2014: year in review (by countries, part 1)

2014

Source: Economist Intelligence Unit

 

 

2014 has been a tumultuous, difficult, peculiar, as well as uneasy year for dozens of countries across the world. As of what we have seen so far, we have experienced missing airplanes, mass protests, return of dictatorships, currencies tumbling, political tensions, elections gone wrong, and dozens of things else which seemingly appear dim, indifferent, and oftentimes unforgiving. Nonetheless, taking it in other perspectives, there already appeared hopes, good expectations, new leaders, and new mindsets. Economy has successfully rebounded in some places, scientific breakthroughs taken place, and conventional wisdom redefined. What else to expect in 2015? Having looked at all the hodgepodge occurring this year, it is worthwhile reviewing 2014 as it nears its end in two days or so.

Reminder: not all countries will be reviewed.

I’ll review these events by countries in alphabetical order as follows:

 

Afghanistan – not much progress has happened in terms of security, despite the end of 13-year NATO mission in this war-torn nation, which has seen countless lives, mostly civilians, perished. Indeed, this year is a particularly deadly one: more than 4,000 Afghans, soldiers, civilians, and Taliban fighters altogether, have died in a triangle of conflicts between each other. However, this year also marks the first time a relatively peaceful election organized, with an iconoclastic World Bank economist, Ashraf Ghani (formerly an anthropology major), elected as the new president, which, after months of protracted conflict with a former tribal commander, Abdullah Abdullah, agreed to form a ‘national unity government’. Equipped with technocratic experiences in rebuilding the country’s currency and housing system, which have seen some pretty good success, it is hoped that Ghani can gradually commence to reform this country, something the public is yet to anticipate next year.

Algeria / Burkina Faso / France / Mali – Air Algerie Flight 5017 tragedy took place. A flight that was supposed to fly 116 people from Ouagadougou, capital of Burkina Faso, to Algiers, capital of Algeria, ended up in a plane crash in a large swath of Sahara Desert in northern Mali, killing all people on board. The bulk of the passengers were Burkinabes and French. (This is not a pretty good year for aviation, to be honest)

Australia – Sydney hostage crisis was a ‘black swan’ phenomenon for this country known for its almost guaranteed safety. But this also serves as a cautionary tale for Tony Abbott’s government, whose popularity has been at stake with many unpopular policies amid a slowing economy, as hundreds of Australians are believed to have joined the Islamic State of Iraq and Syria (ISIS). The murder of 8 underage children in Cairns is also another tragedy befalling this country.

Brazil – World Cup was successfully organized in this country recently recovering from mass protests in 2013, when millions of people took to the streets to demand more attention by Dilma Rousseff’s government to address social inequality issues. This year also oversaw presidential election, by which Rousseff was reelected for the second time. Many issues remain for the President to solve throughout her tenure, however.

Brunei – this oil-rich country of barely 420,000 people became international headlines when the country’s ruler, Sultan Hassanal Bolkiah, approved of first-phase sharia rules to be implemented on a nationwide scale. Caning is now introduced as punishment, and will soon be followed by other harsher ones, including amputation of hands for theft and decapitation for murder and other sinful activities. And what now happens? Emigration rate is slowly peaking up (but largely compensated by the huge inflow of migrants into this economy still enjoying the bonanza from oil industry, despite reduced oil prices).

China – As economic growth has increasingly slowed down, there is increasing proof that China’s decades-old economic miracle is seemingly coming to an end. But not so fast, people. Even with a current single-digit economic growth, the country’s nominal GDP output in 2013 was estimated to be more than 3.3 trillion US$, unmatched by any emerging economy in Asia, and even the whole world. And one achievement, as minor as it seems to be, that China has started to surpass the current global superpower, the United States, can be seen through its GDP figures measured by purchasing power parity: China has gained a whooping level of 16.7 trillion US$, while US itself is now on the level of 16.4 trillion US$.

