Global stocks plunge amid fears of a new financial crisis

Barry Grey

Stock markets in the US and around the world ended the week with massive selloffs, rocked by fears that the slowdown in China and plunging oil and commodity prices will trigger a new financial crisis on the order of the 2007-2008 disaster.

Another sharp fall on Chinese markets, with the Shanghai Composite Index dropping 3.55 percent, followed by a 6 percent fall in oil prices to $29 a barrel, set off a wave of panic selling. The mood was summed up by the chief strategist at Federated Investors, who said, “Investors are scared to death, and the fact that it’s happening at the beginning of the year has some historical significance.”

A major factor in the Chinese selloff was concern that Beijing will report its weakest full-year growth figure in 25 years on Tuesday.

On Friday, Walmart announced that it will close 269 stores, 154 of them in the US, and eliminate 16,000 jobs. The Walmart statement, coming on the heels of multi-store closure announcements by Macy’s and Sears-Kmart, highlighted the worsening slowdown in the real economy globally and in the US that underlies the turbulence on stock and bond markets. It also reflected the reality of falling wages and mounting income insecurity affecting broad layers of the US population.

Also this week, BP announced 4,000 layoffs, pointing to the increasingly depressed state of the energy sector.

Friday’s selloff, with the EURO STOXX/50 index down 2.37 percent and all of the major US indexes lower by well over 2 percent, caps off the worst-ever yearly opening for Wall Street. The Dow Jones Industrial Average, which lost 391 points on Friday to crash through the 16,000-point level, has fallen by 8.24 percent so far this year. The Standard & Poor’s 500 index has fallen by more than 8 percent and the Nasdaq has lost more than 10 percent.

All three US indexes are officially in correction, having lost more than 10 percent from their recent highs. The Chinese stock indexes are officially in bear market territory, having shed more than 20 percent of their value. In just the first two weeks of the new year, global stock markets have lost $5.7 trillion in value.

The price of oil, a barometer of global economic activity, is down 20 percent so far this year. The first two weeks of 2016 have seen the steepest two-week decline for oil since the 2008 financial crisis.

Going into a three-day weekend, with the markets closed Monday for Martin Luther King, Jr. Day, there will be intensive behind-the-scenes discussions between Treasury and Federal Reserve officials and the major Wall Street banks and hedge funds over the spiraling crisis. The White House on Friday took the unusual step of commenting on market movements in an attempt to reassure investors. White House spokesman Josh Earnest said officials were closely watching market movements and their potential impact on the economy.

Since the financial crash of 2008, the world capitalist economy has been propped up by rapid growth in China and a number of emerging market countries and a huge run-up in stock prices, all of which has been engineered on the basis of an immense growth of debt. The Federal Reserve and the central banks of Europe and Asia have pumped trillions of dollars into the financial markets, fueling a further increase in financial parasitism and speculation. This, combined with ruthless austerity against the working class, has formed the basis for an unprecedented enrichment of the world’s rich and super-rich and a further transfer of wealth from the bottom to the top.

But in the US and the other older industrialized countries, there has been a sharp decline in business investment in the productive forces. Instead, the vast profits of banks and corporations have gone largely to parasitic activities such as stock buybacks, dividend increases and mergers and acquisitions.

Earlier this week, Albert Edwards, a strategist at Societe Generale, told an investment conference in London that global economic developments would “push the US back into recession.” Predicting that there will be a new financial crisis “every bit as bad as 2008-2009,” he noted, “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks.”

Now, with China slowing rapidly, Brazil and Russia in deep recessions, and the other emerging market economies sinking under the impact of falling commodity prices and rising debt, the inherently unstable financial house of cards is beginning to collapse.

A measure of the growth of speculation is the fact that since 2009, the US junk bond market has increased by some 80 percent, to $1.3 trillion. The market for energy junk bonds has increased even faster, up 180 percent to more than $200 billion. In recent weeks, as oil and other commodities have continued to fall and China has continued to slow, the junk bond market has shown signs of imploding, with prices dropping sharply and a number of energy junk bond mutual funds collapsing.

Larry Fink, the CEO of Blackrock, the world’s biggest private investment fund, told the US cable channel CNBC Friday that the market crisis was likely to worsen. “I actually believe there’s not enough blood in the streets,” he said, adding that “you’re going to start seeing more layoffs in the middle part of the first quarter, definitely the second quarter…”

A battery of economic data released Friday indicated that the US economy is sharply decelerating. The Federal Reserve reported that industrial production fell 0.4 percent in December, primarily as a result of cutbacks in utilities and mining output, after declining 0.9 percent in November. Industrial production fell at an annual rate of 3.4 percent in the fourth quarter of 2015.

Last week, the Institute for Supply Management released its manufacturing index, showing a decline to 48.2 in December, the lowest reading since December 2009. Any number below 50 signals a contraction.

The New York Fed this week released its Empire State Manufacturing Survey index, showing a decline to minus 19.37 in January from minus 6.21 in December. “Business activity declined for New York manufacturing firms more sharply than at any time since the 2007-2009 recession, according to the January 2016 survey,” the New York Fed said.

These reports confirm the existence of an industrial recession in the US. And this week, Michael Ward, chief executive of the CSX railway, said in a television interview that the country was in the grips of a “freight recession,” with coal and other commodity shipments falling precipitously.

The Commerce Department reported on Friday that US retail sales fell 0.1 percent in December from the previous month. For all of 2015, retail sales rose just 2.1 percent, the weakest reading since 2009, after advancing 3.9 percent in 2014. The National Retail Federation separately estimated that holiday sales rose just 3 percent from the previous year, far below its projection of 3.7 percent growth.

The Commerce Department also reported that business inventories fell 0.2 percent in November, the biggest drop since September 2011.

The Labor Department released its Producer Price Index, showing a decline of 0.2 percent last month. Pointing to deflationary forces in the US economy, producer prices fell 1.0 percent in 2015, the weakest figure since the series began in 2010.

As a result of the weak data on the US economy, JPMorgan Chase cut its fourth quarter 2015 estimate for growth of the gross domestic product from a 1.0 percent annual rate to a mere 0.1 percent pace. Barclays trimmed its forecast by four-tenths of a percentage point to a 0.3 percent rate.

The sharp intensification of the economic crisis will further inflame geopolitical tensions and the drive of the US and other imperialist powers to war. At the same time, it will stoke internal social tensions that are already driving the working class into struggle in the US and internationally against austerity and social inequality.

