Discussion of China in the mainstream Western media is often carried on as if the country were a totalitarian monolith, with vast armies of workers in indistinguishable blue overalls assembling every morning to sing "The East is Red" before going off to earn the forex that secures the iron grip of PLA generals and sinister Mao-suited bureaucrats on world trade. Our elected leaders pitch more or less sophisticated stories of Yellow Peril; and for the pundit class, "China" is an explanation for more or less any outlandish claim one cares to make -- and it has built not a few careers, and not only at the NYT editorial page.
But there is likely nowhere on Earth where the path forwards is less clear, more up for grabs; likely nowhere where the political constellation is more uncertain. That the June Fourth Movement's (六四运动) demands for democratization were never satisfied -- that they were put down, violently, and against the principled opposition of a host of loyal and high-ranking CCP cadres, in Tiananmen Square almost twenty years ago, in an incident of which many young people in China are unaware -- did not mean that popular politics in China came to an end. What we have little considered is that the forms politics has taken since in that country might not be regressions -- stages on the pilgrim's path to the New Jerusalem of plebiscitary democracy and market capitalism -- but new forms with lessons for all of our futures.
Internal migration and urbanization
The China of "manufactured landscapes," the object of a newly refined appreciation for the sublimity of mass production, whence, in the popular imagination, come cheap plastic toys and carbon emissions, obscures another, less titillating reality: the half of the Chinese population (perhaps 700mn people) that lives on farms in the countryside.
China has a system of household registration (hukou 户口) and internal passports which leads to an overstated official number for rural residents; 100mn or more have moved from farms to the coastal cities since Deng Xiaoping's (邓小平) reforms in the early 80s eliminated the "iron rice bowl" (tiefanwan 铁饭碗). It is an old story (the more scholarly and nostalgic CCP cadres are surely familiar with Marx's concept of the "relative surplus population"): persistent underemployment in the agricultural sector driven by the relatively lower productivity of outdated farming techniques and competition from imported and industrially produced agricultural goods leads to a large, stagnant population that moves to cities to look for temporary or permanent work.
But registering internal migrants as rural residents gives the police forces the means to directly intervene in the domestic labor market. Under a system of internal passports, migrant workers whose status isn't regularized are an especially vulnerable (and exploitable) population: the threat of harassment can be used to keep wages down and keep workers from organizing (the state-run unions have an official monopoly on worker organization; neither domestic factory owners nor foreign investors nor the state look kindly on wildcat organization). Thus China's "black jails," illegal detention facilities in which recalcitrant migrant workers are held (1 2 3). And fear of police pressure helped drive migrant workers out of Beijing for the Olympics.
The problem of moving from a predominantly rural, peasant population, to a predominantly urban, worker population is not unique to China -- India is plagued by a rural problem on about the same scale -- and as the world urbanizes, the shadow of mass underemployment or unemployment has led some to warn of a "planet of slums." But it's important not to fall into an easy story in which it is the destiny of premodern farming populations to become city-dwelling industrial workers.
China's contemporary peasant population is the product of determined state policy: first, immediately after the revolution, a policy of redistribution which gave farming families title to land that previously belonged to landlords (the conversion of serfs and sharecroppers into small peasants); second, a series of experiments with collectivization and mechanization on ever-larger scales, including the consolidation of large state-run enterprises employing agricultural wage labor; and third, in the period since Deng, a gradual shift to a mixed economy in agricultural goods, with more and more reliance on prices and markets to organize production. But, as with all such gradual measures, the less-regulated and more enterprising (indeed not infrequently criminally so) have benefited disproportionately. In a cruel irony, the CCP once so concerned with discriminating between the various strata in the countryside (in order to mobilize the population to work for egalitarianism) has become the midwife of their rebirth. Meanwhile, the poorest farmers, left on the land with no prospects, often elderly and unskilled, are the most exposed to the viscissitudes of inflation and the most at risk from the environmental consequences of China's rapid industrialization.
Unemployment and discontent
Those whose luck, skill, or political connections have not been sufficient to assure prosperity -- and, whether still in the countryside or floating through the cities, they number in the tens or hundreds of millions -- have come to constitute a political tinderbox. The number and intensity of "mass incidents" (群体性事件) in China is at best difficult to ascertain, but runs at least into the tens of thousands yearly. But pictures and reports of incidents -- sparked by perceived wrongdoing on the part of government, by wrongful deaths, by rumors -- spread over the internet (here are some examples) and can balloon into larger problems for government. After the Dalai Lama's visit to France earlier this year, a spontaneous anti-Carrefour movement flamed up all over the country. China's minister of public security, Meng Jianzhu (孟建柱), recently warned in a CCP journal that police must avoid inflaming protests and riots.
Organized opposition to government in China has so far been successfully defused and deflected into the courts or managed on a purely local and contingent basis (sometimes with spectacular moves by the central government -- it isn't unheard of for corrupt local government officials to be executed when peasants' complaints are finally brought to central authority). But the Chinese economy has not yet faced a real shakedown. How a shock which left even a fraction of the internal migrant unemployed might affect working-class politics - and reveal the hidden fragilities of industries run by cronyism, corruption, and party privilege -- is an open question. Beijing fears nothing more than the possibility such a shock might be in the offing -- and lead to the formation of new alliances of the dispossessed.
On October 18th, three thousand laid-off migrant workers demonstrated outside the gates of a factory in Dongguan (东莞) in the Pearl River Delta, whose owners had fled to Hong Kong, leaving back wages unpaid: to defuse the situation, city government had to step in to pay back wages. It is not an isolated case. A Pearl River Delta chamber of commerce has estimated one in nine of the region's factories will close before the Chinese New Year, perhaps destroying 2.5mn jobs. So far the damage is mostly limited to export-oriented industries (toys, clothes) -- but domestic demand looks set to slow in line with exports, even as Chinese and foreign economists furiously debate the true dependence of the Chinese economy on exports.
Chinese GDP growth slowed to 9% YoY in Q3 -- which may seem like a high class problem, if growth above 8% were not crucial in order for the government to meet its job creation targets. In a very public (and politically significant) medium, Premier Wen Jiabao (温家宝) has warned of the danger posed by slowing domestic growth. Nouriel Roubini has said a "hard landing" in China may be in the offing, with growth at 6% or lower; Brad Setser makes many of the same points, in a slightly less apocalyptic vein. It seems ever more likely that China is entering a manufacturing recession.
Land tenure reform and transition
It is against this background that the Third Plenum of the Seventeenth Central Committee of the Chinese People's Congress met to discuss rural land reform. Reports on the reform decision are cryptic in any language -- the CCP continues to conduct its business in an elaborate, euphemistic jargon that must be carefully parsed by experts -- but it is clear that the essence of the plenum's decision was to reiterate the rights of farmers to lease or transfer rights to their land. Xinhua's coverage of the decision cited approved Party experts saying the goal of the reform was to increase the flow of capital to the countryside and to accelerate the transformation of farmers into urban residents.
