The Chinese century is well under way

(THIS ARTICLE IS COURTESY OF THE ECONOMIST)

 

 

The Chinese century is well under way

Many trends that appear global are in fact mostly Chinese

When scholars of international relations predict that the 2000s will be a “Chinese century”, they are not being premature. Although America remains the lone superpower, China has already replaced it as the driver of global change.

There is one economic metric on which China already ranks first. Measured at market exchange rates, China’s gdp is still 40% smaller than America’s. However, on a purchasing-power-parity (ppp) basis, which adjusts currencies so that a basket of goods and services is worth the same amount in different countries, the Chinese economy became the world’s largest in 2013. Although China is often grouped with other “emerging markets”, its performance is unique: its gdp per person at ppphas risen tenfold since 1990. In general, poorer economies grow faster than rich ones, because it is easier to “catch up” when starting from a low base. Yet in other countries that were as poor as China was in 1990, purchasing power has merely doubled.

China’s record has exerted a “gravitational pull” on the world’s economic output. The Economist has calculated a geographic centre of the global economy by taking an average of each country’s latitude and longitude, weighted by their gdp. At the height of America’s dominance, this point sat in the north Atlantic. But China has tugged it so far east that the global centre of economic gravity is now in Siberia.

Because China is so populous and is developing so quickly, it is responsible for a remarkable share of global change. Since the start of the financial crisis in 2008, for example, China has accounted for 45% of the gain in world gdp. In 1990 some 750m Chinese people lived in extreme poverty; today fewer than 10m do. That represents two-thirds of the world’s decline in poverty during that time. China is also responsible for half of the total increase in patent applications over the same period.

For all its talk of a “peaceful rise”, China has steadily beefed up its military investment—even as the rest of the world cut back after the end of the cold war. As a result, the People’s Liberation Army accounts for over 60% of the total increase in global defence spending since 1990. And all of this growth has come at a considerable cost to the environment: China is also the source of 55% of the increase in the world’s carbon emissions since 1990.

Sources: Economist Intelligence Unit; Global Carbon Project; Maddison Project Database; SIPRI; World Bank; World Intellectual Property Organisation; The Economist
Get the data

This article appeared in the Graphic detail section of the print edition under the headline “Well under way”

If The Saudi’s Killed A Journalist: So Now What? Answer, Nothing

If The Saudi’s Killed A Journalist: So Now What? Answer, Nothing 

 

In this article today I am not trying to be cold-blooded or hate filled, I’m trying to be honest. Here in the States you have your typical politicians like Lindsey Graham wagging their tongues about “there will be hell to pay if the Saudi government killed this man.” I almost never side with Donald Trump but I do sort of agree with him on this issue. Reality is that many governments kill people every year. How many Journalist’s die in the line of duty every year? The Organization Reporters Without Borders says that 65 Reporters were killed in the line of duty in 2017 plus many more were imprisoned. He was not a Reporter but do you remember the American college kid who tore down a poster in North Korea and spent a year or so in one of their prisons only to be sent back home in a coma where he died a couple of weeks later? Folks, nothing real happened to North Korea because of this because mans murder. Mr. Trump was trying to strike a deal with N.K. President (Dictator) Kim Jung Un to get rid of their Nuclear Weapons. Which was/is more important, one life, or not having a thin-skinned ego maniac with is finger on a Nuke button? By the way, I am speaking of Mr. Kim, not the one that is in Our White House.

 

Now, let us get back to the murder of the Saudi/American Journalist who was murdered inside the Saudi Embassy in Turkey. Here are some realities for us all to think about. Mr. Trump is under pressure to cancel a multi-billion dollar weapons deal with the Saudi government because of them killing this man. Would this action by our President be a wise decision? Would it teach “them” a lesson? My answer is no, it would not. In fact if anything it could/would shift the balance of power on this planet. Here is why I am saying this. First it would shift the Saudi government toward the Chinese. If we do not sell these weapons to the Saudi’s the Chinese would be falling all over themselves to sell weapons to the Saudi government. Honestly I believe that it would be the Chinese and not the Russians who would fill the gap because the Russian government has aligned themselves with the Shiite Nations, mainly Iran and as you know, the Sunni Saudi’s are the enemy of Shiite Islam. China and Russia are allies of each other so it would be more crushing to the U.S. if China filled our void. Plus there is the reality that canceling this contract would put many American workers out of a job which would be felt in the voting booth next month.

