Thursday, July 30, 2009

The Conspiracy Skeptic: HIV Denial


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Abbie Smith is a grad student at the University of Oklahoma studying HIV. She has a popular blog called ERV (ie endogenous retro virus). Smith takes on creationists, the Disco'tute's head honchos, the top HIV deniers, all the while trying to find a way to keep HIV from killing babies. All that from a person who doesn't own more than 3 small kitchen appliances. Naturally, she stops in to chat with the Conspiracy Skeptic about HIV denial.

Iran, China and the New Silk Road

china-silk-roadBy Pepe Escobar

Part 1: Iran and Russia, scorpions in a bottle

HONG KONG - Does it make sense to talk about a Beijing-Tehran axis? Apparently no, when one learns that Iran's application to become a full member of the Shanghai Cooperation Organization (SCO) was flatly denied at the 2008 summit in Tajikistan.

Apparently yes, when one sees how the military dictatorship of the mullahtariat in Tehran and the collective leadership in Beijing have dealt with their recent turmoil - the "green revolution" in Tehran and the Uighur riots in Urumqi - reawakening in the West the ghostly mythology of "Asian despotism".

The Iran-China relationship is like a game of Chinese boxes. Amid the turbulence, glorious or terrifying, of their equally millenarian histories, when one sees an Islamic Republic that now reveals itself as a militarized theocracy and a Popular Republic that is in fact a capitalist oligarchy, things are not what they seem to be.

No matter what recently happened in Iran, consolidating the power the Khamenei-Ahmadinejad-IRGC axis, the relationship will continue to develop within the framework of a clash between US hyperpower - declining as it may be - and the aspiring Chinese big power, allied with the re-emergent Russian big power.

On the road
Iran and China are all about the New Silk Road - or routes - in Eurasia. Both are among the most venerable and ancient of (on the road) partners. The first encounter between the Parthian empire and the Han dynasty was in 140 BC, when Zhang Qian was sent to Bactria (in today's Afghanistan) to strike deals with nomad populations. This eventually led to Chinese expansion in Central Asia and interchange with India.

Trading exploded via the fabled Silk Road - silk, porcelain, horses, amber, ivory, incense. As a serial traveler across the Silk Road over the years, I ended up learning on the spot how the Persians controlled the Silk Road by mastering the art of making oases, thus becoming in the process the middlemen between China, India and the West.

Parallel to the land route there was also a naval route - from the Persian Gulf to Canton (today's Guangzhou). And there was of course a religious route - with Persians translating Buddhist texts and with Persian villages in the desert serving as springboards to Chinese pilgrims visiting India. Zoroastrianism - the official religion of the Sassanid empire - was imported to China by Persians at the end of the 6th century, and Manichaeism during the 7th. Diplomacy followed: the son of the last Sassanid emperor - fleeing the Arabs in 670 AD - found refuge in the Tang court. During the Mongol period, Islam spread into China.

Iran has never been colonized. But it was a privileged theater of the original Great Game between the British Empire and Russia in the 19th century and then during the Cold War between the US and the Soviet Union in the 20th. The Islamic Revolution may at first imply Khomeini's official policy of "neither East nor West". In fact, Iran dreams of bridging both.

That brings us to Iran's key, inescapable geopolitical role at the epicenter of Eurasia. The New Silk Road translates into an energy corridor - the Asian Energy Security Grid - in which the Caspian Sea is an essential node, linked to the Persian Gulf, from where oil is to be transported to Asia. And as far as gas is concerned, the name of the game is Pipelineistan - as in the recently agreed Iran-Pakistan (IP) pipeline and the interconnection between Iran and Turkmenistan, whose end result is a direct link between Iran and China.

Then there's the hyper-ambitious, so-called "North-South corridor" - a projected road and rail link between Europe and India, through Russia, Central Asia, Iran and the Persian Gulf. And the ultimate New Silk Road dream - an actual land route between China and the Persian Gulf via Central Asia (Afghanistan, Tajikistan, Uzbekistan).

The width of the circle
As the bastion of Shi'ite faith, encircled by Sunnis, Iran under what is now a de facto theocratic dictatorship still desperately needs to break out from its isolation. Talk about a turbulent environment: Iraq still under US occupation to the west, the ultra-unstable Caucasus in the northwest, fragile Central Asian "stans" in the northeast, basket cases Afghanistan and Pakistan to the east, not to mention the nuclear neighborhood -Israel, Russia, China, Pakistan and India.

Technological advancement for Iran means fully mastering a civilian nuclear program - which contains the added benefit of turning it into a sanctuary via the possibility of building a nuclear device. Officially, Tehran has declared ad infinitum it has no intention of possessing an "un-Islamic" bomb. Beijing understands Tehran's delicate position and supports its right to the peaceful use of nuclear energy. Beijing would have loved to see Tehran adopt the plan proposed by Russia, the US, Western Europe and, of course, China. Carefully evaluating its vital energy and national security interests, the last thing Beijing wants is for Washington to clench its fist again.

