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		<title>When China meets India</title>
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		<pubDate>Sun, 19 May 2013 07:38:01 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[BRICS]]></category>
		<category><![CDATA[China]]></category>
		<category><![CDATA[economy]]></category>
		<category><![CDATA[exports]]></category>
		<category><![CDATA[government]]></category>
		<category><![CDATA[India]]></category>
		<category><![CDATA[Li Keqaing]]></category>
		<category><![CDATA[trade]]></category>

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		<description><![CDATA[China and India can take the leap-frog to win the competition in many high technology sectors.]]></description>
				<content:encoded><![CDATA[<p align="left">Chinese President Xi Jinping chose Russia when he made his first state visit. Now Li Keqiang, the new premier, has chosen India as the first stop of his overseas debut. Both choices echo the policy of building “new big power relations”, a phrase recently minted by the incoming leadership.</p>
<p align="left">But what exactly does this “new big power relations” mean for China and India?</p>
<p align="left">The two nations are so close to each other, and yet so unfamiliar. It is almost as if China comes from Mars, and India comes from Venus. China and India share a boundary of more than 2,000 kilometres, separated by the snow-capped Himalayas.</p>
<p align="left">Before Li Keqiang’s visit to India, an age-old boundary dispute in the western Himalayas flared up in mid April, when both India and China moved more troops in the area. Indian external affairs minister Salman Khurshid believes that this boundary standoff is just an “acne than can be addressed by simply applying an ointment”. He is probably correct, yet it makes one wonder at what can only be described as a &#8220;juvenile&#8221; exercise between two countries, two ancient neighboring civilizations that boast of a five thousand year old history.</p>
<p align="left">Economic cooperation has always been conveniently called in to smooth over border disputes. For those involved in trade and investment, the border dispute is insignificant. Bilateral trade between the two increased from $2.9 billion in 2000 to around $80 billion in 2012.</p>
<div id="attachment_12684" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12684 " alt="[Xinhua]" src="http://thebricspost.com/wp-content/uploads/2013/05/india-china1-300x169.jpg" width="300" height="169" /><p class="wp-caption-text">&#8220;Premier Li Keqiang’s visit provides a golden opportunity for both countries to script a fresh and more positive chapter in China-India relations&#8221; [Xinhua Images]</p></div>
<p align="left">China is now the third largest partner for India’s exports and the largest source for India’s imports. India is the seventh largest partner for China’s export and 20th largest partner of India’s imports. Leaders of both countries have confidently proposed the goal of increasing bilateral trade to $100 billion by 2015.</p>
<p align="left">By our estimation, the bilateral trade between China and India may reach $500-700 billion by 2020.</p>
<p align="left">Bilateral investment has, also, increased significantly after 2000. China’s direct investment in India has increased seventeen fold from 2006 to 2011, India’s investment in China also increased rapidly from 2000 to 2008, but declined after the global financial crisis.</p>
<p align="left">The economic relationship between China and India, however, is quite asymmetric. India runs a wide trade deficit with China, which jumped to $27 billion in 2011 from $ 4.3 billion in 2006. And bilateral investment, in particular, is insignificant, considering the two are neighbouring emerging economies.</p>
<p align="left">India’s investment in China is around 0.01-0.05 per cent in China’s overall foreign investment, and China’s investment in India only accounts for around 0.2 per cent in India’s foreign investment. Warring about the increasing trade imbalance with China, India has frequently initiated anti-dumping investigations on imports from China. On the other hand, Chinese companies frequently complain about India’s discriminative policy against Chinese investment.</p>
<p align="left">It is in this perspective that the Chinese Premier&#8217;s visit takes centrestage.</p>
<p align="left">Li Keqiang’s Delhi visit provides a golden opportunity for both countries to script a fresh and more positive chapter in China-India relations and must not be squandered away.</p>
<p align="left">It can&#8217;t be over-emphasised that the foundations to forge stronger ties between Beijing and New Deli should be based on the comparative advantages of both countries.</p>
<p align="left">China’s manufacturing sector is very competitive, even by international standards. But with rising labour costs in China, and the policy of “going abroad”, which encourages Chinese companies to invest more aggressively in overseas markets, more and more Chinese companies will increase outbound investment.</p>
<p align="left">India can seize this opportunity to encourage Chinese investments. The main benefit of having more Chinese investment, is not acquiring cutting edge technologies, but creating more job opportunities, especially for unskilled labour.</p>
<p align="left">Another key area for a China-India focus that has huge potential is infrastructure investment. In recent years, the infamous “Made in China”, has had great challenge from the new label- “Built by China”.</p>
<p align="left">The unprecedented scale of a new sort of development in the last three decades has characterised, what some have termed the “China Miracle”, again highlighting the importance of investment.Travelling around China, you will see grand highways, high-speed railways, airports, and fancy modern buildings mushrooming everywhere.</p>
<p align="left">India has also similarly stressed on the importance of investment in achieving growth. According to India’s Twelfth Five Year Plan, investment will increase to $1.2 trillion, which accounts for 8-8.5 per cent of it&#8217;s GDP. Such an ambitious goal needs to be laced with the support of foreign investment. India needs to expand dramatically the sources and volume of available infrastructure financing.</p>
<div id="attachment_9515" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-9515   " alt="[AP]" src="http://thebricspost.com/wp-content/uploads/2013/03/india-china-300x170.jpg" width="300" height="170" /><p class="wp-caption-text">A full fledged cooperation scheme between China and India will have far-reaching effects, says He Fan [AP Images]</p></div>
<p align="left">With the sharp decline of outbound investment from the US and Europe after the global financial crisis, India has to rely more on South-South cooperation, and China should be its most logical partner. India-China bilateral or multilateral infrastructure investment funds can be established to invest in such areas as energy, traffic, telecommunication and urban construction.</p>
<p align="left">If China is called the &#8216;world factory&#8217;, India is the &#8216;world office&#8217;. India has upgraded its very dynamic service sector, especially in the IT industry, significantly since the year 2000. India also has its niche in the pharmaceutical sector for India&#8217;s $26bn generic drug industry supplies much of the affordable medicine used in the developing world.</p>
<p align="left">Curiously enough, China&#8217;s new march of structural reforms also emphasises the development of its service sector. IT and healthcare are among the priorities of the reform agenda for the new Chinese administration. It will be quite amazing to see what kind of cooperation China and India can clinch on these areas. A joint endeavor here would surely reach commanding heights for a new kind of industrial revolution.</p>
<p align="left">Both countries have a trump card in the form of a large pool of high quality, yet still relatively low-wage, engineers and scientists, and the boost of large domestic markets. It would not be surprising then to see China and India take the leap-frog to win the competition in many high technology sectors.</p>
<p align="left">However, there are crucial issues to tackle before unleashing the huge potential of mutual cooperation between the  two growth dynamos. For starters, India has to build a more mature manufacturing base, and China has to open its service sector.</p>
<p align="left">A full-fledged multi-paradigm cooperation scheme between China and India will have far-reaching tectonic effects, and place the China-India relations in a different orbit. It can also pave the way for more strident coordination in international and regional affairs between the two most important powers in the region.</p>
<p align="left">It will be a blessing on Asia and the whole world if the two neighbours can get on well and respect each other&#8217;s concerns.</p>
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		<title>India has only itself to blame</title>
		<link>http://thebricspost.com/india-has-only-itself-to-blame/</link>
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		<pubDate>Sun, 19 May 2013 05:22:53 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[China]]></category>
		<category><![CDATA[India]]></category>
		<category><![CDATA[LAC]]></category>
		<category><![CDATA[Ladakh]]></category>
		<category><![CDATA[Li Keqiang]]></category>
		<category><![CDATA[Line of Actual Control]]></category>
		<category><![CDATA[Line of Control with Pakistan]]></category>
		<category><![CDATA[LoC]]></category>
		<category><![CDATA[Raki Nala]]></category>

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		<description><![CDATA[Beijing’s actions in the past few weeks have shaken New Delhi out of a comfortable inertia.]]></description>
				<content:encoded><![CDATA[<p>What the recent skirmish along the China-India border has undoubtedly established is that India’s policy ennui is not working any more.</p>
<p>On April 15, some 40 Chinese soldiers pitched their tents 19 kilometres into the Indian territory of Raki Nala in the eastern Ladakh region of the Great Himalaya Mountains.</p>
<p>A face-off ensued when the Indian Army then set up their tents 500 metres away from the Chinese.</p>
<p>On May 5, both armies pulled back their forces after mutual agreement.</p>
<p>But Beijing’s actions in the past few weeks have shaken New Delhi out of a comfortable inertia.</p>
<p>In the recent years leading up to the Raki Nala standoff – probably the most high profile confrontation since the near war in the Sumdorong Chu Valley in 1987 – Indian leaders had lulled themselves into believing that the Line of Actual Control (LAC) – the China-India 4,057-kilometre border – will not change:</p>
<p>They believed that LAC would not deteriorate into the conflict-fraught LoC (Line of Control with Pakistan).</p>
