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Monday 13th of January 2020 |
13-JAN-2020 :: 2020 Opens with a Bang. Africa |
Its been an extraordinary opening to the new decade worthy of the best cinematic sequences ever, something like the ‘Ride of the Valkyries’ helicopter scene in Francis Ford Coppola's 1978’s classic Apocalypse Now. Nassim Nicholas Taleb referenced another Francis Ford Coppola classic ''The Godfather''There was perhaps no Soleimani threat (at least nothing new). And there was no need for it. Trump borrowed an old Persian trick: put the head of a horse in the enemy's bed. @nntaleb tweeted. There is this formidable scene in the Godfather when a Hollywood executive wakes up with the bloody severed head of a horse in his bed, his cherished race horse.He had refused to hire a Sicilian American actor for reasons that appeared iniquitous, as while he knew the latter was the best for the role, he was resentful of the “olive oil voice” that charmed one of his past mistresses and fearful of its powers to seduce future ones. its been very cinematic and stream of consciousness in 2020. The Shooting down of #PS752 out of the night Sky a couple of nights before the luminous ''Wolf Moon'' coincided with this verbatim release about Boeing "This airplane is designed by clowns, who in turn are supervised by monkeys," said one Boeing company pilot Meanwhile, Trump tweets that he is going to bomb Iran's cultural sites one moment and the next tweets in Farsi ''To the brave, long-suffering people of Iran: I've stood with you since the beginning of my Presidency, and my Administration will continue to stand with you'' Federico Pieraccini writes in an article captioned ''The Deeper Story Behind The Assassination Of Soleimani'' Iraqi prime minister, Adil Abdul-Mahdi, has revealed details of his interactions with Trump. He tried to explain several times on live television how Washington had been browbeating him and other Iraqi members of parliament to toe the American line, even threatening to engage in false-flag sniper shootings of both protesters and security personnel in order to inflame the situation, recalling similar modi operandi seen in Cairo in 2009, Libya in 2011, and Maidan in 2014.This is why I visited China and signed an important agreement with them to undertake the construction instead. Upon my return, Trump called me to ask me to reject this agreement. When I refused, he threatened to unleash huge demonstrations against me that would end my premiership. Huge demonstrations against me duly materialized and Trump called again to threaten that if I did not comply with his demands, then he would have Marine snipers on tall buildings target protesters and security personnel alike in order to pressure me. The Wall Street Journal reported The Trump administration warned Iraq that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials. The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said. Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical lubricant for the economy. The warning regarding the Iraqi central bank account was conveyed to Iraq’s prime minister in a call on Wednesday, according to an official in his office, that also touched on the overall military, political and financial partnership between the two countries.“The U.S. Fed basically has a stranglehold on the entire [Iraqi] economy,” said Shwan Taha, chairman of Iraqi investment bank Rabee Securities. The World is literally on fire 2019 was Europe’s warmest year, marginally higher than temperatures in 2014, 2015 and 2018 Global average temperatures in 2019 were 0.6 degrees Celsius warmer than the 1981 to 2010 average. A Billion animals are dead in Australia. Joshua Keating tweeted Sussex plunged into anarchy as ruling family's departure leaves power vacuum. its all very Vladimir Ilyich Lenin. “There are decades where nothing happens; and there are weeks where decades happen.” in India 250m Workers went on strike and India cut its growth forecast to the slowest pace in 11 years. The World Bank in its latest economic release spoke of The Fourth Wave: Recent Debt Buildup in Emerging and Developing Economies: There have been four waves of debt accumulation in the last 50 years. The latest wave, which started in 2010, has seen the largest, fastest, and most broad-based increase in debt among the four. Total EMDE debt reached almost 170 percent of GDP in 2018 ($55 trillion), an increase of 54 percentage points of GDP since 2010. The World Bank tried to keep it bright eyed and busy tailed about Africa Sub-Saharan Africa: Regional growth is expected to pick up to 2.9% in 2020 but in the same sentence admitted ''The feeble economic recovery in Sub-Saharan Africa has lost momentum, with growth in 2019 estimated to have edged down to 2.4 percent, from 2.6 percent in 2018'' Africa Confidential headlined their Leader ''African spring, economic winter'' The tension between the aspirations of Africa's overwhelmingly young 1.2 billion people and the continent's sluggish economic progress is palpable throughout the continent's 30 million square kilometres. In several countries, especially in the bigger economies such as Algeria, Nigeria and South Africa where hopes are highest, the political temperature is close to boiling point. It will take quantities of political will not seen so far to respond to such pressures with a credible plan. I put it a different way in my article of 09-DEC-2019 :: Time to Big Up the Dosage of Quaaludes The Markets spiked Gold to $1,600.00 an ounce before closing out the week at $1,561.00 and given the uncertainty I have outlined, Gold looks well underpinned and might even have a Banner Year. Brent Crude spiked above $72 a barrel in the middle of the night but then retreated to close out last week at just above $65.00. There is enough Oil around but there won't be if the strait of Hormuz gets shuttered. US Stocks continue to float higher on a tidal wave of nearly free money [just under 1/2 a trillion dollars since September] Nigeria's stocks are the World's best performers this year. The Nigeria is +9.51% in 2020 but in noted Mr. Dangote is using this bounce to hightail it to New York. Lets finish up in Kenya where we are currently under a Plague of Locusts and Al Shabaab attack. Margot Kiser wrote in the Daily Beast The Manda Bay attack is the first al-Shabab has carried out on a U.S.military installation inside Kenya Among the aircraft destroyed at the Manda Bay base were manned surveillance planes that collect data across the border in Somalia, as well as over Kenya’s dense Boni forest, Also reportedly destroyed were aircraft operated by U.S. Special Operations Command and modified Havilland Canada Dash-8 spy aircraft, which carries the U.S. civil registration code N8200L. This is a mind bending Jedi Level intrusion and asymmetric coup de grace. The U.S. Africa Command has sent its crack East Africa Response Force to secure the airfield and augment security. This is in fact a big deal.
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The Ride of the Valkyries in Apocalypse Now (1979) Africa |
A lot of superlatives have been attached to Francis Ford Coppola’s Vietnam War epic Apocalypse Now, it's every bit as mesmerizing, trippy and poetic as it was when it stunned audiences back in 1979. The helicopter attack scene with the Ride of the Valkyries soundtrack was chosen as the most memorable film scene ever by Empire magazine (this same piece of music was also used in 1915 to similar effect to accompany The Birth of a Nation). Wagner’s imposing score combine wonderfully with the visuals to emphasize the military dominance of the American forces. This is the intent; emphasizing the power and grandiosity of the military force from the US in Vietnam on the surface, but underneath we all know how that tale ends. In madness and embarrassment, that the rest of the film ultimately explore.
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There was perhaps no Soleimani threat (at least nothing new). And there was no need for it. Trump borrowed an old Persian trick: put the head of a horse in the enemy's bed. @nntaleb Africa |
There is this formidable scene in the Godfather when a Hollywood executive wakes up with the bloody severed head of a horse in his bed, his cherished race horse. He had refused to hire a Sicilian American actor for reasons that appeared iniquitous, as while he knew the latter was the best for the role, he was resentful of the “olive oil voice” that charmed one of his past mistresses and fearful of its powers to seduce future ones. It turned out that the actor, who in real life was (possibly) Frank Sinatra, had friends and friends of friends, that type of thing; he was even the godson of a capo. A visit from the consigliere of the “family” neither succeeded to sway the executive, nor softened his Hollywood abrasiveness –the fellow failed to realize that by flying across the country to make the request, the high ranking mobster was not just providing the type of recommendation letter you mail to the personnel department of a state university. He had made him an offer that he could not refuse (the expression was popularized by that scene in the movie).
