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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.

LOL: The Art of Assassination

On the morning of 14 February 2017, a grainy closed circuit television video shows a middle-aged Korean man striding casually into the Low Cost Carrier Terminal (LCCT) of Kuala Lumpur International Airport. He is approached from behind by a young woman in a white t-shirt and blue skirt and in a flash she throws a cloth over his face to administer a lethal dose of a colorless, odorless liquid. The victim, Kim Jong Nam, is the estranged half-brother of North Korean leader Kim Jong Un. He did not yet realize he was already doomed; assassinated by unknown assailants wielding an unidentified chemical weapon. The ongoing international manhunt that followed revealed the greatest strengths of the storied Royal Malaysian Police Special Branch and the brutality and skill of the North Korean intelligence service. The incident also strained relations between Pyongyang and one of the few countries in the world with which it enjoys normal relations.

The brazen murder also captivated millions and brought a shadowy underworld briefly to the surface. What is not apparent to most is that last week’s dramatic events were not a lucky strike by clever opportunists, they were the end result of a sophisticated intelligence operation – actually several separate operations – spanning multiple countries and likely involving dozens of intelligence officers and their agents. (In the professional jargon of the intelligence community, an agent is someone recruited by an intelligence officer.) Coordinating their activities to achieve the final spectacular, and previously impossible result is the real art behind the assassination.

The Cat and the Mouse

Once considered a likely successor to his father, Kim Jong Il, Kim Jong Nam was passed-over following a careless indiscretion and went quickly into exile while his younger sibling thrashed about in the tense early days of his rule. Despite great doubt about his ability to muster the ruthlessness required to retain power over the isolated country, Kim Jong Un quickly consolidated his hold using imprisonment and death to control anyone presenting the slightest political threat. In an environment where even kinship was less important than loyalty, Kim Jong Nam was bound to be targeted even if he had not made statements questioning the stability of his brother’s regime.

Nam Assassination
Before his fortunes faded, Kim Jong Nam (left) was the presumptive heir to North Korean leader Kim Jong Il. Now his half-brother, Kim Jong Un (right), leads the country. Photo credit: http://www.telegraph.co.uk/news/2017/02/15/exclusive-two-female-secret-agents-behind-murder-kim-jong-unsbrother/

The elder Kim withdrew deeper into a dark exile after his father’s death in 2012. In China and Macau he was assumed to be under state protection and travelled under numerous aliases. He had already survived at least two attempts on his life and reportedly begged his half-brother to spare his life and that of his family. His final minutes in Kuala Lumpur were a bizarre drama. After being assaulted by the woman in white, he was initially treated at an airport clinic before being evacuated by ambulance to a local hospital. He died en route, just as police were beginning their hunt for his alleged attackers, an Indonesian girl – Siti Aisyah – and a Vietnamese national, Doan Thi Huong, the now infamous woman wearing the coldly ironic “LOL” t-shirt.

After her attack on Kim Jong Nam, CCTV footage shows Doan calmly leaving the scene and catching a taxi outside. Despite having just administered a lethal dose of an unknown chemical, she displayed no concern for her own safety and wore no obvious protective equipment. She had clearly practiced the sequence. Both Doan and Siti Aisyah later told police separately they believed they were taking part in a made for television prank. But Doan’s actions in the 48 hours prior to the attack suggest she had received some training in tradecraft. During that time she stayed in three hotels in the immediate vicinity of the airport and paid cash for her lodging. At one point she borrowed a pair of scissors and cut her hair, leaving the remnants in the trash can in her room. Her activities during the day are just coming to light but are now known to have included numerous rehearsals and examinations of the target area; possibly in conjunction with Siti Aisyah. These are classic, if clumsy techniques to avoid detection and rehearse the operation. They certainly signal a nefarious intent.

The Art of Assassination

To the casual observer, Kim Jong Nam’s death may seem like the handiwork of a couple clever and highly trained operatives. The reality is that intelligence operations of this kind are highly choreographed, involve dozens of actors, and are compartmented for security. Assassinating Kim Jong Nam required at least five, and as many as seven separate operations managed by seven or more intelligence officers with perhaps dozens of agents in Macau, China, Malaysia, Vietnam, and Indonesia. The overall operation likely consisted of the following supporting operations:

