The Globalization Index 2007


November/December 2007

The world may not be flat for everyone, everywhere, but there’s no turning back the clock on globalization. For the seventh year, FOREIGN POLICY partners with A.T. Kearney to measure countries on their economic, personal, technological, and political integration. Find out who’s climbing the ranks, and who’s sliding down.


Never before have the forces of globalization been so evident in our daily lives. An estimated 2 billion people witness Live Earth, a series of concerts held in 11 locations around the world to raise environmental awareness. Chinese manufacturers decorate toys with paint containing lead, and children around the world have to give up their Batmans and Barbie dolls. Mortgage lenders in the United States face a liquidity crunch, and global stock markets go berserk. Good, bad, and ugly—the effects of our supposedly “flattened” world are undeniable. But just how strong are these ties that bind? As former U.N. Secretary-General Kofi Annan once remarked, “Globalization is a fact of life. But I believe we have underestimated its fragility.”

That fragility is particularly apparent in this edition of the Globalization Index, the seventh annual collaboration between FOREIGN POLICY and A.T. Kearney. This year’s index draws on data from 2005, a year that, on the surface, exemplified the limitations of globalization’s reach. It began with the fallout from the devastating Indian Ocean tsunami, which left at least 300,000 dead, in part because there was no transnational network for emergency alerts in the region. Eight months later, similar scenes unfolded when Hurricane Katrina hit New Orleans, where the benefits of globalization failed to reach the poorest citizens of the world’s wealthiest country. Not long afterward, an earthquake devastated Pakistan-administered Kashmir, where officials put the death toll at 75,000, with more than 2.5 million left homeless.
The limits of globalization weren’t evident only against the backdrop of natural disasters; there were political fault lines, too. Sectarian violence continued to escalate in Iraq. Iran traded the conciliatory Mohammed Khatami for a more isolationist president, Mahmoud Ahmadinejad, who called for Israel to be “wiped off the map.” North Korea announced it had nukes. Voters in France and the Netherlands rejected a new European Constitution. And four suicide bombers terrorized London on July 7 with coordinated attacks on public transportation.
Despite the turmoil in many parts of the world, nations did prove they could play nice with each other. The Middle East was home to some unexpected moments of cooperation, with Israel’s withdrawal from settlements in Gaza and the West Bank, and Syria’s pulling its forces from Lebanon after a 29-year occupation. On the economic front, cooperation in regional trading blocs grew, even as the Doha round of global trade talks continued to stumble. The United States approved a free trade agreement with the Dominican Republic and Central American nations, and Southeast Asian economies implemented several bilateral agreements of their own.
The inevitable push and pull of globalization plays out in the index’s rankings, which incorporate indicators such as trade, foreign direct investment, participation in international organizations, travel, and Internet usage to determine rankings of countries around the world. This year, we added 10 states to the original list of 62 in an effort to expand representation from various regions. Together, the 72 countries account for 97 percent of the world’s gross domestic product and 88 percent of the world’s population. The index measures 12 variables, which are grouped into four “baskets”: economic integration, personal contact, technological connectivity, and political engagement.
The results provide an assessment of how much, or how little, countries are opening themselves up and connecting with others. For example, the International Convention for the Suppression of the Financing of Terrorism welcomed new participants including Argentina, Brazil, Egypt, and Ireland, which boosted their political engagement scores. On the other hand, many countries made fewer contributions to U.N. peacekeeping, both in terms of financial aid and personnel—showing that even the most globalized countries face challenges in maintaining openness.
Cultural factors can curb the benefits of globalization, too. For instance, France’s collective nationalism tilts the scale in favor of home-grown agriculture, and the United States’ fears of terrorism make foreign management of ports an unpalatable prospect—cultural clues that may partially explain why both countries have a relatively low economic ranking on the index. Perhaps the area of the world that bears the brunt of globalization’s economic failures is sub-Saharan Africa. Despite attempts to increase regional trade—Kenya, Tanzania, and Uganda launched an East African Community Customs Union that established common external tariffs—a large informal economy, accounting for more than half the workforce, makes it nearly impossible for governments to raise the revenue they need.
In 2005, the world’s richest nations took some steps to acknowledge that not everyone has reaped globalization’s rewards. As part of its summit in Gleneagles, Scotland, leaders of the Group of Eight industrialized nations pledged $40 billion worth of debt forgiveness and an additional $50 billion in foreign aid to Africa. They also promised more peacekeeping troops and assistance in eradicating disease. To date, Africa has seen more assistance in some areas than others. Ultimately, it may take several years to see if globalization and good intentions can make the world a little bit flatter.
The Winners’ Circle
For the fourth time in seven years, Singapore tops the list as the most globalized country in the world. But there was plenty of movement in the rest of the top 20. Many of the countries that previously ranked high fell off because of stiff competition from newcomers to the index. The top new addition was Hong Kong, which debuted in second place and distinguished itself with the highest scores in both the economic and the personal contact dimensions. The Netherlands made its way back into the top three for the first time since 2001, mostly due to the merger of the Royal Dutch Petroleum Company and Britain’s Shell Transport and Trading Company. Worth about $100 billion, the deal helped to increase foreign direct investment outflows for the Netherlands by more than 590 percent over the previous year. Meanwhile, the United States slipped four places in the overall rankings to end up at seventh. Although U.S. trade grew by 12 percent, foreign investment shrank by more than 60 percent, mostly due to the effects of the 2004 American Jobs Creation Act, which granted tax incentives for hiring domestically. Clearly, the forces of globalization can turn on a dime.

