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How To (and Not To) Navigate between US and China 

By Dan Steinbock

The first 18 months of the Duterte government suggest that the effort to recalibrate the Philippines’ ties between the US and China is necessary, viable and vital.

      

In the first half of the 2010s, Manila and Beijing were drifting toward a geopolitical clash. Nevertheless, former President Benigno Aquino III expected continuity to prevail under what he presumed to be the Roxas government.

Similarly, former President Obama anticipated that Hillary Clinton would be the next US president and that she would sustain his legacy in Asia.

But as I argued in the Philippines Institute for Development Studies (PIDS) in February 2016, What if Duterte would beat Roxas and Trump would win in Washington? That, I said, would change the rules of the game.

 

Washington’s Retreat and Return                

After World War II, Manila cultivated close relations with Washington and supported the US through the Cold War, the War on Terror and was a major non-NATO ally.

After World War II, Manila cultivated close relations with Washington and supported the US through the Cold War, the War on Terror and was a major non-NATO ally.

Indeed, in the postwar era, the Philippines was seen as the most likely country to prosper in the region. And yet, during the Marcos decades and the deep ties with the US, the country fell behind the rest of Asia, despite the “People Power Revolution”.  

At the time, China was focussed mainly on its economic reforms and, after joining the World Trade Organization (WTO) in 2001, on its export-led growth. The latter prevailed until the global financial crisis, the Eurozone sovereign credit crisis and the rise of President Xi Jinping’s administration in the early 2010s.

Despite pledges of change, the Aquino era (2010-16) reaped only some benefits of easy catch-up growth and regional integration. Its anti-corruption struggle was not effective, the explosive drugs problem was largely neglected and poverty persisted. Worst of all, it failed to realise the economic potential of the Philippines.

Meanwhile, the Obama administration began its pivot to Asia, including the plan to move the majority of US warships to Asia Pacific by 2020. Unsurprisingly, China made its counter-moves in the region.

So President Aquino and Foreign Minister Albert del Rosario saw bilateral talks with China as futile, tried multilateral approach through the ASEAN and took the dispute to the international court, while opting for a new defence alliance with the US (2014 EDCA), which was followed by the return of the US Navy to Subic Bay.

Erosion of Manila-Beijing Ties

In Beijing, the Philippines came to be seen as US military platform in Southeast Asia, with Vietnam a complement of Japan in East Asia. Washington encouraged rearmament in all three countries. In Japan, that meant the end of the pacifist postwar constitution; in the Philippines and Vietnam, rising military expenditures. In turn, US defence contractors reaped economic rents as tensions in the South China Sea drove up demand for weapons.

According to SIPRI, the US provided 90 percent of Japan’s weapons imports in 2012-16, while the Philippines started a military expansion program and increased arms imports by 426 percent from 2007 through the Aquino era.

The militarisation benefitted the Pentagon and some of its Western allies, but led to friction with China at precisely wrong time. As the Obama administration orchestrated its military pivot to Asia, it was alienating China, which was promoting regional financing by the BRICS New Development Bank, the Asian Infrastructure Investment Bank, and the huge One Belt One Road initiative.

The net effect? When Chinese foreign investment took off hugely in Asia, Philippines was largely bypassed. Instead, as Aquino and Rosario were struggling for what they felt were Manila’s vital sovereign interests in the region, the country grew geopolitically dependent on Washington.

 

Four Scenarios But…

Before the 2016 Philippines election, there was real concern that the country was heading toward a confrontation with China in the South China Sea. Manila’s new defence alliance with Washington added to the distrust.

As Duterte won the election, the US Navy sent its third warship in less than seven months into the waters of the disputed South China Sea. In hindsight, such actions, which were seen as highly provocative in Beijing, probably reinforced Duterte’s determination to recalibrate ties between the US and China. But did he have any viable alternatives?

Before the 2016 Philippines election, there was real concern that the country was heading toward a confrontation with China in the South China Sea. Manila’s new defence alliance with Washington added to the distrust.

Depending on whether China and the Philippines would opt for a cooperative or assertive stance in bilateral relations, I argued that four scenarios cast a long shadow over Southeast Asia’s future at the PIDS and in the Foreign Service Institute soon after Duterte’s electoral triumph.

If Beijing refused cooperation with Manila, it would corner the Duterte government to rely even more on US security assurances. This I portrayed as a regional dead-end scenario.

Conversely, if Beijing would seek cooperation but Manila would take a back step, due to external pressure, the result would be a polarisation scenario. In that case, Manila would have to lean even more on the US, while China might resort to even greater defensive measures. Both countries would lose economically.

In the third scenario, old policies would prevail, which would ensure the failure of bilateral talks, harden attitudes and increase the probability of proxy conflicts in South China Sea. That was the destabilisation scenario – a costly nightmare economically and strategically, and possibly in human lives.

 

… Only One Path to the Future

The only reasonable approach, I argued then (as I did through the Aquino era), would start with a Sino-Philippines bilateral conversation that would lead to a  formal dialogue. The latter could reduce the weight of geopolitics, while supporting mutual gains in economic development. This stabilisation scenario would be the most preferable economic, political and strategic trajectory for Manila, Beijing, the ASEAN and over time for Washington as well.

For the first time in decades, solid growth and economic catch-up may translate to substantial gains in the lives of ordinary Filipinos.

It is also the scenario that the Duterte government opted for, despite the alleged “Goldberg regime change plan” and the associated efforts at destabilisation in the Philippines – the last relic of the Obama pivot.

Despite occasionally tough bilateral rhetoric and disagreements, peace and stability between the US and China, along with thriving bilateral trade and investment, allows greater focus on economic development globally, particularly in broader Asia.

That’s what the Philippines needs – greater infrastructure investment for industrialisation and urbanisation, constitutional changes to ensure foreign investment increases by magnitude, sustained and inclusive economic growth, all of which should foster rising living standards and reduce poverty.

For the first time in decades, solid growth and economic catch-up may translate to substantial gains in the lives of ordinary Filipinos. Of course, the Duterte balancing act won’t be easy. But failure is not an option and the alternatives are worse.

 

The original commentary was published by The Manila Times on December 4, 2017

Featured Image: US President Donald Trump talks with Philippines President Rodrigo Duterte during the gala dinner marking ASEAN’s 50th anniversary in Manila, Philippines, Nov. 12, 2017.

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

Telesur: The Real Causes of Deficits and the US Debt

By Jack Rasmus

 

With the Senate and House all but assured to pass the US$4.5 trillion in tax cuts for businesses, investors, and the wealthiest 1 percent households by the end of this week, phases two and three of the Trump-Republican fiscal strategy have begun quickly to take shape.

Phase two is to manoeuvre the inept Democrats in Congress into passing a temporary budget deficit-debt extension in order to allow the tax cuts to be implemented quickly. That’s already a “done deal”.

Phase three is the drumbeat growing to attack social security, Medicare, food stamps, Medicaid, and other “safety net” laws, in order to pay for the deficit created by cutting taxes on the rich. To justify the attack, a whole new set of lies are resurrected and being peddled by the media and pro-business pundits and politicians.

 

Deficits and Debt: Resurrecting Old Lies and Misrepresentations

The government then uses the social security surplus to pay for decades of tax cuts for the rich and corporations and to fund endless war in the middle east.

Nonsense like social security and Medicare will be insolvent by 2030. When in fact social security retirement fund has created a multi-trillion dollar surplus since 1986, which the US government has annually “borrowed”, exchanging the real money in the fund created by the payroll tax and its indexed threshold, for Treasury bonds deposited in the fund. The government then uses the social security surplus to pay for decades of tax cuts for the rich and corporations and to fund endless war in the middle east.

As for Medicare, the real culprit undermining the Medicare part A and B funds has been the decades-long escalating of prices charged by insurance companies, for-profit hospital chains (financed by Wall St.), medical devices companies, and doctor partnerships investing in real estate and other speculative markets and raising their prices to pay for it.

As for Part D, prescription drugs for Medicare, the big Pharma price gouging is even more rampant, driving up the cost of the Part D fund. By the way, the prescription drug provision, Part D, passed in 2005, was intentionally never funded by Congress and George Bush. It became law without any dedicated tax, payroll or other, to fund it. Its US$50 billion plus a year costs were thus designed from the outset to be paid by means of the deficit and not funded with any tax.

Social Security Disability, SSI, has risen in costs, as a million more have joined its numbers since the 2008 crisis. That rise coincides with Congress and Obama cutting unemployment insurance benefits. A million workers today, who would otherwise be unemployed (and raising the unemployment rate by a million) went on SSI instead of risking cuts in unemployment benefits. So Congress’s reducing the cost of unemployment benefits in effect raised the cost of SSI. And now conservatives like Congressman Paul Ryan, the would be social security “hatchet man” for the rich, want to slash SSI as well as social security retirement, Medicare benefits for grandma and grandpa, Medicaid for single moms and the disabled (the largest group by far on Medicaid), as well as for food stamps.

Food stamp costs have also risen sharply since 2008. But that’s because real wages have stagnated or fallen for tens of millions of workers, making them eligible under Congress’s own rules for food stamp distribution. Now Ryan and his friends want to literally take food out of the mouths of the poorest by changing eligibility rules.

They want to cut and end benefits and take an already shredded social safety net completely apart – while giving US$4.5 trillion to their rich friends (who are their election campaign contributors). The rich and their businesses are getting $4.5 trillion in tax cuts in Trump’s tax proposal – not the $1.4 trillion referenced in the corporate press. The $1.4 million is after they raise $3 million in tax hikes on the middle class.

Whatever financing issues exist for Social Security retirement, Medicare, Medicaid, disability insurance, food stamps, etc., they can be simply and easily adjusted, and without cutting any benefits and making average households pay for the tax cuts for the rich in Trump’s tax cut bill.

If capital income earners (interest, rent, dividends, etc.) were to pay the same 6.2% it would permit social security retirement benefits to be paid at two thirds one’s prior earned wages, and starting with age 62.

Social security retirement, still in surplus, can be kept in surplus by simply one measure: raise the “cap” on social security to cover all earned wage income. Today the “cap”, at roughly US$118,000 a year, exempts almost 20 percent of the highest paid wage earners. Once their annual salary exceeds that amount, they no longer pay any payroll tax. They get a nice tax cut of 6.2 percent for the rest of the year (Businesses also get to keep 6.2% more). Furthermore, if capital income earners (interest, rent, dividends, etc.) were to pay the same 6.2% it would permit social security retirement benefits to be paid at two thirds one’s prior earned wages, and starting with age 62. The retirement age could thus be lowered by five years, instead of raised as Ryan and others propose.

As for Medicare Parts A and B, raising the ridiculously low 1.45 percent tax just another 0.25 percent would end all financial stress in the A & B Medicare funds for decades to come.

For SSI, if Congress would restore the real value of unemployment benefits back to what it was in the 1960s, maybe millions more would return to work (It’s also one of the reasons why the labour force participation rate in the US has collapsed the past decade). But then Congress would have to admit the real unemployment rate is not 4.2 percent but several percentages higher (Actually, it’s still over 10 percent, once other forms of “hidden unemployment” and underemployment are accurately accounted for).

As for food stamps’ rising costs, if there were a decent minimum wage (at least US$15 an hour), then millions would no longer be eligible for food stamps and those on it would significantly decline.

In other words, the US Congress and Republican-Democrat administrations have caused the Medicare, Part D, SSI, and food stamp cost problems. They also permitted Wall St. to get its claws into the health insurance, prescription drugs, and hospital industries – financing mergers and acquisitions activity and demanding in exchange for lending to companies in those industries that the companies raise their prices to generate excess profits to repay Wall St. for the loans for the M&A activity.

