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Thread: Economics and Irregular Warfare

  1. #81
    Council Member Dayuhan's Avatar
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    Quote Originally Posted by jmm99 View Post
    I see no "Made in USA" label on what I wrote:
    Have we the capacity to make it elsewhere?

    All this talk about creating, selecting, vetting, developing assumes capacity and will. If the host nation government had that capacity and will there wouldn't be an insurgency in the first place. The reason we're involved in these situations is that the capacity and/or will are not present in the host government... and the harsh reality is that in most cases we can neither fill that gap with our own capabilities (which would require us to govern the territory in question ourselves) or to force or persuade others to fill it.

    Quote Originally Posted by jmm99 View Post
    It is often in the enlightened self-interest of "governments" in failed or failing states - also applicable to the various armed groups that may well be roaming around - to preserve what we (liberal democracies) see as instability and insecurity; and to use what they see as a rational distribution of instability and insecurity to serve their own ends. Credits: Marc Legrange.
    One might debate how enlightened this position is, but yes, this is the problem I'm talking about. Complicating the issue is the reality that different units of government (e.g. national vs local) may have very different agenda and priorities, and that individuals within these systems are likely to have agendas and priorities of their own. All of these agendas are likely to be very different from ours, and none of the parties involved may be at all interested in pursuing the sort of capacity building that we're discussing - though they will very likely feign such interest if they think it will get them some of our material support. This is why asking military or civilian forces to assist in "nation-building" in a failed or failing state with the assumption of local capacity is like sending a starving man to sit on a pile of canned goods with instructions to assume a can opener. In a failed or failing state the local capacity is by definition absent. If the capacity was there the state wouldn't be failed or failing.

    Quote Originally Posted by jmm99 View Post
    It is easy to posit a situation (or find one in existence) where the first interest (access to resources) might well be better or more easily secured by support of a "government" that does not support "human development" or "stability".
    Conflict over access to resources is actually easier to posit than to find examples of, despite vast amounts of rhetoric to the contrary. In today's world you don't need to control territory to gain access to resources; in fact physical control is often as much obstacle as advantage in resource access. If resources are the issue it's usually easier to cut a deal with whoever has the territory and simply buy the stuff... or, as base resources are generally fungible, to let the Chinese take the risks and buy our own stuff from somewhere else.

    In our current situation access to resources is less likely to be the motivation for intervention than a perceived need to deny territory or support to hostile forces.

    Quote Originally Posted by jmm99 View Post
    Once Politik decides to intervene, the civilian and military subordinates of Politik don't have the luxury of reversing the decision, but must try to make the best of what may be a bad situation.
    This is all too true, and ultimately the key to managing these situations lies with more realistic decision making at the political level. This of course is small consolation to those in the field, but I don't know if it will help them any more to lay out a program based on assumed capacities that in most cases will not actually exist.

  2. #82
    Council Member Surferbeetle's Avatar
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    Default Fair enough...

    Dayuhan,

    ...your excellent analysis of the heterogeneity of motivations, opportunities, populace/culture/language, governance and economics (access, competition, etc.) have brought our situation into crisp focus.

    Your are also truly on target to emphasize that an ounce of prevention is worth a pound of cure. The question of this being too much to expect of our political construct I would like to defer for the moment.

    Instead, for those of us who have gone and will go again, please turn your analytical skills for a moment to the how-to of building something of lasting value with broken and worn out tools for the situations we are in. My particular focus has been upon Iraq of late however an analysis of Afghanistan would be just as interesting.
    Sapere Aude

  3. #83
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    Default Black Economic Development

