Actually, Albania's PM Sali Berisha ruled the conference

Very impassioned and eloquent--and in English.

Made strong argument against the "absorption capacity" BS coming out of EU's hardliners right now, and declared his number one goal was to make Albania the most FDI-friendly country in the world!

People here said Berisha was a different guy back during the pyramid scheme meltdown of years ago, but that's he's grown immeasurably as a politician since. First time I've noticed him, and found him very impressive in person.

Ha! Still waiting on this headline!

Check this one out from today's Washington Post: Well-Paid Benefit Most As Economy Flourishes.

I'm waiting for the headline that says: "Unprecedented Recovery Benefits Poor While Screwing Rich."

No offense, but why the obssession with rich-poor gap? Question isn't whether rich do better, but do lower ranks simply advance?

Here's the key analysis:

Businesspeople cite shifts in the world economy that give educated workers leverage to negotiate for higher wages but make low-paid workers replaceable -- a disparity that is especially pronounced in a service economy like Washington's.

Does this sound broken? Or just the result of a more competitive global economy, one that promotes and emphasizes the benefits of higher education?

I mean, how are you planning to fight this reality?

The region's economy is strong and businesses are expanding, hiring more software engineers, financial analysts, salespeople and other skilled workers, thus bidding up their pay. But companies are simultaneously finding ways to automate clerical tasks, move call centers to cheaper places and handle business online, weakening demand for less-skilled workers.

Consider Focuspoint Inc., a company in Manassas that sells recorded messages for companies to play when callers are on hold. Three years ago, two order clerks frantically juggled calls and faxes from several hundred clients placing orders. Now the company has 1,700 clients and is expanding its sales and other high-level staff but still has just those two clerks -- who now sit quietly overseeing Internet orders.

"Three years ago, we would have had to hire more people to handle all our new clients," said Joe Martin, a vice president. "Now, we rely on new technology to pick up that work."

Should we not be in the business of replacing people with technology and thus advancing productivity?

Ah, but here's the legitimate rub:

Such innovations help explain why, from 2003 to 2005, the average wage for people in the lowest pay bracket, with salaries around $20,000, rose only 5.4 percent in the Washington region -- not enough to keep up with rising prices. For the jobs that pay around $60,000, salaries rose 12.4 percent, well ahead of the 6.8 percent inflation in that period.

That tells me we need to raise the minimum wage--at a minimum.

But, as always, the key is more educational opportunity, especially generous retraining benefits for anyone who's displaced by globalization's rising competitive environment. The key isn't job protection, but job creation and transitioning.

Croatia Summit 2006

DATELINE: Excelsior Hotel, Dubrovnik Croatia, 10 July 2006

Oy vey! What a trip to get here!

After my day sojourn into Vienna and a couple of hours de-compressing in the biz lounge at the airport, I went through an oddly arduous passport control/security process only to find that my Tyrolean Airways flight to Zagreb was delayed two hours. Finally arriving in Zagreb, I quickly discovered I had missed the last Dubrovnik flight. What to do?

I was so fagged by then (2100 local time) that I was just about brain dead. Nonetheless, I got into line to exchange the tickets, with my remaining RAM just swimming with the possibilities of where I would sleep that night since the first flight out to Dubrovnik was 0555!

I was just about to lose it in line when this gorgeous blond from Austrian Air saved the day, coming up and asking if I was Mr. Barnett. I said yes. She said she was changing my flight and preparing vouchers for both the local hotel and the bus to and fro. Amazing!

Then I realized I had checked my bag to Dubrovnik and needed to locate it so I could suit up prior to the trip (I had no idea when I was speaking today so I was worst-casing the notion that I’d show up just in time to go onstage--more on that later). So I go into the lost bag office, only to have it appear just as I was pointing out its type on the chart.

So I went from no room/no bag/no clue to being in my hotel room at 2230 lying in bed (after throwing up, for some reason) and watching the overtime end of the FIFA final. Sure, my wake-up call was 0400, but I was in hog heaven considering the alternatives, and the puking sort of purged me of the two-days’ stress.

I sleep reasonably well and make the 0555 flight with ease. So there I am at Dubrovnik airport at 0700, looking for my name on somebody’s sign, but nada. In fact, I can’t find anybody who seems to know anything about any summit in town. So I figure, if they want me to talk, someone will show up, right?

Two hours of reading later, I start getting nervous. So I have the Croatian Air passenger handling office call the hotel and someone shows up from the Ministry of Foreign Affairs, saying they had expected me the night before (duh!) and had basically given up when I did not appear. Had they asked the airlines--their national airline!--anything?

No.

So if I say nothing, I would still be at the airport (only two exits at this little airport and I pick the wrong one to camp out in front of). I am told a van will pick me up in 30. So happens that that’s the exact time the Croatian PM and President are flying in, so their caravan of four cars appears, just as my van appears.

My driver, obviously security, thus attaches my car to the end of the official caravan, which is both cool and scary, because they drive at high speeds on very narrow roads that are several hundred feet above the very steeply pitched coastline, and the caravan insists on passing every car in its path, creating more close calls from oncoming traffic that I care to admit, especially since my car was tail-end Charley.

Still, a stunning drive from the airport through mountain slits and down the steep snaking path into this gorgeous, very Mediterranean sea resort town. The Excelsior is a first-class hotel right on the water. Naturally, it is covered with guys wearing ear buds and cords snaking down into the back of the blazers, because there are 8 heads of state here (I type this as the magnificent seven go through their official, post-lunch statements in one amazingly, hot, crowded room where I spoke this morning).

I arrive at 1030, check in and put my garment bag in my room. I check in at the conference and finally get the schedule: I am on a panel that begins at 1050 and I’m to address the “strategic challenges” facing SE Europe in the global security environment.