What happened to the George W Bush-declared, post-9/11 "global war on terror" (GWOT), now remixed by Obama as "overseas contingency operations" (OCO)? GWOT's key, shadowy aim was for Washington to firmly plant the flag in Central Asia. For those sorry neo-cons, China was the ultimate geopolitical enemy, so nothing was more enticing than to try to sway a batch of Asian countries against China. Easier dreamed of than done.

China's counter-power was to turn the whole game around in Central Asia, with Iran as its key peon. Beijing was quick to grasp that Iran is a matter of national security, in terms of assuring its vast energy needs.

Of course China also needs Russia - for energy and technology. This is arguably more of an alliance of circumstance - for all the ambitious targets embodied by the SCO - than a long-term strategic partnership. Russia, invoking a series of geopolitical reasons, considers its relationship with Iran as exclusive. China says slow down, we're also in the picture. And as Iran remains under pressure at different levels from both the US and Russia, what better "savior" than China?

Enter Pipelineistan. At first sight, Iranian energy and Chinese technology is a match made in heaven. But it's more complicated than that.

Still the victim of US sanctions, Iran has turned to China to modernize itself. Once again, the Bush/Dick Cheney years and the invasion of Iraq sent an unmistakable message to the collective leadership in Beijing. A push to control Iraq oil plus troops in Afghanistan, a stone's throw from the Caspian, added to the Pentagon's self-defined "arc of instability" from the Middle East to Central Asia - this was more than enough to imprint the message: the less dependent China is on US-subjugated Arab Middle East energy, the better.

The Arab Middle East used to account for 50% of China's oil imports. Soon China became the second-largest oil importer from Iran, after Japan. And since fateful 2003, China also has mastered the full cycle of prospection/exploitation/refining - thus Chinese companies are investing heavily in Iran's oil sector, whose refining capacity, for instance, is risible. Without urgent investment, some projections point to Iran possibly cutting off oil exports by 2020. Iran also needs everything else China can provide in areas like transportation systems, telecom, electricity and naval construction.

Iran needs China to develop its gas production in the gigantic north Pars and south Pars fields - which it shares with Qatar - in the Persian Gulf. So no wonder a "stable" Iran had to become a matter of Chinese national security.

Multipolar we go
So why the stalemate at the SCO? As China is always meticulously seeking to improve its global credibility, it had to be considering the pros and cons of admitting Iran, for which the SCO and its slogan of mutual cooperation for the stability of Central Asia, as well as economic and security benefits, are priceless. The SCO fights against Islamic terrorism and "separatism" in general - but now has also developed as an economic body, with a development fund and a multilateral economic council. The whole idea of it is to curb American influence in Central Asia.

Iran has been an observer since 2005. Next year may be crucial. The race is on to beat the clock, before a desperate Israeli strike, and have Iran accepted by the SCO while negotiating some sort of stability pact with the Barack Obama administration. For all this to happen relatively smoothly, Iran needs China - that is, to sell as much oil and gas as China needs below market prices, while accepting Chinese - and Russian - investment in the exploration and production of Caspian oil.

All this while Iran also courts India. Both Iran and India are focused on Central Asia. In Afghanistan, India is financing the construction of a US$250 million road between Zaranj, at the Iranian border, and Delaram - which is in the Afghan ring road linking Kabul, Kandahar, Herat and Mazar-i-Sharif. New Delhi sees in Iran a very important market. India is actively involved in the construction of a deep water port in Chabahar - that would be a twin for the Gwadar port built in southern Balochistan by China, and would be very helpful to landlocked Afghanistan (freeing it from Pakistani interference).

Iran also needs its doors to the north - the Caucasus and Turkey - to channel its energy production towards Europe. It's an uphill struggle. Iran has to fight fierce regional competition in the Caucasus; the US-Turkey alliance framed by the North Atlantic Treaty Organization; the perpetual US-Russian Cold War in the region; and last but not least Russia's own energy policy, which simply does not contemplate sharing the European energy market with Iran.

But energy agreements with Turkey are now part of the picture - after the moderate Islamists of the AKP took power in Ankara in 2002. Now it's not that far-fetched to imagine the possibility of Iran in the near future supplying much-needed gas for the ultra-expensive, US-supported Turkey-to-Austria Nabucco pipeline.

But the fact remains that for both Tehran and Beijing, the American thrust in the "arc of instability" from the Middle East to Central Asia is anathema. They're both anti-US hegemony and US unilateralism, Bush/Cheney style. As emerging powers, they're both pro multipolar. And as they're not Western-style liberal democracies, the empathy is even stronger. Few failed to notice the stark similarities in the degree of repression of the "green revolution" in Tehran and the Uighurs in Xinjiang. For China, a strategic alliance with Iran is above all about Pipelineistan, the Asian Energy Security Grid and the New Silk Road. For China, a peaceful solution to the Iranian nuclear dossier is imperative. This would lead to Iran being fully opened to (eager) European investment. Washington may be reluctant to admit it, but in the New Great Game in Eurasia, the Tehran-Beijing axis spells out the future: multipolarity.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

Parallel Worlds, Parallel Lives

There's military logic to Suu Kyi's trial

AsskBy Larry Jagan

BANGKOK - The trial of Myanmar's pro-democracy leader Aung San Suu Kyi has ended amid heightened security around the area near the court, with hundreds of trucks full of armed soldiers stationed around Insein prison where the proceedings took place. The prison court is expected to announce its highly anticipated verdict on Friday, according to one of the opposition leader's lawyers, Nyan Win.

