G-20 Plus Five: The Economic Forum’s Mixed Record

G20Plus5

It is time to take stock of the G-20. Just over five years ago, during the free fall of the global financial crisis, representatives from 20 of the world’s leading economies agreed to gather twice a year in order to develop a more sustainable regulatory framework for financial institutions.

 

There have been many signs of promise. The group has agreed on a new framework for regulatory standards for each country’s most important financial institutions and tasked a Financial Stability Board (FSB) with monitoring adherence to them. But the G-20 has also fallen short of some expectations. Although there have been improvements in global financial regulation over the past five years, serious flaws remain.

 

The G-20 has already addressed the main pillars of financial regulatory reform. The most important decision concerned international bank capital regulations. Prior to the G-20, there were serious problems. The Basel II agreement, initially published in June 2004, gave banks enormous discretion in determining whether they met minimum capital standards. That agreement was also undermined by the fact that the United States decided not to live up to it.

 

The Basel III regulations, which were agreed upon in 2011, were a great improvement. The first important step was that all the G-20 countries agreed to recognize the regulations and task a new body, called the Regulatory Consistency Assessment Programme (RCAP), with monitoring, assessing, and evaluating the implementation of new, more stringent capital standards. The RCAP audits the regulatory frameworks of participating countries and issues formal publications evaluating their progress. It has the authority to request improvements as necessary, and has done so. In each of the four countries it has reviewed, it has requested improvements — 90 of them, in the case of China. In a preliminary assessment, the European Union was declared materially noncompliant on two items, and the United States was declared materially noncompliant on one item.

 

Another achievement of the G-20 was the creation of a regulatory framework for over-the-counter-derivatives, risky financial instruments that were at the center of the last financial crisis. Before the crisis, there were essentially no regulations on the riskiest derivatives trading and there was no transparency in the derivatives marketplace. Now the majority of these transactions are bound to multilateral standards of transparency and regulation. Although these ideas were discussed by the G-20, ultimately the United States and Europe — where 85 to 90 percent of derivatives trading is conducted — are primarily responsible for implementing them. Although most countries have passed laws implementing these regulations, it is too early to tell whether they are working.

 

A third accomplishment of the G-20 was its reforms to international regulations on rating agencies. Before the crisis, ratings agencies, which are responsible for assessing the ability of debtors to pay back what they borrow, were unregulated in most G-20 countries. After the crisis, it was clear that this was a grave mistake. The industry was highly concentrated, with two U.S. firms controlling more than 80 percent of the market. But the ratings issued by these agencies were often sloppily fabricated.

 

The assumption behind the new regulations was that greater transparency and scrutiny of ratings agencies would encourage competition and improve overall performance. Preliminary data suggest that the plan has worked. In the United States and the EU, new entrants have joined the market and a greater number of firms are now rating financial institutions and asset-backed securities.

 

The G-20 has also succeeded at regulating hedge funds. Before the crisis, hedge funds were dealt with in different ways in different countries. (Even the EU lacked a single regulatory framework.) All G-20 economies, with the exception of Brazil, have now passed hedge fund regulations as part of broader efforts to regulate and supervise the shadow banking sector, which involves entities and activities (including hedge funds) that exist fully or partially outside the regular banking system.

 

Finally, the G-20 has made major progress on standards for winding down troubled banks. During the crisis, the lack of such standards proved to be a major problem, as the lack of a common playbook worsened market jitters. The need for a clear resolution scheme is especially relevant for large cross-border banks, which are especially difficult to unravel and are concentrated in the United States and the EU.

 

Resolution regimes require a clear operational authority to stabilize the bank, as well as a clear legislative framework that allows authorities to force creditors to take losses. It is already evident that such a system is easier to build in the United States than the EU. The United States already has a clear authority, the FDIC, which is responsible for taking control of the parent company of the distressed financial group. It has always been capable of keeping distressed operations open by injecting extra liquidity. The FDIC can also access an Orderly Liquidation Fund (OLF), administered by the U.S. Treasury, to finance a “bridge” bank, which is authorized to hold the assets and liabilities of an insolvent bank. A bridge bank is charged with continuing the operations of the insolvent bank until the bank becomes solvent through acquisition by another entity or through liquidation.

 

The EU is only halfway there. Although Europe has agreed on the procedure to resolve a bank, the proposed common fund for that kind of activity is, at 55 billion euro, still too small given the size of the EU banking market, and will only come in place too late. In practice, national governments will still likely be responsible for providing most of the money to assist their ailing banks, which would only worsen the distortions in European financial markets.

 

LONG ROAD AHEAD

 

The G-20 still has plenty of work in coming years. New financial regulatory items have emerged on the agenda, including regulation of the non-bank financial sector. International standards for the non-bank financial sector are far less developed than those for banking. In July 2013, the FSB published a list of nine insurance companies (five are European, three are American, and one is Chinese) that it deemed systemically important. It will soon publish a similar list for other finance and asset management companies. Although the size of total assets of insurers and asset management companies is far below that of the banking sector, and systemic risks are much lower, their business models and risk diversification still require proper supervision.

 

The G-20 regulations have also not yet solved the problem posed by central counterparties (CCPs), the entities that increasingly serve as an exchange for derivatives transactions. They play a critical role, but are still under-regulated: at periods of financial stress, they may not be able to meet the liquidity needs of their members. If inadequately managed, CCPs could become the Fukushimas of global finance. CCP board members need to take a much more hands-on approach to insulating risks coming from CCPs.

 

The G-20 also needs to place greater emphasis on macroeconomics, especially when it comes to coordinating exit policies from the unconventional monetary policy that developed countries have pursued since the start of the crisis. The prospect of the end of such policies — namely, the U.S. Federal Reserve’s decision to draw down its bond-buying program — has already led capital to flee emerging markets. Similar policies are sure to follow in the other developed countries. Whether central banks will take the global dimension into account remains an open question.