The emergence of a major economic crisis takes place against the backdrop of a critical presidential election in the US, which has already revealed the growing alienation of the working population from the entire political system and the further lurch of the two big-business parties to the right.

Forecast 2016: Indian Ocean Politics and Security

Vijay Sakhuja


Continuity and change’, ‘continuity and no change’ and ‘new challenges and opportunities’ are important formulations for any geopolitical and geostrategic forecasting. These help analysts to understand events to develop trend lines. In the Indian Ocean, at least four issues would merit attention during 2016.

First, the primacy of the Indian Ocean Rim Association (IORA) in the regional political, economic and security discourse will continue. Indonesia took over the chairmanship from Australia in 2015 and South Africa would assume charge in 2017. The Bengaluru Declaration (2011), the Gurgaon Communique (2012) and the Perth Communiques (2013 and 2014) noted with concern the maritime security environment in the Indian Ocean, and called upon regional countries to cooperate.

The other important multilateral forum, i.e. the Indian Ocean Naval Symposium (IONS), addressed the regional security agenda by proactively engaging in discussions on piracy in the Gulf of Aden. These multilateral organisations will continue to lead and drive the regional maritime security agenda of the region.

The rise in piracy in the Gulf of Aden led to the promulgation of High Risk Area (HRA) stretching from the Somali coast to as far as 1,400 nautical miles towards Maldives, including the west coast of India. Several affected countries argued that since piracy in the Gulf of Aden had declined from sixteen incidents in 2012 to two incidents in 2014, the HRA label be withdrawn. It was only in 2015 that the area covered by the HRA was reduced but the issue still remains. 

Another significant development in the Indian Ocean is that of Seychelles taking over the Chairmanship of the Contact Group on Piracy off the Coast of Somalia (CGPCS) on 1 January 2016 with a near clean piracy ‘slate’. Seychelles is expected to focus its attention on Illegal, Unregulated and Unreported (IUU) fishing by foreign vessels in the Indian Ocean. It will also provide Seychelles a unique opportunity to invest its politico-diplomatic capital to highlight the issue in Somali waters, given that this was the very reason that prompted the Somali fishermen to stand up to fight foreign fishing vessels and turn into pirates. Also, IUU can potentially undermine the durability of what has been achieved in the Gulf of Aden by the international community over the last five years.

The Indian Ocean also witnessed the growth of Private Maritime Security Companies (PMSC), which emerged as a response to the rising graph of piracy in the Gulf of Aden. These quickly turned into an attractive counter-measure option and triggered a huge demand. As of 2013, nearly 140 security firms reportedly operated in the Northern Indian Ocean. PMSC vessels carried weapons and ammunition but soon came under scrutiny and suspicion after two harrowing incidents in India. In the case of Enrica Lexie, the Italian marines embarked onboard to provide security and opened fire on an Indian vessel off the coast of Kerala, killing two fishermen, which led to a severe diplomatic exchange including the case being brought before the International Tribunal for the Law of the Sea (ITLOS). In the second case, 'Seaman Guard Ohio', a ship owned by a US-based private company was intercepted while carrying weapons in India's contiguous waters and the crew has been convicted. This too may result in a diplomatic standoff between the US and India.

Second, Blue Economy will continue to be high on the agenda of several Indian Ocean countries individually or collectively to harness the seas in a sustainable manner. Significantly, several political leaders of IORA countries have endorsed the concept and states are keen to harness the potential and engage in sustainable development of living and non-living resources of the seas to advance economic growth and enhance human security.

Given that the Indian Ocean is a large sea space with a number of seas and bays, a pan-Indian Ocean approach to address collectively the importance of Blue Economy will be on the agenda of the IORA. This issue is expected to percolate into other groupings and sub-groupings such as the South Asian Association for Regional Cooperation (SAARC), Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), Association of Southeast Asian Nations (ASEAN), Gulf Cooperation Council (GCC) and African Union (AU). Several countries of the above groupings and sub-groupings have already endorsed and internalised Blue Economy in policy, bilateral relations and international transactions.

A number of typologies for the development of Blue Economy are plausible. These are ‘India-Maldives-Sri Lanka-Seychelles-Mauritius’, ‘India-Pakistan-Oman-Iran’, ‘India-Bangladesh-Myanmar’, ‘India-Sri Lanka-Indonesia’ as also among the IORA-SAARC-BIMSTEC, ASEAN and AU. This would have to be led by the IORA.

Third, the Indian Ocean is witnessing a silent yet aggressive naval build-up, which features modern and sophisticated naval hardware - aircraft carriers, submarines, expeditionary platforms, destroyers and frigates and missile-capable craft to conduct complex operations. The Indian Navy is a formidable force and nearly 48 warships are under construction, which include one aircraft carrier, one nuclear and six conventional submarines, and a variety of destroyers, frigates and corvettes.

These trends are indicative of the extended strategic reach of the Indian Navy from the littorals deep into the high seas.

The Pakistani Navy will continue to be a ‘lean and mean’ force focused on sea denial capability. The Iranian Navy is the most powerful in the Gulf region and would enjoy numerical and firepower superiority over its neighbours. The South African Navy has identified itself as the ‘Guardian of the Cape Sea Route’, and would focus on low-end maritime threats and challenges and disaster response at sea. Australia’s interests span the Pacific and the Indian Ocean and the government has plans to plans to spend nearly US$89 billion over the next 20 years to acquire new ships and submarines. Likewise, the Indonesian Navy plans to have three operational fleets comprising of a strike force, a patrol force, a Marine Corps component and other supporting elements. As far as the smaller countries are concerned, their naval acquisitions would be limited to coastal security.

The security dynamics in the Indian Ocean also feature naval nuclear capability involving India and Pakistan. The Indian Navy operates one nuclear-propelled submarine (INS Chakra on lease from Russia) and another indigenously built nuclear-propelled submarine (INS Arihant) would be ready for operations in 2016. 

There are plans to build two more nuclear submarines fitted with submarine-launched ballistic missiles and fit short-range ballistic missiles on warships. In the case of Pakistan, it has chosen to convert conventional submarines and warships and fit these with nuclear-tipped cruise missiles, which will help it to obtain notional parity to overcome conventional naval asymmetry as also a sense of assurance against the large Indian Navy.