The junta's plan to hold democratic elections next year - the first since Suu Kyi's National League for Democracy (NLD) overwhelmingly won May 1990 polls that were annulled by the military - has been put on hold pending the trial's result. People familiar with the situation say that junta leader Senior General Than Shwe will announce in the wake of the verdict the formation of a civilian-led interim government that will hold administrative power until elections are held next year. It's a move, analysts say, designed to deflect growing international criticism.

In the meantime, international pressure is expected to mount, with high-pitched calls for Suu Kyi's and an estimated 2,100 other political prisoners' immediate release from detention. Several Western countries, including the United States and the European Union, have threatened to up their current economic and financial sanctions against the military regime if the pro-democracy leader is sentenced to a new prison term. Suu Kyi was first arrested in 1989 and has spent 14 of the past 20 years under house arrest. For the past five years she has been held in virtual solitary confinement and allowed only occasional visits from her doctor and lawyer.

United States Secretary of State Hillary Clinton, at a regional meeting held last week in Thailand, dangled the prospect of US investment in exchange for freeing Suu Kyi and a move towards genuine democracy. President Barack Obama's administration had earlier hinted it would review US policy towards Myanmar, but according to Clinton that review has been put on hold because of the Suu Kyi trial.

Suu Kyi, a former Nobel Peace Prize winner, is on trial for breaking the terms of her house arrest by harboring an uninvited US veteran, John William Yettaw, who swam across the lake behind her house and into her back garden. Yettaw has said that he was motivated by a vision that Suu Kyi would be assassinated and he swam to her residence to warn her. The state-controlled media has accused him of being an American agent.

Suu Kyi's la

wyers have argued that the law used to charge her to a possible five years in prison, which is based on the 1974 constitution, is no longer valid. They have also argued that the military appointed security guards posted around her residence should be held responsible for any intrusion onto her property.

She was also not officially under detention according to the government's own wording - meaning she could not have violated the terms of her house arrest, according to Nyan Win,. Rather she has officially been held in her Yangon residence since 2003 for "security reasons".

"We are confident that we will win the case if things go according to the law," Nyan Win told reporters outside the court on Tuesday. But, he added, the judges in the case may make their decision based on other considerations. She is already guilty, according to the state-run newspaper the New Light of Myanmar, which published an editorial arguing against her innocence on the weekend. "This may influence the judges," Nyan Win said.

Kangaroo court
Many critics and observers see the trial as a sham aimed at influencing the upcoming election results in the military's favor. While the prosecution was allowed 23 witnesses, of whom 14 took the stand, the defense was only permitted two of the four witnesses they requested to appear in court, underscoring rights groups' criticism that Myanmar's judiciary lacks independence.

"The trial has been entirely scripted and the end already decided beforehand," Mark Canning, the British ambassador in Yangon told Asia Times Online in an interview. Canning based that assessment on his recent attendance at one of the trial's closed-to-the-public hearings.

Regime critics have echoed that assessment. "The junta fears Aung San Suu Kyi and wants to keep her locked up forever," said Zin Linn, a spokesman for the Burmese opposition abroad and a former political prisoner now based in Thailand. "With elections planned for 2010, they cannot afford to have her free to campaign against them," he said.

"The trial is all about keeping all voices of dissent silent in the run-up to the rigged elections planned for next year," said Aung Din, a leading Burmese pro-democracy activist based in the US. "No one is in any doubt about the outcome," said Moe Moe, a taxi driver in the country's main commercial city. "Those men in green in Naypyidaw [the new capital some 400 kilometers north of Yangon] know she is the people's hero and the real leader of this country," he added.

While locals anxiously await the trial's verdict, few analysts believe that a guilty verdict will spark major public protests similar to those in 2007, which started as complaints against fast-rising food and fuel prices and later brought thousands out onto the streets in broad anti-government demonstrations led by Buddhist monks. That failed attempt at people's power regime change became known around the world as the Saffron Revolution.

"There is no doubt people are angry at the regime and they will be even angrier if they sentence Daw Suu [Kyi], but they also feel powerless against the authorities, especially after the military crackdown against the saffron revolt two years ago," a Western diplomat based in Yangon told Asia Times Online. Local journalists agree that most local people are too worried and pre-occupied with day-to-day survival to take to the streets. Yet there has been a storm of international protest ever since the opposition leader was put on trial more than two months ago. United Nations Secretary General Ban Ki-moon left Myanmar in a huff earlier this month when Than Shwe declined his request to meet with the detained pro-democracy leader.

