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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.

 

Considering the Implausible.

datePosted on 18:24, July 2nd, 2015 by Pablo

From time to time I am invited to give public presentations on subjects within my areas of interest. Depending on the topic I sometimes offer ideas for the audience to consider. At a think tank gathering last year I offered the suggestion that parliament should consider the proposition that New Zealand be the first country to publicly and formally renounce the use of lethal drones at home and abroad. I pointed out that although security conservatives and military commanders would oppose the move because it limited NZDF (and perhaps in the future NZ Police) tactical options, it was worth debating on moral and legal as well as practical grounds given New Zealand’s unique political culture and international standing. Since 90 percent of what military drones do is non-lethal and the NZDF does not have a lethal drone capability as of yet, it seems worth a try.

That proposition went nowhere. Some left leaning commentators supported the motion (most notably No Right Turn and one of the authors at The Standard). But no a single political party, to include the Greens, Mana and the Internet Party, adopted it as a policy proposition and it was never brought up in parliament.

This year I was at another event that featured academicians, students, policy practitioners, journalists and diplomats (foreign and Kiwi) discussing New Zealand’s past, present and future foreign policy. I was matched with a representative of the New Zealand intelligence community and a security academic on a panel that addressed intelligence issues, specifically, New Zealand’s intelligence role in foreign policy.

As part of the discussion I suggested that Edward Snowden had done us a favour by exposing the extent to which NZ is a fully integrated member of the 5 Eyes signals intelligence network. The reason is that with the revelations that have come from the documents that he passed on to journalists, New Zealand has an opportunity to re-negotiate some of the terms of its participation in 5 Eyes. I noted that withdrawal from 5 Eyes was not an option–I said that it was like trying to leave the mafia. But the specific terms of what the GCSB does for 5 Eyes could be discussed given that New Zealand is by far the most vulnerable of the 5 Eyes partners to retaliation from the countries that it targets as part of the division of labour within Echelon. I specifically  mentioned that NZ might broach the subject of reducing its role in spying on China given how trade dependent NZ is on the Asian giant.

A couple of journalists in the room ran stories on the suggestion and the PM was asked about it at his weekly press conference. He rejected it out of hand and said that NZ would not modify its intelligence operations because of trade considerations because what it did in was in the national interest.

The Snowden documents suggest otherwise, but that argument can be left for another moment.

Let me explain why NZ has an opportunity to re-negotiate the terms of its agreement with the Anglophone powers even though it cannot withdraw from 5 Eyes entirely.

If NZ were to withdraw from 5 Eyes it would lose the substantial benefits, unique to a small country, that it accrues from being in an alliance with four bigger partners with global reach. The flow of intelligence within 5 Eyes is very much reciprocal but what NZ receives is far more than what it delivers to the network. It is tasked with using shared technological means located on or operated from NZ soil (including its diplomatic missions) to target  specific entities of common interest to the larger partners, and in exchange it receives global as well as more NZ-specific intelligence from those partners.

That is just one reason why withdrawal is unlikely. But think of the consequences if NZ unilaterally decided to opt out of Echelon. It is in possession of some of the most advanced signals interception technologies on the planet. The GCSB knows the processes, procedures, means, methods and protocols of the entire network. Fear that this knowledge and technologies (say, for example, X-Keyscore and Prism) could fall into hostile hands will inevitably prompt a negative response from NZ’s erstwhile intelligence allies, and that response will not be confined to the field of intelligence (I am aware of reports that some of the technologies and methods mentioned in the Snowden documents have been decrypted by Russian and Chinese intelligence but am not sure as to what extent this may have occurred).

Were NZ to try and establish an alternative signals intelligence network with other powers, the remaining 5 Eyes countries would likely move beyond defensive measures and into the field of offensive intelligence operations against NZ. In other words, the exit costs will be too high given the uncertain benefits received in the event of withdrawal.