 

Think about these things please, what if the Russians and the Chinese governments held complete sway over all of the Middle-East, over all of OPEC? What if China grew close to the Saudi Royal Family by such things as massive weapons sells? China is already building the largest refinery in the world in the Saudi Kingdom. If the U.S Government steps away from the Saudi Royal Family how long will it be before the Saudi’s decide to take their oil off of the dollar standard and put it on the Chinese Yen? If the Saudi’s did this I am sure that the rest of OPEC and the Arab world would very quickly follow suite. Think about it, the dollar not being the “world standard” currency. What if OPEC decided to only take the Yen as trading currency, and decided to either not sell any oil to the U.S. at all, or if they did, only at twice or three times the market rate? What would this do to the U.S. economy, to your job, to your living standard? In 2008 during that “depression” the U.S. economy backed off about 2%, what would things here in the States look like if our economy fell off by 10, 15 or 20%? I am just trying to be honest, I don’t like many realities in our world yet if we decide to change some of the current realities, we must be very careful about the new realities that bloom.

 

 

Folks: How Do We Personally Believe In The Independence Of OUR OWN: Supreme Court?

Folks: How Do We Personally Believe In The Independence Of OUR OWN: Supreme Court?

 

Well Folks, do We? This is a case where 1/3 of Our National Government is in the hands and minds of just 9 of Our own People. I personally would not want to have to be a judge, at any level. Not with all the sins that I know that I have  committed. I don’t want to have to have a job of being a Judge where what the 9 of you say, is final. Folks, that’s just like being one step away, or below, God! I am not saying that this Job can’t be done, but to be Truly Independent of the Other 2 Branches of Our Government, at every level is necessary. To me, and I know that I could be wrong, but I believe that in Our Country’s Supreme Court Job Description, that Job Description is to make sure that all Laws are Constitutional! Now again, do the Nine Folks we now have on The Nations Top Court realize the weight upon each of them to be in charge of 1/3 of Our Government? Personally, there is no way, no amount of money that could get me to want that Job. Think of the pressure on all 9 of these folks to be, Honest. Has Our Nations Supreme Court become nothing but pawns of Big Politics, and Big Money? Do you have the Intelligence, and the Morals, do you Mr. Kavanaugh? What are you walking into Mr. Kavanaugh, do you really know? Well folks, as a very dear friend of mine used to say once in a while, “we shall see what we shall see.” Fore without an independent Supreme Court, there is no Democracy and as little as 9 people holds in their hands the weight of 1/3 of the Constitutional Government. Their sort of like those “Super Delegates” the Democrats been hosting, aren’t they? Except if you can totally control one of these 3 Branches of our Government, 9 people could control our Country. How much weight is on Mr. Kavanaugh? How much weight is on all 9 of these people? As I said earlier, I wouldn’t want this job no matter what the pay. When we add in the reality that another 1/3 of Our Government is in the hands of just One Person. Folks this means that 2/3 of Our whole Government is the Hands of 10 people. That is too much power if those positions aren’t filled with quality persons, now who decides what “Quality” is. Now Folks, does this help you see why I would not want to ever have to be in the place of one of these nine Folks.

Hong Kong: History Of This Cash Box To Communist China’s Military Aggression

(THIS ARTICLE IS COURTESY OF THE CIA WORLD FACT BOOK)

 

Hong Kong

Introduction Occupied by the UK in 1841, Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997. In this agreement, China has promised that, under its “one country, two systems” formula, China’s socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.
History Human settlement in the location now known as Hong Kong dates back to the Paleolithic era. The region was first incorporated into Imperial China in the Qin Dynasty, and served as a trading post and naval base during the Tang Dynasty and the Song Dynasty. The area’s earliest recorded European visitor was Jorge Álvares, a Portuguese mariner who arrived in 1513.[4][5] Contact with the United Kingdom was established after the British East India Company founded a trading post in the nearby city of Guangzhou.