<p>Indeed, those in the Indian administration who dictate Pakistan and Kashmir policies have often cited a “peaceful LAC” as an illustration of how India’s boundary should be – “unsettled”.</p>
<p>But the Chinese tents which went up in the dry rivulet of Raki Nala appear to have achieved their raison d’être.</p>
<p>In the days since the tents went up, India has agreed to discuss a Border Defence Cooperation Agreement that China proposed a month-and-half before the Chinese People’s Liberation Army trekked in to Raki Nala.</p>
<p>India has no one but itself to blame for its current predicament.</p>
<p>Successive governments in New Delhi have despite everything continued willy-nilly with the ghost of Captain Younghusband and Lord Curzon, head of the British India government in the late 1800s and early 1900s, and their misconceived attempts at the time to protect the British Raj from Russia.</p>
<p>Lord Curzon ordered the ‘invasion’ of Tibet on the fears that it was about to ally with Russia, which could have threatened British India. The campaign yielded no worthwhile results for London (China annexed Tibet after World War Two) and ended in an irrelevant treaty.</p>
<p>However, what separates the British approach from the current Indian one is that the British were willing to make amends; India is not.</p>
<p>In the 1913-14 Simla Convention, British India accepted that Aksai Chin, an area disputed between China and India, was part of Tibet.</p>
<p>It is difficult to say what could have promoted an otherwise wise leader like Jawaharlal Nehru to lay claim over the area in the 1950s.</p>
<p>Perhaps, politics and the lack of tall leadership in New Delhi lie at the core of this decision. No government in India has ever tried to engage the people-at-large in a debate with the motive of informing them that India’s claim over Aksai Chin isn&#8217;t very strong and perhaps even arbitrary.</p>
<p>More importantly, no government has tried to build a consensus that a resolution of the China-India border issue will require some give-and-take compromising of territory. Lack of political maneuverability has New Delhi in a bind.</p>
<p>To be fair, China has shown much more flexibility. It has given ample indication to India in the last 60 years that it is willing to concede to India in the east, if India were to re-consider its claim over Aksai Chin.</p>
<p>Aksai Chin is crucial to China not only because it skirts the Karakorum Highway – which connects Pakistan to China through the Karakorum Mountains in the north – but also because it connects Tibet and Xinjiang region in the northwest.</p>
<p>Furthermore, in the first ever “Blue Book” on India, Beijing appears to have toned down its aggression over Arunachal Pradesh &#8211; an area in northeast India which both sides claim and which witnessed much of the bitter war in 1962.</p>
<p>Of course, during the brouhaha over the recent standoff, New Delhi and the Indian media, perhaps to its own peril, discovered they had an abundance of “China experts”.</p>
<p>The immediate provocation for China to set up camp in Raki Nala appears to be seven bunkers that the Indian Army was constructing in the Chumar sector in violation of existing agreements.</p>
<p>All eyes, then, will be on Chinese Premier Li Keqiang , the second most important figure in China’s new leadership, when he arrives in India on May 19 in his first official visit abroad.</p>
<p>He is likely to want the LAC to be part of the buffet that New Delhi had planned to serve during his visit. Whether curry mixes with Chow mein remains to be seen.</p>
<p>Two days after the Chinese tents at Raki Nalla were taken down and troops withdrawn, a top official in New Delhi said “we are still analysing the reasons for the incursion, but we are inclined to believe that they (China) want us to bring [discussion of] the LAC out of the back burner”.</p>
<p>Beginning with New Delhi’s Foreign Office’s PAIS (Pakistan, Afghanistan, and Iran) desk, that argument has begun to falter.</p>
<p>In the meantime, China is turning the Karakorum Highway, at least on its side, into an all-weather road.</p>
<p>Add to that the announcement from former Indian Army Chief V K Singh to the Indian public that Chinese military engineers are in Gilgit and Baltisthan, part of  Pakistan Occupied Kashmir (POK) – an area that the Indian Parliament  has resolved to claim.</p>
<p>In other words, while China and Pakistan are finding convergent interest across the Karakorum Highway, the Foreign Office in New Delhi is yet to reconcile the head of the PAI desk with the Head of East Asia desk.</p>
<p>The divide runs wider and deeper, and flows right into the schism between the Ministry of the Defence and the Ministry of Home Affairs.</p>
<p>The Army claims incursions like that of April 15 happen because it doesn&#8217;t have operational control over the Indo-Tibetan Border Police – a para-military force that is designated to guard the India-China border.</p>
<p>On the other hand, the Ministry of Home Affairs argues against the army’s possessiveness about boundaries.</p>
<p>Such is the environment that awaits Le Keqiang in New Delhi.</p>
<p>Unlike External Affairs Minister Salman Khurshid’s visit to Beijing, which provided him with no answers about the April 15 incursion, Li Keqiang will likely scissor the fat of emotion and get to the bone.</p>
<p>Beijing is sick of New Delhi’s languor. “Settle the borders, we want to determine where China ends and India begins. You want to keep it ambiguous.” That is likely to be Premier Li’s categorical statement.</p>
<p>This ups India’s ante. New Delhi wanted this visit to focus on trade, on how Chinese markets could be opened up to more Indian goods and services. The incursion at Raki Nala has made it possible for Beijing to disrupt the Indian government’s approach.</p>
<p>In other words, Beijing is saying we have your money so let us not discuss it; but you have our borders so let us talk about it. The borders are not China’s alone, however, as they are also shared by Tibet, and with a mixed ethnicity and religiosity in China’s autonomous region of Xinjing.</p>
<p>China drubbed India in war after the Indian military found that it had connected Xinjiang and Tibet through territory claimed by India.</p>
<p>Look at the map, look at the topography, see the ranges spiraling out of the Pamir mountain range in Central Asia, and try untangling the knot.</p>
<p>Forbidding as it may be, there is a way to scale the Pamir Knot.  Bar the last 60 odd years, neither the treacherously high ranges of the PamirMountains (nor their off-shoots such as the Karakorum) or the Himalayas have stopped exchanges between India and China.</p>
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		<title>Brazil en route to becoming a global clean powerhouse</title>
		<link>http://thebricspost.com/brazil-en-route-to-becoming-a-global-clean-powerhouse/</link>
		<comments>http://thebricspost.com/brazil-en-route-to-becoming-a-global-clean-powerhouse/#comments</comments>
		<pubDate>Mon, 13 May 2013 12:43:05 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[BNDES]]></category>
		<category><![CDATA[Brazil]]></category>
		<category><![CDATA[BRICS]]></category>
		<category><![CDATA[Energy]]></category>
		<category><![CDATA[ethanol]]></category>
		<category><![CDATA[hydroelectric]]></category>
		<category><![CDATA[hydropower]]></category>
		<category><![CDATA[solar]]></category>
		<category><![CDATA[sugar]]></category>
		<category><![CDATA[wind]]></category>

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		<description><![CDATA[Contradictions in the state's energy policy could play spoilsport to what has been an amazing run for Brazil in the clean energy sector.]]></description>
				<content:encoded><![CDATA[<p style="text-align: left;" align="center">Brazil has all it takes to become a global clean energy powerhouse.</p>
<p style="text-align: left;" align="center">It has the world’s most cost-effective and largest biofuel industry (ethanol). The National Development Bank has just approved the first project finance deal for a second generation ethanol mill. Wind power production is growing very fast, productivity is up, prices coming way down. Photovoltaic solar power is taking-off, prices are starting to fall.</p>
<p>These new renewables are adding clean energy to an energy matrix that is cleaner than the global average: 45 per cent of Brazil’s total energy comes from hydropower. Hydropower represents 80 per cent of electricity production, and all renewable sources, account for 89 per cent of the electricity used by the country. The government has further pledged to invest $1.7 billion on research and development for alternative clean energy, aiming at boosting innovation and investment. Applications for which have already amounted to $6.3 billion.</p>
<p><div id="attachment_12547" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12547  " alt="[AP]" src="http://thebricspost.com/wp-content/uploads/2013/05/hydro-electric-300x182.jpg" width="300" height="182" /><p class="wp-caption-text">Hydropower represents 80 per cent of electricity production in Brazil [AP]</p></div><b>The stumbling blocks?</b></p>
<p>There are however a few pitfalls on the way.</p>
<p>Fossil fuel subsidies are still very high in Brazil, and drastically reduce biofuel competitiveness. Planning mistakes and low priority to new renewable sources have led to an increase of the share of coal, oil, and natural gas fired thermopower plants in the grid. Reservoirs of hydropower plants have been more severely affected by frequent drought, especially in the areas of the Northeast where some of the larger reservoirs of hydroplants are located.</p>
<p>Wind power would be a perfect complementary source, because winds are stronger during the drought season, and most of the new windmills are also located in Northeastern Brazil, reducing the costs of plugging the mills into the grid. Photovoltaics and wind power together would be even more productive and complementary to each other and to hydropower in the grid. Windmills use only about five per cent of the area they occupy.</p>
<p>Brazil’s flex fuel engine is a stunning success case on most counts. In 10 years it has replaced more than 60 per cent of the fleet. Today only a small portion of new light vehicles come out of the assembly lines without a flex fuel engine. All service stations in the country have ethanol pumps and all large service stations located at main highways have biodiesel pumps.</p>
<p><b>The ethanol challenge</b></p>
<p>The ethanol industry in Brazil, however, is facing dire times. Extreme climate events have hit sugarcane crops for four years in a row. This year will likely be the first to see a growing harvested area over the last six. Ageing plantations are yielding lower ethanol productivity crops, and investment in plantation renewal has been lagging.</p>
