Friday, 28 February 2014

Tales of toothpaste bombs and other terror threats

Once the 2014 Winter Olympics officially finished without any of the feared militant attacks on the Russian town of Sochi, attention for international security returns now to the broad and diffused threats from terrorists around the world. The problem is, as usual, no one is quite sure where, when, or how the next attack will occur.

As if to emphasise the unknown nature of the international terror threat, the US Transportation Security Administration temporarily banned all gels and liquids from flights travelling between Russia and the United States. The ban stemmed from a warning based on intelligence that explosives could be carried on board flights disguised in toothpaste tubes. 

Officials from the US Department of Homeland Security issued a warning to US and foreign airlines travelling to Russia for the Winter Olympics to stay alert for toothpaste containers which may store ingredients that could be used to construct a bomb while aboard a plane. The official said that while the US government is not aware of any specific threat regarding toothpaste containers, it regularly shares information on potential threats with foreign and domestic security partners. 

While a bomb concealed in a tube of toothpaste might sound like a fear-mongering excuse dreamed up by the authorities to needlessly constrict air travel further than it already is, there is an important history of militants concealing explosive devices to consider. After all, the very nature of the cat-and-mouse game between authorities and militants is actually more of an evolutionary arms race.

Many simpler explosive devices are virtually impossible to carry aboard aircraft. During the Cold War, terrorists from ideologies ranging from Marxist Palestinians, Sikhs, North Koreans, and anti-Castro Cubans all tried to destroy aircraft as part of their militant goals. The inherent fragility of an aircraft structure makes them a particularly attractive target.

Also, few things frighten travellers more than the idea their flight might have a bomb aboard. Being stuck inside a long aluminium tube flying thousands of metres above the ground at enormous speeds, coupled with the potential for a bomb exploding on board is nightmarish. That fear magnifies and spreads to all potential travellers, even if they aren’t on board an aircraft when something goes wrong. We all vicariously feel the fear of the stricken passengers.  

This is a goal in itself for any militant wishing to target aircraft. In the theatre of terrorism, exploding a bomb in a plane not only kills the passengers, it discourages millions of potential travellers from flying.

The quick spread of terror around the globe for the price of only a few hundred grams of explosives is an enormously skewed cost-benefit result for a terror organisation. However, in cases such as this, it is important not to get too caught up in the exact method of disguise around the explosive.

PETN discovered inside a printer cartridge
The example of a toothpaste bomb is not a huge leap forward in terrorist capability. The technique has been used before. The very idea of using various forms of explosive and marrying them to everyday objects has a long history.

Terror groups allow a significant amount of time for inventing new ways to pass security measures on all types of transport.  There are even reports from the US authorities of credible threats regarding underwear, shoes, printer cartridges, and even breast implants being employed by militants for attack purposes.

Explosives also come in a significant number of forms including, solids, powders, gels, liquids, flexible sheets and cords, and plasticised solids which can be hidden in almost any cavity on any object. The options are effectively infinite.

Toothpaste bombs are not new either. This particular combination of explosives with everyday objects was used by anti-Castro Cuban militants in 1976 to bring down an aircraft over the Caribbean Sea, killing over 70 people.

On top of this, tests have also been conducted in Britain by explosives expert Sidney Alford with a plasticised high explosive called RDX. The explosive was mixed with paste in a small tube, similar to a toothpaste tube. All it took was a heat source to set off the explosion which was shown to be strong enough to breach the fuselage of a standard aircraft.

In light of facts like this, the US Department of Homeland Security decision to ban all liquids and gels on the flights is prudent.

Explosives such as RDX or PETN (pentaerythritol tetranitrate, an odorless, stable, powerful plastic explosive) are very difficult to detect as they have little or no metal content. Whole-body X-ray scanners can penetrate clothing and pick out concealed items, but these machines are still controversial.  Many security personnel still rely more on assessing the demeanour of passengers when selecting for screening than they do on their machines ability to pick them out of a crowd.

Detecting PETN or other plasticised explosives hidden inside body cavities of terrorists with X-ray machines is still very touch and go. An al-Qaeda-affiliated group in Yemen has already successfully experimented with such methods of concealment in their attacks on Saudi Arabian leadership.

