Enterprise Resilience Management Blog

Globalization Provides New Opportunities in India

We often think of globalization simply in terms of connecting local economies with the global economy. But ike ripples in a pond, that connectivity also spreads internally to create new opportunities. In developing countries, those ripples primarily manifest themselves in the form of an emerging and prosperous middle class that is no longer bound by traditional working class jobs. India is providing some anecdotal evidence for this ["Breaking Norms in India," by Emily Wax, Washington Post, 7 August 2008]. The subtitle for Wax's article is a great bumper sticker for globalization: "As Affluence Spreads, Nontraditional Professions Gain Popularity."

"When [27-year-old] Anand Mahesh was a boy, his parents dreamed that he would become a worker bee in India's mammoth civil service. Like many working-class people, they saw job security for him pushing papers or stamping forms in one of the world's biggest bureaucracies. But young Mahesh dreamed of a career that his parents found peculiar: designing or selling private cars in a country where, at the time, transport usually meant bikes, buses or trains. A self-described 'tech-head,' Mahesh applied to work as a salesman at Reva, India's first electric car company, which is helping drive a surge in first-time car ownership here."

Mahesh says he still hopes to design cars, but his friends think he already has a dream job. You don't have to read very deeply between the lines to see how globalization has affected Mahesh's life. First of all, he lives in Bangalore, one India's information technology (IT) capitals. As a result, he lives among some of India's rising middle class citizens -- citizens who can afford to drive cars and not just ride bicycles. That means that Mahesh could dream about designing cars rather than pushing papers. The other interesting point to note is that Mahesh is selling "electric cars," a sign that India's middle class is already pressuring the government and local businesses to think about protecting the environment. Wax continues:

"In an increasingly affluent India, Mahesh's job is one of many new or rapidly expanding professions that are breaking norms and creating fresh opportunities for the country's young generation. Women now work as gas station attendants, filling tanks and checking oil, shrugging off suggestions that they're prostitutes. Indian magazines are filled with stories about hip new career prospects: disc jockeys and bouncers at nightclubs that opened after many middle-class Indians gave up their habit of drinking only in private clubs or at home. Bright billboards hang in nearly every small town with ads featuring stylish young women enrolled in flight-attendant training schools, a glamorous job in a country where trains were long the primary mode of long-distance transport. And women can now work as bartenders, after the Supreme Court of India recently overturned a 1914 British colonial-era law that blocked them from the profession. The new jobs are especially empowering to India's middle- and working-class women. By becoming economically independent, they are delaying marriage, a trend that is slowly changing the male-dominated power dynamic in South Asia."

The disproportionate benefits that globalization provides to women is both a source of hope for emerging market economies and of dismay among their dominant male cultures. I often wonder when I see protests against globalization if those involved really understand how important globalization is for the fate of impoverished women around the world. I'm certain that most of the protesters are unhappy with how male-dominated societies have treated women, yet they continue to try and undermine one of the greatest motive forces for gender equality afoot in the world. Wax reports what this means in India:

"The new jobs ... reflect changing habits and values in a society that is one of the youngest in the world, with 70 percent of its 1.15 billion people under age 35. 'There's a massive loosening of family pressure. That's because today, the rising middle class doesn't have to worry about basic necessities anymore,' said Jagdip Bakshi, head of the Contract Advertising agency in Mumbai, which tracks societal trends. 'It's a complete shift in India for the "Over my dead body you will become a golfer or a drummer" type of Indian parental mentality. Now, some parents are actually saying, "Okay, you want to try graphic art, well go for it."'"

Wax reports on discussions he held with students studying to be veternarians. Historically vets have cared for cows, goats or other animals important to India's agricultural sector. Today vets are just as likely to care for pets -- another sign of a growing middle class. Wax goes on to report that young people in India can now even dream of the stars.

"Not far from the car company is the leafy campus of the Indian Space Research Organization. Young scientists there are helping break down class divisions by bringing the benefits of the space program to Indians living in villages, and are challenging traditional elitist notions of who can be a scientist. A.S. Padmavathy is one of 1,288 female scientists working at the space center, which employs several thousand. She is overseeing satellite programs that can help Indians in rural areas by mapping the location of water, linking village health posts to top surgery centers in New Delhi and working with farmers to predict cyclones and monsoon rains. 'Some Indians in the past asked, "When India is so poor, why waste money on programs in space?"' she said. 'But the new generation sees the value in making sure all citizens enjoy technology -- fisherman get satellite advice from us and students in villages can attend a virtual lecture in Mumbai. It's helping rural and urban, poor and rich India interact.' At a recent education program in a rural area outside Bangalore, several young daughters of farmers saw Padmavathy working. 'They told me later that day that they would love to be lady scientists,' she said."

Wax concludes her article with examples of how these new opportunities have specifically benefited poorer women:

"Women have seen the biggest growth in the range of opportunities. Attendants cleaning windshields and filling tanks at an all-female gas station in New Delhi wear baseball caps and neatly pressed yellow and green uniforms. Many say they had only a few years of basic education and came from poorer states, hoping to find employment as construction workers or servants. But those jobs are often low-paid, with long hours. Rekhan Saksena made the move to New Delhi after her father died last year. She soon read in the paper about the all-female gas station. 'It was such a good environment, working with other women in a clean place with shade. My sister also moved here and joined another station,' said Saksena, 23, a thin woman with a confident demeanor. Some of the male customers are rude, however. ... On a recent afternoon, a retired secret service officer disparaged the women and said he was sure they were prostitutes. In India, the old-generation thinking is that women who work must be desperate -- and must therefore be sex workers. Saksena and her co-workers said they ignore those notions. Saksena said her mother was horrified on first hearing that her daughter would be serving strangers, and at a gas station. But when her mother saw her plentiful monthly salary, part of which was shared with her, she cried and then went shopping for food and a sari."

Show me the money! Take away globalization and you take away opportunities. Take away opportunities and you take away hope. Take away hope and you find a society mired in poverty and corruption. The challenge for this generation is to find a strategy that responsibily connects what Tom Barnett calls the "Non-integrating Gap" with the rest of the world. It's goal worth achieving since it will positively affect the lives of millions of people.

The Russian/Georgia Conflict and Globalization

As I noted in my last post [Influencing Russia], there is a risk (however remote) that the international economy could splinter into trading blocs which could cause this latest wave of globalization to falter or collapse. Such an outcome would be devastating for millions of people trapped in poverty. New York Times columnist Paul Krugman worries about such an outcome ["The Great Illusion," 15 August 2008]. Krugman writes:

"So far, the international economic consequences of the war in the Caucasus have been fairly minor, despite Georgia's role as a major corridor for oil shipments. But as I was reading the latest bad news, I found myself wondering whether this war is an omen — a sign that the second great age of globalization may share the fate of the first. If you're wondering what I'm talking about, here's what you need to know: our grandfathers lived in a world of largely self-sufficient, inward-looking national economies — but our great-great grandfathers lived, as we do, in a world of large-scale international trade and investment, a world destroyed by nationalism."

Krugman draws the headline for his column from the writings of Norman Angell -- namely a 1909 pamphlet entitled Europe's Optical Illusion which was published the following year as the book The Great Illusion. The well-known thesis of Angell's book was that the integration of European economies had grown to such a degree that war between them would be entirely futile, making militarism obsolete. The First World War followed shortly afterwards. Krugman continues:

"Writing in 1919, the great British economist John Maynard Keynes described the world economy as it was on the eve of World War I. 'The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth ... he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world.' And Keynes’s Londoner 'regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement ... The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion ... appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice.' But then came three decades of war, revolution, political instability, depression and more war. By the end of World War II, the world was fragmented economically as well as politically. And it took a couple of generations to put it back together."

