Tag Archives: international relations

World Bank watch out, the BRICS Bank is a game-changer

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Ali Burak GuvenThis post was written by Dr Ali Burak Güven, Lecturer in International Relations & International Political Economy in Birkbeck’s Department of Politics. It was originally published on The Conversation.

The top news from this year’s BRICS summit was the announcement of a New Development Bank. Headquartered in Shanghai, the bank will become operational in 2016 with an initial capital of US$50 billion. Its core mandate is to finance infrastructure projects in the developing world.

The bank, announced at the summit in Fortaleza, Brazil, will also have a monetary twin to provide short-term emergency loans, the Contingency Reserve Arrangement. While the bank will be open to all UN members, the reserve will lend only to the contributing BRICS countries in times of crisis.

This combination of timing, actors, and institutions is noteworthy. It was in July 1944 that the Allied nations gathered at Bretton Woods to form two of the most vital institutions of the post-war era: the International Monetary Fund and what would become the World Bank. Now, 70 years later and only a few years on from the global financial crisis, the leading developing nations of our time have joined forces to forge new institutions of international economic cooperation with mandates identical to the World Bank and the IMF.

This move is born out of a belief that the Bretton Woods twins, despite numerous governance reform initiatives over the past decade, remain set to reflect the policy preferences of their original creators. In creating complementary institutions, the BRICS will be hoping to use these alternative platforms of international economic governance and as leverage to accelerate the reform of existing arrangements.

Game-changing potential

The New Development Bank is currently the more interesting of the “Fortaleza twins”, for it is designed as a freestanding organisation that’s open to all. Yet it has not received a warm welcome in business columns. While the political symbolism of the new institution is widely acknowledged, its immediate economic utility has been challenged – why do the BRICS need a development bank of their own when infrastructure projects are already easily financed through private as well as official channels, especially through the World Bank?

This is a narrow criticism. In the long run, the New Development Bank has the potential to become a game-changer in development financing. In fact, if its evolution even remotely parallels that of the World Bank, it might end up having a formative impact on economic policy-making and overall development strategy in the Global South.

To begin, while there is no shortage of national and regional development banks as well as private financiers of infrastructure projects, there is still a massive gap in development finance, estimated to be as high as US$1 trillion per year. Many developing countries encountered significant financing problems during the global crisis of the late 2000s. This shortfall necessitated a surge in World Bank commitments, from an annual US$25 billion in 2007 to about US$60 billion in 2010.

But commitments declined just as swiftly over the past few years, and as of 2013 stood at about $30 billion. Given these figures, the New Development Bank’s readily available $10 billion in paid-up capital and the extra $40 billion available upon request are not exactly pocket money for development financing.

Yet just as the World Bank was never simply a money lender, so too will the new bank represent far more than a mere pool of funds. The existing geostrategic and policy inclinations of its founding stakeholders imply a bigger role to play for the institution. In the process, it is bound to offer a formidable challenge to the World Bank’s financial prominence and so influence policy in the developing world.

Client-side

The new bank has been long in the making. It is the culmination of nearly two decades of intense South-South cooperation and engagement. In recent years especially, the BRICS and other emerging nations have become donors and investors in both their immediate regions and in less developed areas of the world – with Chinese and Brazilian involvement in sub-Saharan Africa and parts of Latin America representing the prime examples.

They have made an effort to establish more equal relationships with their lower-income developing peers and emphasised an attractive narrative of partnership, non-intervention and knowledge transfer, instead of smug, superior Western notions of top-down aid and restrictive conditionality. To the extent that it could keep its rates competitive, the New Development Bank is unlikely to suffer from a dearth of clients from among its fellow developing nations.

Paradoxically, BRICS and other large middle-income countries still remain the most valuable clients of the World Bank. Since the financial crisis, India has been the largest borrower of the World Bank, and has been closely followed by Brazil, China and a few other near-BRICS such as Indonesia, Turkey and Mexico. But, once the new bank fully kicks off, it is possible the World Bank will lose a lot more business from this traditionally lucrative market of large middle-income borrowers who now have a serious alternative.

Political implications

A reduced loan portfolio will ultimately translate into declining policy influence for the World Bank, which has held near-monopoly of development wisdom over the past 70 years. Perhaps in recognition of their waning power, there has already been a slight but steady decline in World Bank loans that emphasise policy and institutional reforms.