That being said, the GCSB is integral to 5 Eyes operations. The partners cannot afford to alienate NZ on issues that are critical to NZ but marginal or less costly to them. Although they never thought that their operations would be exposed in the measure that they have, the 5 Eyes partners are now acutely aware, thanks to Snowden, that they rise and fall together when it comes to exposing how they go about signals intelligence acquisition and who they target. They can therefore ill afford to call NZ’s bluff on a matter that is of critical importance to the latter.

I would argue that bilateral trade with China is one such matter. Even if they have a pretty good idea of what the GCSB does for Echelon, public revelation of NZ having a lead role in spying on the Chinese at home and abroad will force the PRC to retaliate in some fashion, even if just to save face as an emerging great power with super power pretensions. It must show that it should not be disrespected and meddled in by small states no matter who those states are allied with. The means by which it can reach out and touch NZ in a bad way are myriad and not confined to diplomatic or economic relations.

The only reason that it would not do so is if it has counter-intelligence access to GCSB operations and wants to keep those “backdoor” channels open in spite of the publication of specifics about NZ espionage against it.

If NZ were to say to its partners that given its vulnerability to Chinese utu the GCSB would prefer not to take a major role in spying on the PRC, it is possible that the other partners will listen and consider the request. The GCSB can still spy on South Pacific, Latin American and other nations that do not have much leverage over it, as well as the UN, various NGOs and private firms as it is doing now. But it would give a pass to spying, at least in a major way outside of NZ territory, on the Chinese.

In my view, such a position would not prevent the GCSB (and SIS) from conducting counter-intelligence operations against Chinese espionage at home and abroad. Even if they know about these defensive measures the Chinese will likely not make an issue of them given that they instigated the back and forth. Where I would draw the line is on offensive operations against Chinese targets, especially when at the behest of the larger partners.

I am not surprised that John Key has no interest in this proposition. To do so requires political courage and a commitment to putting NZ national interests first. Neither is in his repertoire. Plus, even if he were to think about the dilemma posed by NZ’s increasingly counter-poised trade and security interests, any renegotiation along the lines I have posed would be done quietly and not publicly announced, much less at a press Q&A. But I doubt the latter is the case.

In any event, this is a potential moment of opportunity to redefine the terms and conditions of NZ’s involvement in 5 Eyes, however implausible that may seem at first glance. There is a supposed review of the NZ intelligence community now underway that could serve as a sounding board for opinions on the suggestion, and I am happy to add my two cents to the discussion should that be deemed worthwhile.

Crowdsourcing opportunity: The 5th Eye.

datePosted on 14:13, June 4th, 2015 by Pablo

I had the opportunity some time go to be interviewed by the one of the director/producers of the documentary “Operation 8″ for a forthcoming film about the GCSB and its role in the 5 Eyes signal intelligence network. These good people are part of the grassroots network that attempts to keep those in power accountable to the folk they supposedly serve, and while I may not agree with them on a number of issues I have no doubts about their sincerity, commitment and interest in the common good.

In order to finish the new documentary, titled “The 5th Eye,”  there is a crowdsourcing effort underway that is well worth supporting. The details are here. Besides information about donating, there is a short video trailer included on the page as well as updates and other valuable information. By all means check it out and help this film on its way to fruition.

If you support truly independent film-making in Aotearoa, this is an excellent opportunity to not only talk the talk, but to walk the walk.

So, it turns out that the much vaunted review of New Zealand’s intelligence community is going to undertaken by Michael Cullen and corporate lawyer  Patricia Reddy. Both are consummate Wellington insiders and Ms. Reddy has no apparent experience in dealing with intelligence matters.  She is, however, the Chair of the NZ Film Commission and sits on a number of boards so obviously must be the best person suited for the job. For his part Mr. Cullen has been a Deputy Prime Minister and sat on the Parliamentary Intelligence and Security Committee that among other things did nothing when Ahmed Zaoui was falsely accused of and detained for being a supposed terrorist by the SIS. It is clear he knows how bread is buttered.