<p>The government has only very recently taken notice of these limiting factors to production and productivity, and has created a special finance program to help producers. It will provide $1.9 billion of subsidised credit for plantation renewal, and $1 billion to increase ethanol storage capacity. It has also decided to grant a small tax reduction aiming at increasing ethanol’s competitiveness over gasoline.</p>
<p>This month, ethanol was competitive only in one out of the 27 Brazilian states (26 states and the Federal District). To control inflation, the government has frozen gas prices to distributors at the refinery for several years, and only recently has authorised a modest increase to prevent state-owned oil giant Petrobras’ balance from going farther down the red.</p>
<p><div id="attachment_12546" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12546 " alt="The ethanol industry in Brazil is facing dire times, says Abranches [AP]" src="http://thebricspost.com/wp-content/uploads/2013/05/ethanol-300x189.jpg" width="300" height="189" /><p class="wp-caption-text">The ethanol industry in Brazil is facing dire times, says Abranches [AP]</p></div>Fossil fuel subsidies damage not only Petrobras&#8217; balance sheet, but also the biofuel industry. The ten-year old flex engine initiative, although a success in renewing the auto fleet becomes almost useless as far as the use of cleaner ethanol is concerned.</p>
<p><b>The wind power success in Brazil</b></p>
<p>Another clear <a href="http://www.greatenergychallengeblog.com/2011/09/21/a-surge-of-wind-over-brazil/" target="_blank">success case</a> in Brazil is wind power. The Brazilian industry has actually taken off only after 2009, when its so-called phase 2 began.</p>
<p>Its installed capacity has grown almost 2000 per cent between 2005 and 2009. Growth over the four years of phase 2, from 2009 to 2013 was 550 per cent, according to the state-owned Energy Research Enterprise (EPE).</p>
<p>Many companies have come to the Brazilian market after the Euro crisis. They say that the minimum sustainable price for wind power today would be around $52.00. Even at $52.00-55.00/kw it would still be lower than hydropower prices, the benchmark prices for both the government and the market.</p>
<p>The last report by the Brazilian association of wind power producers, Abeólica, stresses the impressive gains in productivity. The new windmills are equipped with generators that have greater power output</p>
<p>Brazil’s capacity factor for phase 2 averages 54 per cent, far greater than the world average of 27 per cent, China’s 25 per cent, and Australia’s 39 per cent. Capacity factors vary widely from location to location. In Brazil, the new windmills are primarily located in northeastern states, considerably windier than the southernmost state where earlier mills are located.</p>
<p><b>Bad state planning could play spoilsport</b></p>
<p>The country’s energy planning however has become quite loose and fragmented.</p>
<p>There are 32 new state of the art windmills off the grid because the installation of transmissions lines has been delayed. Today all major global wind power players are active in the Brazilian market, but the power grid, and corresponding transmission lines are government-controlled. Transmission lines have lagged behind as the government was unable to match the pace of construction of windmills.</p>
<p><b>In partnership with China</b></p>
<p>Brazil and China have signed a cooperation agreement for the joint-development of science and technology on sustainability. The major instrument for this cooperation will be the China-Brazil Center for Energy and Innovative Technologies that will be jointly maintained by COPPE and Tsinghua University. The agreement sets the Center research agenda around electric vehicles, solar energy, energy planning and ocean energy.</p>
<p>The government hopes that this incentive to clean energy R&amp;D will encourage domestic technological development, and boost investment in these industries that are already very competitive due to the country’s natural advantages in solar and wind power generation, as well as in energy from biomass.</p>
<p><div id="attachment_12548" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12548 " alt="[Getty images]" src="http://thebricspost.com/wp-content/uploads/2013/05/sugar-300x198.jpg" width="300" height="198" /><p class="wp-caption-text">&#8220;BNDES has just released $150 million to finance Brazil’s first second generation ethanol mill, which will use sugarcane residue and biomass to produce cellulosic ethanol&#8221; [Getty images]</p></div><b>Need to fight systemic shortcomings</b></p>
<p>All players in the domestic energy sector are excited with this new program of incentives to innovation, Inova Energia (Energy Innovation), the government has announced at the end of last year. The $1.7 billion plan aims at: stimulating research and development on smart grids and ultra-high tension transmission; photovoltaics, thermosolar, and wind power generation.</p>
<p>Another important target is R&amp;D on electric (power trains) and hybrid vehicles using ethanol.</p>
<p>The National Development Bank, BNDES, has announced that it received applications from 373 companies and organisations seeking $6.13 billion for this. That’s about four times the program’s approved budget in reais, the Brazilian currency.</p>
<p>There are many such exciting initiatives and ventures under way. BNDES has just released $150 million to finance Brazil’s first second generation ethanol mill, which will use sugarcane residue and biomass to produce cellulosic ethanol.</p>
<p>The Engineering Program of the Federal University of Rio de Janeiro, COPPE, has also recently closed a deal to build a pilot project of a sea tide power plant and has started the construction of its model for a magnetic levitation train.</p>
<p>But to really unleash Brazil’s vast clean energy resources and natural advantages, the government has also to deal with the contradictions of its energy policy. The first step in this direction would be to eliminate fossil fuel subsidies, and to fight systemic inefficiencies that drive energy prices upwards and harms the interests of consumers, as well as the country’s economic competitiveness.</p>
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		<title>No winners in Syria’s civil war</title>
		<link>http://thebricspost.com/no-winners-in-syrias-civil-war/</link>
		<comments>http://thebricspost.com/no-winners-in-syrias-civil-war/#comments</comments>
		<pubDate>Sat, 11 May 2013 12:17:39 +0000</pubDate>
	
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		<category><![CDATA[US]]></category>

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		<description><![CDATA[Many regional players have high expectations of gains in the Syria they expect to emerge at the end of the conflict.]]></description>
				<content:encoded><![CDATA[<p>It is not easy being a Syria analyst.</p>
<p>According to General Martin Dempsey, the chairman of the US joint chiefs of staff, the Syrian conflict &#8220;posed the most complex set of issues that anyone could ever conceive, literally&#8221;.</p>
<p>The top general&#8217;s impression was expressed weeks before Israel’s spectacular air strike on multiple targets just north of Damascus earlier this week. With Israel&#8217;s military intervention, an exceptionally convoluted conflict has just become considerably more confusing.</p>
<p>Despite frequent and clear statements by influential Israelis in full support of the effort to overthrow the Syrian President, Israel&#8217;s indirect role has always been the subject of heated debate. No one wants Israel to visibly be on their side although many secretly hoped Tel Aviv’s influence would covertly work to steer American and European Syria policies to their favour.</p>
<p>Whatever confusion there was about the side Israel really supported, the enormous explosions that lit the Damascus skies at dawn last week provided irrefutable proof that Tel Aviv is really committed to preventing the Assad regime from emerging victorious at the end of its military confrontation with Western and Persian Gulf-backed rebels.</p>
<p>Opinion pieces in the media quickly reminded readers of what everyone in the Arab world already knew: Israel’s attack is meant to be seen as a pre-approved message from the international community that the Syrian regime will be prohibited by all means necessary from winning the current civil war.</p>
<p>It is particularly poignant to mention that none of Bashar Al-Assad&#8217;s regional and international supporters made any serious pledges of military support following Israel’s strike.</p>
<p>Russia, China, Iran and Hezbollah politely protested but otherwise did not vow to do anything beyond the rhetoric.</p>
<p>Could this be a clear indication that the regime’s days might now really be numbered?</p>
<p><b>Ambiguity</b></p>
<p>General Ray Odierno, the US Army Chief of Staff, said he is confident the Free Syrian Army (FSA) will be victorious. &#8220;I kind of believe its not a matter of if, it&#8217;s a matter of when,&#8221; he recently said.</p>
<p>But this clarity was soon replaced by more ambiguity.</p>
<p>First came a totally unexpected statement by Carla del Ponte, member of the UN Human Rights Commission, that managed to almost completely halt the previous momentum of what seemed to be a determined effort by many in the US and Europe (but not by President Obama himself) to accuse the regime of using chemical weapons against its civilian population.</p>
<p>In an interview with a Swiss-Italian television station, Carla del Ponte reportedly said: <i>&#8220;…</i>There are strong, concrete suspicions but not yet incontrovertible proof of the use of sarin gas, from the way the victims were treated. This was used on the part of the opposition, the rebels, not by the government authorities.&#8221;</p>
<p>There were calls by Assad’s opponents to fire Carla del Ponte, while regime supporters were full of smiles as they shared her interview on their Facebook and Twitter accounts. President Obama’s spokespeople now had to explain how the US would act after the apparent crossing of the President’s Chemical weapons “red line” by the Syrian rebels &#8211; their allies in the conflict.</p>
<p>Then came the joint news conference by Russian Foreign Minister Sergei Lavrov and US Secretary of State John Kerry.</p>
<p>Anyone who expected a confrontation or a resignation to the fact that “<i>there is not much anyone can do about Syria</i>” was surprised to see the two top officials appearing friendly, optimistic and united in their intention to support unconditional national dialogue by holding a conference on the conflict as early as late May.</p>
<p>So how likely is it that this apparent Russo-American agreement will bring convergence on how to resolve the Syrian conflict?</p>
<p><b>Too many obstacles</b></p>
