May 23, 2008
Study: Terrorist violence is on the decline

Here is something counter-intuitive: a study says that, rather than increasing, the amount of terrorist violence is actually on the decline globally.

There's a big caveat, we hasten to add. The stark decline is apparent only when violence in Iraq is excluded. That may seem ludicrous, but read on. The authors of the study at Canada's Simon Fraser University argue that the killings of civilians in wartime, such as in Iraq, is not normally described as "terrorism," but rather as a "war crime" or "crime against humanity." In fact, they point out, most major databases of terror count violence against civilians in Iraq as terrorism, but not violence against civilians in Sudan's Darfur region.

Without Iraq included, the report said, two major databases -- one at the University of Maryland and one at the Memorial Institute for the Prevention of Terrorism -- charted a more than 40 percent decline in fatalities from terrorism since 2001.

Even when Iraq is included, terrorism fatalities have dropped recently, the report says.

The report's authors caution that a decline in deaths from terrorism does not necessarily mean the threat from terrorism, especially Islamist terrorism, is decreasing. But they argue there are signs that international counter-terrorism efforts are having an effect, as well as evidence of "bitter doctrinal infighting" within the global Islamist network and reduced support for al Qaida and similar groups in the Muslim world.

Check out the report. Decide for yourself.

As Global Wealth Spreads, the IMF Recedes
By Anthony Faiola
Washington Post Staff Writer
Saturday, May 24, 2008; A01

ACCRA, Ghana -- The economy here turned as hot as the local pepper soup earlier in the decade, with soaring global demand for the nation's riches -- gold, cocoa and bauxite -- sparking a rush to modernize Ghana's decaying roads, rails and power grid. But when the government hatched a plan last year to rebuild the national infrastructure by selling $750 million worth of bonds, its minders at the International Monetary Fund balked.

As in so many other developing countries, the IMF had for years served as banker, bean counter and financial consultant to Ghana, its authority stemming in part from the $1.3 billion over 20 years it lent this once financially troubled country. In dire need of that cash, officials here had cooperated with the fund's requests, agreeing to slash gasoline subsidies, trim spending and open markets to cheaper foreign imports.

But this time, there was a big difference. Ghana had joined a long list of developing countries in Africa and beyond enjoying record periods of growth, with the robust economy leaving it no longer in need of more IMF cash. The government rejected the fund's calls for a far smaller bond sale. The IMF, officials here say, grudgingly agreed, dispatching a liaison to help it carry out the complicated offering.

That decision underscores the changing role of the IMF as developing economies have roared to life in recent years, with the fund increasingly becoming more adviser than lender.

In 2003, fund lending reached an all time high of $116.9 billion. But as developing nations have capitalized on surging commodity prices and shared in the economic coming of age in China and India, more countries are forgoing IMF loans and the strict demands that come with them. Booming Brazil, Argentina and Indonesia -- all recipients of IMF lifelines in the past, and where critics had blamed the fund for forcing painful cuts in health care and education -- have paid back their loans early and signaled no interest for more. Angola, flush with oil cash and billions of dollars in aid from China, rebuffed IMF overtures to become a client last year. By the end of 2007, IMF lending had shrunk to $16 billion.

"It takes a while for your parent to realize that you are mature enough to make your own decisions, but they eventually do because they have no choice," said Sam Mensah, one of Ghana's senior negotiators with the IMF. "Ghana has outgrown the fund's money just as many countries have. . . . And I think the big question for the fund now is how is it going to stay relevant. To do that, it needs to operate very differently than it has in the past."

The IMF, founded in 1944 to foster the reconstruction of the global economy in the wake of World War II, is entering its largest period of upheaval since the fall of the Berlin Wall. Over the next year, the Washington institution will slash its 2,900-person workforce by 13 percent through a combination of buyouts and some layoffs, reflecting a loan portfolio shrinking so fast that the IMF is seeking to sell off $6 billion in gold reserves to create a new long-term source of income.

Yet the IMF was never intended to serve as a global bank for developing nations. That role is reserved more for the World Bank, the fund's sister organization, which focuses on longer-term development projects. Instead, the IMF has been an overseer of structural adjustment and a temporary lender to nations in financial crises, of which there have been fewer and fewer in recent years.

