Lost in the Global South

Your fearless Celebrity Blogger has a new book out on internet gambling entitled Internet Gambling Offshore: Caribbean Struggles over Casino Capitalism World of Celebrities (Palgrave Macmillan IPE series). The main idea of the  book is how Antigua- a state of 70,000 people – took on the US in a protracted fight at the World Trade Organization over the future of this ascendant cyber-business.  Without the resources of a big country Antigua demonstrated an unanticipated amount of creative diplomatic ingenuity taking on the US, harnessing the power of key (mostly American) entrepreneurs who saw internet gambling as a real start up opportunity.  In doing so Antigua gained both cult-status and notoriety.

Beyond the details of this fascinating study, the Antigua challenge raises the question whether in a world of accelerated globalization – and in many ways significant homogenization – can small states nevertheless produce recognized celebrity activists that can play on the global stage?

If speaking English is one necessary ingredient, then countries from the Anglophone Caribbean possess a built-in advantage. But there does not appear to be these days anything like a Bob Marley – a native of Jamaica – but a huge global celebrity.  As mentioned in earlier blog posts, the only one who can claim something close to a Marley status today is Wyclef Jean.  But Wyclef was raised in the US and has long lived there.  And this has influenced the career of Wyclef.

One explanation for the lack of celebrity from the global South is simply that celebrities from small countries – especially in the global South – fly under the radar. Cricket or football/soccer stars (or even ex stars, as exhibited by the number who are in the adverts especially for mobile phone companies!) can be huge in a Caribbean island but still hold no name recognition in North America.

Another explanation is that the hybrid nature of many of these celebrities in the  diaspora doesn’t translate into a fixed identity. Wyclef himself ran into this problem when he was barred from running for president in Haiti because he had not lived there for many years. But equally North American audiences don’t see Rihanna as being from Barbados, even though she was appointed as a Culture and Youth ambassador. Among Bajans, this appointment attracted equal degrees of cult status but also stigmatization.

The final explanation is a more commercial and economic one. Having ‘made it’, many stars from small – or for that matter big – countries in the global South are unwilling to divert themselves from material success. As we have seen from the past St Barts parties of the Gaddafi family many celebrities, including Beyoncé, Usher and Mariah Carey have little awareness of political events or personalities – as long as they get paid.

Notwithstanding these constraints the reach of celebrity activism can extend to small countries. If Bono (and Bjork from another small island, Iceland) can combine to achieve a global reach, a hybrid identity, and an association with specific causes, there is no question that other celebrities whether from small island states or from the global South can reach cult status. If Bob Marley transformed musical culture there is hope for others to do the same whether from the global South or not.

How Wide Spread the “Bad Boy” Behavior – The Case of Charlie Sheen

It is hard to ignore Charlie Sheen and his ‘bad boy’ tour even if his basic image is far removed from celebrity activism.

The nature of Charlie’s engagement contrasts rather markedly even with other members of the Sheen family. How could such an authentic and sustained celebrity activist such as Martin Sheen pass on so few of those characteristics to his son? Does this evident divergence of behavior signal a generational split making the issue more sociological rather than psychological?

Just as a reminder to those who do not follow this side of celebrity life so closely, Martin Sheen, Charlie’s father, has a long history of support for the disadvantaged –  from US Latino farm workers to under-paid hotel staff.  Martin Sheen also has lent support for a myriad environmental causes and he was an open opponent to the Iraqi war.

Charlie Sheen to his credit has supported various AIDS campaigns but is best known for his conspiracy-oriented views of 9/11, even going so far as to suggest that the Bush administration may have been responsible for the attacks.

So some fathers have to expect the unexpected in the way of their children’s public behavior!

On another theme, does “bad” celebrity activist behavior alter the public image of celebrities generally? If Charlie Sheen is constantly erratic, do we expect various aspects his “bad” behavior to be displayed by other celebrities?  Just to give one illustration, do we expect Madonna’s efforts to build schools through her foundation  in Malawi to end in disaster, or did we still expect a positive outcome?  Is it a good idea to use Ginger Spice as a UN goodwill ambassador or should we fear bad celebrity behavior?