<p><div id="attachment_12263" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12263" alt="Have Russia and the US really reached a solution for ending the Syrian conflict through dialogue? [AP]" src="http://thebricspost.com/wp-content/uploads/2013/05/lavrov-kerry-300x188.jpg" width="300" height="188" /><p class="wp-caption-text">Have Russia and the US really reached a solution for ending the Syrian conflict through dialogue? [AP]</p></div>First, there are too many internal players. The regime might still be generally united under the leadership of President Assad and the top commanders of the Syrian army, but the opposition is anything but united.</p>
<p>Efforts to “unite the opposition” will probably continue to be a waste of time or could lead to a short-lived artificial show of unity at best.</p>
<p>The opposition in Syria includes the Islamists and the communists, the urbanites and the rural, the honest and the corrupt, the constructive and the self-promoters, the ones inside Syria and the outside opposition, the ones representing Qatar and the others representing Saudi interests, the Syrian nationalists and the Kurdish separatists, young online activists and old former political prisoners; what &#8211; beyond the unrealistic or costly goal of toppling the regime &#8211; could possibly unite them?</p>
<p>There are also too many regional players. Iran, Turkey, Saudi Arabia, Qatar, Jordan, Iraq, Israel and Lebanon’s Hezbollah and Future Movement.</p>
<p>Many have developed high expectations of potential gains in the new Syria they expect to emerge at the end of the conflict. Russia and the US will need to convince them to leave Syria alone because the cake is not large enough to feed them all.</p>
<p>Adding to the complexity of the large number of regional players who are deeply involved in the Syria crisis, one hears of sharp difference of opinion between many of these countries on how they should react to the situation in Syria. Jordan is worried that an Islamist victory in Syria could spill over into their country and that the Hashemite King would be next to be toppled.</p>
<p>Yet, US pressure plus Persian Gulf incentives reportedly convinced the king to host CIA training centres for thousands of fresh new rebels.</p>
<p>Saudi Arabia’s leaders are worried about the momentum of change that the Arab Spring has taken &#8211; they fear the calls for democracy and liberalism &#8211; but on the other hand some of the Islamist princes are furious and want the Syrian regime defeated at any cost or risk to their kingdom.</p>
<p>The Emir of Qatar is lusting for victory in Syria and so is Turkish Prime Minister Recep Tayyip Erdogan, but the latter has to deal with opinion polls showing that the vast majority of the Turkish people are not pleased with his Syria intervention, the way he destroyed Turkey’s regional relations and exposed their country to unnecessary risks to its ethnic and sectarian coexistence.</p>
<p>Ironically, reducing complexities on the ground requires that they be acknowledged first.</p>
<p>Russia has already adopted the narrative that says neither side can win by force, neither side is always right and moral, and that neither side enjoys the backing of a large majority of the Syrian people.</p>
<p>The challenge is for the Obama administration to learn to speak in the same language. American international politics are almost always supported by moral clarity foundations. Although President Obama’s tone has always been significantly different from his predecessor’s Iraq intervention rhetoric, his administration is still unable to stray too far from the standard template of US foreign policy.</p>
<p>This policy’s prerequisites are that the US is on the right side of history, is supporting the Syrian people’s struggle for freedom and democracy, is defending them from the criminal regime, and is certain of near victory (the regime’s days are numbered).</p>
<p>This tremendous diversity of views and interests can be dealt with through the adoption of a decisive and clear communication strategy by the US and Russia.</p>
<p>All the Syrian and regional players will need to be told that none of them has clean hands, that none of them represents a clear majority of the Syrian people, and that none of them is about to enjoy rewards of victory out of the Syrian crisis.</p>
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		<title>India, China squabble detrimental to equitable world order</title>
		<link>http://thebricspost.com/india-china-squabble-detrimental-to-equitable-world-order/</link>
		<comments>http://thebricspost.com/india-china-squabble-detrimental-to-equitable-world-order/#comments</comments>
		<pubDate>Fri, 10 May 2013 09:09:13 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[Amit Baruah]]></category>
		<category><![CDATA[border]]></category>
		<category><![CDATA[China]]></category>
		<category><![CDATA[India]]></category>
		<category><![CDATA[Salman Khurshid]]></category>
		<category><![CDATA[Wang Yi]]></category>

		<guid isPermaLink="false">http://thebricspost.com/?p=12400</guid>
		<description><![CDATA[There is little doubt that India and China must move towards resolving their border dispute – once and for all, says Amit Baruah.]]></description>
				<content:encoded><![CDATA[<p>The Indian external affairs minister Salman Khurshid has not been able to resolve what has been called the ‘China puzzle’. “It’s not clear why it happened,” Khurshid said in Beijing on Thursday, referring to what India said was an incursion by Chinese troops into its territory in the eastern Himalayan region of Ladakh in April.</p>
<p>“I think they [the Chinese side] were not offering us that background [why the entry of troops happened] and we were not asking for that background&#8230;There was a tremendous sense of satisfaction that it [troops’ entry] was resolved  in the manner it was resolved,” the Indian minister said after meeting Wang Yi, his Chinese counterpart.</p>
<p><div id="attachment_12390" class="wp-caption alignright" style="width: 310px"><a href="http://thebricspost.com/wp-content/uploads/2013/05/china-india.jpg"><img class="size-medium wp-image-12390" alt="Salman Khurshid (left) and his Chinese counterpart Wang Yi [Xinhua]" src="http://thebricspost.com/wp-content/uploads/2013/05/china-india-300x169.jpg" width="300" height="169" /></a><p class="wp-caption-text">Salman Khurshid (left) and his Chinese counterpart Wang Yi [Xinhua]</p></div>After the agreed withdrawal of both Chinese and Indian troops from the Daulat Beg Oldi sector in Ladakh, Mr Khurshid was possibly expressing the relief felt by many Chinese, Indians and other well-wishers of the two countries that there had been a pull-back from a potential flashpoint.</p>
<p>Many Indians, like the minister, are puzzled by the timing of the Chinese incursion given that Chinese Premier Li Keiqang is expected in Delhi on May 20 – India being his first foreign destination after taking over as Premier.</p>
<p>In fact, Mr Khurshid’s was a preparatory visit ahead of Mr Li’s – a sign that the two countries now accord considerable importance to their relations. In the past, preparatory visits took place at the level of officials, now a senior Indian minister had been tasked with the job.</p>
<p>Events around the undefined Line of Actual Control in the Ladakh area last month have seemingly cast a shadow over his visit and Mr Keqiang’s. It’s now up to the leaderships of the two countries to put aside this irritant and move forward in trying to resolve their issues, often described as the “leftovers” of history.</p>
<p>Since the visit of Indian prime minister Rajiv Gandhi in December 1988, the two countries have given their relations a semblance of normality despite the fact that they confront the realities of the largest unresolved land border dispute in the world following their 1962 war.</p>
<p>They have built up a structure through agreements in 1993, 1996 and 2003 through which mechanisms have been put in place to deal with situations where border patrols encounter each other.</p>
<p>In parallel, they first agreed on a Joint Working Group (1988) to exchange maps for the delineation of the Line of Actual Control, which did so in the middle Himalayas, but failed to do the same in the eastern and western sectors of their disputed boundary.</p>
<p>In 2003, the two sides set up the mechanism of Special Representatives to resolve the border issue, with India and China agreeing on a bunch of “political parameters and guiding principles” to resolve the boundary issue.</p>
<p><div id="attachment_12149" class="wp-caption alignright" style="width: 310px"><a href="http://thebricspost.com/wp-content/uploads/2013/05/india-china.jpg"><img class="size-medium wp-image-12149 " alt="There is little doubt that India and China must move towards resolving their border dispute, says Amit Baruah [AP]" src="http://thebricspost.com/wp-content/uploads/2013/05/india-china-300x178.jpg" width="300" height="178" /></a><p class="wp-caption-text">There is little doubt that India and China must move towards resolving their border dispute – once and for all, says Amit Baruah [AP Images]</p></div>After 15 rounds of meetings, the Special Representative process seems to have hit a roadblock, with the two countries nowhere close to clinching a border settlement. In fact, they have now taken to discussing issues not in their original ambit, a sign that progress on boundary resolution has been minimal.</p>
<p>With a new Chinese leadership taking office, and India heading into election mode, breaking new ground between the two countries seems difficult. But both sides, with the world’s largest and second largest standing armies, and trade of $76 billion, need to understand that the stakes are high.</p>
<p>While Delhi talks about the road links and border infrastructure created by the Chinese, the right-wing radical in India constantly points to India’s weaknesses and the need to do more.</p>
<p>At the same time, the Indian right-wing conveniently ignores the strategic context in which India-China relations are now situated. India’s growing alignment with American views is evident, including the no-holds-barred support for the 2008 civil nuclear deal with India.</p>
<p>The official Indian welcome to US President Barack Obama’s pivot strategy towards the Pacific region and growing military-to-military relations would also have been noted by Beijing.</p>
<p>In many private conversations, now exposed by Wikileaks, Indian fears of Chinese intentions are evident. The stress on Indo-American democratic commonalities could well be interpreted as directed at a one-party State like China.</p>
<p>About 10 days before the Chinese incursion in Ladakh, India’s Congress party vice-president and possible Indian prime minister aspirant, Rahul Gandhi, made what must easily classify itself as the silliest possible comments on China made for a while.</p>
<p>Addressing a live audience on television, Gandhi tried on April 4 to (clumsily) show with the help of another gentleman on stage how gently India exercised power and how coercively China exercised power.</p>
