Oxford International Review

Mixing Finance and Politics, China-Style

Published November 20, 2008 Sovereign Wealth Funds 2 Comments
Tags: China, China Investment Corporation, CIC, national security, SAFE, Sovereign Wealth Fund, SWF, USCC

By Ashby Monk | Disclaimer

“Claims by Chinese officials that the establishment of CIC is intended to create an investment vehicle for strictly economic purposes are contradicted by many of the facts”, according to the U.S.-China Economic and Security Review Commission(USCC) 2008 annual report released today. The report, which is over 400 pages long, dedicates an entire section to China’s “capital investment vehicles” (i.e. SWFs) and their implications for the U.S. economy and national security.

It makes for an interesting read, as it outlines in great detail the sources of U.S. concern with respect to China’s SWFs.

“China appears far less likely than other nations to manage its sovereign wealth funds without regard to the political influence that it can gain by offering such sizable investments. With an estimated 40 percent of its domestic economy still under government ownership and control, China has long mixed economic and political goals and is likely to do so with its international investments, despite protestations to the contrary” (p.43).

This is a sentiment that came through clearly during our discussion with USCC Chairman Larry Wortzel this past June. At the time, he noted that you can’t understand the CIC without understanding China’s broader national strategic economic objectives. As the report notes:

“In fact, both SAFE and CIC are just two parts of a complex web of state-owned banks, state-owned businesses, and government-run pension funds, all of which draw their money-and receive their directions-from the central government and which promote a state-led development agenda” (p.44).

While the CIC does get quite a bit of attention, the report casts a very critical eye on SAFE, which it refers to as a “Shadow Sovereign Wealth Fund”:

“…SAFE is determined to prove it is the more astute and capable institution and, in particular, that it can obtain the same or better returns than CIC…SAFE now is competing with CIC for investments and brings some significant advantages to this second phase of the contest. SAFE has far deeper pockets than CIC, which at the moment has only about $90 billion in remaining cash to invest abroad. SAFE’s head sits on CIC’s board, with access to sensitive information about its planned investments” (p.53).

As we have flagged several times, the report goes into some detail about SAFE’s politically motivated investment in Costa Rican bonds:

“In 2008, a Chinese government agency promised to purchase Costa Rican government bonds in return for Costa Rica’s severing of diplomatic ties with Taiwan. That same agency invested $2.5 billion with TPG Capital, a Texas private equity firm.172 In addition, it bought approximately $2 billion in British Petroleum shares and approximately $2.5 billion in shares of France’s oil and gas company, Total S.A.173 Late in 2007, it made several small purchases of shares of three Australian banks..This government-owned investor, however, was not CIC, China’s official sovereign fund, but a secretive offshoot of SAFE, the official manager of the nearly $2 trillion of foreign exchange reserves China has amassed” (p.52).

“Both Taipei and Beijing have used ‘checkbook diplomacy’ in the past, but this is the first confirmed time that China has used its foreign exchange funds as a means of directly applying political pressure” (p.53).

In general, the report is a compilation of all of the fears surrounding CIC, SAFE and SWFs. It outlines the areas where confusion and misunderstanding remain between SWFs and recipient countries. It also serves as a wake up call to those that thought the ‘SWF debate’ had been resolved with the release of the Santiago Principles. Clearly, the trust building exercise that is at the heart of the IWG process has not yet had its intended effect on the USCC.

However, distrust is perhaps to be expected at the USCC, which was created in October 2000 around the time that China topped national security concerns. Indeed, some perceive the commission to be anti-China, viewing the Sino-American relationship as an ongoing and escalating rivalry.

In short, this report says is that China’s SWF may mix the political with the economic in ways similar to the methods of other Chinese institutions. However, as is noted, this is a feature that is particular to China. Once again this highlights the importance of distinguishing between SWFs–they are not all the same.

Q&A with Christian Braun, Creator of SWF Radar

Published November 20, 2008 Q&A , Sovereign Wealth Funds 0 Comments
Tags: SAFE, Sovereign Wealth Funds, SWF

By Ashby Monk | Disclaimer

OIR is a source of open discussion and engagement on the topic of SWFs. As such, we welcome and indeed seek out all views and opinions on the subject. Today, we offer the fourteenth instalment of our segment: “Q&A with a SWF expert, stakeholder or policymaker”. We are pleased to welcome Christian Braun, creator of SWF Radar. While Mr. Braun’s views are his own (see our disclaimer), his perspective helps to further debate and facilitate understanding.

OIR: It is a pleasure to have you with us, Christian. I think anybody reading this today will agree that SWF Radar has been a phenomenal resource. I’m curious, what sparked your interest in SWFs and led to the idea for the site?