The constraints faced by authorities certainly don’t make passenger screening futile. Think of it like a long distance race. The distance already travelled refers to all the low-level threats our current countermeasures protect against. Every time authorities foil an attack they learn and implement fixes for the gaps. While the range of possibilities for a creative terrorist is effectively infinite, it is only infinite in one direction if authorities are vigilant.

Ultimately, what warnings such as these teach is that the arms race between terror groups and authorities is a never-ending game. What we can’t allow to happen is letting the authorities take the easy route and simply ban items on all flights on the threat of an attack. Gels and liquids are necessary for some passengers and removing them would deter many from flying, essentially passing the victory on to the militants without them even conducting an attack.

The key will be to get ahead of terror groups by thinking outside the box and anticipating future threats. But this is easier said than done. The second generation of X-ray scanners currently being trialled is expected to plug some of the existing gaps, but authorities have to embrace the mindset of fighting the next war and being proactive rather than always reacting to counter new devices and their makers.

No matter how vigilant the authorities are, there is always the possibility that attackers will penetrate the protective screen and attack aircraft. In this way, the competition resembles penalty shots in the game of football: at some point the ball is going in the back of the net.

The authorities have to be correct every time, while the militants need only be lucky once. That is why authorities across the world take such drastic banning measures each time a threat appears. They can’t be too careful. And when it comes to convenience weighed against human lives, protection always wins.

Tuesday, 25 February 2014

America the brave, the powerful, the isolated

As I wrote last week, the United States is gradually pulling itself out of the worst financial crisis since the Great Depression. Coupled with a natural resources boom, a hegemonic position in the world system, and a uniquely American set of ideals about capitalism (among other factors), there is a distinct bounce-back occurring for the largest economy on earth.

Perhaps it is useful to ask what the United States is planning to do with all this new power.

For a person reading a newspaper in 1914, it would have been almost laughable had a time-traveller from 2014 described the trajectory of the intervening years. That the Americans would emerge as the preeminent world power after two world wars to begin the 21st Century without peer would sound like the stuff of fiction.

Yet this is the reality today. The question is: how will the United States deal with the situation they’ve largely stumbled into?

The Europeans, according to Ambassador of the European Union to Australia and New Zealand Sem Fabrizi, will discuss the Great War’s anniversary in the language of beginnings. WWI represents the birth of what would eventually become a peacefully united Europe, starting with the opening salvo of artillery. For the Americans, that war was also the beginning of its current supremacy. All Europe felt defeated after the Great War, but the United States and Britain felt victorious by default. They were essentially the last two powers standing.

In the early 21st century, after 100 years of American ascent, it is hard to refuse a classification of the American system as anything but an empire. It may be an unanticipated and unrecognised empire, but an empire is an empire. Even though their economy grows by the willpower and ideals of its people, the American empire emerged for more prosaic and largely predictable reasons.

The United States is not powerful today because of its people’s vigour, but because of its geography and how, by chance, the nation sits isolated from the rest of the troubled world. New Zealand in much the same way is not secure either or economically safe strictly because of its people’s efforts.

Driving anywhere in New Zealand, as in the United States, will not send you over borders where people speak a strange language and see the world differently. New Zealand and America have no military threats, and this breeds a tendency for reclusiveness. It is hard to know from a moral standpoint whether this mindset is good or bad, reflecting as it does only the geographic realities connecting America and New Zealand.

America has a degree of responsibility to maintain the world system, by virtue of its size and range of interests around the globe. New Zealand over the past 100 years has relied on America for implicit, and sometimes explicit, safety even while it too faces few existential threats. Yet their connections run deeper still.

It isn’t often America and New Zealand find fundamental traits they share entirely. Tying these nations together is a balance between enjoying the fruits of globalisation and staying out of trouble as much as possible. What separates them is how much power their isolation and geographic benefits can afford them. In what has become a controversial statement, the United States acting as an empire nevertheless accurately explains American goals for the future.

