Peter L. Berger's Blog, page 529

Twilight of the Elites

Ever since the Russian seizure of Crimea and the gyrations that accompanied the narrowly averted Grexit, the European Union has been journeying along a reverse loop of history, punctuated by increasingly insular and disjointed national politics, and ever more resounding—if ever more futile—elite appeals to pan-European solidarity on economic and migration issues. At one level, the immediate cause of Europe’s current malaise is not hard to identify: the overlapping crises of the war in Ukraine, the financial meltdown in Greece, the waves of MENA migration into Europe, and a keen public awareness that the escalation of jihadi terrorism post-Paris is here to stay. All of these are shaking the EU’s political institutions, straining its finances, and deepening anxiety about what comes next.

But there is another factor at play, one that reflects more than the sum total of these crises: the accelerating surge of public disenchantment with the governing elites across the EU. Europe’s new right-wing politics does not fit neatly into a liberal vs. illiberal dichotomy; rather, it signals a potentially enduring change in public sentiment that could reorder the core tenets of the European project. A mistrust of current elites in Europe is fast becoming a driver of EU politics. This is about more than a shift towards illiberalism, as the media has largely characterized it; rather, this is increasingly about a growing public skepticism about the elites’ ability to find solutions to EU-wide problems.Europe may be on the threshold of a deeper and potentially enduring political shift, with a new-type of national mass politics rooted in populist angst. Conservative political movements, as well as right and far-right political parties, have been surging, not just among smaller or midsize states like Switzerland, Sweden, Hungary, and Poland but increasingly in the EU’s core. In France, the National Front recently polled at close to 30 percent of the national vote in regional elections, even though it ultimately failed to win control in any of the contested regions. In Germany, recent polling by Der Spiegel shows an unsettled people who have grown mistrustful of elite policies, especially on immigration; 84 percent of the respondents fear that “lasting changes” will come to Germany in the wake of the wave of refugees entering the country, and they are increasingly convinced that their concerns are not being addressed by the federal government.To be sure, complaining about “Eurocrats” and “Brussels’s latte-sipping establishment” has been a sport practiced by the EU’s demos for decades. The difference today is that it has now birthed a wave of increasingly angry populism intermingled with deeper questions of national identity and the limits of the EU’s bureaucratic supra-national authority. The surge of national identity politics is especially important after the Paris attacks and also in light of the potentially transformative electoral timetable in 2017 in key EU states: Both Germany and France have elections, while the outcome of the upcoming referendum in the United Kingdom will be a powerful gauge of the country’s public mood. This rightward shift is visible across Europe. From Denmark to Poland, election after election, the right has dominated. Today only about a third of the EU’s population is led by a center-left head of government or state.The European Union has been from its inception an elite-driven project, and the manifest breakdown of an implicit deal contained in EU membership between Europe’s elites and its peoples poses a genuine risk to its future. Today the European public is increasingly convinced that the elites have not only mismanaged some of the key crises facing the continent (the refugee crisis to begin with being but the most recent and potent case), but also that the people in the countries most adversely impacted, whether one is speaking of the Eurozone crisis or mass migration, have lost the ability to shape their future and have national politicians who are either unaccountable or powerless. At a minimum, the growing sense that the elites are failing to provide a baseline measure of security and economic stability is breeding a rebellion that goes deeper than garden variety frustrations with democracy. In the near future we are likely to see a reshuffling of national parliaments on a scale not seen in decades.It is ironic indeed that, inside the European Union, an institution that has at its root the legacy of the Second World War and accompanying mantras of “never again,” the woes today are not the result of failure to avoid another war but in elite mishandling of the challenges facing Europe in times of relative peace and prosperity. Growing Euroskepticism and the rise of the nationalist right in Europe are less about the “return of history” and more about a loss of confidence in the elites’ ability to build a better future.

President Rousseff Strikes Back?

