A Critical Juncture for the World's Newest Energy Superpower

 

Guyana is oft forgotten. As a middling Caribbean state notable for being the only English speaking nation in South America, as well as one of the poorest countries in the hemisphere, Guyana has rarely received much in the way of global attention. That has rapidly changed. US Secretary of State Pompeo paid the first official US visit to the nation of just under 800,000 people last month. Secretary Pompeo was not there to marvel at the world-class wildlife and nature (which the editorial staff at The Thiébault Blog has long wanted to experience) but was presumably much more preoccupied with Guyana’s 8 billion+ barrels of recently discovered oil reserves (not to mention Guyana’s potential as a bulwark against neighbouring Venezuela).

There is much in to be optimistic about for the future of Guyana. Since 2015, when a consortium led by ExxonMobil discovered that aforementioned 8 billion barrels of oil, the groundwork was laid for Guyana to reach an oil output of 1.1 million barrels by 2030, rivaling the per capita output of the Gulf states. This is the kind of boon that any lower-income country would dream of and holds the promise of lifting hundreds of thousands of people out of poverty, should it not be squandered. The prospect of it being squandered is unfortunately cause for grave concern.

Guyana’s history since Colonialism has been frequently marred by ethnic ructions and violence. These came to a head in the early 2000s but have thankfully been abated in recent history. The discovery of oil and a hotly contested election have however led to some recent spasms of ethnically tinged violence. The two predominant political forces in Guyana see their support largely drawn on ethnic lines. PPP/Civic, which won this year’s election, is dominant among Indo-Guyanese while the outgoing APNU/AFC is generally the Afro-Guyanese party of choice. The election has not been without contention, it took months before the election was finally resolved with a curiously partisan Chief Electoral Officer, election irregularities and suspicious arrests (especially of said Chief Electoral Officer in recent days on complaints of “private citizens”). That being said, the Caribbean Community, along with the UK and US intervened and a recount was conducted, which helped ensure the rightful victor took the reigns and a peaceful handover of power occurred.

The future is fraught however, in recent days three teenagers have been killed in what seems to be ethnically motivated violence. Isaiah and Joel Henry were two afro-Guyanese brothers who went coconut picking and were brutally hacked to death, allegedly by an Indo-Guyanese farmer. In retaliation, Afro-Guyanese protesters ambushed a young Indo-Guyanese man Haresh Singh and beat him to death. This ethnic acrimony, made worse by a hotly contested election and the potential for grand oil wealth is being further inflamed by political leadership. In relation to investigations into this recent violence the Guyana Human Rights Association stated that “the prevailing poisonous political atmosphere has penetrated the society to the point where public trust in an impartial investigation is virtually non-existent.”

So what is the way forward? Guyana does have some of the requisite institutions, violence has largely been tempered the past couple of decades because grievances were dealt with in court instead of through violent clashes. The constitution provides for an “Ethnic Relations Commission” whose express purpose is to promote ethnic harmony. The Caribbean Community also acted admirably in effectively intervening and pushing the smooth transition of power. Still, political leadership needs to do much more to dampen ethnic strife and some institutions need bolstering. Newly elected President Ali has stated that he rules for all Guyanese, much more needs to be done to assuage concerns that this may not be the case.

In addition to the ethnic component, another key election issue concerned the deal inked with ExxonMobil for the rights to drill in the offshore reserves. There are very legitimate concerns that the outgoing government was taken advantage of and negotiated a deal which sees far too little of the money from oil going into government coffers. Secretary Pompeo’s visit seems like it was partially to ensure that Guyana would not try to get any more out of the generous deal for ExxonMobil. While it is true that Guyana needs to demonstrate an investment friendly climate, getting fleeced is not a precondition to this. US involvement has not always been an unadulterated net positive, stemming from CIA meddling in the country’s independence movement in the 1960s. Secretary Pompeo’s lobbying on behalf of ExxonMobil does not appear particularly helpful.

Guyana’s future holds immense promise, its people deserve to see this potential attained. There is the real possibility for the development of a wealthy and harmonious nation with many people lifted out of poverty, let’s hope these benefits are fully realized in the world’s newest emerging energy superpower.

