Peter L. Berger's Blog, page 150

Pakistan’s Sharif Resigns

Pakistan’s Supreme Court today ruled ousted Prime Minsister Nawas Sharif today by ruling against him in a case involving undeclared assets. The ruling is the result of a probe launched against the PM after the publication of the Panama Papers showed that three of his children owned offshore companies and various other holdings. Sharif resigned, and his party geared up to nominate install a new figure to lead the country until elections next year. The opposition, naturally, celebrated the ruling. :

The court verdict marks a major political victory for opposition leader Imran Khan, a former cricket star who last year threatened mass street protests unless Sharif’s wealth was investigated. Khan had pounced on the leaking of the Panama Papers, which revealed Sharif’s family had bought posh London apartments through offshore companies.

“Today is a victory day for Pakistan,” said Khan. “Today onward, big thieves will be caught.”

Is this the triumph for democracy Khan is making it out to be? Not quite. Pakistan’s army has been talking about a “legal coup”—using legal means to overthrow a government that the military for one reason or another has tired of—for some time now. That seems to be what is happening here; if the military still wanted Nawas in the prime ministership, he would stay no matter how many lawyers waved papers in front of judges. But since it wants him out, this is a very convenient method of disposing of him.

That doesn’t mean transparency isn’t a good thing—it is a very good thing, and very important. But in a country like Pakistan, where the appearance of civilian power is little more than a wispy piece of gauze veiling the reality of military rule, disclosures from overseas are grist for the mill of politics as usual, not a force disrupting the status quo. Indeed, an essential piece of the argument that military apologists make in Pakistan is that civilian politicians are so clueless and corrupt as a class that only the military can be trusted with the decisions that really matter. So in this case,the Panama Papers have helped strengthen the status quo by providing external proof for the military’s core point.

The post Pakistan’s Sharif Resigns appeared first on The American Interest.

British Shale Gears Up for Major Milestone

A UK company is going where no one has gone before, as it prepares to drill the country’s first commercial shale well in the hopes of starting a shale boom that Britain can call its own. The FT reports:

Cuadrilla hopes to start drilling the first of four horizontal shale gas exploration wells at its site on a farm near the village of Little Plumpton soon. A pilot well will be drilled to approximately 3,500 metres deep. Horizontal wells off it will follow at depths of between 2,000m and 3,500m. […]

Lorries brought a drilling rig to the Lancashire site of shale gas explorer Cuadrilla during the early hours of Thursday under police escort, before anti-fracking activists could block the company’s main gate.

The UK has plenty of shale gas—some 1.3 quadrillion cubic feet of it, at last estimate. But local opposition and concerns over drilling’s impacts on communities has kept that gas in the ground. Unlike a number of other European countries that have failed to replicate America’s extraordinary success in shale formations, the resource isn’t the problem for Britain. Rather, the country’s higher population density (as compared to the United States) has made NIMBY concerns all the more pressing.

Compounding that is the country’s lack of mineral rights for landowners—if you own property in the UK, you don’t necessarily own what’s underneath the surface, so you can’t negotiate comfortable deals with shale drillers to compensate you for the disruption of fracking (which, again, is a contrast to the United States where landowners do retain mineral rights and therefore have an incentive to extend invitations to frack).

The British government has tried to get around this, thus far without much success. David Cameron promised affected communities £100,000 and a 1 percent cut of ensuing revenues, but that wasn’t enough to stop protests at exploratory drilling sites. Last August, Theresa May announced the formation of a Shale Wealth Fund for fracked regions, paid for by taxing the companies doing the fracking. That still doesn’t seem to be doing much to sway public opinion on the issue.

But the nascent British shale industry yet grows, albeit slowly, with three companies pursuing exploratory wells. If Cuadrilla can successfully demonstrate the commercial viability of this new well, fracking could start to gain momentum in a country that badly needs some good domestic energy news. We’ll be watching.

The post British Shale Gears Up for Major Milestone appeared first on The American Interest.

