16
Oct

Cristina de Kirchner has brought her country to the brink of the abyss.

By Daniel Altman

Step into a discount department store in New York or Miami these days, and you’re likely to hear Spanish in the aisles. Not just any Spanish, though — Argentine Spanish. The distinctive accent, where “y” becomes “zh” and the final “s” sometimes disappears entirely, has lately become the sound of a massive transfer of wealth. Ringing through American checkout lines, it is also the sound of another economic crisis on the way.

Argentina has become much more important to the global economy in the decade following its last crisis, which began in 2001. Back then, its exports were only worth about $31 billion, or 11 percent of its gross domestic product. Today, Argentina’s exports have almost doubled, even after accounting for inflation, and it is a central player in commodity markets ranging from lithium to soy. Yet its trading regime is notoriously fickle, and another crisis — economic, political, or more likely both — could cause severe disruption.

Argentines have been talking about the imminence of their next crisis for about two years now, and their economy is showing plenty of worrying signs. Private economists estimate that inflation is running between 20 and 30 percent, while the government has doctored economic statistics to such an extent that the International Monetary Fund may censure it. The peso trades at more than six to the dollar in the street, though the official exchange rate is 4.7. The central bank maintains the artificially high value of the currency by buying pesos with its reserves, while the government limits the purchase of dollars by ordinary Argentines.

The combination of high inflation in wages — as well as prices — and an artificially strong peso has been a boon to Argentine consumers, especially the upper-middle class. Foreign goods are cheaper than ever, as is tourism. Visitors to Argentina, on the other hand, will find prices for clothing, electronics, and other manufactures in Buenos Aires on a par with New York, London, or Tokyo. The question for many well-to-do Argentines is not whether they will go abroad to shop, but how they will sneak their purchases through customs on the way back. Read more…

Daniel Altman teaches economics at New York University’s Stern School of Business and is chief economist of Big Think.

As published in www.foreignpolicy.com on October 15, 2012.

15
Oct

By Joseph S. Nye

This month marks the 50th anniversary of the Cuban missile crisis – those 13 days in October 1962 that were probably the closest the world has come to a major nuclear war. President John F. Kennedy had publicly warned the Soviet Union not to introduce offensive missiles into Cuba. But Soviet leader Nikita Khrushchev decided to cross Kennedy’s red line surreptitiously and confront the Americans with a fait accompli. When an American surveillance plane discovered the missiles, the crisis erupted.

Some of Kennedy’s advisers urged an air strike and invasion to destroy the missiles. Kennedy mobilized troops, but also bought time by announcing a naval blockade of Cuba. The crisis subsided when Soviet ships carrying additional missiles turned back, and Khrushchev agreed to remove the existing missiles from the island. As then US Secretary of State Dean Rusk put it: “We were eyeball to eyeball, and I think the other fellow just blinked.”

At first glance, this was a rational and predictable outcome. The United States had a 17-to-1 advantage in nuclear weaponry. The Soviets were simply outgunned.

And yet the US did not preemptively attack Soviet missile sites, which were relatively vulnerable, because the risk that even one or two of the Soviet missiles would be fired at an American city was enough to deter a first strike. In addition, both Kennedy and Khrushchev feared that rational strategies and careful calculation might spin out of control. Khrushchev offered a vivid metaphor in one of his letters to Kennedy: “We and you ought not now to pull on the ends of the rope in which you have tied the knot of war.”

In 1987, I was part of a group of scholars that met at Harvard University with Kennedy’s surviving advisers to study the crisis. Robert McNamara, Kennedy’s secretary of defense, said he became more cautious as the crisis unfolded. At the time, he thought that the probability of nuclear war resulting from the crisis might have been one in 50 (though he rated the risk much higher after he learned in the 1990’s that the Soviets had already delivered nuclear weapons to Cuba).

