“Is the US at risk?” Here is the extremely relevant question raised by this outstanding discussion, part of the 2012 Great Decision eight mini-episodes, on the threat of cybersecurity. Cyberthreats have been at the heart of a new body of literature in International Relations and Security Studies, an inspiration for moviemakers, an obsession for policy-makers, a problem for multinational corporations, and a virtual reality for all of us.

Even though this episode focuses on the US, it is not difficult to see how it is relevant to the other members of the Euro-Atlantic community. Their societies, political systems, values, norms, and perceptions are quite similar to one another. Thus as demonstrated throughout the episode, it would be a mistake to speak of national cybersphere. National borders, institutions, political systems are only small variables in the digital world.

Susan Landau of the Harvard University and Martin Libicki of the RAND Corporation discussed the matter of cybersecurity, cyberdefense, and the cybersphere around the Great Decision table. Susan Landau claimed that one of the problems with cybersecurity is the inclusive approach instead of having a strategic, narrow method. She identifies three pressing threats that need to be tackled: 1) protect assets of private companies such as copyright and intellectual property; 2) protection of government agencies. The most obvious example was the release of documents by Wikileaks; 3) protecting assets of critical infrastructures such as the electrical grid. Martin Libicki went further by claiming that “people have elevated it [cyberthreat] to a national security issue. But for a most part, only a small aspect of the cybersecurity is a national security issue; as it affects the military and particular portion of the infrastructure […] like the electrical system.”

The discussion went further with interviews of other experts such as former CIA and NSA Director General Michael Hayden, Senator Ben Cardin, former National Security Advisor Stephen Hadley, and others all giving insights on the origins of cybersecurity as well as the early ages of the internet, which was not supposed to be secured but instead easily accessibly by anybody.
Michael Hayden talked about a new category of cyberattack when discussing the Stunext attack on Iran. He defined the Stunext as a cyberweapon, which makes it unique as such attack was different than all the previous ones launched considering the physical destruction of properties. It was one first case of cyberassault. In terms of cyberattacks, Michael Hayden claimed “that’s crossing the Rubicon.” However, is the Stunext an example of legitimate warfare that the US should be preparing for? Susan Landau identified three types of actors interested in attacking the US: the state actors; non-state actors; and the criminals. Her argument is that the non-state actors, or terrorist networks, do not have the capabilities and knowledge to go after the US government just yet. These actors are also a menace to other Western states such as France, Britain, Germany, and so on. In 2007, Estonia was a victim of a cyberattack launched by the Russian government after a political disagreement.

Susan Landau argued that one of the problems is that no one has stepped back and asked the question: what are the big issues? These issues are anonymity, loss of borders, new policies/laws. In the US as well as in other countries of the Euro-Atlantic community there exist a body of laws enforcing individual freedoms such as privacy, freedom of speech, and so on. Germany has, for example, one of the strictness in Europe. “The change in technology has not been accompanied by the change of laws.” For example, in the US, government officials need a warrant in order to have access to private emails if stored in private computers at home, but not if they are stored on the cloud. The cybersphere has become an important component in our daily life wherein the big question – not raised in this documentary – is to balance freedom and democracy, as it has been the case with the HADOPI law in France, and SOPA in the US. Considering the constrains at the domestic level, one can imagine the problem to implement a set of rules at the international level. How do you make the right treaty when countries diverge on issues such as freedom of speech and economic espionage? Susan Landau explained that in the US economic espionage is a crime, when in China and France it is not recognized as such. The challenges are quite considerable. Along the same lines, Michael Hayden, former Director of CIA and NSA, raised an interesting point of unfair advantage in building up cybersecurity between the US and China, for the simple reason that the US is a democracy and must balance freedom with security. This is the dilemma facing any democracies in boosting up their cybersecurity, while not violating basic rights. Dr. John Nagl of the Center for a New American Security went furhter and argued for the need of a cyber Pearl Harbor in order to finally adjust – he even uses the verb ‘sacrifice’ – individual privacy in exchange for a greater degree of security. One could draw comparison with the adoption of the Patriot Act soon after the 9/11 attacks.

“The cyber is a new domain,” argued Stephen Hadley, “in the same way land, sea, air, or space were domains of threat and challenge.” International organizations like the EU, UN, and NATO are starting to be joining the cyber balance of power. NATO has clearly identified cyberthreat as a real menace and has developed an agenda in dealing with it. NATO is even talking of creating a cybershield. Cybersecurity was at the NATO menu in Lisbon in 2010 and will undeniably be at the heart of the discussion in Chicago in 2012.

This episode was truly excellent in exposing the complexity of cyberthreats and the challenges for the future. The balance between policy-makers, experts, academics and journalists offer a very insightful expose for students, citizens and experts wanting to deepen their knowledge on today and tomorrow challenges. The cybersphere does not belong anymore to the world of science fiction. US policy-makers still have trouble understanding this as they often referred to cyberexperts as geeks. It will be time that our leaders reboot their knowledge and understand today’s realities in order to make informed decisions and adopt appropriate policies. This episode clearly demonstrated the intertwinement between national security, individual security, corporate security, international security and so on is so deep that touching at one aspect will have undeniably a snowball effect.

This episode is part of eight mini-episodes that will be shown on PBS. Great Decisions in Foreign Policy airs on PBS World on Fridays at 7:30 AM and 1:30 PM, and at various times throughout the year on PBS affiliates nationwide. Check local listings for details.

The Origin of the Beatles Haircut:

Neatorama presents a guest post from actor, comedian, and voiceover artist Eddie Deezen. Visit Eddie at his website.

New York Press Conference 1964

Reporter: Where you your haircuts come from?

George Harrison: Our scalps.

In their early years as a fledgling rock and roll band in the late 1950s and into the early 1960s, The Beatles each sported typical slicked-back, greased-up Tony Curtis/Elvis Presley type D.A. haircuts. In an early explanation as to the origin of the Beatles haircut, George was quoted as saying that he came out of the swimming baths one day, his hair had fallen down over his forehead, and he just left it that way.

The true derivation of the world famous coiffure is a bit more complex. In August of 1960, the newly-0named “Beatles” consisted of five members: John Lennon, Paul McCartney, George Harrison, bassist Stu Sutcliffe, and a newly-hired drummer named Pete Best. The band was hired to play as series of gigs in August of 1960 in Hamburg, Germany. It was there that they met two people who were to have a profound effect on their future careers as icon and trendsetters: Astrid Kirchherr and Jürgen Vollmer.

Kirchherr was a very original and creative photographer. One night she saw The Beatles play at a local club in Hamburg called the Top Ten Club (she was talked into going by her boyfriend Klaus Voorman and fellow artist and friend Jürgen Vollmer). Astrid, Klaus, and Jürgen struck up an immediate and close friendship with the five young, talented, and slightly homesick young rock and rollers. Also, Astrid and bassist Stu Sutcliffe almost immediately fell in love.

Using Jean Cocteau’s 1950 film Orpheus as her main inspiration, one day Astrid gave her beloved Stu a new haircut (it was also a style she had seen on many German boys at her college). She washed the grease out of his scalp and combed the locks straight down, over his forehead. Astrid recalled that she originally used the long combed-over cut on her boyfriend Klaus Voorman, to cover up his bog, floppy ears.