Some believe the UN could soon table a resolution against Myanmar's military regime through the Security Council, after reports emerged that a North Korean ship was angling to deliver either missile parts or nuclear technology to Myanmar in violation of a resolution passed against Pyongyang. Myanmar allies China and Russia have blocked with their veto powers recent attempts at Security Council censure against the regime's abysmal rights record led by the US.

Last week, many Association of Southeast Asian Nations (ASEAN) countries at a high-level meeting at the Thai beach resort of Phuket called for her release. US Secretary of State Clinton promised important changes in relations with the military regime if Suu Kyi was freed. "If she was released, that would open up opportunities ... to expand our relationship with [Myanmar], including investments," she told reporters.

The regime has reacted angrily to what it regards as outside interference in its internal affairs and said that international bullying would not influence the judicial process. The call for Suu Kyi's and other prisoners' release is "nonsense and unreasonable", said the New Light of Myanmar at the weekend in response to the US and ASEAN calls for her release. "She must face punishment in accordance with the law: the court will hand down a reasonable term to her if she is found guilty, and it will release her if she is found not guilty," the paper said.

"It is not a question of whether the proceedings are fair or not, she should never have gone on trial in the first place - it's a form of political and legal theater," said Benjamin Zawacki, Amnesty International's Bangkok-based Myanmar researcher. "As a prisoner of conscience, she should be released immediately." Amnesty earlier this week awarded Suu Kyi its "Ambassador of Conscience" award, which was accepted on her behalf by the Irish rock musician Bono, who has long campaigned for her release.

All indications are that the generals, unless pushed by their main patrons in Beijing, will as in the past ignore international calls for Suu Kyi's release and genuine political change. "They have completely ignored all international concerns, and gone on with their devastating, shattering repression of all dissent, with extremely heavy sentences being handed down for the crimes of democratic protest," said Paulo Sergio Pinheiro, the UN's former special rapporteur on human rights to Myanmar.

Than Shwe is believed to be waiting for the trial's verdict to further marginalize Suu Kyi and her NLD political party before announcing plans to transfer power to a civilian administration which would oversee next year's elections, say some analysts and regime insiders. "The whole country will really be surprised to see how power is handed over," Than Shwe reportedly told a high-ranking visiting foreign official according to a source familiar with the meeting.

Myanmar military sources confirm that the creation of an interim government is the next step in the junta's roadmap towards "discipline democracy". In an apparent move in that direction, all government ministries have been ordered to complete all of their outstanding work by the end of August, including the preparation of statistical information. Aung Thaung, Minister of Industry-1 and a close confidante to Than Shwe, recently told his deputies that there would soon be a new government and that he may no longer be a minister.

"According to Than Shwe's plans, all the current ministers will have to resign if they are to join a political party and fight the forthcoming elections," said the Thailand-based independent Burmese academic Win Min. So far, he says, there have been no hints as to who will make up the interim administration. Myanmar-based diplomats are skeptical that any move towards a civilian interim administration would be mostly cosmetic and still be controlled by the military. "There have been abundant signals that the roadmap is not an inclusive process and the referendum [in May last year] dispelled any remaining doubts," said Pinheiro. "This is a hyper-flawed process that will not lead anywhere - it's simply a consolidation of the military's control of the state."

Larry Jagan previously covered Myanmar politics for the British Broadcasting Corp. He is currently a freelance journalist based in Bangkok.

The return of Thomas Mun


By Martin Hutchinson

China's recent announcement that it would use its US$2 trillion of foreign reserves to boost its companies' overseas acquisitions tells us that its economic beliefs are neither those of Adam Smith, nor of Karl Marx, but of the 17th century mercantilist Thomas Mun. It is becoming clear that in economics, unlike in "hard" sciences, old belief systems never die.

Mun (1571-1641) wrote a classic magnum opus England's Treasure by Foreign Trade. Published only after his death in 1664, it was nevertheless very influential. Mun had been a director of the East India Company, and, unlike earlier theorists, believed that foreign trade was beneficial. However, he didn't hold with any high-faluting nonsense like comparative advantage or maximization of global economic welfare. For Mun, the purpose of foreign trade was to export more than you imported and, consequently, amass a huge store of foreign "Treasure," which you could then use to found colonies that would take control of natural resources.

To further this objective, countries should: cut back domestic consumption as far as possible; increase the use of land and other domestic resources to reduce imports; encourage the export of goods made with foreign raw materials; and export goods with price-inelastic demand because profits would be greater.

Mun's theory made sense in the 17th century economic jungle - and today it obviously makes sense to China. The country's currency, the yuan, is undervalued, so exports consistently exceed imports. Domestic consumption is kept low and savings high, both of which suppress imports. In industries such as automobiles where consumer demand is inevitable, foreign manufacturers are forced into domestic joint ventures, so that domestic manufacturers can be developed to replace imports. Domestic agriculture and resource extraction efforts are intensive.
China has set up free-trade zones, in which foreign parts are assembled into goods that are then exported. Finally, the country has amassed a gigantic store of $2 trillion of "Treasure," which is now to be used to assist in foreign acquisitions. Those acquisitions are not to be on Wall Street, as Prime Minister Wen Jiabao helpfully explained, but in natural resources, where China can assure itself of exclusive raw materials supplies for decades to come.

