In the next 40 years, a global power shift will see today's leading economic countries drop from having 80% of the world's income to 35%, says John Wolfensohn, former World Bank president. By 2030, two-thirds of people in the world's middle class will be Chinese.
STANFORD GRADUATE SCHOOL OF BUSINESS
James Wolfensohn is all about balance. The former World Bank president introduced himself to a student audience Jan. 11 by talking about how he is grateful at this point in his life to devote time and money to a "balance between business and nonbusiness activities." And in the speech before an overflow crowd, he urged students to "enrich your life as you enrich your business."
"That aspect of duality is the thing that has made my life meaningful" he said.
But the balance of power in the world is what Wolfensohn spent the majority of his hour-long appearance on. A huge power shift will occur in the next 40 years that will reduce the influence of the wealthiest countries, he said. As population and GDP grows in countries such as China and India, they will assume a larger role in relationship to the United States and Europe. The developed countries will drop from having 80% of the world's income to 35%. "There will be a monumental shift of economic power. It's not just a moderation trend, but a fundamental change in the world balance," he said.
By 2030, two-thirds of people in the world's middle class will be Chinese, Wolfensohn said. "These are not trivial changes -- they are tectonic changes in the way the planet works. In my generation we didn't have to think about it. We knew we were a rich country."
But today's students will have to confront a new world in which Africa is no longer an isolated continent but the fastest-growing market for cell phones.
Looking around the auditorium, Wolfensohn noted that many more students from China and India travel to the United States to study, rather than the other way around. In 2007 just 11,200 Americans studied in China. That year more than 110,000 Chinese were studying in the United States.
"It's a tragedy in terms of the potential of young people that they're still being guided to look at European countries," he said.
Wolfensohn was making a repeat appearance at the Stanford Graduate School of Business as a speaker in the Global Management Program's Global Speaker Series. In 2004, while still at the helm of the World Bank, he spoke about how developed countries were delivering on the promise they made to aid developing ones.
He stepped down in 2005 from a decade-long career heading the agency that is in charge of redistributing the world's wealth from the rich to the poor. He now heads an investment banking firm in New York. At 76, he is still advising organizations and governments on economic policy and helps developing countries through his foundation.
Asked about whether humanitarian aid to Africa was a help or a hindrance, Wolfensohn said aid organizations need to be selective. "There are some extremely corrupt countries," he said, adding that the best countries should be rewarded. "I say to the others: it's not acceptable to steal."
He also predicted a shakeup in how the leadership of the World Bank and the International Monetary Fund would be appointed. Traditionally, the president of the former was from the United States and the latter from Europe. The bank may be "internationalized" in the future.
The World Bank's stated goal is to reduce poverty. As an international financial institution, it provides loans to developing countries for capital programs. It was created out of World War II with France as the first recipient of world aid. In the late 1960s the emphasis shifted to loans for developing countries.
Wolfensohn is a native of Sydney, Australia, and a naturalized U.S. citizen. In addition to his firm, Wolfensohn & Co., he is an honorary trustee of the Brookings Institution. He was appointed to head the World Bank in 1995 by President Bill Clinton and served two terms.
Latin American and Caribbean nations have agreed to set up a new regional body without the US and Canada.
The new bloc would be an alternative to the Organisation of American States (OAS), the main forum for regional affairs in the past 50 years.
Mexico has been hosting a regional summit in the beach resort of Cancun.
The OAS has been dogged by rifts between some members and the US over economic policy and trade, and criticised for promoting US interests.
The proposed new grouping was one of the main issues on the agenda of the two-day summit, which ended on Tuesday.
It "must as a priority push for regional integration... and promote the regional agenda in global meetings", Mexican President Felipe Calderon told the summit, which includes leaders and representatives from 32 countries.
Cuba was suspended from the OAS in 1962 because of its socialist political system. In 2009, the OAS voted to lift Cuba's suspension but the country has declined to rejoin.
Venezuelan President Hugo Chavez earlier expressed his support for the proposal, citing it as a move away from US "colonising" of the region.
A US State Department official, Arturo Valenzuela, said he did not see the new body as a problem.
"This should not be an effort that would replace the OAS, " he said.
The terms of the new bloc and whether it would replace the Rio Group of Latin American countries has not been clarified.
"It's very important that we don't try to replace the OAS," said Chile's President-elect Sebastian Pinera. "The OAS is a permanent organisation that has its own functions."
On Monday, Bolivian President Evo Morales proposed that it begin operating in July 2011 with a summit hosted by Venezuela.
The Cancun summit has also unanimously backed Argentina's claim over the British-owned Falklands.
Argentina is angered that a UK firm has begun drilling for oil off the Falkland Islands, which lie about 450km (280 miles) off the Argentine coast.