The terms of reference for the review cover two main areas: the legislative framework governing NZ intelligence agencies; and the mechanisms responsible for overseeing them.

I have serious doubts that as constituted this review panel will do little more than maintain the status quo on both agenda items. I believe that the review panel should have incorporated more people, including people from outside the Wellington “beltway” and some drawn from overseas. As things stand the review has all the makings of yet another exercise in whitewashing under the guise of critical scrutiny. I hope not, but am not holding my breath in any event.

I outline my thoughts in this Radio New Zealand interview.

For those interested in the terms of reference of the “review,” they can be found here.

Guest Post by Kate: Human Rights are Universal.

datePosted on 08:42, May 8th, 2015 by Pablo

On returning this week from his trade mission in the Middle East, John Key stated on Breakfast TV that countries such as Saudi Arabia have views of human rights that are “different” from our own, justifying the government’s decision to exclude human rights issues from any trade agreement that New Zealand is able to secure in the region. That is putting it rather mildly. Saudi Arabia has one of the consistently worst human records in the world. While the mainstream media is quick to focus in on a discriminatory gender regime that bans women from driving and requires them to be covered from head-to-toe, such problems pale in comparison to the treatment of the foreign workers who make up at least a third of the country’s population, or the torture, imprisonment, and death sentences handed down to Christian converts, human rights workers, activists, journalists, and other critics of the ruling elite. Unlike the distinctly Saudi approach to gender relations, it is difficult to see how the Saudis themselves could seriously attempt to justify such severe human rights abuses in religious or cultural terms.

What is especially surprising about the Prime Minister’s statement is that, if he genuinely believes that Saudi Arabian understandings of human rights are “different” rather than simply wrong, this would put him far over on the fringes of moral philosophy into the cultural relativist camp. This is a space occupied only by academic extremists who have followed the logics of social constructionism to their absolute and final conclusions (i.e. there is no such thing as truth, which makes it rather hard to speak truth to power as many of these theorists seem to want to do), or a small minority on the extreme right, which proposes that liberal values can only ever be achieved in supposedly superior Western cultures. Sticking to this line of argument means that anything whatsoever can be justified in cultural terms to the point where, essentially, nothing practised by any society at any point in history can be criticised at all. What strange company for a Mr. Moderate who usually tries to avoid coming to any conclusions that could undermine his apparently undying popularity to be found in.

Furthermore, this is not the generally shared understanding most reasonable people have of these issues. In fact, New Zealand, along with just about every other country in the world, is a signatory to the Universal Declaration of Human Rights, adopted in the wake of the horrors of World War Two and aimed at establishing a basic set of rights and liberties that countries should do their very best to uphold. Least it isn’t clear from the title of the Declaration, most of the world believes that human rights are universal, Mr. Key, not particular.

Saudi Arabia, by the way, does not accept these principles, rejecting the Declaration on the grounds that guaranteeing freedom of religion would be detrimental to the country’s own traditions, and that its own version of Islamic law supposedly upholds a higher threshold of human rights than this or any other international agreement. By far the more important point, however, is that New Zealand is itself a signatory to the Universal Declaration, which not only obligates us to ensuring that we uphold basic human rights within our own borders, but also to promote human rights abroad.

Yet when it comes to trade agreements, the explicit approach adopted by both recent centre-right and centre-left governments has been to exclude human rights from the negotiating agenda. This puts us at odds with the other members of the international “club” we belong to, to use another of the Prime Minister’s terms. Based on academic research, the World Trade Organization states that about 75 percent of contemporary trade agreements include human rights clauses, whether binding or non-binding, driven largely by the human rights promotion agenda of Canada, the European Union, and yes, the United States. It obviously cannot be assumed that these clauses always lead to substantive improvements in human rights outcomes, but they are a start.

