The Casual Truth

What will happen when the world’s poor become rich?

admin — Wed, 01 Sep 2010 13:58:00 -0600

The chief economist of HSBC bank Stephen King recently raised the question in a book of what will happen when the world’s poor become rich.

The answer is obviously great news for the world’s poor, but a mixture of pros and cons for people currently living in the rich world.

He believes the West’s relative power and wealth will decline, as a share of the global pie. But depending on what Westerners’ decide to do about it, their absolute wealth – money in the hand – will either decrease or increase.

The book is called “Losing Control: The Emerging Threat to Western Prosperity.”

It basically accepts that the West is decreasing its proportion of global dominance to emerging nations like China and Brazil (the ‘West’ generally means rich countries).

Due to fundamental economics, the book sees this growth of emerging countries and their people’s wealth as inevitable.

They have cheaper workers so many manufacturing and outsourcing jobs are being moved there. They also have a lot of consumers, so multinational companies are investing heavily to get their piece of the action.

What King discusses is what this all means for people living in the rich world.

Positively speaking, it means there will be a lot more consumers for exporters to sell their products to. And that export wealth trickles through to the rest of society in spending, employment and growth.

Indeed, one only needs to look at the strong economies of Germany and Australia to see how they are defeating the doom and gloom of recession by exporting to places like China.

From a humanitarian point of view, there will be less need for aid assistance as countries get better at looking after themselves.

And ideally it will also mean less terrorist attacks on westerners at home or abroad, as poverty and injustice – the main drivers of extremism – gradually decrease with prosperity.

But there are also the downsides. And this is what King concentrates on most.

In a world of limited resources, the West, with its attractive markets, has for a long time had buying dominance over most of them.

Now companies from the BRIC countries – Brazil, Russia, India and China – and others will have considerably more buying power, meaning Westerners will have to learn to share.

This sharing will also mean higher prices for items like agricultural products and energy fuels – otherwise known as raw materials and commodities. The world got a feel for what higher food and oil prices can look like in 2008, just before the recession kicked in.

The only way to stop this price hike will be for people to grow more food and produce more energy. But whether the planet’s supply can keep up with demand is the trillion-dollar question.

The way King sees it, the West can choose to go two ways in response.

The first, and desirable way, is to accept that the changes are inevitable with globalisation, and try to modify their economies. Concentrate less on manufacturing and more on highly skilled industries or some other competitive advantage.

This will require a bit of short-term pain as people lose their jobs and perhaps have to begin new careers.

But in the long run it will whittle out the uncompetitive businesses, and replace them with more sustainable industries whose jobs can’t be lost to China or India.

But the second, and very undesirable way, is what King is worried about.

This is when Westerners continue to suffer from low unemployment, and their standard of living drops.

As a result, insecure voters take their anger out on politicians, who are then forced to look for short-term solutions to keep their positions.

One of those solutions will be protectionism – when politicians pass laws making goods produced overseas less competitive in an effort to boost production at home.

Such a move could be very destructive. For example, if America did this to protect its factory workers, China or Europe would retaliate with their own protectionist rules.

US exporters would then struggle with sales and have to lay off staff. Meanwhile, consumers would find that many of the cheaper products they used to buy are no longer available or more expensive.

The quest for a short-term solution over job losses would quickly result in a dangerous downward spiral in world trade.

This is what King is afraid of. He says the West should “age gracefully” (meaning accept the changes) and not fall into the protectionist trap that would harm everybody.

He says the issue is currently simmering below the surface, waiting for the debate to take place.

When it does, the hope is that short-term insecurity doesn’t get in the way of long-term prosperity.

By The Casual Truth

The Pakistani cricket bet-fixing scandal

admin — Tue, 31 Aug 2010 13:58:00 -0600

Things are bad enough for the people of Pakistan with the floods and constant bomb attacks by insurgents.

Now a handful of their heroic national cricketers have been accused of deliberately making bad plays in a match against England in order to profit from its betting.

The charges remain unproven while two investigations are completed. But already, the knives are out from cricketing experts and supporters who feel the game and country has been tarnished yet again.

The ordeal began when British newspaper News of the World published a story on August 28 containing allegations that Pakistani players, via their agent, made certain plays in a match in return for payment.

The newspaper gathered video evidence using their undercover reporter Mazher Mahmood (known as the ‘Fake Sheikh’ for his regular undercover exposés of celebrities and minor royals).

Pretending to be a gambler, Mahmood met the players’ agent, wealthy Surrey businessman Mazhar Majeed, on August 25 in a London hotel room, saying he was interested in paying for information about their fixed events.