Argentina and Britain went to war over the South Atlantic islands, which Argentina calls the Malvinas, in 1982, after Buenos Aires invaded them.
The leaders at Cancun also discussed whether to recognise Porfirio Lobo as the legitimate president of Honduras after he was elected president under interim authorities following a 28 June coup that ousted Manuel Zelaya.
A long-term plan to help Haiti recover from the devastating January earthquake was also on the agenda.
updates from The Times:
US refuses to endorse British sovereignty in Falklands oil dispute
Brazil attacks UN over Falklands stand-off
Latin America backs Argentina as Britain begins Falklands oil quest
February 23, 2010
Argentina cemented a Latin American front over the Falklands yesterday as a British oil rig began drilling in the disputed seas around the islands.
Regional leaders at the Rio Group summit in Mexico were expected to sign up for a resolution backing Argentina in its escalating row with Britain after Brazil and Chile pledged their support.
Venezuela’s vociferous President, Hugo Chávez, set the tone of the summit, offering military support. Characterising Britain as an imperialist relic, Mr Chávez demanded the return of "Las Malvinas", as they are known to Argentinians.
“The English are still threatening Argentina. Things have changed. We are no longer in 1982,” he warned. “If conflict breaks out, be sure Argentina will not be alone like it was back then.”
British control of the archipelago was “anti-historic and irrational”, the former paratrooper continued, asking “why the English speak of democracy but still have a Queen”.
Unlike 1982, when some Latin American nations, notably President Pinochet’s Chile, backed Britain’s campaign to repel Argentina’s brief invasion of the islands, the continent now enjoys strong ties between ideologically aligned governments and could mount a powerful resistance to British oil operations.
Mr Chávez was joined by President Ortega of Nicaragua, who predicted that the Rio Group would throw its weight behind Argentina’s claim. “We will back a resolution demanding that England return Las Malvinas to its rightful owner, that it return the islands to Argentina,” he said.
Brazil, the biggest regional power and traditionally Argentina’s main rival, was similarly supportive. “Las Malvinas must be reintegrated into Argentine sovereignty,” Marco Aurelio García, foreign policy adviser to President Lula da Silva, said, adding: “Unlike in the past, today there is a consensus in Latin America behind Argentina’s claims.”
Almost three decades on from the confict, the defeat of Argentina still stings the national consciousness as an historic injury which must be redressed. President Fernández de Kirchner of Argentina has made the issue a central plank of her presidency, whipping up long-simmering resentments that have only been compounded by the prospect of a black gold bonanza in the isolated, windswept archipelago.
The British Geological Survey estimates that up to 60 billion barrels of oil could be beneath Falklands waters, although Desire Petroleum, the company carrying out the drilling, says that the commericially viable reserves are much smaller.
Desire said that test drilling at the Liz 14/19-A exploration site off the Falklands began at 1415 GMT yesterday. “Drilling operations are expected to take approximately 30 days and a further announcement will be made once drilling is completed.
Tensions between the former adversaries rose last week to their highest level since the war, as Argentina attempted to block ships supplying what it says are “illegal” British activities and Britain hit back with a warning that the islands were much better defended than on the eve of the Argentine invasion in 1982.
Gates Calls European Mood a Danger to Peace
WASHINGTON — Defense Secretary Robert M. Gates, who has long called European contributions to NATO inadequate, said Tuesday that public and political opposition to the military had grown so great in Europe that it was directly affecting operations in Afghanistan and impeding the alliance’s broader security goals.
“The demilitarization of Europe — where large swaths of the general public and political class are averse to military force and the risks that go with it — has gone from a blessing in the 20th century to an impediment to achieving real security and lasting peace in the 21st,” he told NATO officers and officials in a speech at the National Defense University, the Defense Department-financed graduate school for military officers and diplomats.
A perception of European weakness, he warned, could provide a “temptation to miscalculation and aggression” by hostile powers.
The meeting was a prelude to the alliance’s review this year of its basic mission plan for the first time since 1999. “Right now,” Mr. Gates said, “the alliance faces very serious, long-term, systemic problems.”
Mr. Gates’s blunt comments came just three days after the coalition government of the Netherlands collapsed in a dispute over keeping Dutch troops in Afghanistan. It now appears almost certain that most of the 2,000 Dutch troops there will be withdrawn this year. And polls show that the Afghanistan war has grown increasingly unpopular in nearly every European country.
The defense secretary, putting a sharper point on his past criticisms, outlined how NATO shortfalls were exacting a material toll in Afghanistan. The alliance’s failure to finance needed helicopters and cargo aircraft, for example, was “directly impacting operations,” he said.
Mr. Gates said that NATO also needed more aerial refueling tankers and intelligence-gathering equipment “for immediate use on the battlefield.”
