Posts Tagged ‘wall street journal’

SATELLITE IMAGES SHOW CONTINUED BUILDING BY CHINA ON ISLANDS IN SOUTH CHINA SEA

September 17, 2015

Wall Street Journal on September 16, 2015, reported that satellite images showed that China continued building on Spratly Islands in the South China Sea. Excerpts below:

A report published earlier this week by the Center for Strategic and International Studies contains high-definition photos of Chinese-controlled reefs in the disputed Spratly Islands taken in early September. The images suggest China’s island-building efforts are ongoing, and that China could soon have three airfields in the area, according to CSIS.

China reclaimed hundreds of acres of land at seven different reefs it occupies in the Spratlys in 2014. The U.S. and other countries in the region fear China might use the reefs as bases for military aircraft in an attempt to enforce an air-defense identification zone in the South China Sea. The U.S. has called for a moratorium on land reclamation in disputed areas as a way to reduce tensions. Chinese foreign minister Wang Yi’s statement at a summit of regional leaders in Malaysia last month that China had halted reclamation efforts appeared designed to calm anxieties in the region.

The satellite images released this week indicate dredging activity continues on two Spratly features: Subi Reef and Mischief Reef.

The northernmost of the Spratly reefs where China is reclaiming land, Subi Reef was a barely visible speck in the ocean as recently as 2012 (see interactive above). According to CSIS’s Bonnie Glaser, images from early September show dredgers widening an access channel to the inner part of the reef and dumping the sediment onto areas next to recently rebuilt sea walls. The images also show sand grading on Subi that could indicated construction of an airstrip, CSIS says.

Like Subi, Mischief Reef existed mostly underwater in 2012. Now, it boasts multiple buildings, at least two concrete plants and a flat rectangular area roughly 3,000 meters long that could be the site of a future airstrip, according to CSIS. Here, too, photos show dredgers working to widen an access channel, Ms. Glaser writes.

Earlier satellite photos confirmed that China has already built one airstrip on the Spratlys’ Fiery Cross Reef that could be big enough for fighter jets, transport planes and surveillance aircraft. CSIS researchers Michael Green and Zack Cooper write that the U.S. could “neutralize” China’s bases in the Spratlys in the event of a conflict, but “doing so would require a concerted effort from U.S. forces.”

The South China Sea is one of the world’s busiest shipping routes. The U.S. thus has an interest in ensuring freedom of navigation in the area, Washington argues.

Comment: The Wall Street Journal article has an excellent map of the Spratly Islands and presents fact on the different reefs and islands in the group. The aggressive construction by China on the Spratlys could be the first step in a strategy of geopolitical expansion into the Pacific Ocean. A common forward strategy of the United States, Japan, South Korea, Taiwan and the Philippines to monitor and challenge this is necessary and something the next US president will have to deal with in 2016.

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UKRAINE FINANCE MINISTRY: KYIV SECURES DEBT-RELIEF DEAL

August 29, 2015

Wall Street Journal on August 27, 2015, reported that Ukraine’s private creditors have accepted a 20% write-down on the face value of their Ukrainian bonds. Excerpts below:

Ukraine said August 27, 2015, that it had secured a debt-relief deal with its creditors, a vital step toward unlocking billions of dollars in emergency financing, after months of stalemate threatened to derail its international bailout.

The agreement, which requires approval by Ukraine’s parliament, is a major success for the pro-Western government as it seeks to push through a series of politically tough economic overhauls and nurse its fragile economy to health.

But the simmering conflict with Russian-backed separatists in the eastern part of the country continues to exact a toll on government finances, and the debt relief by no means assures economic viability for a country that has long been struggling to stay afloat.

Averting a financial tailspin in the country of 45 million people has been a priority in Washington and European capitals, which have sought to buttress the government in Kiev against an increasingly confrontational Russia.

U.S. Treasury Secretary Jacob Lew urged creditors to move swiftly to complete the restructuring, calling it critical to Ukraine’s future prosperity. “A strong, stable Ukraine is in the interests of Ukraine’s citizens, Ukraine’s neighbors, its international partners, and investors,” Mr. Lew said.

According to the Ukrainian Finance Ministry, private creditors including U.S. mutual fund Franklin Templeton Investments agreed to a 20% write-down in the face value of their Ukrainian bonds, and to push back maturities on government debt by four years.

