The economics and politics of instability, empire, and energy, with a focus on Latin America and the Caribbean, plus other random blather and my wonderful wonderful wife. And I’d like a cigar right now.
I clearly need a new tag. What should it be? “Pirates” is too specific for my taste. “Failed states” is a possibility, but seems a bit, well, anodyne given the rather horrible reality of just what happens when a state fails in the modern world. “Empire” is another, but might be too ... whatever the opposite of anodyne is. I'm looking for a short pithy one or two-word phrase that covers places and situations in which the writ of the local state does not apply (or at the very least is not the sole source of authority) and in which other states or institutions might have to substitute for the local government. Ideas? Reasons to pick either “failed states” or “empire”? C'mon, help me out.
Returning to the topic of the day, in theory there is a way to make policing the sea lanes leading to the Suez Canal much easier. For reasons which I do not yet fully understand (help?) the Suez Canal authority organizes transits in three daily convoys. The implication is that, in theory, such convoys could be organized not at the Canal entrance, but at some point in the Indian Ocean. Naval vessels could then shadow the three daily convoys. This would require far fewer ships than the impossible 180-vessel armada.
The organizational details, however, seem rather daunting. Still, it might be possible for an enterprising contractor to organize convoys around their protective vessels. It would be more expensive than simply hiring out a security vessel, because the convoys would need to be managed, but it would allow the security firm to enjoy economies of scale from the point of view of the companies that hired its services: the more clients, the less cost-per-client.
Pirates attacked 11 vessels in the Gulf of Aden in November. They attacked an additional 6 in the Indian Ocean off the Somali coast. Of the 11 incidents in the Gulf, all occurred right outside Yemenese territorial waters, which passing ships have taken to hugging as they head to and from Suez. Of the 11 attacks in the Gulf, the pirates took their targets six times. NATO warships stopped three and a tanker crew managed to avoid the tenth. Of the attacks in the Indian ocean, the Indian navystopped one (sinking the pirate vessel involved), the crews involved evaded three (two by outrunning the pirates and one by turning firehoses on them as they tried to board, knocking their shoulder-held RPGs into the water), and two took their targets.
I can't link to the source; it's what I was told by intel officers in the U.S. Coast Guard. Don't worry, it's unclassified. Another good data source is here, and a third here.
So what is the scale of the problem? Well, in 2006 roughly 51 vessels passed through the Suez Canal each day. Given the length of the Gulf of Aden, the fact that the pirates seem to be able to range about 450 miles beyond that, and an average ship speed of 22 knots, that would mean approximately 90 ships within pirate range every day. (This assumes that vessels headed around Cape Horn could fairly easily re-route to remain out of pirate range.)
The implication is that a rotating flotilla of 180 armed vessels could probably deal with the problem. Djibouti may no longer be a French territory, but it hosts several thousand French troops and at least 450 American ones at Camp Lemonier, and it has a (relatively) modern port. In other words, it isn't right to think that stabilizing Somalia is the only solution. Of course, the pirates use swarming tactics, where they attack with multiple boats, which poses a very serious tactical problem for the escort vessels. (Under the current rules of engagement, there is maybe a 15-minute window to attack a pirate ship.) Alternate strategies are possible; the real point is that the problem is manageable even without any attempt to stabilize Somalia or, alternatively, a smash-up of the pirates' coastal havens. (The human cost of the latter would not be low.) One could imagine alternative operations involving continuous aerial patrols of the effected areas, although speaking as someone with some experience, managing such a thing would not be easy and the chance of a major cock-up would be high.
The United States just announced that the the Millenium Challenge Corporation will suspend $60 million in grants to the government of Nicaragua. The reason? Rigged local elections. Now, I don't expect the aid suspension to accomplish much. It's important to bear in mind that the U.S. still provides more aid than the Bolivarian Republic to most putative members of the Bolivarian alliance.
In other Revolutionary news, the Bolivarian summit in Caracas announced that the alliance would consider establishing a common currency. That is rather weak brew, and I will be very (albeit pleasantly) surprised if it happens. Why pleasantly? Well, a common currency spanning Venezuela, Nicaragua, Cuba, Honduras, Bolivia, Dominica and possibly Ecuador would be a fascinating monetary experiment to watch. Sadly, I feel pretty confident that it isn't going to happen.
Argentine-Mexican relations were rocky under former presidents Néstor Kirchner and Vicente Fox. I was in Argentina during one of their more famous spats, and it was very amusing to watch.