Fourth, the presence of China in the Indian Ocean has received mixed political, economic and security reactions; while some see China as an opportunity, for others it is a challenge. As far as opportunities are concerned, the 21st century Maritime Silk Road (MSR) initiative would help these countries develop maritime infrastructure that is critical for economic growth. On the other hand, these projects are seen as dual-use facilities and part of the Chinese naval strategy for the Indian Ocean wherein these facilities are meant to support PLA Navy’s future operations in the Indian Ocean. In that context, China has successfully obtained access to the port of Djibouti at the mouth of the Red Sea. This would help China to forward deploy its forces in the Indian Ocean. 

Further, the Djibouti base will also serve Chinese naval engagements in the Mediterranean Sea in support of the MSR, safety of shipping, and countering piracy. Interestingly, China, through this base, can support its strategic engagements with Russia. It will be useful to recall that the Chinese and the Russian navies held joint naval exercises -  ‘Mediterranean Sea Cooperation-2015’ - in the Mediterranean Sea to enhance naval interoperability and “jointly deal with maritime security threats” but assured that the exercises were not targeted against any country.

Chinese warships are now a common sight in the Indian Ocean for a number of tasks i.e. counter-piracy operations and non-combatant evacuation operations such as those in Yemen and Libya. It is fair to argue that the 2015 Defence White Paper and the 21st century MSR provide the necessary political and strategic rationale for the PLA Navy to be deployed in the Indian Ocean. In fact the White paper is a carte blanche for the Chinese naval planners to conceptualise expansive strategic geography in which the PLA Navy is expected to operate in the future in support of national interests.

Finally, the Indian Ocean security environment is expected to remain complex and acquisition by regional countries would continue unabated. Chinese naval interests and activities in the Indian Ocean will expand through infrastructure development, military sales, naval operations and formal access to other facilities other than at Djibouti. The sighting and presence of Chinese submarines should not come as a surprise as was the case in 2014 and 2015. At the multilateral level, in 2016, the relevance of IORA and IONS will witness ‘continuity & no change’.

Forecast 2016: On China-Pakistan Relations

Ghulam Ali

It appears that the recently announced China-Pakistan Economic Corridor (CPEC) will remain at the centre of Sino-Pakistan ties during 2016, and even beyond. The CPEC, signed in 2013, got a boost in April 2015 during Chinese President Xi Jinping’s Pakistan visit, where he announced the allocation of US$46 billion for its completion. This is the largest investment China has committed to another country, and the largest Pakistan has ever received.

According to some informed quarters, China may add to this volume if the implementation of the CPEC moves forward smoothly on the Pakistani side. The corridor intends to connect China’s western region with Pakistan's Gwadar Port via a network of roads, rail and fiber optics.

The CPEC is a part of Xi’s grand strategic concept of “One Belt One Road” (OBOR) to connect with over 60 countries and regions. Under OBOR, besides CPEC, China has initiated other projects such as the Bangladesh, China, India, and Myanmar (BCIM) Corridor; Silk Route in Central Asia; and the 21st Century Maritime Silk Route. But the CPEC is regarded as the 'flagship' project among them due to various reasons.

It is the only corridor that involves just one other country, Pakistan, and with whom China has a 'trust'-based relationship. Other corridors consist of different countries with varying degrees of relations with China. Moreover, the CPEC can provide China an access to the Indian Ocean by reducing both time and distance. This route is not only shorter in distance but avoids the Malacca Strait and the vast Indian Ocean dominated by rival Indian and US navies.

For Pakistan, the CPEC can bring large-scale investments in the energy sector, infrastructure building, and industry, giving a boost to its moribund economy. Once Pakistan is prepared, China may also move some of its industry and bring Pakistan into its chain of production. Above all, the CPEC will increase China’s stakes in Pakistan which will leverage Islamabad in regional affairs. It is this backdrop that demonstrates the centrality of the CPEC in future Sino-Pak relations.

From the construction point of view, the corridor has been divided into short, mid and long-term projects. In 2016, progress or completion of some projects for infrastructure development and energy are expected. Actually, it is the top priority of the incumbent government to finish some projects at the earliest to show its performance to the public.

According to the understanding that exists between the two countries, Chinese state companies will build several CPEC-related projects. 2016 will thus witness a number of Chinese engineers, technicians and workers coming to Pakistan. There are already over 120 companies and 1,20,00 technicians engaged in different projects in Pakistan. This increased number of Chinese nationals in Pakistan will add to two-way exchanges. At the same time, however, it will also raise the question of their safety and security. Pakistan has established a special force of 1,20,00 men under the army to provide security to Chinese expatriates and guard their construction work. But given the law and order situation in the country, these measures appear insufficient. Lack of sufficient security may restrict the free moment of Chinese workers and tourists.

While negotiating the CPEC, China and Pakistan have taken into consideration the issue of low trade and economic ties and limited people-to-people contact. Both sides have realised that one of the main reasons for Pakistan’s bad economic and industrial performance in recent years is its severe energy shortage. Due to this, China has allocated a bulk of its funds (roughly US$33 billion out of the total US$6 billion) for the energy sector. In 2016, some energy projects built with China’s assistance are likely to start production. This will create a positive impact on the overall economic development of Pakistan.

Similarly, both countries have taken steps to promote two-way exchanges. China has increased the number of scholarships for Pakistani students and sponsored visits of people from different walks of life. Pakistan in return has promoted Chinese language in quite a short period of time. As result, Chinese visitors and businessmen can be seen in large numbers in the major cities. This trend can also be measured from the fact that two-way direct flights have risen from four to eight per week and are likely to increase. It can thus be inferred that bilateral trade and people-to-people contact will further increase in 2016.

Importantly, there is no significant defence-related deal in the CPEC. However, this does not mean that the CPEC has no strategic importance. Undoubtedly, infrastructure and the port developed for economic purposes could be equally useful for strategic goals if and when required. China seems to have more confidence in the Pakistani army’s ability to complete projects: Frontier Works Organisation (FWO), a branch of the Pakistan army involved in construction work, has been assigned to build roads, highways and bridges of strategic importance.