 

Overall, the G-20 has taken a big step toward instituting better global governance and a more consistent regulatory framework for financial markets. Five years on, the G-20 countries — and especially the United States and Europe, where the seeds of the last financial crisis were sown — have largely delivered on their commitments. Better rules are in place on bank capital, derivatives, ratings agents, hedge funds, and bank liquidation. How these rules are enforced will matter, of course, but at least the rules exist. Initial reports on the implementation of the new Basel III rules, which are key to the entire framework, are already promising.

 

That raises the question of how the G-20 has managed to enforce its agenda without possessing coercive authority. One important factor has been the quality and dedication of its leadership. The past and current chairs of the FSB, Mario Draghi and Mark Carney, were instrumental in driving the process forward. But another factor has been the subtle effectiveness of peer pressure. Although the G-20 cannot force any single country to pass regulations, each country is very aware of being observed by the others. No member of the group has wanted to be accused of shirking its responsibilities. For now, that should be enough for the G-20 to move forward on its remaining agenda.

 

Obama warns Moscow of ‘costs’ if Russia intervenes in Ukraine

ROSTOV-ON-DON, Russia, Feb. 28 (UPI) — U.S. President Barack Obama Friday cautioned Russia “there will be costs for any military intervention in Ukraine.”  In a statement issued by the White House, Obama said his administration is in daily communication with Russian officials, “and we’ve made clear that they can be part of an international community’s effort to support the stability and success of a united Ukraine going forward, which is not only in the interest of the people of Ukraine and the international community, but also in Russia’s interest.”  ”However, we are now deeply concerned by reports of military movements taken by the Russian Federation inside of Ukraine,” he said. “Russia has a historic relationship with Ukraine, including cultural and economic ties, and a military facility in Crimea, but any violation of Ukraine’s sovereignty and territorial integrity would be deeply destabilizing, which is not in the interest of Ukraine, Russia, or Europe.”

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Tokyo bitcoin exchange files for bankruptcy

The Mt. Gox bitcoin exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.  The exchange’s CEO Mark Karpeles appeared before Japanese TV news cameras, bowing deeply. He said a weakness in the exchange’s systems was behind a massive loss of the virtual currency involving 750,000 bitcoins from users and 100,000 of the company’s own bitcoins. That would amount to about $425 million at recent prices.  The online exchange’s unplugging earlier this week and accusations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.  It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.

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Navy’s UCLASS Could Be Air to Air Fighter

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Could the U.S. Navy’s future Unmanned Carrier-Launched Airborne Surveillance and Strike (UCLASS) aircraft have an air-to-air role? The service’s director of air warfare Rear Adm. Mike Manazir posed that it could during a Dec. 20 interview with USNI News.  Manazir contemplated the possibility that that the UCLASS, which is primarily being designed for the intelligence, surveillance and reconnaissance (ISR) and strike roles, could be used as a flying missile magazine which could supplement the firepower of the F/A-18E/F and F-35C Joint Strike Fighter in air-to-air combat as a robotic wingman of sorts.  “Maybe we put a whole bunch of AMRAAMs (Advanced Medium-Range Air-to-Air Missile) on it and that thing is the truck,” Manazir said. “So this unmanned truck goes downtown with—as far as it can go—with a decision-maker.”  In Manazir’s vision the UCLASS could be commanded remotely from a Northrop Grumman E-2D Hawkeye or a Lockheed Martin F-35C Joint Strike Fighter flight leader.  The concept has a lot of merit, said Air Force Reserve Col. Michael Pietrucha, a former F-15E weapons systems officer and autonomous unmanned air vehicle expert in a Wednesday interview with USNI News.

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1 In 4 Americans Thinks The Sun Goes Around The Earth, Survey Says

A quarter of Americans surveyed could not correctly answer that the Earth revolves around the sun and not the other way around, according to a report out Friday from the National Science Foundation.  The survey of 2,200 people in the United States was conducted by the NSF in 2012 and released on Friday at an annual meeting of the American Association for the Advancement of Science meeting in Chicago.  To the question “Does the Earth go around the Sun, or does the Sun go around the Earth,” 26 percent of those surveyed answered incorrectly.  In the same survey, just 39 percent answered correctly (true) that “The universe began with a huge explosion” and only 48 percent said “Human beings, as we know them today, developed from earlier species of animals.”  Just over half understood that antibiotics are not effective against viruses.

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Report: Saudi Arabia Wants Uranium-Enrichment Capacity

Intelligence officials and issue analysts report signs that Saudi Arabia wants to develop a capacity to enrich uranium, despite proliferation concerns.  Riyadh is understood to be worried that world powers will agree to allow Iran to maintain some limited uranium-enrichment capability in a potential lasting deal on its nuclear program. Saudi Arabia has an established interest in developing an atomic-energy program, but its concerns about Iran could be causing the Persian Gulf kingdom to consider a more expansive domestic nuclear capability, the Daily Beast reported on Friday.  Institute for Science and International Security President David Albright told the news website he had learned from an unidentified European intelligence agency of Saudi Arabia’s pursuit in recent years of the scientific and engineering expertise necessary to carry out activities in all parts of the nuclear fuel chain.  The full cycle for producing atomic fuel includes uranium enrichment and the reprocessing of spent nuclear fuel — two processes that could be used to create both more fuel for civil energy needs and fissile material suitable for powering warheads.  Albright said Riyadh was employing technical experts capable of constructing the centrifuge cascades required to enrich uranium.  ”They view the developments in Iran very negatively,” he said. “They have money, they can buy talent, they can buy training.”