Although a number of celebrities appear to be “disasters waiting to happen” others can surprise us. Bob Geldof has come a long way since his bad boy days with the Boomtown Rats. Sean Penn, best known for meeting Saddam Hussein in December 2002, has become deeply engaged – and apparently quite effective – in the Haiti relief efforts.

Is there hope for Charlie Sheen, then? Most probably not! This probably about personality.  But nothing in celebrity activism is clear-cut. Sean Penn invited Charlie Sheen to visit Haiti in March 2011, and Charlie responded by telling Access Hollywood: “I’m excited as hell because, you know, if I can bring the attention of the world down there, then clearly this tsunami keeps cresting.”

So who knows!

Meanwhile – The Beat Goes On

My last blog post The Inflation Tiger Rising concerned the rising tide of inflation in the BRICS countries – and the government efforts in China and Brazil to rein inflation in.

This post examines the other side of that coin – the impact of the US dollar on global prices and interest rates. A recent article by Tom Lauricella at The Wall Street Journal (see “Dollar’s Decline Speed Up, With Risks for the US” (April 23, 2011) chronicles the decline of the US dollar.

The US dollar as we all know is the international reserve currency.  Most international transactions, and much of the key international pricing – oil for example – is done in US dollars.

The US dollar has declined 1 percent in the past week against a basket of of currencies, repeating a similar drop of the week before.  In the past week the dollar as measured by the ICE US dollar index hit its lowest point since the lowest point of the index on March 16, 2008 – the Index fell to 70.698 (the Index had begun in 1973 after the demise of the Bretton Woods System of fixed rates at 100.).  Just before the 2008 global financial crisis the dollar had lost some 40 percent of its value against the basket of 6 currencies including the Pound, Euro, Canadian dollar and Japanese Yen.  This low point in 2008 represented a a steady decline of six-years of the dollar’s value.  As noted above, the Index is approaching that low once again.

The US dollar depreciation is a product of a low and continuing interest rate policy and the the growth differentials with the emerging market countries.  The rising price of oil is also a product of the depreciating dollar adding to inflation fears in the US.  The inflation impulse in the BRICS could add another element in the decline of the dollar as well, of course, the fears of the US deficit and debt and the fears that US politics will make reaching a sensible deficit strategy almost impossible.

The declining US dollar has led China officials to allow a steady appreciation of the renminbi in the last few weeks.  While US officials have urged a significant appreciation in the renminbi,  it leads Chinese officials to be less needful of purchasing US dollar debt with China’s now outsized $3 trillion exchange surplus.

The vicious as opposed virtuous cycles of exchange remain.

The Inflation Tiger – Rising

The announced inflation rate for China signaled again the emergence of inflation as a serious global economic issue.  At the moment it lies principally with large emerging market countries notably in China, India and Brazil.

The Chinese government has targeted 4 percent.  But China’s consumer prices rose at 5.4 percent on a year-on-year basis in March.  This level represents the biggest inflation jump since July 2008.

Meanwhile in India inflation rose at almost 9 percent in March after rising 8.3 percent in February.

Finally, in Brazil the consumer price benchmark rose to 6.44 percent, which is the fastest rate in 2 years.

These major emerging economies are responding with increases in interest rates.  Thus, China’s central bank announced recently its fourth increase in cash reserves for the large banks in China.  These banks must now set aside 20.5 percent  of their cash reserves representing an increase of half percent.  It is then hoped that banks in will reduce their loans to take account of the need to retain larger cash reserves.

Brazil raised its central bank rate to 12 percent representing a quarter point increase – this after two previous increases of a half percentage each.  This interest rate is the highest of any major economy.

All these emerging markets, and others, plus developing countries are experiencing significant increases in food prices as well as energy prices.  The interest rates and inflation rates appear to contrast with the traditional economies – the US core rate rose at 1.2 percent, though the CPI is at 2.7 percent and Europe with a 2.7 percent increase though this represents the highest rate in two years. This increase though significantly lower than the large emerging markets has prompted an interest rate rise by the European Central Bank.

The rising emerging market rates – have helped fuel the appreciation of their currency – the Real has risen some 40 percent since early 2009.  Yet this interest rate efforts  – to deal with inflation – have had the perverse effect of only further encouraging capita inflows precisely what the the Brazilian government, for example, has been trying to staunch since it only causes the currency to further appreciate.  China does not suffer from this vicious cycle only because its currency is managed – indeed presumably significantly undervalued – as argued by US officials and others.

