Monday, November 29, 2010

Only the Caliphate can shield the ummah from the rise in food prices

A few days ago the UN warned that food prices could rise by 10% to 20% next year after poor harvests and an expected rundown of global reserves. More than 70 African and Asian countries will be the worst hit, said the Food and Agricultural Organization in its monthly report. In its gloomiest forecast since the 2007/08 food crisis, which saw food riots in more than 25 countries and 100 million extra hungry people, the report’s authors urged states to prepare for hardship. “Countries must remain vigilant against supply shocks,” the report warned. “Consumers may have little choice but to pay higher prices for their food. The size of next year’s harvest becomes increasingly critical. For stocks to be replenished and prices to return to more normal levels, large production expansions are needed in 2011.” Furthermore the UN warned that international food import bills could pass the $1 trillion mark, with prices in most commodities up sharply from 2009. Global food reserves, which currently stand at around 74 days, are now expected to decrease significantly in the next few months. “Cereal reserves may drop by around 7%, barley nearly 35%, maize 12% and wheat 10%. Only rice reserves are expected to increase, by 6% next year,” said the report. Much now hangs on next year’s harvests, it said. “International prices could rise even more if production next year does not increase significantly – especially in maize, soybean and wheat. Even the price of rice, the supply of which is more adequate than other cereals, may be affected if prices of other major food crops continue climbing.”


Whilst it is apparent that some of the food price hikes are due to a fall in production-Russia’s ban on wheat exports in the aftermath of the fires- the UN has again overlooked the main culprit, food speculation and the declining value of the dollar. Both are playing havoc with food prices worldwide. The debasement of the dollar reduces the purchasing power of the currency to buy goods and services. As most of the world’s staple foods are traded in dollars, the country purchasing staple foods has to pay more in order to secure the same amount of food supplies to feeds its hungry population. Often poorer countries do not have extra dollars to meet the rise in food prices. Hence some nations are forced to borrow dollars at high interest rates, which in turn makes them further indebted to the donor nations. Other countries are forced to make structural changes to their agricultural policies and grow cash crops instead of staple foods. Thus poorer countries find themselves engulfed in a vicious cycle i.e. they borrow more to pay off debtor nations and at the same time deprive their people of food. Still there are some poorer countries, which have abundance of staple foods, but are forced to sell their crops to earn foreign exchange to pay off debt owed to first world nations.

What makes the food equation even worse between the ‘haves and the have nots’ is rampant speculation by the haves. Speculation usually translates into huge food price spikes, especially when the value of the dollar plunges. This is exactly what happened a few years ago. And now after the recent announcement by the US Federal Reserve to spend an extra $600 billion to stimulate the US economy, speculation on the price of essential food commodities has increased and will continue do so for a considerable time to come. The net effect is that food prices will increase sharply and thereby deprive millions around the world of a basic right.

The Muslim world will be adversely impacted by rising food prices and this will leaves millions of Muslims deprived of food and vulnerable to the harsh economic conditions imposed by the West. The only way for the Muslim ummah to protect her from ever increasing food prices is to work for the re-establishment of the Caliphate. The Caliphate will protect its currency by basing it on the bimetallic standard. Hence food prices will stabilize and will not undergo extreme fluctuations as witnessed today. Moreover, the Caliphate will prohibit food speculation, hoarding and price fixing, thereby ensuring that all citizens of the state are able to afford food. For those unfortunate citizens, who are unable to fend for themselves, the Caliphate will buy foodstuffs from the open market and tend to their needs.

The messenger of Allah (SWT) said, “The Son of Adam has no better right than that he would have a house wherein he may live, a piece of clothing whereby he may hide his nakedness and a piece of bread and some water.” [Tirmidhi]


Other related articles

Islamic Economic System as An Alternative

Conquest of Egypt: Ubadah ibn as-Samit's address to the Egyptian Ruler Al-Muqawqis

Amr ibn Al-‘As was commander of the army sent to conquer Egypt during the Caliphate of Umar ibn al-Khattab. After the conquest Amr became Egypt's first Islamic governor (wali).


The Muslim forces laid siege to the Babylon Fortress in 641CE (in the area known as Coptic Cairo today) where al-Muqawqis, the Egyptian Ruler was holed up. General Amr ibn Al-‘As sent a delegation of ten men, headed by Ubadah ibn as-Samit, to speak with al-Muqawqis.

Ubadah was black, and when the delegation travelled by boat to al-Muqawqis and entered his place, Ubadah stepped forward and al-Muqawqis was alarmed because of his blackness.

He said, "Take this black man away from me and let someone else come and speak to me!"

They said, "This black man is the best of us in knowledge and wisdom. He is our leader and the best of us, and has been appointed over us. We all refer to his opinion, and our leader has appointed him over us and ordered us not to go against him."

Al-Muqawqis said to the delegation, "How could you accept this black man as the best among you? Rather he should be the least among you."

They said, "No; even though he is black as you can see, he is the best in status among us, one of the foremost among us and one of the wisest. Blackness is not something bad among us."

