Sunday 24 February 2008

Why a Presidential Dream Team?

Many people have been asking me what this is about. As an external observer of the US political scene, it occurs to me that what this country (and many others) needs is a “time out” from partisan politics and a brief inter-regnum of rational economics. Obviously, there’s not much of a precedent for this, but we are looking at the need to make at least four systemic changes in the next 4-6 years, hopefully before it’s too late:

1. A root-and-branch reform of the educational system to focus on learning, skills and competencies for the 21st Century. The main challenge here is not necessarily curricula, but funding. A National Education Policy needs to be funded at the national level, so that consistent, uniform funding is available. The current practice of the Federal Government providing a fraction of resources, with the States providing the rest, is unfair and incoherent in a global economy. The practice of funding education through real estate taxes is irrational.

2. A comprehensive reform of the national healthcare and social security systems. These two issues are closely linked thanks to demographic changes and changes in the workforce, yet they are being treated as separate issues. Reforming either requires balanced analysis, choice and a commitment for the next generation, without the blatant opt-outs or industry favours apparent in current policy.

3. The adoption of an ethical foreign policy, which implies a shift of resources from military spending to diplomacy, and a willingness to address root causes of religious extremism and terrorism. A sub-set of this area is the eventual reduction of combat operations from Iraq, although I believe a long-term basing presence will be necessary (and desirable).

4. The urgent reform of the national (and global) financial system, improving transparency and monitoring, while reducing unnecessary systemic risks. The role played by securitisation and derivatives markets, credit rating companies, and financial insurors and re-insurors are poorly understood and not fully costed in our equity-driven culture. We need simple, common-sense reforms to improve visibility and incorporate the true cost of many vehicles onto corporate balance sheets. (This involves working with and against extremely well-financed special interests, but no one said it would be easy, and in the long term the system as a whole will benefit)

I don’t include some other major issues, such as the war on terror or the rule of law in the US: I’m sure that if we follow the rules, these issues will resolve themselves. We have a wealth of experience in our own institutions and allies which provide the means to succeed: what we need is consistent, common-sense policy and a commitment over time. Even the issues of immigration or global warming are secondary. Immigration has lasted a long time, and will continue no matter what reform is enacted. Environmental and energy-saving technologies that alleviate global warming have a low cost horizon and can be solved by relatively small financial amounts i.e. % 15-20 billion per year. These should be supported as a matter or rational self-interest rather than as a political issue.

To implement either of these four(five) core national priorities requires an approach to politics which is unfortunately absent in Washington today:

• Rational analysis and means-tested solutions;
• A bipartisan approach;
• Sufficient funding and a long-term, consistent approach;
• Removing lobbyists and special interests from the equation;

Most of all, we must assure that the people passing laws, the people managing the new system, and the people at the front line of implementation – teachers, doctors, medical assistants, insurers, diplomats – have the means, training and will to implement reforms. We can’t separate policy-making from policy management and policy execution in either area. This means an expansion in the federal government payroll, an increase in wages, productivity- and results-linked pay (added incentives), and the resources necessary to get the job done. If we were spending $ 350 billion a year at the Federal level for education in addition to current state funding, the results would be visible.

This approach calls for representatives who are outside the normal polticial career path: law degree; some form of politics-related office; elected official in Congress or State House. Although I respect many of our politicians, they don’t have the skills set necessary for many of the challenges we face. When have you last heard of a brilliant analyst in Congress? What is worse, they are not only beholden to special interests and their party structures (which remain heavily patronage-driven), but they have steeped in the acidic swamp of partisan vitriol and betrayal since Newt Gingrich took over Congress in the 1990s.

Let’s face it: most of our political representatives today are better versed in fund-raising, campaign management, media relations/PR and managing patronage networks than they are at governing for the long-term benefit of the country. Blame them or blame the system or blame The Disney Channel: the facts are visible every serious daily newspaper you read, every day, and they are particularly visible during elections.

So, I was casting about for a “Dream Team” of policy-makers with some form of credibility, a coherent vision and a track record of success outside politics. Obviously, my pick involved lots of compromises, but here was my rationale:

Michael Bloomberg set up Bloomberg media, revolutionizing the way financial information is analysed and distributed. He’s now worth over $ 12 billion, and his fortune is growing every day. He has the track record of solid achievement in a new business field (which I can tell you from experience needs solid, consistent work), and he has an acceptable track record as Mayor of NYC. I’m not saying he’s perfect, nor that he even has an acceptable vision. But if I could hire a manager to implement long-term, bipartisan reform, this would be the man. (As always, I’m very willing to consider alternatives).

Arnold Schwarzenneger is something of a counterpoint to Bloomberg. More popular, with higher name recognition, he would be invaluable to getting the team elected. His record in California is really mixed, but he seems more pragmatic to other Republicans. He brings name recognition and electoral votes in a big state.

Paul Krugman is an academic at Princeton, my alma mater. I distrust academics in policy-making positions. Unfortunately, I can’t think of another economist trusted by enough people to be effective in office. I’d vote for Rubin, but he’s getting old, and I think we need a Treasury Secretary who doesn’t come from Wall Street. Krugman understands the nuts-and-bolts of economic policy in practice, and on paper at least is concerned for “the common man.”

John McCain has the military record and breadth of experience to deal with some of the urgent issues the Pentagon faces today: a bloated procurement system, inadequate resources for counter-insurgency conflicts, the need to support vets, the National Guard, etc. I agree that he’s a bit of a loose cannon, but I think that he should round off his distinguished record contributing to the lasting reform of the Armed Services rather than being President (given his lack of economics knowledge and his need to play to the Republican party base) or languishing in the Senate for another term.

Bill Richardson: An extremely solid candidate, but perhaps not as inspirational as possible. Still, he has an excellent background, policy management experience, is low-key, speaks Spanish and has good contacts in Europe and Latin America.

Homeland Security: Richard Clark comes out well after 9/11. On the other hand, David Petraeus has the front-line experience and has actually led counter-insurgency under extremely difficult conditions. Of the two, I lean towards Petraeus, although a person of Clark’s experience should not be left out in the cold. (CIA Director?)

Bill Gates has a stellar track record, even if people today discount the relevance of Microsoft. I don’t buy that so easily: Microsoft may have problems, but it’s the workhorse of desktop computing, and was a brilliant innovation in its day. Gates is a knowledge worker, and in the 21st Century we’re looking at educatorns as knowledge workers. There is so much that can be done with e-learning, which opens up learning beyond the physical confines of the school. He has also dabbled in educational reform (charter schools) through his Foundation. On the other hand, it’s a pity we can’t give teachers stock options!

Al Gore needs to put his ideas to the test and become Secretary of Energy. Given the role of energy (including transportation) in greenhouse gas production, he will have the mandate and the bully pulpit to push through energy savings, renewables and fuel efficiency standards (among other things). He can get much more done here than as head of the EPA, which is toothless. A future administration should upgrade the EPA to a Department, but in terms of the three main issues in energy, I still think Al Gore is better suited to this position.

Colin Powell deserves a chance to salvage his reputation and contribute his skills to a major issue facing the country. On the other hand, I increasing think this should be an agency, not a Department. Anyway, he brings credibility and real understanding to the job, and the position needs a heavy hitter to get the budget allocations needed, particularly after the ramp-up in problem after Iraq.

John Edwards was a brilliant trial lawyer, and the Dept. of Labour needs to work through the courts. I prefer him in the courtroom than in the Presidency. He’s better suited to a Department than to Oval Office. In time, he may become better balanced and get the experience needed, but I think he’s 12-16 years away from that point.

Barack Obama: same comments apply as per John Edwards. We need an Attorney General to re-inspire Americans (and the world) in the rule of law. We need someone to deal with really difficult moral cases. And we need to de-politicise the justice system. Can Barack do it? I don’t know. But I think he’d be an excellent candidate for President after 8-12 years of national experience. It demands much more than his experience in the state legislature and the Senate, and would make him much better for it.

Are these selections ideal? Hardly. And the problem is, I can’t think of other candidates capable of the changes needed. But I know they’re out there.

