Saturday, January 02, 2010

Happy New Years

To all my readers, Merry Christmas and Happy New Years. May 2010 be a heck of a lot better than 2009, and let's boot out ALL the Democrats in the elections this Fall. Damon

Who The Hell Is Winning This War?
Well, major news organizations are now calling the Mexican military's counter-cartel operations in northern Mexico a “surge.” It is accurate to say that the number of reported Mexican Army operations in northern Mexico is increasing. That does not mean, however, that the actual number of operations run by the military has gone up, rather, the number getting ink and electrons in Mexican and U.S. news outlets has jumped. The government and media reports all acknowledged that the big fight continues to be for Cuidad Juarez (Chihuahua state), but there are reports of operations by the military and national police all along the Mexico-Texas border. An example of this is the December 5, 2009 reports on the army action in the town of Nuevo Progreso (Tamaulipas state). It turns out some of the reports came from tourists who heard the gunfire. The Cartel War is now entering its fourth year and perhaps the Calderon government has decided to mark the anniversary with an offensive (a “surge,” which is a term American media understand). The government has been talking about the success of its “constant pressure” strategy on the cartels. Many critics call that hogwash and say the cartels are getting stronger. If the critics are correct, then more fights may be occurring because the cartels think they can win engagements with the military and they are in the process of proving it. The government's “pressurization” strategy is multi-pronged, but it includes “eroding” the power of cartel leaders and going after their financial assets. The government has racked up some major convictions and a number of cartel leaders have been captured or killed-- and that is erosion of a definite sort. That suggests another scenario: some of the cartels, instead of being stronger, are getting more desperate. They have decided they have to come out and fight. That means more engagements with the military, which is something the military wants.

Mexican media sources estimate 4,000 people have been murdered in drug gang-related violence in Ciudad Juraez (across the Rio Grande from El Paso) and its surrounding area during 2009. Official figures place the number murdered around 2600.

A journalist from the town of Tulum (Quintana Roo state, southeastern Mexico) was murdered by a gunman on a motorcycle. The murdered man, Jose Alberto Velazquez Lopez, owned a newspaper in Tulum. He had recently accused the local mayor, Marciano Dzul Caamal, of corruption. Velazquez and Dzul are described as “sworn enemies.” Media lobbyists have asked the Mexican government to investigate.

Drug cartel gunmen attacked the family of a Mexican Marine who was killed in the Navy's raid that killed drug kingpin Arturo Beltran Leyva. The government called the murders an act of reprisal. The mother of the dead marine, two siblings, and an aunt were killed, in their home in Tabasco state, by the cartelista hit men. A media report said that the gunmen were likely members of Los Zetas. Some government critics now say that releasing the names of military members and police officers killed in battles with drug gangs is a mistake.

Mexican Marines have also killed notorious drug lord Arturo Beltran Leyva (nicknamed “The Beard”) when they raided an apartment in Cuernavaca (south of Mexico City). Five of Beltran Leyva's bodyguards also died in what Mexican media described as a “dramatic shoot-out” in the apartment and in the streets of the town. Three marines were wounded by grenade fragments. One marine later died. The Beltran Leyva cartel split from the Sinaloa cartel. It is closely aligned with Los Zetas. Beltran Leyva himself had been dealing drugs since the 1980s. Mexico's Marine force (Infanteria de Marina) are sometimes called Mexican Naval Infantry. The Marines are part of the Mexican Navy. The Marines are a select force trained for amphibious operations, port security, reconnaissance, and crisis response. Crisis response includes performing security and emergency functions in natural disasters (like hurricanes). Mexico's Marines are a very professional outfit. Like U.S. Marines, they have a high esprit de corps.

The U.S. is going after “kingpin” businesses. The U.S. Treasury Department announced that it had blacklisted three men who it accused of providing material and financial support for the Sinaloa cartel. Treasury can now freeze the assets of the men involved and can exclude them from doing business in the U.S..

The government said Gulf cartel gunmen (likely members of Los Zetas) “dumped” six severed heads in a town in Durango state. The heads were those of a state prosecuting attorney and five policemen. The government said it believes the six men were killed as an “act of revenge.” The Mexican Army killed ten Gulf cartel gang members in the area earlier this month.

