Trinidad Dispatch # 5: Obama Publishes Op-Ed re Summit of the Americas

While many the world over continue to celebrate the election of an African American to the highest post in U.S. government, participants in the IV People’s Summit  are waiting for more than rhetoric and token reformist changes.

While President Obama may be saying the right things, in the eyes of many, he has yet to confront the systemic oppression that U.S. foreign policy has afflicted on Latin America and the Caribbean for decades, if not centuries.

Easing the travel ban on Cuban Americans is not enough, they want an end to the blockade against Cuba and the state’s readmission to the OAS.  They want a foreign policy for the 21st century, not tired ideological battles of the Cold War.

Half a million in increased foreign aid and increased lines of credit will do little if economic and governmental structures are not changed to incorporate more active participation of the grassroots.  They demand a shift in objective from capital gains to human well-being and self-actualization.

New Energy and Climate Partnerships must be grounded in the lives and needs of everyday working people.  They demand sovereignty and systems that end poverty (not hand outs) over any form of corporate or state-led initiative at security.

Read for yourself. Is President Obama’s foreign policy grounded in structural changes that will prevent further crises, or is he working merely to advance an image of the United States and a failed form of capitalism for fear of exploration of true alternatives?  Or is he merely getting started, working within bureaucratic confines and the real change is yet to come?

Trinidad Dispatch #2: Creating Caribbean Solutions to the Economic Crisis

Trinidad is abuzz with talk of the upcoming 5th Summit of the Americas.  Port of Spain’s public transportation schedule has been changed to accommodate the influx of visitors, two giant cruise ships (the summit venues) sit docked in the harbor, and radio hosts take public calls to determine how Trinidad will benefit in the long run.

The 5th Summit represents Obama’s first opportunity to dialogue with Latin American and Caribbean presidents about issues facing the hemisphere.  With Trinidadians already wearing “I -heart- Obama” t-shirts, hopes are high that his visit will chart a new U.S. policy towards the region.

According to Jeffrey Davidow, Obama’s coordinator for the summit, the U.S. will “focus more on dialogue and collaboration, be pragmatic, and look for concrete results, social inclusion and look to reduce extreme poverty.”

But delegates of the Assembly of Caribbean Youth posed an important question this morning:  collaboration and pragmatism according to whom?  For centuries the Caribbean has been at the whim of foreigners, some of the islands changing hands a dozen times or more.  Anticipating the soon to be consequences of the current economic crises–one that did not originate from within the Caribbean–today’s delegates, representing youth organizations from Trinidad, Barbados, Bahamas, Grenada, St. Vincent, Jamaica and Suriname, emphasized the importance of focusing on self-development and sustainability, both as countries and as a region, before entering into agreements with external markets.

Akins Vidale, President of the Trinidad Youth Council, emphasized four main points for regaining and maintaining economic strength within the Caribbean:

1. Agrarian Reform and Food Sovereignty – many of the islands don’t produce their own food.
2. Basic Infrastructure for a Single Caribbean Market – while Suriname may have the capacity to produce food for its neighbors, it hasn’t the efficient means to ship it there.
3. Independent Economic Strength – local cooperatives and credit unions provide an accountable alternative to predatory loans from international banks.
4. Integrated Methods for Moving Forward – you cannot judge present by the present.  Solutions needs to demonstrate that they are sustainable and do not compromise the future.  We must be careful of what we rationalize in the name of economic progress.

These young people are all engaged with their national governments towards the development of these community-based solutions, but they need the support and respect of the hemisphere’s heavy weights–the number one actor being the U.S.

It is absolutely critical that in addition to mastering the economic theories and recommended “best practices” for development, we listen to our peers in the Caribbean (and elsewhere) and encourage our government to consider their perspectives when determining policy.  As a friend from Oxfam America said recently, we don’t do development, people development themselves.  Sometimes they just need our help in clearing the way.

According to Tom Loudon, co-director of the Quixote Center in Washington, DC, the Obama administration, which recently affirmed its intent to move quickly on the Panama FTA, has yet to truly reconsider the model which has increased inequality in the region.  Loudon predicts that “President Obama will likely be surprised by what he encounters in Port of Spain.” Much has changed in the hemisphere in the past few years, and more and more people are beginning to catch on.  Formulas from the past will continue to fail.  We need a fresh perspective.

Open-minded, passionate youth, are starting that process here in the Caribbean.  Where are we?

Mutually Assured Destruction v. 2.0

Much has been made in recent weeks about what I like to call MAD 2.0–this time between the U.S. and China.

Of course, the new MAD is not nearly as vindictive as the previous phase of international relations between the U.S. and the S.U.  It involves no bombs, posturing, or division of the world into spheres of influence (yet).  No, the new MAD is predicated on a simple fact: each country controls the other country’s financial system.

The Financial Times synthesized the situation rather succinctly.  China has made a policy of holding substantial currency reserves while keeping its currency artificially low.  This will, in theory, allow it to weather economic downturns while promoting its exports, because if the currency remains low it is easier for other countries to buy Chinese products.