Intervention and involvement might have appeared to be the norm for America for a long time. And for the last century whenever there were inter-state squabbles one of the first questions asked was, “What is the American position?” With very few exceptions, every country either aligned itself with the United States, or against it, each largely reacting to whatever Washington thought was the best for its own interest.

Today, even while the United States pushes ahead economically, there is a change in the way they are interacting with the world. Intervening in world problems has reached a point of diminishing returns for America, preferring now to balance regional powers rather than coerce forcefully.

The United States has the luxury to detach, as does New Zealand. Flanked by two massive oceans - both completely controlled by the US Navy - and bordered by two largely friendly neighbours, the United States enjoys an enviable default status of peace on the home front. Just like New Zealand, continental American soil has not seen the aggression of war for hundreds of years.

This natural isolation is the default mindset for the American and New Zealand citizens. War and pain are things that happen to other people in faraway lands. New Zealanders use the phrase “overseas” when discussing foreign affairs, in the same way as do Americans. Both countries essentially feel the same way about the rest of the world: sometimes it is necessary to get involved, but in totality, what happens overseas is never really all that important.

That both the average New Zealander and American couldn’t care less about the past week’s upheavals in Ukraine, or the ongoing horror in Syria, reflects more the natural isolation of the two countries than it does any insidious apathy. After all, both nations have had plenty of sporadic engagement with the world’s problems over the past 100 years.

It would be something close to a mistake to assume a revived America immediately translates into greater interaction in the world. America will remain close to the geopolitical action as always, but there is a cycle towards detachment. Just because they depend on low-priced goods from China or high-quality hardware from Germany no longer means the United States feels compelled to be an intervening parent every time a flashpoint sparks somewhere on the globe.

Thursday, 20 February 2014

Getting the story straight in Ukraine

With the death toll rising to double figures in Ukraine after a number of particularly deadly days of rioting, it has become important to separate what is going on in the Former Soviet Union country, from what is not.

The reality of competing national imperatives in one of the world’s most important geographical regions is being lost in casual reiteration of global newswire services which report only a series of violent protests. The events in Ukraine are much deeper than just this.

In what is now being termed by Western media as a low-level revolution, more than 25 people have been killed this week as protesters taking violent action against President Viktor Yanukovich clashed with police in Kiev and other Ukrainian cities. Security forces opened fire at protesters outside a security service building in western Ukraine's Khmelnytskyi region on February 19, killing one and wounding two others. Both members of law enforcement and demonstrators are among the dead.

Amongst all the throwing of stones and Molotov cocktails in Ukraine, it is important to remember that their President Viktor Yanukovich was democratically elected in 2010 with an important majority.

A great many Ukrainians were very happy with Mr Yanukovich. So while they are deadly serious in their grievances, today’s demonstrators calling for his premature removal from office are walking a fine line between necessary political expression and the very real possibility of undermining Ukraine’s very constitution.

It is still unclear when these protests will end, and even though the participants are still low in number relative to the population, those who remain appear to be the stalwarts ready to see the movement through to the bitter end - whatever that end is. The inclusion of football fans in the protests, known as Ultras, are sure to add fuel to the protest fires.

From the government’s perspective, the Ultras illustrate the breakdown of the demonstrations into little more than thuggish opportunism, but this is only half the truth. While not necessarily ideologically aligned with the protesters, Ultras are acclimatised to rough dealings with law enforcement and generally relish any chance to bring their well-honed and relatively sophisticated riot techniques to protesting political groups. Versions of these groups are common all around the world in places with strong football cultures.

The bulk of the protests are centered on Kiev’s aptly-named Independence Square. Police have advanced on the square multiple times but have so far been unable to enter and clear the section due to barricades and reports of semi-automatic gunfire coming from the protesters. A spokesperson for the government assured February 19 that they do not wish to disperse the demonstrators forcibly and are looking at diplomatic channels to resolve the crisis.

Current negotiations have centered on finding a resolution to the violence in Kiev and the growing instability throughout the rest of Ukraine. Amid the unrest, Russia has found an opportunity to exploit Ukraine's divisions for its own benefit, namely by encouraging a discussion on Ukrainian federalism.