Where does this leave the large emerging markets.  For China the rising inflation may encourage a more rapid appreciation of its currency. Wage and product price increases may likely follow and the virtual circle where China growth and lower pricing may come to an end.  China may well export inflation as well as goods.  India may do the same.

For Brazil there are strong voices urging that the Brazilians need to shift to their own form of managed currency (see Roberto Luis Troster’s  Feature of the Week at the Munk School Portal) to constrain the vicious cycle of inflation and interest rate hikes leading to further currency appreciation.

The Inflation Tiger is indeed dangerous.

‘Step by Step’

This post hearkens back to two earlier posts.  The first the Conference in Nanjing at the end of last month on the international monetary system, “A Seminar on Money”  bringing together finance ministers, bankers and experts.  The second was participation by a number of  global governance bloggers over the question of the effectiveness of the G2o, “Punching Below its Weight” and “It’s About “Effectiveness” Stupid“.

So here we are a step further.  The G20 finance ministers met just last Friday during the Spring Meetings of the IMF and the World Bank in Washington.  And at the end of the meeting the finance ministers and central bankers announced their agreement on the criteria for IMF scrutiny of countries.  The communique ending the meeting repeated that the G20 had agreed on a set of indicators to be used to assess persistent imbalances:

(i) public debt and fiscal deficits; and private savings rate and private debt;

(ii) and the external imbalances composed of the trade balance and net investment income flows and transfers whilst taking due consideration of exchange rates, fiscal, and monetary and other policies.

Now the bolded element is where the real compromise in the February G20 finance ministers efforts occurred.  The Chinese wanted no mention at all of exchange rates and had forced exchange rates off the table but the final communique brought them back in this manner.

With this Friday communique (April 15th) , G20 finance ministers agreed on indicative guidelines against which each of the indicators will be examined.  A number of modeling approaches was identified.  And it was then agreed that where at least two of the four approaches showed large imbalances those countries will be assessed in greater depth.  In carrying out the assessment, the communique indicated that, “we will take due account of the exchange rate and monetary policy frameworks of members” – read this as China and the United States.

And the finance ministers and central bankers agreed on a list of countries to receive special scrutiny from the IMF.  While the list was not published the measures chosen indicate that these countries will include: the United States, China, Japan, Germany, France, the UK and the EU.

Another incremental step – and that is all – but step by step the G20 is building a new framework to evaluate global imbalances and then seek, hopefully, to recommend changes to current macroeconomic policy.

Operating on the Front Lines

There is lot going on in the world of celebrity activism.  I hardly know where to start.  However one episode in the midst of the Libya crisis rises to the top of my celebrity blogger list. The Libyan “humanitarian intervention” helps to tease out a major puzzle about the engagement by celebrities in world affairs. The puzzle – how does the profile and projection of celebrities from the world of entertainment differ from the profile given to public intellectuals?

As I have noted in previous posts one of the fundamental shifts in celebrity activism has been on the level of intensity. As opposed to simply becoming the recognizable name and face spokespeople for particular causes, select celebrities have moved to the front lines. This trend stands out among the celebrities I have profiled up to now: Angelina Jolie, George Clooney, Mia Farrow and Bono and Bob Geldof. But this approach is evident for a wider celebrity group including Richard Gere, Bianca Jagger and others.

Adding to the intensity is the willingness of celebrities to make normative judgments of right and wrong in conflicts. Attempts to name and shame have become a tool in the repertoire of growing celebrity activism.

Given this contextual what then is to be made of the story of a well-known French public intellectual – Bernard Henry Lévy (or BHL to audiences in France and beyond) who recently conducted a secret mission for President Sarkzoy.  His mission – make contact with Libyan rebels. One way of interpreting this mission is to view it as an updated version celebrity diplomacy – the mobilization by states of public intellectuals for ‘ambassadorial’ roles.  This traditional celebrity diplomacy goes back to the 18th century with the appointment of Benjamin Franklin to represent the US at the court of France.