Al-Muqawqis said to Ubadah, "Come forward, O black man, and speak to me gently, for your blackness alarms me, and if you speak harshly that will alarm ne further."

Ubadah went forward and said, "I have heard what you said. Among my companions whom I left behind are a thousand men who are all as black as me, and even blacker than me and more terrifying to behold. If you saw them you would be even more alarmed. My youth has gone, but nevertheless I would not be scared if one hundred men of my enemy wanted to face me all at once, and the same is true of my companions, for our hope and our desire is to strive in jihad for the sake of Allah, seeking the pleasure of Allah.

The reason for our campaign against our enemies who wage war against Allah is not hope of worldly gains or the accumulation of wealth; rather Allah has permitted that to us and made the booty we acquire permissible for us. But none of us cares whether he has a qintar of gold or has nothing but a dirham, because all we want from this world is something to eat and ward off hunger, and a cloth to wrap around ourselves. If one of us owns nothing more than that, that is enough. If he gets a qintar of gold he will spend it for the sake of Allah and be content with the little that is left in his hand, because the pleasure of this world is not true pleasure and its luxury is not true luxury; rather real pleasure and luxury come in the Hereafter.

This is how our Lord has guided us and our Prophet has taught us; he advised us that our ambition in this world should be just to have enough to ward off hunger and cover our awrahs (nakedness); our main concern should be to please our Lord and strive in jihad against His enemies."

When al-Muqawqis heard that, he said to those who were around him: "Have you ever heard anything like what this man is saying? His appearance alarmed me but his words alarm me more than his appearance. Allah has sent this man and his companions out to destroy the world! I think that they are bound to prevail over the entire world."

Dr Ali Muhammad as-Sallabi, ‘Umar ibn al-Khattab his life and times,' Vol. 2, p. 327

Raising our Children as Muslims

Muslims as an Ummah and as individuals bear the ultimate responsibility of living this life according to the teachings of Islam as revealed in the Quran and Sunnah. Islam comes with clear guidelines for every aspect of our lives and one of the most important responsibilities is raising our children according to the teachings of Islam. This obligation is especially difficult when societal norms are not Islamic, as is the case in the west. Nevertheless, living in the west, or anywhere else in this world, is not an excuse to relax our standards and surrender our identity as Muslims. Islam provides us with clear commandments that are valid in every time and place.


Muslim families in the west are vulnerable to the overwhelming influence of secular values manifested in every aspect of daily life. The struggle to preserve our children’s identity starts from the very moment they are born.

Regardless of the challenge, Islam gives us clear and categorical instructions for raising pious and strong leaders. In order to achieve this goal, it is pivotal to have absolute conviction in the correctness of Islam and full adherence to its teachings without regard to the obstacles faced and the results achieved.

When to Start

Following the Sunnah of the Prophet (saw), the task of raising our child starts the moment it is born with the calling of the Athan in his/her right ear and the Iqamah in his/her left ear. Giving a good name for the new born baby is a right of the newborn child on his/her parents; the name will stay with the child for the rest of his/her life and will play a role in his/her sense of belonging to the Muslim Ummah. When giving our newborns names we should always remember that non-Muslim names are not a ticket for an easy life in the west. Disguising our child’s identity due to fear of discrimination and material hardship contradicts our belief that Rizq and life are decided by Allah (swt) and not humans. Allah (swt) is the one to be feared and not human beings.

Building the Foundation: Obedience to Allah (swt) Alone

Children must be taught as they grow that their actions are measured only based on the Ahkam Shariah and not on anything else. Allah (swt) revealed:
وَمَا آَتَاكُمُ الرَّسُولُ فَخُذُوهُ وَمَا نَهَاكُمْ عَنْهُ فَانْتَهُوا وَاتَّقُوا اللَّهَ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ
“And whatsoever the messenger giveth you, take it. And whatsoever he forbiddeth, abstain (from it). And keep your duty to Allah. Lo! Allah is stern in reprisal.”[TMQ 59:7]

It may be asked as to what is the most effective way to do this? Some parents rely on their authority to impose the ahkam upon their children. Under this approach, the child will pray, fast, wear hijab, be modest, etc, based upon fear of their parents. However, there is a risk that once the child is exposed to liberal thoughts of society through their peers, the media, and the education system, that they may question the basis of their belief in Islam. Some may go so far as to rebel against their parents. Children and especially teenagers might contemplate that, parents are human beings just like them, so why should they be obeyed?

It is also equally dangerous to present the ahkam as a matter of benefit and harm. This teaches the child to abide by the ahkam when it is in their benefit to do so and reject them when it is in their benefit to do so. For example, if fasting is taught to children as beneficial for their health, they may not fast if they become convinced that it is unhealthy. Similarly, if the hijab is taught as an expression of modesty, they may take it off if they feel that wearing loose clothing achieves the same degree of modesty.