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Russians Think Soleimani Was Great, and Trump's a Big Loser @thedailybeast @JuliaDavisNews Law & Politics |
Russian government figures, lawmakers and analysts sometimes mock U.S. President Donald J. Trump, and sometimes they heap praise on him as, you know, their guy. But it seems a man they really admired was Iranian Major General Qassem Soleimani, head of the elite Quds Force, who was blown away last week on Trump’s orders, precipitating a fraught international crisis. Among other things, Russian state media are describing Soleimani as the architect of Russia's involvement in Syria, an operation in which Moscow takes pride despite a long and continuing history of atrocities. Moscow live-streamed Soleimani’s six-hour funeral and showcased the procession of the mourners who brought flowers to the embassy of Iran in Moscow. Discussing Soleimani’s liquidation on the state television news talk show 60 Minutes on channel Rossiya-24, Russian State Duma lawmaker Vladimir Zhirinovsky—a controversial nationalist politician known as a showman of Russian politics—exclaimed: “Many don't understand it yet, but World War III is already underway. It is being carried out through different methods and technologies.” Zhirinovsky proceeded to extol General Soleimani’s popularity with the Iranian people by comparing his importance to Felix Dzerzhinsky, the founder of Cheka—the secret police predecessor of the KGB and, now, the FSB) and Soviet Marshal Georgy Zhukov, hero of the fight against the Nazis, put together. The Russian Defense Ministry praised Soleimani as “a competent military leader,” who “commanded well-deserved authority and significant influence in the entire Middle Eastern region.” The Russian Ministry of Foreign Affairs warned that Soleimani’s killing would be “fraught with grave consequences for regional peace and stability,” leading “to a new round of escalating tensions in the region.” The chairman of the Russian State Duma’s Foreign Affairs Committee, Leonid Slutsky, described the action as “a barbaric provocation by the United States.” He opined that “the Americans have crossed the 'red line,' and this time the consequences can be very serious.” Russian Deputy Foreign Minister Sergei Ryabkov said that when Russia urges restraint in the conflict between Iran and the United States, it means America “first and foremost.” Ryabkov said that Russia finds American politics “of controlled chaos and destabilization” unacceptable. Likewise, the Kremlin sided with Iran in discussing the Ukrainian airliner, reportedly downed by Russian-made missiles. Ryabkov called on senior world leaders to refrain from public statements accusing the Iranians until an investigation has been completed. Senator Konstantin Kosachev, Chairman of the Federation Council's International Affairs Committee, predicted that the killing of the general would lead to increased violence: “You won’t be forced to wait for a response… wars are easy to start, but very hard to finish.” Kosachev accused Trump of arranging the killing “to spectacularly begin his election campaign.” Russian state media have concluded that Trump's actions against Iran, including the liquidation of Soleimani, were primarily motivated by his re-election ambitions, as well as his urge to create a distraction from the ongoing impeachment proceedings. During the program 60 Minutes, the hosts played a 2011 video clip of President Trump, divining that President Barack Obama would start a war with Iran in order to secure his re-election. ‘Does it remind you of anything?”host Olga Skabeeva asked sarcastically. Trump’s ludicrous prediction revealed his own way of thinking. “Wag, wag, wag,” as in Wag the Dog, read the cartoon shown on 60 Minutes. Even as myriad pro-Kremlin voices condemned Soleimani’s killing, many could hardly conceal their glee about the side effects of the escalation. Military analysts and state media pundits rejoiced at the perceived humiliation and weakening of the United States on the world stage. Russian state TV programs repeatedly broadcast the photograph of American President Donald Trump with missile-shaped slap marks on his face, originally posted on a Twitter page linked to the Iranian Ayatollah Ali Khamenei. فقط یک سیلی؛ انتقام بحث دیگری است... pic.twitter.com/sW1iIcE5G5 — KHAMENEI.IR | فارسی (@Khamenei_fa) January 9, 2020 Russian state television aired the clips from Iranian state television referring to the American president as “a yellow-haired psycho” and offering a bounty for his head. Russian war correspondent Yevgeny Poddubny said that for the first time since the Vietnam War someone dared to strike an American base. He pontificated that Iran raised the red flag of revenge for a good reason and managed to save face. The audience enthusiastically clapped in support of Poddubny’s statements. Russian and Iranian state media jointly emphasized that Iran’s campaign of retaliation against the United States is far from over. An unnamed U.S. government official told Ken Dilanian of NBC News that American intelligence agencies expect Iran to continue retaliating for the Soleimani killing, using clandestine measures. The source said, “If I were a U.S. ambassador, I wouldn't be starting my own car for the foreseeable future.” Likewise, the Russians anticipate that the Iranian revenge for the Soleimani killing won't end with the strikes of the American bases in Iraq. As that tweet of Trump’s slapped face puts it, the missile strike was, “Just a slap; revenge is another argument …” Russian State television reporter Valentin Bogdanov described the killing of Soleimani as “lawless” and opined: “Iranians know how to serve their revenge cold. They could choose to exercise it—for example—close to the November elections, not leaving Trump much time to respond.” Yevgeny Primakov, member of the Russian State Duma, a grandson of a former Russian Foreign Minister and Prime Minister Yevgeny Primakov, and host of the state TV program International Review, said that “Iran demonstrated to the whole world that the hegemon could be kicked.” “Iran showed its strength and America revealed its weakness,” argued military expert Vladimir Evseev, adding: “Nothing like this has ever happened before.” “You can deal with Americans only from a position of strength. Note how they got punched in the nose and that was the end of it,” remarked Nikolay Platoshkin, a former Russian diplomat and a Professor at the Moscow University of the Humanities. Russian State TV host Olga Skabeeva mocked President Trump's assessment that Iran decided to back down. In reality, Skabeeva argued, “Trump got scared of Iran.” She marveled at the unprecedented nature of the unfolding events: “What other examples could you give when some country, some regional power that doesn't possess nuclear weapons— as far as we know—delivered a strike at the United States of America? Simply wow! How is that even possible? Can it really be done?” Skabeeva added: “Trump demonstrated that he can't strike back… Your hegemony no longer works. What are your allies doing? Who supported you, Americans, in this action?” Skabeeva smugly surmised: “You are alone.” America’s deteriorating relationships with allies delight not only the state media, but also the Russian lawmakers. On his Twitter page, Senator Alexey Pushkov pointed out that the great majority of America's traditional allies did not support President Trump's decision to kill General Soleimani. During the state TV show 60 Minutes, Russian military expert Igor Korotchenko yelled at the American panelist, and in the process sketched Moscow’s strategic calculations: “You crapped all over yourselves, that's why the United States needs to shut up! Your time is over!” said Korotchenko. “America is no longer the same. It's come to nothing. America admitted its own defeat, politically and militarily. Iran—an independent strong country, which is significantly weaker militarily—whipped and slapped you all over the face. Two waves of missile strikes—where are your Patriot [anti-missile] systems? They detected nothing and couldn't ward off the attacks. You utterly screwed up. America is not the same and the world is different. The year 2020 is breaking all established norms. Not one of your allies relies on you—not in Europe or the Middle East. You're weak and helpless… You're losing the status of a superpower. Your weapons are bad. Your allies found out that it's senseless to rely on the United States or their weapons systems. Your Patriot systems are ineffective, nothing more than a bluff.” It should be noted that the Patriot systems reportedly were absent from the targeted military facilities in Iraq. Korotchenko predicted: “The year 2020 opens up new opportunities, it will be the time of new alliances—and the place of the United States won’t be in the lead, but somewhere off to the side... Iran's missile strikes are not the final stage of the retaliation. You will no longer be able to decide the fate of the world. This is the collapse of the global U.S. domination. The multipolar world is coming into power in 2020. This represents new opportunities for our country.” Korotchenko is a member of the Russian Defense Ministry's public council, with high-level political and military connections, including the likes of Defense Minister Sergey Shoigu and First Deputy Defense Minister Valery Gerasimov. Lest anyone mistake him for a random bystander, Korotchenko pointed out: “As a participant of the Defense Ministry Board meeting [attended by Russian President Vladimir Putin] in 2019, I can say that our generals are at ease, because our army and navy function like clockwork. We're in control of the situation… The world is changing and it won’t be the American world. It will be a multipolar world in which you will be asked to stand aside when the most important issues of the global world order are being decided.” Korotchenko concluded his tirade against the United States by proclaiming: “Today, Turkey, Russia and Iran are jointly working in Syria… from where you've been asked to get out. Tomorrow, you'll get out of Iraq and then you'll get out of everywhere else, because no one else places their hopes in you any longer. Other countries will be seeking support and alliance with Russia and buying Russian weapons… Russian political and military leadership is smarter and more successful than the Americans. That is the problem of the United States—the incompetence of their leaders. We are competent and that's why we're winning… We're back in the Middle East, we're again in the league of great nations. If the United States has a problem with that, criticize your own leadership that keeps on losing to us.” Expert Nikita Daniuk, deputy director of the Institute for Strategic Studies and Forecasts, argued that “America can no longer dictate its conditions to its direct enemies… Yet again we're noting the weakness of the United States in the face of an indecisive president who can do nothing but raise the stakes… Trump forced his way into a trap.” There is a widespread consensus about the diminishing influence of the United States and the increasing role of Russia amongst Russian lawmakers and experts. “The geopolitical role of Russia and Putin keep growing,” boasted Igor Morozov, a member of Russia’s Federation Council. Elena Suponina, advisor at the Russian Institute for Strategic Studies, surmised that in light of Trump's actions in the Middle East, Russia is now seen as a more reliable and predictable partner. Political commentator Sergey Strokan wrote for the Russian newspaper Kommersant that the new regional crisis will further weaken Washington and increase Moscow’s geopolitical influence, widening the window of Russia’s opportunities in the Middle East. Russian experts see the Kremlin as the main beneficiary of the rising tensions between the U.S. and Iran—both geopolitically and financially. Oil and gold prices soared following the Soleimani killing, and the Moscow Stock Exchange reached all-time record levels. Financial analyst Andrey Kochetkov told the Russian news publication Vedomosti that the geopolitical crisis in the Middle East directly benefits Russia: “While others are fighting, we are out of the way and have the opportunity to profit in this situation through the sales of arms and the growing prices of oil and gold.” The Kremlin continues to reap the dividends of President Trump’s foreign policy blunders and is most certainly not “sick of winning.”
