Tom Loftus: We have a chance to finally end the Korean War

April 25, 2018

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Thomas A. Loftus (Norway, 1993-1997)

Cross posted from Madison.Com

Wisconsinites Stanley Christianson, Melvin Handrich, Einar Ingman, Mitchell Red Cloud Jr. and Jerome Sudet received the Medal of Honor for their service in the Korean War, where fighting lasted from the summer of 1950 until an armistice was signed in the summer of 1953.

It is time to finally end that war. Now there is a chance.

Mike Pompeo, the director of the CIA, has met with North Korea’s leader Kim Jong-un to prepare for a summit meeting between Mr. Kim and President Trump.

On April 27, Kim Jong-un and South Korea’s President Moon Jae-in will meet, and they are expected to issue a joint statement on what may be the subject of future meetings, including the issue of nuclear weapons on the Korean Peninsula.

President Trump has now said that if the two leaders decide to “discuss the end of the Korean War” it is OK with him. This is significant because it has a clarity that the yet-to-be-defined goal of “denuclearization” does not.

Also important is that for the third time Japanese Prime Minister Shinzo Abe is meeting with Trump. Read the rest of this entry »

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Hopeful Signs for Religious Reform in the Arab World

April 10, 2018

trumpsalmansaudi_052017gettyEdward M. Gabriel (Morocco, 1997-2001)

Cross posted from The Hill

Saudi Crown Prince Mohammed Bin Salman’s visit to the United States has generated much press and excitement about the future monarch, a leader who appears to be committed to religious, socio-economic and political reforms.

New York Times writer Thomas Friedman commented, “MbS. is definitely bold … no one else in the ruling family would have put in place the profound social, religious and economic reforms that he’s dared to do — and all at once.” The U.S. press has expressed a lot of excitement about the potential changes that could occur in Saudi Arabia, the country that is the custodian of the two holiest mosques in Islam.

This will come as a welcome sign to Morocco, Jordan and Tunisia, who have been grappling with significant change and reform for the better part of two decades. The first and most impressive effort concerning religious reform, however, is that led by King Mohammed VI of Morocco, who has initiated significant projects with the objective of teaching moderate religious values based on the Maliki rite of Islam, and focused on tolerance and openness to counter extremism and radical religious interpretation. Read the rest of this entry »

Trade Tensions Reflect U.S.-China Battle for 21st Century World Order

April 6, 2018

us_china_trade_1Stuart Eizenstat (European Union, 1993-1996)

and

Anne Pence (International Policy Adviser to the State Department, 1992-2005)

Cross posted from The Hill

The arms race was a defining element of the Cold War between the U.S., its allies and the Soviet Union. President Trump’s recent proposal for $60 billion in unilateral actions against China presages a pitched 21st-century battle over technological supremacy, with fateful consequences for the world order.

The Trump administration rightly sees that China’s aggressive efforts for economic domination hurt the competitiveness of U.S. industries — and that of our allies. But its unilateralist response is unlikely to change China’s approach and could damage U.S. interests. A more comprehensive, coordinated and strategic U.S. approach is necessary. Read the rest of this entry »

Can Fintech Bridge Asia’s Digital Divide?

April 6, 2018

Curtis S. Chin (Asian Development Bank, 2007-2010)

Jose B. Collazo (Southeast Asia analyst)

Cross posted from The Nation Thailand Portal

For policymakers and entrepreneurs, the benefits of addressing the digital divide and of harnessing the power of fintech should be clear-cut. Taken together, both steps can increase the level of access to capital and financial inclusion. 

That’s certainly a view that will be explored here in Thailand as the Milken Institute co-hosts a “Future of Finance” roundtable with the Bank of Thailand tomorrow and at the 21st annual Milken Institute Global Conference next month in Los Angeles.

In the new landscape of finance – with “fintech” serving as shorthand for the technologies that are delivering innovations as well as new challenges and opportunities to the once staid banking sector – up for debate are future business models, regulatory frameworks and how to align fintech practitioners, investors and beneficiaries.

From blockchain to crypto-currencies including Bitcoin and Ethereum, as well as Initial Coin Offerings (ICOs) that allocate “tokens” as a new means of crowdfunding capital, the language and disruptions buffeting the mainstream banking and financial services industry can seem overwhelming.  