To avoid putting our children into such a bind, it is absolutely crucial that we teach our children the Islamic aqeedah as the sole reference point. That is, they should understand that Allah (swt) is the only reason why they do something or abstain from something. The parents need to establish the reality that Allah (swt) exists, and that He has full Knowledge of all things and most important of all, that both the parents and the children will be held accountable by Allah (swt) on the Day of Judgment. The child should be taught that his/her parents will be just as accountable to Allah (swt) as he/she will be. Consequently, the child will learn to fast, pay zakah, shun riba (interest), wear the hijab because of their love for Allah (swt) and His Messenger (saw).

Once this seed is planted in our children as the only perspective for making decisions and making choices, they will always have the fear of Allah (swt) in every step they take and in every act they perform. The fear of Allah (swt) is the only self sustainable protection we can provide our children with. They will realize that even if they can escape the watchful eye of the parent, they can never escape Allah (swt). Growing up in non-Muslim lands, it is critical that our children are taught to act out of fear of Allah (swt) – not fear of parents, family culture, benefit, or anything else.

Ibrahim (as): Worshipping Allah (swt) from his Youth

As parents, we enjoy relating the stories of the Prophets to our children. However, the story of Ibrahim (as) is particularly important because it gives insight into how a child can attain understanding about the existence of Allah (swt) and His Oneness. Allah (swt) revealed:

فَلَمَّا جَنَّ عَلَيْهِ اللَّيْلُ رَأَى كَوْكَبًا قَالَ هَذَا رَبِّي فَلَمَّا أَفَلَ قَالَ لَا أُحِبُّ الْآَفِلِينَ (76) فَلَمَّا رَأَى الْقَمَرَ بَازِغًا قَالَ هَذَا رَبِّي فَلَمَّا أَفَلَ قَالَ لَئِنْ لَمْ يَهْدِنِي رَبِّي لَأَكُونَنَّ مِنَ الْقَوْمِ الضَّالِّينَ (77) فَلَمَّا رَأَى الشَّمْسَ بَازِغَةً قَالَ هَذَا رَبِّي هَذَا أَكْبَرُ فَلَمَّا أَفَلَتْ قَالَ يَا قَوْمِ إِنِّي بَرِيءٌ مِمَّا تُشْرِكُونَ (78) إِنِّي وَجَّهْتُ وَجْهِيَ لِلَّذِي فَطَرَ السَّمَاوَاتِ وَالْأَرْضَ حَنِيفًا وَمَا أَنَا مِنَ الْمُشْرِكِينَ
“When the night covered him over with darkness he saw a star. He said: "This is my lord." But when it set, he said: "I like not those that set." When he saw the moon rising up, he said: "This is my lord." But when it set, he said: "Unless my Lord guides me, I shall surely be among the erring people." When he saw the sun rising up, he said: "This is my lord. This is greater." But when it set, he said: "O my people! I am indeed free from all that you join as partners in worship with Allah. Verily, I have turned my face towards Him Who has created the heavens and the earth Hanifa (Islamic Monotheism, i.e. worshipping none but Allah Alone) and I am not of Al-Mushrikun."[TMQ 6:76-79]

When this story is told to our children, it is important to take time to emphasize that the signs of Allah (swt) are with us where ever we are. We should never miss the opportunity to point out such signs to our children.

Sahabah (ra): Youth who Rejected Society’s Jahiliyah

Our children in the west will learn about Islam as much as we teach them. In addition to teaching them the pillars of Islam (as well as other basics of Islam), it is important to make them familiar with the heritage of Islam. This starts with the Seerah of the Prophet Muhammad (saw), the lives of the Sahabah (ra) as well as the history of the Khulafah Rashideen. The heart of our children should be filled with love and respect for RasulAllah (saw) and the Sahabah (ra).

Furthermore, it is important to emphasize how our children face challenges similar to what the Sahabah (ra) faced. The Sahabah (ra) grew up in the jahil society of Makkah. However, once the message of Islam came to them, they realized that it was the truth. They were rationally convinced that Allah (swt) exists, that the Quran was truly from Allah (swt), and that RasulAllah (saw) was indeed His Messenger. Based on this conviction, they referred to RasulAllah (saw) in totality – even if it meant abandoning the popular ideas and practices of the society around them. The Sahabah (ra) were raised to fear no one but Allah (swt), knowing that their lives and livelihoods were decided by Allah (swt) alone. They were taught to follow the Ahkam of Islam in everything they did. The Prophet’s way of raising his companions produced personalities who strived to take people from worshiping humans to worshiping Allah (swt). For example, Musab ibn Umayr (ra) was an extremely rich individual living the easy life. However, once he accepted Islam, he openly challenged the ideas of Makkan society. His mother tried to pressure him to abandon Islam by first “grounding” him and then by cutting him off from his “allowance”. But Musab (ra) remained steadfast in his obedience to Allah (swt) and His Messenger (saw).

We should explain how the stories of the Sahabah (ra) are relevant to our children in light of the challenges they face during their interactions with society. They should be able to draw lessons and be motivated to be like the Sahabah (ra) and reject the jahil practices of society around us (i.e. zina, dressing inappropriately, alcohol, etc), and insults to Allah (swt) and His Messenger (saw). When our children are older and encounter concepts about the political (i.e. democracy) and economic systems (i.e. Capitalism), we should also teach them to reject these concepts since they do not emanate from the Islamic Aqeedah.

