TELL JONATHAN CHAIT TO STOP TRYING TO DIG UP MARCOS:

November 29, 2006

Is the Philippines Finally Turning Around?: Growth is up. The deficit is down. President Arroyo has survived impeachment threats. The service sector is thriving. Yet much remains to be done (Assif Shameen , 11/22/06, Business Week)

[T]he fact that the center is even close to completion is significant. It is all part of a concerted rebranding effort underway under Arroyo’s leadership for this sprawling archipelago—long viewed as a politically unstable economic underachiever. “We want the region and the world to see that the Philippines has arrived,” Arroyo said during an exclusive interview with BusinessWeek.com on Nov. 20.

Maybe Arroyo has arrived too, in a way. That she is even around to host the summit is nothing short of a miracle. A year ago, Arroyo’s five-year-old administration was under siege. Almost daily street demonstrators called for her ouster in what was billed as “People Power III.” That was not a good place to be, considering two previous people power waves of protest led to the removal of dictator Ferdinand Marcos in 1986 and Joseph Estrada in January 2001.

Amid rumors of military coups (that never transpired), Arroyo also managed to narrowly avoid an impeachment trial in the Congress over allegations of government corruption and vote fraud. Along the way, though, she stayed focused on economic reforms, pushing through tax hikes to cope with the country’s massive fiscal problems and ushering in other revenue-boosting measures. The economy is now in the best shape it has been since the 1950s. “I have said all along there is no gain without pain,” she points out.

Economists have boosted growth forecasts this year to 5.6%—and to more than 6.5% in 2007. Chronic budget deficits have almost been eliminated in a nation that was under scrutiny from credit agencies as a government-default candidate. Moreover, foreign investors are testing the waters again. Foreign direct investments hit $1.2 billion last year and likely will grow to $2 billion this year based on preliminary data. “We are now ready for a take-off,” Arroyo insists.

Analysts enjoy the Philippines turnaround story even though they say much more needs to be done. “Stronger economic fundamentals and growth are starting to feed off one another,” notes Rob Subbaraman, an economist for Lehman Brothers in Hong Kong.
Long Way to Go

Indeed, he is so impressed with the turnaround that Subbaraman says “credit rating agencies should start rewarding the Philippines for its economic growth” with upgrades. “The reforms have reached a critical point where virtuous spirals are developing,” he thinks.

President Arroyo’s Vision for the Philippines: She tells Businessweek.com about her plans to privatize, invest in infrastructure, and make the archipelago a top player in business process outsourcing (Assif Shameen , 11/22/06, Business Week)

Not long ago, the Philippines was in political turmoil, suffering from a huge budget deficit, weak currency and worries the country couldn’t compete with China or India. Today the International Monetary Fund praises the country. What has changed?

I am glad that people are seeing that we’ve finally arrived. There is no looking back from here. Clearly, because of the steps we took, the days of huge deficits are gone. Gone, too, are the days of stagnation and poor economic growth. We fought hard for economic reforms. The first phase was to raise the revenues needed to invest in our infrastructure and our people so that Philippines is a more competitive place to do business and have a better standard of living. Those first battles have been won.

The budget deficit is under control, we are on our way to having a balanced budget by 2008, the stock market is up, the peso is strong, poverty rate is down, per capita income is up, investors are coming in again, growth is robust, new revenues can now be invested in long-overdue repair and rebuilding of our infrastructure, education, health, and job creation. The IMF and credit-rating agencies recognize this and so we are getting constant upgrades. We believe we are now in a virtuous cycle where one good thing leads to another.

Still, the Philippines has an image problem. How do you counter this image issue and tell investors this time it’s for real?

Well, they can see the difficult economic reforms that we’ve undertaken. They can see the revenues that we’ve raised in order to make investments in infrastructure and education. They can also see that I was even willing to pay a political cost to get these through. Now the results are coming in. I am happy the investors are more forthcoming.

The IMF and credit rating agencies reflect the image that we have in the world and we are getting accolades from them for the improvements we have made. Investments are coming in a range of sectors from business process outsourcing to mining. We’ve made it clear that we only encourage mining investments that are ecologically responsible so that there is sustainable development.

Because we now have money to invest, I have announced a trillion peso (nearly $20 billion) infrastructure program for the medium term. The money will come from our new revenues, from government corporations as well as the private sector. A lot of private-sector companies and foreign investors have shown interest and we are now trying to move on the infrastructure projects.


