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The state of Iranian democracy

I can't think of a better answer to the question "is Iran a democracy?":
So surprising was the Rouhani triumph that a story making the rounds in Tehran (though it is not clear if it is fact or legend) has it that at 2am after the election, hundreds of Revolutionary Guards surrounded Mr Rouhani’s residence in northern Tehran. He stepped out to meet them unsure whether their presence was designed as protection or a prelude to his arrest.

Antibiotic resistance: what it's all about

I became interested in the issue of antibiotic resistance as one of my brilliant colleagues at the World Economic Forum was writing the 2013 issue of our Global Risks report. Yet I never felt like I fully understood the ramifications of this emerging risk, which is why I found this WIRED article about its potential ripple effects to be particularly interesting:
If we really lost antibiotics to advancing drug resistance — and trust me, we’re not far off — here’s what we would lose. Not just the ability to treat infectious disease; that’s obvious. 
But also: The ability to treat cancer, and to transplant organs, because doing those successfully relies on suppressing the immune system and willingly making ourselves vulnerable to infection. Any treatment that relies on a permanent port into the bloodstream — for instance, kidney dialysis. Any major open-cavity surgery, on the heart, the lungs, the abdomen. Any surgery on a part of the body that already harbors a population of bacteria: the guts, the bladder, the genitals. Implantable devices: new hips, new knees, new heart valves. Cosmetic plastic surgery. Liposuction. Tattoos. 
We’d lose the ability to treat people after traumatic accidents, as major as crashing your car and as minor as your kid falling out of a tree. We’d lose the safety of modern childbirth: Before the antibiotic era, 5 women died out of every 1,000 who gave birth. One out of every nine skin infections killed. Three out of every 10 people who got pneumonia died from it. 
And we’d lose, as well, a good portion of our cheap modern food supply. Most of the meat we eat in the industrialized world is raised with the routine use of antibiotics, to fatten livestock and protect them from the conditions in which the animals are raised. Without the drugs that keep livestock healthy in concentrated agriculture, we’d lose the ability to raise them that way. Either animals would sicken, or farmers would have to change their raising practices, spending more money when their margins are thin. Either way, meat — and fish and seafood, also raised with abundant antibiotics in the fish farms of Asia — would become much more expensive. 
And it wouldn’t be just meat. Antibiotics are used in plant agriculture as well, especially on fruit. Right now, a drug-resistant version of the bacterial disease fire blight is attacking American apple crops. There’s currently one drug left to fight it. And when major crops are lost, the local farm economy goes too.

Why climate change matters

There's a category of problems that I like to think of as incomprehensible. They're incomprehensible insofar as they are too grave, too broad, and too often re-hashed for a clear, single interpretation of the challenges they pose to emerge. The world becoming increasingly "interconnected" is one such problem. Climate change is another.

That's why I find it particularly helpful when someone clearly spells out why that problem is a problem. Here's a good recap regarding climate change:
Four important global tipping points are the rapid melting of large ice sheets (such as Greenland), large-scale changes in ocean circulation such as the Gulf Stream, feedback processes where warming produces more warming, and enhanced warming over the long run. These tipping points are particularly dangerous because they are not easily reversed once they are triggered.

Turkey in Africa

A lot of attention has been devoted to Turkey's expanding regional ties since it turned away from the European Union around the mid-2000s. But while we've focused on its relationships with the Balkans, Middle East, and Central Asia, few have noticed its push into Africa:
The number of Turkish embassies and the volume of trade  is a clear indication of the rising interest and Turkey’s involvement in Africa. The number of Turkish embassies in Africa increased to 34 this year from 12 in 2002. Turkey’s total trade reached US$20 billion in 2013 from $3 billion in 2002, with sub-Saharan Africa’s share at $6.5 billion, a considerable increase from $750 million in 2002. Turkey’s official aid to Africa is now almost $1 billion, a substantial  portion of $2.5 billion total global aid. Turkish schools, from elementary schools to universities, have been founded in Africa, and Turkish NGOs are among the most visible on  the continent.
In this regard, the German Marshall Fund remains a cutting edge source.

PS. This also reminds me of the Mediterranean Scenarios my Strategic Foresight Team at the World Economic Forum developed a few years ago, in which the term MediterrAfrica was coined.

Arctic shipping route: that good after all?

Everyone is always raving about the great commercial appeal of Arctic shipping lanes, with environmental concerns ranking as the only caveat. Here are therefore a couple of interesting counterpoints:
"The further away global trade moves from a totally China-centric export pattern, the more a short 'polar' route loses its appeal," said Jan Tiedemann, shipping analyst with consultancy Alphaliner. 
"The Southern route — even if longer — will always have the advantage of serving numerous markets at the same time. Think of the Middle East. Think of transshipment via the [Malacca] Straits to Australia and New Zealand. Think of transshipment in Arabia for East Africa. Think of Med and Black Sea loops," he said.

