.
Steve Pearlstein thinks so:
What emerged yesterday from the G-20 ... amounts more to reform than to revolution. Member countries committed themselves to adding $850 billion to the resources available to the IMF and regional development banks to mount rescues of countries in financial distress, with instructions that the money be used not only for traditional purposes such as debt rollover, bank recapitalization and balance-of-payments support, but also for more "flexible" goals such as stimulus spending, infrastructure investment, trade finance and social support.
And just as the old G-7 has given way to the enlarged G-20, the governance structure of the fund and the bank will be revised to give the bigger developing countries the authority they now deserve.
It may suit the politics of Europe to portray all this as a blow to Washington's power and prestige, but the reality may be quite different. In fact, the shift is perfectly in keeping with the new emphasis on the developing world that Obama brings to international economic policy. And if any countries are likely to lose out in the restructuring, they are those of "old Europe" that, by dint of history, now wield power far in excess of their importance in the global economy.
Indeed, while European leaders were crowing that they had successfully beat back calls to step up efforts to stimulate their economies, that's not exactly true. Yesterday's big boost in funding for the IMF could well translate into hundreds of billions of dollars in fresh financing for Eastern European countries that, for political reasons, leaders of Western Europe have been unwilling to offer directly. Yesterday's communique also contains a carefully worded commitment for all countries (read: France and Germany) to increase stimulus spending if the IMF finds that current policies prove insufficient to get their economies growing again.
In today's G-20 communiqué (just a fact sheet, really) world leaders pledged an additional $1.1 trillion in loans and debt guarantees to aid trade and help shore up the worst-ailing economies.
The fact sheet (let's call it a fact sheet) notably included toothy regulatory measures and a lack of fiscal stimulus -- which Britain, the United States, and China have undertaken, to the cold shoulder of most of continental Europe.
It also dramatically increased the budget of the IMF. The New York Times summarizes:
The most concrete measures relate to support for the International Monetary Fund, which has emerged as a “first responder” in this global crisis, making emergency loans to dozens of countries.
The Group of 20 pledged to triple the resources of the Fund to $750 billion — through a mix of $500 billion in loans from countries, and a one-time issuance of $250 billion in Special Drawing Rights, the synthetic currency of the Fund, which will be parceled out to all its 185 members.
So what on earth is a Special Drawing Right (SDR) anyway?
Basically: it's a currency.
Back in 1969, the world economy was still suffering from the effects of the Great Depression and the world wars. At the Bretton Woods conference at the end of World War II, the heads of state attending decided against creating a global reserve currency, instead instituting a fixed-rate exchange system.
Twenty-five years later, there weren't enough key exchange assets -- units of gold bullion and dollars -- to keep up with the growing global economy. So, the IMF's member states decided to create the SDR system.
A basket of stable major currencies -- like the dollar, pound, and yen -- determined its value. Some countries, like Latvia, pegged their currencies to the value of the SDR. But most just used their allocated portion in various international transactions.
But, just a few years after the IMF bothered to make the SDRs, the Bretton Woods fixed-rate system collapsed and the modern world currency market, where exchange rates float freely, emerged. This rendered the SDRs pretty much useless.
Indeed, the current market for SDRs, until the I.M.F. injection, was just $32 billion. The value of current oustanding U.S. currency? Just over $1 trillion.
The G-20 just released its final communique, summarizing the agreements made during the one-day conference. And, it's a doozy.
The agreements we have reached today, to treble resources available to the IMF to $750 billion, to support a new SDR allocation of $250 billion, to support at least $100 billion of additional lending by the MDBs, to ensure $250 billion of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.
It's certainly on an "unprecedented scale." Plus, it's the first global action plan to really emerge from a G-20 conference -- note the sale of gold to shore up developing economies. See more detailed analysis from FP bloggers throughout the day.
