BLOGGING FOREIGN POLICY
The post-war multilateral economic system has been one of the most successful policy projects in modern history. July 22, 2014 marks seventy years since the end of the Bretton Woods conference where John Maynard Keynes and the representatives of 44 Allied nations gave birth to the key institutions that rebuilt the global economy after World War II: the International Monetary Fund (IMF), the World Bank and, much later, the World Trade Organization (WTO).
The 2008 financial crisis provided the greatest test these bodies have faced since their inception. Despite the Bretton-Woods institutions’ best efforts, the destruction of wealth, production and jobs following Lehman Brothers’ 2008 collapse was massive. Yet, in contrast with the 1930s, the system managed to prevent a complete meltdown and its actions paved the way for our nascent recovery. More …
Our multilateral institutions have managed to adapt to the regular upheavals that have rocked the global economy roughly once a decade since World War II. But as global economic power continues to shift to emerging markets, we need to help the multilateral system reinvent itself once more.
For those who doubt it’s worth the effort, recall that the IMF and World Bank are two of the few remaining international institutions where Canada has a seat at a major decision-making table. We lost our last campaign in 2010 for a seat on the United Nations’ Security Council and we took a pass on mounting a new effort. As a result, our chairs on the Fund and Bank executive boards are all the more valuable.
With an economy based upon trade, Canada depends on other countries to consume our goods. Moreover, having spent ninety years as a net debtor to the rest of the world, we’re unusually reliant on other countries’ capital to finance our investment. Despite ranking as the world’s 11th biggest economy, our access to international trade and capital markets has always depended on international rules, expectations and decision-making processes to check the excesses of larger powers.
Until recently, the effectiveness of the Bretton-Woods institutions has depended on a few dominant global powers to push their processes to workable conclusions. But these traditional leaders—the United States, Europe and Japan—are less free to act in a multi-polar world and are handicapped by domestic weakness.
The United States, in particular, is hamstrung by a gerrymandered Congress so skewed toward extremism that it won’t ratify trade deals or reform the IMF’s voting system even though these initiatives are clearly in the United States’ interests. Europe, for its part, will likely remain focused on its own existential sturm und drang for years. And Japan is still waiting for the “Three Arrows” of Abenomics to knock it out of two decades of stagnation.
Emerging markets now account for half of both global output, but their governments have been hesitant to pick up the mantel of the older powers and push multilateral processes to cloture.
The G20 has helped engage new powers in cooperative decision-making, but its nonbinding processes aren’t enough to keep the international system working. Instead, international decision-making is fragmenting into mega-regional trade deals, such as the Trans-Pacific Partnership (TPP); regional monetary arrangements such as the central-bank liquidity swaps under the southeast Asia’s Chiang Mai Initiative; and alternatives to the World Bank, such as the BRICS countries’ New Development Bank.
We still need the more fully inclusive IMF, World Bank and WTO to guide the global recovery and there are specific actions relatively small countries like Canada can take to support them.
First, we need to integrate regional pacts into our multilateral institutions. Whether trade deals or currency swaps, regional arrangements can be stepping stones to more inclusive multilateral structures if Canada uses its influence to design them correctly. Multilateralism is not an all or nothing proposition.
Second, Canada can support efforts to slim down our multilateral negotiating processes. Early talks should be limited to systemically important countries. The IMF and World Bank already do this, with majoritarian decisions taken by representative Executive Boards of 24 and 25 members, respectively. Canada should lobby to move the WTO to similar processes and end the need for unanimous agreement amongst 188 members.
Third, Canada should advance reform through soft initiatives—the articulation of standards and voluntary efforts by the multilateral institutions to which countries can subscribe without the agreement of a super majority or global consensus. Rather than waiting for every country to come along, those willing to act can provide each other with mutual support.
Fourth, Canada should push to slim the work programs of our multilateral institutions. The WTO’s 12-year old negotiating agenda needs to be distilled to a manageable set of goals on which it can deliver success. Similarly, the World Bank needs to get out of lending to middle-income countries and focus on the poorest nations that don’t and shouldn’t have access to capital markets.
Finally, Canada should deepen its collaboration in these institutions with allies, such as Australia and New Zealand—similar resource economies with massive capital inflows into over-valued real-estate sectors—and it make it clear to larger powers that effective support of the multilateral system is the quid pro quo for access to those resources.
Brazil’s military police have long equated law enforcement with warfare. But there are signs that the status quo is changing, and worldwide.
On July 14 last year, military police arrested Amarildo de Souza, an unemployed bricklayer. He was picked-up from the front doorstep of his home in Rocinha, Rio de Janeiro’s sprawling favela, reputedly the largest slum in all of South America. He was taken to the headquarters of the neighbourhood’s pacification police unit, deployed there two years earlier. There he was tortured to death by the police and his body was never recovered.
The pacification police were originally intended to inject a community-oriented ethos to law enforcement. The idea was radical for a city used to being policed by thugs. The first goal of pacification is to recover slums controlled for decades by drug traffickers, and the second is to then win the hearts and minds of local residents. The tragic case of Amarildo, however, exposes the grave shortcomings of one of the world’s most fascinating police experiments.
Brazilians are tragically accustomed to brutality, especially at the hands of their own military police. Between 1985 and 2002 one in every 23 people arrested by Rio de Janeiro’s police force was killed before making it to trial. Compare that to the New York Police Department’s (NYPD) record – 1 in 37,000. Rio’s police kill some 80 civilians a month, making them among the most violent anywhere. The pacification police were supposed to change all this. More …
Until recently, the torture and killing of a dirt-poor Carioca at the hands of the police may well have gone unnoticed by everyone but his killers and the victim’s family. After all, 35,000 Brazilians have disappeared without a trace since 2007. But the case of Amarildo shows how the public mood is changing in Rio, and across the country. And technology is playing a part in amplifying local grievances.