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U.S. sent an encrypted fax via the Swiss Embassy in Tehran urging Iran not to escalate, followed by a flurry of back and forth messages @WSJ Law & Politics |
BERN, Switzerland—Hours after a U.S. strike killed Iranian Maj. Gen. Qassem Soleimani, the Trump administration sent an urgent back channel message to Tehran: Don’t escalate. The encrypted fax was sent via the Swiss Embassy in Iran, one of the few means of direct, confidential communication between the two sides, U.S. officials said. In the days that followed, the White House and Iranian leaders exchanged further messages, which officials in both countries described as far more measured than the fiery rhetoric traded publicly by politicians. A week later, and after a retaliatory Iranian missile attack on two military bases hosting American troops that inflicted no casualties, Washington and Tehran seemed to be stepping back from the brink of open hostilities—for now. “We don’t communicate with the Iranians that much, but when we do the Swiss have played a critical role to convey messages and avoid miscalculation,” a senior U.S. official said. A spokesman at Iran’s mission to the United Nations declined to comment on the exchanges but said “we appreciate [the Swiss] for any efforts they make to provide an efficient channel to exchange letters when and if necessary.” One Iranian official said the back channel provided a welcome bridge, when all others had been burned: “In the desert, even a drop of water matters.” From the Swiss Embassy, a Shah-era mansion overlooking Tehran, the country’s role as a diplomatic intermediary has stretched through four turbulent decades and seven presidencies, from the hostage crisis under Jimmy Carter to Barack Obama’s nuclear deal. It has seldom been tested like this. The Americans’ first note was sent immediately after Washington confirmed the death of Gen. Soleimani, the most important figure in Iran’s Islamic Revolutionary Guard Corps, the U.S. officials said. It arrived on a special encrypted fax machine in a sealed room of the Swiss mission—the most enduring method since the 1979 Islamic Revolution—for the White House to exchange messages with Iran’s top leadership. The equipment operates on a secure Swiss government network linking its Tehran embassy to the Foreign Ministry in Bern and its embassy in Washington, say Swiss diplomats. Only the most senior officials have the key cards needed to use the equipment. Swiss Ambassador Markus Leitner, a 53-year-old career diplomat, delivered the American message by hand to Iranian Foreign Minister Javad Zarif early on Friday morning, according to U.S. and Swiss officials. Mr. Leitner, reached by email, declined to comment. The Swiss Foreign Ministry confirmed there had been an exchange of messages, but declined to comment further. Mr. Zarif responded to the U.S. missive with anger, according to an official familiar with the exchange. “[U.S. Secretary of State Mike] Pompeo is a bully,” he said, according to one U.S. official briefed on Mr. Zarif’s response. “The U.S. is the cause of all the problems.” The Swiss ambassador regularly visits Washington for closed-door sessions with Pentagon, State Department and intelligence officials eager to tap his knowledge about Iran’s opaque and fluid politics. Mr. Leitner spent the days after Gen. Soleimani’s killing shuttling back and forth in a low-key but high-wire diplomatic mission designed to let each side speak candidly. It was a contrast to the jabs of President Trump and Mr. Zarif on Twitter. On Jan. 4, the day after the killing, Mr. Trump tweeted that he had picked out 52 targets, including Iranian heritage sites for potential retaliation if America suffered losses. “Those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD,” the tweet said. Mr. Zarif replied the next day: “A reminder to those hallucinating about emulating ISIS war crimes by targeting our cultural heritage,” he wrote. “Through MILLENNIA of history, barbarians have come and ravaged our cities, razed our monuments and burnt our libraries. Where are they now? We’re still here, & standing tall.” That same day, Mr. Zarif called the Swiss ambassador to take a message to the U.S. It was more restrained, according to the U.S. officials. Statements from both sides helped prevent miscalculations, the officials said. “When tensions with Iran were high, the Swiss played a useful and reliable role that both sides appreciated,” said a senior Trump administration official. “Their system is like a light that never turns off.” The Swiss have served as messengers between Washington and Tehran since 1980, in the wake of the seizure of the American Embassy—and 52 hostages —in Tehran by Iranian revolutionaries. Swiss diplomats call the role the “brieftrager” or “the postman.” In the years after the U.S.-led invasion of Iraq in 2003, the Swiss shepherded messages to help avoid direct clashes. When President Obama assumed office, Switzerland hosted the talks that led to a nuclear deal. When Washington lifted sanctions, Swiss businesses had an early jump on rivals. When Mr. Trump reimposed sanctions, he gave the Swiss a phone number to pass the Iranians, saying: “I’d like to see them call me.” So far, Tehran has continued to speak through the Swiss. Former Swiss ambassadors say the diplomatic channel is effective because the U.S. and Iran can trust a message will remain confidential, be delivered quickly, and will reach only its intended recipients. Statements passed on the back channel are always precisely phrased, diplomatic, and free of emotion, they said. Landlocked Switzerland, a country of nine million with no standing army, parlays its role as “postman” to lever access to the great powers. Currently, Swiss diplomats are working to get Washington’s green light for Swiss banks to finance exports to Iran that aren’t subject to sanctions—like food and medicine. “We do things for the world community, and it’s good,” said a former ambassador. “But it is also good for our interests.” Iran isn’t the only geopolitical hot spot where the Swiss Embassy represents U.S. or other countries’ interests after the breakdown of diplomatic relations. The Swiss now holds six mandates including representing Iran in Saudi Arabia, Georgia in Russia and Turkey in Libya. In April 2019, the Trump administration asked Bern to represent it in Venezuela but President Nicolás Maduro’s government has yet to approve. As tensions between Washington and Tehran have escalated, the channel has remained active. In December the two countries released prisoners at the same time at a special hangar in the Zurich airport. U.S. special envoy on Iran Brian Hook and Iran’s Mr. Zarif sat in separate rooms as the Swiss directed the carefully choreographed exchange. “The Swiss channel has become enormously important because of what they can do in the short term to lessen tensions,” said former New Mexico Gov. Bill Richardson, who worked with the Swiss on the prisoner exchange. “It’s the only viable channel right now.”
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U.S. Warns Iraq It Risks Losing Access to Key Bank Account if Troops Told to Leave @WSJ Law & Politics |
The Trump administration warned Iraq this week that it risks losing access to a critical government bank account if Baghdad kicks out American forces following the U.S. airstrike that killed a top Iranian general, according to Iraqi officials. The State Department warned that the U.S. could shut down Iraq’s access to the country’s central bank account held at the Federal Reserve Bank of New York, a move that could jolt Iraq’s already shaky economy, the officials said. Iraq, like other countries, maintains government accounts at the New York Fed as an important part of managing the country’s finances, including revenue from oil sales. Loss of access to the accounts could restrict Iraq’s use of that revenue, creating a cash crunch in Iraq’s financial system and constricting a critical lubricant for the economy. The warning regarding the Iraqi central bank account was conveyed to Iraq’s prime minister in a call on Wednesday, according to an official in his office, that also touched on the overall military, political and financial partnership between the two countries. During the parliamentary debate, the speaker, a Sunni, urged Shiite lawmakers to be mindful of the potential backlash: “One of the steps the international community could take is to stop financial transactions with Iraq, and we would be unable to fulfill our commitments to our citizens at any moment,” Mohammed al-Halboosi said, based on a video of the proceedings viewed by The Wall Street Journal. The financial threat isn’t theoretical: The country’s financial system was squeezed in 2015 when the U.S. suspended access for several weeks to the central bank’s account at the New York Fed over concerns the cash was filtering through a loosely regulated market into Iranian banks and to the Islamic State extremist group. “The U.S. Fed basically has a stranglehold on the entire [Iraqi] economy,” said Shwan Taha, chairman of Iraqi investment bank Rabee Securities.
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Mohammed bin Zayed @MohamedBinZayed Dark Vision of the Middle East's Future @nytimes A Law & Politics |
Richard Clarke was in Abu Dhabi one morning in 2013 when his phone lit up. “You busy?” a familiar voice said. It was a rhetorical question. The caller was Mohammed bin Zayed al-Nahyan, the ruler of the United Arab Emirates and one of the most powerful men on Earth. “I’ll send a car,” he said, and hung up. Clarke, the former White House counterterrorism czar, was working as a consultant for M.B.Z. (as he’s mostly known outside his country) and had gotten used to impromptu calls like this. M.B.Z. rarely explained what he had in mind. Once, he took Clarke for an unexpected helicopter flight deep into the desert of the Empty Quarter and then landed by an artificial pond, scattering a herd of wild gazelles. Not far away, a group of German engineers was standing around, working on an experimental solar-powered water-desalination plant. This time, Clarke got in the back of the car with no idea where he was heading. As they drove through a remote warehouse district, the thought crossed his mind that he was being kidnapped. Then the driver pulled up outside a building where Clarke heard popping sounds. He went inside and saw a group of young women in military uniforms, firing pistols at targets. Seated not far away was M.B.Z., in his white tunic and ear-protection muffs, alongside his wife and an empty third chair reserved for Clarke. During a lull in the shooting, M.B.Z. introduced the women, who were all his daughters and nieces. “I’m starting a draft,” M.B.Z. said. “I want everyone in the country to feel like they’re responsible. A lot of them are fat and lazy.” To stimulate the draft, he said, he would begin with all the young people in his own family. M.B.Z.’s draft was part of a grand nation-building effort at home and abroad, one that would require more soldiers and have repercussions for the entire Middle East. Since its founding in 1971, the United Arab Emirates — a federation of oil-rich sheikhdoms on the north Arabian coast — has mostly stayed out of the Arab world’s many conflicts. It became the region’s economic marvel, a desert Xanadu of gleaming skyscrapers, endless malls and marble-floored airports. But by 2013, M.B.Z. was deeply worried about the future. The Arab Spring uprisings had toppled several autocrats, and political Islamists were rising to fill the vacuum. The Muslim Brotherhood — the region’s foremost Islamic party, founded in 1928 — and its affiliates had won elections in Egypt and Tunisia, and jihadist militias were running rampant in Libya. In Syria, the rebellion against Bashar al-Assad was also falling into the hands of Islamist militias. ISIS was on the rise, and in less than a year would sweep across the Iraqi border and