Parts, Structures, Systems and Outcomes

Developed Countries

How Britain Will Dominate Europe Britain is less than one half the size of France and only about two-thirds the size of Germany but, by the year 2060, it will have more people living in it than both countries, according to a new report by the research arm of the European Union, Eurostat. Germany, home to the largest population in Europe since its reunification in 1989, will see its population decline from some 82 million today to 70 million in 2060, according to the study. Britain, as a result of higher immigration and more babies, will see its population rise to 77 million from 50 million over the same period. Other countries such as Ireland, Cyprus and Spain are expected to see sharp increases as well. The projections are part of a broader analysis of European populations which also concludes that, if current demographic trends hold, the natural growth in population in the continent as a whole will end in just seven years time, when the number of deaths overtakes the number of births. Thanks to immigration the E.U.'s population will continue to grow to 520 million by 2035 before falling back to 506 million by 2060. (The U.S. population, according to another recent study, will increase over the same period from about 300 million today to 468 million in 2060, most of that increase coming as a result of immigration.) The Eurostat study's most serious implications are for an aging population and the ability of European societies to pay for pensions for their elderly after they stop working. Today, there are three working-age Europeans for every one over 65. By 2060, that number will have fallen to one in two. The lifting of restrictions on immigration for able workers could also helpIn Britain, however, the projections have triggered calls for tighter immigration controls. The steepest population declines are expected in eastern Europe, where countries such as Bulgaria and Poland could lose up to one quarter of their populations, according to the study.

Fukuda Resigns as Japan's Prime Minister After Less Than a Year in Office Yasuo Fukuda resigned as Japan's prime minister after less than a year in office marked by political gridlock, plunging approval ratings and disarray within the ruling Liberal Democratic Party. He follows predecessor Shinzo Abe, who quit last September, in resigning since the LDP lost control of the less-powerful upper house in July 2007 to the Democratic Party of Japan. Both Fukuda and Abe proved unable to work with the opposition or win popular support for road taxes and increased health care for the nation's aging population. The new prime minister, most likely the next LDP president, will need to revive an economy that contracted in the second quarter, bringing Japan to the brink of its first recession in six years. ``This is an act of suicide for the Liberal Democratic Party,'' said Yasunori Sone, a professor of politics at Keio University in Tokyo. ``The public will probably want new elections to be held, instead of an LDP leadership vote.''  Fukuda's resignation comes two years after ex-Prime Minister Junichiro Koizumi tried to privatize the postal service and vowed to destroy his ruling party after encountering opposition to the plan. The political gridlock that followed his departure led to the first leadership vacancy at the Bank of Japan in more than eight decades and helped drive down Japan's Nikkei 225 Stock Average about 20 percent since Koizumi left office.

``The 53-year-old LDP is reaching the end of its political shelf life,'' said Masayuki Fukuoka, a professor of political science at Hakuoh University north of Tokyo. ``Koizumi promised to change Japan by destroying the LDP, and that's what we're seeing -- an eviscerated party on its last legs.'' The short terms of Abe and Fukuda contrasted that of Koizumi, who left office after five-and-half years, the third- longest tenure since World War II. When he was elected, Japan was in deflation and fighting recession. Koizumi cut government spending and pushed banks to write off bad loans. He broke with tradition by naming cabinet members without consulting party leaders. When lawmakers in 2005 rejected legislation to sell the state-run postal system, Koizumi dissolved the lower house and expelled 37 party members who voted against the plan. He won a new election five weeks later. 

I Am Ready to Be Japan's Next Prime Minister: William Pesek Here's a pub quiz expatriates in Tokyo pull out around the time the third bottle of sake arrives: Quick, name Japan's last five prime ministers. Americans put on the spot in a comparable way need to reach back to 1977 and Jimmy Carter. Brits need to think back to James Callaghan in 1976, Germans to Walter Scheel in 1974 and Chinese to Deng Xiaoping -- also in the 1970s. Japanese only need to remember Keizo Obuchi in 1998. At the moment, Japan has had as many leaders since then as Italy. Once a replacement is chosen for Yasuo Fukuda, who quit yesterday after less than a year in the job, Japanese will only need to look back to 2000 to name their last five leaders. What does it say about a Group of Seven economy that presents investors with a revolving door of hapless leaders?

