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The Week That Will Be?

datePosted on 08:09, May 2nd, 2016 by E.A.

I see from NZ Newswire that Labour, NZ First and the Greens are gearing up to go after John Key and National this week over various Panama Papers related issues.

This in interesting for a few reasons.

The first is that this will be a good test of how well the Teflon on Key is still working on such sensitive issues (given his own ultra wealthy background and somewhat dodgy actions by sending his lawyer into bat for the trust business in NZ) and second if this will be a coordinated action against Key and National or individual shots by each party.

Personally I think the Greens will give the best in this situation as Labour and NZ First seem less willing to really go for the jugular as opposed to the other two (possibly due to their own compromising financial circumstances) but I will be back on Friday to see how it went.

This is also a golden opportunity for Labour to make some hay while the sun shines as there is fodder for all in what the Panama Papers have revealed, what they may reveal and NZs connection in all of this.

If they have any brains they will spend the week running non-stop interference on the government with the other two parties playing spoiler on the side.

Of course NZ First and the Greens will also be seeking to get into the spotlight so again if this is coordinated then there should be enough to go round, if not expect a little bit more chaos than normal but also some one upsmanship as each seeks to get in the blows ahead of the other.

Over the last few months National have definitely started looking like they have a case of third-term-itis as the blunders and attitude is starting to become a constant and the media seem to be running nothing but negative articles about them.

Of course NZ Newswire may have jumped the gun and lead me astray and nothing will happen this week but I will be back here on Friday to see how things went.

I Wanna Be Dirty: James Shaw and Greens

datePosted on 10:50, April 29th, 2016 by E.A.

I write this only partially tongue in cheek and my original title was going to be a reference to a Kermit the Frog song*

A final piece of the puzzle fell into place this week with the announcement in the paper that Andrew Campbell, the Green party chief of staff, was leaving to allow “some fresh ideas and new legs” to take over in his role.

The funny thing was that he had been in the job less than a year after replacing Ken Spagnolo, the previous chief of staff for over eight years, in a direct move by co-leader James Shaw, to bring in new blood and ideas in preparation for the expected 2017 election (and probably clear the decks of any not down with Shaw’s new business friendly approach to the environment).

But that comment flies in the face of co-leader Metiria Turei’s statement about Andrew wanting to leave after the 2014 election but agreeing to stay on to help Shaw settle into the role. Has James settled in yet? If so why is Campbell the third senior party staffer to leave in short order? Coms and Policy Director David Cormack (a person some believe to be the actual brains behind the Greens) and Chief Press Secretary Leah Haines both immediately preceded him.

Personality conflicts in politics are not new and party staff generally know not to contradict the leader but when key staff are either removed (as in the case of Spagnolo) or leaving in droves (as with the other three) it takes more than claims of “coincidence” to assuage the growing feeling that something is not right in the good ship Green.

The obvious cause is new male co-leader James Shaw himself, who with his corporate background with HSBC (the money launderers bank of choice) and PriceWaterhouseCoopers (an organisation with so many scandals attached to its name I will not relate them here but encourage any who are interested to have a dig themselves) seems an extremely unusual choice for a party whose charter explicitly states “unlimited material growth is impossible” in two of its four articles.

Shaw won the co-leadership showdown in mid-2015 when Russell Norman moved off to greener pastures (pun intended) to work for Greenpeace NZ. An impressive feat for a first term MP and one, at least in my mind, had shades of the Brash Coup run on National in the 2000’s about it.

Shaw himself is pro-market and believes that it can be reformed to be sustainable, which is a laudable sentiment for a member of the young Nats but not in a party like the Greens. These kind of ideas, Shaw’s background and the recent statements from the party about doing and end run around Labour to work with National on some issues show that the Greens of the past may soon be replaced by the “Greens” of the future.

But perhaps it’s just my paranoia that I see all of these things as being connected, perhaps it’s just me, but somehow I don’t think so as various other in the blog sphere have also noted these changes and the fact that it warranted mention in the mainstream media leads me to think that we are on the cusp of a major change in the Greens.

In my previous “analyses” of Labour, National and NZ First I focused mostly on the failings of the past to illustrate the potential/possible issues in the future but in the case of the Greens I can’t do that.

The Greens currently stand alone in NZ politics as being an actual party of virtue in a parliament full of corruption, incompetence, nepotism and just plain criminality. They are a party which has a genuine political agenda which it has been willing to stand up for, which is why almost every other party in parliament hates them and why several sections of government keep their eye on them.

If any political party has ever been under watch by the SIS; monitored by the GCSB, infiltrated by the SIG, loathed by the Police and hated by Labour it’s the Greens. It’s a party which grew from the Values party in 1972, lived through the tumultuous years of the Alliance in the 90s before going it alone in the 2000s. This is a party that has explicitly argued for the removal of the Security Services as they currently are and our exit from the Five Eyes agreement as well as being an active and persistent thorn in the side of any government which doesn’t prioritize the environment or fails the social contract (Gareth Hughes blistering rebuttal to John Key’s recent parliament commencement speech is a fine example of this).

The Greens are a party which has taken the moral high ground from Labour in the wake of the leadership squabbles after Helen Clark departed (although some say Labour just gave it up when they started the reforms of 1984) and has wielded it ever since, using it like a magic cloak to deflect any criticisms.