 

Read the rest of this entry »

The Crisis in U.S.-Turkish Relations

April 2, 2018

J. William Middendorf II (Netherlands, 1969-1973; European Communities, 1985)

Dan Negrea (Managing Partner, MTN Capital Partners LLC)

Cross posted from The Washington Times

Few U.S. allies have a more important strategic position than Turkey. None has a more troubled relationship with the U.S. Both countries must use prudence, patience and perseverance to repair their alliance.

Turkey is the size of Texas, has a population of 80 million, and an economy that ranks 17th in the world. Its military is the second largest in NATO, with more personnel than Germany, the U.K. and France combined.

Its strategic location is exceptional. On land it neighbors the Balkans, the Caucasus, Iran, Iraq and Syria. To its north, across the Black Sea, is Russia. Turkey’s Bosporus and Dardanelles straits control Russian naval transit from the Black Sea to the Mediterranean. To its south, across the Mediterranean Sea, are Lebanon, Israel, Egypt and the Suez Canal.

Modern Turkey emerged in the 1920s from the wreckage of the Ottoman empire through the reforms of Mustafa Kemal Ataturk. He replaced Islamic law with legal codes from European countries. He introduced economic and educational reforms. And he established a parliamentary democracy with the armed forces as the guardian of secularism.

Read the rest of this entry »

Hands-on learning, out of the classroom and around the world

March 13, 2018

Mark Brzezinski (Sweden, 2011-2015; Managing Director, Makena Capital)

and

Dave Burke (CEO and Co-Founder, Makena Capital)

Cross posted from Axios

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Experiential learning is not new — apprenticeships and “secondee” systems have been practiced for centuries — but this valuable approach still has much to offer, especially once reimagined for the workplaces of today and tomorrow.

As a pilot project, one of us (Dave Burke) organized scholarship funds for a 15-day course on investing and entrepreneurship that took 12 undergraduate students at the University of Virginia to “classrooms” around the world: family investment firms in South Africa, sovereign wealth funds in the United Arab Emirates and financial management offices in Hong Kong.

A central exercise required each student to plan and moderate a conversation with an investment professional in front of their peers, forcing them to draw on and challenge their own knowledge by engaging with an expert in the field. By the end of the course, students felt these hands-on, home-turf encounters with leading practitioners had deepened their understanding and enhanced their confidence.

Stops along the way:

  • Johannesburg: Through meetings with key family office investors, students weighed considerations around preserving capital, recognizing that families have varying goals relating to risk, liquidity, and intergenerational wealth transfers. Deep dive sessions with Richard Okello, the Uganda-born founder of Sango Capital, and the Oppenheimer family, longtime owners of De Beers, explored emerging market dynamics and sustainable nature conservation. To round out the trip, students visited the Apartheid Museum, Lilesleaf Farm (Nelson Mandela’s pre-trial hideout) and the Shambala game reserve.
  • Abu Dhabi: The focus here was on the $7 trillion world of sovereign wealth funds, influential providers of capital to the global financial system with unique investment criteria. To understand how these organizations balance investing as principals against delegating to other investment firms, students moderated an investor panel at the Abu Dhabi Investment Council (ADIC). Magnus Olsson, a Swedish transplant who is CEO of Careem, the Uber of the Middle East, shared what it takes to bring a startup to scale in the unique context of the Middle East. Adding some cultural depth, students toured the “Twelve Civilizations” exhibit at the Louvre Abu Dhabi, visited the Grand Mosque and rode camels among the sand dunes of the “Empty Quarter,” where the UAE borders Oman and Saudi Arabia.
  • Hong Kong: The final stop offered a bottom-up lens into investment “on the ground,” with fund managers who buy and sell individual securities. Meetings covered how investors assess the value of prospective companies; identify attractive investment opportunities; manage a portfolio; and develop thoughtful risk-management policies. The students heard from Lei Zhang at Hillhouse Capital (the “Warren Buffet of China”), venture capitalist Eric Li, and an investment team at Bain Capital, and dined with Jamil Anderlini, the Financial Times’ Asia Bureau Chief, at the China Club atop the Old Bank of China tower, which overlooks Hong Kong Harbor.