Now, especially in Africa -- the region still most heavily dependent on the IMF -- a picture is emerging in some of the stronger economies of what the future of the fund may look like. As robust economies in Uganda, Tanzania and Nigeria have moved away from reliance on IMF cash, they have adopted new "policy support instruments" -- or official advisory programs in which the fund's staff provide intensive guidance on economic policy. Countries such as Kenya and Ghana have embraced a less formal structure, welcoming the IMF in the role as chief consultant on major fiscal and financial decisions.

"The fund's role in low-income countries is changing as these countries grow and mature," Dominique Strauss-Kahn, who took over as IMF president last year, said at the fund's annual meeting last month. "We must speed up the progress made in focusing more on helping low-income countries secure and maintain macroeconomic stability and less on structural issues outside of the fund's core mandate."

Top fund officials describe a "new IMF" that will be less focused on forcing nations to adopt tough cost-cutting measures and more on ensuring that they don't make mistakes that could generate the kind of financial crises that washed over Asia in the late 1990s and South America in the early 2000s. The fund will refocus its efforts on current economic issues, monitoring global currency imbalances and the rise of sovereign wealth funds, the investment arms of nations from Singapore to Kuwait that have bought up big chunks of mega-institutions including Citibank and Merrill Lynch.

IMF officials say it speaks at least in part to the fund's success at teaching countries like Ghana good fiscal and economic policies, as well as the wisdom of an internationally backed effort earlier this decade to forgive massive amounts of African debt.

But critics say it also heralds the fund's diminishing importance in a world where developing nations have more lending options than ever before. That is particularly true as the Chinese and the Indians lavish Africa and other regions with billions of dollars in low- or no-interest loans, often in exchange for access to oil and minerals but carrying no demands for fiscal restraint or free-market reforms. In Latin America, Venezuela's leftist leader, Hugo Chávez, has sought to provide an alternative to the IMF, offering massive aid that has enabled some of the region's countries to pay back loans early and has made them less susceptible to fund demands.

"To be perfectly blunt, their influence is tied to their lending," said Marcus Noland, senior fellow at the Peterson Institute for International Economics in Washington. "If you're not worried about getting more cash from them, then you're going to say, 'Hey, talk all you want, IMF, but I don't have to do everything you say anymore.' "

The weakest nations in Africa remain the most subject to IMF policies because the fund represents one of their few financial lifelines. But even in better-off countries like Ghana -- a West African nation of 23 million -- the IMF still wields clout. Lenders including the World Bank and foreign-aid agencies in Europe and the United States continue to look to the fund to certify a nation as being fiscally responsible before offering grants or loans.

"The poorest countries in sub-Saharan Africa, the non-oil-producers that don't have new cash flow, are still under the thumb of the IMF," said Rick Rowden, senior policy analyst for ActionAid, an IMF watchdog and critic.

In Ghana, the IMF has been credited with helping to promote less wasteful government spending and worked with the World Bank to forgive Ghana's $381 million debt earlier this decade. It allowed Ghana to shift funds once earmarked for debt payments to social spending. Schools that had operated in the open air were moved into classrooms while new medical clinics cut infant mortality and the deaths of women at childbirth, according to the Social Enterprise Development Foundation of West Africa, a regional nongovernmental organization.

Yet other fund-backed policies have proven difficult for the population. As Ghana sought to increase water access, the IMF recommended "full cost recovery." Ghana's water company moved to install prepaid meters and disconnect nonpaying customers, according to a report from Jubilee USA, an anti-poverty nonprofit group in Washington. As a result, Ghanaian women, who traditionally bear the burden of providing water for household use, were forced in some instances to dig unsafe, shallow wells to access drinking water.

It has stung people like Maame Ama Fosuwaa, 43, a single mother of four. "Before, I used to pay less than [$30]" per month for water, said the woman, wearing a sleeveless blue dress and selling tomatoes and cassava in a lively Accra market. "But now I have been paying close to [$60]. I don't know anything about the IMF . . . but I hear on the local radio station that they are to blame for our difficulties."