My colleague Tom Barnett equates this period of European history to America's Civil War. Following the Second World War, Europe made great strides towards a more unified system. But, as seen by the recent Irish vote that stopped further European integration, nationalism is not dead. We have seen rising nationalism around the world. As a result, Krugman asks and answers an important question:

"Can things fall apart again? Yes, they can. Consider how things have played out in the current food crisis. For years we were told that self-sufficiency was an outmoded concept, and that it was safe to rely on world markets for food supplies. But when the prices of wheat, rice and corn soared, Keynes's 'projects and politics' of 'restrictions and exclusion' made a comeback: many governments rushed to protect domestic consumers by banning or limiting exports, leaving food-importing countries in dire straits. And now comes 'militarism and imperialism.' By itself, as I said, the war in Georgia isn't that big a deal economically. But it does mark the end of the Pax Americana — the era in which the United States more or less maintained a monopoly on the use of military force. And that raises some real questions about the future of globalization."

To be accurate, no other country, even Russia, has the capacity to match the United States on the global stage. Regional strength, of course, is a different matter. What Krugman is saying is that the United States has more or less been the only major power with the means and will to use military force until the Russia operation in Georgia. He goes on to talk about the implications of Russian nationalism on globalization.

"Most obviously, Europe’s dependence on Russian energy, especially natural gas, now looks very dangerous — more dangerous, arguably, than its dependence on Middle Eastern oil. After all, Russia has already used gas as a weapon: in 2006, it cut off supplies to Ukraine amid a dispute over prices. And if Russia is willing and able to use force to assert control over its self-declared sphere of influence, won't others do the same? Just think about the global economic disruption that would follow if China — which is about to surpass the United States as the world's largest manufacturing nation — were to forcibly assert its claim to Taiwan."

Those are certainly scenarios worthy of consideration, but Krugman needs to bring in the other side of the equation as well. Without its oil income, Russia falls quickly back into economic chaos and becomes a third-rate player on the world stage. China, which holds a significant amount of Western debt, would risk losing those assets as long-term investments. One thing that Angell taught us, however, is that nationalism trumps logic. Krugman continues:

"Some analysts tell us not to worry: global economic integration itself protects us against war, they argue, because successful trading economies won't risk their prosperity by engaging in military adventurism. But this, too, raises unpleasant historical memories. [As Angell pointed out in his book], ... in the modern industrial era even military victors lose far more than they gain. He was right — but wars kept happening anyway. So are the foundations of the second global economy any more solid than those of the first? In some ways, yes. For example, war among the nations of Western Europe really does seem inconceivable now, not so much because of economic ties as because of shared democratic values. Much of the world, however, including nations that play a key role in the global economy, doesn't share those values. Most of us have proceeded on the belief that, at least as far as economics goes, this doesn't matter — that we can count on world trade continuing to flow freely simply because it's so profitable. But that's not a safe assumption. Angell was right to describe the belief that conquest pays as a great illusion. But the belief that economic rationality always prevents war is an equally great illusion. And today's high degree of global economic interdependence, which can be sustained only if all major governments act sensibly, is more fragile than we imagine."

It's too early to write the eulogy for this latest wave of globalization, and I don't believe that is what Krugman is trying to do. He does want to open our eyes to the dangers of powerful leaders acting in what appears to be irrational ways. At least those actions look irrational through the globalization lens. Through the lens of nationalism, however, the world looks very differently. All of the major powers, the U.S., Russia, and China, have spent too much time looking through that lens (hence, the challenges faced by the Kyoto Accord, the Doha Round of trade talks, the rising cries against free trade pacts, and so forth). Nationalism is a poisoned punchbowl from which leaders tend to drink too deeply. Because many nationalistic stances are immensely popular with some constituencies, politicians have a difficult time resisting them. One need look no further than the U.S. presidential election to realize that Krugman's concerns are in play in many places. Politicians too often take the popular stand, not the most wise one. Only leaders with wisdom and vision will resist these tendencies and ensure that globalization continues to make the world a better place for millions of people still longing for a better life.

Influencing Russia

I haven't written anything about the conflict between Russia and Georgia because this blog is not a political or security blog, although I occasionally touch on those subjects. There are others better suited to discuss the ramifications and consequences of what is happening in Georgia. On the other hand, this blog does deal with globalization, development and resilience. In the post entitled The End of Intervention, I touched on the importance of influence in trying to maintain international order. Applying influence is also the subject of a recent op-ed column by Charles Krauthammer concerning how the international community can affect Russian behavior ["How to Stop Putin," Washington Post, 14 August 2008]. Krauthammer begins his column by stating that he is not impressed with the terms of the French-brokered cease-fire (and his concerns have been subsequently confirmed). Krauthammer's purpose in writing his column was to persuade Western governments that they must use their influence to stop Putin's long-term objectives in Georgia.

"His objectives are clear. They go beyond detaching South Ossetia and Abkhazia from Georgia and absorbing them into Russia. They go beyond destroying the Georgian army, leaving the country at Russia's mercy. The real objective is the Finlandization of Georgia through the removal of President Mikheil Saakashvili and his replacement by a Russian puppet. ... Russia says it will not talk to Saakashvili. Thus regime change becomes the first requirement for any movement on any front. This will be Putin's refrain in the coming days. He is counting on Europe to pressure Saakashvili to resign and/or flee to 'give peace a chance.' The Finlandization of Georgia would give Russia control of the Baku-Tbilisi-Ceyhan pipeline, which is the only significant westbound route for Caspian Sea oil and gas that does not go through Russia. Pipelines are the economic lifelines of such former Soviet republics as Kazakhstan and Azerbaijan that live off energy exports. Moscow would become master of the Caspian basin. Subduing Georgia has an additional effect. It warns Russia's former Baltic and East European satellites what happens if you get too close to the West. It is the first step to reestablishing Russian hegemony in the region."

There is nothing particularly new in Krauthammer's assessment. Turn on any news channel and you can hear the same thing from a dozen pundits. Nevertheless, Krauthammer wants to stress to Western governments that they do have moves they can make. He puts forth four:

"What is to be done? Let's be real. There's nothing to be done militarily. What we can do is alter Putin's cost-benefit calculations. We are not without resources. There are a range of measures to be deployed if Russia does not live up to its cease-fire commitments:

1. Suspend the NATO-Russia Council established in 2002 to help bring Russia closer to the West. Make clear that dissolution will follow suspension. The council gives Russia a seat at the NATO table. Message: Invading neighboring democracies forfeits the seat.

2. Bar Russian entry to the World Trade Organization.

3. Dissolve the G-8. Putin's dictatorship long made Russia's presence in this group of industrial democracies a farce, but no one wanted to upset the bear by expelling it. No need to. The seven democracies simply withdraw. (And if Italy's Silvio Berlusconi, who has been sympathetic to Putin's Georgia adventure, wants to stay, he can have an annual G-2 dinner with Putin.) Then immediately announce the reconstitution of the original G-7.

4. Announce a U.S.-European boycott of the 2014 Winter Olympics at Sochi. To do otherwise would be obscene. Sochi is 15 miles from Abkhazia, the other Georgian province just invaded by Russia. The Games will become a riveting contest between the Russian, Belarusan and Jamaican bobsled teams.

All of these steps (except dissolution of the G-8, which should be irreversible) would be subject to reconsideration depending upon Russian action -- most importantly and minimally, its withdrawal of troops from Georgia proper to South Ossetia and Abkhazia."

I'm not so sure about the fourth step. Jimmy Carter's boycott of the Soviet Olympics following the invasion of Afghanistan only hurt U.S. and boycotting country athletes and accomplished little else. If the West can convince the IOC to move the 2014 venue to one used in the recent past, like Salt Lake City, then it may have some effect. Otherwise, keep athletics out of politics. Krauthammer continues:

"The most crucial and unconditional measure, however, is this: Reaffirm support for the Saakashvili government and declare that its removal by the Russians would lead to recognition of a government-in-exile. This would instantly be understood as providing us the legal basis for supplying and supporting a Georgian resistance to any Russian-installed regime. President Bush could cash in on his close personal relationship with Putin by sending him a copy of the highly entertaining (and highly fictionalized) film 'Charlie Wilson's War' to remind Vlad of our capacity to make Russia bleed. Putin would need no reminders of the Georgians' capacity and long history of doing likewise to invaders."

This can't become a U.S./Russia confrontation. The rest of the developed world must pull together and speak with one voice if a successful and peaceful solution to the crisis is to be found. That may mean letting France take the lead, since Sarkozy has already established his credentials. Krauthammer, however, is not so sure about France (or Europe). He asserts that Secretary of State Condoleezza Rice's task is to get European agreement on as many counter-steps calibrated to change Russian behavior as possible and begin imposing them immediately. He continues:

"Most important of all, ... prevent any Euro-wobbliness on the survival of Georgia's democratically elected government. We have cards. We should play them. Much is at stake."