Hmmm. Nothing like time to prepare.

I check my brief and write down the points I’d like to make in my five-minute presentation (I’m on a panel of four). Ten minutes later we’re on (pix to follow).

It’s a slick set that’s very formal and diplomatic in its layout: big square with cheap seats behind the three sides other than the presenting/stage side. There’s about ten film crews, plus reporters from the WSJ, FT, Economist, NYT, and a slew of European dailies.

There are three morning panels in all, with a dozen speakers. Three are American (myself, a principal from the Albright Group and aN Assist Secretary of State for European Affairs by the name of Dan Fried). I am the only American on my panel. The moderator is a Norwegian ambassador (very cool guy I chat up over lunch), and the other panelists are the Minister of Defense for Croatia, Croatia’s chief negotiator for accession into the EU, and Balkan vet Carl Bildt who is now Chairman of the Board of The Kreab Group.

I go last in the group. I talk about the Balkans’ experience of the 1990s as the first true Core-Gap/globalization war, then make my argument on Leviathan/SysAdmin and make my case for how NATO and Europe need to adapt themselves to that reality. Then I go out of my way to argue against the primacy of the US-Euro bond, arguing that the SysAdmin requirement means we’ll need to ally most with serious “body” states like India and China (BTW, the two biggest peacekeeper-providers in the UN are Pakistan and Bangladesh, two Indian knock-offs).

Following my presentation, we take about seven questions from the audience, half of which consist of statements from Croatian, Bosnia and Serbian diplomats. But we do get some good questions, and most are directed to me. The best, from Mira Ricardel, is about how global institutions must change/arise to meet this new challenge of processing politically-bankrupt states.

Now, Ricardel is both a fan and someone I admire from her stint in the Office of the Secretary of Defense’s office (she was Deputy ASD for Central Asia--she only took me to task for commenting positively on the Shanghai group). The story I tell in PNM about being called on the carpet once by OSD after making some statements about US bases in Central Asia is actually about Mira. She was the senior officer that hosted my brief, the one in which Feith sent one of his minions to check me out).

Once we got all the questions in, each of us got a chance to do a summary reply. I went last again and spoke about the downshifting of global violence over the past generation (in response to a question of “rising” flows of illicit traffic--obviously a big issue for Seam State Croatia, and the question came from a Croatian MP). Then, in response to a question on democracy, I gave my usual answer about pushing economic connectivity first. Then onto the question of energy security in response to a question there. Then I give a quick-and-dirty on the A-to-Z rule set on processing politically bankrupt states in response to Mira’s question. Then I finish with a response to a Bulgarian official who argues for shared Balkan/Central Asia “values” as a guide for realistic foreign policy goals in that region by saying that America needed to look upon the Shanghai Cooperation Organization as a possible tool rather than an automatic threat since we want the fight to go south vice north.

Compared to the other speakers, who spoke inside-out on the Balkans vis-à-vis NATO, I was seemingly out of left field to be talking global security first and then working my way down to the Balkans. But I got a lot of nice comments from people afterwards, especially for telling Europeans that they were neither the “great white hope” nor the “great traitor” in this Long War but that--quite frankly--they are largely irrelevant in comparison to the New Core pillars we really need to court (of course, most of those who congratulated me on delivering that message were non-Europeans!).

But in truth, this is a tough audience for geo-strategy. The Balkans, quite naturally, are so consumed with the question of integrating with the EU and NATO and avoiding Russian domination, that it's hard for most states from the region to see beyond their noses on grand strategy. So I focus here more on connectivity than content, passing out cards like crazy.

Still, in others ways, this is a perfect audience for a grand strategy vision right now. You want to catch states right on their rapid trajectory from Gap to Core, and the Balkans fits that description. Not pretty, but definitely happening. To think of what was happening here a decade ago and then compare it to what's happening now, and it's a real tribute to both the Clinton Administration (as sloppy and slow as their effort was) and America's joint Leviathan-sequing-to-SysAdmin effort with NATO.

After the talk I gave a quick impromptu interview to the WSJ’s Marc Champion for his upcoming story on energy and the G-8 Moscow meeting (something I addressed in my reply on stage as well, noting Putin’s embrace of downstreaming Russia’s energy connectivity, unlike OPEC states), chatted up a Canadian diplomat, and then chilled during the next session.

Once that was over, we had the formal lunch. The heads of state sat at a central table. I sat with Mira and a bunch of other speakers. Ricardel was great to speak with. She’s no longer with the government, spent a couple of years with a private for-profit educational firm, and is soon to join a major defense contractor. She is obviously hugely connected around this region, so sitting next to her over lunch was really an interesting data dump.

During lunch a huge rainstorm let loose, almost completely obliterating our view of the big island just off the coast.

After that we sit through the speeches (I blog this through a WiFi from the conference room, that connect being the only good thing I can say about this steamy venue) of the seven heads/near-heads of states/near-states. The best is Mikhail Saakashvilli, the president of Georgia. Other heads of state were from Romania (PM), Albania (PM), Croatia (PM and President), the Council of Europe (Pres), Montenegro (PM), and Bulgaria (Pres of parliament).

That is followed by the inevitable press conference, group shot, and then tonight we all will go to the opening of the Dubrovnik Summer Festival where even more speeches will be delivered. I’ll get to bed at around midnight and sleep til my 0400 wake-up, giving me less than 12 hours of cumulative sleep for three nights.

Tuesday will be pure joy: four flights to make it home. I’ll write my op-ed column on the Balkans as the first great proof of my A-to-Z rule set on processing politically bankrupt states. Seems fitting enough to take advantage of the trip that way.

