Today's Headlines

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Tuesday, November 18, 2014

It’s Just Africa: Corruption Threatens Two Decades of Democracy in South Africa

For the first time in the 20 years since the end of apartheid in South Africa, riot police entered the National Assembly to break up a brawl that erupted between members of parliament (MPs) during the heated Nkandla debate. The police removed MPs from both opposition parties, the Economic Freedom Fighters (EFF) and the Democratic Alliance (DA), from the chamber, to the delight of the ruling African National Congress (ANC) MPs. The DA asked law-enforcement authorities on Monday to charge an ANC MP and the police with assault against four of its members. The opposition and critics of the ANC decried the forcible removal of opposition MPs as another instance of ANC’s blatant abuse of power. 

There are two factors at play that led directly to Thursday’s parliamentary brawl. The first is that the composition of the South African parliament is changing, with not only a greater representation of opposition parties, but also with stronger relationships developing between those opposition parties against the ANC. For the past two decades, the ANC has enjoyed essentially unchecked power in the parliament as well as majority support in eight of South Africa's nine provinces. Opposition parties were represented, but were unable to combine their power against the ruling party. The Western Cape province is the only one that has been and continues to be controlled by an opposition party (the DA).

In the face of the ongoing Nkandla scandal, South Africa’s opposition parties have found common ground to unite against the governing party with unexpected coordination and energy. In this year's elections, opposition parties took a greater percentage of the vote in all provinces, while the ANC lost a percentage of the vote in more than half of the provinces. 

Wednesday, November 12, 2014

Paris 2015 or Bust! The Historic US-China Climate Deal

Is it just me, or is Pres. Obama having a very, very good week at the APEC summit? Despite the many obstacles before him outlined by my colleague Colin earlier this week, Pres. Obama has – in a very short period of time, at a summit where rhetoric usually substitutes for action – reached several important deals with Chinese premier Xi Jinping: visas between the two countries were given much longer lifespans, tariffs on high-tech devices were lowered, military confrontations are to be avoided, and now a historic deal on climate change has been reached. Not bad for a president with a lame duck congress at home and a Republican-controlled congress on the horizon.


The announcement today that the US and China had reached a deal on climate change has been met with much fanfare, and with good reason. The US essentially agreed to double its cuts in emissions, reducing emissions by 26-28% by 2025 from 2005 levels. China, for its part, agreed that it would reach “peak emissions” by 2030, a date it was previously unwilling to state publicly, and use at least 20% zero-emission energy by 2030 as well. While these measures will not reverse the pace of climate change, they may in fact help the world to avoid a worst-case scenario of 4 degree Celsius temperature rises by 2100 (i.e. environmental catastrophe, if not apocalypse).

Monday, November 10, 2014

Obama's Tightrope Walk at APEC

In late 2009, President Obama arrived in Asia for the APEC summit as the U.S. economy was grappling with the repercussions from the financial collapse the year before. Still relatively new to his job as President of the United States, Obama arrived optimistic, and his promise of an American "pivot" to Asia largely defined the gathering.

Today, five years later, our beleaguered president arrives in Myanmar with a greatly improved economy back home, yet substantially less political capital to use to his advantage, and arguably more geopolitical concerns than the international arena has seen since perhaps the Cold War. The crisis in Ukraine earlier this year has caused a rift in U.S.-Russian relations, which will have ripple effects most certainly seen throughout Asia and especially in China; protests in Hong Kong have again brought attention to what has been at best a questionable human rights record for China; and the matter of the American "pivot" to Asian has yet to be resolved, but may see progress with more agreement on the Trans-Pacific Partnership (or TPP). President Obama will have to remain disciplined in his approach to these issues and others, and strike a precarious balance between hard-line tactics and a more reserved, diplomatic strategy.

When President Obama speaks of the "pivot" to Asia, there is a common retort from officials in Russia: We are already there. Whereas a true rebalancing of the American projection of power would have paid quick and plentiful dividends five years ago, today is different. Perhaps the most significant repercussion to come from the crisis in Ukraine is it has pushed Russia and China as close together as they have been since the early Cold War years. A multi-billion dollar natural gas deal between the two countries that had been stuck in limbo for years was suddenly brought to the table and finalized expeditiously, easing Russia's reliance for natural gas exports away from Europe and providing China with nearly 20 percent of their natural gas needs for the next several years. In fact, it is a trade deal so large that it will effectively replace Germany with China as Russia's largest natural gas partner.



Militarily speaking, a projection of power in Asia is also simply less feasible today than it was years ago. Where we saw the winding down of wars in the Middle East at the last APEC gathering, this week's gathering comes just after more troops have been approved for deployment in Iraq. The fight against ISIS will continue to escalate in coming weeks (if not months), and these developments will hinder military influence elsewhere in the world.

On the economic side of the "pivot", implementation of the TPP is an equally significant obstacle. While 12 nations have participated in TPP negotiations over the years, China has not been one of them. Instead, China has been advocating for an alternative trade partnership, known as FTAAP, or Free Trade Area of the Asia Pacific. Should China prevail over the U.S. in securing a new trade partnership, combined with Russia's increased exports to the region, it would effectively eliminate any possibility of an increase in American influence in the region. The United States remains a major trade partner with many of the countries in Asia, but it will not have much opportunity to expand on those partnerships without the TPP being signed.