That Russia is getting involved now is news in itself. During the first flare-up of unrest in November 2013, when these so-called “Euromaiden” protests began as a negative response to the Yanukovich government’s reversal on Ukraine’s expected closer integration with Europe, Russia remained very quiet. Their silence was troubling for analysts at the time, given how important Ukraine is for Russia, but clearly Moscow was waiting to see who else would join the protests and where they were drawing their encouragement from.

The demonstrators fervour once again appears to be supported by the United States and Germany playing a not-very-covert game in the Former Soviet Republic to influence Ukraine’s politics.

This shouldn’t be too surprising, given that the United States views Ukraine to be just as important strategically for Washington as does Russia. After all, the Americans have indirectly influenced governments through intelligence and aid relief in Ukraine just with the last ten years.

Ukraine's President Viktor Yanukovych speaks during a joint news conference
But this is Russia’s backyard. After the 2004 Orange Revolution, in which the United States supported anti-Russian factions in sweeping to power a pro-EU, pro-Western, and anti-Russian government, Moscow turned its full intelligence and political attention towards Ukraine in an aggressive attempt to reestablish influence over the country. Russia moved quickly to counter the Ukrainian revolutions because it feared the same thing happening in Moscow with protests outside the Kremlin if the contagion of pro-Western sentiment spread.

Unfortunately for the US goals and the newly elected pro-Western Ukrainian government, resources for US intelligence are far outweighed by their Russian counterparts’ in Ukraine and the government of Viktor Yushchenko fell in 2010. Natural gas supplies to Ukraine - which Russia has few qualms using as a particularly effective political tool - were shut-off from Ukraine to help leverage Moscow’s foreign policy goals. The whole extended episode illustrated two major things about Ukraine’s strategic position.

First it showed that the rivalry between Russia and the United States was not a thing of some bygone era, as many had presumed. The Cold War tension certainly appeared to vanish after the fall of the Berlin Wall, but the reality was more complex. Competition between the two simply moved underground and further into the shadows.

Once Russia under the direction of President Vladimir Putin returned to its natural status as a regional power, which it concretely and vividly displayed with its 2008 war with Georgia, the old ways were finally returning. What the world discovered during this time, and continuing into today, was that political manipulation never quite left the repertoire of otherwise “reformed” Cold War adversaries.

Secondly, just like the current protests, the last decade of fluctuating peace and unrest in Ukraine shows how isolated protests can be co-opted by political powers to push their own agendas. Both the United States and Russia have felt comfortable using aggrieved Ukrainian demonstrators as proxies, and now it appears Germany is heavily involved using its own proxy groups stoking anti-Yanukovich protests. And it appears to be just getting started.

The United States is not enthusiastic about Russia gaining superior influence over the extremely strategic and geopolitically important Eastern European region. They would much rather mould a balance of power on the European peninsula between Russian and the EU, one in which Washington does not have to get its hands dirty and neither side can win outright. That scenario is much more preferable than intervening in Eastern European affairs more overtly and directly on the side of the Europeans. This would provoke an already nervous Russia probably too much.

Neither are the Russians excited about any loss of their own influence in the region especially as their own geographic and strategic position relies so heavily on retaining influence over Eastern Europe. Russia’s economy is probably never going to be as strong as they’d have people believe, and they are very good at political theatre.

The cards Russia is playing in Ukraine - and even in Syria - are meant to convince Former Soviet Union countries such as Ukraine that Russia is more than a regional power and they had better think twice before discarding Moscow in favour of the West. Kiev apparently understood this message loud and clear.

Complicating things even more, it appears the Germans are also finally moving into their own version of a post-Cold War foreign policy. Evidence has emerged that one of the major protest leaders, Vitali Klitschko, is being closely controlled by German political tentacles in an effort to further Berlin’s goals in Eastern Europe and towards Russia.

The United States appear to be happy letting Germany take a lead role in controlling the Ukrainian protests from the Western side, but Washington will be observing closely that Germany doesn’t gain too much influence and undermine their own strategy of creating a balance of power on the continent. A strong Germany is one thing, but a Germany with designs on broadening their foreign policy goals is still a worrying thought.

