Taiwan and China Make Strides: Can America Respond? By Rupert Hammond-Chambers, President, U.S.-Taiwan Business Council
The Brookings Institution, Mar 12, 2009
On March 22, 2008, Taiwan voters went to the polls and declared a return to Kuomintang (KMT) rule. The KMT’s Ma Ying-jeou won a landslide election against Frank Hsieh of the incumbent Democratic Progressive Party (DPP), and the end result was rarely in question as voter frustration over DPP rule – accumulated over 8 years – spilled over into a convincing 58.45 percent victory for Ma and his running mate Vincent Siew.
Ma’s contention that Taiwan’s economy had fared poorly from 2000-2008 played well to Taiwan’s electorate - somewhat unfairly, as in fact Taiwan enjoyed average annual GDP growth of 3.63 percent during that period, according to the National Statistics Database maintained by Taiwan’s Directorate-General of Budget, Accounting and Statistics (DGBAS). But voter perception was centered on missed opportunities and a Taiwan that had mostly stood still for eight years while its regional competitors advanced their interests.
But Ma won the election also by highlighting the angst that former President Chen Shui-bian had caused Taiwan’s most important interlocutors – China and the United States. China was never interested in offering President Chen a dialogue during his 8 years as president of Taiwan, other than under terms and conditions that ran contrary to DPP principles. However, President Chen’s diplomatic isolation was exacerbated by his rhetoric that so often caught policymakers in Beijing and Washington off guard. This left the Chinese increasingly concerned about Chen’s intentions – even in the face of obvious constitutional limitations on his power – and left the U.S. frustrated both with constant Chinese harping and Chen’s erratic behavior. This tense situation appeared to cast a shadow over much else that the Bush administration was attempting to accomplish in its relationship with China.
Fairly or unfairly, the picture that evolved – particularly after Chen’s second election victory in March of 2004 – was of a Taiwan actively undermining peace and security in north Asia, and by extension hurting its own commercial and diplomatic interests. This perception neatly teed up candidate Ma’s campaign, where he pitched Taiwan voters on the importance of returning to the safe and steady hands of the technocratic KMT and of addressing Taiwan’s core economic, domestic and foreign relationships.
Ma’s Campaign Commitments
Candidate Ma’s general campaign pitch was a return to balanced and experienced rule under the KMT. He focused acutely on the perception that Taiwan had been treading water during a period of global economic expansion, thereby missing opportunities to grow global markets as well as to reform domestically. In addition, he noted that Taiwan’s global diplomatic isolation had increased under the DPP, and contended that the course of confrontation with China and the U.S. was unsustainable. Ma argued that it was essential to reach a new accommodation with China that would allow for meaningful representation of Taiwan in global organizations – including but not limited to the World Health Assembly (WHA).
Candidate Ma’s choice for vice president spoke volumes for his campaign’s focus on the economy. Vincent Siew is a former premier and was Minister of Economic Affairs under former president Lee Teng-hui. His role would be to spearhead both comprehensive domestic economic reform, including further deregulation of services like banking; and to take charge of implementing the i-Taiwan 12 projects – a large infrastructure package valued at approximately US$117 billion over 8 years. In addition, Vincent Siew is strongly identified with the concept of a Cross-Strait Common Market, an idea that he formulated and championed over several years. Ma even incorporated this initiative into his election manifesto as a central goal in a plan to harmonize commercial activity between Taiwan and what is now Taiwan’s largest market, China.
Cross-Strait economic engagement had another equally important deliverable for the Ma camp; it was a natural platform to reduce tensions and map a more reasonable path for increased cooperation with China, while staving off the need to engage on pricklier matters concerning sovereignty. The Ma campaign promised that this issue, often and rather simplistically viewed through the logistical challenge of flying between Taiwan and China, was to be tackled early on through an incremental resumption of cross-Strait transportation links, coupled with more comprehensive agreements on air travel and mail. Ma and Siew also saw an increase in mainland tourists visiting the island as an important objective, given their potential impact on a broad cross-section of Taiwan’s economy.
During his campaign, Ma also articulated the need to improve relations with the United States, with which ties had soured terribly since about 2003. Chen’s erratic behavior, coupled with a Bush team more interested in improving relations with China, made for a difficult set of circumstances and an increasingly reflexive urge to press Taiwan into a box. While this attitude was initially focused on Chen and his colleagues, it drifted into an overall view of Taiwan that drew no distinctions. In the end, Taiwan could do no right. Ma noted that Taiwan-U.S. relations would likely improve simply as a function of improved Taiwan relations with China. However, he also put great weight on improved communications between Taipei and Washington, and the need to avoid surprising and confrontational actions.
Policies & Developments
President Ma hit the ground running when he assumed office on May 20, 2008.
The newly appointed chairman of the Strait Exchange Foundation (SEF), Chiang Pin-kung, went to China in mid-June of 2008 to consummate an initial deal on cross-Strait transportation as promised by the Ma campaign. The deal allowed for an expanded charter flight schedule, based on the holiday flight framework already in place. While the agreement included a limited number of direct routes on weekends only – and involved aircraft flying over Hong Kong airspace but not alighting – the agreement also stipulated that both sides would work toward normalized passenger and cargo air traffic with direct routes. This early triumph was seen in all three capitals as a positive sign and raised hopes that a more sustainable relationship might be within their grasp.
However, the Ma government had not seen cross-Strait transportation links as the only low-hanging fruit. To remain committed to his election platform, Ma quickly expanded his SEF - Association for Relations Across the Taiwan Straits (ARATS) dialogue to include:
· Opening currency exchanges for Chinese Yuan/New Taiwan Dollar trade
· Loosening of capital restriction for Chinese investment in Taiwan equities, companies, and property
· An agreement on tourists that hypothetically could dramatically increase the number of Chinese citizens visiting Taiwan daily
· Signing agreements for direct cross-Strait sea, air, and mail travel
· Simplifying procedures for Chinese professionals to visit and work for limited periods in Taiwan.
In addition, the Ma administration launched negotiations to allow Chinese students to visit and study in Taiwan, and a whole host of smaller initiatives have been negotiated and are in the early stages of implementation. This is a substantive and impressive body of work for approximately 8 months of dialogue. That said, Ma upped the ante substantially in late February when he and his colleagues responded positively to Chinese President Hu Jintao’s offer to negotiate and sign a Comprehensive Economic Cooperation Agreement (CECA) with Taiwan, now referred to on the island as the Economic Cooperation Framework Agreement (ECFA).
Despite this improvement in cross-Strait relations, Ma did not see the early gains he might have hoped for with the United States. By President Bush’s last year in office, the fact that Chen Shui-bian was no longer president of Taiwan was immaterial. America’s positive relationship with China was viewed as an important part of President Bush’s legacy, and the change in leadership in Taipei did not automatically change Taiwan’s value in the equation. President Ma was treated with minimal cordiality, and as he left office President Bush’s penultimate substantive Taiwan action – an October 3, 2008 decision to notify several weapons systems to Congress – created more confusion and frustration over the breakdown in the arms sales process on the U.S. side. Thus America’s defense relationship with Taiwan was bequeathed with unaddressed platforms and a broken arms sales process, a mess that President Obama and his colleagues will have to address.
China’s Role
From China’s perspective, Taiwan’s democratic transition has been decidedly unpleasant. Chen Shui-bian’s actions and statements were deemed highly provocative, and he replaced the reviled Lee Teng-hui whose late 1990s statements had made him persona non-grata with Beijing. So China stewed for the past eight years, happy only when President Bush or one of his colleagues made a statement or undertook an action or non-action that China saw as contrary to Taiwan’s interests, or beneficial to China at Taiwan’s expense. While the short term approach of demonizing Taiwan presidents might have played well in Beijing, it was having a profoundly negative effect on the view of China from Taiwan.
This was not China’s “Taiwan policy” per se. China mostly understood that Taiwan’s democratization and demographic changes were undermining what support existed on Taiwan for unification with China. A sustained churlish attitude toward the island would only accelerate these trends, making the possibility of resolution of the fundamental dispute that much more remote. Therefore, Ma’s election placed great import on the need to put China’s relations with Taiwan back on a path that at least held the possibility of peaceful resolution. President Hu and his civilian colleagues viewed Ma’s policy of economic engagement as a positive and reasonable momentum builder for relations. So under the guidance of ARATS’s chairman Chen Yunlin, China responded substantively to Ma’s outreached hand.
In a December 31, 2008 speech commemorating the 30th anniversary of an important Taiwan policy speech, China’s President Hu expanded the possibilities in bilateral cross-Strait relations when he made a six point proposal that included, 1) scrupulously abiding by the One-China principle and enhancing political mutual trust; 2) strengthening commercial ties, partly though negotiating an economic cooperation agreement; 3) promoting personnel exchanges of personnel between the two sides; 4) highlighting common cultural links; 5) allowing Taiwan’s “reasonable” participation in international organizations and 6) the negotiation of a peace agreement.
The notion of China’s “One-China Principle” – that there is only one China, it is the People’s Republic of China, and Taiwan is a part of it – is anathema to a majority of the people of Taiwan. According to the latest Mainland Affairs Council poll, 91 percent of Taiwan citizens support the status quo with less than 10 percent in favor of unification with the mainland. But President Hu’s Points 2 and 5 were well received in Taiwan by the current leadership and its supporters, if not by the entire population. If his policies are going to enjoy majority support in Taiwan, Ma must be seen domestically to be making progress with China and he needs for China to be viewed as making real concessions. As argued in his election campaign, Ma places great stock in maximizing Taiwan’s economic relationship with China while reconstituting Taiwan’s global diplomatic position in a more sustainable and accommodating framework under improved relations with China. The overall outcome should also meet another of Ma’s campaign commitments – improved security through increased economic opportunity as well as a reduction in the overall threat from China after 6 plus years of heightened tension. However, as noted below China’s continued massive military modernization efforts and the degree to which their efforts are focused on Taiwan remains a major barrier to sustainable security improvements in the Taiwan Strait.
Evidence of improved relations are already manifest, with clear progress on economic cooperation but with nascent diplomatic progress as well. A small but positive action was Taiwan’s inclusion in the International Health Regulations (IHR) under the World Health Organization (WHO), which will allow the island to contact the body directly. That said, a far larger test will come this spring with Taiwan’s annual attempt to gain observer status at the World Health Assembly (WHA). It’s an important moment for China, one which it must seize both to serve its own interests on Taiwan through an improved view of its attitude, as well as to reinforce Ma’s ability to maintain domestic support for cross-Strait engagement by making a substantive concession.
Finally, it is important to highlight an inconsistency in China’s recent attitude toward Taiwan and a major challenge for the U.S. While Beijing’s civilian leadership continues to frame a positive path for Taiwan-China relations, China’s military modernization continues unabated and actively undermines these gains. There has been no Chinese slowing in defense spending, training, or deployment of forces directed at Taiwan. This marks a stark contrast to the political and economic efforts, and creates a genuine conundrum for Ma as well as for the Obama administration. How do they maintain positive engagement while discouraging China from pursuing such a provocative military posture?
President Obama should certainly use resumed military-to-military exchanges to impress upon the People’s Liberation Army that there is a direct correlation between Chinese force modernization and U.S. support for Taiwan’s defense, including arms sales. In addition, continued material support for President Ma’s move to an all volunteer force, coupled with a more integrated and modern military, will require continued supplies of modern weaponry. This support will positively underpin Taiwan’s engagement with China and will provide continued legitimacy to Ma’s efforts – a dynamic Ma himself understands well, as he continues to make the case for replacement fighters through a second tranche of F-16s, Black Hawk helicopters, and other modern equipment.
The Global Recession & Trade Policy
The Economist Intelligence Unit (EIU) recently noted that of the 55 major global economies tracked in detail, Taiwan has been hit harder than almost anyone else by the global downturn. Based on industrial production alone, Taiwan’s output has fallen by 32 percent in the 12 months to December 2008. GDP figures released on February 18, 2009 showed that Taiwan’s economy contracted by approximately 8.4 percent in Q4 2008, basically wiping away the last two and a half years of economic expansion. Taiwan’s DGBAS is predicting economic contraction of approximately 3 percent in 2009, while the aggregate analyst prediction is closer to 6 percent. Taiwan exports 70 percent of its industrial production, and with its main markets America, China, Japan, and the European Union all experiencing degrees of economic distress, Taiwan is affected acutely. This has added greatly to the urgency of Ma’s domestic economic reform, liberalization, and trade liberalization agenda.
The Ma administration has responded to the crisis, albeit with mixed results to date. The Taiwan government has issued spending vouchers worth approximately US$100 per citizen, vouchers intended to act as a catalyst for domestic demand. Taiwan’s Central Bank of China (CBC) has cut rates aggressively – 7 times since last September – with the latest cut bringing Taiwan interest rates to 1.25 percent. The government has also hastened to implement the 12 i-Taiwan infrastructure projects. In addition, it has allowed Taiwan’s currency to continue to depreciate against its major trading partners, down to a 6 year low against the U.S. dollar. These actions, except for the currency depreciation, are commensurate with those of other major global economies. That said, Taiwan has a high savings rate, and nothing suggests that Taiwan citizens are going to drop the savings habit in order to increase domestic demand for goods and services. Therefore, it seems likely that the Taiwan government will combine a loose economic policy with infrastructure investment, and then wait for its major trading partners to recover.
Taiwan did achieve two major trade policy goals over the past quarter, one being its signing of the Agreement on Government Procurement (GPA) at the World Trade Organization (WTO) in December, and the second being its removal from the United States Trade Representative’s Special 301 Watch List for IPR violators in mid January of 2009. With the GPA, President Ma has signed an agreement that will give Taiwan companies access to government procurement contracts in over 40 global economies, thereby increasing market access dramatically. It will also open Taiwan’s market to increasing competition and competitiveness, as well as to new foreign direct investment. The removal from USTR’s Special 301 Watch List is the culmination of 4-5 years of hard work, and considerable credit must also be given to the Chen administration for implementing many of the policies that resulted in this positive development. While Taiwan’s IPR regime is now well placed to manage the bulk of the challenges, IPR theft remains a massive global problem. Taiwan will be looked to for leadership, particularly in Asia.
President Ma’s economic team views renewed efforts to liberalize Taiwan’s major trading markets as essential to recovery and increased future growth. It is also a way to break out of its current economic isolation, absent of any meaningful role for Taiwan in bilateral and multilateral regional trade liberalization efforts. The Ma government views the ECFA not as a goal unto itself, nor only in the narrow prism of Taiwan-China relations, but as a part of its overall global trade strategy. Both the Taiwan government and businesses are particularly concerned about the impact of ASEAN +1 and ASEAN +3 on Taiwan’s competitiveness in the China market. President Ma also believes that improved Taiwan-China relations and the willingness of China to engage in free trade negotiations will assist Taiwan in breaking out of its trade liberalization isolation and allow it to sign FTAs with the U.S., Japan, Singapore, and other major trading partners. China’s offer of an ECFA has been well received, but it is but a part of what should also be an appropriate U.S. and pan-Asian response to Taiwan’s efforts to liberalize its markets in the shadow of improved Taiwan-China relations.
At this time, Taiwan has a Trade and Investment Framework Agreement (TIFA) with the United States that has acted as a periodic platform for discussing bilateral economic issues. This mechanism is a modest foundation that allows America and its trading partners to manage the myriad trade issues that characterize large commercial relationships. That said, for the second time in 5 years America has frozen the TIFA – in this instance due to its displeasure over Taiwan’s restrictions on imports of American beef. While beef, and indeed rice and pork too, are important export commodities for America, they represent a relatively small percentage of our bilateral trade – in the case of beef it’s considerably less than 1 percent of bilateral trade. The Bush administration felt that it had been misled over commitments to re-open aspects of the beef market (some beef is already being sold), and shut the TIFA process down in 2008 until those commitments were fulfilled. Now we must wait until the Obama administration trade team is confirmed and in place before we can ascertain its intentions on the TIFA freeze. Whatever the outcome, however, America’s last foray into such a freeze – in 2003-2004 over IPR – was generally viewed to have been a failure. Furthermore, as in the case of last year’s arms sales freeze, there are no other cases of global partners being treated in this fashion.