Danwei -- keen observers of the Chinese media scene -- call them "decisions," with quotation marks. It's not clear, after all, that the rights given to farmers actually extend beyond those assured by the 2007 property rights law.
Danwei translate an interview with Yu Jianrong in the Southern Metropolis Weekly: he says the true weight of the reforms is symbolic. And not as a symbol of farmers' rights to sell their land: but of their right not to be bullied into transferring their rights. (Outright "sale" of land is not yet legal in the PRC.)
So a strong signal from central government that it has its eyes on the problems of the rural-to-urban transition and will step in to protect farmers -- often from local governments trying illegally to seize their lands. But we can be excused for our skepticism: will any quantity of good intentions provide jobs for ex-farmers once they move to the coastal cities, or keep them on the land if there is a major shock to the Chinese economy? And such a shock looks to be in the offing.
Further reading
Amnesty International published a searing report on the consequences of the hukou system in 2007.
The International Food Policy Research Institute has published a comparative study of Indian and Chinese agricultural reforms.
Chen Guidi and Wu Chuntao, two Chinese journalists, published a report on the state of China's peasants, translated as Will The Boat Sink The Water? and banned in China. Check out this excellent interview with the authors and Yang Lian's review in New Left Review.
Leslie Chang's new book Factory Girls (here is an excerpt) gives an unvarnished look at the lives of migrant workers in manufacturing.
Elizabeth C. Economy's The River Runs Black is the authoritative English-language monograph on the environmental consequences of Chinese industrialization.
The inimitable Danwei rounds up its "model workers" -- the best China blogs in English and Chinese
ChinaSmack translates posts and comments from the Chinese Internet, giving English speakers a taste of its diversity and vibrancy -- for instance, Suqian city's party secretary blogging about migrant laborers.
Friday, November 7, 2008
Readings: King
"Increasingly, by choice or by accident, this is the role our nation has taken -- the role of those who make peaceful revolution impossible by refusing to give up the privileges and the pleasures that come from the immense profits of overseas investment.
"I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a 'thing-oriented' society to a 'person-oriented' society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered.
"A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. on the one hand we are called to play the good Samaritan on life's roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: "This is not just." It will look at our alliance with the landed gentry of Latin America and say: "This is not just." The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just. A true revolution of values will lay hands on the world order and say of war: "This way of settling differences is not just." This business of burning human beings with napalm, of filling our nation's homes with orphans and widows, of injecting poisonous drugs of hate into veins of people normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.
"America, the richest and most powerful nation in the world, can well lead the way in this revolution of values. There is nothing, except a tragic death wish, to prevent us from reordering our priorities, so that the pursuit of peace will take precedence over the pursuit of war. There is nothing to keep us from molding a recalcitrant status quo with bruised hands until we have fashioned it into a brotherhood."
The Rev. Martin Luther King, Jr., "Beyond Vietnam," April 4, 1967
"I am convinced that if we are to get on the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a 'thing-oriented' society to a 'person-oriented' society. When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism, and militarism are incapable of being conquered.
"A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. on the one hand we are called to play the good Samaritan on life's roadside; but that will be only an initial act. One day we must come to see that the whole Jericho road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life's highway. True compassion is more than flinging a coin to a beggar; it is not haphazard and superficial. It comes to see that an edifice which produces beggars needs restructuring. A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: "This is not just." It will look at our alliance with the landed gentry of Latin America and say: "This is not just." The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just. A true revolution of values will lay hands on the world order and say of war: "This way of settling differences is not just." This business of burning human beings with napalm, of filling our nation's homes with orphans and widows, of injecting poisonous drugs of hate into veins of people normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.
"America, the richest and most powerful nation in the world, can well lead the way in this revolution of values. There is nothing, except a tragic death wish, to prevent us from reordering our priorities, so that the pursuit of peace will take precedence over the pursuit of war. There is nothing to keep us from molding a recalcitrant status quo with bruised hands until we have fashioned it into a brotherhood."
The Rev. Martin Luther King, Jr., "Beyond Vietnam," April 4, 1967
Thursday, November 6, 2008
Roundup: November 6
Markets
Central Banks around the world coordinated a massive rate cut, with the ECB dropping its rate by 50 basis points, the SNB by 50 basis points, and the BOE by 150. Willem Buiter is pleased but a little flustered. Today's trading anyway marks the biggest two-day decline in US stock markets since the '87 crash.
Retail sales dropped to their lowest levels for October since 1969, even after numbers were buoyed by consumers switching to WalMart stores from more upmarket retailers. Numbers showed a 0.9% decline including Walmart, but, excluding Walmart, same-store sales dropped 4.6%. Sales of bonds backed by top-rated consumer credit card debt dropped to zero in October, from around $17bn in October 2007. Initial jobless claims dropped slightly, but continuing jobless claims rose 100k -- a terrible number, and unanticipated.
The auto industry meets today with House Speaker Nancy Pelosi to discuss options for further financial aid for the companies, after the Treasury just rejected their bid for a further bailout. Rules governing the $25bn in low-interest loans to support were rushed out by the DOE today so Detroit could access this financing as soon as possible. Worryingly, Toyota cut its profit forecasts by 60%.
News Corp and Allied Irish Bank warned on profits as UBS says it is considering legal action to claw back bonuses paid to executives during the boom years. RBS sold GBP3bn of bonds backed by the UK government today; Wells Fargo says it plans to sell at least $10bn of common stock to fund its purchase of Wachovia. Goldman Sachs has cut 3200 jobs (10% of its workforce). Brussels is investigating the German recapitalization of Commerzbank to determine if it is anti-competitive.
MiCEX again halted trading because of rapid price drops, its first stop in trading in several weeks.
Brad Setser predicts that the Chinese down-turn will be less severe than some other commentators have forecast, including his close collaborator Nouriel Roubini, arguing that much of China's growth was not export-driven. Of course, a small down-turn may be sufficient to destabilize the Communist Party, which is sitting on several potentially major fires related to land reform in rural China.
Philip Lane argues Iceland should aim to align its future with the European Union. It remains to be seen, of course, whether the EU will emerge from the economic crisis stronger -- or in shambles. A breakdown of EMU due to a Eurozone country experiencing extreme macroeconomic stress -- perhaps Ireland, Portugal, Greece, or Italy -- remains a distinct possibility. Yet with the EU stepping in to help facilitate bailouts for Europe's margins (Ukraine, Hungary, Iceland), existing EU members scheduled for EMU moving to speed the process of monetary integration (Poland), and some non-Eurozone members looking again at joining (Denmark), the balance so far looks in favor of European integration.