The hryvnia currency rose more than 3% against the dollar, and Ukraine’s central bank lowered its key interest rate to 27% from 30%, citing reduced inflation risks just minutes after the deal was announced.

Ukraine’s bonds jumped by about 18%. The price of two-year notes increased to more than 66 cents, from 56 cents, according to data from Tradeweb, the highest level since January.

Under the bailout terms, Ukraine needed to secure $15 billion-worth of debt relief, including interest payments, from its international creditors, as well as pass the economic measures, to release the rest of the promised $25 billion in rescue money from the International Monetary Fund, Europe and the U.S.

IMF Managing Director Christine Lagarde welcomed the deal and said Ukraine should meet the debt targets outlined in the bailout program—but only if all the Eurobond holders participated.

The conflict [with Russia] has destroyed critical infrastructure, fueled a deep recession, pushed the currency into a nose-dive, depleted emergency cash reserves and forced acute budget belt-tightening.

Besides the IMF, Kiev has the backing of Washington, the European Union and other Western allies who see Ukraine as a decisive geopolitical battleground to fend off the advances of an increasingly aggressive Russia.

After months of impasse, negotiations appeared to accelerate in late July, with both sides offering to make concessions. Prospects of a resolution were given a boost last month when Ukraine met the deadline for a $120 million coupon payment on its two-year bonds.

The turning point, said Ms. Jaresko, came…at San Francisco’s Hyatt Regency hotel two weeks ago,…

After leaving San Francisco, the parties spent two more tense weeks thrashing out details.

The agreement is a welcome relief also for other holders of Ukraine debt, who have been following the negotiations from the sidelines. The measures will apply to all the country’s outstanding debt.

Also on August 27, 2015, Wall Street Journal reported that Ukraine’s US-born Finance Minister Natalie Jaresko is praised for her persistence. She was personally involved in securing the debt-relief deal. Excerpts below:

After announcing a deal to help stave off bankruptcy at a government meeting Thursday, Finance Minister Natalie Jaresko received an unusual gift from her fellow ministers: a painted artillery shell casing.

Ms. Jaresko, a 50-year-old American who but only recently became a Ukrainian citizen, was being hailed as the hero of the battle to save the economy, one being waged at the same time as the country fights pro-Russian separatists in its east.

The finance minister led months of tense negotiations with private creditors, clocking thousands of miles flying from Eastern Europe to the U.S. to persuade them to accept a 20% write-down on the face value of their bonds and later repayment. The deal should help Ukraine secure further bailout funds from the International Monetary Fund.

Ms. Jaresko, born into a Ukrainian diaspora family in Illinois, arrived in Kiev two decades ago as one of a handful of diplomats charged with opening the U.S. Embassy. She later moved into the private sector, eventually co-founding the Horizon Capital private-equity fund in 2006, which focused on the region.

It was only after a revolution last year swept Ukraine’s pro-Russian president out of power that Ms. Jaresko contemplated another stint in government.

In December, President Petro Poroshenko tapped her to run the Finance Ministry, a post with notorious bureaucracy, corruption and near-empty coffers—all for a salary equal to $300 a month.

Ms. Jaresko, who speaks Ukrainian, is no stranger to the difficulties of making the case for the country: Colleagues at Horizon Capital say she spent the first year at the fund in hundreds of meetings, traveling thousands of miles to follow up on the slightest flicker of investor interest in Ukrainian assets.

Comments: This is welcome news. This blog has long argued that securing Ukraine as a state is more important than supporting Greece, although financial stability is important in both cases. Ms. Jaresko has proven to be an effective Minister of Finance and the present deal could be a turning point for Ukraine. A financially strong Ukraine is a must when taking on Russia.

DEBTS OF THE AYATOLLAH

August 17, 2015

Wall Street Journal on August 16, 2015, editorialized on Iran’s debt to terror victims. The giveaways in President Obama’s Iran nuclear deal keep piling up. By handing $100 billion or more in frozen funds to Tehran, the deal would not only fill the coffers of Iranian terror proxies. It would also abandon American victims of terrorism waiting to collect tens of billions of dollars in compensation owed to them by Iran. Excerpts below:

Over two decades U.S. federal courts have found the Iranian government liable for orchestrating or supporting the 1983 bombings of the U.S. Embassy and Marine barracks in Beirut, the 1996 bombing of the Khobar Towers U.S. Air Force facility in Saudi Arabia, and multiple shootings and suicide bombings in Israel, among other attacks. Judges have awarded some $45 billion in damages to hundreds of plaintiffs such as Embassy bombing survivor Anne Dammarell and the widow and orphaned children of Hamas bombing victim Ira Weinstein.