The two countries have recently signed a US$4-5 billion deal under which China will provide eight submarines to Pakistan, four to be built in China and the remaining in Pakistan. Another expected defence-related outcome of the year is the commercialisation of the Sino-Pak jointly built JF-17 thunder aircraft. According to Pakistani military sources, Malaysia and Sri Lanka have shown interest in its purchase. If finalised, the deal will pay huge dividends and will give a new boost to defence cooperation especially by encouraging more joint ventures. China could also showcase its joint production with Pakistan to other third world countries as a model.

Besides these mega defence projects, an increase in the number of high profile military visits, training programmes and joint military exercises are expected.

China will continue to meet Pakistan’s defence needs by providing large-scale conventional weapons. Taking these developments into account, it is expected that defence relations will not only remain solid but will deepen further.

Like in the past, during 2016 as well, Pakistan and China will continue the tradition of coordinating their policies on regional and international issues. Key areas of such coordination could be, but not limited to, terrorism, especially in Xinjiang and Afghanistan, security issues in West Asia, and India-Pakistan relations. However, parallel to this, it appears that China will also develop its policies in these areas independently of Pakistan - a trend that has started recently and will gain momentum through the year.

It is also likely that China, without effecting its 'special' relationship status with Pakistan, will continue its relative neutrality on the Kashmir dispute, putting emphasis on India and Pakistan settleling it through peaceful means. Apparently, under this status quo policy, China disregarded Indian concerns on the CEPC passing through this 'disputed' territory.

The chief irritant in Sino-Pak relations in the recent past has been sanctuaries to Uyghur separatists in Pakistan’s tribal areas, and some Pakistan-based militant groups' support to them. This issue is likely to become less stressful in the current year. Pakistan’s military operation against militants in tribal areas has reduced the menace of terrorism while Beijing seems satisfied with Islamabad’s measures.

China however is dismayed at the controversy in Pakistan over the route of the CPEC. Some smaller political parties from Khyber Pakhtunkhwa and Baluchistan insist upon the western route that will pass through their provinces. On the other hand, the ruling Pakistan Muslim League (N) seems determined to build the eastern route which mainly passes through Punjab - its political constituency. Both sides have not shown any flexibility in their approaches. It is well over two years now since the announcement of the CPEC but no consensus has been reached. Some analysts term it this a much bigger challenge than security issues. There are fewer chances of a comprehensive settlement of the issue, which will affect the pace of the development work during 2016.

These above mentioned trends could be affected by certain factors. For example, an early consensus on the route controversy of the CPEC, an improved law and order situation in Pakistan, improved relations with Afghanistan and India  could all have a positive impact on the CPEC, and through it, on the Sino-Pak relationship.

Despite the irritants, the relationship between China and Pakistan will not only remain steadfast but will further deepen in 2016 and will be centered on the CPEC.

Forecast 2016: Difficult Days Ahead for Washington

Chintamani Mahapatra


The Obama administration faced many thorny challenges in 2015, and none of those are likely to fade away in 2016. While foreign policy challenges encountered by the US are global, the most critical of those come from a region that is very much part of India’s strategic environment.

To start with, the decision of the Obama administration to fully implement its goal to end its military operations in Afghanistan witnessed a turnaround in the absence of a credible peace process involving the Taliban. The current efforts towards the same will almost certainly fail, unless some miraculous developments take place.

The dynamic Indo-Pak hostility, rising divergences between the Afghan government and the Pakistani establishment, resurgence of the Afghan Taliban, and spread of IS influence into the Af-Pak region will continue to obstruct the US aspiration to make a quiet exit from Afghanistan.

Nevertheless, US military involvement in Afghanistan will progressively thin down, enlarging the political abyss between the US and Pakistan. While the White House and the US State Department will struggle to maintain cordial ties with Pakistan as long as the US troops remain in Afghanistan, the executive-legislative tug of war will increase and the massive US assistance to Pakistan will keep dwindling in the coming months. As Pakistan's chances of severing ties with terrorist organisations appear dodgy and the possibility of China enhancing its economic footprint in Pakistan seems plausible, the trust deficit between Washington and Islamabad is bound to mount. The steady growth of Indo-US strategic cooperation with regular military exercises and advanced arms trade will also impact the state of US-Pakistan ties.

Significantly, the US, China, Pakistan and Afghanistan have begun their quadrilateral cooperation to address the Afghan situation. India is out of this loop. This, precisely, is going to weigh down the US effort of peace-making in Afghanistan. Pakistan’s nightmare is a stronger Indian influence in Afghanistan, and it vetoes an Indian role in peace-making. After so much investment in nation-building activities in Afghanistan, can India afford to allow Pakistan to re-design its strategic depth in that country? Can India really trust the above-mentioned quadrilateral and buy the outcome of their deliberations, even while remaining a bystander to a peace process in its immediate neighbourhood?

The bigger challenge to US engagement beyond South Asia comes from the knotty precariousness in the West Asian strategic scene. The Obama administration withdrew all US troops from Iraq and left a power vacuum that was filled by the IS. While President Obama stopped using the term “global war on terror,” promised to engage with the Islamic world with constructive cooperation, and terminated military operations in Iraq, the end result turned out to be more perilous. The IS declared a caliphate, ran civil administration, sold oil in the international market, beheaded its opponents, and in a way, provoked the US to return to the battle fields of the region. President Obama did practically that, while repeatedly promising not to put boots on the grounds. He bombarded IS facilities from the sky, sent some troops to train Iraqi soldiers, and now, US Special Forces are also selectively engaging in combat.

The expectation that the entry of the Russians and the Iranians to wage war against the IS would be of great benefit were belied in 2015. The Russians are more interested in protecting the Assad regime than combating IS. In the meantime, the US began to complain that Russian planes were also hitting anti-Assad, pro-Western rebels. While Iran is deeply involved in Iraq and is reportedly training, aiding and equipping the private Iraqi militias to take on the IS, Tehran does not coordinate its operations with the US forces. The US backing of Saudi military intervention in Yemen and killings of Tehran-supported Houthi rebels have contributed to more US-Iranian hostility.

In the meantime, the signature achievement of the Obama administration - the Iran nuclear deal - is under stress. It has annoyed the Saudis and angered the Israelis. The other GCC countries have paid lip service to the deal, but privately appear quite unhappy. Besides the Shia-Sunni divide currently engulfing the West Asian region, the Persian-Arab cultural conflict is also aggressively surfacing. Arab countries are increasingly using the term 'Arabian Gulf' instead of 'Persian Gulf' and Iranians think that it is an affront to their ancient history.