One major problem I see is the lack of really inspirational Republican candidates. (Bloomberg is hardly a Republican; Schwarzenegger is…well…Schwarzenegger). The Republican Party gave us Abraham Lincoln, Teddy Roosevelt and Ike, among others: inspirational candidates (maybe for the wrong reasons). There doesn’t seem to be anyone of the same caliber coming up through the system these days. Mike Huckabee? Mitt Romney? Admirable though their achievements may be, they are neither balanced enough nor have the background necessary to understand the real issues of this generation. They are campaigners, not leaders.

So, this is an explanation of the “Dream Team.” Chances of being implemented? Virtually nil. Intellectual satisfaction derived from the thought process? Very high.

The big question not addressed by this piece is how to separate special interest lobbying from the policy-making and delivery process. I’m only a corporate rocket scientist, not a magician. On this subject, I’m totally out of ideas, but I know there are some good ones out there.

Friday 22 February 2008

The Problem of Kosovo

Yesterday evening, 21 February, a mob attacked the US Embassy in Belgrade, burning part of the Chancery. The US reaction was predictable. Sean McCormack, State Department spokesman stated that:

"…they [the Serbian government] bear a responsibility to ensure that there is not, on the part of their ministers and their officials, an incitement of violence. We have seen a lot of disturbing reports about statements by Serbian Government officials, even including a minister, about incitement to violence. That has to cease."

According to CNN, Richard Holbrooke stated that "The fact that (independence has) not happened as peacefully as people had hoped is the direct result of the incitement to violence by extremist elements in Belgrade, implicitly and privately supported by the Russians." Zalmay Khalilzad, U.S. Ambassador to the United Nations, expressed outrage at the "mob attack,” and plans to introduce a UN resolution condemning the attack.

This whole episode puts the shear absurdity, not to say illegality, of US foreign policy into perspective. The US has just led the process of encouraging Kosovo to independence, leading to the loss of some 17% of Serbian territory which plays a critical role in Serbian culture and history. And now the US is introducing a resolution condemning an attack on its Embassy, in which no US personnel were killed, and no permanent damage incurred?

How much more hypocritical will our foreign policy become? I’m not disputing the sovereign nature of the US Embassy and the inviolability of diplomatic representation. But to condemn the Serbs-who have just lost a huge chunk of territory and culture-and preach about international law at this point is ludicrous, not just in light of what is happening in Kosovo, but in light of the Iraq invasion, Guantanamo Bay, warrantless wiretapping, waterboarding, and extraordinary rendition.

Let’s look quickly at the legal situation in Kosovo. On 10 June 1999, the United Nations Security Council adopted Resolution 1244, which calls for the cessation of violence, the withdrawal of Yugoslav armed forces, the disarmament of the Kosovo Liberation Army, and the establishment of a civilian and security force (UNMIK) designed to stabilise the territory. The United States is a signatory of this Resolution.

In its preamble, Resolution 1244 states:

Reaffirming the commitment of all Member States to the sovereignty and territorial integrity of the Federal Republic of Yugoslavia and the other States of the region, as set out in the Helsinki Final Act and annex 2,

In Annex I, it states that:

A political process towards the establishment of an interim political framework agreement providing for a substantial self-government for Kosovo, taking full account of the Rambouillet accords and the principles of sovereignty and territorial integrity of the Federal Republic of Yugoslavia and the other countries of the region, and the demilitarization of the KLA;

This interim political framework has been accomplished: Kosovo has had a functioning self-government for a number of years now. There is no reference in Resolution 1244 for the independence of Kosovo. This is rightly seen as a unilateral movement, and the diplomatic recognition of Kosovo by the United States can be seen as the territorial violation, absent the political recognition of an independent Kosovo by the Republic of Serbia, which is the legal successor to the Federal Republic of Yugoslavia.

Let’s look at the Helsinki Final Act, of which the United States is also a signatory. Articles II and III are particularly interesting:

III. Inviolability of frontiers
The participating States regard as inviolable all one another's frontiers as well as the frontiers of all States in Europe and therefore they will refrain now and in the future from assaulting these frontiers.

Accordingly, they will also refrain from any demand for, or act of, seizure and usurpation of part or all of the territory of any participating State.

IV. Territorial Integrity of States
The participating States will respect the territorial integrity of each of the participating States. Accordingly, they will refrain from any action inconsistent with the purposes and principles of the Charter of the United Nations against the territorial integrity, political independence or the unity of any participating State, and in particular from any such action constituting a threat or use of force.

The participating States will likewise refrain from making each other's territory the object of military occupation or other direct or indirect measures of force in contravention of international law, or the object of acquisition by means of such measures or the threat of them. No such occupation or acquisition will be recognized as legal.

Judging from both documents, the US is in clear violation of both the Helsinki Act and UN Resolution 1244.

There is no legal basis for diplomatically recognising an independent Kosovo, which according to law has the status of an autonomous province in the Republic of Serbia. By proceeding along this path, i.e. diplomatic recognition without the prior recognition and agreement of Serbia, the United States has lost its status as an impartial partner, and is contravening the very basis of international law it is now claiming for its own benefit.

So why is this a problem? Because it establishes a precedent, no matter how much Condoleeza Rice or Marti Ahtisaari claim otherwise. Marti Ahtisaari’s Report of the Special Envoy of the Secretary-General on Kosovo’s Future Status states, among others:

15. Kosovo is a unique case that demands a unique solution. It does not create a precedent for other unresolved conflicts. In unanimously adopting resolution 1244 (1999), the Security Council responded to Milosevic’s actions in Kosovo by denying Serbia a role in its governance, placing Kosovo under temporary United Nations administration and envisaging a political process designed to determine Kosovo’s future. The combination of these factors makes Kosovo’s circumstances extraordinary.

This is absurd. Any number of other “frozen conflict” administrations will now step up, seeking “independence”: The Republica Srpska part of Bosnia-Herzegovina; the region of Trans-Dniester; Ossetia and Abkhazia; the “Turkish Republic of Northern Cyprus” (that part of Cyprus under military occupation by Turkey since 1974).

What the United States – and the United Nations – have done is open Pandora’s box, stating that any region which has an ethnic majority and has suffered civil violence has the right to declare independence. The United States may not really care about the examples above (where it has not vital interests), but it Kurdistan separates from Iraq, or the Kurdish regions of Turkey press for independence, it would no doubt be firmly against independence.

As a result of this issue, but also as a result of other UN initiatives, such as the Annan Plan for the resolution of the Turkish occupation of Cyprus, it is entirely unclear to me why the UN is so intent on violating the very principles enshrined in its Charter as well as Resolution 1244. UN efforts at conflict resolution are unfortunately becoming not worth the paper they are printed on.

The recognition of an independent Kosovo is a blunder of epic proportions. It raises the spectre of further brinkmanship over ethnic secession: there are any number of dormant or active ethnic conflicts in the Balkans. Over 30% of the population of FYR Macedonia is ethnic Albanian, and the spectre of a “Greater Albania” has just gained much more weight following the Kosovo secession. Turkey has intrigued about a “Turkish minority” in Greece for years, though the Treaty of Lausanne has clearly established that this is a Muslim minority. Kosovo’s independence establishes that armed conflict followed by UN intervention is a viable means of attaining ethnic secession.

As I have already stated, I am not against independence of Kosovo in principle. However, there are better, fairer ways of handling this, which do not contravene international law.

One such way would have been to transfer Kosovo’s trusteeship from the United Nations to the European Union, and promising supervised independence only once the Republic of Serbia entered the EU. This would have been a longer-term process which would have involved the equivalent adoption of European law, the Acquis communautaire, in the two regions. Under this scenario, both sides would have had to comply with the Acquis, following the standard EU accession process.

Another alternative would have been to continue the UN Trusteeship for a longer period of time – perhaps for 15 or 20 years – until a newer generation of leaders would have been able to resolve the situation. Contrary to the Ahtisaari Report, there is no pressing requirement for independence on the part of the international community, only on the part of certain elements in Kosovo.