Brazilian police raided the home and office of lower house President Eduardo Cunha and other elected officials this morning, looking for evidence of corruption. Bloomberg:

The police searches came only hours before the lower house ethics committee voted to push ahead with a probe against Cunha on allegations he lied to Congress. Cunha has denied any wrongdoing and his press office declined to comment when called and e-mailed by Bloomberg.

The latest events may renew pressure for Cunha, Rousseff’s principal detractor, to step down. The presence of police in the residence of the lower house chief is an embarrassment for the country and his permanence in office an offense to the Nation, the Party of Socialism and Freedom said in a statement.

That corruption is widespread in Brazil is no secret, so it’s possible that Cunha isn’t a law-abiding man. But it’s difficult to ignore the whiff of politics here: Cunha started the impeachment proceedings against President Dilma Rousseff. Dilma is a notoriously ruthless politician, and however legitimate the investigation of Cunha and his allies could be, it may be meant to undermine the impeachment efforts. “Today’s development could be seen as an attempt to cower and contain [Cunha’s party] the PMDB, which holds the balance in the impeachment process,” analyst David Fleischer told Bloomberg.

In the end, whether Cunha or Dilma is more corrupt doesn’t much matter. The longer this fight goes on, the longer it will be until Brazil can pass necessary reforms and strengthen its crumbling economy.

Chicago Teachers Gird for Another Strike

Chicago was once seen as “the city that works”—a model of blue model success, where, in contrast to the obvious meltdowns of cities like New Orleans and Detroit, a Democratic political machine and a unionized city work force could actually deliver the goods. But now things are falling apart as the money runs low. The New York Times reports on the latest standoff between city leadership and the Chicago Teachers Union:

The Chicago Teachers Union has voted overwhelmingly to authorize its leaders to call a strike, a move that clears the way for the union’s second walkout in four years and delivers another pressing political challenge for Mayor Rahm Emanuel […]

The teachers’ contract expired in June, and negotiations between school officials and the union have stalled over teacher evaluations, salaries, pension contributions and standardized testing. School administrators have threatened widespread layoffs as they try to address a half-billion-dollar budget shortfall.

The last time the Chicago teachers went on strike was in September of 2012. If the union leaders pull the trigger this time, hundreds of thousands of students—many of whom are among the nation’s most vulnerable—will be out of school through no fault of their own for the second time in four years. This is the reality of the blue modal today, which all too often favors the producers of goods and services at the expense of the people they are supposed to serve.

With its deepening pension crisis, failing school system, and corrupt administration, the Windy City is quickly becoming a face of blue model failure. Other cities around the country should take note: As pension bills that they can’t pay come due and the blue model continues to decay, they will likely be rocked by similar crises.

Oil Flirts with 11-Year Lows

Yesterday was a busy day for oil traders, as global crude benchmarks dipped down towards 11-year lows before mounting something of a weak rebound, with Europe’s Brent benchmark now trading just above $38 per barrel and the U.S. West Texas Intermediate (WTI) inching above $36. It’s hard to imagine producers seeing sub-$40 prices with relief, but, as the FT reports, things looked much worse earlier in the day yesterday:

Brent crude dropped $1.60 to $36.33 a barrel on Monday, the lowest in seven years, edging closer to the December 2008 intraday low of $36.20 a barrel. If Brent falls below this, it will hit a level last seen in the middle of 2004. […]

West Texas Intermediate, the US market benchmark, sank $1.09 to $34.53 a barrel, the lowest since February 2009, before recovering to $36.34 a barrel. WTI traded at $32.40 a barrel in 2008. […]“The year is ending on an uncomfortable note. The smell of fear is back in the air,” said David Hufton at London-based broker PVM.

It’s no great secret what’s behind this prolonged period of bargain prices: Global supply far outstrips demand, and with OPEC showing no signs of coordinating production cuts and U.S. shale producers defying predictions by staving off steep drops in output, there’s no reason to expect oil prices to mount a sustained comeback anytime in the near future. In fact, with Iraqi production at historic levels and Iran poised to mount its own oil comeback once Western sanctions are lifted early next year, the glut is likely only to get worse.