Yahoo CEO Jerry Yang has suggested that Microsoft make a new offer for the takeover of the company.
Calculated Risk has a brief discussion of NYC Mayor Bloomberg's new report on New York City commercial real estate.
World
A story is going around that Dimitri Medvedev may resign his office in 2009 to pave a way for the return of Vladimir Putin to the presidency, whose term will likely be extended from four to six years after yesterday's speech by Medvedev. However, it is likely that this story may have been planted as a way of gauging international reactions. Robert Amsterdam has a lovely piece of analysis of the situation in Nagorno-Karabakh, a region of conflict between Armenia and Azerbaijan. The EU has called for resumption of talks with Russia over a partnership agreement, despite Russia's refusal to remove all troops from South Ossetia. The EU had demanded the withdrawal of these troops as a precondition for the talks, and Poland and Lithuania, among others, are incensed.
Speculation over the possible composition of the Obama cabinet is brewing.
Science
Global oil demand may fall in 2009 for the first time in 26 years, according to the EIA. However, the IEA forecasts an average price for crude of $100 from 2008-2015, as the threat of a global supply crunch enforced not by fundamental shortages but by a lack of investment looms.
Canada has been lobbying the Obama camp about the mitigation of environmental damages from the extraction of oil from Alberta tar sands.
We move closer, amid some controversy, toward the implementation of Individual Trading Quotas (ITQ), a sustainable fishery management tool discussed in Nature last month, along the entire federal Pacific Ocean fishery.
Central Banks around the world coordinated a massive rate cut, with the ECB dropping its rate by 50 basis points, the SNB by 50 basis points, and the BOE by 150. Willem Buiter is pleased but a little flustered. Today's trading anyway marks the biggest two-day decline in US stock markets since the '87 crash.
Retail sales dropped to their lowest levels for October since 1969, even after numbers were buoyed by consumers switching to WalMart stores from more upmarket retailers. Numbers showed a 0.9% decline including Walmart, but, excluding Walmart, same-store sales dropped 4.6%. Sales of bonds backed by top-rated consumer credit card debt dropped to zero in October, from around $17bn in October 2007. Initial jobless claims dropped slightly, but continuing jobless claims rose 100k -- a terrible number, and unanticipated.
The auto industry meets today with House Speaker Nancy Pelosi to discuss options for further financial aid for the companies, after the Treasury just rejected their bid for a further bailout. Rules governing the $25bn in low-interest loans to support were rushed out by the DOE today so Detroit could access this financing as soon as possible. Worryingly, Toyota cut its profit forecasts by 60%.
News Corp and Allied Irish Bank warned on profits as UBS says it is considering legal action to claw back bonuses paid to executives during the boom years. RBS sold GBP3bn of bonds backed by the UK government today; Wells Fargo says it plans to sell at least $10bn of common stock to fund its purchase of Wachovia. Goldman Sachs has cut 3200 jobs (10% of its workforce). Brussels is investigating the German recapitalization of Commerzbank to determine if it is anti-competitive.
MiCEX again halted trading because of rapid price drops, its first stop in trading in several weeks.
Brad Setser predicts that the Chinese down-turn will be less severe than some other commentators have forecast, including his close collaborator Nouriel Roubini, arguing that much of China's growth was not export-driven. Of course, a small down-turn may be sufficient to destabilize the Communist Party, which is sitting on several potentially major fires related to land reform in rural China.
Philip Lane argues Iceland should aim to align its future with the European Union. It remains to be seen, of course, whether the EU will emerge from the economic crisis stronger -- or in shambles. A breakdown of EMU due to a Eurozone country experiencing extreme macroeconomic stress -- perhaps Ireland, Portugal, Greece, or Italy -- remains a distinct possibility. Yet with the EU stepping in to help facilitate bailouts for Europe's margins (Ukraine, Hungary, Iceland), existing EU members scheduled for EMU moving to speed the process of monetary integration (Poland), and some non-Eurozone members looking again at joining (Denmark), the balance so far looks in favor of European integration.
Yahoo CEO Jerry Yang has suggested that Microsoft make a new offer for the takeover of the company.
Calculated Risk has a brief discussion of NYC Mayor Bloomberg's new report on New York City commercial real estate.
World
A story is going around that Dimitri Medvedev may resign his office in 2009 to pave a way for the return of Vladimir Putin to the presidency, whose term will likely be extended from four to six years after yesterday's speech by Medvedev. However, it is likely that this story may have been planted as a way of gauging international reactions. Robert Amsterdam has a lovely piece of analysis of the situation in Nagorno-Karabakh, a region of conflict between Armenia and Azerbaijan. The EU has called for resumption of talks with Russia over a partnership agreement, despite Russia's refusal to remove all troops from South Ossetia. The EU had demanded the withdrawal of these troops as a precondition for the talks, and Poland and Lithuania, among others, are incensed.
Speculation over the possible composition of the Obama cabinet is brewing.
Science
Global oil demand may fall in 2009 for the first time in 26 years, according to the EIA. However, the IEA forecasts an average price for crude of $100 from 2008-2015, as the threat of a global supply crunch enforced not by fundamental shortages but by a lack of investment looms.
Canada has been lobbying the Obama camp about the mitigation of environmental damages from the extraction of oil from Alberta tar sands.
We move closer, amid some controversy, toward the implementation of Individual Trading Quotas (ITQ), a sustainable fishery management tool discussed in Nature last month, along the entire federal Pacific Ocean fishery.
Readings: Malcolm X
"This is why I say it’s the ballot or the bullet. It’s liberty or it’s death. It’s freedom for everybody or freedom for nobody. America today finds herself in a unique situation. Historically, revolutions are bloody. Oh, yes, they are. They haven’t never had a blood-less revolution, or a non-violent revolution. That don’t happen even in Hollywood. You don’t have a revolution in which you love your enemy, and you don’t have a revolution in which you are begging the system of exploitation to integrate you into it. Revolutions overturn systems. Revolutions destroy systems.
"A revolution is bloody, but America is in a unique position. She’s the only country in history in a position actually to become involved in a blood-less revolution. The -- The Russian revolution was bloody; Chinese revolution was bloody; French revolution was bloody; Cuban revolution was bloody; and there was nothing more bloody then the American Revolution. But today this country can become involved in a revolution that won’t take bloodshed. All she’s got to do is give the black man in this country everything that’s due him -- everything."
