West Makes Afghanistan Safe...for Growing Opium

Say what you will about the original premise that the 2002 invasion of Afghanistan was to force Osama bin Laden out of hiding from his Taliban protectors, but the aftermath of all that has not been very positive. Afghanistan remains a very poor nation, and the persistence of the Taliban threat speaks volumes about the West's inability to provide a superior vision of the country's future. That is the political aspect of it.

Meanwhile, the economic aspect is not promising, either: despite untold millions spent on eradicating opium over more than a decade, 2013 will be a bumper crop:

Opium poppy cultivation in Afghanistan rose 36 per cent in 2013, a record high, according to the 2013 Afghanistan Opium Survey released today in Kabul by the Ministry of Counter Narcotics and UNODC. Meanwhile, opium production amounted to 5,500 tons, up by almost a half since 2012.

Calling the news "sobering", Yury Fedotov, Executive Director of UNODC, stressed that this situation poses a threat to health, stability and development in Afghanistan and beyond:  "What is needed is an integrated, comprehensive response to the drug problem. Counter-narcotics efforts must be an integral part of the security, development and institution-building agenda".

The area under cultivation rose to 209,000 ha from the previous year's total of 154,000 ha, higher than the peak of 193,000 hectares reached in 2007. Also, two provinces, Balkh and Faryab, lost their poppy-free status, leaving 15 provinces poppy-free this year compared with 17 last year.

While respect is due to the UN Office for Drugs and Crime (UNODC) for taking on drugs and crime in such a difficult situation, I honestly believe that the West has largely given up on Afghan security, let alone the country's development. After sinking billions into the place with little to show for, Western publics have signaled their armed forces to head for the exit. UNODC's diagnosis is sound, but how exactly do you reconcile so many rival warlords? Moreover, what livelihoods are possible other than this one at the current time?

The link between insecurity and opium cultivation observed in the country since 2007 was still evident in 2013; almost 90 per cent of opium poppy cultivation in 2013 remained confined to nine provinces in the southern and western regions, which include the most insurgency-ridden provinces in the country. Hilmand, Afghanistan's principal poppy-producer since 2004 and responsible for nearly half of all cultivation, expanded the area under cultivation by 34 per cent, followed by Kandahar, which saw a 16 per cent rise.

Across the country, governor-led eradication decreased by 24 per cent to some 7,300 hectares. Badakhshan, the only poppy-growing province in the north-east, witnessed a 25 per cent increase in cultivation despite the eradication of almost 2,800 ha. During the 2013 eradication campaigns, the number of casualties rose significantly, with 143 people killed this year compared with 102 fatalities in 2012.

It's a sad situation (full report here), but the time is at hand when Afghans themselves will need to deal with the insecurity, fragmentation, and lack of the development on their own. Perhaps only when they realize that no one will be left to blame for their situation can progress really be made. Then again, the Taliban would welcome retaking the reins of power.

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Philippines, PRC & Geopolitics of Disaster Relief

[I wish to express my appreciation to those who have gotten in touch to check whether I have been affected by the recent storm in the Philippines. Typhoon Haiyan did not really pass through the capital, Manila, where I am currently based. Nevertheless, any help you can extend to my compatriots is most welcome.] Typhoon Haiyan is one of the most powerful storms ever to hit land. While storms of its magnitude are frequent in the open ocean, it is relatively rate that one reaching over 300 kph hits populated areas. The devastation is enormous, and the UN estimates that $301 million is needed to rehabilitate affected regions over a preliminary six-month period:

The United Nations today appealed for nearly a third of a billion dollars to provide humanitarian assistance to typhoon hit regions of the Philippines where aid workers are labouring around the clock to get in urgently needed survival supplies, such as food, clean water, shelter and basic medicines. UN Emergency Relief Coordinator Valerie Amos launched the $301 million flash appeal from Manila, the capital, where she is surveying the damage by Typhoon Haiyan which ripped through nine regions in south-east Asia over the weekend. 

However, many are noticing the comparatively small amount China is pledging to give to its neighbor ($200,000 total):

China's government has promised $100,000 in aid to Manila, along with another $100,000 through the Chinese Red Cross - far less than pledged by other economic heavyweights. Japan has offered $10 million in aid and is sending in an emergency relief team, for instance, while Australia has donated $9.6 million...

"The Chinese leadership has missed an opportunity to show its magnanimity," said Joseph Cheng, a political science professor at the City University of Hong Kong who focuses on China's ties with Southeast Asia. "While still offering aid to the typhoon victims, it certainly reflects the unsatisfactory state of relations (with Manila)."