Be your Children’s Friend and Teacher

As children grow up, they naturally look up to their parents for protection and the main source of learning and emulation. Parents have to be extremely vigilant during this phase of our children’s life and seize the opportunity to rightfully provide the guidance to Allah’s path. We sometimes take this for granted and miss this opportunity which is one of the biggest mistakes made by Muslim parents in the west; we forget that the safety nets that once existed in Muslim countries are not available in the west. Access to aunts, uncles and extended family is very difficult; there is no tight social fabric in the neighbourhood and Islamic thoughts and norms are not present in the popular culture which our children are exposed to on a daily basis. The role of parents in guiding the youth is far more difficult than what we take for granted. Under the pressure of this responsibility and the pressure of pursuing financial success to provide children with a “better future,” we tend to falter and lose direction leaving our children to become easy prey.

Being a role model is not a part time job or a weekend task; rather it is a continuous, deliberate and systematic effort of listening, communicating and building trust with our sons and daughters. We have to work hard at gaining the trust of our children and youth so that we can become their best friends and role models. We should always show them respect and never humiliate or belittle them, while being decisive and never compromising when it comes to living by Islam. We have to teach them to lead rather than follow and put in their conscious that the objective of their life is to carry Dawah and seek to please Allah (swt).

May Allah (swt) help us raise our children on Islam and may He guide us to maintain our faith through the rough times and guide us to establish the Khilafah Rashida to resume our leadership role to get humanity from the misery and tyranny we are currently in to the justice of Islam.

يَا أَيُّهَا الَّذِينَ آَمَنُوا قُوا أَنْفُسَكُمْ وَأَهْلِيكُمْ نَارًا وَقُودُهَا النَّاسُ وَالْحِجَارَةُ
“O ye who believe! Save yourselves and your families from a Fire whose fuel is Men and Stones.”[TMQ 66:6]

Friday, November 26, 2010

The Current Crisis between North and South Korea

This article is written by brother Adnan Khan

What has led to the current crisis?


North Korea has fired artillery shells onto a South Korean island across its disputed western maritime border, injuring civilians, soldiers and property. South Korea has returned fire and raised its military alert to its highest non-wartime status. The Northern Limit Line (NLL) is disputed by North Korea and comes as South Korea's annual Hoguk military exercises get under way. The incident took place with renewed talks on North Korea's nuclear programme, including revelations of an active uranium enrichment site and preparations for another nuclear test.

Taken together, the nuclear demonstration and the attack are widely interpreted as an effort to bolster the credentials of Kim Jong-un, the heir apparent as the country's leader, and the son and grandson of the only two men who have run the country. When his father, Kim Jong-il, North Korea's ailing leader, was establishing his credentials, the North conducted a similar series of attacks.

Is this not common in the region?
Yes, this is not the most serious incident between the two nations. This incident comes eight months after the sinking of a South Korean warship. In March 2010 the Cheonan, a South Korean warship, was sailing close to the disputed maritime border when an explosion split it in two. 46 soldiers were killed. Investigators concluded that what sank the ship was a torpedo fired from a North Korean submarine.

Why are there tensions between North and South Korea?

Tensions go back to the manner in which the victorious allies determined the division of the Korean Peninsula. Japan annexed Korea in 1910 and ruled over it until 1945. After Japan's defeat in World War II, the UN constructed the administration of Korea. The UN divided the peninsula into two zones of administration: the Soviet Union to the north and the US to the south. North Korea refused to participate in a UN supervised election held in the south in 1948, which led to the creation of separate Korean governments for the two occupation zones. Both North and South Korea claimed sovereignty over the Korean Peninsula as a whole, which led to the Korean War.

North Korea invaded the South, using Soviet tanks and weaponry, China also joined the war on the side of Communist North Korea, the threat of communist expansion led to the US to defend South Korea and by 1953 the US ended the war in a ceasefire agreement at more or less the same boundary, with South Korea making slight territorial gains. The two countries never signed a peace treaty, the two Koreas remain technically at war, since no peace treaty was signed after the conflict. Today the Korean Peninsula remains divided, the Korean Demilitarized Zone acts as the de facto border

Ever since, tensions have remained between the two Korea's. During the Cold war both were patrons of external powers but border skirmishes and assassination attempts have become the norm. The North failed in several assassination attempts on South Korean leaders, most notably in 1968, 1974 and the Rangoon bombing in 1983. Tunnels were frequently found under the DMZ and war nearly broke out over the Axe Murder Incident at Panmunjeom in 1976. In the late 1990s, with the South having rapidly developed and with North Korea having strong rulers with a firm grip on the country, the two nations began to engage publicly for the first time, in what has come to be known as the Sunshine Policy.

North Korea thereafter began a uranium enrichment program in order to possess nuclear weapons which have exacerbated tension between South Korea and the North.

