19 July 2016

** Crisis in Kashmir is not new but could have been avoided

This suggests a very high order of intelligence failure. 15-07-2016

Another cycle of violence in troubled Kashmir has provoked hysterical commentary and predictions of "a new phase" of terrorism in the Valley.
The reality is that this is Kashmir's "normal". Cycles of violence - particularly street violence - have occurred with insistent regularity over the past years, even as the incidence of terrorist violence and related fatalities remains relatively low.
For all the strident commentary, the reality is that the security forces (SF) have acted with restraint. Fatalities among protesters and the particularly disturbing injuries - including partial or complete blindness as a result of the "non-lethal" pellet guns - have been the consequence of patterns of inadequate deployment in particular areas and overwhelming violence by frenzied crowds, necessitating augmenting levels of use of force.
The present escalation, as was the case with past cycles, will die down - and, indeed, has already dramatically diminished at the time of writing.

Unfortunately, it is almost inevitable that another phase of turmoil will crystallise, sooner or later, around some other incident or event.
Despite the state's long experience of dealing with such incidents and developments, however, it appears that the wheel is reinvented on each occasion, and there is little evidence that the lessons of the past inform responses in each renewed spiral of disorders.
It is useful, consequently, to review some of the difficulties and deficiencies of response in the present case without rancour or attempts to point fingers.
It must be abundantly clear that such situations present difficult challenges for the political leadership. There have been many and misconceived exhortations for politicians to "reach out" to the agitators and "find a political solution acceptable to all stakeholders".

This is politically correct nonsense.
There is little possibility of any such outreach at present, particularly in the more volatile centres of the agitation. It is unrealistic to expect politicians to go out and talk to the people, or to expect the people to listen to them, in phases of escalation, with the intimidation of the terrorists a pressing reality in the background.
The problem is not the absence of political initiatives in this phase; it is, rather, their absence in intervening periods of relatively low violence which no political party appears to have exploited to address enduring tensions and to contest persistent processes of Salafist-Islamist radicalisation in the state.

Moreover, the agitation itself was both predictable and preventable, but there were errors of assessment, both of scale and location. This suggests a very high order of the failure of intelligence - particular in view of the fact that there had been a massive media build-up on Burhan Wani.
This had been backed by ill-considered statements by officials from time to time, virtually confirming Wani's "rock star status". It is now of little utility to harp on the fact that Wani had never executed a single major operation.

** What The Cold War Can Teach Us About Jihadism

posted on 14 July 2016
-- this post authored by Scott Stewart
In an earlier column, I briefly addressed the similarities between the utopian ideology of the Islamic State and that of the global communist movement. I have also compared the counterinsurgency efforts used against the two movements in the past. But as I was writing about thestructure of the Islamic State last week, I encountered more and more parallels to the global Marxist movement.
This got me thinking even more intently about the similar ways that the two - despite their differences - have applied, encouraged and supported the use of violence. In light of these parallels, the lessons derived from the decades-long struggle against communism throughout the world may provide important guidance for the continuing fight against jihadism.
Different Targets, Different Tactics

Taken individually, the violent acts of Marxist or Maoist terrorist groups don't appear to hold a candle to the horrors that Islamic State or al Qaeda jihadists have visited on the world. The attacks conducted and territories seized by individual Marxist groups such as the Red Army Faction, the Tupac Amaru Revolutionary Movement, the New People's Army and the Popular Front for the Liberation of Palestine, for instance, seem to pale in magnitude when compared with those of the Islamic State. When one views individual communist terrorist and insurgent groups as part of a larger global movement, however, the parallels with jihadism become more apparent. Undoubtedly, the Italian Red Brigade posed a lesser terrorist threat to Europe than the Islamic State does today. But combined with all the Marxist groups operating across Europe, from the Provisional Irish Republican Army and November 17 to the Red Army Faction and the Basque ETA, the threat of Marxist terrorism was every bit as severe as the threat of jihadist terrorism is now.

Of course, there are significant differences in the methods of Marxist and jihadist terrorist groups in Europe. Marxist terrorists focused their attacks mostly on symbols of the state and the international system, and they rarely staged strikes intended to create mass casualties. More interested in winning hearts and minds, Marxist terrorists did not want to harm the people they hoped to attract to their cause. So, Europe's Marxists targeted prominent politicians, industrialists and American diplomatic and military targets. When deploying large vehicle bombs, the groups often provided warnings to try to minimize civilian casualties. (Outside Europe, Marxist groups were not always so restrained when it came to targeting civilians, especially in Israel. The Japanese Red Army's 1972 assault on Israel's Lod Airport resembled the recent attack by Islamic State operatives on Istanbul's Ataturk Airport, though the Japanese Red Army operatives did not use suicide vests.)

At the time, these groups could go after hard targets such as the OPEC headquarters in Vienna, the German Embassy in Stockholm, or an American CIA station chief and naval attache because, for one thing, they were much easier targets than they are today. But perhaps Marxist terrorists' greatest advantage over jihadists was access to professional trainers from intelligence organizations such as the Soviet KGB, the East German Stasi and the Cuban DGI. These trainers taught professional-level courses on subjects such as surveillance, operations security, bombmaking, clandestine operations and covert travel. What's more, the highly skilled intelligence agents provided terrorist operatives with weapons, funding, and authentic or professional-grade counterfeit travel documents. Terrorists could find refuge in places such as Yugoslavia, Lebanon or Yemen. In some cases, state sponsors could supply terrorist operatives with cash, or even weapons and explosives, smuggled into the target country by way of the diplomatic pouch.
This access to training and resources gave European Marxist terrorist groups a considerable edge. In fact, I would argue that the level of terrorist tradecraft that some of them exhibited was far superior to anything we've seen from jihadist operatives or supporters in Europe. Relative to their jihadist counterparts, they excelled at planning and executing attacks. To date, no jihadist attack in Europe has come close to rivaling the complexity of the assassination of Lord Louis Mountbatten, the Brighton Hotel bombing or the assassination of Alfred Herrhausen.