Some critics here say the IMF has become too lenient, expressing only tempered concern, for instance, about the surge in the national budget deficit, now 9.1 percent of GDP. IMF officials disagree. "We still voice concerns as needed, but Ghana has come a long way," said Arnold McIntyre, the IMF's Ghana representative. "But, of course, we still have our recommendations."

These days, however, Ghana has more flexibility to accept the IMF policies it likes and reject those it doesn't.

Just north of Accra, workers are laboring in the red West African earth, assembling a massive power station financed by the government's recent bond sale. The huge transmitters are designed to add 126 megawatts of electricity to the national grid to help relieve chronic power shortages -- power that is still subsidized by the government.

The IMF has insisted that Ghana eliminate those subsides and pass the full cost of electricity production to its people. It would mean higher power bills just as residents are trying to cope with increases in gas and food prices. The government has opted for a Solomonic solution. It will begin passing the higher costs to corporate users by later this year but has provided no timetable for extending the burden to individual users.

For some here, even that is too much. "The IMF has been pushing us for years," said Leticia Osafo-Addo, chief executive of Samba Processed Foods, a maker of hot pepper sauces, juices and spices that will likely see its electricity bill soar by year's end. "We can and should manage on our own. It is time for that to stop."

source: www.stratfor.com

BRAZIL: COTTON SANCTIONS COULD CREATE LARGER AFTERSHOCKS FOR U.S.

Summary
A Brazilian challenge to U.S. cotton subsidies will put a key U.S. trade issue -- intellectual property rights -- front and center. With enough pressure, the United States might liberalize its policies toward cotton. A liberalized global cotton market would likely lead to a rise in global cotton prices, benefiting major cotton producers such as India and Uzbekistan.

Analysis
After winning a World Trade Organization (WTO) case against the United States, Brazilian officials announced June 3 that they will seek sanctions against the United States. The ruling affirmed that the United States has failed to comply with a previous WTO verdict regarding U.S. subsidies for cotton farmers.

Brazil's decision to proceed with retaliatory measures against the United States opens up the possibility that other major cotton producers could do the same. The politically powerful U.S. agriculture industry is deeply reliant on subsidies; however, if faced with enough pressure, the United States might be forced to lift cotton subsidies. The potential liberalization of the cotton industry would likely lead to a rise in the global market price of cotton, as inefficient U.S. production is eliminated and supply becomes constricted. This would have a significant impact on cotton-producing states across the globe.

Over the past two decades, the cotton industry has achieved the ability to more than double the amount of cotton that can be reaped from a given plot of land. Advances in technology, including genetic engineering, have facilitated the rise. Despite these efficiency gains, the United States remains one of the least cost-competitive producers of cotton. The U.S. Department of Agriculture estimates that subsidies account for 45 percent of U.S. cotton farm revenues. Brazil's estimate of that U.S. figure is more than 80 percent, at about $3 billion per year.

As a rising competitive producer of cotton, Brazil has a significant stake in liberalizing the cotton market. Ranking fifth in the world among cotton producers with its 2007 harvest, Brazil has seen its cotton yield increase tenfold since 2000. Brazil's rise has pushed the country right up against U.S. policies, which limit Brazil's ability to access the U.S. market, as well as depress global prices.

Under WTO rules, Brazil is authorized to take $4 billion in retaliatory measures against the United States -- $3 billion for lost revenue in 2004, and an additional $1 billion for U.S. noncompliance since then. In order to achieve this level of retaliatory action, Brazil would raise tariffs on U.S. goods and suspend compliance on intellectual property rights (IPR) agreements -- a key issue for U.S. trade policy. While $4 billion may not sound much in the grand scheme, the real danger that the United States is facing centers around the potential that the Brazilian action may set a precedent for other cotton-producing countries to follow suit.

In addition to Brazil, there are several countries that will be substantially impacted by any U.S. steps to lift subsidies.

Major world exporters such as India and Uzbekistan are extremely well placed to take advantage of a newly liberalized cotton industry. They are the second- and third-largest cotton producers, respectively, and their exports are growing. Since 2003, India has seen a dramatic uptick in cotton exports. Uzbekistan's cotton exports suffered following the fall of the Soviet Union, but have been steadily increasing since the 2004 season.