China's ties with the Philippines are already fragile as a decades-old territorial squabble over the South China Sea enters a more contentious chapter, with claimant nations spreading deeper into disputed waters in search of energy supplies, while building up their navies.

While the merely state-affiliated publication Global Times usually holds the more jingoistic views compared to the truly official Xinhua news agency or China Daily, this time it expresses concern about how the rest of the region will view the PRC's comparative stinginess. A feint, perhaps? It is still notable that such an opinion was made. Especially notable is the recognition of contributions Filipino-Chinese have made when the PRC has been affected by similar calamities:

China shouldn't be absent in the international relief efforts. Instead, it should offer help within the compass of its power, given China's international position and its location of facing the Philippines across the sea. It's a must to aid typhoon victims in the Philippines despite Haiyan having also battered China's coastal regions and bilateral tensions over the South China Sea disputes.

China, as a responsible power, should participate in relief operations to assist a disaster-stricken neighboring country, no matter whether it's friendly or not. China's international image is of vital importance to its interests. If it snubs Manila this time, China will suffer great losses...  

Aid to the typhoon victims is a kind of humanitarian aid, which is totally different from foreign aid in the past made out of geopolitical concerns. Overseas Chinese in the Philippines played an active part to mobilize relief efforts when the mainland was in disaster. It's legitimate that we provide assistance when they suffer.  

Still, China's pledge is indicative of certain things. Its leadership is not quite pleased with the Philippines, having disinvited the latter's president in recent months and now this. These expressions are also conditioned on playing to public opinion: having portrayed the Philippines as "the enemy" over the South China Sea spat to the Chinese public, it is hard to back down on the tough rhetoric against the Philippines by offering millions in disaster relief.

Asian politics are notable for the long memories of those concerned. If so, the Philippines may better remember those who helped it during its time of need. For instance, that Putin guy might not be so mean towards other developing nations...

UPDATE: China has since upped its commitment to $1.64 million, although many are questioning why it has not dispatched its state-of-the-art hospital ship Peace Ark designed for emergencies such as this to the Philippines. 

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The Day Venezuela is Fully Nationalized Approaches

The economic implosion of Venezuela is interesting insofar as the voters have repeatedly chosen Hugo Chavez and his anointed successor Nicolas Maduro despite them consigning the country to economic oblivion. Populist policies may have won votes as redistribution continues, but we are fast approaching a point when there is nothing left to nationalize or place under state watch. What then?

Venezuelan President Nicolas Maduro says he plans to extend price controls to all consumer goods, if he is given powers to govern by decree. In a televised address, Mr Maduro said that he wanted to set legal limits on businesses' profit margins. His announcement followed the seizure on Saturday of shops accused of selling electronic goods at inflated prices.

The National Assembly is expected to vote this week on his request to govern temporarily by decree. The president demanded there be "zero tolerance with speculators" in his speech broadcast on Sunday. "This is beyond usury, this is theft," he added...[t]he president announced that he would next turn his attention to stores selling toys, cars, food items, textiles and shoes. 

When all production comes under government control--as things will be at this rate--there will be no one left to blame other than the government. It will be at that point when the full extent of the government's mismanagement--galloping inflation, pathetic reserves despite being one of Latin America's leading energy exporters, and the evisceration of a functional economy--becomes apparent even to Chavez/Maduro voters:

Opposition leader Henrique Capriles said the move proved that the president "is a failed puppet of the Cuban government". "Every time he opens his mouth, he scares away the investments that create employment, and he worsens the crisis," said Mr Capriles, who narrowly lost to Mr Maduro in April's presidential election.

Official figures suggest inflation is running at more than 50%. Price hikes have become an important issue in next month's local elections.

For now, Maduro's perverse strategy involves creating artificial shortages by persecuting all forms of private industry as "speculators." Faced with a steadily deteriorating business environment, the rational thing to do would be to cut production (or flee the country if you're a foreign investor). The resulting government-induced shortage is then blamed on your "hoarding" ways, and the government then claims to "act" by slapping price controls on everything to hopefully win elections.

It will likely take Venezuela taking a turn for even worse before the Bolivarian socialists are ejected. Oftentimes, it takes things to deteriorate before they get better to get the attention of those who have been deluded for quite some time.