And there have been criticisms aplenty over the years from the usual pat dismissals by politicians of their policy or position (often with no actual substance to back up why they don’t agree with them) to the all but outright taunts of being “governmental virgins” to the “bloody hippie tree hugger” comments which spew forth from many regular Kiwis when asked about the Green party or their policies. And that’s not even discussing the hate Labour has for the Greens.

If John Key could have all dissenting views in parliament rounded up and shipped off to a re-education “resort” the Greens would certainly be on that list but it would be “just business, nothing personal” to him. And, with only a small sprinkling of fantasy dust could one imagine members of the Greens and National meeting for a beer in Pickwicks after a “hard day” in the debating chamber. One could not imagine such a picture between the Greens and Labour no matter how much magic dust was going round.

If Labour could have all Greens rounded up it would not be “re-education” that they would receive but low altitude skydiving lessons from Air Force helicopters sans parachute out over Cook Straight at night, if it is business with National its personal with Labour.

The Greens owe a large part of their vote base to disgruntled Labour voters and Labour knows it. Labour has treated the Greens like vassals from the earliest days and given their position on the political spectrum expected them to back Labour no matter what (which is why the Greens extension of the hand of friendship to National, even on minor issues has further enraged Labour and provided a pragmatic, but also very dangerous, way to cut through the Gordian knot of being to the left of looser Labour on the political spectrum.

Worse still, the Greens are almost certainly going to gain at the polls as the 2017 election approaches (current polls have them riding high along with NZ First while Labour sags to 26% and National slips closer to 40%) and have proven to have no concern about exposing Labours (and specifically Helen Clark’s) hypocrisy (as its widely believed that they were responsible for the leaks that led to Seeds of Distrust; Nicky Hagar’s expose of Labours cover up of GE contamination in NZ) to get votes.

So in dissecting the Green party at this current time it’s not the past to which I am concerned but the future and to put it simply it looks like the Greens are about to (take a deep breath and say it with me) compromise. In daily use compromise is not a bad term but in politics it almost always means abandoning your principles to reach a short term expediency at the cost of both your long term supporters and policy goals.

For parties like National and Labour compromise (also known as sitting on the fence, seeing which way the wind blows and “flip flopping”) is easy as both have no morals and long since abandoned their core principles in pursuit of power for individual party members and rabid accommodation of whatever orthodoxy is being touted at the time but for the Greens this will not be so easy.

To begin with the Greens capture of the moral high ground is a strategic part of their appeal. They can take positions and advocate issues which would get other parties in hot water; lambaste the government of the day and catch the wind of popular but politically problematic issues (like the TPPA) only because they have this high ground, without it they would be another fringe party which would get whipped senseless with their own past faults and misdeeds if they dared to speak out. Truly they are the hand which can cast the first stone.

Another is that while Shaw himself may be a champagne environmentalist (the 21st century equivalent of Labours champagne socialists) many of the core rank and file are not. Every new voter to the Greens that is merely running from the nitwit antics in Labour will run straight back if either Labour shapes up and flies right (geddit?) or the “sustainable” future Shaw is presenting doesn’t allow people to continue to live their lives under the economic and social model they are accustomed to (for example if rising sea levels did actually require we give up driving cars and banning dairy farms). The core supporters of the greens will likely support the policy measures which reflect the party’s charter but angry voters seeking revenge on Labour or National by voting Green will not.

So the Greens are now at a crucial juncture and with the 2017 election approaching its clear that the Green brain trust has decided get into the game and dispense of the one thing that holds them back which is (pardon my French) governmental virginity. By taking the sandals off, combing the dreadlocks out and with a nice suit or sweater/skinny jeans combo from Hallensteins the Greens will be ready to go to the 2017 Ball and get their cherry popped by that nice Jewish boy from Christchurch or any other potential suitor (perhaps even giving a second chance to that boy next door after his previous sweaty fumbling’s and cloddish behavior).

But there are a few problems with this scenario and Shaw would do well to heed the lessons of history when it comes to playing with fire. The fate of the Lib Dems in the UK, the Maori Party and NZ First should serve as warnings to any minor party leader willing to put short term expediency ahead of long term progress.

Of the three the fate of the Lib Dems is probably the more pertinent. They spent 20 years building up a respectable position in UK politics, under a FPPs system no less, getting 20% of the vote and seats in the house only to piss it all away when in 2010 they supported the Tories in a hung parliament and began to abandon their core principles (as well as break a few key election promises). The voters, predictably, did not like this new direction and the party was slaughtered at the polls in 2015.

In retrospect it probably looked like a bad move to the Lib Dems, but only in retrospect. To everyone else it was clear from the get go that it was a bone headed move and a clear sell out.

Closer to home Winston Peters brainless stunt in 1996 (discussed in my earlier post) and the Maori Parties deal with the devil in 2008 saw both suffer for letting their leadership sell out the voters for a seat at the cabinet table.

It would be unfair though to pin all the blame on Shaw though. He was elected through the Greens relatively fair leadership selection process (one not as convoluted as Labours or as secretive as Nationals) so it appears that he is not the only Champagne environmentalist in the Greens and perhaps many in the party itself want to stop being the wallflower of NZ politics and run naked through the streets singing “Touch-A-Touch-A-Touch-A-Touch Me!”

If this is the case then James Shaw and Metiria Turei are the Brad and Janet of NZ politics while Key is Frank N Furter (with possibly Winston as Riff Raff, Andrew Little as Dr Scott and yours truly as the Narrator). I will leave you to fill in the rest of the cast roles as you see fit.

