Wednesday Night #1477

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Afghanistan, McChrystal and the media – role and responsibility 
The Rolling Stone story The Runaway General that precipitated General Stanley McChrystal’s dismissal provided fodder for discussion of the role of the media in reporting and interpreting news.
The New York Times’ masthead logo, “All The News That’s Fit to Print,” like Jack Webb’s “Just the facts ma’am” appeals to the public who believe that they have the means, knowledge and intelligence to interpret news reports objectively.  However, the nature of reporting news is such that it is of the utmost importance that reporting be responsible as well as open.  For example, raw reporting of the pronouncements of such celebrities as Mahmud Ahmadinejad outside of the context of his personal agenda, constitutes more propaganda than news.
the media have the obligation, not always respected, to report the news in an unbiased manner.  However, too often today, reporting either reflects statements issued by spokesmen with an agenda, or statements made out of context, out of frustration or simply in the context of thinking out loud in a small group.  A competent reporter will get to know the source as a person and, while faithfully reporting the larger picture, will have sufficient understanding of underlying issues and events to deliver the news in an unbiased, albeit interpretative, manner.
In order to differentiate background from news, a trust must be built between journalists and those making the news. 
The fourth estate should accept responsibilities beyond the event.
In today’s atmosphere of gotcha journalism, reflection is not a valued quality among most journalists. No doubt what was reported reflected the feelings of many soldiers and officers, however in the case of this story, one wonders about the responsibility of the editor. Was publishing this story in the best interests of the country, the war effort, or did it constitute a comforting of the enemy? On the other hand, the sentiments quoted were not in a one-off context. The writer spent many days in Afghanistan as well as with the General and his staff in Europe where they were detained by the volcanic ash phenomenon. While the media have chosen to highlight only the most outrageous quotes, the author takes pains to situate it in context.
It is in this perspective that one must review and perhaps regret the predictable dismissal of General McChrystal.  The dismissal of competent Armed Forces Commanders has occurred before (Five Other U.S. Presidents Who Fired Generals) , including that of General MacArthur by President Truman over strategy in the Korean War, not to mention President Lincoln who fired six generals.
As Commander-in-Chief, the President must insist on absolute authority and unwavering loyalty; may be unfortunate, for both General McChrystal and the general public, that President Obama had little option but to dismiss him. He will be succeeded by General Petraeus, rumored to be a possible Republican presidential candidate in 2012. However, his health may be in question;  it is suspected that the recent incident when he fainted at the witness table during a Senate inquiry, may be attributable to more than dehydration as he claimed. Nonetheless, his selection is brilliant, palatable to politicians and troops alike.
[Postscript 30 June — David Jones: Obama, McChrystal, Petraeus and the Peter Principle]
The fact is that nobody has a solution in Afghanistan. After nine years of war, the original objective has been lost, while the military necessarily object to the political policy of  limited warfare which inevitably entrains greater loss of life.
Questions arise regarding the timing of the announcement of vast mineral deposits in Northern Afghanistan, a fact that has been known since the 1970s, although perhaps more refined with recent geological surveys. As for the riches, although the lithium deposits will be valuable, iron ore and copper, plentiful throughout the world, constitute two-thirds of the mineral deposits.  Although it may very well be possible that they may be developed in an economic fashion, some suggest that the current disclosure of old news might be designed to exert a political influence over the wavering American public.

The economy
Did the WN experts foresee the financial crisis? At least one, as early as 2007, warned that we should beware of the financials.
A few months ago, no-one talked about sovereign debt, Iceland, Greece, Spain, the re-evaluation of the yuan, the impact on exporters. In the last two months, the outlook has changed. Is the correction over? Experts are divided as indicators are contradictory: staggering corporate earnings, while fundamental numbers are not good: e.g. very high real unemployment.
As investors panicked two years ago, much of the money removed from investments remains intact, waiting for mergers and acquisitions and reinvestment. Companies are cash-rich.  In the interim, much has happened geopolitically including sub-par growth in the U.S.; slowdown in growth in Canada; major debt problems in Europe; the potential revaluation in China where labor shortages and increased salaries are also factors; the revolt in the Labour Party in Australia (where Prime Minister Rudd may have to resign); and the structural shift from the U.S. and U.K. to southeast Asia and India. Consumer demand in those countries is rising. Infrastructure requirements are in the hundreds of billions. Canada, Australia, New Zealand and Brazil will be ‘the related beneficiaries’ of this shift.  Great opportunities exist as well in the U.K.  and other European countries, especially Germany, whose strong manufacturing companies will benefit from the diminishing value of the euro.