These substantial currency reserves have to sit somewhere, and must be of a different currency (since to hold a potential flood of yuan would pose a potential problem to the currency’s value should it have to be spent).  Up to this point and continuing at least until the near future, the reserves have been held primarily in United States’ assets.

In the process, China has become the largest creditor to the United States, with this debt growing by 25% per year.

If the U.S. were to falter, China would lose its currency reserves, revaluing the yuan and cutting its growth massively.  If China were to draw down its reserves, the U.S. would have to call in mountains of debt to begin to pay it back and would lose the status of reserve currency that has allowed outrageous deficit spending for many years.

From the U.S. perspective, this is quite a precarious situation at first glance: to depend solely on a country that is not exactly the friendliest of allies on many issues for economic security does not top the list of desirable positions to be in.  Yet there are several factors that make this relationship much more complicated and not so evidently negative.

Primarily, the U.S. has the advantageous position at the moment of being the world’s reserve currency, which means for this application that it is still one of the safest investments in terms of long-term stability that exists.  If the Chinese choose to continue their policy of holding huge currency reserves, then their best investment option is still the dollar.

For China, to even begin to move away from its stake in the dollar would collapse all of the value that that remains in their reserves.  This is why they are so cautious to assure the world’s investors that this is precisely what they are not going to do.  Furthermore, to liquidate its reserves would lead to a valuation of the yuan.

Clearly, neither country can afford to have the other make any drastic moves.  A very precarious balance pervades the system, and any sway in either direction could bring both economies to a grinding halt.

Still, China realizes that it has the relative upper hand in the sitaution, and, as the Financial Times report, are beginning to move the issue of debt obligation into the realm of foreign policy.  The U.S. is going to have to tread very lightly into the future–especially because, in this case, it cannot deficit spend the enemy into oblivion.

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For further information, here is an interesting podcast published by the Economist on China’s downturn and how it plays into this financial crisis:

Stream it

Download it

Global Economic Crisis Hits Iran

It is becoming clear that Iran will not escape the growing global economic crisis unscathed. The LA Times reported on Friday that the Iranian government is seriously considering a $300 million bail-out to help companies that are suffering from the recent drops in oil and commodity prices. The Times reports:

According to a report Tuesday in the daily Kargozaaran, the chief of the Tehran Stock Exchange is pressing the government to put up cash to stop the collapse of the stock market, which has dropped to a five-year low since oil prices began plummeting this fall.

Iran is also struggling with rampant inflation. According to a report by Iran’s Central Bank inflation has risen 25% in the last twelve months and the cost of food and drinks rose 35% in September alone. This rise in the cost of living, combined with wide-spread unemployment, is particularly tough on Iran’s young people. A government report recently found that “a young college graduate had to work and save 40 years in order to be able to afford to buy a first home.”

Economic anxiety among Iranian citizens could play a major role in the upcoming Presidential election. Current President Mahmood Ahmadinejahd has been criticized for his handling of the economy, particularly since up until recently he claimed that Iran would not be affected by the global economic downturn. According to Mohammad Atrianfar, a senior adviser to former President Akbar Hashemi Rafsanjani, Ahmadinejahd has consistently lied about Iran’s problems with exports, inflation, and employment. Anger over economic mismanagement could definitely hurt Ahmadinejahd at the polls.

Meanwhile, American and European officials are hoping that Iran’s economic troubles will force the regime to take the threat of economic sanctions more seriously. The threat of sanctions, however, is severely undermined by Russia’s opposition to sanctions and its position as a permanent member of the U.N. Security Council. Without Russia’s support, it is almost certain that the Security Council will not be able to approve new sanctions against Iran. An op-ed in yesterday’s New York Times by Oded Eran, Giora Eiland, and Emily Landau offers an interesting solution: a three-way deal between the United States, Russia, and Iran. They propose that the United States should offer to drop its plans for a missile defense system in Eastern Europe and increased scrutiny for Eastern European NATO candidates, in exchange for Russia support of stricter sanctions and its promise to stop providing Iran with conventional weapons. This deal would give the United States increased leverage that it need to negotiate with Iran and convince the regime to suspend its nuclear enrichment program. Iran would therefore be able to save itself from painful sanctions and rejoin the international community in exchange for putting its nuclear dreams on hold.

This is an interesting proposal but it fails to take in to account how wildly popular Iran’s nuclear program is among Iranians, who believe that they have a right to nuclear energy. If Ahmadinejahd, or indeed any politician, were to agree to such a deal, this could severely hurt their chances in the June election. Rather than asking Iran to completely stop its nuclear program , international pressure would be more effective if it held Iran accountable to the standards of the International Atomic Energy Agency which has demanded more transparency to determine Iran’s nuclear motives.

As Iranian officials are wondering how to stabilize their faltering economy and American and European officials are wondering if the time is right for renewed economic pressure, one thing is clear: the ramifications of the economic downturn are being felt around the globe and Iran is no exception.