    Surferbettle your post,

    The market’s growing size is making some bankers wonder if phone credit should be traded on a public exchange. This may not be practical, but more regulation would be welcome. Criminal rings are among the parallel currency’s busiest users. Kidnap gangs ask for ransom to be paid by text messages listing a hundred or more numbers of high-value phone cards. Prostitutes get regular customers to send monthly retainers to their phones, earning them the nickname “scratch-card concubines”, while corrupt government officials ask citizens for $50 in phone credit to perform minor tasks. Viewed as cash substitutes, scratch cards have also drawn the attention of armed robbers. In one case, a gang emptied out the card storage of Iraq’s biggest mobile operator, Zain, which is based in neighbouring Kuwait.
    triggered an old idea about the black economy (illegal/illicit economic activity). Obviously the thrust of our economic assistance is to boost the white (legal) economy, but in countries where there is limited State control (such as Iraq and Afghanistan) the black economy emerges rapidly, and I suspect these models become deeply rooted (part of their economic culture) and thus are hard to eradicate.

    I remember many of the coalition development efforts in Southern Iraq were controlled by the Shi'a militia's (sometimes directly, sometimes clandestinely by coercing from the shadows). They controlled what contractors got the jobs, and no doubt the militia's collected their taxes and got the message out that if you want to make money you need to side with us. All others will be paid a visit by your friendly militia thugs.

    Several points worth studying IMO.

    - How much of our economic aide in these countries actually supports the efforts of our foes? I just looked a graph today that showed a correlation between CERP spending and reduced violence, but is that the real picture, or did we simply forfeit control to the enemy, thus there is no need to fight?

    - Once black economy models are established (such as the illicit business transfers on the cell phones, selling gas illegally on the side of the road, narcotics trade, human smuggling, kidnap for ransom, etc.) is it even feasible to displace this black economy with a legal economy?

    - There are estimates that up to one third of the world's economic activity takes place in the black economy which equates to over a trillion dollars that governments have no control over. What does the ever increasing convergence of crime and extremism mean to those of us who develop and execute plans in an attempt to defeat terrorists and insurgents?

    - Are there cases where our economic development efforts actually undermine successful black economic development, thus push the populace away from us and the HN? For example, attempting to eradicate the poppy plant and replace it with some form of unskilled labor or with a replacement crop that isn't worth as much?

    There is a lot more to economic development than meets the eye when you're operating in these chaos zones.

  4. #84
    Council Member Surferbeetle's Avatar
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    Quote Originally Posted by Bill Moore View Post
    Surferbeetle your post, triggered an old idea about the black economy (illegal/illicit economic activity). Obviously the thrust of our economic assistance is to boost the white (legal) economy, but in countries where there is limited State control (such as Iraq and Afghanistan) the black economy emerges rapidly, and I suspect these models become deeply rooted (part of their economic culture) and thus are hard to eradicate.
    Bill,

    Speaking of which you might enjoy this short article at Foreign Affairs by Nikolas K. Gvosdev entitled The Soviet Victory That Never Was, What the United States Can Learn From the Soviet War in Afghanistan (H/T to the Nixon Center)

    The Najibullah government was able to survive because Najibullah recognized the futility of the earlier Soviet strategy in Afghanistan. Afghans, he knew, would not fight and die for the Soviet Union. But, he realized, Afghans could be co-opted to work with the government to defend local and clan interests. Najibullah allowed regional leaders -- and, in some cases, former mujahideen commanders -- to form their own militias and, with mixed results, to join the regular army. The most successful of these was the Uzbek militia led by General Abdul Rashid Dostum, which formed the 53rd infantry division of the Afghan army.

    The departure of Soviet troops -- “the foreigners” -- weakened ties among various mujahideen factions. Najibullah’s government used long-standing rivalries, along with selective and generous bribery, to drive wedges between militant groups and then take advantage of the fighting that broke out as a result. At the same time, Najibullah received weaponry, food, and fuel from the Soviets, which gave his forces a significant advantage in terms of battlefield firepower and resources. The Afghan military flew the latest Soviet aircraft and had hundreds of Soviet-made Scud missiles in its arsenal.