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Judicial Watch Uncovers Email Revealing Top Pentagon Leader Ordered Destruction of bin Laden Death Photos

(Washington, DC) – Judicial Watch announced today that on January 31, 2014, it received documents from the Department of Defense (Pentagon) revealing that within hours of its filing a May 13, 2011, Freedom of Information Act (FOIA) lawsuit seeking photos of the deceased Osama bin Laden, U.S. Special Operations Commander, Admiral William McRaven ordered his subordinates to “destroy” any photos they may have had “immediately.” Judicial Watch had filed a FOIA request for the photos 11 days earlier.  The McRaven email, addressed to “Gentlemen,” instructs:

One particular item that I want to emphasize is photos; particularly UBLs remains. At this point – all photos should have been turned over to the CIA; if you still have them destroy them immediately or get them to the [redacted].

According to the Pentagon documents, McRaven sent his email on “Friday, May 13, 2011 5:09 PM.”  The documents do not detail what documents, if any, were destroyed in response to the McRaven directive. The Judicial Watch FOIA lawsuit seeking the documents was filed in the United States Court for the District of Columbia only hours earlier. Judicial Watch also announced the filing at a morning press conference.  On May 2, Judicial Watch had filed a FOIA request with the Defense Department seeking “all photographs and/or video recordings of Usama (Osama) Bin Laden taken during and/or after the U.S. military operation in Pakistan on or about May 1, 2011.”  Federal law contains broad prohibitions against the “concealment, removal, or mutilation generally” of government records.

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The NSA’s Secret Role in the U.S. Assassination Program

The National Security Agency is using complex analysis of electronic surveillance, rather than human intelligence, as the primary method to locate targets for lethal drone strikes – an unreliable tactic that results in the deaths of innocent or unidentified people.  According to a former drone operator for the military’s Joint Special Operations Command (JSOC) who also worked with the NSA, the agency often identifies targets based on controversial metadata analysis and cell-phone tracking technologies. Rather than confirming a target’s identity with operatives or informants on the ground, the CIA or the U.S. military then orders a strike based on the activity and location of the mobile phone a person is believed to be using.  The drone operator, who agreed to discuss the top-secret programs on the condition of anonymity, was a member of JSOC’s High Value Targeting task force, which is charged with identifying, capturing or killing terrorist suspects in Yemen, Somalia, Afghanistan and elsewhere.  His account is bolstered by top-secret NSA documents previously provided by whistleblower Edward Snowden. It is also supported by a former drone sensor operator with the U.S. Air Force, Brandon Bryant, who has become an outspoken critic of the lethal operations in which he was directly involved in Iraq, Afghanistan and Yemen.  In one tactic, the NSA “geolocates” the SIM card or handset of a suspected terrorist’s mobile phone, enabling the CIA and U.S. military to conduct night raids and drone strikes to kill or capture the individual in possession of the device.

The former JSOC drone operator is adamant that the technology has been responsible for taking out terrorists and networks of people facilitating improvised explosive device attacks against U.S. forces in Afghanistan. But he also states that innocent people have “absolutely” been killed as a result of the NSA’s increasing reliance on the surveillance tactic.

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Erdogan Loses It

Erdogan

The Turkish state changed hands a decade ago, when Islamic conservatives (supported by the liberals) prevailed in elections against the country’s old guard, the rightist nationalists known as Kemalists. It may be about to do so again. The conservative alliance of Prime Minister Recep Tayyip Erdogan’s Justice and Development Party (AKP) and the movement of Fethullah Gülen, a Muslim cleric who leads his congregation from self-imposed exile in the United States, has imploded. As it does, the military is gearing up to insert itself into politics once more.

 

The trouble started in 2011, when Erdogan decided to purge most Gülen supporters from the AKP party list ahead of the general election in June. No longer willing to share power with anyone else, Erdogan also ousted most liberals and supporters of the moderate President Abdullah Gül. Then, a subsequent reform of the public administration served as an excuse to remove many Gülenists from key bureaucratic posts.

 

The Gülenists’ response came in February 2012, when a prosecutor believed to be affiliated with the movement tried to summon Hakan Fidan, the head of the National Intelligence Organization and a close confidant of Erdogan, for questioning over his role in then-secret negotiations between the Turkish government and the Kurdistan Workers’ Party (PKK). The Gülenists had made their opposition to talks with the Kurdish movement known and wanted to derail them by charging Erdogan’s envoy — and by implication the prime minister himself — with treason.

 

Last summer, the rift between the two groups widened as protesters occupied Gezi Park. Gülen-affiliated media criticized Erdogan, comparing him to a “pharaoh.” The government, with its reputation tarnished and Gülenists gaining the upper hand, announced in late 2013 that it would shut down Gülen-operated schools. That would have deprived the movement of its main source of revenue and recruits. Not ready to take the hit lying down, the Gülen movement retaliated by supporting a corruption probe, led by the prosecutor Celal Kara, against relatives of several cabinet ministers and businessmen with close ties to the government. Upping the ante, Erdogan launched a full-scale purge of any suspected Gülen sympathizers from sensitive positions in the bureaucracy, judiciary, and police.

Gülen, of course, insists that he does not wield any power over state officials and claims that his only concern is for the public. Yet in an exceptionally fiery sermon last December, Gülen excoriated those “who turn a blind eye to the thief while punishing those who prosecute the thieves,” beseeching God to “consume their homes with fire, destroy their nests, break their accords.” Even Gülenists do not deny the existence of an informal network of devotees within the state. That was the bargain between the AKP and the Gülenists all along: In return for its support — votes and the endorsement of the AKP by Gülenist media — the Gülen movement would get to staff the state bureaucracy. In fact, the AKP needed the Gülenists’ well-educated cadres to run Turkey, especially its police and judiciary. And since 2008, Gülenist sympathizers in the police and among prosecutors have helped put hundreds of regime opponents in prison.

