Global News Journal

Perilous predictions for 2011

It’s the season to be merry – and to make forecasts about next year. Across the finance industry fine minds spend December crafting outlooks and extrapolations about how the world will fare, in the hope of a decent return over the next 12 months and avoiding the bear traps that will swallow an investment. The banks, strategic advisories and political risk consultants trumpet their analytical prowess, of course, but are also meeting a natural human need to peer into the future. We all want guidance to take the sting out of living in an uncertain world.

Nowhere is prediction more fraught with peril than in politics and world affairs. The success rate is in inverse proportion to the costs that unexpected acts in the real world can impose on the investor. So despite the difficulty of providing a reliable guide to the future there are huge incentives to try to chart the way ahead. Here’s  Control Risks, a risk consultancy firm, on its view of 2011, while competitor Eurasia reveals in early January, as does the World Economic Forum. Nomura has a list of 10 political challenges to prosperity that range from the prospect of gridlock in US domestic politics to brinksmanship on the Korean peninsula.

So which voices warning of political perils should one heed? There’s a crowded field of commentators, perhaps because political outcomes are not as reducible to numbers as economic indicators, where the industry of forecasting has statistical validity. If you work for a well-known investment bank or strategic studies institute your thoughts carry  institutional gravitas. However, and this is somewhat a statement of the obvious, only a track record of smart forecasting earns you an audience. That, and saying something worthwhile. Worse than getting a prediction wrong is being so blandly vacuous and broad in scope that your forecasts are both right and uninformative.

Respected voices suggest that beyond pointing to areas of dispute and potential tension, political forecasters are attempting the impossible. “The science of prediction is a contradiction in terms,” says Nigel Inkster, a former British intelligence officer who analyses international political risk at the International Institute for Strategic Studies in London. “There are so  many potential variables that could come together in so many potential configurations that it is really difficult to identify anything about which you can be really confident,” says Inkster.

“You can look at the line up of forces and make some broad predictions, for example on the likelihood of trouble around the referendum in Sudan. But so much there depends on decisions not yet taken,” he says, referring to January’s plebiscite where south Sudan may vote to secede. “And when you get into assigning probabilities (to outcomes), that’s not very helpful.”

Reuters tries to gauge political risks with appropriate cautions in mind. We reckon it is possible to use our expertise to diminish surprise and anticipate both dangers and opportunities. How well do we do? Our 2010 outlook focused on sovereign debt default, a hung parliament in Britain and tension between China and the United States. Those were borne out, unlike our prediction that Kevin Rudd would easily be re-elected in Australia. (He was ousted in a party coup in June and his successor Julia Gillard scraped into power). For comparison’s sake look at the 2010 predictions from Eurasia.

from Afghan Journal:

India, U.S. build ties, with an eye on China

In the end, Pakistan wasn't the unspoken elephant in the room when U.S. President Barack Obama sat down for talks with Indian leaders. Far from tip-toeing around India's Pakistan problem which complicates America's own troubled war there and in Afghanistan, Obama spoke clearly and squarely.

Safe havens for militants in Pakistan wouldn't be tolerated, he said, in what was music to Indian ears. But he also left nobody in doubt Washington wanted India to improve ties with Pakistan, saying New Delhi had the greatest stake in the troubled neighbour's stability.

But the one elephant that the leaders of India and the United States didn't name but which was written all over the flurry of announcements made during the three-day trip was China. Beginning with the headline-grabbing endorsement of India's bid for a permanent place on the U.N. Security Council to maritime cooperation and a surprise partnership to promote food security in Africa, the United States seems to have gone the extra mile to bolster New Delhi's credentials as a global player.

The one country that would be watching this most closely is China where some would see America's deepening ties with India, a continent-size country with a billion-plus people, as aimed at countering its rise.

B.Raman, a  former head of India's Research and Analysis wing, writes that the announcement by India and the United States  to work together for stability in the Indian Ocean region as well as the Pacific  will draw concern in Beijing, which has its own fears of U.S. encirclement.

"Thus, the partnership will seek to promote peace and security across Asia in general and in East and Central Asia in particular, strengthen maritime security and work for a peaceful settlement of maritime disputes. Though China has not been named, Beijing will have reasons to be concerned over the implications of this formulation."

from Pakistan: Now or Never?:

Will Obama refer to Kashmir in public in India?

Will President Barack Obama make some public remarks on Kashmir during his trip to India next month?