(Image credit: Astrid Kirchherr)

Although the exact dates are nebulous, it is indisputable that Stu was the first Beatle to sport the Beatle haircut on stage. When Stu came onstage to perform that night, John and Paul laughed hysterically and ridiculed poor Stu. Stu was soon to leave the band in early 1961 (he died tragically in April of 1962 of a brain hemorrhage at the early age of 21).

George was actually the first of the later famous Beatles to wear the Beatle cut. Astrid recalled (after Stu), “then George came along and asked me to cut his hair that way.” She added that “John and Paul couldn’t decide whether to have the different haircut.” When George came on stage with his hair combed forward in front of an audience at the Top Ten Club “the rockers gave him funny looks” and he combed it back the next day. This was in the early months of 1961.

George Harrison, before and after.

In October of ’61, John and Paul decided to take a spur of the moment vacation to Paris (one of john’s aunts had given him the princely sun of £500 for his 21st birthday). In Paris, they encountered their old friend Jürgen and asked him to give their hair the combed over treatment. According to Paul, “He (Jürgen) had his hair mod style. We said, ‘Would you do our hair like yours? We’re on holiday, what the hell, we’re buying capes and pantaloons, throwing caution to the wind.’ He said ‘No, boys, I like you as rockers. You look great.’ But we begged him enough. So he said alright. We sat down in his hotel and we just got it. The Beatle cut.”

The new Beatle cut was not without its early drawbacks.  Their road manager Neil Aspenall recalled, “The boys were an easy target for troublemakers who attended those early dates. Gangs would often make it a point of shouting insults at them. It was their childish way of looking for a fight or getting back at the Beatles because their girls thought so much of them.”

In August of 1962, drummer Ringo Starr was asked to join the band. Drummer Pete Best never joined John, Paul, and George in combing his hair in their new over-the-forehead look. His hair was too curly. When later asked why he never combed his hair into a Beatle cut, he replied, “They never asked me.” This bit of non-conformity, while not the entire reason, was probably one of the contributing factors when when the Beatles decided to give poor Pete the sack after two years of loyal drumming with them.

At the time, Ringo not only had a greasy swept-back haircut, he also sported a stylish beard. Ringo recalled John’s phone call to him, asking him to join the Beatles. “You can keep your sidies (sideburns), but lose the beard,” he was instructed. Early publicity photos, as well as Ringo’s picture on the Beatles’ first album Please Please Me, show Ringo clean-shaven, but still with a slightly swept-back coiffure.

By late 1962, the Beatle haircut was firmly established as an easily-recognizable part of the Beatles joint persona. In the early months of 1963, the band had already gotten used to being referred to as “the four moptops” by the British press. In September of 1963, The Beatles record “She Loves You” was played on Dick Clark’s popular dance show American Bandstand. According to Newsweek, when kids saw a photo of four long-haired kids, they just laughed. The record received a mediocre 73 rating in the “Rate A Record” segment of the show.

When they first came to America in February of 1964, TIME magazine referred to their hair as “mushroom haircuts.” Besides the obvious Beatles wigs, the Fab Four cottage industry also spawned Beatle hairbrushes, Beatle combs, and Beatle hairspray. Their then-controversial haircuts became fodder at every Beatle press conference.

John stated that he hadn’t visited an actual barber in years; George cut his hair when they were on tour and his wife Cynthia cut it when he was home. Ringo’s girlfriend Maureen Cox, a hairdresser by trade, cut his hair (the two married in February of 1965).

On the Beatles tour of Australia in mid-1964, two girls named Grace Ferrigno and Val Bahrens got to cut John, Paul, and Ringo’s hair in Melbourne (George was out at the time on a “scenic mountain drive.”) Later, the girls tried to sell the precious sheared locks of hair outside Festival Hall. They ended up making no sales. No one believed the hair was real.

Interestingly, when asked in an early interview about what his future goals were, Ringo stated, quite sincerely, that his dream was to own a string of hair salons. Although he led an incredibly successful life with huge accomplishments, this was one goal Ringo was never to achieve.

By: Mićo Tatalović

Members of royal families around the world often express support for science, but Princess Sumaya bint El Hassan of Jordan stands out for taking a particularly close and active interest.

She is a founder and president of the El Hassan Science City, president of Jordan’s Royal Scientific Society and chair of the board of trustees of the Princess Sumaya University for Technology. She has also recently helped set up a science and technology collaboration centre for the Middle East, in Jordan.

This month is the anniversary of two Arab uprisings, in Egypt and Tunisia. We asked Princess Sumaya about the impact the Arab Spring has had on science in the region, her views on science diplomacy, and her hopes and fears for science, education and innovation.

How has the Arab Spring provided opportunities for science and technology?

A large part of it is people starting to think in terms of meritocracy. A huge potential of talent has been unleashed — talent that was previously held back by corruption and by cronyism, and by a disregard for meritocratic progress.

This is when we can start talking about the Arab Spring becoming the Arab Summer — when we see people assessed on, and acknowledged for what they are able to contribute. You cannot have successful scientific cooperation without meritocracy.

The great new freedom has started to entice a lot of the Arab diaspora — we have lost so many of our talented people in the past.

Is there a lesson for other Arab countries that have not experienced protests?

I think so and that’s not just the result of the Arab Spring. Slowly people have started to realise that the way forward is investment in human resources, not in cement or other commodities. And, while some of our neighbouring countries have put huge amounts into science cities and so on, ultimately it’s the working partnerships that we develop between different scientists that will make the big difference. In Jordan, our great resource is human capital and that is what we are investing in.

When we think about the Arabic and Islamic world, the contribution we have made to science and technology is a very important part of our heritage, and now is the time for us to continue from where we left off.

So what are the main obstacles to science in the Arab world?

I think it’s re-establishing that feeling of ownership over innovation for community development. At the same time a lot of Arabs are feeling the weight of Western scientific hegemony. It’s not an excuse for anger or lethargy, but a call to action for a new generation with new ambition. In the Middle East we have focused a lot on imitation, and only in the last few years on innovation once again. Now we really need to start educating people on intellectual property rights and technology commercialisation.

It has been a year since the start of Egypt’s revolution 

Flickr/rouelshimi

What can be learnt from experiences in the West?

We can learn a lot of lessons from the West. One of the analogies I use is that when you look at a fragmented Europe after the Second World War you wouldn’t have expected some of the nations, such as France and Germany, to speak to each other again, but it was elements of science that brought Europe together and led to the second industrial revolution.

And I believe that, in the Arab world, if we started talking together — with the financial resources in some of our rich Gulf countries that are available as well as the human resources in countries such as mine, or Egypt, or Lebanon and Syria — that’s where we can really build a second scientific Golden Age.

What, if anything, is the role for science diplomacy?

Science always flourishes when talent is given freedom and support to apply itself, but I think mentorship programmes are the best approach for success and sustainability. If you can collaborate as people, the money will eventually come in. We have to make sure that science is directed at solving the challenges that we face in the region and that’s why we need to talk to each other and cooperate again.

At the El Hassan Science City, we are now working closely with Arab-American professors from the University of California, Los Angeles, who are working as mentors for our researchers in Jordan. The Science City in itself is a way of attracting back the lost Arab diaspora, and with the wonders of modern communications we are also able to develop our capacity without people actually being here.