    The government in Kabul also dropped many of the more radical social-engineering programs previously championed by the Afghan communist leadership. It moved away from Marxist ideology and embraced Islam as the state religion, making an effort to put many of the country’s mullahs on the government payroll.

    Finally, Najibullah constructed a nationwide patronage network to dispense the government largesse provided by the Soviet Union. In particular, he kept open the Salang Road -- a critical supply route linking Kabul with the country’s south -- by striking a series of deals with local villages and elders, who agreed to prevent mujahideen from mounting attacks on supply lines in exchange for a percentage of the goods flowing from the Soviet Union.

    In short, Najibullah relied on time-honored practices of Afghan statecraft. He resembled a communist version of Mohammad Nadir Shah, who had ruled the country after the overthrow of King Amanullah Khan in 1929. Both the shah and Najibullah pushed for quiet modernization rather than reform from above, placated local interests while using divide-and-rule techniques to break up the opposition, and focused on strengthening the state’s army and security services.
    Quote Originally Posted by Bill Moore View Post
    I remember many of the coalition development efforts in Southern Iraq were controlled by the Shi'a militia's (sometimes directly, sometimes clandestinely by coercing from the shadows). They controlled what contractors got the jobs, and no doubt the militia's collected their taxes and got the message out that if you want to make money you need to side with us. All others will be paid a visit by your friendly militia thugs.
    There were similar things going on up north, but being run by different actors. Certain roads were slick with smuggled oil.

    Quote Originally Posted by Bill Moore View Post
    There is a lot more to economic development than meets the eye when you're operating in these chaos zones.
    If you find any case studies that you think would shed some light please pass them along and I will do the same.
    Sapere Aude

  5. #85
    Council Member slapout9's Avatar
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    Surfer and Bill, might want to try this link to Rogue Economics.......I have not read the book but have seen short interviews of work......not sure I believe everything she says but alot I do.

    http://www.sevenstories.com/book/?GCOI=58322100402010

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    Default All or nothing ?

    I fail to see the logic of this:

    from Dayuhen

    Originally Posted by jmm99
    I see no "Made in USA" label on what I wrote:
    Have we the capacity to make it elsewhere?

    All this talk about creating, selecting, vetting, developing assumes capacity and will. If the host nation government had that capacity and will there wouldn't be an insurgency in the first place. The reason we're involved in these situations is that the capacity and/or will are not present in the host government... and the harsh reality is that in most cases we can neither fill that gap with our own capabilities (which would require us to govern the territory in question ourselves) or to force or persuade others to fill it.
    The logic appears to be that:

    1. If the incumbant government has an insurgency on its hands, it lacks the capabilities or will to implement the very modest suggestions by Steve and me on a local level.

    2. Therefore, since the modest program cannot be implemented by the incumbant government, it can be implemented only by a foreign intervenor (e.g. US).

    3. Therefore, the modest program will have a "Made in the USA" label, even though I clearly stated that the local program should be indigenous.

    The fallacy lies in the initial premise.

    What we are talking about, for a rural population complex of say 2500-5000 people, would be an armed civil affairs team of say 6-12 persons; and a very mobile platoon of patrolling Dobermans to preserve the military balance.

    If the incumbant government cannot make that effort, it indeed is in deep trouble (regardless of how good it looks on paper at higher levels). In effect, it will be legislating into a void.

    The factors of "creating, selecting, vetting, developing" are relative. None of them requires the resources of a modern industrial state. They should be done in accord with the local environment. Obviously, the local environment is capable of "creating, selecting, vetting, developing" - otherwise, the insurgency would not exist.

    Merry Christmas

    Mike

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    Default Economic development and illicit activity

    This is the first post of a few on this topic if the moderators don’t shut me down. In this one I just want to introduce some additional context that will shape later posts on the efficacy of our economic development efforts as means to counter threat economic systems, which can probably be described as the life blood of any movement.