Another way of looking at the BHL episode is to relate it to a a competitive dynamic between public intellectuals and celebrity activists. As Bono, Angelina and George Clooney have grabbed attention for the intensity of engagement on select global issues, public intellectuals have been relegated to armchair experts. Worse for these public intellectuals there is the added dilemma that a good number of these experts clearly got it wrong on big issues.  The most notable “wrong view” was the support provided by many liberal as well as conservative public intellectuals for the 2003 Iraq invasion.

The BHL mission suggests, however, that public intellectuals can get out of their armchairs and operate on the front lines of international crises. Although a number of celebrity activists have made a impact by flirting with danger, including Princess Diana’s famous trip to the anti-personnel land mine fields of Angola, few narratives have the verve of BHL’s top-secret mission. How can you compete with a commandeered vegetable truck racing across the desert to rendezvous with the rebels fighting the Gaddafi regime (James Crabtree, ‘Philosophes sans frontieres as Plato battles Nato’, Financial Times, April 2/3, 2011).

The big question remaining, however, is whether this BHL intervention will represent a “high wire” solo act; or alternatively will secret mission become iconic leading to various  copycat actions by public intellectuals.

Can the US Steer in Turbulent Waters?

As I read the posts of two friends and colleagues, I realize how much I miss our conversations.  This exchange serves as a poor substitute.  The current prod for discussion is Henry Kissinger’s review of a new biography of Bismarck and what can be learned about how the US can manage a difficult and mixed-motive relationship (one that contains elements of conflict as well as cooperation) with China.  In his post, Alan Alexandroff puts the challenge as one of holding “irreconcilables together.”  And he concludes,

“If the policy is a product of a unique diplomatic skill – as proved to be the case with Bismarck – then such behavior and policy – keeping China as both a friend and a foe – will prove equally impossible.  The future then will be riven with competition and even conflict.  Not a happy thought.”

Dick Rosecrance’s reply to the possibility of an ambivalent and inconsistent policy towards China is to argue that the requisite Chinese reciprocity has not been forthcoming and that the US is already shifting towards a policy of linking with allies in the hope that “a stiffening of this enlarged Western position can produce a change in Beijing.”

I want to make only one observation, and that is to ask whether the kind of policy Bismarck pursued is possible in a polity such as the US.  Kissinger himself discovered, as National Security Advisor and as Secretary of State, that such inconsistency was difficult to sustain in the US political system.  In his review, Kissinger quotes from Jonathan Steinberg’s biography, noting that Bismarck accomplished what he did “without commanding a single soldier, without dominating a vast parliamentary majority, without the support of a mass movement, without any previous experience in government and in the face of national revulsion at his name and his reputation.”  Moreover, he served for 28 years, first as minister president of Prussia and then as chancellor of Germany.  Neither such continuity in office, nor such an independent ability to craft policy exists in the US today.

On the other hand, without a coherent grand strategy, and given the shifts in recent administrations, the US has generated plenty of inconsistency and ambivalence in our treatment of China.

Bismarck, Kissinger and the US-China Relationship: A Comment

[Editor:  It is with great pleasure I welcome Dick Rosecrance to Rising BRICSAM and to post his comment on the previous blog post “Not Required to Choose” – A Strategy for US-China Relations.    Hopefully there will be other opportunities where Dick will have an interest in commenting on other posts.]

Historians and diplomatists know that Bismarck’s ability to keep conflict between Russia and Austria within limits was to give somewhat inconsistent commitments to them both. Under certain circumstances he would side with Vienna, on other conditions with St Petersburg. It was this uncertainty that restrained them both. By 1914, all German pretences of evenhandedness had  been given up in favor of the Blank Cheque to Austria. But many argue that Bismarck’s inconsistent links could not long have been sustained in any case. Sooner or later the German leader would have had to decide which was the primary ally. London also moved to clarify its “inconsistent” policy toward France and Germany when Edward Grey succeeded Lansdowne in 1906, embracing France and pushing Germany away. Thus the question is not that a studied policy of ambiguity is not a good strategy, it is how long it can be maintained.

Alan Alexandroff has commended just a strategy to the United States in its relations with China. China is both a Friend and a Foe, so he would have us believe. He is of course right that the balance of interests has not yet moved definitively one way or the other. But how long can such an ambivalent tack endure?  Much depends on China’s strategy. So far, China has acted diplomatically to press forward on all fronts – territorial, economic and political. China has emphatically rejected G2; no agreement was reached on climate change policies; and the territorial sphere of interest line has been moved to the East, to encompass the Senkakus as well as Taiwan. The PLA and the PLAN have not responded to American inquiries about arms restraint and new carrier task forces.