At such time as beef imports resume, or President Obama’s trade team decides to resume the TIFA prior to such a resolution, Taiwan and the Obama administration must look for ways to allow the relationship to mature. America has treated Taiwan in uniquely punitive ways, to the increasing detriment of our interests in this major market. If we cannot find a way to respond to Taiwan and China’s detente, we run the very real risk of adding wind to the economic impetuses that are pushing this top 10 U.S. market further into the purview of China’s economic embrace. A good place to start would be adding consistency to our approach to Taiwan and begin treating it the same way we do our other major trading partners, even when we disagree. In the longer term, we need to start representing our equities more assertively with Taiwan, not, as in the past, in reaction to Beijing’s displeasure on any number of issues but in substantive strategic ways such as free trade agreements. America needs to look at what it can accomplish in the light of improved Taiwan-China relations.
The subject of FTAs at this time may seem ridiculous given the lack of support for such agreements amongst America’s ruling party. However, it is likely that as President Obama grows more comfortable in his new post he’ll look to shape a trade policy consensus that will allow his government to support global trade liberalization. This will be particularly needed in Asia, which continues to remove barriers to trade and accelerate integration. In the absence of U.S. leadership, or even basic participation, this process will continue to center around the China market at the expense of our own. If China and Taiwan see fit to negotiate a free trade agreement then what possible reason should America have for not doing likewise with Taiwan?
In addition, it is certainly time for the U.S. to return to the policy of sending economic cabinet officers to Taiwan annually to boost our interests in the market. This policy was started by President Bush in 1992 with the visit of then United States Trade Representative Carla Hills, and continued throughout the 1990s under President Clinton. While the recent Bush administration had legitimate concerns over how President Chen would react to the presence of such a high ranking U.S. official, now is the time to re-engage this policy. Other countries see high-level interaction with Taiwan as in their economic interest: the U.K.’s commerce secretary visited Taipei within a month of Taiwan’s acceptance of GPA commitments, for example. In light of Ma’s commitment to spend almost US$120 billion on infrastructure in the coming 8 years, the U.S. should also be making every effort to promote its own companies in the market.
What’s Next?
For Taiwan, like with the United States, there are considerable unknowns associated with this latest economic recession. While Taiwan’s financial institutions are not burdened to the same extent with the toxic assets weighting down our own institutions, the notion that Asian economies have decoupled from the U.S. and Europe is nonsense. Asia shares our economic pain, and cannot hope to launch a sustained recovery until America and Europe turn the corner and its export markets return. In the meantime, President Ma will continue to focus on what he can control – namely domestic efforts to increase investment, along with external efforts to open new markets or address trade-diverting developments such as FTAs from which Taiwan has been excluded.
The CECA, or Comprehensive Economic Cooperation Agreement as referred to by President Hu in his recent speech, with China has very real legs, and we can expect to hear a great deal more on this matter as Ma moves it through the Taiwan court of public opinion and shapes a policy response that P.K. Chiang can take into SEF-ARATS negotiations. Indeed, President Ma has already made a significant adjustment by changing the name with which Taiwan will refer to such an agreement to Economic Cooperation Framework Agreement (ECFA). This adjustment was made in response to early domestic criticism of the effort and the similarity of the CECA name to Hong Kong and Macau’s Closer Economic Partnership Agreement (or CEPA) with China. I believe that Ma has made the decision to proceed with the ECFA with a basic framework agreed to and signed with the Chinese at the end of 2009, and the specifics to be worked out in a series of SEF-ARATS negotiations running several years. This will generate much discussion about what sovereignty positions are being sacrificed to secure preferential market access and how transparent the process will be. However, I believe that Ma will work hard to mitigate both negative public perceptions as well as any real attempts by China to use this economic initiative to move the sovereignty line. China wants this agreement too, and this provides real leverage for Ma to strike a good deal for Taiwan.
The ECFA provides a tremendous opportunity for the U.S. as well. We have large interests in the Taiwan market, and the triangular economic relationship between America, Taiwan, and China comes only behind Europe and NAFTA in its strategic importance to U.S. economic prosperity. If China and Taiwan are genuinely seeking a free trade agreement with one another, albeit under a different name, then the United States must seize this opportunity and likewise engage Taiwan. America is not without equities in this discussion; preferential market access for China in the Taiwan market and vice versa should press the U.S. to respond in kind. In addition, the U.S. is vested in continued Taiwan-China rapprochement. But as the negotiations expand so will domestic angst on Taiwan. If the U.S. agrees to negotiate its own FTA with Taiwan, that could assuage domestic Taiwan concerns that this is part of a KMT effort to promote unification with China, and would thereby provide Taiwan’s people with options and a semblance of balance, calming fears and keeping support for improved cross-Strait relations on the right track.
President Obama and his team haven’t yet had an opportunity to shape a cohesive trade policy, but as he ventures out into the world in his capacity as president he will quickly note the importance of U.S. leadership on trade – both in setting sound examples for trade policy as well as leading on trade liberalization. America does not have the luxury of taking a trade “timeout,” particularly with the rest of the global economy looking for ways to accelerate bilateral, regional multilateral, and global trade liberalization.
President Ma’s election and his cross-Strait policies have markedly improved cross-Strait relations. But to what ultimate end, if all parties including the United States cannot use this period to move away from past policies that have retarded the maturing of this complex triumvirate? Taiwan and China are not missing this opportunity to allow their relationship to mature, and America shouldn’t either.
Friday, March 13, 2009
Global hurricane activity has decreased to the lowest level in 30 years
Great Depression! Global hurricane activity reaches new lows. By Ryan N Maue
Global hurricane activity has decreased to the lowest level in 30 years.
Excerpts:
Very important: global hurricane activity includes the 80-90 tropical cyclones that develop around the world during a given calendar year, including the 12-15 that occur in the North Atlantic (Gulf of Mexico and Caribbean included). The heightened activity in the North Atlantic since 1995 is included in the data used to create this figure.
As previously reported here and here at Climate Audit, and chronicled at my Florida State Global Hurricane Update page, both Northern Hemisphere and overall Global hurricane activity has continued to sink to levels not seen since the 1970s. Even more astounding, when the Southern Hemisphere hurricane data is analyzed to create a global value, we see that Global Hurricane Energy has sunk to 30-year lows, at the least. Since hurricane intensity and detection data is problematic as one goes back in time, when reporting and observing practices were different than today, it is possible that we underestimated global hurricane energy during the 1970s. See notes at bottom to avoid terminology discombobulation.
Using a well-accepted metric called the Accumulated Cyclone Energy index or ACE for short (Bell and Chelliah 2006), which has been used by Klotzbach (2006) and Emanuel (2005) (PDI is analogous to ACE), and most recently by myself in Maue (2009), simple analysis shows that 24-month running sums of global ACE or hurricane energy have plummeted to levels not seen in 30 years. Why use 24-month running sums instead of simply yearly values? Since a primary driver of the Earth's climate from year to year is the El Nino Southern Oscillation (ENSO) acts on time scales on the order of 2-7 years, and the fact that the bulk of the Southern Hemisphere hurricane season occurs from October - March, a reasonable interpretation of global hurricane activity requires a better metric than simply calendar year totals. The 24-month running sums is analogous to the idea of "what have you done for me lately".
During the past 6 months, extending back to October of 2008 when the Southern Hemisphere tropical season was gearing up, global ACE had crashed due to two consecutive years of well-below average Northern Hemisphere hurricane activity. To avoid confusion, I am not specifically addressing the North Atlantic, which was above normal in 2008 (in terms of ACE), but the hemisphere (and or globe) as a whole. The North Atlantic only represents a 1/10 to 1/8 of global hurricane energy output on average but deservedly so demands disproportionate media attention due to the devastating societal impacts of recent major hurricane landfalls.
Why the record low ACE?
During the past 2 years +, the Earth's climate has cooled under the effects of a dramatic La Nina episode. The Pacific Ocean basin typically sees much weaker hurricanes that indeed have shorter lifecycles and therefore — less ACE . Conversely, due to well-researched upper-atmospheric flow (e.g. vertical shear) configurations favorable to Atlantic hurricane development and intensification, La Nina falls tend to favor very active seasons in the Atlantic (word of warning for 2009). This offsetting relationship, high in the Atlantic and low in the Pacific, is a topic of discussion in my GRL paper, which will be a separate topic in a future posting. Thus, the Western North Pacific (typhoons) tropical activity was well below normal in 2007 and 2008 (see table). Same for the Eastern North Pacific. The Southern Hemisphere, which includes the southern Indian Ocean from the coast of Mozambique across Madagascar to the coast of Australia, into the South Pacific and Coral Sea, saw below normal activity as well in 2008. Through March 12, 2009, the Southern Hemisphere ACE is about half of what's expected in a normal year, with a multitude of very weak, short-lived hurricanes. All of these numbers tell a very simple story: just as there are active periods of hurricane activity around the globe, there are inactive periods, and we are currently experiencing one of the most impressive inactive periods, now for almost 3 years.
Bottom Line
Under global warming scenarios, hurricane intensity is expected to increase (on the order of a few percent), but MANY questions remain as to how much, where, and when. This science is very far from settled. Indeed, Al Gore has dropped the related slide in his PowerPoint (btw, is he addicted to the Teleprompter as well?) Many papers have suggested that these changes are already occurring especially in the strongest of hurricanes, e.g. this and that and here, due to warming sea-surface temperatures (the methodology and data issues with each of these papers has been discussed here at CA, and will be even more in the coming months). The notion that the overall global hurricane energy or ACE has collapsed does not contradict the above papers but provides an additional, perhaps less publicized piece of the puzzle. Indeed, the very strong interannual variability of global hurricane ACE (energy) highly correlated to ENSO, suggests that the role of tropical cyclones in climate is modulated very strongly by the big movers and shakers in large-scale, global climate. The perceptible (and perhaps measurable) impact of global warming on hurricanes in today's climate is arguably a pittance compared to the reorganization and modulation of hurricane formation locations and preferred tracks/intensification corridors dominated by ENSO (and other natural climate factors). Moreover, our understanding of the complicated role of hurricanes with and role in climate is nebulous to be charitable. We must increase our understanding of the current climate's hurricane activity.
Background:
During the summer and fall of 2007, as the Atlantic hurricane season failed to live up to the hyperbolic prognostications of the seasonal hurricane forecasters, I noticed that the rest of the Northern Hemisphere hurricane basins, which include the Western/Central/Eastern Pacific and Northern Indian Oceans, was on pace to produce the lowest Accumulated Cyclone Energy or ACE since 1977. ACE is the convolution or combination of a storm's intensity and longevity. Put simply, a long-lived very powerful Category 3 hurricane may have more than 100 times the ACE of a weaker tropical storm that lasts for less than a day. Over a season or calendar year, all individual storm ACE is added up to produce the overall seasonal or yearly ACE. Detailed tables of previous monthly and yearly ACE are on my Florida State website.
Previous Basin Activity: Hurricane ACE
[table]
The table does not include the Northern Indian Ocean, which can be deduced as the portion of the Northern Hemisphere total not included in the three major basins. Nevertheless, 2007 saw the lowest ACE since 1977. 2008 continued the dramatic downturn in hurricane energy or ACE. The following stacked bar chart demonstrates the highly variable, from year-to-year behavior of Northern Hemisphere (NH) ACE. The smaller inset line graph plots the raw data and trend (or lack thereof). Thus, during the past 60 years, with the data at hand, Northern Hemisphere ACE undergoes significant interannual variability but exhibits no significant statistical trend.
[graph]
So what to expect in 2009? Well, the last Northern Hemisphere storm was Typhoon Dolphin in middle December of 2008, and no ACE has been recorded so far. The Southern Hemisphere is below normal by just about any definition of storm activity (unless you have access to the Elias sports bureau statistic creativity department), and the season is quickly running out. With La Nina-like conditions in the Pacific, a persistence forecast of below average global cyclone activity seems like a very good bet. Now if only the Dow Jones index didn't correlate so well with the Global ACE lately…Notes:Hurricane is the term for Tropical Cyclone specific to the North Atlantic, Gulf of Mexico, Caribbean Sea, and the Pacific Ocean from Hawaii eastward to the Mexican coast. Other names around the world include Typhoon, Cyclone, and Willy-Willy (Oz) but hurricane is used generically to avoid confusion.
Accumulated Cyclone Energy or ACE: is easily calculated from best-track hurricane datasets, with the one-minute maximum sustained wind squared and summed during the tropical lifecycle of a tropical storm or hurricane.
Global hurricane activity has decreased to the lowest level in 30 years.
Excerpts:
Very important: global hurricane activity includes the 80-90 tropical cyclones that develop around the world during a given calendar year, including the 12-15 that occur in the North Atlantic (Gulf of Mexico and Caribbean included). The heightened activity in the North Atlantic since 1995 is included in the data used to create this figure.
As previously reported here and here at Climate Audit, and chronicled at my Florida State Global Hurricane Update page, both Northern Hemisphere and overall Global hurricane activity has continued to sink to levels not seen since the 1970s. Even more astounding, when the Southern Hemisphere hurricane data is analyzed to create a global value, we see that Global Hurricane Energy has sunk to 30-year lows, at the least. Since hurricane intensity and detection data is problematic as one goes back in time, when reporting and observing practices were different than today, it is possible that we underestimated global hurricane energy during the 1970s. See notes at bottom to avoid terminology discombobulation.
Using a well-accepted metric called the Accumulated Cyclone Energy index or ACE for short (Bell and Chelliah 2006), which has been used by Klotzbach (2006) and Emanuel (2005) (PDI is analogous to ACE), and most recently by myself in Maue (2009), simple analysis shows that 24-month running sums of global ACE or hurricane energy have plummeted to levels not seen in 30 years. Why use 24-month running sums instead of simply yearly values? Since a primary driver of the Earth's climate from year to year is the El Nino Southern Oscillation (ENSO) acts on time scales on the order of 2-7 years, and the fact that the bulk of the Southern Hemisphere hurricane season occurs from October - March, a reasonable interpretation of global hurricane activity requires a better metric than simply calendar year totals. The 24-month running sums is analogous to the idea of "what have you done for me lately".
During the past 6 months, extending back to October of 2008 when the Southern Hemisphere tropical season was gearing up, global ACE had crashed due to two consecutive years of well-below average Northern Hemisphere hurricane activity. To avoid confusion, I am not specifically addressing the North Atlantic, which was above normal in 2008 (in terms of ACE), but the hemisphere (and or globe) as a whole. The North Atlantic only represents a 1/10 to 1/8 of global hurricane energy output on average but deservedly so demands disproportionate media attention due to the devastating societal impacts of recent major hurricane landfalls.
Why the record low ACE?
During the past 2 years +, the Earth's climate has cooled under the effects of a dramatic La Nina episode. The Pacific Ocean basin typically sees much weaker hurricanes that indeed have shorter lifecycles and therefore — less ACE . Conversely, due to well-researched upper-atmospheric flow (e.g. vertical shear) configurations favorable to Atlantic hurricane development and intensification, La Nina falls tend to favor very active seasons in the Atlantic (word of warning for 2009). This offsetting relationship, high in the Atlantic and low in the Pacific, is a topic of discussion in my GRL paper, which will be a separate topic in a future posting. Thus, the Western North Pacific (typhoons) tropical activity was well below normal in 2007 and 2008 (see table). Same for the Eastern North Pacific. The Southern Hemisphere, which includes the southern Indian Ocean from the coast of Mozambique across Madagascar to the coast of Australia, into the South Pacific and Coral Sea, saw below normal activity as well in 2008. Through March 12, 2009, the Southern Hemisphere ACE is about half of what's expected in a normal year, with a multitude of very weak, short-lived hurricanes. All of these numbers tell a very simple story: just as there are active periods of hurricane activity around the globe, there are inactive periods, and we are currently experiencing one of the most impressive inactive periods, now for almost 3 years.