 

The Real Causes of Deficits and the Debt

So if social security, Medicare-Medicaid, SSI, food stamps, and other social safety net programmes are not the cause of the deficits, what then are the causes?

In the year 2000, the US federal government debt was about US$4 trillion. By 2008 under George Bush it had risen to nearly US$9 trillion. The rise was due to the US$3.4 trillion in Bush tax cuts, 80 percent of which went to investors and businesses, plus another US$300 billion to US multinational corporations due to Bush’s offshore repatriation tax cut. Multinationals were allowed to bring US$320 billion of their US$750 billion offshore cash hoard back to the US and pay only a 5.25 percent tax rate instead of the normal 35 percent. (By the way, they accumulated the US$750 billion hoard was a result of Bill Clinton in 1997 allowing them to keep profits offshore untaxed if not brought back to the US. Thus the Democrats originally created the problem of refusing to pay taxes on offshore profits, and then George Bush, Obama, and now Trump simply used it as an excuse to propose lower tax rates for repatriated the offshore profits cash hoard of US multinational companies. From $750 billion in 2004, it’s now $2.8 trillion).

So the Bush tax cuts whacked the US deficit and debt. The Bush wars in the middle east did as well. By 2008 an additional US$2 to US$3 trillion was spent on the wars. Then Bush policies of financial deregulation precipitated the 2007-09 crash and recession. That reduced federal tax revenue collection due to collapse economic growth further. Then there was Bush’s 2008 futile $180 billion tax cut to stem the crisis, which it didn’t. And let’s not forget Bush’s 2005 prescription drug plan – a boondoggle for big pharmaceutical companies – that added US$50 billion a year more. As did a new Homeland Security $50 billion a year and rising budget costs.

There’s your additional US$5 trillion added by Bush to the budget deficit and US debt – from largely wars, defence spending, tax cuts, and windfalls for various sectors of the healthcare industry.

Obama would go beyond Bush. First, there was the US$300 billion tax cuts in his 2009 so-called “recovery act”, mostly again to businesses and investors. (The Democrat Congress in 2009 wanted an additional US$120 billion in consumer tax cuts but Obama, on advice of Larry Summers, rejected that). What followed 2009 was the weakest recovery from recession in the post-1945 period, as Obama policies failed to implement a serious fiscal stimulus. Slow recovery meant lower federal tax revenues for years thereafter.

The problem with chronic US federal deficits and escalating Debt is not social security, Medicare, or any of the other social programmes.

Studies show that at least 60 percent of the deficit and debt since 2000 is attributable to insufficient taxation, due both to tax cutting and slow economic growth below historical rates.

Obama then extended the Bush-era tax cuts another US$803 billion at year-end 2010 and then agreed to extend them another decade in January 2013, at a cost of US$5 trillion. The middle east war spending continued as well to the tune of another $3 trillion at minimum. Continuing the prescription drug subsidy to big Pharma and Homeland Security costs added another $500 billion.

In short, Bush added US$5 trillion to the US debt and Obama another US$10 trillion. That’s how we get from US$4 trillion in 2000 to US$19 trillion at the end of 2016. (US$20 trillion today, about to rise another US$10 trillion by 2027 once again with the Trump tax cuts fast-tracking through Congress today).

To sum up, the problem with chronic US federal deficits and escalating Debt is not social security, Medicare, or any of the other social programmes. The causes of the deficits and debt are directly the consequence of financing wars in the middle east without raising taxes to pay for them (the first time in US history of war financing), rising homeland security and other non-war defence costs, massive tax cuts for businesses and investors since 2001, economic growth at two thirds of normal the past decade (generating less tax revenues), government health program costs escalation due to healthcare sector price gouging, and no real wage growth for the 80 percent of the labour force resulting in rising costs for food stamps, SSI, and other benefits.

Notwithstanding all these facts, what we’ll hear increasingly from the Paul Ryans and other paid-for politicians of the rich is that the victims (retirees, single moms, disabled, underemployed, jobless, etc.) are the cause of the deficits and debt. Therefore they must pay for it.

But what they’re really paying for will be more tax cuts for the wealthy, more war spending (in various forms), and more subsidisation of price-gouging big pharmaceuticals, health insurance companies, and for-profit hospitals which now front for, and are indirectly run by, Wall St.

 

Photo: A general view of the Capitol Dome in Washington, D.C. | Reuters

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About the Author

Dr. Jack Rasmus is author of the just published book, “Central Bankers at the End of Their Ropes? Monetary Policy and the Next Depression”, Clarity Press, July 2017, and the previously published “Systemic Fragility in the Global Economy”, also by Clarity Press, January 2016. For more information: http://ClarityPress.com/RasmusIII.html. He teaches economics at St. Marys College in Moraga, California, and hosts the radio show, Alternative Visions, on the Progressive Radio Network. He blogs at jackrasmus.com and his twitter handle is @drjackrasmus.

Canada-China Trade Amid NAFTA Friction

By Dan Steinbock

As tensions prevail in the NAFTA talks, Canada is hedging its bets by fostering consensus for a trade agreement with China.

 

On Sunday, Canadian Prime Minister Justin Trudeau shall start a trade and tourism dialogue with Chinese officials during his ongoing visit to China. Canada and China began to talk about a free trade agreement (FTA) more than a year ago, following back-to-back meetings of Trudeau and Chinese Premier Li Keqiang in China and Ottawa.

While Canada completed consultations on the matter, three rounds of exploratory talks were held between the two sides from February to August.

Trudeau’s visit takes place after the fifth round of talks over the North American Free Trade Agreement (NAFTA) ended in Mexico City amid simmering tensions.

Hedging Against thePotential NAFTA Collapse

Last year, the US bought three-fourths of Canadian exports, while Canada sourced almost two-thirds of its imports from America. US direct investment in Canada amounts to some $306 billion, while Canada’s investment in the US is almost $370 billion. But the US investment in Canada represents almost 20 percent of the latter’s GDP; while Canada’s investment in the US adds up to only 2 percent of the US’s GDP. The outcome of the NAFTA talks is thus far more important to Canada than to the US.

Intriguingly, the latter are likely to coincide with the time that Canada and China would need to finalise an FTA agreement. 

If the US withdraws from NAFTA, that would start a six-month legal process before official termination. While the Trump administration may see this as a negotiating tool to force Canada and Mexico to accept its demands, the latter could use the time to complete trade talks with Brazil and the European Union (EU).

Canada and Mexico are hedging their bets against a potential NAFTA collapse by pushing for deals with new partners, particularly with China and some other Asian countries.

In 2015, China bought 12 percent of Canadian exports, whereas Chinese exports accounted of 4 percent of Canadian total. A Chinese-Canadian FTA could strengthen bilateral trade and investment significantly.

Last year, the combined investment from China and Hong Kong in Canada soared to $26.4 billion, which is almost half of Asia Pacific investment in the country. But since the starting-point is low, China was only the eighth largest investor in Canada.

Canada’s former China ambassador Howard Balloch believes that Canada “should be able to negotiate with China” during the NAFTA talks. Canada has a “huge interest” in China and trade diversification whatever the outcome of the NAFTA talks.

Intriguingly, the latter are likely to coincide with the time that Canada and China would need to finalise an FTA agreement. 

Political Divisions, Domestic Support

With a population of more than 1.3 billion, China is perceived as a lucrative market for Canada’s agriculture and natural resources sectors. Last year, Trudeau’s cabinet approved the Trans Mountain pipeline expansion mainly to improve Canada’s ability to get oil to China.

However, there is an intense debate over the proposed FTA with China. While Trudeau’s Liberal Party supports greater bilateral trade, Conservative leader Andrew Scheer opposes a bilateral FTA. Relying on the “China threat” card, Conservatives have criticised the Liberals for allowing Chinese takeovers of Canadian businesses, while taking advantage of Canadian concerns about human rights and environmental standards.

What about ordinary Canadians? Asia Pacific Foundation’s polling suggests that a slight majority of 55 percent might support a Canadian-Chinese FTA, but UBC’s recent poll indicates that 70 percent of Canadians support the idea and only 20 percent are against it.

Such a shift would reflect greater economic interest in a bilateral trade deal – but also growing concern about the Trump White House, rising US protectionism and the potential NAFTA collapse.

 

Canada’s Shift toward Asia

China is seen as doing more to “maintain peace” than the US and two-thirds of Canadians believe China will be the “largest economic power” by the 2020s.

While US officials have sought to subdue NAFTA tensions by extending the timetable for renegotiations that may only pour oil on the simmering fire. In Mexico, tight elections in mid-2018 will complicate the NAFTA talks; in Canada, conservatives are positioning for the 2019 elections.

Nevertheless, Canada is losing its faith in the US. According to UBC, 36 percent of Canadians believe the US is a “more responsible global leader” than China (28%). Yet, 37 percent of the citizens are “uncertain” about the matter. Moreover, China is seen as doing more to “maintain peace” than the US and two-thirds of Canadians believe China will be the “largest economic power” by the 2020s.

Amid the new uncertainty, Canada is likely to do what it can to sustain NAFTA over time, while – at least under Trudeau – it is likely to seek a trade deal with China that would foster diversification, new investment at home and greater presence in Asia.

From China’s standpoint, a bilateral deal with Canada would open new doors to North America and pave way to the Free Trade Agreement of Asia Pacific (FTAAP), which would be broader and more inclusive than the current trade pact efforts.

 

The original commentary was published by China Daily on December 4, 2017

The author is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore).  

Photo Courtesy: GREG BAKER / AFP/GETTY IMAGES

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

Overcoming Decades of Missed FDI in the Philippines

By Dan Steinbock

Since the 1980s, economic success in Asia has often relied on foreign investment, at least initially. Last week, President Duterte took a decisive step toward that direction. Why has the change taken so long? And why is the devil in the details?

 

In the third quarter, the Philippine economy grew 6.9%, which made it Asia’s second fastest-growing economy after Vietnam. But unlike Vietnam, which has reaped many benefits of foreign direct investment (FDI), the Philippines has not.

Again and again, former President Benigno Aquino III acknowledged the need to boost FDI during his reign. Yet, the main challenge to attract FDI has been the 60/40 foreign ownership law, which Aquino neglected to confront between 2010 and 2016.

On November 21, President Duterte ordered the National Economic Development Authority (NEDA) to take “immediate steps” to lift or ease restrictions on foreign direct investment (FDI) in the Philippines to foster economic growth.

With this directive, the foreign investment negative list is expected to be cut by half. The goal is to “raise the Philippines’ competitiveness, and to foster higher economic growth in the Association of Southeast Asian Nations (ASEAN) region and beyond.”

As I have argued for years – on the basis of my work in competitiveness, innovation and FDI in several continents – a change is desperately needed in the Philippines. And it is about three decades late.

Falling Behind

While FDI stock illustrates the size of foreign investment historically, FDI flows exemplify the size of recent investments. In the years of booming globalisation, FDI stock as percentage of GDP increased slowly in the Philippines, but more than doubled in Indonesia and almost quadrupled in Thailand – until global FDI plunged during the global financial crisis in 2008.

True, FDI flows in the Philippines more than doubled to $5.7 billion in 2013-14, but only to plunge to $4.9 billion in 2015 toward the end of the Aquino era. These flows should be set in the historical context: In the early 2010s – when Aquino promised to attract far more investment to the Philippines – FDI as a percentage of GDP actually declined to 12.4%. This figure was only half of that in Indonesia, barely a fourth of its counterpart in Thailand and a fifth of the regional average.

During the past decade, Singapore has remained Southeast Asia’s leader in inward FDI flows, which peaked at $74 billion in 2014.

More recently, the FDI performance of both Indonesia and Thailand has eroded significantly. In turn, the weaker FDI players – Myanmar, Cambodia, Laos and Brunei – continue to generate about $1 billion to $2 billion annually.