    Eventually I hope to evolve these thoughts with your help to where I can make a case for changing “clear, hold and build” to clear, hold, and consolidate” where build is one subcategory of consolidate. Then I hope to collaborate with the SWJ larger mind to develop effective approaches of neutralizing enemy economic systems (slap, I’ll know you’ll love this), which will hopefully push the populace to rely on State endorsed economic systems (without conducting economic warfare against the populace). However, I think this will prove to be a tough nut to crack.

    I think that even with over eight years of experience with GWOT, our military and other government organizations such as State remain largely incapable of understanding unconventional warfare, since our perception is biased by outdated doctrine.

    The U.S. military focus on unconventional warfare is really nothing more than a focus on the warfare piece (i.e. maneuvering guerrillas within the constraints of the law of land warfare) against enemy forces. This really isn't UW at all, but simply a fifth column of surrogates that is conducting a limited form of guerrilla warfare that is very much tied to the our interpretation of CvC’s view of war as a state versus state conflict where the military is the decisive factor.

    If this is true (open for debate), then it is only natural that our counter UW, or COIN doctrine is largely focused on militarily defeating the IED networks (in the current fight). Once again the conventional force has learned this isn’t a conventional war (but they were slow learners), so they slowly revisited previous lesson from previous conflicts that had a similar (not identical) character. They started protecting the populace, providing essential service and focused on developed relationships with community to facilitate more effective intelligence operations, which were largely focused on finding and destroying the IED networks. It still keeps coming back to that, because CvC taught us the way to win was to destroy our foe’s ability to wage war. CvC wasn’t wrong, but we failed to see that the enemy can wage war without IED networks through propaganda, political subversion, quiet terrorism behind the scenes to influence key personnel, establishing shadow governments, taking over the local schools, economic subversion, etc. We tend to largely ignore these threats, we may deal with them if we stumble across them, but that isn’t what our intelligence is focused on. I think Jmm would agree that we simply don't have the legal authority to fight fire with fire in the shadow wars, so we focus on what we can.

    Specifically I want to focus on the E in DIME, and challenge the idea that our economic development efforts are achieving the desired results. A combination of luck, intent and globalism is allowing our irregular foes to effectively undermine our economic power. As Naim wrote in his book “Illicit” there is a growing gap between the haves and have nots as globalization spreads. This has facilitated, perhaps out necessity, the rapid growth of the black economy, which according to Naim is in the trillions of dollars. How does the Taliban manage to pay their fighters more than the State of Afghanistan paid theirs? How do numerous NGOs who are clearly tied to various terrorist organizations effectively fund the development of schools, medical clinics, etc.? How do we displace black economic activities such as the narcotics trade and other forms of smuggling without harming the locals who thrive off of it? The State is no longer relevant in this economic system (thus legitimacy is further undermined), and if the State intends to crush or displace this activity, what economic system will they replace it with?

    While this doesn’t apply to all conflicts, it does apply to OIF and OEF-A. If we even hope to understand the problem (system) we have to look at it globally, because the black economic systems are tied into the new global economy of which less and less is controlled by States.

    We see a rapidly increasing trend where organized transnational crime networks (its an open system) and other irregular threats such as insurgents, terrorists, etc. are converging on a global scale, and I suspect we don’t really understand the implications of this.

    These relationships are often based simply on mutual business interests. Such as AQ affiliated groups in the Trans Sahel assisting drug cartels from S. American and W. African smuggle cocaine into Europe. This is just one of many examples of how a terrorist network expands its links (perhaps unintentionally) from a regional effort in the Trans Sahel to bad actors in W. Africa, South America and Europe. The amount of money involved in these activities is overwhelming for developing states, so centers of power shift from State to non-state actors. These groups can now buy effective influence from the windfalls garnered from their illicit activities. Over time, I suspect this corruption/subversion changes the character of the war and its goals, thus my reference to new economic cultural norms in my previous post. We now have an area that neither our law enforcement nor military is ideally organized, trained, or enabled through authorities to confront effectively. Those limitations extend to our partner nations who are afflicted with this threat.

