A standard take on how energy affects world politics  is Tom Friedman's "First Law of Petropolitics" -- the belief that high energy prices cause energy exporters to act in more belligerent ways. What if the opposite is the case, however?   

The Atlantic's Charles Mann has a long, winding cover story on the growth of non-traditional hydrocarbon energy reserves -- shale gas, methane hydrate, and so forth -- and what that could mean for world politics. The good parts version: 

Shortfalls in oil revenues thus kick away the sole, unsteady support of the state—a cataclysmic event, especially if it happens suddenly. “Think of Saudi Arabia,” says Daron Acemoglu, the MIT economist and a co-author of Why Nations Fail. “How will the royal family contain both the mullahs and the unemployed youth without a slush fund?” And there is nowhere else to turn, because oil has withered all other industry, Dutch-disease-style. Similar questions could be asked of other petro-states in Africa, the Arab world, and central Asia. A methane-hydrate boom could lead to a southwest-to-northeast arc of instability stretching from Venezuela to Nigeria to Saudi Arabia to Kazakhstan to Siberia. It seems fair to say that if autocrats in these places were toppled, most Americans would not mourn. But it seems equally fair to say that they would not necessarily be enthusiastic about their replacements.

Augmenting the instability would be methane hydrate itself, much of which is inconveniently located in areas of disputed sovereignty. “Whenever you find something under the water, you get into struggles over who it belongs to,” says Terry Karl, a Stanford political scientist and the author of the classic The Paradox of Plenty: Oil Booms and Petro-States. Think of the Falkland Islands in the South Atlantic, she says, over which Britain and Argentina went to war 30 years ago and over which they are threatening to fight again. “One of the real reasons that they are such an issue is the belief that either oil or natural gas is offshore.” Methane-hydrate deposits run like crystalline bands through maritime flash points: the Arctic, and waters off West Africa and Southeast Asia.

In a working paper, Michael Ross and a colleague, Erik Voeten of Georgetown University, argue that the regular global flow of petroleum, the biggest commodity in world trade, is also a powerful stabilizing force. Nations dislike depending on international oil, but they play nice and obey the rules because they don’t want to be cut off. By contrast, countries with plenty of energy reserves feel free to throw their weight around. They are “less likely than other states to sign major treaties or join intergovernmental organizations; and they often defy global norms—on human rights, the expropriation of foreign companies, and the financing of foreign terrorism or rebellions.” The implication is sobering: an energy-independent planet would be a world of fractious, autonomous actors, none beholden to the others, with even less cooperation than exists today.

Voeten's post at the Monkey Cage goes further. 

The fact that China and the U.S. both currently rely on oil imports may be an important stabilizing force as it creates a shared interest in stable global oil markets and thus in ensuring that the Oceans are navigable, the Middle East is relatively stable, and that rules and norms whose violations could trigger instability are obeyed. Energy independence has long been thought to free U.S. foreign policy from undesirable constraints. But would the world be more stable if the U.S. had fewer constraints on how it exercises its foreign policy?

As if on cue, the Financial Times' Richard McGregor and Ed Crooks report that the Obama administration is starting to think about how to use the country's new energy bounty in

Although the energy department is the decision maker, the issue is being debated at senior levels in the White House which sees energy exports as giving the US new geopolitical leverage.

In a little-noticed speech in New York in late April, Tom Donilon, the White House national security adviser, said the new energy bounty allowed the US “a stronger hand in pursuing and implementing our international security goals”.

Mr Donilon said increased US and global gas production could break the link between the gas and more expensive oil prices and “weaken control by traditional dominant natural gas suppliers”.

The White House is also promoting gas as an alternative fuel to oil and coal as a way to reduce greenhouse emissions.

All of this has Walter Russell Mead a bit giddy, but let's go back to Mann and Voeten's point. Assuming that the extrapolations pan out -- and it's worth remembering that five years ago those projections looked very different -- will declining energy prices trigger an arc of instability? 

Color me a bit skeptical. First, energy is hardly the only resource that imbricates the great powers with the rest of the global economy. The global value chain does that on its own quite nicely, thank you very much, and a glance at the new Trade in Value Added data makes that clear. 

Second, if Donilon's speech was any indication of what new energy reserves would mean for U.S. foreign policy, I'd say retrenchment was not in the cards: 

[R]educed energy imports do not mean the United States can or should disengage from the Middle East or the world. Global energy markets are part of a deeply interdependent world economy. The United States continues to have an enduring interest in stable supplies of energy and the free flow of commerce everywhere.   

We have a set of enduring national security interests in the Middle East, including our unshakeable commitment to Israel’s security; our global nonproliferation objectives, including our commitment to prevent Iran from acquiring a nuclear weapon; our ongoing national interest in fighting terrorism that threatens our personnel, interests and our homeland; our strong national interest in pursuit of Middle East peace; our historic stabilizing role in protecting regional allies and  partners and deterring aggression; and our interest in ensuring the democratic transitions in Yemen, North Africa and ultimately in Syria succeed. 

Furthermore, as the FT article suggests, the United States sees the change in natural gas as a way to expand exports into Latin America. This doesn't sound like a county that wants to retreat into autarky. 

Third, there is one way in which reduced exports might make life easier for Middle Eastern governments -- in the short term. That region has the highest level of energy intensity in the world, in no small part because gas and oil are cheap and subsidized. Declining demand from elsewhere allows these governments to continue to provide cheap energy at home. From both a climate change perspective and an economic reform perspective, this ain't good news. But it does augment political stability.

Finally, this is a slow-motion change in the global energy picture. North America has moved the furthest down the road on this revolution -- Japan, China and Europe are just starting. So energy exporters have a fair degree of warning about what's coming. This doesn't mean that they'll use the lead time properly. Still, one of the reasons for building up sovereign wealth funds and the like is to insure against the time when the energy fairy disappears.

What do you think? 

The Stockholm International Peace Research Institute (SIPRI) just released their 2012 report on trends in world military expenditures. The report -- hell, just the press release -- should please a lot of people in the foreign policy community, albeit for different reasons. 

For those decrying the global arms race, the topline figure should be cause for cheer: 

World military expenditure totalled $1.75 trillion in 2012, a fall of 0.5 per cent in real terms since 2011, according to figures released today by Stockholm International Peace Research Institute (SIPRI).

Hooray! Fewer arms, more hugs, or something like that!! 

For neoconservatives, however, the reasons behind that drop in aggregate defense spending will vindicate their worries. The press release confirms the decline in U.S. hegemony in defense spending: 

In 2012 the USA’s share of world military spending went below 40 per cent for the first time since the collapse of the Soviet Union. A declining trend that began in 2011 accelerated in 2012, with a drop in US military spending of 6 per cent in real terms to $682 billion....

US military spending in 2012 was also projected to be $15 billion lower than previously planned as a result of cuts to the Department of Defense linked to the 2011 Budget Control Act. The bulk of cuts under this legislation will begin in 2013. 

