A happy Easter to all those celebrating this week!
In the latest for our new Putinology column, Anna Nemtsova reveals the unruly forces that are troubling the Kremlin's security services.
Juan Nagel bemoans the absurdity of Nicolás Maduro's presidential campaign in Venezuela.
Mohamed Eljarh assesses a weak point in Libya's media reform that is essential to the country's democratic transition.
Jonathan Morduch and Timothy Ogden advocate using microfinance to meet the real financial needs of the world's poor.
Min Zin argues that Burma's political elite have failed their country in preventing a recurring pattern of ethnic violence.
Greg Rushford argues that it's not just the world's advanced economies driving trade inequality.
And now for this week's recommended reads:
Reporting for The New York Times, Alissa J. Rubin shares the economic hardships forcing an Afghani father to give away his daughter, and the government that won't support him.
In a new paper for the New America Foundation, Philip Napoli and Jonathan Obar examine the global phenomenon where new internet users are gaining access by using cell phones instead of computers.
International Crisis Group assesses the growing discontent in Eritrea and the potential for a violent power struggle.
In a recent Issue Perspective for the Center for Strategic and International Studies, Stephen Engelken argues that India and Pakistan need to expand their trade ties in order to maintain peace in South Asia.
Following Russia's latest crackdown on non-profits and activists, Russian journalist Masha Gessen writes for the International Herald Tribune, comparing the tactics to the Soviet Union.
ANDREY SMIRNOV/AFP/Getty Images)
Hugo Chávez, Venezuela's embattled president, is living on borrowed time. The real problem for Venezuelans, though, is that their economy is also living on borrowed time, and the day of fiscal reckoning may be near. Venezuela has an enormous fiscal deficit, and it is running out of places to borrow from. Like Ponzi schemes, the Venezuelan government needs ever growing sources of funding in order to keep paying for the generous promises it has made to its people.
Photo by Yorvis Weffer/AFP/GettyImages
If history is any guide, it's the bread-and-butter issues that tend to make Burmese people take to the streets. Then, when the authorities use force against these initial protests instead of peacefully managing popular demands, popular outrage mushrooms into a full-scale uprising. That's what happened with the pro-democracy protests in 1988 and the Buddhist monk-led "Saffron Revolution" in 2007. The first was triggered by a confiscatory currency reform along with police brutality against student protesters, the second by a hike in fuel prices in combination with police attacks on monks. Now Burma appears to be facing a similar situation once again.
For days people in cities around the country have been publicly protesting chronic power shortages. The authorities tolerated the demonstrations at first. Then, on Thursday, police in the town of Prome (Pyay), 160 miles northwest of Rangoon, beat up hundreds of protesters, most of them holding candles to symbolize the lack of electricity. Several protestors were detained and subsequently released after intervention by local parliamentarians. Whether this crackdown was an isolated incident or a sign of growing impatience among the country's security forces remains to be seen.
Soe Than WIN/AFP/GettyImages
Can Burma make headway towards democracy when it's still saddled with an authoritarian constitution? Michael Albertus and Victor Menaldo argue that countries in comparable situations have managed to overcome similar obstacles in the past.
Skeptics say that Brazil's economy is losing its mojo. But Albert Fishlow begs to differ, explaining why investors shouldn't give up so soon.
Christian Caryl tells the peculiar story of a West Texas town that has become a player in the global human rights industry.
Thirty-five years after the end of the "Dirty War," Alex Gibson shows how a trial in Argentina is struggling to come to terms with a legacy of state-sponsored violence.
Peter Reuter explains why the West won't be able to contain money laundering from developing countries unless it cleans up its own act first.
Min Zin asks whether Burmese opposition leader Aung San Suu Kyi is making a mistake in her latest confrontation with the powers-that-be, and also offers an entertaining primer on the politics behind the latest Burmese New Year celebrations.
Mohamed El Dahshan explores the decision that has thrown Egypt's presidential election into disarray.