seize a territory the size of Britain. At the same time, M.B.Z. watched in dismay as armies mobilized on the other side of the region’s great sectarian divide. Shiite militias loyal to the Iranian spymaster Qassim Suleimani — who was killed earlier this month in an American drone strike — exploited the post-2011 vacuum to spread their theocratic influence over Syria, Iraq and Yemen. It was a recipe for apocalyptic violence, and the regional powers were doing little to stop it. Turkey was vehemently cheering its own favored Islamists on and backing some of them with weapons. So was Qatar, the U.A.E.’s oil-rich neighbor in the Persian Gulf. The Saudis were ambivalent, hampered by an elderly and ailing monarch. Even the United States — which M.B.Z. had always regarded as his chief ally — seemed to regard the Muslim Brotherhood as an unsavory but inevitable byproduct of democracy in action. M.B.Z. repeatedly warned Barack Obama in phone conversations about the dangers he saw. The American president was sympathetic, former White House officials told me, but seemed intent on getting out of the Middle East, not wading back in. By the time he invited Clarke to his family’s firing range, M.B.Z. had already hatched an immensely ambitious plan to reshape the region’s future. He would soon enlist as an ally Mohammed bin Salman, the young Saudi crown prince known as M.B.S., who in many ways is M.B.Z.’s protégé. Together, they helped the Egyptian military depose that country’s elected Islamist president in 2013. In Libya in 2015, M.B.Z. stepped into the civil war, defying a United Nations embargo and American diplomats. He fought the Shabab militia in Somalia, leveraging his country’s commercial ports to become a power broker in the Horn of Africa. He joined the Saudi war in Yemen to battle the Iran-backed Houthi militia. In 2017, he broke an old tradition by orchestrating an aggressive embargo against his Persian Gulf neighbor Qatar. All of this was aimed at thwarting what he saw as a looming Islamist menace. M.B.Z. makes little distinction among Islamist groups, insisting that they all share the same goal: some version of a caliphate with the Quran in place of a constitution. He seems to believe that the Middle East’s only choices are a more repressive order or a total catastrophe. It is a Hobbesian forecast, and doubtless a self-serving one. But the experience of the past few years has led some veteran observers to respect M.B.Z.’s intuitions about the dangers of political Islam writ large. “I was skeptical at first,” says Brett McGurk, a former United States official who spent years working in the Middle East for three administrations and knows M.B.Z. well. “It seemed extreme. But I’ve come to the conclusion that he was often more right than wrong.” M.B.Z. has put many of his resources into what could be called a counterjihad, and they are formidable. Despite his country’s small size (there are fewer than a million Emirati citizens), he oversees more than $1.3 trillion in sovereign wealth funds, and commands a military that is better equipped and trained than any in the region apart from Israel. On the domestic front, he has cracked down hard on the Brotherhood and built a hypermodern surveillance state where everyone is monitored for the slightest whiff of Islamist leanings. M.B.Z.’s leading role in this ongoing counterrevolution, as a sort of latter-day Metternich, has changed his country’s reputation. The Pentagon still regards him as a loyal and capable ally; during one visit to Abu Dhabi last May, I sat in the audience as Jim Mattis, the former secretary of defense, addressed a crowd of Emirati and foreign dignitaries and compared the Emirates to both Athens and Sparta. But some Obama officials came to see him as a dangerous rogue actor. By the time Donald Trump was elected — offering him a more pliant partner — M.B.Z. was drawing criticism from human rights groups and diplomats for his military’s role in Yemen and Libya. Even some of M.B.Z.’s admirers in diplomatic circles say that he can be too absolutist and that he has waded too deep into conflicts whose outcomes he cannot control. Yet M.B.Z. remains a rare figure in the Middle East: a shrewd, secular-leaning leader with a blueprint of sorts for the region’s future and the resources to implement it. For all his flaws, the alternatives look increasingly grim. The American drone strike that killed Suleimani and his top Iraqi ally, coming on the heels of a tense standoff at the United States Embassy in Baghdad, has pushed the region closer to war, with Iran's supreme leader issuing dire-sounding threats of retaliation. It is too soon to know how Tehran will react, but M.B.Z. is likely to be a key player in whatever unfolds next. Despite his reputation as an Iran hawk, he has made several quiet diplomatic gestures in recent months and reportedly has a back channel to communicate with Iran’s leadership. These departures from Trump’s “maximum pressure” campaign have underscored his new willingness to steer an independent course. The same man who privately criticized Obama for appeasing Iran now appears to be worried that Trump will stumble into war. M.B.Z. may be uniquely well placed to avert a conflict in which his country — which sits just across the Persian Gulf from Iran — could be one of the first targets. M.B.Z., 58, has been the U.A.E.’s leading figure for over a decade (his older brother Khalifa, who suffered a stroke in 2014, remains the titular president) and has been shaping its policies — in education, finance and culture as well as foreign policy — for even longer. Yet he has made few state visits and has never attended a United Nations assembly. He doesn’t do Davos. He rarely gives speeches and doesn’t talk to journalists. He has a lower profile than the ruler of Dubai, Mohammed bin Rashid al-Maktoum, his subordinate in the Emirati federation. “He doesn’t want to be in the photo,” one of his oldest friends told me. It took me nearly a year to arrange an interview. During that time, I went through a series of meetings with his surrogates in New York, Washington, London and Abu Dhabi — a sort of vetting process, which I seem to have survived mostly because I had spent years reporting on the gulf region. He had never given an on-record interview to a Western journalist, but the timing was lucky: My efforts coincided with a push by his inner circle to be more open and transparent. Still, even after our conversation, his advisers were extremely cagey about what could be quoted, fearing his words would be twisted and misused by his enemies. The first time I saw M.B.Z., last May, he was at his evening majlis, a central ritual of Emirati social and political life. It was in a vast reception hall in Abu Dhabi, and I was surrounded by hundreds of fasting Muslims. It was over 100 degrees outside, but this palatial room, with its 50-foot ceilings and rows of immense chandeliers, was air-conditioned to a clammy-palms chill, like almost every other building in the U.A.E. It was strange to be surrounded by so many Emiratis, who form a small minority of the country’s population. I’ve been visiting the U.A.E. for many years, and have come to think of rootlessness as one of the country’s defining features. Even when the streets are packed, almost everyone you see in Dubai or Abu Dhabi — a Benetton crowd of faces from everywhere on Earth — comes from somewhere else. When you ask them about their lives, they almost invariably mention how grateful they are to be in the U.A.E., sending cash home to their families in Kerala or Nairobi or Kuala Lumpur. The majlis I attended was the prelude to an iftar, the ritual evening breaking of the fast during the holy month of Ramadan. M.B.Z. was deep in conversation with a visiting African dignitary seated to his left. On his right was Mohammed bin Rashid. Later, I watched M.B.Z. get up and work the room like a Chicago pol — greeting new arrivals, making introductions, laughing, hugging old friends. He hosts a separate weekly majlis at which any Emirati citizen may apply to appear, often to voice grievances or ask for help. These regular gatherings serve an important purpose, allowing M.B.Z. and his peers to get feedback from businessmen, tribal leaders and other constituencies. Emiratis often tell you, with perfect sincerity, that this is their own indigenous answer to democracy. As we filed into a huge, high-ceilinged hall piled with food and drink, I stationed myself back near the corner. Then I felt a tap on my shoulder and heard a voice behind me: “Come on, guys, let’s eat.” M.B.Z.’s advisers had been telling me for months about his love for going off-script. He drives around Abu Dhabi at the wheel of his white Nissan Patrol and shows up unannounced in local restaurants. A fitness enthusiast, he often conducts meetings during long walks, occasionally jotting notes on his hand. He is scrupulously punctual and always well briefed, but he loves to surprise Western diplomats by flouting princely decorum. One former diplomat told me he was waiting for his car in Abu Dhabi on a foggy evening when a helicopter emerged out of the mist and landed nearby. Out of the pilot’s seat stepped M.B.Z., who trained as a flyer in the 1970s. The official complained that it was much too foggy for a safe flight. “Shut up and get in,” M.B.Z. said with a grin. They then flew to Dubai, staying just above the power lines. Another time, M.B.Z. was driving a former United States ambassador through town when the ambassador noted the absence of any security guards. “Don’t worry,” M.B.Z. said. “Look at the floor beneath your seat.” The ambassador was startled to discover an automatic weapon folded up under the carpet. M.B.Z. led me to his table and seated me directly to his left, across from several of his brothers and a visiting Asian head of state. At M.B.Z.’s insistence, I dug into the hummus and lamb, and soon he was interviewing me about my old life as a journalist in Lebanon. In person, M.B.Z. speaks deliberately and quietly, lapsing now and then into a crooked grin that conveys a surprising impression of shyness. He has a prominent nose and slightly hooded eyes, partly concealed when I met him by a pair of clunky black-plastic glasses. He speaks fluent English with a faint British accent and an American vocabulary. He doesn’t bother with small talk; when I met him in June for a formal interview, he had barely said hello when he began telling me about his government’s latest moves in Yemen. We were sitting in the atrium of the Emirates Palace hotel, a marble-floored monument to Persian Gulf excess. True to form, he showed up with only a couple of security men and an adviser. He went on to talk for an hour about his views on Islamism, his upbringing, his political priorities and his father’s legacy. He seemed to enjoy telling stories, but all of them were calculated to make a point. It is no accident that people often said the same things about his father, Zayed bin Sultan al-Nahyan, who founded the U.A.E. 49 years ago. Here is a story M.B.Z. told me: Sometime in the 1980s, when he was a young military officer, he went on a holiday trip to the grasslands of Tanzania, and on his return to Abu Dhabi, he went to see his father. The two men sat cross-legged on the floor in the traditional style, with M.B.Z. serving his father coffee. Zayed asked his son for details about everything he’d seen: the wildlife, the Masai people and their customs, the extent of poverty in the country. After hearing it all, he asked M.B.Z. what he had done to help the people he’d encountered. In response, M.B.Z. shrugged and said the people he met were not Muslims. His father’s reaction was sudden and indelible. “He clutched my arm, and looked into my eyes very harshly,” M.B.Z. told me. “He said, ‘We are all God’s children.’ ” M.B.Z. says his father’s pluralist instincts are at the root of his own anti-Islamist campaign. Zayed, who died in 2004 at age 86, mixed traditional Bedouin attitudes with a rare liberal-mindedness. Emiratis are deeply religious, but the country’s position on an ancient shipping lane has bred a style of Islam that is relatively cosmopolitan and tolerant. In fact, Zayed’s unusual openness is what elevated him to power and helped set the U.A.E. on a different course from its neighbors. The British installed him as ruler in 1966 — at the request of leading Abu Dhabi families — because they were fed up with his brother Shakhbut, who had been xenophobic and averse to development. The Emirates were desperately poor then, and even the richest families lived in mud-brick huts. There was almost no Western medicine available in the 1960s, and most of the population was illiterate; as many as half of all babies and a third of mothers died in childbirth. Even today, middle-aged people tell stories of how their parents would cut a gash in a camel’s neck and force them to drink the blood to avoid dying of thirst. Zayed insisted on universal education for women at a time when female illiteracy was almost 100 percent. He allowed Christians to build churches in Abu Dhabi, flouting the common Muslim belief that no other religion should establish a presence on the Arabian Peninsula. In the late 1950s, a family of American missionaries built a hospital in the city of Al Ain, and it was there that an American woman doctor delivered Zayed’s third son, Mohammed. As M.B.Z. grew up, his country was being catapulted from poverty into unimaginable wealth by the discovery of oil. At the same time, political Islam was becoming his generation’s great rallying cry. When M.B.Z. was about 14, his father sent him to school in Morocco. Zayed seems to have intended this to be a toughening experience; he gave his son a passport showing a different last name, so that he wouldn’t be treated like royalty. M.B.Z. lived simply in Morocco, and spent several months working as a waiter in a local restaurant. He made his own meals and did his own laundry, and was often lonely. “There’d be a bowl of tabbouleh in the fridge, and I’d keep eating from it day after day until a kind of fungus formed on the top,” M.B.Z. told me. He later spent a summer at Gordonstoun, the Scottish boarding school where generations of British royals and other titled elites have sent their children to endure cold showers and hazing rituals. Prince Charles famously hated the place, but M.B.Z. told me he enjoyed his time there. He went on to spend a year at Sandhurst, the British military academy. Unbeknown to his father, M.B.Z. was under the sway of Islamist thinking throughout these years. Zayed seems to have inadvertently facilitated his son’s indoctrination by putting an Egyptian Islamist named Izzedine Ibrahim in charge of his education. Zayed knew about Ibrahim’s Brotherhood affiliation, but didn’t yet consider the organization a threat. M.B.Z. turned 18 in 1979, the year the Soviet Union invaded Afghanistan. As the Afghan mujahedeen began a heroic resistance, young Muslims from around the world streamed to Peshawar to join them. At the same time, popular demonstrations toppled the shah of Iran, and Ayatollah Khomeini returned to his homeland to lead the revolution. For many people, a thrilling idea bound these events: The region’s Western-backed puppets had failed, and now Islam would provide the guidebook for a better, more authentic society. But M.B.Z. was born with another, opposing legacy: clan loyalty. His famous father was the embodiment of the traditional “feudal” dynasties that Brotherhood ideologues used to rail against. His mother, Fatima, was Zayed’s third and favorite wife, and her shrewdness and determination helped elevate her six sons over Zayed’s other male children. They are intensely loyal to one another and to her. In the late 1960s, when they were children, Fatima told her boys about the al-Nahyan family’s long history of internecine violence, which rose to a crescendo in the 1920s with a series of brother-on-brother murders that saw power change hands three times within seven years. She made them all swear a vow never to overthrow or act against one another, a former British intelligence officer told me. M.B.Z. still talks to his mother almost every day. Only after M.B.Z. returned to Abu Dhabi in the early 1980s did he recognize that the ideas promoted by the Brotherhood were incompatible with his own emerging role as an heir to power. M.B.Z. did not say whether he thought about the corollary of his choice: that for ordinary Emiratis, the Brotherhood’s appeal must have been even stronger. In 1991, as George H.W. Bush assembled a coalition to push Saddam Hussein out of Kuwait, the Pentagon was impressed by Zayed’s eagerness to take part. Afterward, American military leaders began cultivating M.B.Z., who became a military officer and had begun to emerge as the most ambitious and competent of Zayed’s children. “He was a natural, up-and-coming,” I was told by Bruce Riedel, a former C.I.A. officer who is now an analyst at the Brookings Institution. “He was going to run the country. The U.S. set on a path of wooing and grooming him.” In 1995, Riedel told me, Secretary of Defense William Perry invited M.B.Z. to the Pentagon. To make the experience more memorable, he also flew him down to Camp Lejeune and arranged for him to attend a military exercise in which Marines landed on the North Carolina shore — a simulation of an amphibious attack in Iran or Iraq. “We used to say in the Pentagon, the objective was to get M.B.Z. addicted to aerospace magazines so he’d buy everything we produced,” Riedel said. The seduction appears to have worked. The U.A.E. has spent billions on American jets and weapons systems, and visitors to M.B.Z.’s office say they still see stacks of military magazines there. In the early 1990s, M.B.Z. told Richard Clarke, then an assistant secretary of state, that he wanted to buy the F-16 fighter jet. Clarke replied that he must mean the F-16A, the model the Pentagon sold to American allies. M.B.Z. said no, he wanted a newer model he’d read about in Aviation Week, with an advanced radar-and-weapons system. Clarke told him that that model didn’t exist yet; the military hadn’t done the necessary research and development. M.B.Z. said he would pay for the R. & D. himself. The subsequent negotiations went on for years, and though M.B.Z.’s hardball tactics angered some Pentagon brass, “he ended up with a better F-16 than the U.S. Air Force had,” Clarke says. In the decades to come, M.B.Z. would make clear that if the United States military refused to accommodate him, he would be perfectly happy to shop elsewhere — even in China, which has sold inexpensive drones to the Emirati military in recent years. Still, the United States remained his most important relationship by far. On Sept. 11, 2001, M.B.Z. was in northern Scotland, enjoying the last morning of a weeklong rabbit-hunting excursion with his friend King Abdullah II of Jordan. He said his goodbyes and boarded a private plane to London, arriving just after lunch. He hadn’t even left the plane when an Egyptian member of his entourage came running out from the terminal and climbed onboard, according to an official who was present. “New York is burning!” the man shouted. M.B.Z. had heard nothing of the day’s events, and when he did he was furious. “What are you saying?” he asked the man. “New York is the center of the world — look how vulnerable we are.” M.B.Z. tried to reach his father, but was unable to get through. He did manage to get Clarke, who was then working on counterterrorism in the White House. It was the only call Clarke took that morning from outside the government. “Carte blanche — just tell me what to do,” he recalled M.B.Z. telling him. By the time M.B.Z. arrived back in Abu Dhabi, later that day, he knew that two Emiratis were among the 19 hijackers. The Sept. 11 attacks were a life-changing moment for M.B.Z., unmasking both the depth of the Islamist menace and the Arab world’s state of denial about it. That October, M.B.Z. told me, he listened in amazement as an Arab head of state, meeting with his father on a visit to Abu Dhabi, dismissed the attacks as an inside job involving the C.I.A. or the Mossad. After the head of state left, Zayed turned to M.B.Z., who had been there for the meeting, and asked what he thought. “Dad,” M.B.Z. recalled telling his father, “we have evidence.” That fall, the Emirati security services arrested about 200 Emiratis and about 1,600 foreigners who were planning to go to Afghanistan and join Al Qaeda, including three or four who were committed to becoming suicide bombers. That same autumn, M.B.Z. had another conversation with his father that would affect the way he thought about political Islam. The encounter began, M.B.Z. told me, when he entered his father’s office with a momentous piece of news: The Americans were sending troops to Afghanistan. Zayed said he wanted Emirati troops to join them. M.B.Z., who was commanding the armed forces by this time, was not prepared for this. Taking an active role in the American campaign would raise sensitive issues, given that some were calling it a war against Islam. Sensing his son’s unease at the prospect of committing troops, Zayed said: “Tell me, do you think I’m doing this for Bush?” M.B.Z. said yes. “That’s 5 percent of it,” Zayed said. “Do you think I’m doing this to keep bin Laden away?” M.B.Z. nodded. “That’s another 5 percent.” M.B.Z., a little baffled, asked his father to explain. “You’ve read the Quran and the Hadith, the sayings of the Prophet,” Zayed said. “And you like them?” Of course, his son replied. Zayed then said: “Mohammed, do you think this guy bin Laden running around Afghanistan is doing what the Prophet wanted us to do?” Not at all, M.B.Z. said. His father then told him emphatically: “You’re right. Our religion is being hijacked.” M.B.Z. didn't have to add that there was another reason to fight Al Qaeda — it was a threat to their own family’s authority. Soon after the Sept. 11 attacks, M.B.Z. undertook a bottom-up review of all his country’s vulnerabilities to terrorist attacks. “I believe 9/11 made him look internally to re-evaluate key sectors from education to finance,” says Marcelle Wahba, who arrived as the new United States ambassador in October of that year. “They went through it all very systematically.” He formed a team, including his brothers and top advisers, and they worked relentlessly to patch the holes, according to Wahba. They set out to register all the hawala shops, the informal money-transfer system that has often been used by terrorists. They put transponders on dhows that plied the gulf. They began looking for ways to better monitor the U.A.E.’s sprawling trade and finance networks. Much of this was aimed at deterring terrorists transiting the Emirates, but the risk of attacks inside the country was also real. In the following years, U.A.E. authorities foiled a string of terrorist plots by jihadi groups, including a 2005 plan for a triple car-bombing attack against a five-star hotel. At the same time, M.B.Z. mounted a broader assault on Islamist ideology. Many of the U.A.E.’s Islamists belonged to Islah, a group founded in the 1970s that was the local equivalent of the Muslim Brotherhood. They included thousands of foreigners, mostly from Egypt, who had been welcomed decades earlier to fill the U.A.E.’s need for educated professionals and bureaucrats. The country’s ruling families had initially given their blessing to Islah, which they saw as a benignly pious group. By the 1990s, Islamists had made the education and judicial ministries into a “state within a state,” according to the Emirati journalist Sultan al Qassemi, deciding how scholarships were handed out and pushing the courts in a more religious direction. M.B.Z. authorized the firing of Islamist teachers and a sweeping rewrite of the country’s textbooks. Most of the Emiratis I know can tell shocking stories about elementary schoolteachers who casually told them about the glories