And seemingly President Xi Jinping, as far as his government is so intent to denounce hegemony in all forms, is doing a paradox that all rising powers inevitably will encounter: exercising hegemony in their own manner. With his firm stance on South China Sea and East China Sea issue, which he explicitly states belongs to Chinese sovereignty, it remains to be seen how conflict escalation will develop in the future, in particular vulnerable states like Vietnam, Philippines, Japan, and India, all of which stake out a territorial dispute with the soon-to-be global superpower. But President Xi has many agenda in his mind as well: he is now envisioning two gigantic, new Silk Road projects, one across continents, and the other across oceans. Two new financial institutions have also been recently announced, namely BRICS’ New Development Bank and Asian Infrastructure Investment Bank. Surely, an alternative form of IMF, World Bank, and ADB, three of which are dominated by European Union, United States, and Japan. In the latest APEC Summit last November, President Xi is also currently pushing for a larger, and even more China-centric alternative of Obama-proposed Trans-Pacific Partnership (TPP), Free Trade Area of the Asia Pacific (FTAAP). China has also increasingly asserted itself in global role by contributing financially to crisis-ravaged countries ranging from Argentina to Russia, while offering countless infrastructure projects in developing countries to strengthen China’s position. Nonetheless, in years to come, while China’s active role remains exciting for dozens of countries desperate for technical assistance, how the country will resolve numerous issues with their neighbors remains a test to be seen.

Anti-corruption campaign itself has also taken a toll with more than 70,000 cadres captured and punished, the most high-profile of which was Zhou Yongkang, the country’s most formidable security czar having embezzled up to 14 billion US$ from state budget. However, hardening this campaign remains a dangerous game for President Xi, as while doing too soft may ravage Communist Party’s legitimacy, responding too harsh will intensify internal clashes between elites competing for influence within the Party’s leadership, therefore putting national security at stake.

Denmark – this Scandinavian country didn’t receive as much attention as others had in mass media, but among diplomatic discourse and in international relations discussions, Denmark was a sensation. This country has, for the first time, emboldened its claim of nearly the entire North Pole, given that the kingdom maintains possession of its centuries-long self-ruled colony, Greenland. Canada, US, Russia, and Norway, countries with similarly big stakes in the Arctic region, have got a new competitor.

Egypt – The country returned again to authoritarian rule after two bloody revolutions in 2011 and 2013. The former was against Hosni Mubarak, while the latter against Mohamed Morsy, the first democratically elected president. Now with Abdel Fattah el-Sisi, a military general, leading this nation of more than 80 million, stability was restored, but rather on a false perspective. It was a kind of stability produced only under repression, and limited freedoms of expression. Many political prisoners remained incarcerated, some of whom had already been executed, while Mubarak’s associates were gradually released, including Mubarak himself. What is to expect in 2015? As long as Sisi maintains a strong control and doesn’t address crucial issues (fuel subsidies, gas exports to Israel, Palestine crisis, Suez conflict, ISIS), there isn’t much room for progress.

Guinea / Liberia / Sierra Leone – the Ebola epidemic went out of control this year, completely shutting down the three most severely impacted countries in West Africa. Nearly 20,000 people were infected, with mortality rate exceeding 7,000 people. This also served as a major leadership test for health experts and government leaders alike. While the disease has largely subsided (it didn’t turn out to be a pandemic), this leaves devastating effects for the three nations.

India – the age of national leadership had come with the victory of Narendra Modi, and the party he leads, Bharatiya Janata Party (BJP), in the world’s largest general election held this year. More than 550 million people cast their votes, with an overwhelming majority showing support for Modi, an experienced technocrat having transformed Gujarat, his home state almost 60 million strong, into an investment-friendly regime, despite controversies surrounding 2002 Gujarat riots, by which Modi was possibly implicated. Despite the human rights limbo, Modi has proven himself, so far, as a pretty successful leader, having initiated bold moves to make India more open to investment, and more assertive in global role as well.

Modi’s most ambitious agenda is to turn India into a global power with a stronghold in Indian Ocean, something he expects to achieve within his tenure. So far, he has remained cautious in balancing his relations with both China and Japan, by which Modi was closer to the latter, particularly its prime minister, Shinzo Abe, a doppelganger referred to by some people. Nonetheless, reconciling India-Pakistan relations, despite an initial good start, will remain a challenge to be seen in years to come.