We would be wise to avoid the oversimplification apparent in US foreign policy. Idealism is good, but to claim “independence and democracy” as a panacea for all raises vast political problems, and can never be applied uniformly. If this were official US policy, then we would have to recognise Hamas (not condemn it); condemn Hosni Mubarak (not supply him with weapons) and withdraw support from Pervez Musharraf.

The diplomatic recognition of Kosovo sets a dangerous precedent. It violates general international law as well as specific treaties entered into by the United States, and so obviously fans the flames of ethnic secession and political meddling in the Balkans and farther afield.

Thursday 21 February 2008

Revisiting the next Presidential Dream Team

Here's my updated "Dream Team" for the next Administration: the "Competence Cabinet." This would be a bipartisan, centrist cabinet drawn from people with a proven record of competence and results. A key qualification is that the majority of officers should have a proven track record of success outside politics, and be able to work across party lines.

Michael Bloomberg

Arnold Schwartzenegger

Dept. of the Treasury
Paul Krugman

Dept. of Defense
John McCain

Dept. of State
Bill Richardson

Dept. of Homeland Security
David Petraeus or Richard Clarke

Dept. of Education
Bill Gates

Dept. of Energy
Al Gore

Dept. of Veterans' Affairs
Colin Powell

Dept. of Labor
John Edwards

Attorney General
Barack Obama

I'm still working on the remaining Departments: any suggestions?

Dept. of Agriculture
Dept. of Commerce
Dept. of Health & Human Services
Dept. of Housing & Urban Development
Dept. of Interior
Dept. of Justice
Dept. of Transport

On Democratic Values

Last night at the HELADA (Hellenic-American Democratic Association) meeting, I suggested that the only way Democrats will be relevant to Greek-Americans and US expats living in Greece is to have a clear mission and role in the community. I believe that politics should be relevant: we can’t go scurrying around every four years asking for votes, but be absent in the intervening years. We have to know what we believe in and express it clearly.

Yet this seems to be a difficult task, since our beliefs are often based on an intuitive understanding of right and wrong, of fair and unfair, which aren’t reduced to pithy soundbites.

So, I’m putting forth a list of sound-bites for Democrats who need an accurate and memorable description of what they believe in. As always, your comments are welcome.

As a Democrat, I believe in:

A fair living wage for all workers
Specifically, an annual raise in the minimum wage in line with inflation and productivity.

A national healthcare system
Specifically, a system which preserves choice, but which makes the opt-in to a national public system economically advantageous. The capping of medical malpractice suits to reasonable levels, and the right of the government of negotiate rationally (in the economic sense) with private healthcare and pharmaceutical providers.

A well-funded, competitive and cohesive national education policy
Specifically, a system financed on an objective budgeting process set at the national level, not on local real estate values. A well-funded system that is recognized as a key source of national cohesion and competitiveness, which allows dedicated students to advance through primary, secondary and tertiary public education based on merit. A system which pays teachers a living wage, invests in educational infrastructure and methods, based on clear national standards. The clear separation of church and state in public education.

Protecting the environment
Specifically, a growth policy that balances long-term environmental protection and restoration with short-term economic needs. The limitation of carbon emissions and other pollutants, the protection of endangered forests, oceans, lakes and species, and the shift towards an economy based on renewable sources of energy.

An ethical foreign policy
Specifically, one which respects international law and the rights of different countries, cultures and religions. One which does not violate the Geneva Convention and the core values of the United Nations system. One which does not seek of impose our short-term preferences with misguided military action, but seeks sustainable, long-term solutions to the pressing problems of poverty, religious extremism, failed states, climate change and the other root causes of terrorism and instability. The demilitarization of foreign policy.

A fair and regulated economy
Specifically, an economy based on a clear strategy of development, avoiding the excesses of short-term solutions which favour “insiders” or large capital interests. Incentives to promote savings, lower- and middle-income families. The mitigation of systemic problems, such as unregulated hedge funds, insider trading, an excessive reliance on real estate development or stock market “booms” for personal finance, and the unsustainable reliance on too few insurers and re-insurors, ratings agencies and other key actors in the financial system. A balanced national budget with active debt reduction. A reliance on fair trade that respects key priorities in environmental, labour and poverty alleviation.

A fair and predictable tax system
Specifically, one which guarantees the greater good of the majority of citizens, particularly those in lower and middle classes. A system which closes tax loop-holes for the affluent, and particularly companies who register in offshore tax havens such as Bermuda or Cayman Islands, but benefit from public subsidies and spending in from the US government (state and national). At the same time, the tax system must be fair to companies, and promote growth and employment, and be competitive compared to international competitors.

A viable pension system
Specifically, maintaining the right for personal choice in a portion of retirement savings, while strengthening the role of Social Security as an insurer of last resort, but also as a primary insurer for those who choose. An expansion of incentives for retirement savings, extending these to public (national and state) plans (such as CALPERS). An expansion of taxes to strengthen Social Security.

Educated, economically-aware citizens
Specifically, a population with the capacity to make intelligence, rational decisions on key issues such as retirement savings, healthcare choice, real estate investments and consumption. The expansion of adult learning as well as secondary and tertiary education, bringing courses such as “home economics” back into the curricula, and preparing our citizens for the economic challenges of the future. Everyone must be able to draft a personal budget, calculate mortgage payments, prepare their retirement plans and otherwise understand basic household finance.

A fair criminal justice system
Specifically, the design of a legal system that ensures fast and fair resolution of criminal cases, based on national standards. The capping of malpractise, class action and other legal practices which drive up costs and benefit affluent insiders. The availability of qualified legal representation for all income levels. The reform of the prison system, including the possible decriminalization of some narcotics offenses. The provision of a national narcotics programme which addresses the root causes of addiction, provides treatment on a large scale, and calibrates penalties to violent crimes rather than simple possession.

If I were to pick three short-term priorities above all else (similar to the enduring Republican platform on taxes, a strong military and individual freedom), these would be the first three on the list:

• A fair living wage for all workers
• A national healthcare system
• A well-funded, competitive and cohesive national education policy

For me, these are the key priorities in the next administration. Anyone who can make detailed promises and measurable progress towards the key, bipartisan priorities has my vote.

Wednesday 20 February 2008

Language, Rhetoric and Good Intentions

I’ve had a large dose of political fatigue these past few days. Last week I was in Cyprus for the Chamber of Commerce & Industry, and had the opportunity to watch the three main presidential candidates slug it out in a Valentine’s Day Debate. On Sunday, Kosovo declared independence. Over the weekend and all through this week, I’ve been watching Hillary and Barack escalate their attacks on each other in the media.

Rhetoric, of course, is considered a positive attribute in a politician, which is why we remember past heroes of the genre such as Pericles or Alcibiades. And it’s certainly better to have a President capable of communicating in good English, rather than one who cannot: we must only remember the Current Inhabitant of the White House to appreciate this.

The fact, therefore, that a candidate is a good orator should not be considered a negative attribute. Blaming Barrack Obama for speaking well is as disingenuous as blaming Bill Gates for dropping out of Harvard to start Microsoft.

Yet rhetoric is a fragile thing. The same words that are so effective in a heated campaign rally are damning on the written page. This is where, I think, our modern political system and language fail us. Thousands of people attend a campaign rally, yet millions more read the candidate’s words the day after.

Let’s take a look at some examples: The Washington Post reported today (Obama, McCain Roll to Wins in Wisconsin) on some campaign speeches of the two candidates in the run-up to the Wisconsin primary. Here’s what Hillary said:

"Both Senator Obama and I would make history…But only one of us is ready on day one to be commander-in-chief, ready to manage our economy, and ready to defeat the Republicans.”

On the face of it, this statement is absurd. Given past mistakes and political biography, there’s nothing in the record of either candidate to indicate this would be true:

• Neither has served in the armed forces, fought in combat, or ordered troops into battle;

• Neither has been an entrepreneur or corporate manager: they are both professional lawyers and politicians, and many of their statements betray a glaring misunderstanding of economics;

• Defeating the Republicans is not what I imagine most Americans would want. I believe we want solutions to day-to-day and longer-term problems, and in this respect cooperation with Republicans-and all Americans-will be essential.