of violent jihad and the depravity of kuffar, or infidels. The textbooks, written by Brotherhood members, sprinkled zealotry even into subjects like history and math: “If you kill three Jewish settlers and spare two, what is the sum?” Emirati high schools now offer ethics courses that are independent of religious study — something that would have been unthinkable not long ago. M.B.Z. has made other quiet efforts to push religion into the private realm. He has given a platform to respected religious scholars who took a quietist approach, including a number of prominent Sufis like Ali al-Jifri, Aref Ali Nayed, Hamza Yusuf and Abdallah bin Bayyah, the renowned Mauritanian Sufi scholar who now chairs an Emirati council that oversees religious rulings. The U.A.E. also began exporting its own brand of Islam via training programs for imams abroad, including thousands of Afghans. Most Islah members were concentrated in the northern emirates, especially Ras al Khaimah, just over an hour’s drive north from Dubai. It is less dense than the wealthier cities to the south, with fewer skyscrapers and malls, and it is a little shabbier. In a sense, Islah was expressing its disapproval of the hypercapitalist culture being spawned in the U.A.E.’s biggest cities. Many of its public statements were protests against the bars and prostitution that served the U.A.E.’s growing foreign population. Its spokesmen eventually began promoting democracy and human rights, though those may have been at least partly a convenient way to draw Western sympathy to their cause. Arabists and diplomats in the West have mostly taken the view that Islamists of this kind should be tolerated, and that their views are likely to be softened over time by their integration into electoral politics. The Tunisian Ennahda movement is often held up as an example of what may happen when Islamists are given a chance to evolve in a more progressive direction. Ennahda, which emerged from the Muslim Brotherhood, has shared power with a secular party, and its leader has suggested that it is less an Islamist party than an Arab variant on European parties like the Christian Democrats. M.B.Z. did engage in a dialogue of sorts with the U.A.E.’s Islamists, and he claims the experience proved they could not be trusted. After the Sept. 11 attacks, he began meeting with members of Islah and urging them to return to the fold. Initially, he offered them a deal: Stay away from politics and they could maintain their charitable work. They responded with lists of demands. The attempts at outreach came to an end after a tense meeting in 2003, and M.B.Z.’s attitude appears to have hardened. He told a visiting United States delegation in 2004 that “we are having a culture war with the Muslim Brotherhood in this country,” according to a cable made public by WikiLeaks. One of M.B.Z.’s own sons started to fall under the spell of Islamist thinking, he told a group of visiting diplomats in 2009. He responded by employing a tactic his own father had used: sending his son to Ethiopia with the Red Cross to appreciate the moral worthiness of non-Muslims. Even as he cracked down on the Brotherhood, M.B.Z. was working on a far more ambitious project: building a state that would show up the entire Islamist movement by succeeding where it had failed. Instead of an illiberal democracy — like Turkey’s — he would build its opposite, a socially liberal autocracy, much as Lee Kuan Yew did in Singapore in the 1960s and ’70s. He began with Abu Dhabi’s Civil Service, which was afflicted with many of the same ills as those of other Arab countries: bloat and inefficiency, with connections and family reputation playing a bigger role in hiring than merit. These features were partly a legacy of the Egyptian strongman Gamal Abdel Nasser, who built a dysfunctional prototype in the 1950s that was copied everywhere. M.B.Z. deployed a group of young, talented people and authorized them to smash up the bureaucracy. Over the next few years, they fired tens of thousands of employees and reassigned many others, streamlining the state. Between 2005 and 2008, the Abu Dhabi government went from 64,000 people to just 7,000. At the same time, he began harnessing Abu Dhabi’s vast capital reserves to build up a non-oil economy. Using a new sovereign wealth fund called Mubadala, he attracted new industries, creating job opportunities that would help train the local population. He honed his progressive image by including women in his cabinet. Mubadala created an aerospace-and-aviation hub in Al Ain where 86 percent of the workers are women. At times, he seems to want to change Emiratis themselves, to make his people more disciplined, more rational, more self-reliant. “Ever shake hands with an Emirati?” one former diplomat heard him say. “It’s a weak hand — they look away. I’m trying to teach people to look you in the eye and give you a firm hand.” He made jujitsu compulsory in schools. In 2014 he established the military draft, forcing young Emiratis — who are granted free housing, education and health care — to endure a year of boot camp and hard work. M.B.Z. made sure they took it seriously. Soon after the draft started, a few hundred eligible young men failed to register. M.B.Z. had them brought to him and “spent an hour excoriating them about what his father did, building the country and so on,” I was told by one former diplomat. “They all went to jail for 30 days.” (An Emirati spokesman disputed this account.) When I first started visiting the U.A.E., in 2007, I heard a lot of fretting about the social consequences of the country’s sudden vault from poverty to vast wealth: listlessness, depression, isolation and dislocation. On my most recent visit, I heard at least a dozen stories about young couch potatoes who returned from boot camp sober and lean, suddenly willing to do their own laundry and dishes. The draft has also brought together people from different emirates and social classes in a way that rarely happened in the past. The Yemen war has wreaked horrors on that country, but it appears to have had an annealing effect on Emirati society. More than 100 Emiratis have been killed in the fighting, and while that is tiny compared with the appalling toll of Yemeni dead, it is in human terms by far the costliest war the U.A.E. has ever fought. It probably helps that M.B.Z. and most of the rulers of the other six emirates had sons or nephews on the front lines, some of whom were seriously injured. I briefly met Zayed bin Hamdan, M.B.Z.’s nephew and son-in-law, who uses a wheelchair after his spine was damaged in a helicopter crash in Yemen in 2017. In 2009, M.B.Z. made a decision that would vastly augment his ability to project power beyond his borders. He invited Maj. Gen. Michael Hindmarsh, the retired former head of Australia’s Special Operations Command, to help reorganize the Emirati military. Early on, M.B.Z. asked Hindmarsh to help him find an Emirati officer to lead the reboot of the country’s elite units. But M.B.Z. seems to have taken a liking to Hindmarsh, a lanky man with a deeply lined face and a relaxed, frank manner, and ended up choosing him for the job. Putting a non-Arab in charge of the military’s crown jewel would be unimaginable in any other Middle Eastern country. But by 2009, M.B.Z. had a firm grip on the state. The global financial crisis had hurt the other six emirates — especially Dubai — and they had lost some of their autonomy to Abu Dhabi, by far the largest and richest member of the federation. M.B.Z. gave Hindmarsh (who calls him “the Boss”) his full backing and all the money he needed. Hindmarsh, who had gotten used to bureaucratic obstacles during his decades in the Australian Army, was delighted. The U.A.E. has kept Hindmarsh’s role quiet, in deference to Arab sensitivities, but he remains in the job, and his work has been essential in making the Emirati special forces among the best in the world. M.B.Z. was deeply unnerved by the Bush administration’s talk of democracy-promotion and by its consequences, including the creation of sectarian political parties in Iraq and the electoral triumph of Hamas in Gaza. In 2009, M.B.Z. detected a freedom agenda in Obama’s landmark Cairo speech, with its call for a “new beginning between the United States and Muslims around the world.” He told a United States diplomat afterward that he feared the speech “raises the bar of expectations in the Arab world.” Then came the Arab Spring. The United States had supported the Egyptian president, Hosni Mubarak, and autocrats like him for decades, and had treated the Brotherhood as dangerous fanatics. Yet when the Brotherhood’s Mohammed Morsi was elected president of Egypt in 2012, the Obama administration accepted the result. M.B.Z. did not. By early 2013, the U.A.E. was backing Tamarod, the swelling popular movement against Morsi. Vast demonstrations against Morsi took place on June 30, followed by his ouster by the military on July 3, which brought Abdel Fattah el-Sisi, the military chief, to power.
The U.A.E. and its gulf allies instantly pledged billions of dollars in support to the new government. Emirati officials have maintained a discreet silence about their role, but all the diplomats I spoke with believe the U.A.E. approached Sisi and outlined the terms of their financial support before Morsi’s overthrow. “I think there’s every reason to believe he staged a coup,” I was told by one former diplomat. “For a tiny country in the Persian Gulf to overthrow the ruler of Egypt and put their guy in, that’s a big achievement.” M.B.Z. may have prevented Egypt from becoming an Islamic theocracy — that, at any rate, is how he sees it. But Sisi’s own ruthlessness became apparent almost instantly. (It is safe to assume that this doesn’t bother M.B.Z. much, if at all.) In mid-August of 2013, the Egyptian military gunned down about a thousand people in two pro-Brotherhood protest encampments in Cairo, according to Human Rights Watch. Around the same time, the government began cracking down on secular dissidents too, and in many ways Sisi has been more autocratic than Mubarak was. The takeover in Egypt raised tensions between the U.A.E. and the United States, which danced clumsily between censuring Sisi as an undemocratic strongman and quietly continuing some cooperation. (Trump would later offer a much more unqualified embrace, joking that Sisi was “my favorite dictator.”) Soon after Sisi took power, in October 2013, M.B.Z. was watching CNN when he learned for the first time that the United States had been secretly negotiating a nuclear deal with Iran. His American friends had told him nothing. “It was a big blow,” one of M.B.Z.’s senior advisers told me. It wasn’t so much that he opposed the idea of negotiating with Iran (the U.A.E. eventually endorsed the preliminary nuclear deal, which was formalized that November). Instead, M.B.Z. was staggered that Obama had not bothered to consult or even inform a longtime ally about such an important deal — and one that was being negotiated right next door, in Oman. The U.A.E. had a lot at stake, having forced Dubai traders to give up their lucrative business with Iran to comply with the sanctions. “His Highness felt that the U.A.E. had made sacrifices and then been excluded,” the senior adviser said. Together, the Egyptian tumult and the Iran talks formed a kind of watershed in M.B.Z.’s relations with the United States. The shift was not immediately apparent; he continued talking to Obama regularly and offered him advice. He warned him that the proposed remedy in Syria — Islamist rebels — could be worse than the disease (Assad’s tyranny). He also urged Obama to talk to the Russians about working together on Syria, a coldly realistic suggestion that might have ended the war faster, albeit by foreclosing the opposition’s hope of victory. But beneath the veneer of routine consultations, M.B.Z.’s feelings about Obama had changed. The relationship eventually turned toxic, with M.B.Z. trash-talking