This is a good time for the world to pull together. Millions of impoverished people are counting on the benefits of globalization reaching them and these could disappear if the world is again split into separate trading blocs. Putin could certainly hold the West hostage to Russia's oil and natural gas, but he wants the revenue, influence, and international power that selling that oil to the West brings Russia.

Four Lessons Learned from the Myanmar Cyclone Disaster

No response to natural disasters is ever perfect. Some responses, like the one to Hurricane Katrina, are significantly flawed. John Holmes, the U.N. Undersecretary General for Humanitarian Affairs and emergency relief coordinator, takes a look back at the international community's response to Cyclone Nargis that slammed into Myanmar's coast some three months ago ["Disaster Lessons," Washington Post, 6 August 2008]. He also provides an update on how things are faring in a state that remains shrouded in secrecy thanks to its ruling military junta. He writes:

"Three months have passed since Cyclone Nargis and an accompanying tidal surge swept across Myanmar's fertile Irrawaddy Delta region, claiming nearly 140,000 lives and devastating the livelihoods of many more people. All told, some 2.4 million people were seriously affected by Nargis, ranking it among the worst cyclones in Asia in the past 15 years and the worst in Myanmar's history. I recently completed my second trip to Myanmar, where I was again sobered by the immensity of the tragedy but was also cautiously hopeful about relief efforts. In May, government reluctance to allow international aid workers into the affected region sparked a storm of international criticism. We have made a lot of progress since then. Touring the delta by helicopter, I could see that many houses had been repaired one way or another. There was agricultural activity in the fields and commercial activity on the waterways. Schools are in session, in tents if not permanent classrooms. And hundreds of international aid staffers are now working in the delta. The promises about access made to U.N. Secretary General Ban Ki-moon when he saw Myanmar's head of state, Senior Gen. Than Shwe, in late May have essentially been kept."

Holmes helicopter tour anecdotally gauged progress using measures of effectiveness that are becoming more common in the relief and development communities -- measures like number of schools in session, amount of arable land being worked, and level of local economic activity. Gone are the days when gross measures, like tons of food delivered, were the principal yardsticks of effectiveness. Relief is about getting life back to normal and development is about improving and sustaining quality of life. Holmes praises the resilience of Myanmar's citizens:

"Without question, the international response has helped save lives and reduce suffering. While it is impossible to be sure all survivors have been reached, I am confident that the overwhelming majority have received help, even if many still need a good deal more. Crucially, a much-feared second wave of deaths from starvation or disease has not happened -- no small achievement, given that 75 percent of hospitals and clinics in the affected areas were destroyed. The people's resilience has been remarkable, as was the degree of help and solidarity from individual citizens and organizations in Myanmar."

The purpose of Holmes' op-ed piece, however, is not to praise the international community for its help (although it deserves such praise). Holmes wants reflect on the lessons learned from that response. He focuses on four of those lessons.

"First, no nation, rich or poor, can go it alone when confronted by a natural disaster of the magnitude of a Cyclone Nargis. It would have been much better, not least for the survivors, if the government of Myanmar had recognized the value of an international presence from the start. I encourage Myanmar's leaders to continue down the path of cooperation, including in response to other humanitarian challenges, based on the universal principle of the impartial provision of aid."

When Holmes talks about a country's inability to "go it alone," he means that no country keeps on standby all of the specialized emergency assistance required following a natural disaster. It is simply too expensive for every country in the world to maintain such resources. Cooperation and collaboration are essential if a country wants to apply the greatest amount of specialized help in the shortest amount of time. This is a lesson that China learned following its earthquake disaster earlier this year.

"Second, we must stay focused on the goal: assisting people in crisis. From the first, the aid operation in Myanmar -- as is true everywhere we work -- had to be about helping vulnerable people in need, not about politics. In this post-Iraq age, I am concerned that humanitarians are often pressured to choose between the hammer of forced intervention and the anvil of perceived inaction. Was there a realistic alternative to the approach of persistent negotiation and dialogue that we pursued? I do not believe so. Nor have I met anyone engaged in the operations who believes that a different approach would have brought more aid to more people more quickly."

There are really two lessons contained in Holmes' second point. First, staying mission focused (by which he means assisting people in crisis) may or may not be perceived as impartial activity depending on the circumstances in which relief workers find themselves. Had the cyclone hit in an area primarily populated by a rebel group fighting the government, getting the people in crisis back on their feet would not be in the best interests of the government. Donald Daniel and Bradd Hayes call this "blind impartiality" because relief workers are impartial only to the mission at hand, regardless of the consequences to concerned parties. The other lesson contained in Holmes second point is that a lot of situations fall in between the use of force and complete inaction. These situations require what Daniel and Hayes call "coercive inducement," in their book of same name. Coercive inducement can take many forms. The path pursued in this instance was "persistent negotiation." Holmes doesn't rule out the use of force as final option. He writes:

"This is not to say that there can never be a role for humanitarian intervention, even in natural disasters. But it must be the last resort, when all else has been tried and the only alternative is death and suffering on a mass scale."

One of the reasons that humanitarian intervention is a last resort is because it violates the sovereignty of the target nation. Holmes continues with his lessons learned:

"Third, Nargis showed us a new model of humanitarian partnership, adding the special position and capabilities of the Association of Southeast Asian Nations to those of the United Nations in working effectively with the government. This may prove the most important -- and, I hope, enduring -- lesson of the cyclone response, with implications for how we respond, anywhere, in the future. ASEAN's leadership was vital in building trust with the government and saving lives. In recent years, ASEAN members have significantly stepped up participation in the humanitarian arena. Given that eight of the 10 worst natural disasters last year occurred in Asia, this represents a lifesaving investment, where the United Nations is helping to build local capacity."

The use of regional organizations in which the target state has a vested interest is all part of learning what kind of influence and inducements can used to get the target state to behave in manner desired by the international community. Holmes concludes:

"Fourth, Nargis demonstrated once again the importance of disaster risk reduction and preparedness. Simple, low-cost measures -- local evacuation plans, shelters, community early-warning systems -- have saved tens of thousands of lives in neighboring Bangladesh when it has been faced with similarly devastating cyclones. We need to help the people of Myanmar strengthen their resilience and reduce their vulnerability. Building back better, to minimize future disaster risks, is a top priority. In coming years we can expect to see more, and more intense, weather-related natural disasters as the effects of climate change become more pronounced. We must be better prepared and must cooperate as neighbors and an international community in meeting this challenge. The need for effective global humanitarian partnerships has never been more apparent -- or more necessary."

Whether consciously or not, Holmes uses a framework for resilience that I think should be used by all strategic planners. The framework forces one to examine what can be done at the individual level, the state level, and the system (or international) level. As a result, at the individual level Holmes writes about "help[ing] the people of Myanmar strengthen their resilience and reduce their vulnerability." At the state level, Holmes talks about "evacuation plans, shelters, [and] community early-warning systems." Finally at the system level, he concludes "we must be better prepared and must cooperate as neighbors and an international community." Only by looking at all levels can we be reasonably assured that we are prepared as possible for future crises.

Global Poverty

Washington Post columnist Robert J. Samuelson wrote a column a few months ago in which he identified global poverty as mankind's greatest moral challenge ["Rx for Global Poverty," 28 May 2008]. He begins his column by succinctly laying out his case for putting poverty at the top of the priority list of global challenges:

"What's the world's greatest moral challenge, as judged by its capacity to inflict human tragedy? It is not, I think, global warming, whose effects -- if they become as grim as predicted -- will occur over many years and provide societies time to adapt. A case can be made for preventing nuclear proliferation, which threatens untold deaths and a collapse of the world economy. But the most urgent present moral challenge, I submit, is the most obvious: global poverty."

Because poverty seems to be ever present, it can easily become part of the global landscape and thus easily ignored. Jesus famously said, "For ye have the poor always with you." Like all great moral teachers, however, he went on to encourage his followers to and reduce poverty and relieve the suffering of those caught in its awful grasp. Samuelson writes about the extent of the challenge today.