Now let’s take Obama’s statement, quoted in the same article:

"The problem that we face in America is not a lack of good ideas…It's that Washington has become a place where good ideas go to die."

For those who have studied logic, this statement is similar to the Epimenides paradox: “All Cretans are liars. I am a Cretan.” If Washington is indeed a place where good ideas go to die, why in the world are you hell-bent on going there? Indeed, how many good ideas have you killed since you joined the Senate in January 2005?

The problem of rhetoric and language in the political sphere must be put in context. Language is used to fire up supporters, to deliver an easily-digestible narrative of “us versus them”, the “good versus the bad.” The real world, of course, doesn’t work that way. On January 21st, 2009, the day after the Inauguration, whoever is President will have to work with the opposing party to pass legislation. He or she will have to work with states governed by members of the opposite party, and may have to order troops into combat who identify with the opposite party.

The Democratic candidates are hammering John McCain with his statement on keeping troops in Iraq for 100 years. John McCain is hammering Obama for his "eloquent but empty call for change" and the "confused leadership of an inexperienced candidate.” Hillary and Barrack are attacking each other daily.

Yet at the end of the day, these people are all Americans, and are all expressing their constitutional freedoms of speech and assembly. Neither party will have an enduring majority, so the tactic of alienating a significant portion of the population is rationally harmful to one’s own self-interest, let alone to an enlightened, collective interest.

The impact of campaign rhetoric is lasting. Repeated over and over again, it leads of a form of psychological conditioning with a grave impact on candidates, supporters and opponents. The fact that we have now separated official campaign media with unofficial supporters (Swift Boat Veterans for Truth) merely adds to the corrosive acidity of modern political life.

Despite my hopes for this election, and for the American polity as a whole, I can’t help remembering that old canard: It’s only the people who can’t succeed in business, science or arts that run for political office. Given today’s electoral system and wider political climate, I certainly would never consider doing so. No ethical person would, given what it costs in money, honour and spirit.

Saturday 16 February 2008

Is Barack Obama the new Al Gore?

CNN reported yesterday that the Clinton campaign is trying to get the Michigan and Florida primary votes included in the national results. Both states were stripped of their delegates after changing the dates of their primaries to earlier in the year. According to several media reports (see list of sources below), Hillary Clinton stood by that decision, but now is reversing her agreement due to her current position in the Democratic polls.

Before commenting on this, I confirm that I have found no official statement on either the Clinton campaign website or the DNC website this morning (Saturday, 16 February), and thus cannot confirm whether this is an official campaign demand or not.

If the reports of this demand are true, there can be no clearer reminder that political principles are often sacrificed to self-interest in extremis. To put it in the election vernacular, it would be another sign of flip-flopping and hypocrisy, and a reminder of why Hillary Clinton is unfit to be President of the United States.

It is inconceivable to me, an American living overseas, how the country that inspired the world by putting a man on the moon has accepted an election system which is so obviously inefficient, time-consuming, expensive and misleading. One would have thought that after the 2000 Florida recount and the 2004 cases of voter disbarment, the Democratic Party would have provided leadership and initiative to design a fair, transparent and representative system, at least for their own party.

Instead, we are left with superdelegates, demands for a partial recount in two states, campaigning in violation of party agreement and shifting expectations. This situation is either the result of supreme incompetence and cynicism, or of more sinister implications.

In a previous entry, I asked “Is Barack Obama the new Al Gore?” If the current trends last, Obama wins the popular vote and state count, but loses the delegates because of the reinstatement of Florida and Michigan, then he really will be the new Al Gore, a victim of the same practise that led to the judicial election of our current President.

In this case, Hillary will be the new George W Bush.

I’m providing sources for these reports below. In each case, I’m using on-the-record state or national media as far as possible (no blogs or politically-affiliated sources). In each case, only the first few paragraphs are provided: you can follow this up using the links and references. All content quoted here is copyright of the respective authors and sources mentioned.

1. CNN=Politics Daily
February 15, 2008

And bigger battles continue to loom ahead as top Democrats face off over the role of Michigan and Florida. Both states were stripped of their delegates after moving up their primaries in violation of DNC rules. Now, the campaign of Hillary Clinton – who came up the winner in both states – is calling for them to be seated at the party’s summer convention after all.

2. Obama camp cries foul over Clinton stance in Florida
Miami Herald, 14 February 2008

After eight losses in a row and no victories in sight this month, Hillary Clinton's campaign renewed calls Wednesday for the votes in Florida and Michigan to count toward delegates that would help her catch Barack Obama.

Obama's camp said her demand was a blatant attempt to ignore the ground rules set when the national party stripped both states of their delegates for breaking early-primary rules. Last summer, all of the major candidates agreed to boycott the two renegade states.

''Now, when they believe it serves their political interests, they're trying to rewrite the rules,'' Obama's campaign manager, David Plouffe, told reporters in a telephone call. ``Now, at the 11th hour, the Clinton campaign is trying to rewrite rules that were firmly established, and I don't think there's a lot of appetite for that in the country or a lot of appetite for that at the DNC.''

In fact, when the national party inflicted its punishment on Florida in August, Clinton's campaign did not protest. And on Sept. 1, Clinton went along with the boycott urged by four smaller states authorized by the DNC to hold the earliest contests.

3. Clinton: Give States Their Delegates
Associated Press, 25 January 2008

Hillary Rodham Clinton is angling for Florida's delegates to the Democratic National Convention this summer, even though they have been stripped by the national party.

The presidential candidate said Friday — just four days before Florida's primary — that she wants the convention delegates from Florida and Michigan reinstated. The national party eliminated all the delegates from those states — more than 350 in all — because they broke party rules against holding their primaries before Feb. 5. All the major Democratic candidates also made pledges not to campaign in those states before their primaries.

"I hear all the time from people in Florida and Michigan that they want their voices heard in selecting the Democratic nominee," Clinton said in a statement issued by her campaign. "I believe our nominee will need the enthusiastic support of Democrats in these states to win the general election, and so I will ask my Democratic convention delegates to support seating the delegations from Florida and Michigan," she said.

Clinton, a New York senator, called on the other candidates to join her. Requests for comment were left Friday afternoon with the campaigns of her Democratic rivals, Illinois Sen. Barack Obama and former North Carolina Sen. John Edwards.

4. Hillary: FL and MI should be heard
MSNBC / NBC / NBC/NJ: 9 February 2008

Clinton seemed to dismiss the idea that Florida and Michigan -- two states whose primaries she won but weren't contested and didn't award delegates -- should hold caucuses so that their delegates could be seated at the Denver convention.
In a 12-minute media avail here Saturday, the senator also said superdelegates had historically been independent for a reason, added Wisconsin to the mix of states she was feeling good about, and sought to paint Obama as "increasingly" the establishment candidate.

"I think that the people of Michigan and Florida spoke in a very convincing way, that they want their voices and their votes to be heard. The turnout in both places was record-breaking and I think that that should be respected," she told reporters. However, Clinton was the only major Democratic candidate on the ballot in Michigan, as a significant number of people there voted "Uncommitted." And it's worth noting that Clinton never spoke this way about Florida and Michigan until right before the South Carolina primary, a contest she lost decisively.

Clinton was asked whether superdelegates -- the party bigwigs and elected officials who aren't bound by the results in their states -- should in fact vote according to the choice voters in their state made, as Barack Obama suggested earlier this week. "Superdelegates are, by design, supposed to exercise independent judgment. That is the way the system works. But, of course, if Sen. Obama and his campaign continue to push this position, which is really contrary to what the definition of a superdelegate has historically been, I will look forward to receiving the support of Sen. Kennedy and Sen. Kerry," she said. Both senators are from Massachusetts, a state Clinton won on Super Tuesday.

Monday 11 February 2008

Kosovo and Ukraine

There are two issues which will likely hit the headlines this week, and it's worth a moment of reflection on both, since they both involve important political principles.