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The Political Economy of Int'l Beauty Pageants

OK, some qualifiers about the post title here: First, I am not quite attracted to beauty pageant contestants since I generally find them too skinny. Second, I didn't actually watch the Miss Universe 2013 finals in Russia since I didn't bother to figure out what time it was showing. Third, I am probably biased since our country's bet didn't win despite making it to the last five contestants for yet another year without actually winning. (Then again, if you are looking for unbiased commentary from blogs, you are probably looking in the wrong place.) So, with those caveats in mind, here is what the most recent event has taught me about the international political economy of beauty pageants. Excerpts here from the Manila Bulletin:

(1) It often helps if you *can't* speak English, the language of the event:

Fans expressed disappointment when it was announced that [Philippine contestant Ariella] Arida finished third runner-up. They said she was the only candidate who did not use an interpreter in the field of Latina co-semifinalists [from Brazil, Ecuador, Spain, and Venezuela. In 2011, Filipino fans expressed the same sentiments when [Shamcey] Supsup won third runner-up in the beauty contest in which she was the only one in the Top 5 who did not use an interpreter.

The idea is that you are more "exotic" when you cannot speak English. (I'd like to confess that I've been using Google Translate for six years to write this blog, but few of you will believe me.) Some will say that's a nonsense argument since Miss USA won last year, but consider the rarity of straight English answers in the Q&A portions and that the event's promoter is some Yank with a weird hairdo who stands to benefit massively from a ratings jump in the States.

(2) It doesn't help to be smart. This is a beauty contest, not a brains contest.  Ask the Philippine contestant--a chemistry major--who finished fourth:

Born on Nov. 29, 1988, to public school teachers Alresito and Estella, Arida graduated from the University of the Philippines Los Banos [UPLB] in Laguna...

Arida began studying veterinary medicine at UPLB in 2005 but shifted to chemistry on her second year. Her undergraduate thesis entitled “Virtual Binding of Synthetic Nucleoside Analogues and Phyto-brassino steroids to NS5 Dengue Virus mRNA 2’-o-Methyltransferase Domain Using Dock Software” was presented in the 2010 Philippine Chemistry Congress held at Subic Bay in Zambales.

Looks matter, and passable answers will suffice during the Q&A portions--especially if delivered in a language other than English.

(3) So the Latin bloc is not doing so well economically, but hey, they do fantastically well in beauty pageants! 4 out of the top five ain't bad, and the award haul of Latin countries like Venezuela is astounding. I suppose beauty pageants act as the opiate for the masses in an increasingly secularized world--especially in Venezuela, a country run by nutters that has made a successful cottage industry of preparing young women for these events. (And don't speak English for crying out loud.)

Consider that the Philippines was a Spanish colony for over three hundred years and the domination would become even more pronounced. Ah well, roll on 2014; we're bound to win this damn thing sometime soon...

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The Washington Consensus Lives On In Pakistan

There is a photo essay on American shopping malls that I found quite amusing on Yahoo! featuring pictures taken by an obviously obsessive chap who took lots of them during that era of high consumerism, the Eighties, entitled "Big Hair, Smoking, and Record Stores." While the IMF now styles itself as not your grandpa's IMF in being a kinder, gentler lender of last resort, I had a distinct 45 RPM retro flashback while reading its latest press release concerning its recent staff mission to Pakistan (where they are not quite fond of Yanquis).

Much as the IMF would like to say otherwise, it seems we have not yet gotten away from the greatest hits of one-size-fits-all quite yet. Liberalization, privatization, deregulation...structural adjustment austerity....is there anything new?

Structural adjustment:

The mission was also pleased with the strong fiscal performance in the first quarter of 2013/14 and the steady implementation of the government’s structural reform agenda...

Belt-tightening:

Fiscal consolidation remains a key component of the government’s economic reform program. The mission was encouraged by the government’s efforts to enhance tax revenues, which slightly exceeded the program target level.

Privatization:

The government is moving forward with the privatization or restructuring of 31 public sector enterprises to improve public sector resource allocation and limit poor performance.

Liberalization:

The authorities are also working towards significant structural reforms in the areas of trade and the business climate to encourage higher investment.

Everything old is new again, and I am afraid that we have not quite gotten into the New Wave, let alone the Alternative era at the IMF since the song remains the same. Is that doom metal? Would you like to, ah, break dance?

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American Exceptionalism: Why So Few Diesel Cars?

It routinely surprises insular Yanks who dare venture abroad that the rest of us are quite fond of diesel cars. In this day and age of dear fuel, improved mileage has it attractions. Americans would beg to differ: They shake! They stink! That's what trucks run on! are among the things you hear them say. Such stereotypes hold only for older generations (up to, say, Eighties vintage) of passenger vehicles. By the Nineties, consumers elsewhere embraced advances in diesel technology that have made them the fuel of choice not only on fuel saving grounds but also performance given the wider torque spread of cars running diesel. Nowadays, of course, the poshest of brands--Audi, BMW, Mercedes-Benz, etc--feature model ranges replete with diesel models. They certainly don't shake, stink, or run like trucks anymore...from Auntie:

A 1.6-litre turbodiesel delivers the torque surge of a much larger gasoline engine, yet with the fuel efficiency of a much smaller one. In the UK, diesel sales account for more than half of all cars sold, and even with a stat like that, Britain lags the rest of Europe, which has long preferred diesel to gas.