"There are roughly 6 billion people on the planet; in 2004, perhaps 2.5 billion survived on $2 a day or less, says the World Bank. By 2050, the world may have 3 billion more people; many will be similarly impoverished."

Most predictions are that when the world reaches 9 billion people (around 2050) the world will start depopulating. Those predictions are primarily based on statistics that indicate relatively fewer people will be gripped by poverty and birthrates will be correspondingly lower. Samuelson's point is that we know how to eliminate poverty, yet it persists.

"What's baffling and frustrating about extreme poverty is that much of the world has eliminated it. In 1800, almost everyone was desperately poor. But the developed world has essentially abolished starvation, homelessness and material deprivation. The solution to being poor is getting rich. It's economic growth. We know this. The mystery is why all societies have not adopted the obvious remedies."

Okay, it may not be too much of a mystery. There are geographical reasons (some areas simply lack the resources and climate necessary for a prosperous society). There are political reasons (corruption and bad leadership). There are societal reasons (lack of appreciation for education, especially for girls). The list goes on, but the point is that most of these challenges can be successfully addressed. Samuelson continues:

"Just recently, the 21-member Commission on Growth and Development -- including two Nobel-prize winning economists, former prime ministers of South Korea and Peru, and a former president of Mexico -- examined the puzzle. Since 1950, the panel found, 13 economies have grown at an average annual rate of 7 percent for at least 25 years. These were: Botswana, Brazil, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan and Thailand. Some gains are astonishing. From 1960 to 2005, per capita income in South Korea rose from $1,100 to $13,200. Other societies started from such low levels that even rapid economic growth, combined with larger populations, left sizable poverty. In 2005, Indonesia's per capita income averaged just $900, up from $200 in 1966. Still, all these economies had advanced substantially. The panel identified five common elements of success:

• Openness to global trade and, usually, an eagerness to attract foreign investment.
• Political stability and 'capable' governments 'committed' to economic growth, though not necessarily democracy (China, South Korea and Indonesia all grew with authoritarian regimes).
• High rates of saving and investment, usually at least 25 percent of national income.
• Economic stability, keeping government budgets and inflation under control and avoiding a broad collapse in production.
• A willingness to 'let markets allocate resources,' meaning that governments didn't try to run industry."

For long-time readers of this blog, that list should sound somewhat familiar. In my discussions about Development-in-a-Box™, I have touched on all of these points with the possible exception of the last. Although it is easy to list pre-conditions for sustainable development, implementation is much more difficult. For example, a country might be eager to attract foreign direct investment, but that often means having in place the necessary infrastructure to make such investments worthwhile. No company is going to build a plant in an area where the manufactured products have no way of getting efficiently to market. Installing "capable" governments is not easy either. Historically, corrupt leaders do not give up power -- just look at Robert Mugabe in Zimbabwe. High rates of savings and investment are not easy to achieve either when most people are struggling to find enough to eat and to keep their families sheltered. Faced with such conundrums, it's really not so baffling or mystifying that countries remain mired in poverty. The question remains, what can they do to break the cycle of poverty? Samuelson offers a couple of prescriptions.

"One is: Globalization works. Countries don't get rich by staying isolated. Those that embrace trade and foreign investment acquire know-how and technologies, can buy advanced products abroad, and are forced to improve their competitiveness. The transmission of new ideas and products is faster than ever. After its invention, the telegram took 90 years to spread to four-fifths of developing countries; for the cellphone, the comparable diffusion was 16 years.

"A second is: Outside benevolence can't rescue countries from poverty. There is a role for foreign aid, technical assistance and charity in relieving global poverty. But it is a small role. It can improve health, alleviate suffering from natural disasters or wars, and provide some types of skills. But it cannot single-handedly stimulate the policies and habits that foster self-sustaining growth. Japan and China (to cite easy examples) have grown rapidly not because they received foreign aid but because they pursued pro-growth policies and embraced pro-growth values."

I don't disagree with either of those broad lessons, but again identifying them is easier than implementing them. No one can honestly expect Samuelson to lay out a blueprint for solving world poverty in a short column, and he doesn't. He simply points out that challenges exist in many areas and that others elsewhere have overcome them. He concludes:

"The hard question (which the panel ducks) is why all societies haven't adopted [these lessons]. One reason is politics; some regimes are more interested in preserving their power and privileges than in promoting growth. But the larger answer, I think, is culture, as Lawrence Harrison of Tufts University argues. Traditional values, social systems or religious views are often hostile to risk-taking, wealth accumulation and economic growth. In his latest book, 'The Central Liberal Truth,' Harrison contends that politics can alter culture, but it isn't easy. Globalization has moral as well as economic and political dimensions. The United States and other wealthy countries are experiencing an anti-globalization backlash. Americans and others are entitled to defend themselves from economic harm, but many of the allegations against globalization are wildly exaggerated. Today, for example, the biggest drag on the U.S. economy -- the housing crisis -- is mainly a domestic problem. By making globalization an all-purpose scapegoat for economic complaints, many 'progressives' are actually undermining the most powerful force for eradicating global poverty."

I believe that Samuelson is correct and I have repeatedly said so in my blogs. I, too, am concerned that the current economic downturn and emerging "neighborhood effect" [see my post Changing Supply Lines] will delay or crush the hopes of millions of people who could be helped by globalization. We need global vision and leadership as well as national vision and leadership. The poor may always be with us, but there needn't be so many poor.

Changing Supply Lines

Globalization is all about the movement and flow of resources, capital, people, ideas and so forth. Rising fuel prices, however, are changing the routes some of those flows are following ["Shipping Costs Start to Crimp Globalization," by Larry Rohter, New York Times, 3 August 2008].

"When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for installation, then bring the mostly assembled cars back to the United States. But when it began production this spring, the company decided to make the batteries and assemble the cars near its home base in California, cutting more than 5,000 miles from the shipping bill for each vehicle. 'It was kind of a no-brain decision for us,' said Darryl Siry, the company's senior vice president of global sales, marketing and service. 'A major reason was to avoid the transportation costs, which are terrible.'"

In a couple of recent posts, I have noted how changes in supply lines have dramatically and negatively affected economies that had thought they had permanently benefited from globalization [see Looking for Jobs that Last and Colombia Embraces Globalization]. In those posts, I noted that globalization integrates trade by disintegrating production chains and dispersing them across economies. But as the costs of transportation increase, the length of supply lines is beginning to decrease. As a result, globalization is beginning to look more like regionalization. Rohter continues:

"The world economy has become so integrated that shoppers find relatively few T-shirts and sneakers in Wal-Mart and Target carrying a 'Made in the U.S.A.' label. But globalization may be losing some of the inexorable economic power it had for much of the past quarter-century, even as it faces fresh challenges as a political ideology. Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex."

As Rohter notes, rising transportation costs are returning geographical challenges to the place they have historically occupied. Although transportation companies and manufacturing plants decry the changing landscape, many environmentalists are cheered by the changes.

"'If we think about the Wal-Mart model, it is incredibly fuel-intensive at every stage, and at every one of those stages we are now seeing an inflation of the costs for boats, trucks, cars,' said Naomi Klein, the author of The Shock Doctrine: The Rise of Disaster Capitalism. 'That is necessarily leading to a rethinking of this emissions-intensive model, whether the increased interest in growing foods locally, producing locally or shopping locally, and I think that's great.'"

Regionalization is good for many product chains, but it could also slow globalization's advance into areas that are currently mired in poverty, such as Africa. As I pointed out in the posts mentioned earlier, supplier companies need to position themselves within the logistics paths of production chains in order to benefit from globalization. As those logistics lines shrink, they are likely to bypass some geographical regions that are anxiously awaiting for the rest of the world to discover them. Without being embraced as part of disintegrated production chains, these regions will never attract enough capital to build up a sustainable regional economy. The changes have already started to occur.

