Tag Archives: Featured

Maduro Drones On

Wearing full regalia to mark the 81st anniversary of Venezuela’s Bolivarian National Guard on August 4th, President Nicolas Maduro became the world’s most prominent target of a drone strike. The scene was typical of the farcical government theater Venezuelans have grown accustomed to over the last 19 years since Maduro’s charismatic mentor, Hugo Chavez was elected President. The small explosion occurred while Maduro was addressing a massive assembly of soldiers, firefighters, and police; seven of whom were wounded when two drones approached and dropped their ordnance near the procession.

In a speech the following day, Maduro blamed the attack on the former President of Colombia, Juan Manuel Santos, a claim Santos bluntly repudiated. Though Maduro is accustomed to droning on against foreign interference, those claiming credit for the attack, a previously unknown group called “Soldiers of Flannel”, identify themselves as patriotic Venezuelans. They blame Maduro’s incompetence for the exploding economic crisis that is pushing millions of Venezuelans into desperation. Though some would like to write off the incident as a parochial Latin American squabble, the drone-delivery of explosives is a growing global security threat that simply cannot be ignored.

The "Soldiers of Flannel" claimed credit for the drones that attacked Nicolas Maduro.
The “Soldiers of Flannel” claimed credit for the drones that attacked Nicolas Maduro.

Bolivarian Devolution

Though Saturday’s drama may seem remote to those outside Latin America, Venezuela is in the midst of an exploding humanitarian disaster. This is not hyperbole. Some 1.5 million Venezuelans have fled the hyperinflation and scarcity that has plagued their economy since 2014. Conditions are at the point that international humanitarian actors supporting affected Venezuelans in Brazil, Colombia, Ecuador, and elsewhere claim newborns in Syria have lower mortality rates than those in Venezuela. Once the richest nationality in Latin America, Venezuelans both at home and abroad suffer from malnutrition, crime, sexual exploitation, and human trafficking as the crisis — and their desperation — intensifies. Meanwhile, the Maduro regime increasingly relies on repression and violence to maintain control. A patronage system guarantees military and police loyalty but is coming under escalating stress from an inflation rate that may exceed 1 million percent by the end of the year.

At these rates, it is difficult to imagine Maduro will be able to sustain this system, particularly in the face of the rapid collapse of oil exports. For years, the state oil company, PDVSA, funded the socialist economy set up by Hugo Chavez; but as PDVSA demands for control of production grew to pay the rising costs of Chavismo, international oil companies began to cut their losses. Beginning with the American firms, the oil majors shut down their Venezuelan operations, taking their expertise and equipment with them and leaving a lasting impact on the economy, currency, and security of the country. Something will have to give in order for conditions to improve and Saturday’s drone strike suggests the security situation will further deteriorate long before the economy stabilizes.

Drones On Target

Saturday’s attack on Maduro, though of little significance in real terms, marks the first notable proliferation of non-state, drone-delivered explosives outside the Middle East. Though the attacked wounded seven members of the Bolivarian National Guard, Maduro was unhurt and he and the generals surrounding him responded stoically enough to preserve their machismo. What alarms security officials around the world about the incident however, is there is no real way to defend against this rapidly proliferating technology.

Drone technology has advanced by leaps and bounds in the last five years. Improvements in battery capability enabled this leap, driving down costs and giving smaller drones more range and power. Though state militaries were the early drivers of drone technology, they focused their research and development efforts on larger platforms that somewhat replicated capabilities of manned aircraft. Private hobbyists and commercial interests such as Amazon pushed demand for smaller devices and drove innovation faster than militaries were capable of doing. Not surprisingly, the commercial utility of drones as a delivery device has military implications as Mr. Maduro discovered on Saturday.

Maduro's security detail reacts to safeguard him from additional detonations.
Maduro’s security detail reacts to safeguard him from additional detonations.

Keeping up with technological advancement is not the only policy challenge drones represent. In most parts of the world, airspace is only regulated above 3000 feet above ground level (AGL). Below that level, there are very few regulations and almost no laws governing air traffic. Even in those instances where governments made steps to address this gap, enforcement remains an administrative and technical headache. There are very few requirements for registration or licensing, and that’s just the start. On the extreme end of the spectrum, traditional defenses against air attack, specifically fighter aircraft and surface to air missiles, are almost completely ineffective below 3000 feet AGL. This is especially true in urban environments. Though one of the drones that attacked Maduro was reportedly shot down by an alert sniper, it crashed with its deadly payload into a nearby apartment building, setting fire to the structure and forcing an evacuation. The incident highlights that even effective defenses may cause unintended harm.