<p>So, was the message of Chinese troops setting up camp in Ladakh a message to India that Beijing was capable of exercising power? Or, was it a message to the top echelons of the government that their anti-China messaging was being noted?</p>
<p>There will probably never be a definite answer. But, there’s little doubt that India and China must move towards resolving their border dispute – once and for all.</p>
<p>This will be good for the two countries, the rest of the region, the world and for emerging forums like BRICS. Squabbles between India and China are the last thing that would lead to the creation of a more equitable world order.</p>
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		<title>Is the United States going to outpace the BRICS?</title>
		<link>http://thebricspost.com/is-the-united-states-going-to-outpace-the-brics/</link>
		<comments>http://thebricspost.com/is-the-united-states-going-to-outpace-the-brics/#comments</comments>
		<pubDate>Thu, 09 May 2013 11:14:19 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[BRICS]]></category>
		<category><![CDATA[BRICS investment]]></category>
		<category><![CDATA[Broken BRICS]]></category>
		<category><![CDATA[economy]]></category>
		<category><![CDATA[Ruchir Sharma]]></category>
		<category><![CDATA[trade]]></category>
		<category><![CDATA[US]]></category>

		<guid isPermaLink="false">http://thebricspost.com/?p=12168</guid>
		<description><![CDATA[Data and figures showing the extent to which the United States has already been overtaken by the BRICs is nothing short of stunning.]]></description>
				<content:encoded><![CDATA[<p>Ruchir Sharma, the head of emerging markets and global macro at Morgan Stanley Investment Management, is not particularly enamoured of the BRICs. He has written extensively in Foreign Affairs about the “<a href="http://www.foreignaffairs.com/articles/138219/ruchir-sharma/broken-brics" target="_blank">Broken BRICs</a>” and he recently wrote a book <a href="http://breakoutnations.com/books/breakout-nations/overview/">Breakout Nations: In Pursuit of the Next Economic Miracles</a> that was excerpted by <a href="http://www.foreignpolicy.com/articles/2013/04/08/breakout_nation_sharma_us_economy?page=0,0">Foreign Policy</a>. Sharma’s case, essentially, is that the BRICs are economic has-beens who will inevitably lose ground to a rejuvenated United States. His indictment of the BRICs, in shortened form, is as follows:</p>
<p style="text-align: left;" align="center">&#8220;China has simply grown too comfortably middle class, and far too dependent on building new roads and factories, to continue growing at a double digit pace. Russia’s extreme reliance on oil and gas has produced a class of petro tycoons who have turned Moscow into a capital of decadence reminiscent of the last days of Ancient Rome. Brazil is so afraid of a return to the economic volatility of the 1980s and 90s that it has focused almost exclusively on protecting people from economic pain, producing one of the weakest growth records among big emerging markets. India, once hyped as the next China, has given way to gloom as growth slowed in the last year, but its real prospects are very difficult to assess, because it is fragmenting into a collection of state economies.&#8221;</p>
<p style="text-align: left;">To the extent that Sharma is pushing back against a straightforward extrapolation of linear trends (“China grew at 10% during the 2000’s, so it will grow at 10% forever!”) his case is valuable. In my writing on Russian demography, I have consistently argued that linear projection is extremely problematic and that analysts must constantly incorporate new data and new observations into their analyses lest their theories become badly out of step with reality. This happened with theories of endless Russian depopulation and decline, and it has arguably happened with theories of the immediate and problem-free rise of the BRICs.</p>
<p>Sharma, however, seems to be arguing against a straw man, an argument that not even the most enthusiastic boosters of the BRICs were actually making. I don’t know of any noteworthy figure, even among the “declinist” school against which Sharma rails, who suggested that history would forever proceed <i>exactly </i>as it did during the 2000’s and that the BRICs meteoric rise of that decade would continue indefinitely. Indeed if you listen to the pronouncements of BRIC ministers, particularly ministers of finance and trade, they do not usually strike one as arrogant and conceited, but as modest and focused on solving problems, which there is no shortage of.</p>
<p>The case for the growing importance of the BRICs is a far more subtle one than the case that Sharma attempts to disprove. As always, injecting a bit of data into the discussion is helpful. Below is a chart showing what has happened to the purchasing-power-parity adjusted GDPs of the United States and the BRICs since 2000 and to their overall shares of the world economy. To create the charts I used World Bank data for 2000-2011, consensus growth figures for 2012, and conservative forecasts, based closely off of IMF projections, for 2013. The extent to which the United States has <i>already </i>been overtaken by the BRICs is nothing short of stunning:</p>
<p style="text-align: center;"><img class="size-full wp-image-12173 aligncenter" alt="US-BRICS-GDP" src="http://thebricspost.com/wp-content/uploads/2013/05/US-BRICS-GDP.png" width="598" height="411" /></p>
<p style="text-align: center;"><img class="aligncenter size-full wp-image-12177" alt="BRICS_PPP" src="http://thebricspost.com/wp-content/uploads/2013/05/BRICS_PPP.png" width="596" height="381" /></p>
<p>In the excerpt from his book, and in his wider writings about emerging markets, Sharma writes about the prospect of the BRICs passing the United States as some sort of impossible dream: something that might happen in the future if certain trends continue and if the four countries that make up the grouping continue to have “good luck&#8221;. But, as I think the charts make clear, the BRICs have <i>already </i>supplanted the United States in terms of the size of their economies, and all reasonable forecasts are that they will continue to do so for the foreseeable future. To a large extent, Sharma is fighting a battle that the United States has already lost.</p>
<p>And, looking forward, it’s hard to see how the United States could hope to recoup the massive amount of ground that it has already lost to the BRICs. Even the most pessimistic short and medium-term growth forecasts for China and India have them at around five per cent for the next decade, while most forecasts are more optimistic. While this is a clear deceleration from the stratospheric rates they enjoyed during the 2000’s, and while Sharma harps on this deceleration as sign of impending doom, it’s worth remembering that five per cent growth is <i>a lot </i>faster than what the United States is now capable of. For comparison’s sake, 2000 was the last year that the US’ GDP grew by four per cent or more (the next best performance was 2004’s 3.5 per cent but, in retrospect, that was in the midst of a totally crazy and unsustainable real estate bubble).</p>
<p>Viewed over the long term, the slowdown in American GDP growth is remarkable:</p>
<p><a href="http://thebricspost.com/wp-content/uploads/2013/05/GDP.png"><img class="aligncenter size-full wp-image-12178" alt="GDP" src="http://thebricspost.com/wp-content/uploads/2013/05/GDP.png" width="595" height="356" /></a></p>
<p>America’s GDP growth has been slowing for several decades across a wide variety of external situations and under both Democratic and Republican presidents. Additionally, the recovery from the 2008-09 economic crisis, which itself was much sharper than previous recessions, has been far slower than in past experience. If projections hold, American GDP growth will be right around the two per cent mark for the entire period 2011-13: decent when compared to Europe, but remarkably lousy when compared with the BRICs.</p>
<p>Here’s another way to think of it. In the period 2000-2012, the United States outperformed the WORST performer among the BRICs only three times: Brazil in 2003 and 2012, and Russia in 2009. In every other year during that more than decade-long stretch, the United States performed worse than <i>all </i>of the BRICs.</p>
<p>It’s bit of a cliché to say that past performance is the best predictor of future performance, but when you take a historical view of the United States economy it’s impossible to miss the story of its steadily declining growth. It’s <i>possible</i> that this decades long trend, which has persisted despite a broad range of macroeconomic and trade policies and in a bewildering array of external environments, could, as Sharma suggests, suddenly be reversed by the use of cheap shale gas. Cheaper energy, after all, is better than more expensive energy, and cheap domestic energy is the best possibility of all.</p>
<p>However, “solving” the problems of the American economy with cheaper energy would only be possible if those problems were actually being caused by expensive energy. Otherwise it’s one concern among many, and the amelioration of a minor inconvenience not a major disaster. As a cursory look at any graph of oil prices will show you, there is very little, if any, causal relationship between commodity prices and American economic growth: there were years where energy was cheap but growth was weak, years when energy was expensive and growth was robust, and years where both were middling.</p>
<p>Access to plentiful energy clearly isn’t going to <i>hurt </i>the American economy, and I expect its overall impact will be moderately simulative. But the roots of American economic decline, including the steady withering of the middle class, the concentration of wealth in ever-smaller circles, the growth in student loans, and an over-reliance on consumer debt, are much deeper than high prices for natural gas, and cannot be “treated” by fracking any more than an aggressive tumor can be “treated” with antibiotics.  Instead, fixing the problems that are limiting American growth will require compromise, reasonableness, and foresight, precisely the values that are totally lacking from Congress. Instead, what seems likely is that the US will bounce around from one self-inflicted crisis to the other just as it had been since Obama was elected.</p>
<p>The United States will clearly remain an extremely wealthy and powerful country and it will “decline” in a relative, not an absolute sense. But relative decline is decline nonetheless, and by this standard the United States is noteworthy because of the massive decline in its share of World GDP that has already happened.  There are some emerging market triumphalists who have gone a bit over the top in their promotion of the BRICs and who have underestimated the difficulties inherent in running such enormous countries. However, when you weigh all of the evidence, when you look at data about GDP growth, it’s hard to believe that the United States is poised for success, and it’s very easy to see how the problems that have plagued it for the past 13 years will continue to haunt it.</p>