"Many economists argue that globalization will not shift into reverse even if oil prices continue their rising trend. But many see evidence that companies looking to keep prices low will have to move some production closer to consumers. Globe-spanning supply chains — Brazilian iron ore turned into Chinese steel used to make washing machines shipped to Long Beach, Calif., and then trucked to appliance stores in Chicago — make less sense today than they did a few years ago. To avoid having to ship all its products from abroad, the Swedish furniture manufacturer Ikea opened its first factory in the United States in May. Some electronics companies that left Mexico in recent years for the lower wages in China are now returning to Mexico, because they can lower costs by trucking their output overland to American consumers."

Such dramatic changes in so short a period of time make it more important than ever for companies to involve themselves in alternative futures planning. Companies need to consider a number of possibilities about the future because no one can predict how the competitive landscape is going to change with any certainty. One thing that will remain important is wringing out as many efficiencies in the global supply chain as possible. To do that, there is going to have to be a lot more information sharing, even among competitors. Rohter notes how rising fuel prices have affected shipping costs.

"The cost of shipping a 40-foot container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times. The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent surge in shipping costs is on average the equivalent of a 9 percent tariff on trade. 'The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,' the report concluded, and as a result 'has effectively offset all the trade liberalization efforts of the last three decades.' The spike in shipping costs comes at a moment when concern about the environmental impact of globalization is also growing. Many companies have in recent years shifted production from countries with greater energy efficiency and more rigorous standards on carbon emissions, especially in Europe, to those that are more lax, like China and India."

This is not good news for developing countries, especially those that counted on building their industrial capacity using dirty industrial age technologies. Critics of globalization, Rohter reports, are delighted by these developments and have started writing about the death of globalization. They are probably writing a premature eulogy.

"Many leading economists say such predictions are probably overblown. 'It would be a mistake, a misinterpretation, to think that a huge rollback or reversal of fundamental trends is under way,' said Jeffrey D. Sachs, director of the Earth Institute at Columbia University. 'Distance and trade costs do matter, but we are still in a globalized era.' As economists and business executives well know, shipping costs are only one factor in determining the flow of international trade. When companies decide where to invest in a new factory or from whom to buy a product, they also take into account exchange rates, consumer confidence, labor costs, government regulations and the availability of skilled managers."

For the billions of people suffering from extreme poverty the death of globalization would also spell the end of hope. As I noted in one of the posts mentioned above, transportation costs have affected different economic sectors in different ways. Rohter discusses some of these changes.

"The industries most likely to be affected by the sharp rise in transportation costs are those producing heavy or bulky goods that are particularly expensive to ship relative to their sale price. Steel is an example. China's steel exports to the United States are now tumbling by more than 20 percent on a year-over-year basis, their worst performance in a decade, while American steel production has been rising after years of decline. Motors and machinery of all types, car parts, industrial presses, refrigerators, television sets and other home appliances could also be affected. Plants in industries that require relatively less investment in infrastructure, like furniture, footwear and toys, are already showing signs of mobility as shipping costs rise. Until recently, standard practice in the furniture industry was to ship American timber from ports like Norfolk, Baltimore and Charleston to China, where oak and cherry would be milled into sofas, beds, tables, cabinets and chairs, which were then shipped back to the United States. But with transportation costs rising, more wood is now going to traditional domestic furniture-making centers in North Carolina and Virginia, where the industry had all but been wiped out. While the opening of the American Ikea plant, in Danville, Va., a traditional furniture-producing center hit hard by the outsourcing of production to Asia, is perhaps most emblematic of such changes, other manufacturers are also shifting some production back to the United States."

Transportation costs have also contributed to the current food crisis.

"Soaring transportation costs also have an impact on food, from bananas to salmon. Higher shipping rates could eventually transform some items now found in the typical middle-class pantry into luxuries and further promote the so-called local food movement popular in many American and European cities."

To learn a bit more about the local food movement and some of the challenges associated with it, you can read my earlier post titled The Return of Family Farms? Rohter reports that rising transportation costs are creating a so-called "neighborhood effect." This effect, as noted above, is already changing supply chains and it may also mark a return to warehousing and inventories as "just-in-time" logistics systems become strained.

"Global companies like General Electric, DuPont, Alcoa and Procter & Gamble are beginning to respond to the simultaneous increases in shipping and environmental costs with green policies meant to reduce both fuel consumption and carbon emissions. That pressure is likely to increase as both manufacturers and retailers seek ways to tighten the global supply chain. 'Being green is in their best interests not so much in making money as saving money,' said Gary Yohe, an environmental economist at Wesleyan University. 'Green companies are likely to be a permanent trend, as these vulnerabilities continue, but it's going to take a long time for all this to settle down.' In addition, the sharp increase in transportation costs has implications for the 'just-in-time' system pioneered in Japan and later adopted the world over. It is a highly profitable business strategy aimed at reducing warehousing and inventory costs by arranging for raw materials and other supplies to arrive only when needed, and not before. Jeffrey E. Garten, the author of 'World View: Global Strategies for the New Economy' and a former dean of the Yale School of Management, said that companies 'cannot take a risk that the just-in-time system won't function, because the whole global trading system is based on that notion.' As a result, he said, 'they are going to have to have redundancies in the supply chain, like more warehousing and multiple sources of supply and even production.' One likely outcome if transportation rates stay high, economists said, would be a strengthening of the neighborhood effect. Instead of seeking supplies wherever they can be bought most cheaply, regardless of location, and outsourcing the assembly of products all over the world, manufacturers would instead concentrate on performing those activities as close to home as possible."

Opponents of globalization will undoubtedly crow over these developments. I'm not one of them. I believe the world can become a better place because of globalization, not in spite of it. Within a few decades, globalization should reach places it has yet to touch. That timeline could be pushed back if transportation costs rearrange the landscape of the global supply chain to extent implied in Rohter's article. Those concerned with the development of places like Africa would do well to start considering how a regional trading regime could still help create sustainable economies in some of the world's poorest places.

New Calls for Global Leadership

Two years ago I posted a blog about The Need for Global Leadership. It followed a post about the continuing saga of the Doha Round of trade talks that was struggling to make headway. As most of you know, those talks collapsed earlier this month (see my post The Collapse of the Doha Round). In the earlier post on global leadership, I stressed the importance of a having a vision sufficiently grand to inspire action. New York Times op-ed columnist David Brooks is now calling for a new organization of likeminded democracies that could combine sufficient power and influence to "do something" when others organizations appear hopelessly deadlocked ["Missing Dean Acheson," 1 August 2008]. My colleague Tom Barnett finds Brooks' arguments just plain dumb [Some truly bad thinking from Brooks]. I also have some concerns about Brooks' column, but for slightly different reasons. Brooks begins his column writing about the same "wise men" I wrote about in my post on global leadership. These "wise men" helped put the world back together following the last world war. Brooks writes:

"We’re about to enter our 19th consecutive year of Truman-envy. Ever since the Berlin Wall fell, people have looked at the way Harry Truman, George C. Marshall, Dean Acheson and others created forward-looking global institutions after World War II, and they've asked: Why can't we rally that kind of international cooperation to confront terrorism, global warming, nuclear proliferation and the rest of today’s problems? The answer is that, in the late 1940s, global power was concentrated. The victory over fascism meant the mantle of global leadership rested firmly on the Atlantic alliance. The United States accounted for roughly half of world economic output. Within the U.S., power was wielded by a small, bipartisan, permanent governing class — men like Acheson, W. Averell Harriman, John McCloy and Robert Lovett."

Before examining the rest of Brooks' column, one needs to examine the straw man premise he has just set up. He decries the lack action on subjects like terrorism, global warming, and nuclear proliferation and concludes that the stalemate has occurred because there is a lack of concentration of power. It almost seems an afterthought when he writes that "power was wielded by a small, bipartisan, permanent governing class." My post on global leadership was a call for leaders -- leaders with the vision, wisdom and will to see what was right and find ways to make it happen. It helps when such leaders have an institution they can use to implement their plans, but the problem per se is not institutional. Take global warming for example. The United States under the Bush administration has resisted global efforts to address the problem and no new institution would have changed that. On other two challenges Brooks mentioned, terrorism and nuclear proliferation, the Bush administration has managed to cobble together remarkably effective coalitions to address them -- again without a new institution. Brooks, however, focuses on the institutional basis of what he calls "globosclerosis" rather than on the fact that what is really lacking is dedicated class of public servants with broad vision and political acumen. Only a handful of today's politicians understand the importance of bipartisanship and the art of compromise. Brooks writes:

"Today power is dispersed. There is no permanent bipartisan governing class in Washington. Globally, power has gone multipolar, with the rise of China, India, Brazil and the rest. This dispersion should, in theory, be a good thing, but in practice, multipolarity means that more groups have effective veto power over collective action. In practice, this new pluralistic world has given rise to globosclerosis, an inability to solve problem after problem."