The real reason behind both National and Labour’s exclusion of human rights concerns from the negotiation of trade deals is two-fold. Firstly, to state the obvious, New Zealand is very small in global terms, and thus cannot exercise much leverage over larger countries in the Asia and the Middle East. When countries are dependent on us for aid, absolutely do we try to influence human rights, most notably in the Pacific (which also occasionally invokes issues of culture and human rights that I don’t intend to get into here). Realistically, if we are to incorporate human rights concerns into our trade relations framework, this might more successful if done through multilateral arrangements—yet is it difficult to see human rights becoming a major concern of the kind of multilateral trade deals that New Zealand has wedded itself to, such as the Trans Pacific Partnership.

Secondly, the bipartisan approach reveals not only a deep ideological commitment to free trade that is not necessarily shared by other developed countries, in which the influence of large protectionist interest groups often moderates that stance, but a rather naïve belief that trade deals and trade relationships can be separated from everything else. Despite good empirical and historical evidence that trade cannot be viewed independently from other aspects of foreign policy, we do this with regard to our security relations, in which government officials cannot see the long-term problem emerging out of the contradiction between an Asia-oriented trade policy and a Five Eyes-oriented security one, and we also apparently do it when it comes to more noble causes.

So herein lies the hypocrisy not only of our current leadership, but all those sectors of our community who stress trade above all other national goals. We tend to have a rather rosy view of our country not only as an independent voice in the international arena, but as a progressive force in the big wide world. We ban nuclear ships and we save whales. We were the first to give women the vote and at least some of protested against the Springbok Tour. We think we deserve a seat on the Security Council because we are nice (alternatively, to carry on the theme, there are those who no doubt think it will help us out on the trade front). Not caring—or pretending not to care— about the worst instances of human rights abuses, however, not only threatens to undermine this aspect of our national identity, but undermines both our reputation and potential as a global player that punches above our weight on moral issues.

Fear-mongering by frauds for fame and fortune.

datePosted on 16:40, April 20th, 2015 by Pablo

So the Herald on Sunday published an article by a business lecturer from some obscure university in the UK (now apparently visiting at Auckland University) in which she claims that NZ is a  “sitting duck” for an attack on a shopping mall (I will not link to the article because the fool does not deserve any more attention). She compares the NZ terrorism risk level to that of the US, UK an Australia and says that we should emulate them when it comes to mall security, to include bag and ID checks before entering. The Herald on Sunday then followed up the same day with an editorial and a couple of other articles hyping the terrorist threat in NZ.

I will not go over the levels of idiocy marshalled up in this sorry excuse for reportage. Instead I will rephrase a comment I left over at The Standard:

 …(T)he lecturer who penned the scare-mongering hysterical piece has no demonstrable experience with terrorism or counter-terrorism, much less the broader geopolitical and ideological context. She makes a false comparison with the US and UK, acting as if the threat environment here is equivalent to those of these countries and Australia, and states that NZ should emulate them when it comes to mall security. That is simply not true.

Moreover, just because al-Shabbab carried out one successful mall attack in Kenya and called for others in the US, UK and Canada does not mean that they have the capability of doing so anywhere else. In reality, those calls have gone unheeded and security authorities in those states have not appreciably increased their warnings about attacks on malls as a result.

Let us be clear: no mall in the US (and the UK as far as I know) requires bag and ID checks in order to go shopping. So the claim that they do is a lie. I mean, really. Can you imagine the reaction of the average US citizen to being asked to produce an ID before being allowed into Walmart or any one of the thousands of malls that exist in the US? Heck, they might pull out a firearm and say that their name is Smith and Wesson!

Anyway, the costs of of engaging enhanced security measures will be prohibitive for many businesses and even if adopted will be passed on to the consumers, which in turn could drive away customers in an age when they can shop on line. So it is not going to happen. The use of CCTV, coordination with local security authorities and hiring of private security guards suffices in the US and UK, so it surely can suffice here.