The suspicious circumstances surrounding Amarildo’s death – he was spotted by a CCTV camera – sparked massive demonstrations online and off. Grainy footage of Amarildo being escorted into the police station went viral and was viewed by millions. Curiously, the same camera that caught Amarildo entering the station failed to record him leaving. Everyone started asking “quem matou Amarildo”, or who killed Amarildo?
Within two months, ten police officers were detained on charges of torture and concealing a corpse. Local newspapers reported that corrupt pacification police officers killed Amarildo, an epileptic, during interrogations that featured electric shocks from a Taser and the wrapping of a plastic bag around his head. Another 22 residents from Rocinha have since reported being tortured by the police. The case is continuing today.
In a series of remarkable pilots from New York to Kingston and Cape Town to Toronto, police are starting to come under intensive scrutiny. Specially developed technologies are being deployed to protect ordinary people from arbitrary arrest and extra-judicial violence. The results are already showing results. But perhaps the most interesting one of all is that these tools are welcomed not only by citizens but by police officers themselves who are equally enthusiastic about the idea.
The case of Amarildo triggered a round of soul searching across Brazil about the direction of public security in Rio de Janeiro. Social media campaigns denouncing the military police and calling for wholesale reform raged throughout 2013 and 2014. Brazil’s Minister for human rights, Maria del Rosario, weighed in, declaring that the “investigation [of Amarildo] reveals the necessity of changes so that the police are more focused, more accountable to citizens and not oriented towards criminal disregard for human rights”.
Notwithstanding public hand wringing, incidents such as those occurring in Rocinha are distressingly routine. Part of the problem is that Brazil is an extremely violent place: about 56,000 people were murdered in 2012 alone, many of them residents of favelas of mega cities like Rio de Janeiro and Sao Paulo. To put this grisly toll in perspective, more people are massacred in Brazil each year than in every war zone combined. The country’s military police have long equated law enforcement with warfare. But there are signs that the status quo is changing.
Thanks to the technology revolution, policing in Brazil and around the world is changing. Law enforcement agencies are starting to harness big data detection systems to crowd-sourcing and mobile scanners to improve their ability to anticipate, track and prevent crime. Some police forces have started deploying body-worn cameras. Of course technology alone cannot keep crime at bay. But this is not stopping governments from doubling down on digital solutions. Earlier this year the Sao Paulo government announced an investment of $4.3 million in the Detecta system which will arm 100,000 officers with tablets, laptops and smart phones to a live network of smart cameras.
In the United States, these systems are now commonplace. Many of them draw inspiration from a computerized platform originally built by Microsoft for the New York Police Department (NYPD) to counter terrorism after 9/11. Domain Awareness System (DAS) mobilizes public and private closed circuit cameras to predict crime patterns and sound alerts. Today there are more than 90 fusion centers scattered around the country.
The most celebrated instance of police-worn body cameras is from the Californian city of Rialto. There, randomized field experiments using just 54 mobile cameras in 2012 reported an 88 percent reduction in complaints filed against officers and a 60 percent fall in incidents of police use of force. Police wore specially designed HD audiovisual recording devices that captured all police encounters with the public. Rather than introducing a chilling effect, the use of body cameras – or cop cams – actually increased positive officer-citizen contact.
Behavioral psychologists attribute these positive results to an increased sense of self-awareness and what is called “socially desirable responding.” People often act in ways that may be viewed as favourable by others when they themselves know they are being watched. The Rialto experiment has rocked the policing world. It was mentioned favourably by a New York judgewho ruled in 2013 that the NYPD stop-and-frisk program was unconstitutional. She also ordered New York’s finest to begin testing wearable cameras.
Meanwhile, hundreds of other American policy departments are getting into the act. In Tuscon, Arizona, the police ran a 50-camera trial. Most of the officers originally opposed to cop cams quickly became ardent supporters. They are credited not just with catching officers doing something wrong, but also changing behaviour before abuses occur. Likewise, in Greensboro, North Carolina police scaled-up a pilot of body cameras to all serving officers. The scheme was launched with $130,000 worth of community donations, indicating impressive local buy-in from the get-go. Also, in Oakland, California, the police started using cameras in 2009 and now all of its officers are wearing them. And all this innovation is not reserved to the United States alone.
For the past decade British police departments have also been testing body cameras. Following large-scale trials overseen by the country’s premier policing college, Met Commissioner Bernard Hogan-Howe noted how “people are more likely to plead guilty” when they know the incident in question was captured on video. In his view, these technologies speed up the justice process, put genuine offenders behind bars, and protect officers and would-be victims. There is also evidence of the so-called placebo effect whereby the mere presence of a camera defuses potentially violent situations.
And following recommendations issued in a 2013 Police and Community Engagement Review report, police forces in Canada are also beginning to roll-out cop cams. The Toronto police are starting to test so-called “lapel cameras” to supplement CCTV already installed in booking halls, interview rooms and squad cars across the city. The decision came in the wake of controversies over so-called “carding” as well as a coroner’s investigation into the death of three mentally ill people shot dead by the police. The jury recommended that the city’s police consider adopting body cameras as a preventive measure.
While comparatively inexpensive, there are still barriers to entry. Taser International, one of the companies’ marketing body cameras for law enforcement in Rialto, charges roughly $900 for each device and its accessories. Vievu Cameras charges a similar amount to capture data from daylong shifts. Server costs can be reduced by piggybacking off existing systems, but still run in the tens of thousands a year. Police forces do not appear deterred. Working with Taser, the London Metropolitan Police Service is running one of the largest field trails ever, and law enforcement agencies everywhere are taking note.
Start-ups in Latin America and Africa are also getting into the act. The Igarapé Institute, a non-profit group based in Brazil, is developing an Android app that runs on open-source software. It is testing the app with Brazilian, Kenyan and South African police. And the biggest cost driver may not be the cameras or mobile phones, but rather data storage, training of officers, and the time required to manually review videos in response to public-records requests.