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
Johnson shows how financial firms became more and more profitable, and a bigger and bigger part of the U.S. economy. More capital meant more political capital, he argues, which eventually meant nobody prevented the melt-down. The same political entrenchment makes fixing the banks difficult.
The obvious solution to the financial crisis, Johnson says -- informed by his time at the I.M.F. -- is simple. The United States should determine which banks can't survive and temporarily nationalize them, instead of simply recapitalizing them, he says. But the relationship between top financiers and the government means this won't happen -- at least not unless things get much worse.
Still, his article includes a list of the policies (or lack thereof) which most contributed to the bubble and burst. It's a great crib sheet of what Capitol Hill and the G-20 Summit will tackle, piece by piece, to reform the system.
• insistence on free movement of capital across borders;
• the repeal of Depression-era regulations separating commercial and investment banking;
• a congressional ban on the regulation of credit-default swaps;
• major increases in the amount of leverage allowed to investment banks;
• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;
• an international agreement to allow banks to measure their own riskiness;
• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.
It's fascinating, scary reading.
Unless left-wing parliamentarians can pull off some last-minute procedural wrangling, French far-right leader Jean-Marie Le Pen will chair a European Parliament session in July. As the oldest member, Le Pen is entitled to chair the body between June parliamentary elections and the election of a new president.
Le Pen is notorious for, among other things, calling the Holocaust a "detail of History" and was once suspended from the parliament for assaulting a political rival. All the same, the Green Party's explanation for the rule-change they're trying to enact is a little weak:
The Greens co-president, Daniel Cohn-Bendit, said "we would like to see the youngest deputy open the session, not because of Le Pen, but because it's a sign of the future".
Yes. Nothing to do with Le Pen, I'm sure.
To be fair to the Europarl, a similar custom is how the United States wound up with an 92-year-old ex-klansmen, albeit a reformed one, as president pro tempore of the senate and third in the line of succession for the presidency.
FREDERICK FLORIN/AFP/Getty Images
The New York Times reports that embattled Czech Prime Minister and E.U. President Mirek Topolanek, addressing the European Parliament, described Obama's fiscal package as the "road to hell," saying the bailout would "undermine the stability of the global financial market."
Yesterday, Topolanek was defeated in a no-confidence vote by the Czech parliament -- largely due to criticism of his handling of the financial crisis.
Photo: Dominique Faget/AFP/Getty Images
Despite his flailing approval ratings, Nicolas Sarkozy must be doing something right. Today in Paris, the French president survived a Parliamentary vote of confidence over his plans to fully rejoin the NATO alliance after 40 years away. Sarkozy's penchant for rip-roaring foreign policy deals shows no sign of halting.
As Judah Grunstein points out on FP this week, "rejoin" is an odd phrase for a country that contributes troops to NATO missions and shows up at all the big meetings and events. But France is not involved in the NATO command structure that designs and coordinates the alliance's missions. That seperation was an idea of Charles de Gualle, who worried about compromising French sovereignty.
Now France is back, but Sarkozy promises not to lose a smidgen of the country's independence. In fact, as Grunstein argues, rejoining NATO will make the French (read: Sarkozy) even stronger. And if the president's love of the spotlight is any indication -- I suspect that's a promise he can follow through on.
Don Kraus at the Global Solutions Blog and Mark Leon Goldberg at U.N. Dispatch report that Rep. Nita Lowey and Sen. Patrick Leahy managed to cut the Nethercutt Amendment out of the omnibus appropriations bill that Congress passed this week.
The Nethercutt Amendment -- named for former Rep. George Nethercutt and bundled in a 2004 appropriations bill -- cut economic support funds to nations that ratified the International Criminal Court without signing a Bilateral Immunity Agreement with the Bush administration.
Global Solutions says the law affected funding to more than 20 countries, including:
Latin American allies in the war on drugs, including Peru, Ecuador, Paraguay, Brazil, Venezuela, Costa Rica, and Uruguay.