At a White House press briefing, deputy national security adviser Ben Rhodes refused to be pinned down on specifics,  beyond saying that the United States would continue to express support for India and Pakistan to pursue talks.

"I wouldn’t -- I don't want to get into prefacing with precision what his comments are, in part because he’ll be answering a lot of questions there in the town hall and press conference and we haven’t -- we’re still working through his remarks on certain things," he said.

Yet it is a question that cannot -- and will not -- be left to chance.

Indian is deeply sensitive about foreign visitors talking about Kashmir -- as British foreign ministers have learned to their cost on earlier trips. It regards Kashmir as an integral part of India and refuses even to recognise the territory at the heart of more than 60 years of enmity with Pakistan as disputed. Moreover, it has consistently rejected outside interference, saying that its disputes with Pakistan must be settled bilaterally.

Obama, who raised hackles in India during his presidential election campaign by suggesting the Washington should try to help resolve the Kashmir dispute, is hoping to use the trip to help U.S. business tap into India's growing economy. With a flagging economy at home, he cannot afford to offend his hosts.

But at the same time, the biggest foreign policy challenge of his administration is over how to deal with Afghanistan and Pakistan.  The war in Afghanistan cannot be ended without Pakistan's help. And Pakistan itself faces serious instability -- potentially a much bigger worry than Afghanistan with its 180 million people and nuclear bombs. Pakistan's identity in turn is intimately bound up with India - its past support for Islamist militants was driven by its belief that this was the only way to neutralise the influence of its much bigger neighbour both in Kashmir and in Afghanistan.  Depending on who you listen to, it either will not, or can not, tackle Islamist militants based in Pakistan without a peace settlement with India, including on Kashmir.

from Reuters Investigates:

In case you missed them

Just because it was summer, doesn't mean we weren't busy here at Reuters. Here are a few of our recent special reports that you might have missed.

Tracking Iran's nuclear money trail to Turkey. U.N. correspondent Lou Charbonneau -- who used to cover the IAEA for Reuters --  followed the money to Turkey where an Iranian bank under U.S. and EU sanctions is operating freely. Nice to see the New York Times follow up on this today, and the Washington Post also quizzed Turkey's president about it.

Blue-collar, unemployed and seeing red -- Chicago correspondent James Kelleher went on the road for this story about the long-term unemployed and what that means for Obama and the Democrats at November's midterm elections.

Even though he's been forced to move back in with his parents and has virtually no income, Stevenson opposes Obama's proposal to let some tax cuts for the wealthy, dating back to George W. Bush's presidency, expire at year's end in order to raise revenue and reduce the deficit. 

"How is more people, keeping more of the money they earn, bad for the economy?" he said. "The answer is -- it's not."   

UN General Assembly: NYC’s annual headache

For world leaders, foreign ministers and diplomats from the 192 members of the United Nations, the annual gathering of the U.N. General Assembly is a chance to stand at the iconic dark green marble podium and trumpet their countries’ successes, voice their concerns — or occasionally to attack their enemies. (Such as when Venezuelan President Hugo Chavez called former U.S. President George W. Bush “the devil” during his address to the assembly.)

But for people who live or work in, or travel through, the east side of midtown Manhattan, the General Assembly is a headache that runs for three or four days every September. It causes regular traffic jams as official motorcades speed through the city. It’s difficult to book a hotel as prices soar and availability plummets. Scores of heavily armed NYPD officers line the streets. The city’s trademark incessant honking of car horns is punctuated with the roar of helicopters overhead scanning for suspicious activity on the streets below. NYPD checkpoints are set up to screen everyone trying to get within a few hundred yards of U.N. headquarters and those without proof that they live or work in the area are told to get lost.

This year’s General Assembly is an extended headache for the neighborhood. In addition to the assembly’s annual General Debate, world leaders agreed to spend an extra three days discussing the need to redouble efforts to meet a set of U.N. targets aimed at drastically reducing poverty and improving the quality of life for the world’s poor by 2015.

During their speeches, leaders pledged to step up efforts to meet the Millennium Development Goals (MDGs) — agreed 10 years ago — but offered little in the way of new resources. Among those addressing the summit later in the week are U.S. President Barack Obama, German Chancellor Angela Merkel, Chinese Premier Wen Jiabao and Iranian President Mahmoud Ahmadinejad, whose annual attacks on Israel and the United States inevitably prompt a mass walkout by U.S. and European delegations.

