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Economics

2007 Year-Ender

20 December 2007

2007 Year-Ender

 By Gwynne Dyer

2007 was the year in which global warming finally began to be taken seriously. The climate change deniers were in full retreat, and the realisation that we face a long and grave crisis was finally dawning on the general public. However, it remains to be seen whether it was the year in which the world agreed on effective measures to deal with the crisis.

The global conference in Bali that was supposed to kick off negotiations for a new treaty to replace the Kyoto accord after 2012 ended ambiguously. The American delegation did not succeed in wrecking it, but it did manage to get all specific targets for cuts in greenhouse gas emissions removed from the text of the agreement.

The other countries went along with it in order to stop the United States from walking out, on the assumption that next year’s presidential election will produce an administration that is willing to cooperate. Then the hard targets for cuts will get put back in, and United States will sign up to them, and the Indians and the Chinese and the other big developing countries will make a deal that commits them to some cap on emissions in return for much technological and financial help from the developed countries in installing clean energy technologies.

That is the theory, and you can’t blame the other countries for going along with it because the alternative was a rogue America and no agreement. On the other hand, the history is not promising. It was Saint Albert Gore himself, then vice-president, who led the US delegation to the Kyoto talks in 1997 and drove the proposed emissions cuts down from fifteen percent to five percent, in the hope of coming up with a deal that Congress would accept.

But Congress never did accept the Kyoto accord, because its paymasters in the US energy, transport and natural resources sectors said not to. Things may have changed a bit now — Congress passed a bill this month that mandates greater fuel economy in vehicles — but on the big issues it is still largely subservient.

It really is amazingly cheap to buy the US Congress. Since 1990, fossil fuel industries, logging interests, agribusiness companies and the transportation industry have given federal politicians only about $750 million, but that money plays such a key role in funding their election campaigns that on the question of climate change Congress usually toes the line. With no early prospect of campaign finance reform, there is no reason to believe that the next Congress will be very different in its behaviour.

George W. Bush will no longer be there in 2009, but even a more climate-friendly president will probably still face a sold-out Congress. The crisis has finally been acknowledged around the world, but we may not be anywhere near a coordinated global response yet.

The other event with truly global impact was the soaring price of oil, which has been hovering at just below $100 per barrel for the past four months. It may go back down, of course, but it is unlikely ever to drop below $50 again and it is just as likely to rise as to fall. Indeed, many people suspect that we are now at or near “peak oil”, after which production will steadily decline and the price will continue to rise indefinitely.

The impact of higher oil prices on the world’s economies has been remarkably slight so far — much less, for example, than the credit crunch that has been unleashed by the “sub-prime” crisis in the United States — but in the longer run more expensive oil will drive up almost all other prices. The world is skating along the edge of a global recession, and only the continued dynamism of the emerging Asian economies keeps it from toppling in.

In the Asia-Pacific region, the year opened with China’s January test of a satellite-killing missile, which was probably meant mainly as a warning that it will react badly if Taiwan holds a referendum on changing the island’s name from “Republic of China” to “Republic of Taiwan” before next year’s election. China’s anger over India’s growing military relationship with the United States was underlined by the restatement in June of its claim to the Indian state of Arunachal Pradesh — but the Indian parliament’s refusal to ratify the nuclear part of the US-Indian deal in November suggested that the drift towards an Asia-Pacific cold war is not yet unstoppable.

The fall of Shinzo Abe’s government in Japan in September, after less than a year in office, sparked speculation that the Liberal Democratic Party’s half-century monopoly on power may be staggering to its end. Given the harshly nationalistic style of the faction that has controlled the LDP since the turn of the century, this would come as a considerable relief to the country’s Asian neighbours — and also to many Japanese. In the Koreas, an agreement on dismantling North Korea’s nuclear weapons programme led, in October, to the first serious discussions about an actual peace treaty to replace the 54-year-old armistice that ended the Korean War.

The Burmese military junta crushed a non-violent popular uprising led by Buddhist monks, the first since 1988, by killing some hundreds of protesters and arresting thousands of monks. President Gloria Arroyo of the Philippines rode out the fifth coup attempt in seven years, and the Thai military junta got popular approval for a new constitution that grants the military a large permanent role even after democracy is restored.

The thinly disguised military take-over in Bangladesh in January was followed by the arrest of both the main party leaders, whom the army seems determined to exclude from any future elections. The assassination of Pakistan’s former prime minister Benazir Bhutto less than two weeks before the January election that might have returned the country to civilian rule put not just the election, but the country’s whole future as a democracy in doubt. Democracy has not had a good year in southern Asia — but despite the upheavals, the economies of all these countries (except Burma, of course) continue to grow rapidly.