The Balkan countries of Croatia and Serbia and Montenegro, which rely on U.S. military assistance to maintain stability and reform their armies.
Caribbean countries, whose hurricane disaster assistance is tied to the affected programs: Trinidad and Tobago, Barbados, and St. Vincent and the Grenadines.
African allies with which the U.S. partners to help maintain regional security, including South Africa, Kenya, Mali and Tanzania.
Photo: Paul Vreeker/AFP/Getty Images
Congratulations Omar al-Bashir! You have just been indicted by the International Criminal Court on five counts of crimes against humanity and two counts of war crimes. You are the first sitting head of state to be wanted for arrest. Human rights groups, and even the ICC-skeptical United States, applaud the announcement. What are you going to do next?
There are two broad possibilities for how things might unfold. For the first time in history, the world will get to watch how a sitting head of state reacts to such damning charges.
First, there is defiance, and retaliation. The outcomes that Sudan watchers have feared are now on the table in the central African country. As the International Crisis Group writes in a statement today:
Bashir’s regime has already issued veiled threats against the UN and AU missions in Sudan, the international humanitarian agencies operating there and Sudanese who support the ICC prosecution. It could also direct, or encourage, violence against the millions of displaced Darfuris living in camps in the war-torn region. There are signs that it may also declare a state of emergency and clamp down on internal political opposition, to show the Darfur rebel groups that they will not be able to use this development to their military and political advantage.
It could get ugly. In the worst-case scenario, experts see Bashir consolidating his power, kicking out aid workers, stepping up repression in Darfur, and even squashing the Comprehensive Peace Agreement between the North and South signed just a few years ago.
But then again, as Luis Moreno Ocampo, the court's prosecutor, told FP just a few weeks ago, "For people in Darfur, nothing could be worse [than it is now]." Justice, at least, puts pressure on Bashir's upper cadre, and shows the people of Sudan that their leader is no longer immune. Negotiations with Darfur rebel groups, which were reopened on Feb. 17, will have to find a new interlocuter, says Ocampo. But that could be a good thing.
Overnight, the stakes have changed in Sudan. Justice looks possible, impuntity looks over, and internal unrest looks likely. What next?
At the heart of the issue are new rules on nutritional information to be placed on food products.
Bakers would be free to make no health claims for their bread. If however they specify that it is 'high in fibre' then they would also be obliged to tell consumers that it is also 'high in salt'.
The rule was adopted in 2006 but discussions are still under way -- with input from the food industry -- on how they are going to be introduced and what levels would constitute a product being deemed 'low' or 'high' in anything.
A bit of a nanny state annoyance perhaps, but the German media went a bit overboard after the Association of German bakers claimed that German pretzel culture would be "hemmed in" by the sodium labelling rules since "there is more salt in bread in Germany compared with elsewhere in the EU."
"EU Wants to Spoil Our Pretzels!" screamed the tabloid Bild. An EU spokeswoman quickly reassured worried Germans that there was no intention of banning or regulating salty bread.
To be fair, given the EU's infamous fatwa on bendy cucumbers, the bakers' concerns are somewhat understandable.
JOE KLAMAR/AFP/Getty Images
Despite ratifying the Lisbon Treaty this week, the Czech Republic seems hell-bent on offending the European Union as much as possible while it holds the organization's rotating presidency. First it was that sculpture, then yesterday, Czech President Vaclav Klaus -- an outspoken Euroskeptic -- spoke to the European parliament and compared them to a communist dicatorship:
"Here, only one single alternative is being promoted and those who dare thinking about a different option are labelled as enemies of European integration. Not so long ago, in our part of Europe we lived in a political system that permitted no alternatives."
A number of MEPs walked out in a huff.
Say what you will about Klaus, the guy's not afraid to speak his mind. Jiri Pehe wrote about his unconventional views on global warming in the May/June issue of FP. (Hint: He compares environmentalists to communists too.)