He gave Majeed £140,000 cash as an “entry-ticket” into an existing scam based in India (whereby gamblers bet on results they know are going to happen). A further £10,000 had been given as an up-front deposit.

Majeed then told Mahmood he would prove he could deliver fixed outcomes in the fourth test match (5-day game) between England and Pakistan beginning the next day at Lord’s cricket ground in London.

He said “I am going to give you three no-balls to prove to you firstly that this is what’s happening. They’ve all been organised, ok? ...I’m telling you – if you play this right, you’re going to make a lot of money, believe me.”

For those wondering, a ‘no-ball’ is when the bowler (similar to a pitcher) places his foot over a specific line before he lets go of the ball.

Gambling on specific events like this in a game is known as ‘spot-betting’, with ‘spot-fixing’ being the fixing of it.

Majeed also boasted that actual match results had been fixed, and that Pakistan was prepared to lose two of its upcoming one-day games against England.

He said he has been “doing it with the Pakistan team for two and a half years and we’ve made masses and masses of money.”

He claimed to have opened Swiss and English bank accounts for the players and laundered the money through the Croydon FC football club that he owns.

Armed with this evidence, Mahmood then watched the London match unfold. And at the three predicted moments, two of the fast bowlers, Mohammad Amir and Mohammad Asif overstepped the line, and by a whopping margin.

Even TV commentators at the time expressed amazement about how far the bowlers had overstepped.

The actual affect of the three no-balls was trivial and Pakistan ended up losing the game easily.

However, when the team returned to their hotel on the day the story was published, British detectives were waiting to interview the two bowlers, the captain Salman Butt and another player Kamran Akmal.

They also interviewed Majeed at the police station and charged him with conspiracy to defraud bookmakers. He was later released on bail.

Now two investigations are under way, one by the British police and one by the anti-corruption unit of cricket’s international governing body, the International Cricket Council (ICC).

The ICC’s initial report is expected by the end of the week. In the meantime, they have decided to let the tour continue and allow the four named players to take part, on the basis of innocence until proven guilty.

They are due to play English county side Somerset on Thursday, and England in a shorter version ‘Twenty20’ game on Sunday. After that, another Twenty20 game and five one-day games against England are scheduled to be played.

If any remaining games are indeed cancelled due to the findings of the investigations, ticketholders will be refunded and a contingency fund exists to pay hosting venues compensation for any foregone revenue.

Reaction to the allegations has been strong. Fans booed them on the last day of the weekend’s match and again outside their hotel. Cricket officials have expressed outrage and some are disappointed that the tour is being allowed to continue.

Betting scandals have tarnished the sport before, with former South African captain Hansie Cronje and former Indian captain Mohammad Azharuddin both being expelled from the sport in 2000 for accepting bribes in exchange for results.

The Pakistani cricket team are among the lowest paid in international cricket, making them easy targets for crooked gamblers taking advantage of the billion-dollar illegal sports betting industry in India.

But to many unsurprised followers, this is just the latest in a series of bet-fixing incidents that have plagued the sport for over a decade.

By The Casual Truth

Photo – Pakistani players (from left) Mohammad Amir, Salman Butt and Mohammad Asif.

David Petraeus and the COIN strategy

admin — Mon, 30 Aug 2010 13:58:00 -0600

David Petraeus has one of the most difficult jobs in the world.

After the resignation of his predecessor in June, Petraeus has taken on the role of Commander of the International Security Assistance Force in Afghanistan.

So who is this man that President Obama has so much faith in, why was he given this role, and what is his strategy?

The war in Afghanistan began in 2001 in response to the terrorist attacks of 9/11.

The International Security Assistance Force (ISAF) was established in that same year, and is currently comprised of 120,000 troops from 47 nations.

Its stated goals are to reduce the capability and will of the insurgency, improve governance and socio-economic development, and provide stability.

Until June, command of ISAF was in the hands of Stanley McChrystal. He prompted his own resignation by making loose comments about government officials to a reporter, which were later published in Rolling Stone magazine.

His replacement, David Petraeus, is known as “the most competitive man on earth.”

He is often public about his visions: “Committing to a goal publicly puts pressure on oneself; it becomes an enormous action-forcing mechanism and often helps you achieve more than you would have had you kept your goals to yourself.”

During 2007 and 2008 he successfully led the war effort in Iraq that saw a 90% reduction in violence.

And from 2008 until his post in Afghanistan, Petraeus was the Commander of U.S. Central Command (CENTCOM), the headquarters responsible for military operations in 20 countries.

These operations include ‘Iraqi Freedom’ and ‘Enduring Freedom’ in Iraq, as well as operations in Iran, Afghanistan, and Pakistan.