Trump Delivers in Rust Belt

From the Wall Street Journal, a more important story than most of the media noise about White House dysfunction and Beltway shenanigans:

Foxconn Technology Group, which helped turn China into the center of electronics manufacturing, said it would build a $10 billion plant in Wisconsin to make display panels used in televisions and other products.

The plan, announced Wednesday at a White House ceremony, marks the first major U.S. investment for Foxconn, the world’s largest contract manufacturer of electronics and the maker of iPhones and other gadgets for Apple Inc. […]

The announcement confirms plans reported Monday by The Wall Street Journal. Foxconn was exploring investments in seven states including Illinois, Indiana, Michigan, Ohio, Pennsylvania and Texas. Some of those states, including Wisconsin, were pivotal to Mr. Trump’s victory in 2016, and are home to many of the working-class voters who were seen as key to his win.

This is an important step forward in key GOP initiative of the decade: the attempt to build an enduring Republican majority based on working and lower-middle class voters who feel left behind and scorned.

There are legitimate questions about how much credit Trump and Walker can legitimately claim, and one new factory isn’t an industrial renaissance. Nevertheless, even the appearance of a government making service to these forgotten and often scorned voters will have a significant impact.

That the investment is coming at all supports Trump’s claim that his penchant for deal making can bring back well paying blue collar jobs; that it is coming to Wisconsin supports Scott Walker’s claim to be the most successful GOP governor of our times.

More stories like this, and both Trump and the GOP could face 2020 with more optimism than seems possible now.

And hint to ambitious Democrats: Go thou and do likewise.

The post Trump Delivers in Rust Belt appeared first on The American Interest.

UK to Challenge China in the South China Sea

The UK has promised a naval deployment to challenge China’s claims in the South China Sea, according to Reuters:

Britain plans to send a warship to the disputed South China Sea next year to conduct freedom of navigation exercises, Defence Minister Michael Fallon said on Thursday, a move likely to anger Beijing.

Britain would increase in presence in the waters after it sent four British fighter planes for joint exercises with Japan in the region last year, he said. […]

“We hope to send a warship to region next year. We have not finalised exactly where that deployment will take place but we won’t be constrained by China from sailing through the South China Sea,” Fallon told Reuters.

“We have the right of freedom of navigation and we will exercise it.”

Fallon’s comments were echoed by Foreign Secretary Boris Johnson, who suggested that the UK’s two brand new aircraft carriers would be sent to the South China Sea as an early priority. From The Guardian:

“One of the first things we will do with the two new colossal aircraft carriers that we have just built is send them on a freedom of navigation operation to this area,” Johnson said in Sydney on Thursday, “to vindicate our belief in the rules-based international system and in the freedom of navigation through those waterways which are absolutely vital for world trade.”

The UK’s newfound involvement in the South China Sea is not going to sit well with Beijing, which resents any outside parties that seek to challenge its maritime claims. But the news should come as a relief to the United States, which has been a lonely leader in conducting freedom-of-navigation operations (FONOPs) in the South China Sea, often struggling to convince allies to join.

In that regard, it is intriguing that the British made their announcement in Australia. Though a strong U.S. ally, Australia has repeatedly rejected American entreaties to join its FONOPs in the South China Sea, for fear of escalating tensions. But during their bilateral meeting in Sydney, the Australians sounded bullish about an increased British role there. Foreign Minister Julie Bishop said she had a long conversation with Johnson about “deeper British engagement in our part of the world,” with the South China Sea discussed as a key challenge. The two sides also reaffirmed their dedication to a “rules-based international system” and agreed to explore cooperative military activities in the Asia-Pacific.

All that sounds like an Australian endorsement of the UK’s stepped-up involvement in the South China Sea; perhaps it even portends a more assertive Australian role in challenging China in the future. In any case, it is a welcome development to see the UK wading into these waters to defy China’s unjustified claims. The more broad pushback, the better.

The post UK to Challenge China in the South China Sea appeared first on The American Interest.