JOHN THYS/AFP/Getty Images
Should we count Euroskepticism among the victims of the financial crisis?
The Czech Republic's lower house of parliament approved the EU's controversial Lisbon Treaty today in a major victory for the plan to streamline the body's decision-making process. Assuming the upper house passes the measure, that will leave Germany, Poland and Ireland as the only countries yet to ratify Lisbon.
Ireland, the only country to require a public referendum for ratification, is the biggest stumbling block. Irish voters rejected the treaty last June, but the political landscape seems to have changed in the post-crisis world:
Czech approval came as new polls showed public opinion swinging behind the treaty in Ireland, raising the prospect that Irish voters will reverse last year’s 53.4 percent to 46.6 percent veto. A second vote -- if held now -- would yield a majority of 58 percent in favor of the accord, a poll for the Sunday Business Post found on Feb. 1.
The pressing need for unified European action to address the crisis seems to have trumped fears about national sovereignty. The Irish government is now looking to hold a new referendum as soon as possible.
In retrospect, however, country's stubbornness seems to have paid off. The EU has been forced to make a number of concessions to placate Irish voters:
The Irish government agreed to put the Lisbon Treaty to a second referendum by November 2009, in return for a set of EU "legal guarantees" aimed at addressing various concerns raised by voters. The EU pledges not to impose rules on Ireland concerning taxation, "family" issues - such as abortion, euthanasia and gay marriage - and the traditional Irish state neutrality.
Announcing the new Lisbon deal, French President Nicolas Sarkozy also said that under Lisbon "every member state will have a commissioner" - another concession to Ireland.That promise might prove difficult to reconcile with the original plan under Lisbon to have fewer commissioners than member states, as from 2014.
Through sheer obstinateness, the Irish seem to have made themselves the most powerful constituency in the EU. Sometimes it pays to be difficult.
MICHAL CIZEK/AFP/Getty Images
Anyone who follows Libya's Muammar Qaddafi knows that today is a big, big day for the man once called the "Mad Dog of the Middle East." After decades of proclaiming himself leader of the African continent, he was elected year-long Chairman of the African Union today in Addis Ababa.
It's not as if the title came unexpectedly. North Africa was up for the regionally rotating seat. So beginning last summer, Qaddafi crowned himself "king of kings," quite literally by inviting 200 traditional rulers to Libya so that they might elect him. He arrived at the AU summit with seven more well-dressed kings by his side (turns out they didn't make the guest list and weren't allowed in). And once inside, Qaddafi is said to have circulated a letter with a simple message: I am king of kings, and I expect to be treated like one. No big shocker when the closed door vote put Qaddafi at the reigns.
Keeping up with Qaddafi's eccentricities is certainly an engaging pastime. But the big news is actually that he might be good at the job. The Libyan leader garners a lot of respect where it is most needed these days. In Zimbabwe, Qaddafi's credibility as a leader who has 'stood up' to the West and supported anti-apartheid in South Africa could at least win him an audience (and some sway -- should he use it) with Mugabe. Likewise, Qaddafi could do some good in Somalia where a newly elected moderate-Muslim President, Sheik Sharif Sheik Ahmed, desperately needs help holding together a weak government. Qaddafi has the oil money and religious credentials to push the right ways.
On his way out, former AU chairman Jakaya Kikwete proposed creating a budget for Qaddafi to travel the continent fixing spats. Not that Qaddafi has ever needed an invitation to be in charge. Hope the budget is high. Brother Leader likes to travel in style.
The Czech Republic, having only taken over the rotating European Union presidency in January, has already managed to offend its EU peers with a sculpture it installed in the atrium of the European Council headquarters in Brussels. Titled "Entropa," the sculpture makes light of European national stereotypes:
[C]ountries digested depictions of their national character as a Dracula-inspired theme park (Romania), a rudimentary toilet (Bulgaria) or a flooded land with minarets poking through (the Netherlands)...