Christian Braun: In 2001 I helped launch a magazine on corporate responsibility and related topics. This introduced me to the issue of the use of non-financial investment criteria, specifically social and environmental criteria, by public pension funds, something in which I have had a keen interest ever since. When the debate about SWF investments kicked off in 2007, I saw parallels with earlier arguments about public pension fund investments. So I decided to track news stories about SWFs to observe how the debate and the issues evolved. SWF Radar was the upshot of this.

OIR: To the extent that you can talk about your readership, who is interested in SWFs?

Christian Braun: Often the networks that sent the most visitors on any given day were those of the big financial firms that provide investment services for SWFs. The readers who visited the site most regularly came to a great degree from these firms. The site had regular visitors from all sorts of different firms and institutions, though, from SWFs and central banks through to small organizations without an identifiable network location.

OIR: I can’t imagine anyone has followed SWF news more than you. How have perceptions changed over the past year?

Christian Braun: Looking just at the United States, SWFs were treated with suspicion by the administration and by official agencies such as the S.E.C. until a few months into 2008. By around June 2008, though, the U.S. Treasury in particular had started switching the focus away from any potential risks associated with SWF investments toward the need to avoid protectionism. This probably helped tone down the rhetoric about SWFs in the press. But it will take another wave of SWFs investments to test exactly how perceptions and attitudes have changed since last fall and winter. The fact that the launch of the IMF’s GAPP guidelines was pretty much ignored by the press does suggest, though, that the perception of SWFs as something threatening may have eased. It will be interesting to see what happens under the Obama administration, especially given that Lawrence Summers, who is one of Obama’s top economic advisers, helped kick off the present SWF debate with his piece in the Financial Times in July 2007 on how SWFs, as he saw it, “shake of the logic of capitalism.”

OIR: Do any news stories stand out in your mind as being critical to the shaping of the SWF debate over the past few years?

Christian Braun: The Lawrence Summers piece I just mentioned, though not a news story, was important. This spelled out several of the central issues and even pulled the likes of Gazprom, a state-owned enterprise, into the debate about the investment of sovereign wealth. Another thing that was itself newsworthy was 60 Minutes’ interview with Gao Xiqing, general manager of the China Investment Corporation, broadcast in April this year. The CIC had been vilified by certain parts of the U.S. media, notably by Lou Dobbs on CNN. So seeing its soft-spoken, self-effacing investment chief give a candid interview in fluent English to a major U.S. current affairs program I think did a lot to blunt the criticism and reduce the scaremongering. One news piece that had little resonance but that I think was extremely important was the Financial Times’ report in September this year that claimed that China’s State Administration of Foreign Exchange had used its funds to push Costa Rica to sever ties with Taiwan and establish relations with China. I saw you brought this up in the Q&A you published earlier in November with the OECD observer to the IMF’s International Working Group.

OIR: Do you think the media has done a good job of covering SWFs? In what way has coverage been lacking?

Christian Braun: As I mentioned earlier, there was almost no coverage of the launch of the IMF’s GAPP guidelines. I’m not sure how much coverage these guidelines deserve, and I wrote at length on a couple of occasions on SWF Radar about why I think the GAPP will not work. But I still found it strange that there was such a lack of coverage. That is the one thing I’d point to and say that coverage was not what it maybe should have been.

OIR: SWF Radar is great in part because it amalgamates the news without extensive commentary. Can I coax a bit more commentary out of you now? Are you at all concerned by the rapid growth in SWFs? Why or why not?

Christian Braun: I am not at all concerned. I would, though, be very concerned about a move toward protectionism. This is not to say that I think SWFs are necessarily a good thing, especially since their inability to engage in governance-related activism for fear of triggering political alarm bells may be a drag on the corporate governance movement, of which I am a keen supporter.

OIR: For those that aren’t yet aware, you’ve handed off the management of SWF Radar to OIR. What’s next for you?

Christian Braun: SWF Radar eventually started taking up much more of my time than I anticipated, so I’m now pleased to be able to focus more closely again on my freelance work in corporate publishing and corporate communications. I’ll be devoting some of the time I’ve now freed up to the book I’m writing on private property and money. It’s something I’ve been working on for a while now, and I expect to have the first draft finished by April 2009.

OIR: Thanks, Christian, and good luck in your future endeavors. We’re all grateful for your work on SWFs to date. Keep in touch…

On the Recipient Side

Published November 19, 2008 Sovereign Wealth Funds 11 Comments
Tags: Dubai Ports World, protectionism, recipient countries, Santiago Principles, Sovereign Wealth Funds

By Joycelyn Eby | Disclaimer

Much of the discussion on sovereign wealth funds (SWFs) has centered on their owners, while relatively little systematic research has covered the investment recipients. Simon Johnson, director of the IMF’s Research Department, while acknowledging that the size and potential political orientation of SWFs are often discussed as intimidating, noted in September 2007 that “the real danger is that sovereign wealth funds (and other forms of government-backed investment vehicles) may encourage capital account protectionism, through which countries pick and choose who can invest in what.”