Technological solutions are no more promising. Countermeasures range from systems that jam guidance inputs, to others that launch netting to capture drones, to trained birds of prey. Clearly the defense sector is struggling to establish a workable industry standard. Detection is a different problem that has more obvious solutions but integrating them with countermeasures and backing that up with effective legislation and enforcement is the biggest challenge of all. If there is a silver lining associated with the dramatic attack on Nicolas Maduro, it is that his misfortune may actually raise enough alarm at a high enough level to make a difference. When it comes to drone defense, the Soldiers of Flannel said it best: “…it’s only a question of time.”


Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC.

Thanks to Kirby Sanford for consulting on flight rules and airspace control measures. Kirby is the author of Bolivarian Devolution and Paraguay: Voting Away Freedom on The Affiliate Network.

Death of Brexit: Return from the Right

The 2016 Brexit referendum in the United Kingdom (UK) was the surprising outcome of a national plebiscite. Initially dismissed as a long shot by many political scientists, there is now a degree of consensus that the result reflects a delayed response to the effects of globalization in general and to the 2007-2009 Great Recession in particular. The problem is very real as large groups of blue-collar workers see their opportunities decreasing and their jobs moving to cheaper labour markets in Asia and elsewhere. As the dust settles on the referendum, the question remains whether Brexit is really the cure for the malaise that led to it or whether more sober voices in the United Kingdom will drive alternative solutions.

Project Fear Redux

In the campaign before the vote, the Remain argument relentlessly focused on the likely economic consequences of Brexit, arguing that living standards would fall and jobs would be lost as investment dried up. Brexit campaigners labelled this “Project Fear” and mocked the professional economists that issued warnings as “know-nothings”. For a time, it seemed the Brexiteers were right.

After Brexit day in June 2016, the United Kingdom’s economy continued to prosper and showed little evidence of damage other than an immediate 12-15% fall in the value of the British Pound relative to both the US Dollar and the Euro. In fact, in 2016 the UK’s economy remained one of the best performing of the G7 large Advanced Economies, growing at 1.8%. It was as if the ship had hit an iceberg but nothing had changed up on deck. Though Brexiteers continued to ridicule the “know-nothings”, by the end of 2017 a very different story was emerging.

The United Kingdom is now one of the slowest growing of the G7 Advanced Economies, likely to register only a 1.5% growth rate for 2017. Investment is down and inflation is now over 3%; the highest in the G7. Inflation adjusted wages and consumer confidence are also falling with particularly dramatic decreases in car sales, down over 12% year on year in October 2017 according to the Financial Times. As the threat of Brexit grows imminent, the International Monetary Fund is very clear about Brexit’s increasingly negative effects on the United Kingdom’s economy. More worrying, the British Government cut its own economic growth forecasts for 2018 to 2022 more heavily than it has for any other five-year period in the last 40 years. Private forecasts are also broadly of the same view.

It is now abundantly clear that the so called “know-nothings” were not so much wrong as simply guilty of underestimating the strong forward momentum of the British economy at the time. A sharp fall in the exchange rate following the June 2016 referendum, combined with the Bank of England’s accommodative decision to cut the UK Base Rate from 0.5% to 0.25%, certainly aided the economy’s short-lived momentum. If the central bank did this with the intention of softening the blow, it did not last long. Project Fear it seems, is making a comeback.

The Will of the People

At this point, avoiding Brexit will not be easy. Any reversal of Brexit depends upon a significant and sustained shift in public opinion. Without it, Parliament is highly unlikely to vote down the Government’s impending deal, due in late 2018, that will set the terms for the UK’s exit from the European Union (EU) in March 2019. The earlier deal with the EU in December 2017 provided proof—if it were required—that the UK is being out-negotiated by a much better prepared team in Brussels. Indeed, on all main points of agreement so far, the UK has accepted the EU’s demands; something many Brexit supporters are starting to see as a sign of the UK’s weak negotiating position.

brexit
British Prime Minister Teresa May meets with Jean-Claude Juncker, European Commission President at the EU headquarters in Brussels. Photo credit: https://www.voanews.com/a/eu-brexit-talk-next-phase/4154812.html

However, Britain’s poor negotiating performance in the halls of the European Commission in Brussels will not turn the tide alone. This will only happen when ordinary men and women begin to suffer from Brexit’s negative consequences. Given the way the economy is now slowing, it seems the average Briton is in for some very poor economic news over the course of 2018. In the initial referendum, 48.5% voted to remain in the EU but polls suggest the British are changing their minds. The most recent poll taken just before Christmas shows 53% now wish to remain in the EU, with a noticeable shift by middle and working class women concerned about potential impacts on jobs and family finances.