Iran has refused to pay a cent, while continuing to back Hezbollah, Hamas, Islamic Jihad and other terror groups. Yet U.S. law provides for the victims to get compensation. Under the 2002 Terrorism Risk Insurance Act, U.S. court judgments against state sponsors of terror can be satisfied by tapping the seized or frozen assets of those states.

An estimated $100 billion to $150 billion in Iranian oil money has been held in escrow accounts under U.S. sanctions laws since 2012.

A U.S. official told the Journal this month that the U.S. never raised the issue of terrorism victims with Iran. In negotiating Libya’s nuclear disarmament a decade ago, by contrast, the U.S. secured an agreement for the Gadhafi regime to compensate victims of attacks such as the bombing of Pan Am 103 over Lockerbie, Scotland. The 1981 Algiers Accord resolving the Iranian hostage crisis included a claims tribunal that ordered $2.5 billion in payments from Tehran.

In federal court in New York City two dozen victims of Iranian terror have sued to block Mr. Obama’s deal for disregarding U.S. laws meant to enforce just compensation. “It would be outrageous to release the $100 billion in frozen Iranian funds when these American families have unpaid court judgments against the terror-sponsoring regime in Tehran,” said lawyer Nitsana Darshan-Leitner.

By ignoring the $45 billion owed to Iran’s terror victims, the U.S. government mocks its own judiciary and erodes a deterrent to state-sponsored terrorism. This is one more reason for Congress to reject a deal that blesses Iran as a nuclear-threshold state.

JAPANESE PM ABE MAKES PROGRESS ON PLAN TO EXPAND MILITARY

July 17, 2015

Wall Street Journal on July 16, 2015, reported that Prime Minister Shinzo Abe has made a significant stride toward his goal of expanding the role of Japan’s military, as the main chamber of parliament passed a package of national security bills… Excerpts below:

The passage of the bills enables Mr. Abe to make good on a promise he made to U.S. lawmakers to approve “by this summer” legislation that allows Japan to take on more responsibility under their bilateral security agreement. Citing heightened tensions in East Asia, the U.S. and Japan upgraded the guidelines to their security treaty during Mr. Abe’s visit to Washington in April 2015.

“The security environment surrounding Japan continues to get tougher,” Mr. Abe told reporters after the vote. “These are absolutely necessary bills in order to protect the lives of Japanese people and prevent wars.”

The bills will now be sent to the upper house of parliament, where opposition lawmakers plan to continue fighting them. But even if the legislation fails to gain approval there, passage means it will automatically be sent back in 60 days to the more powerful lower house, which would have the final vote.

The most contentious aspect of the legislation would allow Japanese troops to come to the rescue of allies under attack even if Japan itself hasn’t been attacked.

Mr. Abe has criticized China’s territorial ambitions in the South China Sea, and Tokyo and Beijing have a dispute over Japan-held islands in the East China Sea.

The security legislation would bolster Japan’s ability to aid U.S. forces in the event of a U.S.-China conflict in Asian waters — even through direct participation in the fighting, if Japan judged that its own territory was under grave threat.

CHINA STRATEGY CONFIRMS TRENDS ON THE GROUND, U.S. SAYS

May 27, 2015

Wall Street Journal on May 27, 2015, ABOARD A U.S. MILITARY JET reported on China strategy. Excerpts below:

The Chinese “white paper” on defense strategy—which said Beijing plans to shift its armed forces’ focus toward maritime warfare—confirmed trends the U.S. has been monitoring for some time, a senior U.S. defense official said.

“I don’t think there were any surprises for us in the latest white paper,” the official told reporters traveling to Hawaii with Defense Secretary Ash Carter. “The trends described in that paper are trends that we’ve been following for some years.”

In its first public summary of military strategy, the State Council—China’s cabinet—said the navy will expand its operations from offshore areas to the open seas, while the air force will broaden its focus to include offensive operations as well as defense of China’s territory.

…as China continues to expand artificial islands in the South China Sea, the country’s true military intentions continue to be mysterious, the official said. American officials have long sought more clarity from Beijing about its military spending, policy and hardware-acquisition plans.

The white paper expressed Beijing’s interest in operating more aggressively in air and at sea, noting that it would operate vessels in so-called blue waters, farther from shore.