Learning About Mining from Nauru

Nauru is rarely top of mind for most people. If it is thought of at all it is most likely as being the most obese nation on Earth, or perhaps in a slightly more positive light as being the world's smallest republic (though not country, that distinction rests with Vatican City). This blog however aims to take a different tack and glean lessons that are broadly applicable from phosphate mining in Nauru. Phosphate is a critical component in the global food supply. It’s primary use is in fertilizer, but is also important in animal feed supplements. Though it plays a pivotal role in our food supply, the process of mining phosphate can be devastating to the land, leaving it completely unusable.

Many countries are resource dependant and the ills of this are well-known. What Nauru provides is perhaps the most lucid example of the benefits and ramifications of resource dependency. Nauru puts into stark relief the huge benefits mining can bring, from when the tiny island nation became fabulously wealthy, as well as the ramifications from environmental catastrophe. To fully understand why this is so, let's look into Nauru's tumultuous relationship with Phosphate.

The benefits of phosphate mining came quickly, and Nauru was in fact the wealthiest nation on Earth for a time. Though these benefits did disproportionately benefit colonial powers, even after gaining independence, significant wealth was derived for Nauruans from Phosphate. In the peak year of 1975, this amounted to AUD$2.5 Billion in today’s dollars, more than enough for generations of the 10,000 odd inhabitants to survive on. Tragically however, much of this was squandered, perhaps most notoriously in a musical that premiered in London on Leonardo da Vinci having a love affair with the Mona Lisa. This musical was helpfully produced by one of the financial advisors to the Nauruan government, who wanted to get into theatre. What was left when the money was gone was a destitute nation. 80% of its landmass was reduced to little more than hulking bleach-white towers. The land was not only wholly infertile, but the detritus prevents the possibility of any kind of building. Promises by companies for reclamation never materialized. In the aftermath, Nauru's economy has turned to the rather sordid business of money laundering and detention camps. The former booming in the 90s as a favourite of the Russian Mafia, while the latter has burgeoned since the 2000s, with Australia currently providing at least 2/3 of Nauru’s revenue for holding would be asylum seekers in the notorious camps on the island.

This is meant to be far more than a fascinating history lesson of Nauru. What Nauru provides is something that is far too often missing from discussions around mining, a stark example of both the benefits and pitfalls. Resource extraction deserves a robust policy response that takes advantage in the immediate-term of a resource, but that purposively plans for the future. Governments often pay lip service to this idea, but the issue tends to lead to entrenchment on the extremes. With environmentalists advocating for no resource utilization and mining advocates wanting to dig without abandon. Pro-mining nearly always wins out, but far too many countries lack a comprehensive timeline for economic diversification. Policy needs to ensure mining windfalls are appropriately invested and that citizens receive tangible benefits. Additionally, prudent environmental stewardship of mining, including enforceable assurances of clean-up and reclamation of mines is paramount. Nauru provides a microcosm which demonstrates the course countries around the globe are destined for with continued complacency during the good times of a resource boom. A pertinent illustration of the need for resource-dependant economies to be awoken from their torpid stupor, and proactively manage their resources. Its lessons should be heeded.

What Nagorno-Karabakh Means for World Peace

Few know the name Nagorno-Karabakh, nor the recent flare up of hostilities that erupted there earlier this year. To provide a modicum of context, Nagorno-Karabakh is a region in-between Armenia and Azerbaijan which was the site of a brutal conflict in the waning years of the Soviet Union. From 1988 until 1994 Azeris and Armenians fought for control of this territory, which is internationally recognized as the territory of Azerbaijan, but has an ethnic majority of Armenians. After massive loss of life and forced displacement of both ethnic Armenians and Azeris, the current untenable ceasefire was mediated by Russia. Armenia controls most of what is now Nagorno-Karabakh with a self-declared Nagorno-Karabakh Republic being declared but not recognized globally. Meanwhile, Azerbaijan has made plain the fact that they do not want to permanently cede any territory, nor have much interest in greater autonomy for this region. Under this backdrop, headway still seemed to be made. In 2009 meetings between the two nations showed Promise, with Azeri President Ilham Aliyev stating “the negotiations can be said to have been mainly completed”. This turned out to be quixotic. In April of this year open hostilities broke out for days, with allegations of ceasefire violations still continuing to this day. Numbers on the dead are hard to corroborate in the fog of war, but dozens of soldiers and numerous civilians were killed.