The Americans have fewer cards to play than the Russians in all of this, largely because Ukraine is on Russia’s doorstep and thousands of kilometres away from heartland America. Washington’s goal is in balancing Russia with the stronger powers of the EU, but there’s only so far they can take this with the resources they have.

As Washington’s attention moves away from its commitments in the Islamic world and South Asia, it may be able to free up more diplomatic and military resources to better focus on containing Russia. But presently, that is still a way down the track.

What is happening in Ukraine not as simple as a pro-Western faction of residents protesting a unilateral decision to pull away from deeper EU integration made by a democratically elected government. It most certainly is that, but there’s more to the story. It goes back decades and even centuries.

Behind the curtain, where the real story usually is, political forces both old and new are contesting over an important piece of geopolitical real-estate. The implications of where all this competition eventually goes digs all the way down to multiple nation’s very national imperatives. That is why it is important to get the story straight.

Wednesday, 19 February 2014

Why America could be the next "emerging economy"

Pessimistic predictions about America’s economic future are having a tough time squaring with statistical reality in 2014. As much as some would have been overjoyed to see the world’s only remaining superpower succumb to the pressures of merciless capitalism, the US has managed to keep its head above water. The question is why.

The irritating fact (for some) is that America is set not just to float in 2014, but swim strongly and make up significant lost ground, which could last well into 2015 and beyond. According to the US Federal Reserve, who aggressively predict an American GDP increase of at least 3% this year, a gradual slowdown of quantitative easing and a deleveraging of real estate assets are just two reasons pointing to fresh buds of growth.

This particular Fed prediction is higher and much more bullish than the general Wall Street consensus, but the feeling of revitalisation is the pattern connecting many economic soothsayers. Even the extraordinary renaissance in energy extraction currently underway in the Land of the Free is helping push the economic turnaround.

But these reasons aren’t enough to explain the growth entirely satisfactorily. Causal factors for this turnaround are likely too complex for a short article like this, nevertheless as actual emerging markets are beginning to show signs of struggle, one Wall Street analyst has even facetiously called the United States the next great “emerging market”.

This description might be a bit overwrought, but it does reflect the importance of a reinvigorated America to the world system. The US dollar remains the world’s reserve currency and last month’s tapering of the US Federal Reserve’s monetary expansion by a mere US$10 billion caused ripples all throughout the world.

To put the recent taper into perspective, US$10 billion of debt purchases is greater than the monthly portfolio investments into Turkey, India, Brazil, Chile, Ukraine, Indonesia, and Thailand combined. However painful it might be for these and other countries as the fiscal faucet from the Federal Reserve tightens, the decision to taper was made in response to and on behalf of the American economy - the rest of the world be damned (to an extent).

Gradually phasing out of extraordinary monetary stimulus has been a long time coming. The US government was becoming too reliant on stimulus even though it was introduced as a temporary measure to boost the economy out of a slump.

Should broad destabilisation become noticeable in the American economy, the Federal Reserve will need to reassess its evolving policies and perhaps continue the quantitative easing. US monetary decisions are ultimately made by considering the health of the American domestic market. And clearly the US Federal Reserve is confident the pace of recovery can withstand a bit less introductory money buoying the markets artificially.

Over the years since the Global Financial Crisis (GFC), the Reserve’s monetary expansion policy has also been relied upon - potentially too much - by truly emerging economies as well as the American. Many were very concerned about the timing of the expected taper this quarter, fearing that tightening the flow of money might expose serious fiscal flaws and endemic weaknesses in their own economies.

For instance, the Morgan Stanley Emerging Markets Index fell by 5% last year while the United States gained 30% on the Standard & Poor’s benchmark 500 index.

Of course, US consumers will have a rough time if prices rise; and if wages remain subdued despite President Barack Obama’s efforts, any recovery might actually be quite tepid. Although there are some headwinds facing the American economy, it is unlikely that rising gasoline and food prices will affect their expected trajectory of recovery.