Bottom Line
Under global warming scenarios, hurricane intensity is expected to increase (on the order of a few percent), but MANY questions remain as to how much, where, and when. This science is very far from settled. Indeed, Al Gore has dropped the related slide in his PowerPoint (btw, is he addicted to the Teleprompter as well?) Many papers have suggested that these changes are already occurring especially in the strongest of hurricanes, e.g. this and that and here, due to warming sea-surface temperatures (the methodology and data issues with each of these papers has been discussed here at CA, and will be even more in the coming months). The notion that the overall global hurricane energy or ACE has collapsed does not contradict the above papers but provides an additional, perhaps less publicized piece of the puzzle. Indeed, the very strong interannual variability of global hurricane ACE (energy) highly correlated to ENSO, suggests that the role of tropical cyclones in climate is modulated very strongly by the big movers and shakers in large-scale, global climate. The perceptible (and perhaps measurable) impact of global warming on hurricanes in today's climate is arguably a pittance compared to the reorganization and modulation of hurricane formation locations and preferred tracks/intensification corridors dominated by ENSO (and other natural climate factors). Moreover, our understanding of the complicated role of hurricanes with and role in climate is nebulous to be charitable. We must increase our understanding of the current climate's hurricane activity.
Background:
During the summer and fall of 2007, as the Atlantic hurricane season failed to live up to the hyperbolic prognostications of the seasonal hurricane forecasters, I noticed that the rest of the Northern Hemisphere hurricane basins, which include the Western/Central/Eastern Pacific and Northern Indian Oceans, was on pace to produce the lowest Accumulated Cyclone Energy or ACE since 1977. ACE is the convolution or combination of a storm's intensity and longevity. Put simply, a long-lived very powerful Category 3 hurricane may have more than 100 times the ACE of a weaker tropical storm that lasts for less than a day. Over a season or calendar year, all individual storm ACE is added up to produce the overall seasonal or yearly ACE. Detailed tables of previous monthly and yearly ACE are on my Florida State website.
Previous Basin Activity: Hurricane ACE
[table]
The table does not include the Northern Indian Ocean, which can be deduced as the portion of the Northern Hemisphere total not included in the three major basins. Nevertheless, 2007 saw the lowest ACE since 1977. 2008 continued the dramatic downturn in hurricane energy or ACE. The following stacked bar chart demonstrates the highly variable, from year-to-year behavior of Northern Hemisphere (NH) ACE. The smaller inset line graph plots the raw data and trend (or lack thereof). Thus, during the past 60 years, with the data at hand, Northern Hemisphere ACE undergoes significant interannual variability but exhibits no significant statistical trend.
[graph]
So what to expect in 2009? Well, the last Northern Hemisphere storm was Typhoon Dolphin in middle December of 2008, and no ACE has been recorded so far. The Southern Hemisphere is below normal by just about any definition of storm activity (unless you have access to the Elias sports bureau statistic creativity department), and the season is quickly running out. With La Nina-like conditions in the Pacific, a persistence forecast of below average global cyclone activity seems like a very good bet. Now if only the Dow Jones index didn't correlate so well with the Global ACE lately…Notes:Hurricane is the term for Tropical Cyclone specific to the North Atlantic, Gulf of Mexico, Caribbean Sea, and the Pacific Ocean from Hawaii eastward to the Mexican coast. Other names around the world include Typhoon, Cyclone, and Willy-Willy (Oz) but hurricane is used generically to avoid confusion.
Accumulated Cyclone Energy or ACE: is easily calculated from best-track hurricane datasets, with the one-minute maximum sustained wind squared and summed during the tropical lifecycle of a tropical storm or hurricane.
Ban: Satellite lunch by DPR Korea will threaten regional stability
SATELLITE LAUNCH BY DPR KOREA WILL THREATEN REGIONAL STABILITY, BAN WARNS
UN, New York, Mar 12 2009 6:10PM
Secretary-General Ban Ki-moon today voiced concern about plans by the Democratic People’s Republic of Korea (DPRK) to launch a satellite, warning that it could jeopardize stability in the region.
The DPRK authorities have reportedly announced that they plan to launch a satellite sometime between 4 and 8 April.
“I’m concerned about DPRK’s recent moves to launch a satellite or long-range missiles,” Mr. Ban told a news conference in New York. “This will threaten the peace and stability in the region.”
He encouraged Pyongyang to comply with Security Council resolution 1718, which demanded that the country “not conduct any further nuclear test or launch of a ballistic missile,” following its claims to have conducted a nuclear test in October 2006.
“I hope they will abide by the relevant Security Council resolution and return to the Six-Party Talks,” he said, referring to the discussions involving DPRK, Republic of Korea, Japan, China, Russia and the United States.
Mr. Ban also said he hoped for improved bilateral relations between DPRK and the Republic of Korea.
Mar 12 2009 6:10PM
UN, New York, Mar 12 2009 6:10PM
Secretary-General Ban Ki-moon today voiced concern about plans by the Democratic People’s Republic of Korea (DPRK) to launch a satellite, warning that it could jeopardize stability in the region.
The DPRK authorities have reportedly announced that they plan to launch a satellite sometime between 4 and 8 April.
“I’m concerned about DPRK’s recent moves to launch a satellite or long-range missiles,” Mr. Ban told a news conference in New York. “This will threaten the peace and stability in the region.”
He encouraged Pyongyang to comply with Security Council resolution 1718, which demanded that the country “not conduct any further nuclear test or launch of a ballistic missile,” following its claims to have conducted a nuclear test in October 2006.
“I hope they will abide by the relevant Security Council resolution and return to the Six-Party Talks,” he said, referring to the discussions involving DPRK, Republic of Korea, Japan, China, Russia and the United States.
Mr. Ban also said he hoped for improved bilateral relations between DPRK and the Republic of Korea.
Mar 12 2009 6:10PM
Thursday, March 12, 2009
The Chinese Navy's Somali Cruise
The Chinese Navy's Somali Cruise, by J. Peter Pham, Ph.D.
World Defense Review, Mar 12, 2009
Since the beginning of January, three vessels of China's People's Liberation Army Navy (PLAN) – the Guangzhou-class destroyer Wuhan, the Lanzhou-class destroyer Haikou, and the Qiandahou-class supply ship Weishanhu – have been operating in the Gulf of Aden and other waters off as part of a worldwide naval mobilization against the Somali pirates whose attacks, as I warned in this column three weeks ago, are more likely to increase in the coming months, notwithstanding the attention which the international community has focused on the problem. The piracy certainly provides the People's Republic of China (PRC) with a legitimate reason for dispatching the flotilla. At the end of December, Chinese Foreign Ministry spokesman Liu Jianchao told the International Herald Tribune's Mark McDonald that seven of the 1,265 Chinese vessels which passed through those waters in 2008 had been attacked; one of them, the Tianyu No. 8, a Chinese fishing boat whose capture along with its crew of twenty-four (including sixteen Chinese nationals) I reported here last November, was only released last month after its owners paid an undisclosed ransom.
Thus, on the face of it, the dispatch of the PLAN flotilla is completely understandable. Six months ago in a column attempting to draw attention to the crisis before the hijacking of the MV Faina with its cargo of thirty-three refurbished Russian-designed T-72 tanks, grenade launchers, anti-aircraft guns, and other armaments made it front-page news worldwide, I observed that "in addition to other commerce, some 11 percent of world's seaborne petroleum – some 3.3 million barrels – must pass through the very waters currently infested with the Somali pirates." China, however, is even more vulnerable to this threat. As I likewise reported here last year, "the PRC sources about one-third of all its energy needs to Africa, with perhaps one-quarter of its African oil imports originating in Sudan's oilfields" – and all of this is exported via the Marsa al-Bashair terminal near Port Sudan, from whence it must transit on tankers down the Red Sea and through the narrow Bab-el-Mandab straits – 2-mile-wide Bab Iskender and 16-mile-wide Dact-el-Mayun – into the Gulf of Aden, where the pirates await them. And even if vessels do not need to pass through this choke point, the seizure in November of a supertanker loaded with two million barrels of Saudi oil, the Liberian-registered MV Sirius Star, simply underscores a different Chinese vulnerability: Saudi Arabia is China's top supplier of petroleum, exporting 720,000 barrels a day to the PRC in 2008, a figure that will more than double to 1.5 million barrels a day by 2015, according to a study last month by John Sfakianakis, chief economist at the Saudi British Bank.
However, as I argued here two weeks ago, "while the two dozen or so cruisers, destroyers, frigates, and other surface combat vessels which various countries have dispatched to the region ... have made for great political theater and may have even proven useful in escort duty along narrowly defined sea lanes, there are simply not enough of them to make a real dent in the operations of the pirates." Hence there must be considerations, political and otherwise, beyond any marginal tactical utility motivating the launching of the PLAN's first major operation abroad. As the annual threat assessment of the U.S. intelligence community which Director of National Intelligence Dennis Blair delivered to the Senate Select Committee on Intelligence last month: "China's international behavior is driven by a combination of domestic priorities, primarily maintaining economic prosperity and domestic stability, and a longstanding ambition to see China play the role of a great power in East Asia and globally."
First, there are domestic political considerations. While the Chinese military establishment does not have to worry about the public accountability that its counterparts in democracies must concern themselves with, nonetheless high-profile missions like the deployment to the strategic waterways of the western Indian Ocean can help it to justify to the civilian leadership spending increases like the 14.9 percent jump in the official military budget for 2009 over last year's spending in the current global economic climate. In fact, as Reuters reported last week, in presenting the budget before the opening of the annual session of the National People's Congress, parliamentary spokesman Li Zhaoxing, a former foreign minister, specifically cited "enhancing the military's emergency response capabilities in disaster relief, fighting terrorism, maintaining stability and other non-warfare military operations" like the counter-piracy deployment as reasons for the double-digit rise at a time when, as The Economist recently observed, thousands of factories on the mainland were shutting down for want of business and, as the Brookings Institution's Cheng Li writes in the current issue of Foreign Policy, President Hu Jintao and other senior leaders are worried that "if China is no longer able to maintain a high growth rate or provide jobs for its ever growing labor force, massive public dissatisfaction and social unrest could erupt."
Second, China's leaders are constrained to maintain appearances abroad. With the navies of a number of other reemerging or rising powers, including Russia, India, and the first-ever joint European Union naval operation away from Europe, heading for the Gulf of Aden, the PLAN's absence would have conspicuous, especially since the PRC occupies a permanent seat on the United Nations Security Council which, in no fewer than four resolutions last year, called upon "States interested in the security of maritime activities to take part actively in the fight against piracy on the high seas off the coast of Somalia." While it is well and fine for President Hu to visit four African nations – Mali, Senegal, Tanzania, and Mauritius – during his first trip abroad this year (he also stopped in Saudi Arabia), the African partners Beijing has been assiduously cultivating also want to see concrete commitments to their security priorities. Moreover, as the commander of Chinese naval forces, Admiral Wu Shengli, acknowledged in an interview with the official Xinhua news agency before the send-off for the flotilla: "The expedition will show China's active attitude in maintaining the world's peace and safety. It could also embody the Navy's resolution and capacity to accomplish diversified military missions to deal with multiple threats to national security." And, reiterating China's commitment to the specific mission off Somalia, the People's Daily reported this week that PLAN deputy chief of staff Rear Admiral Zhang Deshun disclosed for the first time that the deployment would be ongoing with the current flotilla, which had completed 110 patrols as of this past weekend, being relieved in late April or early May: "We feel this is not a short mission. The length of the mission depends on the Somali political situation and whether Somali pirates can be eventually kept away." Admiral Zhang also some officers and sailors from the first deployment would stay over to transfer their experience to their replacements.
Third, the deployment has also given the PRC an opportunity to assert its military umbrella not only over its recently reclaimed territories of Hong Kong and Macau, but also over what Beijing views as the breakaway province of Taiwan. According to the Chinese Communist Party's official newspaper, China Daily, "the fleet will protect Chinese vessels and crews, including those from Hong Kong, Macao, and Taiwan, that seek protection when passing through the area, as well as foreign ships on request." As could have anticipated, the declaration caused no little consternation on Taiwan, to say the least, especially after it became public that a boat own by the Formosa Plastics Group, a Taiwanese conglomerate with interests in biotechnology, petrochemical processing, and the manufacture of electronics, had received an escort from the PLAN flotilla.
Fourth, the vessels dispatched on the mission – respectively, a Guangzhou-class multirole missile destroyer launched in 2004, a Lanzhou-class destroyer launched in 2003, and a Qiandahou-class supply ship launched in 2004 – represent the modern PLAN as well as China's domestic naval industry at their best. The captains and crews all have experience in the international spotlight. For example, two years ago, the supply ship currently accompanying the Somali flotilla, the Weishanhu, accompanied the destroyer Guangzhou on port calls to Russia, Great Britain, Spain, and France. The State Council defense white paper, China's National Defense in 2008, released in January, declared that: "Since the beginning of the new century, in view of the characteristics and laws of local maritime wars in conditions of informationization [sic], the Navy has been striving to improve in an all round way its capabilities of integrated offshore operations, strategic deterrence and strategic counterattacks, and to gradually develop its capabilities of conducting cooperation in distant waters and countering non-traditional security threats, so as to push forward the overall transformation of the service." The deployment, in a certain respect, is a demonstration to the world of how far China has come in meeting these objectives.
Fifth, even as it shows itself off to other navies, the deployment gives the PLAN an unparalleled opportunity to observe the operations and tactics of other fleets up close in relatively tight quarters. U.S.-led coalition vessels in Combined Task Force 151 (CTF 151), which was stood up in mid-January with the mandate of focusing solely on counter-piracy operations in and around the Gulf of Aden, currently include the Ticonderoga-class Aegis guided missile cruiser USS Vella Gulf, the Arleigh Burke-class destroyer USS Mahan, and the Royal Navy's Type 23-frigate HMS Portland. These ships will soon be joined by the Eisenhower Carrier Strike Group – the Nimitz-class nuclear supercarrier USS Dwight D. Eisenhower, Ticonderoga-class guided missile cruisers USS Gettysburg and USS Vicksburg, the Arleigh Burke-class guided-missile destroyer USS Bainbridge, the Oliver Hazard Perry-class frigate USS Halyburton, the Henry J. Kaiser-class replenishment oiler USNS Big Horn, and the Lewis and Clark-class dry cargo ship USNS Sacagawea – and its eight air squadrons. Russia has the nuclear-powered Kirov-class battlecruiser RFS Pyotr Velikiy ("Peter the Great"), flagship of the North Fleet, deployed to the area. And naval elements from some of China's East Asian neighbors, including South Korea and Japan, may be coming soon.
Sixth, the Chinese navy now has a reason to do in the maritime environment off the east coast of Africa what the 1,636 PLA personnel assigned to six UN peacekeeping missions in Africa – more than the four other permanent members of the Security Council combined – have been doing: achieving a level of tactical and operational familiarity with the African environment that few other outside countries have mastered since the end of the colonial period. (See my October 25, 2007 analysis on Chinese participation in peacekeeping missions in Africa.)
Seventh, while it is far from the most pressing reason for sending a flotilla to the waters off Somalia, Chinese leaders and others will not be unaware of the stake the state-owned China National Offshore Oil Corporation (CNOOC) has attempted to acquire in the country's potential petroleum deposits through a deal struck with Abdullahi Yusuf Ahmed, then head of the faltering "Transitional Federal Government" (see my August 14, 2007 report on the affair). While there is no question of trying to pursue any claims, much less attempting any further explorations given, as I chronicled last month, the current state of anarchy and slow collapse of the shaking remnants of the interim authority, now under Sheikh Sharif Sheikh Ahmed, of the Somali deployment is a success, what is to say that another Chinese naval force could not return one day in a different show of force to "facilitate" recognition of the earlier accord?