Brooks points to the collapse of the Doha Round as evidence of the problem. The culprits there being China and India. He could just have easily pointed to the failure of the Kyota Accord and included the U.S. in the mix of culprits. His point, however, is valid. Special interests continue to win out over common interests. He provides other examples.

"The Doha failure comes amid a decade of globosclerosis. The world has failed to effectively end genocide in Darfur. Chinese and Russian vetoes foiled efforts to impose sanctions on Zimbabwe. The world has failed to implement effective measures to deter Iran's nuclear ambitions. The world has failed to embrace a collective approach to global warming. Europe's drive toward political union has stalled. In each case, the logic is the same. Groups with a strong narrow interest are able to block larger groups with a diffuse but generalized interest. The narrow Chinese interest in Sudanese oil blocks the world's general interest in preventing genocide. Iran's narrow interest in nuclear weapons trumps the world's general interest in preventing a Middle East arms race. Diplomacy goes asymmetric and the small defeat the large."

I have no quarrel with that logic. The problem is that the examples reflect politicians being politicians instead of being leaders. The "wise men" discussed earlier weren't politicians. They were bureaucrats with stature who could see beyond the challenges of the day to a brighter future. Their influence over politicians, however, was significant. Brooks continues to insist, however, that the basic problem is institutional. He continues:

"In a multipolar world, there is no way to referee disagreements among competing factions. In a democratic nation, the majority rules and members of the minority understand that they must accede to the wishes of those who win elections. But globally, people have no sense of shared citizenship. Everybody feels they have the right to say no, and in a multipolar world, many people have the power to do so. There is no mechanism to wield authority. There are few shared values on which to base a mechanism. The autocrats of the world don't even want a mechanism because they are afraid that it would be used to interfere with their autocracy. The results are familiar. We get United Nations resolutions that go unenforced. We get high-minded vows to police rogue regimes, but little is done. We get the failure of the Doha round and the gradual weakening of the international economic order."

Brooks points to the Iraq fiasco as a prime example of why unilateral action is not the solution to globosclerosis. What, he asks himself, is the answer?

"Globosclerosis continues, and people around the world lose faith in their leaders. It's worth remembering that George W. Bush is actually more popular than many of his peers. His approval ratings hover around 29 percent. Gordon Brown’s are about 17 percent. Japan’s Yasuo Fukuda’s are about 26 percent. Nicolas Sarkozy, Angela Merkel and Silvio Berlusconi have ratings that are a bit higher, but still pathetically low. This is happening because voters rightly sense that leaders lack the authority to address problems. The bottom line is that presidential candidates can talk grandly about global partnerships, but it's meaningless without a mechanism to wield authority. A crucial question in an authority crisis is: Who has a strategy for execution? The best idea floating around now is a League of Democracies, as John McCain and several Democrats have proposed. Nations with similar forms of government do seem to share cohering values. If democracies could concentrate authority in such a league, at least part of the world would have a mechanism for wielding authority. It may not be a return to Acheson, Marshall and the rest, but at least it slows the relentless slide towards drift and dissipation."

There is no doubt that some of the post-war institutions set in place by the "wise men" are now a bit long in the tooth. Fixing them, however, has a better chance of succeeding than trying to establish new ones. There is no reason that NATO, for example, could not be morphed into the "League" Brooks recommends (it would be easier and cheaper than coming up with an entirely new organization), but the basic problem would still remain -- a lack of leadership. The past eight years of unilateral American action divided old allies and created few new friends. No new institution would have changed that. What we need a new generation of clear-sighted world leaders who have the imagination to see a brighter future and the will to get us there. That kind of leadership is the sine qua non of any solution to globosclerosis.

The Fear of Nuclear Proliferation

One widely broadcast political advertisement being used by Democratic presidential candidate Barack Obama asserts that nuclear weapons falling into the hands of terrorists is the most serious security threat facing the United States. For good reasons, preventing a nuclear detonation anywhere in the world is high on the list of almost everyone's security concerns. The consequences of such a detonation go far beyond the loss of life that would result. Beyond the concern about radioactive material for a so-called dirty bomb or, even worse, a nuclear weapon falling into the hands of terrorists, the proliferation of nuclear weapons has remained in the headlines thanks to so-called "rogue nations" like North Korea and Iran. The topic again made headlines in late July when a Japanese company suspected of selling equipment that could be used to build nuclear weapons was raided by police ["Japan police raid company, suspect nuclear exports," by Jay Alabaster, Washington Post, 31 July 2008].

"Police raided the headquarters of Horkos Corp., a maker of machining tools and construction equipment, and several other sites in the city of Fukuyama, about 370 miles southwest of Tokyo, said police spokesman Ryoji Manda. The company is suspected of exporting equipment without obtaining government authorization, he said. In 2004, Horkos exported several 'machining centers' to South Korea, from where they could then have been sold to other countries, Japanese media reported. The equipment is highly precise and can be used to make components for centrifuges that enrich uranium for use in nuclear bombs."

The raid underscores the challenges involved with preventing nuclear proliferation. The Horkos Corporation was not suspected or accused of selling nuclear weapon components directly to a so-called rogue state. It sold machines to an ally nation. Its "transgression" was selling that equipment without permission. The first-line defense of nations trying to prevent nuclear proliferation is trying to prevent the components necessary to begin a nuclear program from ever reaching states interested in developing "the bomb." It is a difficult and tedious intelligence challenge. Sometimes the information that components have been secured by undesirable states is only learned after the fact.

"In 2006, Japanese police arrested the president and other employees of Mitutoyo Corp., and the company later admitted it broke the law in a case involving the export of precision three-dimensional measuring devices. Japanese news reports said the International Atomic Energy Agency had earlier discovered Mitutoyo-made machinery at nuclear-related sites in Libya during inspections."

Although the article didn't say, it is likely the machinery by Mitutoyo wasn't sold directly to Libya (even if they knew that is where it would eventually end up). Like the Horkos machinery the Mitutoyo equipment was probably sold initially to a legitimate third party. The most infamous black market for nuclear program components was run by the Pakistani scientist who is credited with developing Pakistan's nuclear weapon program. Four years ago, his operation was uncovered and he was placed under arrest. The extent of his operation is still be being discovered ["Officials Fear Bomb Design Went to Others," by David E. Sanger and William J. Broad, New York Times, June 2008].

"Four years after Abdul Qadeer Khan, the leader of the world’s largest black market in nuclear technology, was put under house arrest and his operation declared shattered, international inspectors and Western officials are confronting a new mystery, this time over who may have received blueprints for a sophisticated and compact nuclear weapon found on his network's computers. Working in secret for two years, investigators have tracked the digitized blueprints to Khan computers in Switzerland, Dubai, Malaysia and Thailand. The blueprints are rapidly reproducible for creating a weapon that is relatively small and easy to hide, making it potentially attractive to terrorists. The revelation this weekend that the Khan operation even had such a bomb blueprint underscores the questions that remain about what Dr. Khan, a Pakistani metallurgist and the father of Pakistan's nuclear weapons program, was selling and to whom. It also raises the possibility that he may still have sensitive material."

Governments interested in preventing the spread of nuclear weapons are concerned by this because Khan is a national hero in Pakistan and the Pakistani government has hinted that it wants to release him. The fear is that Khan will re-start his operation if released.