The United States government has a history of balking at state-owned companies carrying majority stakes in what are perceived to be “strategic industries”. The uproar over CNOOC’s bid to purchase Unocal was one example. More recently, the US Congress fought bitterly to keep Dubai Ports World from taking ownership of several US ports. It is worth noting that management was being shifted from a British company, not from US domestic control. The problem thus was not foreign ownership in itself as a security concern, but rather ownership by a government from a region with unstable relations to the US.

U.S. Representative Ron Lewis recognized the UAE’s “cooperation with our mission to defeat global terror”, but emphasized that the change of port management to an “Islamic country with a history of terrorist ties, in an unstable Al-Qaeda friendly region, is far less suitable to our security concerns than the current British-based parent company.” Senator Tom Colburn expressed similar sentiments when he said that, “Handing the keys to U.S. strategic ports to a regime that recognized the Taliban is not a sound next step in our war against terror.”

These comments demonstrate what an editorial in the Financial Times calls “one of the uglier faces of US protectionism - the one with the slightly racist tinge.” In light of the recent completion of the Santiago Principles, I wonder if host countries will take similar action in defining the parameters of acceptable investment and legal proceedings. The Santiago Principles recognize that the recipient countries should be held to strict transparency standards as well. In fact the Principles state,

Increased transparency—both by the SWFs on their structure and operations, and by the recipient countries on their investment screening processes and equal treatment of investors—is one of the key factors in achieving this [stable and open investment environment].

In addition to the Santiago Principles, the lack of SWF action in the current financial crisis should assuage lingering doubts about the motives behind SWF investments. If SWFs were mainly interested in having a hand in Western economies for political leverage, they would be steadily buying shares in the many financial institutions that are currently up for grabs. While they are involved in some deals, there have been no large-scale changes of hands. However, worries still remain, exemplified in Barclays’ continuing fight with shareholders over the potential infusion of 7bn pounds sterling of capital primarily from the Qatar Investment Authority.

It will be up to the recipient countries to come up with their own set of standards. Many already sent representatives to the IWG meetings. However, with varying national security concerns and long-existing prejudices, this could be quite a task.

Political and Not Economic Profits?

Published November 18, 2008 Sovereign Wealth Funds 0 Comments
Tags: GAPP, hedge funds, Santiago Principles

By Joshua Chan | Disclaimer

October was an exciting month. Several hedge funds imploded, the Hang Seng Index and the KOSPI plunged a shocking 12.2% and 34.1% respectively. Talk about next year’s bonus (that time tested barometer of a banker’s sentiment) has changed from “How much?” to “Will there be any?” Commodity prices are down with several analysts calling it a bottom, and international trade remains severely crimped by the liquidity crunch with banks unwilling to confirm letters of credit.

Amidst the doom and gloom, sovereign wealth funds with their billion dollar war chests have increasingly been seen as a source of funding to bail out troubled companies in need of cash. The governments of Japan, China, Kuwait, Singapore and South Korea provided funds to Citigroup, UBS, Merrill Lynch and Barclays in the earlier months of the financial crisis. However, as their own domestic economies falter in this continuing crisis, there are increasing calls from citizens for these funds to prop up their own economies instead of investing in foreign assets.

Interestingly, most sovereign funds were first established to provide support for their domestic economies. The Hong Kong Monetary Authority intervened in its stock market crisis during 1998 and bought $120 billion worth of equities to successfully defend the market against speculators. The Kuwait Investment Authority, a $250 billion fund founded in 1953, said that it would invest as much as $1 billion to prop up sinking Kuwaiti stocks following a request from the government. And Russian government officials have poured money into domestic investments and have considered using their country’s $45+ billion fund to support a declining stock market.

The Santiago Principles specifically addressed this issue. Both GAPP 14 and 19 refers to the pursuit of economic profits and not political gains:

GAPP 14. Dealing with third parties for the purpose of the SWF’s operational management should be based on economic and financial grounds, and follow clear rules and procedures.

GAPP 19. The SWF’s investment decisions should aim to maximize risk-adjusted financial returns in a manner consistent with its investment policy, and based on economic and financial grounds.

GAPP 19.1 Subprinciple If investment decisions are subject to other than economic and financial considerations, these should be clearly set out in the investment policy and be publicly disclosed.
GAPP 19.2 Subprinciple The management of an SWF’s assets should be consistent with what is generally accepted as sound asset management principles.