All that is over now. President Calderón met with President Fernández in Buenos Aires to cement a series of pacts between the two countries. The pacts covered everything from nuclear technology (Mexico to Argentina), agricultural techniques (Argentina to Mexico), information-sharing (particularly in regards to crime), and mutual recognition of advanced degrees and an extradition treaty. The two presidents also created what they called a “Strategic Association Council,” which would serve to insure both a permanent high-level diplomatic link between the two governments and make it easier for lower-level functionaries outside the foreign ministry to communicate with their equivalents in the other government.
“You know, I’ve always wondered what South America would look like if no one gave a damn about coca or Communism. It’s always impressed me the way you boys have carved this place up.”
“I’ll take that as a compliment, coming from a Brit.”
Now that the U.S. election is over and James Bond is officially a friend of Evo Morales, it's time to take a trip around the Bolivarian Revolution. How is the red banner faring around the continent?
In Venezuela, the Revolution just won what is either an impressive victory or a debilitating blow in the gubernatorial elections. On the one hand, Socialist party candidates garnered a total of 53.5% of the vote. They also took control of most state governments. On the other hand, urban votes shifted dramatically towards the opposition. More ominously for Sr. Chávez himself, the biggest Socialist vote margins piled up in three states whose incumbent Socialist governors opposed the President’s constitutional reforms in last year’s referendum. (Monagas, Anzoátegui and, Lara.) That bodes ill.
As does the fact that Venezuelan oil is now heading for $40 a barrel. (You heard it here first!) Venezuela’s budget is a mess, and a gigantic hole has just been blown through it. Unless Chávez intends to try to emulate Plutarco Calles (or, more contemporaneously, Vladimir Putin) and become a behind-the-scenes jefe máximo de la revolución, he will be on his way out in 2012.
Crossing the Caribbean to Nicaragua, we come to the interesting administration of President Daniel Ortega. One difference between Nicaragua and Venezuela is that Venezuela has a very well developed system for insuring that elections are free and fair, while Nicaragua does not. There are reports that President Ortega, it seems, has taken advantage of that lacuna to steal municipal elections. Several Sandinistas have defected, and violent demonstrations have gripped several cities, including the capital. Things could easily get worse. The Russian Federation, I should add, is a non-player here, despite its government’s pretensions. Venezuela is not a non-player, but given Hugo’s trouble at home, I don’t see him upping aid to Managua. He’s already called off a $4 billion refinery project. Anyway, I’m not sure that Ortega is at the stage where aid could help: fraud charges cross a line, and it will be hard for him to buy support back.
Jinking to the north, Honduras has just joined the Alternativa Bolivariana, and the first shipment of 50 tractors from Venezuela has arrived, along with four million energy-saving light bulbs. El Universalreports that Caracas stands ready to lend Tegucigalpa about $132 million more, along with $82 million in subsidized oil for agricultural use. (It isn’t clear whether that subsidy is a standard Petrocaribe credit, or an actual grant of free petrol.) A nice economic gain for President Zelaya, with the additional benefit of sending a shot across the bow of the new American president-elect. “Pay attention to me or else!” it says.
The problem, of course, is that there doesn’t seem to be a whole lot to the “or else” part. Or else Hugo Chávez will give your people much-needed aid? Okay. Latin Americans, like other foreigners, may have some trouble adjusting to a non-hysterical foreign policy coming from Washington.
Jumping across the Pacific, we come to Ecuador, where President Correa recently shepherded through a new constitution. Ecuador is currently testing how easy it will be to default on its foreign debts. As regular readers know, there are cases when I think sovereign default is a great idea. In this case, I think it is pretty dumb. First, Ecuador would open itself up to lawsuits. If successful, and given the structure of the loan contracts they probably would be, then Ecuador could find its export revenues attached, or worse. With oil prices tanking, interference by the Obama Administration wouldn’t be likely. Second, Ecuador can pay. It can probably roll over its outstanding debt. Now, perhaps all the terrible things that the government claims in its audit are true, and the loans really were odious ... but I’m having trouble believing it. The claims are just too hyperbolic. Third, even though the Ecuadorean government can pay, it would have a great case in a rescheduling negotiation, what with some of its bonds trading as low as 24¢ on the dollar. So why run the risk of default when renegotiation is an option?
But President Correa will do what he will do; I just wish I understood what he is trying to accomplish. Right now, he’s managed to irritate the Brazilian government by threatening to default on a loan from Brazil’s development bank, and he may be about to blunder into a very unnecessary and potentially expensive default on American creditors. To be fair, the brinksmanship to date has worked. The country is not in a technical default despite its recent postponed payment, and I suspect that fortunes may have been made by the debt’s recent dip to 14¢. But my gut feeling is that default would not be wise at the present moment. How many foreign assets does Petroecuador hold?