This Won’t Be The Iraq Election
Petraeus's new strategy is working, though not exactly for the reasons initially advertised.

By Fareed Zakaria
NEWSWEEK
Updated: 3:29 PM ET Nov 3, 2007
The Presidential campaign has jostled this way and that, contenders have risen and fallen, but the one fixture in the political firmament has been Iraq. Polls have consistently said Iraq would be the central issue of the 2008 campaign. The candidates have developed elaborately studied and rehearsed positions on the war. But what if the subject moves off center stage? In the new NEWSWEEK Poll, the economy now tops Iraq as the issue that voters say will most influence their choice for president, 22 percent to 19 percent. For two years, Iraq dominated these kinds of surveys. Only a month ago, in a CBS News poll, 28 percent of respondents wanted Iraq to be the campaign's most-discussed issue, while the economy came in second at 16 percent. One can't make too much of one poll, but other evidence also suggests that the gap seems to be closing.

Why is this happening? The administration would argue that it is a consequence of the surge. And there's some truth to this. Violence is down, Al Qaeda in Iraq is weaker and American casualties are falling. Gen. David Petraeus's new strategy is working, though not exactly for the reasons initially advertised.

When the president announced the surge last January, I wrote a column arguing that it was likely to succeed militarily (by providing better security) but would probably fail politically (because of a lack of political reconciliation). I was both right and wrong. More U.S. troops have meant better security. But they are not at the heart of current improvements in Iraq. The key is that Petraeus has been willing to do what no American official has until now: accept Iraq for what it is and not what Washington wants it to be. Searching for a stable order, Petraeus has allied himself with whoever, within reason, could produce that order.

In insurgent-ridden Anbar he realized that the only way to effectively fight Al Qaeda in Iraq was to have allies within the Sunni community rather than to use a largely Shiite and Kurdish Army. That meant cozying up to Sunni tribesmen, even those with shady pasts. Several Sunni towns and neighborhoods report being given money, infrastructure and training directly by the United States. Petraeus has, in effect, given up hopes of Shiite leaders in Baghdad reconciling with Sunnis, and instead he's made up with them himself. The result has been that Al Qaeda in Iraq has been marginalized, Sunni leaders no longer demand an American withdrawal and the Shiites have recognized that America's support is not unconditional.