Douglas Dillon, Kennedy’s treasury secretary, said he thought that the risk of nuclear war had been about zero. He did not see how the situation could possibly have escalated to nuclear war, and thus had been willing to push the Soviets harder and to take more risks than McNamara was. General Maxwell Taylor, the chairman of the Joint Chiefs of Staff, also believed that the risk of nuclear war was low, and he complained that the US let the Soviet Union off too easily. He felt that the Americans should have removed the Castro regime. Read more…

Joseph S. Nye, a former US assistant secretary of defense and chairman of the US National Intelligence Council, is University Professor at Harvard University.

As published by Project Syndicate on October 8, 2012.

10
Oct

Sir Fazle Hasan Abed, Founder of BRAC, analyzes key issues in poverty alleviation.

Madrid, Spain – On October 5, 2012 Sir Fazle Hasan Abed, founder of BRAC –Bangladesh Rural Advancement Committee–, one of the largest development NGOs, gave a lecture at IE School of Arts & Humanities, in which he analyzed the key issues in poverty alleviation. BRAC currently operates in 10 countries in Asia, Africa, and the Caribbean, and its work touches the lives of an estimated 126 million people.  Sir Fazle Hasan Abed was joined by Arantza de Areilza, Dean of IE School of Arts & Humanities, and Javier Gila, President of the Asociación AIDA – Ayuda, Intercambio y Desarrollo.

In 1972, Bangladesh was the second poorest country in the world. Back then, Sir Fazle Hasan Abed created BRAC with the aim of improving people’s living standards and education. In order to do this, BRAC focused its work on marginalized groups, especially women, who, in the words of Sir Fazle Hasan Abed, “tend to have fairly realistic outlook on situations”. As an example of best practices, BRAC promoted the intervention of experts by interviewing mothers in order to understand the reasons behind such a high mortality rate in Bangladesh. The findings concluded that most children died due to dehydration caused by diarrhea. BRAC also implemented a plan to promote ways to reduce the country’s high birth rates.  To do so, it was crucial to know and understand the “beliefs, wishes, and thoughts” of the population, Sir Fazle Hasan Abed recalled.

In addition to reducing infant mortality and fostering ways to lower Bangladesh’s high birth rates, over the past decades, BRAC has also played an active role in the field of education, key factor in a country’s socioeconomic development. Moreover, BRAC runs one of the largest private school systems in the world, with over a million students. During his lecture at IE School of Arts & Humanities, Sir Hazle Hasan Abed pointed out that, “at BRAC schools, students learn to think”. BRAC has also established a joint program in Education and Leadership with Columbia University geared toward Bangladeshi government officials. Sir Abed likewise insisted in the importance of promoting community development, “empowering those in need so that they can find solutions to their own problems”.

Finally, BRAC has also established a financial institution focused on financing small and medium enterprises. BRAC Bank has grown to become the fifth largest bank in Bangladesh. Sir Fazle Hasan Abed closed his lecture by saying that, “to me business opportunities exist only if they entail improving, developing, or helping someone or something”.

Watch our one-on-one interview with Sir Fazle Hasan Abed:

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9
Oct

The IE School of Arts and Humanities held the Inauguration Ceremony of the Master in International Relations 2012, which celebrates its 5th intake of a truly international program. The program brings together students from 4 continents, with over 65% of its students coming from abroad, who represent 13 countries: United States, Canada, India, Turkey, Spain, Mexico, China, Kazakhstan, Bolivia, Italy, Dominican Republic, Finland and Russia.

This years’ Master in International Relations intake comprises a talented, diverse and ambitious group of students capable of bringing a rich diversity of perspectives to the learning process and leaving their mark on this dynamic and innovative program. The program consists of graduates from diverse fields, such as Political Science, Humanities, Law, Economics, Business, Communication and Journalism, who have a clear interest in international relations, both within the public and the private sectors, and who aim to follow careers in areas such as government, NGO’s, international consulting and multinational companies.

The Master in International Relations is an intensive and rigorous 10-month program which is wholly dedicated to preparing professionals with the relevant knowledge and skills necessary to work effectively within an increasingly complex and interconnected world, and opens pathways to international careers in both the public and private sectors.