I am beat. It’ll be only a short stay at home, then off for a quick trip to DC for two meetings and a speech.

At that point I will face a significantly slower August with no international travel and only one speech--my fourth year in a row of addressing the entire National Defense U. class of officers/students in mid-August (18th). I will make yet another bid to convince C-SPAN to cover that one.

I am looking forward to the lighter travel load like you wouldn’t believe …

Here’s the rundown on 37 countries represented at the conference: Albania, Australia, Bosnia, Bulgaria, Canada, Croatia, Czech Rep., Denmark, Egypt, Macedonia, Georgia, Germany, Greece, Hungary, Iceland, Italy, Japan, Belgium, Latvia, Lithuania, Montenegro, Netherlands, Norway, Oman, South Korea, Romania, Russia, Serbia, Slovakia, Slovenia, South Africa, Spain, Sweden, Turkey, UK, Ukraine, US and the Vatican. Notable academics were Charles Kupchan and Robert Kagan, neither of which spoke.

Big IOs were NATO, the EU and EC, the Council of Europe, the OSCE and NATO.

I was the only speaker who had no title. I was just presented as the author of my two books. That was interesting, and encouraging about the vision’s global spread.

My only bitch (besides the travel) was: where is my cool crystal whatever for speaking? All I got was a lousy insignia tote bag!

The answer, Dr Hawking, is...

Tom got this email:

Dr. Barnett,

Professor Stephen Hawking recently posted the following question on Yahoo! Answers: "In a world that is in chaos politically, socially and environmentally, how can the human race sustain another 100 years?"

Perhaps you should consider visiting Cambridge to discuss “a future worth creating” with arguably the most brilliant thinker of his generation. Maybe he could be convinced that continued strides in economic connectivity, along with many attendant changes, have us staring not into oblivion but into a world filled with unprecedented promise, where more than half of humanity is ready to emerge from relative poverty and the threat of great power war can be all but eliminated.

My questions are simple: If you could choose one word to answer Prof. Hawking’s question above, what would it be? What one word would you select if the question read, “how can the human race fail to sustain another 100 years?”?

Since I get copied on Ask Toms, I actually took a stab at this one in a reply:

Great email.

From what I know of Tom, I'll take a stab at answers for fun:

1. connection

2. China

But, I was off. Not surprisingly, Tom's answer was better:

Easy. Ingenuity.

Scientists do this a lot in old age: they get scared and think that the ingenuity of their generation was unique and will never be repeated again. It is complete bullshit, and arrogant to boot.

But somehow humanity not only gets smarter, we constantly reinvent ourselves and this world.

I've bien all over Wien

DATELINE: Austrian Airlines Business Lounge, Vienna International Airport, 9 July 2006

Weird surprise trip to Vienna for me by taking advantage of earlier flight out of JFK Saturday night. It was better choice than hanging until 2220 flight because I got to read a bunch of papers, watch a movie (Failure to Launch), eat well, and then go Ambien for four hours, arriving at 8:45 and feeling okay.

Once on the ground in Vienna, I change a bit of money into Euros, and take the CAT train into town (much like London's from Heathrow). By 1000 I am wandering the streets rather aimlessly, sort of trying to bump into St. Stephen's cathedral in the center of town. But being one of those old European towns, the streets go every which way but straight. Still, I saw a lot of cool things, camped for a bit in a platz to do some brot und wurst off a stand, and eventually I did find the place. Pix of all will be posted once I can connect direct off my Mac (using the lounge one now and going nuts over the weird key placements!).

After the cathedral I just kept walking and located Sigmund Freud's old apartment/practice on Berggasse 19. It's now a passable museum. Artifacts are few, but the rooms are real and really unchanged. Got the audio tour and it was worth it.

By then I am dragging from the high heat (90ish with high humidity), all that walking (several miles) and the lack of sleep, so catch metro back to CAT train and then check into the lounge for two hours of R&R, meaning more German beers.

Tonight I will fly twice to reach Dubrovnik, hoping to hit a pillow NLT 2300. The conference's first event starts at 0800 and the last one starts deep into the night, so tonight is the night for the good sleep, since I fly at crack of dawn (same four flights home) all day Tuesday.

But tomorrow, depending on what these guys finally decide to have me do (Croat diplomats checked out my Hudson talk way back when), I should at least keep busy through all the speeches working up some column evoked by this trip.

Should get to see the end of the FIFA final tonight though, with any luck, in my hotel room...

Scoping Wien

Thinking St. Stephen's and Freud's museum.

Reading Economist article on India (1 July) and get this cool distinction: hard infrastructure (nets and utilities and roads and transport) versus soft (rules and institutions).

India says it betters China on soft, even if much behind on hard.

Good breakdown to remember re: Development in a Box.

Long and winding road

DATELINE: JFK, New York, 8 July 2006

An itinerary from hell, befitting Croatia's emerging but still somewhat slim connectivity.

1pm from Indy to JFK on Delta, but then a late night flight to Vienna, another 6 hour layover, and then two flights to get me to Dubrovnik. I will arrive at 9pm Sunday night after leaving home at 1115 Saturday morning. Even with the hours shift, that's a long haul.

So rather than sit so long in JFK (nice lounge for biz class), I hop an earlier flight to Vienna, basically giving me the day there (short train ride into town). This way I have more normal night.

Already decided to bag column effort on flights over. Rather, I'll write about East Central Europe and the conference. Might as well dance with them that brought me!

Plus, the Lufthansa lounge has two very nice German beers on tap (self-serve), and that proves too much for this Scot-Irish-German.

Now, the puzzle is, What to do in Vienna in such a short time? I plan on quizzing the stewards on the flight over.

