Turmoil in Pakistan: Personal and Political

Tragic news out of Islamabad this morning–the assassination of Salman Taseer, a liberal giant and provincial bigwig in Punjab. I’ve got a post up at Foreign Exchange on Taseer, what prompted the attack and what it means for the already testy political situation in the country:

Taseer was a staunch progressive, an outspoken defender of the rights of women and minorities, and a telco tycoon who launched an English-language newspaper, and a TV station, to promote his liberal, secular politics. As such, he was a divisive figure: reviled on the right for his ideas, admired (but cautiously) on the left given his melding of money and political power.

According to the Ministry of the Interior, the killer told police after his arrest that he was seeking retribution for Taseer’s criticisms of the country’s blasphemy laws, which are illiberal enough as written, but are often abused to settle differences over property or other personal disputes…

Importantly, Taseer was a member of the Pakistan People’s Party, currently at the head of a government with dwindling political authority. While the PPP’s liberal members are no friends of the blasphemy laws, the tenuous nature of the party’s hold on power at the federal level has precluded picking the fight with the religious right that repealing the blasphemy laws would entail…

It is possible that the assassination changes things…

For the full picture, go here.

Disappearances in Pakistan

I’m vague and inconclusive over at Foreign Exchange again today, this time in response to an NYT story about disappearances in Pakistan.

I must admit the Times story doesn’t sit easily with my reporting in Pakistan…The Times makes two common foreign policy reporting mistakes–trying to fold an old local dispute largely ignored by the international community into a more recent narrative in which the West has a stake; and glossing over the conflicting interests of diverse factions within Pakistan (the courts, the President, the army). That’s a shame because ultimately, the competing centers of power in Pakistan are a much larger problem for its NATO allies than are these human rights violations, and in desperate need of elucidation.

Read it here.

Don’t Dismiss New START

A Christmas Eve post at Foreign Exchange about the New START treaty and why it does actually matter:

New START is a disarmament treaty that is almost irrelevant as a step towards nonproliferation, because while the U.S. and Russia have 95% of the world’s nuclear weapons between them, their arsenals are reasonably secure. Reducing them is not going to end the Iranian nuclear program, stop the escalation on the Korean peninsula or prevent Pakistan from being overrun by the TTP.

What it is going to do, however, is create the basis for the next era in U.S.-Russia relations, burying the last hangovers of the Cold War (which is in many ways what the treaty is about) to acknowledge that as the competition for economic resources and influence in Central and South Asia heats up, Moscow and Washington will increasingly find themselves on the same side.

Go read it. And have a merry Christmas.

China’s New Pakistan Strategy

Post at Foreign Exchange today looks at the geostrategic significance of some new investment MOUs between China and Pakistan. The post is a follow-up to a story I wrote for Forbes in the spring about Chinese investment in Balochistan, where I highlighted a mining contract gone sour under Chinese pressure. That contract finally fell apart last week, and the lessons I learned reporting on it hang heavily over my analysis of the new deals:

Throughout my travels in South Asia, I’ve heard stories about what it means to do business with China. The running refrain has always been that Chinese investors are politically neutral, that they protect their own material interests while doing their best to appease local leaders with a cut of any deal, but with very little concern for the day-to-day running of local life. This is always subtly (or not so subtly) contrasted to an American approach of promoting foreign investment as a mechanism of societal makeover. In much of South Asia, Chinese investment has proven appealing to those who would rather not be re-made. That was very much the theme of my time in Balochistan. This weekend’s deals do not fit that mold…

Want to know why? Read it here.

Gordon Brown, After the Fall

A post at Foreign Exchange on a Gordon Brown lecture/book launch I attended yesterday at NYU:

The basic thrust of the book is that financial reform laws in individual countries are irrelevant as tools against a future crisis, because they simply provide incentives to firms to take their riskier business elsewhere. Instead, the book pushes for formal regulatory coordination and essentially, for expanded global governance. It is not an explicitly left-wing argument, as Brown’s vision of global coordination includes a completed Doha Round and a plea for international institutions to prod China into speeding up its push for more consumer spending. [During his talk, Brown clarified this point–essentially he thinks the recent five year plan can be a two year plan if Beijing wants it to be.] My take having read the first section and skimmed the rest: It’s a pretty good blueprint, but completely unfeasible. It’s also not badly written, as far as books by ex-politicians go. Certainly a relief after the purple prose we got from Blair.

After laying all this out in a short lecture, the former PM took a few questions.

Read the rest.