Not surprisingly, there is heavy criticism of the use of mobile cameras by police forces. Critics believe they presage a dystopian future where “everyone is under suspicion” and Big Brother is watching. They have a point. If unchecked, there is a risk that crime prevention turns into pervasive surveillance. Body cameras running 24/7 are potentially invasive since police officers often enter people’s homes and interact with bystanders, suspects and victims. Many privacy activists take a dim view of the proliferation of cop cams.
Yet there are also rights campaigners who see a possible win-win outcome of arming police with mobile cameras. The American Civil Liberties Union of Southern California – a regular critic of police abuse – has come out in favour of the technology. Along with the American Civil Liberties Union, or ACLU, they have argued that with the proper controls – including regularly deleting videos and keeping them private except for prosecutions – the gains in accountability outweigh privacy concerns. According to the ACLU “police on-body cameras are different (from surveillance) because of their potential to serve as a check against the abuse of power by police officers”. It is no longer a question of whether the tool is warranted, but rather how the solution is implemented.
The controversy can be boiled down to a single question – how to balance the right to individual privacy against the responsibility of police to ensure public safety? In the case of cop cams, a series of checks and balances have been proposed to maximize privacy. The American Civil Liberties Union has advocated for the inclusion of citizen notification schemes and limiting filming in people’s homes. They advise against retaining data for longer than necessary and call for guidelines around the use of recordings, and some degree of public disclosure.
The opportunities afforded by new technologies are gaining traction among police forces in Brazil, Canada, the United States, the United Kingdom, and around the world. Everyone agrees that crime prevention is no longer restricted to boys and girls in blue walking the beat, but also requires mastering new technologies. And while there is much to be gained by tapping into the digital revolution, there is also peril. The outfitting of police with body cameras is to some extent inevitable, but still raises tricky ethical and legal questions for law enforcement and citizens.
So far, the introduction of body cameras is being pursued cautiously. The long-term success of this and other technological tools to prevent crime depends in large part on public confidence in the integrity of the technology and the way it is applied. If crime victims do not call for help owing to a fear that their interactions will become public, then the experiment will fail. But if implemented effectively, then future Amarildos could be prevented. Whatever the future holds, this revolution is being televised.
A version of this piece appeared on OpenDemocracy on July 17, 2014. More information on body cameras can also be found a recent BBC World Service documentary released this month and an op-ed featured in the Los Angeles Times on July 10, 2014.
With International Nelson Mandela Day upon us, it seems an appropriate moment to consider this iconic figure’s legacy in South Africa and around the world. Typically, International Nelson Mandela Day is celebrated by people committing to perform 67 minutes of service to others on July 18, which also turns out to be his birthday. This number commemorates the years that Madiba spent in public service during his anti-apartheid struggle activities and as a statesman in the free and democratic South Africa.
Activities to commemorate Mandela Day can be almost anything that focuses on service to others such as, community clean-ups, running errands for those with mobility challenges, assisting at a local food bank or shelter or volunteering one’s time at a local school. The aim, as Madiba wished, was to get people focused on making a difference in one’s community as he believed service and encouraging service for others is the best way to overcome divisions and create strong bonds between people regardless of background or economic means. More …
Whilst the day is an international day recognized by the United Nations, it holds particular importance and significance in South Africa where years of division between racial groups led to the highest level of inequality between rich and poor in the world. The divisions created by apartheid are no longer official policy, but the legacy of them still pervades much of South African society. The stark contrast between rich and poor is evident throughout the country and still largely demarcated along racial lines.
Don’t get me wrong, progress has been made in attempts to resolve this problem but South Africa is a still a long way off from achieving the type of societal and economic transformation required to fix the imbalances. For example, even after 20 years of democracy and economic growth, South Africa has yet to establish a national minimum wage, let alone determine what constitutes a livable wage. Despite evidence of the importance of primary and secondary education to giving individuals the skills to participate in an economy, many schools in rural or traditionally black urban areas continue to be under resourced in every aspect.
It is in this light that Mandela Day and its message of service to others are important and should be considered an important legacy of Nelson Mandela. Of course, there are other aspects of Mandela’s activities that might seem more apparent as a legacy—including his role in opposing the apartheid regime. But let us not forget that Mandela did not single handedly bring about the democratic transition in South Africa. He was in prison for much of the struggle and thus one part of larger effort undertaken by many individuals to overthrow this racist and evil system. Further, whilst he is affectionately referred to as the “Father of the Nation,” Mandela was president for only five years from 1994 to 1999. It could be argued that he set the tone for democracy in the country, but again, he was but one part of a larger effort in that respect.
It is with this in mind that when thinking through his legacy mere months after his passing, focusing on his interest and commitment to public service and community-building becomes relevant. For Nelson Mandela, the notion of service was at once a value and a principle. As a value, it was apart of his being, his calling and came to define his purpose in life. As a principle, it defined how he wished the South African government and citizenry to conduct itself.
Mandela lived and breathed service despite immense personal and political costs. We all know that he dedicated most of his life to the struggle against apartheid of which he was jailed for 27 years and which caused estrangement from his family. Upon his release, he continued his service by becoming the President of the African National Congress (ANC), leading negotiations for the peaceful transition into democracy and then served as South Africa’s first democratic President.
But what is most remarkable about his leadership is how he viewed service as integral to reconciliation in South Africa. He believed, and rightly so, that if the population of the country focused upon serving each other, as opposed to themselves or their particular ethnic or racial group, that the divisions within South Africa could be overcome, mutual understanding imparted and sustainable peace and prosperity achieved.
These are lofty goals and his vision for reconciliation through service still has a way to go in South Africa. A report released in 2013 by the Institute for Justice and Reconciliation notes that while all South Africans agree about forgiving past injustices, there is still a significant disconnect between white and black South Africans regarding how reconciliation should take place. The report also finds the 20 to 30 percent of white South African’s surveyed are less likely to believe that victims of apartheid should be supported through affirmative action or economic redress policies. Given that the divide between rich and poor is heavily demarcated along racial lines in South Africa, the project of reconciliation through mutual understanding is still very much a work in progress.