Smaller exporters also poised to reap substantial benefits from increased global cotton prices include Australia, Greece, Kazakhstan, Burkina Faso, Turkmenistan and Egypt. Of the top 10 exporters of cotton, Kazakhstan and Turkmenistan are the only non-WTO members.

Importers face the opposite problem. Without U.S. subsidies to keep the price low, countries that buy a great deal of cotton -- including Turkey, Bangladesh, Indonesia, Thailand, Mexico, Russia, South Korea and Taiwan –- will suffer an increased burden as the costs for their textile industries rise.

There are two countries that stand out as both producing and consuming massive volumes of cotton: Pakistan and China. Both countries have massive textile industries that rely on substantial domestic cotton-production industries as well as significant cotton imports. A rise of global prices would stimulate cotton production in Pakistan and China, but it would also increase costs for their textiles industries.

Even for the countries that can benefit from the United States' dropping out of the cotton game, there is no guarantee the United States will let go of its cotton subsidies in the short term. The powerful agriculture industry makes it very difficult for U.S. legislators to pull government funds away from the industry. The 2008 U.S. farm bill locked cotton subsidies into place for the next five years.

The five-year outlook, therefore, is unlikely to change. However, Brazil's retaliation against U.S. IPR interests is no small thing. Changing IPR is an issue that will generate a seriously heated response from interests that would normally ignore the cotton trade.

Copyright 2008 Strategic Forecasting, Inc.

UGANDA, DRC, SUDAN: AN UNCERTAIN ALLIANCE AGAINST THE LRA

Summary
Uganda, the Democratic Republic of the Congo (DRC) and southern Sudan agreed to jointly fight the Lord’s Resistance Army (LRA) should peace talks with the rebel group collapse, a Ugandan military spokesman said June 5. The LRA is unlikely to agree to a peace deal and would probably flee rather than risk defeat, while joint operations could result in as much fighting among the allied forces as it would against the LRA.

Analysis
A Ugandan military spokesman said June 5 that military forces from Uganda, the Democratic Republic of the Congo (DRC) and semiautonomous southern Sudan would conduct a joint offensive against the Lord’s Resistance Army (LRA) if peace talks with the rebel group falter. Not prone to agree to a peace deal, the LRA would probably retreat rather than risk defeat. In any case, a joint offensive could result in as much fighting among the allied forces as it would against the LRA.

Peace talks with the LRA have occurred at irregular intervals in the southern Sudanese town of Juba since 2006 to end more than 20 years of conflict, mainly between the LRA and Uganda. In its guerilla campaign, the LRA has established staging areas in north-west Uganda, northeast DRC, southern Sudan and the southeastern corner of the Central African Republic (CAR). Historically supported by Khartoum, the rebel group has maneuvered throughout these porous border areas to avoid defeat, regroup and rearm, forage and kidnap village conscripts, all in order to destabilize that region of central Africa and undermine threats to Khartoum’s control over Sudan.

The LRA -- made up mainly of Ugandans -- is estimated to number 1,200 fighters plus approximately 600 child soldiers reportedly captured in recent months in the DRC, CAR and southern Sudan. The rebel group is not likely to engage in a pitched battle against Ugandan/DRC/southern Sudanese forces, nor is it likely to agree to peace terms with Uganda. While the LRA did engage in peace talks in 2005 and 2006, amnesty and integration provisions that were once on the table are no longer there, leaving the LRA with little motivation to agree to a deal. There is no quid pro quo with the International Criminal Court, which wants to bring war-crimes against LRA leaders regardless of a peace deal between Uganda and the LRA. Uganda also is unlikely to integrate LRA members into Ugandan society or offer positions in the Ugandan defense forces to LRA commanders. Integrating the LRA into the Ugandan military would compromise security not just in northwestern Uganda but also in Kampala, a risk Kampala wants to avoid.

Uganda wants to defeat the LRA in order to bring stability and security to northwestern Uganda, an area with considerable oil and gas reserves. Because of the fluid movements of the LRA, however, Uganda would be pressed to pursue the LRA into neighboring DRC and Sudan. DRC forces are stretched thin dealing with other conflicts, notably with Rwandan-backed Tutsi rebels lead by Laurent Nkunda in the DRC’s North Kivu province. The DRC is not likely to ignore any Ugandan hot pursuit of the LRA, however, for fear Uganda may simply stay put on the DRC side of the contested oil-rich Lake Albert basin (one that could contain reserves upwards of two billion barrels). Such a pursuit could be mere cover for an extraterritorial resource grab similar to Rwanda’s move into North Kivu. The DRC wants to join the fight against the LRA to head off the Ugandans.