In 1839, the refusal by Qing Dynasty authorities to import opium resulted in the First Opium War between China and Britain.[6] Hong Kong Island was first occupied by British forces in 1841, and then formally ceded from China under the Treaty of Nanking at the end of the war. The British established a Crown Colony with the founding of Victoria City the following year. In 1860, after China’s defeat in the Second Opium War, the Kowloon Peninsula south of Boundary Street and Stone cutter’s Island were ceded to Britain under the Convention of Peking. In 1898, Britain obtained a 99-year lease of Lantau Island and the adjacent northern lands, which became known as the New Territories.

Hong Kong was declared a free port to serve as an entrepôt of the British Empire. The Kowloon-Canton Railway opened in 1910 with a southern terminus in Tsim Sha Tsui. An education system based on the British model was introduced. The local Chinese population had little contact with the European community of wealthy tai-pans settled near Victoria Peak.[6]

In conjunction with its military campaign in World War II, the Empire of Japan invaded Hong Kong on December 8, 1941. The Battle of Hong Kong ended with British and Canadian defenders surrendering control of the colony to Japan on December 25. During the Japanese occupation, civilians suffered from widespread food shortages caused by imposed rations, and hyper-inflation due to forced exchange of currency for military notes. Hong Kong lost more than half of its population in the period between the invasion and Japan’s surrender in 1945,[7] when the United Kingdom resumed control of the colony.

Hong Kong’s population recovered quickly, as a wave of mainland migrants arrived for refuge from the ongoing Chinese Civil War. With the proclamation of the People’s Republic of China in 1949, more migrants fled to Hong Kong from fear of persecution by the Communist Party.[6] Many corporations in Shanghai and Guangzhou also shifted their operations to Hong Kong.[6] The colony became the sole place of contact between mainland China and the Western world, as the communist government increasingly isolated the country from outside influence. Trade with the mainland was interrupted during the Korean War, when the United Nations ordered a trade embargo against the communist government.[8]

The textile and manufacturing industries grew with the help of population growth and low-cost of labor. As Hong Kong rapidly industrialized, its economy became driven by exports to international markets. Living standards rose steadily with the industrial growth. The construction of Shek Kip Mei Estate in 1953 marked the beginning of the public housing estate program. Hong Kong was disrupted by chaos during the riots of 1967.[6] Pro-communist leftists, inspired by the Cultural Revolution in the mainland, turned a labor dispute into a violent uprising against the colonial government lasting until the end of the year.

Established in 1974, the Independent Commission Against Corruption dramatically reduced corruption in the government. When the People’s Republic of China initiated a set of economic reforms in 1978, Hong Kong became the main source of foreign investments to the mainland. A Special Economic Zone was established the following year in the Chinese city of Shenzhen, located immediately north of the mainland’s border with Hong Kong. The economy of Hong Kong gradually displaced textiles and manufacturing with services, as the financial and banking sectors became increasingly dominant. After the Vietnam War ended in 1975, the Hong Kong government spent 25 years dealing with the entry and repatriation of Vietnamese refugees.

With the lease of the New Territories due to expire within two decades, the governments of the United Kingdom and the People’s Republic of China discussed the issue of Hong Kong’s sovereignty in the 1980’s. In 1984, the two countries signed the Sino-British Joint Declaration, agreeing to transfer the sovereignty of Hong Kong to the People’s Republic of China in 1997.[6] The declaration stipulated that Hong Kong would be governed as a special administrative region, retaining its laws and high degree of autonomy for at least fifty years after the transfer. Lacking confidence in the arrangement, some residents chose to emigrate, particularly after the Tiananmen Square protests of 1989.

The Basic Law of Hong Kong, which would serve as the constitutional document after the transfer, was ratified in 1990. Over strong objections from Beijing, Governor Chris Patten introduced democratic reforms to the election process for the Legislative Council. The transfer of the sovereignty occurred at midnight on July 1, 1997, marked by a handover ceremony at the Hong Kong Convention and Exhibition Centre.[6] Tung Chee Hwa assumed office as the first Chief Executive of Hong Kong.

Hong Kong’s economy was affected by the Asian financial crisis of 1997 that hit many East Asian markets. The H5N1 avian influenza also surfaced that year. Implementation of the Airport Core Program led to the opening of the new Hong Kong International Airport in 1998, after six years of construction. The project was part of the ambitious Port and Airport Development Strategy that was drafted in the early 1980’s.