the administration to visitors, former administration officials told me. Obama also made dismissive comments in a 2016 interview in The Atlantic, describing the gulf’s rulers as “free riders” who “do not have the ability to put out the flames on their own” and expect the United States to rescue them. The final straw came a month after the election of Donald Trump, when M.B.Z. flew to New York to meet the president-elect’s team, canceling a parting lunch with Obama. Soon afterward, M.B.Z. hosted a Russian middleman at an Emirati-owned resort in the Seychelles with Erik Prince, the Blackwater founder — an encounter that put them in the sights of Robert Mueller’s investigation of the Trump administration’s ties to Russia. The meetings, mentioned briefly in the Mueller report, do not seem to have involved any Trump-related collusion. But even if he wasn’t colluding with Russians, M.B.Z.’s attitude toward his American patrons seems to have changed. He had plans of his own, and would no longer wait for their approval. The overthrow of Morsi was the first great success of M.B.Z.’s counterrevolutionary campaign, and it seems to have supercharged his confidence about what could be done without American constraints. His attention soon turned to Libya, where jihadists were running rampant. He began providing military support to the renegade former general Khalifa Haftar, an autocrat who shared M.B.Z.’s feelings about Islamists. At a Camp David summit in May, 2015, Obama tacitly scolded M.B.Z. and the emir of Qatar for waging proxy war in support of their rival militias. But by the end of 2016, the U.A.E. had set up a secret air base in eastern Libya, from which drones and aircraft bombed Haftar’s rivals in Benghazi. All of this was in violation of a U.N. weapons embargo, and it irritated Washington. Thousands have been killed in the Libyan fighting, and Haftar’s effort to capture Tripoli has not succeeded. One former United States diplomat who admires M.B.Z. told me that his handling of the Libya mess underscored the danger of overreach. “They are looking to stage-manage and cleave out the parties they don’t like,” she said of the U.A.E. “They will learn they can’t do that.” She added: “You may stir a pot that boils over because of your meddling.” As he pulled away from the Obama administration, M.B.Z. was acquiring a powerful ally: Mohammed bin Salman, the Saudi crown prince. The alliance may seem natural to outsiders — two gulf autocrats with similar initials — but the bond papered over a historic rift. The Saudis, as the slain Saudi journalist Jamal Khashoggi liked to say, are “the mother and the father of political Islam.” M.B.Z. would agree. The Saudi state is rooted in an 18th-century pact between its rulers and a hard-line strain of Islam known as Wahhabism. It is a formula for state-sponsored extremism that makes the Muslim Brotherhood look mild. M.B.Z. grew up in a time when most Emiratis felt threatened by their big desert neighbor; there were armed clashes on the border as recently as the 1950s. In 2005, M.B.Z. told a United States ambassador, James Jeffrey, that his biggest concern was Wahhabism, according to a cable made public by WikiLeaks. He saw the Saudi royal family as feckless, but feared that the alternative in such a deeply conservative society could be an ISIS-style Wahhabi theocracy. “Anybody who replaced the Al Saud would be a nightmare,” Jeffrey remembered him saying. “We have to help them help themselves.” M.B.Z. soon latched onto his Saudi counterpart — who was eager for big reforms — as the key to loosening Saudi Arabia’s ties to radical Islam. He appears to have been something of a mentor to the younger man, and he encouraged the Obama administration to support him. But he doesn’t seem to have any sort of brake on M.B.S.’s worst impulses. When the Saudis led a military campaign against the Iran-allied Houthi fighters in Yemen in March 2015 — with the U.A.E. as their lead partner — many expected it to last a few months at most. Instead, it has lasted nearly five years, becoming a catastrophe that shocked the conscience of the world. Ancient buildings have been smashed to rubble, thousands of civilians have been killed and Yemen — already the Arab world’s poorest country — has suffered terrible outbreaks of famine and disease. The war’s ostensible goal of uprooting the Iran-backed Houthi government is more distant than ever. The U.A.E. has a share of responsibility for this immense tragedy, though it did not carry out the bombings that wreaked so much destruction on northern Yemen. M.B.Z. confined his country’s role to the south, where he tried unsuccessfully to broker political deals to end the war, and relied on Hindmarsh’s commando units to train local forces. One former high-ranking American military official told me that 95 to 100 percent of the military success in the war was due to the Emiratis. When M.B.Z. announced a withdrawal from Yemen in June, he made clear that his new partnership with Saudi Arabia had limits. He also began charting a more diplomatic course with Iran. After a series of attacks on shipping in the Persian Gulf and the downing of an American drone, Trump threatened fire and fury that same month and then abruptly backed down. M.B.Z. appears to have sensed that Tehran was starting to see Trump as a paper tiger — leaving the U.A.E. dangerously exposed to further Iranian aggression. Soon afterward, the U.A.E. issued conciliatory statement
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Mohammed bin Zayed @MohamedBinZayed Dark Vision of the Middle East's Future @nytimes B Law & Politics |
Foreign diplomats have occasionally confronted M.B.Z. about his country’s lack of democracy, and he has responded by saying something along the lines of “This isn’t California”: Lack of education and the prevalence of backward religious attitudes make autocracy necessary, he insists. But if he succeeds in his mission to educate the populace and eradicate political Islam, the al-Nahyan family may eventually have more trouble justifying its role as a virtual monarchy. “You cannot import a ready-made process from abroad,” I was told by Zaki Nusseibeh, who served as a translator and adviser to M.B.Z.’s father for decades. “But yes, we need to start involving young people more in decision-making.” On the two-hour drive from Abu Dhabi to Nusseibeh’s home in Al Ain, in the country’s conservative heartland, I passed immense, upscale housing blocks built by the state for Emiratis, who tend to seclude themselves from the gleaming towers of the city. It was a vivid reminder of the al-Nahyans’ tacit deal with their people: safety and prosperity in exchange for quiescence. Nusseibeh, a slim, bald man of 73 with alert eyes and a professorial air, is a kind of cultural ambassador for the U.A.E., where he has lived since he arrived five decades ago from the West Bank. His house is a museum of sorts, with books in Arabic, English and French stacked ceiling-high and a whole tower of CDs devoted to the work of Richard Wagner (a framed photograph at the bottom shows Nusseibeh with the composer’s descendant, Cosima Wagner). Paintings and sculptures fill almost every available space, most of them by Arab or Iranian artists. The important work, Nusseibeh said, is still about building institutions and protecting against external threats, and that requires stable leadership. We were back to the Islamist menace. “The last 50 years were foundational,” he said. “The next 50 — how do we move this to a new, global level? The challenge becomes more existential. We have to inoculate people against what is happening.” One morning in June, I got a taxi from my hotel to the Louvre Abu Dhabi, M.B.Z.’s madly ambitious, billion-dollar monument to “art and civilization.” It was unbearably hot and humid out, and as we drove past the corniche — a beautifully landscaped mile-long stretch of waterfront — I didn’t see a single human being. As we crossed the bridge onto Saadiyat Island, I could see the museum looming in the distance like a vast metallic tortoise. Its steel dome, which is as heavy as the Eiffel Tower, is a weave of strands designed to act like a palm grove, allowing tiny shards of sunlight onto the grounds below. When we arrived, I got out and suffered my unavoidable minute-long exposure to nature, and then returned indoors to the controlled world of M.B.Z.’s visions. It was easy to imagine him striding confidently around the building site a decade earlier, pointing his index finger like a magician: I want walkways here. Let’s keep the natural coastline there. Let’s put hotels there, with a view of the museum. That, in fact, is more or less what happened, as I learned from the man who ran the project for him. Inside, I goggled alongside the tourists at classic works of Western art sitting alongside Chinese and Indian and Arab masterpieces. The museum’s guiding concept reflects the U.A.E.’s own multicultural ethos, a mash-up of global high culture. It has been derided by some critics, including many in France, as a lavish purchase of a European brand for the benefit of a global leisure class. But M.B.Z.’s main goal for the museum, one of his advisers told me, was to educate the local population, not attract tourists. As I strolled past a Roman sculpture, a group of Emirati schoolchildren in green shirts trickled in and sat on the floor around me. After a few minutes of sketching, their teachers led them toward the Universal Religions gallery, the museum’s centerpiece. I followed behind and listened as one of the teachers led a Q. and A. “You all know about the Quran,” he said. “But who can tell me what the Christian holy book is?” Several children shouted the answer. “Very good! What about the Jewish holy book? And for Hindus?” More high-pitched answers. At last came the clincher. “Sheikh Zayed wanted this to be a universal museum, and he had the idea to put all the holy books in one place, so people could see what their religions had in common, and perhaps that way they’d be a bit nicer to each other.” As the children got up and filed into the next room, it struck me that the teacher’s lecture contained a revealing false note. Sheikh Zayed wasn’t the one who conjured up this museum, with its grand ambition to smash Islamic certainties and turn Bedouins into citizens of the world. M.B.Z. was hiding in his father’s shadow, absent and omnipotent at the same time. Robert F. Worth is a contributing writer for the magazine. His book on the 2011 Arab uprisings, “A Rage for Order,” won the 2017 Lionel Gelber Prize. He last wrote for the magazine about the war in Yemen. |
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A desert locust outbreak that's the worst in 25 years is threatening pastures and crops on both sides of the Red Sea and could spread to Uganda and South Sudan @UN @FAO said @business Africa |
A desert locust outbreak that’s the worst in 25 years is threatening pastures and crops on both sides of the Red Sea and could spread to Uganda and South Sudan, the United Nations’ Food and Agriculture Organization said. A potentially threatening situation is developing along both sides of the Red Sea with locust numbers increasing on the coasts of Egypt, Sudan, Eritrea, Saudi Arabia and Yemen, the FAO said on its website. “There is a risk that some swarms could appear in northeast Uganda, southeast South Sudan and southwest Ethiopia,” it said. While control operations are going on in all affected countries, insecurity and a lack of national capacity have limited efforts in Somalia, FAO said. While large swarms appeared near Kenya’s border with Somalia at the end of December, there’s low risk of breeding there, the FAO said. The East African nation is already spraying swathes of land in its northeast region, the Star newspaper reported on Tuesday. Locusts can cover as much as 150 kilometers (93 miles) a day and an average swarm will destroy crops sufficient to feed 2,500 people for a year, according to the UN.