So, with the decline in U.S. military expenditures, we're in real danger of being overtaken by the Chinese, right? Well ... there's enough grist in the report for neoconservative skeptics as well. 

The fact sheet puts this decline U.S. defense spending in the proper perspective. The United States still spends four times as much on defense as the next-biggest spender (China). Furthermore, "US spending was still more than the combined spending of the next 10 countries (p. 4)." 

Will China's defense spending eventually match the United States? Assuming China grows at a healthy clip -- hardly a guarantee -- sure. But as the Economist noted a few weeks ago, tweaking those assumptions just a tad leads to some very different predictions about when defense parity will occur: 

What's more intriguing is the effect of the Great Recession on defense spending: 

Even in those parts of the world where spending has increased, the effects of the economic crisis can still be seen: slowing economic growth in emerging regions has led to slower rates of growth in military spending. Only the Middle East and North Africa increased their rate of military spending between 2003–2009 and 2009–2012.

The average annual rate of military spending increase in Asia, for instance, has halved from 7.0 per cent per year in 2003–2009, to 3.4 per cent per year in 2009–2012. The slow-down was most dramatic in Central and South Asia, where military spending was growing by an average of 8 per cent per year in 2003–2009, but by only 0.7 per cent a year since 2009, and actually fell in 2012, by 1.6 per cent.

Here's the chart: 

That chart massively undersells the decline in defense spending, because it measures absolute levels of military spending and not spending as a percentage of global output. If you use that metric, then defense spending's share of the global economy has fallen by about half since the end of the Cold War. 

It's almost as if the 2008 financial crisis and subsequent recession didn't trigger the arms races and general increase in political conflict that some expected would happen. It's almost as if the current threats to national security aren't as serious as they were back in the day. 

Zaki Laïdi has a fascinating op-ed in the Financial Times blasting the current state of global governance. It's fascinating because of the mix of not-entirely-accurate observation and breathtakingly naïve prescription. The good parts version:

In principle, the emergence of a multipolar world, in which the US is no longer the only very powerful country, should boost “multilateralism” – institutionalised co-operation among states in pursuit of shared objectives. It should boost efforts to achieve free trade via the World Trade Organisation, poverty reduction through the World Bank, and international security through the UN.

Yet the reality is different. Countries are seeking to extricate themselves from global agreements in order to extract concessions from partners on a bilateral basis or to protect national sovereignty.

Take the case of the WTO. A conflict between India and the US over agricultural subsidies derailed a final compromise in the summer of 2008. This would have – finally – concluded the Doha round of trade talks, which were launched in Qatar in 2001. Negotiations have stalled since the US-India spat. The main responsibility for this failure falls on the US, which believes the system of multilateral trade no longer offers the advantages it used to. The priority for the US is to secure access to markets through enhanced bilateralism. Hence the Obama administration’s drive to agree the trans-Pacific Partnership for Asia and, more recently, to conclude the Transatlantic Trade and Investment Partnership for Europe.

In each case, the strategic objective is to contain China’s rise by setting a high bar for regulatory standards. The novelty is that Europe, which has long defended multilateralism, is now succumbing to the temptation of bilateralism even while it remains completely incapable of assuming political responsibility for its trade policy...

It is important to understand that the collapse of multilateral trade we are witnessing today is far from being an isolated case. Climate talks since the 2009 Copenhagen conference have challenged the multilateralism heralded by the Kyoto protocol of 1997. The idea then was to move forward on the basis of a shared objective – the reduction of greenhouse gas emissions. Today countries only make commitments on climate change on the basis of a very narrow assessment of their national interests. The idea that shared commitments – rather than individual interests – shape behaviour is now dead....

Since the end of the cold war, Europeans have believed deeply in the existence of a global commons – and the declining importance of national sovereignty. The conduct of both the US and emerging countries suggests the opposite. Power politics is back. Multilateralism is dying.

OK, a few things here: 

1) It was a lot easier to take this "Europeans don't really believe in national interests anymore, we're so above all that, so the rest of the world should listen to us" guff prior to the Eurozone crisis. Watching Germany and other Northern European nations make sure that their national interest gets executed through EU institutions, however, makes this canard a bit harder to swallow. 

2) I hate to break it to Laïdi, but during the 1990s the Europeans could afford the luxury of believing in the growing power of multilateralism. That suited their beliefs and seemed to accord with the facts on a surface level. In point of fact, however, it was the growing power of the United States -- along with the strong support and coordination of its European allies -- that made multilateralism work. The idea that multilateralism should work better when power is more dispersed is an ... odd notion. 

3) If Laïdi is really gonna go there on trade, let's ask  blunt question -- exactly which jurisdiction triggered the explosion in bilateral free-trade agreements and preferential trade agreements?  Hold on, I'll wait ... but I bet everyone already knows the answer. 

4) As I've argued at length elsewhere, focusing on Doha and Copenhagen will lead to Laïdi's conclusions -- but those cases are not necessarily representative of global governance writ large. On a raft of other dimensions, the multilateral system has worked surprisingly well.

5) Finally, the real problem with  Laïdi's argument is that it fosters a spectacularly naïve narrative about how multilateral arrangements are created in the first place. This is hardly the first moment when great powers have created club-like arrangements in an effort to move the multilateral status quo. In fact, I'm pretty sure that some big books have been devoted to this topic.   

The reason the European Union has had success in pushing its version of global rules has little to do with its love of multilateralism and a lot to do with its market power and institutional capabilities. The sooner that European international relations commentators appreciate this, the better.

Am I missing anything? 

To follow up on my Cyprus post from yesterday, the deal between Brussels and Nicosia looks like a geopolitical reversal of fortune for the Russian Federation.  As Max Fisher noted: 

Maybe Moscow thought this would tilt its client state toward the pro-Russia choice in that binary, but it appears to have be having the opposite effect....

Russia is not in the process of losing a client-state, exactly — the political and cultural ties are likely still too deep for something that drastic to happen that quickly — but Moscow certainly isn’t doing itself any favors. As [Felix] Salmon wrote today, “If this is how the game ends, it’s an unambiguous loss for Russia, and a win for the E.U.”

Moscow’s aggressive, all-or-nothing approach appears to have only pushed Cyprus further toward Europe. 

Now, far be it for me to question Russia's motiva--- oh, screw it, I'm totally going to question Russia's motivations here.  Because what happened in Cyprus is emblematic of an interesting trend since 2008 -- the great powers that analysts have lazily defined as "revisionist" don't seem all that interested in collecting allies. 

This is not the first time a weak Western ally has sought out either China or Russia as a way of avoiding onerous financial strictures.  Iceland begged Russia for financial assistance during the depths of the 2008 financial crisis.  At one point, the Icelandic President allegedly offered Russia the use of Keflavík Air Base.  This possibility caused some mild consternation in Foggy Bottom.  In the end, the Russians said they didn't need the base and proffered only a fraction of what Iceland wanted, leaving Reykjavik little choice but to cut a deal with the IMF. 