Eighth, while the deployment can be interpreted as proof of the PRC's increasing willingness to bear its share of the burden for the maintenance of the freedom of the seas and other global commons – American policymakers have long complained about China's "free ride" on the security framework which the United States provides – that same engagement might also signal something not quite as benign. Two years ago, referring to a 1993 incident when the U.S. Navy stopped and detained a Chinese container ship thought to be carrying chemical weapons materials to Iran (none were ultimately found after a three week stand-off), one of China's most influential strategists, Zhang Wenmu, made a case for a globally-deployed, assertive naval capacity which deserves to be quoted in full:
Wherever China's interests lead, there too must follow China's capabilities to protect those interests. And as the nation's economic interests expand into the global market, China must consider the problem of safeguarding its global and regional interests. The most crucial conduit connecting China with the region and with the rest of the world is the sea lanes, and therefore, China must have a powerful navy. The oil imports that China consumes from Africa, the Middle East and Central Asia will mainly pass through these sea lanes. China's trade is also 90 percent dependent on sea lane transport. If all goes well and other nations behave fairly, China will certainly act in accordance with WTO rules. But what if others don't act so fairly? It is not difficult for the West to find a pretext to impose sanctions on China. The Yinhe incident in 1993 is a classic case of how the United States has attempted to make an issue out of nothing. Precisely because China's navy did not have the capability to resist, China had little choice but to let them board the ship to make the so-called inspections. In an era when development is the core national interest, China would secure nothing if it did not have a strong navy.
The determining factor shaping the rise and fall of a country ultimately is not just the size of its total economic volume but also the strategic ability of the country; that is, the ability to use national forces to achieve political goals. Many cases in history have shown that the main reason for a country to be strong is more than a rise in prosperity or technological advancement but the effective application of such technology and wealth in national politics, especially military power ...
In the current era, where maritime transportation is a key factor to success of the flow of goods and commodities for the globalized economy, a powerful navy able to effectively control the sea passages will receive increasingly greater attention by all nations, particularly China.
The incident earlier this week whereby five Chinese ships, including a (PLAN) intelligence vessel, shadowed and blocked an unarmed civilian-manned American oceanographic ship, USNS Impeccable, operating in international waters south under the authority of the Military Sealift Command, is disconcerting, following as it does on the harassment, again in international waters, of another unarmed U.S. civilian ship, USNS Victorious, just last week by a Chinese patrol boat. These incidents are a reminder of the challenges that the United States and its allies can expect from a resurgent China shaking off what it views as the humiliating stain of colonialism on what is otherwise a millennial history of imperial glory. While alarmism contributes nothing to strategic analysis, neither is reflexive irenicism a particularly useful policy perspective. Hence, occasioned by these unfortunate incidents, American policymakers and analysts need to take another closer look at the recent deployment of a PLAN flotilla to the already crowded waters off the eastern coast of Africa, trying to understand China's strategic calculus and discerning its implications for American interests, both in the region and beyond. Hysteria may be out of order, but prudent caution is still called for.
— J. Peter Pham is Director of the Nelson Institute for International and Public Affairs at James Madison University in Harrisonburg, Virginia. He is a Senior Fellow at the Foundation for the Defense of Democracies in Washington, D.C., as well as Vice President of the Association for the Study of the Middle East and Africa (ASMEA). In addition to the study of terrorism and political violence, his research interests lie at the intersection of international relations, international law, political theory, and ethics, with particular concentrations on the implications for United States foreign policy and African states as well as religion and global politics.
Dr. Pham is the author of over two hundred essays and reviews on a wide variety of subjects in scholarly and opinion journals on both sides of the Atlantic and the author, editor, or translator of over a dozen books. Among his recent publications are Liberia: Portrait of a Failed State (Reed Press, 2004), which has been critically acclaimed by Foreign Affairs, Worldview, Wilson Quarterly, American Foreign Policy Interests, and other scholarly publications, and Child Soldiers, Adult Interests: The Global Dimensions of the Sierra Leonean Tragedy (Nova Science Publishers, 2005).
In addition to serving on the boards of several international and national think tanks and journals, Dr. Pham has testified before the U.S. Congress and conducted briefings or consulted for both Congressional and Executive agencies. He is also a frequent contributor to National Review Online's military blog, The Tank.
World Defense Review, Mar 12, 2009
Since the beginning of January, three vessels of China's People's Liberation Army Navy (PLAN) – the Guangzhou-class destroyer Wuhan, the Lanzhou-class destroyer Haikou, and the Qiandahou-class supply ship Weishanhu – have been operating in the Gulf of Aden and other waters off as part of a worldwide naval mobilization against the Somali pirates whose attacks, as I warned in this column three weeks ago, are more likely to increase in the coming months, notwithstanding the attention which the international community has focused on the problem. The piracy certainly provides the People's Republic of China (PRC) with a legitimate reason for dispatching the flotilla. At the end of December, Chinese Foreign Ministry spokesman Liu Jianchao told the International Herald Tribune's Mark McDonald that seven of the 1,265 Chinese vessels which passed through those waters in 2008 had been attacked; one of them, the Tianyu No. 8, a Chinese fishing boat whose capture along with its crew of twenty-four (including sixteen Chinese nationals) I reported here last November, was only released last month after its owners paid an undisclosed ransom.
Thus, on the face of it, the dispatch of the PLAN flotilla is completely understandable. Six months ago in a column attempting to draw attention to the crisis before the hijacking of the MV Faina with its cargo of thirty-three refurbished Russian-designed T-72 tanks, grenade launchers, anti-aircraft guns, and other armaments made it front-page news worldwide, I observed that "in addition to other commerce, some 11 percent of world's seaborne petroleum – some 3.3 million barrels – must pass through the very waters currently infested with the Somali pirates." China, however, is even more vulnerable to this threat. As I likewise reported here last year, "the PRC sources about one-third of all its energy needs to Africa, with perhaps one-quarter of its African oil imports originating in Sudan's oilfields" – and all of this is exported via the Marsa al-Bashair terminal near Port Sudan, from whence it must transit on tankers down the Red Sea and through the narrow Bab-el-Mandab straits – 2-mile-wide Bab Iskender and 16-mile-wide Dact-el-Mayun – into the Gulf of Aden, where the pirates await them. And even if vessels do not need to pass through this choke point, the seizure in November of a supertanker loaded with two million barrels of Saudi oil, the Liberian-registered MV Sirius Star, simply underscores a different Chinese vulnerability: Saudi Arabia is China's top supplier of petroleum, exporting 720,000 barrels a day to the PRC in 2008, a figure that will more than double to 1.5 million barrels a day by 2015, according to a study last month by John Sfakianakis, chief economist at the Saudi British Bank.
However, as I argued here two weeks ago, "while the two dozen or so cruisers, destroyers, frigates, and other surface combat vessels which various countries have dispatched to the region ... have made for great political theater and may have even proven useful in escort duty along narrowly defined sea lanes, there are simply not enough of them to make a real dent in the operations of the pirates." Hence there must be considerations, political and otherwise, beyond any marginal tactical utility motivating the launching of the PLAN's first major operation abroad. As the annual threat assessment of the U.S. intelligence community which Director of National Intelligence Dennis Blair delivered to the Senate Select Committee on Intelligence last month: "China's international behavior is driven by a combination of domestic priorities, primarily maintaining economic prosperity and domestic stability, and a longstanding ambition to see China play the role of a great power in East Asia and globally."
First, there are domestic political considerations. While the Chinese military establishment does not have to worry about the public accountability that its counterparts in democracies must concern themselves with, nonetheless high-profile missions like the deployment to the strategic waterways of the western Indian Ocean can help it to justify to the civilian leadership spending increases like the 14.9 percent jump in the official military budget for 2009 over last year's spending in the current global economic climate. In fact, as Reuters reported last week, in presenting the budget before the opening of the annual session of the National People's Congress, parliamentary spokesman Li Zhaoxing, a former foreign minister, specifically cited "enhancing the military's emergency response capabilities in disaster relief, fighting terrorism, maintaining stability and other non-warfare military operations" like the counter-piracy deployment as reasons for the double-digit rise at a time when, as The Economist recently observed, thousands of factories on the mainland were shutting down for want of business and, as the Brookings Institution's Cheng Li writes in the current issue of Foreign Policy, President Hu Jintao and other senior leaders are worried that "if China is no longer able to maintain a high growth rate or provide jobs for its ever growing labor force, massive public dissatisfaction and social unrest could erupt."
Second, China's leaders are constrained to maintain appearances abroad. With the navies of a number of other reemerging or rising powers, including Russia, India, and the first-ever joint European Union naval operation away from Europe, heading for the Gulf of Aden, the PLAN's absence would have conspicuous, especially since the PRC occupies a permanent seat on the United Nations Security Council which, in no fewer than four resolutions last year, called upon "States interested in the security of maritime activities to take part actively in the fight against piracy on the high seas off the coast of Somalia." While it is well and fine for President Hu to visit four African nations – Mali, Senegal, Tanzania, and Mauritius – during his first trip abroad this year (he also stopped in Saudi Arabia), the African partners Beijing has been assiduously cultivating also want to see concrete commitments to their security priorities. Moreover, as the commander of Chinese naval forces, Admiral Wu Shengli, acknowledged in an interview with the official Xinhua news agency before the send-off for the flotilla: "The expedition will show China's active attitude in maintaining the world's peace and safety. It could also embody the Navy's resolution and capacity to accomplish diversified military missions to deal with multiple threats to national security." And, reiterating China's commitment to the specific mission off Somalia, the People's Daily reported this week that PLAN deputy chief of staff Rear Admiral Zhang Deshun disclosed for the first time that the deployment would be ongoing with the current flotilla, which had completed 110 patrols as of this past weekend, being relieved in late April or early May: "We feel this is not a short mission. The length of the mission depends on the Somali political situation and whether Somali pirates can be eventually kept away." Admiral Zhang also some officers and sailors from the first deployment would stay over to transfer their experience to their replacements.
Third, the deployment has also given the PRC an opportunity to assert its military umbrella not only over its recently reclaimed territories of Hong Kong and Macau, but also over what Beijing views as the breakaway province of Taiwan. According to the Chinese Communist Party's official newspaper, China Daily, "the fleet will protect Chinese vessels and crews, including those from Hong Kong, Macao, and Taiwan, that seek protection when passing through the area, as well as foreign ships on request." As could have anticipated, the declaration caused no little consternation on Taiwan, to say the least, especially after it became public that a boat own by the Formosa Plastics Group, a Taiwanese conglomerate with interests in biotechnology, petrochemical processing, and the manufacture of electronics, had received an escort from the PLAN flotilla.
Fourth, the vessels dispatched on the mission – respectively, a Guangzhou-class multirole missile destroyer launched in 2004, a Lanzhou-class destroyer launched in 2003, and a Qiandahou-class supply ship launched in 2004 – represent the modern PLAN as well as China's domestic naval industry at their best. The captains and crews all have experience in the international spotlight. For example, two years ago, the supply ship currently accompanying the Somali flotilla, the Weishanhu, accompanied the destroyer Guangzhou on port calls to Russia, Great Britain, Spain, and France. The State Council defense white paper, China's National Defense in 2008, released in January, declared that: "Since the beginning of the new century, in view of the characteristics and laws of local maritime wars in conditions of informationization [sic], the Navy has been striving to improve in an all round way its capabilities of integrated offshore operations, strategic deterrence and strategic counterattacks, and to gradually develop its capabilities of conducting cooperation in distant waters and countering non-traditional security threats, so as to push forward the overall transformation of the service." The deployment, in a certain respect, is a demonstration to the world of how far China has come in meeting these objectives.
Fifth, even as it shows itself off to other navies, the deployment gives the PLAN an unparalleled opportunity to observe the operations and tactics of other fleets up close in relatively tight quarters. U.S.-led coalition vessels in Combined Task Force 151 (CTF 151), which was stood up in mid-January with the mandate of focusing solely on counter-piracy operations in and around the Gulf of Aden, currently include the Ticonderoga-class Aegis guided missile cruiser USS Vella Gulf, the Arleigh Burke-class destroyer USS Mahan, and the Royal Navy's Type 23-frigate HMS Portland. These ships will soon be joined by the Eisenhower Carrier Strike Group – the Nimitz-class nuclear supercarrier USS Dwight D. Eisenhower, Ticonderoga-class guided missile cruisers USS Gettysburg and USS Vicksburg, the Arleigh Burke-class guided-missile destroyer USS Bainbridge, the Oliver Hazard Perry-class frigate USS Halyburton, the Henry J. Kaiser-class replenishment oiler USNS Big Horn, and the Lewis and Clark-class dry cargo ship USNS Sacagawea – and its eight air squadrons. Russia has the nuclear-powered Kirov-class battlecruiser RFS Pyotr Velikiy ("Peter the Great"), flagship of the North Fleet, deployed to the area. And naval elements from some of China's East Asian neighbors, including South Korea and Japan, may be coming soon.
Sixth, the Chinese navy now has a reason to do in the maritime environment off the east coast of Africa what the 1,636 PLA personnel assigned to six UN peacekeeping missions in Africa – more than the four other permanent members of the Security Council combined – have been doing: achieving a level of tactical and operational familiarity with the African environment that few other outside countries have mastered since the end of the colonial period. (See my October 25, 2007 analysis on Chinese participation in peacekeeping missions in Africa.)
Seventh, while it is far from the most pressing reason for sending a flotilla to the waters off Somalia, Chinese leaders and others will not be unaware of the stake the state-owned China National Offshore Oil Corporation (CNOOC) has attempted to acquire in the country's potential petroleum deposits through a deal struck with Abdullahi Yusuf Ahmed, then head of the faltering "Transitional Federal Government" (see my August 14, 2007 report on the affair). While there is no question of trying to pursue any claims, much less attempting any further explorations given, as I chronicled last month, the current state of anarchy and slow collapse of the shaking remnants of the interim authority, now under Sheikh Sharif Sheikh Ahmed, of the Somali deployment is a success, what is to say that another Chinese naval force could not return one day in a different show of force to "facilitate" recognition of the earlier accord?
Eighth, while the deployment can be interpreted as proof of the PRC's increasing willingness to bear its share of the burden for the maintenance of the freedom of the seas and other global commons – American policymakers have long complained about China's "free ride" on the security framework which the United States provides – that same engagement might also signal something not quite as benign. Two years ago, referring to a 1993 incident when the U.S. Navy stopped and detained a Chinese container ship thought to be carrying chemical weapons materials to Iran (none were ultimately found after a three week stand-off), one of China's most influential strategists, Zhang Wenmu, made a case for a globally-deployed, assertive naval capacity which deserves to be quoted in full:
Wherever China's interests lead, there too must follow China's capabilities to protect those interests. And as the nation's economic interests expand into the global market, China must consider the problem of safeguarding its global and regional interests. The most crucial conduit connecting China with the region and with the rest of the world is the sea lanes, and therefore, China must have a powerful navy. The oil imports that China consumes from Africa, the Middle East and Central Asia will mainly pass through these sea lanes. China's trade is also 90 percent dependent on sea lane transport. If all goes well and other nations behave fairly, China will certainly act in accordance with WTO rules. But what if others don't act so fairly? It is not difficult for the West to find a pretext to impose sanctions on China. The Yinhe incident in 1993 is a classic case of how the United States has attempted to make an issue out of nothing. Precisely because China's navy did not have the capability to resist, China had little choice but to let them board the ship to make the so-called inspections. In an era when development is the core national interest, China would secure nothing if it did not have a strong navy.
The determining factor shaping the rise and fall of a country ultimately is not just the size of its total economic volume but also the strategic ability of the country; that is, the ability to use national forces to achieve political goals. Many cases in history have shown that the main reason for a country to be strong is more than a rise in prosperity or technological advancement but the effective application of such technology and wealth in national politics, especially military power ...