“Chinese blue-water capability has been building for quite some time,” the official said.

UKRAINE OPPOSITION SNUBS TALKS – PRESIDENT YANUKOVYCH MUST TAKE PART

January 21, 2014

Wall Street Journal on January 20, 2014, reported that efforts to solve the political crisis in Ukraine foundered as opposition leaders refused to take part in talks with the government unless President Viktor Yanukovych joined the discussions. Excerpts below:

Hundreds of protesters, mostly masked and wearing helmets, lined up opposite riot police for a second day, throwing Molotov cocktails and cobblestones, and banging on makeshift drums. Police tossed stones back at protesters, fired rubber bullets and sprayed water on the ground in front of their lines that turned to ice in freezing temperatures.

Both sides said dozens had been injured since the clashes.

The escalation came amid frustration among younger and more radical protesters with the week long occupation of Independence Square in central Kiev, which has yielded few concessions.

Thousands of demonstrators have stood on the square since November to demand the government resign after it walked away from a trade and political deal with the EU and accepted a Russian bailout instead.


Opposition leaders have criticized the violence but said it was a result of Mr. Yanukovych ignoring their demands, including for snap presidential elections.

“I call on all citizens and patriots to defend their country and their future,” opposition leader and former world boxing champion Vitali Klitschko said. “Get in cars, minibuses, buses. You’re needed here so that Ukraine wins and not Yanukovych.”

After talks with Mr. Klitschko, Mr. Yanukovych ordered his national security adviser to arrange talks between the government and the opposition.

Mr. Klitschko said the opposition wouldn’t take part unless Mr. Yanukovych did. Opposition leaders sent their deputies to talks with Mr. Yanukovych’s representatives with a list of demands including repealing the new laws.

Some in the opposition say they are concerned that the offer of talks, announced late Sunday night, was a ruse to calm tensions and buy time before launching a crackdown.

FORMER CIA-DIRECTOR JAMES WOOLSEY: TIME TO ‘BUILD BRIDGES’ WITH ALLIES

November 2, 2013

Newsmax on November 1, 2013, reported on James Woolsey writing in Wall Street Journal that Allies are wary of the United States — for good reason. Excerpts below:

That wariness comes from “having seen less American leadership in recent years on a number of important issues…

In Syria, for example, “the U.S. is not even leading from behind but rather stumbling along behind,” Woolsey says, adding that France, for example, was clear about its policy toward Syria and was prepared to attack President Bashar Assad.

In Iran, Woolsey writes, “wavering American leadership has also led the Europeans to fear that their tough economic sanctions may be subjected to a pre-emptive weakening, now that the Obama administration is avidly pursuing talks with Tehran over its nuclear program.”

Woolsey notes that U.S. allies “over the past several years, almost always including Britain, have taken action that is in America’s interest. But they have also rather frequently seen the U.S. make unilateral concessions to enemies and refuse to lead.”

U.S. allies, he writes, deserve an apology because, “[a]t our worst, we have suggested by our behavior that it is better to be an enemy of the United States (Assad) than a friend (Hosni Mubarak).”

The nation’s former top intelligence official said that the US must now offer a sense leadership and direction much as it during the Cold War.

…a good start would be to ease concerns over recent reports that the National Security Agency spied on the leaders of Germany and France.

“America already is part of the decades-old ‘Five Eyes’ pact with Britain, Australia, Canada and New Zealand, agreeing to share intelligence and not to spy on each other. The U.S. should accede to recent requests from Germany and France to join the group,” Woolsey says.

ELITE SYRIAN UNIT MOVES CHEMICAL WEAPONS TO AS MUCH AS 50 SITES

September 14, 2013

Wall Street Journal on September 12, 2013, reported that a secretive Syrian military unit at the center of the Assad regime’s chemical weapons program has been moving stocks of poison gases and munitions to as many as 50 sites to make them harder for the U.S. to track, according to American and Middle Eastern officials. Excerpts below:

The movements of chemical weapons by Syria’s elite Unit 450 could complicate any U.S. bombing campaign in Syria over its alleged chemical attacks, officials said. It also raises questions about implementation of a Russian proposal that calls for the regime to surrender control of its stockpile, they said.

U.S. and Israeli intelligence agencies still believe they know where most of the Syrian regime’s chemical weapons are located, but with less confidence than six months ago, U.S. officials said.