It's likely that Kosovo will declare independence this week, possibly around 17-18 February. Kosovar Prime Minister Hasim Thaci stated that this was a "done deal" last week at a press conference in Pristina.

Meanwhile, in Ukraine, the government of Prime Minister Yulia Timoshenka submitted a hotly-contested application to join NATO's Membership Action Plan (MAP) in late January.

In the Kosovo case, the principle of self determination is enshrined in the UN Charter, which states that "all peoples have the right [to] freely determine their political status and freely pursue their economic, social and cultural development." Together with the actions taken by the Milosevic government in the late 1990s, this has formed the basis for the UN's trusteeship of Kosovo.

The obverse side of the argument, of course, is that a declaration of independence violates the territorial integrity of Serbia, of which Kosovo remains formally a province. Under the UN Charter, "any action that would dismember or impair, totally or in part, the territorial integrity or political unity of sovereign and independent States conducting themselves in compliance with the principle of equal rights and self-determination of peoples and thus possessed of a Government representing the whole people belonging to the territory" is illegal.

Lawyers will be able to argue at length on whether the Milosevic government did extend equal rights and self-determination of people during its regime, and presumably Serbia's position against independence will be supported by Russia with a veto in the Security Council. How this situation will play out is unknown: in the first round of independence in the former Yugoslavia, we remember that Germany recognised Croatia immediately, and that the Yugoslav wars soon followed. While noone predicts an equivalent outcome today (Serbia has stated publically it is against the resolution of this conflict by force), the fact is that this will set a precedent, however much Condoleeza Rice may claim otherwise.

Rice Addresses Afghanistan, Kosovo, Middle East in Norway
26 April 2007

Regarding a possible U.N. Security Council resolution issue, she said the United States wants “to work with Russia and, indeed, with the Serbs to make certain … that everybody understands that Kosovo is sui generis, that this is not a precedent for any other circumstances in which there might be a claim of independence,” but instead arises from “a very particular set of conditions” created by the Balkan war.

This is a bizarre interpretation of international law, but unfortunately on par with the Bush Administration's understanding of this topic. Obviously, Kosovo's independence will certainly serve as a precedent in future conflicts, just as America's invasion of Iraq is already serving as a precedent for Turkey's bombing of Kurdish rebels in northern Iraq. Legal precedents are often interpreted by those with power to decide matters in their own favour.

Which brings us to the issue of Ukraine's application to NATO's MAP. I have no opinion on this matter one way or the other, just as I have no opinion on the issue of Kosovo's independence. However, it seems to me that an application to join NATO serves political interests rather than national interests.

Ukraine is still very closely tied to Russia, economically and certainly ethnically. An application to join NATO is being interpreted by Russia as a hostile action, and predictably given Russia's history. In response, I would expect that Russia's most effective tools will be:

1. A revaluation of gas prices exported to Ukraine;
2. Raising the issue of bilateral debts between Ukraine and Russia, including debts for natural gas exports;
3. Re-visiting the issue of tariffs on Ukrainian exports to Russia, which will have an immediate adverse economic effect;
4. Ad-hoc political tensions, perhaps in the Kerch straights or the "trans-Dniestrian" border.
5. A renewal of the arrest warrant for Julia Timoshenka.

Given the close ties between Russia and Ukraine, it is difficult to see what the national interest of Ukraine is in this matter. Does the Ukrainian government believe that Ukraine is under military threat from Russia? Does it believe that even in the case of a Russian invasion, NATO would come to it's aid? NATO has done previous little to support its members in past incidents of political tension, and currently cannot even scrape enough troops together to take on the Taliban.

I see the dual issues of Kosovo and Ukraine linked in terms of their impact on Russia. The Kosovo case will constitute a further precedent (quite apart from the 2003 US invasion of Iraq invasion) for Russia to support its "national interest", however it chooses to define this. Ukraine's NATO application is another indication that Russia is being encircled by a hostile alliance. This follows the 1999 NATO expansion to include Hungary, Czech Republic and Poland and the 2002 expansion to include Lithuania, Estonia, Latvia, Bulgaria, Romania, Slovakia and Slovenia. Anyone who believes that Russia will be "onside" in future issues over Iran's nuclear programme, the Georgian-Abkhazian issue, the provision of natural gas, or any other major world issue should think again.

And yet, in both the case of Kosovo's independence and Ukraine's application to join NATO, the issue can be distilled down to one of self-determination. An objective, international court of law would probably support Kosovo's declaration of independence. Ukraine is certainly within its national sovereign rights to apply to join NATO. The relative benefits for the rest of the international community are, unfortunately, unclear.

Monday Madness: Democratic Primary Snapshot, 11 February 2008 at 1200

Another primary weekend come and gone, with so little clarity from national media. If I planned my consulting projects the way the media report primary results, I'd be out of business a long time ago.

Although Barack Obama "won" four states (at least winning the majority of the popular vote and therefore the delegates), as of Monday morning, 11 February 2008 at 12:00 GMT+2 the four major media sites I'm using in my Snapshot benchmark have a huge variance in results.

The Washington Post and CNN both count superdelegates - you can see the CNN results split out below the table. The NY Times doesn't count the weekend results. MSNBC counts Saturday's results, but not Sunday's results (Maine's).

Taking all Democratic results into count, including the Michigan and Florida popular votes, we see that Hillary Clinton is ahead with popular votes, but lags with delegates.

Excluding MI and FL, we see that Barack leads in both popular votes and delegates.

My data include the Maine popular vote, but not the Maine delegate count, which was unknown on the MSNBC site at the time of writing)

This is an upset for the Clinton campaign of terriffic proportions. Together with the fact that Senator Obama is doing better at fundraising, it will take very strong nerves to wait out the race until the finish, in the hopes of winning in Ohio, Texas and other more "favourable" states. Still, her [theoretically] larger organisation in the larger states, together with her apparent prevalence in superdelegates, could still put Senator Clinton over the top.

In this case, will Senator Obama become the new Al Gore?

Bill Clinton and the Uranium Miner's Gift

The NY Times ran an interesting article on Bill Clinton and his [possible] role in lobbying Kazakh President Nursultan Nazarbayev on a uranium mining deal. I'd prefer not to comment, but anyone reading this can draw their own conclusions. I read this just before deciding whom to vote for on Super Tuesday.

After Mining Deal, Financier Donated to Clinton
January 31, 2008

Late on Sept. 6, 2005, a private plane carrying the Canadian mining financier Frank Giustra touched down in Almaty, a ruggedly picturesque city in southeast Kazakhstan. Several hundred miles to the west a fortune awaited: highly coveted deposits of uranium that could fuel nuclear reactors around the world. And Mr. Giustra was in hot pursuit of an exclusive deal to tap them.

Unlike more established competitors, Mr. Giustra was a newcomer to uranium mining in Kazakhstan, a former Soviet republic. But what his fledgling company lacked in experience, it made up for in connections. Accompanying Mr. Giustra on his luxuriously appointed MD-87 jet that day was a former president of the United States, Bill Clinton.

Upon landing on the first stop of a three-country philanthropic tour, the two men were whisked off to share a sumptuous midnight banquet with Kazakhstan’s president, Nursultan A. Nazarbayev, whose 19-year stranglehold on the country has all but quashed political dissent.

Mr. Nazarbayev walked away from the table with a propaganda coup, after Mr. Clinton expressed enthusiastic support for the Kazakh leader’s bid to head an international organization that monitors elections and supports democracy. Mr. Clinton’s public declaration undercut both American foreign policy and sharp criticism of Kazakhstan’s poor human rights record by, among others, Mr. Clinton’s wife, Senator Hillary Rodham Clinton of New York.

Within two days, corporate records show that Mr. Giustra also came up a winner when his company signed preliminary agreements giving it the right to buy into three uranium projects controlled by Kazakhstan’s state-owned uranium agency, Kazatomprom.

The monster deal stunned the mining industry, turning an unknown shell company into one of the world’s largest uranium producers in a transaction ultimately worth tens of millions of dollars to Mr. Giustra, analysts said.