Look to the Private Sector, not Government, to Save Health Care

Jeff Bezos, now the world’s richest man, seems to have figured out that the next wave of great American fortunes are going to be made by people who figure out ways to cut the inefficiency out of the health care system. Axios reports:

Amazon has a secret team working on ways to move the e-commerce giant into the health care industry, CNBC reports. Aside from its plan to start distributing prescription drugs, which CNBC previously reported, Amazon also is looking into analyzing electronic health record data and creating a platform for virtual doctor visits. 

It’s innovative projects like this—not legislation jammed through Congress on a party-line vote—that will ultimately turn the health care system from a huge drag on the country to something that empowers and enriches us even as we get better and cheaper care.

Bezos is also right that IT is going to be a big part of this. Telemedicine—video calls to doctors who can send prescriptions via Amazon—has huge potential. Yes, there are problems (we could do without Dr. Feelgood’s telemedicine practice writing thousands of oxycontin prescriptions a day), but the current system is a costly disaster. There isn’t a magic bullet—a single law or a single innovation—that can untangle this complex and suffocating mess. There will be lots of partial answers, some more important than others, that ultimately get us to the kind of health care system that Americans are satisfied with.

How will we know we’ve gotten there? For one thing, the average family will be able to pay the average health care bill in an average year. Insurance will return to its core function of cost-smoothing and protection against catastrophe. And the country we will be able to afford insurance subsidies for those who can’t afford to buy it on their own.

Part of the reason the GOP has gotten itself into such an ugly fix over health care is that it’s accepted the statist premise that government can create a 21st century health care system by legislative fiat and administrative regulation. There is no solution along those lines.

The post Look to the Private Sector, not Government, to Save Health Care appeared first on The American Interest.

Oil Majors Made Better By Shale Competition

Unconventional crude production has driven the growth in global supplies that in turn has driven the collapse in crude prices, and the new oil reality it’s helped usher in has been a difficult one for anyone in the business of supplying oil. Unconventional producers (read: frackers) have proven up to the task of adapting to the low-price environment thus far, while petrostates have been left spinning their wheels in a thus-far ineffective attempt to cut collective output to send prices back up. A third group, private companies operating in conventional oil fields, have also struggled with bargain crude. But now, these majors—the oil companies whose names you’re likely most familiar with—are following the lead of their smaller, nimbler unconventional competitors by slashing costs. Importantly, as the FT reports, they’re once again investing in new projects:

More new oil and gasfields were given the go-ahead in the first half of this year than in the whole of 2016 as companies such as ExxonMobil, Royal Dutch Shell and BP re-engineer projects to lower costs and accelerate speed of development. Average development costs have fallen 40 per cent since 2014, according to Wood Mackenzie, the energy consultancy, encouraging companies to revive investment despite continued weakness in the oil market. […]

Conventional producers know that they need to sharpen operations to remain competitive in the face of surging supplies of US shale resources, which can be brought on stream more quickly and at lower cost.

This should alleviate—though not eliminate—one of the bigger concerns in oil industry today: that the cheap price of oil’s depressive effect on the exploration and development of new projects might create a supply shortage in the medium-term future, five years or so down the line. Unlike shale, with its relatively low start-up costs and short lead-in times, conventional oil projects require billions of dollars in up-front investment and years of work before they come online. As existing oil fields mature, production necessarily declines, so it’s absolutely necessary to continue to invest in new projects to offset these depletion rates.

The shale boom has upended the global oil industry, and by and large it’s produced positive results, not only for the United States (which is now on track for an all-time record year in 2018), but for consumers of energy the world over who can now purchase crude for less than half of what it would have cost three years ago. But in the midst of all this disruption, the fate of oil majors operating conventional fields is still crucial for global energy security. In that context it’s especially good news that “Big Oil” is getting its feet back underneath it.

The post Oil Majors Made Better By Shale Competition appeared first on The American Interest.

