How to Counter the Putin Playbook | The New York Times

Michael A. McFaul, director of the Freeman Spogli Institute and a senior fellow at the Hoover Institution, both at Stanford, served as United States ambassador to the Russian Federation from 2012 to 2014:

…We will not find security in isolationism. No missile defense shield, cybersecurity program, tariff or border wall can protect us if we disengage. Menacing autocracies, illiberal ideas, and antidemocratic and terrorist movements will not just leave us alone or wither away. The threats will grow and eventually endanger our peace, as we saw in Europe and Japan in the 1930s, and Afghanistan in the 1990s.

Conversely, the growth of democracy around the world serves American interests. Democracies do not threaten us; autocracies do. Democratic allies also vote with us at the United Nations, go to war with us, support international treaties and norms, and stand with us against tyranny.

So we must push back, in new ways. Just as the Kremlin has become more sophisticated at exporting its ideas and supporting its friends, so must we.

We should think of advancing democratic ideas abroad primarily as an educational project, almost never as a military campaign. Universities, books and websites are the best tools, not the 82nd Airborne. The United States can expand resources for learning about democracy……

I agree with the sentiment but not the execution. Win friends by promoting education and building infrastructure abroad. These have practical, tangible benefits to citizens of developing nations. Democracy can come later. In many parts of the world it is as foreign a concept as gay marriage.

Source: How to Counter the Putin Playbook – The New York Times

Valley of a Thousand Hills

I tried this as a test of Vimeo, but don’t you just love the attitude of these young Zulu kids. Few possessions other than a skateboard (most likely donated) but not a worry in the world.

A.N.C. Suffers Major Election Setback in South Africa | The New York Times

By NORIMITSU ONISHI:

JOHANNESBURG — The African National Congress, the party that helped liberate black South Africans from white-minority rule but has become mired in corruption, endured its worst election since taking power after the end of apartheid, according to results released on Friday….

For the opposition Democratic Alliance, the election results are the first significant victories outside of its stronghold in the western part of the country. Whites and South Africans of mixed race make up the party’s core supporters in that area, and blacks make up only about one-third of the population there.

The Democratic Alliance retained Cape Town, the nation’s second-biggest city, with a landslide victory. The party now controls at least two of the nation’s eight biggest cities.

Mmusi Maimane, who last year became the Democratic Alliance’s first black leader, claimed victory in the mayoral race in Pretoria on Friday, with more than 10 percent of the votes still left to be tallied. The A.N.C. did not concede.

Under Mr. Maimane, 36, who grew up in Soweto, the Democratic Alliance appears to have made inroads even in A.N.C. strongholds, especially among young voters whose image of the A.N.C. has less to do with Mr. Mandela than with Mr. Zuma.

“I wanted change,” said Tebogo Malatjie, an unemployed 22-year-old man in Soweto who voted for the first time for the Democratic Alliance. “You cannot vote for the A.N.C. if you want change.”

Apart from the charismatic Nelson Mandela, who made a major contribution in uniting the various tribes and cultures in South Africa, the ANC has proved itself incapable of governing a first-world economy. Mired in corruption and with rampant crime, the country has stumbled from one economic disaster to the next. The former guerilla army has proved incapable of adapting to the task of responsible government.

Nothing depicts the plight of the South African economy better than the demise of the Rand against the US Dollar (USDZAR plotted below with inverted semi-log scale):

USDZAR plotted below with inverted semi-log scale

The Democratic Alliance has used its traditional stronghold of the Western Cape to showcase the benefits of clean, stable government. A message that is now winning votes in Traditional ANC areas like Nelson Mandela Bay (formerly Port Elizabeth).

A Democratic Alliance win in the national elections, in 3 years time, is the best chance of restoring the country to its former status as the economic powerhouse of Africa.

Source: A.N.C. Suffers Major Election Setback in South Africa – The New York Times

Do the BRICS still matter?

From Marcus Degaut at CSIS:

BRICS text

The group consists of two emerging industrial economies (China & India) and three commodity exporters (Brazil, Russia, South Africa). Their interests are bound to diverge, especially when slowing Chinese growth drives commodity prices lower.

Read more at CSIS: Do the BRICS still matter?

Cold wind blows for crude oil producers

Long-term June 2017 Nymex Light Crude futures (CLM2017) broke support at $60/barrel, offering a target of $54/barrel*.

Nymex WTI Light Crude June 2017 Futures

* Target calculation: 60 – ( 66 – 60 ) = 54

In the short-term, September 2015 futures (CLU15) are testing support at their March low of $50/barrel. Breach is likely, given the long-term down-trend, and would offer a target of $40/barrel*.