That’s good news for consumers, and for virtually every sector of the global economy (with the obvious exception of the oil industry). But for those in the business of selling crude, this 18-month decline is really starting to wreak havoc on national budgets and capital expenditures. There was some recent talk between Russia and OPEC about a meeting this month to float the idea of coordinating production, but according to a Russian oil ministry spokesperson, that no longer appears to be happening.No one is willing to give up an inch of their share of today’s increasingly crowded market, with the end result that the market hasn’t yet found its bottom.

Tech, Not Treaties, Will Save the Planet

In the much-ballyhooed (yet toothless and hollow) climate agreement signed in Paris over the weekend, delegates affirmed the need to pursue “efforts to limit the temperature increase to 1.5 °C” as compared to pre-industrial levels, without including any specific targets or policy recommendations for individual nations to help the world get there. This was a last-second moving of the goal posts, as the temperature target most often discussed in the run-up to Paris was 2 degrees Celsius—a target that was all but abandoned before the conference even began. Few expected mention of a 1.5 degrees Celsius target in the Paris treaty, and it’s not surprising that it wasn’t backed up by any details. With temperatures today already 1 degree Celsius above pre-industrial levels, there simply aren’t enough tools in the policy toolbox to pull this off.

But as the FT reports, all hope is not lost, as technological breakthroughs could be the solution the world is looking for:

The scientific and technical challenge is to continue to drive down the cost of alternative sources, particularly solar and wind power but also nuclear, while improving the technology for distributing and storing energy.

Perhaps the greatest need is for better batteries that store electricity with much higher density and charge up much more quickly than those available today. They would not only solve the “intermittency problem” of solar and wind power but also enable electric vehicles to surpass the range and performance of petrol and diesel engines. […]On nuclear power, many scientists part company with the green campaigners with whom they have made common cause on other issues during the UN climate negotiations. They see a new generation of smaller and less expensive nuclear power stations — downsized from today’s multibillion-dollar monsters — as a valuable contribution to non-carbon electricity generation. In the long run there could be a role for nuclear fusion reactors.

Predicting the future based on the technologies of the present is a recipe for failure. Moreover, doing so will necessarily exclude some of the most exciting and positive possibilities ahead for our species. Malthusian greens are more atavistic than futuristic, and parts of the environmental movement seem to have an impulse to idealize our agrarian past while demonizing modernity. But this worldview not only ignores how much better life is for the vast majority of people today than it was before the industrial era, but also how much better life can be in the (very near) future.

A breakthrough in energy storage would alone play a big role in solving intermittency issues with wind and solar power, which are one of the biggest obstacles to more widespread deployment of renewable energy. That said, more money needs to be poured into the research and development of more efficient solar panels and wind turbines (diverted away from the subsidization of the current generation), so that the eco-friendly energy sources might be able to compete with fossil fuels on their own merit. Then, too, there are a whole host of new nuclear technologies that seem tantalizingly close to producing a wave of zero-carbon baseload power. Carbon capture and storage technologies could even pull greenhouse gas out of the atmosphere and store it underground.The threat of climate change looms large, but all hope is not lost—and it’s technological progress, not toothless treaty-making, that’s going to make the biggest difference.

The New York Bubble

Don’t tell the Williamsburg hipsters (especially not before they’ve had their afternoon cortados), but New York City’s renewal may be coming to an end. The New York Post:

There’s a pall over the financial markets this holiday season, and it has little to do with the shortage of daylight this time of year.

The lifeblood of the street — bonuses — will be cut, and if you survive, there’s no guarantee of a better 2016.That’s because Wall Street is bracing for merciless job losses that could total 100,000 in the US alone by June.By this estimate, Wall Street head count in New York City — some 170,000 today — could shrink by as much as 17,000, with the downsizing hitting everyone from million-dollar backers to middle-class backoffice workers.

For the past two decades, New York City has enjoyed a remarkable run of economic growth, falling crime rates, and cultural vibrancy. The food scene has never been better, new museums (and new buildings for old ones) keep cropping up, parks are cleaner and more numerous, and, of course, there’s a nice little housing boom. Experts point to policing and reduced crimes rates to explain New York’s resurgence, but Wall Street’s success and government support of it has been equally critical.

