Wednesday Night #1515

As promised in the Prologue, it was a star-studded – and SRO – evening, further enhanced by some last-minute additions that included Clive Rustin and his “Brother Tony”, former Executive Vice President of SNC Lavalin and now Chairman of ProSep Inc., which designs, develops, manufactures and commercializes a wide range of process equipment to separate oil, gas and water. Particularly relevant to this Wednesday Night is that one of ProSep’s network is a company that operates out of Manama, Bahrain.

Japan
It is not inconceivable that this could be the catalyst for both beneficial economic and political change, but I think it is too early to fully understand the global ramifications of what has happened and it will be a while before we can work that out 

In addition to the obvious adverse effects of Nature’s attack on Japan and more specifically, on Japan’s economy, many unanswered questions remain. As for the economic effect, Japan has always proven itself to be resilient and the cost of rebuilding will be shared with insurers all over the world. After a difficult few years, there will be likely be business for everybody, considering the magnitude of the task of reconstruction. Post-disaster reconstruction, notably following a war, has traditionally stimulated the economy of a country and is expected to do the same for Japan following this unspeakably horrible experience. What remains a question mark is the long term effect of an interruption in the global supply chain which is extremely sensitive to any disruption. The impact on the flow of automobile parts and high tech material and other exports to the rest of the world is likely to be huge. [Update: Japan to invest in quake-struck auto-parts industry — The state-backed Development Bank of Japan is setting up a fund to help the country’s auto-parts industry recover from the earthquake and tsunami Financial Times 30/05]

Perhaps more importantly, the psychological effect of the world’s population’s fears of the nuclear industry, the only currently valid alternative to constantly increasing carbon emissions which have the potential to ultimately render life on the planet impossible. The present tragedy has occurred at an especially difficult time when the government of Japan is highly indebted. The question arises as to the economic effect on Japan during the post-rebuilding period.

The Middle East and the U.S. in the world
Democrats have a tendency to sellout foreign policy in favor of domestic concessions [including their own reelection]

The United States is a beacon because of its principles, but it survives because of the way it defends its interests

In the wake of the Bush administration, President Obama faces a world in which not only has anti-Americanism increased overwhelmingly regarding the actions of the U.S., but there is also the fundamental question of what the United States is; what is its character? Mr. Obama came into office at a time of acute distress, both regarding the moral legitimacy of the U.S. but also the [economic] foundations of its power. Despite his many declarations regarding the need for reassessment of foreign policy, Mr. Obama did not have the luxury of time to formulate proposals while the Democrats still controlled Congress. In 2008, foreign policy took a back seat to domestic issues, and now the Republicans have gained control of Congress. For more see Vimeo/Steven Hook
There is no – and rarely ever has been – national consensus on U.S. foreign policy and the role that the United States should play in world affairs. Today, as in the past, there is a split between those Americans who want to reform the world and those who favor isolationist policies. The U.S. general population is neither well educated, nor interested in foreign affairs.
Liberals would like to believe that the U.S. should live by its principles, play an activist role for a better world; but public opinion in the U.S. is moving more and more towards a vision of the U.S. as “the city on the hill” – a role model, but not an intervenor.   Some realists suggest that at this point, the U.S. does not possess sufficient means to exercise large military, hence economic power.
We have data but not really, intelligence. We keep repeating past mistakes, overestimating the power and influence of the United States to patrol the world, as was once the case. We tend, too, to overestimate the power of the President to control the United States.

The uprisings in the Arab world, whatever the root causes,  are especially troubling in the case of Libya, which lacks the disciplined army that enabled a mostly non-violent transition in Tunisia and Egypt. Libya’s primarily non-native soldiers do  not hesitate to fire on native protesters, thus increasing the number of murders sanctioned by the State. Gaddafi has committed the crime of murdering Libyan citizens, clearly in contravention of international law, and has been condemned in the UN Security Council, which will make even Russia and China reluctant to offer him any support. Even if  the opposition fails to topple his regime, there is no doubt that Libya would remain a pariah for many years to come.
Meanwhile, today only the United States has the military ability to intervene, but without the support of the U.N. Security Council, intervention could prove difficult, costly and result in a political quagmire for President Obama.
The  dilemma is increased in the current context by relationships (petroleum and military-related) with other Muslim countries in the area, the President’s power to transcend and transform,  the necessity to deal with Saudi Arabia and Pakistan, Iran [and the elephant in the room – Israel], the will of Congress, the will of the Executive and the system of checks and balances that limits the President’s authority.
According to the principle of Responsibility to Protect (R2P), the international community has the obligation to protect civilians under attack within their own country, but unless the U.S. takes military action,  other nations will not move. This explains why President Obama is emphasizing the need for NATO action and the concurrence – if not cooperation – of the Arab nations.
In effect, there is more at stake in North Africa for Europe, and particularly those countries bordering the Mediterranean, than for the United States. The fact that the U.S. has larger defence budget than the rest of the world combined doesn’t translate into power. It’s a lot more expensive to have enemies than to have friends. It’s more about economic strength and economic growth than military expenditure.