Now, with the AKP-Gülenist relationship broken, Erdogan accuses his former allies of having established a parallel state that defies the authority of the elected government and of staging a coup against him. His most recent move against the so-called parallel state was his attempt last month to enact a law that would subordinate the judiciary to the executive, disabling his enemies from launching further probes. That will suit the Erdogan family just fine: A prosecutor tried to detain Erdogan’s son at the end of last year. The police, instructed by the government, refused to carry out the order, and the prosecutor was subsequently reassigned. More than 2,000 police officers and nearly 100 prosecutors have been reassigned since last December.

The conflict between Erdogan and the Gülen movement might sound quite byzantine. But remember that this is the land that gave us the term. Indeed, the dispute follows a historical pattern. The Ottoman Sultans feared autonomous powers such as religious congregations. Mehmet II, the conqueror of Constantinople, was particularly repressive; he curtailed economic freedoms in a bid to disempower religious fraternities. Kemal Atatürk, the founder of the republic, was obsessed with pacifying religious congregations, wanting to ensure that they could never rival the state. Turkish Foreign Minister Ahmet Davutoglu even defended the ongoing purges by pointing to history. Turkish state tradition, he said, includes the practice of “sacrificing sons for the state,” to eliminate potential rivals for the throne.

Now, leading commentators in the AKP’s media inform that the ruling party hopes to forge new alliances — particularly with the military, its old enemy. But Erdogan should remember that turning to the military to help quash opposition is not risk-free. In 1971, conservative Prime Minister Süleyman Demirel solicited help from the military to quash the left, only to end up out of power. Erdogan has instructed the Ministry of Justice to prepare for a retrial of imprisoned military officers. The generals may very well be acquitted.

It is easy to see how this will play out. After several years of silence, the Turkish General Staff has once again taken to issuing political statements. The military high command has called the judiciary to task after Erdogan’s chief adviser confessed that several military officers had been convicted on trumped-up charges. It has demanded a retrial of the officers and issued sharp condemnations of critics. Many observers fear that the state’s institutional breakdown will invite the generals to intervene and “restore order,” as they have done so many times before. Stoking those fears: In a letter to a newspaper editor last month, Necdet Özel, the chief of the General Staff, wrote that ensuring the functioning of the parliamentary system has been “the basic principle” of the armed forces, stressing that the military is determined to uphold it because “we want peace in our country.” The statement begged the question of what the military will do if there is no peace in the country. Military interventions in the past have always been motivated by an alleged determination to ensure the preservation of democracy.

The return of the old military is not the only risk. There is also a new military to take into account. Since Islamic conservatives won control of the state apparatus and subdued the military in 2007 and 2008, purges from within the military of suspected Islamists — which used to take place once a year — have ceased. It may be inferred from this that there are now likely many within the military who sympathize with Gülen. His message, which combines Islam and Turkish patriotism particularly appeals to officers, who generally hail from conservative family backgrounds. And mass imprisonments of top generals, which have depleted the military’s upper ranks, have made it possible for younger officers to rise further and faster than ever. The Gülenist clout within the military might be considerable. Erdogan would hope that the top brass, to whom he now appeals, will succeed in keeping Gülenists among the lower ranks in check. But he must also fear a move against him by younger officers acting outside the chain of command. That was what happened in 1960, when the authoritarian Prime Minister Adnan Menderes was toppled.

Beyond that, the AKP-Gülenist backbiting represents a massive and collective failure of the Islamic conservative movement, from which none of its components may be able to recover. The corruption charges have deprived the AKP of any remaining moral authority. And the turf war has shattered the government’s reputation for managerial competence. The Gülenists have lost moral capital, too. The movement has always taken pains to show itself as standing above petty politics. But revelations of the extent of its power within the state undermine that point. The Gülenists have shaken Erdogan, but they may have also undone themselves. Their maneuvering does not inspire confidence in all of Turkey: According to a recent poll, only six percent of the public supports the Gülenists’ case against the AKP, whereas 28.5 percent supports the ruling party, and 45 percent thinks that both the AKP and the Gülenists are at fault.

Coalitions may come and go, but authoritarianism is forever — or so it seems in Turkey. The Turkish Islamists’ failure as managers of the state will most likely catapult the traditional custodians of the state, the rightist nationalists in the military and the bureaucracy who enjoy a considerable following in society, back to power.

 

Swiss Immigration Vote Raises Alarm Across Europe

BERLIN — Swiss and European leaders reacted warily on Monday to Swiss voters’ narrow approval of a proposal to limit the number of foreigners allowed to live and work in Switzerland.  A bare majority voted in a referendum on Sunday to cut immigration quotas and require that Swiss nationals be given priority in hiring. The result could have far-reaching implications for relations between Switzerland and the 28-member European Union, of which it is not a member.  Laurent Fabius, France’s foreign minister, said Monday that the European Union would have to reconsider its relationship with Switzerland.  “It is a vote that causes concern because it means that Switzerland wants to withdraw into itself,” Mr. Fabius told RTL radio.

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Iraqi militants accidentally set off bomb, 21 dead

An instructor teaching his militant recruits how to make car bombs accidentally set off explosives in his demonstration Monday, killing 21 of them in a huge blast that alerted authorities to the existence of the rural training camp in an orchard north of Baghdad. Nearly two dozen people were arrested, including wounded insurgents trying to hobble away from the scene.  The fatal goof by the al-Qaida breakaway group that dominates the Sunni insurgency in Iraq happened on the same day that the speaker of the Iraqi parliament, a prominent Sunni whom the militants consider a traitor, escaped unhurt from a roadside bomb attack on his motorcade in the northern city of Mosul.