"Pakistani officials insist that Dr. Khan, as the leader of a uranium enrichment program, had no weapons access. But this is the second weapons design found in his smuggling network. The first was for an unwieldy but effective Chinese design from the mid-1960s that Libya acknowledged obtaining from the Khan network before it surrendered its bomb-making equipment in 2003. Both the new and the old designs exploit the principle of implosion, in which a blast wave from a sphere of conventional explosives squeezes inward with tremendous force to compress a ball of bomb fuel, starting the chain reaction and the atomic explosion. A nuclear official in Europe familiar with the Khan investigation said the new design was powerful but miniaturized — using about half the uranium fuel of the older design to produce a greater explosive force. ... Nuclear experts said a warhead built from the new design was small enough to fit atop a family of medium-range missiles that derive from North Korea’s Nodong class of missiles. Those missiles include Pakistan’s Ghauri and Iran’s Shahab. All are about four feet wide, and any warhead atop them must, by definition, be smaller."

Rising oil, natural gas, and coal prices have raised new fears about nuclear proliferation because dozens of nations are becoming interested in exploring nuclear power as an alternative energy source ["Spread of Nuclear Capability Is Feared," by Joby Warrick, Washington Post, 12 May 2008].

"At least 40 developing countries from the Persian Gulf region to Latin America have recently approached U.N. officials here to signal interest in starting nuclear power programs, a trend that concerned proliferation experts say could provide the building blocks of nuclear arsenals in some of those nations. At least half a dozen countries have also said in the past four years that they are specifically planning to conduct enrichment or reprocessing of nuclear fuel, a prospect that could dramatically expand the global supply of plutonium and enriched uranium, according to U.S. and international nuclear officials and arms-control experts."

Although oil-rich Middle Eastern countries claim that their nuclear power programs are aimed at ensuring their energy future beyond the oil era, arms control experts suspect security concerns are also involved.

"For some Middle Eastern states with ready access to huge stocks of oil or natural gas, such as Kuwait, Saudi Arabia and the United Arab Emirates, the investment in nuclear power appears to be linked partly to concerns about a future regional arms race stoked in part by Iran's alleged interest in such an arsenal, the officials said. ... Although the United Arab Emirates has a proven oil reserve of 100 billion barrels, the world's sixth-largest, in January it signed a deal with a French company to build two nuclear reactors. Wealthy neighbors Kuwait and Bahrain are also planning nuclear plants, as are Libya, Algeria and Morocco in North Africa and the kingdom of Jordan. Even Yemen, one of the poorest countries in the Arab world, last year announced plans to purchase a nuclear reactor, which it says is needed to produce electricity; it is one of 11 Middle Eastern states now engaged in starting or expanding nuclear power programs. Meanwhile, two of Iran's biggest rivals in the region, Turkey and Egypt, are moving forward with ambitious nuclear projects. Both countries abandoned any pursuit of nuclear power decades ago but are now on course to develop seven nuclear power plants -- four in Egypt and three in Turkey -- over the next decade."

The country of most immediate concern, of course, is Iran.

"Although U.S. intelligence agencies have concluded that Iran halted its research into making nuclear weapons five years ago, the Islamic republic still seeks to make enriched uranium with centrifuges at its vast underground facility at Natanz. It is now operating about 3,000 centrifuges and plans to increase the number to 50,000."

All of this highlights the conundrum that will continue to confront the world as it continues to develop and the demand for electricity increases. Nuclear power is a proven and efficient alternative energy source and, once the challenge of radioactive waste is solved, its widespread use should help reduce the emission of greenhouse gasses. But within every peaceful nuclear power program lies a nascent nuclear weapons program. That is why a vigorous international inspection program will be necessary to ensure that peaceful nuclear programs remain peaceful. The other concern is the safe and secure transport and sale of nuclear material that could be used by terrorist organizations if it fell into their hands. To counter this challenge, governments have established sensor systems and intelligence networks ["Interdicting Nuclear Smuggling: Second Line of Defense Program," by Micah Zenko and Matthew Bunn, NTI.org, last updated by Micah Zenko on 20 November 2007].

"The Second Line of Defense program at the Department of Energy's National Nuclear Security Administration (NNSA) seeks to interdict illicit trafficking of nuclear and radiological material through airports, seaports, and border crossings in Russia and other key transit states. It strives to do this by helping states install and use radiation detection equipment at these sites, and providing associated training and support. Since 2003, the Second Line of Defense program has consisted of two components: the 'Core' program that focuses on putting radiation detection in place at border crossings, mid-sized seaports, and airports in Russia, other former Soviet States, Eastern Europe, and other key countries; and the Megaports Initiative that equips major international seaports shipping cargo to the United States with radiation detection equipment."

The first line of defense, of course, is secure handling and storage of nuclear material so that it never makes it to the black market. In addition to the Second Line of Defense Program, the U.S. has established several other initiatives.

"Customs Container Security Initiative. On January 17, 2002, U.S. Customs Commissioner Robert Bonner announced the Container Security Initiative (CSI), a series of bilateral agreements to identify and pre-screen high-risk shipping containers from the twenty foreign ports that collectively account for 90 percent of shipping traffic into the United States, before such containers even start their trip to the United States. Part of the CSI consists of examining U.S.-bound selected containers that are assessed as high-risk for chemical, biological, radiological, and nuclear material, as well as potentially dangerous dual-use items. The Second Line of Defense program has agreed to contribute its expertise in supplying radiation detection equipment to foreign countries for screening for radiological and nuclear material. ...

"Secure Freight Initiative In December 2006, the Department of Homeland Security (DHS) and DOE announced the first phase of the Secure Freight Initiative (SFI). The Initiative complements and coordinates with DHS's Bureau of Customs and Border Protection's Container Security Initiative (CSI) and DOE's Megaports Initiative. Under the joint work-plan, either the host government or DHS pays for the non-intrusive imaging systems while DOE deploys the radiation portal monitors. The SFI works to integrate the data and images provided by the DOE monitors and the non-intrusive imaging systems. All of the data is provided to the host government. Any data that concerns U.S.-bound containers is provided to on-site U.S. CSI systems, and the CBP National Targeting Center (NTC) in the United States. If the DOE-provided radiation monitors set off an alarm from scanning a U.S.-bound container, U.S. and host country personnel are notified at the same time, providing some degree of oversight for the effectiveness of U.S.-funded equipment and training."

The challenge of preventing nuclear proliferation and the illicit marketing of nuclear material is never-ending. Once the nuclear genie was let out of the bottle, there is no putting it back in, despite calls by politicians to do just that. Therefore, preventing proliferation is a challenge that requires significant cooperation between governments and between commercial organizations and governments. If, as predicted, the use of nuclear power becomes more common (and I think it should), the challenge will only grow. We should look at this as an opportunity for international cooperation and collaboration rather than an intractable challenge. Wringing one's hands has never helped the world move forward.

Drug Use Rising in West Africa

Until oil was discovered in and around West Africa, that area was best known as the hub of the 18th and 19th century slave trade. In recent years, West Africa has also seen savage civil wars, which has left some countries devastated and in chaos. With relative peace restored and the discovery of oil, people (including criminals) are seeing opportunities to exploit. Where the West sees oil, criminals see what my colleague Tom Barnett calls "seam states." These are states that have just enough connectivity with the developed world so that they can carry out their nefarious activities, but not so much connectivity that they can't live comfortably "off the scope" of most law enforcement agencies. The more corrupt the area, the better for them. The latest challenge to confront West Africa is cocaine ["Cocaine Finds Africa," by Antonio Maria Costa, Washington Post, 29 July 2008].

"West Africa is under attack. The region has become a hub for cocaine smuggling from Latin America to Europe. States that we seldom hear about, such as Guinea-Bissau and neighboring Guinea, are at risk of being captured by drug cartels in collusion with corrupt forces in government and the military."

As I have repeatedly pointed out, corruption undermines progress more than almost any other challenge faced by countries gripped with poverty. When corruption is found within both the political and security sectors, there is little anyone can do to help that country progress until such corruption is rooted out. The question is who will do the rooting? Unfortunately for some African countries, it looks like corruption is taking deeper root.

"With the exception of cannabis in Morocco, Africa never used to have a drug problem. That has changed, however, in the past five years. Around 50 tons of cocaine are being shipped from the Andean countries to Europe via West Africa every year -- and that is a conservative estimate. Actual amounts could be at least five times higher. The volume seized is rising sharply: from 266 kilograms in 2003, to 3,161 in 2006, to 6,458 in 2007. This steep increase will no doubt continue. This month alone, more than 600 kilos were seized in a plane with fake Red Cross markings at the airport in Freetown, Sierra Leone, and at the international airport in Bissau, several hundred boxes were unloaded from a jet. The profiteers in this illicit trade -- mostly but not only Latinos -- stand out on the streets of West African towns. They drive luxury cars, buy up the best hotels and are building haciendas and other opulent examples of 'narcotecture.'"