This conflict in and of itself has important ramifications. From a geopolitical standpoint Azerbaijan is a close Turkish ally, and Armenia relies on Russia as its patron. Massive oil and natural gas deposits in the Caspian Sea means the region plays a vital role for European energy interests. In addition, the human toll this recent resurgence in the conflict has taken cannot be forgotten. However, for all its significance this conflict has been woefully underreported, meaning lessons that can be gleaned from it are less likely to be learned. Thankfully, as the dozens (note this is up from tens) of avid readers of The Thiébault Blog are well aware, this is a blog that is committed to exposing and learning from important stories which have not received their due.

From a global standpoint, this flare up is instructive for what it says about world peace. Nagorno-Karabakh was known as a frozen conflict, one that was on few people’s radar to escalate. Over a decade of ceasefire had led to complacency in the peace process which was in place, as well as from the international community. With more than enough active conflicts which need some resolution perhaps this is understandable. However, the impetus for peace in those places with ceasefires needs to remain. There is some hope, in Colombia the government and FARC guerillas who have been fighting for 52 years, will sign a peace treaty later this month. Elsewhere in the world, seemingly intractable conflicts mired in endless ceasefires remain. Cyprus, Moldova, Korea, Morocco, India and Pakistan, among others, are embroiled in conflicts which to varying degrees are frozen. Despite the scant attention these conflicts typically receive, paroxysm from a dictator, economic instability, or dictates from more powerful allies can quickly result in re-escalation.

Nagorno-Karabakh serves as a sobering reminder of the importance of durable peace for all conflicts, including those which are not currently active. If we forget the importance of constantly striving for peace regardless of the stage a conflict is in, then we needlessly imperil the prospects for peace around the world. 

How the Euro is Destroying the EU

Europe is currently in the throes its most recent crisis, that of the inundation of refugees. This has caused the EU economic crises to quickly fade from view. With another ephemeral deal agreed to in Greece this year, some might even think that the problem is solved. Unfortunately the problem is not solved. It will not be solved in fact, until there is a radical shift in the institutional underpinnings of the EU Monetary Union (EMU, or the Euro currency). There are two options, either the EU is going to emerge into a mega-state with a fiscal union, or the Euro will need to disappear.

The first question to address is why is there a Euro? Where did it come from? It would make sense for there to be an economic rationale behind the introduction of the single currency. In fact, economics had almost nothing to do with it. The idea was to begin the process of establishing a federal states of Europe by creating greater convergence within the EU. Along with creating a Schengen area of free movement, and allowing EU citizens to work anywhere in the EU, sharing a common currency was meant to pave the way for a common European identity that would lead to greater political integration. There are of course some economic arguments for a monetary union. Primary among them is that it decreases transaction costs between countries, which should boost trade and prosperity. Joining a monetary union however eliminates the ability for flexible exchange rates to adjust to external shocks. To rephrase the above, due to the economic jargon: it is a lot easier to trade things and invest in other EU countries when everyone is using the same currency. This is good. However, if a negative economic event effects some countries and not others, the ability to devalue a currency and pursue monetary policy which ameliorates employment is lost. This is bad.

On balance however the argument for the EU is clear, a monetary union does not make sense. A monetary union is good when there is a strong central state which can increase spending to areas effected by economic malaise, and there are few impediments to capital and labour flow. The European Commission in Brussels spends a fraction of what member-state governments do. Labour and capital though supposedly freely moving within the EU face onerous restrictions, such as differing languages among EU countries and divergent industrial and employment laws. I am far from the first to notice the unsuitability of the EU for a common monetary union. Milton Friedman, on the eve of the adoption of the Euro, wrote a prescient article on the devastating impact of a common monetary union. As Mr. Friedman said in words that I would not dare try to improve on “The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.”