I will leave aside the democratic principles at stake, one of which is that you do not restrict the freedom of movement of everyone on the pretext of stopping a potential act of mass violence. And even if you were do do so, who is to say that evil doers would not switch targets to, say, transportation hubs or entertainment districts in downtown areas. Are we going to then go on to lock down every place where people congregate? Lets get real.

In sum, what we got from the Herald was an article that used a false comparison from someone who is clueless but who somehow got interviewed by a rube reporter as if she was an expert in order to justify a call for a hysterical and impractical overreaction, which the Herald then used to write a fear-mongering editorial that contradicts what our own intelligence agencies are saying about the risk of terrorist threats on home soil. Geez. Perhaps hyping up security and sacrifice in the lead-in to the Anzac Day commemorations has something to do with it?

There is only one indisputable fact when it comes to terrorism and NZ. Joining the fight against IS/Daesh increases the threat of terrorist attack on Kiwis and NZ interests, not so much here at home but in the Middle East where IS/Daesh has a broad reach. Although the Gallipoli commemorations will likely not be affected due to the security measures put in place by the Turks (who do not fool around when it comes to security), the risks to individual or small groups of Kiwis in the ME–say, tourists, aid workers, diplomats or business people– are increased as a direct result of NZ involvement in the anti-IS/Daesh coalition. The emphasis should be on their safety, not on that of local malls.

An absolutely wretched effort by the Herald.”

The problem is bigger than the Herald going overboard with its scare-mongering in the build up to the Anzac Day commemorations. Since 9/11 we have seen the emergence of a plethora of security and terrorism “experts” (including a few here in NZ such as the poseur who featured in the Herald article) as well as an entire industry dedicated to “countering” extremism, terrorism and a host of other potential or imaginary threats. Likewise government security agencies have pounced on the spectre of terrorism to justify expansion of their budgets, personnel, powers and scope of search, surveillance and detention.

There is, in effect, an entire terrorism growth industry hard at work conjuring up threats and scenarios not so much as to safeguard their fellow citizens but to enrich themselves via fame, fortune or power. In this they are abetted by a compliant when not reactionary and sensationalist media that does not bother to fact check the claims of many of these fraudulent experts (such as the Fox News contributor Steve Emerson, who falsely claimed that there are non-Muslim “no go” zones in the UK and France, or the charlatan Rohan Gunaratna, who claimed that there were jihadi cells in NZ ten years ago without ever having visited here, and who has now had to pay serious money in damages for defaming a Tamil community group in Canada).

Together, these various branches of the terrorism industry work to mutually profit by promoting fear and distrust while curtailing the rights of the majority in the ostensible interest of securing against the potential harm visited by a purportedly violent domestic minority. And they are selective when they do so: notice that all the hype is about Islamic extremists when in fact a large (if not THE largest) amount of political violence in Western societies, including NZ, is meted out by white, Christian extremists. Yet we do not hear dire warnings about neo-Nazis and white supremacists even though they have a proven track record of politically or racially motivated violent acts.

“Esoteric pineapples,”a commentator on the Standard thread that I made my remarks on, provided this very useful and informative link on the phenomenon. Read it and weep.

It is a sad day that NZ’s leading newspaper stoops to this type of tabloid rubbish. Shame on them. But at least it seems that many of its readers are not taken in by the ruse, which augers slightly better for informed debate on the true nature of the NZ threat environment.

PS: For the record, I do not consider myself to be a terrorism or security expert. I have a background in counter-insurgency, unconventional warfare and strategic analysis among other things, and have written extensively on those and other topics. But I have largely been pigeon-holed in the NZ media as one or the other in spite of my repeated requests to be identified correctly, which is another example of shoddy journalism.