But India must pride itself on its scientific breakthroughs: having sent a spacecraft to Moon, it now sends another to Mars, making use of locally sourced technologies at limited costs. India’s flagship space organization, ISRO, will also design other spacecraft to be sent to other regions within the solar system pretty soon. Stay tuned for next milestones.

Indonesia – this country of 250 million, a role model of democracy for the world, slightly backtracked when parliament dominated by opposition passed a new regional elections bill which eliminated direct elections for governors, regents, and mayors, leading to mass protests. One main reason: much of the people no longer expect a return of dictatorship, something that can be retraced from this unpopular policy, which was soon cancelled by the outgoing Yudhoyono administration signing a presidential order to restore direct elections in administrative levels.

This country also faced another major test in democracy when the country would soon oversee the first direct transfer of power between democratically elected presidents, as seen by the presidential election hardly fought between Joko Widodo, a successful mayor of Surakarta (2005-2012) and governor of Jakarta (2012-2014), and Prabowo Subianto, the former son-in-law of dictator Suharto as well as a former military strongman, who was potentially implicated in a series of human rights abuses. Widodo hailed from humble origins, spending his childhood in riverside slums in Surakarta, while Prabowo originated from a family of aristocrats. This is also the first election by which a civilian with no military background (but with support from old Sukarno-affiliated elites) won, despite massive black campaign.

For the first two months in power, President Widodo had done successfully in addressing some issues, ranging from simplifying investment permits to reforming fiscal extent by decreasing fuel subsidies to more than 10 billion US$, as well as bringing home foreign investment by Chinese infrastructure corporations worth 27 billion US$ during APEC Summit in Beijing. Nonetheless, in terms of human rights issue, there remains much for President Widodo to resolve in the years to come. His ‘global maritime axis’ doctrine, while so far attracting populist support across the nation, remains to be seen in the future, given the country’s limited ability to realize his vision.

But the end of 2014 didn’t come smoothly for this country as an airliner went missing, namely AirAsia Flight QZ8501., the Surabaya-Singapore flight that went wrong. Up to now, the plane hasn’t been discovered. More search efforts will be deployed within due course.

 

(wait for part 2)

How to lose $34.5 billion in one year

eike batista

 

It can be seen that no other person in history has ever matched Eike Batista in times of ‘losing the most money in one year’. Once regarded as Brazil’s richest person, and the world’s 8th, Eike gets himself lost in his personal realm of excessive self-confidence.

What has he done so much that he could easily let all the money plunge into null and void in such short time and become the public shame of the whole nation? Here are some of the ‘tips’:

1. Be absolutely proud in one’s own ambition and goals, no matter how irrelevantly questionable they are as attested to reality.

2. Grill business loans as though they were more scrumptious than any signature dishes a Michelin-star chef can prepare.

3. Boast that you are going to be the world’s richest person while your company, entrenched in debts, is yielding nothing.

4. Poke with risks – even if you have little or no craftsmanship in handling the consequences.

5. Accept no bad news and ‘shoot the messenger’.

6. Don’t stop believing… in superstitions.

7. Media, please!!

Read the full report in Bloomberg Businessweek.

 

Excerpt:

 

Rare is the person—at least until recently—who meets Batista and is not seduced by his supreme self-confidence. As Daniel Lamarre, CEO of Cirque de Soleil, said when announcing a partnership with Batista’s IMX entertainment venture in 2012: “He is alone in his league.”

Batista has always been the leading chronicler of his own legend. He has long liked to tell the story of how as a teenager in Germany, he dreamed of becoming wealthy on gold, and how those dreams came true. At one point, a clairvoyant advised him to go to Machu Picchu, the ancient Inca site in Peru, and gaze at the sky at a certain hour, saying it would bring him luck. “Seems that it worked,” he told Brazilian TV host Jô Soares in May 2011. It’s all part of a mystical streak he embraced, and peddled. His company names all end in X—EBX, OGX, MMX. In his numerology, X stands for the multiplication of wealth.

 

The century of the emergers

Maps of the emerging markets (colored in green), as of 2005.