In the Shiite south, U.S. policy has abandoned the goal of an impartial government and has picked a side: Abdul Aziz al-Hakim's Islamic Supreme Council of Iraq (ISCI), which holds sway over most local governments in the region. We complain loudly about the infiltration of militias into the national police and Army, by which we have usually meant members of Moqtada al-Sadr's Mahdi Army. But we have been far more reluctant to weed out members of ISCI's militia, the Badr Brigades. Petraeus has even been somewhat accommodating of the Sadrists. In Baghdad, U.S. forces now primarily target "rogue" Mahdi Army militants. The more maintsream Sadrists have been tacitly allowed to operate in several Shiite areas. Of course, we've always been realistic about Kurdistan, where we have encouraged a quasi-independent state run by political parties with their own militias.

Back in Washington, President Bush continues to talk about Iraq's shining democracy in speeches that seem utterly detached from reality. This is a nation where 4.5 million people have fled their homes, ethnic cleansing has transformed whole cities and religious fanatics have imposed a theocratic rule that is often more extreme than in Iran. In much of the country, thugs rule the streets. The police chief of Basra told the Iraqi newspaper Al-Sabah last week, "Most of Basra's ports, especially Umm Qasr, are under the control of militia gangs. The police force is incapable of executing its duties because its members report to the militias." The central government is barely functioning. Half of the cabinet ministries are either vacant or nonfunctional. Iraq's oil production is down this year. Sectarian divisions are, in some ways, getting worse.

On the ground, far from Bush's rhetoric of transformation, these conditions have moved American policy toward realism. Will it work? For Iraq to genuinely recede as a campaign issue, this order has to endure. The balancing act—between Sunnis and Shiites, ISCI and the Mahdi Army, Arabs and Kurds—could easily collapse. As the United States draws down its troops, each of these various forces will try to gain the upper hand. A stable Iraq does not mean a pretty one. The ISCI are our allies but are also the most pro-Iranian element within the Shiite community. (Sadr's followers have historically been the most anti-Iranian.) Building up Sunni militias contributes to the fracturing of the country. But there are no great options here. Petraeus has at least moved the United States into a more flexible position, one that gives it leverage with all communities, allows it to adjust its tactics and forces the creation of local balances of power. It moves us closer toward what must now be the larger strategic objective—to create enough stability to allow the United States to reduce its exposure in Iraq.

URL: http://www.newsweek.com/id/67924

Ethiopia gets its first automaker

Posted Nov 10th 2007 1:01PM by Dan Roth
Filed under: China, Etc., Plants/Manufacturing

China's automakers aren't fooling around when it comes to aggressive growth. While you don't hear much enthusiasm from European or North American automakers about the market on the African continent, There's already at least two Chinese carmakers who've set up shop there as a way to expand beyond the borders of their home country. Holland Car is the first car assembly plant in Ethiopia, and it's kicking out a renamed Lifan 520. The 520 goes by the handle Abay in Ethiopia. Abay is the name of Ethiopia's largest river, and the hope is that the name will spur buyers to check the vehicle out. Equipment levels are luxury-level for its market, $16,000 price buys you safety gear like ABS, airbags and brake distribution, and quality is good enough that Lifan thinks it will change Ethiopian's opinions about a domestically produced car. Power is provided by a 1.3 liter four cylinder twisting a 5-speed transmission. The cars are assembled from knock-downs (CKD), and appear to have been solidly engineered. Lifan produces the 520 in several different locations – Russia, and Vietnam, for example. Hit the jump for a Lifan 520 commercial.

November 28, 2007
NEWS ANALYSIS
Iran Casts Big Shadow on Mideast Talks

By STEVEN ERLANGER
ANNAPOLIS, Md., Nov. 27 — The Middle East peace conference here on Tuesday was officially about ending the Israeli-Palestinian dispute. But there was an unspoken goal just below the surface: stopping the rising regional influence of Iran and Islamic radicalism.

That is why, despite enormous skepticism about the ability of the Israelis and Palestinians to reach a final peace treaty, there is enormous relief among the many Sunni Arab countries in attendance that the United States has re-engaged in what they see as the larger and more important battle for Muslim hearts and minds.