Also, a larger portion of the Bank’s resources have been allocated to conventional development projects, such as environment and natural resource management, private sector development, human development, and social protection. These are precisely the types of projects the Bank will encounter fierce competition from the new BRICS-led bank.

Knowledge and power

Consider also that the World Bank has labelled itself as a “knowledge bank” in recent years. Employing thousands of policy specialists, it doubles as one of the biggest think tanks in the world. Yet if it loses considerable financial ground to initiatives such as the New Development Bank, this threatens a decline in the power it has through knowledge.

Crucially, none of the BRICS adhere to the Bank’s standard policy prescriptions, nor do they advocate a different common strategy either. Brazil’s social democratic neo-developmentalism is quite different from China’s state neoliberalism, which in turn differs from established policy paths in others in the group. The only common denominator is a substantially broader role given to the state. But beyond this there is much flexibility and experimentation and little in the way of templates and blueprints like there is with the Western institutions. This policy diversity itself dismisses any idea of superiority of knowledge and expertise.

None of this suggests that the World Bank, as the dominant, Northern-led development agency, is now on an ineluctable path of decline. Cumbersome as they may appear, large organisations often accumulate considerable resilience and adaptive capacity over generations. Yet the World Bank does have a serious contender in the New Development Bank.

While it may not overtake the World Bank in financial prowess and policy influence any time soon, at a minimum it should be able to exert significant pressure over the World Bank to respond more sincerely and effectively to the new balance of power in the global economy.

The Conversation

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Who can control the post-superpower capitalist world order?

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This post was written by Slavoj Žižek, Director of the Birkbeck Institute for the Humanities. It was originally published on the Guardian’s Comment is Free site.

To know a society is not only to know its explicit rules. One must also know how to apply them: when to use them, when to violate them, when to turn down a choice that is offered, and when we are effectively obliged to do something but have to pretend we are doing it as a free choice. Consider the paradox, for instance, of offers-meant-to-be-refused. When I am invited to a restaurant by a rich uncle, we both know he will cover the bill, but I nonetheless have to lightly insist we share it – imagine my surprise if my uncle were simply to say: “OK, then, you pay it!”

There was a similar problem during the chaotic post-Soviet years of Yeltsin’s rule in Russia. Although the legal rules were known, and were largely the same as under the Soviet Union, the complex network of implicit, unwritten rules, which sustained the entire social edifice, disintegrated. In the Soviet Union, if you wanted better hospital treatment, say, or a new apartment, if you had a complaint against the authorities, were summoned to court or wanted your child to be accepted at a top school, you knew the implicit rules. You understood whom to address or bribe, and what you could or couldn’t do. After the collapse of Soviet power, one of the most frustrating aspects of daily life for ordinary people was that these unwritten rules became seriously blurred. People simply did not know how to react, how to relate to explicit legal regulations, what could be ignored, and where bribery worked. (One of the functions of organised crime was to provide a kind of ersatz legality. If you owned a small business and a customer owed you money, you turned to your mafia protector, who dealt with the problem, since the state legal system was inefficient.) The stabilisation of society under the Putin reign is largely because of the newly established transparency of these unwritten rules. Now, once again, people mostly understand the complex cobweb of social interactions.

In international politics, we have not yet reached this stage. Back in the 1990s, a silent pact regulated the relationship between the great western powers and Russia. Western states treated Russia as a great power on the condition that Russia didn’t act as one. But what if the person to whom the offer-to-be-rejected is made actually accepts it? What if Russia starts to act as a great power? A situation like this is properly catastrophic, threatening the entire existing fabric of relations – as happened five years ago in Georgia. Tired of only being treated as a superpower, Russia actually acted as one.

How did it come to this? The “American century” is over, and we have entered a period in which multiple centres of global capitalism have been forming. In the US, Europe, China and maybe Latin America, too, capitalist systems have developed with specific twists: the US stands for neoliberal capitalism, Europe for what remains of the welfare state, China for authoritarian capitalism, Latin America for populist capitalism. After the attempt by the US to impose itself as the sole superpower – the universal policeman – failed, there is now the need to establish the rules of interaction between these local centres as regards their conflicting interests.