Perhaps at some point and very much in China’s own interest, the Renminbi will be revalued to control inflation and also stimulate needed domestic consumption. Absent progress on other issues, however, that will not be enough to staunch criticism in the United States. Political reform has been placed on the back burner, the PLA seems almost to operate independently of the regime, and China’s mercantilist policies will continue to run up Chinese surpluses and American deficits.

There is emerging a tentative decision in Washington to stop currying favor with Beijing in favor of a more obvious linkage with allies: Japan, Korea, and the European Union. India will be sought as an ally.

In time perhaps a stiffening of this enlarged Western position can produce a change in Beijing. If not, the world will understand the reason. In short, a close tie with China cannot occur now. It can only occur later – if at all.

“Not Required to Choose” – A Strategy for US-China Relations

I was reminded again this weekend of the complexity of  international relations behavior with Henry Kissinger’s  rare review in the NYT book review section of Jonathan Steinberg’s Bismarck a Life.  Many observers have argued in the past that Kissinger pursued Bismarck in theory and practice throughout his academic and policy life.  So I suppose it isn’t all that strange.

In any instance, Kissinger uses this Steinberg book on Bismarck – which he describes as “the best study of its subject in the English language” – as an opportunity to reflect on Bismarck’s complex nineteenth century statecraft.

While attracted to the book review given the fame of the author, it was really a soft spot for Bismarck’s statecraft that drew me to the piece.  My thesis “many moons ago” The Logic of Diplomacy focused on Bismarck’s European diplomacy following the Franco-Prussian War in 1871 to his departure in 1890.  But it was not longing to reread the book – heaven forbid – but a far more current concern – that is the course of US-China relations.

I have on a number of recent occasions in China and here at this blog argued that the best characterization for US-China relations is:

While still insubstantial a phrase I remain comfortable with the characterization of the bilateral relationship as yi di, yi you’ (亦敌 亦友)- both friend and foe (See my earlier confidence in this characterization in the blog post “China Cannot Rise Peacefully” on John  Mearsheimer.

But as my mentor, and long time colleague, Richard Rosecrance – currently at the Belfer Center at Harvard – has argued you have to describe what that means and he has suggested that ultimately there needs to be a choice.  And it was with those comments that I thought again about Bismarck.

The genius of Bismarck was to hold opposites together.  I am not thinking here of his revolutionary early career, forging a Germany – beating both Austria and France in quick but decisive conflicts – but in his diplomatic legerdemain in generating alliances with Germany at the center and antagonists especially Austria-Hungary and Russia circling around this new and newly created European “heavy weight”.  As Kissinger characterized Bismarck’s diplomatic efforts:

He sought to counter it [hostile coalitions] by involving Germany in a dizzying series of partly overlapping, partly conflicting alliances with the aim of giving the other great powers – except the irreconcilable France – a greater interest to work with Germany than to coalesce against it.

The point here is not some linear replication or adaptation of Bismarck – the tools of diplomacy – are no longer classic balance of power – though many colleagues can’t seem to forget classic balance of power – but instead to hold irreconcilables together.  Thus US diplomacy toward China must accept and acknowledge China’s competitiveness in a number of arenas while seeking to work with China in other areas – G20 global governance for instance and even regionally in Asia.  The US must be able to hold the “China Threat School” at bay or it is likely that perception of a security dilemma with China – as described by Harvard’s Alaister Ian Johnston in the recent blog post – Stability and Instability Once Again – Could it Be …? – will become a self fulfilling reality.

The concept I think is real enough.  The dilemma posed is that this Administration may not be able to hold irreconcilables together.  If the policy is a product of a unique diplomatic skill – as proved to be the case with Bismarck – then such behavior and policy – keeping China as both a friend and a foe – will prove equally impossible.  The future then will be riven with competition and even conflict.  Not a happy thought.

It’s About “Effectiveness” – Stupid

[Editor: This is the first of hopefully many blog posts by my colleague Art Stein of UCLA and the host at Grand Strategy.]