Nymex Light Crude September 2015 Futures CLU15

* Target calculation: 50 – ( 60 – 50 ) = 40

Declining prices will hurt the Energy sector in the short/medium-term, but the benefit to the broader economy will outweigh this in the longer term. Lower fuel prices will especially benefit the Transport sector. Highly industrialized exporters like Germany, Japan, China and the broader EU, will also benefit. While oil exporters like Russia, Iran, the Middle East, Nigeria, Angola, Venezuela, and to a lesser extent Norway, face hard times ahead.

Why our prep-school diplomats fail against Putin and ISIS | New York Post

Kerry and Putin

“Why do our “best and brightest” fail when faced with a man like Putin?” Ralph Peters asks. “Or with charismatic fanatics? Or Iranian negotiators? Why do they misread our enemies so consistently, from Hitler and Stalin to Abu Bakr al-Baghdadi, the Islamic State’s self-proclaimed caliph?”

The answer is straightforward:

Social insularity: Our leaders know fellow insiders around the world; our enemies know everyone else.

The mandarin’s distaste for physicality: We are led through blood-smeared times by those who’ve never suffered a bloody nose.

And last but not least, bad educations in our very best schools: Our leadership has been educated in chaste political theory, while our enemies know, firsthand, the stuff of life.

Above all, there is arrogance based upon privilege. For revolving-door leaders in the U.S. and Europe, if you didn’t go to the right prep school and elite university, you couldn’t possibly be capable of comprehending, let alone changing, the world…….

That educational insularity is corrosive and potentially catastrophic: Our “best” universities prepare students to sustain the current system, instilling vague hopes of managing petty reforms.

But dramatic, revolutionary change in geopolitics never comes from insiders. It’s the outsiders who change the world.

An Athenian general once wrote:

The state that separates its scholars from its warriors will have its laws made by cowards, and its fighting done by fools.

~ Thucydides (c. 460 BC – c. 400 BC)

Read more at Why our prep-school diplomats fail against Putin and ISIS | New York Post.

Brazil: Stockholders cast their vote in upcoming election

In emerging markets, Brazil’s stock market surged after the left-leaning President Dilma Rousseff was forced into a run-off race against Aecio Neves, a centre-right challenger, who only surged in the final week of the campaign. Ms Rousseff is promising to expand Brazil’s social programmes and continue strong state involvement in the economy, while Mr Neves says he will pursue more centrist economic approaches, such as central bank independence, more privatisations and the pursuit of trade deals with Europe and the United States.

Brazil’s benchmark Ibovespa index rose 4.7% to 57,115.

Read more at Stocks lower despite upbeat news « Express & Star.

A Century of Policy Mistakes | Niels Jensen

In A Century of Policy Mistakes Neils Jensen describes the demise of Argentina over the last 100 years.

A century ago Argentina ranked as one of the wealthiest countries in world, behind the United States, the United Kingdom and Australia but ahead of countries such as France, Germany and Italy. Its per capita income was 92% of the G16 average; it is 43% today. Life in Argentina was good. It enjoyed the benefits of one of the highest growth rates in the world and attracted immigrants left, right and centre. Boom times galore.

Argentina’s wealth was based on agriculture, but also on its strong ties with the UK, the pre-World War I global powerhouse. Equally importantly, it understood the importance of free trade and took advantage of the relatively open markets which prevailed in the years leading to the Great War. Most importantly, though, it benefitted from, but also relied upon, enormous inflows of capital from the rest of the world. All of this is well documented in a recent piece in The Economist which you can find here.

Neils identifies three main causes:

  1. An over-reliance on commodities;
  2. Failure to invest in education; and
  3. An increasingly closed, inward-looking economy.
  4. It occurred to me that, apart from education, Australia has made the same mistakes.

    Read more at A Century of Policy Mistakes | Niels Jensen – Absolute Return Partners | PRAGMATIC CAPITALISM.

The BRICs party is over | Anders Aslund | Vox

Anders Åslund:

From 2000 to 2008 the world went through one of the greatest commodity and credit booms of all times. Goldman Sachs preached that the BRICs were unstoppable….

However, Genesis warns that after seven years of plenty, “seven years of famine will come and the famine will ravage the land”. Genesis appears to have described the combined commodity and credit cycle, from which the Brazil, Russia, India and China have benefited more than their due….

Read more at The BRICs party is over | vox.