Petraeus is committed to the same counterinsurgency (COIN) strategy implemented in Afghanistan by McChrystal.

COIN integrates military and civilian counterinsurgency activities, and is based on the theory that military operations alone are not enough to defeat an insurgency.

The process of COIN has three objectives: first, the enemy must be cleared from the target area; second, the enemy must be kept out; and third, infrastructure and government must develop to empower the civilians of the region.

As Petraeus helped write in the Field Manual, “Success in COIN operations requires establishing a legitimate government supported by the people.”

With the ultimate goal being to ensure that Afghanistan doesn’t become a safe haven for terrorists, most experts agree COIN is the best strategy.

But this region by region process takes a long time, and requires a high number of troops.

For this reason, Petraeus intends to increase troop numbers in Afghanistan. This objective could be difficult to achieve as congressional enthusiasm for the war continues to diminish.

Last year President Obama stated that US troops will begin to withdrawal in July 2011. But Petraeus stresses that this date merely marks the beginning of the process, with some functions being transferred to the Afghans.

Popular support is thought crucial to a successful counterinsurgency. Therefore, a central theme of COIN is winning the ‘hearts and minds’ of local populations.

To help achieve this goal, strict rules of engagement have been developed which aim to protect innocent civilians and minimise casualties.

These rules restrict soldiers’ ability to use force and therefore lessen accidents between military forces and civilians. But they can be dangerous to implement in practice. ISAF troops have often complained about the lack of self-protection that these rules afford them.

Counterinsurgency expert David Kilcullen was asked what it would cost and what it would take to carry out the original objectives in Afghanistan.

He said that in order to prevent an Al Qaeda sanctuary, protect the government from threats like the Taliban, build civil institutions, and then hand over power, the only option is to spend 10 to 15 more years there.

Kilcullen says that the war effort is at a fork in the road. NATO and the US can either put more troops in and carry out the original objectives, or scale back and focus simply on counter-terrorism – a merely short-term solution.

However, he advises that the two goals are interlinked, meaning you cannot do the counter-terrorism without a certain amount of governance, development, and negotiation.

Indeed, almost all successful counterinsurgencies have involved negotiation with the enemy.

And many countries seem to be reluctantly accepting that there will be a negotiated end to this war: As one official said, “perhaps the best that can be hoped for with the current efforts is to weaken the militants sufficiently to bring them to the table.”

The COIN tactics are a far cry from the ‘shock and awe’ campaigns used in the 2003 invasion of Iraq.

However, the man in charge of military strategy in Afghanistan is committed to their potential.

In the words of Petraeus himself, “The decisive terrain is the human terrain. The people are the centre of gravity. Only by providing them security and earning their trust and confidence can the Afghan government and ISAF prevail.”

By Josh Daniell

Leaked UN report causes major controversy

admin — Sun, 29 Aug 2010 13:58:00 -0600

On Friday, a year after its completion, a historic and controversial draft report by the United Nations was leaked to the media before its scheduled release today.

It is believed that the authors feared that top UN officials were going to have it changed to avoid potentially harmful consequences from one of its findings.

That finding is that after the 1994 Rwandan genocide, the new Rwandan government's forces then carried out their own genocide on the retreating Hutu people.

The purpose of the report

The purpose of the report was to document and highlight the horrific human rights violations that took place in the Democratic Republic of Congo between 1993 and 2003.

There, in what has become known as ‘Africa’s world war’ and is the world’s deadliest since World War Two, eight countries and 21 rebel groups were involved at various times in trying to gain control over the country and its lucrative natural resources (or in some cases, seek revenge).

The huge and unprecedented 545-page report was prepared by a 20-strong team working for the UN High Commission for Human Rights.

They gathered evidence on 600 serious violations, with their standard being two independent sources for each incident.

The report warns that it isn’t based on the standards of judicial investigations, and that an international court will have to be the final judge.

But as it states in its foreword, “it is meant as a first step towards the sometimes painful but very necessary application of the truth.”

The report’s findings

Among the findings of war crimes and crimes against humanity by the various parties involved, the most controversial is the claim of massacres carried out by Tutsi Rwandan forces and their ally, the AFDL rebel group (RPA/AFDL).

After the 1994 genocide by ethnic Hutu militia on the ethnic Tutsi people in Rwanda, over a million Hutus (militia and civilians) fled across the border into DR Congo fearing the backlash from Tutsi soldiers.

The Tutsis followed them, and the report claims that between 1996 and 1997, RPA/AFDL soldiers murdered tens of thousands of Hutus, the majority of whom were women, children, the elderly and the sick.