Mandela’s legacy and commitment to service continues to push people to live for a higher purpose than individual gain or prosperity. In both South Africa and around the world, we would do well to ponder his example on this day.
On July 16, a Dutch court ruled that Dutch peacekeepers were partially responsible for the deaths of more than 300 Bosnian Muslims when Bosnian Serbs attacked the Srebrenica “safe haven” in 1995. This is not anything particularly new as the Netherlands has taken its responsibility in this matter far more seriously than pretty much everyone else.
In 2002, the Dutch government fell after its entire cabinet resigned due to a report on events in Srebrenica seven years earlier. Can you imagine an American or Canadian or British government reacting to events seven years earlier after a critical report is released? No. I didn’t think so. Indeed, has anyone in Belgium resigned in the aftermath of Rwanda? More …
The Netherlands developed a series of reforms to try to prevent a similar disaster in the future. Among these reforms is the Article 100 process in which the parties in parliament must approve of a letter that explains the purposes and means of a military deployment before the troops are sent. In terms of military planning, this is a remarkably transparent process. With that said, it might mean too much legislative influence on what actually goes into a military deployment, but the letter requires a clear statement of purpose, clarity about the rules of engagement and so on.
This latest ruling is consistent with a previous one—that the Netherlands is responsible for those Bosnian Muslims who had been in the UN compound (that the Dutch had been staffing) and who were then expelled. The courts have ruled that the Dutch are not responsible for those that never made it into the compound.
As I have noted previously about a similar case, there is plenty of blame to go around. Obviously, the actual killers are primarily responsible, with the International Criminal Tribunal on Yugoslavia taking those cases, including of Ratko Mladic, the commander of the genocidaires. Canada itself neatly dodged responsibility as the Canadians had peacekeepers in Srebrenica before the Dutch but re-deployed because they saw what was going to happen and didn’t want to be present.
The United Nations perhaps cannot get sued, but, in my mind, it has more responsibility than anyone besides the Bosnian Serbs in this case. The Dutch peacekeepers were willing to fight, but needed air support as they were outmanned. At the time, the NATO planes that could be sent were subject to a dual-key system. Any decision to drop bombs required approval from both the local NATO representative and the UN Secretary General’s Special Representative, and the UN representative said no.
The lesson to be learned? Well, the Dutch learned to always bring their own airpower when they deploy, so that they can get the support they need even if an international organization says no. That’s right—the Netherlands would de-flag their planes and fight under the command of the Dutch if their multilateral bosses were to get in the way in an emergency. Which is why we saw something very strange from 2011-2014—the Dutch police training missions abroad included F-16′s.
The articles reporting these developments argue about the prospect of these types of lawsuits causing countries to decline participation in present and future peacekeeping efforts. This may be true, but we should also remember that there are already enough deterrents to participation in such efforts, including the lesson learned from Somalia and Rwanda—that the “bad guys” may try to kill peacekeepers at the outset so that they go home.
What the recent Dutch case really reminds us is that the notion of responsibility to protect carries a very heavy burden, which is perhaps why the reality is that most countries tend not to actually bear the responsibility at all.
What a difference a year makes. In early 2013, Brazil’s President Dilma Rousseff was enjoying what appeared to be an unassailable lead in the opinion polls.
Touted as one of the most powerful women in the world, she was expected to easily win a second term in the 2014 elections.
Yet during the opening game of the World Cup this past month, the global television audience of roughly one billion people witnessed her being publicly booed by Brazilian fans.
More shockingly, mid-way through Brazil´s humiliating 7-1 loss to Germany in the semi-finals last week, the crowd broke into a rousing, crude F-word chorus of what it thought of her.
Suddenly, Brazil’s once formidable leader now looks vulnerable. Pollsters have started nervously re-running their numbers. More …
It wasn’t supposed to be this way, of course. Hosting the World Cup seemed like a good idea when Brazil’s former president, the ultra-popular Luiz Inacio Lula de Silva, won the bid in 2007.
Times were good then for this football-mad nation of roughly 200 million people, and the cup offered a chance to showcase a modernizing Brazil on the world stage.
A prominent member of the newly established BRIC club of emerging economies, along with Russia, India and China, Brazil was one of the world’s top performers.
Tens of millions of people were being pulled out of poverty and joining a burgeoning middle class, and the rich were also doing well: Brazil was ranked with having the fifth largest numbers of billionaires in the world.
The administration’s stock was high and Lula’s leftist Workers’ Party, which Rousseff inherited, looked to have a lock on power, which hosting the World Cup — and especially winning it — would only advance.
After all, as the country’s former president, Fernando Henrique Cardoso, had famously argued, Brazil’s 1994 World Cup victory propelled the popular economic liberalization program that he oversaw.
Still, there is little evidence of a tight correlation between World Cup outcomes and electoral success. In 2002, Cardoso’s handpicked successor was beaten by Lula in spite of Brazil winning the soccer championship that year.
This time out, the enthusiasm around hosting the World Cup began fading around the time the economy started to tank. After year-over-year growth rates of between five and seven per cent for much of the past decade, the economy slowed to 2.5 per cent in 2013 and currently hovers around one.
Faced with rising inflation, over a million Brazilians took to the streets in June and July 2013 to protest the poor state of public services and the spiralling cost of living (initially sparked by the equivalent of a 10 cent rise in bus fares).
They also lashed out at flagrant corruption, out-of-control crime and, ominously, the billions being spent on upgrading 12 football stadiums.
Today, Brazilians disagree about whether the World Cup result will fundamentally affect the outcome of the presidential elections in October. Even Rousseff’s most ardent critics concede that the event went smoothly and without any serious setbacks for tourists.
But there are genuine concerns about whether the huge expenditure — estimated at more than $11 billion — was worth it.
According to sociologist Claudio Beato, the government “built overpriced stadiums, roads and viaducts, which will eventually turn to scrap … [yet] we still have major gaps in infrastructure.”
He goes on that “in spite of seven years to prepare for improving public security for the games, virtually nothing was accomplished. Instead, Dilma presided over record homicide rates and unsustainable turbo-policing.”