Obama, in general, has been a great president for the rich, helping Wall Street, but not so much Main Street. Wall Street rebounded from the 2008 crash faster than most of the country, in large part thanks to bailout money from Washington. Although the banks shed plenty of jobs, they didn’t collapse the way businesses in other parts of the country did. The 2009 federal stimulus sent $9.1 billion to New York.The result was that property values never really caved in New York like they did elsewhere. Perhaps partly for this reason, newly rich oligarchs in China and other emerging market economies saw New York real estate as a place to keep their money safe from autocratic and potentially-unstable regimes. That phenomenon has only driven home prices higher, and encouraged more construction.Look around, however, and all the springs which have helped New York grow are drying up. Low federal interest rates were great for Wall Street over all, and thus great for New York City. Many predict that the Fed will be tightening soon, the era of easy money is over, or will be over soon. There’s no more stimulus, of course. The rush to move money to the U.S. from collapsing commodities-dependent countries can’t last forever, particularly as a strengthening dollar makes New York property even more expensive. And that strong dollar also discourages international tourism, which is the city’s second-biggest economic engine.But it’s the slowing of the biggest engine, finance, that causes the most concern. New York City could probably survive a decline in tourism, and residents might even appreciate a cooling off of the construction boom, even if it meant the end of skyrocketing housing prices. But if Wall Street cuts jobs and salaries, the city will suffer in ways all of its residents feel.This is particularly bad news for Mayor Bill de Blasio and his progressive agenda, which relies on ever-increasing tax revenues to fund new education and housing initiatives. Bigger, bluer government is also more expensive government. And, although New Yorkers might have trouble imagining why anyone would want to live anywhere else, we suspect they’d change their tune if taxes rose much higher—particularly as schools and subways fail to improve (to say nothing of the city’s apparent inability to house its homeless).New York’s decline isn’t at all inevitable, or necessarily going to be particularly steep, but the winds which have blown New York so far are starting to change direction. Of course, even if the city does weather the storm, we doubt historians will credit de Blasio, the City Council, and their corrupt overlords in Albany for able steering.

Obamacare Premiums to Rise 7.5 Percent

Even the generally Obamacare-boosting Vox delivered its readers some bad news about the Affordable Care Act today:

No matter how you slice the numbers, Obamacare premiums will rise significantly next year. The Obama administration estimates rates will rise 7.5 percent in 2016, compared with 2 percent in 2015.

Insurance markets are complicated. But the story of Obamacare’s 2016 premium increase is actually pretty simple: Many health plans — even those with decades of experience selling insurance — underestimated how sick health law enrollees would be. […]

As prices get higher and as some health insurers scale back their benefit plans, there is the possibility that some consumers might decide coverage isn’t worth it. Premera Blue Cross in Alaska already found that new members who joined the plan in 2015 had health care costs 40 percent higher than those who did not renew.

Vox notes that the big question going forward is whether hikes will be the “new normal.” One fear is that the premium increases currently being phased in will push some healthy people out of the marketplaces (a circumstance that could in turn lead insurers to raise premiums again next year). The Vox piece doesn’t come down especially hard one way or the other on the question of how the hikes will effect enrollment, noting arguments and evidence on both sides. How consequential these hikes will be remains an open question.

But in the meantime, it’s important to look at the bigger picture. President Obama and ACA supporters seized on early premium numbers as evidence that the ACA was working. The Vox piece now admits that those initial numbers were not sustainable. Will other ACA proponents now admit that the law isn’t bringing down costs for Americans they way they thought it was?

Moreover, ACA or not, the U.S. healthcare system is too expensive. Thanks to ACA subsidies, more people have health insurance today than before the law was passed. But unless we address our cost problem, these subsidies will become harder to pay for, and the economic architecture of the law will be stretched even further. As we wrote before: “The authors of the ACA chose to address coverage rather than underlying cost issues, and that decision is slowly but surely coming back to haunt them.”