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		<title>The BRICS and the Dollar</title>
		<link>http://thebricspost.com/the-brics-and-the-dollar/</link>
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		<pubDate>Tue, 07 May 2013 08:33:06 +0000</pubDate>
	
				<category><![CDATA[BRICS Opinion]]></category>
		<category><![CDATA[BRICS]]></category>
		<category><![CDATA[debt]]></category>
		<category><![CDATA[dollar]]></category>
		<category><![CDATA[financial crisis]]></category>
		<category><![CDATA[Radhika Desai]]></category>
		<category><![CDATA[UK]]></category>
		<category><![CDATA[US]]></category>

		<guid isPermaLink="false">http://thebricspost.com/?p=12130</guid>
		<description><![CDATA[Questions about the shape of the international monetary system are bound to re-emerge and soon, argues Radhika Desai.]]></description>
				<content:encoded><![CDATA[<p>Signs of the diminution of US power have been proliferating since the crisis. Geopolitically, revolutions in Tunisia and Egypt signalled that the US’s lid on Middle Eastern popular aspirations was blown off.</p>
<p>The western intervention in Libya went ahead only with Russian and Chinese consent and without US leadership. And today the US fights shy of George Bush Jr style unilateral action against the erstwhile ‘axis of evil’ – Iran, Syria and North Korea – while, back at the ranch, its astronomical defence spending faces sequestration.</p>
<p>Signs of decline are less clear on other chief front of US power. The US dollar’s mixed fortunes have attracted considerable attention since 2008. Every upturn allegedly signals its continuing world role and downturns lead to questions about that role and debates about the future of the international monetary system.</p>
<p>Xiaochuan Zhou, governor of China’s Central Bank, for instance, proposed replacing the dollar with a ‘super-sovereign’ currency like the one John Maynard Keynes outlined during the war-time negotiations at Bretton Woods. Though the US rejected it then, the idea re-emerges punctually when the dollar runs into trouble as it so frequently does.  This time, however, it is unlikely to go away.</p>
<p>Few are today aware of the impending end of the dollar’s world role largely because it is surrounded by obfuscations. Two are particularly relevant for the BRICS and emerging economies.</p>
<p>One is the notion of US hegemony which implies that the dollar can only be displaced by a new more powerful ‘hegemon’ able and willing to internationalise its currency.</p>
<p><div id="attachment_12139" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12139  " alt="[Getty Images]" src="http://thebricspost.com/wp-content/uploads/2013/05/dollar-300x181.jpg" width="300" height="181" /><p class="wp-caption-text">&#8220;Despite the series of financializations that propped it up, the dollar has trended downwards since currencies were first floated in 1973&#8243; [Getty Images]</p></div>Questions about China’s relative strength and the alleged difficulties of internationalising the yuan are ‘Exhibit A and B’ here. Secondly, we are told that there the BRICs, pre-eminently China, will not abandon the dollar because of their large dollar reserves. These obfuscations prevent clarity on developments to come.</p>
<p>The idea of US ‘hegemony’ is old and deeply entrenched. Whether or not the US is considered still ‘hegemonic’, the idea that it once was is practically an article of faith. The reality is otherwise. True, the world dominance of the world’s first industrial country, the UK, was inevitable and sterling served as the world’s currency in the 19th century. True also that US policy-makers sought to emulate such dominance in the 20th century and lacking formal colonies they settled for making the dollar the world’s currency.</p>
<p>However, what is less well-known is that 20th century conditions made even this impossible. Without colonial surpluses to export to provide the world dollar liquidity stably, the US resorted to providing it through balance of payments deficits.</p>
<p>These were subject to the ‘Triffin Dilemma&#8221;: though necessary to provide liquidity, they drove down the dollar’s value. And after 1973, maintaining the dollar’s world role required generating successive dollar-denominated and US-centered financializations – excesses of financial activity unrelated to productive or commercial activity – which inflated international capital flows to ever higher levels.</p>
<p>Initially the economic damage these short-term financial flows wreaked could be externalised and the world witnessed an increase in financial crises, culminating in the East Asian Financial Crisis in 1997-8.</p>
<p>However, with the stock market and housing bubbles of the late 1990s and 2000s, the financialization now rested on damaging asset bubbles at home. After the housing bubble burst no new financialization has emerged to cover up the underlying economic rot and to give the dollar another reprieve, however, temporary. After their massive collapse in 2008, international capital flows recovered to only 40 per cent of their peak before declining again.</p>
<p>Despite the series of financializations that propped it up, the dollar has trended downwards since currencies were first floated in 1973. It rose only twice, albeit spectacularly, with the recession-inducing Volcker Shock in the early 1980s and the stock market bubble of the late 1990s. The housing bubble, by contrast, could only moderate its decline.</p>
<p>Since then, the perennial problems of US debt and deficits have grown a lot worse. The massive bailout of US financial institutions has added to US debt. The even more massive Quantitative Easing (QE) programme has created more unwanted dollars. Though both were justified as necessary for recovery, they have worked only to strengthen the financial sector while the austerity it demands has made US recovery more difficult.</p>
<p><div id="attachment_12140" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-12140 " alt="[Getty Images]" src="http://thebricspost.com/wp-content/uploads/2013/05/wall-street-300x195.jpg" width="300" height="195" /><p class="wp-caption-text">&#8220;If the dollar retains a large role in foreign currency transactions today, it is mainly because US financial institutions, more handsomely bailed out than any other by far, are the chief parties to them as they resume international speculation&#8221; [Getty Images]</p></div>No wonder dissatisfaction with the dollar as a reserve currency among the emerging economies, which had been growing throughout the 2000s, has sharpened. It has brought the dollar’s share of world reserves from 71 per cent in 1999, the peak of the stock market bubble, to about 62 per cent in 2012, despite the massive increase in reserve accumulation since the 1997-8 East Asian Financial Crisis and the US’s historic refusal to allow the creation of alternative reserve assets.</p>
<p>US efforts to retain centrality in the international monetary system face great obstacles. If the dollar retains a large role in foreign currency transactions today, it is mainly because US financial institutions, more handsomely bailed out than any other by far, are the chief parties to them as they resume international speculation.</p>
<p>However, such financialization is unlikely to prop up the dollar’s world role anymore. The BRICS economies are already less financialized and their financial sectors are less internationalised. They embarked on both in the 1990s believing that increased financialization and liberalisation would bring much-needed international investment.</p>
<p>However, they were disappointed as capital outflows (mostly to the US) far outpaced inflows and the capital that did flow in was dominated by unproductive crisis-inducing short term capital not productive long-term Foreign Direct Investment.</p>
<p>Since the 2008 financial crisis, capital controls against short-term capital flows have been implemented by many BRICS and emerging economies. Their capital inflows and outflows are dominated by FDI. They are also fashioning devices to sidestep the dollar’s use such as bilateral trade agreements using local currencies, currency swap and reserve pooling agreements.</p>
<p>For the moment, the Eurozone crisis, the sheer weight of US financial institutions and the ongoing US stock market bubble are holding up the dollar. They cannot do so for long and questions about the shape of the international monetary system are bound to re-emerge.</p>
<p>When they do, the dollar-style internationalisation of other currencies will not prove to be the solution. As the Chinese are all too aware, that would incur the same problems that attended the dollar’s world role to date. Coordinated international action to create a super-sovereign currency is both ideal and difficult. The default is a multiple reserve currency scenario with greater regulation of international capital flows by home governments and other countries as well as reduction of reserves through their efficient use.</p>
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		<title>Cultures of rape, cultures of protest</title>
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		<pubDate>Sat, 04 May 2013 16:00:01 +0000</pubDate>
	
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		<description><![CDATA[The significance of the protests that gripped India lies in the fact that they represented the first-ever public acknowledgment of sexual violence as a widespread social problem.]]></description>
				<content:encoded><![CDATA[<p><em></em>In December 2012, the streets of New Delhi erupted in spontaneous public protests of unprecedented magnitude following the gang rape of a 23-year-old physiotherapy student, who eventually succumbed to her injuries. The rape, which occurred at about 9:30 pm in a busy middle-class neighbourhood of south Delhi, unleashed the outrage of young women – and men – in a way that sexual violence had never before done.</p>
<p>The police, instead of providing greater public security, used water cannons to dispel the protestors. Competing with the repressive machinery of the state in its insensitivity was the distasteful commentary of conservative religious and caste leaders asserting that women who dressed provocatively were sending out invitations to be raped; and that rape was a purely urban phenomenon, the result of a western consumer culture fostered by globalization. One such religious leader suggested that the blame needs to be shared by the victim as well, asking provocatively: &#8220;Can one hand clap?&#8221;.</p>