Kenya
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Of Tigers, Debt Merchants and 2020 Vision @theelephantinfo @DavidNdii Africa |
The former president of the African Development Bank, Donald Kaberuka, has dismissed as “nonsensical” any suggestion that Africa may have over-borrowed, saying instead that with better debt management and higher domestic revenue mobilisation, the continent can take on more debt. But Kaberuka fails to make the link between the increased borrowing and the revenue problem. The public debt burden has dominated economic debate in 2019. Public debt is likely to be even more topical in 2020, both domestically and globally. As at end November 2019, 31 out of 70 countries in the IMF’s roster of low-income countries are listed as either in or at high risk of debt distress. Another 26 are listed as being at moderate risk, leaving only 13 that are still at low risk. Last week, the IMF approved a $2.9b bailout for Ethiopia, one of the high distress risk countries. I first called out the Jubilee administration’s borrowing binge six years ago. Up until two years ago, the IMF and the World Bank were still giving it the thumbs up. (Very often we forget that these institutions are lenders and therefore conflicted on matters debt.) A few weeks ago Donald Kaberuka, the immediate former president of the African Development Bank (AfDB) and erstwhile Finance Minister of Rwanda, dismissed as “nonsensical” any suggestion that Africa may have over-borrowed: “The idea that Africa is drowning in debt is nonsensical . . . If we can improve on our own domestic revenue mobilization, if we can improve on our public debt management and if we can improve on our debt management capabilities, the continent is able to take a bit more debt, especially at this time when the markets are looking for yield.” This is an interesting argument. You may also have heard it from the Jubilee administration—the problem is not too much debt; it is the Kenya Revenue Authority (KRA) that is failing to meet revenue targets. Kaberuka, who I gather is an economist, wittingly or otherwise, fails to make the connection between the borrowing binge and the revenue problem. Only a most incurious economist would look at revenue and debt trends such as ours (see chart) and conclude that they are completely unconnected. Although I have written about the connection on more than one occasion, it is worth recapping. There are two dimensions to the connection: an accounting one and an economic one. Let’s start with the accounting. Let’s say we start with a GDP of Sh10 trillion which is 80 per cent private economy and 20 per cent government. Let’s then say the government is raising Sh2 trillion, which is 20 per cent of GDP, in tax revenue. Suppose the government goes to China and buys a railway worth Sh500 billion on credit. The GDP will now be Sh10.5 trillion. We will be told that the economy has grown by 5 per cent. But the railway has not added anything to the economy, and nor is it paying tax, so the government still collects Sh2 trillion, but which is now 19 per cent of the Sh10.5 trillion GDP. If this is repeated every year, by year five, the GDP will have expanded to Sh12.8 trillion and the tax revenue-to-GDP ratio will be down to 15.7 per cent. This is a purely accounting view, which assumes that government investment is neutral, neither helping nor harming the economy. This is not as far-fetched as it might at first appear. For example, it could simply reflect government investments with long gestation periods. Indeed, we have been told that the new Standard Gauge Railway (SGR) is one such long-term visionary project whose benefits will be realised by our grandchildren. But for no harm to occur, two conditions need to obtain. First, all the borrowing needs to be foreign. Use of domestic resources means diverting these from the private economy, and that is harmful. We call this crowding out. Second, there are no repayments, because repayment of foreign debt amounts to sucking money out of the economy, also harmful. Neither obtains. Let us start with repayments. This year, we have budgeted to pay Sh139 billion ($1.39 billion) in foreign interest, a tenfold-plus increase from Sh11b ($130m) in the 2012-2013 financial year, the last year of the Grand National Coalition government. And this does not include the hefty payments of the principal on the SGR loans that kicked in this year. The use of domestic resources is also a very significant factor. Half the debt that the Jubilee administration has accumulated is domestic. The crowding out extends beyond credit. With so much money to spend liberally, trading with the government becomes the most profitable business, diverting other economic services away from, and inflating the costs for the private sector. This could not be better demonstrated than by the case of Kenya’s banking industry. Last year, the industry made a consolidated profit of Sh140b, and Sh119b in interest from government securities. Considering that lending to government is virtually costless and risk-free, this implies that banks made all their profits from the government, and lost Sh9b on the business they did with the rest of the economy. The contribution of interest on government securities has increased steadily from 37 per cent in 2013 to 108 per cent in 2018 (see chart). But we also see that the banks’ profitability has declined. Profits declined by 40 per cent in 2017, following the capping of interest rates in late 2016. In 2018 profits were 14 per cent lower than in 2013. If banks are not making money from the private economy, it stands to reason that government revenue will also take a hit. How much public debt is too much? Debt experts have sophisticated models that are supposed to tell us. These models are built around “present value.” Present value is the sum of a forecast, such as a cash flow, and in this case annual debt repayments, discounted by a rate of interest or other relevant discount factor, used to give an estimate of current worth. If two similar countries borrow the same amount of money on similar terms, one invests wisely, and the other plunders it all, the net present value of the debt will be the same. It should not surprise then that the IMF’s models were giving the Jubilee borrowing binge the thumbs-up even as the Eurobond went walkabout and one Josephine Kabura was mocking us with tall tales of cash stuffed in gunny bags. For the financial health of a country, a simple rule of thumb is to ensure that debt service does not grow faster than government revenue for too long. If the debt is invested productively, the investments expand the economy, the government generates more tax revenue from the expanding economy, which it then uses to service the debt. How long is too long? That is a matter of exercising sound judgement. As John Maynard Keynes famously quipped, in the long run, we are all dead. But the question becomes moot when the trend looks like what we see in the chart—debt service heading north, revenue heading south. You do not need present value calculations to see that this trend cannot go on for much longer. Sooner or later, something will have to give. Expect to hear a lot about fiscal consolidation in 2020. Fiscal consolidation is defined as policy measures that aim to reduce the deficit and stop the accumulation of debt. The substance of it is what we used to call structural adjustment but, following the 2007 financial crisis, it became necessary to invent a new name—it just wouldn’t do to speak of Spain, or the UK for that matter, as implementing structural adjustment. A fiscal consolidation strategy is predicated on the expectation that governments can find ways of bringing down deficits without hurting growth. Budget deficits are, in essence, the pumping of money into the economy, which ought to stimulate growth. Conversely, fiscal consolidation amounts to withdrawing money from the economy, which would dampen growth. The problem is that economic slowdown hurts revenue, meaning that the government has to constrain expenditure even further to meet its deficit reduction targets. The first strategy entails counteracting the contractionary effect of fiscal consolidation with expansionary monetary policy. Simply put, what the government takes away, the Central Bank puts back in circulation. The Central Bank has a couple of tools to do this, principally by buying bonds and lowering the cash ratio and liquidity requirements for the banks (the percentages of assets that banks are required to have in cash and near-cash assets such as Treasury bills and bonds). Shovelling money out of the door is also expected to reduce interest rates, which besides making borrowing attractive for businesses and consumers, can substantially lower the interest cost of domestic debt. But unlike fiscal stimulus where the government is the spender, monetary stimulus depends on market response. The policy makers hope the money will stimulate production, but it could just as well suck in imports, or leave the country to seek higher returns elsewhere, thereby depleting foreign exchange reserves and putting pressure on the currency. The second strategy is to find “off-balance sheet” financing of public investment. The default alternative these days is the so-called public-private partnerships (PPPs). Simply put, PPPs are the public equivalent of equity financing. Instead of the government borrowing to build a hospital for instance, a private investor builds, and the government leases it. But PPPs have their drawbacks. First, to make them attractive to private investors, PPP projects are usually structured in such a way as to ensure that the investors cannot lose money—“de-risked” in financial lingo. Second, PPPs are seldom commercially viable so, more often than not, the Government usually has to part-finance the project in order to achieve an attractive rate of return for investors. Third, PPP financing cherry picks projects with commercialisation potential, which typically will be projects that benefit more developed areas or better-off people in society. In economics, we call such policies “regressive”, meaning they transfer resources from the poor to the rich. Fourth, PPPs have a very high corruption risk—we need look no further than the stink that is the medical equipment leasing scheme known as the Managed Equipment Services (MES) project. Another scheme is to shift debt and deficit financing from the national government’s books to quasi-government agencies, such as has recently been done by amending the law to allow the Kenya Roads Board (KRB) to issue bonds leveraged on the fuel levy revenues that are earmarked for road construction. Assuming an interest rate of, say, 12 per cent, each shilling of fuel levy revenue can be leveraged to borrow 8 shillings. Already, the KRB has published an expression of interest for transaction advisors to raise Sh150 billion. Suffice it to say that Greece used financial gymnastics of this nature to first be admitted into the Eurozone and to subsequently fake compliance. PPPs have a very high corruption risk—we need look no further than the stink that is the medical equipment leasing scheme known as the Managed Equipment Services (MES) project How much public finance does development require? There is perhaps no better place to benchmark than with the Asian Tigers. In the 70s, Thailand and South Korea were raising 13 and 15 per cent of GDP in tax revenue, well below Kenya’s 18 per cent, while Malaysia and Singapore were doing better at just over 20 per cent (see chart). But where the East Asians stand apart is that each of them was able to put at least a third of their revenue into investment. The real miracle here is how they managed to keep their recurrent budget to a maximum of 10 per cent of GDP, out of which they were also heavily investing in education. As economists Mahbub ul Haq and Khadija Haq observed, beneath the East Asian economic miracle lay an education miracle. It is also a miracle of public finance, specifically, public thrift. We hear a lot about the high saving and investment rate part of the story. What we do not hear about is the role of government in that story. In the early seventies, East Asian and African countries had similar national savings rates, but even then East Asian governments were contributing more to national saving and investment, although African governments’ contribution was also significant (see chart). A decade later, East Asian governments were still contributing over a third of national investment, while for African and other LDC governments this contribution fell to 11 and 6 per cent respectively. Consequently, we turned to foreign resources. By the early 80s, Africa was investing 20 per cent of GDP more than half of which was foreign-financed, while the East Asians were investing 30 per cent, 90 per cent of which was domestically financed. In the 70s, Thailand and South Korea were raising 13 and 15 per cent of GDP in tax revenue, well below Kenya’s 18 per cent, while Malaysia and Singapore were doing better at just over 20 per cent The East Asian experience is telling us that when people were too poor to save much, it is the government, and not foreign resources, that closed the gap between private savings and investment requirements. In economics, we postulate that saving is determined primarily by income, and investment by rate of return. As these public investments paid off, they boosted private income and consequently private saving. When countries save more, they need less, not more foreign resources to finance investment. Donald Kaberuka is telling us that we need to raise more revenue to enable us to borrow more. Is he ignorant or dishonest? During his tenure, the AfDB became the lightning rod for infrastructure-led growth, a fallacy that this column has discussed before. In fact, the nonsensical comments echo sentiments in the AfDB’s 2018 Africa Economic Review, to wit: “For much of the past two decades, the global economy has been characterised by excess savings in many advanced countries. Those savings could be channeled into financing profitable infrastructure projects in developing regions, especially Africa, to achieve the G20’s industrialisation goal. That this mutually profitable global transaction is not taking place is one of the biggest paradoxes of current times.” You may want to note that the objective is to “meet the G20’s industrialisation goal.” The irrepressibly prescient Franz Fanon read in the tea leaves: “The national bourgeoisie will be quite content with the role of the Western bourgeoisie’s business agent, and it will play its part without any complexes in a most dignified manner.” And therein lies the rub.
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Kenya's tourism earnings rise 3.9% in 2019 @ReutersAfrica Africa |
Kenya’s earnings from tourism rose 3.9% last year to 163.56 billion shillings ($1.61 billion), thanks to a slight increase in the number of visitors, its tourism minister said on Friday. The East African nation, which relies on tourism as a major source of foreign exchange and jobs, had 2.05 million tourists last year, an increase of 1%
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