A key question going forward is how will countries like Tunisia, Egypt, Libya deal with the absence of  national expertise and labor forces to develop and maintain their infrastructures? The recent withdrawal of the SNC-Lavalin workforce from Libya illustrates the problem – of the 3,000 workers evacuated, only a small number were Canadians. People in these countries see millions being invested in projects, but have no part in them, which inevitably fuels resentment.

In Canada, the prospect of an early election looms large. The F-35 contract will be reviewed. The armed forces do need a replacement of the CF-18, but the proposal of the F-35 contract might lead to an election.

The “two-handed” response to the direction of the market was evident, with some market gurus recommending “sitting on cash” rather than investing, awaiting money moving to the United States in response to the situation in Japan.
The technical view reports an upturn in the market following an important unsettling world event. The current downturn is taking place and the market is being oversold, leading to an expected buying opportunity. In effect, the expected first quarter pause and correction have taken place. The bull market is expected to regain its strength as spring arrives.

The Prologue

Steven Hook, Chairman of the Kent State University Political Science Department will be with us. Steven, who is a past president of the Foreign Policy Analysis sections of the International Studies Association (ISA) and the American Political Science Association, is attending the ISA Annual Conference, whose theme this year is GLOBAL GOVERNANCE: POLITICAL AUTHORITY IN TRANSITION – a very timely subject in view of events in the Middle East and Arab world, especially Libya, as is his about-to-be-published  Routledge Handbook of American Foreign Policy -.The former surely guarantee a second edition of the latter in the works.
There is a virtual delegation of B.C. representatives – well, at least a 2-person delegation. Linda Naiman, enthusiastic member of Wednesday Night’s West Wing and founder of Creativity at Work, who is recognized globally for pioneering arts-based learning as a catalyst for transformation in business, is in Montreal on one of her too-infrequent visits; and coincidentally, our OWN Martin Barnes who hopes to bring his daughter (a gender and development expert at the OECD in Paris, who has a PhD in that subject from the LSE – we promise limited references to her fellow doctoral graduate, Saif Gadhafi . According to Martin, “She is presenting two separate papers at the ISA conference and also participating in a roundtable session”). And Pierre Arbour, our resident expert on oil & gas, Napoléon, and frequent commentator on Palestinian matters, is back.
The guest list represents such a wealth of talent and information, we hardly dare choose topics for consideration, however we hope to take full advantage of Steven Hook’s presence to garner insights into current U.S. foreign policy in light of the tumultuous events that have been unfolding daily, if not hourly. More importantly, what may we expect going forward?
Events in Libya and other oil producers in the Middle East have triggered higher oil and gas prices, along with much punditry about the wisdom of relying on ‘feeble’ regimes such as Saudi Arabia to bail the West out. With the devastating impact of the earthquake and tsunami in Japan, there is yet another set of energy requirements to be considered (Japan impact on oil and gas markets) Pierre and Martin will surely have comments on the industry and Steven will no doubt be able to add the U.S. dimension to the discussion.
Closer to home, we hope you have been following the Québec shale gas story – Lucien Bouchard may be regretting having accepted his new role.
The tragedy of the twin natural disasters of earthquake and tsunami in Japan is consuming the media. Aside from the humanitarian issues, and the incredible task of rebuilding an entire area, the events have triggered major concerns regarding the wisdom of building nuclear power plants in a country that is prone to earthquakes. The debate has major ramifications for the United States’ energy policy Japan’s Nuclear Crisis: Lessons for the U.S. , and, perhaps as important, it highlights the very sad state of North American infrastructure.
With election fever – or at least, feverish talk of elections – our B.C. delegation may well have comments on Saturday’s announcement of the departure of 3 prominent members of the Harpergovernment and what – if anything – this means to the electors most concerned.
And, while Linda will no doubt bring us up to date on Creativity at work, we would also like to hear from her whether there is any hope for civility at work among our politicians.If you are not daunted by all the brainpower assembled for Wednesday Night, and/or you feel in need of ammunition, we encourage you to attend the discussion with Paul Heinbecker about the state of Canadian foreign policy “Getting Back in the Game: A Foreign Policy Playbook for Canada”, presented by the Montreal branch of the Canadian International Council (CIC) in collaboration with the Concordia Student Union and the Montreal Institute for Genocide and Human Rights Studies (for details and Mr. Heinbecker’s impressive bio, see: CIC website ) It is scheduled for 6-7:30 pm on Wednesday at Concordia’s Hall Building, so you will even have time for a quick bite before WN. We had hoped to welcome Mr. Heinbecker after the event, but not unexpectedly, he is booked solid, so we reserve that pleasure for another occasion.

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