In the current era, where maritime transportation is a key factor to success of the flow of goods and commodities for the globalized economy, a powerful navy able to effectively control the sea passages will receive increasingly greater attention by all nations, particularly China.
The incident earlier this week whereby five Chinese ships, including a (PLAN) intelligence vessel, shadowed and blocked an unarmed civilian-manned American oceanographic ship, USNS Impeccable, operating in international waters south under the authority of the Military Sealift Command, is disconcerting, following as it does on the harassment, again in international waters, of another unarmed U.S. civilian ship, USNS Victorious, just last week by a Chinese patrol boat. These incidents are a reminder of the challenges that the United States and its allies can expect from a resurgent China shaking off what it views as the humiliating stain of colonialism on what is otherwise a millennial history of imperial glory. While alarmism contributes nothing to strategic analysis, neither is reflexive irenicism a particularly useful policy perspective. Hence, occasioned by these unfortunate incidents, American policymakers and analysts need to take another closer look at the recent deployment of a PLAN flotilla to the already crowded waters off the eastern coast of Africa, trying to understand China's strategic calculus and discerning its implications for American interests, both in the region and beyond. Hysteria may be out of order, but prudent caution is still called for.
— J. Peter Pham is Director of the Nelson Institute for International and Public Affairs at James Madison University in Harrisonburg, Virginia. He is a Senior Fellow at the Foundation for the Defense of Democracies in Washington, D.C., as well as Vice President of the Association for the Study of the Middle East and Africa (ASMEA). In addition to the study of terrorism and political violence, his research interests lie at the intersection of international relations, international law, political theory, and ethics, with particular concentrations on the implications for United States foreign policy and African states as well as religion and global politics.
Dr. Pham is the author of over two hundred essays and reviews on a wide variety of subjects in scholarly and opinion journals on both sides of the Atlantic and the author, editor, or translator of over a dozen books. Among his recent publications are Liberia: Portrait of a Failed State (Reed Press, 2004), which has been critically acclaimed by Foreign Affairs, Worldview, Wilson Quarterly, American Foreign Policy Interests, and other scholarly publications, and Child Soldiers, Adult Interests: The Global Dimensions of the Sierra Leonean Tragedy (Nova Science Publishers, 2005).
In addition to serving on the boards of several international and national think tanks and journals, Dr. Pham has testified before the U.S. Congress and conducted briefings or consulted for both Congressional and Executive agencies. He is also a frequent contributor to National Review Online's military blog, The Tank.
Are the Chinese people alone now? On Chas Freeman, Commerce Nominee Locke and State Sec Clinton
The Administration Kowtows, by Ethan Gutmann
Are the Chinese people alone now?
The Weekly Standard, Mar 16, 2009, Volume 014, Issue 25
Over the last three weeks, the Obama administration has sent three clear signals to the Chinese leadership.
First came the news that Chas Freeman would chair the National Intelligence Council. The former U.S. ambassador to Saudi Arabia and an adviser to CNOOC (the state-owned Chinese oil company), Freeman clearly fits the Chinese Communist party's idea of a four-year plan for American intelligence oversight. Just note Freeman's curious 2006 statement about the Tiananmen massacre. It is unacceptable "for any country to allow the heart of its national capital to be occupied by dissidents intent on disrupting the normal functions of government, however appealing to foreigners their propaganda may be." That particular trope was originally laid down by Henry Kissinger, and it's considered safe for public use. Freeman, though, took the argument to its logical conclusion, condemning the "ill-conceived restraint" and "overly cautious behavior" of the party leadership.
It's not hard to predict what line the intelligence community will take on China's military buildup (or another Tiananmen) under Freeman's leadership.
The Chinese will score their number two victory with Gary Locke, former governor of Washington, becoming our new commerce secretary. Locke's been a very--very!--good Friend of China: making public displays of affection for the party's brilliant stewardship, carrying a torch for China in the Beijing Olympics relay, and easily straddling his public and private interests to make a deal. Locke has paraded his guanxi--his connections--and, indeed, his numerous meetings with Hu Jintao are real. As are the campaign funds he got in the 1990s through Buddhist temple fundraisers, Chinese cut-outs, and confessed felon John Huang. This may have knocked Locke out of contention for a spot on the Gore 2000 ticket, but apparently it was of little interest to Obama's third-time-lucky vetting staff in 2009.
To complete the hat trick, Secretary of State Hillary Clinton made a seemingly offhand comment on the eve of her recent trip to Beijing. Discussion of Taiwan, Tibet, and human rights would be "on the agenda," she said. But "We pretty much know what they are going to say." Some commentators have labored to present those words as refreshingly plainspoken. Bringing up human rights to the Chinese government is just an empty ritual the argument goes, and America has larger interests at the moment--China's purchase of treasury bonds, a "partnership" on green technologies--which speak to a much broader, "global" definition of human rights.
But rituals, and the spirit in which they are carried out, matter very much to the Chinese leadership. Chinese citizens, particularly those who dissent, pay close attention as well. Even if Clinton has tired of Chinese human rights (in the old-fashioned definition, where people are tortured to death and so on), the act of unilaterally agreeing to ignore an actual source of tension between our two societies represents a notable change in U.S. policy. The repercussions will extend far into Taiwan, China, and America.
Taiwan, in particular, faces trouble. China's internal crisis of collapsing exports and exploding unemployment would squelch any tendency toward foreign adventurism in most societies. But the Chinese government remains perfectly willing to go to war if they can unify the population and extend the party's control. Its objectives are clear. It wants to prevent Taiwan from being becoming the locus of the Chinese diaspora's resistance. The Chinese reward Taiwanese single-party rule with economic favors to prevent any onset of the democracy cancer when Taiwan is absorbed into the Chinese bloodstream. The current Taiwanese leadership is playing into the scenario by expanding economic contacts, attempting to wring the last Renminbi from the mainland, while intently working over their discredited opposition party to the last man.
As the first viable Chinese democracy in history drifts into genuine peril, it cannot rely on the U.S. president who appears to dislike even using the D-word and needs Chinese cash for his own internal adventurism. The Chinese have an estimated $2 trillion in foreign exchange reserves.
On the mainland, the Obama administration is giving the party a free hand exactly when they need it. The party must keep disparate forces--labor groups, Falun Gong, Christians, democracy advocates--isolated from one another. The tool is surveillance--using the Internet, phones, indeed, any electronic device that can track humans. (Many of these technologies originally came from American companies.) Once dissenters are arrested, the party needs to squelch any legal defense. Dissident lawyer Gao Zhisheng, freshly out of detention after severe torture, recently disappeared again.
Organ harvesting--particularly if the liver, kidneys, and corneas are surgically removed while a prisoner is alive--creates a foreign currency stream for the military. For the Chinese state it also solves a problem: Approximately 100,000 incarcerated Falun Gong, and an unspecified number of Eastern Lightning (Christians) will not give up their beliefs. Release is impossible; they are dangerous enemies of the state. In the marriage of the New China's capitalism and the party's unchanging authoritarianism, organ harvesting has become a profitable form of barbarism.
The last time an administration gave such an explicit green light to the Chinese leadership was three weeks after the Tiananmen Square massacre. George H.W. Bush sent National Security Adviser Brent Scowcroft and Deputy Secretary of State Lawrence Eagleburger to Beijing to reassure the Chinese. Again, the message was that human rights and democracy didn't really matter, only business, only partnership. (That Scowcroft had to deliver it in secret, though, is another sign of how far things have deteriorated.) When this became public some months later, many conservatives broke ranks and some liberals joined them in creating a firestorm of criticism for the administration's policy.
And today? Nancy Pelosi cut her teeth on China human rights, but she won't break ranks without sustained pressure. Amnesty International has made some noises about Clinton's comments. To a lesser extent, so have Freedom House, Reporters Without Borders, and Human Rights Watch. But it's not nearly enough. And where are the AFL-CIO, the academy, and the sweatshop coalitions?
Human rights in China. Democracy in China. These are things that the Obama administration wants nothing to do with. Are the Chinese people on their own now?
Ethan Gutmann, an adjunct fellow at the Foundation for Defense of Democracies, is completing a book on the conflict between the Chinese state and Falun Gong.
Are the Chinese people alone now?
The Weekly Standard, Mar 16, 2009, Volume 014, Issue 25
Over the last three weeks, the Obama administration has sent three clear signals to the Chinese leadership.
First came the news that Chas Freeman would chair the National Intelligence Council. The former U.S. ambassador to Saudi Arabia and an adviser to CNOOC (the state-owned Chinese oil company), Freeman clearly fits the Chinese Communist party's idea of a four-year plan for American intelligence oversight. Just note Freeman's curious 2006 statement about the Tiananmen massacre. It is unacceptable "for any country to allow the heart of its national capital to be occupied by dissidents intent on disrupting the normal functions of government, however appealing to foreigners their propaganda may be." That particular trope was originally laid down by Henry Kissinger, and it's considered safe for public use. Freeman, though, took the argument to its logical conclusion, condemning the "ill-conceived restraint" and "overly cautious behavior" of the party leadership.
I thus share the hope of the majority in China that no Chinese government will
repeat the mistakes of Zhao Ziyang's dilatory tactics of appeasement in dealing
with domestic protesters in China.
It's not hard to predict what line the intelligence community will take on China's military buildup (or another Tiananmen) under Freeman's leadership.
The Chinese will score their number two victory with Gary Locke, former governor of Washington, becoming our new commerce secretary. Locke's been a very--very!--good Friend of China: making public displays of affection for the party's brilliant stewardship, carrying a torch for China in the Beijing Olympics relay, and easily straddling his public and private interests to make a deal. Locke has paraded his guanxi--his connections--and, indeed, his numerous meetings with Hu Jintao are real. As are the campaign funds he got in the 1990s through Buddhist temple fundraisers, Chinese cut-outs, and confessed felon John Huang. This may have knocked Locke out of contention for a spot on the Gore 2000 ticket, but apparently it was of little interest to Obama's third-time-lucky vetting staff in 2009.
To complete the hat trick, Secretary of State Hillary Clinton made a seemingly offhand comment on the eve of her recent trip to Beijing. Discussion of Taiwan, Tibet, and human rights would be "on the agenda," she said. But "We pretty much know what they are going to say." Some commentators have labored to present those words as refreshingly plainspoken. Bringing up human rights to the Chinese government is just an empty ritual the argument goes, and America has larger interests at the moment--China's purchase of treasury bonds, a "partnership" on green technologies--which speak to a much broader, "global" definition of human rights.
But rituals, and the spirit in which they are carried out, matter very much to the Chinese leadership. Chinese citizens, particularly those who dissent, pay close attention as well. Even if Clinton has tired of Chinese human rights (in the old-fashioned definition, where people are tortured to death and so on), the act of unilaterally agreeing to ignore an actual source of tension between our two societies represents a notable change in U.S. policy. The repercussions will extend far into Taiwan, China, and America.
Taiwan, in particular, faces trouble. China's internal crisis of collapsing exports and exploding unemployment would squelch any tendency toward foreign adventurism in most societies. But the Chinese government remains perfectly willing to go to war if they can unify the population and extend the party's control. Its objectives are clear. It wants to prevent Taiwan from being becoming the locus of the Chinese diaspora's resistance. The Chinese reward Taiwanese single-party rule with economic favors to prevent any onset of the democracy cancer when Taiwan is absorbed into the Chinese bloodstream. The current Taiwanese leadership is playing into the scenario by expanding economic contacts, attempting to wring the last Renminbi from the mainland, while intently working over their discredited opposition party to the last man.
As the first viable Chinese democracy in history drifts into genuine peril, it cannot rely on the U.S. president who appears to dislike even using the D-word and needs Chinese cash for his own internal adventurism. The Chinese have an estimated $2 trillion in foreign exchange reserves.
On the mainland, the Obama administration is giving the party a free hand exactly when they need it. The party must keep disparate forces--labor groups, Falun Gong, Christians, democracy advocates--isolated from one another. The tool is surveillance--using the Internet, phones, indeed, any electronic device that can track humans. (Many of these technologies originally came from American companies.) Once dissenters are arrested, the party needs to squelch any legal defense. Dissident lawyer Gao Zhisheng, freshly out of detention after severe torture, recently disappeared again.
Organ harvesting--particularly if the liver, kidneys, and corneas are surgically removed while a prisoner is alive--creates a foreign currency stream for the military. For the Chinese state it also solves a problem: Approximately 100,000 incarcerated Falun Gong, and an unspecified number of Eastern Lightning (Christians) will not give up their beliefs. Release is impossible; they are dangerous enemies of the state. In the marriage of the New China's capitalism and the party's unchanging authoritarianism, organ harvesting has become a profitable form of barbarism.
The last time an administration gave such an explicit green light to the Chinese leadership was three weeks after the Tiananmen Square massacre. George H.W. Bush sent National Security Adviser Brent Scowcroft and Deputy Secretary of State Lawrence Eagleburger to Beijing to reassure the Chinese. Again, the message was that human rights and democracy didn't really matter, only business, only partnership. (That Scowcroft had to deliver it in secret, though, is another sign of how far things have deteriorated.) When this became public some months later, many conservatives broke ranks and some liberals joined them in creating a firestorm of criticism for the administration's policy.
And today? Nancy Pelosi cut her teeth on China human rights, but she won't break ranks without sustained pressure. Amnesty International has made some noises about Clinton's comments. To a lesser extent, so have Freedom House, Reporters Without Borders, and Human Rights Watch. But it's not nearly enough. And where are the AFL-CIO, the academy, and the sweatshop coalitions?
Human rights in China. Democracy in China. These are things that the Obama administration wants nothing to do with. Are the Chinese people on their own now?
Ethan Gutmann, an adjunct fellow at the Foundation for Defense of Democracies, is completing a book on the conflict between the Chinese state and Falun Gong.
Why President Obama Should Not Attend the Alliance of Civilizations Forum
Why President Obama Should Not Attend the Alliance of Civilizations Forum. By Brett D. Schaefer
Heritage WebMemo #2339, March 11, 2009
See full article w/notes at the link above:
A Turkish newspaper is reporting that President Barack Obama will attend the second annual United Nations Alliance of Civilizations (AoC) forum in early April during his visit to Turkey.[1]
The AoC is an attempt by the U.N. to quell perceived tensions between Muslim and Western nations by promoting dialogue. Although well-intentioned, the effort has little prospect for success due to bias and objectionable proposals to freedom of expression. The base document for the Alliance of Civilizations focused on the supposed failings of Western countries while largely ignoring the faults of Muslim nations. It also endorsed the idea of constraining freedom of media, speech, and expression in order to combat "Islamophobia." This is an agenda similar to the effort by Muslim countries to prohibit "defamation of religion" that the U.S. has opposed in other U.N. forums. Rather than attend a U.N. talkfest wedded to objectionable ideas, President Obama should spend his time in the region more constructively, for instance discussing with the Turkish Prime Minister how Turkey can work with the U.S. on mutual concerns like bringing pressure on Iran to halt its nuclear program.
A Less Than Useful Forum
A successor to the Iranian-proposed Dialogue of Civilizations and brainchild of former U.N. Secretary-General Kofi Annan, the Alliance of Civilizations aims to improve relations between Western and Muslim countries by responding "to the need for a committed effort by the international community—both at the institutional and civil society levels—to bridge divides and overcome prejudice, misconceptions, misperceptions, and polarization which potentially threaten world peace."[2]
The 2006 report from the High-Level Group for an Alliance of Civilizations fell far short of this goal. Indeed, the report often simply endorsed ongoing initiatives like the multilateral peace process to resolve the Israeli–Palestinian conflict or repackaged calls for increased assistance from Western countries. When it did offer analysis and recommendations, they were burdened by biased perspectives and a list of objectives—instead of a strategy—to revive the economic performance of Middle Eastern and North African nations.[3]
Among the worst of the recommendations was the report's support for constraining media content and coverage in Western countries "including the use of terms such as 'Islamic terrorism' and 'Islamic fascism'—[which] have contributed to an alarming increase in Islamophobia which further exacerbates Muslim fears of the West."[4] The report virtually ignored the pervasive constraints, official or otherwise, on freedom of speech, expression, and the press in many Islamic countries.