Malcolm X, "The Ballot or the Bullet," April 12, 1964
"A revolution is bloody, but America is in a unique position. She’s the only country in history in a position actually to become involved in a blood-less revolution. The -- The Russian revolution was bloody; Chinese revolution was bloody; French revolution was bloody; Cuban revolution was bloody; and there was nothing more bloody then the American Revolution. But today this country can become involved in a revolution that won’t take bloodshed. All she’s got to do is give the black man in this country everything that’s due him -- everything."
Malcolm X, "The Ballot or the Bullet," April 12, 1964
Wednesday, November 5, 2008
Roundup: November 5
Markets
The DTCC has issued its long-awaited snapshot of the CDS market. There is $33.6tr notional of CDS outstanding (about 2mn individual contracts); about half of the CDS are written on individual names (sovereigns and corporates), and about half are tied to indices. In a test of the credit markets, Ireland had to offer 25bp over benchmarks to raise EUR4bn of 3-year bonds; Irish ten years are trading at a 106bp spread to Bunds.
ArcelorMittal will cut its Q4 steel output by over 30% in a bid to support steel prices. The ISM non-manufacturing index was down sharply for October.
Swedbank is seeking assistance from the Swedish bailout plan, and BMW is exploring whether it might have access to the German scheme. (Detroit is reportedly preparing to lobby the Obama administration for aid.) UBS warned on Q4 profits after saying it could take up to CHF6bn in charges and as wealthy clients continue to withdraw money from the private bank; Swiss Re posted a Q3 loss of CHF304mn and said it will suspend its share buyback program. BNP Paribas's Q3 profit was down 55.6%; Allied Irish Bank has scrapped its dividend. GMAC lost $2.52bn in Q3 and said it might have to close its ResCap mortgage finance unit; the company is reportedly considering becoming a bank holding company in order to take advantage of the TARP.
Carl Icahn has called for the restriction of bonus payouts at firms bailed out by taxpayer dollars. Andrew Cuomo, our New York State Attorney General, whose love for the camera is renowned but occasionally productive, has threatened to challenge any such payouts in court.
World
Barack Obama is the president-elect of the United States of America. President Bush called the Senator last night to congratulate him on his "awesome night." Rep. Rahm Emanuel (D-IL) has been offered the position of White House chief of staff; speculation on the rest of the cabinet is rife, with Larry Summers, Tim Geithner, and even Paul Volcker being punted as possible Treasury Secretaries. FP Passport has a nice roundup of some foreign press.
President Medvedev is the first to test the president-elect's mettle: he has threatened to place missiles on the Polish border in response to the missile-defense pact signed by the US and Poland in the immediate aftermath of the Georgian war. The presidents of Poland and Lithuania issued calls for the EU to suspend any partnership negotiations with Russia until it abides by the terms of the EU-ceasefire in the Georgian War. The two amigos, Gordon Brown and Nicolas Sarkozy, seem unlikely to play along with New Europe, as Brown faces Conservative challenges and Sarko attempts to cement his legacy around an illusionary ceasefire.
Racism may also play a role in Russian reactions to Mr. Obama. Medvedev's Kaliningrad speech erased many of the recent gains on the Russian stock exchanges, as political risk threatens investor confidence. Siberian Light picks up a theme from the speech overlooked in most Western press reactions; the length of the Presidential term will in all likelihood be extended from four to six years, enabling Russia's current leaders to remain in power that much longer, including a possible 12 more years for Putin.
Israel bombed Hamas tunnels yesterday as renewed violence threatens to break the June ceasefire. Ehud Barak warned of a complete breakdown in relations, and the attack may have been a signal by Israel that it expects strong support for its discretion to handle Palestinian affairs under an Obama administration.
Iraqi provincial and national elections will give us an important window onto the president-elect's Iraq policy, as the elections promise to change the lanscape of Iraqi politics. At the very least, the ineffective Maliki may lose office.
Newsweek reports that the FBI is investigating foreign hackers who hacked both presidential campaigns' computers for internal documents, perhaps looking for information on the actual policy perspectives of the two campaigns.
One important side effect of the Obama election may be the weakening of European political parties with anti-American stances. His wide popularity in Europe would seem to undercut these parties' raison d'etre.
The cholera outbreak in Zimbabwe has worsened so much that a national disaster may be declared, and various emergency agencies are acting to stop its further spread. IRIN reports on growing unrest among poor Zimbabweans who are relying on garbage dumps to feed themselves. It seems the Reserve Bank of Zimbabwe may have stolen as much as $7mn intended to help fight AIDS in the country.
Zimbabwe has called Botswana's anti-Mugabe interventions in the SADC negotiations to be "extreme provocation," violating Zimbabwe's sovereignty. Of course, all President Ian Khama has called for are fair, internationally supervised elections to be held to break the deadlock in the power-sharing agreement.
Even as Laurent Nkunda's rebels in eastern Congo have stopped short of Goma, the Lord's Resistance Army has intensified its attacks around Dungu, in the northeast. The UN World Food Program began dispensing food to refugees in Eastern Congo today.
Wen Jiabao warned that high growth in China must continue in order to assure social stability.
Ahmadinejad's interior minister has been impeached and removed from office after (ludicrously) forging an honorary degree from Oxford.
Two top Mexican officials involved in fighting the drug trade and gangs, including the Interior Minister, died in a plane crash yesterday.
Science
Greenwire discusses the presidential transition and likely candidates for key positions at the DOE and EPA. The choice of John Podesta as transition manager points to a bright future for clean energy policy in the next administration. They also overview the fates of various renewables initiatives on state ballots yesterday.
It is likely that as many as three-fourths of solar firms will go out of business in the next few years, as consolidation, improving technology, and market maturity lead to increases in scale and consolidation of R&D. The difficulty of obtaining financing will not help, but the major trend is one of industry maturity, as many companies now planning utility-scale production plants will lose out to the competition.
SaudiAramco, the world's largest oil producer, is "reevaluating" $129bn of planned investment with oil prices falling. The consensus seems to be that all the talk of falling output and investment put on hold will lead to a recovery in oil prices in the next year or so, because of a supply crunch.
VeraSun may not be the only ethanol firm to face bankruptcy with credit availability and oil prices low. Their bad bets on the corn futures markets, which have been volatile of late, are not helping them recover.
The DOE and NREL have released a widely anticipated report on energy efficiency in moderately sized retail and grocery stores. According to the report, energy savings of 50% over ASHRAE standards (the standards most widely implemented in building codes across the nation) are achievable without the need for photovoltaic installation.
A paper in Nature looks at the energy balances for proposals to generate power from human feces, concluding that power densities are so low that feces should play its natural role in the ecosystem and be returned to the soil, not burnt wastefully.
The Antarctic ozone hole is the fifth-largest on record, but, in context, the NOAA says that it is only moderately large and not a source of concern.