A derelict on duty.

datePosted on 12:47, March 28th, 2015 by Pablo

John Key clearly loves his sports and hates funerals. In 2012 he opted to attend his son’s high school baseball tournament in the US (and spend a week in New York) rather than attend the funerals of the soldiers killed in combat in Afghanistan that year. In the following year he did attend Nelson Mandela’s funeral (in spite of his sketchy recollection of where he stood on the Springbok tour and the general issue of apartheid while it still was in force) but skipped that of Hugo Chavez (I cannot say I am surprised). Last year he declined to attend the funeral of Saudi King Abdullah (departed regent of a country that is a major trade partner and which sends a sizeable compliment of students to NZ each year). This week he declared that rather than attend the funeral of Lee Kuan Yew, considered to be the greatest Asian statesman of his time and a leader who forged close diplomatic and security ties with NZ, he is off to the see the Cricket World Cup final in Melbourne so that he can “support he boys.”

In his place will go Governor-General Sir Jerry Mateparae, who has done the drill before.

Mr. Key’s priorities seem a bit out of kilter. First he disrespects the fallen warriors in order to watch an inconsequential sporting event and visit his well heeled pals in NYC. Now he skips a major opportunity to cement ties in SE Asia and reaffirm NZ’s respect for a seminal world figure in order to watch a game of interest only to the Antipodean neighbours and die-hard followers of that particular sport. In fact, Mr Key appears to prefer combining sport and holidays with affairs of state, as his Hawaiian golfing foray with Barak Obama attests. But funerals over sport? Nah.

There is a difference between being a politician, a political leader, and a statesperson. A politician serves as a representative and legislator and acts most immediately according to personal ambition framed by partisan logics. A political leader provides direction and vision to his party and the nation at large, sometimes sacrificing immediate personal or partisan gain in pursuit of the national interest. A statesperson subordinates personal and partisan interest to that of the nation and the larger global community.  S/he looks at the big picture first and foremost and orders his/her priorities accordingly. At his or her best and as much as practicable, a statesperson sacrifices personal and political self-interest in pursuit of the common good, both national and global.

John Key may be an avid sports fan (after all, he has appeared on the sports radio show of that paragon of domestic virtue, Tony Veitch). But one thing is even more certain: he is no statesman.

In recent days there have been claims that there has been both more and less spying by New Zealand intelligence agencies. Proponents and opponents of the intelligence community have seized on one or the other claim to argue in favour or against NZ’s involvement in the 5 Eyes signals intelligence network and the expansion of powers awarded the NZ intelligence community under amendments to various security Acts during the past few years. Given that there is a forthcoming parliamentary review of the NZ intelligence community, it is worth cutting to the gist of the issue of “balance” between civil liberties and intelligence operations.

Monitoring and intercept technologies available to signals and technical intelligence agencies today are superior to those of ten years ago, especially in the field of telecommunications. This allows signals and technical intelligence agencies to do much more than was possible before, something that legal frameworks governing signals and technical intelligence collection have had difficulty keeping pace with. It would therefore seemingly defy credulity to claim that that spy agencies are doing less spying now than in the past, especially given what is known about the 5 Eyes network from the Snowden documents currently being introduced into the public domain.

But perhaps there is a way to reconcile the opposing claims. Can spy agencies actually be doing less with more?

The assertion that there is less spying by NZ intelligence agencies now than seven years ago can be reconciled with the recently released GCSB annual report stating otherwise by understanding that under the intelligence community’s interpretation, “mass collection” is not equivalent to “mass surveillance.” Although the 5 Eyes and other national signals intelligence agencies use systems like PRISM to grab as much meta-data as possible as it passes through nodal points, that data has to be mined using systems like XKEYSCORE to obtain collectable information. Bulk “hovering” of all telecommunications in specific geographic or subject areas by agencies like the GCSB still has to be searched and analysed for it to become actionable intelligence. That is where the use of key words and phrases comes in, and these are not just of the usual “jihad” or “al-Qaeda” variety (since the bulk of intelligence collection is not focused on terrorism).