Juan Nagel shows why the Venezuelan government's recent decision to subsidize beauty products will score it political points.
Endy Bayuni explains how Aceh's separatist leaders have morphed from guerillas into governors.
And in his column, Christian Caryl argues that economic inequality is now becoming a hot political issue in both rich countries and poor ones.
This week's recommended reads:
In Foreign Affairs, Leon Goldsmith writes on the Alawite community of Syria and the motives for their persistent support of the Assad regime.
In an essay in the current issue of Journal of Democracy, political philosopher Abdou Filali-Ansary casts light on why many voters in the Arab world prefer Islamist parties -- and arrives at some surprising conclusions.
A new report by the International Crisis Group documents the growing fight over resources between the Iraqi central government in Baghdad and the Kurdistan regional government.
Writing for Project Syndicate, Alfred Stepan and Etienne Smith discuss the surprising resilience of democracy in Senegal.
Democracy Digest reports on the difficulties faced by Russian dissidents following Vladimir Putin's victory in the March 4 presidential elections. And the German Marshal Fund examines the recent release of imprisoned opposition leaders in Belarus. (The photo above shows activist Dmitry Bondarenko meeting his wife after leaving prison.)
And don't miss Jeffrey Bartholet's great travelogue from post-Mubarak Egypt in National Geographic.
VICTOR DRACHEV/AFP/Getty Images
Is there a worse thing than having the oil curse? It would seem so. Indonesia, which quit the oil cartel OPEC in 2008, learns that it still has to live with the downsides of abundant domestic petroleum supplies even though today it is importing most of its oil needs like much of the rest of the world.
The government continues to spend huge sums of money to subsidize domestic fuel consumption, thus making Indonesia's gasoline, at the equivalent of 50 US cents a liter, the cheapest in Asia. But with world oil prices continuing to soar, the government has now reluctantly agreed to raise domestic fuel prices beginning on April 1, although it hasn't decided by how much. (The photo above shows a man changing the prices at a Jakarta gas station.)
Politics, rather than economics, is the main consideration when it comes to setting fuel prices.
BAY ISMOYO/AFP/Getty Images
Say "macroeconomic adjustment" and Venezuelans immediately think back to 1989. That year, an IMF-inspired shock therapy program pushed through by President Carlos Andrés Pérez set-off serious rioting throughout the country, costing hundreds of lives and undermining governability for years to come. The memory of the traumatic events that followed sharp devaluation, fuel subsidy cuts and the end of price controls still colors policy discussions today.
As this fall's presidential election draws near, Venezuela's opposition is thinking through its macroeconomic approach to transition. At first blush, the parallels are jarring. Just as in 1988, the country faces a fixed, severely overvalued exchange rate, a structural budget deficit fed by a sprawling, loss-making state-owned enterprise sector, rigid price controls, and ruinous gasoline subsidies. It's enough to give any Venezuelan macro-economist the heebie-jeebies. So is the country is on the verge of another massively disruptive adjustment experience?
Not at all, for two reasons: the economic fundamentals of 2012 are nothing like those of1988, and the opposition's presidential candidate this year, Henrique Capriles, is nothing like Carlos Andrés Pérez.
JUAN BARRETO/AFP/Getty Images
Last week the International Monetary Fund (IMF) released a statement saying that Burma has a chance to become "the next economic frontier in Asia." But the IMF went on to note that the country can realize its potential only "if it can turn its rich natural resources, young labor force, and proximity to some of the most dynamic economies in the world" to its advantage.
In a word, it's up to the government.
Contrary to what you might think from the headlines, it's not western sanctions that are causing Burma's economic woes. It's government policy. The Burmese government's Industry Minister, attending the World Economic Forum in Davos last week, admitted as much when he responded to a journalist who asked whether the country has done enough to get U.S. sanctions lifted: "We have a lot of things to reform and lots of things have to change: laws, regulations and institutions, not only in the political sector but also in the economic sectors. But sanctions are up to them."