** How technology disrupted the truth

Social media has swallowed the news – threatening the funding of public-interest reporting and ushering in an era when everyone has their own facts. But the consequences go far beyond journalism
Tuesday 12 July 2016 

One Monday morning last September, Britain woke to a depraved news story. The prime minister, David Cameron, had committed an “obscene act with a dead pig’s head”, according to the Daily Mail. “A distinguished Oxford contemporary claims Cameron once took part in an outrageous initiation ceremony at a Piers Gaveston event, involving a dead pig,” the paper reported. Piers Gaveston is the name of a riotous Oxford university dining society; the authors of the story claimed their source was an MP, who said he had seen photographic evidence: “His extraordinary suggestion is that the future PM inserted a private part of his anatomy into the animal.”

The story, extracted from a new biography of Cameron, sparked an immediate furore. It was gross, it was a great opportunity to humiliate an elitist prime minister, and many felt it rang true for a former member of the notorious Bullingdon Club. Within minutes, #Piggate and #Hameron were trending on Twitter, and even senior politicians joined the fun: Nicola Sturgeon said the allegations had “entertained the whole country”, while Paddy Ashdown joked that Cameron was “hogging the headlines”. At first, the BBC refused to mention the allegations, and 10 Downing Street said it would not “dignify” the story with a response – but soon it was forced to issue a denial. And so a powerful man was sexually shamed, in a way that had nothing to do with his divisive politics, and in a way he could never really respond to. But who cares? He could take it.
Then, after a full day of online merriment, something shocking happened. Isabel Oakeshott, the Daily Mail journalist who had co-written the biography with Lord Ashcroft, a billionaire businessman, went on TV and admitted that she did not know whether her huge, scandalous scoop was even true. Pressed to provide evidence for the sensational claim, Oakeshott admitted she had none.

“We couldn’t get to the bottom of that source’s allegations,”she said on Channel 4 News. “So we merely reported the account that the source gave us … We don’t say whether we believe it to be true.” In other words, there was no evidence that the prime minister of the United Kingdom had once “inserted a private part of his anatomy” into the mouth of a dead pig – a story reported in dozens of newspapers and repeated in millions of tweets and Facebook updates, which many people presumably still believe to be true today.
Oakeshott went even further to absolve herself of any journalistic responsibility: “It’s up to other people to decide whether they give it any credibility or not,” she concluded. This was not, of course, the first time that outlandish claims were published on the basis of flimsy evidence, but this was an unusually brazen defence. It seemed that journalists were no longer required to believe their own stories to be true, nor, apparently, did they need to provide evidence. Instead it was up to the reader – who does not even know the identity of the source – to make up their own mind. But based on what? Gut instinct, intuition, mood?

Does the truth matter any more?
Nine months after Britain woke up giggling at Cameron’s hypothetical porcine intimacies, the country arose on the morning of 24 June to the very real sight of the prime minister standing outside Downing Street at 8am, announcing his own resignation.
“The British people have voted to leave the European Union and their will must be respected,” Cameron declared. “It was not a decision that was taken lightly, not least because so many things were said by so many different organisations about the significance of this decision. So there can be no doubt about the result.”

Power’ful Plan: Tackling Left-Wing Extremism And Developing North-East In One Go

Swarajya Staff - July 15, 2016, 

Rs 1 lakh crore ‘power’ plan to connect the areas affected by left-wing extremism and the north-eastern states by electricity.
The power transmission company, Power Grid, in which the central government holds a majority stake (57.9 percent), is planning to spend Rs 1 lakh crore over the next four years to expand its network and connect areas affected by left-wing extremism (LWE) and the north-eastern states, Livemint reported yesterday (14 July).
In addition to the Power Grid’s existing network in Uttar Pradesh and the North-East, the company put into operation an 186 circuit km 400-kilovolt transmission line from Ranchi in Jharkhand to Gaya in Bihar the day before yesterday. This transmission line passes through the left-wing extremism affected areas like Lohardaga, Latehar and Chatra in Jharkhand.

The project will help break the monopoly of the incumbent actors operating in the region and give the household and industrial consumers more choice and freedom in purchasing power.
The company is hoping to put 84,500 ckm into operation in the next couple of years in addition to its existing network of 130,000 ckm, a more than 60 percent increase in infrastructure addition which is huge.
The company intends to aid connectivity and communications in the regions where it now seeks to penetrate. It plans to do this in two ways.

First, it plans to install telecom towers along transmission routes. It is still not clear who will build/operate these towers. LWE affected areas are generally known for poor connectivity and telecom operators are loath to operate in such areas.
Second, apart from telecom towers, Power Grid corporation will also run a fibre optic cable network . This diversification will have a multiplier effect on the development of the region that’s been neglected for long.
At the same time, the company will be contributing in the progress of Digital India programme.

** The Dysfunctional Pakistani Counterinsurgency and Counterterror Campaign

India-Pakistan: Counter-Terrorism Gone Bad
July 17, 2016
Pakistan is feeling pretty good about its progress in suppressing Islamic terrorism within Pakistan. So far this year Islamic terrorism related deaths are down over fifty percent compared to 2015. Terrorist deaths are still more than ten times higher (on a per-capital basis) than neighboring India. But India blames Pakistan for the sharp increase in Islamic terror activity in Kashmir this year. Pakistan has been sponsoring Islamic terrorism in Indian Kashmir since the 1980s and terrorism deaths in Kashmir peaked in 2001. By 2011 India had reduced Islamic terrorist related violence in Kashmir by over 95 percent from that 2001 peak. Despite that Pakistan and the Pakistani experience with internal Islamic terrorist violence Pakistan keeps recruiting, training and sending Islamic terrorists into India.