One can tell a similar story with Pakistan and China.  During the fall of 2008 Islamabad was facing a balance of payments crisis and sought out China as a benefactor.   In the end, China was unwilling to offer Pakistan enough money to substitute for IMF support, forcing the Pakistani government to take out an IMF loan. 

Both the Iceland and Pakistan outcomes were surprising enough in 2008 that I bothered to blog about them back then.  The interesting thing is that nothing much has changed.  Sure, through the Forum on China-Africa Cooperation, China has enhanced its role outside its region, but even FOCAC is more about commercial interests than geopolitical interests.  At the same time, China became estranged from one of its most loyal allies when Myanmar started embracing the United States.  It also alienated a lot of neighbors that might otherwise have been more willing to defer to Beijing.  And as I blogged earlier this year, China continues to be standoffish towards Pakistan despite the latter country's eagerness to ally itself with Beijing.  Ironically, the only countries that Russia and China have really stuck their neck out for in recent years have been the allies that have given them the most agita -- Syria for Moscow, and North Korea for Beijing.  [Gee, it's almost as if this phenomenon of small allies that are strategic deadweights is not unique to the United States or something!!--ed.  This is a blog post, so stop your subtweeting.]

To be sure, China and Russia have , on occasion, engaged in some revisionist efforts to change the status quo.  See: Russia's 2008 war with Georgia; China's border disputes with the rest of the Pacific Rim.  What's striking, however, is that neither Moscow nor Beijing seems terribly interested in collecting client states.  Hell, for all the rhetoric involving closer Sino-Russian cooperation, it seems as though the actual bilateral relationship amounts to little more than empty rhetoric and cooperation at the U.N. Security Council. 

Why is this?  I'm honestly not sure.  Back in 2008, I spitballed the following: 

For all their aspirations to great power status, both countries lack the policy expertise necessary to take on greater leadership roles.  This leads to profound risk aversion, which leads to inaction.  On the flip side, the U.S. is accustomed to talking to the countries in crisis, which both provides it with more information and allows Washington to act more quickly.

Four and a half years later, I don't think that's a sufficient explanation.  Spitballing now, I think there are three possible explanations. 

1)  Pure buckpassing.  Why should Moscow or Beijing spend their hard-earned cash on marginally useful client states?  Let the West exhaust itself with these aid packages. 

2)  Internal balancing.  Realists like to think that external balancing (forming alliances) and internal balancing (augmenting national capabilities) are substitutable strategies.  Maybe China and Russia prefer to focus on national capabilities rather than coalition-building.

3)  Outside their own neighborhood, neither Russia nor China is really revisionist.  As great powers, Moscow and Beijing will do what they gotta do in their near abroads.  Globally, however, they have neither the ambition nor the interest in altering the current system of "good enough" global governance.  After all, the current rules of the global game have benefited both of them pretty well over the past decade or so. 

You can guess which of these explanations I gravitate towards, but I'm hardly convinced. 

What do you think? 

The passing of Hugo Chavez has prompted the usual 21st century cycle of news coverage and commentary that follows the death of a polarizing figure: the breaking news on Twitter, followed by the news obits, followed by the hosannahs from supporters, followed by denunciations of the figure, followed by official statements, followed by mealy-mouthed op-eds, followed by hysterical, unhinged criticism of standard diplomatic language. 

Now that the first news cycle has passed, we can get to the more interesting question of assessing Venezuela's future. There was always a fundamental irony to Hugo Chavez's foreign policy. Despite his best efforts to chart a course at odds with the United States, he could never escape a fundamental geopolitical fact of life: Venezuela's economic engine was based on exporting a kind of oil that could pretty much only be refined in the United States. 

So, with Chavez's passing, it would seem like a no-brainer for his successor to tamp down hostility with the United States. After all, Chavez's "Bolivarian" foreign policy was rather expensive -- energy subsidies to Cuba alone were equal to U.S. foreign aid to Israel, for example. With U.S. oil multinationals looking hopefully at Venezuela and Caracas in desperate need of foreign investment, could Chavez's successor re-align foreign relations closer to the U.S.A.? 

I'm not betting on it, however, for one simple reason: Venezuela might be the most primed country in the world for anti-American conspiracy theories. 

International relations theory doesn't talk a lot about conspiracy thinking, but I've read up a bit on it, and I'd say post-Chavez Venezuela is the perfect breeding ground. Indeed, the day of Chavez's death his vice president/anointed successor was already accusing the United States of giving Chavez his cancer. 

Besides that, here's a recipe for creating a political climate that is just itching to believe any wild-ass theory involving a malevolent United States:

1) Pick a country that possesses very high levels of national self-regard. 

2) Make sure that the country's economic performance fails to match expectations.

3) Create political institutions within the country that are semi-authoritarian or authoritarian. 

4) Select a nation with a past history of U.S. interventions in the domestic body politic.

5) Have the United States play a minor supporting role in a recent coup attempt. 

6) Make sure the United States is closely allied with the enduring rival of the country in question.

7) Inculcate a long history of accusations of nutty, American-led conspiracies from the political elite. 

8) Finally, create a political transition in which the new leader is desperate to appropriate any popular tropes used by the previous leader. 

Venezuela is the perfect breeding ground for populist, anti-American conspiracy theories. And once a conspiratorial, anti-American culture is fomented, it sets like concrete. Only genuine political reform in Venezuela will cure it, and I don't expect that anytime soon. 

Oh, and by the way: Those commentators anticipating a post-Castro shift by Cuba toward the U.S., should run through the checklist above veeeery carefully.

Am I missing anything? 

Your humble blogger is a busy man. There are books to write, referee reports to complete, committee meetings to attend, grant proposals to craft, silver prices to fix at the behest of the Council on Foreign Relations, tweets to tweet, witty blog posts to devise, and petty acts of professorial revenge to enact. He doesn't have time to revisit an ongoing international crisis with no changes in the dynamic. 

So, after reading Thomas Erdbrink and David Sanger's front-pager in the New York Times and Jason Rezaian's story in the Washington Post, I think we're at the stage where it's possible to automate any blog post on  the Iran crisis. Here are the seven key points to make in any \post of this nature going forward, with quotes from one of these two stories as evidence: 

1) There is a deal on the nuclear issue that can be agreed upon any time both sides are interested in an agreement. From Erdbrink and Sanger:

The outlines of a nuclear deal have been clear for months: an Iranian agreement to limit the number of centrifuges that produce uranium, a cap on the amount of fuel in Iranian hands, and an agreement to ship its most potent stockpiles — the stuff that can be quickly converted to bomb fuel — out of the country. It would also have to agree to expose its history of nuclear work, including any on weapons technology, which it has refused to show international inspectors. In return, Iran would get an acknowledgment that it has a right to peaceful nuclear enrichment, and a gradual lifting of the sanctions.