Farther west, the war in Afghanistan intensified in 2007, with foreign forces heavily engaged all across the south of the country against Pashtun rebels fighting under the Taliban banner. Nevertheless, the country’s export trade is thriving, with Afghan heroin now accounting for 93 percent of global production. And Turkmenistan’s ruler for the past 21 years, Saparmurat Niyazov, was succeeded on his death by his former dentist, Gurbanguly Berdymukhamedov.

In the Middle East, President Bush’s troop “surge” in Iraq bought him an extra two years and ensured that he would be able to drop the mess in the lap of his successor, but it is still an unwinnable war for the United States. Some militias have switched sides for the moment for tactical reasons, but a poll conducted by ABC News, the BBC and Japan’s NTV in August found that 57 percent of Iraqis believe that attacks on US forces are acceptable. On the assumption that most Kurds (20 percent of the population) are pro-American, the implication is that around three-quarters of Arab Iraqis have no problem with blowing up Americans.

The great and frightening imponderable of the year was not the fate of Iraq, but the question of whether the United States would also attack Iran. Both President Bush and Vice-President Cheney repeatedly accused Iran of working on nuclear weapons (predicting “World War III” if it were not stopped), and warned that “all options are on the table” including a US attack. In early December, however, the sixteen US intelligence agencies produced a new National Intelligence Estimate which asserted that Iran has not been working on nuclear weapons for the past four years. Mr Bush grumpily insisted that Iran was still a threat because it MIGHT do so, but the likelihood that he could actually launch another war before leaving office dropped dramatically.

Israel lost President Moshe Katsav to a sex scandal, and General Dan Halutz, Chief of Staff of the Israel Defence Forces, stepped down after being condemned by the Winograd report for his role in the ill-conceived 2006 war against Lebanon. Amir Peretz, the defence minister, was ousted as Labour Party leader because of his bungling performance in the war. But Prime Minister Ehud Olmert, equally criticised in the Winograd report, clung to office.

This left Olmert in charge of the Israeli response to the armed take-over of the Gaza Strip in June by the Islamist movement Hamas, which rejects the whole notion of Israeli and Palestinian states existing side by side within the territory of former Palestine. Olmert’s response was to blockade the Gaza Strip and try to strangle it economically in the hope of turning its residents against Hamas, and meanwhile to try for some sort of interim peace deal with the less militant Fatah-led “emergency government” that now governs the West Bank.

But the people of the Gaza Strip, who strongly supported Hamas in the last Palestinian elections, have not turned against it despite soaring unemployment, deepening poverty, and food shortages. Olmert’s cabinet is so deeply divided that he cannot offer terms for a peace settlement that even Fatah would seriously consider. The “peace process” that began with the 1993 Oslo accords is dead — but since nobody in power on either side wishes to contemplate the alternatives, we get empty charades like the Arab-Israeli “summit” at Annapolis in November.

We can see glimpses of the region’s real future, perhaps, in events like the postponement of planned electoral reforms in Jordan that might have allowed the local Islamists to win an election there, and the Israeli air strike in Syria’s northern desert in September that was allegedly aimed at a suspected nuclear facility. In July the United States announced a $60 billion military aid package to its three main allies in the region, Israel, Egypt and Saudi Arabia. Lebanon has been teetering on the brink of civil war all year.

Matters were much less military in Europe, where the great non-surprise of the year was the revelation this month that Russia’s President Vladimir Putin, who cannot run again in next year’s presidential election, will re-emerge as Prime Minister Vladimir Putin. To be fair, that is just the way most Russian voters would have wanted it:, as they credit Putin for restoring both Russia’s prosperity and its prestige — and it’s every bit as legal as Bill Clinton’s wife running for the presidency in the United States.

The European Union finally got the constitution that French and Dutch voters rejected in referendums two years ago, cleverly re-packaged as a 312-page catalogue of amendments to existing treaties which does not require ratification by referendum. It was actually quite a good constitution, and the French and the Dutch voted against it mainly because they were cross at the EU for letting Turkey become a candidate for membership, but the way it has been done leaves a bad taste in the mouth. Also, it now reads, as one British journalist put it, “like a manual for a forklift truck.”

Tony Blair finally relinquished the prime ministership in Britain in June to take up a lucrative career on the lecture circuit and a largely symbolic post as prominent-person-in-charge-of-doing-something-for-the-Palestinians, while his successor Gordon Brown struggled to get the hang of being prime minister after ten years in the number two job. Nicolas Sarkozy won the French presidency in May, promising to reanimate the French economy with sweeping free-market reforms — but his wife promptly divorced him, and he soon ran into predictable resistance from the beneficiaries of the existing system in the form of nationwide strikes.

