Friday, February 3, 2012

"The China Syndrome" of desperately uneven "free trade"

By Chrystia Freeland, Globe and Mail, February 2, 2012
(I)n his State of the Union address, the President opted explicitly for the 99 per cent perspective. Restoring their fortunes is “the defining issue of our time,” he said. “No challenge is more urgent. No debate more important. We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, and everyone does their fair share, and everyone plays by the same set of rules.”

The Obama analysis gets a lift from “The China Syndrome,” a recent paper on the impact of trade with China by a powerful troika of economists: David H. Autor, David Dorn and Gordon H. Hanson. The empirical study, which was cited in an important speech on inequality a few weeks ago by Alan Krueger, chairman of the president’s Council of Economic Advisers, is particularly significant because it marks a shift in consensus thinking in the academy.
In the debate about the causes of growing income inequality, U.S. economists have tended to opt for technology as the driving force. Indeed, in his remarks, Mr. Krueger referred to a survey he did of those economists, who overwhelmingly cited technological change as the most important factor.
But, drawing on detailed data from local labour markets in the United States, the authors of the “The China Syndrome” argue that globalization, and in particular trade with China, is having a huge impact on blue-collar U.S. workers: “Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment.”
The deleterious effects go beyond those workers who lose their jobs. In communities hit by the China Syndrome, wages fall – particularly, it turns out, outside the manufacturing sector – and some people stop looking for work. The result is “a steep drop in the average earnings of households.” Uncle Sam gets hit, too, especially in the form of increased disability payouts.
Messrs. Autor, Dorn and Hanson are no protectionists. But, in a challenge to the “one nation under God” view of the world, they offer a sharp reminder that the costs and benefits of trade are unevenly shared. As they put it, their finding does not “contradict the logic” of arguments favouring free trade: “It just highlights trade’s distributional consequences.”
When I raised the issue with Joseph E. Stiglitz, the Nobel economics laureate and long-time doomsayer about the downside of globalization, he practically crowed with vindication. “The economic theory is very clear,” he said. “What happens when you bring together countries which are very different like the United States and China, what happens is that the wages in the high-wage country get depressed down. This was predictable. Full globalization would in fact mean the wages in the United States would be the same as the wages in China. That’s what you mean by a perfect market. We don’t like that.”
The truth is we are no longer living in “one nation under God” – we are living in one world under God. Globalization is working – the world over all is getting richer. But a lot of the costs of that transition are being borne by specific groups of workers in the developed West.
We are accustomed to thinking of the left as having an internationalist perspective. Liberals are the sort of people who worry about poverty in Africa or the education of girls in India. The irony today is that the real internationalists are no longer the bleeding-heart liberals, they are the cutthroat titans of capital.
Little wonder, then, that the host of the Davos Conference on World Economy called for a transformation of capitalism, presumably to bring the "liberal" perspective to the table to counter the "cutthroat titans of capital" in their ravenous and unmolested greedy pursuit of profit.
The titans of capital have held the stage, starting in both the U.S. and Great Britain since the Reagan-Thatcher regimes in those countries in the 1980's. Deregulation, lower taxes for the rich and the corporations, and more international trade (so-called "free trade") have been the order of the day. While that combination has brought the names of various world cities and countries into the headlines of most dailies in western countries, names that rarely appeared prior to that time, it has also brought increasing competition to western workers, without adequate preparation of either economic and trade policy or transitional preparation of the workers who would have been and now are, displaced.  Politicians whose success depends on the success of their corporate "masters" (aka bag-men) have traditionally taken a very short-term view of the implications of their ego-and-vote-driven initiatives. So long as we have "more" trade, including theoretically more "markets" for home-produced products, (without requiring a commensurate level playing field in worker benefits, environmental standards and wages) the countries that can produce adequate quality goods at less than half the price of "western" countries will generate more sales, and thereby more industry than the countries where worker benefits including safety, pensions and health are, as well as environmental standards are higher.
In short, the political leaders whose careers relied on these short-sighted "free-trade" treaties, and "open markets" without the backfill of carefully monitored and prosecuted clauses needed for a level playing field, have sold out the very workers whose votes put them into power in the first place.
While we cannot prosecute people like Mulroney (in Canada) and Reagan and Thatcher and their ideological successors Dubya and Cheney, we can, however, hold our current leaders' feet to the fire to work to fill in the blanks left by those cowboys (and cowgirl) who have led the charge against workers, against unions, against the environment and for more trade through enhanced international legal oversight agencies to help to right the balance.
Siphoning off the profits from the top of the bottle, by the cutthroat titans, without regard to the basic, hard-fought-for and earned and merited "worker" rights, not to mention the starving and dying poor in the third world is a recipe for disaster. And now, finding the non-profits joining those same corporate titans, in order to survive, only completes the "gutting" of the liberal agenda, basically without a bang or a whimper.
We need strong, visionary, courageous leaders, like Obama, in all western capitals, including Ottawa, London, Paris, Berlin, and Rome to help right the balance of a world international "ship" that has struck the shoal of greed and is listing dangerously "to port" endangering the lives and livlihood of millions who are clinging to the rails by the fingers, in the hope that this ship does not take a sudden and dramatic dive into the deep.