Russia's crude oil export duty is "choking" investment in the oil sector and has led major producers to stockpile crude rather than export it at sub-par prices.
Lemming populations are sensitive to local effects of climate change, such as decreased snow depth, a new review of their population dynamics finds. This is one of the first studies of the quantitative dependence of a population on temperature dynamics.
The DTCC has issued its long-awaited snapshot of the CDS market. There is $33.6tr notional of CDS outstanding (about 2mn individual contracts); about half of the CDS are written on individual names (sovereigns and corporates), and about half are tied to indices. In a test of the credit markets, Ireland had to offer 25bp over benchmarks to raise EUR4bn of 3-year bonds; Irish ten years are trading at a 106bp spread to Bunds.
ArcelorMittal will cut its Q4 steel output by over 30% in a bid to support steel prices. The ISM non-manufacturing index was down sharply for October.
Swedbank is seeking assistance from the Swedish bailout plan, and BMW is exploring whether it might have access to the German scheme. (Detroit is reportedly preparing to lobby the Obama administration for aid.) UBS warned on Q4 profits after saying it could take up to CHF6bn in charges and as wealthy clients continue to withdraw money from the private bank; Swiss Re posted a Q3 loss of CHF304mn and said it will suspend its share buyback program. BNP Paribas's Q3 profit was down 55.6%; Allied Irish Bank has scrapped its dividend. GMAC lost $2.52bn in Q3 and said it might have to close its ResCap mortgage finance unit; the company is reportedly considering becoming a bank holding company in order to take advantage of the TARP.
Carl Icahn has called for the restriction of bonus payouts at firms bailed out by taxpayer dollars. Andrew Cuomo, our New York State Attorney General, whose love for the camera is renowned but occasionally productive, has threatened to challenge any such payouts in court.
World
Barack Obama is the president-elect of the United States of America. President Bush called the Senator last night to congratulate him on his "awesome night." Rep. Rahm Emanuel (D-IL) has been offered the position of White House chief of staff; speculation on the rest of the cabinet is rife, with Larry Summers, Tim Geithner, and even Paul Volcker being punted as possible Treasury Secretaries. FP Passport has a nice roundup of some foreign press.
President Medvedev is the first to test the president-elect's mettle: he has threatened to place missiles on the Polish border in response to the missile-defense pact signed by the US and Poland in the immediate aftermath of the Georgian war. The presidents of Poland and Lithuania issued calls for the EU to suspend any partnership negotiations with Russia until it abides by the terms of the EU-ceasefire in the Georgian War. The two amigos, Gordon Brown and Nicolas Sarkozy, seem unlikely to play along with New Europe, as Brown faces Conservative challenges and Sarko attempts to cement his legacy around an illusionary ceasefire.
Racism may also play a role in Russian reactions to Mr. Obama. Medvedev's Kaliningrad speech erased many of the recent gains on the Russian stock exchanges, as political risk threatens investor confidence. Siberian Light picks up a theme from the speech overlooked in most Western press reactions; the length of the Presidential term will in all likelihood be extended from four to six years, enabling Russia's current leaders to remain in power that much longer, including a possible 12 more years for Putin.
Israel bombed Hamas tunnels yesterday as renewed violence threatens to break the June ceasefire. Ehud Barak warned of a complete breakdown in relations, and the attack may have been a signal by Israel that it expects strong support for its discretion to handle Palestinian affairs under an Obama administration.
Iraqi provincial and national elections will give us an important window onto the president-elect's Iraq policy, as the elections promise to change the lanscape of Iraqi politics. At the very least, the ineffective Maliki may lose office.
Newsweek reports that the FBI is investigating foreign hackers who hacked both presidential campaigns' computers for internal documents, perhaps looking for information on the actual policy perspectives of the two campaigns.
One important side effect of the Obama election may be the weakening of European political parties with anti-American stances. His wide popularity in Europe would seem to undercut these parties' raison d'etre.
The cholera outbreak in Zimbabwe has worsened so much that a national disaster may be declared, and various emergency agencies are acting to stop its further spread. IRIN reports on growing unrest among poor Zimbabweans who are relying on garbage dumps to feed themselves. It seems the Reserve Bank of Zimbabwe may have stolen as much as $7mn intended to help fight AIDS in the country.
Zimbabwe has called Botswana's anti-Mugabe interventions in the SADC negotiations to be "extreme provocation," violating Zimbabwe's sovereignty. Of course, all President Ian Khama has called for are fair, internationally supervised elections to be held to break the deadlock in the power-sharing agreement.
Even as Laurent Nkunda's rebels in eastern Congo have stopped short of Goma, the Lord's Resistance Army has intensified its attacks around Dungu, in the northeast. The UN World Food Program began dispensing food to refugees in Eastern Congo today.
Wen Jiabao warned that high growth in China must continue in order to assure social stability.
Ahmadinejad's interior minister has been impeached and removed from office after (ludicrously) forging an honorary degree from Oxford.
Two top Mexican officials involved in fighting the drug trade and gangs, including the Interior Minister, died in a plane crash yesterday.
Science
Greenwire discusses the presidential transition and likely candidates for key positions at the DOE and EPA. The choice of John Podesta as transition manager points to a bright future for clean energy policy in the next administration. They also overview the fates of various renewables initiatives on state ballots yesterday.
It is likely that as many as three-fourths of solar firms will go out of business in the next few years, as consolidation, improving technology, and market maturity lead to increases in scale and consolidation of R&D. The difficulty of obtaining financing will not help, but the major trend is one of industry maturity, as many companies now planning utility-scale production plants will lose out to the competition.
SaudiAramco, the world's largest oil producer, is "reevaluating" $129bn of planned investment with oil prices falling. The consensus seems to be that all the talk of falling output and investment put on hold will lead to a recovery in oil prices in the next year or so, because of a supply crunch.
VeraSun may not be the only ethanol firm to face bankruptcy with credit availability and oil prices low. Their bad bets on the corn futures markets, which have been volatile of late, are not helping them recover.
The DOE and NREL have released a widely anticipated report on energy efficiency in moderately sized retail and grocery stores. According to the report, energy savings of 50% over ASHRAE standards (the standards most widely implemented in building codes across the nation) are achievable without the need for photovoltaic installation.
A paper in Nature looks at the energy balances for proposals to generate power from human feces, concluding that power densities are so low that feces should play its natural role in the ecosystem and be returned to the soil, not burnt wastefully.
The Antarctic ozone hole is the fifth-largest on record, but, in context, the NOAA says that it is only moderately large and not a source of concern.
Russia's crude oil export duty is "choking" investment in the oil sector and has led major producers to stockpile crude rather than export it at sub-par prices.
Lemming populations are sensitive to local effects of climate change, such as decreased snow depth, a new review of their population dynamics finds. This is one of the first studies of the quantitative dependence of a population on temperature dynamics.
