China loses its allure

January 27, 2014

This week’s print edition of The Economist brings a worth reading story on China: life is getting harder for foreign companies there.

“According to the late Roberto Goizueta, a former boss of The Coca-Cola Company, April 15th 1981 was “one of the most important days…in the history of the world.” That date marked the opening of the first Coke bottling plant to be built in China since the Communist revolution.

The claim was over the top, but not absurd. Mao Zedong’s disastrous policies had left the economy in tatters. The height of popular aspiration was the “four things that go round”: bicycles, sewing machines, fans and watches. The welcome that Deng Xiaoping, China’s then leader, gave to foreign firms was part of a series of changes that turned China into one of the biggest and fastest-growing markets in the world.

For the past three decades, multinationals have poured in. After the financial crisis, many companies looked to China for salvation. Now it looks as though the gold rush may be over.”

Read full story.


Trade Deals Take Global Commerce Back to the Future

January 17, 2014

Edward Alden argues in an article for World Politics Review that the United States and European Union are reasserting their control over global trade rules after two decades of stalemate with developing countries.

After the negotiations that led to the creation of the WTO in 1995, developing country officials were determined to never again allow the U.S. and EU dictate the final terms of a global trade agreement. For the past two decades, until this month’s modest agreement in Bali, they have made good on that threat. But through ambitious regional deals, the U.S. and EU are reasserting control over global trade rules.

“Never again. That was the sentiment I remember hearing over and over from developing country officials following the tumultuous completion of the Uruguay Round negotiations in 1993 that led to the creation of the World Trade Organization (WTO) two years later. Once again, most of them believed, the United States and the European Union had dictated the final terms of a global trade agreement and forced it down the throats of the rest of the world. These countries were determined to have far more say in the shape of any future deals.

For the past two decades, until this month’s modest agreement in Bali to adopt new “trade facilitation” measures, the developing countries have made good on that threat. They have insisted that any new global trade agreement, such as that pursued unsuccessfully over the past decade through the Doha Round, pay special attention to their needs and priorities in areas like agriculture, manufacturing and intellectual property rules. Their united opposition has made it impossible to conclude another big global trade round on terms acceptable to the U.S. and EU.”

Read full story.


Four European Oil Firms Stop Investing in Iran

October 1, 2010

The United States announced that four of Europe’s five biggest oil companies (Total, Shell, Statoil and Eni) would end their energy investments in Iran, an attempt to bolster the Obama administration’s efforts to pressure Iran into entering negotiations over its nuclear program.

Lloyd’s of London also announced it would not insure petroleum shipments going into Iran.

A chart of the major "big oil" companies (Author: Boereck, Hamburg)

A chart of the major "big oil" companies (Author: Boereck, Hamburg)

“The goal here is not to impose sanctions for sanctions’ sake but to end companies from doing business with Iran,” Deputy Secretary of State James B. Steinberg said.

Read full story.


Principles for Economic Revival

September 22, 2010

Top White House economic adviser Lawrence Summers announced he will leave, allowing President Barack Obama to reshape his economic staff after midterm elections.

President Barack Obama makes his point to Lawrence Summers, left, head of the National Economic Council, and Office of Management and Budget Director Peter Orszag, seated next to Summers, during a budget meeting in the White House Roosevelt Room in the President's first week in office. Rahm Emanuel, White House Chief of Staff, is seated to the President's left (January 24, 2009)

President Barack Obama makes his point to Lawrence Summers, left, head of the National Economic Council, and Office of Management and Budget Director Peter Orszag, seated next to Summers, during a budget meeting in the White House Roosevelt Room in the President's first week in office. Rahm Emanuel, White House Chief of Staff, is seated to the President's left (Photo: Peter Souza; January 24, 2009).

The Federal Reserve said yesterday it was prepared to do more to help the U.S. economy but stopped short of announcing specific measures.

In the Wall Street Journal, George P. Shultz, Michael J. Boskin, John F. Cogan, Allan Meltzer, and John B. Taylor outline a set of policies to guide economic policymakers back to rapid growth, including lowering taxes, balancing the budget, modifying Social Security and healthcare entitlements, and a stronger monetary policy.

Read full story.


U.S. Recession Longest Since World War II

September 21, 2010

The U.S. recession lasted eighteen months and was the longest since World War II, according to the National Bureau of Economic Research, which announced yesterday that the recession ended in June 2009.

Read full story.


The Arab Lobby and US Foreign Policy

September 17, 2010

The Arab lobby is one of the strongest in America—even stronger than Israel’s, argues a new book written by Mitchell Bard – The Arab Lobby: The Invisible Alliance That Undermines America’s Interests in the Middle East.

A book review by Alan M. Dershowitz

While the media and politicians engage in frenzied debate about the virtues and vices of building—or preventing the building of—a Muslim community center (cum mosque) near the “sacred ground” of 9/11, Iran continues to build a nuclear weapon, as the Israelis and Palestinians take a tentative step toward building a peaceful resolution to their age-old conflict.

Inevitably, whenever Middle East issues take center stage, the question of the role of lobbies, particularly those that advocate for foreign countries, becomes a hot topic. This book by longtime Middle East authority, Mitchell Bard, is a must read for anyone who cares—and who doesn’t?—about the role of lobbies in influencing American policy in the Middle East. Its thesis, which is sure to be controversial, is easily summarized:

Yes Virginia, there is a big bad lobby that distorts U.S. foreign policy in the Middle East way out of proportion to its actual support by the American public. Professors Stephen Walt and John Mearsheimer, author of the screed, The Israel Lobby, are right about that. But the offending lobby is not AIPAC, which supports Israel, but rather the Arab lobby, which opposes the Jewish state.