But the puzzle I referred to at the start of this post has not yet been solved but I think the picture is becoming clearer. If we discount the “coincidence” argument in favour of a more holistic approach we see that new leadership with new ideas, mass changes in key staff and indications of attempts to exit the political corner that the Greens have painted themselves into shows a party on the cusp of a major political shift, a party that is smelling the winds of change and planning to take full advantage of them.

The dangers of this course of action are not always clear and while I personally don’t subscribe to the following rumors (at least not yet) I feel they are worth mention here just to add some zest to an otherwise dull analysis and to indicate just how problematic the issue is.

They are: a) Shaw is a corporate Trojan horse (ala Don Brash in both the National and ACT coups); b) Shaw is an agent provocateur in the pay of the security services (not so astounding once you realize that it’s a known fact that the security services have had paid informants in environmental groups since the 90s; or  c) the Greens have a serious case of political blue balls and are now prepared to do anything (and I mean “anything”) to get into power (this one could be answered a lot easier if we knew who exactly is funding the Greens, not something I have had time to do yet but if anyone wants to let me know I would be grateful).

But at the end of the day the Greens are still a party which is currently fighting the good fight and with an entirely justified moral stance and matching policy prescriptions. When you match up any doubts about the party with the generally disgusting and loathsome behavior of the rest of the rabble in parliament a few potential worries about their direction pale into significance. Only time will tell if it stays that way.

* Its Not Easy Being Green/Bein’ Green.

I was invited by the nice folk at sustainnews.co.nz to contribute a short essay related to sustainable economics from my perspective as a geopolitical and strategic analysis consultant. The essay wound up  making the connection between political risk and sustainable enterprise, and more importantly, the relationship between sustainable enterprise and democracy. You are welcome to view it here.

Fiji’s strategic pivot.

datePosted on 15:13, January 27th, 2016 by Pablo

Last week Fiji took delivery of a shipment of Russian weapons that were “donated” by Russia pursuant to a bilateral Memorandum of Understanding (MOU) signed in February 2015. The Fijians say that the weapons are needed by Fijian peacekeepers in places like the Middle East because what they currently have in their inventory is obsolete. The shipment includes small arms (squad) weapons, two trucks, tear gas, other non-lethal munitions and possibly one or more helicopters. The shipment will formally be unveiled in February in front of a Russian delegation that will include military trainers who will remain in Fiji to instruct Fijian military personnel in their proper usage.

Fijian opposition figures believe that the shipment is illegal because it was not approved by Parliament and that it could be used against domestic opponents of the current, military-backed government. Let me briefly outline the issues.

The shipment is perfectly legal as it is not part of a Treaty that needs parliamentary ratification. Plus, it is a “donation” of military aid so it does not need parliamentary approval.

The opposition is correct to be concerned about the “dual use” potential of the weapons. Squad weapons, tear gas and non-lethal munitions can be used in peacekeeping but can also be used as instruments of crowd control at home. Given the Fijian Military Forces history, that is a very real possibility.

The arms shipment could trigger an arms race with Tonga, which also has a military and is a rival of Fiji. The Tongans are not likely to view the shipment kindly even if it does not specifically include naval equipment. Squad weapons can and are used by navies as a matter of routine, and the introduction of military helicopters into a regional rivalry is bound to cause alarm in the Kingdom.

Although Fijian military inventories may well be obsolete (meaning Vietnam era US weapons), most UN peacekeeping missions are armed by the UN using NATO-standard equipment. That includes small arms and troop carriers used in “blue helmet” operations.  Thus the claim that the Russian arms are needed for peacekeeping is debatable at best.

The MOU with Russia also outlines military educational exchanges. These follow on a similar program with the Chinese military (PLA). The Chinese also have funded and undertaken numerous infrastructure projects such as port dredging and road building that have a parallel “dual use” potential: they can be used for civilian and military purposes alike.

Given the above, it is reasonable to speculate that the Chinese and/or Russians may receive forward basing rights in Fiji in the not to distant future. Under the “Looking North” policy Fiji has clearly pivoted away from its traditional Western patrons (Australia, NZ and the US) and towards others that are less concerned about the status of Fijian democracy (such as it is, and it is not very much). Given these weapons transfers plus bilateral military education and training exercises with China and Russia, the path is cleared for the two countries to use Fiji as a means of projecting (especially maritime) power in the South Pacific. The Chinese are already doing so, with Chinese naval ships doing regular ports of call in Suva. After years of neglect, the Russian Pacific fleet has resumed long-range patrols. So the stage is set for a deepening of military ties with a basing agreement for one or both.

The Chinese and Russians are enjoying some of their best bilateral relations in decades. It is therefore possible that they may be working in coordinated, cooperative or complementary fashion when it comes to their overtures to the Fijians. Both seek tourism opportunities as well as preferential access to fisheries in and around Fijian territorial waters, so their non-military interests converge in that regard, which may limit the regional competition between them.

It is clear that post-election Fiji has moved from a “guarded” democracy in which the military acts as a check on civilian government to a soft authoritarian regime in which the executive branch supersedes and subordinates the legislature and judiciary with military connivance. Instead of going from a “hard” dictatorship to a “hard” democracy, Fiji has moved  from a “hard” dictatorship to a “soft” one (for those who know Spanish and the regime transitions literature, the move was from a “dictadura” to a “dictablanda” rather than to a “democradura”).