Despite its problems, U.N. Secretary-General Ban Ki-moon appointed the former president of Portugal, Jorge Sampaio, as the High Representative for the Alliance of Civilizations in April 2007, giving him the task of promoting "the Alliance of Civilizations as a credible and viable attempt to diminish the dangerous tensions between diverse societies and their threat to international stability"[5] and established a voluntary Trust Fund in September 2007 to support the Alliance of Civilizations.
Not unexpectedly, the report of the first annual Alliance of Civilizations forum in Madrid in January 2008 illustrated that the AoC continues to support constraints on freedom of expression and speech in order to combat "Islamophobia":
One of the biggest challenges in engaging "Muslim" and "Western" societies is the rise of "Islamophobia." Constantly, Muslims and Islam are on the defensive. The point of departure for discussions on Islam is often that it is not a violent religion. In the non-Muslim world it is thought that it is the responsibility of mainstream Muslims to differentiate themselves from extremists. The non-Muslim world also has a part to play in actively differentiating between the religion and acts of terror.
Stereotyping is often a product of intended ignorance. There are resources being constantly deployed to spread disinformation and misperceptions of others. This can be described as an industry of ignorance. To counter this, it was proposed that a human right to be understood should be promoted as a mutual obligation for all societies and cultures. Additionally, education around this right should be incorporated into school curricula and textbooks, such that it can become the basis of interaction between cultures and societies.[6]
To accomplish the objectives of the AoC, which, presumably, include taking action to help combat negative "stereotyping" by the media and establishing an indefinable "human right to be understood," the AoC has created:
Pushing Back Freedom
There is remarkably little information on exactly what the AoC has accomplished aside from holding meetings and establishing Alliance-approved databases of experts and organizations who can discuss youth, education, media, and migration issues.
There is major cause for concern considering the AoC's ongoing support of constraints on freedom of expression and speech. As U.N. High Representative for the Alliance of Civilizations Jorge Sampaio announced at a 2008 press conference in Iran, "There is a balance to be found between freedom of expression and respect for religion and for religious feelings and principles."[11] These types of platitudes are unworthy of a true effort to promote frank dialogue. Freedom of expression means little if it is subject to the sensitivities and feelings of those who may be offended by personal statements on, or media coverage of, religious matters. After all, non-controversial statements and views are rarely subject to censorship. Discussions stilted and constrained by censorship are unlikely to "promote understanding and reconciliation among cultures globally and, in particular, between Muslim and Western societies."[12]
In U.N. debates, the balance between freedom of expression and "respect for religion and for religious feelings and principles" is increasingly tilting against freedom of expression and speech. The Organization of the Islamic Conference, for instance, has convinced the U.N. Human Rights Council and the U.N. General Assembly to pass resolutions that limit freedom of speech in the name of opposing "defamation of religions" and "Islamophobia."[13]
Only weeks ago, the Obama Administration announced that it would not participate in the upcoming Durban Review Conference (Durban II) on racism, in part because the conference's resulting draft document embraced the troubling concept of "defamation of religion."[14] It would send mixed signals, to say the least, for the U.S. to boycott Durban II in protest over the concept of "defamation of religion" while simultaneously embracing the idea of constraints on freedom of expression and speech through President Obama's attendance at the Alliance of Civilizations forum.
A Better Use of Time
President Obama is right to recognize that not all Muslims are extremists, and he is right to express his hopes that Western nations and moderate Muslims can work together to confront Islamic extremism, which threatens them both. Such sentiments are logical and echo those of President George W. Bush, who also sought to reach out to moderate Muslims and work with them to combat extremism.
Such objectives are not likely to be advanced by the AoC. A dialogue subject to censorship, regardless of intent, is unlikely to be productive or fruitful. Instead, President Obama should express, unequivocally, his commitment to freedom of speech and expression—even if it leads to statements deemed unacceptable by the AoC. Rather than attend the AoC forum in Turkey, the President should dedicate his time to soliciting Turkey's cooperation on serious foreign policy objectives, such as halting Iran's nuclear program.
Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.
Heritage WebMemo #2339, March 11, 2009
See full article w/notes at the link above:
A Turkish newspaper is reporting that President Barack Obama will attend the second annual United Nations Alliance of Civilizations (AoC) forum in early April during his visit to Turkey.[1]
The AoC is an attempt by the U.N. to quell perceived tensions between Muslim and Western nations by promoting dialogue. Although well-intentioned, the effort has little prospect for success due to bias and objectionable proposals to freedom of expression. The base document for the Alliance of Civilizations focused on the supposed failings of Western countries while largely ignoring the faults of Muslim nations. It also endorsed the idea of constraining freedom of media, speech, and expression in order to combat "Islamophobia." This is an agenda similar to the effort by Muslim countries to prohibit "defamation of religion" that the U.S. has opposed in other U.N. forums. Rather than attend a U.N. talkfest wedded to objectionable ideas, President Obama should spend his time in the region more constructively, for instance discussing with the Turkish Prime Minister how Turkey can work with the U.S. on mutual concerns like bringing pressure on Iran to halt its nuclear program.
A Less Than Useful Forum
A successor to the Iranian-proposed Dialogue of Civilizations and brainchild of former U.N. Secretary-General Kofi Annan, the Alliance of Civilizations aims to improve relations between Western and Muslim countries by responding "to the need for a committed effort by the international community—both at the institutional and civil society levels—to bridge divides and overcome prejudice, misconceptions, misperceptions, and polarization which potentially threaten world peace."[2]
The 2006 report from the High-Level Group for an Alliance of Civilizations fell far short of this goal. Indeed, the report often simply endorsed ongoing initiatives like the multilateral peace process to resolve the Israeli–Palestinian conflict or repackaged calls for increased assistance from Western countries. When it did offer analysis and recommendations, they were burdened by biased perspectives and a list of objectives—instead of a strategy—to revive the economic performance of Middle Eastern and North African nations.[3]
Among the worst of the recommendations was the report's support for constraining media content and coverage in Western countries "including the use of terms such as 'Islamic terrorism' and 'Islamic fascism'—[which] have contributed to an alarming increase in Islamophobia which further exacerbates Muslim fears of the West."[4] The report virtually ignored the pervasive constraints, official or otherwise, on freedom of speech, expression, and the press in many Islamic countries.
Despite its problems, U.N. Secretary-General Ban Ki-moon appointed the former president of Portugal, Jorge Sampaio, as the High Representative for the Alliance of Civilizations in April 2007, giving him the task of promoting "the Alliance of Civilizations as a credible and viable attempt to diminish the dangerous tensions between diverse societies and their threat to international stability"[5] and established a voluntary Trust Fund in September 2007 to support the Alliance of Civilizations.
Not unexpectedly, the report of the first annual Alliance of Civilizations forum in Madrid in January 2008 illustrated that the AoC continues to support constraints on freedom of expression and speech in order to combat "Islamophobia":
One of the biggest challenges in engaging "Muslim" and "Western" societies is the rise of "Islamophobia." Constantly, Muslims and Islam are on the defensive. The point of departure for discussions on Islam is often that it is not a violent religion. In the non-Muslim world it is thought that it is the responsibility of mainstream Muslims to differentiate themselves from extremists. The non-Muslim world also has a part to play in actively differentiating between the religion and acts of terror.
Stereotyping is often a product of intended ignorance. There are resources being constantly deployed to spread disinformation and misperceptions of others. This can be described as an industry of ignorance. To counter this, it was proposed that a human right to be understood should be promoted as a mutual obligation for all societies and cultures. Additionally, education around this right should be incorporated into school curricula and textbooks, such that it can become the basis of interaction between cultures and societies.[6]
To accomplish the objectives of the AoC, which, presumably, include taking action to help combat negative "stereotyping" by the media and establishing an indefinable "human right to be understood," the AoC has created:
- A Media Literacy Education Clearinghouse to create a "participatory global repository of information, resources, and good practices relevant to Media Literacy Education, Media Education Policy and Youth Media"[7];
- An Education About Religions and Beliefs Clearinghouse to offer "consensus guidelines about teaching about religions and belief in elementary and secondary education; collections of curricula about religions and beliefs in elementary and secondary education, and where possible, evaluations of curricular outcomes; links to relevant associations, institutions and organizations; and events of interest to researchers, policy-makers and educators working in this area"[8];
- A Rapid Response Media Mechanism to "provide a platform for voices that can help reduce tensions in times of cross-cultural crises" and establish a "network of experts to develop messages (i.e. op-ed articles, audio and video statements and interviews) that help frame contentious issues in less polarizing terms and offer insightful and nuanced perspectives on complex debates"[9]; and
- A multi-million dollar Alliance of Civilizations Media Fund "aimed at financing mainstream film productions that help promote cross-cultural understanding and combat stereotypes."[10]
It is easy to imagine how a tyranny of relativism could govern the information collected, since the countries involved do not share the same values or philosophies.
Pushing Back Freedom
There is remarkably little information on exactly what the AoC has accomplished aside from holding meetings and establishing Alliance-approved databases of experts and organizations who can discuss youth, education, media, and migration issues.
There is major cause for concern considering the AoC's ongoing support of constraints on freedom of expression and speech. As U.N. High Representative for the Alliance of Civilizations Jorge Sampaio announced at a 2008 press conference in Iran, "There is a balance to be found between freedom of expression and respect for religion and for religious feelings and principles."[11] These types of platitudes are unworthy of a true effort to promote frank dialogue. Freedom of expression means little if it is subject to the sensitivities and feelings of those who may be offended by personal statements on, or media coverage of, religious matters. After all, non-controversial statements and views are rarely subject to censorship. Discussions stilted and constrained by censorship are unlikely to "promote understanding and reconciliation among cultures globally and, in particular, between Muslim and Western societies."[12]
In U.N. debates, the balance between freedom of expression and "respect for religion and for religious feelings and principles" is increasingly tilting against freedom of expression and speech. The Organization of the Islamic Conference, for instance, has convinced the U.N. Human Rights Council and the U.N. General Assembly to pass resolutions that limit freedom of speech in the name of opposing "defamation of religions" and "Islamophobia."[13]
Only weeks ago, the Obama Administration announced that it would not participate in the upcoming Durban Review Conference (Durban II) on racism, in part because the conference's resulting draft document embraced the troubling concept of "defamation of religion."[14] It would send mixed signals, to say the least, for the U.S. to boycott Durban II in protest over the concept of "defamation of religion" while simultaneously embracing the idea of constraints on freedom of expression and speech through President Obama's attendance at the Alliance of Civilizations forum.
A Better Use of Time
President Obama is right to recognize that not all Muslims are extremists, and he is right to express his hopes that Western nations and moderate Muslims can work together to confront Islamic extremism, which threatens them both. Such sentiments are logical and echo those of President George W. Bush, who also sought to reach out to moderate Muslims and work with them to combat extremism.
Such objectives are not likely to be advanced by the AoC. A dialogue subject to censorship, regardless of intent, is unlikely to be productive or fruitful. Instead, President Obama should express, unequivocally, his commitment to freedom of speech and expression—even if it leads to statements deemed unacceptable by the AoC. Rather than attend the AoC forum in Turkey, the President should dedicate his time to soliciting Turkey's cooperation on serious foreign policy objectives, such as halting Iran's nuclear program.
Brett D. Schaefer is Jay Kingham Fellow in International Regulatory Affairs in the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.
WaPo on Chas Freeman: The Obama administration's latest failed nominee peddles a conspiracy theory
Blame the 'Lobby'. WaPo Editorial
The Obama administration's latest failed nominee peddles a conspiracy theory.
WaPo, Thursday, March 12, 2009; A18
FORMER ambassador Charles W. Freeman Jr. looked like a poor choice to chair the Obama administration's National Intelligence Council. A former envoy to Saudi Arabia and China, he suffered from an extreme case of clientitis on both accounts. In addition to chiding Beijing for not crushing the Tiananmen Square democracy protests sooner and offering sycophantic paeans to Saudi King "Abdullah the Great," Mr. Freeman headed a Saudi-funded Middle East advocacy group in Washington and served on the advisory board of a state-owned Chinese oil company. It was only reasonable to ask -- as numerous members of Congress had begun to do -- whether such an actor was the right person to oversee the preparation of National Intelligence Estimates.
It wasn't until Mr. Freeman withdrew from consideration for the job, however, that it became clear just how bad a selection Director of National Intelligence Dennis C. Blair had made. Mr. Freeman issued a two-page screed on Tuesday in which he described himself as the victim of a shadowy and sinister "Lobby" whose "tactics plumb the depths of dishonor and indecency" and which is "intent on enforcing adherence to the policies of a foreign government." Yes, Mr. Freeman was referring to Americans who support Israel -- and his statement was a grotesque libel.
For the record, the American Israel Public Affairs Committee says that it took no formal position on Mr. Freeman's appointment and undertook no lobbying against him. If there was a campaign, its leaders didn't bother to contact the Post editorial board. According to a report by Newsweek, Mr. Freeman's most formidable critic -- House Speaker Nancy Pelosi -- was incensed by his position on dissent in China.
But let's consider the ambassador's broader charge: He describes "an inability of the American public to discuss, or the government to consider, any option for U.S. policies in the Middle East opposed by the ruling faction in Israeli politics." That will certainly be news to Israel's "ruling faction," which in the past few years alone has seen the U.S. government promote a Palestinian election that it opposed; refuse it weapons it might have used for an attack on Iran's nuclear facilities; and adopt a policy of direct negotiations with a regime that denies the Holocaust and that promises to wipe Israel off the map. Two Israeli governments have been forced from office since the early 1990s after open clashes with Washington over matters such as settlement construction in the occupied territories.
What's striking about the charges by Mr. Freeman and like-minded conspiracy theorists is their blatant disregard for such established facts. Mr. Freeman darkly claims that "it is not permitted for anyone in the United States" to describe Israel's nefarious influence. But several of his allies have made themselves famous (and advanced their careers) by making such charges -- and no doubt Mr. Freeman himself will now win plenty of admiring attention. Crackpot tirades such as his have always had an eager audience here and around the world. The real question is why an administration that says it aims to depoliticize U.S. intelligence estimates would have chosen such a man to oversee them.
The Obama administration's latest failed nominee peddles a conspiracy theory.
WaPo, Thursday, March 12, 2009; A18
FORMER ambassador Charles W. Freeman Jr. looked like a poor choice to chair the Obama administration's National Intelligence Council. A former envoy to Saudi Arabia and China, he suffered from an extreme case of clientitis on both accounts. In addition to chiding Beijing for not crushing the Tiananmen Square democracy protests sooner and offering sycophantic paeans to Saudi King "Abdullah the Great," Mr. Freeman headed a Saudi-funded Middle East advocacy group in Washington and served on the advisory board of a state-owned Chinese oil company. It was only reasonable to ask -- as numerous members of Congress had begun to do -- whether such an actor was the right person to oversee the preparation of National Intelligence Estimates.
It wasn't until Mr. Freeman withdrew from consideration for the job, however, that it became clear just how bad a selection Director of National Intelligence Dennis C. Blair had made. Mr. Freeman issued a two-page screed on Tuesday in which he described himself as the victim of a shadowy and sinister "Lobby" whose "tactics plumb the depths of dishonor and indecency" and which is "intent on enforcing adherence to the policies of a foreign government." Yes, Mr. Freeman was referring to Americans who support Israel -- and his statement was a grotesque libel.
For the record, the American Israel Public Affairs Committee says that it took no formal position on Mr. Freeman's appointment and undertook no lobbying against him. If there was a campaign, its leaders didn't bother to contact the Post editorial board. According to a report by Newsweek, Mr. Freeman's most formidable critic -- House Speaker Nancy Pelosi -- was incensed by his position on dissent in China.