<p>The significance of the protests that gripped India this time, lies in the fact that they represented the first-ever public acknowledgment of sexual violence as a widespread social problem. They inaugurated an energetic and candid debate on an astonishing range of legal, administrative, social and cultural issues relating to gendered violence. Rape was scarcely uncommon before this particular incident, but a frank public discussion on it certainly was.</p>
<p>Rape is an everyday occurrence. The newspapers have been reporting several rapes a day from different parts of the country, and continue to do so even today. However, till this incident sparked off the protests, discussions on rape had mostly remained confined to feminist seminar rooms. It is surely a measure of the power of the protests that it is today not unusual to hear people discussing the finer points of the age of consent or even the abhorrent two-finger test as a form of medical evidence of rape.</p>
<p>Similarly, in the past, the social stigma of rape had inevitably discouraged victims from speaking up. In some cases, rapists were even enjoined by judges to offer to marry their victims, and the victims encouraged in this further humiliation. The gang rape of December 2012, and the protests that ensued, enabled rape survivors to emerge from the shadows and speak frankly about their experiences of trauma followed by stigmatization.</p>
<p>The most significant concrete outcome of the protests was undoubtedly the constitution of the Justice Verma Committee to advise the government on law reform. Over 80,000 representations, more than a hundred testimonies, and four weeks later, the Verma Committee submitted a path-breaking 650-page report on amending the criminal law on sexual violence. The report deals with everything from acid attacks and stalking as sexual crimes to the more contentious issues of marital rape and the lowering of the age of consent.</p>
<p>Though the suggested reforms are yet to be enacted as  law, the government has already passed an ordinance on sexual assault that is clearly calculated to forestall protest. However weak and unsatisfactory the ordinance may be in both procedural and substantive terms, the Report of the Justice Verma Committee will stand as an enlightened force for moulding public discourse and a lodestar for future legislation.</p>
<p>A third largely positive aspect of the protests and the media attention to them is that the middle class appears to have been shaken out of its legendary political apathy. The anti-corruption movement led by Anna Hazare in 2011 had accomplished something similar; the protests against the gang rape made it clear that the middle-class citizenry no longer hesitates to join sit-ins, demonstrations, silent marches and candle-light vigils.</p>
<p>The practice and the performance of citizenship may be limited in scope, but they are certainly visible in the cities as they have never been in the past. In the last few days, the repeated rape and brutalization of a 5 year old girl by two men has sparked off fresh protests, this time demanding the resignation of the Police Commissioner.</p>
<p>Whether such protest will be sustained or, more importantly, integrated with the larger agenda of the feminist movement, is as yet unclear. This is because the urban and middle-class bias of the movement is both a virtue and a limitation. The victim of December’s gang rape was aspirationally middle class. Her class background was modest, but hers was a story of social mobility that reaffirms the faith of urban elites in the model of growth and prosperity ushered in by the economic reforms.</p>
<p>While the protests have been heartening, it remains to be seen whether the young people of cities like Delhi would be as willing to take up cudgels for, say, dalit women in rural areas. There may be insufficient acknowledgment here of the fact that sexual exploitation is endemic in Indian society, especially for women belonging to marginalized groups, whose experience of sexual exploitation and sexual violence is no less brutal for its being everyday, routinized and meekly accepted.</p>
<p>A disturbing aspect of the protests was the shrill calls for the death penalty, or at least chemical castration. The Verma Committee was unequivocal in its position against the death penalty, but this view continues to enjoy some popularity in society at large. The evidence that the death penalty does not serve as a disincentive to sexual violence is not always given the attention that it deserves.</p>
<p>The greater public consciousness about sexual violence will hopefully, in time, have the effect of making women from even the least advantaged sections of Indian society more aware of their rights in relation to the range of offensive behavior that can be classified as sexual violence. Better policing and improved adjudication in such cases are only two of the many institutional and governance challenges that have yet to be addressed.</p>
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		<title>Nuclear Iran: What’s at Stake for the BRICS</title>
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		<pubDate>Mon, 29 Apr 2013 07:43:36 +0000</pubDate>
	
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		<description><![CDATA[BRICS need to call Washington's bluff on Iran and develop alternatives to US-dominated mechanisms in settling global issues.]]></description>
				<content:encoded><![CDATA[<p style="text-align: left;" align="center"><em><strong>The controversy over Iran’s nuclear activities has at least as much to do with the future of international order as it does with nonproliferation. For this reason, all of the BRICS have much at stake in how the Iranian nuclear issue is handled.</strong></em></p>
<p>Conflict over Iran’s nuclear programme is driven by two different approaches to interpreting the <a href="http://www.state.gov/documents/organization/141503.pdf" target="_blank">Nuclear Non-Proliferation Treaty</a> (NPT); these approaches, in turn, are rooted in different conceptions of international order. Which interpretation of the NPT ultimately prevails on the Iranian nuclear issue will go a long way to determine whether a rules-based view of international order gains ascendancy over a policy-oriented approach in which the goals of international policy are defined mainly by America and its partners. And that will go a long way to determine whether rising non-Western states emerge as true power centers in a multipolar world, or whether they continue, in important ways, to be subordinated to hegemonic preferences of the West—and especially the United States.</p>
<p>The NPT is appropriately understood as a set of three bargains among signatories: non-weapons states commit not to obtain nuclear weapons; countries recognised as weapons states (America, Russia, Britain, France, and China) commit to nuclear disarmament; and all parties agree that signatories have an “inalienable right” to use nuclear technology for peaceful purposes. One approach to interpreting the NPT gives these bargains equal standing; the other holds that the goal of nonproliferation trumps the other two.</p>
<p><div id="attachment_11811" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-11811 " alt="[Getty Images]" src="http://thebricspost.com/wp-content/uploads/2013/04/palestine-300x188.jpg" width="300" height="188" /><p class="wp-caption-text">&#8220;Those recognising Iran’s nuclear rights take what international lawyers call a “positivist” view of global order&#8221; [Getty Images]</p></div>There have long been strains between weapons states and non-weapons states over nuclear powers’ poor compliance with their commitment to disarm. Today, though, disputes about NPT interpretation are particularly acute over perceived tensions between blocking nuclear proliferation and enabling peaceful use of nuclear technology. This is especially so for fuel cycle technology, the ultimate “dual use” capability—for the same material that fuels power, medical, and research reactors can, at higher levels of fissile isotope concentration, be used in nuclear bombs. The dispute is engaged most immediately over whether Iran, as a non-weapons party to the NPT, has a right to enrich uranium under international safeguards.</p>
<p>For those holding that the NPT’s three bargains have equal standing, Tehran’s right to enrich is clear—from the NPT itself, its negotiating history, and decades of state practice, with at least a dozen states having developed safeguarded fuel cycle infrastructures potentially able to support a weapons program. On this basis, the diplomatic solution is also clear: Western recognition of Iran’s nuclear rights in return for greater transparency through more intrusive verification and monitoring.</p>
<p>Those recognising Iran’s nuclear rights take what international lawyers call a “positivist” view of global order, whereby the rules of international relations are created through the consent of independent sovereign states and are to be interpreted narrowly. Such a rules-based approach is strongly favoured by non-Western states, including BRICS—for it is the only way international rules might constrain established powers as well as rising powers and the less powerful.</p>
<p>Those who believe nonproliferation trumps the NPT’s other goals claim that there is no treaty-based “right” to enrich, and that weapons states and others with nuclear industries should decide which non-weapons states can possess fuel cycle technologies.  From these premises, the George W Bush administration sought a worldwide ban on transferring fuel cycle technologies to countries not already possessing them. Since this effort failed, Washington has pushed the Nuclear Suppliers’ Group to make such transfers conditional on recipients’ acceptance of the Additional Protocol to the NPT—an instrument devised at US instigation in the 1990s to enable more intrusive and proactive inspections in non-weapons states.</p>
<p><div id="attachment_7498" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-7498  " alt="[Getty Images]" src="http://thebricspost.com/wp-content/uploads/2013/02/Iran-300x198.jpg" width="300" height="198" /><p class="wp-caption-text">&#8220;America has pressed the UN Security Council to adopt resolutions telling Tehran to suspend enrichment&#8221; [Getty Images]</p></div>America has pressed the UN Security Council to adopt resolutions telling Tehran to suspend enrichment, even though it is part of Iran’s “inalienable right” to peaceful use of nuclear technology; such resolutions <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2182257" target="_blank">violate</a> UN Charter provisions that the Council act “in accordance with the purposes and principles of the United Nations” and “with the present charter.” The Obama administration has also defined its preferred diplomatic outcome and, with Britain and France, imposed it on the P5+1: Iran must promptly stop enriching at the near-20 per cent level to fuel its sole (and safeguarded) research reactor; it must then comply with Security Council calls to cease all enrichment. US officials say Iran might be “allowed” a circumscribed enrichment programme, after suspending for a decade or more, but London and Paris insist that “zero enrichment” is the only acceptable long-term outcome.</p>