As the global economy grinds to a slowdown (or even negative growth in some), it remains to be seen if these funds will adhere to the Principles. Their actions in the months ahead will definitely be a good test of their intentions, confirming whether they independently maximize profits or act as quasi-governmental bodies. The sovereign wealth funds should definitely bear this in mind before bowing to any political pressure.

“We Are Not a Sovereign Wealth Fund”

Published November 17, 2008 Sovereign Wealth Funds 1 Comment
Tags: Mark Lee, Mubadala, Sovereign Wealth Funds, Temasek, Waleed Al-Mubairi

By Chen Zhou | Disclaimer

The Financial Times has some very in-depth reporting on sovereign wealth funds. If you open the first FT Video on this page, you will hear Mr. Waleed Al-Mubairi, COO of Mubadala Investment Company, talking about the company’s new deal with GE. This isn’t exactly breaking news, nor does Mr. Al-Mubairi sound any different than Western professional in the private equity industry. What grabbed my immediate attention was his repeated line that “we are not a sovereign wealth fund”. Mubadala is not a sovereign wealth fund? Then why is this video clip even included on FT’s SWF page? I need an explanation.

A few minutes of Internet research will tell one that Mubadala is an investment vehicle of the Abu Dhabi government. It has invested in the energy, telecommunication, aerospace, automotives, healthcare, real estate and shipbuilding sectors. On its website, Mubadala Development Company says it was established in October 2002 as a Public Joint Stock Company, and its sole shareholder is the Government of the Emirate of Abu Dhabi.

In another Financial Times report, Mr. Simon Israel, executive director of Temasek Holdings, said “It is wrong to club everyone together as sovereign investors.” He added, “We regard ourselves as very differentiated from other sovereign wealth funds. While we are state-owned, we are not state-directed.”

On another occasion earlier this year, Temasek’s spokesman Mark Lee also claimed, “Temasek is not a sovereign wealth fund, it has to sell assets to raise cash for new investments and doesn’t require the government to give approvals.” He argued that as the majority of the fund’s nine-man board are “independent” and they do not have to refer to the finance ministry (Temasek’s 100 percent shareholder), before making investment decisions, it should be classified as a “a commercial company”.

Both of these government-owned investment firms want to distance themselves from the secretive and politically-intentioned image attached to the term sovereign wealth funds by claiming that they are not SWFs. In Temasek’s case, a lot of people suspect that it was also trying to exclude itself from an international agreement that clearly covered Temasek.

Nonetheless, Temasek is always included as one of the classic long-standing SWFs. To be as comprehensive and inclusive as possible, SWFs could be defined as sovereign-owned asset pools that are neither traditional public pension funds nor traditional reserve asset supporting national currencies. In other words, as long as the asset in questions are sovereign-owned and do not represent either prudential monetary reserves or classic public pension money, they must be sovereign wealth.

Under this broader definition, both Mubadala and Temasek should be classed as SWFs, no matter how different their investment objectives or governance structures are. That is because, in real life, the Government of the Emirate of Abu Dhabi wholly owns Mubadala and the Finance Ministry of Singapore wholly owns Temasek.

SWFs Are a Symptom, Not the Problem

Published November 14, 2008 Sovereign Wealth Funds 0 Comments
Tags: imbalances, Sovereign Wealth Funds

By Ashby Monk | Disclaimer

The OIR team has been in Oxford and London all week conducting / collecting interviews for our project on SWFs. It’s hard to put into words the sentiments among some of our interviewees; so I won’t. I’ll let one of the interviewees do it: “Here is a quote for you. A global depression is going to happen. You can print that.” Not everybody we met with during the week was this pessimistic. Nevertheless, all wanted to reflect broadly on an incredible year in financial markets; and the role of SWFs therein.

Who did we meet? I can’t say exactly because confidentiality agreements restrict our ability to disclose names. That said, some will eventually appear in the OIR volume on SWFs, which will be a compendium of the most interesting interview transcripts. What I am allowed to say, however, is that we met with senior bankers, bureaucrats, journalists, and SWF stakeholders in and around the City of London.

An interesting theme developed during these discussions: SWFs are seen to be a symptom of, and a (small) solution to, the current economic and financial crisis. Here is the way the discussion usually unfolded. Yes, SWFs are a small comfort to the current financial system during this crisis. They are owners of capital in a system that is seriously decapitalized. However, SWFs, by their very nature, are also a symptom of the global economic malaise characterized by imbalances. For a variety of reasons, countries have accumulated massive current account surpluses. These surpluses are not seen to be sustainable, but SWFs are nonetheless a useful tool for managing these imbalances. In short, we cannot understand or even hope to solve any problems we have with SWFs without first understanding and indeed solving the larger problems that have underpinned the rapid growth of these funds: imbalances.