Consequently, Malaysia, Vietnam and the Philippines are now competing FDI flows in the same category. In the early 2010s, Malaysia was the leader with some $12 billion in FDI flows. Currently, Vietnam has the mantle with almost $13 billion, but – in the Duterte era – FDI flows to the Philippines grew to almost $8 billion last year and there is potential for far more (Figure 1).

 

Figure 1: Inward FDI Flows, 2005-2016

Source: Data from UNCTAD

 

In historical view, the picture is worse because, unlike its more successful ASEAN peers, the Philippines has failed to benefit from inward FDI for decades.

In the 1990s, FDI stock as percentage of the GDP was more than 30% in Malaysia, close to 28% in Vietnam but only 8% in the Philippines. By 2016, the ratio had soared to 57% in Vietnam, while climbing to 41% in Malaysia. In the Philippines, it was 20% – while remaining stagnant through much of the Aquino era (Figure 2).

 

Figure 2: Inward FDI Stock as Percentage of GDP, 1995-2016

Source: Data from UNCTAD

The good news is that the change in FDI flows has come with the Duterte era. The bad news is that it has been preceded by three decades of missed opportunities.

But how should the Philippines attract FDI?

 

Using FDI to Upgrade Competitiveness

Boosting FDI flows should be linked with efforts to enhance innovation in strategic clusters that will be vital in the future as the Philippines competitiveness is enhanced and upgraded.

The bottom line is that FDI flows should enhance Philippine competitiveness over time. Otherwise, foreign investment may benefit foreign companies and their investors – but not Philippine living standards.

In the Global Competitiveness Index, the Philippines is today ranked 56th, right after Vietnam. In the Corruption Perception Index, the country (101st) is ahead of Vietnam (113th).

But here’s the real challenge: Despite impressive growth performance, the Philippines (113th) remains far behind Vietnam (68th) in the Ease of Doing Business rankings, along with Malawi, Swaziland, and Palestine. That’s unconscionable. The Philippines needs substantial structural reforms to unleash entrepreneurship.

But how should the Duterte government use FDI to upgrade competitiveness?

First of all, the objective should not be to attract investors with subsidised input costs, but with higher productivity. For instance, subsidising electricity rates may offer private gains for investors, but improving the efficiency and quality of the electricity grid would support the productivity of the entire business environment.

Second, the goal should not be to improve the quality of the location in ways that benefit just investors, but multiple companies and industries. For instance, tariff exemptions generate market distortions, whereas improved customs procedures enhance national competitiveness.

Third, it is vital to develop “sticky” incentives that are tied to the location. Corporate tax breaks boosts the “race to the bottom”, whereas general improvements in the business environment contribute to the country’s attractiveness.

Fourth, focus should be on sustained investment rather than transient one-time deals. If incentives are tied to the total size of the investment, they will be more beneficial to the country (and to the investors). Indeed, the government’s “Build, Build, Build” infrastructure plan is one vital instrument in this regard. Similarly, incentives that encourage profitability and motivate investors to upgrade activities in the country contribute to more sustained FDI.

Indeed, boosting FDI flows should be linked with efforts to enhance innovation in strategic clusters that will be vital in the future as the Philippines competitiveness is enhanced and upgraded.

 

The Magnitude of Challenges

Nevertheless, increased foreign investment is no panacea, as labour and nationalist leaders often argue. If FDI flows rise at the cost of the country’s long-term productivity and economic development, nation’s sovereignty will be penalised. Furthermore, without appropriate efforts at the long-term “indigenisation” of foreign investment, FDI benefits are likely to prove transient.

In much of emerging Asia, including China, national leaders did not opt for the FDI as a way to enhance productivity because it was the best option, but because alternatives were worse.

What the Philippines needs is inclusive foreign investment, which requires a long-term focus on economic development.

Second, the countries that have truly benefited from FDI are ones that have excelled in “learning by doing”. Initially, foreign multinationals arrived with their own eco-systems; over time, foreign suppliers were replaced by cost-effective indigenous contractors.

Third, as China’s success has demonstrated, assembly manufacturing, coupled with unleashed entrepreneurship, can make a great difference in economic development because it opens the benefits of industrialisation to many.

Even currently favourable “demographic sweet spots” will only prove tomorrow’s development traps unless jobs are available, under-employment is marginal and the best and the most industrious are not being exported to other countries.

Moreover, significant FDI flows are necessary but not enough in countries in which manufacturing lacks adequate presence and in which landed elites are reluctant to renounce historical privileges – even in the name of their children or grandchildren.

Undoubtedly, the Duterte government is now paving way to recapture some of the FDI flows of the missed decades. Yet, the magnitude of the challenges should be taken seriously.

What the Philippines needs is inclusive foreign investment, which requires a long-term focus on economic development.

 

The original commentary was published by The Manila Times on November 27, 2017

Featured Image: Leaders at the 30th Association of Southeast Asian Nations (ASEAN) summit in Manila, Philippines, April 29, 2017. © Reuters

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About the Author

Dr. Dan Steinbock is Guest Fellow of Shanghai Institutes for International Studies (SIIS), see http://en.siis.org.cn/. The commentary is part of his SIIS project “China in the Era of Economic Uncertainty and Geopolitical Risk”. For his global advisory activities and other affiliations in the US and Europe, see http://www.differencegroup.net/

Uzbekistan – A Voice from Eurasia

By Peter Koenig

 

Uzbekistan is a peaceful friendly country, smiling faces, many of them struggling to make a living, but still smiling. Uzbekistan is a double landlocked nation, meaning she is surrounded by other landlocked countries, i.e. Afghanistan, Tajikistan, Kyrgyzstan, Kazakhstan and Turkmenistan.

Landlocked countries have no access to the sea. They are economically more challenged than are those with access to the seas. Exports to and from distant destinations are more complicated and more expensive.

Since the collapse of the Soviet Union, Uzbeks are trying to find their bearings in defining and paying for their own social services, health, education, water and sanitation, as well as for a rapidly decaying infrastructure. But they are doing what they can, exporting labor to Russia and western Europe (receiving transfer payments); young people leaving their families behind, send money home, come back for a vacation, once, twice – then, many start new families in their host countries and leave their wives and children behind. A classic for Gastarbeiter, or guest workers, throughout the world.

But lately Uzbekistan, like other Central Asian countries, are experiencing a mini-boom – a boom thanks to the sanctions imposed on Russia by Washington and through extension by its European vassals. Her exports of vegetables, fruit, other agricultural and industrial goods to Russia are skyrocketing. Mr. Putin already said two years ago, the sanctions were the best thing that ever happened to Russia since the collapse of the Soviet Union. They forced Russia to develop their agriculture again and bring her defunct industrial apparatus with science and research up to cutting edge technology, at par or above that of the west. They have certainly succeeded and by association, the sanctions have benefitted Uzbeks and other Central-Asians by improving their standards of living by supplying goods and services to Russia, while Russia’s capacity is growing stronger. Together with her Eurasian partners they are gradually achieving full self-reliance, independence from the blackmailing “sanctions” of the western economies.

The SCO is a huge block for trade, economic, defence, and strategic thinking, comprising half of the globe’s population and one third the world’s GDP.

There is also the Shanghai Cooperation Organization (SCO), of which most of Central Asia, plus Russia and China are members. The SCO is a huge block for trade, economic, defence, and strategic thinking, comprising half of the globe’s population and one third the world’s GDP. In short, the day of total decoupling from the western fraudulent dollar-euro system is clearly visible on the horizon. – All that thanks to abject, arrogant and inhuman behaviour, beset by greed for power and monetary gains by the west. The west is constantly shooting itself in the foot. Soon it will have no more feet to walk on. Then it will shoot higher not realising that the ricochets will eventually kill it. The west is committing willy-nilly suicide by greed for money and power.

Is that good? – Difficult to say. For many common people, lower middle-class and poor people, in Europe and elsewhere, it may mean at least temporary hardship, until the world recovers from two centuries-plus of western made wars, conflicts and oppression, claiming tens of millions of deaths and untold misery around the world. But recover we will – unless, yes unless – a Zion-western prompted nuclear madness against Iran, North Korea, Syria, or even Russia and China devastates us all.

This message comes from Ferghana, the capital of Uzbek’s Ferghana Province, embracing a vast, large, flat valley that stretches to the north-east into Tajikistan and Kyrgyzstan, a transit point of the old Silk Road. Today the Ferghana Valley is a fertile agricultural area, the home of many cotton growers and exporters to Russia and China – and other SCO countries. It is trade outside of the dollar dominion.

And of course, Uzbekistan like the rest of Eurasia is part of China’s President Xi’s NEW Silk Road project, the One Belt Initiative, or OBI, a multi-trillion-dollar endeavour of infrastructure, industry, science and technology development that is meant to eventually embrace all of Europe, Asia and even Africa.

OBI is to become a multi-pole of economic development outside of the current western dollar dominion, but its doors are open for any nation that dares to join and detach from the stranglehold of the Washington dominated military and financial power grip – a clear and present danger for Washington’s objective of full spectrum dominance. OBI is the future for economic growth and development, job creation, science, education, culture. Therefore, the East, where undoubtedly the future lays, has to be denigrated by any means the western mainstream presstitute has at its disposal – disparaging lies and slander, including constant accusations of human rights abuses.

OBI, a humane approach to prospering life in peace, has become the west’s new economic axis of evil that has to be defeated by any means. While western aggressors, the US, the ridiculously defunct NATO and its many vassal-proxies in Europe and the Middle East are on their last breath, they are seeking to pull the world with them into a nuclear abyss of total destruction. NATO is even prospecting for new clients in South America – a contract of collaboration with Columbia which may spread like brushfire throughout Latin America – their leaders are not careful. That is the zion-western thought process – its US or NOBODY; its profit über alles.

Uzbekistan, China, Russia and the entire East is doing great as far as human rights are concerned – there is not even a shred of comparison with the abusive, murderous west.

Uzbekistan being part of the New East, thus, has to be smeared, for example with human rights abuses. Western drip-by-steady-drip propaganda is such that it escapes common people’s perception and becomes reality. A friend, knowing of my stay in Uzbekistan, recently wrote to me, “how are human rights in Uzbekistan?” – inferring that they are disastrous. They are certainly not.

The western populace lives in a bubble in which their values are enshrined as the truth – all the wars and conflicts started by the west, the so called war on terror, based on a “false flag” 9/11, is justifying any human rights abuse, wars, CIA assassinations, drone killings, financial strangulations by “sanctions” abject torture, raping and slaughtering entire countries, like the central African countries, for natural resources, rare earths used for the military-security industrial complex that needs an ever-mounting spiral of wars and conflicts for ever more and higher profits by an economy of death and destruction – which is what we have become in the west. “Fake news” also makes Uzbekistan a country that allegedly supplies terrorists, like the recent downtown Manhattan sidewalk rampage, supposedly carried out by an Uzbek national.

Yet, hardly anybody in the west sees the context of western aggression, when they launch accusations of human rights abuse against Russia, China, Iran, Syria, Venezuela, Cuba, Uzbekistan – and the list goes on. It is beyond comprehension how blind our media have made us in the west – to the point that truth seeking media, like Russia Today (RT), Sputnik, TeleSur – are shunned, if not outright banned in the west, i.e. in the US of A and its European puppets and in some of the newly converted neoliberal Latin American countries.

Uzbekistan, China, Russia and the entire East is doing great as far as human rights are concerned – there is not even a shred of comparison with the abusive, murderous west.