<p>Those asserting that Iran has no right to enrich—America, Britain, France, and Israel—take a policy-or results-oriented view of international order. In this view, what matters in responding to international challenges are the goals motivating states to create particular rules in the first place—not the rules themselves, but the goals underlying them. This approach also ascribes a special role in interpreting rules to the most powerful states—those with the resources and willingness to act in order to enforce the rules.  Unsurprisingly, this approach is favoured by established Western powers—above all, by the United States.</p>
<p><b>BRICS need to call Washington’s bluff   </b><b>    </b></p>
<p>All of the BRICS have, in various ways, pushed back against a <i>de facto</i> unilateral rewriting of the NPT by America and its European partners. Since abandoning nuclear weapons programmes during democratisation and joining the NPT, Brazil and South Africa have staunchly defended non-weapons states’ right to peaceful use of nuclear technology, including enrichment. With Argentina, they resisted US efforts to make transfers of fuel cycle technology contingent on accepting the Additional Protocol (which Brazil has refused to sign), ultimately forcing Washington to <a href="http://www.armscontrol.org/act/2012_11/The-NSG-Decision-on-Sensitive-Nuclear-Transfers-ABACC-and-the-Additional-Protocol" target="_blank">compromise</a>. With Turkey, Brazil brokered the <a href="http://www.raceforiran.com/key-documents/turkey-brazil-iran-nuclear-agreement" target="_blank">Tehran Declaration</a> in May 2010, whereby Iran accepted US terms that it swap most of its then stockpile of enriched uranium for new fuel for its research reactor. But the Declaration openly recognised Iran’s right to enrich; <a href="http://www.raceforiran.com/flynt-leverett-debates-obama%E2%80%99s-iran-policy-with-dennis-ross" target="_blank">for this reason</a>, the Obama administration rejected it.</p>
<p>The recently concluded 5th BRICS Summit in Durban saw a joint declaration Declaration that referred to the official BRICS position on Iran:</p>
<p>“We believe there is no alternative to a negotiated solution to the Iranian nuclear issue. We recognize Iran’s right to peaceful uses of nuclear energy consistent with its international obligations, and support resolution of the issues involved through political and diplomatic means and dialogue.”</p>
<p><div id="attachment_10407" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-10407  " alt="[PPIO]" src="http://thebricspost.com/wp-content/uploads/2013/03/BRICS-PPIO-300x200.jpg" width="300" height="200" /><p class="wp-caption-text">&#8220;BRICS have all, to varying degrees, accommodated Washington on the Iranian issue&#8221; [PPIO Images]</p></div>At the same time, the BRICS have all, to varying degrees, accommodated Washington on the Iranian issue. Russian and Chinese officials acknowledge there will be no diplomatic solution absent Western recognition of Tehran’s nuclear rights. Yet China and Russia endorsed all six Security Council resolutions requiring Iran to suspend enrichment. Beijing and Moscow did so partly to keep America in the Council with the issue, where they can exert ongoing influence—and restraint—over Washington; at their insistence, the resolutions state explicitly that none of them can be construed as authorising the use of force against Iran.</p>
<p>Russia, China, and the other BRICS have also accommodated Washington’s increasing reliance on the threatened imposition of “secondary” sanctions against third-country entities doing business with the Islamic Republic. Such measures violate US commitments under the World Trade Organisation, which allows members to cut trade with states they deem national security threats but not to sanction other members over lawful business with third countries. If challenged on this in the WTO’s Dispute Resolution Mechanism, America would surely lose; for this reason, US administrations have been reluctant actually to impose secondary sanctions on non-US entities transacting with Iran. Nevertheless, companies, banks, and even governments in all of the BRICS have cut back on their Iranian transactions—feeding American elites’ sense that, notwithstanding their illegality, secondary sanctions help leverage non-Western states’ compliance with Washington’s policy preferences and vision of (US-dominated) world order.</p>
<p>If the BRICS want to move decisively from a still relatively unipolar world to a genuinely multipolar world, they will, at some point, have to call Washington’s bluff on Iran-related secondary sanctions. They will also have to accelerate the development of alternatives to US-dominated mechanisms for conducting and settling international transactions—a project to which the proposed new BRICS bank could contribute significantly.</p>
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		<title>The curious case of the Boston bombings</title>
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		<pubDate>Tue, 23 Apr 2013 22:40:41 +0000</pubDate>
	
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		<description><![CDATA[The tragedy at the Boston marathon shatters the strange alliance of the West and Islamist radicals.]]></description>
				<content:encoded><![CDATA[<p>As the public thirst for more information on the two Boston bombers is being satisfied by the omnipresent, but increasingly delinquent modern media, the “psychotic” version of the Boston tragedy is predictably fading.</p>
<p>The “leader” of the terrorist pair, Tamerlan Tsarnaev, was obviously neither a &#8216;psycho&#8217; nor a &#8216;loser&#8217; in American parlance; awards for boxing, a beautiful American-born wife and numerous girlfriends &#8211; seems he blended right in.</p>
<p>His accomplice, 19-year-old US citizen Dzhokhar Tsarnaev, appeared an even more promising case with his college education and a pack of American friends who stayed loyal to him even after his arrest. The case is almost symbolic: it smashes into the Western delusion that militant Islamism can be “cured” by access to free media, voting rights and “eradication of poverty.”</p>
<p>The brothers had it all. But the Tsarnaevs’ exposure to all these “Western values” did not prevent them from becoming killers.</p>
<p>This complex reality actually vindicates Russia’s pessimistic view of the so called Arab Spring (and of the “Islamic democratic revival” in general), which is still enthusiastically embraced by the US and many European powers.</p>
<p>The first day of Dzhokhar Tsarnaev’s interrogation was eventful. On that same day, Canadian authorities revealed that a plot of Islamist terrorists to blow up a train on its way from Toronto to New York City was foiled in Canada.</p>
<p><div id="attachment_11279" class="wp-caption alignright" style="width: 310px"><img class="size-medium wp-image-11279  " alt="Still image released by the FBI of suspects allegedly involved in the Boston bombings " src="http://thebricspost.com/wp-content/uploads/2013/04/AP13041815558-300x288.jpg" width="300" height="288" /><p class="wp-caption-text">&#8220;The brothers had it all. But the Tsarnaevs’ exposure to all these “Western values” did not prevent them from becoming killers&#8221; [AP Images]</p></div>And on the other side of the planet, in Libya, local Islamist extremists blew up a car bomb near the French embassy, with several people injured but no casualties (although strangely enough a whole building was destroyed).</p>
<p>In all three cases, the actions of these Islamist extremists defy the Western logic that guided previous engagements and policy decisions of the Western powers.</p>
<p>The Chechen terrorists came to the US as refugees fleeing what the Western media portrayed as the “oppressive” (some even used the word “genocidal”) Russian regime.</p>
<p>The Libyan Islamists won their war with Qaddafi thanks to the “pioneering” French bombing raids in 2011, which inaugurated a mass-scale foreign intervention into Libya’s internal affairs by the NATO countries. This intervention, inevitably, greatly aided the Islamists’ victory</p>
<p>One has to swallow European headlines about the new Libyan government being “liberal,” with a pinch of salt, especially in view of the continued attacks against foreign diplomats in Libya. It was only last summer that the American ambassador in Libya was killed during an attack by militants, initially described as a &#8216;protest&#8217; by a spokesperson of the US Department of State. This is a situation that tells you volumes about the new regime in Libya and America’s dangerous illusions about it.</p>
<p>Libya and Boston echoed in the terror attempt in Canada. One of the two failed Canadian terrorists (Tunisian-born Chiheb Esseghaier, 30) before his arrest was a PhD student in Montreal’s “Centre de la Recherche Scientifique” specialising in biosensors. The ‘preachers of democracy’ are baffled yet again.</p>
<p>The bizarre nature of the alliance between Western powers and Islamist insurgents in Syria has been underscored by the events in the US, Canada and Libya. European newspapers carried headlines on the Boston terror attack next to that of the imminent lifting of the EU embargo prohibiting lethal arms’ supplies to Syria (“Syria” in this context is an EU-coined euphemism for “Syrian anti-government rebels”).</p>
<p>Meanwhile, even the conservative French <em>Le Figaro </em>daily expressed doubt as to the ability of European donors to control the future use of the supplied weapons once they get into the hands of the Syrian rebels. “There is absolutely no guarantee that these arms would not be resold to anti-Western jihadist organisations or not used to suppress minorities in Syria,” notes Le Figaro’s columnist Renaud Girard. “There are no reliable puppets in geopolitics.”</p>
<p>In the end of his opinion piece, Renaud Girard stresses that the French president, Francois Hollande, would do a wise thing if he listens to Russia’s doubts on the “regime change” in Syria – for once in recent years.</p>
<p>One might add that China had similar doubts during NATO’s action against Yugoslavia in 1999 (let’s not forget the anti-NATO protest actions in Beijing at the time) and South Africa was deeply skeptical about the operation against Libya, whose controversial authoritarian leader, Muammar Qaddafi, was, among other things, one of the most influential leaders of the Organization of African Unity. Alas, ‘doubt’ is something that the bullish and imposing modern Western civilization often rejects. Even if these doubts are “backed up” by such tragic events as the Boston Marathon bombing.</p>
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