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Weekend catch-up: World War I, Iraq, nuclear submarines, Russia sanctions and more

Weekend catch-up: World War I, Iraq, nuclear submarines, Russia sanctions and more
Published 9 Aug 2014   Follow @SamRoggeveen

Bringing together all the longer Interpreter articles you were too busy to read this week.

Although I would hate to distract you from reading our fine long-form content, before highlighting this week's best pieces, I'll mention one other feature from this week, our multi-part series on the best films about World War I, as nominated by you, our readers. Here are part 1, part 2 and part 3, and part 4.

We began the week with qualified good news from the Pacific, thanks to economist Tim Harcourt:

There's been a lot of talk about getting women into top positions in business in Australia, but our friends in the Pacific have been walking the walk. The inaugural Pacific Export Survey 2014 reveals that around 27% of exporting small and medium enterprises (SMEs) in the Pacific are run by women, compared to 11% of exporters in Australia according to the DHL Export Barometer. That's almost a 3:1 ratio.

Monday was the 100th anniversary of the start of World War I, and Rory Medcalf took the opportunity to look at parallels with today's security picture:

Improvements in the methods of interstate relations have not kept pace with the speed or complexity of today's international environment. Sure, as Graham Allison suggests, things are better now because 'intelligence systems provide near real-time information' to help make decisions in a crisis. Moreover, leaders 'can talk directly to one another' by phone or videoconference. In 1914, on the other hand, he notes that governments 'sent cables to ambassadors who transmitted messages to foreign offices, increasing the chances of miscommunication'.

The sad secret of 21st century diplomacy, however, is that a lot of the time it still works likes that, even during crises. Consider the lack of operational hotlines between, say, China and Japan or even China and the US; or the potential for mischief or miscommunication. A telephone call can only help avert crisis if both sides are willing at least to talk. And while crisis and disaster can strike suddenly, even the most urgent and accomplished multilateral diplomacy – like the recent UN Security Council resolution on flight MH17 – takes precious days.

Rodger Shanahan argued that there is no hypocrisy in Obama's decision to intervene in Iraq while staying out of Syria: [fold]

There will of course be accusations that Obama is a hypocrite for intervening in Iraq but not Syria. That argument is simplistic and wrong. If the US is obliged to intervene militarily everywhere there is a humanitarian need, it would never stop intervening. Obama said as much in his speech. He is one of the few US leaders to understand the limits of American power. 

Moreover, the situation in Syria is far more complex. To have assisted one side would have meant breaching a nation's sovereignty (no big deal) and potentially assisting the very Islamist forces that pose a security threat to the region and the West (a very big deal). The intervention in Iraq requires Obama to do neither of those things, so the calculus is completely different.

This week we kicked off a debate thread on sea-based nuclear deterrence in the Indo-Pacific. The entire thread (with much more to come) is here, but it's worth highlighting this piece from Chinese scholar Wu Riquiang:

Chinese and Indian SSBNs are unnecessary because China-India and China-US strategic relations are stable, and will probably remain so in near future. While the Indian nuclear weapons program is driven by China's nuclear capability, it is America that drives China's nuclear development. Neither China nor India has first-strike capability against the other side, and neither side is seeking such capability. Some American nuclear and conventional strategic capabilities, such as missile defences and conventional prompt global strike (CPGS), do pose a big challenge of China's nuclear deterrent, but China can deal with these threats and restore strategic stability with its land-based nuclear missiles, which are relatively cheap and technologically mature compared to sea-based nuclear weapons.

Stephen Grenville said the international ratings agencies were being unfair to Australia:

Remarkably, some of the key actors responsible for the 2008 financial debacle have managed to restore their reputations, and no rehabilitation is more remarkable than that of the Teflon-coated credit rating agencies. Leading up to 2008, they handed out AAA ratings to worthless mortgage securitisations (but of course these were a different sort of AAA rating: the debt issuers simply paid for it). Nor were the country ratings much better: S&P's 'investment-grade' endorsements of bankrupt Greece survived well into 2010.  The role of the CRAs was under critical review well before the 2008 crisis but no satisfactory answer has yet been found for their undue influence and they are still accorded a role in the Basel prudential supervision arrangements.   