The killings were often carried out with edged weapons. In one alleged incident, soldiers rounded up 310 villagers whom they accused of sheltering Hutu militias and killed them with hoes or axes to the head. Thousands more were shot, raped, burnt or beaten.

As well as qualifying as ‘war crimes’, the report states that “the systematic and widespread attacks” could be considered crimes of genocide, “if proven before a competent court” (genocide is the deliberate targeting of a specific ethnic group).

The Rwandan government has dismissed the report as “insane” and described it as an “amateurish NGO job” that “can only achieve instability in the Great Lakes region.”

The current Rwandan government has always claimed the moral high ground in ending the 1994 genocide, and has repeatedly denied allegations that they committed their own genocide in neighbouring Congo.

The consequences

Given these findings, those in charge, including President Paul Kagame (who earlier this month was re-elected with a dubious but overwhelming 93% of the vote) could find themselves on trial if the UN chose to establish a court to prosecute these claims (the Rwanda tribunal only covers crimes committed during 1994).

Furthermore, the current Rwandan government receives 50% of its revenue from foreign aid (60% of which comes from the UK, followed by the US). If it gets accused of genocide in a UN report, this support could be compromised.

Because of this, the Rwandan government has demanded that the report’s genocide claim be removed.

And if it isn’t, they have threatened to end their peacekeeping commitments in Darfur and Haiti, and perhaps even their membership of the United Nations altogether.

Faced with such consequences, and possible instability in a country that has seen genuine progress under Kagame, top UN officials (including possibly the Secretary-General Ban Ki-moon himself) reportedly asked for the genocide claim to be removed.

Afraid that this would happen, it’s rumoured the authors leaked the report to the media on Friday in order to keep its findings intact.

The revelation is also embarrassing for Britain and the US who have strongly supported the Rwandan government since the genocide.

The leaked report is only a draft and the UN has already said the final version will have some changes.

If these changes include the removal of the genocide claim, the UN will be accused of unfairly protecting Rwandan officials for political reasons.

The report states it is meant “to help [the Congolese people] build a better future where impunity has no place.” The report’s leaking may have just rescued that promise.

By The Casual Truth

Photo – Rwandan President Paul Kagame

Around the world in 60 seconds - 27 August 2010

admin — Thu, 26 Aug 2010 13:58:00 -0600

This week’s events include:

• Judgement errors made over Philippines bus hijacking
• Australian election comes down to four independents
• Somali politicians gunned down in hotel
• Plane crashes in China and Nepal

Judgement errors made over Philippines bus hijacking

Eight Hong Kong tourists were killed along with the gunman after he took a bus full of people hostage on Monday in the Philippines capital city Manila.

The whole ordeal unfolded on live TV throughout the day as police tried to negotiate with the gunman – a disgruntled ex-policeman trying to get his job back.

Negotiations broke down in the evening after the gunman informed a radio station he had shot two hostages and then began shooting. He was eventually shot by a sniper.

Nine hostages were released during the day and seven more, including the bus driver, survived after police stormed the bus.

The police have been criticised for being unprepared, properly trained and possibly even shooting some of the hostages.

Furthermore, they fled from the gunman’s shots after initially storming the bus, and didn’t take opportunities to either shoot or disarm him.

Some experts also believe they could have given in to his request to have his job reinstated, and then arrested him later on.

China has temporarily banned travel to the Philippines in response.

Australian election comes down to four independents

Australia’s election result on Saturday produced their first ‘hung parliament’ in 70 years, with the two main parties, Labor and Liberals each getting 71 seats, 5 short of the 76 majority needed to govern.

Three seats remain undecided and are proving difficult to pick. One Green party minister, their first ever elected, has indicated his conditional support to Labor.

The decision of which party will be the next government now rests with three independent MPs – each from rural areas. A fourth independent MP is contemplating joining them in the negotiations.

They have produced a list of seven demands that they want met, with the economy being top priority.

One of the demands is for the Treasury department to clarify the costings of the two parties’ pre-election promises (to which the Liberals have said no and Labor is taking advice on).

An outcome of the negotiations is not expected for at least another week or so, as all parties await the outcome of the three remaining seats.

Somali politicians gunned down in hotel

Two gunmen disguised as government soldiers stormed a hotel in the Somali capital Mogadishu and shot dead 32 people. One of the gunmen then blew himself up inside the building.

Among those killed were six members of parliament, five government officials, and 21 civilians. The hotel was known as being popular with politicians due to its location inside the small government-controlled area of Mogadishu.

The attackers were from the Somali militant group Al-Shabab, the same group that carried out the twin-suicide bombings in the Ugandan capital during the world cup final.