Some of this is by constitutional design (since the military bureaucratic regime dictated the current constitution prior to the 2014 elections), while other aspects of the slide back towards dictatorship are de facto rather than de jure (such as the speakers’ order to reduce the amount of days parliament can sit. The speaker is a member of the ruling party yet holds a position that is supposed to be apolitical). Then there are the strict restrictions on press freedom and freedom of political participation to consider. Attacks on the Methodist Church, arrests of civil society activists and claims of coup plotting by expats and local associates contribute to concerns about the state of governmental affairs. Add to that the fact that the first Police Commissioner after the election resigned after military interference in his investigation of police officers implicated in torture, and then was replaced by a military officer (against constitutional guarantees of police and military independence) while the policemen were given military commissions (which insulated them from prosecution thanks to provisions in the 2014 constitution), and one gets the sense that Fiji is now a democracy in name only.

None of this bothers the Russians or the Chinese, both of whom resisted the imposition of sanctions on Fiji after the 2006 coup (to include vetoing UN Security Council resolutions barring Fiji from peacekeeping operations).

All in all, the outlook is two-fold, with one trend a continuation and the other one new. Fiji is once again becoming authoritarian in governance, this time under electoral guise and a facade of constitutionalism. In parallel it has decisively turned away from the West when it comes to its diplomatic and military alignments. This turn is a direct result of the failed sanctions regime imposed on Fiji after the 2006 coup, which was too porous and too shallow to have the impact on Fiji that was hoped for at the time of imposition. The result is a greatly diminished diplomatic influence and leverage on the part of Australia, New Zealand and (to a lesser extent) the US and the rise of China, India and Russia as Fiji’s major diplomatic interlocutors. Factor in Fiji’s disdain for the Pacific Island Forum (PIF) and its continued attempt to fashion the Melanesian Spearhead Group (MSG) as a counter to it, and the makings of a regional transitional moment are clear.

The sum result of this is that the strategic balance in the South Pacific is clearly in flux. Given the US “pivot” to Asia and the reassertion of its security ties with Australia and New Zealand, that is bound to result in increased diplomatic tensions and gamesmanship in the Western Pacific in the years to come.

Loansharking Greece and odious debt.

datePosted on 10:57, July 7th, 2015 by Pablo

I do not purport to be an economist nor would I ever want to be. Theirs is a world of implicit assumptions and pseudoscience that only a brave few have challenged from within. However, theirs is also a discipline that in theory and practice can shape the fate of millions, which is why I pay more than casual attention to them. Thus it is that I came to ponder the financial situation in Greece, a place that I lived in in 2010 at the start of its downward slope towards the current moment (my wife has researched and written on matters of Greek political economy and I have an interest in Greek civil-military relations, so our stay was mutually beneficial). Here is my non-expert view of things.

When lenders charge interest on principal loaned, they prefer to have the interest paid rather than the principal. This loan repayment rationale, which is true for states, firms and individuals, keeps the debtor beholden to the lender so long as the principal remains unpaid. Over time, the interest accrued can well exceed the amount lent, which is perfectly fine from the lenders point of view but keeps the debtor permanently saddled in a cycle of interest payment unless the debtor earns additional income (revenue) that can be directed towards paying down the principal. Short of a lottery win, a pay raise or new sources of revenue, debtors on relatively fixed incomes are locked into the cycle of debt.

Greece is in that situation. Until 2008 it was servicing the interest payments on its debt to international lenders (mostly the European Central Bank, various national banks and private investors). Then the international financial crisis of 2008-09 hit, which had nothing to do with Greece per se but which drove up interest rates. With a stagnant economy and flat tax revenues, Greece quickly found itself unable to make interest payments and, in a dramatic revelation, announced in 2010 that it had been systematically underestimating its fiscal deficit in order to maintain interest payments on its debt at a sustainable rate. At that point many private investors dumped their Greek debt holdings and the IMF assumed a significant portion of them as well as some of that accrued by European public banks.

The Greeks were subsequently offered two “bailout” loans that allowed them to continue to pay the interest on their debt, which together with the principal now amounts to nearly 250 billion Euros. With interest set at approximately 4 percent annually, the figure is set to reach the half trillion euro mark in a few years. Even if interest rates were capped at zero, it is estimated that it would take Greece 81 years to repay the amount currently owed.

There are several questions arising from the Greek debt. Why, since the interest paid is now more than the principal borrowed, does not the ECB and IMF put a cap on the debt? Why did investors continue to offer loans to Greece when it turned out that the Greeks were fiddling the books, and that neither the principal or the repayment loans ever trickled down to the general public in terms of public goods and services? Why does it expect the Greek population to pay via austerity for the risky borrowing of Greek elites and the even riskier lending of European banks?

Asking the Greek people to shoulder the burden of austerity–in a country with 30 percent general unemployment and 50 percent unemployment for those under 30, with a massive brain drain of educated professionals, porous borders and deep cuts to public sector salaries, pensions and basic services–is akin to forcing the children of crack addicts to starve and swab floors in order to pay for the rehab treatment of their parents. And the outcome is just as uncertain.

Let’s look at it this way. Capitalism is about assuming risk for higher reward. In the financial world, the riskier the investment the higher the interest paid on it. And just like quick finance and pawn shops are located in poor rather than rich neighbourhoods, high interest bonds are issued on “risky” countries with poor credit ratings and histories of financial instability. For “courageous” investors riding the line between high interest and junk bonds, the rewards for so-called bailouts are great. But the downside of a default is that they will have to wear losses, just as many ill-advised investors have to.