It's not often you see an economist's ideas put into effect with such precision. "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist" said John Maynard Keynes, but he probably didn't expect the economist to be almost 370 years defunct, nor the slavery quite so deferential. William Gladstone's Britain never followed Adam Smith's theories with such precision. Neither was Clement Attlee's Britain so scrupulously faithful to the teachings of Keynes himself. Certainly Josef Stalin's Russia played fast and loose with the teachings of Karl Marx, as did Mao Zedong's China.

It indeed has to be doubtful whether any member of China's current State Council has read Mun with any care. Wen himself is a geologist by training. One vice premier, Li Keqiang, has an economics PhD, but he got it at Peking University in the 1980s, so probably did not have Mun high on his reading list. Two other vice premiers, Hui Liangyu and Zhang Dejiang, have economics first degrees, but Hui got his at Jilin Party Provincial School while Zhang aced the economics syllabus at Pyongyang's Kim Il Sung University. Neither institution is known as a haven of Mun studies.
Still, to us practical men, the interesting question is not where the Chinese leadership got its exquisite understanding of Mun's theories, but whether they are likely to work.

For Adam Smith, writing a century later, Mun's nostrums were clearly inadequate. "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage," he wrote. China does not believe this. China preferred to force GM into a joint venture in China that even now, 12 years after the joint venture's foundation and with Buick sales volume in China higher than in the US, makes China's citizens pay $32,200 for a base model 2010 Buick LaCrosse - 16% more than its US price of $27,835.

Thus in Smith's time the ideas of Thomas Mun had come to seem hopelessly primitive. With the supply of natural resources essentially infinite, countries maximized their wealth by exploiting their comparative advantages, whether through cheap natural resources, as in British coal, through high quality agriculture, as in French wines, or through high-level mechanical ingenuity, as in German manufactures. Whether a country ran a balance of payments surplus or deficit was of little short-term consequence, and unless a country ran out of money altogether, "Treasure" was of no consequence at all. It was Smith's economics that brought the world the Industrial Revolution and the enormous advances in global prosperity that marked the 19th and 20th centuries.

There is, however, some evidence that Smith's economics are ceasing to work so well, and that we may be re-entering the world of Thomas Mun.

The key problem is natural resources. In Smith's time, with a global population of only 1 billion and little industrialization, the global supply of resources was almost infinite. Today, however, when we have allowed global population to bloat to 6.8 billion, there are signs that the global resources supply may be becoming disturbingly finite. Under Smith's economics, that isn't a problem; if one resource becomes scarce its price rises, and the world switches to an alternative. If, however, we are now dependent on a few critical resources for which alternatives are not readily available, price signals alone may not prevent us from depleting those resources altogether, causing catastrophic disruption to our economic life.

China clearly believes this is about to happen. That's why it is attempting to appropriate control of oilfields, mines and so forth in emerging markets, providing itself with secure sources of supply that will allow its economy to continue to flourish in a world of scarcity. Mun would surely have approved. In the dog-eat-dog world of 17th century mercantilism, a $2 trillion hoard of "Treasure" would find ready use in such activities, whether through formal colonies, or, as in China's case, merely through exploitation agreements backed, if necessary, by the People's Liberation Army.

In reality, China is probably a few decades premature. Oil, the world's most critical natural resource, is still in ample supply if the price is high enough to bring offshore drilling, oil shale and tar sands into operation. Other natural resources may certainly find their prices driven up by the rapid industrialization of China and India, but there is no sign of their rising prices being due to any absolute global scarcity - not yet.

Nevertheless, over the coming decades we are in danger of reverting to a Thomas Mun world, in which prosperity depends on hoarding sources of natural resources and "Treasure." That will be a world significantly poorer than our own, in which the price mechanism no longer carries much weight and innovation is stifled by the dead hand of the government bureaucracies that dominate economic life through their direction of nations' economic policies. While initially a Mun world might survive fairly comfortably, the long-term economic prognostication for it must be truly grim.

There are two possible escapes from this future. One is the 1950s' dream of space exploration, in which technology advances to the level where we can garner resources from other worlds, and if necessary dispose of surplus population in galactic colonization. However, 40 years after Apollo 11, our advance to that future seems much less certain than it did. Indeed, we are in reality no closer to it than were Jules Verne's fantasy astronauts of 1865, who shot to the moon from the barrel of a gigantic Florida-based cannon.

The other possibility is to return to the world of Adam Smith, in which global population was around 1 billion, so that resources and environmental problems posed little constraint. In such a world, natural resources would be abundant for centuries to come, so China's economics would be wholly foolish, and the free market would reign supreme. Government policy would no longer be relevant, and private sector companies would build new technologies and possibilities in a world of globalized free trade. Environmental constraints such as global warming would also pose little threat, since the carbon emitted into the atmosphere by the global economy would be a fraction of its current level.