But let's consider the ambassador's broader charge: He describes "an inability of the American public to discuss, or the government to consider, any option for U.S. policies in the Middle East opposed by the ruling faction in Israeli politics." That will certainly be news to Israel's "ruling faction," which in the past few years alone has seen the U.S. government promote a Palestinian election that it opposed; refuse it weapons it might have used for an attack on Iran's nuclear facilities; and adopt a policy of direct negotiations with a regime that denies the Holocaust and that promises to wipe Israel off the map. Two Israeli governments have been forced from office since the early 1990s after open clashes with Washington over matters such as settlement construction in the occupied territories.
What's striking about the charges by Mr. Freeman and like-minded conspiracy theorists is their blatant disregard for such established facts. Mr. Freeman darkly claims that "it is not permitted for anyone in the United States" to describe Israel's nefarious influence. But several of his allies have made themselves famous (and advanced their careers) by making such charges -- and no doubt Mr. Freeman himself will now win plenty of admiring attention. Crackpot tirades such as his have always had an eager audience here and around the world. The real question is why an administration that says it aims to depoliticize U.S. intelligence estimates would have chosen such a man to oversee them.
Three Libertarian Women and Energy
Three Libertarian Women and Energy, by Robert Bradley
Master Resource, March 11, 2009
Excerpts:
March is women’s history month. In recognition, the Cato Institute’s post, “Three Women Who Launched a Movement: Celebrating Liberty in Women’s History Month,” brings attention to Isabel Paterson, Rose Wilder Lane, and Ayn Rand–each of whom wrote a powerful book in the 1940’s that helped launch the modern libertarian movement.
Each recognized energy as the master resource in different ways. [...]
Rose Wilder Lane begins The Discovery of Freedom (1943) with this memorable prose:
Here is a planet, whirling in sunlit space. The planet is energy. Every apparent substance composing it is energy. The envelope of gases surrounding it is energy. Energy pours forth from the sun upon this air and earth.
Isabel Paterson develops the analogy of “the energy circuit” in her 1943 book, The God of the Machine:
Personal liberty is the pre-condition of the release of energy. Private property is the inductor which initiates the flow…. An empire is merely a long circuit energy-system. The possibility of a short circuit, ensuing leakage, and breakdown or explosion, occurs in the hook-up of political organization to the productive processes.
Ayn Rand’s The Fountainhead (1943) did not have any direct or indirect energy themes, but Atlas Shrugged (1957) certainly did. A whole essay could be written on her creative, even prophetic, use of energy, but here is a partial summation:
Energy Comes from the Mind
But the iron ore and all those other things were there all the time. Why didn’t anybody else make that Metal, but Mr. Reardon did?
Potential of Energy
[Galt’s motor would add] about ten years added to the life of every person in this country—if you consider how many things it would have easier and cheaper to produce, how many hours of human labor it would have released for other work, and how much more anyone’s work would have brought him.
Energy Poverty
Far below in the valley, in the gathering night, there trembled a few pale smears which were the lights of tallow candles.
Energy Moves the World
“‘Motive power—you can’t imagine how important that is. That’s the heart of everything.’”
Energy as a Supreme Good
He was the man of extravagant energy … who knew … that ingenuity of his mind is his noblest and most joyous power.
Rand’s fictional account of a deteriorating society contains an interventionist dynamic of growing government control of the vital energy economy. There is the Bureau of Economic Planning and Natural Resources. There are price controls, conservation mandates, and an excess profits tax. (She had seen all this during World War II.) There are shortages and breakdowns (what Ludwig von Mises called “planned chaos). Regulators play the blame game on private industry.
The Cato essay ends:
Surveying the disheartening intellectual climate of the 40s [and add the intellectual climate of today], F. A. Hayek wrote:
We must make the building of a free society once more an intellectual adventure, a deed of courage…. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.
The battle, history has since shown, is not yet lost, and this is due in no small part to Rand, Paterson, and Lane’s belief in the power of ideas. Unconstrained by conventional political categories, they savaged the collectivist economic nostrums of the left even while, in their lives and careers, they exploded the rigid gender roles seen as sacrosanct by so many on the right. In the process, they laid the foundations of the modern libertarian movement. This Women’s History Month, on the sixty-sixth anniversary of their monumental triple achievement, the Cato Institute pays homage to three women without whom it would not exist.
Cato senior fellow Jim Powell’s full essay on the role of Lane, Paterson, and Rand on the modern libertarian movement, published in The Freeman in May 1996, is available here.
Master Resource, March 11, 2009
Excerpts:
March is women’s history month. In recognition, the Cato Institute’s post, “Three Women Who Launched a Movement: Celebrating Liberty in Women’s History Month,” brings attention to Isabel Paterson, Rose Wilder Lane, and Ayn Rand–each of whom wrote a powerful book in the 1940’s that helped launch the modern libertarian movement.
Each recognized energy as the master resource in different ways. [...]
Rose Wilder Lane begins The Discovery of Freedom (1943) with this memorable prose:
Here is a planet, whirling in sunlit space. The planet is energy. Every apparent substance composing it is energy. The envelope of gases surrounding it is energy. Energy pours forth from the sun upon this air and earth.
Isabel Paterson develops the analogy of “the energy circuit” in her 1943 book, The God of the Machine:
Personal liberty is the pre-condition of the release of energy. Private property is the inductor which initiates the flow…. An empire is merely a long circuit energy-system. The possibility of a short circuit, ensuing leakage, and breakdown or explosion, occurs in the hook-up of political organization to the productive processes.
Ayn Rand’s The Fountainhead (1943) did not have any direct or indirect energy themes, but Atlas Shrugged (1957) certainly did. A whole essay could be written on her creative, even prophetic, use of energy, but here is a partial summation:
Energy Comes from the Mind
But the iron ore and all those other things were there all the time. Why didn’t anybody else make that Metal, but Mr. Reardon did?
Potential of Energy
[Galt’s motor would add] about ten years added to the life of every person in this country—if you consider how many things it would have easier and cheaper to produce, how many hours of human labor it would have released for other work, and how much more anyone’s work would have brought him.
Energy Poverty
Far below in the valley, in the gathering night, there trembled a few pale smears which were the lights of tallow candles.
Energy Moves the World
“‘Motive power—you can’t imagine how important that is. That’s the heart of everything.’”
Energy as a Supreme Good
He was the man of extravagant energy … who knew … that ingenuity of his mind is his noblest and most joyous power.
Rand’s fictional account of a deteriorating society contains an interventionist dynamic of growing government control of the vital energy economy. There is the Bureau of Economic Planning and Natural Resources. There are price controls, conservation mandates, and an excess profits tax. (She had seen all this during World War II.) There are shortages and breakdowns (what Ludwig von Mises called “planned chaos). Regulators play the blame game on private industry.
The Cato essay ends:
Surveying the disheartening intellectual climate of the 40s [and add the intellectual climate of today], F. A. Hayek wrote:
We must make the building of a free society once more an intellectual adventure, a deed of courage…. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.
The battle, history has since shown, is not yet lost, and this is due in no small part to Rand, Paterson, and Lane’s belief in the power of ideas. Unconstrained by conventional political categories, they savaged the collectivist economic nostrums of the left even while, in their lives and careers, they exploded the rigid gender roles seen as sacrosanct by so many on the right. In the process, they laid the foundations of the modern libertarian movement. This Women’s History Month, on the sixty-sixth anniversary of their monumental triple achievement, the Cato Institute pays homage to three women without whom it would not exist.
Cato senior fellow Jim Powell’s full essay on the role of Lane, Paterson, and Rand on the modern libertarian movement, published in The Freeman in May 1996, is available here.
President Obama and signing statements
Congrats, President Obama. By Ed Whelan
Bench Memos/NRO, Wednesday, March 11, 2009
Candidate Obama made it clear on the campaign trail that he rejected the ABA’s risible conclusion that a president may not properly use signing statements to state his constitutional objections to provisions in laws that he is signing:
Given that the ABA is pigheadedly sticking to its position, I’m glad to see this report that President Obama, in signing the omnibus spending bill today, “released a ‘signing statement’ in which he said several of the bill’s provisions raised constitutional concerns.” (As for the omnibus bill itself, I doubt very much that it is to be welcomed.)
Bench Memos/NRO, Wednesday, March 11, 2009
Candidate Obama made it clear on the campaign trail that he rejected the ABA’s risible conclusion that a president may not properly use signing statements to state his constitutional objections to provisions in laws that he is signing:
“No one doubts that it is appropriate to use signing statements to protect a president's constitutional prerogatives.”Well, no one other than the members of the ABA’s task force that produced its ridiculous report. (For various of my criticisms of the ABA’s report, see here, here, here, and here.)
Given that the ABA is pigheadedly sticking to its position, I’m glad to see this report that President Obama, in signing the omnibus spending bill today, “released a ‘signing statement’ in which he said several of the bill’s provisions raised constitutional concerns.” (As for the omnibus bill itself, I doubt very much that it is to be welcomed.)
Industry Views: The Dangers of a “Carbon Fed”
The Dangers of a “Carbon Fed”
IER, March 11, 2009
The Federal Reserve was established in 1913 as the central bank of the United States. It acts as the “banker’s bank” and has the dual mission of smoothing out the ups and downs of the business cycle and of containing price inflation. The Fed ultimately controls the U.S. money supply through its regulation of commercial banks, which are required by law to “back up” a fraction of their customers’ checking account balances with either cash in their vaults or reserves that the commercial banks themselves hold on deposit with the Fed. If the Fed thinks that inflation is too high, it “tightens” by siphoning reserves from the system which has the effect of raising interest rates and shrinking the money supply. On the other hand, if the Fed thinks the economy needs a shot in the arm, it pumps extra reserves into the banking system which causes interest rates to fall and increases the supply of dollars.
Though the Fed is supposed to create stability in the financial system, over the last year analysts have increasingly blamed the Fed for creating some of the current financial uncertainty. Business leaders must guess about Fed Chairman Ben Bernanke’s next moves. Will the Fed save large banks? Will Bernanke allow them to fail? No one knows. This uncertainty makes it more difficult to take large risks or make billion-dollar bets if the Fed will change the rules of the game. Not only have Bernanke’s actions caused some instability, but many analysts think Alan Greenspan’s ultra-low interest rates in the mid-2000s contributed to the housing boom and subsequent bust. While the Fed may have been created with the best of intentions, in the real world the Fed is not a perfect institution and its large economic powers can create a new set of financial problems.
The Fed’s role in our financial woes should give us pause. However, there are some people who promote extending the idea of a Federal Reserve to the regulation of carbon dioxide and greenhouse gases. Like the regulation of the money supply, this will likely lead to many problems.
The fundamental causes of our current financial mess would be amplified if we establish a new market for carbon permits, especially if such a market were regulated by an overseeing “carbon Fed,” as many academics propose. Although analysts disagree about who is responsible, clearly what happened during the housing boom was that investors began trading mortgage-related assets at prices that were not supported by the market fundamentals. Yet in a cap and trade regime, where firms must buy and sell permits giving them legal permission to emit carbon dioxide, the “assets” will have values entirely determined by government fiat. A simple change in government policy, such as changing the size of emission allowances, could cause a boom or bust in the permit market. This new source of uncertainty will make markets even more volatile, and will make long-term investment in the US economy even riskier.
Former Resources for the Future (RFF) researcher Daniel Hall recently left the think tank to join the Obama Administration as a Climate Policy Analyst. In his final post at the RFF website, Hall summarizes the issues he believes need to be hashed out in the upcoming debate on cap and trade. But Hall’s discussion of “allowance banking” and the proposed “carbon Fed” shows the danger that cap and trade legislation poses to the American economy. A “carbon Fed” that will target a “carbon price” will cause even more distortions in the economy and politicize markets even more.
In his summary of the unsettled cap and trade issues, Hall devotes a section to “Cost Containment.” He writes:
Cost containment is the central issue, the fulcrum on which legislators hope to balance the ambition of an emissions reduction program with its economic impact. It therefore intersects with the emissions target, the revenues that will be raised, and the impacts on domestic industries and households. Cost containment itself, however, is not well defined. In practice, it conflates two different (though related) issues. The first is how to manage short-term volatility in the price of emissions allowances. The second is how—or whether—to manage the long-term trajectory of allowance prices. Several policy mechanisms, outlined below, have been proposed to accomplish one or both of these goals.
So far, it sounds reasonable enough. The policymakers are considering that their efforts to reduce carbon dioxide emissions would adversely affect the economy. It sounds as if Hall is arguing for government to do the sensible thing and balance environmental goals against economic hardships. But when Hall discusses the various proposals for how businesses would actually receive relief, he does not reassure the alarmed reader. Two of the mechanisms to reduce short-term volatility in allowance prices are “banking and borrowing”:
Banking and borrowing provide intertemporal flexibility and prevent allowance prices from being driven by year-to-year fluctuations in unrelated factors (such as weather and economic growth). Banking of allowances is uncontroversial and will certainly be included in legislation. Borrowing is likely to be allowed but limited in both volume and duration because of concerns about default by heavily indebted firms.
Hall is saying that under a cap and trade system, the government will issue a given number of allowances entitling the bearer to emit a specified amount of carbon dioxide each year. But businesses will not have to use their allowances in the year of issue. If it proves more profitable, a business will be allowed to “bank” its current allowances so that they can be used in the future. (Academics argue over the proper “interest rate” the government should pay on these allowance deposits.)
The economic rationale for allowing “banking” of carbon permits is cost containment. Even in the computer simulations that yield the most worrisome projections of future climate change, the policy goal is to reduce emissions in the long-run. The precise timing of the emissions isn’t nearly as significant as the total amount of emissions over, say, a ten-year period. But differences in timing can have a significant impact on how costly it is for businesses to comply with the regulations. This is why Hall argues that allowance banking is “uncontroversial” and will certainly be included in legislation.
However, Hall points out that policymakers should be much more skeptical of allowing companies to borrow against future allowances. In theory, borrowing provides cost containment just as much as banking. For example, a particular factory owner might decide that it makes sense to completely revamp his operations, so that (say) in five years his factory emissions are much lower. On the other hand, if carbon dioxide-capturing technologically existed on a commercial scale, at a reasonable price, a factory owner could go for a hypothetically cheaper, quicker fix by installing these hypothetical filters on his smokestacks. Without the possibility of borrowing future allowances, the factory owner might not be able to afford the first approach, even though it would mean lower long-run emissions.
If a company borrows against future carbon allowances and uses them in the present, it means total U.S. emissions are higher in the present year than the amount actually allowed by the legislated cap. But in terms of reducing carbon dioxide emissions this outcome is acceptable, so long as the company remains in business and then pays back its “loan” in a future year by buying excess permits off the carbon market and returning them to the government, unused. That loan payback will ensure that total U.S. emissions are lower that year, than the number of permits actually issued.
What if a company borrows against future carbon permits—so that today’s emissions are higher than the legislated cap— then the company goes bankrupt before it pays back the “loan”? The government would then be in a bind. If it simply forgives the loan, then long-run emissions will exceed their legislated trajectory, because the company’s over-emission during its period of borrowing will not be counterbalanced by under-emission when the company pays back permits from the market. On the other hand, the government could adhere to the legislated (long-run) emission cap by reducing the total number of permits issued by the amount of the company’s default. For example, if the now-bankrupt company had been obligated to buy and deliver 500 tons worth of unused carbon dioxide emission permits, the government could instead auction 500 fewer permits in the first place. Under this approach, ultimately the taxpayers would eat the loss of the company’s default, because the Treasury would effectively be auctioning the 500 permits to the bankrupt company for free, rather than charging the market price.