Greece is one such high risk place and those who lent to it knew this from the beginning.

With that in mind is is easy to see that the behaviour of the “troika” (the European Commission, European Central Bank and IMF) can be (and has been) likened to loansharking and needs to be treated as such. When people seek debt relief from loansharks, banks or credit card providers, they arrange to repay a capped sum and a payment schedule is established. The alternative is bankruptcy, which leaves the creditor with nothing. Although suboptimal from the lender’s point of view, the capped payment alternative is better than nothing.

When it comes to states, the decision to cap debt is a political decision, not a financial one. That is because the stability of states is more important than the returns on risky investment, especially when ample returns have already been received, many creditors are no longer at risk and demands for future returns put state stability at peril. In the case of Greece there is a twist, in that the referendum on whether to accept austerity was the first political iteration in a multi-step process. Now that the Greeks have refused more austerity, it is the turn of the EC to make a political decision of its own.

Let’s be clear: this is not a Greek crisis; it is a crisis of European finance capital. The demand for more Greek austerity is not about servicing the debt but about humiliation, punishment and deterrence of others who might dare to do the same.

The people who should seek answers are those who invested in the agencies that undertook the high risk lending strategies that have brought us to this moment. The people who are responsible for the crisis are not average Greeks but suits sitting in fancy offices in Athens, Brussels, Frankfurt and London. They are the ones who took the risk on Greece and they are the ones who need to be held to account.

This does not absolve Greeks from their own mistakes. Certainly the culture of entitlement and the pervasive corruption in Greek society needs to be addressed. But here again, this was well known to foreign creditors at the time they lent money to Greece, and for all the everyday petty corruption in Greece involving phantom war veterans and people faking disabilities, it is the Greek political-economic elite who elevated institutional corruption to an art form. Syriza proposes to confront them as well as the lower-level scams but in order to do so it must show that it can negotiate a debt payment agreement that puts the interests of average Greeks first.

There is a way out of the imbroglio that can leave Greece in the EU without undergoing more austerity punishment. In international law there is a concept known as “odious debt.” Odious debts are those that are incurred by governments that do not go to their stated purposes or are ill-gotten from the onset. Under international law, odious debts are the responsibility of the incurring parties and are not the responsibility of their successors. As such, they do not have to be serviced by others if the responsible parties cannot be made to pay.

One can argue that the debt incurred by pre-Syriza governments from 1999-2008 fall into the odious debt category and should be forgiven as such. If anything the political parties in government during the time the debts were incurred can be sued for repayment (these being the Panhellenic Socialist Party (PASOK) and New Democracy (ND)). Whatever happens, it is clear that Greece has not seen the purported benefits of the loans incurred by previous governments (to include the now abandoned or derelict Olympic facilities) but it has paid more than its fair share of interest on them. By any reasonable measure the remaining debt is now odious.

In the end this is a cautionary tale with minor and major sub-plots. The minor plot is about sustainable debt and the limits of debt relief. The major plot is about the perils of political union. The EU needs to understand that how it addresses the minor plot will determine the conclusion of the major one.

Bonus read: Although I do not agree with some of his observations, Brian Easton has a nice short piece on the Greek situation here.

 

This week I attended a talk by Kiwi journalist Yasmine Ryan, currently based in Tunis. Yasmine previously worked for al-Jazeera and now freelances from her Tunisian base. Her talk was about the state of affairs in the Arab world, and more specifically, North Africa.

She had many interesting things to say but I garnered three main points from her talk. First, the the so-called Arab Spring has failed to open Arab politics in any meaningful way. Second, levels of corruption in the Arab world are so high and so pervasive that reform is virtually impossible, especially when foreign interests back the entrenched power elites. Third, state capacity (measured by public infrastructural development, enforcement of norms beyond simple repression and provision of goods and services) is woefully lacking throughout the region, something that contributes to pervasive discontent amongst disempowered groups.

Her bottom line was that although Tunisia is touted as an Arab Spring success story, it is in fact not and yet is the best of a sorry lot of post-dictatorial regimes now governing in North Africa.

As Yasmine spoke, I found myself pondering her use of words. She referred to the Tunisian “revolution” and to the “democratisation” of Arab politics. Her use of these terms reflects standard journalistic practice although she knows well that nothing of the sort has happened in North Africa. Let me explain why.

“Revolutions” properly conceived are popular uprisings that lead to the armed overthrow of the state and the imposition of a paradigmatic change on society under a new political regime in the wake of the overthrow. The first key to revolutionary success is victory over the repressive apparatus, either as a result of combat or because the repressive apparatus switches its allegiances to the new sovereign contenders. The second key to revolutionary success is the scope of paradigmatic change covering political society, civil society and the economic structure of the nation-state. Needless to say, none of this happened as a result of the so-called Arab Spring.

So what did happen? Well, if revolution does not eventuate and democracy does not obtain, then other outcomes are possible. The regime being challenged can use its repressive superiority to reassert its authority and crack down on dissent, thereby quashing the seeds of popular uprising. This occurred in Bahrain, although it took Saudi Arabian troops to help repress the mostly Shiia uprising against the Sunni elite in that country. To a lesser extent it occurred in the 2009-10 election protests and the 2011-12 Arab Spring-inspired “Day of Rage” protests in Iran.