What’s next: Plans are underway for a second course next year: a trip to Nepal that will focus on development assistance, disaster recovery (from the massive earthquake two years ago) and the role of microfinance and grassroots entrepreneurship in job creation and women’s empowerment. Alumni of the previous course could be recruited as student leaders.

Why it matters: This model can be adapted at plenty of other scales. No matter what industry you work in, seize the opportunity to let students shadow you, so they learn from real experts and practitioners. Students absorb skills and lessons through experiential learning that they never will in a classroom, while seeing what works and what doesn’t in a professional context. It’s a venture-style bet that mentors can make with their most important resources — their time and network — that our nation’s young people need perhaps now more than ever.

 

Can Trump Come Back from a Blunder on North Korea

March 13, 2018

Richard N. Holwill (Ecuador, 1988-1989; Arms Control and Disarmament Agency, 1990-1993)

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The Kim dynasty has long sought to bring legitimacy to the country formally known as Democratic People’s Republic of Korea (DPRK) and informally as North Korea. The long-standing position of the U.S. Government (USG) has been that diplomatic recognition will not be extended to the DPRK until its supreme leader signs a peace treaty with the Republic of Korea (ROK), informally known as South Korea.

A meeting with the president of the United States would grant that legitimacy to the DPRK and make a hero of Kim Jong-Un but without securing a peace treaty or any other concession. Kim will not give up his nuclear weapons based on a single meeting. The path to denuclearization will be long and hard and will require concessions from the United States and security guarantees by the People’s Republic of China.

President Trump’s acceptance of the invitation appears to have been impulsive. The New York Times and Washington Post have each confirmed that Trump did not seek the advice of his National Security Advisor or of his Secretary of Defense before his meeting with the envoys from South Korea who delivered the invitation to meet with the DPRK’s “Supreme Leader.” There are signs that this meeting will not happen, which may well reflect the fact that those in this Administration that have extensive foreign policy experience have now explained the complexity of the issue to the President.

Without regard to the capricious way that this came about, seasoned diplomats would now try a gambit to make the most of the current state of play. If Kim’s appetite for a meeting is now so strong, he might be willing to accept a peace treaty and diplomatic recognition as the price of the meeting. After all, a peace treaty and diplomatic recognition could offer the DPRK a degree of security. At this point, U.S. policy implies a desire to overthrow the Kim Dynasty. With diplomatic recognition, the USG will be expected to forego that goal. Only then can we move forward with negotiations toward denuclearization.

Diplomatic efforts, like a chess game, are best played with the king hanging back. We believe that the President would now be wise to move other pieces on the board before over committing himself.

Note: The author served as Counselor to the Arms Control and Disarmament Agency when an earlier administration considered negotiations with the DPRK.

News from Norway: Russia and the Floating Nuclear Power Plant

March 2, 2018

Thomas A. Loftus (Norway, 1993-1998)

Cross posted from Madison.com

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When they learned of the Russian plan, 5 million Norwegians fell off their skis.

This June, two nuclear reactors on a barge — a floating nuclear power plant christened the “Akademik Lomonosov” — will be towed from the naval shipyard in St. Petersburg through the Baltic Sea and then north along the 1,600-mile coast of Norway. The barge will stop just over the Norwegian border with Russia in Murmansk, where its nuclear fuel will be loaded.

The original plan had the reactors being loaded with fuel in St. Petersburg. This was the shocker that had the descendants of the Vikings sputtering “Uff da” (untranslatable).

Norwegians translated “Lomonosov” as Russian for “a radioactive accident waiting to happen sailing through the offshore oil rigs and the cod fishery, not to mention the armada of cruise ships plying the same course.”

After strong protests from the Norwegian government, the Russians said they would wait to make the reactors hot until they reach Murmansk.

From Murmansk, the now-armed nuclear power plant is to be towed 6,500 miles east on the Northern Sea Route, a new ocean route connecting the Atlantic and the Pacific that has opened up because of global warming.

The destination of the Lomonosov is Pevek, the northernmost town in Russia, quite close to the Bering Strait and Alaska, where the reactor will power a large copper-mining project.

Murmansk, a port city of 300,000, is the largest city north of the Arctic Circle. It is at the terminus of the warm waters of the Gulf Stream, giving it the strategic status of being Russia’s only ice-free port with direct access to the Atlantic Ocean. It is home to the Russian Navy’s nuclear submarines — the ones tipped with atomic bombs meant for targets in the United States — and the home of the Russian nuclear icebreaker fleet. The reactors on the Lomonosov will be the same type as those powering the icebreakers.