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Moscow and the Mosque

RUSSIA-POLITICS-PUTINIf Russians were holding their breath in the run-up to the 2014 Winter Olympics, it was with good reason. A Black Sea spa town long favored by Kremlin apparatchiks, Sochi occupies a perilous position on Russia’s southern frontier, just 50 miles west of the North Caucasus Federal District, a cauldron of ethnic strife, nationalist separatism, and state repression since the collapse of the Soviet Union. In the last two years alone, violence in this vast mountainous region, including car bombings, assassinations, and clashes between Muslim fighters and Russian security forces, has killed or injured more than 1,500 people.

Islamist militants in the North Caucasus have been making more frequent appeals to Russia’s other Muslims to rise up and join their cause. Last summer, Doku Umarov, an underground commander who claims control over a phantom Caucasus emirate, called on mujahideen in Tatarstan and Bashkortostan — two faraway autonomous republics about 400 miles and 700 miles east of Moscow, respectively — to “spoil” Russian President Vladimir Putin’s plans to stage the Olympics in Sochi atop “the bones of our ancestors.”

But Umarov’s attempts to provoke a Muslim uprising across Russia against Putin’s government have accomplished little. The Caucasus remains an outlier among Russia’s Muslim-majority territories, which, rather than radical redoubts, are stable, well-integrated, and relatively prosperous regions. Most Muslims in the bulk of the Russian Federation hardly ever express sympathy for their brethren in the restive North Caucasus, and historically, they have shown more interest in accommodating the state than resisting it.

The key question today, however, is how the Kremlin will continue to manage its varied Muslim population and whether it can maintain the allegiances of such a diverse group. The Putin government has worked especially hard to co-opt Muslims for its own political goals, both foreign and domestic. Finding an end to the war in the North Caucasus is one piece of the puzzle. In other regions, stability will depend more on whether Moscow keeps trying to control how Russia’s Muslim citizens interpret Islamic tradition by mandating which religious authorities and practices are sufficiently patriotic and compatible with the state.

Muslims in Russia have increasingly embraced different and competing religious orientations. Government interference in the debates among disparate Muslim communities runs the risk of alienating those who opt for ways of being Muslim that, although perfectly peaceful, conflict with official understandings of Islam. Putting a straitjacket on Islamic interpretation, even if done with the support of one camp of Muslim authorities over another, will not resolve the many policy challenges related to Islam that Russia faces. Instead, the Kremlin will have to accommodate greater pluralism in an ever-changing Islamic landscape.

CONTESTING THE CENSUS

Russia’s Muslims defy easy categorization. Even their demographic profile is the subject of intense dispute. Today, the government, journalists, and civil rights organizations estimate the total population to be some 20 million, or 14 percent of Russia’s overall population of 143 million. That figure would make Russian Muslims not just the second-largest religious group in the country but also the largest Muslim population in all of Europe. Yet the most recent census, in 2010, which asked only for “nationality,” not religious affiliation, suggested that the country has closer to 13 million Muslims, or roughly nine percent of the population.

This smaller figure is the product of only counting members of ethnic groups that have historically identified with Islam, such as the Azeris, the Bashkirs, the Chechens, the Kazakhs, and the Tatars, and listing them all as Muslims. Many Muslim leaders claim that the lower count represents an effort to undermine their political clout, since it fails to reflect Russians’ actual religious affiliations. Despite the official census numbers, even Russian politicians close to Putin, and others from the ethnic republics, regularly invoke the higher figure of 20 million. They do so to make Russia’s claim on membership in the Islamic world look more credible and to pander to their bases in order to secure Muslim electoral support.

Russia’s federal system, inherited from the Soviets, compounds the uncertainty by giving local ethnicities an incentive to overcount their numbers. Take Tatarstan. In the early Soviet period, Lenin and Stalin (an ethnic Georgian) created it and other similar republics as a concession to ethnic nationalism and to rebuff ethnic Russian domination. Today, elites there and elsewhere cling to power by claiming to represent the interests of their self-described nations. But in Tatarstan and other republics, it has always been hard to maintain indigenous majorities, given the large Russian populations and constant emigration; Tatars today officially make up only 53 percent of a population of 3.8 million. Muslim activists and local elites have been accused of pressuring pollsters to manipulate the census and increase the count of Muslim groups.

A similar tussle takes place in Moscow, which is officially home to 300,000 Muslims of varied ethnicities, out of a total population of between 12 million and 17 million people. Yet the census tells only part of the story. Another two million Muslims live there without registration papers, and some observers claim that two million more Muslim migrants work in the city. Most of these Muslims have come to Moscow to escape woeful economic conditions in their home countries, such as Azerbaijan, Tajikistan, and Uzbekistan. But their temporary and often undocumented status makes them vulnerable to police harassment, exploitation, and racist violence — all factors that undermine the government’s attempts to project tolerance.

The distorted census figures, police intimidation, and bigotry lump all of Russia’s Muslims together into a single group, even though they are in fact a varied lot spread across the country. In places such as Tatarstan, Muslims make up the elites, but in Moscow, most occupy the lowest ranks of the labor force. Although the Russian federal system gives Russian Muslims considerable political influence, government policies, including well-documented cases of police harassment and raids of homes and businesses, marginalize Muslim immigrants, who remain invisible to census takers yet appear highly visible to Muscovites anxious about Muslim immigration.

BEYOND CHECHNYA

This anxiety is fed by Moscow’s long confrontation with Chechen separatists, a conflict that, as it has spread throughout the North Caucasus as a wider Islamist-led insurgency, has fused radicalism and Islam in the minds of the Russian public. As the Volgograd bombings last December showed, militants from the North Caucasus have taken their fight against the government to Russian territory beyond their home region. Yet the government has also capitalized on this fear.