Another alternative outcome is a civil war where the challenged regime is forced into an armed struggle with rebel groups or in which the old regime is overthrown but new power contenders fight each other in order to establish their claim to being the new sovereign. The former is happening in Syria and the latter is happening in Libya.  Iraq is a variation on this, with foreign intervention rather than popular unrest being the gateway (if not cause) for post-authoritarian internecine violence marshalled along sectarian lines.

A third option is for the authoritarian regime being challenged to engage in what is known as a “passive revolution.” “Passive revolution” is where the regime elite adopts cosmetic changes and engages in reform-mongering to appease popular discontent but does not fundamentally alter the power elite or the institutional bases of their power.  One of the cosmetic changes is electioneering rather than democratisation (which involves more than elections and encompasses institutional, social and economic life). This, sadly, is what has happened in Tunisia after the fall of Zine El Abidine Ben Ali and in Egypt after the respective ousters of Hosni Mubarak and Mohamed Morsi. In both cases the power elite underpinning the ousted authoritarian leaders regrouped under an electoral facade that allowed them to cloak their rule in a mantle of “democratic” legitimacy. In Egypt’s case the scenario had a twist in that Morsi was allowed to become the first freely elected president in Egyptian history, but when his Muslim Brotherhood government pushed its Islamicist-backed constitutional project and Morsi granted himself unlimited executive powers not subject to judicial or parliamentary review, they were deposed in a military coup. The leader of the coup and then head of the Egyptian military, Abdel Fattah el-Sisi, is now president of Egypt.

However, for a passive revolution to work it must, along with continuing to selectively repress dissent, deliver goods otherwise not obtained by the discontented masses. Be it as a short term or longer term strategy, the passive revolutionary approach is more than political window dressing because it hinges on giving the appearance of progressive change by providing public goods and services, and material benefits, that previously were unavailable. Yet, in Egypt as well as Tunisia, none of that has occurred because of rampant corruption, lack of state capacity, and an absence of economic opportunity under the power elites that ruled before the regime changes and who continue to rule today. What has occurred is the resumption of repression of those who wish to push for a further and more substantive political opening.

This means that the root causes of popular discontent remain unaddressed, which makes the passive revolutionary approach inherently weak. It is akin to putting a sticking plaster on an arterial bleed–it may staunch some short term dissent but it cannot contain the surge of discontent over the long term.

But there is a twist to the story. It turns out that Tunisia has supplied the largest contingent of foreign fighters to the Islamic State. Egypt also has proved to be a fertile recruiting ground for jihadists, and Libya is overrun with them fighting to overthrow the central government in Tripoli. Why would alienated individuals in Tunisia and Egypt opt to join a foreign war rather than continue to fight for progressive political change at home?

I believe the answer is that those who choose to leave to fight for IS or al-Qaeda see the results of the Arab Spring for what they really are: a reassertion of the traditional status quo under different guise. Understanding the impossibility of affecting significant political, social and economic change at home, these disaffected fighters migrate to foreign conflicts in which the enemy is clear (be it the West, Israel, Iran or Shiia Islam in general) and in which their skills in the management of organised violence can be honed for future use at home should they survive combat. Should they not, they will have died for what they believe to be a good cause.

That is the crux of the “returning jihadi” problem. They pose no existential threat to the West or even stable authoritarian regimes (barring an overreaction by the state and society that makes it appear as if there is in fact a “war” between Islam as a whole and the non-Islamic world). They do not pose an existential threat to stable Muslim dominant societies such as Indonesia and Malaysia. But they do pose a potential existential threat to the passive revolutionary regimes in North Africa as well as in failing or failed states such as Yemen, Somalia and/or those in which civil war is occurring (to include Nigeria even if Boko Harum is comprised of indigenous fighters who for the most part have not traveled abroad).

That is why I see al-Qaeda  and the Islamic State as regional rather than global problems–they may have a world wide impact given the decentralised nature of terrorist tactics outside of the Middle East, but their real strategic impact stems from the existential threat they pose to the Middle East itself. After all, even if they use the US, the West, Israel and/or Iran as foils for their violent ambitions, al-Qaeda and IS have their eyes focused squarely on the Gulf petrolarchies as much if not more than they do on any other territorial and political objective.

In the end, it has been the failure of the Arab Spring to deliver on its theoretical promise and popular expectations for real change that has led to the rise of IS and the spreading wave of violent unrest throughout the Arab world. After a moment that promised a thawing of old political structures and the germination of new ideas about the relationship between state and society, the region has proven yet again to be barren ground for peaceful, progressive and lasting social change.

PS: Here is something I wrote in 2011 about Tunisia and other Middle Eastern transitions. Although I do not claim any particular expertise on the Middle East or Arab world, I think that by and large my observations of four years ago have stood the test of time.

Perhaps not yet a Cuba Libre, but an opening nevertheless.

datePosted on 14:55, December 19th, 2014 by Pablo

In a previous life one of the US government roles I played was as co-team leader of the OSD/JCS Cuba Task Force. That was a combined team of officials and officers from the US Office of the Secretary of Defense (OSD) and Joint Chiefs of Staff (JCS) tasked with exploring contingency scenarios for Cuba, including refugee flows (then ongoing) as well as possible civil unrest and regime transition scenarios in the wake of the withdrawal of Soviet aid to the island nation and the increasingly geriatric nature of its original leadership. My co-team leader was a Cuban American political appointee, with the idea being that my academic experience studying authoritarian regime transitions and knowledge of the Cuban approach to irregular conflict would be balanced by his sensitivity to the domestic political implications of  any moves we proposed to undertake.