The natural question that followed: who is to blame for the global imbalances and how can they be unwound? Once again, two of our more opinionated interviewees offered interesting insights. First, “we need to break the oil dependence and stop the over-consumption in the West”. And, second, “Arabs need to start buying large chunks of China.” While the two points are perhaps oversimplifications of the problems we face, they do nonetheless capture the nature of the larger considerations at play.

So, while SWFs do present a series of new concerns to Western policymakers (national security, nationalization of markets, state capitalism, etc.), they are also symptoms of much larger global economic problems. As such, any new national SWF policies should take into consideration these larger issues. Otherwise, these policies will only be treating symptoms. In this case, our patient, the global economy, will only get sicker.

Q&A with Zhang Ming, Scholar at the Institute of World Economics and Politics

Published November 13, 2008 Q&A , Sovereign Wealth Funds 0 Comments
Tags: China, Sovereign Wealth Fund, China Investment Corporation, CIC, GAPP, SAFE, Santiago Principles

By Ashby Monk | Disclaimer

OIR is a source of open discussion and engagement on the topic of SWFs. As such, we welcome and indeed seek out all views and opinions on the subject. Today, we offer the thirteenth installment of our segment: “Q&A with a SWF expert, stakeholder or policymaker” (see the Q&A archive). We are pleased to welcome Zhang Ming, Scholar at the Institute of World Economics and Politics within the Chinese Academy of Social Sciences. While Mr. Zhang’s views are his own (see our disclaimer), his perspective helps to further debate and facilitate understanding.

OIR: It is a pleasure to have you with us today, Ming. Part of what we try to do at OIR is canvass all points of view on the topic of SWFs. With this in mind, what is your reading of the internal Chinese debate on SWFs and the CIC?

Zhang Ming: Since the establishment of CIC in September 2007, there are 3 hot issues in internal debate. First, why CIC is independent from both PBOC and Ministry of Finance? This point raises two questions: Is 200 billion USD CIC’s capital or its liabilities? Why should CIC pay the interest of special government bonds? Second, why did CIC merge Central Huijin as its major subsidiary? Third, whether the poor performance of CIC in the last year is due to the fluctuations of international financial market, or due to CIC’s poor decision-making process? The people have not formed consensus about these questions yet.

OIR: That’s interesting. Based on my discussions with Western policymakers, many were also interested in understanding the CIC’s decision-making process so as to better gauge its intentions. Officially, the CIC intends to achieve higher returns on foreign exchange reserves. Unofficially, do you see any scope for using the CIC to advance broader Chinese goals, such as helping domestic companies move overseas or extracting political concessions?

Zhang Ming: In my personal opinion, I think that CIC is trying to behave as a pure financial investor. However, the Central Huijin, one of CIC’s subsidiaries, is a typical strategic investor. For example, Central Huijin is the major shareholder of China Development Bank, and the latter is responsible for facilitating Chinese state-owned enterprises to do overseas investment. In the last year, China Development Bank offered a huge loan to Aluminum Corporation of China to help it to buy shares of Rio Tinto. Therefore, if Central Huijin is still the subsidiary of CIC, CIC will continue to be treated as a strategic investor by host countries.

OIR: Jamil Anderlini of the FT reported in September the State Administration of Foreign Exchange used its assets to extract political concessions from Costa Rica. What’s your reaction?

Zhang Ming: Frankly speaking, every country has been using its domestic resources, including foreign exchange reserve, to maximize its national interest. I don’t know why foreign media have paid so much attention to this issue.

OIR: Many inevitably ask about the CIC’s internal governance. Can you give us some idea as to how investment decisions are made within the CIC? What is the process, as you understand it?

Zhang Ming: There are a board of directors, a Chinese Communist Party committee, and a management team in CIC. According to the related laws and regulations about Chinese state-owned enterprises, the Party committee is responsible for ideology-related issues and will not interfere with operations. Therefore, it is the management team which forms an investment decision. Before it is implemented, the decision should be passed by the board of directors. If the scale of investment is very large or the implication of investment is very complicated, the final decision might be made by upper government, for example, the State Council. However, the above process is only based on my speculation.

OIR: By some accounts, the CIC is in enviable position since most of its capital is still sitting in cash. Given the fund has been in existence for well over a year, why has so little of its capital been invested?

Zhang Ming: I don’t think most of the asset of CIC is located in cash. One third of 200 bn USD was used to purchase Central Huijin. Another 20 bn was injected into China Development Bank. As for the rest, most of them have been invested in US government bonds, money market funds, etc. Why is so little of its capital been invested? The historic performance of CIC was so bad, and now the market is so volatile. Due to the uncertainties and the pressure from upper government, CIC is very cautious in making new investment decisions, maybe over cautious.