The agreement that the Science City has with the SESAME project [Synchrotron-light for Experimental Science and Applications in the Middle East — funded by several Middle East countries, and based in Jordan] brings a huge advantage for collaboration with different nations. Some might not sit together around the political table, but scientifically we can overcome that political hurdle.

How do we make sure everyone benefits from science diplomacy?

In Jordan we recently signed an agreement for the development of the first UN ESCWA [Economic and Social Commission for Western Asia] technology centre for research and scientific collaboration. It’s the first time ESCWA has opened an office outside its headquarters and this centre involves 14 Arab countries. The idea is to increase not only Arabic content on the Internet but also to provide an opportunity for research and alliances.

The more we as a region can start addressing combined strategies and identifying national priorities — but where everyone gets a slice of the pie — the better.

Science culture must become an intrinsic part of our development from school age up.

Oil-rich countries could help the whole Arab region develop 

Flickr/potomo

What is the future for education and innovation in the region?

We are very focused on teaching and learning by rote and not being able to question. I think the fact that we have a generation that now wants to stand up and ask questions, and is being given the freedom to do so, is probably the first symbolic step forwards.

And then, of course, a more equitable division of resources is the right way to go about things. That starts with education and is particularly important with tertiary education. We must ensure that we build a quality university system that is affordable to the less well off. We have missed so much potential because education has not been equitable in our region.

I don’t have a PhD. Life experience can teach you a lot and while I don’t undermine the importance of a PhD, it’s also very important to acknowledge the role of entrepreneurial thinking. Enabling the right environments is very important.

When you look at innovation ecosystems you realise that it is young people who need to have an environment in which to become creative and commercialise technologies.

So a combination [of the traditional and the entrepreneurial] is the formula for success that we need.

And what is the position of women in science?

There’s a lot of encouragement given to women in science in my country. More than half of our undergraduate science students are women.

At my university we have just appointed the first woman dean for engineering, the first one in Jordan. Because women still traditionally have a dual role — they are also a mother and a wife — if you educate a woman, you educate a family.

It is very important that this is supported. There are a lot of women in the Arab world in leadership positions who are now able to give support to other women.

It is very rare now that you don’t see girls being educated in the Arab world — it’s one of the success stories of the MDGs [Millennium Development Goals]. With the advancement of social media you can’t keep women in the dark anymore.

Link to opinion by Princess Sumaya bint El Hassan

Pakistan struggles to make progress against polio
Child malnutrition and vaccination refusals are hindering Pakistan’s effort to battle polio, and the health community is seeking new ways to address the problem. Despite authorities’ backing for an ambitious vaccination program last year, the number of cases in 2011 actually increased over 2010.

German researchers pave way to cheaper malaria drug
Researchers in Germany have developed a way to synthesize artemisinin, a drug crucial to anti-malaria efforts, using oxygen and light — a breakthrough that should make artemisinin not only easier to produce, but more affordable. “The impact of this is hard to overestimate,” said one observer, industrial chemist Jack Newman.

Polio gains in Afghanistan threatened by outbreak
Polio cases in Afghanistan nearly tripled in 2011 in a major setback to international public health efforts to eradicate the disease. Dr. Bruce Aylward of the World Health Organization said, “This is a national tragedy to end up with a major polio outbreak, especially with all the effort they have put into it. It increases the risk to neighboring countries and is both a local and national, and international, concern.

India sets sights on higher education
Indian authorities are scrambling to build 1,000 universities and 50,000 colleges over the next decade to promote higher education and development. The number of young Indians entering the workforce is expected to reach 100 million by 2020, and authorities hope increased higher education opportunities will help propel India’s economy in the decades to come. 

Valuing Indian women, by the numbers
A considerable drop in the number of girls in India as a result of sex-selective abortions and general neglect could, in fact, make women more valuable in accordance with the law of supply and demand. Not only could women begin to be paid better in relation to men, but their marriage value could rise too, ostensibly reducing the burden of dowries on families.

Kenyan faces legal action over child bride
A Kenyan man facing charges for defiling a child bride he paid about $58 for has called for the girl’s parents to be brought in to corroborate. Child marriage remains commonplace in Kenya due to chronic poverty, tradition and the desire to protect family honor

Prioritizing the end of polio
The last recorded case of polio in India affected an 18-month-old girl in West Bengal, Rukhsar Khatoon, who recovered from the disease without lasting paralysis — only a few years ago, the country recorded as many as 100,000 cases a year. Eradication of the disease can happen elsewhere, according to philanthropist Bill Gates, when there is “political will, quality immunization campaigns and an entire nation’s determination.

UNICEF officials talks of past, future challenges
In an interview, Susan Bissell, chief of child protection programs for UNICEF, talks about influences on her career, as well as the reputation of the UN agency and the emerging global challenges it is facing. Among the programs she mentions is the public-private partnership, Together for Girls, for which the agency is conducting first-ever surveys of violence against children — including sexual violence — in households across the world.

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Credit: AltaRock Energy

2012 could be the year that Enhanced Geothermal System (EGS) technology takes off and enters the public consciousness. And to highlight this, Altarock, the Seattle based geothermal energy developer, has recently announced plans to undertake field tests by 2012 on a volcanic site in Oregon, with expected support from the government department of energy and Google, whilst similar developments in Europe and Australia are at more advanced stages. Even China has outlined its plans to use EGS technology to provide 10 -15% of its total power generation by 2050.
It is an ambitious technology that exploits the huge untapped energy potential in deep impermeable rock, or hot dry rock systems. Basically, water is drilled deep into impermeable rock to open up spores where the steam / hot water is piped back up to create energy. It bypasses the limitations of traditional geothermal technologies which are restricted to particularly conducive areas near the earth’s surfaces. It is more carbon neutral, can be used on virtually any land surface, creates a new economy or jobs and is renewable in the sense that the water it uses is interred in a continual closed loop.

In fact, the energy forecast is so high that in the U.S. 500,000 MW (potentially) could be utilized, which is around half of the electric power generation capacity currently used. In the other ‘hotbed’ of ESG research, Australia, Geodynamics is currently in the drilling stage of a huge 500 MW site at the Cooper Basin site. Furthermore, EGS technology is already commercially viable at Landau in Germany and at the Soultz-sous-Forêts site in France which is already partially energizing Paris Orly Airport.

However, there are still hurdles to be overcome and they are chiefly economic. In the U.S., AltaRock Chief Technology Officer Susan Petty says that the price incentives are just not competitive. On the technical side, reservoir connection and lifetime issues could be problems: fears of induced seismicity cause local communities to be wary. There is also the issue of  the necessary high level public and private investment to support energy developer’s claims of the bankability of EGS.

Overall, the betting is on EGS reaching maturity in the next few years with rising R&D successes and commercially viable plants coming into fruition. It is certainly a technology to keep an eye on.

A Chinese supercomputer was ranked the world's
fastest machine in the TOP500 list officially issued Tuesday by U.S. and
European researchers, highlighting China's rapid progress in the field.

The Tianhe-1A system at the National Supercomputer Center in Tianjin,
is capable of sustaining computation at 2.57 petaflop/s, which equates
to a mind-numbing 2.57 quadrillions of calculations per second.