As this national change of heart accelerates in response to bad economic news, calls for a second referendum will become louder. The Government can and probably will ignore them initially but once the polls start showing 60% in support of a second referendum and/or a desire to stay in the EU, the dam will break. Just as “the will of the people” was used by the pro-Brexit media to bludgeon the current Government into a Brexit-at-any-cost policy, so too will public opinion embolden Parliament to stop the Government on this reckless path.

Different Solutions

Addressing the challenges of globalization, the Great Recession, and the loss of secure jobs for average to low-skilled workers remains a critical policy challenge for all Western governments. And whilst the populist spasm that resulted in Brexit is understandable, it is surely not the solution. The alternative to the low tax and small government mantra of right wing populism is likely to be a centre left agenda comprising more state intervention and investment in public services such as healthcare and education. Experimentation with more radical ideas such as a citizens’ basic income may also become more widespread, especially as artificial intelligence and other job destroying technology washes over the economy.

All this favours Jeremy Corbyn’s Labour Party, which is committed to a more radical, anti-globalization agenda than the current Brexit-supporting Tory Party. With the British anti-globalization fight thus championed from the left rather than the right, it is possible the same phenomenon could take place in the United States, reversing the rightward trend occurring in politics there since 2012. If events in the UK continue this way—a prospect which seems likely—the death of Brexit could mean a return from the right. This effect will be felt not just in London, but in Washington too, producing a global impact that will make an increasing number of British voters very proud indeed.


Adam Pharaoh is a former Auto (Volvo & GM) and Pharma (J&J) industry executive that now runs Pharaoh & Company SPRL, a consultancy on Strategy and Organisational challenges, mainly in Europe and Asia. He is a close observer of UK and EU politics and contributes regularly to debates in The Financial Times. He lives in Brussels.

For more on Brexit from The Affiliate Network, please see:

The Sky is not Falling on the European Union by Victor Angelo

The Spark to Redefine “Europe” by Nick Avila

With or Without the EU: Brexit and Security by Victor Perez-Sañudo

 

 

A Tale of Two Cities: Development in Latin America

Looking out upon the city from the top of a modern high-rise, one cannot help but note the contradiction. The urban sprawl of luxury apartments, malls, and cafés gives way to the eclectic but destitute clusters of favelas; the multi-colored and corrugated steel-roofed slums that dominate the periphery. The city is Rio de Janeiro, but it could easily be Lima, Peru, Buenos Aires, Argentina, or Bogotá, Colombia. This caricature of rich-meets-poor ambiguously describes nearly every major city in Latin America, a region in which a growing number of countries occupy the margin between developed and developing status.

The global trend of urban migration is particularly strong in Latin America, compounding development shortfalls for safe and adequate housing in capital cities. In Rio, for instance, 1.5 million people live in the favelas—about 24% of the population. There are over 1000 of these neighborhoods in the city, the majority of which are illegally constructed. Brazil is the region’s largest country, economy, and the presumptive regional hegemon, but like others in the region they struggle to spread the benefits of growth to all socioeconomic classes. Nearing the milestone of developed status, Latin America is starting to question exactly what developed truly means.

Development by the Numbers

The World Bank sorts countries of the world into four income categories: low income, lower middle-income, upper middle-income, and high-income countries. Half of the world’s countries fall into the two middle-income categories, which contain 70% of the world’s population and 72% of the world’s poor. All low-income and middle-income nations are eligible for Official Development Assistance (ODA)—the collective non-military aid, grants, and financial instruments intended to promote economic development and welfare—which totaled $142.6 billion dollars in 2016.

Once middle-income nations reach and maintain a per capita Gross National Income (GNI) of $12,745 USD or greater for three consecutive years (2013 numbers), they “graduate” from upper middle-income status to high income status, rendering them ineligible for ODA. Latin American ODA totaled nearly $5 billion dollars in 2016, but sable growth within the region over the last 25 years places countries such as Brazil, Argentina, and Mexico—those with large populations and high inequality—on a path to graduation from ODA eligibility.

development
The projected GNI growth (2015) will cause the majority of Latin American middle-income countries to graduate and lose ODA by the year 2030, based on OECD projections. Photo credit: https://www.oecd.org/dac/financing-sustainable-development/ODA-graduation.pdf.