Yet alliance members, he noted, were far from reaching their spending commitments, with only 5 of 28 having reached the established target: 2 percent of gross domestic product for defense. By comparison, the United States spends more than 4 percent of its G.D.P. on its military.
Dana Allin, a senior fellow with the International Institute of Strategic Studies in London, called Mr. Gates’s remarks “very striking.”
“Whether this is a conscious statement to sound a real sharp warning, there’s no question that the frustration among the American military establishment is palpable regarding coalition operations in Afghanistan,” he said.
Mr. Gates did soften his message a bit, noting that, not counting United States forces, NATO troops in Afghanistan were to increase to 50,000 this year, from 30,000 last year.
“By any measure,” he said, “that is an extraordinary feat.”
More sobering, he said, was that just two months into the year, NATO was facing shortfalls of hundreds of millions of euros — “a natural consequence of having underinvested in collective defense for over a decade.”
NATO’s problems — greatly magnified by the expansion of its mandate beyond European borders, following 9/11 — called for “serious, far-reaching and immediate reforms,” Mr. Gates said.
Indeed, the secretary general of NATO, Anders Fogh Rasmussen, last month turned to an unlikely source — Russia — to request helicopters for use in Afghanistan, arguing that this would help reduce the terrorism threat and drug trade on a border of the former Soviet Union.
Mr. Rasmussen, speaking at the same meeting as Mr. Gates, said that NATO’s members needed to better coordinate their weapons purchases. The European Union and NATO should collaborate on developing capabilities like heavy-lift helicopters, he said, and avoid “spending double money.”
Dutch confirm Afghan troop pullout sparking fears of domino effect
February 22, 2010
Nato was left in fear of further troop withdrawals from Afghanistan yesterday after the Dutch Prime Minister conceded that he could not prevent his forces being pulled out this year after the collapse of the Government in The Hague.
Jan Peter Balkenende lost the argument over extending the deployment at a 16-hour Cabinet session, in the first big reversal for the recently appointed Nato leader, Anders Fogh Rasmussen, who had publicly requested a continued Dutch commitment.
“Our task as the lead nation [in Uruzgan province] ends in August,” Mr Balkenende said. After a three-month draw-down, the Dutch will be completely out of Afghanistan by the end of the year.
There are concerns that other countries where public opinion is turning against the Afghan campaign could follow, notably Canada, which has had the biggest proportional casualty rate and is committed to withdrawing its 2,800 troops by the end of next year. Another concern is the continued presence of 1,000 Australian troops. The Canberra Government has repeatedly refused to take over the lead role in Uruzgan if Holland leaves, demanding that a big Nato power provide the main share of troop numbers.
Just as important is the impression that European countries are struggling to find their share of the 10,000 extra troops requested by US General Stanley McChrystal to join 30,000 extra US troops in Afghanistan, with France ruling out more forces and a fierce debate in Germany.
The Times understands that the Dutch forces in Uruzgan will be replaced by US troops, diverting them from the surge operation against the Taleban.
Asadullah Hamdam, governor of Uruzgan, said that peace and reconstruction efforts would suffer, telling the BBC that the Dutch played a key role in building roads, training Afghan police and providing security for civilians. “If they withdraw and leave these projects incomplete, they will leave a big vacuum,” he said.
A British security source said: “This is a big setback because the Dutch are very highly rated. It is also a psychological blow, because as soon as one country leaves it starts making the public in other countries worried.”
Although the Dutch endured some sniping from bigger Nato powers about their perceived lack of aggression after they deployed to Uruzgan in 2006, their “population centric” strategy was a precursor of “The McChrystal Doctrine” adopted by British and American forces.
Mr Balkenende faces a general election in May after his main coalition partners, PvdA, the Labour party, walked out rather than break a promise to withdraw the 1,950 Dutch troops this year. Wouter Bos, the Labour leader, said: “A plan was agreed to when our soldiers went to Afghanistan. Our partners in the government did not want to stick to that plan, and on the basis of their refusal we have decided to resign.”
Mr Balkenende’s Christian Democrats and Labour are forecast to lose seats in the 150-member parliament. The two big gainers are forecast to be the ultra-liberals D66 and the right-wing Party of Freedom of the anti-Islamist MP Geert Wilders. Both oppose the Afghan mission.
A recent poll put support for keeping Dutch troops in Uruzgan at 35 per cent compared with 58 per cent for withdrawal, after 21 Dutch deaths.
The Dutch mission in Afghanistan was due to end in 2008, but the Government extended it until August 2010 — a decision made while the head of Nato was Jaap de Hoop Scheffer, a former Dutch defence minister.