The president-elect
Barack Obama is the president-elect of the United States of America; the first black man to win the office in history. It was a rout, or at least it looks like one by recent standards: Obama takes 364 electoral votes to McCain’s 174, taking nine of Bush's ‘red’ states (FL, NC, VA, OH, IN, IA, NV, CO, and NM) when Florida or Ohio alone would have sufficed. The electoral map has been redrawn. At the very least it has been revealed, not only to us but also to the world, that the rigidly consistent line between loyal Republican states and loyal Democratic states that held in 2000 and 2004 was probably no more than a tremendous, hard-fought achievement by the Bush campaign—not something more enduring and Kulturkampfy in the political field. No doubt the highest voter turnout since 1908 had something to do with this correction.
After the Democratic victory in the 2006 mid-term election—echoed by last night's blue gains in the Senate and House of Representatives—Mike Davis mustered a pinch of optimism:
With only seventy-six days until his inauguration, the president-elect is understandably anxious to start his preparations. The WSJ reports that he will begin high level briefings on Thursday, and many expect key cabinet positions to be announced next week. Obama made nods in his acceptance speech to the difficulties that lie ahead: two wars in the Middle East, a housing and financial crisis that has yet to hit bottom, serious immigration concerns, and a number of potentially catastrophic humanitarian crises on the world's horizon. It has never been clear that Obama is up to these tasks; the coming weeks will offer the first signs of how he will actually proceed, now that the votes have been counted.
For now, feelings are unusually high. Nobody ever accused Obama of being prone to give bad speeches, and, visibly exhausted, he delivered another spectacle last night. The rhetorical armature of the speech was huge, mixing Christian with American, "yes we can" with distinct allusions to the canonical American speeches of the last century and a half: Lincoln, FDR, JFK, RFK, King, and even Reagan. (As with Nixon, once, and Clinton, the kids get a puppy.) It was a sermon; its text the scriptures of American politics. For those who went to Grant Park to hear the speech in person, the religiosity was unmistakeable, the enthusiasm even overbearing.
"We have a righteous wind at our back," Obama announced over the weekend. And the wind did blow in Chicago. It remains to be seen where, if anywhere, it will take us. There were 19th-century crowds in that city. In New York, and Boston, in Philadelphia and Los Angeles too. It is hard to recall a popular expression of so-called 'collective effervescence' like this one -- not in this country, not recently. Maybe Boston after the Red Sox won in 2004, maybe, for a margin, the trek to Burning Man every year—but nothing of this palpable, almost utopian spirit that erupted last night in so many cities, so many different cities. In living memory, in the United States, we have only known that spirit when it emerges, vengeful, to burn its own houses down; or occasionally to mourn.
And for what? For change, we are told, for a new birth of popular politics in America. We’ll see. It doesn't seem like there is, really, any rational ground on which we might be permitted to hope that Obama’s presidency will satisfy the spirit which welcomed him to power last night. Maybe that's the point, the real question: will people remember how elated, how relieved, and how hopeful they were on November 4, 2008, when change was on the rhetorical bill of fare like never before? Will there emerge a discourse, a way of thinking, that can hold this presidency to its own, historic standards, and that can offer a productive outlet for the frustrations that, almost certainly, lie ahead?
After the Democratic victory in the 2006 mid-term election—echoed by last night's blue gains in the Senate and House of Representatives—Mike Davis mustered a pinch of optimism:
"The exhilarating promise of the November victory is that a cadre of veteran liberal Democrats -- Charles Rangel (Ways and Means), Barney Frank (Financial Services), Henry Waxman (Government Reform), David Obey (Appropriations), Ike Skelton (Armed Forces), and John Rockefeller IV (Senate Intelligence Committee) -- will use their hard-won committee chairmanships to mount sweeping inquisitions of the Himalayan corruption and collusion of the DeLay years. With subpoena power finally in the hands of the opposition, the interlocking special interests that dominate the Bush administration will face the comprehensive exposure and accounting that they managed to elude in the aftermath of the Enron scandal."But Davis was rightfully skeptical:
"In the worst-case scenario, the long-hoped-for New Populism would simply become midwife to a bipartisan regroupment of bigots and cranks, while the Democratic leadership continues to take its cues from Goldman Sachs and Genentech."Today, there is even more cause for caution.
With only seventy-six days until his inauguration, the president-elect is understandably anxious to start his preparations. The WSJ reports that he will begin high level briefings on Thursday, and many expect key cabinet positions to be announced next week. Obama made nods in his acceptance speech to the difficulties that lie ahead: two wars in the Middle East, a housing and financial crisis that has yet to hit bottom, serious immigration concerns, and a number of potentially catastrophic humanitarian crises on the world's horizon. It has never been clear that Obama is up to these tasks; the coming weeks will offer the first signs of how he will actually proceed, now that the votes have been counted.
For now, feelings are unusually high. Nobody ever accused Obama of being prone to give bad speeches, and, visibly exhausted, he delivered another spectacle last night. The rhetorical armature of the speech was huge, mixing Christian with American, "yes we can" with distinct allusions to the canonical American speeches of the last century and a half: Lincoln, FDR, JFK, RFK, King, and even Reagan. (As with Nixon, once, and Clinton, the kids get a puppy.) It was a sermon; its text the scriptures of American politics. For those who went to Grant Park to hear the speech in person, the religiosity was unmistakeable, the enthusiasm even overbearing.
"We have a righteous wind at our back," Obama announced over the weekend. And the wind did blow in Chicago. It remains to be seen where, if anywhere, it will take us. There were 19th-century crowds in that city. In New York, and Boston, in Philadelphia and Los Angeles too. It is hard to recall a popular expression of so-called 'collective effervescence' like this one -- not in this country, not recently. Maybe Boston after the Red Sox won in 2004, maybe, for a margin, the trek to Burning Man every year—but nothing of this palpable, almost utopian spirit that erupted last night in so many cities, so many different cities. In living memory, in the United States, we have only known that spirit when it emerges, vengeful, to burn its own houses down; or occasionally to mourn.
And for what? For change, we are told, for a new birth of popular politics in America. We’ll see. It doesn't seem like there is, really, any rational ground on which we might be permitted to hope that Obama’s presidency will satisfy the spirit which welcomed him to power last night. Maybe that's the point, the real question: will people remember how elated, how relieved, and how hopeful they were on November 4, 2008, when change was on the rhetorical bill of fare like never before? Will there emerge a discourse, a way of thinking, that can hold this presidency to its own, historic standards, and that can offer a productive outlet for the frustrations that, almost certainly, lie ahead?