JUST WAIT FOR THE CHAPTERS WE HAVEN'T WRITTEN YET…:

November 28, 2006

Once upon a time in the west: a review of DANGEROUS NATION: America and the World 1600-1898 by Robert Kagan (Robert Cooper, Sunday Times of London)

The Monroe Doctrine of 1823 — that the US would not accept European interference in the Western hemisphere — was unilateral, like all subsequent American “doctrines”. But America also retained an ideological preference for Britain over the continental powers; if not a republic, it was at least a liberal monarchy. This was not the special relationship that the British still like to imagine. Britain was the superpower of the day; and it is this that accounts for the remarkable survival of Canada on a continent where the United States took everything else within reach. Dealing with America is always easier if you are powerful.

Why was the nation dangerous? Because it believed in itself and in its cause. America, Kagan tells us, was never a status quo power. It wanted to remake the world in its own image; and because its cause was righteous it saw no reason to limit its power. Reacting to the American wish to be rid altogether of the French and Indians, Edmund Burke argued for a balance of power in America. The idea that you could feel secure “only by having no other Nation near you was alien and repulsive to the European mind”. The search for absolute security — which was American policy then and now — represented, like the search for absolute power, immoderation; and that was dangerous.

So are idealism and democracy. The unnecessary wars that America fought in the 19th century — in 1812 against Britain, and in1898 against Spain — began on a wave of popular enthusiasm. (By contrast, America entered the necessary wars of the 20th century with reluctance.) Throughout this period the United States was long on ambition but short on the power to impose its ideals. But by the end of the century it had taken over most of the continent, settled the question of slavery, and was sending gunboats to Samoa, Brazil and Korea.

Dangerous Nation’s emphasis on democracy as a constant goal, accompanied occasionally by regime change (starting 200 years ago, during the war on piracy, with an attempt to overthrow the Pasha of Tripoli), make this a neoconservative history. Perhaps, but the case is well put and is beautifully written. This reader could not put it down, and cannot wait for part two.

MORE:
Back to the Future (Fouad Ajami, November 26, 2006, US News)

The sin of George W. Bush, to hear his critics tell it, is that he unleashed the forces of freedom in Arab-Islamic lands only to beget a terrible storm. In Iraq and in Lebanon, the furies of sectarianism are on the loose; and in that greater Middle East stretching from Pakistan to Morocco, the forces of freedom and reform appear chastened. Autocracy is fashionable once again, and that bet on freedom made in the aftermath of the American venture into Iraq now seems, to the skeptics, fatally compromised. For decades, we had lived with Arab autocracies, befriended them, taken their rule as the age-old dominion in lands unfit for freedom. Then came this Wilsonian moment proclaimed in the course of the war on Iraq. To the “realists,” it had been naive and foolhardy to hold out to the Arabs the promise of freedom. We had bet on the Cedar Revolution in Lebanon, thrilled to these young people in Beirut’s plazas reclaiming their country from Syrian tyranny. But that promise, too, has been battered, and in the shadows, the old policy of ceding Lebanon to the rule of Syria’s informers and policemen now claims a measure of vindication. On the surface of things, it is the moment of the “realists,” then: They speak with greater confidence. The world had lived down, as it were, to their expectations. And now they wish to return history to its old rhythm.

But in truth there can be no return to the bosom of the old order. American power and the very force of what had played out in the Arab-Islamic lands in recent years have rendered the old order hollow, mocked its claims to primacy and coherence. The moment our soldiers flushed Saddam Hussein from his filthy spider hole, we had put on display the farce and swindle of Arab authority.

Primacy and power. We can’t shy away from the very history we unleashed. We had demonstrated to the Arabs that the rulers are not deities; we had given birth to the principle of political accountability. In the same vein, we may not be comfortable with all the manifestations of an emancipated Arab Shiism–we recoil, as we should, from the Mahdi Army in Iraq and from Hezbollah’s Hassan Nasrallah in Beirut–but the Shiite stepchildren of the Arab world have been given a new claim on the Arab political order of primacy and power. In the annals of Arab history, this is nothing short of revolutionary. The Sunni Arab regimes have a dread of the emancipation of the Shiites. But American power is under no obligation to protect their phobias and privileges. History has served notice on their world and their biases. We can’t fall for their legends, and we ought to remember that the road to all these perditions, and the terrors of 9/11, had led through Sunni movements that originated in Egypt and Saudi Arabia.


THERE IS NO CANADA:

November 28, 2006

‘Nation’ motion passes, but costs Harper (GLORIA GALLOWAY and BILL CURRY AND ALEX DOBROTA, 11/27/06, Globe and Mail

Prime Minister Stephen Harper’s plan to outmanoeuvre separatists with a motion to recognize the Québécois as a nation has cost the government a cabinet minister and exposed fractious divides within both the Liberals and Conservatives.

The vote Monday night passed by 266 votes to 16. The only MPs who stood to oppose the motion were newly Independent member Garth Turner and 15 members of the Liberal caucus — including leadership candidates Ken Dryden and Joe Volpe.