Is there any international dimension to the crisis?

International involvement on the Korean peninsula is the fundamental problem in the region and continues to infuriate the conflict. The Korean War ended with the UN declaring the Korean peninsula divided between North and South between the Soviet Union and China on one hand and the US on the other.

Whilst the highest-level contact the government of North Korea has had with the US was with Secretary of State Madeleine Albright, who visited Pyongyang in 2000, the two countries do not have formal diplomatic relations. Then in 2002, George W. Bush labeled North Korea part of an ‘axis of evil' and an ‘outpost of tyranny,' which has defined US actions against North Korea ever since.

With North Korea developing Nuclear weapons the US position has always been very clear. The US in 1986 demanded detailed information on North Korea's nuclear programme, which North Korea refused to hand over to the US, instead it gave those detailed documents running into 19,000 pages to China. An agreement was reached between the US and North Korea in 1994 regarding North Korea's nuclear reactors. This agreement called for North Korea to bring to halt its nuclear programme and shut down its Yongbyon reactors. This was in exchange for the US supplying two light-water type reactors. But the US failed to honor its part of the promise and hence North Korea resumed its nuclear activities. This has been the case ever since, the US offers a range of promises which do not materialize so North Korea continues with its nuclear programme.

As put it in an Al Jazeera interview Robert Gates outlined the US position: "The United States will not accept North Korea as a nuclear-weapons state." He warned against the flaring of a nuclear arms race and said: "We will not stand idly by as North Korea builds the capability to wreak destruction on any target in the region, or on us." On the issue of nuclear proliferation, Gates said: "The transfer of nuclear weapons or material by North Korea to states or non-state entities would be considered a grave threat to the United States and its allies, and we would hold North Korea fully accountable for the consequences of such action."

China is North Korea's biggest trading partner and is the country which holds the greatest sway over the secretive Pyongyang regime. China has supported the regime since the 1950's and forms part of the six-party gathering which comprises the North & South Koreas, America, Russia and Japan which negotiates on behalf of the US with North Korea to find a peaceful resolution to the security concerns as a result of the North Korean nuclear weapons program.

What are the US and China really attempting to achieve with North Korea?

The US has been considerably silent to the nuclear progress in Pyongyang compared to Iran, whilst China has been pursuing six party talks trying to ensure its back door is not set on fire. The statements from such meetings have been contradictory where China has been pessimistic about the talks with distance on most issues whilst the US has continually remarked ‘successful negotiations'. The New York Times commented ‘America's opening gambits in this process have exasperated a stalemate, as these positions have been so unworkable that it almost presents the case of feigning a stance.[1]

The US has always offered North Korea incentives for closing down its nuclear activities, but the US has never delivered on its promises. This is why North Korea always resumes its nuclear activities. North Korea has attempted after testing a nuclear bomb in October 2006, to come to some agreement with the US over security and peace. This is as the North Korean people have been in virtual poverty due to the whole economy being geared towards war which has resulted in no consumer industry or general economic development. Hence the testing of nuclear devices was in order to warm the waters for a mutual agreement with the US. The US has not negotiated with North Korea which is prolonging the issue. The continued sluggish progress and prolonging fits perfectly for the presence of nearly 100 000 US troops in the region and with North Korea testing its nuclear arsenal in October 2006 this will expend Chinese efforts and gives a suitable justification for sustained and substantial US presence in South Korea.

J Rielly outlined this in a policy paper ‘These U.S. troops are in the region not simply to fight the "terrorist groups" causing local instability, but to enhance U.S. military control over territory in the South China Sea. This strategic area with vast potential oil reserves sits aside the shipping lanes to the Middle East and offers access to much of Southeast Asia. The expanded U.S. presence and nascent military alliances with Southeast Asian nations exacerbates Chinese anxieties and impedes independent accords among Asian states through such mechanisms as the ASEAN Regional Forum.'[2]

China shares an open border with the Korean peninsula, therefore any escalation of hostilities brings the US military even closer to China's borders.

What is the likely outcome of this crisis and the future for the region?

The US has conducted a summer of military exercises in the region confirming its support for the security of the nations that surround China. The US has used this crisis to send its USS George Washington aircraft carrier strike group to participate in South Korea's Hoguk military exercises. It is unlikely South Korea will retaliate - they never have, with the US in the region the US could launch strikes against North Korea's nuclear sites.

However this is very unlikely as China would see this as a major threat to its territorial integrity and retaliate. The US never resorted to such measures when North Korea did not have either a nuclear warhead or ballistic missile and was aware that Pyongyang was heading in this direction. The US has always used incentives to bring North Korea to the negotiating table.

What is the reality of North Korea domestically and its leadership?

North Korea since the end of WW2 was ruled by the current ruler, Kim Jong-il's father Kim Il-sung - the founder of North Korea and the country's only president. He was replaced by his son as heir, who himself is in the process of transferring power to his son. North Korea initially followed the Juche philosophy of self - reliance, however with the collapse of the Soviet Union this was replaced with a military first doctrine.