The body that determines these categories is the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). The DAC, in conjunction with the International Monetary Fund and the World Bank, meets every two to three years to refine the list of eligible aid recipients. Middle-income countries constitute 90% of Latin America, and by the year 2030, 80% of the region will no longer be eligible for ODA.

The first wave of this phenomenon hit the region in August when Chile, Uruguay, and Costa Rica graduated to high-income country status. The graduations come after a period of GDP growth  in the region averaging 3% between 2000 and 2015. In countries like Brazil and Argentina, next on the list of prospective graduates, poverty has decreased drastically since the turn of the century. According to the World Bank data, poverty in Brazil decreased from 12.3% in 2002 to 3.7% in 2014. Argentina’s poverty level fell from 14% to 1.7% over the same period.

But these indicators only reveal part of the story. The World Bank international poverty line is drawn at $1.90 dollars of income per day, or about $685 dollars per year. Inequality figures in the region are the highest in the world. The 2016 Gini Index—the measure of statistical indicators that assign a value to inequality—show Latin America occupying 13 of the top 25 spots for highest inequality in the world. The top 20% of the population still holds 57% of the wealth and it has the fastest growing number of billionaires in the world, numbering 151 in 2015, a 38% increase over the previous year. Given that context, reaching the $685 dollars per year milestone seems to leave much room for improvement.

Graduate to Cooperate

The steady loss of ODA will be Latin America’s next development challenge, and the millionaires and billionaires will not be the ones feeling the impact. Chilean government officials have already been vocal in their objection to the graduation process, arguing that the loss of ODA comes at the most critical point for developing nations. They contend that the process is one-dimensional and does not reflect the complex set of issues that countries in this category face in sustaining development. This is true, but many of the challenges come from within Latin American governments and cannot be solved with ODA. Tax systems are archaic and welfare programs, especially in a non-welfare state like Chile, are limited or not sufficient to bridge the gap of inequality.

development cooperation
ODA is used on a wide range of development themes. Chile relies on development funds for programs related to climate change, the effects of which are more pronounced in the Patagonia region of the south. Photo credit: https://visualizingclimatechange.wordpress.com.

The real implications for ODA graduation are unknown. The OECD lacks the requisite data to be able to predict how ODA graduation affects future development. Additionally, development assistance varies from year to year, is given at the complete discretion of the donor countries, and is subject to global foreign policy trends. A retraction in globalism, increases in terrorism and security concerns, and global migration and refugee flow will continue to influence the distribution of aid. As countries in the global south continue their efforts in development, relying on ODA cannot be the only strategy to sustain development.

One opportunity lies in increasing South-South Cooperation, characterized as a framework of collaboration across multiple domains between countries of the global south. South-South Cooperation focuses on the transfer of knowledge, technical expertise, and human capital—all critical components of development. This collaboration already exists in the region, but the programs are few, the level of institutionalization is low, and domestic and regional politics often hamper cooperation efforts. Unlike the regional bodies (like MERCOSUR and UNASUR) that have high levels of institutionalization with low output, South-South Cooperation is accomplished through existing, state-level institutions like a country’s Ministry of Foreign Affairs. This allows them to engage in programs on a limited or enduring timeline, bilaterally or multilaterally, at both the national and sub-national levels.

Latin America—and the global south in general—must seek internal solutions for development. They will also need to find a way to better incorporate NGOs and the private sector, who have an increasingly important role to play in the global system. Regional economic leaders, such as Brazil, Chile, and Mexico, can accelerate the pace of regional cooperation initiatives and counter the loss of ODA over the next decade. Bureaucratic inefficiency and corruption make reforms difficult, but South-South Cooperation provides an existing framework and  support from the United Nations Office of South-South Cooperation (UNOSSC). A failure to reform and generate intra-regional development programs may not slow economic  growth, but it will threaten future social and political stability and undermine long-term regional security.


The views expressed in this article are those of the authors and do not reflect the views of any  government or private institution.

Major Patrick “TISL” Parrish is the Blogmaster and editor for the Affiliate Network. He is a US Air Force Officer and A-10C Weapons Instructor Pilot with combat tours in Afghanistan and Libya. He is currently serving as an Olmsted Scholar in Santiago, Chile.