Just months after the Kazakh pact was finalized, Mr. Clinton’s charitable foundation received its own windfall: a $31.3 million donation from Mr. Giustra that had remained a secret until he acknowledged it last month. The gift, combined with Mr. Giustra’s more recent and public pledge to give the William J. Clinton Foundation an additional $100 million, secured Mr. Giustra a place in Mr. Clinton’s inner circle, an exclusive club of wealthy entrepreneurs in which friendship with the former president has its privileges.

Mr. Giustra was invited to accompany the former president to Almaty just as the financier was trying to seal a deal he had been negotiating for months.

In separate written responses, both men said Mr. Giustra traveled with Mr. Clinton to Kazakhstan, India and China to see first-hand the philanthropic work done by his foundation.

A spokesman for Mr. Clinton said the former president knew that Mr. Giustra had mining interests in Kazakhstan but was unaware of “any particular efforts” and did nothing to help. Mr. Giustra said he was there as an “observer only” and there was “no discussion” of the deal with Mr. Nazarbayev or Mr. Clinton.

But Moukhtar Dzhakishev, president of Kazatomprom, said in an interview that Mr. Giustra did discuss it, directly with the Kazakh president, and that his friendship with Mr. Clinton “of course made an impression.” Mr. Dzhakishev added that Kazatomprom chose to form a partnership with Mr. Giustra’s company based solely on the merits of its offer.

After The Times told Mr. Giustra that others said he had discussed the deal with Mr. Nazarbayev, Mr. Giustra responded that he “may well have mentioned my general interest in the Kazakhstan mining business to him, but I did not discuss the ongoing” efforts.

As Mrs. Clinton’s presidential campaign has intensified, Mr. Clinton has begun severing financial ties with Ronald W. Burkle, the supermarket magnate, and Vinod Gupta, the chairman of InfoUSA, to avoid any conflicts of interest. Those two men have harnessed the former president’s clout to expand their businesses while making the Clintons rich through partnership and consulting arrangements.

Mr. Clinton has vowed to continue raising money for his foundation if Mrs. Clinton is elected president, maintaining his connections with a wide network of philanthropic partners.

Mr. Giustra said that while his friendship with the former president “may have elevated my profile in the news media, it has not directly affected any of my business transactions.”

Mining colleagues and analysts agree it has not hurt. Neil MacDonald, the chief executive of a Canadian merchant bank that specializes in mining deals, said Mr. Giustra’s financial success was partly due to a “fantastic network” crowned by Mr. Clinton. “That’s a very solid relationship for him,” Mr. MacDonald said. “I’m sure it’s very much a two-way relationship because that’s the way Frank operates.”

Foreseeing Opportunities

Mr. Giustra made his fortune in mining ventures as a broker on the Vancouver Stock Exchange, raising billions of dollars and developing a loyal following of investors. Just as the mining sector collapsed, Mr. Giustra, a lifelong film buff, founded the Lion’s Gate Entertainment Corporation in 1997. But he sold the studio in 2003 and returned to mining.

Mr. Giustra foresaw a bull market in gold and began investing in mines in Argentina, Australia and Mexico. He turned a $20 million shell company into a powerhouse that, after a $2.4 billion merger with Goldcorp Inc., became Canada’s second-largest gold company.

With a net worth estimated in the hundreds of millions of dollars, Mr. Giustra began looking for ways to put his wealth to good use. Meeting Mr. Clinton, and learning about the work his foundation was doing on issues like AIDS treatment in poor countries, “changed my life,” Mr. Giustra told The Vancouver Sun.

The two men were introduced in June 2005 at a fund-raiser for tsunami victims at Mr. Giustra’s Vancouver home and hit it off right away. They share a love of history, geopolitics and music — Mr. Giustra plays the trumpet to Mr. Clinton’s saxophone. Soon the dapper Canadian was a regular at Mr. Clinton’s side, as they flew around the world aboard Mr. Giustra’s plane.

Philanthropy may have become his passion, but Mr. Giustra, now 50, was still hunting for ways to make money.

Exploding demand for energy had helped revitalize the nuclear power industry, and uranium, the raw material for reactor fuel, was about to become a hot commodity. In late 2004, Mr. Giustra began talking to investors, and put together a company that would eventually be called UrAsia Energy Ltd.

Kazakhstan, which has about one-fifth of the world’s uranium reserves, was the place to be. But with plenty of suitors, Kazatomprom could be picky about its partners.

“Everyone was asking Kazatomprom to the dance,” said Fadi Shadid, a senior stock analyst covering the uranium industry for Friedman Billings Ramsey, an investment bank. “A second-tier junior player like UrAsia — you’d need all the help you could get.”

The Cameco Corporation, the world’s largest uranium producer, was already a partner of Kazatomprom. But when Cameco expressed interest in the properties Mr. Giustra was already eying, the government’s response was lukewarm. “The signals we were getting was, you’ve got your hands full,” said Gerald W. Grandey, Cameco president.

For Cameco, it took five years to “build the right connections” in Kazakhstan, Mr. Grandey said. UrAsia did not have that luxury. Profitability depended on striking before the price of uranium soared.

“Timing was everything,” said Sergey Kurzin, a Russian-born businessman whose London-based company was brought into the deal by UrAsia because of his connections in Kazakhstan. Even with those connections, Mr. Kurzin said, it took four months to arrange a meeting with Kazatomprom.

In August 2005, records show, the company sent an engineering consultant to Kazakhstan to assess the uranium properties. Less than four weeks later, Mr. Giustra arrived with Mr. Clinton.

Mr. Dzhakishev, the Kazatomprom chief, said an aide to Mr. Nazarbayev informed him that Mr. Giustra talked with Mr. Nazarbayev about the deal during the visit. “And when our president asked Giustra, ‘What do you do?’ he said, ‘I’m trying to do business with Kazatomprom,’ ” Mr. Dzhakishev said. He added that Mr. Nazarbayev replied, “Very good, go to it.”

Mr. Clinton’s Kazakhstan visit, the only one of his post-presidency, appears to have been arranged hastily. The United States Embassy got last-minute notice that the president would be making “a private visit,” said a State Department official, who said he was not authorized to speak on the record.

The publicly stated reason for the visit was to announce a Clinton Foundation agreement that enabled the government to buy discounted AIDS drugs. But during a news conference, Mr. Clinton wandered into delicate territory by commending Mr. Nazarbayev for “opening up the social and political life of your country.”

In a statement Kazakhstan would highlight in news releases, Mr. Clinton declared that he hoped it would achieve a top objective: leading the Organization for Security and Cooperation in Europe, which would confer legitimacy on Mr. Nazarbayev’s government.

“I think it’s time for that to happen, it’s an important step, and I’m glad you’re willing to undertake it,” Mr. Clinton said.

A Speedy Process

Mr. Clinton’s praise was odd, given that the United States did not support Mr. Nazarbayev’s bid. (Late last year, Kazakhstan finally won the chance to lead the security organization for one year, despite concerns raised by the Bush administration.) Moreover, Mr. Clinton’s wife, who sits on a Congressional commission with oversight of such matters, had also voiced skepticism.

Eleven months before Mr. Clinton’s statement, Mrs. Clinton co-signed a commission letter to the State Department that sounded “alarm bells” about the prospect that Kazakhstan might head the group. The letter stated that Kazakhstan’s bid “would not be acceptable,” citing “serious corruption,” canceled elections and government control of the news media.

In a written statement to The Times, Mr. Clinton’s spokesman said the former president saw “no contradiction” between his statements in Kazakhstan and the position of Mrs. Clinton, who said through a spokeswoman, “Senator Clinton’s position on Kazakhstan remains unchanged.”

Noting that the former president also met with opposition leaders in Almaty, Mr. Clinton’s spokesman said he was only “seeking to suggest that a commitment to political openness and to fair elections would reflect well on Kazakhstan’s efforts to chair the O.S.C.E.”