So what exactly is driving the latest American resurgence? Well, it’s a bit hard to pinpoint directly as these things are never isolated events. But a critical factor seems to be in the American knack for innovation and flexibility. Many major technology breakthroughs which go on to be used around the world begin in the United States.

The shale gas boom is a perfect case in point. Tapping the easy-to-reach hydrocarbons over the past century quickly reached a point of diminishing returns for larger companies. After they were depleted, the United States looked overseas for its energy, leading to decades of reliance on foreign governments for its economic sustenance.

Then hundreds of smaller, more agile companies eventually moved in to review the dry fields and experiment with new techniques to access to tight oil and gas deposits. Those companies were relatively unexceptional; it was the economic climate and society around them which set them apart. They were able to succeed or fail without the threat of vanishing thousands of jobs or losing millions of dollars.

They were also small enough to soak up the inevitable collapses expected when processing new technologies in the real world. Some survived, many failed, but they managed to reduce the United States’ oil imports from 60% of total consumption in 2005 to 40% today. Natural gas imports have fallen by 27% over the same period.

On the other hand, Russian energy giants Gazprom and Rosneft are together in control of enormous potential reserves of tight gas and oil in Siberia. However, they have both proven to be too large and cumbersome to take advantage of the deposits quickly enough to compete with the American hydrocarbon revolution.

And to a large extent, that is what is setting the United States apart from the other giant economies in the world system. Not only are they comfortable letting smaller companies fail if they are not efficient enough - which is the very essence and consequence of capitalism - the crucial innovation this approach breeds is extremely beneficial to the America.

After all, necessity is the mother of invention and the Americans do bottom-up innovation better than most.

America’s free society stands in stark contrast to China or Russia where a top-down approach to innovation still reigns. Free societies tend to encourage scepticism and critical thought even though it might lead to instability in the short term.

Yet that initial instability fades away when the benefits of new technologies honed on the whetstone of unforgiving competition brighten the future. As the United States has discovered, the key is in encouraging originality. This is something that - so far - the Chinese and many other emerging economies are yet to fully embrace, but they will need to if they wish to compete with a booming America.