October Themes: Zimbabwe in Turmoil
Civil society in Zimbabwe has been in chaos since the run-up to the elections earlier this year. Despite widespread abuses, ballot box-stuffing, forcible intimidation of likely voters, and outright violence on the part of some cadres of Robert Mugabe's Zanu-PF, opposition leader Morgan Tsvangirai's MDC for the first time won the popular vote. Unfortunately, his margin of victory was not large enough to prevent a run-off election, from which, after thousands of MDC supporters were brutalized and Tsvangirai himself was arrested several times, he withdrew to prevent further harm to his supporters. Mugabe won the run-off, unsurprisingly, but the MDC retained the parliamentary majority it had won in the first round of elections, leading to a standoff.
On September 15, a vague and nebulous power-sharing agreement was brokered between the MDC and Zanu-PF. Deadlock over this agreement had dominated the news for the past month, as the humanitarian situation in Zimbabwe deteriorates.
Cabinet posts
The controversy has centered around the allocation of ministerial positions. Under the agreement, the MDC would control the right to 13 seats on the cabinet directly, with three reserved for an MDC splinter faction led by Arthur Mutambara. Mugabe is alloted 15 of the 31 ministerial positions by the text of the agreement, but he has unilaterally claimed every substantial ministry, including the home office (which controls the police), justice, and finance. As a result, the MDC have broken off talks several times, saying, "We will end up in but out of government."
Several times the MDC has broken off talks, after the two parties were “worlds apart” on the allocation of ministries. After one of these incidents, Tsvangirai gave this hopeful speech.
Most sensible draft power-sharing proposals that have been made public have allocated the key ministries between the two parties. In one, the MDC would receive finance and the home office, and Zanu-PF would retain defense. But proposals have been vexed by allegations that various parties have misrepresented their terms, and anyway have faced a more serious problem.
The military and the police
The police are the greatest barrier to the power-sharing agreement. If the MDC were to achieve control of either the home office or the justice ministry, it would be able to prosecute police officers for past atrocities, including the systematic beating, intimidation, and murder of the MDC’s civilian supporters. Naturally, the police are against this.
Similarly, military hardliners who have supported Mugabe for all these years fear retribution for their past crimes. The military organized the pre-runoff violence, and fears over the repercussions of their brutality have led the generals to petition Mugabe to ensure their safety. Some generals have called for Mugabe to form a government without the MDC and have threatened Tsvangirai’s safety. One general said that only one option remained for the country with Tsvangirai: “Take action.”
Thabo Mbeki and the SADC
Thabo Mbeki, pushed out of office in his native South Afirca, has been appointed to lead the South African Development Community’s attempts to negotiate a successful end to the power-sharing agreement. In a characteristically helpful moves, he closed the borders of South Africa to Zimbabwean refugees on September 28/29, reasoning that since he had stepped in to negotiate, there was no longer a situation in Zimbabwe that necessitated the extension of the right to asylum.
Mbeki has been widely accused of partiality in the negotiations, as he has historically favored Mugabe's government. Apparently, one of the first proposals he put forth after he joined talks was substantively identical to Mugabe’s unilateral self-allocation of the proposals. As a result, the MDC has called for the UN and African Union to intervene if the SADC and Mbeki continue to fail to resolve the situation.
The passport fiasco
Under international pressure to do something, the SADC called a regional summit in Swaziland -- and Mugabe's government denied Morgan Tsvangirai the passport he would have needed to travel through South Africa to the summit. The talks have since been rescheduled, but this show of utter contempt on Mugabe's part has begun to stimulate international diapproval. Ian Khama of Botswana, a long-time opponent of Mugabe's, has broken with the SADC and denounced Mugabe’s actions, calling for new elections in Zimbabwe. The MDC has said it will call for new elections if the talks fail to proceed.
Kgalema Molanthe, the new president of South Africa, asked the MDC not to boycott the talks after they were rescheduled. The MDC entered preliminary talks in Harare vowing to take a hard line and demand a fair division of power. The SADC claimed a certain measure of progress in the negotiations, but the MDC denounced these statements as misleading propaganda. Mbeki’s participation is now being recognized on all sides as a failure; and the farce has reached the heights of banning journalists from covering the talks for fear they would be destabilized.
After the failure of these early talks to resolve outstanding issues, UN Secretary General Ban Ki-Moon publicly slammed Mugabe, accusing him of insincerity and the SADC of weakness and incompetence. This was another important public salvo in the anti-Mugabe fight. Tsvangirai has consented to attending the full summit of the SADC on Sunday for more talks.
The people starve
At the time of the elections the populace was on the brink of famine. According to Tsvangirai, food agencies were already feeding 4 million people, with the number set to rise to 5.5 million by early 2009. In the beginning of the month the UN World Food Program was calling for $140mn in extra funding to deal with the unfolding crisis, even with the Red Cross and other agencies intensifying their efforts to deliver food.
This article presented the real plight of a Zimbabwean farmer trying to plant his fields in the midst of the troubles. The systematic destruction of farmland undertaken by Mugabe in the early part of the decade, combined with the reallocation of farmland from white farmers to inexperienced black farmers to get votes -- not to mention the kleptocratic consolidation of large new estates owned by members of government-- had already eliminated any surplus capacity in this fertile country. The people of lush Zimbabwe now depend on food aid and remittances from abroad for basic subsistence. And the Zanu-PF apparatus is tightening its noose: the military has taken control of the distribution of basic agricultural inputs, like seed.
The deadlock over government has dovetailed with the unfolding fiscal catastrophe to make famine a reality. On Monday we suggested Zimbabwe's experience this decade would likely replace Weimar Germany as the new locus classicus for studies of hyperinflation. Paper currency is worthless; aid agencies find their available foreign exchange reserves confiscated (perhaps stolen is a better term) for government uses and corruption, instead of being spent on feeding Zimbabweans.
Zimbabweans are limited in the amount of cash they can withdraw from banks in a given week, but with inflation running at hundreds of billions of percent per annum, this amount is constantly revised upwards. Just before each increase in the withdrawal limit, poor families find themselves unable to eat, to send their children to schools, or to clothe themselves. The education system, once sub-Saharan Africa’s finest, has fallen to pieces. Cholera has broken out in Harare. Illegal mining is poisoning the country's rivers. Ordinary people are relying on wild foods to support themselves. Children are hit the hardest.
The cash withdrawal limit for enterprises is lower still than that for individuals; as a result, companies can neither maintain their operations nor meet payroll, let alone finance any import or export of goods. As a result, unemployment is running at a conservatively estimated 80%. But in this kind of situation the notions of unemployment and money themselves start to break down.
Hope?