Russia’s security agencies fabricate militants where none exist and accuse local Muslims of extremist ties on the basis of evidence that often hardly goes beyond one’s style of beard or dress. Frequently aided by Muslim clerics close to the state, officials like to blame violence on “Wahhabis,” Muslims who have ostensibly adopted Saudi Arabia’s controversial version of Islam. But the government, the media, and the courts tend to apply the label liberally. They call nonconformists Wahhabis to reinforce the authority of state-backed Muslim clerics, who oppose religious styles that the government deems alien to Russian Islam. Such stigmatized groups include Tablighi Jamaat, the world’s largest Muslim proselytizing organization, which has an underground presence in various Russian cities today, and Hizb ut-Tahrir, a pan-Islamic organization that seeks to create a transnational caliphate.

At times, the security agencies have contributed to the extremist threat in more direct ways. Both Putin during his first term as president and his predecessor, Boris Yeltsin, used the wars that began in Chechnya in the late 1990s to boost their popularity and to justify an array of authoritarian security measures. As a result of their manipulations, many Russians suspect, with good reason, that the Federal Security Service had a hand in a number of major terrorist attacks that rocked Russia a decade ago, including a series of apartment bombings across the country in 1999 and the Dubrovka Theater crisis in 2002 (in which 40 Chechen militants and some 130 hostages were killed).

Moscow likes to portray violence in the North Caucasus as linked to Islamic insurgencies outside Russia. After the Kremlin launched the second war in Chechnya, in 1999, some Muslim fighters did start to wage a campaign to create a pan-Islamic emirate on Russian soil. But such utopian schemers were responsible for only some of the region’s overall instability. For the most part, armed groups in the Caucasus were engaging in highly localized struggles for power, in which religion was only one of several motivating forces. Often, so-called extremist fighters have been more interested in criminal profit or revenge against government brutality than in Islamist causes.

The truth is, despite the government’s hype and provocations, most Russian Muslims remain firmly attached to their country and its institutions. Elements of transnational Islam may be growing in appeal — Russian Muslims can now shop for the latest international Islamic fashions at specialized stores and attend the annual Moscow Halal Expo — but that does not betray a fundamental shift in loyalty or outlook.

And most Russian Muslims remain indifferent to the blandishments of foreign missionaries. Like other communities in Russia, Muslims have used the freedoms they have won since the demise of communism and atheism to rediscover their religion. But they have mostly rejected offers made by Turkish missionaries, the Saudi government, or other foreigners to replace the Communist Party of the Soviet era with new religious tutors from abroad (notwithstanding Russian Salafists, a deeply conservative cohort that has intellectual ties to Saudi Arabia and that advocates living lives strictly modeled on those of the early companions of the Prophet Muhammad). Outside the North Caucasus republic of Dagestan, which has the closest ties to Arab educational institutions, Russian Muslims have focused on establishing their own religious schools. And in this effort, at least, Muslims have enjoyed the firm support of the state, which has accorded Islam the privileged status of a “traditional” Russian faith. Although formally a secular state, Russia favors the Orthodox Church, but officials also pledge to protect Islam, Buddhism, and even Judaism from foreign influence. In practice, this means lending support to those religious authorities who are willing to work closely with the state to promote patriotism among the faithful.

CATHERINE THE GREAT’S EXAMPLE

The state’s backing of a version of Islam it finds palatable was on display last October, when Russian officials and Islamic scholars in Ufa, the capital of the republic of Bashkortostan, celebrated the 225th anniversary of the Central Ecclesiastical Administration of the Muslims of Russia, an institution created under Catherine the Great to bring Islam under the direction of the state. During Catherine’s rule (1762–96), Russian Muslims gained official recognition for their clerics and mosques. Her government even endorsed Islamic laws in relation to marriage, the family, and public morality. Mullahs and mosque community members frequently turned to the tsarist police to denounce neighbors who committed adultery or failed to attend prayers. Islam became a pillar of a conservative imperial order.

In exchange, Islamic authorities were expected to teach their followers that being a good Muslim meant being loyal to the state — then as now, official tolerance came with strings attached. As in the past, today many Muslim clerics also preach against social ills, although now they include alcohol and narcotics. A number of them also focus on foreign policy, echoing the Kremlin’s vision of an alliance among Muslim countries and of Russia as a counterweight to a hegemonic United States.

At the ceremony in Ufa, Putin declared Islam to be “a striking element of the Russian cultural code, an inalienable, organic part of Russian history” and praised the institution for having helped make Muslims “true patriots of our country.” But he warned that “certain political forces” were seeking “to use Islam or, more precisely, its radical currents” to weaken the state. Russian Muslims, Putin added, “have always been united in serving society and their state, defending it from external enemies as well as from any manifestations of extremism.” He called on the assembled clerics to be “louder” in forging unity and harmony within Russia and in the Muslim world at large, to help integrate migrant laborers, and to strengthen Islamic institutions with a distinctively Russian Muslim theology so as to marginalize “informal leaders” whose spurious teachings threaten the country.

Putin’s remarks underscored how Muslims and Russian officialdom have always been engaged in a dialogue about how to police Islam, albeit one in which the state has ultimately had the final say. And sure enough, Talgat Tadzhuddin, the 65-year-old leader of the Central Ecclesiastical Administration, responded enthusiastically to Putin’s instructions. Reiterating Putin’s reference to Muslims’ historic service in defense of the state, the senior mufti noted that his institution was doing everything possible to preserve “traditional Islam” by blocking “the prop­aganda of totalitarian sects and radical currents in our communities.”