2) The sanctions against Iran will be tightened until there is a nuclear deal. From Erdbrink and Sanger: 

The existing sanctions on financial transactions have also forced Iran to engage in unfavorable oil-for-goods barter trade with its biggest customers, China and India. Chinese goods and medicine from India are prominently featured in stores and pharmacies across the country.

And now Iranian economic ingenuity will be tested again. Under the new crackdown, the United States is tightening the rules governing countries it has allowed to keep buying Iranian oil, as long as they show they are weaning themselves of it. From now on, when China, Japan, South Korea and India, among others, pay for oil deliveries, they will be required to put that money into a local bank account, which Iran can use only to buy goods within that country.

It is a way of keeping the money from ever being repatriated to Iran, even through third parties.

3) Iran will reject any linkage between negotiation and coercion, even though any final deal will be a function of both factors. From Rezaian: 

Supreme Leader Ayatollah Ali Khamenei said that will not solve the dispute over Iran’s nuclear program.

"I’m not a diplomat, I’m a revolutionary, and speak frankly and directly,” said Khamenei, according to a report by Iran's Mehr News agency. “You Americans have pointed guns toward Iran, but at the same time you want to negotiate. The Iranian nation will not be intimidated by these actions."

4) American officials will express concerns in public about the rationality of the Iranian leadership. From Erdbrink and Sanger: 

Obama administration officials were disturbed by a new analysis, prepared for the president and his staff, that paints a picture of the supreme leader as so walled off from what is happening with his country’s oil revenues that he is telling visitors that the sanctions are hurting the United States more than they are hurting Iran.

“The people may be suffering in Iran,” one senior official involved in Iran strategy said last week, “but the supreme leader isn’t, and he’s the only one who counts.”

5) The sanctions will continue to inflict serious damage on the Iranian economy without beinging the regime to its knees. From Erdbrink and Sanger: 

The Iranian economy’s resiliency could surprise Westerners. The way Iran’s economy is structured, with strong links between state bodies and semiofficial and private businesses, helps shield the country, said Saeed Laylaz, an economist and columnist for the Sharq newspaper, which is critical of the government....

Others are more pessimistic, saying the effects of the sanctions have still not been fully felt.

“If the sanctions, government mismanagement and inflation continue naturally in the future, we will encounter serious difficulties,” said Mohsen Farshad Yekta, a professor of economics at the University of Economic Sciences in Tehran.

6) Force will be brandished as an option but not used against Iran. Nick Burns is not known for being a terribly militaristic diplomat, but here's what he told Erdbrink and Sanger about how to deal with Iran:

[T]he U.S. must remain patient and commit to direct talks at the highest levels. But, ultimately both Obama and Netanyahu also need to make the threat of force more credible to Tehran. Combined with sanctions, this may be the most effective way to convince Iran to agree to a peaceful, negotiated settlement.

Chuck Hagel said similar things during his confirmation hearing.  No U.S. official is gonna take force off the table -- but short of a deliberate Iranian provocation in the region, it's not gonna be used. 

7) And the last, most important point: everyone involved -- with the possible exception of Israel -- is pretty comfortable with the status quo. The U.S. is delighted to keep Iran contained. The Iranian leadership is content to blame the U.S. for all of its woes and possess a nuclear breakout capacity, without actually having nuclear weapons.  Iran's economic elites are delighted to engage in sanctions-busting -- more profit for them. And Iran's neighbors are happy to see Iran contained and not actually develop a nuclear weapon. I think even Israel would be copacetic with the current arrangement if they knew that the Iranian regime had no intention of crafting an actual weapon unless it felt an existential threat. 

So... unless and until there's a change in the status quo -- and there hasn't been for some time -- I'll just link back to this post when I need to post my quarterly musings on What to Do About Iran. Or I'll program a bot to cull the updated version of the quotes above to point out that nothing fundamental has changed. 

For the past few years, a low level theme that occasionally pops into my news feed is the idea of greater Sino-Pakistani cooperation.  Now this has a certain amount of realpolitik sense to it.  The United States and Pakistan are not exactly on the best of terms, China is a rising power, they share a comon interest in containing India, yadda, yadda yadda.  As a result, there has been the occasional press story about closer ties, which begets the inevitable U.S.-based blog posts about China expanding its "string of pearls" strategy of more deepwater ports in the Asia/Pacific region.

There's just one thing.  The more closely one reads these stories, the less clear it is that China wants a string of pearls.  Most of these stories talk about great Pakistani enthusiasm for more Chinese involvement.  That enthusiasm is not really reciprocated by China, however.  Consider Jane Perlez's New York Times story from October 2011:   

A rising China with global ambitions is unlikely to supplant the United States in Pakistan, according to Chinese experts on Pakistan, as well as Pakistani and American officials. And while Pakistan’s latest flirtations with Beijing have been received cordially, Pakistani officials have walked away from their junkets with far less in hand than they might have hoped....

China’s core interests lie elsewhere — in its competition with the United States and in East Asia, experts say. China has shown little interest in propping up the troubled Pakistani economy, consistently passing up opportunities to do so.

Despite China playing it cool, Pakistan has continued to fall all over itself to attract greater Chinese engagement in their country.  Which leads us to today's headline in the New York Times:  "Chinese Firm will Run Strategic Pakistani Port."   Sounds ominous for U.S. interests... until one reads Declan Walsh's actual story:

Pakistan is handing management control of a strategic but commercially troubled deep-sea port to a Chinese company, the information minister confirmed Thursday....

The fate of Gwadar, once billed as Pakistan’s answer to the bustling port city of Dubai, United Arab Emirates, has been a focus of speculation about China’s military and economic ambitions in South Asia for the past decade. Some American strategists have described it as the westernmost link in the “string of pearls,” a line of China-friendly ports stretching from mainland China to the Persian Gulf, that could ultimately ease expansion by the Chinese Navy in the region. Gwadar is close to the Strait of Hormuz, an important oil-shipping lane.

But other analysts note that Gwadar is many years from reaching its potential, and they suggest that fears of creeping Chinese influence might be overblown. “There may be a strategic dimension to this, where the Chinese want to mark their presence in an important part of the world,” said Hasan Karrar, an assistant professor of Asian history at the Lahore University of Management Sciences, referring to the management transfer at Gwadar. “But I wouldn’t go so far as saying this implies a military projection in the region.”....

Pakistan has failed to build the port or transportation infrastructure needed to develop the port, the property bubble has burst and, according to the port management Web site, the last ship to dock there arrived in November. “The government never built the infrastructure that the port needed — roads, rail or storage depots,” said Khurram Husain, a freelance business journalist. “Why would any shipping company come to the port if it has no service to offer?”

According to reports in the Pakistani news media, the Port of Singapore Authority sought to withdraw from the management contract after the Pakistani government failed to hand over land needed to develop the facility.  (emphasis added)

This greater Chinese involvement, it should be noted, also comes after Beijing rebuffed Pakistani requests to turn Gwadar into a naval base. 