Diplomat/Scholar: What if Assad Falls?...tumult and chaos..

By Michael Bell, Globe and Mail, February 3, 2012
Michael Bell, a former Canadian ambassador to Egypt, Jordan, Israel and the Palestinian territories, is the Paul Martin Sr. Scholar in International Diplomacy at the University of Windsor.
The chances of Syrian President Bashar al-Assad’s fall and an opposition takeover are growing, despite the rebels’ own divisions. Unrest now embraces some 30 urban centres; if Damascus and Aleppo rise up, the results will be catastrophic for the regime. The Baath Party’s demise, to be welcomed in the struggle for human rights and pluralism, is also fraught with challenges. A United Nations Security Council resolution would be a key symbolic gain for progressives, but alone will have little, if any, effect on the ground in the Middle East.
The popular Arab uprisings in Tunisia, Egypt and Libya, combined with the consequences of the ill-fated U.S. intervention in Iraq, have already shifted the strategic balance of power in the region between nations and communities, unlike anything seen since the collapse of the Ottoman Empire after the First World War. Nor can Shia-dominated Iran be ignored in its competition with the region’s Sunni Arab majority, a rivalry centuries long.
Mr. al-Assad’s demise will end Syria’s secular tradition, of value in itself no matter how corrupt and repressive the regime has been, as many Syrian Christians will testify. It will bring about Sunni domination over substantial minority communities, including Alawites, Christians, Druze, Kurds and others. The revolt is not led by Islamists, nor was it in Egypt or elsewhere. But it’s more than likely that Syria’s Sunni domination will yield to Muslim Brotherhood rule, with that movement’s organizational strength and ideological agenda.
Unhappily, the widely shared Western conceptions that change in the name of pluralism would invariably succeed in the aftermath of the Arab Spring looks to be proved naive. A much murkier reality has emerged. While frustration with an abusive and ossified status quo has led to revolution, the consequences clash dramatically with the vision of the progressive movements that unseated the secular autocrats.
Emerging Islamist governments could prove to be relatively benign. But early indicators are less than reassuring. Israel, not unexpectedly, is already the subject of further demonization for its policies respecting Palestinians and, at a deeper level, for its very existence as a Jewish state. Mosque sermons are increasingly fiery, and Muslim Brotherhood leaders are caustic. This does not mean military confrontation or an abrogation of peace treaties. But it does mean a still more hostile Arab street, a re-energized Hamas and a weakened Palestinian Authority, unable to take further risks for peace lest it be labelled Zionist sellouts to an Israeli government where accommodation with Palestinians often seems anathema.
Israel is ambivalent about the current rulers in Damascus. The Baath Party has been hostile in rhetoric and has fostered low-level confrontation with the Jewish state, but has generally been predictable and risk-averse. For Israel, the prospect of Sunni rule in Syria causes intense worry about chaos in an already fragile Arab society, and fear about forced confrontation with an Islamist government in Damascus. This raises the question of whether the Lebanese-based Shia group Hezbollah, which is dependant on Mr. al-Assad, will retreat in the face of a Sunni-ruled Damascus or pursue still more active confrontation with Israel in a bid to reinforce its revolutionary credentials.
Iran would be a major loser should the al-Assad regime fall. It’s heavily reliant on a sympathetic Syrian government in its own pursuit of a Shia-dominated crescent through Iraq to Lebanon. Should Hezbollah turn inward toward conventional politics in Beirut, Tehran would lose much of its regional influence. If Syria fragments, its various communities will be driven toward civil war. Lebanon, dramatically fragmented itself, will be drawn in.
Majority Sunni treatment of the minority Shiites has historically been less than generous throughout the region, exemplified by Shia subjugation in Iraq under Saddam Hussein and in Saudi Arabia, where restrictions on Shia places of worship, education and identity are severe. Among the most vocal indicators of animosity between these competing faiths was Saudi King Abdullah’s remark to senior Americans in 2008, urging them to “cut off the head of the snake” by attacking Iran. Shiites differ from Sunnis in doctrine, ritual, law, theology and religious organization to a depth difficult for most Canadians to imagine. Both share a primordial distrust of the other.
The current situation in the Middle East is incredibly complex. Today’s reality contains so many variables that it’s impossible to predict an ultimate outcome. What can be said categorically is that tumult and chaos will be the region’s leitmotif for the foreseeable future. No player in the international community will fail to feel the consequences.