This is why our times are potentially more dangerous than they may appear. During the cold war, the rules of international behaviour were clear, guaranteed by the Mad-ness – mutually assured destruction – of the superpowers. When the Soviet Union violated these unwritten rules by invading Afghanistan, it paid dearly for this infringement. The war in Afghanistan was the beginning of its end. Today, the old and new superpowers are testing each other, trying to impose their own version of global rules, experimenting with them through proxies – which are, of course, other, small nations and states.

Karl Popper once praised the scientific testing of hypotheses, saying that, in this way, we allow our hypotheses to die instead of us. In today’s testing, small nations get hurt and wounded instead of the big ones – first Georgia, now Ukraine. Although the official arguments are highly moral, revolving around human rights and freedoms, the nature of the game is clear. The events in Ukraine seem something like the crisis in Georgia, part two – the next stage of a geopolitical struggle for control in a nonregulated, multicentred world.

It is definitely time to teach the superpowers, old and new, some manners, but who will do it? Obviously, only a transnational entity can manage it – more than 200 years ago, Immanuel Kant saw the need for a transnational legal order grounded in the rise of the global society. In his project for perpetual peace, he wrote: “Since the narrower or wider community of the peoples of the earth has developed so far that a violation of rights in one place is felt throughout the world, the idea of a law of world citizenship is no high-flown or exaggerated notion.”

This, however, brings us to what is arguably the “principal contradiction” of the new world order (if we may use this old Maoist term): the impossibility of creating a global political order that would correspond to the global capitalist economy.

What if, for structural reasons, and not only due to empirical limitations, there cannot be a worldwide democracy or a representative world government? What if the global market economy cannot be directly organised as a global liberal democracy with worldwide elections?

Today, in our era of globalisation, we are paying the price for this “principal contradiction.” In politics, age-old fixations, and particular, substantial ethnic, religious and cultural identities, have returned with a vengeance. Our predicament today is defined by this tension: the global free circulation of commodities is accompanied by growing separations in the social sphere. Since the fall of the Berlin Wall and the rise of the global market, new walls have begun emerging everywhere, separating peoples and their cultures. Perhaps the very survival of humanity depends on resolving this tension.

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Putin needs to show more restraint than hero to avoid a new Crimean war

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This post was written by Professor Orlando Figes of Birkbeck’s Department of History, Classics and Archaeology. He is the author of Crimea: The Last Crusade (Penguin). This article originally appeared on The Guardian on 28 February 2014.Crimea: The Last Crusade, by Orlando FigesThe signs are ominous: Crimea’s parliament has been stormed by pro-Russian gunmen; its airports seized by soldiers in Russian uniforms; and Russian military trucks and helicopters are on the move. It looks like we are heading for a new Crimean war.Its course is predictable. Russia‘s forces, or – more likely – their Crimean proxies, would carry out a coup to defend the interests of the Russian-speaking majority in the peninsula and hold a referendum to secure autonomy from Ukraine.

Perhaps Crimea would rejoin Russia, despite the objections of the Crimean Tatars and Ukrainians. The pro-Russian movement might then spread into south-east Ukraine, whose industries are heavily dependent on Russia. Ukraine loses, Russia wins.

Crimea was bound to be the focus of the Russian backlash against the Ukrainian revolution. The Black Sea peninsula is the only part of Ukraine with a clear Russian majority. For more than 20 years, ever since the collapse of the Soviet Union, its rule by Kiev has been a major source of Russian resentment – inside and outside Crimea – and a major thorn in Ukraine’s relations with Russia.

The Treaty of Friendship and Co-operation – by which Russia rents its naval base at Sevastopol from the Ukrainian government – is so far-reaching in the rights it gives the Russians to exercise their military powers that it is seen by many in Ukraine to undermine the country’s independence. In 2008 the Ukrainians said they would not renew the lease when it expired in 2017. But they buckled under the pressure of a gas-price hike and, in 2010, extended the Russian navy’s lease until 2042. What will happen to it now is anybody’s guess.

From the Russian point of view, it is all the more annoying that Crimea was part of Russia until 1954. Exactly 60 years ago, on 27 February 1954, it was casually gifted to Ukraine by Nikita Khrushchev (after only 15 minutes of discussion in the Supreme Soviet Presidium), supposedly to mark the 300th anniversary of the 1654 treaty unifying Ukraine with Russia.