Russia's anti-Putin opposition

I've just finished reading Ben Judah's Fragile Empire, which is a contemporary history of the rise and fall of pro-Putinism in Russia throughout the 2000-10s. The book reads extremely well, subtly combines shocking data points with qualitative interview quotes, and avoids the cliches of most other sources. In a word, I would strongly recommend it to anyone interested in understanding what is going on in Russia today and how recent changes in the political landscape might unfold in the coming years.

As a primer, below are my key takeaways from the book. Some are direct lessons from Judah; others are reflections derived from the book's food for thought.

Key points:
  • Most Russians are not angry at Putin for being authoritarian but rather for being incompetent. A few liberals in Moscow might like to have more political voice for the sake of being a more democratic country. But for the most part anger throughout the rest of the country comes from disappointment with promises of a better life that have been unfulfilled by failed institutions. Even in Moscow, the rise of Navalny's success based on anti-corruption campaigns attests to the significance of institutional reform in voters' minds. Putin became popular because he was able to restore some order of institutional reality after a decade of chaos throughout the 1990s. But blatant institutional failures in recent years seem to have put an end to the business model on which he had based his popularity. More power is not always the road to more sustainable power: By taking full control of all gubernatorial posts over the years, Putin also made himself vulnerable to attacks against the myriad track records of governors throughout the country.
  • Russians feel robbed. Given the vast mineral riches that their country is home to, Russians throughout the country's peripheral regions simply do not understand how they can live in such relative disrepair. Sure the past decade has seen an unprecedented rise in middle class consumerist opportunities, but the country's economic development could be much higher relative to its resources. Russians beyond Moscow have the sense that money from their region (if mineral-rich) is turned in to Moscow, from where it is simply funneled out of the country by a hand-full of Kremlin associates. Remember, this is exactly the reason why most Russians came to abhor the oligarchs of the 1990s and therefore welcomed Putin as the oligarch-buster of the early 2000s.
  • The structure of the Russian job market plays in the Kremlin's favor, for now. Two characteristics of the Russian job market indeed bind many workers to United Russia: First, many Russians work -- directly or indirectly -- for the state, which means they either feel positively inclined towards a system that has created more jobs for them (at the detriment of institutional efficiency; note the catch), or they would like to vote against it but don't feel they can. Second, given the dependence of many Russian cities beyond Moscow and St Petersburg on the survival of just one or two lone factories (so-called mono-gorods), even those who do not work for the state indirectly hinge on its artificial support. The catch for the regime is that both of these incentives run counter to its long-term financial stability and, hence, chances for political success.
  • For now, there is still no proper anti-Putin opposition. By this I mean two things: First, there is no coherent opposition in the sense that it is still scattered (center vs. periphery, liberal vs. nationalist). Second, the opposition to Putin is not for the most part "proper" in the moral sense Western observers always seem to hope for and never seem to get. In Moscow, the greatest opposition figure, Alexei Navalny, is a fervent nationalist. In the regions, an opposition player like Yevgeny Roizman of Yekaterinburg is a heavy-handed militiaman. It may be tempting for Western observers to root for the anti-Putin opposition, but -- just as in the case of the Arab Spring -- it might also be worthwhile reading through a few of its leaders' bios before signing them blank checks.
  • The opposition has no funding. In the early 2000s, Khodorkovsky used his "personal" wealth to finance a range of opposition leaders. When he was taken out of the picture, so was Yukos as a source of financing, which was never replaced. Any political movement needs cash to function. So where will the money to finance a post-Putin future come from? Navalny has done a great job at importing Obama-style crowd-funding. But can that be enough? The opposition will either need to find a more imposing source of cash-flow or revert to fully out of the box ways.
  • In that regard, the role of the Orthodox Church is one thing worth considering when thinking creatively about the future of anti-Putinism. So far, the Kremlin has been very apt at keeping the Church on its side, and the Pussy Riot incident helped paint the Muscovite opposition as heretic, which displeases most Russians. Should anti-Putin forces manage to put the Patriarch's resources on their side in the longer run however, that could prove a game-changer for their ability to federate Russians against the Kremlin. The Church has been kingmaker in before.
  • The positioning of the country's security forces will also be critical to determining whether the opposition can keep expressing itself or will be violently crushed if things get tenser. Security forces tend to follow two incentives: money and ideology. Until now, Putin has tried to cast the opposition as a bunch of liberal hipsters. It doesn't take much to convince the kind of person who goes into state security to crush liberal hipsters. But more recently those who compose the opposition have not only been more than Muscovites, they have also been from an increasingly nationalist crowd. When those on each side of a security chain share the same sociological background, it becomes increasingly difficult to convince them to hate each other. As regards the second incentive -- money -- well let's just say that it will be harder to double public sector salaries when the oil price goes down and coffers are empty.
Side notes:
  • Western observers like to take sides with imprisoned Mikhail Khodorkovsky, but if we assume that Khodorkovsky stood for maintaining Russia's oil and gas assets under private sector (and arguably more effective) control while Putin brought them under public ownership by arresting the Yukos head, then could it also be argued that the country's wealth boom of the 2000s would not have happened if it hadn't been for the infamous arrest? 
  • Few expected Yelstin to choose Putin as his replacement. Few expected Putin to choose Medvedev as his replacement. What's the next surprise?