With all of the shenanigans surrounding the recent bailouts of financial institutions, we should be very alarmed by Hall’s casual discussion of carbon banking, and the potential for corruption that such schemes would entail. Yet Hall’s discussion of a “carbon Fed” is even more disturbing:
Independent oversight bodies have been proposed to oversee and intervene in allowance markets (modeled in some ways on the Federal Reserve for monetary policy). This proposal is not so much a mechanism as an institutional structure through which various policy mechanisms could be applied.
Just as the Federal Reserve is given a two-pronged task of fighting inflation while ensuring economic stability, so too the “carbon Fed” would have the dual mandate of fighting carbon dioxide emissions increases while ensuring economic growth. During hard times, the Federal Reserve allows the money supply to increase more rapidly, and is willing to tolerate higher inflation if it helps get the economy out of recession.
By the same token, then, the carbon Fed would adjust its various rules—such as the total size of the cap, the interest rate charged on loans or earned by deposits of allowances, and the “credit limit” granted to various businesses—in order to ease the pain of carbon dioxide mitigation during recessions. On the other hand, if the economy is healthy and climate scientists bring alarming new projections to the attention of the carbon Fed governors, then they might decide to “raise the price of carbon dioxide emissions” the same way that today’s Fed raises the federal funds rate when it wants to tighten the money supply.
The scope for unintended consequences—as well as simple corruption—involved with the proposal for a carbon Fed is breathtaking. It would introduce yet another huge source of uncertainty for businesses. In addition to trying to anticipate their customers’ tastes, new regulatory and tax burdens, and the Fed’s stance on interest rates, businesses will also have to make forecasts about how loose or tight “carbon dioxide policy” will be. This extra uncertainty in the U.S. economy will cause investors to shift some of their funds to other countries.
As with any major new institution, a carbon Fed would almost certainly make enormous mistakes as it interacts with the economy and environment. Remember, the Federal Reserve was established in 1913 ostensibly to prevent the volatile financial panics that had periodically gripped the country, such as the then-most recent 1907 panic. And yet, fifteen years after the Federal Reserve banks opened their doors for business, the U.S. suffered the worst stock market crash in history, followed by the worst decade in U.S. economic history. (Clearly the Federal Reserve had a long learning curve when it came to its mission of ensuring stability.) In our own times, more and more analysts are blaming the housing boom and our current financial mess at least partly on Alan Greenspan’s ultra-low interest rates following the dot-com crash and 9/11 attacks.
Beyond the honest mistakes that will inevitably accompany any major new enterprise, we must also beware of the huge scope for corruption afforded by these proposals. The danger here is a quantum leap from the permit banking programs established by the Clean Air Act for air pollutants, because the market for carbon dioxide emissions will be much larger and will affect more businesses. For example, an incumbent president could put pressure on the carbon Fed to keeps carbon prices low going into an election year. Or, the government might allow large companies experiencing hard times to receive very generous carbon dioxide credits because they are “too big to fail.”
This new form of corporate welfare would be particularly insidious, because the “debt” wouldn’t involve future taxpayers. Currently, if the government wants to bail out a politically-favored company, it ultimately puts the taxpayers on the hook, either through higher deficits or more inflation. But once a carbon Fed is up and running, corporate bailouts can occur through printing up new carbon dioxide emission permits “out of thin air” on the carbon Fed’s balance sheet—just as Bernanke currently grants new reserves to banks out of thin air, by simply increasing their account balances with the Federal Reserve.
However, the political incentives against “loose” carbon dioxide policy would only come from environmental groups. These groups would be the only ones concerned when the carbon Fed grants new allowances to businesses. Unlike inflation or deficits, which are very tangible indicators of irresponsibility to taxpayers, average citizens won’t be up in arms over a “low carbon price” that gives them cheaper electricity. Given the lopsided incentives, we would expect the carbon Fed to very soon hold a high proportion of “non-performing” loans of allowances. There would be direct and immediate benefits from granting allowance relief to politically connected companies , while the (alleged) harms of such loans would only even be realized years later, if and when the company didn’t pay back the carbon permits.
Because of real-world politics, even those who believe in catastrophic predictions of climate change should think twice before running to the U.S. federal government as a savior. Whether it is the Federal Reserve, Social Security, the Securities and Exchange Commission, or even the FBI and CIA for that matter, the government has a poor track record in creating institutions that actually live up to their founding purpose.
If policymakers implement an economy-wide cap and trade program as President Obama proposes, the special interests who cheerlead the move will eventually see the worst of both worlds: The government will pose as savior of the planet, and point to the stringent carbon dioxide emission trajectories contained in the initial legislation. But in practice, connected companies will receive special treatment, and new bodies such as the “carbon Fed” would allow certain businesses to circumvent the statutory caps. The U.S. economy would suffer needless hardship and inefficiency, while total emissions may not even be reduced from the status quo baseline.
IER, March 11, 2009
The Federal Reserve was established in 1913 as the central bank of the United States. It acts as the “banker’s bank” and has the dual mission of smoothing out the ups and downs of the business cycle and of containing price inflation. The Fed ultimately controls the U.S. money supply through its regulation of commercial banks, which are required by law to “back up” a fraction of their customers’ checking account balances with either cash in their vaults or reserves that the commercial banks themselves hold on deposit with the Fed. If the Fed thinks that inflation is too high, it “tightens” by siphoning reserves from the system which has the effect of raising interest rates and shrinking the money supply. On the other hand, if the Fed thinks the economy needs a shot in the arm, it pumps extra reserves into the banking system which causes interest rates to fall and increases the supply of dollars.
Though the Fed is supposed to create stability in the financial system, over the last year analysts have increasingly blamed the Fed for creating some of the current financial uncertainty. Business leaders must guess about Fed Chairman Ben Bernanke’s next moves. Will the Fed save large banks? Will Bernanke allow them to fail? No one knows. This uncertainty makes it more difficult to take large risks or make billion-dollar bets if the Fed will change the rules of the game. Not only have Bernanke’s actions caused some instability, but many analysts think Alan Greenspan’s ultra-low interest rates in the mid-2000s contributed to the housing boom and subsequent bust. While the Fed may have been created with the best of intentions, in the real world the Fed is not a perfect institution and its large economic powers can create a new set of financial problems.
The Fed’s role in our financial woes should give us pause. However, there are some people who promote extending the idea of a Federal Reserve to the regulation of carbon dioxide and greenhouse gases. Like the regulation of the money supply, this will likely lead to many problems.
The fundamental causes of our current financial mess would be amplified if we establish a new market for carbon permits, especially if such a market were regulated by an overseeing “carbon Fed,” as many academics propose. Although analysts disagree about who is responsible, clearly what happened during the housing boom was that investors began trading mortgage-related assets at prices that were not supported by the market fundamentals. Yet in a cap and trade regime, where firms must buy and sell permits giving them legal permission to emit carbon dioxide, the “assets” will have values entirely determined by government fiat. A simple change in government policy, such as changing the size of emission allowances, could cause a boom or bust in the permit market. This new source of uncertainty will make markets even more volatile, and will make long-term investment in the US economy even riskier.
Former Resources for the Future (RFF) researcher Daniel Hall recently left the think tank to join the Obama Administration as a Climate Policy Analyst. In his final post at the RFF website, Hall summarizes the issues he believes need to be hashed out in the upcoming debate on cap and trade. But Hall’s discussion of “allowance banking” and the proposed “carbon Fed” shows the danger that cap and trade legislation poses to the American economy. A “carbon Fed” that will target a “carbon price” will cause even more distortions in the economy and politicize markets even more.
In his summary of the unsettled cap and trade issues, Hall devotes a section to “Cost Containment.” He writes:
Cost containment is the central issue, the fulcrum on which legislators hope to balance the ambition of an emissions reduction program with its economic impact. It therefore intersects with the emissions target, the revenues that will be raised, and the impacts on domestic industries and households. Cost containment itself, however, is not well defined. In practice, it conflates two different (though related) issues. The first is how to manage short-term volatility in the price of emissions allowances. The second is how—or whether—to manage the long-term trajectory of allowance prices. Several policy mechanisms, outlined below, have been proposed to accomplish one or both of these goals.
So far, it sounds reasonable enough. The policymakers are considering that their efforts to reduce carbon dioxide emissions would adversely affect the economy. It sounds as if Hall is arguing for government to do the sensible thing and balance environmental goals against economic hardships. But when Hall discusses the various proposals for how businesses would actually receive relief, he does not reassure the alarmed reader. Two of the mechanisms to reduce short-term volatility in allowance prices are “banking and borrowing”:
Banking and borrowing provide intertemporal flexibility and prevent allowance prices from being driven by year-to-year fluctuations in unrelated factors (such as weather and economic growth). Banking of allowances is uncontroversial and will certainly be included in legislation. Borrowing is likely to be allowed but limited in both volume and duration because of concerns about default by heavily indebted firms.
Hall is saying that under a cap and trade system, the government will issue a given number of allowances entitling the bearer to emit a specified amount of carbon dioxide each year. But businesses will not have to use their allowances in the year of issue. If it proves more profitable, a business will be allowed to “bank” its current allowances so that they can be used in the future. (Academics argue over the proper “interest rate” the government should pay on these allowance deposits.)
The economic rationale for allowing “banking” of carbon permits is cost containment. Even in the computer simulations that yield the most worrisome projections of future climate change, the policy goal is to reduce emissions in the long-run. The precise timing of the emissions isn’t nearly as significant as the total amount of emissions over, say, a ten-year period. But differences in timing can have a significant impact on how costly it is for businesses to comply with the regulations. This is why Hall argues that allowance banking is “uncontroversial” and will certainly be included in legislation.
However, Hall points out that policymakers should be much more skeptical of allowing companies to borrow against future allowances. In theory, borrowing provides cost containment just as much as banking. For example, a particular factory owner might decide that it makes sense to completely revamp his operations, so that (say) in five years his factory emissions are much lower. On the other hand, if carbon dioxide-capturing technologically existed on a commercial scale, at a reasonable price, a factory owner could go for a hypothetically cheaper, quicker fix by installing these hypothetical filters on his smokestacks. Without the possibility of borrowing future allowances, the factory owner might not be able to afford the first approach, even though it would mean lower long-run emissions.
If a company borrows against future carbon allowances and uses them in the present, it means total U.S. emissions are higher in the present year than the amount actually allowed by the legislated cap. But in terms of reducing carbon dioxide emissions this outcome is acceptable, so long as the company remains in business and then pays back its “loan” in a future year by buying excess permits off the carbon market and returning them to the government, unused. That loan payback will ensure that total U.S. emissions are lower that year, than the number of permits actually issued.
What if a company borrows against future carbon permits—so that today’s emissions are higher than the legislated cap— then the company goes bankrupt before it pays back the “loan”? The government would then be in a bind. If it simply forgives the loan, then long-run emissions will exceed their legislated trajectory, because the company’s over-emission during its period of borrowing will not be counterbalanced by under-emission when the company pays back permits from the market. On the other hand, the government could adhere to the legislated (long-run) emission cap by reducing the total number of permits issued by the amount of the company’s default. For example, if the now-bankrupt company had been obligated to buy and deliver 500 tons worth of unused carbon dioxide emission permits, the government could instead auction 500 fewer permits in the first place. Under this approach, ultimately the taxpayers would eat the loss of the company’s default, because the Treasury would effectively be auctioning the 500 permits to the bankrupt company for free, rather than charging the market price.
With all of the shenanigans surrounding the recent bailouts of financial institutions, we should be very alarmed by Hall’s casual discussion of carbon banking, and the potential for corruption that such schemes would entail. Yet Hall’s discussion of a “carbon Fed” is even more disturbing:
Independent oversight bodies have been proposed to oversee and intervene in allowance markets (modeled in some ways on the Federal Reserve for monetary policy). This proposal is not so much a mechanism as an institutional structure through which various policy mechanisms could be applied.
Just as the Federal Reserve is given a two-pronged task of fighting inflation while ensuring economic stability, so too the “carbon Fed” would have the dual mandate of fighting carbon dioxide emissions increases while ensuring economic growth. During hard times, the Federal Reserve allows the money supply to increase more rapidly, and is willing to tolerate higher inflation if it helps get the economy out of recession.
By the same token, then, the carbon Fed would adjust its various rules—such as the total size of the cap, the interest rate charged on loans or earned by deposits of allowances, and the “credit limit” granted to various businesses—in order to ease the pain of carbon dioxide mitigation during recessions. On the other hand, if the economy is healthy and climate scientists bring alarming new projections to the attention of the carbon Fed governors, then they might decide to “raise the price of carbon dioxide emissions” the same way that today’s Fed raises the federal funds rate when it wants to tighten the money supply.
The scope for unintended consequences—as well as simple corruption—involved with the proposal for a carbon Fed is breathtaking. It would introduce yet another huge source of uncertainty for businesses. In addition to trying to anticipate their customers’ tastes, new regulatory and tax burdens, and the Fed’s stance on interest rates, businesses will also have to make forecasts about how loose or tight “carbon dioxide policy” will be. This extra uncertainty in the U.S. economy will cause investors to shift some of their funds to other countries.
As with any major new institution, a carbon Fed would almost certainly make enormous mistakes as it interacts with the economy and environment. Remember, the Federal Reserve was established in 1913 ostensibly to prevent the volatile financial panics that had periodically gripped the country, such as the then-most recent 1907 panic. And yet, fifteen years after the Federal Reserve banks opened their doors for business, the U.S. suffered the worst stock market crash in history, followed by the worst decade in U.S. economic history. (Clearly the Federal Reserve had a long learning curve when it came to its mission of ensuring stability.) In our own times, more and more analysts are blaming the housing boom and our current financial mess at least partly on Alan Greenspan’s ultra-low interest rates following the dot-com crash and 9/11 attacks.
Beyond the honest mistakes that will inevitably accompany any major new enterprise, we must also beware of the huge scope for corruption afforded by these proposals. The danger here is a quantum leap from the permit banking programs established by the Clean Air Act for air pollutants, because the market for carbon dioxide emissions will be much larger and will affect more businesses. For example, an incumbent president could put pressure on the carbon Fed to keeps carbon prices low going into an election year. Or, the government might allow large companies experiencing hard times to receive very generous carbon dioxide credits because they are “too big to fail.”
This new form of corporate welfare would be particularly insidious, because the “debt” wouldn’t involve future taxpayers. Currently, if the government wants to bail out a politically-favored company, it ultimately puts the taxpayers on the hook, either through higher deficits or more inflation. But once a carbon Fed is up and running, corporate bailouts can occur through printing up new carbon dioxide emission permits “out of thin air” on the carbon Fed’s balance sheet—just as Bernanke currently grants new reserves to banks out of thin air, by simply increasing their account balances with the Federal Reserve.
However, the political incentives against “loose” carbon dioxide policy would only come from environmental groups. These groups would be the only ones concerned when the carbon Fed grants new allowances to businesses. Unlike inflation or deficits, which are very tangible indicators of irresponsibility to taxpayers, average citizens won’t be up in arms over a “low carbon price” that gives them cheaper electricity. Given the lopsided incentives, we would expect the carbon Fed to very soon hold a high proportion of “non-performing” loans of allowances. There would be direct and immediate benefits from granting allowance relief to politically connected companies , while the (alleged) harms of such loans would only even be realized years later, if and when the company didn’t pay back the carbon permits.
Because of real-world politics, even those who believe in catastrophic predictions of climate change should think twice before running to the U.S. federal government as a savior. Whether it is the Federal Reserve, Social Security, the Securities and Exchange Commission, or even the FBI and CIA for that matter, the government has a poor track record in creating institutions that actually live up to their founding purpose.
If policymakers implement an economy-wide cap and trade program as President Obama proposes, the special interests who cheerlead the move will eventually see the worst of both worlds: The government will pose as savior of the planet, and point to the stringent carbon dioxide emission trajectories contained in the initial legislation. But in practice, connected companies will receive special treatment, and new bodies such as the “carbon Fed” would allow certain businesses to circumvent the statutory caps. The U.S. economy would suffer needless hardship and inefficiency, while total emissions may not even be reduced from the status quo baseline.
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