My first trip to Murmansk was in 1995. My trip was part of a successful diplomatic effort to negotiate an agreement where Russia would no longer dump submarine reactor coolant in the Arctic Ocean.

My hotel was a nuclear icebreaker. The captain of the ship, my host for the night, had a red hammer and sickle tattoo on the webbing of skin between this thumb and forefinger on his right hand.

I boarded just after touring the facility that stored low-level liquid nuclear waste, the spent cooling fluid for the reactors on Russian submarines. Hearing this, the captain handed me a glass of vodka and said, “Nostrovia.” Translation: “To your health.” More toasts followed and we got healthier.

The end of the Cold War had not been good for the captain. The icebreaker was taking tourists to the North Pole at $25 grand a pop. There was not much else for the ship to do because when the Soviet Union broke up, the economy collapsed and the usual task of icebreakers, to keep Arctic rivers open so coal, iron and timber could reach Murmansk for export, was no more.

No longer. In the eye blink of time between my visit to Murmansk to today, 23 years, global warming has created the first new sea route in recorded history. The rapid warming of the Arctic means the Northern Sea Route will see more commercial shipping, almost all needing icebreaker escort. The route, northern Europe to Shanghai, beats the Suez Canal route by 18 days.

The Murmansk-Norwegian border region has more nuclear weapons, nuclear reactors and nuclear waste sitting around than any other place on earth. And, no military secret: This is where the U.S. Navy’s nuclear subs also hang out.

Some accident is bound to happen. The Russian submarines have had several over the years, mostly fires onboard.

Northern Norway is where the radioactive cloud from Chernobyl drifted in 1986. There was no alert and no information from the Soviet Union. The Norwegians did not know what was happening.

They expect another incident of release of radioactivity from the uptick in nuclear activity. The government is planning to distribute 3 million iodine pills to areas of high risk. Iodine pills, when taken within hours of exposure, offer some protection against cancer for children.

The Lomonosov will be tested in the summer of 2018 in Murmansk. A transport ship hauling spent nuclear fuel will also be in and out of the harbor. The docks for the icebreakers and their maintenance yard, unique in all the world, are beyond capacity already.

If the Northern Sea Route is to be commercially viable and Murmansk is to be the center of Arctic shipping, the Russians have to guarantee safety.

The Norwegians will be demanding it. The United States has to play a constructive role. No bellicose threats. No provocative maneuvers by our submarines. Offers of help even though they will be turned down. And, an acknowledgement that the Northern Sea Route is very important to Russia.

If the U.S. is smart we will let the diplomats lead. This should be the place a new constructive relationship with Russia begins. Call it the Nostrovia Initiative.

An FBI Contribution in Eastern Europe

February 21, 2018

Donald M. Blinken (Hungary, 1994-1998)

Cross posted from the New York Times

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To the Editor:

On the wall in my office is a 1996 photograph taken in Budapest. Among the 10 portrayed facing the camera are a former president of Hungary, Arpad Goncz; Louis Freeh, then the F.B.I. director; Janet Reno, then the attorney general; and me. We were celebrating the first anniversary of the 1995 founding of the International Law Enforcement Academy.

The brainchild of Mr. Freeh, the Budapest-based academy supports training for law enforcement personnel from 26 countries in Central and Eastern Europe and in Central Asia. In 2005, Robert S. Mueller III, then the F.B.I. director, attended the academy’s 10th anniversary celebrations.

Mr. Freeh, the Hungarian government and I had two goals in mind: training law enforcement personnel in the former Soviet bloc in appropriate policing and investigative methods, as enjoyed by the United States and Western Europe, and encouraging these disparate police officials to begin to talk to one another, a practice unknown in the Communist days.

The results in uprooting crime and heading off terrorism have been outstanding. I am persuaded that neither President Trump nor Devin Nunes, the chairman of the House Intelligence Committee, who released the memo critical of the F.B.I., has ever heard of the academy, but the American public deserves to know how its interests are being effectively served by the F.B.I. throughout Central and Eastern Europe.