 

Photo Courtesy: http://uzbekistan.travel/en/

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About the Author

koenig-webPeter Koenig is an economist and geopolitical analyst. He is also a former World Bank staff and worked extensively around the world in the fields of environment and water resources. He lectures at universities in the US, Europe and South America. He writes regularly for Global Research, ICH, RT, Sputnik, PressTV, The 4th Media, TeleSUR, TruePublica, The Vineyard of The Saker Blog, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe. He is also a co-author of The World Order and Revolution! – Essays from the Resistance.

Exaggerated Alarm and Destructive Excursions: Anti-Proliferation Policy and The Case of North Korea

By John Mueller

The consequences of nuclear proliferation have been substantially benign: those who have acquired the weapons have “used” them simply to stoke their egos or to deter real or imagined threats. However, alarmed anti-proliferation efforts have proved to be exceedingly costly. History suggests that the best policy for dealing the North Korea’s nuclear weapons program is to stop threatening and, as with the Chinese programme, to do nothing.

 

In 1950, notes historian John Lewis Gaddis, “no one” among foreign policy decision-makers anticipated “that there would be no World War” over the next half century and that the United States and the USSR, “soon to have tens of thousands of thermonuclear weapons pointed at one another, would agree tacitly never to use any of them.”1

However, it could have been reasonably argued at the time that major war was simply not in the cards – that despite the huge differences on many issues, the leading countries of the world would manage to keep themselves from plunging into a self-destructive cataclysm like, or even worse than, the one they had just survived. This perspective was not, of course, the only one possible, but there was no definitive way to dismiss it. Thus, as a matter of simple, plain, rational decision-making, this prospect – the one that proved to be true – should have been on the table.

The pattern continues. Just about everyone, including the whole of the foreign policy establishment, has for decades taken it as a central article of faith that the proliferation of nuclear weapons is an overwhelming danger and that all possible measures, including war, must be taken to keep it from happening.

But the consequences of such proliferation that has taken place have been substantially benign: those who have acquired the weapons have “used” them simply to stoke their egos or to deter real or imagined threats.      At the same time, however, alarmed efforts to prevent the proliferation of nuclear weapons have proved to be very costly, leading to the deaths of more people than perished at Hiroshima and Nagasaki combined.

This experience suggests, essentially, that the best policy toward North Korea today would be, essentially, to do nothing.

The Benign Consequences of Nuclear Proliferation

Although the weapons have certainly generated obsession and have greatly affected military spending, diplomatic posturing, and ingenious theorising, the few countries to which the weapons have proliferated have for the most part found them a notable waste of time, money, effort, and scientific talent. They have quietly kept them in storage and haven’t even found much benefit in rattling them from time to time.

Although there are conceivable conditions under which nuclear weapons could serve a deterrent function, it is questionable whether they have yet ever done so. In particular, it is far from clear that nuclear weapons are what kept the Cold War from becoming a hot one. Indeed, each leak from the archives suggests that the Soviet Union never seriously considered any sort of direct military aggression against the United States or Europe. As historian Vojtech Mastny puts it, “The strategy of nuclear deterrence [was] irrelevant to deterring a major war that the enemy did not wish to launch in the first place.”2

Moreover, the weapons have not proved to be crucial status – or virility – symbols. How much more status would Japan have if it possessed nuclear weapons? Would anybody pay a great deal more attention to Britain or France if their arsenals held 5,000 nuclear weapons, or would anybody pay much less if they had none? Did China need nuclear weapons to impress the world with its economic growth? Or with its Olympics?

Insofar as most leaders of most countries (even rogue ones) have considered acquiring the weapons, they have come to appreciate several defects: nuclear weapons are dangerous, distasteful, costly, and likely to rile the neighbors. Moreover, as Jacques Hymans has demonstrated, the weapons have also been exceedingly difficult to obtain for administratively dysfunctional countries like Iran.3 In consequence, alarmist predictions about proliferation chains, cascades, dominoes, waves, avalanches, epidemics, and points of no return have proved to be faulty.

It is sometimes said that proliferation has had little consequence because the only countries to possess nuclear weapons have had rational leaders. But nuclear weapons have proliferated to large, important countries run by unchallenged monsters who, at the time they acquired the bombs, were certifiably deranged. Thus, when he got his bomb, the Soviet Union’s Stalin had been plotting to “transform nature” by planting lots of trees and was given to wandering around the Kremlin mumbling that he could no longer trust anyone, not even himself.4 And when China’s Mao got his bomb, he had recently launched an addled campaign to remake his society that created a famine killing tens of millions.5 Yet neither country used its nuclear weapons for anything other than deterrence and ego-boosting.

 

The Destructive Consequences of Anti-proliferation Policy

Although the consequences of nuclear proliferation have proved to be substantially benign, the same cannot be said for those of the nuclear anti-proliferation quest.

Although the consequences of nuclear proliferation have proved to be substantially benign, the same cannot be said for those of the nuclear anti-proliferation quest.

The war in Iraq, with deaths that have run well over a hundred thousand, is a key case in point. The war against the fully deterrable and containable Saddam Hussein was a militarised anti-proliferation effort to keep his pathetic regime from developing nuclear and other presumably threatening weapons and to prevent him from palming off some of these to eager and congenial terrorists. However, the devastation of Iraq in the service of limiting proliferation did not begin with the war in 2003. For the previous thirteen years, that country had suffered under economic sanctions visited upon it by both Democratic and Republican administrations that were designed to force Saddam from office (and, effectively, from life since he had no viable sanctuary elsewhere) and to keep the country from developing weapons, particularly nuclear ones.

The costly alarmist perspective on atomic proliferation is also evident in policies advocated toward North Korea at various times. In the 1990s the Clinton administration, alarmed by concerns about a North Korean nuclear weapon, moved to impose deep economic sanctions to make the isolated country even poorer (insofar as that was possible). And in the next years, when floods and bad weather exacerbated the economic disaster that had been inflicted upon the country by its rulers, there were efforts to deny the existence of a famine (in which over a million people perished) for fear that a politics free response to a humanitarian disaster would undercut efforts to use food aid to wring diplomatic concessions on the nuclear issue from North Korea.6

 

The Case of North Korea

If North Korea goal were to commit self-destructive mayhem, it has long possessed the capacity to do so. With the artillery it has amassed in its south, it could pulverise much of South Korea, including its capital city, Seoul.

Since World War II, then, none of the handful of countries with nuclear weapons has “used” them for anything other than ego-stoking and deterrence. North Korea seems highly likely to follow the same approach. The hysteria its nuclear program has inspired, then, is simply not justified.

North Korea sports perhaps the most pathetic, insecure, and contemptible regime in the world, and survival is about the only thing it has proved to be good at. It surely knows that launching a nuclear bomb somewhere against a set of enemies that possess tens of thousands is a pretty terrible idea. This would be the case even if the missile actually manages to complete the trip and even if the warhead actually detonates, neither of which is very likely given the country’s technological prowess: 88 percent of the flight tests of some of its missile have failed (5 to 10 percent is normal).7

And North Korea does continually insist that its nuclear program is entirely for “defensive” purposes. Moreover, if its goal were to commit self-destructive mayhem, it has long possessed the capacity to do so. With the artillery it has amassed in its south, it could pulverise much of South Korea, including its capital city, Seoul.8

North Korea’s ego-stoking has, of course, already started. And the threat it needs to deter has not been difficult for it to identify. Since the 1950s, the United States has persistently and unambiguously wanted to take out the regime, and it has, at times, actively schemed to do so.

Although a quick perusal of the front pages might suggest that Donald Trump has a lock on irresponsible, even infantile, presidential bloviating, the art form has a long history. A prime example, and the one that essentially started the current phase of hysteria over North Korea, occurred shortly after 9/11 when President George W. Bush announced that America’s “responsibility to history” was now to “rid the world of evil” – rather outdoing God who once tried with that flood of His.9

Then, a few months later, Bush specified in a major speech that, while evil could presumably be found everywhere, a special “axis of evil” existed, and it lurked, in this order, in North Korea, Iran, and Iraq.10 As Bush geared up to attack number three in early 2003, North Korea announced that it would be withdrawing from the Nuclear Non-Proliferation Treaty.

North Korea’s wariness about negotiating away its nuclear capacity can only have been enhanced by the experience of Libya’s dictator, Muammar Qaddafi, who cut a deal with the Americans to do that in 2003.11 When Qaddafi was confronted with an insurrection in 2011, the Obama administration militarily intervened, speeding his downfall and brutal execution.

It is commonly argued that we have to worry because the North Korean regime is exceptionally crazy. However, it is incumbent on those alarmed by North Korea’s bomb to demonstrate that the regime is daffier than Stalin’s Soviet Union and Mao’s China.

When China, impelled, like North Korea, primarily by incessant threats from the United States, began building a bomb, President John Kennedy very seriously considered bombing Chinese nuclear facilities. He was heard to declare that “A Chinese nuclear test is likely to be historically the most significant and worst event of the 1960s.”12

Nuclear proliferation, while not particularly desirable, is unlikely to prove to be a major danger, and extreme anti-proliferation policies need careful reconsideration.

Instead, the US essentially did nothing. China ended up building far fewer of the bombs than it could have, its foreign and domestic policy eventually mellowed very substantially, and the existence of its arsenal has proved to be of little historical consequence.

And it turned out that “historically the most significant and worst event of the 1960s” stemmed not from China’s nukes, but from Kennedy’s tragically misguided decision to begin to send American troops in substantial numbers to Vietnam largely to confront the Chinese threat that he came to believe lurked there.

Insofar as nuclear proliferation is a response to perceived threat, it follows that one way to reduce the likelihood such countries would go nuclear is a simple one: stop threatening them. And, more generally, any anti-proliferation priority should be topped with a somewhat higher one: avoiding militarily aggressive actions under the obsessive sway of worst-case-scenario fantasies, actions that might lead to the deaths of tens – or hundreds – of thousands of people.

Nuclear proliferation, while not particularly desirable, is unlikely to prove to be a major danger, and extreme anti-proliferation policies need careful reconsideration. They can generate costs far higher than those likely to be inflicted by the potential (and often essentially imaginary) problems they seek to address.

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About the Author

John Mueller is a Senior Fellow at the Cato Institute and a Political Scientist at Ohio State University in the United States. Among his books are Atomic Obsession: Nuclear Alarmism from Hiroshima to Al-Qaeda and (with Mark Stewart) Chasing Ghosts: The Policing of Terrorism and Are We Safe Enough? Measuring and Assessing Aviation Security.

 

References

1. Gaddis, John Lewis, George F. Kennan: An American Life, New York: Penguin, 2011, p. 403.
2. Mastny, Vojtech, “Introduction,” in Vojtech Mastny, Sven G. Holtsmark, and Andreas Wenger, eds., War Plans and Alliances in the Cold War: Threat Perceptions in the East and West, London and New York: Routledge, 2006, p. 3.
3. Hymans, Jacques E.C., Achieving Nuclear Ambitions: Scientists, Politicians, and Proliferation, New York: Cambridge University Press, 2012.
4. Mueller, John, Retreat from Doomsday: The Obsolescence of Major War, New York; Free Press, 1989, p. 123.
5. Dikötter, Frank, Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958-1962, New York: Walker, 2010.
6. Oberdorfer, Don, The Two Koreas: A Contemporary History, New York: Basic Books, 2001, pp. 147‑148, 318.
7. Bowden, Mark, “How to Deal with North Korea,” Atlantic, July/August 2017. https://www.theatlantic.com/magazine/archive/2017/07/the-worst-problem-on-earth/528717/
8. Ibid.
9. https://www.youtube.com/watch?v=-0VQH8hODlo
10. https://georgewbush-whitehouse.archives.gov/news/releases/2002/01/20020129-11.html
11. Pillar, Paul, R., “The Terrorist Consequences of the Libyan Intervention,” nationalinterest.org, March 23, 2011. http://nationalinterest.org/blog/paul-pillar/the-terrorist-consequences-the-libyan-intervention-5064
12. Mueller, John, Atomic Obsession: Nuclear Alarmism from Hiroshima to Al-Qaeda, New York: Oxford University Press, 2010, pp. 95-97, 144.