As a result, the former number one system — the U.S. Department of
Energy's (DOE) Jaguar in Oak Ridge, Tennessee, that achieved 1.75
petaflop/s — is now ranked in second place, according to the 36th
edition of the TOP500 list.

The list is compiled by Hans Meuer of the University of Mannheim,
Germany, Erich Strohmaier and Horst Simon of National Energy Research
Scientific Computing Center (NERSC)/Lawrence Berkeley National
Laboratory, and Jack Dongarra of the University of Tennessee, Knoxville.

"A Chinese university made Tianhe based on China's own technology,"
Dongarra said at a ceremony to honor the top 500 supercomputers Tuesday.
"Its interconnects are very interesting."

Tianhe is a demonstration of how "a country can achieve if they put
their money on their ambitions," said Strohmaier at the same ceremony.
"Making progress like that is only possible by supporting your research
community and your manufactures for extended period of time like five to
10 years."

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EU NAVFOR Atalanta in action (source: German Navy)

The last two years were a bumpy ride for the European security policy. One may claim that the Europeans once again failed not only to convey a clear message about their security goals to the foreign partners, but also to take concrete actions in order to stave off the creeping erosion of the Common Security and Defense Policy (CSDP). Do we really face a European strategic decay in that domain? Indeed, some serious doubts about this statement may be raised. Therefore, it is high time to debunk three prophecies about European security in 2012.

1. Do worry, do not be happy. The Polish Presidency did a good job. The last six months have been the most fruitful and substantial for CSDP since the French Presidency in 2008. The joint conclusions of the Council of the European Union of December 2011 gave a vivid signal that the EU Member States are still willing to further develop the CSDP concept and necessary capabilities (personnel, assets, intelligence analytical support.) It was not easy to reach a consensus as there are multiple visions of European security and the pace in which it should evolve. Despite that fact the current message is a bit more optimistic than a year ago: Be of good cheer! After two years of stagnation there is a light of hope for CSDP. However, there are still a lot of obstacles on the European way toward ultimate success. One of them are financial constraints.

2. Crisis will impede everything. Against the backdrop of current financial constraints, the challenge for Europe is to do better with less while making good on its responsibilities. The crisis has inevitably made it more difficult for politicians to sell the benefits of the ongoing defense integration to the wary public. The crisis has blunted the importance of Europe in the world, exposed the Old Continent to numerous risks and threats, but also put it to the critical test that it cannot fail. The biggest challenge for Europeans remains the weakening of mutual trust between the Member States. The Weimar initiative from December 2010 – which sought to strengthen CSDP – has to some extent filled the gap. Poland, France and Germany were able to build a coalition of the willing and able (e.g. Finland, Italy, Spain, Sweden, Romania) to spark a new wave of trust that may empower CSDP. However, crisis can only be overcome by concrete actions. Therefore, without a visible sign of progress in the implementation of the pooling and sharing initiative in 2012 it will be hard to revamp CSDP. In fact, an agreement on at least basic issues (e.g. support structures required for education, training and exercises) is a must.

3. The EU will diminish its external security policy engagement. To be fair, a glance at the number and locations of the past and current EU missions around the world reveals the union’s clear desire to live up to its ambitions in terms of crisis management policy. Since 2003, the EU has launched 25 civilian and military missions, in such far-flung countries as Chad and the Central African Republic in 2008-2009 and Guinea-Bissau from 2008-2010. Currently, the EU’s engagement in the world stretches from the Balkans, in Bosnia-Herzegovina and Kosovo; through Eastern Europe, in Georgia and Moldova; to the Middle East, in the Palestinian territories; up to Africa, in the Democratic Republic of the Congo, the Horn of Africa and Uganda. In 2011, as a result of budget cutbacks, the EU has struggled at least to maintain the status quo of its foreign operational engagements. Some experts even thought that the EU was likely to adopt an even less expeditionary posture in the future. On the contrary, the 2012 agenda looks both ambitious and promising. Besides, the ongoing operations the EU will remain committed to addressing the security challenges in the Sahel with a view to start a CSDP mission to reinforce regional security capabilities, in close cooperation with the African Union. A second operation, in South Sudan (with a focus on airport security), is also being prepared. Finally, the Polish Presidency has facilitated the amendment process of the Athena mechanism which administers the financing of common costs of EU operations having military or defence implications. Therefore, it will be now easier than before to set up a mission.

On paper it all seems doable and easy. But, as diplomats say: Paper is patient. After the Libyan crisis there is a growing sense of ambiguity about the real outcome of the EU’s crisis management policy. Therefore, it is more than certain that the development of CSDP will be a long process. But Europeans should not forget that they are approaching a “do or die” moment for Common Security and Defense Policy.

Dominik P. Jankowski serves as Expert Analyst at the National Security Bureau of the Republic of Poland and is pursuing a doctorate at the Warsaw School of Economics.

The opinions, findings and conclusions expressed herein are those of the author and do not necessarily reflect those of the National Security Bureau of the Republic of Poland.

I went to an interesting event last week, the first of a four-part series:  Discourses on Nature and Society.  The discussion by a star panel of energy and environment experts was titled Energy for the Next 20 Years: Protecting the Environment and Meeting Our Demands.  The series is being cosponsored by the venerable NY Academy of Sciences and the Nature Conservancy.  The NY Academy of Sciences has been around since 1817.

The panelists were led by David Roberts, the top environmental blog Grist’s top writer.  (If, for some reason, you’ve not checked out Grist, please get on it right away.)  Roberts is as smart in person as he is in his writing.  (I have had, to toot my own horn for a sec, an article at Grist:  Biochar as the new black gold.)

Roberts laid out the premise that we are dealing with three fundamental problems:  (a) rising energy demand, much of it coming from the rapidly emerging economies of Asia and elsewhere, (b) stress thereby on limited traditional energy resources and on the environment from which they are being extracted, and (c) climate change.  He posited that our energy therefore needs to be plentiful, low carbon and not requiring a lot of land or pressuring the environment.

Each of the panelists then jumped in, covering an area of their expertise, before launching into a more extended cross discussion and the Q&A.  Jesse Jenkins, the Director of Energy and Climate Policy at the Breakthrough Institute, fleshed out some of the issues relative to energy demand, talked about energy poverty – that billions in the developing world lack access to electricity – and that as we bring power to the rural populations that lack it, and as the burgeoning global middle classes start buying cars, air conditioners and plasma TVs for the first time, we must also be reducing our energy intensity.  (This is defined by the IPCC as “…the ratio of energy use to economic or physical output.  At the national level, energy intensity is the ratio of total primary energy use or final energy use to Gross Domestic Product. At the activity level, one can also use physical quantities in the denominator, e.g. litre fuel/vehicle km.”)  In simpler terms:  bang for the buck.  Jenkins underscored the idea that fossil fuels need to be made obsolete, but that energy needs to be cheap.

Jeff Opperman is the Senior Freshwater Scientist for the Nature Conservancy.  His principal brief has been to look at improving hydropower’s sustainability.  He echoed the need for cheap, decarbonized energy but with an eye to protecting natural resources.  He reminded us that even though the perception on hydro’s negative environmental impact is generally that it floods lands upstream from the dams, that there are also very serious concerns regarding its downstream effects on fisheries and agriculture.  To optimize, then, the environmental benefits of traditional hydropower, planning and siting are fundamental.