Politics, NAFTA and Security Make for a Bumpy Ride

February 16, 2018

Antonio Garza (Mexico, 2002-2009)

Cross posted from Ambassador Garza’s newsletter

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In two weeks, North America’s NAFTA negotiators will sit down for the seventh round of negotiations in Mexico City, and Presidents Trump and Pena Nieto have announced that they too will be meeting. The teams will have a lot on their plates, as previous rounds have eked out only slow progress on all the major issues. It is a far cry from this summer’s initial ambitious agenda that promised a modernized agreement by early 2018. Although, it’s not particularly surprising, since opening up an agreement that touches almost every sector in North America’s economies is no simple task and especially so with a U.S. team that is navigating its own domestic landmines and political risk (as I’ve written about previously). We should be preparing ourselves for a much longer timeline than initially expected, with negotiations likely stretching at least through the coming months and potentially into the coming year.

Yet, time is not on the NAFTA negotiations’ side. On July 1st, Mexicans will head to the polls to elect their next president and the pre-campaigns are already in full swing. The top three candidates have been traveling the country to meet with voters and share their campaign promises. Andrés Manuel López Obrador (AMLO) is the current leader with 23 percent of the vote. Best known for his populist platforms and discourse against the political establishment, AMLO has indirectly taken a more moderate position on NAFTA. His proposed economy minister promised to continue NAFTA negotiations and not to trash or restart the modernization process. The other top contenders—PAN party candidate Ricardo Anaya and PRI candidate José Antonio Meade (with 20.4 and 18.2 percent of the vote respectively)—have also made it clear that they would continue the talks. Yet, negotiating a thorny agreement through a political transition is sure to be a precarious endeavor.

Another controversial political issue has been the future of Mexico’s 2013 energy sector opening. While Anaya and Meade have supported the reform, AMLO has been a critical opponent, previously saying that he would roll it back or put it to a referendum. Yet AMLO’s proposed Energy Minister has adopted a less extreme path, outlining his plan to build a Mexican refinery and saying that he wouldn’t tear up existing contracts. Despite the political uncertainty, private sector interest in Mexico’s energy sector has surged. The January 31 deepwater oil and gas round was the largest to date, with investors claiming 19 of the 29 fields and pledging half a billion dollars in cash-signing bonuses. Overall, investment in the sector is estimated to reach $150 billion over the course of the current contracts.

However, while NAFTA and the energy reform are two major policy concerns, Mexicans are likely paying more attention to corruption and violence levels around the country. In the latest saga, Chihuahua Governor Javier Corral recently emerged as a national voice on corruption after his team began investigating the alleged embezzlement of more than US$12 million in state funds. The money was siphoned off under the previous (and now fugitive) governor Cesar Duarte and allegedly used to fund other PRI politicians’ campaigns. The investigation into the missing money exploded onto the national scene when it began to ensnare top PRI officials and after the federal government responded by withholding from Chihuahua $36.5 million in promised funds. The standoff led Corral to criss-cross the country protesting with a “Caravan of Dignity” and with the federal government finally backing down this past Monday and delivering the money.

These corruption scandals are also taking place in the midst of Mexico’s most violent year in recorded history. The number of homicides in 2017 surged past even the bloodiest years of the Calderón administration with no signs of slowing down. The factors driving the rise in violence are likely sub-region-specific and include everything from group infighting between different factions of the Gulf Cartel in Reynosa, local groups jockeying over lucrative poppy production in Guerrero, or fighting over who gets to sell drugs where in Ciudad Juárez. Yet one thing is clear, there has not been a strong and united federal strategy for lowering the violence. Instead, the response has been reactionary, with security issues failing to garner the same high-level attention as the country’s economic issues.

In the United States, we’ve also been grappling with our own domestic issues that directly affect Mexico. This includes the DACA debate, which will go back in front of Congress next week, and the budget’s emergency funding for the United States’ opioid crisis. Two weeks ago, U.S. Secretary of State Rex Tillerson emphasized the importance of working together with Mexico on many issues. In a speech last week at my alma mater the University of Texas at Austin, Tillerson outlined how the United States can approach cross-border security issues by improving its own drug policies and also by providing Mexico with targeted funding and training. While bilateral discussions may get overheated at times, working together on these and other cross-border issues continues to be the best way to respond to both countries’ most pressing challenges.