For the first four months of 2016 the Islamic terrorist violence in Kashmir was running at the same levels as 2015. But in the last few months there has been a major escalation and now Islamic terrorist deaths in Kashmir are 50 percent higher than the same period in 2015. This is largely because Pakistan based Islamic terrorists are increasingly active in trying to cross into India along the Kashmir (northern Pakistan/northwest India) border. So far this year 81 Islamic terrorists have been killed in Indian Kashmir compared to 36 for the same period last year. Over half of these dead terrorists can be identified as coming from Pakistan. Leftist rebels (Maoists) continue to be a bigger problem for India than Islamic terrorism. The difference is the Maoists have no outside support while the Islamic terrorists have long, and very visibly been based in Pakistan.
India has tried several times to negotiate agreements with Pakistan to eliminate Pakistani border violence. These attacks are often carried out to distract Indian border guards and make it easier for Islamic terrorists to cross into India. These ceasefires have worked along most of the border, but along the border between Indian and Pakistani Kashmir.

On this border there have been 11,270 ceasefire violations since 2002 through the end of 2015. These incidents resulted in 313 deaths on the Indian side, 44 percent of them soldiers or police. These incidents peaked in 2002 with 8,376 incidents. That led to negotiations and during 2003 there were only 2,045 incidents. A new ceasefire treaty came into effect during November 2003. For a while this worked. During three years (2004, 2005 and 2007) there were no violations. But in the last few years, especially 2016, that has changed. This coincides with the Pakistani military announcing this year the January 2013 decision declaring internal Islamic terrorist groups were the main threat to Pakistan, not India, was now revoked. To the Pakistani generals India is now the main reason why the Pakistani military exists. The 2013 decision caused many Islamic conservatives in Pakistan to call for “true Moslems” in the military to rise up and oppose this disturbing policy change. That did not happen and reassured the military leadership. But by 2012 there was agreement among most Pakistanis that Islamic terrorism inside Pakistan was a problem that needed more attention than India. Despite this 2013 decision Pakistan did not abandon their two decade old terrorism campaign in Indian Kashmir, but activity was reduced. The Pakistani army never stopped supporting cooperative Islamic terrorists and now has ordered them to increase their efforts in Kashmir. Officially Pakistan denies it is behind the Islamic terrorism in Kashmir but that deceit no longer works.

Pakistan Gets Real
In Pakistan a growing number of present and former officials are admitting that Pakistan still supports certain Islamic terrorist groups. It is becoming increasingly difficult to deny this as more and more evidence is presented. This has led to open discussions about how to deal with the mess these lies have gotten Pakistan into. Some of these public discussions feature Pakistani officials saying that to move against all Islamic terrorists in Pakistan too aggressively would mean more Islamic terrorist attacks inside Pakistan. While that makes sense to many Pakistanis it simply angers Afghanistan and India (and now Bangladesh as well) because they have long suffered from Pakistan based Islamic terror groups that had (and still have) sanctuary in Pakistan and until recently any Pakistani openly admitting that would be called a traitor and risk prison or death. What changed Pakistani attitudes towards this official denial was the growing evidence that the Pakistani position was all a lie. That includes Pakistan trying to blame all Islamic terrorist violence inside Pakistan on foreigners (usually India). This became embarrassing when Pakistani Islamic terrorists would get on the Internet and provide evidence that they, not India, did it. The Afghans and Americans also lost their patience with years of Pakistani promises that “they were working on the problem” when, in fact, that was all for show.

* Remembering the Forgotten War: Assessment of the Security Situation in Afghanistan

July 15, 2016
Afghanistan Partial Threat Assessment: June 30, 2016
Institute for the Study of War
By Caitlin Forrest
President Obama announced on July 6 that the U.S. will maintain 8,400 troops in Afghanistan through the end of January 2017 instead of the planned drawdown to 5,500. He then stated that the only way to achieve a full drawdown of forces is to reach a peaceful political settlement between Taliban militants and the Afghan government. A peace agreement is unlikely, however, as militants have steadily regained territory since the bulk of U.S. forces withdrew from Afghanistan beginning in 2011. While recent efforts have forestalled militant advances, current troop levels do not sufficiently threaten militant operations to bring them to the negotiating table or prevent additional extremist groups from reconstituting in Afghanistan.

Taliban militants announced their summer campaign, “Operation Omari,” onApril 12, 2016, the day ISW published the last version of this map. The group has since held back from launching major offensives, likely in response to increased pressure from the U.S. A U.S. drone strike killed Taliban leader Mullah Akhtar Mohammad Mansour, the successor to Mullah Omar, on May 21in Balochistan, Pakistan. Mansour’s death shifted some of the decision-making power back to the Taliban’s Quetta Shura Council, possibly slowing operations. The Taliban quickly announced new leadership to maintain cohesion within the movement, selecting Haibatullah Akhundzada as the new Emir and Sirajuddin Haqqani and the late Mullah Omar’s son, Mullah Yaqoob, as his deputies. Yaqoob originally challenged Akhtar Mansour’s leadership, but Sirajuddinfacilitated his reconciliation with the group in early 2016. The appointment of both Sirajuddin and Yaqoob circumvented the likely factional infighting that might follow the choice of either of the deputies and averted the international sanctions that Siraj Haqqani’s appointment would have brought. Akhundzada’s appointment came less than two weeks before Ramadan began on June 5, and observance of the holy month may have also delayed offensives. If the group’s Operation Omari remains stalled after the end of Ramadan on July 5, it could indicate that leadership change has negatively affected operations over the medium term.

Successful joint U.S.-ANSF operations have likely also stalled major Taliban militant operations. President Obama broadened the authorities of the U.S. military in Afghanistan on June 10 to allow it to conduct joint operations with the ANSF and for U.S. airpower to offensively target Taliban militants. Resolute Support Commander General John Nicholson stated on July 12 that the U.S. used new and previous authorities to support the ANSF in successfully defending the Kunduz and Uruzgan provincial capitals from Taliban militants. These operations represent important progress of the ANSF’s capabilities to defend key population centers, but does not eliminate surrounding militant sanctuaries that threaten the integrity of cities in the long-term. Meanwhile ISIS’s Wilayat Khorasan is currently resurgent in eastern Afghanistan despite broadened U.S. authorities in December 2015 to target them directly. ISIS has launched new offensives, increased recruitment, and claimed to capture areas in Nangarhar Province since March 2016, when ANSF forces with U.S. airstrikes dislodged them.