This is not simply a pedantic argument on the benefits of monetary union in the EU, there are real consequences to this policy. Discussions about the Euro-zone’s current economic turmoil mischaracterize it as simply a debt crisis. This is an obscenely myopic view of the situation. One problem is that the EU has a severe internal trade balance. Germany in particular exports far more to the EU than EU countries export to it. This has happened at least partially because Germany has actively engaged in a policy of wage suppression. In a normal situation, the benefits of keeping wages low would be short lived, as the currency would adjust due to those aforementioned exchange rates. In the absence of this, the Euro is advantaging the German policy of excessive exports, while weak demand at home is preventing struggling Euro-zone countries from selling their products in Germany. Without rectifying this situation, the Euro-zone periphery will never recover. Once again, this is an oft overlooked institutional problem that would not exist without a Euro. With no Euro, Germany’s wage suppression policy would not hurt other Euro-zone members. There is meant to be a mechanism in Brussels for addressing excessive macroeconomic imbalances, of which this is an acute case. If the concern was largely economic and technocratic, as is usually portrayed, this imbalance would be a top priority. It isn’t however, and Germany’s political clout make any action on this inconceivable. This once again shows the relative irrelevance of the European Commission in Brussels compared to certain member states, and yet another reason why the Euro is not working.

The remedy that has largely been chosen for Europe’s crisis economies is to slash spending and supress wages (called structural reforms) in order to increase competitiveness. Increasing labour competitiveness would be much more effective with the ability to devalue a currency however. This is the beauty of exchange rates, they compensate for differing economic realities across countries. Unfortunately, with the current situation of a single currency and Germany’s low-wage labour competitiveness, it is almost impossible for structural reforms to work in Europe's periphery. In addition, without the Euro, national central banks would be able to set the interest rate appropriate for their respective countries. Greece desperately needs to get out of a deflationary spiral. Deflation is probably the worst macroeconomic outcome, it increases debt burdens (including of Greece’s sovereign debt), and makes people less likely to spend (because prices will be lower in the future). This would be the perfect time to lower interest rates, and spur inflation. However, in the usual refrain, with a monetary union this is impossible. The EU as a whole is less in need of a rate cut, without the deflationary pressures Greece is facing, and thus Greece will suffer.

Fundamentally the structure that undergirds the entire Euro-zone is unsustainable. Few would say that the monetary union has been successful. In fact, it has been an abject failure. Growth is anemic, unemployment is at stunning levels, and perhaps more tragically, the political project it was meant to propel seems destined to collapse. One of the main arguments for staying in the Euro now is the catastrophic consequences of leaving it, this is not exactly a ringing endorsement of the single currency’s success. In the most extreme case of Greece, this argument does not even hold. Greece has already faced the effects of a financial crisis and bank runs. With these costs already paid, it would at least be worth reaping the benefits of leaving the monetary union.

Friedman, and so many others were right. The Euro has created schisms in the EU that have endangered the entire European project, all because of the erroneous assumptions some European elites made. They knew that the EU was not ready for a deep political union and in its stead a monetary one was created. Now, much less than catalyzing a stronger and closer union, the Euro has simply led to political acrimony. This is the underlying and important story of the Euro-zone economic crisis. Debt, competitiveness, and bailouts are all elements of this story. But ultimately, the EMU structure belies much of the grief that has been endured in Europe. The only long-term solution is an end to the euro-zone, or the transition to what would essentially be one country. With neither of these options on the horizon, all that remains is more despair.

What Israel's Election Means for Canada

An election pitting a long serving right wing prime minister, against a recently resurgent party that used to dominate the political landscape, but had been in a precipitous decline in recent years. With a new face descended from a previous national leader, this left-wing party in many polls seemed likely to wrest power from a prime minister who had served one of the longest mandates in that nation’s history. This narrative applies just as easily to Canada’s election as it does to Israel’s. The parallels are stark, and the lessons to be learned likely are too.