In those days of the “fraternity of peoples” in the USSR there were no real borders between the Soviet republics, whose territories were drawn up by largely artificial and even arbitrary means.

But the Soviet collapse brought real national feelings back. Russians in Ukraine felt they had been orphaned by the breaking of their ties to Moscow; they latched on to Crimea as a symbol of their nationalist resentments.

Crimea is vitally important to the Russians. According to medieval chronicles, it was in Khersonesos – the ancient Greek colonial city on the south-western coast of Crimea, just outside Sevastopol – that Vladimir, the Grand Prince of Kiev, was baptised in 988, thereby bringing Christianity to Kievan Rus’, the kingdom from which Russia derives its religious and national identity.

Ruled by the Turks and Tatar tribes for five hundred years, Crimea was annexed by the Russians in 1783. It was the fault line separating Russia from the Muslim world, the religious division on which the Russian empire grew.

Catherine the Great liked to call the peninsula by its Greek name, Taurida, in preference to Crimea (Krym), its Tatar name. She thought that it connected Russia to the Hellenic civilisation of Byzantium. She gave land to Russia’s nobles to build magnificent palaces along the mountainous southern coast, a coastline to rival the Amalfi in beauty; their classical buildings, Mediterranean gardens and vineyards were supposed to be the bearers of a new Christian civilisation in this previously heathen land.

The Tatar population was gradually forced out and replaced by Russian settlers and other Eastern Christians: Greeks, Armenians, Bulgarians.

Ancient Tatar towns such as Bakhchiserai were downgraded, while new towns like Sevastopol were built entirely in the neoclassical style. Russian churches replaced mosques. And there was an intense focus on the discovery of ancient Christian archaeological remains, Byzantine ruins, ascetic cave-churches and monasteries, to make a claims for Crimea as a sacred site, the cradle of Russian Christianity.

In the 19th century, the Black Sea fleet was the key to Russia’s imperial might. From Sevastopol it bullied the Ottomans into submission to Russia – a policy that led to the Crimean war after Tsar Nicholas I overplayed his hand in defence of the sultan’s Orthodox subjects and the British and their French allies sent their troops to Crimea to destroy his naval base.

For 11 months, the Russian sailors held out in the siege of Sevastopol – a struggle immortalised by Leo Tolstoy’s Sebastopol Sketches – before finally abandoning the town to the vastly superior allied forces. Their heroic sacrifice became a powerful emotive symbol of Russian defiance in the nationalist imagination.

The Russian character of Sevastopol is still defined by this siege mentality.

Memories of the Crimean war continue to stir profound feelings of Russian pride and resentment towards the west. Although it ended in defeat, the war has always been presented by the Russians as a moral victory. Nicholas I is one of Putin’s heroes because he fought for Russia’s interests against all the Great Powers. His portrait hangs in the antechamber of the presidential office in the Kremlin.

If a new Crimean war is to be avoided, Putin must show more restraint than his Tsarist hero. Nationalist emotions must be calmed. There are political remedies for the deep divisions in Ukraine. If peace can hold until the elections on 25 May, a new Ukrainian government might do well to consider options for the country’s federalisation to grant Crimea more autonomy.

But with deposed president Viktor Yanukovych now saying that the elections are “unlawful” there is much uncertainty and, if he speaks with Russia’s backing, little hope that those divisions can be peacefully resolved.

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Commonwealth hamstrung to fight abuse in Sri Lanka

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This post was contributed by Frederick Cowell, a lecturer and researcher in international law in Birkbeck’s School of Law. This article first appeared on The Conversation.

The list of crimes alleged to have been perpetrated by brothers Mahinda and Gotabhaya Rajapaksa – respectively the president and defence minister of Sri Lanka – are truly horrifying. During the last few months of the civil war in 2009, the Sri Lankan army was alleged to have deliberately shelled civilian areas and since the ceasefire, as the Sri Lanka justice campaign has detailed, there have been numerous extrajudicial killings and incidents of torture.

Rather than being treated as international pariahs, though, the Rajapaskas are hosting the Commonwealth Heads of Government Meeting this week, attended by representatives of more than 40 governments from around the world.

Since 1965 the Commonwealth has been an independent intergovernmental organisation, with its own headquarters and secretariat. From 1971 it took a leading role in facilitating negotiations over ending white minority rule in Southern Africa.