Another Nature Conservancy leader, Joe Fargione, their  Lead Scientist for North America, had some noteworthy things to say about biofuels.  (In my classes, I cite Dr. Fargione’s critical work on how biofuel production exacerbates climate change through the land-use changes that it engenders.)  He noted the other night that 35% of American corn goes to offset 6% of our oil for transportation – not a good tradeoff.  (I mentioned Amory Lovins’s new project and book, Reinventing Fire, here recently.  Lovins and his team at the Rocky Mountain Institute have a lot to say about the role of biofuels in transportation going forward.  I’m using Reinventing Fire in my Clean Tech class this Spring.  Lovins, for my money, has the answers to the panel’s questions regarding how best to optimize energy while reducing environmental impacts – with nearly maximum bang for the buck it turns out.)

Now Stewart Brand is a whole ‘nother kettle of fish.  Here’s a guy, a visionary, who founded the Whole Earth Catalogue, a project that “…pushed grassroots direct power—tools and skills.”  Brand himself said famously:  “We are as gods and might as well get good at it.”  So how do you get from that to shilling for nuclear power?  Damned if I know.  As I have noted here many times, and told Brand during the Q&A at the event, nuclear power is the least godlike activity going.  In any event, the presentation that Brand gave was rife with the inaccuracies that Amory Lovins so thoroughly debunked in his paper, “Four Nuclear Myths,” among them that solar and wind use too much land.  Brand, talking with me later, mentioned the “nuclear renaissance,” yet another myth.  Nuclear power is running on fumes.

Brand trotted out a new bit of nonsense:  that storage of spent nuclear fuel rods is safe in the U.S. because we use dry storage in casks.  First, that’s not even close to true.  If it were, as it is in Germany, I’d feel safer.  However, as we saw in Japan, most spent fuel rods are stored in pools of water where, if you have a loss of that water, very bad things happen quickly.  In the U.S., the Union of Concerned Scientists reports, “Spent fuel pools contain more highly radioactive fuel than the reactor cores. And the spent fuel pools at all U.S. nuclear plants are located outside the reactor containment structure.”  Or, as the veteran nuclear policy analyst, Robert Alvarez, notes here:  “Even though they contain some of the largest concentrations of radioactivity on the planet, U.S. spent nuclear fuel pools are mostly contained in ordinary industrial structures designed to merely protect them against the elements. Some are made from materials commonly used to house big-box stores and car dealerships.”

Another myth is that renewable energy can’t get the job done.  Actually, that’s nothing better than a Big Lie.  But the bottom line, as I tried to point out during the Q&A, is that the embrace of nuclear power materially slows down our efforts to stop climate change and achieve sustainability because it drains resources, energy, expertise, and focus from building out the renewably powered distributed generation infrastructure that will give us at least a chance of overcoming the climate crisis.  Amory Lovins makes this point abundantly in his blockbuster paper and another panelist, Arne Jungjohann, articulated this beautifully during the Q&A.

Jungjohann, Director for the Environment and Global Dialogue Program in the Washington office of the Heinrich Böll Foundation, had plenty of useful things to say about renewables and DG, particularly in Germany.  The Germans really get it, not only on shuttering their nuclear power plants, but on promoting clean tech:  they have the technology, the industry, the policy, the political will and the track record to show that clean tech means jobs.  The Green Party and the Social Democrats, powerful forces in German politics, want to see a 100% renewable energy economy by 2050.  Germany, has had visionaries like the late Hermann Scheer, and has canny businessmen like Peter Löscher, the head of Siemens, one of the world’s industrial powerhouses, leading the way.  I quoted Löscher here:  “The green revolution has started and by 2020, green technology will have surpassed the car industry as well as the engineering sector in Germany.”  As Jungjohann pointed out at the event, Germany installed nearly double the amount of solar PV in December as the U.S. did in all of 2011.

We’ve simply got to accelerate some of the breathtaking progress that has been taking place, not only in Germany, but throughout the world, on renewables, DG, green building, and as a number of panelists noted, smart urban planning and mass transit, and, at the end of the day, reduce our consumption to sustainable levels.  Eat a salad today and turn out the damn lights when you leave the room.

French President Nicolas Sarkozy (AFP, Pierre-Philippe Marcou)

Standard and Poor’s rating agency has lowered the credit ratings of 9 eurozone members, including formerly AAA-rated France and Austria. The move is significant, affecting as it does the future of the eurozone’s bail-out fund, the French presidential election, the roll-over of existing European sovereign debt, and more. However, the downgrade is not really a catastrophe for the nations downgraded nor for the European economy’s prospects. Our purpose here is to understand what the downgrade is, what it means and what it may not mean.

First off, what is a sovereign credit rating and what does a downgrade mean? There are numerous entities in finance that offer their well-informed (or otherwise) opinions about a variety of investment instruments. What we are concerned with here are the three main credit rating agencies: S&P, Fitch and my former employer Moody’s. What they do is issue a rating, that is an alphanumeric symbol, that encapsulates the agency’s detailed analysis of a debtor’s ability and willingness to repay a debt. In that sense, their ratings aren’t a whole lot different from the FICO score you have that is supposed to tell lenders about your creditworthiness.

While the methodologies vary a bit from one agency to another, the ratings scales of each are comparable by and large. For example, AAA is the best rating possible (Aaa at Moody’s). Junk status is about 10 notches below that at BB+ (Ba1 Moody’s) , and default is another 10 or so notches down. Because these agencies have been in the business of issuing ratings for decades (Moody’s was founded in 1900), it is possible to tie actual default experiences to the ratings. S&P’s can be found here.

On Friday, France and Austria fell one notch from AAA to AA+, Italy fell a couple of notches from A to BBB+, Spain went down one from AA- to A, Cyprus dropped two notches to BB+, Portugal’s two notch fall leaves it at BB (junk status, and it also has a negative outlook), Malta went down one notch to A- from A, Slovakia fell a notch to A from A+, and Slovenia is one notch lower at A+ from AA-. The other members of the eurozone retain their ratings. That means Germany, the Netherlands, Luxembourg, and Finland kept their AAA. For the record, the other members states and their S&P ratings are: Belgium (AA), Estonia (AA-), Greece (CC) and Ireland (BBB).

What is extremely important to remember is that the downgrades were only to the ratings issued by S&P. Moody’s and Fitch did nothing. In their eyes, France and Austria (and the USA for that matter) are still AAA. Split ratings, when the agencies don’t agree exactly, are rather common. And in every regulation where ratings agencies are mentioned, two different agencies’ opinions matter, not three. So, there is a real question as to whether Austria and France are still AAA or not. The market, of course, is not focused on the dog that didn’t bark – it’s paying attention to S&P despite it having the minority opinion.

Be that as it may, the S&P downgrades for France and Austria are economically inconvenient but not really all that important for investors. Yes, both will have to pay a bit more in interest to fund their debts. However, a study by JPMorgan Chase looking at the nine sovereign borrowers that lost their AAA ratings between 1998 and the US downgrade in August shows an increase of 2 basis points (or 0.02%) in the following week. Is it a make or break situation if your mortgage is 4.12% or 4.14%? France and Austria will face no funding problems as a result of the downgrade. And indeed, the US saw its borrowing costs actually decline immediately after S&P downgraded it a few months ago.