The outbreak of severe acute respiratory syndrome took hold of Hong Kong in the first half of 2003.[9] That year, half a million people participated in a march to voice disapproval of the Tung administration and the proposal to implement Article 23 of the Basic Law, which had raised concerns over infringements on civil liberties. The proposal was later abandoned by the administration. In 2005, Tung submitted his resignation as chief executive. Donald Tsang, the Chief Secretary for Administration, was selected as chief executive to complete the term.

Geography Location: Eastern Asia, bordering the South China Sea and China
Geographic coordinates: 22 15 N, 114 10 E
Map references: Southeast Asia
Area: total: 1,092 sq km
land: 1,042 sq km
water: 50 sq km
Area – comparative: six times the size of Washington, DC
Land boundaries: total: 30 km
regional border: China 30 km
Coastline: 733 km
Maritime claims: territorial sea: 3 nm
Climate: subtropical monsoon; cool and humid in winter, hot and rainy from spring through summer, warm and sunny in fall
Terrain: hilly to mountainous with steep slopes; lowlands in north
Elevation extremes: lowest point: South China Sea 0 m
highest point: Tai Mo Shan 958 m
Natural resources: outstanding deep water harbor, feldspar
Land use: arable land: 5.05%
permanent crops: 1.01%
other: 93.94% (2001)
Irrigated land: 20 sq km (1998 est.)
Natural hazards: occasional typhoons
Environment – current issues: air and water pollution from rapid urbanization
Environment – international agreements: party to: Marine Dumping (associate member), Ship Pollution (associate member)
Geography – note: more than 200 islands
People Population: 6,980,412 (July 2007 est.)
Age structure: 0-14 years: 13% (male 476,089/female 434,326)
15-64 years: 74% (male 2,515,518/female 2,652,660)
65 years and over: 12.9% (male 419,479/female 482,340) (2007 est.)
Median age: total: 41.2 years
male: 40.9 years
female: 41.4 years (2007 est.)
Population growth rate: 0.561% (2007 est.)
Birth rate: 7.34 births/1,000 population (2007 est.)
Death rate: 6.45 deaths/1,000 population (2007 est.)
Net migration rate: 4.72 migrant(s)/1,000 population (2007 est.)
Sex ratio: at birth: 1.08 male(s)/female
under 15 years: 1.096 male(s)/female
15-64 years: 0.948 male(s)/female
65 years and over: 0.87 male(s)/female
total population: 0.956 male(s)/female (2007 est.)
Infant mortality rate: total: 2.94 deaths/1,000 live births
male: 3.12 deaths/1,000 live births
female: 2.74 deaths/1,000 live births (2007 est.)
Life expectancy at birth: total population: 81.68 years
male: 78.99 years
female: 84.6 years (2007 est.)
Total fertility rate: 0.98 children born/woman (2007 est.)
HIV/AIDS – adult prevalence rate: 0.1% (2003 est.)
HIV/AIDS – people living with HIV/AIDS: 2,600 (2003 est.)
HIV/AIDS – deaths: less than 200 (2003 est.)
Nationality: noun: Chinese/Hong Konger
adjective: Chinese/Hong Kong
Ethnic groups: Chinese 94.9%, Filipino 2.1%, other 3% (2001 census)
Religions: eclectic mixture of local religions 90%, Christian 10%
Languages: Chinese (Cantonese) 89.2% (official), other Chinese dialects 6.4%, English 3.2% (official), other 1.2% (2001 census)
Literacy: definition: age 15 and over has ever attended school
total population: 93.5%
male: 96.9%
female: 89.6%

Workers with low levels of education still haven’t recovered from the Great Recession

(THIS ARTICLE IS COURTESY OF THE BROOKINGS BRIEF)

 

Workers with low levels of education still haven’t recovered from the Great Recession

Lauren Bauer and Jay Shambaugh

Over a decade after the start of the Great Recession, most Americans looking for a job can find one—the unemployment rate has fallen to around 3.9 percent. Also, following a decline in labor force participation that pre-dated but continued through the Great Recession, the share of Americans aged 25-54 in the labor market has increased in the last few years.

Despite these positive developments, the labor market is not perfect. Wage growth is still sluggish, with modest gains offset by inflation. Despite recent increases, the share of prime-age Americans in the labor force is still slightly below the pre-Recession level. Levels of unemployment vary widely across places and the population by key demographic characteristics.