Brexit – How the British People were Hacked

By Graham Vanbergen

In today’s context, social engineering has now moved on – dramatically. It refers to the manipulation of people into performing actions they wouldn’t normally do. It’s a type of confidence trick, but unlike back in the day when propaganda was largely in print newspapers, there are now serious consequences of social media being used as the vehicle to distribute computational propaganda via psychological warfare strategies originally designed by the industrial military complex. Brexit was one of them.

 

Social engineering is really the hacking of human beings. It’s not new but what is new is the spectacular take up rate of social media across the world, and it brings with it some unique challenges.

The hints of social media being used for geo-political change arrived most notably in the 2010 US Congressional elections, where 61 million Facebook users saw a “social” message encouraging them to vote, with a link to polling station information. People saw a clickable “I VOTED” button, like a counter showing how many people had clicked on it and the profile pictures of six of their Facebook friends who had done so. Facebook’s project saw users who saw their friends’ faces more likely to vote than those who saw the message alone. Hundreds of thousands of votes were attributed to this one action by Facebook.1

As most democratic elections are usually (but not always) won within a margin of about 5 percent, social media has become the latest battleground to garner votes.

As most democratic elections are usually (but not always) won within a margin of about 5 percent, social media has become the latest battleground to garner votes. For instance, in the 2015 general election in Britain, 10 parliamentary seats were won on less than one percent of the vote. One Conservative won his seat on a margin of just 27 votes. And social media had a lot to do with these results.

As for Britain’s 2016 EU referendum, 72.2 percent of eligible voters, nearly 34 million turned up at polling stations. A total of 70 per cent of all voters, and 82 per cent of 18-24 year olds, expected the UK to stay in the EU. However, since the unexpected Brexit result there has been an epic media post-mortem on why this happened. Much was blamed on certain demographics such as age, location, education and even religion. But the truth of the matter was that something else happened, which is currently being fought out in both the courts and in the shadows and more recently with the announced involvement of the Electoral Commission.

In the case of the EU referendum, only 2.5% of the electorate were identified as the crucial targets needed to cause an historical moment in British history. And so the strategy for bringing about Brexit was constructed.

By April this year it was becoming clear that illegal social media campaigns had played a significant role in Brexit. More recently though, research has uncovered a number of illegal game plans that were both scandalous and steeped in corruption whilst giving the lie that Britain has a functioning democracy, which it can no longer claim. To deflect the illegal strategies from within, mainstream media has firmly laid blame at Britain’s customary mortal enemy, Russia. These reports have now reached the point of frenzied delirium. There may be some small truth in them, but as I’ve said before, there’s a big difference between influence and control. Russia does not control Britain.

However, bots and trolls were worked together to spread propaganda and manipulate Twitter and Facebook users’ political views, which played a significant role in the Brexit outcome, says a new study  from the Oxford Internet Institute, University of Oxford (which does not mention Russia).2

The report describes this particular form of computational propaganda as a “phenomenon that encompasses recent digital misinformation and manipulation efforts”, which “involves learning from and mimicking real people so as to manipulate public opinion across a diverse range of platforms and device networks”. It ends with the stark warning that: “Computational propaganda is now one of the most powerful tools against democracy.”

Social media are now monopoly platforms for public life and are being used as a tool for public opinion manipulation, which is clearly heading down a route towards methods of social control. For instance, the report makes an example that computational propaganda played a role during three recent political events in Brazil: the 2014 presidential elections, the impeachment of former president Dilma Rousseff and the 2016 municipal elections in Rio de Janeiro.

In Britain, it was clear that individual users design and operate fake and highly automated social media accounts. Political candidates, campaigns and lobbyists rent larger networks of accounts for purpose-built campaigns while governments assign public resources to the creation, experimentation and use of such accounts. The Oxford report confirms this.

In Britain, it was clear that individual users design and operate fake and highly automated social media accounts.

In studies in seven democratic countries, members of political parties and so called “freelance campaigners”, and even elections officials provided evidence that social media bots and computational propaganda more broadly had been used to manipulate online discussions. The report confirms this as well.

We have since found out that in Poland, significant portions of the conversation about politics over Twitter is produced by a handful of right-wing and nationalist accounts. Ukraine provides another perspective. It is perhaps the most globally advanced case of computational propaganda where numerous online social media disinformation campaigns have been waged against Ukrainian citizens. The industry that drives these efforts at manipulation has been active in Ukraine since the early 2000s, giving an insight to how long this form of human hacking has been active.

The most powerful forms of computational propaganda involve both algorithmic distribution and human curation – that is bots and trolls working together, all of which are now artificially shaping public life (Woolley & Howard, 2016). One person, or a small group of people, can use an army of political bots on social media to give the illusion of large-scale consensus.

Part of the Oxford report focussed on how regimes use political bots, built to look and act like real citizens, in efforts to silence opponents and to push official state messaging. In the case of Brexit and Donald trump’s unexpected rise to the Whitehouse we can see that certain campaigns were aimed directly at swaying the vote or defaming the opposition with numerous examples of misinformation distributed online with the intention of misleading voters.

As for the UK Brexit referendum it was found that political bots played a strategic role in shaping Twitter conversations. The family of hashtags associated with the argument for leaving the EU dominated, while less than one percent of accounts generated almost a third of all the messages (Howard & Kollanyi, 2016).

This was evidenced by a network of 13,000 twitter bots found to have tweeted hundreds of thousands of predominantly pro-Brexit messages prior to Britain’s EU referendum. The bots then disappeared within a few days of the result confirming their illegal existence. That Twitter may or may not know anything about these accounts is one thing, the fact that someone paid for it all against electoral regulations and got away undetected is very worrying indeed.

The co-ordinated attack on Britain’s democracy is slowly coming to light. A company called Cambridge Analytica are accused by a growing number of newspapers of using the same methods the military use to effect mass sentiment change.3 These are the same strategies of psychological warfare but adapted with the latest technology and used against a civilian population. In this case – Britain.

By mining the data of the entire adult population of Britain, algorithms were used with bots pumping out millions of micro-ads every day that continually learned and morphed enabling individual targeting. At one point, those identified as persuadable were receiving 50-60 politically driven messages in the last few days prior to the referendum.

As if to reinforce the huge technical changes society is experiencing, a report from security firm Imperva found that for the first time, bots had overtaken human driven activity on the Internet. That report from October this year stated that 52 percent of online activity is now automated. However, it also found that nearly a third of this activity was driven with nefarious intent i.e. pushing political messages, propaganda and fake news.4

The truly alarming realisation of all this is that in Britain, with its endemic surveillance apparatus, constructed for the government intelligence operation GCHQ by private contractors, without public or parliamentary debate, has left democracy at the mercy of political actors both inside and outside the borders of the country.

According to a growing number of prominent journalists, Brexit was the result of a combination of proven psychological warfare strategies used by privately owned corporations but developed by the British military, along with illegal funding provided by foreign billionaires for the sole purpose of profiting from the economic destabilisation caused by the result. And whilst these accusations are now the subject of bitter legal battles, the accusations keep bubbling to the surface from different sources.

In addition, it has since been found that coordination between “Leave” campaigns took place to give Brexit more of a push. It is prohibited under UK electoral law, unless campaign expenditure is declared, jointly, which it wasn’t. Vote Leave says the Electoral Commission “looked into this” and gave it “a clean bill of health” proving that the Commission is woefully equipped to deal with modern day strategies using new technologies. Money was then concentrated into online public manipulation strategies. In fact, more money was paid to just one company than any other “Leave” campaign and that one company distributed millions of political propaganda ads.

Martin Moore, director of the centre for the study of communication, media and power at King’s College London, contributed to an LSE report published in April that concluded the “UK’s electoral laws were weak and helpless in the face of new forms of digital campaigning.” They also concluded that within the safety of offshore companies, money poured into databases, and that the caps on spending had come off. The laws that had always underpinned Britain’s electoral regulations were no longer fit for purpose. Laws, the report said, that needed “urgent reviewing by parliament”.

One of the data companies deeply involved in this souring of democracy is not only owned by an American billionaire but is effectively part of the British and American defence establishment.

One of the data companies deeply involved in this souring of democracy is not only owned by an American billionaire but is effectively part of the British and American defence establishment. Having been caught strategically changing the outcome of history through data manipulation, you would have thought an investigation at the highest level was underway with arrest warrants following quickly behind. Instead, there is merely a libel case over the claims made by The Guardian newspaper to warn off others daring to speak the truth.

David Miller, a professor of sociology at Bath University and an authority in military psychological operations and propaganda, says it is “an extraordinary scandal that this should be anywhere near a democracy. It should be clear to voters where information is coming from, and if it’s not transparent or open where it’s coming from, it raises the question of whether we are actually living in a democracy or not.”

From here, politics has now evolved into tactical cyber warfare – against it’s own citizens. In the meantime, without legislation, Will Moy, Director of Britain’s Full Fact said – “It’s possible to target dark ads at millions of people without the rest of us knowing about it. Inaccurate information is spreading with no-one to scrutinise it. Democracy needs to be done in public.”

Finally, only Twitter or Facebook knows what users are being shown what adverts. With weak privacy obligations that the British government allowed in the first place, combined with commercial interests it means that this information is not publicly accessible. If, for instance, Facebook preferred a particular political party in power over another for tax advantages – who is going to know what they got up to.

 

Featured Image: UK spy agency GCHQ monitoring social media accounts of entire Britain © Times of Islamabad

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About the Author

graham-webGraham Vanbergen’s business career culminated in a Board position in one of Britain’s largest property portfolio’s owned by one of the world’s largest financial institutions of its type. Today, he writes for a number of renowned news and political outlets, is the contributing editor of TruePublica.org.uk and Director of NewsPublica.com.

 

References

1. – Facebook “I VOTED” – hundreds of thousands voted after seeing this button: https://www.forbes.com/sites/sebastianbailey/2012/09/24/how-facebook-could-swing-the-election/#759bc6d48389
2. Computational propaganda report – university of Oxford: http://comprop.oii.ox.ac.uk/wp-content/uploads/sites/89/2017/06/Casestudies-ExecutiveSummary.pdf
3. The great British Brexit robbery – The Guardian: https://www.theguardian.com/technology/2017/may/07/the-great-british-brexit-robbery-hijacked-democracy
4. When you can’t trust the data – Imperva report: http://www.thedrum.com/industryinsights/2017/10/10/when-you-can-t-trust-the-data-what-next

What the West Can Learn from the ASEAN Way

By Edgardo Angara

The rise of ASEAN shows how consensus-building, more than the rule of the majority, can help nations overcome religious and racial divisions to achieve shared goals. The West, too, can learn from the ASEAN way of musyawarah (consultation) and muafakat (consensus), which has sustained and strengthened the community in the last 50 years.

 

The rise of the ASEAN community is a curious study of how cooperation and consensus, more than the rule of the majority, can help nations overcome deep divisions in religion, law and race in the pursuit of common goals.

To some Western observers, the ASEAN propensity to build consensus in the midst of discord is a source of puzzlement and frustration as the members have refused to press and criticise each other on major issues confronting the 10-nation bloc, from human rights to maritime disputes.

Indeed, such a noninterventionist policy is enshrined within the ASEAN Charter itself, which commits members to “respecting the fundamental importance of amity and cooperation, and the principles of sovereignty, equality, territorial integrity, non-interference, consensus and unity in diversity”.1

It is, however, precisely this focus on unanimity in its decision-making process, rooted in the ASEAN way of musyawarah (consultation) and muafakat (consensus),2 which has given the ASEAN community the stability and resilience to grow and thrive in the last 50 years.