Kim Jong Il used the doctrine to consolidate his own political position and mobilize the country against threats both external and internal. There are practically no civilians in North Korea: there are only future soldiers, current soldiers, veterans, and families of soldiers. The military is the only truly functioning institution in the society, not only in terms of protecting borders and preparing for the much-touted foreign attack, but also in maintaining infrastructure and keeping the extraction industries running.

By putting the military first, the North Korean leadership is responding to a perceived foreign threat from the outside and strengthening the regime's hold on power. But it is also appealing to the country's most representative institution. In this sense, the military-first doctrine is a populist platform. Pyongyang's nuclear tests can be interpreted as an attempt to stimulate nationalist pride and provide some measure of compensation for the economic adversity of the past decade.

--------------------------------------------------------------------------------
[1] New York Times, 29th February 2004
[2] Reilly J, Feb 2002, The U.S. "War on Terror" and East Asia,' Foreign Policy In Focus, http://www.fpif.org/papers/asia2002.html.

Tuesday, November 23, 2010

Global Economic Crisis - The Quest for Growth

This article is written by brother Adnan Khan

The IMF's annual gathering in Washington had one message, that the worlds economies need to work together to achieve sustainable economic growth. "The most important policy question we confront together is how to strengthen the pace of growth and repair," US Treasury Secretary Timothy Geithner reiterated the same remarks at a Brookings Institute speech.

At the G-20 summit in June, world leaders pledged to coordinate their economic policies, putting particular emphasis on the need to refrain from currency actions that could endanger global economic health. But a sluggish global economic recovery set the stage for fractious talks on currencies and growth-rebalancing as financial leaders from the world's largest economies gathered at the G-20 conference in South Korea. Charles Dallara, head of the Institute for International Finance, which represents many of the world's largest private banks, said the lack of collaboration threatening the recovery extends beyond currency issues. "Sustaining growth and restoring confidence will require not only astute domestic policymaking, but an unprecedented level of multilateral coordination," Dallara said. "It will also require action that transcends purely domestic short-term concerns."

Economic Growth: Mission Impossible

Over the past year, world output and trade have expanded and financial conditions have improved, but policymakers have still had to deal with the strains of sovereign debt crises and the start of public sector austerity. Ben Bernanke, chairman of the Federal Reserve, summed up the global economy in 2010 at the annual get-together of central bankers in October 2010: "Notwithstanding some important steps forward ... I think we would all agree that, for much of the world, the task of economic recovery and repair remains far from complete."

The global economy in 2010 has been unable to achieve sustainable economic growth. In some ways the global economy today is in the same position it was in 2009. Whilst the worlds largest economies attempted to kick start growth with stimulus plans, any stimulus was always a high-octane boost and a temporary measure. They are designed to kick-start stalled economies, not to fuel sustained economic growth. The growth figures achieved in 2010 are the inflated results of stimulus measures achieving their intended effect to be temporary. Brian Bethune, economist at IHS Global Insight highlighted this: "It's good to have the economy growing again, but we don't think that rate of growth is sustainable because it is distorted by all the government stimulus. The challenge here is to get organic growth - growth that isn't helped by fiscal steroids." This is why over 15 million people remain unemployed in the US.

The stimulus packages have driven artificial growth, whilst Western nations have not provided such a leg up for their economies for some time the free market has been unable to grow on its own in any sustainable way and has brought the spectre of double dip recession ever closer.

The US Economy and Unemployment

The US economy the largest in the world has seen its recovery stalled. US policymakers in October were considering how much ammunition they had left to throw at the economy as global economic co-operation, so strong at the start of the global financial crisis descended into quarrels over currencies and economic nationalism. The global financial crisis has left an unprecedented degree of unemployed in the US and underused factories in its wake. The possibility of the recovery faltering has pressured the Federal Reserve, America's central bank, to unleash a new round of Quantitative Easing (QE) - the electronic equivalent of printing money. The various stimulus measures may have prevented economic collapse, but the spending programs that were financed by them are winding down, and cash-strapped local governments, have resorted to layoffs and other cost-cutting measures.

Economic nationalism

The consensus driven response to the financial crisis has started to crumble. This was most apparent at the G20 summit in June 2010. Whilst the US called for a continuation of stimulus which would encourage consumer spending and stimulate the economy with new jobs and allow the recovery to take hold. Europe however was calling for austerity, as the various fiscal stimulus plans and Quantitative easing was creating even more debt in Europe - the Greek debt crisis also caused Europe to focus on individual strategies for economic recovery rather than a global approach. These differences have sharpened over the year due to the different effects the global financial crisis has had on the premier economies of the world. Mohamed El-Erian, chief executive of Pimco, the world's largest bond investor, said: "A once promising global response has now been replaced by inadequately co-ordinated national economic policies and growing frictions among countries."

US-China currency war

The weak recovery has led to many nations to resort to protective measures for their own economies which have led to currency wars. The sharpened differences between China and the US recently has led to some senators to consider the support China provides to its currency a subsidy which has an adverse impact on the US economy. Various senators attempted in September 2010 to mark up the ‘Currency and Reform Fair Trade Act,' the new bill would force the US commerce department to treat China's undervalued currency as a subsidy for its exports and retaliate accordingly.