The Colin Bradford piece in FP, “Seven New Laws of the G-20 Era”, Dan Drezner’s blog comment, “Learning to Embrace the Policy Deadlocks” and then Bradford’s rebuttal – again in FP – “Don’t Judge the G-20 by Its Summits,” and finally the Alexandroff retort in Rising BRICSAMPunching Below Its Weight” strike me as eliding omitting [editorial comment – you can tell this is one smart academic] the crucial issue: is disagreement in a broader venue such as the G20 a problem for global governance, and especially economic governance?

The original Bradford piece argued that disagreement is not so bad.  The G20 should not be judged by outcomes but as constituting a process and one that was broader and more diverse.  The argument contains a core implicit argument – one never articulated, much less examined and substantiated.  More on this below.

Drezner’s critique was largely focused on mass public reactions to G20 disagreements.  Interesting, but tangential at best.  Mass reaction would presumably be secondary to the concrete consequences of such disagreements.

The Alexandroff reaction to the Bradford-Drezner exchange is to focus on “effectiveness”, and this gets closest to the heart of the matter.  He notes that disagreement is a feature of the G7/8 as well.  Even the small number G set exhibits all kinds of “varieties of capitalism”:  more or less corporatism;  larger and smaller welfare states;  more or less industrial policy.    A substantial variety of types existed/exist even in that small club.

The core issue, then, is whether for the G8 or the G20 disagreement and divergence over policy options are preferable to agreement, coordination, and a concerted response.  There is a small literature among economists about whether macroeconomic policy coordination makes things better or worse.  Implicit in Bradford’s argument is that disagreement and its policy consequences are not so bad and, implicitly, to be preferred to agreement between a less diverse set of actors.  Perhaps.  But what is the evidence?  Is that true for every policy?  From the perspective of one of the world’s largest economies – California – dysfunctional politics does not seem so great.

All this reminds me of the argument about whether market failure or government failure is worse.  Government action is often encouraged to deal with market failure.  But government failure is also a problem.  Is government failure a problem in global economic governance?  Is the failure to coordinate and sustained disagreement preferable?  That was certainly the argument of states that wanted to impose capital controls and thought the Washington consensus was wrong and that they should be free to experiment with a different policy.  The acceptance of policy divergence and experimentation did mean that the experience of the global financial crisis of 2008 was not same everywhere.

So, whether the G20 works or not depends on: the issue, and what is required to deal with the particular problem.

1) It will depend on the nature of the disagreements, whether they are fundamental (about the desirability of markets), substantive (about how to deal with a specific problem), or distributional (about how to allocate the costs).

2) It will depend on how the parties respond to disagreement.  Will the response be 20 separate uncoordinated responses to problems?  Will the response to disagreement among the 20 be to form smaller clubs of agreement, say a G7 and a G13 set of separate responses but coordinated within each subset?

3) It will depend on time and the consequences of delay.  One proposition: the larger the group the greater must be the crisis to generate a consensus response, and the greater the delay in responding to crises.   The consequences of delay are also likely to vary.  Note the national responses undertaken before the first G20 meeting was even held.

In short, the commentaries and blog posts are correctives.  Yes, a stampede of lemmings is undesirable.  Yes, disagreements can lead to better policy.  There is an argument known in business schools as the “Abilene paradox” about the consequences of “mismanaged agreement” (the international relations literature refers to this as “groupthink”).  So we should not respond in despair to disagreement.  After all, bargaining occurs in situations of disagreement and it takes time to arrive at bargaining solutions, and initial disagreement and even stalemate do not preclude eventual agreement.  But sometimes, available bargains are not struck and the even when they are, the costs of delay are enormous.  Few international conferences result in an agreement at the first meeting and in immediate resolutions to problems.  Yet many international conferences have resulted in breakdown, a failure to deal with underlying issues, and, in the national security sphere, as precursors to war.

One’s view of the consequences of disagreement will thus depend on one’s answer to some of the questions posed above and to the specific issues and experiences (not surprisingly, Pacific island nations fearing their disappearance have been the ones most urgently pressing for responses to global warming).

And a comparison with historical assessments of other institutions should make us wary both of snap judgments or even generic views.  Think of NATO, and all the times people decried its disagreements, the problems in obtaining consensus, and the divergent assessments depending on the issue.  I would guess the G-20 will look no different, assuming it has some successes.