In August of last year, The Hamilton Project calculated that the “jobs gap”—the difference between demographically adjusted national employment and its level before the recession—had closed for the country overall. That is, after adjusting for demographic shifts, the economy had added enough jobs to fill the hole left by the Great Recession.

But not every group of Americans has fully recovered from the Great Recession. In this piece, we provide an annual update of the employment rate gap, which is different from the jobs gap, by race/ethnicity and level of education.

CALCULATING EMPLOYMENT RATE GAPS 

Using the Current Population Survey from January 2007 to May 2018, we identify the “employment rate gap:” the difference between the demographically adjusted 2007 employment-to-population ratio and the actual employment-to-population ratio at a given point in time. It should be noted that this methodology differs from that used for The Hamilton Project’s previous monthly jobs gap series.1 Because we are exploring differential trends by demographic characteristics, we cannot use payroll employment from the Current Employment Statistics, as the “jobs gap” did.

RECOVERING FROM THE GREAT RECESSION

Figure 1 shows that, in the depths of the Great Recession, blacks and Hispanics faced much steeper job losses than their white counterparts. What this figure also shows, though, is that blacks and Hispanics recovered from the recession much more quickly, and ultimately closed their employment rate gap before non-Hispanic whites did. Once we account for demographic change, the employment-to-population ratio for blacks is almost two percentage points above pre-recession levels.

Demographically Adjusted Employment Rate Gap, by Race/Ethnicity

That said, we note that even with this higher rate of growth for blacks, they still experience lower levels of employment in absolute terms. In June 2018, 58.2 percent of African-Americans aged 16 and older were employed, compared to 60.6 percent of whites and 63.4 percent of Hispanics, and the unemployment rate for African-Americans was still nearly twice the rate it is for white Americans.

All three major ethnic groups have a demographically adjusted employment rate above the pre-crisis level, consistent with the demographically adjusted jobs gap having closed.

There are three reasons this may not signal an end to slack in the economy. First, as Americans live longer and the Social Security retirement age has increased, older Americans are working longer. The employment rate for 55-64 Americans is well above pre-recession levels while the prime age employment rate is still slightly below its November 2007 level. Second, as noted in Schanzenbach, Nunn, Bauer, and Breitwieser, the employment recovery from the 2001 recession was weak—arguably leaving labor market slack in 2007—such that recovering to the 2007 level may not mark the elimination of labor market weakness. Finally, given that more-educated Americans tend to have higher employment levels, one might have expected the increase in educational attainment from 2007 to 2018 to have raised the employment-to-population ratio. We therefore explore educational outcomes next.

Demographically Adjusted Employment Rate Gap, by Level of Education

Those with less education were disproportionately harmed by the Great Recession (figure 2).2 We see that graduate degree holders—and to a lesser extent bachelor’s degree holders—experienced smaller reductions in employment during the recession. For those with no postsecondary degree, the employment rate gap in 2011 was 5 percent or more, while it was just 2 percent for those with a bachelor’s degree.

Recovery from the bottom of the trough occurred earlier for those with more education. The first upturn among graduate degree holders was between 2009 and 2010, between 2010 and 2011 for those with a bachelor’s degree. By 2018, only those with bachelor’s or graduate degrees had returned to their demographically adjusted pre-recession employment rate.

The recession was particularly hard on those without a high school diploma. In 2010 and 2011, this group had an employment-to-population ratio that was fully six percentage points lower than in 2007. Those with a high school diploma and/or some college followed a similar trend through this period, with a slightly shallower trough during the worst of the recession than those who didn’t graduate from high school. In recent years, workers without a postsecondary degree have seen improving employment outcomes, though a gap remains.3

Not only have less-educated groups not recovered as fully from the recession, they started at lower levels of employment rates prior to the crisis such that at this point, amongst those aged 25 and higher, 72.5 percent of those with a bachelor’s degree work compared to just 55 percent of those with only a high school degree.

CONCLUSION

The Great Recession inflicted economic pain on many American families, but its burden was not equally distributed. Ultimately, the brunt of the Great Recession was borne by those without the protection of post secondary education. College raises average lifetime earnings, and it also helps insulate workers from economic downturns, providing economic security in the times they need it most. Finally, racial disparities have been less severe in recovery than in the worst years of the Great Recession, though differences in employment rates persist. For the American labor market to be truly healthy, it needs to work for all people—not just some.