Worst case? I wimp out on fatigue and watch the FIFA final in the Vienna biz lounge. Saw the end of the Germany romp over Portugal for 3rd place just now, so figure the final must be tomorrow.

Feeling a bit anxious. Hate all this flying, despite the cool locales. Will miss the reception Sunday night at some fortress in Dubrovnik (would have had to fly yesterday, apparently, to make it), but will get a full day with all the leaders on hand at the conference on Monday, ending with some cultural event that night at some other local landmark. My time will be completely booked in Croatia (land 2100 Sunday night, then 0800 to midnight on Monday, then 0600 flight Tuesday morn), so Vienna may be it for souvenirs...

I clutch my Beatles book like it's my bible for the weekend, the vast majority of which I will spend at 40,000 feet.

Tom around the web

+ Zenpundit dialogues with Tom in The resilience of civilizations and opines on Blogospheric conversation.

+ Younghusband refers to Tom's call for an East Asian NATO.

+ Lexington Green of Chicago Boyz writes about a family of blogs, listing Tom as the headliner, before going on to recommend Coming Anarchy to his readers who haven't discovered it.

+ Phatic Communion references Tom's plan for nonviolent world change in the last paragraph of the very long Observing the Maturing World: Subtitle: Part Three of Rethinking the OODA, then includes Tom with references to Mark and Steve in Rule Sets and the Revised OODA

+ John Robb links Tom's post on Russian gas dynamics.

+ Opposed Systems Design links to Tom in Body armor.

Did I miss your post? Let me know, or comment it.

Pictures from China trip

Prof. Niu Ke of Beijing U. introducing Tom on Sunday night (25th June) to crowd at PKU (Peking University is what everyone still calls it).

Tom talking.

Working the A-to-Z rule set.

Talking Kim.

Q&A. 'Guy in blue shirt heard me two years ago at China Reform Forum. I never forget faces, only names.'

Dinner before talk at PKU. Zhang Yu, or "Daisy," is at far left.

Full shot of dinner at PKU.

Yoda the First on "warring against the enemy" versus "policing the problem"

Great article ("On Policing the Frontiers of Freedom" in Army Magazine sent to me by Waveman, who constantly pesters me with questions and avoids my wrath by sending me little gems like this now and then.

As indicated in the byline,

BRIG. GEN. HUBA WASS DE CZEGE, USA Ret., a consultant for the U.S. Army Training and Doctrine Command advanced warfighting experiments, was one of the principal developers of the Army’s AirLand Battle concept and the founder and first director of the School of Advanced Military Studies, Fort Leavenworth, Kan.

Since the SAMS school is known as the home of the "Jedi Knights," HWDC is known as "Yoda I" (I interviewed "Yoda X" for "The Monks of War" piece when in Leavenworth).

The General's distinction on war and policing captures exactly what I reach for with Leviathan and SysAdmin. Here's the first five paras (find the whole article in the link above):

We Americans and our usual allies will be warring and policing on the new 21st-century frontiers of freedom for the foreseeable future. Often we will be doing both in the same place. A survey of the strategic problems U.S. forces have faced since the dawn of the 21st century, arguably beginning with Urgent Fury in Grenada, would uncover only two commonalities. One could describe them as “messes” or “wicked problems.” The literature of policy planners dealing with urban, ecological and social programs define such problems, their usual sort, as ill-structured, even problematic to define. Invariably they beg for a solution even though no clear solution, with wide consensus, is readily apparent. One could also describe these wicked problems as wicked social problems because they seem lodged in a complex social ecology. Solving them always requires restoring a bargain in which the people provide support and soldiers and marines provide a safe environment, not only for the people, but for the nonmilitary actors who really have the expertise and means to deal with the root social causes.

Much of the discussion of how to cope with such problems is about how the leaders of those soldiers and marines, and military overhead structures, can compensate for the non-military problem solvers who are absent because the environment is not safe. While this is an important issue, it is the subject of a different article. A more important issue is how soldiers and marines provide the safe environment at the real root of local popular support when security forces collapse or are overwhelmed. The first step in answering that question is to realize that we make war on an enemy, and we police a problem. When we need to make war, we ought to make war wholeheartedly, and when we need to police a problem, we ought to do that wholeheartedly as well. Applying this principle and understanding the difference is of tremendous importance.

The article “War with Implacable Foes,” (May) outlined the enduring and fundamental logic of war. In that article I said, “Statesmen should know that the logic of war may be significantly different from the logic of peaceful political intercourse, and that policing and warring are two very different things.” The very fundamental difference has been stated, but there are overlapping commonalities, and a very different enduring fundamental logic. This article primarily addresses those.

Twenty-first-century soldiers will need to be proficient in both warring and policing. The flexible and smart soldiers and sergeants the U.S. Army has in the field today are ample evidence that the same units can do both equally well, provided they are well-trained and led, and know how to think differently in the novel situations they keep finding themselves in today. There is no real need for specialized soldiers and units. The impracticality of that idea is not addressed here, but the nature of the wicked problems they will encounter will often favor units that can readily switch from a warring to a policing mentality and back again even in the same tactical action.

U.S. forces are currently combining warring and policing in various locations throughout the world. While the logic outlined in “War with Implacable Foes” may apply to one group in a particular situation, the policing approach may be more useful for attaining political policy aims with other violent groups. While the best intuitively understand the difference and can show the way for the rest, real success will come only when all leaders and soldiers, as well as statesmen and generals, understand the logic of policing on the rough 21st-century frontiers, whether we find these in the wake of major combat operations to change a regime, in scattered pockets of failed governance on “the Pentagon’s New Map” or at home during major disasters.

What I like best? No distinction in "home" or "away" policing.