All these developments have contributed to the plight of the US Middle East policy, although critics partially blame US policy for the current crisis in the region. The US has lost its grip over the developments in the region, even as the civil wars in Syria, Yemen and Libya are ravaging on.  Anti-Americanism is at its height among the Shias and Sunnis, Arabs and the Persians, and the most trusted ally, Israel, also appears to have lost faith in the Obama administration for its handling of the Iran nuclear deal. The constant depreciation of energy prices has negatively affected shale gas producers in the US as well. It is very unlikely that the economic crisis, social instability and the political upheavals or even terrorism in West Asia would be satisfactorily handled in this region. American hegemony in West Asia, already facing trouble, will have no respite in 2016.

Developments in the Asia Pacific are no less exigent to US power.

North Korean nuclear obstinacy and Chinese muscle-flexing in the South China Sea raise questions of US credibility among its allies. The competition between the US-led TPP and the Chinese-led RCEP, Chinese defiance of US calls for multilateral dispute resolution in the South China Sea, Chinese resistance to the movement of US ships or surveillance planes close to islands reclaimed by China, the single-minded construction of potential military facilities by Beijing in the disputed islands of this sea and several other similar developments indicate that Obama’s strategy of a “pivot to Asia” is little more than gesturing.

In 2016, US' Asian allies such as the Philippines, Australia, Japan and South Korea will expect it to behave more robustly vis-à-vis China. Deployment of ships, flying of bombers, more frequent surveillance, selling military equipment and reiterating US commitment to the security of its allies will not be considered enough. All these actions by the US have hardly altered Chinese policy or behaviour. Nor have threats and sanctions brought North Korea to its knees. As the EAS, ARF and APEC have proven powerless to manage an assertive China and adamant North Korea, the US may look for alternative methods to deal with provocations in this region in 2016.

The US preoccupation with the unprecedented chaos in the Middle East/West Asia, domestic political polarisation, persistent economic recession in the world and the election year in the US will constrain the Obama administration from taking tough measures abroad. As such, President Obama has tasted the bitterness of some of his liberal approaches. First, he drew a red line for the Assad regime on the issue of use of chemical weapons and fell short of carrying out the promised response.

Second, he wanted to reset relations with Russia and found that US-Russia relations have deteriorated further. Third, the Budapest Pact promised Ukraine territorial integrity in exchange for its surrender of nuclear weapons. But the US could do precious little when Russia annexed Crimea. 

Fourth, critics hold President Obama responsible for continuing violence in Libya, mishandling the Arab Spring, and the inability to overthrow the Assad regime. Fifth, two key US allies - Israel and Saudi Arabia - feel estranged in the wake of the Iran nuclear deal, and yet there are still there no signs of Iran refraining from missile tests, or supporting  alleged terrorists, or providing muscular support to the Assad regime. 

Is there any possibility of President Obama taking appropriate measures to answer his critics? Can he stabilise Libya? Can he bring an end to the Yemeni and Syrian civil wars? Can he get Iran to abide by the nuclear agreement it negotiated with the P5+1? Can he stop the Saudi-Iranian regional Cold War? Can he improve the image of the US in this region? Can he persuade or pressurise China to vacate the occupied islands in the South China Sea? Can he coerce China to withdraw its declaration of an Air Defense Identification Zone? Can he end the US military presence in Afghanistan even after seeing the consequences of total US withdrawal from Iraq?

There is hardly any time for Obama to do so much. Nevertheless Obama has not done everything wrong. In the complex strategic landscape of the post-9/11 era, we have all witnessed the empowerment of non-state-actors. Modern technology has proven to be both a boon and curse. No superpower can flex its muscles and use all its abilities to control, direct and shape global events. Even then President Obama’s diplomatic success in the Paris Climate Change Conference, in roping in Russia and China to strike a nuclear deal with Iran, in opening a new chapter in US relations with India in the post-Devyani Khobragade episode, are no mean achievements. In the last year of his office, President Obama will certainly try to build on his successes.

Messi is an Extraterrestrial

Ceasar Chelala

By winning for a fifth time FIFA’s 2015 Ballon d’Or Messi has confirmed what is now widely known: he is, without any doubt, the best soccer player in the world.

What explains Messi’s unique abilities and that he became the world’s best player in the world? And that he continues to break records and win awards? Jose Delbo, a 72 year-old Argentinean fan of Messi who follows every game from his home in Florida, told me recently, “I have never before been so moved seeing a player’s game as I am so now with Messi. After some of his beautiful plays I almost feel like crying.”

Many claim that Messi is the result of Pep Guardiola’s teachings in Barcelona. They seem to forget that as a child, in Argentina, Messi was already a brilliant player. Ernesto Vecchio, a coach from his youth, said, “As a player, he is very similar now to how he was as a youngster.” He added, “He decides in milliseconds what he is going to do with the ball at his feet.”

His exceptional qualities as a player made him the object even of medical studies, trying to find clues to his unique talent. Because of his spectacular speed and brilliance in making decisions, how Messi’s brain works is now being studied by a Dutch physician, Pieter Medendorp, of Radboud University in Nijmegen. Dr. Medendorp hopes to learn “how people make split-second decisions and know how to prioritize.”

Dr. Medendorp is fascinated by how people make quick decisions, particularly when moving. It is Messi’s ability to concentrate opponents in front of him and then almost effortlessly weave through them that particularly interests Dr. Medendorp. “In the field,” Dr. Medendorp noted, “Messi knows where to find the [other players] and then decide not only how to escape from a marking or where to go but also what to do with the ball.”

The retired Brazilian soccer player Pelé said, “I would love to play with Lionel Messi. But Messi is an incomplete player because he cannot use his head.” That criticism opinion is not shared by Argentinean Maradona, who said that Messi “is at a select level, being the best in the world and a star in Barcelona.”

The best explanation, however, may be an article written by the Argentine journalist Hernán Casciari, published in his blog and ironically titled “Messi is a dog.”

Casciari -who doesn’t hide his admiration for Messi- tells how, after watching several of Messi’s goals on YouTube he realized that Messi plays as if in a trance, hypnotized.

His only wish is to see the ball in the opposing team’s goal. He writes, “We must look well into his eyes to understand this: he looks cross-eyed at the ball, as if reading an out-of-focus subtitle; he focuses on it and does not lose sight of it even if they knife him.