Sri Lanka and China Reach Deal On Strategic Port

China’s “string of pearls” of strategic ports in the Indian Ocean is about to get a little bigger. As the Financial Times reports, debt-laden Sri Lanka is finalizing a deal to sell its southern port of Hambantota to a Chinese state company:

Sri Lanka is selling the port as part of its strategy to pay down some of its estimated $65bn in debts, including $8bn owed to China. Currently, nearly all Sri Lankan government revenue goes to debt servicing.

The $1.3bn, Chinese-built deep-sea Hambantota port, which began operating in 2011, is situated in a remote corner of Sri Lanka with little demand for large-scale freight traffic, making it financially unviable.

But its strategic Indian Ocean location makes it attractive for military use, and New Delhi has long suspected that Beijing’s long-term interest in the project is strategic rather than commercial.

According to the FT, China and Sri Lanka haggled out a deal whose terms would be acceptable to India, which has long opposed Beijing’s encroachments into the region (including China’s other Sri Lankan port) and fears that this port could be used as a military base. Those fears have apparently been assuaged for now, with China agreeing to a smaller majority stake than first envisioned, and Sri Lanka remaining responsible for the port’s security operations. Still, it’s hard to avoid the conclusion that China outplayed both India and Sri Lanka here, gaining yet another friendly port on the Indian Ocean in three easy steps.

Step One: China lends Sri Lanka the money to build a port that has a military but no commercial use.

Step Two: Sri Lanka, in order to pay down its large debt to China, sells that commercially useless but expensive port to China.

Step Three: China swears an oath to never, ever, use the commercially useless port for anything but commercial purposes—and both India and Sri Lanka agree to go along with the charade.

As China continues to expand its maritime reach, expect this playbook to be deployed again, with China wielding debt as a tool to acquire strategically crucial footholds in the Indian Ocean and elsewhere. And expect China’s rivals like India, Japan, and the United States to take notice and push back, as tensions across Asia continues to ratchet up.

The post Sri Lanka and China Reach Deal On Strategic Port appeared first on The American Interest.

The Tibetan Roots of the China-India Border Dispute

The border standoff between China and India is in its second month. In June, Peoples Liberation Army troops were found building a road in disputed territory at the junction of Chinese-occupied Tibet, Bhutan, and India. India’s national security advisor is visiting Beijing in an effort to resolve the matter.

While the Sino-Indian border tensions reflect the rivalry between two enormous, nuclear powers competing for influence in the region, to a degree underappreciated in the West, China’s pressure on India’s border also stems from the Party’s inability to pacify Tibet and its expansive definition of its interests there.

Over a period of decades, the PRC settled all but one of the major land borders it acquired through the conquest of Tibet and East Turkestan (Xinjiang), often making territorial concessions in exchange for other kinds of influence. In Nepal, for example, the PRC received permission to destroy Tibetan rebel bases in the early 1960s, and since then it has coopted Kathmandu in the effort to stop the flow of Tibetan refugees. With the Central Asian countries, Beijing sought cooperation in clamping down on Uighur refugees from Xinjiang, which the PLA occupied in 1949. These relationships laid the foundation for the Shanghai Cooperation Organization, which serves among other things as a platform for Beijing’s challenge to democracy as a universal norm.

The border with India is the only one of China’s major land boundaries that remains unsettled. For decades, China promoted a settlement based on an exchange of two large areas of disputed territory. China would keep Aksai Chin, a high-altitude desert in the west that is important to Beijing’s control of Tibet. Delhi would keep Arunachal Pradesh, a large state in India’s northeast. In this way, Beijing implicitly respected a border negotiated by Tibet and British-ruled India in 1914.

Several years ago, the Party shifted its position. Now Beijing demands not only Aksai Chin but also almost all of the state of Arunachal, which officials have taken to calling “South Tibet.” Beijing is particularly concerned with the district of Tawang, home to an important monastery associated with the Dalai Lama’s Tibetan Buddhist religious order and where the Dalai Lama stopped as he entered exile in India in 1959. When the Dalai Lama made a return visit to Tawang in April, China promised “blows for blows.” The area of current tensions is near a stretch of land vital to India’s defense of its northeast.