In India, Size Does Matter

More ambiguous, waffly writing at Foreign Exchange. Promise to write something rich and conclusive this coming week. But for now, a slightly different take on the Indian microfinance mess:

First, a brief summary of the situation: In October, the government of Andhra Pradesh (AP), a state in the south of the country and home to A. all those call centers B. 30% of the country’s microloan industry, decided to blame microfinance institutions (MFIs) for a series of debtors’ suicides. [The relationship between poverty and suicide is not a new political subject in India: the left-wing newspaper The Hindu has made a business of chronicling in harrowing and tragic detail the suicides of bankrupt farmers in the last few years.] The suicides pointed to a growing trend, in AP and elsewhere, of over-indebted borrowers, many of whom had loans from multiple sources, a sign of the intense pressure that these mega-lenders put on loan officers to grow their portfolios. As others have noted, the ban also reflected the fact that the government oversees its own lending scheme, the Self-Help Groups (SHGs), and that the suicides presented a great opportunity to shut down competitors.

But the ‘pox on both their houses’ critique that has emerged from these facts is not helpful, not least because it doesn’t engage particular closely with what either MFIs or SHGs actually do.

…

Rather it seems to me that the whole sector got into trouble because it was insufficiently localized. As practiced in India, both the MFI and the SHG model have neglected the key piece that made microlending in Bangladesh work so well.

More here.

Some Soul-Searching On Inequality

In the early months of the financial crisis, I wrote up a post that attempted to look at the relationship between income inequality and economic catastrophes, arguing that as the U.S. economy has opened to the rest of the world, the correlation between economic growth and income growth has eroded. As a result, it’s now perfectly possible to see incomes fall even as the economy is growing. There are two problems with this: first, the kind of debt bubbles created by the gap between growth (ie consumption) and income, and secondly, the ease with which a person paying attention to that top-line growth can MISS the signs of an oncoming bubble burst if they aren’t paying attention to the income gap.

At the time, this was a bit of a crazy argument to be making, but since then I have seen versions of it pop up elsewhere. It was posed as a question–and left hanging–by Derek Thompson at the Atlantic. It was the underlying assumption of a series on the causes of inequality that Tim Noah wrote up for Slate. And it has been bandied about by senior economists at Harvard, Princeton, and U. Chicago.

Here’s what’s interesting about this trend. Most of the people making the argument against income inequality are folks who were in favor of greater redistribution before the crisis, folks who see a moral argument for greater equity irrespective of the economics, and for whom the economics is just a new arrow in the quiver. Read the rest of this entry »

What is China Thinking?

Latest post at Foreign Exchange waffles about trying to understand what’s happening on the Korean peninsula:

So here are the questions: to what extent is the DPRK acting with Chinese support, and to what extent is it acting alone? and if it is acting alone, how comfortable is Beijing with the decisions Pyongyang is making? How seriously should observers take Chinese expressions of dissatisfaction, if, as the pessimists suggest, the proposed solutions are empty? South Korean news is reporting that North Korean envoy Choe Thae-Bak is in Beijing till Saturday–is that a friendly meeting or an opportunity for reprimanding? Truth be told, we just don’t know.

What we do know is that the primary foreign policy imperative for China is its sphere of influence in northeast Asia, not the regime per se.

Go read the rest.

More on Ireland

Another quickie Ireland at Foreign Exchange today, this time looking at the politics of the deal with an Irish TD:

Going into the conversation, I was under the impression that Ireland might hope to renegotiate at a lower interest rate after the crisis has stabilized somewhat. Deputy Fleming was determined to disabuse me of this assumption.

Over time, he says, “people will begin to see that the interest rate is not so bad. If the financial situation stabilizes, by year 3 [of the loan period], it may be possible to be raising funds in the bond markets again at a rate that is lower than the rate on offer [in the EU settlement], and we may not have to draw it all down at that rate.” In other words, there’s no plan to renegotiate a better deal in Brussels, but there is a plan to aggressively hack at the deficit domestically, and then leverage the Brussels offer to renegotiate with the bond markets.

For more such optimistic predictions, read the whole thing.

Covering the Wikileaks

The latest at Foreign Exchange on the way news organizations are handling the Wikileaks:

as we come to see Wikileaks as just a source, news organizations are having to decide whether to cover them at all, and–as we often do with delicate subject matter–how to balance the scoop against the risk to those implicated. I have very minimal sympathy with Wikileaks’ overall agenda, which seems increasingly to be about embarrassing the US government for the sake of it rather than to advance any particular cause, but I do think that news organizations have an obligation to cover these leaks in some fashion once they’ve occurred. They can pick and choose what to include on the basis of what’s really significant, and they can avoid reprinting the actual documents if they see a risk to someone’s life, but they can’t just choose to ignore the whole development.  That’s why I think it’s deplorable that two major news organizations–the Wall Street Journal and CNN–chose to turn down access to the documents altogether, because, in essence, they were afraid of being compromised. National security reporting is inevitably compromised and risky, and to run from that challenge is unjournalistic, and wrong.

Go read the whole thing.