We are coming into a period of slow growth with a great hoard of cash available for investment, weighing the risks against the potential for gain.  The hesitation to take risks reflects the memory of the recent fall of the mighty.  Companies with huge cash positions resist making acquisitions.  Canada, however, looks very interesting over the longer term. The trick for the investor is to identify the countries that will be beneficiaries.  In predicting the path and image of the ultimate recovery, it may be useful to remind ourselves that the basis of the business of finance is faith and trust and no one can forecast when faith and trust is lost, even for a small percentage of assets.  The loss of trust has the potential to cause a chain reaction and it may very well be many years until the pre-crisis level of trust is fully re-established. 
The investment environment may be sensitized to the possibility of yet another world crisis, one that will most certainly come at some point. Some pundits are worried about the domino affect in the banking sector.
Although very unlikely, given the company’s revenues of $750 million per day, the BP crisis might be the trigger. Some suggest  that would represent the “fear factor” rather than the greed factor.  If this were to happen, however improbable, it would be more the case of the current liquidity squeeze than insufficient assets, as BP assets are worth two hundred and forty billion dollars. There was some debate about whether the $20billion fund established by BP was capped [Editor’s note: According to the BP website, “The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims.”] The company appears to be a dream target for acquisition by one of its rivals. The fear is that so many British pension funds own BP, along with the pension fund of the State of New Jersey, and BP has now cancelled payment of dividends for the remainder of 2010; the company’s liabilities are such that bankruptcy could be the alternative to law suits (as was the case with asbestos).
One expert fears a geopolitical risk such as a sudden rise in the price of oil, or if, perhaps, it were to be discovered that the origin of the Gulf of Mexico disaster were to prove to be the prototype of mechanical engineering factors common to many oil rigs, – this possibility is one of the reasons for the moratorium.
The business of finance is based on faith and trust. Nobody can forecast to what extent faith and trust are lost
Financials as an investment are therefore exceptionally difficult to evaluate at this period and some wise investors are wary of what is happening to European banks at present and the potential repercussions in southeast Asia. It may take many years for trust to be restored to pre-crisis levels.
The Last Days of Lehman Brothers aired very recently on CNBC. It provides an extraordinary account of the curious circumstances leading up to the collapse of the firm despite the fact that at least three governments (Britain, Germany and the U.S.) were aware that its purchase by Barclay’s was hours away from being signed. But Henry Paulson described the fundamental problem as being a “massive Ponzi scheme”.

The Ontario G8 and G20
Maude Barlow’s proposed “flotilla invasion” of the site of the G8 elicited some mirthful commentary. As did the claim made recently by Bernard Kouchner that the G20 was an invention of M. Sarkozy (who was not even a presence when Paul Martin was campaigning for the idea).
Giving up the G20 would be a huge mistake. On the other hand,there is a need for more proactive organizations.
The G20 evokes mixed reactions ranging from the worst idea ever to savior of the world. It is likely that the G8 will not disappear, but reserve for itself certain issues like security. While it is better than having nothing, the G20 is far from the definitive solution of governance problems; its lacunae include the fact that it is not fully representative (173 countries are not members), however a trade-off between representation and effectiveness is inevitable. Like-mindedness, a criterion of the OECD, still does not generate consensus.
At best, G8 but more especially G20 conferences, do little more than favour an exchange between leaders of member countries and utter soothing words. These are not proactive organizations. Nor do they anticipate crises.   The inverse relationship between the numbers of member nations and meaningful decisions is evident.  The degree of compliance is extremely low even after agreements have been watered down in order to bring about some appearance of accord.  In effect, the G20  is a good crisis management tool but very poor at crisis prevention.  The effect on the actions of private corporations in member countries is virtually nil.  Action on vital issues that have the capacity to adversely affect life on earth remains impossible.  Realistic cynics expect little more from the current G-20 conference than a bland communiqué – prepared well ahead of time – and the announcement of the proposed date of the next conference.