The reduction of U.S troops allows militants, powerbrokers, and regional actors to expand operations that ultimately threaten long-term interests in Afghanistan. Northern warlords are taking advantage of Taliban militant offensives in order to carve out their own fiefdoms and undermine President Ghani and CEO Abdullah Abdullah. Tensions between long-time rivals First Vice President Abdul Rashid Dostum and acting Balkh Provincial Governor Mohammad Atta Noor have escalated, culminating in at least one clash between their two parties’ militias in Faryab Province over the reporting period. President Ghani likely gave Dostum the authority to utilize his own militias against militants in February 2016 in return for Dostum’s continued participation in government affairs as the First Vice President. Dostum and Atta are competing to establish themselves as leading security providers. Dostum also resumed harsh criticisms of the ineffectiveness of the Unity Government, indicating Dostum may be positioning himself to extract additional concessions from President Ghani to increase his influence in government and expand his militia’s operations. Dostum and Atta’s operations impede U.S. operations in northern Afghanistan by undermining the national security institutions the U.S. mission seeks to bolster.

Pakistan’s Kamikaze Kashmir Policy Exposes Lives of Innocent Kashmiris to Risk

Rahul Bhonsle
Jul 16, 2016 
Pakistan is frequently cited as a state in self-destructive mode. While every nation has the right to select policies that are congruent to the aspirations of its people and leaders when these create insecurities in the neighbourhood, these need to be contested in the public domain.
Kashmir is on the boil for the past week plus since the killing of terrorist leader Burhan Wani in an encounter on 8 July with the Indian security forces. Wani was a leader of the Hizbul Mujahideen a terrorist outfit falling under the List Of Banned Terrorist Organisations Under Section 35 Of Unlawful Activities (Prevention) Act, 1967 in India. Thus Pakistan is ipso facto declaring support to him through a cabinet resolution indicates scant regard for an international commitment to counter terrorism.

Pakistan’s political or military leaders are no bleeding heart liberals their record of human rights violations and war crimes are a gory chapter in the history of the Sub Continent which needs no recounting here.
This time, the Pakistan Cabinet has jumped into the fray fishing in troubled waters. A special meeting of the federal cabinet on 15 July chaired by Prime Minister Nawaz Sharif, decided to mark July 19 as ‘black day’.
Prime Minister Nawaz Sharif thundered, “I and entire Pakistani nation steadfastly stand by Kashmiris,” against what he claimed, “Indian oppression.”

The reason for the emergency meeting of the Cabinet and the declaration of 19 July as the Black Day is not hard to fathom.
Two days later on 21 July are elections in Pakistan Occupied Kashmir [POK]. Nawaz Sharif's Pakistan Muslim League-Nawaz (PML-N) is desperate to show that it retains the trust of the people. With aggressive campaigning by Pakistan People's Party (PPP) led by Bilawal Zardari Bhutto and Pakistan Tehreek-i-Insaf led by Imran Khan Nawaz is under pressure.
The worry over the impact of Panama Papers revelations is possibly bugging the Prime Minister, who has just returned from open heart surgery in London and is facing flak from the opposition with the Army also breathing down his neck.

Reports of posters in Pakistani cities asking Army Chief Raheel Sharif to take over had appeared last week mysteriously. This was an indirect signal to the political parties even though the Army denied any links to the episode.
While POK elections may not be central to the country’s polity, as Sharif knows loss in even peripheral areas may have a spiralling impact with just about a year plus left for the general elections.
The violence in Kashmir has provided a suitable handle for not only Nawaz Sharif but others as Bilawal Zardari Bhutto making his debut in electoral politics in POK.
A win for either party has become crucial however irresponsible statements that rouse the flames of violence in Kashmir is only adding to complex dynamics in the Valley.
If Islamabad has good of the Kashmiri people on its minds, it has to stop this mindless folly of propaganda and instead arrest and take action against the likes of Hafeez Saeed, the terrorist leader of the Lashkar e Taiyyaba perpetrator of the Mumbai 26/11 terror attack.

Why Brazil’s Economy May Be Headed for Recovery

July 15, 2016
By Allison Fedirka
There are growing indications that investments in Brazil are increasing.
For months, mainstream headlines have been painting a negative picture of the Brazilian economy and yesterday’s headlines were no different. The Central Bank announced that economic activity in May fell by 0.51 percent compared to the previous month. This means economic activity decreased 16 of the last 17 months – the exception being April, when it increased by 0.07 percent. Despite this negative economic performance, growing anecdotal evidence indicates investors still maintain a strong interest in Brazil. Much of this steadfast interest can be attributed to the economic reforms promised by interim President Michel Temer. 

In our Mid-Year Report Card, Geopolitical Futures identified Brazil as one of the key countries for our forecast that there will be increased foreign direct investment (FDI) in South America this year. This forecast stems from the fact that the Western Hemisphere remains stable compared to Eurasia, as well as the anticipation of a regional shift to more center-right, market-friendly policies. According to the U.N., Brazil received about 57 percent of all FDI destined for South America in 2015. The tracking of this forecast relies on anecdotal evidence since there is a general lack of data for running FDI totals and quarterly or annual statistics often publish months after the fact. For example, complete 2015 FDI figures for the region were not released by the Economic Commission for Latin America until June 2016. For this reason, when we observe anecdotal evidence of interest in Brazilian investment, we take special note.