The Miracle in Myanmar: What’s Next?

When I first visited Burma back in 2003, there were ominous blood-red billboards posted throughout the country that said:

The People’s Desire

Oppose those relying on external elements, acting as stooges, holding negative views
Oppose those trying to jeopardize stability of the State and progress of the nation
Oppose foreign nations interfering in internal affairs of the State
Crush all internal and external destructive elements as the common enemy

The Orwellian sign was printed daily in state-controlled newspapers. It was posted in government offices, schools and universities. It was inescapable.

If that was a sign of the times, November 8 provided another one. In the first general election in 25 years, the people got to express their true desire: to get the military boot off their backs.In astonishing numbers, the people of Burma, renamed Myanmar by the military, voted overwhelming and decisively for the party of Nobel Prize Winner Aung San Suu Kyi. By the end of the day, results showed that Suu Kyi’s party, the National League for Democracy (NLD), had won about 78 percent of the seats in the combined houses of Parliament. The NLD won 387 seats, while the military-backed Union Solidarity and Development Party (USDP) took a mere 41. The ruling party even lost seats in their grandiose capital city of Naypyidaw. As it turned out, many soldiers preferred the opposition party to their bosses.The victory is more than enough for Suu Kyi and her party to control the majority of the Parliament—at long last. Suu Kyi and the NLD won 82 percent of the seats back in 1990, only to have the ruling generals ignore the results. The junta placed Suu Kyi under house arrest for 15 out of the next 20 years and threw the rest of her party leaders into prison. Now those former political prisoners will be in charge.The WinnerReleased from house arrest only five years ago, Aung San Suu Kyi has engineered a remarkable political comeback. She personally is the clear winner, despite months of complaining in the press about her autocratic leadership style and widespread concerns that the military would steal the elections. Millions of people jammed voting booths and filled the streets in support of change. They wore T-shirts and tattoos with Aung San Suu Kyi’s image. Many said in exit polls that they voted for the NLD candidates not so much because of who they were but simply because of “Mother Suu.” As one seasoned journalist remarked to the local Irrawaddy magazine, “They wanted a way out of this Hell, so they chose her.”The LoserPresident Thein Sein, a former general, came to power following a rigged 2010 general election. He initially said he would not seek another five-year term for health reasons and then said he would if it was the will of the people. He warned that there had been “enough change.” The people disagreed. Since Thein Sein did not seek re-election to his seat in Parliament, his political career is probably over. At 70, he is the same age as Aung San Suu Kyi, but he has a pacemaker and now has a mandate to get some rest.His record is mixed. At the beginning of his term, he liberalized the economy faster than anyone expected. He relaxed controls on the media, unions, and civic culture. As a result, Burma is on track to be the fourth-fastest growing economy in the world. Ford, Gap, Hilton, Dell, Cisco, and even Kentucky Fried Chicken have opened shop in what was once a pariah nation.However, toward the end of his term, Thein Sein presided over a renewed crackdown on dissent. Ten journalists are behind bars. More than 400 protestors are awaiting trial, including dozens of students seeking more academic freedom. As the ballots were being counted, the students were on a hunger strike in prison. Thein Sein also stood by while religious violence against Muslims was stirred up. He detained more than 140,000 Rohingya Muslims in squalid camps.On balance, historians will give him credit for managing the election process to completion and honoring the results. Thein Sein has congratulated Aung San Suu Kyi on for her victory and promised a smooth transition when he met with her. After years of trying to thwart Suu Kyi, one of his last acts will be playing De Klerk to her Mandela and handing over power.Other LosersFormer General Than Shwe, who ruled Burma with a bloody fist for more than two decades, is believed to have been pulling strings behind the scenes to perpetuate military control and protect his family’s riches based on corrupt investments. Than Shwe is said to have serious organ failure, so his personal power is waning, but he put other protégés in positions of power in the military who may try to carry on his hardline ideas.One of those protégés, Commander-in-Chief Min Aung Hlaing, was thought to have a good shot at the Presidency if the military party won. Though he acted coolly toward Aung San Suu Kyi in the past, the powerful army chief also congratulated her party and promised to respect the poll results. The question is, will the General share power going forward? The military still controls three of the most powerful ministries: defense, home affairs (which includes police forces), and border affairs. The military also is guaranteed 25 percent of seats in Parliament. Building bridges with those military elements will be essential for the NLD to