The similarities between the recently held election in Israel and the forthcoming one in Canada extend to politics as well. Prime Minister Netanyahu pivoted away from any talk of his country’s languishing economy to focus squarely on security issues and foreign policy. This led to increasingly shrill calls to ditch any potential peace deal with Iran, and ultimately, renouncing his former position of a two state solution with Palestine. Perhaps the most egregious action was during voting itself when Netanyahu warned of Arab Israelis rushing to vote. Taking extreme measures to obfuscate domestic failure is something Canada’s own prime minister has been resorting to. Sweeping new measures to drastically curtail civil liberties are conjured up in response to terrorism through bill C-51. This bill seems to do very little to counter terrorism, and very much to foment fear and play wedge politics. Speaking of wedge issues, Harper has also decided as of late to tackle niqabs during citizenship tests. These wedge politics, just like Netanyahu’s policies towards Iran and Palestinians can drive votes, especially right-leaning votes. They also do well to gloss over these leader’s other glaring failings. The strength of the primary opposition party in both cases is sorely lacking as well. Isaac Herzog, former head of the labour party and leader of the Zionist Union, had the backing of a family name with his dad being a former president, but was largely out of his depth when it came to the campaign. An allegory is likely for Justin Trudeau.

Admittedly the similarities have been emphasized here, but there are enough of them that Israel’s elections should have insights into the one Canada is likely to hold soon. Those insights are not all rosy. Harper, like his friend Netanyahu has already begun playing crass politics with fear. It worked very well for Netanyahu, despite polls that seemed to put him in second place he still came out the victor. Harper is already using the same tactics, and even polls that put him behind should be analyzed with this in mind. Voters are unfortunately very receptive to fear, despite gains for the left in Israel, fear and a strong showing from a more united right won out. Hopefully Canada will not succumb to the same fate, and there is no reason to be deterministic about this, but there is no reason to be overconfident either. Harper’s tactics might prove more effective than many think, that was most certainly the case for Netanyahu in Israel. 

The Spread of Buddhist Extremism

Avid readers of this blog (now maybe numbering in the tens) will know that these posts tend to be extremely pessimistic. That being said, even the most quixotic analysis of unfolding events in Burma and Sri Lanka would find little to be positive about, especially in light of the new agreement recently signed between two Buddhist supremacist groups in Asia.

Before getting into the details, as always some backstory is required. This piece largely builds upon one of the inaugural Thiébault Blog posts concerning “Burma’s Muslim Problem” or the persecution of Muslims by Buddhist extremists in Burma. A brief synopsis of the situation will suffice here. The 969 terrorist organization in Burma led by monk Ashin Wirathu has fanned violence against Muslims in his country, killing hundreds and leaving many more maimed and injured. Wirathu’s tactics and rhetoric, include warning of Muslims who are kidnapping and raping Buddhist women, Muslims who want to overrun and take over Burma, and claiming they are “armed to the teeth and waging jihad” (all of which are patently untrue).

These tactics unfortunately have not gone unnoticed and have been emulated by another group which rose to prominence at around the same time (roughly in 2012), the Bodu Bala Sena (BBS). The BBS is based in Sri Lanka and the name roughly translated means Buddhist Power Force. A relatively innocuous traffic dispute between a Muslim and Bhuddist in Sri Lanka led to a reaction which was incited by BBS’ leader and monk Galagoda Gnanasara. The response was to gather a mob of around 7,000 to terrorize the Muslim community, resulting in several dead (some Muslims were shot by police who as in Burma simply watch events unfold). These events are becoming more commonplace in Sri Lanka as they are in Burma

The similarities between these two groups has not gone unnoticed by them. A few months ago 969 leader Wirathu gave an inflammatory and repulsive speech in Colombo to the BBS. This lead to a formal agreement between these two Buddhist supremacist groups to form an “international Buddhist force”, with the hopes of fomenting other ties with possible future Buddhist extremist organizations.

To say the reaction to these events has been muted would be an exercise in understatement. There are several reasons for this. First, nationally, both countries have Buddhist majority populations and leaders have been afraid that speaking out could be politically harmful. Sri Lanka’s government was mum in response to Muslim and Christian demands (Christians have also been targeted by BBS) to deny Wirathu a visa. Perhaps even more objectionable given her stature as a human rights paragon is Aung San Suu Kyi’s silence on the issue. This again is done on her part for political expediency.

The entire blame does not rest on representatives in these countries however. As has been mentioned before, the narrative of Buddhists carrying out extremism against Muslims does not sit well for Western audiences. First, there is a parochial fixation with Islamic terrorism that does not situate Muslims as victims well, or extremism by non-Muslims well either. In addition, Buddhism has a perhaps unique role among major religions as being venerated as being incapable of violence. Violence is supposed to be anathema to Buddhists. This leads to a willful blindness with regards to Buddhist extremism in Asia. An example that demonstrates this well is satirical online show “The Onion”, last year in the midst of violence in Burma came out with a video joking about Buddhist peacefulness entitled “Buddhist Extremist Cell Vows to Unleash Tranquility on West”. A cursory glance at the comments section shows no mention of the deep irony involved in a video making light of the existence of Buddhist extremism while a violent Buddhist extremist group was wreaking havoc in Burma.