Ban has described the MDG summit, and the draft declaration leaders are expected to approve before the week is over, as evidence of an “unprecedented level of support” for the world body’s crusade to improve quality of life for the poor.

Another unprecedented aspect of this year’s General Assembly is the difficulties journalists face covering the world’s top newsmakers, who the United Nations Department of Safety and Security (DSS) are taking extra precautions to keep away from journalists.

With much of the building closed due to a $1.9 billion renovation, the traditional areas where delegates and journalists could quietly mingle are gone. It was only after reporters complained that a media stakeout area was set up in the so-called North Lawn Building, a temporary structure where many of this week’s most important meetings — on Sudan, the Middle East peace process and other issues — are taking place. (The chalk-white container-like North Lawn Building has acquired a number of nicknames, including Bantanamo and Walmart.)

EU delivers its own “State of the Union” address

The European Union talks frequently about wanting to be a bigger player in the world, about making its political influence match its economic weight and the need to stand shoulder-to-shoulder with the United States.

And at least in one respect it can now say it’s America’s equal – both have a State of the Union address.

Jose Manuel Barroso, the president of the European Commission, delivered his inaugural State of the Union speech to the European Parliament on Tuesday, a sweeping assessment of where the bloc of 27 countries stands and what it needs to do to be better in the future, tapping a similar vein to President Barack Obama’s State of the Union address to Congress in January.

But beyond the matching titles, and some common themes, there were few similarities, at least from a rhetorical point of view.

Barroso’s 4,300-word discourse was heavy on EU-speak, the need for the Union’s member states to stand closely together, work on “economic governance” and build “strategic partnerships” for the future.  It was hardly a grand rallying cry to the glories of greater European unity.

Compare for example this passage from early in Barroso’s address, assessing Europe’s response to the economic crisis, to a similar passage from Obama’s State of the Union.

“As I look back at how we have reacted, I believe that we have withstood the test,” said Barroso. “We have provided many of the answers needed — on financial assistance to member states facing exceptional circumstances, on economic governance, on financial regulation, on growth and jobs. And we have been able to build a base camp from which to modernise our economies. Europe has shown it will stand up and be counted.”

from Afghan Journal:

WikiLeaks: shaking the foundations of U.S. policy toward Pakistan

A Pakistani security official stands near a burning vehicle after it was attacked in Chaman in Pakistan's Balochistan province, along the Afghan border on May 19, 2010.

On the face of it, you could ask what's new about the latest disclosures of Pakistani involvement in the Taliban insurgency while accepting massive U.S. aid to fight Islamic militancy of all hues. Hasn't this been known all along -- something that a succession of top U.S. officials and military leaders have often said, sometimes  couched in diplomatic speech and sometimes rather clearly?

It was only last week that U.S. Secretary of State Hillary Clinton said there must be somebody in the Pakistani government who knew Osama bin Laden's whereabouts. Coming from America's top diplomat, it couldn't be more blunt.

Then why is a trove of over 90,000 classified military documents released by WikiLeaks on the war in Afghanistan causing so much consternation? Leslie H. Gelb, president emeritus of the Council on Foreign Relations, says  it is now much more difficult to deny or dodge the truths that everyone has been aware of:

Government officials can always deflect news stories simply by crossing their fingers and waiting for the story to sink in a haze of oil spills and Lindsay Lohan extravaganzas. Now, however, “proof” is there in the black-and-white of secret U.S. documents, compliments of anti-war WikiLeaks. Even if one does not believe that the information contained in every one of these reports is accurate (some do sound rather bizarre), and even if little in the reports can be corroborated independently, the very volume of the “secret” material is overwhelming and plausible—and yes, seductively “secret.”

The White House condemned the leak, saying it could threaten national security and endanger the lives of Americans. Islamabad said leaking unprocessed reports from the battlefield was irresponsible and added that Pakistan had paid in blood fighting militants.

Who do you call to speak to Europe?

Who do you call when you want to speak to Europe? The question, long attributed to Henry Kissinger, has yet to be answered convincingly by the 27-country European Union.

Six months ago, European Commission President Jose Manuel Barroso told a news conference the person to call on foreign policy issues was Catherine Ashton, who had just been chosen as the European Union’s foreign affairs chief.  The “so-called Kissinger issue is now solved”, he said.

Ashton reinforced that view on Monday by suggesting she was the person to call if Iran wanted to discuss the latest diplomatic moves on its nuclear programme. “They have my phone number,” she said.