Monday, 17 February 2014

Russia's dangerous Olympic theatre

The 2014 Winter Olympic Games in the Russian Black Sea resort city of Sochi are just over halfway through their 16-day competition schedule.
Sochi was chosen to host the event at two clusters of venues for its beauty as well as its political importance to Russian President Vladimir Putin’s vision of a reinvigorated Russia.
The two games sites have come under criticism for their poor state of completion, with scaffolding still on major buildings and roads partially built, according to journalists and spectators.
The games themselves have been relatively free-flowing as an expected three billion people are expected to watch the competitions on television around the world.
Mr Putin hopes the event will be a public relations boost for his country. And to a large extent it certainly has been so far. He personally lobbied the International Olympic Committee to ensure Sochi was picked and has invested a good deal of Russia’s – and his own – prestige on the event running without a hitch.
However, what should have simply been a story about common humanity joining together in a competitive, friendly sporting environment was overshadowed by a series of terror attacks in the months leading up to the games.
These attacks have encouraged the unfortunate description of the games as the most dangerous ever. Bombings in Volgograd, some 600 kilometres from Sochi, in December killed 34 people and injured 72 others. Militants from the restive Caucasus region are suspected to be responsible for the attacks.
Extra security for the games, in the shape of 40,000 law enforcement and military personnel, were sent to the venues by Mr Putin to ensure no further planned attacks could affect the games.
At this point, even if no attacks occur during the final days of the games (with the Winter Paralympics starting March 7 to March 16) the militants have already achieved a significant victory for their cause.
Media attention is a large percentage of measuring the success of terror attacks, and the world is now watching with knowledge about the plight of the Caucasus separatists.
International worry about athlete and spectator safety has meant that much of the media attention has been focused on whether Russian authorities can keep the games secure.
This is still a genuine concern. Yet with the amount of physical security apportioned by the Russian government, an attack on the sporting events is unlikely. But the security preparations still do not guarantee that militants will be unable to attack the games.
By their very nature, suicide bombers like the ones in Volgograd are not deterred by hi-visibility jackets or police units and can essentially strike at any time or place of their choosing.
The burden is on the authorities to interdict the militants before they reach the venues, and that is no easy task. Russian intelligence and law enforcement is capable, but still human. The authorities must be lucky 100% of the time, whereas a bomber need only be successful once.
Again, even if an attack does little physical damage, the media attention it will generate will be enough to claim a symbolic victory over the Russian state.
Keeping the Winter Olympic Games safe is therefore essential from both a domestic and international perspective. A lot is riding on its success.
Mr Putin’s public image will be strengthened if the event can be completed without disaster. Hosting either the Summer or Winter Olympic Games is an opportunity to showcase a country’s competence while favourably shaping the globe’s perspective of the host nation.
Mr Putin is widely considered to be one of the more unsavoury characters in geopolitics but there’s no denying that Russia is a more potent and vigorous nation today since he has been at the helm.  
He has taken Russia from disorientation after the collapse of the Soviet Union and near anarchy, to a robust and rising economy. The path to success has been a bumpy ride for Russia, with the chaos in the 1990s nearly eviscerating the Russian national identity.
After almost a decade of churning out hydrocarbons and selling them to an energy-hungry Europe, Russia would like the world to believe it is back on the global stage once again.
Brokering a deal with the US over Syria’s chemical weapons was a theatrical - but effective - public relations boon for Mr Putin, increasing Russia’s international standing. A terror-free and flowing Winter Olympic Games should help lift Russia’s prestige even further.
But the fact remains that Russia still faces very similar constraints today as it did throughout its tenuous Soviet era. Both a largely unfavourable geography and a declining population, among other problems, will make any resurgence troublesome, regardless of Mr Putin’s ambitions.
Understanding the reality of Russia’s constraints in this light, the prestige of the Olympics could very well be seen as another classically Russian theatrical step to convince both the international community and the Russian people that everything is on track.
The reality is probably starkly different, as the very dangerous threat of militant activity in the Caucasus perfectly illustrates.
Mr Putin surely chose the city of Sochi for the Olympic venue to show the world he had the militant problem under control. It was a risky bet, bordering on dangerous, but it might be enough to convince those who need convincing (Ukraine, Poland, Hungary, Turkey, etc) that Russia is back again as a regional force to contend with.
Theatre aside, Mr Putin’s Russia still has a long way to go before finally proving that the country is ready to roll once more.
Russia is stable, sure, but given their fluctuating political history and the rapid evolution of both the European energy market and a shifting global stage of blossoming and strong competing economies, it definitely has its work cut out.

Monday, 3 February 2014

China's coal dependency will persist as pollution levels thicken dangerously

China’s leaders are working hard on a number of reforms to turn the world’s third-largest economy into even more of a robust powerhouse. The government’s plans to tackle corruption, food safety, and banking rules will all be overdue upgrades for the economy. But there is one issue China will need to address before it gets even more out of control. That issue is pollution.

If China cannot control this swelling crisis, it may have more trouble on its hands than it needs, especially as the economy is expected to slow in the coming years. And the trouble it might cause will not be isolated in the lungs of Chinese citizens.  

China’s extraordinary industrialisation has employed an unsustainable economic growth formula over the past few decades in an effort to keep its 1.3 billion people happy and complacent.  Most people have been prepared to look past the environmental damage that comes with their new-found prosperity but that attitude appears to be changing.

About 700 million people now live in China’s cities, contributing to high levels of congestion and industrialisation, but efforts by the government to rein in pollution have been much more limited than they perhaps should be given the size of the problem.

If the statistics from Former Health Minister Chen Zhu are to be believed 500,000 people per year could die from the smog if it continues to belch from factories and cars at present rates. This is bound to lead to internal strife which could threaten regime legitimacy. With greater prosperity comes greater awareness of the world and many Chinese citizens are comparing other countries to their own and noticing the stark differences.

The negative impact on the health of Chinese people is rearing its head in other ways. So-called “cancer villages” – clusters of cancer and sickness around industrial facilities and polluted waterways – are now so common that the Chinese government finally had to admit they exist.