IE School of Art and Humanities benefits from IE Business School´s expertise, which receives international recognition and is ranked among the top 10 business schools in the world, according to international journals such as Financial Times, The Economist, BusinessWeek and The Wall Street Journal.

The program has successfully served as the spearhead of IE’s international projection, which responds to our firm belief that global awareness is vital to the success of today’s projects in both public and private sectors. It is not by mere chance that some 40.000 of our alumni are working on 5 continents, and that more than 90 nationalities are represented among our student body and faculty.

The program is offered at IE’s Madrid campus, situated in the heart of the city’s modern business district where students benefit from a global atmosphere, unmatched networking opportunities, as well as everything the city has to offer, including learning Spanish, the native language of 500 million people worldwide and the world’s second business language.

IE School of Arts & Humanities is as a Member of the Association of Professional Schools of International Affairs (APSIA), comprised of over 60 member schools in North America, Asia, and Europe. These members promote the enhancement of professional education in international relations and the advancement of international cooperation, cultural tolerance and peace. APSIA serves as an active platform for the exchange of valuable expertise in the international affairs arena.

8
Oct

By Francis Fukuyama

It is a curious fact that in contemporary American political science, very few people want to study the state, that is, the functioning of executive branches and their bureaucracies. Since the onset of the Third Wave of democratizations now more than a generation ago, the overwhelming emphasis in comparative politics has been on democracy, transitions to democracy, human rights, ethnic conflict, violence, transitional justice, and the like. There is of course interest in stability, but primarily as the absence of violence and conflict. Studies of non-democratic countries focus on issues like authoritarian persistence, meaning that the focus still remains the question of democracy in the long run or democratic transition. In other words, most people are interested in studying political institutions that limit or check power—democratic accountability and rule of law—but very few people pay attention to the institution that accumulates and uses power, the state.

The relative emphasis on checking institutions rather than power-deploying institutions is evident in the governance measures that have been developed in recent years. There are numerous measures of the quality of democracy like the Freedom House Freedom in the World and Polity IV measures, as well as newer  ones like the Varieties of Democracy project led by Michael Coppedge, John Gerring et al. What we do not have is a good measure of Weberian bureaucracy—that is, the degree to which bureaucratic recruitment and promotion is merit-based, functionally organized, based on technical qualifications, etc. One of the only studies to attempt to do this was by Peter Evans and James Rauch back in 2000, but their sample was limited to 30-odd countries and produced no time series data. There is also a proprietary cross-country measure, the Political Risk Service’s Group (PRSG) International Country Risk Guide, but because it is proprietary we don’t really know what goes into it. Several of the World Bank Institute’s Worldwide Governance Indicators purport to measure state aspects of state capacity (government effectiveness, regulatory quality, and stability and absence of violence, control of corruption), but these are aggregates of other existing measures and it is not clear how they map onto the Weberian categories. For example, does a good absence of violence score mean that there is effective policing? I suspect that there isn’t much street crime in North Korea. (There are similar problems with the Bank’s internal CPIA scores.)

One important measure that would be great to have but which no one has ever attempted to create, to my knowledge, is a measure of bureaucratic autonomy, that is, the degree to which bureaucrats are under day-to-day control by their nominal political masters, both with regard to policy and with regard to control over cadres. This is utterly critical in understanding bureaucratic quality, and yet is totally unavailable for any kind of quantitative analysis. Read more…

Francis Fukuyama is Olivier Nomellini Senior Fellow at the Freeman Spogli Institute for International Studies (FSI) at Stanford University. Dr. Fukuyama is chairman of the editorial board of The American Interest, which he helped to found in 2005.   He is a senior fellow at the Johns Hopkins SAIS Foreign Policy Institute, and a non-resident fellow at the Carnegie Endowment for International Peace and the Center for Global Development. 

As published by The American Interest on October 2, 2012.

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