This week, two leading financial media outlets – Bloomberg and Valor Econômico – published articles highlighting increased investor confidence in Brazil. In one article, Bloomberg noted that BlackRock, the world’s largest money manager, increased Brazilian holdings in their portfolio from 46 percent to 57 percent in the last six months. In a separate article, the outlet noted that nine out of 12 funds surveyed by Reuters included Brazilian bonds. And London’s Finisterre Capital has enjoyed positive returns on its purchase of Petrobras bonds in February. The bonds initially traded at $0.75 on the dollar but now trade at around $0.93. 
Valor Econômico detailed the market expectations for Brazil’s leading asset management firms for 2016 and 2017. In particular, asset managers from AZ Quest, BNP Paribas, BTG Pactual and Santander Asset Management Brasil expressed an optimistic outlook for the second half of the year and highlighted signs the Brazilian market will start to recover.

This anecdotal evidence also aligns with Brazil’s Central Bank estimates for the year. Since late April, there has been a steady rise in the Central Bank’s expectations for direct investment into the Brazilian economy this year. At the start of 2016, Brazil’s Central Bank’s weekly bulletin, Focus, reported the expected aggregate median market estimate for direct investment was $55 billion. In the last week of April, this figure crept up to $58 billion and in the most recent edition of Focus published on July 8 it increased to $63.5 billion. 

In general, one of the first things evaluated for potential investment locations is the macroeconomic environment. The objective is to understand whether the broader performance, on the whole, is up or down. To make the most profit, investors ideally invest when the economy has bottomed out. 

With the Brazilian Senate’s decision on May 12 to open an impeachment trial against President Dilma Rousseff came the opportunity to reform Brazil’s economy. Many investors, including from the companies listed above, view economic reforms proposed by Temer as a turning point for the Brazilian economy. Furthermore, major credit rating agencies – include S&P and Moody’s – have noted their earlier downgrades did not factor in Temer’s planned economic reforms, making any future downgrades this year and next unlikely. 

Markets also responded positively to the promise of reforms in the interim Brazilian government. Brazil’s stock market Ibovespa gained this week for the sixth consecutive session. At this point in the year, Ibovespa is the best performing major stock market in the world. The Brazilian currency, the real, also has gained 20 percent against the dollar this year and is one of the currencies that has made the largest gains in the world. Lastly, the cost to hedge against losses in Brazil’s bonds with credit default swaps has dropped by almost a third in the past six months.

Temer’s reforms focus on reducing the government’s fiscal deficit and keeping the government solvent primarily through austerity measures. One of his first acts in office was to redefine the 2016 budget, which included a new deficit target of 170.5 billion reais ($52.4 billion) for 2016 and roughly 139 billion reais for next year. The priority for the current government is to amend the constitution so that the government can cap public spending to an increase no more than the previous year’s inflation rate. Ideally, this spending cap will be in place by 2017 and will lower government spending by 80 billion reais. 

There is also discussion of raising about 10 different taxes by a small amount in localized areas, rather than increasing personal income tax or taxes on very general items like fuel. Pension reform has also been discussed but is currently on the back burner due to its controversial nature. The desired side-effects of these changes include lower inflation and interest rates, as well as renewed investor confidence. 

At this time, the general consensus and perception is that Temer will remain in office through 2018 as Rousseff is expected to be found guilty at her impeachment trial in late August. The most recent tally of impeachment votes by the Estadão newspaper show 38 senators in favor, 18 against, 19 undisclosed and six undecided. Fifty-four votes are needed to be impeached. Temer will still need to work closely with Congress to ensure he has enough support to move his measures through. This will be a difficult but not impossible task. 

Markets frequently have difficulty distinguishing between cyclical and structural shifts. Brazil has many structural problems but nonetheless enjoyed high growth during the administration of President Luiz Inácio Lula da Silva. There is a tendency to forget that after periods of growth, no matter how large or small, the opposite will follow and markets will contract. This is a necessary corrective and a natural part of the economic cycle that helps force inefficiencies out of the market. It was inevitable that Brazil would experience a contraction, which was further aggravated by underlying structural problems. Inevitably, many have seen this as a failure of the Brazilian economy rather than a natural corrective phase. 

The current recession has helped correct distortions and inefficiencies in the Brazilian economy. Parallel to this, the government has raised investors’ confidence by laying out vital economic reforms. The recession has been painful at times and may not be entirely over yet. However, as indicated by the growing anecdotal evidence, writing off Brazil would be a mistake.

Philippines vs. China in the South China Sea: Beijing at a Geopolitical Crossroads

July 17, 2016
"An overwhelming victory" is how Paul Reichler, lead counsel of the Philippines, describes the Award issued by Permanent Court of Arbitration Tribunal in the case of Philippines v. China concerning the South China Sea (SCS). The Tribunal unanimously granted all but a handful of Manila’s claims, and in doing so laid down a significant number of rulings that will reshape the discourse over the SCS disputes in the years to come.
First and foremost, the Tribunal definitively characterized and then struck down the most expansive of all the various claims to the SCS: China’s historic rights claims, as represented by the ‘nine-dash line’ map. The Tribunal held that clearly, any and all historic rights claims to waters beyond the territorial sea were relinquished and abandoned by China when it signed and ratified UNCLOS and thereby agreed with the establishment of the EEZ and continental shelf regimes in favor of all coastal states.

Second, the Tribunal comprehensively characterized all of the features in the Spratly Islands region and Scarborough Shoal. The islands and rocks created pockets of disputed territorial sovereignty, but the sea areas around them could be jurisdictionally allocated to adjacent coastal states in accordance with UNCLOS.

Third, the Tribunal found that China’s interference with Filipino fishing and petroleum exploration activities, construction of artificial islands, and failure to prevent Chinese fishermen from fishing in the Philippines’ EEZ, were all in violation of the Philippines’ sovereign rights over its EEZ and continental shelf. The Tribunal also determined that China’s construction of seven artificial islands and failure to prevent its fishermen from engaging in destructive fishing practices, violated its obligations to preserve and protect the marine environment.

Lastly, the Tribunal found that by creating artificial islands, China violated its obligations to refrain from taking actions that cause permanent and irreparable harm to the marine environment and acted prejudicially against the rights of the Philippines. China thereby acted contrary to international law by aggravating the dispute.