    I recommend a quick read through "Illicit" (there are other books on the topic now) to get additional context.

    http://www.amazon.com/Illicit-Smuggl...1677733&sr=1-1

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    Default Bring it on, Bill Moore ...

    I like to read and think about your ideas. Lord knows, we need a more comprehensive approach to transnational violent non-state actors - and to the non-violent species as well. That cuts across the entire DIME spectrum and ultimately will affect all of the various legal systems that have to deal with these non-state problems.

    Merry Christmas - I now have to go out in the snow and buy the bottle of Christmas dinner wine.

    Mike

  9. #89
    Council Member Surferbeetle's Avatar
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    Default So, what are the kids doing in Khandar this winter?

    How-to-build a wireless router:

    FabFi is an open-source, FabLab-grown system using common building materials and off-the-shelf electronics to transmit wireless ethernet signals across distances of up to several miles.
    From Scientific American by Richard Heeks, Gaming for Profits: Real Money from Virtual Worlds

    A gold farmer in China who plays games and sells virtual currency can earn the same wage and, sometimes, more than might be paid for assembling toys in a factory for 12 hours a day.
    In just a few years gold farming has become a vast enterprise. A best estimate suggests that Asia, and particularly China, where most of the gold farmers reside, employs more than 400,000 players who spend their days stocking up on gold. Total annnual trade in virtual gold probably amounts to at least $1 billion. Perhaps as many as 10 million players worldwide buy gold or services from farmers that help them to advance in the game.
    ...currently the game most subscribed to, 1,000 gold units retail for around $10, which is about the same as the yen-to-dollar exchange rate
    CIA World Factbook puts the estimated 2008 GDP for Afghanistan at 11.71 billion dollars.

    What about having a 'Virtual Easy Button' in the games to employ a 'gold farmer' in Afghanistan to help with the OEF effort?
    Last edited by Surferbeetle; 12-24-2009 at 09:57 PM.
    Sapere Aude

  10. #90
    Council Member Surferbeetle's Avatar
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    Default Yepper...

    Quote Originally Posted by Bill Moore View Post
    Eventually I hope to evolve these thoughts with your help to where I can make a case for changing “clear, hold and build” to clear, hold, and consolidate” where build is one subcategory of consolidate. Then I hope to collaborate with the SWJ larger mind to develop effective approaches of neutralizing enemy economic systems (Slap, I’ll know you’ll love this), which will hopefully push the populace to rely on State endorsed economic systems (without conducting economic warfare against the populace). However, I think this will prove to be a tough nut to crack.
    Bill,

    I am in. Let's see where it goes...
    Sapere Aude

  11. #91
    Council Member Surferbeetle's Avatar
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    From IEEE Spectrum, Open-Source Warfare by Robert N. Charette (H/T to Global Guerrillas)

    To understand open-source warfare, it's instructive to revisit Eric S. Raymond's 1997 manifesto, The Cathedral and the Bazaar , in which he describes how a large community of open-source software hackers created the operating system Linux.

    ”Linux is subversive,” Raymond wrote. ”Who would have thought even five years ago [1991] that a world-class operating system could coalesce as if by magic out of part-time hacking by several thousand developers scattered all over the planet, connected only by the tenuous strands of the Internet?” He likened the rise of Linux to the public marketplace of the bazaar. The programmers agreed to observe a few simple principles but were otherwise free to innovate and create. Raymond contrasted that style with the ”cathedral” approach to software, in which a single organization, using highly planned, sequentially structured steps, maintained tight managerial control over every aspect of the process.