Today, the Association of Southeast Asian Nations is an unqualified success.

It is one of the most dynamic regional blocs standing toe-to-toe with the European Union, and is even considered by some as the most successful supranational grouping in the world. Composed of 10 countries, ASEAN is home to the world’s third-largest labour force with an economy that is poised to become the world’s fifth-largest by 2020, and, by some projections, the fourth-largest by 2050.

In 2016 the combined GDP of ASEAN countries was collectively worth $2.5 trillion, almost double the $1.3 trillion measured in 2010. In that same period, according to the World Economic Forum, GDP per capita across the region grew by 76 percent.3

Within Asia, only China and Japan have bigger economies.

The bloc’s population of 650 million citizens accounts for a staggering 10 percent of the world population, making it the biggest geopolitical bloc by the number of people, according to the WEF.

As an investment destination, ASEAN is topnotch. It is the fourth-largest exporting region in the world, accounting for up to 7 percent of global exports. Furthermore, more than half of the consumer base in ASEAN is young – under 30 years old. The Philippines is entering its “demographic sweet spot” with more working people than dependent children and retirees. This will reap substantial rewards, including higher per capita income, higher savings rate, and a broader tax base.

ASEAN is home to peoples of various racial origins, including the Han Chinese, the Indo-Aryan and Dravidian peoples of South Asia and the Malay-Austronesian race. Three of the world’s major religions – Christianity, Islam and Hinduism – are practiced in the region, and, at times, right next to each other.

Another sector that has boomed is tourism. All together, the 10 ASEAN states drew more visitors in 2013 than France, the world’s top destination. Three years ago, the World Cruise Industry Review projected that Asia may attract 7 million visitors by 2020, representing a fifth of the global cruise industry.

ASEAN will get a sizable portion of this market, considering its 25,000 island-destinations on offer. By contrast, the Bahamas has only 7,000.

What makes ASEAN’s success even more impressive is that it has done it amid deep divides in religion, race and legal tradition in Southeast Asia.

ASEAN is home to peoples of various racial origins, including the Han Chinese, the Indo-Aryan and Dravidian peoples of South Asia and the Malay-Austronesian race. Three of the world’s major religions – Christianity, Islam and Hinduism – are practiced in the region, and, at times, right next to each other. For instance, the world’s largest Muslim country, Indonesia, maintains brotherly ties with Asia’s largest Christian country, the Philippines.

Such religious and racial divisions tend to degenerate into outbursts of conflict in most parts of the world, but in ASEAN, people mostly live in peaceful coexistence with each other, with some notable and unfortunate exceptions, as in Myanmar’s Rohingya crisis and the long-running Muslim insurgency in the southern Philippines.

There, too, is significant diversity in terms of legal traditions.

Where most former British colonies, like Malaysia, Singapore and Brunei Darussalam follow common law (largely unwritten, precedent-based) systems, Thailand and Vietnam adhere to a continental or codal (“Napoleonic”) legal system. The Philippines follows a mixture of the two.

Such diversity “puts Southeast Asia at a distinct disadvantage in terms of fostering regional cooperation,” according to Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy, National University of Singapore, and coauthor of “The ASEAN Miracle: A Catalyst for Peace”.4

“When ASEAN was founded in 1967, most experts expected it to die within years.” he said in a commentary published in August.

The Singaporean academic noted that Southeast Asia at the time was a poor and deeply troubled region described by the British historian C.A. Fisher as the “Balkans of Asia”.

“The Vietnam War was underway, and the Sino-Vietnamese War was yet to be fought. Many viewed the five non-Communist states that founded ASEAN – Indonesia, Malaysia, the Philippines, Singapore, and Thailand – as dominoes, set to be tipped over by a neighbour’s fall to communism or descent into civil strife,” Kishore said.

In 1967, when the five founding members signed the Bangkok Declaration, the primary objective was to ward off the threat of foreign interference that loomed heavily over the region during the Cold War. This signalled the transformation of the region “from battlefield into a marketplace”, as explored by Balazs Szalontai in “The end of the Cold War and the Third World: new perspectives on regional conflict.”5

Soon, according to Kishore, even ASEAN’s “communist enemies” Cambodia, Laos and Vietnam joined the bloc.

“So, too, did Myanmar, ending decades of isolation,” he said. “Asean’s policy of engaging Myanmar drew criticism from the West, but it helped lay the groundwork for a peaceful transition from military rule,” Kishore said, pointing out the contrast with the West’s policy of isolation toward Syria.

As the region grows, however, threats and challenges persist.

One is the Islamic State and the scourge of religious extremism. In March 2015, Singapore Prime Minister Lee Hsien Loong, speaking at the 14th Asia Security Summit, described ISIS’s declaration to establish an ASEAN wilayat (province) under its caliphate as a “grandiose, pie-in-the-sky dream”.6

The plan to form an antiterrorism pact between the Philippines, Malaysia and Indonesia is thus highly urgent.

He nonetheless predicted that it was not far-fetched for the terrorist organisation to aim to establish a base in the region, “somewhere far from the centres of power of state governments, where the governments’ writ does not run”. His words proved prophetic. The plan materialised in Marawi City in southern Philippines, where fighting continues between government forces and militant sympathisers of the terrorist group.

ASEAN has long been threatened by radical extremism. Many young Southeast Asian Muslims went to Pakistan in the 1980s to help Afghani jihadists defend against Soviet occupation of Afghanistan. They were radicalised by such groups as al-Qaeda. When they returned to their home countries in the 1990s, they founded their own groups, such as Jema’ah Islamiyah, which was responsible for the 2002 bombing in Bali and the 2000 “Rizal Day” bombings around Metro Manila.

The plan to form an antiterrorism pact between the Philippines, Malaysia and Indonesia is thus highly urgent.

Besides terrorism, maritime disputes aggravated by China’s island-building activities and militarisation of the South China Sea rank among the most disturbing and disruptive challenges to ASEAN’s future development.

Though not all members are party to the disputes, ASEAN’s insistence and emphasis on consensus-building makes it difficult for the bloc to take any decisive position beyond calling for a toothless Code of Conduct in the South China Sea.

Pundits have argued that such a decision-making process is a weakness of ASEAN, leading to ineptness in responding to humanitarian crises and security issues besetting the region. Other commentators, however, believe this approach is preferable to the Western model.

Edith Terry, an Adjunct Professor at the Hong Kong University of Science and Technology, wrote that such a “lowest-common-denominator approach” was in fact why ASEAN “holds up well amid disappointment with the Bretton Woods institutions”.7

She said: “ASEAN will never face a Brexit. Its fundamental promise to its members is that it does not challenge their sovereignty. Its Jakarta-based secretariat is the opposite of the bureaucratic Babylons of the European Union, the World Bank, the International Monetary Fund, the World Trade Organization or the UN and its many offshoots. It has a staff of 300, compared to 100 times that in EU headquarters in Brussels.”

Unlike the World Bank, IMF or the UN, according to Terry, ASEAN does not have an equity structure that gives richer members more say but, instead, calibrates its dues to the paying capacity of its poorest members.

The flip side of such an argument is that the requirement for unanimity among the 10 ASEAN states opens the window for interference by big external powers, such as China and the United States, whose attempts to peddle influence within the grouping are no secret.

In January, Kilian Spandler, a political scientist and board member of the Germany-based think-tank Young Initiative on Foreign Affairs and International Relations, wrote an analysis with the intriguing title: “What Can ASEAN Teach the EU?”8

Unlike the World Bank, IMF or the UN, ASEAN does not have an equity structure that gives richer members more say.

Whereas before, the European Union had shown little interest in learning from the ASEAN experiment, Spandler said this changed recently as a consequence of domestic challenges in Europe arising from “populist and xenophobic reactions toward the increased immigration by displaced persons from outside the continent”.

“Just like that, EU policymakers have become very interested in how countries like Malaysia, Singapore, and the Philippines managed to keep conflict between people of Malay, Sinic, and Indian ethnicity, Christian and Muslim belief, or indigenous and immigrant origin at bay,” Spandler said.

Thus, he said, ASEAN has begun to develop its own “normative power” – a term used to describe the EU’s ability to influence others’ ideas and create a beneficial international environment by projecting its values abroad. “ASEAN appears to have found a unique selling point beyond its trade potential, and this has brought the organisation closer to the goal of a level playing field with its European partners,” Spandler said.

In the next 50 years, ASEAN may achieve a level of economic and political integration that is similar to that of the EU. Its economic and social fundamentals are strong and stable, and, barring major obstacles, the bloc appears to be on its way to becoming a major power.

The European model, however, clearly is not the suitable one to follow. Instead, ASEAN will do well to continue on the path of longevity and relevance that has sustained it for the past 50 years – the ASEAN way.

 

Featured Image: Leaders of the Association of Southeast Asian Nations gather for a plenary session of the biyearly summit in Manila, Philippines on April 2017. © ASEAN50/Released

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About the Author

Edgardo J. Angara spent most of his professional career in public service and law. He was Senate President (1993-1995) and Senator for four six-year terms, serving as a legislator for 23 years. He was a Founding President of the ASEAN Law Association (ALA); President of the Integrated Bar of the Philippines (IBP) (1979-1980); and the Philippine Bar Association (1975-1976).

 

References

1. The Asean Charter. http://www.asean.org/wp-content/uploads/2012/05/11.-October-2015-The-ASEAN-Charter-18th-Reprint-Amended-updated-on-05_-April-2016-IJP.pdf
2. “ASEAN’s Third Way?” by Daniel Wu, The Diplomat. https://thediplomat.com/2011/11/aseans-third-way/
3. “ASEAN is 50, and it’s come a long way. Here’s why you should care,” by Alex Gray, World Economic Forum. https://www.weforum.org/agenda/2017/01/asean-is-50-and-it-s-come-a-long-way-here-s-why-you-should-care/
4. World View, by Kishore Mahbubani, Philippine Daily Inquirer http://opinion.inquirer.net/106070/asean-at-50
5. “From battlefield into marketplace: The end of the Cold War in Indochina, 1985-1989,” by Balazs Szalontai, “The end of the Cold War and the Third World: new perspectives on regional conflict.” http://www.academia.edu/25628812/From_Battlefield_into_Marketplace_The_End_of_the_Cold_War_in_Indochina_1985-9
6. Keynote Speech by Prime Minister Lee Hsien Loong at the Shangri-La Dialogue. http://www.pmo.gov.sg/newsroom/transcript-keynote-speech-prime-minister-lee-hsien-loong-shangri-la-dialogue-29-may-2015
7. “Asean at 50 is a model that has aged surprisingly well,” by Edith Terry, South China Morning Post. http://www.scmp.com/comment/insight-opinion/article/2105746/asean-50-model-has-aged-surprisingly-well
8. “What Can ASEAN Teach the EU?” by Kilian Spandler, The Diplomat. https://thediplomat.com/2017/01/what-can-asean-teach-the-eu/

Nuclear Power and Public Fear in the Era of Climate Change

By Scott Montgomery

To discuss nuclear power requires discussion of public anxiety, particularly fear of radiation. Such fear exaggerates levels of actual risk and poses a hurdle to progress in non-carbon energy in the West, while nuclear power advances elsewhere. China and Russia will soon gain leadership of nuclear power over the US, posing major questions for the future.

 

To write about nuclear power and its future, there’s no avoiding the matter of public anxiety. Perused with a calm eye, the dread surrounding this energy source, which accounts for the great majority of non-carbon electricity in Europe and the US, largely returns to fear and trembling about radiation. Not dealing with this factor is thus to allow the proverbial elephant in the room to hold a family reunion. What follows therefore begins with a discussion of this anxiety before looking at the new nuclear era the world has lately entered.