What I like least? The assumption of "usual allies."

The General is a legitimate legend as a thinker, so very gratifying to see the casual, unexplained reference to PNM. That is a portable strategic concept at work.

Two good calls by Bush

The first is the nuclear cooperation pact with Russia ("U.S. and Russia to Enter Civilian Nuclear Pact, by Peter Baker, Washington Post, 8 July 2006). After the Indian one and this one, the next two should be with China and Brazil.

The second is to reject solo talks with North Korea ("Bush Rejects Solo Talks With North Korea," by Michael A. Fletcher, Washington Post, 8 July 2006). No sense in biting on that one. North Korea is ultimately an Asian problem with a largely Asian solution that segues into a U.S. troop reduction in the region. The only way that string is pulled is for something to step into the place of our historic balancing role in the region, and that is some sort of region-wide security alliance. Alliances are built off of common threats and shared victories, and again, both in this case must be primarily Asian in character.

Our fight lies in SWA shifting to Sub-Saharan Africa. Resources must be freed for the Long War. New allies must be obtained and stupid fights (Iran) must be obviated in order to keep our eyes on the prize of defeating this latest historic variant of the rejection of the ever expanding global capitalist economy.

A lawsuit beats a blog diatribe on Leigh Bureau

Looks like I will end up suing Leigh Bureau for money it's witholding from me. It'll be the first time I've been forced to take legal action against someone business-wise, but better that than just getting ripped off.

The purge complete, for now

DATELINE: Above the garage in Indy, 7 July 2006

The folder of articles to blog is now empty, yielding about 10k in post wordage over the past few days. Nice thing about delaying the effort: you find some aren't worth doing in the end and that others should be set aside as future op-eds (this week it's a fight between North Korea and the much-needed rule set on processing terrorists in legal settings, and I lean to the latter simply because I don't like writing a biweekly too closely tied to current events, given the lag between writing and publication and because--quite frankly--I'm trying to keep my column as analytical as possible, so ixne on the eportingre).

I was feeling depressed when I woke up this morning, but I powered through, seeking solutions to my anxiety.

The messy house seemed out of control. So I got up early and cleaned every floor in every room.

A couple of trees looking weak in the yard spooked me. So I walked out and discovered the Japanese beetles chewing them up. Quick call to my lawn guy and that's being worked now (yes, being disconnected from my lawn is the price of blogging).

Felt unhappy about my kids laying about, so I sent them out into the street, and playmates have been found just across the street (where we left them last week). Now, instead of lecturing Kev on what a lousy big brother he is to Jerry, Kev is playing pied piper to Jerry and other younger boys in the neighborhood, doling out rides in the buggy we pull behind our bikes. They run to the intercom every so often, regaling me with their exploits. They feel connected to our new neighborhood, and everyone likes this.

Meanwhile, the three females are all off shopping, connecting themselves to my future earnings.

Peace reigns supreme in the household.

So it must be time for me to depart... to Eastern Europe this time, or more specifically Dubrovnik, Croatia, for an international conference on regional security. Supposed to be senior government officials--even leaders--from a number of European countries. Not sure what I'm doing, just that the Croatians are thrilled to have me coming (they sent diplomats to check out my talks in recent months, but I'm not sure I'll be giving one when I'm there, as it seems the conference is a series of roundtables, so looks like talkinghead duty, interrupted by the occasional wisdom-implying tug of the chin).

I am doing this for no fee, but simply for the connectivity for the company. Steve and I are increasingly being asked by major corps and multinationals to provide geo-strategic advice on security and globalization, and we figure we need to sell our network as much as our content--or not just what we know as whom we know. So you never turn down a chance, as Steve likes to say, to meet a foreign leader (within limits, of course), because strong personal connectivity plus the content is a powerful package.

First time to Dubrovnik for me, but not the first time to Croatia. Passed through on train and bus back in 1985. If this trip works out well, I may well take up a similar offer from Romania later in the fall. But the Croatia invite was fairly easy to say yes to. Not every day you get mail from a prime minister.

And no surprise here on the symmetry: corps want to grill Steve and I on New Core and Seam States and my books/vision appeal most to New Core and Seam States. So I go where I'm asked to go and Steve is cutting deals where it makes sense to cut deals and these travels naturally take us to such states, and multinationals naturally are interested in such states.

Ain't rocket science, but it does pay better... well, some of the time.

There goes my next op-ed (just kidding!)

ARTICLE: "Energy Independence: A Dry Hole? Experts Across Political Spectrum Challenge 'Emotionally Compelling' Slogan," by John J. Fialka, Wall Street Journal, 5 July 2006, p. A4.

It is the quintessential irrational slogan of our era, one that places all economic logic secondary to political (and op-ed) opportunism: "Energy independence for America!"

I'm sorry to see Kerry dip into that one recently, but he's in good cynical company with our current president, a recent convert himself.

The truth is, our consumption per thousand dollars of GDP has declined dramatically over the past 30 years, making oil far less crucial to our economy. In 1973 it stood at roughly 1.4 barrels/1kGDP. Now it stands at roughly 0.7 barrels, or a decline of roughly 50 percent.

Not bad for "oil addicted" America, whose only true sin is growing our economy so dramatically since 1973.

But even there our total oil consumption has risen only from about 17 million barrels a day in 1973 to about 21 today. Again, not bad.

The real issue for many is one of imports, which stood at only 5 mbd in 1973 and now sits about 11 mbd, so shifting from about one third of our oil use back then to roughly 60% now.

Still, about the only thing dumber than describing that as an addiction is calling for independence. C. Fred Bergsten, director of the International Institute of Economics, calls the notion "ridiculous," because it implies that "price doesn't matter, that you'll pay any amount to decrease your reliance on imports--and that would be crazy."