The reason for this minimal change lies in the default record of AA+ issuers. According to the chart cited above, issuers rated AAA will default 0.00% of the time in the next 12 months. An issuer with a rating of AA+ has the same default rate over 12 months. Over a 5-year period, the default rate for AAA issuers is 0.10%; for an AA+ debtor, it’s 0.15%. In other words, if you lend to France or Austria by buying a 3-year bond, you still have a 99+% chance of getting paid back in full with interest on time.

Where the downgrades do become problematic is in the political sphere. In three months’ time, the French will go to the polls to elect a president. France lost its AAA rating on Nicholas Sarkozy’s watch, and whether justly or not, he will take some blame for it – the leftish newspaper Liberation ran a headline calling him S_RKOZY, having lost an “A” of his own. He currently trails socialist candidate Francois Hollande by 10% in the polls. With 53% of the electorate believing that the loss of the AAA rating is a serious matter, the downgrade only makes his re-election more difficult.

In the end, though, the ratings come back to the issue that undermined them in the first place – the euro. The bail-out fund that has kept Greece, Ireland and Portugal afloat so far, the European Financial Stability Facility, was rated AAA because of its backing from AAA-rated sovereigns. However, 16 January 2012, S&P dropped that rating to AA+ because of the French and Austrian downgrades. S&P said that the EFSF could get its AAA back if it could obtain more guarantees (from whom I wonder?) or if it raised less money that would be better protected by the existing guarantees. A smaller bail-out fund, however, is less likely to succeed at stabilizing the eurozone. At the same time, a fund rated less than AAA will have to pay more for its funds, and that will make the bail-out fund less effective as well.

So what does it all mean? Objectively, the difference between AAA and AA+ is very small, and it should not have much impact. Markets, however, are never objective. They are fueled by greed and fear. S&P’s downgrade of these nations has made the eurozone’s problems harder to solve.

Last year was the Year of the Rabbit for the Chinese – promising among other things good luck!  However, China which came out of the global financial crisis almost unscathed (or at least better off than most major world economies) hit one too many ‘speed-bumps’ in 2011.  Last year’s inflation is threatening a significant slow-down of the Chinese economy, and the housing market is in such collapse that it could lead to real civil unrest.

Overall, in 2011 China assumed a more assertive role on the global stage.  China’s new posture was reflected in an aggressive trade agenda, a push for a larger role in international institutions, and provocative moves in the South and East China Seas.  These actions were both a reflection and a consequence of China’s growing economic prominence and resource needs, as well as China’s view that the United States is in decline while China is ascendant.

China continued the backsliding from market reforms in favor of an increased role of the state in the economy.  China continues to subsidize its state-owned enterprises to the detriment of both private Chinese firms and international competitors.  Despite promises by President Hu Jintao and other Chinese officials to ease a policy of discriminating against foreign companies in government procurement decisions; however, real change remains elusive, particularly among the provincial and local governments.

Currency Liberalization

China continued its aggressive capital controls during 2011, a policy which pegs the renminbi (RMB) to the dollar, restricts the flow of foreign capital in the domestic market, and investing foreign reserves in U.S. Treasury bonds.

By the end of 2011, China’s foreign exchange reserves are projected to be over $3.2 trillion, up nearly one trillion from $2.4 trillion back in January of 2010.  China’s foreign exchange reserves are now roughly three times greater than that of Japan, which has the second-highest foreign exchange reserves in the world.  Roughly two-thirds of China’s foreign exchange reserves are generally thought to be denominated in U.S. dollars, although the exact makeup of the reserves is unknown, because the Chinese government considers it to be a state secret.

Somewhat better known is the volume of China’s foreign exchange reserves that are made up of U.S. Treasury securities.  As of July 2011, the official estimate by the U.S. Treasury Department

stood at $1.2 trillion, up slightly from the same period one year before.  The real amount is considerably higher, since the $1.2 trillion does not take into account any purchases made on the secondary market nor does it factor in purchases made by intermediaries or made through tax havens, such as the Cayman Islands.

On the positive side, the Chinese government allowed the RMB to rise by roughly 6% in nominal terms over the last year, from 6.641 RMB per dollar at the beginning of the year, to 6.30 RMB per dollar by the end of December 2011.  This is the second-fastest rate of appreciation since the Chinese government eliminated its hard peg to the dollar in 2005.

The 12^th Five-Year-Plan

In March 2011, China ratified its 12th Five-Year Plan (2011– 2015), a government-directed industrial policy that focuses on the development and expansion of seven ‘‘strategic emerging industries.’’  The central and local governments will likely continue to combine targeted investment with preferential tax and procurement policies to ensure that Chinese firms emerge as global leaders, or ‘‘national champions,’’ in these industries within the next five years.

One of the main objectives of the 12th Five-Year Plan is to redirect China’s economy to one more focused on domestic consumption and less on exports and investment.  The plan assumes that China’s growth would therefore be more balanced and sustainable.  The plan also emphasizes higher value-added production and increased government support for domestic high-tech industries.

Increasing household consumption, a major goal of the 12^th Five-Year Plan, and the subsequent emergence of a more assertive consumer class, may be in direct contradiction to the Chinese government’s policy of keeping economic power firmly in the hands of the state and may compromise lending to many vested interests, including SOEs and the export sector.

Analysts and foreign business leaders fear that the emphasis on industrial upgrading will lead to the introduction of new government subsidies, which in turn will disadvantage foreign competitors.

In particular, the government’s new growth model includes such goals as:

• Setting a GDP growth target of 7% (down from the current actual GDP growth rate of 10%).  To do that, the government will have to divert money away from construction and corporate subsidies, and instead use public funds to increase household incomes.
• Cutting import tariffs to reduce input-costs, while boosting consumer demand and reducing China’s reliance for growth on exports which generates trade surpluses and contributes to the global trade imbalance.
• Improving the income of farmers and migrant workers, who have benefited the least from China’s phenomenal economic growth, by increasing minimum wages.  In particular, provinces across China have announced a string of double-digit wage increases this year as part of the government desire to increase incomes among the rural regions and migrant workers in the cities.
• Increasing spending on healthcare and full nationwide social welfare insurance to reduce the need for “precautionary savings” and encourage more Chinese consumer spending.
• Raising the minimum threshold for personal income tax.  This could exempt hundreds of millions of people from having to pay taxes, and boost household spending.

The most important short-term priority for the government is to address increases in food price, which Beijing intends to do through price controls.  In order to control inflation, the government intends to keep using the tools and methods that it has been employing thus far: manage liquidity, use price controls, curb real-estate speculation, and “adjust and improve” property tax policies.  Furthermore, the budget for this year shows a 35% increase in spending on low-income housing.

(For more, read: China’s 12th Five-Year-Plan – Will It Help With the Global Trade Imbalance?)

Inflation

While China has taken an externally assertive posture, it faces many internal challenges. The Chinese Communist Party (CCP) relies on economic growth, combined with strict authoritarian rule, to maintain control over a factious and geographically vast nation.  Sharp increases in consumer prices, a pivotal factor in the early days of the student protests in Tiananmen Square in 1989, are once again a problem for the Chinese economy.