'I Fear for Germany'  Erich Honecker's heirs are making a remarkable comeback in Germany. The Left Party, an amalgam of the successors to the former East German Communist Party and disgruntled Social Democrats, is now the country's third-strongest political force. With about 15% public support, it is quickly closing the gap with the Social Democrats, whose popularity is at a historic low of 20%, according to a Forsa poll published last week. With general elections scheduled for next year, it's even possible that the Communists may be able to return to power a mere 20 years after the fall of the Berlin Wall. Such a development would undermine nothing less than Germany's standing as a market economy and Western ally. It is the Social Democrats who may pave the way for the Communists' relaunch. Currently in an uneasy grand coalition with the Christian Democrats, the Social Democrats might be tempted to lead the next government by joining forces with the Green Party and the Left. Such a three-way coalition, were it to occur, already has enough votes in parliament to elect a Social Democratic Chancellor; it could possibly gain a majority next year. While the Social Democrats have been cooperating with the Left in regional parliaments in East Germany, doing so in West Germany, let alone at the national level, has been taboo. Social Democratic leader Kurt Beck said last month that this won't change -- at least not for now. While ruling out cooperating with the Left next year, he added that "No one can know today what will exist in 2020."

EU Leaders Put Off Moves to Pressure Moscow  The European Union pledged Monday to help Georgia recover from Russia's continuing military intervention, but fears over Europe's dependence on Russia for energy and of splitting the EU prevented moves to pressure Moscow. Russian officials including President Dmitry Medvedev, made similar demands in the run-up to Monday's summit, warning the EU would have to decide as it responds to events in Georgia what kind of relationship it wants with Moscow. EU leaders agreed in their final statement to send Mr. Sarkozy and EU officials to Moscow Sept. 8 to assess Russian intentions. After that, the bloc will draw up a full response ahead of an EU-Russia summit in November, effectively giving Moscow two months' grace before any potential EU action.Still, the summit's final statement did little to penalize Moscow beyond suspending meetings on a new trade-and-investment agreement until Russia has pulled its troops back in accordance with the cease-fire deal Mr. Sarkozy brokered last month. Russia says it is already abiding by the deal. 'Stop! Or We'll Say Stop Again!'

Korea, China, India, Africa

LEADERSHIP: The Big Switch In South Korea South Korea and the U.S. have negotiated the details of how South Korea will take over command of wartime military operations in South Korea. Since 1950, the U.S., in the name of the UN, has been in charge. This will change in 2012, as South Korea becomes master of its own house, militarily, for the first time since 1950. As part of that switch, South Korea had to acquire additional communications capabilities, software and officers (both staff and command) that  enable them to run the entire operation. To that end, the U.S. and South Korea are running a series of wargames, where the South Koreans can practice being in charge. Everything went better than expected, but many problems were encountered. South Koreans information systems, including databases that did not work well with their American counterparts. In addition to the wargames, there are also political games. Procedures are being worked out to coordinate how the two nations will handle the escalation that would lead to a war. Even if the North Koreans execute the dreaded surprise attack, the two nations have to be on the same page when it comes to mobilizing and moving additional military and diplomatic resources towards the war effort. The South Koreans have to have an idea of what additional forces the U.S. could, or would, provide, and when. The U.S. has to be kept informed of South Korean strategy, because what the South Korean generals do is a matter of life or death for the American forces involved.