The most hopeful part of the process is the burgeoning realization throughout the international community that, one way or another, Mugabe’s days are numbered. The SADC is beginning to stand up for itself, with Mbeki out of power in South Africa. Individual nations like Botswana have denounced the dictator, and the UN may finally move toward intervention. Even if Mugabe retains power after this drama, we are seeing the beginning of the end of his reign. The only question is how much longer the innocent people of Zimbabwe will be made to suffer for an old man's power-mad ravings.
On September 15, a vague and nebulous power-sharing agreement was brokered between the MDC and Zanu-PF. Deadlock over this agreement had dominated the news for the past month, as the humanitarian situation in Zimbabwe deteriorates.
Cabinet posts
The controversy has centered around the allocation of ministerial positions. Under the agreement, the MDC would control the right to 13 seats on the cabinet directly, with three reserved for an MDC splinter faction led by Arthur Mutambara. Mugabe is alloted 15 of the 31 ministerial positions by the text of the agreement, but he has unilaterally claimed every substantial ministry, including the home office (which controls the police), justice, and finance. As a result, the MDC have broken off talks several times, saying, "We will end up in but out of government."
Several times the MDC has broken off talks, after the two parties were “worlds apart” on the allocation of ministries. After one of these incidents, Tsvangirai gave this hopeful speech.
Most sensible draft power-sharing proposals that have been made public have allocated the key ministries between the two parties. In one, the MDC would receive finance and the home office, and Zanu-PF would retain defense. But proposals have been vexed by allegations that various parties have misrepresented their terms, and anyway have faced a more serious problem.
The military and the police
The police are the greatest barrier to the power-sharing agreement. If the MDC were to achieve control of either the home office or the justice ministry, it would be able to prosecute police officers for past atrocities, including the systematic beating, intimidation, and murder of the MDC’s civilian supporters. Naturally, the police are against this.
Similarly, military hardliners who have supported Mugabe for all these years fear retribution for their past crimes. The military organized the pre-runoff violence, and fears over the repercussions of their brutality have led the generals to petition Mugabe to ensure their safety. Some generals have called for Mugabe to form a government without the MDC and have threatened Tsvangirai’s safety. One general said that only one option remained for the country with Tsvangirai: “Take action.”
Thabo Mbeki and the SADC
Thabo Mbeki, pushed out of office in his native South Afirca, has been appointed to lead the South African Development Community’s attempts to negotiate a successful end to the power-sharing agreement. In a characteristically helpful moves, he closed the borders of South Africa to Zimbabwean refugees on September 28/29, reasoning that since he had stepped in to negotiate, there was no longer a situation in Zimbabwe that necessitated the extension of the right to asylum.
Mbeki has been widely accused of partiality in the negotiations, as he has historically favored Mugabe's government. Apparently, one of the first proposals he put forth after he joined talks was substantively identical to Mugabe’s unilateral self-allocation of the proposals. As a result, the MDC has called for the UN and African Union to intervene if the SADC and Mbeki continue to fail to resolve the situation.
The passport fiasco
Under international pressure to do something, the SADC called a regional summit in Swaziland -- and Mugabe's government denied Morgan Tsvangirai the passport he would have needed to travel through South Africa to the summit. The talks have since been rescheduled, but this show of utter contempt on Mugabe's part has begun to stimulate international diapproval. Ian Khama of Botswana, a long-time opponent of Mugabe's, has broken with the SADC and denounced Mugabe’s actions, calling for new elections in Zimbabwe. The MDC has said it will call for new elections if the talks fail to proceed.
Kgalema Molanthe, the new president of South Africa, asked the MDC not to boycott the talks after they were rescheduled. The MDC entered preliminary talks in Harare vowing to take a hard line and demand a fair division of power. The SADC claimed a certain measure of progress in the negotiations, but the MDC denounced these statements as misleading propaganda. Mbeki’s participation is now being recognized on all sides as a failure; and the farce has reached the heights of banning journalists from covering the talks for fear they would be destabilized.
After the failure of these early talks to resolve outstanding issues, UN Secretary General Ban Ki-Moon publicly slammed Mugabe, accusing him of insincerity and the SADC of weakness and incompetence. This was another important public salvo in the anti-Mugabe fight. Tsvangirai has consented to attending the full summit of the SADC on Sunday for more talks.
The people starve
At the time of the elections the populace was on the brink of famine. According to Tsvangirai, food agencies were already feeding 4 million people, with the number set to rise to 5.5 million by early 2009. In the beginning of the month the UN World Food Program was calling for $140mn in extra funding to deal with the unfolding crisis, even with the Red Cross and other agencies intensifying their efforts to deliver food.
This article presented the real plight of a Zimbabwean farmer trying to plant his fields in the midst of the troubles. The systematic destruction of farmland undertaken by Mugabe in the early part of the decade, combined with the reallocation of farmland from white farmers to inexperienced black farmers to get votes -- not to mention the kleptocratic consolidation of large new estates owned by members of government-- had already eliminated any surplus capacity in this fertile country. The people of lush Zimbabwe now depend on food aid and remittances from abroad for basic subsistence. And the Zanu-PF apparatus is tightening its noose: the military has taken control of the distribution of basic agricultural inputs, like seed.
The deadlock over government has dovetailed with the unfolding fiscal catastrophe to make famine a reality. On Monday we suggested Zimbabwe's experience this decade would likely replace Weimar Germany as the new locus classicus for studies of hyperinflation. Paper currency is worthless; aid agencies find their available foreign exchange reserves confiscated (perhaps stolen is a better term) for government uses and corruption, instead of being spent on feeding Zimbabweans.
Zimbabweans are limited in the amount of cash they can withdraw from banks in a given week, but with inflation running at hundreds of billions of percent per annum, this amount is constantly revised upwards. Just before each increase in the withdrawal limit, poor families find themselves unable to eat, to send their children to schools, or to clothe themselves. The education system, once sub-Saharan Africa’s finest, has fallen to pieces. Cholera has broken out in Harare. Illegal mining is poisoning the country's rivers. Ordinary people are relying on wild foods to support themselves. Children are hit the hardest.
The cash withdrawal limit for enterprises is lower still than that for individuals; as a result, companies can neither maintain their operations nor meet payroll, let alone finance any import or export of goods. As a result, unemployment is running at a conservatively estimated 80%. But in this kind of situation the notions of unemployment and money themselves start to break down.
Hope?
The most hopeful part of the process is the burgeoning realization throughout the international community that, one way or another, Mugabe’s days are numbered. The SADC is beginning to stand up for itself, with Mbeki out of power in South Africa. Individual nations like Botswana have denounced the dictator, and the UN may finally move toward intervention. Even if Mugabe retains power after this drama, we are seeing the beginning of the end of his reign. The only question is how much longer the innocent people of Zimbabwe will be made to suffer for an old man's power-mad ravings.
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