When widespread protests on the Tibetan plateau in 2008 revealed China’s failure to assimilate Tibet, Beijing elevated Tibet’s importance in its international relations. Deference to a “correct understanding” on Tibet became a condition for the PRC’s cooperation on issues ranging form North Korea to the global economy. Under pressure, a number of European countries adopted the “one China” phrase for Tibet and stopped high-level meetings with the Dalai Lama. This helps Beijing cast the Dalai Lama as a “splittist” and support for him as “anti-China.” However, as Lodi Gyari, a former envoy to Sino-Tibetan talks explained, unlike the government of Taiwan “no Tibetan government has ever claimed to be the government of China so the application of the ‘one china policy’ to Tibet…simply does not arise.” If Tibet is reduced to the status of just another region of China, then it need not come up in bilateral relations any more than other provinces do. For its part, Beijing had no reason to take seriously the Sino-Tibetan Dialogue with representatives of the Dalai Lama, which collapsed in 2010.

While Beijing has forced concessions from foreign capitals, a new challenge emerged at home. Chinese democrats began to see the issue as one of democratic legitimacy, a view that obviates the Party’s historical revisionism on sovereignty. “The roots of the crisis in Tibet are the same as the roots of the crisis in all of China,” Liu Xiaobo wrote shortly before he was arrested for subversion in 2008. “A confrontation between freedom and dictatorship has been made to look like a clash between ethnicities.” Liu, the Nobel Peace Prize laureate, died in custody on July 13. In 2008, Liu and other intellectuals signed an open letter criticizing Party propaganda on Tibet. A think tank, later shuttered, traced the origins of the Tibetan protests to Party policies and Chinese lawyers volunteered to defend Tibetans arrested in the crackdown. Some were arrested or disbarred.

For Chinese democrats the addition of a democratic polity (albeit one with limited sovereignty) to China’s periphery is, like the democratization of Taiwan, a welcome development. In 2011, the Dalai Lama completed the democratization of the exile government by transferring his temporal powers to a parliament and prime minister elected by the Tibetan diaspora.

China’s first priority in building up force at the border and dramatically increasing incursions may be to interfere with the Dalai Lama’s succession, perhaps by unleashing, or just threatening, war along the border when he dies, and diminishing international recognition of a Tibetan-chosen successor. Beijing has already promulgated bureaucratic regulations on reincarnation through which it intends to designate an impostor. The next step might be to use military pressure to threaten India over Tibet’s democratic exile government.

The U.S. government has already quietly indicated its support for the Tibetans’ control of the Dalai Lama’s succession process. It needs to make that point more clearly and enlist other democracies in taking the same position as a first step toward ending the dynamic of demand-and-concession on Tibet. Likewise, Washington should help India improve its infrastructure and defenses along the border.

In the West, Tibet is usually seen as a settled matter of limited strategic interest. In fact, China’s expansive approach to Tibet now threatens India and the model of a free Tibet it hosts within its borders. Both are of the utmost importance to the United States as it confronts China’s rise in the region and around the world.

The post The Tibetan Roots of the China-India Border Dispute appeared first on The American Interest.

A Fair-Weather Fleet Visits Turkey

A contingent of three ships from the Chinese People’s Liberation Army Navy (PLAN) were hosted as special guests in Istanbul last week. The visitors were greeted with considerable fanfare, conjuring images from an era when the city was still referred to as the Sublime Porte, and when the United States sent its own Great White Fleet to circumnavigate the globe. Chinese diplomats gathered for a fete with the 600 visiting sailors, entertained by a traditional band and, apparently, dancers wearing dragon costumes.

Amid all the pageantry, it is worth considering the implications of the PLAN’s apparent… plan.