Yuan’s international usage remains stable: report

(THIS ARTICLE IS COURTESY OF THE SHANGHAI CHINA NEWS AGENCY ‘SHINE’)

 

Yuan’s international usage remains stable: report

Xinhua

International usage of Chinese currency renminbi, or the yuan, remains stable despite a sharp fall in the offshore exchange rate, according to a new report by Bank of China.

In June, the yuan remained in 5th place in the currency rankings for global payments with a share of 1.81 percent, BOC said in its Offshore RMB Express report citing data from SWIFT, a global financial institution network.

Currently, Hong Kong is the key offshore market for yuan payments, accounting for 75.98 percent of renminbi trading volume.

Total turnover via the Real Time Gross Settlements clearing system reached 21.46 trillion yuan (US$3.11 trillion), up 10 percent month on month and 38.7 percent year on year, the report showed.

China’s domestic capital market’s opening continues at a steady pace, BOC said.

As of July 31, the quota in the RMB Qualified Foreign Institutional Investors program came in at 622.1 billion yuan, data from the State Administration of Foreign Exchange showed.

So far, 19 countries and regions have obtained RQFII quotas, totaling 1.94 trillion yuan, according to the report.

U.S.-Turkey Relations Will Never Be the Same

(THIS ARTICLE IS COURTESY OF BLOOMBERG NEWS)

 

U.S.-Turkey Relations Will Never Be the Same

Escalating tensions might simmer down, but we’re past the point of pretending these two governments’ values are compatible.

Hope you sold all your lira before this week.

Photographer: Chris McGrath/Getty Images

There are only two ways that the diplomatic rift between the U.S. and Turkey can end: a compromise that salvages the relationship as best possible, or a complete rupture with devastating consequences both for Turkey’s economy and America’s regional strategic interests. Either way, there is no going back to the way things were.

The arrest in Turkey of American pastor Andrew Brunson nearly two years ago has led to a diplomatic spat that threatens a full-blown economic meltdown in Turkey. Brunson, along with many foreign nationals that were detained in the wake of the failed 2016 coup attempt, has been accused of “supporting terrorism.” A deal for Brunson’s release seemed likely as Turkish officials traveled to Washington this week, but fell apart apparently over last-minute Turkish demands.

Meanwhile, tensions have ratcheted up. The Trump administration has imposed sanctions on Turkey’s interior and justice ministers. Erdogan threatened retaliation and got the support of most of the Turkish opposition. On Wednesday, Stars and Stripes reported that a group of pro-government lawyers in Turkey have filed charges against several U.S. officers at the Incirlik Air Base, accusing them too of ties to terrorist groups. They are demanding all flights leaving the base be temporarily suspended and a search warrant be executed.

The standoff is partly the accumulation of years of resentment, despite the pretenses of a faithful partnership. Turkey’s once-unassailable support among U.S. foreign policy leaders, and in Congress, has been weakened by years of authoritarian creep, a worsening human rights record and cooperation with Russia and Iran in Syria. Turkey’s plans for a $2 billion purchase of Russian-made S-400 surface-to-air missiles, which NATO has said are incompatible with allied systems and restrictions on American use of the Incirlik Air Base, haven’t gone down well.

The feeling is mutual. Erdogan has never quite recovered from his anger at the way his allies seemed to sit on the fence in the hours after an attempted coup was announced in July 2016.

The Turkish leader is also furious at American support for the Kurdish militia fighting Islamic State in northern Syria. Earlier this year, he threatened American troops with an “Ottoman slap” if the U.S. tried to block Turkey’s military incursion into northwest Syria.

One major source of contention has been the U.S. refusal to turn over the Pennsylvania-based cleric Fethullah Gulen, a one-time Erdogan ally and now an enemy, whom Erdogan alleges was behind the coup and other attempts to undermine him. Trump’s abandonment of the Iran nuclear deal is another sore point; nearly half of Turkey’s oil imports come from Iran, and the re-imposition of sanctions against Iran hurts Turkey’s economy.

The Brunson case made all of that impossible to ignore, as U.S. evangelicals took up the cause.