Unit 450—a branch of the Syrian Scientific Studies and Research Center that manages the regime’s overall chemicals weapons program—has been moving the stocks around for months, officials and lawmakers briefed on the intelligence said.

Movements occurred as recently as last week, the officials said, after Mr. Obamasaid he was preparing to launch strikes.

The unit is in charge of mixing and deploying chemical munitions, and it provides security at chemical sites, according to U.S. and European intelligence agencies. It is composed of officers from Mr. Assad’s Alawite sect.

U.S. military officials have looked into the possibility of gaining influence over members of Unit 450 through inducements or threats. “In a perfect world, you would actually like to co-opt that unit. Who cares who pays them as long as they sit on the chemical weapons,” said a senior U.S. military official.

The U.S. estimates the regime has 1,000 metric tons of chemical and biological agents. “That is what we know about. There might be more,” said one senior U.S. official.

The regime traditionally kept most of its chemical and biological weapons at a few large sites in western Syria, U.S. officials said. But beginning about a year ago, the Syrians started dispersing the arsenal to nearly two dozen major sites.

Unit 450 also started using dozens of smaller sites. The U.S. now believes Mr. Assad’s chemical arsenal has been scattered to as many as 50 locations in the west, north and south, as well as new sites in the east, officials said.

The U.S. is using satellites to track vehicles employed by Unit 450 to disperse the chemical-weapons stocks. But the imagery doesn’t always show what is being put on the trucks. “We know a lot less than we did six months ago about where the chemical weapons are,” one official said.

The U.S. wants any military strikes in Syria to send a message to the heads of Unit 450 that there is a steep price for following orders to use chemical weapons, U.S. officials said.

“Attacking Unit 450, assuming we have any idea where they actually are, would be a pretty tricky affair because…if you attack them you may reduce the security of their weapons, which is something we certainly don’t want,” said Jeffrey White, a veteran of the Defense Intelligence Agency and a defense fellow at The Washington Institute.

Even high-ranking defectors from the Syrian military that form the core of the rebel insurgency—including those who served in units trained to handle chemical attacks—said they hadn’t heard of Unit 450.

The Pentagon has prepared multiple target lists for possible strikes, some of which include commanders of Unit 450.

The Syrian Scientific Studies and Research Center answers only to Mr. Assad and the most senior members of his clan, according to U.S. and European officials. Attack orders are forwarded to a commanding officer within Unit 450.

Gen. Martin Dempsey, the chairman of the U.S. military’s Joint Chiefs of Staff, has said that President Barack Obama directed him to plan for “a militarily significant strike” that would deter the Assad regime’s further use of chemical weapons and degrade the regime’s military capability to employ chemical weapons in the future.

But officials said the U.S. doesn’t plan to bomb chemical weapons sites directly because of concerns any attack would disperse poison agents and put civilians at risk.

In addition to satellites, the U.S. also relies on Israeli spies for on-the-ground intelligence about the unit, according to U.S. and Israeli officials.

Though small in size, Unit 450 controls a vast infrastructure that makes it easier for the U.S. and Israel to track its movements. Chemical weapons storage depots are guarded by the unit within larger compounds to provide multiple layers of security, U.S. officials said.

Whenever chemical munitions are deployed in the field, Unit 450 has to pre-deploy heavy equipment to chemical mixing areas, which the U.S. and Israel can track.

THE MIDDLE-CLASS REVOLUTION IN THE EMERGING MARKET COUNTRIES

June 30, 2013

Wall Street Journal on June 28, 2013, published an article by Francis Fukuyama on the ongoing middle-class revolution in some of the emerging countries. Over the past decade, Turkey and Brazil have been widely celebrated as star economic performers—emerging markets with increasing influence on the international stage. Yet, over the past three months, both countries have been paralyzed by massive demonstrations expressing deep discontent with their governments’ performance. What is going on here, and will more countries experience similar upheavals? Excerpts below:

The theme that connects recent events in Turkey and Brazil to each other, as well as to the 2011 Arab Spring and continuing protests in China, is the rise of a new global middle class. Everywhere it has emerged, a modern middle class causes political ferment, but only rarely has it been able, on its own, to bring about lasting political change.

In Turkey and Brazil, as in Tunisia and Egypt before them, political protest has been led not by the poor but by young people with higher-than-average levels of education and income. They are technology-savvy and use social media like Facebook and Twitter to broadcast information and organize demonstrations. Even when they live in countries that hold regular democratic elections, they feel alienated from the ruling political elite.

