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Conflict and Consequences

Project Syndicate: low Chinese wages lead to unrest. Washington Post: Arabs don't trust Obama on Israel. The Hindu: tension rises between Bahrain's Sunnis and Shias.


China’s low labor costs lead to social unrest

Fan Gang, Director of China’s National Economic Research Institute, writes in Project Syndicate that the low wages that help drive China’s global competitiveness also contribute to income disparity and social unrest.

QUOTE: To prevent serious social tension, China’s government (at various levels) has begun to intervene by enforcing higher minimum wages…But the minimum wage is normally much lower than the effective wage…

U.S. involvement has led to a stronger Iraq economy

David Brooks writes in the New York Times that U.S. involvement in Iraq has paid off for that country’s economy, which has become one of the world’s fastest growing. Yet widespread corruption and weak public services remain.

QUOTE: …there has been substantial progress on the things development efforts can touch most directly: economic growth, basic security, and political and legal institutions.

Modernization is critical to the growth of Russia’s economy

Alexander Morozov, HSBC’s chief economist in Russia, writes in the Moscow Times that Russia’s economy has been hurt as oil prices have remained low and capital inflows have weakened. The way to reliably build the economy, he says, is through modernization.

QUOTE: Russia should be returning to the high pre-crisis growth trend… Unfortunately, further economic growth is likely to be a moderate 2 to 4 percent per year.

Growth has shifted to exporters of capital

Hans-Werner Sinn, a professor of economics and public finance at the University of Munich, writes in The Japan Times that countries whose economic growth has been dependent upon imported financial capital, such as the U.S., Greece and Spain, are beset by tepid economic growth. But countries that exported capital are now growing fast.

QUOTE: While the U.S. is expected to grow by 3.3 percent this year and by 2.9 percent next year — roughly the long-term average for the past 30 years, this cannot be called a self-sustaining upswing given that the fiscal deficit is expected to reach a breathtaking 11 percent of GDP this year.

Arab nations distrust Obama

Richard Cohen writes in the Washington Post that despite President Obama’s overtures to the Arab countries, trust of the U.S. president remains low there. The reason, writes Cohen, is the sense that the U.S. will ultimately give precedence to Israeli needs.

QUOTE: What the Arab world seems to appreciate is that America will never agree to what the Arab world most wants -- an Islamic state where a Jewish one now exists.

Funding is needed to help countries fight environmental crises

Martin Khor writes in The China Post that Pakistan’s flooding highlights the need for global emergency financing to aid countries hit by environmental crisis.

QUOTE: At present, the affected countries simply have to rely on charity and donations. The funds promised are usually far too little, and even less of that is eventually paid.

Bahrain’s democracy teeters as religious tensions rise

The Hindu writes that shia-sunni tensions in Bahrain have risen ahead of coming elections, threatening the country’s fragile democracy.

QUOTE: The unrest has evidently strengthened sections of the ruling Al Khalifa family that are against democratic reform. But as Bahrain deals with the challenges of the situation, it may want to consider that rolling back the reforms will only worsen the unrest.

A U.N. report finds that the Rwandan government took part in Congolese genocide

Howard French writes in the New York Times News Service that a soon to be published U.N. report links the Rwandan government and Congolese rebel forces to mass executions of Rwandan Hutu refugees in the 1990s. The report raises the possibility that the Rwandan government itself could be found guilty of genocide.

QUOTE: While Rwanda and Congolese rebel forces have always claimed that they attacked Hutu militias who were sheltered among civilians, the United Nations report documents deliberate reprisal attacks on civilians.

U.S. import tariffs hurt trade and consumers

In an editorial the Wall Street Journal criticizes proposed rules from the U.S. Commerce Department that would make it easier to impose duties on imports from China and other countries. Recent duties on imports of Chinese tires resulted in reciprocation from China while providing little relief to U.S. businesses.

QUOTE: Several centuries of economic wisdom on the benefits of free trade shows that blocking imports won’t boost exports.

The U.S. sends mixed messages on Iraq

In the New York Times columnist Bob Hebert denounces President Obama’s handling of the war in Afghanistan as detached, and criticizes the conflicting messages from senior U.S. officials on the timeframe for withdrawal from the war.

QUOTE: I get a headache when I hear supporters of this endless warfare complaining about the federal budget deficits. They’re like arsonists complaining about the smell of smoke in the neighborhood.