 

Believe it or not, the world is currently turning upside-down right now. This has been obviously apperceived, to say the least, in terms of geopolitical and economic equilibrium. It is interpretable in many senses; some say that the world’s vehemence has again moved to the East, which many centuries prior, used to dominate global economy, before European colonialism became sporadically widespread and tense by the onset of 16th century. All of a sudden, these major powers were all of a sudden seduced in the arms of Morpheus, having themselves weakened by the rapid civilizational and technological progresses attained by Western societies. After hostile rivalries between European superpowers, it was British empire who in the end became the largest colonists in human history,  but their omnipotence only extended until the end of 19th century, when United States unexpectedly toppled down its position after decades of rapid industrialization as a by-product of the Civil War. Even in both World Wars, no matter how destructive they had been to humankind, it was the ‘big brother’ who in the long run managed to gain triumph, despite the fact they had to compensate it with hundred thousands of lives.

Cold War was also a spine-chilling period, where there was intense competition between United States and Soviet Union, not only in terms of nuclear weapons, ideologies they both exported to the whole world, and political intrigues, but it also triggered massive economic competition between these two superpowers, to gain sympathy among their allies. Near the omega point of the decades-long war, we had barely seen these countries did really emerge in the global stage, but the economists had far long projected that this might be a self-fulfilling prophecy: that, it is instead those countries, which had been severely affected by the aftermath of the Cold War, but will slowly-and-surely adopt democracy, that will dominate the global economy in the upcoming century.

Yes, it is. As of today, the reality is invisibly reverberating stronger than ever. United States might still play a pivotal role in global policing, perhaps until the next century, but the world has become increasingly polarized. The epicentrum is no longer in America; history, all in a sudden, again repeats itself. It is instead being divided, and is distancing itself in Asia, Africa, Middle East, Eastern Europe, Pacific, and Latin America. What’s more, globalization, which itself is a Western ideal, has unified all these regions economically.

No doubt, someday in the 21st century, we will perceive not only 1 superpower; there will be a plethora of superpowers emerging anywhere in the world, those which also used to be the similar major powers many centuries far before the Europeans came and set the thames on fire.

Welcome to the century of the emergers.

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BRICS, AND ITS OWN OBSTACLES

 

 

Let the ‘emerging market’ term be explained, firstly beforehand.

In the past, in terms of economic prosperity, the globe used to be divided mainly into three categories: First World (advanced, highly industrialized nations), Second World (newly industrialized countries or NICs, which haven’t fully achieved all the prerequisites of a standard, developed nation), and Third World (developing, less-, and least-developed countries). But this form of measurement began to experience minor changes after the introduction of newly-minted ‘emerging market’, which was originally named under the epithet of ‘less economically developed countries (LEDCs) in the beginning of 1980s. This term refers to developing countries which are undergoing transitionary phase into the next stage of NICs. Because of their striking differences with other developing countries, particularly in terms of macro-economic growth, some economists are currently suggesting that this term be given its own separate degree, independent of the three stages previously mentioned above.

The ‘emerging market’ trend itself actually kickstarted after the coinage of ‘BRIC’ term by Goldman Sachs economist, Jim O’Neill, in 2001, to identify 4 potential superpowers, largely Brazil, Russia, India, and China. There were multiple reasons why he chose to opt for these countries: all of these countries are experiencing rapid economic growth, and currently relish a demographic boom as a result of their tremendous population. Prove it: China’s population currently accounts for almost one-fifth of the world’s, with figures amounting to 1.35 billion, while India is placed in the second rank, with close to 1.15 billion residents. Brazil, as a result of population boom in which it was virtually commonplace to perceive a family consisted of 6 to 7 children, now accommodates 200 million people. And Russia has 150 million citizens, almost four-fifth of whom are situated in the European side. And add one more country which has recently conjoined the parvenu club: South Africa, which houses almost 50 million inhabitants. This might sound like a piece of good news, but it is not entirely a sort. Many obstacles are actually facing these countries away, which they have to tidy up in order to sustain the status, otherwise they may lose the chance to save their own faces.

 

Shanghai is currently China’s largest city, inhabited by more than 25 million people, and has the highest GDP per capita compared to that of all the other cities in the country, which surpasses 10,000 US$ this year.

