August 27, 2010

The Week in Review

August 20, 2010 | From

U.S. combat troops roll out of Iraq, Europe’s strongest economy, the target for China’s missiles, and 20-somethings moving back in.

Middle East

If reports are accurate, Russia will begin loading uranium into Iran’s first nuclear power plant on Saturday. The moment this “irreversible step” is taken, stated Sergei Novikov, a spokesman for the Russian nuclear agency assisting Tehran, the “Bushehr plant will be officially considered a nuclear energy installation.” If all goes well, Iran will be producing fissile material by October. While there is disagreement over the tangible contributions a fully operational Bushehr will provide to Iran’s nuclear weapons program, Saturday’s activation will be a milestone in Iran’s quest for nukes. Many agree that inside Iran the opening of Bushehr will provide a morale boost to supporters of both the conservative regime and the nuclear program. On the global playing field, Bushehr’s activation will be seen as a symbolic victory for Iran in its confrontation with the West over its quest for nuclear weapons.

A prominent Shiite militant leader has returned to Iraq from Iran, under Iranian protection. Ismail al-Lami, who uses the name Abu Deraa, has been wanted by the United States since 2004 for his Iranian-sponsored attacks against Iraqi Sunnis as a leader in Muqtada al Sadr’s Shiite Mahdi Army. He escaped to Iran in 2008. Abu Deraa’s return to Iraq at this time—right when the U.S. is cutting its numbers in Iraq down to 50,000 as its operations move from combat to assist—was likely carefully deliberated by Iran, according to Stratfor. It is a reminder to the U.S.—at a time when an Iraqi government has yet to be formed—that Iran still has powerful levers to influence events in Iraq. If Tehran perceives politics in Iraq are not going its way enough, it could ratchet up the level of violence in the country.

A Gaza-bound ship carrying women activists and aid will depart Lebanon on Sunday, according to an organizer. Israel has warned that it will not allow vessels to reach the Hamas-controlled Gaza Strip. The fact that so-called aid ships are still heading for Gaza even as aid is flowing more-or-less unrestricted into Gaza via land crossings makes it patently obvious that the purpose for such endeavors is purely political. The ship, which is sailing via Cyprus, will reportedly carry medical equipment and supplies—ironically, items of a nature that Israel has never denied Gazans.


While many countries are facing financial ruin, Germany has experienced its best quarter of growth since East and West Germany unified in 1990. During the second quarter of this year, the German economy grew by 2.2 percent, according to data released by Germany’s statistics office on August 13. “[T]he recovery of the German economy, which lost momentum at the turn of 2009/2010, is really back on track,” wrote the statistics office. According to Germany’s Economy Minister Rainer Bruederle, the “recovery of the German economy has shown itself to be much stronger than people have recently predicted.” He said German economic growth for 2010 could be over 2 percent of gross domestic product. “We’re currently living through an extra-large upswing,” he said. These strong results will probably cement Germany’s role as Europe’s, and even the world’s, economic leader. Germany wanted to deal with the financial crisis in a different way to other countries. Rather than throwing as much money as it could at the problem, Berlin preferred a prudent, cautious approach. German leaders were opposed within and without Europe, but they held firm. Now, the numbers seem to show that Germany got it right. Something has changed in Germany. Its economy is stronger while most of the world is economically weak. But more importantly, the Germans are growing more self-confident and assertive. Expect this attitude to spread beyond just economic policy.

Despite the success of Germany’s economy, Chancellor Angela Merkel is doing less well. A poll by Forsa last week said that only 34 percent of Germans intended on voting for a party in the ruling collation. “The Germans see no link between the good performance of the economy and Merkel’s government,” said political scientist Gerd Langguth. Voters instead focus on the squabbling of Merkel’s coalition and her hesitation in handling the Greek crisis. “For most people, there is no recovery. They are not earning more, but the costs of life are rising,” said another political scientist, Barbara Riedmueller. “Frau Merkel is going to have a very tough year,” said Langguth. Watch for a new leader to emerge in Germany.


In the latest evidence of Russia’s menacing ascension, Russian President Dmitry Medvedev conveyed to Tajik President Emomali Rakhmon that if Tajikstan discontinues the Russian military’s free use of Tajik airfields, then Dushanbe could suffer the same fate as the recently overthrown government in nearby Kyrgyzstan. Since Tajikistan borders both conflict-ridden Afghanistan and Uzbekistan, it is a strategic region for Moscow, prompting the Russian military to maintain a significant military presence there. Although Moscow and Dushanbe have an accord granting Russian military aircraft free use of Tajikistan’s military airfields, Dushanbe has recently hesitated to allow Russia free use of the Gissar airfield. Instead, Tajikistan, the poorest of the former Soviet Union countries, would like to be paid for Russian access. In the meeting held in Sochi, Russia, on Wednesday, Medvedev reminded Rakhmon of neighboring Kyrgyzstan’s former president, Kurmanbek Bakiyev, who tried to use a U.S. military base it hosted as leverage to squeeze money from both Moscow and Washington. Bishkek’s strategy led to a Russian-backed uprising in Kyrgyzstan, and to Bakiyev’s overthrow. Medvedev’s message to Rakhomon was that Moscow will not tolerate Tajikistan’s attempts at extracting Russian money any more than it tolerated Kyrgyzstan’s. Expect Russia’s drive for control in Tajikistan and elsewhere in the former Soviet Union region to continue as Moscow works to resurrect an empire in its former sphere of influence.