A few years ago, I was hired to run a workshop on communication for a group of scientists at a well-known US government agency, most of whom worked on radiation safety. When asked what they thought about public attitudes on this topic, most deferred to official agency statements or changed the subject. One researcher, however, took me aside and in a lowered voice, as if confessing a dark deed, told me:

I rarely talk about my work or about radiation, Chernobyl, etc. What most people feel they know about these things, probably from decades of news hysteria and other sources, is too misinformed. They don’t want to hear what I have to say, not really. It would take many hours to correct any part of this. And you’d be climbing a steep hill the whole time. By the way, you can’t use my name.1

In the years I’ve spent researching nuclear power (NP), I’ve managed to gain responses on the question of popular attitudes from dozens of experts. None of these people ever worked in the NP industry. They were radiologists, health physicists, nuclear physicists, radiobiologists, and medical researchers working on the impacts of ionising radiation (that is, radiation able to remove an electron from an atom). What they told me was quite striking, though unsurprising.

It is common knowledge in this expert community that public fear of radiation, and the media tendency to legitimise it, are out of all proportion to the actual risk determined by decades of research. Much of the public, for example, unfortunately believes that any level of exposure is dangerous. Fear is felt to be justified no matter the dose level, type(s) of radiation, or exposure pathway (skin, inhalation, ingestion). It has also become clear that such fear is responsible for actions causing the great majority of casualties in nuclear accidents. Bluntly put, dread of radiation has proven more perilous than radiation itself.

It is common knowledge in this expert community that public fear of radiation, and the media tendency to legitimise it, are out of all proportion to the actual risk determined by decades of research.

How do we know this? From research on four key groups: 1) Japanese survivors from Hiroshima and Nagasaki; 2) populations living in areas of high natural background radiation; 3) workers in various industries who deal with radioactive materials; and 4) residents affected by fallout from Chernobyl and Three Mile Island. Radiation dose is measured in milli-Sieverts (mSv), with higher levels considered to start around 1,000 mSv, where radiation sickness is significant but fatal cancer risk is 5% or less. Low doses are usually viewed as below 100 mSv. At such levels, lifetime cancer risk is extremely small or undetectable.2 While a statistical risk (<0.01%) has been interpreted down to 50 mSv/year, millions of people live in parts of the world where doses from natural background radiation range from 30-200 mSv. Repeated epidemiological studies have shown no added risk for cancer in any of these places.3

By “added” I mean in addition to the expected risk of 25%-33% in most societies, due to tobacco use, air pollution, exposure to certain chemicals, poor diet, and other factors. In the Chernobyl accident, over 99% of the resident population affected by the fallout received doses in the 5-33 mSv, including evacuees. After 30 years, a total of 47 deaths and roughly 4,000 cases of thyroid cancer have been attributed to radiation from the worst nuclear accident in history (no fatalities are associated with Three Mile Island and none are predicted for Fukushima).4 The question must be asked whether this constitutes a true “catastrophe”. It is a necessary question when we compare the many hundreds of deaths among the public from oil/gas explosions (e.g. the 1984 San Juanico disaster in Mexico) and hydroelectric dam failures, and most pressingly the >1 million premature deaths annually caused by air pollution due to coal and oil use.5

There is another reason to refocus our understanding of Chernobyl. This too is well-known in the expert community but much less appreciated in the rest of society. Work by medical professionals, such as Evelyn Bromet, Stony Brook University School of Medicine, documents the widespread presence of “depression, anxiety, post-traumatic stress disorder, general distress, and medically unexplained somatic symptoms (e.g., fatigue, severe headaches, muscle and joint pain)”. And there are yet other impacts to consider, brought by evacuation:

Families were sometimes separated, and pregnant women were told to have abortions. Evacuees were not welcomed by the communities where they were resettled… Doctors attributed diseases and symptoms to Chernobyl indiscriminately [and the] psychosocial fallout from Chernobyl was then compounded by the political and socio-economic turmoil following the break-up of the Soviet Union.6

With Fukushima, where no radiation injuries to any member of the public occurred, over a thousand people died as a result of the evacuation. This included hospital patients and elderly people who needed nursing care, plus others with heart ailments and others who suffered from stroke. As with Chernobyl, stigmatisation by others and by oneself, has become a serious problem for many.7

There seems a worrisome irony here. Emergency response programmes are predominantly aimed at protecting the public from radiation. Yet the evidence from actual accidents shows that this emphasis can be misplaced. By embodying public fear, it can encourage rushed evacuations, while downplaying the need for resources to address medical and psychosocial impacts of an event.

Why do people so fear radiation, and therefore in many cases NP? The reasons are complex. Moreover, they have an evolving history. A simplified (but still accurate) overview might begin with the visions left by Hiroshima and Nagasaki, images that blended in the 1950s with government secrecy and misinformation about fallout from atmospheric tests. Claims by some scientists about multi-generational genetic damage were later disproven yet still became part of nuclear lore. By the 1960s and 70s, the rise of environmentalism foregrounded worry over nuclear waste. But in the Vietnam Era, opposition to NP was also motivated by deep concerns over growing power of the state, specifically the “military-industrial complex”, with NP as both sign and symbol of failing democracy and an endangered planet. Tyranny didn’t arrive, but Three Mile Island and Chernobyl did. These two accidents, and the media gales they gave rise to, helped elevate dread about radiation, a reality revitalised by Fukushima. During all this time, proliferation worries have been real too. But they are not what keeps people up at night or leads them to vote and march against a NP plant or waste site planned for their area.

In today’s world, various elements of this benighted past tend to melt together for many people into an alloy of suspicion and angst. An intimidation factor – the feeling that radiation and NP are too complex to grasp (not true) – adds to the sense of vulnerability. Yet this is far from true for everyone. A significant portion of the environmental, scientific, high tech, and business communities, as well as many younger people concerned about climate change, are either unpersuaded that NP represents an existential threat or view it as a much-needed non-carbon source of electricity. Such is all the truer now that major nations and auto makers have vowed to electrify the car by 2040.

Even with a large number of further closures, say 200 or more, the world could see over 600 operating reactors within a few decades.

This is a good sign for the future. NP, after all, is shaping up to be a growth industry for the 21st century in many parts of the world. This truth may sound impossible to some in the West, but the numbers bear it out. Today, two-thirds of humanity live in countries with nuclear power; by 2050, the figure could well be 75% or more.

Here are some figures to contemplate. In late 2011, soon after the Fukushima accident, there were 433 operable reactors in the world. Six years later, after two dozen permanent shut downs, the number had climbed to 449, with 57 more reactors under construction8 and plans and proposals in a wide variety of countries for over 500 more.9 In a majority of nations with NP, older reactors that have been well-maintained and updated over time are now being relicensed for a further 20 years of operation. While this will extend their operating lives into the 2040s and 50s, there is much discussion about further relicensing if further upgrading is done. Such considerations make sense against a background of climate change, lethal pollution from carbon energy, and possible future cost constraints. It bears emphasis that the original 40-year licensing period was applied for economic reasons, not engineering ones, as the time needed for loan repayment and some degree of profit-making.

Yet even with a large number of further closures, say 200 or more, the world could see over 600 operating reactors within a few decades. There is more than a small possibility that China alone will build as many as 300-5003 of various sizes, given its extensive plans. Russia and India also have major expansion plans underway that together total more than 100 new reactors.

No less important, however, is the growth of NP into countries where it has not previously existed. Naysayers love to call this a matter of “paper reactors”. Yet in the past few years, real physical plants have been started or are about to start in Belarus (2 reactors), United Arab Emirates (4), and Turkey (4). Other countries where the choice of NP sites, financing options, and signed agreements with vendors have continued to move forward include Egypt, Saudi Arabia, Jordan, Nigeria, Bangladesh, and Poland. Meanwhile, the International Atomic Energy Agency, whose main job is to provide guidance and monitoring of civilian NP programmes worldwide, has been especially busy in recent years. It has been called on to help develop the legal and policy basis for nuclear programmes in nearly two dozen in Africa, Southeast Asia, Central Asia, and South America.10 None of this guarantees that all such programmes will result in reactors being built, of course. Yet to deny that a strong level of global interest exists, or to claim it is temporary and misguided, would be both naïve and condescending.

Thus, a key question: why are these nations attracted to NP? The answer is that it helps provide a real solution to their most pressing energy needs. Surging demand for electricity is one of these, a reality in many developing nations. At least 1.1 billion people have no access to electricity, with another 2 billion having only intermittent power. Economic growth is constrained in many nations by power availability, while much farm produce spoils due to lack of refrigeration. Energy security defines another issue, one that merges with the need to lower carbon emissions. NP satisfies these requirements at a high level, providing massive amounts of non-carbon power with the smallest footprint of any source, allowing a nation to shift away from dependence on fossil fuels. Neither can it be denied that nations are drawn to NP for the prestige it can give to a country’s image.

China, in a sense, provides an overall model – and lesson – for this. Having pursued a breakneck pace of development from the late 1990s to 2013, it sought energy security in colossal use of its most abundant domestic resource, coal. The result has been an equally immense level of pollution, with severe impacts on public health and rising levels of dissent. More recently, China’s government has moved assertively to develop non-carbon sources. Though far from solving its carbon energy problems, China has set a precedent by combining all non-carbon sources, including nuclear and renewables, into one category. It is a sign of recognition that both sources are required to deal with pollution and climate change.

China’s NP programme is unique, and huge.11 Since 2013, it has been completing 6-7 new reactors each year, reaching a total of 38 in late 2017. Its plans are to have just under 100 by around 2030, with over 140 more now proposed to follow. At this point, it appears certain that China will surpass the US (99 reactors) as the world’s leading NP nation within 15 years. China’s plans include developing reactors of varied size and output, using current and advanced designs adapted from western and Russian sources. A big part of China’s long-term effort will involve exports of its technology and investments in other country’s programmes, as shown, for example, by its participation in the UK’s Hinkley Point C plant. For Asia, the Middle East, and Africa, such plans are part of the One Belt One Road initiative launched by the current President Xi Jinping.

It seems another tragic irony that much of the advanced world simply watches as other parts of the globe move ahead with a non-carbon technology the West itself invented.

The only other country with a comparable programme is Russia, which has developed its own successful reactor technology for export. Rosatom, the Kremlin’s NP entity, has signed agreements of various kinds with as many as 32 countries for building and financing NP plants. Given the economic sanctions on Russia for its seizure of Crimea, many observers doubt more than a small handful of these will ever see broken ground. Such a conclusion appears sensible at the moment. Yet, somehow, Rosatom is right now building 2 reactors in Belarus and will very soon (2018) begin 4 more in Turkey. Though the firm is undoubtedly in no position to pay for dozens of reactors itself, the new export landscape is proving more adaptable than the old build-in-your-own-pasture approach.12

It seems another tragic irony that much of the advanced world simply watches as other parts of the globe move ahead with a non-carbon technology the West itself invented. Such is particularly true for the US, the once-and-future world leader whose nuclear industry is in dire trouble with little help from government. Such is happening even as the country’s chief global rivals become the new world forces in a technology humanity needs to combat climate change. For those much concerned with non-proliferation, a nuclear future run by Russia and China can hardly be reassuring. In this new context, radiation/nuclear angst translates into a serious hurdle. The world will move ahead with nuclear power regardless. But there will be much to bemoan if the West indeed proves to be so scared of its own peaceful and productive creations that it cannot adequately deal with the greatest and most long-term global threat we all now face.