Feb. 21, 2010
Warren P. Strobel
February 21, 2010
WASHINGTON — Here's a war game involving Iran, Israel and the U.S. that shows how unintended consequences can spin out of control:
With diplomacy failing and precious intelligence just received about two new secret Iranian nuclear facilities, Israel launches a pre-emptive strike against Tehran's nuclear complex. The strike is successful, wiping out six of Iran's key sites and setting back its suspected quest for a bomb by years.
But what happens next isn't pretty.
The U.S. president and his National Security Council try to keep the crisis from escalating. That sours U.S.-Israeli relations, already stressed by the fact that Israel didn't inform Washington in advance of the strike. The White House tries to open a channel for talks with Iran, but is rejected.
Instead, Iran attacks Israel, both directly and through its proxies in Lebanon and the Gaza Strip. It misinterprets U.S. actions as weakness and mines the Straits of Hormuz, the world's chief oil artery. That sparks a clash and a massive U.S. military reinforcement in the Persian Gulf.
This recent war game conducted at the Saban Center for Middle East Policy, part of the Washington-based Brookings Institution, a center-left think tank, appears to dampen hopes for a simple solution to Iran's real-world nuclear challenge.
The lesson is "once you start this, it's really hard to stop it," said Kenneth Pollack, a former White House and CIA official who oversaw the simulation.
Pollack and others who participated in the day-long exercise late last year are quick to point out that war games are imperfect mirrors of reality. How Iran's notoriously opaque and fractious leadership would react in a real crisis is particularly hard to divine.
But the outcome underscores what diplomats, military officers and analysts have long said: even a "successful" airstrike on Iran's nuclear facilities — setting the program back by two to four years — could come at a tremendous, unpredictable cost.
"It's ... an option that has to be looked at very, very, very carefully," a senior European diplomat said Friday. "Because we know what the results could be, and they could be disastrous." He requested anonymity to speak more frankly on the sensitive issue.
Tensions over Iran's nuclear program rose again this week after the U.N.'s nuclear watchdog reported that the country could be secretly developing a nuclear warhead to be placed atop a ballistic missile. Additionally, Iran has begun enriching uranium closer to the purity level needed for use in a nuclear weapon.
Israel, which sees Iran as a direct threat, has refused to rule out military force, although officials there say they are counting for now on diplomatic pressure. There have even been hints from Sunni Arab states, particularly Saudi Arabia, that they would look the other way in the event of a strike on Shiite Iran, a historic adversary.
Yet one of the Brookings war game's major conclusions is that Israel could pay dearly for an attack on Iran.
By the end of the simulation, eight days after the fictitious Israeli strike, Israel's prime minister, under heavy domestic pressure, is forced to launch a 48-hour air blitz in southern Lebanon to halt rocket attacks from Hezbollah, the militant group sponsored by Iran. Israeli officials know the blitz is unlikely to achieve its objectives, and prepare a larger, costlier operation in Lebanon, including ground forces.
Israel's relations with the United States, its most important ally, are damaged. To avoid damaging them further, Israel bows to intense U.S. pressure and absorbs occasional missile strikes from Iran without retaliating.
Some members of the "Israeli" team nonetheless felt that setting back Iran's nuclear program "was worth it, even given what was a pretty robust response," said one participant. He asked that his name not be used, because under the game's ground rules, participants are supposed to remain anonymous.
Jonathan Peled, an Israeli embassy spokesman, declined comment on the war game or its outcome.
"All we can say is that Iran constitutes a threat not only to Israel but to the region, to the US and to the world at large, and therefore should be addressed without delay by the international community, first and foremost through effective sanctions," he said.
The Brookings war game was one of three simulations regarding Iran's nuclear program conducted in December. The other two, at Harvard University and Tel Aviv University, reportedly found that neither sanctions nor threats dissuaded Tehran from its suspected nuclear weapons ambitions.
In the Brookings game, three teams of experts, including former senior U.S. officials, played the Israeli, Iranian and American leadership. They assembled in separate rooms at the think tank's Washington headquarters. Israeli and U.S. "officials" communicated with each other, but not with the Iranians.
One of the simulation's major findings was how aggressively the Iranians responded to the attack — more aggressively, some participants felt, than they would in real life — and how Washington and Tehran, lacking direct communication, misunderstood each other.
Iran did not retaliate directly against the United States or U.S. troops in Iraq or Afghanistan. But it struck back at Israel, then attacked Dharan in eastern Saudi Arabia, then began mining the Straits of Hormuz.
"There would be almost no incentive for Iran not to respond" with force, said another participant, a member of the Iranian team. "It was interesting to see how useful it was for Tehran to push the limits."
Without knowing it, Iran's last two actions crossed U.S. "red lines," prompting an American military response.
"No one came out on top — (but) arguably the Iranians," the Iran team member said.
The Tehran regime was also able to crush its domestic political opposition.