Other national depictions in ”Entropa” include Luxembourg as a lump of gold on sale to the highest bidder, France emblazoned with the word ”Greve” (”strike”), Denmark made of Lego, and Sweden lying within an Ikea flatpack. Britain is simply missing – supposedly a reference to its deep Euroscepticism.
Worse still, the piece turns out to be an eleaborate prank. It was not the work of artists from all 27 EU member states, as had been claimed, but was created by a single Czech artist, David Cerny. (You probably want to make sure your speakers are turned off if you click on that link at work.) The Czech government has been forced to make a public apology.
Arguably, the Eurocrats should have known what they were getting into. As anyone who's read Kafka or seen a Jan Svankmajer movie can attest, Czech culture has always had a somewhat dark, surrealist edge to it. This is, after all, a country that elected an absurdist playwright as its first post-communist president. I reported on the country's strange obsession with Frank Zappa for Radio Prague in 2004. The documentary, Czech Dream, a feature-length prank in which hundreds of real Prague residents were tricked into attending a fake supermarket opening in an empty field, is another good example.
So while Cerny's sculpture might not be great diplomacy, I like that a bit of classic Czech weirdness has been injected into one of the world's stuffier organizations.
(Hat tip: Passport reader Aaron Lovell)
Update: Cerny responds to the controversy:
Grotesque hyperbole and mystification belongs among the trademarks of Czech culture and creating false identities is one of the strategies of contemporary art. The images of individual parts of Entropa use artistic techniques often characterised by provocation. The piece thus also lampoons the socially activist art that balances on the verge between would-be controversial attacks on national character and undisturbing decoration of an official space. We believe that the environment of Brussels is capable of ironic self-reflection, we believe in the sense of humour of European nations and their representatives.
That belief was clearly mistaken.
Photo: DOMINIQUE FAGET/AFP/Getty Images
Call it a virtual thrown shoe at the United States. Yesterday, 33 countries in Latin America met in Brazil to discuss regional cooperation and the financial crisis. Here's the flying one-two punch: The summit condemned the U.S. embargo on Cuba, blamed the United States for the financial crisis, and refused to let the northern neighbor attend. Ouch.
Like Muntadar al-Zaidi's famous act of protest, the shoe flew -- but may have missed the mark ever so slightly. Leaders were dismissive of Bolivian President Evo Morales's call for the region to expel U.S. ambassadors unless the Cuba embargo was lifted. And though host Brazil asserted its regional dominance, bickering prevented solid agreements on trade issues and further regional cooperation.
By the way, the strained shoe analogy is not entirely mine. Brazilian President Luiz Inácio Lula da Silva found the metaphor too good to pass up -- threatening to throw his slipper at Venezuela's Hugo Chavez if he overspoke his podium time.
And then there were the instructions to press: "Please, nobody take off your shoes."
Photo: ANTONIO SCORZA/AFP/Getty Images
Over at Slate, CFR's Michael Levi explains one big reason why the UN climate talks currently under way in Poznan, Poland have hit the skids. The UN climate change regime apportions different levels of responsibility to rich and poor countries, but the way it makes that distinction if very odd:
The United Nations first divvied up the developed and developing world for climate talks in 1992, with the goal of using that split to apportion responsibilities for cutting emissions. But distinctions that once made sense are no longer tenable. Ukraine, for example, is considered rich. In 1992, it was reflexively lumped together with the countries that once comprised the powerful Soviet Union; by 2007, its citizens had fallen to 97th richest in the world by GDP per person. (All wealth figures cited here are from The CIA World Factbook.) At the same time, Singapore (now the sixth-richest nation in the world) was designated as poor. Unless the climate regime overhauls its wealth labels, a country like Singapore could reap the benefits of financial aid, while Ukraine would be burdened with emissions caps. Needless to say, that kind of nonsensical setup won't get you very far in international talks. [...]