Instead, Bergsten, like me, calls for more cooperation between us and rising China (with its skyrocketing demand for foreign oil), calling us "natural allies" because we're both big consumers sitting on the same side of the table opposite OPEC.

Ah, but we can't have alliance with China, can we? That would ruin all those plans for high-tech weaponry we don't actually need for wars we won't actually fight against opponents that won't actually materialize. Calling for energy independence fits that rationale nicely, because it begs America to beg off from trying to connect the Middle East or even to seek Chinese cooperation in that effort. Instead, let's go autarkic on energy, hunker down, keep our powder dry... you know the story.

Strange bedfellows indeed.

But if we stopped all imports from the Middle East, wouldn't the Middle East stop being a security issue? Well, as one expert points out in this piece, we don't import any Iranian oil and haven't in decades. So much for that theory of disconnectedness leading to security.

But the real weakness here is that autarky in any form is not a realizable strategy in an interconnected world, whether you're talking energy or R&D or manufacturing ("Buy American!") or the service sector ("Traitor CEOs selling our jobs to damn furreigners!"). The network of globalization itself becomes the security issue, so building in resiliency is the answer, not the false dream of autarky.

We need new rules to manage this far more integrated and connected security order, to shrink this Gap and grow this Core by keeping it safe. That's what my books are all about: 21st century answers to 21st century problems of war and peace.

And that's what Enterra Solutions is all about, leading that charge (as it should be) from the private sector.

Sure, I could sell more books by peddling more fear and making it all seem so much simpler than it is (we need a Manhattan Project on X...), but I like to sleep at night, and I fear intellectual dishonesty more than anything--even obscurity and failure.

But the truth is there is no logical trade-off between connectivity and security, or between efficiency and security. That's the gospel Steve DeAngelis and I are preaching, and it sells because it speaks to our true ingenuity as Americans: not running away from tough problems but running toward them.

Great piece by Fialka. Pound-for-pound, as good as anything I've read in the last five years.

Individual-level celebrations and grieving for an individual-level war

ARTICLE: “Tribute or Protest? Lowering flags for soldiers killed in Iraq emerges as another flashpoint on the home front,” by Jeffrey Zaslow, Wall Street Journal, 1-2 July 2006, p. A1.

ARTICLE: “Breaking Party Protocol: In the Iraq war, a new approach to welcoming home the troops is emerging. From bonfires to black-tie galas, how some families are bucking tradition,” by Ellen Gamerman, Wall Street Journal 1-2 July 2006, p. P1.

Pair of fascinating articles that tell us much, I believe, about the emerging reality of the Long War.

First one explores how state and local politicians are using the flag-at-half-mast tribute in light of losses in Iraq.

Governor Jennifer Granholm, who would be a presidential contender if she wasn’t born outside the U.S. (Canada, I believe) orders Michigan’s state offices to put flags at half mast whenever a Michiganer is killed in Iraq. The U.S. flag code says states can do this only when a state official dies, so, in effect, governors like Granholm are abusing the privilege by treating soldiers like officials.

Is this political in motivation? Anything a politician does is political in motivation. That’s the job.

I think the act is really warranted in the sense that many soldiers dying in Iraq are de facto servants of the state, being in the National Guard, which belongs to the governors first and foremost, but can be appropriated by the Fed when needed. If you extend that privilege to them, then I think it’s no big stretch to do so to non-NG soldiers who also hailed from your state.

Granholm has done this 72 times, each time calling up the family in question in advance to tell them of her decision. To me, this is a solid call that recognizes sacrifice in a Long War where individual soldiers will die fighting individuals--not states. In a war of our ideology of freedom and connectedness and individuality against their ideology of authoritarianism and disconnectedness and collective identity, I think it’s crucial to recognize individual sacrifice, because it’s what defines us in this struggle.

A historian notes that if we had done that in WWII, when Michigan alone lost 13 soldiers, on average, every day, then Michigan’s flags would have been at half-mast the entire war. And I agree with that notion: in that state-on-state war, recognizing sacrifice so individually would have been damaging to morale. But here, in this Long War, fought primarily by our individuals against their individuals, within states and across them, I think individual recognition makes more sense.

Yes, some will abuse the symbology here, but they will do within their rights as U.S. citizens speaking freely on matters of great concern to us all, and that’s okay.

But it’s not just the tragedy that will be marked more individually in this way, so too will the celebrations:

This war’s unique aspects are also changing the homecoming equation. Iraq marks the first extended conflict for the U.S. since the draft was abandoned in 1973. About 29% of the 1.3 million troops deployed since the invasion of Afghanistan in October 2001 have done two or more tours of duty. This is a big change from Vietnam when the draft assured supplies of fresh troops, and from the 1991 Gulf War, which lasted eight months [in terms of deployments]. In this conflict, homecoming is often temporary--and when troops do come back for good, it follows an extended absence.

More troops are returning to spouses eager to celebrate the event. About 52% of the fighting force is married, according to the Defense Department. Military experts say the troops in Vietnam, with a draft that tilted heavily toward young men, were largely unmarried, though the Defense Department said it had not compiled marriage statistics for all the services in that war.

In another shift, many of the troops today are returning directly to civilian communities. National Guard and Reserve members have comprised as much as 40% of forces, compared with a high of 20% during the Gulf War.

The reality is that the Long War will be fought far more by SysAdmin troops in a SysAdmin function than by traditional warfighting troops in a blitzkrieg-ish, high-tech Leviathan way. This will be long and slow, involving the Reserve Component (Guard and Reserves) far more than anything we did in the Cold War.

And this reality will radically alter all sorts of rule sets for this war-within-peace.