    Eventually, the open-source culture would triumph over the proprietary world, Raymond argued, not because it was morally right ”but simply because the closed-source world cannot win an evolutionary arms race with open-source communities that can put orders of magnitude more skilled time into a problem.”
    Sapere Aude

  12. #92
    Council Member slapout9's Avatar
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    Default Ditto

    Quote Originally Posted by Bill Moore View Post

    Eventually I hope to evolve these thoughts with your help to where I can make a case for changing “clear, hold and build” to clear, hold, and consolidate” where build is one subcategory of consolidate. Then I hope to collaborate with the SWJ larger mind to develop effective approaches of neutralizing enemy economic systems (slap, I’ll know you’ll love this), which will hopefully push the populace to rely on State endorsed economic systems (without conducting economic warfare against the populace). However, I think this will prove to be a tough nut to crack.
    Bill, may not be as tough as you think. In fact the tough part is probably going to be convincing the establishment that there is another (better) way to achieve a lasting desirable outcome. Can't wait to read some of your ideas.

  13. #93
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    Default Economics in a War Zone

    Bill:

    Your insight about the black economy is the driver.

    We are sitting heree with the notion that Afghanistan has virtually no economy, while the self-evident truth is that there is always an economy, everywhere, all the time.

    The Russian Ambassador, commenting on their failures, reiterated the truism that Afghanistan is not a war that cane be won, but a reconstruction/development process.

    Where, in truth, the many parts of Afghanistan were, more often than not, under "foreign" subjugation throughout history, it was to trade patterns and alliances that were productive.

    It is almost silly to believe that the largest global trade in opium derives from Afghanistan without a substantially evolved and routinely performing economic system. Obviously, in a three year period, Afghanistan has sprung two vibrant economies: first, the fantastically growing poppy trade; and, second, a booming business in foreign aid "supporting" industries (security, theft, extortion/kidnapping).

    So, if we start with the reality that Afghans, like everyone else, are substantially economically motivated and capable, we then turn to the problem that we don't like their economic system and desire to change it.

    But if I put on my Afghan farmer hat, why am I going to do something else, given my alternatives?

    Let's assume for a second that we substantially interfere with the poppy conveyor (arrest major leaders, disrupt production/distribution). Absent a credible alternative, wouldn't that, of itself cause such substantial opposition and economic suffering that we are back to where we started?

    If it was me, I would be interested in mapping out and understanding the poppy economy (not just the military/terrorist component), then looking for ways to re-direct it.

    India, for example, is a huge poppy economy, but for the legal medical markets. What's up with that? Could legal production displace illegal?

    What if, once you mapped out the system, you were able to limit external transfers of poppy wealth? You can earn it, but it has to be spent in Afghanistan. Does that become a basis for economic investment in infrastructure, etc...

    I continue to hear the lament from the North and West that they need to exploit mineral resources to create jobs, GDP. Lots of questions surrounding that, but our focus on the Northern Supply route (for military expedience) does not sound like a sustainable supporting investment on that path. I assume the black economy would see the Northern Route as a boon to getting opium to Europe by piggybacking on our efforts.

    Good idea to start with a base-line understanding of all economic systems.

    Merry Xmas.

    Steve

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    Council Member davidbfpo's Avatar
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    Default Some musings on Bill's thoughts

    Bill,

    A small quote from your longer commentary above:
    How do numerous NGOs who are clearly tied to various terrorist organizations effectively fund the development of schools, medical clinics, etc.?
    I suspect the reason some Islamic groups can obtain funding and have a non-violent infrastructure is that compared to their competitors they are not corrupt, greedy etc. Look at how the PLO ran the Gaza Strip and Hamas's pre-power imagery; or in slightly different setting of Southern Lebanon, how Hezbollah became the de facto state IMHO.

    I not aware of how much overseas funding is raised by such groups, IMHO mixing the non-violent even charitable actions and the violent actions enables donors to "pick & mix", or claim "I gave it to 'X' charity and it ended up there, shocking".

    Probably the best example is nearer the 'frontline' with LeT in Pakistan, with an established structure of charities, schools etc (see Stephen Tankel's writings on LeT). That provides not just supporters, but the wider public with facilities when others - including the state - fail to provide.