But “impossible to ignore” is not to say that the Trump administration has become a principled defender of human rights in Turkey. Far from it. Trump, whose name adorns luxury properties in Turkey, expressed only praise for Erdogan when they met in 2017. When Erdogan’s supporters and guards attacked protesters in Washington, the affair was handled quietly.

The administration has been silent on other arrests of U.S. and foreign nationals in Turkey. But it was ready to strike a deal for Brunson’s release. The U.S. had already asked Israel to release Ebru Ozkan, a Turkish national who was arrested there on suspicion of aiding Hamas (Israel deported herthe day after Trump called Israeli President Benjamin Netanyahu). The Trump administration was also reportedly ready to allow Hakan Atilla, a former top executive of state-owned Halkbank, convicted for violating Iran sanctions, to serve out the rest of his prison sentence in Turkey. The deal was scuppered, reportedly, when Turkey wanted relief on a multibillion-dollar fine against Halkbank and an assurance that any investigations be dropped.

The U.S. can afford to play a longer game. The June 24 election may have strengthened Erdogan’s power further, but he didn’t win by a Putin-sized margin. (Erdogan cleared just over 52 percent, and that’s if we all agree to ignore the voting irregularities that presumably bolstered his numbers.) Turkey is divided politically, and the longer Erdogan rules by coercion, the more vulnerable he may become, especially if Turkey’s economy continues to suffer. As the main barometer of confidence in the country, the lira’s decline speaks volumes.

Even so, a diplomatic solution is clearly preferable to continued escalation. Erdogan is sacrificing the Turkish economy in order to keep Brunson as a bargaining chit. A fractured relationship with the U.S. will also put a strain on Turkey’s EU relationships and will give investors, already spooked, even more pause.

American support for Turkey doesn’t crumble in a day. The relationship is baked into ties on multiple levels, both inside and outside government, and for good reason. As Asli Aydintasbas and Kemal Kirisci argue in an April 2017 Brookings paper, however bad it looks, Turkey is crucial:

Without Turkey, it is difficult to see how a rule-based U.S.-led world order could be sustained in this region, and how a successful policy on containing chaos in the Middle East could be envisioned. Similarly, there are arguably no Muslim-majority nations apart from Turkey that can serve as a bridge with the Western world or achieve the democratic standards, to which Turks have grown accustomed and, inadvertently or not, still expect.

And yet, it has definitely changed, thanks not so much to national interests, but to failings in leadership. The U.S. will have to settle for something less loyal, less an alliance and more a transactional relationship. But then that seems to define these times pretty aptly.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Therese Raphael at [email protected]

To contact the editor responsible for this story:
Philip Gray at [email protected]

Cryptocurrency-related crime will surpass all other cyber attacks in 2018

(THIS ARTICLE IS COURTESY OF THE TIMES OF ISRAEL NEWSPAPER)

 

Cryptocurrency-related crime will surpass all other cyberattacks in 2018: expert

Leading experts at Tel Aviv cybersecurity conference weigh pros and cons of cryptocurrencies like Bitcoin, and the risks of blockchain technology in financial transactions

Illustrative image of bitcoins (Courtesy BitsofGold)

Illustrative image of bitcoins (Courtesy BitsofGold)

Cryptocurrency-related attacks will surpass all other types of cyberattacks in 2018, a leading expert warned.

Issuing the bleak prediction, Lotem Finkelsteen, a threat intelligence analyst with the Israeli cybersecurity company Check Point Software Technologies, said “not a day goes by without our hearing about a new ICO [initial coin offering] scam or mining attack.”

By “cryptocurrency-related cyberattacks,” he appeared to be referring to any form of cybercrime involving or related to cryptocurrencies, including financial scams and hacking.

Blockchain, the technology that underpins cryptocurrencies, “is suffering from reputational damage,” said Finkelsteen. “And that is one of the main obstacles for blockchain technology to move forward.”

Lotem Finkelsteen (Twitter)

Finkelsteen was speaking on a panel at an event entitled “Blockchain, The New Digital Age” at Tel Aviv University’s annual Cyber Week cybersecurity conference. Other panelists at the event were more optimistic about the positive potential for blockchain and cryptocurrency technology.

“There are real projects rolling out,” said John Velissarios, Principal Director and Global Blockchain Technology Lead at Accenture, a global management consulting company. “We’re seeing blockchain applications for capital markets, exchanges, clearing and settlement systems and payment systems. The technology is evolving and the applications are becoming more significant.”