Returning to a global population of 1 billion would be difficult, but it may be more practicable than a gigantic interstellar exploration program. If so, it may form the only viable exit from the inexorable approach of the world of Thomas Mun.

Martin Hutchinson is the author of Great Conservatives (Academica Press, 2005) - details can be found at

Cutthroat Capitalism: An Economic Analysis of the Somali Pirate Business Model


The rough fishermen of the so-called Somali coast guard are unrepentant criminals, yes, but they're more than that. They're innovators. Where earlier sea bandits were satisfied to make off with a dinghy full of booty, pirates who prowl northeast Africa's Gulf of Aden hold captured ships for ransom. This strategy has been fabulously successful: The typical payoff today is 100 times what it was in 2005, and the number of attacks has skyrocketed.

Like any business, Somali piracy can be explained in purely economic terms. It flourishes by exploiting the incentives that drive international maritime trade. The other parties involved — shippers, insurers, private security contractors, and numerous national navies — stand to gain more (or at least lose less) by tolerating it than by putting up a serious fight. As for the pirates, their escalating demands are a method of price discovery, a way of gauging how much the market will bear.

The risk-and-reward calculations for the various players arise at key points of tension: at the outset of a shipment, when a vessel comes under attack, during ransom negotiations, and when a deal is struck. As long as national navies don't roll in with guns blazing, the region's peculiar economics ensure that most everyone gets a cut.

All of which makes daring rescues, like the liberation in April of the Maersk Alabama's captain, the exception rather than the rule. Such derring-do may become more frequent as public pressure builds to deep-six the brigands. However, the story of the Stolt Valor, captured on September 15, 2008, is more typical. Here's how it played out, along with the cold, hard numbers that have put the Somali pirate business model at the center of a growth industry.

The Hot Zone: Pirates Know That Plunder Pays

Most of Somalia's modern-day pirates are fishermen who traded nets for guns. They've learned that ransom is more profitable than robbery, and rather than squandering their loot, they reinvest in equipment and training. Today, no ship is safe within several hundred miles of the Somali coast.

Illustration: Siggi Eggertsson

Pirate Math - Plunder Pays

An ordinary Somali earns about $600 a year, but even the lowliest freebooter can make nearly 17 times that — $10,000 — in a single hijacking. Never mind the risk; it's less dangerous than living in war-torn Mogadishu.

Oh Bummer

Pixies Announce Doolittle U.S. Tour Dates



Don’t expect new material from the Pixies anytime soon, but the band has just announced a string of U.S. dates on their Doolittle tour. The indie-rock figureheads will play all of the classic album and its related B-sides on the tour, and some “Doolittle-related surprises” are also promised.

The band hasn’t totally given up on the rest of its back catalog—a career-spanning set by the Pixies will be a highlight of the Virgin Festival in Toronto on August 29. The U.S. Doolittle tour will run throughout November, full dates and ticket availability listed below.

11.04 Los Angeles, CA: The Palladium (on sale TBA)

11.08 Oakland, CA: Fox Theater (on sale August 16)

11.09 Oakland, CA: Fox Theater (on sale August 16)

11.12 Seattle, WA: Paramount Theatre (on sale August 1)

11.13 Seattle, WA: Paramount Theatre (on sale August 1)

11.14 Eugene, OR: Hult Center (on sale August 14)

11.16 Denver, CO: The Fillmore (on sale September 12)

11.20 Chicago, IL: Aragon Ballroom (on sale September 12)

11.21 Chicago, IL: Aragon Ballroom (on sale September 12)

11.23 New York, NY: Hammerstein Ballroom (on sale August 14)

11.24 New York, NY: Hammerstein Ballroom (on sale August 14)

11.25 New York, NY: Hammerstein Ballroom (on sale August 14)

11.27 Boston, MA: Wang Center (on sale September 12)

11.30 Washington, D.C.: Constitution Hall (on sale September 11)

Wednesday, July 29, 2009

Iran and Russia, scorpions in a bottle

art.iran.giBy Pepe Escobar

HONG KONG - Things get curiouser and curiouser in the Iranian wonderland. Imagine what happened last week during Friday prayers in Tehran, personally conducted by former president Ayatollah Hashemi Rafsanjani, aka "The Shark", Iran's wealthiest man, who made his fortune partly because of Irangate - the 1980s' secret weapons contracts with Israel and the US.

As is well known, Rafsanjani is behind the Mir-Hossein Mousavi-Mohammad Khatami pragmatic conservative faction that lost the most recent battle at the top - rather than a presidential election - to the ultra-hardline faction of Ayatollah Ali Khamenei-Mahmud Ahmadinejad-Iran Revolutionary Guard Corps. During prayers, partisans of the hegemonic faction yelled the usual "Death to America!" - while the pragmatic conservatives came up, for the first time, with "Death to Russia!" and "Death to China!"

