Resiliency, ambition and tactical advantage mark first year of ISIS advance, analysts say -iPolitics


ISIS, one year later…

“In the 12 months since, more than 3,000 people in Syria alone have died at the hands of the militants and more than 60 nations have so far had limited success in trying to rein in the group’s influence, in Iraq, Syria and beyond. While Western leaders insist the coalition’s military campaign against ISIS is working, the past year has been marked by surprising displays of resilience and undeterred ambition by the group — and if anything, have shown that traditional models for understanding jihadist terrorism need to be thrown out the window, say experts.”

Greek Capital Controls -Various


Here is an overview of the Greek situation, covering the decision to impose capital controls, some background on how capital controls work, and some of the potential outcomes of the crisis. Capital controls prevent capital flight. That is, everyone taking their money out of the banks and the country and therefore undermining the country’s financial institutions. This sounds like a reasonable policy, though one of the ironies is that once people think capital controls are going to be put in place, they have an extra incentive to take their money out of the bank fast so they don’t get caught. In the short term, they also reduce the money available for people to spend and therefore depress the economy further. In the long term, they can scare away future investment because potential financiers are afraid they will lose control of their funds once they invest in a country with a history of imposing capital controls. This is why the current global free-trade regime places so many restrictions on the use of capital controls. If investors feel secure, they will, in theory, put more money into the global economy thus spurring growth etc… etc… Nevertheless, there is considerable debate about whether it is better to break with the established economic wisdom when a country is faced with crippling debt as Greece is, or some other type of economic melt-down. Malaysia, for instance, used capital controls to help deal with the Asian financial crisis of the late 1990s.

“After bailout talks between the leftwing government and foreign lenders broke down at the weekend, the European Central Bank froze vital funding support to Greece’s banks, leaving Athens with little choice but to shut down the system to keep the banks from collapsing.”
“Banks will be closed and the stock market shut all week, and there will be a daily 60 euro limit on cash withdrawals from cash machines, which will reopen on Tuesday. Capital controls are likely to last for many months at least.”
-Greece imposes capital controls as crisis deepens

“Basically, a capital control is when the government tells you that you are no longer allowed to move your money around freely.
A government can use capital controls to order its banks to impose strict limits on daily withdrawals and overseas transfers of cash. It can also impose other measures such as limiting foreign exchange transactions.
In this case it would be to prevent euros flowing out of Greek banks – to overseas banks, into a different currency, or to be stashed under the mattress.”
-Greek debt crisis: What are capital controls?

“Until Saturday the last-ditch option to cover the IMF payment for Athens was to strike a deal on reforms and make available 1.8 billion euros worth of profits made by the European Central Bank on purchases of Greek bonds during the debt crisis.
But because Greece ended talks on a deal last night and called a referendum, the money cannot be disbursed and Greece is on course to default on Tuesday.”
-Factbox – Possible scenarios for Greece after a default

See also:
All Greek to you? Greece’s debt jargon explained

The Economist Explains: Why China is creating a new “World Bank” for Asia -The Economist


“…the AIIB has stoked controversy because Asia already has a multilateral lender, the Asian Development Bank (ADB). Why is China creating a new development bank for Asia?

China’s official answer is that Asia has a massive infrastructure funding gap. The ADB has pegged the hole at some $8 trillion between 2010 and 2020. Existing institutions cannot hope to fill it: the ADB has a capital base (money both paid-in and pledged by member nations) of just over $160 billion and the World Bank has $223 billion. The AIIB will start with $50 billion in capital—hardly enough for what is needed but still a helpful boost. Moreover, while ADB and World Bank loans support everything from environmental protection to gender equality, the AIIB will concentrate its firepower on infrastructure.”
“But the real, unstated tension stems from a deeper shift: China will use the new bank to expand its influence at the expense of America and Japan, Asia’s established powers. China’s decision to fund a new multilateral bank rather than give more to existing ones reflects its exasperation with the glacial pace of global economic governance reform. The same motivation lies behind the New Development Bank established by the BRICS (Brazil, Russia, India, China and South Africa). Although China is the biggest economy in Asia, the ADB is dominated by Japan; Japan’s voting share is more than twice China’s and the bank’s president has always been Japanese. Reforms to give China a little more say at the International Monetary Fund have been delayed for years, and even if they go through America will still retain far more power. China is, understandably, impatient for change. It is therefore taking matters into its own hands.”