So, to sum up:  despite Pakistan prostrating itself before China, Beijing has been extremely leery of getting too enmeshed in that country.  It has rejected repeated requests for military basing, and only now has a commercial Chinese company agreed to manage a port that appears to be the Pakistani exemplar of "white elephant." 

So please, no "strong of pearls" posts from the national security blogosphere today.  These pearls are about as fake as you can get. 

Am I missing anything? 

I have a shocking confession to make:  it's possible that maybe, just maybe, professors and graduate students don't always finish tasks on time.  Once in a blue moon, a project will sneak up on us that is due the next day, at which point the academic or aspiring academic is faced with the following menu of options: 

1)  Pull an all-nighter, throw every crazy idea onto the page, and pray something sticks;

2)  Email whomever is waiting for your written work and explain that illness/unforseeen circumstances/preparations for the zombie apocalypse mean you need another week or so to finish;

3)  Go dark on all social media, refuse to answer email queries, and hope that everything works out for the best. 

You'd be surprised how many people opt for (3), but there it is. 

I bring this up because of Mali.  Now let me confess that I am about as far from an Africa expert as one can be.  Let me further confess that I haven't paid too much attention to Mali over the past year.  My sum knowledge of the stituation there boils down to "there's some trouble in the north," "the government ain't that stable," and "gosh, people seem to be saying, 'Al Qaeda!!  There's Al Qaeda in them thar hills!!' an awful lot." 

Still, reading this Financial Times story by Xan Rice on the United Nations' latest plan of action for Mali, it doesn't seem like the Security Council knows that much more than I do: 

The UN Security Council has approved the deployment of an African force to retake northern Mali from al-Qaeda-linked insurgents.

The council also authorised the EU and individual countries to help equip and train Mali’s army, which is meant to work alongside the 3,300-strong international force. The proposed military operation is not expected to start before September 2013 to allow for proper planning and political progress in Mali....

The French-drafted text stresses the need for a twin track military and political plan. Deployment of the intervention force, known as the African-led International Support Mission in Mali, or AFISMA, was authorised for an initial one-year period to take “all necessary measures, in compliance with applicable international humanitarian law and human rights law”. Working alongside Mali’s armed forces, the goal is to retake northern Mali from “terrorist, extremist and armed groups”....

The UN resolution did not specify how the international mission will be funded. Nor is it clear how the force will be composed. The west African regional block Ecowas has pledged to supply the 3,300 troops, with Nigeria taking the lead. But US military officials believe that the desert conditions in northern Mali will be more suited to armies from non-Ecowas countries, such as Chad and Mauritania.

There are also questions about how Mali’s army will work with an outside force. Coup leader Captain Amadou Sanogo, who retains significant influence in Bamako and forced the prime minister to resignthis month, is wary of allowing in foreign troops, fearing his power will be diminished.

The resolution stressed that more military planning was needed, and the security council asked Ban Ki-moon, UN Secretary General, to report on the readiness of AFISMA troops before the start of any combat operations.

So, to sum up:  the Security Council has pledged to send peacekeepers on a timetable that makes academic publishing seem speedy, without any idea of how it will be funded, staffed, or operate with indigenous forces, married to vague calls for political action to lay the groundwork for said peacekeepers. 

So in this case, it appears that the Security Council has followed multiple academic routes -- they scrambled to put something together at thre last minute, but still managed to kick the can down the road a great deal. 

Again, let me confess that this could very well be the right thing to do -- I'm no Mali expert.  I do know something about procrastination and last-minute hackwork, however, and man, this reeks of it.

I hereby plead and beg Mali-watchers to correct my misperceptions in the comments.  Cause from the outside, this whole thing seems damn peculiar. 

It would be safe to describe the Chinese government as having been "peeved" at Norway for the Nobel Peace Prize that Liu Xiaobo was awarded back in 2010.  More than two years later, Beijing is still pissed off at Oslo, according to the Financial Times' Jamil Anderlini and Clare MacCarthy:

China is offering visa-free visits to Beijing for visitors from every European country except Norway, in what appears to be the latest in a string of punishments for the Nordic country since it gave a jailed Chinese dissident the Nobel peace prize in 2010.

The Nobel Peace Prize is awarded by a committee of five appointed by the Norwegian parliament, and committee members have always been Norwegian nationals.

On Wednesday, the Beijing city government unveiled a list of 45 countries whose citizens will be allowed to enter the city while in transit for 72 hours without a visa, starting from January 1.

Visitors from all 27 EU member states, as well as Iceland and Switzerland, will enjoy the new visa-free treatment, as will those from the US, Russia, Japan, Australia and most major Latin American countries.

When asked why Norway was left off the list, Wang Qin, a senior official at the Beijing government travel administration, did not respond directly but said that some countries were not eligible because their citizens or government were “of low-quality” and “badly behaved”.  (emphasis added)

Yeah!!  I've taught a few Norwegians in my day, and the whole lot of them are low quality and badly behaved, with their inscrutable fjords and smug blondness and their vague association with herring and their very specific association with lutefisk!! 

In fact, I'm glad Wang Qin brought this up, because in the past couple of months a whole bunch of country rankings have come out, and they're an excellent way to bolster Wang's assertion of low Norwegian quality and bad behavior, especialy as compared with a peacefully rising China.

Why, just yesterday, Transparency International released their 2012 Corruptions Perception Index, and Norway ranks 7th and China ranks 80th!!  Who's dirty now??!!  [Ahem!--ed.]  Oh.... Norway's the 7th least corrupt economy and China is... way more corrupt. 

Well, there's more than one ranking system! A few weeks ago the World Justice Project released their 2012 Rule of Law Index.  I bet that shows how dirty Norway really is!!  [Ahem!--ed.]  Oh... Norway is actually pretty good on rule of law issues, including ranking first among all 97 countries in civil justice.  Whereas China is.... um... not as good, ranking 94th out of 97 countries on fundamental rights. 

Well, even if Norway's government is pretty good, I bet their low quality, badly behaved people make the country an unlivable hellhole compared to Beijing.  [Ahem!!--ed.]  Oh... so based on Legatum's 2012 Prosperity Index, Norway is actually the most prosperous country in the world, whereas China ranks.... 55th. 

Well, I'm sure if you looked at other ranking systems, like the U.N. Human Development Index or just GDP per capita, you'd find... similar results. 

[But that's just because Norway's rich!!  What have they done for the rest of the exploited developing world??!!--ed.cn]  Excellent point, oh great and glorious Beijing-based editor!!  Why, when we go to the Center for Global Development's 2012 Commitment to Development Index, we find that... that... Norway is the second-most supportive country for assisting the developing world.  Son of a....

Look, it kills me to write this.  I use to have great fun teasing my Norwegian students about the whaling and the high agricultural import barriers, just so they wouldn't think they were all that and a bag of chips.  But if China thinks Norway is a country of low quality and bad behavior, then China would be what happened if Lindsay Lohan hooked up with Kid Rock at 4 AM after a two-day coke bender and three bottles of Patron.   

In other words, Wang Qin wins this week's Vizzini Award.    