Thursday, February 2, 2012

Kenneth Rogoff: Coronary Capitalism

By Kenneth Rogoff, Project Syndicate, from CNN website, February 1, 2012

Editor's Note: Kenneth Rogoff is Professor of Economics and Public Policy at Harvard University, and was formerly chief economist at the IMF. For more from Rogoff, visit Project Syndicate or follow it on Facebook and Twitter. The views expressed in this article are solely those of Kenneth Rogoff.
A systematic and broad failure of regulation is the elephant in the room when it comes to reforming today’s Western capitalism. Yes, much has been said about the unhealthy political-regulatory-financial dynamic that led to the global economy’s heart attack in 2008 (initiating what Carmen Reinhart and I call “The Second Great Contraction”). But is the problem unique to the financial industry, or does it exemplify a deeper flaw in Western capitalism?
Consider the food industry, particularly its sometimes-malign influence on nutrition and health. Obesity rates are soaring around the entire world, though, among large countries, the problem is perhaps most severe in the United States. According the US Centers for Disease Control and Prevention, roughly one-third of US adults are obese (indicated by a body mass index above 30). Even more shockingly, more than one in six children and adolescents are obese, a rate that has tripled since 1980. (Full disclosure: my spouse produces a television and Web show, called kickinkitchen.tv, aimed at combating childhood obesity.)
Of course, the problems of the food industry have been vigorously highlighted by experts on nutrition and health, including Michael Pollan and David Katz, and certainly by many economists as well. And there are numerous other examples, across a wide variety of goods and services, where one could find similar issues. Here, though, I want to focus on the food industry’s link to broader problems with contemporary capitalism (which has certainly facilitated the worldwide obesity explosion), and on why the US political system has devoted remarkably little attention to the issue (though First Lady Michelle Obama has made important efforts to raise awareness).
Obesity affects life expectancy in numerous ways, ranging from cardiovascular disease to some types of cancer. Moreover, obesity – certainly in its morbid manifestations – can affect quality of life. The costs are borne not only by the individual, but also by society – directly, through the health-care system, and indirectly, through lost productivity, for example, and higher transport costs (more jet fuel, larger seats, etc.).
But the obesity epidemic hardly looks like a growth killer. Highly processed corn-based food products, with lots of chemical additives, are well known to be a major driver of weight gain, but, from a conventional growth-accounting perspective, they are great stuff. Big agriculture gets paid for growing the corn (often subsidized by the government), and the food processors get paid for adding tons of chemicals to create a habit-forming – and thus irresistible – product. Along the way, scientists get paid for finding just the right mix of salt, sugar, and chemicals to make the latest instant food maximally addictive; advertisers get paid for peddling it; and, in the end, the health-care industry makes a fortune treating the disease that inevitably results.
Coronary capitalism is fantastic for the stock market, which includes companies in all of these industries. Highly processed food is also good for jobs, including high-end employment in research, advertising, and health care.
So, who could complain? Certainly not politicians, who get re-elected when jobs are plentiful and stock prices are up – and get donations from all of the industries that participate in the production of processed food. Indeed, in the US, politicians who dared to talk about the health, environmental, or sustainability implications of processed food would in many cases find themselves starved of campaign funds.
True, market forces have spurred innovation, which has continually driven down the price of processed food, even as the price of plain old fruits and vegetables has gone up. That is a fair point, but it overlooks the huge market failure here.