The ties that don't bind

I've written before about how we tend to overestimate the ties between government and big business, focusing on the ambiguous relationship of China's energy companies with the country's political circles.

Reading Steve Coll's history of ExxonMobil brought me to a similar conclusion. Indeed it seems that even a company as closely connected as this one was to the Bush Administration simply doesn't need the US government that much, and certainly doesn't take orders from it. It is, in more ways than one, its own man.

Speaking of the USG, ExxonMobil simply says:
we work with the government that is here, just like we work with the government in whatever country we are dealing with around the world
Nothing more, nothing less.

In fact it seems not only does ExxonMobil see the USG as just another government, but even its help looks like an unwanted gift:
Bush said that his administration stood ready to dive into oil diplomacy to push back against Putin's attempts at renegotiation. Tillerson thanked the president, but afterward, through its Washington office, the company begged the Bush administration to stay away.
Seems like ExxonMobil really is a private empire.

Surprising take by ICG

I was very surprised to read the International Crisis Group arguing that the international community and Syrian domestic stakeholders should acknowledge the tacit victory of the Assad regime. I'm not judging; just very surprised:
The easiest way to de-escalate the war and end its most vicious forms of violence arguably would be to acquiesce in a de facto regime victory – in other words, negotiate the terms of Assad remaining in power rather than of his departure.

Corruption leads to unrest: but how?

It sounds perfectly intuitive that there'd be a link between corruption and the risk of popular unrest. But just how and why?

Here's a concrete example, related to worker safety -- a common plight in emerging markets: In China, for instance, corruption seems to lead to under-par worker safety, which in turns leads to local unrest, which in turn could one day take a more radical, durable, or national form:
Some analysts believe corruption is partly to blame—that many companies use their political relationships to circumvent safety oversight and regulations. New research provides backing for this claim, demonstrating a strong link between worker deaths from accidents and the political connectedness of corporate executives. 
We studied all publicly traded Chinese companies in safety-regulated industries, including petroleum and natural gas extraction, mining, chemicals manufacture, and construction—a total of 276 firms. We added up the annual fatalities in each firm from 2008 to 2011, using company-reported statistics, government data, and press reports. After examining the employment histories of the firms’ top (C-suite-equivalent) leaders, we defined a company as “connected” if at least one executive previously held a high-level government post. 
Our results showed that on average, the rate of worker deaths is five times greater at connected companies than at similar companies that lack political connections. The finding that connected companies have much worse records was remarkably consistent from year to year. Moreover, deaths per 10,000 workers rose by almost 10, on average, during the year following the arrival of a connected executive at a previously unconnected firm, and fell by 6.4 during the year following a connected executive’s departure.

LatAm CEOs are the best

The Harvard Business Review looks at which CEOs are most effective. Turns out the Chinese and Japanese don't do so well, but Brazilians and Mexicans are oustanding:
China has been the growth miracle of the past decade, so you might expect CEOs there to have done very well. We find that the opposite is true: Among the 3,143 CEOs we analyzed, the average rank of Chinese executives was 176 places lower than the average rank of U.S. executives. Only three Chinese companies’ CEOs made the top 100, though 17% of all the executives studied were from China. The Chinese leaders we asked about this discrepancy theorized that as the country’s companies become more innovation-focused, their performance will improve. 
Likewise, the average rank of Japanese CEOs was 562 places lower than that of their U.S. counterparts, although this is not a big surprise, since Japan’s economy has struggled for many years. On the whole, U.S. CEOs did not shine either, despite holding six of the top 10 slots. Their average rank was 215 places lower than Latin American CEOs’, 140 places lower than Indian CEOs’, and 137 places lower than British CEOs’. Continental European and U.S. CEOs ranked about the same. U.S. CEOs have not been as competitive on a global scale as one might think. 
One bright spot is Brazil, whose CEOs make up only 4.5% of the total sample but 9% of the top 100. They include Roger Agnelli of Vale (#4) and Embraer’s Maurício Botelho (#11). Botelho took over the state-owned company in 1995, when it was reporting losses of around $300 million a year, and over the next 12 years, built it into a world-class competitor. (Interestingly, Brazil is also overrepresented in the bottom 100, suggesting that companies from that country play a high-risk, high-reward game.) Another standout is Mexico, whose average CEO ranked 108 places higher than the average U.S. CEO.