The resulting deal had its flaws then. It makes absolutely no sense today. Belarus, for example, is lumped together with the rich countries, despite a GDP per person of about $10,000. As a result, it has an emissions cap like those in place for Europe and Japan. Kuwait, meanwhile, is considered poor. That means the oil-rich emirate is spared any obligations, despite the fact that its residents are about five times wealthier than the Belarussia.
Not surprisingly, the "poor" countries aren't in much of a hurry to change this set-up. Any regulatory system that has Singapore crying poverty is probably in need of reform.
The International Atomic Energy Agency's probe into the alleged Syrian nuclear reactor, which Israel bombed last year, has been hobbled by a mysterious lack of satellite footage. IAEA chief Mohamed ElBaradei referred to the absence of commercial satellite footage of the site after Israel's attack last year as "baffling."
Adding to the intrigue, the Associated Press quotes unnamed diplomats as claiming that IAEA officials are considering the possibility that Syria, or another country with an interest in a coverup, bought the rights to all the commercial satellite photos. Others have proposed more mundane explanations for the lack of satellite imagery, pointing out that the countries involved gave out very few details after the attack, making it difficult for companies to find the site immediately after the bombing.
Coupled with last month's IAEA report, which stated that the building that was bombed shared similarities with a type of nuclear reactor design and that inspectors had found trace amounts of uranium particles there, the site in northern Syria continues to raise more questions than answers. Certainly, there are already enough doubts to delay Syria's request for U.N. aid in planning a commercial nuclear reactor. And if definitive proof emerges that Syria was covertly building a nuclear plant, it could derail the much-anticipated American-Syrian rapprochement.
Photo: SAMUEL KUBANI/AFP/Getty Images
Great quote from European Commission agriculture spokesman Michael Mann:
"Next Wednesday is a new dawn for the bendy cucumber and the amusingly shaped carrot."
The news is that the commission is voting tomorrow on whether to ditch its infamous "marketing standards" for produce, a favorite target of ridicule for euroskeptics. Among other rules, the standards specified that cucumbers sold within Europe had to be "practically straight (maximum height of the arc: 10 mm per 10 cm of the length of cucumber)."
Eliminating the draconian standards is the right thing to do in a time of high global food prices and a smart move for the EU's image. Bring on the amusing carrots!
Is this what we really need right now? The world economy fell off the fence, and just as finance ministers, the World Bank, and the International Monetary Fund (IMF) start trying to put it back together again... a sex scandal threatens to debilitate the managing director of the IMF.
Late last week, the Wall Street Journal began looking into an affair that has rocked the (usually dry) halls of one of the world's most important financial institutions. IMF chief Dominique Strauss-Kahn is being accused of abusing his power as director of the fund in a sexual relationship with colleague Piroska Nagy, the wife of a former Argentinian central banker, Mario Blejer. According to Bloomberg news, an official IMF inquiry "will seek to determine whether the relationship involved any conflict of interest, harassment or favoritism."
Strauss-Kahn denies misusing his position. His wife, Anne Sinclair, writes on her blog, "Everyone knows these are things that can happen in the lives of any couple. To me, this one-night stand is behind us. We have turned the page" (my translation from the French).
Unfortunately for Ms. Sinclair, journalists around the world are just starting to write the page.
That's particularly true in France, where some commentators have worried that the public disclosure of the IMF's investigation is a move to discredit French-led efforts to stem the financial crisis. President Nicolas Sarkozy seems to be among the angry, irked that his frantic efforts to organize an economic rescue might be discredited.
Quel dommage! At least among some French commentators, the mood is forgiving. Asked by Le Figaro newspaper if such an affair would produce a media scandal in France, Christophe Deloire (author of Sexus Politicus) responded (my translation):
Certainly not. There are things that one can do in Paris but not in Washington... in France, such an affair... would never have seen the light of day...