 

Featured Image: Jungliangcheng power plant in Tianjin, China © Wikimedia Commons

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About the Author

Scott L. Montgomery is a Geoscientist and Faculty Member at the University of Washington, Seattle (USA). After 25 years in the energy industry, he now teaches, lectures, and writes on energy-related matters. His most recent book, with US diplomat Thomas Graham Jr., is Seeing the Light: Making the Case for Nuclear Power in the 21st Century.

 

References

1. Quoted from: Scott L. Montgomery and Thomas Graham, Jr. Seeing the Light: Making the Case for Nuclear Power in the 21st Century. Cambridge University Press, 2017;
2. These points are extensively covered in: Timothy Jorgensen, Strange Glow: The History of Radiation. Princeton University Press, 2016. Some of this information is also covered on Dr. Jorgensen’s website devoted to the book, at: http://www.timothyjorgensen.com/index.htm
3. S.M.J. Mortazavi, M. Ghiassiu-Nejad, and M. Rezaiean, “Cancer risk due to exposure to high levels of natural radon in the inhabitants of Ramsar, Iran.” International Congress Series 1276 (2005), 436-437; http://www.sums.ac.ir/~mmortazavi/paper2.pdf
4. International Atomic Energy Agency (IAEA), Chernobyl: Looking Back to Go Forward. Conference Proceedings, 6-7 September 2005, Vienna, 43-116. http://www-pub.iaea.org/books/IAEABooks/7717/Chernobyl-Looking-Back-to-Go-Forward
5. Kiran Stacey, “India air pollution poised to exceed China’s,” Financial Times 14 February 2017, https://www.ft.com/content/dbcb8502-f1d8-11e6-8758-6876151821a6
6. Evelyn J. Bromet, “Mental Health Consequences of the Chernobyl Disaster,” Journal of Radiological Protection 32:1 (2012), N71-N75. http://iopscience.iop.org/article/10.1088/0952-4746/32/1/N71/meta
7. Akira Ohtsuru et al., “From Hiroshima and Nagasaki to Fukushima 3: Nuclear disasters and health – lessons learned, challenges, and proposals.” The Lancet 386, 1 August 2015, 490-497. http://www.thelancet.com/series/from-hiroshima-and-nagasaki-to-fukushima
8. International Atomic Energy Agency (IAEA), Power Reactor Database, https://www.iaea.org/pris/
9. World Nuclear Association, World Nuclear Power Reactors & Uranium Requirements, http://www.world-nuclear.org/information-library/facts-and-figures/world-nuclear-power-reactors-and-uranium-requireme.aspx (September 2017). Accessed 12/10/2017
10. See varied stories of such work at: IAEA Press Centre, https://www.iaea.org/press
11. World Nuclear Association, Nuclear Power in China, http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-power.aspx
12. Scott L. Montgomery, “Russia: a global energy superpower that is much more than a petrostate,” The Conversation, 14 April 2016, https://theconversation.com/russia-a-global-energy-powerhouse-thats-much-more-than-a-petro-state-57766

What Do We Know About Mass Shootings?

By Frederic Lemieux

In this article, the author examines key elements defining mass shootings and the evolution of definitions over time. The article also scrutinises the characteristics of active shooters and the dynamics of these incidents. Finally, it looks at the impact of gun control regulation on the occurrence of mass shootings through the years and by comparison to other developed countries.

 

On Sunday October 1st 2017 an active shooter named Stephen Paddock, 64 years old, perpetrated the deadliest mass shooting in modern American history killing 58 persons and injuring more than 500 in Las Vegas. The criminal investigation showed that the shooter meticulously prepared the massacre by stockpiling multiple modified assault rifles and explosives, choosing the “perfect” shooting vantage point and planning an escape route.1 However, this tragic incident is not isolated and other active shooters have shown similar level of preparation in the past (for instance James Holmes, Aurora 2012; Eric Harris and Dylan Klebold, Columbine 1999). Once again, the Las Vegas mass shooting reignited the debate on gun control but what do we know about mass shootings? Are they getting worse? Can they be prevented? To answer these questions, this article will shed light on the phenomenon of mass shootings by examining existing academic researches and available government data. This article places an emphasis on the definition of mass shootings, their characteristics and dynamics as well as the ability of our society to prevent them.

 

What is Mass Shooting?

Mass shooting is an act of extreme violence in which an individual armed with one or several firearms engage in a shooting rampage killing and injuring random people.2 Randomness is an important aspect of a mass shooting because it differentiates these incidents from multiple casualties violence like familicides, hate crimes or gang violence, which target very specific groups of people and have different root causes. Mass shooting and act of terror are not the same either. Terrorism, also known as political violence, is motivated by a political or social cause. For instance, the terrorist attacks that happened in Orlando and San Bernardino used mass shooting as modus operandi as part of a broader strategy of jihadist terrorism. In these cases, mass shootings are a mean (violence) to end (political cause). The vast majority of mass shootings do not fall into this category because they are perpetrated by individuals that have more personal motives such as vengeance and frustration.

It has been established that in 59% of the cases, the perpetrators were carrying two or more firearms and that assault rifles were used in 26% of the cases. In 76% of the cases, the firearms were acquired legally through stores or private sales.

The formal definition and classification of mass shooting has evolved over the years. In 2008, According to the Department of Homeland Security (DHS), an active shooter is defined as “an individual actively engaged in killing or attempting to kill people in a confined and populated area”. In its definition, DHS notes that “in most cases, active shooters use firearms(s) and there is no pattern or method to their selection of victims”.3 Before 2013, the Federal Bureau of Investigation (FBI) provided a more operational categorisation where mass shootings happen when four or more people are killed by one or more murderer(s) in a particular location with no cooling-off period between the murders. More recently, federal institutions and agencies such as the White House, Department of Justice, Department of Education, Department of Homeland Security agree on the following definition: “an individual actively engaged in killing or attempting to kill people in a confined or populated area”.4 This definition implicitly assumes that firearms are used for the perpetration of the crime. These changes in definition impacted directly the number of cases included in studies and affected the comparability of studies conducted over time.

Characteristics and Frequency of Mass Shootings

In a study published in 2014,5 using the old definition of mass shooting that only includes incidents with four or more casualties, provides a descriptive analysis showing that mass shooting perpetrators were 35 years old on average and that their ages ranged from 13 to 66 years old. The vast majority of shooters are Caucasian and male (66% and 99% respectively). In 56% of the cases, signs of mental illness existed before the incidents occurred. It has been reported that 52% of the perpetrators committed suicide, that 17% were killed by police officers, that 30% were arrested, and that in only one case did a bystander stop the shooter by use of physical force (without a weapon). Regarding the weapons involved in these incidents, it has been established that in 59% of the cases, the perpetrators were carrying two or more firearms and that assault rifles were used in 26% of the cases. In 76% of the cases, the firearms were acquired legally through stores or private sales. The vast majority of the mass shootings happened in a closed environment, such as schools (16%), workplaces (29%), and commercial buildings like restaurants, shopping malls, or shops (23%). Finally, the total number of victims is established at 1090. More precisely, these incidents have caused 576 fatalities and 514 injuries between 1983 and 2013.

Another study completed by the FBI in 2014 and using the new definition with no restriction on casualties reveals similar findings.6 The report has identified 160 mass shooting incidents between 2000 and 2013, with a yearly average of 6.4 incidents. A total of 486 persons have been killed and 557 injured. The report also shows that mass shooting incidents are becoming more frequent in the last seven years of that period (2006-2013) with annual average of 16.4 incidents. This trend has also been corroborated by another study conducted by Harvard University researchers.7 The active shooters have committed suicide in the majority of these incidents (56%) or have been killed by law enforcement officers (28%). In 13% of incidents, unarmed citizens have been able to restrain the active shooter. In the remaining cases (3%), active shooters have surrendered to police officers. Finally, the majority of mass shootings incidents took place in commercial (45.6%) and educational environments (24.3%).

 

Can Mass Shootings Be Prevented?

During the period of the so-called “assault rifle ban” law (1994-2004), the number of mass shooting incident has reduced by 31% and the number of victims as a result of these incidents dropped by 45%.

It is a very difficult question to answer since these incidents are difficult to predict. However, available data and studies tend to indicate that, by adopting gun control laws that restrict the accessibility to certain types of firearms (assault rifles), limit the firepower (e.g. magazine capacity), and prohibits certain category of person to acquire firearms (children, criminals, mentally ill), mass shooting occurrence and the number of victims can be significantly reduced. For instance, the number of mass shootings in the United States and the number of fatalities associated with these incidents have reduced substantially under the Public Safety and Recreational Firearms Use Protection Act of 2004.8 More precisely, during the period of the so-called “assault rifle ban” law (1994-2004), the number of mass shooting incident has reduced by 31% and the number of victims as a result of these incidents dropped by 45% compared to the decades before (1983-1993) and after the ban period (2004-2013). Similar results have been found by other research.9 The relation between stricter gun control legislations and lower occurrence of mass shooting incidents and their associated death toll is not only verified in the United States but also exists in other developed countries. A study examining the impact of the National Firearm Agreement of 1996 and the National Handgun Control Agreement (2002) in Australia between 1981 and 2013 shows that a drastic decrease in mass shooting incidents happened after 1996. Only one incident happened in 2002 at Monash University compared to 13 mass shootings prior to 1996.10 In many other developed countries, strict gun control legislations are in effect for several years and they have experienced far less occurrence in mass shooting. In other words, stricter gun regulations may not guarantee zero mass shootings incidents but can substantially reduce their occurrence and save a significant number of lives.

 

Featured Image: The “Welcome to Las Vegas” sign is surrounded by flowers and items, left after the October 1 mass shooting, in Las Vegas, Nevada October 2017. © REUTERS/Las Vegas Sun/Steve Marcus

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About the Author

Frederic Lemieux is Professor of the Practice and Faculty Director of the Master’s degree in Applied Intelligence at Georgetown University. He received his doctoral degree from the School of Criminology at the University of Montreal, Canada. During his academic career, Dr. Lemieux has studied violent crimes including terrorism and mass shooting. His research findings have been published in peer-reviewed journal and books.

 

References

1. https://www.nytimes.com/2017/10/03/us/las-vegas-gunman.html.
2. Bjelopera, J. P., Bagalman, E. S., Caldwell, W., Finklea, K. M., & McCallion, G. (2013). Public Mass Shootings in the United States: Selected Implications for Federal Public Health and Safety Policy. Washington DC: Congressional Research Service.
3. “Active Shooter – How to Respond.” Department of Homeland Security. October 2008. http://www.dhs.gov/xlibrary/assets/active_shooter_booklet.pdf
4. Federal Bureau of Investigation (2014). A Study of Active Shooter Incidents in the United States between 2000 and 2013. Washington D.C., Department of Justice.
5. Lemieux, F. (2014). Effect of Gun Culture and Firearm Laws on Gun Violence and Mass Shootings in the United States. International Journal of Criminal Justice Sciences, 9 (1): 74-93.
6. Federal Bureau of Investigation (2014). A Study of Active Shooter Incidents in the United States between 2000 and 2013. Washington D.C., Department of Justice.
7. https://www.hsph.harvard.edu/news/features/mass-public-shootings-increasing-in-us/
8. Lemieux, F. (2014). Effect of Gun Culture and Firearm Laws on Gun Violence and Mass Shootings in the United States. International Journal of Criminal Justice Sciences, 9 (1): 74-93.
9. Duwe, G. (2016). Pattern and Prevalence of Public Mass shootings in the United States 1915-2013. In Wilson, L. (2016) The Wiley Handbook of the Psychology of Mass Shootings. Wiley & Sons, Chichester U.K.: 20-35.
10. Lemieux, F., S. Bricknell, T. Prenzler, (2015) Mass shootings in Australia and the United States, 1981-2013. Journal of Criminological Research, Policy and Practice, 1 (3): 131-142.

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