China ponders the lessons of the Japanese 'miracle' Albert Keidel at the Carnegie Endowment for International Peace in Washington says that when Japan was at China's current level of gross domestic product of just over $2,000 per capita, and headed for $10,000, it had growth rates of 8 to 10 percent. So did South Korea and Taiwan. Economists have observed that the later a country begins its catching-up, the more rapidly it modernizes. So Keidel expects China to grow more swiftly than its three neighbors did at the same stage of development. The result, he says, is that China will match the United States for economic size by 2035 and be twice as big by midcentury. "Because its success in recent decades has not been export-led but driven by domestic demand, its rapid growth can continue well into the 21st century, unfettered by world market limitations," Keidel wrote in a recent paper. "Nor do other problems China faces jeopardize long-term growth prospects." One such problem is that rapid industrialization of a country of 1.3 billion people is generating so much pollution that it risks choking off growth.But we have been here before. The Organization for Economic Cooperation and Development, Keidel notes, called Japan in the late 1960s "one of the most polluted countries in the world." Japan, however, started to tackle its pollution, giving its environmental agency de facto cabinet status in 1971. China, now following suit, did the same earlier this year. Another American scholar, Derek Scissors of the Heritage Foundation, draws a much gloomier lesson from Japan's experience. The population boom that has powered Chinese growth will give way over the next decade to a rapid aging of the society, which will usher in weaker economic growth, as it did in Japan, he says. The number of Chinese in the industrious 15-24 age cohort grew by 20 million from 2000 to 2005, but the increase in 2010 will be just 1 million, according to UN projections. It will then drop sharply, as a consequence of China's one-child policy, and the country's overall working population will shrink after 2015. After four decades of a young population and rapid export-led growth, Japan was also projected by many to challenge the United States for global economic pre-eminence, Scissors noted. "Instead, Japan is now approaching 20 years of starkly inferior performance, coincident with an aging population and much lower birth rates than those seen at the outset of that earlier 'miracle,"' he said.

Faiths Clash, Displacing Thousands in East India At least 3,000 people, most of them Christians, are living in government-run relief camps after days of Christian-versus-Hindu violence in eastern India, government officials said. The government said that many people were also living in the jungle without any shelter or security because of the tensions, which erupted in violence after a Hindu leader was killed Saturday. At least 10 people, most of them Christians, have been killed since. Christian community leaders say that at least 1,000 homes of Christians have been set on fire since Monday, rendering more than 5,000 people homeless. Many of those living in the jungle were without food or water, said the Rev. Dibakar Parichha, a priest at the Roman Catholic church in Phulbani, a town in Orissa State. Father Parichha said that about 90 places of worship, including small churches and prayer halls, had been burned down. Local officials said the figure was about 20. The violence has occurred in Kandhamal, a district in Orissa State that has a history of communal and ethnic clashes. The latest conflict started Saturday night, when unidentified armed men stormed a Hindu school in Kandhamal and killed the Hindu leader Laxmanananda Saraswati and four of his followers. The police suspected that Maoist rebels were responsible. But Hindus blamed Christians. In the retaliatory violence, 500 houses were burned. All nine towns in the district are under a curfew, and the police have license to shoot. At least two people have been killed in violent reprisals in other districts of Orissa, including a woman who died when an orphanage was burned down.

Tata Clash Stalls Building Of Car Plant Tata Motors is suspending production of the world's cheapest car and plans to move manufacturing in the face of violent protests. The maker of the world's cheapest car warned it is suspending plant construction and planning to move manufacturing elsewhere in the face of violent protests from farmers and local politicians. While the outcome is still unclear, the declaration by Tata Motors Ltd. -- part of India's flagship industrial conglomerate and an international symbol of the nation's modern engineering prowess -- is the starkest sign yet of how rapid industrialization is clashing with those who are skeptical of modernization and suspicious of the reach of big business into rural India. It is a conflict being played out across the nation as India strives to boost manufacturing to supplement slowing growth in its larger services industry. But Tata's predicament has been the most closely watched, because the $2,500 Nano mini-car has been touted around the world as revolutionary and Tata is known as one of India's most powerful, yet socially responsible, employers. As a result, Tata's problems could send a discouraging message to big international companies interested in operating in India.