Although I cannot reveal much of what we did, I can say a few things about the process that has now led to a normalisation of diplomatic relations between the US and Cuba.

First, almost everyone in the US government realised that the embargo was a failure. However, the Cuban lobby is on a par with the gun and Israel lobbies when it comes to single issue fixation and willingness to spend money for the cause. This made Cuba a thorny political problem for any US government trying to improve relations with it, as the usual suspects would (and still do) immediately hurl the “soft on communism” and “appeasing dictators” invective as part of their negative electoral campaigning. This placed the issue in the “too hard” basket as far as most politicians were concerned, especially given the myriad of other issues at play and the trade-offs they involved. As a foreign diplomat said in my presence when asked about the US approach to Cuba: “That is a domestic matter, not a diplomatic one.”

Secondly, from the 1980s to the present day, every former Chairman of the Joint Chiefs of Staff and the US Chamber of Commerce have repeatedly called for an end to the embargo and resumption of full diplomatic relations. One would have thought that the weight of conservative military leaders and the leading business organisation in the US would hold some sway, but in fact their views were trumped by the lobbying efforts described above. Episodic attempts have been made to launch US business initiatives in Cuba (for example, in agricultural machinery), but the legal and monetary costs of circumventing the embargo by using off-shore subsidiaries, etc. simply proved too much given the limited nature of the potential returns.

Third, as of the early 1990s the Castro brothers increasingly delegated authority to second generation leaders, who now have been replaced in large measure by third generation revolutionary cadres (people in their 40s and 50s). In fact, both the Cuban exile community as well as the revolutionary leadership have seen the physical decline of the so-called “dinosaurios” (dinosaurs) and their replacement with younger, often more moderate leaders who were not present during the revolution and who therefore do not all have personal scores to settle stemming from it. My co-team leader was second generation and not fuelled by the rabid thirst for revenge exhibited by many of his parent’s generation (some of whom I got the dubious pleasure of meeting). Now that second generation’s children are coming to the fore. This has opened the door for initiatives focused on normalising relations.

But the issue remains complex. The end of the Cold War and fall of the USSR actually reinforced the view in some US policy circles that an embargo could, given the withdrawal of Soviet aid to Cuba, bring the Castro regime to its knees.  On the other hand, the increase in non-US foreign investment in Cuba after the Cold War (mostly but not exclusively in tourism) was seen by some in the US as making the embargo counter-productive when it came to promoting US business interests in its near abroad. Overlying these views was a persistent belief that Cuba continued to logistically and intellectually support Marxist-Leninist guerrilla groups in Latin America (including those that drug trafficked) as well as rogue regimes such as North Korea, Libya, Syria and Iran (to say nothing of Nicaragua and Venezuela). As a result, foreign policy opinion in the US after the Cold War remained very divided on the question of what to do with Cuba given the embargo and rudimentary diplomatic relations.

Yet given the demographic changes mentioned earlier, the question about Cuba the last twenty years has mostly been one of political timing: when is the opportune moment to make the move towards restoring normality to the bilateral relationship? Conventional wisdom on US presidential politics states that only during second terms can presidents get away with bold foreign policy initiatives, and even then they have to be popular and presiding over a strong economy in order to do so (since voters tend to ignore foreign policy issues when their pockets and bellies are full). However, owing to the perverse ideological evolution of the Republican Party, only Democrats would even contemplate doing so after 1990, which meant that it was left to Clinton or Obama to be bold (recall that Nixon opened the relationship with China and Reagan encouraged glasnost and perestroika, even if both Republican presidents did so for self-interested reasons).

I have little doubt that Clinton would have normalised relations with Cuba in his second term if he had not been hamstrung by the Lewinsky scandal, which helped turn the Elian Gonzalez saga into a Republican battle cry (Elian Gonzalez was a little Cuban boy who washed up on US shores in a raft in which his mother died. After weeks of to- and fro-ing between the US government and exiled members of the boy’s family, he was forcibly repatriated to Cuba to live with his divorced father. Sensing that Clinton was wounded by the Starr investigation into Cigargate, the GOP turned the boy’s ordeal into an anti-communist political circus, which effectively ended the quiet efforts Clinton’s administration had initiated with an eye towards opening up the Cuban relationship).

Now it appears that Obama has seized the moment to undertake a little glasnost of his own, perhaps because he senses that he has little to lose given the disloyal nature of the opposition (which will rant and rail at anything he does), perhaps because the US economy is doing well enough for him to feel immune on some aspects of foreign policy even after the adverse results of the midterm elections, and perhaps because, like gay marriage and medical marijuana, the US public has simply changed its views on Cuba over the years.  In fact, it is likely a little bit of each, as the GOP and Fake News blowhards may not want to waste political capital on a dead issue that will gain the GOP no electoral traction. As it turns out, with the exception of some posturing clowns like Marco Rubio and the braying jackasses on conservative media outlets, the reaction from the political Right has been fairly muted.