But Robert Herman, who worked for the State Department in the Clinton administration and is now at Freedom House, a human rights group, said the former president’s statement amounted to an endorsement of Kazakhstan’s readiness to lead the group, a position he called “patently absurd.”

“He was either going off his brief or he was sadly mistaken,” Mr. Herman said. “There was nothing in the record to suggest that they really wanted to move forward on democratic reform.”

Indeed, in December 2005, Mr. Nazarbayev won another election, which the security organization itself said was marred by an “atmosphere of intimidation” and “ballot-box stuffing.”

After Mr. Nazarbayev won with 91 percent of the vote, Mr. Clinton sent his congratulations. “Recognizing that your work has received an excellent grade is one of the most important rewards in life,” Mr. Clinton wrote in a letter released by the Kazakh embassy. Last September, just weeks after Kazakhstan held an election that once again failed to meet international standards, Mr. Clinton honored Mr. Nazarbayev by inviting him to his annual philanthropic conference.

Within 48 hours of Mr. Clinton’s departure from Almaty on Sept. 7, Mr. Giustra got his deal. UrAsia signed two memorandums of understanding that paved the way for the company to become partners with Kazatomprom in three mines.

The cost to UrAsia was more than $450 million, money the company did not have in hand and had only weeks to come up with. The transaction was finalized in November, after UrAsia raised the money through the largest initial public offering in the history of Canada’s Venture Exchange.

Mr. Giustra challenged the notion that UrAsia needed to court Kazatomprom’s favor to seal the deal, contending that the government agency’s approval was not required.

But Mr. Dzhakishev, analysts and Mr. Kurzin, one of Mr. Giustra’s own investors, said that approval was necessary. Mr. Dzhakishev, who said that the deal was almost done when Mr. Clinton arrived, said that Kazatomprom was impressed with the sum Mr. Giustra was willing to pay and his record of attracting investors. He said Mr. Nazarbayev himself ultimately signed off on the transaction.

Longtime market watchers were confounded. Kazatomprom’s choice of UrAsia was a “mystery,” said Gene Clark, the chief executive of Trade Tech, a uranium industry newsletter.

“UrAsia was able to jump-start the whole process somehow,” Mr. Clark said. The company became a “major uranium producer when it didn’t even exist before.”

A Profitable Sale

Records show that Mr. Giustra donated the $31.3 million to the Clinton Foundation in the months that followed in 2006, but neither he nor a spokesman for Mr. Clinton would say exactly when.

In September 2006, Mr. Giustra co-produced a gala 60th birthday for Mr. Clinton that featured stars like Jon Bon Jovi and raised about $21 million for the Clinton Foundation.

In February 2007, a company called Uranium One agreed to pay $3.1 billion to acquire UrAsia. Mr. Giustra, a director and major shareholder in UrAsia, would be paid $7.05 per share for a company that just two years earlier was trading at 10 cents per share.

That same month, Mr. Dzhakishev, the Kazatomprom chief, said he traveled to Chappaqua, N.Y., to meet with Mr. Clinton at his home. Mr. Dzhakishev said Mr. Giustra arranged the three-hour meeting. Mr. Dzhakishev said he wanted to discuss Kazakhstan’s intention — not publicly known at the time — to buy a 10 percent stake in Westinghouse, a United States supplier of nuclear technology.

Nearly a year earlier, Mr. Clinton had advised Dubai on how to handle the political furor after one of that nation’s companies attempted to take over several American ports. Mrs. Clinton was among those on Capitol Hill who raised the national security concerns that helped kill the deal.

Mr. Dzhakishev said he was worried the proposed Westinghouse investment could face similar objections. Mr. Clinton told him that he would not lobby for him, but Mr. Dzhakishev came away pleased by the chance to promote his nation’s proposal to a former president.

Mr. Clinton “said this was very important for America,” said Mr. Dzhakishev, who added that Mr. Giustra was present at Mr. Clinton’s home.

Both Mr. Clinton and Mr. Giustra at first denied that any such meeting occurred. Mr. Giustra also denied ever arranging for Kazakh officials to meet with Mr. Clinton. Wednesday, after The Times told them that others said a meeting, in Mr. Clinton’s home, had in fact taken place, both men acknowledged it.

“You are correct that I asked the president to meet with the head of Kazatomprom,” Mr. Giustra said. “Mr. Dzhakishev asked me in February 2007 to set up a meeting with former President Clinton to discuss the future of the nuclear energy industry.” Mr. Giustra said the meeting “escaped my memory until you raised it.”

Wednesday, Mr. Clinton’s spokesman, Ben Yarrow, issued what he called a “correction,” saying: “Today, Mr. Giustra told our office that in February 2007, he brought Mr. Dzhakishev from Kazatomprom to meet with President Clinton to discuss the future of nuclear energy.”

Mr. Yarrow said his earlier denial was based on the former president’s records, which he said “show a Feb. 27 meeting with Mr. Giustra; no other attendees are listed.”

Mr. Dzhakishev said he had a vivid memory of his Chappaqua visit, and a souvenir to prove it: a photograph of himself with the former president.

“I hung up the photograph of us and people ask me if I met with Clinton and I say, Yes, I met with Clinton,” he said, smiling proudly.

David L. Stern and Margot Williams contributed reporting.

Thursday 7 February 2008

So Who Won Super Tuesday?

America is the only country in the world where it’s so difficult to find out who won an election. Everyone is spinning a different story. Here’s a snapshot of poll results on four major national media websites, accessed at 10:00 GMT+2 on Thursday, 7 February 2008:

Table 1: Delegate Tally Snapshot as of 7 February 2008

This is absurd. The technical explanations for how these totals were calculated are insubstantial and raise more questions than they answer. There should be a single source and method for data, and it should be on the DNC website. Try finding this data on the DNC site and let me know how easy it is.

Given the interest I had in the Super Tuesday results, I decided to do my own tally, using MSNBC results, which were the easiest to total by state, combining both delegate and popular votes. For objectivity, I should probably do this for the other three sites as well, but their data is in such a format that extensive manual data entry is needed.

I re-formatted the MSNBC data in an Excel table with the first column comprising the State, and the next columns the popular and delegate votes for each delegate (Barack Obama, Hillary Clinton and John Edwards). I added one further column called “uncommitted”, where I put all the votes for the other Democratic candidates.

In line with the MSNBC methodology, neither Michigan nor Florida have delegate votes, since they’ve been disbarred from the final tally by the Democratic National Committee for moving up their primary dates. However, MSNBC does present the popular vote for these states.

I’ll present the results in two ways:

(a) With all the popular vote, but without delegate counts for MI and FL;
(b) With the popular vote and delegate counts of all states, but not MI and FL.

Here they are:

Table 2: Democratic Primary Results to Super Tuesday, All States (Popular Votes for MI, FL included, but not Delegates)

Table 3: Democratic Primary Results to Super Tuesday (Excluding Delegates and Popular Votes in MI, FL)

So, who’s winning? Barack Obama is, by a hair. He has overcome tremendous disadvantages in terms of national name recognition and a national organization to pass the established front runner, Hillary Clinton. This is a remarkable performance, if we believe the statistics behind it.

There needs to be an urgent and honest overhaul of the way electoral statistics are processed. No one can have an interest in this confusion, which raises shades of the 2000 Florida recount. At one point, substantive and commonly-agreed rules for reporting have to be implemented, or this system will really be all about spin and not all all about substance.

Wednesday 6 February 2008

Reflections on Super Tuesday – Casting My Vote in the Electronic Primary

Well, yesterday I fulfilled my modest part in this political hysteria called Super Tuesday. Last week I registered to vote online in the Democratic primary. I’m registered in the great state of New Jersey, and since I couldn’t quite square the image of voting Democratic at the Athens Grande Bretagne, where the paper primary would be held, an online vote was the natural choice.

Those of you who might stumble across this blog or remember me in the real world know that I’m a numbers man, quietly enamoured by the harmonious interaction of forecasts and research. I have an abiding belief in the power of the scientific approach, of rational solutions to real-world problems. Indeed, my career is based on this: I’m paid to undertake analyses that lead to dispassionate decisions based on return-on-investment, discounted cash flow, debt-to-equity and the entire cabalistic code of finance and corporate management.