The big monthly
Putting the games aside, the fact is that Rousseff’s ratings were falling well before Brazil scored an own-goal during the opening match of the World Cup.
While not as erratic as mid-2013 when support fell by 27 percentage points, she is currently polling at around 38 per cent in a country where voting is obligatory.
Meanwhile, her closest competitor, Aecio Neves from the right-leaning PSDB Party, has improved his appeal from 10 per cent last year to around 20 per cent today, and has been making gains in crucial states.
Barring another catastrophe, President Dilma, as she is widely known here, is expected to win re-election in October. But the inevitability of the contest is now an open question.
There is little doubt that the dramatic way Brazil crashed out of the World Cup is shaking things up. After soaring talk in the early going of this being “the Cup of Cups,” for most Brazilians the fantasy has ended.
And as the excitement fades, Brazilians are reminded once more of the country’s sky-high cost of living, its stumbling economy and the litany of scandals.
One of them is the so-called Mensalão (or big monthly), which involves illegal payments by the ruling Workers’ Party to coalition members in order to keep them in line.
The big monthly was only recently eclipsed by the announcement of criminal investigations into the state oil company, Petrobas, accused of concealing millions in illicit pay-offs and of a botched acquisition of an oil refinery in the U.S.
The company’s market value has shrunk from $300 billion in 2008 to less than $76 billion today, and its stagnation and indebtedness has come to symbolize the wider malaise of the Brazilian economy.
The World Cup will undoubtedly be a factor in the upcoming presidential elections, but probably not the decisive one.
Although some analysts have been predicting a resumption of mass protests in the wake of the early exit for Brazil, these have yet to materialize.
Still, Brazil’s economic problems are real and unsettling international investors, and consumer and business confidence has plummeted to record lows in the past few months.
Meanwhile, in spite of a dip in her ratings, the president still counts on the support of 50 million Brazilians who benefit from the Bolsa Familia, the administration´s flagship poverty reduction program.
The opposition candidates are finding it difficult to generate political advantage by capitalizing on the current national mood, but are sure to ratchet-up their efforts as the big match of a presidential election heats up.
This post was originally published by the CBC.
It has been a while since I focused on the events in Ukraine, so let’s check in and see where things stand now. The Crimea sham referendum seems to have done the trick—no one is really talking about rolling back Russia’s annexation despite the fact that it challenges international norms (Helsinki Accords, etc.) far more than the support of separatists in Eastern Ukraine. Despite more over-flights over the Baltics and other minor military maneuvers, Russia’s irredentism has remained quite inconsistent—only focused on Crimea and some regions of eastern Ukraine and not aimed beyond. More …
Still, the good news of the limits of Russia infiltration reminds us that Russia has been quite aggressive. The latest news has Ukraine finally winning some battles against separatist groups, retaking territory and Russia providing far less assistance to the separatists it had inspired, supported, organized, armed and staffed. Indeed, defeated separatists have been denied entry into Russia and have even been shot at. It is almost as if they are being treated like potential immigrants. 
It seems that Russia is as fearful about these separatists entering Russia as the West is when thinking about those who went to Syria to fight and might return. This seems a strange comparison since the Russians fostered the separatists whereas Canada, the United States, France, Britain and the others were none too thrilled to see their citizens of Mideast descent going to the battlefields.
Why has Russia and Putin lost their loving feeling for enclaves of ethnic Russians within Ukrainian territory? It might be that despite complaints about the weak Western response that the costs have begun to accumulate. More likely, the original effort beyond Crimea was meant to prevent or disrupt the Ukrainian election. With the election proceeding and with much support for the government from Eastern Ukraine, the short-term desire to mess with Ukraine has now lapsed. That is, Putin may not be such a sincere nationalist after all. That he is more like Serbia’s Slobodan Milosevic, just with more heft.
This is actually good news—cynical nationalists are easier to deal with than true believers. Cynical nationalists will sell out their cause if the costs get too high or if they find a better way to get what they want—which is to stay in power.
Still, this leaves us with some big questions for the United States, Canada, and NATO. The biggest is how best to deter future Russian aggression and reassure the allies of Eastern Europe. The obvious answer is more permanent basing of NATO troops in the countries closest to the bear—the Baltic Republics and Poland. While some talk about a real capability to respond to Russian aggression, it feels more like Cold War déjà vu as U.S./NATO forces would serve as a tripwire. This would guarantee their involvement in any clash involving Russia with its NATO neighbours. When the military head of NATO, General Phillip Breedlove, was in Ottawa this spring he was asked about this and it was very clear from his comments then and since that he was seriously considering exactly this issue.
The problem is that permanent basing is costly. The costs would be borne mostly by the United States and Germany since the countries in the region want these two countries, more than the other NATO members, to make binding commitments. They want the United States because it is the most powerful and would serve as the greatest deterrent to Russian aggression—that any move that might lead to World War III would be less. These countries also want Germany to deploy troops because Germany has been far less credible as a NATO partner lately—not showing up in Libya, not opposing France selling Mistral ships to Russia, and by not taking a more strident stance against Russia.
Yet neither the United States nor the Germans want to spend any more money on defending Eastern Europe. My guess is that the United States will find some kind of semi-permanent basing strategy acceptable. Pre-deploying equipment and regular exercises is quite familiar, given both past practice in Europe and post-1991 basing in the Middle East. Germany? I would not bet either way on it. The current practice of the Baltic air patrol to signal commitment is clearly not enough to reassure their allies nor present any lasting capability to deal with a Russian move.
The only clear prediction one can make is that the upcoming NATO summit in Wales in September will be far more interesting than the average rubber-stamping of agreed upon documents. Whether anything definitive comes out of the meeting is uncertain because of that old NATO requirement—consensus. It may be very difficult to reach an agreement to change course in Eastern Europe. I do expect that countries, mainly the United States, will develop bilateral deals that have the impact of increasing NATO’s commitment—such as more frequent exercises and the aforementioned pre-deployment of equipment.