“Where had I seen that look before? In whom? I knew that gesture of supreme introspection. I pressed the pause key in the video. I zoomed in Messi’s eyes. And then I remembered it: those were the eyes of ‘Totín’ when he became crazy for the sponge.

“I had a dog in childhood, which was called ‘Totín’. Nothing moved him. He wasn’t a smart dog. Thieves came in and he just watched them carry the TV. The buzzer sounded and he didn’t hear it. However, when someone [my mother, my sister, myself] grabbed a sponge—a particular yellow sponge for washing dishes—Totín became mad. He wanted this sponge more than anything in the world; he wished with all his heart to take this yellow rectangle to the doghouse”, Casciari wrote.

“I showed it to him holding it in my right hand and he focused on it. I moved the sponge from one side to the other and he never stopped looking at it. He couldn’t stop looking at it. No matter how fast I moved the sponge, Totín’s neck moved with equal speed through the air. His eyes had the searching look of Sherlock Holmes. I discovered this afternoon, watching that video, that Messi is a dog. Or a man-dog. That’s my theory. I regret your having read up to here with better expectations. Messi is the first dog ever who plays soccer,” concludes Casciari.

President Buhari and the Anxious Expectations of Nigerians

Taju Tijani

The passing away of 2015 did not go away quietly. At the tail end of that year, Nigerians were entertained with a sad comedy of Abuja profligate monoculture of graft and corruption in high places. We read through confessions of how Nigeria’s petrol wealth was squandered to indulge the appetite of few avaricious and greed-driven elite and their systemic stripping of this nation’s money among themselves. The repulsive evil of corruption was exposed and its fall out of class collaboration and collusion astounded our sense of moral indignation and national pride. It was the first time Nigerians will see a sitting president who took on the fight against corruption, not as a lip service, but as an obsessive cause worth dying for.

The mantra of CHANGE which has remained the slogan for the redemption of Nigeria acquired more force, and along its tortuous journey, nationwide support of Nigerians for the evolving vision of President Mohammadu Buhari. However, the overwhelming support for President Buhari from most Western nations, to Ms Christine Lagarde, the IMF Managing Director, to the man in the streets is not without its own condition: get Nigeria out of trouble and calm the anxious expectations of Nigerians with the fierce urgency it requires.

In 2016, Nigerians expect President Buhari to redirect the cause of our nation’s history by reinforcing the fight against corruption; freeing Nigeria from the narrow and selfish agenda of tiny elites, rebuilding our moribund institutions, bring back the abducted Chibok girls, and the total rejuvenation of our social, economic and political paralysis. Nigerians are becoming impatient and the old appetite for theatrical democratic interventions from our politicians are becoming obsolete.

The first task before President Mohammadu Buhari is the deepening of our democracy through the recalibration of the virtues of open, integrity-driven, transparent, honest and good governance as the best hope for the future of our democratic survival. These should be the new ideas that must drive leadership in this country. The president has to understand that retreating into the old essentialism of autocracy, secrecy, superficiality and lies will no longer wash with Nigerians especially in the face of the aftermath of the political tension generated by the arrest and re-arrest of former National Security Adviser, Col. Sambo Dasuki and the leader of the Indigenous People of Biafra (IPOB), and Radio Biafra Director, Mr Nnamdi Kanu.

The government should experiment with progressive innovations in tackling the socio, economic and political problems challenging Nigeria. President Mohammadu Buhari must tackle our large scale infrastructural deficit head on. In any nation, the provision of infrastructure facilitates the happiness of the greatest majority. This nation faces huge infrastructural deficit and this parlous state of play is negatively affecting businesses and more importantly, the humanity of all Nigerians.

The 2016 budget voted N1.8 trillion for capital expenditure, representing 30 per cent of the total budget of N6.08 trillion. Last year, the capital vote was 557 billion. In fact, a total of N11 billion was budgeted for the Ministry of Works. Giving breakdown of the 2016 capital vote, Mr. Buhari said, “This increased capital expenditure commits significant resources to critical sectors such as Works, Power and Housing – N443.4 billion; Transport – N202.0 billion; Special Intervention Programs – N200.0 billion; Defence – 134.6 billion; and Interior N53.1 billion. He continued, “These investments in infrastructure and security are meant to support our reforms in the Agriculture, Solid Minerals and other core job creating sectors of our economy.” “This is a fulfilment of our promise to align expenditure to our long-term objectives, and a sign of government’s commitment to sustainable development,” he added.

Nigerians applaud the deployment of N1.8trillion for capital expenditure in the 2016 national budget. The first capital project for this administration is the urgent repairs of the sorry state of our roads. Statistics indicate that 18% of the 197,000 km of our road networks are in good shape and the situation is worse in state and local governments thereby hampering agricultural and social developments. Secondly, Nigerians must see visible increase in power generation and distribution which currently stands between 3,500 -3,700 kilowatts. Not forgetting the provision of clean, drinkable water which has not been able to meet the Millennium Development Goal (MDG) of 75% coverage for safe and drinkable water. Thirdly, our primary health care system needs to be overhaul with the provision of free health care for all Nigerians.

Fourthly, our economic condition is in the intensive unit. Nigeria became the highest economy in Africa and the 26th in the world but with no visible impact on the common man. Standard of living and cost of living are the twin challenges of majority of Nigerians from all work of life except probably those who stole government money. As I write, global oil prices have plummeted and the consequences of such free fall should give us a sober reflection to diversify from our dependence on oil as the chief mainstay of our economy.

Fifthly, by some divine intervention, Nigeria had one the freest and fairest elections in the history of our democratic evolution. We had our epiphanic moment where the sitting president was ousted by the opposition. However, the inexperience of the ruling party nearly caused chaos in parliament and the consequence of such political hiccup is the permanent loss of patriotism to narrow, selfish party agenda. Above all, Nigerians are demanding for a proactive, effective, intelligent gathering and the deployment of highly trained and motivated Army to engage Boko Haram and bring an end to the cyclone of disasters that have blighted the North East.