Politics – and its modern handmaiden, the media – is the polar opposite. It thrives on a sensationalist self-promotion of the most blatant sort, while simultaneously destroying every achievement of the previous administration, and of all political rivals regardless of affiliation.

Political contests in America are all about charisma, which we prefer to call “character” and it’s necessarily evil twin, “electability.” Our current crop of candidates is particularly messianic in both respects, playing on the conscious and sub-conscious fears and aspirations of an electorate which is increasingly divorced from reality, both within its own borders and within the wider world.

Ultimately, this is what the endlessly saccharine, narcissistic marketing machine that underpins and defines the contemporary American economy – and society – has brought us to. The willingness to suspend a healthy disbelief of the basic hubris and arrogance of the human spirit in a seat of power, in exchange for sound bites and slogans, banners and balloons and the promise of a better tomorrow. We clamour for a heroic saviour-candidate to defend us against that nefarious other whose evil legions will, if elected, surely lead us into the abyss.

Yet the day after the election we’ll forget about primaries and elections and statistics and trivia and goodness knows what else we have yet to see and dissect and parse in our wide-eyed search for the truth. The vanquished will be consigned to the oblivion of defeat; the triumphant will enter the new Jerusalem, there to pronounce and moralise until the next election. Slowly but surely, the country will sink back into its dazed idyll of Britney and Paris Hilton and the next reality show that flares like a firefly in the twilight of our national conscious.

And good riddance. This present circus will cost untold billions, eject millions of tonnes of carbon dioxide into the atmosphere, and leave us more confused and addled and distrustful than we were before. And yet we gladly participate, blithely discovering new Prometheans every four years like hamsters on an endless wheel. One day, perhaps we will vote for avatars, electronic ciphers to replace Mitt and Mike and John and Barack and Hillary, who will make their ubiquitous appearance on MySpace or Second Life, where we will inhabit the greater part of our days, avoiding the toxins and unseen menace of our glorious future.

But I digress. This morning, I opened up my Party email, dutifully confirmed my date of birth, address and email, and found myself on a nearly blank web page with just a few sparse lines of text and boxes next to them.

And thus was my decision was made. Dazed by this hurly-burly, I paused, comforted by this blank page. After the surfeit of blaring CNN jingles and the cloying, earnest voices of the candidates and their pundits, the stark choice was upon me. It was now, not then. It was me, not them. It was an action, not an advertisement. It was a vote. It was our future.

Abandoning reason to the winds, I clicked the box by the name of the next big thing, the candidate of change and the future, the crusader with the white cowboy hat who would ride up to Washington and set that city – and the country – aright.

And so it was done. My civic duty was fulfilled, for this news cycle at least. For the first time this year I felt a surge of tranquillity, that it had all been worth it, that my choice would be respected, and that democracy and the Republic were alive and well.

And then it was time for lunch.

Saturday 2 February 2008

Barack Obama's Race Against Time

The Washington Post ran a perceptive article today (Obama Is Racing Against the Clock Short Calendar Favors Clinton) on the Obama campaign. The opening sentence says it all: Sen. Barack Obama has two opponents: Sen. Hillary Rodham Clinton and the clock, which is rapidly running down.

I'm struck by three things about this article:

1. Politics is still personality-driven
This is strange, given all this country has been through in the last 8 years, and given the improvements in media technology which presumably make it easier to find out about issues. The emphasis on personal appearances at campaign rallies, together with the exhausting primary schedule, are definitely a keynote feature of US Presidential politics. In today's world, this implies that since "time is money", a campaign needs A LOT of money.

2. Politics are not issue-driven, at least in the primary stages
I was struck by the comment in the article that people couldn't distinguish campaign platforms.

But along the trail there are signs of the ground that Obama has to make up with many voters who have had little experience in casting a meaningful vote in the primaries and have only recently trained their minds on their choices.

In Phoenix, Cynthia and Stuart Preston said that as they were driving to Obama's rally with their children, they quizzed each other to come up with three of the candidate's major platform planks. To their surprise, they couldn't think of them. Despite that, Cynthia Preston said she is supporting Obama. She was drawn, she said, by the "popular movement" behind him.

"I don't know if he has enough time to detail [his plans in all Feb. 5 states], but if you care enough, you can do the research on your own," she said.

Both Senators Clinton and Obama have excellent campaign websites, although I find Obama's more convincing in terms of detailed policy recommendations. The importance of issues will become more pronounced after the Democratic and Republican candidacies are announced.

3. You need a permanent campaign structure
One of Senator Obama's acknowledged weaknesses is the lack of a well-funded, national campaign structure to offset the awareness issue. To do this obviously costs a lot of money. Yet if we are worried that the campaign season is already too long, imagine what it may become like in the future. I wouldn't be surprised if it's a 2- or 3-year campaign season, where candidates maintain permanent structures in place to get their message out, then ramp up spending and events long before the primaries start.

Despite any perceived weaknesses with the Obama campaign, I believe the race is still open, and that some of the conclusions in this article - such as the Florida results - may not stand up for long.

It seems that Democratic voters face a choice: backing an "insider" such as Senator Clinton, whom is seen on the one hand as a "safe" pair of hands, with a strong network. Or backing an "outsider" such as Senator Obama, who inspires more than the "insider", yet raises more doubts about "electability".

Given this choice, I think we should look carefully at the campaign websites of the two candidates as well as the record of the new Congress. We have to ask ourselves whether we really believe something will change in Washington in January 2009, or whether it will be business as usual - no matter who is elected.

Friday 1 February 2008

Sub-prime losses continue; UBS write-down

A new estimate on sub-prime losses was released by S&P on Wednesday: losses are expected to reach $ 265 billion. Reuters reports that S&P "...cut or may cut its ratings on $270 billion worth of U.S. mortgage-backed securities and put $264 billion of collateralized debt obligations on watch for a possible downgrade."

The S&P report states:

Standard & Poor's Ratings Services today announced that it has placed on CreditWatch with negative implications or downgraded its ratings on 6,389 classes from U.S. residential mortgage-backed securities (RMBS) transactions backed by U.S. first-lien subprime mortgage collateral rated between January 2006 and June 2007. At the same time, it placed on CreditWatch negative 1,953 ratings from 572 global CDO of asset-backed securities (ABS) and CDO of CDO transactions.

The affected U.S. RMBS classes represent an issuance amount of approximately $270.1 billion, or approximately 46.6% of the par amount of U.S. RMBS backed by first-lien subprime mortgage loans rated by Standard & Poor's during 2006 and the first half of 2007. The CDO of ABS and CDO of CDO classes with ratings placed on CreditWatch negative represent an issuance amount of approximately $263.9 billion, which is about 35.2% of Standard & Poor's rated CDO of ABS and CDO of CDO issuance worldwide.

In December 2007, S&P quantified the volume of ARM reset loans that face interest rate adjustment at the end of 2008 at an additional $ 500 billion. (S&P 11 December 2007). S&P's After the Credit Boom, Banks and Brokers face a Troubling Year in 2008. states that the declared write-down of CDOs, subprime RMBS and leverages loans as of 17.01.2008 was $ 90.7 billion:

Merrill Lynch .... $ 22.0 bln
Citigroup ........ $ 21.0 bln
UBS .............. $ 14.8 bln
Morgan Stanley ... $ 9.6 bln
13 Others* ........$ 23.3 bln

* BoA, Barclays, Bear Stearns, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, ING, JP Morgan Chase, Lehman Bros, RBS, SocGen,

This is before UBS wrote down a further $ 4 billion this week, bringing its total losses to over $ 18 billion. Ben Bernanke testified that total losses would not exceed $ 500 billion, but that was before two rate cuts. Yet more earnings announcements will follow this month. Expect losses.

Still no data on how the 2 rate cuts will affect sub-prime and ALT-A repayments by borrowers. The situation should improve with a Fed date of 3%, although mortgage rates have not fallen by the same magnitude - yet.