Although the GCSB may be doing more bulk collection of electronic data, it claims to be analysing proportionately less of what is collected than during the last year of the Fifth Labour government. So it is doing less with more. But a fundamental problem remains when it comes to intercepting telecommunications in democracies.

That problem is that whether it is analysed or not, mass collection of so-called meta-data of everyone’s personal and professional telecommunications presumably violates the democratic right to privacy as well as the presumption of innocence because it is obtained without there being a particular suspicion or specific reason for its collection (much less a warrant for its collection). Bulk intercepts can then be data-mined after the fact using classified search vehicles in order to build a case against individuals or groups.

That runs against basic tenets of democratic jurisprudence. Moreover, indefinite storing of meta-data that has not been analysed but which could be in the future in the event target (and key word) priorities change is something that is the subject of legal argument at this very moment.

There are therefore fundamental principles of democratic governance at stake in the very collection of meta-data, and these cannot be easily set aside just because the threat of terrorism is used as a justification. The issue is constitutional and needs to be resolved before the issue of “balance” can effectively be addressed.

However, for the sake of argument let’s accept that bulk collection is not mass surveillance and that the former is legal. How does one balance civil liberties and security under such circumstances?

The implementation of balance under such conditions starts at the point where data mining begins. What are the key phrases and words that identify targets for closer scrutiny? What are legitimate targets and what are not? Some search terms may be easy to understand and broadly accepted as necessary filters for the acquisition of more precise information about threats. Others might be more controversial and not widely accepted (say, “opposition leader sex life” or “anti-TPPA protest leaders”).

That is where the issue of effective intelligence oversight comes into play and on that score NZ is sorely wanting. There have been some cosmetic changes in the workings of and a slight extension of the powers of the Inspector General of Intelligence and Security, and the process of issuing domestic security warrants made more robust with the participation of the Commissioner of Security Warrants. Yet any honest assessment of the oversight mechanisms of the NZ intelligence community will show that they are inadequate when it comes to providing effective and transparent proactive as well as retroactive oversight and review of our intelligence community’s activities given the range and scope of the latter.

These mechanisms are fewer and less effective than those of most liberal democracies (including our 5 Eyes partners), which means that NZ’s intelligence partners may well ask it to do things that they cannot do themselves due to the restrictions imposed by their own oversight mechanisms. That possibility should be of concern and needs to be addressed. Relying on the good faith of NZ intelligence agencies involved is not enough, especially given their history of playing loose with the rules when it suits them.

Therein lies the core problem with regard to balancing civil liberties and intelligence operations. If there is effective intelligence oversight before the fact (“proactive” in the sense that oversight mechanisms dictate was is permissible data-mining before it occurs) as well as after the fact (“retroactive” in the sense that oversight mechanisms hold intelligence officials to account for their use of bulk collection and data-mining), then balance can be achieved. However, if such effective oversight is lacking–again, both proactive and retroactive in nature–then the “balance” will be skewed heavily in favour of unaccountable intelligence collection and usage. That is not acceptable in a democracy but is in fact the situation at present in New Zealand.

Then there are the issues of how national security is defined and what role intelligence agencies play in its defense, on whose behalf NZ intelligence agencies engage in espionage, and with who the intelligence obtained by human, signals and technical means is shared. This matters because trying to achieve balance between civil liberties and intelligence operations without addressing the larger context in which the latter occur is much like putting the cart before the horse.

EveningReport.nz is a new NZ-based online media outlet that among other valuable things offers in-depth interviews on matters of public interest.  As such t is a welcome addition and antidote to corporate media soundbites and frivolities.

I was fortunate to feature in one such interview (there is also one by Nicky Hager), which explores the latest revelations that the GCSB does a heck of a lot of spying on New Zealand’s friends and partners as well as on so-called rogue states, and it does much of this on behalf of the the US and other Five Eyes partners rather than as a matter of national security. The ramifications of the revelations about NZ’s role in 5 Eyes are one subject of the discussion, but there are other items of interest as well.