America's Subservience To The Saud Family

Eric Zuesse

The Saud royal family are by far the world's largest buyers of U.S. weapons. The King of Saudi Arabia is by far the world's richest person, with a net worth well over a trillion dollars; and, when his (Aramco's) 260 billion barrels of oil reserves were valued at $100 per barrel, his net worth was around $15 trillion. The King has total control over the world's largest (in terms of dollar-value) company: Aramco. (On January 7th, Britain's Economist  bannered “Saudi Arabia is considering an IPO of Aramco, probably the world's most valuable company.” Aramco is certainly the world's largest oil company in terms of sales, and it has twice the reserves of the company that has the world's second-largest reserves; nobody comes even close to Aramco's dominance.) Since 1980, the Saudi government has owned 100% of Aramco; the Saudi government is totally under the King's exclusive control. The King owns all that oil, and his extraction cost is reputed to be the world's lowest. Forbes and Bloomberg decline to estimate his wealth, because kings don't want them to; but, clearly, his dwarfs that of anyone such as Bill Gates or Warren Buffett. And Gates and Buffett don't possess the power to keep their wealth from becoming published, but the Saudi King does.

On 13 September 2010, Britain's Telegraph  headlined “US secures record $60 billion arms sale to Saudi Arabia.” On 28 January 2012, Dayton Business Journal  bannered “Top 10 foreign buyers of U.S. weapons,” and Saudi Arabia was #1 that year, with $13.8B. #2 was UAE, with 10.4B. UAE is run by six royal families, all friends of the Saud family; and, like the Sauds, they follow the strictest, Wahhabist-Salafist, form of Islam, the type of Sunni Islam that's preached by ISIS and by Al Qaeda. Current ‘defense' expenditure figures aren't available; but, clearly, the Sauds are now fully embroiled in slaughtering Shiites both in Yemen and in Syria, and are buying far more U.S. weapons today than they were before — the sum probably dwarfs any previous sales-volume. 

It's good business for the owners of U.S. ‘Defense' contractors. On 15 May 2015, Alex Kane at Alternet headlined “4 U.S. Companies Getting Rich Off Gulf Arab Conflict With Iran,” and the companies were: Boeing, Raytheon, Lockheed Martin, and United Technologies. In 2015, lobbying for the “Defense” sector amounted to $96 million. $56 million of that was specifically on “Defense Aerospace.” If the Sauds weren't buying lots of that hardware, then some very wealthy Americans would be significantly less wealthy than they now are. It's mutually beneficial. (Though not beneficial for the people those bombs and bullets are killing and maiming.)

The Sauds have long been courted by U.S. Presidents; but, actually, it's the U.S. Presidents who have been courting the Saudi kings. The Washington Post  headlined on 27 January 2015, “13 times U.S. presidents and Saudi kings have met,” and, since 1945, all U.S. Presidents have privately met and spoken with the King of Saudi Arabia, except Truman and Ford. President Obama bowed deeply when meeting the Saudi King; but, this doesn't mean that none of the others did; it means only that a cellphone-video happened to leak onto the Internet showing it — Obama's bad luck.

When the U.S. President meets the Saudi King, it's not the U.S. leader who has control over the two holiest sites in the world's second-largest and fastest-growing religion, Mecca and Medina. It's not the U.S. President in whose general direction more than a billion people around the world ritually bow several times a day.

Long after a U.S. President has become a former President, the Saudi King whom he has met can still be remaining as the Saudi King, until death. It's sort of like the Papacy in that regard.

Iran is the center of Shiia Islam. The Saud family doesn't hide that they are anti-Shia and very anti-Iran. The approximately 10% to 15% of Saudi Arabia's population who are Shiites are discriminated against, by law, in education, work, and other ways, which have caused it to be termed a religious “apartheid.” On 26 May 2014, Catherine Shakdam at International Policy Digest wrote that, “Driven by political and territorial greed, the House of Saud has served as ground zero for anti-Shiism. The nefarious force behind the region's sudden burst of ethnic-based violence and prejudices, disseminated by Saudi Arabia has sown the seeds of intolerance in the entire Middle Eastern region.”

On January 3rd, Iranians rioted in Tehran against the Embassy of Saudi Arabia because a Shiite cleric in Saudi Arabia who had spoken out for equal treatment by the Sauds' government, regarding both Sunnis and Shia, had been beheaded the day before, for having publicly urged such a thing.

The Saudi King had had 47 people executed on January 2nd, and this Shiite cleric was only one; but he had been speaking for all Shia in Saudi Arabia; so, Shia everywhere felt as if they were the targets — and they actually were, because when in 1744 Muhammad Ibn Saud and Muhammad Ibn Wahhab came to the agreement that started Saudi Arabia, part of that agreement was for the Saud clan to exterminate all Shiia, and today's Saud clan might actually have enough wealth to give that a try. They're getting plenty of weapons from America to do it.

The U.S. Democratic Party's leading candidate for President, Hillary Clinton, said “I don't think it was a smart decision for them to make.” She didn't say it was a wrong decision, just that she didn't think it was “smart.” King Salman al-Saud will probably be understanding; after all, her suckers think that their Party is democratic in more than just its name — they don't like head-choppers, particlularly not dictatorial ones; and most of them don't even think much of the Wahhabist religion, which wants all non-Wahhabists dead, not merely Shia dead.

By contrast, Republican candidates don't need to pander so much about the matter, because they don't consider themselves to be hung up on the ‘democracy' thing; they call themselves “Republicans,” which, even though it actually means the same thing (and so no democracy exists that isn't also a republic), makes it easier for stupid people (including all non-aristocratic Republicans) to think it doesn't.

Republican candidate Carly Fiorina said, “Saudi Arabia is our ally, despite the fact that they don't always behave in a way that we condone. … Iran is a real and present threat.” She was singing King Salman's song. She even condemned Iran's condemnation of the Sauds' execution of the Shiia-rights cleric: “I take the Iranian condemnation with a huge grain of salt. … This [in Iran] is a regime that tortures citizens routinely, that thinks nothing of executions, that still holds four Americans in jail.”

Republican candidate Ben Carson said: “The Saudis have been one of our strongest allies in the Middle East, and I think it's unfortunate that we put them in the position we have by showing the support to Iran that we have with this foolish deal” on Iran's nuclear program. “There's no reason for the Saudis to believe that we're really on their side when we do things like that.” If anything, he was trying to outdo Fiorina or anyone else.

The Saudi King terminated diplomatic relations with Iran over the matter.

U.S. President Barack Obama, via his State Department, said in response to that: "We're aware that the Kingdom of Saudi Arabia has ordered the closure of Iranian diplomatic missions in the Kingdom. We believe that diplomatic engagement and direct conversations remain essential in working through differences and we will continue to urge leaders across the region to take affirmative steps to calm tensions.”