Riches of Africa Nigerian traders can be found in most corners of Africa. But until recently, formal cross-border investments by Nigerian businesses have been a rarity. That is changing. Awash with petrodollars and foreign capital, Nigeria’s banks are rapidly extending their reach. Aliko Dangote’s multi-billion dollar plans to expand his cement empire are on a different scale, however. This has made him something of a pioneer as well as an ambassador for a growing trend. He has been restructuring management, bringing in foreign expertise to drive his group’s cement production across the continent to 50m tonnes by 2012. He is investing in new plants in east, west and southern Africa. Experience in Nigeria must count among the toughest for any industrialist. In some respects it also adds an extra hurdle, concedes Mr Dangote. “In the majority of these African countries, they’ve been used to Europeans or Chinese going in there,” he says. As a Nigerian it has proved difficult at times to be taken as seriously. “Always they will be looking at you at a distance, saying, ‘Hey, these Nigerians, we don’t know what they’re up to.’” At the same time, he is confronting dilemmas familiar to any multinational. “We are dealing with 10 different African governments and some of them change their laws midway.” The decisive moment for his company came a decade ago, he says, when he moved from trading basic commodities to processing them, following an inspiring trip to Brazil. It was then that he began building flour mills, a pasta factory and a sugar refinery, which became the principal supplier to Nigerian beverage groups. Until then, other than family seed capital, the Dangote group had “never taken out a loan”. The timing of his subsequent multibillion dollar investments in cement production, now his fastest growing business, was bold. Nigeria, with its ailing power grid, sharp bankers and political instability, is a tough environment for manufacturers. It was far from clear that industry on the scale envisaged by the Dangote group would be commercially viable.

Middle East

Syria: Who Needs Annapolis? It was the biggest gathering of radical Palestinian factions since the signing of the Oslo Peace Accord in 1993, with Hamas, Islamic Jihad and Popular Front for the Liberation of Palestine-General Command attending along with the Lebanese Hizballah organization — an all-star cast of organizations branded as terrorist by the U.S.  Beneath portraits of Syrian President Bashar al Assad and his late father, Hafez, one speaker after another called for an end to peace negotiations with Israel, demanded a lifting of the Israeli siege of Gaza, and urged Palestinians and Arabs to unite against Israel. "Zionists are bastards, and will always be bastards," said Hamas chief Khaled Meshal. "They will never be legitimate." With melted snow dripping into the conference hall, decorated in burlap sacking to evoke the inside of a bedouin tent, the setting could hardly have born less resemblence to the Naval Academy in Annapolis, Maryland, scene of the U.S. sponsored Middle East peace conference last November. That, of course, was the point. By hosting this belligerent, anti-Annapolis conference, the Assad regime seemed to be symbolically turning its back on the U.S.-led peace effort. For over a year, Damascus had been calling for a resumption of peace negotiations with Israel, not least at the Annapolis meeting itself. But though a brief thaw in U.S.-Syrian relations ensued, the resumption of hard-line posturing seems to suggest that Syria wanted more than the Bush Administration was willing to deliver. Syria's main beef with Israel is the occupation of the Golan Heights (captured by Israel in 1967), but the Assad regime has long been concerned that the U.S. is trying to isolate or even topple it. Still, it's not clear that that Syria's rejection of Annapolis means it seeks confrontation with Israel. Despite the presence of Meshal and a few other leaders, a look at the graying conference attendees — mostly third-tier political cadres sporting corduroy suits, leather trench coats, and other 70s fashion statements — suggests that the best minds of the resistance are busy elsewhere.

IRAN: Depressing News The governments growing closeness with leftist Venezuelan president Hugo Chavez had led to hundreds of Iranian intelligence and special warfare (terrorism) operatives being dispatched to South America. But with Venezuela as a safe, and hospitable, base, Iranian death squads are again up and running in South America. Last year, the government said that it had 3,000 uranium enrichment centrifuges operating. That was enough to produce enough enriched uranium in a year for a nuclear bomb. Previously, Iran had only 328 centrifuges operating in a research facility. Now, Iran says it has 5,000 centrifuges, although UN IAEA inspectors believe that the Iranians are exaggerating, and have only 4,000 functioning, with several thousand more being prepared for operation. The World Health Organization (WHO) believes Iran has an above average number of people (about 20 percent of the population) suffering from depression. WHO also believes that Iran has at least a million drug addicts (mainly opium and heroin). The government has long believed that the number of addicts was over two million. The governments solution for decades of double digit inflation is to issue new currency, that is worth 10,000 times what the current one does (thus the current 10,000 rial note would be replaced by one worth one rial). Three decades, 70 Iranian rials were worth one dollar. Now it takes nearly 10,000 rials. The government mismanagement of the economy is resulting in growing labor unrest. Workers at many government owned companies have not been paid for months, because the government runs so many companies that don't make a profit. Having these workers go on strike does not bother the government much, but increasingly the workers have realized that and taken to organizing noisy public demonstrations against the government. Using the government paramilitary forces (in civilian clothes) to attack the workers does not always work (the paramilitaries are defeated). That, however, has revealed another worrying syndrome; growing disenchantment with Islam. The secret police reports on "the public mood" reveal a growing dislike for Islam itself. Not just in the cities, but in the countryside.