Could it be that S&P is peeved because it recently lost its reputation-damning court case in Australia? It's little wonder that analysis of the sort produced by S&P for Australia evokes a derisive response. Can't they do better?

Here's Hugh Jorgensen on a potentially thorny problem for the G20: America locking French bank BNP Paribas out of USD transactions:

While the French have accepted BNPP's guilt, they have taken issue with what they see as America's exploitation of the central role of the US dollar by blacklisting BNPP's oil-and-gas divisions from USD clearing houses. Of the judgement, Francois Hollande pointedly stated 'I am conscious of the risks of totally disproportionate, unfair sanctions, that could have economic and financial consequences for the whole of the euro zone...there are other banks that could also be targeted, creating a risk and a doubt over the solidity of the European financial system'. Indeed, Societe Generale, Credit Agricole and Deutsche Bank are all believed to be in line for DoJ investigation on similar sanction-breaking grounds.

In essence, the European leaders are concerned about the precedent that might be set by the DoJ's ruling. Global banks rely upon access to USD clearing houses to complete international payments on behalf of their clients. If an Indian importer wants to buy goods from Russia, it is easier for both parties to complete the transaction in US dollars than rupees or rubles. Accordingly, of the US$5 trillion that is traded every day on foreign exchange markets, the US dollar features in 87% of transactions.

One of our most popular posts this week was Vaughan Winterbottom's treatment of the tit-for-tat diplomatic measures taken this week by Russia and Japan:

Japan imposed limited new financial sanctions yesterday on 40 individuals and two groups implicated in Russia's actions in Crimea and Eastern Ukraine. The sanctions attempted to walk a tightrope between appeasing the US and keeping alive hopes of settling a nearly seven decade-old territorial dispute with Russia, but it looks like Moscow has pushed Tokyo off the tightrope.

Julian Snelder asked this week: just how big are CNOOC's oil reserves? Worryingly low, it seems:

Researchers have previously noted the significant long-term decline in CNOOC's domestic offshore oil reserve life. Based on updated information presented in the filing, and assuming CNOOC's forecast production rates, the company may run down its reserve life to barely six years by 2015. This compares to almost 15 years in 2001, and it is well below the 10 years normally considered comfortable for an 'upstream' oil exploration company.

Rhys Thompson surveyed Myanmar's media environment:

Since 2011 there have been many positive changes. The Government abolished pre-publication censorship and issued new 'daily' licences to local publications. It also extended visas for international journalists to three months and passed a new media law in early 2014. However, these changes need to be contrasted with later developments which challenge President Thein Sein's rhetoric and suggest the Government still remains uncomfortable with reducing its control of the media.

Matt Hill looked at the 'salami tactics' practiced by Moscow and Beijing, and how democracies are responding:

So the risk is not that the developed democracies will march into conflict with Russia or China after some predictable accumulation of provocations. Rather, the risk lies in the fact that the complex nature of democratic popular sentiment means we cannot effectively judge the political ramifications of any given security event until we observe the way it merges with or diverts from the strategic narrative. 

The MH17 tragedy may or may not galvanize sufficient political will in democratic states to change the political calculus in Europe. But who is to say how government, media, and social perceptions will evolve, and how it will affect calls for action in, say, Britain and the Netherlands, but also attitudes towards Russia in bordering states such as Finland and Sweden which are weighing the prospects of NATO affiliation? Moreover, if Putin continues his efforts to destabilise eastern Ukraine, MH17 is unlikely to be the last tragedy with collateral damage to the West. Another such shock could tip the balance of Atlantic sentiment.

Photo by Flickr user Kevin McShane.



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