Consumers are provided with precious little information through schools, libraries, or health campaigns; instead, they are swamped with disinformation through advertising. Conditions for children are particularly alarming. With few resources for high-quality public television in most countries, children are co-opted by channels paid for by advertisements, including by food industry.
Beyond disinformation, producers have few incentives to internalize the costs of the environmental damage that they cause. Likewise, consumers have little incentive to internalize the health-care costs of their food choices.
If our only problems were the food industry causing physical heart attacks and the financial industry facilitating their economic equivalent, that would be bad enough. But the pathological regulatory-political-economic dynamic that characterizes these industries is far broader. We need to develop new and much better institutions to protect society’s long-run interests.
Of course, the balance between consumer sovereignty and paternalism is always delicate. But we could certainly begin to strike a healthier balance than the one we have by giving the public far better information across a range of platforms, so that people could begin to make more informed consumption choices and political decisions.
The views expressed in this article are solely those of Kenneth Rogoff.
First, let's get the lobbyists and the corporate financing out of Capitol Hill, and every other legislature, including all political campaigns.
Let's give the FDA both courageous and independent leadership and a fire wall separating its funding from the corporate interests.
Let's set up an independent body to receive and dispense research dollars to universities, independently from the corporate donors, so that those doing the research are not aware of the name of the corporate sponsor of their specific research, nor of the political (financial) implications of their findings.
Let's separate all politicians from using their "information" to speculate, trade or inform others as to the potential value of that information on specific stocks, bonds, funds etc. through legislation.
Let's transform the health care system to include compensation for doctors based on the "health" of their patients, not on the frequency of office visits with sick people who have no incentive to take repsonsibilty for their own health.
Let's ban tobacco products from all pharmacies and health care suppliers.
Let's get serious about the curricula that are permitted, encouraged and offered in elementary and secondary schools, as well as colleges and universities through incentivizing intramural activities and the elimination of intercollegiate athletics, both to reduce costs and to enhance the levels of participation among students at all levels.
Let's require full and complete disclosure of the chemical, and caloric, fat and salt contents of all processed foods, and incentivize the growth and marketing of non-processed foods for all tastes, and all budgets, and including formal education in the relative merits of the natural foods in all secondary schools. We also need to remove all sales of soda beverages from all educational institutions, as well as all "sugar" snacks, replacing them with sugar-free beverages and fruit, vegetable and nut snacks.
Let's incentivize corporations to develop healthy worker campaigns, including both formal and informal competitions, with funds raised going to such charities as Heart and Stroke Foundation, Canadian Cancer Society, the Lung Foundation...from such competitions. And let's start with the hospitals, around whose exits, around the clock, we can find clusters of hospital workers generating a cloud of toxic smoke from their lethal cigarettes.
If we are really going to get serious about the incestuous relationships that currently infest our capitalistic systems,
especially those that directly and indirectly "feed" public systems that are naturally suffering organizational COPD because of our participation in unhealthy lifestyles.
We are all addicted to unhealthy foods, habits, relationships and the blame game....pushing responsibilty onto others, while ignoring our own capacity to make better choices.
Incidentally, this piece is not funded by any corporation or non-profit foundation.