The Guardian also has a few interesting things to say about the new bank. In addition to echoing the Economist’s comments about competition between China and the US/Japan, it also argues:
“the world suffers from insufficient aggregate demand. Financial markets have proven unequal to the task of recycling savings from places where incomes exceed consumption to places where investment is needed.
When he was chair of the US Federal Reserve, Ben Bernanke mistakenly described the problem as a “global saving glut.” But in a world with such huge infrastructure needs, the problem is not a surplus of savings or a deficiency of good investment opportunities. The problem is a financial system that has excelled at enabling market manipulation, speculation, and insider trading, but has failed at its core task: intermediating savings and investment on a global scale. That is why the AIIB could bring a small but badly needed boost to global aggregate demand.”

In defence of the Asian Infrastructure Investment Bank

Argument: The Enemy You Know and the Ally You Don’t -Foreign Policy


After the fall of Ramadi, the accepted wisdom has been that the problem is the government in Baghdad. Prime Minister Haider al-Abadi has continued in the footsteps of his predecessor, Nuri al-Maliki, building an exclusionary Shi’a political system. Until he arms the Sunnis and gets them to fight along side the Shi’a and the Kurds, ISIS will never be defeated and Iraq will be doomed. This article suggests that arming the Sunnis is a dangerous option as well.

“If members of Iraq’s Sunni leadership indeed had ties to the Islamic State, it raises serious questions about these figures as reliable long-term partners and as stewards of their own security forces. The U.S. strategy in Iraq hinges on putting in place a power-sharing agreement based on a willingness by all parties to set aside narrow sectarian agendas. However, none of the major political blocs — Sunni, Shiite, or Kurd — appear likely to change their zero-sum calculus. Political leaders on all sides have demonstrated a willingness to do whatever it takes to advance their sectarian agendas. And in the case of Sunni leaders, this has likely included direct cooperation with the Islamic State.”*Editors+Picks&utm_campaign=2014_EditorsPicks-June23

U.N. peacekeeping and transactional sex -Washington Post


“Yesterday, the United Nations’ Office of Internal Oversight Services (OIOS) released a rather scathing report on enforcement and remedial assistance efforts for sexual exploitation and abuse by U.N. peacekeepers. The report draws on research that we conducted in Liberia’s capital, Monrovia…”

“In 2003, the U.N. banned its peacekeepers from engaging in transactional sex (the exchange of money or anything of value for sex). Despite this ban, our survey of 475 18- to 30-year-old women in greater Monrovia revealed that about half of them report having engaged in transactional sex, and within that group of women, over three-quarters report having done so with U.N. personnel. Over 90 percent of the women who have engaged in transactional sex report that they usually receive money in exchange. And underage girls are at particular risk: 58 percent of the women who report the age at which they engaged in their first sexual transaction say they were younger than 18.”

ANALYSIS: Can Syrian Kurds maintain momentum after IS defeat in Tal Abyad? -Middle East Eye


Recently there have been a number of news stories suggesting IS was sweeping across both Iraq and Syria; the Assad regime was on its last legs and the anti-IS coalition in Iraq was a failure. The following story suggests however that IS is still having a tough time in parts of Syria, losing ground to FSA and Syrian Kurdish forces. This is not to say that IS is actually “losing” in Syria, or that everything in Iraq is going as planned/hoped. Rather, the situation in both countries is fluid and complex, and momentum will probably change many more times before anything gets settled. Stories about decisive turning points (one way or the other) therefore need to be taken with a big grain of salt.

“US-based Kurdish journalist, Mutlu Civiroglu, who just returned to the US from Turkey, said that the loss of Tal Abyad was a massive loss for IS.

“Tel Abyad was their main access to the outside world. Reportedly, most foreign fighters have been pouring into Syria from Tal Abyad,” he told Middle East Eye by telephone.

“Moreover, IS border trade is going to have a huge blow, since not only foreign fighters are coming in, they also sell things [such as oil] outside,” he added, referring to cross-border trade between IS border regions and areas in Turkey.

The re-capture of Tal Abyad also crucially opens the road south to the YPG and its allies and could help the Syrian FSA rebels to continue their attacks on Raqqa province. With the Kurdish areas now partially liberated, they could become a solid staging ground against Syria’s IS capital, once again making something that felt so out of reach only a week ago seem almost within reach.”

The High School Student Who Maps ISIS’s Lightning-Quick Advance -Newsweek


“Thomas van Linge’s colorful, detailed maps showing which parties control which parts of Iraq, Libya and Syria are a hit whenever he posts them on Twitter. They have been cited on news stories in the Huffington Post, Lebanon’s Daily Star and Vox, as well as on the University of Texas at Austin’s website. But van Linge isn’t a policy expert and he’s never been to the region: In fact, he’s just a Dutch high school student who tracks the war on social media.”