“The Arabs have come here not because they love the Jews or even the Palestinians,” said an adviser to the Palestinian negotiating team who spoke on condition of anonymity. “They came because they need a strategic alliance with the United States against Iran.”

Hovering over Annapolis are deep anxieties over the challenge from a resurgent Shiite and non-Arab Iran, with its nuclear program and its successful allies and proxies in southern Lebanon, Iraq and the Palestinian territories. Those Arab nations fear that the tide of history is moving away from them, and that they are losing their own youth to religious militancy.

“There is a genuine concern and fear among political classes in the Arab world that the Islamic trend hasn’t reached its plateau,” said Hisham Melhem, the Washington bureau chief for Al Arabiya television. “They worry that Iran and its allies act as if this may be the beginning of the end of America’s moment in the Middle East.”

Those concerns are linked in the minds of the region’s leaders to the Palestinian issue, he said. “They want to try for a resolution to an Israeli-Palestinian conflict that has always been the focal point for mobilization of Islamic and radical groups,” he said.

Dan Gillerman, Israel’s ambassador to the United Nations, put it this way: “This is the summit of our hope and their fear. It’s our hope that at long last the Arab world will understand that the Israeli-Palestinian problem is not the core and can be solved, and their fear of Islamic extremism and Iran, which they call the Persian threat. This is what brought them here.”

In his speech here, President Bush listed three reasons why he thought “the time is right” for Annapolis. First, he said, “because Palestinians and Israelis have leaders who are determined to achieve peace.” But second, he said, “because a battle is under way for the future of the Middle East, and we must not cede victory to the extremists.” His third reason was an extension of the second, “because the world understands the urgency of supporting these negotiations.”

In his own speech, the Palestinian president, Mahmoud Abbas, took a similar tack, addressing Mr. Bush directly and saying, “We do recognize — and I presume that you share with me this view — that the absence of hope and overwhelming despair would feed extremism.”

The Saudi foreign minister, Saud al-Faisal, was blunt. “Stagnation in the peace process has increased the appeal of extremist ideologies,” he said. “Feelings of despair and frustration have reached a dangerously high level.”

Shibley Telhami, Anwar Sadat professor of government at the University of Maryland, said that the fear of growing militancy and radicalism, fed by the model of Iran and Al Qaeda, has brought the Arabs together in the hope that a new urgency will persuade Washington to try to settle the Israeli-Palestinian problem.

“They’re very worried about militancy and their public’s great sympathy with Hezbollah and Hamas,” Mr. Telhami said, speaking by telephone from Cairo. “They were all stunned by the Hamas takeover of Gaza” in June.

The countries of the gulf in particular, he said, “are worried about regional stability, about their kids and about jeopardizing their extraordinary economic power.” The moderate Arab states are “vulnerable to militancy because of the Arab-Israeli conflict and Iraq, and they want to reduce their vulnerability.”

Aaron David Miller, a former negotiator for the Clinton administration, said that while he applauded the effort at Annapolis, he doubted that the Bush administration “has the will and skill” to pull off a peace treaty. “The chances for a Palestinian state in George Bush’s term are slim to none,” he said. But the Annapolis gathering does have important regional significance.

“For the Arab centrists, the new Middle East is a nasty one, and the Palestinian issue resonates emotionally and deeply,” he said.

So despite low Arab expectations, too, Arabs came as a way to commit Washington, as both Saudi Arabia and Jordan have been demanding since 2001, to press for an Israeli-Palestinian peace and begin a larger regional process through it. “Bush will be gone in a year,” Mr. Miller said. “But the Arabs want to lock the U.S. into some kind of negotiating process in which the next president is also locked.”

Representative Gary L. Ackerman, Democrat of New York, put it pithily. “Everybody at Annapolis has something in common,” he said. “It’s not love of Israel or the Palestinians. It’s fear of Iran. Everyone needs a relative to protect them from Iran.”