China passed Japan during the second quarter of this year to become the world’s second-largest economy behind the United States, according to government figures released Monday. Although China’s economy is still only a third of the size of America’s, the milestone is a clear indicator that the world is now reckoning with an ascending economic superpower. Economically, the Asia Pacific is now China’s backyard. It is the most important trade partner for every nation in the region including Australia and New Zealand. As China continues to grow, watch for it to act like a magnet—relentlessly dragging Asia’s other powers into its sphere of influence.

The annual report to Congress on China’s military power was finally released Monday. It describes a massive Chinese military buildup designed with one purpose—to push America out of the Western Pacific. The report, titled “Annual Report on Military and Security Developments Involving the People’s Republic of China,” says China is pursuing a variety of air, naval, submersible, space, and cyber weapons designed specifically to destroy U.S. battle carrier groups. Most conspicuous is the Dong Feng 21D carrier-killer ballistic missile, which can supposedly hit heavily fortified American carriers with accuracy at distances between 900 and 1,000 miles. Bejing officials called the report exaggerated and “not beneficial for the improvement and development of Sino-U.S. military ties.” The U.S., however, is right to be concerned over China’s military buildup—but concern alone will not neutralize the threat. Expect China’s military to continue to grow along with its economy, and for Beijing to intensify its belligerency on the global stage.

China has cut its reserves of U.S. debt by the largest amount ever. The move raised speculation that a plunge in U.S. yields has made government securities unattractive. Beijing, whose $2.45 trillion worth of foreign exchange holdings is the world’s largest stockpile of cash, is also increasing its reserves of euro-bonds and Japanese bonds as it trims its dollar holdings. From June 2009 to June 2010, China hacked its holdings of U.S. debt by $100 billion, or 11 percent, according to Treasury Department data released on Monday. 
China’s May 2009 highpoint of $939.9 billion in U.S. holdings had fallen to $839.7 billion by June 2010. To compensate for its decrease in U.S. holdings, China has been turning bullish on Europe and Japan. Yu Yongding, a former adviser to the People’s Bank of China, said that Beijing has been buying “quite a lot” of European bonds. On August 9, Japan’s Ministry of Finance said that in the first half of 2010, China bought ¥1.73 trillion (us$20.3 billion) more Japanese debt than it sold, which is the fastest pace of purchases in at least five years. The U.S. is piling up debt at record levels, and has operated under the assumption that China would reliably buy that debt up. After all, Washington calculated, who else would Beijing go to? Now China has revealed the sobering answer to that question.

Latin America/Africa

Colombia’s constitutional court suspended a 2009 treaty with the U.S. that gives American forces access to Colombian military bases, saying that the treaty had to be approved by the Colombian congress. The treaty has helped Colombia make a lot of progress against drug smuggling and the terrorist group farc. Colombian President Juan Manuel Santos supports the agreement, and it will probably be reinstated by congress with minimal disruption to American access to bases. But other countries, especially Venezuela, are strongly against having U.S. forces next door. Expect them to try and twist Colombia’s arm into kicking the U.S. out.

Rwandan President Paul Kagame was reelected on August 9, winning 93 percent of the vote. Five days later, America’s National Security Council issued a statement expressing concern about the election. “We remain concerned, however, about a series of disturbing events prior to the election, including the suspension of two newspapers, the expulsion of a human rights researcher, the barring of two opposition parties from taking part in the election, and the arrest of journalists,” said the statement. “Democracy is about more than holding elections. A democracy reflects the will of the people, where minority voices are heard and respected, where opposition candidates run on the issues without threat or intimidation, where freedom of expression and freedom of the press are protected.”


The last United States combat brigade left Iraq Thursday morning. The last soldiers of the 4th Stryker Brigade Combat Team crossed into Kuwait by night, executing President Barack Obama’s order to remove combat troops by September 1. About 50,000 other American troops remain in Iraq, which is still unstable and struggling to form a government. However, those troops are scheduled to withdraw next year.

This week’s economic data points to a “darker outlook,” Reuters reported on Thursday. Rather than falling 24,000 as expected, initial claims for unemployment benefits rose 12,000 to hit the half million mark last week, after seasonal adjustment. It was the highest figure since mid-November and the third straight week of increasing claims. The official unemployment rate is now 9.5 percent.

On Wednesday, the New York Times asked, “What Is It About 20-Somethings?”, quipping, “Why are so many people in their 20s taking so long to grow up?” More and more, the phenomenon of the 40 percent of 20-year-olds who move back to live with their parents at least once is becoming a topic of discussion, and even the subject of television shows. The Times, which rationalized the trend as neither good nor bad, reported that fewer than half of women and one third of men have completed the five traditional milestones of reaching adulthood. Now, young people increasingly are not finishing school, leaving home, gaining financial independence, marrying and having a child until their 30s.

The latest lawsuit filed against the Catholic Church for protecting officials who have sexually abused children has hit home in the U.S. Six women and one man accuse the church in Oakland of negligence for hiring a reverend who already had multiple accusations of abuse against him and then proceeded to sexually abuse them as well. Then Cardinal Joseph Ratzinger had urged Oakland officials to take more time before deciding to defrock the man.