So why would more Americans not drive diesels? From the European perspective, it would suit the driving style of the States perfectly, with lots of relaxed muscle available at low rpms to cruise vast interstate networks that are the envy of the world. Better mileage means fewer fill-ups, and the on-paper improvements in fuel economy would, overnight, take the US fleet one massive step toward President Obama’s targeted 54.5 mpg national average by 2025. Simply stated, diesel should “work” in the US.

EPA rules on mileage will probably "force" US consumers to adopt diesels alike Europeans have. OTOH, you can argue that the US market is more primitive in this respect, resembling a pre-enlightened Europe:

In the UK of the 1980s, diesel drivers were outcasts. They were required to fill up around the back of the station, over by the truckers, to be looked upon by gasoline burners with a mixture of pity and smugness. And that presumed diesel drivers could even find somewhere to fill up, as not every filling station bothered to stock their fuel.

This sheer lack of availability led to great variability in pricing. As the only filling-station proprietor in 25 miles to stock diesel, Mr. Smith could subsequently charge more or less whatever he wanted. A survey of diesel prices in the US illustrates a similarly maddening snapshot of how scarcity can produce wide price fluctuations, with pump prices varying by up to 50 cents a gallon. But with more diesel purchasers, the laws of the marketplace would kick in, bringing prices into greater alignment.

Given the need for low-sulphur refining, diesel would not necessarily become cheaper than premium in the US. It is pricier on the other side of the Pond, too, but although Europeans gripe about it, they still know the savings add up. Diesel generally returns 30% better mileage than gas, and in the dominion of $8 gallons, this is no small advantage.

So the Yanks are a bunch of eco-primitives; tell me something new about these folks who still debate about whether climate change exists when the rest of the world has moved on to doing something about it. 

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Are the Port of Hong Kong's Glory Days Over?

How the mighty are falling. Here's another one from the Far East shipping files: Hong Kong ranks regularly among the world's top three busiest container ports in terms of twenty-foot equivalent units (TEUs) handled. Yet, its previously unassailable status is coming under attack due to a number of factors. First, rising labor costs in the Pearl River Delta mean it is being less used to handle shipments of manufactured goods from that part of China. Second, "industrial action" hit Hong Kong for the first time in many years earlier in 2013...

Like Shenzhen, Hong Kong’s throughput has been pinched by the decline of South China manufacturing, as high labour costs impel factory owners to shift operations to China’s interior or elsewhere in Asia. Hong Kong narrowly missed losing its third place position against Shenzhen, which marginally increased volumes in 2012 by 1.6%.

The biggest operator in the port, Hutchison International Terminals, was hit by the first major industrial action in Hong Kong in 20 years that began on March 28, 2013. The strike involved 450 port workers, including crane operators and stevedores, and lasted for 40 days. The strike caused a 20% drop in throughput at the Hong Kong operations of HPH Trust — a Singapore-listed Hutchison spin-off that comprises many of Hutchison’s Hong Kong assets.

As a result, many major port operators are divesting themselves of Hong Kong.  Indeed, the years it served as the world's gateway to China are numbered since, well, the former crown colony was reabsorbed by the mainland in 1997 and became a special administrative region (SAR). The handover happened a long time ago, and there is certainly no lack of mainland ports companies can now use--no need to use HK as an intermediary with the Reds in charge here as well:

Dropping volumes in Hong Kong was a factor in divestments by major port operators. In March 2013, HPH Trust bought Asia Container Terminals Holdings for $503m from joint owners Dubai-based DP World and Singapore-based PSA. Simultaneously, DP World sold 75% of its interest in Hong Kong’s Kwai Chung Terminal berth 3 and in ATL Logistics Centre Hong Kong for $463m to Goodman Hong Kong Logistics Fund.

While Hong Kong still retains an edge for operational efficiency, it also faces continuous erosion of demand, as more operators make direct calls to mainland ports. The competitiveness of Shenzhen ports has been boosted by easing of customs requirements for ocean to ocean transhipment.

Hong Kong retains its place as the world's freest economy, but certain parts of its portfolio no longer dominate its unique selling proposition as others have caught up. I hate to say it, but the port business may truly be a "sunset industry" for HK as some have presaged.

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