PUTIN’S GAMBLE

Although such exchanges represent an attempt by Putin to maintain the state’s tradition of control, they also highlight a dilemma for him, since Russian Muslims do not speak with one voice. Tadzhuddin may have stressed cooperation, but he has a rival: Ravil Gainutdin, the 54-year-old head of the Council of Muftis of Russia, a body of clerics that has competed with the Central Ecclesiastical Administration to act as Russia’s authoritative representative of Islam. Gainutdin did not relish Tadzhuddin’s time in the spotlight with Putin and only made a fleeting appearance at the ceremonies in Ufa. The two Muslim leaders have been battling for years over control of Russia’s Muslim institutions, including numerous regional clerical bodies and schools, in a struggle for prestige, financial resources, and access to state patronage.

Tadzhuddin interpreted the anniversary celebration as an endorsement of his call to unite some 80 regional Islamic organizations in the country under his authority. Gainutdin, for his part, faults Tadzhuddin for supporting a local court’s decision to ban a new translation of the Koran, a ruling that has outraged many Muslim campaigners for civil rights. The danger for Putin is that tapping Tadzhuddin as the official voice of Russian Islam may not only compromise Tadzhuddin’s standing in the eyes of his followers. It could also endanger the Kremlin’s friendly relationship with Gainutdin’s organization and lend weight to those Muslim critics who see persecution as being on the rise. In Tadzhuddin, Putin may be betting on a lame horse.

Such power struggles are playing out throughout Russia today, with mosque leaders challenging one another for supremacy, hurling charges of extremism and heresy, and appealing to state censors and the police to intervene. In a recent case, Seidzhagfar Lutfullin, an imam from Tatarstan who organized a boycott of an Elton John concert in the republic’s capital city late last year, raised the alarm that two of his opponents were disseminating “extremist” views associated with Hizb ut-Tahrir. They were promptly convicted and sentenced to jail.

Such polemic labels mask more subtle and profound debates about what it means to be a Muslim in Russia today. For the past two decades, the quest for an authentic Islam in a post-Soviet world has yielded multiple answers — and deep disagreements. Many Tatars, for example, have embraced the view that they practice an Islam that is a kind of ethnic inheritance, complete with religious leaders whose authority should be reinforced by the government. They see this interpretation as inseparable from their distinctive Tatar identity. But this school of thought quickly brands those who question its precepts as Wahhabis or extremists.

More secular Tatar intellectuals look west to argue that Islam calls for reform along the lines of what is practiced in Europe. Islam, they say, should be compatible with contemporary notions of progress and women’s rights. In their view, Muslims should have broad leeway in deciding which Islamic legal norms have outlived their time.

But both the Tatars’ ethnic and government-sanctioned conceptions of Islam and their more secular, cosmopolitan beliefs are anathema to Russia’s Salafists, who renounce such mainstream interpretations. Largely apolitical and distributed in small pockets throughout the country, the Salafists stand out the most among Russia’s Muslims, not only with their distinctive beards and dress but also because they pose such a bold intellectual challenge to the status quo.

Despite the recent rise of the Salafists, who have drawn inspiration from Saudi Arabian and other sources, it would be misguided to see them as the future of Russian Islam. In Bashkortostan and Tatarstan, Moscow and St. Petersburg, and elsewhere across Russia, all kinds of Sunni and Shiite groups are mixing in new ways, often through immigration from former Soviet republics to the south. For example, even though Salafists reject Sufis (who hold a more mystical interpretation of Islam) and their veneration of saints and shrines, the two groups still meet on the job at construction sites and markets and in Moscow’s overflowing mosques. And both groups pray alongside the sycophants of the state-backed Islamic hierarchies and alongside those who call for civil society, not the state, to organize Muslim affairs.

For all the emerging pluralism, dissent, and rediscovery of Islam in Russia, it would be a mistake to either exaggerate the scale of this religious revival or equate it with militancy. A 2010 poll by the respected Russian Public Opinion Research Center found Muslims to be generally less enthusiastic about religious holidays, literature, and rites than Orthodox Christians are. In Tatarstan, a 2012 survey revealed that only six percent of Muslims there identified themselves as “deeply religious,” with another 17 percent admitting to being “doubtful,” if still Muslim at all. Although Muslim women in Tatarstan have practiced various kinds of veiling since the early 1990s, only seven percent of them wear the hijab.

If militancy is bred in war zones such as the Caucasus, Tatarstan has little reason to worry. With its lucrative oil industry, solid agricultural base, and strong manufacturing sector, Tatarstan ranked fourth among Russian regions for quality of life in a recent poll, after Moscow, St. Petersburg, and the greater Moscow area. Respondents who expressed the most fervent religious devotion were not the angry young men that Russian and Western journalists tend to caricature: they were instead female pensioners in the countryside. A starker contrast could not be drawn with the war-scarred republics of Chechnya and Ingushetia, where, in addition to there being ubiquitous violence, at least one-third of the population is unemployed and despair and anxiety reign.