COUNTER-TERRORISM: Walking Away From Islam Hamas has an image problem, and it's getting worse. It's gotten so bad that the 30 year old son (Mosab Yousef) of one of the Hamas founders (Hassan Yousef) has not only renounced Hamas, but has become a Christian. Mosab is fed up with the terrorism/"destroy Israel" approach the Arab world has embraced over the last sixty years. Mosad notes, as have many other Arabs, that this has not worked. The conversion angle is something Moslems are trying to keep quiet. Mosab Yousef's father pleaded with his son to keep quiet about the conversion (which took place 18 months ago). The elder Yousef knows that this is not an isolated incident. Many young Moslems are abandoning Islam. Most do so quietly. In Iran, the clerics that run the country are shocked at secret police reports about a growing number of young Iranians who have, in effect, abandoned Islam. This sort of thing is happening all over the Moslem world, but especially in Arab countries. The people who switch to Islamic radicalism get all the headlines, not the larger numbers who just walk away from Islam are largely ignored. In the Palestinian territories, there is also a growth in the number of Sunni Moslems who are switching to the Shia version (as championed by Iran). But many other Moslems are openly distancing themselves from the conservative forms of Islam (like the well funded Saudi Wahhabism). One reason this trend is kept quiet is because Islamic militants are inclined to kill such traitors, if the switch is done too openly.

Iraq 

Iraq Bonds Safer Than Ohio Bank Debt Stung by Subprime Losses, Yields Show Iraq's bonds are delivering the biggest returns in emerging markets as oil export revenue bolsters government finances and violence declines. The country's $2.7 billion of 5.8 percent bonds due 2028 gained 45 percent since August 2007, according to Merrill Lynch & Co. indexes. Investors demand 4.84 percentage points more in yield to own the debt instead of Treasuries, down from 7.26 percentage points a year ago. The spread is narrower than for notes of Ohio banks National City Corp. and KeyCorp, suggesting Baghdad may be safer for bond investors than Cleveland. Oil exports will climb as high as $86 billion this year, more than double the $30 billion annual average from 2005 to 2007, helping the country post a $52.3 billion budget surplus, according to the U.S. Government Accounting Office. A reduction in bloodshed has allowed the Bush administration to consider a ``general timeline horizon'' for troop reductions.

Victory in Anbar As significant as Okinawa and the Chosin Reservoir. Two years ago, on September 11, 2006, the Washington Post stirred an election-year uproar with this chilling dispatch: "The chief of intelligence for the Marine Corps in Iraq recently filed an unusual secret report concluding that the prospects for securing that country's western Anbar province are dim and that there is almost nothing the U.S. military can do to improve the political and social situation there . . ." But there was something we could do: Pursue a different counterinsurgency strategy and commit more troops. And on Monday, U.S. forces formally handed control of a now largely peaceful Anbar to the Iraqi military. "We are in the last 10 yards of this terrible fight. The goal is very near," said Major-General John Kelly, commander of U.S. forces in Anbar, in a ceremony with U.S., Iraqi and tribal officials. Very few in the American media even noticed this remarkable victory. Yes, the stunning progress in Anbar owes a great deal to the Awakening Councils of Sunni tribesmen who broke with al Qaeda terrorists and allied with U.S. forces. But those Sunni leaders would never have had the confidence to risk their lives in that way without knowing the U.S. wasn't going to cut and run. The U.S. committed some 4,000 additional troops to Anbar as part of the 2007 "surge," along with thousands more Iraqi troops.