    It will be interested to watch, from afar, whether this non-violent aspect of the 'struggle' and the creation and maintenance of a broader coalition, which is assumed, is adopted by AQ. A question that has been posed in discussions amongst analysts on the future of the global jihad (FGJ).
    Last edited by davidbfpo; 12-25-2009 at 10:59 PM.
    davidbfpo

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    Council Member slapout9's Avatar
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    Link to some real economic thinking, explodes the myth of so called free markets. Talks about the superiority of the Military business model applied to the civilian economy. Good stuff.

    http://www.youtube.com/watch?v=wUfYGl40KqE&feature=sub

  16. #96
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    Default Case study

    From the WSJ, by DAVID LUHNOW Saving Mexico

    Today, the world's most successful drug trafficking organizations are found in Mexico. Unlike Colombian drug gangs in the 1980s, who relied almost entirely on cocaine, Mexican drug gangs are a one-stop shop for four big-time illicit drugs: marijuana, cocaine, methamphetamines and heroin. Mexico is the world's second biggest producer of marijuana (the U.S. is No. 1), the major supplier of methamphetamines to the U.S., the key transit point for U.S.-bound cocaine from South America and the hemisphere's biggest producer of heroin.

    This diversification helps them absorb shocks from the business. Sales of cocaine in the U.S., for instance, slipped slightly from 2006 to 2008. But that decline was more than made up for by growing sales of methamphetamines.

    In many ways, illegal drugs are the most successful Mexican multinational enterprise, employing some 450,000 Mexicans and generating about $20 billion in sales, second only behind the country's oil industry and automotive industry exports. This year, Forbes magazine put Mexican drug lord Joaquin "Shorty" Guzman as No. 401 on the world's list of billionaires.

    Unlike their rough-hewn parents and uncles, today's young traffickers wear Armani suits, carry BlackBerrys and hit the gym for exercise. One drug lord's accountant who was arrested in 2006 had a mid-level job at Mexico's central bank for 15 years.

    Recently, Mexico's deputy agriculture minister, Jeffrey Jones, told some of the country's leading farmers that they could learn a thing or two from Mexican drug traffickers. "It's a sector that has learned to identify markets and create the logistics to reach them," he said. Days later, Mr. Jones was forced to resign. "He may be right," one top Mexican official confided, "but you can't say things like that publicly."
    Sapere Aude

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    From Bloomberg by Anthony DiPaola and Grant Smith on December 10, 2009, Iraq’s Second Oil Bidding Round Bolstered by Exxon, Eni Deals

    From Bloomberg by Anthony DiPaola and Maher Chmaytell on December 11, 2009, Shell, CNPC Win Iraq Oil Contracts, Adding to Earlier Deals


    From the website Iraq and Gulf Analysis by Reidar Visser on December 13, 2009 The Second Licensing Round in Iraq: Political Implications

    The second licensing round for Iraqi oilfields was carried out by the oil ministry in Baghdad over the weekend. On the one hand, the contracts won by foreign companies will prove controversial because Iraq remains in the middle of a chaotic process of political transition and has yet to agree on a legal framework for the oil sector. At the same time, however, the relatively straightforward nature of the technical service contracts under offer as well as the emerging broader picture of a reasonably balanced mix of foreign and Iraqi participation in developing the country’s oil sector mean that these deals are on the whole less vulnerable to criticism than those previously entered into by foreign companies on extremely lucrative terms with the Kurdistan Regional Government – and therefore also stand a greater chance of surviving in their existing form in the long term.
    Sapere Aude

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    From the 9 Jan '10 WSJ Chavez Devalues Venezuela's Currency By JOHN LYONS and DARCY CROWE

    President Hugo Chavez, harried by recession and declining popularity, announced a major currency devaluation late Friday to shore up government finances and stimulate economic growth before key elections this year.