If I am missing something, I would very much like to know what.
One country that is not a member of the Bolivarian axis but which has a government that is sometimes considered to be allied to it is Argentina. Argentina has just run into a bit of trouble that might be relevant for Ecuador’s energetic head of state: the (in)famous Judge Thomas Griesa of New York has frozen $2 billion in recently-nationalized pension assets. Argentina could lose those assets on appeal; they would then be used to pay the American “holdouts” from that country’s debt renegotiation and repudiation. Ecuador could be headed for a similar problem, and that is assuming that the debtors fail to get ICSID involved.
(I have no opinion on the Aerolineas Argentinas nationalization. After all, the firm is headed towards liquidation, and its owners don’t have much of a leg to stand on demanding more compensation. That said, it isn’t clear to me why Argentina needs a national flag carrier. Unless there is some reason why the airline’s failure will cause some sort of catastrophic economic knock-on — and I am open to arguments of that type in the case of the Big Three in the U.S. — it seems like a dumb idea to take a dying airline under government ownership regardless of who gets compensated by how much.)
Which finally takes us to Bolivia. The country is back from the political brink. A draft of a new constitution has been agreed upon, and goes before the voters on January 25th. More interesting is the Bolivian government’s aggressive stance towards the U.S.: expelling the ambassador, the DEA, and the Peace Corps. Where will that lead? Some cogent analysis here. What do you think?
And that has been your latest installment of “Around the Revolution.” Stay tuned, and hasta la victoria siempre.
You get the sense of a great machine that has been set in motion and cannot be stopped. It forecloses on homes that have no value and ejects their inhabitants to no purpose.
It was tragic to watch. The quiet desperation in the exurban garage sales was perhaps truly worse than what you see here in the inner suburbs of Cleveland, but this is much more distilled. I wonder what became of the family that lived here until the day this photo was taken.
The Typepad editor crashes when I try to edit after having uploaded a picture. The Typepad editor crashes when I try to insert a fold. The Typepad editor, in short, is terrible. As a paying customer of Typepad, this has me somewhere between angry and furious.
Regular blogging will resume when the problem is fixed. Perhaps in an hour, perhaps never. Has anyone else had these difficulties?
I've been busy, what with the election and then finishing Work-in-Progress number 1. It isn't quite done, but Carlos and I went through a frenzy of productivity (and three steak lunches, with wine) in New York last week, and the end is very near.
So I will try to get back to posting, although I can't promise anything. Anyway, I began today with a brief discussion of the Typealyzer. It purports to be able to analyze the personality type of a blog-writer using some sort of unspecified text analysis algorithm. I heard about it on Kevin Drum, and then again on Language Log.
Now, I usually like this sort of thing. What British political party should I belong to? The Liberal Democrats! Of course! What kind of movie is my life most like? An action flick! Obviously! What South American country would I be? Venezuela! Uh ... well, yes, that does make more sense than any of the others, when I think about it.
But the result from the Typealyzer, well, it was just odd:
Some commentators, like Bill Maher, have been worrying over the fact that the Democrats have lost the self-identified "white" vote since the 1964 election. Barack Obama did better than most, they say, but he still didn't win it. And that, they believe, is a problem.
Now, I don't understand why it's a problem. But let's put that aside for a moment. Do the Democrats have a problem with self-identified whites in presidential elections?
I punched up the exit poll data to find out. And what did I discover? The following:
Share of the white vote: Obama McCain Former confederate states: 31% 68% Other states: 50% 49% 2004 blue states: 52% 47%
To be clear, these are not arithmetical averages across states. They are the share of self-identified "white" people who stated that they voted for each of the major candidates for the synthetic jurisdictions listed on the left.
The Congressional results aren't broken down as easily, but considering as the Democrats won 56% of the Congressional vote versus 52% of the presidential one, then I suspect that their share of the "white" vote was even higher.
Question to readers: is it a problem that southern whites really don't like Democrats?
Where have I been? Well, I've been travelling a lot lately. An interesting combination of academic or personal and election work. Conference in Miami? Chance to lobby your relatives' state representative to pressure Governor Crist into extending early voting hours! Paper presentation in Cleveland? Chance to knock on doors. Got to go to a family gathering in Fort Lauderdale? Opportunity to talk to a small business organization about what a Democratic administration means for them.
And so, I am now in North Carolina. Today I discussed HSBC's purchase of Banistmo and the future of the Panamanian banking industry with an anonymous banking executive in Charlotte. Tomorrow I go off the clock, and work to get Barack Obama elected the next president of the United States.