In July Turkish democracy weathered a major crisis when voters decisively supported the “Muslim democrats” of the ruling Justice and Development Party against veiled threats of intervention by an army that still sees an Islamic party as a threat to the secular state. Polish voters threw out the government of the “toxic twins” in October, rejecting two years of ultra-nationalism, anti-German xenophobia, and witch-hunts against anybody linked to the old Communist regime even in the most menial capacity — but one of the twins, Lech Kacynski, will stay on as president until 2010, which may make it hard for Donald Tusk’s new centre-right government to get legislation through. And Belgium remained without a government six months after last June’s election, amidst alarmist talk that the country might finally break into its French- and Flemish-speaking parts, but agreement on an interim government was reached last week.

One could continue with one-sentence summaries of the cyber-assault on the Estonian government, the mega-fires that ravaged forests in Greece and Tenerife, the anti-immigrant racism that marred the Swiss election in September, and so on for many paragraphs, because there are a great many countries in Europe. But such a list would serve no purpose, so let us leave Europe, noting only that Kosovo’s impending declaration of independence from Serbia may spark a new Balkan crisis in February, and look southwards.

You have to look hard to find encouraging news from Africa. Ivory Coast has reunited, at least for the moment, after five years of civil war and division. The civil war in the Congo is still mostly over, although there was a flare-up in the north-east in September. Nigeria had a peaceful transfer of power from one elected president to another, for the first time in its history — although only after the outgoing president was defeated in his attempt to change the constitution and run for a third term. But the victor and new president of Nigeria, Umaru Yar’Adua, won by an absurd four-to-one majority in an election that European Union observers described as “not credible” and the United States called “deeply disturbing”. “Tell” magazine put it best, claiming to quote Joseph Stalin: “Those who cast the votes decide nothing. Those who count the votes decide everything.”

That’s the good news. The bad news is that almost all of north-eastern Africa is already at war or rapidly drifting in that direction. The Darfur war in south-western Sudan has spilled over into Chad and the Central African Republic, exacerbating the local conflicts there, and the peace deal that ended the far bigger, decades-long war between southern Sudan and the centre is breaking down. Ethiopia is fighting its own rebel citizens in the north-east and waging a brutal and indiscriminate campaign against civilians and resistance fighters alike in occupied Somalia, while to the north Eritrea, Africa’s Sparta, is gearing up for another war with Ethiopia. These are some of the poorest countries in Africa and perhaps also among the earliest victims of climate change, which may explain why they are also being ravaged by war. Bad things come in threes.

East Africa and southern Africa are in far better shape, of course, apart from the ongoing disaster of Zimbabwe, but even there very few countries have an economic growth rate that is more than one or two points higher than their population growth rate. It will be a great many years, at that rate, before the majority of their people escape from grinding poverty.

The main story in Latin America all year has been the advance of the left, fuelled in part by Venezuelan oil wealth. Hugo Chavez was the role model in Ecuador, where President Rafael Correa won power in January on a platform of radical reform. Venezuela paid the legal bills when Bolivia nationalised its gas fields and extracted more revenue from the foreign companies that operate them. And Venezuela is now providing so much aid to Cuba, mainly in the form of cheap oil, that the subsidies compare with those that Castro used to get from the Soviet Union. That certainly helped to stabilise Cuba’s transition from Fidel Castro’s one-man rule to the new “collective leadership” — but there was a nationwide sigh of relief when the still ailing Castro finally indicated in December that he did not intend to take power back.

In the United States, the war in Iraq fell off the front pages as American military casualties declined, though it will probably be back there by next summer: everybody, including the Iraqi insurgents, knows how the Tet offensive turned American opinion decisively against the Vietnam war in the election year of 1968. The presidential primaries, the most wide open in decades, were already taking up almost all the available media space by year’s end, but no candidate in either party had established an unbeatable lead. The US dollar was collapsing in external markets, but most attention focussed instead on the collapse of the domestic mortgage market and the risk of a recession.

What else? A theatrical competition for rights to the Arctic seabed opened up, with Russian submarines planting flags on the bottom at the North Pole and Canada investing in new armed icebreakers to patrol the Northwest Passage, but the rival claims will really be settled by geological evidence in front of an international court. Australia dumped its long-serving prime minister, a serial climate change denier, and promptly signed the Kyoto accord. And a British court told the Chagos Islanders that they could finally go home to their home on Diego Garcia, now a key US airbase in the Indian Ocean, only 41 years after Britain illegally expelled them to make room for its American ally.

So it wasn’t all bad, was it?

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This article is 2950 words. To shorten to 1900, omit paragraphs 6, 8-9,12-13, 17-20, 22, 25 and 28. (“It really…behaviour”; “The other…toppling in”; “The Burmese…rapidly”; “Israel…all year”; “The European…truck”; “One…southwards”; “East…poverty”;