Igniting a culture of innovation in frozen Canada

By Jeffrey Simpson, Globe and Mail, February 1, 2012
By one count, the federal government has – count ’em – more than 100 programs, institutes and regional development agencies to support business. That figure doesn’t include an array of tax incentives, the largest of which is the Scientific Research and Experimental Development (SR&ED) tax credit. All together, these business programs cost $6.44-billion in the fiscal year 2010-2011.

Head-scratchers in Ottawa have long wondered about these programs, to which every government wants to add more. They are certainly costly and numerous, but they don’t seem to have achieved the bang for the buck, at least not judging by the amount of innovation they spark. And innovation lies at the core of enhanced productivity.
What perplexes policy-makers further is that for several decades, governments have adopted many of the policies that textbooks suggest should enhance productivity. They’ve run (until recently) intelligent fiscal policies, lowered taxes, tried to reduce regulations, entered into liberalized trade deals, privatized Crown corporations, invested in research and skills training – and yet productivity remains low by international standards.
Just as in reducing the number of high school drop-outs, the job cannot begin with adolescents; it must begin much earlier in order to engender a culture that supports learning among especially young boys who constitute the vast majority of high school drop-outs, so with innovation.
Programs, like mascara to a face, will not generate innovation. Politicians seeking to make a name for themselves, peddling make-up that will seduce business leaders to produce new ideas, new technologies and new ways of doing business are like so much wasted money on advertising when it does not tell the truth.
Truth is....(how presumptuous of this scribe!)...Canadians  have, inhabit and proudly want a culture of resistance to change. We have and embrace a cultural fixation with authority, with accountability, with risk aversion and with, albeit artistic imagination in novels, plays, poetry and even canvas and the dance stage and even the recording studio.
And much of this explosion over the last four or five decades has been funded partly by government and partly by the private sector, especially the banks.
However, just as there is a divide between the wealthy and the poor, there is an even deeper and wider divide between the business community and the artistic community, with respect to innovation. Business thrives on consistency, stability, "no surprises" and "no mistakes"....while spending money on thought provocateurs to stimulate change, innovation and colouring outside the lines.
And it begins in our schools. A little story to illustrate. A friend, a practicing psychologist noticed that his grade one son was bringing home papers with unhappy faces until one day, he brought home a big happy face on his drawing. Not having mentioned the unhappy faces, he asked his son, "What happened?" when the happy face arrived.
"Oh," replied Jeremy, "the teacher did not like me colouring outside the lines, so today I drew my picture and then put the lines around the picture!"
Smart Kid!
Dumb teacher! And even dumber school system that believes those "lines" are more important than the picture.
We need to embrace both change and the opportunity to make it happen. We need to believe that our theology is not a fossilized bunch of rules engraved in some tablets of stone and brought down from a mountain for right and proper living, in order to "purchase the keys to an afterlife in heaven." We need to believe that teaching is not only a "conserving" activity but also a "rebelling" activity; we need to honour the black sheep in our families, lest we become to addicted to our need for perfection that we abandon and effective abort from lack of use, our courage to speak up when we see injustice, our imagination when we see a captivating picture while out driving and need to stop to capture it in a photo, or even attempt to draw it when we return home. We need to accept the eccentricities of our people and that needs to begin very early when we are dressing our children "to look like all the other children" in the piano recital so they will "not stick out".
And we need to enourage those same piano students to try different rhythms and different dynamics when they are learning new pieces in their lessons, so that the "perfect" rendition of the notes and timing is not the only way to"succeed" in playing the piece. And we need to stop insisting on those damn lines around all our pictures, as a function of good parenting, and then of good teaching and then of good theology and then of good medicine and good engineering and especially good accounting.
We need our kids to eat more dirt, and to swing and fall from more trees, and to break a few more teeth when the puck accidentally jumps of an opponent's stick (Oh, I forgot...no one plays hockey without a face mask today!)...and a few more kids attempting to make their own music in their parents garages, and...yes, a few more gadgets like computers in their parents' garages....and a few more of anything they get their vibrant minds around....and we need to take the belts off our tightly wound need for "getting it right" if we truly want a culture on innovation and comfort with risk and individuality and new ideas in order to generate productivity.
And, surprise, surprise, we might just find that God is not just a set of rules that bind our psyches and our spirits...but that S/He celebrates our wildest imaginings with us....how unCanadian would that be?
And the cost will be seen in far fewer prescriptions for depression and for anxiety and for fears unrealized and far less need for alcohol and stimulants.....and the government will not have played much of a role in engendering the change.

Wednesday, February 1, 2012

EU leaders fail to increase bailout funds for ailing members

New York Times Editorial, January 31, 2012
European Union leaders failed on Monday to move forward on their most urgent task: increasing the bailout fund to protect Europe’s ailing economies from defaulting on their bonds.