move forward.Another former general, Parliament Speaker Shwe Mann, was rudely ejected from his position as head of the military party before the election. Once considered a potential President and ally of Suu Kyi, the powerful Speaker then suffered the additional indignity of losing his seat in Parliament to an NLD candidate. What’s unknown is whether he still has enough support to make a comeback of his own. He was the first leader to meet with Suu Kyi after the election and could be helpful during the next two-and-a-half months when the lame-duck Parliament will be in session. His support will be necessary to keep holdovers from making mischief by passing measures to benefit the military. Even though Aung San Suu Kyi was overwhelmingly re-elected to her own seat in Parliament, she cannot lead the country as President. Section 59f of the military-rigged constitution specifically bars anyone with a foreign spouse or children with a foreign passport from service as President. By design, that rules out Suu Kyi because she was married to a British professor and their two children live abroad.Yet as head of her party, Suu Kyi can definitely play the role of “kingmaker.” Since her party won majorities in both the upper and lower houses of Parliament, she will be able to determine two of the three nominees for President, with the military nominating the third. Thanks to her party’s new clout, one of her anointed candidates would then be elected President. Suu Kyi has raised some eyebrows by saying she will serve “above the President.” Presumably, she means the President will follow her lead on policy going forward as her designated regent, much as Sonia Gandhi influenced Indian leadership as head of the Congress Party. With all the adulation she has received from the crowds, Suu Kyi must be especially mindful to avoid Evita Syndrome.The biggest guessing game at the moment is who Suu Kyi will anoint as the next President. One thing is for sure: It will be a loyal ally that she trusts completely. The new President then could pursue changes to the constitution, such as removing Section 436, which mandates a 75 percent approval by Parliament to amend the constitution. That would help speed further reforms.The NLD now has the opportunity to prove it can govern the country. The new President will be able to appoint all chief ministers of the 14 regional governments. The NLD also will control most of the 14 state and regional parliaments. Working relationships will need to be built with the existing bureaucracies, a considerable challenge in itself.In the days ahead, Suu Kyi will hold more meetings with outgoing military leaders. She has consistently said she will not take revenge on the military leaders who held her prisoner, mismanaged the economy, and carried out mass arrests, torture, and rape. She has studied the reconciliation process in Poland, the Czech Republic, and South Africa while under house arrest and envisions more of a velvet transition than a vengeful one.Tough as the run-up to the election was, the Day After will be just a difficult. The military has left the NLD a country with widespread poverty and limited infrastructure. The additional hurdles include:Achieving a realistic peace with ethnic groups. Ethic groups have been fighting for more autonomy and power-sharing for generations. After many months of a full-court press on negotiations, Thein Sein’s government managed to get only eight of the 15 rebel factions to sign a peace agreement. The ethnic groups historically have been leery of the ruling Burman majority and may remain so, since Suu Kyi is considered Burman like her father. However, she has long voiced support for the reconciliation process begun by her father with the Panglong agreement in 1947. Now she has the chance to finish the task.Resolving the Rohingya issue. A recent report by Queen Mary University in London has documented that the Rohingya were systematically persecuted as part of a state-sponsored genocide under military rule. Suu Kyi dodged the Rohingya issue during the election, saying she hoped to be a mediator. Now she will have to find solutions. If she moves too fast and too far to address the human rights of the ostracized minority, she runs the risk of alienating her Buddhist base and triggering more violence and resistance from radical Buddhist elements. The influential monk Wirathu, who has inspired anti-Muslim campaigns, may be watching for opportunities to challenge the new administration.Dealing with China. Since 2010, the Thein Sein government has made a conscious effort to distance itself from China’s potentially destabilizing dominance of Burma’s economy. Thein Sein’s government moved quickly to suspend work on the multibillion-dollar Myitsone Dam, which China was banking heavily on. Then the government courted countries like India, Japan, Thailand, and the United States to fill the investment gap.Suu Kyi has shown a realpolitik view of China. She has maintained, “We have to get along with our neighbors whether we like it or not.”That admission may prove a welcome change in Beijing. The Chinese have grown increasingly impatient with fighting with ethnic groups on the border and corruption in Burmese society. Suu Kyi was invited to a rare one-on-one with President Xi Jing Ping in the run-up to the election, marking the first time China has