The Calderon government proposed that future presidential elections, where no candidate receives over fifty percent of the vote, be decided in a run-off election. Several recent elections have been decided by a percentage point (or less) between two candidates who both collected around 35 percent of the vote in a three-way race. The run-off idea has merit, since it would give the new president a definite mandate. The government reform proposal also backed citizen ballot initiatives.

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The Return of the Russian Bear
After a devastating economic crisis Russia seemed to be changing its ways. But an unexpected rebound in export prices has eased the pressure. As the boom gains strength, memories of tough times are fading fast. So are the reforms. That was the story in 2000. Then Russia rebounded spectacularly from the 1998 financial crash. It’s also the story for 2010. Russia is poised for economic recovery, but not a particularly healthy one. The country still depends too much on commodity exports. When prices fell, Russia’s GDP slumped – by an estimated 7.5 percent in 2009. But with prices up, the government spending and foreign capital coming into the country, 5 percent growth is possible in 2010.

Russia has a few pluses. Its financial system is less indebted than that of more developed peers. Strong neighboring Asian economies are big markets. And the latest crisis has spurred some reforms, including a revival of the moribund privatization program and a re-energized a bid to join the World Trade Organization. A new nuclear weapons treaty with the United States will be welcomed around the world.

But the reform drive is largely superficial. Indeed, there is less push than a decade ago. Vladimir Putin, now prime minister, has become more of an obstacle than a change-agent. The fate of fallen oligarch Mikhail Khodorkovsky is an ominous example. His second trial, which should end in the spring, will probably extend his prison sentence by many years, and further tarnish the reputation of the country’s legal system.

President Dmitry Medvedev, Putin’s protege, seems to have the desire to do more, but as yet he lacks the necessary clout. If he does get more authority, the result could be a paralyzing fight with Putin, rather than big changes. Investors may be willing to overlook the Russian economy’s structural woes, but they shouldn’t forget the country has had a crisis almost every five years. Watch out for 2013.

Why China Really Wants A Big Navy
The growth of the Chinese navy, seen from the Chinese point of view, is the result of China's three decades of economic growth and modernization. This economic growth depends on massive imports of raw materials, particularly oil and ores, especially iron ore. While China's economy could continue to grow without its massive exports, that economy would collapse without the imports. Thus China has gone from being classic "Continental Power" (that was not dependent on seaborne commerce), to a maritime power, that must maintain access to oceanic supply routes. Thus China needs a navy to help preserve that access.

Russia, the other great Eurasian continental power, is still one. Russia produces its own oil, and can get anything else it needs via land routes in Eurasia. Thus Russia is not overly concerned that its navy is shrinking to the size of coast guard. China, however, has to be particularly concerned with the sea routes to distant Persian Gulf and Africa. Australia is closer, but still a long sea distance away. It's not that China wants to fight a naval war, but it does want a strong enough navy to prevent any smaller, rogue, nation from interfering with Chinese shipping. For example, China's contribution to the anti-piracy patrol in the Gulf of Aden is a big deal in China. For once, the Chinese Navy is able to reach a long distance, and protect Chinese interests.


In particular, China has to worry about the Straits of Malacca (the narrow seaway providing the quickest passage between the Pacific and Indian oceans). Some 20 percent of all world trade moves through these straits. Sea traffic here is vulnerable to naval mines and sinking large ships in shallower channels. This would disrupt some traffic. Near total shutdown of the straits would cause economic disruption worldwide, and especially in China. Shipping costs would go up and there would be lots of shipping delays. Ultimate economic costs would run into the hundreds of billion dollars. China needs to stay on good terms with Singapore (the island city, populated largely by ethnic Chinese, right on the straits), and have a naval force capable to protecting the straits from any threat.

Then there is the Indian Ocean. India takes the name seriously, and considers itself the guardian of the sea routes through this vast area. This includes most of the oil coming out of the Persian Gulf (where most of the world's known oil reserves are). India needs access to that oil, as well as to African resources. India is not receptive to seeing the Chinese Navy operating nearby, but the Chinese feel they have to show up, to prepare for any contingency. From China's perspective, the U.S. Navy is not the big threat, unless the Americans ally themselves with India, or anyone else trying to cut China's maritime supply lines.

An Obama Tour