Global Governance
It was noted that the Centre for International Governance Innovation (CIGI), an international think tank, was founded in 2002 thanks to the initiative of Jim Balsillie and Mike Lazaridis, Co-Chief Executive Officers of RIM. CIGI’s main purpose is to address international governance challenges through world-class research. It appears to be going through some difficult moments vis à vis the Balsillie School of International Affairs. There is also considerable competition offered by the Munk School of Global Affairs of U. of Toronto, which is home to the G8 Research Group.
Some Wednesday Nighters are convinced of the inevitability of global governance if the species is to survive, and that it may come about sooner than expected because of the phenomenon of interdependence and the realization that faced with a pandemic, environmental disaster, or a global financial  crisis, it is impossible to solve the problem with the institutions we have today.  Achieving valid global governance requires fundamental new global governance structures and to bring these about, investigation and adaptation of four avenues:  the reform of the U.N.; the establishment of a global parliament;  G20-type organizations; and finally the institutions of regional integration such as the European Union.  The mission of the global governance entity, e.g. The New School of Athens,  would be to devise global solutions to global problems without interfering in matters of national/local sovereignty. [In addition to the European Union, federated nations such as Canada and the U.S. are examples of division of powers between different levels of government.] Governance does not mean more government.  In the light of obvious imperfections in the League of Nations and United Nations, although the chances of world government appear slim, there are those who believe that it is inevitable and may happen sooner than now believed possible, should  a major global crisis, perhaps an intractable world problem, a deadly world-wide epidemic impossible to resolve on a national level, or the recognition of the potential effect of the rising temperature level of the oceans, provide the spark.A cautionary note: the acceptability of global solutions depends on the coherence of proposed strategies. David Brooks makes this point in his brilliant column Faustus Makes a Deal.
And then, there are the skeptics…
Every time I hear the word governance, I know someone is going to interfere with something I like to do

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The Prologue
Wednesday Nighters in the news
Cleo Paskal‘s first contribution to HuffPost (her fame and fortune now assured)
Global Warring: How Environmental, Economic, and Political Crises Will Redraw the World Map, – and, just in, Cleo and “Global Warring” have received a Grantham Prize Award of Special Merit
John Ciaccia talks to La Presse Crise d’Oka: l’entente qui ne fut jamais signée – John tells us that he is disappointed in the piece as the journalist missed the point he was making regarding a missed opportunity to resolve the crisis a month earlier. The feds had balked over a condition that was agreed three weeks late.
This will be Kimon‘s last WN until early August, as he leaves for Europe next weekend.
G8/G20
On the eve of the Fête nationale, we should be joyously lighting bonfires to celebrate Midsummer’s Eve (sort-of). Instead we are gloomily looking around the world, while anticipating a less-than-generous ROI for the Muskoka-Toronto G8-G20 extravaganza starting on Friday. Have you all read the G8 Muskoka Accountability Report? We confess that we gave up after reading the anodyne “The G8 has acted as a force for positive change and its actions have made a difference in addressing global challenges. In some areas, the G8 can point to considerable success; in others, it has further to go to fully deliver on its promises.” Yes, it sounds like the report you might receive from your troublesome child’s favorite teacher.
Oh, did you notice that it is not really a G8 meeting; it’s a G18 gathering. BUT this doesn’t mean that it is G20 minus 2, because the ten added to G8 are not invited to G20 – are you still with us? Does an invitation to Muskoka, but not Toronto mean that you are a Most Favoured Nation?
We hope you have carefully perused the Greening of the conferences plan and that someone will explain the ‘living wall’ that will produce high-quality indoor air through lush plants at the Direct Energy Centre – how will they survive in all that hot air?
We are perhaps too pessimistic. Margaret Lefebvre attended the G8 Research Group‘s warm-up conferences on the G8 and G20 (where the Group released its own Compliance Report – who would like to volunteer to do a comparative analysis?) in Toronto last week. She reports that she was extremely impressed by the quality of the presenters and presentations (we note only one current politician among them). The Compliance Report makes for fascinating reading, although we remain somewhat mystified by some of the scoring. This statement, however, is fully transparent:  “Scores for commitments dealing with the international framework for development assistance were low across the board. Official Development Assistance received an average score of 0.33, Aid Effectiveness received a score of 0.33, and Good Governance received a score of 0.” Fascinating – if turgid – reading.