The value of the Yuan plays an important role in China's rapid economic development. China is an export driven economy, its economy is built to produce goods which are exported around the world. This is why most consumer goods have a ‘made in China' label. To make Chinese goods more attractive then Japanese and German goods, the Chinese government controls the value of the exchange rate of its currency, rather then let it float freely. This is in order to achieve certainty - certainty in a number of areas. China keeps the value if its currency low, which makes it cheaper to purchase consumer goods - far cheaper for the world than anyone else. By China undercutting the world, aside from keeping Chinese factories open, this also means most Chinese citizens have a job. When Chinese citizens have jobs this deals with domestic social unrest which has long plagued China. Chinese factories make little profits on the goods they export, as due to the low exchange rate the potential profit is lost. However for China - profit is not the real concern but territorial cohesion is what drives its currency policy.

The impact this has on the wider world - especially the US is that its companies are unable to complete with Chinese craftsmanship as China is under cutting the market. This has led to most of the world to turn to China for consumer goods rather then domestic suppliers. This causes unemployment across the world as such industries lose business to China. It is those senators who have seen many businesses collapse in their states, due to China, that have led the campaign to have the US pass legislation to counter it.

As China is an export driven economy, it has to ensure it can sell goods globally cheaper than anyone else, its currency policy is central to this. This has the impact of those industries closing in the West - where most of Chinese exports go, as they are unable to complete with china on such a low price. It results in China selling more goods to the world than what China buys from the world. This is why China has a trade surplus with the world, whilst the world has a trade deficit with China. Commerce Minister Chen Deming told the BBC in 2009 that when economic growth slowed ‘the chances of possible social unrest increase as well.' I don't worry a lot about the GDP growth, however the biggest challenge to China is unemployment.' We need to create sufficient jobs for university graduates and the redundant workforce from the countryside.'

Conclusions

As the West struggles in its quest for economic growth, unemployment is now at the top of the agenda. The breakdown in the multilateral approach that characterized the early response to the financial crisis will lead to more and more economic protection by the world's economies which will compound the recovery. The currency war is just the beginning. The conditions in the world economy have stopped worsening, however unemployment remains high and consumer spending is still low to sustain any economic recovery. At best the current growth rates seen in some of the world's major economies is premature, the underlying economic fundamentals remain absent.

The spectre of double dip recession has not subsided and as the US implements another round of stimulus, the economic crisis the engulfed the world in 2008 is far from over

NATO: Divergent Interests Plague Alliance

This article is written by Brother Saqib Bukhari

28 heads of state convened in Lisbon, Portugal, today to discuss a new ‘Strategic Concept' for the North Atlantic Treaty organization (NATO) as a means to deal with the threats, issues and challenges it faces in the next decade. A lot of speculation is circulating amongst western academics in relation to the end result of such a convention and how it will shape global politics.


A number of statements have been made by many a policy maker concerning the efficacy and purpose of NATO and such statements have ranged from the institution being an outdated coalition to a necessary mechanism in order to deal with security issues and the like. For one to better understand the current reality of NATO as well as its future forecasts, it is imperative to appreciate its history based on the causes for its inception in 1949.

Following the end of WWII in 1945, European countries faced an array of problems. Economic hardship, inflation and industrial stagnation led to a host of societal problems as poverty increased and living standards rapidly decreased. This concern was coupled by the presence of an assertive Soviet Union in the east that espoused the Communist ideology. This particular era in history represented the watershed moment in international politics as it marked the end of the conflict of nation states, in the conventional sense, to a conflict of ideologies. This conflict became known as the Cold War

The Cold War was a tense era as two rival viewpoints, namely Capitalism and Communism battled for supremacy. Such a situation meant that European nations were beholden to the United States for defence and financial assistance in the form of the Marshall Plan to bolster economic recovery, giving Europe time to craft the European Union and expansive welfare states. For the Americans, this was a minor inconvenience and a small price to pay as the potential of a Soviet-dominated Europe would have combined Europe's technology and industrial expertise with Soviet natural resources, manpower and ideology, thereby creating a continent directly threatening the US.

The inception of NATO was solely to:-

Protect Europe (and the wider region) from Communism

To prevent the balance of power shifting from the US and Europe to the USSR

To create regional power blocs to stand united to effectively deal with threats that may hinder the West's strategic and economic interests

The above 3 points can be simplified by stating that a bloc needed to be created as a mechanism in the midst of an ideological warfare and NATO filled that need and void.

During the Cold War, the presence of 50 Soviet and Warsaw Pact armoured divisions and nearly 2 million troops to the West of the Urals, justified the creation of NATO.