Missing from the Conservative bench was Michael Chong, the man who had just resigned as minister of intergovernmental affairs over his inability to recognize the Québécois as a nation, even when framed within a united Canada.


TO ACCEPT NEGOTIATIONS IS TO ACCEPT STATEHOOD:

November 27, 2006

Olmert offers ‘serious’ plan for new state (Stephen Farrell, 11/27/06, Times of London)

Twenty-four hours after Palestinian militants began a ceasefire in Gaza, Israel’s Prime Minister sought to maintain the momentum yesterday by offering peace talks leading to the creation of a Palestinian state.

Ehud Olmert said that Israel would release prisoners, withdraw from West Bank Jewish settlements and ease checkpoints if Palestinians abandoned violence.

Pretty good test for the Palestinians–if they sit down it’s over.


BUT WE'RE EXCEPTIONAL EVEN WITHIN THE ANGLOSPHERE:

November 27, 2006

The Exceptionally Entrepreneurial Society (Arnold Kling, 27 Nov 2006, Tech Central Station)

Edmund Phelps is the 2006 winner of the Nobel Prize in economics. Shortly after his award was announced, Phelps published an essay on how capitalism in the United States differs from the system in Continental Europe. Phelps wrote,

There are two economic systems in the West. Several nations — including the U.S., Canada and the U.K. — have a private-ownership system marked by great openness to the implementation of new commercial ideas coming from entrepreneurs, and by a pluralism of views among the financiers who select the ideas to nurture by providing the capital and incentives necessary for their development. Although much innovation comes from established companies, as in pharmaceuticals, much comes from start-ups, particularly the most novel innovations…

The other system — in Western Continental Europe — though also based on private ownership, has been modified by the introduction of institutions aimed at protecting the interests of “stakeholders” and “social partners.” The system’s institutions include big employer confederations, big unions and monopolistic banks.

In Continental Europe, large banks control the bulk of investment. The United States has a more vibrant stock market, many more banks, venture capital firms, and other financial channels.

In Continental Europe, large established firms have access to funds from the large banks, but newer enterprises have a much more difficult time raising money. In the United States, the more competitive financial system gives more opportunity for entrepreneurs to raise start-up capital. […]

If the United States is exceptional because of our entrepreneurial culture, then our natural allies may not be in Continental Europe, in spite of its democratic governments and high levels of economic development. China seems more dynamic than Europe, but I would argue that China’s government-controlled financial system ultimately is not compatible with American-style entrepreneurship. Instead, we may have more in common with other nations of the Anglosphere, as well as such entrepreneurial outposts as India, Israel, and Singapore.

For the half century following World War II, the United States focused on democracy as the cornerstone of foreign policy. Democratic nations were our allies, and promoting democracy abroad was a top priority. However, it may be that American exceptionalism mostly reflects entrepreneurship. In that case, we have less in common with European social democracy than we thought previously. And, if our goal is to have more countries that look like America, then having them adopt a democratic political system may not be necessary and will certainly not be sufficient.

One wouldn’t expect a libertarian to grasp the fact, bit neither democracy nor capitalism are sufficient. They’re means, not ends.


WE DON'T DO REALITY, WE REMAKE IT:

November 22, 2006

Interventionism’s Realistic Future

By Robert D. Kaplan
Wednesday, November 22, 2006; A21

Hard-core foreign policy realists (the kind who say this country should rarely intervene again, anywhere) are hoping that in the wake of our comeuppance in Iraq things will be going their way. That is to say, U.S. foreign policy will be defined by an obdurate caution, coupled with a ruthless, almost mathematical application of balance-of-power principles. You’d think — to hear some of them talk — that we’re about to emulate China, which seeks only energy sources and advantageous trade agreements and cares nothing at all for the moral improvement of regimes in such places as Zimbabwe, Burma and Uzbekistan.

This is nonsense. Our foreign policy is about to experience an adjustment, not a flip-flop. Neither political party will support anything else if it really wants to elect a president in 2008. Just look at the dismay in this country over our failure to intervene in Darfur, even given the burden we already carry in Iraq. To be sure, the recent evidence that our democratic system cannot be violently exported will temper our Wilsonian principles, but it will not bury them. Pure realism — without a hint of optimism or idealism — would immobilize our mass immigrant democracy, which has always seen itself as an agent of change.


THE LIGHTER FOOTPRINT:

November 22, 2006

On Iraq: Listen carefully to General Abizaid (Walid Phares, 11/20/06, World Defense Review)

General Abizaid was asked by a panel of well informed Senators last week, how to “measure” the need to send in additional U.S. forces or to begin withdrawal from Iraq.