OIR: What has the reaction in China been to the Santiago Principles? Do you see the CIC fully implementing them? How about SAFE?

Zhang Ming: At first, CIC did not actively participate in the establishment of good practice for SWF. However, CIC had changed its attitude toward global governance of SWF, and we saw that CIC had joined the making of the Santiago Principles. I think that CIC will try to implement them to improve its overseas investment environment and to gain the trust of host countries. SAFE does not think that it is a SWF, therefore SAFE will not implement the Principles.

OIR: Thanks, Ming. Very interesting insights.

Education in Iraq: Then and Now

Published November 12, 2008 Iraq Innovation Project 0 Comments
Tags: historical narrative, Iraqi Education, Iraqi history, national identity, self-determination

By Asma Jaber | Disclaimer

The severity of the Iraqi brain drain and the setback to education the war has engendered can be better understood when historically contextualized. People throughout the Middle East acknowledge that for part of Saddam’s rule, Iraq enjoyed one of the strongest health and education systems in the Middle East. From all across the region people gravitated towards Iraq, a country whose education was largely secular (unlike many other Middle Eastern countries), in order to seek enlightenment. Iraq’s universities produced some of the leading doctors and academics throughout the Middle East. In a 2003 article, The Christian Science Monitor reports that women’s literacy rates were “among the highest of all Islamic nations” and that in 1982 Iraq received a UNESCO prize for eradicating illiteracy.

So what happened? According to UNICEF, after the 1991 Gulf War, spending for schools in Iraq dropped by nearly 90 percent, as teachers’ salaries plummeted to $6 a month. Whether due to Saddam using money allocated for schools on his palaces, or to the eight-year war with Iran and later the United Nations sanctions, the education system in Iraq has deteriorated. Having once been the center of enlightenment in the Middle East, the education system in Iraq is likely now even more decrepit than it was after the Gulf War. Where does this lead to, besides a disgruntled population, increasing instability, and youth resorting to violence?

While accurate and up-to-date information concerning Iraqi education today has been difficult to come across, something I did come across was extremely puzzling to me. Iraqi children are not being given a chance to learn their correct history. In late 2003 the Ministry of Education under the US-led coalition government revised millions of textbooks to exclude much of Iraq’s modern history; the 1991 Gulf War, the Iran-Iraq war, references to Israelis, Americans, or Kurds, and images of Saddam and the Baath Party were all removed. It is alarming that the US had such clout over what was to be published and removed from history books. More importantly, what implications does such an erasure of narratives have on one’s identity and, on a larger scale, on national identity?

This is no new story in the Middle East. It takes me back to talking to countless Palestinians about how they were not allowed to learn of their true history while living under Jordanian rule after Israel’s establishment. These students, similar to what the next generation of Iraqis will likely do, learned about Palestinian modern history not from textbooks in the schools, but from the stories of grandmothers, aunts, and uncles. Stories such as these are often lost and not necessarily because no one remembers them, but because its remembrance is not legitimated.

History is repeating itself now, as a new generation of Iraqis will grow up unaware of crucial parts of their history. In addition to preventing knowledge from reaching future Iraqis, erasing these aspects of history is an attack on the memory of people living today. This ‘memoricide’ is nothing short of an assault on individual and collective memory, on history, and on Iraqi identity and self-determination. Whether he represents a pleasant or dark chapter of the past, Saddam is a part of Iraqi history, a history that must be written down for the sake of preserving a powerful historical narrative. This history must be accessible to Iraqis, and it should be up to them to decide how they view it. After all, common historical narratives are oftentimes what bind nations together, creating a cohesive sense of national identity – something very much needed in Iraq.

Obama and the Media in Times of Collective Euphoria

Published November 12, 2008 EMJI 2008 0 Comments
Tags: Barack Obama, France, Obamania

In the days leading up to the 2008 US presidential election, 43 journalists from 20+ countries, all participants in the 2008 Euro-Mediterranean Journalism Institute (EMJI), shared their views on the US election. After Barack Obama’s win, several of these journalists were asked to share their views on the outcome of the race.

The views of Sandrine Amiel should not be viewed as representative of her employer, the sponsors of EMJI (The Fund for American Studies and the Greek Association for Atlantic and European Cooperation), or of Oxford International Review. Please see the OIR Disclaimer.