Oops. Unlike the United States and Western Europe, both Russia and China almost instantly accepted the contested presidential re-election of Ahmadinejad. Could they then be portrayed as enemies of Iran? Or have pragmatic conservatives not been informed that obsessed-by-Eurasia Zbig Brzezinksi - who has US President Barack Obama's undivided attention - has been preaching since the 1990s that it is essential to break up the Tehran-Moscow-Beijing axis and torpedo the Shanghai Cooperation Organization (SCO)?

On top of it, don't they know that both Russia and China - as well as Iran - are firm proponents of the end of the dollar as global reserve currency to the benefit of a (multipolar) basket of currencies, a common currency of which Russian President Dmitry Medvedev had the gall this month to present a prototype at the Group of Eight (G-8) meeting in Aquila, Italy? By the way, it's a rather neat coin. Minted in Belgium, it sports the faces of the G-8 leaders and also a motto - "Unity in diversity".

"Unity in diversity" is not exactly what the Obama administration has in mind as far as Iran and Russia are concerned - no matter the zillion bytes of lofty rhetoric. Let's start with the energy picture.

Iran is world number two both in terms of proven oil reserves (11.2%) and gas reserves (15.7%), according to the BP Statistical Review of World Energy 2008.

If Iran ever opted towards a more unclenched-fist relationship with Washington, US Big Oil would feast on Iran's Caspian energy wealth. This means that whatever the rhetoric, no US administration will ever want to deal with a hyper-nationalist Iranian regime, such as the current military dictatorship of the mullahtariat.

What really scares Washington - from George W Bush to Obama - is the perspective of a Russia-Iran-Venezuela axis. Together, Iran and Russia hold 17.6% of the world's proven oil reserves. The Persian Gulf petro-monarchies - de facto controlled by Washington - hold 45%. The Moscow-Tehran-Caracas axis controls 25%. If we add Kazakhstan's 3% and Africa's 9.5%, this new axis is more than an effective counter-power to American hegemony over the Arab Middle East. The same thing applies to gas. Adding the "axis" to the Central Asian "stans", we reach 30% of world gas production. As a comparison, the whole Middle East - including Iran - currently produces only 12.1% of the world's needs.

All about Pipelineistan
A nuclear Iran would inevitably turbo-charge the new, emerging multipolar world. Iran and Russia are de facto showing to both China and India that it is not wise to rely on US might subjugating the bulk of oil in the Arab Middle East. All these players are very much aware that Iraq remains occupied, and that Washington's obsession remains the privatization of Iraq's enormous oil wealth.

As Chinese intellectuals are fond of emphasizing, four emerging or re-emerging powers - Russia, China, Iran and India - are strategic and civilizational poles, three of them sanctuaries because they are nuclear powers. A more confident and assertive Iran - mastering the full cycle of nuclear technology - may translate into Iran and Russia increasing their relative weight in Europe and Asia to the distress of Washington, not only in the energy sphere but also as proponents of a multipolar monetary system.

The entente is already on. Since 2008, Iranian officials have stressed that sooner or later Iran and Russia will start trading in rubles. Gazprom is willing to be paid for oil and gas in roubles - and not dollars. And the secretariat of the Organization of Petroleum Exporting Countries (OPEC) has already seen the writing on the wall - admitting for over a year now that OPEC will be trading in euros before 2020.

Not only the "axis" Moscow-Tehran-Caracas, but also Qatar and Norway, for instance, and sooner or later the Gulf Emirates, are ready to break up with the petrodollar. It goes without saying that the end of the petrodollar - which won't happen tomorrow, of course - means the end of the dollar as the world's reserve currency; the end of the world paying for America's massive budget deficits; and the end of an Anglo-American finance stranglehold over the world that has lasted since the second part of the 19th century.

The energy equation between Iran and Russia is much more complex: it configures them as two scorpions in a bottle. Tehran, isolated from the West, lacks foreign investment to upgrade its 1970s-era energy installations. That's why Iran cannot fully profit from exploiting its Caspian energy wealth.

Here it's a matter of Pipelineistan at its peak - since the US, still during the 1990s, decided to hit the Caspian in full force by supporting the Baku-Tblisi-Ceyhan (BTC) oil pipeline and the Baku-Tblisi-Supsa (BTS) gas pipeline.

For Gazprom, Iran is literally a goldmine. In September 2008, the Russian energy giant announced it would explore the huge Azadegan-North oilfield, as well as three others. Russia's Lukoil has increased its prospecting and Tatneft said it would be involved in the north. The George W Bush administration thought it was weakening Russia and isolating Iran in Central Asia. Wrong: it only accelerated their strategic energy cooperation.

Putin power play
In February 1995, Moscow committed to finishing construction of a nuclear reactor at Bushehr. This was a project started by that erstwhile, self-proclaimed "gendarme of the Gulf" for the US - the shah of Iran. The shah engaged KWU from Germany in 1974, but the project was halted by the Islamic Revolution in 1979 and hit hard between 1984 and 1988 by Saddam Hussein's bombs. The Russians finally entered the picture proposing to finish the project for $800 million. By December 2001, Moscow also started to sell missiles to Tehran - a surefire way of making extra money offering protection for strategic assets such as Bushehr.