I hope that the purely private affaire will not become an incident for Dominique Strauss-Kahn... [Politicians] always feel obligated to make the public believe that they have a stable private life... the last presidential compaign is a very good example: the difficulties between the couple of Nicolas Sarkozy on the one hand and Ségolène Royal on the other hand stayed secret. It wasn't until after the scrutiny that the two couples separated..."
The greatest sin, it seems, wasn't the affair, but the fact that Strauss-Kahn got caught, and French credibility will go down in the fallout. Alors, c'est la vie!
Is it just me, or does French President Nicolas Sarkozy sound a little like Gollum in this quote about a planned summit to restructure the world's financial architecture?
Europe wants the summit before the end of the year... Europe wants it. Europe demands it. Europe will get it."
We wants it! In all seriousness, smart people have been saying for a long time -- way before the current mess -- that the framework put in place at Bretton Woods in 1944 is woefully obsolete.
But I'm not sure that Sarko, an old-school economic nationalist in liberal clothing, is the guy I'd want leading the charge. And how much confidence would Americans have in any decisions George W. Bush makes at this point? My take: it would be better to leave any grand, sweeping changes to No. 44.
Without taking anything away from former Finnish President Martti Ahtisaari, who was awarded the Nobel Peace Prize today for his work as an “outstanding international mediator” in conflicts from Indonesia to Northern Ireland, the entire institution of the Nobel Committee has grown so self-important that this is a worthwhile opportunity to question its judgment and ultimately its usefulness.
Peace Prize, awarded to then-Secretary of State Henry Kissinger and
Vietnamese negotiator Le Duc Tho for their role in the Paris Peace Accords,
remains a head-scratcher. Kissinger played a major role in expanding the U.S.
bombing campaign across Vietnam,
The Nobel Prize in Literature also has been guilty of sins of omission. Many of the last century’s most celebrated writers, such as Leo Tolstoy, Graham Greene, Vladimir Nabokov, Mario Vargas Llosa and Philip Roth, have been ignored by the Committee. Greene and Nabokov were considered in 1974, but eventually lost out to Swedes Eyvind Johnson and Harry Martinson -- who just happened to be Nobel judges themselves.
The Literature Prize is awarded by a committee selected by the Academy, founded by the Swedish King Gustav III in 1786, while the Peace Prize is awarded by a committee appointed by the Norwegian parliament. In any other context, the idiosyncratic tastes and political beliefs of these elite Scandinavians don't exactly make headlines. Why the entire world pauses to honor the selections of an otherwise unknown group of people remains a mystery.
In the end, the Nobel Prize reveals more about society's collective obsession with honorifics than it does about the world's great leaders and writers.
At last Wednesday's United Nations Association 50th anniversary gala, rapper Jay-Z was honored for his work with the project Water for Life. Getting a bit too into the spirit, Secretary General Ban Ki-moon delivered a rap, which includes shout-outs to his homies Jay-Z, Ted Turner and Bill Luers, president of the United Nations Association of the United States of America. UN Dispatch's Mark Leon Goldberg passes along video and lyrics:
Global Classrooms are a cinch
With the help of Merrill Lynch
When you put the org in Google
Partnerships go truly gloooobal
There is hope for Earth's salvation
With the Cisneros Foundation
With Jay-Z there's double strife
Life for children and water for life
Human health will get ahead
With the valiant work of (RED)
For the poor and doing good
Stays the job of Robin Hood
UN stays on the front burner
Thanks to our champ Ted Turner
And whole revolutions stem
From the work of UNIFEM
But tonight my special shout-out
Goes to one I can't do without
We have traveled up and down
Frisco, Atlanta, Chicago town
Yes, the king of all the doers
Is my trusty friend Bill Luers
Bill, I cannot say goodbye
So take the floor and take a bow.
Ladies and Gentlemen, Ambassador Bill Luers"
Okay, so he's no Biggie. I'll take him over MC Rove any day, though.