Instead, leaders of 25 of 27 European countries agreed to sign a new fiscal compact that will legally restrict them from fighting recessions with robust fiscal stimulus. Most economists outside the euro zone consider this approach a dangerous one. Those countries account for more than 20 percent of the world’s economy. Condemning them to longer and deeper recessions will drag down economies elsewhere that depend on trade, from the United States to China.
Without a bigger bailout fund, investors will likely keep betting against weakened economies like Italy and Spain, pushing up their interest costs and, consequently, adding to their deficits. Nevertheless, Europe’s leaders deferred action on more money until March. Market speculators may not agree to wait.
The world has gotten used to failed European summit meetings. What is particularly disheartening about this one is that some European leaders seem to believe they succeeded. “Considering the time frame, this was a real masterpiece,” Chancellor Angela Merkel of Germany said of the new fiscal pact. It was only in December that she made clear to other European leaders that adopting a fiscal pact to balance their budgets and reduce debt was an essential precondition for Germany to continuing to pay its fair share of European debt-relief costs.
The fiscal pact imposes substantial fines on any signatory nation whose deficit averages more than 0.5 percent of gross domestic product over a full economic cycle, a condition the United States would have had great trouble meeting over the past three decades. The summiteers also made ritual nods in the direction of more jobs and higher growth, without providing any new money to achieve this.
As the European Union’s biggest economy, and biggest contributor to the bailout fund, Germany continues to determine the approach in managing the Continent’s economic crisis. Others, particularly those needing help paying their bills, have little choice but to go along, whether or not they really believe that German-dictated austerity will help their ailing economies. Many leaders — Prime Minister Mario Monti of Italy, for example — have made clear that they do not.
A leader wiser than Mrs. Merkel would build a stronger European Union by helping her neighbors grow their way out of debt, not squeeze them to the breaking point. A wise leader would also remind German voters that the prosperity of their own export-dependent economy requires sustained demand in neighboring countries.
Poor German leadership in this crisis has exacted an increasing economic and social price from Greece, Ireland, Portugal, Spain, Italy, Belgium and France. The longer Germany insists on putting fiscal austerity ahead of growth, the more likely it becomes that Germany, too, will suffer economic pain.
For many of the last seven decades, I have watched as those advocating "austerity" in the middle of a crisis have held the dominant position. Austerity, or restraint, or holding back....these are code words for both fear and control. There is no way "austerity" by itself  can be used as a surrogate for "responsibility"...not now, and not tomorrow, not in North America and not in Europe.
And let's not put all of the responsibility for this regrettable decision on Ms Merkel; there had to be other European leaders who believed that, if they joined in supporting this decision, they would receive less "flack" back home from their electorate. Some have even called this the Merkozy decision, punning on the Merkel Sarkozy leadership.
Crisis is like a medical red flag from the family doctor, "If you don't stop smoking, you will die within two years!"
It make get one's attention; it may even bring about a little shock and thereby a little change of habit. However, it does not bode well for a smoking cessation regime that has much likelihood of success.
In North America too, the calls for "austerity" in the middle of this economic stress/crisis/lowpoint....grow primarily from the neo-cons whose capacity to demonstrate leadership is much less than they are given credit for doing.
Primarily, their fears are playing to the fears of the citizenry. Both are singing from the same song sheet, hoping that not everyone will jump off the dock at their invitation, urging and manipulation. Fears always send one into a "retreat" position, whether it is the fear of budget shortfalls, business or personal bankruptcy, or government's runaway spending. And whatever the public expression of fear, we can be confident that the louder the public fear, the more likely the political leaders will give expression to that fear, fearing themselves that they will not sustain public support, either now or at election time.
Most responsible economists, including the New York Times Editorial Board, believe that a balanced approach of both spending restraint and investment in growth will be more likely to provide a way out of the crisis, without pitting the 99% against the 1%....and some measure of social order, never easy to calculate its "dollar value" is essential, as is a steady flow of government revenues, enhanced only by increasing the number of people working and paying taxes.
That is the position of Paul Krugman, Jeffrey Sachs, (The Price of Civilization), and it is also the position of President Obama. Clearly, the Harpers and Niall Ferguson's and the Republican party sing from a different song sheet, the same one, apparently, being used by Merkozy and friends in Europe.
Many of the talking heads postulate that a weakened Europe will redound on President Obama's election prospects. If European leaders want another dose of George W. Bush's Republican conservative politics and policies, they may have taken one step to make that result more likely. On the other hand, if they come to their senses, seeing the constrictions that are holding their trachial tubes from breathing fully, as well the restrictions they are placing on their compatriot EU members, they might just revise their position and decision.
We are hoping and watching.

UN to vote Feb.2 on Syria..China and Russia veto Resolution (Feb. 4, 2012)

By Anita Snow, Associated Press, in Toronto Star, February 4, 2012By Sonia Verma, Globe and Mail, January 31, 2012

Russia and China have vetoed a Security Council resolution backing an Arab League peace plan that calls for Syrian President Bashar Assad to step down.
The other 13 council members, including the U.S., France and Britain, voted Saturday in favour of the resolution aimed at stopping the ongoing violence in Syria.
The vote took place as Syrian forces pummeled the city of Homs with mortar and artillery fire that activists say killed more than 200 people in one of the bloodiest episodes of the uprising against Assad's regime.
The UN says more than 5,400 people have been killed over almost 11 months in a Syrian government crackdown on civilian protests

(At the United Nations) Arab and Western states joined political forces against Russia, which is threatening to veto the latest initiative to force Syrian President Bashar al-Assad to step aside.