This is an interesting article for two reasons:

The first and most obvious reason is that it identifies an excellent source for maps of the civil war in Syria. You can find the maps and more analysis of the situation in Syria at Pieter Van Ostaeyen’s blog, “pietervanostaeyen: Musings on Arabism, Islamicism, History and current affairs”

Secondly, this is another example of an amateur blogger providing first rate information and analysis that is used by researchers and policy-makers. Another example is the Brown Moses Blog ( run by Eliot Higgins. The blog covers the military hardware being used by the various parties in the fighting. Although that may sound like a somewhat narrow, perhaps even geeky thing to analyze, it tells us a lot about the politics of the conflict, like who is supplying which groups with which weapons systems. Higgins has no formal training and started the blog while at home minding his child. Nevertheless, his work is widely respected and frequently cited.

Gulf countries rake in billions in Ex-Im Bank subsidies -al Monitor


“Companies from Saudi Arabia and the United Arab Emirates together pulled in about $12 billion in trade financing over the past five years — 8.5% of the $141 billion global total — to help pay for nuclear reactors, industrial power generators and new fleets of Boeing jets. That includes a record-setting $5 billion loan to help Saudi Arabia build one of the world’s largest petrochemical complexes.”

The US subsidizes purchases made by the oil monarchies of the Persian Gulf? Big surprise, that is not a popular idea:
“The companies keep the profits if sales go well; taxpayers bear the risk of loss if not,” House Financial Services Committee Chairman Jeb Hensarling, R-Texas, wrote in The Wall Street Journal last week. “The bank is a small-scale example of a larger and more dangerous threat: the shrinking of the free-market economy and the rise of a progressive welfare state — with its attendant cronyism, public-private partnerships and spreading government economic controls.”

The rational however, is that by providing loans and guarantees, the ‘ExIm’ Bank is supposed to facilitate trade, increase US exports and support the US economy. It is also argued that the bank provides a necessary service because other states intervene in similar ways to boost the sales of their own products on foreign markets.

Nevertheless, there are still questions about which industries get support and how much of the profits remain in the US. ExIm claims the biggest category of US companies it works with is “small businesses”:
Hensarling and other critics on Capitol Hill, remain unconvinced.

The ExIm bank also provides an interesting example of the role that states play in promoting trade. To the extent that institutions like ExIm provide a strategic advantage of one country over another, trade is still being pursued on mercantilist terms, a zero-sum competition between states.

Borders and Empires -Various


Robert Kaplan has penned a provocative piece in Foreign Policy entitles “The Ruins of Empire in the Middle East” where in he argues for the virtues of empire in the Middle East as a means for maintaining stability: “Imperialism bestowed order, however retrograde it may have been. The challenge now is less to establish democracy than to reestablish order. For without order, there is no freedom for anyone.”

Not surprisingly, there has been a response. Benjamin Denison and Andrew Lebovich argue that Kaplan’s history is shaky and vague at best, and that “Kaplan and others call for imperialism-lite — without acknowledging that empires aren’t always sunny, stable and successful. Policymakers and scholars alike need accurate historical examinations of imperial rule, and need to stay alert to the ways in which local politics, outside political forces and military intervention affect countries in untold and infinitely complex ways.”

The debate also raises a deeper question about the nature of the state system in the Middle East. Since the rise of IS it has become increasingly popular to argue that the Middle East state system is entirely artificial, a remnant of the Sykes-Picot agreement, and therefore unsustainable. In two separate articles, Marc Lynch and Sarah Pursley argue that the history and the current reality are too complex to be captured by this common though simplistic argument.
Lynch argues in “Rethinking Nations in the Middle East” that identities based on the current state system do have resonance:

And in a two part article,’Lines Drawn on an Empty Map’: Iraq’s Borders and the Legend of the Artificial State (Part 1 & 2)’ Pursley describes the division of the Middle East as a complex process at least in part influenced by local politics:

Why did Saudi Arabia intervene in Yemen? -al Monitor


This article, written largely from a Saudi perspective, explains Riyadh’s intervention into Yemen as a defensive strategy intended to avoid chaos on its southern border.

“While Iran’s destructive influence in Yemen is as alarming to Saudi Arabia as its meddling in Iraq, Syria and Lebanon, Saudi Arabia’s decision to intervene militarily in Yemen was based on much more than merely countering Iran. It’s precisely because of — and not despite — Yemen’s potential to slip into complete chaos that Saudi Arabia chose to intervene. There was no other way for Saudi Arabia. There is no other way for Yemen.”

Unfortunately, while this strategy has not been directed solely at countering Iran, countering Iran is an essential part of it. This means Riyadh has been unwilling to negotiate or make concessions to the Houthis or Tehran. Rather, they have chosen to rely solely on military power. As a result, the more they try to stamp-out the chaos in Yemen, the more the chaos  grows.