And quite aside from this being strictly a Chinese problem it is quickly becoming a global issue as well. A report by the US National Academy of Sciences found that on a daily basis “the export-related Chinese pollution contributed, at a maximum, 12–24% of sulfate concentrations over the western United States”.

Air pollution in China is not exactly an unknown entity. The country is the world’s largest emitter of anthropogenic air pollutants, and it has been this way for a long time. It is so bad in Beijing that smog levels due to coal-burning factories and automobile exhaust are not measurable on the American particulate scale which maxes out at 500 particles per unit. They consistently rise far higher.

The US State Department now considers its diplomatic appointments to Beijing to be a hardship post and ensures its diplomats and their families take periodic rest and relaxation leave out of the country for health reasons.

On January 16, the US Embassy in Beijing reported “hazardous” levels of smog particulates. To reach this tier, the smog must have tipped the scales at over 25 times the levels recommended by the World Health Organisation. On the same week, poor visibility closed four major highways in the capital city.

Pollution levels are bad elsewhere in China, and it’s not just the air that is suffering. The Chinese Vice Minister of Land and Resources Wang Shiyuan said recently that more than 8 million acres – which translates to about 2% of China’s arable land – is too toxic for crops. Many of these farms lie in the northeast of China, in the Hunan province and near the Pearl and Yangtze river deltas.

Beijing does have some moves it can make to cut back the rising tide of pollution. President Xi Jinping’s anti-corruption drive is likely to have a positive effect by legislating “harsh” fines on polluters and limiting carbon emissions. But China’s dependence on coal is the real sticking point and the most politically sensitive.

The US Energy Information Administration places China as the world’s largest producer and consumer of coal, this also means they will account for almost half of global carbon dioxide emissions growth over the next three decades. The Chinese government has pledged to curb coal burning to below 65% in 2014 (down from its current level of 65.7%) of the country’s energy matrix, but they are worried anything less could severely hamstring its enormous energy demand.

To further this pledge, according to Chinese authorities, Beijing will close its four remaining coal-fired power plants before the start of 2015. The alternative is a $NZ9.62 billion investment into gas-fired power plants which should burn cleaner and supply the requisite amount of energy for the hungry city.

This step would help reduce pollution in the city, but the capacity for cleaner fuel alternatives is too limited to expect the disappearance of coal-fired plants in the near future. Coal burning is a cheap form of energy generation, and natural gas isn’t available to supersede the fossil fuel, so reducing the environmental impact of coal burning could extend simply to sulphur filters on exhaust flus and other similar measures.

Widespread use of carbon capture technology is estimated by the World Bank to potentially reduce the cost of pollution in China by $NZ123 billion a year. So as long as the Beijing can enforce its implementation nation-wide, that would be a great place to start.

These can be expensive technologies however, which could lead to price hikes and job losses as profit margins become slimmer than they already are. At this point the Chinese government would need to balance its long-term goal of moving to a more efficient economic model and its need to maintain high levels of employment.

China’s dependence on coal to generate electricity and support its phenomenal economic growth is reaching a point of no return. While the fuel is still the cheapest option – which greatly assists the economic development - damage to the Chinese and global environment could be irreversible if more impactful actions are not taken by the government.

Ultimately, China is and probably will remain a coal economy. There are significant systemic limits on Mr Xi’s efforts to evolve China into new and cleaner fuel sources. Capture technologies will help to reduce carbon emissions, but the industrial energy requirements to create large amounts of low-priced manufacturing for export to the world can presently only be satisfied with coal-burning plants.

However, without significant change - which will include a tightening of President Xi Jinping’s anti-corruption screws – the government could face civil unrest as more than half the nation’s citizens living in cities struggle to breathe healthy air and drink clean water. None of this will help encourage foreign investment which will hurt their economy and exacerbate the problems of government stability and economic prosperity.

Unfortunately, it isn’t as easy as that either. Taking the necessary actions to curb emissions will probably introduce equally devastating problems for the government as their economy slows and suffers, further lowering the prosperity indices and angering the Chinese people. Beijing has found itself in a very dangerous predicament indeed.