  • Recruit the assassins. Siti Aisyah was recruited in Indonesia. Doan may have been recruited in Vietnam.
  • Determine Kim Jong Nam’s travel plans. Doan was aware of Kim Jong Nam’s travel plans at least 48 hours prior to the attack. She used this time to rehearse and to complete her reconnaissance. Information gleaned from his social media feed is not reliable enough for this purpose and had to be corroborated with direct knowledge from intercepted communications or recruited agents in a position to provide assured access to his itinerary.
  • Report Kim Jong Nam’s movements. The attack required very precise information about his flight, his mode of transportation, his likely arrival time at the terminal, the gate/check-in counter for his flight, what he was wearing, etc.; all of which had to be communicated to the assassins in a timely manner. A botched operation would have been far too damaging to leave this to chance. This could have been as simple as a phone warning from his hotel but doing this reliably requires layers of mobile and static surveillance at the hotel, the airport, and his many residences.
  • Deliver the chemical. The chemical used to kill Kim Jong Nam was smuggled into Malaysia or manufactured locally. It likely required special skill to make and specific equipment to store and administer. For Security, Doan would have received the chemical secretly and been trained in its use at the last possible moment raising the risk it could have killed bystanders or the assassins themselves.
  • Kill Kim Jong Nam. There is a possibility Doan and Siti Aisyah may have been employed separately to ensure redundancy. They may even have been unaware of each other’s activities. The leaked CCTV footage of the attack supports this conclusion, though there is new information that they rehearsed the attack together.
  • Observe and report the outcome. Though this could have been conducted overtly through North Korean diplomats and/or monitoring of the press, it is a critical piece. At a minimum, Doan needed to report her task complete or a separate observer had to be in place at the scene to do so. Emerging information suggests this was the task of the four North Korean nationals still sought by Malaysian police.
  • Exfiltrate the assets. The four remaining fugitives all left Malaysia within a few hours of the operation. They took circuitous routes back to North Korea via Indonesia, Dubai, Russia, and elsewhere. Their roles are not certain but probably also included passing intelligence and issuing final orders. One, Ri Jong Chol, remained in Kuala Lumpur and was apprehended Monday. Doan and Siti Aisyah seemed to lack viable escape plans. It is possible they were left as a diversion to throw investigators off the trail of fleeing North Korean intelligence officers.
assassination malaysia
Deputy National Police Chief of Malaysia Noor Rashid Ibrahim, left, speaks as Selangor Police Chief Abdul Samah Mat listens during a press conference at the Bukit Aman national police headquarters in Kuala Lumpur, Malaysia, Sunday, Feb. 19, 2017. Photo credit: AP Photo/Vincent Thian, http://time.com/4676018/kim-jong-nam-death-north-korea-suspects/

Though it was possible to conduct some of the supporting operations above clandestinely, meaning the operations themselves remain hidden, the politically explosive death of Kim Jong Un’s half-brother could never be kept secret and therefore had to be done covertly, meaning the sponsor’s hand remains hidden. A covert operation is much more difficult to execute than a clandestine one and requires layers of separation between intelligence officers and their agents that are typically not highly trained operatives. Agents are deniable and sometimes coerced. Occasionally they do not know whom they are working for or even that they are working for someone at all.

As an additional security measure, the supporting operations would be kept completely separate. The risk of detection is highest when these operations come together through communications or physical contact, meaning the moment of greatest vulnerability was during the attack itself when all the pieces were brought together in time and space. At that point, all the complicated designs of the North Korean regime rested on the element of surprise and the skill and demeanor of half-trained agents.

Ultimately, the assassination of Kim Jong Nam was a well-planned and skillfully executed intelligence operation, but the Royal Malaysian Police Special Branch is untangling the knot with great efficiency. With its roots in the long, difficult fight against Communist insurgency, Special Branch is a tough adversary in the ongoing spy game. Known locally as SB, Special Branch serves as both the internal and external intelligence service of the Malaysian state. They enjoy good relationships with counterparts in the region and are receiving excellent mutual support from Malaysia’s Foreign Ministry which is aggressively setting the conditions for international cooperation in the investigation. Though culpability for Kim Jong Nam’s death may never be fully proven, SB has managed to minimize political damage to Malaysia and imposed a high cost on North Korea. With the dust still settling, only Kim Jong Un himself can say if his brother’s murder was worth the resultant damage to relations with Malaysia and the increased suspicion that the operation has inspired around the world.


Lino Miani

Lino Miani is a retired US Army Special Forces officer, author of The Sulu Arms Market, and CEO of Navisio Global LLC. He provided expertise in special and intelligence operations to NATO from 2013-2016. Read about one of his encounters with the North Koreans in Kuala Lumpur.