As Latin American countries clean up their acts (see my post about Colombia), the cartels are moving to seam states. Lacking the resources of developed nations, honest local law enforcement officers find themselves out-equipped and out-manned.

"Law enforcement has been helpless against this onslaught. Drug planes don't have to fly below the radar, because in most cases there is no radar (or electricity). Soldiers sometimes help smugglers by closing airports and unloading the cargo. Police cars run out of gas when giving chase or are left in the dust by smugglers' all-terrain vehicles. There are no local navies to intercept the ships coming from Latin America or to chase the 2,000-horsepower boats that speed drugs up the coast to Europe. Traffickers are seldom brought to trial; in some cases, there are no prisons to put them in. Even when they are charged, they are usually released because evidence is not collected or needed laws are not in place."

In my discussions about Development-in-a-Box™, I have stressed that there are certain pre-conditions that must exist before development can take place. Atop that list is security. Too often people think about security just in terms of military might. Law enforcement is an even more important part of the security picture. As Costa points out, security is one reason that the rest of the world should be concerned with what is happening in West Africa.

"Drugs have become a security issue. Drug money is perverting the weak economies of the region. In some cases, the value of the drugs being trafficked is greater than a country's national income. The influence that this buys is rotting these fragile states; traffickers are buying favors and protection from candidates in elections. Quick intervention by the international community five years ago prevented a crisis in Cape Verde, but the cartels merely shifted their operations to Guinea-Bissau. Now Guinea is under threat; Guinea's neighbor Sierra Leone could be next. Without a regional response, the problem will move from country to country."

I often talk about the need for a holistic approach to building a sustainable economy in a developing state. Costa, who is executive director of the U.N. Office on Drugs and Crime, underscores the importance of taking a holistic approach to regional problems as well as national challenges. But she notes that the road ahead is bumpy.

"Containing this threat will not be easy. Poverty is the biggest problem. These countries are the worst performers on the human development index -- their populations at the bottom of the 'bottom billion.' Unemployed and desperate youths are vulnerable to being recruited as foot soldiers for criminal groups. West African countries must take control of their coasts and airspace. This requires hardware (boats, planes and radar), know-how (investigative techniques and container security) and counter-narcotics intelligence. Some of these capabilities can be developed nationally, but some assistance will have to come from abroad. Cooperation among customs officials, border guards, the police and counter-narcotics agents -- at ports and airports, for example -- has made Cape Verde a less attractive transit point for drug traffickers. The same approach should be adopted elsewhere. Because the drug trade defies borders, regional cooperation is vital, particularly intelligence-sharing. Stronger legal cooperation among West African nations would enable more effective extradition, mutual legal assistance and confiscation of the proceeds of crime. Working contacts must also be strengthened between countries of origin and destination, in South America and Europe, respectively."

Costa notes that some nascent efforts have begun but, by themselves, are insufficient to counter the challenges ahead. She harkens back to getting rid of corruption and building local capacities and infrastructures.

"In some cases, mechanisms for intelligence-sharing are under construction. But measures, and even laws, to fight organized crime and corruption will be meaningless without the political will and capacity to implement them. Too often, drugs that are seized disappear instead of being destroyed. Judges, police and witnesses are intimidated. Security forces turn a blind eye or lend a hand to smuggling. The highest authorities must recognize the stakes. Their failure to act is a sign of helplessness or complicity. Political will would be strengthened if regional leaders were rewarded for their integrity and punished for corruption. At the moment, the honest ones feel abandoned and the crooked ones act with impunity. We must reduce vulnerability to drugs and crime with greater development. And greater justice would build faith in the rule of law. West Africa's drug trafficking problem is still relatively small compared with that of West Asia, the Caribbean or Latin America. But it is growing exponentially and threatens to turn the region into a center of lawlessness. Such instability is the last thing Africa needs. The affected countries and the international community must act before the situation spirals out of control."

The drug problem is simply another challenge that must be thrown in the mix as the search for solutions continues. These challenges cannot be countered serially but must be attacked simultaneously. Progress must be made in all areas so that the economy and quality of life in all sectors rise in unison. Any other approach will turn out to be more like a "whack-the-varmint" game found in amusement parks. Although tackling a multitude of problems simultaneously is more difficult, it is the only strategy that can maintain sufficient momentum to make real and lasting progress. Unfortunately, the international community has yet to settle on a grand strategy of how to attack these problems, let alone the mechanism for doing so.

Another Search Engine Revs Up

Every six months or so it seems that a company introduces a new search engine in hopes of competing with Google and other big search engine sites [see my posts Globalization's Competitive Landscape and Wikiasari, Web 2.0, and Other Search Engines]. In the first post, I noted that the combatants in the search engine struggle included (in addition to Google), Microsoft, Yahoo, and Ask.com. The focus of the post was Ask.com, which started life as Ask Jeeves. The post also mentions companies like Lycos, Alta Vista, and HotBot. I'm sure there are others of which I'm not aware or use little, like Hakia. Another search engine has now entered the fray ["Former Employees of Google Prepare Rival Search Engine," by Miguel Helft, New York Times, 28 July 2008]. As the headline of Helft's article reveals, the pedigree of this new search engine is impressive.

"In her two years at Google, Anna Patterson helped design and build some of the pillars of the company's search engine, including its large index of Web pages and some of the formulas it uses for ranking search results. Now, along with her husband, Tom Costello, and a few other Google alumni, she is trying to upstage her former employer. On [28 July], their company, Cuil, ... unveil[ed] a search engine that they promise will be more comprehensive than Google's and that they hope will give its users more relevant results."

To test the search engine, I did a search for my company, Enterra Solutions. Cuil returned 11,076 hits and scanning the first 10 pages of results, they all appeared relevant to the search. I must admit, however, that I was a bit baffled by the images that accompanied the hits. Some were relevant and some seemed oddly out of place. For web surfers used to seeing the results provided by Google, they should be pleasantly surprised by results presented by Cuil. They are presented in an attractive and easy to read format. Whether this is enough to make a dent in the search engine market remains to be seen.

"Cuil, pronounced 'cool,' is only the latest in a long string of start-up companies that have been founded and financed with the goal of competing with Google, as well as Yahoo and Microsoft. (In June, Google accounted for 61.5 percent of search queries in the United States, while Yahoo held 20.9 percent and Microsoft had 9.2 percent, according to comScore.) Some of the most prominent include Powerset, which Microsoft recently bought, and Wikia, which was founded by Jimmy Wales, one of the creators of Wikipedia. So far, none have managed to make a dent in the search market."

Analysts, however, are not writing off Cuil as simply another contender that is going to get crushed by the reigning champ.

"Some analysts say Cuil has potential, in part because of the pedigree of its founders. 'This is the most promising thing I've seen in a while,' said Danny Sullivan, who has followed the online search business for more than a decade and is the editor of Search Engine Land. 'Whether they are going to threaten Microsoft, much less Google, that's another story.' Mr. Costello, a former researcher at Stanford, said that with 120 billion Web pages, Cuil's search index is larger than any other. The company uses a form of data mining to group Web pages by content, which makes the search engine more efficient, he said. Instead of showing results as short snippets of text and images with links, it displays longer entries and uses more pictures. It also provides tools to help users further refine their queries. ... Mr. Sullivan said he was unimpressed by Cuil's claim that its index includes more Web pages, noting that that could mean users are 'overwhelmed by a whole bunch of junk.' But he said that Cuil’s new approach to ranking pages and presenting results could prove to be a hit with some users. 'If it turns out that they have good relevancy, I could see that the word of mouth' would bring Cuil some popularity, he said."

As Mr. Costello says earlier in the article, the success of Cuil is in the hands of users. With $33 million of venture capital sunk into the enterprise to date, some pretty big bets have been made that Cuil will succeed where others have failed.