Syrian tank explosion caught on tape The resolution under debate at the UN Security Council stops short of calling for military intervention, but it presses Mr. Assad to step down or face “further measures” in 15 days.
“It is time for the international community to put aside our own differences and send a clear message of support to the people of Syria,” U.S. Secretary of State Hillary Rodham Clinton told the Security Council in backing an Arab League plan for the country.
It is unclear whether the plan's proponents – the Arab League, the United States, Britain and France – will succeed, even as violence intensified.
Syria is suffering its bloodiest days since the Arab Spring movement spread to the nation that has been ruled by the al-Assad family since 1970. More than 100 people have been reported killed so far this week and the latest figures from the United Nations suggest that more than 5,400 people have died in the revolt so far.
Neighbouring countries such as Israel and Turkey have expressed rising concern that Mr. al-Assad's hard-line response could threaten stability of the region. As violence intensifies, the heavyweights of the Security Council appear to be digging in ahead of Thursday’s UN vote.
As violence intensifies, the heavyweights on different sides of the issue appear to be digging in ahead of Thursday’s vote.
ARAB LEAGUE The Arab League’s call to condemn violence in Syria and demand Mr. al-Assad step aside is modelled on what analysts call “the Yemen plan,” considered more palatable than the “Libya option.”
The latest draft resolution also signals a growing consensus among Arab countries to ostracize Mr. al-Assad. In the 22-member Arab League only two are resisting the latest initiative. One is Lebanon, fearing violence along its shared border with Syria. The other is Algeria, whose authoritarian regime worries about its own hold on power.
Qatar has emerged as the most hawkish of the Arab countries on Syria. The Emir of Qatar, which sent warplanes to join in military strikes that aided rebels in Libya last year, recently went as far as to suggest that “some troops should go to stop the killing” in Syria.
The tiny but powerful country holds increasing sway over the debate, according to Murhaf Jouejati, a professor at the National Defense University’s Near East South Asia Center for Strategic Studies. “We know there is at least the political will for military in Qatar,” he said.
While Russia’s veto power makes such a move unlikely, Prof. Jouejati said that Washington might come around.
“Whatever the Arab League has adopted in this Arab Spring, the United States has more or less come to be supportive of,” he added.
THE UNITED STATES As the Security Council debates the latest draft resolution on Syria, the Republican Party primaries are winding down. The fact that this is an election year in the United States is lost on no one. With America’s fighting forces having left Iraq and drawing down in Afghanistan, the last thing Washington wants is another war, analysts said.
While Qatar has suggested sending troops into Damascus, Secretary of State Hilary Clinton played down such a prospect in her remarks yesterday. “I know that some members here may be concerned that the Security Council is headed toward another Libya,” she said, adding that “that is a false analogy.”
Washington appears to favour a more nuanced approach that would see Syrian government and opposition leaders negotiate an end to the conflict. It also is wary of getting pulled into a proxy war with Iran, and irritating its allies, Jordan and Israel, which fear regional destabilization.
“We can appreciate the need for what you might call a soft landing,” said David Mack, a former American ambassador in the Middle East and vice-president of the Middle East Institute, a Washington think tank.
“This is not a case of a government that seems out of control, like we saw in Libya,” he added. “In fact, one has the feeling of a rather calibrated use of force, but this has really gone on for too long.”
He said patience with Russia’s position is wearing thin. As he put it, “Are they so attached to their relationship with Bashar al-Assad that they’ll go down with him?”
RUSSIA Moscow has proved a staunch ally of Mr. al-Assad since the uprising began 11 months ago, its loyalty stemming from historic strategic and defence ties with Damascus. Russia used its veto power to strike down the first Security Council attempt in October to censure Syria’s crackdown and, today, shows no signs of altering its stand.
Russia is completely opposed to any draft resolution that sets the stage for foreign military intervention or even sanctions, according to Dmitri Trenin, director of the Moscow Carnegie Centre.
“They want the blame for the atrocities, the killings in Syria to be shared between the Assad regime and the opposition,” Mr. Trenin said.
With a Security Council vote coming on Thursday (February 2, 2012) e can all expect Russia to use the veto to quash any attempt at either military action to remove Assad, or any attempt to require his stepping down. And the council of nations that seeks co-operation and collaboration on behalf of the people of Syria, suffering at the hands of their own "government," one far different from the Libyan government of the former dictator, is once again finding its hands tied behind its own backs, unable to secure agreement to stop the bloodshed.
What these reports exclude is the flow of arms from Russia to the Syrian government, and the dollars that flow to Moscow in return. They also exclude the potential of military arms sales to the F.S.A. by the Americans. So, while the diplomatic skirmish is unfolding at the UN, the commercial side of the conflict is playing out behind different doors, without the scrutiny of the public media and the need for votes, arm-twisting and joint decision-making.
Unilaterally, and essentially without disclosure, both the U.S. and Russia could, conceivably bring about a long-term, financially viable conflict (to their respective ailing economies) through the backdoor sales of weapons to the opposing sides. And we think that by keeping up with the headlines, and the nuances of whether this is more like a Yemen plan, and not a Lybian effort to topple what is clearly a dictatorship, we can stay on top of the developments.
Naive, we are!
We need some public acknowledgement of the sales of arms, some documentation of its size and potential duration and some agreement to intervene in such "private" contracts at the international level, if such conflicts are not being compromised at one level, while such resolutions are being negotiated at the public level.
Diplomats from all sides cannot clap with one hand tied behind their backs. They cannot do their job while other agents of their own governments are secretly loading arms onto planes for shipment into Syria, no matter whether those sales are essential for the survival of the companies that manufacture those weapons or not.
People are dying in the streets as a result of the importation of those very weapons; and the conversations in New York have to be clouded by that information.
It is not only Assad who must be deposed; it is also the back deals for arms that have to be stopped, from both sides potentially, if this kind of conflict is to be contained, and stopped within days not months.