It will be interesting to see what happens in the next few years. Back when I was dealing with Cuba, the word from their side was that everything was negotiable except for two pillars of the revolution: health and education. That is to say, the vaunted Cuban health and educational systems were sacrosanct and could not be touched in any post-Castro environment. Beyond that, market forces could dictate how Cuba would re-insert itself in the global economy. With an extremely literate, healthy and underemployed work force, it would seem that Cuba would be ideal for any number of value-added export commodity production ventures (textiles and pharmaceuticals have already become targets of foreign investor interest).

The other issue, left unresolved during my time working that beat, was the role of the Communist Party. It is clear that the Cuban political elite have been watching the transitions in the former socialist world, be it the USSR, China, Vietnam or Eastern Europe. They have also watched the experiments in indigenous socialism in Venezuela, Ecuador and Bolivia. It is pretty clear that they would prefer to do a China-style transition to state capitalism under one party rule.

The trouble with that preferred picture is that it is only a partial transition, with the political regime remaining largely the same while the economy changes. That may be possible in a huge country like China but is problematic in a small country like Cuba, especially when it is so proximate to a formerly adversarial super power and has a number of expatriates with ideas about Cuba’s future that do not include a dominant role for the Communist Party, much less its continued sole rule.

Thus the conundrum for the second and third generation Cuban Communist Party leadership is whether to embark on a sequential transition (first changing the economy then the political system, or, less likely, vice versa), or  to go all in and mount a simultaneous transition of the economic and political systems. From the standpoint of keeping things peaceful and orderly, the best hope scenario is a sequential transition in which economic change precedes political change. Opening Cuba for business will present a formidable challenge for the Communist Patry, and the social and cultural influences that will come with diplomatic normalisation and economic opening will be hard to contain, much less stop. So whether by design or by the forced pace of change, it is likely that the Cuban political system will open up as a result of the economic transition and its superstructural ramifications.

The key is for the Cuban political elite to realise that the Chinese transition model is not possible for them given the circumstances, and that the days of one party rule will either come to a natural end or be overturned by force. In that light the best thing to do is to prepare a timetable leading up to multiparty competitive elections somewhere down the road, with appropriate guarantees put in place to preserve key revolutionary gains and to safeguard the institutional position of entities like the Revolutionary Armed Forces (FAR).  That will take some doing, and could well take a fair bit of time given the current makeup of the Communist Party leadership (in which Fidelistas still hold significant influence along with Raulistas).

The question remains as to what will happen with the two pillars of the revolution in a market-driven economy. It also remains to be seen as to how Cuban society will respond to the introduction of full market logics on the island. Things like the elimination of food subsidies and introduction of merit-based employment criteria in and outside the public serve could prove painful for Cuban society. It could also lead to  criminal opportunism in what some observers have already characterized as an increasingly amoral and feral civil society no longer wedded to the revolutionary ethos of the original 26th of July movement. If one thinks of where Cuba is spatially located in relation to drug trafficking corridors, the downside possibilities should be obvious.

Even so, the resumption of full diplomatic relations is a welcome development and hopefully followed by a formal end to the US embargo (not a certain thing, given opposition by GOP majorities in both the Senate and the House of Representatives). There still will be many hard days ahead as Cuba comes to grip with its post-revolutionary future, but at least the range of potential outcomes will be expanded relative to those extant up until a few days ago. As for the US, it demonstrates that sometimes diplomatic face-saving on foreign policy is a waste of energy and the better self-interested choice is to admit mistakes and move on. As the old Korean saying goes: a rich uncle can afford to be generous.

Whatever its motivations, Uncle Sam just was.

 

Blog Link: Could Fiji Emulate Singapore?

datePosted on 16:20, September 26th, 2014 by Pablo

Although we in NZ have been preoccupied with our own national election,  Fiji had one a few days earlier that arguably is far more important when it comes to that country’s long-term prospects. Much has been written about this foundational election and the transition from dictatorship to democracy, but in this 36th Parallel analysis I consider the possibility that Fiji may see Singapore as a developmental model worth emulating.

It is not as crazy an idea as you might think at first glance.

Transitional Dilemmas.

datePosted on 11:20, March 16th, 2014 by Pablo

Military-bureaucratic authoritarian regimes often seek to legitimate their rule and establish a positive legacy by transferring power to elected civilian authorities. However, they do so only under certain conditions and with specific outcomes in mind. One way to ensure that their post-authoritarian vision is adhered to is to run a military-backed candidate (often a retired military leader) as the “official” candidate while actively working to use their control of the election process to promote divisions and disunity amongst the opposition. The way in which the elections are governed and the process leading up to them are used by the outgoing authoritarians to produce a voting outcome that upholds the status quo under elected civilian guise.

In spite of its dominant position in such “top-down” forms of electoral transition, military-backed candidates and/or parties are confronted with several dilemmas that complicate their ability to ensure their desired post-authoritarian outcome. In this 36th Parallel Assessments brief I point out two of them as well as some other political dynamics at play in such scenarios.

Although the analysis is framed broadly, it may be of particular interest to those interested in the elections scheduled for September in Fiji.

Blog Link: The Transition Tango in Fiji.

datePosted on 11:35, October 3rd, 2013 by Pablo

Over at 36th Parallel Assessments I explore some of the dynamics that are and will be key factors in the political transition to free and open elections in Fiji scheduled for mid 2014. Unique circumstances in Fiji notwithstanding, the success of a transition from military-bureaucratic authoritarianism to freely elected government (if not democracy) hinges on some key factors, particularly the interplay between regime and opposition hard- and soft-liners. The essay explains how and why.

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