Below is a screen-shot of the end of Obama's bow to the King of Saudi Arabia (the complete bow was telecast — at 5:33 in this video — by Rupert Murdoch's Republican ‘news' operation, against Obama as being a closeted ‘Muslim,' not against King Saud, for his executions, slavery, or anything else; American politics is practically owned, on both its sides, by the Saud family, and Murdoch stirs bigotry — and religion, and religion-based hatreds — as much as the Sauds do; he's even a business-partner with at least one of the royal Sauds, and this is what America's ‘democracy' has come to):

The State Of The Nation: A Dictatorship Without Tears

John W. Whitehead

“There will be, in the next generation or so, a pharmacological method of making people love their servitude, and producing dictatorship without tears, so to speak, producing a kind of painless concentration camp for entire societies, so that people will in fact have their liberties taken away from them, but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda or brainwashing, or brainwashing enhanced by pharmacological methods. And this seems to be the final revolution.”—Aldous Huxley

While only 1 in 5 Americans claim to trust the government to do what is right, the majority of the people are not quite ready to ditch the American experiment in liberty. Or at least they’re not quite ready to ditch the government with which they have been saddled.

It doesn’t matter that the government has shown itself to be corrupt, abusive, hostile to citizens who disagree, wasteful and unconcerned about the plight of the average American.For the moment, Americans are continuing to play by the government’s rules. Indeed, Americans may not approve the jobs being done by their elected leaders, and they may have little to no access to those same representatives, but they remain committed to the political process, so much so that they are working themselves into a frenzy over the upcoming presidential election, with contributions to the various candidates nearing $500 million.

Yet as Barack Obama’s tenure in the White House shows, no matter how much hope and change were promised, what we’ve ended up with is not only more of the same, but something worse:an invasive, authoritarian surveillance state armed and ready to eliminate any opposition.

The state of our nation under Obama has become more bureaucratic, more debt-ridden, more violent, more militarized, more fascist, more lawless, more invasive, more corrupt, more untrustworthy, more mired in war, and more unresponsive to the wishes and needs of the electorate.Most of all, the government, already diabolical and manipulative to the nth degree, has mastered the art of “do what I say and not what I do” hypocrisy.

For example, the government’s arsenal is growing. While the Obama administration is working to limit the public’s access to guns by pushing for greater gun control, it’s doing little to scale back on the federal government’s growing arsenal of firepower and militarized equipment.

The national debt is growing. In fact, it’s almost doubled during Obama’s time in office to nearly $20 trillion.

Meanwhile, almost half of Americans are struggling to save for emergencies and retirement, 43% can’t afford to go more than one month without a paycheck, and 24% have less than $250 in their bank accounts preceding payday.

On any given night, over half a million people in the U.S. are homeless, and half of them are elderly.

While the U.S. spends more on education than almost any other country, American schools rank 28th in the world, below much poorer countries such as the Czech Republic and Vietnam.

The American police state’s payroll is expanding. Despite the fact that violent crime is at a 40-year-low, there are more than 1.1 million persons employed on a full-time basis by state and local law enforcement in this country.

While crime is falling, the number of laws creating newcrimes is growing at an alarming rate.

The prison population is growing at an alarming rate. Owing largely to overcriminalization, the nation’s prison population has quadrupled since 1980 to 2.4 million, which breaks down to more than one out of every 100 American adults behind bars.

The nation’s infrastructure—railroads, water pipelines, ports, dams, bridges, airports and roads—is rapidly deteriorating.

The expense of those endless wars in Afghanistan and Iraq will cost taxpayers $4 trillion to $6 trillion.

Government incompetence, corruption and lack of accountability continue to result in the loss of vast amounts of money and weapons. A Reuters investigation revealed $8.5 trillion in “taxpayer money doled out by Congress to the Pentagon since 1996 that has never been accounted for.”

Rounding out the bad news, many Americans know little to nothing about their rights and the government. Only 31% can name all three branches of the U.S. government, while one in three says that the Bill of Rights guarantees the right to own your own home, while one in four thinks that it guarantees “equal pay for equal work.” One in 10 Americans (12%) says the Bill of Rights includes the right to own a pet.

If this brief catalogue of our national woes proves anything at all, it is that the American experiment in liberty has failed, and as political economist Lawrence Hunter warns, it is only a matter of time before people realize it.

So are there any real, workable solutions to the emerging American police state?

A second American Revolution will not work. In the first revolution, the colonists were able to dispatch the military occupation and take over the running of the country. However, the Orwellian state is here and it is so pervasive that government agents are watching, curtailing and putting down any resistance before it can get started.

A violent overthrow of the government will not work.Government agents are armed to the teeth and will easily blow away any insurgency when and if necessary.

Politics will not help things along. As history has made clear, the new boss is invariably the same as or worse than the old boss—all controlled by a monied, oligarchic elite.

As I make clear in my book Battlefield America: The War on the American People, there is only one feasible solution left to us short of fleeing the country for parts unknown: grassroots activism that strives to reform the government locally and trickles up.

Unfortunately, such a solution requires activism, engagement, vigilance, sacrifice, individualism, community-building, nullification and a communal willingness to reject the federal government’s handouts and, when needed, respond with what Martin Luther King Jr. referred to as “militant nonviolent resistance.”

That means forgoing Monday night football in order to actively voice your concerns at city council meetings, turning off the television and spending an hour reading your local newspaper (if you still have one that reports local news) from front to back, showing your displeasure by picketing in front of government offices, risking your reputation by speaking up and disagreeing with the majority when necessary, refusing to meekly accept whatever the government dictates, reminding government officials—including law enforcement—that they work for you, and working together with your neighbors to present a united front against an overreaching government.

Unfortunately, we now live in a ubiquitous Orwellian society with all the trappings of Huxley’s A Brave New World. We have become a society of watchers rather than activists who are distracted by even the clumsiest government attempts at sleight-of-hand.

There are too many Americans who are reasonably content with the status quo and too few Americans willing to tolerate the discomfort of a smaller, more manageable government and a way of life that is less convenient, less entertaining, and less comfortable.

It well may be that Huxley was right, and that the final revolution is behind us. Certainly, most Americans seem to have learned to love their prison walls and take comfort in a dictatorship without tears.