Iran Sends Warships to US Maritime Borders

TEHRAN (FNA)- Senior Iranian Navy commanders announced on Saturday that the country has sent several fleets of warships to the US maritime borders.  ”The Iranian Army’s naval fleets have already started their voyage towards the Atlantic Ocean via the waters near South Africa,” Commander of Iran’s Northern Navy Fleet Admiral Afshin Rezayee Haddad announced on Saturday.  The admiral, who is also the commander of the Iranian Army’s 4th Naval Zone said, “Iran’s military fleet is approaching the United States’ maritime borders, and this move has a message.”  In September 2012, Iran’s Navy Commander Rear Admiral Habibollah Sayyari reiterated Iran’s plans for sailing off the US coasts to counter the US presence in its waters in the Persian Gulf.  Sayyari had earlier informed of Tehran’s plans to send its naval forces to the Atlantic to deploy along the US marine borders, and in September 2012 he said that this would happen “in the next few years”.  The plan is part of Iran’s response to Washington’s beefed up naval presence in the Persian Gulf. The US Navy’s 5th fleet is based in Bahrain – across the Persian Gulf from Iran – and the US has conducted two major maritime war games in the last two years.  In September 2011, Sayyari had announced that the country planned to move vessels into the Atlantic Ocean to start a naval buildup “near maritime borders of the United States”.  ”Like the arrogant powers that are present near our maritime borders, we will also have a powerful presence close to the American marine borders,” Sayyari said.  Speaking at a ceremony marking the 31st anniversary of the start of the 1980-1988 war with Iraq, Sayyari gave no details of when such a deployment could happen or the number or type of vessels to be used.  Sayyari had first announced in July, 2011 that Iran was going to send “a flotilla into the Atlantic”.  The Iranian navy has been developing its presence in international waters since 2010, regularly launching vessels in the Indian Ocean and the Gulf of Aden to protect Iranian ships from Somali pirates operating in the area.

13,000 teens complete Hamas training camps to emulate ‘suicide martyrs’

weapons-trainingThe Hamas government in Gaza celebrated the graduation on Monday of paramilitary camps geared at training high-school children “to follow in the footsteps of the suicide martyrs.”  The camps, titled “the pioneers of liberation,” are run by Hamas’s ministries of education and interior. Some 13,000 students in grades 10-12 participated in the one-week training camps this year, compared to 5,000 last year when the program was launched, Israeli sources with knowledge of the program said.  The corps of instructors consists mainly of active members of Hamas’s security forces, and the curriculum includes weapons training, first aid, self defense, marching exercises and “security awareness” classes on identifying Israeli spies.  Hamas Prime Minister Ismail Haniyeh, Interior Minister Fathi Hammad and Education Minister Usama Mzeini attended the graduation ceremony on Monday, each delivering fiery speeches stressing the importance of military training in developing a new generation of Palestinian combatants.

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Saudi Women Find a Way

“I changed my baby brother’s Pampers, and now? I’m a 42-year-old mother, and I need him to sign off when I travel abroad?” My divorced Saudi friend and I were sharing tea in Riyadh’s Al Faisaliah Hotel, and she could not hide her disgust. A striking beauty of regal bearing, she has a high-powered international job and limited patience for her culture’s suffocating “protections” for women.  Yet even this worldly skeptic could see signs of progress for the kingdom’s women. “It’s changing,” she insisted. “We are in a correctional phase.” On a recent trip to Riyadh and Jeddah, that is an opinion I encountered time and again from Saudis and westerners alike. “The country is on a trajectory of modernization, if not too fast,” recently departed U.S. Ambassador James Smith told me. Together with his wife, Janet, a former professor at the National War College, Smith has spent nearly five years steeped in kingdom culture. “There is an imbalance politically that ever so slightly favors the modernizers” and, he continued, “an emerging critical mass of daughters — on campuses and in jobs — who will make a difference.”

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China buys up Russia’s backyard

Russia spent the end of last year battling the EU for control over Ukraine. But should the Kremlin have been paying more attention to what was going on its southern border instead? In the last three months, the Chinese have swept through Central and Eastern Europe (CEE) and Central Asia, buying up Russia’s backyard in a string of billion-dollar deals.  Chinese President Xi Jinping was set for a summit in Moscow in September last year, where Russian President Vladimir Putin was hoping to conclude a crucial natural gas deal that would see a gas pipeline built to connect Russia’s Siberian fields with China’s underdeveloped northwest territories. The pipeline project was agreed on years ago, but the deal has been held up, as the two sides can’t agree on the price of the gas that will flow through it.  However, instead of flying directly to Russia’s northern capital, President Xi went on a whirlwind tour of Central Asia. It was like a visit from Santa Claus as Xi distributed billions of dollars of deals along the way.  In what must have come as a shock to the Kremlin, during his last stop in Turkmenistan Xi signed off on a $60bn energy investment deal that includes $10bn to develop the massive Galkynysh gasfield which has gas reserves of some 1.3 trillion cubic metres – enough to meet China’s needs for several years. The Turkmen deal makes Gazprom’s deal largely superfluous.

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The first congressman to battle the NSA is dead. No-one noticed, no-one cares

Last month, former Congressman Otis Pike died, and no one seemed to notice or care. That’s scary, because Pike led the House’s most intensive and threatening hearings into US intelligence community abuses, far more radical and revealing than the better-known Church Committee’s Senate hearings that took place at the same time. That Pike could die today in total obscurity, during the peak of the Snowden NSA scandal, is, as they say, a “teachable moment” —one probably not lost on today’s already spineless political class.

In mid-1975, Rep. Pike was picked to take over the House select committee investigating the US intelligence community after the first committee chairman, a Michigan Democrat named Nedzi, was overthrown by more radical liberal Democrats fired up by Watergate after they learned that Nedzi had suppressed information about the CIA’s illegal domestic spying program, MH-CHAOS, exposed by Seymour Hersh in late 1974. It was Hersh’s exposés on the CIA domestic spying program targeting American dissidents and antiwar activists that led to the creation of the Church Committee and what became known as the Pike Committee, after Nedzi was tossed overboard.

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Mississippi Most Religious State, Vermont Least Religious

PRINCETON, NJ — Religiousness across the U.S. in 2013 remained similar to previous years. With 61% of its residents classified as very religious, Mississippi held on to its position as the most religious state, while Vermont, with 22% very religious residents, remained the least religious. The most religious states were in the South, except for Utah, while the least religious states were clustered in New England and the West.

Most Religious States, Based on % Very Religious, 2013Least Religious States, Based on % Very Religious, 2013

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