The Award has serious implications that ripple across the Southeast Asian region and the rest of the Asia-Pacific. It closes the door on China’s claims to excessive maritime jurisdictions in the SCS based on historic rights. The vindication of the Philippines’ rights to its EEZ and continental shelf outside of these disputed enclaves implies that beyond the mainland coasts and enclaves of islands or rocks, the SCS is open to either coastal state exclusive resource rights or common international uses.

* Why China Won't Back Off The South China Sea - Whatever The World Might Say

4 July 2016
A much-anticipated ruling on the South China Sea dispute initiated against China by the Philippines finally came down - and unsurprisingly, the Hague-based international tribunal that judged it ruled in favour of the Philippines, rejecting China's claims of historical rights to the sea's resources.

The Philippines welcomed the ruling, and celebrated it as a devastating legal blow to China's claims in the contested waters. Filipinos coined a new word, "Chexit", inspired by the term Brexit, to symbolise that China is out of the South China Sea.
The reaction from China was furious. Its Ministry of Foreign Affairs immediatelydeclared that "the award is null and has no binding force", and that China "neither accepts nor recognises it". Xinhua, the state news agency, said the tribunal was "law-abusing" and its award "ill-founded". Meanwhile Beijing released a white paperreiterating its claims to the South China Sea and adhering to the position that the dispute should be settled through negotiations.
Chinese internet users overwhelmingly expressed their patriotic sentiments and support for the government claim. On Sina Weibo, China's hugely popular social sharing site, state newspaper People's Daily said:

"There is no need for others to rule on China's territorial and maritime rights", with an image and slogan stating, "China: we can't lose even one single dot".
Within a few hours, this message had attracted more than 1m retweets and hundreds of thousands of supporters among Weibo users. Its hashtag has totted up more than 3.7 billion shares.
In the global media, by contrast, China has been widely accused of disregarding international law and needlessly heating up the dispute in the region.

In what still thankfully remains a war of words, at least for now, it may be worth looking into the reasons why China rejects the authority of international arbitration in the first place.
China says no
Right after the Philippines appealed to the court in 2013, Beijing stated that it would not participate in the tribunal proceedings because the Philippines had no legal grounds to unilaterally initiate compulsory arbitration. And in December 2014, the Chinese Ministry of Foreign Affairs released an official position paper stating that it would neither recognise nor participate in the arbitration.

Its argument was that the UN Convention on the Law of Sea cannot be used to decide issues of sovereignty in the South China Sea. It also pointed to an official declaration of optional exception that China made in 2006, which stated that China accepted no compulsory settlement procedures provided by the convention on territorial sovereignty and maritime delimitation.
Beijing takes the position that the South China Sea dispute should be resolved firstly by negotiations among the countries involved before any international arbitration takes place. Under the UN convention, compulsory arbitration can only be sought after other procedures, including bilateral negotiations, have been exhausted - something China does not believe has happened yet.
China is under severe criticism for its position. The US in particular has long urged China to respect international law; back in December 2014, the US State Department released a report subjecting China's claims to legal scrutiny. And since 2015, in the name of "freedom of navigation exercises", the US Navy has deployed more and more military patrol warships near the contested waters, despite the fact that it is not a party to the territorial claims in the disputed waters.

Syrian Army Cuts Rebel Supply Route to Their Forces in Aleppo

Pro-Regime Forces Close Main Opposition Supply Route to Aleppo City
Institute for the Study of War
July 16, 2016
By Christopher Kozak with Genevieve Casagrande

Syrian President Bashar al-Assad is within two miles of besieging over 200,000 civilians in Aleppo City. Pro-regime forces established fire control over the primary ground line of communication into opposition-held districts of Aleppo City on July 8after seizing a key hill overlooking the Castello Highway north of the city. Regime forces including the elite Syrian Arab Army Republican Guard later launched anoffensive in the Khalidiyah Industrial District of Northern Aleppo City on July 12, advancing from the south towards the Castello Road. The advances mark the latest high-water mark in a multi-phase campaign to encircle and besiege Syria’s largest urban center, an effort that began in October 2015 with support from Russian airpower and Iranian ground reinforcement. The Assad regime has long relied upon siege-and-starve tactics in order to force the submission of opposition pockets throughout the Syrian Civil War. The threat of a looming siege in Aleppo has already begun to impact conditions in neighborhoods across the city. The price of staple foods such as flour and rice reportedly more than tripled over the past few days as municipal leaders implemented mandatory rationing and fell back upon prepared stockpiles of supplies. The UN Office for the Coordination of Humanitarian Affairs (OCHA) warned on July 13 that humanitarian agencies only have enough assistance in position to provide one month of food for 145,000 out of an estimated 200,000 to 300,000 civilians living in opposition-held parts of Aleppo City.

A successful siege would constitute a serious blow to the non-jihadist opposition and would ensure the further radicalization of the Syrian opposition in northwestern Syria. Aleppo City has remained the priority effort for Russia and Iran in Syria. The regime and its allies will likely leverage the siege to secure meaningful political concessions from the international community. An anonymous source quoted by Al-Rai in Kuwait claimed that Russia, Syria, and Iran agreed as early as June 10 to close the supply line into Aleppo City and thereby impose a ceasefire by force as the first step towards political negotiations that favor the regime. If true, this vision appears close to becoming a reality - particularly given recent steps towards a limited military partnership between the U.S. and Russia in Syria. The Syrian Sunni population will not accept a negotiation that allows President Assad to remain in power. Political negotiations that fail to address the legitimate grievances of Syrian Sunnis will only strengthen the hand of irreconcilable groups such as ISIS and Jabhat al-Nusra at the expense of acceptable opposition groups. The siege of Aleppo City thus does not represent the beginning of the end of the Syrian Civil War, but rather the driver of a new, deadlier phase of long-term disorder in the Middle East. 