The South Sudanese are also leery of Uganda’s motivations. With its own struggle against Khartoum for control of oil resources in the contested Abyei region, which borders both northern and southern Sudan, Juba is aiming to gain its own control resources -- and ultimate independence. Trying to move from autonomous region to independent state, southern Sudan wants to avoid becoming a mere surrogate under Kampala’s thumb if Kampala decided to occupy the region as a buffer against the LRA. Fears of Kampala’s extraterritorial interests are not ungrounded; Uganda has a history of pursuing rebels into the DRC and southern Sudan.

In any case, an alliance between Uganda, the DRC and southern Sudan would be a tenuous one. They have never conducted a joint military operation, which is a challenging endeavor even in the best of circumstances. Facing renewed Ugandan interests and pressures, the DRC and southern Sudan would likely cooperate in their respective zones in attacking the LRA, but their suspicions of each other would make them wary allies indeed. And the LRA, seeking to avoid a pitched battle, would likely retreat toward southwestern Sudan and eastern CAR, thus distancing itself from Uganda’s reach and relying on Kinshasa and Juba’s divided forces to ensure its survival.

Copyright 2008 Strategic Forecasting, Inc.

> TURKEY: THE HEADSCARF BAN AND THE STRUGGLE OVER SECULARISM
>
> Summary
> Turkey's high court on June 5 restored a ban preventing women from wearing the
> Islamic headscarf in universities. The ruling is a victory for the
> ultrasecular Kemalist establishment over the ruling Justice and Development
> Party and could bolster the Kemalists' attempts to have the party disbanded --
> but at the risk of creating political and economic instability.
>
> Analysis
>
>
> Turkey's constitutional court on June 5 overturned a February constitutional
> amendment that repeals the ban on women wearing the Islamic headscarf, or
> hijab, in universities. Turkish television reported that nine members of the
> court voted in favor of repealing the amendment while two voted against,
> including court Chairman Hasim Kilic. Execution of the law was halted
> immediately.
>
> The court ruling is a setback to the ruling Justice and Development Party (AK)
> Party. The party is already facing legal troubles because of another case,
> filed March 14 by the state's chief prosecutor, seeking to ban the AK Party
> and bar 71 of its leaders -- including Prime Minister Recep Tayyip Erdogan and
> President Abdullah Gul -- from political life for five years. The apex court's
> decision to annul the amendment strengthens the case against the AK Party,
> because it bolsters the prosecutor's case that the party has sought to
> undermine the secular nature of the Turkish republic.
>
> The two court cases represent the frontline of a power struggle between the AK
> Party and the ultrasecular Kemalist establishment, which comprises the
> military, judiciary, bureaucracy and academia. The Kemalist power-center's
> position is that the AK Party is attempting to turn Turkey into an Islamist
> state. The real debate, however, is over the definition of what a secular
> state should look like. The ruling party is pushing for U.S.-style secularism,
> under which religious freedom is guaranteed, while its opponents adhere to the
> French laicist model, under which religious expression and action (such as
> wearing the hijab) are not tolerated in the public realm.
>
> The shutting down of the AK Party carries a threat of political instability;
> the party is highly popular, with a strong presence in the parliament and
> control of the presidency. Additionally, any such move has potentially grave
> implications for the country's economy, which has improved tremendously since
> the AK Party first came to power in the 2002 elections, following the 2001
> financial crisis.
>
> Therefore, the possibility remains that a compromise will be struck between
> the establishment and the ruling party. The court could agree not to shut down
> the AK Party in exchange for assurances that the party will desist from
> further moves away from the Kemalists' laicist ultrasecularism. It is up to
> the AK Party leaders to decide how to proceed, but the power -- and decision
> -- in this contest remains firmly against them.
>
> Copyright 2008 Strategic Forecasting, Inc.