The issue now at hand is that the Communist threat is gone; however, as we have heard many a time, the red menace has been replaced by the green crescent and one can safely deduce that NATO will be looking to form a more pronounced alignment of its policies and strategies to protect its ideology of Capitalism from a revived Islam rippling throughout the world. However divergent interests and threat perceptions of its constituent states has created a deep tension in NATO in terms of a strategy that is best suited to deal with the threat.

To illustrate this point, one should analyze the presence of NATO troops in Afghanistan as part of its war on terror and understand how the operation in the region (including Pakistan) is deeply controversial and is acting as a thorn for many of the states involved. It is of no secret that NATO presence in the region is geared to curtailing the possibility of an Islamic government taking power. This sentiment is further echoed by a former British General, Sir Richard Dannatt, who in an interview expressed his concern that an ‘islamist agenda, which if we don't oppose it and face it off in Southern Afghanistan or Afghanistan or in South Asia, then frankly that influence will grow... to the high- water mark of the Islamic Caliphate'

His statement typifies the concerns that have been voiced by politicians, academics and policy makers regarding the aspirations of the masses in the Muslim World to live according to Islamic governance.

The point of contention, however, is whether or not the ‘Islamist threat' will be a pressing issue to the point of devising a mission statement that will explicitly take such a reality into consideration and become part of its core activity or will it lie in a peripheral space. The reasons for such potential disagreements amongst NATO states lie in the following:

Its mission in Afghanistan is deeply unpopular

The NATO alliance seems deeply split in relation to the issue of Afghanistan and its presence in the region. This split is made clear by a recent speech by U.S Defence Secretary, Robert Gates, who stated that NATO was in ‘a state of crisis' and levied much of the blame on the European's lack of commitment to deploying troops to fight the Taliban and other mujahideen groups in the region. Essentially a two-tiered alliance has formed, where certain countries such as U.S, Britain and Canada have committed fully to the tasks at hand and are willing to employ and implement the NATO values but there are other countries that are reluctant to toe the line.

The reasons for such reluctance are many fold; a) a number of states including Germany cannot get public or parliamentary support to deploy troops under the NATO guise, simply because the war has been viewed with great scepticism on part of the Europeans who considered it to be a ill thought out objective coupled with the fact that the Neoconservative Bush Doctrine was unpopular and its war mongering aspirations were detrimental to European interests and threat perceptions. Secondly, the European experience of 2 world wars has left a bitter taste in the mouths of policy makers and public so to fully commit to the mission is resulting in an unsure hesitancy. A third difference is predominantly methodological; all NATO countries recognise the threat of an Islam taking political assertion but for most European states, such revivalism is not one to be countered with warfare but rather at home using domestic anti-terror policies, law enforcement initiatives and educational enactments in order to create a friendlier version of Islam, a secular European Islam so to speak that can be projected to other parts of the Muslim world.

Differences on Russia

After the demise of the Soviet Union and the post cold-war era, NATO began to integrate the central and east European countries within its structure. This further weakened the alliance as each new state had differing self interests and threat perceptions which subsequently led to a lack of consensus on many issues. The main point of tension was, and still is, the role of Russia in the region. NATO's enlargement to the Baltic States combined with the pro-Western Georgian and Ukrainian colour revolutions - all occurring in a one-year period between the end of 2003 and end of 2004 raised suspicions in Moscow. Russia viewed the NATO expansion to the Baltic States and former Warsaw Pact countries as a vehicle by which the U.S can extend its sphere of influence in the post Soviet space and she has found this unacceptable. As a result, the Kremlin has countered the threat by amplifying its influence in Central Asia.

For the European countries, especially Germany, an aggressive Russia is a peripheral issue and not warranting concern because of energy and economic deals between the 2 entities. Secondly, the major European powers do not wish to witness another type of cold-war. The U.S on the other hand is concerned about a resurgent Russia, however, is over-stretched in its commitments primarily in Iraq and Afghanistan. Therefore, at present it remains a low priority but as Russia looks to expand its interests, the U.S will have no choice but to act. When the U.S does fully reawaken to the Russian resurgence, it will find that only a portion of NATO shares a similar view of Russia. That portion is in the Central European countries that form NATO's new borderlands with Russia, for whom a resurgent Moscow is the supreme national threat. By contrast, France and Germany - Europe's heavyweights - do not want another Cold War splitting the Continent.

The above is not an exhaustive account of the divisions and tensions in NATO but it suffices to articulate the problems the alliance will have in deciding where to align its policies for the next decade. For the U.S, its efforts will be geared towards bringing the member countries to the consensus that greater military employments need to be conducted and it will use the threat of a ‘radical Islam' to muster the support and political will. The E.U countries however, are far more reluctant to engage in unpopular wars because of a lack of public support coupled with defence cuts as a result of the recession engulfing the continent. The most likely outcome is that the U.S will continue to be the big player and will develop a two pronged strategy vis a vis the Muslim World. It will essentially divide its policies along the hard-soft power spectrum. The hard power will be exhibited by the core NATO members such as Britain and warfare will continue to persist, whereas the more reluctant E.U countries will be happy to be utilised as the soft power arm of U.S affairs, thereby be engaged in intellectually challenging the rise of Islam.