hosted an opposition leader. The challenge for Suu Kyi will be maintaining Burma’s independence while fostering a constructive relationship with China, which still leads in direct foreign investment in Burma. An early test will be resolving concerns about giant Chinese hydropower projects that threaten the Burmese environment.Dealing with massive corruption. Despite some early talk about reining in corruption, it continued unabated under Thein Sein. A recent Global Witness report documented that the military and its cronies have hauled in the profits from a staggering $31 billion in jade trade. Before the election, Suu Kyi convinced some of the business moguls who made billions doing business with the military to support the NLD instead. Sure enough, some of the long-time cronies bragged that they voted for the NLD on November 8. Now that the elections have provided more legitimacy to “The Burma Spring,” international investors are poised to put more money into Burma. Will the military cronies use the opportunity to make more profits honestly or dishonestly?The next three to four months are critical as the NLD races to assemble its talent and translate its policies into laws. The new members of Parliament will not take their seats until February and the President will assume power by the end of March.In the meantime, those watching in the wings include the military’s Old Guard. The powerful 11-member National Defense and Security Council has the authority to appoint the Commander-in-Chief and holds tacit power over major decisions. The military has a solid majority of six seats on the council and could undermine the new President’s agenda. The Old Guard is well aware that a provision in the Constitution allows the military to resume control in the event of civil unrest. Will they foment opportunities to “rescue” the country and preserve “unity,” their usual excuses?The United States has keen interest in monitoring the transition process as well. President Barack Obama was among the first to call Aung San Suu Kyi to congratulate her on her victory. Obama was roundly criticized for declaring premature success in 2012 after re-establishing relations with Burma. Critics were right: The Administration gave up too much of its “stick” by joining the stampede to relax economic sanctions. That meant the U.S. had less leverage to press for greater reforms. But unlike Norway and the European Union, the Administration suspended its remaining sanctions and reserved the right to re-instate them. Visa bans against corrupt associates of the military regime still remain in force.Those bargaining chips are now on the table. American businesses have been complaining that the remaining sanctions are limiting their ability to compete. Pressure is growing for the Administration to recognize the election results and remove remaining barriers. But the State Department is right to say it is too early to forecast jettisoning all the sanctions. If the transition continues in an honest and orderly way, changes should be made in due time. The U.S. should stick to its principles.There are few precedents to what the NLD is trying to accomplish. There has not been a peaceful transition to a truly democratic government since 1949, when Aung San Suu Kyi’s father, General Aung San, began assembling a cabinet after securing Burma’s independence from Great Britain. He was assassinated by political rivals before he could complete the process. History shows that subsequent administrations were hobbled by weak leaders who struggled to unite ethnic factions and fight Communist insurgencies. That internal weakness led to a military coup in 1962 and the series of regimes that held the country in bondage for nearly six decades. Burma became the “dark house on the block” that everyone avoided.It was during that dark period of human rights violations that I came to know many brave people who joined the struggle to remove military control. One of them was Zin Mar Aung, who was thrown in prison as a college student. Her crime? Distributing poetry that had a political message. She was held in solitary confinement for ten years. When she got out, she founded the Yangon School of Political Science to train future leaders and set up an organization to preserve the environment. She likes to put flowers on the dash of her car because she didn’t get to see any for a decade.Another was a young man named Nay Phone Latt. He was put in prison for four years. His crime? He used the Internet to smuggle out photos and videos to foreign journalists when the military brutally assaulted monks who were protesting the poverty imposed on the people. Nay Phone Latt was released in the 2010 amnesty as part of the “Burma Spring.” He went on to found a chapter of the international organization PEN in Rangoon to support freedom of expression. He’s been training young bloggers and leading a campaign against hate-speech on the internet. When prospects for a fair election looked dimmest a year ago, he encouraged his friends not to give up hope, saying, “Maybe there will be a magic show.”He was right. Something miraculous did happen. Both Zin Mar Aung and Nay Phone Latt were elected members of Parliament on November 8. They are a reminder that the real winners in the election were the people of Burma. Those threatening red billboards should be gone for good.

