Wednesday Night #1324 – Anne Sophie, Cleo & Kimon

This Wednesday we will sadly say farewell to Anne Sophie Coleman, who leaves Montreal for an exciting new post in Washington where she will be dealing with issues relating to China and intellectual property rights. Probably even more challenging than the role she has occasionally had to assume on Wednesday Nights! She will be sorely missed, but promises to set up the Washington Wing of Wednesday Night and to be in constant touch.
At the same time, we are happy to welcome Cleo Paskal home from London where she has enjoyed her role as Chatham House Associate Fellow, Energy, Environment and Development Programme and produced an impressive report on Climate change, security & foreign policy Exceedingly timely in view of all the chatter about the Northwest Passage and Canadian sovereignty to be protected by new patrol boats that, in the words of Senator Colin Kenney “would not crush the ice in a gin and tonic” (wish I’d said that). For those of you who were not with us, there’s lots of background on the Arctic question from last week‘s stimulating discussion.
And Kimon Valaskakis is back at last from his European travels. We look forward to his comments on the new government in France and to comparing his impressions to those of Dr. André Pasternac, particularly with respect to the rivalry with Angela Merkel for the title of Europe’s “top leader” . We are also looking forward to his views on prospects for global governance in the face of such troubling issues as Russia’s suspension of participation in the European arms control treaty; the elections in Turkey and that country’s chances for admission to the EU , not to mention the new agreement with Iran on natural gas supply to Europe; the outlook for Pakistan in the wake of the Red Mosque violence; and, in Africa, predictions regarding when Zimbabwe will finally emerge from the catastrophe of the Mugabe regime.
As some in Washington are looking for face-saving ways of retreating from Iraq, U.S. Maj. Gen. Rick Lynch is urging that the “surge” continue into the spring of 2008, and the Iraqi PM says that U.S. forces can leave anytime, we have two relevant and fascinating reading recommendations for you.
The first comes from Guy Stanley – a link to Radio Free Europe “full of interesting information that provides a new look at the forces unleashed by the fall of Saddam (as well as the history of the region, etc.) “, and the second, from Ron Robertson is Gwynne Dyer’s new book ” The Mess They Made: The Middle East after Iraq”, reviewed by Nathan Whitlock in the Toronto Star
Would our week’s round-up be complete without reference to Conrad Black? We are, of course, fascinated by the coverage of the outcome of his trial which, as expected, ranges from controlled delirium from the Left to not-so-controlled hysteria from the Right. Pick your own media references and be assured that the topic will be on the menu.
Nor will we ignore the Rio Tinto/Alcan merger news, especially topical in light of our recent evening with Andrea Mandel-Campbell
With your help and these and other emerging issues, we can guarantee a rousing send-off for Anne and a great welcome home for Cleo and Kimon. We look forward to your participation

The Report

Global Governance and the School of Athens
Views on globalization are mixed, but public opinion is moving from ‘let’s stop it (globalization)’ to ‘let’s manage it’ with the realization that there are global issues – climate change, terrorism – that should be addressed globally. If they are, the positive aspects of globalization will quickly become apparent.
The School of Athens has evolved into a Centre of Excellence in Athens, – a “think and do tank” focused on teaching the management of globalization through examination of the successes of the past and solutions for the future. Six former heads of government will be among the 250 people at this year’s four- day (November 28 – December 2) conference in Athens. ‘Former’ because they have the necessary knowledge and experience while being free of the constraints imposed on incumbents. Former President of France, Valérie Giscard d’Estaing who founded the G-6 and drafted the EU constitution, will give the keynote address on Europe as a blueprint for global government. As the future of world government lies in the hands of today’s youth, fifty subsidized invitations will be offered to members of the under-30 generation (ten from Canada). A celebrity gala evening is planned with Angelina Jolie who is apparently much admired in Greece because of her role as the mother of the King in “Alexander the Great” and Brad Pitt’s role as Achilles in “Troy”. [Editor’s note: Oh Dear! Two dreadful movies.]

China
The School of Athens’ 2008 session in Beijing hopes to address China’s role in global governance. While some believe that China does not wish to be included, it is obvious that the second largest economy in the world must be engaged in global governance. There are certain indications, such as China’s membership in WTO since 2001 that this is changing. Thus, a more accurate view may be that China wishes to be engaged but is not as yet familiar with the rules of the game and does not have a concept of global governance.
Attitudes towards China have changed from one of admiration for what has been accomplished to some fear of its growing world influence accompanied by increasing concern about the possibility of an economic, political (or both) collapse. To put the situation in context it is helpful to look at China’s long history as a nation of world traders and potential economic superpower, and the willingness of its citizens to do whatever is necessary to survive and thrive. Nevertheless, it has never been able to create a governance system beyond its borders. Notably, in the 16^th century, China’s navigation techniques were far in advance of the rest of the world – it could have conquered Europe, but drew back.

China & Africa
It would be naïve to believe that any nation would act in a manner other than to protect its own interest. China has seized on the world attention vacuum in Africa as a great opportunity. “The lack of conditionality to China’s aid, such as the absence of any stipulation based on anti-corruption measures, as well as the speed with which it is dispersed have both proved attractive to African governments with varying degrees of accountability and respect for human rights.” Unlike the European imperial model based on proactive government of colonies, while also educating the local population and transferring technology, China in its eagerness to feed its own needs does little if anything for long-term African development, even resorting to importing Chinese labour for large projects. Moreover, China’s international investments are often at the expense of healthcare, education, environmental and other social issues in China.