Your humble blogger has been pretty quiet about this week's Israeli/Hamas conflict.  That's for a bunch of reasons:

1)  I've had a few day job papers to bang out;

2)  Foreign Policy has not suffered a deficit of content on this topic;

3)  My bar to blogging about Israel and Palestine is whether I can offer anything more insightful than The Onion.  It's a disturbingly high bar.

That said, I do think there are a few interesting political science questions that are worth asking after the past week.  After all, we've just had an election in this country where it turns out that political science explained an awful goddamned lot.  I wonder if some of that knowledge is being imbibed -- in uneven amounts -- in the Middle East.

In particular, I have three questions: 

1)  Has Bibi Netanyahu been reading Romer and Rosenthal?  One of the landmark articles in political science is Thomas Romer and Howard Rosenthal's paper on the effect of the status quo on political positioning.  One of the key takeaways is that in a two candidate race, if Candidate A takes an extreme position on the central policy issue, it allows Candidate B to adopt a policy position that is further away from the median voter and still win. 

After reading Ethan Bronner's story in the New York Times on how the Gaza conflict is radicalizing the West Bank away from Fatah and towards Hamas (see also Haaretz), I wonder if Israeli President Benjamin Netanyahu has figured out the following political jujitsu:

STEP 1:  Take actions that radicalize the Palestinian population -- particularly in the West Bank;

STEP 2:  Have Fatah look less and less like a credible negotiating partner, have the world acknowledge that Hamas now represents the median Palestinian preference on peace talks;

STEP 3:  Have Likus win Israeli election without changing its policy position, which suddenly doesn't look so bad to Israeli voters. 

Actually, I'd posit that there's an element of this in the Israeli's right's strategy of the past decade, but it seems to be particularly blatant this time around. 

2)  Has Hamas been reading Stephen Walt?  And if so, which Stephen Walt?  No, I don't mean that Stephen Walt.  I mean the author of The Origins of Alliances and Revolution and War.  I bring this up cause those books would offer contrasting takes on what Hamas would expect the rest of the Middle East to do.  It seems pretty clear from the press reportage that Hamas believed that This Time Was Different:  the Arab Spring had eliminated authoritarian despots who had used the Palestinian issue as a useful vent for domestic unrest.  Newly democratic regimes would -- according to Walt's Revolution and War -- be more likely to identify with Hamas' cause, thereby taking more aggressive action to undermine and isolate Israel.  And, indeed, at the rhetorical and symbolic level, this has happened.  Libya is sending a "solidarity delegation" to Gaza, Turkish Prime Minister Recep Tayyip Erdogan has labeled Israel a "terrorist state," and Egypt's Morsi governmment has been pretty plain in blaming Israel for the latest hostilities.   

The thing is, my bet would be on Walt's Origins of Alliances playing the larger role here.  What's interesting about Arab government's reactions to this Operation Pillar of Defense is that they seem.... an awful lot like how Mubarak et al would have reacted.  It would seem that once Islamic movements are charged with running a government, they suddenly start to care about things other than the occupied territories (this appears to be Dennis Ross' take as well, by the way).  For example, I'd argue that these negotiations matter far more to the Morsi government than brokering a cease-fire between Israel and Hamas. 

3)  Does the Israeli right really want to make U.S. Middle East policy a partisan football?  CNN polled Americans on the conflict in Gaza, and just like every other poll on this question, Americans backed Israel pretty strongly.  57% of American sympathize with the Israelis; only 13% side with the Palestinians.  But as The Weekly Standard's Daniel Halper notes, there's a catch: 

CNN's poll director, Keating Holland, finds that there is a great discrepancy in which Americans think the action is justified, however. Of particular note is that only about 40 percent of Democrats believe the self-defense measures are "justified."

"Although most Americans think the Israeli actions are justified, there are key segments of the public who don't necessarily feel that way," Holland tells CNN. "Only four in ten Democrats think the Israeli actions in Gaza are justified, compared to 74% of Republicans and 59% of independents. Support for Israel's military action is 13 points higher among men than among women, and 15 points higher among older Americans than among younger Americans."

Now, you can speculate all you want about the source of this partisan divergence --  *COUGH* Netanyahu gambled on Obama being a one-termer and lost *COUGH* -- but friends of Israel should be disturbed by this growing split.  If Israel becomes a partisan issue, it's not really going to help Republicans all that much, because all it will do is mobilize the evangelical vote -- which they've already pocketed.  And eventually, Israel will have to face a Democratic president with a base that no longer cares about Israel's security.  That's not going to be a good day for Israel. 

[Yeah, we still liked the Onion story better--ed.  Yeah, me too.]

The latest issue of The Washington Quarterly is just lousy with China essays -- it's like there's a theme or something.  Andrew Scobell and Andrew Nathan tackle China's (apparently overstretched) military, and Guoyou Song and Wen Jin Yuan review China's response to the burgeoning Trans-Pacific Partnership.

James Reilly has an essay on China's use of unilateral economic sanctions that really caught my eye, however.  The overwhelming bulk of economic sanctions that have been threatened and used during the past century have been from the United States.  From a scholarly perspective this is somewhat disturbing, as general theories about economic statecraft become tough to distinguish from theories of U.S. foreign policy.  If another great power starts being profligate with its economic statecraft, there's the promise of a lot of new data. 

China has deplored the use of economic sanctions in the past, but as Reilly notes, "Over the past few years, Chinese experts have begun to clear some of the legal, moral, ideological, and practical hurdles to Beijing’s use of unilateral sanctions."

So... how effective are they?  Well, at best, it's a mixed bag.  Here's Reilly's key paragraph: 

Ultimately, China uses sanctions for the same reasons other countries do: they are a relatively low-cost, low-risk way to signal dissatisfaction, increase the costs to those who take undesired actions, and satisfy domestic demands to respond to those actions. Sanctions can assuage domestic criticism while not undermining broader economic and diplomatic interests. For all these reasons, China has increasingly resorted to unilateral sanctions in recent years on issues like Taiwan, Tibet, human rights, and maritime disputes.

If you read the article, it's pretty clear that any concessions made by other countries have  been pretty modest --more modest than Reilly seems willing to admit (compare Reilly's take on the 2010 Nobel Prize sanctions with, for example, Erik Voeten's). 

But there are three caveats to this observation.  First, if China views the sanctions as mostly symbolic and for domestic consumption, then it wouldn't be surprising that they're ineffective.  Symbolic sanctions aren't supposed to work, they're supposed to be for show.  Second, Reilly notes that China likes threatening sanctions more than using them, and sanctions threats are more likely to work as a form of pre-emptive coercion and deterrence than actually compelling the actor in this particular case. 

Third, as with its economic statecraft more generally, China is just beginning to understand this foreign policy tool.  Indeed, as Reilly observes, the problem with issuing empty threats is that "the credibility of Beijing’s bluffs risk eroding over time."  It will be veeeery interesting to see how China's approach to economic statecraft evolves over time. 