Japan and India Sign Raft of Deals

Japanese Prime Minister Shinzo Abe’s trip to India appears to have been a success. From the WSJ:

Indian Prime Minister Narendra Modi and Shinzo Abe, his Japanese counterpart, signed the $15 billion rail pact, agreed to transfer technology to increase arms production in India and said Japan will be a stable guest at Indian-U. S. naval exercises […]

Mr. Modi offered Mr. Abe—a fellow nationalist—support for his concerns over China’s land reclamation around small reefs in the South China Sea, which are also claimed by other countries in the region. Japan is also concerned that if China’s territorial ambitions go unchecked it could face more pressure in the East China Sea.“The message is: We don’t want Chinese hegemony in Asia and we’ll work together to create a multipolar Asia,” said Sreeram Chaulia, Dean of the New Delhi-based Jindal School of International Affairs.

Progress was also reportedly made on an energy deal that could see Japan helping India build nuclear reactors, but the two countries said they weren’t quite there yet, citing “technicalities” as responsible for the holdup.

India and Japan make natural partners and the United States has a strong interest in seeing their relationship deepen. Abe and Modi certainly talk a big game and have arranged some impressive deals, but they’ll also need to get their own houses in order before the partnership can reach its true potential. In the long run, we’re cautiously optimistic. But for now, lots of work still needs to be done.

Third Time’s a Charm?

Mere days after we covered the news that South Africa was in economic turmoil after its President unexpectedly sacked his Finance Minister, another reshuffle has happened. As Quartz reports:

In an embarrassing reversal, South African president Jacob Zuma replaced his controversial choice for new finance minister David van Rooyen on Sunday (Dec. 13), barely a week after appointing him, and instead tapped Pravin Gordhan (pictured above), the current minister of cooperative governance, to take over.

Unlike van Rooyen, Gordhan comes to the position with significant experience—he served as finance chief from 2009 to 2014. He was succeeded by Nhlanhla Nene, who was abruptly fired last week in favor of the inexperienced van Rooyen. Van Rooyen will now swap with Gordhan, becoming minister of cooperative governance.

“It’s absolutely shambolic,” John Ashbourne, Africa economist at London-based Capital Economics, tells Quartz. “On the plus side, Gordhan is known as a safe pair of hands, and this will be comforting. But on the other, this second reshuffle in five days will really confirm the impression that president Zuma has blundered into a self-inflicted crisis.”

Many cabinet members said they were neither aware of nor consulted about the moves. Meanwhile, the President spent the weekend denying that his decisions had anything to do with Nene’s strident criticism of the head of the nearly bankrupt South African Airlines, Dudu Myeni, with whom the President was rumored to have had an affair and a love child. Zuma has denied a romantic relationship with Myeni (“Rumours about a romance and a child are baseless and are designed to cast aspersions on the president,” his office said in a statement). But whether Zuma is literally or only figuratively in bed with her, Myeni appears to be incompetent at best, corrupt at worse.

The recent events suggest that the President is far from being the corruption-fighter South Africa needs, and that he is not his managing his responsibilities well. And Zuma has a year left to go, amid a commodities slump and (as you can see) serious economic problems. All of that may spell trouble for South Africa.