 

China may enjoy its vibrant prosperity today, but it won’t be too long, and even might sound improbable, to catch up with the United States, unless they begin to make some en masse changes, ranging from reforming one-child policy (experts have forewarned that unless the government ends this repressive rule, at least as many as one-fifth of Chinese people might have aged beyond 60 by the time of 2050, which may increase social burden), decreasing a widening social gap (the urban elites are getting richer, while many of the rural peasants remain impoverished, as seen from increasing number of social protests and riots, which have increased to a staggeringly high 70,000 as of this year), liberalizing more of its economic sectors (many of the vital and strategic sectors are still controlled largely by state-owned corporations, which may hundred billion dollars in assets), improving its environmental quality (China should invest more in clean, green technologies than in building coal power plants), emphasizing more on domestic consumption and trading with other emerging markets (the country so far exports more products to United States and Europe than to their own co-equal counterparts), and most importantly, but also the most challenging one, introducing a more democratic, and more transparent, political system. This is just a matter of time how long Communist Party would last in China. People’s voices are actually getting louder, no matter how harsh they are suppressed.

 

Mumbai has been, since British colonialism, the economic epicentrum of India.

 

India’s case is different from the former’s. It boasts the largest democracy in the world, but its bureaucracy is even much more obnoxious than that in China. In terms of foreign direct investment, India had only so far succeeded to persuade foreign businesses to invest 40 billion US$ in the country in 2011, at the same time more than 100 billion US$ of FDI had flowed in the rest of BRIC members (except South Africa), respectively. The red tape is painstakingly sluggish, as it needs the approval of not only by local authorities, but also those in charge of the state, the nation, and most importantly, majority of the people. Corruption rate prevails exceedingly astronomical, which inspired a series of nation-wide hunger-strike protests by anti-corruption apparatchik, Anna Hazare. Furthermore, India is also posed to another serious challenge: caste-based societies. Indians, especially of those lower castes, are often subject to discrimination and depredation by those of upper castes. Sectarian violence, especially Hindu-Muslim conflicts, are overwhelmingly high. Many of the territories, particularly in rural areas, end up as battlefields which witness bloody insurgencies between Naxalite rebels (Marxism-inspired combatants who are fighting against inequalities and injustices) and security forces. The vulnerability to national disintegration is quite high here, as some provinces accommodate certain movements which aspire to establish independent states throughout the country.

 

Sao Paolo is Brazil’s largest city, with its metropolitan areas inhabited by more than 20 million people.

 

Brazil has been licking its own lips from fluorishing economic growth in the last decade. It is endowed with abundant natural resources, the bulk of which is based from Amazonian rainforests, and recent exploration efforts have uncovered more than 10 billion barrels of oil off the eastern coasts of the country. It also relishes a very stable population growth, with an average family nowadays, either rich, middle-class, or poor, having in average 1 to 3 children. Nevertheless, there is a very huge, behemoth cost they have to compensate in expense of its own rapid, cash-rich growth: environmental destruction that is currently taking place in the country. It is estimated that as many as 60 million hectares of tropical forests had been cut off to pave way for brobdingnagian corn, soybean, and sugarcane plantations which supply billions of litres of ethanol oil – another alternative in case of fuel shortage – every year. At the same time this article is being written, as many as 70 hydroelectric dams are being planned for construction throughout the entire rivers in Amazon, a numismatic figure beyond measure which can flood up large swaths of the remainding jungles. Excluding large infrastructure and mining projects proposed by the country’s largest conglomerates, the possible side effects of these works must be vividly examined by the government, and remains a major responsibility for Brazil’s current president, Dilma Rousseff. Moreover, there is a high social disparity between the less developed Northern territories, and the largely-urbanized Southern territories, in which more than half of Brazil’s GDP is based (particularly in the metropolitan areas of Sao Paolo and Rio de Janeiro, which are almost entirely covered up in concrete forests).

 

As a result of oil boom, Moscow once underwent through massive property boom (before it doomed because of GDP’s downfall in 2009), as well, with numbers of skyscrapers drastically on the rise.