In the case of Turkey, they object to Prime Minister Recep Tayyip Erdoğan’s development-at-all-cost policies and authoritarian manner. In Brazil, they object to an entrenched and highly corrupt political elite that has showcased glamour projects like the World Cup and Rio Olympics while failing to provide basic services like health and education to the general public.

The business world has been buzzing about the rising “global middle class” for at least a decade. A 2008 Goldman Sachs GS -1.47% report defined this group as those with incomes between $6,000 and $30,000 a year and predicted that it would grow by some two billion people by 2030.

Corporations are salivating at the prospect of this emerging middle class because it represents a vast pool of new consumers. Economists and business analysts tend to define middle-class status simply in monetary terms, labeling people as middle class if they fall within the middle of the income distribution for their countries, or else surpass some absolute level of consumption that raises a family above the subsistence level of the poor.

But middle-class status is better defined by education, occupation and the ownership of assets, which are far more consequential in predicting political behavior. Any number of cross-national studies, including recent Pew surveys and data from the World Values Survey at the University of Michigan, show that higher education levels correlate with people’s assigning a higher value to democracy, individual freedom and tolerance for alternative lifestyles. Middle-class people want not just security for their families but choices and opportunities for themselves.

Families who have durable assets like a house or apartment have a much greater stake in politics, since these are things that the government could take away from them. Since the middle classes tend to be the ones who pay taxes, they have a direct interest in making government accountable. Most importantly, newly arrived members of the middle class are more likely to be spurred to action by what the late political scientist Samuel Huntington called “the gap”: that is, the failure of society to meet their rapidly rising expectations for economic and social advancement. While the poor struggle to survive from day to day, disappointed middle-class people are much more likely to engage in political activism to get their way.

This dynamic was evident in the Arab Spring, where regime-changing uprisings were led by tens of thousands of relatively well-educated young people. Both Tunisia and Egypt had produced large numbers of college graduates over the past generation.

While protests, uprisings and occasionally revolutions are typically led by newly arrived members of the middle class, the latter rarely succeed on their own in bringing about long-term political change. This is because the middle class seldom represents more than a minority of the society in developing countries and is itself internally divided. Unless they can form a coalition with other parts of society, their movements seldom produce enduring political change.

Thus the young protesters in Tunis or in Cairo’s Tahrir Square, having brought about the fall of their respective dictators, failed to follow up by organizing political parties that were capable of contesting nationwide elections.

A similar fate potentially awaits the protesters in Turkey. Prime Minister Erdoğan remains popular outside of the country’s urban areas and has not hesitated to mobilize members of his own Justice and Development Party (AKP) to confront his opponents. Turkey’s middle class, moreover, is itself divided. That country’s remarkable economic growth over the past decade has been fueled in large measure by a new, pious and highly entrepreneurial middle class that has strongly supported Erdoğan’s AKP.

This social group works hard and saves its money. It exhibits many of the same virtues that the sociologist Max Weber associated with Puritan Christianity in early modern Europe, which he claimed was the basis for capitalist development there. The urban protesters in Turkey, by contrast, remain more secular and connected to the modernist values of their peers in Europe and America. Not only does this group face tough repression from a prime minister with authoritarian instincts, it faces the same difficulties in forging linkages with other social classes that have bedeviled similar movements in Russia, Ukraine and elsewhere.

The situation in Brazil is rather different. The protesters there will not face tough repression from President Rousseff’s administration. Rather, the challenge will be avoiding co-optation over the long term by the system’s entrenched and corrupt incumbents.

Brazil’s recent economic growth has produced a different and more entrepreneurial middle class rooted in the private sector. But this group could follow its economic self-interest in either of two directions. On the one hand, the entrepreneurial minority could serve as the basis of a middle-class coalition that seeks to reform the Brazilian political system as a whole, pushing to hold corrupt politicians accountable and to change the rules that make client-based politics possible. This is what happened in the U.S. during the Progressive Era, when a broad middle-class mobilization succeeded in rallying support for civil-service reform and an end to the 19th-century patronage system. Alternatively, members of the urban middle class could dissipate their energies in distractions like identity politics or get bought off individually by a system that offers great rewards to people who learn to play the insiders’ game.

There is no guarantee that Brazil will follow the reformist path in the wake of the protests. Much will depend on leadership. President Rousseff has a tremendous opportunity to use the uprisings as an occasion to launch a much more ambitious systemic reform. Up to now she has been very cautious in how far she was willing to push against the old system, constrained by the limitations of her own party and political coalition.