Inflation is the Achilles heal of the CCP; inflation is what precipitated the Tiananmen Square demonstrations back in 1989, is what fueled the Arab youth discontent for the status quo, and is what is caused by China’s undervalued currency and current account restrictions.  What was but a prospect of inflation in 2010, turned to a serious threat to the longevity of the Chinese economy in 2011, forcing the government to impose price controls to a number of goods.  The rise in property values during the year, led to fears of a bubble market, and a significant drop of values by the end of 2011.  In the middle of the year, inflation was as high as 6.5%; the second highest level in the past 10 years.

Property Bubble

Following a decade-long boom and nearly two years of attempts by the central government to cool the overheated sector, the housing market in China appears to have turned.  In order to cool the overheating residential-property market, the central government has restricted purchases of multiple homes, demanded larger down-payments and curtailed opportunities for speculators to “flip”, or quickly sell on, properties.  It has curbed developers’ access to bank lending and cut off credit from new trust companies.  It is also encouraging the use of property taxes like those introduced in Shanghai and Chongqing last year.

Taken together, these measures have certainly slowed down the market.  Price growth has been slowing since early 2010.  Analysts suggest that prices fell during December 2011 in 60 of the 100 cities it monitors.  Land prices are falling fast, too.

In 2010, property construction accounted for 13% of Chinas GDP, and for more than 25% of all investment in what is the most investment-dependent economy of the world.  Property directly accounts for 40% of Chinese steel use; the country itself produces more steel than the next 10 producing countries combined, making it by far the most important buyer of inputs such as iron ore.  Construction in China is also important for a host of other industries, from copper, cement and coal to power generation equipment.  Most analysts agree that the sector matters to an extraordinary degree for the overall Chinese growth, for commodity demand, household expenditures, external trade and underlying heavy industrial profitability.

According to government figures, which most analysts believe understate the reality, average housing prices more than doubled in the last four years nationwide, while in Beijing and some other regions the price increase was more like 150%.  Data are incomplete but analysts say the price of an average apartment in a Chinese city is now about 8-10 times the average annual income nationwide; in cities like Beijing and Shanghai the ratio is closer to 30 times.  Now, by some estimates, property prices might fall by as much as 25% in the near future, and by another similar amount in the following two to three years.

However, its impost to remember that before 1998 China did not have a residential real estate market to speak of.  In urban areas, all housing was built and allocated by the state through the ubiquitous “work unit”.  In the countryside, peasant farmers built their own homes on land allotted to them by the state or the collective.

The real estate market that now plays such an important part in China’s overall economy was born when the Communist party decided in the late 1990s to begin transferring ownership of the vast majority of housing to individuals.  It is easy to forget that the market is just over a decade old and, apart from a brief dip in the midst of the 2008 financial crisis when transactions dried up, most Chinese have only seen prices double every couple of years and never seen them fall.  Besides, China is a country where speculative bubbles have been a constant phenomenon since market-based reforms picked up pace in the 1980s.

(For more, read: China Property – A lofty ceiling reached)

WTO – 10 Year Anniversary

In December of 2011, China celebrated 10 years since its entry into the World Trade Organization (WTO).  Last year also marks the end of China’s probationary period, under the terms of its Accession Agreement to the WTO.  The probationary period required China to lower its tariffs to levels below those of many other developing countries.  But compared with most industrialized countries, China was allowed to impose considerably higher tariffs (on average around 25%, while U.S. tariffs are mostly under 5%) — tariffs China has retained even as its economy has subsequently grown to No. 2 in the world.

Practices such as forced technology transfer and the creation of joint venture companies as a condition to obtaining access to the Chinese market; the adoption of unique, Chinese-specific standards for high-tech equipment; and extensive intellectual property rights violations are among the faulty policies designed to help China achieve its economic and development goal, while blatantly violating the spirit and often the letter of WTO law.

In the ten years since China joined the World Trade Organization (WTO), China has maintained a steep growth trajectory, outpacing both Germany and Japan to become the second largest economy in the world. China’s gross domestic product (GDP) has grown from $1.32 trillion in 2001 to a projected $5.87 trillion in 2011 (an increase of more than 400%).  Concurrently, China has lifted 400 million of its citizens out of poverty and has experienced the largest rural-to-urban migration in history.

However, 2011 has been a particularly confrontation year in terms of trade disputes with the U.S., China’s most important trade partner.  The U.S. initiated consultations with the Chinese government on a number of cases (chicken products, subsidies, and internet restrictions), and China followed suite in the case of imports of U.S. cars.  Currently, three previous WTO cases involving U.S.-China trade are both open and active.  The Raw Materials case, which resulted in a decision favorable to the United States, is under appeal as of August 31, 2011.  The Flat-rolled Electrical Steel case and the Electronic Payments case have both advanced to formal dispute settlement, though no decision has been reached.

(For more, read: Sino-American Trade Relations – A heated exchange)

Soft Power – Climate Change

In December 2011, the World Climate Change Summit in Durban, South Africa, was considered a (at least very promising) success, thanks in part to the new found commitment of China to the cause.  More specifically, for the first time since the Kyoto agreement back in 1997, large emerging economic powers such as China, India and Brazil agreed to legal constraints on their emissions (unlike their previous resistance in 2007 and 2009, which clearly doomed past climate change efforts).

In the past, a familiar stalling point has been the refusal by emerging powerhouses such as China to agree to legal targets.  That has prompted others – most notably the US – to insist that they could not sign up to such pledges.  China, which in 2007 overtook the US to become the globe’s largest emitter, was one of the largest obstacles. However, China is still classed as a developing country under UN climate conventions and therefore not subject to legally binding constraints.

Having been blamed for wrecking the 2009 Copenhagen talks, Beijing went to Durban eager to promote its green credentials.  In a series of side events, its delegates boasted of China’s rising dominance of renewable energy markets and a five-year plan that for the first time includes plans for emissions trading and carbon intensity reduction targets.

There is still a lot of follow-up needed to make these new commitments real, but it seems that climate change (and the profitable side of this issue: development and marketing of green energy sources) is one area where China is willing to ‘play ball’ with the rest of the world and stretch its ‘soft power’ muscles.

(For more, read: Climate Change – The great regrouping)

Taiwan Strait

Despite the continuing improvement in economic and diplomatic relations across the Taiwan Strait, China deploys some 1,200 short-range ballistic missiles against the island.  In 2011 we saw the sale by the U.S. to Taiwan of a new $5.8 billion package of upgrades to its aging fleet of F–16 fighter jets.  In response to that, China indicated that it might suspend a series of military-to-military engagements.

However, as much as military build-up and confrontation across the Taiwan Strait will always define the China-Taiwan relationship, the upcoming Taiwanese Presidential election overshadowed developments at the end of last year.  China’s strategic planners are very alarmed by the uncertainty over the outcome of this month’s presidential election in Taiwan.

President Ma Ying-jeou, the Beijing government’s preferred candidate who has steered a path of warmer ties and direct economic links with the mainland, is suddenly in a tough race for reelection.  Ma’s chief opponent is Tsai Ing-wen, chairwoman of the Democratic Progressive Party, which officially backs the independence of Taiwan.  Tsai has raised the Beijing government’s ire for her refusal to publicly support an informal, unwritten, 20-year-old agreement between the two sides stipulating that there is just “one China.”