ISIS’s Identity Crisis

Journal Article | July 16, 2016 

As France reels from the most recent terror attack in Nice, no group has officially claimed responsibility. ISIS supporters have taken to twitter to unofficially claim responsibility for the attacks as retaliation for the death of Abu Omar Shishani. The attack claimed 84 lives and appears to answer the call by ISIS leaders for followers to conduct attacks in a similar method. In the midst of mounting losses against a US led coalition, ISIS has struggled to maintain its narrative. It has been adamant in its self-identification as a state but struggles to function as such seemingly more concerned with terrorist strikes than governance.
In 2014, ISIS tore across Syria and Iraq exploiting the Syrian Civil War and a vacuum left in a post-US Iraq. Their ability to hijack the Sunni narrative relied heavily on a marginalized Sunni population exasperated by Iraqi political sectarianism and the Syrian revolution. The self-proclaimed Islamic State promised a seemingly viable alternative to the Syrian and Iraqi governments bolstered by its own claims of a truly Islamic State with professionally produced media providing the proof. At its peak, ISIS had effectively achieved proto-statehood, blurring the lines between nation state, terrorist organization, and PR company, masquerading as a functioning government while simultaneously funding, facilitating, and exporting terrorism abroad.

Two years since its formal self-proclamation as a state, ISIS’s identity crisis centers on its claims of governance. The US led Coalition has succeeded in degrading ISIS’s military capability, as the organization continues to lose territory they are faced with a reality check as they lose credibility as a self-proclaimed state. The Coalition’s progress along the Tigris and Euphrates river valleys serves as a very real threat to ISIS’s core as they continue to trade territory for security in an effort to maintain their narrative of a cohesive Islamic State. ISIS will continue to prioritize holding their Syrian strongholds and shift fighters as needed to preserve combat power. ISIS’s economy of force is most apparent as they melt from cities pressured by Coalition advances while maintaining a reserve capable of conducting insurgent like attacks in order to destabilize and undermine Coalition efforts.

US led efforts to diminish ISIS’s governance capacity have been woefully unsuccessful without supporting lethal effects. However, targeting ISIS’s governmental capacity quickly becomes a wicked problem, any action to solve one problem worsens another. The US has struggled to provide a credible counter narrative in ISIS controlled areas. Lethal targeting via kinetic strikes against ISIS held infrastructure undermines ISIS’s ability to govern but immediately impacts the civilian population and significantly hinders any post ISIS transitional government’s ability to provide services. Nonlethal efforts to highlight the increased cost of living and decreased quality of life under ISIS solicit comparison to life under the Regime, recognized as a greater evil within ISIS controlled areas. Research from ORB International indicates that the number one factor in displaced Syrians fleeing their homes is safety from airstrikes. A distant second is the quality of life under ISIS’s strict enforcement of Sharia law. Coalition nonlethal efforts to weaken ISIS’s legitimacy are immediately undermined by lethal efforts to hinder ISIS’s capacity to govern.

* Brexit: Birth of a Nation

Journal Article | July 16, 2016 

“What men value in this world are not rights but privileges.” – H.L. Mencken
Churchill was correct. Democracy is a flawed vessel, especially when the vote doesn’t go your way.
Incumbents and the establishment don’t care much for independent voters, citizens who can’t be manipulated or controlled. When the electorate shows some pluck, the whining begins. The complaint today is “too much democracy.”
Elites are not just bad losers; they’re bad winners too. Indeed, most politicians who have been in office for more than two election cycles usually become tone deaf and clueless.

Part of the problem is professional. Too many politicians are lawyers by schooling, trade, or inclination. Billing hours, not justice, is the lodestar for the Bar, when they appear before it or sit on the bench. That ethic does not change when lawyers are elected or appointed to the ruling class. Yes, class is trending again.
A lawyer in government may not control billing hours, but they still control the purse, perks, and the revolving door. Few barrister/politicians want for much. Hillary and Bill come to mind.
Once seduced by the privileges of office, most politicians can only remember the adjective, not the noun in sobriquets like “public servant.” Lawyers and politicians get paid, win or lose, in or out of office. An American congressman, for example, collects a pension after five years of service; a senator serves one term to win a pension.
Contemporary politicians are “servants” in the same sense that marijuana is medication.

The recent referendum in Britain, aka “Brexit,” might be a case study in poetic justice. David Cameron, the unctuous PM who sponsored the exit referendum, never expected a majority “yes” vote. Cameron is a typical political weasel, now a cake-and- eat-it casualty. He played to the crowd with talk about Brit sovereignty, never believing that the lumpen proletariat would actually jump the EU ship.
God save the Queen and the flat hats!
Indeed, the people have spoken. Cameron is out of a job and globalism is on the ropes for a change. Call it a declaration of independence. Better still, call Brexit the birth of a nation. 
If the EU exit vote says anything, it suggests that national sovereignty matters more than supra national or NGO tyranny. The immigration issue is an illustration.
In Europe, unelected EU Commissioners, Juncker’s politburo, decide number and nationality of migrants who must be accepted by member states. In America, while numbers may be smaller, all migrants are laundered through UN agencies or NGO’s, none of which are accountable to the American people. The Yankee electorate, like Europe, has little to say about who comes, goes - or pays.
Globalism, open borders, the welfare state, and the Islamic jihad have created a witch’s brew of national insecurities.

Few will admit it, but terror, Islam, and the Muslim small wars have done what conventional attack could not. Europe is now at risk from within and without. Indeed, the EU may collapse long before any meaningful number of Muslims can be “assimilated.” Paradoxically, tolerance and assimilation is the fairy tale which rationalizes Sharia imperialism and immigrant tsunamis.
The Marquise de Pompadour captured the cost of both ancien regimes and the revolution, “Apres nous, le deluge!”

The globalism chimera in Brussels seems to have reached that tipping point. Most Eurocrats, like their UN counterparts, are the otherwise unemployed political deadwood from social or autocratic “democracies.” Jean-Claude Juncker, former PM of Luxembourg (population 0.5 million), is the archetype. As with non-profits and NGO’s, such privileged elites do not answer to any constituency except committees of their own making.