[Editor’s note: China’s voracious demand for energy to feed its booming economy has led it to seek oil supplies from African countries including Sudan, Chad, Nigeria, Angola, Algeria, Gabon, Equatorial Guinea, and the Republic of Congo. The U.S. Energy Information Administration says China accounted for 40 percent of total growth in global demand for oil in the last four years; in 2003, it surpassed Japan as the world’s second-largest oil consumer, after the United States. In the first ten months of 2005, Chinese official sources say, Chinese companies invested a total of $175 million in African countries, primarily on oil exploration projects and infrastructure. On January 9, state-owned Chinese energy company CNOOC Ltd. announced it would buy a 45 percent stake in an offshore oil field in Nigeria for $2.27 billion. China already has a significant presence in many African countries, notably Sudan: China takes 64 percent of Sudan’s oil exports. more]

Neglect of environmental problems in favour of development has brought huge problems. Pollution is real and severe; Shanghai is built on a swamp and is sinking; much of the infrastructure is very vulnerable. China recently asked the World Bank to excise estimates from a report that about 460,000 Chinese died prematurely each year from water and air pollution and about 300,000 more died from indoor toxins.
[Editor’s Note: On July 23, the International Herald Tribune reported that “China has stopped the public release of an official study adding up the cost of the nation’s environmental damage”]
The promotion of Chinese interest, particularly in the Asia Pacific region, also involves such practices as bribery and buying of politicians, eliciting sometimes violent response from the residents of such places as the Solomon Islands.
Although China’s government is centralized and what is planned by the central government gets done, it must be remembered that China is much more than Beijing and Shanghai; much real power resides in the municipalities that have populations of many millions. There are vast differences in degrees of regional development and policies applied to foreign-based investment.
Foreign exchange surplus is largely invested in other countries. With 3% inflation, the Yuan is considered to be undervalued by 30%. Some Wednesday Night economists believe that even if the Yuan were to be re-evaluated upwards by 30%, it would not make a dent in the export volume from China, given the low wages paid to Chinese workers.

World economy
With the weakening U.S. dollar some people are suggesting that perhaps the number of currencies in the world should be reduced. The euro is actually overvalued. While Germany has recovered its position as top exporter, the Dow Jones is reaching record levels and the US dollar is down, the monetary situation is unstable. However, when between 1914 and 1939 there were two world currencies, the British pound and the U.S. dollar, the situation was destabilizing. While there would ideally be a single currency, one has only to look at the inequalities prevalent in the EU to comprehend that a single currency without common fiscal and monetary policy is shaky at best. This is why President Sarkozy is arguing for harmonization of economic policy, not simply monetary policy. An interesting sidelight to the ubiquity of Asian exports is the apparently healthy state of European exports. In fact, the European economy is not great overall, but its weakness is hidden by the recovering German economy and German exports to other European countries.

Iraq
As the situation continues to deteriorate, the new British Prime Minister would no doubt like to distance his government from the Blair policy; there are signs of population fatigue with respect to Britain’s presence in Iraq and in Afghanistan, even some rumours of spot mutiny among troops who are often not regular army. But the situation is complex, with serious conjecture that the U.S. is more and more likely to strategically bomb Iran. Even if the U.S. were to pull out tomorrow, it would still have huge costs to bear in Iraq, not the least of which would be the sunk costs of building its largest embassy in the world, plus staffing, maintaining and protection. It is unlikely that there would be any ‘peace dividend’ with departure from Iraq; no reduction in the defense budget because of the uncertainty surrounding world security. The geopolitical impact of withdrawal without a clear plan is huge if the consequence is a retreat into isolationist policy and the EU unprepared to intervene, leading to regime changes throughout the Middle East. What happens to the concept of the need to protect as developed by Canada to the United Nations?

The Geopolitical implications of climate change
Climate Change is only one aspect of environmental change. One of the major components of environmental change is the increase in population, pushing people into areas that are susceptible to climate change, and placing pressure on the world’s resources, notably food and water (also cities; for the first time ever, the world’s urban population has surpassed the rural population). Energy supply is another critical element.
Climate change can affect maritime borders as a nation’s coastline determines its excusive economic zone. Thus, if the coastal waters retreat, does your maritime zone retreat? If an island state disappears under rising oceans (ex: Tuvalu, the Maldives) does it cease to exist as a country when its population is evacuated? Do the waters revert to international waters?
If there is a scattering of islands off the coast, a country can create a baseline extending from the remotest island. (See UN Convention on the Law of the Sea). The U.S. does not recognize this law for domestic political reasons, as it conflicts with domestic law that rules that within a 12-mile zone, the State can exploit the first (and easiest to exploit) three miles and the federal government has jurisdiction over the remaining nine. Pushing limits would extend federal jurisdiction into deeper (more difficult to exploit) waters.
Other nations do not back Canada’s attempt to reaffirm its sovereignty over the Northwest Passage despite our seemingly undisputable claim to the Arctic waterway. Canada’s interest would be served by forming a strategic alliance with Russia, which unlike Canada and the U.S. has a fleet of functioning ice-breakers and could assume responsibility for verification of ships passing through the choke point of the Bering Strait. This arrangement would serve Russia’s interest as the Northwest Passage feeds into Russia’s Northeast shipping lanes.
With the potential of year-round Arctic navigation, shipping costs to and from many ports would be reduced and with the deterioration of the Russian permafrost destabilizing their pipelines in the Arctic, transhipment of oil and gas across the Arctic through Québec’s northern ports would become an attractive option. Meanwhile, as the water levels of the Great Lakes drop dramatically, shipping into the heartland of North America will be much more difficult. Montreal would then once-again become a key transhipment port, with possibly in the longer-term, development of a new Québec port remote from urban areas.