Sincere commitments at the organisational level, however, did little to affect the Commonwealth’s membership. Military regimes and dictatorships were prominent members of the Commonwealth throughout the 1980s. When the Commonwealth broadened its focus to the protection of human rights with the passage of the 1991 Harare Declaration, committing Commonwealth member states to the protection of “fundamental human rights” and democracy, it was clear a more robust enforcement mechanism was needed if the declaration was to have any meaningful effect.

Suspension is easy

Article 3 of the 1995 Millbrook Action Programme allows states to be suspended from the organisation when they were clearly “in violation” of the Harare Principles, “particularly in the event of an unconstitutional overthrow of a democratically elected government”. This was the first instrument of its kind and was a radical move. At the time the UN Human Rights Commission didn’t even have an instrument for suspending serial human rights abusers or illegal governments.

In 1995 Nigeria became the first country to be suspended from the Commonwealth after General Abache’s regime rejected the results of the 1993 elections and went onto commit series of human rights abuses including the execution of activist Ken Saro Wiwa. This was followed by the suspension of Pakistan in 1999 and Fiji in 2000, both following military coups.

The Millbrook action programme also allowed the appointment of ad-hoc groups of high level officials. Zimbabwe was suspended from the Commonwealth in 2002 after a troika of officials, including then Australian prime minister John Howard, concluded Robert Mugabe’s re-election that year had been “marred by a high level of politically motivated violence”. This led to Zimbabwe withdrawing from the organisation a year later. The most recent suspension was Fiji in 2009 after the government refused to accept a domestic court ruling that a 2006 coup was illegal.

Human rights play second fiddle

The focus of the Commonwealth Ministerial Action Group (CMAG), the decision making body of the Commonwealth, has been largely on the overthrow of democratically elected governments. This has led to the relative relegation of the protection of human rights, effectively turning Article 3 into an anti-coup instrument. And even as an anti-coup instrument, it has been applied inconsistently. When Maumoon Abdul Gayoom took power unconstitutionally in the Maldives in February 2012, CMAG issued a statement urging the government to hold fresh elections, but little action has been taken since.

It is also increasingly unclear what suspension is actually for. Fiji has been suspended for nearly four years, during which time it has made scant progress towards returning to constitutional government. Fiji’s government has covered the shortfall in development aid it suffered by receiving aid from China.

Anti-coup instruments have been adopted in several other international and regional organisations including the African Union. The problem is that they can easily become mechanisms that protect governments rather than human rights.

An anti-coup mechanism is also a barrier to gaining international recognition for a new government that comes to power through a coup. This can help deter future coups, which benefits exiting governments. This is why the Millbrook Action plan has received so much support from Commonwealth members. Commonwealth states have resisted attempts to create an independent Commonwealth Human Rights Commissioner, meaning that the decision to suspend states still rests with diplomats from member states.

The situation in Sri Lanka has split opinion among Commonwealth governments about the best way to respond to the human rights abuses taking place in Sri Lanka. Until a strong independent mechanism is brought in to assess suspension, Sri Lanka will remain a Commonwealth member, despite the atrocities that occur on its soil.

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UN General Assembly another venue for Obama’s inaction

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This post was contributed by Professor Rob Singh of Birkbeck’s Department of Politics. It originally appeared on The Conversation on 24 September 2013.

And so the annual autumn ritual of American masochism begins again in New York. Like inviting your least likeable in-laws to detail your worst features to your nearest and dearest after an agreeable Christmas lunch, this week’s 68th UN General Assembly welcomes heads of state and government from its 193 member states. With its plenary session overshadowed by Syria, and issues from Iran’s nuclear programme and Israeli-Palestinian relations vying for competition on the agenda, the media expectancy is even greater than usual. “The stakes are very high,” according to PJ Crowley, a former assistant US secretary of state.

What fatuous nonsense.

While the invitees marvel at the size of the food portions in New York City, and media frenzies erupt at incipient photo opportunities in Turtle Bay, let’s recognise this week for what it is – a symbolic spectacle signifying minimal substance. Yes, an enticing opportunity for non-US leaders to grandstand on the biggest international stage for strictly domestic political benefit. And yes, a chance for mere politicians – democratic and authoritarian alike – to pose as statesmen and solemnly pledge their fealty to human rights, the rule of law, and international peace (how very controversial). But, ultimately, whether New York or Washington, DC is the more reliably dysfunctional venue for serious politicking is up for debate.