The latest "last chance" on global trade

ARTICLE: “At the Trade Talks, Threats to Book Flights Home: Failure to agree could mean a delay until the end of the decade,” by James Kanter, New York Times, 1 July 2006, p. B3.

OP-ED: “Doha’s Last Chance: The ‘pain’ is really gain,” by Paul Wolfowitz, Wall Street Journal, 1-2 July 2006, p. A10.

ARTICLE: “French Presidential Hopefuls Play to Disaffection on Campain Trail,” by Leha Abboud and Christina Passariello, Wall Street Journal, 3 July 2006, p. A4.

ARTICLE: "Europeans Broach Idea Of Trade Pact With Russia," by Andrew E. Kramer, New York Times, 4 July 2006, p. C3.

Doha is failing, but then all of the previous rounds failed, failed, and then failed some more until some baseline consensus emerged and some deal was salvaged, moving the ball forward some measure. With each round, the gains are more profound but that much harder to achieve, because with each round the penetration of national economics by global economics gets more difficult, more personal, more passionate.

Delving into agriculture subsidies and protectionism is amazingly hard, because the long-held myths about “our food,” “our lands,” and “our farmers” are so strong. Hell, for centuries people bound themselves together mostly over food, so national pride here isn’t just an issue, it’s the identity in many ways.

The deal has been on the table for a while: Europe and U.S. both cut their ag subsidies to a range somewhere near that demanded by New Core powers led by Brazil. Current European offers are less than half the movement desired, while the U.S. offer is roughly two-thirds. We refuse to move anymore unless the Europeans do, and the Europeans are frozen by France’s rather solitary resistance.

So long as those two sides of the “triangle” don’t budge (the U.S. basically wearing the T-shirt that proclaims, “I’m with stupid!”), then the New Core powers (the third corner) don’t budge on their tariffs on manufactured goods.

So if you really want to target the biggest threat to global trade and globalization right now, you plan to invade France tomorrow.

But maybe time will heal that wound. France’s unemployment rate is the highest in Western Europe at almost 10 percent, with the number surpassing 20 percent for those under 25. But you saw what happened when France tried to liberalize its labor laws recently. Add to that the racial tensions over Muslims, and we’re talking one scared and increasingly scarred society.

The last article highlights the current front-runners from the center-right (Nicholas Sarkozy, considered very pro-American) and the left (socialist Segolene Royal). Both are showing some willingness to take on taboos. With any luck, France will fix France and we’ll see a Doha that happens in some significant way prior to 2010--the latest dark-scenario prediction.

Still, with any failure in global talks, there tends to be rising potential for bold bilaterals. And frankly, when the global economy is growing as fast as it is right now, bilats tend to dominate more. Countries are simply less willing to make the big bold deals on global negotiations unless they're feeling more pain. Still, you have to wonder how bad it must get for France to come to its senses.

Russia’s recovery from sovereign bankruptcy nears completion

ARTICLE: “Russians Bet Ruble Will Rise To Status of Dollar, Euro, Yen,” by Peter Finn, Washington Post, 29 June 2006, p. A24.

Interesting to see the economic bravado connected with Russia’s recovery from state bankruptcy just a decade ago.

Whether or not the ruble becomes an international reserve currency is less important than the clear signals being sent by Russians themselves: they now believe in their own currency, and believing in your own currency means believing in your nation’s economic future.

All currency panics/meltdowns are triggered when local people start shorting the national currency (i.e., assuming it will devalue). That’s what triggers the similar pressure from abroad.

Now we have Putin talking about paying off the nation’s foreign debt and bills in the parliament that would require all commercial establishments “to express their price in rubles.”

That’s all good stuff, because a stable, growing Russia that seeks not just to sell us oil and gas but likewise seeks investment opportunities downstream in those industries is a Russia we don’t have to worry about militarily.

And not worrying about a country militarily is my most essential definition of being in the Core--i.e., scenarios about sending our troops to your nation become more and more fantastic, so you’re basically in.

Connectivity creates wealth opportunities but threatens homogeneity: it’s as simple as that

ARTICLE: “On Lake Michigan, a Global Village,” by Steve Lohr, New York Times, 2 July 2006, p. BU1.

ARTICLE: “”Last Stop, Lhasa: Rail Link Ties Remote Tibet to China; Critics See Cultural Peril and Domination,” by Joseph Kahn, New York Times, 2 July 2006, p. A8.

ARTICLE: “At 13,000 Feet High, Pens Explode, Ears Pop on Tibet Train,” by James T. Areddy, Wall Street Journal, 5 July 2006, p. A15.

ARTICLE: “Business Joins African Effort To Cut Malaria,” by Sharon LaFraniere, New York Times, 29 June 2006, p. A1..

First story is an interesting one about how Racine, Wisconsin is trying to recast its global connectivity in such a way as to revitalize its economy. The factories are gone, as are the reflexive, anti-big-business politics. So a new mayor pushes a globalizing agenda for little old Racine.

“In the past, Racine was a self-contained economy,” [Gary Becker] said. “But that is not an option anymore.”

Will Racine’s locale uniqueness get somewhat lost in this transition? You bet. With connectivity comes a certain degree of homogeneity. That’s how connections are built and made secure--a certain level of standardization.

Culture is mongrelized and transnationalized in this process, and that is pure evil to some, who would rather keep people pristine and poor, celebrating that lifestyle from afar--no doubt (or perhaps on the occasional visit to their quaint little remote village).

So China’s engineering marvel of a train that now links Beijing to Lhasa is naturally decried as the beginning of the end for Tibetan culture, which has remained so distinct precisely because of its disconnectedness. Tibetan activists will tell us that the rail line is a tool of imperialism, both economic and cultural, and they will be correct. Connectivity brings contamination. It reduces the power of collective identity and raises the power of individual identity.