Both the pro-Israel and pro-Arab lobby (really lobbies because there are several for each) are indeed powerful but there is a big difference—a difference that goes to the heart of the role of lobbying in a democracy. Bard puts it this way:

“One of the most important distinguishing characteristics of the Arab lobby is that it has no popular support. While the Israeli lobby has hundreds of thousands of grass root members and public opinion polls consistently reveal a huge gap between support for Israel and the Arab nations/Palestinians, the Arab lobby has almost no foot soldiers or public sympathy. It’s most powerful elements tend to be bureaucrats who represent only their personal views or what they believe are their institutional interests, and foreign governments that care only about their national interests, not those of the United States. What they lack in human capital in terms of American advocates, they make up for with almost unlimited resources to try to buy what they usually cannot win on the merits of their arguments.”

This is a critical distinction for a democracy. The case for Israel (though not for all of its policies) is an easy sell for pro-Israel lobbyists, especially elected representatives. Voting in favor of Israel is popular not only in areas with a large concentration of Jewish voters, but throughout the country, because Israel is popular with Evangelical Christians in particular and with much, though certainly not all, of the public in general. Lobbies that reflect the will of the people are an important part of the democratic process. Thus, the American Association of Retired People (AARP), the principal lobbying group for the elderly, is extremely powerful because there are so many elderly people in this country who want to protect social security, Medicaid, and other benefits. The National Rifle Association (NRA) is a powerful lobby precisely because so many Americans, for better or worse, love their guns. And The American Israel Public Affairs Committee (AIPAC) is a powerful lobby because Americans, in general, support the Middle East’s only democracy and reliable American ally.

But why is the Arab lobby, and most particularly the Saudi lobby, also powerful? Saudi Arabia has virtually no support among Americans. Indeed, it is widely reviled for its export of terrorists such as Osama bin Laden, its manipulation of oil prices, its anti-Christian and anti-Semitic policies, its total deprivation of any semblance of freedom of speech or dissent, and its primitive forms of punishment that include stoning and amputation. Yet, as Bard demonstrates, the Saudi lobby has beaten the pro-Israel lobby over and over again in head-to-head conflicts, such as the sale of sophisticated weapons to a regime that doesn’t even have the technical skills to use them, and the conflict over whether to move the United States’ embassy to Jerusalem. Even now, Saudi Arabia is lobbying to obtain a multibillion-dollar arms deal, and it is likely to succeed over the objections of Israel.

How then does a lobby with no popular support manage to exert influence in a democratic country? The secret is very simple. The Arab lobby in general and the Saudis in particular make little effort to influence popularly elected public officials, particularly legislators. Again, listen to Bard:

“The Saudis have taken a different tact from the Israeli lobby, focusing a top-down rather than bottom-up approach to lobbying. As hired gun, J. Crawford Cook, wrote in laying out his proposed strategy for the kingdom, ‘Saudi Arabia has a need to influence the few that influence the many, rather than the need to influence the many to whom the few must respond.'”

The primary means by which the Saudis exercise this influence is money. They spend enormous amounts of lucre to buy (or rent) former state department officials, diplomats, White House aides, and legislative leaders who become their elite lobbying corps. Far more insidiously, the Saudis let it be known that if current government officials want to be hired following their retirement from government service, they had better hew to the Saudi line while they are serving in our government. The former Saudi ambassador to the United States, Prince Bandar, who was so close to the President George H.W. Bush that he referred to himself as “Bandar Bush,” acknowledged the relationship between how a government official behaves while in office and how well he will be rewarded when he leaves office. “If the reputation then builds that the Saudis take care of friends when they leave office, you’d be surprised how much better friends you have when they are just coming into office.”

Bard concludes from this well known quid pro quo that: “given the potential of these post-retirement opportunities, it would not be surprising if officials adopted positions while in government to make themselves marketable to the Arab lobby.”

The methodology employed by the Arab lobby is thus totally inconsistent with democratic governance, because it does not reflect the will of the people but rather the corruption of the elite, while the Israeli lobby seems to operate within the parameters of democratic processes. Yet so much has been written about the allegedly corrosive nature of the Israeli lobby, while the powerful Arab lobby has widely escaped scrutiny and criticism. This important book thus contributes to the open marketplace of ideas by illuminating the dark side of the massive and largely undemocratic Arab lobbying efforts to influence American policy with regard to the Middle East.

© Alan M. Dershowitz

***

About the author: Professor Alan M. Dershowitz is a Brooklyn native who has been called “the nation’s most peripatetic civil liberties lawyer” and one of its “most distinguished defenders of individual rights.” He is Professor of Law at Harvard Law School. Professor Dershowitz’s new novel, The Trials of Zion, will be published by Hachette Book Group on October 1, 2010


Europe’s Ash Cloud Response

April 19, 2010

European governments are facing criticism for their response to unprecedented air traffic disruptions caused by the ash of an erupting Icelandic volcano Eyjafjallajökull.

In the Washington Post, columnist Anne Applebaum says the volcanic eruption could go on for months or years, changing the economics and politics of Europe.

Read full story.


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