There is one other certainty: enlargement of NATO, except for Finland and Sweden if their publics are willing, is off the table. So, Putin may have some success to embrace even though Ukrainian membership was already unlikely. But if taking credit for this keeps Russian troops at home and no more appearances by little green men beyond Russian borders, that would be okay.
 One of the core arguments that Bill Ayres and I made about irredentism is that a successful effort can have the impact of a big wave of immigration, which serves to inhibit irredentism.
There are two holidays when an ex-pat American feels most out of place: Thanksgiving (the November one) and the Fourth of July. I have yet to experience the former, as I travel south every American Thanksgiving to be with my family, but this is the thirteenth consecutive Independence Day I have spent in Canada. It has been a long time since I have seen parades and fireworks on July 4. Each year, I do reflect a bit on the State of the Union—not the speech given by the President but where the United States stands.
To be honest, I spent my first few Independence Days in Canada in a state of frustration and embarrassment as the United States was preparing to engage in an ill-considered war that did much damage all around—to the America’s reputation in the world, to the U.S. economy, to the people of Iraq and to the soldiers and marines involved in the fighting. More …
Some might suggest that this is a similarly embarrassing time as the United States has been unable to return Crimea to Ukraine, produce a favourable outcome in Syria, or prevent the rise of the Islamic State (whatever it is called by the time this is published) in Iraq. Frustrating? Certainly, but the Obama administration has yet to find a magic wand that would allow it to impose its preferred reality on the existing situations in Ukraine and the Mideast.
Perhaps the brilliant performance by goalkeeper Tim Howard at the World Cup best illustrates the role of the United States in the world: defender of the status quo, doing its best to stop most shots with inevitably a few getting by. While Howard’s performance was most dramatic and made clear his brilliance while under fire from those pesky Belgians, we take for granted the stops the U.S. has actually made while castigating Washington for those they’ve missed.
That China has not engaged in a war with any of its neighbours is a non-event worth considering. We have seen China have minor military confrontations with Japan and the Philippines not escalate, despite the constant refrains this year of 1914 all over again. Indeed, the United States plays a vital role in Asia, pivot or not, as there is no NATO—no multilateral web of countries to serve as a deterrent and as a crisis manager. Japan and South Korea essentially hate each other, which means that someone else must be the glue that connects many of the countries in the region as they all individually encounter a rising and increasingly assertive China.
The United States also served a vital role during the 2008 financial crisis, which, alas had much to do with the American way of doing business. The system that the U.S. built essentially worked to contain the economic damage and prevent the Great Recession from becoming something far worse.
Regarding Russia, the United States is still leading in Europe, providing most of the military response and coordinating the sanctions effort against Russian officials. Perhaps Obama’s patented “give them enough rope to hang themselves” strategy is being applied here and working. The most vulnerable allies have been given reassurance, although we learned during the Cold War that those at risk tend not to feel at all confident.
Canada’s relations with the United States are also somewhat frosty these days, but that does not really embarrass this American in Canada. Unlike Harper, I understand that Obama has a base to worry about, so his hesitation does not worry me so much. It is kind of like Harper kicking the F-35 decision down the road potentially past the next election. Canada’s relations with the U.S. are not as bad as they seem and will get better once either the players change or the focus of the relationship moves on.
Of course, comparing the United States in the world to Tim Howard might be problematic since the United States is now out of the World Cup tournament after losing the big game. But the United States exceeded expectations in Brazil. In its international affairs, expectations about the United States always seem unrealistically high. Yes, Obama has made some poor decisions, and dithering is not always restraint. But the United States over its long run has managed to exceed expectations most of the time in spite of how high they are set. Perhaps with a little humility about what can be done in some difficult places and some appreciation of the less noisy successes, I can be proud American on this Independence Day.
The Globe and Mail reported that Prime Minister Stephen Harper has withdrawn the F-35 from the agenda of a recent meeting of the cabinet’s committee on planning and priorities. A skeptic might suggest this is part of a larger effort to delay the big decision until after the next election, and yes, I am that skeptic. I got some pushback from Philippe Lagassé, who served on the panel that evaluated the evaluation process, as he suggested this might mean that this merely gives the relevant cabinet officials more time to take seriously the work done thus far. So, this might just be my confirmation bias at work. More …
Why am I skeptical? The pattern of Harper decisions over the past several years has tended to suggest that more/better information is usually not a key ingredient in decision-making nor is consultation with the rest of Cabinet. When Harper decided in 2010 to send the 900-person CF mission to help train the Afghans from 2011 to 2014, this was news to NATO. The decision was also made almost entirely without advice from the Canadian military. More recently, when the panel of scientists came out with the map that should be the basis of Canadian claims to the Arctic, Harper asked them to revise their work as the claims were not expansive enough.
To be sure, politics should and always will drive decisions. We live in a democracy and not a technocracy to quote a Lagassé tweet. However, one of the mantras I took seriously from my year in the Pentagon in 2001-2002 was that intelligence should drive policy. That is, that the best understanding of the situation should set the parameters for the politicians who then shape policy. When that is reversed, as we saw in 2003 where the US administration had a policy in mind that then shaped the intelligence and how it was evaluated, bad things happen—such as invading a country because of non-existent weapons of mass destruction.
When we think of the F-35 or whatever plane Canada ultimately chooses, we need to think about how it fits in the broader policy challenges facing Canada. I have elaborated here before about the threats facing Canada and the need for a strategy. When I suggested that the Canada First Defence Strategy [CFDS] is obsolete, I am told that the six pillars, which have largely been consistent over time in Canadian defence thinking, are still relevant. These are:
- Conduct daily domestic and continental operations, including in the Arctic and through NORAD
- Support a major international event in Canada, such as the 2010 Olympics
- Respond to a major terrorist attack
- Support civilian authorities during a crisis in Canada such as a natural disaster
- Lead and/or conduct a major international operation for an extended period
- Deploy forces in response to crises elsewhere in the world for shorter periods
Maybe all these are still in play, but having six priorities without any serious ranking is almost as unhelpful as having no priorities. Priorities mean taking seriously the tradeoffs and evaluating which pillars are most important. Being deployable may mean choices that come at the expense of guarding the Arctic. The good news is that I have been told by officials off the record that the CFDS is being revised. The bad news is that the revisions have not been made public. Which means that we have less information than we should about how to evaluate the choices the government is making or would be making if it were actually making a decision.