Blockchain technology is the underlying technology of Bitcoin and other cryptocurrencies. A blockchain is a database that is maintained by numerous collaborators, like a Google document. The computers of the collaborators decide through a consensus mechanism how to update the database. Once they decide, the update is rendered immutable through cryptography. The resulting record can be used as proof of ownership without the need for a central authority deciding who owns what.

Many entrepreneurs and computer scientists see enormous potential in blockchain, and believe that the fact that money and other assets can be transferred from person to person without going through a central authority has many real-world applications.

But Haim Pinto, the CTO of Bank Hapoalim, Israel’s largest bank, asserted that there are no blockchain applications that are dependably usable at present, least of all for a trusted institution like a major commercial bank.

“Blockchain is still in a hype cycle,” he said in the panel discussion, arguing that the technology is not yet ready for widespread adoption. “We can’t just take it and use it.”

Pinto said cryptocurrencies present problems for banks seeking to comply with anti-money laundering and privacy regulation.

“As long as we are under anti-money laundering and FATCA rules, we have to know the source of customers’ money,” he said. This requirement, he said, does not jibe with the nature of cryptocurrencies, which can be transferred anonymously.

In addition, said Pinto, cryptocurrencies present a challenge for banks seeking to comply with the EU’s “right to be forgotten” laws, which require that businesses erase clients’ sensitive personal data if they are asked to do so.

“Distributed general ledgers cannot erase anything,” he said, referring to the fact that most blockchains are immutable. “That’s just one of the challenges. In addition, there are mathematical challenges. Distributed general ledgers can’t scale up to the volume of transactions we need to serve.”

Pinto said that most banks around the world are running mainframe computers as their core platforms. Before they can adopt blockchains or distributed general ledgers, they will probably first adopt “open banking,” a new trend in the banking world that refers to the practice of allowing third-party developers to build applications around the bank.

In recent years in Israel, some experts have touted cryptocurrency and blockchain as the next major driver of the Israeli economy, but as The Times of Israel has reported, it is unclear how much of the activity in this new high-tech field is legitimate, how much is mere hype, and how much is outright fraud perpetrated by malevolent actors, including transnational criminal organizations.

A second panel at the event dealt with the non-financial applications of the blockchain.

At that session, Gideon Lichfield, the editor-in-chief of the MIT Technology Review, described enthusiasm about using blockchain technology for supply-chain management.

Gideon Lichfield (Courtesy Cyber Week)

“Businesses see it as a way to track bananas or lettuce from the supplier to the supermarket shelf.”

If some lettuce turns out to be bad, he said, blockchain technology can be used to find out which farm the lettuce came from.

Lichfield questioned why blockchain is a good solution for this, as opposed to a centralized database or some other solution. Nevertheless, he said, if blockchain is an adequate solution, it could become the de facto standard, simply because there is so much hype around, and money being poured into, blockchain technology.

“Big companies don’t want to be left behind,” said Lichfield, ”They jump into this.”

Steve Bassi, the CEO of the cybersecurity company Polyswarm, agreed with the other panelists that blockchain is often proposed as a solution to a problem where a centralized database might work just as well.

Attempting to distill the circumstances under which blockchain could be useful, he asked, “Where do we always cheat each other unless someone else is watching? That is where blockchain might be applicable.”

Another speaker at the final session of the conference on Thursday, Tel Aviv University Economics professor Neil Gandal, presented a paper called “Price Manipulation in the Bitcoin Ecosystem” that he and his colleagues first published in January.

Tel Aviv University Economics Professor Neil Gandal speaks at Cyber Week, June 21, 2018 (Simona Weinglass/Times of Israel)

Gandal contended that Bitcoin’s first major price spike, when it rose from $150 to over $1,000 in late 2013, was likely caused by a single person using trading robots.

Gandal argued that if this could happen once it could happen again, and cited a recent paper by University of Texas economists arguing that Bitcoin’s more recent price spike, when it reached close to $20,000 last year, was also caused by price manipulation.

“It’s possible for a small number of actors to manipulate things,” he said. “We need some sort of regulation [of cryptocurrencies],” he said. “There is a loss of confidence in the system.”

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