That scares for a lot of reasons. It challenges the meaning of what it is to be Tibetan. It will change gender roles and relations dramatically, and that subverts traditional society. Some will win, others will lose, and if China’s pattern of resource exploitation holds, the losers will outnumber the winners.

But it’s hard to argue against China’s clear domination of Tibet. China considers Tibet part of its mainland like we consider Texas to be part of ours. Did we get Texas in any nicer a fashion, all myths aside? Hmm. Not an easy argument.

But connectivity-wise, Tibet is more like a Montana or Idaho: landlocked and distant from damn near everywhere. Unless the connectivity is forced through infrastructure development, which almost always is driven by demand for raw materials in the first iteration, then Tibet will remain very pristine and very poor.

Me, I don’t think cultural preservation outweighs the need or right for economic development leading to individual empowerment.

Then again, I’m an American, and that’s our whole raison d’etre.

But once you get that connectivity in there, then you often force private businesses coming into the remote situation to deal with all sorts of collective goods issues that the local weak governments are poorly equipped to handle, like watching mining giant Billiton get sucked into dealing with malaria in Mozambique. Is it better to leave those people to suffer their pristine fate? Or is it better to force the connectivity--and the connectors themselves--to deal with the challenges found within?

I know, I know. Send in the aid instead. But what has all that aid done for Africa to date?

Infrastructure investment: the long pole in the connectivity tent

ARTICLE: “Slow! Government obstacles ahead: The public sector in Latin America is not spending enough on transport, electricity and water, but nor is it allowing private investors to help out,” The Economist, 17 June 2006, p. 41.

The real connectivity problem with Latin America:

Although the region’s economies are growing faster, thanks to an export boom [see China, says Tom], they are hobbled by poor roads and railways, clogged ports and a precarious electricity supply. In the 1990s governments slashed public investment to balance their budgets. They invited private investors to make up the shortfall. Between 1990 and 2003, Latin America accounted for half of total private-sector participation in infrastructure in developing countries. Private investment has expanded telecom networks. But the flow of private money for electricity, water and transport has dried up in many countries, partly because citizens or politicians turned against privatization.

So no surprise: a survey of businessmen there sees 55% saying infrastructure is a serious hindrance to further development, compared to only 18% in East Asia. So the World Bank says spending on infrastructure should double or even triple if the region hopes to catch up to East Asia.

The big exception in the region is Chile, thanks to a long-standing commitment to privatization. As such, the economic connectivity there is quite strong: “Only the most remote households in Chile lack running water or electricity.”

The key for Chile is a rule set for arbitration for investors when things go wrong, so investors don’t fear putting there money into Chile.

Meanwhile, caboose braking in Brazil threatens to make the lack of such infrastructure the key chokehold on future growth, with some there predicting it pretty much tops the country out at 4% and no higher until fixed. Rule-set fights abound in Brazil on utilities, and that too scares away investors.

But a bright spot emerges:

Brazil, after much delay, is launching a scheme under which private companies can build and operate roads, sewerage systems and even jails in exchange for a stream of revenue guaranteed by the government. Local firms are less queasy than international investors about risk. “Can we wait to reach the level of Chile? We need to accept a little the conditions there are (sic),” said Marcelo Odebrecht, boss of a construction firm that bears his surname.

This article reminds my of my ten commandments for globalization, or the original articulation of the military-market nexus:

1) Look for resources, and ye shall find, but …

2) No stability, no markets

3) No growth, no stability

4) No resources, no growth

5) No infrastructure, no resources

6) No money, no infrastructure

7) No rules, no money

8) No security, no rules

9) No Leviathan, no security

10) No U.S. will, no Leviathan.

Easily the best slide to come out of the NewRuleSets.Project with Cantor Fitzgerald.

The real race Ahmadinejad’s running (on economics)

ARTICLE: “Behind Rise of Iran’s President: A Populist Economic Agenda: Ahmadinejad Wins Power Promising Lavish Outlays; Inflation Is a Major Worry; Crunch Time at Biscuit Factory,” by Bill Spindle, Wall Street Journal, 22 June 2006, p. A1.

Really good article on how Ahmadinejad is running more than one race. The nuclear one we know about already, and the strategy of trying to create a non-mullah-based single-party state is another. So those are the military and political ones.

The economic one is no surprise, given his rhetoric and his cash windfall on oil: a populist agenda designed to keep popular support. The man promised to put Iran’s oil earnings on the dinner table of every Iranian, and he’s keeping his promise, basically taking what should be the economic legacy of all that oil and turning it into immediate domestic consumption instead of long-term investment. Billions here and there and it begins to add up.

All of this is a strong turn away from the connectivity-embracing reforms of the late 1990s, which were designed ultimately to gain acceptance into the WTO. Thus Ahmadinejad, focusing on his political agenda, which determines his security agenda, has decided to embrace his inner Chavez (diverting billions from Iran’s Oil Stabilization Fund--essentially a rainy day fund) and eat his nation’s seed corn as fast as possible.

So Iran remains a heavily subsidized minimal-market economy, making its integration into a global competitive landscape all the harder, and that plays nicely into the other two strategies, both of which require high levels of disconnectedness from the world’s rules and networks.

The results of this strategy are predictable: nice growth rates, but at the price of rising inflation and rising unemployment (seen as being as high as 20% in a population that adds millions to the workforce each year because universities are full and 70 percent of the population is under 30).

Ahmadinejad’s strategy reminds me of Gorbachev’s: fix the politics just so before trying to take on the economics. It’s not a bad strategy for us to encourage, because it’s bound to fail.