Even legendary “non-profit” institutions, like the Red Cross, succumb to root rot in the globalist commune. As with many international “charities,” Red Cross humanitarians take better care of themselves today than they do disaster victims. Even die hard socialists seem to have given up on such clueless, if not in-bred, transnationals.

Speaking of vacuity, Barack Obama and Joe Biden presume to lecture the English on the hazards of national soveignty before and after the Brexit vote. Obama threatened to put Britannia at the “end of the queue.” Vice-President Biden, before the egg on the president’s face could dry, suggested that the Brit establishment didn’t necessarily have to honor the mandate of voters.

Such globalist arrogance is manifest in Brussels. At the moment, a cabal of Euro strategic storm troopers is actually arguing for an “EU Army,” as if the NATO legion wasn’t dangerous enough. For the past two decades, NATO and the US State Department have been playing nuclear chicken with the Russians.

At the same time, Brussels can’t protect itself from Islamists at home. Hard to believe that a Schengen army in Europe would be any more effective or economical than the hapless Frontex border scouts. 

Withal, our English cousins have fired a shot across the bow of a least one globalist goliath and laid down a marker for national sovereignty everywhere, especially America. The echoes of Brexit are sure to be heard in the 2016 American presidential election.

England is the mother of parliaments and the father of modern democracy. Both America and England were products of the Enlightenment. National independence and democracy were probative values then and they remain so today. All of America’s founding fathers were in fact enlightened Englishmen.

Locke, Smith, Hume, Darwin, and Burke too were rational humanists, men who believed that national independence and pragmatic empiricism were virtues. Charles Darwin and Adam Smith, in particular, argued that individual and national freedom were, not simply morally appropriate and natural, but necessary too in a bio-economic world where true progress has measures of effectiveness - concrete achievements, winners and losers in large and small ways.

Today, words like success, victory, and winning have been stricken from the public square in favor of communal rhetoric and politicized egalitarian hokum. The world of political correctness is now one “whose function is to prevent thought or discussion (or remedy) for unpleasant realities.” Islam is an example.

Alas, English and America democracies were fashioned at a time where empirical meant factual, skeptical meant objective, and liberal actually meant progress, not fantasy. The real world, then and now, is a competitive, yea sometimes a lethal contest between ideas, individuals, institutions, and frequently nations. The fittest survive.

A world of winners would be absurd without losers. Life, reality, and people are frequently unpleasant.

“To be a hero is, by definition, exceptional; if everyone were heroic, no one would be a hero.” Opportunity, or fair competition, might be noble goals. Equality, on the other hand, of individuals or nation states is just so much civic drivel. We are diverse because we are different. In many cases, “diverse” is the polite euphemism for weak - and unequal.

Post-Brexit ironies abound. Losers are calling for a new vote. The worst are asking for an outright ban on referendums. Quasi- nationals like Northern Ireland, Scotland, and Wales are talking separation from the UK. Alas, Scots and Irishmen value the dole as much as much they do a good tipple. Brussels is unlikely to pick up those Celtic bar tabs.

Globalism has been found wanting because dreams of homogeneous empire are always impractical schemes. In the end, empire requires autocratic and arbitrary measures to survive. Rome lasted as long as it did because, early on, it had good engineers, extra-virgin olive oil, and ruthless legions.

There are many euphemisms for empire today. The most pernicious might be Parag Khanna’s “connectography” a globalist theory that sees urban centers, nee big cities, replacing Westphalian nation states. The beads on this daisy chain are to be connected by trade. Khanna’s dream world is not much different than China’s “Silk Road,” the “one belt, one road” project.

These trade and infrastructure visions tend to confuse connectivity with consensus, integration with intelligent design. Facebook is an example. Zuckerberg’s vision is to have the world on his social network.Qui bono?

If you gave plebs of the world a choice of potable water, central heating, pizza, a flush toilet, housing, and literacy - or a personal computer; do trade trolls like Khanna really believe that the consensus choice would be a smart phone?

Any connectographs or silk thruways that run through the Muslim world are sure to be toll roads too, if not free fire zones. Islam knows too well that consumerism and commerce are the cutting edges of the imperial sword.

Empire fails because it is always at odds with common needs and true diversity; that species of tribalism, or local solidarity, which drives all genuine human competitive enterprise. Or as one ward healer put it, “All politics is local.” UN membership has expanded exponentially since 1945, creating the misfired meme of national equality. Somalia is the equal of Sweden in the same sense that a goat is the equal of a Volvo.

The EU and NATO continue to expand nonetheless, channeling the menace of the now defunct Warsaw Pact. The EU began as a benign economic condominium too. That consortium is now being undone by autocratic pipe dreams, political/military over reach at home, and appeasement abroad.

Tragically, EU imperialism (aka humanitarian intervention) has now destabilized the Levant, North Africa, and Eastern Europe. The refugee crisis in not just blowback or poetic justice anymore. The Levant, the Islamic State, and Europe are now joined by an umbilical cord of bad policy. Today, Washington and Brussels are the official sponsors of Mohammad’s backpack jihad.

Globalism is indeed the new imperialism. Empire now comes dressed as a Muslim pilgrim, a humanitarian, or a trade troll. Like other Utopian illusions; the EU, the UN, the sharia Ummah, and those globalist trade mirages will suffer the same fate as the Internationale and the Thousand YearReich. How much carnage comes before then is anybody’s guess. For now, Brexit appears to be the ghost of Christmas future.

If global government were possible today, the end of national and local democracy would begin.

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About the Author

The author is a former USAF Intelligence officer, Vietnam veteran, a graduate of Iona College (BA), the University of Southern California (MS), the Defense Intelligence College, and the Air War College. He the former Senior USAF Research Fellow at RAND Corporation, Santa Monica and the former Director of Research and Russian (nee Soviet) Studies, ACS Intelligence, HQ USAF, serving under General James Clapper. Colonel Donovan has served at the Defense Intelligence Agency, the National Security Agency and the Central intelligence Agency.