The global economic growth that has taken place since the 1970s—with a quadrupling of global economic output—has reshuffled the social deck around the world. The middle classes in the so-called “emerging market” countries are larger, richer, better educated and more technologically connected than ever before.

This has huge implications for China, whose middle-class population now numbers in the hundreds of millions and constitutes perhaps a third of the total. These are the people who communicate by Sina Weibo—the Chinese Twitter—and have grown accustomed to exposing and complaining about the arrogance and duplicity of the government and Party elite. They want a freer society…
This group will come under particular stress in the coming decade as China struggles to move from middle- to high-income status. Economic growth rates have already started to slow over the past two years and will inevitably revert to a more modest level as the country’s economy matures. The industrial job machine that the regime has created since 1978 will no longer serve the aspirations of this population.

There, as in other parts of the developing world, the rise of a new middle class underlies the phenomenon described by Moises Naím of the Carnegie Endowment as the “end of power.” The middle classes have been on the front lines of opposition to abuses of power, whether by authoritarian or democratic regimes. The challenge for them is to turn their protest movements into durable political change, expressed in the form of new institutions and policies.

The new middle class is not just a challenge for authoritarian regimes or new democracies. No established democracy should believe it can rest on its laurels, simply because it holds elections and has leaders who do well in opinion polls. The technologically empowered middle class will be highly demanding of their politicians across the board.

The U.S. and Europe are experiencing sluggish growth and persistently high unemployment, which for young people in countries like Spain reaches 50%. In the rich world, the older generation also has failed the young by bequeathing them crushing debts. No politician in the U.S. or Europe should look down complacently on the events unfolding in the streets of Istanbul and São Paulo. It would be a grave mistake to think, “It can’t happen here.”

Mr. Fukuyama is a senior fellow at Stanford University’s Freeman Spogli Institute for International Studies and the author of “The Origins of Political Order: From Prehuman Times to the French Revolution.”

US SENATOR LINDSEY GRAHAM OF SOUTH CAROLINA: THE SENATE’S REPUBLICAN DEALMAKER

June 26, 2013

Wall Street Journal on June 21, 2013, published an interview with Senator Lindsey Graham of South Carolina. Excerpts below:

On the issues, Lindsey Graham is at odds with prevailing—in his preferred description, merely louder—opinion in the GOP. He is also one of his party’s leading legislators.

Mr. Graham also faces re-election next year, and something may have to give. “If I lose, I lose,” he says, invoking one of his trademark sayings: “I don’t want to stop being a senator to be senator.” But Mr. Graham, a practiced politician, says the assumptions about the GOP’s mood and future direction are wrong. He says defense and immigration are a winner for him, even with South Carolina primary voters, as well as for the Republican Party.

Like drones, he says, data-mining is one of many tools approved by the courts and Congress to protect Americans from terrorists. “When I defend it, my critics say, ‘There, you’re helping Obama.’ No, I’m defending America. I don’t want to get so partisan and so jaded when it comes to national security I can’t help the commander in chief when I know I should.”

The isolationist mood in the GOP “has to be contained and pushed back against,” he says. “You know why I’m not worried about it? Because after the Boston bombing everybody was tripping over themselves to get to the right of me. A lot of this is headline-driven.”

In the rising generation of GOP politicians, he sees in Mr. Rubio, New Hampshire Sen.Kelly Ayotte and Wisconsin Rep. Paul Ryan successors to Ronald Reagan’s “peace through strength model” of politics.

Along with Mr. McCain, he continues to call for the U.S. to impose a no-fly zone in Syria and to move beyond President Obama’s decision last week to supply small arms to the rebels. Yet some Republicans joined with the antiwar left to oppose any involvement in Syria. Mr. Graham brushes it off.”Every major period of turmoil, there have been voices, ‘Leave those people alone.’ And they have been eventually drowned out by voices that we are America, we have to do the right thing, we have to lead.”

Looking beyond immigration, Mr. Graham sees a showdown over a congressional attack on the NSA program. “I think it’ll go down in flames, and I’m gonna try to prove to you that criticism doesn’t represent a change in Republican Party politics. It’s loud and it’ll sometimes be a threat. But in the 2016, 2014 [election cycles] . . . all of that won’t sell. And if it does sell, I’ll be a man without a party.”