Developing....

Tonight is the first presidential debate in the United States, which means I could blog about how I killed a man once just to steal his Klout score and no one would care.  The fact that debates don't seem to matter all that much in the grand scheme of things makes this fact pretty odd, but there it is. 

So, while America's foreign policy community operates in a state of suspended animation for the next twelve hours, here are some stories that might help you while away the time:

1)  Hey, it turns out that the sanctions against Iran really are crippling -- so much so that even Mahmoud Admadinejad is admitting it and Benjamin Netanyahu now has sanctions fever.  Based on my own sanctions model, I'd predict that the sanctions are now becoming so costly that Iran will in fact be willing to compromise on its nuclear program -- but any concessions will seem tiny compared to how devastating the sanctions have been. 

2)  It's interesting that even IMF Managing Director Christine Lagarde has felt it necessary to weigh in on the Japan-China row. 

3)  This story about Paul Romer's efforts to develop his very own Millennium Village a charter city in Honduras without all the ickiness of current Honduran modes of governance is just... bizarre.   Until I read this blog post -- which makes it even more bizarre. 

4)  I get to explain the "bad boyfriend" theory of foreign policy in this BBC documentary on Obama's foreign policy record, which you should really listen to because they were smart enough to interview Jack Goldsmith, Anne-Marie Slaughter, and a bunch of other smart policymakers. 

5)  You could spend the next twelve hourse doing a lot worse things than reading Nate Silver's The Signal and The Noise.  I've only started it, but my own signal for whether it's a quality book -- how many times Philip Tetlock gets mentioned in the index -- suggests that this will be a very worthwhile read. 

In today's paper the New York Times has two long stories on the two largest countries in the world: one on China and one on India. What's interesting is that both stories talk about the tensions between national and regional governments -- but their interpretation of the behavior of these local governments is very different.

Let's start with China, where Andrew Jacobs notes that political paralysis at the national level combined with the economic slowdown is causing regional governments to double down on their debt-driven growth:

Local governments, alarmed by a slowdown they fear could lead to mass unemployment and the kind of sluggish growth that can dent political careers, have decided to take matters into their own hands. In recent months, a number of cities have proposed extravagant infrastructure projects they hope will be financed in part by newly liberalized bank loan policies.

Tianjin claims $236 billion will be spent in the petrochemical, aerospace and other industries. Xi’an, home of the famed terra cotta warriors, plans to invest tens of billions of dollars on nine new subway lines. In Guizhou, one of China’s poorest provinces, officials said they hoped to funnel $472 billion into tourism-related development.

In Changsha, the provincial capital of Hunan, officials brag of 12.9 percent growth as they spend billions of dollars on a new subway system, a ring road, an intercity rail line and a pair of bridges to knit together its transportation system.

“We haven’t felt any impact from the crisis in Europe,” said Liu Maosong, chairman of the Hunan Economics Association and an adviser to the Changsha government. “Our guiding philosophy is ‘investment, investment, investment.’ ”

Even if many such projects turn out to be wishful thinking, economists have expressed alarm that municipalities are still chasing debt-financed growth. “It almost scares me to death,” said Mao Yushi, a prominent economist. “Local governments are using the people’s money for investment, but when they can’t repay the banks, the financial system will snap.”

And Liao Jinzhong, an economist at Hunan University, worries that much of the spending is misplaced. “What we really could use is a functioning sewage system,” he said, speaking from his sixth-floor apartment in a crumbling faculty building that has no elevator.

Mr. Liao said he gave frequent lectures at the local party school about the dangerous fixation on propping up growth figures at all costs. He said officials often congratulated him on his frank views.

“But then they admit they can’t change the way they do things,” he said. “Given that the whole system is oriented toward bolstering the careers of officialdom, I just don’t see things changing any time soon.”

Interesting... so because of the political incentives that exist within the Chinese Communist Party, provincial and urban leaders have an incentive to prime their pumps to seek advancement.

Now let's turn to India, where Jim Yardley notes that -- wait for it -- seeming paralysis at the national level and a sagging national economy are causing unaffiliated leaders at the regional and local level to muse about things like forming a third party and compete at the national level. Yardley notes that the likelihood of success is low. What's interesting, however, is the question of why these local leaders are so popular:

Regional bosses, once in decline, are becoming kingmakers again: the squat, sleepy-eyed Mulayam Singh Yadav, who oversees the powerful Samajwadi Party, is even publicly musing about himself as a future prime minister.

“The incentive for every single party from the opposition to the allies is to send a signal that the Congress can’t govern,” said Pratap Bhanu Mehta, president of the Center for Policy Research in New Delhi. “That’s the election plank.”....

“Indian politics will have to live with bargains and negotiations with regional parties,” Ashutosh Varshney, a political expert, said in an e-mail interview. “A third front may or may not emerge, but both national parties will have to negotiate and bargain. That also means that India will find it harder to make firm assertions of power on the international stage, à la China. Its power will grow, but more gradually.”....

In the meantime, India’s regional leaders will continue to press for advantage. Ms. Banerjee is planning a huge demonstration in New Delhi on Monday against the government’s new economic measures. Even as [Bengal Chief Minister Ms. Mamata] Banerjee is often criticized for being intemperate and unpredictable, her influence is undeniable: this week the American ambassador, Nancy Powell met with her privately, just as Secretary of State Hillary Rodham Clinton made a point of visiting her during a trip to India in May.

Other regional leaders are also increasingly powerful national figures. Nitish Kumar, the chief minister of the state of Bihar, has hinted that his regional party could join any coalition that granted his state special status. Naveen Patnaik, the chief minister of Orissa, has expressed support for a third-front coalition. Jayalalithaa, the chief minister of Tamil Nadu, has also spoken suggestively about a new political alliance.

Most of them have won political support by delivering economic growth and, to varying degrees, improved government. This is one reason that even as India’s politics is again fragmenting, some analysts believe that the country’s economic modernization can continue. In recent years, as policy logjams paralyzed the central government, many international and domestic business leaders shifted their focus to negotiating with individual state leaders.

So, if one buys both of these stories, there's an interesting contrast. Both countries appear to be dealing with feckless national leadership and a slowdown in their national economies. In China, regional leaders are pursuing reckless "growth now" policies that could harm the national economy in the long run. In India, it's the competent economic leadership at the regional level that's bailing out a dysfunctional national government (emphasis added).

The thing is, I don't know if I completely buy Yardley's story on India. I've read enough on China to know that Jacobs' assertion about bad regional policy seems to be pretty accurate (not to mention the out-and-out distortions in economic statistics coming from China's provinces) I wish he had pushed a little bit deeper to see exactly how these regional political bosses had delivered better economic growth. If they did it using variants of what China's leaders did -- short-term measures that accelerate growth now at the expense of growth later -- then what's interesting is that regardless of regime type, local leaders can make life hell for national economic policymakers. If, on the other hand, India's regional leaders have done a genuinely better job at governing, then it's a really interesting story.