For months, the election was expected to hand an easy reelection victory to Ma, from the ­Kuomintang, or Nationalist Party, after he steered the island through the worst of the global recession and secured a new trade deal with China.  But the race became more unpredictable with the entry of a third candidate, James Soong, a former Nationalist Party stalwart who founded the People First Party.

For China, a victory by the DPP will be considered a setback to cross-strait relations, and could lead to an military escalation as China is preparing for its own leadership transition.

China in South-East Asia

To the consternation of its neighbors, China asserts its expansive territorial claims in the South and East China Seas.  China is increasingly capable of pursuing its own interests at the expense of regional, perhaps even global, stability.  David Gordon of the Eurasia Group recently argued that China has overplayed its hand in Asia, and its rapid growth and aggressive posturing (both economic and military) “is inadvertently driving Asian states to build closer economic and strategic ties with the U.S. and each other.”

Over the past 18 months China has taken a very aggressive tone towards territorial disputes in the South China Sea and elsewhere.  Mr. Gordon further argues that Beijing has miscalculated its ability to cater to nationalist feelings domestically without alarming its neighbors, and is now (inadvertently) driving Asian nations to build closer economic and strategic ties with the U.S. and each other.

The Chinese leadership is very concerned with developments with the Trans-Pacific Partnership, a U.S. led effort for freer trade among Pacific economies which the Chinese press often casts it as an aggressive U.S.-led ploy to squeeze China out of South East Asia.  During the fall, the U.S. formally accede to the East Asia Summit (the ASEAN+3 – just like China did back in 2005), a move that the other SE Asian nations welcome, as they hope that the U.S. could provide a counterweight to China in the region.

Last but not Least – Domestic Unrest

Every year, China experiences some kind of public unrest, be it because of food product contamination that was not handled properly by the authorities, or some natural disaster that was not remedies properly afterword’s, or some transportation accident that could have been averted.  Last year was no different.  However, what happened during the fall in a couple of rural places could have greater ramifications for this year.

In the Southern village of Wukan, protests began on 21–23 September 2011 after officials sold land to real estate developers without properly compensating the villagers.  Several hundred to several thousand people protested in front of and then attacked a Chinese Communist Party building, a police station and an industrial park.  Residents of Wukan had previously petitioned the national government in 2009 and 2010 over the land disputes.

In an apparent attempt to ease tensions, authorities allowed villagers to select 13 representatives to engage in negotiations.  Security agents abducted five of the representatives and took them into custody in early December.  The protests strengthened after one of the village representatives, Xue Jinbo, died in police custody in suspicious circumstances.  The villagers forced all Communist Party officials and police to flee the village, which came back with reinforcements and laid siege to the village, preventing food and goods from entering the village.

Eventually, the village representatives and provincial officials reached a peaceful agreement, satisfying the villager’s immediate requests.

During December, protests in the town of Haimen, of Guangdong province, which drew thousands of participants were ignited over plans to expand a coal-fired power plant in the town—a plan that residents opposed, arguing that existing coal-fired plants had caused environmental and health damage.  Demonstrations began on 20 December when thousands of residents barricaded a freeway and surrounded government offices in an attempt to block the project.

Riot police fired tear gas into the crowd and beat protesters with riot sticks.  Tensions cooled by 23 December, after Communist Party officials declared that the plant expansion plans would be temporarily suspended, and authorities agreed to release detained protesters.  Although the protests in Haimen were unrelated to demonstrations in nearby Wukan, Haimen residents told Reuters that they had followed developments in Wukan closely, regarding it as a good model of how citizens might negotiate with authorities.

This is not the beginning of China’s ‘Arab Spring’ moment.  China is a very large and very diverse country.  But when the people at the bottom of the ‘food chain’ can justify physical confrontation with the authority as the only viable way of ‘negotiating’ with the government, then everyone should be paying very close attention!

I wonder, what will the year of the Dragon bring…  more assertiveness by local people, or more resolve by the government in Beijing?

In an era of austerity,US defense is facing cutbacks, or to stick with the administration’s euphemism, the US military will become “leaner”. This much is clear following the release of the latest US defense review, Sustaining US Global Leadership: Priorities for 21st Century Defense.

Most would agree that defense spending cuts are only natural, considering the winding down of two land wars by a military that outspends the military of the next 10 countries combined. But before we soft power enthusiastic Europeans get too carried away, it is worth taking a look at what these cutbacks will mean for Europe.

Cutbacks necessarily mean prioritization of available means. If there were doubts as to where the US intends to focus its resources, the defense review made it clear; the Asia-Pacific will be given top priority while the Middle East and South Asia also will be area of special focus. Europe‘s days as US priority numero uno are long gone. With cutbacks that fact will now become apparent.

Although the defense review in diplomatic terms calls “most European countries producers of security rather than consumers of it”, and underscores its commitment to NATO and Europe, between the lines the intention is clearly that Europe must take on a larger share of its own security responsibilities. Some US commentators, particular those on the right, are less diplomatic, condemning Europeans for skimping on defense, taking advantage of the US security umbrella, while they instead spend on welfare.

Although I believe a pretty solid argument could be made for a more holistic approach to security than the one mentioned; i.e. that the strength, stability, and security of a country has as much to do with the wealth and wellbeing of a society as whole as its military, it would seem that Europe must now get serious on defense if it intends to exert influence in its own neighborhood.

The EU’s own security strategy, A Secure Europe in a Better World, has building security through the development of democratic government and the rule of law in its own neighborhood as one of its central aims. However, the intentions set forth in A Secure Europe in a Better World have largely proven outside European capabilities. In particular the intention of providing “robust intervention” has proven illusionary.

The NATO led action in Libya, for example, demonstrated the limits of European nations’ logistic capabilities. Ammunition had to be bought from the US, likewise US refueling and intelligence capabilities were relied heavily upon. As for coherence, Europe’s most powerful nation, Germany, chose to sit Libya out, making a mockery of a common EU defense policy.

In a time when the only effective security institution at Europe’s disposal, NATO, is being downsized, and no sign of the EU becoming better at pooling its military assets, it would seem that Europe will find it even harder to make its preferences felt in the future. Even with this being the case, the time is not ripe for raising defense budgets. Regardless that less security is being provided by the US, European constituents would not appreciate cuts in education, hospitals, and pensions while defense appropriations go up. Furthermore it is hard for the US to put pressure on Europe to up its defense budgets, when the US itself is slashing its expenditure.

And what do the cutbacks mean for NATO? Thomas Valasek of the Centre for European Reform points out, that as forces on both sides of the Atlantic are cut back, NATO’s security guarantees will increasingly lose their credibility. It doesn’t seem unreasonable to see the US shift toward the Asia-Pacific, coupled with the transatlantic defense cuts, as the end for NATO as we know it. Instead of an institution of collective defense, NATO will be the framework within which smaller coalitions of the willing operate.

So, perhaps Europe must seek out alternative security arrangements for itself? For example, smaller coalitions formed around core nations on more or less ad hoc basis, coupled with intergovernmental asset sharing agreements, such as the French-British talk of coordinating aircraft carrier patrols. Regardless of the desirability of such solution, considering the current state of the Common Foreign and Security Policy, solutions outside the EU framework seem the only way forward.