Bushehr is a source of immense controversy in Iran. It should have been finished by 2000. As Iranian officials see it, the Russians seem never to be interested in wrapping it up. There are technical reasons - such as the Russian reactor being too big to fit inside what KWU had already built - as well as a technology deficit on the part of Iranian nuclear engineers.

But most of all there are geopolitical reasons. Former president Vladimir Putin used Bushehr as a key diplomatic peon in his double chessboard match with the West and the Iranians. It was Putin who launched the idea of enriching uranium for Iran in Russia; talk about a strategic asset in terms of managing a global nuclear crisis. Ahmadinejad - and most of all the Supreme Leader - gave him a flat refusal. The Russian response was even more foot-dragging, and even mild support for more US-sponsored sanctions against Tehran.

Tehran got the message - that Putin was not an unconditional ally. Thus, in August 2006, the Russians landed a new deal for the construction and supervision of two new nuclear plants. This all means that the Iranian nuclear dossier simply cannot be solved without Russia. Simultaneously, by Putin's own framework, it's very clear in Moscow that a possible Israeli strike would make it lose a profitable nuclear client on top of a diplomatic debacle. Medvedev for his part is pursuing the same two-pronged strategy; stressing to Americans and Europeans that Russia does not want nuclear proliferation in the Middle East while stressing to Tehran that it needs Russia more than ever.

Another feature of Moscow's chessboard strategy - never spelled out in public - is to keep the cooperation with Tehran to prevent China from taking over the whole project, but without driving the Americans ballistic at the same time. As long as the Iranian nuclear program is not finished, Russia can always play the wise moderating role between Iran and the West.

Building up a civilian nuclear program in Iran is good business for both Iran and Russia for a number of reasons.

First of all, both are military encircled. Iran is strategically encircled by the US in Turkey, Iraq, Saudi Arabia, Bahrain, Pakistan and Afghanistan, and by US naval power in the Persian Gulf and the Indian Ocean. Russia has seen the North Atlantic Treaty Organization (NATO) gobbling up the Baltic countries and threatening to "annex" Georgia and Ukraine; NATO is at war in Afghanistan; and the US is still present, one way or another, across Central Asia.

Iran and Russia share the same strategy as far as the Caspian Sea is concerned. They are in fact opposed to the new Caspian states - Kazakhstan, Turkmenistan and Azerbaijan.

Iran and Russia also face the threat of hardcore Sunni Islam. They have a tacit agreement; for instance, Tehran has never done anything to help the Chechens. Then there's the Armenian issue. A de facto Moscow-Tehran-Erevan axis profoundly irks the Americans.

Finally, in this decade, Iran has become the third-largest importer of Russian weapons, after China and India. This includes the anti-missile system Tor M-1, which defends Iran's nuclear installations.

What's your axis?
So thanks to Putin, the Iran-Russia alliance is carefully deployed in three fronts - nuclear, energy and weapons.

Are there cracks in this armor? Certainly.

First, Moscow by all means does not want a weaponized Iranian nuclear program. This spells out "regional destabilization". Then, Central Asia is considered by Moscow as its backyard, so for Iran to be ascendant in the region is quite problematic. As far as the Caspian goes, Iran needs Russia for a satisfactory juridical solution (Is it a sea or a lake? How much of it belongs to each border country?)

On other hand, Iran's new military dictatorship of the mullahtariat will react savagely if it ever had Russia fully against it in the UN Security Council. That would spell a rupture in economic relations - very bad for both sides - but also the possibility of Tehran supporting radical Islam everywhere from the southern Caucasus to Central Asia.

Under these complex circumstances, it's not so far-fetched to imagine a sort of polite Cold War going on between Tehran and Moscow.

From Russia's point of view, it all comes back to the "axis" - which would be in fact Moscow-Tehran-Erevan-New Delhi, a counter-power to the US-supported Ankara-Tblisi-Telaviv-Baku axis. But there's ample debate about it even inside the Russian elite. The old guard, like former prime minister Yevgeny Primakov, thinks that Russia is back as a great power by cultivating its former Arab clients as well as Iran; but then the so-called "Westernizers" are convinced that Iran is more of a liability.

They may have a point. The key of this Moscow-Tehran axis is opportunism - opposition to US hegemonic designs. Is Obama - via his "unclenched fist" policy - wily enough to try to turn this all upside down; or will he be forced by the Israel lobby and the industrial-military complex to finally strike a regime now universally despised all over the West?

Russia - and Iran - are fully committed to a multipolar world. The new military dictatorship of the mullahtariat in Tehran knows it cannot afford to be isolated; its road to the limelight may have to go through Moscow. That explains why Iran is making all sorts of diplomatic efforts to join the SCO.

As much as progressives in the West may support Iranian pragmatic conservatives - who are far from reformists - the crucial fact remains that Iran is a key peon for Russia to manage its relationship with the US and Europe. No matter how nasty the overtones, all evidence points to "stability" at this vital artery in the heart of the New Great Game.

Next: Iran, China and the New Silk Road

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

He may be reached at