In 2004, the well-known U.S. economist Jeffrey Sachs wrote that sanctions against Burma had "systematically weakened the economy by limiting trade, investment and foreign aid." It's an argument that many critics of sanctions have made.
The media love to use terms like "pariah," "isolated," and "closed" whenever they describe Burma and the effects of sanctions on the country.
If the term "pariah" denotes a country that utterly disregards international norms and behavior, and correspondingly meets with unrelenting censure from the international community, then that's a pretty good fit for Burma. But when the word is used in a way that's supposed to characterize the country's overall economic position (invariably in combination with words like "closed" and "isolated"), then it doesn't describe the situation at all.
According to the Economist Intelligence Unit, in 2010 Burma's exports and imports stood at $8.7 billion and $4.9 billion respectively. That's higher than the data for some of the comparable members of the Association of Southeast Asia Nations (ASEAN), such as Cambodia and Laos. Meanwhile, many experts caution that the official figures for Burma's exports fall far short of the real numbers because they don't cover the value of timber, gems, narcotics, rice, and other products smuggled to neighboring countries.
As far as foreign direct investment (FDI) is concerned, Burma reached a record high in 2010-11 of almost $20 billion. That's more than the figure in the same year for Southeast Asia's latest investment darling, Vietnam.
These facts suggest that Burma's exposure to trade and FDI is higher today than ever before, and even higher than that of some comparable ASEAN countries. In this light it becomes extremely hard to argue that sanctions have deprived Burma of FDI and trade, much less that Burma is "isolated" or "closed." (This also offers an eloquent commentary on how ineffective the sanctions regime has actually been.)
Of course, sanctions do have negative effects on the economy (for instance, job losses in garment industry after the 2003 sanctions imposed by the U.S.), and there are many spillovers to other sectors, ranging from education to the growth of civil society. But the government cannot use sanctions as an excuse for its mismanagement and kleptocratic corruption.
Paula Bronstein/Getty Images
The conventional wisdom on Venezuela has Hugo Chávez's government locked in a death match with the country's embattled, shrinking private sector. But even if they aren't fans of the man, many in Venezuela's business elite have found ways to make a buck within the system he's created.
What remains of Venezuela's "private sector" -- farm, transport, banking, and manufacturing firms that have yet to be expropriated -- is heavily regulated. I recently asked a top manager at one of the country's largest private banks how they cope with this.
His response startled me.
"Yes," he said, "the government sets everything, from the interest we charge to our ATM fees. They decide how we allocate our loan portfolio -- a minimum X percent for agricultural loans, Y percent for personal loans, and the like."
"But," he added, "this makes the market more orderly. We don't have to decide how much we lend to whom. We don't spend time finding out what other banks are doing. This levels the playing field for everybody. It's smart."
Finding a silver lining in the government's heavy hand may help to explain why the private sector is taking Chávez's latest regulatory push in stride.
Last July, Venezuela's legislature passed the "Law of Fair Costs and Prices," forcing private businesses to hand over detailed cost and production information. On that basis, the government is empowered to set a price ceiling for any product sold in the nation at any time.
Business may not be pleased with the new law, but since they can't stop it, many are trying to turn it to their advantage. Their muted response may reflect what economists Frederic Scherer and David Ross call the "focal point" theory of collusion.
In a market economy, they argue, firms have the incentive to form a cartel, but the existence of an infinite number of possible price points makes collusion difficult. When the government steps in and sets a price ceiling that is high enough, this provides a focal point for all firms to coalesce around, stifling competition.
This may help explain the banker's satisfied approach to Chávez's economic policies. It could also be the reason why most Venezuelan private businesses, from airlines to insurance companies, have long ago stopped trying to provide quality products and good customer service. They're simply coasting, focusing their efforts on getting the best possible price ceiling from the government.
In Venezuela, it seems, competition isn't just rare; it's actually illegal.
THOMAS COEX/AFP/Getty Images
Transitions is the group blog of the Democracy Lab channel, a collaboration between Foreign Policy and the Legatum Institute.