In Pakistan, Echoes of Iran
By David Ignatius
Wednesday, November 7, 2007; A21

JERUSALEM -- As we struggle to make sense of the current political crisis in Pakistan, it's useful to think back nearly 30 years to the wave of protests that toppled the shah of Iran and culminated in the Islamic Republic -- a revolutionary earthquake whose tremors are still shaking the Middle East.

The shah was America's friend, just like Pakistani President Pervez Musharraf. He was our staunch ally against the bogeyman of that time, the Soviet Union, just as Musharraf has been America's partner in fighting al-Qaeda. The shah ignored America's admonitions to clean up his undemocratic regime, just as Musharraf has. And as the shah's troubles deepened, the United States hoped that moderate opposition leaders would keep the country safe from Muslim zealots, just as we are now hoping in Pakistan.

And yet the Iranian explosion came -- a firestorm of rage that immolated any attempt at moderation or compromise. A similar process of upheaval has begun in Pakistan -- with one terrifying difference: Pakistan has nuclear weapons.

The Iran analogy was made forcefully two weeks ago by Gary Sick, a Columbia professor who helped oversee Iran policy for the Carter administration during the time of the revolution. "There was no Plan B," Sick wrote in an online posting. He sees the same dynamic at work in Pakistan. "We have bet the farm on one man -- in this case Pervez Musharraf -- and we have no fall-back position, no alternative strategy in the event that does not work."

So ask yourself: What Iran policy would have made sense, in hindsight, given the ruinous consequences of the Iranian revolution? Should the United States have encouraged the shah to crack down harder against protesters and ride out the storm, as some hard-liners urged at the time? Or should it have moved more quickly to encourage a change of regime, after it became obvious the shah couldn't or wouldn't reform?

Even now, almost 30 years later, it's hard to know what we should have done. And perhaps that's the point.

Many Americans instinctively feel that the United States should have pushed sooner for reform -- and helped engineer a transition to a democratic Iran. We should have gotten ahead of the storm, the argument goes, before the Iranian movement for change was captured by followers of Ayatollah Khomeini who, it turned out, wanted to destroy the modern, secular state that was struggling to be born during the shah's tumultuous rule.

Advocates of benign intervention would take a similar line now in Pakistan. Musharraf's imposition of emergency rule last weekend was a shah-like act of desperation. A change of regime is coming in Pakistan, the argument goes, and we should work with responsible opposition leaders such as former prime minister Benazir Bhutto to encourage a political transition. Unless Musharraf agrees to go ahead with parliamentary elections planned for January, America should squeeze him by reducing its aid package of $150 million a month.

Reformist regime-change advocates would argue, further, that we're in better shape in Pakistan than we were in Iran. The Bush administration began pressuring Musharraf months ago to widen his political base by allowing Bhutto to return home. And many of the protesters in the streets of Lahore, Islamabad and Karachi this week aren't reactionary Islamists but middle-class lawyers. Their leader isn't the fanatical Osama bin Laden but the deposed chief justice of the Supreme Court, Iftikhar Mohammed Chaudhry.

Yet even as we watch the birth pains of a better Pakistan, we know that al-Qaeda operatives are plotting to take advantage of the chaos. And we recognize, too, that if Musharraf is toppled, there is a new threat from those Pakistani nukes -- and even more, from the fissile material that would allow others to build nuclear weapons or dirty bombs.

The abiding truth, about Iran then and Pakistan now, is that outsiders don't understand the forces at work in these societies well enough to try to manipulate events. The disaster of Iran happened partly because of American meddling -- in installing the shah in the first place and then enabling his autocratic rule. Pakistan, too, has suffered over the years from too much U.S. intervention.

Pakistanis are in the streets this week protesting Musharraf's gross assault on democracy. I hope they succeed in creating a Pakistan that is more free and democratic. I pray that the reformers can work with the Pakistani military to suppress al-Qaeda and Taliban movements that would destroy any semblance of democracy in that country.

But changing Pakistan is a job for Pakistanis, and history suggests that the more we meddle, the more likely we are to get things wrong.

The writer is co-host ofPostGlobal, an online discussion of international issues. His e-mail address isdavidignatius@washpost.com.