In April, the ships embarked on a global “friendship tour,” ostensibly spreading Chinese goodwill and influence around the world. Turkey is one of twenty countries that the fleet will visit in the course of 180 days. Despite growing self-censorship among Turkish papers, Hurriyet Daily News candidly hinted at the politics behind their recent ostentatious reception:

This is a fourth Chinese friendly navy visit to Turkey […]

In a demonstration of the Chinese navy’s expanding global reach, the country’s latest-generation warships conducted live-firing drills in the Mediterranean Sea earlier this month while en route to joint exercises with the Russian navy […]

China’s navy is the world’s second-largest behind the U.S. and is increasingly operating in the Mediterranean, aided by the construction of a naval logistics base in the Horn of Africa.

Here we have yet another manifestation of Turkey’s new strategic pose, aimed at gaining a diverse group of fair-weather friends at the expense of steadfast relations with traditional allies in the West. President Recep Tayyip Erdoğan has needlessly escalated diplomatic disagreements with fellow NATO members and continues to provoke them with his increasingly ostentatious demonstrations of his authoritarian tendencies at home. His government has flirted with supporting Russian interests in the region, making common cause with an cagey regime in Moscow despite long-held historical enmities between the two countries.

That Turkey opened its main port to China’s expedition indicates that is may play a similar game of temporary, capricious accommodation of Beijing’s advances as well. In this era of instability, where Turkey and the European powers continue to alienate each other, there is a crude logic behind this strategic course. Yet the implications could be dire. It is hard to imagine any other NATO member hosting ships from a navy that is busily building islands in South China sea—not to mention carrying out live-fire drills in the Mediterranean.

The post A Fair-Weather Fleet Visits Turkey appeared first on The American Interest.

Saudi Arabia and Russia Conspire to Make America Rich

Oil prices had their best day in three weeks on Tuesday after Saudi Arabia announced it would be cutting 300,000 more barrels per day than what it was already planning on doing as part of a coordinated petrostate effort to reduce the global glut of crude. Thus far, that OPEC & co. strategy has been ineffective at inducing a significant price rebound, in part due to the resilience of non-OPEC producers (the United States chief among them), but also because of spotty participation rates among the petrostates supposedly committed to erasing the oversupply. By deepening its own cuts, Saudi Arabia seems to want to lead by example, but the country’s energy minister also had some harsh words for petrostates deemed to be getting a “free ride.” The FT reports:

Speaking in St Petersburg on Monday after a monitoring committee meeting, which includes Opec and countries outside of the cartel such as Russia, Saudi Arabia’s energy minister Khalid al Falih said “We are going to forcefully demand participation of all.” He added they would escalate matters to “leadership beyond oil ministers if we do not see a response”, saying the kingdom would not permit certain countries to “free ride” as others enact drastic curbs. […]

“[We are] not going to allow other countries to free ride and undercut the agreement…everyone needs to contribute,” he said.

Russian energy minister Alexander Novak expressed similar sentiments earlier this week about a drop in adherence to production reduction targets across the petrostate coalition.

The Saudis and Russians might as well be joining forces to demand “Make America rich,” because that is what will happen if the OPEC countries heed their call to cut production to keep prices up.

This is diplomatically as well as economically interesting: it shows how changes in the oil market are driving Saudi, once the closest U.S. ally in oil markets, to collaborate with Russia now that it has lost the ability to set the global price. But this also shows how hard it is for the collaboration to work; U.S. shale producers will take advantage of any price hikes to pump up their own production, undercutting any discipline OPEC can impose. The net result of OPEC production cuts in this environment is a transfer of wealth from OPEC and Russia to the United States.

The other alternative, to let prices fall, will slow but not stop the super-resilient shale industry, accelerating the tech innovation that keeps reducing shale’s break even point. But the low prices will impose great hardship on oil-addicted countries like OPEC and Russia, depriving Putin, and religious fanatics who depend on Arab and Iranian largesse, of the revenue they need to support their various nefarious schemes.

The U.S. wins either way—and this transformation of the global energy market continues to support America’s superpower status no matter how badly D.C. politicians misplay their hands.

The post Saudi Arabia and Russia Conspire to Make America Rich appeared first on The American Interest.