This leads us back to the news of the week—that there is no decision forthcoming on what to do about the fighter project. Perhaps delaying the decision makes sense, as Canada will then be purchasing the planes not at the beginning of the F-35 production cycle but towards the middle or end. This might mean that the bugs have been found and that the planes Canada actually gets might be better. Or the government could just be waiting until after the next election.
The problem, as always with this government, is that we do not know. Ottawa always denies that there are problems, asserts that decisions have not been made when they have, and spins so much that nearly everything is pretty hard to observe. Of course, this has worked for Harper, as his government has been in power for nearly a decade. So, deferring, denying, and obscuring may just be good political strategy. That it leaves the CF and the Canadian public uncertain about Canada’s plans for the military down the road is an unfortunate side effect.
The International Monetary Fund (IMF) is considering a big shift in its lending rules. Eager to avoid a repeat of the massive loans it provided to the hopeless case that was Greece in 2010 (pdf)—and Argentina in 2003—the Fund has just released a staff paper that proposes two major changes in its policy framework.
First, the paper argues that the Fund should explicitly recognize that some sovereign crises fall in a messy middle—neither clear-cut insolvency, nor a temporary balance-of-payments problem. This gray zone calls for a new approach to crisis management. More …
When a sovereign is clearly insolvent, the IMF normally insists that the country default on its major creditors and restructure its debt to them. Without a debt restructuring in such cases, IMF financing would just throw good money after bad by bailing out private creditors and absolving them of poor lending decisions—while at the same time saddling a country’s taxpayers with more debt that can’t be written down.
This proscription on lending to insolvent countries gives IMF members an incentive to prevent crises, and gives creditors an incentive not to over-lend. By making it clear that the fire station has only limited water, countries and their creditors should be more inclined to build fireproof financial houses.
If, instead, a country merely (“merely”!) faces a temporary liquidity gap and the IMF can certify with a “high probability” that the country’s debt will remain sustainable, then the Fund can step in with loans to help see the country through.
The trouble is, the line between insolvency and illiquidity is much fuzzier for a country than a corporation.
A corporation is clearly insolvent when it is unable to pay its debts and its assets are less than its liabilities. For a country, present and future tax revenue represents its major asset. But the size of this asset hinges on how much the government is willing to tax its citizens and how willing the citizens are to tolerate austerity.
This tolerance varies widely: Latvians are legendary for weathering brutal cuts that slashed their annual per capita income by a fifth during the late 2000s. Most governments, fearing revolt, would have thrown in the towel and restructured their debt long before reaching such extremes.
Reprofiling instead of restructuring
Knowing that a debt restructuring increases by half (pdf) the chances that a finance minister could be sacked, most administrations opt to avoid a default any way they can. And sometimes they get away with it. Countries that pundits, Wall Street and even some IMF staff privately wrote off as insolvent—see Turkey and Brazil in 2002—have managed to whistle by the default graveyard with support from the Fund.
So rather than stretching credibility by certifying such cases as sustainable with “high probability,” the proposed new policy would allow the Fund to lend in situations where the outcomes look less certain. Creditors would be asked to defer or “reprofile” their debt-service payments for a number of years, in the expectation that the country’s adjustment program would enable it to return to growth and pick up these payments at a later date.
There are some good precedents for this approach. Faced with looming bulges in their debt-service obligations, Uruguay in 2003 and Dominican Republic in 2005 reprofiled their debt with IMF support. Both recovered quickly and the hit to their creditors was small.
These aren’t cases of “wait and see” but rather “work and see.” The IMF loans don’t eliminate the need for a country that reprofiles its debt to undertake massive reforms. Instead, they give the country the breathing room necessary for these reforms to work.
If they do work, it’s a win for everyone: the country avoids a default, a loss of market access, a potentially disruptive change in government and a massive hit to its standard of living. Creditors skirt a write-down of their claims. And the drag on IMF resources is reduced. Meanwhile, if these reforms don’t work, the country can proceed to a restructuring under fairly orderly circumstances.
A more honest approach to evaluating risk
Reprofiling is arguably a big improvement on the fudge the IMF executive board adopted in 2010 (pdf) to enable it to lend to Greece.
In May of that year, the IMF staff was unable to project with “high probability” that Greece’s adjustment program would make its massive debt burden sustainable. But Europe was unprepared for a restructuring of Greek debt and needed to buy time to get ready.
To permit a loan to Greece that was about five times larger than the country’s normal IMF credit limit, the Fund’s board gutted the “high probability” requirement for certain cases, such as crises inside currency unions, where a default risks triggering an international meltdown.
Like St Augustine’s plea “Lord, make me chaste—just not yet”, IMF board members effectively said “tie our hands, except when we most want them unbound.” Given the risks the world faced, they arguably had little choice: the constraints they had earlier put on themselves were simply too tight.
Many IMF member countries have argued, however, that this change was both ad hoc and unfair: ad hoc because a major policy change was made in the same meeting that approved a loan; unfair because small countries outside a rich economic club such as the euro zone will never qualify for this special treatment.
So the second major proposal in the recent IMF paper calls for the elimination of this exception. This would make the Fund’s credit decisions less arbitrary by moving the IMF’s lending rules back to a sweet spot where they constrain its behaviour, but not so much that the rules have to be cast aside the first time they’re tested.
Even if these two good proposals are adopted by the IMF board later this year, it’s not clear the reprofiling option they would enable will actually be used. There’s still a lot of stigma associated with going to the IMF for help. No country wants to be told its debt isn’t “sustainable with high probability.” So when countries do seek IMF assistance, they will likely still argue that their debt needs neither a relatively gentle reprofiling, nor a more profound restructuring.