 

Of all the BRICS countries surveyed, Russia remains the most serious focus, and also the one largely questionable by many economists whether this country is actually appropriately titled as ‘emerging market’ , or everything else is just coincidences. After the downfall of Soviet Union in 1991, Russia faced a period of economic malaise and stagnation which would last almost a decade long, until Vladimir Putin was sworn in as president of Russia. Despite his cold-blooded, steel-hearted methods in handling the nation many Western observers regarded as ‘undemocratic’ and ‘unjust’, Russia in the long run managed to sustain very high economic growth, witnessed a massive surge in numbers of middle-class, cash-rich societies, and gained more prestige in international affairs. But the country does also have its own time-ticking bombs which may lead itself to self-organized criticality, a point of no return: severe corruption, acute oligarchy in which most of the economic sectors are controlled by a mere handful of politically and economically powerful, pro-Kremlin families, dirty collaboration between police, bureaucrats, politicians, and organized-crime syndicates, and heart-breaking bureaucracy, all of which cause mass ‘brain drain’, or an outflow of intellectuals and educated scholars, to other more advanced countries. Russia’s economy has also not been fully diversified, as oil & gas sector remains the utmost priority in terms of revenues (as a matter of fact, Russia has outpaced Saudi Arabia in oil production, which hit a record-high 10 million barrels a day). This was the main reason behind the steep contraction of Russia’s economy when crude oil prices freefell from 147 to less than 50 US$ a hogshead. In order to sustain its ‘emerging country’ status, there is nothing more urgent than reforming its police and bureaucracy, minimizing corruption rates, reducing the leverage held by the oligarchists, diversifying its energy-based economy, and most importantly, introducing a more democratic, transparent environment. The government also promises that an additional 1 trillion US$ will be invested in infrastructure until 2020, but what makes the public concerned is its vulnerability to corruption and misappropriation. This might be a rigorous task, but if the similar cycle is sustained, in the long term, it is Russia itself which must bear a painful shame in global stage, because of its failures to handle its own heels of Achilles.

 

Gauteng metropolitan area, inhabited by 10 million South Africans, 4 million of which are situated in Johannesburg, currently produces as much as thirty percent of South Africa’s, and 10% of the continent’s total GDP.

 

South Africa also needs to be taken in full consideration. It is true that situation has been overall much better, especially in post-Apartheid era. Government has so far built 3 million homes to provide housing for black South Africans, while the number of middle-class black families is on the rise. But, still, there are myriad obstacles which remain unsolved in so far, ranging from high unemployment (the actual figure may be 25% for blacks), a prevalently high social inequality with little progress even after Apartheid has ended (it is estimated that white South Africans, although they only account for 10% of the population, do still have 80% control in the country’s overall GDP), and high ratio of people living with HIV/AIDS, which claims one in nine individuals in average. Although AIDS-related deaths have gradually decreased by slightly 10% after the massive antiretroviral (ARV) campaigns, this disease continues to be the dominant force behind the large economic losses suffered by the country after en masse brain drain (this is very ecumenical among white South Africans, in which between 1 and 1.6 million well-educated South Africans are known to have emigrated overseas since 1994), which is forecast to be close to 50 billion US$ every year, and the similar trend will go on for decades to come. It also faces a mass exodus of economic refugees from many neighboring countries, especially Zimbabwe, whose population is expected to surpass 5 million. This helped sparkling a series of anti-immigrant riots in major cities in 2008, which led to massive internal displacement of more than 60,000 immigrants. Security prevails vulnerable to murders, robberies, and rape. For the third case, more than 500,000 South African women are subject to rape every year. The country also suffers more than 100,000 homicides every year, among the highest per capita in the world.

In a nutshell, despite all the hindrances being faced by these countries, they still have tremendous potential to dominate global economy in the 21st century, alongside with other emerging-market countries. These problems might not be solved overnight, because of the long-term adaptability they have been to societies for many decades, but governments, in order to make all the economists’ streamline projections pass with flying colors, must co-operate together with societies to explore and exploit as many possible ideas as they can afford. More transparency, and open democracy, might be a better alternative.

On the next section, more sexy acronyms other than BRICS, and more about BRICS itself, will be fully discussed.

 

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