Even by the standards of US politics, watching an array of exotic guests use one of the nation’s great cities to excoriate America and hail the arrival of a new “post-American era” must represent one of the more depressing spectacles for the domestic public. Sadly for the scriptwriters, the drama is not quite as vivid as when Chavez, Ahmedinajad and Gaddafi enjoyed their 15 minutes of fame denouncing George W Bush. Through fair means and foul, these characters have moved on.

But already, new scripts have been written and the question is merely whether the actors play their roles accordingly. Above all, will the Iranian and American presidents finally break a taboo and meet in the Great Satan’s living room (not, like Gordon Brown, in the UN kitchen)? Will the recent conciliatory words and gestures of President Hassan Rouhani receive symbolic reward – a presidential handshake, a deliberately accidental encounter, even a “meet and greet”?

To which the appropriate response is: “So what if they do?”.

Prior US presidents viewed the annual UN debate with emotions ranging from resignation to despair. But for Barack Obama, it’s tailor made. Teleprompter to the ready, warm words to go and nothing of substance to slog through. Only if one still buys into “Obama-world” – where grand speeches substitute for hard bargaining – can one continue to regard this earnest symbolism and soaring rhetoric as remotely consequential.

As such, it’s tempting to view the NYC goings-on as emblematic of not just the weakening of the West but also the end of US leadership.

But this wisdom is far more conventional than wise. On most measures of national power, the US remains far beyond all other nation-states. Not only is it the only player capable of global power projection, but America’s energy revival promises a “power surge” of substantial and enduring economic and geo-political dividends. No other power, or combination of powers, is likely to rival the US for decades to come.

The strategic problems, rather, are two-fold.

First, the UN’s profound limitations remain. A Security Council that reflects the power distribution of 1945, not 2013. A veto system that effectively precludes collective action even when genocide, ethnic cleansing and civil war destroy tens of thousands of lives and displace millions. And a gaping legitimacy deficit in which prolific UN declarations about the “responsibility to protect” are consistently belied as hollow by its inability, unwillingness and incapacity to do so.

Second, it is not American weakness that is at issue, but the irresolution, confusion and dwindling credibility of this particular White House. Like a poker player who believes that decent chaps don’t bluff, Obama is neither trusted by his allies nor feared by his adversaries. On the 50th anniversary of JFK’s assassination, one has to go back to Kennedy’s besting by Nikita Khruschev at the 1961 Vienna summit to recall a US president so powerfully outplayed by his Russian rival. But that was in Kennedy’s first year as president. Less than a year after his re-election, Obama appears adrift, ineffectual and preoccupied by domestic, not international, politics.

Whether or not Obama meets Iran’s president, few will mention the recent appointment of hardliner Ali Shamkhani as secretary of Iran’s Supreme National Security Council, a clear signal that Rouhani intends to preserve Iranian nuclear “rights”. Whatever the Russian delegation declares on Syria’s chemical weapons arsenal, few will focus on the 100,000 plus dead through conventional means of warfare – and counting. Festering issues from North Korea to a reconfigured and reinvigorated al Qaeda will receive minimal attention. And why should they? This week was never intended for serious diplomacy or meaningful negotiations. As for the Middle East, even now – never mind the rest of the world – Obama’s default disposition recalls Ernest Hemmingway’s in 1935: “Of the hell broth that is brewing in Europe, we have no need to drink.”

Mostly, the coming days represent theatre, and not especially impressive theatre at that. In the days of mobile phones, email and the internet, the notion that such international conflabs are necessary for genuine communication is redundant. It seems difficult, in that light, to entertain anything more than a minimal hope of substantive progress on Syria, Egypt, North Korea or any of the functional issues – from nuclear proliferation to climate change – that supposedly preoccupy our leaders.

Let’s hope I’m wrong. But ask yourself – when was the last time you either listened to, or took seriously, an Obama speech? Now imagine the response the average Syrian, Iranian, Israeli or Russian would have to that question. Ignore the theatrics and atmospherics. Lie back and take in the warm words. And watch the inaction.

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