But Barroso was more vague at the news conference last November when asked whom U.S. President Barack Obama should call if he wanted to speak to the EU. He pointed out that the EU was not one country, like the United States, China or Russia — implying they each had one clear leader. He seemed to be saying that the person you have to call depends on circumstances or the nature of the problem a foreign leader wishes to discuss.

So who did Obama call when he wanted to discuss the debt crisis threatening the group of 16 EU states that use the euro?

It wasn’t Ashton — as a Briton, she is not from a euro zone country and anyway this was a call about economics, which is not in her brief.

It wasn’t Herman Van Rompuy either, even though he too could stake a claim to be the face of Europe as the bloc’s first full-time president.

from Pakistan: Now or Never?:

With Karzai off to Washington, Taliban talks back in focus

"The effort required to bring about a compromise was indistinguishable from the requirements of victory—as the administration in which I served had to learn from bitter experience."

The quote is from Henry Kissinger on Vietnam but you could just as easily apply it to the current U.S. strategy in Afghanistan of aiming to weaken the Taliban enough to bring them to the negotiating table. And unfashionable as it is to compare Vietnam to Afghanistan (it was hopelessly overdone last year), it does encapsulate one of the many paradoxes of the American approach to the Taliban.

If, so the argument goes, the United States is willing to reach an eventual political settlement with the Taliban, why does it keep launching fresh military offensives? Or alternatively, if it has no intention of making a deal, why has President Barack Obama promised to start drawing down troops in 2011, signalling to the Taliban that all they need to do is wait it out until the Americans leave?

In this 2008 Newsweek article which carries remarkable resonance today, Kissinger, a former National Security Adviser, sets out the risks of a strategy that is somewhere between war and peace.

"When the United States goes to war, it should be able to describe to itself how it defines victory and how it proposes to achieve it. Or else how it proposes to end its military engagement and by what diplomacy. In Vietnam, America sent combat forces on behalf of a general notion of credibility and in pursuit of a negotiation whose content was never defined," he writes.

He then faults previous administrations for assuming that once the U.S. military thwarted the North Vietnamese, "an undefined compromise would emerge through diplomacy—in effect, a strategy seeking stalemate, not victory. But stalemate violates the maxim that the guerrilla wins if he does not lose. "

"The purpose of war is victory. Stalemate is a last resort, not a desirable strategic objective." (my italics)

from Afghan Journal:

Karzai, the West and the diplomatic marriage from hell

One of my Kabul press corps colleagues once described covering President Hamid Karzai’s government and the Western diplomats who are supposed to be supporting it as a lot like being friends with a couple while they go through a savage divorce. We reporters hop back and forth, from cocktail party to quiet lunch to private briefing, listening to charming Afghans and Westerners -– many of whom we personally like very much -- say outrageously nasty things about each other. Usually, the invective is whispered “off the record” by both sides, so you, dear reader, miss out on the opportunity to learn just how dysfunctional one of the world’s most important diplomatic relationships has become.

Over the past few weeks, the secret got out. Karzai -- in a speech that was described as an outburst but which palace insiders say was carefully planned -- said in public what his allies have been muttering in private for months: that Western diplomats orchestrated the notorious election debacle last year that saw a third of his votes thrown out for fraud. The White House and State Department were apoplectic: “disturbing”, “untrue”, “preposterous” they called it. Peter Galbraith, the U.S. diplomat who was the number two U.N. official in Kabul during last year’s election, went on TV and said he thought Karzai might be crazy or on drugs. Karzai’s camp’s response: Who’s being preposterous now?

Then, like every good marital fight, it was suddenly over. There were Hillary Clinton and Bob Gates assuring Americans that Karzai is, in fact a "reliable partner”. Karzai, without taking back a word of his speech, let it be known that he held no grudges. On Saturday, the Afghan president and the United Nations sealed the deal by agreeing new rules for the next election.

Readers can be forgiven for wondering what on earth is the matter with some of these people.

For the record: I’m no doctor, but I think the Afghan president is probably not a mentally ill drug addict. Nor do I think Western officials were trying to overthrow him by engineering ballot fraud last year. I do think both sides are doing themselves real harm by shouting at each other.

There are still a few diplomats that Karzai likes, and some who like Karzai. And this is Afghanistan, after all, a country where “enemies” are often just the people you are trying to kill until they become your friends. Karzai is a master at working with people he distrusts: many of the members of his cabinet belong to groups that were –- literally -- at war with each other at various times. His first vice president was once a rival faction’s security boss who threw him in jail.