So, perhaps we move on to other topics?
For the China watchers among us, the FT tells us that the apparent shift in China’s policy regarding the Renminbi seems to be more apparent than real, however tonight the NYT says “China’s central bank on Tuesday set a key daily rate for the renminbi at its highest level in five years, in a closely watched move that echoed a 0.42 percent rise in the Chinese currency on Monday and suggested possible further increases. But it is the Wall Street Journal that asks the fundamental question: Yuan or Renminbi: What’s the Right Word for China’s Currency?
Iran
Ambassador Marc Ginsberg asks: Is Iran actually containing the U.S.?
As sanctions are increasingly fine tuned, Iran will surely be more “contained,” and find it far more economically painful to continue thumbing its nose at the world. So it would seem. But Iran has been feverishly constructing its own containment policy to neutralize sanctions and straightjacket any military designs against its nuclear facilities. As the clock ticks toward a showdown with Iran, will it succeed – or miscalculate – that it can thwart an attack by Israel or the U.S. against its nuclear enrichment facilities?
Zimbabwe
Last week we wondered about Afghanistan’s $trillion of natural resources. This week it is Zimbabwe’s turn: New mining has provoked fears that riches will be used to subvert attempts to bring democracy to Zimbabwe and to finance conflicts. We are not sure about the effectiveness of efforts to bring democracy to that country, but this is another dimension of the debate.
Kyrgyzstan‘s troubles continue. But there was one interesting tidbit you may have missed.  Russia’s drug chief proposed on Monday the building of a military base in Kyrgyzstan as part of global efforts to combat Afghan drug trafficking. (more) We believe that is worthy of a bit of geopolitical analysis.
BP
While most of the North American Press excoriates BP, Rolling Stone has published a detailed report on the failures of the current administration – and in particular, Ken Salazar – to take fundamental steps to prevent disasters such as the Gulf oil spill. Read and weep. The Spill, The Scandal and the President: The inside story of how Obama failed to crack down on the corruption of the Bush years – and let the world’s most dangerous oil company get away with murder
Meanwhile from the U.K. comes Frederick Forsyth’s commentary – perhaps in anticipation of a new book?
“As I understand it the Deepwater Horizon oil rig in the Gulf of Mexico was designed and built in South Korea.
Did it contain a flaw that triggered the tragedy? We do not know … yet. It is wholly owned by U.S. company Transocean Inc, some of whose staff were on board at the time.
How much were their staff involved in operations? We do not know … yet. BP North America is a 100% American-staffed subsidiary of BP UK.
Basically the old American Amoco Inc which BP bought years ago. Their staff were also among the operating crew. Did they play any role in the explosion that tore open that hole a mile down on the seabed? We do not know … yet.
One thing we do know: the valve that was supposed to shut off all supply the instant anything went wrong malfunctioned. It was designed, made and operated by 100% American company Haliburton Inc.”
It has been announced that Tony Hayward (won’t it be nice when we can no longer recall who he was), following his unfortunate appearance to cheer on his yacht will skip Tuesday’s session of the World National Oil Companies Congress, where he was due to give the keynote speech about the global responsibilities of international oil companies. We think giving that occasion a miss is probably a good idea.
Which brings us to a suggestion by one of our Wednesday Nighters after considering what goes on un-noticed in developing nations, either too poor or too greedy/corrupt – or all of the above – to combat environmental degradation from oil and other natural resource companies. The suggestion is that there is a need for an International Convention on Offshore Drilling (ICOD) developed by, and passed at the U.N, principally to protect developing nations. He adds, “the U.S.and G.B. may not sign it, but if oil companies based in their countries wished to drill in the waters of signatory countries, or international waters, they would be required to abide by the Convention.”
A thought that occurs is that if Stephen Harper really wanted to make his mark in foreign affairs, this would be a wonderful signature issue for him in the grand tradition of Nixon to China. We would love to hear your comments and feed-back.
Finally, we are not known as sports fans, but who could help but be entertained by antics of the World Cup and the national characteristics that become so blatantly obvious – our current favorite is the French team that went on strike and remains in turmoil, though close second is the debate over the influence of the WAGs over the athletes’ ability to concentrate.