While these issues remain at the forefront for the next week, President Obama will also have to express cautious support for Hong Kong protestors and find a way to urge Chinese leaders not to use violence as a means of bringing an end to the protests. And while the Hong Kong protests have been making headlines for the past several months, they are certainly not the only matter of dispute in the region. Arguments over many islands have been simmering, as well as other territorial disputes that could erupt into larger conflicts at any time. President Obama must be careful to remain on the sidelines of these issues, while influencing decision-making and keeping things deescalated.

Much has changed in the past five years since President Obama last convened with Asian leaders at the APEC summit, and he will undoubtedly have a more challenging time accomplishing items on his agenda this time around. However, at the same time, the stakes are much higher. President Obama must be pragmatic in his approach to tackling these objectives, while preserving what are already tenuously positive relationships with major powers like Russia and China.

Tuesday, November 4, 2014

It’s Just Africa: A “Sub-Saharan Spring” in Burkina Faso?

It’s like déjà vu all over again: Popular uprising against abuses of power forces long-serving former military man to step down. The military, loyal to the deposed head of state, seizes power and promises a democratic transition. Protests resume. International outcry commences.

The parliament building in Ouagadougou was set on fire by protesters last Thursday
Last week, residents of Burkina Faso’s capital city of Ouagadougou took to the streets, setting fire to parliament and government buildings in response to President Blaise Compaore’s attempt to change the country’s constitution and extend his nearly three-decade long rule. The protests forced Compaore’s resignation, but the resulting celebration, complete with cheering and dancing in the streets, was short lived, as thousands of people gathered on Sunday in protest of what they called a blatant power grab by the army.

Friday, October 31, 2014

"Hungary" for Tax Revenue

After days of mass protests, Hungarian Prime Minister Viktor Orban announced today that he was putting the proposed tax on internet usage aside for the time being. Ever the populist, Orban said on the radio "if the people not only dislike something but also consider it unreasonable then it should not be done...", and said that the Hungarian government would work to revise the tax code and the internet tax proposal specifically in order to tailor it to the constituency's liking. Contrary to basic democratic principles, Prime Minister Orban is wrong to trust the sentiment of the people in this case. Populism is a slippery slope that has led numerous countries to ruin in the past, and in this particular case, the proposed tax would provide much-needed revenue to a nation that could be doing better financially.

A tax on internet usage has never been carried out in any country before. The one proposed in Hungary would have cost internet users roughly $0.60 per gigabyte of data traffic. Activists were quick to point out that this tax would end up costing 9 cents per hour of Spotify usage; 14 cents per hour of Facebook usage; $19 per movie stream, and a whopping $323 to stream an entire TV series. Those numbers are staggering - especially in a country where, according to the OECD the median household income is less than $16,000 a year (in the U.S., that figure is just under $45,000) and the average monthly income is $680 - and looking at them point blank it's perfectly understandable that people would protest such a tax.

Last Sunday, after the proposal was announced, protestors took to the streets in anger, even going so far as to hurl computer equipment at the headquarters of Prime Minister Orban's Fidesz party. Many accused the Prime Minister of continuing a series of "anti-democratic" measures that would bring down the middle and working classes. Bowing to reaction, Orban even proposed a cap of less than $3 per month for private users and about $20 for corporations. Despite this outrageously reasonable cap, protests continued. And while the protests did not reach the magnitude of those elsewhere (looking at you, Hong Kong) and did not really turn violent, they were enough to sway the Prime Minister, who has struggled to maintain popularity and cannot afford the bad publicity.

Unfortunately, Hungary can't afford to miss out on new tax revenue streams. After the global financial collapse in 2008, Hungary was forced to take a $25 billion loan from the IMF to help service its short-term debt. Its GDP per capita ranks Hungary at 71, which is not terrible but should be better. And with 14% of the population below the poverty line and a 10% unemployment rate, consumer spending is not what it should be and families are struggling. In fact, this financial malaise led the government to implement "crisis taxes" in 2010, which were imposed on the energy, retail, and telecommunications sectors. Sadly, like today, Prime Minister Orban gave way to his populist tendencies and vowed to end the taxes, which concluded in January of 2013.

All of this is beside the point, however. The fact is, the vast majority of countries already tax consumption. In the U.S., for example, we are taxed on retail sales and food service - many countries have similar taxes. The debate over taxing the internet has raged for decades. In the U.S., a moratorium on taxing internet usage was put in place in 1998, and although it is set to expire tomorrow (November 1st), it will likely be extended. The common argument is that unrestricted access to the internet has virtually infinite benefits that are far more wide-reaching and universal than a tax on that access could ever provide. This argument has teeth, and truthfully, it's hard to disagree. But the fact is, internet traffic is facilitated by physical infrastructure, the same way phone usage is, the same way vehicular traffic over roads and bridges is, and the same way most goods and services are provided. Those entities are all taxed, so why can't internet usage?

Protestors' arguments that Prime Minster Orban is implementing "anti-democratic" tax policies are unfounded: he was democratically elected and there is an entire government in place working on behalf of constituents. It is impossible to argue that new tax revenue streams are not needed. Without the sort of innovation that allowed for the internet tax proposal, the Hungarian economy may continue to flounder. Citizens pay a flat 16% income tax, and corporations just 19% - this revenue accounts for less than half of the annual budget, and will not pull Hungary out of their slump. Prime Minister Orban should implement this tax, and continue to propose new taxes that help bring up the middle and working classes and facilitate the government spending that will propel Hungary forward.