The group launched a new offensive in the capital on Monday after it declared a “massive war” against the 6,000 strong African Union peacekeeping force which is propping up the country’s weak government.

Another 40 people have been killed and 130 wounded in the street fighting so far.

Plane crashes in China and Nepal

A passenger plane crashed in north-eastern China on Tuesday after it overshot the runway in heavy fog.

42 people were killed after the plane broke into two pieces and burst into flames. However, 53 people managed to survive. It’s China’s first major plane crash in five years.

Meanwhile, there were no survivors when a small passenger plane crashed in bad weather in Nepal on its way to the Mount Everest base camp, killing 14 people, including 11 tourists.

Photo – Emergency workers remove one of the hostages from the bus hijacking in Manila.

The story of the Chilean miners

admin — Wed, 25 Aug 2010 13:58:00 -0600

It’s not often you get a happy disaster story. But on Sunday – two weeks after their mineshaft in northern Chile caved in – all 33 miners acknowledged they were alive.

Trapped after rocks blocked their exit, they managed to live in a shelter 700 metres (2,300 feet) underground.

But rather than bring them straight out, rescuers now say they won’t be able to get them out until Christmas, posing a serious challenge ahead for the miners.

The accident

The small San Jose copper and gold mine near Copiapo is owned by San Esteben Mining Company, an operator with a poor safety record.

After several accidents at the mine including one death, a government report in July warned that the owners had failed to reinforce the roof. But nothing had been done about it.

On August 5, the roof of the mine collapsed, blocking the main access way 330 metres (1,100 feet) below the surface. Little was known about the fate of the miners trapped inside.

The rescue attempt

Rescue efforts began on 6 August, supervised by various government officials and ministers.

The next day President Sebastian Pinera returned from the swearing in of Colombia’s new president to oversee the emergency response.

A second rock fall occurred on August 7 blocking the ventilation shaft after rescuers themselves tried to use it to access the mine. Following that, rescuers began drilling several bore holes the width of grapefruits into the mine.

On August 19 the first drill reached the area where rescuers thought the miners were located but did not encounter any sign of life.

Finally, on Sunday August 22, one of the drills reached the depth of the shelter, and rescuers heard a tapping on the drill.

The miners then duck taped a handwritten note on a piece of paper to the end of the drill saying “The 33 of us in the shelter are well.”

A video image of their faces hours later showed they were in much better condition than expected.

After reading out the note, an emotional President Pinera said “Today all of Chile is crying with excitement and joy.” People across Chile waived flags, honked car horns and broke into applause when the news was announced.

But the rescue is far from over.

The plan is now to drill a 66cm-wide hole to where the miners are and bring them to the surface one by one using a pulley (a separate shaft will be drilled for ventilation).

Given the instability of the mine, they estimate the process of deciding where to drill plus the actual drilling will take about four months, meaning it won’t be until late-December before the miners are freed.

Rescuers haven’t broken that news to them yet and some psychological experts suggest not doing so at all. However, it’s believed some of the more senior miners might understand this reality already.

Conditions underground

The miners are living in a 50 sq metre shelter (the size of a small apartment) where food, water and oxygen were stored.

However, workers familiar with the mine believe they may actually have about 1.8km of space to move around in.

The miners have been surviving on two spoonfuls of tuna, a sip of milk and a biscuit every 48 hours – causing them to lose about 8kg each – and extra water from tanks, drilling machines and ventilation shafts.

They used truck batteries to power lights and charge their helmet lamps.

Using a 5-foot plastic tube that takes about an hour, rescuers are lowering down high-energy glucose gels, rehydration tablets and medicine, as well as more water and oxygen. Normal food will start to be delivered in the next few days.

Further requests have included toothbrushes and something for their eyes.

Lines of communication are open now between the miners and the rescuers, and microphones will be sent down so they can talk to their families.

Psychiatrists will be working with doctors to monitor their psychological conditions.

The pressure on the miners over the next four months is likely to be immense. The mine’s extreme heat (32C) and humidity will dehydrate them, sap energy levels, and likely cause tension.

They won’t be used to the heat and lack of sunlight for such a long period of time. Experts say they will need to exercise, keep busy and above all avoid infections.

There have been suggestions the mine’s owner will be made bankrupt once the ordeal is over. And President Pinera has already sacked the chief of the national mining regulator who oversees mine safety.

As it stands, authorities will probably consider the whole incident a lucky escape and a cheap lesson. Disasters of this nature usually bring only sad news for the country involved.

So Chileans, who have already experienced a heartbreaking earthquake this year, will be relieved to know that this story comes with a happy ending.

By The Casual Truth

Photo – President Sebastian Pinera shows off the miners’ note.