By Sandrine Amiel
France

Paris, 5 November 2008, 7.30 am. Like a majority of European citizens, I woke up with the hope that Barack Obama would be the new President-elect of the United States. The Polls were optimistic, the pundits as well, but my sleepy self felt anxious. Was this too good to be true? What if the so-called Bradley effect had stolen the victory from the Senator from Illinois? Even before I got my first sip of coffee, I ran to my computer and check the news…. Yes, he made it! Yes, we can! Damn, I should have stayed awake all night to see the triumph. Why did we Europeans have to sleep while history was happening? I spent the rest of the day on a cloud of hope for “change we can believe in,” dreaming of a new era of multilateralism and intercultural dialogue, led by an America which has become likable again. Around me, I saw my euphoria shared by my colleagues, by my friends… and unanimously by the French media.

Financial crisis, wars in Iraq and Afghanistan, Israeli-Palestinian conflict, etc.: the French press evoked the impossible problems the new president will have to solve, even though did not want to spoil the party. On the contrary, the media fueled general enthusiasm. L’Express, a mainstream weekly newspaper was titled “The Man Who Can Change the World”; Courier International ran a very straightforward “Yes!” Even the rather conservative Le Point announced “A Historical President”.

In the days following the election, the French press delivered extensive information on the election, together with a good deal of fairy tale. Most press coverage emphasized the extraordinary life story of the cosmopolitan citizen Barack Obama, his astonishing intelligence, his self mastery, his irresistible charisma. The coverage of this election was also particularly emotional, with many incredible images of a multicoloured America in tears, or African townships bursting with joy. Even when sensationalism was avoided and the challenges were highlighted, the French press was unanimous: the election of Barack Obama is a good thing for America and for the world. After this exclusively Obamaniac coverage, I found the article Artan Haraqija’s disapproving blog entry on Barack Obama titled “America’s Unfortunate Choice” incredibly refreshing.

Despite my own enthusiasm and deep conviction that Barack Obama was the right choice, his glorification in the media has been somewhat disturbing. Fascination for the Great Man, for the politics of charisma and belief in a savior: this American election seems to have awakened these old demons of the press, in France and elsewhere. Let us hope that the exercise of power and its day-to-day difficulties will moderate the media’s Obamania. Balanced coverage and critical analysis make more interesting articles than boundless admiration.

A Moment of Global Celebration

Published November 12, 2008 EMJI 2008 0 Comments
Tags: Barack Obama, Hungary, international relations, politics

The views of Viktoria Szabo should not be viewed as representative of her employer, the sponsors of EMJI (The Fund for American Studies and the Greek Association for Atlantic and European Cooperation), or of Oxford International Review. Please see the OIR Disclaimer.

By Viktoria Szabo
Hungary

Election Night
Being a journalist, election day was a big work day. My excitement built up as I reported about the record turnout at the beginning of the day. It looked like the intense final campaign and the poll results succeeded in mobilizing people–but there were still many scenarios to consider and every observer remained careful not to speak of certainties. We did an Elections by the Minute project with my news portal and, because of the frequent updates, even our guesses remained in suspension for a long time. On Election Day our project got so many hits that the server could hardly manage.

In terms of information demand, the financial crisis is of course still at the top of Hungarian’s agendas. Hungary has been governed to the verge of economic collapse and we are about to receive a huge IMF loan. Considering that the media is measuring how badly this is going to affect taxpayers and Hungarian “Joe the Plumber”’s, and who is to blame for the state of affairs, we journalists were expecting attention to be channeled entirely into our domestic crisis. However, the level of interest in our election coverage shows that people were in fact following November 4 quite closely.

Sharing a moment of global celebration?
Some social events, mostly election night parties and buffets across the country, also helped people to “get involved”. I think it is somewhat hilarious that crowds of non-US citizens partied, cast mock votes, and staged costume debates in foreign cities for what is mostly a domestic election. Not that I don’t recognize the global importance of the result, but such participatory initiations–including my favorite, the Global Electoral College of The Economist, which encouraged people to vote and reported the results around the world–seem more of a social/media game to me. What a nice inclusive idea to invite people from all walks of life (but only with Internet access, of course) to “vote”. And who doesn’t want to express preferences? Anyway, my friends who attended the parties unanimously said the buffet was great and they had a fantastic time (note their highlight).

However, as the results came out, we were, just like the United States, struck by the historic significance of this vote. The campaign characterized by superlatives (most expensive, longest, hardest-fought on the Democratic side, and most thrilling) came to an end that suits a cathartic Hollywood movie. The President-elect delivered an exquisite and inspiring speech that I am sure gave the Chicago crowd and everyone watching (including me) a sense of history-in-the-making. Senator McCain made a similarly elegant gesture, congratulating the man who has been his rival, and now will be his President. I was impressed by their performance.