The discussion, hosted by Selwyn Manning, can be found here.

There has been a fair bit of public debate about the decision to send NZ troops to Iraq. I have had my say on this so will not go over the pros and cons. What has struck me is the clear divide between those who see NZ as a global actor that needs to “play the game” in accordance with its international commitments and obligations, and those that maintain that NZ needs to steer clear of foreign entanglements at any cost.

Let me start with the latter. The isolationist wing of NZ public opinion has a fair dose of pacifism layered in it, often tinged with strong anti-Americanism (especially amongst the activist Left). But isolationism in NZ is rooted in more than pacifism or anti-imperialism, and appears to be born of the idea that being small and far away from the world’s major conflict zones, NZ simply has no dog in those fights and invites unwanted attention should it join them. It should therefore steer clear of messy involvement in places like Iraq and pay more attention, if at all, to its nearest neighbours.

There appears to be a fair bit of isolationist sentiment on the political Right as well as the Left, particularly amongst those of a Libertarian persuasion that value non-interference in the sovereign affairs of others as strongly as the pacifist Left does.

However, for a country that is utterly dependent on trade and long-cultivated international diplomatic, cultural and political ties for its material and social well-being, this would seem to be a bit of a contradiction. It is hard to determine if it is born of popular ignorance of the linkages between trade, diplomacy and security (“issue linkage” in the academic parlance), or because there is simply a “cannot be bothered” attitude amongst the general public (especially the young, as my university teaching friends point out to me).

What does seem clear is that, as in many other countries, the lower one descends the socio-economic totem pole in NZ, the more likely is the prevalence of isolationist views. My reckon is that this is due to the fact that lower class (defined as subsistence wage labourers) or disadvantaged sectors of society are too busy with the rigours and trials of everyday existence to find time to ponder the intricacies of foreign policy, especially when these do not have a discernible and immediate impact at home (in another manifestation of what I have called “survivalist alienation” in other writings).

On the other hand there are two types of internationalists in NZ: so-called multilateralists who believe that all international problems require collective solutions preferably brokered by international organisations such as the UN; and traditionalists who maintain that NZ is bound to join and support its traditional (Western) allies when push comes to shove in the international arena. This latter stance has been complicated by NZ’s increasing trade dependence on Asia, and the PRC in particular, but as of yet the “traditional” focus on Western alliances and forms of international exchange appear to continue to dominate the public imagination.

I am not sure that the thought processes that distinguish multilateralists from traditionalists have filtered down into the public consciousness to the point that such distinctions are made on a general level. Instead, it seems that these viewpoints exist only in the minds of the informed public and political society (to include public bureaucracies and private firms) rather than the “average” Kiwi, especially in non-Pakeha populations. I say the latter because if one looks at the composition of the foreign policy-making elite, it has an extremely strong Pakeha demographic that reflects the economic, political and social values of the upper classes from which it is recruited.

I do not wish to be controversial about this last reflection and am happy to stand corrected if in fact NZ’s internationalist foreign policy perspectives are significantly (as opposed to symbolically) informed by maori, Pacifika and other non-Pakeha voices. It is clear that Asian perspectives have begun to temper the traditionally Anglo-centric views of the foreign policy elite, but I am not sure if that translates into the full embrace of multilateralism over traditionalism , or whether it trickles down to the level of the Kiwi Asian “street.”

Whatever the distribution of isolationists and internationalists in NZ society, the absence of public debate on most issues of foreign policy and the disingenuous approach taken by successive governments to the subject of foreign policy in general and to sensitive subjects like military adventures in particular have not helped clarify where the NZ public stands on matters that are, again, fundamental to the country’s well being over the long-term. For that to happen there has to be a critical media and a curious public that demands of politicians that they address honestly and openly where they stand on NZ’s international position and role. Only then can the weight of public opinion genuinely influence what is to date an elite conversation conducted with minimum popular consultation.

That is not likely to happen anytime soon.

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