The beauty of an IMF-supported debt reprofiling is that it takes the final assessment of sustainability away from the IMF staff and hangs it on the ability of a country’s reformers to convince financial markets that their public finances are sound.
This post was originally published on Quartz on June 23, 2014.
Members of the North Atlantic Treaty Organization are grappling with big decisions as they prepare for their major annual summit in Wales. What stance should they adopt towards Russia? Should they keep the alliance’s doors open to new members? And what role, if any, should NATO play beyond Europe?
In March, NATO Secretary General Anders Fogh Rasmussen invited ten independent experts to provide recommendations on strengthening the alliance. The group, which included a Canadian, an American and eight Europeans, submitted their report last week in Brussels in advance of the September summit.
While the Ukraine crisis is testing NATO’s unity and resolve, this crisis is one of several challenges facing the alliance, the experts group argued. These challenges arise from four major shifts taking place in world affairs. More …
The first shift is Russia’s emergence as an openly revisionist power whose actions threaten to replace a rules-based order in Europe with one governed by the application of military power and economic coercion. The Ukraine crisis is a manifestation of this change.
The second shift is the sudden unravelling of states and political order across parts of the Middle East and North Africa. These places may seem far away to North Americans, but for many of our European allies, they are practically next door. Radicalization of foreign and local fighters and the spread of weapons in these conflicts pose a long-term challenge to the security of all NATO countries.
The third shift is the rapid escalation of tensions between China and its neighbours. They are engaging in dangerously militarized competition for control over islands, important sea lanes, and strategic resources in the South and East China Seas. NATO has little direct role to play in this part of the world, but all of its members have, at least, an economic interest in maintaining open shipping and regional peace.
The fourth shift is the increasingly strained system of international rules and institutions, which seems less and less able to manage the security challenges arising from the first three shifts.
NATO countries and their publics should look beyond the Ukraine crisis to these broader shifts, all of which pose longer-term challenges to the security and well-being of the transatlantic community.
First and foremost, NATO must adopt a firm stance towards Russia by demonstrating its commitment to defend all its members. This should include regularly exercising NATO combat forces in the eastern areas of the alliance; preparing the NATO Response Force to be deployed at shorter notice; investing in scalable infrastructure and pre-positioning military equipment in Eastern Europe to accommodate larger NATO forces should they be required in an emergency; and holding snap exercises to practice the deployment of these forces at scale.
NATO countries must also develop the doctrines, instruments and techniques to defend against the “non-linear” type of aggression that Russia practiced in Ukraine, which combined the use of special forces disguised as local partisans, mobilization of local proxies, cyber-attacks, mass disinformation campaigns, intimidation through displays of strength, and economic coercion. In addition, reducing the total or near-total reliance of certain European countries on Russian energy imports is critical to the future security of the whole transatlantic community.
NATO’s door should remain open to European democracies that share the alliance’s commitment to democracy and the rule of law. However, before any new members are inducted, all existing NATO allies must be willing and able to defend that country against threats. There should be no ambiguity about this and, conversely, no implied security commitments to non-members.
Nor can there be a return to the NATO-Russia “partnership” of previous years as long as Russia uses military power to threaten and to seize the territory of neighbouring states. This does not mean refusing to communicate with Russia or its president, which would be short-sighted given our common interests on a range of international issues from nuclear proliferation to terrorism.
On matters relating to European security, however, Russia is behaving as an adversary, not a partner. Moscow’s self-declared right to defend Russian-speaking “compatriots” wherever they may live poses a risk to the transatlantic community that is unprecedented since 1989. In addition to shifting NATO’s military presence eastwards and increasing its state of readiness, the allies should maintain economic sanctions on Moscow and tighten these sanctions if Russia’s threatening behaviour continues. NATO members must not trade their core commitment to collective defence in return for national economic benefits.
While buttressing collective defence in Europe is crucial, the alliance should avoid the temptation to turn inwards. NATO cannot afford to ignore rising instability in North Africa and the Middle East. Nor should it overlook China’s more aggressive posture in Asia and the mounting tensions in that region, and other types of threats from cyber-attacks and piracy.
Here is the problem: all of these challenges are growing. Western governments need to recognize – and explain to their populations – that while we now live in an era of relative peace, recent developments are raising longer-term concerns about our security. A stable neighbourhood and a secure international environment cannot be taken for granted.
NATO countries – including those in Europe – must have the capacity to deploy and sustain effective military forces overseas in case of emergency. Reckless overseas interventions will not secure us, but neither will turning away from the world.
Last year, defence spending increased in all the world’s regions but three: North America, Western and Central Europe, and Oceania. While the United States remains the foremost military power today, if these investment patterns continue, Western militaries will eventually lose the technological advantage that they have long relied upon for their effectiveness.
Western diplomacy also appears to be flagging. Ultimately, our security is best ensured through effective international rules and institutions. When the existing structures of global governance are under strain, as they are today, countries such as Canada should be working overtime to renovate and strengthen these institutions.
The shift towards a multipolar world is not a forecast; it is happening now. Adapting the global system of rules and institutions to this new reality is a historic challenge for this generation, but responding to this challenge will require more energetic, ambitious and far-sighted Western diplomacy than we have seen in recent years.
NATO countries, including Canada, have benefited enormously from the relatively peaceful and open international order that has prevailed for nearly 70 years. If they commit to doing so, the Western allies and their global partners should be able to extend this period for decades longer. But it will not happen by itself, and cracks in the foundations of this order are already visible.
Political leaders on both sides of the Atlantic need to describe this situation to their publics. Without fear-mongering, they need to explain that the world is becoming more dangerous and that ignoring these risks is not a solution. If we do not reinvest in both our diplomatic and military capacities today, we will likely pay a much higher price later.
This piece originally appeared in the Globe and Mail on June 20, 2014.