    The move cuts Mr. Chavez's two-year-old "strong bolivar" currency by half – to 4.3 per dollar from 2.15 per dollar – for most imports and transactions. The central bank will also subsidize a stronger 2.6-per-dollar rate for imports of food, medicine and other essential items, Mr. Chavez said.

    The move reflects the increasingly difficult economic and political trade-offs faced by Mr. Chavez, who has been in power for more than a decade and veered the country's economy sharply to the left through steps like nationalization of key industries, rampant government spending, and currency and price controls.
    For years, Venezuela has been able to defend an overvalued currency thanks to currency controls. Venezuelan citizens and companies can get dollars at the official rate only with government permission. That has led to a thriving black market, where those who don't get government permission buy the U.S. currency. Even the Venezuelan government uses the black market to some degree, economists say.

    On Friday, that black market rate stood at about 6.25 per dollar – well below the former official rate of 2.15 and still below the new rate of 4.30. Economists say one of the reasons for the move was an attempt to deflate the black market, a catalyst for inflation that has also spawned a frenzy of schemes to defraud the central bank of dollars.
    Official devaluations are nothing new for Venezuelans, with many getting their first taste of currency controls in 1961. The peg imposed then was kept for 22 years but a decline in oil revenue forced the government to devalue in 1983, marking the beginning a downward spiral that included several adjustments to the foreign currency rate. A devaluation in 1994 amid a deep economic crisis spurred a wave of popular unrest that Chavez eventually tapped to win the presidency five years later.
    Sapere Aude

  19. #99
    Council Member Surferbeetle's Avatar
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    Default Datapoint?

    Unfortunately little quantitative data is provided on how much $ by line of operation

    From the January 10, 2010 LA Times,
    In West Bank, conditions 'not ripe' for Palestinian uprising
    by Edmund Sanders

    But in a not-so-subtle reminder that Israel can reseal the borders again, construction is underway on a new, expanded checkpoint. Meanwhile, Nablus residents -- from businessmen to teenagers -- say they are enjoying the broadest freedom of movement they have experienced in years.
    Israel takes part of the credit for the apparent softening of Palestinian resistance through a carrot-and-stick approach under which it has eased checkpoints and permitted economic growth even as it has maintained an army presence and cracked down on militants.

    "You have to have a very complex, nuanced approach of strengthening moderates, building the economy but not giving in to the terrorists," said Israeli Deputy Foreign Minister Danny Ayalon. "The [Israeli army] presence right now is not only necessary, it's diminished the chances of a third intifada."

    Critics say Israel's strategy amounts to "beautifying" the occupation by relieving just enough pressure to weaken resistance and by making the West Bank dependent on billions of dollars in foreign aid.

    "We are 'for sale' now," Kassem said, adding that some Palestinians today place a higher priority on jobs, education and lifestyle. "We are spoiled. People might get angry, but in a week they reach in their pockets and do nothing. We don't feel the occupation as much."

    He noted that the Palestinian Authority, largely funded by the U.S. and other countries, now employs 180,000 people who "are not ready to sacrifice their jobs for another intifada."
    Sapere Aude

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    Default Latest Pipeline News

    Steve:

    Financial Times had the latest on the opening of the Northern Route, and hearty encouragement for the line through Afghanistan to India via Pakistan:
    "From hell, through hell, to hell."

    Strange but typical business arguments about united all stakeholders, and long-term benefits if Taliban will join up with Pashtun brethren to reap the benefits...

    Seems out of place for a couple of reasons: First, corruption---How are all these long-term stakeholders supposed to perceive/receive a benefit in the current climate? Second, another reason to unite Taliban and Pashtuns for an inter-border "benefit" for Pashtunistan. No?

    http://www.ft.com/cms/s/0/0e09d8fa-f...44feab49a.html

    Makes sense, but there are plenty of reasons why it hasn;t moved forward yet.

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