The Wall Street Journal's Monical Langley reports:
Republican vice presidential candidate Sarah Palin will meet with foreign leaders next week at the United Nations, a move to boost her foreign-policy credentials, a Republican strategist said.
Republican candidate John McCain plans to introduce the Alaska governor to heads of state at the opening of the U.N. General Assembly, although specific names weren’t yet firmed up. “The meetings will give her some exposure and experience with foreign leaders,” the strategist said. “It’s a great idea.”
Hope she was reading up over the weekend.
Hat tip: Mark Halperin
Not a good day to be working at the press office of the Department of Defense. This morning, The Times of London released a video that purports to show civilian casualties in Afghanistan -- dozens at least -- from an American air raid in late August.
The Pentagon has insisted that civilian casualties in the attack were limited to the single digits, even as both the Afghan government and the United Nations put the number above 90. In a blog post last week, I wondered if this was a problem of counting methods -- deciding who is a civilian and who is a fighter.
That's a hard case to argue after watching the video [WARNING: graphic]. The Times says that a doctor shot the mobile-phone film the morning after the air raid. In the clip, casualties overcrowd a room filled equally with grieving men and women. The corpses include children. The chaos and pain of the moment is palpable.
As Human Rights Watch explains in a report released today, this is a serious problem -- and not just for America's reputation in Afghanistan. Civilian deaths, of which HRW says there were 321 this year, could easily provoke an even larger humanitarian crisis:
In every case investigated by Human Rights Watch where airstrikes hit villages, many civilians had to leave the village because of damage to their homes and fear of further strikes. People from neighboring villages also sometimes fled in fear of future strikes on their villages. This has led to large numbers of internally displaced persons.
Hopefully, all this will be enough for Pentagon officials to reconsider their story. Until now, they have claimed that the incident began after forces came under fire while going after Mullah Sadiq, a Taliban commander. While the U.N. called upon civilian and government witnesses to verify its 90-something number, the Pentagon has pointed to retired Lt. Col. Oliver North, a Fox News correpondent who was indicted (but later cleared of charges) for his involvement in the Iran-Contra affair, to back its claim. A new investigation has been promised.
Last week, Major Gen. Jeffrey Schloesser, the commander of troops in eastern Afghanistan, addressed the growing concerns with promises that Americans are avoiding casualties at all costs. He also complained:
The enemy routinely exaggerates the number of civilian casualties as propaganda, just pure and simple. They use lies and deceit as an asymmetric strategy."
All the more reason to have a transparent, indpendent investigation. With due respect to the general, the importance of ending civilian casualties -- or at least owning up to them -- is something we cannot exaggerate enough.
Dmitry Medvedev may have hoped the Shanghai Cooperation Organization would evolve from a loose security bloc into an anti-NATO counterweight, but so far things don't look like they're going in the Russian president's favor.
On Thursday, Medvedev asked the group, which also includes China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, to back Russia's response to Georgian "aggression." Instead, while the group welcomed "Russia's active role in contributing to peace and co-operation in the region," it condemned the use of force and reaffirmed its support for the sovereignty of the countries involved:
The SCO states express grave concern in connection with the recent tensions around the South Ossetian issue and urge the sides to solve existing problems peacefully, through dialogue, and to make efforts facilitating reconciliation and talks," their statement said.
That China and the others spoke of respecting territorial integrity should come as no surprise. From its relations with Sudan abroad to its concerns with seperatists in Tibet and Xinjiang at home, China has long expressed a policy of non-intervention.
Russia, too, was often a strong opponent of Western interventions -- in Iraq and Kosovo, among others -- which makes its military action in Georgia all the more galling. Its Asian allies, though, haven't jumped on board. That, at the very least, should be a comforting sign for the West amid cries of a new Cold War.
For more on how Russia's recognition of South Ossetia and Abkhazia may backfire, check out FP's interview with regional expert and CIA veteran Paul Goble.
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