It is almost unthinkable that similar actions could occur, for example from Muslim groups formally working together while simultaneously targeting Christians, or even other Muslims with so little attention. No atrocities deserve to be carried out with impunity, and the deafening silence surrounding Burmese and Sri Lankan victims is unacceptable. These atrocities, and the terrifying prospect of their intensification with this new pact deserve to be focused on, condemned, and combatted by the entire international community. The fear now is that Muslim minority communities in these countries may start retaliating and committing heinous acts themselves, maybe then the world will notice. 

China's Other Restless Region

Though Tibet is unquestionably the most well-known example of regional dissatisfaction in China, it is not alone. The egregiously underreported plight of residents in Xinjiang has been fomenting for decades, and has recently erupted into a horrible raft of violence. This heinous violence has been fuelled by harsh Chinese policy supressing the ethnic Uighurs in the region. Before delving into the specifics however, it is vital to provide some context.

Xinjiang is a province located in the far west of China. It borders Central Asia, specifically Kazakhstan, Kyrgyzstan and Tajikistan. This is important because the majority of the population in Xinjiang is ethnically Uighur, sharing much with their Central Asian counterparts. They are Muslim, speak a Turkic language and have very distinct customs from Han Chinese. The region was briefly its own republic before China quashed it and took control in 1949. Ever since, due to their unique ethnicity, language and religion, there has been a Uighur separatist movement in Xinjiang advocating for the establishment of an East Turkestan country.

China has not responded well to Uighur discontent in the farcically named Xinjiang Uyghur Autonomous Region. Decades ago, the initial response to the problem of this restless region was the massive immigration of Han Chinese to the area. This is a page out of the former Soviet Union playbook of Russification, or flooding Soviet states that had independent minded ethnicities with ethnic Russians. In China, as was the case in Russia, it merely feeds resentment and fear of cultural loss. So many Han Chinese have flooded the area that they now make over 40% of the population. The negative implications of this policy are exacerbated by the fact that the gigantic amount of money that has been poured in to boost the economy, has overwhelmingly benefited the Han Chinese minority. Xinjiang has a recently exploited wealth of natural gas, as well as oil. These too usually benefit the ruling Han while Uighurs live in abject poverty. To make matters worse, the Chinese government has repressed Uighur language and culture, and consistently jails even the most moderate Uighurs who speak out against the government.

This sets the background for the current bloodbath in Xinjiang. Heinous attacks from Uighur separatists are accelerating in their sophistication and brutality. In April of this year, the Kunming train station saw 29 killed and 130 injured through indiscriminate attacks by knife wielding assailants. In May, a busy street market in the Xinjiang capital of Ürümqi experienced twin car bombings, along with bombs hurled at a street market which killed 31 and injured another 90. The violence has accelerated since many local governments and schools announced that students and staff would be forbidden from practising Ramadan. More recently the city of Karamay stated that for the duration of a local sports competition, for most of the month of August anyone with a beard, burka or Islamic star on them would be forbidden from boarding public busses. Chinese paramilitary units in Kashgar, considered the heartland of the Uighurs, now have paramilitary patrols who check ids and search through IPods of Uighurs to ensure that they have no Arabic or Muslim music. As for women wearing clothing that is too Islamic, they are assured detention.

The Heavy handed approach by Chinese authorities is making the problem worse. Uighurs in Xinxiang used to be known for tolerance and moderation, repression only ferments extremism and makes the horrific cycle of violence worse. The solution is a tolerance of Uighur rights, more involvement for them in economic growth, and targeting terrorists while respecting dissent. Whether or not the Chinese government will take head of this advice is unclear. Though the world might not be scrutinizing events in Xinjiang as closely as if it were Tibet, China ignores the underlying problems in this province at their peril, and at the peril of all Xinjiang’s civilians.