And most importantly, we witnessed a peaceful revolution of America becoming politically color-blind. Quite apart from their party preferences, I think every American should be proud of this. I was swept up in the joyful celebration of Election Night, wishing that the parties of our political elite could learn to be so generous toward each other (they are not), and that the election result can inspire us to decrease domestic social tensions and improve integration (we have a long way to go to elect the first Gypsy president, I think).
So what now? I am glad I witnessed this election; it was an inspiring experience for me. However, the actual problems Barack Obama is facing are a little sobering and are likely to cool down global Obamania in the long run. First of all, the reality of the political decision-making process will require the president to seek support, especially in a heterogeneous Democratic party. Lobby groups and established White House actors will limit his freedom in return for supporting legislation. Also, the lame duck and the transition periods are not beneficial for handling the financial crisis and this could allow the situation to deteriorate by the time the new presidency begins.

In terms of foreign policy, Obama has an extraordinary number of issues to tackle, and he has raised expectations worldwide with his idealism and plans for sweeping change. Many expect that the liberal approach of investing in international institutions will position the Obama administration as a sponsor of international cooperation. He could make low political investments in climate change and energy consumption issues. It would be a good strategy to use a bigger space to maneuver in areas where he produces trust, an important instrument of enhancing US prestige abroad.

The US is involved in two wars, difficult nuclear non-proliferation negotiations, and there is the Israel-Palestine conflict, where both parties are expecting much of the new presidency. Obama needs to keep his campaign promise about Iraq, but the partial withdrawal will certainly test his diplomatic skills. He will also have to be careful on the international scene because of his family background that raises so many expectations in the Arab world. In order to avoid seeming “soft” there is a risk that Obama will overcompensate. This could lead to slow and uncertain or too strong actions.

The emerging powers of Russia and China will probably take advantage of the inexperienced president and his new leadership and will not wait and cheer for Obama to restore America’s role as a superpower. Finally, transatlantic cooperation is expected to be strengthened by the change in US governance. Europe has welcomed Obama’s victory with great enthusiasm (Gordon Brown, Angela Merkel and Nicholas Sarkozy all expressed their eagerness to cooperate, and the rest of the EU and non-EU states are mostly supportive as well). However, Europe will almost certainly be asked to contribute more to global peacekeeping and democracy-strengthening operations, which will decrease enthusiasm. We should also remember the upcoming elections in the UK and Germany. Actual leadership and politicians’ profiles could influence their international relations. The EU still does not have a common foreign policy; therefore it is individual bilateral relations that create shades of the overall picture.

Change of profile
I expect that Obama will have to make compromises both domestically and on the international level. The financial crisis will restrict his ability to invest in international institutions or non-political projects. The fight against global warming, emissions capping and the participation in international action will eventually lead Obama to sign the Kyoto protocol and increasingly take a multilateral approach. However, these will also problematic because of the delicate balance between the job market and energy consumption that is needed to fuel the economy. Therefore I think it is likely that Obama will be forced to leave popularity behind and take a firm and internationally demanding stance. He needs to establish his position as a global diplomat the same way he needs to make up for not being a seasoned member of the Washington network. Obama will not want to seem weak or soft and will eventually abandon trying to live up to global expectations.

For me, the excitement of the election will continue. There is change to come as the new profile of the President-elect unfolds. It all depends on personal performance (which we haven’t seen in foreign policy practice yet but which we know is very innovative), the international context (which is also changing) and social and US foreign policy elite expectations. There are guesses, but the exact formula will be developed in practice and it is influenced by internal and external factors alike, a combination that is unpredictable.

Finally, here is a quick outline of possible risks we could face in the coming administration:

isolation as opposed to the ‘strike back’ reflex, which would affect a lack of foreign policy initiation and constructive participation in institutions. This depends on 2 factors: (a) the international environment and (b) constituency and elite expectations
permanently decreased potential for action – because of a prolonged crisis or war fatigue and an exhaustion of taking an active part in conflicts
poll-centered governance – considering the public profile he built in the campaign, this is possible if Obama does not want/dare to face unpopularity triggered by decisions on certain trade and environmental policy, as well as on energy issues
because of the sweeping reform plans, there could be a start/stop curve that prevents a general and complete renewal of the areas Obama targeted – due to (a) wanting too much from a legislation and administration point of view (b) a lack of financial resources (c) political mechanisms
challenges in the international system (Moscow, Tehran, Beijing, newly elected leaders, non-state actors, etc.) – the question is how effective the new administration will be in case these challenges accumulate
solutions in trade and tariff policy - because of the financial crisis, world trade is slowing down and there is mostly short term planning – the US will need substantial partnership with other states in order to reply effectively to possible threats such as (possible) unfair Chinese trade practices

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    Scott Moore

  NATO: Reflections Upon the
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Q&A with Zhang Ming, Scholar at the Institute of World Economics and Politics

Education in Iraq: Then and Now

Obama and the Media in Times of Collective Euphoria

A Moment of Global Celebration

Global Reactions to the US Election

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