What do you think? Psst... in this case, by "you," I mean India experts.

As China gears up for its 18th Party Congress and the trial of Bo Xilai's wife Gu Kailai on charges of murdering a British business partner, there have been accompanying press stories (even from the Chinese press) about the opaque nature of the Chinese regime. For example, consider this Edward Wong and Jonathan Ansfield New York Times front-pager about the relationship between China's civilian leadership and the People's Liberation Army: 

During a holiday banquet for China's military leadership early this year, a powerful general lashed out in a drunken rage against what he believed was a backhanded move to keep him from being promoted to the military’s top ruling body.

The general, Zhang Qinsheng, vented his fury in front of President Hu Jintao, according to four people with knowledge of the event. At the banquet, he even shoved a commanding general making toasts; Mr. Hu walked out in disgust.

The general’s tirade was one of a series of events this year that have fueled concerns among Communist Party leaders over the level of control they exercise over military officials, who are growing more outspoken and desire greater influence over policy and politics.

With China’s once-a-decade leadership transition only months away, the party is pushing back with a highly visible campaign against disloyalty and corruption, even requiring all officers to report financial assets.

“Party authorities have come to realize that the military is encroaching on political affairs,” said one political scientist with high-level party ties. “Although the party controls the gun, the expression of viewpoints from within the military on political issues has aroused a high level of alarm.” He, like others who agreed to discuss internal party affairs, spoke on the condition of anonymity because of fear of reprisals.

Now if you read the whole article, it's really not clear at all just how much of a problem this is.  We learn that Hu Jintao's relationship with the PLA is weak, even though he has engineered promotions of his favored generals (including, apparently, Zhang). We learn Ju's likely successor Xi Jinping allegedly has better ties to the military, but that Hu might keep control of the Central Military Commission for the next few years anyway. Oddly, we also learn that some PLA hardliners want to see China adopt a more liberal political model -- like Singapore. 

In other words, we know a bit more about the machinations than we do in, say, North Korea.  But we don't know much. 

Western readers are now likely clucking to themselves and thinking, "Man, am I glad that we don't have to live in a regime with that much political uncertainty and caprice." To those readers: Let's take a tour of Europe and the United States now, shall we? 

In Europe, there was a long WSJ front-pager about Italian prime minister Mario Monti and his efforts to push back against Angela Merkel's austerity policies.  The impresssion that was given in the beginning of the article is that Mnti was successful... and then we get to this: 

Mr. Monti didn't want Rome and Madrid to suffer the stigma of applying formally for aid or signing a list of policy demands written in Brussels, fearing this would undermine his public standing at home, as well that of his ally, Spain's premier Mariano Rajoy....

The evening before the [June EU Summit meeting], Mr. Monti hatched a plan to hijack the summit. Unless Ms. Merkel accepted his proposal on bond-market intervention by Europe's bailout fund, Mr. Monti would veto the growth pact -- stymieing Ms. Merkel in her parliament.

Italy had previously lobbied for the growth pact, so Mr. Monti's threatened veto -- announced just before Europe's leaders were due to sit down for dinner -- was a bombshell....

Mr. Monti's blockade lasted until 4 a.m., when leaders finally agreed to a text hashed out by their aides. It promised that Europe's bailout funds would be used "in a flexible and efficient matter" to stabilize the bond markets of vulnerable euro members.

It didn't go as far as Mr. Monti had originally wanted: Italy and Spain would still have to apply for any aid and sign a policy memorandum. But by planting the need to stabilize bond markets in the declaration, Italy had convinced Germany to recognize Italian reform efforts and pushed its approach for tackling the crisis into the spotlight.

An ebullient Mr. Monti spoke to reporters, claiming satisfaction for Italy and for Europe. A tired Ms. Merkel slunk off to her hotel.

German media and lawmakers were convinced their chancellor had buckled under Mr. Monti's pressure, granting Italy and Spain unconditional access to Germany's treasury. Her protestations later that morning that the fine print preserved the existing procedure for aid went largely unheard.

So did Monti get what he wanted? Beyond political optics, I don't think so, but the article makes it unclear. Actually, to be fair, the summit declaration itself makes it unclear as well, as the Financial Times' Peter Spiegel explains: 

Last week’s signal from Spain’s prime minister that he may be prepared to request assistance from the eurozone’s €440bn rescue fund to drive down his country’s borrowing costs has shifted the debate back to where it was more than a month ago: What strings will be attached to such aid?

Eurozone leaders had hoped to put the question to bed during an all-night summit in late June, where Mario Monti, Italy’s prime minister, thought he had won agreement that new aid from the bailout fund to buy a struggling country’s bonds would come with few additional conditions.

Indeed, Herman Van Rompuy, who chaired the summit as president of the European Council, publicly declared there would “not be any more countries” subject to full monitoring if they sought bond-buying assistance from the fund, the European Financial Stability Facility.

The only conditions, Mr Van Rompuy said, would be living up to existing commitments under EU budget rules.

Even before the summit wrapped up, however, that conclusion came into dispute. Indeed, the summit’s final communiqué appears to contradict itself.

At one point, it asserts bond buying programmes would be executed “in a flexible and efficient manner” -- code words for light conditions sought by Mr Monti and his Spanish counterpart, Mariano Rajoy. But in another section it says such aid would only be granted under “existing guidelines” -- code words for the more onerous conditions that existed before the summit (emphasis added).

So I'm gonna say that the EU is not winning a lot of points in the transparency department right now. 

Well, there's always the United States, right?  Right? Oh, wait, what's this New York Times front-pager from Monday saying? 

A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months.

Executives at companies making everything from electrical components and power systems to automotive parts say the fiscal stalemate is prompting them to pull back now, rather than wait for a possible resolution to the deadlock on Capitol Hill....

All told, the political gridlock in the United States, along with the continuing debt crisis in Europe, will shave about half a percentage point off growth in the second half of the year, estimates Vincent Reinhart, chief United States economist at Morgan Stanley.

More than 40 percent of companies surveyed by Morgan Stanley in July cited the fiscal cliff as a major reason for their spending restraint, Mr. Reinhart said. He expects that portion to rise when the poll is repeated this month.

“Economists generally overstate the effects of uncertainty on spending, but in this case it does seem to be significant,” he added. “It’s at the macro- and microeconomic levels.”....

In Washington, powerful business lobbies like the National Association of Manufacturers, the Business Roundtable, and more specialized groups like the National Electrical Manufacturers Association have grown more vocal about their frustration with the inaction of Congress, and the possible dangers ahead.

“It’s totally irresponsible and absolutely insane,” said Evan R. Gaddis, the president of the electrical manufacturers’ group. “The two parties are really dug in. Companies see the writing on the wall and business decisions are now being made on this.”

Sure, China is an opaque mess when it comes to governance. Sure, praising China's governance in an uncritical fashion should trigger critical blowback. Let's face it, however -- 2012 is not a year for democracies to be crowing about how their governing model is more transparent.