In short military sentences, the CENTCOM boss told them it will all depend on the ability of U.S. forces to train, support and direct Iraqi units in their confrontation with the terrorists. The Senators didn’t seem the get Abizaid’s very accurate point. Both Republican and Democrat legislators wanted a quantitative answer:

“How many additional troops do you need so that we can pull out lots of troops after,” they repetitively asked with hints at past and future electoral promises to end the conflict.

Sticking with his analysis, Abizaid (who speaks the language of the region and has studied its ideologies) said the question is not to bring in more troops to Iraq, but to have Iraqi forces begin to win their war. This was the first key in the whole hearing. The man was trying to tell the Senators that more important than bringing in additional 20,000 Marines and soldiers, was to train an additional 50,000 Iraqi troops.

Indeed, the ultimate objective in this war (at least the counter-terrorist part of it) is to help the Iraqis help themselves. Surely with half a million boots on the ground you can saturate the whole country, but from what? There is no standing army the U.S. is fighting against.

The fight is against a factory that is producing Jihadists, both external and internal. The answer is to build the counter-factory: i.e. an Iraqi military and intelligence force. And to do so, you have to allow it to fight the battle, with all the sacrifices and setbacks that come with it. U.S. forces cannot keep fighting instead of the Iraqis, and win the war for them.

Aware of this reality, General Abizaid (along with his colleagues) was trying to explain to Congress that – in the historical context of it – the war against terrorism in Iraq is one of the centers of the global conflict. Even the seasoned U.S. diplomat David Satterfield, who was also testifying on behalf of the State Department, asserted the inescapable reality: it is about the Iraqis’ political will. And in addition to the General and the diplomat, may I stress as an academic, that the matter at the end is psychological.

If Iraqi citizens “see” their army engaging the terrorists and winning, the tide will turn. It is not about how many new troops or about the statistics of death. It is between al Jazeera convincing Iraqis that the U.S. is defeated and that former Secretary of State Jim Baker (co-chair of the Iraq Study Group) is supposedly negotiating the terms of the surrender, and between al Hurra TV showing Iraqi commanders fraternizing with Shia and Sunni villagers after encounters with terrorists and sectarian militias. It boils down to this: who would the Iraqis send their sons to fight with: The Jihadists of all types or the multiethnic Army?

Without this understanding of the conflict, advocated by Abizaid, decision-makers are left with mostly political calculations: how to cut deals, how to get out, how not to suffer more losses, and how to be reelected or super-elected in 2008. General Abizaid instead recommended moves that make sense only if we can see the bigger picture:

Insert U.S. forces within Iraqi units: Reduce the presence of American (and Coalition) military in the “Jihadi zones” and instead deploy more Iraqi-American solidified forces. Call on U.S. units to strategically support Iraqis when the Jihadists are rebuilding other “Fallujahs.” Let the sons and daughters of Iraq take the fight to the terrorists, should they be Salafists or Khumeinists. This is their time to face off with their enemy (who happens to be our enemy). Let them engage and test their will and the will of the people they are protecting and liberating. Let al Jazeera and al Hurra (their media and ours) and the Iraqiya TV (Iraqi national TV) show the panache or the setback of their own forces. It is fine if we don’t take all the credit for all the battles. It is fine if the Iraqi military takes the front row for the good and the bad. Let their generals, commanders, soldiers be in the media and lash out against the Jihadists. And at the core of each unit, let’s place the best of our U.S. support. The bottom line, Iraqis needs victories in Arabic language (and also in Kurdish, Assyrian and Turkic). Audiences in Baghdad need to hear Iraqi commentators evaluating the conflict, not talking heads from New York to Los Angeles. This is not our exclusive war in Mesopotamia; this is also Iraq’s war against terror and fascism, whether our intellectual elites like it or not.

U.S. and Coalition forces should redeploy inside Iraq not away from it at this point in time. The actual need for ground, sea, and air forces should be designed by those who are waging the war in the realm of reality; not by those who are managing domestic politics at home. For lovers of debates, televised war-rooms and partisan labyrinths we suggest another arena of talents: engage the Iraqi people, politicians, youth, women, and mobilize them. Visit Iraq and meet with them or invite them to your cities, towns and campuses back at home. Be a part of the international mobilization, not the global demobilization. Strategically, large chunks of the expeditionary force should be deploying on or about the Iraqi-Iranian and Iraqi-Syrian borders. Use the weight of American might to deter the two regimes who are at real war with Iraq’s emerging democracy. Don’t let the agents of Damascus and Tehran killing the guys and gals in convoys and patrols inside urban areas. Fulfill the strategy of liberation with smarter moves instead of self-collapsing.

A uniquely sensible analysis that the neocons would do well to study.