Thomas Homer-Dixon: Cripping Oil Supply Crunch in this Decade?

By Thomas Homer-Dixon, Globe and Mail, February 1, 2012
Thomas Homer-Dixon is director of the Waterloo Institute for Complexity and Innovation and CIGI Chair of Global Systems at the Balsillie School of International Affairs in Waterloo, Ont.

Peak oil – it’s history, right?

Everything has changed so fast.
Two years ago, the world was facing an intractable oil crisis. “By 2012, surplus oil production capacity could entirely disappear,” the U.S. Defence Department declared in a major report. “A severe energy crunch is inevitable without a massive expansion of production and refining capacity.”
But now we’re told that the world is awash in oil. Deepwater production from the Gulf of Mexico and offshore Brazil is soaring. New “elephant” fields have been discovered off Ghana and possibly Angola. Meanwhile, hydrofracking technology is liberating hundreds of thousands of barrels a day from “tight” shale oil formations in North Dakota and Texas, with more coming on line from Colorado, Wyoming and even Ohio.
In his new book The Quest: Energy, Security and the Remaking of the Modern World, Pulitzer-winning energy analyst Daniel Yergin declares that the latest version of the peak oil thesis is just more handwringing by long-discredited Malthusians. Higher prices and new technologies will bring vast quantities of new oil to market. “The world has decades of further production growth before flattening out into a plateau – perhaps some time around mid-century.”
Whew, that was close. Glad we don’t have to worry about that problem any more!
But there’s a nagging issue: Oil prices remain stubbornly high. The North American benchmark price of West Texas Intermediate is hovering around $100 a barrel. The world benchmark price for Brent crude is currently about $110. Sure, the possibility of war with Iran has created a risk premium that explains a portion of this high price. But the fact remains that oil has been trading around $100 a barrel for about a year, despite chronic weakness in the world economy and on-again, off-again concerns about Iran.
In fact, as University of California energy economist James Hamilton shows in a new paper, except for brief periods in the late 1970s, early 1980s and in 2008, oil is far costlier in constant dollars today than at any time since the beginning of the modern oil age in the 19th century.
Last week, in a commentary in the scientific journal Nature, James Murray of the University of Washington and David King, former chief scientific adviser to the British government, showed how slack in global oil markets has largely vanished. Since 2005, when oil was about $50 a barrel, global conventional crude production, which is about 80 per cent of total crude supply, has stayed roughly constant at around 74 million barrels a day – despite average annual gains of 15 per cent in price.
Unconventional sources of oil – from Canada’s oil sands and U.S. shale oil, from biofuels and from natural gas production – boosted total liquids output to about 89 million barrels a day in 2011. But these unconventional sources are very expensive, averaging between $50 and $90 a barrel. Professors Murray and King show that since 2005, world oil supply has become far less responsive to increasing demand – in econo-speak, its price elasticity has fallen sharply. “As a result,” they write, “prices swing wildly in response to small changes in demand.”
Oil optimists like Mr. Yergin are good at creating straw men. For instance, they often claim that analysts concerned about oil supply believe the world will soon run out of oil. But no one makes such a silly claim.
Instead, concerned analysts usually point to two basic facts. First, each year, the world’s mature conventional fields produce about four million barrels a day less oil than the previous year, a gap that has to be filled just to keep global output constant. In only five years, that gap grows to 20 million barrels a day of production – equivalent to twice Saudi Arabia’s output, which is mammoth. Second, the world’s cheap and easy-to-get oil is disappearing fast. So, on average, each additional barrel requires more work, more complex technology, more environmental risk to get and refine than the last.
These two facts mean that humankind will have to invest staggering resources – many trillions of dollars – to find and produce new oil if global output is to grow steadily for decades into the future. The International Energy Agency in Paris and other analysts have been warning for years that current investment isn’t nearly enough to ensure such a supply. The result is likely to be a critical supply crunch, perhaps within this decade, which could cripple global economic growth.
The petroleum economist Chris Skrebowski defines peak oil as the point at which “the cost of incremental supply exceeds the price economies can pay without destroying growth.” We’re likely much closer to that kind of peak than most people, including Mr. Yergin, acknowledge.